FY2006-06 Amending Public Finance - BudgetM n
WHEREAS, the list of allowed investments could be more clearlydeftne ;+a
WHEREAS, collateral is not available on all investment types, o
certificates of deposit; and
WHEREAS, because the principal amount of the
used for daily operations, investments can be hel
value; and
WHEREAS, generally, over a Ion
government securities; and
WHEREAS, because of G
ledger even though it
NOW, THER
BOROUGH
Sec
Sections:
3.04.010
3.04.015
3.04.020
3.04.021
3.04.022
3.04.023
3.04.026
3.04.027
3.04.030
3.04.040
3.04.050
3.04.051
KODIAK ISLAND BOROUGH
ORDINANCE NO. FY 2006 -06
Introduced by Manager Gifford
Requested by Assembly
Drafted by Finance Director
Introduced: 02/16/2006
Failed to Advance to PH: 02/16/2006
Reconsidered: 03/02/2006
Public Hearing: 04/06/2006
Postponed Indefinitely 04/06/2006
AN ORDINANCE OF THE KODIAK ISLAND BOROUGH
AMENDING KODIAK ISLAND BOROUGH CODE OF ORDINANCES
TITLE 3 REVENUE AND FINANCE CHAPTER 3.04 PUBLIC FINANCE— BUDGET
SECTION 3.04.020 PERMISSIBLE INVESTMENTS
SECTION 3.04.022 COLLATERAL REQUIREMENTS
SECTION 3.04.051 FACILITIES FUND BY
CHANGING THE TYPES OF INSTRUMENTS THE BOROUGH CAN INVEST IN AN
CHANGING THE INVESTMENTS ALLOWED IN THE FACILITIES FUN
WHEREAS, the Borough Code pertaining to investments has become date
hts and
cilities Fund is not
have larger swings in
cks) show a greater return than
e,of't:orough investments change on our general
ife of an investment;
BY THE ASSEMBLY OF THE KODIAK ISLAND
an ``"` of a general and permanent nature and shall become a part of the
nd Borough Code of Ordinances.
Revenue and finance Chapter 3.04 Public Finance — Management and
ounting Section 3.04.020 Permissible investments is hereby amended as follows:
Chapter 3.04
PUBLIC FINANCE— MANAGEMENT AND ACCOUNTING
General treasury management.
Authority.
Permissible investments.
Terms defined.
Collateral requirements.
Collateral safekeeping.
Diversification of investments.
Investment records.
Deposit of school money.
Basis of accounting.
Funds.
Facilities fund.
Kodiak Island Borough, Alaska Ordinance No. FY2006 -06
Page 1 of 5
3.04.052 Education fund.
3.04.053 Fern Fuller fund.
3.04.056 Land sale fund.
3.04.056 Penalties.
3.04.057 General fixed assets.
3.04.060 Distribution of funds.
3.04.065 Review of service fees.
3.04.070 Post audit.
3.04.020 Permissible investments. The treasurer shall invest money only in the following types
of security instruments:
A. Bonds, notes, or other obligations, direct or otherwise, of the United States
Government;
B. Bonds and other evidence of indebtedness of the state of Alaska, or any municipality,
or political subdivision of the state of Alaska;
C. Savings accounts, certificates of deposit, banker's acceptances, r- ase
agreements, and such other legal security instruments; or
D. The Alaska Municipal League Investment Pool, Inc. made in accordance'
of that Pool's "Common Investment Agreement ".
Section 3: Title 3 Revenue and finance Chapter 3.04 Pub 1
Accounting Section 3.04.022 Collateral require
3.04.022 Collateral requirements. CD's over $100 e • 'P : +'°5 + 1 � j a3 �8 at 102 %. Ali
A. Stato and municipal
v- ojoct notes other 100% of markot (Ord. 82 15 O(A) (p, ;.
and
as follows:
Section 4: Title 3 Revenue and finance Chapter 3.04 Public Finance — Management and
Accounting Section 3.04.051 Facilities fund is herebyamended as follows:
3.04.051 Facilities Fund.
A. The facilities fund is established as a separate investment fund which is distinct from
the general land solo fund and all other funds. The fund consists of all proceeds received from
the sale of Shuyak Island property to the Exxon Valdez Oil Spill Trustee Council. All income
from the fund shall be deposited to the fund. The assembly may, by ordinance, make
additional appropriations to the fund at any time. Any additional funds added to the fund,
aside of Shuyak Island proceeds, shall become part of the fund as a whole and subject to the
regulations of the facilities fund.
Kodiak Island Borough, Alaska Ordinance No. FY2006 -06
Page 2 of 5
B.
investment purpose of the Facilities Fund is growth through prudent investment of fund assets.
Notwithstanding the objectives of the Borough policy for the investment of its operating and
other funds set out in 3.04.020, the investment of the Facilities Fund assets shall be made to
maintain safety of principal while maximizing total return. Investments shall be diversified to
minimize the risk of loss resulting from a concentration of investments in a specific maturity,
issuer, class of security, financial institution or, with respect to equity investments, in a
specific company industry or investment sector. Fund assets may be invested in the
instruments and securities set out in the following:
1, United States Treasury obligations including bills, notes, bonds, and other debt
obligations issued by the United States Treasury, and backed by the full faith and credit of the
U.S. Government.
2. Securities issued or guaranteed by agencies and instrumentalities of the U.S.
Government but not explicitly backed by the full faith and credit of the U.S. Govern ent.
3. Securities issued or guaranteed by municipalities in the United States,,red one
of the three highest rating categories by nationally recognized statistical ratin o at anti tion
(NRSRO). ��
4. Corporate debt securities rated investment grade.
5. Asset - Backed securities rated investment grade.
6. Yankee debt (that is, U.S. dollar denominated obligatig ns is
markets by foreign issuers) rated investment grade. +� f \
7. Mortgage-Backed Securities (MBS) and Collat
comprising.
Agency MBS investments issued by Fedei
Loan Mortgage Corporation, or the Govern' e
CMO investments securitized�
Association, Federal Home Loa
Mortgage Association• providecljtlJat
class CMO's or type I plann'edtarrid
8. Money market m tuMt
which comply it e) ) e`.' (a)
securities• ar
9 n`�
an ETF4
'F If d Whi is designed to replicate the Standard and Poor's 500 Index or
d Funds) with the same purpose.
stments. The Borough ma have all or •art of the Facilities Fund
0
UST
Agencies
Bonds
BA's
Repo's
CD's
Mutual Funds
AMLIP
ernal money managers.
Minimum
Requirements
BBB
A
A
A
age +`corpo
on, or the Governmental National
(ssible ,GMO investments include only sequential
laf' CMO's.
aced by the Securities and Exchange Commission
e underlying portfolio consists of investment grade
League Investment Pool Inc.
Allowable
Percentage
of Issuer
5%
CD's over $100,000 must be collateralized at 102%
Mutual Funds must meet all of the above requirements.
ed\in'the y capital
( 313ligations (CMO)
sociation, Federal Home
qe Association.
Federal National Mortgage
er.
Maximum
Percentage
of portfolio
100% 0 - 100%
100% 0 - 100%
10% 0 - 25%
2% 0 - 25%
0 - 25%
5% 0- 10%
10 - 25%
0- 50%
Kodiak Island Borough, Alaska Ordinance No. FY2006 -06
Page 3 of 5
The
2. By Finance Director or designee: The finance director or designee can invest in any
of the above except for mutual funds.
D. The following are prohibited transactions:
1. Purchase of non - dollar securities.
2. Purchase of private placement securities.
3. Short sale of securities (the sale and settlement of a security not currently owned
and a formal agreement to borrow the security to facilitate the settlement of the
short sale)
4. Purchases of futures, forwards or options.
5. Borrowing to leverage the return on investments. Extended settlement of securities
purchases executed to facilitate or improve the efficiency of a transaction will not
be considered borrowing, provided that sufficient cash equivalent securities or
receivables are available to facilitate the extended settlement.
In the event a security currently held in the portfolio is downgraded below investment a ade
the money manager shall provide written notification to the Finance Director and in
writing a recommended course of action.
The fund may not be appropriated or spent, except as provided in this segti
earnings or principle shall at no time run or supplement the running of gamer
as specified in this section.
a. ... •..
DE.The excess income of the fund is d
investr4Sent income from the fund. The exc
by the assembly in the fiscal year f
excess income of the fund may
1. maintenance and
2. insurance pa
3. upgrade
4. debt
(50) percent
€F. A
ordin
e
da s •rior to fiscal ear end the Assembl will ado •t a resolution to
ow much of the Facilities Fund will be managed by external monev managers.
Se ° `•n of money managers. If the Assembly desires the services of a money manager,
jte Finance Director will prepare an RFP to solicit proposals from different monev
managers to manage a portion or all of the investments of the Facilities Fund. The
Borough There shall be a committee consisting of the Borough Finance Director. a Borough
staff member appointed by the Manager, and an Assembly member appointed by the Mayor
to will evaluate the various proposals and make a recommendation to the Assembly
through the Borough Manager. Money managers must meet the following minimum
criteria:
1. Be a bank, insurance company, investment management company, or investment
adviser as defined by the Registered Investment Advisers Act of 1940.
2. Provide historical quarterly performance numbers calculated on a time - weighted
basis, based on a composite of all fully discretionary accounts of similar
investments style, and reported net and gross of fees.
Kodiak Island Borough, Alaska
ercent of the annual
available for appropriation
the income is earned. The
following purposes:
acilities,
or gh buildings,
ng facilities, or
n bonds issued for facilities construction - -uP to fifty
_r this purpose.
.:; be appropriated for another purpose only upon approval of an
o- thirds (2/3) majority of the qualified voters at a regular or special
Ordinance No. FY2006 -06
Page 4 of 5
3. Provide detailed information on the history of the firm, key personnel, key clients,.
fee schedule, and support personnel. This information can be a copy of a recent
Request for Proposal (RFP) completed by the money manager.
4. Clearly articulate the investment strategy that will be followed and document that
the strategy has been successfully adhered to over time.
Selected firms shall have no outstanding legal judgments or past judgments, which may reflect
negatively upon the firm.
I. Duties and responsibilities of the money manager. The duties and responsibilities of each
money manager retained by the Borough include the following:
1. Managing the Borough assets under its care, custody and /or control in accordance
with the objectives and guidelines set forth herein.
2. Exercising investment discretion (including holding cash equivalents as an
alternative) within the objectives and guidelines set forth herein.
3. Promptly informing the Borough through the Finance Director in writing regardt q all
significant and /or material matters and changes pertaining to the invesdfi of
Borough assets, including but not limited to:
a. Investment strategy
b. Portfolio structure
c. Tactical approaches
d. Ownership
e. Organizational structure
f. Financial condition
g. Professional staff
h. Recommendations for •ui
i. All legal material, SEC an
firm.
4. Promptly voting all pro
term interests anc,:ot
shall keep deta'lei
AI
comply wp h
5. Utilize,
the
•
ATTEST:
proceedings affecting the
c 'bn a manner consistent with the long-
ti }h set forth herein. The money manager
votfq of proxies and related actions and will
s related thereto.
P''•dence and due diligence under the circumstances
investment .rofessionals actin• in a like ca.acit
ar t" such matters would use in like activities for like Borough and
ds with like aims in accordance and compliance with all applicable
a' regulations from local, state, federal and international political
ertains to fiduciar duties and res.onsibilities.
ledge and agree in writing to their fiduciary responsibility to fully comply
all of the objectives and guidelines set forth herein, and as modified in the
future.
ADOPTED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH
THIS DAY OF 2006
Judith A. Nielsen, CMC, Borough Clerk
KODIAK ISLAND BOROUGH
Jerome M. Selby, Borough Mayor
Kodiak Island Borough, Alaska Ordinance No. FY2006 -06
Page 5 of 5