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INTEROFFICE MEMORANDUM
Date: September 2, 2022
To: The Honorable Mayor and City Council
Through: Ron Burton, City Manager
From: Kandy Daniel, Interim Finance Director
RE: P.R 22753 —Approval of the FY22-23 Investment Policies
Introduction: Request approval of Proposed Resolution No 22753, which updates and affirms
the Investment Policies of the City of Port Arthur for FY2022-2023. An updated list of
approved Investment Officers and Bank Signatories is included in attachment Al and A2. No
other changes are reflected in the policies. Policies are in accordance with the City's primary
investment objectives (safety, liquidity,public trust and yield) and as required by the Public
Funds Investment Act.
Background: In September 1995,the City Council adopted the first investment policies for
the City of Port Arthur, as required by Chapter 2256 of the Government Code, commonly
known as the "Public Funds Investment Act" (PFIA). Under the Act, City Council must
review the investment policy annually and the written instrument must reflect any changes
made to either the investment policy or investment strategies. The policy was last re-affirmed
on November 30, 2021. The City has complied with the policy and the PFIA over the past
year,by investing in authorized instruments, reporting investment activity to Council on a
quarterly basis, and having properly trained investment staff.
Budget Impact: The investment portfolio is managed with the objective of attaining a market
rate of return throughout budgetary and economic cycles,taking into account safety and
liquidity first. Interest revenue is distributed on a monthly basis to the appropriate City funds
and reported to City Council as part of the investment report on a quarterly basis.
"Remember,we are here to serve the Citizens of Port Arthur"
P.O.Box 1089 X Port Arthur,Texas 77641-1089 X 409.983.8101 X FAX 409.982.6743
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Recommendation: The attached Proposed Resolution No. 22753 updates and affirms the
Investment Policies of the City of Port Arthur for Fiscal Year 2022-2023 in accordance with
the Public Funds Investment Act. We recommend that the City Council approve as presented.
"Remember,we are here to serve the Citizens of Port Arthur"
P.O.Box 1089 X Port Arthur,Texas 77641-1089 X 409.983.8101 X FAX 409.982.6743
P. R. NO. 22753
KD: 9/2/22
RESOLUTION NO.
A RESOLUTION UPDATING AND AFFIRMING
THE INVESTMENT POLICIES OF THE CITY OF
PORT ARTHUR FOR THE 2022-2023 FISCAL
YEAR
WHEREAS, Chapter 2256 of the Government Code,V.T.C.A.,commonly known as"The
Public Funds Investment Act", requires that the City adopt an investment policy by rule, order,
ordinance or resolution stating that it has reviewed the investment policy and strategies and that
the written instrument so adopted shall record any changes made to either the investment policy
or investment strategies; and
WHEREAS, the City Council shall review the City's investment policy and strategies not
less than annually; and
WHEREAS, there were no substantial changes to the Public Funds Investment Act during
the latest legislative session; and
WHEREAS, The Finance Director (chief financial officer) and the Assistant Finance
Directors (investment officers) of the City are designated as authorized individuals to conduct
investment transactions for the City in accordance with the City's Investment Policies; and
WHEREAS,a list of authorized individuals is shown in attachments"Al" and"A2"of the
policies; and
WHEREAS, a list of investment training courses by independent sources is shown in
attachment"B"of the policies; and
WHEREAS,the designated chief financial officer and investment officers of the City have
complied with the investment training as required by the Public Funds Investment Act; and
WHEREAS, a list of qualified broker/dealers and financial institutions authorized to
engage in investment transactions with the City is shown in attachment"C"of the policies; and
WHEREAS, the attached investment policies comply with the Public Funds Investment
Act, as amended, and authorizes the investment of City funds in safe and prudent investments.
NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF PORT ARTHUR:
THAT, the City of Port Arthur has complied with the requirements of the Public Funds
Investment Act, and the Investment Policies with attachments, as amended, attached hereto as
"Exhibit A" is hereby adopted as the investment policies of the City effective this date and shall
remain effective until rescinded by the Council.
THAT, a copy of the caption of this Resolution shall be spread upon the Minutes of the
City Council.
READ, ADOPTED, AND APPROVED, this day of September, 2022, AD, at a
Regular Meeting of the City Council of the City of Port Arthur, Texas by the following vote:
AYES:
Mayor:
Councilmembers:
NOES:
Thurman"Bill"Bartie, Mayor
ATTEST:
Sherri Bellard, City Secretary
APPROVED AS TO FORM:
At€4, (-2114d eayi, 4_0/1
Val Tizerlo, City Attorney
APPROVED FOR ADMINISTRATION:
Ron Burton, City Manager
APPROVAL AS TO AVAILABILITY OF FUNDS:
Kandy Dani , Interim Direc or of Finance
Exhibit "A"
Revised 9/13/2022
INVESTMENT POLICY
I. Policy
It is the policy of the City of Port Arthur that after allowing for the anticipated cash flow requirements of
the City and giving due consideration to the safety and risk of investment, all available funds shall be
invested in conformance with these legal and administrative guidelines, seeking to optimize interest
earnings to the maximum extent possible.
Effective cash management is recognized as essential to good fiscal management. Investment interest is a
source of revenue to City funds. The City's investment portfolio shall be designed and managed in a
manner designed to maximize this revenue source,to be responsive to public trust,and to be in
compliance with legal requirements and limitations.
Investments shall be made with the primary objectives of:
* Safety and preservation of principal
* Maintenance of sufficient liquidity to meet operating needs
* Public trust from prudent investment activities
* Optimization of interest earnings on the portfolio
II. Purpose
The purpose of this investment policy is to comply with Chapter 2256 of the Government Code("Public
Funds Investment Act"), which requires each City to adopt a written investment policy regarding the
investment of its funds and funds under its control. The Investment Policy addresses the methods,
procedures and practices that must be exercised to ensure effective and judicious fiscal management of
the City's funds and the funds of the Port Arthur Section 4A Economic Development Council(PAEDC).
III. Scope
This Investment Policy shall govern the investment of all financial assets of the City. These funds are
accounted for in the City's Comprehensive Annual Financial Report(CAFR)and include:
• General Fund
• Special Revenue Funds
• Capital Projects Funds
• Enterprise Funds
• Internal Service Funds
• Economic Development Corporation
• Trust and Agency Funds, to the extent not required by law or existing contract to be kept
segregated and managed separately
• Debt Service Funds, including reserves and sinking funds,to the extent not required by law or
existing contract to be kept segregated and managed separately
• Any new fund created by the City, unless specifically exempted from this Policy by the City
Council(Council)or by law.
The City will consolidate cash balances from all funds and the Port Arthur Section 4A Economic
Development Corporation to maximize investment earnings. Investment income will be allocated to the
various funds based on their respective participation and in accordance with generally accepted accounting
principles.
Pr
Revised 9/13/2022
This Investment Policy shall apply to all transactions involving the financial assets and related activity for
all the foregoing funds. However, this policy does not apply to the assets administered for the benefit of
the city employees by outside agencies under deferred compensation programs.
IV. Investment Strategy
The City of Port Arthur maintains portfolios that utilize two specific investment strategy considerations
designed to address the unique characteristics of the fund groups represented in the portfolios:
A. Investment strategies for operating funds and co-mingled pools containing operating funds have as
their primary objective to assure that anticipated cash flows are matched with adequate investment liquidity.
The secondary objective is to create a portfolio structure that will experience minimal volatility during
economic cycles. This may be accomplished by purchasing high quality, short to medium term securities
that will complement each other in a laddered or barbell maturity structure. The dollar weighted average
maturity of 365 days or less will be calculated using the stated final maturity date of each security.
B. Investment strategies for special projects or special purpose fund portfolios will have as their primary
objective to assure that anticipated cash flows are matched with adequate investment liquidity. These
portfolios should include at least 10% in highly liquid securities to allow for flexibility and unanticipated
project outlays. The stated final maturity dates of securities held should not exceed the estimated project
completion date or the necessary progress payments for construction projects.
V. Investment Objectives
The City shall manage and invest its cash with four primary objectives, listed in order of priority: safety,
liquidity, public trust, and yield expressed as optimization of interest earnings. The safety of the
principal invested always remains the primary objective. All investments shall be designed and managed
in a manner responsive to the public trust and consistent with state and local law.
The City shall maintain a comprehensive cash management program,which includes collection of account
receivables,vendor payments in accordance with invoice terms, and prudent investment of available cash.
Cash management is defined as the process of managing monies in order to insure maximum cash
availability and maximum earnings on short-term investment of idle cash.
Safety [PFIA 2256.005(6)(2)]
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 capital in the overall portfolio. The objective will be
to mitigate credit and interest rate risk.
❑ Credit Risk and Concentration of credit risk—The City will minimize credit risk, the risk of
loss due to the failure of the issuer or backer of the investment,by:
• Limiting investments to the safest type of investments.
• Diversifying the investment portfolio so that potential losses on individual issuers will
be minimized.
❑ Interest Rate Risk—the City will minimize the risk that the interest earnings and the market
value of investments in the portfolio will fall due to changes in general interest rates,by:
• Investing operating funds primarily in shorter-term securities, money market mutual
funds, or local government investment pools functioning as money market mutual
funds.
• Diversifying maturities and staggering purchase dates to minimize the impact of
market movements over time.
Revised 9/13/2022
Liquidity [PFIA 2256.005(6)(2)]
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 investments mature
concurrent with cash needs to meet anticipated demands. Because all possible cash demands cannot be
anticipated, a portion of the portfolio will be invested in shares of money market mutual funds or local
government investment pools that offer same-day liquidity. In addition, a portion of the portfolio will
consist of securities with active secondary or resale markets.
Public Trust
All participants in the City's investment process shall seek to act responsibly as custodians of the public
trust. Investment officers shall avoid any transaction that might impair public confidence in the City's
ability to govern effectively.
Yield(Optimization of Interest Earnings) [PFIA 2256.005(b) (3)]
The investment portfolio shall be designed with the objective 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 compared to the safety and liquidity objectives described
above.
VI. Responsibility and Control
Delegation of Authority [PFIA 2256.005(J)]
In accordance with the Public Funds Investment Act, the Council designates the Finance Director and the
Assistant Finance Director(s)as the City's Investment Officers. A list of authorized individuals is shown
in Attachment"Al",which is herein adopted and effective until rescinded by the Council or termination of
the person's employment with the City of Port Arthur. An Investment Officer is authorized to execute
investment transactions on behalf of the City. No person may engage in an investment transaction or the
management of City funds except as provided under the terms of this Investment Policy as approved by the
Council.
In addition,the City Charter designates the City Secretary to countersign all checks issued by the Director
of Finance(Article VII,section 2(d)). A list of individuals authorized as signatories at the City's depository
bank(s)is shown in Attachment"A2".
Quality and Capability of Investment Management [PFIA 2256.005(6) (3)]
The City shall provide periodic training in investments for the designated investment officers and other
investment personnel through courses and seminars offered by professional organizations,associations,and
other independent sources in order to insure the quality and capability of investment management in
compliance with the Public Funds Investment Act.
Training Requirement(PFIA 2256.008)
In accordance with the Public Funds Investment Act, designated Investment Officers shall attend an
investment training session no less often than once every two years commencing September 1, 1997 and
shall receive not less than 8 hours of instruction relating to investment responsibilities. A newly appointed
Investment Officer must attend a training session of at least 10 hours of instruction within twelve months
Revised 9/13/2022
of the date the officer took office or assumed the officer's duties. The investment training session shall be
provided by an independent source(Attachment B)approved by the Council(Note:a designated investment
committee may approve the independent source of training). For purposes of this policy, an"independent
source" from which investment training shall be obtained shall include a professional organization, an
institution of higher education or any other sponsor other than a business organization with whom the City
may engage in an investment transaction.
Internal Controls(Best Practice)
The Finance Director is responsible for establishing and maintaining an internal control structure designed
to ensure that the assets of the City are protected from loss,theft, or misuse. The internal control structure
shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable
assurance recognizes that(1)the cost of a control should not exceed the benefits likely to be derived; and
(2)the valuation of costs and benefits requires estimates and judgments by management.
Accordingly, the Finance Director shall establish a process for annual independent review by an external
auditor to assure compliance with policies and procedures. The internal controls shall address the following
points:
• Control of collusion
• Separation of transaction authority from accounting and record keeping
• Custodial safekeeping
• Avoidance of physical delivery securities
• Clear delegation of authority to subordinate staff members
• Written confirmation for telephone(voice)transactions for investments and wire transfers
Prudence(PFIA 2256.006)
The standard of prudence to be applied by the Investment Officer shall be the"prudent investor"rule. This
rule states that"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." In determining whether an Investment Officer has exercised prudence with respect
to an investment decision,the determination shall be made taking into consideration:
• The investment of all funds, or funds under the City's control, over which the officer had
responsibility rather than a consideration as to the prudence of a single investment.
• Whether the investment decision was consistent with the written approved investment policy
of the City.
Indemnification(Best Practice)
The Investment Officer, acting in accordance with written procedures and exercising due diligence, shall
not be held personally responsible for a specific investment's credit risk or market price changes,provided
that these deviations are reported immediately and the appropriate action is taken to control adverse
developments.
Revised 9/13/2022
Ethics and Conflicts of Interest [PFIA 2256.005(i)]
Officers and employees involved in the investment process shall refrain from personal business activity that
would conflict with the proper execution and management of the investment program,or that would impair
their ability to make impartial decisions. Employees and Investment Officers shall disclose any material
interests in financial institutions with 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 officers shall refrain from undertaking personal investment transactions with the same
individual with whom business is conducted on behalf of the City.
An Investment Officer of the City who has a personal business relationship with an organization seeking to
sell an investment to the City shall file a statement disclosing that personal business interest. An Investment
Officer who is related within the second degree by affinity or consanguinity to an individual seeking to sell
an investment to the City shall file a statement disclosing that relationship. A statement required under this
subsection must be filed with the Texas Ethics Commission and the Council.
VII. Suitable and Authorized Investments
Portfolio Management
The City intends to pursue an active versus passive portfolio management philosophy. When possible,
maturity dates are matched with cash flow requirements and investments are purchased with the intent to
be held until maturity. However,investments may be liquidated prior to maturity for the following reasons:
• An investment with declining credit may be liquidated early to minimize loss of principal.
• Cash flow needs of the City require that the investment be liquidated.
• An investment may also be liquidated early if market conditions present an opportunity for the
City to benefit from the trade.
Investments [PFIA 2256.005-2256.019]
City funds governed by this policy will only be invested in the instruments described below, all of which
are authorized by Chapter 2256 of the Government Code (Public Funds Investment Act). Investment of
City funds in any instrument or security not authorized for investment under the Act is prohibited. The
City will not be required to liquidate an investment that becomes unauthorized subsequent to its purchase.
A. Authorized
1. Obligations of the United States of America, its agencies and instrumentalities including
the Federal Home Loan Banks.
2. Interest bearing bank deposits or certificates of deposit issued by an approved depository
institution organized under Texas law,the laws of another state,or federal law,that has its
main office or a branch office in Texas, and that is guaranteed or insured by the Federal
Deposit Insurance or its successor or secured by obligations described in Section 2256.009
(a)and in accordance with Chapter 2257,the Public Funds Collateral Act. The City may
also purchase Certificates of Deposits from depositories not having its main office or a
branch office in Texas as long as they are purchased through a broker/dealer on the City's
approved broker/dealer list that has an office located in the state of Texas.
INF
Revised 9/13/2022
3. Fully collateralized direct repurchase agreements with a defined termination date secured
by a combination of cash and obligations of the United States or its agencies and
instrumentalities as described by Section 2256.009(a) 1. These securities shall be pledged
to the City,held in the City's name,and deposited at the time the investment is made with
the City or with a third party selected and approved by the City. Repurchase agreements
must be purchased through an approved primary government securities dealer, as defined
by the Federal Reserve, or an approved financial institution doing business in Texas. A
Master Repurchase Agreement must be signed by the bank/dealer prior to investment in a
repurchase agreement. All repurchase agreement transactions will be on a delivery vs.
payment basis. Securities received for repurchase agreements must have a market value
greater than or equal to 102 percent at the time funds are disbursed.
4. No-load money market mutual funds as described by Section 2256.014 (a) that 1) is
registered and regulated by the Securities and Exchange Commission,2)provides the City
with a prospectus and other information required by the Securities Exchange Act of 1934,
3) complies with federal Securities and Exchange Commission Rule 2a-7, and 4) is
specifically authorized by the City Council or purchased through the City's primary
depository as an overnight investment tool.
5. Local government investment pools,which 1)meet the requirements of Chapter 2256.016
of the Public Funds Investment Act,2)are rated no lower than AAA or an equivalent rating
by at least one nationally recognized rating service, 3)seek to maintain a$1.00 net asset
value,and 4)are authorized by resolution or ordinance by the Council.
All prudent measures will be taken to liquidate an investment that is downgraded to less than the
required minimum rating. (PFIA 2256.021)
B. Not Authorized [PFIA 2256 009(b)(1-4)]
Investments including interest-only or principal-only strips of obligations with underlying
mortgage-backed security collateral, collateralized mortgage obligations with an inverse floating
interest rate or a maturity date of over 10 years are strictly prohibited.
VIII. Investment Parameters
Maximum Maturities [PFIA 2256.005(b)(4) (B)]
The longer the maturity of investments, the greater their price volatility. Therefore, it is the City's policy
to concentrate its investment portfolio in shorter-term securities in order to limit principal risk caused by
changes in interest rates.
The City attempts to match its investments with anticipated cash flow requirements. The City will not
directly invest in securities maturing more than three (3) years from the date of purchase; however, the
above described obligations, certificates, or agreements may be collateralized using longer dated
investments. Because no secondary market exists for repurchase agreements, the maximum maturity shall
be 120 days except in the case of a flexible repurchase agreement for bond proceeds. The maximum
maturity for such an investment shall be determined in accordance with project cash flow projections and
the requirements of the governing bond ordinance.
Revised 9/13/2022
The composite portfolio will have a weighted average maturity of 365 days or less. No-load money market
mutual funds shall maintain a dollar weighted average stated maturity of 90 days or less. The dollar-
weighted average maturity will be calculated using the stated final maturity dates of each security. [PFIA
2256.005(b)(4)(C)]
Diversification [PFIA 2256.005(b)(3)]
The City recognizes that investment risks can result from issuer defaults, market price changes or various
technical complications leading to temporary illiquidity. Risk is controlled through portfolio diversification
that shall be achieved by the following general guidelines:
• Limiting investments to avoid overconcentration in investments from a specific issuer or
business sector(excluding U.S. Treasury securities),
• Limiting investment in investments that have higher credit risks,
• Investing in investments with varying maturities,and
• Continuously investing a portion of the portfolio in readily available funds such as local
government investment pools (LGIPs), money market funds or overnight repurchase
agreements to ensure that appropriate liquidity is maintained in order to meet ongoing
obligations.
The following maximum limits,by instrument,are established for the City's total portfolio:
1. U. S. Treasury Securities .. 90%
2. Agencies and Instrumentalities .70%(30% in any 1 Agency)
3. Certificates of Deposit .50%(25%in any 1 institution)
4. Repurchase Agreements .50%
5. Money Market Mutual Funds 50%(not to exceed 10%of Fund assets)
6. Authorized Pools .100%(80%in any 1 pool)
IX. Selection of Banks and Dealers
Depository Sec 105.011
At least every five(5)years a Depository shall be selected through the City's banking services procurement
process. Before awarding a depository services contract to a depository,the City shall receive applications
for the performance of depository services from one or more banks, credit unions, or savings associations
(RFA). The selection of a depository will be determined by evaluation of the applications and will be based
on the following selection criteria:
• The ability to qualify as a depository for public funds in accordance with state law.
• The ability to provide requested information or financial statements for the periods specified.
• The ability to meet all requirements in the banking RFA.
• Complete response to all required items on the applications form
• Lowest net banking service cost, consistent with the ability to provide an appropriate level of
service.
Authorized Brokers/Dealers(PFIA 2256.025)
The City shall, at least annually,review,revise,and adopt a list of qualified broker/dealers and
financial institutions authorized to engage in securities transactions with the City. The existing list of
qualified broker/dealers is attached hereto as Attachment "C" which is herein adopted. Those firms that
request to become qualified brokers/dealers for securities transactions will be supplied a copy of this
investment policy. Additional authorized firms may include primary dealers or regional dealers that qualify
under Securities & Exchange Commission Rule 15C3-1 (Uniform Net Capital Rule), and approved
Revised 9/13/2022
financial institutions and local government investment pools. In addition, local government investment
pools, must sign a certification acknowledging that the organization has received and reviewed the City's
investment policy and that reasonable procedures and controls have been implemented to preclude
investment transactions that are not authorized by the City's policy. [PFL4 2256.005(k-1)]
Competitive Bids(Best Practice)
It is the policy of the City to require competitive bidding for all individual security purchases and sales
except for: a) transactions with approved money market mutual funds and local government investment
pools and b) treasury and agency securities purchased at issue through an approved broker/dealer or
financial institution. The Finance Director shall develop and maintain procedures for ensuring a
competition in the investment of the City's funds.
Delivery vs.Payment IPFL4 2256.005(b) (4)(EN.
Securities shall be purchased using the delivery vs. payment method with the exception of investment
pools and money market mutual funds. Funds will be released after notification that the purchased security
has been received.
X. Safekeeping of Securities and Collateral
Safekeeping and Custodian Agreements(Best Practice)
The City shall contract with a bank or banks for the safekeeping of securities either owned by the City as
part of its investment portfolio or held as collateral to secure demand or time deposits. Securities owned
by the City shall be held in the City's name as evidenced by safekeeping receipts of the institution holding
the securities.
Collateral for deposits will be held by a third party custodian designated by the City and pledged to the City
as evidenced by safekeeping receipts of the institution with which the collateral is deposited. Original
safekeeping receipts shall be obtained. Collateral may be held by the depository bank's trust department,
a Federal Reserve Bank or branch of a Federal Reserve Bank,a Federal Home Loan Bank, or a third party
bank approved by the City.
Collateral Policy(PFCA 2257.023)
Consistent with the requirements of the Public Funds Collateral Act, it is the policy of the City to require
full collateralization of all City funds on deposit with a depository bank including certificates of deposit.
In order to anticipate market changes and provide a level of security for all funds,the collateralization level
will be 102%of market value of principal and accrued interest on the deposits or investments less an amount
insured by the FDIC. At its discretion, the City may require a higher level of collateralization for certain
investment securities. Securities pledged as collateral shall be held by an independent third party with
which the City has a current custodial agreement.
The Finance Director is responsible for entering into collateralization agreements with third party
custodians in compliance with this Policy. The agreements are to specify the acceptable investment
securities for collateral, including provisions relating to possession of the collateral, the substitution or
release of investment securities, ownership of securities, and the method of valuation of securities. A
clearly marked evidence of ownership (safekeeping receipt) must be supplied to the City and retained.
Collateral shall be reviewed at least monthly to assure that the market value of the pledged securities is
adequate.
Revised 9/13/2022
Collateral Defined
The City shall accept only the following types of collateral:
• Obligations of the United States or its agencies and instrumentalities including the Federal
Home Loan Bank
• Direct obligations of the state of Texas or its agencies and instrumentalities
• 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 or
instrumentality of the United States
• Obligations of states, agencies, counties, cities, and other political subdivisions of any state
rated as to investment quality by a nationally recognized rating firm not less than A or its
equivalent with a remaining maturity of ten(10)years or less
• A surety bond issued by an insurance company rated as to investment quality by a nationally
recognized rating firm not less than A
• A letter of credit issued to the City by the Federal Home Loan Bank
Subject to Audit
All collateral shall be subject to inspection and audit by the Finance Director or the City's independent
auditors.
XI. Performance
Performance Standards
The City's investment portfolio will be managed in accordance with the parameters specified within this
policy. The portfolio shall be designed with the objective of obtaining a rate of return through budgetary
and economic cycles, commensurate with the investment risk constraints and the cash flow requirements
of the City.
Performance Benchmark
It is the policy of the City to purchase investments with maturity dates coinciding with cash flow needs.
Through this strategy, the City shall seek to optimize interest earnings utilizing allowable investments
available on the market at that time. Market value will be calculated on a quarterly basis on all securities
owned and compared to current book value. The City's portfolio shall be designed with the objective of
regularly meeting or exceeding the average rate of return on U.S. Treasury Bills at a maturity level
comparable to the City's weighted average maturity in days.
XII. Reporting(PFIA 2256.023)
Methods
The Investment Officer shall prepare an investment report on a quarterly basis that summarizes investment
strategies employed in the most recent quarter and describes the portfolio in terms of investment securities,
maturities,and shall explain the total investment return for the quarter.
Revised 9/13/2022
The quarterly investment report shall include a summary statement of investment activity prepared in
compliance with generally accepted accounting principles.This summary will be prepared in a manner that
will allow the City to ascertain whether investment activities during the reporting period have conformed
to the Investment Policy. The report will be provided to the Council. The report will include the following:
• A listing of individual securities held at the end of the reporting period.
• Unrealized gains or losses resulting from appreciation or depreciation by listing the beginning
and ending book and market value of securities for the period.
• Average weighted yield to maturity of portfolio as compared to applicable benchmark.
• Listing of investments by maturity date.
• Fully accrued interest for the reporting period
• The percentage of the total portfolio that each type of investment represents.
• Statement of compliance of the City's investment portfolio with state law and the investment
strategy and policy approved by the Council.
An independent auditor will perform a formal annual review of the quarterly reports with the results
reported to the governing body [PFIA 2256.023(d)].
Monitoring Market Value [PM 2256.005(b)(4) (D)]
Market value of all securities in the portfolio will be determined on a quarterly basis. These values will be
obtained from a reputable and independent source and disclosed to the governing body quarterly in a written
report.
XIII. Investment Policy Adoption IFFIA 2256.005(e)1
The City's investment policy shall be adopted by resolution of the Council. It is the City's intent to comply
with state laws and regulations. The City's investment policy shall be subject to revisions consistent with
changing laws, regulations, and needs of the City. The Council shall adopt a resolution stating that it has
reviewed the policy and investment strategies annually, approving any changes or modifications.
Revised 9/13/2022
Attachment Al:
Approved List of Investment Officers:
Kandy Daniel,Interim Finance Director
Melissa Thomas, Interim Assistant Finance Director
Attachment A2:
Approved List of Depository Bank Signatories:
Kandy Daniel, Interim Finance Director
Melissa Thomas,Interim Assistant Finance Director
Sherri Bellard, City Secretary
Attachment B:
Approved List of Independent Source of Training
-Texas Institutions of Higher Learning
-The Texas Society of CPA's
-Government Finance Officers Association
-Government Treasurers Organization of Texas
-Texas Municipal League
-Center for Public Management at University of North Texas
Attachment C:
Qualified Broker/Dealers and Financial Institutions Authorized to Engage in Securities
Transactions with the City of Port Arthur
Broker Dealers:
FTN Financial (Formerly Coastal Securities)
Financial Institutions:
Capital One Bank,primary depository, contact: Tamera Palmer
JP Morgan Chase, contact: Cary Gilliam
BBVA Compass Bank, contact: John Morrell
Bank of NY Mellon, contact: Germaine Morgan
UMB Bank,NA, contact: Shazia Flores
Local Government Investment Pools:
Texpool, contact: Denise Hamala
TexStar, contact: Mary Anne Dunda
Texas Class, contact: Tony Sekaly