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9404M 1 2 3 4 c� 5 1� 6 7 n 8 o. 9 10 a� 11 \ 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 RROLUTION NO. 9,404 • A RESOLUTION ADOPTING ANEW INVESTMENT POLICY FOR THE CITY OF LITTLE ROCK, ARKANSAS; REPEALING RESOLUTION NO. 8,054; AND FOR OTHER PURPOSES. WHEREAS, the Board of Directors of the City of Little Rock, Arkansas last adopted an official investment policy on November 15, 1988; and WHEREAS, the funds available for investment by the City are substantial and are vital to the ability of the City to deliver services to its citizens; and WHEREAS, conditions in the financial markets have changed since the existing policy was adopted, and the existing policy should be revised to insure that it provides adequate safeguards to insure the safety of taxpayer funds. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CITY OF LITTLE ROCK, ARKANSAS: SECTION 1. The Board of Directors of the City of Little Rock, Arkansas hereby adopt as its investment policy the investment policy statement attached hereto and which is hereby made a part of this Resolution. SECTION 2. This Resolution repeals Resolution No. 8,054 and all other Resolutions or policy statements which are inconsistent with this Resolution. ADOPTED: June 6, 1995 ATTEST: APPROVED AS TO FORM: r" `' T M. CARPENKYR CITY ATTORNEY APPROVED: NOR � I =I � r. 274 0 POLICY CITY OF LITTLE ROCK n u 275 In accordance with and under authority granted by State Statutes and by the City Board of Directors, the Finance Director and Treasurer is responsible for investing the unexpended cash in the City Treasury. The authority governing investments for municipal governments is set forth in Arkansas Code sections 19 -1 -501 through 19 -1 -504. Investment of City funds will be made only in compliance with Arkansas statutes. Investment of the funds of the City of Little Rock shall be governed by the primary objective of safety of principal; the secondary objective shall be compliance with all legal restrictions and liquidity needs; and the final objective shall be yield. SCOPE This policy shall apply to all monies held in City accounts, under the control of the City's Board of Directors, that are not needed for the near term payment of obligations, including (but not limited to) the funds listed below. General Fund Street Fund Special Projects Fund Economic Development Fund Emergency 9 -1 -1 Fund Revenue Sharing Fund Capital Projects Funds Fleet Service Fund Waste Disposal Revenue Fund Debt Service Funds This policy shall also apply to any entity that receives a majority of its funding from City appropriations. This policy does not apply to the Police, Fire, Municipal Judges, and Nommiformed Employees Retirement Funds. This policy also does not apply to those funds managed by approved trustees, such as the Employees' Deferred Compensation Fund. The Board recommends that a similar investment policy be adopted by the various boards, commissions, and component units of the City. However, this policy does not apply to those units that do not receive a majority of their funding from budgeted City appropriations. M M M M M • PRUDENCE • 27s Under all circumstances, the "prudent man rule" shall apply. Investments shall be made with the judgement and care, under circumstances then prevailing, which persons of prudence, direction and intelligence would exercise in the management of their own affairs. Decisions shall be made for investment only, not for speculation, considering the probable safety of the capital as well as the probable income to be derived. The Director of Finance and Treasurer and other individuals assigned to manage the investment portfolio shall act within the intent and scope of the investment policy and other written procedures and exercise due diligence. An individual security's credit risk, market price change or other deviation from expectations is to be reported in a timely manner and appropriate action is to be taken to control adverse developments. Safety of Principal: Safety of principal is the foremost objective of the City of Little Rock's investment policy. Each investment transaction shall seek to ensure that capital losses are avoided, whether from securities default or erosion, broker - dealer default, or erosion of market value. Legal Requirements: Investment of City funds will be made only in compliance with Arkansas statutes and policies adopted by City ordinance or resolution. Liquidity: The City of Little Rock's investment portfolio will remain sufficiently liquid to enable the City to meet all operating requirements reasonably anticipated through historical and current cash flow requirement analysis. Furthermore, a cash flow analysis will be made immediately prior to investing funds to determine projected cash flow requirements and maturity dates. Return on Investments: Subordinate to the safety, legal requirements, and liquidity parameters in investment consideration will be interest yield. The City shall maximize interest yields while ensuring that the maturity dates coincide with projected expenditure requirements. Furthermore, the City shall purchase investments through competitive bidding, placing the investment with the bid providing the highest interest yield for the maturity required. DELEGATION OF AUTHORITY M M M Arkansas state laws and the authority granted by the Board of Directors assign the responsibility of investing unexpended cash to the City's Finance Director and Treasurer. He shall establish written procedures for the investment operations consistent with the investment policy. These procedures shall include delegation of authority to persons responsible for executing investment transactions including the purchase and sale of securities and an adequate system of internal controls. ETHICS AND CONFLICT OF INTEREST Officers and employees involved in the investment process shall refrain from personal business activities that conflict with proper execution of the investment program, or impair their ability to make impartial investment decisions. Employees and investment officials shall disclose any material financial interests that could be related to the performance of the City's investment portfolio. RECORDS AND REPORTING Complete records of all investment transactions will be kept in the Little Rock Finance Department and will be open to inspection during normal business hours. The Director of Finance shall render a monthly report to the City Manager detailing the type of investment, amount of money invested, maturity date, and interest yields. An independent analysis by an external auditor shall be conducted annually to review internal control, account activity, and compliance with City's investment policy and procedures. The external auditor shall physically review all bank certificates of deposit held by the City. SAFEKEEPING OF SECURITIES All U. S. Treasury securities owned by the City shall be held in safekeeping by a third party bank safekeeping or security processing department, acting as agent for the City under terms of a custodial agreement. Any trade executed by a dealer will settle on a delivery vs. payment basis with the City's safekeeping agent. Bank certificates of deposit shall be held either in trust with the issuing bank or in physical form in the City's Revenue Collector's office. QUALIFIED DEALERS The City shall transact business only with banks or broker dealers operating in the State of Arkansas, with investment officers and at least one branch located in the City. Exceptions will be made only upon written authorization of the Director of Finance and Treasurer. The Director of Finance and Treasurer shall annually send a copy of the City's current investment policy to all dealers approved to do business with the City. Confirmation of receipt of this policy shall be considered evidence that the dealer understands the City's investment policies and intends to sell the City only appropriate investments. 278 AUTHORIZED INVESTMENTS While Arkansas statutes may provide for additional allowable investment vehicles, the City of Little Rock investments shall be limited to: United States Treasury Bills, Bonds. Strim, and Notes which are direct obligations of the United States of America, the principal and interest on which are fully guaranteed by the United States of America. Bank certificates of deposit which are non - negotiable time deposits and collateralized in accordance with Arkansas law and the City's investment policy. State legislative action that further provides for allowable investment vehicles may be incorporated into the City's investment policy. While repurchase agreements are statutorily allowed vehicles for investments, the City shall not enter into repurchase or reverse repurchase agreements. The City of Little Rock shall not invest in: Obligations of agencies of the United States not guaranteed by the full faith and credit of the United States of America, such as obligations issued by the Federal National Mortgage Association (FNMA) or the Federal Home Loan Mortgage Association (FHLMC). Derivative products, commercial paper, common stocks, or long term bonds. Any Arkansas state legislative action that further restrict investment vehicles will be incorporated into the City of Little Rock's investment policy and supersede any previous applicable language. COLLATERALIZATION Collateralization is required for investments not placed in U. S. government securities. To reduce market risk, the collateralization level will be 102% of the market value of the certificate of deposit and accrued interest. A three party collateral agreement between the City, the financial institution, and the Federal Reserve bank, with acceptance by the City and the financial institution, will be executed prior to the purchase or delivery of the certificate of deposit. It will be the policy of the City to transact business only with firms who are willing to meet all federal and state laws, and to comply with the City's requirements for safekeeping, delivery, and receipt relative to collateralization instruments. In conformance with the provision of the Federal Bankruptcy Code which provides for the liquidation of securities held as collateral, the only securities acceptable as collateral shall be securities that are the direct obligations of, or are fully guaranteed as to principal and interest by the United States or an agency of the United States. MATURITY SCHEDULING 0 2'79 Investment maturities shall normally not extend longer than three (3) years for operating funds or five (5) years for debt service or construction funds. However, exceptions for extraordinary circumstances for funds clearly not needed within the normal term limitations may be approved by the Director of Finance and Treasurer. The intent of this policy is to guide the City's investments to short or medium term instruments and away from long term securities. POLICY REVIEW This investment policy shall be reviewed at least annually to ensure its consistency with the overall objectives of preservation of principal, liquidity, and yield, and its relevance to current state law and economic trends. Amendments to the policy shall be forwarded to the Board of Directors for approval.