Resolution 2018-30482 RESOLUTION NO. 2018-30482
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF
THE FINANCE AND CITYWIDE PROJECTS COMMITTEE AND, AS SET
FORTH IN THE ATTACHED EXHIBIT A, AMENDING THE CITY'S
INVESTMENT POLICY AND PROCEDURE, AS ADOPTED BY
RESOLUTION NO. 95-21726, AND AS AMENDED BY RESOLUTION NOS.
97-22315, 2007-26602, AND 2012-27816, BY PROHIBITING THE
INVESTMENT OF THE PUBLIC FUNDS MANAGED BY THE CITY IN ANY
SECURITIES, STOCKS, OR BONDS ISSUED BY THE GOVERNMENT OF
VENEZUELA OR BY ANY COMPANY THAT IS MAJORITY-OWNED BY
THE GOVERNMENT OF VENEZUELA; OR BY ANY INSTITUTIONS OR
COMPANIES DOING BUSINESS IN OR WITH THE GOVERNMENT OF
VENEZUELA, OR ANY OF ITS AGENCIES OR INSTRUMENTALITIES, IN
VIOLATION OF FEDERAL LAW; AND, FURTHER, PROVIDING THAT THE
CITY COMMISSION MAY WAIVE THE AFORESTATED PROHIBITIONS IF
THE EXISTING REGIME IN VENEZUELA COLLAPSES AND THERE IS A
NEED FOR IMMEDIATE AID TO VENEZUELA FOR HUMANITARIAN
REASONS.
WHEREAS, on March 29, 2018, Governor Rick Scott of Florida signed into law House
Bill No. 359, stating that the State Board of Administration shall divest any funds and is
prohibited from investing in any institution or company (U.S. company or its subsidiary), doing
business in or with the Government of Venezuela, or with any agency or instrumentality
thereof, in violation of federal law; and
WHEREAS, specifically House Bill No. 359 amended Section 215.471 of the Florida
Statutes to read: "The State Board of Administration shall divest any investment under s.
121.151 and ss. 215.44-215.53, and is prohibited from among other things, investment in
stocks, securities, or other obligations of:
(i) Any institution or company domiciled in the United States, or
foreign subsidiary of a company domiciled in the United States,
doing business in or with the government of Venezuela, or with
any agency or instrumentality thereof, in violation of federal law.
The term "government of Venezuela" means the government of
Venezuela, its agencies or instrumentalities, or any company that
is majority-owned or controlled by the government of Venezuela.
(ii) The Governor may waive the requirements of the new law if the
existing regime in Venezuela collapses and there is a need for
immediate aid to Venezuela before the convening of the
Legislature, or for other humanitarian reasons as determined by
the Governor; and
WHEREAS, the law was effective July 1, 2018 and was approved without any opposition
in the Legislature and also prohibits the Florida State Retirement System and State Agencies
from investing in companies that extend credit, trade, or buy goods or services with the
Venezuelan government; and
WHEREAS, the law is limited to the State Board of Administration which governs the
investments of the Florida Retirement System and State Agencies and does not implement or
require the change of Florida State Statute 218.415 which governs the investments of the City
of Miami Beach; and
WHEREAS, this item was referred by the City Commission to the Finance and Citywide
Projects Committee (FCWPC) and heard at the FCWPC on June 29, 2018 to consider similar
investment policies for the City of Miami Beach. At its meeting on June 29, 2018, the
FCWPC voted 3-0 to recommend prohibiting the City from doing business in or with the
Government of Venezuela, or with any company that is majority-owned by the Government of
Venezuela, or with any of Venezuela's agencies or instrumentalities, in violation of federal
law; and, to make such recommendation to the City Commission; and
WHEREAS, amending the City's policy pursuant to the recommendation of the FCWPC,
and as set forth in the attached Exhibit A, will have no impact on the City's current investments;
and
WHEREAS, this recommendation will be provided to the Board of Trustees of the Miami
Beach Employees' Retirement System, Retirement System for Firefighters and Police Officers,
and the Firemen's and Police Relief and Pension Funds for their consideration.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission hereby accept the recommendation of the Finance and Citywide
Projects Committee and, as set forth in the attached Exhibit A, hereby amend the City's
Investment Policy and Procedure, as adopted by Resolution No. 95-21726, and as amended by
Resolution Nos. 97-22315, 2007-26602, and 2012-27816, by prohibiting the investment of the
public funds managed by the City in any securities, stocks, or bonds issued by the government
of Venezuela or by any company that is majority-owned by the government of Venezuela, or
by any institutions or companies doing business in or with the government of Venezuela, or any
of its agencies or instrumentalities, in violation of federal law; and, further, providing that the City
Commission may waive the aforestated requirements and prohibitions if the existing regime in
Venezuela collapses and there is a need for immediate aid to Venezuela for humanitarian
reasons.
PASSED AND ADOPTED this I L_ day of Sr .2018.
ATTEST: ��''��� _
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RafaelE. Granado, CityClerk „ NCORP ORATED. * BB& FORM & LAN. :
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Resolutions- C7 AJ
MIAMI BEACH
COMMISSION MEMORANDUM
TO: Honorable Mayor and Members of the City Commission
FROM: Jimmy L. Morales, City Manager
DATE: September 12, 2018
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE
FINANCE AND CITYWIDE PROJECTS COMMITTEE AND, AS SET FORTH IN
THE ATTACHED EXHIBIT A, AMENDING THE CITY'S INVESTMENT POLICY AND
PROCEDURE,AS ADOPTED BY RESOLUTION NO. 95-21726,AND AS AMENDED
BY RESOLUTION NOS. 97-22315, 2007-26602, AND 2012-27816, BY PROHIBITING
THE INVESTMENT OF THE PUBLIC FUNDS MANAGED BY THE CITY IN ANY
SECURITIES, STOCKS, OR BONDS ISSUED BY THE GOVERNMENT OF
VENEZUELA OR BY ANY COMPANY THAT IS MAJORITY-OWNED BY THE
GOVERNMENT OF VENEZUELA; OR BY ANY INSTITUTIONS OR COMPANIES
DOING BUSINESS IN OR WITH THE GOVERNMENT OF VENEZUELA, OR ANY
OF ITS AGENCIES OR INSTRUMENTALITIES, IN VIOLATION OF FEDERAL LAW;
AND, FURTHER, PROVIDING THAT THE CITY COMMISSION MAY WAIVE THE
AFORESTATED PROHIBITIONS IF THE EXISTING REGIME IN VENEZUELA
COLLAPSES AND THERE ISA NEED FOR IMMEDIATE AID TO VENEZUELA FOR
HUMANITARIAN REASONS.
RECOMMENDATION
The Administration recoh.nends that the Mayor and City Commissioners adopt the Resolution.
ANALYSIS
On March 29, Governor Rick Scott of Florida signed into law House Bill No. 359 (exhibit A), stating
that the State Board of Administration shall divest any funds and is prohibited from investing in any
institution or company (U.S. company or its subsidiary), doing business in or with the Government of
Venezuela, or with any agency or instrumentality thereof, in violation of federal law.
Specifically House Bill No. 359 amended Section 215.471, Florida Statutes to read: "The State
Board of Administration shall divest any investment under s. 121.151 and ss. 215.44-215.53, and is
prohibited from among other things, investment in stocks, securities, or other obligations of:
1. My institution or company domiciled in the United States, or foreign subsidiary of a
company domiciled in the United States, doing business in or with the government of
Venezuela, or with any agency or instrumentality thereof, in violation of federal law. The term
"government of Venezuela" means the government of Venezuela, its agencies or
instrumentalities, or any company that is majority-owned or controlled by the government of
Venezuela.
2. The Governor may waive the requirements of this paragraph if the existing regime in
Page 795 of 1802
Venezuela collapses and there is a need for immediate aid to Venezuela before the convening
of the Legislature or for other humanitarian reasons as determined by the Governor.
The law, was effective July 1, 2018 and was approved without any opposition in the Legislature and
also prohibits the Florida State Retirement System and State Agencies from investing in companies
that extend credit, trade, or buy goods or services with the Venezuelan government. The law is
limited to the State Board of Administration which governs the investments of the Florida Retirement
System and State Agencies and does not implement or require the change of Florida State Statute
218.415 which governs the investments of the City of Miami Beach.
This item was referred by the City Commission to the Finance and Citywide Projects Committee
(FCWPC) and heard at the FCWPC on June 29, 2018 to consider similar investment policies for the
City of Miami Beach.At its meeting on June 29, 2018, the FCWPC voted 3-0 to recomend prohibiting
the City from doing business in or with the Government of Venezuela, or with any company that is
majority-owned by the Government of Venezuela, or with any of Venezuela's agencies or
instrumentalities, in violation of federal law; and, to make such recommendation to the City
Commission.
Amending the City's policy for the foregoing will have no impact on the City's current investments.
CONCLUSION
The Administration requests that the Mayor and City Commissioner accept the recommendation of
the Finance and Citywide Projects Committee and amend the City's Investment Policy and
Procedure as adopted by Resolution No. 95-21726, and as amended by Resolution Nos. 97-22315,
2007-26602, and 2012-27816, by prohibiting the investment of the public funds managed by the City
in any securities, stocks, or bonds issued by the government of Venezuela or by any company that is
majority-owned by the government of Venezuela, or by any institutions or companies doing business
in or with the government of Venezuela, or any of its agencies or instrumentalities, in violation of
federal law; and, further, providing that the City Commission may waive the aforestated requirements
and prohibitions if the existing regime in Venezuela collapses and there is a need for immediate aid to
Venezuela for humanitarian reasons. The proposed revisions to the City's Investment Policy and
Procedure are set forth in Exhibit B.
In addition, this recommendation will be provided to the Board of Trustees of the Miami Beach
Employees' Retirement System, Retirement System for Firefighters and Police Officers, and the
Firemen's and Police Relief and Pension Funds for their consideration.
Legislative Tracking
Finance
Sponsor
Commissioner Kristen Rosen Gonzalez
ATTACHMENTS:
Description
❑ ExhibitA
❑ Exhibit B
❑ Resolution
Page 796 of 1802
CHAPTER 2018-125
House Bill No. 359
An act relating to state investments; amending s. 215.471, P.S.; requiring
the State Board of Administration to divest specified investments and
prohibiting it from investing in specified investments of institutions or
companies doing business in or with the government of Venezuela or any
of its agencies or instrumentalities in violation of federal law;defining the
term "government of Venezuela"; authorizing the Governor to waive the
investment prohibitions if certain conditions exist; prohibiting the State
Board of Administration from voting in favor of any proxy resolution
advocating expanded United States trade with the government of
Venezuela; amending s. 215.472, F.S.; prohibiting state agencies from
investing in specified financial entities that extend credit, trade or buy
goods or services with the government of Venezuela or investing in any
company doing business with Venezuela in violation of federal law;
defining the term"government of Venezuela";authorizing the Governor to
waive the investment prohibitions under specific circumstances;providing
an effective date.
WHEREAS, the people of Venezuela believe the current government of
Venezuela is intolerable because it has used and continues to use extreme
violence and political persecution in the orchestrated suppression of human
rights, and
WHEREAS, the Maduro regime continues to unjustly detain and
prosecute political prisoners in spite of international calls for their freedom,
and
WHEREAS, the State of Florida stands in unity with the people of
Venezuela in their fight for democracy and freedom from the oppressive
Maduro regime, and
WHEREAS, the United States deems the situation in Venezuela as an
extraordinary threat to national security and foreign policy, and
WHEREAS, the United States Department of the Treasury's Office of
Foreign Assets Control has issued sanctions against Venezuelan officials,
including Nicolas Maduro who has been identified as a "Specially Desig-
nated National" and labeled a dictator, NOW, THEREFORE,
Be It Enacted by the Legislature of the State of Florida:
Section 1. Section 215.471, Florida Statutes, is amended to read:
215.471 Divestiture by the State Board of Administration; reporting
requirements.-
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Page 797 of 1802
Ch. 2018-125 LAWS OF FLORIDA Ch. 2018-125
(1) The State Board of Administration shall divest any investment under
s. 121.151 and ss. 215.44-215.53, and is prohibited from investment in
stocks, securities, or other obligations of:
(a) Any institution or company domiciled in the United States,or foreign
subsidiary of a company domiciled in the United States,doing business in or
with Cuba, or with agencies or instrumentalities thereof in violation of
federal law.
(b) Any institution or company domiciled outside of the United States if
the President of the United States has applied sanctions against the foreign
country in which the institution or company is domiciled pursuant to s. 4 of
the Cuban Democracy Act of 1992.
(c)1. Any institution or company domiciled in the United States, or
foreign subsidiary of a company domiciled in the United States doing
business in or with the government of Venezuela, or with any agency or
instrumentality thereof in violation of federal law.The term"government o('
Venezuela"means the government of Venezuela,its agencies or instrumen-
talities, or any company that is majority-owned or controlled by the
government of Venezuela.
2. The Governor may waive the requirements of this paragraph if the
existing regime in Venezuela collapses and there is a need for immediate aid
to Venezuela before the convening of the Legislature or for other humani-
tarian reasons asdeterminedby the Governor.,
(2) The State Board of Administration may not be a fiduciary under this
section with respect to voting on,and may not have the right to vote in favor
of, any proxy resolution advocating expanded United States trade with
Cuba,er Syria or Venezuela.The board's staff shall report on its activities in
its annual proxy voting report.
Section 2. Subsection(3)is added to section 215.472,Florida Statutes,to
read:
215.472 Prohibited investments.—notwithstanding any other provision
of law, each state agency, as defined in s. 216.011, is prohibited from
investing in:
(3)(a) Any financial institution or company domiciled in the United
States, or foreign subsidiary of a company domiciled in the United States
which, directly or through the United States or foreign subsidiary, extends
credit of any kind or character,advances funds in any manner or purchases
or trades any goods or services with the government of Venezuela, or any
company doing business in or with the government of Venezuela,in violation
of federal law. The term "government of Venezuela"means the government
of Venezuela, its agencies or instrumentalities or any company that is
majority-owned or controlled by the government of Venezuela.
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Page 798 of 1802
Ch. 2018-125 LAWS OF FLORIDA Ch. 2018-125
(b) The Governor may waive the requirements of this subsection if the
existing regime in Venezuela collapses and there is a need for immediate aid
to Venezuela before the convening of the Legislature or for other humani-
tarian reasons as determined by the Governor.
Section 3. This act shall take effect July 1, 2018.
Approved by the Governor March 28, 2018.
Filed in Office Secretary of State March 28, 2018.
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Page 799 of 1802
CITY OF MIAMI BEACH
INVESTMENT POLICY
AND PROCEDURE
Last updated July 25, 2018
Page 800 of 1802
CITY OF MIAMI BEACH
INVESTMENT POLICY AND PROCEDURE
TABLE OF CONTENTS
SUBJECT PAGE
Background 1
General Overview 1
Cash Management Investment Policy 1
Investment Objectives 2
Investment Ethics 2
Investment Process 3
Authorized Investments 4
Prohibited Investments 8
Maturity & Liquidity Requirements 98
Portfolio Composition 99
Custodial Account 99
Treasury Management Services Master Agreement 109
Investment Transaction Authority 109
Internal Controls 10
Investment Advisor 11
Investment Reporting 11
Recordkeeping and Performance Measurement 124
Pension Investments 12
Bond Funds 132
Page 801 of 1802
Background
The Florida Legislature passed CS/SB 2090 (CS/HB 1795) on May 4, 1995. Among other
provisions of this legislation each local government entities required to create, adopt and maintain
comprehensive investment policies, incorporating fourteen required elements.
The City has operated under investment guidelines adopted by Resolution 95-21726 on
September 27 1995. Due to the amendment of City Code Section 18A-1, these policies have
been amended accordingly.
II. General Overview
The City of Miami Beach has established policies relating to the investment of excess funds.
Excess funds are defined as funds not required to meet short term expenditures of the City.
Excess funds are placed in two general categories of investments. The first category is "cash
management investments". Cash management investments are defined as investments whose
terms are less than one year. Those funds placed in cash management investments include all
daily operating funds, debt service funds and various deposits. The second category is "long term
city investments". Long term city investments are investments whose terms are more than one
year. The policy governing long term city investments is set forth below after the description of
cash management investment policy.
III. Cash Management Investment Policy
Short term expenditures are defined as all daily operating expenditures excluding payroll and debt
service which are invested based on their payment cycle. For short term expenditures, the City
maintains a continuous investment program, a Municipal NOW account, collateralized by full faith
and credit instruments of the U.S. Government and its Agencies , held by the State of Florida, with
the City designated as collateral beneficiary. The City complies with the State of Florida "Public
Deposits Law" Chapter 280 Florida Statutes. Chapter 280 insures the City against investment
principal loss on certificates of deposits and demand deposits in excess of $250,000 per
institution. FDIC insurance covers demand deposits up to $250,000 per institution. The City will
utilize only financial institutions qualified under Chapter 280, a listing of which is received by the
City and reviewed on a quarterly basis. The City also complies with Chapter 280 by filing all
required reports annually with the State.
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Page 802 of 1802
This investment policy shall be reviewed no longer than five (5) years from the last review date or
at the time of any significant accounting pronouncement or change in the City's market treasury
services.
A. Investment Objectives
The City of Miami Beach's investment objectives are set forth below in order of
importance:
1. Safety of capital
2. Liquidity of capital
3. Return on capital
Investment returns are important and can make a significant contribution to the City's
operations and capital projects. Therefore, every effort is made to select the most
advantageous investment vehicle and term of investment to maximize earnings. However,
safety and liquidity, in that order, take precedence over the return. In this regard, the City
has delineated, through ordinance, certain permissible types of investments, with a view to
meeting the criteria set out above.
B. Investment Ethics
The City of Miami Beach selects all investments by means of a bidding process. In no
case does the City invest funds or place idle funds in financial institutions as compensating
or courtesy balances. The standard of prudence to be applied by the investment officer
shall be the "prudent person" rule, which states: "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 derived." The "prudent person" rule shall be applied in the context of
managing the overall portfolio.
The investment officer and staff, acting in accordance with the written procedures and
exercising due diligence, shall not be held personally responsible for a specific security's
credit risk or market price changes, provided that these deviations are reported
immediately and that appropriate action is taken to control adverse developments.
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Page 803 of 1802
C. Investment Process
The formal bidding process for investment instruments consists of the following
procedures (Steps#1 through #4 are performed by Investment Advisor):
1. Maintain a bid list of approximately five major financial institutions qualified under
Chapter 280 and two major brokerage firms. This bid list is adjusted periodically to
delete bidders who are non-responsive or non-competitive over a period of time,
replacing such institution(s) with other qualified institutions which have expressed
an interest to bid on City funds. Qualified institutions are defined as financial
institutions governed by Chapter 280 of the Florida Statutes with a branch location
in Miami-Dade County, Florida.
Brokerage houses must maintain an office in Miami-Dade County, Florida and are
selected based on the amount of equity in the firm, number of years the firm has
been in operation and reputation.
2. Place telephone calls requesting a bid from each institution on the bid list either on
the day of the transaction or the afternoon immediately preceding the transaction
date.
3. Receive and note all bids on a standard form designated for this purpose and
retain on file for each transaction.
4. Select the highest winning bid
5. Transfer funds in exchange for evidentiary receipt from winning bidder.
The purpose of this process is to prevent influence being experienced by either
City personnel or the financial institution in the selection of the institution chosen
for the purchase of City investments.
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D. Authorized Investments
The City has established a list of authorized types of investments. The authorized
cash management investments are descried in Chapter 18A of the City Code and
are further limited as follows:
1. Time Deposits
Duration N/A
Maximum % of Portfolio 100%
Maximum per Issuer 25%
2. Certificates of Deposit
Duration 1-3 yrs
Maximum % of Portfolio 100%
Maximum per Issuer 25%
3. U. S. Treasury Bills
Duration N/A
Maximum % of Portfolio 100%
4. U. S. Treasury Notes
Duration 0-7 yrs
Maximum °% of Portfolio 100%
5. U.S. Government Agency and Instrumentality Securities
Duration 0-7 yrs
Maximum % of Portfolio 50%
Maximum per Issuer 40%
6. Rated or unrated bonds, notes, or instruments backed by the full faith and credit of
the government of Israel.
Duration 0-7 yrs
Maximum % of Portfolio 5%
Maximum per Issuer 5%
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7. Obligations issued by any state or territory of the United States, which are fully
insured or rated in one of the two highest rating categories by both Moody's
Investors Service, Inc. and Standard and Poor's Corporation or their successors.
Duration 7-10 yrs
Maximum °/ of Portfolio 50%
Maximum per Issuer 10%
8. Fixed Term Repurchase Agreements
Duration 0-3 yrs
Maximum % of Portfolio 20%
Maximum per Issuer 25%
9. Overnight Repurchase Agreements
Duration N/A
Maximum % of Portfolio 100%
Maximum per Issuer 25%
10. Bankers Acceptances
Duration N/A
Maximum % of Portfolio 20%
Maximum per Issuer 20%
11. Commercial Paper with a rating of A-1 or P-1 only, rated by Moody's or Standard &
Poor's
Duration N/A
Maximum % of Portfolio 20%
Maximum per Issuer 10%
12. Corporate notes, corporate bonds, medium term notes, with terms of one year or
less rated by 2 of 3 designated rating agencies as follows:
Maturity 0-1 yrs
Maximum % of Portfolio 20%
Maximum per Issuer 5%
a. Moody's - AA3 higher
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Page 806 of 1602
b. Standard & Poor's - AA- or higher
c. Fitch - AA- or higher
13. Corporate notes, corporate bonds, medium term notes, with terms in excess of
one year with a maximum of 5.0 years rated by 2 of 3 designated rating agencies
as follows:
Duration 1-5 yrs
Maximum % of Portfolio 20%
Maximum per Issuer 5%
a. Moody's - AA3 higher
b. Standard & Poor's - AA- or higher
c. Fitch - AA-or higher
14. Money market mutual/trust funds which substantially conform with this policy as
follows:
Duration N/A
Maximum °/ of Portfolio 100%
Maximum per Issuer 50%
a. State of Florida Local Government Surplus Funds Trust Fund
b. Mutual/trust funds sponsored by the Florida League of Cities
c. Private money market mutual funds backed entirely by "Full Faith
and Credit" U.S. Government Securities not to exceed 25%
d. Intergovernmental investment pools rated "AAAm" authorized
pursuant to Florida State Statute s. 163.01, F.S.
15. Fixed income mutual funds sponsored by the Florida League of Cities which
substantially conform with this policy as follows:
Duration N/A
Maximum % of Portfolio 25%
Maximum per Issuer 25%
16. 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 3.0 years at time of purchase and structured as either
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Page 807 of 1902
collateralized mortgage obligations or unstructured pass-through securities and
rated by 2 of 3 designated rating agencies as follows:
Maturity 3— 5 yrs
Maximum °/ of Portfolio 15%
Maximum per Issuer 20%
a. Moody's - AA3 higher
b. Standard & Poor's - AA- or higher
c. Fitch - AA- or higher
17. Externally managed funds requiring specific approval by Commission with
investments limited to City policy and rating criteria.
Duration 1-7 yrs
Maximum % of Portfolio 100%
18. 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 with the requirement that all "Swap" agreements be approved by
City Commission prior to execution.
Duration N/A
Maximum % of Portfolio 10%
All repurchase agreements are fully collateralized and the collateral is held in the City's
name by a third party custodian. Repurchase agreements must be collateralized at
minimum mark-to-market value of 102% in U.S. Government securities.
Derivatives (defined as a financial instrument the value of which depends on, or is derived
from the value of one or more underlying assets or index of asset values) shall be utilized
only if specifically authorized as part of the investment plan and the Chief Financial Officer
or his designee has sufficient understanding/expertise to invest in derivatives. All
proposed derivative investments (including "SWAPS") will be analyzed by the City's
Financial Advisor and will be presented to the Finance and Citywide Projects Committee
and the City commission for approval. Repurchase Agreements (an agreement between
an investor and a security dealer whereby dealer agrees to buy back the security at a
specified price in the future) will be limited to transactions in which the proceeds will be
used to provide liquidity. Any investment which is not issued in "Book Entry Only" form is
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Page 808 of 1802
physically held by the City in a secure vaulted area and surrendered only when invested
funds and earnings are received by the City at maturity.
E. Prohibited Investments
Funds to be invested in cash management investments may not be invested in the
following:
Common Stock Private Placements
Preferred Stock Unregistered or Restricted Stock
Convertible Bonds Margin Trading
Venture Capital Limited Partnerships
Options and Futures Oil and Gas Wells
Warrants 10 or PO strips or inverse floater
mortgage backed securities
Commodities Foreign Exchange
Short Selling Any Inverse Floating Rate Securities
Real Estate
In addition to the above prohibited investments, funds should not be invested in:
a) any scrutinized companies with active business operations in Sudan or Iran as listed
by the State Board of Administration (SBA) on a quarterly basis, which is outlined in
the Protecting Florida's Investment Act(F.S. 215.442 and 215.473).
b) any securities, stocks, or bonds issued by the Government of Venezuela or by any
Company that is majority-owned by the Government of Venezuela or securities,
stocks, or bonds issued by any institutions or companies doing business in or with the
Government of Venezuela or any of its agencies or instrumentalities, in violation of
Federal Law. The City Commission may waive the prohibitions in the subsection E (b)
if the regime existing in Venezuela as of July 25, 2018 collapses and there is a need
for immediate aid to Venezuela for Humanitarian reasons.
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F. Maturity and Liquidity Requirements
The City selects investments whose terms compliment the need to make the majority
expenditures set forth below.
1. Biweekly Payrolls
2. Periodic Debt Service Payments
3. Capital Project Needs
For each expenditure event, investments are selected whose maturities occur at a date
close to the date that funds will be needed. Investments also are selected based on the
highest yield for the particular type of investment. In the case of capital projects, in which
the exact date that expenditures will need to be made is unknown, the City selects several
investments with varying maturities so that monies are available each month to cover all
capital expenditures. Any unused capital investment funds are then placed in investments
of one year or more to maximize return potential.
G. Portfolio Composition
Diversity of investment types is highly desirable. To promote diversity, no security or
individual cusip shall exceed 5% of the City funds. Such diversity is necessary in cases
where securities are traded frequently and not held to maturity and where volatile
securities are traded.
H. Custodial Account
All City investments, except for swap agreements, must be held in an independent
custodial account within the trust department of a major financial institution with a branch
located in Miami-Dade County, Florida. The custodian will not be utilized to buy or sell
investments for the City. All City investments must be registered in the City's name in
book entry form evidenced by transaction tickets maintained by the custodian with a copy
provided to the City. Physical possession of securities by the City should be avoided. The
investment held by the custodian must be reconciled monthly to the City's general ledger.
The City will carry investments at cost but will maintain a record of portfolio market value
each month. However, investments are recorded at fair value in the annual financial
statements in accordance with GASB Statement#31.
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Treasury Management Services Master Agreement
A 'Treasury Management Services Master Agreement" has been developed, reviewed and
accepted by the City and is part of the contract established with the City's main depository
bank. This agreement is a standard Public Securities Association ("PSA") form agreement
offering all recommended protection to the City. This agreement is scheduled to be in
effect for the duration of the contract with the City's main depository.
J. Investment Transaction Authority
The Chief Financial Officer has designated the Treasury Manager as the individual
responsible for managing the City's investments. The Treasury Manager discusses
investments with upcoming maturities with the Assistant Finance Director and the Chief
Financial Officer if there is a question as to new maturity target dates or type of investment
vehicle to be used. Based on these discussions, the Treasury Manager executes the
transaction and completes an "Investment Transaction Report" for each investment
transaction. Funds related to each investment are transferred according to authorized
funds transfer procedures and limits established under the provisions of the City's contract
with its main depository bank.
K. Internal Controls
The City has established a number of internal controls to prevent loss of funds by fraud,
employee error, misrepresentation by third parties, or imprudent actions by employees of
the City. The internal controls are as follows:
1. Investment transactions authority is limited to specific persons within the
Finance Department.
2. Wire transfer of funds authority is restricted to specific individuals with
specific dollar limits within the Finance Department. All non-repeat type
wire transfers require confirmation authorization by a second individual
specified in wire authority documents executed with the City's main
depository.
3. All investment transactions require the approval of the Treasury Manager in
consultation with the Assistant Finance Director or Chief Financial Officer.
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4. A monthly report is prepared by the Investment Advisor and distributed to
the Treasury Manager early in the subsequent month for review. In addition
a Financial Analyst in the Finance Department receives a copy of this report
and reconciles these investments with the City's general ledger on a
monthly basis.
5. A Financial Analyst III in the Finance Department reconciles the City's
general depository account on a monthly basis by comparing the City's
general ledger with the applicable bank account statements. The
reconciliation of the general depository account would reveal any difference
in investment transaction recording and the actual movement of funds.
6. Each month, the Financial Analyst III and the Treasury Manager reconciles
investments reflected in the custodial statements with the City's records.
7. Each year both internal auditors and the City's external auditors review
existing internal controls as well as investment transactions by examining
data on a random basis.
L. Investment Advisor
The City engages the services of an investment advisor with regard to the management of
its investment program. Investment Advisors shall be registered with the Securities
Exchange Commission under the Investment Advisors Act of 1940. Advisors shall be
selected using the City's authorized purchasing procedures for selection of professional
services and shall be subject to the provisions of this Investment Policy. Under no
circumstances shall the advisor take custody of any City funds or securities.
M. Investment Reporting
As discussed previously, the Finance Department maintains several types of information
and reports on investments. The records relating to investments are as follows:
1. Investment Transaction Report — A recording/approval form for each
investment transaction, regarding both active and matured investments.
This form also indicates all bids obtained where applicable.
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2. Investment bid sheet, where applicable, for each investment.
3. Investment Monthly Statement — a document listing, in chronological
maturity order, pertinent information on each investment.
4. Investment monthly statement is reconciled with the City's general ledger.
5. Annual summary of average investment returns (which are included in the
monthly Investments Statements) which is subjected to external audit for
reasonableness of average stated yield for the fiscal year.
N. Recordkeepinq and Performance Measurement
Comprehensive records of each investment transaction are maintained in the Finance
Department. These records include bid sheets where applicable, investment transaction
reports, investment bank advices, the monthly investment statements, and a quarterly
compilation of total returns for the preceding fiscal quarter by City fund type (e.g., General
Fund, Capital Projects, Enterprise, Internal Service). Annually, the City's external auditors
review the calculation of investment yields prepared by the Finance Department for
comparison to indices and comparative data maintained by the external auditors. They
then determine the reasonableness of the average yield calculated by the Finance
Department. If no problem is indicated, the Finance Department then compares its
average annual yield to yields of surrounding local governments when such information
becomes available.
While yield is not the primary concern of the City's investment manager, it should be noted
that the City has consistently enjoyed an average yield competitive with other major local
governmental entities while assuming lower risk.
0. Pension Investments
The City does not manage the cash or investments of the City's two pension systems. Each
pension system has elected or appointed members to its pension Board of Trustees who exercise
oversight over money managers engaged to manage pension fund investments in accordance
with policies and guidelines established by each pension system. The Boards, therefore, have
oversight authority over investments for pension systems and the City does not actively
participate in this process.
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P. Bond Funds
Notwithstanding anything to the contrary contained in City Code Chapter 18A or these investment
guidelines the provisions pertaining to investment of monies under all ordinances, resolutions,
trust indentures and agreements adopted or entered into by the City in connection with bonds
issued by the City or other dept incurred by the City will control and supersede the provisions
herein contained with respect to the investment of such monies.
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