It is the policy of the city that the administration of its funds and the investment of those funds shall be handled as its highest public trust. Investments shall be made in a manner which will provide the maximum security of principal invested through limitations and diversification while meeting the daily cash flow needs of the city and conforming to all applicable state statutes governing the investment of public funds.
(Ordinance 2004-05-03-012, sec. 2(I), adopted 5/3/04)
This investment policy applies to all financial assets of the city and includes all funds of the city. The city may commingle its funds into one pooled investment fund for investment purposes for efficiency and maximum investment opportunity. These funds are and are to be accounted for in the city’s comprehensive annual [financial] report (CAFR) and [include] any new funds created by the city unless specifically exempted by the city council and this policy.
(Ordinance 2004-05-03-012, sec. 2(II), adopted 5/3/04)
The city shall maintain a comprehensive cash management program, to include the effective collection of all accounts receivable, the prompt deposit of receipts to the city’s bank accounts, the payment of obligations so as to comply with state law and in accord with vendor invoices, and the prudent investment of idle funds in accord with this policy and the Public Funds Investment Act (in this division, the “act”).
(Ordinance 2004-05-03-012, sec. 2(III), adopted 5/3/04)
(a) 
It is the policy of the city that all funds shall be managed and invested with four primary objectives, listed in order of their priority: safety, liquidity, diversification and yield.
(b) 
Effective cash management is recognized as essential to good fiscal management. Cash management is defined as the process of managing monies in order to ensure maximum cash availability.
(Ordinance 2004-05-03-012, sec. 2(IV), adopted 5/3/04)
(a) 
Investments shall be made with judgment and care, under circumstances then prevailing, that 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.
(b) 
The standard of prudence to be used by investment officials shall be the “prudent person” standard and shall be applied in the context of managing the overall portfolio. Investment officers acting in accordance with written procedures, the act, and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.
(Ordinance 2004-05-03-012, sec. 2(V), adopted 5/3/04)
The finance director, as the city’s chief financial officer, is responsible for overall management of the city’s investment program and is designated as the city’s investment officer. Accordingly, the finance director is responsible for day-to-day administration of the investment program and for the duties listed below.
(1) 
Maintain a general accounting system for the city and exercise financial control over all offices, departments and agencies thereof.
(2) 
Maintain current information as to available cash balances in city accounts and as to the amount of idle cash available for investment.
(3) 
Certify the availability of funds for all proposed expenditures. Unless the finance director shall certify that an unencumbered balance exists in the appropriations and funds available, no appropriation shall be encumbered and no expenditure shall be made.
(4) 
Make investments in accord with the act. No officer or designee may engage in an investment transaction except as provided under the terms of this policy and the procedures established.
(5) 
Ensure that all investments are adequately secured.
(6) 
Submit to the council through the city manager a monthly statement of all receipts and disbursements in sufficient detail to show the exact financial condition of the city.
(7) 
Designate a staff person as a liaison/deputy in the event circumstances require timely action and the investment officer is not available.
(8) 
Attend training as prescribed by the Public Funds Investment Act provided by the Texas Municipal League or the University of North Texas.
(Ordinance 2004-05-03-012, sec. 2(VI), adopted 5/3/04)
The investment officer shall establish a system of written internal controls, which will be reviewed annually with the independent auditor of the city. The controls shall be designed to prevent loss of public funds due to fraud, employee error, misrepresentation by third parties, unanticipated market changes, or imprudent actions by employees of the city.
(Ordinance 2004-05-03-012, sec. 2(VII), adopted 5/3/04)
(a) 
Assets of the city may be invested in instruments, funds, banks and securities permitted by the Public Funds Investment Act; however, at no time shall assets of the city be invested in any instrument or security not authorized for investment under the act, as the act may be amended from time to time.
(b) 
The city shall maintain portfolios which utilize four specific investment strategy considerations designed to address the unique characteristics of the fund groups represented in the portfolios:
(1) 
Operating funds and commingled funds containing operating funds.
(A) 
The primary objective will be liquidity and reasonable market yield. Funds will be invested in accordance with the investment policy. The authorized securities chosen or pool utilized for this portfolio are of the highest credit quality and marketability supporting the city’s objectives of safety and liquidity. Securities, when not matched to a specific liability, will be of a liquid nature to provide adequate liquidity for the city. The portfolio shall be diversified to protect against market and credit risk in any one sector. Diversification requirements can be fully met through use of an authorized investment pool.
(B) 
Weighted average maturity on the pooled investment group will be of no greater than ninety (90) days. Because the funds are pooled for investment purposes, the portfolio will address the varying needs of all funds in the pooled fund, recognizing liquidity needs as well as the desire to extend slightly for incremental return on core funds in the pool.
(2) 
Debt service funds.
Investment strategies for debt service funds shall have as the primary objective the assurance of investment liquidity adequate to cover the debt service obligation on the required payment date. Since this is one of the highest priorities of the city, securities will be chosen with the highest priorities of safety. Securities will be chosen for their maturity dates and not require the highest degree of diversification. Securities purchased shall not have a stated final maturity date which exceeds the next debt service payment date until that date is fully funded, and shall be chosen secondarily with regard to yield and diversification. The weighted average maturity on the pooled investment group will be no greater than one hundred eighty (180) days.
(3) 
Debt service reserve funds.
Investment strategies for debt service reserve funds shall have as the primary objective the ability to generate a safe, dependable revenue stream to the appropriate debt service fund from securities with a low degree of risk. Except as may be required by the bond ordinance specific to an individual issue, securities should be of high credit quality, with short-to intermediate-term maturities. The funds will have a maximum weighted average maturity of two hundred seventy (270) days.
(4) 
Special projects and special purpose funds.
Investment strategies for special projects or special purpose fund portfolios will have as their primary objective to assure that anticipated cash flows are matched with adequate investment liquidity for the safety of the funds and the completion of the targeted projects. These portfolios should include at least 10% in highly liquid securities to allow for flexibility and marketability of the securities should funds be needed for unanticipated project outlays. A diversified portfolio structured with laddered maturities to match anticipated cash flows will be used to provide a reasonable market yield in those comparable maturity sectors. The stated final maturity dates of securities held should not exceed the estimated project completion date. The funds will have a maximum weighted average maturity of one hundred eighty (180) days.
(c) 
Acceptable investments under this policy shall be limited to the instruments listed below and as further defined and described by the Public Funds Investment Act.
(1) 
Obligations of the United States government, its agencies and instrumentalities, and government sponsoring enterprises, not to exceed two years to stated maturity, excluding collateralized mortgage obligations (CMOs);
(2) 
Fully insured or collateralized certificates of deposit from a bank doing business in the state and under the terms of a written depository agreement with that bank, not to exceed one year to stated maturity;
(3) 
Commercial paper rated A-1/P-1 or the equivalent by at least two nationally recognized rating agencies not to exceed 180 days to stated maturity;
(4) 
Repurchase agreements and reverse repurchase agreements as defined by the Public Funds Investment Act, not to exceed 180 days to stated maturity, provided an executed PSA master repurchase agreement is on file with the city and the counterparty bank or primary dealer;
(5) 
No-load, SEC registered money market funds, each approved specifically before use by the city;
(6) 
Constant dollar Texas local government investment pools as defined by the Public Funds Investment Act.
(d) 
No security will be eligible for investment by the city until this policy has been amended and the amended version approved by the city council.
(e) 
Delivery versus payment. All security transactions, including collateral for repurchase agreements, entered into by the city shall be conducted on a delivery versus payment (DVP) basis.
(Ordinance 2004-05-03-012, sec. 2(VIII), adopted 5/3/04; Ordinance adopting Code)
(a) 
The finance director will maintain a list of financial institutions authorized to provide investment services. In addition to a list, the finance director will also maintain a list of approved security broker/dealers selected by creditworthiness who are authorized to provide investment services in the state. These may include “primary” dealers or regional dealers that qualify under the Securities and Exchange Commission uniform net capital rule. No public deposit shall be made except in a qualified public depository as established by state laws.
(b) 
All financial institutions and broker/dealers who desire to become qualified bidders for investment transactions must supply the finance director the following: latest audited financial statements, proof of state registration, NASD certification (regional brokers only), and certification of having read the city’s investment policy.
(c) 
Every broker/dealer and bank with whom the city transacts business will be provided a copy of this investment policy to assure that they are familiar with the goals and objectives of the investment program. A representative of the firm will be required to return a signed certification stating the policy has been received and reviewed and that controls are in place to assure that only authorized securities are sold to the city.
(Ordinance 2004-05-03-012, sec. 2(IX), adopted 5/3/04)
(a) 
The laws of the state and prudent treasury management require that all purchased securities be bought on a delivery versus payment basis and be held in safekeeping by either the city, an independent third party financial institution, or the city’s designated banking services depository.
(b) 
The investment officer shall designate all safekeeping arrangements and an agreement of the terms executed in writing. The third party custodian shall be required to issue safekeeping receipts to the city listing each specific security, rate, description, maturity, CUSIP number, and other pertinent information. Each safekeeping receipt will be clearly marked that the security is held for the city or pledged to the city.
(c) 
All securities pledged to the city for certificates of deposit or demand deposits shall be held by an independent third party bank doing business in the state. The safekeeping bank may not be within the same holding company as the bank from which the securities are pledged.
(d) 
Collateralization on time and demand deposits over the FDIC insurance coverage of 100,000 and repurchase agreements. In order to anticipate market changes and provide a level of additional security for all funds, the collateralization level required will be 102% of the market value of the principal and accrued interest. An independent third party safekeeping agent will hold collateral.
(Ordinance 2004-05-03-012, sec. 2(X), adopted 5/3/04)
The investment officer shall submit monthly reports to the city manager and quarterly and annual reports to the city council containing sufficient information to permit an informed outside reader to evaluate the performance of the investment program and consistent with statutory requirements. All reports shall be in compliance with the act.
(Ordinance 2004-05-03-012, sec. 2(XI), adopted 5/3/04)
The city will designate one banking institution through a competitive process as its central banking services provider at least every three years. This institution will be used for normal banking services including disbursements, collections, and safekeeping of securities. The banking institution must meet FIRREA requirements. Other banking institutions from which the city may purchase certificates of deposit will also be designated as a depository after they provide their latest audited financial statements to the city.
(Ordinance 2004-05-03-012, sec. 2(XII), adopted 5/3/04)
The council shall adopt the city’s investment policy. The city council or a designated committee shall review the policy and strategies on an annual basis. A written resolution approving that review and changes to the policy from the review will be passed and recorded by the city council.
(Ordinance 2004-05-03-012, sec. 2(XIII), adopted 5/3/04)