Resolution No. 19-16RESOLUTION NO. 19-16
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 for the put -pose
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 //f/, day of March, 2019.
E en Glasser, Mayor
Attest:
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Donna L. Bartle, City Clerk
Approved as to form and correctness:
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•4. Durdwwii� Attorney
GI T Y OF ATLANTIC BEACH, FLORIDA
INVESTMENT POLICY STATEMENT
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March 2019
City of Atlantic Beach,
Florida Investment
Policy Statement
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.
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, and 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 (inthis order):
1. to ensure the safety and preservation of investment principal
2. provide for sufficient liquidity
Maximize the return on investment (yield) while controlling risk through
diversification.
The City's investment portfolio shall be managed in a manner to attain appropriate
diversification of the investment portfolio. Investments held should be diversified to the
extent practicable to control the risk of loss resulting from over concentration of assets in a
specific maturity, issuer, instrument, dealer, or bank through which financial instruments
are bought and sold. Diversification strategies within the established guidelines shall be
reviewed and revised periodically, as deemed necessary by the appropriate management
staff.
IV. DELEGATION OF AUTHORITY
The Director of Finance is responsible for investment decisions and activities, under the
direction of the City Manager. The Director of Finance 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 at minimum quarterly 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 INVESTMENTS
The Director of Finance or approved outside investment manager shall purchase or sell
investment securities at prevailing market rates. All investments shall be limited to the
following:
A. Sector
Minimum
Maximum
Sector Diversification
Weighting
Weighting
Cash & Short -Term Money Market Securities
0%
100%
U.S. Treasury/U.S. Agency/ Other U.S. Gov't
0%
100%
Corporates (including Foreign Gov't/Supra)
0%
65%
Mortgage -Backed Securities (including Residential
0%
65%
and Commercial)
Asset -Backed Securities
0%
30%
Municipals (Taxable and Tax -Exempt)
0%
25%
B. Quality
All securities will be rated Baa3/BBB- or better at time of purchase by a Nationally
Recognized Statistical Rating Organization (NRSRO. The minimum weighted average
quality of the underlying assets will be maintained at Aa3/AA-.
For purposes of the portfolio minimum average quality, securities issued or guaranteed
by the U.S. Government, U.S. Government Agencies and U.S. Government Sponsored
Enterprises shall be deemed to carry a AAA or equivalent rating.
In the event that a security held in the portfolio is downgraded below Baa3/BBB- the
manager shall notify the client of the downgrade in a timely manner. The downgraded
position may be held at the manager's discretion.
* In the case of a split rating on securities, the higher rating shall apply.
C. Restrictions and Limitations
No more than 5% of the portfolio will be held in securities of any one issuer, excluding
securities issued or guaranteed by the U.S. Government, U.S Government Agencies and
U.S. Government Sponsored Enterprises. The issuer for any non -Agency structured
security shall be the specific trust or special purpose corporation that holds the
associated collateral backing such security.
All securities shall be denominated in US dollars.
D. Permissible Securities
The following types of securities are permissible for inclusion in the portfolio:
1. Short-term money market securities including, but not limited to, CDs**, time
deposits*, bankers acceptances, commercial paper and repurchase agreements
2. U.S. Treasury securities, U.S. Agency securities, and issues or loans guaranteed
by the U.S. Government or its Agencies
3. Direct obligations of a Government Sponsored Enterprise (GSE) and issues or
loans guaranteed by a GSE
4. Corporate securities, including domestic and foreign issuers
5. Foreign government securities and supranationals denominated in U.S. Dollars
6. Residential mortgage-backed securities
7. Commercial mortgage-backed securities
8. Asset-backed securities
9. Municipal securities
10. Securities issued under 144A and private placements
11. Local Government Investment Pools***
*Demand Deposits
Invest in 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. A maximum of 100% of available funds may be invested in
demand deposits.
**Certificates of Deposit
Invest in 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. A maximum of 50% of available funds may
be invested in certificates of deposit with no more than $2,000,000 invested in any
individual issuer.
***Local Government hvestment Pools
Invest in 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. A maximum of
20% of available funds may be invested in local government investment pools, with no
more than 10% of available funds invested in any individual issuer.
E. Performance Benchmark & Performance Measurement
The goal of the portfolio is to outperform its benchmark, the Barclays 1-3 Government
Index.
VIII. AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS
The Director of Finance 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.
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IX. THIRD PARTY CUSTODIAL AGREEMENTS
The Director of Finance may execute a third party Custodial Safekeeping Agreement with a
financial institution 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 financial institution or its agent,
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.
X. BID REQUIREMENTS
When feasible and appropriate, investment purchases will be competitively bid pursuant to
the City's procurement policy.
XI. INTERNAL CONTROLS
The Director of Finance 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 Director of finance 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:
Director of finance City Manager City Clerk
7. Staff in the Finance Department reconciles the City's general depository account on
a monthly basis. 5
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.
XII. CONTINUING EDUCATION
The Director of finance and appropriate staff shall annually complete eight (8) hours of
continuing education in subjects or courses of study related to investment practices and
products.
XIII. 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.
XIV. DERIVATIVES AND REVERSE REAURCHASE 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.
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