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HomeMy WebLinkAboutBack-Up from Law DeptCity of Miami Legislation Resolution: R-07-0504 City Hall 3500 Pan American Drive Miami, FL 33133 www.miamigov.com File Number: 07-01082 Final Action Date: 9/11/2007 A RESOLUTION OF THE MIAMI CITY COMMISSION AMENDING THE CITY OF MIAMI'S INVESTMENT POLICY TO AUTHORIZE INVESTMENT OF SURPLUS FUNDS IN RATED OR UNRATED BONDS, NOTES, OR INSTRUMENTS BACKED BY THE FULL FAITH AND CREDIT OF THE GOVERNMENT OF ISRAEL, AND TO PROHIBIT INVESTMENTS IN ANY COMPANIES WITH BUSINESS OPERATIONS IN SUDAN, IRAN, NORTH KOREAAND CUBA, PROVIDED THAT SUCH REVISIONS SATISFIES SPECIFIED FIDUCIARY STANDARDS. WHEREAS, the Florida State Legislature has authorized counties and cities in Florida to invest in Israeli bonds, regardless of the bond rating; and WHEREAS, as a result of this Resolution, if acted upon, the invested money will provide the Jewish nation funding to invest in economic expansion and build up infrastructure; and WHEREAS, the City Commission finds that it is unconscionable for the City of Miami ("City") to invest public funds in companies that have business operations in or with foreign countries that sponsor terrorism and commit egregious human rights violations; and WHEREAS, as a result of this Resolution, if acted upon, none of the City's surplus dollars will support either the genocide in Sudan, or Iran's development of nuclear weapons, or North Korea and Cuba's repression of human rights; NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: Section 1. The recitals and findings contained in the Preamble to this Resolution are adopted by reference and incorporated as if fully set forth in this Section. Section 2. The City's Investment Policy established and adopted May 10, 2001 pursuant to Resolution No. 01-448, is amended to authorize investment of surplus funds in rated or unrated bonds, notes or instruments backed by the full faith and credit of the government of Israel, and to prohibit investments in any companies with business operations in Sudan, Iran, North Korea and Cuba, provided that such revisions satisfies specified fiduciary standards. Section 3. This Resolution shall become effective immediately upon its adoption and signature of the Mayor.{1} City of Miami Page 1 of 2 File Id: 07-01082 (Version: 2) Printed On: 8/13/2014 File Number:' 07-01082 Enactment Number: R-07-0504 Footnotes: {1} If the Mayor does not sign this Resolution, it shall become effective at the end of ten calendar days from the date it was passed and adopted. If the Mayor vetoes this Resolution, it shall become effective immediately upon override of the veto by the City Commission . City of Miami Page 2 of 2 File Id: 07-01082 (Version: 2) Printed On: 8/13/2014 City of Miami City Hall 3500 Pan American Drive Miami, FL 33133 www.miamigov.com Meeting Minutes Tuesday, September 11, 2007 9:00 AM REGULAR City Hall Commission Chambers City Commission Manuel A. Diaz, Mayor Angel Gonzalez, Chairman Joe Sanchez, Vice Chairman Marc David Samoff, Commissioner District Two Tomas Regalado, Commissioner District Four Michelle Spence -Jones, Commissioner District Five Pedro G. Hernandez, City Manager Jorge L. Fernandez, City Attorney Priscilla A. Thompson, City Clerk City Commission Meeting Minutes September 11, 2007 D2.1 07-01082 RESOLUTION A RESOLUTION OF THE MIAMI CITY COMMISSION AMENDING THE CITY OF MIAMI'S INVESTMENT POLICY TO AUTHORIZE INVESTMENT OF SURPLUS FUNDS IN RATED OR UNRATED BONDS, NOTES, OR INSTRUMENTS BACKED BY THE FULL FAITH AND CREDIT OF THE GOVERNMENT OF ISRAEL, AND TO PROHIBIT INVESTMENTS IN ANY COMPANIES WITH BUSINESS OPERATIONS IN SUDAN, IRAN, NORTH KOREAAND CUBA, PROVIDED THAT SUCH REVISIONS SATISFIES SPECIFIED FIDUCIARY STANDARDS. Motion by Commissioner Sarnoff, seconded by Vice -Chairman Sanchez, that this matter be ADOPTED WITH MODIFICATIONS PASSED by the following vote. Votes: Ayes: 5 - Commissioner(s) Gonzalez, Sarnoff, Sanchez, Regalado and Spence -Jones R-07-0504 Chairman Gonzalez: D2.1. Commissioner Sarnoff, it's your item. Commissioner Sarnoff Yes. What -- the purpose of this resolution or discussion, since we won't vote from our blue pages, is merely to have a conversation asking that the City of Miami Commission amend the City of Miami's investment policy to authorize investment of surplus funds in rated or unrated bonds, notes, or instruments backed by the full faith and credit of the government of Israel, and the reason I bring up Israel is this is the exact language, the exact motion that was brought up -- or the exact legislation that was passed by Tallahassee very recently in this past November. I also would prohibit investments in any companies that do business and operate -- with operations in Sudan, Iran, I would include Cuba and North Korea as a friendly amendment, provided that such revision satisfied specified fiduciary standards. Now, in the interest of full disclosure to this Commission, I just received, as in the minute of five minutes ago, a letter from Berkowitz Dick Pollack & Brant, and I'll read it to the Commission so that we're all apprised of it. It says, Dear Commissioner Sarnoff, on September 6, 2007, at the regular meeting of the City of Miami Finance Committee, the Committee was asked to approve a proposed resolution of the City of Miami Commission amending the City of Miami's investment policy (see the proposed resolution attached). The Committee appreciates the desire of the Commissioner to authorize the investment of surplus funds in rated or unrated bonds, notes, or instruments backed by the full faith and credit of the government of Israel. The Committee wishes to bring to the attention of the Commissioner that current investment policy of the City of Miami does not allow investments in foreign debt instruments. The Committee unanimously recommend -- excuse me, recommends amending the resolution to allow the City of Miami to invest in foreign debt rated AA or better by Moody [sic] Standard and Poor's. The Committee recommends the following amendment to Section 2 of the proposed resolution,'and here's their amendment. The City's investment policy, established and adopted May 10, 2001, pursuant to Resolution 01-448, is amended to authorize investment of surplus funds in foreign bonds rated AA or better by Moody's and Standard and Poor's. The Committee understands that the Commissioner wishes to give preference to bonds issued by the State of Israel. The Committee has no position with respect to this issue. The Committee has considered the language of the proposed resolution's granting clauses, which includes statements that are political and social in nature. The City of Miami's investment policy has no such statements. The Committee believes that the City of Miami's investment policy should not contain political or social statements, and therefore, the Committee is unanimously opposed to including the language in the proposed resolution. "I don't see any of the other Commissioners being CC'd (Carbon Copied) on this. I just got this, truthfully, five minutes ago. I understand that we don't vote from our blue pages, so I just wanted to bring it up for discussion. I want to bring clearly to this Board that this is City of Miami Page 2 Printed on 8/13/2014 City Commission Meeting Minutes September 11, 2007 exactly what the State of Florida did. I think -- Chairman Gonzalez: And I agree with you. Commissioner Sarnoff: Yeah, and I think we can add in there that we should not do business with Sudan, Iran, and I want to carefully interlineate Cuba and North Korea -- Chairman Gonzalez: Korea. Commissioner Sarnoff: -- and I can't think of a better time than September 11 -- Chairman Gonzalez: To do that. Commissioner Sarnoff -- to state as a policy the wishes and desires of this Board regarding investment by our, you know, agencies that are backing our pension boards, so we're talking about the surplus funds, and I will tell you two things that probably very few people know. There are only two countries in this world that have never defaulted on a negotiable instrument; one is the United States of America, the second is Israel, and they pay two points higher than the United States of America. They have never defaulted. Whatever their rating, they have never defaulted, and I can tell you this; that the State of New York, the State of California, the State of Utah, all invest in those bonds. Chairman Gonzalez: All right. Commissioner Regalado: If I may, Mr. Chairman. Chairman Gonzalez: Yes, sir. Commissioner Regalado: Just for clarification, when I saw the first draft, I said, well, we need to go to the State Department list of nation that sponsor terrorism, so these countries were not picked at random. The State Department has a list of country that sponsor international terrorism, and these are Sudan, Iran, Cuba, and North Korea. Syria was taken off the list some time ago, so I don't see anything wrong in having social or political language on the resolution because, after all, the Congress of the United States is always passing resolutions -- even -- remember when the embargo was declare against the Apartheid regime in South Africa. It had a very fiery language of the US (United States) Congress calling on the world to boycott South African (UNINTELLIGIBLE) government, so 1 don't understand that letter, nor I do support it because 1 think that cities and states and countries have responsibility to make a political statement, and the reason that we do not want to do business with Iran or Sudan or Cuba and North Korea is -- needs to be explained, and this is why the resolution explain it, so it's nothing wrong to being politically vocal, socially vocal, so I am -- I really do not agree with the letter, so I don't have any problem in making the reconvnendation. Chairman Gonzalez: All right. Charlie. Charlie Cox: Yes. Charlie Cox, 4011 West Flagler Street, Miami, Florida. I can let you all know that we do already invest in Israel bonds on the pension board, and as far as the other issue on this, I will make sure -- and I'm sure Rosalie Marks [sic] from the City Manager's Office that's appointed to our pension board -- that this gets on our next pension board meeting. We have one Friday, so it's too late to put it on that, but we will definitely put it on the next one, and I know already we don't invest in North Korea, but we do buy Israel bonds already. Chairman Gonzalez: Thank you, Charlie. Commissioner Sarnoff: Thanks, Charlie. City of Miami Page 3 Printed on 8/13/2014 City Commission Meeting Minutes September 11, 2007 Mr. Cox: Thank you. Tom Gabriel: Tom Gabriel, chair of the FIPO (Firefighter and Police Officers) Trust. We've also are allowed to invest at this point, under the State of Florida, to invest in Israeli bonds. I did check when I saw this thing here. Currently, we do not have any, but once this passes, well certainly let our investment managers know that the Commission has voiced an opinion on it. On the second part of it is more of an issue, and we've been exploring it already on the FIPO Board. We've had one of the members of the board that you've just reappointed had brought it to our attention; had brought up the fact that the State of Florida, who often gives us rules that we're not happy with, did do that and has given sort of the OK to allow that to happen on the state level. YVe have already started researching it. The biggest issue is how the heck do you find who has companies or business in Iraq or Iran, North Korea, et cetera. There are services out there. We've put out feelers to see what it would cost, and probably, the final statement is we -- although we have no -- and speaking as the chair, not having had a board meeting since then -- we have no problem with the direction, and it does talk about the fiduciary responsibility. The first thing we have to do is make sure that it doesn't cost the taxpayers and the fiduciary responsibility, but from what I've read in a lot of cases, it actually is good money management to stay away from countries that do terror, so I can commit to you -- it's been on our agenda. We're going to a conference shortly to discuss it more fully and hear speakers from all over the country talk about it, and we'll be having that back on our agenda the next meeting, so -- Chairman Gonzalez: Thank you. Mr. Gabriel: -- thank you. Chairman Gonzalez: Thank you. All right. Is there a motion? Commissioner Sarnoff It -- yeah. I'd like to make a motion. Chairman Gonzalez: Instructing the City Attorney or the Administration to come up with the -- Commissioner Sarnoff I know you have a rule that you don't like to have notions coming off of blue pages. Chairman Gonzalez: Right. Commissioner Sarnoff If you'd like give me the latitude of making a motion, I would certainly -- Chairman Gonzalez.: Go ahead. Commissioner Sarnoff -- appreciate it. I'd like to make a motion to approve resolution D2. 1 and D2.2. I'll do it both. I think we've discussed amply both reasons. Vice Chairman Sanchez: As amended -- Chairman Gonzalez: All right. We have a motion -- Vice Chairman Sanchez: -- to include Cuba and Korea. Chairman Gonzalez: -- and we have a second. Commissioner Sarnoff.• Oh, yeah. I'm sorry, as amended Vice Chairman Sanchez: Second. City of Miami Page 4 Printed on 8/13/2014 City Commission Meeting Minutes September 11, 2007 Chairman Gonzalez: We have a motion, and we have a second, as amended. All in favor, say aye The Commission (Collectively): Aye. Chairman Gonzalez: Motion carries. Priscilla A. Thompson (City Clerk): We need to do the vote separately, please. Chairman Gonzalez: All right. That was on D2.1. City of Miami Page 5 Printed on 8/13/2014 Please direct mail to Miami office: 200 South Biscayne Boulevard Sixth Floor Miami, Florida 33131.5310 Telephone: 305.379.7000 Toll Free: 800-999-1CPA (1272) Fax 305-379-8200 BERKOWITZ DICKPOLLACK&GRANT ..da".a, ar CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS, LLP Direct Dial: 305-960-1253 Email: berkowi.tz@bdpb.corn September 6, 2007 Honorable Marc D. Sarnoff, Commissioner City of Miami 3500 Pan American Drive Miami, Florida 33133 Dear Commissioner Sarnoff: 515 East Las O1as Boulevard Fifteenth Floor Fort Lauderdale, FL 33301-2281 Telephone: 954-712-7000 Toll Free: 800-999-1CPA (1272) Fax; 954-712-7070 wwwbdplawm SUBMITTED INTO THE PUBLIC RECORD FOR ITEM Da.i ON 9-ii4)9 . On September 6, 2007, at the regular meeting of the City of Miami Finance Committee, the Committee was asked to approve a proposed resolution of the Miami City Commission amending the City of Miami's Investment Policy. See the proposed resolution attached. The Committee appreciates the desire of the Commissioner to authorize the investment of surplus funds in rated or unrated bonds, notes or instruments backed by the full faith and credit of the government of Israel, The Committee wishes to bring to the attentionof the Commissioner that the current Investment Policy of the City of Miami does not allow investments in foreign debt instruments. The Committee unanimously recommends amending the resolution to allow the City of Miami to invest in foreign debt rated AA or better by Moody's and Standard and Poors. The Committee recommends the following amendment to Section 2 of the proposed resolution: Section 2. The City's Investment Policy established and adopted May 10, 2001 pursuant to Resolution No. 01-448, is amended to authorize investment of surplus funds in foreign bonds rated AA or better by Moody's and Standard and Poors. The Committee understands that the Commissioner wishes to give preference to bonds issued by the State of Israel. The Committee has no position with respect to this issue. Honorable Marc D. Samoff, Commissioner September 6, 2007 Page 2 The Committee has considered the language in the proposed resolutions' granting clauses which includes statements that are political and social in nature. The City of Miami's Investment Policy has no such statements. The Committee believes that the. City of Miami's Investment Policy should not contain political or social statements, and therefore the Committee unanimously is opposed to including that language in the proposed resolution. Very truly yours, Ritliard A. BerkrSwitz, J.D., C.P.A., Cl a ' On behalf of City of Miami Finance Committee cc: Eli Feinberg, Member, City of Miami Finance Committee Carol Gardner, Member, City of Miami Finance Committee Diana M. Gomez, Member, City of Miami Finance Committee Humberto Rodriguez, Member, City of Miami. Finance Committee Juan Martinez, Member, City of Miami Finance Committee Signed in Mr, Derkowitz's absence to prevent delay. SUBMITTED INTO THE PUBLIC RECORD FOR ITEM. ; ON q-,_ �-oa , City of Miami Legislation Resolution 3500 D2.1 Mie wwW.miamigov.cotn File Number: 07-01082 Final Action Qatct • A RESOLUTION OF THE MIAMI CITY COMMISSION AMENDING THE CITY OF MIAMI'S INVESTMENT POLICY TO AUTHORIZE INVESTMENT OF SURPLUS.. FUNDS IN RATED OR UNRATED BONDS, NOTES, OR'INSTRUMENTS BACKED BY THE FULL FAITH AND CREDIT OF THE GOVERNMENT OF ISRAEEL; AND TO . PROHIBIT INVESTMENTS IN ANY COMPANIES WITH BUSINESS OPERATIONS IN SUDAN OR IRAN PROVIDED THAT SUCH REVISIONSSATISFIES SPECiFtED FIDUCIARY STANDARDS. :WHEREAS; the Florida State Legislature has authorized Counties and cities in Florida to invest,in, ...Israeli bonds, regardless of the bond•.rating; and • • :WHEREAS, as a result of this Resolution, if acted upon, the invested money will provide the Jewish nation funding to invest in economic expansion and bulld'up,infrastructure; and WHEREAS, the City Cohimission finds that it is unconscionable for the City of Miami ("City") to .:'investpublic funds in companies that have business operations. in or with foreign countries that ::sponsor terrorism and commit egregious human rights violations; and WHEREAS, as a result of this Resolution, if acted upon, none of the City's surplus dollars will ..support either the'genocide in Sudan, or Iran's development of nuclear weapons; . NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, • FLORIDA: • Section 1. The recitals and findings contained in the Preamble to this Resolution are adopted by .reference and Incorporated as if fully set forth in this Section, ••Section 2. The City's Investment Policy established and adopted May 10; 2D01 pursuant to • Resolution No; 01-448, is amended to authorize investment of surplus funds in rated or unrated bonds; notes or instruments backed by the full faith and credit of the government of Israel, and to prohibit investments' in any companies with business operations in Sudan or Iran provided that such revisions satisfies specified fiduciary standards, Section 3. This Resolution shail.become effective immediately upon its adoption and signature of the Mayor.{1) Cite of Miami Mtge 1 of 2 iUBMITTED INTO TM UBLIC RECORD FCC ITEM 12 . 'ON" 3/I (I cn File Number: 07-01082 APPROVED AS TO FORM AND CORRECTN5,SS: JORG L` glk"NANDEZ CITY q TORNEY Footnotes: (1),If the Mayor does not sign this Resolution, it shali become effective at the end: af•ten`caiet0arday5 . from the date it was passed and s.dopted, ff.the Mayor vetoes. this Reso3ution; it. shalt becomet;;: effective immediately upon override of the veto py the:City; Commission:: SUBMITTED INTO THE PUBLIC RECORD FOR ITEM_, ON a-it City of Miami Page 2 of 2 Printed On:8/23/200.7 City of Miami Legislation Resolution: R-07-0505 City Hall 3500 Pan American Drive Miami, FL 33133 www.miamigov.com File Number: 07-01083 Final Action Date: 9/11/2007 A RESOLUTION OF THE MIAMI CITY COMMISSION URGING THE CITY OF MIAMI GENERAL EMPLOYEES' AND SANITATION EMPLOYEES' RETIREMENT TRUST AND THE CITY OF MIAMI FIREFIGHTERS' AND POLICE OFFICERS' RETIREMENT TRUST (COLLECTIVELY "PENSION BOARDS") TO INVEST IN BONDS BACKED BY THE GOVERNMENT OF ISRAELAND TO PROHIBIT INVESTMENTS IN ANY COMPANIES DOING BUSINESS WITH IRAN, SUDAN, NORTH KOREAAND CUBA, PROVIDED THAT SUCH REVISIONS SATISFIES SPECIFIED FIDUCIARY STANDARDS; DIRECTING THE CITY CLERK TO TRANSMITA COPY OF THIS RESOLUTION TO THE MEMBERS OF THE PENSION BOARDS. WHEREAS, the Florida State Legislature has authorized counties and cities in Florida to invest in Israeli bonds, regardless of the bond rating; and WHEREAS, as a result of this Resolution, if acted upon, the invested money will provide the Jewish nation funding to invest in economic expansion and build up infrastructure; and WHEREAS, the City Commission finds that it is unconscionable for the City of Miami ("City") to invest public funds in companies that have business operations in or with foreign countries that sponsor terrorism and commit egregious human rights violations; and WHEREAS, as a result of this Resolution, if acted upon, none of the City's surplus dollars will support either the genocide in Sudan, Iran's development of nuclear weapons, or North Korea and Cuba's repression of human rights; NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: Section 1. The recitals and findings contained in the Preamble to this Resolution are adopted by reference and incorporated as if fully set forth in this Section. Section 2. The City Commission urges the General Employees' and Sanitation Retirement Trust and the Firefighters' and Police Officers' Retirement Trust (collectively "Pension Boards") to invest in bonds backed by the government of Israel, and to prohibit investment in any companies doing business with Iran, Sudan, North Korea and Cuba, provided that such policy satisfies specified fiduciary standards. Section 3. The City Clerk is directed to transmit a copy of this Resolution to the members of the Pension Boards. Section 4. This Resolution shall become effective immediately upon its adoption and signature of City of Miami Page 1 of 2 File Id: 07-01083 (Version: 2) Printed On: 8/13/2014 File Number: 07-01083 Enactment Number: R-07-0505 the Mayor.{1} Footnotes: {1} If the Mayor does not sign this Resolution, it shall become effective at the end of ten calendar days from the date it was passed and adopted. If the Mayor vetoes this Resolution, it shall become effective immediately upon override of the veto by the City Commission . City of Miami Page 2 of 2 File Id: 07-01083 (Version: 2) Printed On: 8/13/2014 City of Miami City Hall 3500 Pan American Drive Miami, FL 33133 www.miamigov.com Meeting Minutes Tuesday, September 11, 2007 9:00 AM REGULAR City Hall Commission Chambers City Commission Manuel A. Diaz, Mayor Angel Gonzalez, Chairman Joe Sanchez, Vice Chairman Marc David Sarnoff, Commissioner District Two Tomas Regalado, Commissioner District Four Michelle Spence -Jones, Commissioner District Five Pedro G. Hernandez, City Manager Jorge L. Fernandez, City Attorney Priscilla A. Thompson, City Clerk City Commission Meeting Minutes September 11, 2007 D2.2 07-01083 RESOLUTION A RESOLUTION OF THE MIAMI CITY COMMISSION URGING THE CITY OF MIAMI GENERAL EMPLOYEES' AND SANITATION EMPLOYEES' RETIREMENT TRUST AND THE CITY OF MIAMI FIREFIGHTERS' AND POLICE OFFICERS' RETIREMENT TRUST (COLLECTIVELY "PENSION BOARDS") TO INVEST IN BONDS BACKED BY THE GOVERNMENT OF ISRAELAND TO PROHIBIT INVESTMENTS IN ANY COMPANIES DOING BUSINESS WITH IRAN, SUDAN, NORTH KOREAAND CUBA, PROVIDED THAT SUCH REVISIONS SATISFIES SPECIFIED FIDUCIARY STANDARDS; DIRECTING THE CITY CLERK TO TRANSMITA COPY OF THIS RESOLUTION TO THE MEMBERS OF THE PENSION BOARDS. Motion by Commissioner Sarnoff, seconded by Vice -Chairman Sanchez, that this matter be ADOPTED WITH MODIFICATIONS PASSED by the following vote. Votes: Ayes: 5 - Commissioner(s) Gonzalez, Sarnoff, Sanchez, Regalado and Spence -Jones R-07-0505 Chairman Gonzalez: D2.2. Commissioner Sarnoff So move. Chairman Gonzalez: We need a mo -- we have a -- Commissioner Sarnoff So move. Chairman Gonzalez: -- motion. We have a second. Commissioner Sarnoff So moved, as amended. Vice Chairman Sanchez: Second. Chairman Gonzalez: As amended. Jorge L. Fernandez (City Attorney): And to be -- Chairman Gonzalez: All -- Mr. Fernandez: -- clear, the amendment is only with reference to adding North Korea and Cuba. Chairman Gonzalez: And Cuba. Commissioner Sarnoff Correct. Chairman Gonzalez: All in favor, say dye." The Commission (Collectively): Aye. Priscilla A. Thompson (City Clerk): I'm sorry. I didn't record a second. Vice Chairman Sanchez: Second. City of Miami Page 2 Printed on 8/13/2014 City Commission Meeting Minutes September 11, 2007 Ms. Thompson: Thank you. Chairman Gonzalez Motion carries. Ms. Thompson: Thank you. City ofMiaini Page 3 Printed on 8/13/2014 City of Miami Legislation Resolution: R-05-0463 City Hall 3500 Pan American Drive Miami, FL 33133 www.miamigov.com File Number: 05-00698 Final Action Date: 7/28/2005 A RESOLUTION OF THE MIAMI CITY COMMISSION, WITH ATTACHMENT(S), ACCEPTING AND APPROVING THE AMENDED CITY OF MIAMI INVESTMENT POLICY ("INVESTMENT POLICY"), ATTACHED AND INCORPORATED; DIRECTING THE CITY MANAGER TO INSTRUCT THE DIRECTOR OF FINANCE TO IMPLEMENT THE AMENDED INVESTMENT POLICY. WHEREAS, Resolution No. 01-448, adopted May 10, 2001, accepted and authorized the implementation of the City of Miami Investment Policy ("Investment Policy"); and WHEREAS, on July 19, 2005, the Finance Committee met and approved the recommended amendments to the Investment Policy; and WHEREAS, the Department of Finance is recommending that the City Commission accept and approve the Finance Committee amendments to the Investment Policy; NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: Section 1. The recitals and findings contained in the Preamble to this Resolution are adopted by reference and incorporated as if fully set forth in this Section. Section 2. The amended Investment Policy, attached and incorporated, is accepted and approved. Section 3. The City Manager is directed to instruct the Director of Finance to implement the amended Investment Policy. Section 4. This Resolution shall become effective immediately upon its adoption and signature of the Mayor.{1} Footnotes: City of Miami Page 1 of 2 File Id: 05-00698 (Version: 1) Printed On: 9/2/2014 File Number: 05-00698 Enactment Number: R-05-0463 {1} If the Mayor does not sign this Resolution, it shall become effective at the end of ten calendar days from the date it was passed and adopted. If the Mayor vetoes this Resolution, it shall become effective immediately upon override of the veto by the City Commission. City of Miami Page 2 of 2 File Id: 05-00698 (Version: 1) Printed On: 9/2/2014 City of Miami Master Report Enactment Number: R-05-0463 City Hall 3500 Pan American Drive Miami, FL 33133 www.miamigov.com File Number: 05-00698 Version: 1 File Type: Resolution Status: Passed Reference: Controlling Body: Office of the Mayor Introduced: 7/6/2005 Requester: Department of Finance Cost: Final Action: 7/28/2005 File Name: Amending the Investment Policy Title: ARESOLUTION OF THE MIAMI CITY COMMISSION, WITHATTACHMENT(S), ACCEPTING AND APPROVING THE AMENDED CITY OF MIAMI INVESTMENT POLICY ("INVESTMENT POLICY"), ATTACHED AND INCORPORATED; DIRECTING THE CITY MANAGER TO INSTRUCT THE DIRECTOR OF FINANCE TO IMPLEMENT THE AMENDED INVESTMENT POLICY. Sponsors: Notes: Indexes: Attachments: 05-00698 Legislation.pdf,05-00698 Exhibit.pdf,05-00698 Summary Form.pdf, History of Legislative File Version: Acting Body: Date: Action: Sent To: Due Date: Return Date: Result: 1 Office of the City 7/27/2005 Attorney 1 City Commission 7/28/2005 1 Office of the Mayor 8/2/2005 1 Office of the City Clerk 8/4/2005 Reviewed and Approved ADOPTED Signed by the Mayor Office of the Mayor Signed and Attested by City Clerk Pass City of Miami Page 1 Printed on 9/2/2014 ¶21d A if 00)/0 -z_ Table of Contents Page I. PURPOSE 3 II. SCOPE 3 III. INVESTMENT OBJECTIVES 3 IV. DELEGATION OF AUTHORITY 4 V. STANDARDS OF PRUDENCE 4 VI. ETHICS AND CONFLICTS OF INTEREST 5 VII. INTERNAL CONTROLS AND INVESTMENT PROCEDURES 5 VIII. CONTINUING EDUCATION 5 IX. AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS 5 X. MATURITY AND LIQUIDITY REQUIREMENTS 6 XI. COMPETITIVE SELECTION OF INVESTMENT INSTRUMENTS 6 XII. AUTHORIZED INVESTMENTS AND PORTFOLIO COMPOSITION 7 XIII. DERIVATIVES AND REVERSE REPURCHASE AGREEMENTS 14 XIV. PERFORMANCE MEASUREMENTS 15 XV. REPORTING 15 XVI. THIRD -PARTY CUSTODIAL AGREEMENTS 16 XVII. INVESTMENT POLICY ADOPTION 16 XVIII. GLOSSARY OF TERMS 17 City of Miami Investment Policy Page 2 Investment Policy City of Miami, Florida I. PURPOSE The purpose of this policy is to set forth the investment objectives and parameters for the management of public funds of the City of Miami, Florida (hereinafter "City"). These policies are designed to safeguard the City's funds, the availability of operating and capital funds when needed, and an investment return competitive with comparable funds and financial market indices. II. SCOPE In accordance with Section 218.415, Florida Statues, this investment policy applies to all cash and investments held or controlled by the City and shall be identified as "general operating funds" of the City with the exception of the City's Pension Funds, Deferred Compensation & Section 401(a) Plans, and funds related to the issuance of debt where there are other existing policies or indentures in effect for such funds. Additionally, any future revenues, which have statutory investment requirements conflicting with this Investment Policy and funds held by state agencies (e.g., Department of Revenue), are not subject to the provisions of this policy. III. INVESTMENT OBJECTIVES Safety of Principal The foremost objective of this investment program is the safety of the principal of those funds within the portfolios. Investment transactions shall seek to keep capital losses at a minimum, whether they are from securities defaults or erosion of market value. To attain this objective, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. From time to time, securities may be traded for other similar securities to improve yield, maturity or credit risk. For these transactions, a loss may be incurred for accounting purposes, provided any of the following occurs with respect to the replacement security: A. Yield has been increased, or City of Miami Investment Policy Page 3 B. Maturity has been reduced, or lengthen C. Quality of the investment has been improved. Maintenance of Liquidity The portfolios shall be managed in such a manner that funds are available to meet reasonably anticipated cash flow requirements in an orderly manner. Periodical cash flow analyses will be completed in order to ensure that the portfolios are positioned to provide sufficient liquidity. Return on Investment Investment portfolios shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of least importance compared to the safety and liquidity objectives described above. The core of investments is limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. IV. DELEGATION OF AUTHORITY In accordance with the City's Administrative Policies, the responsibility for providing oversight and direction in regard to the management of the investment program resides with the City's Finance Director. The management responsibility for all City funds in the investment program and investment transactions is delegated to the Finance Director or designee. The Finance Director shall establish written procedures for the operation of the investment portfolio and a system of internal accounting and administrative controls to regulate the activities of employees. The City may employ an Investment Advisor to assist in managing some of the City's portfolios. Such Investment Advisor must be registered under the Investment Advisors Act of 1940. V. STANDARDS OF PRUDENCE 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 the overall investment program. 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 expectation are reported to the Director of Finance in a timely fashion and the liquidity and the sale of securities are carried out in accordance with the terms of this policy. The "Prudent Person" rule states the following; 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 from the investment. While the standard of prudence to be used by investment officials who are officers or employees is the "Prudent Person" standard, any person or firm hired or retained to invest, monitor, or advise concerning these assets shall be held to the higher standard of "Prudent Expert". The standard shall be that in investing and reinvesting moneys and in acquiring, retaining, managing, and disposing of investments of these funds, the contractor shall exercise: the judgment, care, skill, prudence, and diligence under the circumstances then prevailing, which persons of prudence, discretion, and intelligence, acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and City of Miami investment Policy Page 4 with like aims by diversifying the investments of the funds, so as to minimize the risk, considering the probable income as well as the probable safety of their capital. VI. ETHICS AND CONFLICTS OF INTEREST Employees 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 their ability to make impartial investment decisions. Also, employees involved in the investment process shall disclose to the City Manager any material financial interests in financial institutions that conduct business with the City, and they shall further disclose any material personal financial/investment positions that could be related to the performance of the City's investment program. VII. INTERNAL CONTROLS AND INVESTMENT PROCEDURES The Finance Director shall establish a system of internal controls and operational procedures that are in writing and made a part of the City's operational procedures. The internal controls should be designed to prevent losses of funds, which might arise from fraud, employee error, and misrepresentation, by third parties, or imprudent actions by employees. The written procedures should include reference to safekeeping, repurchase agreements, separation of transaction authority from accounting and recordkeeping, wire transfer agreements, banking service contracts, collateral/depository agreements, and "delivery -vs -payment" procedures. No person may engage in an investment transaction except as authorized under the terms of this policy. Independent auditors as a normal part of the annual financial audit to the City shall conduct a review of the system of internal controls to ensure compliance with policies and procedures. VIII. CONTINUING EDUCATION The Finance Director, Treasurer, and appropriate staff shall annually complete 8 hours of continuing education in subjects or courses of study related to investment practices and products. IX. AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS Authorized City staff shall only purchase securities from the following financial and investment institutions. A. Certificates of Deposit or Savings Accounts These investments may only be purchased from public depositories qualified by the Treasurer of the State of Florida, in accordance with Chapter 280, Florida Statutes. B. Overnight Repurchase Agreement Collateral for the City's "Sweep Accounts" shall be held at City's depository bank that must be a State Qualified Public Depository. City of Miami Investment Policy Page 5 C. All Other Investments For purchases and sales of securities by the City, dealers designated as "Primary Securities Dealers" by the Federal Reserve Bank of New York or from direct issuers of commercial paper and bankers' acceptances will be utilized, and all approved non -primary securities dealers that qualify under Securities and Exchange Commission Rule 15C3-1 (uniform net capital rule) must provide the following information prior to executing investment trades with the City: 1. Annual financial statement, as well as most recent quarterly statement. 2. Regulatory history, through either the Office of the Comptroller of the Currency for dealer banks, or the NASD for securities firms.. 3. Statement of any pending lawsuits materially affecting the firm's business. Each Dealer's representative will be required to complete the "City's Investment Firm Certification Form" prior to the City conducting any business with the Dealer or its representative. X. MATURITY AND LIQUIDITY REQUIREMENTS To the extent possible, an attempt will be made to match investment maturities with known cash needs and anticipated cash flow requirements. A. Maturity Guidelines Securities purchased by or on behalf of the City shall have a final maturity of five (5) years or less from the date of purchase. The overall weighted average duration of principal return for the portfolio shall be less than three (3) years. The maturities of the underlying securities of a repurchase agreement will follow the requirements of the Master Repurchase Agreement. B. Liquidity Requirements In order to meet the day-to-day expenditure needs of the City, $3,000,000 will be the targeted cash balance in the City's depository bank. All funds in the depository bank will be "swept" each night into a fully collateralized repurchase agreement account. XI. COMPETITIVE SELECTION OF INVESTMENT INSTRUMENTS After the Finance Director or Designee has determined the approximate maturity date based on cash flow needs and market conditions and has analyzed and selected one or more optimal types of investments, a minimum of three (3) qualified banks and/or approved broker/dealers must be contacted and asked to provide bids/offers on securities in questions. Bids will be held in confidence until the bid deemed to best meet the investment objectives is determined and selected. However, if obtaining bids/offers are not feasible and appropriate, securities may be purchased utilizing the comparison to current market price method on an exception basis. Acceptable current market price providers include, but are not limited to: City of Miami Investment Policy Page 6 A. Telerate Information System B. Bloomberg Information Systems C. Wall Street Journal or a comparable nationally recognized financial publication providing daily market pricing D, Daily market pricing provided by the City's custodian or their correspondent institutions The Finance Director or designee shall utilize the competitive bid process to select the securities to be purchased or sold. Selection by comparison to a current market price, as indicated above, shall only be utilized when, in judgment of the Finance Director or designee, competitive bidding would inhibit the selection process. Examples of when this method may be used include: A. When time constraints due to unusual circumstances preclude the use of the competitive bidding process B. When no active market exists for the issue being traded due to the age or depth of the issue C. When a security is unique to a single dealer, for example, a private placement D. When the transaction involves new issues or issues in the "when issued" market Overnight sweep repurchase agreements will not be bid, but may be placed with the City's depository bank relating to the demand account for which the repurchase agreement was purchased. XII. AUTHORIZED INVESTMENTS AND PORTFOLIO COMPOSITION Investments should be made subject to the cash flow needs and such cash flows are subject to revisions as market conditions and the City's needs change, However, when the invested funds are needed in whole or in part for the purpose originally intended or for more optimal investments, the Finance Director or designee may sell the investment at the then -prevailing market price and place the proceeds into the proper account at the City's custodian. The following are the investment requirements and allocation limits on security types, issuers, and maturities as established by the City. Diversification strategies within the established guidelines shall be reviewed and revised periodically as necessary by the Investment Committee. The Investment Committee, Director of Finance or designee shall have the option to further restrict investment percentages from time to time based on market conditions, risk and diversification investment strategies. The percentage allocations requirements for investment types and issuers are calculated based on the original cost of each investment. Investments not listed in this policy are prohibited. A. The Florida Local Government Surplus Funds Trust Fund ("SBA") 1. Investment Authorization City of Miami Investment Policy Page 7 The Finance Director or designee may invest in the SBA. 2. Portfolio Composition A maximum of 100% of available funds may be invested in the SBA. B. United States Government Securities 1. Purchase Authorization The Finance Director or designee may invest in negotiable direct obligations, or obligations the principal and interest of which are unconditionally guaranteed by the United States Government, Such securities will include, but not be limited to the foI lowing: Cash Management Bills Treasury Securities — State and Local Government Series ("SLGS") Treasury Bills Treasury Notes Treasury Bonds Treasury Strips 2. Portfolio Composition A maximum of 100% of available funds may be invested in the United States Government Securities with the exception of Treasury Strips are limited to 10% of available funds. 3. Maturity Limitations The maximum length to maturity of any direct investment in the United States Government Securities is five (5) years from the date of purchase. C. United States Government Agencies 1. Purchase Authorization The Finance Director or designee may invest in bonds, debentures, notes or callables issued or guaranteed by the United States Governments agencies, provided such obligations are backed by the full faith and credit of the United States Government. Such securities will include, but not be limited to the following: United States Export — Import Bank -Direct obligations or fully guaranteed certificates of beneficial ownership Farmer Lorne Administration -Certificates of beneficial ownership Federal Financing Bank -Discount notes, notes and bonds Federal Housing Administration Debentures City of Miami Investment Policy Page 8 Government National Mortgage Association (GNMA) -GNMA guaranteed mortgage -backed bonds -GNMA guaranteed pass -through obligations General Services Administration United States Maritime Administration Guaranteed -Title XI Financing New Communities Debentures -United States Government guaranteed debentures United States Public Housing Notes and Bonds -United States Government guaranteed public housing notes and bonds United States Department of Housing and Urban Development -Project notes and local authority bonds 2. Portfolio Composition A maximum of 50% of available funds may be invested in United States Government agencies. 3. Limits on Individual Issuers A maximum of 10% of available funds may be invested in individual United States Government agencies. 4. Maturity Limitations The maximum length to maturity for an investment in any United States Government agency security is five (5) years from the date of purchase. D. Federal Instrumentalities (United States Government sponsored agencies) l . Purchase Authorization The Finance Director or designee may invest in bonds, debentures, notes or callables issued or guaranteed by United States Government sponsored agencies (Federal instrumentalities) which are non -full faith and credit agencies limited to the following: Federal Farm Credit Bank (FFCB) Federal Home Loan Bank or its City banks (FHLB) Federal National Mortgage Association (FNMA) Federal Home Loan Mortgage Corporation (Freddie -Macs) including Federal - Home Loan Mortgage Corporation participation certificates 2. Portfolio Composition A maximum of 100% of available funds may be invested in Federal Instrumentalities. 3. Limits on Individual Issuers A maximum of 25% of available funds may be invested in any one issuer. City of Miami Investment Policy Page 9 4, Maturity Limitations The maximum length to maturity for an investment in any Federal Instrumentality security is five (5) years from the date of purchase. E. Interest Bearing Time Deposit or Saving Accounts 1. Purchase Authorization The Finance Director or designee may invest in non-negotiable interest bearing time certificates of deposit or savings accounts in banks organized under the laws of this state and/or in national banks organized under the laws of the United States and doing business and situated in the State of Florida, provided that any such deposits are secured by the Florida Security for Public Deposits Act, Chapter 280, Florida Statutes. Additionally, the bank shall not be listed with any recognized credit watch information service. 2. Portfolio Composition A maximum of 10% of available funds may be invested in non-negotiable interest bearing time certificates of deposit. 3. Limits on Individual Issuers A maximum of 10% of available funds may be deposited with any one issuer. 4. The maximum maturity on any certificate shall be no greater than one (1) year from the date of purchase. F. Repurchase Agreements 1. Purchase Authorization a. The Finance Director or designee may invest in repurchase agreements composed of only those investments authorized in Section XII.B, C, and D. All repurchase agreements that are legal and authorized by this policy: a Master Repurchase Agreement must be signed with the bank or dealer. All firms are required to sign the City's Master Repurchase Agreement prior to the execution of a repurchase agreement transaction. b. A third party custodian with whom the City has a current custodial agreement shall hold the collateral for all repurchase agreements with a term longer than one (1) business day. A clearly marked receipt that shows evidence of ownership must be supplied to the Finance Director or designee and retained. c. Securities authorized for collateral must have maturities under ten (10) years and with market value for the principal and accrued interest of 102 percent of the value and for the term of the repurchase agreement. Immaterial short-term City of Miami Investment Policy Page 10 deviations from 102 percent requirement are permissible only upon the approval of the Finance Director or designee. d. The overnight sweep arrangement shall adhere to the agreement between the City and the City's depository bank. 2. Portfolio Composition A maximum of 20% of available funds may be invested in repurchase agreements excluding one (1) business day agreements and overnight sweep agreements. Limits on Individual Issuers A maximum of 10% of available funds may be invested with any one institution excluding one (1) business day agreements and overnight sweep agreements. 4. Limits on Maturities The maximum length to maturity of any repurchase agreement is 90 days from the date of purchase. G. Commercial Paper 1. Purchase Authorization The Finance Director or designee may invest in commercial paper of any United States company that is rated, at the time of purchase by two of the three rating agencies, "Prime-1" by Moody's, "A-]" by Standard & Poor's and F-1 by Fitch (prime commercial paper). If the commercial paper is backed by a letter of credit ("LOC"), the long-term debt of the LOC provider must be rated "A" or better by at least two nationally recognized rating agencies. 2. Portfolio Composition A maximum of 35% of available funds may be directly invested in prime commercial paper. 3. Limits on Individual Issuers A maximum of 10% of available funds may be invested with any one issuer. 4. Maturity Limitations The maximum length to maturity for prime commercial paper shall be 270 days from the date of purchase. H. Corporate Notes 1. Purchase Authorization City of Miami Investment Policy Page 11 The Finance Director or designee may invest in corporate notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States that have a long term debt rating, at the time or purchase, at a minimum "Aa" by Moody's and a minimum long term debt rating of "AA" by Standard & Poor's, 2. Portfolio Composition A maximum of25% of available funds may be directly invested in corporate notes. 3. Limits on Individual Issuers A maximum of 10% of available funds may be invested with any one issuer. 4, Maturity Limitations The maximum length to maturity for corporate notes shall be (2) two years from the date of purchase, Bankers' Acceptances 1. Purchase Authorization The Finance Director or designee may invest in Bankers' Acceptances issued by a domestic bank or a federally chartered domestic office of a foreign bank, which are eligible for purchase by the Federal Reserve System, at the time or purchase, the short- term paper is rated, at a minimum, "P-1" by Moody's Investors Services and "A-1" Standard & Poor's. 2. Portfolio Composition A maximum of 10% of available funds may be directly invested in Bankers' Acceptances 3. Limits on Individual Issuers A maximum of 5% of available funds may be invested with any one issuer. 4. Maturity Limitations The maximum length to maturity for Bankers' Acceptances shall be 180 days from the date of purchase. J. State and/or Local Government Taxable and/or Tax -Exempt Debt 1. Purchase Authorization The Finance Director or designee may invest in state and/or local government taxable and/or tax-exempt debt, general obligation and/or revenue bonds, rated at least "Aa" by City of Miami Investment Policy Page 12 Moody's and "AA" by Standard & Poor's for long-term debt, or rated at least "MIG-2" by Moody's and "SP-2" by Standard & Poor's for short-term debt. 2. Portfolio Composition A maximum of 25% of available funds may be invested in taxable and tax-exempt General Obligation bonds. A maximum of 10% of available funds may be invested in taxable and tax-exempt Revenue and Excise tax bonds of the various municipalities of the State of Florida, provided none of such securities have 'been in default within five (5) years prior to the date of purchase. 3. Maturity Limitations A maximum length to maturity for an investment in any state or local government debt security is (2) two years from the date of purchase. K. Registered Investment Companies (Money Market Mutual Funds) 1. Investment Authorization The Finance Director or designee may invest in shares in open-end and no-load money market funds provided such funds are registered under the Federal Investment Company Act of 1940 and operate in accordance with 17 C.F.R. § 270.2a-7, which stipulates that money market funds must have an average weighted maturity of 90 days or less. 2, Portfolio Composition A maximum of 20% of available funds may be invested in money market funds. 3, Limits of Individual Issuers A maximum of 10% of available funds may be invested with any one money market fund. 4, Rating Requirements The money market funds shall be rated "AAm" or "AAm-G" or better by Standard & Poor's, or the equivalent by another rating agency. 5. Due Diligence Requirements A thorough review of any money market fund is required prior to investing, and on a continual basis. There shall be a questionnaire developed by the Finance Director or designee that will contain a list of questions that covers the major aspects of any investment pool/fund. City of Miami Investment Policy Page 13 L. Intergovernmental Investment Pool 1. Investment Authorization The Finance Director or designee may invest in intergovernmental investment pools that are authorized pursuant to the Florida Interlocal Cooperation Act, as provided in Section 163.01, Florida Statutes and provided that said funds contain no derivatives. 2 Portfolio Composition A maximum of 25% of available funds may be invested in intergovernmental investment pools, 3. Due Diligence Requirements A thorough review of any investment pool/fund is required prior to investing, and on a continual basis. There shall be a questionnaire developed by the Finance Director or Designee that will contain a list of questions that covers the major aspects of any investment pool/fund. XIII. DERIVATIVES AND REVERSE REPURCHASE AGREEMENTS The City may invest in investment products that include the use of derivatives as long as the dollar amount invested by the investment product is minuscule to the total dollar amount invested by the investment product. The Finance Director or designee shall develop sufficient understanding of the derivative products and have the expertise to manage them. A "derivative" is defined as a financial instrument the value of which depends on, or is derived from, the value of one or more underlying assets or indices or asset values. If the Finance Director approves the use of reverse repurchase agreements or other forms of leverage, the investment shall be limited to transactions in which the proceeds are intended to provide liquidity and for which the City has sufficient resources and expertise to manage them. XIV. PERFORMANCE MEASUREMENTS In order to assist in the evaluation of the portfolios' performance, the City will use performance benchmarks for short-term and long-term portfolios. The use of benchmarks will allow the City to measure its returns against other investors in the same markets. A. The short-term investment portfolio shall be designed with the annual objective of exceeding the weighted average return (net book value rate of return) of the Florida Local Government Surplus Funds Trust Fund (SBA). B. The long-term investment portfolio shall be designed with the annual objective of exceeding the return of the Merrill Lynch 1-3 Year Treasury Index compared to the portfolio's total rate of return. The Merrill Lynch 1-3 Year Treasury Index represents all U.S. Treasury securities City of Miami Investment Policy Page 14 maturing over one year, but less than three years. This maturity range is an appropriate benchmark based on the objectives of the City. XV. REPORTING A. The Finance Director or designee will prepare quarterly investment reports. Schedules in the quarterly report should include the following: 1. A listing of individual securities held at the end of the reporting period 2. Percentage of available funds represented by each investment type 3. Coupon, discount or earning rate 4. Average life or duration and final maturity of all investments 5. Par value, and market value B. Annual Investment Report On an annual basis, the Finance Director shall prepare and submit to the City Commission a written report on all invested funds. The annual report shall provide all, but not limited to, the following: a complete list of all invested funds, name or type of security in which the funds are invested, the amount invested, the maturity date, earned income, the book value, the market value and the yield on each investment. The annual report will show performance on both a book value and total rate of return basis and will compare the results to the above -stated performance benchmarks. All investments shall be reported at fair value per GASB standards. Investment reports shall be available to the public. C. Investment Committee The City shall have an investment committee comprised of the Finance Director, Assistant Finance Director, Treasurer, and Investment Coordinator to report to this committee as often as requested. Reports shall be prepared and distributed to the committee quarterly. XVI. THIRD -PARTY CUSTODIAL AGREEMENTS Securities, with the exception of certificates of deposits, shall be held with a third party custodian; and all securities purchased by, and all collateral obtained by; the City should be properly designated as an asset of the City. The securities must be held in an account separate and apart from the assets of the financial institution. A third party custodian is defined as any bank depository chartered by the Federal Government, the State of Florida, or any other state or territory of the United States which has a branch or principal place of business in the State of Florida as defined in Section 658.12, Florida Statutes, or by a national association organized and existing under the laws of the United States which is authorized to accept and execute trusts and which is doing business in the State of Florida. Certificates of deposits will be placed in the provider's safekeeping department for the term of the deposit. City of Miami Investment Policy Page 15 The custodian shall accept transaction instructions only from those persons who have been duly authorized by the Director of Finance and which authorization has been provided, in writing, to the custodian. No withdrawal of securities, in whole or in part, shall be made from safekeeping, shall be permitted unless by such a duly authorized person. The custodian shall provide the Finance Director or designee with safekeeping receipts that provide detail information on the securities held by the custodian. In addition, the custodian shall report at least quarterly and the Finance Director or designee shall verify the reports. Security transactions between a broker/dealer and the custodian involving the purchase or sale of securities by transfer of money or securities must be made on a "delivery vs. payment" basis, if applicable, to ensure that the custodian will have the security or money, as appropriate, in hand at the conclusion of the transaction. Only after receiving written authorization from the Director of Finance shall the City Treasurer be authorized to deliver securities "free". Securities held as collateral shall be held free and clear of any liens. XVII. INVESTMENT POLICY ADOPTION The investment policy shall be adopted by City resolution. The Director of Finance, Treasurer, and the Investment Committee shall review the policy annually and the City Commission shall approve any modification made thereto. PASSED AND ADOPTED BY THE CITY COMMISSION ON MANUEL A DIAZ, MAYOR ATTEST: PRISCILLA A. THOMPSON CITY CLERK APPROVED AS TO FORM AND CORRECTNESS: JORGE L. FERNANDEZ CITY ATTORNEY City of Miami Investment Policy Page 16 Glossary of Terms AGENCIES: Federal agency securities and/or Government -sponsored enterprises. ASKED: The price at which securities are offered. BANKERS' ACCEPTANCE {BA): A draft or bill or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer. BENCHMARK: A comparative base for measuring the performance or risk tolerance of the investment portfolio. A benchmark should represent a close correlation to the level of risk and the average duration of the portfolio's investments. BID: The price offered by a buyer of securities. (When you are selling securities, you ask for a bid.) See Offer. BROKER: A broker brings buyers and sellers together for a commission. CALL FEATURE or CALLABE SECURITY: A security redeemable by the issuer before the scheduled maturity date. A security is usually called when interest rates fall so that the issuer can save money by floating a new security at lower rates. CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a certificate. Large -denomination CD's are typically negotiable. COLLATERAL: Securities, evidence of deposit, or other property that a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. COMPREHENSIVE ANNUALFINANCIAL REPORT (CAFR): The official annual report for the City of Miami it includes five combined statements for each individual fund and account group prepared in conformity with GAAP. It also includes supporting schedules necessary to demonstrate compliance with finance - related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section. COUPON: (a) The annual rate of interest that a bond's issuer promises to pay the bondholder on the bond's face value. (b) A certificate attached to a bond evidencing interest due on a payment date. DEALER: A dealer, as opposed to a broker, acts as a principal in ail transactions, buying and selling for his own account. DEBENTURE: A bond secured only by the general credit of the issuer. DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities. City of Miami Investment Policy Page 17 DERIVATIVES: (1) Financial instruments whose return profile is linked to, or derived from, the movement of one or more underlying Index or security, and may include a leveraging factor, or (2) financial contracts based upon notional amounts whose value is derived from an underlying index or security (interest rates, foreign exchange rates, equities or commodities). DISCOUNT: The difference between the cost price of a security and its maturity when quoted at lower than face value. A security selling below original offering price shortly after sale also is considered to be at a discount. DISCOUNT SECURITIES: Non -interest bearing money market instruments that are issued a discount and redeemed at maturity for full face value, e.g. U.S. Treasury Bills. DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to various classes of institutions and individuals, e.g., S&L's, small-business firms, students, farmers, farm cooperatives, and exporters. FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits, currently up to $100,000 per deposit. FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently pegged by the Federal Reserve through open -market operations. FEDERAL HOME LOAN BANKS (FHLB): Government sponsored wholesale banks (currently 12 regional banks) that lend funds and provide correspondent banking services to member commercial banks, thrift institutions, credit unions and insurance companies. The mission of the FHLBs is to liquefy the housing related assets of its members who must purchase stock in their district Bank. FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA): FNMA, like GNMA was chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal corporation working under the auspices of the Department of Housing and Urban Development (HUD). It is the largest single provider of residential mortgage funds in the United States. Fannie Mae, as the corporation is called, is a private stockholder owned corporation. The corporation's purchases include a variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages. FNMA's securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all security holders will receive timely payment of principal and interest. FEDERAL OPEN MARKET COMMITTEE (FOMC): Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a permanent member, while the other Presidents serve on a rotating basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases and sales of Government Securities in the open market as a means of influencing the volume of bank credit and money. FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks and about 5, 700 commercial banks that are members of the system. FLORIDA STATUTES CHAPTER 280: The State Treasurer requires ail qualified public depositories to deposit with the Treasurer or another banking institution eligible collateral equal to 50% to 125% of the average daily balance for each month of all public City of Miami Investment Policy Page 18 deposits in excess of any applicable deposit insurance held. The percentage of eligible collateral (generally, U.S. governmental and agency securities, state or local government debt, or corporate bonds) to public deposits is dependant upon the depository's financial history and its compliance with Chapter 280, Florida Statutes. In the event of a failure of a qualified public depository, the remaining public depositories would be responsible. for covering any resulting losses. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae): Securities influencing the volume of bank credit guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations, and other institutions. Security holder is protected by full faith and credit of the U.S. Government. Ginnie Mae securities are backed by the FHA, V A, or FmHA mortgages. The term "pass throughs" is often used to describe Ginnie Maes. LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes. LOCAL GOVERNMENT INVESTMENT POOL (LGIP): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment. MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold. MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase -reverse repurchase agreements that establishes each party's rights in the transactions. A master agreement will often specify, among other things, the right of the buyer -lender to liquidate the underlying securities in the event of default by the seller -borrower. MATURITY: The date upon which the principal or stated value of an investment becomes due and payable. MONEY MARKET: The market in which short term debt Instruments (bills, commercial paper, bankers' acceptances, etc, are issued and traded. OFFER: The price asked by a seller of securities. OPEN MARKET OPERATIONS: Purchases and sales of government and certain other securities in the open market by the New York Federal Reserve Bank as directed by the FOMC in order to influence the volume of money and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and credit; sales have the opposite effect. Open market operations are the Federal Reserve's most important and most flexible monetary policy tool. PORTFOLIO: Collection of securities held by an investor. PRIMARY DEALER: A group of government securities dealers who submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission (SEC) -registered City of Miami investment Policy Page 19 securities broker -dealers, banks, and a few unregulated firms. PRUDENT PERSON RULE: An investment standard. In some states the law requires that a fiduciary, such as a trustee, may invest money only in a list of securities selected by the custody state -the so-called legal list. In other states the trustee may invest in a security if it is one which would be bought by a prudent person of discretion and intelligence who is seeking a reasonable income and preservation of capital. QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits. RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond the current income return. REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security "buyer" in effect lends the "'seller" money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. Dealers use RP extensively to finance their positions. Exception: When the Fed is said to be doing RP, it is lending money, that is, increasing bank reserves. SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank's vaults for protection. SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following the initial distribution. SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect investors in securities transactions by administering securities legislation. SEC RULE 15C3-1: See Uniform Net Capital Rule. STRUCTURED NOTES: Notes issued by Government Sponsored Enterprises (FHLB, FNMA, SLMA, etc.) and Corporations that have imbedded options (e.g., call features, step-up coupons, floating rate coupons, derivative -based returns) into their debt structure. Their market performance is impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the shape of the yield curve. TREASURY BILLS: A non -interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months, or one year. TREASURY BONDS: Long-term coupon -bearing U.S. Treasury securities issued as direct obligations of the U.B. Government and having initial maturities of more than 10 years. TREASURY NOTES: Medium -term coupon bearing U.S, Treasury securities issued as direct obligations of the U.S. Government and City of Miami Investment Policy Page 20 having initial maturities from two to 10 years. UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that member firms as well as nonmember broker -dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio, Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital Includes cash and assets easily converted into cash. YIELD: The rate of annual income return on an investment, expressed as a percentage. (a) INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus any discount from par In purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond. City of Miami Investment Policy Page 21 Date: 6/20/2005 AGENDA ITEM SUMMARY FORM FILE ID: 65_ QOip'ig Requesting Department: Finance Commission Meeting Date: 7/28/2005 District Impacted: None Type: Z Resolution ❑ Ordinance ❑ Emergency Ordinance ❑ Discussion Item U Other Subject: Amending the Investment Policy Purpose of Item: It is respectfully recommended that the City commission adopt the attached resolution amending the Investment Policy. The attached amendment was approved by the Finance Committee on July 19, 2005. This resolution further directs the City Manager to implement the amended Investment Policy, Background Information: In 2001 Resolution #01-448 established an Investment Policy guidelines, limitations, and conditions for the investment of the assets of public funds available to units of local governments pursuant to the State of Florida's investment of public funds act {218.415, Florida Statutes (200)}. It is also created a Finance Committee to review and make recommendation to amend said policy as needed. On July 19th, 2005 the Finance Committee amended the Investment policy as submitted. Budget Impact Analysis NO Is this item related to revenue? NO Is this item an expenditure? If so, please identify funding source below. General Account No: Special Revenue Account No: CIP Project No: NO Is this item funded by Homeland Defense/Neighborhood Improvement Bonds? Start Up Capital Cost: Maintenance Cost: Total Fiscal Impact: Final Approvals (SIGN AND DATE) CIP Budget If using or receiving capital funds Grants Risk Manageme Purchasing Heft. Director Chin _� City Manager Page 1 of 1