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HomeMy WebLinkAboutOrdinance No. 3512-2026KENAI CITY OF KENAI ORDINANCE NO. 3612-2026 Sponsored by: Administration AN ORDINANCE AMENDING KENAI MUNICIPAL CODE CHAPTER 7.22 INVESTMENT OF MONIES, TO BROADEN THE RANGE OF PERMITTED INVESTMENTS AND EXTEND THE MATURITY PROFILE OF THE CITY'S INVESTMENT PORTFOLIO. WHEREAS, Kenai Municipal Code Chapter 7.22 intends for the City's investment portfolio to be managed so that the portfolio provides safety of principal, maintains sufficient liquidity to meet cash flow requirements and achieves a reasonable market -average rate of return; and, WHEREAS, the City's current investment policy emphasizes safety of principal, liquidity, and reasonable return consistent with prudent public fund management; and, WHEREAS, the City has historically experienced minimal short-term liquidity demands relative to the size of its investment portfolio; and, WHEREAS, extending the permitted maturity profile of the portfolio and broadening the range of permitted investment -grade securities may improve long-term investment returns while maintaining prudent safeguards for the safety of principal; and, WHEREAS, the City Council finds that allowing limited incremental risk within clearly defined parameters is consistent with prudent financial management and may generate meaningful additional returns over time for the benefit of the City and its taxpayers. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, AS FOLLOWS: Section 1. Amendment of Section 7.22.030 of Kenai Municipal Code: That Kenai Municipal Code, Section 7.22.030 - Finance, Taxation, and Business Affairs of the City - Investment of Monies - Authorized Investments is hereby amended as follows: 7.22.030 Authorized Investments. City funds shall be invested in U.S. dollar denominated securities. Authorized instruments shall be limited to the following: (a) Obligations of the U.S. government, its agencies and instrumentalities. (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 102% 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 one hundred twenty (120) days, and whose portfolios consist primarily of obligations of the New Text Underlined; [DELETED TEXT BRACKETED] Ordinance No. 3512-2026 Page 2 of 3 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. (f) Obligations of a corporation or municipality if the obligations are investment grade by at least two nationally recognized rating services at the time of investment. (q) The portfolio may hold short -dated agency mortgage -backed securities, provided they are issued or guaranteed by U.S. Government or Government Sponsored Enterprises and exhibit low extension and prepayment risk. Eligible securities must have a modified duration not exceedinq five (5) years and must demonstrate adequate market liquidity. Section 2. Amendment of Section 7.22.040 of Kenai Municipal Code: That Kenai Municipal Code, Section 7.22.040 - Finance, Taxation, and Business Affairs of the City - Investment of Monies - Maturities is hereby amended as follows: 7.22.040 Maturities and Interest Rate Risk. Investments shall have maturities, measured from the date of purchase, that do not exceed [FIVE (5)] ten years, except for investments that shall be put to specific uses (such as defeasance of debt or establishment of a sinking fund) where the matching of maturity to the use is important[.] or securities defined by (g) in Kenai Municipal Code section 7.22.030. The portfolio's duration may not exceed five 5 ears. Section 3. Amendment of Section 7.22.060 of Kenai Municipal Code: That Kenai Municipal Code, Section 7.22.060 - Finance, Taxation, and Business Affairs of the City - Investment of Monies - Liquidity is hereby amended as follows: 7.22.060 Liquidity and Diversification. (a) Liquidity shall be assured through investments in marketable authorized investments with existing maturities of one (1) year or less, short-term repurchase agreements, a State authorized investment pool, or money market funds. At least [TWENTY] ten percent [(20%)] 10% of the portfolio shall be held in such instruments. [(B) NO MORE THAN THIRTY PERCENT (30%) OF THE PORTFOLIO MAY BE INVESTED IN SECURITIES WITH MATURITIES OF LONGER THAN TWO (2) YEARS.] (b) Cash, cash equivalents, and US Government (non -mortgage) securities of must exceed 40% of the portfolio market value. (c) Corporate and Municipal securities cannot exceed 40% of the portfolio market value. (d) Agency mortgage -backed securities cannot exceed 30% of the portfolio market value. Section 4. Severability: That if any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined- in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to, other persons or circumstances. The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. New Text Underlined; [DELETED TEXT BRACKETED] Ordinance No. 3512-2026 Page 3 of 3 Section 5. Effective Date: That pursuant to KMC 1.15.070(f), this ordinance shall take effect 30 days after enactment. Z17 ENACTED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, ATTEST: LZ Michelle �Sanr,- MC, City Clerk n Introduced: Enacted: Effective: New Text Underlined; [DELETED TEXT BRACKETED] 22 ND DAY APRIL, 2026. r kstedt, Mayor April 1, 2026 April 22, 2026 May 22, 2026 ��KENAI City of Kenai 1 210 Fidalgo Ave, Kenai, AK 99611-7794 1907.283.7535 1 www.kenai.city MEMORANDUM TO: Mayor Knackstedt and Council Members THROUGH: Terry Eubank, City Manager FROM: Dave Swarner, Finance Director DATE: March 10, 2026 SUBJECT: Ordinance No. 3512-2026 - Amending Kenai Municipal Code Chapter 7.22 Investment of Monies to Broaden the Range of Permitted Investments and Extend the Maturity Profile of the City's Investment Portfolio. Ordinance No. 3512-2026 proposes updates to the City's investment code to extend the permitted maturity profile of the City's investment portfolio and broaden the range of allowable securities. The City's current investment policy has historically emphasized highly liquid, short-term investments, and effectively safeguarded public funds. Historically the City has maintained strong liquidity and experienced minimal short-term demands on its investment portfolio. Because of this, a portion of the portfolio can prudently be invested with longer maturities without compromising the City's ability to meet operational needs. The proposed ordinance would allow the City to structure the portfolio more strategically, while continuing to prioritize safety of principal and liquidity and continue to effectively safeguard public funds. Thank you for your consideration.