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HomeMy WebLinkAbout1988-O-21 - Tax RateAN ORDINANCE LEVYING A TAX RATE FOR THE CITY OF STEPHENVILLE, TEXAS, FOR THE YEAR 1988. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF STEPHENVILLE, TEXAS: That we, the City Council of the City of Stephenville, Texas, do hereby levy or adopt the tax rate on $100.00 valuation for this city for tax year 1988 as follows: $.4109 for the purpose of maintenance and operation $.0000 for the payment of principal and interest on bonds. $94109 The Tax -Assessor -Collector is hereby authorized to assess and collect the taxes of the City of Stephenville, Texas, employing the above tax rate. PASSED AND ADOPTED this 20th day of September 1988. ATTEST: 6 y c re to ry Allen Horne, Mayor Pro Tem September 1, 1988 PROPOSED INVESTMENT POLICY ARTICLE I PURPOSE Purpose. To establish. a policy to provide clear and concise guidelines for investing City funds; providing for security of capital, diversification, and maximum return. ARTICLE II SCOPE This investment policy applies to the investment activities of the Government of the City of Stephenville, Texas. This policy serves to satisfy the statutory requirement to define and adopt a formal investment policy. All financial assets of all funds of the City at the present time and any funds to be created in the future will be administered in accordance with the provisions of these policies. All funds are accounted for in the City's Comprehensive Annual Financial Report (CAFR). ARTICLE III OBJECTIVES SAFETY AND SECURITY The primary objective of the City's investment activity is the preservation of capital in it's overall financial portfolio. Each investment transaction will seek first to ensure that capital losses are avoided, whether they be from securities defaults or erosion of market value. LIQUIDITY The City's investment portfolio will remain sufficiently liquid to enable the City to meet operating requirements which might be reasonably anticipated. Liquidity will be achieved by matching investment maturities with cash flow requirements. RETURN ON INVESTMENT The City's investment portfolio will be designed with the objective of regularly exceeding the average rate of return on three-month U.S. Treasury Bills. The investment program will seek to augment returns above this threshold consistent with risk limitations identified herein and prudent investment principles. LOCAL CONSIDERATIONS The City seeks to attain market rates of return on its invesments, consistent with constraints imposed by its safety and security objectives, cash flow considerations, and state and Iocal laws that restrict the placement of certain public funds. - 1 - t PUBLIC TRUST All participants in the investment process will seek to act responsibly nsiblas custodians of the public trust. Investment officials will avoid l � any transaction that might impair public confidence in the City's ability to govern effectively. The governing body recognizes that in a diversified portfolio, occasional measured losses due to market volatility are inevitable, and must be considered within the context of the overall portfolio's investment return, provided that adequate diversification has been implemented. ARTICLE IV INVESTMENT COMMITTEE MEMBERS There is hereby created an Investment Committee, consisting of the City Administrator, the Director of Finance, and a City Council Investment Committee appointed by the Mayor. The Investment Committee will meet at least quarterly PP � to determine general strategies and to monitor results. The Investment Committee will be authorized to invite advisors to the meetings as needed including, but not limited to, the City Attorney and outside advisors. SCOPE The Investment Committee will include in its deliberations such -topics as: ecomomic outlook, portfolio diversification, maturity structure, potential risk to the City's funds, authorized brokers and dealers, and the target rate of return on the investment portfolio. PROCEDURES The Investment Committee will provide for minutes of its meetings. Any two members of the Committee may request a special meeting, and three members will constitute a quorum. The Committee will establish its own rules of procedures. ARTICLE V RESPONSIBILITY AND CONTROL DELEGATION Management responsibility for the investment program is hereby delegated to the Director of Finance, who will assit the Investment Committee in establishing written procedures for the operation of the investment programs consistent with this investment policy. Such procedures will include explicit delegation of authority to persons responsible for investment transactions. No person may engage in any investment transactions except as provided under the terms of this policy and the procedures established. The Director of Finance will be responsible for all transactions undertaken and will be responsible for establishing controls to regulate the activities of subordinate investment officials. QUARTERLY REPORTS The Director of Finance will submit quarterly an investment report that summarizes recent market conditions, ecomonic developments, and anticipated investment conditions. The report will summarize the investment strategies employed in the most recent quarter, describe the portfolio in terms of investment securities, maturities, risk characteristics, and other features. The report will explain the quarter's total investment return and compare the return with budgetary expectations. The report will include an appendix that discloses all transactions during the past quarter. - 2 - ANNUAL REPORTS Within 90 days of the end of the fiscal year, the Director of Finance will present a comprehensive annual report of the Investment Program and investment activity. The annual report will include twelve-month retuns, and r will suggest improvements that might be made in the investment program. Annually, the investment program and activity report will be reviewed by the auditors and be reported upon in the City's Comprehensive Annual.Financial Report (CAFR) as part of the requirements promulgated by the Governmental Accounting Standards Board (GASB). PRUDENCE Investments will be made with the exercise of judgment and due 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 and security of their own capital as well as the probable income to be derived. Investment officers acting in accordance with written procedure and exercising due diligence will be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviation from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. ETHICS AND CONFLICTS OF INTEREST Officers and employees involved in the investment process will 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 and investment officials will disclose to the Investment Committee any material financial interests in financial institutions that conduct business within this jurisdiction, and will further disclose any large personal financial/investment positions that could be related to the performance of this jurisdiction's portfolio. Employees and officers will subordinate their personal investment transactions to those of this jurisdiction, particularly with regard to the timing of purchases and sales. ARTICLE VI INVESTMENTS ELIGIBLE INVESTMENTS Securities listed in the Public Funds Investment Act of 1987 (HB 1488) as listed below: a. Obligations of the United States, its agencies and instrumentalities, b. Direct obligations of the State of Texas or its agencies, c. Other obigations, the principal and interest on which are unconditionally guaranteed or insured by the State of Texas or the United States, d. Obligations of states, agencies thereof, counties, cities, and other political subdivisions of any state having been rated as to investment quality by a nationally recognized investment rating firm and having received a rating of not less than A or its equivalent, e. Fully insured or collateralized* certificates of deposit issued by state and national banks, domiciled in this state, f. Fully collateralized* direct repurchase agreements, having a definite termination date, purchased pursuant to a master Contractual Agreement which specifies the rights and obligations of both parties and which requires that securities involved in the transaction be held in a Safekeeping Account subject to the control and custody of the City. - 3 - Repurchase agreements must be purchased through a primary government securities dealer, as defined by the Federal Reserve, or a bank domiciled in Texas. g. Money Market Investment Accounts which are fully insured, h. Negotiable Order of Withdrawal (NOW) Accounts which are fully insured, i. Other such securities or obligations as approved by the Investments Committee. (See definition of collateral, Article VIII) LENGTH OF INVESTMENTS The General Fund, the enterprise funds, and any other operating funds maturities will not exceed one (1) year, unless a temporary extension of securities is extended by the Investment Committee . in such cases the average maturity of each fund's portfolio will not exceed one (1) year. Bond proceeds and other reserve funds may be invested in maturities exceeding one (1) year with the special approval of the Investment Committee. Assets held in Interest and Sinking Funds may be invested in maturities not exceeding one (1) year. DIVERSIFICATION It is the policy of the City of Stephenville to diversify its investment portfolio. Assets held in the common investment portfolio will be diversified to eliminate the risk of loss resulting from concentration of assets in a specific maturity, a specific issuer or a specific class of securities. Diversification strategies will be determined and revised periodically by the Investment Committee. It is recognized that investment risks can result from issuer defaults, market price changes or various technical complications leading to temporary illiquidity. Portfolio diversification is to be employed as a way to control risk. In establishing specific diversification strategies, the following general policies and constraints will apply: a. Portfolio maturities will be staggered in a way that protects interest income from the volatility of interest rates and that avoids concentration of assets in a specific maturity sector. Securities will be selected which provide for stability of income and reasonable liquidity. b. To control market price risks, volatile investment instruments will be avoided, unless specifically approved by the Investment Committee. c. The Investment Committee will establish strategies and guidelines for the percentage of the total portfolio that may be invested in securities other than collateralized' certificates of deposit, repurchase agreements, and U.S. Treasuries and Agencies. The Investment Committee will conduct a quarterly review of these guidelines, and will evaluate the probability of market and default risk in various investment sectors as part of its considerations. (see definition of collateral, Article VIII ) ARBITRAGE Care will be taken to distribute bond issuances annually in amounts not to exceed $5 million dollar increments. If this process does not occur-, the City of Stephenville will fall under arbitrage regulations. The Tax Reform Act of 1986 provides limitations restricting the City's investing of tax-exempt bond proceeds and debt service income. New arbitrage rebate provisions require that the City compute earnings on investments from each issue of bonds on an annual basis to determine if a rebate is required. To determine the City's arbitrage position, the City is required to perform specific calculations relative to the actual yield earned on the investment of the funds 4 and the yield that could have been earned if the funds had been invested at a rate equal to the yield on the bonds sold by the City. The rebate provision states that periodically (not less than once every five years, aria not later than sixty days after maturity of the bonds), the City is required to pay the U.S. Treasury a rebate of excess earnings based on -the City being in a positive arbitrage position. The Tax Reform restrictions require extreme precision in the monitoring and recording facets of investments as a whole, and par- t i Cu l art y as relates to yields and computations so as to insure compliance. Failure to comply can -dictate that the bonds become taxable, retroactively frorrl the date of issuance. The City's investment position relative to the new arbitrage restrictions is the continued pursuit of maximi?ing yield on applicable investments while insuring the safety of capital and liquidity. It is a fiscally sound position to continue maximization of yield and rebate excess earnings if necessary. ARTICLE VII BANKS AND DEALER SELECTION DEPOSITORY BIDDING PROCESS The City Depository will be selected in accordance with the City Charter, Article VII , Sec. 13. Depvsi tor.ies will be selected through the City's banking services procurement process, which will include a formal request for proposal (RFP) once a year on a fiscal year basis. In selecting depositories, the credit worthiness of each institution will be considered, and the City will conduct a comprehensive review of prospective depositories credit characteristics and financial History. INSURABILITY Banks and savings and loan associations seeking to establish eligibility for the City's competitive investment program will submit financial statements, evidence of federal insurance, and other information as required by the Director of Finance. These documents will be reviewed periodically by the Investment Committee. BROKERS AND DEALERS For brokers and dealers of government securities, the City will select Reserve Bank dealers," and dealers must institutions transactions only those reporting to the Market Reports Division of the Federal of New York, also known as the "primary government securities reports daily to the Dallas Federal Reserve Bank. All brokers and be authoriued by the Investment Committee. All financial will agree to undertake reasonable efforts to preclude impruclent involving the City's funds, ARTICLE VIII SAFEKEEPING AND CUSTODY INSURANCE OR COLLATERAL All deposits and investments of City funds other- than direct purchases of U.S. Treasuries or U.S. Agencies will be secured by pledged collateral with a market va1ue equal to no less than 100% of the deposits or investments less an amount insured by the FDIC or FSLIC. Evidence of the pledged collateral will be maintained by the Director" of Finance or a third party financial institution. Bearer instruments will be held only * through -third party institutions. Repurchase agreements will be documented by a specific -5- agreement noting the collateral pledged in each agreement. Collateral will be revie►4ed -monthly to assure the market value of the securities pledged equals or exceeds the related investments or bank balances. COLLATERAL DEFINED The City of Stephenville will accept only the following securities as collateral a. FDIC and FSLIC insurance coverage, b. United States Treasuries and Agencies, and Instrumentalities, c. Texas State, City, County, School, or Road District bonds with a remaining maturity of ten (10) years or less. d. Other securities as approved by the Investment Committee, SUBJECT TO AUDIT All collateral will be subject to inspection and audit by the City's independent auditors. DELIVERY VS. PAYMENT Collateralized securities wi1I be purchased by using the delivery versus payment method. That is, funds will not be wired or paid until verification has been made that the collateral was received by the third party institution. The collateral will be held in the name of the City or held on behalf of the City. The third party's records will assure the notation of the City's ownership of or explicit claim on the securities. The original copy of all safekeeping receipts will be delivered to the City. - 6 -