Loading...
97-3074 ORD ORl)INANCE NO. 97-3074 AN ORDINANCE OF THE CITY OF MIAMI BEACH, FLORIDA, AMENDING SECTION 18A-l OF THE CITY CODE OF THE CITY OF MIAMI BEACH, TO PROVIDE ADDITIONAL PERMISSIBLE INVESTMENT OPTIONS FOR THE INVESTMENT OF CITY FUNDS; PROVIDING FOR REPEALER, SEVERABILITY AND AN EFFECTIVE DATE. WHEREAS, the Mayor and City Commission adopted Ordinance Nos. 87-2588 and 92-2793 which specify the permitted investments of City funds; and WHEREAS, the Mayor and City Commission wish to make additional investment options available for use by the City. NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA: SECTION 1. That Section 18A-I of Chapter 18A, entitled "Investment of Surplus Funds", of the City Code of the City of Miami Beach be and the same is hereby amended by adding subsections (g) - (m) as follows: W Coq>orate notes. coq>orate bonds. medium term notes. Yankee notes. and Yankee bonds with durations of one year or less rated by 2 of 3 designated rating agencies as follows: Moody's Standard & Poor's Fitch PI or higher A I or higher Al or higher: au Coq>orate notes. coq>orate bonds. medium term notes. Yankee notes. and Yankee bonds. with durations of in excess of one year with a maximum duration of 5.0 years rated by 2 of 3 designated rating agencies as follows: Moody's Standard & Poor's Fitch A3 or higher A- or higher A- or higher: ill. Money market mutual/trust funds as follows: L State of Florida Local Government Suq>lus Funds Trust Fund 2.... Mutual/trust funds sponsored by the Florida League of Cities 1.. Private money market mutual funds backed entirely by "Full Faith and Credit" U.S. Government Securities: ill Fixed income mutual funds sponsored by the Florida League of Cities: .Q0. Mortgage-backed securities collateralized by first mortgages (or deeds of trust) and asset-backed securities collateralized by consumer or business receivables with a maximum duration of 5.0 years and structured as either collateralized mortgage obligations or unstructured pass-through securities and rated by 2 of 3 designated rating agencies as follows: Moody's Standard & Poor's Fitch AA3 or higher AA- or higher AA- or higher: ill Externally managed investment funds which receive the approval of the City Commission and whose investments are listed as permissible investments in this section: (m) Interest rate swap agreements between the City and a counter party to pay/receive a fixed interest rate payment in exchange for a variable rate payment over a specified term provided that the "swap" agreement has been ap.vroved by the City Commission prior to execution: SECTION 2. REPEALER. All ordinances or parts of ordinances in conflict herewith be and the same are hereby repealed. SECTION 3. SEVERABILITY. If any section, subsection, clause or provision of this ordinance is held invalid, the remainder shall not be affected by such invalidity. SECTION 4. EFFECTIVE DATE. This ordinance shall take effect on the 15 t h day of Ma r c h after its passage. , 1997, which is ten days PASSED and ADOPTED this 5th day of March ATTEST: APPROVED AS TO FORM & LANGUAGE & FOR EXECUTION I I ( / , I I \" ( K ()- ~{U \1 GA C~~ , u CITY CLERK 1st reading 2/19/97 2nd reading 3/5/97 1t~ ~J--//17 Date RWS:cp F:\FINA \$DIRI WPWIN60ICITYCOMMIINV AMEND.ORD CITY'OF MIAMI BEACH CITY HALL l700 CONVENTION CENTER DRIVE MIAMI BEACH FLORIDA 33139 OFFICE OF THE CITY MANAGER TELEPHONE: (305) 673-7010 FAX: (305) 673-7782 COMMISSION MEMORANDUM NO. ~ TO: Mayor Seymour Gelber and Members of the City Commission DATE: March 5, 1997 FROM: Jose Garcia-Pedrosa ~J City Manager 'If PUBLIC HEARING AND SECOND READING OF AN ORDINANCE AMENDING THE INVESTMENT POLICY TO INCLUDE ADDITIONAL INVESTMENT ALTERNATIVES SUBJECT: ADMINISTRATION RECOMMENDATION: The Administration recommends that the City Commission hold the public hearing and then adopt this Ordinance regarding investment policy to include additional investment alternatives. BACKGROUND: Over the past several years the City has invested its surplus funds primarily in United States Treasury Bills and certificates of deposit. While additional investment alternatives are authorized, there has been little spread in interest rates among authorized investment alternatives. In order to maximize interest earnings, after first considering safety (risk) and liquidity needs, it is necessary to add additional investment vehicles to the list of those authorized. This issue went to the Capital Improvements/Finance Committee in July, 1996, who requested that an Ad-Hoc Committee be formed to review this issue. The Ad-Hoc Committee reviewed, commented and modified the proposal from the Administration. The Ad-Hoc Committee reduced the proposed investment options for cash management purposes and suggested an oversight committee be formed to carry forward the community oversight over the management of the City's cash assets. With the guidelines, as modified, the Ad-Hoc Committee has recommended the approval of these investment alternatives and procedures. Additional investment alternatives for cash management purposes proposed in this ordinance are corporate notes, corporate bonds, medium term notes, Yankee notes, Yankee bonds, money market mutual/trust funds, fixed income mutual funds, mortgage-backed securities, asset-backed securities, externally managed funds, and interest rate Swap agreements. Agenda Item R '5 c.. Date 3-5-91 Historically, these investment types have produced yields in excess of comparable U.S. Treasury Securities as follows: Investment Type Additional Yield (Basis Points 100 Basis Points = 1 %) Corporate Notes Corporate Bonds Medium Term Notes Yankee Notes Yankee Bonds Money Market/Mutual Trust Funds Fixed Income Mutual Funds Mortgage-Backed Securities Asset-Backed Securities Externally Managed Funds Interest Rate Swap Agreement 100 115 60 50 50 o 75 65 70 N/A N/A The external management of funds as well as interest rate Swap agreements would require approval by Commission on a case by case basis. ANAL YSIS The City currently averages approximately $110,000,000 on an annual basis for cash management investments, which are managed passively primarily due to authorized investment alternatives and the need for aggressive investing with dedicated resources. A Treasury Manager will be hired by the City to manage the investment portfolio in a more aggressive manner utilizing a full range of investment alternatives, including those alternatives contained in this ordinance. It is estimated that the addition of investment alternatives, combined with a more aggressive approach to investing will result in additional income to the City of $825,000 - $1,100,000 (75-100 Basis Points) on an average portfolio of $110,000,000. CONCLUSION: Based on the above, the Administration has concluded that the City Commission should adopt on first reading the amending of Ordinance No. 87-2588 regarding investment of surplus funds. rJ JGP:RJN:cp F:IFINAI$DIRIWPWIN60\CITYCOMMIINVAMEND.ORD