Loading...
HomeMy WebLinkAboutORDINANCE 1349-1989• u Suggested By: CITY OF KENAI ORDINANCE 1349-89• Finance Department AN ORPINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AMENDING THE KENAI MUNICIPAL"CODE BY ADDING A NEW CHAPTER ENTITLED, "INVESTMENT OF MONIESr" TO ESTABLISH A POLICY FOR INVESTMENT OF CITY MONIES. WHEREAS, Section 5-5 of the City Charter authorizes the Cit Council to regulate investment of City monies; and, y WHEREAS, previous authority and regulation regarding City investment policy is set out in Resolution No. 84-146, and the City Administration believes such authority should be made part of the Kenai Municipal Code; and, WHEREAS, the City Administration wishes to expand the types of authorized investment instruments, consistent with the objectives of safety and liquidity. NOW THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that ection 1: Resolution No. 84-146 is hereby rescinded, -'and, Section 2: The City of Kenai Code of Ordinances is hereby amended by adding, a new chapter to be numbered 7.22., entitled "Investment of Monies," which shall read as described on the attached "Exhibit A." PASSED BY THE COUNCIL OF THE CITY OF KENAZ, ALASKA, this third day of January, 1990. ., First Reading: Dec6mber 20, 1989 Second Reading: January 3, 1990 Effective Date: February 3, 1990 Approved by Finance: (12/13/89) i i • • Ch,. 12ter .22 INVESTMENT OF _b0K1ES Se. stons 7.22.010 Scope and Objectives. 7.22.020 Authority and Prudence. 7.22.030 Authorized Investments. 7.22.040 Maturities. 7.22.050 Collateralization. 7.22.060 Liquidity. 7.22.070 Safekeeping. 7.22.080 Ethics. 7.22.090 Reports. 7.22.010 Scope and ObiectiXeg; (a) This Chapter applies to the investment of 11 City monies held in all City funds, except for pension and retirement monies and deferred compensation accounts. (b) The City's investment portfolio shall be managed so that the portfolio, as a whole, meets the objectives set forth below. All persons selecting investments for City monies shall adhere to these objectives, which are listed in order of relative importance. (1) Safety of principal; (2) Maintaining sufficient liquidity to meet the City's cash flow requirements; and, (3) Achieving a reasonable market -average rate,of return. 7.22.020 1_#uthority an__ d_EX-MA nge: (a) The Finance Director is the City official responsible for investment transactions. (b) Investments shall be made with judgment and care, under circumstances then prevailing, which persons of c 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. Investment officers acting in accordance with this Chapter and exercising due diligence shall be relieved of personal responsibility for an individual security's performance. 7.22.030 Authorized I v stm nts: The City may invest its. available monies in the following instruments: (a) Obligations of the U.S. government, its agencies and instrumentalities. PAGE 1 OF EXHIBIT "A" (b) Insured or collateralized certificates of deposit, savings accounts, and other deposits with banks and savings and. loan associations. (c) Repurchase agreements that are documented by a written agreement, and are fully collateralized by delivery of obligations of the U.S. government to an independent third -party custodian. (d) Money market mutual funds whose dollar -weighted average.. portfolio maturities are not greater than 120 days, and whose portfolios consist primarily of obligations of the U.S. government, its agencies and instrumentalities, and of repurchase agreements collateralized with such U.S. government, agency, or.. instrumentality obligations. (e) A, State investment pool, should one become available. 7.22.040 Maturities: Investments shall have maturities, measured from the date of purchase, that do not exceed two years, except for investments that shall be put to specific rises (such as defeasance of debt or establishment of a sinking fund) where, the matching of maturity to the use is important. 7.22.O50 Collaterglizati2ao Collateral is required for all uninsured certificates of deposit or other deposits with banks and savings and loan associations. The market value of collateral must be maintained during the life of the investment at a level equal to or greater than the amount of the investment.. All collateral securities must be delivered to, and held by, a third party trustee. An undivided interest in the securities pledged as collateral must be granted to the City. Eligible securities for collateralization shall be limited to obligations of the United States government, its agencies and instrumentalities whose maturities do not exceed five (5) years, measured from the date of the City's investment transaction. 7.22.060 Liquidity: Liquidity shall be assured through investments in marketable U.S. Treasury bills, short-term repurchase agreements, or money market funds. At least twenty percent (20%) of the portfolio shall be held in such instruments. 7.22.070 Saffeek_ aping: The Finance Director shall establish custody and safekeeping procedures with regard to all investments authorized by RMC 7.22.030(a), (b), and (c). All such investment. securities, or their related collateral securities, shall be either held by the City or by a custodial agent for the City. 7.22.080 Ethics,: Officers and employees involved in the investment process shall refrain from personal business activity, that could conflict with proper execution of the investment PAGE 2 OF EXHIBIT "A" • r I • 0 program, or which could il►pair their ability to make impartial . inVestment decisions. Such employees arid, Investment, 'offzci�als,. nhall . disclose confidentially to '.the .City M�txia�er ..any material :,financial interesta: is financial. *nstitutthat conduct buoizess ,with the `City.. .1*016yees , and off..cQars: ,ah tll aubor4.note their , p reQi a1 .inveetment txansaetfoind` to th sus of.: the' City, partx.cularl ' . with regard ��,. the : timinq of:: Purchases.: and sales. 7.0 22,106ii44 The "inance Dir-actor Shall aubm3t to the .City Council a quarterlt : �.n►ventment report .that summarizes recent. and anticipated ..a«arket co�ndttiaz�ar, 'and. deacripea the �3ty'.e investment portfolio ;ixs terms . ot' trant$acring ' tote quarter, maturities r ,arc Qharacteristica., and iAveatmeat return compared With. budgetary .eaxpectat�on�. PAGE 3 OF EXHIBIT "A" �J • MEMORANDUM Kenai City Council Charles A. Brown, Finance Director a q4 December 13, 1989 Subject: City Investments Ordinance No. 1349-89 establishes investment policy by ordinance and places the policy in the Kenai Municipal Code. Resolution No. 84-146, which is attached to this memo, is being rescinded. Below, I have identified the substantial differences between the resolution (old policy) and the ordinance (new policy): 1. Liaur dity: The new policy adds liquidity as a stated objective, and describes the means to measure liquidity. 2. Authorized Investments: The old policy was limited to U.S. government, agency, and instrumentality obligations, collateralized certificates of deposit, and repurchase agreements. The new policy adds money market funds that invest in the U.B. government, agency, and instrumentality obligations and in repurchase agreements collateralized by the same. It also adds' authority to invest in a state investment pool, should one be established. My main purpose here is to add the authority to invest in money market mutual funds. Only the safest types of' funds would be allowed. 3. _safekeeping: The old policy did not address safekeeping of direct investments; it only addressed safekeeping of collateral securities. The new policy adds a safekeeping requirement for direct investments, like Treasury bills. The City is currently using National Bank of Alaska's Trust Department, although not required to provide such safekeeping. 4. Brokers' Location: The old policy prohibited placing investments with Lower 48 brokers. This prohibition is being eliminated because I want to add money market funds. This prohibition is. very unusual and not necessarily in the best interest of the City. However, I have no intention of using outside (Lower 48) brokers for investments, other than for money market funds. S. Reimporting: The new policy adds a reporting requirement; none existed in the old policy. This ordinance was prepared using material provided by the Government Finance Officers Association, as well as information received from the Kenai Peninsula Borough, who adopted an investment ordinance in February, 1989. In most cases, the proposed City of Kenai policies are more restrictive and conservative than those recommended by GFOA or used by other municipalities, reflecting my desires to avoid risk, work little (a passive investment policy), and sleep well. I F. • • • Suggested by: Administration CITY OF KENAI RESOLUTION NO. 84-146 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, ESTABLISHING INVESTMENT POLICIES FOR CITY MONIES. WHEREAS, Section 5-5 of the City Charter authorizes the City Council to regulate investment of City monies, and WHEREAS, the City has not established a policy regarding which types of investments are proper for City monies, and WHEREAS, the City's current policy regarding collateral for investments is inadequate and does not protect the City against loss due to default. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that Resolutions No. 80-135 and 82-133 be rescinded and that the following policies be established for the investment of City monies: 1. General Investment Policy: 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. Of primary importance is safety of capital, with yield being a secondary consideration. Each investment transaction shall seek to avoid capital losses from securities defaults or erosion of market" value. The City will hold the City's investment manager harmless with regard to losses on investment transactions undertaken in accordance with these investment policies. 2. Objective: The City's investment objective is to attain market -average rates of return consistent with the risk tolerated within the general investment policy. 3. Authority: The Finance Director is the City official responsible for investment transactions. 4. Eligible Monies: All monies in all funds are eligible for investment. 1 C Ott ...., i 4(...