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Home My WebLink About00-074 - ADMIN Resolution - City Council - 2000/06/05RESOLUTION NO. 00-074 A RESOLUTION ADOPTING THE INVESTMENT POLICY FOR THE CITY OF ST. LOUIS PARK WHEREAS, it is the policy of the City of St. Louis Park to establish guidelines for the investment of all public funds and ensure the prudent management of such funds; and WHEREAS, the investment policy is designed to ensure safety of principal, liquidity of assets and market rate of return NOW THEREFORE BE IT RESOLVED the City of St. Louis Park hereby adopts the Investment Policy dated June 5, 2000 which supercedes the investment policy dated May 19, 1986. Reviewed for Administration: Attest: Adopt�cd by the City Council June 5, 2000 7 Resolution No. 00-074 -2- City of St. Louis Park Investment Policy June 5, 2000 POLICY It is the policy of the City of St. Louis Park to establish guidelines for the investment of all public funds. This policy is designed to ensure the prudent management of public funds, the availability of operating and capital funds when needed and providing the highest investment return with maximum security and minimum risk. I. SCOPE This policy applies to all financial assets of the City of St. Louis Park. While separate investment funds are created to accommodate reporting on certain bonded indebtedness, individual investments are purchased using a pooled approach for efficiency and maximum investment opportunity. The City's funds are defined in the City's Comprehensive Annual Financial Report and include: • General Fund; • Special Revenue Funds; • Debt Service Funds; • Capital Project Funds; • Enterprise Funds; • Trust and Agency Funds • Any new funds created by the City. II. OBJECTIVES The primary objectives, in priority order of the City's investment activities will be: A. Safety of Principal Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure preservation of capital in the overall portfolio. B. Liquidity The investment portfolio will remain sufficiently liquid to enable the City to meet all operating and capital requirements that might reasonably be anticipated. A portion of the portfolio may be placed in money market mutual funds or local government investment pools which offer same-day liquidity. C. Yield The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account investment risk and liquidity needs. Resolution No. 00-074 -3- } III. STANDARDS OF CARE The prudent person standard shall be applied to the management of the portfolio. This standard states: "Investments shall be made with judgment 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." Investment officers acting in accordance with written procedures and this investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and the liquidity and the sale of securities are carried out in accordance with the terms of this policy. IV. INVESTMENT AUTHORIZATION The Director of Finance/Treasurer is designated as the Investment Officer of the City and is responsible for investment management decisions and activities. The Director of Finance/Treasurer shall carryout established written procedures and internal controls for the operation of the investment program consistent with this investment policy. The Director of Finance/Treasurer is authorized, as allowed under the State Statute, to designate depositories and broker-dealers for City Funds. V. CONFLICT OF INTEREST Any city official 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 his/her ability to make impartial investment decisions. Employees shall disclose any material interests in financial institutions with which they conduct business. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with which business is conducted on behalf of the City. VI. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The Director of Finance/Treasurer will maintain a list of financial institutions authorized to provide investment services to the City. All broker/dealers who desire to become qualified bidders for investment transactions must supply the Director of Finance/Treasurer with: • Audited financial statements and proof of National Association of Security Dealers (NASD) certification; • Proof of Minnesota Registration Broker Notification and Certification form required by Minnesota Statutes 118A prior to any investment transactions with the City. The Broker Notification must be updated annually. • The Official Broker/Dealer Questionnaire must be on file for each broker the City is currently doing business with. Resolution No. 00-074 -4- • Certification of having read the City's investment policy and agreement to conduct investment transactions in accordance with the policy and objectives, as well as state statutes. • Written agreement to disclose potential conflicts of interest or nsk to public funds that might arise out of business transactions between the firm and the City. Authorized institutions must maintain an investment office within the Twin Cities metropolitan area and have other Minnesota local government clients. VII. AUTHORIZED INVESTMENTS The City is authonzed, under State Law Chapter 118A, to invest the securities fisted in Exhibit A. VIII. COLLATERALIZATION Full collateralization will be required on non-negotiable certificates of deposit. All deposits will be insured or collateralized in accordance with Minnesota Statutes Chapter 118. IX. SAFEKEEPING Investments shall be kept at the broker/dealers in the City's name. Certificates will be held at the financial institution in the City's name. All securities should be a risk category one according to the Government Accounting Standard No. 3. The broker/dealer must provide asset protection of $500,000 through the Securities Investor Protection Corporation (SIPC) and at least another $2,000,000 supplemental insurance protection. X. INVESTMENT PARAMETERS The City's investment shall be diversified as to specific maturity, issuer and institution in order to minimize the risk to the portfolio. Investments should be purchased to match expected cash flow needs, minimizing the market risk associated with the early sale of the investments. XI. REPORTING AND REVIEW A. The investment portfolio will be managed in accordance with the parameters outlined in this policy. The portfolio will be designed with the objective of obtaining a rate of return throughout budgeting and economic cycles, commensurate with the investment risk constraints and cash flow needs. B. The City's investment policy shall be adopted by resolution by the City Council. The City's investments and investment practices shall be reported to the City Council. Quarterly information shall be reported to the City Council and include: Resolution No. 00-074 -5- 1. A listing of individual securities held at end of reporting period. 2. A listing of investments by maturity date. 3. The percentage of the total portfolio in each type of investment. 4. Rate of return for quarter. 5. Market to market analysis. C. Interest earned on investments shall be allocated to various funds based on each fund's average monthly cash balance. XII. STATUTORY AUTHORITY Specific investment parameters for the investment of public funds by the City are found in Minnesota Statutes Chapters 118A. XIII. POLICY CONSIDERATIONS A. Exemption Any investment currently held that does not meet the guidelines of this policy shall be exempted from the requirements of this policy. At maturity or liquidation, such monies shall be reinvested only as provided by this policy. B. Amendments This policy shall be reviewed on an annual basis. Any changes must be approved by the City Council resolution. C. Interest Allocation The general fund shall be allocated a management fee equal to three percent of the total net investment earnings of the investment pool, excluding investments related to the Economic Development Authority. Resolution No. 00-074 -6- EXHIBIT A INVESTMENT TYPE MAXIMUM PER ISSUE MAXIMUM PER INVESTMENT MINIMUM CREDIT QUALITY MAXIMUM MATURITY US Treasures No more than 15% of the total portfolio No limit N/A Five years. If beyond five years, should be related to the specific debt payments. US Governmental Agencies and Federally Sponsored Agency Securities To include callables and step-ups No more than 15% of the total portfolio No limit N/A Five years If beyond five years, should be related to specific debt payments Commercial Paper - issued by United States corporations or their Canadian subsidiaries No more than 15% of the total portfolio No limit Any two of the following national ratings Al, P1, F1 or 01 270 days Repurchase Agreements or Reverse Repurchase Agreements No more than 15% of the total portfolio No limit Provided they are fully collatenzed at 102% of market value by US Treasuries or Agencies 30 days. Bankers Acceptances - Fed eligible United States banks No more than 15% of the total portfolio. No limit Any two of the following ratings. Al, P1, F1 or 01 270 days Certificates of Deposit No more than 15% of the total portfolio No limit. Provided it is guaranteed by the FDIC, FSLIC or is backed by collateral as required by M S 118A Five years If beyond five years, should be related to specific debt payments Guaranteed Investment Contracts - issued or guaranteed by United States commercial banks domestic branches of foreign banks, United States Insurance Companies, or their Canadian subsidianes. No more than 15% of the total portfolio The issuer's or guarantor's short - term and long term unsecured debt must be rated in one of the two highest categories by a nationally recognized rating agency Should the issuer's or guarantor's credit quality be down- graded below "A", Resolution No. 00-074 V'''';, 1 -7- INVESTMENT TYPE MAXIMUM PER ISSUE MAXIMUM PER INVESTMENT MINIMUM CREDIT QUALITY MAXIMUM MATURITY General Obligations of state or local government with taxing powers No more than 15% of the total portfolio No more than 50% of the portfolio Rated "A" or better by a national bond rating service. Five years. If beyond five years, should be related to specific debt payments. Revenue Obligation of any state or local govern- ment with taxing powers No more than 15% of the total portfolio No more than 50% of the portfolio Rated "AA" or better by a national bond rating service. Five years If beyond five years, should be related to specific debt payments. General Obligation of the Minnesota Housing Finance Agency which is a moral obligation of the State of Minnesota No more than 15% of the total portfolio No more than 50% of the portfolio Rated "A" or better by a national bond rating service. Five years. If beyond five years, should be related to specific debt payments Money Market Mutual Funds No limit No limit. Invested primarily in the securities allowed by this policy. N/A