HomeMy WebLinkAbout2001 09 10 Regular A City Investment Policy
COMMISSION AGENDA
ITEM A
CONSENT
INFORMATIONAL
PUBLIC HEARING
REGULAR XX
Septemher 10, 2001
Meeting
MGRhDEPT~
A 11th ori7::ltion
REQUEST:
The Finance Department requesting the Commission approve and adopt a new City Investment
Policy,
PURPOSE:
To approve and adopt a new City Investment Policy in accordance with amended Florida Statutes
Section 218.415.
CONSIDERATIONS:
. Section 218.415 of the Florida Statutes regarding local government investment policies was
amended during the 2000 Legislative Session,
. The major effects of the revision include:
. Annual training requirements for local governmental officials,
. Audit reports are required to contain investment policy compliance information
. Auditor General shall notifY the Joint Legislative Auditing Committee if a local
government does not comply with the law after notification,
. The Department of Revenue, the Department of Banking and Finance, and the
Department of Community Affairs may enforce local government compliance with the
law by withholding certain revenues.
. Effective date for the law is October 1, 2000.
. The City hired Steve Alexander from Public Financial Management in April to prepare a
new Investment Policy in accordance with the amended Florida Statute,
. The new policy supercedes the City's current Investment Policy dated September, 1995.
ATTACHMENTS:
. New Investment Policy
. Florida Statute 218.415 with revisions
RECOMMENDATION: The Finance Department recommends that the Commission approve
and adopt the new City Investment Policy,
COMMISSION ACTION:
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verify the determination of the fair market value for those
investments and ascertain that the determination complies with
all applicable state and federal requirements. The investment
policy shall require that the board disclose to the Department
of Management Services and the plan's sponsor each such
investment for which the fair market value is not provided.
Section 3. Section 218.415, Florida Statutes, is
amended to read:
218.415 Local government investment
policies.--Investment activity by a unit of local government
must be consistent with a written investment plan adopted by
the governing body, or in the absence of the existence of a
governing body, the respective principal officer of the unit
of local government and maintained by the unit of local
government or, in the alternative, such activity must be
conducted in accordance with Ll.e ';'.,ve.:JLw<;:;.,L ':ju';'del';'I'E:.:J .:Jet
[ot: tl, iI, subsection J...!2l-tT5T. Any such uni t of local
government shall have an investment policy for any public
funds in excess of the amounts needed to meet current expenses
as provided in subsections (I) - (16) (l) (l4), or shall meet
the alternative investment guidelines contained in subsection
(17}f+5T. Such policies shall be structured to place the
highest priority on the safety of principal and liquidity of
funds. The optimization of investment returns shall be
secondary to the requirements for safety and liquidity. Each
unit of local government shall adopt policies that are
commensurate with the nature and size of the public funds
wi thin its Ll,eir custody.
(1) SCOPE.--The investment policy shall apply to funds
under the control of the unit of local government in excess of
those required to meet current expenses. The investment policy
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shall not apply to pension funds, including those funds in
chapters 175 and 185.!..., LJ..u.:>L fUlld.5,or funds related to the
issuance of debt where there are other existing policies or
indentures in effect for such funds.
(2) INVESTMENT OBJECTIVES.--The investment policy
shall describe the investment objectives of the unit of local
government. Investment objectives shall include safety of
capital, liquidity of funds, and investment income, in that
order.
(3) PERFORMANCE MEASUREMENT.--The investment policy
ulliL of 10(.(.11 goveJ.uwent shall specify d<:::velop performance
measures as are appropriate for the nature and size of the
public funds within the res custody of the unit of local
government.
(4) PRUDENCE AND ETHICAL STANDARDS.--The investment
policy shall describe the level of prudence and ethical
standards to be followed by the unit of local government in
carrying out its investment activities with respect to funds
described in this section. The unit of local government shall
adopt the Prudent Person Rule, which states that: "Investments
should 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."
(5) LISTING OF AUTHORIZED INVESTMENTS.--The investment
policy shall list investments authorized by the governing body
of the unit of local government, subiect to the provisions of
subsection (16).Lllv<:::.:>tllleJlt.5. Investments not listed in the
investment policy are prohibited. If the policy authorizes
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investments in derivative products, the policy must require
that llLu.:>L be ~peci[i,-ully uuLJ.u..:iL.eJ ';'11 Lilt:: illVe.:>LHI<::lIL plal!
alld HlUY be cUll.:>ide.l:<::cl 01l1y if the unit of local government I s
officials responsible for making investment decisions or chief
financial officer have ~ developed sufficient understanding
of the derivative products and have ~ the expertise to
manage them. For purposes of this subsection, 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 index or asset values. If the policy
authorizes investments in The u.:>e of reverse repurchase
agreements or other forms of leverage, the policy must limit
the investments ~ball be P.LOllibitecl O.L liwiteJ by illVe",Ull<::lIt
policy to transactions in which Wll<::.Le the proceeds are
intended to provide liquidity and for which the unit of local
government has sufficient resources and expertise.
(6) MATURITY AND LIQUIDITY REQUIREMENTS.--The
investment policy shall require that the investment portfolio
is structured in such manner as to provide sufficient
liquidity to pay obligations as they come due. To that end,
the investment policy should direct that, to the extent
possible, an attempt will be made to match investment
maturities with known cash needs and anticipated cash-flow
requirements.
(7) PORTFOLIO COMPOSITION.--The investment policy
shall establish guidelines for investments and limits on
security issues, issuers, and maturities. Such guidelines
shall be commensurate with the nature and size of the public
funds within the custody ot the unit of local government.
(8) RISK AND DIVERSIFICATION, --The investment policy
shall provide for appropriate diversification of the
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investment portfolio. Investments held should be diversified
to the extent practicable to control the risk of loss
resulting from overconcentration of assets in a specific
maturity, issuer, instrument, dealer, or bank through which
financial instruments are bought and sold. Diversification
strategies within the established guidelines shall be reviewed
and revised periodically, as deemed necessary by the
appropriate management staff.
(9) AUTHORIZED INVESTMENT INSTITUTIONS AND
DEALERS.--The investment policy should specify the authorized
securities dealers, issuers, and banks from whom the unit of
local government may purchase securities.
(10) THIRD-PARTY CUSTODIAL AGREEMENTs.--The investment
policy shall provide appropriate arrangements for the holding
of assets of the unit of local government. Securities should
be held with a third party; and all securities purchased by,
and all collateral obtained by, the unit of local government
should be properly designated as an asset of the unit of local
government. No withdrawal of securities, in whole or in part,
shall be made from safekeeping, except by an authorized staff
member of the unit of local government. Securities
transactions between a broker-dealer and the custodian
involving purchase or sale of securities by transfer of money
or securities must be made on a "delivery vs. payment" basis,
if applicable, to ensure that the custodian will have the
security or money, as appropriate, in hand at the conclusion
of the transaction.
(11) MASTER REPURCHASE AGREEMENT.--The investment
policy U1lil 0[ locol gvVe1.11J1Iellt shall require all approved
institutions and dealers transacting repurchase agreements to
execute and perform as stated in the Master Repurchase
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1 I Agreement. All repurchase agreement transactions shall adhere
2 to the requirements of the Master Repurchase Agreement.
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(12)
BID REQUIREMENT.--The investment policy shall
4 require that the unit of local government's staff determine
5 the approximate maturity date based on cash-flow needs and
6 market conditions, anal ze and select one or more 0 timal
7 t es of
bid the securit In
8 question when feasible and appropriate. Except as otherwise
9 required by law, the bid deemed to best meet the investment
10 objectives specified in subsection (2) must be selected.After
11 LLc; u'L;'.L vf local goVe.J..'lillellt ..:>taff ]10..:> de:teull';'lled Lhe
12 app.(o^';"H1ate H1aLu.J..';"Ly daLe LJC1..:>eJ Oll ell..:>l, flow "eed", auJ lllo.J..J...et
13 eo"d';"L';"ull"'. oud ]10'" allalYked olld ",e:le,-ted oIle u.J.. '"U.ce oplilllol
14 Lype:", of illve",Lllle"L, Llle ..:>e,-u.J..ily ';'11 yUe",L';'oll "']1011, Wlle!l
15 feo",';"blc; o"J appru!-,.J..';'aLe, be: cOll,peL';'L';"ve:ly b.i.d.
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(l3)
INTERNAL CONTROLS.--The investment policy shall
provide for a system of internal controls and operational
procedures.
The unit of local government's officials
responsible for making investment decisions or chief financial
officer shall, by J011l.l<'.\..(y 1, IJJG, establish a system of
internal controls which shall be in writing and made a part of
the governmental entity's operational procedures. The
investment policy shall provide for review of such controls by
independent auditors as part of any financial audit
25 periodically required of the unit of local government. The
26 internal controls should be designed to prevent losses of
27 funds which might arise from fraud, employee error,
28 misrepresentation by third parties, or imprudent actions by
29 employees of the unit of local government.
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CONTINUING EDUCATION,--The investment policy
31 shall provide for the continuing education of the unit of
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local overnment's officials res onsible for makin investment
decisions or chief financial officer. Such officials must
annuall lete 8 hours of continuin education in sub'ects
or courses of study related to investment practices and
products.
il2lTT+t REPORTING.--The investment policy shall
provide for appropriate annual or more frequent reporting of
investment activities. To that end, the governmental entity's
officials responsible for making investment decisions or chief
1 financial officer shall prepare periodic reports for
1 submission to the legislative and governing body of the unit
1 of local government, which shall include securities in the
1 portfolio by class or type, book value, income earned, and
14 market value as of the report date. Such reports shall be
15 available to the public.
16 (16) AUTHORIZED INVESTMENTS; WRITTEN INVESTMENT
17 POLICIES.--Those units of local government electing to adopt a
18 written investment policy as provided in subsections (1)-(15)
19 may by resolution invest and reinvest any surplus public funds
20 1n their control or possession in:
21 (a) The Local Government Surplus Funds Trust Fund or
22 ny intergovernmental investment pool authorized pursuant to
23 he Florida Interlocal Cooperation Act as provided in s.
24 63.01.
25 (b) Securities and Exchange Commission registered
26 oney market funds with the highest credit quality rating from
27 nationally recognized rating agency.
28 (c) Interest-bearing time deposits or savings accounts
29 n qualified public depositories as defined in s. 280.02.
30 (d) Direct obligations of the United States Treasury.
31 (e) Federal agencies and instrumentalities,
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trust re istered under the Investment Com an Act of 1940, 15
U.S,C. ss. 80a-1 et seq., as amended from time to time,
rovided that the ortfolio of such investment com an or
investment trust is limited to obligations of the United
States Government or an or instrumentalit thereof and
to re urchase a reements full collateralized b such United
States Government obligations, and provided that such
1 investment com an or investment trust takes deliver of such
1 collateral either directly or through an authorized custodian.
1 () Other investments authorized b law or b
1 ordinance for a county or a municipality.
14 (h) Other investments authorized b law or b
15 resolution for a school district or a special district.
16 ll2l~ AUTHORIZED INVESTMENTS; NO WRITTEN INVESTMENT
17 POLICY ALTERNATIVE INVE::J'l'IlENT GUIDELIl~C5.--Those units of
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(f) Securities of, or other interests in, an 0 en-end
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in accordance with investment olicies develo ed as
(1)-(15) ma invest or reinvest an
surE"us public funds in their control or possession in'Tn
:ddiL~O!l Lo 0.1. ~ll l~cu o[ e.:>taLl';'..)!'';'I'Y <':l W.l..~Ltell ~llve,:>~"'cl.t
25 to 'cullducL ill\;le.::>LlIlellt activity o~-e the [.l..au,<::wO.1.].. l-'Lov~ded
Lo .:>ub~ec.L~ull':> (1)
(14), a u"iL v[
poliC~b dl::velO~l::J ~U::::l't
lv\....ul "jVVe..Ll1.uIC.llL elc;,,-L~.llg
pia" ill ~l\...l.-OrJ6uce
wit I. ill v <::.:> lllle II L
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Tile uu';'L of lOCll+-gcrvCl.IUlle"L IIlDY ';'llvc.:>L iu Lhe
29 llVe.:> Lu,cuL.:>, aL prevailillY IIlDIk-et--pJ.ic.<::.:> or-rot<::..:>, ..:>uLjcl.-L to
30 I,e liu,iLDLicJlI~ o[ th';'.:> .'\cct-i-orr:-
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163.0l.
(b) Securities and Exchange Commission registered
money market funds with the highest credit quality rating from
a nationally recognized rating agency.
(c) Interest-bearing time deposits or savings accounts
in ~tote ceLL~[ied qualified public depositories, as defined
1 in s. 280.02.
1 (..1) CeL tif~cote.:> of depo.:>iL ill .:>toLe eeL l.i.fied
1 y'ual~[ied publ~<.- defJo.:>~toL~e.:>, (.l~ defilled .i.1I .:>. 200.02.
1 ~Tet Direct obligations of the u.S. Treasury.
14 (f) FeJe.u~1 ugeiKie.:> OIlJ ~lI.:>L.cU111elILoliti<:::.:>.
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16 The securities listed in paragraphs (c) and,(d), (<:::), alld (f)
17 shall be invested to provide sufficient liquidity to pay
18 obligations as they come due moldl ~IIVe.:>llHelll lHaLuL~L';"e.:> vI~tb
19 GU.(.l:euL expeu.:>e.5.
20 (18) SECURITIES; DISPOSITION.--
21 (a) Every security purchased under this section on
22 ehalf of the governing body of a unit of local government
23 ust be properly earmarked and:
24 1. If registered with the issuer or its agents, must
25 e immediately placed for safekeeping in a location that
26 rotects the governing body's interest in the security;
27 2. If in book entry form, must be held for the credit
28 f the governing body by a depository chartered by the Federal
29 overnment, the state, or any other state or territory of the
30 nited States which has a branch or principal place of
31 usiness in this state as defined in s. 658.12, or by a
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(a) The Local Government Surplus Funds Trust Fund, or
any intergovernmental investment pool authorized pursuant to
the Florida In~erlocal Cooperation Act, as provided in s.
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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 this state, and must be
kept by the depository in an account separate and apart from
the assets of the financial institution; or
3. If physically issued to the holder but not
registered with the issuer or its agents, must be immediately
placed for safekeeping in a secured vault.
(b) The unit of local government's governing body may
also receive bank trust receipts in return for investment of
surplus funds in securities. Any trust receipts received must
enumerate the various securities held, together with the
specific number of each security held. The actual securities
on which the trust receipts are issued may be held by any bank
depository chartered by the Federal Government, this state, or
any other state or territory of the United States which has a
branch or principal place of business in this state as defined
in s. 658.12, 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 this state.
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(19) SALE OF SECURITIES.--When the invested funds are
needed in whole or in part for the purposes originally
lntended or for more optimal investments, the unit of local
government's governing body may sell such investments at the
hen-prevailing market price and place the proceeds into the
roper account or fund of the unit of local government.
(20) PREEXISTING CONTRACT. --Any public funds sub-ject
o a contract or agreement existing on October 1, 2000, may
ot be invested contrary to such contract or agreement.
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(21) PREEMPTION. --Any provision of any special act,
municipal charter, or other law which prohibits or restricts a
local governmental entity from complying with this section or
any rules adopted under this section is void to the extent of
the conflict.
(22) AUDITS.--Certified public accountants conducting
audits of units of local government pursuant to s. 11.45 shall
report, as part of the audit, whether or not the unit of local
government has complied with this section.
1 (23) AUDITOR GENERAL; REVIEW.--During the Auditor
1 General's review of audit reports of units of local
1 government, the Auditor General shall contact those units of
1 local government not in compliance with this section and
1 request evidence of corrective action. If the unit of local
15 government does not provide the Auditor General with evidence
16 of corrective action within 45 days after the date it is
17 requested, the Auditor General shall then notify the Joint
18 Legislative Auditing Committee of any unit of local government
19 not in compliance with this section. Following notification of
20 failure by a local government to comply with this section, a
21 hearing may be scheduled by the committee. If a hearing lS
22 scheduled, the committee shall determine which units of local
23 government will be subjected to further state action. If the
24 committee finds that one or more units of local government
25 hould be subjected to further state action, the committee
26 hall:
27 (a) In the case of a county, municipality, or district
28 chool board, request the Department of Revenue and the
29 epartment of Banking and Finance to withhold any funds not
30 ledged for bond debt service satisfaction which are payable
31 0 such governmental entity. The Department of Revenue and the
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Department of Banking and Finance are authorized to implement
the provisions of this paragraph. The committee, ln its
request, shall specify the date such action shall begin, and
the request must be received by the Department of Revenue and
the Department of Banking and Finance 30 days before the date
of the distribution mandated by law.
(b) In the case of a special district, notify the
Department of Community Affairs that the special district has
failed to comply with this section. Upon receipt of
notification, the Department of Community Affairs shall
proceed pursuant to the provisions specified in ss. 189.421
and 189.422.
Section 4. Paragraph (a) of subsection (3) of section
11.45, Florida Statutes, is amended to read:
11.45 Definitions; duties; audits; reports.--
(3) (a)l. The Auditor General shall annually make
financial audits of the accounts and records of all state
agencies, as defined in this section, of all district school
boards in counties with populations of fewer than 125,000,
according to the most recent federal decennial statewide
census, and of all district boards of trustees of community
colleges. The Auditor General shall, at least every other
year, make operational audits of the accounts and records of
all state agencies, as defined in this section, The Auditor
General shall, at least once every 3 years, make financial
audits of the accounts and records of all district school
boards in counties with populations of 125,000 or more. For
each of the 2 years that the Auditor General does not make the
financial audit, each district school board shall contract for
an independent certified public accountant to perform a
financial audit as defined in paragraph (1) (b). This section
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Table of Contents
Page
1. PURPOSE 3
II. SCOPE 3
m. INVESTMENT OBJECTIVES 3
IV, DELEGATION OF AUTHORITY 4
V. STANDARDS OF PRUDENCE 4
VI. ETIDCS AND CONFLICTS OF INTEREST 5
VII. INTERNAL CONTROLS AND INVESTMENT PROCEDURES 5
vm, CONTINUING EDUCATION 5
lX. AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS 5
X. MATURITY AND LIQUIDITY REQUIREMENTS 6
XI, COMPETITNE SELECTION OF INVESTMENT INSTRUMENTS 6
XII, AUTHORIZED INVESTMENTS AND PORTFOLIO COMPOSTION 1
XllI. DERIV A TIVES AND REVERSE REPURCHASE AGREEMENTS 13
XIV. PERFORMANCE MEASUREMENTS 13
XV, REPORTING 13
XVI. THIRD-PARTY CUSTODIAL AGREEMENTS 14
XVII. INVESTMENT COMMmEE 15
XVllI. INVESTMENT POLICY ADOPTION 15
City of Winter Springs
Investment Policy
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City of Winter Springs
Investment Policy.
I. PURPOSE
The purpose of this policy is to set forth the investment objectives and parameters for the management of
the funds of the City of Winter Springs, (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.
n. SCOPE
In accordance with Section 218.415, Florida Statues, this investment policy applies to all cash and
investments held or controlled by the City and shall be identified as "general operating funds" of the City
with the exception of the City's Pension Funds and funds related to the issuance of debt where there are
other existing policies or indentures in effect for such funds. Additionally. any future revenues, which
have statutory investment requirements conflicting with this Investment Policy and funds held by state
agencies (e,g" Department of Revenue), are not subject to the provisions of this policy.
ill. 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.
From time to time, securities may be traded for other similar securities to improve yield, maturity or
credit risk. For these transactions, a loss may be incurred for accounting purposes to achieve optimal
investment return, provided any of the following occurs with respect to the replacement security:
A, The yield has been increased. or
B. The maturity has been reduced or lengthened. or
C, The quality of the investment has been improved.
City of Winter Springs
Investment Policy
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Maintenance of Liquidity.
The portfolios shall be managed in such a manner that funds ar~ available to meet reasonably anticipated
cash flow requirements in an orderly manner, Periodical cash flow analyses will be completed in order
to ensure that the portfolios are positioned to provide sufficient liquidity.
Return on 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 on 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,
IV. DELEGATION OF AUTHORITY
In accordance with the City's Charter, the responsibility for providing oversight and direction in regard
to the management of the investment program resides with the City's Manager. The City Manager may,
from time to time, designate in writing a designee to have management responsibility for all City funds in
the investment program and investment transactions. The City Manager shall establish written procedures
for the operation of tbe 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.
V. STANDARDS OF PRUDENCE
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 expectation are reported to the City Council 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 1S 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 contractor 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
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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. ETIDCS AND CONFLICTS OF INTEREST
Employees involved in the investment process shall refrain from personal business activity that could
conflict with proper ex.ecution 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
Investment Committee any material financial interests in financial institutions that conduct business with
the City, and they shall further disclose any material personal fmancial/investment positions that could be
related to the performance of the City's investment program.
vn. INTERNAL CONTROLS AND INVESTMENT PROCEDURES
The Finance 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, and misrepresentation, by third
parties. or imprudent actions by employees. The written procedures should include reference to
safekeeping, repurchase agreements, separation of transaction authority from accounting and record
keeping, wire transfer agreements, banking service contracts, collateral/depository agreements. and
"delivery vs, payment" procedures, No person may engage in an investment transaction ex.cept as
authorized under the terms of this policy. These procedures are intended to reduce to a relatively low
risk that material losses may occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions.
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.
VITI. CONTINUING EDUCATION
The Finance Director. management designee andlor appropriate staff shall annually complete 8 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 Institutions by the City or institutions designated as "Primary Securities Dealers" by
the Federal Reserve Bank of New York. Authorized City staff and Investment Advisors shall only enter
into repurchase agreements with financial institutions that are Qualified Institutions and Primary
Securities Dealers as designated by the Pederal Reserve Bank of New York. The Finance Director,
management designee and/or the Investment Advisors shall maintain a list of financial institutions and
broker/dealers that are approved for investment purposes and only firms meeting the following
requirements will be eligible to serve as Qualified Institutions:
1) regional dealers that qualify under Securities and Exchange Commission Rule 15C3-1
(uniform net capital rule);
2) Capital of no less than $10,000,000;
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All brokers, dealers and other financial institutions deemed to be Qualified Institutions shall be provided
with current copies of tbe City's Investment Policy. A current audited financial statement is required to
be on me for each financial institution and broker/dealer with which the City transacts business.
3) registered as a dealer under the Securities Exchange Act of 1934;
4) member of the National Association of Dealers (NASD);
5) registered to sell securities in Florida; and
6) the firm and assigned broker bave been engaged in the business of effecting transactions
in U,S, government and agency obligations for at least five (5) consecutive years,
7) Public Depositories qualified by the Treasurer of the State of Florida, in accordance with
Chapter 280, Florida Statutes.
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,
Xl. COMPETITIVE SELECTION OF INVESTMENT INSTRUMENTS
After the Finance Director, management designee 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 Institutions and/or Primary
Dealers must be contacted and asked to provide bids/offers on securities in questions, 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 lnformation System
B, Bloomberg Information Systems
C. Wall Street Journal or a comparable nationally recognized financial publication providing daily
market pricing
D. Daily market pricing provided by the City's custodian or their correspondent institutions
The Finance Director or the lnvestment 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 Finance Director or the Investment Advisor, competitive
bidding would inhibit the selection process,
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Example the City 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 investments or repurchase agreements will not be bid, but may be placed with the City's
depository bank relating to the demand account for which the sweep investments or 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 as 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 Finance
Director or management designee may sell tbe 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 Finance Director or management designee 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 requirements for investment types and
issuers are calculated based on the original cost of each investment. Investments not listed in this policy
are prohibited,
The allocation limits and security types do not apply to the investment of debt proceeds, These
investments shall be governed by the debt covenant included in the debt instrument.
A. United States Government Securities
1, Purchase Authorization
The Finance Director or management designee may invest in direct negotiable
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
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2. Portfolio Composition
A maximum of 100% of available funds may be invested In the United Slates
Government Securities,
3, 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.
B, United States Government Agencies
1. Purchase Authorization
The Finance Director or management designee may invest in bonds, debentures, notes or
callable issued and guaranteed by the United States Governments 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:
Government National Mortgage Association (GNMA)
-aNMA guaranteed mortgage-backed bonds
-GNMA guaranteed pass-through obligations
United States Export - Import Bank
-Direct obligations or fully guaranteed certificates of beneficial
ownership
Farmer Home Administration
-Certificates of beneficial ownership
Federal Financing Bank
-Discount notes, notes and bonds
Federal Housing Administration Debentures
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
2, Portfolio Composition
A maximum of 75% of available funds may be invested in United States Government
agencies.
3. Limits on Individual Issuers
A maximum of 50% of available funds may be invested in individual United States
Government agencies,
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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,
C. Federal Instrumentalities (United States Government sponsored agencies)
1, purchase Authorization
The Finance Director or management designee may invest in bonds, debentures or notes
which may be subject to call, issued or guaranteed as to principal and interest by United
States Government sponsored agencies (Federal Instrumentalities) which are Don-full
faith and credit agencies 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 (Freddie-Macs)
Student Loan Marketing Association (Sallie-Mae)
2, Portfolio Composition
A maximum of 80% of available funds may be invested in Federal Instrumentalities.
3, Limits on Individual Issuers
A maximum of 40% of available funds may be invested in anyone issuer,
4, Maturity Limitations
The maximum length to maturity for an investment in any Federal Instrumentality
security is five (5) years from the date of purchase,
D, Interest Bearing Time Deposit or Saving Accounts
1. purchase Authorization
The Finance Director or management designee may invest in non-negotiable interest
bearing time certificates of deposit or savings accounts in banks organized under the
laws of this state and in national banks organized under the laws of the United States and
doing business and situated in the State of Florida, Additionally, tbe bank shall not be
listed with any recognized credit watch information service,
2. Portfolio Composition
A maximum of 25% of available funds may be invested in non-negotiable interest
bearing time certificates of deposit.
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3, Limits on Individual Issuers
A maximum of 15% of available funds may be deposited with anyone issuer,
4. The maximum maturity on any certificate shall be no greater than one (1) year from the
date of purchase.
E, Repurchase Agreements
1. Purchase Authorization
a. The Finance Director or management designee 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
tbe 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 bold 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 Finance Director and retained.
c. Securities authorized for collateral are negotiable direct obligations of the United
States Government, Government Agencies, and Federal Instrumentalities 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 Finance Director or
management designee,
2, Portfolio Composition
A maximum of 50% 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 25% of available funds may be invested with anyone institution.
4. Limits on Maturities
The maximum length to maturity of any repurchase agreement is 90 days from the date
of purchase,
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F. Commercial Paper
1, Purchase Authorization
The Finance Director or management designee may invest in commercial paper of any
United States company that is rated, at the time or purchase, "Prime-I" by Moody's and
"A_I" by Standard & Poor's (prime commercial paper), Additionally, the company shall
not be listed with any recognized credit watch information service,
2, Portfolio Composition
A maximum of 30% 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 anyone issuer.
4, Maturity Limitations
The maximum length to maturity for prime commercial paper shall be 180 days from the
date of purchase.
F. Bankers' acceptances
1. Purchase Authorization
The Finance Director or management designee may invest in Bankers' acceptances
issued by a domestic bank or a federally chartered domestic office of a foreign bank.,
which are eligible for purchase by the Federal Reserve System, at the time or purchase,
the short-term paper is rated, at a minimum, "P-l" by Moody's Investors Services and
"A-I" Standard & Poor's. Additionally, the bank shall not be listed with any recognized
credit watch information service.
2. Portfolio Composition
A maximum of 30% of available funds may be directly invested in Bankers' acceptances
3. Limits on Individual Issuers
A maximum of 1 0% of available funds may be invested with anyone issuer,
4, Maturity Limitations
The maximum length to maturity for Bankers' acceptances shall be 180 days from the
date of purchase.
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G. State andlor Local Government Taxable and/or Tax.-Ex.empt Debt
1, Purchase Authorization
The Finance Director may invest in state andlor local government taxable andlor tax-
exempt debt, general obligation andlor revenue bonds, rated at least "Aa" 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, 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,
H, Registered Investment Companies (Money Market Mutual Funds)
1, Investment Authorization
The Finance Director or management designee may invest in shares in open-end and no-
load fixed-income securities money market mutual funds provided such funds are
registered under tbe Federal Investment Company Act of 1940 and invest in securities
permitted by this policy,
2. Portfolio Composition
A maximum of 100% of available funds may be invested in money market mutual funds
excluding one (1) business day overnight sweep agreements,
3. Limits of Individual Issuers
A maximum of 25% of available funds may be invested with anyone money market
mutual fund.
4, Rating Requirements
The money market mutual funds shall be rated "AAm" or "AAm-G" or better by
Standard & Poor's, or the equivalent by another national rating agency.
5, Due Diligence Requirements
A thorough investigation of any money market mutual market fund is required prior to
investing, and on a continual basis, There shall be a questionnaire developed by the
Finance Director or management designee that will contain a list of due diligence
considerations that deal with the major aspects of any investment pool/fund, A current
prospectus must be obtained,
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I, Intergovernmental Investment Pool
1. Investment Authorization
The Finance 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 25% of available funds may be invested in intergovernmental investment
pools.
XUI. DERlV ATIVES AND REVERSE REPURCHASE AGREEMENTS
Investment in any derivative products or the use of rev'erse repurchase agreements requires specific City
Council approval prior to their use, If the City Council approves the use of derivative products, the
Finance Director or management designee shall develop sufficient understanding of the derivative
products and have the ex.pertise 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 Council 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 whicb the Finance Director or maoagement designee bas sofficient resourees and
expertise to manage them,
XIV. PERFORMANCE MEASUREMENTS
In order to assist in the evaluation of the portfolios' performance. the City will use performance
benchmarks for short-term and long-term portfoHos, The use of benchmarks will allow the City to
measure its returns against other investors in the same markets.
A. Investment performance of funds designated as short-term funds and other funds that must maintain
a high degree of liquidity will be compared to the return on the six-month U.S, Treasury Bill,
Investments of current operating funds shall have maturities of no longer than twenty-four (24)
months,
B, Investment performance of funds designated as core funds and other non-operating funds that have a
10nger-tenn investment horizon will be compared to an index comprised of U. S. Treasury or
Government securities, The appropriate index will have a duration and asset mix that approximates
the portfolios and will be utilized as a benchmark to be compared to the portfolios' total rate of
return, 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 ex.ceed five (5) years.
xv. REPORTING
The Finance Director, management designee and/or Investment Advisor shall provide the City Manager
with a "Quarterly Investment Report" that summarizes but is not limited to the following:
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A. Recent market conditions, economic developments and anticipated investment conditions.
B. The investment strategies employed in the most recent quarter,
C, A description of all securities held in investment portfolios at month-end.
D, The total rate of return for the quarter and year-to-date versus appropriate benchmarks.
E. Any areas of policy concern warranting possible revisions to current or planned investment
strategies. The market values presented in these reports will be consistent with accounting
guidelines in GASB Statement 31,
On an annual basis, the City Manager designee shall 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, earned income, the book value, the market value, the yield on each investment.
The annual report will show performance on both a book value and total rate of return basis and will
compare the results to the above-stated performance benchmarks, All investments shall be reported at
fair value per GASB Statement 31. Investment reports shall be available to the public,
XVI. THIRD-PARTY CUSTODIAL AGREEMENTS
Securities, with the exception of certificates of deposits, shall be held with a third party custodian; and all
securities purchase 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, 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 City Manager and which authorization has been provided, in writing, to the custodian,
No withdrawal of securities, in whole or in part, shall be made from safekeeping, shall be permitted
unless by such a duly authorized person.
The custodian shall provide the Finance Director or management designee with safekeeping statements
that provide detail information on the securities held by the custodian. On a monthly basis, the custodian
will also provide reports that list all securities held for the City, the book value of holdings and the
market value as of month-end,
Security transactions between a broker/dealer and the custodian involving the purchase or sale of
securities by transfer of money or securities must be made on a "delivery vs. payment" basis, if
applicable, to en,ure that the cu,'ndian will have lhe security or money, 118 appropriate, in hand at the
conclusion of the transaction, Securities held as collateral shall be held free and clear of any liens.
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; ..
X~I.~STMENTCO~E
The Finance Director with the approval of the City Manager will establish an Investment Committee for
the pUIJlOse of fonnulatiog altemative investment stmtegies and short-range directions withio the
guideline herein set forth and for monitoring the perfnnnance and structure of the City's portfolio. The
Committee shall include the Finance Director as Chairman, the City Controller, a Cormnission member
and the City's financial/investment advisor, and may include other members as may be designated by the
City Manager from time to time.
A designee of the Finance Director will provide the Committee members with current market
information, an updated portfolio listing and analysis. and various pertinent financial data, The
Committee, or quorum of the committee shall meet as often as deemed necessary, under the given
conditions. to review, discuss and affirm or alter the current investment strategy and perform other
functions as herein provided,
The Investment Committee activities shall include but not be limited to review and setting investment
strategies; review and establishing of written investment procedures; review and approval of bank and
other rating agency services; review and approval of source documentation regarding issuers, institutions
and dealers, and any other functions as defined herein.
xvm. INVESTMENT POLICY ADOPTION
The Investment Policy shall be adopted by City resolution, The Finance Director, Controller, and the
Investment Committee shall review the policy annually and submit recommendations to the City
Manager for review and approval. If a change in the Policy is recommended for approval by the City
Manager, the Finance Director will prepare the necessary report to Commission,
APPROVED AND ADOPTED BY THE CITY COMMISSION ON
Title:
Title:
Title:
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P.15
Investment Policy
City of Winter Springs,
Florida
Approved by the City Commission
on September 10, 2001 and amended on January 28, .2002
Table of Contents
Page
I. PURPOSE 3
II. SCOPE 3
III. INVESTMENT OBJECTIVES 3
IV, DELEGA TION OF AUTHORITY 4
V. STANDARDS OF PRUDENCE 4
VI. ETHICS AND CONFLICTS OF INTEREST 5
VII. INTERNAL CONTROLS AND INVESTMENT PROCEDURES 5
VIII. CONTINUING EDUCATION 5
IX. AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS 5
X. MATURITY AND LIQUIDITY REQUIREMENTS 6
XI. COMPETITIVE SELECTION OF INVESTMENT INSTRUMENTS 6
XII. AUTHORIZED INVESTMENTS AND PORTFOLIO COMPOSTION 7
XIII. DERrv A TIVES AND REVERSE REPURCHASE AGREEMENTS 13
XlV. PERFORMANCE MEASUREMENTS 13
XV. REPORTING 14
XVI. THIRD-PARTY CUSTODIAL AGREEMENTS 14
XVII. INVESTMENT COMM ITTEE 15
XVII. I. INVESTMENT OVERSIGHT COMMITTEE 15
XVIII. INVESTMENT POLICY ADOPTION 16
City of Winter Springs
Investment Policy
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"
City of Winter Springs
Investment Policy
I. PURPOSE
The purpose of this policy is to set forth the investment objectives and parameters for the management of
the funds of the City of Winter Springs, (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 Statues, this investment policy applies to all cash and
investments held or controlled by the City and shall be identi fied as "general operating funds" of the City
with the exception of the City's Pension Funds and funds related to the issuance of debt where there are
other existing policies or indentures in effect for such funds. Additionally, any future revenues, which
have statutory investment requirements conflicting with this Investment Policy and 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,
From time to time, securities may be traded for other similar securities to improve yield, maturity or credit
risk. For these transactions, a loss may be incurred for accounting purposes to achieve optimal investment
return, provided any of the following occurs with respect to the replacement security:
A. The yield has been increased, or
B. The maturity has been reduced or lengthened, or
C. The quality of the investment has been improved.
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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, Periodical cash flow analyses will be completed in order to
ensure that the portfolios are positioned to provide sufficient liquidity.
Return on Investment
Investment portfolios shall be designed with the objective of attaining a market rate of return throughout
budgetary and economic cycles, raking into account the investment risk constraints and liquidity needs.
Return on 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.
IV. DELEGATION OF AUTHORITY
In accordance with the City's Charter, the responsibility for providing oversight and direction in regard to
the management of the investment program resides with the City's Manager. The City Manager may,
with timely notice (prior to implementation) to the City Commission designate in writing a designee to
have management responsibility for all City funds in the investment program and investment transactions.
The City Manager 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,
~ STANDARDS OF PRUDENCE
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 expectation are reported to the City Commission in a timely fashion and the
liquidity and the sale of securities are carried out in accordance with the tenns 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 finn 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 contractor 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.
City of Winter Springs Investment Policy Page 4
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 Committee and or investment
process shall disclose to the Investment Oversight Committee 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 Finance 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, and misrepresentation by third
parties, or imprudent actions by employees. The written procedures should include reference to
safekeeping, repurchase agreements, separation of transaction authority from accounting and record
keeping, wire transfer agreements, banking service contracts, collateral/depository agreements, and
"delivery vs. payment" procedures, No person may engage in an investment transaction except as
authorized under the terms of this policy. These procedures are intended to reduce to a relatively low risk
that material losses may occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions,
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 EDUCA nON
The Finance Director, management designee and/or appropriate staff shall annually complete 8 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 Institutions by the City or institutions designated as "Primary Securities Dealers" by
the Federal Reserve Bank of New York. Authorized .City staff and Investment Advisors shall only enter
into repurchase agreements with financial institutions that are Qualified Institutions and Primary
Securities Dealers as designated by the Federal Reserve Bank of New York, The Finance Director,
management designee and/or the Investment Advisors shall maintain a list of financial institutions and
broker/dealers that are approved for investment purposes and only firms meeting the following
requirements will be eligible to serve as Qualified Institutions:
2)
3)
4)
5)
City of Winter Springs
. I) regional dealers that qualify under Securities and Exchange Commission Rule J 5C3-1
(uniform net capital rule);
Capital of no less than $10,000,000;
registered as a dealer under the Securities Exchange Act of 1934;
member of the National Association of Dealers (NASD);
registered to sell securities in Florida; and
Investment Policy
Page 5
6) the firm and assigned broker have been engaged in the business of effecting transactions
in U.S. government and agency obligations for at least five (5) consecutive years,
7) Public Depositories qualified by the Treasurer of the State of Florida, in accordance with
Chapter 280, Florida Statutes.
All brokers, dealers and other financial institutions deemed to be Qualified Institutions shall be provided
with current copies of the City's Investment Policy. A current audited financial statement is required to
be on file for each financial institution and broker/dealer with which the City transacts business.
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 teml appropriate to the need for funds and in accordance with debt covenants, but in no event shall
exceed five (5) years.
XI. COMPETITIVE SELECTION OF INVESTMENT INSTRUMENTS
After the Finance Director, management designee 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 Institutions and/or .Primary
Dealers must be contacted and asked to provide bids/offers on securities in questions. 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 System
B. Bloomberg Information Systems
C. Wall Street Journal or a comparable nationally recognized financial publication providing daily
market pricing
D. Daily market pricing provided by the City's custodian or their correspondent institutions
The Finance Director 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 Finance Director or the Investment Advisor, competitive
bidding would inhibit the selection process.
Examples of when this method may be used.
City of Winter Springs
Investment Policy
Page 6
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 investments or repurchase agreements will not be bid, but may be placed with the City's
depository bank relating to the demand account for which the sweep investments or 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 as 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 Finance Director or
management designee 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 Finance Director or management designee 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 requirements for investment types and
issuers are calculated based on the original cost of each investment. Investments not listed in this policy
are prohibited.
The allocation limits and security types do not apply to the investment of debt proceeds, These
investments shall be governed by the debt covenant included in the debt instrument.
A. The Florida Local Government Surplus Funds Trust Fund ("SBA")
1. Investment Authorization
The Finance Director may invest in the SBA.
2, Portfolio Composition
A maximum of 100% of available funds may be invested in the SBA.
B, United States Government Securities
I. Purchase Authorization
.City of Winter Springs
Investment Policy
Page 7
The Finance Director or management designee may invest in direct negotiable
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 I 00% of available funds may be invested In the United States
Government Securities.
3, 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
I. Purchase Authorization
The Finance Director or management designee may invest in bonds, debentures, notes or
callable issued and guaranteed by the United States Governments 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:
Government National Mortgage Association (GNMA)
-GNMA guaranteed mortgage-backed bonds
-GNMA guaranteed pass-through obligations
United States Export - Import Bank
-Direct obligations or fully guaranteed certificates of beneficial
ownership
Farmer Home Administration
-Certi ficates of beneficial ownership
Federal Financing Bank
-Discount notes, notes and bonds
Federal Housing Administration Debentures
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
City of Winter Springs
Investment Policy
Page 8
2. Portfolio Composition
A maximum of 75% of available funds may be invested In United States Government
agencies.
3, Limits on Individual Issuers
A maximum of 50% 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 agencies)
. I. Purchase Authorization
The Finance Director or management designee may invest in bonds, debentures or notes
which may be subject to call, issued or guaranteed as to principal and interest by United
States Government sponsored agencies (Federal Instrumentalities) which are non-full
faith and credit agencies limited to the following:
Federal Fann Credit Bank (FFCB)
Federal Home Loan Bank or its district banks (FHLB)
Federal National Mortgage Association (FNMA)
Federal Home Loan Mortgage Corporation (Freddie-Macs)
Student Loan Marketing Association (Sallie-Mae)
2. Portfolio Composition
A maximum of 80% of available funds may be invested in Federal Instrumentalities.
3. Limits on Individual Issuers
A maximum of 40% of available funds may be invested in anyone issuer.
4. Maturity Limitations
The maximum length to maturity for an investment In any Federal Instrumentality
security is five (5) years from the date of purchase.
E. Interest Bearing Time Deposit or Saving Accounts
I.
Purchase Authorization
City of Winter Springs
The Finance Director or management designee may invest in non-negotiable interest
bearing time certificates of deposit or savings accounts in banks organized under the laws.
Investment Policy Page 9
of this state and in national banks organized under the laws of the United States and doing
business and situated in the State of Florida. Additionally, the bank shall not be listed
with any recognized credit watch information service.
2. Portfolio Composition
A maximum of 25% of available funds may be invested in non-negotiable interest bearing
time certificates of deposit.
..
3. Limits on Individual Issuers
A maximum of 15% of available funds may be deposited with anyone issuer.
4, The maximum maturity on any certificate shall be no greater than one (I) year from the
date of purchase.
F. Repurchase Agreements
I. Purchase Authorization
a, The Finance Director or management designee may invest in repurchase
agreements composed of only those investments based on the requirements set
forth by the City's Master Repurchase Agreement. All finns 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
(I) business day, A clearly marked receipt that shows evidence of ownership
must be supplied to the Finance Director and retained,
c. Securities authorized for collateral are negotiable direct obligations of the United
States Government, Government Agencies, and Federal Instrumentalities 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 pernlissible only upon the approval of the Finance Director or management
designee.
2, Portfolio Composition
A maximum of 50% of available funds may be invested in repurchase agreements
excluding one (I) business day agreements and overnight sweep agreements,
3. Limits on Individual Issuers
A maximum of 25% of available funds may be invested with anyone institution.
4. Limits on Maturities
City of Winter Springs
Investment Policy
Page 1 0
The maximum length to maturity of any repurchase agreement is 90 days from the date of
purchase.
G, Commercial Paper
I. Purchase Authorization
The Finance Director or management designee may invest in commercial paper of any
United States company that is rated, at the time or purchase, "Prime-I" by Moody's and
"A-I" by Standard & Poor's (prime commercial paper). Additionally, the company shall
not be listed with -any recognized credit watch infonnation service,
2. Portfolio Composition
A maximum of 30% 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 anyone issuer.
4. Maturity Limitations
The maximum length to maturity for prime commercial paper shall be 180 days from the
date of purchase.
H. Bankers' acceptances
I , Purchase Authorization
The Finance Director or management designee may invest in Bankers' acceptances issued
by a domestic bank or a federally chartered domestic office of a foreign bank, which are
eligible for purchase by the Federal Reserve System, at the time or purchase, the short-
tenn paper is rated, at a minimum, "P-I" by Moody's Investors Services and "A-I"
Standard & Poor's. Additionally, the bank shall not be listed with any recognized credit
watch information service,
2. Portfolio Composition
A maximum of 30% of available fund;5 may be directly invested in Bankers' acceptances
3. Limits on Individual Issuers
A maximum of 10% of available funds may be invested with anyone issuer.
4, Maturity Limitations
The maximum length to maturity for Bankers' acceptances shall be 180 days from the
date or purchase,
I. State and/or Local Government Taxable and/or Tax-Exempt Debt
City of Winter Springs Investment Policy
Page II
I. Purchase Authorization
The Finance Director or management designee may invest in state and/or local
government taxable and/or tax-exempt debt, general obligation and/or revenue bonds,
rated at least "Aa" by Moody's and "AN' 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, 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 (Money Market Mutual Funds)
I. Investment Authorization
The Finance Director or management designee may invest in shares in open-end and no-
load fixed-income securities money market mutual funds provided such funds are
registered under the Federal Investment Company Act of 1940 and invest in securities .
permitted by this policy.
2. Portfolio Composition
A maximum of 100% of available funds may be invested in money market mutual funds
excluding one (I) business day overnight sweep agreements,
3, Limits of Individual Issuers
A maximum of 25% of available funds may be invested with anyone money market
mutual fund.
4. Rating Requirements
The money market mutual funds shall be rated "AAm" or "AAm-G" or better by
Standard & Poor's, or the equivalent ~y another national rating agency.
5. Due Diligence Requirements
A thorough investigation of any money market mutual market fund is required prior to
investing, and on a continual basis. There shall be a questionnaire developed by the
Finance Director or management designee that will contain a list of due diligence
considerations that deal with the major aspects of any investment pool/fund. A current
prospectus must be obtained.
City of Winter Springs
Investment Policy
Page 12
~
K. Intergovernmental Investment Pool
I. Investment Authorization
The Finance Director or management designee may invest in intergovernmental
investment pools that are authorized pursuant to the Florida Interlocal Cooperation Act,
as provided in Section 163.0 I, Florida Statutes and provided that said funds contain no
derivatives.
2. Portfolio Composition
A maximum of 25% of available funds may be invested in intergovernmental investment
pools,
XIII. DERIV A TlVES AND REVERSE REPURCHASE AGREEMENTS
Investment in any derivative products or the use of reverse repurchase agreements is specifically
prohibited by this investment policy. 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.
XIV. PERFORMANCE MEASUREMENTS
In order to assist in the evaluation of the portfolios' 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,
A. Investment performance of funds designated as short-term funds and other funds that must maintain a
high degree of liquidity will be compared to the return on the six-month U,S, Treasury Bill.
Investments of current operating funds shall have maturities of no longer than twenty-four (24)
months.
B, Investment performance of funds designated as core funds and other non-operating funds that have a
longer-term investment horizon will be compared to an index comprised of U. S, Treasury or
Government securities. The appropriate index will have a duration and asset mix that approximates
the portfolios and will be utilized as a benchmark to be compared to the portfolios' total rate of
return, 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.
XV. REPORTING
The Finance Director, management designee and/or Investment Advisor shall provide the City Manager
with a "Quarterly Investment Report" that summarizes but is not limited to the following:
A, Recent market conditions, economic developments and anticipated investment conditions... . .....
City of Winter Springs Investment Policy Page 13
B, The investment strategies employed in the most recent quarter.
C. A description of all securities held in investment portfolios at month-end.
D. The total rate of return for the quarter and year-to-date versus appropriate benchmarks.
E. Any areas of policy concern warranting possible revisions to current or planned investment
strategies. The market values presented in these reports will be consistent with accounting
guidelines in GASB Statement 31.
On an annual basis, the City Manager designee shall 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, earned income, the book value, the market value, the yield on each investment.
The annual report will show performance on both a book value and total rate of return basis and will
compare the results to the above-stated perfonnance benchI:l1arks, All investments shall be reported at fair
value per GASB Statement 31. . Investment reports shall be available to the public,
XVI. THIRD-PARTY CUSTODIAL AGREEMENTS
Securities, with the exception of certificates of deposits, shall be held with a third party custodian; and all
securities purchase 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, 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 City Manager and which authorization has been provided, in writing, to the custodian,
No withdrawal of securities, in whole or in part, shall be made from safekeeping, shall be permitted unless
by such a duly authorized person.
City of Winter Springs
Investment Policy
Page 14
The custodian shall provide the Finance Director or management designee with safekeeping statements
that provide detail information. on the securities held by the custodian. On a monthly basis, the custodian
will also provide reports that list all securities held for the City, the book value of holdings and the market
value as of month-end,
Security transactions between a broker/dealer and the custodian involving the purchase or sale of
securities by transfer of money or securities must be made on a "delivery vs. payment" basis, if
applicable, to ensure that the custodian will have the security or money, as appropriate, in hand at the
conclusion of the transaction, Securities held as collateral shall be held free and clear of any liens,
XVlL lNVESTMENT COMMITTEE
The Finance Director with the approval of the City Manager will establish an Investment Committee for
the purpose of fonnulating alternative investment strategies and short-range directions within the
guideline herein set forth and for monitoring the perfonnance and structure of the City's portfolio. The
Committee. shall include. the Finance Director as. Chainnan, the City, Treasurer, a1}d the City's
financial/investment advisor, and may include other members as may be designated by the City Manager
from time to time.
A designee of the Finance Director will provide the Committee members with current market infonnation,
an updated portfolio listing and analysis, and various pertinent financial data, The Committee, or quorum
of the committee shall meet as often as deemed necessary, under the given conditions, to review, discuss
and affinn or alter the current investment strategy and perfonn other functions as herein provided.
The Investment Committee activities shall include but not be limited to review and setting investment
strategies; review and establishing of written investment procedures; review and approval of bank and
other rating agency services; review and approval of source documentation regarding issuers, institutions
and dealers, and any other functions as defined herein.
XVII. L INVESTMENT OVERSIGHT COMMITTEE
The City Commission shall serve as the Investment Oversight Committee and shall be responsible for
monitoring the results of investments and compliance with the investment policies provided herein. The
City Manager shall file a report with the Investment Oversight Committee quarterly verifying investment
transactions and results,
City of Winter Springs
Investment Policy
. Page 15
XVIII. INVESTMENT POLICY ADOPTION
The Investment Policy shall be adopted by the City in writing. The Finance Director and the Investment
Committee shall review the policy annually and submit recommendations to the City Manager for review
and approval. If a change in the Policy is recommended for approval by the City Manager, the Finance
Director will prepare the necessary report to the City Commission.
APPROVED AND ADOPTED BY THE CITY COMMISSION ON SEPTEMBER 10, 2001 AND
AMENDED JANUARY 28, 2002.
Title:
Title:
Title:
City of Winter Springs
Investment Policy
Page I 6