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2014-R-04 RESOLUTION NO. 2014-R-04 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EDGEWATER, FLORIDA, UPDATING THE CITY OF EDGEWATER'S INVESTMENT POLICY; REPEALING ALL RESOLUTIONS IN CONFLICT HEREWITH AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, pursuant to the City Charter, the City Manager has the responsibility for managing an investment program for the City; WHEREAS, the City Manager requests that City Council update the existing Investment Policy that the City of Edgewater approved during the Council meeting held on April 7, 2008 pursuant to the adoption of Resolution #2008-R-03. WHEREAS, in an effort to be consistent with current laws and policies, City Council wishes for the City of Edgewater to update/modify the existing City of Edgewater Investment Policy. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Edgewater, Florida: Section 1. The City Council hereby updates/modifies the City of Edgewater Investment Policy and all investments as provided for therein shall be invested in accordance with said policy, a copy of which is attached and incorporated herein as Exhibit "A". Section 2. All conflicting purchasing policies are superseded by this policy. Section 3. All resolutions or parts of resolutions in conflict herewith are hereby repealed. (Resolution/#2014-R-04) Section 4. This resolution shall take effect upon adoption. After motion by enineAltoomo„ Ynioer and second by Councilman 1=m-ler , the vote on this resolution was as follows: AYE NAY Mayor Michael Thomas Councilwoman Christine Power X Councilwoman Gigi Bennington CXCUSC-6, Councilman Mike Ignasiak X Councilman Gene Emter X PASSED AND DULY ADOPTED this 3rd day of March, 2014. ATTEST: CITY COUNCIL OF THE C YOFEDG TER, F e ' DA s 1 10 G,v -h. 1). k&N. o� By: ��� Bonnie A. Wenzel U Michae omas Cit `lerk ' `; `,,. Mayor c , :J • Robin L. Matusick Paralegal For the use and reliance only by the City of Approved by the City Council of the City of Edgewater, Florida. Approved as to form Edgewater during the meeting held on the and legality by: Aaron R. Wolfe, Esquire 3rd day of March, 2014 under Agenda Item City Attorney $e . Doran, Sims, Wolfe&Kundid (Resolution/#20 1 4-R-03) EXHIBIT "A" (Resolution/#2014-R-04) 21)1.1 Investment Policy City of Edgewater, Florida 1 City of ILED G Inc.1951 TE.R Dated February 12, 2014 City of Edgewater 2014 Table of Contents Page I. PURPOSE 3 II. SCOPE 3 III. INVESTMENT OBJECTIVES 3 IV. DELEGATION OF AUTHORITY 4 V. STANDARDS OF PRUDENCE 4 VI. ETHICS AND CONFLICTS OF INTEREST 4 VII. INTERNAL CONTROLS AND INVESTMENT PROCEDURES 4 VIII. CONTINUING EDUCATION 5 IX. AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS 5 X. MATURITY AND LIQUIDITY REQUIREMENTS 5 XI. COMPETITIVE SELECTION OF INVESTMENT INSTRUMENTS 5 XII. AUTHORIZED INVESTMENTS AND PORTFOLIO COMPOSTION 6 XIII. DERIVATIVES AND REVERSE REPURCHASE AGREEMENTS 13 XIV. PERFORMANCE MEASUREMENTS 13 XV. REPORTING 13 XVI. THIRD PARTY CUSTODIAL AGREEMENTS 14 XVII. INVESTMENT COMMITTEE 14 XVIII. INTERNAL LOAN PROGRAM 15 XIX. INVESTMENT POLICY ADOPTION 15 City of Edgewater Page 2 of 16 Investment Policy of the City of Edgewater,Florida PURPOSE The purpose of this Investment Policy(hereinafter"Policy") is to set forth the investment objectives and parameters for the management of the funds of the City of Edgewater, (hereinafter"City"). This Policy is designed to ensure the prudent management of public funds, the availability of operating and capital funds when needed, and an investment return competitive with comparable funds and financial market indices. II. SCOPE In accordance with Section 218.415, Florida Statues,this Policy applies to all cash and investments held or controlled by the City and shall be identified as"general operating funds"of the City with the exceptions of the City's Pension Funds and funds related to the issuance of debt where there are other existing policies or indentures in effect for such funds. Additionally, any future revenues, which have statutory investment requirements conflicting with this Policy and funds held by state agencies(e.g.Department of Revenue),are not subject to the provisions of this Policy. III. INVESTMENT OBJECTIVES Safety of Principal The foremost objective of this investment program is the safety of the principal of those funds within the portfolios. Investment transactions shall seek to keep capital losses at a minimum,whether they are from securities defaults or erosion of market value. To attain this objective, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio. From time to time, securities may be traded for other similar securities to improve yield, maturity or credit risk. For these transactions, a loss may be incurred for accounting purposes to achieve optimal investment return, provided any of the following occurs with respect to the replacement security: A.The yield has been increased,or B.The maturity has been reduced or lengthened,or C.The quality of the investment has been improved. Maintenance of Liquidity The portfolios shall be managed in such a manner that funds are available to meet reasonably anticipated cash flow requirements in an orderly manner. Periodical cash flow analyses will be completed to ensure that the portfolios are positioned to provide sufficient liquidity. Return on Investment Investment portfolios shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles,taking into account the investment risk constraints and liquidity needs. Return on investment is of least importance compared to the safety and liquidity objectives described above. The core of investments is limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. City of Edgewater Page 3 of 16 IV. DELEGATION OF AUTHORITY In accordance with the City's Charter, the responsibility for providing oversight and direction in regard to the management of the investment program resides with the City's Manager. Responsibility for the administration of the investment program is hereby delegated by the City Manager to the Finance Director, who shall maintain an Investment Procedures and Internal Controls Manual based on this Policy. The Finance Director shall be responsible for monitoring internal controls, administrative controls and to regulate the activities of the City's staff involved with the investment program. The City may employ an Investment Manager to assist in managing some of the City's portfolios. Such Investment Manager must be registered under the Investment Advisors Act of 1940. V. STANDARDS OF PRUDENCE The standard of prudence to be used by investment officials shall be the"Prudent Person"standard and shall be applied in the context of managing the overall investment program. Investment officers acting in accordance with written procedures and this investment Policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectation are reported to the City Council in a timely fashion and the liquidity and the sale of securities are carried out in accordance with the terms of this Policy. The"Prudent Person"rule states the following: 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 to be derived from the investment. While the standard of prudence to be used by investment officials who are officers or employees is the "Prudent Person" standard, any person or firm hired or retained to invest, monitor, or advise concerning these assets shall be held to the higher standard of"Prudent Expert". The standard shall be that in investing and reinvesting moneys and in acquiring, retaining, managing, and disposing of investments of these funds, the contractor shall exercise: the judgment, care, skill, prudence, and diligence under the circumstances then prevailing, which persons of prudence, discretion, and intelligence, acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims by diversifying the investments of the funds, so as to minimize the risk,considering the probable income as well as the probable safety of their capital. VI. ETHICS AND CONFLICTS OF INTEREST Employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to impartial investment decisions. Also, employees involved in the investment shall disclose to the Investment Committee any material financial interests in financial institutions that conduct business with the City,and they shall further disclose any material personal financial/investment positions that could be related to the performance of the City's investment program VII. INTERNAL CONTROLS AND INVESTMENT PROCEDURES The Finance Director shall establish a system of internal controls and operational procedures that are in writing and made a part of the City's operational procedures. The internal controls should be designed to prevent losses of funds, which might arise from fraud, employee error, and misrepresentation by third parties, or imprudent actions by employees. The written procedures should include reference to safekeeping, repurchase agreements, separation of transaction authority from accounting and record keeping,wire transfer agreements, banking service contracts, City of Edgewater Page 4 of 16 collateral/depository agreements,and"delivery vs.payment"procedures. No person may engage in an investment transaction except as authorized under the terms of this Policy. These procedures are intended to reduce the relatively low risk that material losses may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Independent auditors as a normal part of the annual financial audit to the City shall conduct a review of the system of internal controls to ensure compliance with policies and procedures. VIII. CONTINUING EDUCATION The Finance Director management designee and/or appropriate staff shall annually complete 8 ours of continuing education in subjects or courses of study related to investment practices and products. IX. AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS Authorized City staff Advisors shall only purchase securities from financial institutions, which are Qualified and Investment Institutions by the City or institutions designated as "Primary Securities Dealers"by the Federal Reserve Bank of New York. Authorized City staff and Investment Advisors shall only enter into repurchase agreements with financial institutions that are Qualified Institutions and Primary Securities Dealers as designated by the Federal Reserve Bank of New York. The Finance Director, management designee and/or the Investment Advisors shall maintain a list of financial institutions and broker/dealers that are approved for investment purposes and only firms meeting the following will be eligible requirements to that qualify serve as Qualified Institutions: 1) Regional dealers capital rule 2 under Securities and Exchange Commission Rule15C3-1 (uniform net capital rule); 2) Capital of no less than$10,000,000; 3) Registered as a dealer under the Securities ExchangeActof1934; 4) Member of the National Association of Dealers(NASD) 5) Registered to sell securities in Florida;and 6) The firm and assigned broker have been engaged in the business of effecting transactions in U.S.government and agency obligations for at least five(5) consecutive years. All brokers, dealers and other financial institutions deemed to be Qualified Institutions shall be provided with current copies of the City's Investment Policy. A current audited financial statement is required to be on file for each financial institution and broker/dealer with which the City transacts business. X. MATURITY AND LIQUIDITY REQUIREMENTS To the extent possible an attempt will be made to match investment maturities with known cash needs and anticipated cash flow requirements. Investments of current operating funds shall have maturities of no longer than twenty-four(24)months. Investments of bond reserves,construction funds,and other non-operating funds("core funds")shall have a term appropriate to the need for funds and in accordance with debt covenants, but in no event shall exceed five(5)years. XI. COMPETITIVE SELECTION OF INVESTMENT INSTRUMENTS After the Finance Director, management designee or the Investment Advisor has determined the approximate maturity date based on cash flow needs and market conditions and has analyzed and selected one or more optimal types of investments, a minimum of three (3) Qualified Institutions and/or Primary Dealers must be contacted and asked to provide bids/offers on securities in question ,for investments over$1,500,000. Investments under$1,500,000 only one(1)Qualified Institutution_ _. ..f Formatted:Underline,Font color:Red City of Edgewater Page 5 of 16 and/or Primary Dealer must be contacted and asked to provide a bid/offer on a security. Bids will be held in confidence until the bid deemed to best meet the investment objectives is determined and selected. However, if obtaining bids/offers are not feasible and appropriate, securities may be purchased utilizing the comparison to current market price method on an exception basis. Acceptable current market price providers include,but are not limited to: A. Telerate Information System B. Bloomberg Information C. Wall Street Journal or a comparable nationally recognized financial publication providing daily market pricing D. Daily market pricing provided by the City's custodian their correspondent institutions. The Finance Director or the Investment Advisor shall utilize the competitive bid process to select the securities to be purchased or sold. Selection by comparison to a current market price, as indicated above, shall only be utilized when, in judgment of the Finance Director or the Investment Advisor, competitive bidding would inhibit the selection process. Examples of when this method may be used include: A. When time constraints due to unusual circumstances preclude the use of the competitive bidding process B. When no active market exists for the issue being traded due to the age or depth of the issue C. When a security is unique to a single dealer,for example,a private placement D. When the transaction involves new issues or issues in the"when issued"market Overnight sweep investments or repurchase agreements will not be bid,but may be placed with the City's depository bank relating to the demand account for which the sweep investments or repurchase agreement was purchased. XII. AUTHORIZED INVESTMENTS AND PORTFOLIO COMPOSITION Investments should be made subject to the cash flow needs and such cash flows are subject to revisions as market conditions and the City's needs change. However,when the invested funds are needed in whole or in part for the purpose originally intended or for more optimal investments, the Finance Director or management designee may sell the investment at the then-prevailing market price and place the proceeds with the City's custodian. The following are the investment requirements and allocation limits on security types, issuers, and maturities as established by the City. The Finance Director or management designee shall have the option to further restrict investment percentages from time to time based on market conditions, risks or diversification investment strategies. The percentage allocations requirements for investment types and issuers are calculated based on the original cost of each investment. Investments not listed in this Policy are prohibited. n,,.;unents when purchased must have the required minimum debt rating as required by Moody's and by Standard Poor's. The allocation limits and security types do not apply to the investment of debt proceeds. These investments shall be governed by the debt covenant included in the debt instrument. City of Edgewater Page 6 of 16 A. The State Board of Administration's Local Government Surplus Funds Trust Fund("SBA Pool") 1. Investment Authorization Authorized Staff may invest in the SBA 2. Portfolio Composition A maximum of 100%of available funds may be invested in the SBA. B. United States Government Securities 1. Purchase Authorization Authorized Staff may invest in negotiable direct obligations, or obligations the principal and interest of which are unconditionally guaranteed by the United States Government. Such securities will include,but not be limited to the following: Cash Management Bills Treasury Securities State and Local Government Series SLGS Treasury Bills Treasury Notes Treasury Bonds Treasury Strips 2. Portfolio Composition A maximum of 100%of available funds may be invested in the United States Government Securities. 3. Maturity Limitations The length to maturity of any direct investment in the United States Government Securities are five(5)years from the date of purchase. Maturities longer than five (5)years require the City's approval. C. United States Government Agencies full faith and credit of the United States Government 1. Purchase Authorization Authorized Staff may invest in bonds, debentures or notes issued or guaranteed by the United States Government agencies, provided such obligations are backed by the full faith and credit of the United States Government. Such securities will include,but not be limited to the following: Government National Mortgage Association(GNMA) United States Export Import Bank Direct obligations or fully guaranteed certificates of beneficial ownership Farmer Home Administration Certificates of beneficial ownership Federal Financing Bank Discount notes,notes and bonds Federal Housing Administration Debentures City of Edgewater Page 7 of 16 General Services Administration New Communities Debentures United States Government guaranteed debentures United States Public Housing Notes and Bonds United States Government guaranteed public housing notes and bonds United States Department of Housing and Urban Development Project notes and local authority bonds 2. Portfolio Composition A maximum of 50%of available funds may be invested in United States Government agencies. 3. Limits on Individual Issuers A maximum of 25%of available funds may be invested in individual United States Government agencies. 4. Maturity Limitations The length to maturity for an investment in any United States Government agency security is five(5)years from the date of purchase. Maturities longer than five(5) years require the City's approval. E. Federal Instrumentalities(United States Government sponsored agencies which are non-full faith and credit). 1. Purchase Authorization Authorized Staff may invest in bonds, debentures or notes issued or guaranteed by United States Government sponsored agencies (Federal Instrumentalities which are non-full faith and credit agencies)limited to the following: Federal Farm Credit Bank(FFCB) Federal Home Loan Bank or its District banks(FHLB) Federal National Mortgage Association(FNMA) Federal Home Loan Mortgage Corporation(Freddie Macs)including Federal Home Loan Mortgage Corporation participation certificates Student Loan Marketing Association(Sallie Mae) 2. Portfolio Composition A maximum of 80% of available funds may be invested in Federal instrumentalities. The combined total of available funds invested in Federal Agencies and Mortgage Backed Securities cannot be more than 80%. 3. Limits on Individual Issuers A maximum of 40%of available funds may be invested in any one issuer. 4. Maturity Limitations The length to maturity for an investment in any Federal Instrumentality is five (5) years from the date of purchase. Maturities longer than five (5)years require the City's approval. City of Edgewater Page 8 of 16 E. Mortgage Backed Securities(MBS} 1. Investment Authorization based on mortgages that arc guarant • _ _ e: ••••• __ _ •••• principal,and a guarantee of timely payment- 2. Portfolio Composition of available funds invested in Federal Agencies and Mortgage Backed Securities cannot be more than 80%. 3. Limits of Individual Issuers o Requirements MBS shall be AA rated or better by Standard Poor's or the equivalent by another nationally recognized rating agency. 4. Maturity Limitations the date of purchase. F L. Non-Negotiable Interest Bearing Time Certificates of Deposit 1. Purchase Authorization Authorized Staff may invest in non-negotiable interest bearing time certificates of deposit or savings accounts in banks organized under the laws of this state and/or in national banks organized under the laws of the United States and doing business and situated in this state,provided that any such deposits are by the Florida security for secured Public Deposits Act,Chapter 280,Florida Statutes and provided that the bank is not listed with any recognized credit watch information service. 2. Portfolio Composition A maximum of 50%of available funds maybe invested in non-negotiable interest bearing time certificates of deposit or savings accounts. 3. Limits on Individual Issuers A maximum of 25%of available funds maybe deposited with any one issuer. 4. Maturity Limitations The maximum maturity on any certificate shall be no greater than one(1)year from the date of purchase. Repurchase Agreements City of Edgewater Page 9 of 16 1. Purchase Authorization a. Authorized Staff may invest in repurchase agreements comprised of only those investments based on the requirements set forth by the City's Master Repurchase Agreement. All firms with whom the City enters into repurchase agreements will have in place an executed Master repurchase Agreement with the City. b. A third party custodian shall hold collateral for all repurchase agreements with a term longer than one(1)business day. c. Securities authorized for collateral are negotiable direct obligations of the United States Government and Federal Instrumentalities with maturities under five(5) years and must have a mark-to-market value at a minimum of 102 percent during the term of the repurchase agreement. Immaterial short-term deviations from 102 percent requirement are permissible only upon the approval of the Authorized Staff. 2. Portfolio Composition A maximum of 50%of available funds may be invested in repurchase agreements with the exception of one(1)business day agreements and overnight sweep agreements. 3. Limits on Individual Issuers A maximum of 25%of available funds may be invested with any one institution with the exception of one(1)business day agreements and overnight sweep agreements. 4. Maturity Limitations The maximum length to maturity of any repurchase agreement is 60 days from the date of purchase. Commercial Paper 1. Purchase Authorization Authorized Staff may invest in commercial paper of any United States company that is rated,at the time or purchase,"Prime-I"by Moody's and"A-I"by Standard Poor's (prime commercial paper). If backed by a letter of credit(LOC),the long-term debt of the LOC provider must be rated at least"A"by at least two nationally recognized rating agencies at the time of purchase. The LOC provider must be ranked in the top fifty(50) United States banks in terms of total assets by the American Banker's yearly report. 2. Portfolio Composition A maximum of 25%of available funds may be directly invested in prime commercial paper. 3. Limits on Individual Issuers A maximum of 15_of available funds may be invested with any one issuer. 4. Maturity Limitations City of Edgewater Page 10 of 16 The maximum length to maturity for prime commercial paper shall be 270 days from the date of purchase. H Corporate Notes 1. Purchase Authorization Authorized staff may invest in corporate notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States that have a long term debt rating at the time off purchase with at a minimum"Aa"by Moody's and a minimum long term debt rating of"AA"by Standard Poor's. 2. Portfolio Composition A maximum of 25%of available funds may be directly invested in corporate notes. 3. Limits on Individual Issuers A maximum of 20g%of available funds may be invested with any one issuer. 4. Maturity Limitations The maximum length to maturity for corporate notes shall be 3 years from the date of purchase. .J Bankers Acceptances 1. Purchase Authorization Authorized Staff may invest in banker's acceptances, which are issued by a domestic bank,which has at the time of purchase,an unsecured,uninsured and un- guaranteed obligation rating of at least "Prime-I" by Moody's or"A-I" by Standard Poor's. The bank must be ranked in the top fifty(50)United States banks in terms of total assets by the American Banker's yearly report. 2. Portfolio Composition A maximum of 35%of available funds may be directly invested in bankers' acceptances. 3. Limits on Individual Issuers A maximum of 20%of available funds may be invested with any one issuer. 3. Maturity Limitations The maximum length to maturity for bankers'acceptances shall be 180 days from the date of purchase. V J State and/or Local Government Taxable and/or Tax-Exempt Debt 1. Purchase Authorization City of Edgewater Page 11 of 16 Authorized Staff may invest instate and/or local government taxable and/or tax- exempt debt,general obligation and/or revenue bonds rated at least"Aa"by Moody's or"AA"by Standard Poor's for long-term debt,or rated at least"MIG-2"by Moody's or"SP-2"by Standard Poor's for short-term debt. 2. Portfolio Composition A maximum of 20%of available funds may be invested in taxable and tax-exempt Debts. 3. Limits on Individual Issuers A maximum of 20%of available funds maybe invested with any one issuer. 4. Maturity Limitations A maximum length to maturity for an investment in any state or local government debt security is three(3)years from the date of purchase. Registered Investment Companies(Money Market Mutual Funds) 1. Investment Authorization Authorized Staff may invest in shares in open-end and no-load money market funds provided such funds are registered under the Federal Investment Company Act of 1940 and operate in accordance with 17 C.F.R.§2a-7,which stipulates that money market funds must have an average weighted maturity of 90 days or less. In addition,the share value of the money market funds must be equal to$1.00. 2. Portfolio Composition A maximum of 50%of available funds may be invested in money market funds. 3. Limits of Individual Issuers A maximum of 25%of available funds may be invested with anyone money market Fund. 4. Rating Requirements The money market funds shall be rated"Aam"or"Aam-G"or better by Standard Poor's or the equivalent by another rating agency. 5. Due Diligence Requirements A thorough review of any money market fund is required prior to investing and on a continual basis. There shall be a questionnaire developed by the Finance Director that will contain a list of questions that covers the major aspects of any investment pool/fund. Intergovernmental Investment Pool 1. Investment Authorization City of Edgewater Page 12 of 16 Authorized Staff my invest in intergovernmental investment pools that are authorized pursuant to the Florida Interlocal Cooperation Act, as provided in s.163.01, F.S. 2. Portfolio Composition A maximum of 25%of available funds may be invested in intergovernmental investment pools. 3. Due Diligence Requirements A thorough review of any investment pool/fund is required prior to investing, and on a continual basis. There shall be a questionnaire developed by the Finance Director that will contain a list of questions that covers the major aspects of any investment pool. XIII. DERIVATIVES AND REVERSE REPURCHASE AGREEMENTS Investment in any derivative products or the use of reverse repurchase agreements requires specific City Council approval prior to their use. If the City Council approves the use of derivative products, assets or indices or asset values. If the City Council approves the use of reverse repurchase XIV. PERFORMANCE MEASUREMENTS In order to assist in the evaluation of the portfolios' performance, the City will use performance benchmarks for short-term and long-term portfolios. The use of benchmarks will allow the City to measure its returns against other investors in the same markets. A. Investment performance of funds designated as short-term funds and other funds that must maintain a high degree of liquidity will be compared to the return on the six-month U.S. Treasury Bill. Investments of current operating funds shall have maturities of no longer than twenty-four(24)months. B. Investment performance of funds designated as core funds and other non-operating funds that have a longer-term investment horizon will be compared to an index comprised of U.S. Treasury or Government securities. The appropriate index will have a duration and asset mix that approximates the portfolios and will be utilized as a benchmark to be compared to the portfolios'total rate of return. Investments of bond reserves, construction funds, and other non-operating funds ("core funds") shall have a term appropriate to the need for funds and in accordance with debt covenants,but in no event shall exceed five(5)years. XV. REPORTING The Finance Director,management designee and/or Investment Advisor shall provide the City Manager with a"Quarterly Investment Report"that summarizes but not limited to the following: A. Recent market conditions, economic developments and anticipated investment conditions. B. The investment strategies employed in the most recent quarter. City of Edgewater Page 13 of 16 C. A description of all securities held in investment portfolios at month-end. D. The total rate of return for the quarter and year-to-date versus appropriate benchmarks. E. Any areas of the Policy concern warranting possible revisions to current or planned investment strategies. The market values presented in these reports will be consistent with accounting guidelines in GASB Statement 31. On an annual basis, the City Manager designee shall submit to the City Council a written report on all invested funds. The annual report shall provide all, but not limited to,the following a complete list of all invested funds, name or type of security in which the funds are invested,the amount invested, the maturity date,earned income,the book value,the market value,the yield on each investment. The annual report will show performance on both a book value and total rate of return basis and will compare the results to the above-stated performance benchmarks. All investments shall be reported at fair value per GASB Statement 31. If an investment held by the City shall fall below the required Moody's or Standard Poor's rating this shall be included in the Investment report. The Council shall have the option to discuss and affirm or alter the current investment held by the City. Investment reports shall be available to the public. XVI. THIRD PARTY CUSTODIAL AGREEMENTS Securities, with the exception of certificates of deposits, shall beheld with a third party custodian; and all securities purchase by, and all collateral obtained by the City should be properly designated as an asset of the City. The securities must be held in an account separate and apart from the assets of the financial institution. A third party custodian is defined as any bank depository chartered by the Federal Government, the State of Florida, or any other state or territory of the United States which has a branch or principal place of business in the State of Florida, or by a national association organized and existing under the laws of the United States which is authorized to accept and execute trusts and which is doing business in the State of Florida. Certificates of deposits will be placed in the provider's safekeeping department for the term of the deposit. The custodian shall accept transaction instructions only from those persons who have been duly authorized by the City Manager and which authorization has been provided, in writing, to the custodian. No withdrawal of securities,in whole or in part,shall be made from safekeeping,shall be permitted unless by such a duly authorized person. The custodian shall provide the Finance Director or management designee with safekeeping statements that provide detail information on the securities held by the custodian. On a monthly basis,the custodian will also provide reports that list all securities held for the City,the book value of holdings and the market value as of month-end. If an investment falls below the required Moody's or Standard Poor s rating,the custodian shall notify the Finance Director within 30 days. Security transactions between a broker/dealer and the custodian involving the purchase or sale of securities by transfer of money securities must be made on a "delivery vs. payment" basis, if applicable, to ensure that the custodian will have the security or money, as appropriate, in hand at the conclusion of the transaction. Securities held as collateral shall be held free and clear of any liens. XVII. INVESTMENT COMMITTEE The Finance Director with the approval of the City Manager may establish an Investment Committee for the purpose of formulating alternative investment strategies and short-range directions within the City of Edgewater Page 14 of 16 guideline herein set forth and for monitoring the performance and structure of the City's portfolio. The Committee may include the Finance Director as Chairman,the City s financial advisor,and may include other members as maybe designated by the City Manager from time to time. In lieu of formal establishment of an investment committee the Finance Director will evaluate and manage the investment portfolio solely with the City's Financial Advisor. A designee of the Finance Director may provide the Committee members with current market information, an updated portfolio listing and analysis, and various pertinent financial data. The Committee or quorum of the committee shall meet as often as deemed necessary, under the given conditions, to review, discuss and affirm or alter the current investment strategy and perform other functions as herein provided. The Investment Committee activities can include but not be limited to review and setting investment strategies; review and establishing of written investment procedures; review and approval of bank and other rating agency services;review and approval of source documentation regarding issuers, and dealers,and any other functions as defined herein. XVIII. INTERNAL LOAN PROGRAM This section governs the extension of internal loans from the city's internal liquidity resources of the Pooled Cash Fund for the purpose of financing capital construction projects or capital outlay expenditures for which external financial is not available, or for providing interim financing for municipal strategic initiatives for which a gap exists between the acquisition or construction of a project and the timing of the cash receipts from planned sources of funding including permanent debt financing,federal and state grants,fees and charges and cash from general operating sources. Internal loans will be utilized to provide a short to medium term financing alternative for departments seeking to finance such capital projects/capital outlay expenditures, in a manner that does not detract from the overall City portfolio investment objectives and liquidity requirements. All internal loans under the Program must be approved by the City Council. The Finance Director will promulgate general objectives,guidelines and financial reporting of administration of Program. XIX. INVESTMENT POLICYADOPTION The Investment Policy shall be adopted by City resolution. The Finance Director and City's Financial Advisor shall review the Policy annually and submit recommendations to the City Manager for review and approval. If a change in the Policy is recommended for approval by the City Manager,the Finance Director will prepare the necessary report to Council. City of Edgewater Page 15 of 16 Approved by the City Council of the City of Edgewater at a meeting held on the 3rd 2014 under Agenda day Item of April 2008March II II City of Edgewater Page 16 of 16