This policy applies to all investments made by the City of Fairfax regardless
of the fund.
The primary objective of the City's investment activities shall
be safety, liquidity, and yield.
A. The preservation of capital in the overall portfolio
and the protection of the investment principal. The safety of principal is
the foremost objective of the City of Fairfax;
B. To remain sufficiently liquid to meet disbursement requirements
which might be reasonably anticipated; and
C. Investment income is a major contributor of revenue to
the City's annual budget, the investment portfolio of the City of Fairfax
shall be designed to attain a market-average, or better, rate of return.
The investment portfolio is subject to public review and evaluation.
Therefore, the overall program shall be designed and managed with a degree
of professionalism worthy of the public trust. The City Council, however,
recognizes that with a diversified portfolio, occasional measured losses are
inevitable and must be considered within the context of the overall portfolio's
investment return, provided adequate diversification has been implemented.
The City Clerk-Treasurer is authorized to make investments of public
funds. No person may engage in an investment transaction except as provided
in this policy.
All investment transactions shall be made in good faith with the degree
of judgement and care, under the circumstances, that a person of prudence,
discretion and intelligence would exercise in the management of their own
affairs. This standard of prudence shall mean not for speculation and with
consideration of the probable safety of the capital as well as the probable
investment return, derived from assets, and will be applied in all investment
transactions.
It is the policy of the City of Fairfax to offer local financial institutions
an opportunity to bid on investments; however, because it is the City's
policy to seek the highest investment yield, local investment bids below 100
basis points of other competitive bids will not be considered. A minimum of
75% of the total investment portfolio shall be invested in certificates of
deposit or other instruments through local Fairfax banks.
Assets of funds of the City of Fairfax may be invested in the following:
A. U.S. Government obligations, including Treasury bills,
Treasury notes, and Treasury bonds.
B. Fully insured or collateralized certificates of deposit.
C. Repurchase agreements collateralized by U.S. Treasury
securities.
D. Shares in mutual funds which invest exclusively in U.S.
Government and federal agency issues.
E. Notes and bonds issued by agencies of the federal government,
such as federal land banks or federal home loan banks.
F. Securities which are a general obligation of the State
of Minnesota or Minnesota municipalities, provided the securities are rated
A or better.
When the City deposits in the depository institution in excess of the
FDIC insurance it shall be secured by the depository institution in pledged
collateral. The securities pledged are to be at least 110% market value of
the amount invested plus interest to be earned at the time of the investment.
If the security is pledged mortgages, their market value must equal 140% of
the uninsured amount. To qualify as collateral securities must be fully insured
certificates of deposit, any qualified state or local government obligation,
or any obligations that are legal investments for cities.
Recommendation of the City Clerk-Treasurer and action of the City Council
may amend the policies. Investment Policy revisions may become necessary with
changes in state law, City needs, the economy, and investment opportunities.