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3. Resolution 4545 - Investment PolicyON of KaHSDell Post Office Box 1997 • Kalispell, Montana 59903-1997 • Telephone (406) 758-7700 • FAX (406) 758-7758 REPORT TO: FROM: SUBJECT: MEETING DATE: BACKGROUND: Mayor Boharski and City Council Members Amy Robertson, Finance Director Chris Kukulski, City Manager Resolution formalizing the City Investment policy March 20, 2000 The City currently invests its cash in accordance with State law. This resolution is to formalize the City's policy. Basically the City must invest in securities which are direct obligations of the United States. Securities must be pledged. Our experience has been to require 100% pledged securities. Under the law, institutions which meet certain net worth to asset ratios may only be required to pledge 50%. We will continue to follow State law. RECOMMENDATION: Adoption of this resolution. FISCAL EFFECTS: This policy is not a change as we have always followed State law. ALTERNATIVES: As suggested by Council. Amy . Robertson Finance Director Report compiled: March 15, 2000 C"- �r Chris A. Kukulski City Manager RESOLUTION NO. 4545 d RESOLUTION FORMALIZING THE INVESTMENT POLICY OF THE CITY OF KALISPELL, MONTANA. WHEREAS, the City is restricted by State law as to the kind of investments that City funds can be invested in, WHEREAS, the City has not formally adopted its own policy, WHEREAS, the City has the authority to adopt its own policy, and WHEREAS, the City will only invest in Legal Montana Investments. NOW, THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF KALISPELL, MONTANA AS FOLLOWS: SECTION I. That the attached Exhibit "A" will become the formal investment policy of the City. PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF KALISPELL AND SIGNED BY THE MAYOR THIS 20th DAY OF MARCH, 2000. Wm. E. Boharski Mayor ATTEST: Theresa White City Clerk Exhibit "A" Investment Policy of the City of Kalispell The City of Kalispell will use repurchase agreements in the City investment program, unless a financial institution agrees to pledge securities in the amount of: (1) 100% of such deposits if the institution in which the deposit is made has a net worth to total assets ratio of less than 6%; or (2) 50% of such deposits if the institution in which the deposit is made has a net worth to total assets ratio of 6% or more and has filed with the City Finance office its latest financial statement demonstrating such ratio. If repurchase agreements are used, securities will be purchased by the City of Kalispell subject to repurchase by the investing institution. The -following types of securities will be acceptable to meet pledging requirements or will be purchased by the City under the repurchase agreements. MCA 17-6-103 (1) Direct obligations of the United States Government. (2) Securities as to which the payment of principal and interest is guaranteed by the United States Government. (3) Securities issued for fully guaranteed by the following agencies of the United States Government, or their successors: a. Commodity Credit Corporation; b. Federal Home Loan Mortgage Corporation; C. Federal Land Bank; d. Bank for cooperatives; e. Federal Home Loan banks; f. Federal National Mortgage Association; g. Government National Mortgage Association; h. Small Business Administration; i. Federal Housing Administration. (4) General obligation bonds of the State of Montana, or of any county, city or school district within the State of Montana. (5) General Obligation bonds of other states and municipalities, counties, and school districts of other states; provided, however, that any such out-of-state bonds must be rated BAA or higher by Moody's, or its equivalent if rated by another agency. (6) Revenue bonds of any county, city or other political subdivision of the State, when backed by the full faith and credit of the subdivision or when the revenue pledged to the payment of the bonds is derived from a water or sewer system and the issuer has covenanted to establish and maintain rates and charges for the system in an amount sufficient to produce revenue equal to at least 125% of the average annual principal and interest due on all bonds payable from the revenue during the outstanding term of the bonds; (7) Interest -bearing warrants of the State or of any county, city, school district or other political subdivision of the State issued in evidence of claims in an amount that, with all other claims on the same fund, does not exceed the amount validly appropriated in the current budget for expenditure from the fund in the year in which they are issued. The Finance Office is encouraged to deposit funds in such a manner as to maximize the amount of investments that will be federally insured. Public money not necessary for immediate use shall be offered on a bid basis to banks and savings and loan institutions located within the City of Kalispell and will be deposited with the high bidder(s) upon confirmation that such a bidder(s) has pledged securities to the City in the amount required above or has deposited sufficient qualifying securities to effect a repurchase agreement. The City will reserve the option to invest in U. S. Treasury bills, qualifying securities guaranteed by the United States Government, or the State of Montana Investment Pool (STIP). Securities which are either pledged or are the subject of repurchase agreements must be in the possession of an independent third party and that third party (i) must be bonded in an amount at least equal to the amount of the repurchase agreement, and (ii) must affirm to the City Finance office that the securities are in its possession. The City shall take the necessary and appropriate steps to implement and administer this policy.