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HomeMy WebLinkAbout1990 Ordinance No. 0420 C!ll)INl\NCE NO. i/;..._ SEI\IES OF 199_0_ BY AlJl'll0RITY 9 D COONCIL BILL NO. 43 INl'ROOOCEll BY COONCIL MEMBER KOLTAY AN CIIDINl\NCE A.'!F.lIDING TITLE 4, CHAPl'ER 1, s=rru 2 :A . OF THE ENGLEl-ox> 11.JNICIPAL CXDE 1985, B'i ALLCmNG INIIES'IMENl'S IN THE COWRIOO LCCAL 001/ERNMENI' LICOID ASSET TRUsr. WIIERF.AS, the City of Englewood desires to invest its funds in 'Ihe Colorado Local Goverrarent Li quid Asset Trust FUnd; and W!IERE.-.S, such investrrents are essentially II nutual fund for crnmunities throoghout t.oe State of Colora<'o; and !ICM, THEREFORE, BE IT ORDAI!lED BY THE CITY CXJUNCIL CF 'IllE CITY CF ENGLENXlD, COLORADO, THAT: Section 1. Title 4, Chapter 1, Section 2 , SUbsection A. is !lll!lnded to add""siil:iparagraph 8, to read as follc:,,.,s. 4-1-2: INIIES'INENI' OF MUNICIPAL FUNDS: A. Of r.oney invested, not less that Fifty percent (SO'I,) shall be invested in: 8. THE COLOR.= LCCAL GOVERNMENl' LIO,ID ASSET TRUsr ruND. Introduced, read in full, and passed on first reading on the 17th day of September , 1990. Published as a Bill for an Ordinance on the 20th day of Septeni:>~, 1990. Read by title and passed on final reading oo the 1st day ol' .:l::tober, 1990. Published by title as Ordinance No . ~ Series of 1990, on the 4th day of October, 1990. -1 - I, Patricia H. Crc,,,, City Clerk of the City of Englewood, Colorado, r, hereby certify that the above and for@gOing is a true cq,y of th~ j>rdinance passed on final reading and published by titl6 as Ordinance No. ~ Series of 1990. IA ~4iu~~x1~ Patr cia H. ere,,, 0 -2 - Sept-.r 17, 1990 l ifI~IATED BY ISSIIE/ACUON PROPOSEt. COUltCIL COIINUIIICA~ION AO!IIDA 11'1111 11 (•) 8UBJBCT City InvHtment Policy Department of Financial Service ■ Margaret L. Freeman, Director of Financial Service ■ 1, Approve an ordinance M1endin9 Englewood Municipal Code '85 4--1-2. 2, ~prrove a motion adopting the City Inv-"?9tment Policy. PREVIOUS COUNCIL ACTION Nona. Currant inve ■tment policy adopted 3-1-79. S~APP' ANALYSIS In order to maintain and improve upon the affect'.ivena ■■ of the City of Englewood ca ■h management program, periodic review of policie ■ and practice■ ■hould occur. For the la ■t aaveral montha I have bean reviewing the City'■ inva ■tmant policy and procedure, and preparing an u~d.,,ted policy for conaideration by the City Manager and City Council. The ■ubmitted policy is not an "overh11.ul" of exieting legislation and programs but i ■ proposed aa a refinement and enhancement of the current polic y . The propoaed pc'll icy encompaaaes not only the City• s overall investment philosophy but also includes apecific procedure& and direction relating to internal control, management pract ice ■ and ■ound operating procedures . The policy provi de ■ for utili:tation of an inve ■tmenc advi ■or and doe ■ include the guidel i ne• requ l r~d to beat benefit from the ■ervicea of an inveotmant adviaor. Thi ■ provi ■ion allowa the City to safely ma ,t.miz• ita inveatment earning ■ through uae of oupplcmonta l technical oxportioo, After review by the City Attorney, on l y one change i ■ r equired in the current Inglewood Municipal Code and it i ■ the lnclu ■ion of Colorado Local-Government Liquid A11et Tru ■t (COLOTRUST) •• an authorized inve ■tment. R ■oolution 25, Serie ■ 1989, pa ■■ed by City Council on Hl y 1, 1989, autho1·ized the Ci ty to participate in COLOTRUST, Th ■ attached policy i ■ comprehen ■iv• and addr••••• all n ■c ■■■ary ar■a■ relatin; to the City•• inv-■tmant program, Th• policy would provide th• nac-■ury quidalinH required to achi■v■ a ■af ■, flexibl ■ and r ■■pon ■ibl ■ inv■■tment pro;ram. !.!!!!!£!!!! Ther■ would be no co ■t ■ or fundin; required for implmentation of th ■ inv ■■tment policy. Any fa-■ or coat■ related to th• in·. -■tment program are reflected in the net ••••t value of the City'■ portfolio. UCOIIIIDDATION 1. Approve the ordinance .... ndin; IMC'85 4-1-l relatin; to inv-■tment of municipal fund ■• 2. Approve a motion adoptin; City inv■atment policy. City of En~lewood, Colorado INVrnTMENT POLICY The Director of Financial Services, City of Englewood, Colorado is charged with the responsibility to prudently and properly manage any and all funds of the City. Because these funds may be called upon, it is essential that absolute maturity horizons are identifiable for the purpose of liquidity . Moreover , these funds must be fully collateralized and appropriately authorized. The following Investment Policy addresses the methods, procedures and practices which must be exercised to en sure effective and sound fiscal management . SCOPE iliTspolicy shall apply to the investment of all financial assets and all funds of the City of Englewood (hereinafter referred to as the "City") over which it exercises financial control, except the City of Englewood Fire, Police and Employees Pension funds. In order to effectively make use of the City's cash resources, all moneys shall be pooled into one investment account and accounted for separately. The investment income derived from this account shall be distributed to the various City funds in accordance with EMC,4-1-2-D. OBJECTIVES The City's principal investment objectives are: Preservation of capital and the protection of investment principal . Maintenance of sufficient liquidity to meet anticipated disburs eme nts and cash flows. Diversification to avoid incurring unreasonable risks regarding securities owned . Attainment of a market rate of return equal to or higher than the performance measure established by the Director of Financial Services. Conformance with all City, Federal, State and other legal requirements. DELEGATION OF AUTHORITY The ultimate res pons i bi l i ty and authority for investment transaction s involving the City resides with the Director of Financial Services (hereinafter referred to as the "Director") who has been designated by the City Manager as the investment off icer in accordance with Englewood Municipal Code. The Director may appoint other members of the City staff to assist he r (him) in the ca sh management and investment function. Persons who are authorized to transact business and wire funds on behalf of the City will, be designated by the Director by the wire transfer ag re ement executed with the City's approved depository for bank services. The Director shall be responsible for all investment decisions and activities, and shall establish written administrative procedure s for the operation of the City 's investme ,.t program consistent with this Investment Policy. The investment officer acting within the se procedures s~all not be held personally liable for specific investment transact i ans. The Director may in her (his) discretion appoint one or more Investment Advisors , registered with the Securities and Exchange Commission und er the Investment Advisors Act of 1940, to manage J portion of the City's assets . An appointed Investment. Advisor may be granted limited investment discretion within the guidelines of this Investment Policy with regard to the City 's assets placed under its management. No more than fifty percent (50%) of the -I - City 's total assets may be managed by an Investment Advisor. An Investment Advisor can only be appointed after consultation with and approval by the City Manager . PRUDENCE 'Tliestaiidard of prudence to be used for managing the City's assets is the •prudent investor" rule , which states, "i nvestments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and i nte 11 igence exercise in the management of their own affairs, not for speculation , but for investment cons idering t he pr obable safety of their capital as well as the probable i ncome to be derived ." ELIGIBLE INVESTMENTS All investments will be made in accordance with the Colorado Revis ,id Statu~b (CRS) as follows : CRS 11-10.5-101, et seq . Public Depo,i t Protection Act ; CRS 11-47 -101,et seq. Savings and Loan Association Fublic ~eposit Protection Act; CRS 24-75-601 , et seq. Funds-Legal Inve stments fir Governmental Units; CRS 24-75-603, et seq. Deposito r ies; and CRS 24 -75-7ll, et seq. Local Governments -Loca 1 Government Pooling . As a home rule City , Englewood may adopt a list of acceptable i ~ve s tment instruments differing from those outlined in CRS 24-75-601, Funos-Legal Investments for Governmental Units and as allowed by Englewood Municipal Code 4-1-2 . Funds of the City of Englewood co vered by this Investment Policy may be invested in the following types of securities and transactions : U.S. Treasury Obligations (T -Bills, T-Notes, T-Bonds). U.S. Trea sury Strips (book-entry U.S. Treasury securit i es who se coupon has been removed) . Federal Instrumentalities -the following only : Federal National Mortgage Association (FNMA), Federal Home Loan Bank ( FHLB), Federal Home L~a n Mortgage Corporation (FHLMC) and Federal Farm Credit Banks (FFCB). Repurchase Agreement s with a maturity of 90 days or less on the above securities collateralized at a minimum of 102 percent of the dollar value of the Repurchase Agreement. Reverse Repurchase Agreements with a maturity of 90 days or less executed against securities owr.dd by the City and collateralized by the same type of security reversed . Time Certificates of neposit or savings accounts in state or national banks headquartered in Colorado which are state appro ved depositories (a s evidenced by a certificate issued by the State Bank i ng Board) and ar e insured by the FDIC . Certificates of Deposit which exceed the FDI C in sured am,unt shall be collateral ized in accordanc e with the Colorado Public Deplsit Protection Act . This collateral will have a market va lue equal to or exceeding 102 percent of the difference between the in sur ed amount and the City's total deposits for all funds within the in stitution. Tim e Certificates of Deposit or savings accounts in st ate or federally chartered savings and loans with headquarters in Colorado which are insured by the FSLIC. Deposits which exce ed the FSLIC insured amount shall be collateralized in accordance with the Colorado Public Deposit Protection Act. This collateral will have a market value equal to or exceeding 102 percent of the difference between the insured amount and th e City's total deposit for all funds within the institution . Colorado Local Government liquid Asset Trust (COLOTRUST). Prime Bankers Acceptance with a maturity of 3 months or less issued on domestic banks or branches or foreign banks domiciled in the U.S. and -2 • operating unde r U.S. banking laws . Prime Co11111erc1al Paper with a maturity of 3 months or les s issued on U.S. corporations w,iich 1s A-1 or P-1 by a nationally recognized rating service or I+ by Duff and Phelps, Inc . OTHER INVESTMENTS It Is the Intent of the City that the foregoing 11st of authorized securities be strictly interpreted and that any deviation from this list must be pre-approved by the Di rector in writing after approval by the City Manager. INVESTMENT DIVERSIFICATION It is the Intent of the City to diversify the i r ~stment instructions within the portfolio to avoid incurring unreasonable risks inherent in over invest i ng i r. specific instruments, individual financial institutions or maturities . The asset allocation in the portfolio should, however , be flexible depending upon the outlook for the economy and the securities market. The City may invest with i n the following limits : 100% in U.S . Treasury O~l i gations but not '.~ss than 50% 50% in Certificates of Deposit 50% in Federal Instrumentalities or Agenc i es 30% in Repurchase Agreements collateral ized by Federal Instrumentalities, or 100% i n Repurchase Agreements collateralized by U.S. Trea s ury Obligations 20% in Bankers Acceptances 20% in Commercial Paper INVESTMENT MATURITY AND LI UIDITY nvestment s a e i mited in maturities not exceeding three years. In '\ addition, the weighted av erage maturity 1 i fe of the total portfolio sha 11 at no time exceed eighteen mo nths . The City shall at all time s ma i ntain 15% of its total investment port to l i o in instruments maturing in 12 0 days or less . OTHER INVESTMENT GUIDELINES All Investment transact ions must be executed with brokers/dealers and financial institutions that have been authorized by the City, and each transaction must be competit i vel y transacted with at least two authorized br~~~r/dealer or financial institutions . In addition, oefore any repurchase agreements shall be executed with an authoriz ed broke r/deale r or financial in stitution , a Ma~ter Repurchase Agreem ent mu s t be signed between the City and that broker/dealer or financial institution. The Di r ector shall maintain a file of •11 Master Repurchase Agreements. The purchase and sa 1 e of a 11 securities sha 11 be on a delivery versus payment basis . The City seek s an active , rather than passive, manage ment of its portfolio assets . As sets may be so i d at a lo s s only if the Director or the Investment Advisor feels tha t the sale of the security is in the be st long -term inter est of the City . SELECTION OF FINANCIAL INSTITUTIONS AND BROKER DEALERS e ty s a ma ntain a ist o aut orize ro er ealers and financial institutions which are approved for investments purposes, and it shall be the pol icy of the City to purchase securities only from those authorized institutions and firms . To be eligible for authorization, a broker/dealer must • 3 • .,. G •be recogniied as a prim ary Dealer by the Federal Reserve Bank of New York . Banks and Savings and Loan Associations must be members of the FDIC or FSLIC in order to be eligible for authorization . In addition, each broker/dealer or financial institution must complete a Broker/Dealer Questionnaire which includes the firm's most recent financial statements. The Director shall maintain a file of all Broker/Dealer Questionnaires . Broker/dealers and other financial institutions will be selected on the basis of their expertise in ca sh management and their ability to service the City's account. SELECTION OF BAN KS ANO SAVINGS ANO LOANS The City shall maintain a list of authorized banks and savings and loans wh i ch are approved to provide banking services or from whom the City may purchase Certificates of Deposit. To be eligibl e for authorization , a bank or savings and loan must meet the minimum credit criteria (described below) of a credit analysis provided by a commerc i ally available bank rating service . Banks or savings and 1 oans failing to meet the minimum criteria, or in the judgm ~r,t pf the Director no longer offering adequate safety to the City will be removed from the list . Although a bank or savings and loan is on the qualified list, it will still be r equired to pledge collateral on all deposits and investments, pur suant to State 1 aw . The City shall util1ze a commercially available bank rating se r . ··2 (Prudent Man Analysis, Inc .) to perform a cred ; c analysis on banks and savings and loans . The bank rating guidelines will be calculated using publicly available financial information obtained from the release of the preliminary reports of condition and reports on income from the Federal Reserve . Data obtained fro m the bank rating service will include factors covering the following : ove rall rating, liquidity policy , credit risk policy , intere st rate policy, profitability and cap ital policy . Ratings will be don e on a five po i nt scale with one being Exce llent . In order to meet the min i mum credit criteria , a bank or sav in gs and loan must meet each of the following credit rating requirements : The overall credit rating must be three or higher, (Per Prudent Man Analysis , Inc.) The credit risk and capital policy rating must be three or higher, (per Prudent Man Analys i s , Inc.) regardless of the overall credit rating, and The institution must qualify as a dcµository of public funds in Colorado as defined in CRS 22-40-105 . The Director shall mainta i n a file of all credit rating anal ysi s reports performed for the City . SAFEKEEPING Investment securities purchased by the City will be delivered by either book entry or phy s ical delivery, and held in third party safekeeping by a Federal Reser ve member financial institution designated at the City's depository . The trust department of the in s titution design ated as depository will be con s idered to be a third party for the purpose of safekeeping of securities. It is the intent of the City that all securities be perfe cted in the name of the City. REPORTING An investment report shall be prepared, at least on a monthly basis, list ing the inv estments held by the City, the current market valuation of the investments and performance results . The monthly investment rep ort shall be submitted in a timely manner to the City Manager and the City Council . A • 4 • · record shall be maintained by the Departinent of Financial Services of all bids and offerings for securities transactions in order to ensure that the City receives competitive prici :1 9. PERFORMANCE REVIEW The Director and the City Manager shall meet at least quarterly to review the portfolio's adherence to appropriate risk levels and to compare the portfolio's total return to the established investmen t object i'les and goals . The Director shall periodically establish a benchmark yield for the Ci ty's investments which shall be equal to the average yield on the U.S. Treuury security which most closely corresponds to the portfolio's actual weigtted average maturity . When comparing the performance of the City's portffdo, all fees and expenses involved with managing the portfolio should be included in the computation of the portfolio 's rate of return . ETHICS PND CONFLICTS OF INTEREST Officers and employees involved i n the investment process shall refrai .1 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. Employees and investment officials shall disclose to the City Manager any material financial interest in financial institutions that conduct business with the City, and they shall further disclose any large personal fi nanci a 1/i nvestment posit ions that could be related to the performance of the City's portfolio. Employees and officers shall subordinate their persona 1 investment tran sactions to those of the City particularly with regard to the timing of purchases and sales . POLICY REVISIONS This Investment Pol icy will be reviewed periodically by the Director and may be amended as conditions warrant by the City Manager and the City Council. Submitted September 6, 1990 Margaret L. Freeman, Director of Financial Services • 5 • Rl!TURN ON l'ORTl'OUO FOK Tllli MONTH INCOME EAKN EO HUl THE MUNTI I GAIN (LO:S) ON SAIJ:.S FOR TIIE MONTII ACCRETION (AMORTIZATION) 1:oR TIIE MONTII RE.TURN ON roR,-1 :ouo FOK TIIE MONTII LV.!.X...!m UIU.017.29 S0.00 $214.971.97 wrm;IITED AVEMAGE PORTf-OUO HOOK VALUE S32,0S7.9Sl.68 Pf.RCENT RETURN OH f'ORTf-01.10 1:0R TIIU MONTII 7 .90'-' BEGINNING l'ORTHll . .10 BALl'\NCC Sll.749,674.JI ENDING PORTFOUO DOOK nALANCH SJJ,0JJ,060.00 ENOING PORTFOLIO MARKET VALUE SJJ ,016.JJS.OO SUMMAR.Y OF INV.ESTMENT l'OKTFOLIO ~ CASH AND EQUIVALENTS REl'URCHASE AGREEMENTS U.S . TREASUR\" SECURITIES U.S. GOV"T AGENCY SECURrrms i ,lM .147 .SO Sll.629,.SJ7 .SO JA .019,37.S .OO S0.00 SJ.1.0Jl.OG0 .00 l.l6S 16.67S 12.17S 0 ,00$ 100.001' )MONTII T-DILL Ill.ATE 7 .SOS J MOHTII CO RATE 7 .2.51'