Resolution 2023-22 RESOLUTION NO. 2023-22(R)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WYLIE, TEXAS,
APPROVING THE CURRENT INVESTMENT POLICY, PROVIDING FOR SCOPE
OF THIS POLICY, PROVIDING FOR INVESTMENT OBJECTIVES, PROVIDING
FOR AN INVESTMENT COMMITTEE, PROVIDING FOR DELEGATION OF
AUTHORITY, PROVIDING INVESTMENT STRATEGIES BY POOLED FUND
GROUPS, PROVIDING FOR STANDARD OF CARE, PROVIDING FOR OTHER
INVESTMENT GUIDELINES, PROVIDING FOR INVESTMENTS AUTHORIZED
BY PUBLIC FUNDS INVESTMENT ACT AND INVESTMENTS UNAUTHORIZED
BY THE CITY, PROVIDING FOR PORTFOLIO DIVERSIFICATION AND
MATURITY LIMITS, PROVIDING FOR SELECTION OF BROKERS/DEALERS,
PROVIDING FOR SELECTION OF DEPOSITORIES, PROVIDING FOR
SAFEKEEPING AND CUSTODY, PROVIDING FOR RECORD KEEPING AND
REPORTING, PROVIDING FOR ETHICS AND CONFLICTS OF INTEREST,
PROVIDING FOR POLICY REVISIONS; AND MAKING VARIOUS FINDINGS
AND PROVISIONS RELATED TO THE SUBJECT.
WHEREAS, the Public Funds Investment Act, as amended, requires the City of Wylie to adopt
the Investment Policy by rule, order, ordinance or resolution; and
WHEREAS,the Investment Policy was originally approved December 12,2006; and
WHEREAS, the Investment Policy complies with the Texas Government Code, Chapter 2256,
Public Funds Investment Act, Subchapter A — Authorized Investments for Governmental Entities and
Subchapter B—Miscellaneous Provisions as amended, and authorizes the investment of City funds in safe
and prudent investments.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
WYLIE,THAT the City of Wylie has complied with the requirements of the Public Funds Investment Act
and the Investment Policy, attached hereto, is adopted as the Investment Policy of the City effective
September 26,2023.
DULY PASSED AND ADOPTED by the City Council of the City of Wylie, Texas this 26th day
of September 2023.
i
w Porter,Mayor
ATTESTED BY:
a
Cc
Stephanie Storm, City Secretary \ `'fr_
Resolution No. 2023-22(R) Investment Policy Page 1 of 1
City of Wylie, Texas
INVESTMENT POLICY
CITY OF WYLIE, TEXAS
INVESTMENT POLICY
Submitted for Review September 26,2023
Table of Contents
I. INTRODUCTION 1
II. SCOPE 1
III. OBJECTIVES 1
Safety 1
Liquidity 1
Diversification 1
Yield 1
IV. INVESTMENT COMMITTEE 2
V. DELEGATION OF AUTHORITY 2
VI. INVESTMENT STRATEGY 3
Operating Funds 3
Debt Service Funds 3
Debt Service Reserve Funds 3
Special Projects and Special Purpose Funds 3
VII. STANDARD OF CARE 3
VIII. INVESTMENTS AUTHORIZED BY THE CITY 4
IX. OTHER INVESTMENT GUIDELINES 5
X. DIVERSIFICATION AND MATURITY LIMITS 5
XI. SELECTION OF BROKER/DEALERS 6
XII. SAFEKEEPING AND CUSTODY 6
XIII. RECORD KEEPING AND REPORTING 7
XIV. ETHICS AND CONFLICTS OF INTEREST 8
XV. POLICY REVISIONS 9
APPENDIX A-BROKER/DEALER QUESTIONNAIRE
APPENDIX B -CERTIFICATION BY DEALER
CITY OF WYLIE, TEXAS
INVESTMENT POLICY
I. INTRODUCTION The City's principal investment objectives, in order of
priority,are listed below.
Chapter 2256 of Title 10 of the Local Government
Code (hereinafter referred to as the "Public Funds Safety.The primary objective of the City's investment
Investment Act") prescribes that each city is to adopt activity is the preservation of principal (capital) in the
written rules governing its investment practices and to overall portfolio. Each investment transaction shall
define the authority of the investment officer. The seek first to ensure that capital losses are avoided,
following Investment Policy addresses the methods, whether the loss occurs from the default of a security
procedures, and practices which must be exercised to or from erosion of market value.
ensure effective and judicious fiscal management of
the City's funds. This Policy shall not apply to the Liquidity.The City's investment portfolio will remain
selection, retention or other issues concerning the sufficiently liquid to enable the City to meet operating
depositories of the City's funds in demand deposits as requirements that might be reasonably anticipated.
provided under Chapter 105 of the Local Government Liquidity shall be achieved by matching investment
Code. maturities with forecasted cash flow requirements,by
investing in securities with active secondary markets,
II. SCOPE and by using state or local investment pools.
This Policy shall apply to the investment and Diversification. The governing body recognizes that
management of all funds of the City under its control, in a diversified portfolio, occasional measured losses
other than those expressly excluded herein or by due to market volatility are inevitable, and must be
applicable law or valid agreement. This Policy shall considered within the context of the overall portfolio's
not supersede the restrictions on investment and use return,provided that adequate diversification has been
applicable to any specific fund and, in the event of any implemented. Therefore, assets held in the common
conflict between this Policy and the requirements of investment portfolio shall be diversified to eliminate
any fund subject hereto, the specific requirement the risk of loss resulting from one concentration of
applicable to such fund shall be followed as well as all assets in a specific maturity, a specific issuer or a
other provisions of this Policy other than those in specific class of securities.
conflict. The Employees Deferred Compensation
Agency Fund is excluded from coverage under this Yield. The investment portfolio goal (benchmark)
Policy. against which the yield is compared will be established
from time to time by the Finance Director.
In order to make effective use of the City's resources, Recommendations by the Investment Committee will
all monies shall be pooled into one bank account, be considered when the performance measure is being
except for those monies required to be accounted for established. Efforts to seek higher than the above goal
in other bank accounts as stipulated by applicable must be consistent with risk limitations identified in
laws, bond covenants or contracts. The bank account this policy and prudent investment principles. The
will be maintained by pooled fund group for purposes City's investment portfolio shall be designed with the
of implementing pooled fund strategies and reporting. objective of attaining a rate of return which is
The income derived from this pooled investment consistent with the risk limitations and cash flow
account shall be distributed by fund in accordance characteristics of the City's investments.
with the City's internal procedures.
IV. INVESTMENT COMMITTEE
III. OBJECTIVES
An investment committee consisting of the City
Manager, the Director of Finance and the Assistant
CITY OF WYLIE, TEXAS
INVESTMENT POLICY
Director of Finance will meet annually before the With written approval from the City Manager, the
beginning of a new fiscal year. The Investment Director may delegate any phase of the investment
Committee shall be authorized to invite advisors to the management program to members of the City staff.
meetings as needed. Such approval shall state specifically the functions
such person is authorized to perform or that the person
The investment officer will present a brief report of is authorized to perform all activities of the Director
investment activities to the Investment Committee. under this Policy. The Director shall obtain and
The primary objectives of the committee will be to maintain, at the City's expense, fidelity bonds for
himself and each of his designees in amounts
(1) make recommendations regarding investment determined adequate by the Director(which shall not
strategies be less than five percent of the amounts subject to this
(2) approve a list of authorized brokers, dealers, Policy) for each fiscal year as shown by the approved
banks, savings and loans, credit unions, and budget. No person may engage in an investment
pools transaction except as provided under the terms of this
(3) recommend a list of authorized training Policy and the internal procedures established by the
sources for the state mandated investment Director. A current list of persons authorized to
training and transact investment business and wire funds on behalf
(4) monitor program results. of the City shall be maintained by the Director.
The committee shall include in its deliberations such At the discretion of either the City Manager or the
topics as performance reports, economic outlook, Director and in any event upon the termination or
portfolio diversification, maturity structure, potential reassignment of any member of the Director's staff
risk to the city's funds,and the target rate of return on authorized to conduct transactions for the City
the investment portfolio. pursuant to this Policy, the authority of such person
shall be revoked and such revocation of authority shall
V. DELEGATION OF AUTHORITY be immediately communicated by the Director orally
and in writing to each and every depository,
Management responsibility for the investment broker/dealer,investment advisor,custodian and other
program is delegated by the City Council to the City agency or entity with whom the City has any existing
Manager who will designate the Finance Director as or continuing relationship in the management of its
Investment Officer (hereinafter referred to as the investments.
"Director"). The Director's authority will at all times
be limited by conformance with all Federal VI. INVESTMENT STRATEGY
regulations, State of Texas statutes and other legal
requirements including the City Charter and City The City of Wylie maintains a pooled investment
Ordinances, including this Policy. portfolio. The pooled portfolio utilizes specific
investment strategies designed to address the unique
The Director shall develop and maintain written characteristics of the pooled investment portfolio. The
administrative procedures for the operation of the pooled investment portfolio includes Operating Funds,
investment program consistent with this Policy. The Debt Service Funds, Debt Service Reserve Funds,
controls shall be designed to prevent, identify and Capital Projects and Special Purpose Funds.
control losses of public funds arising from deviation Investment strategies for these different groups are
from this Policy, fraud, employee error, and detailed below.
misrepresentation by third parties, or imprudent
actions by employees and officers of the City. (1) Investment strategies for operating, debt
service,capital project,and special purpose funds have
CITY OF WYLIE, TEXAS
INVESTMENT POLICY
as their primary objective to assure that anticipated (2) whether the investment decision was
cash outflows are matched with adequate investment consistent with the written investment policy
liquidity. The secondary objective is to create a of the City.
portfolio structure which will experience minimal
volatility during economic cycles. The Director and his staff shall recognize that the
investment activities of the City are a matter of public
(2) The investment strategy for the debt service record. Therefore, all participants in the investment
reserve funds shall have as the primary objective the process shall seek to act responsibly as custodians of
ability to generate a dependable revenue stream from the public trust. Investment officials shall avoid any
securities with a low degree of volatility. Securities transactions that might impair public confidence in the
should be of high quality, with short to intermediate City's ability to govern effectively.
term maturities. Except as may be required by a bond
ordinance, securities should be of high quality with VIII. INVESTMENTS AUTHORIZED BY THE
short to intermediate-term maturities. CITY OF WYLIE
VII. STANDARD OF CARE Authorized investments for municipal governments in
the State of Texas are set forth in the Public Funds
Investments shall be made with judgment and care, Investment Act, as amended (Section 2256.009-
under prevailing circumstances, that a person of 2256.019, Government Code). However, suitable
prudence, discretion, and intelligence would exercise investments for the City of Wylie are limited to the
in the management of the person's own affairs, not for following.
speculation, but for investment, considering the
probable safety of capital and the probable income to (1) Direct obligations of the United States or its
be derived. Investment of funds shall be governed by agents and instrumentalities with a stated
the following investment objectives, in order of maturity of 5 years or less.
priority:
(2) Certificates of deposit issued in the State of
(1) preservation and safety of principal; Texas with a maximum maturity of 2 years or
less and insured by the Federal Deposit
(2) liquidity; and Insurance Corporation.
(3) diversification; and (3) Fully collateralized direct repurchase
agreements with a defined termination date of
(4) yield. 2 years or less which are secured by
obligations of the United States or its agencies
In determining whether an investment officer has and instrumentalities and pledged with a third
exercised prudence with respect to an investment party in the City's name. The agreement must
decision, the determination shall be made taking into be placed through a primary government
consideration: securities dealer, as defined by the Federal
Reserve, or by a financial institution doing
(1) the investment of all funds,or funds under the business in the State of Texas. Each issuer of
City's control, over which the officer had repurchase agreements shall be required to
responsibility rather than a consideration as to sign a master repurchase agreement.
the prudence of a single investment;and
(4) Approved investment pools as described in
Section 2256.016 which are continuously
CITY OF WYL.IE, TEXAS
INVESTMENT POLICY
rated no lower than AAA, AAAm or an X. DIVERSIFICATION AND MATURITY
equivalent rating by at least one nationally LIMITS
recognized rating agency and have a weighted
average maturity no greater than 90 days. It is the policy of the City to avoid concentration of
assets in a specific maturity, a specific issue, or a
IX. OTHER INVESTMENT GUIDELINES specific class of securities, with the exception of U.S.
Treasury issues. The asset allocation in the portfolio
The City seeks active management of its portfolio should, however, be flexible depending upon the
assets. In order to meet the objectives of this Policy, outlook for the economy and the securities markets.
the City may from time to time sell securities that it
owns in order to better position its portfolio assets. The City will not exceed the following maximum
Sales of securities prior to maturity shall be limits as a percentage of the total portfolio for each of
documented and approved by the Director before such the categories listed below:
a transaction is consummated. Sales of securities
yielding net proceeds less than 92%of the book value Max.
of the securities must be approved in advance and in of Max.
Investment Category Portfolio Maturity
writing by the City Manager. Three examples of
situations involving the sale of securities prior to Obligations of the United 100% 5 years
maturity are States or its agencies and
(1) swap - to sell an investment to realize a instrumentalities.
capital gain, Certificates of Deposit 25% 18 mon.
(2) To better position selected investments
due to a change in market conditions, Repurchase Agreements 100% 2 years
NOT Reverse Repurchase
(3) To react to emergency liquidity demands. Agreements
Each investment transaction must be based upon The Director shall evaluate how each security
competitive quotations received from at least three purchased fits into the City's overall investment
broker/dealers who have been approved by the City in strategy.
accordance with Texas law.
At all times the City shall maintain 10 percent of its
The purchase and sale of all securities shall be on a total investment portfolio in instruments maturing in
delivery versus payment or payment versus delivery 90 days or less. The weighted average maturity of all
basis(i.e.,for securities purchases,monies will not be securities and certificates of deposit in the City's total
released by the City's safekeeping bank until securities investment portfolio at any given time (not including
are received at the Federal Reserve Bank for further cash or demand deposits)shall not exceed 2 years.
credit to the City's safekeeping bank. In the case of
securities sales, monies will be received by the City's XI. SELECTION OF BROKERS/DEALERS
safekeeping bank via the Federal Reserve Bank as the
securities are simultaneously released to the The City shall maintain a list of broker/dealers and
purchaser). In this manner the City will always have financial institutions which have been approved for
possession of either its securities or its monies. investment purposes by the investment committee.
(For the purpose of this investment policy,
Broker/dealer will be used to refer to any brokerage
CITY OF WYLIE, TEXAS
INVESTMENT POLICY
firm, bank, investment pool, or financial institution guidelines, executed master repurchase agreement, if
with which the City does investment business). applicable, and current financial information on file.
Securities may only be purchased from those Certification language should be mutually acceptable
authorized institutions and firms. The authorized to both parties. An investment officer of the City may
broker/dealers will be reviewed at least annually. To not buy any securities from a person who has not
be eligible, a broker/dealer must meet at least one of delivered to the City an instrument substantially in the
the following criteria: 1)be recognized as a Primary form provided by this policy.
Dealer as defined by the New York Federal Reserve
Market Reports Division; or 2) complies with The Director shall review the quality of service and
Securities and Exchange Commission Rule 150-1, financial stability of each broker/dealer and financial
the Uniform Net Capital Requirement Rule. If the institution approved under this Section at least
City's depository bank also provides custodial and annually. Any approved broker/dealer or financial
safekeeping services for the City,the bank may not be institution may be removed from the list of approved
included as an authorized broker/dealer for the City. broker/dealers with the approval of the Director, if in
However, non-negotiable Certificate of Deposits are the opinion of the Director,the firm has not performed
exempt from this policy. adequately or its financial position is considered
inadequate.
Broker/dealers will be selected and recommended to
the investment committee by the Director on the basis
of their financial stability, expertise in cash XII. SAFEKEEPING AND CUSTODY
management and their ability to service the City's
account. Each broker/dealer that has been authorized Investment securities purchased for the City will be
by the City shall be required to submit and annually delivered by either book entry or physical delivery and
update a Broker/Dealer Information Request form shall be held in third-party safekeeping by a Federal
which includes the firm's most recent financial Reserve Member financial institution designated as
statements. The Director shall maintain a file which the City's safekeeping and custodian bank. The City
includes the most recent Broker/Dealer Information may designate more than one custodian bank. The
Request forms submitted by each firm approved for City shall execute a Safekeeping Agreement with each
investment purposes. A copy of the submitted bank prior to utilizing the custodian's safekeeping
Broker/Dealer Information Request forms as well as a services. Only a state or national bank located within
list of those broker/dealers approved by the City shall the State of Texas may be utilized as a custodian of
be maintained by the Director(See Appendix A). securities pledged to secure certificates of deposit.
The safekeeping agreement must provide that the
The City of Wylie will provide all approved securities safekeeping bank will immediately record and
dealers with a copy of the City's Investment Policy. A promptly issue and deliver a signed safekeeping
principal in the firm must execute a written statement receipt showing the receipt and the identification of
acknowledging receipt and review of the policy and a the security,as well as the City's interest.
statement acknowledging that reasonable procedures
and controls have been implemented to preclude The Director shall maintain a list of designated
imprudent investment activities being conducted custodian banks and a copy of the Safekeeping
between the entity and the securities firm (See Agreement executed with each custodian bank.
Appendix B).
The City must approve release of securities in writing
All approved broker/dealer firms must have a prior to their removal from the custodial account. A
completed City of Wylie broker/dealer questionnaire, telephone facsimile of a written authorization shall be
investment policy,written acknowledgment per above sufficient if the custodian orally confirms receipt of
CITY OF WYLIE, TEXAS
INVESTMENT POLICY
the transmission and an exact copy of the document is a description of the transaction and a brief statement
retained in the City's files. In no event shall the of the reason(s)for the transaction.
custodial bank be an authorized depository bank,
issuer of repurchase agreements in which the City At least annually, the Director shall verify that all
invests or broker/dealer of securities on behalf of the securities purchased by or pledged to the City are on
City. hand in appropriate form. The City, in conjunction
with its annual financial audit, shall perform a
All securities shall be confirmed in the name of the compliance audit of management controls on
City and delivered to an approved custodial bank or investments and adherence to the City's established
carried at a Federal Reserve Bank in the name of the investment policies.
City. The Custodian shall not otherwise deposit
purchased or pledged securities. All book entry Each depository of the City's funds shall maintain
securities owned by the City shall be evidenced by a separate, accurate and complete records relating to all
safekeeping receipt issued to the City and signed by deposits of the City's funds, the securities pledged to
the appropriate officer at the custodian bank stating secure such deposits and all transactions relating to the
that the securities are held in the Federal Reserve pledged securities. Each approved custodian shall
System in a CUSTOMER ACCOUNT naming the maintain separate, accurate and complete records
City as the"customer." In addition,the custodian bank relating to all securities received on behalf of the City,
will, when requested, furnish a copy of the delivery whether pledged, purchased or subject to repurchase
advice received by the custodian bank from the agreement, as well as all transactions related to such
Federal Reserve Bank. securities. In addition, each depository shall file all
reports required by the Texas State Depository Board.
All certificated securities (those transferred by Each depository and custodian shall agree to make all
physical delivery) shall: 1) be held by an approved the records described in this paragraph available to the
custodian bank or any correspondent bank in New Director or designee and the City's auditors at any
York City approved by the Director; and 2) the reasonable time.
correspondent bank or the City's safekeeping bank
shall issue a safekeeping receipt to the City evidencing All broker/dealers, custodians, depositories and
that the securities are held by the correspondent bank investment advisors shall maintain complete records
for the City. of all transactions that they conducted on behalf of the
City and shall make those records available for
The original safekeeping receipt for each transaction inspection by the Director or other representatives
including purchased securities under a repurchase designated by the City Council or City Manager.
agreement and collateral securing deposits will be
forwarded to the Director or his designee and held in a All sales of securities for less than the book value of
secured file by the City. the security shall be approved by the Director. Sales
of securities for less than 92 percent of the book value
XIII. RECORD KEEPING AND REPORTING of the securities must be approved by both the City
Manager and the Director.
A record shall be maintained of all bids and offerings
for securities transactions in order to ensure that the A monthly investment report shall be prepared by staff
City receives competitive pricing. All transactions and signed by the Director, listing all of the
shall be documented by the person authorizing the investments held by the City, beginning and ending
transaction in a form that shows that person's name, market value for period, the current market valuation
the party instructed to execute the transaction,the date, of the investments and transaction summaries,
including a detailed list of the gains and losses
CITY OF WYLIE, TEXAS
INVESTMENT POLICY
recognized. The market value will be determined by: investment advisors. Employees and officers shall not
(1)written reports such as the Wall Street Journal; (2) utilize investment advice concerning specific
on-line services such as Bloomberg; or (3) through a securities or classes of securities obtained in the
primary dealer or national bank that is independent of transaction of the City's business for personal
the specific security being valued. The report must investment decisions, shall in all respects subordinate
state the pooled fund group for each asset/security. their personal investment transactions to those of the
The report shall list the total investment return for the City, particularly with regard to the timing of
month. If invested in securities, the City's audit firm purchases and sales and shall keep all investment
must review the monthly reports annually and the advice obtained on behalf of the City and all
result of the review shall be reported to the City transactions contemplated and completed by the City
Council by that auditor. confidential, except when disclosure is required by
law.
Within 90 days after the end of the City's fiscal year,
the Director shall prepare, sign and deliver to the City An investment officer of the City who has a personal
Manager and the City Council an annual report on the business relationship with an organization seeking to
City's investment program and investment activity sell an investment to the City shall file a statement
which has also been signed by each officer and disclosing that personal business interest. An
employee of the City authorized to conduct any of the investment officer who is related within the second
City's investment activity. The annual report shall degree by affinity or consanguinity to an individual
include full year investment returns. Such annual seeking to sell an investment to the City shall file a
report shall include an analysis of the compliance with statement disclosing that relationship. A statement
this Policy as well as changes in the applicable laws required under this subsection must be filed with the
and regulations during the previous year and may Texas Ethics Commission and the governing body of
include any other items of significance related to the the City.
investment program. The annual investment report
will be reviewed as a part of the annual audit. XV. POLICY REVISIONS
XIV. ETHICS AND CONFLICTS OF INTEREST This Investment Policy will be reviewed at least
annually by the City Manager,the Director of Finance
Officers and employees of the City involved in the and the Assistant Director of Finance and revised
investment process shall refrain from personal when necessary. All revisions shall be approved by
business activity that involves any of the City's the City Council.
approved custodians, depositories, broker/dealers or