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HomeMy WebLinkAboutOrd 1512 - investment policies for West U. ORDINANCE NU1v1BER 1512 AN ORDINANCE ADOPTING AND RE-ADOPTING INVESTMENT POLICIES FOR THE CITY OF WEST UNlVERSITY PLACE, TEXAS; AMENDING THE CODE OF ORDINANCES OF SAID CITY; CONTAINING FINDINGS AND PROVISIONS RELATING TO THE SUBJECT; AND DECLARING AN EMERGENCY. WHEREAS, the City Council desires to adopt and re-adopt investment policies; NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF WEST UNlVERSITY PLACE, TEXAS: Section 1. The Code of Ordinances of the City of West University Place, Texas, is hereby amended by adding a Division 2 to article III of Chapter 2 of said Code, which Division 2 shall read as follows: DIVISION 2. INVESTMENT POLICIES Sec. 2-41. Generally. (a) Application. This division applies to to all investments of City Funds, including the funds under the City's control, except for funds that are employee- directed investments of funds held under the terms a deferred compensation agreement with the City's employees. The term investments shall be construed broadly to include all investable funds not on deposit at a City depository or paying agent bank. However, if City funds are used to buy an instrument described in Sec 2 - 44 such funds are "investments" and are subject to this ordinance, regardless of whether a depository or paying agent holds such funds (b) Laws and Objectives. Funds of the City will be invested in accordance with Chapter 105, TEX. LOCAL GOVERNMENT CODE and Chapter 2256, TEX. GOVERNMENT CODE (as amended from time to time), other applicable state laws, the City Charter, IRS arbitrage regulations, bond covenants and this code. The City's objectives in managing its investment portfolio are, in order of importance, as follows: (1) Safety - The first and foremost consideration of any custodian of public funds must be the preservation and safety of the principal amount involved. (2) Liquidity - The City must have sufficient cash on hand to meet current operational needs. (3) Yield - The City shall invest local funds in investments that yield the highest possible rate of return while providing necessary protection of the principal consistent with the terms set forth in this policy , , (4) Investment strategy - The City Council hereby adopts the investment strategy for each fund as detailed below' (i) General Fund - The investment objective of the City's General Fund will be to purchase investments that will preserve the safety of principal, maximize liquidity, and maximize yield (in that order of priority). The strategy to meet these objectives will be to invest in any of the eligible investments authorized by this ordinance provided that: Funds needed for the City's day-to-day operating expenditures will be available, and investments of available operating reserves will mature no later than three (3) years after the date of the purchase. (ii) Debt Service Fund - The investment objective of the City's Debt Service Fund will be to purchase investments that will preserve the safety of principal, maximize liquidity, and maximize yield (in that order of priority) taking into account the timing of the City's debt service payments The strategy to meet these objectives will be to invest in any of the eligible investments authorized by this ordinance provided that Funds needed to meet the City's next debt service payment will be invested in investments that mature no later than the date the debt service payment is due, and funds in the debt service reserve (those funds not needed for the City's debt service payment) the maximum stated maturity date of the investment will be no more than three (3) years after the purchase. (iii) Construction Funds - The investment objective of the City's Construction Funds will be to purchase investments that will preserve the safety of principal, maximize liquidity, and maximize yield (in that order of priority) taking into account the City's planned or potential capital projects that may require the expenditure of the funds invested.. The strategy to meet these objectives will be to invest in any of the eligible investments authorized by this ordinance provided that: Funds needed to meet the City's planned capital projects will be invested in investments that mature no later than the date the funds will be needed to make scheduled payments for the project, and for funds not designated for specific planned capital projects the maximum stated maturity date of the investment will be no more than three (3) years after the purchase. (iv) Special Revenue Funds - The investment objective of the City's Special Revenue Funds will be to purchase investments that will preserve the safety of principal, maximize liquidity, and maximize yield (in that order of priority). The strategy to meet these objectives will be to invest in any of the eligible investments authorized by this ordinance provided that: Funds needed for the special purposes for which these funds are reserved will be available as needed, and investments of available operating reserves will mature no later than three (3) years after the date of the purchase. (v) Enterprise Fund - The investment objective of the City's Enterprise Fund will be to purchase investments that will preserve the safety of principal, maximize liquidity, and maximize yield (in that order of priority). The strategy to meet these objectives will be to invest in any of the eligible investments authorized by this ordinance provided that: Funds needed for the City's day to day operating expenditures in the Enterprise Fund will be available, and investments of available operating reserves will mature no later than three (3) years after the date of the purchase. (vi) All Other Funds - The investment objective for all other City Funds will be to purchase investments that will preserve the safety of principal, maximize liquidity, and maximize yield (in that order of priority). The strategy to meet these objectives will be to invest in any of the eligible investments authorized by this ordinance provided that: Funds needed for those Funds' day-to-day operating expenditures will be available, and investments of available operating reserves will mature no later than three (3) years after the date of the purchase. Sec. 2-42. Investment Officer. (a) The Director of Finance is designated the Investment Officer for the City and is responsible for the investment decisions and activities. The investment officer shall have the authority to execute sale and purchase transactions in accordance with this code and to transfer funds between authorized investments. When requested to do so by the Director of Finance or in the absence of the Director of Finance, the City Manager or the Deputy Director of Finance may act as investment officer. (b) The standard of prudence to be applied by the Investment Officer shall be the "prudent investor" rule, which states, "Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived." The prudent investor rule shall be applied in the context of managing the overall portfolio. In the event the credit risk or market price of a specific security changes, provided that these deviations are reported immediately that appropriate action is taken to control adverse developments, and that ownership of the security is not inconsistent with state laws or these policies, the investment officer, acting in accordance with written procedures and exercising due diligence, shall not be held personally responsible. (c) The Investment Officer will routinely monitor the contents of the portfolio, the available markets and the relative values of competing instruments, and will adjust the portfolio accordingly. (d) The Investment Officer and the Deputy Director of Finance will attend at least one training session relating to the Investment Officer's responsibilities within twelve months after assuming duties of Investment Officer and at least once every two calendar years thereafter. Training must include education on investment controls, security risks, strategy risks, market risks, and compliance with the Public Funds ~. Investment Act. (e) If the Investment Officer, City Manager, or Deputy Director of Finance has a personal or business relationship with an entity seeking to sell an investment to the City, then they must file a statement disclosing the personal or business relationship. (Disclosure Statement) If the Investment Officer, City Manager or Deputy Director of Finance is related within the second degree by affinity or consanguinity, as determined by Chapter 573 of the Government Code, to an individual seeking to sell an investment to the District, then they must file a Disclosure Statement with the City Council and with the Texas Ethics Commission. Sec. 2-43. Internal Controls (a) The Director of Finance shall establish written procedures designed to prevent loss of public funds due to fraud, error, misrepresentation, theft, unanticipated market changes, and imprudent actions. (b) In connection with the annual audit, the City's independent auditors will perform an annual compliance audit of the City's internal controls applicable to the investment of City Funds and adherence to this ordinance. (c) Each year, concurrent with the delivery of the final investment report required by this ordinance, or at any other time deemed necessary by the City Council, the City Council will review this ordinance to insure that the requirements outlined are satisfied. Sec. 2-44 Investment Instruments. (a) State Law Limits. The City will invest only in investments authorized by Chapter 2256, TEX. GOVERN1v1ENT CODE, (as amended from time to time) further limited to the investments listed below: (l) Direct obligations backed by the full faith and credit of the United States Government maturing in three (3) years or less. (2) Obligations of agencies of the United States Government maturing in two (2) years or less. (3) Certificates of deposit not exceeding 36 months in length, which are insured by Federal Deposit Insurance or which are fully collateralized under a pledge agreement approved by the City. (4) Investment Pools established under the provIsIons of Chapter 2256.016, TEX. GOVERNMENT CODE, (as amended from time to time) Must be authorized by a separate resolution and cumulative investments in these pools may not exceed thirty percent (30%) of the investment portfolio. II I (5) A no-load money market mutual fund meeting the requirements established by Chapter 2256.014, TEX. GOVERNMENT CODE (as amended from time to time). Must be authorized by a separate resolution and cumulative investment in these funds may not exceed twenty percent (20%) of the investment portfolio. Sec. 2-45. Qualified Institutions. (a) The Director of Finance shall maintain a listing of financial institutions which are approved for investment purposes. These institutions will be evaluated from time to time, as circumstances dictate to assure their creditworthiness (b) The City may not purchase investments from any entity which does not meet the following requirements: (1) The entity must be either the City's depositary or specifically approved by a resolution of the City Council. (2) The entity must acknowledge the receipt of a copy of this ordinance in writing. (3) The entity must provide written assurances that it has implemented reasonable controls and procedures to preclude any violations of this ordinance. Sec. 2-46. Safekeeping. (a) Third-Party Safekeeping. All investment securities purchased directly by the City shall be held by the City or in third-party safekeeping by an institution designated as custodian by the City Council. A safekeeping receipt shall be issued and delivered to the City listing the specific instrument held in safekeeping, the rate of return, maturity and other pertinent information. (b) Deposit-type securities (i.e. certificates of deposit) are to be physically delivered to City contemporaneously with purchase. (c) Securities will be purchased using the delivery vs. payment method. That is funds will not be wired or paid until verification has been made that the correct security has been received by the trustee. The security will be held in the City's name or in a third party's name on behalf of the City. The trustee's records will assure the notation of the City's ownership of or explicit claim to the securities. (d) Investments in the physical custody of the City will be covered by insurance. 0' Sec. 2-47. Reports. As required by Chapter 2256, TEX GOVERNMENT CODE, the Investment Officer will prepare and submit at least quarterly to the City Council written reports of investment transactions for all funds of the City for the preceding reporting period. The report will describe in detail the investment position of the City on the date of the report and include elements specified under said Chapter 2256, TEX GOVERNMENT CODE. Sec 2-48 Electronic Wire Transfer The Investment Officer, City Manager or Deputy Director of Finance may use electronic means to transfer or invest funds collected or controlled by the City, but only (1) between City accounts and (2) in the name of the City, unless otherwise authorized by in writing City Council. Section 2. This ordinance takes the place of investment policies heretofore adopted or observed by the City. Section 3. All ordinances and parts of ordinances In conflict herewith are hereby repealed to the extent of the conflict only. Section 4 If any word, phrase, clause, sentence, paragraph, section or other part of this ordinance or the application thereof to any person or circumstance, shall ever be held to be invalid or unconstitutional by any court of competent jurisdiction, the remainder of this ordinance and the application of such work, phrase, clause, sentence, paragraph, section or other part of this ordinance to any other persons or circumstances shall not be affected hereby. Section 5, The City Council officially finds, determines and declares that a sufficient written notice of the date, hour, place and subject of each meeting at which this ordinance was discussed, considered or acted upon was given in the manner required by the Open Meetings Law, Chapter 551, Texas Local Government Code, as amended, and that each such meeting has been open to the public as required by law at all times during such discussion, consideration and action. The City Council ratifies, approves and confirms such notices and the contents and posting thereof Section 6. This ordinance shall take effect immediately upon its adoption and signature. Section 7. The public importance of this measure and the requirements of the law create an emergency and an urgent public necessity requiring that this Ordinance be passed and take effect as an emergency measure, and a state of emergency is hereby declared, and the ordinance is accordingly passed as an emergency measure and shall take effect and be in force on the tenth day following its publication, as required by Section 2.12 of City Charter. PASSED AND APPROVED this the~~y of ~~.p--Jr " 1995. V oting Aye: V oting Nay: Absent: Signed ~~ Bill Watson Mayor AT lEST APPROVED AS TO FORM. / - ~~' " ~A - _-f6t,)-~~___ Kaylynn Holloway .. City Secretary JwuY~ James Dougherty, Jr. City Attorney I'