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HomeMy WebLinkAbout169-99 RESOLUTION• RESOLUTION NO 169-99 r A RESOLUTION APPROVING A NEW INVESTMENT POLICY TO REPLACE POLICY ACCT -2 (EFFECTIVE JULY 2, 1996) IN THE CITY OF FAYETTEVILLE POLICY AND PROCEDURES, AS PERMITTED BY STATE OF ARKANSAS ACT 1341 OF 1999. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS - Section 1. That the City Council hereby approves a new investment policy to replace Policy Acct -2 (effective July 2, 1996) in the City of Fayetteville Policy and Procedures, as permitted by State of Arkansas Act 1341 of 1999. A copy of the policy amendment is attached hereto marked Exhibit "A" and made a part hereof. .rt.t • PASSED'4ND APPROVED this 21st day of December , 1999. A';; %.0.• APPROVE ` r•' APPROVE By red Hanna, Mayor ATTEST: By Heather Woodruff, Cit rk y CITY OF FAYETTEVILLE, ARKANSAS INVESTMENT POLICY 1. Purpose: EXHIBIT 1h The purpose of this policy is to provide guidelines for investment of City of Fayetteville operating funds to preserve the safety of principal, to maintain adequate cash flow, and to maximize interest earnings. 11. Scope: This policy applies to the investment of City of Fayetteville operating funds not needed for immediate expenditures. This policy does not govern the investment of employee retirement or pension funds or proceeds of bond issues. III. Standards/Objectives: Investments will be made within the constraints of applicable State laws and this policy, taking into consideration liquidity needs of the City. Investment decisions will 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. Investment of the funds of the City of Fayetteville shall be directed to the primary objective of safety of principal; the secondary objective shall be maintaining adequate cash flow; and the final objective shall be maximizing investment yield. Except for cash in certain restricted and special funds, the City may consolidate moneys from individual funds to maximize interest earnings. Investment income will be allocated to the various funds based on each fund's participation. IV. Delegation of Authority/Responsibility: Management of the investment of City funds regulated by this policy shall be the responsibility of the Mayor and the Administrative Services Director. The Mayor and the Administrative Services Director may delegate authority for investment transactions. The Mayor and the Administrative Services Director may, by proper procurement procedures, contract for the services of an asset manager, an investment advisor, or other expert advisor(s) to invest all or a portion of City funds regulated by this policy. Selection of an independent asset manager or investment advisor will be limited to those candidates who have an office within the City of Fayetteville. 1 • The Mayor and the Administrative Services Director and their designees are authorized to: open and close accounts with financial institutions in the name of the City, make wire transfers of funds for the City; make deposits of funds for the City; execute collateral, depository and investment agreements for the City; and take any other such actions needed to carry out their responsibilities for the depositing and investing of the City's funds as authorized by State Statues and this policy. The Mayor, the Administrative Services Director, and other City employees assigned to manage the investment portfolio, acting within the intent and scope of this Investment Policy, shall be relieved of personal responsibility for an individual security's credit risk or market risk. 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. The Mayor and the Administrative Services Director shall establish operating procedures to implement this investment policy. V. Authorized Investments: A. The City will invest only in book entry securities. B. The City may, without limitation, invest in the following instruments, provided, however, that at no time shall assets of the City be invested in any instrument or security not authorized for investment by Arkansas Code Annotated §§ 14-58-309 (Act 1341 of 1999), and further defined in Section 23-47-401 (Investment Powers and Limitations), copy attached or by the Local Government Joint Investment Trust Act, Arkansas Code Annotated §§ 19-8-301 et seq., (Local Government Trusts) as they may from time to time be amended: 1. Direct obligations of the United States Government; Obligations of agencies and instrumentalities created by act of the United States Congress and authorized thereby to issue securities or evidences of indebtedness, regardless of guarantee of repayment by the United States Government; 3. Obligations the principal and interest of which are fully guaranteed by the United States Government or an agency or an instrumentality created by an act of the United States Congress and authorized thereby to issue such guarantee. Obligations the principal and interest of which are fully secured, insured, or covered by commitments or agreements to purchase by the United States Government or an agency or instrumentality created by an act of the United States Congress and authorized thereby to issue such commitments or agreements. 5. General obligations of the states of the United States and of the political 2 • • subdivisions, municipalities, commonwealths, territories or insular possessions thereof (general obligation bonds); 6. Obligations issued by the Arkansas State Board of Education under authority of the State Constitution or applicable statues; Prerefunded municipal bonds, the principal and interest of which are fully secured by the principal and interest of a direct obligation of the United States Government; Certificates of deposit with banks authorized by State law to receive deposits of public funds, that have branches or main offices within the Fayetteville City limits, with which the City has both a depository agreement and a collateral agreement. Repurchase agreements that are fully collateralized by direct obligations of the United States Government, provided that any such repurchase agreement shall provide for the taking of delivery of such collateral directly or through an authorized custodian; 10. Securities of, or other interest in, any open-end type investment company or investment trust registered under the Investment Company Act of 1940, and which is defined as a "money market fund" under 17 CFR § 270.2a-7, provided that the portfolio of such investment company or investment trust is limited principally to United States Government obligations and to repurchase agreements fully collateralized by United States Government obligations, and, provided further that any such investment company or investment trust shall take delivery of such collateral either directly or through an authorized custodian. 11. Local Government Trusts. C. The City may invest no more than twenty percent (20%) of the pooled investments in the following investment types and in accord with certain limitations described in Section VII Investing Parameters: 1. Corporate debt obligations (including commercial paper) of any corporation, with the following credit ratings: investment of City funds in Corporate Bonds will be limited to those rated as Single A minus or better by both Moody's Investor Service and Standard and Poor's; investment of City funds in Commercial Paper will be rated A -1/P-1, 2. Securities of, or other interests in, an open-end or closed-end management type investment company or investment trust registered under the Investment Company Act of 1940, provided that the portfolio of such investment company • or investment trust is limited to United States Government obligations and to repurchase agreements collateralized by the same type of collateral used to collateralize other City deposits, and provided further that any such investment company or investment trust shall take the delivery of such collateral either directly or through an authorized custodian; D. Other Provisions 1. The Administrative Services Director may establish an account with the Federal Reserve Bank to purchase U.S. Government Securities directly from the U.S. Treasury. Any Arkansas state legislative action that provides for additional investment vehicles or further restricts investment vehicles will be incorporated into the City's investment policy and will supersede any previous language. The City will be allowed to hold to maturity any investments existing at the time of enactment of this policy. Reinvestment of such funds will be in accordance with this policy. 4. The Mayor and the Administrative Services Director may set additional limitations on the parameters for various types and concentration of investments. Operating procedures will define requirements to implement this policy. VL Investments Not Authorized: The following investment vehicles, authorized by Act 1341 of 1999, are not considered suitable investments for City of Fayetteville funds: A. Warrants of political subdivisions of the State of Arkansas and municipalities thereof having maturities not exceeding one (1) year. The sale of federal funds with a maturity of not more than one (1) business day. Industrial development bonds for corporate obligors issued through any state of the United States or any political subdivision thereof. D. Revenue bond issues of any state of the United States or any municipality or any political subdivision thereof. Securities or other interests issued, assumed or guaranteed by the International Bank for Reconstruction and Development, the Inter -American Development Bank, the European Bank for Reconstruction and Development, the Asian Development Bank, or the African Development Bank. 4 Uninsured demand, savings, or time deposits or accounts of any depository institution chartered by the United States, any state of the United States, or the District of Columbia. VII. Investing Parameters: A. Diversification The City Investments regulated by this policy shall be diversified by: • limiting investments to avoid over concentration in securities from a specific issuer to five percent (5%) of the cost basis of the city's portfolio at the time of purchase, a limit of fifteen percent (15%) of the cost basis of the City's portfolio will apply to each business sector as defined by any recognized rating agency (excluding U.S. Treasury securities and collaterialized certificates of deposit), • investing in securities with varying maturities, and • continuously investing a portion of the portfolio in readily available funds to ensure that appropriate liquidity is maintained. Maximum Maturities The City will attempt to match investment maturities with cash flow requirements and will utilize investments in readily available funds, when needed, to meet ongoing obligations. The City anticipates a range of maturities of ninety (90) days to five (5) years. The City will invest in securities maturing more than five (5) years from the date of purchase only when the funds are easily defined to be used after five (5) years. VIII Allowed Institutions: Security transactions on behalf of the City by an asset manager, or the City itself, will be conducted only with financial institutions and broker/dealers who have offices within Washington County unless otherwise authorized in writing by the Mayor and Director of Administrative Services. A list of authorized financial institutions and broker/dealers to be used by an asset manager, an investment advisor, or the City itself, will be maintained by the City and provided to such asset manager or investment advisor on a mutually agreed upon basis. Security broker/dealers on the list will meet or exceed the capital adequacy standards set by the Federal Reserve Bank of New York and may include dealers designated as primary dealers by the Federal Reserve Bank of New York or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15C3 -I (Uniform Net Capital Rule). 5 IX. Safekeeping/Collateralization: A. Investment of City funds, including cash held for investment, managed under contract of services by an asset manager, investment advisor, or other expert advisor(s) will be placed with a third party custodian approved by the City. All trades, where applicable, will be executed by Delivery vs. Payment (DVP) to ensure that securities are deposited in an eligible financial institution prior to the release of funds. B. The custodian will make reports as requested by the City or advisor(s) and will be accountable for the assets held by the custodian for the City's account. The custodian will be required to maintain an office in Washington County, Arkansas. C. Collateralization will be maintained as required by State law and procedures established by the City. Demand deposits, time deposits, repurchase agreements, and any other investments requiring collateralization shall be collateralized at a level of 102 percent of the market value of principal and accrued interest, less the amount insured by the FDIC. • Dc AGENDA REQUEST CONTRACT REVIEW GRANT REVIEW STAFF REVIEW FORM RECEIVED DEC 2 1 1999 CITY OFFAYETTEVILLE ' l4�ry FOR THE FAYETTEVILLE CITY COUNtIT�EHWOOFFICE ,i1 i1 FROM: JOHN MAGUIRE NAME DIVISION ADMINISTRATIVE SERVICES DEPARTMENT ACTION REQUIRED: REVIEW ATTACHED INVESTMENT POLICY et, $o.00 COST OF THIS REQUEST ACCOUNT NUMBER PROJECT NUMBER CATEGORY/PROJECT BUDGET FUNDS USED To DATE CATEGORY/PROJECT NAME PROGRAM NAME REMAINING BALANCE FUND BUD ET IEW: B DGET COORDINATOR BUDGETED ITEM BUDGET ADJUSTMENT ATTACHED ADMINISTRATIVE SERVICES DIRECTOR CONTRACT/GRANT/LEASE REVIEW: GRANTING AGENCY: ACCOUN G MANAGE ite /-2-/3 4/ DATE /2 -/G -y' CITY ATTORNEY DATE 1:1 IT PURCHASING OFFICER la -ab R9 DATE ADA COORDINATOR DATE /2-1//42 DATE STAFF RECOMMENDATION: DIVISION HEAD DATE DATE CROSS REFERENCE NEW ITEM. YES No PREV ORD/RES #: ORIG CONTRACT DATE: STAFF REVIEW FORM DESCRIPTION MEETING DATE COMMENTS: BUDGET COORDINATOR REFERENCE COMMENTS: ACCOUNTING MANAGER REFERENCE COMMENTS: PAGE 2 CITY ATTORNEY REFERENCE COMMENTS: PURCHASING OFFICER REFERENCE COMMENTS: ADA COORDINATOR REFERENCE COMMENTS: INTERNAL AUDITOR REFERENCE COMMENTS: CITY OF FAYETTEVILLE, ARKANSAS INVESTMENT POLICY 1. Purpose: The purpose of this policy is to provide guidelines for investment of City of Fayetteville operating funds to preserve the safety of principal, to maintain adequate cash flow, and to maximize interest earnings. II. Scone: This policy applies to the investment of City of Fayetteville operating funds not needed for immediate expenditures. This policy does not govern the investment of employee retirement or pension funds or proceeds of bond issues. III. ,Standards/Objectives: Investments will be made within the constraints of applicable State laws and this policy, taking into consideration liquidity needs of the City. Investment decisions will 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. Investment of the funds of the City of Fayetteville shall be directed to the primary objective of safety of principal; the secondary objective shall be maintaining adequate cash flow; and the final objective shall be maximizing investment yield. Except for cash in certain restricted and special funds, the City may consolidate moneys from individual funds to maximize interest earnings. Investment income will be allocated to the various funds based on each fund's participation. IV. Delegation of Authority/Responsibility: Management of the investment of City funds regulated by this policy shall be the responsibility of the Mayor and the Administrative Services Director. The Mayor and the Administrative Services Director may delegate authority for investment transactions. The Mayor and the Administrative Services Director may, by proper procurement procedures, contract for the services of an asset manager, an investment advisor, or other expert advisor(s) to invest all or a portion of City funds regulated by this policy. Selection of an independent asset manager or investment advisor will be limited to those candidates who have an office within the City of Fayetteville. 1 • The Mayor and the Administrative Services Director and their designees are authorized to: open and close accounts with financial institutions in the name of the City; make wire transfers of funds for the City; make deposits of funds for the City; execute collateral, depository and investment agreements for the City; and take any other such actions needed to carry out their responsibilities for the depositing and investing of the City's funds as authorized by State Statues and this policy. The Mayor, the Administrative Services Director, and other City employees assigned to manage the investment portfolio, acting within the intent and scope of this Investment Policy, shall be relieved of personal responsibility for an individual security's credit risk or market risk. 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. The Mayor and the Administrative Services Director shall establish operating procedures to implement this investment policy. V. Authorized Investments: A. The City will invest only in book entry securities. B. The City may, without limitation, invest in the following instruments, provided, however, that at no time shall assets of the City be invested in any instrument or security not authorized for investment by Arkansas Code Annotated §§ 14-58-309 (Act 1341 of 1999), and further defined in Section 23-47-401 (Investment Powers and Limitations), copy attached or by the Local Government Joint Investment Trust Act, Arkansas Code Annotated §§ 19-8-301 et seq., (Local Government Trusts) as they may from time to time be amended: 1. Direct obligations of the United States Government; Obligations of agencies and instrumentalities created by act of the United States Congress and authorized thereby to issue securities or evidences of indebtedness, regardless of guarantee of repayment by the United States Government; 3. Obligations the principal and interest of which are fully guaranteed by the United States Government or an agency or an instrumentality created by an act of the United States Congress and authorized thereby to issue such guarantee. Obligations the principal and interest of which are fully secured, insured, or covered by commitments or agreements to purchase by the United States Government or an agency or instrumentality created by an act of the United States Congress and authorized thereby to issue such commitments or agreements. General obligations of the states of the United States and of the political 2 1 subdivisions, municipalities, commonwealths, territories or insular possessions thereof (general obligation bonds); Obligations issued by the Arkansas State Board of Education under authority of the State Constitution or applicable statues; 7. Prerefunded municipal bonds, the principal and interest of which are fully secured by the principal and interest of a direct obligation of the United States Government; Certificates of deposit with banks authorized by State law to receive deposits of public funds, that have branches or main offices within the Fayetteville City limits, with which the City has both a depository agreement and a collateral agreement. Repurchase agreements that are fully collateralized by direct obligations of the United States Government, provided that any such repurchase agreement shall provide for the taking of delivery of such collateral directly or through an authorized custodian; 10. Securities of, or other interest in, any open-end type investment company or investment trust registered under the Investment Company Act of 1940, and which is defined as a "money market fiind" under 17 CFR § 270.2a-7, provided that the portfolio of such investment company or investment trust is limited principally to United States Government obligations and to repurchase agreements fully collateralized by United States Government obligations, and, provided further that any such investment company or investment trust shall take delivery of such collateral either directly or through an authorized custodian. 11. Local Government Trusts. The City may invest no more than twenty percent (20%) of the pooled investments in the following investment types and in accord with certain limitations described in Section VII Investing Parameters: 1. Corporate debt obligations (including commercial paper) of any corporation, with the following credit ratings: investment of City funds in Corporate Bonds will be limited to those rated as Single A minus or better by both Moody's Investor Service and Standard and Poor's; investment of City funds in Commercial Paper will be rated A -1/P-1, 2. Securities of, or other interests in, an open-end or closed-end management type investment company or investment trust registered under the Investment Company Act of 1940, provided that the portfolio of such investment company 3 CITY OF FAYETTEVILLE, ARKANSAS INVESTMENT POLICY 1. Purpose: The purpose of this policy is to provide guidelines for investment of City of Fayetteville operating funds to preserve the safety of principal, to maintain adequate cash flow, and to maximize interest earnings. 11. Scope: This policy applies to the investment of City of Fayetteville operating funds not needed for immediate expenditures. This policy does not govern the investment of employee retirement or pension funds or proceeds of bond issues. III. Standards/Objectives: Investments will be made within the constraints of applicable State laws and this policy, taking into consideration liquidity needs of the City. Investment decisions will 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. Investment of the funds of the City of Fayetteville shall be directed to the primary objective of safety of principal; the secondary objective shall be maintaining adequate cash flow; and the final objective shall be maximizing investment yield. Except for cash in certain restricted and special funds, the City may consolidate moneys from individual funds to maximize interest earnings. Investment income will be allocated to the various funds based on each fund's participation. IV. Delegation of Authority/Responsibility: Management of the investment of City funds regulated by this policy shall be the responsibility of the Mayor and the Administrative Services Director. The Mayor and the Administrative Services Director may delegate authority for investment transactions. The Mayor and the Administrative Services Director may, by proper procurement procedures, contract for the services of an asset manager, an investment advisor, or other expert advisor(s) to invest all or a portion of City funds regulated by this policy. Selection of an independent asset manager or investment advisor will be limited to those candidates who have an office within the City of Fayetteville. 1 • The Mayor and the Administrative Services Director and their designees are authorized to: open and close accounts with financial institutions in the name of the City; make wire transfers of funds for the City, make deposits of funds for the City; execute collateral, depository and investment agreements for the City; and take any other such actions needed to carry out their responsibilities for the depositing and investing of the City's funds as authorized by State Statues and this policy. The Mayor, the Administrative Services Director, and other City employees assigned to manage the investment portfolio, acting within the intent and scope of this Investment Policy, shall be relieved of personal responsibility for an individual security's credit risk or market risk 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. The Mayor and the Administrative Services Director shall establish operating procedures to implement this investment policy. V. Authorized Investments: A. The City will invest only in book entry securities. The City may, without limitation, invest in the following instruments, provided, however, that at no time shall assets of the City be invested in any instrument or security not authorized for investment by Arkansas Code Annotated §§ 14-58-309 (Act 1341 of 1999), and further defined in Section 23-47-401 (Investment Powers and Limitations), copy attached or by the Local Government Joint Investment Trust Act, Arkansas Code Annotated §§ 19-8-301 et seq., (Local Government Trusts) as they may from time to time be amended: 1. Direct obligations of the United States Government; 2. Obligations of agencies and instrumentalities created by act of the United States Congress and authorized thereby to issue securities or evidences of indebtedness, regardless of guarantee of repayment by the United States Government; Obligations the principal and interest of which are fully guaranteed by the United States Government or an agency or an instrumentality created by an act of the United States Congress and authorized thereby to issue such guarantee. 4. Obligations the principal and interest of which are fully secured, insured, or covered by commitments or agreements to purchase by the United States Government or an agency or instrumentality created by an act of the United States Congress and authorized thereby to issue such commitments or agreements. General obligations of the states of the United States and of the political • subdivisions, municipalities, commonwealths, territories or insular possessions thereof (general obligation bonds); Obligations issued by the Arkansas State Board of Education under authority of the State Constitution or applicable statues; Prerefunded municipal bonds, the principal and interest of which are fully secured by the principal and interest of a direct obligation of the United States Government; Certificates of deposit with banks authorized by State law to receive deposits of public funds, that have branches or main offices within the Fayetteville City limits, with which the City has both a depository agreement and a collateral agreement. Repurchase agreements that are fully collateralized by direct obligations of the United States Government, provided that any such repurchase agreement shall provide for the taking of delivery of such collateral directly or through an authorized custodian; 10. Securities of, or other interest in, any open-end type investment company or investment trust registered under the Investment Company Act of 1940, and which is defined as a "money market fund" under 17 CFR § 270.2a-7, provided that the portfolio of such investment company or investment trust is limited principally to United States Government obligations and to repurchase agreements fully collateralized by United States Government obligations, and, provided further that any such investment company or investment trust shall take delivery of such collateral either directly or through an authorized custodian. 11. Local Government Trusts. The City may invest no more than twenty percent (20%) of the pooled investments in the following investment types and in accord with certain limitations described in Section VII Investing Parameters: 1. Corporate debt obligations (including commercial paper) of any corporation, with the following credit ratings: investment of City funds in Corporate Bonds will be limited to those rated as Single A minus or better by both Moody's Investor Service and Standard and Poor's; investment of City funds in Commercial Paper will be rated A -1/P-1, Securities of, or other interests in, an open-end or closed-end management type investment company or investment trust registered under the Investment Company Act of 1940, provided that the portfolio of such investment company • • • • or investment trust is limited to United States Government obligations and to repurchase agreements collateralized by the same type of collateral used to collateralize other City deposits, and provided further that any such investment company or investment trust shall take the delivery of such collateral either directly or through an authorized custodian; D. Other Provisions 1. The Administrative Services Director may establish an account with the Federal Reserve Bank to purchase U.S. Government Securities directly from the U.S. Treasury. Any Arkansas state legislative action that provides for additional investment vehicles or further restricts investment vehicles will be incorporated into the City's investment policy and will supersede any previous language. The City will be allowed to hold to maturity any investments existing at the time of enactment of this policy. Reinvestment of such funds will be in accordance with this policy. The Mayor and the Administrative Services Director may set additional limitations on the parameters for various types and concentration of investments. Operating procedures will define requirements to implement this policy. VI. Investments Not Authorized: The following investment vehicles, authorized by Act 1341 of 1999, are not considered suitable investments for City of Fayetteville funds: A. Warrants of political subdivisions of the State of Arkansas and municipalities thereof having maturities not exceeding one (1) year. B. The sale of federal funds with a maturity of not more than one (1) business day. Industrial development bonds for corporate obligors issued through any state of the United States or any political subdivision thereof. D. Revenue bond issues of any state of the United States or any municipality or any political subdivision thereof. Securities or other interests issued, assumed or guaranteed by the International Bank for Reconstruction and Development, the Inter -American Development Bank, the European Bank for Reconstruction and Development, the Asian Development Bank, or the African Development Bank. • F. Uninsured demand, savings, or time deposits or accounts of any depository institution chartered by the United States, any state of the United States, or the District of Columbia. VII. Investing Parameters: A. Diversification The City investments regulated by this policy shall be diversified by: • limiting investments to avoid over concentration in securities from a specific issuer to five percent (5%) of the cost basis of the city's portfolio at the time of purchase, a limit for fifteen percent (15%) of the cost basis of the City's portfolio will apply to each business sector as defined by any recognized rating agency (excluding U.S. Treasury securities), and collaterialized certificates of deposit, • investing in securities with varying maturities, and • continuously investing a portion of the portfolio in readily available funds to ensure that appropriate liquidity is maintained. Maximum Maturities The City will attempt to match investment maturities with cash flow requirements and will utilize investments in readily available funds, when needed, to meet ongoing obligations. The City anticipates a range of maturities of ninety (90) days to five (5) years The City will invest in securities maturing more than five (5) years from the date of purchase only when the funds are easily defined to be used after five (5) years. VIII. Allowed Institutions: Security transactions on behalf of the City by an asset manager, or the City itself, will be conducted only with financial institutions and broker/dealers who have offices within Washington County unless otherwise authorized in writing by the Mayor and Director of Administrative Services. A list of authorized financial institutions and broker/dealers to be used by an asset manager, an investment advisor, or the City itself, will be maintained by the City and provided to such asset manager, or investment advisor on a mutually agreed upon basis. Security broker/dealers on the list will meet or exceed the capital adequacy standards set by the Federal Reserve Bank of New York and may include dealers designated as primary dealers by the Federal Reserve Bank of New York or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15C3-1 (Uniform Net Capital Rule). • IX. Safekeeping/Collateralization: A. Investment of City funds, including cash held for investment, managed under contract of services by an asset manager, investment advisor, or other expert advisor(s) will be placed with a third party custodian approved by the City. All trades, where applicable, will be executed by Delivery vs. Payment (DVP) to ensure that securities are deposited in an eligible financial institution prior to the release of funds. B. The custodian will make reports as requested by the City or advisor(s) and will be accountable for the assets held by the custodian for the City's account. The custodian will be required to maintain an office in Washington County, Arkansas. C. Collateralization will be maintained as required by State law and procedures established by the City. Demand deposits, time deposits, repurchase agreements, and any other investments requiring collateralization shall be collateralized at a level of 102 percent of the market value of principal and accrued interest, less the amount insured by the FDIC. Arkansas Code 14-58-309. Legislative findings. (a) The State of Arkansas has investment policies which allow the Treasurer of State and others to prudently invest cash funds in low risk investments which outperform those investments currently permitted by law for municipalities. Larger municipalities and groups of municipalities having in excess of one billion dollars ($1,000,000,000) in real property valuation have the ability to hire employees with expertise to direct investments pursuant to state investment policy, which is the same authority as investments authorized by state banks. If similar authority were given to larger municipalities or groups of municipalities having in excess of one billion dollars ($1,000,000,000) in real property valuation, it would assist them to balance their budgets without a tax increase. It is hereby found and determined that larger municipalities or groups of municipalities having in excess of one billion dollars ($1,000,000,000) in real property valuation should be given authority to invest pursuant to state laws governing permissible investments by the State of Arkansas, which would allow them to improve their rate of return over the return on investments currently authorized and would assist them in balancing their budgets without a tax increase. (b)(1) Cities of the first class which have real property valuation in excess of four hundred million dollars ($400,000,000) or groups of municipalities having in excess of one billion dollars ($1,000,000,000) in real property valuation may invest cash funds in securities as outlined in § 23-47-401 pursuant to an investment policy adopted by its governing body. (2)(A) Investments shall be made with the judgment and care under prevailing circumstances that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation but for investment, considering the probable safety of the capital and the probable income to be derived. (B) Investment of funds shall be governed by the following investment objectives, in order of priority: (i) Preservation and safety of the principal; (ii) Liquidity; and (iii) Yield. (3) In determining whether an investment officer has exercised prudence with respect to an investment decision, the determination shall be made taking into consideration: (A) The investment of all city funds or funds under the officer's control over which the officer had responsibility, rather than a consideration as to the prudence of a single investment; and (B) Whether the investment decision was consistent with the city's or group's written investment policy. History. Acts 1999, No. 1341, §§ 1, 2. Date Printed: December 10, 1999 11:52:35 AM Coovriaht 1999. Law Office Information Systems. Inc. All Riahts Reserved. • -raUG,20 '99 13:48 FROM TO 85015758273 PAGE .00'6i007- 23-47-401. Investment powers and limitations. (a) A state bank may invest its funds without limitation in the following: (1) Direct obligations of the United States Government; (2) Obligations of agencies and instrumentalities created by act of the United States Congress and authorized thereby to issue securities or evidences of indebtedness, regardless of guarantee of repayment by the Umted States Government; (3) Obligations the principal and interest of which are fully guaranteed by the United States Government or an agency or an instrumentality created by an act of the United States Congress and authorized thereby to issue such guarantee; (4) Obligations the principal and interest of which are fully secured, insured, or covered by commitments or agreements to purchase by the United States Government or an agency or instrumentality created by an act of the United States Congress and authorized thereby to issue such commitments or agreements; (5) General obligations of the states of the United States and of the political subdivisions, municipalities, commonwealths, territories or insular possessions thereof; (6) Obligations issued by the State Board of Education under authority of the State Constitution or applicable statutes; (7) Warrants of political subdivisions of the state of Arkansas and municipalities thereof having maturities not exceeding one (1) year; (8) Prerefunded municipal bonds, the principal and interest of which are fully secured by the principal and interest of a direct obligation of the United States Government; (9) The sale of federal funds with a maturity of not more than one (1) business day; _ (10) Demand, savings, or time deposits or accounts of any depository institution chartered by the United States, any state of the United States, or the District of Columbia, provided funds invested in such demand, savings, or time deposits or accounts are fully insured by a federal deposit insurance agency; (11) Repurchase agreements that are fully collateralized by direct obligations of the United States Govetnment, and general obligations of any state of the United States or any political subdivision thereof, provided that any such repurchase agreement shall provide for the taking of delivery of such collateral, either directly or through an authorized custodian; (12) Securities of, or other interest in, any open-end type investment company or investment trust registered under the Investment Company Act of 1940, and which is defined as a "money market fund" under 17 CFR § 270.2a-7, provided that the portfolio of such investment company or investment trust is limited principally to United States Government obligations and to repurchase agreements fully collateralized by United States Government obligations, and