HomeMy WebLinkAbout08-22-05 Regular Meeting of Fiscal Affairs Committee MinutesSTATE OF TEXAS )(
COUNTY OF HARRIS )(
CITY OF LA PORTE )(
NOTICE IS HEREBY GIVEN OF A REGULAR MEETING OF FISCAL AFFAIRS COMMITTEE TO BE HELD ON
OCTOBER 24, 2005 AT 5:00 P.M. AT LA PORTE CITY HALL COUNCIL CHAMBERS, 604 WEST FAIRMONT
PARKWAY, LA PORTE, TEXAS, REGARDING THE ITEMS OF BUSINESS ACCORDING TO THE AGENDA
LISTED BELOW:
5:00 P.M. — REGULAR SESSION
1. CALL TO ORDER
2. CONSIDER APPROVAL OF MINUTES OF REGULAR MEETING OF FISCAL AFFAIRS COMMITTEE
HELD AUGUST 22, 2005.
3. CONSENT AGENDA
TAX RESALE PROPERTY - RECOMMEND APPROVAL OF 1 PARCEL — K. POWELL
4. RECEIVE AND REVIEW FOURTH QUARTER (FY 2005) INVESTMENT REPORT — S. WOL14Y
5. REVIEW RECOMMENDED AMENDMENT TO INVESTMENT POLICY — S. WOLNY
6. RECEIVE AND REVIEW CREDIT CARD REPORT — M. DOLBY
7. COMMITTEE COMMENTS
8. ADJOURNMENT
There may be a possible quorum of City Council present at this meeting and may participate in discussion at this
meeting, however, they will not vote on matters.
THIS FACILITY HAS DISABILITY ACCOMMODATIONS AVAILABLE. REQUESTS FOR
ACCOMMODATIONS OR INTERPRETIVE SERVICES AT MEETINGS SHOULD BE MADE 48 HOURS PRIOR
TO THIS MEETING. PLEASE CONTACT CITY SECRETARY'S OFFICE AT 281-471-5020 OR TDD LINE 281-
471-5030 FOR FURTHER INFORMATION.
Martha A. Gille TRMC
tt,
City Secretary
Date posted
MINUTES OF THE LA PORTE FISCAL AFFAIRS COMMITTEE
August 22, 2005
1. Call to Order
The meeting was called to order by Chairperson Chuck Engelken at 5:00 p.m.
Members of Committee Present: Chairperson Chuck Engelken, Barry Beasley and
Councilmember Louis Rigby.
Members of Committee Absent: Howard Ebow and Tommy Moser.
Members of Cily Executive Staff and City Employees Present: City Manager Debra
Feazelle, Assistant City Manager Cynthia Alexander, Assistant Finance Director
Michael Dolby, City Secretary Martha Gillett, Budget Investment Officer Shelley Wolny
and Assistant City Manager John Joerns.
Other citizens: None
2. Consider approval of Minutes of Regular Meeting of La Porte Fiscal Affairs Committee
Minutes held on April 25, 2005.
Motion was made by Committee Member Beasley to approve the minutes as presented. A
second by Committee Member Chuck Engelken. Committee Member Louis Rigby
abstained. The motion carried.
3. Discussion Items
Garbage Bag Report — Assistant City Manager Cynthia Alexander provided a report on
the garbage bag inventory. She noted inventory control is problematic and losses have
occurred. The problem has been reported to Chief Reff by Public Works to conduct an
investigation.
4. Receive and review third quarter (FY 2005) investment report. — C. Alexander
Investment Officer Shelley Wolny provided the Fiscal Affairs Committee with an
overview of the report. She will clarify the time frame the report covers.
5. Assistant Finance Director Michael Dolby presented summary and recommendation
regarding fraud policy.
It was noted, all Board, Commissions and Committees should be included.
Councilmember Rigby made a recommendation that the policy should include the
changes when adopted at the Council Meeting.
The City Secretary's Office will be sending out a Boards and Commissions list.
Minutes of the La Porte Audit COrnittee — October 24, 2005 — Page 2 •
6. Assistant Finance Director Michael Dolby provided the credit card report and noted there
was nothing out of the ordinary in the report.
7. Committee Comments. There were no additional comments made by the committee.
8. Administrative Reports. There was no additional information reported.
9. Adjournment
There being no further business to come before the Committee, the meeting was
adjourned at 5:00 p.m.
Respectfully submitted,
G�r,�rl
Martha A. Gillett, TRMC
City Secretary
Appro ed this 24t' d o ct r , 2005.
Ch i erson Chuck Engelken
v�.9
.7
U
•
Recommendation to Fiscal Affairs Committee
HCAD Account # 063-022-008-0003 Resale P073
Taxes+ Costs $11,758.57
Adjudged Value $6,300
Offer Name: Kathryn Aguilar
Bid Amount: $17,500.00
Recommendation: Approve OX Bid is sufficient to cover the costs associated with
Reason: the judgment and is higher than the adjudged valL
Reject
Reason:
Reviewed By: Kathy Powell
At any time any jurisdiction that was party to the original tax suit can sell the property being held in trust
for the lesser of: the taxes + costs or the adjudged value set out in the tax suit.
10/17/2005-
OUMMARY OF FORECLOSURE ACTIVITY •
HCAD ACCOUNT NO:
063-022-008-0003
CAUSE NO:
1999-27463
PLAINTIFF(S):
City of La Porte & La Porte Independent School District
JUDGMENT AGAINST:
Elizabeth Kay (aka Betty) Marconi; as heir to Karl & Frances Springer
JUDGMENT DATE:
October 6, 1999 STRUCK OFF DATE: February 1, 2000
ORDER OF SALE:
August 10, 1999
DEED RECORDED DATE:
February 28, 2000 STRUCK OFF TO: City of La Porte
CONSTABLE:
Bill Bailey, Constable Precint No 8
PROPERTY ADDRESS:
239 Dwire Dr
LEGAL DESCRIPTION:
Lot 3 & 4 Block 8 Bay Oaks
Bay Front to La Porte
ADJUDGED VALUE (IN JUDGMENT): $6,300.00
SQUARE FOOTAGE:
9,500
SUMMARY OF SALE ACTIVITY
BIDDER: Kathryn Aguilar BIDDER'S ADDRESS: 3119 Fondren Dr
AMOUNT OF BID: $17,500.00 La Porte, TX 77571
AMOUNT OF DEPOSIT: $1,750.00
AMOUNT DUE: $15,750.00 BIDDER'S PHONE NO: 281-471-7828
PRORATED PERCENTAGED OF TAXES DUE TO EACH JURISDICTION BASED UPON JUDGMENT
JUDGMENT TO
COUNTY, ET
AL.
%
SCHOOL
%
CITY
%
TOTAL
AMOUNT DUE
$2,588.69
23.73%
$4,994.36
45.78%
$3,327.52
30.50%
$10,910.57
ASSOCIATED COSTS ON ORIGINAL AND SEALED BID SALES
ESTIMATED' AMOUNT
AMOUNT OF
COURT
CONSTABLE/PUBLICA
AD LITEM
RESEARCH FEE &
TO BE PRORATED TO
BID
COST
TION FEE (TISD)
FEE
DEED RECORDING -FEE
TAXES
$17,500.00
$283.00
$315.00
$0.00
$250.00
$16,652.00
PRORATED TAX AMOUNTS TO EACH JURISDICTION
OWED TO
COUNTY
%
SCHOOL
%
CITY
%
TOTAL
PRORATED
AMOUNT
$3,950.93
23.73%
$7,622.52
45.78%
$5,078.55
30.50%
$16,652.00
Amount of Bid: $17,500.00
Costs:
-District Clerk
$233.00
-Tax Master
$50.00 Mike Landrum
-City Liens
$140.00
-Publication
$175.00
-Abstract Fee
$250.00
-Ad Litem Fee
$0.00
Total: $16,652.00
Taxing
Jurisdictions:
Amount in Judgment:
% -
Amount Received
City of La Porte
$3,327.52
30.50%
$5,078.55
La Porte ISD
$4,994.36
45.78%
$7,622.52
Harris County
$2,254.25
20.66%
$3,440.50
San Jacinto CCD
$334.44
3.07%
$510.43
State of Texas
$0.00
0.00%
$0.00
$10,910.57
100.00%
$16,652.00
Costs + Taxes $11,758.57
Adjudged Value $ 6,300.00 ,
P073
MR430I07
Customer ID . . . .
Last statement
Last invoice
Current balance .
Pending
CITY OF LA PORTE 10/17/05
1cellaneous Receivables Ingry 08:47:55
1402 Name: CITY OF LA PORTE
8/17/05 Addr: 063 022 008 0003
0/00/00 CAUSE # 99-27463
140.00 LA PORTE, TX 77572-1115
.00 A ACTIVE MOWING/DEMOLITION
Type options,
press
Enter. Combined Detail
5=Display
Opt Trans Date
Code
Description
Amount
8/17/05
stmrn
Statements Processed
.00
6/22/05
stmrn
Statements Processed
.00
6/16/05
stmrn
Statements Processed
.00
5/11/05
LM01
LOT MOWING/DEBRIS CH
140.00
F3=Exit F12=Cancel * = Pending
Chg Bnk G
Balance Typ Cd L
140.00 N
140.00 N
140.00 N
140.00 00
Bottom
HCAD: Appraisal Record Detail
Real: Account Number Address Owner Name Advanced
MM Personal: Account Number Address Owner Name Advanced
Real Property Account
HCAD Account # : 0630220080003 Tax Year : 2000
Owner Name : SPRINGER KARL L Ownership
History...
Owner Address : 239 DWIRE DR
LA PORTE TX 77571-7029
Property Address : 239 DWIRE DR
LA PORTE TX 77571
Legal Description : LTS 3 & 4 BLK 8
BAY OAKS
State Class Code : Al -- Real, Residential, Single -Family
Homestead Exemptiori : --
Special Exemption : C -- Proration
Jurisdiction Codes : 020 040 047 071
Overlapping/Shared CAD : No Notice Date : 4/27/00
Capped Account : No ARB Approved : 8/4/00
Value Status : All Values
Certified
Your taxes will be based on Appraised Value, less applicable exemptions; if any.
Use market value for comparison with your neighbors.
(Homestead Cap)
Valuation : TY2000 Previous Change Appraised Value Market Value
Land : 6,300 0 6,300
Improvement : 0 0 0
Ag/Tmbr/Spc : 0 0 0
Total Value : 6,300 0 6,300
5-Year Value History...
Note:
For any problems or questions with any account, please email us with the account
number (if you have it) and the nature of the problem or question.
Home Records Maps Forms HCAD Info Links News
Page 1 of 2
http://www.hcad.orglcgi=bin/AVIAVDetail.asp?taxyear=2000&acct=0630220080003 4/30/2002
HCAD: Appraisal Record Detail
Real: Account Number Address Owner Name Advanced
RM Personal: Account Number Address Owner Name Advanced
Vacant Residential Property Data
RNE - Account Number : 0630220080003 Tax Year : 2000
Location : 239 DWIRE DR View Main Screen
Card Parcel ID : 20 - 00921.2 - 01.0 - 042.0 - 0 / 000 - 001 8
1 Land Use : 100 -- Residential Vacant Land Land Area : 9,500 sq. ft.
CAMA Class : RVO -- Residential Vacant Map Facet
Key Map : 580Q
Neighborhood : 2153
For any problems or questions with any account, please email us with the account
number (if you have it) and the, nature of the problem or question.
Home Record
Page 1 of 1
http://Www.hcad.orglcgi-binICAMAIResVacant. asp?acet=0630220080003 &taxyear=2000&card=l 4/30/2002
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CITY OF LA PORTE
Interoffice Memorandum
TO: Barry Beasley, Councilman
Howard Ebow, Councilman
Chuck Engelken, Councilman
Tommy Moser, Councilman
Louis Rigby, Councilman
Debra Brooks Feazelle, City Manager
FROM: Cynthia Alexander, Assistant City Manager
Shelley Wolny, Investment Officer AP
DATE: October 17, 2005
SUBJECT: Quarterly Investment Report
For the fourth quarter of the 2005 fiscal year, the City's investment portfolio yield has been between
3.01% and 3.13%. The average return on the portfolio for the fourth quarter of the fiscal year was 3.07%,
which is 53 basis points below the average yield of our benchmark, which was 3.60% (see graph below).
The current year to date interest earned for the 2005 fiscal year is $913,032, which is $293,002 more than
the budget.
City vs. Benchmark
4.00%
3.50%
3.00%
2.50%
2.00%
1.50%
1.00%
oh Ah oh Ah oh
40 >,% PJ� 01
Portfolio Yield Benchmark
At September 30'h the City's portfolio consisted of 65% in Agency Notes, 13% in Texpool, 10% in
TexSTAR and 12% in Logic (see pie chart below).
By Investment Type
13%
10%
6512%
%
1-0 Texpool N TexSTAR 0 Logic 13 Agency Notes
The Fed has increased the overnight rate six times since December 2004, and is likely to increase the rate
a few more times before they are through. The current overnight rate as of September 20`s is 3.75. With
that said, our main focus is to continue to ladder the portfolio.
0 0
At the end of the fourth quarter, the City's portfolio consisted of 35% of the portfolio maturing overnight
(see graph below). 46% of the City's portfolio matures in one year and 19% of the City's portfolio
matures in 12-24 months.
By Investment Maturity
19%
35%
46%
0 Overnight ®1-12 Months 012-24 Months
Currently, the 3-month T-Bill is at 3.49%; 2 year, at 3.95%; 5 year, at 4.01%; and, the 20-year is at 4.51%
(see yield curve below).
Yield Curve
5.50%
4.50%
3.50%
2.50%
1.50%
0.50%
0 5 10 15 20
3 Months Ago -Current
The overnight rate is currently at 3.75%. We will continue to focus on laddering the portfolio to maintain
a constant cash flow and a liquid position.
2 Year T-Note
12.00%
10.00%
s.00�io
6.00%
4.00%
2.00%
0.00%
501 01 � 41 Spa S�� 5�� S10 *1
In summary, we will continue to invest the City's funds in conservative investments, as authorized by the
Public Funds Investment Act, always keeping in mind Safety first, and then Liquidity and lastly Yield.
Portfolio Composition and Value
as of September 30, 2005
80.00'%
60.00%
=- _ =
Par
Book
Market Days to
Value
Value
Value Maturity
Investment Pools
11,189.656
11,189,656
11.199,656 1
40.00%
Agencies
20.988,016
20,988,016
20,808,178 314
20.00%
Total
32,177,67]
32,177,671
31,997,833 205
0.00%
Investment Pools Agencies
34.77% 65.23%
®Sep-05 BtiMar-05-Sep-04
Investment Maturity Schedule
as of September 30, 2005
Book
Value
Percent
0-3 months
11,189.656
34.77%
9.12 ldynn
maths
9-12 months
14,988,825
46.58%
1-2 years
5,999,190
18.64%
2 or more years
.
0.00%
W moaft
Total
32,177b71
100.00%
Portfolio Performance
for the month of September 2005
Weighted
Portfolio
Benchmark
Average
3.00%
Yield
Yield*
Maturity
Pooled Funds
3.13%
3.79%
6.53 months
2.00li
Bond Funds
3.60%
3.49%
1 day
Total
3.37%
3.64%
5.14 months
1.00%
0.00%
'The pooled funds benchmark is based on the average monthly yield
of a 6-month Treasury.
Pooled Funds Bond Funds Total
The bond funds benchmark yield is based on the average monthly yield of a 3-month Treasury.
The total is based on weighted average monthly benchmark yields.
O Ponfolio Yield ■ Benchmark Yield•
Portfolio Earnings
for months ended September 30, 2005
250,000
Budget
Actual*
Percent
200.000
General
236,410
273,384
115.64%
t50.000
Enterprise
41,540
42,813
103.06%
internal Service
64,200
82,517
128.53%
100,000
Total
3426110
398,714
116.53%
50.000
wrhru August
General Entetrise Internal Service
O Budget ■ Actual -
Yield Curve
5.00%
4.50%
4.OD% _-
3.5D%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
3 mo 8 mo t yr 2yr Syr
-0--Jul-05-8-Au0-05 ZMHSep-05
Average for September
% of funds invested in:
2005
2004
Securities & Pools
96.05%
98.04%
Bank Depository
3.95%
1.96%
Total % of funds invested
100.00%
100.00%
Operating Account Balance
1,324,783.97
589,137.47
•
E
Monthly Summary Report of Cash Management for September 2005
1. Purchases and Associated Interest Rates 2. Calculation of Purchasing Effectiveness
START END INVESTMENT DAYS INVESTMENT DAYS RATIO OF ADJ 6 MONTH ADJ
TYPE DATE DATE COST RATE HELD COST * COST TOTAL RATE RATE T-BILL T-BILL
AGY *
9
28
05
9
30
05
1,000,000.00
4.250%
3
1,000,000.00
3,000,000.00
0.308%
4.250%
0.013%
3.870%
0.012%
AGY *
9
29
05
9
30
05
1,000,000.00
4.140%
2
1,000,000.00
2,0002000.00
0.206%
4.140%
0.009%
3.890%
0.008%
AGY *
9
1
05
9
30
05
1,000,000.00
4.000%
30
1,000,000.00
30,000,000.00
3.083%
4.000%
0.123%
3.620%
0.112%
AGY *
9
1
05
9
30
05
12000,098.27
3.175%
30
1,000,098.27
30,002,948.10
3.084%
3.175%
0.098%
3.620%
0.112%
AGY *
9
1
05
9
30
05
2,000,000.00
3.080%
30
2,000,000.00
60,000,000.00
6.167%
3.080%
0.190%
3.620%
0.223%
AGY *
9
1
05
9
30
05
2,000,000.00
3.050%
30
2,000,000.00
60,000,000.00
6.167%
3.050%
0.188%
3.620%
0.223%
AGY *
9
1
05
9
30
05
2,000,000.00
3.020%
30
2,000,000.00
60,000,000.00
6.167%
3.020%
0.186%
3.620%
0.223%
AGY *
9
1
05
9
30
05
999,190.39
3.000%
30
999,190.39
29,975,711.70
3.081%
3.000%
0.092%
3.620%
0.1120%
AGY *
9
1
05
9
30
05
998,482.57
2.680%
30
998,482.57
29,954,477.10
3.079%
2.680%
0.083%
3.620%
0.1110;00
AGY *
9
1
05
9
30
05
1,000,000.00
2.640%
30
1,000,000.00
30,000,000.00
3.083%
2.640%
0.081%
3.620%
0.112%
AGY *
9
1
05
9
30
05
1,999,561.51
2.625%
30
1,999,561.51
59,986,845.30
6.165%
2.625%
0.162%
3.620%
0.223%
AGY *
9
1
05
9
30
05
999,701.98
2.500%
30
999,701.98
29,991,059.40
3.082%
2.500%
0.077%
3.620%
0.112%
AGY *
9
1
05
9
30
05
2,000,000.00
2.435%
30
2,000,000.00
60,000,000.00
6.167%
2.435%
0.150%
3.620%
0.223%
AGY *
9
1
05
9
30
05
994,741.86
2.375%
30
994,741.86
29,842,255.80
3.067%
2.375%
0.073%
3.620%
0.111%
AGY *
9
1
05
9
30
05
1,000,000.00
2.300%
30
1,000,000.00
30,000,000.00
3.083%
2.300%
0.071%
3.620%
0.112%
AGY *
9
1
05
9
30
05
996,238.92
2.250%
30
996,238.92
29,887,167.60
3.072%
2.250%
0.069%
3.620%
0.111%
TEXSTAR
9
1
-05
9
30
05
3,097,727.25
3.5490/6
29
3,097,727.25
89,834,090.25
9.233%
3.549%
0.328%
3.620%
0.334%
TEXSTAR
9
30
05
9
30
05
3,106,775.97
3.710%
1
3,106,775.97
3,106,775.97
0.319%
3.710%
0.012%
3.930%
0.013%
TEXPOOL
9
1
05
9
12
05
6,472,594.05
3.510%
11
6,472,594.05
71,198,534.55
7.318%
3.510%
0.257%
3.620%
0.265%
TEXPOOL
9
12
05
9
20
05
6,710,876.04
3.586%
8
6,710,876.04
53,687,008.32
5.518%
3.586%
0.198%
3.790%
0.209%
TEXPOOL
9
20
05
9
28
05
6,110,876.04
3.684%
8
6,110,876.04
48,887,008.32
5.024%
3.684%
0.185%
3.890%
0.195%
TEXPOOL
9
28
05
9
29
05
5,110,876.04
3.743%
1
5,110,876.04
5,110,876.04
0.525%
3.743%
0.020%
3.870%
0.020%
TEXPOOL
9
29
05
9
30
05
4,110,876.04
3.764%
1
4,110,876.04
4,110,876.04
0.423%
3.764%
0.016%
3.890%
0.016%
TEXPOOL
9
30
05
9
30
05
4,129,308.14
3.813%
1
4,129,308.14
4,129,308.14
0.424%
3.813%
0.016%
3.930%
0.0170/69
LOGIC
9
1
05
9
30
05
3,942,098.85
3.536%
29
3,942,098.85
114,320,866.65
11.750%
3.536%
0.415%
3.620%
0.425%
LOGIC
9
30
05
9
30
05
3,953,571.54
3.662%
1
3,953,571.54
3,953,571.54
0.406%
3.662%
0.015%
3.930%
0.016%
TOTALS
67,733,595.46
TOTALS
67,733,595.46
972,979,380.82
100.000/0
3.13%
3.65%
T-BILL = U.S. TREASURY BILL; T-NOTE = U.S. TREASURY NOTE; T-BOND = U.S. TREASURY BOND; CMO = COLLATERALIZED MORTGAGE OBLIGATION; TEXPOOL = TEXAS LOCAL GOVERNMENT
2
Monthly Summary Report of Cash Management, Continued
3. Comparison to Performance Indicator 1 7. Diversification oflnvestments
This Months Adjusted Rate
- Measurement Rate
+/- Adjustment for Past Performance History
= Performance Rate for the Month (Basis Points)
This Months Performance Rate Applied
to Interest Earned Formula to arrive
at Impact for the Month
4. Effectiveness to Date (Since Otober 1, 2004)
Interest:
Summation Through Beginning of Month
+/- impact of Investment Purchases
Summation Through End of Month
Gain (Loss) on Investments:
Summation Through Beginning of Month
+/- impact of Investment Purchases
Summation Through End of Month
Total Impact Through End of Month
I Interest Earnings to Date
2 Year T-Bill
3.13%
3.65%
0.03%
-0.55%
(14,290.15)
(79,081.40)
(14,290.15)
(93,371.55)
0.00
0.00
0.00
(93,371.55)
A. By Investment Type
Logic
12%
Texpool
13%
Agency Notes
65%
TexSTAR
10%
B. By Stated Maturity
12-24 Months
19%
Interest Earned this Month plus Gain or (Loss) 83,348
1-12 Months Overnight
Total budgeted 620,030 46% 35%
Interest Earned Year to Date 913,032
Yet to be earned (293,002)
Percentage Earned 147.26%
6. Market Value and Weighted Average Maturity Summary
Beginning Book Value
Beginning Market Value
Ending Book Value
Ending Market Value
34,498,696.76
34,360,260.15
32,177,671.15
31,997,833.15
Beginning Weighted Average Maturity (Mths)
Ending Weighted Average Maturity (Mths)
Change in Market Value from Prior Month
Unrealized Gain/(Loss) on Portfolio
Net Asset Value
5.7
6.5
(39,662.50)
(179,838.00)
99.4%
0
0
3
0
TOTAL RETURN CALCULATION REPORT
FOR SEPTEMBER A 30 DAY MONTH
PURCHASE
MATURITY
DAYS
INVESTMENT
INTEREST
INTEREST
DAYS
DATE
DATE
HELD
COST
RATE
EARNED
COST
09/28/05
09/28/07
3
1,000,000.00
4.250%
349.32
3,000,000.00
09/29/05
06/29/07
2
1,000,000.00
4.140%
226.85
2,000,000.00
04/07/05
04/05/07
30
1,000,000.00
4.000%
3,287.67
30,000,000.00
02/24/05
02/24/06
30
1,000,098.27
3.175%
2,609.85
309002,948.10
10/19/04
10/19/06
30
2,000,000.00
3.080%
5,063.01
60,000,000.00
09/29/04
09/29/06
30
2,000,000.00
3.050%
5,013.70
60,000,000.00
09/08/04
09/08/06
30
2,000,000.00
3.020%
4,964.38
60,000,000.00
11/15/04
11/15/06
30
999,190.39
3.000%
2,463.76
29,975,711.70
07/08/04
06/29/06
30
998,482.57
2.680%
2,199.40
29,954,477.10
05/26/04
05/26/06
30
1,000,000.00
2.640%
2,169.86
30,000,000.00
12/13/04
12/15/05
30
1,999,561.51
2.625%
4,314.12
599986,845.30
11/16/04
12/15/05
30
999,701.98
2.500%
2,054.18
299991,059.40
04/28/04
04/28/06
30
2,000,000.00
2.435%
4,002.74
60,000,000.00
07/02/04
08/15/06
30
994,741.86
2.375%
19941.79
29,842,255.80
01/20/04
01/20/06
30
1,000,000.00
2.300%
1,890.41
30,000,000.00
02/01/05
02/28/06
30
996,238.92
2.250%
1,842.36
29,887,167.60
09/01/05
09/30/05
29
3,097,727.25
3.549%
8,733.84
899834,090.25
09/30/05
09/30/05
1
3,106,775.97
3.710%
315.79
3,106,775.97
09/01/05
09/12/05
11
6,472,594.05
3.510%
6,846.18
71,198,534.55
09/12/05
09/20/05
8
6,710,876.04
3.586%
5,274.27
53,687,008.32
09/20/05
09/28/05
8
6,1109876.04
3.684%
4,934.37
48,887,008.32
09/28/05
09/29/05
1
5,110,876.04
3.743%
524.14
5,110,876.04
09/29/05
09/30/05
1
4,110,876.04
3.764%
423.87
4,110,876.04
09/30/05
09/30/05
1
49129,308.14
3.813%
431.39
4,1299308.14
09/01/05
09/30/05
29
3,942,098.85
3.536%
11,073.78
1149320,866.65
09/30/05
09/30/05
1
3,953,571.54
3.662%
396.68
3,953,571.54
TOTALS:
INTEREST EARNED
83,347.72
972,979,380.82
GAIN (LOSS) ON INVESTMENT ACTIVITY
0.00
981,352.13
TOTAL RETURN
83,347.72
31,386,431.64
TOTAL RETURN ON AVERAGE DAILY INVESTED BALANCE
3.13%
s
INVENTORY REPORT
INVESTMENT PORTFOLIO AT SEPTEMBER 30, 2005
PURCHASE
MATURITY
INTEREST
BEGINNING
BEGINNING
ENDING
ENDING
CHANGE IN
MONTHS TO
INVESTMENT
ACCRUED FUND
TYPE
DATE
DATE
RATE
BOOK VALUE
MARKET VALUE
BOOK VALUE
MARKET VALUE
MARKET VALUE
NfATURITY
PARITACE
INTEREST
AGENCIES
FHLB
09/28/05
09/28/07
4.250%
1,000,000.00
1,000,000.00
1,000,000.00
995,937.50
(4,062.50)
24
1,000,000.00
354.17 POOLED
FHLB
09/29/05
06/29/07
4.140%
1,000,000.00
1,000,000.00
1,000,000.00
995,000.00
(5,000.00)
21
1,000,000.00
230.00 POOLED
FHLB
04/07/05
04/05/07
4.000%
1,000,000.00
997,190.00
1,000,000.00
992,810.00
(4,380.00)
18
1,000,000.00
3,370.79 POOLED
FHLB
02/24/05
02/24/06
3.175%
1,0009118.32
996,880.00
1,000,098.27
9969880.00
0.00
5
1,000,000.00
29645.83 POOLED
FHLB
10/19/04
10/19/06
3.0800/a
2,000,000.00
1,980,000.00
29000.000.00
1,973,760.00
(6,240.00)
13
2,000,000.00
5,133.33 POOLED
FHLB
09/29/04
09/29/06
3.050%
2,0009000.00
1,980,620.00
2,000,000.00
1,973,760.00
(6,860.00)
12
29000,000.00
338.89 POOLED
FHLB
09/08/04
09/08/06
3.020%
2,000,000.00
1,981,260.00
2,000,000.00
1,975,000.00
(6,260.00)
11
2,000,000.00
3,858.89 POOLED
FHLB
11/15/04
11/15/06
3.000%
999,131.29
988,440.00
999,190.39
985,000.00
(3,440.00)
14
1,000,000.00
2,500.00 POOLED
FNMA
07/08/04
06/29/06
2.6800/o
998,315.20
989,690.00
998,482.57
988,130.00
(1,560.00)
9
1,000,000.00
2,233.33 POOLEDi
FHLB
05/26/04
05/26/06
2.640%
1,0009000.00
990,630.00
1,000,000.00
989,690.00
(940.00)
8
1,0009000.00
2,200.00 POOLED 14
FFCB
12/13/04
12/15/05
2.625%
1,999,388.42
1,993,760.00
1,999,561.51
19994,380.00
620.00
2
2,0009000.00
4,375.00 POOLED
FHLB
11/16/04
12/15/05
2.5000/o
999,584.34
996,560.00
999,701.98
9969880.00
320.00
2
1,000,000.00
2,083.33 POOLED
FHLB
04/28/04
04/29/06
2.435%
2,000,000.00
1,980,620.00
2,000,000.00
1,979,380.00
(1,240.00)
7
2,000,000.00
4,058.33 POOLED
FHLB
07/02/04
08/15/06
2.375%
994,247.36
985,310.00
9949741.86
983,440.00
(1,870.00)
10
1,000,000.00
1,979.17 POOLED
FNMA
01/20/04
01/20/06
2.300%
1,000,000.00
994,690.00
1,000,000.00
995,000.00
310.00
4
1,000,000.00
1,916.67 POOLED
FNMA
02/01/05
02/28/06
2.250%
995,491.68
992,190.00
996,238.92
9939130.00
940.00
5
1,000,000.00
1,875.00 POOLED
20,986,276.61
209847,940.00
20988015.50
20,808,177.50
399662.50
21,000,000.00
39,152.73
POOLS
TEXPOOL
09/30/05
3.603%
6,472,594.05
69472,594.05
4,129,308.14
4,129,308.14
0.00
0
4,129,308.14
POOLED
TEXSTAR
09/30/05
3.554%
3,0979727.25
3,097,727.25
3,106,775.97
3,1069775.97
0.00
0
3,106,775.97
POOLED
LOGIC
09/30/05
3.540%
3,942,098.85
3,942,098.85
3,953,571.54
3,953,571.54
0.00
0
3,953,571.54
POOLED
13,512,420.15
13512420.15
11,189,655.65
11,189,655.65
0.00
11,189,655.65
0.00
TOTAL:
34,498,696.76
34,360,260.15
32,177,671.15
31,997,833.15
(39,662.50)
7
32,189,655.65
39,152.73
•
PORTFOLIO DETAIL TRANSACTION REPORT
FOR PERIOD ENDING SEPTEMBER 30, 2005
PURCHASES
TYPE
PAR
COUPON
YIELD
MATURITY
PRICE
PRINCIPAL
PREM/(DISC)
ACCRUED
TOTAL
FUND
FHLB
FHLB
SALES
1,000,000.00
1,0009000.00
4.250%
4.140%
4.250%
4.140%
09/28/07
06/29/07
100.0000
100.0000
1,000,000.00
1,000,000.00
-
-
-
-
1,000,000.00 POOLED
1,000,000.00 POOLED
TYPE
PAR
COUPON
YIELD
MATURITY
PRICE
PRINCIPAL
PREM/(DISC)
ACCRUED
TOTAL
FUND
CALLED
TYPE
PAR
COUPON
YIELD
MATURITY
PRICE
PRINCIPAL
PREM/(DISC)
ACCRUED
TOTAL
FUND
MATURED
TYPE
PAR
COUPON
YIELD
MATURITY
PRICE
PRINCIPAL
PREM/(DISC)
ACCRUED
TOTAL
FUND
0.
Portfolio Yield vs Benchmark
3.50%
3
1
1
LI
0.00% •
Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05
Portfolio Yield 2.14% 2.30% 2.45% 2.47% 2.57% 2.68% 2.79% 2.88% 2.93% 3.01% 3.07% 3.13%
Benchmark 2.01% 2.23% 2.42% 2.62% 2.79% 3.03% 3.13% 3.16% 3.13% 3.41% 3.74% 3.65%
7
Additional Earnings
10,000
(1
(70,000)—
(80,000)—X
(90,000)
(100,000)
Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 May-05 Jun-05 Jul-05 Aug-05 Sep-05
®Monthly 2,245 825 (128) (5,013) (7,302) (12,037) (11,043) (9,058) (6,634) (12,061) (18,875) (14,290)
13Cumulative 2,245 3,070 2,942 (2,071) (9,373) (21,410) (32,453) (41,511) (48,145) (60,206) (79,081) (93,372)
i
40
8
4,000,000.00
3,000,000.00
2,000,000.00
1,000,000.00
Investment Maturity
& Cashflow
(excluding Texpool & Logic)
�Ah �05 oh ,0�0 �0�0 A� ono ADO A� A� p�O b �p�
4- 'IF F4 It ay YYSe Oc, �°a,e 40 %-J Qo4°
is
0
Market Gain (Loss)
by Month
4
10
Monthly Portfolio Division
❑ 24% ❑ 14%
❑ 14%
®48%
❑ First SW ■ Coastal Securities ❑ Southwest Securities ❑ Duncan Williams
Average Return on Investments
4.00%
3.00%
2.00%
1.00%
0.00%
First SW Coastal Southwest Duncan
Securities Securities Williams
10 Average Yields 2.87% 2.89% 2.44% 3.34%
0'
11
September 30, 2005
0
This report is in full compliance with the investment strategy as
established for the pooled investment fund and the Public Funds
Investment Act (Chapter 2256).
a
Cigiawexanderk., MAha Dolby
Assistant City Manager Assistant Finance Director
" -1
104)4� "L4
helley Wolny
Investment Officer
12
•
E
0
City of La Porte, Texas
Investment Policy
Adopted by the City Council
Of the City of La Porte
On January 13,1992, by
Ordinance No. 1802
Amended — November 1995
Amended — August 1997
Amended — November 2000
Amended — February 2003
Amended — February 2005
City of LaPorte, Texas
Cynthia B. Alexander
Assistant City Manager
Shelley Wolny
Investment Officer
POLICY
It is the policy of the City of La Porte, Texas (the "City") to administer and invest its funds in a
manner which will preserve the principal and maintain the liquidity through limitations and
diversification while meeting the daily cash flow requirements of the City. The City will invest all
available funds in conformance with legal and administrative guidelines, seeking to optimize
interest earnings to the maximum extent possible.
II. PURPOSE
The purpose of this investment policy is to comply with all statutes governing the investment of
the City's funds and Chapter 2256 of the Government Code ("Public Funds Investment Act"),
which requires the 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.
III. SCOPE
The City will strive to earn a return on funds invested at the highest investment return possible
after taking in consideration the primary goals of preservation of principal and liquidity of funds
invested, consistent with the policy objectives described below. This investment policy applies to
the investment activities of the government of the City of La Porte, Texas.
FUNDS INCLUDED All financial assets of all funds managed by the City, including but not
limited to receipts of Tax Revenues, Charges for Services, Bond Proceeds, Interest Incomes,
Loans and Funds received by the City where the City performs a custodial function.
IV. OBJECTIVES
SAFETY The primary objective of the City's investment activity is the preservation of capital in
the overall portfolio. Each investment transaction shall seek first to ensure that capital losses are
avoided, whether they are from securities defaults or erosion of market value. The City will
strive to minimize credit risk by limiting investments to the safest types of investments,
prequalifying the financial institutions and broker/dealers with which the City conducts business,
and diversify the investment portfolio so that potential losses on individual issuers will be
minimized. To minimize interest rate risk, the City will ladder the portfolio and match
investments with future cash requirements and invest operating funds in shorter, more liquid
securities and investments.
LIQUIDITY The City's investment portfolio will remain sufficiently liquid to enable the City to
meet operating requirements that might be reasonably anticipated. Liquidity shall be achieved by
matching investment maturities with forecasted cash flow requirements and by investing in
securities with active secondary markets. 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.
PUBLIC TRUST All participants in the investment process shall seek to act responsibly as
custodians of the public trust. Investment Officials shall avoid any transaction that might impair
public confidence in the City's ability to govern effectively. The governing body recognizes that
in a diversified portfolio, occasional measured losses due to market volatility are inevitable, and
must be considered within the context of the overall portfolio's investment return, provided that
adequate diversification has been implemented.
YIELD (Optimization of Interest Earnings) The City's cash management 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.
The investment program shall seek to augment returns above this threshold consistent with risk
limitations identified herein and prudent investment principles.
V. OVERSIGHT RESPONSIBILITY
Oversight Responsibility for the investment activity of the City of La Porte shall rest with the
Fiscal Affairs Committee and the City Manager.
VI. RESPONSIBILITY AND CONTROL
DELEGATION Management responsibility for the investment program is hereby delegated to
the Director of Finance, who shall establish written procedures for the operation of the investment
program, consistent with this investment policy. Such procedures shall include explicit delegation
of authority to persons responsible for investment transactions.
SUBORDINATES All persons involved in investment activities will be referred to as
"Investment Officers." No person shall engage in an investment transaction except as provided
under the terms of this policy and the procedures established by the Director of Finance. The
Director of Finance shall be responsible for all transactions undertaken, and shall establish a
system of controls to regulate the activities of Subordinate Investment Officers.
QUARTERLY REPORTS The Director of Finance shall submit quarterly an investment report
that summarizes recent market conditions, economic developments and anticipated investment
conditions. The report shall summarize the investment strategies employed in the most recent
quarter and describe the portfolio in terms of investment securities, maturities, risk
characteristics, book values, market values and other features. The report shall explain the
quarter's total investment return and compare the return to budgetary expectations. The report
shall include an appendix that discloses all transactions during the quarter.
ANNUAL REPORTS Within 90 days of the end of the fiscal year, the Director of Finance shall
present a comprehensive annual report on the investment program and investment activity. The
annual report shall include twelve-month and quarterly comparison of returns, and shall suggest
improvements that might be made in the investment program.
PRUDENCE Investments shall be made with the exercise of due care, 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 own capital as well as the
probable income to be derived. Investment Officers acting in accordance with written procedures
and this investment policy 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 the liquidity and the sale of securities are
carried out in accordance with the terms of this policy.
IMDEMNIFICATION 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.
ETHICS DISCLOSURE AND CONFLICTS OF INTEREST Officers and employees involved
in the investment process shall refrain from personal business activity that could conflict with
proper execution and management of the investment program, or which could impair their ability
to make impartial investment decisions. Employees and Investment Officers shall disclose to the
City Manager any material interests in financial institutions that conduct business with the City of
La Porte, and shall further disclose any personal financial or investment positions that could be
related to the performance of the City's investment portfolio. Employees and Investment Officers
shall refrain from undertaking personal investment transactions with the same individual with
which business is conducted on behalf of the City of La Porte.
An Investment Officer of the City of La Porte who has a personal business relationship with an
organization seeking to sell an investment to the City of La Porte 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 of La Porte
shall file a statement disclosing that relationship. A statement required under subsection
2256.005(i) of the PFIA must be filed with the Texas Ethics Commission and the governing body
of the City of LaPorte.
TRAINING Investment Officers shall attend at least one investment training session within 12
months after taking office or assuming duties, and shall attend an investment training session not
less than once in a two-year period and receive not less than 10 hours of instruction relating to
investment responsibilities from an independent source approved by the Fiscal Affairs
Committee. For the purposes of this policy, an "independent source" is defined as a professional
organization, an institute of higher learning or any other sponsor other than a Business
Organization with whom the City may engage in investment transactions. Independent sources
that may provide investment training include the Government Treasurer's Organization of Texas,
the University of North Texas, the Government Finance Officers Association of Texas, or the
Texas Municipal League. Training shall be in accordance with the Public Funds Investment Act
and shall include education in investment controls, security risks, market risks, and compliance
with statutes governing the investment of public funds.
VII. INVESTMENTS
ACTIVE PORTFOLIO MANAGEMENT The City intends to pursue active versus passive
portfolio management philosophy. That is, securities may be sold before they mature if market
conditions present an opportunity for the City to benefit from the trade.
AUTHORIZED INVESTMENTS Assets of funds of the government of the City of La Porte may
be invested in the following as authorized by the Public Funds Investment Act:
A. Obligations of, or Guaranteed by Governmental Entities
1. Except as provided by Subsection (b), the following are authorized investments under
this section:
a) obligations of the United States or its agencies and instrumentalities;
b) direct obligations of this state or its agencies and instrumentalities;
4
c) 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;
d) other obligations, the principal and interest of which are unconditionally guaranteed
or insured by, or backed by the full faith and credit of, this state or the United States
or their respective agencies and instrumentalities; and
e) obligations of states, agencies, counties, cities, and other political subdivisions of any
state rated as to investment quality by a nationally recognized investment rating firm
not less than A or its equivalent.
2. The following are not authorized investments under this section:
a) obligations whose payment represents the coupon payment on the outstanding
principal balance of the underlying mortgage -backed security collateral and pays not
principal (Interest only bonded);
b) obligations whose payment represents the principal stream of cash from the
underlying mortgage -backed security collateral and pays no interest (Principal only
bonds);
c) collateralized mortgage obligations that have a final stated maturity date of greater
that 10 years; and
d) collateralized mortgage obligations, the interest rate of which is determined by an
index that adjusts opposite to the changes in a market index.
B. Certificates of Deposit and Share Certificates
1. A certificate of deposit is an authorized investment under this Subchapter if the
certificate is issued by a state or national bank domiciled in this state, a savings bank
domiciled in this state, or a state or federal credit union domiciled in this state and is:
a) guaranteed or insured by the Federal Deposit Insurance Corporation or its successor
or the National Credit Union Share Insurance Fund or its successor;
b) secured by obligations that are described by Section 2256.009 (a), including
mortgage backed securities directly issued by a federal agency or instrumentality that
have a market value of not less than the principal amount of the certificates, but
excluding those mortgage backed securities of the nature described by Section
2256.009 (b); or
c) secured in any other manner and amount provided by law for deposits of the
investing entity.
C. Repurchase Agreements
1. A fully collateralized repurchase agreement is an authorized investment under this
Subsection if the repurchase agreement:
a) has a defined termination date;
b) is secured by obligations described by Section 2256.009 (a)(1); and
c) requires the securities being purchased by the entity to be pledged to the entity, held
in the entity's name, and deposited at the time the investment is made with the entity
or with a third party selected and approved by the entity; and
d) is placed through a primary government securities dealer, as defined by the Federal
Reserve, or a financial institution doing business in this state.
e) repurchase agreements and reverse repurchase agreements shall be entered into only
with dealers who have executed a Master Repurchase Agreement with the City.
2. In this section, "repurchase agreement" means a simultaneous agreement to buy, hold for
a specified time, and sell back at a future date obligations described by Subsection A,
l,a), at a market value at the time the funds are disbursed of not less than the principal
amount of the funds disbursed. The term includes a direct security repurchase agreement
and a reverse security repurchase agreement.
Notwithstanding any other law, the term of any reverse security repurchase agreement
may not exceed 90 days after the date the reverse security repurchase agreement is
delivered.
4. Money received by an entity under the terms of a reverse security repurchase agreement
shall be used to acquire additional authorized investments, but the term of the authorized
investments acquired must mature no later than the expiration date stated in the reverse
security repurchase agreement.
D. Banker's Acceptances
A banker's acceptance is an authorized investment under this subchapter if the banker's
acceptance:
a) has a stated maturity of 270 days or fewer from the date of its issuance;
b) will be, in accordance with its terms, liquidated in full at maturity;
c) is eligible for collateral for borrowing from a Federal Reserve Bank; and
d) is accepted by a bank organized and existing under the laws of the United States or
any state, if the short-term obligations of the bank, or of a bank holding company of
which the bank is the largest subsidiary, are rated not less that A-1 or P-1 or an
equivalent rating by at least one nationally recognized credit rating agency.
E. Commercial Paper
1. Commercial paper is an authorized investment under this subchapter if the commercial
paper;
a) has a stated maturity of 270 days or fewer from the date of its issuance; and
6
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b) is rated not less than A-1 or P-1 or an equivalent rating by at least;
c) two nationally recognized credit rating agencies; or
d) one nationally recognized credit rating agency and is fully secured by an irrevocable
letter of credit issued by a bank organized and existing under the laws of the United
States or any state.
F. Mutual Funds
1. A no-load money market mutual fund is an authorized investment under this subchapter
if the mutual fund:
a) is registered with and regulated by the Securities and Exchange Commission;
b) provides the investing entity with a prospectus and other information required by the
Securities and Exchange Act of 1934 (15 U.S.C. Section 80a-1 et seq.);
c) has a dollar -weighted average stated maturity of 90 days or fewer; and
d) includes in its investment objectives the maintenance of a stable net asset value of $1
for each share.
2. In addition to a no-load money market mutual fund permitted as an authorized investment
in Subsection (a), a no-load mutual fund is an authorized investment under this Section if
the mutual fund:
a) is registered with the Securities and Exchange Commission;
b) has an average weighted maturity of less than two years;
c) is invested exclusively in obligations approved by this subchapter;
d) is continuously rated as to investment quality by at least one nationally recognized
investment rating firm of not less than AAA or it equivalent; and
e) conforms to the requirements set forth in Sections 2256.016 (b) and (c) relating to the
eligibility of investment pools to receive and invest funds of investing entities.
3. An entity is not authorized by this section to:
a) invest in the aggregate more than 15 percent of its monthly average fund balance,
excluding bond proceeds and reserves in other funds held for debt service, in mutual
funds described in Subsection (b);
b) invest any portion of bond proceeds, reserves and funds held for debt service, in
mutual funds described in Subsection (b); or
c) invest its funds or funds under its control, including bond proceeds and reserves and
other funds held for debt service, in any one mutual fund described in Subsection (a)
or (b) in an amount that exceeds 10 percent of the total assets of the mutual fund.
7
G. Investment Pools
1. An entity may invest its funds and funds under its control through an eligible investment
pool if the governing body of the entity by rule, order, ordinance, or resolution, as
appropriate, authorizes investment in the particular pool. An investment pool shall invest
the funds it receives from entities in authorized investments permitted by this subchapter.
2. To be eligible to receive funds from and invest funds on behalf of an entity under this
chapter, an investment officer or other authorized representative of the entity an offering
circular or other similar disclosure instrument that contains, at a minimum, the following
information:
a) the types of investments in which money is allowed to be invested;
b) the maximum average dollar -weighted maturity allowed, based on the stated maturity
date, of the pool;
c) the maximum stated maturity date any investment security within the portfolio has;
d) the objectives of the pool;
e) the size of the pool;
f) the names of the members of the advisory board of the pool and the dates their terms
expire;
g) the custodian bank that will safekeep the pool's assets;
h) whether the intent of the pool is to maintain a net asset value of one dollar and the
risk of market price fluctuation;
i) whether the only source of payment is the assets of the pool at market value or
whether there is a secondary source of payment, such as insurance or guarantees, and
a description of the secondary source of payment;
j) the name and address of the independent auditor of the pool;
k) the requirements to be satisfied for an entity to deposit funds in and withdraw funds
from the pool and any deadlines or other operating policies required for the entity to
invest funds in and withdraw funds from the pool; and
1) the performance history of the pool, including yield average dollar -weighted
maturities, and expense ratios.
3. To maintain eligibility to receive funds from and invest funds on behalf of an entity under
this chapter, an investment pool must furnish to the investment officer or other
authorized representative of the entity:
a) investment transaction confirmations; and
b) a monthly report that contains, at a minimum, the following information:
0
i. the types and percentage breakdown of securities in which the pool is invested;
ii. the current average dollar -weighted maturity, based on the stated maturity date,
of the pool;
iii. the current percentage of the pool's portfolio in investments that have stated
maturities of more than one year;
iv. the book value versus the market value of the pool's portfolio, using the
amortized cost valuation;
V. the size of the pool;
vi. the number of participants in the pool;
vii. the custodian bank that is safekeeping the assets of the pool;
viii. a listing of daily transaction activity of the entity participating in the pool;
ix. the yield and expense ratio of the pool;
X. the portfolio managers of the pool; and
xi. any changes or addenda to the offering circular.
4. An entity by contract may delegate to an investment pool the authority to hold legal title
as custodian of investments purchased with its local funds.
5. In this section, "yield" shall be calculated in accordance with regulations governing the
registration of open-end management investment companies under the Investment
Company Act of 1940, as promulgated from time to time by the Federal Securities and
Exchange Commission.
To be eligible to receive funds from and invest funds on behalf of an entity under this
chapter, a public funds investment pool created to function as a money market mutual
fund must mark its portfolio to market daily, and, to the extent reasonably possible,
stabilize a $1 net asset value. If the ratio of the market value of the portfolio divided by
the book value of the portfolio is less than 0.995 or greater than 1.005, portfolio holdings
shall be sold as necessary to maintain the ratio between 0.995 and 1.005.
7. To be eligible to receive funds from and invest funds on behalf of an entity under this
chapter, a public funds investment pool must have an advisory board composed:
a) equally of participants in the pool and other persons who do not have a business
relationship with the pool and are qualified to advise the pool, for a public funds
investment pool created under Chapter 791 and managed by a state agency; or
b) of participants in the pool and other persons who do not have a business relationship
with the pool and are qualified to advise the pool, for other investment pools.
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8. To maintain eligibility to receive funds from and invest funds on behalf of an entity under
this chapter, an investment pool must be continuously rated no lower that AAA or AAA-
m or at an equivalent rating by at least one nationally recognized rating service.
EXISTING INVESTMENTS Any investments currently held that do not meet the guidelines of
this policy shall be reviewed to determine the ability to liquidate. If the investment cannot be
liquidated because of material adverse change in the value since the time of purchase, and holding
the investment to maturity does not negatively affect disbursements or cash flow, a
recommendation of holding said investment to maturity is acceptable.
PROCUREMENT Investments of subsections A-G of this section may be made only after
competitive bids are solicited from at least three sources, with the exception of a) transactions
with 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.
MONITORING The market value of each investment shall be obtained monthly from a source
such as the Wall Street Journal newspaper, a reputable brokerage firm or security pricing service
and reported on the monthly investment reports.
LENGTH OF INVESTMENTS The maximum stated maturity, from the date of purchase, for
any individual investment may not exceed 5 years and the maximum dollar -weighted average
maturity for the pooled fund group (investment portfolio) may not exceed 2 years.
DIVERSIFICATION It is the policy of the City of La Porte to diversify its investment portfolios.
Assets held in the common investment portfolio shall be diversified to eliminate the risk of loss
resulting from one concentration of assets in a specific maturity, a specific issuer or a specific
class of securities. Diversification strategies shall be determined and revised periodically by the
Fiscal Affairs Committee.
In establishing specific diversification strategies, the following general policies and constraints
shall apply:
A. Portfolio maturities shall be staggered in a way that protects interest income from the
volatility of interest rates and that avoids undue concentration of assets in a specific maturity
sector. Securities shall be selected which provide for stability of income and reasonable
liquidity. The City shall continually invest 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.
B. The Fiscal Affairs Committee shall establish strategies and guidelines for the percentage of
the total portfolio that may be invested in securities other than repurchase agreements,
Treasury bill and notes, or insured and collateralized certificates of deposits. The Fiscal
Affairs Committee shall conduct a semi-annual review of these guidelines, and shall
evaluate the probability of market and default risk in various investment sectors as part of its
considerations.
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VIII.
FINANCIAL INSTRUMENTS Maximum allowable percentages of the total portfolio for
investments are stated as follows:
Investment Type
1. Investment Pools
2. Money Market Accounts
3. Certificates of Deposit
4. U.S. Government Securities
5. U.S. Agency Securities
6. Municipal Securities
7. Repurchase Agreements
8. Bankers' Acceptance Bonds
9. Commercial Paper
SELECTION OF BANKS AND DEALERS
Maximum Limit
100%
10%
60%
80%
80%
20%
50%
35%
35%
BIDDING PROCESS Depositories shall be selected through the City's banking services
procurement process, which shall include a formal request for proposal (RFP) issued every three
(3) years. In selecting depositories, the credit worthiness of institutions shall be considered, and
the Director of Finance shall conduct a comprehensive review of prospective depositories credit
characteristics and financial history.
INSURABILITY Banks and Savings & Loans Associations seeking to establish eligibility for
the City's competitive certificate of deposit purchase program, shall submit financial statements,
evidence of Federal insurance and other information as required by the Director of Finance.
PRIMARY DEALERS AND APPROVED LIST For brokers and dealers of government
securities, Investment Officers shall select only those dealers reporting to the Market Reports
Division of the Federal Reserve Bank of New York, also known as "primary government
securities dealers," unless a comprehensive credit and capitalization analysis reveals that other
firms are adequately financed to conduct public business. Before engaging in investment
transactions with a broker/dealer, the Investment Officer shall have received, from a Qualified
Representative of said firm, a signed Certification Form. (Exhibit B) This form shall attest that
the individual responsible for the City's account with that firm has (1) received and reviewed the
investment policy of the entity; and (2) acknowledged that the business organization has
implemented reasonable procedures and controls in an effort to preclude investment transactions
conducted between the entity and the organization that are not authorized by the entity's
investment policy, except to the extent that this authorization is dependent on an analysis of the
makeup of the entity's entire portfolio or requires an interpretation of subjective investment
standards. Investment Officers of the City may not acquire or otherwise obtain any authorized
investment described in the investment policy from a person who has not delivered a signed
Certification Form. The Fiscal Affairs Committee shall at least annually review, revise, and
adopt a list of qualified brokers that are authorized to engage in investment transactions with the
City. (Exhibit A)
11
IX. SAFEKEEPING AND CUSTODY
INSURANCE OR COLLATERAL All bank deposits, certificates of deposit, and repurchase
agreements shall be secured by pledged collateral. Bank deposits and certificates of deposit shall
be collateralized with a market value equal to no less than 102% of the deposits plus accrued
interest less than an amount insured by FDIC. Repurchase agreements shall be monitored daily.
Evidence of the pledged collateral shall be maintained by the Director of Finance or a third party
financial institution. Repurchase agreements shall be documented by specific agreement noting
the collateral pledged in each agreement. Collateral shall be reviewed monthly to assure the
market value of the securities pledged equals or exceeds the related bank balances.
SAFEKEEPING AGREEMENT All safekeeping arrangements shall be in accordance with a
Safekeeping Agreement approved by the Fiscal Affairs Committee which clearly defines the
procedural steps for gaining access to the collateral should the City of La Porte determine that the
City's funds are in jeopardy. The safekeeping institution, or Trustee, shall be the Federal Reserve
Bank or an institution not affiliated with the firm pledging the collateral. The safekeeping
agreement shall include the signatures of the City of La Porte, the firm pledging the collateral,
and the Trustee.
COLLATERAL DEFINED The City of La Porte shall accept only the following securities as
collateral:
A. FDIC insurance coverage;
B. United States Treasuries and Agencies;
C. Texas State, City, County, School or Road District bonds with a remaining maturity of ten
(10) years or less with rating from a nationally recognized investment rating firm and having
received a rating of not less than A or its equivalent;
D. Other securities as approved by the Fiscal Affairs Committee.
SUBJECT TO AUDIT All collateral shall be subject to inspection and audit by the Director of
Finance or the City's independent auditors.
DELIVERY VERSUS PAYMENT All investment transactions, with the exception of local
government investment pools and mutual fund transactions, shall be purchased using the delivery
versus payment method. That is, funds shall not be wired or paid until verification has been made
that the collateral was received by the Trustee. The collateral shall be held in the name of the
City or held on behalf of the City. The Trustee's records shall assure the notation of the City's
ownership of or explicit claim on the securities. The original copy of all safekeeping receipts shall
be delivered to the City.
X. MANAGEMENT AND INTERNAL CONTROLS
The Director of Finance shall establish a system of internal controls, which shall be reviewed by
an independent auditor. The controls shall be designed to prevent losses of public funds arising
from fraud, employee error, misrepresentation by third parties, unanticipated changes in financial
markets, or imprudent actions by employees or Investment Officers of the City.
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Controls and managerial emphasis deemed most important that shall be employed where practical
are:
A. Control of collusion.
B. Separation of duties.
C. Separation of transaction authority from accounting and record keeping.
D. Custodian safekeeping receipts records management.
E. Avoidance of physical delivery securities.
F. Clear delegation of authority.
G. Documentation on investment bidding events.
H. Written conformation of telephone transactions.
I. Reconcilement and comparisons of security receipts with the investment subsidiary records.
J. Compliance with investment policies.
K. Accurate and timely reports.
L. Validation of investment maturity decisions with supporting cash flow data.
M. Adequate training and development of Investment Officers.
N. Verification of all interest income and security purchase as sell computations.
O. Review of financial condition of all brokers, dealers and depository institutions.
P. Staying informed about market conditions, changes, and trends that require adjustments in
investment strategies.
COMPLIANCE AUDIT The City of La Porte shall perform, in conjunction with its annual
financial audit, a compliance audit of management controls on investments and adherence to the
entity's established investment policies. The audit shall include a formal review of the quarterly
investment reports by an independent auditor and the results reported to the governing body by
the independent auditor. Also, the governing body shall review its investment policy and
investment strategy not less than annually and adopt a written instrument by rule, order,
ordinance, or resolution stating that it has reviewed the investment policy and strategy, and
recorded any changes made to them.
13
Exhibit A
City of La Porte
Approved List of Brokers/Dealers and Investment Pools
Brokers/Dealers
Coastal Securities
First Southwest Company
Duncan Williams, Inc.
Morgan Stanley, Inc.
Investment Pools
TexPool
LOGIC Investment Pool
TexSTAR
0 0
Exhibit B
BROKER/DEALER CERTIFICATION FORM
As required by Texas Government Code 2256.005 (k-1)
CITY OF LA PORTE, TEXAS
This certification is executed on behalf of (the Investor)
and (the Dealer) pursuant to the Public Funds
Investment Act, Chapter 2256, Government Code, Texas Codes Annotated (the Act) in
connection with investment transactions conducted between the Investor and Dealer.
The Undersigned Qualified Representative of the Dealer hereby certifies on behalf of the
Dealer that:
1. The Dealer Qualified Representative is duly authorized to execute this
Certification on behalf of the Dealer, and
2. The Dealer Qualified Representative has received and reviewed the Investment
Policy furnished by the Investor, and
3. The Dealer has implemented reasonable procedures and controls in an effort to
preclude investment transactions conducted between the Dealer and the Investor
that are not authorized by the entity's investment policy, except to the extent that
this authorization is dependent on an analysis of the makeup of the entity's entire
portfolio or requires an interpretation of subjective investment standards.
Dealer Qualified Representative
Signature
Name (Printed):
Title:
Date:
r1
City of La Porte, Texas
Investment Strategy Statement
Exhibit C
The City of La Porte, Texas (the "City") will strive to administer and invest its pooled
funds at the highest investment return possible while always taking into account the
primary goals of preservation of principal and liquidity of funds invested consistent with
the City's investment policy.
The City's funds, which are pooled together and constitute the investment portfolio,
include all financial assets of all funds managed by the City, including but not limited to
receipts of tax revenues, charges for services, bond proceeds, interest incomes, loans and
funds received by the City where the City performs a custodial function.
The City will never invest its funds in a security that is deemed unsuitable to the financial
requirements of the City. Maturities will be staggered in a manner that meets the cash
flow needs of the City.
The primary investment objective is the preservation and safety of principal. Each
investment transaction shall seek first to ensure that principal losses are avoided, whether
they are from security defaults or erosion of market value.
The City's investment portfolio will remain sufficiently liquid to enable the City to meet
operating requirements that might be reasonably anticipated. Liquidity shall be achieved
by matching investment maturities with forecasted cash flow requirements and by
investing in securities with active secondary markets.
The City shall always maintain a highly diversified investment portfolio in order to
reduce the amount of credit and market risk exposed to the City's portfolio.
After first considering safety and liquidity, the City's investment portfolio shall be
designed with the objective of regularly 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. The City shall seek to augment returns above this threshold consistent with risk
limitations identified in the City's investment policy and prudent investment principles.
IT
City of La Porte, Texas
Quarterly Report of Credit Card
Fourth Quarter FY 2005
Report of Credit Card Expenditures
Quarter Ending September 30, 2005
Check
Payee Date Number Amount
CardMember Services
07/28/05
220672
1,627.60
CardMember Services
09/02/05
221488
1,189.15
CardMember Services
10/07/05
222139
135.00
$ 2,951.75
Cardholder Name/Position
Amount
Alton Porter, Mayor
0.00
Debra Feazelle, City Manager
2,023.30
John Joerns, Assistant City Manager
172.45
Cynthia Alexander, Assistant City Manager
594.90
Martha Gillett, City Secretary
0.00
Richard Reff, Police Chief
161.10
Total Expenditures $
2,951.75
NOTE: This report reflects all PAYMENTS made during the Fourth Quarter of FY 2005 (July, August, September 2005)
�m
•
City of La Porte, Texas
Quarterly Report of Credit Card Expenditures
Fourth Quarter FY 2006
Cardholder Position: City Manager
Payee Date Amount
ICMA Internet 07/11/05 565.00
Continental Airlines 07/11/05 233.90
WP Solace Enterprises 07/22/05 964.40
Texas Municipal League 07/25/05 125.00
The Innovation Groups 08/19/05 135.00
Expense
Type Purpose
Registration ICMA Annual Conference
Debra Feazelle - Minneapolis/St Paul, MN
$25.00 check received from Debra Feazelle
Airfare ICMA Annual Conference
Debra Feazelle - Minneapolis/St Paul, MN
Registration Solace Annual Conference 2005
Debra Feazelle - Scotland (Oct 18-20 2005)
$45.92 check received from Debra Feazelle
Registration TML - Legislative Wrap -Up
Debra Feazelle - Sugarland, TX
Registration Webcast Conference
Debra Feazelle
Total Quarterly Charges $ 2,023.30 Check #
220672
221488
222139
NOTE: This report reflects all PAYMENTS made during the Fourth Quarter of FY 2005 (July, August, September 2005)
•
is
City of La Porte, Texas
Quarterly Report of Credit Card Expenditures
Fourth Quarter FY 2005
Cardholder Position: Assistant City Manager, John Joerns
Expense
Payee Date Amount Type Purpose
Hilton Austin Airport 06/30/05 172.45 Lodging Legislative Wrap -Up
John Joerns - Austin, TX
Check #
Total Quarterly Charges $ 172.45 220672
NOTE: This report reflects all PAYMENTS made during the Fourth Quarter of FY 2005 (July, August, September 2005)
City of La Porte, Texas
Quarterly Report of Credit Card Expenditures
Fourth Quarter FY 2005
Cardholder Position: Assistant City Manager, Cynthia Alexander
Expense
Payee Date Amount Type Purpose
Govt Finance Officers
06/27/05
10.00
Book
Marriott Hotel
07/01/05
584.90
Lodging
Total Quarterly Charges $ 594.90
Debt Issuance
Cynthia Alexander
99th Annual GFOA 2005 Conference
Cynthia Alexander - San Antonio, TX
June 26-29, 2005
Check #
220672
NOTE: This report reflects all PAYMENTS made during the Fourth Quarter of FY 2005 (July, August, September 2005)
•
•
City of La Porte, Texas
Quarterly Report of Credit Card Expenditures
Fourth Quarter FY 2005
Cardholder Position: Police Chief
Expense
Payee
Date
Amount
Type
Purpose
Harris County Toll Road
07/11/05
61.35
EZ Tag
Task Force & SOP Vehicles
Harris County Toll Road
08/04/05
37.50
EZ Tag
Task Force & SOP Vehicles
Harris County Toll Road
08/17/05
62.25
EZ Tag
Task Force & SOP Vehicles
0
Total Quarterly Charges
Check #
220672
221488
NOTE: This report reflects all PAYMENTS made during the Fourth Quarter of FY 2005 (July, August, September 2005)
September 30, 2005
This report is in full compliance with the credit card policy as
established by the City of La Porte's Audit Committee.
t,A�,b' w�,
Mich el Dolby, CPA
Assistant Finance Direc r
.S
C�