Loading...
RES 93-52 ADOPTION OF INVESTMENT POLICYRESOLUTION No. 93 — 52 A RESOLUTION OF THE CITY OF BAINBRIDGE ISLAND, WASHINGTON ADOPTING AN INVESTMENT POLICY. WHEREAS, the city council has determined that section 3.12 of the Bainbridge Island Municipal Code longer serves the needs of the city; and WHEREAS, on December 2, 1993, the city council passed Ordinance 93-16 which calls for the city council to adopt an investment policy by resolution; now; therefore, THE CITY COUNCIL OF THE CITY OF BAINBRIDGE ISLAND, WASHINGTON, DOES RESOLVE AS FOLLOWS: The attached document labeled 'Investment Policy for the City of Bainbridge Island " is adopted by this resolution as the investment policy of the city. PASSED by the City Council this 16th day of December, 1993. APPROVED by the Mayor this 17th day of December, 1993. SAM ATTEST/AUTHENTICATE: lJ SUSAN P. KASPER, City Clerk FILED WITH THE CITY CLERK: December 8, 1993 PASSED BY THE CITY COUNCIL: December 16, 1993 PUBLISHED: December 22, 1993 POSTED: December 22, 1993 EFFECTIVE DATE: RESOLUTION 93 — 52 VATO, Mayor INVESTMENT POLICY for the CITY OF BAINBRIDGE ISLAND 1. POLICY It is the policy of the City of Bainbridge Island to invest public funds in a manner which will provide security adequate to ensure the protection of the investment together with the highest return consistent with such security while meeting the daily cash flow needs of the City amd conforming to all state and local statutes governing the investment public funds. 2. SCOPE This investment policy applies to all financial assets of the City of Bainbridge Island. These funds are accounted for in the City's Comprehensive Annual Financial Report and include all the funds of the City. 3. PRUDENCE 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 probable income to be derived. The standard of prudence to be used by investment officials shall be the "prudent person" standard and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with state law, written proced- ures 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 appropriate action is taken to control adverse developments. 4. OBJECTIVE The primary objectives, in priority order, of the the City of Bainbridge Island's investment activities shall be : SAFETY : Safety of the principal is the foremost objective of the investment program. Investments of the City shall be undertaken in a manner that seeks to ensure the preser- vation of capital in the overall portfolio. To obtain this objective, when investing in securities other than obligations of the United States Treasury or in the Local PAGE 2 INVESTMENT POLICY for the CITY OF BAINBRIDGE ISLAND Government Investment Pools of the State of Washington and/or Kitsap County, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. LIQUIDITY : The City's investment portfolio will remain sufficiently liquid to enable the City to meet all operat- ing requirements which might be reasonably anticipated. YIELD : The City's investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the City's investment risk constraints and the cash flow characteristics of the portfolio. 5. DELEGATION OF AUTHORITY Authority to manage the City's investment program is derived from : the Bainbridge Island Municipal Code, policies adopted by the Mayor, and this policy as adopted and amended by the City Council. Management responsibility for the investment program is hereby delegated to the Director of Finance and Administrative Services ("the Director"), who shall establish written procedures for the operation of the investment program consistent with this investment policy. Procedures should include reference to: safekeeping, master repurchase agreements, wire transfer agreements, custody agreements and investment related banking services contracts. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Director. The Director shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. 6. ETHICS AND CONFLICTS OF INTEREST Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution of the investment program, or which could impair their ability to make impartial invest- ment decisions. Employees and investment officials shall PAGE 3 INVESTMENT POLICY for the CITY OF BAINBRIDGE ISLAND disclose to the Mayor any material financial interests in financial institutions that conduct business within this jurisdiction, and they shall further disclose any personal financial/investment positions that could be related to the performance of the City's portfolio. Employees and officers shall subordinate their personal investment transactions to those of the City, particularly with regard to the timing of purchases and sales. 7. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The Director will maintain a list of financial institutions authorized to provide investment services. In addition, a list will also be maintained of approved security broker/ dealers selected by credit worthiness. These may include "primary" dealers or regional dealers that qualify under Securities and Exchange Commission Rule 15C3-1 (uniform net capital rule). No public deposits shall be made except in qualified public depositories a provided in Chapter 39.38 RCW. 8. AUTHORIZED AND SUITABLE INVESTMENTS The City of Bainbridge Island is empowered to invest in all types of securities which are designated by the Treasurer of the State of Washington as "Eligible Investments for Public Funds" in the State of Washington. 9. COLLATERALIZATION Collateralization is required on all repurchase agreements. In order to anticipate market changes and provide a level of security for all funds, the collateralization level will be 105 0 of market value of principal and accrued interest. 10. SAFEKEEPING & CUSTODY All security transactions, including collateral for repurchase agreements, entered into by the City shall be conducted on a delivery -versus -payment (DVP) basis. Securities purchased by PAGE 4 INVESTMENT POLICY for the CITY OF BAINBRIDGE ISLAND the City will be delivered against payment and held in a custodial safekeeping account with the trust department of a bank. The trust department of a bank, a third party custo- dian, will be designated by the Director and all transactions will be evidenced by safekeeping receipts. 11. DIVERSIFICATION The City will diversify its direct investments by security type and institution. With the exception of U.S. Treasury securities and authorized pools, no more than ten (10) percent of the City's total investment portfolio (including such exempted securities) will be invested in a single security type or with a single financial institution. 12. MAXIMUM MATURITIES & DURATION To the extent possible, the City will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the City will not directly invest Operating Fund balances totaling four months' expend- itures in securities maturing more than two (2) years from the date of purchase. Operating Fund balances in excess of four months' expenditures and all other fund balances may be invested in securities with a duration of not more than four (4) years from the date of purchase. However, the City may collateralize repurchase agreements using longer -dated investments not to exceed ten (10) years to maturity. 13. INTERNAL CONTROLS The Director shall establish an annual process of independent review by an external auditor. This review wil provide internal control by assuring compliance with policies and procedures. 14. PERFORMANCE STANDARDS The investment portfolio will be designed to obtain an average rate of return during budgetary and economic cycles which meets or exceeds the average yield of the Local Government Investment Pool of the State of Washington. This performance standard shall take into account the City's investment risk constraints and cash flow needs. The City's investment INVESTMENT POLICY for the CITY OF BAINBRIDGE ISLAND strategy is active. 15. REPORTING PAGE 5 The Director is charged with the responsibility for including a market report on the investment activity and returns in the City's Financial Report. 16. INVESTMENT POLICY ADOPTION The Investment Policy of the City of Bainbridge Island shall be adopted by resolution of the City Council. The policy shall be reviewed on an annual basis by the Finance Committee of the City Council and any recommended modifications shall be forwarded to the City Council for consideration and approval prior to implementation.