HomeMy WebLinkAboutCity of Tamarac Resolution R-2010-075TR11824
June 9, 2010
Page 1
CITY OF TAMARAC, FLORIDA
RESOLUTION NO. 10- 75
A RESOLUTION OF THE CITY COMMISSION OF THE
CITY OF TAMARAC, FLORIDA, AMENDING THE
INVESTMENT POLICY FOR SECURITIES INVESTMENTS
OF THE CITY OF TAMARAC TO AUTHORIZE
UTILIZATION OF CERTAIN INVESTMENT INSTRUMENTS
AND; TO AUTHORIZE THE AMENDING OF THE
INVESTMENT PARAMETERS AS DETAILED IN EXHIBIT A
ATTACHED HERETO; PROVIDING FOR CONFLICTS;
PROVIDING FOR SEVERABILITY; AND PROVIDING FOR
AN EFFECTIVE DATE.
WHEREAS, Section 6-27 of the City of Tamarac Code of Ordinances
establishes the procedures for adopting an Investment Policy: and
WHEREAS, an investment policy for securities investments provides the
formal structure that governs activities of investment official(s) and clarifies the
City's securities investment objectives, standards and activities; and
WHEREAS, the City Commission of the City of Tamarac adopted an
Investment Policy by Resolution R-96-67 on March 27, 1996, and amended
same in 2000, 2001, 2002, 2004, 2008, and 2009, all of which are available in
the City Clerk's office; and
WHEREAS, the City Manager, the Director of Financial Services and the
Investment Advisory Committee recommend adopting an amended City
Investment Policy as detailed in Exhibit A attached hereto and made a part of this
Resolution; and
WHEREAS, the Investment Advisory Committee wishes to strengthen the
parameters of individual securities investments and expand the general
TR11824
June 9, 2010
Page 2
objectives of the Investment Policy as detailed in the amended City Investment
Policy included as Exhibit A attached hereto; and
WHEREAS, the City Commission of the City of Tamarac, Florida has
deemed it to be in the best interest of the citizens and residents of the city of
Tamarac that the existing Investment Policy be amended and revised to to allow
the City to participate in certain investment products.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF
THE CITY OF TAMARAC, FLORIDA:
SECTION 1: The foregoing "WHEREAS" clauses are hereby ratified and
confirmed as being true and correct and are hereby made a specific part of this
Resolution. Exhibit A attached hereto is expressly incorporated herein and made
a part hereof.
SECTION 2 The City Commission adopts the attached Investment Policy
(attached hereto as Exhibit A), pursuant to Section 6-27 of the City of Tamarac
Code of Ordinances.
SECTION 3 All Resolutions or parts of Resolutions in conflict herewith are
hereby repealed to the extent of such conflict.
SECTION 4 If any clause, section, other part or application of this
Resolution is held by any court of competent jurisdiction to be unconstitutional or
invalid, in part or application, it shall not affect the validity of the remaining
portions or applications of this Resolution.
SECTION 5 This Resolution shall become effective immediately upon its
passage and adoption.
PASSED, ADOPTED AND APPROVED this day of 2010.
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1
ATTEST:
MARION SWE ON, CMC
CITY CLERK
I HEREBY CERTIFY that
I have approved this
RESOLUTION as to form.
Vo ( /v
SAkfUEL 6. G R
CITY ATTORN
TR11824
June 9, 2010
Page 3
4w X��4�20-
BETH TALABISCO
MAYOR
Record of COMMISSION VOTE:
MAYOR TALABISCO
DIST 1: COMM BUSHNEL
DIST 2: COMM ATKINS-GRAA
DIST 3: COMM GLASSER
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DIST 4: VM DRESSLER t/'U
INVESTMENT POLICY
CITY OF TAMARAC, FLORIDA
APPROVED ON �U
TABLE OF CONTENTS
Page
1.
PURPOSE
3
II.
SCOPE
3
III.
INVESTMENT OBJECTIVES
3
IV.
DELEGATION OF AUTHORITY
4
V.
STANDARDS OF PRUDENCE
4
VI.
ETHICS AND CONFLICTS OF INTEREST
4
VII.
INTERNAL CONTROLS AND INVESTMENT PROCEDURES
5
VIII.
CONTINUING EDUCATION
5
IX.
AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS
5
X.
MATURITY AND LIQUIDITY REQUIREMENTS
5
XI.
COMPETITIVE SELECTION OF INVESTMENT INSTRUMENTS
6
XII.
AUTHORIZED INVESTMENTS AND PORTFOLIO COMPOSITION
7
XIII.
DERIVATIVES AND REVERSE REPURCHASE AGREEMENTS
15
XIV.
PERFORMANCE MEASUREMENTS
16
XV.
INVESTMENT COMMITTEE
16
XVI.
REPORTING
16
XVII.
THIRD -PARTY CUSTODIAL AGREEMENTS
17
XVIII.
INVESTMENT POLICY ADOPTION
17
City of Tamarac, Florida Investment Policy Page 2
Investment Policy
The City of Tamarac, Florida
I. PURPOSE
The purpose of this policy is to set forth the investment objectives and parameters for the management
of public funds of the City of Tamarac, Florida (hereinafter "City"), These policies are designed to
ensure the prudent management of public funds, the availability of operating and capital funds when
needed, and an investment return competitive with comparable funds and financial market indices.
II. SCOPE
In accordance with Section 218.415, Florida Statutes, this investment policy applies to all cash and
investments held or controlled by the City with the exception of Pension Funds and funds related to the
issuance of debt where there are other existing policies or indentures in effect for such funds. Funds
held by state agencies (e.g., Department of Revenue) are not subject to the provisions of this policy.
III. INVESTMENT OBJECTIVES
Safety of Principal
The foremost objective of this investment program is the safety of the principal of those funds
within the portfolios. Investment transactions shall seek to keep capital losses at a minimum,
whether they are from securities defaults or erosion of market value. To attain this objective,
diversification is required in order that potential losses on individual securities do not exceed the
income generated from the remainder of the portfolio.
Maintenance of Liquidity
The portfolios shall be managed in such a manner that funds are available to meet reasonably
anticipated cash flow requirements in an orderly manner. Periodic cash flow analyses will be
completed in order to ensure that the portfolios are positioned to provide sufficient liquidity.
Return of Investment
Investment portfolios shall be designed with the objective of attaining a market rate of return
throughout budgetary and economic cycles, taking into account the investment risk constraints
and liquidity needs. Return of investment is of least importance compared to the safety and
liquidity objectives described above. The core of investments is limited to relatively low risk
securities in anticipation of earning a fair return relative to the risk being assumed.
City of Tamarac, Florida Investment Policy Page 3
IV. DELEGATION OF AUTHORITY
In accordance with the Charter of the City of Tamarac, the responsibility for providing oversight and
direction in regard to the management of the investment program resides with the City Manager. The
daily management responsibility for all City funds in the investment program and investment
transactions is delegated to the Financial Services Director and the Controller. The Financial Services
Director shall establish written procedures for the operation of the investment portfolio and a system of
internal accounting and administrative controls to regulate the activities of employees. The City may
employ an Investment Manager to assist in managing some of the City's portfolios. Such Investment
Manager must be registered under the Investment Advisors Act of 1940.
The standard of prudence to be used by investment officials shall be the "Prudent Person" standard and
shall be applied in the context of managing the overall investment program. Investment officers acting
in accordance with written procedures and this investment policy and exercising due diligence shall be
relieved of personal responsibility for an individual security's credit risk or market price changes,
provided deviations from expectations are reported to the City Manager in a timely fashion and the
liquidity and the sale of securities are carried out in accordance with the terms of this policy. The
"Prudent Person" rule states the following:
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.
While the standard of prudence to be used by investment officials who are officers or employees is the
"Prudent Person" standard, any person or firm hired or retained to invest, monitor, or advise
concerning these assets shall be held to the higher standard of "Prudent Expert". The standard shall be
that in investing and reinvesting moneys and in acquiring, retaining, managing, and disposing of
investments of these funds, the Investment Advisor shall exercise: the judgment, care, skill, prudence,
and diligence under the circumstances then prevailing, which persons of prudence, discretion, and
intelligence, acting in a like capacity and familiar with such matters would use in the conduct of an
enterprise of like character and with like aims by diversifying the investments of the funds, so as to
minimize the risk, considering the probable income as well as the probable safety of their capital.
VI. ETHICS AND CONFLICTS OF INTEREST
Employees 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 their ability to make
impartial investment decisions. Also, employees involved in the investment process shall disclose to
the City Manager any material financial interests in financial institutions that conduct business with
the City, and they shall further disclose any material personal financial/investment positions that could
be related to the performance of the City's investment program.
VII. INTERNAL CONTROLS AND INVESTMENT PROCEDURES
The Financial Services Director shall establish a system of internal controls and operational procedures
that are in writing and made a part of the City's operational procedures. The internal controls should
be designed to prevent losses of funds, which might arise from fraud, employee error,
misrepresentation by third parties, or imprudent actions by employees. The written procedures should
include reference to safekeeping/custody, repurchase agreements, and separation of transaction
City of Tamarac, Florida Investment Policy Page 4
authority from accounting and recordkeeping, wire transfer agreements, banking service contracts and
collateral/depository agreements. No person may engage in an investment transaction except as
authorized under the terms of this policy.
Independent auditors, as a normal part of the annual financial audit to the City, shall conduct a review
of the system of internal controls to ensure compliance with policies and procedures.
VIII. CONTINUING EDUCATION
The Financial Services Director, the Controller, and other appropriate staff shall annually complete
eight hours of continuing education in subjects or courses of study related to investment practices and
products.
IX. AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS
Authorized City staff and Investment Advisors shall only purchase securities from financial
institutions, which are qualified as public depositories by the Treasurer of the State of Florida;
instutitions designated as "Primary Securities Dealers" by the Federal Reserve Bank of New York,
direct issuers of commercial paper and bankers' acceptances or approved non -primary securities
dealers.
All approved non -primary securities dealers that qualify under Securities and Exchange Commission
Rule 15C3-1 (uniform net capital rule) must provide the following information prior to executing
investment trades with the City:
1. Annual financial statement, as well as most recent quarterly statement.
2. Regulatory history, through either the Office of the Comptroller of the Currency for dealer
banks, or the NASD for securities firms.
3. Statement of any pending lawsuits materially affecting the firm's business.
Authorized City staff and Investment Advisors shall only enter into repurchase agreements with
financial institutions that are state qualified public depositories and primary securities dealers as
designated by the Federal Reserve Bank of New York.
X. MATURITY AND LIQUIDITY REQUIREMENTS
To the extent possible, an attempt will be made to match investment maturities with known cash needs
and anticipated cash flow requirements. Investments of current operating funds shall have maturities
of no longer than twenty-four (24) months.
Investments of bond reserves, construction funds, and other non -operating funds ("core funds") shall
have a term appropriate to the need for funds and in accordance with debt covenants, but in no event
shall exceed five (5) years.
The maturities of the underlying securities of a repurchase agreement will follow the requirements of
the Master Repurchase Agreement.
XI. COMPETITIVE SELECTION OF INVESTMENT INSTRUMENTS
After the Financial Services Director, the Controller or the Investment Advisor has determined the
approximate maturity date based on cash flow needs and market conditions and has analyzed and
selected one or more optimal types of investments, a minimum of three (3) qualified banks and/or
City of Tamarac, Florida Investment Policy Page 5
approved broker/dealers must be contacted and asked to provide bids/offers on securities in question.
Bids will be held in confidence until the bid deemed to best meet the investment objectives is
determined and selected.
However, if obtaining bids/offers are not feasible and appropriate, securities may be purchased
utilizing the comparison to current market price method on an exception basis. Acceptable current
market price providers include, but are not limited to:
A. Telerate Information Systems
B. Bloomberg Information Systems including but not limited to the BOOM, FIT, NIM and
TRACE fixed income securities transactional and market transparency systems.
C. Wall Street Journal or a comparable nationally recognized financial publication providing
daily market pricing.
D. Nationally recognized independent fixed income market pricing services such as IDC.
The Financial Services Director, the Controller, or the Investment Advisor shall utilize
the competitive bid process to select the securities to be purchased or sold. Selection by
comparison to a current market price, as indicated above, shall only be utilized when, in
judgment of the Financial Services Director, the Controller, or the Investment Advisor,
competitive bidding would inhibit the selection process.
Examples of when this method may be used include:
A. When time constraints due to unusual circumstances preclude the use of the
competitive bidding process
B. When no active market exists for the issue being traded due to the age or depth of
the issue
C. When a security is unique to a single dealer, for example, a private placement
D. When the transaction involves new issues or issues in the "when issued" market
Overnight sweep repurchase agreements will not be bid, but may be placed with the City's depository
bank relating to the demand account for which the repurchase agreement was purchased.
XII. AUTHORIZED INVESTMENTS AND PORTFOLIO COMPOSITION
Investments should be made subject to the cash flow needs, and such cash flows are subject to
revisions as market conditions and the City's needs change. However, when the invested funds are
needed in whole or in part for the purpose originally intended or for more optimal investments, the
Financial Services Director, or the Controller may sell the investment at the then -prevailing market
price and place the proceeds into the proper account at the City's custodian.
The following are the investment requirements and allocation limits on security types, issuers,
and maturities as established by the City. The Financial Services Director or the Controller
shall have the option to further restrict investment percentages from time to time based on
market conditions, risk, and diversification investment strategies. The percentage allocations
City of Tamarac, Florida Investment Policy Page 6
requirements of investment types and issuers are calculated based on the original cost of each
investment. Investments not listed in this policy are prohibited.
A. The Florida Local Government Surplus Funds Trust Fund ("SBA")
Investment Authorization
The Financial Services Director may invest in the SBA.
2. Portfolio Composition
A maximum of 50% of available funds may be invested in the SBA.
B. United States Government Securities
Purchase Authorization
The Financial Services Director may invest in negotiable direct obligations, or obligations
the principal and interest of which are unconditionally guaranteed by the United States
Government. Such securities will include, but not be limited to the following:
Cash Management Bills
Treasury Securities — State and Local Government Series ("SLGS")
Treasury Bills
Treasury Notes
Treasury Bonds
Treasury Strips
2. Portfolio Composition
A maximum of 100% of available funds may be invested in the United States Government
Securities.
Maturity Limitations
The maximum length to maturity of any direct investment in the United States
Government Securities is five (5) years from the date of purchase.
C. United States Government Agencies
Purchase Authorization
The Financial Services Director may invest in bonds, debentures, notes or callables issued
or guaranteed by the United States Government agencies, provided such obligations are
backed by the full faith and credit of the United States Government. Such securities will
include, but not be limited to the following:
United States Export — Import Bank
- Direct obligations or fully guaranteed certificates of beneficial ownership
Farmer Home Administration
- Certificates of beneficial ownership
Federal Financing Bank
City of Tamarac, Florida Investment Policy Page 7
- Discount notes, notes and bonds
Federal Housing Administration Debentures
- Government National Mortgage Association (Note: GNMA is a
government -owned corporation within HUD. GNMA MBS securities are
fully guaranteed by the U.S. government.)
General Services Administration
United States Maritime Administration Guaranteed
- Title XI Financing
New Communities Debentures
- United States Government guaranteed debentures
United States Public Housing Notes and Bonds
- United States Government guaranteed public housing notes and bonds
United States Department of Housing and Urban Development
- Project notes and local authority bonds
This shall include securities issued under the Temporary Liquidity Guarantee Program
under which the FDIC guarantees the full and timely payment of principal and interest on
qualified securities.
2. Portfolio Composition.
A maximum of 50% of available funds may be invested in United States Government
agencies.
3. Limits on Individual Issuers
A maximum of 10% of available funds may be invested in individual United States
Government agencies.
4. Maturity Limitations
The maximum length to maturity for an investment in any United States Government
agency security is five (5) years from the date of purchase.
D. Federal Instrumentalities (United States Government Sponsored Enterprises (GSEs) and
Federally Owned Corporations (FOCs))
1. Purchase Authorization
The Financial Services Director may invest in bonds, debentures, notes or callables issued
or guaranteed by GSEs and FOCs which are non -full faith and credit instrumentalities
limited to the following:
Federal Farm Credit Bank (FFCB)
Federal Home Loan Bank or its district banks (FHLB)
Federal National Mortgage Association (FNMA)
Federal Home Loan Mortgage Corporation (FHLMC) including Federal
Home Loan Mortgage Corporation participation certificates
Federal Agricultural Mortgage Corporation (FRMAC)
Tennessee Valley Authority (TVA) — An instrumentality of the U.S. Government
as a "Federally Owned Corporation" as distinct from a GSE.
2. Portfolio Composition
City of Tamarac, Florida Investment Policy Page 8
A maximum of 75% of available funds may be invested in Federal Instrumentalities GSEs
and FOCs.
Limits on Individual Issuers
A maximum of 25% of available funds may be invested in any one issuer.
4. Maturity Limitations
The maximum length to maturity for an investment in any GSE or FOC security is five (5)
years from the date of purchase.
E, Interest Bearing Certificates of Deposits, Time Deposits or Saving Accounts
Purchase Authorization
The Financial Services Director may invest in certificates of deposit, time deposits or
savings accounts in banks organized under the laws of this state and/or in national banks
organized under the laws of the United States and doing business and situated in the State
of Florida, provided that any such deposits are secured by the Florida Security for Public
Deposits Act, Chapter 280, Florida Statutes. Additionally, the bank shall not be listed with
any recognized credit watch information service.
Portfolio Composition
A maximum of 10% of available funds may be invested in certificates of deposit, time
deposits or savings accounts.
Limits on Individual Issuers
A maximum of 5% of available funds may be deposited with any one issuer.
4. Maturity Limitations
The maximum maturity on any certificate shall be no greater than one (1) year from the
date of purchase.
F. Repurchase Agreement
Purchase Authorization
a. The Financial Services Director may invest in repurchase agreements composed of
only those investments based on the requirements set forth by the City's Master
Repurchase Agreement. All firms are required to sign the Master Repurchase
Agreement prior to the execution of a repurchase agreement transaction.
b. A third party custodian with whom the City has a current custodial agreement shall
hold the collateral for all repurchase agreements with a term longer than one (1)
business day. A clearly marked receipt that shows evidence of ownership must be
supplied to the Financial Services Director and retained.
City of Tamarac, Florida Investment Policy Page 9
C. Securities authorized for collateral are negotiable direct obligations of the United
States Government, Government Agencies, and United States Government
Instrumentalities as authorized in Section XII Paragraph D with maturities under five
(5) years and must have a market value for the principal and accrued interest of 102
percent of the value and for the term of the repurchase agreement. Immaterial short-
term deviations from the 102 percent requirement are permissible only upon the
approval of the Financial Services Director.
2. Portfolio Composition
A maximum of 25% of available funds may be invested in repurchase agreements
excluding one (1) business day agreements and overnight sweep agreements.
3. Limits on individual issuers.
A maximum of 10% of available funds may be invested with any one institution.
4. Limits on Maturities
The maximum length to maturity of any repurchase agreement is 90 days from the date of
purchase.
G. Commercial Paper
1. Purchase Authorization
The Financial Services Director may invest in commercial paper of any United
States company that is rated, at the time of purchase, "Prime-1" by Moody's and
"A-1" by Standard & Poor's (prime commercial paper). If the commercial paper is
backed by a letter of credit ("LOC"), the long-term debt of the LOC provider must
be rated "A" or better by at least two nationally recognized rating agencies.
2. Portfolio Composition
A maximum of 25% of available funds may be directly invested in prime
commercial paper.
3. Limits on individual issuers
A maximum of 10% of available funds may be invested with any one issuer.
4. Maturity Limitations
The maximum length to maturity for prime commercial paper shall be 180 days
from the date of purchase.
H. Banker's Acceptance
1. Purchase Authorization
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The Financial Services Director may invest in bankers' acceptances issued by a
domestic bank or a federally chartered domestic office of a foreign bank, which is
eligible for purchase by the Federal Reserve System, at the time of purchase, the
short-term paper is rated, at a minimum, "P-1" by Moody's Investors Services and
"A-l" Standard & Poor's.
2. Portfolio Composition
A maximum of 25% of available funds may be directly invested in Bankers'
acceptances.
3. Limits on Individual Issuers
A maximum of 10% of available funds may be invested with any one issuer.
4. Maturity Limitations
The maximum length of maturity for bankers' acceptances shall be 180 days from the date
of purchase.
I. State and/or Local Government Taxable and/or Tax -Exempt Debt
l . Purchase Authorization
The Financial Services Director may invest in state and/or local government taxable and/or
tax-exempt debt, general obligation and/or revenue bonds, rated at least "Aa2" by Moody's
and "AA" by Standard & Poor's for long-term debt, or rated at least "MIG-2" by Moody's
and "SP-2" by Standard & Poor's for short-term debt.
2. Portfolio Composition
A maximum of 20% of available funds may be invested in taxable and tax-exempt debts.
3. Limits on Individual Issuers
A maximum of 5% of available funds may be invested with any one issuer.
4. Maturity Limitations
A maximum length to maturity for an investment in any state or local government debt
security is three (3) years from the date of purchase.
J. Registered Investment Companies (Mutual Funds)
1. Investment Authorization
The Financial Services Director may invest in shares in open-end, no-load mutual funds
provided such funds are registered under the Federal Investment Company Act of 1940 and
operated in accordance with 17 C.F.R. § 270.2a-7. In addition, the Financial Services
Director may make investments in other types of mutual funds provided such funds are
registered under the Federal Investment Company Act of 1940, invest exclusively in the
securities specifically permitted under this investment policy, and are similarly diversified.
City of Tamarac, Florida Investment Policy Page I
2. Portfolio Composition
A maximum of 25% of available funds may be invested in mutual funds.
3. Limits of Individual Issuers
A maximum of 10% of available funds may be invested with any one non -SEC Rule 2a-7
investment mutual fund.
4. Rating Requirements
The mutual funds shall be rated "AAm: or "AAm-G" or better by Standard & Poor's, or the
equivalent by another rating agency.
5. Due Diligence Requirements
A thorough review of any investment mutual fund is required prior to investing, and on a
continual basis. There shall be a questionnaire developed by the Financial Services
Director that will contain a list of questions that covers the major aspects of any investment
pool/fund.
K. Intergovernmental Investment Pool
Investment Authorization
The Financial Services Director may invest in intergovernmental investment pools that are
authorized pursuant to the Florida Interlocal Cooperation Act, as provided in Section
163.01, Florida Statutes and provided that said funds contain no derivatives.
2. Portfolio Composition
A maximum of 50% of available funds may be invested in intergovernmental investment
pools.
3. Due Diligence Requirements
A thorough review of any investment pool/fund is required prior to investing, and on a
continual basis. There shall be a questionnaire developed by the Financial Services
Director that will contain a list of questions that covers the major aspects of any investment
pool/fund.
L. Corporate Obligations or Corporate Notes
Investment Authorization
The Financial Services Director may invest in corporate obligations or corporate notes of U.S.
corporations.
2. Portfolio Composition
A maximum of 20% of available funds may be invested in corporate obligations or
corporate notes.
City of Tamarac, Florida Investment Policy Page 12
3. Limits of Individual Issuers
A maximum of 5% of available funds may be invested with any one corporate note.
4. Rating Requirements
Corporate obligations or notes shall have two of the following three minimum ratings: A-,
A3 or A- as rated by Standard & Poor's and/or Moody's and/or Fitch Investors Services
rating services. However, if such obligations are rated by only one rating service, then
such rating shall be at least AA-, Aa3, or AA- by Standard & Poor's, or Moody's or Fitch.
5. Maturity Limitations
A maximum length to maturity for an investment in any corporate obligation or note is five
(5) years from the date of purchase.
M. Mortgage -Backed Securities (MBS)
1. Investment Authorization
The Financial Services Director may invest in mortgage -backed securities (MBS) which
are usually based on mortgages that are guaranteed by a government agency or
instrumentality for payment of principal and a guarantee of timely payment.
2. Portfolio Composition
A maximum of 15% of available funds may be invested in MBS.
3. Limits of Individual Issuers
A maximum of 5% of available funds may be invested with any one MBS.
4. Rating Requirements
MBS shall be AA rated or better by Standard & Poor's or the equivalent by another rating
agency.
5. Maturity Limitations
A maximum length to maturity for an investment in any MBS is five (5) years from the
date of purchase.
N. Asset -Backed Securities (ABS)
1. Investment Authorization
The Financial Services Director may invest in asset -backed securities (ABS) which are
bonds or notes backed by financial assets.
2. Portfolio Composition
A maximum of 10% of available funds may be invested in ABS.
City of Tamarac, Florida Investment Policy Page 13
Limits of Individual Issuers
A maximum of 5% of available funds may be invested with any one ABS.
4. Rating Requirements
ABS shall be AA rated or better by Standard & Poor's or the equivalent by another rating
agency.
Maturity Limitations
A maximum length to maturity for an investment in any MBS is five (5) years from the
date of purchase.
Q. Bond Funds
1. Investment Authorization
The Financial Services Director may invest in bond funds.
2. Portfolio Composition
A maximum of 25% of available funds may be invested in bond funds.
3. Limits of Individual Issuers
A maximum of 10% of available funds may be invested with any one bond fund.
4. Rating Requirements
Bonds funds shall be AA rated or better by Standard & Poor's or the equivalent by another
rating agency.
XIII. DERIVATIVES AND REVERSE REPURCHASE AGREEMENTS
Investment in any derivative products or the use of reverse repurchase agreements requires specific
City Commission approval prior to their use. If the City Commission approves the use of derivative
products, the Financial Services Director shall develop sufficient understanding of the derivative
products and have the expertise to manage them. A "derivative" is defined as a financial instrument
the value of which depends on, or is derived from, the value of one or more underlying assets or
indices or asset values. If the City Commission approves the use of reverse repurchase agreements or
other forms of leverage, the investment shall be limited to transactions in which the proceeds are
intended to provide liquidity and for which the Financial Services Director has sufficient resources and
expertise to manage them.
XIV. PERFORMANCE MEASUREMENTS
In order to assist in the evaluation of the portfolio's performance, the City will use performance
benchmarks for short-term and long-term portfolios. The use of benchmarks will allow the City to
measure its returns against other investors in the same markets.
City of Tamarac, Florida Investment Policy Page 14
A. The S & P Rated LGIP Index/All will be used as a benchmark as compared to the portfolio's net
book value rate of return for current operating funds.
B. The Bank of America Merrill Lynch 1-3 Year US Treasury & Agency Index which is a subset of
The Bank of America Merrill Lynch US Treasury & Agency Index including all securities with a
remaining term to final maturity less than 3 years, will be used as a benchmark for the
performance of funds designated as core funds and other non -operating funds that have a longer -
term investment horizon. The index will be used as a benchmark to be compared to the
portfolio's total rate of return.
C. Investment advisors will report performance on both book value (on operating funds only) and
Month to Month total rate of return basis (on long-term funds) and compare results to the above -
stated benchmarks.
XV. INVESTMENT COMMITTEE
The City of Tamarac Charter, Section 4.12 states the following:
"The commission, by ordinance, shall create an investment advisory committee
consisting of at least five (5) members from the general public.
The purpose of the committee is to recommend, counsel and advise the appropriate
city officials in all matters of financial investments as provided by state laws,
ordinances, resolutions and Charter of the City of Tamarac." (Res. No. CBR-86-6, §
1, 1-17-86)
The City Commission will establish an Investment Advisory Committee, pursuant to
Ordinance, for the purpose of recommending, counseling and advising the City
Manager in all matters of financial investments and shall be responsible to keep
abreast of current investment trends, receive the input of administrative officers
regarding investment concepts for the City, and make recommendations thereon to
the City Manager (and his designees), and file such reports with the mayor and City
Commission as necessary. The Committee shall have no administrative authority and
shall not be directly involved in the ongoing process of investment of city funds.
The members of the Investment Advisory Committee shall be appointed by the City Commission on
an annual basis and serve at the pleasure of the City Commission without compensation. The chairman
of the Committee shall be appointed by the City Commission. The Committee may have a
Commission liaison and may have a staff liaison assigned to it by the City Manager.
The Committee, or quorum of the Committee, shall meet, at a minimum, every other month, or as
often as deemed necessary, to review, discuss and affirm or alter the current investment strategy.
XVI. REPORTING
The Financial Services Director shall provide the Investment Advisory Committee with
monthly/quarterly investment reports. Schedules in the quarterly report should include the following:
A. A listing of individual securities held at the end of the reporting period
B. Percentage of available funds represented by each investment type
C. Coupon, discount or earning rate
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D. Average life or duration and final maturity of all investments
E. Par value and market value
On a monthly/quarterly basis, the Financial Services Director shall prepare and submit to the City
Commission a written report on all invested funds. The annual report shall provide all, but not limited
to, the following: a complete list of all invested funds, name or type of security in which the funds are
invested, the amount invested, the maturity date, income earned, the book value, the market value and
the yield on each investment.
The report will show performance on both a book value (for short-term investments) and total rate of
return basis (for long-term investments) and will compare the results to the above -stated performance
benchmarks. All investments shall be reported at fair value per GASB standards. Investment reports
shall be available to the public.
XVII. THIRD -PARTY CUSTODIAL AGREEMENTS
Securities, with the exception of certificates of deposits, shall be held with a third party custodian; and
all securities purchased by, and all collateral obtained by; the City should be properly designated as an
asset of the City. The securities must be held in an account separate and apart from the assets of the
financial institution. A third party custodian is defined as any bank depository chartered by the
Federal Government, the State of Florida, or any other state or territory of the United States which has
a branch or principal place of business in the State of Florida as defined in Section 658.12, Florida
Statutes, or by a national association organized and existing under the laws of the United States which
is authorized to accept and execute trusts and which is doing business in the State of Florida.
Certificates of deposits will be placed in the provider's safekeeping department for the term of the
deposit.
The custodian shall accept transaction instructions only from those persons who have been duly
authorized by the Financial Services Director and which authorization has been provided, in writing,
to the custodian. No withdrawal of securities, in whole or in part, shall be made from custody, or shall
be permitted unless by such a duly authorized person.
XVIII. INVESTMENT POLICY ADOPTION
The investment policy shall be adopted by a City Ordinance. The Financial Services Director and the
Controller shall review the policy annually and the City Commission shall approve any modification
made thereto.
APPROVED AND ADOPTED BY THE CITY COMMISSION OF TAMARAC, FLORIDA ON
2010.
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