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HomeMy WebLinkAboutBack-Up DocumentCITY OF PALM BAY AMENDMENT #1 TO CONTRACT # 66-0-2021 INVESTMENT ADVISORY SERVICES This amendment to contract is made and entered into this l ) day of February, 2025, by and between the City of Palm Bay, a municipal corporation organized and existing under the State of Florida, hereinafter referred to as the "City" and PFM Asset Management LLC, an organization now known as U.S. Bancorp Asset Management, Inc., hereinafter referred to as the "Contractor". WHEREAS the City and the PFM Asset Management LLC, successor to Contractor entered into a Contract under the date of March 11, 2022, and WHEREAS the City and Contractor, through its PFM Asset Management division. desire to renew term of said Contract. NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties agree as follows: I. The renewed term of the Agreement shall be February 28, 2025, through February 27, 2026. This shall be the 15t of seven (7) possible 1-year renewals. II. No price increases will be allowed. III. The following language is added to the Agreement: Section 215,855, Florida Statutes Compliance. Pursuant to Section 215.855, Florida Statutes, the Parties hereby agree that (a) Any written communication made by the Contractor to a company in which the Contractor invests public funds on behalf of the City must include the following disclaimer in a conspicuous location if such communication discusses social, political, or ideological interests; subordinates the interests of the company's shareholders to the interest of another entity; or advocates for the interest of an entity other than the company's shareholders: "The views and opinions expressed in this communication are those of the sender and do not reflect the views and opinions of the people of the State of Florida.'' (b) This Contract may be unilaterally terminated at the option of the City if the Contractor does not include the disclaimer required in the above paragraph. In all other respects and, except as specifically modified and amended, the Contract shall continue in full force and effect as written. The parties hereto execute this Amendment to become effective as of the date and year first above written. CITY OF PALM BAY By: Chief Procurement Officer U.S. BANCORP ASSET MANAGEMENT, INC. j l amelTitle Sig ure and Date 2/I;(2-25 Procurement Department 120 Malabar Rd SE Suite 200 Palm Bay. FL 32907-3009 321-952-3424 procurement t pbfl.org Iit of 4iami ANNIE PEREZ, CPPO ARTHURNORIEGA V Chief Procurement Officer Cihv Manager CITY OF MIAMI'S SUPPLEMENTAL AGREEMENT TO CONTRACT NO. #66- 0-20211SZ BETWEEN THE CITY OF PALM BAY, AND PFM ASSET MANAGEMENT LLC The City of Miami, a Florida municipal corporation ("City"), is accessing Contract No. #66-0-2021/SZ between the City of Palm Bay, Florida ("Palm Bay") and PFM Asset Management LLC, a Delaware Limited Liability Company authorized to conduct business within the State of Florida ("PFM", "Contractor", or the "Advisor"), made and entered effective as of March 11, 2022, attached hereto as Exhibit "A" and incorporated herein by reference ("Contract"), for the provision of investment advisory services ("Services"). This is a Supplemental Agreement to the Contract, inclusive of applicable City legal requirements and language for use by the City's Finance Department ("Agreement"). The term of the Contract is from March 1, 2022 to February 28, 2025, with seven (7) optional one (1) year renewal periods. Pursuant to this Agreement, the effective date of Contract access by the City is April 1st , 2024. 1) The phrase/word "Palm Bay" shall be stricken and replaced hereby with the phrase/word "City of Miami" or "City" throughout the Contract. 2) The phrase "City of Palm Bay" shall be stricken and replaced hereby with the phrase/word "City of Miami" or "City" throughout the Contract. 3) The phrase "City Council" shall be stricken and replaced hereby with the phrase/word "City Commission" throughout the Contract. 4) PFM's Responsibilities: A. PFM has agreed to furnish the Services as further described in the Contract's Exhibit A, Investment Policy, as attached. B. PFM shall provide Services to the City in an amount equal to the costs identified in the Contract. C. PFM's responsibilities shall commence on the effective date of this Agreement. 5) Article 2 of the Agreement, titled "Compensation", subsection (a) is hereby amended by adding the following language: Compensation for services provided under this Agreement will not exceed fifty thousand dollars ($50,000.00). 6) Article 3 of the Agreement, titled "Payment", paragraph 2, is hereby deleted in its entirety and replaced with the following language: The City reserves the right, with justification, to partially pay any invoice submitted by the Advisor when requested to do so by the using City Department. All invoices shall be directed to the Accounts Payable Section, City of Miami Finance Department, at pavables@miamigov.com. 7) Article .7 of the Agreement, titled "Termination" is hereby amended by adding the following language: The City, acting by and through its City Manager, shall have the right to terminate this Agreement, in its sole discretion, and without penalty, at any time, by giving written notice to Advisor at least thirty (30) calendar days prior to the effective date of such termination. In such event, the City shall pay to Advisor compensation for Services rendered and approved expenses incurred prior to the effective date of termination. In no event shall the City be liable to. Advisor for any additional compensation and expenses incurred, other than that provided herein, and in no event shall the City be liable for any consequential or incidental dama9es. The Advisor shall have no recourse or remedy against the City for a termination under this subsection except for payment of fees due prior to the effective date of termination. The. Advisor may terminate this Agreement for a material breach of its terms by the City upon the City's failure to cure such material breach within thirty (30) days after written notice thereof has been delivered by the Advisor. 8) Article 16, of the Agreement, titled "Insurance is hereby deleted in its entirety and replaced with the following language: PFM shall provide and maintain in force at all times during the Agreement with the City, insurance requirements pursuant to Exhibit B. 9) Article 17 of the Agreement, titled "Public Records" is hereby deleted in its entirety and: replaced with the following language: PFM hereby agrees and understands that the public shall have access, at all reasonable times, to all documents and information pertaining to the City, subject to the provisions of Chapter 119, Florida Statutes, and any specific exemptions there from, and agrees to allow access by the City and the public to all such documents subject to disclosure under applicable law. PFM's failure or refusal to comply with the provisions of this section shall result in the City's immediate termination of this Agreement with PFM. Pursuant to the provisions of Section 119.0701, Florida Statutes, PFM shall comply with the Florida Public Records Laws, specifically PFM shall: 1) Keep and maintain public records that ordinarily and necessarily would be required by the City in order to perform the service; 2) Provide the public with access to public records on the same terms and conditions that the City would provide the records and at a cost that does not exceed the cost provided inChapter 119, Florida Statutes, ;or as otherwise provided by law; 3) Ensure that public records that are exempt or confidential and exempt from public records disclosure requirements are not disclosed except as authorized by law; 4) Meet all requirements for retaining public records and transfer, at no cost, to the City all public records in possession of PFM upon termination of the Agreement and destroy any duplicate public records that are exempt or confidential and exempt from public records disclosure requirements; and, 5) Provide all records stored electronically to the City in a format compatible with the information technology systems of the City. The Inspection and Audit provisions set forth in Sections 18-101 and 18-102 of the City Code are deemed as being incorporatedby reference herein and additionally apply to this Agreement. Should PFM determine to dispute any public access provision required by Florida Statutes, then PFM shall do so • at its own expense and at no cost to the City. .IF PFM HAS QUESTIONS REGARDING. THE APPLICATION OF CHAPTER 119, FLORIDA STATUTES, TO PFM'S DUTY TO PROVIDE Page 2 PUBLIC RECORDS RELATING TO THIS AGREEMENT, CONTACT THE DIVISION OF PUBLIC RECORDS AT (305) 416-1800, VIA EMAIL AT PUBLICRECORDS(t�MIAMIGOV.COM, OR REGULAR MAIL AT CITY OF MIAMI OFFICE OF THE CITY ATTORNEY, 444 SW 2ND AVENUE, 9TH FLOOR, MIAMI, FLORIDA 33130. PFM MAY ALSO CONTACT THE RECORDS CUSTODIAN AT THE CITY OF MIAMI DEPARTMENT WHO IS ADMINISTERING THIS CONTRACT. 10)Article 18 of the Agreement titled "Notice", is hereby deleted in its entirety and replaced with the following language: TO PFM: PFM Asset Management LLC 225 E. Robinson Street, Ste. 250 Orlando, FL 32801 TO THE CITY OF MIAMI: Arthur Noriega V, City Manager 444 S.W. 2nd Avenue, 10th Floor Miami, FL 33130-1910 George K. Wysong, III City of Miami City Attorney 444 S.W. 2nd Avenue, 9th Floor Miami, FL 33130-1910 Erica Paschal Director Finance Department 444 S.W. 2nd Avenue, 6th Floor Miami, FL 33130-1910 EPaschal(cr�,miamigov.com Annie Perez, CPPO City of Miami Procurement Director 444 S.W. 2nd Avenue, 6th Floor Miami, FL 33130-1910 APerez@a,miamigov.com 11)Article 19 of the Agreement, titled "Applicable Law", is hereby deleted in its entirety and replaced with the following language: This Agreement with the City shall be governed by and construed under the laws of the State of Florida regardless of choice or conflict of law principles. Venue in any proceedings between PFM and the City shall be in a court of competent jurisdiction located in Miami -Dade County, Florida. In the event of a dispute, each party shall be responsible for payment of its own attorneys' fees. 12) Article 22, titled "Conflict of Interest", is hereby added with the following language: Pursuant to City Code Section 2-611, as amended, regarding conflicts of interest, PFM hereby certifies to the City that no employee of PFM performing services directly under this Agreement or any immediate family member of any of the same is also a member of any board, commission, or agency of the City. PFM hereby represents and warrants to the City that throughout the term of this Agreement, PFM employees performing services directly under this Agreement s will abide by this prohibition of the City Code. Page 3 13) Section 23, titled "Counterparts/Electronic Signatures", is hereby added with the following language: This Agreement may be executed in counterparts, each of which shall be an original as against either Party whose signature appears thereon, but all of which taken together shall constitute but the same instrument. An executed facsimile or electronic scanned copy of this Agreement shall have the same force and effect as the original. The parties shall be entitled to sign and transmit an electronic signature on this Agreement (whether by facsimile, PDF, or other email transmission), which signature shall be binding on the party whose name is contained therein. Any party providing an electronic signature agrees to promptly execute and deliver to theother parties an original signed Agreement upon request. 14) Section 24, titled "Section :215.855,. Florida Statutes Compliance", is hereby added with the following language: Pursuant to Section 215.855, Florida Statutes, the parties hereby agree that: (i) any written communication made by the Advisor to a company in which the Advisor invests public funds on behalf of the City must include the following disclaimer in a conspicuous location if such communication discusses social, political, or ideological interests; subordinates the interests of the company's shareholders to the interest of another entity; or advocates for the interest of an entity other than the company's shareholders: "The views and opinions expressed in this communication are those of the sender and do not reflect the views and opinions of the people of the State of Florida:" and (ii) This Agreement may be unilaterally terminated at the option of the City if the Advisor does not include the disclaimer required in the above paragraph. Page 4. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their respective officials thereunto duly authorized. "PFM" "City" PFM ASSET MANAGEMENT LLC, CITY OF MIAMI, a Delaware limited liability company BY: Richard Pengelly, Managing Director DATE: 6/12/2024 ATTEST: 2.� a Florida municipal corporation BY: ,—DocuSigned by: grgukr Novitia. `— 850CF6C372DD42A... Arthur Noriega V, City Manager October 3, 2024 1 08:02:15 EDT DATE: ,—DocuSigned by: ATTEST: "-E46D7566DCF1459... orporate Secretary/Notary Public Todd Hannon, City Corporate Seal/Notary Seal Notary Public State of Florida Leslie A. Bell My Commission ���� HH 225894 Exp. 2/712026 APPROVED AS TO INSURANCE REQUIREMENTS: ,—DocuSigned by: FV'a,tAk Gowlt7 `-27395C6318214E7... Ann -Marie Sharpe, Director Risk Management APPROVED AS TO LEGAL FORM AND CORRECTNESS: ,—DocuSigned by: rot, WlisatA411l1TMF 24-312 '88776E9FE88248B... George K. Wysong, Ill, City Attorney Page 5 EXHIBIT A INVESTMENT ADVISORY AGREEMENT CONTRACT #66-0-2021/SZ THIS AGREEMENT, entered into as of the / j day of AA tt ') , 2022, by and between the City of Palm Bay, 120 Malabar Road SE, Palm Bay, Florida 32907, a Florida municipal corporation and political subdivision of the State of Florida, (hereinafter the "Client" or the "City"), and PFM ASSET MANAGEMENT LLC, 225 E. Robinson Street, Suite 250, Orlando, Florida 32801, a Delaware limited liability company (hereinafter the "Advisor"). WITNESSETH DOCUMENTS The following documents are hereby incorporated into and made part of this Agreement. 1.1. Specifications and Contract Documents prepared by the City of Palm Bay, "RFP #66-0- 2021/SZ, Investment Advisory Services" (Exhibit A). 1.2. Bid for the City of Palm Bay prepared by the Advisor dated October 5, 2021 (Exhibit B). All exhibits may also be collectively referred to as the "Documents". In the event of any conflict between the Documents or any ambiguity or missing specifications or instruction, the following priority is established: A. Specific direction from the City Manager (or designee). B. This Agreement dated 1 i [OrLG 1/ , 2022 and any attachments. C. Exhibit A D. Exhibit B TERM OF AGREEMENT The period of this Agreement shall be for thirty-six (36) months, beginning on March 1, 2022, and ending on February 28, 2025. This Agreement may, by mutual written assent of the parties, be extended for seven (7) additional twelve (12) month periods or portions thereof, up to a cumulative total of one hundred twenty (120) months. WHEREAS, the Client has funds available for investment purposes (the "Initial Funds") for which it intends to conduct an investment program; and WHEREAS, the Client desires to avail itself of the experience, sources of information, advice, assistance and facilities available to the Advisor; to have the Advisor undertake certain duties and responsibilities; and to perform certain services as investment advisor on behalf of the Client, as provided herein; and WHEREAS, the Advisor is willing to provide such services on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premicec and mntnal covenants herein contained, the parties hereto, intending to be legally bound, agreed as follows: 1. SERVICES OF ADVISOR. The Client hereby engages the Advisor to serve as investment advisor under the terms of this Agreement with respect to the Initial Funds and such other funds as the Client may from time to time assign by written notice to the Advisor (collectively the "Managed Funds"), and the Advisor accepts such engagement. In connection therewith, the Advisor will provide investment research and supervision of the Managed Funds investments and conduct a continuous program of investment, evaluation and, when appropriate, sale and reinvestment of the Managed Funds assets. The Advisor shall continuously monitor investment opportunities and evaluate investments of the Managed Funds. The Advisor shall furnish the Client with statistical information and reports with respect to investments of the Managed Funds. The Advisor shall place all orders for the purchase, sale, loan or exchange of portfolio securities for the Client's account with brokers or dealers recommended by the Advisor and/or the Client, and to that end the Advisor is authorized as agent of the Client to give instructions to the custodian designated by the Client (the "Custodian") as to deliveries of securities and payments of cash for the account of the Client. In connection with the selection of such brokers and dealers and the placing of such orders, the Advisor is directed to seek for the Client the most favorable execution and price, the determination of which may take into account, subject to any applicable laws, rules and regulations, whether statistical, research and other information or services have been or will be furnished to the Advisor by such brokers and dealers. The Custodian shall have custody of cash, securities and other assets of the Client. The Advisor shall not take possession of or act as custodian for the cash, securities or other assets of the Client and shall have no responsibility in connection therewith. Authorized investments shall include only those investments which are currently authorized by the state investment statutes and applicable covenants and as supplemented by such other written instructions as may from time to lime be provided by the Client to the Advisor. The Advisor shall be entitled to rely upon the Client's written advice with respect to anticipated drawdowns of Managed Funds. The Advisor will observe the instructions of the Client with respect to broker/dealers who are approved to execute transactions involving the Managed Funds and in the absence of such instructions will engage broker/dealers which the Advisor reasonably believes to be reputable, qualified and financially sound. 2 2. COMPENSATION. (a) For services provided by the Advisor pursuant to this Agreement, the Client shall pay the Advisor an annual fee, in monthly installments, based on the daily net assets under management according to the schedule below: Average Assets Under Management Fees First $40 million 8 basis points (0.08%) Over $40 million 7 basis points (0.07%) "Daily net assets" is defined to include the amortized value of securities, accrued interest and cash or any money market fund balance. The minimum annual fee is $25,000, to be applied in equal monthly installments. (b) The Advisor will bill the Client monthly for service performed under this Agreement, said bill to include a statement indicating the basis upon which the fee was calculated. The Client shall pay to the Advisor the amount payable pursuant to this Agreement not later than on the 15th day of the month following the month during which the Advisor's statement was rendered. (c) Assets invested by the Advisor under the terms of this Agreement may from time to time be invested in (i) a money market mutual fund managed by the Advisor or (ii) a local government investment pool managed by the Advisor (either, a "Pool"), or in individual securities. Average daily net assets subject to the fees described in this section shall not take into account any funds invested in the Pool. Expenses of the Pool, including compensation for the Advisor and the Pool custodian, are described in the relevant prospectus or information statement and are paid from the Pool. (d) If and to the extent that the Client shall request the Advisor to render services other than those to be rendered by the Advisor hereunder, such additional services shall be compensated separately on terms to be agreed upon between the Advisor and the Client. 3. PAYMENT Upon acceptance of work by using department of the City, employees and others, the City shall make payment to the Advisor in accordance with the Local Government Prompt Payment Act, Chapter 218, Florida Statutes. 3 The City reserves the right, with justification, to partially pay any invoice submitted by the Advisor when requested to do so by the using City department. All invoices shall be directed to the Accounts Payable Section, City of Palm Bay, 120 Malabar Road SE, Palm Bay, FL 32907. 4. EXPENSES. (a) The Advisor shall furnish at its own expense all necessary administrative services, office space, equipment, clerical personnel, telephone and other communication facilities, investment advisory facilities, and executive and supervisory personnel for managing the ManagedFunds. (b) Except as expressly provided otherwise herein, the Client shall pay all of its own expenses including, without limitation, taxes, commissions, fees and expenses of the Client's independent auditors and legal counsel, if any, brokerage and other expenses connected with the execution of portfolio security transactions, insurance premiums, and fees and expenses of the Custodian. 5. REGISTERED ADVISOR; DUTY OF CARE. The Advisor hereby represents it is a registered investment advisor under the Investment Advisers Act of 1940, as amended. The Advisor shall immediately notify the Client if at any time du_: this Agreement The the term of L lls t1�'IGeli-lent it is not so registered or if its registration is suspended. Advisor agrees to perform its duties and responsibilities under this Agreement with reasonable care. The federal securities laws impose liabilities under certain circumstances on persons who act in good faith. Nothing herein shall in any way constitute a waiver or limitation of any rights which the Client may have under any federal securities laws. The Client hereby authorizes the Advisor to sign I.R.S. Form W-9 on behalf of the Client and to deliver such form to broker -dealers or others from time to time as required in connection with securities transactions pursuant to this Agreement. 6. ADVISOR'S OTHER CLIENTS. The Client understands that the Advisor performs investment advisory services for various other clients which may include investment companies, commingled trust funds and/or individual portfolios. The Client agrees that the Advisor, in the exercise of its professional judgment, may give advice or take action with respect to any of its other clients which may differ from advice given or the timing or nature of action taken with respect to the Managed Funds. The Advisor shall not have any obligation to purchase, sell or exchange any security for the Managed Funds solely by reason of the fact that the Advisor, its principals, affiliates, or employees may purchase, sell or exchange such security for the account of any other client or for itself or its own accounts. 7. TERMINATION This Agreement may be terminated by the Client in the event of any material breach of its 4 terms immediately upon notice to the Advisor by certified mail, return receipt requested. This Agreement may be terminated by the Client at any time, on not less than thirty (30) days' written notice to the Advisor. The Advisor may terminate this Agreement immediately upon any material breach of its terms by the Client, or at any time after one year upon thirty (30) days' written notice to the Client. The Client may terminate with cause if at any time the Advisor fails to fulfill or abide by any of the terms or conditions specified. Failure of the Advisor to comply with any of the provisions of this Agreement shall be considered a material breach of Agreement and shall be cause for immediate termination of the Agreement at the discretion of the Client. In the event sufficient budgeted funds are not available for a new fiscal period, the Client shall notify the Advisor of such occurrence in writing and this Agreement shall terminate on the last day of current fiscal period without penalty or expense to the Client. The Advisor understands and agrees that the Client may immediately terminate this Agreement upon written notice if the Advisor is found to have submitted a false certification or any of the following occur with respect to the Advisor or a related entity: (i) for any contract for goods or services in any amount of monies, it has been placed on the Scrutinized Companies that Boycott Israel List, or is engaged in a boycott of Israel, or (ii) for any contract for goods or services of one million dollars ($1,000,000) or more, it has been placed on the Scrutinized Companies with Activities in Sudan List or the Scrutinized Companies with Activities in the Iran Petroleum Energy Sector List, or it is found to have been engaged in business operations in Cuba or Syria. 8. INDEMNIFICATION For other and additional good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Contractor, including but not limited to the Contractor's officers, officials, employees, representatives, agents, contractors officers, etc., subcontractors and their officers, etc. (hereinafter Contractor) hereby agrees to indemnify, hold harmless and defend the City of Palm Bay, including but not limited to its officers, agents, subcontractors, officers, officials, representatives, volunteers, employees and all those others acting on the City's behalf (hereinafter City) against any and all liability, loss, cost, damages, expenses, claims or actions of whatever type or nature, including but not limited to attorney and expert fees and suit cost, for trials and appeals, that the City may pay, sustain, or incur arising wholly or in part due to any wrongful act, error or omission, whether negligent or deliberate, of Contractor in the execution, performance or non- performance or failure to adequately perform the Advisor's obligation pursuant to this Agreement. 5 9. FORCE MAJEURE. The Advisor shall have no liability for any losses arising out of the delays in performing or inability to perform the services which it renders under this Agreement which result from events ha ,nnrl itc rnntrnl inrhuling internintinn of thP. hiIsinPcc activitiPc of the Advicnr nr nther fi_n2nci21 institutions due to acts of God, acts of governmental authority, acts of war, terrorism, civil insurrection, riots, labor difficulties, or any action or inaction of any carrier or utility, or mechanical or other malfunction. 10. DISCIPLINARY ACTIONS. The Advisor shall promptly give notice to the Client if the Advisor shall have been found to have violated any state or federal securities law or regulation in any final and unappealable judgment in any criminal action or civil suit in any state or federal court or in any disciplinary proceeding before the Securities and Exchange Commission ("SEC") or any other agency or department of the United States, any registered securities exchange, the Financial Industry Regulatory Authority, or any regulatory authority of any State based upon the performance of services as an investment advisor. 11. INDEPENDENT CONTRACTOR. The Advisor, its employees, officers and representatives shall not be deemed to be employees, agents (except as to the purchase or sale of securities described in Section 1), partners, servants, and/or joint ventures of the Client by virtue of this Agreement or any actions or services rendered under this Agreement. 12. BOOKS. The Advisor shall maintain records of all transactions in the Managed Funds. The Advisor shall provide the Client with a monthly statement showing deposits, withdrawals, purchases and sales (or maturities) of investments, earnings received, and the value of assets held on the last business day of the month. The statement shall be in the format and manner that is mutually agreed upon by the Advisor and the Client. 13. THE ADVISOR'S BROCHURE AND BROCHURE SUPPLEMENT. The Advisor warrants that it has delivered to the Client prior to the execution of this Agreement the Advisor's current SEC Form ADV, Part 2A (brochure) and Part 2B (brochure supplement). The Client acknowledges receipt of such brochure and brochure supplement prior to the execution of this Agreement. 6 14. MODIFICATION. This Agreement shall not be changed, modified, terminated or discharged in whole or in part, except by an instrument in writing signed by both parties hereto, or their respective successors or assigns. 15. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be binding on the Advisor and its successors and assigns, provided, however, that the rights and obligations of the Advisor may not be assigned without the consent of the Client. 16. INSURANCE REQUIREMENTS The Advisor, and its subcontractors, subconsultants, assignees and suppliers, at its own expense, shall keep in force and at all times maintain during the term of this Agreement: Commercial General Liability: The Advisor shall maintain combined single minimum limits of $1,000,000.00 each occurrence / $2,000,000.00 general aggregate for bodily injury and property damage liability. This shall include premises/operations, products, completed operations, personal and advertising injury, and contractual liability. This policy of insurance shall be considered primary to and not contributing to any insurance maintained by the City of Palm Bay and shall name the City of Palm Bay as an additional insured. The policy of insurance shall be written on an "occurrence" basis and form. Automobile Liability: The Advisor shall maintain minimum limits of liability of $1,000,000.00 each accident, combined single limit for bodily injury and property damage. This shall include coverage for: • Owned Automobiles • Hired Automobiles • Non -Owned Automobiles Umbrella / Excess Liability: The Advisor shall maintain umbrella/excess coverage with limits of no less than $1,000,000.00 excess of Commercial General Liability, Automobile Liability and Employers Liability. **This coverage is optional if the Advisor has $2,000,000 General Aggregate under the Commercial General Liability Policy** Workers' Compensation Coverage: Full and complete Workers' Compensation Coverage, including coverage for Employer's Liability, as required by State of Florida law, shall be provided. Should the Named Vendor utilize a 7 Professional Employer Organization, said Vendor acknowledges and agrees that all employees sent to the City of Palm Bay MUST be included on that PEO roster. Professional Liability Insurance or Errors and Omissions Insurance: The Advisor shall maintain professional liability insurance, or Errors and Omissions Insurance, with a minimum limit of $1,000,000.00 aggregate with respect to acts, errors or omissions in connection with professional services to be provided under this Agreement. The Advisor represents it is financially responsible for the deductible amount. Insurance Certificates: The City of Palm Bay is to be specifically included as an additional insured on all certificates of insurance (with exception to Workers Compensation and Professional Liability Insurance). Waiver of Subrogation is required for Commercial General Liability and Automobile Liability. All certificates must be received prior to commencement of service/work. In the event the insurance coverage expires prior to the completion of this Agreement, a renewal certificate shall be issued thirty - (30) days prior to said expiration date. The certificate shall provide a thirty - (30) day notification clause in the event of cancellation odifieatiell to the policy except 10 days' notice shall be acceptable when cancellation is due to non-payment of premium. All insurance carriers shall be rated (A-) or better by the most recently published A.M. Best Rating Guide. Unless otherwise specified, it shall be the responsibility of the advisor to ensure that all subcontractors comply with the insurance requirements set forth in this Agreement. 17. PUBLIC RECORDS The City is a public agency subject to Chapter 119, Florida Statutes. The Advisor shall comply with Florida's Public Records law. Specifically, the Advisor shall: A. Keep and maintain public records that ordinarily and necessarily would be required by the public agency in order to perform this service. B. Provide the agency with access to public records at a cost that does not exceed the cost provided in Chapter 119, Florida Statutes or as otherwise provided by law. C. Ensure that public records that are exempt or that are confidential and exempt from public record requirements are not disclosed except as authorized by law; and D. Meet all requirements for retaining public records and transfers to the City, at no cost, all public records in possession of the contractor upon termination of the contract and destroy any duplicate public records that are exempt or confidential and exempt. All records stored electronically must be provided to the City in a format that is compatible with the information technology systems of the City. 8 The failure of the Advisor to comply with the provisions set forth in this section shall constitute a material breach of Agreement and shall be cause for immediate termination of the Agreement. If the Contractor has questions regarding the application of Chapter 119 Florida Statutes, to the contractor's duty to provide public records relating to this contract, contact the custodian of public records at the City of Palm Bay Procurement Department, 120 Malabar Road SE, Suite 200 Palm Bay, Florida 32907; 321-952-3424; or procurement pbtl.org. 18. NOTICE. Written notices required under this Agreement shall be sent by regular mail, certified mail, overnight delivery or courier, and shall be deemed given when received at the parties' respective addresses shown below. Either party must notify the other party in writing of a change in address. Client's Address Chief Procurement Officer City of Palm Bay 120 Malabar Road SE Palm Bay FL 32907 Advisor's Address PFM Asset Management LLC 225 E. Robinson Street, Suite 250 Orlando, FL 32801 Attn: With copy to: City Manager City of Palm Bay 120 Malabar Road SE Palm Bay FL 32907 With copy to: PFM Asset Management LLC 213Market Street Harrisburg, PA 17101 Attn: Chief Administrative Officer 19. APPLICABLE LAW. This Agreement shall be construed, enforced, and administered according to the laws of the State of Florida. The Advisor and the Client agree that, should a disagreement arise as to the terms or enforcement of any provision of this Agreement, each party will in good faith attempt to resolve said disagreement prior to filing a lawsuit. 20. MISCELLANEOUS PROVISION By entering into this Agreement, the Advisor becomes obligated to comply with the provisions of Section 448.095, Fla. Stat., "Employment Eligibility," as amended from time to time. This includes but is not limited to utilization of the E-Verify System to verify the work authorization status of all newly hired employees and requiring all subcontractors to provide an affidavit attesting that the subcontractor does not employ, contract with, or subcontract with, an unauthorized alien. The Advisor shall maintain a copy of such affidavit for the duration of the contract. Failure to 9 comply will lead to termination of this Agreement, or if a subcontractor knowingly violates the statute, the subcontract must be terminated immediately. Any challenge to termination under this provision must be filed in the Circuit Court no later than 20 calendar days after the date of termination If this Agreement is terminated for a violation of the statute by the Adviser, the Advisor may not be awarded a public contract for a period of 1 year after the date of termination. 21. EXECUTION AND SEVERABILITY. Each party to this Agreement represents and warrants that the person or persons signing this Agreement on behalf of such party is authorized and empowered to sign and deliver this Agreement for such party. The invalidity in whole or in part of any provision of this Agreement shall not void or affect the validity of any other provision IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their authorized representatives as of the date set forth in the first paragraph of this Agreement. ame:„<r7E( C'Y I fr' Title: Managing Director City of Palm Bay By: iil% ► tL O �rJ Nam : Ja(te1- /1/143 cr Title: )114 Pit Lu-lt/Lterl'-i Cam✓ tC City of Palm Bay, Florida Resolution No. 2018-16 EXHIBIT "A" INVESTMENT POLICY CITY OF PALM BAY Approved on May 3, 2018 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. MASTER REPURCHASE AGREEMENT 6 XII. RISK AND DIVERSIFICATION 6 XIII. COMPETITIVE SELECTION OF INVESTMENT INSTRUMENTS 6 XIV. AUTHORIZED INVESTMENTS AND PORTFOLIO COMPOSITION 7 XV. DERIVATIVES AND REVERSE REPURCHASE AGREEMENTS 11 XVI. PERFORMANCE MEASUREMENTS 11 XVII. REPORTING 12 XVIII. THIRD -PARTY CUSTODIAL AGREEMENTS 12 XIX. INVESTMENT POLICY ADOPTION 12 ATTACHMENT A: Glossary of Cash and Investment Management Terms ATTACHMENT B: Investment Pool/Fund Questionnaire City of Palm Bay Investment Policy Page 2 INVESTMENT POLICY CITY OF PALM BAY, 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 Palm Bay, Florida (hereinafter "City"). These policies are designed to ensure the prudent management of public 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 Statutes, this investment policy applies to the investment of public funds in excess of the amounts needed to meet current expenses, which includes cash and investment balances of the following funds: ➢ General Fund ➢ Special Revenue Funds • Capital Projects Funds ➢ Enterprise Funds ➢ Intemal Service Funds ➢ Trust and Agency Funds This policy does not apply to the investment of principal, interest, reserve, construction, capitalized interest, redemption or escrow accounts created by ordinance or resolution pursuant to the issuance of bonds where the investments are held by an authorized depository. This policy does not apply to funds not under investment control of the City; such as, employee pension or retirement plans. 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 to 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 purchased at a premium or traded for other securities to improve yield, maturity or credit risk. For these transactions, a loss may be incurred for accounting purposes to achieve optimal investment return, provided any of the following occurs with respect to the replacement security: A. The yield has been increased, or B. The maturity has been reduced or lengthened, or City of Palm Bay Investment Policy Page 3 C. The quality of the investment has been improved Maintenance of Liquidity The second highest priority is liquidity of funds. The portfolios shall be managed in such a manner that funds are available to meet reasonably anticipated cash flow requirements in an orderly manner. Return on Investment The third highest priority is income. 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 The management responsibility for all City funds in the investment program and investment transactions is delegated to the Finance Director. The daily administration of the investment program will be the responsibility of the Assistant Finance Director. 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 manager to assist in managing some of the City's portfolios. Such investment manager 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. The Finance Director acting in accordance with written procedures and this investment policy and exercising due diligence shall be relieved of any personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectation are reported to the City Manager 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 standard is as follows: 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 the City's staff 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 consultant 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 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. City of Palm Bay Investment Policy Page 4 VI. ETHICS AND CONFLICTS OF INTEREST The City's staff 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 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 maintained in writing. 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. 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 or designee responsible for making investment decisions shall annually complete eight (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 and/or the management designee shall maintain a list of financial institutions and broker/dealers that are approved for investment purposes and only firms meeting the following requirements will be eligible to serve as Qualified Institutions: 1) regional dealers that qualify under Securities and Exchange Commission Rule 15C3-1 (uniform net capital rule); 2) Capital of no less than $10,000,000; 3) registered as a dealer under the Securities Exchange Act of 1934; 4) member of the Financial Industry Regulatory Authority, Inc. (FINRA); 5) registered to sell securities in Florida; and 6) the firm and assigned broker have been engaged in the business of effecting transactions in U.S. government and agency obligations for at least five (5) consecutive years. Authorized City staff shall only purchase securities from financial institutions that are qualified as public depositories by the Chief Financial Officer of the State of Florida. A listing of the Qualified Public Depositories is available at hops: //www.myfloridacfo. com/division/treasury/collateralmanagement/documents/ListofActiveQPDs.pdf. In addition, institutions designated as "Primary Dealers" by the Federal Reserve Bank of New York City of Palm Bay Investment Policy Page 5 (source of information: https://www.newyorkfed.org/markets/primarydealers.html), direct issuers of commercial paper and bankers' acceptances, or approved non -primary dealers. The City's Investment Advisor(s) shall utilize and maintain its own list of approved primary and non - primary dealers. 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. Investment maturities shall not exceed five and one-half (5.5) years from the date of settlement. XI. MASTER REPURCHASE AGREEMENT The Finance Director will require all approved institutions and dealers transacting repurchase agreements to execute and perform as stated in the Securities Industry and Financial Markets Association (SIFMA) Master Repurchase Agreement. All repurchase agreement transactions will adhere to requirements of the SIFMA Master Repurchase Agreement. XII. RISK AND DIVERSIFICATION Assets shall be diversified to control the risk of loss resulting from over concentration of assets in a specific maturity, issuer, instrument, dealer, or bank through which these instruments are bought and sold. XIII. COMPETITIVE SELECTION OF INVESTMENT INSTRUMENTS After the Finance Director or the investment advisor 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 investments in question. 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, investments 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: A. Tradeweb 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 City of Palm Bay Investment Policy Page 6 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 investments 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. XIV. 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 management 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. The Finance Director or management 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, at the time of purchase. Investments not listed in this Policy are prohibited. In the event of a ratings downgrade of a security, the Investment Advisor shall notify the Finance Director within five business days of such a decline in the required rating. The Investment Advisor and the Finance Director will review the individual facts and circumstances of the situation and determine an appropriate course of action. City of Palm Bay Investment Policy Page 7 Sector Sector Maximum (%) Per Issuer Maximum (%) Minimum Ratings Requirement) Maximum Maturity U.S. 'treasury 100% 100% N/A 5.50 Years (5.50 Years avg. life4 for GNMA) GNMA 40% Other U.S. Government Guaranteed (e.g. AID, GTC) 10% Federal Agency/GSE: FNMA, FHLMC, FHLB, FFCB* 75% 40%3 N/A 5.50 Years Federal Agency/GSE other than those above 10% Supranationals where U.S. is a shareholder and voting member ° 25% 10% Highest ST or Highest LT Rating Categories (A-1/P-1, AAA/Aaa, or equivalent) 5.50 Years Corporates 50%2 5% Highest ST or Three Highest LT Rating Categories (A-1/P-1, A-/A3 or equivalent) 5.50 Years Municipals 25% 5% Highest ST or Three Highest LT Rating Categories (SP-1/IVIIG 1, A-/A3, or equivalent) 5.50 Years Agency Mortgage -Backed Securities (MBS) 25% 40o3 N/A 5.50 Years Avg. Life4 Asset -Backed Securities (ABS) 25% 5% Highest ST or LT Rating (A-1+/P-1, AAA/Aaa, or equivalent) 5.50 Years Avg. Life4 Non -Negotiable Collateralized Bank Deposits or Savings Accounts ° 50% None, if fully collateralized None, if fully collateralized. 2 Years Commercial Paper (CP) 50%2 5% Highest ST Rating Category (A-1/P-1, or equivalent) 270 Days Repurchase Agreements (Repo or RP) ° 25% ° 10% Counterparty (or if the counterparty is not rated by an NRSRO, then the counterparty's parent) must be rated in the Highest ST Rating Category (A-1/P-1, or equivalent) If the counterparty is a Federal Reserve Bank, no rating is required 1 Year Money Market Funds (MMFs) 50% 25% Highest Fund Rating by all NRSROs who rate the fund (AAAm/Aaa-mf, or equivalent) N/A Intergovernmental Pools (LGIPs) ° 50% ° 25% Highest Fund Quality and Volatility Rating Categories by all NRSROs who rate the LGIP, (AAAm/AAAf, Sl, or equivalent) N/A Florida Local Government Surplus Funds Trust Funds ("Florida Prime") ° 25% N/A Highest Fund Rating by all NRSROs who rate the fund (AAAm/Aaa-mf, or equivalent) N/A Notes: Nationally and bank credit Federal agency, including ABS is based on (FNMA); Farm Credit Bank Recognized Statistical Rating Organization ("NRSRO"), unless otherwise noted. ST=Short- 50% combined. holdings of Agency debt and Agency MBS, is 40%. life at time of settlement, measured using Bloomberg or other industry Mortgage Corporation (FHLMC); Federal Home Loan Bank or its ' Rating by at least one SEC -registered term; LT=Long-term. 2 Maximum allocation to all corporate 3 Maximum exposure to any one 4 The maturity limit for MBS and standard methods. * Federal National Mortgage Association District banks (FHLB); Federal instruments is the combined the expected average Federal Home Loan (FFCB). City of Palm Bay Investment Policy Page 8 1) U.S. Treasury & Government Guaranteed - U.S. Treasury obligations, and obligations the principal and interest of which are backed or guaranteed by the full faith and credit of the U.S. Government. 2) Federal Agency/GSE - Debt obligations, participations or other instruments issued or fully guaranteed by any U.S. Federal agency, instrumentality or government -sponsored enterprise (GSE). 3) Supranationals — U.S. dollar denominated debt obligations of a multilateral organization of governments where U.S. is a shareholder and voting member. 4) Corporates — U.S. dollar denominated corporate notes, bonds or other debt obligations issued or guaranteed by a domestic corporation, financial institution, non-profit, or other entity. 5) Municipals — Obligations, including both taxable and tax-exempt, issued or guaranteed by any State, territory or possession of the United States, political subdivision, public corporation, authority, agency board, instrumentality or other unit of local government of any State or territory. 6) Agency Mortgage Backed Securities - Mortgage -backed securities (MBS), backed by residential, multi -family or commercial mortgages, that are issued or fully guaranteed as to principal and interest by a U.S. Federal agency or government sponsored enterprise, including but not limited to pass-throughs, collateralized mortgage obligations (CMOs) and REMICs. 7) Asset -Backed Securities - Asset -backed securities (ABS) whose underlying collateral consists of loans, leases or receivables, including but not limited to auto loans/leases, credit card receivables, student loans, equipment loans/leases, or home -equity loans. 8) Non -Negotiable Certificate of Deposit and Savings Accounts - Non-negotiable interest bearing time certificates of deposit, or savings accounts in banks organized under the laws of this state or in national banks organized under the laws of the United States and doing business in this state, provided that any such deposits are secured by the Florida Security for Public Deposits Act, Chapter 280, Florida Statutes. 9) Commercial Paper — U.S. dollar denominated commercial paper issued or guaranteed by a domestic corporation, company, financial institution, trust or other entity, only unsecured debt permitted. 10) Repurchase Agreements - Repurchase agreements (Repo or RP) that meet the following requirements: a. Must be governed by a written SIFMA Master Repurchase Agreement which specifies securities eligible for purchase and resale, and which provides the unconditional right to liquidate the underlying securities should the Counterparty default or fail to provide full timely repayment. b. Counterparty must be a Federal Reserve Bank, a Primary Dealer as designated by the Federal Reserve Bank of New York, or a nationally chartered commercial bank. c. Securities underlying repurchase agreements must be delivered to a third party custodian under a written custodial agreement and may be of deliverable or tri-party form. Securities must be held in the City's custodial account or in a separate account in the name of the City. d. Acceptable underlying securities include only securities that are direct obligations of, or that are fully guaranteed by, the United States or any agency of the United States, or U.S. Agency -backed mortgage related securities. City of Palm Bay Investment Policy Page 9 e. Underlying securities must have an aggregate current market value of at least 102% (or 100% if the counterparty is a Federal Reserve Bank) of the purchase price plus current accrued price differential at the close of each business day. f Final term of the agreement must be 1 year or less. 11) Money Market Funds - Shares in open-end and no-load money market mutual funds, provided such funds are registered under the Investment Company Act of 1940 and operate in accordance with Rule 2a-7. A thorough investigation of any money market fund is required prior to investing, and on an annual basis. Appendix B is a questionnaire that contains a list of questions, to be answered prior to investing, that cover the major aspects of any investment pool/fund. A current prospectus must be obtained. 12) Local Government Investment Pools — State, local government or privately -sponsored investment pools that are authorized pursuant to state law. A thorough investigation of any intergovernmental investment pool is required prior to investing, and on an annual basis. Appendix B is a questionnaire that contains a list of questions, to be answered prior to investing, that cover the major aspects of any investment pool/fund. A current prospectus must be obtained. 13) The Florida Local Government Surplus Funds Trust Funds ("Florida Prime") A thorough investigation of the Florida Prime is required prior to investing, and on an annual basis. Appendix B is a questionnaire that contains a list of questions, to be answered prior to investing, that cover the major aspects of any investment pool/fund. A current prospectus or portfolio report must be obtained. General Investment and Portfolio Limits 1. General investment limitations: a. Investments must be denominated in U.S. dollars and issued for legal sale in U.S. markets. b. Minimum ratings are based on the highest rating by any one Nationally Recognized Statistical Ratings Organization ("NRSRO"), unless otherwise specified. c. All limits and rating requirements apply at time of purchase. d. Should a security fall below the minimum credit rating requirement for purchase, the Investment Advisor will notify the Finance Director. e. The maximum maturity (or average life for MBS/ABS) of any investment is 5.50 years. Maturity and average life are measured from settlement date. The final maturity date can be based on any mandatory call, put, pre -refunding date, or other mandatory redemption date. 2. General portfolio limitations: a. The maximum effective duration of the aggregate portfolio is 3 years. 3. Investment in the following are permitted, provided they meet all other policy requirements: a. Callable, step-up callable, called, pre -refunded, putable and extendable securities, as long as the effective final maturity meets the maturity limits for the sector b. Variable -rate and floating-rate securities c. Subordinated, secured and covered debt, if it meets the ratings requirements for the sector d. Zero coupon issues and strips, excluding agency mortgage -backed Interest -only structures (I/Os) City of Palm Bay Investment Policy Page 10 e. Treasury TIPS 4. The following are NOT PERMITTED investments, unless specifically authorized by statute and with prior approval of the governing body: a. Trading for speculation b. Derivatives (other than callables and traditional floating or variable -rate instruments) c. Mortgage -backed interest -only structures (I/Os) d. Inverse or leveraged floating-rate and variable -rate instruments e. Currency, equity, index and event -linked notes (e.g. range notes), or other structures that could return less than par at maturity f. Private placements and direct loans, except as may be legally permitted by Rule 144A or commercial paper issued under a 4(2) exemption from registration g. Convertible, high yield, and non-U.S. dollar denominated debt h. Short sales i. Use of leverage j. Futures and options k. Mutual funds 1. Equities, commodities, currencies and hard assets m. Reverse Repurchase Agreements XV. DERIVATIVES AND REVERSE REPURCHASE AGREEMENTS Investment in any derivative products or the use of reverse repurchase agreements requires specific approval by the governing body of the city prior to their use. If the governing body approves the use of derivative products, the Finance Director shall develop sufficient understanding of the derivative products and have the expertise to manage them. The City may also acquire the services of a third -party to manage the product. 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. XVI. PERFORMANCE MEASUREMENTS In order to assist in the evaluation of the portfolio's 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. Investment performance of funds designated as short-term funds and other funds that must maintain a high degree of liquidity will be compared to the return on the S&P Rated GIP Index Government 30- Day Gross of Fees Yield. Investment performance of funds designated as core funds and other non -operating funds that have a longer -term investment horizon will be compared to the BofA Merrill Lynch 1-3 Year U.S. Treasury/Agency Index and the portfolio's total rate of return will be compared to this benchmark. The appropriate index will have a duration and asset mix that approximates the portfolios and will be utilized as a benchmark to be compared to the portfolios' total rate of return. City of Palm Bay Investment Policy Page 11 XVII. REPORTING The Finance Director shall provide a quarterly investment report including the listing of holdings in the portfolio at cost and market value to the City Manager. This report will then be forwarded to the City Council. Such reports shall be available to the public. Schedules in the quarterly report should include but not be limited to the following: A. A listing of individual investments held at the end of the reporting period B. Coupon, discount or earning rate C. Final maturity date on all investments D. Book value, and market value E. Income Earned XVIII. THIRD -PARTY CUSTODIAL AGREEMENTS All 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 maintained by book -entry at the issuing bank shall clearly identify the City as the owner. The City Manager shall execute on behalf of the City, third party custodial agreement(s) with its bank(s) and depository institution(s). Such agreements may include letters of authority from the City, details as to the responsibilities of each party, method of notification of security purchases, sales, delivery procedures related to repurchase agreements and wire transfers, safekeeping and transaction costs, procedures in case of wire failure or other unforeseen mishaps and describing the liability of each party. The custodian shall accept transaction instructions only from those persons who have been duly authorized by the City of Palm Bay 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 with safekeeping receipts that provide detail information on the securities held by the custodian. 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. Securities held as collateral shall be held free and clear of any liens. XIX. INVESTMENT POLICY ADOPTION The Finance Director shall review the policy annually and make recommendations to the City Council for modification thereto. City of Palm Bay Investment Policy Page 12 Attachment A Glossary of Cash and Investment Management Terms The following is a glossary of key investing terms, many of which appear in the City's Policy. This glossary clarifies the meaning of investment terms generally used in cash and investment management. This glossary has been adapted from the GFOA Sample Investment Policy and the Association of Public Treasurers of the United States and Canada's Model Investment Policy. Accrued Interest. Interest earned but which has not yet been paid or received. Agency. See "Federal Agency Securities." Ask Price. Price at which a broker/dealer offers to sell a security to an investor. Also known as "offered price." Asset Backed Securities (ABS). A fixed -income security backed by notes or receivables against assets other than real estate. Generally issued by special purpose companies that "own" the assets and issue the ABS. Examples include securities backed by auto loans, credit card receivables, home equity loans, manufactured housing loans, farm equipment loans, and aircraft leases. Available Funds. Cash and investment balances in excess of those required to meet current expenses for the short term. Average Life. The average length of time that an issue of serial bonds and/or term bonds with a mandatory sinking fund feature is expected to be outstanding. Bankers' Acceptance (BA's). A draft or bill of exchange drawn upon and accepted by a bank. Frequently used to finance shipping of international goods. Used as a short-term credit instrument, bankers' acceptances are traded at a discount from face value as a money market instrument in the secondary market on the basis of the credit quality of the guaranteeing bank. Basis Point. One hundredth of one percent, or 0.01%. Thus 1% equals 100 basis points. Bearer Security. A security whose ownership is determined by the holder of the physical security. Typically, there is no registration on the issuer's books. Title to bearer securities is transferred by delivery of the physical security or certificate. Also known as "physical securities." Benchmark Bills: In November 1999, FNMA introduced its Benchmark Bills program, a short-term debt securities issuance program to supplement its existing discount note program. The program includes a schedule of larger, weekly issues in three- and six-month maturities and biweekly issues in one-year for Benchmark Bills. Each issue is brought to market via a Dutch (single price) auction. FNMA conducts a weekly auction for each Benchmark Bill maturity and accepts both competitive and non-competitive bids through a web based auction system. This program is in addition to the variety of other discount note maturities, with rates posted on a daily basis, which FNMA offers. FNMA's Benchmark Bills are unsecured general obligations that are issued in book -entry form through the Federal Reserve Banks. There are no periodic payments of interest on Benchmark Bills, which are sold at a discount from the principal amount and payable at par at maturity. Issues under the Benchmark program constitute the same credit standing as other FNMA discount notes; they simply add organization and liquidity to the short-term Agency discount note market. Benchmark Notes/Bonds: Benchmark Notes and Bonds are a series of FNMA "bullet" maturities (non - callable) issued according to a pre -announced calendar. Under its Benchmark Notes/Bonds program, 2, 3, 5, 10, and 30-year maturities are issued each quarter. Each Benchmark Notes new issue has a minimum size of $4 billion, 30-year new issues having a minimum size of $1 billion, with re -openings based on investor demand to further enhance liquidity. The amount of non -callable issuance has allowed FNMA to build a yield curve in Benchmark Notes and Bonds in maturities ranging from 2 to 30 years. The liquidity emanating from these large City of Palm Bay Investment Policy Page 13 size issues has facilitated favorable financing opportunities through the development of a liquid overnight and term repo market. Issues under the Benchmark program constitute the same credit standing as other FNMA issues; they simply add organization and liquidity to the intermediate- and long-term Agency market. Benchmark. A market index used as a comparative basis for measuring the performance of an investment portfolio. A performance benchmark should represent a close correlation to investment guidelines, risk tolerance, and duration of the actual portfolio's investments. Bid Price. Price at which a broker/dealer offers to purchase a security from an investor. Bond. Financial obligation for which the issuer promises to pay the bondholder (the purchaser or owner of the bond) a specified stream of future cash -flows, including periodic interest payments and a principal repayment. Book Entry Securities. Securities that are recorded in a customer's account electronically through one of the financial markets electronic delivery and custody systems, such as the Fed Securities wire, DTC, and PTC (as opposed to bearer or physical securities). The trend is toward a certificate -free society in order to cut down on paperwork and to diminish investors' concerns about the certificates themselves. The vast majority of securities are now book entry securities. Book Value. The value at which a debt security is reflected on the holder's records at any point in time. Book value is also called "amortized cost" as it represents the original cost of an investment adjusted for amortization of premium or accretion of discount. Also called "carrying value." Book value can vary over time as an investment approaches maturity and differs from "market value" in that it is not affected by changes in market interest rates. Broker/Dealer. A person or firm transacting securities business with customers. A "broker" acts as an agent between buyers and sellers, and receives a commission for these services. A "dealer" buys and sells financial assets from its own portfolio. A dealer takes risk by owning inventory of securities, whereas a broker merely matches up buyers and sellers. See also "Primary Dealer." Bullet Notes/Bonds. Notes or bonds that have a single maturity date and are non -callable. Call Date. Date at which a call option may be or is exercised. Call Option. The right, but not the obligation, of an issuer of a security to redeem a security at a specified value and at a specified date or dates prior to its stated maturity date. Most fixed -income calls are a par, but can be at any previously established price. Securities issued with a call provision typically carry a higher yield than similar securities issued without a call feature. There are three primary types of call options (1) European - one- time calls, (2) Bermudan - periodically on a predetermined schedule (quarterly, semi-annual, annual), and (3) American - continuously callable at any time on or after the call date. There is usually a notice period of at least 5 business days prior to a call date. Callable Bonds/Notes. Securities which contain an imbedded call option giving the issuer the right to redeem the securities prior to maturity at a predetermined price and time. Certificate of Deposit (CD). Bank obligation issued by a financial institution generally offering a fixed rate of return (coupon) for a specified period of time (maturity). Can be as long as 10 years to maturity, but most CDs purchased by public agencies are one year and under. Collateral. Investment securities or other property that a borrower pledges to secure repayment of a loan, secure deposits of public monies, or provide security for a repurchase agreement. Collateralization. Process by which a borrower pledges securities, property, or other deposits for securing the repayment of a loan and/or security. City of Palm Bay Investment Policy Page 14 Collateralized Mortgage Obligation (CMO). A security that pools together mortgages and separates them into short, medium, and long-term positions (called tranches). Tranches are set up to pay different rates of interest depending upon their maturity. Interest payments are usually paid monthly. In "plain vanilla" CMOs, principal is not paid on a tranche until all shorter tranches have been paid off. This system provides interest and principal in a more predictable manner. A single pool of mortgages can be carved up into numerous tranches each with its own payment and risk characteristics. Commercial Paper. Short term unsecured promissory note issued by a company or financial institution. Issued at a discount and matures for par or face value. Usually a maximum maturity of 270 days and given a short-term debt rating by one or more NRSROs. Convexity. A measure of a bond's price sensitivity to changing interest rates. A high convexity indicates greater sensitivity of a bond's price to interest rate changes. Corporate Note. A debt instrument issued by a corporation with a maturity of greater than one year and less than ten years. Counterparty. The other party in a two party financial transaction. "Counterparty risk" refers to the risk that the other party to a transaction will fail in its related obligations. For example, the bank or broker/dealer in a repurchase agreement. Coupon Rate. Annual rate of interest on a debt security, expressed as a percentage of the bond's face value. Current Yield. Annual rate of return on a bond based on its price. Calculated as (coupon rate / price), but does not accurately reflect a bond's true yield level. Custody. Safekeeping services offered by a bank, financial institution, or trust company, referred to as the "custodian." Service normally includes the holding and reporting of the customer's securities, the collection and disbursement of income, securities settlement, and market values. Dealer. A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his/her own account. Delivery Versus Payment (DVP). Settlement procedure in which securities are delivered versus payment of cash, but only after cash has been received. Most security transactions, including those through the Fed Securities Wire system and DTC, are done DVP as a protection for both the buyer and seller of securities. Depository Trust Company (DTC). A firm through which members can use a computer to arrange for securities to be delivered to other members without physical delivery of certificates. A member of the Federal Reserve System and owned mostly by the New York Stock Exchange, the Depository Trust Company uses computerized debit and credit entries. Most corporate securities, commercial paper, CDs, and BAs clear through DTC. 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). For hedging purposes, common derivatives are options, futures, interest rate swaps, and swaptions. Derivative Security. Financial instrument created from, or whose value depends upon, one or more underlying assets or indexes of asset values. Designated Bond. FFCB's regularly issued, liquid, non -callable securities that generally have a 2 or 3 year original maturity. New issues of Designated Bonds are $1 billion or larger. Re -openings of existing Designated Bond issues are generally a minimum of $100 million. Designated Bonds are offered through a syndicate of two City of Palm Bay Investment Policy Page 15 to six dealers. Twice each month the Funding Corporation announces its intention to issue a new Designated Bond, reopen an existing issue, or to not issue or reopen a Designated Bond. Issues under the Designated Bond program constitute the same credit standing as other FFCB issues; they simply add organization and liquidity to the intermediate- and long-term Agency market. Discount Notes. Unsecured general obligations issued by Federal Agencies at a discount. Discount notes mature at par and can range in maturity from overnight to one year. Very large primary (new issue) and secondary markets exist. Discount Rate. Rate charged by the system of Federal Reserve Banks on overnight loans to member banks. Changes to this rate are administered by the Federal Reserve and closely mirror changes to the "fed funds rate." Discount Securities. Non -interest bearing money market instruments that are issued at discount and redeemed at maturity for full face value. Examples include: U.S. Treasury Bills, Federal Agency Discount Notes, Bankers' Acceptances, and Commercial Paper. Discount. The amount by which a bond or other financial instrument sells below its face value. See also "Premium." Diversification. Dividing investment funds among a variety of security types, maturities, industries, and issuers offering potentially independent returns. Dollar Price. A bond's cost expressed as a percentage of its face value. For example, a bond quoted at a dollar price of 95 '/2, would have a principal cost of $955 per $1,000 of face value. Duff & Phelps. One of several NRSROs that provide credit ratings on corporate and bank debt issues. Duration. The weighted average maturity of a security's or portfolio's cash -flows, where the present values of the cash -flows serve as the weights. The greater the duration of a security/portfolio, the greater its percentage price volatility with respect to changes in interest rates. Used as a measure of risk and a key tool for managing a portfolio versus a benchmark and for hedging risk. There are also different kinds of duration used for different purposes (e.g. MacAuley Duration, Modified Duration). Fannie Mae. See "Federal National Mortgage Association." Fed. See "Federal Reserve System." Fed Money Wire. A computerized communications system that connects the Federal Reserve System with its member banks, certain U. S. Treasury offices, and the Washington D.C. office of the Commodity Credit Corporation. The Fed Money Wire is the book entry system used to transfer cash balances between banks for themselves and for customer accounts. Fed Securities Wire. A computerized communications system that facilitates book entry transfer of securities between banks, brokers and customer accounts, used primarily for settlement of U.S. Treasury and Federal Agency securities. Federal Agency. Government sponsored/owned entity created by the U.S. Congress, generally for the purpose of acting as a financial intermediary by borrowing in the marketplace and directing proceeds to specific areas of the economy considered to otherwise have restricted access to credit markets. The largest Federal Agencies are GNMA, FNMA, FHLMC, FHLB, FFCB, SLMA, and TVA. Federal Agency Security. A debt instrument issued by one of the Federal Agencies. Federal Agencies are considered second in credit quality and liquidity only to U.S. Treasuries. City of Palm Bay Investment Policy Page 16 Federal Deposit Insurance Corporation (FDIC). Federal agency that insures deposits at commercial banks, currently to a limit of $250,000 per depositor per bank. Federal Farm Credit Bank (FFCB). One of the large Federal Agencies. A government sponsored enterprise (GSE) system that is a network of cooperatively -owned lending institutions that provides credit services to farmers, agricultural cooperatives and rural utilities. The FFCBs act as financial intermediaries that borrow money in the capital markets and use the proceeds to make loans and provide other assistance to farmers and farm -affiliated businesses. Consists of the consolidated operations of the Banks for Cooperatives, Federal Intermediate Credit Banks, and Federal Land Banks. Frequent issuer of discount notes, agency notes and callable agency securities. FFCB debt is not an obligation of, nor is it guaranteed by the U.S. government, although it is considered to have minimal credit risk due to its importance to the U.S. financial system and agricultural industry. Also issues notes under its "designated note" program. Federal Funds (Fed Funds). Funds placed in Federal Reserve Banks by depository institutions in excess of current reserve requirements, and frequently loaned or borrowed on an overnight basis between depository institutions. Federal Funds Rate (Fed Funds Rate). The interest rate charged by a depository institution lending Federal Funds to another depository institution. The Federal Reserve influences this rate by establishing a "target" Fed Funds rate associated with the Fed's management of monetary policy. Federal Home Loan Bank System (FHLB). One of the large Federal Agencies. A government sponsored enterprise (GSE) system, consisting of wholesale banks (currently twelve district banks) owned by their member banks, which provides correspondent banking services and credit to various financial institutions, financed by the issuance of securities. The principal purpose of the FHLB is to add liquidity to the mortgage markets. Although FHLB does not directly fund mortgages, it provides a stable supply of credit to thrift institutions that make new mortgage loans. FHLB debt is not an obligation of, nor is it guaranteed by the U.S. government, although it is considered to have minimal credit risk due to its importance to the U S financial system and housing market. Frequent issuer of discount notes, agency notes and callable agency securities. Also issues notes under its "global note" and "TAP" programs. Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac"). One of the large Federal Agencies. A government sponsored public corporation (GSE) that provides stability and assistance to the secondary market for home mortgages by purchasing first mortgages and participation interests financed by the sale of debt and guaranteed mortgage backed securities. FHLMC debt is not an obligation of, nor is it guaranteed by the U.S. government, although it is considered to have minimal credit risk due to its importance to the U S financial system and housing market. Frequent issuer of discount notes, agency notes, callable agency securities, and MBS. Also issues notes under its "reference note" program. Federal National Mortgage Association (FNMA or "Fannie Mae"). One of the large Federal Agencies. A government sponsored public corporation (GSE) that provides liquidity to the residential mortgage market by purchasing mortgage loans from lenders, financed by the issuance of debt securities and MBS (pools of mortgages packaged together as a security). FNMA debt is not an obligation of, nor is it guaranteed by the U.S. government, although it is considered to have minimal credit risk due to its importance to the U S financial system and housing market. Frequent issuer of discount notes, agency notes, callable agency securities and MBS. Also issues notes under its "benchmark note" program. Federal Reserve Bank. One of the 12 distinct banks of the Federal Reserve System. Federal Reserve System (the Fed). The independent central bank system of the United States that establishes and conducts the nation's monetary policy. This is accomplished in three major ways: (1) raising or lowering bank reserve requirements, (2) raising or lowering the target Fed Funds Rate and Discount Rate, and (3) in open market operations by buying and selling government securities. The Federal Reserve System is made up of City of Palm Bay Investment Policy Page 17 twelve Federal Reserve District Banks, their branches, and many national and state banks throughout the nation. It is headed by the seven member Board of Governors known as the "Federal Reserve Board" and headed by its Chairman. Financial Industry Regulatory Authority, Inc. (FINRA). A private corporation that acts as a self -regulatory organization (SRO). FINRA is the successor to the National Association of Securities Dealers, Inc. (NASD). Though sometimes mistaken for a government agency, it is a non -governmental organization that performs financial regulation of member brokerage firms and exchange markets. The government also has a regulatory arm for investments, the Securities and Exchange Commission (SEC). Fiscal Agent/Paying Agent. A bank or trust company that acts, under a trust agreement with a corporation or municipality, in the capacity of general treasurer. The agent performs such duties as making coupon payments, paying rents, redeeming bonds, and handling taxes relating to the issuance of bonds. Fitch Investors Service, Inc. One of several NRSROs that provide credit ratings on corporate and municipal debt issues. Floating Rate Security (FRN or "floater"). A bond with an interest rate that is adjusted according to changes in an interest rate or index. Differs from variable -rate debt in that the changes to the rate take place immediately when the index changes, rather than on a predetermined schedule. See also "Variable Rate Security." Freddie Mac. See "Federal Home Loan Mortgage Corporation." Ginnie Mae. See "Government National Mortgage Association." Global Notes: Notes designed to qualify for immediate trading in both the domestic U.S. capital market and in foreign markets around the globe. Usually large issues that are sold to investors worldwide and therefore have excellent liquidity. Despite their global sales, global notes sold in the U.S. are typically denominated in U.S. dollars. Government National Mortgage Association (GNMA or "Ginnie Mae"). One of the large Federal Agencies. Government -owned Federal Agency that acquires, packages, and resells mortgages and mortgage purchase commitments in the form of mortgage -backed securities. Largest issuer of mortgage pass -through securities. GNMA debt is guaranteed by the full faith and credit of the U.S. government (one of the few agencies that are actually full faith and credit of the U.S. government). Government Securities. An obligation of the U.S. government, backed by the full faith and credit of the government. These securities are regarded as the highest quality of investment securities available in the U.S. securities market. See "Treasury Bills, Notes, Bonds, and SLGS." Government Sponsored Enterprise (GSE). Privately owned entity subject to federal regulation and supervision, created by the U.S. Congress to reduce the cost of capital for certain borrowing sectors of the economy such as students, farmers, and homeowners. GSEs carry the implicit backing of the U.S. government, but they are not direct obligations of the U.S. government. For this reason, these securities will offer a yield premium over U.S. Treasuries. Examples of GSEs include: FHLB, FHLMC, FNMA, and SLMA. Government Sponsored Enterprise Security. A security issued by a Government Sponsored Enterprise. Considered Federal Agency Securities. Index. A compilation of statistical data that tracks changes in the economy or in financial markets. Interest -Only (IO) STRIP. A security based solely on the interest payments from the bond. After the principal has been repaid, interest payments stop and the value of the security falls to nothing. Therefore, IOs are considered risky investments. Usually associated with mortgage -backed securities. City of Palm Bay Investment Policy Page 18 Internal Controls. An internal control structure ensures that the assets of the entity are protected from loss, theft, or misuse. The internal control structure is designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that 1) the cost of a control should not exceed the benefits likely to be derived and 2) the valuation of costs and benefits requires estimates and judgments by management. Internal controls should address the following points: 1. Control of collusion - Collusion is a situation where two or more employees are working in conjunction to defraud their employer. 2. Separation of transaction authority from accounting and record keeping - A separation of duties is achieved by separating the person who authorizes or performs the transaction from the people who record or otherwise account for the transaction. 3. Custodial safekeeping - Securities purchased from any bank or dealer including appropriate collateral (as defined by state law) shall be placed with an independent third party for custodial safekeeping. 4. Avoidance of physical delivery securities - Book -entry securities are much easier to transfer and account for since actual delivery of a document never takes place. Delivered securities must be properly safeguarded against loss or destruction. The potential for fraud and loss increases with physically delivered securities. 5. Clear delegation of authority to subordinate staff members - Subordinate staff members must have a clear understanding of their authority and responsibilities to avoid improper actions. Clear delegation of authority also preserves the internal control structure that is contingent on the various staff positions and their respective responsibilities. 6. Written confirmation of transactions for investments and wire transfers - Due to the potential for error and improprieties arising from telephone and electronic transactions, all transactions should be supported by written communications and approved by the appropriate person. Written communications may be via fax if on letterhead and if the safekeeping institution has a list of authorized signatures. 7. Development of a wire transfer agreement with the lead bank and third -party custodian - The designated official should ensure that an agreement will be entered into and will address the following points: controls, security provisions, and responsibilities of each party making and receiving wire transfers. Inverse Floater. A floating rate security structured in such a way that it reacts inversely to the direction of interest rates. Considered risky as their value moves in the opposite direction of normal fixed -income investments and whose interest rate can fall to zero. Investment Advisor. A company that provides professional advice managing portfolios, investment recommendations, and/or research in exchange for a management fee. Investment Adviser Act of 1940. Federal legislation that sets the standards by which investment companies, such as mutual funds, are regulated in the areas of advertising, promotion, performance reporting requirements, and securities valuations. Investment Grade. Bonds considered suitable for preservation of invested capital, including bonds rated a minimum of Baa3 by Moody's, BBB- by Standard & Poor's, or BBB- by Fitch. Although "BBB" rated bonds are considered investment grade, most public agencies cannot invest in securities rated below "A." Liquidity. Relative ease of converting an asset into cash without significant loss of value. Also, a relative measure of cash and near -cash items in a portfolio of assets. Additionally, it is a term describing the City of Palm Bay Investment Policy Page 19 marketability of a money market security correlating to the narrowness of the spread between the bid and ask prices. Local Government Investment Pool (LGIP). An investment by local governments in which their money is pooled as a method for managing local funds, (e.g., Florida State Board of Administration's Florida Prime Fund). Long -Term Core Investment Program. Funds that are not needed within a one-year period. Market Value. The fair market value of a security or commodity. The price at which a willing buyer and seller would pay for a security. Mark -to -market. Adjusting the value of an asset to its market value, reflecting in the process unrealized gains or losses. Master Repurchase Agreement. A widely accepted standard agreement form published by the Securities Industry and Financial Markets Association (SIFMA) that is used to govern and document Repurchase Agreements and protect the interest of parties in a repo transaction. Maturity Date. Date on which principal payment of a financial obligation is to be paid. Medium Term Notes (MTN's). Used frequently to refer to corporate notes of medium maturity (5-years and under). Technically, any debt security issued by a corporate or depository institution with a maturity from 1 to 10 years and issued under an MTN shelf registration. Usually issued in smaller issues with varying coupons and maturities, and underwritten by a variety of broker/dealers (as opposed to large corporate deals issued and underwritten all at once in large size and with a fixed coupon and maturity). Money Market. The market in which short-term debt instruments (bills, commercial paper, bankers' acceptance, etc.) are issued and traded. Money Market Mutual Fund (MMF). A type of mutual fund that invests solely in money market instruments, such as: U.S. Treasury bills, commercial paper, bankers' acceptances, and repurchase agreements. Money market mutual funds are registered with the SEC under the Investment Company Act of 1940 and are subject to "rule 2a-7" which significantly limits average maturity and credit quality of holdings. MMF's are managed to maintain a stable net asset value (NAV) of $1.00. Many MMFs carry ratings by a NRSRO. Moody's Investors Service. One of several NRSROs that provide credit ratings on corporate and municipal debt issues. Mortgage Backed Securities (MBS). Mortgage -backed securities represent an ownership interest in a pool of mortgage loans made by financial institutions, such as savings and loans, commercial banks, or mortgage companies, to finance the borrower's purchase of a home or other real estate. The majority of MBS are issued and/or guaranteed by GNMA, FNMA, and FHLMC. There are a variety of MBS structures with varying levels of risk and complexity. All MBS have reinvestment risk as actual principal and interest payments are dependent on the payment of the underlying mortgages which can be prepaid by mortgage holders to refinance and lower rates or simply because the underlying property was sold. Mortgage Pass -Through Securities. A pool of residential mortgage loans with the monthly interest and principal distributed to investors on a pro-rata basis. The largest issuer is GNMA. Municipal Note/Bond. A debt instrument issued by a state or local government unit or public agency. The vast majority of municipals are exempt from state and federal income tax, although some non -qualified issues are taxable. City of Palm Bay Investment Policy Page 20 Mutual Fund. Portfolio of securities professionally managed by a registered investment company that issues shares to investors. Many different types of mutual funds exist (e.g., bond, equity, and money market funds); all except money market funds operate on a variable net asset value (NAV). Negotiable Certificate of Deposit (Negotiable CD). Large denomination CDs ($100,000 and larger) that are issued in bearer form and can be traded in the secondary market. Net Asset Value. The market value of one share of an investment company, such as a mutual fund. This figure is calculated by totaling a fund's assets including securities, cash, and any accrued earnings, then subtracting the total assets from the fund's liabilities, and dividing this total by the number of shares outstanding. This is calculated once a day based on the closing price for each security in the fund's portfolio. (See below.) [(Total assets) - (Liabilities)]/(Number of shares outstanding) NRSRO. A "Nationally Recognized Statistical Rating Organization" (NRSRO) is a designated rating organization that the SEC has deemed a strong national presence in the U.S. NRSROs provide credit ratings on corporate and bank debt issues. Only ratings of a NRSRO may be used for the regulatory purposes of rating. Includes Moody's, S&P, Fitch, and Duff & Phelps. Offered Price. See also "Ask Price." Open Market Operations. A Federal Reserve monetary policy tactic entailing the purchase or sale of government securities in the open market by the Federal Reserve System from and to primary dealers in order to influence the money supply, credit conditions, and interest rates. Par Value. The face value, stated value, or maturity value of a security. Physical Delivery. Delivery of readily available underlying assets at contract maturity. Portfolio. Collection of securities and investments held by an investor. Premium. The amount by which a bond or other financial instrument sells above its face value. See also "Discount." Primary Dealer. A designation given to certain government securities dealer by the Federal Reserve Bank of New York. Primary dealers can buy and sell government securities directly with the Fed. Primary dealers also submit daily reports of market activity and security positions held to the Fed and are subject to its informal oversight. Primary dealers are the largest buyers and sellers by volume in the U.S. Treasury securities market. Prime Paper. Commercial paper of high quality. Highest rated paper is A-1+/A-1 by S&P and P-1 by Moody's. Principal. Face value of a financial instrument on which interest accrues. May be less than par value if some principal has been repaid or retired. For a transaction, principal is par value times price and includes any premium or discount. Prudent Expert Rule. Standard that requires that a fiduciary manage a portfolio with the care, skill, prudence, and diligence, under the circumstances then prevailing, that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. This statement differs from the "prudent person" rule in that familiarity with such matters suggests a higher standard than simple prudence. Prudent Investor Standard. Standard that requires that when investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the City of Palm Bay Investment Policy Page 21 anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency. More stringent than the "prudent person" standard as it implies a level of knowledge commensurate with the responsibility at hand. Qualified Public Depository - Per Subsection 280.02(26), F.S., "qualified public depository" means any bank, savings bank, or savings association that: 1. Is organized and exists under the laws of the United States, the laws of this state or any other state or territory of the United States. 2. Has its principal place of business in this state or has a branch office in this state which is authorized under the laws of this state or of the United States to receive deposits in this state. 3. Has deposit insurance under the provision of the Federal Deposit Insurance Act, as amended, 12 U.S.C. ss.1811 et seq. 4. Has procedures and practices for accurate identification, classification, reporting, and collateralization of public deposits. 5. Meets all requirements of Chapter 280, F.S. 6. Has been designated by the Chief Financial Officer as a qualified public depository. Range Note. A type of structured note that accrues interest daily at a set coupon rate that is tied to an index. Most range notes have two coupon levels; a higher accrual rate for the period the index is within a designated range, the lower accrual rate for the period that the index falls outside the designated range. This lower rate may be zero and may result in zero earnings. Rate of Return. Amount of income received from an investment, expressed as a percentage of the amount invested. Realized Gains (Losses). The difference between the sale price of an investment and its book value. Gains/losses are "realized" when the security is actually sold, as compared to "unrealized" gains/losses which are based on current market value. See "Unrealized Gains (Losses)." Reference Bills: FHLMC's short-term debt program created to supplement its existing discount note program by offering issues from one month through one year, auctioned on a weekly or on an alternating four -week basis (depending upon maturity) offered in sizeable volumes ($1 billion and up) on a cycle of regular, standardized issuance. Globally sponsored and distributed, Reference Bill issues are intended to encourage active trading and market -making and facilitate the development of a term repo market. The program was designed to offer predictable supply, pricing transparency, and liquidity, thereby providing alternatives to U.S. Treasury bills. FHLMC's Reference Bills are unsecured general corporate obligations. This program supplements the corporation's existing discount note program. Issues under the Reference program constitute the same credit standing as other FHLMC discount notes; they simply add organization and liquidity to the short-term Agency discount note market. Reference Notes: FHLMC's intermediate -term debt program with issuances of 2, 3, 5, 10, and 30-year maturities. Initial issuances range from $2 - $6 billion with re -openings ranging $1 - $4 billion. The notes are high -quality bullet structures securities that pay interest semiannually. Issues under the Reference program constitute the same credit standing as other FHLMC notes; they simply add organization and liquidity to the intermediate- and long-term Agency market. City of Palm Bay Investment Policy Page 22 Repurchase Agreement (Repo). A short-term investment vehicle where an investor agrees to buy securities from a counterparty and simultaneously agrees to resell the securities back to the counterparty at an agreed upon time and for an agreed upon price. The difference between the purchase price and the sale price represents interest earned on the agreement. In effect, it represents a collateralized loan to the investor, where the securities are the collateral. Can be DVP, where securities are delivered to the investor's custodial bank, or "tri-party" where the securities are delivered to a third party intermediary. Any type of security can be used as "collateral," but only some types provide the investor with special bankruptcy protection under the law. Repos should be undertaken only when an appropriate Securities Industry and Financial Markets Association (SIFMA) approved master repurchase agreement is in place. Reverse Repurchase Agreement (Reverse Repo). A repo from the point of view of the original seller of securities. Used by dealers to finance their inventory of securities by essentially borrowing at short-term rates. Can also be used to leverage a portfolio and in this sense, can be considered risky if used improperly. Safekeeping. Service offered for a fee, usually by financial institutions, for the holding of securities and other valuables. Safekeeping is a component of custody services. Secondary Market. Markets for the purchase and sale of any previously issued financial instrument. Securities Industry and Financial Markets Association (SIFMA). The bond market trade association representing the largest securities markets in the world. In addition to publishing a Master Repurchase Agreement, widely accepted as the industry standard document for Repurchase Agreements, the SIFMA also recommends bond market closures and early closes due to holidays. Securities Lending. An arrangement between and investor and a custody bank that allows the custody bank to "loan" the investors investment holdings, reinvest the proceeds in permitted investments, and shares any profits with the investor. Should be governed by a securities lending agreement. Can increase the risk of a portfolio in that the investor takes on the default risk on the reinvestment at the discretion of the custodian. Sinking Fund. A separate accumulation of cash or investments (including earnings on investments) in a fund in accordance with the terms of a trust agreement or indenture, funded by periodic deposits by the issuer (or other entity responsible for debt service), for the purpose of assuring timely availability of moneys for payment of debt service. Usually used in connection with term bonds. Spread. The difference between the price of a security and similar maturity U.S. Treasury investments, expressed in percentage terms or basis points. A spread can also be the absolute difference in yield between two securities. The securities can be in different markets or within the same securities market between different credits, sectors, or other relevant factors. Standard & Poor's. One of several NRSROs that provide credit ratings on corporate and municipal debt issues. STRIPS (Separate Trading of Registered Interest and Principal of Securities). Acronym applied to U.S. Treasury securities that have had their coupons and principal repayments separated into individual zero -coupon Treasury securities. The same technique and "strips" description can be applied to non -Treasury securities (e.g., FNMA strips). Structured Notes. Notes that have imbedded into their structure options such as step-up coupons or derivative - based returns. Supranational. Supranational organizations are international financial institutions that are generally established by agreements among nations, with member nations contributing capital and participating in management. These agreements provide for limited immunity from the laws of member countries. Bonds issued by these institutions are part of the broader class of Supranational, Sovereign, and Non-U.S. Agency (SSA) sector bonds. City of Palm Bay Investment Policy Page 23 Supranational bonds finance economic and infrastructure development and support environmental protection, poverty reduction, and renewable energy around the globe. For example, the World Bank, International Finance Corporation (IFC), and African Development Bank (AfDB) have "green bond" programs specifically designed for energy resource conservation and management. Supranational bonds, which are issued by multi -national organizations that transcend national boundaries. Examples include the World Bank, African Development Bank, and European Investment Bank. Swap. Trading one asset for another. TAP Notes: Federal Agency notes issued under the FHLB TAP program. Launched in 6/99 as a refinement to the FHLB bullet bond auction process. In a break from the FHLB's traditional practice of bringing numerous small issues to market with similar maturities, the TAP Issue Program uses the four most common maturities and reopens them up regularly through a competitive auction. These maturities (2, 3, 5, and 10 year) will remain open for the calendar quarter, after which they will be closed and a new series of TAP issues will be opened to replace them. This reduces the number of separate bullet bonds issued, but generates enhanced awareness and liquidity in the marketplace through increased issue size and secondary market volume. Tennessee Valley Authority (TVA). One of the large Federal Agencies. A wholly owned corporation of the United States government that was established in 1933 to develop the resources of the Tennessee Valley region in order to strengthen the regional and national economy and the national defense. Power operations are separated from non -power operations. TVA securities represent obligations of TVA, payable solely from TVA's net power proceeds, and are neither obligations of nor guaranteed by the United States. TVA is currently authorized to issue debt up to $30 billion. Under this authorization, TVA may also obtain advances from the U.S. Treasury of up to $150 million. Frequent issuer of discount notes, agency notes, and callable agency securities. Total Return. Investment performance measured over a period of time that includes coupon interest, interest on interest, and both realized and unrealized gains or losses. Total return includes, therefore, any market value appreciation/depreciation on investments held at period end. Treasuries. Collective term used to describe debt instruments backed by the U.S. government and issued through the U.S. Department of the Treasury. Includes Treasury bills, Treasury notes, and Treasury bonds. Also a benchmark term used as a basis by which the yields of non -Treasury securities are compared (e.g., "trading at 50 basis points over Treasuries"). Treasury Bills (T-Bills). Short-term direct obligations of the United States government issued with an original term of one year or less. Treasury bills are sold at a discount from face value and do not pay interest before maturity. The difference between the purchase price of the bill and the maturity value is the interest earned on the bill. Currently, the U.S. Treasury issues 4-week, 13-week, and 26-week T-Bills. Treasury Bonds. Long-term interest -bearing debt securities backed by the U.S. government and issued with maturities of ten years and longer by the U.S. Department of the Treasury. Treasury Notes. Intermediate interest -bearing debt securities backed by the U.S. government and issued with maturities ranging from one to ten years by the U.S. Department of the Treasury. The Treasury currently issues 2-year, 3-year, 5-year, and 10-year Treasury Notes. Trustee. A bank designated by an issuer of securities as the custodian of funds and official representative of bondholders. Trustees are appointed to insure compliance with the bond documents and to represent bondholders in enforcing their contract with the issuer. Uniform Net Capital Rule. SEC Rule 15c3-1 that outlines the minimum net capital ratio (ratio of indebtedness to net liquid capital) of member firms and non-member broker/dealers. City of Palm Bay Investment Policy Page 24 Unrealized Gains (Losses). The difference between the market value of an investment and its book value. Gains/losses are "realized" when the security is actually sold, as compared to "unrealized" gains/losses which are based on current market value. See also "Realized Gains (Losses)." Variable -Rate Security. A bond that bears interest at a rate that varies over time based on a specified schedule of adjustment (e.g., daily, weekly, monthly, semi-annually, or annually). See also "Floating Rate Note." Weighted Average Maturity (or just "Average Maturity"). The average maturity of all securities and investments of a portfolio, determined by multiplying the par or principal value of each security or investment by its maturity (days or years), summing the products, and dividing the sum by the total principal value of the portfolio. A simple measure of risk of a fixed -income portfolio. Weighted Average Maturity to Call. The average maturity of all securities and investments of a portfolio, adjusted to substitute the first call date per security for maturity date for those securities with call provisions. Yield Curve. A graphic depiction of yields on like securities in relation to remaining maturities spread over a time line. The traditional yield curve depicts yields on U.S. Treasuries, although yield curves exist for Federal Agencies and various credit quality corporates as well. Yield curves can be positively sloped (normal) where longer -term investments have higher yields, or "inverted" (uncommon) where longer -term investments have lower yields than shorter ones. Yield to Call (YTC). Same as "Yield to Maturity," except the return is measured to the first call date rather than the maturity date. Yield to call can be significantly higher or lower than a security's yield to maturity. Yield to Maturity (YTM). Calculated return on an investment, assuming all cash -flows from the security are reinvested at the same original yield. Can be higher or lower than the coupon rate depending on market rates and whether the security was purchased at a premium or discount. There are different conventions for calculating YTM for various types of securities. Yield. There are numerous methods of yield determination. In this glossary, see also "Current Yield," "Yield Curve," "Yield to Call," and "Yield to Maturity." City of Palm Bay Investment Policy Page 25 Attachment B Investment Pool/Fund Questionnaire 1. A description of eligible investment securities, and a written statement of investment policy and objectives. 2. A description of interest calculations and how it is distributed, and how gains and losses are treated. 3. Describe how ongoing monitoring regarding ratings of underlying securities is performed and how that information is reported to investors. 4. Does the pool have a stable net asset value or floating net asset value? 5. What are the liquidity gates? 6. A description of how the securities are safeguarded (including the settlement processes), and how often the securities are priced and the program audited. 7. A description of who may invest in the program, how often, what size deposit and withdrawal are allowed. 8. A schedule for receiving statements and portfolio listings. 9. Are reserves, retained earnings, etc. utilized by the pool/fund? 10. A fee schedule, and when and how is it assessed. 11. Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds? City of Palm Bay Investment Policy Page 26 EXHIBIT B INSURANCE REQUIREMENTS INVESTMENT ADVISORY SERVICES I. Commercial General Liability A. Limits of Liability Bodily Injury and Property Damage Liability Each Occurrence $1,000,000 General Aggregate Limit $ 2,000,000 Personal and Adv. Injury $ 1,000,000 Products/Completed Operations $ 1,000,000 B. Endorsements Required City of Miami listed as additional insured Premises and Operations Liability Primary Insurance Clause Endorsement II. Business Automobile Liability A. Limits of Liability Bodily Injury and Property Damage Liability Combined Single Limit Owned/Scheduled Autos Including Hired, Borrowed or Non -Owned Autos Any One Accident $ 1,000,000 B. Endorsements Required City of Miami listed as an additional insured III. Worker's Compensation Limits of Liability Statutory -State of Florida Waiver of Subrogation Employer' s Liability A. Limits of Liability $500,000 for bodily injury caused by an accident, each accident $500,000 for bodily injury caused by disease, each employee $500,000 for bodily injury caused by disease, policy limit IV. Professional/E&O Liability Combined Single Limit Each Common Cause $10,000,000 General Aggregate Limit $10,000,000 Retroactive date included V Network Security and Privacy Injury (Cyber Liability) Each Claim $3,000,000 Policy Aggregate $3,000,000 Retro Date Included VI. Umbrella Liability Each Occurrence Policy Aggregate $5,000,000 $5,000,000 City of Miami listed as an additional insured. Coverage is excess over the general liability and auto policies Consultant agrees to maintain professional liability/Errors & Omissions coverage, along with Network Security and Privacy Injury (Cyber) coverage for a minimum of 1 year after termination of the contract period subject to continued availability of commercially reasonable terms and conditions of such coverage. The above policies shall provide the City of Miami with written notice of cancellation or material change from the insurer in accordance to policy provisions. Companies authorized to do business in the State of Florida, with the following qualifications, shall issue all insurance policies required above: The company must be rated no less than "A-" as to management, and no less than "Class V" as to Financial Strength, by the latest edition of Best's Insurance Guide, published by A.M. Best Company, Oldwick, New Jersey, or its equivalent. All policies and /or certificates of insurance are subject to review and verification by Risk Management prior to insurance approval. ANTI -HUMAN TRAFFICKING AFFIDAVIT The undersigned affirms, certifies, attests, and stipulates as follows: a. The entity is a non -governmental entity authorized to transact business in the State of Florida and in good standing with the Florida Department of State, Division of Corporations. b. The. nongovernmental entity is either executing, renewing, or extending a contract (including, but not limited to, any amendments, as applicable) with the City of Miami ("City") or one of its agencies, authorities, boards, trusts, or other City entity which constitutes a governmental entity as defined in Section 287.138(1), Florida Statutes (2024). c. The nongovernmental entity is not in violation of Section 787.06, Florida Statutes (2024), titled "Human Trafficking." d. The nongovernmental entity does not use "coercion" for labor or services as defined in Section 787..06, Florida Statutes (2024), attached and incorporated herein as Exhibit Affidavit -I. Under penalties of perjury, 1 declare the following: a. 1 have read and understand the foregoing Anti -Human Trafficking Affidavit and that the facts, statements and representations provided in Section 1 are true and correct. b. 1 am an officer or a representative of the nongovernmental entity authorized to execute this Anti - Human Trafficking Affidavit. Nongovernmental Entity: PFM Asset Management LLC Name: Richard Pengelly Signature of Officer: 225 E`iobinson Street, Suite 250, Orlando, FL 32801 Office Address: Email Address: pengellyr@pfmam.com FEINNo.4/1_2/0/0/3/7/ 3/2 STATE OF FLORIDA COUNTY OF 1wM1AG4l44Aef^- Main Phone Number: 407-406-5776 The Corcgoiing instrument was sworn to and subscribed before me by means of D physical presence or t7 online notarization. this 3thday of August, 2024 by Richard Pengelly , as the authorized officer or representative for the nongovernmental entity„ He/she is personally known to me or has produced as identification. (NOTARY PUBLIC SEAL) My Commission Expires: � 02o-L6 gnature of Person Taking Oath Leslie Bell (Printed, Typed. or Stamped Name ofNotary Public) Jilt! i Notary Public State of Florida Leslie A. Belt My Commission HH 225894 Exp. 2/7/2026 1111 EXHIBIT AFFIDAVIT-1 SECTION 787.06, FLORIDA STATUTES (2024) Select Year: 2024 v The 2024 Florida Statutes Go Title Chapter 787 View Entire XLVI KIDNAPPING; CUSTODY OFFENSES; HUMAN TRAFFICKING; AND RELATED Chapter CRIMES OFFENSES 787.06 Human trafficking.— (1)(a) The Legislature finds that human trafficking is a form of modern-day slavery. Victims of human trafficking are young children, teenagers, and adults. Thousands of victims are trafficked annually across international borders worldwide. Many of these victims are trafficked into this state. Victims of human trafficking also include citizens of the United States and those persons trafficked domestically within the borders of the United States. The Legislature finds that victims of human trafficking are subjected to force, fraud, or coercion for the purpose of sexual exploitation or forced labor. (b) The Legislature finds that while many victims of human trafficking are forced to work in prostitution or the sexual entertainment industry, trafficking also occurs in forms of labor exploitation, such as domestic servitude, restaurant work, janitorial work, sweatshop factory work, and migrant agricultural work. (c) The Legislature finds that traffickers use various techniques to instill fear in victims and to keep them enslaved. Some traffickers keep their victims under lock and key. However, the most frequently used practices are less obvious techniques that include isolating victims from the public and family members; confiscating passports, visas, or other identification documents; using or threatening to use violence toward victims or their families; telling victims that they will be imprisoned or deported for immigration violations if they contact authorities; and controlling the victims' funds by holding the money ostensibly for safekeeping. (d) It is the intent of the Legislature that the perpetrators of human trafficking be penalized for their illegal conduct and that the victims of trafficking be protected and assisted by this state and its agencies. In furtherance of this policy, it is the intent of the Legislature that the state Supreme Court, The Florida Bar, and relevant state agencies prepare and implement training programs in order that judges, attorneys, law enforcement personnel, investigators, and others are able to identify traffickers and victims of human trafficking and direct victims to appropriate agencies for assistance. It is the intent of the Legislature that the Department of Children and Families and other state agencies cooperate with other state and federal agencies to ensure that victims of human trafficking can access social services and benefits to alleviate their plight. (2) As used in this section, the term: (a) "Coercion" means: 1. Using or threatening to use physical force against any person; 2. Restraining, isolating, or confining or threatening to restrain, isolate, or confine any person without lawful authority and against her or his will; 3. Using lending or other credit methods to establish a debt by any person when labor or services are pledged as a security for the debt, if the value of the labor or services as reasonably assessed is not applied toward the liquidation of the debt, the length and nature of the labor or services are not respectively limited and defined; 4. Destroying, concealing, removing, confiscating, withholding, or possessing any actual or purported passport, visa, or other immigration document, or any other actual or purported government identification document, of any person; 5. Causing or threatening to cause financial harm to any person; 6. Enticing or luring any person by fraud or deceit; or 7. Providing a controlled substance as outlined in Schedule I or Schedule II of s. 893.03 to any person for the purpose of exploitation of that person. (b) "Commercial sexual activity" means any violation of chapter 796 or an attempt to commit any such offense, and includes sexually explicit performances and the production of pornography. (c) "Financial harm" includes extortionate extension of credit, loan sharking as defined in s. 687.071, or employment contracts that violate the statute of frauds as provided in s. 725.01. (d) "Human trafficking" means transporting, soliciting, recruiting, harboring, providing, enticing, maintaining, purchasing, patronizing, procuring, or obtaining another person for the purpose of exploitation of that person. (e) "Labor" means work of economic or financial value. (f) "Maintain" means, in relation to labor or services, to secure or make possible continued performance thereof, regardless of any initial agreement on the part of the victim to perform such type service. (g) "Obtain" means, in relation to labor, commercial sexual activity, or services, to receive, take possession of, or take custody of another person or secure performance thereof. (h) "Services" means any act committed at the behest of, under the supervision of, or for the benefit of another. The term includes, but is not limited to, forced marriage, servitude, or the removal of organs. (i) "Sexually explicit performance" means an act or show, whether public or private, that is live, photographed, recorded, or videotaped and intended to arouse or satisfy the sexual desires or appeal to the prurient interest. (j) "Unauthorized alien" means an alien who is not authorized under federal law to be employed in the United States, as provided in 8 U.S.C. s. 1324a(h)(3). The term shall be interpreted consistently with that section and any applicable federal rules or regulations. (k) "Venture" means any group of two or more individuals associated in fact, whether or not a legal entity. (3) Any person who knowingly, or in reckless disregard of the facts, engages in human trafficking, or attempts to engage in human trafficking, or benefits financially by receiving anything of value from participation in a venture that has subjected a person to human trafficking: (a)1. For labor or services of any child younger than 18 years of age or an adult believed by the person to be a child younger than 18 years of age commits a felony of the first degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. 2. Using coercion for labor or services of an adult commits a felony of the first degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. (b) Using coercion for commercial sexual activity of an adult commits a felony of the first degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. (c)1. For labor or services of any child younger than 18 years of age or an adult believed by the person to be a child younger than 18 years of age who is an unauthorized alien commits a felony of the first degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. 2. Using coercion for labor or services of an adult who is an unauthorized alien commits a felony of the first degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. (d) Using coercion for commercial sexual activity of an adult who is an unauthorized alien commits a felony of the first degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. (e)1. For labor or services who does so by the transfer or transport of any child younger than 18 years of age or an adult believed by the person to be a child younger than 18 years of age from outside this state to within this state commits a felony of the first degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. 2. Using coercion for labor or services who does so by the transfer or transport of an adult from outside this state to within this state commits a felony of the first degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. (f)1. For commercial sexual activity who does so by the transfer or transport of any child younger than 18 years of age or an adult believed by the person to be a child younger than 18 years of age from outside this state to within this state commits a felony of the first degree, punishable by imprisonment for a term of years not exceeding life, or as provided in s. 775.082, s. 775.083, or s. 775.084. 2. Using coercion for commercial sexual activity who does so by the transfer or transport of an adult from outside this state to within this state commits a felony of the first degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. (g) For commercial sexual activity in which any child younger than 18 years of age or an adult believed by the person to be a child younger than 18 years of age, or in which any person who is mentally defective or mentally incapacitated as those terms are defined in s. 794.011(1), is involved commits a life felony, punishable as provided in s. 775.082(3)(a)6., s. 775.083, or s. 775.084. For each instance of human trafficking of any individual under this subsection, a separate crime is committed and a separate punishment is authorized. (4)(a) Any parent, legal guardian, or other person having custody or control of a minor who sells or otherwise transfers custody or control of such minor, or offers to sell or otherwise transfer custody of such minor, with knowledge or in reckless disregard of the fact that, as a consequence of the sale or transfer, the minor will be subject to human trafficking commits a life felony, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. (b) Any person who, for the purpose of committing or facilitating an offense under this section, permanently brands, or directs to be branded, a victim of an offense under this section commits a second degree felony, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. For purposes of this subsection, the term "permanently branded" means a mark on the individual's body that, if it can be removed or repaired at all, can only be removed or repaired by surgical means, laser treatment, or other medical procedure. (5) The Criminal Justice Standards and Training Commission shall establish standards for basic and advanced training programs for law enforcement officers in the subjects of investigating and preventing human trafficking crimes. Every basic skills course required for law enforcement officers to obtain initial certification must include training on human trafficking crime prevention and investigation. (6) Each state attorney shall develop standards of instruction for prosecutors to receive training on the investigation and prosecution of human trafficking crimes and shall provide for periodic and timely instruction. (7) Any real property or personal property that was used, attempted to be used, or intended to be used in violation of this section may be seized and shall be forfeited as provided by the Florida Contraband Forfeiture Act. After satisfying any liens on the property, the remaining proceeds from the sale of any property seized under this section and owned by a defendant convicted of a violation of this section must first be allocated to pay any order of restitution of a human trafficking victim in the criminal case for which the owner was convicted. If there are multiple human trafficking victims in the criminal case, the remaining proceeds must be allocated equally among the victims to pay restitution. If the proceeds are sufficient to pay any such order of restitution, any remaining proceeds must be disbursed as required by s. 932.7055(5)-(9). (8) The degree of an offense shall be reclassified as follows if a person causes great bodily harm, permanent disability, or permanent disfigurement to another person during the commission of an offense under this section: (a) A felony of the second degree shall be reclassified as a felony of the first degree. (b) A felony of the first degree shall be reclassified as a life felony. (9) In a prosecution under this section, the defendant's ignorance of the victim's age, the victim's misrepresentation of his or her age, or the defendant's bona fide belief of the victim's age cannot be raised as a defense. (10)(a) Information about the location of a residential facility offering services for adult victims of human trafficking involving commercial sexual activity, which is held by an agency, as defined in s. 119.011, is confidential and exempt from s. 119.07(1) and s. 24(a), Art. I of the State Constitution. This exemption applies to such confidential and exempt information held by an agency before, on, or after the effective date of the exemption. (b) Information about the location of a residential facility offering services for adult victims of human trafficking involving commercial sexual activity may be provided to an agency, as defined in s. 119.011, as necessary to maintain health and safety standards and to address emergency situations in the residential facility. (c) The exemptions from s. 119.07(1) and s. 24(a), Art. I of the State Constitution provided in this subsection do not apply to facilities licensed by the Agency for Health Care Administration. (11) A victim's lack of chastity or the willingness or consent of a victim is not a defense to prosecution under this section if the victim was under 18 years of age at the time of the offense. (12) The Legislature encourages each state attorney to adopt a pro -prosecution policy for human trafficking offenses, as provided in this section. After consulting the victim, or making a good faith attempt to consult the victim, the state attorney shall determine the filing, nonfiling, or diversion of criminal charges even in circumstances when there is no cooperation from a victim or over the objection of the victim, if necessary. (13) When a contract is executed, renewed, or extended between a nongovernmental entity and a governmental entity, the nongovernmental entity must provide the governmental entity with an affidavit signed by an officer or a representative of the nongovernmental entity under penalty of perjury attesting that the nongovernmental entity does not use coercion for labor or services as defined in this section. For purposes of this subsection, the term "governmental entity" has the same meaning as in s. 287.138(1). History.—s. 2, ch. 2004-391; s. 1, ch. 2006-168; s. 5, ch. 2012-97; s. 300, ch. 2014-19; s. 7, ch. 2014-160; s. 96, ch. 2015-2; s. 2, ch. 2015-147; s. 3, ch. 2016-24; s. 25, ch. 2016-105; s. 4, ch. 2016-199; s. 2, ch. 2020-49; s. 2, ch. 2021-189; s. 3, ch. 2023-86; s. 7, ch. 2024- 184. Copyright © 1995-2024 The Florida Legislature • Privacy Statement • Contact Us 9/6/24, 12:58 PM Detail by Entity Name DIVISION OF CORPORATIONS ip % Di viiu t of lorgr POP r 1y an official laic of Flotilla svei1Sf14' Department of State / Division of Corporations / Search Records / Search by Entity Name / Detail by Entity Name Foreign Limited Liability Company PFM ASSET MANAGEMENT LLC Filing Information Document Number M01000002143 FEI/EIN Number 41-2003732 Date Filed 09/17/2001 State DE Status ACTIVE Last Event LC STMNT OF RA/RO CHG Event Date Filed 12/27/2021 Event Effective Date NONE Principal Address 213 Market Street Harrisburg, PA 17101 Changed: 01/31/2022 Mailing Address U.S. Bank CM-9703 PO Box 70870 St. Paul, MN 55170-9703 Changed: 01/31/2022 Registered Agent Name & Address C T CORPORATION SYSTEM 1200 SOUTH PINE ISLAND ROAD PLANTATION, FL 33324 Name Changed: 12/27/2021 Address Changed: 12/27/2021 Authorized Person(s) Detail Name & Address Title MANAGER https://search.sunbiz.org/Inquiry/CorporationSearch/Search ResultDetail?inquirytype=EntityName&directionType=l nitial&searchNameOrder=PFMASSE.. 1/3 9/6/24, 12:58 PM BRANT, LAUREN L 13010 SW 68th Pkwy Suite 100 Tigard, OR 97223 Title MANAGER BREEN, KEVIN M 800 Nicollet Mall Minneapolis, MN 55402 Title MANAGER MOLLOY, JOHN W 213 Market St Harrisburg, PA 17101 Title MANAGER THOLE, ERIC J 800 Nicollet Mall Minneapolis, MN 55402 Title Authorized Representative BIDON, LINDA E 800 Nicollet Mall Minneopolis, MN 55402 Title Owner U.S. Bancorp Asset Management, Inc. 800 Nicollet mall Minneapolis, MN 55402 Annual Reports Report Year Filed Date 2022 01/25/2022 2023 01/30/2023 2024 04/18/2024 Document Images 04/18/2024 -- ANNUAL REPORT 01 /30/2023 -- ANNUAL REPORT 06/29/2022 -- AMENDED ANNUAL REPORT 01 /31 /2022 -- AMENDED ANNUAL REPORT 01/25/2022 --ANNUAL REPORT 12/27/2021 -- CORLCRACHG 04/30/2021 -- ANNUAL REPORT Detail by Entity Name View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format https://search.sunbiz.org/Inquiry/CorporationSearch/Search ResultDetail?inquirytype=EntityName&directionType=1 nitial&searchNameOrder=PFMASSE.. 2/3 9/6/24, 12:58 PM 12/21 /2020 -- AMENDED ANNUAL REPORT 04/14/2020 -- ANNUAL REPORT 09/03/2019 -- AMENDED ANNUAL REPORT 01 /23/2019 -- ANNUAL REPORT 01 /12/2018 -- ANNUAL REPORT 01 /09/2017 -- ANNUAL REPORT 01 /14/2016 -- ANNUAL REPORT 06/25/2015 -- AMENDED ANNUAL REPORT 02/23/2015 -- ANNUAL REPORT 01 /13/2014 -- ANNUAL REPORT 01 /25/2013 -- ANNUAL REPORT 03/22/2012 -- Reg. Agent Change 01/19/2012 --ANNUAL REPORT 02/18/2011 --ANNUAL REPORT 01 /05/2010 -- ANNUAL REPORT 01 /13/2009 -- ANNUAL REPORT 01 /17/2008 -- ANNUAL REPORT 01 /04/2007 -- ANNUAL REPORT 03/23/2006 -- ANNUAL REPORT 02/14/2005 -- ANNUAL REPORT 03/10/2004 -- ANNUAL REPORT 04/25/2003 -- ANNUAL REPORT 04/24/2002 -- ANNUAL REPORT 09/25/2001 -- ANNUAL REPORT 09/17/2001 -- Foreign Limited Detail by Entity Name View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format View image in PDF format Florida Department of State, Division of Corporations https://search.sunbiz.org/Inquiry/CorporationSearch/Search ResultDetail?inquirytype=EntityName&directionType=1 nitial&searchNameOrder=PFMASSE... 3/3