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95-25 v RESOLUTION NO. 95- 25 A RESOLUTION OF THE CITY OF ATLANTIC BEACH, FLORIDA, ADOPTING AN INVESTMENT POLICY FOR CITY FUNDS, AND PROVIDING AN EFFECTIVE DATE. WHEREAS, newly created §218 . 415, Florida Statutes, requires the City to adopt a written investment plan relating to investment of municipal funds, and WHEREAS, Sec. 2-73 of the Atlantic Beach Code, as amended by Ordinance No. 35-95-9 , effective September 25, 1995, authorizes the City Commission to adopt its written investment plan by Resolution, and WHEREAS, the Director of Finance has proposed an Investment Policy which establishes procedures and criteria for investment of municipal funds, and WHEREAS, the City's financial advisor has reviewed and recommended approval of the proposed Investment Policy, and WHEREAS, it is desire of the City Commission to adopt the proposed Investment Policy, provided it does not abrogate or conflict with any provision or covenant contained in any bond resolution or ordinance of the City. NOW THEREFORE, be it resolved by the City Commission of the City of Atlantic Beach as follows: SECTION 1. The City of Atlantic Beach Investment Policy, attached hereto, is hereby adopted pursuant to §218 . 415, Florida Statutes, and Sec. 2-73 , Atlantic Beach Code. SECTION 2 . Nothing in this Resolution or the attached Investment Policy shall be interpreted or construed to abrogate or conflict with any specific provision or covenant contained in any bond resolution or ordinance of the City relating to the investment of bond proceeds available in specific funds or accounts. SECTION 3. This Resolution shall take effect immediately upon its final passage and adoption. PASSED by the City Commission this ay of September, 1995. ATTEST: 1 1010111" - � MAU EEN KING L"MAN T. FLETCHER City Clerk Mayor, Presiding Officer App over] as to form and correctness: C. SEN, ESQUIRE City At rney CITY OF ATLANTIC BEACH, FLORIDA INVESTMENT POLICY September 1995 10,:c 1... A NI* --- liet- i _ -() 4sc-NN.i.-,:.,.., $ toi , „,,, .irrt • iitb., . • , • • 0.... . -- ---- .,,, - . „„Ziet C:t 0 R V City of Atlantic Beach, Florida Investment Policy I. Scope This Investment Policy applies to all financial assets, other than pension fund assets and deferred compensation or other employee benefit plans, if any, that are held by the City of Atlantic Beach or for the benefit of the City by a third party custodian and/or money manager. This policy does not apply to the uninvested funds of the City, for example, demand deposit accounts and cash on hand, or to the assets of municipal trusts for which separate Investment Policies are adopted, or certain other non-City funds in the custody of the Finance Director. The intent of this Investment Policy is to be specific enough to be meaningful, yet flexible enough to be practical, given changing economic, business and financial market conditions . II. Investment Objectives The following investment objectives will be applied in the management of the City ' s funds : A. The primary objective of the City of Atlantic Beach investment activities is the preservation of capital and the protection of investment principal; B. The investment strategy will provide sufficient liquidity to meet the City ' s operating, payroll and capital requirements; C . In investing public funds, the Finance Director will strive to maximize the return on the portfolio, but will minimize the investment risk; and, D. The Finance Director will set procedures to control risks and diversify investments regarding specific security types, maturities and financial institutions . Page 2 City of Atlantic Beach, Florida Investment Policy III. Delegation of Authority The Finance Director is responsible for investment decisions and activities, under the direction of the City Manager. The Finance Director shall develop and maintain written administrative procedures for the operation of the investment program, consistent with these policies . IV. Investment Performance and Reporting A portfolio report shall be provided monthly to the City Manager and the City Commission. This report shall include a breakdown of the portfolio, as well as the performance during the period. V. Prudence and Ethical Standards The "prudent person" standard shall be used by the City staff in the management of the overall investment portfolio. Investments shall be made with judgment and care under the circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital, as well as the probable income to be derived from the investment . VI . Authorized Instruments The Finance Director shall purchase or sell investment securities at prevailing market rates . Authorized instruments are as follows : A. The Florida Local Government Surplus Funds Trust Fund (SBA) ; B. Negotiable direct obligations, or obligations the principal and interest of which are unconditionally guaranteed by the United States Government . Such securities will include, but not be limited to, the following: Page 3 City of Atlantic Beach, Florida Investment Policy VI . Authorized Instruments (cont . ) 1 . Cash Management Bills 2 . Treasury Securities - State and Local Government Series (SLGS) 3 . Treasury Bills 4 . Treasury Notes 5 . Treasury Bonds 6 . Treasury Strips C . Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by United States agencies, provided such obligations are backed by the full faith and credit of the United States Government . Such securities will include, but not be limited to, the following: 1 . United States Export-Import Bank (Direct obligations or fully guaranteed certificates of beneficial ownership) 2 . Farmers Home Administration (Certificates of beneficial ownership) 3 . Federal Financing Bank (Discount notes, notes and bonds) 4 . Federal Housing Administration Debentures 5 . General Services Administration Participation Certificates 6 . Government National Mortgage Association (GNMA) (GNMA-guaranteed mortgage-backed bonds) (GNMA-guaranteed pass-through obligations) 7 . United States Maritime Administration Guaranteed Title XI Financing 8 . New Communities Debentures (United States Government guaranteed debentures) 9 . United States Public Housing Notes and Bonds (United States Government guaranteed public housing notes and bonds) 10 . United States Department of Housing and Urban Development (Project notes and local authority bonds) Page 4 City of Atlantic Beach, Florida Investment Policy VI. Authorized Investments (cont. ) D. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by the United States Government agencies (Federal Instrumen- talities) which are nonfull faith and credit agencies limited to the following: 1 . Federal Farm Credit Bank (FFCB) 2 . Federal Home Loan Bank or its district banks (FHLB) 3 . Federal National Mortgage Association (FNMA) 4 . Federal Home Loan Mortgage Association (FHLMA) ( [Freddie Macs] including Federal Home Loan Mortgage Corporation participation certificates) 5 . Student Loan Marketing Association (Sallie Mae) E. Nonnegotiable interest bearing time certificates of deposit or savings accounts in banks or savings associations organized under the laws of this state and/or in national banks or savings associations organized under the laws of the United States and that any such deposits are secured by the Florida Security of Public Deposits Act, Chapter 280, Florida Statutes, and provided that the bank or savings association is not listed with any recognized credit watch information service. F. Repurchase agreements comprised of only those investments as authorized in Sections B, C and D. G. Bankers ' Acceptances which are inventory-based and issued by a domestic bank which has an unsecured, uninsured and unguaranteed obligation rating of at least "Prime-1" and "A" by Moody ' s Investor Service and "A-1" and "A" by Standard and Poor ' s Corporation and ranked in the top fifty (50) United States banks in terms of total assets by the American Banker ' s yearly report . H. Commercial Paper rated, at the time of purchase, "Prime-1" by Moody' s and "A-1" by Standard & Poor ' s (prime commercial paper) . Page 5 City of Atlantic Beach, Florida Investment Policy VI. Authorized Investments (cont. ) I . State and/or local government taxable and tax- exempt debt, General Obligation and/or Revenue Bonds rated at least "Aa" by Moody ' s and "AA" by Standard & Poor ' s for long-term debt, or rated at least "MIG-2 " by Moody ' s and "SP-2 " by Standard & Poor ' s for short-term debt . J. Fixed income mutual funds comprised of only those investment instruments as authorized in Sections B, C, D and I . VII. Investment Maturity To the extent possible, an attempt will be made to match investment maturities with known cash needs and anticipated cash flow requirements . Investments of current operating funds shall have maturities of no longer than eighteen (18) months . Investments of bond reserves, construction funds, and other non-operating funds shall have a term appropriate to the need for funds and in accordance with debt covenants, but in no event shall exceed ten (10) years . VIII . Risk and Diversification Assets held shall be diversified to control the risk of loss resulting from overconcentration of assets in a specific maturity, issuer, instrument, dealer, or bank through which these instruments are bought and sold. Diversification strategies within the established guidelines shall be reviewed and revised periodically, as necessary, by the appropriate management staff . IX. Authorized Investment Institutions and Dealers The Finance Director shall only purchase securities from financial institutions which are qualified as public depositories by the Treasurer of the State of Florida or from securities dealers that are members of the New York Stock Exchange having a physical presence in Florida and having a minimum regulatory capital in excess of fifty million dollars ($50, 000, 000) or primary securities dealers as designated by the Federal Reserve Bank of New York. Page 6 City of Atlantic Beach, Florida Investment Policy IX. Authorized Investment Institutions and Dealers (cont. ) Bond funds subject to arbitrage rebate shall be invested in accordance with specific bond covenants . Repurchase agreements shall only be entered into with primary securities dealers and financial institutions which are state qualified public depositories . X. Third Party Custodial Agreements The Finance Director may execute a third party Custodial Safekeeping Agreement with a commercial bank having trust powers or a trust company which is chartered by the United States Government or the State of Florida. All securities purchased and/or collateral obtained by the City shall be properly designated as an asset of the City and held in safekeeping by the trust department or trust company, and no withdrawal of such securities, in whole or in part, shall be made from safekeeping, except by an authorized City staff member. The third party Custodial Safekeeping Agreement shall include letters of authority from the City with details as to responsibilities of parties, notification of security purchases, sales, delivery, repurchase agree- ments, wire transfers, safekeeping and transaction costs, procedures in case of wire failure or other unforeseen mishaps, including liability of each party. XI. Bid Requirements When feasible and appropriate, investment purchases will be competitively bid. A minimum of three (3 ) banks and/or dealers must be contacted and asked to provide bids on securities in question. Bids will be held in confidence until the best bid is determined and awarded. Due to the cost of safekeeping, one business day repurchase agreements and overnight sweep repurchase agreements will not be bid. Page 7 City of Atlantic Beach, Florida Investment Policy XII. Internal Controls The Finance Director shall establish and monitor a set of internal controls designed to protect the City' s funds and ensure proper accounting and reporting of the securities transactions . Such internal controls shall include, but not be limited to, the following: A. All securities purchased or sold will be transferred only under the "deliver versus payment " (D.V. P. ) method to ensure that funds or securities are not released until all criteria relating to the specific transaction are met ; B. The Finance Director is authorized to accept, on behalf of and in the name of the City of Atlantic Beach, bank trust receipts or confirmations as evidence of actual delivery of the obligations or securities in return for investment of funds; C . Trust receipts or confirmations shall fully describe the various obligations or securities held, and the receipt or confirmation shall state that the investment is held in the name of the City of Atlantic Beach; D. The actual obligations or securities, whether in book entry or physical form, on which trust receipts or confirmations are issued, may be held by a third party custodial bank and/or institution or a designated correspondent bank which has a correspondent relationship to the City ' s third party custodian; and, E . Other internal controls such as : 1 . Written documentation of telephone transactions; 2 . Adequate segregation of duties ; 3 . Custodial safekeeping; 4 . Supervisory control of employee actions and operations review; 5 . Performance evaluations and interim reporting; Page 8 City of Atlantic Beach, Florida Investment Policy XII. Internal Controls (cont . ) 6 . Requirement of dual signatures on all investment transactions (except overnight repurchase agreements and sweep accounts) from two of the following authorized personnel : Finance Director City Manager City Clerk XIII. Money Managers A. The City may utilize an outside money manager to invest up to 25% of the portfolio. B. The money manager must be a securities dealer that is a member of the New York Stock Exchange having a physical presence in Florida and having a minimum regulatory capital in excess of fifty million dollars ($50, 000, 000) or a primary securities dealer as designated by the Federal Reserve Bank of New York or a bank having trust powers or a trust company which is chartered by the United States Government or the State of Florida . C . The City shall select the money manager based upon qualifications and fees, using a Request for Proposal (RFP) process . At least three proposals must be solicited. D. Any money manager selected will be required to enter into a money management agreement with the City, as approved by the City Commission.