HomeMy WebLinkAbout1997-149 Council ResolutionCouncil Member Neal introduced the following resolution and
moved its adoption:
CITY OF LINO LAKES
RESOLUTION NO. 97-149
RESOLUTION AMENDING THE CITY OF LINO LAKES
INVESTMENT POLICY
WHEREAS, the original policy was adopted per Resolution No. 29-91, and
WHEREAS, that policy does not allow investments by the Finance Director, and
WHEREAS, the State Statute referenced in the current policy is 475, which has been
repealed, and
WHEREAS, the current State Statute that covers the investing of municipal funds is 118,
and
WHEREAS, the regulations for investing have changed since 1991.
NOW THEREFORE BE IT RESOLVED, by the City Council of Lino Lakes that the City
Investment Policy be amended to reflect these changes effective immediately.
Adopted by the City Council of Lino Lakes this 13th day of October, 1997.
JohLanders - Mayor
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Marilyn G. Anderson - Clerk Treasurer
The motion for the adoption of the foregoing resolution was duly seconded by Bergeson
and upon vote being taken thereon, the following voted in favor thereof: Bergeson, Kuether,
Neal, Landers.
The following voted against same: None, Council Member Lyden was absent.
Where upon said resolution was declared duly passed and adopted.
CITY OF LINO LAKES
INVESTMENT POLICY
I. Scope
This policy applies to the investment of all municipal funds.
1. Pooling of Funds Except for cash in certain restricted and special funds, the City of
Lino Lakes will consolidate cash balances from all funds to maximize investment earnings.
Investment income will be allocated to the various funds based on their respective participation
and in accordance with generally accepted accounting principles.
II. General Objectives
The primary objectives, in priority order, of investment activities shall be safety, liquidity, and
yield:
1. Safety Safety of principal is the foremost objective of the investment program.
Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the
overall portfolio. The objective will be to mitigate credit risks and interest rate risk.
a. Credit Risk The City of Lino Lakes will minimize credit risks, the risk of loss
due to the failure of the security issuer or backer, by:
* Limiting investments to those investments specified in Minnesota Statutes
118A
* Annually appointing the financial institutions, broker/dealers,
intermediaries, and advisers.
* Diversifying the investment portfolio so that potential losses on
individual securities will be minimized.
b. Interest Rate Risk The City of Lino Lakes will minimize the risk that the
market value of securities in the portfolio will fall due to changes in general interest rates, by:
* Structuring the investment portfolio so that securities mature to meet
cash requirements for ongoing operations.
* Investing municipal funds primarily in shorter -term securities.
2. Liquidity The investment portfolio shall remain sufficiently liquid to meet all
operating requirements that may be reasonable anticipated. This is accomplished by structuring
the portfolio so that securities mature concurrent with cash needs to meet anticipated demands.
Furthermore, since all possible cash demands cannot be anticipated, the portfolio should consist
largely of securities with active secondary or resale markets.
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3. Yield The investment portfolio 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 secondary importance
compared to the safety and liquidity objectives described above. The core of investments are
limited to relatively low risk securities in anticipation of earning a fair return relative to the risk
being assumed. Securities shall not be sold prior to maturity with the following exceptions:
* A security with declining credit may be sold early to minimize loss of principal.
* A security swap would improve the quality, yield, or target duration in the portfolio.
* Liquidity needs of the portfolio require that the security be sold.
III. Standards of Care
1. 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 an overall portfolio.
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 expectations are reported in a
timely fashion and the liquidity and the sale of securities are carried out in accordance with the
terms of this policy.
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.
2. Delegation of Authority Authority to manage the investment program is granted to
the Finance Director and appointed employee in cases of his/her unavailability [hereinafter
referred to as investment officer]. Responsibility for the operation of the investment program is
hereby delegated to the investment officer, who shall act in accordance with established written
procedures and internal controls for the operation of the investment program consistent with this
investment policy. Procedures should include references to: safekeeping, delivery vs. payment,
investment accounting, repurchase agreements, wire transfer agreements, and
collateral/depository agreements. No person may engage in an investment transaction except as
provided under the terms of this policy and the procedures established by the investment officer.
The investment officer shall be responsible for all transactions undertaken and shall establish a
system of controls to regulate the activities of subordinate officials.
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IV. Safekeeping and Custody
1. Authorized Financial Dealers and Institutions A list will be maintained of
financial institutions authorized to provide investment services. In addition, a list also will be
maintained of approved security broker/dealers per statute 118A.06. Representatives within the
institutions providing investments should be licensed with the appropriate federal and state
agencies. A minimum capital requirement of $5,000,000 and at least five years of operation is
mandatory.
From time to time, the City Council may choose to invest in instruments offered by minority and
community financial institutions. In such situations, a waiver to the criteria under Paragraph 1
may be granted. All terms and relationships will be fully disclosed prior to purchase and will be
reported to the appropriate entity on a consistent basis and should be consistent with state or
local law. These types of investment purchases should be approved by the appropriate legislative
or governing body in advance.
2. Internal Controls The investment officer is responsible for establishing and
maintaining an internal control structure designed to ensure that the assets of The City of Lino
Lakes are protected from loss, theft or misuse. The internal control structure shall be designed to
provide reasonable assurance that these objectives are met. The concept of reasonable assurance
recognizes that (1) the cost of a control should not exceed the benefits likely to be derived and
(2) the valuation of costs and benefits requires estimates and judgments by management.
V. Suitable and Authorized Investments
1. Investment Types Consistent with Minnesota State Statute 118A, the following
investments will be permitted by this policy:
* U.S. government obligations, U.S. government agency obligations, and U.S.
government instrumentality obligations, which have a liquid market with a
readily determinable market value,
* Certificates of deposit and other evidences of deposit at financial institutions,
bankers' acceptances, and commercial paper, rated in the highest tier (e.g., A-1,
P-1, F-1, or D-1 or higher) by a nationally recognized rating agency;
commercial paper shall mature in 270 days or less;
* Investment-grade obligations of state, local governments and public authorities;
* Repurchase agreements;
* Money market mutual funds;
* Local government investment pools, either state -administered or through joint
powers statutes and other intergovernmental agreement legislation.
Investment in derivatives under Minnesota State Statute 118A.04, Subd. 6 shall not be permitted.
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VI. Investment Parameters
1. Diversification The investments shall be diversified by:
* limiting investments to avoid over concentration in securities from a
specific issuer or business sector (excluding U.S. Treasury securities),
* limiting investment in securities that have higher credit risks,
VII. Reporting
1. Methods The investment officer shall prepare an investment report monthly that is
given to the City Administrator. Annually, investments are audited for legality and generally
accepted accounting practices by an independent auditor.
2. Performance Standards The investment portfolio will be managed in accordance
with the parameters specified within this policy. The portfolio should obtain a market average
rate of return during a market/economic environment of stable interest rates.
VIII. Policy Considerations
1. Exemption Any investment currently held that does not meet the guidelines of this
policy shall be exempted from the requirements of this policy. At maturity or liquidation, such
monies shall be reinvested only as provided by this policy.
2. Amendments This policy shall be reviewed on a regular basis. Any changes must be
approved by the investment officer and any other appropriate authority,. as well as the
individual(s) charged with maintaining internal controls.
IX. List of Attachments
The following documents, as applicable, are attached to this policy:
* Relevant investment statutes and ordinances.
* Listing of authorized broker/dealers and financial institutions.
* Resolution adopting current policy.
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