R2019-280 2019-11-25 RESOLUTION NO. R2019-280
A Resolution of The City Council of the City of Pearland, Texas, adopting an
Amended Investment Policy, Investment Strategy and approved Brokers in
accordance with Chapter 2256 of the Government Code ("Public Funds
Investment Act").
WHEREAS, the Public Funds Investment Act codified in Government Code Chapter 2256
governs local government investment; and
WHEREAS,the Public Fund Investment Act(Section 2256.005a), as amended, requires the
City to adopt an Investment Policy and Investment Strategy by rule, order, ordinance or resolution
governing the investment of funds under its control; and
WHEREAS, the Public Fund Investment Act (Section 2256.005e), requires the governing
body to review and adopt that Investment Policy and Investment Strategy by rule, order, ordinance
or resolution not less than annually, recording any changes made thereto; now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
Section 1. That the City of Pearland has complied with the requirements of the Public
Funds Investment Act and the Investment Policy. The modified Investment Policy, Investment
Strategy and approved Brokers, attached hereto as Exhibit "A," is hereby adopted and approved.
PASSED, APPROVED, AND ADOPTED this 25th day of November, A.D., 2019.
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TOM REID
MAYOR
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MARIA RODRIGUEZ /111
INTERIM CITY SECRE ARY
APPROVED AS TO FORM:
DARRIN M. COKER
CITY ATTORNEY
Resolution No. 2019-280
Exhibit "A"
Memo o1, 44
To: Clay Pearson, City Manager
TE X AS
From: Rhonda Daugherty, Assistant Director of Finance tsr, 0.04
CC: Jon Branson, Deputy City Manager
Cynthia Pearson, Director of Finance
Date: October 28, 2019
Re: Investment Policy and Strategy Update
Amended Bank and Investment Authorization
The Public Funds Investment Act (PFIA) requires the government body to review its investment
policy, investment strategies, and approved broker/dealers not less than annually. The governing
body must adopt a written instrument by ordinance or resolution stating that it has reviewed the
investment policy, investment strategies, approved broker/dealers, and that the written instrument
so adopted shall record any changes made to the policy, strategy, and broker/dealers. City
Council last approved the policy, strategy, and broker/dealers at the regular council meeting held
November 12, 2018.
The investment policy was reviewed by the City's investment advisor, Valley View Consulting,
LLC, and the following Substantive changes were recommended. All other changes noted are
considered housekeeping items intended to make the policy more consistent and concise.
Recommended Policy Changes
2.03 Liquidity
A cash flow analysis can estimate reasonably anticipated obligations, however
unexpected obligations are not predictable, therefore that language was removed.
Money market accounts were added as they can provide liquidity at competitive yields.
These are compliant with the PFIA.
2.05 Yield
This section was updated to match the current benchmarks used in the City's quarterly
investment reports, as well as provide the option to utilize other benchmarks as
appropriate.
2.07 Investment Training
Training hours may be accumulated over the time period.
3.01 Authorized Investments
A. Language was updated to match PFIA.
E. Language was condensed and reference to the policy's Collateralization section was
added.
I & J. These eligible investment options are covered by E. above, so they were removed.
3.02 Certificates of Deposit
A & B. Updated to match PFIA requirements.
C. Added reference to the policy's Collateralization section.
3.04 Investments with Required Ratings
Checking ratings was changed from "monthly online" to "routinely" to allow for City
procedure to dictate when ratings are checked.
4.01 Selection of Investment Broker/Dealers
This section was updated to match the PFIA requirements and current City procedures.
4.02 Certification
This section was updated to match PFIA requirements. Previously, certification was
required from broker/dealers, however updates to the code now only require certification
from business organizations defined as an investment pool or discretionary investment
management firm. The addition to 2. reflects the current PFIA language.
4.06 Competitive Bidding
In this section it is not necessary to exclude CDs placed in accordance with Section
2256.010(b) from competitive bidding. These rates can be compared to other CDs and
securities to determine competitiveness; therefore, it was removed.
"Greatest return and quality" was replaced by "optimum risk/return investment option"
because the investment's risk must also be considered when comparing returns.
At least two Investment Officers must sign off on the investments placed.
4.07 Portfolio Diversification
This update removed the stipulation to rotate broker/dealers for solicitations. All approved
broker/dealers should be solicited when requesting rates, otherwise competitiveness is
limited.
Under the diversification requirements, the 25% for CDARS Program was combined with
Certificates of Deposit for a total maximum investment of 75%. Participating banks offer
the CDARS program for CD placements, therefore these categories can be combined.
5.0 Arbitrage
The language in this section was updated to reflect arbitrate rebate provision application.
7.01 Collateral
This section was updated to reflect requirements under the Public Funds Collateral Act
and the City's current procedures.
Letters of Credit issued by U.S. Government Agencies do not fluctuate in value, therefore
language was added to allow for the value of no less than 100% of all principal and
anticipated accrued interest of the investment.
Attachment A
The language was updated to match PFIA.
Attachment B
Updated to list approved broker/dealers and investment pools. The list was downsized
from nine to four broker/dealers after a thorough review by staff and the City's investment
advisor. The current amount of the portfolio that reflects the types of investments the city
would invest with these brokers is approximately $9.7 million.
The PFIA also requires a separate written investment strategy for each fund or pooled group of
funds. The strategy must address suitability, safety of principal, liquidity, marketability,
diversification, and yield. As such a separate written investment strategy is also included for City
Council approval. The following changes are recommended:
City of Pearland Investment Strategy -VI. Yield
Updated to match language in section 2.05.
On March 25, 2019, Council approved Resolution No. R2019-78, authorizing the City Manager
and/or Chief Financial Officer to negotiate and execute any and all contracts and other documents
incident to establishing bank and investment account(s)for the purpose of investing in authorized
investments and financial institution deposits. An amendment to R2019-78 was recommended
by the City's investment advisor, Valley View Consulting, LLC, to include the City Manager and
the titles of the Investment Officers as they appear in the Investment Policy (Director of Finance,
Assistant Director of Finance, and Treasury Analyst).
The City's investment committee met on October 28, 2019 and concur on the recommendations.
The Investment Policy, Investment Strategy, and Bank and Investment Authorization documents
will be submitted for approval at the next council meeting.
Attachments: Draft 2019 Investment Policy & Strategy_clean
Draft 2019 Investment Policy & Strategy_redlined
Sample Bank and Investment Authorization_clean
Sample Bank and Investment Authorization_redlined
Exhibit A - Incumbents