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Home My WebLink About031611 RES - 12/04/2018Resolution amending and reaffirming the City of Corpus Christi's Investment Policy and Investment Strategies for fiscal year 2018- 2019. WHEREAS, the City of Corpus Christi's Investment Policy and Investment Strategies were first adopted pursuant to Resolution No. 022390 on October 24, 1995; WHEREAS, the Texas Public Funds Investment Act requires the governing body to annually review, amend as necessary, and reaffirm its investment policy and invest- ment strategies; WHEREAS, the Investment Policy and Investment Strategies were previously re- viewed for fiscal year 2017-2018 on December 19, 2017, and reaffirmed pursuant to Resolution No. 031314; and WHEREAS, the Investment Policy and Investment Strategies were reviewed for fiscal year 2018-2019 by the Investment Committee on November 15, 2018; recom- mended for approval with style and formatting changes; substantive amendments; and an updated issuance date; and recommended for reaffirmation by the City Council; Therefore, be it resolved by the City Council of the City of Corpus Christi, Texas: Section 1. The City Council has reviewed the City of Corpus Christi's Investment Policy and Investment Strategies for fiscal year 2018-2019. A copy of the Investment Policy, which contains the separate Investment Strategies, for fiscal year 2018-2019 is attached to this resolution as Exhibit A and incorporated by reference into this resolution as if set out here in its entirety. Section 2. Style and formatting changes, along with substantive amendments, are being made to the previous fiscal year's 2017-2018 Investment Policy and Investment Strategies document, with such changes and amendments delineated and described in the attached Exhibit B, which exhibit is incorporated by reference into this resolution as if set out here in its entirety. Section 3. With an updated issuance date that coincides with the date this resolution is passed, the City Council approves the City of Corpus Christi's Investment Policy and Investment Strategies for fiscal year 2018-2019 and reaffirms the continuation of the policy and strategies in full force and effect. ATTEST: CITY OF CORPUS CHRISTI Re ecca Huerta City Secretary Jo McComb M7.1 03IC1]. SCANNED Corpus Christi, Texas 4 day of 20 1 E The above resolution was passed by the following vote: Joe McComb Rudy Garza Paulette Guajardo Michael Hunter Debbie Lindsey -Opel Ben Molina Greg Smith Carolyn Vaughn (vacant) Page 2 of 2 EXHIBIT "A" City of Corpus Christi Investment Policy and Investment Strategies Adopted December 4, 2018 TABLE OF CONTENTS I. POLICY STATEMENT 1 II. SCOPE 1 III. PRUDENCE 2 IV. OBJECTIVES 2 V. LEGAL LIMITATIONS AND AUTHORITIES 3 VI. DELEGATION OF AUTHORITY AND RESPONSIBILITY 3 VII. AUTHORIZED FINANCIAL INSTITUTIONS AND BROKER/DEALERS 5 VIII. AUTHORIZED INVESTMENTS 5 IX. COLLATERALIZATION 7 X. SAFEKEEPING 8 XI. INTERNAL CONTROLS 8 XII. REPORTING 9 XIII. DEPOSITORIES 10 XIV. AUDITS AND COMPLIANCE WITH LAWS 10 XV. INVESTMENT POLICY ADOPTION 11 XVI. INVESTMENT STRATEGIES 12 APPENDIX A. RESOLUTION 14 i CITY OF CORPUS CHRISTI INVESTMENT POLICY AND INVESTMENT STRATEGIES Adopted December 4, 2018 This Investment Policy ("Policy") sets forth the specific policies and guidelines and general strategy for the investment of funds of the City of Corpus Christi ("City") in order to achieve the City's goals of safety, liquidity, diversification, and yield and to preserve the public trust. This Policy satisfies the statutory requirements of the Public Funds Investment Act, Texas Government Code, Chapter 2256 ("Act") to define and adopt a formal investment policy and strategy and assures compliance with the Act. I. POLICY STATEMENT It is the policy of the City that the administration of its funds and the investment of those funds shall be handled as its highest public trust. Investments shall be made in a manner which will provide maximum security of principal invested through risk management and diversification strategies while meeting the cash flow needs of the City and conforming to all federal, State and local laws, rules and regulations governing the investment of public funds. The receipt of a reasonable yield is secondary to the requirements for safety and liquidity. Earnings from investment will be used in a manner that best serves the interests of the City. II. SCOPE This Policy governs the investment of all funds of the City as reported in the CAFR, except for the following: A. Employee's Retirement Fund, and B. Fireman's Retirement System. With respect to the funds of non-profit corporations that are established by City Council resolution and act on behalf of the City in accordance with State law, this Policy shall prevail in the absence of a specific investment policy adopted by the non-profit corporation. In addition to this Policy, the investment of bond proceeds and other bond funds (including debt and reserve funds) of the City or of a non-profit corporation established by the City and acting on behalf of the City in accordance with State law shall be governed and controlled by their creating ordinance, resolution or trust indenture, including the authorization of eligible investments, and by the provisions of the Internal Revenue Code of 1986, as amended, including all regulations and rulings promulgated thereunder applicable to the issuance of tax- exempt obligations. 1 All funds in the investment portfolio ("Portfolio") of the City are managed as a pooled fund group, referenced in this Policy as the City's Pooled Fund, except the following, which are managed as separately invested assets: A. Texas Utility System Junior Lien Revenue Improvement Bonds Escrow; B. Airport Passenger Facility Charges (PFC); and C. Law Enforcement Seized Assets. III. PRUDENCE The standard of care established by law to be used in the investment process shall be the "prudent person standard" and shall be applied in the context of managing the overall Portfolio, rather than a consideration as to the prudence of a single investment. The standard states that: Investments shall be made with 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. IV. OBJECTIVES All funds shall be managed and invested with four primary objectives, in order of their priority: A. Safety The preservation and safety of principal is the City's foremost objective. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. Authorized investments are chosen for their high credit quality and stability. B. Liquidity The Portfolio shall remain sufficiently liquid, and retain a liquidity buffer, to assure that the City meets all reasonably anticipated expenditures. Investment decisions will be based on anticipated cash flows and only high -credit quality securities will be used for their marketability. C. Yield The Portfolio shall be designed with the objective of attaining a reasonable market yield taking into account the investment risk constraints and liquidity needs of the City. 2 D. Diversification The City will diversify its investments by maturity and market sector in an effort to avoid incurring unreasonable and avoidable market risks. V. LEGAL LIMITATIONS AND AUTHORITIES Specific investment parameters for the investment of public funds in Texas are found in the Act. All investments will be made in accordance with the Act, this Policy, and any applicable financial indentures or trust requirements. VI. DELEGATION OF AUTHORITY AND RESPONSIBILITY All participants in the investment process shall seek to act responsibly as custodians of the public trust. A. City Council The City Council has ultimate fiduciary responsibility for all funds. The City Council is responsible for reviewing and adopting the Policy on no Tess than an annual basis. The City Council shall receive and review quarterly investment reports, approved by the Investment Committee, from the Investment Officers. B. Investment Committee An Investment Committee shall meet at least quarterly to review and determine operational strategies and to monitor investment results. The Investment Committee shall consist of the City Manager, Assistant City Managers, Director of Financial Services, City Attorney, and Director of Management and Budget. The Investment Committee shall include in its deliberation such topics as: economic outlook, diversification, maturity structure, risk, and performance of the portfolio. At least annually, the Investment Committee shall review, revise, and adopt a list of qualified brokers that are authorized to engage in investment transactions with the City. The Investment Committee shall be responsible for monitoring, reviewing, and making recommendations regarding the Policy to the City Council. The Investment Committee will review quarterly investment reports before submission to the City Council. C. Investment Officers Investment Officers are designated by City Council resolution until such designation is rescinded. The authority to invest City funds and the execution of any documentation necessary is granted to the Investment Officers consisting of the Director of Financial Services, Assistant Director of Financial Services over Accounting, City Treasurer and Investment Analyst. The Investment Officers are responsible for the daily operation of the investment program; shall comply with this Policy, the Act, and all applicable federal, State, 3 and City laws, rules, and regulations; and will provide complete reports to the Investment Committee on a quarterly basis. The Investment Officers will retain all documentation on investment transactions. Each Investment Officer, including the Director of Financial Services, shall attend at least 10 hours of training within 12 months after taking office or designation as an Investment Officer and eight hours of investment training in each succeeding two-year fiscal period. Training must be received from an independent source approved by the City's Investment Committee and must include education in investment controls, security risks, strategy risks, market risks, diversification of the investment portfolio and compliance with the Act. The Investment Officers will avoid any transaction that might impair public confidence in the City. The Investment Officers may not engage in an investment transaction except as provided under the terms of this Policy. In order to ensure quality and capability of investment management, the Investment Officers shall possess sufficient working knowledge of economics and securities markets, as well as the experience and judgment necessary to carry out the responsibilities outlined in this Policy. D. Investment Advisor The City Council may contract with an investment management firm registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.) or with the State Securities Board to provide for the investment and management of its public funds or other funds under its control. A contract made under authority of this subsection may not be for a term longer than two years. A renewal or extension of the contract must be made by the City Council by ordinance or resolution. E. Ethics and Conflicts of Interest Investment Officers shall comply with the City's Code of Ethics which requires disclosure of financial interests each year. Investment Officers shall refrain from personal business activities that could conflict with proper execution of the investment program or which could impair the ability to make impartial investment decisions. Investment Officers shall disclose to the City Council any material investment decisions and financial interests in institutions that conduct investment or banking transactions with the City. Investment Officers must file a disclosure statement with the Texas Ethics Commission and City Council if: 1. The Investment Officer has a personal business relationship with a business organization offering to engage in an investment transaction with the City (as defined in 2256.005 (i)(1-3)); or 2. The Investment Officer is related within the second degree by affinity or consanguinity, as determined under Chapter 573 of the Texas Government Code, to an individual seeking to transact investment business with the City. 4 VII. AUTHORIZED FINANCIAL INSTITUTIONS AND BROKER/DEALERS All investment transactions shall be made through the financial institutions or broker/dealers approved by the Investment Committee. No investment transactions may be entered into with a brokerage subsidiary of the City's safekeeping bank in order to perfect delivery versus payment (DVP) requirements for trade independence. Th Investment Officers will provide each authorized financial institution and broker/dealer a copy of this Policy to ensure that they are familiar with the goals and objectives of the City as required by the Act. Investments shall only be made with those financial institutions or broker/dealers (including money market mutual funds and local government investment pools) which have provided the City with a written certification executed by a qualified representative of the firm acknowledging that the business organization has: A. Received, and thoroughly reviewed the Policy; and B. Implemented reasonable controls and procedures in an effort to preclude investment transactions not authorized by the Policy, except to the extent that this authorization is dependent on an analysis of the makeup of the City's Portfolio or requires an interpretation of subjective investment standards. The Investment Officers will request the Investment Committee authorize the deletion of financial institutions or broker/dealers for: A. Slow response time; B. Inability to compete with other authorized firms; C. Insufficient market information on technical or fundamental expectations based on economic indicators; D. Failed transactions or continuing operations difficulties; or E. Unwillingness to abide by this Policy. VIII. AUTHORIZED INVESTMENTS A. Investments Authorized investments under this Policy shall be limited to the instruments listed below as further described by the Act. If additional types of securities are approved for investment of public funds by State statute, they will not be eligible for investment by the City until this Policy has been amended and the amended version adopted by the City Council. The City is not required to liquidate investments that were authorized investments at the time of purchase (2256.017). 1. Obligations of the U.S. Government, its agencies and instrumentalities, excluding 5 mortgage backed securities, with a maximum stated maturity of three years [2256.009(a)(1)). 2. Fully Federal Deposit Insurance Corporation (FDIC) insured or collateralized depository certificates of deposit of a depository institution that has its main office or a branch office in Texas with a maximum maturity of one year (2256.010). 3. Fully collateralized direct repurchase agreements with a defined termination date secured in accordance with this Policy and placed through a primary government securities dealer, as defined by the Federal Reserve, or a financial institution doing business in this State. All repurchase agreement transactions shall be governed in accordance with the Act. The maximum stated maturity shall be one year with the exception of flex repurchase agreements used for bond proceeds capital projects. The flex repurchase agreement transaction shall be matched to the expenditure plan of the bonds (2256.011). 4. AAA, or equivalent, rated local government investment pools defined by the Act and striving to maintain a $1 net asset value and specifically approved for participation by a resolution of the City Council (2256.016). 5. AAA -rated, SEC registered no-load money market mutual funds which strive to maintain a $1 net asset value [2256.014(a)]. 6. Fully FDIC insured or collateralized interest-bearing depository accounts of banks in Texas [2256.009(a)(7)}. 7. General debt obligations of any U.S. state rated no less than A by a nationally recognized rating agency and with a maximum stated maturity of two years [2256.009(a)(5)]. 8. FDIC insured brokered certificate of deposit securities from a bank in any U.S. state, DVP to the City's safekeeping agent, not to exceed two years to maturity. Before purchase, the Investment Officers must verify the FDIC status of the bank on www.fdic.gov to assure the bank is FDIC insured [2256.010(b)]. 9. Al/P1 rated commercial paper with a maximum maturity of 180 days (2256.013). 10. Guaranteed investment contracts with a maximum maturity of two years and executed in accordance with the Act (2256.015). 11. Securities lending transactions with primary dealers or banks doing business in Texas in accordance with the Act (2256.0115). B. Competitive Bidding Requirement It is the policy of the City to require competitive bidding for all security purchases and sales, except for: 1. Transactions with money market mutual funds and local government investment pools; 2. Treasury and agency securities purchased at issue; 3. Automatic overnight "sweep" transactions with the city depository; 4. Fully insured certificate of deposit placed in accordance with the Act [2256.010 (b)]; 5. Repurchase agreements; and 6. Guaranteed investment contracts. 6 At least three bids or offers must be solicited for all other transactions involving individual securities. In situations where the exact security is not offered by other dealers, offers on the closest comparable investment may be used to establish a fair market price for the security. Bids for certificates of deposit may be solicited in any manner permitted by the Act. C. DVP Requirement All transactions, excluding local government investment pool and mutual fund transactions, shall be conducted on a DVP basis. IX. COLLATERALIZATION The City requires that all uninsured collected balances plus accrued interest, if any, in depository accounts be secured in accordance with the requirements of the Depository Services Agreement, this Policy, the Public Funds Collateral Act (Texas Government Code, Chapter 2257), and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. A. Time and Demand Deposit Pledged Collateral Consistent with State law, the City requires all bank time and demand deposits to be federally insured and collateralized above federal insurance coverage with eligible securities. Depository collateral is pledged to and not owned by the City. All collateral shall be held by an independent third -party custodian approved by the City under an executed collateral agreement with the pledging bank. The custodian shall provide a monthly report of the collateral. The value of pledged securities must be at least 102% of deposits including accrued interest. Eligible collateral securities shall only include: 1. Obligations of the U.S. Government, its agencies and instrumentalities, including mortgage backed securities and collateralized mortgage obligations passing the Federal Reserve bank test, 2. Municipal debt obligations rated not Tess than A by a nationally recognized rating agency, or 3. Letters of credit issued to the City by the Federal Home Loan Bank. The City's Investment Officers reserve the right to accept or reject any form of collateral or enhancement at their sole discretion. Collateralization often requires substitution. The substituted collateral's market value will be calculated and, if its market value is equal to or greater than the required collateral value, the substitution is allowed. Substitutions should be limited to minimize the City's transactional recording requirements. 7 Should the collateral's market value exceed the required amount, the pledging Institution may request approval from an Investment Officer to reduce collateral. Collateral reductions may be permitted only if the City's records indicate that the total collateral market value exceeds the required amount. B. Repurchase Agreements Owned Collateral Collateral under a repurchase agreement is owned by the City (2256.011). It will be held by an independent third -party safekeeping institution approved by the City under an executed Bond Market Master Repurchase Agreement. Securities (collateral) with a market value totaling 102% of the principal and accrued interest of the repurchase agreement is required, and the third -party is responsible for the monitoring and maintaining of collateral and margins daily. Authorized collateral for repurchase agreements will include only: 1. Cash; 2. Obligations of the U.S. Government, its agencies and instrumentalities including mortgage-backed securities and CMO which pass the bank test; or 3. Debt obligations of any U.S. state or U.S. state sub -division rated A or better by at least one nationally recognized rating agency. X. SAFEKEEPING The City shall maintain safekeeping with its banking institution or other banks for the safekeeping of City -owned securities (including those owned under a repurchase agreement or guaranteed investment contract). All collateral must be held in the City's name and must be so reflected on the safekeeping receipts. All security transactions shall be settled on a DVP basis by the safekeeping institution (2256.005). Securities shall not be held in any brokerage account. Securities shall not be bought from the City's depository bank in order to provide perfected DVP. The safekeeping institution shall be required to issue safekeeping receipts listing each specific security, rate, description, maturity, Committee on Uniform Security Identification Procedures (CUSIP) number, and other pertinent information which will be maintained by the Investment Officers. Xl. INTERNAL CONTROLS The Investment Officers will maintain controls to regulate the activities of the investment program in accordance with this Policy. The controls shall be designed to prevent loss of funds due to fraud, employee error, misrepresentation by third parties, unanticipated market 8 changes, or imprudent actions. Internal controls deemed most important would include: competitive bidding, control of collusion, separation of duties, safekeeping, delegation of authority, and documentation. In conjunction with the annual financial audit, a compliance audit of management controls on investments and adherence to this Policy shall be performed. A. Cash Flow Forecasting Cash flow analysis and forecasting is designed to protect and sustain cash flow requirements of the City. Executive management of the City will inform the Investment Officers of anticipated cash flows which will be used for cash flow and investment purposes. B. Loss of Rating The Investment Officers shall monitor the credit rating on all authorized investments in the portfolio which require ratings by policy or law. Ratings will be based upon independent information from a nationally recognized rating agency. An investment that requires a minimum rating under the Act does not qualify as an authorized investment during the period the investment does not have the minimum rating. The City shall take all prudent measures that are consistent with this Policy to liquidate an investment that does not have the minimum rating. If any security falls below the minimum rating required by Policy or law, the Investment Officers shall notify the Committee of the loss of rating, conditions affecting the rating and possible loss of principal with liquidation options available, within one week after the Toss of the required rating (2256.021). C. Monitoring FDIC Coverage The Investment Officers shall monitor, on no Tess than a weekly basis, the status and ownership of all banks issuing brokered certificates of deposit owned by the City based upon information from the FDIC. If any bank has been acquired or merged with another bank in which brokered certificates of deposit are owned by the City, the Investment Officers shall immediately liquidate any brokered certificate of deposit which places the City above the FDIC insurance level. XII. REPORTING In accordance with the Act (2256.023), not Tess than quarterly, the Investment Officers shall prepare and submit to the Investment Committee and City Council a written report of investment transactions for all funds covered by the Act and this Policy for the preceding reporting period within a reasonable time after the end of the period. The report must: A. Describe in detail the investment position of the portfolio on the date of the report; B. Be prepared jointly by all Investment Officers of the City; C. Be signed by each Investment Officer of the City; D. Contain a summary statement of each pooled fund group that states the: 9 1. Beginning market value for the reporting period; 2. Ending market value for the period; and 3. Fully accrued interest for the reporting period; E. State the book value and market value of each separately invested asset at the end of the reporting period by the type of asset and fund type invested; F. State the maturity date of each separately invested asset that has a maturity date; G. State the account or fund or pooled group fund in City for which each individual investment was acquired; and H. State the compliance of the investment portfolio of the City as it relates to: 1. The investment strategy expressed in this Policy; and 2. Relevant provisions of Section 2256.023 of the Act. The quarterly reports prepared by the Investment Officers shall be formally reviewed at least annually by an independent auditor, and the result of the review shall be reported to City Council by that auditor. In addition to quarterly reports, the Investment Officers will submit to the Director of Financial Services the following reports on a monthly basis: A. Cash position by bank account; B. Collateral position; and C. Investment transaction. Market prices for market value calculations shall be obtained from nationally recognized securities databases including those provided by the City's •depository bank through its safekeeping services and Bloomberg Professional Services. XIII. DEPOSITORIES The City designates one banking institution for banking services through a competitive process at least every five years. Written depository agreements shall be executed before funds are transferred. XIV. AUDITS AND COMPLIANCE WITH LAWS Each banking institution agrees to comply with all federal, State, and local laws, rules, and regulations. 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 of all contracts, invoices, materials, and other data relating to applicable investments. 10 XV. INVESTMENT POLICY ADOPTION The City Council shall review and adopt by resolution its Investment Policy and Investment Strategies not less than annually, and the approving resolution shall designate any changes made to the Policy and Strategies. <This space is intentionally left blank.> 11 XVI. INVESTMENT STRATEGIES The City's Investment Portfolio ("Portfolio") will be designed and managed based on projected cash flows to provide for all anticipated and projected cash needs for each fund. The Portfolio is to be managed pro -actively considering ongoing market changes but is essentially a buy -and - hold portfolio. Information on expected expenditures from the executive management of the City will be incorporated into investment decisions. The overall investment program shall be designed and managed with a degree of professionalism worthy of public trust. The investment strategy for funds established after the annual Policy adoption will be managed in accordance with the terms of this Policy and applicable agreements until a specific strategy is reviewed and adopted. A. Pooled Fund Strategy The City's Pooled Fund is an aggregation of City funds which include tax receipts, enterprise revenue, fine and fee revenues, as well as, bond proceeds, grants, gifts, and endowments. The City's Pooled Fund may include funds from various Corporations associated with the City which receive income distributions from their pro -rata share of the full fund group. The City's Pooled Fund is maintained to meet anticipated daily cash needs for City operations, capital projects, and debt service payments. The objectives of this fund are to: 1. Ensure safety of principal by investing only in high -credit quality investments for which a strong secondary market exists which are designed to assure on-going suitability and marketability of such investments; 2. Ensure that anticipated cash flows are matched with adequate investment liquidity; 3. Limit market and credit risk through diversification; and 4. Attain a market yield commensurate with the objectives and restrictions set forth in this Policy. The City's Pooled Fund shall have a maximum dollar -weighted average maturity (WAM) of one year (365 days) designed to meet anticipated cash flow needs. The fund shall be laddered based on cash flow analysis to provide ongoing liquidity for anticipated needs and provide for reasonable extension. A minimum of 15% of the City's Pooled Fund shall be held in cash or cash equivalents for liquidity and no more than 40% may be invested longer than one year. Changes in City cash flows may change percentage representations over time. Unless approved by the Investment Committee, the target percentages specified shall not be exceeded for a temporary period greater than thirty (30) days without the Investment Officers taking corrective action. The risks in the City's Pooled Fund shall be measured quarterly against a risk benchmark designed to mirror the authorized market investments and the City's cash flow requirements. Because this fund is dictated by cash flow needs, the benchmark becomes a measure of risk which reflects the primary market rates matched to the WAM. With a 12 maximum WAM of one year, the risk benchmark is established as the one-year Treasury Bill for the comparable period. The fund should track the risk benchmark but will naturally lag as market interest rates, which adjust daily, move. B. Texas Utility System Junior Lien Revenue Improvement Bonds Escrow Fund Strategy This escrow fund was established pursuant to an escrow agreement dated as of August 29, 2017 with The Bank of New York Mellon Trust Company, N.A. Escrow will be maintained with The Bank of New York Mellon Trust Company, N.A. in investments authorized by the Act and this Policy. The objectives of this fund are to: 1. Ensure safety of principal by investing only in high credit quality investments for which a strong secondary market exists; 2. Ensure that anticipated cash flows are matched with adequate investment liquidity; 3. Manage market and credit risk through diversification of investments and the requirement of AAA ratings; and 4. Attain a market yield commensurate with the objectives and restrictions set forth in this Policy and the escrow agreement. C. Airport Passenger Facility Charges (PFC) Fund Strategy The Airport PFC Fund is revenue comprised of fees imposed as authorized by The Aviation Safety and Capacity Expansion Act of 1190 (Public Law 101-508, Title II, Subtitle B). The revenue is segregated as required by the Passenger Facility Charge Audit Guide for Public Agencies, issued by the Federal Aviation Administration. The objectives of this fund are to: 1. Ensure safety of principal by investing only in high credit quality investments for which a strong secondary market exists; 2. Ensure that anticipated cash flows are matched with adequate investment liquidity; 3. Manage market and credit risk through diversification of investments and the requirement of AAA ratings; and 4. Attain a market yield commensurate with the objectives and restrictions set forth in this Policy and the escrow agreement. D. Law Enforcement Seized Assets Fund Strategy The Law Enforcement Seized Assets Fund is comprised of seized contraband money that, per the Code of Criminal Procedure, Chapter 59, Article 8, may be deposited in an interest- bearing bank account in the jurisdiction of the attorney representing the State until final judgment is rendered concerning the contraband. The objective of this fund is to ensure safety of principal by investing only in a fully FDIC -insured or collateralized interest-bearing depository account of banks in Texas. Since the revenue will only be deposited into this type of investment, there is no liquidity risk, market risk, diversification risk, nor credit risk. 13 APPENDIX "A" Resolution amending and reaffirming the City of Corpus Christi's Investment Policy and Investment Strategies for fiscal year 2018- 2019. WHEREAS, the City of Corpus Christi's Investment Policy and Investment Strategies were first adopted pursuant to Resolution No. 022390 on October 24, 1995; WHEREAS, the Texas Public Funds Investment Act requires the governing body to annually review, amend as necessary, and reaffirm its investment policy and invest- ment strategies; WHEREAS, the Investment Policy and Investment Strategies were previously re- viewed for fiscal year 2017-2018 on December 19, 2017, and reaffirmed pursuant to Resolution No. 031314; and WHEREAS, the Investment Policy and Investment Strategies were reviewed for fiscal year 2018-2019 by the Investment Committee on November 15, 2018; recom- mended for approval with style and formatting changes; substantive amendments; and an updated issuance date; and recommended for reaffirmation by the City Council; Therefore, be it resolved by the City Council of the City of Corpus Christi, Texas: Section 1. The City Council has reviewed the City of Corpus Christi's Investment Policy and Investment Strategies for fiscal year 2018-2019. A copy of the Investment Policy, which contains the separate Investment Strategies, for fiscal year 2018-2019 is attached to this resolution as Exhibit A and incorporated by reference into this resolution as if set out here in its entirety. Section 2. Style and formatting changes, along with substantive amendments, are being made to the previous fiscal year's 2017-2018 Investment Policy and Investment Strategies document, with such changes and amendments delineated and described in the attached Exhibit B, which exhibit is incorporated by reference into this resolution as if set out here in its entirety. Section 3. With an updated issuance date that coincides with the date this resolution is passed, the City Council approves the City of Corpus Christi's Investment Policy and Investment Strategies for fiscal year 2018-2019 and reaffirms the continuation of the policy and strategies in full force and effect. ATTEST: CITY OF CORPUS CHRISTI Rebecca Huerta City Secretary Joe McComb Mayor Corpus Christi, Texas day of , 20 The above resolution was passed by the following vote: Joe McComb Rudy Garza Paulette Guajardo Michael Hunter Debbie Lindsey -Opel Ben Molina Greg Smith Carolyn Vaughn (vacant) Page 2 of 2 EXHIBIT "B" City of Corpus Christi Investment Policy and Investment Strategies Substantive Changes The City of Corpus Christi Investment Policy and Investment Strategies has been revised in an effort to simplify and update the document to reflect current investment practices and language in the Public Funds Investment Act (PFIA). This process included the following recommended substantial changes to the policy: 1. Update overall style, structure, and format of document for ease of application and readability. 2. Update title of the document to include investment strategies. 3. Remove the following appendices not required to be included: ■ Appendix A — Texas Public Funds Investment Act ■ Appendix B — Code of Ethics ■ Appendix D — Legal Defense and Indemnification of City Officers and Employees 4. Remove definitions section; words are defined within the body of the document. 5. Simplify scope to include all funds of the City instead of listing out specific types of funds covered by the policy. 6. Update ethics section to reflect PFIA requirements. Only investment officers are required to complete a disclosure of financial interest because investment decisions are made only by investment officers. 7. Remove specific approved training organizations; replace with language in line with the PFIA. 8. Add the Director of Financial Services and Assistant Director of Financial Services over Accounting as Investment Officers. 9. Remove Texas Term Investment Pool as an authorized investment. 10. Add the following authorized investments: ■ Interest-bearing depository accounts of banks in Texas ■ General debt obligations of any US state ■ Commercial paper ■ Securities lending 11. Increase maximum maturity of investments from 2 years to 3 years. Weighted average maturity (WAM) will remain the same at 1 year. This allows for added flexibility to increase earnings in varying market conditions. 12. Update risk benchmark requirement to reflect 1 -Year U.S. Treasury. 13. Consolidate safekeeping requirements into one section. Page 1 of 2 14. Remove prohibited collateral section; add eligible collateral section. 15. Add the City's depository services agreement as a required document to be followed with regard to collateralization. 16. Remove collateral monitoring since this requirement is outlined in the City's depository services agreement and the Public Funds Collateral Act. 17. Move investment strategies section to the end of the document. 18. Remove record retention requirement as the City is required to follow State record retention rules. 19. Remove external reporting/evaluations section; investment officers can obtain this information online when needed. 20. Remove audits and inspections section; replace with audits and compliance with laws section. 21. Update and expand on investment strategies to reflect current investment practices of the City. a. Removed strategies for: ■ Operating and CIP Funds ■ Debt Service Funds ■ Debt Service Reserve Funds ■ Special Purpose Funds b. Added strategies for: ■ Pooled Fund Strategy ■ Texas Utility System Junior Lien Revenue Improvement Bonds Escrow Strategy ■ Airport Passenger Facility Charges Fund Strategy ■ Law Enforcement Seized Assets Fund Strategy 22. Remove inapplicable quarterly reports; replace with reporting requirements as listed in the PFIA. Page 2 of 2 Paw h INTRODUCTION 1 PURPOSE 1 11-h DEFINITIONS 2 IV, INVESTMENT OBJECTIVES 4 V AUTHORIZED INVESTMENTS AND MAXIMUM MATURITY 6 VI, INVESTMENT STRATEGIES 9 VI4, DESIGNATION OF RESPONSIBILITY 11 VI -1-1, INTERNAL CONTROLS 12 IX COMPETITIVE SOLICITATION 13 X AUTHORIZED COUNTER PARTIES 14 X4, COLLATERALIZATION 16 X4l, SAFEKEEPING OF CITY SECURITIES 15 MI, INFORMATION REPORTING/PORTFOLIO EVALUATION 16 XIV, BANKING SERVICES 17 XV, ANNUAL POLICY ADOPTION 17 XV -I, GENERAL PROVISIONS 17 APPENDICES A, 13, G, TEXAS PUBLIC FUNDS INVESTMENT ACT 19 54 CODE OF ETHICS 66 63 RESOLUTION 64 66 ALE La l A. di AkM EMPLOYEES 67 68 Investment nst a viablc and matcrial revenue source. The City's portfolio shall be dcsignatcd and federal -law. • • . • . the City of Corpus Christi. Go IGTal Fund Spooial Rev o F undo Enterprise Funds Intornai Se o F un.ds Funds shall be managed (including the yield calculation thcrcon) by -1- .ucipo;sn3 siatitieeta 9 c ui wig pozuoytne yoc3 SkrtertiIMAM tt 243 Investment nf,.ors (B) For a ctatc or fcdcral bank, a savings bank, or a state or fcdcral crcdit union, a ifistitutieni I e e - - by Scction VII, to bc held in thc Investment Portfolio or acceptable to bc pledged a , permittcd to invest; includcs such cntitics as thc Coastal Bend Haalth Facilities Christi Industrial Dcvclopmcnt Corporation, Corpus Christi Businccc and Job 3 INVESTMENT -OBJECTIVES Investment Y4e1.44 F arkcts er in Public Funds to this Policy. 4 VT Tcxas as rcquired by the PFIA; foleney-Mefliet-Muttial-Fundsi Tcxas Tcrm Invcstmcnt Pool; - - - - !: - : " - - - : repurchasc agrccmcnts. AF Authorized -investments fellewing-stated-final-mattifities+ a. Short-term MaximumMaturity 1.) U.S. Treasury Bills up to 365 days* 2.) U.S. Treasury Coupon Notcs up to 3 ywrs* 3.) U.S. Treasury Notcs and Strips up to 3 ywrs* b.1.17&-Agenoiesi Maximum Maturity 1.)Fcdcral Homc Loan Bank up to 2 years* 2.)Fcdcral National Mortgagc AGcociation. up to 2 yews* 3.)Fcdcral Farm Crcdit up to 2 yews* 1.)Fcdcral Homc Loan Mortgagc Corporation up to 2 yews* 5.)Fcderal Agricultural Mortgage Corporation up to 2 years* 2. Repurchase Agrccmcnts up to 365 day* approved Custodian, as provided undcr thc provisions of thc SIFMA Feptifehase-agreenient7 3. Public Funds Invcctmcnt Pool up to 1 day Peftfelie rating scrvicc. Public Funds Invectmcnt Pools may contain investment 6 adopted by thc investment pool. n addition to the requirements of its e - a -weekly -basis, 5. Money Market Mutual Fund up to 1 ycor autiReFized-investaient-if, U.S.C. Scction 78a et ccq.) or thc Investment Company Act of 1940 (15 U.S.C. Scction 80a 1 ct seq.); d. thc accts of the moncy markct mutual fund arc invested in those matufity-ef-90-days-ef-feWer 6. Guaranteed Investment Contracts up to 3 yews : • - utilizcd only in conncction with the invcctmcnt of bond procccds. The 7. Texas Term Investment Pool up to 1 year days. B. Weighted-Avecage-Matufity as-fe4lews than 366 days. lOperatiag-Furiels 2,Capital-lmprovement-Funds Funds; and Bond proceeds subject :o yicld =friction shall be invcstcd Internal Rcvcnuc Codc of 1986 as amcndcd_(thc "IRC"). lid - - =- - - _- - - - - -- The following Reserve Funds may be invcstcd up to fivc years in U.S. Troamurics or Agencies: Maximum Chokc Canyon Fund 4060 $10,000,000 CT Metkeds-te-Meniter-Investment-Mar-kel-PFiGe The City monitors the market pricc of investments obtained from Tcxpool'a V17 INVESTMENT STRATEGIES AT Investment-Mattir-ity-Divefsifieatien Investments with maturity datcs of 90 days or Icse for liquidity. U& 9 taking-seFfestive-astienT 13T Strategies Operating-and-CIP-Funds 00 days or Icsc will mcct immcdiatc cash needs. A fcw Authorizcd X Debt-SOP/ice-Funds Investment stratcgics for dcbt scrvicc funds shall havc as thc primary mct. 3 Debt-Servise-Resenge-Funds Invcctmcnt stratcgics for dcbt scrvicc rcscrvc funds shall havc as the a—lew--elegfee—ef—velatility, In accordancc with thc cpccific bond Riatur-ity-ef-ene-year7 4: Special -Purpose -Funds semialetien-elete 4-0 a- tur;ties, Therefore, longer maturities (that can be held to the holdin od disbursement projcctions, or to cxtcnd or shorten maturity dcpcnding on cconomic forecasts. The City Managcr, or his V14, DESIGNATION-OF-RESPONSIBILITY I ). 137 Investment-CsfaGer-s Officers. The City Treasurer and the Investment Analyst arc the designated by the Act. If the Investment Officer desires to attend an investment training seminar C: MILL INTERNAL CONTROL C Services. A - - • .. - - - ---- . - - .--- - - -- --- '= - •- of 44... r rod rating 1} 137 &hiss ._ _ _. _ - - _ - - •- - - . Scco_ction ..._c4 bo f.lod. IX, COMPETITIVE SO CITATION - _. • - -. _ . _. - • 44 !'V'XI U! pols!l 117 t RFFIttsti! '44!3 041 1uowisonu! opnlowd of po}}o uc u! sloquoo pue soinp000xl ieett powlcn3 c Aq polnooxo 'Apl3 oqi o} olgcjd000c uuoj c u! uo!;compoo L9 V ctrl -- . _---- ---• - - -- - -- . -- - . - ---• -- - . --- e •- _ . -- - - - -- -•-- __ - - • - . XI, COLLATERALIZATION • -- • - -- - ' - • - -- - - - - - - - - -• ' -- - ' agreement. -• - - - -- -- - -- - -- - - - -- -- - -- - -- - -- . ' . pledged- sellateFal The Invcctment Officers will monitor adequacy of 67 gellatecal-Substitution approved if its value is equal to or greater than the required collateral value. 07 FERalaibited-Seourities X117 - • _ e - - - - - - AT Thifd-PaFty-Safekeeping-Agfeement - - - - - - -• - - - -- ' - . The delivery of all securities into 9-I- luatualeis-eauetidudeo idessete - . , , - ,Lu eR9%t-Aq-ePtiff±PueEl leefe-kelleutiete3 4.%e8-l'aCh'40‘119V-ele68-J66V eRuated-tuatuseecui -- -- - - ---- - - - - ----- -- ------- Ieeft-eue-Lietti-deee9 cluowisoAul pue sounsmi .s.n `s1uolemnb3 use° pue use° tfet1Peetwe9-etteffled-leAPtAl:Put tiel1t9eduzie3-e!leftled-Poutqw199 1E1 soffteft - 6 . 6 . • . 1 . , VD( oto to situol oui o luensind pous!igelso uooq sey luoweal6e 6u!clooples pue sounsmi .8.n oi popuisal s! lenielloo palluoo luowisonu! poplueicno teletelleo-tuetuee-Ay-tuettisettut peeweaefte ueweelEfe-Cautdeemetes OAJOS0 tamped 0141 11 24 6ellateFal position 33 roves+.,..trn tions CT External-Repecting/E-valuations sheet and income statement for the Call Report for review. All depository and required by the Act. DT XIV7 BANKING-SERVICES XPh ANNUAL-POLICY-ADOPTION to APoliey XVIIGENERAL-PROVISIONS �: Each Institution agrccs to comply with all fcdcral, statc, and local laws, rulcs, - - - - - - - - - - - - -- -- -by-tha - - CT ReFfer-manee-Auclits t-audit6F - - - -- - - - --- APPENDIX A COVERNMENT CODE TITLE 10. GENERAL GOVERNMENT SUBTITLE F. STATE AND LOCAL CONTRACTS AND FUND MANAGEMENT CHAPTER 2256. PUBLIC FUNDS INVESTMENT SUBCHAPTER A. AUTHORIZED INVESTMENTS FOR COVERNMENTAL ENTITIES Sec. 2256.001. SHORT TITLE. This chapter may bc cited as thc Public Funds Investment Act. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, cff. Sept. 1, 1995. Sec. 2256.002. DEFINITIONS. In this chapter: (1) "Bond proceeds" m ans thc procccds from thc sale of (2) "Bo k value" mens thc riginal acquisition cost of an (3) "Funds" means public funds in the custody of a state- (A) tate (A) arc not required by law to bc deposited in the state treasury; aRell (B) the investing cntity has authority to invest. (1) "Instituti n of higher cducation" has thc meaning assigned by Section 61.003, Education Code. (5) "Investing cntity" and "cntity" men an entity subject 1 . (6) "Invcstmcnt pool" means an cntity cr atcd undcr this code to invest public funds jointly on behalf of thc entities that participate in the pool and whose investment objectives in order of priority are: (A) preservation and safety of principal; (B) liquidity; and (C) yicld. 211 school district, a district or authority created under Section 52 (b) (1) or (2) , Article III, or Section 59, Article XVI, Texas Constitution, a fresh water supply district, a hospital district, and politic, or instrumentality of the State of Texas, and any nonprofit corporation acting on behalf of any of those entities . (8) "Market value" means the current face or par value of an investment multiplied by the net selling price of the security as quoted by a recognized market pricing source quoted on the valuation date. (9) "Pooled fund group" means an internally cr ated fund the, investing entity are invested. _ (10) "Qualified representative" means 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 savings bank, or a state or federal credit union, a member of the loan committee for the bank or branch of the ba.r-k or a ge-rse _ ' --_ _ . e et _ - resolution to act on behalf of and bind the banking institution; (C) for an investment pool, the . _ e _ _ : 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; (D) the Investment Advisers Act of 1910 (15 U.S.C. Section 80b-1 et seq. ) or, if not subject to registration under that Act, registered with the State Securities Board, a person who is an officer or principal of the investment management firm. (11) "School district" means a public school district. (12) -- - - - - _ - - _- - - - - - - e - pooled fund group. 21 (13) "State agency" means an office, depart-me-nr commission, board, or other agency that is part of any branch of Amended by Acts 1995, 74th Leg. , ch. 402, Sec. 1, eff. Sept . 1, 1995; Acts 1997, 75th Leg. , ch. 1121, Scc. 1, eff. Sept. 1, 1997; Acts 1999, 76th Leg. , ch. 1454, Sec. 1, eff. Sept. 1, 1999. Sec. 2256 . 003. AUTHORITY TO INVEST FUNDS; ENTITIES SUBJECT TO THIS CHAPTER. (a) Each governing body of the following entities may investments authorized under this subchapter in compliance with the standard of care prescribed by Section 2256. 006: (1) a local government; (2) a state agency; (3) - - t- t = _e ee - e - - e - - - e - (4) an investmcnt pool acting on behalf of two or more entities . (b) In the exercise of its powers unde-r S section (a) , the governing body of an inve€tiaq entity may cee-tract with -inveetm (15 U.S.C. Section 80b-1 et seq. ) or with the State Securities Board other funds under its control. A contract made under authority o this subsection may not be for a term longer than two years . A renewal or extension of the contract must be rade by the body of the investing entity by order, ordinance, or resolution. (c) This chapter does not prohibit an investing entity or investment officer from using the entity's employees or the services of a contractor of the entity to aid the investment officer in the execution of the officer' s duties under this chapter. Amended by Acts 1995, 74th Leg. , ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1999, 76th Leg. , ch. 1451, Scc. 2, eff. Sept. 1, 1999. 22 of the current statutes, see H.B. 1003, 85th Legislature, Regular Sec. 2256. 004 . APPLICABILITY. (a) This subchapter does not apply to: (1) a public retirement system as defined by Section 802 . 001; (2) ctate funds invested as authorized by Section 404 . 024; endowments of at least $95 million in book value on May 1, 199.5-;- (1) funds invested by the Veterans ' Land Board as authorized by Chapter 161, 162, or 164, Natural Resources Codc; (5) registry funds deposited with the county or district clerk under Chapter 117, Local Covernment Codc; (6) a deferred compensation plan that qualifies use either Section 101 (k) or 957 of the Internal *- . - __e- e _ U.S.C. Section 1 et seq. ) , as amended. (b) This subchapter does not apply to an investment donated--to specified by the donor. Amended by Acts 1995, 74th Leg. , ch. 402, Sec. 1, off. Sept. 1, 1995; Acts 1997, 75th Leg. , ch. 505, Sec. 24, eff. Sept. 1, i9n Acte 1997, 75th Leg. , ch. 1121, Sec. 2, eff. Sept. 1, 1997; Acts 1999, 76th Leg. , ch. 62, Sec. 8 .21, eff. Sept. 1, 1999; Acts 1999, 76th Leg. , ch. 1151, Sec. 3, eff. Sept. 1, 1999. This section was a by the 85th Legislate- - . '- _ _ _ _ e - of the current statutes, see H.B. 1701, 85th Legislature, Regular Session, for amendments affecting this section. Sec. 2256 .005 . INVESTMENT POLICIES; INVESTMENT STRATEGIES; INVESTMENT OFFICER. (a) The governing body of an investing entity shall adopt by rule, order, ordinance, or resolution, as appropriate, funds under its control . 23 (b) The investment policies must: (1) be written; (2) primarily emphasize safety of principal and liquidity; (3) maturity and the quality and capability of investment management; and (4) include: (A) a list of thc types of authorized investments in which the investing entity's funds may be invested; (B) the maximum allowable stated maturity of any individual investment owned by the entity; (C) for pooled fund groups, thc maximum dollar - for the portf lio; (D) methods to monitor thc market price of investments acquired with public funds; (E) a requirement for settlement of all transactions, except investment pool funds and mutual funds, on a delivery versus payment basis; and (F) procedures to monit r rating changes in investments acquired with public funds and thc liquidation of such investments consistent with thc provisions of Scction 2256.021. (c) The investment policies may provide that bids for certificates f deposit be solicited: (1) orally; (2) in writing; (3) e oct,-o.,; a„ < (4) in any combination of those methods. (d) As an integral part of an investment policy, the governing body shall adopt a separate written investment strategy for each of the funds or group f funds under its control. Each investment strategy must describe thc investment objectives for the particular fund using the foil ging pri ritics in order of importance: (1) understanding of thc suitability of thc investment to the financial requirements of the entity; (2) (3) liquidity; (4) marketability of thc investment if thc need arises to liquidate the investment before maturity; 29. (5) _ _ ' - - - - a44.4 (6) yield. (c) The governing body of an investing entity shall review its The governing body shall adopt a written instrument by rule, order, ordinance, or resolution stating that it has reviewed the investment adopted shall record any changes made to either the investment policy or investment strategies . (f) Each investing entity shall designate, by rule, order, ordinance, or resolution, as appropriate, one or more officers or as investment officer to be responsible for the investment---e-f---14e. funds consistent with the investment policy adopted by the entity. If the governing body of an investing entity has contracted with another investing entity to invest its funds, the investment officer of the other investing entity is considered to be the investment officer of the first investing entity for purposes of this chapter. Authority granted to a person to invest an entity's funds is effective until rescinded by the investing entity, until the expiration of the officer' s term or the termination of the person's, employment by the investing entity, or _ - . -_ ••- - -_ -_ e --- - firm, _ _ _ -••- - firm, until the expiration of the contract with the investing entity. In the administration of the duties of an investment officer, the person designated as investment officer shall exercise the judgment and care, under prevailing circumstances, that a prudent person wo ld exercise in the management of the person' s own affairs, but the governing body of the investing entity retains ultimate responsibility as fiduciaries of the assets of the entity. Unless, authorized by law, a person may not deposit, withdraw, transfer, or manage in any other manner the funds of the investing entity. (g) - = = ="- - = - - - = - government, or investment pool for which an officer of the entity is assigned by law the function of investing its funds . 2a (h) An officer or employee of a commission created under Chapter 391, Local GovernmeR-t Code, is ixe - e e- _ - . -_ ••- - officer for the commission under Subsection (f) if the officer or employee is an investment officer designated under Subsection (f) for another local government. Text of subsec. (h) as amended by Acts 1997, 75th Leg. , ch. 1421, Scc. 3 (h) An officer or employee of a commission created under an investment officer under Subsection (f) for any investing entity other than for that commission. (i) A . _ __ ..- _ e - e business relationship with a business organization offering to engage disclosing that personal business interest. An investment officer who is related within the second degree by affinity or consanguinity, investment to the investment officer's entity shall file a statement disclosing that relationship. A statement required under this subsection must be filed with the Texas Ethics Commission and the governing body of the entity. For purposes of this subsection, an investment officer les a pe-soul bsi-- _ _ - _ e _ _ • - _ business organization if: (1) the investment officer owns 10 percent or more of the voting stock or shares of the business organization or owns $5, 000 or more of the fair market value of the business organization; .(2) funds received by the investment officer from the business organization exceed 10 percent of the investment officer' s gross income for the previous year; e (3) the investment officer has acquired from the business organization during the previous year investments with a book value of $2, 500 or more for the personal account of the investment officer. 25. (j ) The governing body of an investing entity may specify in its investment policy that any investment authorized by this chapter is not suitable. (k) A written copy of the investment policy shall be presented investing entity or to an investment management firm under contract with an investing entity to invest or manage the enti s inves �� portfolio. For purposes of this subsection, a business organization includes investment pools and an investment management firm under contract with an investing entity to invest or manage the entity's investment portfolio. Nothing in this subsection relieves the investing entity of the responsibility for monitoring the investments made by the investing entity to determine that they arc in compliance with the investment policy. The qualified representative of the business organization offering to engage in an investment transaction acceptable to the investing entity and the business organization substantially to the effect that the business organization has : (1) received and reviewed the investment policy of the entity; a (2) acknowledged that the business organization ha& implemented reasonable procedures and controls in an effort to preclude investment transactions conducted between the entity and the. organization that are not authorized by the entity' s investment policy, except to the extent that this authorization is dependent on an analysis of the makeup of the entity' s entire portfolio or requires an interpretation of subjective investment standards. (1) The investment officer of an entity may not acquire or otherwise obtain any authorized investment described in the investment policy of the investing entity from a person who has not (m) � - - -_ _ - - - - - - - - - _ s - - conjunction with its annual financial audit, shall perform a to the entity' s established investment policies. (n) Except as provided by Subsection (o) , at least two years a state agency shall arrange for a compliance audit- of 22 established investment policies . The compliance audit shall be performed by the agency' s internal auditor or by a private auditor employed in the manner provided by Section 321 . 020 . Not later than January 1 of each even-numbered year a state agency shall report the results of the most recent audit performed under this subsection to the state auditor. Subject to a risk assessment and to the legislative audit committee's approval of including a review by the 'state auditor in the audit plan under Section 321 . 013, the state auditor may review information provided under this section. € committee, the state auditor may, based on its review, require a the state auditor determines necessary to assess compliance with laws e _e _ _ _ e - e _ _ - ••- - A report under this subsection shall be prepared in a manner the state auditor prescribes . (o) The audit requirements of Subsection (n) do not apply to assets of a state agency that are invested by the comptroller under Section 101 . 024 . Amended by Acts 1995, 71th Leg. , ch. 102, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg. , ch. 685, Scc. 1, cff. Sept. 1, 1997; Acts 1997, 75th Leg. , ch. 1421, Sec. 3, eff. Sept. 1, 1997; Acts 1999, 76th Leg. , ch. 1451, Sec. 1, eff. Sept. 1, 1999; Acts 2003, 78th Leg. , ch. 785, Sec. 41, eff. Sept . 1, 2003 . Amended by: Acts 2011, 82nd Leg. , R.S. , Ch. 1004 (H.B. 2226) , Sec. 1, cff. June 17, 2011 . Scc. 2256. 006. STANDARD OF CARE. (a) Investments shall be made with judgment and care, under e _ _ _ _ - 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 a the probable income to be derived. Investment of funds shall be governed by the following investment objectives, in order of priority: (1) preservation and safety of principal; (2) liquidity; and 28 (3) yield. (b) In determining whether an investment officer has exercised prudence with respect to an investment deeis ' -- -- - •• _ _ shall be made taking into consideration: (1) the investment of all funds, or funds under the entity' s control, over which the officer had responsibility rather (2) whether the investment decision was consistent with the written investment policy of the entity. Amended by Acts 1995, 79th Leg. , ch. 402, Sec. 1, cff. Sept. 1, 1995. Sec. 2256 .007 . INVESTMENT TRAININC; STATE AGENCY BOARD MEMBERS AND OFFICERS . (a) Each member of the governing board of a state agency and its investment officer shall attend at least one training cession relating to the person' s responsibilities under this chapter within six months after taking office or assuming duties . (b) -- - _ _ - - - - = -- - e - e _e_ - - - e = the training under this section. (c) - - - '= - = - investment controls, security ricks, strategy risks, market risks, chapter. (d) An investment officer shall attend a training session not 4-ess than once each state fiscal bi- - - - -= - - _ from any independent source approved by the governing body of the state agency. The investment officer shall prepare a report on this subchapter and deLiver the report to the governing body of the state agency not later than the 180th day after the last day each regular session of the legislature . Amended by Acts 1995, 74th Leg. , ch. 902, Sec. 1, cff. Sept. 1, 1995; Acts 1997, 75th Leg. , ch. 73, Sec. 1, cff. May 9, 1997; Acts 1997, 75th Leg. , ch. 1921, Sec. 9, cff. Sept. 1, 1997; Acts 1999, 76th Leg. , ch. 1959, Sec. 5, cff. Sept . 1, 1999 . Amended by: Acts 2011, 82nd Leg. , R.S. , Ch. 1009 (H.B. 2226) , Sec. 2, cff. June 17, 2011 . 2.g of the current statutes, see H.B. 1238 and S.B. 1488, 85th Legislature, Regular Session, for amendments affecting this scction. Sec. 2256. 008 . ;N-VESTMENT 'FRA IN �T LOCAL COVERPIMFsNTS . Tcxt of subsection as amended by Acts 2015, 84th Leg. , R.S. , Ch. 222 (H.B. 1148) , Sec. 1 (a) Except as provided by Subsections (b) and (c) , the treasurer, the chief financial officer if the treasurer is not the chief financial officer, and the investment officer of a local government shall : (1) attend at least one training Fa-e-6& 014- 49144—..a44 government or a designated investment committee advising the investment officer as provided for in the investment policy of the relating to the treasurer' s or officer' s responsibilities under this subchapter within 12 months after taking office or assuming duties; and (2) except as provided by Subsections (b) , (e) , and (f) , year period that begins on the first -day o-f that 1-eeal gevere t-Ls fiscal year and consists of the two consecutive fiscal y ars after that date, and receive not less than 10 hours of instruction relating to investment responsibilities under this subchapter from an independent source & roted by the e • . - - . -e -_- . _ investment officer as provided for in the investment policy of the local governme • I - -_ - _ A ! (H.B. 870) , Scc. 1 (a) Except as provided by Subsections (a-1) , (b) , and (c) , the government shall : (1) attend at least one training session from an government or a designated investment committee advising tho investment officer as prozi eel fog i- - - - _ ••- - _ _ _ . e -- local government and containing at least 10 hours of instruction relating to the treasurer' s or officer' s responsibilities under this and (2) attend an investment training cession not less than years after that date, and receive not less than 10 hours of instruction relating to investment responsibilities under this subchapter from an independent source approved by the governing body the investment officer as p-rovide.d far in the i- -_ ••- - _e the local govcrnmen.4, (a-1) In addition to the requirements of Subsection (a) (1) , the treasurer, or the chief financial officer if the treasurer is not the chief financial officer, and the investment officer of a school district or a municipality shall attend an investment training cession not less than once in a two-year period that begins on the consists of the two consecutive fiscal years after that date, and receive not less than eight hours of instruction relating to investment responeibilitie-s -C-r this s_ e - _ - - - source approved by the governing body of the school district or municipality, or by a designated investment committee advising the investment officer as provided for in the investment policy of the school district or municipality. (b) , Article III, or Section 59, Article XVI, Texas Constitution, that has contracted with an investment management firm under Section 2256. 003 (b) and has fewer than five full-time employees or an 3.1. investing entity that has contracted with another investing entity to invest the entity's funds may satisfy the training requirement provided by Subsection (a) (2) by having an officer of the governing period that begins on the first day of that - - _ _ . - -••- - 1 - ' - _ year and consists of tine -two consecutive _ __ -_ _ _ - _ date. The treasurer or chief financial officer of an investing Section 59, Article XVI, Texas Constitution, and that has fewer than five full-time employees is not required to attend training required by this section unless the person is also the investment officer of the entity. (c) Training under this section must include education in investment controls, security risks, strategy ricks, market ricks, diversification of investment portfolio, and compliance- 44- 44s chapter. (d) Not later than December 31 each year, each individual, association, business, organization, governmental entity, or other person that provides training under this section shall report to the comptroller a list of the governmental entities for which the person provided required training under t- ' _ _ _ _ _ year. An individual 's reporting requirements under this subsection arc satisfied by a report of the individual ' s employeror t .e sponsoring or organizing entity of a training program or seminar. (e) This section does not apply to a district governed by Chapter 36 or 19, Water Codc . (f) Subsection (a) (2) does not apply to an officer of a municipality if the municipality: (1) does not invest municipal funds; or (2) only deposits municipal funds in: (A) interest-bearing deposit accounts; or (B) _ 2256. 010. Amended by Acts 1995, 71th Leg. , ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg. , ch. 1421, Sec. 5, eff. Sept. 1, 1997; Act& 1999, 76th Leg. , ch. 1154, Sec. 6, eff. Sept . 1, 1999; Acts 2001, 77th Leg. , ch. 69, Sec. 1, eff. May 14, 2001 . 32 Amended by: Acts 2011, 82nd Leg. , F..S . , Ch. 1004 (H.B. 2226) , Sec. 3, eff. June 17, 2011 . - ' - --- . R.S . , Ch. 222 (H.B. 1148) , Scc. 1, eff. September 1, 2015 . Acts 2015, 84th Leg. , R.S . , Ch. 1248 (H.B. 870) , Sec. 1, eff. September 1, 2015. e --the current statutes, see H.B. 1083, H.B. 2647 and M.B. 2928-,-8-5th Sec. 2256. 009. AUTHORIZED INVESTMENTS: OBLIGATIONS OF, OR CUARANTEED BY COVERNMENTAL ENTITIES. (a) Except ac provided by subchapter: (1) obligations, including letters of credit, of the United States or its agencies aid ie•strumenta1ities; (2) direct obligations of this state or its agencies and (3) collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency er instrumentality of the United States; (4) other obligations, the principal and interest of which arc unconditionally guaranteed or insured by, or backed by the full faith and credit of, this state or the United States or the respective agencies and instrumentalities, including obligations that arc fully guaranteed or insured by the Federal Deposit Insurance States; (5) obligations of states, agencies, counties, cities, and than A or its equivalent; and (6) -- - - - -- - -- - -- - ---- - - -- - --- e ._ - - - e Israel . 23 (b) - section: (1) obligations whose payment represents the coupon mortgage-backed secu-city colla-teal a-dd - _ • (2) obligations whose payment represents the principal collateral and bears no interest; (3) final maturity date of greater than 10 years; a444 (4) collateralized mortgage obligations the interest r of which is determined by an index that adjusts opposite to the changes in a market index Amended by Acts 1995, 74th Leg. , ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1999, 76th Leg. , ch. 1454, Sec. 7, eff. Sept. 1, 1999; Acts 2001, 77th Leg. , ch. 558, Sec. 1, eff. Sept. 1, 2091 ,- Amended by: Acts 2011, 82nd Leg. , R.S . , Ch. 1004 (H.B. 2226) , Sec. 4, eff. June 17, 2011 . of the current statutes, sec H.B. 2928, 85th Legislature, .Regular Sec. 2256 . 010 . AUTHORIZED INVESTMENT S RTIFICATES OF DEPOSIT AND SHARE CERTIFICATES. (a) A certificate of deposit or share (1) - - - - e - - e . -- - -_ - - •_ - " Insurance Fund or its successor; (2) 2256. 009 (a) , including mortgage backed securities directly issued by a federal agency o- ixstrumentality th _ - those mortgage backed securities of the nature described by Section 2256 . 009 (b) ; or (3) cccured in any other manner and amount provided by lair for deposits of the investing entity. (b) In addition to the author ' - conditions is an authorized investment under this subchapter: (1) the funds arc invested by an iRve-sting entitythrong : (A) a broker that has its main office or a branch (B) a depocitory inctitution that has its main office or a branch office in this state and that is selected by the investing entity; (2) the broker or the depository institution selected by the investing entity under Subdivision (1) arranges for the deposit the investing entity; (3) - - - - - -" - - - - - -_ of each of the certificate- et depo-sit is insu-red by the—United States or an instrumentality of the United States; And (4) - . - - - - _ -- - - institution selected by the investing entity under Subdivision (1) , 4. (17 C. F.R. Section 240 . 15c3-3) as custodian for the invecting entity the invccting entity. Amended by Acts 1995, 79th Leg. , ch. 32, Scc. 1, eff. April 28, 1995; Acts 1995, 71th Leg. , ch. 102, Sec. 1, eff. Sept . 1, 19-4÷ Actc 1997, 75th Leg. , ch. 1121, Sec. 6, eff. Sept. 1, 1997 . Amended by: Acts 2005, 79th Leg. , Ch. 128 (H.B. 256) , Sec. 1, off. September 1, 2005 . aa Acts 2011, 82nd Leg. , R.S. , Ch. 1004 (H.B. 2226) , Sec. 5, eff. June 17, 2011 . of the current statutes, see H.B. 1003, 85th Legislature, Regular Session, for amendments affecting this section. Scc. 2256 . 011 . AUTHORIZED INVESTMENTS : A ' =="=' _ . investment under this subchapter if the repurchase agreement: (1) has a defined termination date; (2) ' - - - _e - - e - - - -e obligations described by Section 2256. 009 (a) (1) ; a40,4 (3) requires the sectitie-s being - - or cash held by tip entity to be p ged to - - _ - - - entity' s name, and deposited at the time the investment is made with and (1) "- dealer, as defined by the Federal Reserve, or a financial institution doing business in this state. . (b) In this section, "repurchase agreement" moans a -- - - - _ = - - -- e - " - less than the principal amount of the funds disbursed. The term security repurchase agreement. (c) ' e - - e e ethe reverse security repurchase agreement is delivered. (d) - - . . -e e . _ - - - - - e - acquired must mature not later than the expiration date stated in the reverse security repurchase agreement. Amended by Acts 1995, 71th Leg. , ch. 402, Sec. 1, eff. Sept. 1, 1995. ab Amended by: Acts 2011, 82nd Leg. , R.S. , Ch. 1001 (H.B. 2226) , Sea-,-4y—att.,- June ee, 6-, off.June 17, 2011 . Sec. 2256 .0115. A4THORIZED INVESTMENTS : SECURITIES LENDINC PROGRAM. -a-)- A securities lending program is an autn ed investment under this subchapter if it meets the conditions provided by this section. (b) subchapter: (1) the value of securities loaned under the program must be not less than 100 percent collateralized, including accrued income; (2) a loan made u-neie-rthe p-rogra t must allow €or termination at any time; (3) a loan made under the program must be secured by: (A) pledged securities described by Section 2256 . 009; (B) pledged irrevocable ettcrs at credit ^d h-. bank that is : (i) organized and existing under the laws of the United States or any other state; aid (ii) continuously rated by at least one nationally recognized investment rating firm at not less than A or its equivalent; or (C) (i) 2256 . 009; (ii) 2256. 013; (iii) 2256. 014; e (iv) 2256. 016; (4) - • - - - -- ' - - - - _ - ' - require that the securities being held as collateral be: (A) pledged to the investing entity; (B) held in the investing entity' s name; aid (C) deposited at the time the in- -estmentls made t investing entity; (5) a loan made under the program must be placed through: 31 (A) a primary government securities dealer, as defined by 5 C. F.R. Section 6801 . 102 (f) , as that regulation existed on September 1, 2003; or (B) a financial institution doing business in this state; and (6) an agreement to lend securities that is executed under this section must have a term of one year or less . Added by Acts 2003, 78th Leg. , ch. 1227, Sec. 1, eff. Sept. 1, 2003 . Sec. 2256. 012 . AUTHORIZED INVESTMENTS : BANKER'S ACCEPTANCES . A bankers ' acceptance is an authorized investment under this subchapter if the bankers ' acceptance:- (1) cceptance..(1) has a stated maturity of 270 days or fewer from the date of its issuance; (2) will be, in accordance with its terms, liquidated in full at maturity-;- (3) - - e - - - - - e t - - - Federal Reserve Bank; and ('1) is accepted by a bank organized and existing under the laws of the United States or any state, if the short-term obligations of the bank, or of a bank holding company of which the bank is the equivalent rating by at lgact one nationally recognized credit rating agency. Amended by Acts 1995, 71th Leg. , ch. 402, Scc. 1, eff. Sept. 1, 1995. Sec. 2256.013 . AUTHORIZED INVESTMENTS : COMMERCIAL PAPER. Commercial paper is an authorized investment under this subchapter if the commercial paper: (1) has a stated maturity of 270 days or fewer from the date of its issuance; ad (2) is rated not less than A-1 or P-1 or an equivalent rating by at least: (A) two nationally recognized credit rating agencies; aa (B) one nationally recognized crcdit rating agency and organized and existing under the laws of the United States or any state. Amended by Acts 1995, 74th Leg. , ch. 402, Sec. 1, cff. Sept. 1, 1995. This section was amended by the 85th Legislature. Pending publication of the current statutes, see H.B. 1003, 85th Legislature, Regular Session, for amendments affecting this section. Sec. 2256 . 014 . AUTHORIZED INVESTMENTS : MUTUAL FUNDS . (a) A no-load money market mutual fund is an authorized investment under this subchapter if the mutual fund: (1) is registered with and regulated by the Securities and Exchange Commission; (2) provides the investing entity with a prospectus and other information required by the Securities Exchange Act of 1934 (15 U.S .C. Section 78a et seq. ) or the Investment Company Act of 1940 (15 U.S .C. Section 80a-1 et seq. ) ; (3) has a dollar-weighted arae o • ! days or fewer; and (4) includes in its investment objectives the maintenance of a stable net asset value of $1 for each share. (b) In addition to a no-load money market mutual fund permitted as an authorized investment is S sect ' s- _ _ _ e_ _ _ __ - -t is an authorized investment under this subchapter if the mutual fund: (1) is registered with the Securities and Exchange Commission; (2) has an average weighted maturity of less thane yrs; (3) - - - ' . - e - - _ ee e -e this subchapter; (4) is continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or its equivalent; a -4 (5) conforms to the requirements cet forth in Sections 2256. 016 (b) and (c) relating to the eligibility of investment pools to receive and invest funds of investing entities . (c) An entity is not authorized by this section to: monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service, in mutual funds described in Subsection (b) ; (2) invest any portion of bond proceeds, reserves and funds held for debt service, in mutual funds described in Subsection (b) ; or (3) invest its funds or funds under its control, including any one mutual fund described in Subsection (a) or (b) in an amount that exceeds 10 percent of the total assets of the mutual fund. Amended by Acts 1995, 71th Leg. , ch. 402, Scc. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg. , ch. 1121, Sec. 7, cff. Sept. 1, 1997; Acts 1999, 76th Leg. , ch. 1454, Sec. 8, eff. Sept. 1, 1999 . This section was amended by the 85th Legislature. Pending publication of the current statutes, see H.B. 1003, 85th Legislature, Regular Sec. 2256 . 015. AUTHORIZED INVESTMENTS : GUARANTEED INVESTMENT CONTRACTS . (a) A guaranteed invectme-tet c.- _ _ _ _ _ _ -e -_ investment for bond proceeds under thic subchapter if the guaranteed investment contract: (1) has a defined termination date; (2) is secured by obligations described by Section II . - - -' - - -- - - e _ , e- _ -- - --- - -- ! ! * - - "- - - - ' " - - - - - proceeds invested under the contract; and (3) is pledged to the entity and deposited with the entity (b) Bond proceeds, other than bond proceeds representing reserves and funds maintained for debt service purposes, may not be AL with a term of longer than five years from the date of issuance of the bonds . (c) To be eligible as an authorized investment: (1) the governing body of the entity must specifically authorize guaranteed investment contracts as an eligible investment in the order, ordinance, or resolution authorizing the issuance of bonds; (2) the entity must receive bids from at least thea separate providers with no material financial interest in the bonds from which proceeds were received; (3) the entity must purchase the highest yielding received; (4) the price of the guaranteed investment contract must take into account the rea-sonably amaacte4 d - _ _ - - - -_ _ - _ bond proceeds to be invested; and (5) the provider must certify the administrative cost& the guaranteed investment contract. Amended by Acts 1995, 74th Leg. , ch. 402, Sec. 1, cff. Sept. 1, 1995; Acts 1997, 75th Leg. , ch. 1421, Sec. 8, cff. Sept. 1, 1997; Acts 1999, 76th Leg. , ch. 1454, Sec. 9, 10, eff. Sept . 1, 1999 . of the current statutes, see H.B. 1003, 85th Legislature, Regular Session, for amendments affecting this section. Scc. 2256. 016. AUTHORIZED INVESTMENTS : INVESTMENT POOLS. (a) An entity may invest its fps ad f_ - _ _ -- ' _ _ e tligiblc investment pool if the governing body of the entity by rule, investment in the particular pool. An investment pool shall invest the funds it receives from entities in authorized investments permitted by this subchapter. An investment pool may invest it& funds in money market mutual funds to the extent permitted by and consistent with this subchapter and the investment policies and abjectives adopted by the investment pool . (b) To be eligible to receive funds from and invest funds on behalf of an entity under this chapter, an investment pool must furnish to the investment officcr or other authorized representative of the entity an offering circular or other similar disclosure instrument that contains, at a minimum, the following information: (1) the types of investments in which money is allowed to be invested; (2) the maximum average dollar-weighted maturity allowed, based on the stated maturity date, of the pool; (3) ..- - security within the portfolio has; (1) the objectives of the pool; (5) the size of the pool; (6) the names of the members of the advisory board of the pool and the dates their terms expire; (7) the custodian bank that will safekeep the—peel 's assets; (8) whether the intent of the pool is to maintain a net asset value of one dollar and the rick of market price fluctuation; (9) whether the only source of payment is the assets of the pool at market value or whether there is a secondary source of payment, such as iA-su-ra--ce eg ate-e-s, e - e-- ' e ' e- e -secondary source of payment; (10) the name and address et the "e e- e- - _ _ _ ' _ the pool; (11) - - - _ _ ' -••- - - - -- - - - - - e or other operating policies required for the entity to invest funds in and withdraw funds from the pool; and (12) the performance history of the pool, including yield, average dollar-weighted maturities, and expense ratios . (c) To maintain eligibility to receive funds from and invest funds on behalf of an entity under this chapter, an investment pool must furnish to the investment officer or other authorized representative of the entity: (1) investment transaction confirmations; and (2) a monthly report that contains, at a minimum, the following information: 42 (A) the types and percentage breakdown of cecurit c in which the pool is invested; (B) the current average dollar-weightod m=tur t<, based on the stated maturity date, of the pool; (C) the current percentage of the pool's portfolio in investments that have stated maturities of more than one year; (D) the book value versus the market value of the pool's portfolio, using amortized cost val4T (E) the size of the pool; (F) the number of participants in the pool; (G) the custodian bank that is cafckceping thc assets- of cseto of the pool; (H) a listing of daily tran entity participating in. thc po 1; (I) the yield and expense ratio of thc pool, including (J) the portfolio managers of thc pool; and (K) any changes or addenda to the offering circular. (d) An entity by contract may delegate to an investment pool purchased with its local funds. (c) with regulations governing thc registration of open-end management investment companies under the Investment Company Act of 1940, ac pr mulgated fr m time t time by thc federal Sccuritie a^d Exch ngo Commicsi n. (f) To be eligible to receive funds from and invest funds on 11 pool cr ated to function as a money market mutual fund must mark i -4s portfoli to market daily, and, to the extent reasonably possible, stabilize at a $1 net asset value. If thc ratio of the market value of thc p rtfolio divided by thc boo]- value of thc portf li is lcco than 0.995 or greater than 1.005, portfolio holdings chall be cold as necessary to maintain the ratio between 0.995 and 1.0-95. I adds t o ee e. money market mutual fund shall report yield to its investors in 93 accordance with regulations of the federal Securities and Exchange (g) To be eligible to receive funds from and invest funds on behalf of an entity under this chapter, a public funds investment pool must have an advisory board composed: (1) equally of participants in the pool and other persons who do not have a business relatior�shi. - -- _ _ _ - -t _ - qualified to advise the pool, for a public funds investment pool created under Chapter 791 and managed by a etate agency; or (2) of participants in the pool and other persons who do advice the pool, for other investment pools . (h) To maintain eligibility to receive funds from and invest funds on behalf of an entity under this chapter, an investment pool mutt be continuously rated no lower than AAA or AAA-m e ' at an equivalent rating by at least one nationally recognized rating service . (i) If the investment pool operates an Internet website, the information in a disclosure instrument or report described in Subsections (b) , (c) (2) , and (f) must be posted on the website . (j ) To maintain eligibility to receive funds from and invest funds on behalf of an entity under this chapter, an investment pool must make available to the entity an annual audited f; na c; a' statement of the investment pool in which the entity has fund& invested. (k) If an investment pool offers fcc broakpointc based on fund balances invested, the investment pool in advertising investment rates must include either all levels of return based on the breakpoints provided or state the lowest possible level of return based on the smallest level of funds invested. Amended by Acts 1995, 74th Leg. , ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg. , ch. 1421, Sec. 9, eff. Sept. 1, 1997 . Amended by: Acts 2011, 82nd Leg. , R.S. , Ch. 1004 (H.B. 2226) , Sec. 7, eff. June 17, 2011 . of the current statutes, see S .B. 253, 85th Legislature, Regular Session, for amendments affecting this section. Sec. 2256 . 017 . _ _ _ __ _ An entity is not required of purchase. . e - - 1 . . I . - - 1995; - . . A - --_ _ A • _- _ - . . Amended by Acts 1997, 75th Leg. , ch. 1121, Sec. 10, eff. Sept . 1, 1997 . Sec. 2256. 019. RATING OF CERTAIN INVESTMENT POOLS . A public funds investment pool must be continuously rated no lower than AAA or recognized rating service. Added by Acts 1995, 71th Leg. , ch. 402, Sec. 1, eff. Sept. 1, 1995. ♦ . 1 . . 1997 . Amended by: A - - I _ - _-e . . • - - . . I _ - -- . - . June 17, 2011 . Scc. 2256. 020 . AUTHORIZED INVESTMENTS÷ _ e, _ e EDUCATION. In addition to the authorized invicetments permitted by sell-►---and ices-t its fua-ds and fu- ds un4e-r its ce trol ince following: (1) cash management and fixed income funds sponsored by organizations exempt from federal income taxation under Section 501 (f) , Internal Revenue Code of 1986 (26 U.S .C. Section 501 (f) ) ; (2) .-e ' - - - -- e e e - - - - -- equivalent by a nationally recognized credit rating agency or that is 9.5. at 1 ast A-1, P-1, or the equivalent by a nationally recognized credit rating agency; and (3) corporate bonds, debentures, or similar debt obligations rated by a nationally recognized investment rating firm Added by Acts 1995, 71th Leg. , ch. 102, Sec. 1, eff. Sept. 1, 1995 . Sec. 2256 . 0201 . AUTHORIZED INVESTMENTS; MUNICIPAL UTILITY. _ - - - engaged in the distribution and sale of electric energy or natural gas to the public may enter into a hedging contract and related security and insurance agreements in relation to feel eel-,� t ral gas, coal, nuclear fuel, and electric energy to protect against less due to price fluctuations . A hedging transaction must comply with the regulations of the Commodity Futures Trading Commission and the Eceuritic. and Exchange Commission. If there is a conflict between the municipal charter of the municipality and this chapter, this chapter prevails . (b) A payment by a municipally owned electric or gas utility supplies or fuel reserves is a fuel expense, and the utility may against fuel expenses . (c) - - - -- - - e --_ - - - utility or the body vested with power to m -- _ - _ -e ee- _ - -- hedging transactions . (d) In this section, "hedging" means the buying and selling of fuel oil, natural gas, coal, nuclear fuel, and electric energy futures or options or similar contracts on those commodities and related transportation costs as a protection against loss due to price fluctuation. Added by Acts 1999, 76th Leg. , ch. 105, Sec. 18, eff. Sept. 1, 1999. Amended by: T7 ATTeuoTgeu e Aq quoTeATnba Gu. JO „-VV„ ueu. 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The term does not include a debt obligation that : (1) on conversion, would result in the holder becoming a stockholder or shareholder in the entity, or any affiliate subsidiary of the entity, that issued the debt obligation; or (2) is an unsecured debt obligation. (b) This section applies only to an independent school district that qualifies as an issuer as defined by Section 1371 . 001 . (c) In addition to authorized investments permitted by this subchapter, an independent school district subject to this section may purchase, sell, and invest its funds and funds under its control in corporate bonds that, at the time of purchase, arc rated by a nationally recognized investment rating firm "AA-" or the equivalent and have a stated final, maturity that is not later than the third anniversary of the date the corporate bonds were purchased. (d) An independent school district subject to this section is not authorized by this section to: _ monthly average fund balance, excluding bond proceeds, reserves, and other funds held for the payment of debt service, in corporate bonds; s-� (2) invest more than 25 percent of the funds invested in corporate bonds in any one domestic business entity, including subsidiaries and affiliates of the oz (e) An independent school district subject to this section may purchase, sell, and invest its funds and funds under its control in corporate bonds if the governing body of the district : (1) amends its investment policy to authorize corporate bonds as an eligible investment; (2) adopts procedures to provide for: (A) monitoring rating changes in corporate bondc acquired .lith public funds; and (B) liquidating the investment in corporate bonds; and (3) identifies the funds eligible to be invested in corporate bonds . (f) The investment officer of an independent school district, acting on behalf of the district, chall sell corporate bonds in which the district has invested its funds not later than the seventh day after the date a nationally recognized investment rating firm: (1) issues a release that places the corporate bonds or the domestic business entity that issued the corporate bonds on negative credit watch or the equivalent, if the corporate bonds are rated "AA-" or the equivalent at the time the release is issued; or (2) changes the rating on the corporate bonds to a rating lower than "AA-" or the equivalent . (g) Corporate bonds arc not an eligible investment for a public funds investment pool. Added by Acts 2011, 82nd Leg. , R.S . , Ch. 1347 (S .B. 1543) , Scc. 1, eff. June 17, 2011 . Sec. 2256. 0205. AUTHORIZED INVESTMENTS; DECOMMISSIONING TRUST. (a) In this section: (1) "Decommissioning trust" means a trust created to provide the Nuclear Regulatory Commission assurance that funds will be available for decommissioning purposes as required under 10 C. F.R. Part 50 or other similar regulation. (2) "Funds" includes any money held in a decommissioning trust regardless of whether the money is considered to be public funds under this subchapter. (b) In addition to other investments au -e _ - ' - that is engaged in the distribution and sale of electric energy or natural gas to the public may invest funds held in a decommissioning trust in any investment authorized by Subtitle B, Title 9, Property Code. Added by Acts 2005, 79th Leg. , Ch. 121 (S.B. 1464) , Sec. 1, eff. September 1, 2005 . Sec. 2256. 021 . EFFECT OF LOSS OF REQUIRED RATINC. AR investment that requires a minimum rating under this subchapter does not qualify as an authorized investment during the period the investment does not have the minimum rating. An entity shall take Aa all prudent measures that arc consistent with its investment policy to liquidate an investment that does not have the minimum rating. Added by Acts 1995, 71th Leg. , ch. 402, Scc. 1, cff. Sept. 1, 1995. Sec. 2256. 022 . EXPANSION OF INVESTMENT AUTHORITY. Expansion of investment authority granted by this chapter shall require a risk state auditor, subject to the legislative audit committee's approval of including the review in the audit plan under Section 321 . 013. Added by Acts 1995, 71th Leg. , ch. 102, Sec. 1, off. Sept. 1, 1995 . Amended by Acts 2003, 78th Leg. , ch. 785, Sec. 42, cff. Sept. 1, 2003 . Scc. 2256. 023 . INTERNAL MANAGEMENT REPORTS . (a) Not less than quarterly, the investment officer shall prepare and submit to the transactions for all funds covered by this chapter for the preceding reporting period. (b) The report must: (1) describe in detail the investment position of the entity on the date of the report; (2) be prepared jointly by all investment officers of the entity; (3) be signed by each investment officer of the entity; (4) contain a summary statement of each pooled fund group that states the: (A) beginning market value for the reporting period; (B) ending market value for the period; and (C) fully accrued interest for the reporting period; (5) state the book value and market value of each separately invested asset at the end of the reporting period by the type of asset and fund type invested; (6) state the maturity date of each separately invested asset that has a maturity date; (7) state the account or fund or pooled group fund in the was acquired; and (8) ctate the compliance of the investment portfolio of the state agency ar decal gear-••- - _ _ - _ -_ _ . (A) (B) relevant provisions of this chapter. (c) -- - -= - - - -_- - = " - - - - - - = within a reasonable time after the end of the period. (d) If an entity invests in other than money market mutual funds, investment pools or accounts offered by its depository bank in the form of certificates of deposit, or money market accounts or -similar accounts, the reports prepared by the investment officers e- he governing body—by that a=uditor. Added by Acts 1995, 71th Leg. , ch. '102, Sec. 1, eff. Sept. 1, 1995 . Amended by Acts 1997, 75th Leg. , ch. 1421, Sec. 12, eff. Sept . 1, 1997 . Amended by: Acts 2011, 82nd Leg. , R.S . , Ch. 1004 (H.B. 2226) , Sec. 9, eff. June 17, 2011 . This section was amended by the 85th Legislature . Pending publication of the current statutes, sec S .B. 253, 85th Legislature, Regular Sec. 2256 . 024 . - _ __- ' • _ * (a) The authority granted by this subchapter is in addition to that granted by other law. Except as provided by Subsection (b) , this subchapter dee-s-44-4 - - - - other law; or other law. 51 (b) Except with respect to those investing entities described in Subsection (c) , a security described in Section 2256 . 009 (b) is not another investing entity, notwithstanding any other provision of this chapter or other law to the contrary. (c) Mortgage pass-through certificates and individual mortgage loans that may constitute an investment described in Section 2256. 009 programs operated by: (1) the Texas Department of Housing and Community Affa s or a nonprofit corporation created to act on its behalf; (2) an entity created under Chap-ter 3' ____ -••-Code; or (3) - ...- - Code. Added by Acts 1995, 79th Leg. , ch. 402, Sec. 1, cff. Sept. 1, 1995 . Scc. 2256 . 025 . SELECTION OF AUTHORIZED BROKERS. The governing investment committee of the entity shall, at least annually, review, revise, and adopt a list of qualified brokers that arc authorized to engage in investment transactions with the entity. Sec. 2256. 026. STATUTORY COMPLIANCE. All investments made by entities must comply with this subchapter and all federal, state, and local statutes, rules, or regulations . Added by Acts 1997, 75th Leg. , ch. 1421, Scc. 13, cff. Sept. 1, 1997 . SUBCHAPTER B. MISCELLANEOUS PROVISIONS Sec. 2256 . 051 . ELECTRONIC FUNDS TRANSFER. Any local governmen- may use electronic means to transfer or invest all funds collected or Amended by Acts 1995, 74th Leg. , ch. 402, Sec. 1, eff. Sept. 1, 1995 . O2 Scc. 2256.052 . PRIVATE AUDITOR. Notwithstanding any other-maw, legislative audit committee either on the committee 's initiative or on request of the governing body of the agency. Amended by Acts 1995, 71th Leg. , ch. 402, Sec. 1, eff. Sept. 1, 1995. Sec. 2256. 053 . PAYMENT FOR SECURITIES PURCHASED BY STATE. The comptroller or the disbursing officer of an agency that has the power to invest assets directly may pay for authorized securities purchased from or through a member in good standing of the National Association of Securities Dealers or from or through a national or state bank on receiving an invoice from the seller of the securities showing that the securities have been purchased by the board or agency and that the amount to be paid for the securities is just, due, and A purchase of securities may not be made at a price that exceeds the existing market value of the securities. Amended by Acts 1995, 71th Leg. , ch. 402, Scc. 1, eff. Sept . 1, 1995; Acts 1997, 75th Leg. , ch. 1123, Sec. 8 . 67, eff. Sept. 1, 1997 . Sec. 2256. 054 . DELIVERY OF SECURITIES PURCHASED BY STATE. A security purchased under this chapter may be delivered to the comptroller, a bank, or the board or agency investing its funds . The delivery shall be made under normal and recognized practices in- he cccuritiec and banking industries, including the book entry procedure of the Federal Reserve Bank. Amended by Acts 1995, 74th Leg. , ch. 402, Scc. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg. , ch. 1423, Sec. 8 . 68, eff. Sept. 1, 1997 . Sec. 2256. 055 . DEPOSIT OF SECURITIES PURCHASED BY STATE. A4 under this chapter may be deposited in trust with a bank or federal reserve bank or branch designated by the comptroller, whether in or outside the state. The deposit shall be held in the entity' s name as aa evidenced by a trust receipt of the bank with which the sccuriticc arc deposited. Amended by Acts 1995, 74th Leg. , ch. 102, Sec. 1, cff. Sept. 1, 1995; Acts 1997, 75th Leg. , ch. 1423, Sec. 8 . 69, eff. Sept. 1, 1997 . 59. APPENDIX-Et ARTICLE V. CODE OF ETHICS114 . _ !♦ . . .. ! !• ! - See.-3.10. Treat 029428, § 1,3 27 2012) • See.-3.11. Stan s. Special privileges. be construed con3istently with Texa3 Election Code Section 255.003. • . 56 Crifits , eapnela4in • . _ .. •. • ---- • • -- •• : , - fficial or cmploycc; Conflicts of interest: • • • • • .. .. - . . - .. . _ - !•- - .. -- . !•- . •- - - , .. --. the conflict or potential conflict of intcrc3t. : :. ... - •• - •- --• . - .. - - - • . - -•-- . performance of your dutic3,or rcflcct discredit upon the city. duties. Actions adverse to the city: except 03 required by law. programs. the City of Corpus Chri3ti a3 provided by the City Charter. 58 (1)13 related to you within a degree dc3cribed by Section 573.002,Tcxa3 Government Codc; (2)13 your employer; (3)I3 a director or officer of a busine33 entity(a3 defined in Section 171.001,Tcxa3 Local employer. • interest). criminal activity or enterprise. •. . . . (Ord.No.20781, § 1,9 19 1989;Ord.No. 20913,§ 1,5 1 1990;Ord.No.23772, § 2,9 21 1999;Ord.No.24613, 1, 10 9 2001;Ord.No.025769,§ 1,5 25 2001;Ord.No.027642, § 1, 4 8 2008;Ord.No.028170,§ 1,5 • Seer-3-1E Defitition 59 thereof. 029428, § 1,3 27 2012) • See.2 313. Ef eet-efviten . . .•. 69 reser . . • . . . .•. Cross reference Rulc3 of conduct, §2 311. • . . . . , • ••• . mss- (Ord.No.20781, § 1,9 19 1989) • (A)a ncwspaper; (E)a wirc scraicc;or - - - - '• - to,if the person doc3 not cngagc in ., . . . • - - --- - - -- . .-- .. . - •-- . - . • .' - - .. . - .. - - - • -- - . -. . ... contingent fcc. enmminnemiem eefftflitiftiettfient = cour3c of a public proceeding or any other (b)A separate regi3tration form mu3t be filed for each client. applieitblet (A)the registrant; (B)the client; and - - - - - -- - - - : -- - - - • - change3 or i3 incorrect. - - (Ord.No.23772, § 3,9 21 1999) • Sees.2 317 2 319. Reserved. 63 APPENDIX C Resolution A PPFeved 64 Strategics wcrc first adopted pursuant to Resolution No. 022300 on October 24, 1005: , -- - . ---- _ - -- _. •••-:to annually review, amend as nccescary. and reaffirm its investment policy and invest meat strategics: viewed for fiscal year 2016 2017 on November 18, 2016, and reaffirmed pursuant to fiscal year 2017 2018 by the Investment Committee on November 28, 2017, rccom - reviewed, amended (if necesfary), and reaffirmed by the City Council: Section 1. The City Council has reviewed the City of Corpus Christi's Investment Policy and Investment Strategies for fiscal year 2017 2018. A copy of the Investment Policy, which contains the separate Investment Strategies, is attached to this resolution as Exhibit A and incorporated by reference into this resolution as if set out here in its entirety. Investment Strategies for fiscal year 2017-2018 and continues the policy and strategies in full force and effect. ATTEST:Rt:, Lk..: ( F" Re ecca Huerta Joe,M Comb City Secretary Mayor 031314 INDEXED Corpus�Christi, TexobeQ__Q,ntkir 1911 !1l day of , 20 I 1 Joe Comb I Rudy Garza Paulette Cuajardo I �: Michael Hunter 14 Debbie Lindsey Opel 1� Ben Melina A L: Lucy Rubio Greg Smith r • Gefe� 17 A f 031314 APPEND-M-0 APPENDIX-I) (a)Definitions. For the purpo3c3 of thi3 3cction the term"officer"3hall include any elected or appointed employee i3 engaged in out3ide employment or i3 rendering contractual 3crvicc3 to 3omconc other than the employee - . after conclusion of the civil 3uit. - - (g)Suits in behalf of the city. Nothing in thi3 Section 3hall require the city to indemnify any officer or (Ord.No. 14320,§ 1,5 17 1978;Ord.No. 17867,§§ 1 3, 10 5 1983;Ord.No. 19863, § 1,7 21 1987;Ord. No. 19864, § 1,7 21 1987) 68