R-3071-3-12RESOLUTION NO. 3071-3-12(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 June 22, 2010 and March 22, 2011; and
WHEREAS, the Investment Policy is hereby amended to include the Economic Development Corporation
and Community Development Corporation as component units, increases the maximum percentage of
Collateralized Certificates of Deposits (CD's) from 40% to 50% of the total investment portfolio, change title
of Finance Director to Chief Financial Officer, remove and add authorized broker/dealer/financial
institutions/ bankstand/or investment pools; and
WHEREAS, the Investment Policy attached as Exhibit "A" has been reviewed and includes amendments since
the re -adoption on March 22, 2011.
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 THE CITY COUNCIL OF THE CITY OF ALLEN, COLLIN
COUNTY, TEXAS, ON THIS THE 13'rr DAY OF MARCH, 2012.
ATTEST:
lOtiSl
Shelley B. GeorkatITY SECRETkRV
1
APPROVED:
AQ�ax
Stephen Terrell, MAYOR
EXHIBIT A
CITY OF ALLEN, TEXAS
INVESTMENT POLICY
March 13, 2012
Resolution No. 3071-3-12(R), Page 2
' 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 Fonds Investment Act, 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 Trust 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
' tern 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.
' 1. SCOPE
This investment policy applies to all financial assets of the City of Allen including component units reported
as follows:
Resolution No. 3071-3-12(R), Page 3
•
General Fund
•
Enterprise Funds
•
Debt Service Funds
'
•
Special Revenue Funds
•
Capital Projects Fonds
•
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 Trust Code, for the City's retiree healthcare benefits program are
excluded from this policy.
II. 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.
M. RESPONSIBILITY AND CONTROL
' DELEGATION OF AUTHORITY AND TRAINING
Resolution No. 3071-3-12(R), Page 4
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
Finance Director is designated m secondary investment officer in the absence of the CFO. The CFO 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 CFO. The CFO 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 training sessions in compliance with Section 2256.008 of the Act. New
investment officers shall attend training 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 "prudent 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 terns 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
Resolution No. 3071-3-12(R), Page 5
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 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
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.
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;
Resolution No. 3071-3-12(R), Page 6
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 any state
rated as to investment quality by a nationally recognized investment rating firth 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 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.
1. Commercial Paper, Bankers 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):
50%
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%
1.
U.S. Government Sponsored Corporation's Instruments: callable
70%
I.
Commercial Paper:
20%
'
K.
Bankers Acceptances:
10%
L.
Guaranteed Investment Contracts:
25%
M.
State or Local Governmental Obligations:
30%
Resolution No. 3071-3-12(R), Page 7
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 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 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 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
Resolution No. 3071-3-12(R), Page 8
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.
Authorized Broker/Dealer/Financial Institutions/Banks/Investment Pools
American National Bank
Colleen Biggerstaff
972-727-5785
colleenbieeernafUmbtz.com
720 S. Greenville Ave.,
Admin. Officer
Ext 5929
Allen, TX 75002
214-863-6179 F
Cantor Fitzgerald
Don La Pinna
214-866-0410
dlaoiana(lcantoccom
14185 Dallas Parkway,
800- 883-6332
Suite 870
214 -662-6632 C
Dallas, TX 75254
972- 385-0691 F
Cathay Bank
Elizabeth Chang
972-618-2000
liz chane(�cathaybank.com
4100 Legacy Dr.
Assist. Branch Mgr
EM 8248
Suite 403
972-618-7345 F
Plano, TX 75024
Coastal Securities
Tony D. Sekaly
800-6814121
tonv.sekalv(a)coastalsecurlties com
tds(acoastalsecurities.com
5555 San Felipe
7134354534 F
Suite 2200
Therese Gillis
Houston, TX 77055
hf coastalsecurities.com
Collin Bank
Jennifer Moss, CTP
972-294-6245
imoss(A7collinbank.com
2701 Dallas Parkway
Sr. Vice President
469-222-5002 C
Suite 100
469-326-0049 F
Plano, TX 75093
Comerica Bank
Rosie G. Payson
214-589-5694
refawon(<),comerica.com
MC6548
VP -Texas Market
469-235-7710 C
1508 West Mockingbird Ln
Municipal Banking
214-589-5450 F
Dallas, TX 75235
Comerica Securities, Inc.
Chris Theut
313-222-0048
ctheut(<ilcomerica.com
201 W. Fon St.
Institutional Sales
800-327-7058
3rd Floor
313-964-2743 F
MC 3089
Detroit, MI 48226
First Empire Securities
Chris Reda
800-645-5424
cnida a lemnire.com
100 Motor Parkway
VP -Fixed Income
www.lempire.com
2"a Floor
Strategies
Hau au e, NY 11788
Gilford Securities
Steve Neri
800-540-7000
Steve.Neri a(Ieilfordsecurlties.com
2020 Main Street
949-852-7002 F
Suite 650
Irvine, CA 92614
Resolution No. 3071J -12(R), Page 9
I
Legacy Texas Bank
5000 Legacy Drive
Elisa Martinez
-t
972461-7290
469-682-0311 C
EOza.Martineydleeacvtexas.com
Suite 120
972-461-7020 F
Plano TX 75024
Stifel Nicolaus & Co., Inc.
Fixed Income Inst Sales
Michael B Bell
Director
214-706-9469
866-779-2415
bellm(a).stifel.com
Mbell23(la.bloombere net
5956 Sherry Lane
Nancy Grass
214-3684292 F
emssn(alstifel corn
Suite 875
Dallas, TX 75225
515-661-6271
515-661-6334 F
neruss(a bloombere net
Texas Security Bank
Nicki Davis
469-398-4827
Nicki.Davis(a)Texa SecuriNBank com
1212 Turtle Creek Blvd
Vice President
469-3984888 F
Dallas TX 75207
Treasury Mgmt
TexPool Participant Services
Dianne Parker
866-839-7665
dpartkerlalfederatedirm com
c/o Federated Investors
866-839-3291
1001 Texas Avenue
Suite 1400
Houston, TX 77002
Viewpoint Bank
Patti Mckee
972-578-5000
patti.mckee(a)viewoointbank com
321 E. McDermott
Executive VP,
800-578-9009
Charles.BangmKilviewoointbank com
michael.martin(alviewoointbank com
Allen, TX 75013
CFO
469-467-1004 F
Charles Bangert,
Charles
VP -Director of
972-801-5762
Finance
Michael
Michael Martin,
972-801-5884
Treasury Sales
469-964-7246 C
Officer
469467-1043 F
Wells Fargo Brokerage
Susan T Ward
Dallas 800-937-
wardst(alwellsfargo.com
Services, LLC
Huey Scott
0998
Huev.H.Scottna.wellsfareo.com
1445 Ross Avenue
Susan 214-740-1586
Suite 210
214-740-9990
Dallas, TX 75202
F
Huey 214-7774033
Zions First National Bank
Kathleen Sullivan
801-524-4819
'iumpAbloombera.net
Capital Markets
Assistant Vice
801-5244659 F
One South Main Street
President
17a Floor
Salt Lake City,UT 84111
Resolution No. 3071-3-12(R), Page 10