HomeMy WebLinkAboutR-2920-6-10RESOLUTION NO. 2920-6-IO(R)
' A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, APPROVING AN AMENDED POLICY FOR THE INVESTMENT
OF MUNICIPAL FUNDS; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, Chapter 2256 TEX. GOVT CODE requires the City Council to annually review its Investment
Policy regarding the investment of City funds and funds under its control; and,
WHEREAS, the City Council re -adopted the Investment Policy on May 27, 2008 and May 26, 2009; and,
WHEREAS, the Investment Policy attached as Exhibit "A" has been reviewed and includes amendments since
the re -adoption on May 26, 2009.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ALLEN,
COLLIN COUNTY, TEXAS, THAT:
SECTION 1. The Investment Policy attached hereto as Exhibit "A" ("Investment Policy") and made a part
hereof for all purposes, has been reviewed and includes any amendments thereto, is hereby adopted as the
Investment Policy of the City of Allen as required by Chapter 2256 of the Texas Government Code.
SECTION 2. This resolution shall take affect upon its adoption
DULY PASSED AND APPROVED BY THEE CITY COUNCIL OF TIIE CITY OF ALLEN, COLLIN
' COUNTY, TEXAS, ON THIS THE 22"a DAY OF JUNE, 2010.
APPROVED:
StephenUermll, MAYOR
ATTEST:
Shelley B. George, IffW SECRETARY
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EXHIBIT A
CITY OF ALLEN, TEXAS
INVESTMENT POLICY
June 22,2010
The purpose of this document is to set forth specific investment policy and strategy guidelines
for the City of Allen in order to achieve the goals of safety, liquidity, yield and public trust for all
investment activity. This policy serves to satisfy the statutory requirement (specifically the
Public Funds Investment Act, Chapter 2256, Texas Government Code, as amended, [the "Act'])
to define, adopt and review a formal investment strategy and policy.
The City of Allen maintains portfolios which utilize four specific investment strategy
considerations designed to address the unique characteristics of the fund groups represented in
the portfolios. Preservation and safety of principal shall be the foremost investment objective in
each of the portfolios. Liquidity is the second objective. Its importance to each fund group is
emphasized in the following paragraphs. Yield and diversification shall also be a consideration
and shall be in compliance with the guidelines set forth in the Investment Policy.
A. Investment strategies for operating funds have as their primary objective to assure
that anticipated cash flows are matched with adequate investment liquidity. The
secondary objective is to create a portfolio structure which will experience
minimal volatility during economic cycles. This may be accomplished by
purchasing high quality, short -to -medium term securities which will complement
each other in a laddered or barbell maturity structure.
B. 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. If the annual debt service obligation is covered,
then securities may be purchased that have a stated final maturity date which
exceeds the debt service payment date.
C. Investment strategies for reserve funds shall have as the primary objective the
ability to generate a dependable revenue stream to the appropriate fund from
securities with a low to moderate degree of volatility. Securities should be of
high quality and, except as may be required by any bond ordinance specific to an
individual issue, of intermediate to longer-term maturities.
D. Investment strategies for special projects or special purpose fund portfolios shall
have as their primary objective to assure that anticipated cash flows are matched
with adequate investment liquidity. These portfolios should include at least l0%
in highly liquid securities to allow for flexibility and unanticipated project
outlays. The stated final maturity dates of securities held should not exceed the
estimated project completion date.
INVESTMENT POLICY
I. SCOPE
This investment policy applies to all financial assets of the City of Allen. The funds included
are:
• General Fund
• Enterprise Funds
• Debt Service Funds
• Special Revenue Funds
• Capital Projects Funds
• Internal Service Fund
• Trust and Agency Funds
11. OBJECTIVES
The City of Allen shall manage and invest its cash with the four objectives listed in priority
order: Safety; Liquidity; Yield and Public Trust. Safety of principal invested is always the
primary objective. All investments shall be designed and managed in a manner responsive to the
public trust and consistent with State and Local law.
SAFETY
The primary objective of the City's investment activity is preservation of capital. Each
investment transaction shall be conducted in a manner to avoid capital losses.
' LIQUIDITY
The City's investment portfolio shall remain sufficiently liquid to enable the City to meet
operating requirements that may be reasonably anticipated. To the extent possible, the City will
attempt to match its investments with anticipated cash flow requirements. Unless matched to a
specific cash flow, the City will not directly invest in securities maturing more than five years
from the date of purchase.
YIELD
The investment portfolio shall be designed with the objective of regularly exceeding the average
rate of return on a six month U.S. Treasury Bill. The City's investment risk constraints and cash
flow needs shall be taken into consideration.
PUBLIC TRUST
All participants in the City's investment process shall seek to act responsibly as custodians of the
public trust. Investment officials shall avoid any transaction which might impair public
confidence in the City's ability to govern effectively.
III. RESPONSIBILITY AND CONTROL
DELEGATION OF AUTHORITY AND TRAINING
Authority to manage the City's investment program is derived from a resolution of the City
Council. The Finance Director is designated as the primary investment officer of the City. The
' Assistant Finance Director is designated as secondary investment officer in the absence of the
Finance Director. The Finance Director shall establish written procedures for the operation of
the investment program, consistent with this investment policy. Procedures shall include
reference to safekeeping, banking service contracts and collateral. No person may engage in an
investment transaction except as provided under the terms of this policy and the procedures
established by the Finance Director. The Finance Director shall be responsible for all
transactions undertaken and shall establish a system of controls to regulate the activities of
subordinate officials.
The investment officers shall attend at least one training session relating to the officers'
responsibility under the Act within 12 months after taking office or assuming duties.
PRUDENT INVESTOR RULE
The standard of prudence to be applied by the investment officer shall be the "pmdent investor'
rule which states: "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."
In determining whether an investment officer has exercised prudence with respect to an
' investment decision, the determination shall be made taking into consideration:
A. the investment of all funds, or funds under the entity's control, over which the
officer had responsibility rather than a consideration as to the prudence of a single
investment; and
B. whether the investment decision was consistent with the written investment policy
of the entity.
ETHICS AND CONFLICTS OF INTEREST
City staff involved in the investment process shall refrain from personal business activity that
could conflict with proper execution of the investment program, or which could impair the
ability to make impartial investment decisions. City staff shall disclose to the City Manager any
material financial interest in financial institutions that conduct business with the City.
An investment officer of the City who has a personal business relationship with an organization
seeking to sell an investment to the City shall file a statement with the City Manager disclosing
that personal business interest.
' LIABILITY
Investment and management staff acting in accordance with written procedures and this
investment policy and exercising due diligence shall be relieved of personal responsibility for
' market price changes, provided deviations from expectations are reported in a timely fashion and
the liquidity and the sale of the securities are carried out in accordance with the terms of this
policy.
CASH FLOW: Investment staff of the City will maintain a cash flow analysis which
identifies the present and future cash requirements. The investment portfolio (utilizing the
cash flow analysis) will be structured such that the selling of securities prior to maturity for
the purpose of meeting daily cash needs would be on an exception basis only.
SEPARATION OF DUTIES: Investment staff of the City will be responsible for maintaining
the cash flow analysis, determining the amount eligible for investment, and all other
administrative duties necessary in executing and tracking the investments. Finance
management staff will be responsible for the actual investment decisions.
INTERNAL CONTROL:
The Finance Director shall establish an annual process of independent review by an external
auditor in conjunction with the annual audit. This review will provide internal control by
assuring compliance with policies and procedures.
' IV. INVESTMENT PORTFOLIO
RISK AND DIVERSIFICATION
The City recognizes that investment risks can result from issuer defaults, market price changes or
various technical complications leading to temporary illiquidity. Risk is controlled through
portfolio diversification which shall be achieved by the following general guidelines:
A. risk of issuer default is controlled by limiting investments to those instruments
allowed by the Act, which are described herein;
B. risk of market price changes shall be controlled by avoiding over -concentration of
assets in a specific maturity sector, limitation of average maturity of operating
funds investments to less than 18 months, and avoidance of over -concentration of
assets in specific instruments other than U.S. Treasury Securities and authorized
investment pools.
C. risk of illiquidity due to technical complications shall be controlled by the
selection of securities dealers as described herein.
D. Concentration of credit risk is controlled by limiting the amount of investment
with a single issuer with the exception of State approved investment pools and
' U.S. Government Securities.
E. Custodial credit risk is minimized by requiring pledged securities to be in the
name of the City.
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Assets of the
City may be invested in the following instruments if deemed an authorized
investment pursuant to the Public Funds Investment Act, Chapter 2256, Texas Government
Code, as amended:
A.
obligations of the United States of America, its agencies and instrumentalities;
B.
direct obligations of the State of Texas or its agencies and instrumentalities;
C.
collateralized mortgage obligations directly issued by a federal agency or
instrumentality of the United States, the underlying security for which is
guaranteed by an agency or instrumentality of the United States;
D.
other obligations, the principal and interest of which are unconditional guaranteed
or insured by, or backed by the full faith and credit of, the State of Texas or the
United States or the respective agencies and instrumentalities;
E.
obligations of states, agencies, counties, cities, and other political subdivisions of
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any state rated as to investment quality by a nationally recognized investment
rating firm not less than A or its equivalent;
F.
certificates of deposits and share certificates meeting the requirements of the
Public Funds Investment Act, Chapter 2256, Texas Government Code, as
amended (the "PFIA"), (i) that are issued by a depository institution that has its
main office or a branch office in the state of Texas, that are guaranteed or insured
by the Federal Deposit Insurance Corporation or the National Credit Union Share
Insurance Fund, or are secured as to principal in the name of or benefit of the City
by obligations that are described in A through E above or an irrevocable standby
letter of credit from the Federal Home Loan Bank of Dallas for the benefit of the
City. All pledged securities acceptable pursuant to state law or letters of credit
shall have a market value of at least 103% of the original price;
G.
Public Funds Investment pools in the State of Texas which follow practices
allowed by the current law and whose investments may consist of CD's, U.S.
Treasuries, U.S. Government Agency Securities, U.S. Government Sponsored
Corporation's Instruments, Commercial Paper, Repurchase Agreements, or other
investment instruments permitted by law.
H. Collateralized Repurchase Agreements that are contractual agreements between
' the City and commercial banks, trust companies, state or federally chartered
savings and loan associations, and federally chartered savings banks. The Repo
issuer sells acceptable securities to the City and, in tum, the City agrees to resell
TERM OF INVESTMENTS
The maximum term of any investment may not exceed five (5) years.
TRANSACTION BIDS
Transaction bids may be obtained orally, in writing, electronically, or in any combination of
these methods.
TRANSACTION SETTLEMENTS
The settlement of all transactions, except investment pool funds and mutual funds, shall be on a
delivery versus payment basis.
' V. REPORTING
The Finance Director shall submit a signed quarterly investment report to the
the securities on a specific date at a specified amount (original cost plus interest).
Repurchase agreements are required to be backed by acceptable collateral
securities in the time of or benefit of the City and have a market value of at least
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103% of the original purchase price.
I. Commercial Paper, Banker's Acceptances, and Guaranteed Investment Contracts
that have met all requirements of state law, including ratings, term, and security.
The following is the maximum goal for various types of authorized deposits (shown as a
percentage of total investments) for each type of investment. The percentages are based mainly
on the
safety and liquidity of the investment and to obtain the overall highest rate of return with
appropriate risk for the City.
A.
Collateralized Certificates of Deposits (CD's): 40%
B.
Collateralized Repurchase Agreements: 30%
C.
U.S. Treasury Obligations: 100%
D.
Municipal Investment Pool (MIP): 100%
E.
Commercial Bank Savings Accounts: 15%
F.
U.S. Government Agency Securities: non -callable 100%
G.
U.S. Government Agency Securities: callable 70%
H.
U.S. Government Sponsored Corporation's Instruments: non -callable 75%
I.
U.S. Government Sponsored Corporation's Instruments: callable 70%
J.
Commercial Paper: 20%
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K.
L.
Banker's Acceptances: 10%
Guaranteed Investment Contracts: 25%
M.
State or Local Governmental Obligations: 30%
TERM OF INVESTMENTS
The maximum term of any investment may not exceed five (5) years.
TRANSACTION BIDS
Transaction bids may be obtained orally, in writing, electronically, or in any combination of
these methods.
TRANSACTION SETTLEMENTS
The settlement of all transactions, except investment pool funds and mutual funds, shall be on a
delivery versus payment basis.
' V. REPORTING
The Finance Director shall submit a signed quarterly investment report to the
City Council that contains the information required by the Public Funds Investment Act
including but not limited to:
' A. describing in detail the investment position of the entity on the date of the report;
B. stating the book value and market value of each separately invested asset at the
beginning and end of the reporting period by the type of asset and fund type
invested;
C. stating the maturity date of each separately invested asset that has a maturity date;
and
D. stating the compliance of the investment portfolio of the City as it relates to the
investment strategy stated in the City's Investment Policy.
VI. SELECTION OF BROKERS AND SECURITY DEALERS
For brokers and dealers of government securities the City may select only those dealers reporting
to the Market Reports Division of the Federal Reserve Board of New York also known as the
"Primary Government Security Dealers," unless a comprehensive credit and capitalization
analysis reveals that other firms are adequately financed to conduct public business. Investment
officials shall not knowingly conduct business with any firm with whom public entities have
sustained losses on investments. All securities dealers shall provide the City with references
from public entities which they we currently serving. The city shall review the list of brokers on
an annual basis pursuant to Section 2256.025 of the Public Funds Investment Act.
All financial institutions and broker/dealers who desire to become qualified bidders for
investment transactions must supply the following as appropriate:
A. audited financial statements
B. proof of National Association of Securities Dealers (NASD) certification
C. proof of state registration
D. certification of having read the City's Investment Policy signed by a registered
principal of the organization
E. acknowledgement that the organization has implemented reasonable procedures
and control in an effort to preclude imprudent investment activities arising out of
investment transactions conducted between the City and the organization.
The list of brokers/dealers, financial institutions, banks, and investment pools shown are
authorized to conduct investment business with the City.
' VII. INVESTMENT POLICY ADOPTION
The City of Allen Investment Policy shall be adopted by resolution of the City Council. The City
Council shall review this Investment Policy and investment strategies annually and any
' modifications made thereto must be approved by the City Council.
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Authorized Broker/Dealers, Financial Institutions, Banks, and Investment Pools
Wendy Wong-Majors, VP Public Funds
Coastal Securities
600 N. Pearl St., STE 2500
Tony D. Sekaly
Dallas, Texas 75201
5555 San Felipe, Suite 2200
214-855-1611
Houston, TX 77055
800-562-9007
800-681-4121
Fax: 972-822-3910
713-435-4534 Fax
Wendvwona-maiors(aDcapitalonebank.com
tony.sekalv(acoastalsecurities.com
tdse,coastalsecurities.com
First Public, LLC
Therese Gillis
Trent Toon
hti(@,coastalsecurities.com
800-558-8875 Toll Free
512-467-3695 Direct
Gilford Securities
512-452-7842 Fax
Steve Ned
7620 Guadalupe
2020 Main Street, Suite 650
Austin, Texas 78752
Irvine, CA 92614
Trent.TOon(O7firstpublie.com
800-540-7000
"
949-852-7002 Fax
Viewpoint Bank
Steve.Neri(aileilfordsecurities.com
Patti McKee, Exec. VP, CFO
s.neri(@,gilfordsecurities.com
Michael Martin, Treasury Sales Officer
steveneri(a),eilfordsecurities.net
Kari Anderson, Controller
stevewalker(rdeilfordsecurities.net
321 E. McDermott
225 S. Custer Rd.
Allen, Texas
Diarme Parker
1-800-578-9009 469-467-1004 (fax)
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Texpool Participant Services
972-578-5000
c/o Federated Investors
Michael 972-801-5884 (direct)
1001 Texas Ave, 14th Floor
Michael 469467-1043 (fax)
Houston, TX 77002
patti.mckee(a viewpointbank.com
866-839-7665
kari.andersonQdviewpointbank.com
Fax 866-839-3291
michael.martinna.viewpointbank.com
doarkerQfedemtedinv.com
American National Bank
Raymond James Financial Services, Inc.
Colleen Biggerstaff, Banking Supervisor
Jamie Richardson, CPR Principal
Tammy Hoggatt
1309 W. 15" St., Suite 400
720 S. Greenville Ave.
Plano, TX 75075
Allen, Texas
972-398-3472
972-727-5785 ext 5929
972-578-5000 ext 7410
214-863-5929
972-801-9719 Fax
214-863-6179 (fax)
Jamie.richardsonaravmondiames.com
colleenbig eg >staffQaanbtx.com
www.viewpointbank.com/inves[
' Lone Star Investment Pool
First Public, LLC
Capital One, N.A. Trent Toon
Authorized Broker/Dealers, Financial Institutions, Banks, and Investment Pools
800-558-8875 Toll Free
313.222.0048
512467-3695 Direct
800.327.7058 Toll Free
512452-7842 Fax
313.964.2743 Fax
'
7620 Guadalupe
ctheul(a)comerica.com
Austin, Texas 78752
Trent.Toon(a),firstoublic.com
Legacy Texas Bank
Cathay Bank -Dallas Region
Esau C. Liu,First Vice President &
Regional Manager
4100 Legacy Dr., Suite 403
Plano, Texas 75024
214-228-2658 (cell)
972-618-2000 (office)
972-618-7345 (fax)
esau liu0calhavbank.com
RBC Dain Rauscher
Philip Smith
Institutional Fixed Income
Cityplace, suite 2500
2711 N Haskell Avenue
Dallas, TX 75204
866-410-5833
214-989-1423
Fax 866-958-1640
philip.smithexbccm.com
Michael B. Bell
First Vice President
Stifel Nicolaus & Company, Incorporated
Fixed Income Institiutional Sales
5956 Sherry Lane, Suite 875
Dallas, TX 75225
Phone: (214) 706-9469
Phone: (866) 779-2415
Fax: (214)368-4292
Bell, Michael (Dallas) [bellm@stifel.com]
' Comerica Securities, Inc.
Chris Theut, Institutional Sales
201 W. Fort St. 3rd Floor
MC 3089
Detroit, MI 48226
Jennifer Moss
5000 Legacy Drive, Ste 120
Plano, TX 75024
972 461-7055
Jennifer.mosse,leeacvtexas.com
Wells Fargo Brokerage Services, LLC
Susan T. Ward (Dallas) MAC TS303-028
Huey Scott
1445 Ross Avenue, Suite 210
Dallas, TX 75202
1-800-937-0998 (Dallas)
214-740-1586 (Susan phn)214-740-9990 (fax)
214-7774018 Chuck phn) "
214-7774033 (Huey phn)
wardst(a),wel Isfareo.wm
Chock.landrv(@,wellsfar%zo.com
Huev.H.Scott(i4 W ellsfargo.co
Texas Security Bank
Nicki Davis, Asst VP
Treasury Management
1212 Turtle Creek Blvd
Dallas, TX 75207
469-398-4827 Direct.Cell.Fax
214-571-9595 Main
Nicki.davisna,TexasSecuritvBank.com
First Southwest Asset Management Inc.
TexSTAR, Mary Ann Dunda
325 North St. Paul Street, Suite 800
Dallas, TX 75201
1-800-839-7827 214-953-4086
214-953-8878 Fax
mdunda - .firstsw.com
Authorized Broker/Dealers, Financial Institutions, Banks, and Investment Pools
Zions First National Bank -
Capital Markets
Kathleen Sullivan, AVP
One South Main Street, 17" Floor
Salt Lake City, UT 84111
801-524-4819
801-524-4659 Fax
iu nD(a bIoombere.nel
Ned Boyer, Senior Vice -President
FTN Financial
845 Crossover Lane, Suitel50
Memphis, TN 38117
901435-8915
800-934-8915
901-435-8776 (fax)
901-412-7298 (cell)
Ned.bover(a,Rnfinancial.com
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