HomeMy WebLinkAbout2618RESOLUTION #2618
A RESOLUTION of the City Council of the City of Brernerton
Adopting a Policy for the Investment of City Funds.
WHEREAS, the present investment policy of the City was adopted in 1990; and
WHEREAS, the City is desirous of updating this policy to meet changing local needs in
order to provide for sound management of its financial assets;
NOW, THEREFORE, BE IT RESOLVED:
That the Bremerton City Council does hereby adopt the City of Bremerton Investment Policy
providing for the management of its financial assets.
ADOPTED by the City Council of the City of Bremerton this 30th day of
July, 1997.
DAVID FARR, Council President
;USaTON r VEST m
OLICY~
~EX EFFECTIVE DATE 1986
C~unding APPROVED
!-1~13 REVISED DATE 7/07 Resolution ~2618
POLICY
SCOPE
PRUDENCE
It is the policy of the City of Bremenon to invest public funds in a manner which will
provide the highest investment return with the maximum security while meeting the
d_aily cash flow demands on the Treasury and conloaning to all Washington statutes
governing the investment of public funds.
This investment policy applies to all financial assets of the City. These funds are
accounted for in the City's Annual Financial Report and include:
Funds:
General Fund
Special Revenue Funds
Debt Service Fund
Capital Project Funds
Enterprise Funds
Internal Service Funds
Trust and Agency Funds
Any new fund created by Council
Investments shall be made with judgement and care - under circumstances then
prevailing - which persons of prudence, discretion and intelligence exercise in the
rnanagea~ent 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 standard of prudence to be used by investment officials shall be the "prudent
person" and shall be applied in the context of managing an overall portfolio.
Inve~hnent officers acting in accordance with this policy and written procedures and
exercising due diligence shall be relieved of personal responsibility for an indMdual
security's credit risk or market price changes, provided deviations from expectations
are reported in a timely fashion and appropriate action is taken to control adverse
developments.
OBJECTIVE
DI:,I ,F, GATION OF
AUTHORITY
ETH/CS AND
CONFLICTS OF
INTEREST
ALYITIOI~IZF, D
FINANCIAL
DEAL~-~ AND
INSTITUTIONS
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The primary objectives, in priority order, of the City's investment activities slnll be:
Safety of principal is the foremost objective of the City. Investments
of the City of Bremerton shall be undertaken in a manner that seeks
to ensure the preservation of capital in the overall portfolio. To attain
this objective, divmi~cation is required in order that potential losses
on individual securities do not exceed the income generated from the
remainder of the portfolio.
LIQUIDITY:
The City's investmeal portfolio will remain s~ffldently liquid to enable
the City to meet all operating requirements which might be reasonably
anticipated.
RETURN ON
INVESTMENT:
The City's investment portfolio shall be designed with the objective of
attaining a market rate of remm throughout budgetary and economic
cl, cles, consistent with the City's investment risk constraints and the
cash flow characteristics of the portfolio.
Management responm~ility for the inve~U,xent program is hereby delegated to the City
Treasur~, who shall establish written procedures for the operation of the investment
program, consistent with this investment policy. The City Treasurer shall be
responm'ble for all transactions undertaken and shall establish a system of controls to
regulate the activities of subordinate officials.
Officers and employees involved in the investment process shall refrain from personal
business activity tha~ could conflict with proper execution of the investment program,
or which could impair their ability to make impartial investment decisions. Employees
and inve~hnent offidals shall disclose to the Mayor any material financial interests in
financial institutions that conduct business within this jurisdiction, and they shall
further disclose any large personal ~nancialfmvestment positions that could be related
to the performance of the City' s portfolio. Employees and officers shah subordinate
their personal inve~mient transactions to those of the City of Bremerton, particularly
with regard to the time of purchases and sales.
The City Treasurer will maintain a list of financial institutions as required by the
Public Deposit Commission, authorized to provide investment services (RCW
39.58.080). In addition, a mist win also be maintained of approved se~'ity
broker/dealers, who ~ an office in the State of'Washington. These may include
"primary" dealers or regional dealers that qunllfy under Securities & Exchange
Commk~ion Rule 15C-31 (uniform net capital rule). No public deposit shall be made
except in a qualified public depository in the State of Washington.
AUTHOBIzh'T~
~VESTMENTS
All numicipal corporations in Washington State, including the City of Bremenon, are
empowered by statute to invest in the following types of securities:
Investment deposits, including certificates of deposit, with qualified public
depositories as defined in Chapter 39.58 KCW.
Certificates, notes, or bonds of the United States, or other obligations of the
United States or its agencies, or of any corporation wholly owned by the
government of the United States.
Obligations of government-sponsored corporations which are eligible as
collateral for advances to member banks as dete.nined by the Board of
Governors of the Federal Reserve System.
Banker's acceptances purchased on the second _n_ry market.
Repurchase agreements for securities listed in 2, 3, and 4 above, provided that
the transaction is structured so that the City of Bremerton obtains control
over the underlying securities and a Master Repurchase Agreement has been
signed with the bank or dealer.
The State of Washington's Local Government Investment Pool.
SAFEKEEPING
AND CUSTODY
All seatrity transactions, including collateral for repurchase agreements, entered into
by the City of Bremerton shall be conducted on a delivery-versus-payment (DVP)
basis. Securities will be held by a third party custodian designated by the City
Treasurer.
DIVERSIFICATION
MATURITIES
The City will diversify its investments by security type and institution. With the
exception of U.S. Treasury securities and the State Investment Pool, no more than
30% of the City' s total investment portfolio will be invested in a single security type
or with a single financial institution.
To the extent possible, the City will attempt to match its investments with anticipated
cash flow requirements. Unless matched to a specific cash flow, the City will not
directly invest in securities maturing more than five years from the date of purchase.
However, the City may collateralize its repurchase agreements using longer-dated
investments.
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INTERNAL
CONTROL
PERFORMANCE
STANDARDS
REPORTING
The City Treasurer shall establish a process of independel~t review by an external
auditor. This review will provide internal control by assuring that poli~im and
pfc~lures are being complied with. Such review may also result in recommendations
to change operating procedures to improve internal control.
The City of Bremerton investment portfolio will be designed with the objective of
obtaining a market average rate of return throughout budgetary and economic cycles,
commensurate with the City' s investment risk constraints and cash flow needs.
Mm'ket Yield (Benchmark): The City's investment strat~y is passive. Given
this strategy, the basis used by the City Treasurer to determine whether
market yields are being achieved shall be the sk-month U.S. Treasury Bill and
the average Federal Funds rate.
The City Treasurer shall provide to the Mayor and City Council monthly inve~h~ient
reports which provide a clear picture of the status of the current investment portfolio.
The management report may include comments on the fixed income markets and
economic conditions, discussions regarding restrictions on percentage of inve~iment
by categories, poss~]31e changes in the portfolio structure going forward and thoughts
on investment strategies.
Schedules in the monthly report should include the following:
A listing of individual securities held at the end of the reporting period.
Anticipated maturity and final maturity of all investment holdings.
Coupon, discount or earnings rate.
Par value, amortized book value and market value.
INVESTMENT
POLICY
ADOPTION
The City of Bremerton investment policy shall be adopted by resolution of the City
Council. The policy shall be reviewed on an annual basis by the Fiscal and Budget
Committee and any modifications made thereto must be approved by the City
Council.
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