HomeMy WebLinkAboutR-00-57
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RESOLUTION NO. R-OO-57
A RESOLUTION OF THE CITY OF SEBASTIAN,
INDIAN RIVER COUNTY, FLORIDA, AMENDING
THE CITY'S INVESTMENT POLICY PURSUANT
TO LEGISLATIVE AMENDMENTS OF SECTION
218.415, FLORIDA STATUTES; PROVIDING FOR
CONFLICT; AND PROVIDING FOR AN
EFFECTIVE DATE.
WHEREAS, Chapter 2000-264, Laws of Florida, amends current section 218.415,
Florida Statutes, regarding investment policies; and
WHEREAS, the City Council has adopted an investment policy in accordance with
Section 218.415, Florida Statutes via Resolution R-99-51 on November 3, 1999; and
WHEREAS, Chapter 2000-264, Laws of Florida, requires additional requirements to be
contained in the Investment Policy;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEBASTIAN, INDIAN RIVER COUNTY, FLORIDA, that:
Section 1. INVESTMENT POLICY. The City of Sebastian's Investment
Policy is hereby amended and adopted to include Section XIV, Continuing Education
Requirements pursuant to Chapter 2000-264, amending Section 218.415, F.S. and
identified as attachment 1.
Section 2.
CONFLICT. All resolutions or parts of resolutions in conflict
herewith are hereby repealed.
Section 3.
EFFECTIVE DATE. This resolution shall take effect on October
1,2000. ;jI
The foregoing Resolution was moved for ado.! by ConnCilmemb.J:)z1Wk...
The motion was seconded by Councilmember Dl.olvrf and, upon being put
into a vote, the vote was as follows:
Mayor Walter Barnes
Councilmember James Hill
Councilmember Joe Barczyk
Councilmember Ben A. Bishop
Councilmember Edward J. Majcher, Jr.
The Mayor thereupon declared this Resolution duly passed and adopted this 11 th day of
October, 2000.
CITY OF SEBASTIAN, FLORIDA
BY:_~)o.~r'V) ho~
Walter Barnes, Mayor
ATTEST:
~a.)JJ~ .
Sally M 0, CMC
City Clerk
Approved as to form and legality for the
reliance by the Gity of Sebastian only:
...
ATTACHMENT 1
CITY OF SEBASTIAN
INVESTMENT POLICY
I. SCOPE
The investment policy applies to the investment of surplus funds which includes cash and
investment balances of the following funds:
~ General Fund
~ Special Revenue Funds
~ Debt Service Funds
~ Capital Projects Funds
~ Enterprise Funds
~ Trust and Agency Funds
This policy does not apply to the investment of principal, interest, reserve, construction,
capitalized interest, redemption, or escrow accounts created by ordinance or resolution
pursuant to the issuance of bonds where the investments are held by an authorized depositary.
This policy does not apply to funds not under investment control of the City; such as, the
Sebastian Police Officer Pension Fund, the International City Management Association
deferred compensation program administered by the Retirement Corporation, or the United
States Conference of Mayors deferred compensation program administered by the Public
Employee Benefit Services Corporation.
II. INVESTMENT OBJECTIVES
The following investment objectives will be applied in the management ofthe City's funds.
A. The primary objective and the highest priority of the City's investment activities is the
safety of principal. Investments of the City shall be undertaken in a manner that seeks to
ensure the preservation of capital in the overall portfolio.
B. There shall be sufficient liquidity to meet the City's operating, payroll and capital
requirements.
C. The optimization of investment returns shall be secondary to the requirements for safety
and liquidity, while striving for a reasonable rate of return.
III. PRUDENCE AND ETHICAL STANDARDS
The "Prudent Person Rule" shall be used in the management of the overall investment
portfolio. The "Prudent Person Rule" states: "Investments shall be made with judgement
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
derived. "
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The Director of Finance or his designee, acting in accordance with written procedures and
exercising due diligence, shall not be held personally responsible for a specific security's
credit risk or market price changes, provided that these deviations are reported immediately
and that appropriate action is taken to control adverse developments.
IV. PERFORMANCE MEASUREMENT
The benchmark yield for the overall performance of the portfolio is considered to be a market
rate at least equal to the ninety (90) day Treasure Bill rate.
V. DELEGATION OF AUTHORITY
An Investment Committee shall be established consisting of the City Manager, City Attorney,
and Director of Finance. The Investment Committee shall approve all investments prior to
their purchase, except routine transfers between the State Board Account and the Operating
Account of the City. The Investment Committee shall meet at least semi-annually to review
the City's investment strategy.
VI. AUTHORIZED INVESTMENTS
Authorized investments are limited pursuant to Chapter 166.261, Florida Statutes and the
Cash Management Services Contract.
VII. MATURITY AND LIQUIDITY REQUIREMENTS
A. To the extent possible, investment maturities shall be matched with known cash needs
and anticipated cash flow requirements. Investments of operating funds shall have
maturities of no longer than twenty-four (24) months.
B. Investments do not necessarily have to be made for the same length of time that the
funds are available. The basic criteria for investment maturities are as follows:
1. Keep maturities short in a period of constantly rising interest rates based on Treasury
bill auctions or the daily Federal Funds rate.
2. Keep maturities short in a period of an inverted treasury yield curve (short-term rates
are higher than the long-term rates.)
3. Maturities should be lengthened when the treasury yield curve is normal and is
expected to remain that way based on economic reports taken as a whole. The yield
curve is normal when short-term rates are lower than long-term rates.
4. Maturities should be lengthened when interest rates are expected to fall based on
economic reports taken as a whole.
5. Maturities should be staggered to provide for sequential maturities.
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C. Investments shall be purchased with the intent of earning a favorable rate of interest and
return on the City's funds for the stated maturity. The value of individual investments
(such as treasury and federal agency securities) will fluctuate with market conditions and
may offer opportunities for favorable gains if liquidated. All factors shall be considered
when liquidating an investment prior to its scheduled maturity, including market
conditions (e.g., rising or falling interest rates) and the opportunity to reinvest the funds
at a favorable return.
VIII. BID REQUIREMENTS
Investments shall be made through a competitive bid process. A minimum of three (3) banks
and/or dealers shall be contacted and asked to provide bids on the securities on question,
except those with City investments of $2,000,000 unless approved by the City Manager.
Bids shall be awarded based on the highest yield on the investment, or, at the discretion of
the Director of Finance, with the Local Government Surplus Funds Trust Funds administered
by the State Board of Administration when it is deemed probable that interest rates will
increase in the very near futures and is not prudent to commit funds for a period of time at a
lower interest rate. Surplus funds may also be invested with the Local Government Surplus
Funds Trust Fund when investments in local financial institutions exceed the maximum
authorized per institution.
However, on an exception basis the City may invest in the following instruments and may
divest itself of such investments at prevailing market prices or rates:
~ Local Government Surplus Funds Trust Fund
~ Direct obligations ofthe U.S. Treasury
~ Florida League of Cities Florida Municipal Investment Trust
The Director of Finance or his designee shall notify the successful bidder verbally in order to
expedite the purchase of the investments via a check, wire transfer or account transfer. This
notice shall be confirmed by a letter from the Director of Finance or another authorized
signatory of the City which states the fund and account for which the investment is made, the
principal amount of the investment, the yield or interest rate, any premium or discount
applicable to the investment, the maturity date, and instructions for payment of interest.
IX. RISK AND DIVERSIFICATION
Investments shall be diversified to control the risk ofloss resulting from overconcentration of
assets in a specific maturity, issuer, instrument, dealer, savings and loan, or bank through
which these instruments are bought and sold. No more than $2,000,000 shall be held by any
one depository without the approval of the City Manager. The depository that holds the
funds for the Local Government Surplus Funds Trust Fund administered by the State Board
of Administration pursuant to Chapter 218, F.S., shall be excluded from this requirement.
All investments shall be held in the name of the City of Sebastian and shall be designated as
an asset of the City of Sebastian. Securities, other than non-negotiable certificates of deposit,
purchased from a bank shall be held in safekeeping by the trust department of the bank.
Securities purchased from Primary dealers shall be held in safekeeping by a third party
custodian. Due to the cost of safekeeping, one-business day repurchase agreements made
pursuant to a Cash Management Services Contract may be placed with the depositary relating
to the demand account for which the repurchase agreement was purchased.
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II.
X. AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS
The Investments shall only be purchased form financial institutions that are designated as "
qualified public depositories" pursuant to Chapter 280, F.S., or from Primary dealers.
Purchases of all investments, except those from the Local Government Surplus Funds Trust
Fund administered by the State Board of Administration pursuant to Chapter 218, F.S., shall
be made through the local office of the financial institution. Repurchase agreements shall
only be entered into with the financial institution providing Cash Management Services.
XI. CASH MANAGEMENT SERVICES
The City shall enter into a Cash Management Services Contract with a local bank no later
than March 31, 2000. This contract shall be placed for bid among all the qualified local
banks.
This contract shall provide for zero balance checking accounts for certain revenue, operating,
and construction accounts of the City. These accounts shall be designated by the Director of
Finance.
The Director of Finance or his designee shall monitor investments pursuant to a Cash
Management Services Contract. The investment of surplus funds in overnight repurchase
agreements pursuant to this contract shall not exceed $1,500,000 for three consecutive
working days. These investments hall be guaranteed by obligations of the U.S. Government.
Funds in excess of$1,500,000 shall be invested in accordance with the preceding paragraphs.
XII. INVESTMENT REPORTS
In accordance with City of Sebastian Ordinances Section 2-120, quarterly investment reports
shall be provided to the City Council. The investment report shall include a list of the
investments in the portfolio by fund, type, maturity, interest rate or yield, book value, market
value, and income earned as ofthe report date.
XIII. INTERNAL CONTROLS
The Director of Finance shall, by January 1, 2000, prepare written internal control policies
and procedures for investment transactions made pursuant to this Investment Policy. The
City Manager shall be notified immediately upon deviations from currently approved
investment policies. Compliance with these internal controls shall be audited annually by
independent auditors as part ofthe City's annual financial audit.
XIV. CONTINUING EDUCATION REQUIREMENTS
The Director of Finance shall complete eight (8) hours annually of continuing professional
education in subject courses of study related to investment practices and products.
XV. POLICY REVIEW
This Investment Policy shall be reviewed annually by the Director of Finance who shall make
recommendations for amendments as appropriate.
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