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HomeMy WebLinkAbout1989-26 Investment PolicyRESOLUTION 89-26 A RESOLUTION AUTHORIZING THE INVESTMENT POLICY OF THE CITY OF ASHLAND AND REPEALING ALL PREVIOUS INVESTMENT RESOLUTIONS WHEREAS, ORS 294.035 prohibits local governments from investing money unless the governing body of the local government has authorized the investments. THEREFORE, BE IT RESOLVED, that the City of Ashland authorizes the investment of City monies in accordance with the attached policy. BE IT FURTHER RESOLVED, that this resolution supersedes previous authorizations related to the investment of City monies and the purchase of Bancroft Bonds. The foregoing resolution was READ and DULY ADOPTED at a regular meeting of the Ashland City Council on the~day of June 1989. Nan Frank/lin City Recorder SIGNED and APPROVED this ~/~ day of June, 1989. Catherine M. Golden Mayor CITY OF ASHLAND, OREGON INVESTMENT & PORTFOLIO POLICIES May 18, 1989 Scope This investment policy applies to activities of the City, including Ashland Community Hospital, and Ashland Parks and Recreation with regards to investing the financial assets of all funds, including the following: General Fund Special Revenue Funds Capital Projects Funds Debt Service Funds Enterprise Funds Internal Service Funds Trust & Agency Funds Funds of the City will be invested in compliance with the provisions of ORS 294.035 through 294.048; ORS 294.125 through 294.155; ORS 294-810, and other applicable statutes. Investments will be in accordance with these policies. OBJECTIVES The city's investment objectives are: Preservation of capital and the protection of investment principal. 2. Conform with Federal, state and other legal requirements. 3. Maintenance of sufficient liquidity to meet operating requirements. Diversification to avoid incurring unreasonable risks regarding specific security types of individual financial institutions. So Attainment of a market rate of return throughout budgetary and economic cycles. 6. Reducing Bancroft debt financing costs. Page 2 DELEGATION OF AUTHORITY The City Record/Treasurer and Director of Finance are designated as the investment officers of the city and are responsible for investment decisions and activities. The day to day administration of the cash management program is handled by the city Recorder/Treasurer or by, the Director of Finance and the Accounting Supervisor in the absence of the Treasurer. The authority of investing Parks and Recreation monies lies with the Director of Parks and Recreation. PRUDENCE The standard of prudence to be used by the investment officer in the context of managing the overall portfolio shall be the prudent investor rule, which states, "Investments shall be made with judgement 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." The investment officer and staff, acting in accordance with written procedures and exercising due diligence, shall not be held personally responsible for a specific security's credit risk or market price changes, provided that these deviations are reported as soon as practical and that appropriate action is taken to control adverse developments. MONITORING AND ADJUSTING THE PORTFOLIO The investment officer will routinely monitor the contents of the portfolio, the available markets and the relative values of competing instruments and will adjust the portfolio accordingly. INTERNAL CONTROLS The investment officer shall maintain a system of internal controls, which shall be reviewed annually by the independent auditor. The controls shall be designed to prevent loss of public funds due to fraud, error, misrepresentation or imprudent actions. Page 3 INVESTMENT DIVERSIFICATION The City will diversify the portfolio to avoid incurring unreasonable risks inherent in overinvesting in specific instruments, individual financial institutions or maturities. Percent of Diversification by Instrument: Portfolio U.S. Treasury Obligations (Bills, notes, and bonds) 100% U.S. Government Agency Securities and Instrumentalities of Government Sponsored Corporations 100% Bankers' Acceptances (BA's) 50% Certificates of Deposit (CD) Commercial Banks - which have a branch in Oregon 50% Certificates of Deposit (CD) Savings & Loan Associations which have a branch in Oregon 10% State & Local Government Securities 35% State of Oregon Investment Pool 100% Diversification by Financial Institution: The combination of CD's, and BA's, may not exceed 40% with any one financial institution. Bankers' Acceptances (BA's) No more than 40% of the total portfolio with any one financial institution. Certificates of Deposit (CD's) - Commercial Banks Amount per institution based on capital adequacy guidelines; in any case not to exceed 40% of the total portfolio with any one institution. State and Local Government Securities No more than 35% of the total portfolio. State of Oregon Investment Pool - State Pool No more than 100% of the total portfolio. Page 4 INVESTMENT MATURITy Maturity limitations shall depend upon whether the funds being invested are considered short term or long term funds. All funds shall be considered short term except those set aside for capital projects, special assessment prepayments being held for debt retirement, trust funds, insurance services fund and equipment fund. All monies shall be invested in one pooled portfolio with a tail for long term monies. POOLED PORTFOLIO Investment maturities for operating funds shall be scheduled to coincide with projected cash flow needs and timed to comply with the following guidelines. Initially the City of Ashland Bancroft Bonds and warrants will be allowed first in an amount not to exceed 10% of the total portfolio, the balance of the portfolio shall be timed to comply with the following guidelines. Under 30 days Under 90 days Under 270 days Under 1 year Under 18 months Under 3 years 10% minimum 25% minimum 50% minimum 75% minimum 80% minimum 100% minimum Ail investments with maturities in excess of one year shall pay interest at least annually. Maturity scheduling shall be timed according to anticipated need. For example, investment of capital project funds shall be timed to meet projected contractor payments, usually for a term not to exceed three years. Investment of prepaid assessment funds shall be tied to bond payment dates. COMPETITIVE SELECTION OF INVESTMENT INSTRUMENTS Before the City invests any surplus funds, a competitive "bid" process shall be conducted. Bids will be requested from financial institutions for various options with regards to term and instrument. The City will accept the bid which provides the highest rate of return within the maturity required and within the parameters of these policies. Records will be kept of the bids offered, the bids accepted, and a brief explanation of the decision which was made regarding the investment. Page 5 OUALIFIED INSTITUTIONS The City shall maintain a listing of all authorized dealers and financial institutions which are approved for investment purposes. Any firm is eligible to make an application to the investment officer and upon due consideration and approval will be added to the list. (Additions or deletions to the list will be made at the City's discretion.) At the request of the City, the firms performing investment services for the City shall provide their most recent financial statements or Consolidated Report of condition ("call report") for review. At minimum, the city shall conduct an annual evaluation of each firm's credit worthiness to determine whether it should be on the authorized list. Securities dealers not affiliated with a bank shall be required to have an office located in Oregon (preferably local) and be classified as reporting dealers affiliated with the New York Federal Reserve Bank as primary dealers. SAFEKEEPING AND COLLATERAL Investment securities purchased by the city will be delivered by either book entry or physical deliver, and held in third party safekeeping by a bank designated as primary agent. The purchase and sale of all securities will be on a payment versus delivery basis. The primary agent shall issue a safekeeping receipt to the city listing the specific instrument, rate, maturity and other pertinent information. Deposit-type securities (i.e., certificates of deposit) shall be collateralized through the State collateral pool as required by ORS for any amount exceeding FDIC or FSLIC coverage. Other investments shall be collateralized by the actual security held in safekeeping by the primary agent. ACCOUNTING METHOD Investments will be carried at cost. Gains or losses from investments will be credited or charged to investment income at the time of sale. Premiums or discounts on securities may be amortized over the life of the securities. The City shall comply with Government Accounting Standards Board (GASB) requirements. Page 6 ~EPORTING REQUIREMENTS The investment officer shall generate monthly reports for management purposes. In addition, the City Council will be provided quarterly reports which will include data on investment instruments being held, as well as any narrative necessary for clarification. PERFORMANCE EVALUATION The performance of the City's portfolio shall be measured against the performance of the Oregon Local Government Investment Pool, using the monthly net yield of both portfolio's as the yardstick.