Chapter 4.28
UTQIAĠVIK PERMANENT FUND Revised 7/18
Sections:
4.28.010 Utqiaġvik permanent fund – Creation. Revised 7/18
4.28.020 Administration of the fund. Revised 7/18
4.28.030 In-state investments. Revised 7/18
4.28.035 Authorized investments. Revised 7/18
4.28.040 Income. Revised 7/18
4.28.050 Withdrawal of income. Revised 7/18
4.28.060 Withdrawal of principal. Revised 7/18
4.28.070 Prohibited activities. Revised 7/18
4.28.080 Audit of Utqiaġvik permanent fund. Revised 7/18
4.28.010 Utqiaġvik permanent fund – Creation. Revised 7/18
There is created the Utqiaġvik permanent fund. The Utqiaġvik permanent fund shall consist of:
A. At least fifty percent of the net proceeds from the sale of any real property owned by the city, or the lease, except leases for the purpose of mineral extraction, including sand and gravel, of any real property owned by the city for a term of more than three years;
B. Ten percent of the net income of the Utqiaġvik permanent fund; and
C. Such additional sums as the city council may transfer to the Utqiaġvik permanent fund by ordinance or resolution in any fiscal year. (Ord. 02-2017 §2(part); Ord. 88-7 §3(part): Ord. 87-1 §1(part), 1987)
4.28.020 Administration of the fund. Revised 7/18
A. The Utqiaġvik permanent fund shall be administered by the city council, who shall act as the trustees of the Utqiaġvik permanent fund, based on analysis and recommendation from the mayor. The prudent man rule shall be applied by the city council in the management and investment of the assets of the Utqiaġvik permanent fund and the city council. The “prudent man rule” shall mean that in making investments the city council shall exercise the judgment and care under the circumstances then prevailing which an institutional investor of ordinary prudence, discretion and intelligence exercises in the management of large investments entrusted to it not in regard to speculation but in regard to the permanent disposition of funds, taking into account both probable safety of capital as well as probable income.
B. The city council may provide by contract for the administration of the Utqiaġvik permanent fund, but only with qualified persons, licensed by appropriate state and federal agencies to provide services of that kind, and maintaining bonding or insurance meeting the prudent man rule, as defined in this section, adequate to protect the assets of the Utqiaġvik permanent fund.
C. The investment directives for the Alaska Permanent Fund set out at AS 37.13.120(g), as it may be amended from time to time, are adopted by reference as investment directives for the Utqiaġvik permanent fund. (Ord. 02-2017 §2(part); Ord. 88-7 §3(part): Ord. 87-1 §1(part), 1987)
4.28.030 In-state investments. Revised 7/18
The city council shall invest the assets of the Utqiaġvik permanent fund in in-state investments to the extent that in-state investments have a risk level and probable yield comparable to alternate investment opportunities and the in-state investments meet the standards of the prudent man rule under Section 4.28.020. (Ord. 02-2017 §2(part); Ord. 88-7 §3(part): Ord. 87-1 §1(part), 1987)
4.28.035 Authorized investments. Revised 7/18
A. Utqiaġvik permanent fund moneys shall be invested only in the following instruments. All securities purchased with Utqiaġvik permanent fund moneys must mature not later than the time indicated below, measured from the date of the Utqiaġvik permanent fund investment transaction:
1. U.S. Treasury securities, five years;
2. Other obligations guaranteed by the U.S. government or its agencies and instrumentalities, five years;
3. Repurchase agreements with financial institutions for the sale and repurchase of securities specified in subsections (A)(1) and (2) of this section, which meet the margin requirements for such securities specified in Section 4.12.040; maturity of security which is the subject of the repurchase agreement, five years;
4. Certificates of deposit and other deposits at banks and savings and loan associations collateralized as provided in Section 4.12.040, five years;
5. Uncollateralized deposits at banks and savings and loan associations, to the extent that the deposits are insured by the Federal Deposit Insurance Corporation, five years;
6. Bonds and notes which are issued by any state or political subdivision thereof, and which are graded A or higher by Moody’s Investors Service, Inc., or Standard and Poor’s Corporation, five years;
7. Prime commercial paper graded A1 or higher by Moody’s Investors Service, Inc., or P1 or higher by Standard and Poor’s Corporation, two hundred seventy days;
8. Prime banker’s acceptances offered by the fifty largest international banks, one hundred eighty days;
9. Money market mutual funds whose portfolios consist entirely of instruments specified in subsections (A)(1), (2) and (3) of this section, maturity date not applicable.
B. No person shall invest any Utqiaġvik permanent fund moneys in any instrument which is not listed in subsection A of this section. This prohibition includes, but is not limited to, investment of Utqiaġvik permanent fund moneys in any mutual fund, except as otherwise provided in subsection (A)(9) of this section, common or preferred stock, precious metal, zero coupon bond, corporate bond, option contract, futures contract or negotiable instrument with a variable interest rate.
C. The mayor may enter into a short-term repurchase agreement, certificate of deposit or other authorized instrument with the bank in which the city’s daily operating moneys are deposited, for the purpose of investing any excess Utqiaġvik permanent fund moneys which will be needed for such purpose at the time of investment. This investment may be continuing in nature, such that excess Utqiaġvik permanent fund moneys are continually invested. This short-term investment shall be governed by the provisions of this chapter and Chapter 4.12 relating to similar long-term investments, except that the mayor may alter the margin requirements of Section 4.12.040 with respect to this short-term investment, if the mayor determines that such action is reasonably necessary to obtain and secure the investment.
D. Subject to the limitations imposed by Section 4.12.090, Utqiaġvik permanent fund moneys may be invested in any financial institution, as defined in Section 4.12.190, except that moneys may be invested with a bank which does maintain a business office in the United States on a regular and permanent basis, only when investment with an “international bank” is expressly authorized by this chapter or Chapter 4.12. (Ord. 02-2017 §2(part); Ord. 2003-04 §3)
4.28.040 Income. Revised 7/18
The net income of the Utqiaġvik permanent fund shall be computed annually at the end of the city’s fiscal year, in accord with generally accepted accounting procedures. (Ord. 02-2017 §2(part); Ord. 88-7 §3(part): Ord. 87-1 §1(part), 1987)
4.28.050 Withdrawal of income. Revised 7/18
Ninety percent of the net income of the Utqiaġvik permanent fund in each fiscal year shall be transferred each year from the Utqiaġvik permanent fund to the general fund of the city for the following fiscal year. Ten percent of the net income of the Utqiaġvik permanent fund in each fiscal year shall be automatically added to the principal of the Utqiaġvik permanent fund, without ordinance or resolution of the city council, and shall thereafter be treated as principal of the Utqiaġvik permanent fund. (Ord. 02-2017 §2(part); Ord. 88-7 §3(part): Ord. 87-1 §1(part), 1987)
4.28.060 Withdrawal of principal. Revised 7/18
No principal of the Utqiaġvik permanent fund shall be withdrawn from the Utqiaġvik permanent fund except for a lawful purpose and upon the vote of a majority of the city voters voting in a general election or special election called for that purpose. (Ord. 02-2017 §2(part); Ord. 88-7 §3(part): Ord. 87-1 §1(part), 1987)
4.28.070 Prohibited activities. Revised 7/18
The following actions or activities with regard to the Utqiaġvik permanent fund shall be prohibited:
A. Making or directing any investment in which a present member of the city council, or a person who was a member of the city council within the preceding one year, or a present city employee, has a material interest;
B. Investing to finance or influence political activities;
C. Investing to benefit any resident of the city, where the same benefit is not available to other residents according to the same terms. (Ord. 02-2017 §2(part); Ord. 88-7 §3(part): Ord. 87-1 §1(part), 1987)
4.28.080 Audit of Utqiaġvik permanent fund. Revised 7/18
The Utqiaġvik permanent fund shall be audited annually as a part of the annual post-audit of the city. The Utqiaġvik permanent fund shall be shown as a separate portion of the audit, and shall not be included in the general income and expenses of the city. (Ord. 02-2017 §2(part); Ord. 88-7 §3(part): Ord. 87-1 §1(part), 1987)