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HomeMy WebLinkAbout1996-10-15 - Special City CouncilMINUTES OF SPECIAL MEETING City of Stephenville -City Council TUESDAY, OCTOBER 15, 1996 - 5:30 P.M. The City Council of the City of Stephenville, Texas, convened in special session on October 15, 1996, at 5:30 p.m., in the Council Chambers at City Hall, 354 N. Belknap Street, with the meeting being open to the public and notice of said meeting, giving the date, time, place and subject thereof, having been posted as prescribed by Chapter 551, Government Code, Vernon's Texas Codes Annotated, with the following members present, to wit: Mayor John Pollan C ouncilmemb ers : Jerry B . Madkins Barbara Terrell Marshall Shelton Joel Hillin K. H. Conatser Billy Bob Hodges Scott Evans Bill Corbin Others Attending Don Davis, City Administrator Cindy L. Stafford, City Secretary Randy Thomas, City Attorney L CALL TO ORDER, Mayor Pollan called the meeting to order at 5:30 p.m. and declared a quorum present. II. CONSIDER THE APPROVAL OF PLANS AND SPECIFICATIONS FOR VEHICLES Councilmember Shelton moved to approve the plans and specifications for vehicles as presented. Councilmember in seconded the motion, which passed by unanimous vote. III. APPROVE REPAIRS TO THE LILLIAN STREET RAILROAD CROSSING Councilmember Conatser moved to approve the repairs to the Lillian Street Railroad Crossing. Councilmember Hodges seconded the motion, which passed by unanimous vote. October 15, 1996 Minutes of Special Meeting IV. CONSIDER THE APPROVAL OF AN INVESTMENT POLICY Councilmember Corbin gave a report from the Finance Committee which met on October 14. He stated that three items were discussed at this meeting. The first item was to hear a proposal from Dr. Don Henneke to conduct a feasibility study on how the City might benefit and capitalize on our cowboy heritage. Henneke made a detailed proposal to the committee. No action is being sought on this item at this time. The second subject discussed at the Finance Committee meeting was to consider bid bond requirements for vehicle specifications. The Committee is not recommending any action be taken at this time. The third item for discussion involved the City's investment policy. When Patterson & Associates were employed as the City's investment advisor, one of the first tasks was the review of the present investment policy. The purpose of the new policy is to make sure we comply with local and state laws concerning investments. Councilmember Corbin moved to adopt the investment policy as presented. Councilmember Terrell seconded the motion, which passed by unanimous vote. V. CONSIDER ADOPTING A RESOLUTION AUTHORIZING THE DIRECTOR OF FINANCE TO ENGAGE IN CERTAIN INVESTMENT TRANSACTIONS ON BEHALF OF THE CITY OF STEPHENVILLE Councilmember Evans moved to pass Resolution No. 1996-9, authorizing the Director of Finance to engage in certain investment transactions on behalf of the City of Stephenville. The motion was seconded by Councilmember Corbin and passed by unanimous vote. VI. CONSIDER A RESOLUTION AUTHORIZING THE DIRECTOR OF FINANCE TO ENGAGE IN CERTAIN DEPOSITORY TRANSACTIONS ON BEHALF OF THE CITY OF STEPHENVIELLE Councilmember Corbin moved to pass Resolution No. 1996-10, authorizing the Director of Finance to engage in certain depository transactions on behalf of the City of Stephenville. The motion was seconded by Councilmember Shelton and passed by unanimous vote. VII. EXECUTIVE SESSION in compliance with the provisions of the Texas Open Meetings Law, Subchapter D, Closed Meeting, §551.071(1)(A), Government Code, Vernon's Terms Codes, Annotated, in accordance with the authority contained therein October 15, 1996 Minutes of Special Meeting n � f concerning Consultation with Attorney regarding pending or contemplated litigation. Texas Parks & Wildlife Department, et al v. Texas Water Commission, et al; Cause No. 432,066; In the 98th Judicial District Court, Travis County, Texas Mayor Pollan announced that there is no need to go into executive session to discuss the pending lawsuit. VIII. ADJOURN There being no further business, Mayor Pollan adjourned the meeting at 5:44 p.m. Jo Pollan, Mayor ATTEST: % ' L Cindy L. Strrd, �- City Secret OT October 15, 1996 Minutes of Special Meeting CITY OF STEPHENVILLE INVESTMENT POLICY I. POLICY STATEMENT This document is to establish an investment policy which provides clear and concise guidelines for investing City of Stephenville funds; providing for security of capital, diversification and maximum return. It is the policy of the City of Stephenville, Texas ("City") that the administration of its funds and the investment of those funds shall be handled as its highest public trust. Investments shall be fnade in a manner which will provide the maximum security of principal invested through limitations and diversification while meeting the daily cash flow needs of the City and conforming to all applicable state and City statutes governing the investment of public funds. The receipt of a market rate of return will be secondary to the requirements for safety and liquidity. It is the intent of the City to be in. complete compliance with local law and the Texas Public Funds Investment Act. The earnings from investment will be used in a manner that best serves the public trust and interests of -the City. II. SCOPE This investment policy applies to all the investment activities and financial assets of the Governm(-.%..nl: of the City. 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 Ainds are accounted for in the City's Comprehensive Annual Financial Report (CAFR). This policy serves to satisfy the statutory requirement to define and adopt a formal investment policy. The City commingles its funds into one pooled investment fund for investment purposes fi)r effl- s.encN and maximum investment opportunity. These funds are defined in the CAFR and in.clud(:; all (:City funds. Ill. OBJECTIVES AND STRATEGY It is the policy of the City that all funds shall be managed and invested with four primary obj a ..i ves, listed below in order of their priority. These objectives encompass: Safety of Principal The primary objective of the City's investment activity is the preservation of capital in its mferrfll, 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. To obtain goal, diversification is required in the portfolio's composition. The suitability of each investment do ision. will be made on the basis of these objectives. LiCuldl The City's investment portfolio will remain sufficiently liquid to enable it to meet all operating requirements which might be reasonably anticipated. Liquidity will be achieved by inatching investment maturities with cash flow requirements. Page 1. 10 0119G Return on Investment The City's investment portfolio shall be designed with the objective of regularly exceedi ag the average rate of return on three-month US Treasury Bills. The investment program will s=�ek to augment returns above this threshold consistent with the cash flow of the portfolio, risk limil ations identified herein, and prudent investment principles. Local Considerations The City seeks to attain market rates of return on its investments, consistent with constraints irr posed by its safety and security objectives, cash flow consideration, and state and local laws that restrict the placement of certain public funds. IV. LEGAL LIMITATIONS, RESPONSIBILITIES AND AUTHORITY The City intends for all investment activities to comply with state and local laws. Direct specific investment parameters for the investment of public funds in Texas are found in the Public Funds Investment Act, Chapter 2256, Texas Government Code, (the "Act"). The Act is attached as Exhibit A. The Public Funds Collateral Act, Chapter 2257, Texas Government Code, specifies collateral requirements for all public funds deposits. The Collateral Act is attached as Exhibit B. The Interlocal Cooperation Act, Chapter 791, Texas Government Code, authorizes local governments in Texas to participate in an investment pool established thereunder. That statute and reference to authorized investment in investment pools in the Act, is primary authority for use of investment pool: by political subdivisions of the State of Texas. V. DELEGATION OF INVESTMENT AUTHORITY The Financial Director, acting on behalf of the City Council, is designated as the Invesstment ofthe City and is responsible for investment management decisions and activities. The C.'ounc l is afisc responsible for considering the quality and capability of staff, investment advisors, and consult(I.nts involved in investment management and procedures. The Council may contract with a rCol s-te-red Investment Advisor to assist the Investment officer in the fulfillment of his responsibilities. 41-11 participants in the investment process shall seek to act responsibly as custodians of the put li(. !I'Ll'st. No officer or designee may engage in an investment transaction except as provided under the t ernes of this policy and the procedures established by the Investment officer and approved by the (:'ity- Manager. VI. PRUDENCE The standard of prudence to be used in the investment function shall be the "prudent person" standard and shall be applied in the context of managing the overall portfolio. This standard states: "Investments shall be made with judgement 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 expected income to be derived." Page 2 l U/0 a/96, Limitation of Personal Liability The Investment Officer and those delegated investment authority under this policy, when acting, in accordance with the written procedures and this policy and in accord with the Prudent Persor_ Rule, shall be relieved of personal responsibility and liability in the management of the portfolio provide;, that deviations from expectations for a specific security's credit risk or market price change or portfolio shifts are reported in a timely manner and that appropriate action is taken to control adverse market effects. VII. INTERNAL CONTROLS The Investment Officer shall establish a system of written internal controls which will be reviewed annually with the independent auditor of the City. The controls shall be designed to prevent. loss of public funds due to fraud, employee error, misrepresentation by third parties, unanticipated market changes, or imprudent actions by employees of the City. CAC Flnw Cash flow forecasting is designed to protect and sustain cash flow requirements of the. City. Supplemental to the financial and budgetary systems, the Investment Officer will maintain a cash flow forecasting process designed to monitor and forecast cash positions for investment purposes. Crash flow will include the historical researching and monitoring of specific cash flow items, payablv's and receivables as well as overall cash position and patterns. V.1II. AUTHORIZED INVESTMENTS Acceptable investments under this policy shall be limited to the instruments listed below They investments are to be chosen in a manner which promotes diversity or market sector and 11-laturity. The choice of high-grade government investments and high-grade money market instnitriE2nts. is designed to assure the marketability of those investments should liquidity needs arise. A. Obligations of the United States Government, its agencies and instrumentali-:ies, a -rid government sponsoring enterprises, excluding collateralized mortgage obligations (CI\40 3 '', no to exceed two year to stated maturity; B. Fully insured or collateralized certificates of deposit from a bank domiciled in the State, of Texas and under the terms of a written depository agreement with that bank, not to excec'.4 One year to the stated maturity; C. Commercial paper rated A-1/P-1 or the equivalent by at least two nationally recognized rating; agencies not to exceed 180 days to stated maturity; D. Repurchase agreement and reverse repurchase agreements as defined by the Publ:i( Funds Investment Act, not to exceed 180 days to stated maturity, provided an executed PSA Master Repurchase Agreement is on file with the City and the counter party bank or primary dealer; and E. Texas Local Government Investment Pools as defined by the Public Funds Investment Act. Page 3 10/ U 1; 96 If additional types of securities are approved for investment by public funds by state statute, they will not be eligible for investment by the City until this policy has been amended and the amended Version approved by the City Council. Competitive Bidding Requirement All securities, including certificates of deposit, will be purchased or sold after three (3) offers/bids are taken to verify that the City is receiving fair market value/price for the investment. Delivery versus Pavment All security transactions, including collateral for repurchase agreements, entered into by the City, shall be conducted on a delivery versus payment (DVP) basis. IX. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS All investments made by the City will be made through either a regional or primary broker/dealer which complies with the City's requirements. The City, or its Investment Advisor, shall ma.intatn a list of financial institutions which are authorized to provide investment services. At a minim ern the City shall conduct an annual evaluation of each bank's creditworthiness to determine m1 etlier it should be on the "Qualified Institution" listing. Banks shall continuously provide their moist "(::'onsolidated Report of Condition" (call report). Securities broker/dealers shall meet certain criteria as determined by the Investment ( fficor. A lisl of'no more than five (5) authorized broker/dealers will be established and maintained. 'rlhe followirl.g criteria must be met by those firms on the list: - provision of an audited financial statement for the most recent period, -proof of certification by the National Association of Securities Dealers (NASD), -proof of current registration with the State Securities Commission, and -completion of a City questionnaire. Every dealer with whom the City transacts business will be provided a copy of this Investzneiit Policy to assure that they are familiar with the goals and objectives of the investment prograin 'I1he broker/dealer will be required to return a signed copy of the Certification Form substantially iri the form provided as Exhibit C. X. DIVERSIFICATION AND MATURITY LIMITATIONS It is the policy of the City to diversify its investment portfolio. Invested funds shall be diver. si ted -to minimize risk or loss resulting from over -concentration of assets in a specific maturity, specific Issuer, or specific class of securities. Diversification strategies shall be established and periodically revieNved. At a minimum, diversification standards by security type and issuer shall be: U.S. Treasuries and securities with the US Government's guarantee 100% U.S. Government agencies and instrumentalities not to exceed 50% Fully insured or collateralized CD S not to exceed 3 0`%% Commercial paper not to ex-ceed '2..:5�%'u Maximum per CP issuer not to exceed 10(X Pace 4 10110 96 Repurchase agreements 100% Local Government Investment Pools Liquidity Pools 10001% Maximum percent ownership of pool not to exceed 200/0 The portfolio shall be diversified by maturities. The Investment Officer, to the extent possible, will attempt to match investment with anticipated cash flow requirements. Matching maturities with cash flow dates will reduce the need to sell securities prior to maturity, thus reducing market risk.. Unless matched to a specific requirement, the Investment Officer may not invest more than 20% of the portfolio for a period greater than one (1) year. X t. SAFEKEEPING AND COLLATERALIZATION All securities shall be brought on a delivery versus payment basis and be held in safekeeping by citheir the City, an independent third party financial institution, or the City's designated de.positor�7. Alt safekeeping arrangements shall be designated by the Investment Officer and an agreement cf they teams executed in writing. The third party custodian shall be required to issue safekeeping rcccipts to the City listing each specific security, rate, description, maturity, cusip number, and other pe:-tin(�3�1. information. Each safekeeping receipt will be clearly marked that the security is held fbr the (;ity 01' pledged to the City. All securities pledged to the City for certificates of deposit or demand deposits shall be held by an. independent third party bank domiciled in Texas. The safekeeping bank may not be within the scl N.-Ming; company as the bank from which the securities are pledged. Collateralization Collateralization shall be required on two types of investments: a. certificates of deposits over the FDIC insurance coverage of $100,000, and b. repurchase agreements. In order to anticipate market changes and provide a level of additional security for all funds, the collateralization level required will be 102% of the market value of the principal and accrued interest. XII. PERFORMANCE EVALUATION AND REPORTING The Investment Officer shall submit quarterly and annual reports to the City Council containing) - sufficient information to permit an informed outside reader to evaluate the performance of the investment program. At a minimum, these summary management reports shall contain: Beginning and ending market value of the portfolio by market sector and total portfolio, Beginning and ending book value of the portfolio by market sector and total portfolio Transactions which change market and book value, Overall current yield of the portfolio, Overall weighted average maturity of the portfolio, Maximum maturities, by security, in the portfolio, Total earnings for the month and fiscal year-to-date, and Performance comparison including average yield on 3-month US Treasury Bill. Pa„e 5 101101119t The detail reports with full information on each individual position in the portfolio including: Par amount Yield -to -maturity Book value Coupon or rate Yield at cost Market Value Maturity date Cusip Gain/loss Total coupon interest received Amortization/Accretion Interest earning accrued The reports will be prepared jointly by all involved in the investment activity and be signed by all staff involved in accordance with the Act. '.III. DEPOSITORIES The City will designate one banking institution through a competitive process as its central banking services provider at least every three years. This institution will be used for normal banking services including disbursements, deposits, lockbox, controlled disbursement and safekeeping of securities. NIV. INVESTMENT POLICY ADOPTION BY CITY COUNCIL The City's investment policy shall be adopted by the City Council. The policy shall be reviewed on an annual basis by the City Manager and City Council. PASSED AND APPROVED this the 15th day of October, 1996. Jo ollan, Mayor ATTEST: Cindy St a rd, City ecret Reviewed by :Donald B. Davis, City Admini strat or Randy Thomas, City Attorney Approved as to form and legality Page 6 101/01/9-6 n Page 7 EXHIBITS A AND B PUBLIC FUNDS INVESTMENT ACT (Texas Government Code Section 2256) PUBLIC FUNDS COLLATERAL ACT (Texas Government Code Section 2257) l 111,01119 . EXHIBIT C BROKER/DEALER CERTIFICATION FORM as required by Texas Government Code 2256.005(k) CITY OF STEPHENVILLE, TEXAS I, as a registered principal for the firm do hereby cert i4r th "[111) an.d the broker covering this account, , have received and bot) lizole thoroughly reviewed the investment policy of the City. The firm has implemented reasonable internal procedures and controls in an effort: to r)r, ,(.-Ju.de investments transactions between this firm and the City which do not comply with tlt_s policy. Name: Title: Date: