Chapter 3.05
INVESTMENT OF CITY FUNDS
Sections:
3.05.040 Authorization to invest excess or inactive moneys.
3.05.050 Determination of moneys available for investment.
3.05.070 Ethics and conflicts of interest.
3.05.080 Authorized financial dealers and institutions.
3.05.090 Authorized investment instruments.
3.05.100 Safekeeping and custody.
3.05.120 Income from investment of funds.
3.05.010 Policy statement.
It is the policy of the city to invest public funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands on the treasury and conforming to all Washington statutes governing the investment of public funds and applicable bond covenants. (Ord. 99-6 § 7, 1999; Ord. 95-29 § 1(part), 1995).
3.05.020 Scope.
This investment policy applies to all financial assets of the city as limited by RCW 35A.40.050 and 35.39.030. These funds are accounted for in the city’s comprehensive annual financial report and include:
A. General governmental funds;
B. Special revenue funds;
C. Debt service funds;
D. Enterprise funds;
E. Internal service funds;
F. Pension funds;
G. Capital improvement funds;
H. Trust funds;
I. Any new funds created by city council. (Ord. 99-6 § 8, 1999; Ord. 95-29 § 1(part), 1995).
3.05.030 Objectives.
The primary objectives, in order of priority, of the city’s investment activities shall be:
A. Safety. Safety of principal is the foremost objective of the city. Investments of the city shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. To attain this objective, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio.
B. Liquidity. The city’s investment portfolio will remain sufficiently liquid to enable the city to meet all operating requirements which might be reasonably anticipated.
C. Return on Investment. The city’s investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the city’s investment risk constraints and the cash flow characteristics of the portfolio. (Ord. 99-6 § 10, 1999; Ord. 95-29 § 1 (part), 1995).
3.05.040 Authorization to invest excess or inactive moneys.
An investment committee, composed of the city finance director, who shall chair the committee, city manager, and the deputy city manager, is authorized to oversee and supervise investment of all such excess or inactive funds, and to provide for the converting of any such investments into cash, from time to time, without the necessity for consent of the city council for each investment or conversion into cash. The city finance director shall develop specific policies and procedures consistent with this chapter and the city investment policy to ensure sound and prudent investment practices. The day-to-day investment authority subject to those practices is delegated to the city finance director. See RCW 35A.42.010. (Ord. 2016-05 § 8, 2016: Ord. 99-6 § 6(part), 1999).
3.05.050 Determination of moneys available for investment.
The city finance director shall be responsible for determining the amount of money available in any fund of any department for investment purposes. In event of dispute or uncertainty, the decision shall be referred to the investment committee. See RCW 35A.40.050. (Ord. 2016-05 § 9, 2016: Ord. 99-6 § 6 (part), 1999).
3.05.060 Standard of care.
Investments shall be made with judgment and care – under circumstances then prevailing – which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived.
The standard of prudence to be used by investment officials shall be the “prudent person” and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with written procedures and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. (Ord. 99-6 § 9, 1999; Ord. 95-29 § 1 (part), 1995).
3.05.070 Ethics and conflicts of interest.
Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose to the city manager any material financial interests in financial institutions that conduct business within the city’s jurisdiction, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the city’s portfolio. Employees and officers shall subordinate their personal investment transactions to those of the city, particularly with regard to the time of purchases and sales. (Ord. 99-6 § 11, 1999; Ord. 95-29 § 1 (part), 1995).
3.05.080 Authorized financial dealers and institutions.
The city finance director shall maintain a list of financial institutions as required by the public deposit protection commission, authorized to provide investment services. In addition, a list shall also be maintained of approved security broker/dealers selected by credit worthiness, who maintain an office in the state of Washington. These may include primary dealers, national dealers and regional dealers. No public deposit shall be made except in a qualified public depository in the state of Washington. When services and rates are comparable, preference shall be given to dealers who pay taxes to the city of Walla Walla. (Ord. 2016-05 § 10, 2016: Ord. 99-6 § 6 (part), 1999).
3.05.090 Authorized investment instruments.
Excess or inactive funds may be placed in any of the following investments:
A. Investments authorized by RCW 35A.40.050, as presently enacted or subsequently amended;
B. Investments authorized by RCW 39.59.020, as presently enacted or subsequently amended;
C. Investments authorized by RCW 39.59.030, as presently enacted or subsequently amended;
D. The local government investment pool in the State Treasury in accordance with Chapter 43.250 RCW;
E. General obligation or utility revenue bonds or warrants issued by the city of Walla Walla;
F. Interfund loans authorized by Chapter 3.04 or by ordinance of the Walla Walla city council; or
G. Such other investments authorized by law and approved by ordinance or resolution of the Walla Walla city council. (Ord. 2016-05 § 11, 2016: Ord. 2014-39 § 2, 2014: Ord. 99-6 § 6 (part), 1999).
3.05.100 Safekeeping and custody.
All security transactions entered into by the city shall be conducted on a delivery-versus-payment (DVP) basis. Securities will be held by a third-party custodian designated by the city finance director. Investment officials shall be bonded to protect the city against loss due to possible embezzlement, malfeasance, or other defalcation. (Ord. 2016-05 § 12, 2016: Ord. 99-6 § 6 (part), 1999).
3.05.120 Income from investment of funds.
Moneys determined to be available for investment purposes may be invested on an individual fund basis or may, unless otherwise restricted by law, be commingled within one common investment portfolio for the mutual benefit of all participating funds; provided, that funds derived from the sale of general obligation bonds or revenue bonds or similar instruments of indebtedness shall be invested, or used in such manner as the initiating ordinances, resolutions, or bond covenants may lawfully prescribe. When moneys are commingled in a common investment portfolio, all income derived therefrom shall be apportioned to the city’s general fund; except in instances where the State Auditor’s office has determined that income from a particular revenue source must be allocated to the funds that hold the restricted revenues. Income derived from investment of restricted revenues shall be apportioned in accordance with rules and regulations established by the State Auditor’s office. Any excess or inactive funds not otherwise invested for the specific benefit of any particular fund, may be invested for the benefit of the general fund. (Ord. 2014-37 § 1, 2014: Ord. 99-6 § 6 (part), 1999).