Ordinance 97-3074ORDINANCE NO. 97-3074
AN ORDINANCE OF THE CITY OF MIAMI BEACH,
FLORIDA, AMENDING SECTION 18A-1 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-1 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:
f.21 Corporate notes, corporate 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 1 or higher
- Al or higher;
Corporate notes, corporate 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:,
▪ Money market mutual/trust funds as follows:
1. State of Florida Local Government Surplus Funds Trust Fund
2 Mutual/trust funds sponsored by the Florida League of Cities
3. Private money market mutual funds backed entirely by "Full Faith and
Credit" U.S. Government Securities:
Fixed income mutual funds sponsored by the Florida League of Cities;
(k) Mortgage-backed securities collateralized by first mortgages (or deeds of trust) and
asset -hacked 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:
11) 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 approved 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 15th day of March
after its passage.
PASSED and ADOPTED this 5th day of
ATTEST:
CITY CLERK
1st reading 2/19/97
2nd reading 3/5/97
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March
, 1997, which is ten days
, 1997.
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
City Attorney
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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
TO:
COMMISSION MEMORANDUM NO. I�L-1 �1
Mayor Seymour Gelber and DATE: March 5, 1997
Members of the City Commission
FROM: Jose Garcia -Pedrosa
City Manager
SUBJECT: PUBLIC HEARING AND SECOND READING OF AN ORDINANCE AMENDING
THE INVESTMENT POLICY TO INCLUDE ADDITIONAL INVESTMENT
ALTERNATIVES
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:
Additional Yield
Investment Type (Basis Points 100 Basis Points = 1%)
Corporate Notes 100
Corporate Bonds 115
Medium Term Notes 60
Yankee Notes 50
Yankee Bonds 50
Money Market/Mutual Trust Funds 0
Fixed Income Mutual Funds 75
Mortgage -Backed Securities 65
Asset -Backed Securities 70
Externally Managed Funds N/A
Interest Rate Swap Agreement 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.
ANALYSIS
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.
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