§ 38-139. Review and amendment.
(a)
Annual review. This policy shall be reviewed annually by the city council. Amendments must be approved by the investment officers and adopted by the city council.
(b)
City investment strategy. In order to minimize risk of loss due to interest rate fluctuations, investment maturities will not exceed the anticipated cash flow requirements of the funds. The investment strategy for all funds IS established according to the following priorities:
(1)
Investment suitability;
(2)
Preservation and safety of principal;
(3)
Liquidity;
(4)
Marketability prior to maturity of each investment;
(5)
Diversification; and
(6)
Yield.
(c)
Guidelines by fund-type. Investment guidelines by fund-type are as follows:
(1)
Operating funds. The current-operating funds are used for day-to-day operating activities and, accordingly, require short-term liquidity.
a.
Suitability. Any investment eligible in the investment policy is suitable for the operating funds.
b.
Safety of principal. All investments are to be of high quality with no perceived default risk. Market price fluctuations will, however, occur. By managing the weighted average days to maturity for the operating funds portfolio to less than 270 days and restricting the maximum allowable to two years, the price volatility of the overall portfolio will be minimized.
c.
Marketability. Securities with active and efficient secondary markets are necessary, in the event of an unanticipated cash requirement. An efficient market is generally defined as a bid-asked price relationship being no greater than one-fourth of one percent of principal value.
d.
Liquidity. Short-term financial institution deposits, investment pools and money market mutual funds shall provide daily liquidity and may be utilized as a competitive yield alternative to fixed maturity investments. Reserves established in accordance with the city's cash reserves policy or designated for specific and time frames may be invested for longer terms.
e.
Diversification. Diversified investment maturities shall provide cash flow based on the anticipated operating needs of the city.
f.
Yield. Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. The comparative yield of a like-term treasury bill shall be the minimum yield objective.
(2)
Debt service funds.
a.
Suitability. Any investment eligible in the investment policy is suitable for the debt service funds.
b.
Safety of principal. All investments are to be of high quality with no perceived default risk. Market price fluctuations will, however, occur. By managing the debt service fund's portfolio to not exceed the debt service payment schedule, the market risk of the overall portfolio will be minimized.
c.
Marketability. Securities with active and efficient secondary markets are not necessary as the event of an unanticipated cash requirement is not probable.
d.
Liquidity. Short-term financial institution deposits, investment pools and money market mutual funds shall provide daily liquidity and may be utilized as a competitive yield alternative to fixed maturity investments.
e.
Diversification. Diversified investment maturities shall provide cash flow based on the anticipated debt service payment schedule.
f.
Yield. Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. The comparative yield of a like-term treasury bill shall be the minimum yield objective.
(3)
Capital project funds.
a.
Suitability. Any investment eligible in the investment policy is suitable for the capital improvement funds.
b.
Safety of principal. All investments are to be of high quality with no perceived default risk. Market price fluctuations will, however, occur. By managing the capital project fund's portfolio to anticipate the construction and/or acquisition cash flow requirements, the market risk of the overall portfolio will be minimized.
c.
Marketability. Securities with active and efficient markets are necessary in the event of an unanticipated cash requirement. An efficient market is generally defined as a bid-asked price relationship being no greater than one-fourth of one percent of principal value.
d.
Liquidity. Funds used for construction programs have reasonably predictable draw down schedules. Therefore, investment maturities shall generally follow the anticipated cash flow requirements. Because of the potential for variance from the anticipated draw down schedule maintaining appropriate balances in short-term financial institution deposits, investment pools and money market mutual funds is required.
e.
Diversification. Diversified investment maturities shall provide cash flow based on the anticipated operating needs of the city. Bond proceeds may be invested in a single security or investment if the investment officers determine that such an investment provides economic advantage and complies with Federal arbitrage restrictions or facilitates arbitrage recordkeeping and calculation.
f.
Yield. Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. The comparative yield of a like-term treasury bill shall be the minimum yield objective.
(4)
Debt service reserve funds.
a.
Suitability. Any investment eligible in the investment policy is suitable for the debt service funds, bond ordinance constraints and insurance company restrictions may create issue-specific considerations in addition to the investment policy.
b.
Safety of principal. All investments are to be of high quality with no perceived default risk. Market price fluctuations will, however, occur. By managing the debt service reserve fund's portfolio to not exceed five years or maturity provisions or, generally, the call provisions of the bond issue, the market risk of the overall portfolio will be minimized.
c.
Marketability. Securities with active and efficient secondary markets are not necessary for debt service reserve funds.
d.
Liquidity. Debt service reserve funds have no anticipated expenditures. Therefore, liquidity up to the maturity date or call date is of minor importance.
e.
Diversification. Market conditions and the arbitrage regulations influence the attractiveness of staggering the maturity of fixed rate investments for debt service reserve funds. At no time shall the final debt service payment date of the bond issue be exceeded in an attempt to bolster yield.
f.
Yield. Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. The comparative yield of a like-term treasury bill shall be the minimum yield objective. Arbitrage regulations should be heeded in investing for yield.
(Code 1990, ch. 1, § 30(N); Ord. No. 97-10-21-22, 10-21-1997; Ord. No. 2012-09-18-23, § 30(N), 9-18-2012)