HomeMy WebLinkAbout1995 Resolution No. 059•
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RESOLUTION NO . ..5J..
SERIES OF 1995
A RESOLUTION ADOPT!NG AN INVEST:.1ENT POL!CY FOR THE CITY OF
ENGLEWOOD.
WHEREAS, the Englewood City Council authorized amending Title 4, Chapter 1,
Sections 1 and 2 of the Englewood Munidpal Code 1985 on August 7, 1995 ; and
WHEREAS, Title 4, Chapter 1, Sections 1 and 2 address the investment policy and
administration of the City of Englewood funds : and
WHEREAS, City Council is to revie " and adopt a City investment policy annually;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
E NG LEWOOD, COLORADO , THAT:
~-The City Council for th e City of Englewood , Colorado hereby adopts the
investment policy for City attached hereto as Exhibit A.
ADOPTED A."11) APPROVED th is 5th day of September, 1995.
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Loucrishia A. Ellis, City Clerk
I, L-0 ucrishia A. Ell is , City Clerk for the City of Englewoo d, Colorado, hereby certify the
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Louc:ri hia A. Ellis
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elCHIBIT A
City or Eacl.,.ood, Colonado
INVESTMENT POLICY
The Director ofFinancial Services , City ofEnglewood,.Colorado is charged with the
respons ibility to prudently and properly manage any and all funds of the City . Because these
funds ma . 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 lnvesnnent Polic y addresse s the methods, procedures and practices
which must be exerc ised to ensure effective and sound fiscal management.
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This policy shall appl y to the investment of all financial assets and all funds of the City of
Englewood (hereafter referred to as the "City") over which it exercises financial control, except
the City of Engl ewood Firefighters Pension Fund, Volunteer Firefighters Pension Fund, Police
Officers Pension Fund, the Non-f mergenc y Employees Retirement Plan Fund and other City
employee retirement plans . In o· rr to effectivel y make use of the City 's cash resources, all
monies shall be pooled into one :~v estment account and accounted for separately . The
investment income derived from <his account shall be distributed to the various City funds in
ac co rdan ce with Englewood Municipal Code , 4-1-2-A.
QBJECTIY.ES
The City 's principal investment objectives are :
• Preservation of capital and the protection of invesnnent principal .
• Maintenance of sufficient liquidity to meet anticipated disbursements and cash
flows .
• Di vers ificat ion to av c,:o incurring unreasonable risks regarding securities owned.
• Attainment of 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 reqi;irements.
PEI EG ,TIQN Of A)JJHQBIIY
The ultimate responsibility and authority for in vestment transactions involving the City resides
with the Director of Finan cial Services (hereinafter referred to as the "Director"i who bas been
de signated by the City Manager as the investment officer in accordance with Englewood
Municipal Code . The Director may appoint other members of the City Staff to assist her (him)
in the cash mana2ement and investment function. Persons who arc authorized to transact
busine ss and wir; funds on behaif of the City will be designated by the Director by the wire
trans fer aoreement ,xecuted with the City's approved depository for bank services (See
App.:..J1x
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I). The Director shall be responsible for all in vestment decisions and activ ities, and
sh all establish written administrative procedures for the operation of the City 's investment
program consistent wi th thi s In v~stment Polic y. The invemnent officer acting within these
pr oced ure s shall not be held personall y liable for specific inve stment tra.1Sactions .
The Director may in her (his) discretion appoint one or more Investment Advisors, registered
with the Securit ies and Exchange Commission under the Investment Advisors Act of 1940, to
manage a 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. An Investment Advisor can only be appointed after
consultation with and approval by the City Manager.
PRtIDENCE
The standard of prudence to be used for managing the City's assets is the "prudent investor" rule ,
which states , "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 ." (CRS IS-1-304)
El IG!BI E INVESTMENTS e\NP TRAKSACTIONS
All invest ments will be made in accordance with the Colorado Revised Statutes (CRS) as
follows : CRS l l -10 .5-IOI. ct seq . Public Deposit Protection Act; CRS 11-47-101, et seq .
Savings and Loan Association Pablic Deposit Protection Act; CRS 24-7S-601, et seq . Funds-
Legal Investmen ts for Governmental Units; CRS 24-7S-603, et seq . Depositories ; and CRS 24-
75-70 I , ct seq . Local Governments-Local Government Pooling.
As a home rule City, Englewood may adopt a list of acceptable investment instruments differing
from those outlin ed in CRS 24-7~-60 I, et seq. Funds-Legal Investments for Governmental
Uni ts . Fund s of the City of Englewood covo r:d by thi£ Investment Policy may be invested in the
fo llowin g types of sccuriti,s and transactions :
• U.S. Treasury Obligations (T-Bills. T-Notes. T-Bonds).
• U.S. Treasury .tri ps (boo k-e ntry U.S. Treasury securi ties whose coupon has been removed).
• Federal Instrumcnta liti cs--Debentures, Discount Notes, Medium Term Notes or Callable
Securities issued by the following only : Federal National Mortgage Association (FNMA),
Federa l· ,me Loan Bank (FHLB), Federal Home Loan Mortgage Corporation (FHLMC),
Fedcra, . .rm C:cdit Bank s (FFCB), and Student Loan Marketing Association (SLMA).
• Repu rchase agreemer,r.s with a term ination date of90 dr ·s or !ess utilizing U.S. Treasury
and Federal Aiency Securities listed in the items above , collateralized initially utilizing
securities having a minimum market value of 102 percent of the dollar value of the
transact ion with the accrued interes: accumulated on the collateral included in the
caltula ,io n. If the market va lue of the collateral falls below 101 percent of the dollar value
of the tran saction , the collateral will be required to be brought up to th• I 02 percent initial
maintenan ce level.
Repurchase agrccn.ents shall be entered into only with dealers who : I) are recognized as
pr ima ry rcport in.; dealers wit h the Market Reports Division of the Feder11I Reserve Board of
New York ; and 2) have an executed, City approved Master Repurchase A~ment (See
Appe .. dix II ). Collateral (p urchased securities) sha ll be held by the City's custodian bank as
safekeeping agent. and the market va lue of the .ollateral securities shall be marked-to-the-
market dail) based on :he bid price for the pre vious day as reported in the WAI J STREET
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For the purposes of thi s section. tho tmn "collateral " shall mC111 "purclwod securities"
under the terms of the City approved Master repun:hase agreement. In Dll cas e will the
maturity of the collateral exceed a ten year rr.arurity.
• Re verse Repurchase Agreements with a maturity of90 days or less executed only against
securities owned by the City and collateraliud by at least the same type of security reversed .
• Time Cenificates of Deposit or savings accounts in stale or national banks operating in
Colorado which are state appro ved depositories (as evidenced by a cenificale issued by the
Sta te Ban ki ng Board ) and are insured by the FDIC . Certificates of Deposit which exceed the
FDIC insured amount shall be collateralized in accordance with the Colorado Public Dcp,sit
Pro tection Act. Th is collatera' will have an initial market value equal 10 or exceeding 102
perce nt of the difference between the insured amount and the City's total deposits for all
fu nd s with in the inst itut ion. If th e market value of the collateral falls below 101 percent of
the dollar va lue of the transact io n, the collateral will be required to be brought up to the 102
pe rccn : initial maintc nanr• level.
• Time C :nifi ca 1es of Deposit or savings accounts is state or federall y chanered savings and
loans operating in Col orado which are insured by the FDIC . Deposits which exceed the
FD IC insured amount shall be collateralized in .iccordance with the Colorado Public Deposit
Prot ect ion Act . This collateral will have an initial market value equal to or exceeding I 02
perce nt of the difference between the insured amount and the City 's total deposit for all
funds within the institution . If the market value of the collateral falls below 101 percent of
the dolla r value of the transaction , the collateral will be required to be brought up 10 the 102
percent initial m1ti ntcnan cc lcvtl.
• Colora do Local Government Liquid Asset Trust (COLOTRUST) .
• Prime Bankers Acceptance with a maturi ty of six months or less issued on domestic banks or
branc hes or foreign banks domiciled in the U.S. and operating under U.S. banking laws .
Acc epting banks mu st have a senior debt rating of A-1 by Moodys and/or A+ by Standard
an d Poo rs .
• Prime Com merc ial Pape r with a maturity of 180 days or less which, at the time of purchase,
is rated at lc a.;1.
A-1 + by St an dard and Poors ,
P-1 by Moodys OR
D-1 + by Duff and Phelps .
(I) Al the time of purchase . the Commerc ial Paper must be rated by at least two of the
above stated ratin g agencie s aH.he-statcd minimum rating .
(2) If more than two of the above stated agenc ies rates an issuer , all of those rating
agencie s mu st rate the iss uer in accordance with above stated minimum credit criteria.
(3) If th e Commercial Paper issu er has senior debt outstanding, the senior debt must be
rated by each service that publishes a rating on the issue r ss al least :
A-1 by Moodys ,
A+ by Standard and Poors OR
A-1 by Duff and Phelp s.
QiliERJJ\'Y ESTME NTS
It is the int ent of the City that the fore goi ng list of authorized secu ritie s be strictly interpreted
and that any devia tio n from this li st must be pre-ap proved by the Director in writing after
app ro val by the Ciry Manager .
INVESTMENT PJVERSIFICATION
It is the intent of the City to divmify the invesunent instruments within the portfolio to avoid
incurring unreasonabl ,, risks inherent in over investing in specific instnunents, individual
financial institutions ur maturities . The asset allocation in the portfolio should, however, be
nexible depending upon the outlook for the economy and the securities market .
The City may invest to the following maximum limits within each category :
I 00 ¾ in U.S. Treasury Obligati ons but not less than 50¾
• 50 ¾ in Ccnificatcs of Deposit
• 50¾ in allowable Federal Instrumentalities
• 30¾ in Repurchase Agreements collatcralizcd by allowable Federal lnstnunentalitics, or
I 00 ¾ in Repurchase Agreements collateralizcd by U.S. Treasury Obligations
• 20¾ in Bankers Acceptances
• 20¾ in Commercial Paper
INV ESTME NT MATIJRIIY AND J lotUDIIY
In vestments shall be lim ited to maturities not exceeding three years. In addition , the weighted
average maturity life of the total portfolio shall at no time exceed eighteen months . The City
shall at all time s maintain 15¾ of its total investment portfolio in instruments maturing in 120
days or less . For callable securities JSsumcd to be called on their first call date, that flr,~ call
date sha ll be use d to calculate th e securities weighted average maturi ty.
OTHER INVESTMENT GUIQEI INES
All investme nt transactions must be executed wi th broker/dealers and financial institutions that
have been authorized by the City, and each tra..'ISact io n must be competitively transacted with at
least two authorized broker/dealers financial institutions . In addition, before any repurchase
a2reeme nts shall be executed with an authorized broker/dealer or financial instiMio• a Master
R-epurchase Agreement must be signed between the City and that broker/dealer or financial
insti tut ion . The Dire ctor shall maintain a file of all Master Repurchase Agreements .
The purchase and sale of all securiries shall be on a delivery versus payment or payment versus
deli very basis (i.e. fo r sec ur ities purchases , monies will not be released by the City's safekeeping
bank until sec uritie s arc received at the Federal Reserve Bank for funher crcdirto the City's
safekeepi ng ban k. In the case of securities sales, monies will be received by the City's
safekeeping bank via the Federal Reserve Bank as the securities are simultaneously released to
the pu rchaser.) In this manner the City will always have possession of either its securities or its
monies .
The City seeks an ac tive, rather than passi ve, management of its portfolio assets. Assets may be
sold at a loss only if the Director or the Inve stm ent Advisor feels that the sale of the security is in
the best long•term interest of the City .
SE! ECTJON OF FINANCIAi INSTITIJTIONS AND BROKER/DEAi ERS
The City shall mainta in a list of authorized broke r/dealers and financial institutions which are
approved for in vestment purposes (S ee Appendix Ill), and it sha!I be the policy of the City to
purchase sec ur ities on ly from thos e authorized institutions and firms . To be eligible for
authorization, a broker /dealer must be recognized as a primary Dealer by the Federal Reserve
Bank of New York . Banks and Sav in gs and Loan Associations mu st be members of the FDIC in
orde r to be eligible for auth oriza tio n. In addition , each broker/dealer or financial institution must
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complete a City appro ved Brol.cr/Dealer I ormation Request Form which includes the finn's
most recent financ ial swcrnents. The Director shall m1int.1in a file of all Broker/Dealer
lnfonnation Requesu . Broker/dealers and other financial institutions will be selected on the
basis of•heir expenise in cash management and their ability to provide service to the City's
account .
SE! ECDON OF BANKS AND SAYINGS AND I OANS
The City shall maint.1in a list of authorized banks and savings and loans which an approved to
provide banlcing services or from whom the City may purchase a Certificates of Deposit . To be
eligible for authorization. a bank or sav in gs and loan must meet the minimum credit criteria
(d escri bed below) of credil analysis provi ded by a commercially available bank rating service .
Banks or savi ngs and loans failing to meel the minimum cri1eria, or in the judgrnenl of the
Direct or no longer offering adequate safety to the Ci ty will be removed from the list . Although a
bank or savings and loan is on the qualified list. it will still be required to pledge collateral on all
deposits and investments, pursuanl to St.lie law .
The City shall utilize a commercially available bank rating service (PMA Financial Ncrwork ,
In c .) to perfonn a semiannual credit analysis on banks and savings and loans . The banJc rating
guidelines will be calculated using publicl y avai lable financial infonnation obtained from the
release cf the preliminary repons of condition and repons on income from the Federal Reserve
or fro m data reponed to the Comptroller of the Currency . Data obtained from the bank rating
service will include factors covering the foll ow ing: overall rating, liquidity policy, credit risk
policy , interest rate policy,'profitabilil)' and capital polic y. Ra1ings will be don e on a five point
sca le with on e being Excellent.
In ord er t~ meet the minimum credit criteria, a bank or savings and k ·n must meet each of the
following credi: raring requirements :
• The overall credil rating must be three or higher, (Per PMA Financial Ncrwork, Inc .)
• The credit risk and capit.11 policy rating must be three or higher, (Per PMA Financial
etWork. Inc .) regardless of the overall credit rating, and
• The institution must qualify as a deposito ry of public funds in Colorado as defined in CRS
22 -4 0-105.
The Direc10r shall maintai n a file of all credit rating anal ysi s repons perfonned for the City.
SAFEKEEPING
In vestment securities purchased by the City will be delivered by either book entry or physical
deli very and held in third party safekeeping b_ a Federal Reserve member financial institution
designated as the City 's deposirory . Securities delivered lo the City in physical form (BA's, CP ,
el c .). will be deli vere d to the City 's custodial bank 's correspondent bank in New York or to the
Depos itory Trust Corporation. It is the in1en1 of the City that all securities be perfected in the
name of the Ciry .
PR QVJSION S FOR A.RBJTRAGE ,
The Cit) per iodicall y issues debl obligarions which are subjecl 10 the provisions of the Tax
Reform Act o f J 986 (s ecrion I 48F), Arbitrage Rebale Regulations . Due 10 the legal complexities
ofarbitra~• Jaw and the necessory immunizar ion of yield le ve ls, the procedures underulcen in the
rein vestm.ent of all or a ponion of the proceed s of such debt issuance may extend beyond those
outlined in 1his policy . The Direclo r, upon advice from Bond Counsel and financial advisors ,
ma y alter provisi ons of this poli cy for arbitrage relared investmen ts as may be necessary to
conform with federal arbitrage n,gulations . In all cases, however, invesuncnts will be in
compliance with Colorado Revised SlaMCS. This section is only 1j>plicable to City fund., subject • ·
to arbitrage restrictions .
REPORTING
An investment re po rt shall be pn,pared , at least on a monthly basis, listing the investments held
by the City , the current market valuation of the investments and performance n,sults . The
month ly in vestment report shall be submined in a timel y manner to the City Manager and the
Ci ty Council. A n,cord shall be maintained by the Department of Financial Services of all bids
and offerings for securities transa ctions in order to ensun that the City receives competitive
pric ing .
The City has established n,porting and accounting standards for callable U.S. Government,
Agency aud instrumentality seeurities . Callable Securities may be retired at the issuer 's option
prior to the stated max imum maturity. All securities holding n,ports for the City sh.ti cfuclosc
the stated matur ity as well as th e first call date of each callable security held . In the case of
callo b:e ,ecur i1 ies whi ch are pu rc hased priced to the first call date and, in the opinion of the
Direct~•, h.-: an O\'C helming probability of being calle d on the fim call date, we ighted
aver Jg e maturity amo rtizati on as well as yield shall Ix .:alculated using the fir.;t call date. The
Director may, howe ver. choos e to u.<o a funher call date maturity date for reporting purposes
when cond itions mand1.tc .
ft Rf\lll\jANCE REY·~
The Director and the C.1" Manage r shall meet at least quarterly to n,view the portfolio's
adheren ce to 2.ppro priate risk levels and to compare the porrfolio 's total return to the est2blished
in vestment obj ectives and goal s.
The Director shall pc 1ly esta blis ~ a benchmark yield for the City 's investments which
shall be equa l to th e 8\, ,6 e yield on the U.S. Treasury security which most closely corresponds
to the po rrfo lio ·s actual weighted average maturity . When comp!Uing the performance of the
Ci ty's porrfol io, all fees and expenses invo lved with managing the porrfolio should be included
in the co mpu tati on of the porrfolio 's rate ofn,tum .
ETHJ('S ~ND CO NFJ JCT$ OF INTEREST
Offi cers and empl oyees in volved in the investment proc ess shall refrain from personal business
acti vity that could confli ct with pro;,cr execution of the investment program , or which could
impair the ir ab ili ty to make impartial investtnent decisions . Employees an d investment officials
sha ll dis cl ose to the City Manager an y material financial inten,st in financial institutions that
co nduc t bu si ne ss with the City, and they shall further di sclose any large personal
finan ci al/in vestment positions that could be related to the performance of the City 's porrfolio .
Emp loy ee s and officers shall subordinate the ir personal investment transacti ons to those of the
City parti cularl y with reg ard to the timin g of purchases and sales .
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POJ !CY REY)SJQNS
Th is Investment Poli cy will be reviewed periodicall y Ir; the DiJector and may be amended u
condicions warnnt by the Cicy Manager and the City Council.
Ap pruved by Cicy Co unci l
Septemb.•~ 17. 1990
Amended b, City Council
December 16. 1991
AJnended by City Cou 1,1I
Ap ri l 5. 1993
Amended by City Council
September 5. 1995
State of Colorado
Count) of Arapahoe
I, Loucrishia A. Ellis , City Clerk in and for The City of Englewood, in the State aforesaid, do
here by cenify that the forego ing is a full . true and correct copy of the ln vesune11t Policy as the
same appears upon the records of my office whi ch are in my custod y .
Given under by hand and official seal , thi s __ day of ____ -.c, A.O.
1995. ____ o'clock _.m.
/st LouGJisbia A Ellis
City Cieri<
APPENUIXJ
Authorized PersoMel
The following p,,rsons an, authoritcd to conduct investm ent tranuctions and wire transfer funds on behalf rf The Ciry of fi ngi<w,•,'<f :
Steve Dazzio, Chief Accol,ntA;,!
Verna Cole, Accountant II
Jennifer Nolan , Accountan1 II
Frank Gryglewic z, Director ofFina11cial Services
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Prudential Securitie s. Inc .
Merrill Lynch
Smith Barney
APPINDIXU
Rcpun:base Agreoments
Agreements maintained in separate file .
APPENDIXW
Authoriz.ed Broker/Dealers and Financial Institutions
Prudent ial Securitie s, In c.
Merrill Lyn ch
Kirkpatric k Pen is--ln vestment Bankers
Paine Webber
Sm ith Barney
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APPENDIX IV
Designated Depositories
The following bank is authorized as the designated depository for The City of Englewood :
First Interstate Bank of Denver, N.A.
633 Seventeenth Street
Denver , Colora1o 80 27 0
rNY STFNl. DOC 11 8/22/<JS 2:46 PM
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COUNCIL COMMUNICATION
Date Agenda Item Subject
September 5, 1995 Resolution Adopting The
10 a i 1 Investment Policy Of The City
Of Eni:ilewood
Initiated By I Staff Source
Department Of Financial Services Frank Grvolewicz, Director
COUNCIL GOAL AND PREVIOUS COUNCIL ACTION
The City Counci l d iscussed the pol icy at the August 7, 1995 study sess ion . Council orig inally
approved the policy on September 17 , 1990 and amended in on December 16 , 1991 and April
5 , 1993. Council made changes to City Code Title 4, Chapter 4 , Sections 1 and 2 on first
read ing August 7, 1995. This Title and Chapter deals with the investment and admin istration
of C ity funds .
RECOMMENDED ACTION
Staff recommends Council approve the amended Investment Pol icy of the City of Englewood .
BACKGROUND, ANALYSIS, AND ALTERNATIVES IDENTIFIED
The City of Eng lewood Investment Policy has been in ex i&tence since 1990. The policy is
comprehens iv e, b ut at the same lime fle xi ble . As needs or opportunities arise, st;,ff and the
C ity's investme nt ad v isor (Amer ican Mo r,,,, Management Association) update and present
change s to the City Council.
FINANCIAL IMPACT
This will not direct ly impact the finances of the City of Englewood
LIST OF ATTACHMENTS
Proposed reso lutio n
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Prin1ed an A. .:ycled Paper .at