R-3289-4-15RESOLUTION NO.3289-4-15(Rl
' A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, APPROVING AN AMENDED POLICY FOR THE INVESTMENT
OF MUNICIPAL FUNDS; DECLARING THAT THE CITY COUNCIL HAS
COMPLETED ITS REVIEW OF THE INVESTMENT POLICY AND INVESTMENT
STRATEGIES OF THE CITY AND THAT EXHIBIT "A" RECORDS ANY CHANGES
TO EITHER THE INVESTMENT POLICY OR INVESTMENT STRATEGIES;
PROVIDING A REPEALING CLAUSE; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, Section 2256.005, Tex. Gov't Code, requires the City Council to review the investment policies and
investment strategies not less than annually and to adopt a resolution or order stating the review has been
completed and recording any changes made to either the investment policies or investment strategies; and,
WHEREAS, the City Council re -adopted the Investment Policy on October 9, 2012, and November 12, 2013;
and,
WHEREAS, the Investment Policy is hereby amended to change the title of City staff and to add or remove
authorized broker/dealer/financial institutions/ and/or banks; and,
WHEREAS, the Investment Policy attached as Exhibit "A" has been reviewed and includes amendments since
the re -adoption on November 12, 2013.
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. All provisions of the resolutions of the City of Allen, Texas, in conflict with the provisions of
this Resolution be, and the same are hereby, repealed, and all other provisions not in conflict with the provisions
of this Resolution shall remain in full force and effect.
SECTION 3. Should any word, sentence, paragraph, subdivision, clause, phrase or section of this Resolution
be adjudged or held to be void or unconstitutional, the same shall not affect the validity of the remaining portions
of said Resolution which shall remain in full force and effect.
SECTION 4. This Resolution shall take effect upon its adoption.
DULY PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, ON THIS THE 14TH DAY OF APRIL, 2015.
APP VED:
' Steph Terrell, MAYOR
ATTEST:
Shelley B. G , CITY SE ARY
(MS:3-30-15IM 00894)
I
EXHIBIT"A"
CITY OF ALLEN, TEXAS
INVESTMENT POLICY
April 14, 2015
Resolution No. 3289-4-15(R), Page 2
' L,.. V,..V1\
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
(PFIA), Chapter 2256, Texas Government Code, as amended, (the "Act") to define, adopt and review a
formal investment strategy and policy. Additionally, this policy excludes the investment of public funds
that are invested by a trustee pursuant to Chapter 172 of the Texas Local Government Code, and Chapter
113 and Chapter 117 of the Texas Property Code, for the City's retiree healthcare benefits program. Such
funds are invested pursuant to a separate Investment Guidelines Document as part of a Post -Retirement
Health Care Plan Trust.
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 10% 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
' 1. SCOPE
Resolution No. 3289-4-15(R), Page 3
'
This investment policy applies to all financial assets of the City of Allen including component units
reported as follows:
•
General Fund
•
Enterprise Funds
•
Debt Service Funds
•
Special Revenue Funds
•
Capital Projects Funds
•
Internal Service Fund
•
Trust and Agency Funds
•
Economic Development Corporation
•
Community Development Corporation
Funds that are invested by a trustee pursuant to Chapter 172 of the Texas Local Government Code, and
Chapter 113 and Chapter 117 of the Texas Property Code, for the City's retiree healthcare benefits
program are excluded from this policy.
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.
1
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.
Resolution No. 3289-4-15tR1, Page 4
' 111. 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
Chief Financial Officer (CFO) is designated as the primary investment officer of the City. The Assistant
Chief Financial Officer is designated as secondary investment officer in the absence of the CFO. No
person may engage in an investment transaction except as provided under the terms of this policy and the
procedures established by the CFO. The CFO shall be responsible for all transactions undertaken and
shall establish a system of controls and compliance audit to regulate the activities of subordinate officials.
The investment officers shall attend training sessions within the fiscal year time period in compliance
with Section 2256.008 of the Act. New investment officers shall attend training within 12 months after
taking office or assuming duties.
SAFEKEEPING AND CUSTODY
The CFO shall establish written procedures for the operation of the investment program, consistent with
this investment policy. Procedures shall include reference to safekeeping and reporting of the portfolio
market value for securities held in safekeeping, banking service contracts and collateral. Securities and
collateral will be held by a third party custodian designated by the City or by the Federal Reserve Bank
and held in the City's name as evidenced by safekeeping receipts of the institution with which the
securities are deposited. The market value of the securities and collateral shall be reported at least
monthly by the custodians.
PRUDENT PERSON RULE
The standard of prudence to be applied by the investment officer shall be the "prudent person" 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. An investment officer of the City who has a personal business
relationship, as defined in the PFIA Section 2256.005, with a financial organization seeking to sell an
' investment to the City, shall file a disclosure statement with the Texas Ethics Commission, the City
Council, and the City Manager.
Resolution No. 3289-4-15(R), Page 5
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.
INVESTMENT SAFEGUARDS
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 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. Authorized Finance management staff will be
responsible for the actual investment decisions.
INTERNAL CONTROL: The CFO 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 the weighted 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.
Resolution No. 3289-4-15(R), Page 6
' AUTHORIZED INVESTMENTS
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, including obligations that are fully
insured or guaranteed by the Federal Deposit Insurance Corporation or by the explicit full
faith and credit of the United States;
E. obligations of states, agencies, counties, cities, and other political subdivisions of 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 a Federal Home Loan
Bank in the United States 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 plus accmed interest;
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 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 103% of the original purchase price plus accrued interest.
' 1. Commercial Paper and Banker's Acceptances that have met all requirements of state law,
including ratings, term, and security.
Resolution No. 3289-4-15(R), Page 7
' J. No-load money market mutual fund that meets the requirements of state law as an
authorized investment under Chapter 2256 of the PFIA.
K. Guaranteed investment contracts that meet the requirements of state law as an authorized
investment for bond proceeds and that the governing body of the City has specifically
authorized guaranteed investment contracts as an eligible investment in the order,
ordinance, or resolution authorizing the issuance of bonds
L. The City is not required to liquidate investments that were authorized investments at the
time of purchase.
M. The City shall take all prudent measures that are consistent with its investment policy to
liquidate an investment that no longer has the required minimum rating. The City shall
establish procedures to monitor rating changes of its investments.
N. The City requires that all City depository accounts have sufficient pledging, valued at
market, and shall be secured at 103% of the City balances less the amount of FDIC
insurance at all times.
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):
50%
'
B. Collateralized Repurchase Agreements:
30%
C. U.S. Treasury Obligations:
100%
D. Municipal Investment Pool (MIP):
100%
E. Commercial Bank Savings Accounts:
30%
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%
1. U.S. Government Sponsored Corporation's Instruments: callable
70%
J. Commercial Paper:
20%
K. Banker's Acceptances:
10%
L. Guaranteed Investment Contracts:
25%
M. State or Local Governmental Obligations:
30%
N. Money Market Mutual Funds
15%*
* Must comply with percentage restriction in PFIA Section 2256.014(c)
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. It is recommended to obtain at least three competitive bids for individual
security purchases,
however, this provision excludes transactions involving money market mutual funds,
local government
'
investment pools, securities issued and deemed to be made at prevailing market rates, or a reinvestment of
funds from a called security with the original broker.
Resolution No. 3289-4-15(R), Page 8
' 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 CFO 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 firs are adequately financed to conduct public business. Investment officials shall not knowingly
conduct business with any fir with whom public entities have sustained losses on investments. All
securities dealers shall provide the City with references from public entities which they are 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.
Resolution No. 3289-4-15(R), Page 9
' 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.
I
Resolution No. 3289-4-15(R), Page 10
I
1
1
Authorized Broker/Dealer/Financial Institutions/Banks/Investment Pools
American National Bank
Colleen Biggerstaff
972-727-5785
colleenbieeerstaff(a anbtz com
720 S. Greenville Ave.,
Banking Center Manager
Ext 5967
Allen, TX 75002
214-863-6175 FGre
ancom
ebsen btx.
Bank of America Merrill
Julia Ann Erickson
214.209.2015
ulia.a.erickson(@,baml.com
Lynch
Vice President of
214.209.2067 F
Bank of America, N.A.
Global Liquidity
901 Main Street, 63rd Floor
Investment Services
Dallas, TX 75202
Daniel Schroeder
214-209-2963
daniel schroeder(a),baml com
Senior Vice President
Bank of America Merrill
Lynch
Bank of America, N.A.
Capital One Bank
Michael Bradford
214-855-2601
michael.bradford(acaoitalone com
600 North Plaza Suite 2500
Senior Vice President
318-525-4522 C
Dallas, TX 75201
Government Banking
Coastal Securities
Tony D. Sekaly
800-6814121
tonv.sekalv(ola coastalsecurities com
920 Memorial City Way—
I lu Floor
713-4354534 F
1-800489-3232
tds(lacomtalsecurities.com
tsekaly(obloombere.net
Houston, TX 77024
Therese Gillis
hticoastalsecurities.com
Comerica Bank
Rosie G. Fayson
214-589-5694
MC6548
VP -Texas Market
469-235-7710 C
1508 West Mockingbird Ln
Dallas, TX 75235
Municipal Banking
214-589-5450 F
rafayson(a)comerica com
Comerica Securities, Inc.
Chris Theut
313-222-0048
ctheut(a)eomerica.com
201 W. Fort St.
Institutional Sales
800-327-7058
3rd Floor
313-964-2743 F
MC 3089
Detroit, MI 48226
East West Bank
Esau Liu,
832-973-8938 O
esau.liu6i)eastwestbank com
9600 Bellaire Blvd., Ste. 252
Senior Vice
310-775-8838 F
Houston, TX 77036
President/Team
713-208-6463 C
Manager, SW Region
Advisors Asset Management
Chris Reda,
631-390-2244
creda(aaamlive.com
48 South Service Rd.
Regional Advisory
Suite 210
Consultant
Melville, NY 11747
Gilford Securities
Steve Neri
800-540-7000
Steve.Neri(@,gilfordsecwities.com
com
2020 Main Street, Ste. 650
949-852-7002 F
Irvine, CA 92614
Legacy Texas Bank
Elisa Martinez
972-461-7290
Elisa. Martinez(alleeacvtexascom
5000 Legacy Dr., Ste, 120
Linda McMurtry
469-682-0311 C
Plano, TX 75024
972-461-7020F
Linda,MeMu Ie it exas.com
Stifel Nicolaus & Co., Inc.
Patrick McDowell-
(901) 333-8152 (phone)
mcdowelloa(4stifel.com
Fixed Income Capital
Director
(901)340-3800
m_cdpw0pa(a0loomberenet
Markets
(mobile)
6075 Poplar Avenue, Suite
(901) 762-8520 (fax)
628, Memphis, TX 38119
Laine Argo
(901)333-8122 (phone)
argwI(a),stifel com
Heidi Crouse
901 333-8123 hone
crouseh tifel.com
Resolution No. 3289-4-15(R), Page 11
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Texas Security Bank
3212 Beltline Road
Bonnie Nichols
Senior Vice President
469-398-4804
469-398-0804 Fax —
bonnie.ntahols(4texassecuritvbank wm
Farmers Branch, Texas
Chief Compliance
same as phone
Officer
214-571-9595 main line
TexPool Participant Services
Dianne Parker
866-839-7665
doarkeridifederatedinv com
c/o Federated Investors
866-839-3291
1001 Texas Avenue
Suite 1400
Houston, TX 77002
Wells Fargo Securities, LLC
Susan T Ward
Dallas 800-937-0998
wardst(a)wellsfareo com
1445 Ross Avenue
Pamela Steuben
Susan 214-740-1586
Pamela.K Steuben/ilwellsfareo com
Suite 210
214-740-9990 F
Dallas, TX 75202
Pamela 214-777-4078
Fax 877-605-9530
Resolution No. 3289-4-15(R), Page 12