This investment policy applies to the investment activities of the City of Atlanta, Texas. This policy serves to satisfy the statutory requirements of defining and adopting a formal investment policy in accordance with the Public Funds Investment Act Number TX 74 R HB 2459. All financial assets of city funds except those expressly prohibited by covenant or regulation shall be administered according to the provisions of these policies.
(Ordinance 462, adopted 1/22/96, Section I)
(a) 
Compliance.
The city must adopt rules and designate staff to manage local funds and submit related reports per Chapter 2256 Government Code.
(b) 
Safety.
The primary objective of the city’s investment activity is the preservation of capital in the overall portfolio. Each investment transaction shall seek first to ensure that capital losses are avoided, whether they be from security defaults or erosion of market value.
(c) 
Liquidity.
The city’s investment portfolio will remain sufficiently liquid to enable the city to meet operating requirements that might be reasonably anticipated. Liquidity shall be achieved by matching investment maturities with forecasted cash flow requirements and by investing in securities with active secondary markets.
(d) 
Yield.
Funds held for future capital projects shall be invested in securities that reasonably can be expected to produce enough income to offset inflationary construction cost increases. However, such funds shall never be exposed to market price risks or default risks that would jeopardize the assets available to accomplish their stated objective, or be invested in a manner inconsistent with applicable federal and state regulations.
(e) 
Risk of Loss.
All participants in the investment process shall seek to act responsibly as custodians of the public trust. Investment officials shall avoid any transactions that might impair public confidence in the city’s ability to govern effectively. The governing body recognizes that in a diversified portfolio, occasional measured losses due to market volatility are inevitable, and must be considered within the context of the overall portfolio’s investment return, provided that adequate diversification has been implemented.
(Ordinance 462, adopted 1/22/96, Section II)
(a) 
Delegation.
Management responsibility for the investment program is hereby delegated to the city manager. The city manager or his designee shall establish written procedures for the operation of the investment program, consistent with this investment policy. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions.
(b) 
Designation.
All persons involved in investment activities will be referred to as “investment officials”. No person shall engage in an investment transaction except as provided under the terms of this policy and the procedures established by the city manager or his designee. The city manager or his designee shall make recommendations to the city council for approval of all investments. All investment officials must receive proper training through continuing education programs to ensure that prudent and educated investment decisions are made.
(c) 
Quarterly Reports.
The city manager or his designee, shall prepare an investment report quarterly that summarizes recent market conditions, economic developments and anticipated investment conditions. The report shall explain the quarter’s total investment return and compare the return with budgetary expectations.
(d) 
Annual Report.
Within sixty (60) days of the end of the fiscal year, the city manager or his designee, shall prepare a comprehensive annual report on the investment program and investment activity.
(e) 
Due Care.
Investments shall be made with exercise of due care, which persons of prudence 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.
(f) 
Conflicts of Interest.
Employees and investment officials involved in the investment process shall refrain from personal business activity that would conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose to the city manager, who in turn shall report to the city council any material financial interests in financial institutions that conduct business with the City of Atlanta, Texas, and they shall further disclose any large personal financial or investment positions that could be related to the performance of the city’s portfolio. Employees and investment officials shall subordinate their personal investment transactions to those of the City of Atlanta, Texas, particularly with regard to the timing of purchases and sales.
(Ordinance 462, adopted 1/22/96, Section III)
(a) 
Active Portfolio Management.
The city intends to pursue an active versus a passive portfolio management philosophy. That is, securities may be sold before they mature if market conditions present an opportunity for the city to benefit from the sale.
(b) 
Eligible Investments.
Assets of funds of the government of the City of Atlanta, Texas, may be invested in:
(1) 
U. S. Treasury securities maturing in less than three (3) years.
(2) 
Short-term obligations of U. S. Government Agencies.
(3) 
Fully insured or collateralized certificates of deposits at commercial banks and savings and loan associations.
(4) 
Repurchase agreements collateralized by U. S. Treasury or U. S. Government agency securities.
(5) 
Local government investment pools which are rated in the highest investment category by at least one nationally recognized rating service.
(c) 
Length of Investments.
Except for funds in debt service funds, special assessment funds, bond proceeds and reserve funds, the City of Atlanta, Texas, shall invest in instruments whose maturities do not exceed two (2) years at the time of purchase. Assets held in debt service funds, special assessment funds, bond proceeds and reserve funds may be invested in maturities exceeding two years.
(d) 
Diversification.
Assets held in the common investment portfolio shall be diversified to eliminate the risk of loss resulting from one concentration of assets in a specific maturity, a specific issuer, or a specific class of securities. Portfolio maturities shall be staggered in a way that protects interest income from the volatility of interest rates and that avoid undue concentration of assets in a specific maturity sector.
(Ordinance 462, adopted 1/22/96, Section IV)
(a) 
Bidding Process.
Depositories shall be selected through the city’s banking service procurement process, which shall include a formal request for proposals issued at least every five years. In selecting depositories, the credit worthiness of institutions shall be considered, and the city manager or his designee shall conduct a comprehensive review of prospective depositories credit characteristics and financial history.
(b) 
Insurability.
Banks and savings and loan associations seeking to establish eligibility for the city’s investment program, shall submit financial statements, evidence of federal insurance and other information as required by the city manager or his designee.
(c) 
Investment Dealers.
For brokers and dealers of government securities, the city manager or his designee shall select only primary government securities dealers that report daily to the New York Federal Reserve Bank, unless a comprehensive credit and capitalization analysis reveals that other firms are adequately financed to conduct public business. Investment Officials, in their dealing with city funds, shall not conduct business with any securities dealer with whom or through whom public entities have sustained losses on investments.
(d) 
Signed Agreement.
Any financial institution, broker or dealer selling an authorized investment to the city must sign a statement that a written copy of the city’s investment policy has been received and reviewed and that controls are in place that would prevent “imprudent” investment activities.
(Ordinance 462, adopted 1/22/96, Section V)
(a) 
Insurance or Collateral.
All deposits and investments of city funds other than direct purchases of U. S. Treasury or U. S. Agency notes or bills shall be secured by pledged collateral with a market value equal to at least 100 percent of the deposits or investments, less and amount insured by FDIC or FSLIC. Evidence of the pledged collateral shall be maintained by the city manager or his collateral will be reviewed monthly to ensure the market value of the securities pledged equals or exceeds the related bank balances.
(b) 
Collateral.
The City of Atlanta, Texas shall accept only the following securities as Collateral:
(1) 
FDIC and FSLIC insurance coverage.
(2) 
United States Treasuries and Agencies.
(3) 
Texas State, city, county, school or road district bonds with a remaining maturity of ten (10) years or less with an investment grade bond rating of not less than A or its equivalent from an nationally recognized investment rating firm.
(c) 
Audit.
All collateral shall be subject to inspection and audit by the city manager or his designee, and the city’s independent auditor.
(d) 
Delivery vs. Payment.
Treasury Bills, Notes and Bonds and Government Agencies securities shall be purchases using the delivery versus payment method. That is, funds shall not be wired or paid until verification has been made that the collateral was received by the Trustee. The collateral shall be held in the name of the city or held on behalf of the city. The Trustee’s records shall assure the notations of the city’s ownership of or explicit claim receipts shall be delivered to the city.
(Ordinance 462, adopted 1/22/96, Section VI)