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Home My WebLink AboutCC 2005-05-23 Agendas . . CITY OF NORTH RICHLAND HILLS PRE-COUNCIL AGENDA MAY 23,2005 - 5:45 P.M. For the Regular Meeting conducted at the North Richland Hills City Hall - Pre-Council Chambers 7301 Northeast Loop 820. . I NUMBER I ITEM I ACTION I TAKEN 1. Discuss Items from May 23, 2005 City Council Meeting (5 Minutes) Discuss Investment Strategy and Investment Policy Update 2. I R 2005-064 (10 Minutes) <AQenda Item No.9> Discuss Simmons Drive (Mid-Cities Boulevard to Grapevine 3. I R 2005-065 Highway); Short Term Improvements and Long Term Improvements (10 Minutes) Discuss Possible Amendment to Council Rules of 4. Procedures (10 Minutes) *Executive Session - The Council may enter into closed 5. Executive Session to discuss the following: Consultation with Attorney to Discuss Legal Issues as Authorized by §551.071 - (a) Charter Communications (b) Status Report Davis v. North Richland Hills Deliberation of Personnel Matters as Authorized by §551.074 - Deliberate the Appointment, Employment, Evaluation Duties of Public Officers and Employees to wit: City ManaQer 6. Adiournment *Closed due to subject matter as provided by the Open Meetings law. If any action is contemplated, it will be taken in open session. POSTED . _ --rrItUj-. ~ ~ð6 DlÍte /IJ.' Y5.1hh) Time OS/23/05 City Council Agenda Page 1 of 3 ~e. cretary ~ . .. l-kb By . CITY OF NORTH RICHLAND HILLS CITY COUNCIL AGENDA MAY 23, 2005 - 7:00 PM For the Regular Meeting conducted at the North Richland Hills City Hall Council Chambers 7301 Northeast Loop 820, at 7:00 p.m. The below listed items are placed on the Agenda for discussion and/or action. 1. Items on the consent agenda will be voted on in one motion unless a Council Member asks for separate discussion. 2. The Council reserves the right to retire into executive session concerning any of the items listed on this Agenda, whenever it is considered necessary and legally justified under the Open Meetings Act. 3. Persons with disabilities who plan to attend this meeting and who may need assistance should contact the City Secretary's office at 817-427-6060 two working days prior to the meeting so that appropriate arrangements can be made. . NUMBER ITEM ACTION TAKEN 1. Call to Order 2. Invocation - Mayor Pro Tern Whitson 3. Pledge - Mayor Pro Tern Whitson 4. GN 2005-051 Election of Mayor Pro Tern 5. Special Presentations Proclamations Golightly's Gallery Celebrating 20th Anniversary 2005 Motorcycle Safety and Awareness Month - Gene O'Bannon Yard of the Month Presentation 6. Citizens Presentation . OS/23/05 City Council Agenda Page 2 of 3 . NUMBER ITEM ACTION TAKEN 7. Removal of Item(s) from the Consent Agenda 8. Consent a. Minutes of the May 09, 2005 Council Agenda Meeting b. Minutes of the May 17, 2005 Special Council Meeting Approve Investment Strategy and Investment 9. GN 2005-052 Policy Update - Resolution No. 2005-043 Appoint Members to the Youth Advisory 10. GN 2005-053 Committee Approve Ordinance Abandoning & Closing 11. GN 2005-054 Cardinal Lane between State Highway 26 & Walker Boulevard - Ordinance No. 2835 Approve Participation Agreement with Tarrant 12. GN 2005-055 County for the Community Development Block Grant Program - Resolution No. 2005-045 Action on Any Item Discussed in Executive 13. Session listed on Pre-Council AQenda 14. Information and Reports - Councilwoman Johnson 15. Adjournment . . POSTED''''' - '-1rJt!/t ,M¡ ~t?6 Da~ 10: 'Y 7 hrt/ Time OS/23/05 City Council Agenda Page 3 of 3 By ~ïzY INFORMAL REPORT TO MAYOR AND CITY COUNCIL No. IR 2005-064 II ~-~-~ --~ " v Date: Subject: May 23, 2005 Discuss Investment Strategy and Investment Policy Update The Public Funds Investment Act ("PFIA") requires that the City Council review and adopt the City's Investment Strategy and Investment Policy annually. Occasional legislative changes in the PFIA, as well as changes in the economic environment affecting investment decisions, require revisions to the Investment Strategy Statements and Investment Policy. Several revisions have been made to these investment documents to maintain compliance with the PFIA, respond to economic conditions, and improve and update general procedures. The Investment Committee presented the recommended changes to the Investment Strategy Statements and Investment Policy in a previous IR to Council on May 13, 2005. I will give a brief presentation of these changes at the May 23rd Pre Council meeting. Overall, the revised Investment Strategy Statements and Investment Policy are designed in a manner responsive to the public trust and consistent with federal, state and local law. This also helps to meet Council Goal 4: Financially Responsible City Government. Recommendation for adoption of the revised City of North Richland Hills Investment Strategy Statements and Investment Policy will be on the Council agenda May 23, 2005. Respectfully submitted, ~'1J I~ Larry Koonce . ¡.^lL/ Director of Finance ISSUED BY THE CITY MANAGER NORTH RICHLAND HILLS, TEXAS . CITY OF NORTH RICHLAND HILLS INVESTMENT STRA TEGY STATEMENT . Approved: May 23, 2005 . . . . PREFACE It is the policy of the City of North Richland Hills that, giving due regard to the safety and risk of investment, all available funds shall be invested in conformance with State and Federal Regulations, applicable Bond Resolution requirements, adopted Investment Policy and adopted Investment Strategy. In accordance with the Public Funds Investment Act (Texas Government Code Art. 2256), the City of North Richland Hills' investment strategies shall address the following priorities (in order of importance): · Understanding the suitability of the investment to the financial requirements of the City, · Preservation and safety of principal, · Liquidity, · Marketability of the investment prior to maturity, · Diversification of the investment portfolio, and . Yield. Effective investment strategy development coordinates the primary objectives of the City of North Richland Hills' Investment Policy and cash management procedures to enhance interest earnings and reduce investment risk. Aggressive cash management will increase the available "investment period" and subsequently interest earnings. Maturity selections shall be based on cash flow and market conditions to take advantage of various interest rate cycles. The City's investment portfolio shall be designed and managed in a manner responsive to the public trust and consistent with the Investment Policy. Each major fund type has varying cash flow requirements and liquidity needs. Therefore specific strategies shall be implemented considering the fund's unique requirements. The City's Funds shall be analyzed and invested according to the following major fund types: I. Operating Funds II. Capital Improvement Funds III. Debt Service Funds IV. General Fund Balance Reserve V. Revenue Bond Reserves 1 INVESTMENT STRATEGY . In order to minimize risk of loss due to interest rate fluctuations, investment maturities will not exceed the anticipated cash flow requirements of the funds. Investment guidelines by fund type are as follows: I. Operatina Funds The City of North Richland Hills Operating Funds are as follows: General Fund Special Revenue Funds Special Investigation Fund Drainage Utility Fund Crime Control and Prevention District Fund Promotional Fund Economic Development Fund Donations Fund Parks and Recreation Facilities Development Fund Enterprise Funds Utility Fund Aquatic Park Fund Golf Course Fund . Internal Service Funds Building Services Fund Equipment Services Fund Self-Insurance Fund Information Services Fund Capital Proiects Funds General CIP Fund Street Maintenance Fund Sidewalk Maintenance Fund Component Units Tax Increment Financing District 1 (TIF #1) Tax Increment Financing District 2 (TIF #2) 2 . . . . Suitability. Any investment eligible in the Investment Policy is suitable for the Operating Funds. Safety of Principal - All investments shall be high quality securities with no perceived default risk. The maximum shall be limited to investments. anaging the weighted average days to maturity for the operating fund portfolio to less than 270 days and restricting the maximum allowable maturity to three years, the price volatility of the overall portfolio wìll be minimized. Marketability - Securities with active and efficient event of an unanticipated cash and offer price of a particular secondary market. arkets are necessary in the ds" between the bid type of less than 0.25% wìll define an efficient Liquidity - The Operating Funds require the greatest short-term liquidity of any of the fund types. Short-term constant dollar investment pools and money market mutual funds shall provide daily liquidity and may be utilized as a competitive yield alternative to fixed maturity investments. Diversification - Investment maturities shall be staggered throughout the fiscal year to provide cash flow of the City. Market cycle risk wìll be reduced by diversifying the structure throughout two years and diversification by market sector. Yield - Attaining a competitive market yield for comparable restrictions is the 3 II. Capital Improvement Funds . The City of North Richland Hills Capital Improvement Funds are comprised of the monies available from the sale of debt and other sources to finance capital improvement projects. Bond proceeds are segregated from operating funds on the general ledger and in investment accounts for arbitrage compliance purposes. Capital Improvement Funds include all funding for the design and construction of capital projects, including streets, drainage facilities, utility adjustments, park improvements, and municipal building as well as the acquisition of capital assets. Suitability - Any investment eligible in the Investment Policy is suitable for Capital Improvement Funds. Safety of Principal - All investments shall be high quality securities with no perceived default risk. The maximum allowable investment in commercial paper shall be limited to 10% of total' Fund investments. Market price fluctuations wìll occur. By managing Capital Improvement accounts in anticipation of cash flow requirements, the impact of market risk for the portfolio will be minimized. Marketability - Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. His between the bid and offer price of a particular security type of less than O. will define an efficient secondary market. Liquidity - The City's funds used for construction and capital improvement programs have . reasonably predictable draw down schedules. Therefore, investment maturities shall generally follow the anticipated cash flow requirements. Investment pools and money market mutual funds shall provide readily available funds generally equal to one month's anticipated cash flow needs, or a competitive alternative for short-term fixed maturity investments. A singular repurchase agreement may be utilized if disbursements are allowed in the amount necessary to expenditure request. This investment structure is commonly referred to as a Flexible hase Agreement. Diversification - Market conditions and arbitrage . ns influence the attractiveness of staggering the maturity of fixed rate in proceeds and other construction and capital improvement funds. With bond proceeds, if investment rates exceed the applicable arbitrage yield, the City is best served by locking in most investments. If the arbitrage yield can not be exceeded, then current market conditions will determine the attractiveness of diversifying maturities or investing larger amounts for a shorter period. At no time will the anticipated expenditure schedule be exceeded in an attempt to increase yield with any City funds. Yield - Achieving a positive spread to the applicable 4 . . . . III. Debt Service Funds The City's Debt Service funds include the General Debt Service Fund and the Sales Tax Revenue Debt Service Fund. The General Debt Service Fund is funded from ad valorem tax collections and transfers funds. The Sales Tax Revenue Debt Service Fund is funded solely from from the Park and Recreation Facilities Development Fund. Suitability - Any investment listed as eligible in the Investment Policy is suitable for the Debt Service Funds. Safety of Principal - All investments shall be high quality securities with no perceived default risk. The maximum allowable investment in cial paper shall be limited to 10% of total Debt Service Fund investments. Marke s will however occur. By limiting the Debt Service Funds Portfolio maturity dates to the next scheduled debt service payment, the market risk of the overall portfolio will be minimized. Marketability - Securities with active and efficient secondary markets are not necessary as the event of an unanticipated cash requirement is not probable. Liquidity - Debt service funds have predictable payment schedules. Therefore, investment maturities shall Investment pools and money market mutual funds may provide a competitive yield alternative for time deposits and short-term fixed maturity investments. A singular repurchase agreement may be utilized if disbursements are allowed in the amou s re request This investment structure is commonly to as a FI epurchase Agreement Diversification - Market conditions influence the attractiveness offul/y extending maturities to the next unfunded payment date. Generally, if investment rates are trending down, the City is best served by locking in most investments. If interest rates are flat or trending up, then current market conditions will determine the attractiveness of extending maturity or investing in shorter term alternatives. At no time shall the debt service schedule be exceeded in an attempt to bolster yield. Yield - Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. 5 IV. General Fund Balance Reserve . The City's objective regarding the General Fund Balance is to maintain a sufficient fund balance to operate the City for a period of sixty days or 15% of the following year's budgeted expenditures. The amount of funds to be invested in non-liquid other-than- overnight investments shall be limited to not more than 50% of this amount of the General Fund Balance. Suitability - Any investment eligible in the Investment Policy is suitable for General Fund Balance Reserves. Safety of Principal - Generally, the investment quality of all securities allowed as investments in the Operating Funds will be allowable in the General Fund Balance Reserve. All investments shall be high quality securities with no perceived default risk. The maximum allowable investment in commercial paper shall be limited to 10% of total General Fund Balance Reserve investments. Market price fluctuations will occur. Under no circumstance shall any investment from this portfolio cause the combined portfolio's weighted average maturity to exceed the maximum allowed by the Investment Policy. The maximum allowable maturity is restricted to three years. Marketability - Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Historical market "spreads" between the bid and offer price of a particular security type of less than 0.25% will define an efficient secondary market. liquidity - The Fund Balance Reserve requires the liquidity necessary to cover the City's expenditures in the event of a cash shortfall. Short-term constant dollar investment pools and money market mutual funds shall provide daily liquidity and may be utilized as a competitive yield alternative to time deposits and fixed maturity investments. . Diversification - Maturing investments shall be reinvested within the desired maturity to provide cash flow in the event that cash is needed for the operating needs of the City. Market cycle risk will be reduced by diversifying the appropriate maturity structure throughout three years and diversification by market sector. Yield - Attaining a competitive market yield for comparable security-types and portfolio restrictions is the 6 . . v. Revenue Bond Reserves Debt service reserves are required by Service Reserve portfolio shall be requirements. covenants for a particular bond issues. A Debt hed to better comply with bond covenant Suitability - Any investment eligible in the Investment Policy is suitable for Debt Service Fund Reserves. Safety of Principal - Gen quality of all securities allowed as investments in the Operating in the Debt Service Fund Reserve. All investments shall be high qu perceived risk. The maximum allowable investment in commercial paper shall be limited to of total Revenue Bond Reserve investments. Market price fluctuations will occur. Under no circumstance shall any investment from this portfolio cause the combined portfolio's weighted average maturity to exceed the maximum allowed by the Investment Policy. The maximum allowable maturity is restricted to three years. Marketability - Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement Historical market "spreads" between the bid and offer price of a particular security 0.25% will define an efficient secondary market By utilizing the yield income securities, maximum yield should be attained while meeting cash requirements. . Liquidity - The Debt Service Reserve Funds require the amount of liquidity necessary to convert securities into cash if needed for payment of debts on schedule. Short-term constant dollar investment pools and money market mutual funds shall provide liquidity and may be utilized as a competitive yield alternative to fixed maturity investments. Diversification - Market cycle risk will be structure throughout three years and by diversifying the appropriate maturity by market sector. Yield - Attaining a competitive market yield for restrictions is the desired objective. arable security-types and portfolio . 7 . CITY OF NORTH RICHLAND HILLS INVESTMENT POLICY May 23, 2005 . . - . TABLE OF CONTENTS Preface Page I. Introduction and Objectives 1 II. Scope 1 III. Delegation and Restriction of Investment Authority 2 IV. Investment Committee 2 V. Investments 3 A Authorized 4 B. Unauthorized 6 VI. Diversification 6 A Securities Dealers and Banks 6 B. Investment Type 7 . VII. Safekeeping 8 VIII. Collateral izati on 8 IX. Investment Procedures 10 A Approval of Broker/Dealers 11 B. Investment Transactions 11 C. Investment Reporting 12 D. Marking to Market 12 E. Training 12 X. Prudence 13 XI. Ethics and Conflicts of Interest 13 XII. Arbitrage 14 XIII. Management and Internal Controls 15 XIV. Depositories 15 XV. Investment Policy Adoption 16 . - APPENDICES . Page A. City of North Richland Hills Ordinance 2079 17 B. Investment Bid Form, Security Information Worksheet, and Broker/Dealer Rotation Procedures 19 C. Broker/Dealer Questionnaire 23 D. Authorized Securities Dealers 30 E. Primary Dealers 31 F. TBMA Master Repurchase Agreement 32 G. Public Funds Investment Act of 1997 44 H. Interlocal Agreements 65 I. Glossary 75 . . . . . - PREFACE "A public office is a public trust." Charles Sumner, 1872 If a public office is a public trust, then the trust must be administered properly. Public funds are acquired by governments largely through involuntary payments, particularly through taxation. In a modern democratic society, public officials are obligated to manage these funds in a disciplined manner. In most cases, laws govern the investment process. Laws alone however cannot compel public officials to a series of actions that assure the public's best interests. The actions of public officials responsible for investing public funds must be guided by knowledge, skills, systems, policies, procedures and confidence that can be described only as professional discipline. It is the policy of the City of North Richland Hills that, giving due regard to safety and risk of investments, all available funds shall be invested in conformance with these legal and administrative guidelines, and, to the maximum extent possible, at the highest rates obtainable at the time of the investment. Effective cash management is recognized as essential to good fiscal management. An aggressive cash management and investment policy will be pursued to take advantage of investment interest as a viable and material revenue to all operating and capital funds. Earnings from investments will be used in a manner that will best serve the interest of the City of North Rich/and Hills. The City's portfolio shall be designed and managed in a manner responsive to the public trust and consistent with state and /ocallaw. . NRH . . . . . I. INTRODUCTION AND OBJECTIVES The purpose of this document is to set forth the specific investment policy and strategy guidelines for the City of North Richland Hills. All investment activity shall be consistent with state law as defined in Government Code 10 (Chapter 2256), known as the Public Funds Investment Act (the Act) and local law and shall be made in accordance with the following objectives in order of priority: - security of investments and City funds - preservation of capital and protection of principal maintenance of sufficient liquidity to meet operating needs diversification of investments to avoid unreasonable risks public trust from prudent investment activities optimization of the portfolio's yield within the City's investment risk constraints The City is required under the Public Funds Investment Act, Section 5, to adopt a formal written Investment Policy. This policy is to be adopted annually to meet the requirements of the Act, and has been revised periodically to comply with updated state requirements. Cash management is the process of managing monies in order in ensure maximum cash availability and maximum yield on short-term investments of idle cash. An aggressive cash management program and investment policy will be pursued by the Investment Officer to take advantage of investment interest as a viable and material revenue to all operating and capital funds. The City's portfolio shall be designed and managed in a manner responsive to the public trust. Earnings from investments will be used in a manner that will best serve the interests of the City of North Richland Hills.:. II. SCOPE This Investment Policy applies to all financial assets of the City of North Richland Hills in all current funds, any funds to be created in the future, and any other funds held in custody by the City, unless expressly prohibited by law or unless it is in contravention of any depository contract between the City and its depository bank. These funds are accounted for in the City's Comprehensive Annual Financial Report and include: General Fund Special Investigation Fund Crime Control and Prevention District Fund Donations Fund Drainage Utility Fund Parks and Recreation Facilities Development Fund Utility Fund Golf Course Fund Aquatic Park Fund Self-Insurance Fund Building Services Fund Equipment Services Fund Information Services Fund 1 Promotional Fund Capital Improvements Funds Street Maintenance Fund Sidewalk Maintenance Fund Economic Development Fund Grant Fund Debt Service Funds Tax Increment Financing District NO.1 Tax Increment Financing District NO.2 . III. DELEGATION MENT AUTHORITY This Investment Policy and the outlining of investment practices and authorities is compiled in accordance with state legislation, Article 4413 (34c) which requires the adoption of rules governing investment and designation of an investment officer, and City Ordinance # 2079 which designates investment officers and provides prudent investment rules. Collateral requirements are created in accordance with the Public Funds Collateral Act (2257). Ultimate responsibílìty and authority for all investment transactions and cash management reside with the City Manager and the City's Director of Finance. The Director of Finance is also responsible for considering the quality and capability of staff. to be involved in investment management and procedures. The Director of Finance may delegate responsibifity for the day to day investment activities to other qualified staff members. These staff members will be termed Investment Officers of the City. One of these Investment Officers will be designated the Primary Investment Officer by the Director of Finance to conduct daily investment activity and prepare required investment reports. Investment Officers will not conduct any investment or banking activities involving City funds until a resolution or ordinance giving them authority to do so has been approved by the City Council of the City of North Richland Hills. All participants in the investment process shall seek to act responsibly as custodians of public trust IV. INVESTMENT COMMITTEE There shall be established an investment committee to assist in monitoring the performance and structure of the City's portfolio and approved brokers. Members of this committee shall include the Director of Finance (as Chairman) and the Accounting Manager as permanent members. Additional members, numbering no less than three, will be appointed at the discretion Investment Officer will report to and make recommendations to the Investment Committee, but will have no vote concerning investment policy or suitability of investments. Any matters presented to the committee requiring a vote of the members shall be passed or denied by a simple majority. . 2 . The Investment Officer or any other member of the committee shall have the power to call meetings of the committee. The committee shall meet no less than quarterly. The Investment Committee shall perform the following functions: A Approve the process of selecting authorized dealers, brokers, investment advisors, and safekeeping agents/custodians used by the City. B. general portfolio activity and performance for compliance to this end any changes or amendments to this policy to the City C. Approve the Investment Strategy document, as This document is required by State law to m the Investment Policy. The Investmen to the investment of all funds controlled by the City as Investment Policy. The strategy is intended to adapt to changes in market conditions. D. Advise the Investment Officer as to recommendations regarding investment strategy and portfolio performance. E. Approve the purchase of any securities with maturities over three (3) years. . F. Immediately notify the Investment Officer of any information brought to their attention that materially affects the portfolio or the marketability of any investments purchased in accordance with the Investment Policy. G. Oversee the activities of the persons designated to carry out investment transactions and inform the City Council of unaddressed concerns with the management of the City's investment portfolio. V. INVESTMENTS . 3 A Authorized Investments . Within the guidelines provided by the Public Funds Investment Act, Government Code 10, Chapter 2256, and further restrictions imposed by local ordinances, the following are acceptable investments of the City of North Richland Hills. 1. Obligations of the United States, its Agencies, and Instrumentalities. 2. Collateralized Mortgage Obligations (CMOs) directly issued by an agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States. 3. Direct Obligations of the State of Texas or its Agencies. 4. Obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality of not less than A or its equivalent by a nationally recognized investment rating firm. 5. Certificates of Deposit issued by state or national banks doing business in the State of Texas, guaranteed or insured by the Federal Deposit Insurance Corporation in or its successor, or secured 1 through 4 above, and that have a market value of than the principal amount of the certificates. 6. Fully Collateralized Repurchase Agreements that are structured in compliance with the Public Funds Investment Act. A flexible repurchase agreement can be utilized for the investment of bond proceeds to meet projected cash flow expenditures. Repurchase agreements must be purchased through a primary government securities dealer, as defined by the Federal Reserve, or financial institutions doing business in this state (see Appendix E for a current list of Primary Dealers). Repurchase Agreements will only be executed with counterparties that have signed a TBMA Tri-Party Repurchase Agreement with the City. A sample TBMA Tri-Party Repurchase Agreement is incorporated in this investment policy as Appendix F. . . 4 . 9. Mutual Funds a. No-load Money Market Mutual Funds are acceptable investments provided they are registered and regulated by the Securities and Exchange Commission, have a dolla stated average maturity of 90 days or less, and maintain a stable net value of $1 per share. b. No-load Mutual Funds are acceptable investments provided they are regulated by the Securities and Exchange Commission, have a dollar- weighted average stated maturity of 90 days or less, maintain a stable net asset value of $1 per share, are continuously rated AM by at least one agency, and conform to all requirements of investment pools to receive and invest for the complete requirements for authorized Mutual Funds under the Act) . 10. Investment Pools a. Investment Pools must provide the Investment Officer with an offering statement that contains specific and detailed information required by the Act Additionally, the pool should provide transaction confirmations, detailed monthly transaction summaries, and monthly performance reports to the Investment Officer. The specific requirements for authorized investment pools are detailed in the Public Funds Investment Act, Subchapter A, Section 2256.016 (See Appendix G, pp. 47 for specifics). Authorized pools must maintain a credit rating of no lower than investment grade by at least one nationally recognized rating service. Investment Pools created to operate as a money market mutual fund must mark investments to market daily and maintain a net asset value of $1 per share with the market value per share between .995 and 1.005. b. In order to participate in an investment pool, the City Council must approve by resolution or ordinance a Participation Agreement or Interlocal Agreement to be executed with the State or Interlocal authority responsible for the investment pool. This will specify the City's authorized representatives and fund transfers and information reports. (See Appendix H for approved interlocal agreements). . 5 B. Unauthorized Investments . The following investment instruments are specifically not authorized: 1. Obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal (CMO-derived Interest Only Strips). 2. Obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security collateral and bears no interest (CMO- derived Principal Only Strips). 3. Collateralized Mortgage Obligations that have a stated final maturity date of greater than ten (10) years. 4. Collateralized Mortgage Obligations whose interest rates are determined by an index that adjusts opposite to the changes in a market index (Inverse Floaters). 5. Certificates of Deposit and other investments issued by Savings and Loans. 6. Share Certificates and other investments issued by Credit Unions. 7. Guaranteed Investment Contracts. . VI. DIVERSIFICATION A. Securities Dealers and Banks Diversification of funds and investments must be accompanied by competitive bidding of all investments to assure diversification among securities dealers. Diversification is necessary to reduce the portfolio's credit and market risks, while helping the portfolio attain a market rate of return. The City shall seek to conduct its investment transactions with several competing, reputable investment security dealers and brokers to protect principal while achieving full advantage of the market To assure diversification of financial institutions, business involving two party transactions (Le. repurchase agreements) with anyone investment broker should be limited to thirty percent (30%) of the par value of the total portfolio for any reporting period. In this way, a bankruptcy, receivership or legal action would not immobilize the City's ability to meet payroll, operating, or other expenses. It is the policy of the City to diversify its investment portfolio so that reliance on any one issuer or broker will not place an undue financial burden on the City. . 6 . B. Investment Type Texas statutes authorize depositories and define allowable investment programs for municipal governments. The Texas City Depository Act (Article 2559-2599a, V.AT.C.S.) and the Public Funds Investment Act (Article 842a-2, V.AT.C.S.) are the primary legal influences upon City investment practices. It is the policy of the City to purchase only securities authorized by both the Public Funds Investment Act and Section VI. A of the City's Investment Policy. Market risk shall be minimized by diversification of investment types. The following limits, by instrument, are established for the City's total portfolio: (1) Repurchase Agreements 50% (2) Certificates of Deposit 30% (3) U.S. Treasury Notes/Bonds/Bills 80% (4) U.S. Agencies and Instrumentalities 75% (5) Commercial paper 10% . (7) State and local Bonds and Notes 20% (8) Money Market Mutual Funds 80% (9) Mutual Funds 15% (10) Investment Pools 100% The maximum maturity of any given investment in the portfolio shall not exceed a final, stated maturity of 5 years from the date of purchase. Reductions in the size of the portfolio due to cash outflows may cause an investment type to exceed the maximum percentage allowed for that investment type. In such situations, securities will be allowable levels only if no loss will be realized from the sale. If a loss will be realized, then the investment may be held to maturity. . 7 To allow efficient and effective placement of proceeds from bond sales, a singular repurchase agreement can be utilized for the investment of bond proceeds, which exceeds the diversification limits. . VII. SAFEKEEPING The laws of the State of Texas and prudent treasury management require that all purchased securities shall be held in safekeeping by either the City, a City account in a third party financial institution, or the City's safekeeping account in its designated depository bank. All securities owned by the City shall be held by a third party safekeeping agent, or in the Federal Reserve Bank, except for certificates of deposit that have FDIC insurance provided. For certificates of deposit with FDIC insurance, the City will hold the deposit receipt. Transfers of securities in safekeeping shall be processed with written confirmations. The confirmation will be used for documentation and retention purposes. One of the City's designated investment officers must approve release of collateral prior to its removal from the safekeeping account. It is the policy of the City that all securities rendered for payment will be sent "delivery versus payment" (DVP) through the Federal Reserve System. By so doing, City funds are not released until the City has received, through the Federal Reserve wire, the . securities purchased. VIII. COLLATERALlZATION Consistent with the requirements of State law, it is the policy of the City to require full collateralization of all City investments other than obligations of the United States and its agencies and instrumentalities. Collateral on investments shall be maintained by an appropriate third party safekeeping agent, as designated by the City. This policy also applies to any deposits held in an approved depository in excess of the amount protected by FDIC insurance. . 8 . Certificates of deposit plus accrued interest up to $100,000 per bank do not need to be collateralized pursuant to . nce is provided. Certificates of Deposit in exce interest must be secured by approved collateral for the amount in excess of FDIC insurance. . Collateral is valued at current market plus interest accrued the date of the valuation. Collateral shall be marked to market no less than to determine if adequate collateralization is being maintained. Repurchase agreement collateral must be maintained at the following levels, with respect to repurchase agreement par value plus accrued interest: Maturity of U.S. Treasury Other Collateral Securities Securities 1 year or less 101% 101% 1 year to 5 years 102% 102% Over 5 years 103% 104% Any collateral with a maturity of over 5 years must be approved by the investment committee in writing before the transaction is initiated. . 9 Collateralized investments often require substitution of collateral. Any broker or financial institution requesting substitution must contact the Primary Investment Officer, or in his absence any other authorized Investment Officer, for approval and settlement. The substituted collateral's value will be calculated and the substitution approved if its value is equal to or greater than the original collateralization level. The Director of Finance, or an authorized designee, must give immediate notification of the decision to the bank or third party holding the collateral. Substitution is allowable for all transactions, but should be limited, if possible, to minimize potential administrative problems and transfer expense. The Director of Finance may limit substitution and assess appropriate fees if substitution becomes excessive or abusive. Collateral shall be audited at least annually by the City's independent audit firm, and may be audited by the City at any time during normal business hours of the safekeeping party. The financial institutions with whom the City invests and/or maintains other deposits shall provide, as requested by the City, a listing of the City's certificates of deposit and other deposits at the institution and a listing of collateral pledged to the City marked to current market prices. The listing shall include total pledged securities with the following information: Name Type/description CUSIP Par value Current market value Maturity date Moody's or Standard & Poor's rating (both if available) Under state law, Article 2560, Section (d) (V.AT.C.S.) substitution and release of collateral must be approved by the governing body. City of North Richland Hills Ordinance # 2079 Section (3) delegates the investment officers' overall responsibilities to ensure that investment objectives are accomplished, and therefore, the authority to release and substitute collateral as deemed necessary and reasonable within the guidelines of this policy. IX. INVESTMENT PROCEDURES risk-return relationship will be controlled through the investment parameters, operating requirements, and guiding policies of the Council. Safety of principal is the foremost 10 . . . . objective of this investment policy. The City will practice competitive bidding when purch the highest rate of return for the most financially it is portfolio of the City. all investments to guarantee right is reserved to reject the to the investment strategy or A. Approval of Broker/Dealers It is the policy of the City to securities only from those institutions on the City's approved list and banks. All securities dealers must be registered and certified with the Texas State Securities Commission, National Association of Security Dealers (NASD) and Securities and Exchange Commission (SEC). . questionnaire, sign a certification Investment Policy, be approved by the to the . oved broker/dealers before any is included in Appendix "C." A current list is included in Appendix "D." be revised by the Investment Committee as the City's investment investment committee shall also be able to limit the number of authorized securities . the City as required. The Investment Committee shall no less than annually, review, revise, and adopt a list of qualified brokers that are authorized to engage in investment transactions with the City. An institution must c stating that they have Investment Committee, All banks authorized to sell securities to the City will be Federal Reserve member banks and must be approved by the Investment Committee. No investments will be placed with Savings and loan institutions or Credit Unions. B. Investment Transactions All purchases and sales of securities must be on a competitive bid basis. A minimum of three bids must be obtained to ensure a competitive price for the transaction. All investment transactions the Director of Finance, or, in their absence, an authorized Investment Officer. Appendix "B" contains the Investment Bid Form rity Information Worksheet necessary to provide documentation for all in ent transactions. . 11 All securities purchased shall require delivery on the settlement date to the City or its third party accounts on a DVP (delivery versus payment) basis. By so doing, City funds are not released until the City has received, through the Federal Reserve wire, the securities purchased. . C. Investment Reporting The Public Funds Investment Act of 1997 the preparation of quarterly management reports Investment transactions of the City to be presented to the ce # 2079 section (4) also requires an annual report be presented to the City Council. The Primary Investment Officer will prepare the required quarterly and annual reports for evaluating investment portfolio performance. The reports will be approved and signed by all members of the Investment Committee. The reports will include the following information, as required by the Public Funds Investment Act: - a summary narrative of investment activity and portfolio performance over the period - size and composition of portfolio at the beginning and end of the reporting period - list all investments according to the fund they were purchased from - beginning and ending book and market for all securities held - beginning and ending book and market for the total portfolio - all additions and changes to the market value during the period - state the compliance of the portfolio to the investment policy and the Public . Funds Investment Act - yield - diversification of funds - total sales, maturities, and purchases - accrued interest - performance compared to an established benchmark These quarterly reports should be used along with the annual report to fully evaluate and explain market trends a of investment strategies to manage market fluctuations. The an won a fiscal year basis the results of the overall investment strategy. The quarterly reports will conform to GAAP and be reviewed annually by the City's independent auditor, with results reported to Council. . 12 . . . E. Training As required by the Act, all authorized Investment Officers must attend a training course that covers the requirements of the Act within one year of taking office or assuming duties. This training, provided by an independent source selected by the Investment Committee, will include discussion of investment controls, security risks, and market risks. An additional 1 0 hours of investment training is required every two years for investment officers. X. PRUDENCE The standard of prudence to be applied by the investment officer shall be the "prudent investor" rule, which states: "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 capital as well as the probable income to be derived." It should be noted that, in a diversified portfolio, occasional losses are inevitable and must be considered within the context of the overall portfolio's return. In determining whether an investment officer has exercised prudence with respect to an investment decision, the determination shall take into consideration the investment of all funds, or funds under the City's control, over which the investment officer had responsibility, rather than a consideration as to the prudence of a single investment; and whether the investment decision was consistent with the written investment policy ofthe City. The investment officer, acting in accordance with written procedures and exercising due diligence, shall not be held personally responsible for a specific security's credit risk or market price changes, provided that these deviations are reported in a timely manner and appropriate action is taken to control adverse developments. The City shall provide for the defense and indemnification of any investment officer or investment committee member who is made party to any suit or proceeding, other than by actions of the City, or against whom a claim is asserted by reasons of their actions taken within the scope of their service as investment officers or appointed members of the investment committee. Such indemnity shall extend to judgments, fines, and amounts paid in settlement, of any such claim, suit or proceeding, including any appeal thereof. This protection shall extend only to members who have acted in good faith and in a manner which they reasonably believe to be in, or not opposed to, the best interests of the City. 13 XL ETHICS AND CONFLICTS OF INTEREST . City staff involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair the ability to make impartial investment decisions. City staff should disclose to the City Manager any material financial investments in financial institutions that conduct business with the City and they shall further disclose positions that could be related to the performance of the City's portfolio. City staff shall subordinate their personal financial transactions to those of the City, particularly with regard to the timing of purchases and sales. An investment officer of the City who has a personal business relationship, as defined by the Public Funds Investment Act of 1997, Section 2256.005 (I), 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 of affinity or consanguinity to an individual seeking to sell an investment to the City shall file a statement disclosing that relationship. A disclosure statement required under this section must be filed with the Texas Ethics Commission and the governing body of the City. XII. ARBITRAGE The Tax Reform Act of 1986 provides limitations on the City's yield from investing tax- . exempt bond proceeds and debt service funds. These arbitrage rebate provisions require that the City compute earnings on investments from each issue of bonds on a periodic basis to determine if a rebate is required. To determine the City's arbitrage position, the city is required to calculate the actual yield earned on the investment of the funds and compare it to the yield that would have been earned if the funds had been invested at a rate equal to the yield on the bonds sold by the City. The rebate provisions state that periodically (not less than once every five years, and not later than sixty days after maturity of the bonds), the City is required to pay the U.S. Treasury a rebate of any excess earnings. These restrictions require extreme precision in the monitoring and record keeping of investments, particularly in computing yields to ensure compliance. Failure to comply can dictate that the bonds become taxable, retroactively from the date of issuance. The City's investment position relative to the arbitrage restrictions is to continue pursuing the maximum yield on applicable investments while ensuring the safety of capital and liquidity. It is a fiscally sound position to continue maximization of yield and to rebate excess earnings, if necessary. . 14 I ~ . XIII. . XIV. DEPOSITORIES The Texas City Depository Act, Article 2559 2566a, prescribes procedures for cities custody of city funds from any banking corporation, asso doing business within the city." This clause indicates that cities are not required to designate one central depository . The City of North Richland Hills will, through a request for proposals designate one or more banks as its primary dep . designed to maximize investment capabilities and minimize banking cost The depository designation does not limit investment activity to one financial institution. . 15 ~ The consideration the City of North Richland Hills will use to execute a banking services contract will include: . Obtaining competitive proposals on the City's depository specifications will be the responsibility of the Director of Finance. Selection of the depository shall be based on the institutions offering the most favorable terms and conditions for the handling of City funds (Article 2560, V.AT.C.S.) and the services available to the City. The maximum term for a depository contract under State law is five years. The City's . contract shall not exceed five years. An annual performance review will be conducted by the I needs be contracted for by the City outside the depository contract if approved by City il. If a depository does not meet the city's requirements in the banking services contract, the bank will be required to meet the requirements within six months or lose the depository contract. XV. INVESTMENT POLICY ADOPTION The investment policy shall be adopted by ordinance or resolution of the City Council. The policy shall be reviewed annually by the Investment Committee and the City Council. Any policy revisions that require enactment due to updates of applicable state or federal laws may be authorized by the City Manager. Any other significant revisions must be approved by the City Council. . 16 Appendix A . ORDINANCE NO 2079 AN ORDINANCE OF THE CITY OF NORTH RICHLAND HILLS, TEXAS PROVIDING FOR THE DESIGNATION OF INVESTMENT OFFICERS: PROVIDING FOR INVESTMENT RULES AND POLICIES: PROVIDING FOR MANAGEMENT REPORTS: REPEALING A PREVIOUS ORDINANCE: AND PROVIDING A SEVERABILITY CLAUSE Whereas, the City of North Richtand Hills acknowledges the high priority of providing the necessary guardianship of pUblic funds in the municipal sector; and Whereas, the City Council expressly intends to set high fiscal standards, delegate treasury and investment duties to appropriate officials. and to review the actual performance at regular intervals; and Whereas, the City Council hereby intends to implement investment requirements set forth in ¡ex. Rev. Civ. Stat. Ann., Art 4413 (34c) and 2256, NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CfTY OF NORTH RICHLAND HILLS, TEXAS. . Section 1. Investment Rules. That the following policies and guidelines be established as investment rules governing the investment of local funds: A. All City funds from various revenue sources shall be billed or requested as early as they are recognized, computed, and determined to be due to the City. B. Funds received by the City shalf be deposited into the depository bank at the end of each business day or as earty as practical operating circumstances will allow. C. All debts Owed by the City shall be paid as of the date they come due and not before unless approval is given by the City Manager. D. Based on cash forecasts, all monies not required immediately to pay obligations shall be invested in an income producing instrument or account. E. AU investment activities and procedures shall be governed by a written investment policy. The Investment Policy is attached to this ordinance. Revisions to the Investment Policy required by updates to state and federal laws may be authorized by the City Manager. Any other significant alterations to the Investment Policy must be approved by the City Council. . Section 2. Investment Objectives. The City's funds shall be invested in appropriate instruments In such a manner to ensure the safety of investments, retention of investment principal, maintenance of sufficient liquidity to cover operating needs. diversity of the portfolio. and maximization of yield. The preceding objectives are listed in order of priority. The City shall invest in instruments oroviding the highest rate of retum, as long as such investments do not conflict with the other priorities of the City's investment portfolio or statutes of this state regulating investments of City funds. 17 Appendix A Section 3. Desianated Officials. The City Council hereby designates the Investment Officers of the City to be the City Manager and Finance Director. The City Manager and Finance Director. will have the overall responsibility to ensure that investment objectives are accomplished and that the guidelines of the investment policy are followed. The Finance Director will designate staff members to administer the daily functions of managing the cash and investments of the City. These persons must be authorized as investment officers by a Resolution of the City Council before they are delegated any investment duties. . Section 4. Manaaement Recorts. At least quarterty the investment officers shall prepare a written report concerning the City's investment transactions for the preceding quarter. This report will describe in detail the investment position of the City at the end of each quarter. A report on investment activity for the fiscal year shall be presented as the report for the fourth quarter. The reports shall be signed by the City Manager, the Finance Director and alt other authorized investment officers and presented to the City Council. Section 5. Repeal of Previous Ordinances. Ordinance No. 2076 is hereby repealed. Section 6. Severabilitv. Provisions of this ordinance shalt be, and they are hereby, declared to be severable; and should any portion of it be declared to be invalid for any reason by a court of competent jurisdiction, such holding shall not affect the remaining portions thereof. PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLA.ND HILLS, TEXAS on this the 9th day of October, 1995. APPROVED: . ~'~7';t.(~d}j~ Tommy Brown ayor ATTEST: (/\ '\. /r.£-~~ 9fY Secretary /L.~ APPdOVE 5 TO. ~~RM AND LEGALITY: ! V/t " f Attðmey . 18 6~ » -I ?' ~ !" r-> :'" . -a ¡¡¡ 0 0 -a 0 Z -I ::¡ m m m ~ a t/'J !':Q 00 00 <: <: IU m () Sl ;:t1 ::5 ::5 00 0 0- õ' m m m -I m !XI ::¡ 0 0 0 3: §; ':"; !XI OJ ~ j; 00 m ':"; ::u m z -I 0 -I ;:t1 (') -I m " c ~ c » ....... m ;:t1 ;:t1 (") -I ::u ~ r- ~ D §: C 0 !'!) !TI c z :-:I (¡¡ m (') c:: ::u ~ ~ 2 ::u ~ I I I I I (') 0 c:: 1J 0 z I I I I I z -< <: ....¡ m :s: en -I 3: I I I I I m z . -< -I ¡j CD 5 " 0 ;:t1 3!: " c ;:t1 (') ~ ~ r- en !":" !11 f; (') m -0 ....¡ m o 8 x!puadd\f -- . Appendix B SECURITY INFORMATION WORKSHEET NAME OF SECURITY: CUSIP NUMBER: COUPON / DISC. RATE: YIELD TO MATURITY/CALL: MATURITY/CALL DATE: PAR VALUE: TRADE DATE: SETTLEMENT DATE: PRINCIPAL +ACCRUED INTEREST: PURCHASE PRICE $ SAFEKEEPING ACCOUNT: 259091 NAME OF BROKER: TIME OF TRADE: ENTERED BY: FAX TO: BANK OF AMERICA SAFEKEEPING PH # 1-800-657-9529 FAX # 704-386-0175 APPROVED BY: K:ACCl\INVESTMENTS\BROKER\SECURITIES \IVORKSHEET XLS FUND: 20 . . . . 3. 4. 5. 6. 7. . 8. . Appendix B Broker/Dealer Rotation Procedures 1. Open the broker rotation file located at K:\ACCT\lnvestments\Broker\broker rotation. 2. The file contains a macro to select the brokers randomly. A pop-up window will appear, select "Enable Macros". If you mistakenly click on "Disable Macros", the random selection command will not work. If that is the case, close the document and repeat the procedure. Once the document is displayed, left-click the black box in the upper left hand corner for the brokers to be selected. The top three brokers displayed will be contacted to participate in the bidding process. Run the random selection again if two or more numbers are repeated. After each investment transaction, the bids received are entered in the trading history spreadsheet. Perform the broker selection procedures after an investment transaction has been completed. The brokers that are selected will be contacted for the next investment transaction. Open the document K:\ACCT\lnvestments\Policy\FINANCE\lnvestment Policy, Strategy and Procedures 2005\bidform (investment bid form), fill in the brokers' information and use this bid form for the next investment transaction. 21 co ã; N ~ It) ;::: !!!? .... .... ~ .... ea Q) ~ <'> 0 ~ .... ¡¡:; ca >. It) ..c ~ ., ~ 0 It) ..... M .!Q :::I: It) 0) - c: N "'C CO ~ .... N .... It) ~ - It) ~ N ~ ~ .~ ~ 0 !:? :g~:g ~ ~ ÜÜÜ It) -"" ~ (/ C .... - -NM ~ EEB It) ~ è5 ~ Appendix B . E ü: 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 II) II) II) .91 cD ! II) :¡:; 11 II) :¡: 'C:: ¡¡¡ 'C: E ¡¡¡ ::J c:: ::J cD ::J iü 'C:: <.J '" <.J :t "§ <.J ::J ,2! cD <.J cD CI cD .s::: cD '13 <.J ~ ~ :t I: en cD en t: ü: en 0 c:: cD .s::: '13 cD ~ 0 ¡¡¡ ~ '" en '5. :; c: :.¡: c: II) c: C E '" '" '" z c: cD '" iü 0 c... ~ c:: :t u.. ü: r¡ w en '" ~ cD 0 ¡¡¡ 1ií 0 ~ E E .s::: ~ en '" c: "§ "§ cD ::i: S '" E :; ~ c... 0 ::J ð c... 0 cD 0 « () 0 ü: ü: ...., ::i: ::i: en ü5 en - N <'> "" It) co .... co 0> 0 ~ N <'> ~ ~ ~ II) "C cD cD "C "C E Ìij iii ¡=: :t - « 0 (¡¡ "C .c cD E 13 ::J cD Z ã) en ~ 0> E . .e "C iii ¡¡:; 0 0 N II) ~ ::J "C ~ e c... "C c: '" >- CI cD "§ èi5 .~ õ c... i: cD E ¡¡¡ cD > .5 ãí <.J c: '" c: ü: s. .~ õ 9: II) 1: cD E ¡¡¡ cD > c:: ¡:: () () :$ . ~ 22 . NRH Appendix C City of North Richland Hills Broker/Dealer Questionnaire and Certification 1. Name of firm 2. Local address National address 3. Local telephone number National telephone number 4. Primary representative/manager/partner -in-charge Name Name . Title Title Telephone # Telephone # 5. Is your firm a subsidiary of another firm? [ ] Yes [ ] No If yes, which firm? 6. Is firm a primary dealer in U.S. Government securities? [ ] Yes [ ] No If so, for how long has firm been a primary dealer? years 7. Is your firm an inventory dealer? [] Yes [] No Do you take a position in securities which you sell or buy? ] Yes [ ] No 8. What was your firm's total volume in U.S. Government and agency securities trading last year? Firm-wide $ Number of transactions Local office $ Number of transactions . 23 NRH Appendix C City of North Richland Hills Broker/Dealer Questionnaire . 9. Which instruments are offered regularly by your local desk? ] T-bills ] Treasury notes/bonds ] GNMAs ] FHLMCs [ ] BAs (domestic) [ ] Commercial paper [ ] Bank CDs [ ] S & L CDs Other Federal Agencies (please specify) Instrumentalities (please specify) 10. Identify all personnel who will be trading with or providing security quotes to North Richland Hills employees. Name Title Telephone # Primary Alternate Alternate . (Please attach resumes of the personnel listed above.) 11. Which of the above personnel have the City of North Richland Hills' investment policy? 12. Are the firm and the account representative registered with the Texas State Securities Commission? [] Yes [] No If yes, for how long? years Representative . 24 . NRH Appendix C City of North Richland Hills Broker/Dealer Questionnaire 13. Please indicate which agents of your firm's local offices are currently licensed, certified, or registered and by whom. Agent Licensed or registered by 14. Please identify firm's public sector clients in our geographical area who are most comparable to North Richland Hills. Entity Contact Person Telephone # Client . 15. Is firm a member of NASD? [ ] Yes [ ] No If not, why? 16. Please mark each regulatory agency by which firm is examined and/or to which firm is subject to agency rules and regulations: [ ] FDIC [ ] SEC [ ] Comptroller of currency [ ] NYSE [ ] Federal Reserve System Other regulatory or oversight agency: (Note: Multi-state firms need not include regulatory agencies which do not have jurisdiction over firm's activities in the State of Texas) 17. Have you obtained all required licenses to operate as a broker/dealer in the State of Texas? [] Yes [] No . 25 NRH Appendix C City of North Richland Hills Broker/Dealer Questionnaire . 18. To the best of your knowledge, has there been any "material" litigation, arbitration, or regulatory proceeding, either pending, adjudicated or settled, to which the firm has been subject within the last five (5) years that involved issues concerning the suitability of the sale or purchase of securities to an institutional client? If so, please describe each such matter briefly. For purposes of this question, proceedings are "material" if your independent accountant applying generally accepted accounting principles determines that such proceedings required disclosure in the firm's financial statements. 19. Have any of the employees listed in item ten (10) ever had sanctions imposed due to any of the activities noted in item eighteen (18)? Explain the outcome, case, and/or case citation in an attached explanation. . 20. Please provide samples of research reports that your firm regularly provides to public-sector clients. 21. Explain the firm's normal custody and delivery process. Who audits these fiduciary systems? What reports, transactions, confirmations, and paper trail will North Richland Hills receive? 22. Enclose a complete schedule of fees and charges for various transactions. . 26 . NRH Appendix C City of North Richland Hills Broker/Dealer Questionnaire 23. Provide firm's most recent certified, audited financial statements. In addition, for those dealers preparing and submitting financial statements to the following organizations, provide publicly available financial documents filed with these agencies for the most recent reporting period. National Association of Securities Dealers Securities and Exchange Commission New York Stock Exchange Federal Deposit Insurance Corporation 24. Has firm consistently complied with the Federal Reserve Bank's capital adequacy guidelines? As of this date, does firm comply with the guidelines? Has firm's capital position ever fallen short? By what factor (1.5X, 2X, etc.) does firm presently exceed the capital adequacy guidelines? Include certified documentation of firm's capital adequacy as measured by the Federal Reserve standards. . 25. Describe the capital line and trading limits that support/limit the office that would conduct business with North Richland Hills. 26. If firm is not a bank, provide the following information regarding the firm's principal banking relationship. Bank Name Address Contact Length of relationship Telephone # . 27 NRH Appendix C City of North Richland Hills Broker/Dealer Questionnaire . 27. Does firm participate in the SIPC insurance program? [ ] Yes [ ] No If not, please explain why. 28. What portfolio information do you require from your clients? 29. How many and what per~entage of your transactions failed last month? Last year? . 30. Describe the precautions taken by firm to protect the interests of the public when dealing with governmental agencies as investors. . 28 . . NI~H Appendix C City of North Richland Hills Broker/Dealer Certification - CERTIFICATION - This certification is executed on behalf of the City of North Richland Hills (the Investor) and (the Business Organization) pursuant to the Public Funds Investment Act, Chapter 2256, Texas Government Code (the Act) in connection with investment transactions conducted between the Investor and the Business Organization. The undersigned Qualified Representative(s) of the Business Organization hereby certifies on behalf of the Business Organization that: 1. The undersigned is a Qualified Representative of the Business Organization offering to enter an investment transaction with the Investor as such terms are used in the Public Funds Investment Act, Chapter 2256, Texas Government Code, and 2. The Qualified Representative of the Business Organization has received and reviewed the Investment Policy furnished by the Investor, and . 3. The Qualified Representative of the Business Organization has implemented reasonable procedures and controls in an effort to preclude investment transactions conducted between the Business Organization and the Investor that are not authorized by the Investor's investment policy, except to the extent that this authorization is dependent on an analysis of the Investor's entire portfolio or requires an interpretation of subjective standards. Qualified Representative of the Business Organization Signature: Name: Title: Date: . 29 - Appendix D . City of North Richland Hills Approved Securities Dealers As of Company First Empire, Inc. Morgan Keegan & Company, Inc. APS Financial Corp. Duncan-Williams, Inc. Coastal Securities Seattle-Northwest Securities Corp. Great Pacific Securities Southwest Securities, Inc. Multi-Bank Securities, Inc. Wells Fargo Brokerage Services, LLC . Bankina Institutions First Simmons National Bank Investment Pools TexPool LOGIC MBIA CLASS TexSTAR . 30 Appendix E . PRIMARY SECURITIES DEALERS No primary dealers currently approved. This page to be inserted when received. . . 31 - Master Repurchase Agreement . September 1996 Version Dated as of Between: and 1. Applicability From time to time the parties hereto may enter into transactions in which one party ("Seller") agrees to transfer to the other ("Buyer") securities or other assets ("Securities") against the transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such Securities at a date certain or on demand. against the transfer of funds by Seller, Each such transaction shall be referred to herein as a "Transaction" and, unless otherwise agreed in writing, shall be governed by this Agreement, including any supplemental terms or conditions contained in Annex I hereto and in any other annexes identif1ed herein or therein as applicable hereunder. . 2. Definitions (a) "Act of Insolvency", with respect to any party, (i) the commencement by such party as debtor of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, moratori- um, dissolution, delinquency or similar law. or such party seeking the appointment or election of a receiver, conservator, trustee, custodian or similar omcial for such party or any substantial part of its property, or the convening of any meeting of creditors for purposes of commencing any such case or proceeding or seeking such an appointment or election, (ii) the commence- ment of any such case or proceeding against such party, or another seeking such an appoint- ment or election, or the filing against a party of an application for a protective decree under the provisions of the Securities Investor Protection Act of 1970. which (A) is consented to or not timely contested by such party, (B) results in the entry of an order for relief, such an appoint- ment or eJection, the issuance of such a protective decree or the entry of an order having a sim- ilar effect. or (C) is not dismissed within 15 days, (iii) the making by such parry of a general assignment for the benefit of creditors, or (iv) the admission in writing by such party of such party's inability to pay such party's debts as they become due; (b) "Additional Purchased Securities", Securities provided by SeUer to Buyer pursuant to Paragraph 4 (a) hereof; . 32 . . . (c) "Buyer's Margin Amount", with respect to any Transaction as of any date, the amount obtained by application of the Buyer's Margin Percentage to the Repurchase Price for such Transaction as of such date: (d) "Buyer's Margin Percentage". with respect to any Transaction as of any date, a percentage (which may be equal to the Seller's Margin Percentage) agreed to by Buyer and Seller or, in the absence of any such agreement, the percentage obtained by dividing the Market Value of the Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for such Transaction: (e) "Confirmation", the meaning specified in Paragraph 3(b) hereof: (f) "Income", with respect to any Security at any time, any principal thereof and all interest, dividends or other distributions thereon: (g) "Margin Deficit", the meaning specified in Paragraph 4(a) hereof: (h) "Margin Excess", the meaning specified in Paragraph 4(b) hereof; (i) "Margin Notice Deadline", the time agreed to by the parties in the relevant Confirmation, Annex I hereto or otherwise as the deadline for giving notice requiring same-day satisfac- tion of margin maintenance obligations as provided in Paragraph 4 hereof (or, in the absence of any such agreement, the deadline for such purposes estab1ished in accordance with market practice): Q) "Market Value", with respect to any Securities as of any date, the price for such Securities on such date obtained from a generally recognized source agreed to by the parties or the most recent closing bid quotation from such a source, plus accrued Income to the extent not included therein (other than any Income credited or transferred to, or applied to the obligations of, Seller pursuant to Paragraph 5 hereof) as of such date (unless contrary to market practice for such Securities); (k) "Price Differentia\", with respect to any Transaction as of any date, the aggregate amount obtained by daily application of the Pricing Rate for such Transaction to the Purchase Price for such Transaction on a 360 day per year basis for the actual number of days dur- ing the period commencing on (and including) the Purchase Date for such Transaction and ending on (but excluding) the date of determination (reduced by any amount of such Price DifIerential previously paid by Seller to Buyer with respect to such Transaction) : 0) "Pricing Rate", the per annum percentage rate for determination of the Price Differential; (In) "Prime Rate", the prime rate of US commercial banks as published in The Wall Street Journal (or. if more than one such rate is published, the average of such rates); (n) "Purchase Date", the date on which Purchased Securities are to be transferred by Seller to Buyer: 2 . September 1996 . Master I~epurchase Agreement 33 (0) "Purchase Price", (i) on the Purchase Date, the price at which Purchased Securities are transferred by Seller to Buyer, and (ii) thereafter, except where Buyer and Seller agree oth- erwise. such price increased by the amount of any cash transferred by Buyer to Seller pur- suant to Paragraph 4 (b) hereof and decreased by the amount of any cash transferred by Seller to Buyer pursuant to Paragraph 4(a) hereof or applied to reduce Seller's obligations under clause (ii) of Paragraph 5 hereof; . (p) "Purchased Securities", the Securities transferred by Seller to Buyer in a Transaction here- under. and any Securities substituted therefor in accordance with Paragraph 9 hereof. The term "Purchased Securities" with respect to any Transaction at any time also shall include Additional Purchased Securities delivered pursuant to Paragraph 4 (a) hereof and shall exclude Securities returned pursuant to Paragraph 4(b) hereof; (q) "Repurchase Date", the date on which Seller is to repurchase the Purchased Securities from Buyer, including any date determined by application of the provisions of Paragraph 3(c) or 11 hereof; (r) "Repurchase Price", the price at which Purchased Securities are to be transferred from Buyer to Seller upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the Price Differential as of the date of such determination; (s) "Seller's Margin Amount", with respect to any Transaction as of any date, the amount obtained by application of the Seller's Margin Percentage to the Repurchase Price for such Transaction as of such date; (t) "Seller's Margin Percentage", with respect to any Transaction as of any date, a percentage (which may be equal to the Buyer's Margin Percentage) agreed to by Buyer and Seller or, in the absence of any such agreement, the percentage obtained by dividing the Market Value of the Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for such Transaction. . 3. Initiation; Confirmation; Termination (a) An agreement to enter into a Transaction may be made orally or in writing at the initia- tion of either Buyer or Seller. On the Purchase Date for the Transaction. the Purchased Securities shall be transferred to Buyer or its agent against the transfer of the Purchase Price to an account of Seller. (b) Upon agreeing to enter into a Transaction hereunder, Buyer or Seller (or both), as shall be agreed, shall promptly deliver to the other party a written confirmation of each Transaction (a "Confirmation"). The Confirmation shall describe the Purchased Securities (including CUSIP number, if any), identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase Price. (iii) the Repurchase Date, unless the Transaction is to be terminable on demand, (iv) the Pricing Rate or Repurchase Price applicable to the Transaction, and (v) any additional terms or conditions of the Transaction not inconsistent with this Agreement The Confirmation, together with this Agreement. shall constitute conclusive evidence of the terms agreed between Buyer and Seller with respect to the Transaction to which the Confirmation relates, unless with . September 1996. Master Repurchase Agreement. 3 34 - . respect to the Confirmation specific objection is made promptly after receipt thereof. In the event of any conflict between the terms of such Confirmation and this Agreement, this Agreement shall prevail. (c) In the case of Transactions terminable upon demand. such demand shall be made by Buyer or Seller, no later than such time as is customary in accordance with market prac- tice, by telephone or otherwise on or prior to the business day on which such termination will be effective. On the date specified in such demand, or on the date fixed for termina- tion in the case of Transactions having a fixed term, termination of the Transaction will be effected by transfer to Seller or its agent of the Purchased Securities and any Income in respect thereof received by Buyer (and not previously credited or transferred to, or applied to the obligations of. Seller pursuant to Paragraph 5 hereof) against the transfer of the Repurchase Price to an account of Buyer. . 4. Margin Maintenance (a) If at any time the aggregate Market Value of all Purchased Securities subject to all Transactions in which a particular party hereto is acting as Buyer is less than the aggre- gate Buyer's Margin Amount for all such Transactions (a "Margin Deficit"). then Buyer may by notice to Seller require Seller in such Transactions, at Seller's option. to transfer to Buyer cash or additional Securities reasonably acceptable to Buyer ("Additional Purchased Securities"), so that the cash and aggregate Market Value of the Purchased Securities. including any such Additional Purchased Securities, will thereupon equal or exceed such aggregate Buyer's Margin Amount (decreased by the amount of any Margin Deficit as of such date arising from any Transactions in which such Buyer is acting as Seller) . (b) If at any time the aggregate Market Value of all Purchased Securities subject to all Transactions in which a particular party hereto is acting as Seller exceeds the aggregate Seller's Margin Amount for all such Transactions at such time (a "Margin Excess"). then Seller may by notice to Buyer require Buyer in such Transactions, at Buyer's option, to transfer cash or Purchased Securities to Seller, so that the aggregate Market Value of the Purchased Securities, after deduction of any such cash or any Purchased Securities so transferred, will thereupon not exceed such aggregate Seller's Margin Amount (increased by the amount of any Margin Excess as of such date arising from any Transactions in which such Seller is acting as Buyer). (c) If any notice is given by Buyer or Seller under subparagraph (a) or (b) of this Paragraph at or before the Margin Notice Deadline on any business day, the party receiving such notice shall transfer cash or Additional Purchased Securities as provided in such subpara- graph no later than the close of business in the relevant market on such day. If any such notice is given after the Margin Notice Deadline. the party receiving such notice shall transfer such cash or Securities no later than the close of business in the relevant market on the next business day following such notice. (d) Any cash transferred pursuant to this Paragraph shall be attributed to such Transactions as shall be agreed upon by Buyer and Seller. . 4 . September 1996 . Master Repurchase Agreement 35 (e) Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the respective rights of Buyer or Seller (or both) under subparagraphs (a) and (b) of this Paragraph may be exercised only where a Margin Deficit or Margin Excess, as the case may be. exceeds a specified dollar amount or a specified percentage of the Repurchase Prices for such Transactions (which amount or percentage shall be agreed to by Buyer and Seller prior to entering into any such Transactions). . (f) Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the respective rights of Buyer and Seller under subparagraphs (a) and (b) of this Paragraph to require the elimination of a Margin Deficit or a Margin Excess, as the case may be, may be exercised whenever such a Margin Deficit or Margin Excess exists with respect to any single Transaction hereunder (calculated without regard to any other Transaction outstanding under this Agreement). 5. Income Payments Seller shall be entitled to receive an amount equal to all Income paid or distributed on or in respect of the Securities that is not otherwise received by Seller, to the full extent it would be so entitled if the Securities had not been sold to Buyer. Buyer shall. as the parties may agree with respect to any Transaction (or, in the absence of any such agreement, as Buyer shall rea- sonably determine in its discretion) , on the date such Income is paid or distributed either (i) transfer to or credit to the account of Seller such Income with respect to any Purchased Securities subject to such Transaction or (ii) with respect to Income paid in cash, apply the Income payment or payments to reduce the amount, if any, to be transferred to Buyer by Seller upon termination of such Transaction. Buyer shall not be obligated to take any action pursuant to the preceding sentence (A) to the extent that such action would result in the cre- ation of a Margin Deficit. unless prior thereto or simultaneously therewith Seller transfers to Buyer cash or Additional Purchased Securities sufficient to eliminate such Margin Deficit, or (B) if an Event of Default with respect to Seller has occurred and is then continuing at the time such Income is paid or distributed. . 6. Security Interest Although the parties intend that all Transactions hereunder be sales and purchases and not loans, in the event any such Transactions are deemed to be loans, Seller shall be deemed to have pledged to Buyer as security for the performance by Seller of its obligations under each such Transaction, and shall be deemed to have granted to Buyer a security interest in, all of the Purchased Securities with respect to all Transactions hereunder and all Income thereon and other proceeds thereof. 7. Payment and Transfer Unless otherwise mutually agreed, all transfers of funds hereunder shall be in immediately available funds. All Securities transferred by one party hereto to the other party (i) shall be in suitable form for transfer or shall be accompanied by duly executed instruments of transfer or assignment in blank and such other documentation as the party receiving possession may reasonably request, (ii) shall be transferred on the book-entry system of a Federal Reserve Bank. or (iii) shall be transferred by any other method mutually acceptable to Seller and Buyer. . September 1996. Master Repurchase Agreement. 5 36 - . 8. Segregation of Purchased Securities To the extent required by applicable law, all Purchased Securities in the possession of Seller shall be segregated from other securities in its possession and shall be identified as subject to this Agreement. Segregation may be accomplished by appropriate identification on the books and records of the holder. including a financial or securities intermediary or a clearing corpo- ration. All of Seller's interest in the Purchased Securities shall pass to Buyer on the Purchase Date and, unless otherwise agreed by Buyer and Seller. nothing in this Agreement shall pre- clude Buyer from engaging in repurchase transactions with the Purchased Securities or other- wise selling, transferring, pledging or hypothecating the Purchased Securities, but no such transaction shall relieve Buyer of its obligations to transfer Purchased Securities to Seller pur- suant to Paragraph 3, 4 or 11 hereof, or of Buyer's obligation to credit or pay Income to, or apply Income to the obligations of, Seller pursuant to Paragraph 5 hereof. . Required Disclosure for Transactions in Which the Seller Retains Custody of the Purchased Securities Seller is not permitted to substitute other securities for those subject to this Agreement and therefore must keep Buyer's securities segregated at all times, unless in this Agreement Buyer grants Seller the right to substitute other securities. If Buyer grants the right to substitute, this means that Buyer's securities will likely be commingled with Seller's own securities during the trading day. Buyer is advised that, during any trading day that Buyer's securities are commingled with Seller's securities, they [will] * [may] ** be subject to liens granted by Seller to [its clearing bank]* [third parties]** and may be used by Seller for deliveries on other securities transactions. Whenever the securities are commingled, Seller's ability to resegregate substitute securities for Buyer will be subject to Seller's ability to satisfy [the clear- ing]* [any]** lien or to obtain substitute securities. * Language to be used under 17 e.ER. ß403.4 (e) if Seller is a government securities broker or dealer other than a financial institution. ** Language to be used under 17 C.ER. ß403.5(d) if Seller is a financial institution. 9. Substitution (a) Seller may, subject to agreement with and acceptance by Buyer. substitute other Securities for any Purchased Securities. Such substitution shall be made by transfer to Buyer of such other Securities and transfer to Seller of such Purchased Securities. After substitution, the substituted Securities shall be deemed to be Purchased Securities. (b) In Transactions in which Seller retains custody of Purchased Securities. the parties expressly agree that Buyer shall be deemed. for purposes of subparagraph (a) of this Paragraph, to have agreed to and accepted in this Agreement substitution by Seller of other Securities for Purchased Securities; provided, however, that such other Securities shall have a Market Value at least equal to the Market Value of the Purchased Securities for which they are substituted. . 6 . September 1996 . Master Repurchase Agreement 37 10. Representations Each of Buyer and Seller represents and warrants to the other that (i) it is duly authorized to execute and deliver this Agreement. to enter into Transactions contemplated hereunder and to perform its obligations hereunder and has taken all necessary action to authorize such exe- cution, delivery and performance, (H) it will engage in such Transactions as principal (or. if agreed in writing. in the form of an annex hereto or otherwise, in advance of any Transaction by the other party hereto. as agent for a disclosed principal). (Hi) the person signing this Agreement on its behalf is duly authorized to do so on its behalf (or on behalf of any such disclosed principal). (iv) it has obtained all authorizations of any governmental body required in connection with this Agreement and the Transactions hereunder and such autho- rizations are in full force and effect and (v) the execution. delivery and performance of this Agreement and the Transactions hereunder will not violate any law, ordinance, charter, by- law or rule applicable to it or any agreement by which it is bound or by which any of its assets are affected. On the Purchase Date for any Transaction Buyer and Seller shall each be deemed to repeat all the foregoing representations made by it. . 11. Events of Default In the event that (i) Seller fails to transfer or Buyer fails to purchase Purchased Securities upon the applicable Purchase Date. (H) Seller fails to repurchase or Buyer fails to transfer Purchased Securities upon the applicable Repurchase Date, (Hi) Seller or Buyer fails to com- ply with Paragraph 4 hereof. (iv) Buyer fails. after one business day's notice. to comply with Paragraph 5 hereof. (v) an Act of Insolvency occurs with respect to Seller or Buyer, (vi) any representation made by Seller or Buyer shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated. or (vii) Seller or Buyer shall admit to the other its inability to, or its intention not to, perform any of its oblig- ations hereunder (each an "Event of Default"): . (a) The nondefaulting party may, at its option (which option shall be deemed to have been exercised immediately upon the occurrence of an Act of Insolvency). declare an Event of Default to have occurred hereunder and, upon the exercise or deemed exercise of such option, the Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to occur (except that. in the event that the Purchase Date for any Transaction has not yet occurred as of the date of such exercise or deemed exercise, such Transaction shall be deemed immediately canceled). The nondefaulting party shall (except upon the occurrence of an Act of Insolvency) give notice to the defaulting party of the exercise of such option as promptly as practicable. (b) In all Transactions in which the defaulting party is acting as Seller. if the nondefaulting party exercises or is deemed to have exercised the option referred to in subparagraph (a) of this Paragraph, (i) the defaulting party's obligations in such Transactions to repurchase all Purchased Securities. at the Repurchase Price therefor on the Repurchase Date deter- mined in accordance with subparagraph (a) of this Paragraph, shall thereupon become immediately due and payable, (H) all Income paid after such exercise or deemed exercise shall be retained by the nondefaulting party and applied to the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder, and (iii) the defaulting party shall immediately deliver to the nondefaulting party any Purchased Securities subject to such Transactions then in the defaulting party's posses- sion or control. . September 1996 . Master Repurchase Agreement. 7n 38 · (c) In all Transactions in which the defaulting party is acting as Buyer. upon tender by the nondefaulting party of payment of the aggregate Repurchase Prices for all such Transactions. all right. title and interest in and entitlement to all Purchased Securities subject to such Transactions shall be deemed transferred to the nondefaulting party, and the defaulting party shall deliver all such Purchased Securities to the nondefaulting party. (d) If the nondefaulting party exercises or is deemed to have exercised the option referred to in subparagraph (a) of this Paragraph. the nondefaulting party, without prior notice to the defaulting party, may: (i) as to Transactions in which the defaulting party is acting as Seller, (A) immediately sell, in a recognized market (or otherwise in a commercially reasonable manner) at such price or prices as the nondefaulting party may reasonably deem satisfactory, any or all Purchased Securities subject to such Transactions and apply the proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased Securities, to give the defaulting party credit for such Purchased Securities in an amount equal to the price therefor on such date, obtained from a generally recognized source or the most recent closing bid quotation from such a source, against the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder: and · (ii) as to Transactions in which the defaulting party is acting as Buyer, (A) immediately purchase, in a recognized market (or otherwise in a commercially reasonable man- ner) at such price or prices as the nondefaulting party may reasonably deem satisfac- tory, securities ("Replacement Securities") of the same class and amount as any Purchased Securities that are not delivered by the defaulting party to the non default- ing party as required hereunder or (B) in its sole discretion elect. in lieu of purchas- ing Replacement Securities, to be deemed to have purchased Replacement Securities at the price therefor on such date, obtained from a generally recognized source or the most recent closing offer quotation from such a source. Unless otherwise provided in Annex 1. the parties acknowledge and agree that (1) the Securities subject to any Transaction hereunder are instruments traded in a recognized market, (2) in the absence of a generally recognized source for prices or bid or offer quo- tations for any Security, the nondefaulting party may establish the source therefor in its sole discretion and (3) all prices, bids and offers shall be determined together with accrued Income (except to the extent contrary to market practice with respect to the rel- evant Securities). (e) As to Transactions in which the defaulting party is acting as Buyer, the defaulting party shall be liable to the nondefaulting party for any excess of the price paid (or deemed paid) by the nondefaulting party for Replacement Securities over the Repurchase Price for the Purchased Securities replaced thereby and for any amounts payable by the defaulting party under Paragraph 5 hereof or otherwise hereunder. · (f) For purposes of this Paragraph II, the Repurchase Price for each Transaction hereunder in respect of which the defaulting party is acting as Buyer shall not increase above the 8. September 1996. Master Repurchase Agreement 39 amount of such Repurchase Price for such Transaction determined as of the date of the exercise or deemed exercise by the nondefaulting party of the option referred to in sub- paragraph (a) of this Paragraph. · (g) The defaulting party shall be liable to the nondefaulting party for (i) the amount of all reasonable legal or other expenses incurred by the nondefaulting party in connection with or as a result of an Event of Default. (ii) damages in an amount equal to the cost (including all fees. expenses and commissions) of entering into replacement transactions and entering into or terminating hedge transactions in connection with or as a result of an Event of Default. and (iii) any other loss. damage. cost or expense directly arising or resulting from the occurrence of an Event of Default in respect of a Transaction. (h) To the extent permitted by applicable law, the defaulting party shall be liable to the non- defaulting party for interest on any amounts owing by the defaulting party hereunder. from the date the defaulting party becomes liable for such amounts hereunder until such amounts are (i) paid in full by the defaulting party or (ii) satisfied in full by the exercise of the nondefaulting party's rights hereunder. Interest on any sum payable by the default- ing party to the nondefaulting party under this Paragraph 11 (h) shall be at a rate equal to the greater of the Pricing Rate for the relevant Transaction or the Prime Rate. (i) The nondefaulting party shall have, in addition to its rights hereunder, any rights other- wise available to it under any other agreement or applicable law. 12. Single Agreement Buyer and Seller acknowledge that, and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that. all Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of each other. Accordingly. each of Buyer and Seller agrees (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the perfor- mance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, (ii) that each of them shall be entitled to set off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transactions hereunder and (iii) that payments, deliveries and other transfers made by either of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Transactions hereunder. and the obligations to make any such payments. deliveries and other transfers may be applied against each other and netted. · 13. Notices and Other Communications Any and all notices. statements, demands or other communications hereunder may be given by a party to the other by mail, facsimile, telegraph, messenger or otherwise to the address specified in Annex II hereto, or so sent to such party at any other place specified in a notice of change of address hereafter received by the other. All notices. demands and requests hereun- der may be made orally. to be confirmed promptly in writing. or by other communication as specified in the preceding sentence. · September 1996 . Master Repurchase Agreement. 9 40 . . . 14. Entire Agreement; Severability This Agreement shall supersede any existing agreements between the parties containing gen- eral terms and conditions for repurchase transactions. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement. 15. Non-assignability; Termination (a) The rights and obligations of the parties under this Agreement and under any Transaction shall not be assigned by either party without the prior written consent of the other party. and any such assignment without the prior written consent of the other party shall be null and void. Subject to the foregoing. this Agreement and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. This Agreement may be terminated by either party upon giving written notice to the other. except that this Agreement shall. notwithstanding such notice, remain applicable to any Transactions then outstanding. (b) Subparagraph (a) of this Paragraph 15 shall not preclude a party from assigning. charg- ing or otherwise dealing with all or any part of its interest in any sum payable to it under Paragraph 11 hereof. 16. Governing Law This Agreement shall be governed by the laws of the State of New York without giving effect to the conflict of law principles thereof. 17.No Waivers, Etc. No express or implied waiver of any Event of Default by either party shall constitute a waiver of any other Event of Default and no exercise of any remedy hereunder by any party shall constitute a waiver of its right to exercise any other remedy hereunder. No modification or waiver of any provision of this Agreement and no consent by any party to a departure here- from shall be effective unless and until such shall be in writing and duly executed by both of the parties hereto. Without limitation on any of the foregoing. the failure to give a notice pur- suant to Paragraph 4(a) or 4(b) hereof will not constitute a waiver of any right to do so at a later date. 18. Use of Employee Plan Assets (a) If assets of an employee benefit plan subject to any provision of the Employee Retirement Income Security Act of 1974 ("ERISÄ') are intended to be used by either party hereto (the "Plan Party") in a Transaction, the Plan Party shall so notify the other party prior to the Transaction. The Plan Party shall represent in writing to the other party that the Transaction does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and the other party may proceed in reliance thereon but shall not be required so to proceed. 10. September 1996. Master Repurchase Agreement 41 (b) Subject to the last sentence of subparagraph (a) of this Paragraph, any such Transaction shall proceed only if Seller furnishes or has furnished to Buyer its most recent available audited statement of its financial condition and its most recent subsequent unaudited statement of its financial condition. . (c) By entering into a Transaction pursuant to this Paragraph, Seller shall be deemed (i) to represent to Buyer that since the date of Seller's latest such financial statements. there has been no material adverse change in Seller's financial condition which Seller has not dis- closed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited statements of its financial condition as they are issued, so long as it is a Seller in any out- standing Transaction involving a Plan Party. 19. Intent (a) The parties recognize that each Transaction is a "repurchase agreement" as that term is defined in Section 101 of Title 11 of the United States Code, as amended (except insofar as the type of Securities subject to such Transaction or the term of such Transaction would render such definition inapplicable), and a "securities contract" as that term is defined in Section 741 of Title 11 of the United States Code, as amended (except insofar as the type of assets subject to such Transaction would render such definition inapplica- ble). (b) It is understood that either party's right to liquidate Securities delivered to it in connec- tion with Transactions hereunder or to exercise any other remedies pursuant to Paragraph 11 hereof is a contractual right to liquidate such Transaction as described in Sections 555 and 559 of Title 11 of the United States Code, as amended. . (c) The parties agree and acknowledge that if a party hereto is an "insured depository insti- tution," as such term is defined in the Federal Deposit Insurance Act. as amended ("FDIA"), then each Transaction hereunder is a "qualified financial contract:' as that term is defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplica- ble). (d) It is understood that this Agreement constitutes a "netting contract" as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDlCIA") and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a "covered contractual payment entitlement" or "covered contractual payment obligation", respectively, as defined in and subject to FDI- CIA (except insofar as one or both of the parties is not a "financial institution" as that term is defined in FDlCIA). 20. Disc10sure Relating to Certain Federal Protections The parties acknowledge that they have been advised that: (a) in the case of Transactions in which one of the parties is a broker or dealer registered with the Securities and Exchange Commission ("SEC") under Section 15 of the Securities Exchange Act of 1934 ("1934 Act"), the Securities Investor Protection Corporation has . September 1996 . Master Repurchase Agreement. 11 42 . . . taken the position that the provisions of the Securities Investor Protection Act of 1970 ("SIPA") do not protect the other party with respect to any Transaction hereunder; (b) in the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC under Section 15C of the 1934 Act. SIPA will not provide protection to the other party with respect to any Transaction hereunder; and (c) in the case of Transactions in which one of the parties is a financial institution. funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund. as applicable. [Name of Party] [Name of Party] By: By: Title: Title: Date: Date: 12 . September 1996 . Master Repurchase Agreement 43 Appendix G TEXAS GOVERNMENT CODE . CHAPTER 2256. PUBLIC FUNDS INVESTMENT SUBCHAPTER A. AUTHORIZED INVESTMENTS FOR GOVERNMENTAL ENTITIES Sec. 2256.001. SHORT TITLE This chapter may be cited as the Public Funds Investment Act Sec. 2256.002. DEFINITIONS. In this chapter: (1) "Bond proceeds" means the proceeds from the sale of bonds, notes, and other obligations issued by an entity, and reserves and funds maintained by an entity for debt service purposes. (2) "Book value" means the original acquisition cost of an investment plus or minus the accrued amortization or accretion. (3) "Funds" means public funds in the custody of a state agency or local government that: (A) are not required by law to be deposited in the state treasury; and . (B) the investing entity has authority to invest (4) "Institution of higher education" has the meaning assigned by Section 61.003, Education Code. (5) "Investing entity" and "entity" mean an entity subject to this chapter and described by Section 2256.003. (6) "Investment pool" means an entity created under this code to invest public funds jointly on behalf of the entities that participate in the pool and whose investment objectives in order of priority are: (A) preservation and safety of principal; (B) liquidity; and (C) yield. (7) "Local government" means a municipality, a county, a school district, a district or authority created under Section 52(b)(1) or (2), Article III, or Section 59, Article XVI, Texas Constitution, a fresh water supply district, a hospital district, . 44 - Appendix G . and any political subdivision, authority, public corporation, body, politic, or instrumentality of the State of Texas, and any nonprofit corporation acting on behalf of any of those entities. (8) "Market value" means the current face or par value of an investment multiplied by the net selling price of the security as quoted by a recognized market pricing source premium or discount quoted on the valuation date. (9) "Pooled fund group" means an internally created fund of an investing entity in which one or more institutional accounts of the investing entity are invested. (10)"Qualified representative" means a person who holds a position with a business organization, who is authorized to act on behalf of the business organization, and who is one of the following: (A) for a business organization doing business that is regulated by or registered with a securities commission, a person who is registered under the rules of the National Association of Securities Dealers; . (B) for a state or federal bank, a savings bank, or a state or federal credit union, a member of the loan committee for the bank or branch of the bank or a person authorized by corporate resolution to act on behalf of and bind the banking institution; (C) for an investment pool, the person authorized by the elected official or board with authority to administer the activities of the investment pool to sign the written instrument on behalf of the investment pool; or (0) for an investment management firm registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.) or, if not subject to registration under that Act, registered with the State Securities Board, a person who is an officer or principal of the investment management firm. (11) "School district" means a public school district. (12) "Separately invested asset," means an account or fund of a state agency or local government that is not invested in a pooled fund group. (13) "State agency" means an office, department, commission, board, or other agency that is part of any branch of state government, an institution of higher education, and any nonprofit corporation acting on behalf of any of those entities. . 45 . Appendix G Sec. 2256.003. AUTHORITY TO INVEST FUNDS; ENTITIES SUBJECT TO THIS CHAPTER. . (a) Each governing body of the following entities may purchase, sell, and invest its funds and funds under its control in investments authorized under this subchapter in compliance with investment policies approved by the governing body and according to the standard of care prescribed by Section 2256.006: (1) a local government; (2) a state agency; (3) a nonprofit corporation acting on behalf of a local government or a state agency; or (4) an investment pool acting on behalf of two or more local governments, state agencies, or a combination of those entities. (b) In the exercise of its powers under Subsection (a), the governing body of an investing entity may contract with an investment management firm registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.) or with the State Securities Board to provide for the investment and management of its public funds of other funds under its control. A contract made under authority of this subsection may not be for a term longer than two years. A renewal or extension of the contract must be . made by the governing body of the investing entity by order, ordinance, or resolution. (c) This chapter does not prohibit an investing entity or investment officer from using the entity's employees or the services of a contractor of the entity to aid the investment officer in the execution of the officer's duties under this chapter. Sec. 2256.004. APPLICABILITY. (a) This subchapter does not apply to: (1) a public retirement system as defined by Section 802.001; (2) state funds invested as authorized by Section 404.024; (3) an institution of higher education having total endowments of at least $95 million in book value on May 1, 1995; (4) funds invested by the Veterans' Land Board as authorized by Chapter 161,162, or 164, Natural Resources Code; (5) Registry funds deposited with the county or district clerk under Chapter 117, Local Government Code; or . 46 . . . Appendix G (6) a deferred compensation plan that qualifies under either Section 401 (k) or 457 or the Internal Revenue Code of 1986 (26 U.S.C. Section 1 et seq.), as amended. (b) This subchapter does not apply to an investment donated to an investing entity for a particular purpose or under terms of use specified by the donor. Sec. 2256.005. INVESTMENT POLICIES; INVESTMENT STRATEGIES; INVESTMENT OFFICER. (a) The governing body of an investing entity shall adopt by rule, order, ordinance, or resolution, as appropriate, a written investment policy regarding the investment of its funds and funds under its control. (b) The investment policies must: (1) be written; (2) primarily emphasize safety of principal and liquidity; (3) address investment diversification, yield, and maturity and the quality and capability of investment management; and (4) include: (A) a list of the types of authorized investments in which the investing entity's funds may be invested; (B) the maximum allowable stated maturity of any individual investment owned by the entity; (C) for pooled fund groups, the maximum dollar-weighted average maturity allowed based on the stated maturity date for the portfolio; (D) methods to monitor the market price of investments acquired with public funds; and (E) a requirement for settlement of all transactions, except investment pool funds and mutual funds, on a delivery versus payment basis. (c) The investment policies may provide that bids for certificates of deposit be solicited: (1) orally; (2) in writing; 47 Appendix G (3) electronically; or . (4) in any combination of those methods. (d) As an integral part of an investment policy, the governing body shall adopt a separate written investment strategy for each of the funds or group of funds under its control. Each investment strategy must describe the investment objectives for the particular fund using the following priorities in order of importance: (1) understanding of the suitability of the investment to the financial requirements of the entity; (2) preservation and safety of principal; (3) liquidity; (4) marketability of the investment if the need arises to liquidate the investment before maturity; (5) diversification of the investment portfolio; and (5) yield. (e) The governing body of an investing entity shall review its investment policy and investment strategies not less than annually. The governing body shall adopt a written instrument by rule, order, ordinance, or resolution stating that it has reviewed the investment policy and investment strategies and that the written instrument so adopted shall record any changes made to either the investment policy or investment strategies. . (f) Each investing entity shall designate, by rule, order, ordinance, or resolution, as appropriate, one or more officers or employees of the state agency, local government, or investment pool as investment officer or contract with an investment management firm under Section 2256.003(b) to be responsible for the investment of its funds consistent with the investment policy adopted by the entity. If the governing body of an investing entity has contracted with another investing entity to invest its funds, the investment officer of the other investing entity is considered to be the investment officer of the first investing entity for purposes of this chapter. Authority granted to a fiduciary to invest an entity's funds is effective until rescinded by the investing entity, until the expiration of the officer's term or the termination of the person's employment by the investing entity, or if an investment management firm, until the expiration of the contract with the investing entity. In the administration of the duties of an investment officer, the fiduciary designated as investment officer shall exercise the judgment and care, under prevailing circumstances, that a prudent person would exercise in the management of the person's own affairs, but the governing body of the investing entity retains ultimate responsibility as fiduciaries of the assets of the entity. Unless authorized by law, a . 48 - . . . Appendix G person may not deposit, withdraw, transfer, or manage in any other manner the funds of the investing entity. (g) Subsection (f) does not apply to a state agency, local government, or investment pool for which an officer of the entity is assigned by law the function of investing its funds. (h) An officer or employee of a commission created under Chapter 391, Local Government Code, is ineligible to be designated as an investment officer under Subsection (f) for any investing entity other than for that commission. (i) An investment officer of an entity who has a personal business relationship with a business organization offering to engage in an investment transaction with the entity shall file a statement disclosing that personal business interest. An investment officer who is relate within the second degree by affinity or consanguinity, as determined under Chapter 573, to an individual seeking to sell an investment to the investment officer's entity shall file a statement disclosing that relationship. A statement required under this subsection must be filed with the Texas Ethics Commission and the governing body of the entity. For purposes of this subsection, an investment officer has a personal business relationship with a business organization if: (1) the investment officer owns 10 percent or more of the voting stock or shares of the business organization or owns $5,000 or more of the fair market value of the business organization; (2) funds received by the investment officer from the business organization exceed 10 percent of the investment officer's gross income for the prevIous year; or (3) the investment officer has acquired from the business organization during the previous year investments with a book value of $2,500 or more for the personal account of the investment officer. U) The governing body of an investing entity may specify in its investment policy that any investment authorized by this chapter is not suitable. (k) A written copy of the investment policy shall be presented to any person offering to engage in an investment transaction with an investing entity or to an investment management firm under contract with an investing entity to invest or manage the entity's investment portfolio. For purposes of this subsection, a business organization includes investment pools and an investment management firm under contract with an investing entity to invest or manage the entity's investment portfolio. Nothing in this subsection relieves the investing entity of the responsibility for monitoring the investments made by the investing entity to determine that they are in compliance with the investment policy. The qualified representative of the business organization offering to engage in an investment transaction with an investing entity shall execute a written 49 Appendix G instrument in a form acceptable to the investing entity and the business organization substantially to the effect that the business organization 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. (I) The investment officer of an entity may not acquire or otherwise obtain any authorized investment described in the investment policy of the investing entity from a person who has not delivered to the entity the instrument required by Subsection (k). (m) An investing entity other than a state agency, in conjunction with its annual financial audit, shall perform a compliance audit of management controls on investments and adherence to the entity's established investment policies. (n) Except as provided by Subsection (0), at least once every two years a state agency shall arrange for a compliance audit of management controls on investments and adherence to the agency's established investment policies. The compliance audit shall . be performed by the agency's internal auditor or by a private auditor employed in the manner provided by Section 321.020. Not later than January 1 of each even-numbered year, a state agency shall report the results of the most recent audit performed under this subsection to the state auditor. A state agency also shall report to the state auditor other information the state auditor determines necessary to assess compliance with laws and policies applicable to state agency investments. A report under this subsection shall be prepared in a manner the state auditor prescribes. (0) The audit requirements of Subsection (n) do not apply to assets of a state agency that are invested by the comptroller under Section 404.024. Sec. 2256.006. STANDARD OF CARE. (a) Investments shall be made with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived. Investment of funds shall be governed by the following investment objectives, in order of priority: . 50 - . . . Appendix G (1) preservation and safety of principal; (2) liquidity; and (3) yield. (b) In determining whether an investment officer has exercised prudence with respect to an investment decision, the determination shall be made taking into consideration: (1) the investment of all funds, or funds under the entity's control, over which the officer had responsibility rather than a consideration as to the prudence of a single investment; and (2) whether the investment decision was consistent with the written investment policy of the entity. Sec. 2256.007. INVESTMENT TRAINING; STATE AGENCY BOARD MEMBERS AND OFFICERS. (a) Each member of the governing board of a state agency and its investment officer shall attend at least one training session relating to the person's responsibilities under this chapter within six months after taking office or assuming duties. (b) The Texas Higher Education Coordinating Board shall provide the training under this section. (c) Training under this section must include education in investment controls, security risks, strategy risks, market risks, diversification of investment portfolio, and compliance with this chapter. (d) An investment officer shall attend a training session not less than once in a two-year period and may receive training from any independent source approved by the governing body of the state agency. The investment officer shall prepare a report on this subchapter and deliver the report to the governing body of the state agency not later than the 180th day after the last day of each regular session of the legislature. Sec. 2256.008. INVESTMENT TRAINING; LOCAL GOVERNMENTS. (a) Except as provided by Subsections (b) and (e), the treasurer, the chief financial officer if the treasurer is not the chief financial officer, and the investment officer of a local government shall: (1) attend at least one training session under a curriculum approved by the state auditor and containing at least 10 hours of instruction relating to the treasurer's or officer's responsibilities under this subchapter within 12 months after taking office or assuming duties; and 51 Appendix G (2) except as provided by Subsection (b), 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 under this subchapter under a curriculum approved by the state auditor and approved by the governing body of the local government or a designated investment committee advising the investment officer as provided for in the investment policy of the local government. (b) An investing entity created under authority of Section 52(b), Article III, or Section 59, Article XVI, Texas Constitution, that has contracted with an investment management firm under Section 2256.003(b) and has fewer than five full-time employees or an investing entity that has contracted with another investing entity to invest the entity's funds may satisfy the training requirement provided by Subsection (a)(2) by having an officer of the governing body attend four hours of appropriate instruction in a two-year period. (c) Training under this section must include education in investment controls, security risks, strategy risks, market risks, diversification of investment portfolio, and compliance with this chapter. (d) Not later than December 31 each year, each individual, association, business, organization, governmental entity, or other person that provides training under this section shall report to the comptroller a list of the governmental entities for which the person provided required training under this section during that calendar year. An . individual's reporting requirements under this subsection are satisfied by a report of the individual's employer or the sponsoring or organizing entity of a training program or seminar. (e) This section does not apply to a district governed by Chapter 36 or 49, Water Code. Sec. 2256.009. AUTHORIZED INVESTMENTS: OBLIGATIONS OF, OR GUARANTEED BY GOVERNMENTAL ENTITIES. (a) Except as provided by Subsection (b), the following are authorized investments under this subchapter: (1) obligations, including letters of credit, of the United States or its agencies and instrumentalities; (2) direct obligations of this state or its agencies and instrumentalities; (3) 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; (4) other obligations, the principal and interest of which are unconditionally . 52 . . . Appendix G guaranteed or insured by, or backed by the full faith and credit of, this state or the United States or their respective agencies and i nstru mentalities; (5) 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; and (6) bonds issued, assumed, or guaranteed by the State of Israel. (b) The following are not authorized investments under this section: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal; (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security collateral and bears no interest; (3) collateralized mortgage obligations that have a stated final maturity date of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is determined by an index that adjusts opposite to the changes in a market index. Sec. 2256.010. AUTHORIZED INVESTMENTS: CERTIFICATES OF DEPOSIT. A certificate of deposit is an authorized investment under this subchapter if the certificate of deposit is issued by a state or national bank domiciled in this state or a savings bank domiciled in this state, or state or federal credit union domiciled in this state and is: (1) guaranteed or insured by the Federal Deposit Insurance Corporation, or its successor, or the National Credit Union Share Insurance Fund or its successor; (2) 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 (3) secured in any other manner and amount provided by law for deposits of the investing entity. 53 Appendix G Sec. 2256.011. AUTHORIZED INVESTMENTS: REPURCHASE AGREEMENTS. . (a) A fully collateralized repurchase agreement is an authorized investment under this subchapter if the repurchase agreement: (1) has a defined termination date; (2) is secured by obligations described by Section 2256.009(a)(1), and (3) 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 (4) is placed through a primary government securities dealer, as defined by the Federal Reserve, or a financial institution doing business in this state. (b) 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 Section 2256.009(a)(1), 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. . (c) 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. (d) 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 not later than the expiration date stated in the reverse security repurchase agreement. Sec. 2256.0115. AUTHORIZED INVESTMENTS: SECURITIES LENDING PROGRAM. (a) A securities lending program is an authorized investment under this subchapter if it meets the conditions provided by this section. (b) To qualify as an authorized investment under this subchapter: (1) the value of securities loaned under the program must be not less than 100 percent collateralized, including accrued income; (2) a loan made under the program must allow for termination at any time; (3) a loan made under the program must be secured by: . 54 Appendix G . (A) pledged securities described by Section 2256.009; (B) pledged irrevocable letters of credit issued by a bank that is: (i) organized and existing under the laws of the United States or any other state; and ii) continuously rated by at least one nationally recognized investment rating firm at not less than A or its equivalent; or (C) cash invested in accordance with Section: (i) 2256.009; (ii) 2256.013; (iii) 2256.014; or (iv) 2256.016; (4) the terms of a loan made under the program must require that the securities being held as collateral be: (A) pledged to the investing entity; (B) held in the investing entity's name; and (C) deposited at the time the investment is made with the entity or with a third party selected by or approved by the investing entity; (5) a loan made under the program must be placed through: (A) a primary government securities dealer, as defined by 5 C.F.R. Section 6801.102(f), as that regulation existed on September 1, 2003; or (B) a financial institution doing business in this state; and (6) an agreement to lend securities that is executed under this section must have a term of one year or less. . Sec. 2256.012. AUTHORIZED INVESTMENTS: BANKER'S ACCEPTANCES. A bankers' acceptance is an authorized investment under this subchapter if the bankers' acceptance: (1) has a stated maturity of 270 days or fewer from the date of its issuance; (2) will be, in accordance with its terms, liquidated in full at maturity; (3) is eligible for collateral for borrowing from a Federal Reserve Bank; and (4) 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 than A-1 or P-1 or an equivalent rating by at least one nationally recognized credit rating agency. Sec. 2256.013. AUTHORIZED INVESTMENTS: COMMERCIAL PAPER. Commercial paper is an authorized investment under this subchapter if the commercial paper: (1) has a stated maturity of 270 days or fewer from the date of its issuance; and (2) is rated not less than A-1 or P-1 or an equivalent rating by at least: . 55 Appendix G (A) two nationally recognized credit rating agencies; or . (B) 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. Sec. 2256.014(a). AUTHORIZED INVESTMENTS: MUTUAL FUNDS. (a) A no-load money market mutual fund is an authorized investment under this subchapter if the mutual fund: (1) is registered with and regulated by the Securities and Exchange Commission; (2) provides the investing entity with a prospectus and other information required by the Securities Exchange Act of 1934 (15 U.S.C. Section 78a et seq.) or the Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.); (3) has a dollar-weighted average stated maturity of 90 days or fewer; and (4) includes in its investment objectives the maintenance of a stable net asset value of $1 for each share. . (b) 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 subchapter if the mutual fund: (1) is registered with the Securities and Exchange Commission; (2) has an average weighted maturity of less than two years; (3) is invested exclusively in obligations approved by this subchapter; (4) is continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AAA or its equivalent; and (5) 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. . 56 Appendix G . (c) An entity is not authorized by this section to: (1) invest in the aggregate more than 15 percent of its monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service, in mutual funds described in Subsection (b); or (2) invest any portion of bond proceeds, reserves and funds held for debt service, in mutual funds described in Subsection (b); or (3) invest its funds or funds under its control, including bond proceeds and reserves and other funds held for debt service, in anyone mutual fund described in Subsection (a) or (b) in an amount that exceeds 10 percent of the total assets of the mutual fund. Sec. 2256.015. AUTHORIZED INVESTMENTS: GUARANTEED INVESTMENT CONTRACTS. (a) A guaranteed investment contract is an authorized investment for bond proceeds under this subchapter if the guaranteed investment contract: (1) has a defined termination date; . (2) is secured by obligations described by Section 2256.009(a)(1), excluding those obligations described by Section 2256.009(b), in an amount at least equal to the amount of bond proceeds invested under the contract; and (3) is pledged to the entity and deposited with the entity or with a third party selected and approved by the entity. (b) Bond proceeds, other than bond proceeds representing reserves and funds maintained for debt service purposes, may not be invested under this subchapter in a guaranteed investment contract with a term of longer than five years from the date of issuance of the bonds. (c) To be eligible as an authorized investment: (1) the governing body of the entity must specifically authorize guaranteed investment contracts as an eligible investment in the order, ordinance, or resolution authorizing the issuance of bonds; (2) the entity must receive bids from at least three separate providers with no material financial interest in the bonds from which proceeds were received; (3) the entity must purchase the highest yielding guaranteed investment contract for which a qualifying bid is received; . 57 Appendix G (4) the price of the guaranteed investment contract must take into account . the reasonably expected drawdown schedule for the bond proceeds to be invested; and (5) the provider must certify the administrative costs reasonably expected to be paid to third parties in connection with the guaranteed investment contract. Sec. 2256.016. AUTHORIZED INVESTMENTS: INVESTMENT POOLS. (a) 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. (b) To be eligible 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 an offering circular or other similar disclosure instrument that contains, at a minimum, the following information: (1) the types of investments in which money is allowed to be invested; (2) the maximum average dollar-weighted maturity allowed, based on the stated maturity date, of the pool; . (3) the maximum stated maturity date any investment security within the portfolio has; (4) the objectives of the pool; (5) the size of the pool; (6) the names of the members of the advisory board of the pool and the dates their terms expire; (7) the custodian bank that will safe keep the pool's assets; (8) whether the intent of the pool is to maintain a net asset value of one dollar and the risk of market price fluctuation; (9) 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; . 58 . . . - Appendix G (10) the name and address of the independent auditor of the pool; (11) 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 (12) the performance history of the pool, including yield, dollar-weighted average maturities, and expense ratios. (c) 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: (1) investment transaction confirmations; and (2) a monthly report that contains, at a minimum, the following information: (A) the types and percentage breakdown of securities in which the pool is invested; (8) the current average dollar-weighted maturity, based on the stated maturity date, of the pool; (C) the current percentage of the pool's portfolio in investments that have stated maturities of more than one year; (0) the book value versus the market value of the pool's portfolio, using amortized cost valuation; (E) the size of the pool; (F) the number of participants in the pool; (G) the custodian bank that is safekeeping the assets of the pool; (H) a listing of daily transaction activity of the entity participating in the pool; (I) the yield and expense ratio of the pool; (J) the portfolio managers of the pool; and (K) any changes or addenda to the offering circular. 59 Appendix G (d) 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. (e) 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 Security and Exchange Commission. (f) 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 at 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. (g) 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: (1) 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 (2) 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. (h) 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 than AAA or AAA-m or at an equivalent rating by at least one nationally recognized rating service. Sec. 2256.017. EXISTING INVESTMENTS. An entity is not required to liquidate investments that were authorized investments at the time of purchase. Sec. 2256.019. RATING OF CERTAIN INVESTMENT POOLS. A public funds investment pool must be continuously rated no lower than AAA or AAA-m or at an equivalent rating by at least one nationally recognized rating service or no lower than investment grade by at least one nationally recognized rating service with a weighted average maturity no greater than 90 days. Sec. 2256.020. AUTHORIZED INVESTMENTS: INSTITUTIONS OF HIGHER EDUCATION. In addition to the authorized investments permitted by this subchapter, an institution of higher education may purchase, sell, and invest its funds and funds under its control in the following: . 60 . . . Appendix G (1) cash management and fixed income funds sponsored by organizations exempt from federal income taxation under Section 501 (f), Internal Revenue Code of 1986 (26 U.S.C. Section 501 (f)); (2) negotiable certificates of deposit issued by a bank that has a certificate of deposit rating of at least 1 or the equivalent by a nationally recognized credit rating agency or that is associated with a holding company having a commercial paper rating of at least A-1, P·1, or the equivalent by a nationally recognized credit rating agency; and (3) corporate bonds, debentures, or similar debt obligations rated by a nationally recognized investment rating firm in one of the two highest long-term rating categories, without regard to gradations within those categories. Sec. 2256.0201. AUTHORIZED INVESTMENTS; MUNICIPAL UTILITY. (a) A municipality that owns a municipal electric utility that is engaged in the distribution and sale of electric energy or natural gas to the public may enter into a hedging contract and related security and insurance agreements in relation to fuel oil, natural gas, and electric energy to protect against loss due to price fluctuations. A hedging transaction must comply with the regulations of the Commodity Futures Trading Commission and the Securities and Exchange Commission. If there is a conflict between the municipal charter of the municipality and this chapter, this chapter prevails. (b) A payment by a municipally owned electric or gas utility under a hedging contract or related agreement in relation to fuel supplies or fuel reserves is a fuel expense, and the utility may credit any amounts it receives under the contract or agreement against fuel expenses. (c) The governing body of a municipally owned electric or gas utility or the body vested with power to manage and operate the municipally owned electric or gas utility may set policy regarding hedging transactions. (d) In this section, "hedging" means the buying and selling of fuel oil, natural gas, and electric energy futures or options or similar contracts on those commodity futures as a protection against loss due to price fluctuation. Sec. 2256.021. EFFECT OF LOSS OF REQUIRED RATING. An investment that requires a minimum rating under this subchapter does not qualify as an authorized investment during the period the investment does not have the minimum rating. An entity shall take all prudent measures that are consistent with its investment policy to liquidate an investment that does not have the minimum rating. 61 Appendix G Sec. 2256.022. EXPANSION OF INVESTMENT AUTHORITY. Expansion of investment . authority granted by this chapter shall require a risk assessment by the state auditor or performed at the direction of the state auditor, subject to the legislative audit committee's approval of including the review in the audit plan under Section 321.013. Section 2256.023. INTERNAL MANAGEMENT REPORTS. (a) Not less than quarterly, the investment officer shall prepare and submit to the governing body of the entity a written report of investment transactions for all funds covered by this chapter for the preceding reporting period. (b) The report must: (1) describe in detail the investment position of the entity on the date of the report; (2) be prepared jointly by all investment officers of the entity; (3) be signed by each investment officer of the entity; (4) contain a summary statement, prepared in compliance with generally accepted accounting principles, of each pooled fund group that states the: (A) beginning market value for the reporting period; . (8) additions and changes to the market value during the period; (C) ending market value for the period; and (D) fully accrued interest for the reporting period; (5) state the book value and market value of each separately invested asset at the beginning and end of the reporting period by the type of asset and fund type invested; (6) state the maturity date of each separately invested asset that has a maturity date; (7) state the account or fund or pooled group fund in the state agency or local government for which each individual investment was acquired; and (8) state the compliance of the investment portfolio of the state agency or local government as it relates to: (A) the investment strategy expressed in the agency's or local government's investment policy; and . 62 . . . Appendix G (8) relevant provisions of this chapter. (c) The report shall be presented not less than quarterly to the governing body and the chief executive officer of the entity within a reasonable time after the end of the period. (d) If an entity invests in other than money market mutual funds, investment pools or accounts offered by its depository bank in the form of certificates of deposit, or money market accounts or similar accounts, the reports prepared by the investment officers under this section shall be formally reviewed at least annually by an independent auditor, and the result of the review shall be reported to the governing body by that auditor. Sec. 2256.024. SUBCHAPTER CUMULATIVE. (a) The authority granted by this subchapter is in addition to that granted by other law. Except as provided by Subsection (b), this subchapter does not: (1) prohibit an investment specifically authorized by other law; or (2) authorize an investment specifically prohibited by other law. (b) Except with respect to those investing entities described in Subsection (c), a security described in Section 2256.009(b) is not an authorized investment for a state agency, a local government, or another investing entity, notwithstanding any other provision of this chapter or other law to the contrary. (c) Mortgage pass-through certificates and individual mortgage loans that may constitute an investment described in Section 2256.009(b) are authorized investments with respect to the housing bond programs operated by: (1) the Texas Department of Housing and Community Affairs or a nonprofit corporation created to act on its behalf; (2) an entity created under Chapter 392, Local Government Code; or (3) an entity created under Chapter 394, Local Government Code. Sec. 2256.025. SELECTION OF AUTHORIZED BROKERS. The governing body of an entity subject to this subchapter or the designated investment committee of the entity shall, at least annually, review, revise, and adopt a list of qualified brokers that are authorized to engage in investment transactions with the entity. Sec. 2256.026. STATUTORY COMPLIANCE. All investments made by entities must comply with this subchapter and all federal, state, and local statutes, rules, or regulations. 63 Appendix G SUBCHAPTER B. MISCELLANEOUS PROVISIONS . Sec. 2256.051. ELECTRONIC FUNDS TRANSFER. Any local government may use electronic means to transfer or invest all funds collected or controlled by the local government. Sec. 2256.052. PRIVATE AUDITOR. Notwithstanding any other law, a state agency shall employ a private auditor if authorized by the legislative audit committee either on the committee's initiative or on request of the governing body of the agency. Sec. 2256.053. PAYMENT FOR SECURITIES PURCHASED BY STATE. The comptroller or the disbursing officer of an agency that has the power to invest assets directly may pay for authorized securities purchased from or through a member in good standing of the National Association of Securities Dealers or from or through a national or state bank on receiving an invoice from the seller of the securities showing that the securities have been purchased by the board or agency and that the amount to be paid for the securities is just, due, and unpaid. A purchase of securities may not be made at a price that exceeds the existing market value of the securities. Sec. 2256.054. DELIVERY OF SECURITIES PURCHASED BY STATE. A security purchased under this chapter may be delivered to the comptroller, a bank, or the board or agency investing its funds. The delivery shall be made under normal and recognized practices in the securities and banking industries, including the book entry procedure of the Federal Reserve Bank. . Sec. 2256.055. DEPOSIT OF SECURITIES PURCHASED BY STATE. At the direction of the comptroller or the agency, a security purchased under this chapter may be deposited in trust with a bank or federal reserve bank or branch designated by the comptroller, whether in or outside the state. The deposit shall be held in the entity's name as evidenced by a trust receipt of the bank with which the securities are deposited. Sec. 2256.056. COMPLIANCE WITH OTHER LAWS. Notwithstanding any other law, a municipality with a population of less than 50,000 may not issue for any purpose or cause to be issued in its behalf any installment sale obligation or lease-purchase obligation having the principal amount of $1 million or more without complying with the provisions of Section 3.002, Chapter 53, Acts of the 70th Legislature, 2nd Called Session, 19S7 (Article 717k-S, Vernon's Texas Civil Statutes), regardless of whether the obligation was issued individually or in a series of related transactions, or whether the obligation was issued with no recourse to the local government. e 64 . . e - Appendix H RESOWl'ION NO. 90-04 WßEREþ,S, the City of North Richland Hills is an agency or political subdivision of the State of Texas (the "Participant") and is empowered to delegate to a public funds investment pool the authority tn invest funds and to act as custodian of investments purchased with local investment ftmds ¡ and WHEREAS, it is in the best interest of the Participant and its inhabitants to invest local funds in investments that yield the highest possible rate of return while providing necessary safekeeping and protection of the princ:ipal¡ and WHEREAS, the Treasurer of the State of Texas acting by and through the Texas Treasury Safekeeping Trust Cœ1pany (the IITrust Ccmpanyll) has created " TexPoo 1 ", a public funds investIœnt pool to effectuate the goals of providing investments at the highest possible yield and maintaining complete safety of the funds of the Participant, æw THEREFORE, be i t resolved as follows: 1. That the City of North Richland Hills establish an account in its name with the Trust Canpany' s Public Funds Investrænt Pool "TexPool It for the purpose of transrni tting local funds for investment by the Trust Canpany in Te.:<Pool. 2. That the following individuals whose signatures appear below are officers or employees of the Participant and are each hereby authorized to transmit funds to the Trust Canpany for investment in TexPool and are each further authorized to withdraw funds fran time to time, to issue letters of instruction, and to take all other actions deened necessary or appropriate for the. investJœnt of local funds: Nazœ: Lee Maness Title: Director of Finance Signature: ~(711~ Name: Jjro Cook Title: Asst. Director of Finance Signature: ~/ ~~_ Naræ: Carœlia Fisher Title: Senior Staff Accountant Signature: f/~L~ ,--6~ 65 Appendix H 3. That this Resolution and its authorization shall continue in full force and effect 1.mtil ænended or revoked by the Participant and 1.mtil the Trust Canpany receives a copy of any such amendment or revocation, W'1til such time the Trust Catlpany is entitled to rely on same. This Resolution is hereby introduced and adopted by the participant at its regular rreeting held on the 23rd day of January, 1990. CITY OF OORl'H RICHI..AND HTILS By' co i."" ""J {?,...- ¿ Amm. 9L~Æu.J 66 . . -- Resolution 96-19 Appendix H . LŒa1 Go?ernment Investment CQQpel"2tive Resolution RESOLUTION APPROVING AND AUTHORIZING EXECUTION OF AN INTERLOCAL AGREEMENT FOR P ARTICIP A TION IN A PUBUC FUNDS INVESTMENT COOPERATIVE (THE -COOPERATIVE-), DESIGNATING THE BOARD OF DIREC!ORS OF THE COOPERATIVE AS AN AGENCY AND INSTRUMENTALITY TO SUPERVISE THE COOPERATIVE. APPROVING INVES'I"MENT POUCIES OF THE COOPERATIVE, APPOINTING AUTHORIZED REPRESENTATIVES AND DESIGNATING INVESTMENT OFFICERS WHEREAS. the Interloc::a1 Cooperation Act. Chapter 791 of the Taas Government Cade, as amended (the -Interloca1 Act-), permits any -local &ovemment- to contract with one or more other -1oc:alaovemments- to perform -Iovcmmental functions and services, - includin¡ investment of public funds (as such phrases are defined in the Inà:rloc:a1 Act); WHEREAS, the Interlocal Act authorizes the contracting parties to any inte:rloc:a1 agreement to c:ontr.lct with agencies of the State of Texas, within the meaning of Chapter 771 of the Government Code, . WHEREAS. the Act permits the COI1traCtin¡ pa:ti= to any interlac:a1 a¡reement to create an administrative a¡euq to supervise the performance of such inter10cal acreem=u and to employ personnel and enpge in other administrative activities and provide other administrative services necessary to execute the terms of such interlocal agreement; WHEREAS, the Public Funds Investment Act, Chapter 2256 of the Texas Government Cade, as amended (the -PFIA -), authorizes the entities described in Subsection (a) of the PFIA to invest their funds in an eligible public funds investment pool, and the intends to . become and remain an e1ipble public funds investment pool, under the terms and conditions set forth in PFIA; ~e~~ City of North Richland Hills .....~. (the -Government Entity-) desires to enter into that certain Interloc:al Agreement (the - Agreement-), a œpy of which is presented with this Resolution and is incorporated herein by referenccy and to become a participant in a public funds investment pool created thereunder and under PFIA, to be known as I..oc:al Government Investment Cooperative (the ·Cooperative-); . WHEREAS. the Government Entity is a Government Entity as defined in the Agreement; and Raohu.iOQ - 67 Appendix H WHEREAS, the Government Entity desires to cause administration of the . Cooperative to be perfcnned by a beard of directors (the -Board-), which shall be an administrative agency created under the Interlocal Act; and WHEREAs, the Government Entity desires to designate the Beard as its agency and instrumentality with authority.to supervise performance of the Agreement. employ personnel and engage in other administrative activities and provide other adminiStt4tive services nt'!('..<')ë!ry to execute the terms of the Agreement; WHEREAs, each capitalized term used in this Resolution and not othe:vvise defined has the same meaning assigned to it in the Agre=nent; NOW, THEREFORE, BE IT RESOLVED: 1. The Acr=nent is bereby approved and adopted and, upon execution thereof by an Authorized iepresenwïve (defined below) and receipt of the Government Entity's application to join the Caoperaâve by the Administratcr, the Government Entity shall become a Participant in the ~ve for the purpose of investing its available funds therein from time to time in accordance wirh its terms. 2. The Board is hereby designated as an agency and instrumentality of the Government Entity, and the Beard sbaI1 have the authority CD supervise performance of the: Agreement and the Cooperative, ~ploy pcrscnne1 and engage in other administmivc activities and provide other adminiuntive services n-~ry to =eoùe the terms of the Aar=mem. 3. The investment policies of the Cooper.ttivc, as set forth in the document entitled Investment Policies, as summarized in the Infonnation Statement. and as may be amended from time to time by the Board. are hereby adopted as invesunent policies of the Government Entity with respect to money invested in the ~ve, and any existinC investment policies of the Government Entity in conflict therewith shaIll10t apply to investments in the Cooperative. . 4. The following officers, officials or employees of the Government Entity an: hereby dcsi¡natcd as · Authorized Rcprc:scntatïves- within the meaning of the A¡reemcnt, with full power anå authority to: execute the A¡r=mcnt, an applicar:ion to join the Cooperative and any other documents required to become a Participant; deposit money to and withdraw money from the Government Entity's Coopcraâve account from time to time in 3Ca)rdance with the Agreement and the Information Statement; and take all other actions deemed necessary or appropriate for the investment of funds of the Government Entity: R.aa.!¡¡eiQQ e 68 . . ~~ Appendix H Siptun:: . Printed Name: Bret Starr Title: Accountant SignatUre: Printed Name: Jackie Theriot T"1t1e: Accounting Manager .' Siptture: /, "¡"->' ""ri;:/// Ç' -"""'--.... -, ~ -- Påarcd Name: Charles Harris T"1tIe: Finance Director . In acc:ordance with Cooperative Procedur=, an Authorized Representative sha11 promptly notify the Cooperative in wrltin¡ of any chan¡es in who is scmn¡ as Authorized Repraeøtatives. ,. In addition to the fore¡oin¡ Authorized ~~--..tatives. each Invesmu:at Officer of the ~ve appointed by the Beard from time to time is hereby tf--ill'l'Ited as an investment officer of the Government Entity and, as such, shan have œ:sponsibillty for investin¡ the share of Cooper.uive assets repr=entin¡ fund.s of the Government Entity. Each depository and custodian appointed by the Board from time to time are hereby designated as a depository and custOdian of the Government Entity for purposes o( holdin¡ the shan: of Cooperative assets rep~ting funch of the Government Entity. PASSED AND APPROVED this 25 day of March . 19~ A'ITEST: By: 9 k¿.d77( ;-!, ¿...' Jeanette Rewis, City Secretary Printed name and title B¡e-, /:(1 ~~ '- ¿ T Y Brown, Mayor Printed Name and Title SEAL It_I·lei_ e 69 - Additional Party Acreemem The Government Entity of the State of Texas named below, acting by and through . the undersigned Authorized Representative, hereby agrees to become a party to that certain lnterlocal Agreement to which this page is attached, and thereby become a Participant in the Local Government Investment Cooperative, subject to all of the terms and provisions of such Agreement. The undersigned hereby represents that it is a Government Entity as defined in such Agreement. Appendix H Executed this --1hlüay of March . 1996. ~i~y n; ~M~~n ~i~n'~nñ ~il1Q Name of Government Entity ~~./ By: Autho . resentative Tommv Brown. Mavor Printed Name and Title ACCEPTED: . Local G By: PATRICK SHINKLE, v. P. Printed Name and Title Iøcerlocal Acreemeal e 70 - Appendix H . Resolution No. 2001-046 WHEREAS, pursuant to the requirements of the Public Funds Investment Act, Texas Government Code, Section 2256.001 et seq. (the "Acf'), the City Council of the City of North Richland Hills has previously reviewed and adopted an investment policy that provides in part that the funds of the City of North Richland Hills will be invested in investments permitted by the Act in order to: (i) invest only in investments legally permitted under Texas law; (ii) minimize risk by managing portfolio investments so as to preserve principal and maintain a stable asset value; (iii) manage portfolio investments to ensure cash will be available as required to finance operations: and (iv) maximize current income to the degree consistent with legality, safety, and liquidity; and WHEREAS, the Act provides that funds under the control of the City of North Richland Hills may be invested through investment pools meeting the standards of Section 2256.016 of the Act and the City of North Richland Hills has reviewed the Information Statement, dated 3/3/96, as supplemented on 12/31/98 (the "Statemenr), of Texas Cooperative Liquid Assets Securities System, an investment pool (the "Pool") administered by MBIA Municipal Investors Service Corporation, as the manager of the Pool (the "Manager") and has determined that the investments proposed to be acquired by the Pool are of a type permitted by the Act and consistent with the Policy will assist in achieving the goals set forth in the Policy; and . WHEREAS, the City of North Richland Hills understands that the Pool is created through an instrument of trust, dated as of January 1, 1996, and amended as of November 20, 1997 (the "Trust Instrument"), which provides the terms on which the Pool will operate and the rights of the participants in the Pool who will be governed and sets for the responsibilities of the Manager, and of Bank One, Texas, N.A. as trustee (the "Trustee); NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS, THAT: The form, terms and provisions of the Trust Instrument, a draft of which was presented and reviewed at this meeting, be and the same are hereby approved and adopted; and that Larry Koonce, Director of Finance, heretofore appointed by the City of North Richland Hills pursuant to the Policy and the Act as its Investment Officer, be and he is hereby authorized and directed to execute and deliver to the Manager and the Trustee in the name and on behalf of the City of North Rich/and Hills, a Trust Instrument substantially in the form of the trust instrument reviewed and approved at this meeting, together with such changes as said officer may approve, such approval to be conclusively evidenced by the execution thereof; and be it further Resolved, that the investment program described in the Statement is hereby found and determined to be consistent with the Policy, and to preclude imprudent investment activities arising out of investment transactions conducted between the City of North Richland Hills and the Pool; and be it further . Resolved, that the City Council hereby officially finds and determines that the facts and recitations in the preamble of this Resolution are true and correct and adopts the preamble as part of the operative provisions of this Resolution; and be it further 71 Appendix H Resolved, that the City Council hereby finds and declares that written notice of the . date, hour, place and subject of the meeting at which this Resolution was adopted was posted. for the time required by law preceding this meeting, and that such meeting was open to the public as required by law at all times during which this Resolution and the subject matter thereof were discussed, considered and formally acted upon, all as required by Chapter 551, Texas Government Code, as amended, and the Act; and be it further Resolved, that the officers of the City of North Richland Hills, each is expressly authorized, empowered and directed from time to time to perform all acts and to execute, acknowledge, seal and deliver in the name and on behalf of the City of North Richland Hills all certificates, instruments and other documents as they may determine to be necessary or desirable to carry out the provisions of this Resolution and the Trust Instrument, such determination to be conclusively evidenced by the performance of such acts and the execution of any such documents; and be it further Resolved, that this Resolution shall take effect and be in full force upon and after its passage. PASSED AND APPROVED this 27th day of August 2001. APPROVED: . Rex McEntire, Attorney for the City APPROVED AS TO CONTENT: h~ Ié~ Larry Ko ce, Director of Finance . 72 - . . e - Resolution No. 2003.;023 Appendix H WHEREAS, pursuant to the requirements of the Public Funds Investment Act. Texas Government Code, Section 2256.001 et seq. (the "Act"), the City Council of the City of North Richland Hills has previously reviewed and adopted an investment policy that provides in part that the funds of the City of North Richland Hills will be invested in investments permitted by the Act in order to: (i) invest only in investments legally pennitted under Texas law; (ii) minimize risk by managing portfolio investments so as to preserve principal and maintain a stable asset value; (iii) manage portfolio investments to ensure cash will be available as required to finance operations; and (iv) maximize current income to the degree consistent with legality, safety, and liquidity; and WHEREAS, the Act provides that funds under the control of the City of North Richland Hills may be invested through investment pools meeting the standards of Section 2256.016 of the Act and the City of North Richland Hills has reviewed the Information Statement, dated 4/8/02 (the "Statement"), of Texas Short Term Asset Reserve Program ("TexSTAR"), an investment pool (the "Pool") administered by First Southwest Asset Management, Inc. and JPMorgan Fleming Asset Management (USA), Inc. as the managers of the Pool (the "Managers") and has determined that the investments proposed to be acquired by the Pool are of a type permitted by the Act and consistent with the Policy will assist in achieving the goals set forth in the Policy; and WHEREAS, the City of North Richland Hills understands that the Pool is created under the authority of applicable Texas law, including the Interlocal Cooperation Act, Chapter 791 of the Texas Govemment Code, as amended (the "Interlocal Act"), and the Investment Act and that the attached agreement (the "Agreement), upon enactment, serves as the agreement between the City and the Pool and provides the terms on which the Pool will operate and the rights of the participants in th.e Pool who will be governed and sets for the responsibilities of the Managers, and of JPMorgan Chase Bank. as custodian (the "Custodian"); NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS. TEXAS, THAT: The form, terms and provisions of the Agreement, a draft of which was presented and reviewed at this meeting, be and the same are hereby approved and adopted; and that Larry Koonce, Director of Finance, heretofore appointed by the City of North Richland Hills pursuant to the Policy and the Act as its Investment Officer, be and he is hereby authorized and directed to execute and deliver to the Managers and the Custodian in the name and on behalf of the City of North Richland Hills, an Agreement substantially in the form of the agreement reviewed and approved at this meeting, together with such changes as said officer may approve, such approval to be conclusively evidenced by the execution thereof; and be it further Resolved, that the investment program described in the Statement is hereby found and determined to be consistent with the Policy, and to preclude imprudent investment activities arising out of investment transactions conducted between the City of North Richland Hills and the Pool; and be it further Resolved. that the City Council hereby officially finds and determines that the facts and recitations in the preamble of this Resolution are true and correct and adopts the preamble as part of the operative provisions of this Resolution; and be it further 73 Appendix H Resolved, that the City Council hereby finds and declares that written notice of the date, hour, place and subject of the meeting at which this Resolution was adopted was posted for the time required by law preceding this meeting, and that such meeting was . open to the public as required by law at all times during which this Resolution and the subject matter thereof were discussed, considered and formally acted upon, all as required by Chapter 551, Texas Govemment Code, as amended. and the Act: and be it further Resolved, that the officers of the City of North Richland Hills, each is expressly authorized, empowered and directed from time to time to perform all acts and to execute, acknowledge, seal and deliver in the name and on behalf of the City of North Richland Hills all certificates, instruments and other documents as they may determine to be necessary or desirable to carry out the provisions of this Resolution and the Agreement, such determination to be conclusively evidenced by the performance of such acts and the execution of any such documents: and be it further Resolved, that this Resolution shall take effect and be in full force upon and after its passage. . ØMuÌYå~' Patricia Hutson I City Secretary APPROVED AS TO CONTENT: e 74 - . . . Appendix I GLOSSARY Agencies: Organizations formed by the Federal Government but not directly controlled by the Government. Each agency is authorized to issue its own securities, which are comparable to Treasury Notes, Bills, and Bonds. Book Value: The value of a security as stated in the City's general ledger. This is generally the purchase price plus any amortized discount or less any amortized premium. Bullet Agency: An agency security that contains no call provision. Interest is paid until the investment matures. Callable: Describes a fixed income security containing a provision that allows the issuer to redeem the security for a fixed price or a range of dates. Bonds are usually called when interest rates fall so significan that the issuer can save money by issuing new bonds at lower rates. Certificate of Deposit (CD): A time deposit interest rate for a specified time for the amount by a bank that guarantees a specified the certificate. Commercial Paper: Short-term unsecured promissory notes issued by large corporations with maturities ranging from two to 270 days. CUSIP: Committee on Uniform Securities Identification Procedures. This committee assigns . g numbers and codes for all securities. The identifying number itself is often referred "CUSIP." Discount: The difference between the amount paid below a security's par value and the security's par value. Discount Notes: Short-term securities by government discounted price and redeemed at full purchase price and maturity value is the investment's interest income. that are sold at a between the Federal Funds Interest rate charged by Reserve district banks needing most sensitive indicator of the direction of with excess reserves at a Federal meet reserve requirements. It is the tes, since it is set daìJy by the market. FFCB: (Federal Farm Credit Bank) a U. S. Government Agency that issues securities. FHlB: (Federal Home Loan Bank) a U. S. Government Agency that issues securities. 75 . Appendix I FHLMC: (Federal Home Loan Mortgage Corporation, or Freddie Mac) aU. S. Government Agency that issues securities. . Flex Repos: A Flexible Repurchase agreement is a type of structured Repo that allows portions of the invested amount to be withdrawn under specified conditions before the maturity of the Repo. This type of transaction is useful for the investment of construction funds, where the size and timing of payments are somewhat predictable FNMA: (Federal National Mortgage Association, or Fannie Mae) aU. S. GovernmentAgency that issues securities. Inverted Yield Curve: An unusual situation where short-term interest rates are higher than long-term rates. This usually occurs when a surge in demand for short-term credit drives up short-term rates on T-bills and money-market funds, while long-term rates move up more slowly. LOGIC: (Local Government Investment Cooperative) a privately managed investment pool administered by Southwest Securities Capital Corporation with a structure similar to Texpool. Market Value: The value of a security if it was sold for cash at a given date. Maturity Value: The amount received for an investment at its maturity, not including coupon interest. Also known as par value. MBIA CLASS: MBIA Cooperative Liquid Assets Securities System (CLASS), one of MBIA's local government investment pools designed to make the job of managing public funds safer and easier. CLASS enables local governments to pool funds with other units of government, giving them the opportunity to obtain safety of principal, daily liquidity, and competitive rates on overnight investments. . Net Asset Value: A term used to indicate the market value of one dollar invested in the portfolio at a given date. This measure shows the aggregate value of the portfolio instead of comparing the gain or loss of any given investment in the portfolio. Public Funds Investment Act: Also known as Chapter 2256 of the Texas Government Code. This law is the primary legislation regarding the proper investment guidelines for political subdivisions in the State of Texas. A copy of this act is included in the appendices of the City's Investment Policy. Purchased Interest: An additional amount paid for a fixed income security when the investment is purchased in the secondary market on a date other than the coupon payment date. The additional amount paid represents the seller's accrued interest on the investment since the last coupon date. The buyer recovers any purchased interest and realizes interest income for the period he owns the investment on the next coupon payment date. Premium: The amount paid above a fixed income security's par (maturity) value. . 76 - . Appendix I Repurchase Agreements (Repos): Agreements where the City purchases an investment with an t to resell the investment to at a specific date for a specific price. The the purchase sale price represents interest earned on the transaction. Repos can be established for any given size and maturity. Return on Investment (ROI): The amount of money earned on a given amount of investments for a specified period of time. TexPool: An investment pool administered by Lehman Brothers and Federated Investors. Funds from political subdivisions of Texas are deposited with T exPool and invested as a single portfolio to earn higher levels of interest income. . TexSTAR The Texas Short Term Asset Res Southwest Asset Management, Inc. and JPMorgan Chase. The purpose of TexSTAR is to offer a safe, efficient, and liquid investment alternative to local governments, in the State of Texas so that they may benefit from and realize a higher investment return by utilizing economies of scale and professional investment expertise. Treasury Bills (T -Bills): Short term securities sold by the federal government They have a maturity of one year or under, and are similar to discount notes. Treasury Notes: Securities issued by the federal government with maturities between 1 and 10 years. Interest is paid in semi-annual coupons until maturity. Unrealized Gain (loss): The difference between the price paid for an investment plus or minus any unamortized discount or premium and the proceeds that would be realized if the investment were to be sold on a specific date. Weighted Average Maturity (WAM): A measure of the average length until maturity for the investment portfolio based on the number of days until maturity for each investment weighted by the dollar value of each investment . 77 Appendix I Yield Curve: A graphical representation of the principal that the market for investments with longer maturities demand, a higher yield due to greater uncertainty in the financial environment than do shorter term investments. The yield curve is typically upward sloping but varies greatly in shape and steepness based on economic and political factors. Yield to Call (YTC): The percentage rate of a bond or note if the investor buys and holds the security until the call date. This yield is valid only if the security is called prior to maturity. Generally, bonds are callable over several years and normally are called at a slight premium. The calculation of yield to call is based on coupon rate, length of time to call, and market price. Yield to Maturity (YTM): The percentage rate of return paid on a bond, note, or other fixed income security if the investor buys and holds it to its maturity date. The calculation for YTM is based on the coupon rate, length of time to maturity, and market price (purchase price). It assumes that coupon interest paid over the life ofthe bond will be reinvested at the same rate. 78 - . . . .,. INFORMAL REPORT TO MAYOR AND CITY COUNCIL No. IR 2005-065 ~ Date: T Subject: May 23, 2005 Simmons Drive (Mid-Cities Boulevard to Grapevine Highway); Short Term Improvements and Long Term Improvements During the past several months there has been a lot of development activity along the section of Simmons Drive between Mid-Cities Boulevard and Grapevine Highway. This section of Simmons Drive represents the eastern border of Hometown, Therefore, some of the development activity has consisted of planned Hometown expansions, yet other developments have been outside of Hometown such as the U.I.C.I. expansions, Various times during the past year, the individual projects have been brought before Council for either approval or for informational purposes. Some of the key projects are the new elementary school, the proposed Library, the mixed use commercial/retail development and as previously mentioned, the U.I.C.I. expansions. Staff has been looking at both the short and long term improvement plans for this section of Simmons Drive. Since the plan may include improvements that Council may not be aware of, staff wanted to brief Council on the entire plan. Short Term Improvements The short term plan is to get the entire section of Simmons Drive between Mid-Cities Boulevard and Grapevine Highway in the best possible condition before the new elementary school opens in late summer. This will be accomplished by first reconstructing the existing asphalt section of the street adjacent to the new elementary school and U,I.C,I. with a new wider concrete section. This work will be performed by the school contractor. Once this work is complete the majority of Simmons Drive from Mid-Cities Boulevard south past the school will be concrete. The width will vary because there will be sections of pavement on various sides not yet improved, but for the most part a concrete driving surface. Staff is currently discussing with BISD the possibility of their contractor constructing this section of Simmons Drive to its full width with the City, Hometown, and U.I.C.I. participating to cover the cost of their corresponding portions of the improvements. The details are still being worked out but will be presented to Council in the near future. The remaining asphalt section of Simmons Drive which begins at the south property line of the school and winds around to Walker Boulevard would be overlaid by the Public Works Department during the summer. This section of Simmons Drive was part of the Preventive Street Maintenance Program which was approved earlier this year. Lonq Term Improvements The long term plan consists of completing the section of Simmons Drive from Mid-Cities Boulevard south past the school to its full width if it is not completed prior to school starting in late summer. As mentioned above, staff is looking into the possibility of completing this section this summer. If the details cannot be worked out and/or Council elects not to participate, then these improvements would be made through a Capital Improvement Project that will be presented in the proposed 2005/06 Capital Projects Budget. ISSUED BY THE CITY MANAGER NORTH RICH LAND HILLS, TEXAS .~ . . . The remaining section of Simmons Drive consists of an asphalt section (overlaid in the Short Term Plan) beginning at the south side of the school property and winding around to the improved section of Walker Boulevard. This section is planned to be realigned and brought in between the proposed Library and the Tarrant County College conference center. Simmons Drive would end at the future street in front of the Library. These improvements are planned for a Capital Improvement Project that will be presented in the proposed 2005/06 Capital Projects Budget. Staff will present these plans during the Pre Council Meeting and will be available to answer any questions. Respectfully submitted, íL·~:t~ C~//\~, Mike Curtis, P.E, Public Works Director CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 5/23/05 Subject: Election of Mayor Pro Tern Agenda Number: GN 2005-051 The Charter states that the Mayor Pro Tern shall be selected from the seven council members at the first regular meeting following the City's general election. Since this is the first regular meeting following the May 7 general election and the canvass of the election, the City Council must elect a Mayor Pro Tem at this Council meeting. Recommendation: To elect a Mayor Pro Tern Finance Review Source of Funds: Bonds (GO/Rev.) Operating Budget Other Account Number Sufficient Funds Ävallable Finance Director gát/~&~ ~7j~ Department Head Signature Paqe 1 of NRH CITY OF NORTH RICHLAND HILLS PROCLAMATION WHEREAS, a rove for restoratíon anáfiístoríca{ noveCs, {edJanet Çjoûgfit{y to oyen Çjoûgfit{y's Çja{{ery ín 1985 next to tfie Smítfifíe{á'Post Offíce; aná WHEREAS, tfie successfu{ busíness exyandéá severa{ tímes ínc{uding moves to SmítfiJíe{á Statíon, Nortfieast Ma{{ and: Nortfi J{í{Cs Ma{{; and: WHEREAS, ín 1990 Çjoûgfit{y's Çja{{ery founá íts fiome aná oyeneá ín íts current {ocatíon at 5505 'Davís 13ou{evará; aná WHEREAS, eacfi move aná exyansíon turneá Çjo{ígfit{y's Çja{{éry ínto what ít ís toáay, a tru{y syecía{y{ace wfierejríenás anáfamí{y can go anáGe ínsyíredGy magnifícent room áesígns, one-oJ-a-kíná treasures, aná new áécoratíve accessoríes; aná WHEREAS, Janet Çjoûgfit{y enjoys Geíngyart of tfie {oca{Eusíness communíty aná fias gíven fier tíme to serve as a Goará memGer for tfie Nortfi 'Rícfi{and: J{í{Cs 'Economíc Veve{oyment Commíttee aná tfie Nortfi 'Rícfi{aná j-{í{Cs 'Teen Court; aná WHEREAS, Çjoûgfit{y's Çja{{ery ís ce{ef3ratíng íts 2dh ..Anníversary áuríng tfie montfi of May 2005_ NOW, THEREFORE, I, Oscar 'Trevíno, Mayor of tfie Cíty of North 'Rícfifaná J{í{Cs áo fiereGy yroc{aím May 20, 2005 as : "GOLIGHTLY'S GALLERY DAY" ín tfie Cíty of Nortfi 'Rícfi{aná J-(í{Cs aná urge a{{ cítízens aná cívíc organízatíons to recogníze tfiís {oca{ Eusíness for íts 20 years of servíce to our communíty_ IN 'WI'I':JV7£SS 'W:J{'E'R:EO:F, I fiave hereunto set my fianá aná causeátfie sear of tfie Cíty of Nortfi 'Rícfi{aná J{í{Cs to Ge affíxeá tfiís tfie 12tfi áay of May 2005_ r\-.... _ ~ · ~----~-------- Oscar Trevíno, :Mayor . YARD-OF-THE-MONTH May, 2005 AREA 1 Kim Kirbv. 3808 Park Oaks Court AREA 2 Oris Baldwin. 4624 Mackev Dr. AREA 3 Dale & Sarah Henry. 4913 Skvlark Circle AREA 4 Terrv & Brenda Garrett. 5817 Steeclewood e AREA 5 Robert Moffeit. 8409 Birdae Street AREA 6 Caroline Pivonka. 6733 Brittanv Park Court AREA 7 Ridvan Karsi. 8629 Madison Dr. AREA 8 Tom & Jeanice Gaither, 7832 Aubrey Lane AREA 9 Lee Ann Moore. 8821 Trails Edae Texas SmartScape Winner Anaela McCrory. 7404 Woodhaven Business Landscape Winner Arcadia DeveloDment. Attention: Bill Gietema 5440 Harvest Hill Road, Suite 206. Dallas, TX ?? . 1" e e e MINUTES OF THE PRE-COUNCIL AND REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS, HELD IN THE CITY HALL, 7301 NORTHEAST LOOP 820 - MAY 09,2005 PRE-COUNCIL SESSION The City Council of the City of North Richland Hills, Texas met in Pre-Council session on the 9th day of May, 2005 at 6:15 p.m. in the Pre-Council Room prior to the 7:00 regular Council meeting. Present: Oscar Trevino David Whitson John Lewis Jo Cox Suzy Compton JoAnn Johnson Nancy Bielik Timothy J. Welch Staff Members: Larry J. Cunningham Richard Torres Ogden Bo Bass Karen Bostic Patricia Hutson George Staples Mary Edwards John Pitstick Larry Koonce Mike Curtis Dave Green Drew Corn JoAnn Stout Vickie Loftice Richard Abernethy Call to Order Mayor Mayor Pro Tern Councilman Councilwoman Councilwoman Councilwoman Councilwoman Councilman City Manager Assistant City Manager Assistant City Manager Managing Director Administrative/Fiscal Services City Secretary City Attorney Public I nformation Officer Director of Development Finance Director Public Works Director Director of Planning Budget Director Neighborhood Services Director Director of Parks & Recreation Assistant to City Manager Mayor Trevino called the Pre-Council meeting to order at 6:15 p.m. 1. Discuss items from Regular May 09. 2005 City Council Meeting Item 7g, PW 2005-06 - Staff clarified for Councilman Lewis that the signal light at Davis and Shadywood would be a full function light as opposed to an emergency light. Councilwoman Cox referred to Council's discussion at a recent council meeting with a church concerning signalization at Bursey Road and Davis, and questioned the closeness of the two signals. Staff advised that a signal light at Bursey would need to e e City Council Minutes May, 09 2005 Page 2 be approved by the State and explained the distance requirements between signal lights. 2. IR 2005-059 Discuss Ordinance Amendina Appendix A to the Code of Ordinances and Fees Charaed Under Chapter 18 of the Code Neighborhood Services Director JoAnn Stout advised the item was a housekeeping item to clarify some of the categories and their fees. Ms. Stout advised of new categories being added and their fees. Separate categories are being requested for concession stands and municipal special events vendors. Staff is requesting to reduce the weekend food vendor fee from $520 to $110, A survey of comparable cities with the same program was conducted and it was determined that $110 was consistent with other cities. Staff is requesting to remove the fee for group day care homes because they are currently being inspected by the State Linder the Child Care Licensing Department. 3. IR 2005-060 Update on the Pilot Proaram for Outsourcina Parks Mowing Parks Director Vickie Loftice updated the Council on the pilot program to outsource parks mowing. Council discussed the pilot program at their March 28 meeting and concurred with going forward with a pilot program. Bids were solicited and VMC Landscape Services submitted the lowest total base bid. The initial contract period will begin May 16, 2005 and continue through September 30, 2005. Upon approval of the 2005/06 fiscal year budget, the contract will be extended to September 26,2006 with an option to renew the contract twice for one year periods at the end of the 2005/06 contract. Staff will monitor and evaluate the program to measure the success of the program and its continuation. 4. IR 2005-054 State Legislative Update Managing Director Karen Bostic highlighted some of the priority legislative bills the city is tracking and addressed questions from the Council. 5. Executive Session Mayor Trevino announced at 6:29 p.m. that the Council would adjourn to Executive Session as authorized by Texas Government Code Section 551.074 for deliberation of personnel matters for council appointed positions and board members of the City of North Richland Hills. 6. Adiournment Mayor Trevino announced at 7:23 p.m, that the Council would adjourn to the regular e Council meeting. e e e City Council Minutes May, 09 2005 Page 3 REGULAR COUNCIL MEETING 1. CALL TO ORDER Mayor Trevino called the meeting to order May 09, 2005 at 7:28 p.m, ROLL CALL Present: Oscar Trevino David Whitson John Lewis Jo Cox Suzy Compton JoAnn Johnson Nancy Bielik Timothy J. Welch Mayor Mayor Pro Tern Councilman Councilwoman Councilwoman Councilwoman Councilwoman Councilman Staff: Larry J, Cunningham Ogden Bo Bass Richard Torres Patricia Hutson George Staples City Manager Assistant City Manager Assistant City Manager City Secretary Attorney 2. INVOCATION Councilwoman Compton gave the invocation. 3. PLEDGE OF ALLEGIANCE Councilwoman Compton led the pledge of allegiance, 4. SPECIAL PRESENTATIONS City Council Minutes May, 09 2005 Page 4 e PROCLAMATION - PUBLIC WORKS WEEK BEING PRESENTED TO JIMMY CATES, DAVID SMYTH AND BOB NELSON Councilwoman Cox presented proclamation recognizing "National Public Works Week" to Public Works Director Mike Curtis, Operations Manager Jimmy Cates, Streets Supervisor Gaylon Cremeen and Utility Superintendent David Smyth. 5. CITIZENS PRESENTATION Mr. Ken Sapp, 8312 Thornway Court, spoke on the past Saturday's City Council election and the voter turnout. Mr. John Propp, 8220 Euclid Avenue, spoke on the election activities the past several months and his hope that the vision for the City would continue to be kept alive - the City Walk at Calloway Creek, Library, more road improvements, new businesses, and neighborhood developments. Councilwoman Johnson left the meeting at 7:40 p.m. e 6. REMOVAL OF ITEM(S) FROM THE CONSENT AGENDA None. 7. APPROVAL OF CONSENT AGENDA ITEMS APPROVED A. MINUTES OF THE APRIL 25, 2005 COUNCIL MEETING B. FP 2005-06 CONSIDERATION OF A REQUEST FROM ANGEL FREEZE TO APPROVE THE FINAL PLAT OF LOTS 1-4, BLOCK 1 ALLEN ADDITION (LOCATED IN THE 7700 BLOCK OF CHAPMAN ROAD - 1.505 ACRES) C. FP 2005-04 CONSIDERATION OF A REQUEST FROM WINKELMANN & ASSOCIATES TO APPROVE THE FINAL PLAT OF LOTS 2 & 3, BLOCK 1 U.I.C.I. ADDITION (LOCATED ON UICI DRIVE EAST OF SIMMONS DRIVE - 4.335 ACRES) D. FP 2005-06 CONSIDERATION OF A REQUEST FROM RICK FIGUEROA TO APPROVE THE FINAL PLAT OF LOTS 1-4, BLOCK 1 TAYLOR'S PLACE ADDITION (LOCATED IN THE 8800 BLOCK OF KIRK LANE - 2.996 ACRES) e City Council Minutes May, 09 2005 Page 5 e E. GN 2005-043 APPROVE RENEWAL OF ARBITRAGE REBATE COMPLIANCE AGREEMENT WITH FIRST SOUTHWEST ASSET MANAGEMENT, INC. _ RESOLUTION NO. 2005-037 F. PU 2005-022 AWARD OF BID TO VMC IN THE AMOUNT OF $259,211.48 FOR IMPLEMENTING THE PILOT PROGRAM FOR OUTSOURCING GENERAL PARKS MOWING - RESOLUTION NO. 2005-038 G. PW 2005-006 AWARD OF BID FOR THE DAVIS BOULEVARD AT SHADYWOOD LANE TRAFFIC SIGNAL INSTALLATION TO SHARROCK ELECTRIC, INC. IN THE AMOUNT OF $74,678.70 MAYOR PRO TEM WHITSON MOVED TO APPROVE THE CONSENT AGENDA. COUNCILWOMAN BIELlK SECONDED THE MOTION. MOTION TO APPROVE CARRIED 6-0. e 8. ZC 2005-05 PUBLIC HEARING AND CONSIDERATION OF A REQUEST FROM RICHARD RHODES FOR A ZONING CHANGE FROM "C-2" COMMERCIAL AND "R- 3" RESIDENTIAL TO "RD-PD-HC" REDEVELOPMENT PLANNED DEVELOPMENT FOR "HC" HEAVY COMMERCIAL DISTRICT USES (LOCATED AT 7516 SMITHFIELD ROAD - 1.6 ACRES) - ORDINANCE NO. 2831 APPROVED Mayor Trevino opened the Public Hearing. Nature of request is to rezone the site from "C-2" Commercial and "R-3" Residential District to "RD-PD-HC" for all "HC" Heavy Commercial uses. The applicant is proposing to extend the adjacent Smithfield Storage facility onto this site. A redevelopment planned development for heavy commercial uses has been requested because the applicant is requesting several landscaping and screening variances. The request is consistent with the Comprehensive Plan, The development consists of four single-story buildings containing a total of 84 rental units and 15 open storage spaces. Variances being requested are: e 1) Variance requested to utilize the exterior wall of the northern-most storage building as the required masonry screening wall. The wall shall contain no windows or openings; 2) Timing for the construction of the required screening wall along the east side of the site shall coincide with the issuance of the first residential building permit issued for Parkwood Estates Addition. This wall shall be constructed within the 2.5' wall easement as shown on the plan; 3) Variance requrested from the requirement of a 15' landscape buffer and landscaping along the east boundary of the site; e e e City Council Minutes May, 09 2005 Page 6 4) Variance requested from providing parking required for the expansion. The Planning & Zoning Commission recommended approval of ZC 2005-05 and the final site plan with the variances outlined. The adjacent property owner (Integer Developments Inc.) has stated that the future Parkwood Estates residential development will accept responsibility for the required masonry screening wall and landscaping required along the common boundary line. City ordinance places the responsibility on the more intensive use, which would be the applicant. The applicant has requested variances from this responsibility based on Integer's offer. The City Attorney has opined that the offer is a private agreement between property owners and is not enforceable by the City. Mr. Richard Rhodes, applicant, presented the case and was available to answer questions from the Council. Mr. Dave Green, Director of Planning, presented the recommendations of staff and the Planning & Zoning Commission, . There were questions and discussion on a screening wall at the back of the north warehouse, the existing stockade fence along Smithfield Road coming down, the type of masonry to be used for the tilt-walls, hours of operation, the possibility of RV's being stored in the open parking area along the property line backing up to lots 5 and 6, and the accessibility of the site through a keyed entry/access code. A suggestion was made to construct a building where the open parking area is located along lots 5 and 6 and the back of the building forming the screening wall. The applicant was not in favor of changing the site plan and placing a building to back up to lots 5 and 6, Mayor Trevino asked if there was anyone wishing to speak for or against the request. There being no one wishing to speak Mayor Trevino closed the public hearing, COUNCILMAN LEWIS MOVED TO APPROVE ORDINANCE No. 2831, ZC 2005-05 AS APPROVED BY THE PLANNING & ZONING COMMISSION. COUNCILWOMAN BIELIK SECONDED THE MOTION. MOTION TO APPROVE CARRIED 4-3; COUNCILMAN LEWIS, COUNCILWOMEN Cox AND BIELIK VOTING FOR AND COUNCILWOMAN COMPTON, MAYOR PRO TEM WHITSON AND COUNCILMAN WELCH VOTING AGAINST. MAYOR TREVINO VOTING IN FAVOR TO BREAK THE TIE. 9. GN 2005-044 PUBLIC HEARING AND CONSIDERATION OF ORDINANCE ADOPTING YOUTH PROGRAMS STANDARD OF CARE - ORDINANCE NO. 2832 APPROVED e e City Council Minutes May, 09 2005 Page 7 e Mayor Trevino opened the Public Hearing. The purpose is to request Council approval of an ordinance adopting the North Richland Hills Youth Programs Standards of Care. Adopted standards are a State requirement for an exempt status for day care licensing, The Parks and Recreation Department offers day camp programs for children ages five to thirteen, The State requires municipal day camp youth programs for elementary age children to meet day care licensing requirements or file for an exemption. In order for the Parks Department to receive exempt status, the City must submit a copy of program standards, the notice of public hearing and the ordinance adopting the standards. The North Richland Hills day camp program meets and in some areas exceeds the State's standards, The Standards of Care included in the Parks and Recreation day camp pOlicies and procedures have already been in place and have been used in the staff training process each year prior to camp starting. . Ms. Vickie Loftice, Parks Director, presented the item and was available to answer questions, Mayor Trevino asked for anyone wishing to comment on the item. There being no one wishing to speak, Mayor Trevino closed the Public Hearing. COUNCILWOMAN COMPTON MOVED TO ADOPT ORDINANCE No. 2832, GN 2005-044. MAYOR PRO TEM WHITSON SECONDED THE MOTION. MOTION TO APPROVE CARRIED 6-0. 10. GN 2005-045 APPROVE ORDINANCE AMENDING APPENDIX A TO THE CODE OF ORDINANCES AND THE FEES CHARGED UNDER CHAPTER 18 OF THE CODE _ ORDINANCE NO. 2833 APPROVED Item is a housekeeping item to include fees with respect to food services. The proposed ordinance clarifies some of the categories and their fees. Fee categories are being established for Concession Stands and Municipal Special Events Vendors. The Weekend Food Vendor Fee is being reduced and the group day care home fee is being removed. Neighborhood Services Director JoAnn Stout presented item and was available to answer questions. MAYOR PRO TEM WHITSON MOVED TO APPROVE ORDINANCE No. 2833J GN 2005-045. COUNCILWOMAN BIEUK SECONDED THE MOTION. e e City Council Minutes May, 09 2005 Page 8 MOTION TO APPROVE CARRIED 6-0. 11. GN 2005-046 APPROVE PARTICIPATION IN TARRANT COUNTY CDBG AND HOME INVESTMENT PARTNERSHIP PROGRAM - RESOLUTION NO. 2005-039 APPROVED The resolution supports the application of Tarrant County for funding from the Housing and Community Development Act of 1974. In order for the City to continue to receive Community Oevelopment Block Grant (COBG) funds, Tarrant County must requalify every three years as an Urban County under the CDBG and HOME programs. The City uses the COBG funds to improve streets, for housing rehabilitation and to fund a portion of the Northeast Transportation Service for disabled and senior residents, Mr. Richard Abernethy, Assistant to City Manager, presented the item and answered questions··from Council. Mr, Abernethy advised that the City had approximately three or four neighborhoods that qualified for CDBG funds and that there were pockets within the City that qualified. He also explained what it means to be a direct entitlement city. COUNCILMAN WELCH MOVED TO APPROVE RESOLUTION No. 2005-039. COUNCILWOMAN COMPTON SECONDED THE MOTION. MOTION TO APPROVE CARRIED 6-0. 12. GN 2005-047 APPROVE JOINT ADMINISTRATIVE AGREEMENT FOR ADMINISTRATION OF THE COMMUNITY DEVELOPMENT ENTITLEMENT PROGRAM - RESOLUTION NO. 2005-040 APPROVED Part of the process for the City to continue to receive Community Development Block Grant (COBG) funds is the renewal of the joint administrative agreement with Tarrant County to include the administration of the CDBG entitlement funding. Mr. Richard Abernethy was available to answer questions from Council. COUNCILMAN LEWIS MOVED TO APPROVE GN 2005-047, APPROVING THE RENEWAL OF THE JOINT ADMINISTRATIVE AGREEMENT FOR THE ADMINISTRATION OF THE COMMUNITY DEVELOPMENT BLOCK GRANT ENTITLEMENT PROGRAM. COUNCILWOMAN BIEUK SECONDED THE MOTION. e MOTION TO APPROVE CARRIED 6-0. City Council Minutes May, 09 2005 Page 9 e 13. GN 2005-048 CONSIDERATION OF A RECOMMENDATION FROM THE NAMING BOARD FOR A STREET NAME CHANGE OF A PORTION OF INDUSTRIAL PARK BOULEVARD - ORDINANCE NO. 2834 APPROVED Councilwoman Compton, Acting Chair of the Naming Board, advised the Board had met and was recommending to Council that the name of the portion of Industrial Boulevard between Tecnol Boulevard and Holiday Lane be changed to Liberty Way, COUNCILWOMAN COMPTON MOVED TO APPROVE ORDINANCE No. 2834 CHANGING THE NAME OF A PORTION OF INDUSTRIAL PARK BOULEVARD TO LIBERTY WAY. COUNCILWOMAN BIEUK SECONDED THE MOTION. MOTION TO APPROVE CARRIED 6-0. e 14. ACTION ON ANY ITEM DISCUSSED IN EXECUTIVE SESSION LISTED ON PRE-COUNCIL AGENDA NO ACTION NEEDED Mayor Trevino advised that the City Council held an executive session with the City Manager. Mayor Trevino advised of the discussion in Executive Session. Mayor Trevino stated that recently the City Manager, Staff and Council have been accused of wrongdoing, improper spending of funds and other improper actions. These comments are broad, uncalled for and without base of fact. The City of North Richland Hills has numerous projects to address this year and into the foreseeable future - South Grapevine Highway Corridor redevelopment, North Hills Mall redevelopment, implementing the capital projects from the 2003 bond election, design and construction of a new library, opening of two new fire stations and expansion of the other two fire stations, implementing a third EMS station, staying breast of police services and response times, implementing parks in underserved areas, pursuing new businesses, revitalization of old neighborhoods, etc. The City Council knows that it has a very good staff, good employees and that it is led by a good City Manager and Assistant City Managers. These people do a great job and have the interest of the public at heart. They are honest, trustworthy and people of great integrity with professional talents, This is their careers and there are people out there challenging their integrity, their honesty and their desire to serve. Mayor Trevino stated the City Council wants the Staff and the City Manager to continue to serve the citizens with the highest level of service possible. The Council goes on record as serving our citizens with high quality service, to continue its goals and visions and to support the highly qualified and trusted employees of North Richland Hills, The Council will address any allegations and lies publicly and supports the City Manager and his Staff, e e e City Council Minutes May, 09 2005 Page 10 15. INFORMATION AND REPORTS Mayor Pro Tern Whitson made the following announcements: A Special City Council Meeting is scheduled for 6 p.m. on Tuesday, May 17, to canvass the May 7 election results. The elected Council Members will take the official oath of office at this time. The City of North Richland Hills continues its free spring concert series at Green Valley Park, 7701 Smithfield Road. The next concert will be an a cappella, percussion and acoustic performance by "Vocal Trash" at 7 p.m. on May 20. Admission is free. Please bring your lawn chairs and blankets. For more information, call 817-427-6614. Join us on Armed Forces Day, Saturday, May 21, for the dedication of Liberty Park anq the new Veterans Monument. This event honoring America's military will begin at 10 a.m. Liberty Park is located at the corner of Holiday Lane and Industrial Park Boulevard, For more information, please call 817-427-6620. Kudos Korner - Adrien Pekurney and Staff, Recreation Center - A compliment was received from a patron of the North Richland Hills Recreation Center stating that the facility was a wonderful place to exercise in the mornings, have coffee and visit with friends, He also praised the staff for being helpful and very knowledgeable in all areas of health. Mayor Trevino announced that the Mayors Action Line, 817-427-6070, is available for citizens to ask a question, request information, leave complaints or express concerns. In order to receive a response, callers to the Mayors Action Line are asked to please leave a name and number. 17. ADJOURNMENT Mayor Trevino adjourned the meeting at 8:29 p.m. ATTEST: Oscar Trevino - Mayor e Patricia Hutson - City Secretary e MINUTES OF THE SPECIAL MEETING OF THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS, HELD IN THE CITY HALL, 7301 NORTHEAST LOOP 820 - MAY 17, 2005 - 6:00 P.M. 1. CALL TO ORDER Mayor Trevino called the meeting to order May 17, 2005 at 6:00 p.m. ROLL CALL Present: Oscar Trevino David Whitson John Lewis Jo Cox Suzy Compton JoAnn Johnson Nancy Bielik Tim Welch Mayor Mayor Pro Tern Councilman Councilman Councilwoman Councilwoman Councilwoman Councilman e Staff: Larry J. Cunningham Ogden Bo Bass Richard Torres Patricia Hutson Alicia Richardson George Staples City Manager Assistant City Manager Assistant City Manager City Secretary Assistant City Secretary Attorney 2. INVOCATION Councilwoman Johnson gave the invocation. 3. PLEDGE OF ALLEGIANCE Councilwoman Johnson led the pledge of allegiance, 4. GN 2005-049 CANVASSING MAY 7,2005 MUNICIPAL ELECTION RESOLUTION NO. 2005-041 APPROVED The following resolution was presented to the City Council canvassing the May 7, 2005 e Municipal election: e e e City Council Minutes - Special May 17,2005 Page 2 "WHEREAS, an election was duly held in the City of North Richland Hills on the 7th day of May, 2005, to elect City Council places 1, 3, 5, and 7; and, WHEREAS, the City Council has met and canvassed the votes cast in such election; and, WHEREAS, such canvass shows the following results: Citv Council - Place 1 Number of Votes John H. Lewis Suzette Christopher 2610 1961 Citv Council - Place 3 Suzy Compton John Martin 2766 1807 Citv Council - Place 5 David Whitson Maury Siskel 2778 1802 City Council - Place 7 Tim Welch Kerry West 2725 1857 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS: Section 1: THAT the above canvass be, and the same is hereby approved. Section 2: THAT the following are, and the same are hereby declared to have been elected to the offices listed below to serve until May of 2007, or until their successors are duly elected and qualified. City Council - Place 1 John H, Lewis City Council - Place 3 Suzy Compton , e e City Council Minutes - Special May 17 2005 Page 3 City Council - Place 5 David Whitson Citv Council - Place 7 Tim Welch AND IT IS SO RESOLVED." COUNCILWOMAN JOHNSON MOVED, SECONDED BY MAYOR PRO TEM WHITSON, TO APPROVE RESOLUTION No. 2Q05-041. MOTION TO APPROVE CARRIED 7-0. 6. GN 2003-059 OATH OF OFFICE Mr. Ken Sapp administered the oath of office to John H. Lewis. Mr. Larry Compton administered the oath of office to Suzy Compton Dr, Tommy Teague administered the oath of office to David Whitson. Mr. Ron Flores administered the oath of office to Tim Welch. 7. ADJOURNMENT Mayor Trevino adjourned the meeting at 6:23 p.m. Oscar Trevino - Mayor ATTEST: e Patricia Hutson - City Secretary · , CITY OF NORTH RICHLAND HILLS Department: Finance Council Meeting Date: 5/23/2005 Subject: Approve Investment Strategy and Investment Policy Agenda Number: GN 2005-052 Update Resolution No. 2005- 043 The Public Funds Investment Act (UPFIA") requires that the City Council review and adopt the City's Investment Strategy and Investment Policy annually. Occasional legislative changes in the PFIA, as well as changes in the economic environment affecting investment decisions, require revisions to the Investment Strategy Statements and Investment Policy. Several revisions have been made to the attached investment documents to maintain compliance with the PFIA, respond to economic conditions, and improve and update general procedures, The Investment Committee has reviewed and recommends the following revised Investment Strategy Statements and Investment Policy. Significant changes, shown in red line type, follow: Investment StrateQY Statements · A sentence has been replaced in the yield section of each fund to include a more thorough definition of the objective of this investment guideline. This change is reflected on pages 3, 4, 5,6, and 7. Investment Policv · A statement explaining the consolidation of cash balances and the allocation of earnings to various funds as required by GAAP (generally accepted accounting principles) was included under the Scope section on page 2, · On page 3, under the Investments section V, a paragraph which describes additional portfolio management procedures was incorporated. · According to a recent PFIA training session, if an investment pool used by the city invests funds in commercial paper and/or banker's acceptances, the investment policy does not need to list these instruments as authorized investments, For that reason, these two investments were removed from the Authorized Investments section on pages 4 and 5. Finance Review Source of Funds: Bonds (GO/Rev.) _ Operating Budget _ Other Account Number N/A Sufficient Funds Available ~ Budget Director Page 1 of 2 CITY OF NORTH RICHLAND HILLS · Under section VI titled Diversification on page 7, item (6) on the list of investment limits by type was deleted due to the removal of the investments as authorized. Item (5) now includes narrative concerning indirect investment limits. · A statement has been added to clearly define the type of securities the City will accept as collateral for City funds. The new statement appears under section VIII titled Collateralization on page 8. · A paragraph was added to section VIII Collateralization on page 9 stating collateral should be increased to cover the funds used to purchase an investment to ensure adequate coverage in the event of a failed trade. · The City does not monitor market prices through a private financial firm at this time. Section IX titled Investment Procedures on page 10 was modified to indicate this change and provide an appropriate explanation of the investment procedures currently in place. · Marking to Market paragraph was included in section IX Investment Procedures (page 12). · Section XIII titled Management and Internal Controls on page 15 was included to list in detail the controls that should be maintained by the Director of Finance. · Section XIII titled Depositories on page 15 has been updated to reflect the considerations the City uses for award of the depository services contract. · The investment bid form (Appendix B) on page 19 was updated to include more detailed information about the investment transaction. · The approved securities dealers (Appendix D) on page 30 and the Glossary (Appendix I) on page 75 have been updated to reflect current information as it relates to the City's investments. · The master repurchase agreement (Appendix F) on page 32 has been updated with a more current version of the document. Other minor changes were made as deemed necessary to improve grammar and spelling throughout the documents. Such minor changes, which do not materially change the strategy or policy, are not shown in redline type. Overall, the revised Investment Strategy Statements and Investment Policy are designed in a manner responsive to the public trust and consistent with federal, state and local law. This also helps to meet Council Goal 4: Financially Responsible City Government. Recommendation: Approve Resolution 2005-043. CITY COUNCIL ACTION ITEM . . . RESOLUTION NO, 2005-043 BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS, THAT: 1, The City of North Richland Hills acknowledges the high priority of providing the necessary guardianship of public funds in the municipal sector. The City Council expressly intends to set high fiscal standards, delegate treasury and investment duties to appropriate officials, and to review the actual performance at regular intervals. The City Council hereby intends to implement investment requirements set forth in Tex. Rev, Civ. Stat Ann" Art. 4413 (34c) and 2256. 2. The City Council has reviewed and hereby adopts the City of North Richland Hills' Investment Strategy Statements dated May 23, 2005, as prepared by the City's Investment Committee. These Investment Strategy Statements replace the previous document dated May 10, 2004, The City Council has also reviewed and hereby adopts the City of North Richland Hills' Investment Policy dated May 23, 2005, including all revisions and changes required under state law or recommended by City staff, This Investment Policy replaces the investment policy dated May 10, 2004. PASSED AND APPROVED this 23rd day of May 2005. APPROVED ATTEST: Oscar Trevino, Mayor Patricia Hutson, City Secretary APPROVED AS TO FORM AND LEGALITY: George Staples, City Attorney APPROVED AS TO CONTENT: ~t ~ , Director of Finance · CITY OF NORTH RICHLAND HILLS INVESTMENT STRA TEGY STATEMENT · Approved: May 23, 2005 · · PREFACE It is the policy of the City of North Richland Hills that, giving due regard to the safety and risk of investment, all available funds shall be invested in conformance with State and Federal Regulations, applicable Bond Resolution requirements, adopted Investment Policy and adopted Investment Strategy. In accordance with the Public Funds Investment Act (Texas Government Code Art. 2256), the City of North Richland Hills' investment strategies shall address the following priorities (in order of importance): · Understanding the suitability of the investment to the financial requirements of the City, · Preservation and safety of principal, . Liquidity, · Marketability of the investment prior to maturity, · Diversification of the investment portfolio, and · · Yield. Effective investment strategy development coordinates the primary objectives of the City of North Richland Hills' Investment Policy and cash management procedures to enhance interest earnings and reduce investment risk. Aggressive cash management will increase the available "investment period" and subsequently interest earnings. Maturity selections shall be based on cash flow and market conditions to take advantage of various interest rate cycles. The City's investment portfolio shall be designed and managed in a manner responsive to the public trust and consistent with the Investment Policy. Each major fund type has varying cash flow requirements and liquidity needs. Therefore specific strategies shall be implemented considering the fund's unique requirements. The City's Funds shall be analyzed and invested according to the following major fund types: I. Operating Funds II. Capital Improvement Funds III. Debt Service Funds IV. General Fund Balance Reserve V. Revenue Bond Reserves · 1 INVESTMENT STRATEGY . In order to minimize risk of loss due to interest rate fluctuations, investment maturities will not exceed the anticipated cash flow requirements of the funds. Investment guidelines by fund type are as follows: I. Operatinq Funds The City of North Richland Hills Operating Funds are as follows: General Fund Special Revenue Funds Special Investigation Fund Drainage Utility Fund Crime Control and Prevention District Fund Promotional Fund Economic Development Fund Donations Fund Parks and Recreation Facilities Development Fund Enterprise Funds Utility Fund Aquatic Park Fund Golf Course Fund . Internal Service Funds Building Services Fund Equipment Services Fund Self-Insurance Fund Information Services Fund Capital Projects Funds General CIP Fund Street Maintenance Fund Sidewalk Maintenance Fund Comconent Units Tax Increment Financing District 1 (TIF #1) Tax Increment Financing District 2 (TIF #2) . 2 . . . Suitability - Any investment eligible in the Investment Policy is suitable for the Operating Funds. Safety of Principal - All investments shall be high quality securities with no perceived default risk. The maximum allowable investment in commercial paper shall be limited to 10% of total Operating Fund investments. Market price fluctuations will occur. By managing the weighted average days to maturity for the operating fund portfolio to less than 270 days and restricting the maximum allowable maturity to three years, the price volatility of the overall portfolio will be minimized. Marketability - Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Historical market "spreads" between the bid and offer price of a particular security type of less than 0.25% will define an efficient secondary market. Liquidity - The Operating Funds require the greatest short-term liquidity of any of the fund types. Short-term constant dollar investment pools and money market mutual funds shall provide daily liquidity and may be utilized as a competitive yield alternative to fixed maturity investments. Diversification - Investment maturities shall be staggered throughout the fiscal year to provide cash flow based on the anticipated operating needs of the City. Market cycle risk will be reduced by diversifying the appropriate maturity structure throughout two years and diversification by market sector. Yield - Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. The City's portfolio shall be designed with the purpose of obtaining a rate of return, through budgetary and economic cycles, commensurate with the investment risk, policy constraints, and cash flow requirements 3 II. Capital Improvement Funds . The City of North Richland Hills Capital Improvement Funds are comprised of the monies available from the sale of debt and other sources to finance capital improvement projects. Bond proceeds are segregated from operating funds on the general ledger and in investment accounts for arbitrage compliance purposes. Capital Improvement Funds include all funding for the design and construction of capital projects, including streets, drainage facilities, utility adjustments, park improvements, and municipal building as well as the acquisition of capital assets. Suitability - Any investment eligible in the Investment Policy is suitable for Capital Improvement Funds. Safety of Principal - All investments shall be high quality securities with no perceived default risk. The maximum allowable investment in commercial paper shall be limited to 10% of total Capital Improvement Fund investments. Market price fluctuations will occur. By managing the various Capital Improvement accounts in anticipation of cash flow requirements, the impact of market risk for the portfolio will be minimized. Marketability - Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Historical market "spreads" between the bid and offer price of a particular security type of less than 0.25% will define an efficient secondary market. Liquidity - The City's funds used for construction and capital improvement programs have . reasonably predictable draw down schedules. Therefore, investment maturities shall generally follow the anticipated cash flow requirements. Investment pools and money market mutual funds shall provide readily available funds generally equal to one month's anticipated cash flow needs, or a competitive alternative for short-term fixed maturity investments. A singular repurchase agreement may be utilized if disbursements are allowed in the amount necessary to satisfy any expenditure request. This investment structure is commonly referred to as a Flexible Repurchase Agreement. Diversification - Market conditions and arbitrage regulations influence the attractiveness of staggering the maturity of fixed rate investments for bond proceeds and other construction and capital improvement funds. With bond proceeds, if investment rates exceed the applicable arbitrage yield, the City is best served by locking in most investments. If the arbitrage yield can not be exceeded, then current market conditions will determine the attractiveness of diversifying maturities or investing larger amounts for a shorter period. At no time will the anticipated expenditure schedule be exceeded in an attempt to increase yield with any City funds. Yield - Achieving a positive spread to the applicable arbitrage yield is the desired objective for bond proceeds. The City's portfolio shall be designed with the purpose of obtaining a rate of return, through budgetary and economic cycles, commensurate with the investment risk, policy constraints and cash flow requirements. . 4 . . . . I" . Debt Service Funds The City's Debt Service funds include the General Debt Service Fund and the Sales Tax Revenue Debt Service Fund. The General Debt Service Fund is funded from ad valorem tax collections and transfers from various other funds. The Sales Tax Revenue Debt Service Fund is funded solely from transfers from the Park and Recreation Facilities Development Fund. Suitability - Any investment listed as eligible in the Investment Policy is suitable for the Debt Service Funds. Safety of Principal - All investments shall be high quality securities with no perceived default risk. The maximum allowable investment in commercial paper shall be limited to 1 0% of total Debt Service Fund investments. Market price fluctuations will however occur. By limiting the Debt Service Funds Portfolio maturity dates to the next scheduled debt service payment, the market risk of the overall portfolio will be minimized. Marketability - Securities with active and efficient secondary markets are not necessary as the event of an unanticipated cash requirement is not probable. Liquidity - Debt service funds have predictable payment schedules. Therefore, investment maturities shall not exceed the anticipated cash flow requirements. Investment pools and money market mutual funds may provide a competitive yield alternative for time deposits and short-term fixed maturity investments. A singular repurchase agreement may be utilized if disbursements are allowed in the amount necessary to satisfy any expenditure request. This investment structure is commonly referred to as a Flexible Repurchase Agreement. Diversification - Market conditions influence the attractiveness of fully extending maturities to the next unfunded payment date. Generally, if investment rates are trending down, the City is best served by locking in most investments. If interest rates are flat or trending up, then current market conditions will determine the attractiveness of extending maturity or investing in shorter term alternatives. At no time shall the debt service schedule be exceeded in an attempt to bolster yield. Yield - Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. The City's portfolio shall be designed with the purpose of obtaining a rate of return, through budgetary and economic cycles, commensurate with the investment risk, policy constraints and cash flow requirements~ 5 IV. General Fund Balance Reserve . The City's objective regarding the General Fund Balance is to maintain a sufficient fund balance to operate the City for a period of sixty days or 15% of the following year's budgeted expenditures. The amount of funds to be invested in non-liquid other-than- overnight investments shall be limited to not more than 50% of this amount of the General Fund Balance. Suitability - Any investment eligible in the Investment Policy is suitable for General Fund Balance Reserves. Safety of Principal - Generally, the investment quality of all securities allowed as investments in the Operating Funds will be allowable in the General Fund Balance Reserve. All investments shall be high quality securities with no perceived default risk. The maximum allowable investment in commercial paper shall be limited to 10% of total General Fund Balance Reserve investments. Market price fluctuations will occur. Under no circumstance shall any investment from this portfolio cause the combined portfolio's weighted average maturity to exceed the maximum allowed by the Investment Policy. The maximum allowable maturity is restricted to three years. Marketability - Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Historical market "spreads" between the bid and offer price of a particular security type of less than 0.25% will define an efficient secondary market. Liquidity - The Fund Balance Reserve requires the liquidity necessary to cover the City's expenditures in the event of a cash shortfall. Short-term constant dollar investment pools and money market mutual funds shall provide daily liquidity and may be utilized as a competitive yield alternative to time deposits and fixed maturity investments. . Diversification - Maturing investments shall be reinvested within the desired maturity to provide cash flow in the event that cash is needed for the operating needs of the City. Market cycle risk will be reduced by diversifying the appropriate maturity structure throughout three years and diversification by market sector. Yield - Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. The City's portfolio shall be designed with the purpose of obtaining a rate of return, through budgetary and economic cycles, commensurate with the investment risk, policy constraints and cash flow requirements. . 6 . . . . v. Revenue Bond Reserves Debt service reserves are required by bond covenants for a particular bond issues. A Debt Service Reserve portfolio shall be established to better comply with bond covenant requirements. Suitability - Any investment eligible in the Investment Policy is suitable for Debt Service Fund Reserves. Safety of Principal - Generally, the investment quality of all securities allowed as investments in the Operating Funds will be allowable in the Debt Service Fund Reserve. All investments shall be high quality securities with no perceived default risk. The maximum allowable investment in commercial paper shall be limited to 10% of total Revenue Bond Reserve investments. Market price fluctuations will occur. Under no circumstance shall any investment from this portfolio cause the combined portfolio's weighted average maturity to exceed the maximum allowed by the Investment Policy. The maximum allowable maturity is restricted to three years. Marketability - Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Historical market "spreads" between the bid and offer price of a particular security type of less than 0.25% will define an efficient secondary market. By utilizing the yield advantages of fixed income securities, maximum yield should be attained while meeting cash requirements. Liquidity - The Debt Service Reserve Funds require the amount of liquidity necessary to convert securities into cash if needed for payment of debts on schedule. Short-term constant dollar investment pools and money market mutual funds shall provide liquidity and may be utilized as a competitive yield alternative to fixed maturity investments. Diversification - Market cycle risk will be reduced by diversifying the appropriate maturity structure throughout three years and diversification by market sector. Yield - Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. The City's portfolio shall be designed with the purpose of obtaining a rate of return, through budgetary and economic cycles, commensurate with the investment risk, policy constraints and cash flow requirements. 7 . CITY OF NORTH RICHLAND HILLS INVESTMENT POLICY May 23, 2005 . . . TABLE OF CONTENTS Preface Page I. Introduction and Objectives 1 II. Scope 1 III. Delegation and Restriction of Investment Authority 2 IV. Investment Committee 2 V. Investments 3 A Authorized 4 B. Unauthorized 5 VI. Diversification 6 A Securities Dealers and Banks 6 B. Investment Type 6 . VII. Safekeeping 7 VIII. Collateralization 8 IX. Investment Procedures 10 A Approval of Broker/Dealers 10 B. Investment Transactions 11 C. Investment Reporting 11 D. Marking to Market 12 E. Training 12 X. Prudence 12 XI. Ethics and Conflicts of Interest 13 XII. Arbitrage 13 XIII. Management and Internal Controls 14 XlV. Depositories 14 . XV. Investment Policy Adoption 15 . PREFACE "A public office is a public trust" Charles Sumner, 1872 If a public office is a public trust, then the trust must be administered properly. Public funds are acquired by governments largely through involuntary payments, particularly through taxation. In a modern democratic society, public officials are obligated to manage these funds in a disciplined manner. In most cases, laws govern the investment process. Laws alone however cannot compel public officials to a series of actions that assure the public's best interests. The actions of public officials responsible for investing public funds must be guided by knowledge, skills, systems, policies, procedures and confidence that can be described only as professional . discipline. It is the policy of the City of North Richland Hills that, giving due regard to safety and risk of investments, all available funds shall be invested in conformance with these legal and administrative guidelines, and, to the maximum extent possible, at the highest rates obtainable at the time of the investment. Effective cash management is recognized as essential to good fiscal management An aggressive cash management and investment policy will be pursued to take advantage of investment interest as a viable and material revenue to all operating and capital funds. Earnings from investments will be used in a manner that will best serve the interest of the City of North Richland Hills. The City's portfolio shall be designed and managed in a manner responsive to the public trust and consistent with state and local law. . . NRH . . . . . I. INTRODUCTION AND OBJECTIVES The purpose of this document is to set forth the specific investment policy and strategy guidelines for the City of North Richland Hills. All investment activity shall be consistent with state law as defined in Government Code 10 (Chapter 2256), known as the Public Funds Investment Act (the Act) and local law and shall be made in accordance with the following objectives in order of priority: security of investments and City funds preservation of capital and protection of principal maintenance of sufficient liquidity to meet operating needs diversification of investments to avoid unreasonable risks public trust from prudent investment activities optimization of the portfolio's yield within the City's investment risk constraints The City is required under the Public Funds Investment Act, Section 5, to adopt a formal written Investment Policy. This policy is to be adopted annually to meet the requirements of the Act, and has been revised periodically to comply with updated state requirements. Cash management is the process of managing monies in order in ensure maximum cash availability and maximum yield on short-term investments of idle cash. An aggressive cash management program and investment policy will be pursued by the Investment Officer to take advantage of investment interest as a viable and material revenue to all operating and capital funds. The City's portfolio shall be designed and managed in a manner responsive to the public trust Earnings from investments will be used in a manner that will best serve the interests of the City of North Richland Hills.:. II. SCOPE This Investment Policy applies to all financial assets of the City of North Richland Hills in all current funds, any funds to be created in the future, and any other funds held in custody by the City, unless expressly prohibited by law or unless it is in contravention of any depository contract between the City and its depository bank. These funds are accounted for in the City's Comprehensive Annual Financial Report and include: General Fund Special Investigation Fund Crime Control and Prevention District Fund Donations Fund Drainage Utility Fund Parks and Recreation Facilities Development Fund Utility Fund Golf Course Fund Aquatic Park Fund Self-Insurance Fund Building Services Fund Equipment Services Fund Information Services Fund . Promotional Fund Capital Improvements Funds Street Maintenance Fund Sidewalk Maintenance Fund Economic Development Fund Grant Fund Debt Service Funds Tax Increment Financing District No.1 Tax Increment Financing District NO.2 The City will consolidate cash balances from all funds to optimize investment earnings. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles. III. DELEGATION AND RESTRICTION OF INVESTMENT AUTHORITY This Investment Policy and the outlining of investment practices and authorities is compiled in accordance with state legislation, Article 4413 (34c) which requires the adoption of rules governing investment and designation of an investment officer, and City Ordinance # 2079 which designates investment officers and provides prudent investment rules. Collateral requirements are created in accordance with the Public Funds Collateral Act (2257). Ultimate responsibility and authority for all investment transactions and cash management reside with the City Manager and the City's Director of Finance. The Director of Finance is also responsible for considering the quality and capability of staff . to be involved in investment management and procedures. The Director of Finance may delegate responsibility for the day to day investment activities to other qualified staff members. These staff members will be termed Investment Officers of the City. One of these Investment Officers will be designated the Primary Investment Officer by the Director of Finance to conduct daily investment activity and prepare required investment reports. Investment Officers will not conduct any investment or banking activities involving City funds until a resolution or ordinance giving them authority to do so has been approved by the City Council of the City of North Richland Hills. All participants in the investment process shall seek to act responsibly as custodians of public trust. IV. INVESTMENT COMMITTEE There shall be established an investment committee to assist in monitoring the performance and structure of the City's portfolio and approved brokers. Members of this committee shall include the Director of Finance (as Chairman) and the Accounting Manager as permanent members. Additional members, numbering no less than three, will be appointed at the discretion of the Director of Finance. The Primary Investment Officer will report to and make recommendations to the Investment Committee, but will have no vote concerning investment policy or suitability of investments. Any matters presented to the committee requiring a vote of the members shall be passed or denied by a simple majority. . 2 . . . - The Investment Officer or any other member of the committee shall have the power to call meetings of the committee. The committee shall meet no less than quarterly. The Investment Committee shall perform the following functions: A. Approve the process of selecting authorized dealers, brokers, investment advisors, and safekeeping agents/custodians used by the City. B. Review the City's general portfolio activity and performance for compliance to this policy and recommend any changes or amendments to this policy to the City Council. C. Approve the Investment Strategy document, as prepared by the Investment Officer. This document is required by State law to be separate from the Investment Policy. The Investment Strategy will be a guide to the investment of all funds controlled by the City as described in Section II of the Investment Policy. The strategy is intended to adapt to changes in market conditions. D. Advise the Investment Officer as to recommendations regarding investment strategy and portfolio performance. E. Approve the purchase of any securities with maturities over three (3) years. F. Immediately notify the Investment Officer of any information brought to their attention that materially affects the portfolio or the marketability of any investments purchased in accordance with the Investment Policy. G. Oversee the activities of the persons designated to carry out investment transactions and inform the City Council of unaddressed concerns with the management of the City's investment portfolio. V. INVESTMENTS The City currently has a "buy and hold" portfolio strategy. 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. 3 A. Authorized Investments . Within the guidelines provided by the Public Funds Investment Act, Government Code 10, Chapter 2256, and further restrictions imposed by local ordinances, the following are acceptable investments of the City of North Richland Hills. 1. Obligations of the United States, its Agencies, and Instrumentalities. 2. Collateralized Mortgage Obligations (CMOs) directly issued by an agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States. 3. Direct Obligations of the State of Texas or its Agencies. 4. Obligations of states, agencies, counties, cities, and other political subdivisions of any state rated as to investment quality of not less than A or its equivalent by a nationally recognized investment rating firm. 5. Certificates of Deposit issued by state or national banks doing business in the State of Texas, guaranteed or insured by the Federal Deposit Insurance Corporation in or its successor, or secured by obligations described in 1 through 4 above, and that have a market value of not less than the principal amount of the certificates. . 6. Fully Collateralized Repurchase Agreements that are structured in compliance with the Public Funds Investment Act. A flexible repurchase agreement can be utilized for the investment of bond proceeds to meet projected cash flow expenditures. Repurchase agreements must be purchased through a primary government securities dealer, as defined by the Federal Reserve, or financial institutions doing business in this state (see Appendix E for a current list of Primary Dealers). Repurchase Agreements will only be executed with counterparties that have signed a TBMA Tri-Party Repurchase Agreement with the City. A sample TBMA Tri-Party Repurchase Agreement is incorporated in this investment policy as Appendix F. 7. Mutual Funds a. No-load Money Market Mutual Funds are acceptable investments provided they are registered and regulated by the Securities and Exchange Commission, have a dollar-weighted stated average maturity of 90 days or less, and maintain a stable net asset value of $1 per share. b. No-load Mutual Funds are acceptable investments provided they are regulated by the Securities and Exchange Commission, have a dollar- weighted average stated maturity of 90 days or less, maintain a stable net . 4 . . . - - asset value of $1 per share, are continuously rated AAA by at least one nationally recognized credit rating agency, and conform to all requirements under the Public Funds Investment Act relating to the eligibility of investment pools to receive and invest funds of investing entities. (See Appendix G for the complete requirements for authorized Mutual Funds under the Act) 8. Investment Pools a. Investment Pools must provide the Investment Officer with an offering statement that contains specific and detailed information required by the Act Additionally, the pool should provide transaction confirmations, detailed monthly transaction summaries, and monthly performance reports to the Investment Officer. The specific requirements for authorized investment pools are detailed in the Public Funds Investment Act, Subchapter A, Section 2256.016 (See Appendix G, pp. 47 for specifics). Authorized pools must maintain a credit rating of no lower than investment grade by at least one nationally recognized rating service. Investment Pools created to operate as a money market mutual fund must mark investments to market daily and maintain a net asset value of $1 per share with the market value per share between .995 and 1.005. b. In order to participate in an investment pool, the City Council must approve by resolution or ordinance a Participation Agreement or Interlocal Agreement to be executed with the State or Interlocal authority responsible for the investment pool. This agreement will specify the City's authorized representatives and the standard delivery instructions for fund transfers and information reports. (See Appendix H for approved interlocal agreements). B. Unauthorized Investments The following investment instruments are specifically not authorized: 1. Obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal (CMO-derived Interest Only Strips). 2. Obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security collateral and bears no interest (CMO- derived Principal Only Strips). 3. Collateralized Mortgage Obligations that have a stated final maturity date of greater than ten (10) years. 4. Collateralized Mortgage Obligations whose interest rates are determined by an index that adjusts opposite to the changes in a market index (Inverse Floaters). 5 5. Certificates of Deposit and other investments issued by Savings and Loans. . 6. Share Certificates and other investments issued by Credit Unions. 7. Guaranteed Investment Contracts. VI. DIVERSIFICATION A Securities Dealers and Banks Diversification of funds and investments must be accompanied by competitive bidding of all investments to assure diversification among securities dealers. Diversification is necessary to reduce the portfolio's credit and market risks, while helping the portfolio attain a market rate of return. The City shall seek to conduct its investment transactions with several competing, reputable investment security dealers and brokers to protect principal while achieving full advantage of the market. To assure diversification of financial institutions, business involving two party transactions (i.e. repurchase agreements) with anyone investment broker should be limited to thirty percent (30%) of the par value of the total portfolio for any reporting period. In this way, a bankruptcy, receivership or legal action would not immobilize the City's ability to meet payroll, operating, or other expenses. It is the policy of the City to diversify its investment portfolio so that reliance on any . one issuer or broker will not place an undue financial burden on the City. B. Investment Type Texas statutes authorize depositories and define allowable investment programs for municipal governments. The Texas City Depository Act (Article 2559-2599a, V.A.T.C.S.) and the Public Funds Investment Act (Article 842a-2, V.AT.C.S.) are the primary legal influences upon City investment practices. It is the policy of the City to purchase only securities authorized by both the Public Funds Investment Act and Section VI. A of the City's Investment Policy. Market risk shall be minimized by diversification of investment types. The following limits, by instrument, are established for the City's total portfolio: (1) Repurchase Agreements 50% (2) Certificates of Deposit 30% (3) U.S. Treasury Notes/Bonds/Bills 80% (4) U.S. Agencies and Instrumentalities 75% . 6 . (5) Commercial paper (indirectly through 10% investment pools) (6) State and Local Bonds and Notes 20% (7) Money Market Mutual Funds 80% (8) Mutual Funds 15% (9) Investment Pools 100% The maximum maturity of any given investment in the portfolio shall not exceed a final, stated maturity of 5 years from the date of purchase. Reductions in the size of the portfolio due to cash outflows may cause an investment type to exceed the maximum percentage allowed for that investment type. In such situations, securities will be sold to reduce the percentage to allowable levels only if no loss will be realized from the sale. If a loss will be realized, then the investment may be held to maturity. . To allow efficient and effective placement of proceeds from bond sales, a singular repurchase agreement can be utilized for the investment of bond proceeds, which exceeds the diversification limits. VII. SAFEKEEPING The laws of the State of Texas and prudent treasury management require that all purchased securities shall be held in safekeeping by either the City, a City account in a third party financial institution, or the City's safekeeping account in its designated depository bank. All securities owned by the City shall be held by a third party safekeeping agent, or in the Federal Reserve Bank, except for certificates of deposit that have FDIC insurance provided. For certificates of deposit with FDIC insurance, the City will hold the deposit receipt. Transfers of securities in safekeeping shall be processed with written confirmations. The confirmation will be used for documentation and retention purposes. One of the City's designated investment officers must approve release of collateral prior to its removal from the safekeeping account. It is the policy of the City that all securities rendered for payment will be sent "delivery versus payment" (DVP) through the Federal Reserve System. By so doing, City funds are not released until the City has received, through the Federal Reserve wire, the securities purchased. . 7 . · VIII. COLLATERALlZATION Consistent with the requirements of State law, it is the policy of the City to require full collateralization of all City investments other than obligations of the United States and its agencies and instrumentalities. Collateral on investments shall be maintained by an appropriate third party safekeeping agent, as designated by the City. This policy also applies to any deposits held in an approved depository in excess of the amount protected by FDIC insurance. The City of North Richland Hills shall accept only the following securities as collateral: A. FDIC insurance coverage, B. a bond, certificate of indebtedness, or Treasury Note of the United States, or other evidence of'indebtedness of the United States that is guaranteed as to principal and interest by the United States, C. obligations of the United States, its Agencies, and Instrumentalities, or D. a bond of the State of Texas or of a county, city, or other political subdivision of the State of Texas having been rated as investment grade (investment rating no less than "An or its equivalent) by a nationally recognized rating agency with a remaining maturity of ten (10) years or less. Certificates of deposit plus accrued interest up to $100,000 per bank do not need to be collateralized pursuant to this policy as long as FDIC insurance is provided. Certificates of Deposit in excess of $100,000, including accrued interest must be secured by approved collateral for the amount in excess of FDIC insurance. · Collateral is valued at current market plus interest accrued through the date of the valuation. Collateral shall be marked to market no less than monthly to determine if adequate collateralization is being maintained. Repurchase agreement collateral must be maintained at the following levels, with respect to repurchase agreement par value plus accrued interest: Maturity of U.S. Treasury Other Collateral Securities Securities 1 year or less 101% 101% 1 year to 5 years 102% 102% Over 5 years 103% 104% Any collateral with a maturity of over 5 years must be approved by the investment committee in writing before the transaction is initiated. · 8 . Collateral levels should be maintained during an investment transaction. The amount placed in the bank to cover the cost of a securities purchase should be fully collateralized in the event the security fails to be delivered to the safekeeping agent. Collateralized investments often require substitution of collateral. Any broker or financial institution requesting substitution must contact the Primary Investment Officer, or in his absence any other authorized Investment Officer, for approval and settlement. The substituted collateral's value will be calculated and the substitution approved if its value is equal to or greater than the original collateralization level. The Director of Finance, or an authorized designee, must give immediate notification of the decision to the bank or third party holding the collateral. Substitution is allowable for all transactions, but should be limited, if possible, to minimize potential administrative problems and transfer expense. The Director of Finance may limit substitution and assess appropriate fees if substitution becomes excessive or abusive. Collateral shall be audited at least annually by the City's independent audit firm, and may be audited by the City at any time during normal business hours of the safekeeping party. . The financial institutions with whom the City invests and/or maintains other deposits shall provide, as requested by the City, a listing of the City's certificates of deposit and other deposits at the institution and a listing of collateral pledged to the City marked to current market prices. The listing shall include total pledged securities with the following information: Name Type/description CUSIP Par value Current market value Maturity date Moody's or Standard & Poor's rating (both if available) Under state law, Article 2560, Section (d) (V.A.T.C.S.) substitution and release of collateral must be approved by the governing body. City of North Richland Hills Ordinance # 2079 Section (3) delegates the investment officers' overall responsibilities to ensure that investment objectives are accomplished, and therefore, the authority to release and substitute collateral as deemed necessary and reasonable within the guidelines of this policy. . 9 IX. INVESTMENT PROCEDURES . The City's 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. The risk-return relationship will be controlled through the investment parameters, operating requirements, and guiding policies of the Council. Market value of all securities owned will be compared to current book value of those securities to determine portfolio performance on a quarterly basis. Safety of principal is the foremost objective of this investment policy. The City will practice competitive bidding when purchasing all investments to guarantee the highest rate of return for the desired maturity date. The right is reserved to reject the most financially favorable bid if it is potentially disruptive to the investment strategy or portfolio composition of the City. A. Approval of BrokerlDealers It is the policy of the City to purchase securities only from those institutions on the City's approved list of broker/dealers and banks. All securities dealers must be registered and certified with the Texas State Securities Commission, National Association of Security Dealers (NASD) and Securities and Exchange Commission (SEC). An institution must complete a broker/dealer questionnaire, sign a certification . stating that they have read the City's Investment Policy, be approved by the Investment Committee, and added to the list of approved broker/dealers before any business can be transacted with the City. A blank broker/dealer questionnaire is included in Appendix "C." A current list of approved securities dealers and banks is included in Appendix "D." This list may be revised by the Investment Committee as the City's investment needs change. The investment committee shall also be able to limit the number of authorized securities dealers/banks doing business with the City as required. The Investment Committee shall no less than annually, review, revise, and adopt a list of qualified brokers that are authorized to engage in investment transactions with the City. All banks authorized to sell securities to the City will be Federal Reserve member banks and must be approved by the Investment Committee. No investments will be placed with Savings and Loan institutions or Credit Unions. . 10 . B. Investment Transactions All purchases and sales of securities must be on a competitive bid basis. A minimum of three bids must be obtained to ensure a competitive price for the transaction. All investment transactions must be approved by the Accounting Manager, or the Director of Finance, or, in their absence, an authorized Investment Officer. Appendix "B" contains the Investment Bid Form and Security Information Worksheet necessary to provide documentation for all investment transactions. All securities purchased shall require delivery on the settlement date to the City or its third party accounts on a DVP (delivery versus payment) basis. By so doing, City funds are not released until the City has received, through the Federal ReseNe wire, the securities purchased. C. Investment Reporting The Public Funds Investment Act of 1997 requires the preparation of quarterly management reports and an annual report of all investment transactions of the City to be presented to the City Council. City Ordinance # 2079 section (4) also requires an annual report be presented to the City Council. . The Primary Investment Officer will prepare the required quarterly and annual reports for evaluating investment portfolio performance. The reports will be approved and signed by all members of the Investment Committee. The reports will include the following information, as required by the Public Funds Investment Act: - a summary narrative of investment activity and portfolio performance over the period - size and composition of portfolio at the beginning and end of the reporting period - list all investments according to the fund they were purchased from - beginning and ending book and market value for all securities held - beginning and ending book and market value for the total portfolio - all additions and changes to the market value during the period - state the compliance of the portfolio to the investment policy and the Public Funds Investment Act - yield - diversification of funds - total sales, maturities, and purchases - accrued interest - performance compared to an established benchmark . These quarterly reports should be used along with the annual report to fully evaluate and explain market trends and adjustment of investment strategies to manage market fluctuations. The annual report will show on a fiscal year basis the results of the overall investment strategy. The quarterly reports will conform to GAAP and be reviewed annually by the City's independent auditor, with results reported to Council. 11 D. Marking to Market . 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 in the quarterly investment report. E. Training As required by the Act, all authorized Investment Officers must attend a training course that covers the requirements of the Act within one year of taking office or assuming duties. This training, provided by an independent source selected by the Investment Committee, will include discussion of investment controls, security risks, and market risks. An additional 1 0 hours of investment training is required every two years for investment officers. X. PRUDENCE The standard of prudence to be applied by the investment officer shall be the "prudent investor" rule, which states: "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 capital as well as the probable income to be derived." It should be noted that, in a diversified portfolio, occasional . losses are inevitable and must be considered within the context of the overall portfolio's return. In determining whether an investment officer has exercised prudence with respect to an investment decision, the determination shall take into consideration the investment of all funds, or funds under the City's control, over which the investment officer had responsibility, rather than a consideration as to the prudence of a single investment; and whether the investment decision was consistent with the written investment policy of the City. The investment officer, acting in accordance with written procedures and exercising due diligence, shall not be held personally responsible for a specific security's credit risk or market price changes, provided that these deviations are reported in a timely manner and appropriate action is taken to control adverse developments. . 12 . . . The City shall provide for the defense and indemnification of any investment officer or investment committee member who is made party to any suit or proceeding, other than by actions of the City, or against whom a claim is asserted by reasons of their actions taken within the scope of their service as investment officers or appointed members of the investment committee. Such indemnity shall extend to judgments, fines, and amounts paid in settlement, of any such claim, suit or proceeding, including any appeal thereof. This protection shall extend only to members who have acted in good faith and in a manner which they reasonably believe to be in, or not opposed to, the best interests of the City. XI. ETHICS AND CONFLICTS OF INTEREST City staff involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair the ability to make impartial investment decisions. City staff should disclose to the City Manager any material financial investments in financial institutions that conduct business with the City and they shall further disclose positions that could be related to the performance of the City's portfolio. City staff shall subordinate their personal financial transactions to those of the City, particularly with regard to the timing of purchases and sales. An investment officer of the City who has a personal business relationship, as defined by the Public Funds Investment Act of 1997, Section 2256.005 (I), 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 of affinity or consanguinity to an individual seeking to sell an investment to the City shall file a statement disclosing that relationship. A disclosure statement required under this section must be filed with the Texas Ethics Commission and the governing body of the City. XII. ARBITRAGE The Tax Reform Act of 1986 provides limitations on the City's yield from investing tax- exempt bond proceeds and debt service funds. These arbitrage rebate provisions require that the City compute earnings on investments from each issue of bonds on a periodic basis to determine if a rebate is required. To determine the City's arbitrage position, the city is required to calculate the actual yield earned on the investment of the funds and compare it to the yield that would have been earned if the funds had been invested at a rate equal to the yield on the bonds sold by the City. The rebate provisions state that periodically (not less than once every five years, and not later than sixty days after maturity of the bonds), the City is required to pay the U.S. Treasury a rebate of any excess earnings. These restrictions require extreme precision in the monitoring and record keeping of investments, particularly in computing yields to ensure compliance. Failure to comply can dictate that the bonds become taxable, retroactively from the date of issuance. 13 The City's investment position relative to the arbitrage restrictions is to continue pursuing the maximum yield on applicable investments while ensuring the safety of capital and liquidity. It is a fiscally sound position to continue maximization of yield and to rebate excess earnings, if necessary. . XIII. MANAGEMENT AND INTERNAL CONTROLS The Director of Finance is responsible for establishing and maintaining an internal control structure designed to ensure the City's assets are protected from loss, theft, or misuse. The internal controls 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 Director of Finance 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 transactions 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 - Development of a wire transfer agreement with the depository bank or third party custodian XIV. DEPOSITORI ES The Texas City Depository Act, Article 2559 through 2566a, prescribes procedures for selection of a city depository designating that both general-law and home-rule cities are "authorized to receive applications (as depository) for the custody of city funds from any banking corporation, association, or individual banker doing business within the city." This clause indicates that cities are not required to designate one central depository . The City of North Richland Hills will, through a request for proposals process, designate one or more banks as its primary depository(ies). This centralization is designed to maximize investment capabilities and minimize banking cost. The depository designation does not limit investment activity to one financial institution. . 14 . The consideration the City of North Richland Hills will use to execute a banking services contract will include: - Full service capabilities, - Reputation of bidder and quality of services provided, - Interest paid on interest bearing accounts and deposits, - Earnings credit calculation on account balances, - Completeness of proposal and agreement to points outlined in RFP, - Convenience of locations, - Previous service relationship with the City, - Financial strength and stability of institution, and - Cost of banking services Obtaining competitive proposals on the City's depository specifications will be the responsibility of the Director of Finance. Selection of the depository shall be based on the institutions offering the most favorable terms and conditions for the handling of City funds (Article 2560, V.AT.C.S.) and the services available to the City. . The maximum term for a depository contract under State law is five years. The City's contract shall not exceed five years. An annual performance review will be conducted by the Investment Committee. Special banking needs may be contracted for by the City outside the depository contract if approved by City Council. If a depository does not meet the city's requirements in the banking services contract, the bank will be required to meet the requirements within six months or lose the depository contract. xv. INVESTMENT POLICY ADOPTION The investment policy shall be adopted by ordinance or resolution of the City Council. The policy shall be reviewed annually by the Investment Committee and the City Council. Any policy revisions that require enactment due to updates of applicable state or federal laws may be authorized by the City Manager. Any other significant revisions must be approved by the City Council. . 15 Appendix A . ORDINANCE NO 2079 AN ORDINANCE OF THE CITY OF NORTH RICH LAND HILL.S. TEXAS PROVIDING ~OR THE DESIGNATION OF INVESTMENT OFFICERS: PROVIDING FOR INVESTMENT RULES AND POLICIES: PROVIDING FOR MANAGEMENT REPORTS: REPE.A.L!NG A PREVIOUS ORDINANCE: AND PROVIDING A SEVERABILITY CLAUSE Whereas, the City of North Ríchland Hills acknowledges the high priority of providing the necessary guardianship of public funds in the municipal sector; and Whereas, the City Council expressly intends to set high fiscal standards, delegate treasury and investment duties to appropriate officials. and to review the actual performance at regular intervals; and Whereas, the City Council hereby intends to implement investment requirements set forth in Tex. Rev. Civ. Stat. Ann., Art 4413 (34c) and 2256, NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS. Sedion 1. Investment Rules, That the following policies and guidelines be established as investment rules governing the investment of local funds: . A. All City funds from various revenue sources shall be billed or requested as earty as they are recognized, computed. and determined to be due to the City. B. Funds received by the City shall be deposited into the depository bank at the end of each business day or as eariy as practical operating circumstances will allow. C. AI! debts owed by the City shall be paid as of the date they come due and not before unless approval is given by the City Manager. D. Based on cash forecasts, all monies not required immediately to pay obligations shall be invested in an income producing instrument or account. E. All investment activities and procedures shall be governed by a written investment policy, The Investment Policy is attached to this ordinance. RevIsions to the Investment Policy required by updates to state and federal laws may be authonzed by the City Manager. Any other significant alterations to the Investment Policy must be approved by the City Council. Section 2. Investment Obiectives. The City's funds shall be investec in apprOCriate instruments In such a manner to ensure the safety of investments, retention of investment principal. maintenance of sufficIent liquidity to cover ocerating needs. diversity of the portfolio. and maximization of yield. The preceding objectives are listed in order of priority. The City snail . invest in instruments croviding the highest rate of return. as long as such investments do not :::onflic: with the other pnorities of the City's Investment portfolio or statutes of this state regulating investments of City funds. 16 - . Appendix A Section 3. Desicnated Officials. The City Council hereby designates the Investment Officers of the City to be the City Manager and Finance Director. The City Manager and Finance Director. will have the overall responsibility to ensure that investment objectives are accomplished and that the guidelines of the investment policy are foHowed. The Finance Director will designate staff members to administer the daily functions of managing the cash and investments of the City. These persons must be authorized as investment officers by a Resolution of the City Council before they are delegated any investment duties. Section 4. Management Recorts. At least quarteriy the investment officers shall prepare a written report concerning the City's investment transactions for the preceding quarter. This report will describe ín detail the investment position of the City at the end of each quarter. A report on investment activity for the fiscal year shall be presented as the report for the fourth quarter. The reports shall be signed by the City Manager. the Finance Director and all other authorized investment officers and presented to the City Council. Section 5. Receal of Previous Ordinances. Ordinance No. 2076 is hereby repealed. Section 6. Severabilitv. Provisions of this ordinance shall be, and they are hereby. declared to be severable; and should any portion of it be declared to be invalid for any reason by a court af competent jurisdiction, such holding shall not affect the remaining portions thereof. . PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS on this the 9th day of October, 1995. APPROVED: ~/='~~-G'-U~ Tommy Bro~ ayor AïTEST: //-..\ . y; ~ \.... /1 --.e-a...u...t g.KY Secretary ~ APP;U~VE ,S.TO. F;RMANDLEGAUY /' ~:/¿ ~ , AtttSmey . 17 - I Ðt Z - I- Z Ww :;1- w<{ ~o I- w en ...JW ...J I- <{ <{ 00 ~ r I I I e::: I 0 ü u... I- 0 >- ã5 I I I l- I I z UJ ~ ~ I- >- UJ I I I UJ I I > z Z 0 c.. ::J 0 Ü >- I- C2 ::J I- <{ :¡; >- t:: a: ::J ü W en ¡:..: J z w >- ::J ;>-: ::J >- Lu 0 I- ...J t:: I:!I >- U ;g; e::: w I:!I ~ e::: :.:: c ¡=: U ::J ::J 0 .2 " <{ e::: I- a: Û (I) I- U « « CD ro > UJ ~ 0 ll.J Z a.. UJ a. I- UJ c <{ UJ 0 0 0 ro C- O ~ UJ UJ UJ r= « l- e::: c::: c::: -oi .,; ll.J UJ ¡¡; UJ ..; 0 ll.J ¡¡; ll.J ~ N <{ > UJ UJ 0 e::: ~ 0 0 I- 18 lu UJ <{ I U e::: ::J a.. ...J ...J UJ UJ Appendix B o W l- e.. w ü ü <{ . en I- Z W :¡; :¡; o ü . . . . . Appendix A Section 3. DesiQnated Officials. The City Council hereby designates the Investment Officers of the City to be the City Manager and Finance Director. The City Manager and Finance Director. will have the overall responsibility to ensure that investment objectives are accomplished and that the guidelines of the investment policy are followed. The Finance Director will designate staff members to administer the daily functions of managing the cash and investments of the City. These persons must be authorized as investment officers by a Resolution of the City Council before they are delegated any investment duties. Section 4. Manaaement Recorts. At least quarterly the investment officers shall prepare a written report concerning the City's investment transactions for the preceding quarter. This report will describe in detail the investment position of the City at the end of each quarter. A report on investment activity for the fiscal year shall be presented as the report for the fourth quarter. The reports shall be signed by the City Manager. the Finance Director and all other authorized investment officers and presented to the City Council. Section 5. Receal of Previous Ordinances. Ordinance No. 2076 is hereby repealed. Section 6. Severabilitv. Provisions of this ordinance shall be, and they are hereby, declared to be severable; and should any portion of it be declared to be invalid for any reason by a court of competent jurisdiction, such holding shall not affect the remaining portions thereof. PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS on this the 9th day of October, 1995. APPROVED: A TIEST: <:::::>~ ~dJU-"'- .I Tommy Br~ ayor .~, I ' 'Y; ~ \.... /:Þa..-u-t gjt'y Secretary ~ APP. H~VE S.TO F~RM AND LEGA~ /' fj~/Í ~ I Att6mey 17 . Appendix B SECURITY INFORMATION WORKSHEET NAME OF SECURITY: CUSIP NUMBER: COUPON / DISC. RATE: YIELD TO MATURITY/CALL: MATURITY/CALL DATE: PAR VALUE: TRADE DATE: . SETTLEMENT DATE: PRINCIPAL+ACCRUED INTEREST: PURCHASE PRICE $ SAFEKEEPING ACCOUNT: 259091 NAME OF BROKER: TIME OF TRADE: ENTERED BY: FAX. TO: BANK OF AMERICA SAFEKEEPING PH # 1-800-657-9529 FAX # 704-386-0175 APPROVED BY: K:ACCT\JNVESTMENTS\BROKER\SECURITIES WORKSHEET.XLS FUND: . - 19 Appendix B Broker/Dealer Rotation Procedures 1. Open the broker rotation file located at K:\ACCT\lnvestments\Broker\broker rotation. 2. The file contains a macro to select the brokers randomly. A pop-up window will appear, select "Enable Macros". If you mistakenly click on "Disable Macros", the random selection command will not work. If that is the case, close the document and repeat the procedure. 3. Once the document is displayed, left-click the black box in the upper left hand corner for the brokers to be selected. 4. The top three brokers displayed will be contacted to participate in the bidding process. 5. Run the random selection again if two or more numbers are repeated. 6. After each investment transaction, the bids received are entered in the trading history spreadsheet 7. Perform the broker selection procedures after an investment transaction has been completed. The brokers that are selected will be contacted for the next investment transaction. 8. Open the document K:\ACCT\lnvestments\Policy\FINANCE\lnvestment Policy, Strategy and Procedures 2005\bidform (investment bid form), fill in the brokers' information and use this bid form for the next investment transaction. 20 . . . . '" -0 '" E -0 -0 (¡; ä5 ¡:: ~ Õ « ID -0 ..Q Q) E 13 " Q) z ãi CI) 0> Õi !:!? 0> N £::! r- Il") - r- !:!? r- r- .... <a Q) ..::.::: '" 0 ~ .... a:J >. Il") . ..c ~ >. .... 0 Il") -- M en :r: Il") 0) N c: -C CO 0> .... N l- ll") ;::: Il") N QJ QJ QJ 0 .!,1 u .!::1 !:2 0 Õ 0 .J::..c: Ü Üü Il") U; "0 "0 c ~ ~ N - EEE Il") õ Ë ¡¡: . - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 I I '" '" '" '" Æ ~ ûí ~ ~ <n "§ "§ E ûí c Q) ¡) u '" u ~ (ij 5 ª Q) u '" 0> '" ..c: "E! '" '0 u ~ ~ ~ 0= en Q) CI) 1:: ¡¡: CI) 0 co '" 'ü '" ~ 0 ûí 0> '" CI) ï5. "5 c ~ '" (¡; c C: c '" '" C: ¡¡; z co Q) (ij 0 a. 0> ~ L.1.. ¡¡: '" Üj CI) C5 '" CD ~ 0 ûí u iii 0> E ..!iJ en '" c "§ "E! '" :::: <5 iii E ~ a. 0 " c'3 Cl. ~ '" 0 « ü 0 ¡¡: ¡¡: -, ::; en Cñ CI) - N '" ..,. '" '" r- eo '" 0 - N '" - - - - 21 Appendix B E .E -0 ä5 LÕ o o N '" Q) 5 -0 '" U o c: -0 co '" ,.. 0> Q) "§ ìñ > .!'! Õ a. 1: ~ " ûí Q) :> .E: Qj u c '" c ¡¡: >. .!'! õ 90 ~ ¡¡; E ûí '" ê: ¡:: ü ü :5 ~ NI~H Appendix C . City of North Richland Hills Broker/Dealer Questionnaire and Certification 1. Name of firm 2. Local address National address 3. Local telephone number National telephone number 4. Primary representative/manager/partner-in-charge Name Name Title Title . Telephone # Telephone # 5. Is your firm a subsidiary of another firm? [ ] Yes [ ] No If yes, which firm? 6. Is firm a primary dealer in U.S. Government securities? [ ] Yes [ ] No If so, for how long has firm been a primary dealer? years 7. Is your firm an inventory dealer? [] Yes [] No Do you take a position in securities which you sell or buy? [ ] Yes [ ] No 8. What was your firm's total volume in U.S. Government and agency securities trading last year? Firm-wide $ Number of transactions Local office $ Number of transactions . 22 . NRH Appendix C City of North Richland Hills Broker/Dealer Questionnaire 9. Which instruments are offered regularly by your local desk? [ ] T -bills [ ] Treasury notes/bonds [ ] GNMAs [ ] FHLMCs [ ] BAs (domestic) [ ] Commercial paper [ ] Bank CDs [ ] S & L CDs Other Federal Agencies (please specify) Instrumentalities (please specify) 10. Identify all personnel who will be trading with or providing security quotes to North Ríchland Hills employees. Name Title Telephone # Primary Alternate . Alternate (Please attach resumes of the personnel listed above.) 11. Which of the above personnel have the City of North Richland Hills' investment policy? 12. Are the firm and the account representative registered with the Texas State Securities Commission? [] Yes [] No If yes, for how long? years Representative . 23 NRH Appendix C City of North Richland Hills Broker/Dealer Questionnaire . 13. Please indicate which agents of your firm's local offices are currently licensed, certified, or registered and by whom. Agent Licensed or registered by 14. Please identify firm's public sector clients in our geographical area who are most comparable to North Richland Hills. Entity Contact Person Telephone # Client . 15. Is firm a member of NASD? [ ] Yes [ ] No If not, why? 16. Please mark each regulatory agency by which firm is examined and/or to which firm is subject to agency rules and regulations: [ ] FDIC [ ] SEC [ ] Comptroller of currency NYSE Federal Reserve System Other regulatory or oversight agency: (Note: Multi-state firms need not include regulatory agencies which do not have jurisdiction over firm's activities in the State of Texas) 17. Have you obtained all required licenses to operate as a broker/dealer in the State of Texas? [] Yes [] No . 24 . NI~H Appendix C City of North Richland Hills BrokerlOealer Questionnaire 18. To the best of your knowledge, has there been any "material" litigation, arbitration, or regulatory proceeding, either pending, adjudicated or settled, to which the firm has been subject within the last five (5) years that involved issues concerning the suitability of the sale or purchase of securities to an institutional client? If so, please describe each such matter briefly. For purposes of this question, proceedings are "material" if your independent accountant applying generally accepted accounting principles determines that such proceedings required disclosure in the firm's financial statements. . 19. Have any of the employees listed in item ten (10) ever had sanctions imposed due to any of the activities noted in item eighteen (18)? Explain the outcome, case, and/or case citation in an attached explanation. 20. Please provide samples of research reports that your firm regularly provides to public-sector clients. 21. Explain the firm's normal custody and delivery process. Who audits these fiduciary systems? What reports, transactions, confirmations, and paper trail will North Richland Hills receive? 22. Enclose a complete schedule of fees and charges for various transactions. . 25 NRH Appendix C City of North Richland Hills Broker/Dealer Questionnaire · 23. Provide firm's most recent certified, audited financial statements. In addition, for those dealers preparing and submitting financial statements to the following organizations, provide publicly available financial documents filed with these agencies for the most recent reporting period. National Association of Securities Dealers Securities and Exchange Commission New York Stock Exchange Federal Deposit Insurance Corporation 24. Has firm consistently complied with the Federal Reserve Bank's capital adequacy guidelines? As of this date, does firm comply with the guidelines? Has firm's capital position ever fallen short? By what factor (1.5X, 2X, etc.) does firm presently exceed the capital adequacy guidelines? Include certified documentation of firm's capital adequacy as measured by the Federal Reserve standards. · 25. Describe the capital line and trading limits that support/limit the office that would conduct business with North Richland Hills. 26. If firm is not a bank, provide the following information regarding the firm's principal banking relationship. Bank Name Address Contact Telephone # Length of relationship · 26 . NRH Appendix C City of North Richland Hills Broker/Dealer Questionnaire 27. Does firm participate in the SIPC insurance program? [ ] Yes [ ] No If not, please explain why. 28. What portfolio information do you require from your clients? 29. How many and what percentage of your transactions failed last month? Last year? . 30. Describe the precautions taken by firm to protect the interests of the public when dealing with governmental agencies as investors. . 27 .. NI~H Appendix C City of North Richland Hills Broker/Dealer Certification . - CERTIFICATION- This certification is executed on behalf of the City of North Richland Hills (the Investor) and (the Business Organization) pursuant to the Public Funds Investment Act, Chapter 2256, Texas Government Code (the Act) in connection with investment transactions conducted between the Investor and the Business Organization. The undersigned Qualified Representative(s) of the Business Organization hereby certifies on behalf of the Business Organization that: 1. The undersigned is a Qualified Representative of the Business Organization offering to enter an investment transaction with the Investor as such terms are used in the Public Funds Investment Act, Chapter 2256, Texas Government Code, and 2. The Qualified Representative of the Business Organization has received and reviewed the Investment Policy furnished by the Investor, and 3. The Qualified Representative of the Business Organization has . implemented reasonable procedures and controls in an effort to preclude investment transactions conducted between the Business Organization and the Investor that are not authorized by the Investor's investment policy, except to the extent that this authorization is dependent on an analysis of the Investor's entire portfolio or requires an interpretation of subjective standards. Qualified Representative of the Business Organization Signature: Name: Title: Date: . 28 . . . Appendix D City of North Richland Hills Approved Securities Dealers As of May 23, 2005 Securities Dealers First Southwest Company First Empire, Inc. Morgan Keegan & Company, Inc. APS Financial Corp. Duncan-Williams, Inc. Coastal Securities Seattle-Northwest Securities Corp. Great Pacific Securities J.P. Morgan Securities, Inc. Southwest Securities, Inc. Multi-Bank Securities, Inc. Wells Fargo Brokerage Services, LLC Bankina Institutions First Simmons National Bank Investment Pools T exPool LOGIC MBIA CLASS TexSTAR 29 Appendix E PRIMARY SECURITIES DEALERS No primary dealers currently approved. This page to be inserted when received. 30 . . . . . . . Master Repurchase Agreement September 1996 Version Dated as of Between: and 1. Applicability From time to time the parties hereto may enter into transactions in which one party ("Seller") agrees to transfer to the other ('"Buyer") securities or other assets ("Securities") against the transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such Securities at a date certain or on demand. against the transfer of funds by Seller. Each such transaction shall be referred to herein as a "Transaction" and. unless otherwise agreed in writing. shall be governed by this Agreement. including any supplemental terms or conditions contained in Annex r hereto and in any other annexes identifìed herein or therein as applicable hereunder. 2. Definitions (a) "Act of Insolvency". vvith respect. to any party, (i) the commencement by such party as debtor of any case or proceeding under any bankruptcy. insolvency, reorganization, liquidation. moratori- um. dissolution. delinquency or similar law. or such party seeking the appointment or election of a receiver. conservator. trustee, custodian or similar official for such pany or any substantia] pan of its property. or the convening of any meeting of creditors for purposes of commencing any such case or proceeding or seeking such an appointment or election. (ii) the commence- ment of any such case or proceeding against such party, or another seeking such an appoint- ment or election. or the filing against a party of an application for a protective decree under thE.' provisions of the Securities Investor Protection Act of 1970. which (A.) is consented to or not timely contested by such party. Œ) results in the entry of an order for relief. such an appoint- ment or eìection. the issuancE.' of such a protectivE.' decree or the entry of an order having a sim- ilar effect. or (C) is nor dismissed within 15 days. (iii) the making by such party of a general assignment for the benefit of creditors. or (iv) the admission in writing by such pany of such party's inability to pay such party"s debts as they become due; (b) '"Additional Purchased Securities". Securities provided bv SeIJer to Buyer pursuant to Paragraph 4(aj hereof: 31 - (c) "Buyer's Margin Amount", with respect to any Transaction as of any date, the amount obtained by application of the Buyer's Margin Percentage to the Repurchase Price for such Transaction as of such date: . (d) "Buyer's Margin Percentage". with respect to any Transaction as of any date, a percentage (which may be equal to the Seller's Margin Percentage) agreed to by Buyer and Seller or. in the absence of any such agreement, the percemage obtained by dividing the Market Value of the Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for such Transaction; (e) "Confirmation", the meaning specified in Paragraph 3(b) hereof; (0 "Income", with respect to any Security at any time, any principal thereof and all interest. dividends or ot.her distributions thereon: (g) "Margin Deficit", the meaning specified in Paragraph 4(a) hereof; (h) "Margin Exces..<;", the meaning specified in Paragraph 4(b) hereof: (i) "Margin Notice Deadline", the time agreed to by the parties in the relevant Confirmation, Annex I hereto or otherwise as the deadline for giving notice requiring same-day satisfac- tion of margin maintenance obligations as provided in Paragraph 4 hereof (or, in t.he absence of any such agreement, the deadline for such purposes established in accordance with market practice); ú) "Market Value", with respect to any Securities as of any date, the price for such Securities on such date obtained fÌ'om a generally recognized source agreed to by the parties or the most recent closing bid quotation from such a source, plus accrued Income to the extent not included therein (other than any Income credited or transferred to. or applied to the obligations of. SeHer pursuant to Paragraph 5 hereon as of such date (unless contrary to market practice for such Securities); . (k) "Price Differential", with respeer to any Transaction as of any date, the aggregate amount obtained by daiìy application of the Pricing Rate for such Transaction to the Purchase Price for such Transaction on a 360 day per year basis for the actual number of days dur- ing the period commencing on (and including) the Purchase Date for such Transaction and ending on (but excluding) the date of determination (reduced by any amount of such Price DHTerential previously paid by Seller to Buyer with respect to such Transaction) ; 0) "Pricing Rate", the per annum percentage rate for determination of the Price Differential: (rn) "Prime Rate", the prime rate of U.S. commercial banks as pubJished in The Wall Street Journal (or. if more than one such rate is published, the average of such rates): (n) "Purchase Date", the date on which Purchased Securities are to be transferred by Seller to Buyer; . 2 . September ! 996 . VI"s[er Repurchase Agret:1T1ef1T 32 . (0) "Purchase Price", (i) on the Purchase Date, the price at which Purchased Securities are transferred by Seller to Buyer, and (ii) thereafter, except where Buyer and Seller agree oth- erwise, such price increased by the amount of any cash transferred by Buyer to Seller pur- suant to Paragraph 4(b) hereof and decreased by the amount of any cash transferred by Seller to Buyer pursuant to Paragraph 4 (a) hereof or applied to reduce Seller's obligations under clause (ii) of Paragraph 5 hereof; (p) "Purchased Securities", the Securities transferred by Seller to Buyer in a Transaction here- under. and any Securities substituted therefor in accordance with Paragraph 9 hereof. The term "Purchased Securities" with respect to any Transaction at any time also shall include Additional Purchased Securities delivered pursuant to Paragraph 4(a) hereof and shall exclude Securities returned pursuant to Paragraph 4(b) hereof; (q) "Repurchase Date", the date on which Seller is to repurchase the Purchased Securities from Buyer, including any date determined by application of the provisions of Paragraph 3 (c) or 11 hereof; (r) "Repurchase Price", the price at which Purchased Securities are to be transferred from Buyer to Seller upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the Price Differential as of the date of such determination; . (s) "Seller's Margin Amount", with respect to any Transaction as of any date, the amount obtained by application of the Seller's Margin Percentage to the Repurchase Price for such Transaction as of such date; (t) "Seller's Margin Percentage", with respect to any Transaction as of any date, a percentage (which may be equal to the Buyer's Margin Percentage) agreed to by Buyer and Seller or, in the absence of any such agreement, the percentage obtained by dividing the Market Value of the Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for such Transaction. 3. Initiation; Confirmation; Termination (a) An agreement to enter into a Transaction may be made orally or in writing at the initia- tion of either Buyer or Seller. On the Purchase Date for the Transaction, the Purchased Securities shall be transferred to Buyer or its agent against the transfer of the Purchase Price to an account of Seller. . (b) Upon agreeing to enter into a Transaction hereunder, Buyer or Seller (or both), as shall be agreed, shall promptly deliver to the other party a written confirmation of each Transaction (a "Confirmation"). The Confirmation shall describe the Purchased Securities (including CUSIP number. if any), identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase Price, (iii) the Repurchase Date, unless the Transaction is to be terminable on demand, (iv) the Pricing Rate or Repurchase Price applicable to the Transaction, and (v) any additional terms or conditions of the Transaction not inconsistent with this Agreement. The Confirmation, together with this Agreement, shall constitute conclusive evidence of the terms agreed between Buyer and Seller with respect to the Transaction to which the Confirmation relates, unless with 33 September 1996. Master Repurchase Agreement. 3 . respect to the Confirmation specific objection is made promptly after receipt thereof. In the event of any conflict between the terms of such Confirmation and this Agreement, this Agreement shall prevail. . (c) In the case of Transactions terminable upon demand, such demand shall be made by Buyer or Seller, no later than such time as is customary in accordance with market prac- tice, by telephone or otherwise on or prior to the business day on which such termination will be effective. On the date specified in such demand, or on the date fixed for termina- tion in the case of Transactions having a fixed term, termination of the Transaction will be effected by transfer to Seller or its agent of the Purchased Securities and any Income in respect thereof received by Buyer (and not previously credited or transferred to, or applied to the obligations of, Seller pursuant to Paragraph 5 hereof) against the transfer of the Repurchase Price to an account of Buyer. 4. Margin Maintenance (a) If at any time the aggregate Market Value of all Purchased Securities subject to all Transactions in which a particular party hereto is acting as Buyer is less than the aggre- gate Buyer's Margin Amount for all such Transactions (a "Margin Deficit"), then Buyer may by notice to Seller require Seller in such Transactions, at Seller's option, to transfer to Buyer cash or additional Securities reasonably acceptable to Buyer ("Additional Purchased Securities"), so that the cash and aggregate Market Value of the Purchased Securities, including any such Additional Purchased Securities, will thereupon equal or exceed such aggregate Buyer's Margin Amount (decreased by the amount of any Margin Deficit as of such date arising from any Transactions in which such Buyer is acting as Seller) . . (b) If at any time the aggregate Market Value of all Purchased Securities subject to all Transactions in which a particular party hereto is acting as Seller exceeds the aggregate Seller's Margin Amount for all such Transactions at such time (a "Margin Excess"), then Seller may by notice to Buyer require Buyer in such Transactions, at Buyer's option, to transfer cash or Purchased Securities to Seller, so that the aggregate Market Value of the Purchased Securities, after deduction of any such cash or any Purchased Securities so transferred, will thereupon not exceed such aggregate Seller's Margin Amount (increased by the amount of any Margin Excess as of such date arising from any Transactions in which such Seller is acting as Buyer). (c) If any notice is given by Buyer or Seller under subparagraph (a) or (b) of this Paragraph at or before the Margin Notice Deadline on any business day, the party receiving such notice shall transfer cash or Additional Purchased Securities as provided in such subpara- graph no later than the close of business in the relevant market on such day. If any such notice is given after the Margin Notice Deadline, the party receiving such notice shall transfer such cash or Securities no later than the close of business in the relevant market on the next business day following such notice. (d) Any cash transferred pursuant to this Paragraph shall be attributed to such Transactions as shall be agreed upon by Buyer and Seller. . 4 . September 1996. Master Repurchase Agreement 34 . (e) Seller and Buyer may agree. with respect to any or all Transactions hereunder. that the respective rights of Buyer or Seller (or both) under subparagraphs (a) and (b) of this Paragraph may be exercised only where a Margin Deficit or Margin Excess. as the case may be. exceeds a specified dollar amount or a specified percentage of the Repurchase Prices for such Transactions (which amount or percentage shall be agreed to by Buyer and Seller prior to entering into any such Transactions). (f) Seller and Buyer may agree, with respect to any or all Transactions hereunder. that the respective rights of Buyer and Seller under subparagraphs (a) and (b) of this Paragraph to require the elimination of a Margin Deficit or a Margin Excess. as the case may be, may be exercised whenever such a Margin Deficit or Margin Excess exists with respect to any single Transaction hereunder (calculated without regard to any other Transaction outstanding under this Agreement). . 5. Income Payments Seller shall be entitled to receive an amount equal to all Income paid or distributed on or in respect of the Securities that is not otherwise received by Seller. to the full extent it would be so entitled if the Securities had not been sold to Buyer. Buyer shall, as the parties may agree with respect to any Transaction (or. in the absence of any such agreement, as Buyer shall rea- sonably determine in its discretion), on the date such Income is paid or distributed either (i) transfer to or credit to the account of Seller such Income with respect to any Purchased Securities subject to such Transaction or (ii) with respect to Income paid in cash, apply the Income payment or payments to reduce the amount, if any, to be transferred to Buyer by Seller upon termination of such Transaction. Buyer shall not be obligated to take any action pursuant to the preceding sentence (A) to the extent that such action would result in the cre- ation of a Margin Deficit, unless prior thereto or simultaneously therewith Seller transfers to Buyer cash or Additional Purchased Securities sufficient to eliminate such Margin Deficit, or (B) if an Event of Default with respect to Seller has occurred and is then continuing at the time such Income is paid or distributed. 6. Security Interest Although the parties intend that all Transactions hereunder be sales and purchases and not loans. in the event any such Transactions are deemed to be loans, Seller shall be deemed to have pledged to Buyer as security for the performance by Seller of its obligations under each such Transaction. and shall be deemed to have granted to Buyer a security interest in, all of the Purchased Securities with respect to all Transactions hereunder and all Income thereon and other proceeds thereof. . 7. Payment and Transfer Unless otherwise mutually agreed, all transfers of funds hereunder shall be in immediately available funds. All Securities transferred by one party hereto to the other party (i) shall be in suitable form for transfer or shall be accompanied by duly executed instruments of transfer or assignment in blank and such other documentation as the party receiving possession may reasonably request, (ii) shall be transferred on the book-entry system of a Federal Reserve Bank. or (iii) shall be transferred by any other method mutually acceptable to Seller and Buyer. 35 September J 996 . Master Repurchase Agreement. 5 8. Segregation of Purchased Securities To the extent required by applicable law, all Purchased Securities in the possession of Seller shall be segregated from other securities in its possession and shall be identified as subject to this Agreement. Segregation may be accomplished by appropriate identification on the books and records of the holder, including a financial or securities intermediary or a clearing corpo- ration. All of Seller's interest in the Purchased Securities shall pass to Buyer on the Purchase Date and. unless otherwise agreed by Buyer and Seller, nothing in this Agreement shall pre- clude Buyer from engaging in repurchase transactions with the Purchased Securities or other- wise selling, transferring. pledging or hypothecating the Purchased Securities, but no such transaction shall relieve Buyer of its obligations to transfer Purchased Securities to Seller pur- suant to Paragraph 3, 4 or 11 hereof, or of Buyer's obligation to credit or pay Income to, or apply Income to the obligations of, Seller pursuant to Paragraph 5 hereof. · Required Disclosure for Transactions in Which the Seller Retains Custody of the Purchased Securities Seller is not permitted to substitute other securities for those subject to this Agreement and therefore must keep Buyer's securities segregated at all times, unless in this Agreement Buyer grants Seller the right to substitute other securities. If Buyer grants the right to substitute, this means that Buyer's securities will likely be commingled with Seller's own securities during the trading day. Buyer is advised that, during any trading day that Buyer's securities are commingled with Seller's securities, they [willJ* [may]** be subject to liens granted by Seller to [its clearing bank] * [third parties] ** and may be used by Seller for deliveries on other securities transactions. Whenever the securities are commingled, Seller's ability to resegregate substitute securities for Buyer will be subject to Seller's ability to satisfy [the clear- ing] * [any] ** lien or to obtain substitute securities. · * Language to be used under 17 C.ER. ß403.4 (e) if Seller is a government securities broker or dealer other than a financial institution. ** Language to be used under 17 C.ER. ß403.5 (d) if Seller is a financial institution. 9. Substitution (a) Seller may, subject to agreement with and acceptance by Buyer, substitute other Securities for any Purchased Securities. Such substitution shall be made by transfer to Buyer of such other Securities and transfer to Seller of such Purchased Securities. After substitution, the substituted Securities shall be deemed to be Purchased Securities. (b) In Transactions in which Seller retains custody of Purchased Securities, the parties expressly agree that Buyer shall be deemed, for purposes of subparagraph (a) of this Paragraph, to have agreed to and accepted in this Agreement substitution by Seller of other Securities for Purchased Securities; provided, however, that such other Securities shall have a Market Value at least equal to the Market Value of the Purchased Securities for which they are substituted. · 6 . September 1996 . Master Repurchase Agreement 36 · 10, Representations Each of Buyer and Seller represents and warrants to the other that (i) it is duly authorized to execute and deliver this Agreement, to enter into Transactions contemplated hereunder and to perform its obligations hereunder and has taken all necessary action to authorize such exe- cution. delivery and performance, (ii) it will engage in such Transactions as principal (or, if agreed in writing, in the form of an annex hereto or otherwise. in advance of any Transaction by the other party hereto, as agent for a disclosed principal), (iii) the person signing this Agreement on its behalf is duly authorized to do so on its behalf (or on behalf of any such disclosed principal). (iv) it has obtained all authorizations of any governmental body required in connection with this Agreement and the Transactions hereunder and such autho- rizations are in full force and effect and (v) the execution, delivery and performance of this Agreement and the Transactions hereunder will not violate any law, ordinance, charter, by- law or rule applicable to it or any agreement by which it is bound or by which any of its assets are affected. On the Purchase Date for any Transaction Buyer and Seller shall each be deemed to repeat all the foregoing representations made by it. · 11. Events of Default In the event that (i) Seller fails to transfer or Buyer fails to purchase Purchased Securities upon the applicable Purchase Date, (ii) Seller fails to repurchase or Buyer fails to transfer Purchased Securities upon the applicable Repurchase Date, (iii) Seller or Buyer fails to com- ply with Paragraph 4 hereof, (iv) Buyer fails, after one business day's notice, to comply with Paragraph 5 hereof, (v) an Act of Insolvency occurs with respect to Seller or Buyer, (vi) any representation made by Seller or Buyer shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated, or (vii) Seller or Buyer shall admit to the other its inability to, or its intention not to. perform any of its oblig- ations hereunder (each an "Event of Default"): (a) The nondefaulting party may. at its option (which option shall be deemed to have been exercised immediately upon the occurrence of an Act of Insolvency), declare an Event of Default to have occurred hereunder and, upon the exercise or deemed exercise of such option, the Repurchase Date for each Transaction hereunder shall. if it has not already occurred, be deemed immediately to occur (except that. in the event that the Purchase Date for any Transaction has not yet occurred as of the date of such exercise or deemed exercise, such Transaction shall be deemed immediately canceled). The nondefaulting party shall (except upon the occurrence of an Act of Insolvency) give notice to the defaulting party of the exercise of such option as promptly as practicable. · (b) In all Transactions in which the defaulting party is acting as Seller. if the nondefaulting party exercises or is deemed to have exercised the option referred to in subparagraph (a) of this Paragraph, (i) the defaulting party's obligations in such Transactions to repurchase all Purchased Securities, at the Repurchase Price therefor on the Repurchase Date deter- mined in accordance with subparagraph (a) of this Paragraph, shall thereupon become immediately due and payable, (ii) all Income paid after such exercise or deemed exercise shall be retained by the nondefaulting party and applied to the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder, and (iii) the defaulting party shall immediately deliver to the nondefaulting party any Purchased Securities subject to such Transactions then in the defaulting party's posses- sion or control. 37 September 1996. Master Repurchase Agreement. 7 (c) In all Transactions in which the defaulting party is acting as Buyer. upon tender by the non defaulting party of payment of the aggregate Repurchase Prices for all such Transactions. all right, title and interest in and entitlement to all Purchased Securities subject to such Transactions shall be deemed transferred to the nondefaulting party. and the defaulting party shall deliver all such Purchased Securities to the non defaulting party. . (d) If the nondefaulting party exercises or is deemed to have exercised the option referred to in subparagraph (a) of this Paragraph. the nondefaulting party. without prior notice to the defaulting party. may: (i) as to Transactions in which the defaulting party is acting as Seller. (A) immediately sell. in a recognized market (or otherwise in a commercially reasonable manner) at such price or prices as the nondefaulting party may reasonably deem satisfactory. any or all Purchased Securities subject to such Transactions and apply the proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder or (B) in its sole discretion elect. in lieu of selling all or a portion of such Purchased Securities. to give the defaulting party credit for such Purchased Securities in an amount equal to the price therefor on such date. obtained from a generally recognized source or the most recent closing bid quotation from such a source. against the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder; and (ii) as to Transactions in which the defaulting party is acting as Buyer. (A) immediately purchase. in a recognized market (or otherwise in a commercially reasonable man- ner) at such price or prices as the nondefaulting party may reasonably deem satisfac- tory. securities ("Replacement Securities") of the same class and amount as any Purchased Securities that are not delivered by the defaulting party to the nondefault- ing party as required hereunder or (B) in its sole discretion elect, in lieu of purchas- ing Replacement Securities. to be deemed to have purchased Replacement Securities at the price therefor on such date. obtained from a generally recognized source or the most recent closing offer quotation from such a source. . Unless otherwise provided in Annex I. the parties acknowledge and agree that (1) the Securities subject to any Transaction hereunder are instruments traded in a recognized market. (2) in the absence of a generally recognized source for prices or bid or offer quo- tations for any Security. the nondefaulting party may establish the source therefor in its sole discretion and (3) all prices. bids and offers shall be determined together with accrued Income (except to the extent contrary to market practice with respect to the rel- evant Securities). (e) As to Transactions in which the defaulting party is acting as Buyer. the defaulting party shall be liable to the nondefaulting party for any excess of the price paid (or deemed paid) by the nondefaulting party for Replacement Securities over the Repurchase Price for the Purchased Securities replaced thereby and for any amounts payable by the defaulting party under Paragraph 5 hereof or otherwise hereunder. (f) For purposes of this Paragraph 11. the Repurchase Price for each Transaction hereunder in respect of which the defaulting party is acting as Buyer shall not increase above the . 8 . September 1996 . Master Repurchase Agreement 38 . amount of such Repurchase Price for such Transaction determined as of the date of the exercise or deemed exercise by the nondefaulting party of the option referred to in sub- paragraph (a) of this Paragraph. (g) The defaulting party shall be liable to the nondefaulting party for (i) the amount of all reasonable legal or other expenses incurred by the nondefaulting party in connection with or as a result of an Event of Default, (ii) damages in an amount equal to the cost (including all fees. expenses and commissions) of entering into replacement transactions and entering into or terminating hedge transactions in connection with or as a result of an Event of Default. and (iii) any other loss. damage, cost or expense directly arising or resulting from the occurrence of an Event of Default in respect of a Transaction. (h) To the extent permitted by applicable law. the defaulting party shall be liable to the non- defaulting party for interest on any amounts owing by the defaulting party hereunder. from the date the defaulting party becomes liable for such amounts hereunder until such amounts are (i) paid in full by the defaulting party or (ii) satisfied in full by the exercise of the nondefaulting party's rights hereunder. Interest on any sum payable by the default- ing party to the nondefaulting party under this Paragraph 11 (h) shall be at a rate equal to the greater of the Pricing Rate for the relevant Transaction or the Prime Rate. (i) The nondefaulting party shall have. in addition to its rights hereunder, any rights other- wise available to it under any other agreement or applicable law. . 12.Single Agreement Buyer and Seller acknowledge that. and have entered hereinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that. all Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of each other. Accordingly, each of Buyer and Seller agrees (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the perfor- mance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, (ii) that each of them shall be entitled to set off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transactions hereunder and (iii) that payments, deliveries and other transfers made by either of them in respect of any Transaction shall be deemed to have been made in consideration of payments. deliveries and other transfers in respect of any other Transactions hereunder. and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted. 13. Notices and Other Communications Any and all notices. statements. demands or other communications hereunder may be given by a party to the other by mail, facsimile. telegraph. messenger or otherwise to the address specified in Annex II hereto. or so sent to such party at any other place specified in a notice of change of address hereafter received by the other. All notices. demands and requests hereun- der may be made orally, to be confirmed promptly in writing. or by other communication as specified in the preceding sentence. . 39 September 1996. Master Repurchase Agreement. 9 14. Entire Agreement; Severability This Agreement shall supersede any existing agreements between the parties containing gen- eral terms and conditions for repurchase transactions. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement. . 15. Non-assignability; Termination (a) The rights and obligations of the parties under this Agreement and under any Transaction shall not be assigned by either party without the prior written consent of the other party, and any such assignment without the prior written consent of the other party shall be null and void. Subject to the foregoing, this Agreement and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. This Agreement may be terminated by either party upon giving written notice to the other, except that this Agreement shall, notwithstanding such notice, remain applicable to any Transactions then outstanding. (b) Subparagraph (a) of this Paragraph 15 shall not preclude a party from assigning, charg- ing or otherwise dealing with all or any part of its interest in any sum payable to it under Paragraph 11 hereof. 16. Governing Law This Agreement shall be governed by the laws of the State of New York without giving effect to the conflict of law principles thereof. . 17. No Waivers, Etc. No express or implied waiver of any Event of Default by either party shall constitute a waiver of any other Event of Default and no exercise of any remedy hereunder by any party shall constitute a waiver of its right to exercise any other remedy hereunder. No modification or waiver of any provision of this Agreement and no consent by any party to a departure here- from shall be effective unless and until such shall be in writing and duly executed by both of the parties hereto. Without limitation on any of the foregoing, the failure to give a notice pur- suant to Paragraph 4(a) or 4(b) hereof will not constitute a waiver of any right to do so at a later date. 18. Use of Employee Plan Assets (a) If assets of an employee benefit plan subject to any provision of the Employee Retirement Income Security Act of 1974 ("ERISA") are intended to be used by either party hereto (the "Plan Party") in a Transaction, the Plan Party shall so notify the other party prior to the Transaction. The Plan Party shall represent in writing to the other party that the Transaction does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom. and the other party may proceed in reliance thereon but shall not be required so to proceed. . 10 . September 1996 . Master Repurchase Agreement 40 . . . - I (b) Subject to the last sentence of subparagraph (a) of this Paragraph, any such Transaction shall proceed only if Seller furnishes or has furnished to Buyer its most recent available audited statement of its financial condition and its most recent subsequent unaudited statement of its financial condition. (c) By entering into a Transaction pursuant to this Paragraph, Seller shall be deemed (i) to represent to Buyer that since the date of Seller's latest such financial statements, there has been no material adverse change in Seller's financial condition which Seller has not dis- closed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited statements of its financial condition as they are issued, so long as it is a Seller in any out- standing Transaction involving a Plan Party, 19.Intent (a) The parties recognize that each Transaction is a "repurchase agreement" as that term is defined in Section 101 of Title 11 of the United States Code, as amended (except insofar as the type of Securities subject to such Transaction or the term of such Transaction would render such definition inapplicable), and a "securities contract" as that term is defined in Section 741 of Title 11 of the United States Code, as amended (except insofar as the type of assets subject to such Transaction would render such definition inapplica- ble). (b) It is understood that either party's right to liquidate Securities delivered to it in connec- tion with Transactions hereunder or to exercise any other remedies pursuant to Paragraph 11 hereof is a contractual right to liquidate such Transaction as described in Sections 555 and 559 of Title 11 of the United States Code, as amended. (c) The parties agree and acknowledge that if a party hereto is an "insured depository insti- tution." as such term is defined in the Federal Deposit Insurance Act, as amended ("FDIA"), then each Transaction hereunder is a "qualified financial contract," as that term is defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplica- ble). (d) It is understood that this Agreement constitutes a "netting contract" as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a "covered contractual payment entitlement" or "covered contractual payment obligation", respectively, as defined in and subject to FDI- CIA (except insofar as one or both of the parties is not a "financial institution" as that term is defined in FDICIA). 20, Disclosure Relating to Certain Federal Protections The parties acknowledge that they have been advised that: (a) in the case of Transactions in which one of the parties is a broker or dealer registered with the Securities and Exchange Commission ("SEC") under Section 15 of the Securities Exchange Act of 1934 ("1934 Act"). the Securities Investor Protection Corporation has 41 September 1996 · Master Repurchase Agreement. 11 taken the position that the provisions of the Securities Investor Protection Act of 1970 ("SIPA") do not protect the other party with respect to any Transaction hereunder: . (b) in the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC under Section 15C of the 1934 Act. SIPA will not provide protection to the other party with respect to any Transaction hereunder; and (c) in the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable. [Name of Party] [Name of Party] By: By: Title: Title: Date: Date: . . 12. September 1996. Master Repurchase Agreement 42 . . . Appendix G TEXAS GOVERNMENT CODE CHAPTER 2256. PUBLIC FUNDS INVESTMENT SUBCHAPTER A. AUTHORIZED INVESTMENTS FOR GOVERNMENTAL ENTITIES Sec. 2256.001. SHORT TITLE This chapter may be cited as the Public Funds Investment Act Sec. 2256.002. DEFINITIONS. In this chapter: (1) "Bond proceeds" means the proceeds from the sale of bonds, notes, and other obligations issued by an entity, and reserves and funds maintained by an entity for debt service purposes. (2) "Book value" means the original acquisition cost of an investment plus or minus the accrued amortization or accretion. (3) "Funds" means public funds in the custody of a state agency or local government that: (A) are not required by law to be deposited in the state treasury; and (B) the investing entity has authority to invest (4) "Institution of higher education" has the meaning assigned by Section 61.003, Education Code. (5) "Investing entity" and "entity" mean an entity subject to this chapter and described by Section 2256.003. (6) "Investment pool" means an entity created under this code to invest public funds jointly on behalf of the entities that participate in the pool and whose investment objectives in order of priority are: (A) preservation and safety of principal; (B) liquidity; and (C) yield. (7) "Local government" means a municipality, a county, a school district, a district or authority created under Section 52(b)(1) or (2), Article III, or Section 59, Article XVI, Texas Constitution, a fresh water supply district, a hospital district, 43 Appendix G and any political subdivision, authority, public corporation, body, politic, or instrumentality of the State of Texas, and any nonprofit corporation acting on behalf of any of those entities. · (8) "Market value" means the current face or par value of an investment multiplied by the net selling price of the security as quoted by a recognized market pricing source premium or discount quoted on the valuation date. (9) "Pooled fund group" means an internally created fund of an investing entity in which one or more institutional accounts of the investing entity are invested. (10)"Qualified representative" means a person who holds a position with a business organization, who is authorized to act on behalf of the business organization, and who is one of the following: (A) for a business organization doing business that is regulated by or registered with a securities commission, a person who is registered under the rules of the National Association of Securities Dealers; (8) for a state or federal bank, a savings bank, or a state or federal credit union, a member of the loan committee for the bank or branch of the bank or a person authorized by corporate resolution to act on behalf of and bind the banking institution; · (C) for an investment pool, the person authorized by the elected official or board with authority to administer the activities of the investment pool to sign the written instrument on behalf of the investment pool; or (D) for an investment management firm registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.) or, if not subject to registration under that Act, registered with the State Securities Board, a person who is an officer or principal of the investment management firm. (11) "School district" means a public school district. (12) "Separately invested asset," means an account or fund of a state agency or local government that is not invested in a pooled fund group. (13) "State agency" means an office, department, commission, board, or other agency that is part of any branch of state government, an institution of higher education, and any nonprofit corporation acting on behalf of any of those entities. · 44 . . . Appendix G Sec. 2256.003. AUTHORITY TO INVEST FUNDS; ENTITIES SUBJECT TO THIS CHAPTER. (a) Each governing body of the following entities may purchase, sell, and invest its funds and funds under its control in investments authorized under this subchapter in compliance with investment policies approved by the governing body and according to the standard of care prescribed by Section 2256.006: (1) a local government; (2) a state agency; (3) a nonprofit corporation acting on behalf of a local government or a state agency; or (4) an investment pool acting on behalf of two or more local governments, state agencies, or a combination of those entities. (b) In the exercise of its powers under Subsection (a), the governing body of an investing entity may contract with an investment management firm registered under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et seq.) or with the State Securities Board to provide for the investment and management of its public funds of other funds under its control. A contract made under authority of this subsection may not be for a term longer than two years. A renewal or extension of the contract must be made by the governing body of the investing entity by order, ordinance, or resolution. (c) This chapter does not prohibit an investing entity or investment officer from using the entity's employees or the services of a contractor of the entity to aid the investment officer in the execution of the officer's duties under this chapter. Sec. 2256.004. APPLICABILITY. (a) This subchapter does not apply to: (1) a public retirement system as defined by Section 802.001; (2) state funds invested as authorized by Section 404.024; (3) an institution of higher education having total endowments of at least $95 million in book value on May 1,1995; (4) funds invested by the Veterans' Land Board as authorized by Chapter 161, 162, or 164, Natural Resources Code; (5) Registry funds deposited with the county or district clerk under Chapter 117, Local Government Code; or 45 Appendix G . (6) a deferred compensation plan that qualifies under either Section 401 (k) or 457 or the Internal Revenue Code of 1986 (26 U.S.C. Section 1 et seq.), as amended. (b) This subchapter does not apply to an investment donated to an investing entity for a particular purpose or under terms of use specified by the donor. Sec. 2256.005. INVESTMENT POLICIES; INVESTMENT STRATEGIES; INVESTMENT OFFICER. (a) The governing body of an investing entity shall adopt by rule, order, ordinance, or resolution, as appropriate, a written investment policy regarding the investment of its funds and funds under its control. (b) The investment policies must: (1) be written; (2) primarily emphasize safety of principal and liquidity; (3) address investment diversification, yield, and maturity and the quality and capability of investment management; and . (4) include: (A) a list of the types of authorized investments in which the investing entity's funds may be invested; (B) the maximum allowable stated maturity of any individual investment owned by the entity; (C) for pooled fund groups, the maximum dollar-weighted average maturity allowed based on the stated maturity date for the portfolio; (D) methods to monitor the market price of investments acquired with public funds; and (E) a requirement for settlement of all transactions, except investment pool funds and mutual funds, on a delivery versus payment basis. (c) The investment policies may provide that bids for certificates of deposit be solicited: (1) orally; (2) in writing; . 46 . . . Appendix G (3) electronically; or (4) in any combination of those methods. (d) As an integral part of an investment policy, the governing body shall adopt a separate written investment strategy for each of the funds or group of funds under its control. Each investment strategy must describe the investment objectives for the particular fund using the following priorities in order of importance: (1) understanding of the suitability of the investment to the financial requirements of the entity; (2) preservation and safety of principal; (3) liquidity; (4) marketability of the investment if the need arises to liquidate the investment before maturity; (5) diversification of the investment portfolio; and (5) yield. (e) The governing body of an investing entity shall review its investment policy and investment strategies not less than annually. The governing body shall adopt a written instrument by rule, order, ordinance, or resolution stating that it has reviewed the investment policy and investment strategies and that the written instrument so adopted shall record any changes made to either the investment policy or investment strategies. (f) Each investing entity shall designate, by rule, order, ordinance, or resolution, as appropriate, one or more officers or employees of the state agency, local government, or investment pool as investment officer or contract with an investment management firm under Section 2256.003(b) to be responsible for the investment of its funds consistent with the investment policy adopted by the entity. If the governing body of an investing entity has contracted with another investing entity to invest its funds, the investment officer of the other investing entity is considered to be the investment officer of the first investing entity for purposes of this chapter. Authority granted to a fiduciary to invest an entity's funds is effective until rescinded by the investing entity, until the expiration of the officer's term or the termination of the person's employment by the investing entity, or if an investment management firm, until the expiration of the contract with the investing entity. In the administration of the duties of an investment officer, the fiduciary designated as investment officer shall exercise the judgment and care, under prevailing circumstances, that a prudent person would exercise in the management of the person's own affairs, but the governing body of the investing entity retains ultimate responsibility as fiduciaries of the assets of the entity. Unless authorized by law, a 47 Appendix G person may not deposit, withdraw, transfer, or manage in any other manner the funds of the investing entity. . (g) Subsection (f) does not apply to a state agency, local government, or investment pool for which an officer of the entity is assigned by law the function of investing its funds. (h) An officer or employee of a commission created under Chapter 391, Local Government Code, is ineligible to be designated as an investment officer under Subsection (f) for any investing entity other than for that commission. (i) An investment officer of an entity who has a personal business relationship with a business organization offering to engage in an investment transaction with the entity shall file a statement disclosing that personal business interest. An investment officer who is relate within the second degree by affinity or consanguinity, as determined under Chapter 573, to an individual seeking to sell an investment to the investment officer's entity shall file a statement disclosing that relationship. A statement required under this subsection must be filed with the Texas Ethics Commission and the governing body of the entity. For purposes of this subsection, an investment officer has a personal business relationship with a business organization if: (1) the investment officer owns 10 percent or more of the voting stock or shares of the business organization or owns $5,000 or more of the fair market value of the business organization; . (2) funds received by the investment officer from the business organization exceed 10 percent of the investment officer's gross income for the previous year; or (3) the investment officer has acquired from the business organization during the previous year investments with a book value of $2,500 or more for the personal account of the investment officer. U) The governing body of an investing entity may specify in its investment policy that any investment authorized by this chapter is not suitable. (k) A written copy of the investment policy shall be presented to any person offering to engage in an investment transaction with an investing entity or to an investment management firm under contract with an investing entity to invest or manage the entity's investment portfolio. For purposes of this subsection, a business organization includes investment pools and an investment management firm under contract with an investing entity to invest or manage the entity's investment portfolio. Nothing in this subsection relieves the investing entity of the responsibility for monitoring the investments made by the investing entity to determine that they are in compliance with the investment policy. The qualified representative of the business organization offering to engage in an investment transaction with an investing entity shall execute a written . 48 . . . - Appendix G instrument in a form acceptable to the investing entity and the business organization substantially to the effect that the business organization 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. (I) The investment officer of an entity may not acquire or otherwise obtain any authorized investment described in the investment policy of the investing entity from a person who has not delivered to the entity the instrument required by Subsection (k). (m) An investing entity other than a state agency, in conjunction with its annual financial audit, shall perform a compliance audit of management controls on investments and adherence to the entity's established investment policies. (n) Except as provided by Subsection (0), at least once every two years a state agency shall arrange for a compliance audit of management controls on investments and adherence to the agency's established investment policies. The compliance audit shall be performed by the agency's internal auditor or by a private auditor employed in the manner provided by Section 321.020. Not later than January 1 of each even-numbered year, a state agency shall report the results of the most recent audit performed under this subsection to the state auditor. A state agency also shall report to the state auditor other information the state auditor determines necessary to assess compliance with laws and policies applicable to state agency investments. A report under this subsection shall be prepared in a manner the state auditor prescribes. (0) The audit requirements of Subsection (n) do not apply to assets of a state agency that are invested by the comptroller under Section 404.024. Sec. 2256.006. STANDARD OF CARE. (a) Investments shall be made with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived. Investment of funds shall be governed by the following investment objectives, in order of priority: 49 Appendix G (1) preservation and safety of principal; . (2) liquidity; and (3) yield. (b) In determining whether an investment officer has exercised prudence with respect to an investment decision, the determination shall be made taking into consideration: (1) the investment of all funds, or funds under the entity's control, over which the officer had responsibility rather than a consideration as to the prudence of a single investment; and (2) whether the investment decision was consistent with the written investment policy of the entity. Sec. 2256.007. INVESTMENT TRAINING; STATE AGENCY BOARD MEMBERS AND OFFICERS. (a) Each member of the governing board of a state agency and its investment officer shall attend at least one training session relating to the person's responsibilities under this chapter within six months after taking office or assuming duties. (b) The Texas Higher Education Coordinating Board shall provide the training under this . section. (c) Training under this section must include education in investment controls, security risks, strategy risks, market risks, diversification of investment portfolio, and compliance with this chapter. (d) An investment officer shall attend a training session not less than once in a two-year period and may receive training from any independent source approved by the governing body of the state agency. The investment officer shall prepare a report on this subchapter and deliver the report to the governing body of the state agency not later than the 180th day after the last day of each regular session of the legislature. Sec. 2256.008. INVESTMENT TRAINING; LOCAL GOVERNMENTS. (a) Except as provided by Subsections (b) and (e), the treasurer, the chief financial officer if the treasurer is not the chief financial officer, and the investment officer of a local government shall: (1) attend at least one training session under a curriculum approved by the state auditor and containing at least 10 hours of instruction relating to the treasurer's or officer's responsibilities under this subchapter within 12 months after taking office or assuming duties; and . 50 . . . - Appendix G (2) except as provided by Subsection (b), 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 under this subchapter under a curriculum approved by the state auditor and approved by the governing body of the local government or a designated investment committee advising the investment officer as provided for in the investment policy of the local government. (b) An investing entity created under authority of Section 52(b), Article III, or Section 59, Article XVI, Texas Constitution, that has contracted with an investment management firm under Section 2256.003(b) and has fewer than five full-time employees or an investing entity that has contracted with another investing entity to invest the entity's funds may satisfy the training requirement provided by Subsection (a)(2) by having an officer of the governing body attend four hours of appropriate instruction in a two-year period. (c) Training under this section must include education in investment controls, security risks, strategy risks, market risks, diversification of investment portfolio, and compliance with this chapter. (d) Not later than December 31 each year, each individual, association, business, organization, governmental entity, or other person that provides training under this section shall report to the comptroller a list of the governmental entities for which the person provided required training under this section during that calendar year. An individual's reporting requirements under this subsection are satisfied by a report of the individual's employer or the sponsoring or organizing entity of a training program or seminar. (e) This section does not apply to a district governed by Chapter 36 or 49, Water Code. Sec. 2256.009. AUTHORIZED INVESTMENTS: OBLIGATIONS OF, OR GUARANTEED BY GOVERNMENTAL ENTITIES. (a) Except as provided by Subsection (b), the following are authorized investments under this subchapter: (1) obligations, including letters of credit, of the United States or its agencies and instrumentalities; (2) direct obligations of this state or its agencies and instrumentalities; (3) 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; (4) other obligations, the principal and interest of which are unconditionally 51 Appendix G 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; . (5) 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; and (6) bonds issued, assumed, or guaranteed by the State of Israel. (b) The following are not authorized investments under this section: (1) obligations whose payment represents the coupon payments on the outstanding principal balance of the underlying mortgage-backed security collateral and pays no principal; (2) obligations whose payment represents the principal stream of cash flow from the underlying mortgage-backed security collateral and bears no interest; (3) collateralized mortgage obligations that have a stated final maturity date of greater than 10 years; and (4) collateralized mortgage obligations the interest rate of which is . determined by an index that adjusts opposite to the changes in a market index. Sec. 2256.010. AUTHORIZED INVESTMENTS: CERTIFICATES OF DEPOSIT. A certificate of deposit is an authorized investment under this subchapter if the certificate of deposit is issued by a state or national bank domiciled in this state or a savings bank domiciled in this state, or state or federal credit union domiciled in this state and is: (1) guaranteed or insured by the Federal Deposit Insurance Corporation, or its successor, or the National Credit Union Share Insurance Fund or its successor; (2) 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 (3) secured in any other manner and amount provided by law for deposits of the investing entity. . 52 - . . . Appendix G Sec. 2256.011. AUTHORIZED INVESTMENTS: REPURCHASE AGREEMENTS. (a) A fully collateralized repurchase agreement is an authorized investment under this subchapter if the repurchase agreement: (1) has a defined termination date; (2) is secured by obligations described by Section 2256.009(a)(1), and (3) 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 (4) is placed through a primary government securities dealer, as defined by the Federal Reserve, or a financial institution doing business in this state. (b) 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 Section 2256.009(a)(1), 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. (c) 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. (d) 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 not later than the expiration date stated in the reverse security repurchase agreement. Sec. 2256.0115. AUTHORIZED INVESTMENTS: SECURITIES LENDING PROGRAM. (a) A securities lending program is an authorized investment under this subchapter if it meets the conditions provided by this section. (b) To qualify as an authorized investment under this subchapter: (1) the value of securities loaned under the program must be not less than 100 percent collateralized, including accrued income; (2) a loan made under the program must allow for termination at any time; (3) a loan made under the program must be secured by: 53 - Appendix G (A) pledged securities described by Section 2256.009; (B) pledged irrevocable letters of credit issued by a bank that is: (i) organized and existing under the laws of the United States or any other state; and ii) continuously rated by at least one nationally recognized investment rating firm at not less than A or its equivalent; or (C) cash invested in accordance with Section: (i) 2256.009; (ii) 2256.013; (iii) 2256.014; or (iv) 2256.016; (4) the terms of a loan made under the program must require that the securities being held as collateral be: (A) pledged to the investing entity; (B) held in the investing entity's name; and (C) deposited at the time the investment is made with the entity or with a third party selected by or approved by the investing entity; (5) a loan made under the program must be placed through: (A) a primary government securities dealer, as defined by 5 C.F.R Section 6801.102(f), as that regulation existed on September 1, 2003; or (B) a financial institution doing business in this state; and (6) an agreement to lend securities that is executed under this section must have a term of one year or less. Sec. 2256.012. AUTHORIZED INVESTMENTS: BANKER'S ACCEPTANCES. A bankers' acceptance is an authorized investment under this subchapter if the bankers' acceptance: (1) has a stated maturity of 270 days or fewer from the date of its issuance; (2) will be, in accordance with its terms, liquidated in full at maturity; (3) is eligible for collateral for borrowing from a Federal Reserve Bank; and (4) 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 than A-1 or P-1 or an equivalent rating by at least one nationally recognized credit rating agency. Sec. 2256.013. AUTHORIZED INVESTMENTS: COMMERCIAL PAPER. Commercial paper is an authorized investment under this subchapter if the commercial paper: (1) has a stated maturity of 270 days or fewer from the date of its issuance; and (2) is rated not less than A-1 or P-1 or an equivalent rating by at least: 54 . . . . . . Appendix G (A) two nationally recognized credit rating agencies; or (B) 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. Sec. 2256.014(a). AUTHORIZED INVESTMENTS: MUTUAL FUNDS. (a) A no-load money market mutual fund is an authorized investment under this subchapter if the mutual fund: (1) is registered with and regulated by the Securities and Exchange Commission; (2) provides the investing entity with a prospectus and other information required by the Securities Exchange Act of 1934 (15 U.S.C. Section 78a et seq.) or the Investment Company Act of 1940 (15 U.S.C. Section 80a-1 et seq.); (3) has a dollar-weighted average stated maturity of 90 days or fewer; and (4) includes in its investment objectives the maintenance of a stable net asset value of $1 for each share. (b) 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 subchapter if the mutual fund: (1) is registered with the Securities and Exchange Commission; (2) has an average weighted maturity of less than two years; (3) is invested exclusively in obligations approved by this subchapter; (4) is continuously rated as to investment quality by at least one nationally recognized investment rating firm of not less than AM or its equivalent; and (5) 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. 55 Appendix G (c) An entity is not authorized by this section to: . (1) invest in the aggregate more than 15 percent of its monthly average fund balance, excluding bond proceeds and reserves and other funds held for debt service, in mutual funds described in Subsection (b); or (2) invest any portion of bond proceeds, reserves and funds held for debt service, in mutual funds described in Subsection (b); or (3) invest its funds or funds under its control, including bond proceeds and reserves and other funds held for debt service, in anyone mutual fund described in Subsection (a) or (b) in an amount that exceeds 10 percent of the total assets of the mutual fund. Sec. 2256.015. AUTHORIZED INVESTMENTS: GUARANTEED INVESTMENT CONTRACTS. (a) A guaranteed investment contract is an authorized investment for bond proceeds under this subchapter if the guaranteed investment contract: (1) has a defined termination date; (2) is secured by obligations described by Section 2256.009(a)(1), excluding . those obligations described by Section 2256.009(b), in an amount at least equal to the amount of bond proceeds invested under the contract; and (3) is pledged to the entity and deposited with the entity or with a third party selected and approved by the entity. (b) Bond proceeds, other than bond proceeds representing reserves and funds maintained for debt service purposes, may not be invested under this subchapter in a guaranteed investment contract with a term of longer than five years from the date of issuance of the bonds. (c) To be eligible as an authorized investment: (1) the governing body of the entity must specifically authorize guaranteed investment contracts as an eligible investment in the order, ordinance, or resolution authorizing the issuance of bonds; (2) the entity must receive bids from at least three separate providers with no material financial interest in the bonds from which proceeds were received; (3) the entity must purchase the highest yielding guaranteed investment contract for which a qualifying bid is received; . 56 . . . - Appendix G (4) the price of the guaranteed investment contract must take into account the reasonably expected drawdown schedule for the bond proceeds to be invested; and (5) the provider must certify the administrative costs reasonably expected to be paid to third parties in connection with the guaranteed investment contract. Sec. 2256.016. AUTHORIZED INVESTMENTS: INVESTMENT POOLS. (a) 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. (b) To be eligible 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 an offering circular or other simifar disclosure instrument that contains, at a minimum, the following information: (1) the types of investments in which money is allowed to be invested; (2) the maximum average dollar-weighted maturity allowed, based on the stated maturity date, of the pool; (3) the maximum stated maturity date any investment security within the portfolio has; (4) the objectives of the pool; (5) the size of the pool; (6) the names of the members of the advisory board of the pool and the dates their terms expire; (7) the custodian bank that will safe keep the pool's assets; (8) whether the intent of the pool is to maintain a net asset value of one dollar and the risk of market price fluctuation; (9) 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; 57 I Appendix G (10) the name and address of the independent auditor of the pool; . (11) 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 (12) the performance history of the pool, including yield, dollar-weighted average maturities, and expense ratios. (c) 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: (1) investment transaction confirmations; and (2) a monthly report that contains, at a minimum, the following information: (A) the types and percentage breakdown of securities in which the pool is invested; (B) the current average dollar-weighted maturity, based on the stated maturity date, of the pool; . (C) the current percentage of the pool's portfolio in investments that have stated maturities of more than one year; (0) the book value versus the market value of the pool's portfolio, using amortized cost valuation; (E) the size of the pool; (F) the number of participants in the pool; (G) the custodian bank that is safekeeping the assets of the pool; (H) a listing of daily transaction activity of the entity participating in the pool; (I) the yield and expense ratio of the pool; (J) the portfolio managers of the pool; and (K) any changes or addenda to the offering circular. . 58 . . . Appendix G (d) 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. (e) 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 Security and Exchange Commission. (f) 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 at 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. (g) 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: (1) 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 (2) 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. (h) 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 than AAA or AAA-m or at an equivalent rating by at least one nationally recognized rating service. Sec. 2256.017. EXISTING INVESTMENTS. An entity is not required to liquidate investments that were authorized investments at the time of purchase. Sec. 2256.019. RATING OF CERTAIN INVESTMENT POOLS. A public funds investment pool must be continuously rated no lower than AAA or AAA-m or at an equivalent rating by at least one nationally recognized rating service or no lower than investment grade by at least one nationally recognized rating service with a weighted average maturity no greater than 90 days. Sec. 2256.020. AUTHORIZED INVESTMENTS: INSTITUTIONS OF HIGHER EDUCATION. In addition to the authorized investments permitted by this subchapter, an institution of higher education may purchase, sell, and invest its funds and funds under its control in the following: 59 Appendix G (1) cash management and fixed income funds sponsored by organizations exempt from federal income taxation under Section 501 (f), Internal Revenue Code of 1986 (26 U.S.C. Section 501 (f)); . (2) negotiable certificates of deposit issued by a bank that has a certificate of deposit rating of at least 1 or the equivalent by a nationally recognized credit rating agency or that is associated with a holding company having a commercial paper rating of at least A-1, P-1, or the equivalent by a nationally recognized credit rating agency; and (3) corporate bonds, debentures, or similar debt obligations rated by a nationally recognized investment rating firm in one of the two highest long-term rating categories. without regard to gradations within those categories. Sec. 2256.0201. AUTHORIZED INVESTMENTS; MUNICIPAL UTILITY. (a) A municipality that owns a municipal electric utility that is engaged in the distribution and sale of electric energy or natural gas to the public may enter into a hedging contract and related security and insurance agreements in relation to fuel oil, natural gas, and electric energy to protect against loss due to price fluctuations. A hedging transaction must comply with the regulations of the Commodity Futures Trading Commission and the Securities and Exchange Commission. If there is a conflict . between the municipal charter of the municipality and this chapter, this chapter prevails. (b) A payment by a municipally owned electric or gas utility under a hedging contract or related agreement in relation to fuel supplies or fuel reserves is a fuel expense. and the utility may credit any amounts it receives under the contract or agreement against fuel expenses. (c) The governing body of a municipally owned electric or gas utility or the body vested with power to manage and operate the municipally owned electric or gas utility may set policy regarding hedging transactions. (d) In this section, "hedging" means the buying and selling of fuel oil, natural gas, and electric energy futures or options or similar contracts on those commodity futures as a protection against loss due to price fluctuation. Sec. 2256.021. EFFECT OF LOSS OF REQUIRED RATING. An investment that requires a minimum rating under this subchapter does not qualify as an authorized investment during the period the investment does not have the minimum rating. An entity shall take all prudent measures that are consistent with its investment policy to liquidate an investment that does not have the minimum rating. . 60 . . . Appendix G Sec. 2256.022. EXPANSION OF INVESTMENT AUTHORITY. Expansion of investment authority granted by this chapter shall require a risk assessment by the state auditor or performed at the direction of the state auditor, subject to the legislative audit committee's approval of including the review in the audit plan under Section 321.013. Section 2256.023. INTERNAL MANAGEMENT REPORTS. (a) Not less than quarterly, the investment officer shall prepare and submit to the governing body of the entity a written report of investment transactions for all funds covered by this chapter for the preceding reporting period. (b) The report must: (1) describe in detail the investment position of the entity on the date of the report; (2) be prepared jointly by all investment officers of the entity; (3) be signed by each investment officer of the entity; (4) contain a summary statement, prepared in compliance with generally accepted accounting principles, of each pooled fund group that states the: (A) beginning market value for the reporting period; (B) additions and changes to the market value during the period; (C) ending market value for the period; and (0) fully accrued interest for the reporting period; (5) state the book value and market value of each separately invested asset at the beginning and end of the reporting period by the type of asset and fund type invested; (6) state the maturity date of each separately invested asset that has a maturity date; (7) state the account or fund or pooled group fund in the state agency or local government for which each individual investment was acquired; and (8) state the compliance of the investment portfolio of the state agency or local government as it relates to: (A) the investment strategy expressed in the agency's or local government's investment policy; and 61 Appendix G (B) relevant provisions of this chapter. . (c) The report shall be presented not less than quarterly to the governing body and the chief executive officer of the entity within a reasonable time after the end of the period. (d) If an entity invests in other than money market mutual funds, investment pools or accounts offered by its depository bank in the form of certificates of deposit, or money market accounts or similar accounts, the reports prepared by the investment officers under this section shall be formally reviewed at least annually by an independent auditor, and the result of the review shall be reported to the governing body by that auditor. Sec. 2256.024. SUBCHAPTER CUMULATIVE. (a) The authority granted by this subchapter is in addition to that granted by other law. Except as provided by Subsection (b), this subchapter does not (1) prohibit an investment specifically authorized by other law; or (2) authorize an investment specifically prohibited by other law. (b) Except with respect to those investing entities described in Subsection (c), a security described in Section 2256.009(b) is not an authorized investment for a state agency, a . local government, or another investing entity, notwithstanding any other provision of this chapter or other law to the contrary. (c) Mortgage pass-through certificates and individual mortgage loans that may constitute an investment described in Section 2256.009(b) are authorized investments with respect to the housing bond programs operated by: (1) the Texas Department of Housing and Community Affairs or a nonprofit corporation created to act on its behalf; (2) an entity created under Chapter 392, Local Government Code; or (3) an entity created under Chapter 394, Local Government Code. Sec. 2256.025. SELECTION OF AUTHORIZED BROKERS. The governing body of an entity subject to this subchapter or the designated investment committee of the entity shall, at least annually, review, revise, and adopt a list of qualified brokers that are authorized to engage in investment transactions with the entity. Sec. 2256.026. STATUTORY COMPLIANCE. All investments made by entities must comply with this subchapter and all federal, state, and local statutes, rules, or regulations. . 62 . . . - Appendix G SUBCHAPTER B. MISCELLANEOUS PROVISIONS Sec. 2256.051. ELECTRONIC FUNDS TRANSFER. Any local government may use electronic means to transfer or invest all funds collected or controlled by the local government. Sec. 2256.052. PRIVATE AUDITOR. Notwithstanding any other law, a state agency shall employ a private auditor if authorized by the legislative audit committee either on the committee's initiative or on request of the governing body of the agency. Sec. 2256.053. PAYMENT FOR SECURITIES PURCHASED BY STATE. The comptroller or the disbursing officer of an agency that has the power to invest assets directly may pay for authorized securities purchased from or through a member in good standing of the National Association of Securities Dealers or from or through a national or state bank on receiving an invoice from the seller of the securities showing that the securities have been purchased by the board or agency and that the amount to be paid for the securities is just, due, and unpaid. A purchase of securities may not be made at a price that exceeds the existing market value of the securities. Sec. 2256.054. DELIVERY OF SECURITIES PURCHASED BY STATE. A security purchased under this chapter may be delivered to the comptroller, a bank, or the board or agency investing its funds. The delivery shall be made under normal and recognized practices in the securities and banking industries, including the book entry procedure of the Federal Reserve Bank. Sec. 2256.055. DEPOSIT OF SECURITIES PURCHASED BY STATE. At the direction of the comptroller or the agency, a security purchased under this chapter may be deposited in trust with a bank or federal reserve bank or branch designated by the comptroller, whether in or outside the state. The deposit shall be held in the entity's name as evidenced by a trust receipt of the bank with which the securities are deposited. Sec. 2256.056. COMPLIANCE WITH OTHER LAWS. Notwithstanding any other law, a municipality with a population of less than 50,000 may not issue for any purpose or cause to be issued in its behalf any installment sale obligation or lease-purchase obligation having the principal amount of $1 million or more without complying with the provisions of Section 3.002, Chapter 53, Acts of the 70th Legislature, 2nd Called Session, 1987 (Article 717k-8, Vernon's Texas Civil Statutes), regardless of whether the obligation was issued individually or in a series of related transactions, or whether the obligation was issued with no recourse to the local government. 63 Appendix H . RESOWI'ION NO. 90-04 WHEIæÞ.S, the City of North Richland Hills is an agency or political subdivision of the State of Texas (the "Participant") and is empowered to delegate to a public funds investment 'fX)01 the authority tr> invest fm1ds and to act as custodian of investIœnts purchased with local investJrent ftmds ¡ and WHEREAS, it is in the best interest of the Participant and its inhabitants to invest lcx::al funds in investments that yield the highest possible rate of return while providing necessa:ry safekeeping and protection of the principal; and WfiEREAS, the Treasurer of the State of Texas acting by and through the Texas Treasury Safekeeping Trust Cœtpany (the "Trust Canpany") has created lITexPool", a public funds investIœnt f.XX)l to effectuate the goals of providing investIœnts at the highest possible yield and maintaining complete safety of the funds of the Participant, ~ THEREFORE, be it resolved as follows: 1 . That the Ci ty of North Richland Hills establish an account in its name with the Trust Canpany I s Public Funds InvestIœnt Pool "TexPool" for the purpose of transmitting local funds for investIœnt by the TI11St Ccmpany in Te..'CPool. . 2. That the following individuals whose signatures appear below are officers or employees of the Participant and are each hereby authorized to transmit funds to the Trust Canpany for investment in TexPool and are each further authorized to withdraw funds fran time to time, to issue letters of instruction, and to take all other actions deeIœd necessary or appropriate for the inves1Jœnt of local funds: Name: Lee Maness Title: Director of Finance Signature: ~(?11~ Name: J:iJn Cook Title: Asst. Director of Finance Signature: ~/' .~~_ Name: Camelia Fisher Title: Senior Staff Accmmtant Signature: ~~.:..- ......6-GA- . 64 Appendix H . 3. That this Resolution and its authorization shall continue in full force and effect until aJœnded or revoked by the Participant and until the Trust Company receives a copy of any such amendment or revocation, until such time the Trust Cœq;mly is entitled to rely on same. This Resolution is hereby introduced and adopted by the par-..icipant at its regular meeting held on the 23rd day of January, 1990. CITY OF OORTH RICHLAND HILLS By, c L.__) ~.._ J ==, 9'J'~¿'<"J . . 65 Resolution 96-19 Appendix H Local Government Investment Coaper:ative Resolution . RESOLUTION APPROVING AND AUTHORIZING EXECUTION OF AN rNTERLOCAL AGREEMENT FOR P ARTICIP A TION IN A PUBLIC FUNDS 1NVESThŒNT COOPERATIVE (THE ·COOPER.A. TIVE-), DESIGNATING THE BOARD OF DIRECfORS OF THE COOPERATIVE AS AN AGENCY AND INSTRUMENTALITY TO SUPERVISE TEE COOPERATIVE, APPROVING INVESTMENT POLICIES OF 11Œ COOPERATIVE, A:PPOI.N!'ING AUTHORIZED REPRESENTATIVES AND DESIGNATING 1NVESThŒNT OFFICERS WHEREAS, the IntcrlOC3l Coopemion Act, Chapter 791 of the Tcw Govemment Coc:ie, as amended (the -Interloc:a1 ActA), permits any -loc::al ¡ovemment- to contract with one or more other -1ac:a1 ¡ove:mments· to perform -Iovemmental functions and services,· includin¡ investment of public funds (as such phr2.ses are defined in the Inœrloc::al Act); WHEREAS, the Inrer1oca1 Act authorl%es the contaeting parties to any interlcx::ü agre=ment to c:ontr2Ct with agencies of the State of Texas, within the meaning of Chapter 771 of the Government Code, WHEREAS, the Act permits the c:omractin¡ parti=s to any intcrloc:al a¡r=ment to c:re:aœ an adminisuative aaency to supervise the performance of such inter1oca1 acr=m= and . to employ personnel and enpp in other administrarive activities and provide other adm.inistra%:ive servic:s n~~~ry to execute the terms of such interlcal agreement; WHEREAS, the Public Funds Invc:stment Act, OIapter 2256 of the Texas Government Code, as amended (the -PAA -), auå\orizes the enå.ties described in Subsection (a) of the PF1A to invest their funds in an eligible public funds investment pool, and the intends to . become and remain an eli¡ible public funds investment pool, under the termS and. conditiotu set forth in PAA; ,~~eA~ City of North Richlanå Rills "~, (the -Government EntityA) desires to enter into that certain Inœrlocal Agreement (the · Agr=ment·). a aJPY o( which is presented with this Resolution and is incorporated herein by reference, and to become a participant in a public funds investment pool creaœd thereunder and under PFIA, to be known as Local Government Investment Cooperative (the ·Cooperative-); , VlHEREAS, the Government Entity is a Government Entity as defined in tite Agre::me:1t; and ReaollltiOQ . 66 Appendix H . 3. That this Resolution and its authorization shall continue in full force and effect tmtil amended or revoked by the Participant and until the Trust Company receives a copy or any such amendment or revocation, until such time the Trust Cc:Itpmy is entitled to rely on same. '!his Resolution is hereby introduced and adopted by the Par'"..icipant at its regular meeting held on the 23rd day of January, 1990. CITY OF OORI'H RICEIAND HILLS By, <;;; L -. -. ï -:&".. "'" .-' lmESr, 9L d'~ ¿a- 'J . . 65 Resolution 96-19 Appendix H Loc:a1 Government Investment Cooperative Resolution . RE.SOLtmON APPROVING AND AUTHORIZING EXECUTION OF AN IN1'ERLOCAL AGREEMENT FOR P ARTICIP A -nON IN A Ptmuc FUNDS INVE.SThŒNT COOPERATIVE (THE ·COOPERA TIVE"), DESIGNATING THE BOARD OF DIREcrORS OF THE COOPERATIVE AS AN AGENCY AND INSTRUMENTALITY TO SUPERV1SE 'TEE COOPERATIVE, APPROVING rnvESThŒNT POUClES OF TEE COOPERATIVE, APPOINTING AUTHORIZED REPRESENTATIVES AND DESIGNATING INVE.SThŒNT OFFICERS WHEREAS, the InterlOC3l Coopemion Act, Chapter 791 of the Taas Government Code, as amended (the -Interlcc:al Act'"), permits any ·loc::al ¡cvemment· to contract with one or mere other .loca.1 ¡ovemments- to perform ·¡ovemmenta1 func:tions and services, - including investment of public funds (as such phr3sc:s are defined in the Intt:rlocal Ad); WHEREAS, the Inœrlocal Act authorizes the CQntracting parties to any interloc:al agre=ment to contt3Ct with agencies of the State of Texas, within the mcming of Chapter 771 of the Government Code, WHEREAS, the Act permits the comr.acting pa:ties to any int=icc:al a¡r=ment to c:reate an administrative a¡ency to supervise the performance of such intt:rloca1 acr=ment and . to employ personnel and enpee in other administrative activities and provide other administrative servic:s neces.sa.ry to execute the terms of such interlOC3l agreement; WHEREAS, the Public Funds Investment Act, Chapter 2256 of the Texas Government Cede, as amended (the -PFtA .), authorizes the entities described in Subsection (a) of the PFIA to invest their funds in an eligible public funds investment pool, and the intends to . become and remain an elipble public funds investment pool, under the terms and CQndition! set forth in PFIA; WHEREAS, City of North Richland Hills (the -Government Entity'") desires to enter into that certain Interloc:a1 Agreement (the · Agr=ment-), a copy of which is presented with this Resolution and is inccrporated herei..'1 by reference. and to become a participant in a public funds investment pool created thereunder and under PFIA, to be known as Loa! Government Investment Cooperative (the ·Coope:ÄtÏve·); , VlHEIŒ.AS, the Government Entity is a. Government Entity as defined in the Agre=mc::'1C; and Ruolutioa . 66 Appendix H · WHEREAS. ÙU: Government Entity desires to cause administration of the Coope."'2Iive to be perfonned by a board of dir~..ors (the -Board-), which shall be an a.dminist!'3ti ve agency created under the Intcrlocal Act; and WHEREAS, the Government E."nity desires to designate the Board as its agency and instrumentality with authority .to supervise performance of the Agr=:mcnt,. employ personnel and eng¡.ge in other administrative activities and provide other adminiStr4tive se..""';'ces n~-~ry to execute the terms of the Agreement; WHEREAS, each capitalized term used in this Resolution and not otherwise: defined has the same meaning assigned to it in the Agrc::me:lt; NOW, THEREFORE, BE IT RESOLVED: 1. The A¡rc:ement is hereby approved and adopted and. upon accuticu thereof by :an Authari%ed Repœse:uative (defined below) and receipt of the Govt:mme:U Entity's application to join the Caope:ative by the Administtarcr, the Government Entity shall becQme a Participant in the Caoper3tive for the purpose of investing its available funds therein from time to time in accordance with its terms.. · 2. The Beard is hereby designated as an agency and instrumenœlity af the Government Entity I and the Board shall have the authority to supervise performance of the Agreement and the Coopemive, ~ploy personnel and engage in ather a.d111ÎniSt=ive activities and provide other administrative servic::1 n--ry to ae::uœ the tI:m1S af the A¡reement. 3. The investment policies of the C~ve, as set forth in the document entitled Investment Policies, as summarized in the Infonnatian Statement, and as may be amended from time to time by the Board, are hereby adopted as investment policies of the Government Entity with respect to maney invested in the Caoper3tive, and any existin¡ investment policies of the Government Entity in conflia the:ewith $halinot apply to investments in the CoapeIative. 4. The follawing offic:rs, officials or employees of the Government Entity are hereby desi¡natcd as · Authorized R..-prcsentativcs- within the meaning af the Acr=ment, with full power and authority to: aecute the Agreement, an application to join the Coopemive and any other documents required to become a Participant; dc:pošt money to and withdraw maney from the Government Entity's Coape.--mve account from time to time in ac:ordance with the Agreement and the Information Statement; and take all other actions deemed ncœssary or app~riate for the investment of funds of the Government Entity: · it.uoJiWoQ 67 s¡~: L-~ Appendix H Printed Name: Bret Starr . T'1t1c:: Accountant Signature: Prinœd Name: Jackie Theriot T'1tle: Accounting Manager - . S'F~rot'e: . . , , - . . /"ø>' \.' {t'///~ -----..-- - , "i - Printed Name: T'1tIe: Charles Harris Finance Director In accordance with Coape:arive prrxedures, an Authorized Repœsentative sha.Il promptly notify the Coape:arive in writing of any chanCes in whò is servin¡ as Autharized Representatives. ,. In tddition to the f"ore¡oin¡ Authorized Repte$;;uta1ives, each Investment . Officer of the ~ve appointed by the Board !rem time rD time is hereby d-'l"'stM as an investment officer of the Government Entity and, as such, shall have n:sponsibiIity for investin¡ d1e share of Coape:arive assets repr=entine funds of the Government Entity. Each depositary and c:ustodian appointed by the Baard from time to time are hereby designated as a depository and custOdian of the Government Entity for purposes of holdine the share oC Coape:arive assets repr=enting funds of the Government Entity. PASSED AND APPROVED this 25 day of March , 19~. A T1'EST: By: 9 ßáw' -d- .r!., ~ ' Jeanette Rewis, City Secretary Priated name and title B~ L r-~~¿-~ ./ ~Brown, Mayor Printed Name and Title SEAL l.aaIulÌg. . 68 Appendix H . Additional Party A¡reement The Government Entity of the State of Texas named below, acting by and through the undersigned Authorized Representative, hereby agrees to become a party to that certain Inter1oca1 Agreement to which this page is attached, and thereby become a Participant in the Local Government Investment Cooperative, subject to all of the tenns and provisions of such Agreement. The undersigned hereby represents that it is a. Government Entity as defined in such Agreement. Executed this ~tUay of Marc:h . 1996. r;~y n; Nn~~" ~;~n'~"ñ ~;11~ Name of Government Entity Br-'---~~ Autho . resentative Tommy Brown. Mavor Printed Name and Title . ACCEPTED: I..ocal G~. en! Investment COOper.1!Ìve By: ~c.L~Slll. ~ LOO C Administrator PATRICK SHINKLE, V. P. Printed Name and Title . laterlocal Acreemel1t 69 Appendix H Resolution No. 2001-046 . WHEREAS, pursuant to the requirements of the Public Funds Investment Act. Texas Government Code, Section 2256.001 et seq. (the "Acf'), the City Council of the City of North Richland Hills has previously reviewed and adopted an investment policy that provides in part that the funds of the City of North Richiand Hills will be invested in investments permitted by the Act in order to: (i) invest only in investments legally permitted under Texas law; (ii) minimize risk by managing portfolio investments so as to preserve principal and maintain a stable asset value; (iii) manage portfolio investments to ensure cash will be available as required to finance operations; and (iv) maximize current income to the degree consistent with legality, safety, and liquidity; and WHEREAS, the Act provides that funds under the control of the City of North Richland Hills may be invested through investment pools meeting the standards of Section 2256.016 of the Act and the City of North Richland Hills has reviewed the Information Statement, dated 3/3/96, as supplemented on 12/31/98 (the YStatemenf'), of Texas Cooperative Liquid Assets Securities System, an investment pool (the "Pool") administered by MBIA Municipal Investors Service Corporation, as the manager of the Pool (the "Manager") and has determined that the investments proposed to be acquired by the Pool are of a type permitted by the Act and consistent with the Policy will assist in achieving the goals set forth in the Policy; and WHEREAS, the City of North Richland Hills understands that the Pool is created through an instrument of trust, dated as of January 1, 1996, and amended as of November . 20, 1997 (the "Trust I nstrurnenf') , which provides the terms on which the Pool will operate and the rights of the participants in the Pool who will be governed and sets for the responsibilities of the Manager, and of Bank One, Texas, N.A. as trustee (the "Trustee); NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS, THAT: The form, terms and provisions of the Trust Instrument, a draft of which was presented and reviewed at this meeting, be and the same are hereby approved and adopted; and that Larry Koonce, Director of Finance, heretofore appointed by the City of North Richland Hills pursuant to the Policy and the Act as its Investment Officer, be and he is hereby authorized and directed to execute and deliver to the Manager and the Trustee in the name and on behalf of the City of North Richland Hills, a Trust Instrument substantially in the form of the trust instrument reviewed and approved at this meeting, together with such changes as said officer may approve, such approval to be conclusively evidenced by the execution thereof; and be it further Resolved, that the investment program described in the Statement is hereby found and determined to be consistent with the Policy, and to preclude imprudent investment activities arising out of investment transactions conducted between the City of North Richland Hills and the Pool; and be it further Resolved, that the City Council hereby officially finds and determines that the facts . and recitations in the preamble of this Resolution are true and correct and adopts the preamble as part of the operative provisions of this Resolution; and be it further 70 . . . - Appendix H Resolved, that the Cjty Council hereby finds and declares that written notice of the date, hour, place and subject of the meeting at which this Resolution was adopted was posted, for the time required by law preceding this meeting, and that such meeting was open to the public as required by law at all times during which this Resolution and the subject matter thereof were discussed, considered and formally acted upon, all as required by Chapter 551, Texas Government Code, as amended, and the Act: and be it further Resolved, that the officers of the City of North Richland Hills, each is expressly authorized, empowered and directed from time to time to perform all acts and to execute. acknowledge, seal and deliver in the name and on behalf of the City of North Richland Hills all certificates. instruments and other documents as they may determine to be necessary or desirable to carry out the provisions of this Resolution and the Trust Instrument, such determination to be conclusively evidenced by the performance of such acts and the execution of any such documents; and be it further Resolved, that this Resolution shall take effect and be in full force upon and after its passage. PASSED AND APPROVED this 27th day of August 2001. APPROVED: Rex McEntire, Attorney for the City APPROVED AS TO CONTENT: \.....I h~V~ Larry Ko ce, Director of Finance 71 Resolution No. 2003.;023 Appendix H WHEREAS, pursuant to the requirements of the Public Funds Investment Act, . Texas Government Code, Section 2256.001 et seq. (the "Act"), the City Council of the City of North Richland Hills has previously reviewed and adopted an investment policy that provides in part that the funds of the City of North Richland Hills will be invested in investments permitted by the Act in order to: (i) invest only in investments legally pelTTlitted under Texas law; (ii) minimize risk by managing portfolio investments so as to preseNe principal and maintain a stable asset value; (iii) manage portfolio investments to ensure cash will be available as required to finance operations; and (iv) maximize current income to the degree consistent with legality, safety, and liquidity; and WHEREAS, the Act provides that funds under the control of the City of North Richland Hills may be invested through investment pools meeting the standards of Section 2256.016 of the Act and the City of North Richland Hills has reviewed the InfolTTlation Statement, dated 4/8/02 (the "Statement"), of Texas Short Term Asset Reserve Program (UTexSTAR"), an investment pool (the "Poot") administered by First Southwest Asset Management, Inc. and JPMorgan Fleming Asset Management (USA), Inc. as the managers of the Pool (the "Managers") and has determined that the investments proposed to be acquired by the Pool are of a type pennitted by the Act and consistent with the Policy will assist in achieving the goals set forth in the Policy; and WHEREAS, the City of North Richland Hills understands that the Pool is created under the authority of applicable Texas law, including the InterJocal Cooperation Act, Chapter 791 of the Texas Government Code, as amended (the "'nteriocal Act"), and the Investment Act and that the attached agreement (the "Agreement), upon enactment, . serves as the agreement between the City and the Pool and provides the terms on which the Pool will operate and the rights of the participants in the Pool who will be governed and sets for the responsibilities of the Managers, and of JPMorgan Chase Bank. as custodian (the "Custodian"); NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS, THAT: The form, terms and provisions of the Agreement, a draft of which was presented and reviewed at this meeting, be and the same are hereby approved and adopted; and that Larry Koonce, Director of Finance, heretofore appointed by the City of North Richland Hills pursuant to the Policy and the Act as its Investment Officer, be and he is hereby authorized and directed to execute and deliver to the Managers and the Custodian in the name and on behalf of the City of North Richland Hills, an Agreement substantially in the form of the agreement reviewed and approved at this meeting, together with such changes as said officer may approve, such approval to be conclusively evidenced by the execution thereof; and be it further Resolved, that the investment program described in the Statement is hereby found and determined to be consistent with the Policy, and to preclude imprudent investment activities arising out of investment transactions conducted between the City of North Richland Hills and the Pool; and be it further Resolved, that the City Council hereby officially finds and determines that the facts . and recitations in the preamble of this Resolution are true and correct and adopts the preamble as part of the operative provisions2:>f this Resolution; and be it further · · · Appendix H Resolved, that the City Council hereby finds and declares that written notice of the date. hour, place and subject of the meeting at which this Resolution was adopted was posted for the time required by law preceding this meeting, and that such meeting was open to the public as required by law at all times during which this Resolution and the subject matter thereof were discussed, considered and formally acted upon, all as required by Chapter 551, Texas Govemment Code, as amended, and the Act; and be it further Resolved, that the officers of the City of North Rlchland Hills, each is expressly authorized. empowered and directed from time to time to perform all acts and to execute. acknowledge, seal and deliver in the name and on behalf of the City of North Richland Hills all certificates, instruments and other documents as they may determine to be necessary or desirable to carry out the provisions of this Resolution and the Agreement, such determination to be conclusively evidenced by the performance of such acts and the execution of any such documents; and be it further Resolved, that this Resolution shall take effect and be in full force upon and after its passage. ""*"'" ATTEST: Øâbu{yà~' Patricia Hutson I City Secretary APPROVED AS TO CONTENT: 73 - GLOSSARY Appendix I . Agencies: Organizations formed by the Federal Government but not directly controlled by the Government. Each agency is authorized to issue its own securities, which are comparable to Treasury Notes, Bills, and Bonds. Book Value: The value of a security as stated in the City's general ledger. This is generally the purchase price plus any amortized discount or less any amortized premium. Bullet Agency: An agency security that contains no call provision. Interest is paid until the investment matures. Callable: Describes a fixed income security containing a provision that allows the issuer to redeem the security for a fixed price on a certain date or a range of dates. Bonds are usually called when interest rates fall so significantly that the issuer can save money by issuing new bonds at lower rates. Certificate of Deposit (CD): A time deposit issued by a bank that guarantees a specified interest rate for a specified time for the amount of the certificate. Commercial Paper: Short-term unsecured promissory notes issued by large corporations with maturities ranging from two to 270 days. . CUSIP: Committee on Uniform Securities Identification Procedures. This committee assigns identifying numbers and codes for all securities. The identifying number itself is often referred to a its "CUSIP." Discount: The difference between the amount paid below a security's par value and the security's par value. Discount Notes: Short-term securities issued by government agencies that are sold at a discounted price and redeemed at full value upon maturity. The difference between the purchase price and maturity value is the investment's interest income. FAMCA (Federal AClricultural MortaaCle Corporation. or Farmer Mac): A U.S. Government Aaencv that issues securities. Federal Funds Rate: Interest rate charged by banks with excess reserves at a Federal Reserve district bank to banks needing overnight loans to meet reserve requirements. It is the most sensitive indicator of the direction of interest rates, since it is set daily by the market. FFCB: (Federal Farm Credit Bank) aU. S. Government Agency that issues securities. FHLB: (Federal Home Loan Bank) a U. S. Government Agency that issues securities. . 74 . . . - Appendix I FHLMC: (Federal Home Loan Mortgage Corporation, or Freddie Mac) a U. S. Government Agency that issues securities. Flex Repos: A Flexible Repurchase agreement is a type of structured Repo that allows portions of the invested amount to be withdrawn under specified conditions before the maturity of the Repo. This type of transaction is useful for the investment of construction funds, where the size and timing of payments are somewhat predictable FNMA: (Federal National Mortgage Association, or Fannie Mae) a U. S. Government Agency that issues securities. Inverted Yield Curve: An unusual situation where short-term interest rates are higher than long-term rates. This usually occurs when a surge in demand for short-term credit drives up short-term rates on T -bills and money-market funds, while long-term rates move up more slowly. LOGIC: (Local Government Investment Cooperative) a privately managed investment pool administered by Southwest Securities Capital Corporation with a structure similarto Texpool. Market Value: The value of a security if it was sold for cash at a given date. Maturity Value: The amount received for an investment at its maturity, not including coupon interest. Also known as par value. MBIA CLASS: MBIA Cooperative Liquid Assets Securities System (CLASS), one of MBIA's local government investment pools designed to make the job of managing public funds safer and easier. CLASS enables local governments to pool funds with other units of government, giving them the opportunity to obtain safety of principal, daily liquidity, and competitive rates on overnight investments. Net Asset Value: A term used to indicate the market value of one dollar invested in the portfolio at a given date. This measure shows the aggregate value of the portfolio instead of comparing the gain or loss of any given investment in the portfolio. Public Funds Investment Act: Also known as Chapter 2256 of the Texas Government Code. This law is the primary legislation regarding the proper investment guidelines for political subdivisions in the State of Texas. A copy of this act is included in the appendices of the City's Investment Policy. Purchased Interest: An additional amount paid for a fixed income security when the investment is purchased in the secondary market on a date other than the coupon payment date. The additional amount paid represents the seller's accrued interest on the investment since the last coupon date. The buyer recovers any purchased interest and realizes interest income for the period he owns the investment on the next coupon payment date. 75 Premium: The amount paid above a fixed income security's par (maturity) value. Appendix I . Repurchase Agreements (Repos): Agreements where the City purchases an investment with an agreement to resell the investment to the same firm at a specific date for a specific price. The difference between the purchase price and the sale price represents interest earned on the transaction. Repos can be established for any given size and maturity. Return on Investment (ROI): The amount of money earned on a given amount of investments for a specified period of time. Step-up AQency: A bond that has a fixed coupon rate for a period of time. It is then available to be "called" (redeemed @ par) bv the issuina Aaency. If the note is not called, the coupon will then step-up (adjust) to a new coupon rate. These various coupons and the amount of time between the step dates are established at the issuance and will not be chanaed over the life of the bond. Texas CLASS (Cooperative Liauid Assets Securities System): A privately-manaqed investment pool administered bv MBIA Asset Manaaement Funds from participatina qovernmental entities of Texas re deposited with Texas CLASS and invested as a sinqle portfolio to earn hiaher levels of interest income than could be realized individually. TexPool: An investment pool administered by Lehman Brothers and Federated Investors. Funds from political subdivisions of Texas are deposited with TexPool and invested as a single portfolio to earn higher levels of interest income. . TexSTAR (Texas Short Term Asset Reserve ProQram): The Texas Short Term Asset Reserve Fund (TexSTAR) is administered by First Southwest Asset Management, Inc. and JPMorgan Chase. The purpose of TexST AR is to offer a safe, efficient, and liquid investment alternative to local governments, in the State of Texas so that they may benefit from and realize a higher investment return by utilizing economies of scale and professional investment expertise. Treasury Bills (T-Bills): Short term securities sold by the federal government. They have a maturity of one year or under, and are similar to discount notes. Treasury Notes: Securities issued by the federal government with maturities between 1 and 10 years. Interest is paid in semi-annual coupons until maturity. Unrealized Gain (Loss): The difference between the price paid for an investment plus or minus any unamortized discount or premium and the proceeds that would be realized if the investment were to be sold on a specific date. Weighted Average Maturity (WAM): A measure of the average length until maturity for the investment portfolio based on the number of days until maturity for each investment weighted by the dollar value of each investment. . 76 . . . Appendix I Yield Curve: A graphical representation of the principal that the market for investments with longer maturities demand, a higher yield due to greater uncertainty in the financial environment than do shorter term investments. The yield curve is typically upward sloping but varies greatly in shape and steepness based on economic and political factors. Yield to Call (YTC): The percentage rate of a bond or note if the investor buys and holds the security until the call date. This yield is valid only if the security is called prior to maturity. Generally, bonds are callable over several years and normally are called at a slight premium. The calculation of yield to call is based on coupon rate, length of time to call, and market price. Yield to Maturity (YTM): The percentage rate of return paid on a bond, note, or other fixed income security if the investor buys and holds it to its maturity date. The calculation for YTM is based on the coupon rate, length of time to maturity, and market price (purchase price). It assumes that coupon interest paid over the life of the bond will be reinvested at the same rate. ì7 .¡. Department Ci!'l ManaQer'S Office CITY OF NORTH RICHLAND HILLS Council Meeting Date: May 23, 2005 Subject: Appoint Members to the Youth Advisory Committee Agenda Number: GN 2005-053 The Youth Advisory Committee (YAC) by-laws specify that 10 members are to be appointed for a two-year term and 6 members are be appointed for a one-year term for a total of 16 members. Currently there are four members graduating while at the same time completing there 2 year terms. These members are: Cheris Hart, Fort Worth Christian School- completing a 2 year term Nick Ward, Fort Worth Christian School - completing a 2 year term Blake Brown, Fort Worth Christian School - completing a 1 year term John Tugman, Richland High School - completing a 1 year term The following members are proposed appointees to fill these vacancies: Elise Manley, Fort Worth Christian School, 2 year term Lauren Pitts, Richland High School. 2 year term Paige Ammons, Richland High School, Junior, 1 year term Daniel Hamilton, Richland High School, Junior, 1 year term These new appointments are in accordance with the Y AC By-laws Recommendation: Approve the Youth Advisory Committee's recommendations for new committee members for 2004-2005. Source of Funds: Bonds (GO/Rev.) Operating Budget Other Finance Review Account Number Sufficient Funds Ävallacle Finance Director P::Inl> 1 nf 1 t ~ CITY OF NORTH RICHLAND HILLS Department: Public Works Council Meeting Date: 5/23/05 Subject: Approve Abandoninq and Closinq Cardinal Lane Between Agenda Number: GN 2005-054 State Highway 26 and Walker Boulevard - Ordinance No. 2835 The section of Cardinal Lane from State Highway 26 to Walker Boulevard was blocked off for public use when Walker Boulevard was constructed in 2000. This section of Walker Boulevard replaced an existing 2-lane asphalt road with a bar ditch (Cardinal Lane) with a new concrete roadway with underground drainage improvements. Arcadia Land Partners is currently working on a proposed retail/residential development on the property where the old section of Cardinal Lane is located. In order to proceed with the development the section of Cardinal Lane that is no longer being used needs to be officially closed and the right-of-way abandoned, Ordinance No. 2835 accomplishes this step. Recommendation: To approve Ordinance No. 2835, Source of Funds: Bonds (GO/Rev.) Operating Budget Other ~. /. ~ I/)) ,-1-(. ~, -c- -=-r D~partment Kead Signature Finance Review Account Number Sufficient Funds Ävallable Finance Director ~. .,dget D;,_, Ci~~ana :¡:n~~ Page 1 of _ , .1 3 ORDINANCE NO. 2835 5 AN ORDINANCE ABANDONING AND CLOSING CARDINAL LANE BETWEEN STATE HIGHWAY 26 AND WALKER BOULEVARD IN THE CITY OF NORTH RICHLAND HILLS. 7 WHEREAS, there is no longer a requirement for that portion of Cardinal Lane described on Exhibit "A" hereto; NOW, THEREFORE, 9 11 BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS: 13 Section 1: THAT Cardinal Lane between State Highway 26 and Walker Boulevard in the City of North Richland Hills, Texas, and more specifically described on Exhibit "A" hereto is hereby abandoned and discontinued, 15 17 AND IT IS SO ORDAINED. 19 PASSED AND APPROVED this 23rd day of May, 2005. 21 CITY OF NORTH RICHLAND HILLS .3 25 By: Oscar Trevino, Mayor 27 ATTEST: 29 31 Patricia Hutson, City Secretary 33 APPROVED AS TO FORM AND LEGALITY: 35 37 George A. Staples, Attorney 39 APPROVED AS TO CONTENT: 41 43 ~J~ C.- ;.~ Mike urtis, Public Works Director .5 EXHIBIT "A" SHEET 1 OF 2 LEGAL DESCRIPTION BEING all that tract of land in the City of North Richland Hills, Tarrant County, Texas, being a part of the LC. WALKER SURVEY, ABSTRACT No. 1652. and being 0 part of Cardinal Lane (0 prescriptive right-of-way), o port of that 7.770 acre tract of land conveyed to Arcadia Land Partners 17. Ltd. os recorded in Volume 16652, Page 181. Tarrant County Deed Records, 0 port of that 116.797 acre tract of land conveyed to Arcadia Land Partners 25, Ltd. os recorded in Clerk's Document No. D203472402. Tarrant County Deed Records, and being further described os follows: COMMENCING at 0 PK nail found at the most easterly corner of said 7,770 acre tract, said paint being the intersection of the southwest line of Walker Boulevard (90 foot right-of-way) with the northwest line of State Highway No. 26 (variable width right-of-way); THENCE North 44 degrees 51 minutes 59 seconds West, 30.00 feet along the northeast line of said 7.770 acre tract and along the southwest line of Walker Boulevard to 0 point for comer at the POINT OF BEGINNING of this tract of land; THENCE South 44 degrees 35 minutes 29 seconds West. 46.48 feet to 0 point for corner; THENCE North 89 degrees 46 minutes 22 seconds West, 665.01 feet to 0 point for corner; THENCE North 01 degrees 22 minutes 14 seconds West. 665.16 feet to 0 point for corner; THENCE South 44 degrees 52 minutes 23 seconds East, 71.90 feet to 0 point for corner in the southwest line of Walker Boulevard; THENCE South 01 degrees 15 minutes 05 seconds East. 250.18 feet to 0 point for corner; THENCE South 05 degrees 28 minutes 31 seconds East, 224.30 feet to a point for corner; THENCE South 45 degrees 10 minutes 31 seconds East, 132.82 feet to a point for corner; THENCE South 86 degrees 07 minutes 27 seconds East, 222,25 feet to a point for corner; THENCE North 88 degrees 51 minutes 41 seconds East. 304.89 feet to a point for corner in the northeast line of said 7.770 acre tract and in the southwest line of Walker Boulevard; THENCE along the northeast line of said 7.770 acre tract and the southwest line of Walker Boulevard as follows: South 65 degrees 51 minutes 14 seconds East, 15.13 to 0 one-half inch iron rod found for corner; South 44 degrees 51 minutes 59 seconds East, 1.94 to the POINT OF BEGINNING and containing 64,427 square feet or 1.479 acres of land. DrowlnQ: H:\Proect8\ARC004\dwv\)(ARC004...ROW ABAND.dwv Sawd By. ......... Saw TIme: 4/27/2005 1:35 pt, 1m Jones & Boyd, Inc, 17090 Dallas Parkway, Suite 200 Dallas, Texas 75248 Tel: 972-248-7676 Fax: 972·248-1414 DRAWN: RS PROJECT: DATE: 03/16/05 .- .- .,- - .- ARC004 z o .... tJ t.) ~ ~ ~ ~ ! 0) 0) pi .... O? :J> ;:0 ° :J> o 8> Or ':J> zz 90 O-U N:J> 0;:0 l-J-1 .þ.z ;:j~ .þ.(/) ON N(J1 r -1 o EXHIBIT "A" SHEET 2 OF 2 I I I I I I I I 1(1) rJg ~...z .UI ~Ò T~ ¡'" I I \ I I \-- CITY OF NORTH RICHLAND \ UTILITY EASEMENT VOL. 9910, PC. 714 \(1) Jg ~ tJ ARCADIA LAND PARTNERS 25, ~ .... DOC. NO. D203472402 U~ ~~. 1fT' \ \ \~ "- 1r~ ~~>Oj.; . ." ~ "- _ S86-o7'27-E - - "222.25~ - LINE TABLE BEARING N44·S1'59hW S44'35'29"W 544·S2'23"E S65·51'14 hE S44·51'59hE LINE L1 L2 L3 L4 LS DISTANCE 30.00' 46.48' 71.90' 15.13' 1.94' ARCADIA LAND PARTNERS 25, L TD DOC. NO. D203472402 ~ It;., 0- '( -?"'c; +-('1> 'Ý)o '^ '0 '-'( "', 'z¡ ~- . "'J;; NORTHEAST CROSSING ADDITION LOT 3, BLOCK 1 CAB. A, SL. 6064 C' ~-1~ <"& ()/Ò C /V -?,...() -1( '7, <' '1' -1 1'0 1--(- 'J¡.. J ARCADIA LAND PARTNERS 17, LTD. VOL. 16652. PG. 181 N88-S1'41-E "-3(T4:a~ - - - - L.C. WALKER SURVEY, A-1652 D.C. MANNING SURVEY. A 1046 N89.46'22.W APPROX. LOCATION OF 665,01' // // CITY OF NORTH RICHLAND HilLS / / 20.5' SANITARY SEWER EASEMENT / / VOL. 9854, PG. 1841 & / / VOL. 9858, PG. 395 / CITY or NORTH RICHLAND HILLS ~ / 10' WA TER LINE EASEMENT Y VOL. 11506, PG. 2018 / / < // // // // / , ARCADIA LAND PARTNERS 17, LTD. VOL. 16652. PC. 181 P.K. NAIL ...1.. FOUND '?- ~":\ 0~ O· .:¿::.G ~. ~ -\.-<- ..:,,~~'V ..ß <.; N~ G~ .ß3 «: ..:,,'Y' \.:: DrawIng: H:\Pro¡.cta\ARC004\dwv\XARC004..ROW ABAHD.dwg Sawd B)C ..._ Saw 'TIme: 4/27/2005 1:35 PU 1m Jones & Boyd, Inc. 17090 Dallas Parkway, Suite 200 Dallas, Texas 75248 Tel: 972-24&-7676 Fax: 972-248-1414 . SCALE 1" = 1 00' .- .- "'- - .-- DR AWN: RS PROJECT: ARC004 DATE: 03/16/05 \ . CITY OF NORTH RICHLAND HILLS Department: City ManaQer's Office Council Meeting Date: May 23, 2005 Subject: Approve Participation Aqreement with Tarrant County Agenda Number:GN 2005-055 for the Community Development Block Grant Program - Resolution No. 2005-04.5 On May 9, 2005 the City Council approved Resolution No. 2005-039 authorizing the City to Participate with Tarrant County in the Community Development Block Grant and HOME Fund program through 2008. The Council also approved a Joint Administrative Agreement with Tarrant County to administer the Community Development Block Grant Program for the City. Tarrant County has subsequently informed us that the Federal regulations require the HOME Fund provisions be in a separate agreement rather than included in the participation agreement. Therefore, they requested changes to their originally recommended resolution. Again, this is necessary so that the document will be in compliance with the Department of Housing Urban and Development. The new resolution also includes a place for the Tarrant County Judge's signature. The amended resolution also removes all HOME language. A separate agreement for participation in the HOME program will be required at a later date. Tarrant County is in the process of preparing this agreement for our approval. Staff is recommending that Council rescind Resolution No. 2005-039 and approve Resolution No. 2005-045 authorizing the City to participate in Tarrant County's Community Development Block Grant Program, Recommendation: To rescind Resolution No. 2005-039 and approve Resolution No. 2005-045. Finance Review Source of Funds: Bonds (GO/Rev.) Operating Budget Other Account Number Sufficient Funds Ävallable ~e.~ Department Head Signatu Finance Director P~n~ 1 nf 1 RESOLUTION No, 2005-045 RESOLUTION REGARDING CITY OF NORTH RICHLAND HILLS, A DEPARTMENT OF e HOUSING AND URBAN DEVELOPMENT (RUD) METROPOLITAN CITY DESIGNATED AS A DIRECT ENTITLEMENT CITY, FOR PARTICIPATION IN TARRANT COUNTY'S COMMUNITY DEVELOPMENT BLOCK GRANT FOR THE THREE PROGRAM YEAR PERIOD, FISCAL YEAR 2006 THROUGH FISCAL YEAR 2008, SUBJECT TO THE JOINT ADMINISTRATIVE AGREEMENT ATTACHED (ATTACHMENT "A"). WHEREAS, Title I of the Housing and Community Development Act of 1974, as amended through the Housing and Community Development Act of 1992, establishes a program of community development block grants for the specific purpose of developing viable communities by providing decent housing and suitable living environments and expanding economic opportunities principally for persons of low and moderate income, and WHEREAS, Tarrant County has been designated an "Urban County" by the Department of Housing and Urban Development entitled to a formula share of Community Development Block Grant program funds provided said County has a combined population of 200,000 persons in its incorporated areas and units of general local government with which it has entered into cooperative agreements, and WHEREAS, Article III, Section 64 of the Texas C01)stitution authorizes Texas counties to enter into cooperative agreements with local governments for essential Community Development and Housing Assistance activities, and WHEREAS, the City of North Richland Hills shall not apply for grants under the Small Cities e or State CDBG Program from appropriations for fiscal years during the period in which it is participating in Tarrant County's CDBG program, and WHEREAS, through cooperative agreements Tarrant County has authority to carry out activities funded from annual CDBG Program Allocations from Federal Fiscal Years 2006, 2007,2008 appropriations and from any program income generated from the expenditure of such funds, and WHEREAS, Tarrant County and the City of North Richland Hills agree to cooperate to undertake, or assist in undertaking, community renewal and low income housing assistance activities, and WHEREAS, Tarrant County will not fund activities in support of any cooperating unit of general government that does not affinnatively further fair housing within its own jurisdiction or that impedes the county's actions to comply with its fair housing certification, and WHEREAS, the City of North Richland Hills has adopted and is enforcing a policy prohibiting the use of excessive force by law enforcement agencies within its jurisdiction against any individuals engaged in non-violent civil rights demonstrations, and WHEREAS, the City of North Richland Hills has adopted and is enforcing a policy of enforcing applicable State and local laws against physically barring entrance to or exit from a facility or location which is the subject of such non-violent civil rights demonstrations within jurisdictions, and e WHEREAS, Tarrant County and the City of North Richland Hills shall take all actions necessary to assure compliance with the Urban County's certification required by section I04(b) of Title I of the Housing and Community Development Act of 1974, as amended, including Title VI of I the Civil Rights Act of 1964, and Title VIII of the Civil Rights Act of 1968, section 109 of Title I of the Housing and Community Development Act of 1974, and other applicable laws, and e WHEREAS, prior to disbursing any CDBG Program funds to a subrecipient, Tarrant County shall sign a written agreement with such subrecipient, and WHEREAS, the City of North Richland Hills agrees to infonn the County of any income generated by the expenditure of CDBG funds received and that any such program income must be paid to the County to be used for eligible activities in accordance with all CDBG Program requirements, and WHEREAS, in accordance with 24 CFR 570.501(b), Tarrant County is responsible for ensuring that CDBG funds are used in accordance with all program requirements, including monitoring and reporting to the U.S. Department of Housing and Urban Development on the use of program income and that in the event of close-out or change in status of the city of North Richland Hills, any program income that is on hand or received subsequent to the close-out of change in status shall be paid to the County, and WHEREAS, the City· of North Richland Hills, agrees to notify Tarrant County of any modification or change in the use of the real property from that planned at the time of acquisition or improvement, including disposi~ion, and further agrees to reimburse the County in an amount equal to the current fair market value (le'ss any portion thereof attributable to expenditure of non-CDBG funds) of property acquired or improved with CDBG funds that is sold or transferred for a use which does not qualify under the CDBG regulations, and e WHEREAS, any money generated from disposition or transfer of the property will be treated as program income and returned to the county prior to or subsequent to the close-out, change of status or termination of the cooperation agreement between county and the City of North Richland Hills; NOW, THEREFORE, BE IT RESOLVED, by the City of North Richland Hills, that the City Council of North Richland Hills, Texas supports the application of Tarrant County for funding from the Housing and Community Development Act of 1974, as amended, and asks that its population be included for three successive years with that of Tarrant County, Texas to carry out under Public Law 93-383, and Affordable Housing activities under Public Law 101-625, and authorizes the Mayor of North Richland Hills, Texas to sign such additional forms as requested by the Department of Housing and Urban Development pursuant to the purposes of the Resolution, and further that the City of North Richland Hills, Texas understands that Tarrant County will have final responsibility for selecting projects and filing annual grant requests. BE IT FURTHER RESOLVED, this agreement will automatically be renewed for participation in successive three-year qualification periods, unless Tarrant County or the City of North Richland Hills provides written notice it elects not to participate in a new qualification period. Tarrant County will notify the City of North Richland Hills in writing of its right to make such an election on the date specified by the U.S. Department of Housing and Urban Development (HUD) in their urban county qualification notice for the next qualification period, Any amendments or changes contained within the urban county qualification notice applicable to for a subsequent three-year urban county qualification period must be adopted by Tarrant County and the City of North Rich1and Hills, and e submitted to HUD. Failure by either party to adopt such an amendment to the agreement will void the automatic renewal of this agreement. 2 This agreement remains in effect until CDBG, and income received to the fiscal years 2006, 2007, and 2008 programs, and to any successive qualification periods provided through the automatic renewal of this agreement, are expended and the funded activities completed, neither Tarrant County nor the City e of North Richland Hills may terminate or withdraw from the agreement while the agreement remains in effect. Official notice of amendments or changes applicable for a subsequent three-year urban county agreement shall be in writing and be mailed by certified mail to the City Secretary of the City of North Richland Hills. Any notice of changes or amendments to this agreement by the City of North Richland Hills to Tarrant County shall be in writing to the Tarrant County Community Development Division Director. PASSED AND APPROVED THIS _ day of ATTEST: APPROVED: 'CITY SECRETARY MAYOR COUNTY JUDGE COMMISSIONERS COURT CLERK e Approval Form for District Attorney Approved as to F orm* *By law, the District Attorney's Office may only advise or approve contracts or legal documents on behalf of its clients. It may not advise or approve a contract or legal document on behalf of other parties. Our review of this document was conducted solely from the legal perspective of our client. Our approval of this document was offered solely for the benefit of our client. Other parties should not rely on this approval, and should seek review and approval by their own respective attorney(s). e 3 e e e JOINT ADMINISTRATIVE AGREEMENT FOR ADMINISTRATION OF COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM THE STATE OF TEXAS § § § KNOW ALL MEN BY THESE PRESENTS COUNTY OF TARRANT The CITY OF NORTH RICHLAND HILLS, hereinafter called "City", has accepted a designation by the United States Department of Housing and Urban Development (RUD) as a metropolitan city eligible to receive direct entitlement of Community Development Block Grant (CDBG) program funds for the FY 2006 program year, and The CITY OF NORTH RICHLAND HILLS has entered into a cooperative agreement (attachment "A") with TARRANT COUNTY, hereinafter called "County", to participate in the County's CDBG program as a metropolitan city eligible to receive direct entitlement of CDBG funds, and The CITY OF NORTH RICHLAND HILLS and TARRANT COUNTY have agreed to abide by HUD requirements as detailed in CPD 96-04, Article 5, in the cooperative agreement (attachment "A"), and in accordance with 24 CFR 570.308 Joint Requests. This JOINT ADMINISTRATIVE AGREEMENT is made and entered into by and between the City Council of the CITY OF NORTH RICHLAND HILLS and TARRANT COUNTY and the parties hereby AGREE as follows: 1. Scope of Term of Services. The City hereby employs the County through this Joint Administrative Agreement to administer all activities and requirements of federal, state and local law, and rules and procedures of the United States Department of Housing and Urban Development with regard to the City's metropolitan city designation and related Community Development Block Grant for the Fiscal Years 2006 through 2008. 2. Distribution of CDBG Funds. The City shall receive CDBG entitlement program funding from the County as an entitled metropolitan city. The amount of funding shall be equivalent to or greater than what HUD determines annually as the City's entitlement as a metropolitan city. 3, Duties of County, The County shall be responsible for administering all activities related to the City CDBG entitlement program in accordance with 24 CFR 570.500 Subpart "J" Grant Administration. 4. Duties of the City. The City will approve all City CDBG entitlement program funding decisions. The City will determine specific programs, projects, or any other uses to the extent permitted and consistent with HUD eligible activities. e e e 5. Fee for Services. The County shall be paid an annual fee based upon FOURTEEN PERCENT (14%) of the total City CDBG entitlement program funding. 6. City Administrative Expenses. The County shall remit to the City SIX PERCENT (6%) of total City CDBG entitlement program funding for administrative costs.incurred by the City in accordance with HUD eligible reimbursable administrative costs. This Joint Administrative Agreement is executed on behalf of the CITY OF NORTH RICHLAND HILLS and TARRANT COUNTY by its duly authorized officials. CITY OF NORTH RICHLAND HILLS MAYOR DATE: TARRANT COUNTY, TEXAS TOM VANDERGRIFF, JUDGE DATE: · e -- .... Announcements and Information May 23, 2005 Announcements City offices will be closed Monday, May 30, in observance of the Memorial Day Holiday. Garbage will be collected by Trinity Waste Service. The City of North Richland Hills continues its free spring concert series at Green Valley Park, 7701 Smithfield Road. The next concert will be "Me and Pooch" at 7 p.m. on June 3. Admission is free. Please bring your lawn chairs and blankets. For more information, call 817-427-6614. The Keep NRH Beautiful Commission is planning its 2nd Annual Pond and Garden Tour. The Commission is looking for a few pond and/or garden owners that would be willing to open their property to the public on Saturday, June 4, from 11 :00 a.m. to 3:00 p.m. If you live in North Richland Hills and would like to be considered for participation, please call Neighborhood Services at 817-427-6651. Kudos Korner Every Council Meeting, we spotlight our employees for the great things they do. Tommy Miller, Supervisor at the Animal Adoption & Rescue Center An e-mail was received from the Haltom City Animal Care and Adoption Center thanking Tommy for his assistance during their extreme staffing shortage. Miller provided advice on training, ordering supplies, cleaning and more. Haltom City is grateful to have such a great neighbor.