11-782 Adopting Meridian Investment PolicyCITY OF MERIDIAN RESOLUTION NO. I ~ ' ~ R ~.,
BY THE CITY COUNCIL: BIRD, HOAGLUN, ROUNTREE, ZAREMBA
A RESOLUTION ADOPTING THE INVESTMENT POLICY FOR THE CITY OF
MERIDIAN; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, on April 12, 201 1, the City Council of Meridian received a report from the
Finance Department regarding the draft City of Meridian Investment Policy; and
WHEREAS, after receiving said report, the City Council directed that the City of
Meridian Inveshnent Policy be brought forward in Resolution form to establish the Investment
Policy for the City of Meridian.
NOW THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY
COUNCIL OF THE CITY OF MERIDIAN CITY, IDAHO:
Section 1. That the City of Meridian Investment Policy be adopted, a copy of which is
attached to this Resolution and incorporated herein by this reference.
Section 2. That this Resolution shall be in full force and effect immediately upon its
adoption and approval.
ADOPTED b the Cit Council of Cit of Meridian, Idaho this ~ day of
Y Y Y
~~ ,2011.
APPROVED by the Mayor of the City of Meridian, Idaho, this ~rday of
i7Y' ~ ~ , 2011.
APPROVED:
TAMMY I~~. EERD, MAYOR
~ ~ y
""" t"Jk~'<u
y. ~, .t~ {,l'1
4j "~,,~ d °^. .
ATTEST: ~~~ ~ :~,, ~~ ~~ ~~,~-~~ ~m~~~ -~
d ~~~
~ C~, .r ~#
f~
JA E ,~-~y~~ .~ ~, b~
~~
y„b
- ..,~ ~;s~~.
c ~ ~{
~~ .;
RESOLUTION FOR CITY OF MERIDIAN INVESTMENT POLICY -1 of 1
CITY OF MERIDIAN
INVESTMENT POLICY
Revised March 2011
SCOPE
This investment policy applies to the cash and investment activities of all funds under the
jurisdiction of the City of Meridian Finance Department as authorized by Idaho Code 57-
127 and by City resolution.
Employee Retirement Fund and any Employee Deferred Compensation Plans are
specifically excluded from this policy.
INVESTMENT OBJECTIVES
The primary objective of the Finance Department is to safeguard City funds while
providing adequate liquidity to meet the City's on-going operating needs. The investment
objectives in order of priority are as follows;
1. Safety
Investments will preserve the capital in the portfolio. Investments will be
purchased that mitigate credit risk and interest rate risk.
A. Credit Risk -will minimize the risk of loss due to the failure of the
security issuer or backer by limiting investments to those investments
authorized by state law as detailed below.
B. Interest Rate Risk- interest rate risk will be minimized by structuring the
portfolio so it is not necessary to sell securities before maturity to meet cash
requirements and by limiting the average maturity of this portfolio.
C. Custodial Credit Risk -the risk that in the event of the failure of a
depository a government will not be able to recover its deposits or will
not be able to recover collateral securities that are in possession of an
outside party.
Deposits -The City will minimize deposit Custodial Credit Risk by
requiring that all of the City's deposits be protected by deposit
insurance to the highest reasonable degree.
Investments -The City requires that all investments to the extent
possible be identified as to City of Meridian ownership and held in the
City's name. The City will require investments be insured to the
highest reasonable degree.
2. Liquidity
The investment portfolio will remain liquid enough to meet the operating
needs of the City. In addition to meeting anticipated daily needs of the City
an amount of the portfolio will be available in money market or Idaho State
Investment Pool funds that offer one day liquidity for unanticipated operating
needs.
3. Yield
The investment portfolio will be designed to obtain the highest yield possible
under the constraints of safety, liquidity, and state regulation.
STANDARDS OF CARE
1. Prudence
The standard of prudence used by City Finance employees and any investment advisors
contracted by the City shall be the "prudent person" standard.
The "prudent person" standard states that "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."
2. Ethics and Conflict of Interest
Employees, officials, and contractors involved in the investment process must refrain
from personal business activity that could conflict with the proper management of the
investment program or create an actual or perceived impairment of ability to make sound
investment decisions. Employees, officials, and contractors shall disclose any personal
financial or investment positions that could be related to the performance of the
investment portfolio.
3. Delegation of Authority
Authority to manage the investment portfolio is granted to the City Finance Director
under the direction of the City Council. Any investment advisor contracted by the City to
purchase investments is bound by this investment policy.
2
ALLOWABLE INVESTMENT VEHICLES PER IDAHO CODE 50-1013
(a) Revenue bone issued by the revenue bond act
(b) City coupon bonds provided for under section 50-1019, Idaho Code
(c) Local improvement district bonds provided for under chapter 17, title 50, Idaho Code
(d) Time deposit accounts with public depositories
(e) Bonds, treasury bills, interest-bearing notes, or other obligations of the United States,
or those for which the faith and credit of the United States are pledged for the payment of
principal and interest.
(fj General obligation bonds of any county, city, metropolitan water district, municipal
utility district, school district or other taxing district of this state.
(g) Notes, bond, debentures, or other similar obligation issued by the farm credit system
or institutions forming a part thereof under the farm credit act of 1971 (12 U.S.C sections
2001-2259) and all acts of congress amendatory thereof or supplementary thereto; in
bonds or dentures of the federal home loan bank board established under the federal home
loan bank act (12 U.S.C sections 1421-1449) ; in bonds, debentures and other obligations
of the federal national mortgage association established under the national housing act
(12 U.S.C. Sections 1701-1750g) as amended, and in the bonds of any federal home loan
bank established under said act and in other obligations of agencies and instrumentalities
of the government of the state of Idaho or of the United States.
i. Bonds, notes or other similar obligations issued by public corporations of the
state of Idaho including, but not limited to, the Idaho state building authority, the Idaho
housing authority and the Idaho resource board, but such investment shall not exceed
beyond seven (7) days.
j . Repurchase agreements and reverse repurchase agreements covered by any legal
investment for the state of Idaho or as otherwise allowed by this section, provided that
reverse repurchase agreements shall only be used for the purpose of liquidity and not for
leverage or speculation.
k. Tax anticipation bonds or notes, income and revenue anticipation bonds or notes
and registered warrants of the state of Idaho or of taxing districts of the state of Idaho.
(1) Savings accounts including, but not limited to, accounts on which interest or
dividends are paid and upon which negotiable orders of withdrawal maybe drawn, and
similar transaction accounts.
(m) Time deposit accounts and other savings accounts of state or federal savings
and loan associations located within the geographical boundaries of the state in amounts
not to exceed the insurance provided by the federal savings and loan corporation,
including but not limited to, accounts on which interest or dividends are paid and upon
which negotiable orders of withdrawal may be drawn, and similar transaction accounts.
(n) Share, savings and deposit accounts of state and federal credit unions located
within the geographical boundaries of the state in amounts not to exceed the insurance
provided by the national credit union share insurance fund and/or any other authorized
3
share guaranty corporation, including, but not limited to, accounts on which interest or
dividends are paid and upon which negotiable orders of withdrawal may be drawn, and
similar transaction accounts.
(o) Prime banker's acceptances
(p) Prime commercial paper
(q) Money market funds, mutual funds, or any other similar funds whose portfolios
consist of any allowed investment as specified in this section.
(r) Bonds, debentures or notes of any corporation organized, controlled and
operating within the United States which have at the time of their purchase, an A rating
or higher by a commonly known rating service.
4
AUTHORIZED FINANCIAL INSTITUTIONS, DEPOSITORIES. AND
BROKER/DEALERS
All brokers and dealers doing business with the City of Meridian must be registered with
the State of Idaho Department of Finance and must adhere to Securities and Exchanges
Commission Rule 15C3-1 (uniform net capital rule). Non-bank broker/dealer firms and
the individuals handling the City's account must be registered with the National
Association of Securities Dealers (NASD).
INTERNAL CONTROL
The City Finance Department is responsible for establishing and maintaining an internal
control structure designed to protect the City from loss of public funds due to fraud, error,
or actions inconsistent with the requirements the laws governing allowable public entity
investments. The City will require an annual independent audit to include reviews of the
investment internal controls as necessary to issue an opinion on the financial statements as
a whole.
REPORTING
The Finance Department will prepare annual, quarterly, and monthly reports for Council
containing:
• Percentage of the total portfolio each type of investment represents.
• The percentage of the portfolio each fund represents.
• Monthly rate of investment return for each type of investment.
• Quarterly summary of market conditions.
• Annual realized and unrealized gains and losses on in market value and amortized
expense or income from amortization of bond premiums and discounts.
• Annually average weighted yield to maturity.
• Annually listing of investments by maturity date.
5