19-R-22 Investment Policy and Strategyft _ 0 9 it r. _
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WHEREAS, the City of Schertz Investment Policy requires an annual review by the City
Council (the "City Council ") and after such review the City of Schertz (the "City ") has determined
that it is in the best interest of the City to adopt the City of Schertz Investment Policy and Strategy,
now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS
THAT:
Section 1. The City Council hereby adopts the City of Schertz Investment Policy and
is repealing any and all prior changes and amendments to Investment Policy attached as Exhibit
A.
Section 2. The City of Schertz Investment Policy requires an annual review by the City
Council.
Section 3. All resolutions, or parts thereof, which are in conflict or inconsistent with
any provision of this Resolution are hereby repealed to the extent of such conflict, and the
provisions of this Resolution shall be and remain controlling as to the matters resolved herein.
Section 4. This Resolution shall be construed and enforced in accordance with the laws
of the State of Texas and the United States of America.
Section 5. If any provision of this Resolution or the application thereof to any person
or circumstance shall be held to be invalid, the remainder of this Resolution and the application of
such provision to other persons and circumstances shall nevertheless be valid, and the City Council
hereby declares that this Resolution would have been enacted without such invalid provision.
Section 6. It is officially found, determined, and declared that the meeting at which
this Resolution is adopted was open to the public and public notice of the time, place, and subject
matter of the public business to be considered at such meeting, including this Resolution, was
given, all as required by Chapter 551, Texas Government Code, as amended.
Section 7. This Resolution shall be in force and effect from and after its final passage,
and it is so resolved.
PASSED AND ADOPTED, this 26th day of February 2019.
CITY OF SCHERTZ,
Pro -Tem �Allisoa' Heyward
ATTEST:
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I. INVESTMENT SCOPE ............................................................................ ............................... 1
GeneralStatement ............................................................................. ............................... i
FundsIncluded ................................................................................... ............................... 1
FundsExcluded .................................................................................. ............................... 1
II. INVESTMENT OBJECTIVES .............................................................. ............................... 1
GeneralStatement ............................................................................. ............................... 1
Safety................................................................................................... ............................... 2
Liquidity.............................................................................................. ............................... 2
Diversification.................................................................................... ............................... 2
Yield.................................................................................................... ............................... 2
Maturity.............................................................................................. ............................... 3
PublicTrust ........................................................................................ ............................... 3
PortfolioManagement ....................................................................... ............................... 3
InvestmentStrategy ........................................................................... ............................... 3
IIL INVESTMENT RESPONSIBILITY AND CONTROL ..................... ............................... 3
City's Investment Delegate ................................................................ ............................... 3
Selecting And Processing Investments ............................................. ............................... 4
Documenting Investments And Providing Details .......................... ............................... 5
Developing Cash Flow Projections For All Portfolios .................... ............................... 5
Determining Cash Available For Investment .................................. ............................... 4
Monitoring Investment Performance ............................................... ............................... 5
Reconciling Investment Records And General Ledger .................. ............................... 5
Allocating Interest Revenue .............................................................. ............................... 6
Providing Revenue Estimates For All Portfolios .......................................................... : 6
Prudence............................................................................................. ............................... 6
Business Relationships of City Manager and Investment Officers .............................. 6
Liability of City Manager and Investment Officers ....................... ............................... 6
IV. INVESTMENT REPORTING .............................................................. ............................... 7
QuarterlyReport ............................................................................... ............................... 7
Investment Advisory Committee ...................................................... ............................... 8
AnnualReview ................................................................................... ............................... 7
InvestmentTraining .......................................................................... ............................... 7
Notification of Investment Changes or Defaults ............................. ............................... 8
ComplianceAudit .............................................................................. ............................... 8
V. INVESTMENT INSTRUMENTS .......................................................... ............................... 9
Authorized Investment Instruments ................................................ ............................... 9
VI. INVESTMENT INSTITUTIONS ........................................................ ............................... 11
Investment Institutions Defined ...................................................... ............................... 11
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VII. INVESTMENT COLLATERAL AND SAFEKEEPING ---------------{77
Collateral or insurance For Deposits ............................................................................ l2
Safekeeping ----------------------'----.-----------.l3
Delivery vu ----------------------------------l3
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This policy (this "Policy ") serves to satisfy the statutory requirement of the Public Funds
Investment Act, as amended, Texas Government Code Chapter 2256, as amended (the "Act "), to
define and adopt a formal written investment policy for the City of Schertz, Texas (the "City ").
The City shall be authorized to invest its funds pursuant to the provisions of the Act and this Policy
or, upon obtaining the prior approval of the City Council of the City (the "City Council "), any
other applicable law.
This Policy applies to all City funds under the direct control of the City, at the present time
any funds to be received in the fixture and any other funds held in custody by the City, -unless
expressly prohibited by law or unless it is in contravention of any depository contract between the
City and any depository bank.
The City funds that are entrusted to the City Council for investment pursuant to this Policy
are divided into the following portfolios based on the source of funds:
The operating account portfolio that consists of funds from the general fund and all
other miscellaneous funds.
The agency funds portfolio, which consists of all agency funds.
Special Revenue, Special Assessment, and all other City funds.
Funds Excluded
This Policy shall not be applicable to any funds on deposit in any bond account, reserve
account, or capital improvement construction account. The provisions of the ordinances
authorizing the issuance of these debt obligations and the provisions of the Internal Revenue Code
of 1986, as amended control the investment of funds on deposit in these accounts.
II. INVESTMENT OBJECTIVES
General Statement
Funds of the City will be invested in accordance with the Act, this Policy, written
investment strategy, and written administrative procedures to be developed by the City Manager,
Finance Director, and Investment Officers. The City's investment portfolio shall be managed in a
manner to attain the maximum rate of return allowed through prudent and legal investing of City
funds while preserving and protecting capital in the overall portfolio.
Safety
The primary objective of the City for all portfolios and funds is to ensure the safety of the
principal. All investment transactions shall first seek to avoid capital losses by choosing high
credit quality securities. The Investment Officers will monitor credit rating changes on a monthly
basis and will immediately liquidate any investment that fails to meet the credit quality required
by the Public Funds Investment Act,
Liquidity
The City's investment portfolio must be structured in a manner that will provide the
liquidity necessary to meet all operating requirements which might reasonably be anticipated, and
to pay obligations as they become due.
Diversification
The policy of the City, except when investing with the City's depository bank or in U.S.
Treasury Bills, Bonds or Notes, will be to diversify its investment portfolio when investing in
certificates of deposit of other banks and savings and loans domiciled in Texas, repurchase
agreements, U.S. agencies securities, and other investment instruments provided for by law. The
City's portfolio shall be diversified to eliminate the risk of loss resulting from over concentration
of assets in a specific maturity, a specific issuer or a specific class of investments. Investments of
the City shall always be selected to provide stability of income and reasonable liquidity. Liquidity
is defined as the ability to sell an investment at reasonable cost under adverse market conditions.
In establishing specific diversification strategies, the following general polices and
constraints shall apply:
(1) Portfolio maturities shall be staggered in a way that avoids undue concentration of
assets in a specific maturity sector. Maturities shall be selected which provide for
stability of income and reasonable liquidity.
(2) Liquidity shall be maintained through practices that ensure that the next
disbursement date and payroll date are covered through current revenues, maturing
investments, or marketable securities.
(3) Risks of market price volatility shall be controlled through maturity diversification.
Yield
It is the objective of the City to earn the maximum rate of return allowed on its investments
within the constraints imposed by its safety and liquidity objectives, and the applicable law
governing the investment of public funds.
The City must invest its portfolios in eligible investments that yield the highest possible
rate of return while providing the necessary protection of the principal. The City seeks to optimize
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return on investments in all portfolios. The average minimum rate of return for the entire portfolio,
excluding funds needed for current obligations, must be at least equal to a no default risk rate of
return indicator, such as the return on the threemonth Treasury bill. If fiends are subject to yield
restrictions due to federal arbitrage regulations, those funds are excluded from the -yield
calculation.
All security transactions will be made on documented competitive bid basis to assure the
City is receiving good market rates. When- issued US agency securities should be compared to
other securities available in the secondary market to determine competitiveness.
It will be the objective of the City to act responsibly as custodians of the public trust.
Portfolio Management
Under this Policy all investments will be made with the intent of pursuing, at the time of
purchase, the best rate of return on securities held until maturity, and not with the intent of
speculative trading. However, securities may be sold before maturity if market conditions present
an opportunity for the City to benefit from this transaction.
Investment Strategy
The City maintains one commingled portfolio for investment purposes which incorporates
the specific use and the unique characteristics of the funds in the portfolio. The investment strategy
has as its primary objective assurance that anticipated liabilities are matched and adequate
investment liquidity provided. The City shall pursue conservative portfolio management strategy.
This may be accomplished by creating a laddered maturity structure with some extension for yield
enhancement. The maximum maturity of any security will be live years and the maximum dollar
weighted average maturity of one year or less will be calculated using the stated final maturity date
of each security.
The investment strategy for debt service shall have as its primary objective the timely
payment of debt service obligations. Successive debt service dates will be fully funded before any
investment extensions are made.
III. INVESTMENT RESPONSIBILITY AND CONTROL
City's Investment Officers
In accordance with Section 2256.005 of the Act, Investment Officers for the City include
the City Manager, the Assistant City Managers, the Executive Director of Economic Development,
the Finance Director, and the Assistant Finance Director. The Finance Director is the primary
manager of City investment portfolios, and shall develop and maintain written administrative
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procedures for the operation of the investment program, consistent with this Policy, including the
following:
(1) Summarizing the economic and market analysis;
(2) Forecasting available cash for investments;
(3) Formulating strategies for asset mix, investment instruments, maturities, and target
yields;
(4) Monitoring performance against the current investment strategy and evaluating
reasons for variances;
(5) Reporting portfolios performance for the previous quarter to the City Council; and
(6) Revising the investment strategy based on recommendations by the Investment
Advisory Committee.
The City Manager and the Investment Officers must file a statement with the City Council
and the Texas Ethics Commission of any personal business relationship that they may have with a
business organization as defined in the Act offering to engage in an investment transaction with
the City. A personal business relationship is defined by Section 2256.005 of the Act to exist if
(1)The investment officer owns 10% or more of the voting stock or shares of the
business organization or owns $5,000 or more of the fair market value of
the business organization;
(2)Funds received by the investment officer from the business organization exceed
10% of the investment officer's gross income for the previous year; or
(3)The investment officer has acquired from the business organization during the previous
year investments with a book value of $2,500 or more for the personal account of
the investment officer.
The City Manager and Investment Officers must file a statement with the City Council and
Texas Ethics Commission to disclose any personal business relationship within two
levels of blood or marriage with an organization seeking to sell an investment to
the City.
Selecting and Processing Investments
The Investment Officers review the composition of the current portfolio and determines
whether the securities under consideration maintain the portfolio within the guidelines established
by this Policy, subchapter A of the Act, and all federal, state, and local statutes, rules or regulations.
The Investment Officers approve the wire transfer form authorizing the transfer of funds for a
specific investment transaction.
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The City Manager, Finance Director, and Investment Officers retain documentation of all
investment transactions, including any bond swaps. The City Manager, Finance Director, and
Investment Officers provide information and supporting documentation for all investment
transactions for entry in the General Ledger. The City Manager, Finance Director, and Investment
Officers will utilize information and backup documentation on all investment transactions to
ensure accurate calculation of cash position and accurate posting to appropriate accounts.
New Investment accounts can only be established by signatures from all Investment
Officers not on probation. Changes in the account authorization or banking information may only
be updated with signatures from all active Investment Officers. Investment transactions cannot be
initiated and recorded by the same Investment Officer.
The City Manager, Finance Director, and Investment Officers analyzes prior period data
and develops and amends cash flow projections of the City's cash requirements The cash flow
projections to match assets and liabilities in order to maximize the return on investments. All funds
that can be legally invested and match the available balance identified in the cash flow projections
are considered available for investment.
Monitoring Investment Performance
The City Manager, Finance Director, and Investment Officers must routinely perform
market and economic analysis to forecast probable market conditions for the investment period by
assembling and analyzing current and trend data to develop and plan investment strategy. This
analysis uses information obtained from investment advisors, brokers, and investment industry
publications.
The City Manager, Finance Director, and Investment Officers monitor the current and
expected yield curves for interest rate movements. When interest rates are expected to decline,
maturity ranges are extended within portfolio and the constraints of this Policy. When interest
rates are expected to increase, maturity ranges are shortened. The City Manager, Finance Director,
and Investment Officers monitors yield spreads between various government agency issues and
United States notes and bonds to determine the best value. The City Manager, Finance Director,
and Investment Officers summarizes economic and market trend information and presents
recommendations for investments strategy based on economic and market conditions to the City
Council and the Investment Advisory Committee.
Reconciling Investment Records and General Ledger
The City Manager, Finance Director, and Investment Officers prepares a monthly report
that includes information such as identifying investments at par value, identifying CUSIP number,
disclosing the premium or discount, and the interest purchased for the City's investments. The
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report includes monthly and year -to -date interest accruals and amortization /accretion of
premium/discount. This report should reconcile to the investment accounts in the General Ledger.
Allocating Interest Revenue
The City Manager, Finance Director, and Investment Officers allocates the interest revenue
earned from investments proportionately to all accounts that participate in the investment function.
Providing Revenue Estimates for All Portfolios
The City Manager, Finance Director, and Investment Officers provides an estimate of the
investment revenue for the annual budget
Prudence
Investments of the City shall be made with judgment and the exercise of due care, under
prevailing circumstances, that a person of prudence, discretion and intelligence would exercise in
the management of the person's own affairs, not for speculation, but for investment, considering
the probable safety of capital, as well as the probable income to be derived for the City. Unless
authorized by law, a person may not deposit, withdraw, transfer, or manage in any other manner
the funds of the City.
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Liability of City Manager, Finance Director, and Investment Officers
The City Manager, Finance Director, and Investment Officers are not responsible for any
loss of the City funds through the failure or negligence of a depository bank or other financial or
investment institution as described in Article VI of this Policy.
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Liability of City Manager, Finance Director, and Investment Officers
The City Manager, Finance Director, and Investment Officers are not responsible for any
loss of the City funds through the failure or negligence of a depository bank or other financial or
investment institution as described in Article VI of this Policy.
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Liability of City Manager, Finance Director, and Investment Officers
The City Manager, Finance Director, and Investment Officers are not responsible for any
loss of the City funds through the failure or negligence of a depository bank or other financial or
investment institution as described in Article VI of this Policy.
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IV. INVESTMENT REPORTING
Quarterly Report
The City Manager, Finance Director, and Investment Officers will continually monitor and
evaluate the City's investments, and report quarterly to the City Council as provided in Section
2256.023 of the Act. The report must:
(1) describe in detail the investment position of the City on the date of the report;
(2) be prepared jointly by all investment officers of the City;
(3) be signed by each investment officer of the City;
(4) contain a summary statement, prepared in compliance with generally accepted
accounting principles, of each pooled fund group that states the:
(a) beginning market value for the reporting period;
(b) additions and changes to the market value during the period;
(c) ending market value for the period; and
(d) fully accrued interest for the reporting period;
(5) state the book value and market value of each separately invested asset at the
beginning and end of the reporting period by the type of asset and fund type
invested;
(6) state the maturity date of each separately invested asset that has a maturity date;
(7) state the account or fund or pooled group fund in the City for which each individual
investment was acquired; and
(8) state the compliance of the investment portfolio of the City as it relates to:
(a) the investment strategy expressed in the City's investment policy; and
(b) relevant provisions of the Act.
The report shall be presented not less than quarterly to the City Council and the City
Manager of the City within a reasonable time after the end of the period.
If the City invests in other than money market mutual funds, investment pools or accounts
offered by its depository bank in the form of certificates of deposit, or money market accounts or
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similar accounts, the reports prepared by the investment officers under this section shall be
formally reviewed at least annually by an independent auditor, and the result of the review shall
be reported to the City Council by that auditor.
An Investment Advisory Committee composed of the City Manager (as Chair), the
Assistant City Managers, the Executive Director of Economic Development, the Finance Director,
the Assistant Finance Director, the Budget /Financial Analyst, and two representatives of the City
Council, will meet no less than once semiannually to review the investment portfolio, process, and
practices to ensure adherence to the Act and the adopted Policy.
This Policy and investment strategy will be reviewed by the investment Advisory
Committee and City Council annually. The Investment Advisory Committee will recommend
changes to the Policy annually to the City Council who shall adopt a written rule, order, ordinance,
or resolution stating that it has reviewed the Policy and investment strategy and shall record in the
order, ordinance or resolution any changes made to either the Policy or investment strategy.
Investment Training
The City Manager, Finance Director, and Investment Officers are required to receive 10
hours training pertaining to the Texas Public Funds Investment Act within the first 12 months after
assuming duties and 8 hours every 2 years thereafter. This training shall be through courses and
seminars offered by professional organizations and associations in order to ensure the quality and
capability of the Investment Officers and staff in making investment decisions. Training for city
council officials on the Investment Committee is recommended to provide education and
knowledge pertaining to the Public Funds Investment Act but the training is not mandatory.
Notification of Investment Changes or Defaults
It shall be the duty of the City Manager, Finance Director, and Investment Officers to notify
the City Council of any significant changes in current investment methods and procedures prior to
their implementation and to immediately notify the City Council in the event of a default or
nonpayment of any investment acquired with City funds. In addition, the City Council in its annual
review of the Policy shall adopt any order, ordinance, or resolution establishing its annual review
and record any changes to the Policy or investment strategies.
Compliance Audit
The City, in conjunction with its annual financial audit, shall perform a compliance audit
of management controls on investments and adherence to the Policy.
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The City Manager, Finance Director, and Investment Officers shall use any or all of the
following authorized investment instruments consistent with governing law:
(1) Obligations, including letters of credit, of the United States or its agencies
and instrumentalities;
(2) Collateralized mortgage obligations directly issued by a federal agency or
instrumentality of the United States, the underlying security for which is
guaranteed by an agency of instrumentality of the United States;
(3) General Obligations of states, agencies, counties, cities, and other political
subdivisions of any state having been rated as to investment quality by a
nationally recognized investment rating firm and having received a rating
of not less than A or its equivalent;
(4) Certificates of deposit issued by a state or national bank domiciled in this
State, a savings bank domiciled in this state or federal credit union
domiciled in this State that are
(A) Guaranteed or insured by the Federal Deposit Insurance Corporation
or its successor or the National Credit Union Share Insurance Fund
or its successor; or
(B) Secured by obligations that are described by subdivisions (1) -(6) of
this subsection, including mortgage- backed securities directly
issued by a federal agency or _instrumentality that have a market
value of not less than the principal amount of the certificates or in
any other manner and amount provided by law for deposits of the
City; or
(C) Secured in any other manner and amount provided by law for
deposits of the City; or
(5) Prime domestic bankers' acceptances if it
(A) Has stated maturity of 270 days or fewer from the date of its
issuance;
(B) Will be, in accordance with its terms, liquidated in full at maturity;
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(C) Is eligible for collateral for borrowing from a Federal Reserve Bank;
and
(D) Is accepted by a bank organized and existing under the laws of the
United States or any state, if the short-term obligations of the bank,
or of a bank holding company of which the bank is the largest
subsidiary, are rated not less than A -1 or P -1 or an equivalent rating
by at least one nationally recognized credit rating agency;
(6) Commercial paper if it
(A) Has a stated maturity of 270 days or less from the date of its
issuance; and
(B) Is rated not less than A -1, P-1, or the equivalent by at least
(1) Two nationally recognized credit rating agencies; or
(2) One nationally recognized credit rating agency and is fully
secured by an irrevocable letter of credit issued by a bank
organized and existing under the laws of the United States or
any state thereof,
(C) For commercial paper with maturity of over 90 days, monthly credit
checks will be conducted on the issuer to determine risk and to take
appropriate steps to protect the investment
(7) Fully collateralized direct repurchase agreements having a defined
termination date, secured by obligations described by subdivision (1) of this
subsection, pledged to the City, held in the City's name, and deposited at
the time the investment is made with a third party selected and approved by
the City, and placed through a primary government securities dealer, as
defined by the Federal Reserve, or a financial institution doing business in
this State;
(8) Bond proceeds, other than bond proceeds representing reserves and funds
maintained for debt service purposes, may not be invested under the Act in
a guaranteed investment contract with a term of longer than five years from
date of issuance of the bonds; to be eligible as an authorized investment
(A) The City Council must specifically authorize guaranteed investment
contracts as an eligible investment in the ordinance or resolution
authorizing the issuance of bonds;
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(E) The City must receive bids from at least three separate providers
with no material financial interest in the bonds from which proceeds
were received;
(C) The City must purchase the highest yielding guaranteed investment
contract for which a qualifying bid is received;
(D) The price of the guaranteed investment contract must take into
account the reasonably expected drawdown schedule for the bond
proceeds to be invested; and
(E) The provider must certify the administrative costs reasonably
expected to be paid to third parties in connection with the guaranteed
investment contract.
(9) Interest bearing bank deposits insured by the FDIC or National Credit Union
Share Insurance Fund, and shared deposit programs, are authorized
investments.
In addition to the investments described by items (1) - (9) above, the City may invest funds
under its control in eligible public funds investment pools as permitted under the Act. A public
funds investment pool must be continuously rated no lower than AAA or AAA -m or at an
equivalent rating by at least one nationally recognized rating service or no lower than investment
grade by at least one nationally recognized rating service with a weighted average maturity no
greater than 90 days.
In addition to the investments described by items (1) - (9) above, the City may, in
accordance with the Act, purchase, sell, and invest funds, after receiving a prospectus and other
information required by the SEC, under its control in an SEC - regulated, no -load money market
mutual fund with a dollar weighted average stated maturity of 60 days and whose investment
objectives include seeking to strive to maintain a stable net asset value of $1 per share and must
comply with SEC Rule 2a -7, or a no -load mutual fund which is registered with the SEC, has an
average weighted maturity of less than two years, is invested exclusively in obligations approved
by the Act, is continuously rated as - investment quality by at least one nationally recognized
investment rating firm of not less than AAA or its equivalent and conforms to the requirements set
forth in Sections 2256.016(b) and (c) of the Act relating to the eligibility of investment pools to
receive and invest funds of the City. The City shall not (i) invest in the aggregate more than 15%
of its monthly average fund balance, excluding bond proceeds and reserves and other funds held
for debt service in mutual funds as described by the Act; (ii) invest any portion of bond proceeds,
reserves and funds held for debt service, in mutual funds described by the Act; or (iii) invest its
funds or funds under its control, including bond proceeds and reserves and other funds held for
debt service in any one mutual fund described by the Act in an amount that exceeds 10% of the
total assets of the mutual fund.
VI. INVESTMENT INSTITUTIONS
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Any business organization offering to engage in an investment transactions must be given
a copy of the entity's Investment Policy and must sign a certification that acknowledges they have
received it and have implemented procedures to preclude imprudent transactions, and supply the
City Manager, Finance Director, and Investment Officers with the information specified below.
First, a broker /dealer must submit audited financial statements for the financial institution or
broker /dealer. Second, a broker /dealer must provide evidence of appropriate registration by the
qualified representative of the business organization as such terms are defined in the Act. For bank
dealers, this requires a statement from a senior bank official that the bank dealer is appropriately
registered with its primary regulatory agency (the Office of the Comptroller of the Currency for
National Banks) as a government securities dealer, municipal securities dealer, or both. For a
securities firm, this requires a statement from a senior official that the firm is registered with the
National Association of Securities Dealers. Finally, a broker /dealer must deliver a written
statement, acceptable to the City, by the qualified representative, offering to engage in an
investment transaction with the City, that they have received and thoroughly reviewed the Policy
and acknowledged that the business organization has implemented reasonable procedures and
controls in an effort to preclude investment transactions conducted between the City and the
business organization that are not authorized by this Policy or the Public Funds Investment Act.
The City Manager, Finance Director, and Investment Officers will recommend both primary and
secondary securities dealers to the City Council for final approval. The City Manager, Finance
Director, and Investment Officers may not acquire or otherwise obtain any authorized investment
described in this Policy from a person who has not delivered to the City the written statement
required in this section.
The City Council or the designated Investment Advisory Committee members shall, at
least annually, review, revise, and adopt a list of qualified brokers that are authorized to engage in
investment transactions with the City.
Investment Management Firms
The City may contract with an investment management firm registered under either the
Investment Advisors Act of 1940 or with the State Securities Board for a maxim -um 2 years with
renewal or extension subject to approval by City Council by resolution.
Collateral or Insurance for Deposits
The City Manager, Finance Director, and Investment Officers shall ensure that all
deposited and invested City funds are, to the extent required, fully collateralized or insured
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consistent with federal and state law and the current bank depository contract in one or more of
the following manners:
(1) FDIC or National Credit Union Share coverage;
(2) Obligations of the United States or its agencies and instrumentalities;
(3) Direct obligations of the State of Texas or its agencies;
(4) Other obligations, the principal of and interest on which are unconditionally
guaranteed or insured by the State of Texas or the United States or its
agencies and instrumentalities; or
(5) Any other manner allowed by law.
(6) Certificates of Deposits can be secured by an FHLB letter of credit.
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All purchased securities shall be held in safekeeping by the City, or a City account in a
third party financial institution, or with a Federal Reserve Bank.
All certificates of deposit, insured by FDIC, purchased outside the depository bank shall
be held in safekeeping by either the City or a City account in a third party financial institution.
All pledged securities by the depository bank shall be held in safekeeping by the City, or a
City account in a third party financial institution, or with a Federal Reserve Bank.
All certificates of deposit, pledged by the depository bank shall be held in custody of a
Federal Reserve Bank for safekeeping, be the subject of a valid pledge agreement designating the
City as the beneficiary of the pledge agreement; be insured by the FDIC; be described in detail by
a safekeeping receipt issued to the City by the Federal Reserve Bank having custody of the
certificates; and be issued with the City as registered owner.
Delivery vs. Payment
It will be the policy of the City that all transactions, except investment pool funds and
mutual funds, shall be purchased using the delivery vs. payment method through the Federal
Reserve System. By so doing, City funds are not released until the City has received, through the
Federal Reserve wire, the securities purchased.
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