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
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CITY CLERK
1st reading 2/19/97
2nd reading 3/5/97
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Date
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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.
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