Chapter 3.16
INVESTMENT AND COLLATERALIZATION OF PUBLIC FUNDS
Sections
3.16.030 Permissible investments
3.16.060 Ownership—encumbrance of collateral
3.16.070 Substitution of collateral
3.16.080 Collateral safekeeping
3.16.090 Investments per financial institution
3.16.010 Generally
The purpose of this investment and collateralization policy is to provide guidelines for investments with an investment period of at least 30 days but not more than 10 years. The policy guidelines do not apply to investments of less than 30 days which may be invested at the discretion of the finance director. [Ord. 1430 §2, 2023; Ord. 829 §1, 1988]
3.16.015 Definitions
As used in this chapter:
“Committee” means the investment committee established under KCC 3.16.025.
“Investment manager” means the person or persons with whom the city contracts to perform the services of investment manager under KCC 3.16.027. [Ord. 1345 §1, 2016]
3.16.020 Treasury management
The finance director shall be responsible for treasury management, and the committee shall be responsible for investment and reinvestment of all city funds. [Ord. 1345 §2, 2016; Ord. 829 §1, 1988]
3.16.025 Investment committee
(a) There shall be an investment committee, that shall have overall responsibility for and administration of the investment of all city funds.
(b) The committee shall consist of the following five voting members:
(1) The city manager;
(2) The deputy city manager;
(3) The finance director;
(4) The city clerk;
(5) A member of the city council, appointed by motion of the city council.
(c) The finance director shall be the chair of the committee and preside at all committee meetings. The committee shall hold quarterly regular meetings, and special meetings as circumstances require. Three committee members shall constitute a quorum of the committee. The committee shall act by majority vote of the members present and constituting a quorum.
(d) The committee shall have the following powers and duties:
(1) Review the city’s investment policy periodically, and recommend changes to the investment policy to the city council.
(2) Select one or more investment managers to perform the duties prescribed in KCC 3.16.027.
(3) Monitor the performance of each investment manager. [Ord. 1345 §3, 2016]
3.16.027 Investment manager
(a) An investment manager retained by the committee shall be licensed by the federal and state governments to perform its duties under this section.
(b) An investment manager retained by the committee shall have the powers and duties assigned by the committee, which may include without limitation the following:
(1) Assisting the committee in strategic planning for the city’s investments, including assistance in developing an investment policy, recommendations on asset allocation strategy, and investment vehicle structure.
(2) Provide the committee with written reports on the performance of the city’s investments at the frequency required by the committee.
(3) Meet with the committee quarterly to review performance, suggest recommendations, and implement approved actionable ideas;
(4) Manage the city’s investments in a manner consistent with the investment objectives, guidelines, and constraints outlined in the city’s investment policy and in accordance with applicable laws.
(5) Act as a fiduciary with respect to the investments it manages. [Ord. 1345 §4, 2016]
3.16.030 Permissible investments
City funds shall be invested only in the following types of security investments. Securities will be in U.S. dollars.
(a) Bonds, notes, or other obligations, direct or otherwise, of the United States;
(b) Bonds and other evidence of indebtedness of the state of Alaska or its political subdivisions or other states of the United States;
(c) Savings accounts, certificates of deposit, bankers’ acceptances, repurchase agreements, and such other security instruments as may be authorized by law; and
(d) The Alaska Municipal League Investment Pool, Inc., made in accordance with the terms of that pool’s Common Investment Agreement;
(e) Obligations of a corporation or municipality if the obligations are investment grade by at least one nationally recognized rating service at the time of investment. [Ord. 1430 §3, 2023; Ord. 1345 §5, 2016; Ord. 956 §2, 1993; Ord. 829 §1, 1988]
3.16.040 Insurance
The finance director shall not deposit funds in any depository that is not a member of the Federal Deposit Insurance Corporation (FDIC), the Federal Savings and Loan Insurance Corporation (FSLIC), or similar insurance agencies of the banking institute. [Ord. 829 §1, 1988]
3.16.050 Collateral
The following collateral will be valued at current market value on the date of pledge in a manner consistent with that used by the institution in preparing its federal and/or state bank reports:
(a) Obligations of, or obligations insured or guaranteed by, the United States or an agency or instrumentality of the United States;
(b) Obligations of the state of Alaska, an agency or instrumentality of the state of Alaska or its political subdivisions which are rated at least Baa, or its equivalent, by a nationally recognized rating service; and
(c) Obligations of states and municipalities of the United States outside of Alaska rated at least A, or its equivalent, by a nationally recognized rating service.
(d) Direct purchase of securities, identified in subsections (a) and (b) of this section, do not require pledged collateral.
(e) Investments in Alaska Municipal League Investment Pool, Inc., are collateralized only by the assets of the Pool. [Ord. 956 §3, 1993; Ord. 829 §1, 1988]
3.16.060 Ownership—encumbrance of collateral
Pledged collateral must be owned by the bank or other financial institution and the entity shall keep the pledged collateral free and clear of liens, security interests, or encumbrances and shall not release, assign, sell, transfer, pledge, or grant a security interest in, encumber, substitute, or otherwise dispose of or abandon any part or all of the pledged collateral without the written authorization of the finance director. [Ord. 829 §1, 1988]
3.16.070 Substitution of collateral
The city reserves the right to review, from time to time, any and all collateral proposed or submitted by a bank or other financial institution, and if the city determines that the public funds are not adequately secured by the pledged collateral, the city may demand additional collateral or a substitution of collateral. [Ord. 829 §1, 1988]
3.16.080 Collateral safekeeping
(a) All collateral pledged by a bank or other financial institution shall be deposited and kept for safekeeping with an independent third-party bank or other financial institution acceptable to the city. The receipt of the collateral by the third-party bank shall be further evidenced by a depository receipt received by the city within a reasonable time period following award of bid or notification or demand for substitute collateral. The bank or other financial institution shall be obligated for any and all expenses incurred with the safekeeping requirement.
(b) Direct purchase of securities identified in KCC 3.16.030(a) and (b) shall be kept for safekeeping in a bank or financial institution designated by the city. Charges for safekeeping services shall be borne by the city. [Ord. 829 §1, 1988]
3.16.090 Investments per financial institution
No more than one-third of the funds available for investment shall be invested with a single bank or financial institution at the time funds are being invested by the city. The city shall not make an investment, at any time, in an amount greater than five percent of the total investments at any one bank or financial institution. [Ord. 829 §1, 1988]
3.16.100 Bid provisions
(a) The finance director shall solicit bids from a minimum of three banks or financial institutions for each investment.
(b) Notices to bid shall be delivered in person, by mail, or by other electronic means including telephone, to those eligible banks and financial institutions as the city may elect.
(c) Notices to bid shall set forth:
(1) The principal amount, the maturity date, the investment period, and the cash settlement date;
(2) The date, time, and place of bid opening; and
(3) Such other information as the city, from time to time, may deem necessary or appropriate.
The city reserves the right to cancel any or all notices to bid, in whole or in part, for any reason at any time, and the cancellation of a notice to bid will be binding on the banks and financial institutions submitting bids.
(d) Bids may be delivered to the city in person, by mail, or by other electronic means including telephone, as authorized by the city. No bid, or amendment to a bid, will be accepted after the time set forth in the notice. In the event no bids are received, the finance director may negotiate the investment with any eligible bank or financial institution.
(e) Bids shall be submitted separately for each investment identified by principal amount and maturity date. Interest rates shall be a rate per annum calculated on a 360-day year. Bids for portions of investments may be accepted by the city at the discretion of the finance director.
(f) If identical bids are received from two or more banks or financial institutions, the investment shall be divided equally among such bidders if the divided investment amount would not result in loss of interest. If the divided deposit would result in loss of interest the finance director shall, at the finance director’s discretion, award by lot or by auction to the highest bidder of those bidders submitting identical bids.
(g) The finance director shall award the bid made on each investment to the bank or financial institution offering the highest return to the city (giving consideration to the security of the investment and the margin of risk).
(h) The city of Kodiak reserves the right to accept or reject any and all bids, in whole or in part, when deemed to be in the best interests of the city.
(i) Investments in the Alaska Municipal League Investment Pool, Inc., and new issues of permissible investments as set forth in KCC 3.16.030 are exempt from the competitive bidding requirements as set forth in this section. [Ord. 956 §4, 1993; Ord. 829 §1, 1988]
3.16.110 Investment records
Investment records shall be maintained as provided for by the standards of generally accepted accounting practices. In addition, the finance director shall obtain and keep a record of all investment bids for three years following the date of the bid opening. [Ord. 829 §1, 1988]