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HomeMy WebLinkAbout023133 RES - 11/18/1997A RESOLUTION AMENDING THE CITY INVESTMENT POLICY TO COMPLY WITH RECENT LEGISLATIVE CHANGES TO THE PUBLIC FUNDS INVESTMENT ACT, CHAPTER 2256 OF THE TEXAS GOVERNMENT CODE; CLARIFYING THE COMPETITIVE SOLICITATION PROCESS FOR SALE AND PURCHASE OF INVESTMENTS; AND ADOPTING THE CITY INVESTMENT POLICY AS AMENDED. WHEREAS,the City of Corpus Christi Investment Policy was adopted in Resolution No. 022390 on October 24, 1995 and amended in Resolution 022980 on June 18, 1997; and WHEREAS,the Texas State Legislature recently passed House Bill 2799 which concerns the Public Funds Investment Act, Chapter 2256 of the Texas Government Code, and the Investment Policy must be amended to comply with these laws; and WHEREAS, the City of Corpus Christi Investment Committee reviewed the proposed amendments to the Investment Policy and recommends that the City Council amend the City Investment Policy to comply with state law and to clarify the competitive solicitation process for sale and purchase of investments; and WHEREAS, the City Council must review the Investment Policy annually. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI, TEXAS: SECTION 1. The City Investment Policy is hereby amended and adopted. A copy of the amended City Investment Policy is attached and incorporated as Exhibit I. ATTEST: City Secretary tk, Approved this the �3 day ofMihv , 1997. James R. Bray, Jr., City Attorney By: I ^."2' C,"/,•;) Lisa Ortiz Aguilar Assistant City Attorney LOA Aordl.035 November 13. 1997 %IIU<UFILMED THE CITY OF CORPUS CHRISTI MAYOR The City of Corpus Christi 023133 November 13. 1997 L.OAA 1000-046 CITY OF CORPUS CHRISTI INVESTMENT POLICY EXHIBIT I TABLE OF CONTENTS I. INTRODUCTION 3 II. PURPOSE 3 III. DEFINITIONS 4 IV. INVESTMENT OBJECTIVES 5 V. AUTHORIZED INVESTMENTS AND MAXIMUM TERM 7 VI. INVESTMENT MIX AND STRATEGIES 10 VII. RESPONSIBILITY AND CONTROLS 12 VIII. COMPETITIVE SOLICITATION 13 IX. INSTITUTIONS 14 X. PLEDGED COLLATERAL 15 XI. SAFEKEEPING 15 XII. WIRE AND ELECTRONIC SERVICES 16 XIII. INFORMATION REPORTING/EVALUATION 16 XIV. BANKING SERVICES 18 XV. GENERAL PROVISIONS 18 APPENDICES A. APPENDIX A: PUBLIC FUNDS INVESTMENT ACT 19 B. APPENDIX B: LIST OF AUTHORIZED CITY REPRESENTATIVES 34 C. APPENDIX C: TEXPOOL INVESTMENT RESOLUTION 35 D. APPENDIX D: CITY'S CODE OF ETHICS ORDINANCE 38 E. APPENDIX E: CITY'S INDEMNIFICATION ORDINANCE 51 F. APPENDIX F: WIRE AND ELECTRONIC SERVICES 54 G. APPENDIX G: INVESTMENT POLICY RESOLUTIONS 58 November 13, 1997 I.OAA1000.046 2 I. INTRODUCTION It is the policy of the City of Corpus Christi to invest all available monies in conformance with these legal and administrative guidelines. Effective cash management is recognized as essential to good fiscal management. An aggressive cash management program will be pursued to maximize interest earnings as a viable and material revenue source. The City's portfolio shall be designated and managed in a manner responsive to the public trust and consistent with local, state, and federal law. Investments shall be made with the primary objective of: o Preservation of capital and protection of principal; o Maintenance of sufficient liquidity to meet operating needs; o Security of city funds and investments; o Diversification of investments to minimize risk while maximizing interest earnings; and o Maximization of return on the portfolio. Earnings from investments will be used in a manner that will best serve the interests of the City of Corpus Christi. II. PURPOSE A. Authorization This Investment Policy is authorized by the City Council (see Appendix G) in accordance with Chapter 2256, Subchapter A of the Government Code - The Public Funds Investment Act (see the attached and incorporated Appendix A). B. Scope November 13. 1997 I.OAA 1000.046 This Investment Policy applies to activities of the City, excluding pension funds, with regard to investing the financial assets of all Funds, including, but not limited to, the following Funds: General Operating Funds Special Revenue Funds Bond Funds (Bond Proceeds, Bond Reserves and Debt Service) Enterprise Funds Internal Service Funds Special Purpose Funds (within the control of Investment Officers) In addition to this policy, the investment of Bond Funds, Debt Service, and Reserve Funds shall be managed by their governing ordinances and Federal Law, including the Tax Reform Act of 1986 and subsequent legislation. 3 C. Review and Amendment This Policy shall be reviewed annually by the City Council on or before Septe,.thea 38 December 31 of each calendar year subsequent to its adoption. Amendments must be authorized by the City Council. The City Council shall adopt a written instrument b ordinance or resolution statin • that it has reviewed the Investment Policy. The written instrument so adopted shall record any changes made to the Investment Policy. III. DEFINITIONS Director of Finance - The Director of Finance is the Municipal Finance Officer responsible for City investments. Director of Finance's Designee - Controller or Chief Accountant Excess Cash Balances - Collected bank balances not needed to pay estimated check clearings. Investment Officers - City Treasurer and Investment Analyst Investment Portfolio - All City monies being invested under authority of the Investment Officers. Institution - Any firm, bank, bankholding company, broker or dealer who provides quotes for either the purchase or sale of investments. Third Party Safekeeping Institution - Any Institution not affiliated with Institution delivering the Investment. Investment - All authorized Securities listed in Item V. "AUTHORIZED INVESTMENTS AND MAXIMUM TERM." Investments approved by the Investment Committee include U.S. Treasuries, U.S. Agencies, Repurchase Agreements, Local Government Investment Pool, and Collateralized Certificates of Deposit. Decayed Transaction - An Investment which an Institution fails to deliver the City's Third Party Safekeeping Institution. Collateral - Securities pledged by an Institution to safeguard City assets; the City requires either U.S. Treasuries or U.S. Agencies Securities so that the market values can be readily determined at any point in time. Authorized City Representative - Officers authorized to transact as set out in the attached and incorporated Appendix B on behalf of the City (City Treasurer, Controller, Chief Accountant, and Director of Finance). Reserve Funds - Funds designated by Council for specific purposes which have not been appropriated for spending. November 13. 1997 LOAA 1000 046 4 Securities - Approved Investments designated by the Investment Committee to be held in the Investment Portfolio or acceptable to be pledged as Collateral to secure the monies of the City. Special Purpose Funds - Monies of non-profit corporations that Investment Officers are permitted to invest; includes such entities as the Corpus Christi Health Facilities Development Corporation, Coastal Bend Health Facilities Development Corporation, Corpus Christi Housing Finance Corporation, Corpus Christi Community Improvement Corporation, HOME Project, First Time Home Buyer, and Corpus Christi Industrial Development Corporation. Authorized Selling Group - Primary dealer and regional firms that have been selected by the underwriter to sell their securities. Each authorized member of a selling group will offer the issue at the price authorized by the governmental agency. Qualified Representative - A person who holds a position with a business organization, who is authorized to act on behalf of the business organization, and who is one of the following; (A) for a business organization doing business that is regulated by or registered with a securities commission, a person who is registered under the rules of the National Association of Securities Dealers; (B) for a state or federal bank, a saving, bank, or a state or federal credit union, a member of the loan committee for the bank or branch of the bank or a person authorized by corporate resolution to act on behalf of and bind the banking institution; or (C� for an investment pool, the person authorized by the elected official or board with authority to administer the activities of the investment pool to sign the written instrument on behalf of the investment pool. IV. INVESTMENT OBJECTIVES A. Preservation and Safety of Principal Investments of the City shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall Investment Portfolio. B. Liquidity The City's Investment Portfolio must be structured in a manner which maintains the liquidity necessary to pay obligations as they become due. Sufficient cash flows must be maintained by rapidly depositing monies and timing disbursements. Generally, Investments are matched to specific cash flow requirements such as payrolls, debt service payments, and other payables. Liquidity November 13. 1997 1,0N.1000 046 is also achieved by investing in Investments with active secondary markets or in Local Government Pools with stable net asset values. It is imperative that the Investment Portfolio and Excess Cash Balances be protected with sufficient Collateral at 102% of current market values so that monies are available as needed. Return on Investments The City's Investment Portfolio shall be designed with the objective of regularly exceeding the average yield of the three-month U.S. Treasury bill in a manner consistent with the principles of this policy described in IV. A and B above. However, it must be recognized that during a bear market, satisfying this objective may not be practical until Investments mature and can be re -invested. For bond issues to which arbitrage restrictions apply, the primary objectives shall be to obtain satisfactory market yields and to minimize the costs associated with investing such monies. D. Diversification Diversification is required because of differing liquidity needs of the City and is employed as a way to control risk. Diversification minimizes the risk to the overall Investment Portfolio of potential losses on individual Securities and enhances the safety of the Investment Portfolio. Through the solicitation of competitive proposals, the City shall allocate and diversify its Investments through various Institutions. The following types of Investments will be solicited from the following types of Institutions: 1. Government Securities - through approved brokers; 2. Repurchase Agreements - through a Third Party Safekeeping Institution Agreement which includes an approved primary dealer; 3. Public Funds Investments Pools - through participation agreements; and 4. Certificates of Deposit - through approved local banks. The City recognizes that investment risks can result from default risk and market price risks due to various technical and fundamental economic factors, and other complications, leading to temporary illiquidity. To control market price risks, volatile Investments shall be avoided. To control default risk, the only acceptable method of payment will be on a "delivery versus payment" basis for dircct purchases of government sccuritios all transactions. except investment pool funds. This method provides for payment to Institutions at the time the Investments are recorded in book entry form at the City's Third Party Safekeeping Institution, currently maintained at the Federal Reserve. For November 13. 1997 LOA1000 046 6 certificates of deposit, sufficient Collateral at 102% of current market values must be pledged to protect all City monies or monies under its control that exceed Federal Deposit Insurance Corporation (FDIC) coverage; the Collateral must be safekept at a Third Party Safekeeping Institution not affiliated with the bank or bank holding company providing the certificate of deposit. V. AUTHORIZED INVESTMENTS AND MAXIMUM TERM The City of Corpus Christi is authorized to invest in: A. Authorized Investments November 13. 1997 LOAA 1000.046 1. Obligations of the United States or its agencies and instrumentalities which currently include: a. Short-term U.S. Treasuries: Maximum Term (1) U.S. Treasury Bills up to 365 days (2) U.S. Treasury Coupon Notes up to 3 years (3) U.S. Treasury Strips (Interest Only) up to 3 years (4) U.S. Treasury Notes and Strips up to 7 years* *see Section V.B.3. below. b. U.S. Agencies: Maximum Term (I) Federal Home Loan Bank up to 2 years (2) Federal National Mortgage Association. up to 2 years (3) Federal Farm Credit up to 2 years (4) Federal Home Loan Mortgage Corporation. up to 2 years (5) Student Loan Marketing Association. up to 2 years c. Repurchase Agreements up to 365 days Repurchase agreements fully collateralized at 102% with a defined maturity date placed with a primary government dealer and safekept at a Third Party Safekeeping Institution, as provided under the provisions of the PSA (Pubic Securities Association) master repurchase agreement. An executed agreement between the City, primary government dealer and Third Party Safekeeping Institution will be on file before the City will enter into a repurchase agreement. Weekly monitoring by the City's Investment Officers of all Collateral underlying repurchase agreements is required. More frequent 7 monitoring may be necessary during periods of market volatility. Reverse repurchase agreements are not a permitted Investment. d. Local Government Investment Pool daily Investments made on behalf of the City by a public funds investment pool duly created to function as a money market mutual fund who marks its portfolio to market daily and, to the extent reasonably possible, who stabilizes its portfolio to market daily and, to the extent reasonably possible, who stabilizes its portfolio at a $1 net asset value. If the ratio of the market value of the Pool's portfolio divided by the book value of the portfolio is less than 99.50% or greater than 100.50%, the Pool's portfolio holdings shall be sold as necessary to maintain the ratio between 99.50% and 100.50%. The public funds investment pool must be continuously rated no lower than AAA or AAA -m or at an equivalent rating by at least one nationally -recognized rating service (see the attached and incorporated Appendix C) with a weighted average maturity no greater than 90 days. e. Collateralized Certificates of Deposit up to 1 year Certificates of deposit or other instruments issued by state and national banks domiciled in Texas that are: (1) guaranteed or insured by the Federal Deposit Insurance Corporation or its successor; or (2) secured by obligations that are described by Section V, Subdivision A.1(a) and A.1(b). Certificates of deposit must be fully collateralized at 102% of their market value. The City requires the bank to pledge U.S. Treasuries or U.S. Agencies (no Collateral Mortgage Obligations will be eligible as Collateral -see X.C., page 15) as Collateral. The Investment Officers will monitor adequacy of collateralization on a weekly basis. Weighted Average Maturity In order to minimize risk of loss to the Investment Portfolio due to interest rate fluctuations, Investment maturities will not exceed the anticipated cash flow November 13. 1997 LOAA 1000.046 8 November 13. 1997 LOAA 1000.046 requirements of the Funds. Maturity guidelines by Fund are as follows: The maximum term for any Investment other than Reserve Funds is three years. The weighted averaged days to maturity shall be less than 365 days for Investments, other than Reserve Funds. General Operating Funds The weighted average days to maturity of Investments, other than Reserve Funds, shall be less than 365 days. The Investment Officers will monitor the maturity level and make changes as appropriate. 2. Bond -Funds Capital Improvement Funds (Bond Proceeds Bond Reserves Debt Service) The Investment maturity of that portion of the City Portfolio that represents Bei,d Funds Capital Improvement Funds (bond proceeds, reserve funds, and debt service) shall be determined considering: a. The anticipated cash flow requirements of the Bend -Funds Capital Improvement Funds; and b. The "temporary period" as defined by Federal tax law during which time bond proceeds may be invested at an unrestricted yield. After the expiration of the temporary period, bond proceeds subject to yield restriction shall be invested considering the anticipated cash flow requirements of the ids- Capital Improvement Funds. Before an Investment can be made of bond proceeds from all bond issues affected by the Tax Reform Act of 1986, a careful yield analysis must be performed to comply with the Tax Reform Act. Also, an annual rebate calculation must be performed to determine if the City is required to rebate interest at the end of each respective bond issue's five-year term. Beginning on the anniversary of the third year for the respective bond issues, all bond proceeds will be yield restricted as required by the Tax Reform Act. 3. Reserve Funds: Established by Operative Bond Funds or by the City Council The following Reserve Funds may be invested up to seven years in U.S. Treasuries: Maximum Fund 148 Choke Canyon $2,000,000 Fund 300 Debt Service $4,000,000 9 Fund 445 Utility Refunding $5,975,000 City monies governed by this Policy may not be invested in other investments permitted by law unless (i) such investments are specifically authorized for the investment of these monies by an ordinance adopted by the City Council issuing bonds or other debt obligations or (ii) this Policy is amended to permit such investment. C. Methods to Monitor Investment Market Price The City monitors the market price of investments by obtaining this information from the Bloomberg system or the Tele -Rate system which are made available through the City's authorized institutional brokers. The City may also obtain market price information from other nationally recognized sources of financial information such as the Wall Street Journal. VI. INVESTMENT MIX AND STRATEGIES A. Investment Mix As a target to ensure adequate liquidity, the Investment Portfolio administered by the Investment Officers should consist of at least 25% in U.S. Treasury Securities described in V.A.1.a. A minimum of 15% of the total Investment Portfolio shall be held in Investments with maturity dates of 90 days or less for liquidity. U.S. Treasuries/Agencies may be purchased for longer term maturities (greater than one year) but shall not exceed 40% of the total Investment Portfolio to preserve liquidity. Daily Investment reports shall specifically address whether stated Investment mix requirements are being met. Unless approved by the Investment Advisory Committee, the target percentages specified shall not be exceeded for temporary periods greater than thirty (30) days without the Investment Officers taking corrective action. B. Strategies November 13, 1997 40A11000 046 Investment strategies for General Operating Funds and Bond Funds have as their primary objective the assurance that anticipated cash flows are matched with adequate Investment liquidity. The secondary objective is to create an Investment Portfolio structure which will experience minimal volatility during economic cycles. To accomplish this strategy, the City will purchase high quality, short -to -medium- term Investments which will compliment each other. To pay for anticipated disbursements, Investments will be laddered to correspond with the projected cash needs of the City. Some Investments are acquired on the short end of the yield curve (90 days or less) to meet immediate cash needs. A few 10 Investments are purchased on the intermediate part of the yield curve (1-3 years) to lock in higher interest rates when rates are projected to decline due to the economic cycle of the economy. The dollar weighted average Investment maturity of 365 days or less will be calculated using the stated final maturity dates of each Investment. Investment strategies for debt service funds shall have as the primary objective the assurance of Investment liquidity adequate to cover the debt service obligation on the required payment date. Investments purchased shall not have a stated final maturity date that exceeds the debt service payment date. Investment strategies for debt service reserve funds shall have as the primary objective the ability to generate a dependable revenue stream to the appropriate debt service fund from Investments with a low degree of volatility. In accordance with the bond ordinance specific to an individual bond issue which sets out the maximum investment term, Investments should be of high quality, with short -to -intermediate- term maturities. Investment strategies for Special Purpose Funds will have as their primary objective the assurance that anticipated cash flows are matched with adequate Investment liquidity. These Investment Portfolios shall include highly liquid Investments to allow for flexibility and unanticipated project outlays. The stated final maturity dates of Investments held shall not exceed the estimated project completion date. C. Achieving Investment Return Objectives November 13, 1997 LOA\1000 046 Investment selection shall be based on legality, appropriateness, liquidity, and risk/return considerations. Monies designated for immediate expenditure should be passively invested. Passive investment provides for: 1. Liquidity to pay upcoming disbursements (payroll, debt service, payments, payables, etc.); 2. Maximizing investment terms under the current budget; and 3. Structuring the Investment Portfolio on a `laddered" basis. The remaining portion of the Investment Portfolio may be invested actively and the reasons for doing so. are: Active investment provides for: 1. The ability to improve yields in the Investment Portfolio by riding the yield curve during business cycle recovery and expansion periods. Interest rates 1I on longer maturities typically exceed those on shorter maturities. Therefore, longer maturities (that can be held to maturity, if necessary) are purchased in anticipation of selling later at the same lower interest rate, improving the total return during the holding period. 2. The ability to improve market sector diversification by swapping out of one Investment into another for a better total return, to realign for disbursement rates, or to extend or shorten maturity depending on economic forecasts. The City Manager, or his designee, is required to approve any Investment that must be sold at a loss. All gains and losses will be reported to the City Council and Investment Committee on a quarterly basis. VII. RESPONSIBILITY AND CONTROLS A. Authority to Invest The authority to invest City funds and the execution of any documentation necessary to evidence the investment of City funds is granted to the Director of Finance. The City Treasurer and the Investment Analyst are the designated Investment Officers responsible for the daily operation of the investment program. All Investments will be approved in writing by the Director of Finance or Designee (excluding Investment Officers). B. Establishment of Internal Controls The City Treasurer will establish a system of internal controls over the Investment activities of the City and document such controls in the Investment Procedures Manual. These internal controls shall be approved by the Director of Finance. C. Prudent Investment Management November 13. 1997 I.OAA 1000 046 Investments shall be made with the same judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived. Prudent investment is to be judged by the Investment Portfolio as a whole, not on individual Investments. If liquidation is necessary due to a pool losing its AAA rating or for other reasons, liquidation will be done in a prudent manner consistent with the investment objectives of this policy and as provided in 2256.021 of the Government Code. Investment of monies shall be governed by the following investment objectives in order of priority: 1. preservation and safety of principal; 2. liquidity; and 12 3. yield. The designated Investment Officers shall perform their duties in accordance with the adopted Investment Policy and Procedures set forth in the Investment Procedures Manual. Investment Officers acting in good faith and in accordance with these policies and procedures shall be relieved of personal liability. The Investment Committee and Officers are indemnified as provided by City Ordinance attached and incorporated as Appendix E. D. Standards of Ethics The Investment Committee and City Treasurer will comply with the City's Code of Ethics Ordinance attached and incorporated as Appendix D which requires disclosure of financial interests by April of each year. The designated Investment Officers and all members of the Investment Committee shall adhere to the City's Ethics Ordinance. To the extent required by section 2256.0050) of the Government Code, the Investment Committee and City Treasurer shall make such filings as required by law. Training and Education Recognizing that the training and education of Investment Officers contributes to efficient and effective investment management, the City requires its Investment Officers to obtain appropriate professional training. Such training is currently required by, and shall be obtained in accordance with Section 2256.008 of the Government Code Public Funds Investment Act. The Investment Committee approves investment training seminars presented by the following organizations: Government Finance Officers Association Government Finance Officers Association of Texas Government Treasurers Or • anization of Texas Municipal Treasurers Association Texas Municipal League VIII. COMPETITIVE SOLICITATION All I.,vcst,aelitstzdlr.i,1isteied by the City exeept fat a repurchase aye -et -yield, public fund, investment Except for repurchase agreements and public funds investment pools , any new issue investment will be urchased throu ' h an Authorized Sellin • Grou s or directl throu • h the November 13. 1997 LOAA1000-046 13 issuer. For any Investment purchased or sold through the secondary market. the City will obtain at least three proposals from Authorized Institutions. Any Institution that wishes to participate in the City's investment program must meet Collateral pledge requirements outlined in Section IV.D. of these guidelines and must submit call reports on a quarterly basis by the 15th day after the required submission date. IX. AUTHORIZED INSTITUTIONS All institutions who seek to sell an authorized Investment to the City are required to complete the questionnaire approved by the Investment Committee and furnish supporting documentation required by the Investment Committee. Securities shall only be purchased from through those Institutions approved by the Investment Committee. A. Investments shall only be made with those Institutions who have executed a written instrument in a form acceptable to the City. executed by a Qualified Representative of the Institution, and substantially to the effect that the Institution has: 1. Received, thoroughly reviewed and acknowledged, in writing, receipt and understanding of the City's Investment Policy, and; 2. Acknowledged that it -the Institution has implemented reasonable procedures and controls in an effort to preclude activity arising out of investment transactions conducted between the Institution entity and the City that are not authorized by the City's Investment Policy. B. -Investments shall only be made with those Institutions who have met the qualifications and standards established by the City's Investment Committee and set forth in the Investment Procedures Manual. C. The Investment Committee shall, at least annually, review, revise, and adopt a list of qualified brokers that are authorized to engage in investment transactions with the City, D.$. The City Treasurer will request the Investment Committee to authorize deletion of Institutions for: November 13. 1997 LOA A1000.046 1. Slow response time; 2. Less than competitive pricing; 3. Little or no information on technical or fundamental expectations based on economic indicators; 14 4. Decayed Transactions or continuing operational difficulties; or 5. Unwillingness to continue to abide the provisions listed in IX.A. X. PLEDGED COLLATERAL The market value of pledged Collateral must be 102% of the principal plus accrued interest for Excess Cash Balances, certificates of deposit, and repurchase agreements. Evidence of proper collateralization in the form of original safekeeping receipts held at a Third Party Safekeeping Institution not affiliated with the Institution pledging the Collateral will be approved by the City Treasurer and will be maintained in the City's Treasurer Office. An authorized City Representative (See Appendix B) will approve and release all pledged Collateral. A. Collateral Substitution Collateralized Investments and certificates of deposit often require substitution of Collateral. Any Institution must contact the Investment Officers for approval and settlement. The substituted Collateral's value will be calculated and substitution approved if its value is equal to or greater than the required Collateral value. Substitution is allowable for all transactions, but should be limited, to minimize the City's potential administrative problems. B. Collateral Reductions Should the Collateral's market value exceed the required amount, any Institution may request approval from the Investment Officer to reduce Collateral. Collateral reductions may be permitted only if the City's records indicate that the Collateral's market value exceeds the required amount. C. Prohibited Securities Investment securities described in Section 2256.009(b), Government Code, shall not be eligible for use as Collateral of City monies governed by this Policy. XI. SAFEKEEPING A. Third Party Safekeeping Agreement The City shall contract with a Bank or Banks for the safekeeping of Securities either owned by the City as a part of its Investment Portfolio or held as Collateral to secure certificates of deposit, repurchase agreements, or Excess Cash Balances. B. Safekeeping of Certificate of Deposit Collateral November 13. 1997 LOA A 1000.046 15 All Collateral securing bank and savings and loan deposits must be held by a Third Party Safekeeping Institution approved by the City, or Collateral may be held at the Federal Reserve Bank, C. Safekeeping of Repurchase Agreement Collateral The U.S. Treasuries which serve as Collateral for repurchase agreements with Institutions must be delivered to a Third -Party Safekeeping Institution with which the City has established a third -party safekeeping agreement. XII. WIRE AND ELECTRONIC SERVICES Wire and electronic services are to be provided as referenced in the City's Depository Services agreement, portions of which are attached and incorporated as Appendix F. The City rebids the depository agreement every three to five years and the applicable terms of any new depository agreement will be incorporated as it fully set out herein, Appendix F will be updated every time a depository agreement is authorized by the City Council. XIII. INFORMATION REPORTING/EVALUATION The City Treasurer and Investment Analyst are hereby designated as the Investment Officers and are responsible for the daily operation of the Investment program and will report to the Investment Committee on a quarterly basis. The Investment Committee will be responsible for monitoring, reviewing, and making recommendations regarding the City's Investment program to the City Council. Reports will be provided to the City Council by the Investment Officers no less than quarterly, as required by the Public Funds Investment Act. A. Investment Committee November 13, 1997 LOAA 1000 046 City Manager Assistant City Managers Director of Finance City Attorney Director of Management and Budget Internal Reporting/Evaluation The following reports are to be submitted on a: Daily basis to the Director of Finance or Desgnee (Excluding Investment Officers): a. Cash Position by Bank Account b. Investment Portfolio by Maturity Date c. Schedule of Investment Purchases/Maturities 16 Monthly basis to the Investment Committee: a. Report of Cash and Investments by Fund b. Interest Report c. Report any change in the membership of the TEXPOOL Board of Directors; amendment of the interlocal cooperation agreement; amendment of the By-laws; or change in the amount, percentage, or method of computation of the administrative fee of any public funds investment pool which the City Council has approved. d. Market Value vs. Book Value Analysis of Investment Portfolio Quarterly Basis to Investment Committee and City Council: a. Compliance with Public Funds Investment Act and Investment Policy b. Interest Report c. Investments by Institution d. Investment Maturities/Purchases e. Collateral Position f. Highest/Lowest Interest Yields g. Investment Survey h. Analysis of Gains/(Losses) on Sale of Securities i. Market Values vs. Book Values of Investment Portfolio j. Forecast of Market Conditions i. Summary statement, prepared in compliance with generally accepted accounting principles of each pooled fund group that states the: u beginning market value for the reportingperiod; 0l additions and changes to the market value during the period; (3) ending market value for the period; and u fully accrued interest for the reporting period. C. External Reporting/Evaluations On a quarterly basis, the City's main depository and all applicable Institutions providing certificates of deposit in excess of FDIC coverage will provide to the Investment Officer for review a copy of the balance sheet and income statement for the Call Report. All Institutions will provide annual audited financial statements. Any local government investment pools must provide reports and disclosure statements as required by the Public Funds Investment Act. D. Record Retention November 13. 1997 LOA A1000.046 The City follows the guidelines of retaining records for seven years from City's current fiscal year, as recommended in the Texas State Library Municipal Records Manual or may be authorized by the City's local records management guidelines. I7 XIV. BANKING SERVICES All depository services are provided in the City's main depository agreement. Other services such as credit cards, direct deposit of payroll or other services may be administered through separate agreements. To aggressively invest Excess Cash Balances. controlled disbursements accounts, zero balance accounts and other cash management tools may be employed. XV. GENERAL PROVISIONS A. Audits and Inspections. During regular business hours and as often as the Investment Officers deem necessary, the Institution providing certificates of deposit will make available for examination by the City Manager, his duly authorized agent, accountant, or legal representative, such records and data to assure the pledge of Collateral, availability of Collateral, and financial stability of the Institution. B. Compliance with Laws. Each Institution agrees to comply with all federal, state, and local laws, rules, regulations, and ordinances. The personnel or officers of such Institution, shall be fully qualified and authorized under federal, state. and local law to perform the services set out under this Policy. Each Institution shall permit the Investment Officers to audit, examine, and make excerpts or transcripts from such records and to make audits of all contract, invoices, materials, and other data relating to applicable Investments. C. Performance Audits. The City's Annual External Financial Audit shall include a compliance audit of management controls on Investments and adherence to this Policy. If the City invests in other than money market mutual funds, investment pools or accounts offered by its depository in the form of certificates of deposit or money market accounts, the quarterly reports prepared by Investment Officers for the City Council must be formally reviewed at least annually by an independent auditor. The results of the review must be reported to the City Council by that auditor. D. Investment Policy Resolution. The resolution authorizing this Investment Policy is attached and incorporated as Appendix G. November 13. 1997 LOAA 1000.046 18 Corpus Christi, Texas Day of .9) 9Q/ The above resolution was passed by the following vote: Loyd Neal Jaime Capelo, Jr. Melody Cooper Alex L. Garcia, Jr. Arnold Gonzales Betty Jean Longoria John Longoria Edward A. Martin Dr. David A. McNichols LOA\ord1.035 November 13. 1997 023133