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HomeMy WebLinkAboutResolution_06-95/96_11/09/1995 i • RESOLUTION NO. 6 -95/96 A RESOLUTION OF THE VILLAGE COUNCIL OF THE VILLAGE OF TEQUESTA, PALM BEACH COUNTY, FLORIDA, PROVIDING FOR THE ADOPTION OF AN INVESTMENT POLICY FOR THE VILLAGE INVESTMENT ACTIVITIES IN ACCORDANCE WITH THE PROVISIONS OF SECTION 218.415, FLORIDA STATUTES, WHEREAS, SECTION 218.415, Florida Statutes, is an act relating to investment of public funds, requiring that certain investment activity of units of local government shall be consistent with a written investment plan; providing for establishment of certain investment policies which place priority on the safety of principal and liquidity of funds; providing scope; providing for investment objectives; providing for performance measurement; requiring a description of the level of prudence and ethical standards to be followed; providing for listing of authorized investments; providing for • establishment of maturity and liquidity requirements; providing for portfolio composition; providing for appropriate diversification to minimize risk; providing for specification of authorized investment institutions and dealers; providing for third -party custodial agreements; providing for repurchase agreements; providing for competitive bidding; providing for establishment of internal controls and operational procedures; providing for reports; specifying alternative investment guidelines to apply where there is no investment plan, and providing for conformance; and WHEREAS, the Village desires to adopt investment policies consistent with the provisions of Section 218.415, Florida Statutes. NOW, THEREFORE, BE IT RESOLVED BY THE VILLAGE COUNCIL OF THE VILLAGE OF TEQUESTA, PALM BEACH, COUNTY, FLORIDA, AS FOLLOWS: SECTION 1. The Village Council of the Village of Tequesta, Palm Beach County, Florida hereby adopts the attached "Investment Policy" (Exhibit A) to be followed as the guideline for Village Officials responsible for cash management and investment activities of Village funds, which policy has been determined to be in • accordance with Section 218.415 Florida Statutes. • - 2 - SECTION 2. A copy of the Village Investment Policy shall be made available to all authorized institutions and dealers conducting business with the Village. THE FOREGOING RESOLUTION WAS OFFERED BY Councilmember Elizabeth A. Schauer who moved its adoption. The motion was seconded by Councilmember Carl C FJansen , and upon being put to a vote, the vote was as follows: FOR ADOPTION AGAINST ADOPTION Joseph N. Capretta Carl C. Hansen Ron T. Mackail Elizabeth A. Schaller • The Mayor thereupon declared the Resolution duly passed and adopted this ()th day of Noverlbel A.D., 1995 MAYOR OF TEQUESTA . :i- Ron T. Mackail ATTEST: J ann Mangani4llo Village Clerk • Exhibit "A" • VILLAGE OF TEQUESTA INVESTMENT POLICY OCTOBER 1, 1995 A. SCOPE OF INVESTMENT POLICY This Investment Policy applies to the investment activities of the Village of Tequesta, except for the Firefighters' Pension Fund and any other established local employee pension funds which are subject to the order of the Board of Trustees of those particular funds. In addition, all other Trust Funds, and depositories for defeased debt or assets under Bond Trust Indenture Agreements when controlled by third party custodians and /or money managers shall be managed outside the scope of this Investment Policy as required by Florida State Statutes, Section 218.415. All financial assets of other funds, including the General Fund, Special Revenue Funds, Capital Project Funds, Debt Service Funds, Enterprise Funds, and other funds that may be created from time to time, unless specifically exempted by the Village Council, shall be administered in accordance with the provisions of this Policy. • B. OBJECTIVES OF INVESTMENT POLICY The purpose of the Investment Policy of the Village of Tequesta is to establish cash management and investment guidelines for Village officials responsible for the stewardship of public funds. Specific objectives include: 1. Safety of principal is the foremost objective of the Investment Policy of the Village of Tequesta. Each investment transaction shall seek to first ensure that capital losses are avoided, whether they be from institution or securities defaults or erosion of market value. 2. The Village's investment portfolio shall remain sufficiently liquid to enable the Village to meet all operating requirements which may be reasonably anticipated. 3. The investment program shall seek to maximize the investment returns given the limitations imposed by maintaining safety of principal and liquidity. C. PERFORMANCE MEASURES The investment portfolio of the Village shall be designed with the objective of • regularly exceeding the weighted average return of three -month U.S. Treasury Bills (25 %) and six -month U.S. Treasury Bills (75 %). The investment program shall seek to augment returns above this threshold, consistent with risk limitations identified herein and prudent investment principles. • Village of Tequesta - Investment Policy October 1, 1995 Page 2 - ------------------------------------------ D. PRUDENCE AND ETHICS The standard of prudence to be applied in the context of managing the overall portfolio by the investment officer for the investment of Village funds shall be the "Prudent Person Rule" which states: "Investments shall be made with judgment and care, under circumstances then prevailing which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable outcome to be derived." Any investment officer acting in accordance with the written procedures of this investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, • provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. 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. Employees shall disclose to the Village Manager and Village Council any material financial interest in financial institutions that conduct business with the Village of Tequesta and shall further disclose any large, personal financial /investment positions that could be related to the performance of the Village's portfolio. E. INVESTMENT SELECTION The Village of Tequesta shall limit its investments to any of the securities listed below: 1. Negotiable direct obligations of, or obligations the principal and interest of which are unconditionally guaranteed by, the United States Government at the then prevailing market price for such securities; 2. Obligations of the federal farm credit banks; the Federal Home Loan • Mortgage Corporation, including Federal Home Loan Mortgage Corporation participation certificates; or the Federal Home Loan Bank or its district banks or obligations guaranteed by the Government National Mortgage Association; • Village of Tequesta - Investment Policy October 1, 1995 Page 3 - ------------------------------------------ 3. Obligations of the Federal National Mortgage Association, including Federal National Mortgage Association participation certificates and mortgage pass- through certificates guaranteed by the Federal National Mortgage Association; 4. Interest - bearing time deposits or savings accounts in banks organized under the laws of this state, in national banks organized under the laws of the United States and doing business and situated in this state, in savings and loan associations which are under state supervision, or in federal savings and loan associations located in this state and organized under federal law and federal supervision, provided that any such deposits are secured by collateral as may be prescribed by law; 5. Securities of, or other interests in, any open -end or closed -end management type investment company or investment trust registered under the Investment Company Act of 1940, as amended from time to • time, provided the portfolio of such investment company or investment trust is limited to United States Government obligations and to repurchase agreements fully collateralized by such United States Government obligations and provided such investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian. 6. The Local Government Surplus Funds Trust Fund (State Board of Administration); 7. Short term obligations of corporations organized in the United States with assets exceeding $500,000,000 if (a) such obligations are, rated at the time of purchase at one of the three highest classifications established by at least two standard rating services and which mature not later than 180 days form the date of purchase, (b) such purchases do not exceed ten percent of the corporation's outstanding obligations. 8. The Florida Counties Investment Trust. 9. EXCLUSIONS: The Village will not invest any funds in derivative investment products. This includes, but is not limited to, collateralized mortgage obligations (CMOs), interest -only (IOs) and principal -only (POs), forwards, futures, currency and interest rate swaps, options, floaters /inverse floaters, and caps /floors /collars. Village of Tequesta - Investment Policy October 1, 1995 • Page 4 - --------------------------------------------- F. MATURITY AND LIQUIDITY REQUIREMENTS The Village's portfolio shall be structured to provide the necessary funds to pay the expenses of the Village in a timely manner. Investments shall be purchased consistent with a "buy and hold to maturity" philosophy, matching maturities to anticipated cash flow needs of the Village. G. PORTFOLIO COMPOSITION The portfolio shall be designed to provide a balance of short -term and medium - term maturities designed to meet the liquidity needs of the Village. In addition, the portfolio shall be diversified with respect to investment instruments and issuers as follows: 1. On any given date, at least 80% of the portfolio shall mature within one year. 2. On any given date, not more than 10% of the portfolio shall mature beyond five (5) years. 3. No security purchased may have a maturity of greater than five (5) years. 4. Commercial paper shall not exceed 10% of the Village's investment portfolio. 5. No bank or savings association shall hold more than 50% of the Village of Tequesta's investment portfolio, exclusive of securities held in safekeeping as a third party custodian. H. RISK AND DIVERSIFICATION In order to reduce the risk of loss from over concentration of assets in a specific maturity, issuer, instrument, dealer or bank, the investment portfolio shall be managed to minimize the potential risk from default and changes in market conditions. The Finance Director shall seek to balance the portfolio among issues, issuers, maturities, investment vehicles, and financial institutions. The Finance Director and Village Manager shall review the portfolio periodically to review the adequacy of the diversification strategy. • Village of Tequesta - Investment Policy • October 1, 1995 Page 5 - -------------------------------------------- I. AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS The Village may purchase securities from any primary dealer in government securities, a regional broker if they have been in business for 10 years and have a minimum of $ 10,000,000 of capital, or a qualified public depository. Broker - dealers shall be selected using the following criteria: 1. The institutional and broker qualifications as they relate to both general and specific product knowledge; 2. The ability to provide value added services; 3. Pricing competitiveness; and 4. The financial strength and stability of the company. • Investments in savings accounts, certificates of deposit or other deposit accounts in a bank or savings association may be made only in qualified public depositories as defined by Florida State Statutes Section 280.02. All authorized institutions and dealers conducting business with the Village shall be given a copy of the Village's Investment Policy and be required to abide by the Investment Policy. The broker shall execute a certification acknowledging receipt of the Investment Policy and agreeing to follow its terms and conditions. J. THIRD -PARTY CUSTODIAL AGREEMENTS All investments purchased or collateral obtained as security for investments purchased under this Policy shall be properly designated as an asset of the Village and held in safekeeping by a third party custodial bank or savings association, chartered by the United Sates Government or the State of Florida. The third party shall be the designated agent of the Village, ensuring that all assets held on behalf of the Village shall be clearly held and accounted for to indicate ownership by the Village. No withdrawal of such securities, in whole or in part, shall be made from safekeeping except as authorized by the Finance Director with the prior approval of the Village Manager. • Village of Tequesta - Investment Policy • October 1, 1995 Page 6 - --------------------------------------------- The Village shall settle the purchase or sale of securities on a "delivery vs. payment" basis, if applicable. K. MASTER REPURCHASE AGREEMENT All repurchase agreements transacted, must be in compliance with the requirements of the Master Repurchase Agreement (attached). The Master Repurchase Agreement shall be supplemented by an Annex which addresses the issues of permissible purchased securities, delivery, substitution, margin ratios, margin maintenance and notification of parties. L. COMPETITIVE BIDDING For all investment purchases or sales, the Village shall seek multiple quotations from authorized brokers and financial institutions, when feasible and appropriate, in order to maximize the performance of the portfolio. Competitive • bids will not be required when: 1. The security involved is a new issue and can be purchased at auction or at a preset, initial offering price. 2. The security is available through a direct issue or private placement. In all cases where competitive bidding is not feasible, the appropriateness and return of the investment shall be compared to other investments with similar maturities available in the financial markets. M. INTERNAL CONTROLS The Finance Director shall establish a system of internal controls, which shall be documented in writing. The internal controls shall be reviewed by the Village Manager periodically and by the Village auditor annually in conjunction with the annual examination of the financial statements of the Village. The controls shall be designed to prevent losses of public funds arising from fraud, employee error, misrepresentation by third parties, unanticipated changes in financial markets or imprudent actions by employees and officers of the Village of Tequesta. • Village of Tequesta - Investment Policy • October 1, 1995 Page 7 - ------------------------------------------------- N. REPORTING The Finance Director shall submit a quarterly investment report to the Village Manager and the Village Council. The report shall list investments by fund and type and include a summation of changes from the previous quarter. 0. RESPONSIBILITY The establishment of the investment policy is the responsibility of the Village Council. The Finance Director, under the direction of the Village Manager, shall be responsible for implementing the policy and managing the Village's portfolio within its guidelines. P. CASH MANAGEMENT Except where otherwise provided by the Village Council and State law, the • Finance Director is authorized to pool the cash of various funds to maximize investment earnings where it is advantageous and prudent to do so. Investment income will be allocated to the various funds based upon their respective participation. BCK /mk