12-05-17 City of Beacon Investment Policy

Resolution 12-05-17 

 

A RESOLUTION ADOPTING THE CITY OF BEACON INVESTMENT POLICY

 

Section 1:  SCOPE OF INVESTMENT POLICY

 

The Investment Policy of City of Beacon shall apply to all operating funds, bond proceeds and other funds and all investment transactions involving funds, bond proceeds and other funds accounted for in the financial statements of the City of Beacon.  Each investment made pursuant to this Investment Policy must be authorized by applicable law and this written Investment Policy.

 

The investment of bond funds or sinking funds shall comply not only with this investment policy, but also be consistent with any applicable bond resolution or bond ordinance.

 

The Investment Policy is intended to comply with Iowa Code Chapter 12B.10.

 

Upon passage and future amendment, if any, copies of this Investment Policy shall be delivered to all of the following:

 

  1. The governing body or officer of the City of Beacon to which the Investment Policy applies.

 

  1. All depository institutions or fiduciaries for the public funds of the City of Beacon.

 

  1. The auditor engaged to audit any fund of the City of Beacon.

 

In addition, a copy of this Investment Policy shall be delivered to every fiduciary or third party assisting with or facilitating investment of the funds of the City of Beacon.

 

SECTION 2:  DELEGATION OF AUTHORITY

 

In accordance with Section 12B.10 of the Iowa Code, the responsibility for conducting investment transactions resides with the Treasurer of the City of Beacon. Only the Treasurer and those authorized by resolution may invest public funds and a copy of any empowering resolution shall be attached to this Investment Policy.

 

All contracts or agreement with outside persons investing public funds, advising on the investment of public funds, directing the deposit or investment of public funds or acting in a fiduciary capacity for the City of Beacon, shall require the outside person to notify the City of Beacon in writing, within thirty (30) days of receipt of all communications from the Auditor of the outside person or any regulatory authority, of the existence of a material weakness in internal control structure of the outside person or regulatory orders or sanctions regarding the type of services being provided to the City of Beacon by the outside person.

 

The records of investment transactions made by or on behalf of the City of Beacon are public records and are the property of the City of Beacon whether in the custody of a fiduciary or other third party.

 

The Treasurer shall establish a written system of internal controls and investment practices. The controls shall be designed to prevent losses of public funds, to document those officers and employees of the City of Beacon responsible for elements of the investment process and to address the capability of investment management. The controls shall provide for the receipt and review of the audited financial statement and related reports on internal control structure of all outside persons performing any of the following for the City of Beacon.

 

  1. Investing public funds
  2. Advising on the investment of public funds.
  3. Directing the deposit or investment of public funds.
  4. Acting in a fiduciary capacity of this public body.

 

A Bank, Savings and Loan Association or Credit Union providing only depository services shall not be required to provide an audited financial statement and related report on internal control structure.

 

The Treasurer of and all employees authorized to place investments for the City of Beacon shall be bonded or be covered by the City of Beacon’s insurance policy’s theft coverage for a minimum of $5,000.

 

SECTION 3:  OBJECTIVES OF INVESTMENT POLICY

 

The primary objectives in order of priority, of all investment activities involving the financial assets of the City of Beacon shall be the following:

 

  1. Safety: Safety and preservation of principal in the overall portfolio is the foremost investment objective.

 

  1. Liquidity: Maintaining the necessary liquidity to match expected liabilities is the second investment objective.

 

  1. Return: Obtaining a reasonable return is the third investment objective.

 

SECTION 4:  PRUDENCE

 

The Treasurer of the City of Beacon when investing or depositing public funds, shall exercise the care, skill, prudence and diligence under the circumstances then prevailing that a person acting in a like capacity and familiar with such matters would use to attain the Section 3 investment objectives. This standard requires that when making investment decisions, the Treasurer shall consider the role that the investment or deposit plays within the portfolio of assets of the City of Beacon and the investment objectives stated in Section 3.

 

When investing assets of the City of Beacon for a period longer than two (2) years, the Treasurer shall request competitive investment proposals for comparable credit and term investments from a minimum of two (2) investment providers.

 

 

SECTION 5:  INSTRUMENTS ELIGIBLE FOR INVESTMENT

 

Assets of the City of Beacon may be invested in the following:

 

  1. Interest bearing savings accounts, interest bearing money market accounts, and interest bearing checking accounts at any bank, savings and loan association or credit union in the State of Iowa. Each bank must be on the most recent Approved Bank List as distributed by the Treasurer of the State of Iowa or as amended as necessary by notice inserted in the monthly mailing by the Rate Setting Committee. Each financial institution shall be properly declared as a depository by the governing body of the City of Beacon. Deposits in any financial institution shall not exceed the amount approved by the governing body of the City of Beacon.

 

  1. Obligations of the United States government, its agencies and instrumentalities.

 

  1. Certificates of deposit and other evidences of deposit at federally insured depository institutions approved pursuant to Chapter 12C, Code of Iowa.

 

  1. Iowa Public Agency Investment Trust (“IPAIT”).

 

  1. Prime bankers’ acceptances that mature within 270 days of purchase and that are eligible for purchase by a federal reserve bank.

 

  1. Commercial paper or other short-term commercial debt that matures within 270 days of purchase and is rated within the two highest classifications, as established by at least one of the standard rating services approved by the superintendent of banking by rule .

 

  1. Repurchase agreements whose underlying collateral consists of the investments obligations of the United States government, its agencies and instrumentalities and City of Oskaloosa takes delivery of the collateral either directly or through an authorized custodian.  Repurchase agreements do not include reverse repurchase agreements.

 

  1. An open-end management investment company registered with the Securities & Exchange Commission under the federal Investment Company Act of 1940, 15 U.S.C.  Section 80(a), and operated in accordance with 17 C.F.R. § 270.2a-7, whose portfolio investments are limited to those instruments individually authorized in this Section 5 of this Investment Policy.

 

  1. Warrants or improvement certificates of a levee or drainage district.

 

All instruments eligible for investment are further qualified by all other provisions of this Investment Policy, including Section 7 Investment Maturity Limitations and Section 8 Diversification Requirements.

 

 

SECTION 6:  PROHIBITED INVESTMENTS AND INVESTMENTS PRACTICES

 

Assets of the City of Beacon shall not be invested in the following.

 

  1. Reverse repurchase agreements.
  2. Futures and options contracts

 

Assets of the City of Beacon shall not be invested pursuant to the following investment practices:

 

  1. Trading of securities for speculation or the realization of short-term trading gains.

 

  1. Pursuant to a contract providing for the compensation of an agent or fiduciary based upon the performance of the invested assets.

 

If a fiduciary or other third party with custody of public investment transaction records of the City of Beacon fails to produce requested records when requested by the City of Beacon within a reasonable time, the City of Beacon shall make no new investment with or through the fiduciary or third party and shall not renew maturing investments with or through the fiduciary or third party.

 

SECTION 7:  INVESTMENT MATURITY LIMITATIONS

 

Operating funds must be identified and distinguished from all other funds available for investment.  Operating funds are defined as those, which are reasonably expected to be expended during a current budget year or within fifteen months of receipt.

 

All investments authorized in Section 5 are further subject to the following investment maturity limitations:

 

  1. Operating funds may only be invested in instruments authorized in Section 5 of this Investment Policy that mature within three hundred ninety-seven (397) days.

 

  1. The Treasurer may invest funds of the City of Beacon that are not identified as Operating Funds in investments with maturities longer than three hundred ninety-seven days (397) days. However, all investments of the City of Beacon shall have maturities that are consistent with the needs and use of the City of Beacon.

 

SECTION 8:  DIVERSIFICATION

 

Investments of the City of Beacon are subject to the following diversification requirements:

 

Prime bankers’ acceptance:

 

  1. At the time of purchase, no more than ten percent (10%) of the investment portfolio of the City of Beacon shall be invested in prime bankers’ acceptances; and

 

  1. At the time of purchase, no more than five percent (5%) of the investment portfolio of the City of Beacon shall be invested in the securities of a single issuer.

 

Commercial paper or other short-term corporate debt:

 

  1. At the time of purchase, no more than ten percent (10%) of the investment portfolio of the City of Beacon shall be in commercial paper or other short term corporate debt;

 

  1. At the time of purchase, no more than five percent (5%) of the investment portfolio of the City of Beacon shall be invested in the securities of a single issuer; and

 

  1. At the time of purchase, no more than five percent (5%) of all amounts invested in commercial paper and other short-term corporate debt shall be invested in paper and debt rated in the second highest classification.

 

Where possible, it is the policy of the City of Beacon to diversify its investment portfolio. Assets shall be diversified to eliminate the risk of loss resulting from overconcentration of assets in a specific maturity, a specific issuer, or a specific class of securities. In establishing specific diversification strategies, the following general policies and constraints shall apply:

 

  1. Portfolio maturities shall be staggered in a way that avoids undue concentration of assets in a specific maturity sector. Maturities shall be selected which provide stability of income and reasonable liquidity.

 

  1. Liquidity practices to ensure that the next disbursement date and payroll date are covered through maturing investments, marketable U.S. Treasury bills or cash on hand shall be used at all times.

 

  1. Risks of market price volatility shall be controlled through maturity diversification so that aggregate price losses on Instruments with maturities approaching one year shall not be greater than coupon interest and Investment Income received from the balance of the portfolio.

 

SECTION 9:  SAFEKEEPING AND CUSTODY

 

All invested assets of the City of Beacon involving the use of a public funds custodial agreement, as defined in Iowa Code section 12B.10C, shall comply with all rules adopted pursuant to Iowa Code section 12B.10C. All custodial agreements shall be in writing and shall contain a provision that all custodial services be provided in accordance with the laws of the State of Iowa.

 

All invested assets of the City of Beacon eligible for physical delivery shall be secured by having them held at a third party custodian. All purchased investments shall be held pursuant to a written third party custodial agreement requiring delivery versus payment and compliance with all rules set out in this Section 9.

 

SECTION 10:  ETHICS AND CONFLICT OF INTEREST

 

The Treasurer and all officers and employees of the City of Beacon 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.  Any personal investments or loans in excess of $5,000 in or with any entity that the City of Beacon has declared as a depository or with which the City of Beacon regularly conducts investment business shall be disclosed in writing within thirty (30) business days to the Beacon City Council.

 

SECTION 11:  REPORTING

 

The Treasurer shall submit to the City of Beacon an investment report that summarizes recent market conditions and investment strategies employed since the last investment report. The investment report shall set out the current portfolio in terms of maturity, rates of return and other features and summarizes all investment transactions that have occurred during the reporting period and compare the investment results with the budgetary expectations.

 

SECTION 12:  INVESTMENT POLICY REVIEW AND AMENDMENT

 

This Investment Policy shall be reviewed every three (3) years or more frequently as appropriate. Notice of amendments to the Investment Policy shall be promptly given to all parties as noted in Section 1.

 

SECTION 13:  ADOPTION

 

The City of Beacon Investment Policy shall be adopted by resolution of the City Council.  Any modification must be approved by the City Council.

 

Approved and adopted this 5th day of December, 2017.

 

 

SIGNED:                                                                    ATTEST:

 

 

 

 

Jim Hughes, Mayor                                                 Jaimie Williamson, City Clerk

City of Beacon                                                          City of Beacon