Fort Walton Beach Resolution — 00-24-Investment Policy/Procedures — reading text

f)Surplus Fund Permissible investments for Surplus Funds are all investments permitted for the Capital Expenditure Fund, except portfolio duration may not exceed five years. g) Prohibited Investments and Investment Practices The following actions are prohibited: 1) Purchases of margins or short sales. 2) Purchases of derivative securities that are, in effect, a leveraged bet on future movements of interest rates or some price index. 3) Purchases Collateralized mortgage obligations because of their complexity and prepayment rate uncertainty. 4) Lending securities with an agreement to but them back after a stated period of time ( reverse repurchase agreements from the perspective of the public body). 10. 0 RISK AND DIVERSIFICATION The investments will be diversified to the extent practicable to control the risk of loss resulting from over concentration of assets in a specific maturity, issuer, instrument, dealer, or bank through which financial instruments are bought and sold. 11. 0 AUTHORIZED INVESTMENT INSITUTIONS AND DEALERS Financial institutions, qualified as public depositories in the state of Florida, are authorized to provide investment services to the City of Fort Walton Beach. Security BrokersD/ ealers selected by credit worthiness who are authorized to provide investment services in the state of Florida are also allowed. 4-  o o 12. 0 TIDRD-P ARTY CUSTODIAL AGREEMENTS Securities should be held with a third party; and all securities purchased by, and all collateral obtained by, the City of Fort Walton Beach should be properly designated as an asset of the City. No withdrawal of securities, in whole or in part, shall be made from safekeeping, except by an authorized staff member of the City of Fort Walton Beach. Securities transactions between a broker- dealer and 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. 13. 0 MASTER REPURCHASE AGREEMENT The City of Fort Walton Beach shall require of all authorized institutions/ dealers involved in repurchase agreement transactions, on behalf of the City of Fort Walton Beach, to execute and perform these transactions according to a Master Repurchase Agreements. 14. 0 BID REQUIREMENT The City of Fort Walton Beach shall analyze and select one or more optimal types of investment, and the security will be obtained through competitive bidding, when feasible and appropriate and with emphasis on the local community lending institutions when feasible and appropriate. 15. 0 INTERNAL CONTROLS The Finance Director shall establish written internal controls and operational procedures regarding investments. The City' s independent, external auditors shall review the controls in conjunctions with the annual financial audit. 16. 0 CONTINUING EDUCATION The City of Fort Walton Beach shall provide for the continuing education of the City' s officials responsible for making investment decisions. Such officials must annually complete 8 hours of continuing education in subjects or courses of study related to investment practices and products. 17.0 REPORTING The Finance Director shall prepare an investment report at least quarterly, including a succinct management summary that provides the status of the current investment portfolio. This management summary will allow the City to ascertain whether investment activities during the reporting period have conformed to the investment policy. The report should be provided to the City Manager and City Council. 18. 0 SALE OF SECURITIES When the investment funds are needed, in whole or in part, for the purposes originally intended or for more optimal investments, the City of Fort Walton Beach may sell the investments at market price and place the proceeds into the proper account or fund. 19. 0 PREEMPTION Any provision of any special act, municipal charter, or other law which prohibits or restricts the City of Fort Walton Beach from complying with Florida State Statute Chapter 218, Section 415 or any rules adopted under the Statute is void to the extend of the conflict. 20. 0 REPEAL Resolution 95- 29, adopted September 26, 1995, a copy of which is attached hereto, and made part hereof by, is hereby repealed. 5-  City of Fort WOn Beach 1Ito4t ~~ ~~ )! f yV 95- 29 A RESOLUTION ADOPTING A POLICY FOR THE INVESTMENT PROCEDURES OF THE CITY OF FORT WALTON BEACH AS IN SECTIONS 166. 261 AND PROVIDED 218. 415 F . S.; PROVIDING FOR REPEAL OF RESOLUTION 94- 9; AND PROVIDING FOR AN EFFECTIVE DATE THEREOF. . WHEREAS, the City of Fort Walton Beach, both now and in the past, has funds in excess of the amounts needed to meet current' expenses, and WHEREAS, interest income from such revenues has greatly enhanced the City' s financial position in the past and is expected to provide additional revenues in the future, and Florida Statute 218. 415 requires certain investment WHEREAS, activity of units of local government shall be consistent with a written investment plan to be adopted on or before October 1, 1995, and WHEREAS, Florida Statute 166. 261 provides standards and controls for investment of surplus City funds under its possession and control, and WHEREAS, investment in the methods contained in Florida Statutes 166. 261 is in the best interest of the City of Fort Walton Beach and its citizens. NOW, THEREli'ORE, r RESOLvm BY THE CITY COUNCn. or TH!: BE r. CITY or FO~ WALTON BEACH, FLORIDA: THE CITY OF FORT WALTON BEACH, FLORIDA INVESTMENT POLICY 1. 0 POLICY It policy of the City of Fort Walton Beach, Florida is the to invest funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the entity and conforming to all statutes governing the investment of Fort Walton Beach Funds. 2. 0 SCOPE This investment policy applies to all financial assets of Fort Walton Beach, excluding Pension Funds. These furids are accounted for in the City' s Comprehensive Annual Financial Report and include: General Fund, Capital Project Funds, Special Revenue Funds, Enterprise Funds and Trust and Agency Funds. 1 L-~ 3Q STATUTORY AUTHORITY o The investment of Local Government surplus funds is administered under Florida Statute Chapter 166. 261, and amended under Chapter 218 Part IV, sections 218. 40 through 218. 45. 3. 1 POSITIONS AUTHORIZED TO : INVEST The City' s Finance Director or designee of the Finance Director and/ or City Manager, are authorized to invest and reinvest surplus public funds of the City in accordance with Florida Statute 166. 261. 4. 0 INVESTMENT OB.JECTIVES The primary objectives, in priority order, of the City. of Fort Walton Beach' s investment activities shall be: 1. Safety. Safety of principal is the foremost objective of the investment program. Investments of Fort Walton Beach shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. 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. 2. Liquidity. The City of Fort Walton Beach' s investment portfolio will remain sufficiently liquid to enable the City to meet all operating requirements which might be reasonably anticipated. 3. Return Investment. The City of Fort Walton Beach' s on investment portfolio shall be designed with the objective of attaining a market rate' of return throughout budgetary and economic cycles, taking into acco~ t the City' s investment risk co~straints and the cash fl~.charac~ eristiGs of ,the I port~ol1,o. 4. 1 INVESTMENT OB.JECTIVES. BY TYPES OF FUNDS Public funds will be divided into three categories, and the investment objectives and policies vary with the nature of the fund: 1. Fund for Operating Expenses Funds to provide for the ordinary operating expenses of the. City of Fort Walton Beach; Portfolio management is designed to balance the inflow and outflow of the principal of the funds, using income generated as a supplementary source of revenue. A. Objective: The primary investment objectives of this portfolio are preservation of principal and liquidity; income is a secondary objective. B. Risk Tolerance: Because most of the principal of the fund will be paid out over the course of the fiscal year, volatility of principal is not permitted, although moderate income volatility can be tolerated. Financial risk is not acceptable, and because of the short investment time horizon of the funds, exposure to interest rate risk and purchasing 2  o power will be minimal. o C. Rates of Return: The annual time- weighted rate of return of this portfolio should exceed the annual' total return on three- month Treasury bills. 2. Fund for Capital Expenditures Funds to provide for major expenses, capital outlays, and other specified nonrecurring' long- term purposes: This portfolio is managed to ensure that funds are available as needed, preserve the principal, and generate income that can supplement other funding sources. A. Objective: The primary investments objectives of this fund are preservation of