HomeMy WebLinkAboutReso 2005-861
RESOLUTION NO. 2005-~l
A RESOLUTION OF THE CITY COMMISSION OF
THE CITY OF SUNNY ISLES BEACH, FLORIDA,
APPROVING AN INVESTMENT POLICY FOR
SURPLUS FUNDS; PROVIDING THE INTERIM
CITY MANAGER AND THE FINANCE DIRECTOR
WITH THE AUTHORITY TO DO ALL THINGS
NECESSARY TO EFFECTUATE THE TERMS OF
THIS RESOLUTION; PROVIDING FOR AN
EFFECTIVE DATE.
WHEREAS, Section 166.21, Florida Statutes provides the City with the authority
to invest surplus funds in certain securities; and
WHEREAS, The City Commission has the desire to invest surplus funds in
accordance with state law; and
WHEREAS, by adopting an investment policy the City will be able to earn
higher returns on its investments.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION
OF THE CITY OF SUNNY ISLES BEACH, FLORIDA, AS FOLLOWS:
Section 1. Approval of Investment Policy. The City Commission hereby approves the
Investment Policy attached hereto as Exhibit "A".
Section 2. Authorization of Interim City Manager and Finance Director. The Interim
City Manager and Finance Director are hereby authorized to do all things necessary to
effectuate the terms of this Agreement.
Section 3.
Effective Date. This Resolution will be become effective upon adoption.
PASSED and ADOPTED this
ATTEST: , "
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~;"""I\"'. . '\",'
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. /ti....J .
Jane A. H~ne~, City Clerk' .
, .
Approving Investment Policy for Surplus Funs
APPROVED AS TO FORM
AND A IENCY
VOTE AS FOLLOWS: 5-0
Mayor Edelcup
Vice Mayor Thaler
Commissioner Brezin
Commissioner Goodman
Commissioner Iglesias
Approving Investment Policy for Surplus Funs
Moved by: 'flu.. rV\aJ.jOY ~~
Second by: rj)Mrrl\lSS\Dl\)~ 'ILoL~~I~
--.0Yes)_(No)
V(Yes)_(No)
V(Yes)_(No)
~(Yes)_(No)
v"fYes)_(No)
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CITY OF SUNNY ISLE BEACH
INVESTMENT OPERATING POLICY
OF
PREP ARED BY THE
Finance Department
Jean Watson, Finance Director
TABLE OF CONTENTS
Investment Operating Policy
Investment Policy
Purpose ............................................................................................................. 1
Scope . .. .. .. .. .. .. .. . .. . . . .. . . . . .. . .. . . . .. .. .. .. . . . . . .. .. .. . . .. .. . . . . . .. .. .. . .. . . .. . . .. . . . .. . . . . .. . .. . . . . . . .. .. . . . ... 1
Investment Objectives....................................................................................... 2
Performance Measurement..................................................... ..................... ...... 2
Delegation of Authority.................................................................................... 3
Prudence and Ethical Standards........................................................................ 3
Listing of Authorized Investments.................................................................... 3, 4
Maturity and Liquidity Requirements.... ........................................................... 4
Portfolio Composition....................................................................................... 5,6,7,8
Interfund Loans or Transfers............................................................................. 8
Risk and Diversification.................................................................................... 8
Authorized Investment Institutions and Dealers............................................... 8, 9
Selection of Investment Managers.................................................................... 9
Sale of Securities............................................................................................... 9
Audits.................... ............................................................................................ 10
Existing Investments......................................................................................... 10
Effective Date.................................................................................................... 10
CITY OF SUNNY ISLES BEACH
INVESTMENT/PORTFOLIO POLICY
PURPOSE
It is the intent of this policy to provide the Finance Director or designee sufficient
latitude to effectively manage the City's financial assets so as to protect the
principal, provide sufficient liquidity and maximize the return on investments
within an acceptable exposure to risk. In an effort to accomplish the
aforementioned, this policy identifies various portfolio parameters addressing
investment instruments, issuer diversification, maturity constraints, investment
ratings, and liquidity.
SCOPE
This investment policy applies to all financial assets held or controlled by the City
of Sunny Isles Beach, except for pension and deferred compensation funds.
All financial assets held or controlled by the City, not otherwise classified as
restricted assets requiring separate investing, shall be identified as " funds' of the
City for the purpose of this policy, and shall be invested under the guidelines as
herein set forth. The guidelines, provided herein are the general operating
procedures.
Funds group included:
· General Fund
· Special Revenue Funds
· Debt Service Funds
. Capital Projects
. Enterprise Funds
· Internal Service Funds
. Agency Funds
· Any new fund group created by the City, unless specifically
exempted by the City Commission.
INVESTMENT OBJECTIVES
The following investment objectives will be applied in the management of City
funds.
· The investment objective order of the priority shall be safety of
capital, liquidity of funds, and investment income, in that order.
· Safety of principal is regarded as the foremost objective of the
investment program. Investments of the City shall be undertaken in a
manner that seeks to ensure the preservation of capital in the overall
portfolio. Each investment transaction shall be entered into with
every effort to prevent capital losses, whether they are from
securities defaults, theft, or the impact of adverse market conditions.
· The City will maintain sufficient liquidity to enable the City to meet
operating requirements, which might be reasonably anticipated.
· The City will employ mechanisms to reduce risks by diversifying its
investments between specific security types and individual financial
instituti ons.
· The City will strive to maximize the return of the portfolio and to
preserve the purchasing power but will avoid assuming unreasonable
investment risk.
· Funds of the City will be invested in accordance with Florida State
Statutes 166.261, 280, 218,415, these policies, and written
administrative procedures.
· The funds are in general, passively invested.
PERFORMANCE MEASUREMENT
The City seeks to optimize return on investment within the constraints of safety
and liquidity. The investment portfolio shall be designed with the objective of
exceeding the average return earned on investments held by the State Board of
Administration Local Government Surplus Funds Investment Pool ("SBA").
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DELEGATION OF AUTHORITY
The Finance Director or designee is responsible for investment decisions and
activities, under the direction of the City Manager. The day-to-day administration
of the cash management program is handled by the Finance Director. No person
may engage in an investment transaction except as provided under the terms of the
policy and the procedures so established.
Positions authorized as investment signatories are the Mayor, City Manager, Vice
Mayor, City Clerk, Finance Director and the designee. The persons holding these
positions are also authorized to initiate or approve a wire transfer transaction in
accordance with applicable policies and procedures.
PRUDENCE AND ETHICAL STANDARDS
The standard or prudence to be applied by the Finance Director or designee 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 from the investment."
The "Prudent Person" rule can be applied in the context of managing the overall
portfolio.
The Finance Director or designee and staff, acting in accordance with the written
procedures and exercising due diligence, shall not be held personally responsible
for a specific security's credit risk or market price changes, provide that these
deviations are reported immediately and that appropriate action is taken to control
adverse developments.
LISTING OF AUTHORIZED INVESTMENTS
Although investments may be on the authorized list, only those securities with an
active secondary market may be purchased from the list.
The Finance Director or the designee may purchase/sell investments securities, at
prevailing market rates, in the following authorized investment vehicles:
(a) the Local Government Surplus Funds Trust Fund and any other investment
plan or investment trust developed by the Florida League of Cities, the
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Florida Association of Counties, the Florida Association of Court Clerks,
or similar state or national associations, approved by the City.
(b) Negotiable direct obligations of or obligations the principal and interest of
which are unconditionally guaranteed by the United States Government or
its agencies.
(c) Non-negotiable interest-bearing time certificates of deposits or savings
accounts in state or federal banks, state or federal savings and loan
associations as permitted and/or prescribed by chapter 280 of the Florida
Statutes.
(d) Government Sponsored Enterprises including but not limited to Federal
Farm Credit banks, Federal Home Loan Bank or its district banks, Federal
National Mortgage Association, Federal Home Loan Mortgage
Corporation, including Federal Home Loan Mortgage Corporation
Participation Certificates, Student Loan Marketing Association or
obligations guaranteed by the Government National Mortgage Association.
(e) State or local government taxable and tax exempt debt, general obligation
and/or revenue bonds rated at least "A a" by Moody's or "AA" by Standard
& Poor's for long-term debt or rated at least MIG -2 by Moody's or SP-2
Standard & Poor's for short-term debt.
(f) Real estate, so long as the acquisition and sale complies with applicable
federal and state laws and regulations in addition to applicable City
Charter provisions, if any, and the city Code of Ordinances.
MATURITY AND LIQUIDITY REQUIREMENTS
To the extent possible, the City will attempt to match its investments with overall
anticipated cash flow requirements. The average maturity of the portfolio as a
whole may not exceed five (5) years. This calculation also applies to the expected
average life of asset-backed securities and mortgage -backed securities (rather than
the stated final maturity). Limitation percentages of the portfolio are measured
from the date the securities are acquired. Unless matched to a specific cash flow
requirement, the City will not directly invest in securities with an expected average
life of more than twenty (20) years from the date of purchase. No more than 30%
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of the City's total investment portfolio shall be placed III securities with an
expected average maturity of more than five (5) years.
PORTFOLIO COMPOSITION
The following are the authorities for investments and limits on security issues,
issuers, and maturities as established within this policy. The Finance Director or
the investment adviser/manager shall have the option to further restrict investment
in selected instruments, to conform to then-present market conditions.
A. Investment Plans and Trusts
1. Authority to Invest
The Finance Director or the designee may invest in the following:
a. Local Government Surplus Trust Fund "Trust Fund"
b. Any intergovernmental investment trust developed by the
Florida Interlocal Cooperation Act as provided in Section
163.01.
c. Any other investment plan or investment trust developed by
the Florida League of Cities, the Florida Association of
Counties, the Florida Association of Court Clerks, the State
Board of Administration or similar state 0 national
associations approved by the City.
2. Portfolio Composition
A maximum of 100% of the portfolio may be invested in the "Trust
Fund". Bond proceeds may be deposited in the "Trust Fund" until
alternative investments have been purchased.
B. Government Securities
1. Authority to Purchase
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The Finance Director or designee may invest in negotiable direct
obligations of the U.S. Government. Such securities will include
the following:
Direct Obligations:
. Treasury Bills
· Treasury Notes
· Treasury Bonds
2. Portfolio composition
The portfolio may be comprised of 100% direct government
obligations including the securities held under overnight
repurchase agreements.
3. Maturity Limitations
The maximum length to maturity of any direct investment In
government obligations is five (5) years.
"
C. Federal Agencies
1. Authority to Purchase
The Finance Director or designee may invest in obligations the
principal and interest of which are unconditionally guaranteed by
the U.S. Government and issued through Federal agencies. Such
securities will include but not be limited to:
· Government National Mortgage Association (GNMA)
2. Portfolio Composition
Federal Agencies may comprise 100% of the portfolio.
3. Limits on Individual Issuers
A maximum of 100% of the portfolio may be invested in anyone
Federal Agency.
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4. Maturity Limitations
The maximum expected average life for an investment in Federal
Agency securities is five (5) years.
D. Non-negotiable Interest Bearing Time Certificates of Deposit (CDs)
1. Authority to Purchase
The Finance Director or the investment adviser/manage may invest
in non-negotiable interest-bearing time certificates of deposit or
savings accounts in state or federal banks, state or federal savings
and loan associations as permitted and/or prescribed by Chapter
280 of the Florida Statute.
2. Portfolio Composition
A maximum of 50% of the portfolio may be invested III non-
negotiable CDs.
3. Limits on Individual Issuers
a. All issues must be approved as "Qualified Public Depositories"
by the State of Florida, as required by the Florida Security for
Public Deposits Act Chapter 280, Florida Statutes.
b. A maximum of 50% of the portfolio may be invested with a
maximum maturity of 5 years from date of purchase.
4. Maturity Limitations
a. A maximum of 50% of the portfolio may be invested with a
maximum maturity of 5 years from date of purchase.
E. Government Sponsored Enterprises
1. Authority to Purchase
Securities include but are not limited to obligations of the:
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· Federal National Mortgage Association (FNMA)
· Federal Farm Credit Banks (FFCB)
· Federal Home Loan Bank or its District Banks (FHLB)
· Federal Home Loan Mortgage Corporation (Freddie-Macs)
· Federal Home Loan Mortgage Corporation participation
certificates
2. Portfolio Composition
The portfolio may be comprised of 100% Government Sponsored
Enterprises Federal Instruments.
3. Limits on Individual Issuers
A maximum expected average life for an investment in any
government Sponsored Enterprise is five (5) years for fixed rate
securities and five (5) years for variable rate securities.
INTERFUND LOANS OR TRANSFERS
Nothing in the Investment Policy prohibits any interfund transfers or loans to the
extent otherwise permitted by law. Such interfund transfers or loans shall not be
governed by this Investment Policy.
RISK AND DIVERSIFICATION
It is the policy of the City of Sunny Isles Beach to diversify its investment
portfolio. Assets held shall be diversified to control the risk of loss resulting from
over concentration of assets in a specific maturity, a specific issuer, a specific
instrument, a class of instruments, and a dealer or bank through whom these
investments are bought and sold. Diversification strategy's shall be reviewed and
revised periodically as deemed necessary by the appropriate management staff.
AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS
Certificate of Deposit shall be placed only with financial institutions, which qualify
under Chapter 280 of the Florida Statues or financial institutions that are selected
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by the City Commission. Other securities shall be purchased only 1) through the
"primary government securities dealet?' as designated by the Federal Reserve
Bank, 2) regional dealers that qualify under Securities and Exchange Commission
Rule 15C3-1 (Uniform Net Capital Rule) 3) through the Florida State Board of
Administration (SBA), 4) through a money manager appointed by the City. These
institutions, dealers and issuers must meet capital adequacy guidelines as
determined by their respective regulatory agencies and certify that no material
adverse events have occurred since the issue of their most recent financial
statements. They must also agree to notify the City in the event of material adverse
events affecting their capital adequacy. All securities purchased shall be only those
securities of authorized issuers of the various security types.
SELECTION OF INVESTMENT MANAGERS
1) Request for Proposal (RFP) or Letters of Interest
2) Interview the respondents
3) The City Commission approves the selection and authorized a contract to
be signed.
SALE OF SECURITIES
When the invested funds are needed in whole or in part for the purposes
originally intended or for more optimal investments, investments may be sold at
the then-prevailing market price with the proceeds placed into the proper account
or fund.
Securities may be traded for other similar securities to improve yield, maturity,
credit risk or market risk, provided any of the following occurs with respect to
the replacement security:
· The yield has been increased, or
· The maturity has been reduced, or
· The quality of the investment has been improved, or
· The Risk from a market decline has been reduced.
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AUDITS
Certified Public Accountants conducting audits of the City shall report as part of
the audit, whether or not the City has complied with applicable law relating to
investment of surplus funds.
EXISTING INVESTMENTS
Any investments currently held that do not meet the guidelines of the policy shall
be exempted from the requirements of this policy. At maturity or liquidation, such
monies so invested shall be reinvested only as provided for in this policy.
The Finance Director or designee may take a sufficient period of time to adjust the
existing portfolio to the provisions of the policy so as not to require the premature
liquidation of any investment.
EFFECTIVE DATE
This policy shall become effective immediately upon its adoption by the City
Commission.
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ar
City of Sunny Isles Beach
soryCommissionuy
o�N' - a Norman S.Edelou .Mmr
os Lewis J.Thaler,Vice Mayor
18070 Collins Avenue, Suite 250
\7Roslyn Bruin.Commissioner
� Sunny Isles Beach, Florida 33160 Gerry Goodman,Commsstoner
%. (305) 947-0606 Clly Hall Danny Iglesias,Commissioner
\.\ (305) 949-3113 Fox Chief Fred hlaas,Interim City Manager
➢jr / (305) 947-2150 Building Deportment Hans Otti of Sr.,C4Airney
o sa s (305) 947-5107 Fox Jane A.Hines.Cry Clerk
MEMORANDUM
TO: The Honorable City Commission
FROM: Mayor Norman S. Edelcup11�ah{lll�n
DATE: November 17, 2005
RE: Investment Policy
Recommendation:
The attached Resolution is presented to you for your consideration and approval.
Reasons:
The City does not currently have an Investment Policy at this time. In order for the City to invest
surplus funds in certain type of securities, the City must adopt an investment policy by resolution
in accordance with state law.
By adopting the attached Investment Policy, the City will be able to optimize returns on its
investments. Simply put, the City will be able to accumulate additional revenue through its
investments. However, it is important to note that the fund will be passively invested to ensure
safety of capital and liquidity of funds. As indicated in the attached Policy, surplus funds will
generally be invested in government securities. The Finance Director and qualified money
managers will be responsible for investing the surplus funds.
Thank you for your consideration of this Resolution.
NSEJjb
Attachment
Commission Agenda Item 0 P
Recommending Investment Policy
Date 1 — — o3