City of Normandy, MO
St. Louis County
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Table of Contents
Table of Contents
[R.O. 2012 §155.010; Ord. No. 456 §1, 3-7-2000]
A. 
This policy applies to the investment of all operating funds of the City.
1. 
Pooling of funds. Except for cash in certain restricted and special funds, the City will consolidate cash balances from all funds to maximize investment earnings. Investment income will be allocated to the various funds based on their respective participation and in accordance with the generally accepted accounting principles.
2. 
External management of funds. Investment through external programs, facilities and professionals operating in a manner consistent with this policy will constitute compliance.
[R.O. 2012 §155.020; Ord. No. 456 §1, 3-7-2000]
A. 
Safety. Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of capitol in the overall portfolio. The objective will be to minimize credit risk and interest rate risk.
1. 
Credit risk. The City will minimize credit risk, the risk of loss due to the failure of the security issuer or backer, by:
a. 
Pre qualifying the financial institutions, brokers/dealers, intermediaries, and advisors with which the City will do business. Diversifying the portfolio so that potential losses on individual securities will be minimized.
2. 
Interest rate risk. The City will minimize the risk that the market value of securities in the portfolio will fall due to changes in general interest rates, by:
a. 
Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity.
b. 
Investing operating funds primarily in shorter-term securities.
B. 
Liquidity. The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by structuring the portfolio so that securities mature concurrent with cash needs to meet anticipated demands.
C. 
Yield. The investment portfolio shall be designed with the objectives of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance to the safety and liquidity objectives described above. The core of investments are limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. Securities shall not be sold prior to maturity with the following exceptions:
1. 
A security with declining credit may be sold early to minimize loss of principal.
2. 
A security swap would improve the quality, yield, or target duration.
3. 
Liquidity needs of the portfolio require that the security be sold.
[R.O. 2012 §155.030; Ord. No. 456 §1, 3-7-2000]
A. 
Prudence. The standard of care to be used by investment officials shall be the "prudent person" standard and shall be applied in the context of managing an overall portfolio.
B. 
Ethics And Conflicts Of Interest. Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions. Employees and investment officials shall disclose any material interests in financial institutions in which they conduct business. They shall further disclose any personal financial/ investment positions that could be related to the performance of the investment portfolio. Employees and officials shall refrain from undertaking personal investment transactions with the same individual with which business is conducted on behalf of the City.
C. 
Delegation Of Authority. Authority to manage the investment program is granted to the City Administrator, hereinafter referred to as investment officer and derived from the State Statutes or Constitution. Responsibility for the operation of the investment program is hereby delegated to the investment officer, who shall act in accordance with the established written procedures and internal controls for the operation of the investment program consistent with this investment policy. Procedures should include references to: safekeeping, delivery vs. payment, investment accounting, repurchase agreements, wire transfer agreements, and collateral/depository agreements. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the investment officer. The investment officer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials.
[R.O. 2012 §155.040; Ord. No. 456 §1, 3-7-2000]
A. 
The investment officer is responsible for establishing and maintaining an internal control structure that will be reviewed annually with the City's independent auditor. The internal control structure shall be designed to ensure that the assets of the City, are protected from loss, theft or misuse and to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that:
1. 
The cost of control should not exceed the benefits likely to be derived, and
2. 
The valuation of costs and benefits require estimates and judgements by management.
B. 
The internal controls shall address the following points:
1. 
Control of collusion.
2. 
Separation of transaction authority from accounting and record keeping.
3. 
Custodial safekeeping.
4. 
Clear delegation of authority to subordinate staff members.
5. 
Written confirmation of transactions for investments and wire transfers.
6. 
Development of a wire transfer agreement.
[R.O. 2012 §155.050; Ord. No. 456 §1, 3-7-2000]
A. 
Investment Types. In accordance with and subject to restrictions imposed by current Statutes, the following list represents the entire range of investments that the City will consider and which shall be authorized for the investments of funds by the City.
1. 
United States Treasury securities. The City may invest in obligations of the United States government for which the full faith and credit of the United States are pledged for the payment of principal interest.
2. 
United States agency securities. The City may invest in obligations issued or guaranteed by any agency of the United States Government.
3. 
Repurchase agreements. The City may invest in contractual agreements between the City and commercial banks or primary government securities dealers. The purchaser in a repurchase agreement (repo) enters into a contractual agreement to purchase Treasury and government agency securities while simultaneously agreeing to resell the securities at predetermined dates and prices.
4. 
Collateralized public deposits. Instruments issued by financial institutions which state that specified sums have been deposited for specified periods of time and at specified rates of interest. Such deposits are required to be backed by acceptable collateral securities as dictated by State Statute.
5. 
Commercial paper. The City may invest in commercial paper issued by domestic corporations, which has received the highest rating issued by Moody's Investor Services, Inc. or Standard and Poor's Corporation. Eligible paper is further limited to issuing corporations that have total assets in excess of five hundred million dollars ($500,000,000.00).
[R.O. 2012 §155.060; Ord. No. 456 §1, 3-7-2000]
A. 
To provide for the safety and liquidity of the City's funds, the investment portfolio will be subject to the following restrictions:
1. 
Borrowing for investment purposes ("Leverage") is prohibited.
2. 
Instruments known as Structured Notes (e.g., inverse floaters, leveraged floaters, and equity-linked securities) are not permitted. Investment in any instrument, which is commonly considered a "derivative" investment (e.g., options, futures, swaps, caps, floors, and collars), is prohibited.
3. 
Contracting to sell securities not yet acquired in order to purchase other securities for purposes of speculating on developments or trends in the market is prohibited.
4. 
No more than fifty percent (50%) of the total market value of the portfolio may be invested in commercial paper of any one issuer.