Resolution No. 10-03 vRESOLUTION NO. 10-03
A RESOLUTION OF THE CITY OF ATLANTIC BEACH,
FLORIDA, AMENDING THE INVESTMENT POLICY FOR CITY
FUNDS, AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, Florida Statute 218.415 requires the City of Atlantic Beach to adopt a written
investment plan relating to the 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 amending the current investment policy upon
recommendations of the Investment Policy Ad Hoc Committee appointed by the Mayor for the
purpose of making improvements to the policy, and
WHEREAS, it is the desire of the City Commission to adopt the revised 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,
Florida as follows:
Section 1. The City of Atlantic Beach hereby revised Investment Policy attached hereto, is
hereby adopted pursuant to sec 218.415, Florida Statutes, and Section 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 2lof~ day of April, 2010.
ATTEST:
Donna L. Bartle, CMC
City Clerk
// ,/ .~
Louis "Mike" Borno, Jr.
Mayor, Presiding Officer
Approved ~s to form and Correctness:
Esquire
City of Atlantic Beach, Florida
Investment Policy
I.Purpose:
The purpose of this policy is to set forth the investment objectives and parameters for the
management of public funds of the City of Atlantic Beach, Florida (hereinafter “City” ).
These policies are designed to ensure the prudent management of public funds, the
availability of operating and capital funds when needed and an investment return
competitive with comparable funds and financial market indices.
II. Scope
In accordance with section 218.415, Florida Statutes ,this investment policy applies to all
financial assets, , and to the investment of principal, interest, reserve, construction,
capitalized interest, redemption or escrow accounts created by ordinance or resolution
pursuant to the issuance of bonds where the investments are held by an authorized
depository.
This investment policy does not apply to pension fund assets held by the City of Atlantic
Beach (City) or for the benefit of the City by a third party custodian.
III. Investment Objectives
The investment objectives for the City’s cash reserves are (in this order):
1)to ensure the safety and preservation of investment principal
2)provide for sufficient liquidity
3)Maximize the return on investment (yield) while controlling risk through
diversification.
The City’s investment portfolio shall be managed in a manner to attain a market rate of
return throughout budgetary and economic cycles while preserving and protecting capital in
the overall portfolio.
To attain these objectives, and to further reduce risk, diversification should be utilized such
that potential losses on individual securities do not exceed the income generated from the
remainder of the portfolio.
IV. 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.
V. 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.
VI. Prudence and Ethical Standards
The City shall adopt the Prudent Person Rule, which states that: “Investments shall be made
with judgment and care, under circumstances then prevailing, which persons of prudence,
discretion, and intelligence exercise in the management of their own affairs, not for
speculation, but for investment, considering the probable safety of their capital as well as
the probable income to be derived from the investment.”
VII. Authorized Instruments
The Finance Director shall purchase or sell investment securities at prevailing market rates.
All investments shall be limited to the following:
TYPE A-1: - U.S. Treasury Securities ( 6 months or less) and,
TYPE A-2: - U.S. Securities (over 6 months) -
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:
1.Treasury Securities - State Government Series (SLGS)
2.Treasury Bills
3.Treasury Notes
4.Treasury Bonds
5.Treasury Strips
TYPE B: - Demand Deposits
Interest bearing demand deposit accounts whereby the City
has access to the funds by writing drafts against the money on deposit. Any such deposits
are to be secured by the Florida Security for 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.
TYPE C: - U.S. Government Agency Securities -
Bonds, debentures, notes or other
evidence of indebtedness issued or guaranteed by a United States Government agency,
provided such obligations are backed by the full faith and credit of the United States
Government.
1. United States Export-Import Bank (direct obligations or fully guaranteed certificates
of beneficial ownership)
2. Farm Services Agency (FSA)
3. General Services Administration Participation Certificates (GSA)
4. Government National Mortgage Association (GNMA)
5. Small Business Administration (SBA)
6. Maritime Administration
Type D: - Certificates of Deposit
Non negotiable interest bearing time certificates of
deposit or savings accounts in banks or savings associations organized under the laws of
Florida and or/ national banks or saving 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.
Type E: - US Government Sponsored Enterprises
- Bonds, debentures, notes or other
evidence of indebtedness issued or guaranteed by a United States Government agency
(Federal Instrumentalities) which are non-full 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)
Type F: -. Government Fixed Income Mutual Funds
as defined by the SEC; which
primarily invest in instruments as authorized for types A, B, C, and E.
Type G: - Local Government Investment Pools
– A state or local government authorized
pooled investment fund that operates like a mutual fund for the exclusive benefit of the
governments within the state. Local government investment pools may be state
sponsored pools or set up through intergovernmental agreements known as “joint
powers” agreements.
VIII. Investment Maturity
To the extent possible, an attempt wi1l be made to match investment maturities with known
cash needs and anticipated cash flow requirements of the City. Refer to the Risk and
Diversification Table for maturities.
IX. Risk and Diversification
Assets held should be diversified to control the risk of loss resulting from over investing in
specific instruments or individual financial institutions. Diversification strategies within
the established guidelines shall be reviewed and revised periodically, as necessary, by the
appropriate management staff. The following table represents those guidelines:
Risk and Diversification Table
Maximum Maximum
Percent of Maximum Individual
Type Description Portfolio Maturity Issuer
U.S. Treasury Securities
Short Term 6 months or 100% 6 months None
A-1 less
U.S. Treasury Securities
Long term over 6 75% 10 Years None
A-2 months
100% N/A None
B Demand Deposits
U.S. Government
50% 10 Years $1,000,000
C Agency Securities
50% 10 Years $2,000,000
D Certificates of Deposit
U.S. Government
30% 10 Years $1,000,000
E Sponsored Enterprises
Government Fixed
30% N/A $1,000,000
F Income Mutual Funds
Local Government
20% N/A $1,000,000
G Investment Pools
X. Authorized Investment Institutions and Dealers
The Finance Director shall only purchase securities from financial institutions which are
qualified as public depositories of the State of Florida as identified by the Treasurer of the
State of Florida or dealers designated as “Primary Securities Dealers” by the Federal
Reserve Bank of New York, for purchases and sales of securities. The firm must have a
minimum of $500 million in annual underwriting of U.S. Government Agency Securities or
Instrumentalities for the previous calendar year. The firm must have capital of no less than
$10,000,000.
Bond funds subject to arbitrage rebate shall be invested in accordance with specific bond
covenants.
XI. 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 agreements, wire transfers, safekeeping and transaction costs,
procedures in case of wire failure or other unforeseen mishaps, including liability of each
party.
XII. 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.
XIII. Internal Controls
The Finance Director shall establish and monitor a set of internal controls designed to
prevent loss of funds by fraud, employee error, misrepresentation by third parties, or
imprudent actions by employees of the City 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 or e-mail communications;
2.Adequate segregation of duties;
3.Custodial safekeeping;
4.Supervisory control of employee actions and operations review;
5.Performance evaluations and interim reporting;
6. Requirement of dual signatures on all investment transactions from two of the
following authorized personnel:
Finance Director
City Manager
City Clerk
7. Staff in the Finance Department reconciles the City’s general depository account
on a monthly basis.
8. Independent auditors as a normal part of the annual financial audit to the City
shall conduct a review of the system of internal controls to ensure compliance
with policies and procedures.
XIV. Continuing Education
The Finance Director and appropriate staff shall annually complete eight (8) hours of
continuing education in subjects or courses of study related to investment practices and
products.
XV. Ethics and Conflicts of Interest
The City’s staff involved in the investment process shall refrain from personal business
activity that could conflict with proper execution of the investment program, or which could
impair their ability to make impartial investment decisions. Also, employees involved in
the investment process shall disclose to the City any material financial interests in financial
institutions that conduct business with the City, and they shall further disclose any material
personal financial/investment positions that could be related to the performance of the
City’s investment program.
XVI. Derivatives and Reverse Repurchase Agreements
Investment in any derivative products or the use of reverse repurchase agreements is not
permitted. A “derivative” is defined as a financial instrument the value of which depends
on, or is derived from, the value of one or more underlying assets or indices or asset values.