HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 10/05/2010 - RESOLUTION 2010-065 APPROVING AN AMENDMENT TO THE DATE: October 5, 2010 "
STAFF: John Voss • - • •
SUBJECT
Resolution 2010-065 Approving an Amendment to the Asset Allocation Parameters of the City's Investment Policy.
EXECUTIVE SUMMARY
The proposed revision to the 2008 Investment Policy includes the following significant change:
"Allow for an increase in the allocation amount of Certificate of Deposit investments from 5 percent
to 15 percent. This change will allow for additional flexibility to maximize investment returns while
minimizing investment risk and align the CD Investment category with the CDARS (CD Account
Registry Service) investment category which is currently at 15 percent."
BACKGROUND / DISCUSSION
The City updated its Investment Policy in 2008. Going forward, the Investment Policy will be reviewed by the Council
Audit and Finance Committee at a minimum of every three years to determine whether it is properly serving the City
and, most importantly, ensuring the safety of the public funds entrusted to the City for delivering the services to the
community.
FINANCIAL / ECONOMIC IMPACTS
The financial impacts of the proposed change are minimal. Investment income would be enhanced slightly while
reducing the level of risk compared to alternative investments.
STAFF RECOMMENDATION
Staff recommends adoption of the Resolution.
ATTACHMENTS
1. Excerpt of Updated Investment Policy
ATTACHMENT 1
Excerpt from the Investment policy dated December 2, 2008 with the
proposed allocation percentage change to Certificates of Deposit :
VII. Investment Parameters
1 . Diversification and Asset Allocation
It is the intent of the City to diversify its investment portfolio. Investments shall
be diversified to eliminate the risk of loss resulting from over-concentration of
assets in a specific maturity, issuer or class of securities . Diversification
strategies and guidelines shall be determined and revised periodically by the
Financial Officer. The investments may be diversified by :
a) Limiting investments to avoid over-concentration in securities from a
specific issuer or business sector (excluding U. S . Treasury securities) ;
b) Limiting investment in securities that have higher credit risks ;
c) Investing in securities with varying maturities; and
d) Maintaining a portion of the portfolio in readily available funds such
as local government investment pools, money market funds or short
term repurchase agreements to ensure that City liquidity needs are met.
The maximum investment allowable for each investment category as a
percentage of the entire portfolio is as follows (excluding collateral for
repurchase agreements) :
CASH AND CASH EQUIVALENTS ...................................................................... 100%
TREASURY SECURITIES .......................................................................................90%
GOVERNMENT-SPONSORED AGENCY SECURITIES ....................................90%
REPURCHASE AGREEMENTS ..............................................................................70%
CORPORATE NOTES OR BONDS* .......................................................................40%
BANK DEBENTURES* .............................................................................................25%
COMMERCIAL PAPER* .........................................................................................25%
BANKER'S ACCEPTANCES* .................................................................................25%
LOCAL GOVERNMENT INVESTMENT POOLS................................................20%
MONEY MARKET FUNDS AND MUTUAL FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15%
CD ACCOUNT REGISTRY SERVICE.....(MAXIMUM 50 MILLION). . . . . . ...... 15 %
CERTIFICATES O T1L'Dl1CTT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . �-Yv
CERTIFICATES OF DEPOSIT. . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 %
GUARANTEED INVESTMENT CONTRACTS ............ .. .. .. .. .. .. .. .. .. .. .. .. ..................5 %
* A maximum of 10 percent of the portfolio may be invested in any one
provider or issuer.
RESOLUTION 2010-065
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROVING AN AMENDMENT TO THE ASSET ALLOCATION PARAMETERS
OF THE CITY'S INVESTMENT POLICY
WHEREAS,Article V, Section 12 of the City Charter states that the cash balance of the City
shall be deposited or invested in a manner approved by the City Council; and
WHEREAS, the types of securities in which City funds may be invested have been
established in Ordinance No. 108, 1988 and amended by Ordinance No. 090, 1993; and
WHEREAS, the City Council has adopted Resolution 1990-044 authorizing a Cash
Management and Investment Policy that establishes guidelines and limitations to be followed by
City staff in managing the investment of City funds; and
WHEREAS, by Resolution 2008-121, the City Council has also adopted a new Investment
Policy dated December 2,2008 (the"Investment Policy")that reflects the current financial markets
and provides guidance to the Financial Officer on prudent investment practices to protect investment
principal and maximize return on City investments; and
WHEREAS, City staff has recognized the ongoing turmoil in the financial markets and
recommends amending the Investment Policy to increase the percentage of City investments that
may be allocated to Certificates of Deposit as those investments will maximize investment returns,
minimize investment risk, and provide needed flexibility; and
WHEREAS, City staff has put on file with the Office of the City Clerk the proposed
amendments to Section VII.L, Diversification and Asset Allocation, of the Investment Policy; and
WHEREAS; the City Council believes it is in the best interests of the City to approve the
amendment to the Investment Policy.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT
COLLINS, that the Investment Policy dated December 2, 2009 is amended to increase the
percentage of City funds that may be invested in Certificates of Deposit.
Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 5th
day of October A.D. 2010.
Mayor
ATTEST:
City Clerk