Ordinance 92-2793 ORDINANCE NO. 92-2793
AN ORDINANCE OF THE CITY OF MIAMI BEACH,
FLORIDA, AMENDING ORDINANCE NO. 87-2588
PROVIDING FOR THE INVESTMENT OF SURPLUS FUNDS,
PROVIDING FOR A REPEALER, SEVERABILITY AND AN
EFFECTIVE DATE.
Whereas, the City Commission adopted Ordinance 87-2588 which specified the
permitted investments for City funds, and,
Whereas, the City Commission wishes to make additional investment options
available for use by the City,
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA:
Section 1 - That Ordinance 87-2588 be amended by adding subsection (f) to
Section 1 of the Ordinance to read as follows:
1,0 commercial paper issued by any corporation organized under the laws
of any State with a rating of A-1 or P-1 from a recognized financial rating agency;
however, in no event shall the City purchase more than ten percent (10%) of its total
of investment of surplus funds in any one corporations commercial paper.
Section 2 - All Ordinances or parts of Ordinances in conflict herewith be and the
same are hereby repealed.
Section 3 - If any section, subsection, clause or provision of this Ordinance is held
invalid, the remainder shall not be affected by such invalidity.
Section 4 - This Ordinance shall take effect on the 26th day of Septembgr1992.
Passed and Adopted this 16th day of September 1992.
fi
Attest: ror
FO" APPROVED
City Clerk LEGAL DEPT.
1st reading 9/2/92
By
2nd reading 9/16/92
Date ---V(27/22.:
CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH FLORIDA 33139
OFFICE OF THE CITY MANAGER TELEPHONE: (305) 673-7010
FAX: (305) 673-7782
COMMISSION MEMORANDUM NO. 521 -92 1 ?Q;(}k4.9-.C)
DATE: September 16 , 1992
TO: Mayor Seymour Gelber and
Members of the City Commission
FROM: Roger M. Carito(1/h
tati_.
City Manager
SUBJECT: Ordinance amending the Investment Policy by adding commercial paper as
an authorized investment
Administrative Recommendation:
The Administration recommends that the City Commission adopt this Ordinance on
first reading and call a public hearing for September 16, 1992.
Background:
The City has invested its surplus funds primarily in certificates of deposit from local
banking institutions and in U. S. Treasury securities over the past several years. With the
decline in interest rates and the lack of demand for funds by the banks, the rates of return
that have been achieved over the past year have been well below expectations. Corporations
still have the demand for funds and the rates available on high grade corporate commercial
paper are higher than that available on the investments that are currently used. High grade
paper is the short term commercial paper issued by major corporations. Examples of such
corporations would be General Motors Acceptance Corp., Ford Motor Credit, General
Electric Credit Corp. and Citicorp Bank. There is an opportunity for the City to improve
its return with the addition of high grade commercial paper as an authorized investment.
Analysis:
The City averages approximately $65,000,000 on an annual basis for cash
management investm:nts. The current decline in interest rates over the last year has
resulted in the reduction of $1,300,000 in interest earnings for the City. The decline in
interest rates has also been coupled with a decline in demand for funds in our banking
community which has caused rates paid on certificates of deposit to be offered at lower
2
AGENDA ?
ITEM J l>
DATE l t 6 -92-
ar
rates than are offered on U. S. Treasury Bills. High grade commercial paper placed by
major corporations is currently being offered at approximately 15 basis points or .15% over
Treasury rates. This would produce $100,000 over the income that the City of Miami Beach
would earn with existing investment practices.
Conclusion:
This expansion of the investment options available to the City has the potential of
producing an extra $100,000 in income to the City and in conjunction with the FY 93
Proposed Budget should be adopted.
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