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CC 2011-01-24 Agendas
CITY OF NORTH RICHLAND HILLS CITY COUNCIL WORK SESSION AGENDA NORTH RICHLAND HILLS CITY COUNCIL WORKROOM 7301 NORTHEAST LOOP 820 NORTH RICHLAND HILLS, TEXAS Monday, January 24, 2011 5:30 P.M. A.1 Discuss Items from Regular City Council Meeting A.2 Discuss Code of Ordinances, Sec. 106 -11, Temporary Signs During Roadway Construction (5 Minutes) B.0 EXECUTIVE SESSION - The City Council may enter into closed Executive Session to discuss the following as authorized by Chapter 551, Texas Government Code B.1 Executive Session: Pursuant to Section 551.071, Texas Government Code for Consultation with Attorney regarding Pending Litigation - 1) Hometown Urban Partners, Ltd. vs. City of North Richland Hills (No. 096- 236530 -09); 2) Arcadia Land Partners 25 Ltd., et al vs. City of North Richland Hills (No. 067 - 241297 -09); 3) Venue at Hometown vs. City of North Richland Hills, et al (No. 352 - 237213 -09) C.0 Adjournment Certification I do hereby certify that the above notice of meeting of the North Richland Hills City Council was posted at City Hall, City of North Richland Hills, Texas in compliance with Chapter 551, Texas Government Code on January 21, 2011 at ', FA P.M. &6C 4sis' nt y Secretary This facility is wheelchair accessible and accessible parking spaces are available. Requests for accommodations or interpretive services must be made 48 hours prior to this meeting. Please contact the City Secretary's office at 817 - 427 -6060 for further information. The City Council may confer privately with its attorney to seek legal advice on any matter listed on the agenda or on any matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with Chapter 551, Texas Government Code. January 24, 2011 — City Council Agenda Page 1 of 4 CITY OF NORTH RICHLAND HILLS CITY COUNCIL AGENDA CITY HALL COUNCIL CHAMBERS 7301 NORTHEAST LOOP 820 NORTH RICHLAND HILLS, TEXAS Monday, January 24, 2011 7:00 P.M. ------------------------------------------------------------------------------------------------------------------------- Hard copies of the full City Council agenda information packet are accessible prior to every regularly scheduled Monday Council meeting according to the following locations and schedule: ❑ City Hall on the day of the meeting Additionally, the agenda packet is available for download from the City's web site at www.nrhtx.com after 10 a.m. the day of every regularly scheduled Council meeting. ---------------------------------------------------------------------------------------------------------------------------- A.0 Call to Order - Mayor Trevino A.1 Invocation - Councilman Lombard A.2 Pledge - Councilman Lombard A.3 Special Presentation(s) and Recognition(s) No items for this category. A.4 Citizens Presentation An opportunity for citizens to address the City Council on matters which are not scheduled for consideration by the City Council or another City Board or Commission at a later date. In order to address the Council, please complete a Public Meeting Appearance Card and present it to the City Secretary prior to the start of the Council meeting. The Texas Open Meetings Act prohibits deliberation by the Council of any subject which is not on the posted agenda, therefore the Council will not be able to discuss or take action on items brought up during the citizens presentation. A.5 Removal of Item(s) from Consent Agenda B.0 CONSIDER APPROVAL OF CONSENT AGENDA ITEMS All consent agenda items listed below are considered to be routine items deemed to require little or no deliberation by the City Council and will be voted on in one motion. There will be no separate discussion of these items unless a Council Member so requests, in which event the item will be removed from the Consent Agenda and considered. January 24, 2011 — City Council Agenda Page 2 of 4 B.1 Approval of Minutes of January 10, 2011 City Council Meeting B.2 GN 2011 -004 Reschedule the March 14, 2011 Council Meeting to March 7, 2011 B.3 PU 2011 -001 Authorize the Purchase of Badger Water Meters and Telemetric Devices from Atlas Utility Supply Company for an amount not to exceed $350,000. B.4 PW 2011 -001 Terminate the Construction Contract of Project RFB No. 10 -034 with J & T Excavating, LLC in the Amount of $840,828.50 for the Construction of the Shady Grove Road Street Improvements Project (ST0802) from Davis Boulevard to Clay - Hibbins Road, Approve a Settlement Agreement with SureTec Insurance Company in the amount of $42,691.88, and Award this Project to Reliable Paving, Inc. in the Amount of $793,401.30 C.0 PUBLIC HEARINGS No items for this category. D.0 PLANNING AND DEVELOPMENT Items to follow do not require a public hearing. No items for this category. E.0 PUBLIC WORKS E.1 PW 2011 -002 Revise the FY 2010/2011 Capital Projects Budget and Award RFB No. 11 -003 to RKM Utility Services, Inc. in the Amount of $598,815.90 for the Construction of the Mackey Drive (Briley Drive to Glenview Drive) Street Reconstruction Project (ST0905) E.2 PW 2011 -003 Revise the FY 2010/2011 Capital Projects Budget and approve the funding and replacement of a portion of the 16 -inch water supply line running along Big Fossil Creek (UT1107) F.0 GENERAL ITEMS F.1 GN 2011 -005 Approval of continued participation in Tarrant County's HOME Investment Partnership Program - Resolution No. 2011 -002 F.2 GN 2011 -006 Calling May 14, 2011 City Council Election and Authorizing a Joint Election Agreement with Other Tarrant County Political Subdivisions and Contract for Election Services with Tarrant County - Resolution No. 2011 -003 F.3 GN 2011 -007 Approve Investment Strategy and Investment Policy - Resolution No. 2011 -004 January 24, 2011 — City Council Agenda Page 3 of 4 F.4 GN 2011 -008 Approve Suspension of the February 14, 2011 Effective Date of Oncor Electric Delivery's Request To Increase Rates - Resolution No. 2011 -005 F.5 PU 2011 -003 Authorize the Purchase and Installation of Equipment from Consolidated Traffic Controls in the amount of $190,900 to replace the existing Loop Detectors F.6 GN 2011 -009 Amend the Code of Ordinances by adding Restricted Residency - Ordinance No. 3125 F.7 PU 2011 -004 Authorize the purchase of replacement of point -of -sale system for NRH2O Family Waterpark from Centaman Inc. in the amount of $161,375 G.0 EXECUTIVE SESSION ITEMS G.1 Action on Any Item Discussed in Executive Session Listed on Work Session Agenda H.0 INFORMATION AND REPORTS H.1 Announcements - Councilman Turnage H.2 Adjournment All items on the agenda are for discussion and /or action. Certification I do hereby certify that the above notice of meeting of the North Richland Hills City Council was posted at City Hall, City of North Richland Hills, Texas in compliance with Chapter 551, Texas Government Code on January 21, 2011 at p.m. sist nt City Secretary This facility is wheelchair accessible and accessible parking spaces are available. Requests for accommodations or interpretive services must be made 48 hours prior to this meeting. Please contact the City Secretary's office at 817 - 427 -6060 for further information. The City Council may confer privately with its attorney to seek legal advice on any matter listed on the agenda or on any matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with Chapter 551, Texas Government Code. January 24, 2011 —City Council Agenda Page 4 of 4 CITY OF NORTH RICHLAND HILLS CITY COUNCIL WORK SESSION AGENDA NORTH RICHLAND HILLS CITY COUNCIL WORKROOM 7301 NORTHEAST LOOP 820 NORTH RICHLAND HILLS, TEXAS Monday, January 24, 2011 5:30 P.M. A.1 Discuss Items from Regular City Council Meeting A.2 Discuss Code of Ordinances, Sec. 106 -11, Temporary Signs During Roadway Construction (5 Minutes) B.0 EXECUTIVE SESSION - The City Council may enter into closed Executive Session to discuss the following as authorized by Chapter 551, Texas Government Code B.1 Executive Session: Pursuant to Section 551.071, Texas Government Code for Consultation with Attorney regarding Pending Litigation - 1) Hometown Urban Partners, Ltd. vs. City of North Richland Hills (No. 096- 236530 -09); 2) Arcadia Land Partners 25 Ltd., et al vs. City of North Richland Hills (No. 067 - 241297 -09); 3) Venue at Hometown vs. City of North Richland Hills, et al (No. 352 - 237213 -09) C.0 Adjournment Certification I do hereby certify that the above notice of meeting of the North Richland Hills City Council was posted at City Hall, City of North Richland Hills, Texas in compliance with Chapter 551, Texas Government Code on January 21, 2011. City Secretary This facility is wheelchair accessible and accessible parking spaces are available. Requests for accommodations or interpretive services must be made 48 hours prior to this meeting. Please contact the City Secretary's office at 817 - 427 -6060 for further information. The City Council may confer privately with its attorney to seek legal advice on any matter listed on the agenda or on any matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with Chapter 551, Texas Government Code. CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Agenda No. A.1 Subject: Discuss Items from Regular City Council Meeting CITY OF NORTH RICHLAND HILLS Department: Economic Development Council Meeting Date: 1 -24 -2011 Presented by: Craig Hulse Agenda No. A.2 Subject: Discuss Code of Ordinances, Sec. 106 -11, Temporary Signs During Roadway Construction (5 Minutes) Summary In anticipation of numerous transportation projects along the city's commercial corridors, city staff, in conjunction with the NRH Business Mobility Team, would like Council to consider potential amendments to Sec. 106 -11 of the Sign Ordinance that would assist customer ingress and egress to businesses impacted by roadway construction. General Description In September 2010, Council requested guidance from the NRH Business Mobility Team on a fair and equitable use of temporary signage for businesses impacted by roadway construction. The NRH Business Mobility Team, made up of representatives from 20 key local businesses, was created in 2010 as the city embarked upon a host of transportation projects, specifically the North Tarrant Express project. During the January 24 Council Work Session, staff will bring forward two types of temporary signs and business eligibility requirements for Council to consider formally adopting at a later date. CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Agenda No. B.0 Subject: EXECUTIVE SESSION - The City Council may enter into closed Executive Session to discuss the following as authorized by Chapter 551, Texas Government Code CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Agenda No. B.1 Subject: Executive Session: Pursuant to Section 551.071, Texas Government Code for Consultation with Attorney regarding Pending Litigation - 1) Hometown Urban Partners, Ltd. vs. City of North Richland Hills (No. 096- 236530 -09); 2) Arcadia Land Partners 25 Ltd., et al vs. City of North Richland Hills (No. 067 - 241297 -09); 3) Venue at Hometown vs. City of North Richland Hills, et al (No. 352 - 237213 -09)) CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Agenda No. C.0 Subject: Adjournment CITY OF NORTH RICHLAND HILLS CITY COUNCIL AGENDA CITY HALL COUNCIL CHAMBERS 7301 NORTHEAST LOOP 820 NORTH RICHLAND HILLS, TEXAS Monday, January 24, 2011 7:00 P.M. ------------------------------------------------------------------------------------------------------------------------- Hard copies of the full City Council agenda information packet are accessible prior to every regularly scheduled Monday Council meeting according to the following locations and schedule: ❑ City Hall on the day of the meeting Additionally, the agenda packet is available for download from the City's web site at www.nrhtx.com after 10 a.m. the day of every regularly scheduled Council meeting. ---------------------------------------------------------------------------------------------------------------------------- A.0 Call to Order - Mayor Trevino A.1 Invocation - Councilman Lombard A.2 Pledge - Councilman Lombard A.3 Special Presentation(s) and Recognition(s) No items for this category. A.4 Citizens Presentation An opportunity for citizens to address the City Council on matters which are not scheduled for consideration by the City Council or another City Board or Commission at a later date. In order to address the Council, please complete a Public Meeting Appearance Card and present it to the City Secretary prior to the start of the Council meeting. The Texas Open Meetings Act prohibits deliberation by the Council of any subject which is not on the posted agenda, therefore the Council will not be able to discuss or take action on items brought up during the citizens presentation. A.5 Removal of Item(s) from Consent Agenda B.0 CONSIDER APPROVAL OF CONSENT AGENDA ITEMS All consent agenda items listed below are considered to be routine items deemed to require little or no deliberation by the City Council and will be voted on in one motion. There will be no separate discussion of these items unless a Council Member so requests, in which event the item will be removed from the Consent Agenda and considered. B.1 Approval of Minutes of January 10, 2011 City Council Meeting B.2 GN 2011 -004 Reschedule the March 14, 2011 Council Meeting to March 7, 2011 B.3 PU 2011 -001 Authorize the Purchase of Badger Water Meters and Telemetric Devices from Atlas Utility Supply Company for an amount not to exceed $350,000. B.4 PW 2011 -001 Terminate the Construction Contract of Project RFB No. 10 -034 with J & T Excavating, LLC in the Amount of $840,828.50 for the Construction of the Shady Grove Road Street Improvements Project (ST0802) from Davis Boulevard to Clay - Hibbins Road, Approve a Settlement Agreement with SureTec Insurance Company in the amount of $42,691.88, and Award this Project to Reliable Paving, Inc. in the Amount of $793,401.30 C.0 PUBLIC HEARINGS No items for this category. D.0 PLANNING AND DEVELOPMENT Items to follow do not require a public hearing. No items for this category. E.0 PUBLIC WORKS E.1 PW 2011 -002 Revise the FY 2010/2011 Capital Projects Budget and Award RFB No. 11 -003 to RKM Utility Services, Inc. in the Amount of $598,815.90 for the Construction of the Mackey Drive (Briley Drive to Glenview Drive) Street Reconstruction Project (ST0905) E.2 PW 2011 -003 Revise the FY 2010/2011 Capital Projects Budget and approve the funding and replacement of a portion of the 16 -inch water supply line running along Big Fossil Creek (UT1107) F.0 GENERAL ITEMS F.1 GN 2011 -005 Approval of continued participation in Tarrant County's HOME Investment Partnership Program - Resolution No. 2011 -002 F.2 GN 2011 -006 Calling May 14, 2011 City Council Election and Authorizing a Joint Election Agreement with Other Tarrant County Political Subdivisions and Contract for Election Services with Tarrant County - Resolution No. 2011 -003 F.3 GN 2011 -007 Approve Investment Strategy and Investment Policy - Resolution No. 2011 -004 F.4 GN 2011 -008 Approve Suspension of the February 14, 2011 Effective Date of Oncor Electric Delivery's Request To Increase Rates — Resolution No. 2011 -005 F.5 PU 2011 -003 Authorize the Purchase and Installation of Equipment from Consolidated Traffic Controls in the amount of $190,900 to replace the existing Loop Detectors F.6 GN 2011 -009 Amend the Code of Ordinances by adding Restricted Residency - Ordinance No. 3125 F.7 PU 2011 -004 Authorize the purchase of replacement of point -of -sale system for NRH2O Family Waterpark from Centaman Inc. in the amount of $161,375 G.0 EXECUTIVE SESSION ITEMS G.1 Action on Any Item Discussed in Executive Session Listed on Work Session Agenda H.0 INFORMATION AND REPORTS H.1 Announcements - Councilman Turnage H.2 Adjournment All items on the agenda are for discussion and /or action. Certification I do hereby certify that the above notice of meeting of the North Richland Hills City Council was posted at City Hall, City of North Richland Hills, Texas in compliance with Chapter 551, Texas Government Code on January 21, 2011. City Secretary This facility is wheelchair accessible and accessible parking spaces are available. Requests for accommodations or interpretive services must be made 48 hours prior to this meeting. Please contact the City Secretary's office at 817 - 427 -6060 for further information. The City Council may confer privately with its attorney to seek legal advice on any matter listed on the agenda or on any matter in which the duty of the attorney to the governmental body under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas clearly conflicts with Chapter 551, Texas Government Code. CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Mayor Oscar Trevino Agenda No. A.0 Subject: Call to Order - Mayor Trevino CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Councilman Tom Lombard Agenda No. A.1 Subject: Invocation - Councilman Lombard CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Councilman Tom Lombard Agenda No. A.2 Subject: Pledge - Councilman Lombard CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Agenda No. A.3 Subject: Special Presentation(s) and Recognition(s) No items for this category. CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Agenda No. A.4 Subject: Citizens Presentation An opportunity for citizens to address the City Council on matters which are not scheduled for consideration by the City Council or another City Board or Commission at a later date. In order to address the Council, please complete a Public Meeting Appearance Card and present it to the City Secretary prior to the start of the Council meeting. The Texas Open Meetings Act prohibits deliberation by the Council of any subject which is not on the posted agenda, therefore the Council will not be able to discuss or take action on items brought up during the citizens presentation. CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Agenda No. A.5 Subject: Removal of Item(s) from Consent Agenda CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Agenda No. B.0 Subject: CONSIDER APPROVAL OF CONSENT AGENDA ITEMS All consent agenda items listed below are considered to be routine items deemed to require little or no deliberation by the City Council and will be voted on in one motion. There will be no separate discussion of these items unless a Council Member so requests, in which event the item will be removed from the Consent Agenda and considered. CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Agenda No. B.1 Subject: Approval of Minutes of January 10, 2011 City Council Meeting Recommendation To approve the minutes of the January 10, 2011 City Council Meeting. MINUTES OF THE WORK SESSION AND REGULAR MEETING OF THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS, HELD IN THE CITY HALL, 7301 NORTHEAST LOOP 820 — JANUARY 10, 2011 WORK SESSION The City Council of the City of North Richland Hills, Texas met in work session on the 10 day of January, 2011 at 5:00 p.m. in the City Council Workroom prior to the 7:00 p.m. regular Council meeting. Present: Oscar Trevino Mayor Ken Sapp Mayor Pro Tem, Council, Place 2 John Lewis Council, Place 1 Tom Lombard Council, Place 3 Tim Barth Council, Place 4 David Whitson Council, Place 5 Scott Turnage Council, Place 6 Tim Welch Council, Place 7 Staff Members: Mark Hindman City Manager Jared Miller Assistant City Manager Karen Bostic Assistant City Manager Jimmy Perdue Director of Public Safety Mike Curtis Managing Director Vickie Loftice Managing Director Patricia Hutson City Secretary George Staples City Attorney Mary Peters Public Information Officer John Pitstick Director of Planning & Development Larry Koonce Finance Director Vickie Loftice Parks & Recreation Director Craig Hulse Economic Development Director Jamie Brockway Purchasing Manager Mike Hamlin Assistant Police Chief Gregory VanNieuwenhuize Assistant Public Works Director Kristin Weegar Public Works Senior Mgmt. Assistant Call to Order Mayor Trevino called the work session to order at 5:00 p.m. A.0 Discuss Items from Regular City Council Meeting There were no questions from Council. A.2 Discuss Rescheduling March 14, 2011 City Council Meeting Patricia Hutson, City Secretary, advised Council there were several Council members who will be unable to attend the March 14 City Council meeting. Council was asked to consider rescheduling the meeting. The consensus of the Council was to reschedule the meeting to March 7. A.3 Amend Code of Ordinances by adding Restricted Residency Ordinance Assistant Chief Hamlin advised Council of a proposed ordinance that would regulate where certain sex offenders can reside within North Richland Hills. The focus of the ordinance is to create a protective area around those areas where children gather and play. The ordinance will prohibit a person that has been convicted or adjudicated whose victim was younger than 17 years of age from residing within 1,000 feet of a protected area and prohibits one from allowing a convicted or adjudicated sex offender whose victim was younger than 17 years of age to reside at a location that is within 1,000 feet of a protected area. Protected areas include premises where children commonly gather such as playgrounds, schools, video arcade facilities, youth centers, public swimming pools, and day care facilities. The ordinance provides for five defenses — 1) if offender resided at the location prior to adoption of the ordinance; 2) if the offender was a minor at the location prior to adoption of the ordinance; 3) if the offender was a minor at the time of the offense or conviction; 4) if the protected area is opened after the offender established a legal residency; or 5) if the information on the Department of Public Safety database is incorrect. Council was advised that no one as a result of the ordinance will be required to move or relocate. Chief Hamlin advised Council of the number of registered sex offenders residing in the City and presented a map of the City showing the protected areas and the location of the offenders. After questions from the Council, the Council concurred with the ordinance being brought forward for their consideration at the next Council meeting. B.0 EXECUTIVE SESSION - The City Council may enter into closed Executive Session to discuss the following as authorized by Chapter 551, Texas Government Code B.1 Executive Session: Pursuant to Section 551.072, Texas Government Code to consider the sale of land to State for right of way - 1) Parcel 152 located at 820 and Cummings Drive; 2) Parcel 96 located at 6729 Northeast Loop 820; 3) Parcel 135 located at 7301 Northeast Loop 820; 4) Parcel 150 located at 4816 Cummings Drive East. B.2 Executive Session: Pursuant to Section 551.071, Texas Government Code for Consultation with Attorney regarding Pending Litigation - 1) Hometown Urban Partners, Ltd. vs. City of North Richland Hills (No. 096- 236530 -09); 2) Arcadia Land Partners 25 Ltd., et al vs. City of North Richland Hills (No. 067 - 241297 -09); 3) Venue at Hometown vs. City of North Richland Hills, et al (No. 352 - 237213 -09) Mayor Trevino announced at 5:20 p.m. that the Council would convene into Executive Session as authorized by Chapter 551, Texas Government Code, pursuant to the following sections: • Section 551.072, Texas Government Code to consider the sale of land to State for right of way - 1) Parcel 152 located at 820 and Cummings Drive; 2) Parcel 96 located at 6729 Northeast Loop 820; 3) Parcel 135 located at 7301 Northeast Loop 820; 4) Parcel 150 located at 4816 Cummings Drive East. • Section 551.071 for consultation with Attorney regarding Pending Litigation - 1) Hometown Urban Partners, Ltd. vs. City of North Richland Hills (No. 096- 236530- 09); 2) Arcadia Land Partners 25 Ltd., et al vs. City of North Richland Hills (No. 067 - 241297 -09); 3) Venue at Hometown vs. City of North Richland Hills, et al (No. 352 - 237213 -09). C.0 Adjournment Mayor Trevino announced at 7:00 p.m. that the Council would adjourn to the regular Council meeting. REGULAR COUNCIL MEETING A.0 CALL TO ORDER Mayor Trevino called the meeting to order January 10, 2011 at 7:05 p.m. ROLL CALL Present: Oscar Trevino Mayor Ken Sapp Mayor Pro Tem, Council, Place 2 John Lewis Council, Place 1 Tom Lombard Council, Place 3 Tim Barth Council, Place 4 David Whitson Council, Place 5 Scott Turnage Council, Place 6 Tim Welch Council, Place 7 Staff: Mark Hindman City Manager Jared Miller Assistant City Manager Karen Bostic Assistant City Manager Jimmy Perdue Director of Public Safety Mike Curtis Managing Director Vickie Loftice Managing Director Patricia Hutson City Secretary George Staples Attorney A.1 INVOCATION Mayor Pro Tern Sapp gave the invocation. A.2 PLEDGE OF ALLEGIANCE Mayor Pro Tern Sapp led the pledge of allegiance. A.3 SPECIAL PRESENTATION(S) AND RECOGNITION(S) 2010 UNITED WAY CAMPAIGN Mr. Ron Newman, United Way Committee Chair, recognized the employee committee members. The City raised a total of $37,542 during the City's 2010 United Way Campaign. Councilman Barth and Mr. Newman presented a check from the City's campaign to Ms. Faye Beaulieu, PhD, Regional Director of United Way Northeast. A.4 SPECIAL PRESENTATION(S) AND RECOGNITION(S) KEEP NRH BEAUTIFUL HOLIDAY LIGHTING AWARDS Ms. Kathy Luppy, Keep NRH Beautiful Commission Chair and Councilman Turnage presented the 2010 Holiday Lighting awards to Gary & Sandy Moore, 4033 Diamond Loch; Paul & Patty Lussier, 7021 Briley; Charlie & Denise Niziolek, 6300 Skylark Circle; Robert & Dessie Simmons, 7437 North Richland Boulevard; Dave & Debra Byczek, 8608 Olmstead; Debbie Gann, 7116 Smithfield Road; Roger & Connie Stillwell, 8309 Thornbrook; Greg & Kathy Hull, 7621 Woodhaven; Albert & Beverly Partman, 8000 Canyon Oak. A.5 CITIZENS PRESENTATION None. A.6 REMOVAL OF ITEM(S) FROM THE CONSENT AGENDA None. B.0 APPROVAL OF CONSENT AGENDA ITEMS APPROVED B.1 APPROVAL OF MINUTES OF DECEMBER 13, 2010 CITY COUNCIL MEETING B.2 PU 2011 -001 AUTHORIZE INTER -LOCAL PURCHASING AGREEMENT WITH THE CITY OF TEMPLE B.3 GN 2011 -002 AN INTERLOCAL AGREEMENT ESTABLISHING THE NORTH CENTRAL TEXAS MAJOR CASE INVESTIGATIVE TEAM — RESOLUTION NO. 2011 -001 B.4 GN 2011 -003 AUTHORIZE SPECIAL EVENTS AGREEMENT WITH CITY OF ARLINGTON COUNCILMAN WHITSON MOVED TO APPROVE THE CONSENT AGENDA.. COUNCILMAN TURNAGE SECONDED THE MOTION. MOTION TO APPROVE CARRIED 7 -0.. PUBLIC HEARINGS C.1 SDP 2010 -01 PUBLIC HEARING AND CONSIDERATION OF AN APPEAL REQUEST FROM MICHELLE THOMAS (THE M GROUP) FOR A SPECIAL DEVELOPMENT PLAN FOR TEMPORARY OFFICE USES IN A RESIDENTIAL STRUCTURE ON LOT 1, BLOCK 3, MEACHAM ADDITION (TOD CORE SUBZONE) WITH FUTURE ACCESS FROM LOT 3, BLOCK 1, MEACHAM ADDITION (TOD RESIDENTIAL SUBZONE) IN THE TRANSIT ORIENTED DEVELOPMENT ZONING DISTRICT - ORDINANCE NO. 3124 (LOCATED AT 6333 SMITHFIELD ROAD AND 7828 ARTHUR DRIVE) APPROVED Mayor Trevino opened the Public Hearing. Mayor Trevino advised that his wife and partner own property nearby and while he is not required to recuse himself he will limit his discussion. Ms. Michelle Thomas, applicant, 151 Sandy Creek Trail, Weatherford, presented her request for a Special Development Plan under the Transit Oriented Development (TOD) district to allow for an interim office use in an existing single family structure. Ms. Thomas advised the current building is not up to the TOD or Buildings Standards and Codes, but she wants to use the existing building for 18 months as a professional office. Ms. Thomas presented a footprint of the proposed development and concept of the buildings she plans to construct on the property after 18 months. Ms. Thomas addressed the issues and concerns from the Planning & Zoning meeting over drainage, access and traffic on Arthur Drive. Ms. Thomas advised construction would begin at the end of the 18 months if not sooner. Mr. John Pitstick, Director of Planning, summarized the case and presented the recommendation of the Planning and Zoning Commission. Applicant is requesting a Special Development Plan to allow for an interim office use for 18 months in an existing structure. The Special Development Plan specifies that by June 1 the existing residential houses on Lots 1 and 3, Block 1, Meacham Addition will be demolished or removed and construction plans will be submitted for a series of new mixed -use buildings with access off Arthur Drive. The plan is to phase in the development including a 4,950 square foot 2 -story mixed use building with retail or office on the first floor and residential living on the second floor located at the corner of Smithfield and Mid Cities and a 3,300 square foot similar mixed use building adjacent to the phase 1 building. This case is an appeal to City Council based on a denial from the Planning and Zoning Commission. The request is only for the interim use of an existing building as a business office for 18 months or until June 1, 2012. The property will have to be replatted and drainage and street issues will be addressed at the time of replatting. The Planning and Zoning Commission voted 3 -1 to recommend denial of the request. There were concerns over the current market demand and ability to construct the future proposed mixed -use buildings with the primary concern being fairness to other existing commercial buildings in allowing a temporary conversion of an existing single - family house to be used as a business office for an interim time frame. Mayor Trevino called for those wishing to speak in favor of the request to come forward. There being no one wishing to speak Mayor Trevino called for anyone wishing to speak in opposition to come forward. The following spoke in opposition to the request: • Mr. Glenn Willis, 7820 Arthur Drive — Mr. Willis expressed concerns with drainage, traffic, screening wall to separate the commercial property from the residential and the applicant's financial status to complete the development in 18 months. Mr. Curtis addressed the traffic and drainage concerns. Mr. Curtis advised that as part of the process the applicant will replat the property. At that point, the City's development criteria would become effective and the applicant will provide engineering, drainage plans, etc. for approval. Mr. Pitstick explained the screening wall regulations. Mayor Trevino confirmed with Staff that the concerns on drainage, screening walls, and traffic issues were not part of this request and would be addressed in the appropriate venue. Mayor Trevino asked Mr. Hindman for the city's position on the concerns expressed on the applicant's financial status. Mr. Hindman advised financial performance was not within the City's purview. • Mr. Kevin Murphy, 7813 Arthur Drive — Mr. Murphy expressed concerns with drainage, traffic and safety and the applicant's financial ability. There being no one else wishing to speak, Mayor Trevino closed the public hearing. Councilman Welch raised point of order and requested Council allow rebuttal from Ms. Thomas. Council concurred with Councilman Welch's request. Ms. Thomas addressed the concerns expressed on her financial ability to perform. COUNCILMAN LOMBARD MOVED TO APPROVE SDP 2010 -01, ORDINANCE NO. 3124. COUNCILMAN LEWIS SECONDED THE MOTION. MOTION TO APPROVE CARRIED 6 -1. MAYOR PRO TEM SAPP, COUNCILMEN LEWIS, LOMBARD, BARTH, TURNAGE AND WELCH VOTING FOR; COUNCILMAN WHITSON VOTING AGAINST. PLANNING & DEVELOPMENT D.1 RP 2010 -01 CONSIDERATION OF A REQUEST FROM RAMON GOHEEN FOR A REPLAT CREATING LOT 1B1, BLOCK 1, J. M. ESTES ADDITION (LOCATED AT 4028 RUFE SNOW DRIVE - 0.75 ACRES.) APPROVED Mr. Ramon Goheen, 4028 Rufe Snow, applicant, presented his request to replat the property to the north of his existing business to add a parking lot. Mr. John Pitstick, Director of Planning, summarized the request and presented the recommendation of the Planning and Zoning Commission. Applicant is proposing to replat two lots into a single lot creating a 0.75 -acre lot allowing him to expand his business. The Planning and Zoning Commission recommended approval of the request. MAYOR PRO TEM SAPP MOVED TO APPROVE RP 2010 -01, CREATING LOT 181, BLOCK 1, J.M. ESTES ADDITION. COUNCILMAN WELCH SECONDED THE MOTION.. MOTION TO APPROVE CARRIED 7 -0. PUBLIC WORKS No items for this category. GENERAL ITEMS F.1 GN 2011 -001 AWARD OF CONTRACT TO THE CORBET GROUP, INC. IN THE AMOUNT OF $771,600 FOR THE INSTALLATION OF THE NEW WATER PARK ATTRACTION AT NRH2O APPROVED Mr. Joe Pack, Senior Park Planner, presented the item. The item is to award a construction contract to The Corbet Group, Inc. for the installation of a new water park attraction at NRH2O. Competitive Sealed Proposals were received for the installation of the attraction, construction of the receiving pool, tower, associated infrastructure, and expansion of the medical building. Six alternates were included to determine the values of specific project elements and to assist in developing a construction contract within the available funding. The alternates were: 1) The addition of five area lights leading up to the new attraction. 2) The installation of a separate electrical panel and conduit for lighting and audio, which would provide for a "special effects" package for the slide. 3) Providing CMU walls and a roof over the mechanical building expansion in lieu of providing a "pump pit" with a chain link fence. 4) Providing an eight foot wide sidewalk from the entrance of the Green Extreme to the new attraction in lieu of a five foot wide sidewalk. 5) Providing additional irrigation around the new slide. 6) Providing for a substantial completion date of June 1, 2011 in lieu of May 2, 2011. Staff is recommending awarding the contract to The Corbett Group, Inc. for the base bid, plus alternates 1 -5, for a total contract amount of $771,600. Alternate 6 did not provide adequate savings to justify moving the substantial completion date and disrupting the summer season with construction activities. The remaining balance in the budget ($41,210) will be used to provide construction materials testing, a shade canopy for structure and project contingencies. COUNCILMAN TURNAGE MOVED TO APPROVE GN 2011 -001, AWARDING THE CONSTRUCTION CONTRACT TO THE CORBET GROUP, INC. IN THE AMOUNT OF $771,600 FOR THE INSTALLATION OF THE NEW WATER PARK ATTRACTION AT NRH2O. COUNCILMAN WHITSON SECONDED THE MOTION. MOTION TO APPROVE CARRIED 7 -0. EXECUTIVE SESSION ITEMS GA ACTION ON ANY ITEM DISCUSSED IN EXECUTIVE SESSION LISTED ON WORK SESSION AGENDA No action required. INFORMATION AND REPORTS H.1 ANNOUNCEMENTS Councilman Whitson made the following announcements. Mulch from recycled Christmas trees is available for residents to pick up, while supplies last, at Green Valley Park and at the city parking lot at the southeast corner of Rufe Snow Drive and Loop 820. Please bring your own container and shovel to load the mulch. For more information, contact Neighborhood Services at 817 - 427 -6650. Iron Horse Golf Course is currently booking its pavilion and clubhouse for 2011 weddings, graduation parties, retirement parties, receptions and more. To make a reservation for your next special event, call 817 - 485 -6666. Join us at the NRH Public Library each Saturday for free family films. Movies are shown in the Community Room starting at 2 p.m. Free popcorn is provided. Families are invited to bring snacks, drinks and floor cushions. For more details, please call 817 - 427 -6814. Kudos Korner — Ricky Bryant, Lucio Valdez, Elija Dorminy and Kevin Jackson, Public Works Department. An e-mail was received from a resident expressing his thanks and appreciation to the employees who responded to a water main break on Christmas Day. "My neighbors and I would like to extend a warm thank you to these fine men for having a positive attitude and a determined work ethic especially on Christmas," the resident said. "It's men like this who make this city such a great place to live." H.2 ADJOURNMENT Mayor Trevino adjourned the meeting at 8:12 p.m. Oscar Trevino — Mayor ATTEST: Patricia Hutson, City Secretary CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Patricia Hutson Agenda No. B.2 Subject: GN 2011 -004 Reschedule the March 14, 2011 Council Meeting to March 7, 2011 Summary The March 14, 2011 City Council meeting is being rescheduled due to a conflict. General Description Several Council members will not be in the City for the March 14, 2011 City Council meeting. Council discussed rescheduling the meeting during the January 11 Council Work Session. The consensus of the City Council was to reschedule the meeting to March 7, 2011. Recommendation To reschedule the March 14, 2011 City Council Meeting to March 7, 2011. CITY OF NORTH RICHLAND HILLS Department: Finance Council Meeting Date: 1 -24 -2011 Presented by: MCurits /LKoonce Agenda No.B.3 Subject: PU 2011 -001 Authorize the Purchase of Badger Water Meters and Telemetric Devices from Atlas Utility Supply Company for an amount not to exceed $350,000. Summary: To request Council to authorize the purchase of Badger water meters and telemetric devices from the sole distributor Atlas Utility Supply Company for an amount not to exceed $350,000. General Description: Since 1992 the City of North Richland Hills has used a telemetric water meter reading system. The telemetric system consists of a transponder that is installed on the water meters. This system allows meters to be read from a van with an on -board computer. This is a very efficient and accurate method of reading meters. The city currently has an ongoing meter replacement program to ensure the accurate measurement of water flow usage. Approximately 2,000 of the 17,000 total meters and telemetric devices are replaced annually. City Council has appropriated $350,000 annually in the capital projects budget for the replacement of water meters and telemetric devices. Badger Meter hardware and software has been used since the inception of the telemetric program in 1992. The Badger meter and telemetric device is the only unit compatible with the Badger computer system. Badger Meter extends exclusive territories to distributors of their meters and accessories. Atlas Utility Supply is the only authorized distributor in our area. Atlas is a local company that has provided good service, met all specifications and made deliveries within the requested time. They have adequate inventory on hand to supply the City's meter requirements and a knowledgeable staff to assist with inquiries regarding meters and telemetric devices. Atlas is the sole source for purchasing the Badger water meters and telemetric devices in this area. They have submitted the attached price increase in effect through December 31, 2011 on the Orion product line that we began using in 2005. Atlas cites increases in the price of copper and brass as reasons for increases in pricing. They are requesting an increase between 1% and 7% for the different meter and telemetric device sizes. The price for a 3/4" meter will increase 4 %, from $38.00 to $39.50 per meter. The price for a 1" meter will increase 7 %, from $107.90 to $115.00 per meter. The approximate dollar amount to be spent between now and December 31, 2011 is $340,000. Any purchase exceeding $50,000 requires Council approval according to City Purchasing Policies. Recommendation To authorize the purchase of Badger water meters and telemetric devices from Atlas Utility Supply Company for an amount not to exceed $350,000. PRICING REMAINS FIRM THROUGH DECEMBER 31, 2011 ORION Total $ Requested TRACE ORION ORION ORION ORION Pricing Increase Sep -04 New Jun -07 Feb -08 Feb -09 Feb -11 Requested 11 Month Based on thru Product thru thru thru thru Percentage Estimated Estimated 2005 - Apr-07 2007 Jan -08 Dec -08 Dec -10 Dec -11 Increase Units Units 3/4" Meter $25.71 $26.50 $36.50 $36.86 $38.00 $39.50 4% 1800 $2,700.00 3/4" Transponder $130.94 $112.00 $115.00 $120.00 $123.60 $125.45 1% 1900 $3,515.00 $164.95 1" Meter $74.82 $87.72 $103.50 $104.76 $107.90 $115.00 7% 100 $710.00 i ll Transponder $130.94 $112.00 $115.00 $120.00 $123.60 $125.45 1% 100 $185.00 $240.45 1 1/2 Meter $187.83 $218.51 $261.00 $260.93 $268.75 $276.00 3% 0 1 1/2" Transponder $154.72 $118.00 $121.00 $127.00 $130.80 $137.60 5% 0 $413.60 2" Meter $267.54 $298.22 $367.00 $365.69 $376.65 $387.95 3% 20 $226.00 2 " Transponder $154.72 $118.00 $121.00 $127.00 $130.80 $137.60 5% 40 $272.00 $525.55 $7,608.00 PRICING REMAINS FIRM THROUGH DECEMBER 31, 2011 Date: 1/3/2011 To: Ms. Jami Brockavay City of North Richland Hills Subject: Meters and Orion Pricing for North Richland Hills Effective: 1/24/2011 - 12/31/20111 Quantity Description Unit Cost Total BADGER BARE METER & ORION TRANSMITTER PRICING EA Badger 5/8" X 3/4" M -25, Bare Meter Only 53950 EA Badger 5/8" X 3/4" M -25, cubic feet ORION RTR and Pit Transmitter only $125.45 with 3' lead EA Badger 1" M -70, Bare Meter Only $115.00 EA Badger 1" M -70, cubic feet ORION RTR and Pit Transmitter only with 3' $125.45 lead EA Badger 11/2" M -1Z0, Bare Meter Only $276.00 EA Badger 11/2" M -120, cubic feet ORION RTR and Pit Transmitter only with $137.60 3' lead EA Badger 2" M -170 Bare Meter Only $387.95 EA Badger 2" M -170 cubic feet ORION RTR and Pit Transmitter only, with 3' $137.60 lead 40. 20111 %I_TER E o.,i, aR.u,NA� CITY OF NORTH RICHLAND HILLS Department: Public Works Council Meeting Date: 1 -24 -2011 Presented by: Gregory Van Nieuwenhuize Agenda No. B.4 Subject: PW 2011 -001 Terminate the Construction Contract of Project RFB No. 10 -034 with J & T Excavating, LLC in the Amount of $840,828.50 for the Construction of the Shady Grove Road Street Improvements Project (ST0802) from Davis Boulevard to Clay - Hibbins Road, Approve a Settlement Agreement with SureTec Insurance Company in the amount of $42,691.88, and Award this Project to Reliable Paving, Inc. in the Amount of $793,401.30 Summary The City Council is being asked to terminate a construction contract with J & T Excavating ( "J &T") for the Shady Grove Road Street Improvements Project (the "project "), approve a settlement agreement with J &T's bonding company (SureTec Insurance Company) and award the Project to Reliable Paving, Inc. ( "RPI "). General Description On June 22, 2010, a bid opening was conducted for the project and 12 bids were received. The project was set up with a total base bid and an alternate bid. The alternate bid included an allowance for Shady Grove Road to be restricted to one -way traffic during construction. The results from this bid opening are provided below: CONTRACTOR NAME TOTAL BID ALTERNATE BID DIFFERENCE J &T Excavating, LLC $840,828.50 $834,128.50 -$6,700.00 Reliable Paving, Inc. $845,326.50 $844,326.50 -$1,000.00 JLB Contracting, LLC $896,533.90 $867,483.90 - $29,050.00 McClendon Construction Co. $946,113.00 $928,113.00 - $18,000.00 Conatser Construction $959,052.50 $954,052.50 -$5,000.00 L.H. Lacy Construction $992,500.00 $952,500.00 - $40,000.00 Weir Brothers, Inc. $1,007,155.50 $1,003,155.50 -$4,000.00 Stabile & Winn, Inc. $1,052,171.35 $1,008,171.35 - $44,000.00 Tiseo Paving Company $1,068,383.25 $1,055,383.25 - $13,000.00 Jagoe Public Company $1,082,271.75 $1,080,696.75 -$1,575.00 RKM Utility Services, Inc. $1,085,325.00 $1,080,325.00 -$5,000.00 Ed A. Wilson, Inc. $1,152,608.75 $1,132,608.75 - $20,000.00 The project is designed to widen approximately 2,200 lineal feet of the roadway from an existing 21 -foot wide asphalt street to a 40 -foot wide concrete collector street in conformance with the city's Master Thoroughfare Plan. In addition, an underground drainage system will replace the current bar ditches, sidewalks will be constructed on both sides of the street, and a sanitary sewer main will be extended across Shady Grove Road to provide sewer service to the currently unserved area on the north side of Shady Grove Road. On July 26, 2010, the City Council awarded the project to J &T in the amount of $840,828.50. Following this award and full execution of the contract documents, a Pre - construction conference was scheduled. The pre- construction conference was conducted on August 26, 2010 at which time a "construction start date" of September 7, 2010 was mutually agreed upon. J &T began work on the project in mid - September. However, shortly thereafter (first week of October), staff learned that J &T was not going to be able to complete the project. Staff contacted J &T's bonding company, SureTec Insurance Company ( "SureTec "). SureTec verified that J &T was no longer going to be in business, and no further work on the project would be performed. Because of the condition in which J &T had left the project site, staff arranged for LH Lacy (the North Tarrant Parkway contractor) to provide some temporary paving and drainage work to stabilize the roadway until such time as a new contractor could be mobilized. The cost for this work ($4,735.32) is accounted for in the Settlement & Release Agreement (discussed below) with SureTec. Staff re- examined the project's bid tabulation to determine if the second lowest bidder (Reliable Paving, Inc.) would be appropriate for the project. Reliable Paving, Inc. ( "RPI ") has had some experience with staff and the construction of paving projects in North Richland Hills. RPI's original bid was $845,326.50 which is $4,498.00 more than J &T's bid. Staff contacted RPI and they agreed to honor their bid amount even though the time period for "holding bids" has expired. Staff then inquired with SureTec to see if they would be willing to absorb the difference between J &T's bid and Reliable Paving's bid. SureTec was receptive to this idea; however, SureTec requires a Settlement & Release Agreement ( "SRA ") to be executed with the city in order to handle the transaction. Additionally, because J &T never invoiced the city for the amount of work that they did complete on the project, SureTec, as basically J &T's agent, proposed that the SRA also address this matter. Staff indicated to SureTec that a SRA could be recommended to the Council if the city was not out any monies above the amount of J &T's construction contract ($840,828.50). Therefore, the amount paid to LH Lacy (for their temporary stabilization work), plus any amounts due J &T (for their initial work on the project) and the amounts RPI bid (for the remaining work on the project) could not exceed $840,828.50. SureTec has negotiated with RPI such that the remaining work on the project equates to $793,401.30. As such the SRA outlines the following payments to be made by the city in order for the project to be completed at the same amount of J &T's initial bid /construction contract amount. These amounts are indicated as follows: Amount due LH Lacy for Temporary Project Stabilization $ 4,735.32 Amount due SureTec for Work Completed by J &T $ 42,691.88 Construction Contract with RPI $ 793,401.30 $ 840,828.50 SureTec has proposed a SRA that addresses staff's concerns and therefore will allow the Project to be completed as designed without costing the City any additional monies. Staff received the SRA and forwarded it to the City Attorney for his review. The City Attorney has reviewed the SRA and found it adequate for the current situation. There is sufficient construction funding for this project in the FY 2010/2011 Capital Projects Budget. Recommendation 1. Terminate the Construction Contract of Project RFB No. 10 -034 to J & T Excavating in the amount of $840,828.50 for the construction of the Shady Grove Road Street Improvements Project (ST0802) from Davis Boulevard to Clay - Hibbins Road; 2. Approve the Settlement & Release Agreement with SureTec Insurance Company; and 3. Award Project RFB No. 10 -034 to Reliable Paving, Inc. in the amount of $793,401.30 for the construction of the Base Bid (maintaining two -way traffic) for the Shady Grove Road Street Improvements Project (ST0802) from Davis Boulevard to Clay - Hibbins Road. Enclosures: • Exhibit A: Shady Grove Road — Project Location Map • Exhibit B: Shady Grove Road — Settlement & Release Agreement Exhibit A Shady Grove Road -- Project Location Map Shady Grove Rd Street Improvements (Davis Blvd to Clay- Hibbins Rd) n .jt a � 3 S%f.YVL�d' X j {�✓ N " C:1 p V F SHADY'GROVE RD r NO RTH N ORTH TARRANT PKWY RICHLAND ___... _....._N RTH TARRAN7 PKWY ......... h::FRTH- L1tKRA1.` r1ti 1�'Y- r HILLS Shady.Grcve Rd Project Locator Map 'Stree't Improvements (Davis-Blvd to :Clay Hibbins Rd) Or r r y .,.. 'r, ,n5 t om. T� 1h;a'aflw4ce al sc.w':r -. _..._� a ,,. ,'..• . x z x 3 Exhibit B Shady Grove Road -- Settlement & Release Agreement Settlement & Release Agreement This Settlement & Release Agreement (this "Agreement ") is made and entered into this 10th day of January, 2011, by and between The City of North Richland Hills ( "Obligee "), and SureTec Insurance Company ( "Surety "). WITNESSETH WHEREAS, Obligee entered into a written contract (the "Contract ") dated July 26, 2010, with J &T Excavating, LLC ( "Contractor ") for work described as the Shady Grove Road Paving Improvements Project (the "Project'), and WHEREAS, Surety and Contractor, on or about July 30, 2010, provided a Performance Bond No. 4380665 (the "Performance Bond ") in favor of Obligee to secure the performance obligations of Contractor under the Contract, and WHEREAS, Surety and Contractor, on or about July 30, 2010, provided a statutory Payment Bond No. 4380665 in favor of Owner to secure the payment obligations of Contractor to suppliers and subcontractors; and WHEREAS, Contractor was unable to perform Contract shortly after starting performance of Contract, and WHEREAS, Obligee terminated the Contract on October 19, 2010, and WHEREAS, the Surety received a proposal for the completion of the Contract from one of the original bidders on the project, Reliable Paving, for $793,401.30, and WHEREAS, no funds have been released from the original contract amount of $840,828.50, and WHEREAS, Owner has spent $4,735.32 on miscellaneous items associated with and as a result of the Contract termination, reducing the contract balance to $836,093.18, and WHEREAS, Surety and Contractor have agreed to tender to Obligee Reliable Paving's proposal for completion of the Contract; NOW, THEREFORE, for and in consideration of the mutual promises set forth herein, the payments herein recited, and other good and valuable consideration, the Obligee and Surety have agreed and do hereby agree as follows: 1. Owner agrees to pay to the order of the Surety, and Surety agrees to accept, the sum of $42,691.88 to be disbursed through the course of settling active payment bond claims on the Contract, in full and final settlement of all of Surety's obligations to Obligee, whether known or unknown, under the Performance Bond. Such amount shall be paid within thirty days of the execution of this Agreement, and the return to Surety at Surety's offices in Austin, Texas of the original Contract Performance Bond marked "CANCELLED" on the face thereof. 2. The Obligee hereby releases and forever discharges Surety from any and all claims, demands, causes of action, damages, and /or expenses, known or unknown, arising out of or in any way related to the performance of the Contract and /or the Performance Bond. 3. The Obligee, without recourse or warranty, hereby assigns, sells, and transfers and subrogates Surety to, to the extent of the aforesaid payment, Obligee's rights, claims, causes of action, and demands against Contractor. 4. Surety agrees to investigate and discharge its liability under the Payment Bond issued by it as to all lawful demands upon it by subcontractors and suppliers to Contractor for labor and material used, consumed and expended in connection with Contractor's Contract prior to its abandonment of the work on the Project. In no event shall Surety be liable for any labor, materials, or equipment furnished to or for Contractor after the date of Contractor's default. 5. The parties hereby confirm that this Agreement constitutes the entire terms of their agreement and further acknowledge that they have read and understand this Agreement constitutes a full, complete and final settlement and release. 6. This Agreement shall be governed by the laws of the State of Texas. CITY OF NORTH RICHLAND HILLS SureTec Insurance Company By: By: Mark Hindman Michael Cronin City Manager Suretec Claims Representative Date: Date: Attest: Attest: Patricia Hutson, City Secretary Notary Public in and for the State of Texas Type or Print Notary's Name My Commission Expires: CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Agenda No. C.0 Subject: PUBLIC HEARINGS No items for this category. CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Agenda No. D.0 Subject: PLANNING AND DEVELOPMENT Items to follow do not require a public hearing. No items for this category. CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Agenda No. E.0 Subject: PUBLIC WORKS CITY OF NORTH RICHLAND HILLS Department: Public Works Council Meeting Date: 1 -24 -2011 Presented by: Gregory Van Nieuwenhuize Agenda No. E.1 Subject: PW 2011 -002 Revise the FY 2010/2011 Capital Projects Budget and Award RFB No. 11 -003 to RKM Utility Services, Inc. in the Amount of $598,815.90 for the Construction of the Mackey Drive (Briley Drive to Glenview Drive) Street Reconstruction Project (ST0905) Summary The City Council is being asked to award a construction contract for the CIP Project identified as "Mackey Drive (Briley Drive to Glenview Drive)" in the Capital Projects Budget. General Description On December 7, 2010, a bid opening was conducted for the Mackey Drive (Briley Drive to Glenview Drive) Project (the "project "). The project was originally identified in the 2003 Bond Program. The FY 2010/2011 Capital Projects Budget identifies a $540,000.00 construction budget for the project. This project will consist of reconstructing approximately 1,800 lineal feet of asphalt pavement with concrete pavement to comply with the current city standards. In addition, sidewalks will be constructed, and the existing storm drainage system will be expanded. This section of Mackey Drive was originally constructed in 1950 as an asphalt street without sidewalks. The project was designed in accordance with the city's standard pavement cross - section — this includes a concrete pavement section and the inclusion of sidewalks on both the east and west sides of Mackey Drive. Because these sidewalks would be placed in a retrofit scenario, the design engineer has prepared a sidewalk alignment which meanders around the existing trees. The project was bid such that the sidewalk construction along the west side of Mackey Drive (the side closest to Alliene Mullendore Elementary School) was a part of the base bid and the construction of sidewalks on the east side of Mackey Drive was bid as an additive alternate. Notice of the city's intent to bid was advertised in local newspapers, as required by state statute, and posted on the city's website. The project received nine bids, which were opened on December 7. The bids are provided on the following page: ADDITIVE CONTRACTOR NAME BASE BID ALTERNATE TOTAL BID RKM Utility Services, Inc. $ 583,677.90 $ 15,138.00 $ 598,815.90 Reliable Paving $ 586,387.20 $ 13,245.00 $ 599,632.20 Stabile & Winn $ 586,256.70 $ 21,004.30 $ 607,261.00 JLB Contracting $ 597,424.35 $ 21,098.75 $ 618,523.10 McClendon Construction $ 622,566.50 $ 25,766.55 $ 648,333.05 BRJ Paving $ 659,066.05 $ 14,727.55 $ 673,793.60 MACVAL Associates $ 712,573.00 $ 18,796.40 $ 731,369.40 Ed A. Wilson $ 813,868.95 $ 24,599.00 $ 838,467.95 Bradley Douglas $ 847,972.25 $ 14,569.80 $ 862,542.05 The design engineer recommends awarding the contract to the lowest bidder: RKM Utility Services, Inc. ( "RKM "), who is also currently constructing the Briarwood Estates Drainage Project. Currently, RKM is meeting the city's specifications and working ahead of schedule on that project. There are two issues with the project that warrant further discussion. One of these issues is the extent to which sidewalks are constructed along Mackey Drive as part of the project and the other issue is the project's construction funding. Sidewalks As previously indicated, sidewalks do not presently exist along this section of Mackey Drive. Staff has received an email requesting sidewalks on both sides of Mackey Drive (Exhibit C) and a petition (Exhibit D) from some of the Mackey Drive residents who request that sidewalks be omitted from the project. While a petition was not submitted by sidewalk proponents, staff has received phone calls from a few of the property owners in favor of sidewalks. Alliene Mullendore Elementary School is two blocks west of Mackey Drive. In the past, staff has heard from parents of the school age children that attend this school regarding the need for sidewalks along both sides of Mackey Drive. Some of these parents have expressed a concern that there have been "too many close calls" between motorists and children who are using the street because of a lack of sidewalks. The project's costs were estimated in the 2001/2002 time period. The cost estimates included the construction of sidewalks on both sides of this section of Mackey Drive. Staff recommends construction of the sidewalks along both sides of Mackey Drive. Construction Funding The construction funding ($540,000) for the project identified in the FY 2010/2011 Capital Projects Budget is lower than the bid amount ($598,815.90). This shortfall is due to a culmination of items. Specifically, these items are: • The cost to replace the existing clay sanitary sewer pipe under the pavement portion of the right -of -way • The costs due Oncor for the relocation of street lighting units • The addition of off -site sidewalks along Manor Drive to connect Alliene Mullendore Elementary School with the Mackey Drive sidewalks • The bid item for concrete paving being slightly higher than initially budgeted This project's construction shortfall is approximately $70,000. This amount can be funded with a budget revision using funds from 2003 Bond Program's Unspecified Street Savings Account. There is sufficient funding in this account for a transfer (via a budget revision) into the Mackey Drive Construction Account. Upon conducting this transaction, there is sufficient construction funding for this project. Recommendation: 1. Approve the Budget Revision to the FY 2010/2011 Capital Projects Budget; and 2. Award RFB No. 11 -003 to RKM Utility Services, Inc. in the Amount of $598,815.90 for the Construction of the Mackey Drive (Briley Drive to Glenview Drive) Street Reconstruction Project (ST0905) which includes sidewalks along both sides of this section of Mackey Drive. Enclosures: • Exhibit A: Mackey Drive — Budget Revision • Exhibit B: Mackey Drive — Project Location Map • Exhibit C: Mackey Drive — Email Requesting Sidewalks • Exhibit D: Mackey Drive — Petition Opposing Sidewalks Exhibit A Mackey Drive — Budget Revision Street & Sidewalk Capital Projects Mackey Drive Briley Drive to Glenview Drive ST0905 PROJECT DESCRIPTION & JUSTIFICATION Mackey Drive $rlley Drive to Glenview Drive) is identifed on the Master Thorough Plan as a Residential. 2 Lane, Undivided (R.2U) street. T his prqect will begin at Briley Drive and end at Glenview Drive currently the existing st reet consists of asphalt pavement. This project will consist of reconst-icting approximately 1,800 feet of street with concrete pavement and providing drainage improvements veces&ary to comply with current city standards. (Enter Project Justification] Tris section of Macke;) Street was originally constructed in 1950 as an asphalt street. The average Ile of an asphalt street is 20 years. This street is approximately 58 years old and was overlaid in 1970 The current street condilbon rating is 44. This ratings is considered to poor, consisting of significant potholes, complete surface deterioration, and misaligned curt) and pavements surface. PROJECT STATUS Origirai 2010,111 0 201911 Stan Date Revision Eric Date Revision Engine-eringifiCiesign 4812GO9 01120I0 03120I0 ID2010 Constructlor 0312oll 1212011 REVISION EXPLANATION The construct tion funding ($E40,GOO) for the project identified in the FY 2010,2011 Capital Projects Budget is lower than the bid amount ($598,615.90). The Project's shortfall is awroximaWy 570,000. This additional funding is necessary for the construction of off -Site sidewalks (to connect an elementary school with the sidewalks on Mackey Drive), for LhR replacement of existing clay sanitary sewer under tine pavement portion of the tight -of -way, to cover Oncors costs for the relocation of street lighting units tftatwili interfere with the radii at the Pro,,ects Intersections and because the cost of the concrete pavement section exceeded the initial project estimate for this item- The $70,000 amount car, be funded from the 2OG3 Bond Prograrr's Unspecified Street Savings Account. FINANCIAL DATA Adopted Piroo(*K„ Revised Total Fundinu Source BudgetThruLecY Budget Thru Remaining Project 20 10111 ROV*A 2011011 Balance Cost QO Prior Funding Allocations: $1520.000 S620,000 SG $620,000 2003 Bond Program's Unspecified Street Savings 0 70,000 0 70,00E Account Total $620.000 - �70,OW $690.000 so $690,000 Pf olect Expenditures Engineering ConstrucVon -""'TO'OW 610.000 G 610,0013 ITotal $620,000 $690,0001 so 1 IMPACT ON OPERATING BUDGET T here is no anticipated impact on the Opc-r3tng Budget, Annual Operating Impact 2010)2011 1 201 2012;2013 201X2014 2014•2015 Total Pru-,",ected I $o I V) so $0 $0 $0 Exhibit B Mackey Drive - Project Location Map Macke Dr Z J ( W I _. _ .. v.... . " (Briley Dr to Glenview Dr) r tIVIERkDR , titsY1`b' v FA- aXfP:�q � �,3N < BRILEY OR Q w a d J i _..,., m : wrviFk2f 4E .m. . a Z u. " S I s , GLENVIEW DR <' NORTH K RICHLAND x HILLS Mackey,- (Briley Dr to s h Glenview Dr) Project Locator Map �l n I � + ©I a4 > S LL ...... ........ _ , ^r (.z Exhibit C Mackey Drive -- Email Requesting Sidewalks From: Daly Marley [mailto: _] Sent: Saturday, January 08, 20118:00 PM To: Mayor Subject: Dear Mayor and Council Members, Thank you for your hard work and dedicated service on the city council. I appreciate what you do for our great city. My name is Daly Marley, and I've lived at 4416 Mackey Drive for over 40 years. I'm writing to voice my support for your original plan for sidewalks on both sides of the street during the upcoming Mackey Drive reconstruction project. In a few weeks, my son Jesse, his wife Jenni & his five children (ages 6 & under) will be permanently living with me here on Mackey. The children will all attend Mullendore Elementary just as my son and I both did. From my personal experience growing up on Mackey Drive, I can assure you that the sidewalks will be well utilized and greatly appreciated by many. My son, his wife and I were excited when we heard of the reconstruction plan using concrete for the street with sidewalks on both sides. The safety elements of the sidewalks are obvious, and we believe they will also provide an update & enhancement to the neighborhood. Thanks for your consideration. Sincerely, Daly Marley, Jesse Marley, Jenni Marley and the five little Marleys Exhibit D Mackey Drive •- Petition . - • ��4se�tPd d ur ,'n9 el l/vrne of 11-f- ec rYttq. Opposition to sidewalks on Mackey Dr. Glenview East side of Mackey West side of Mackey 4100 Mackey Dr. - oppose 4101 Mackey Dr. -oppose 4108 Mackey Dr. - oppose 4109 Mackey Dr. -oppose 4116 Mackey Dr. - sidewalk 4117 Mackey Dr. - sidewalk 4124 Mackey Dr. - oppose 4130 Mackey Dr. - oppose 4132 Morgan Circle - sidewalk 4136 Mackey Dr. - oppose (Corner) 4142 Mackey Dr, - oppose 4141 Morgan Circle - vacant 4146 Mackey Dr. - oppose (Corner) 4154 Mackey Dr. - oppose 4200 Mackey Dr. - oppose 4147 Mackey Dr. - sidewalk 4206 Mackey Dr. - oppose 4153 Mackey Dr. - sidewalk 4212 Mackey Dr. - oppose Manor Dr. Manor Dr. 4201 Mackey Dr. - oppose 4301 Mackey Dr. - oppose 4307 Mackey Dr. - oppose 4300 Mackey Dr. - oppose 4315 Mackey Dr. - oppose 4312 Mackey Dr. - oppose 4321 Mackey Dr. - oppose 4322 Mackey Dr. - oppose 4327 Mackey Dr. - oppose 4328 Mackey Dr. - sidewalk 4333 Mackey Dr. - sidewalk 4334 Mackey Dr. - oppose 4401 Mackey Dr. - no contact 4400 Mackey Dr. - vacant 4409 Mackey Dr. - sidewalk 4408 Mackey Dr. - oppose 4415 Mackey Dr. - sidewalk 4416 Mackey Dr. - sidewalk 4425 Mackey Dr. - oppose 4424 Mackey Dr. - sidewalk Briley Dr. Page 1 of 3 Petition Opposing Sidewalks on Mackey Drive in North Richland Hills when the street is reconstructed The undersigned are opposed to sidewalks: Name r Address ul Y/V V /Y Al G��P �- L� 00 }01 G cK L� r G� ql d y G, "1(lC kk t 1 T_ Page 2 of 3 Name Address cl 6�a L� j c l 16 - -3 .2 a 2, — f!Y;3/ 5 ec / /S t r. 9 IYQGKey Dg- .1Z � - C %- L f 3 /d � ?7izC�F•��� m in e m Ly - (Jr: Page 3 of 3 nie Address j fll Db U�a� 4 32I ►M Rc 211 P7 A C 4 3 a CITY OF NORTH RICHLAND HILLS Department: Public Works Council Meeting Date: 1 -24 -2011 Presented by: Jimmy Cates /Mike Curtis Agenda No. E.2 Subject: PW 2011 -003 Revise the FY 2010/2011 Capital Projects Budget and approve the funding and replacement of a portion of the 16 -inch water supply line running along Big Fossil Creek (UT1107) Summary This project will consist of replacing approximately 100 linear feet of a 16" North Richland Hills water supply line located adjacent to the Diamond Oaks Country Club and crossing Big Fossil Creek in Haltom City. The replacement of this portion of the water line is considered an emergency situation. The estimated cost for the project is $225,000. General Description The section of line for replacement is part of a major water supply line that runs from the city owned Stanley Keller Pump Station located in Haltom City to the City of North Richland Hills. The line is several thousand feet long and is a major supply line of water from the City of Fort Worth to North Richland Hills. The line serves North Richland Hills residents located south of Northeast Loop 820. Big Fossil Creek is an earthen tributary and over time the channel bottom and slopes have eroded to a point where the water supply line is now exposed. Any future incidents of heavy rain or flooding could create a situation where debris, such as large rocks and tree branches, could damage the line. The debris could possibly hit the water supply line hard enough to break the line. A breakage of this line would result in the loss of water deliveries from one of city's three potable water entry points from Fort Worth and a loss of water pressure in the city's south side. Since the erosion is actually in Haltom City, staff has discussed the exposed water line with Haltom City to determine if they had any plans to address the erosion problem in their section of the channel. At this time, Haltom City has no plans to correct any erosion problems on this section of Big Fossil Creek. With this being the case, the City of North Richland Hills must take the necessary steps to protect the water supply line. Because of this being an emergency situation, staff has hired an engineer to evaluate options and to provide a recommendation. The engineer's recommendation is to replace approximately 100 feet of exposed pipe that shows some signs of damage and then replace the earthen material that has eroded away with cement stabilized earthen material. To further protect the bank, grouted rock rubble will be placed along the bank over the cement stabilized earthen material. The total cost for this project is $225,000, with $25,000 being dedicated to engineering costs and $200,000 to construction costs. Staff has verified that sufficient funding is available within the Utility Construction Projects Reserves account. Recommendation To revise the FY 2010/2011 Capital Projects Budget to fund $225,000 for this project and approve the replacement of the 16 -inch water supply line running along Big Fossil Creek. km Water Line RIVIERP� (16" Fart Worth R - stlaw �etlrtla$ :sae tlaasrstt Su Line Sup ply ) Water Line - - -- 16 Fort Worth Supply Line � " pp Y ) Diamond Oaks �4L Country Club WATERLINE N t w L l T N ° T OR r RICHLAND Al o oJlcb HILLS co A Project Locator Map DRS- : 1� c i 14JAN91 5tanoardMUSt�Ii� ti_ 4YL- fontiL4:xtli_;upply_Linc -.iraA Intonmt— Sary SDepagm rn -GS Scale: 1 " = 1000' . r A; I y� E Diamond Oaks Country Club } r f 4r.11M►` . '' a .r' x IF F rr . Water Line to be Replaced i (Approximately 100') g � w r i Line to be replaced s j Abandoned Water Line 40 E Utility Capital Projects Department Project Tito Project Number Public Works Water Line (16" Fort Worth Supply Line) UT1107 Project Description This project will constist of replacing approximately 100 linear feet of the 16 inch Fort Worth water supply line. The City of North Richland Hills has three water supply lines coming from the City of Fort Worth. This water line was installed approximately 25 years ago.The water line begins at the booster pump station located at 4145 Stanley - Keller Road in Haltom City and continues along sections of Big Fossil Creek until it reaches the North Richland Hills water system. The total length of this water line is several thousand feet. The portion of the line that needs to be replaced is at a location where is crosses Big Fossil Creek. Project Justification The 16 inch water line was installed approximately 25 years ago. There has been severe erosion along Big Fossil Creek where the water line crosses and several feet of the water line is exposed. If another large rain event occurs prior to the line being replaced and the banks of Big Fossil Creek being reinforced, this section of the water line could be washed away. This would cause the water supply from Fort Worth to be shut down for this supply line until repairs can be made. The result would be negative impacts to the water pressure in this area of the city. Pro Schedule Beginning Date Ending Date Budget Hlsto Professional Services Engineering /Design 1/15/2011 2/1/2011 Land /ROW Acquisition Construction 2/1/2011 5/1/2011 Other Total Project 1/15/2011 5/1/2011 Total Project Costs Sources of Funds . To Gate X010 »11 2011 -12 2012 to; =Total Amount'' Proposed Estimated Gom jetlon General Obligation Bonds Certificate of Obligation Federal /State Grants Reserves 225,000 225,000 Sales Tax - Other - Total Funding $ $ 225,000 $ $ $ 225,000 Total Pro j ect Costs Professional Services - Engineering /Design 25,000 25,000 Land /ROW Acquisition Construction 200,000 200,000 Other - Total Costs $ - $ 225,000 $ $ $ 225,000 Impact on Operating Budget Estimated Annual 2010 -11 2011.12 201213 1 201344 1 1 5-Year Total O eratin; tm ct Utility Capital Projects Water Line (16" Fort Worth Supply Line) UT1107 PROJECT DESCRIPTION & JUSTIFICATION This project will constist of replacing approximately 100 linear feet of the 16 inch Fort Worth water supply line. The City of North Richland Hills has three water supply lines coming from the City of Fort Worth. This water line was installed approximately 25 years ago.The water line begins at the booster pump station located at 4145 Stanley - Keller Road in Haltom City and continues along sections of Big Fossil Creek until it reaches the North Richland Hills water system. The total length of this water line is several thousand feet. The portion of the line that needs to be replaced is at a location where is crosses Big Fossil Creek. The 16 inch water line was installed approximately 25 years ago. There has been severe erosion along Big Fossil Creek where the water line crosses and several feet of the water line is exposed. If another large rain event occurs prior to the line being replaced and the banks of Big Fossil Creek being reinforced, this section of the water line could be washed away. This would cause the water supply from Fort Worth to be shut down for this supply line until repairs can be made. The result would be negative impacts to the water pressure in this area of the city. PROJECT STATUS Original 2010/11 Original 2010/11 Start Date Revision End Date Revision Engineering /Design 1/15/2011 2/1/2011 Construction 2/1/2011 5/11/2011 REVISION EXPLANATION If another large rain event occurs prior to the line being replaced and the banks of Big Fossil Creek being reinforced, this section of the water line could be washed away. This would cause the water supply from Fort Worth to be shut down for this supply line until repairs can be made. The result would be negative impacts to the water pressure in this area of the city. FINANCIAL DATA Adopted Proposed Revised Total Funding Source Budget Thru Project Budget Thru Remaining Project 2010111 Revision 2010/11 Balance Cost Funding Allocations: $0 $225,000 $225,000 $0 $225,000 Utility Construction Projects Reserves 0 0 Total $0 $225 : 000 1 $225,000 $0 $225,000 Project Expenditures Engineering $0 $25,000 $25,000 $0 $25,000 Construction 0 200,400' 200,000 0 200,000 Total $0 $22 000' $225,000 $0 $225,000 IMPACT ON OPERATING BUDGET AnnualO erating Impact 2010/2011 1 2011/2012 2012/2013 201312014 2014/2015 Total Pro ected $0 1 $0 $0 $0 $0 $0 CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Agenda No. F.0 Subject: GENERAL ITEMS CITY OF NORTH RICHLAND HILLS Department: Neighborhood Services Council Meeting Date: 1 -24 -2011 Presented by: Jo Ann Stout Agenda No. F.1 Subject: GN 2011 -005 Approval of continued participation in Tarrant County's HOME Investment Partnership Program - Resolution No. 2011 -002 Summary: In 2008, City Council approved Resolution No. 2008 -031 which appropriated $75,000 in matching funds on all HOME expenditures. The resolution that was passed allowed for automatic renewal of the grant for three years, running through 2009, 2010 and 2011. However, a change in the HOME Investment Partnership Grant now requires municipalities to provide 30% matching funds, instead of the 25% requirement of prior years, and we must now specify in a resolution the amount of matching funds that will be appropriated to the program. The maximum amount of HOME Funds a municipality can request is $300,000 and the minimum is $100,000. The approval of this resolution will allow the City of North Richland Hills to request $100,000 in HOME Funds for 2011 and will appropriate 30% in matching funds or $30,000. General Description: Entitlement counties must re- qualify every three years for funding. Tarrant County is eligible to receive entitlement grant funds by having a combined population of 200,000 or more from unincorporated areas and participating municipalities. HOME Funds provide formula grants to States and localities that communities use, often in partnership with local nonprofit groups, to fund first -time homebuyer assistance and homeowner rehabilitation assistance to lower income families. The 2011 HOME Fund application and resolution must be executed and the application submitted to Tarrant County Community Development by February 14, 2011. If approved, the City of North Richland Hills will re -apply for $100,000 from Tarrant County's HOME Investment Partnership Program, with the City to appropriate 30% of the grant match or $30,000. The matching funds will be paid out of the existing Neighborhood Initiative Program funding. Recommendation Approval of Resolution 2011 -002. TARRANT COUNTY COMMUNITY DEVELOPMENT HOME INVESTMENT PARTNERSHIP PY 1 AFFORDABLE HOUSING APPLICATION PACKET Available HOME funding: . HO ME INVESTMENT PARTNERSHIP GRANT Program Year 2011 IMPORTANT NOTES Return Application to: Tarrant County Community Development Division Attention: Patricia Ward (HOME application) 1509B S. University Drive, Suite 276 Fort Worth, Texas 76107 HOME pplic do duo February 14, 2011 Overview and Eligible Activities The Department of Housing and Urban Development (HUD) appropriates funds to entitlement communities through the HOME Investment Partnership Block Grant (HOME) program. These funds are targeted to benefit low to moderate income persons. Funds are to be used for the development of safe and descent housing by providing: • Homebuyer assistance; and • Homeowner rehabilitation. Match Requirement The Department of Housing and Urban Development (HUD) requires matching funds on all HOME expenditures. Each applicant is required to provide 30% match for activities undertaken in that city. Match can be generated in many ways and must be approved by County staff prior to a commitment of funds. A letter by the city stating commitment amount is required with the submittal of this application. For more detailed information, please contact Patricia Ward or Brian Cramer at Tarrant County Community Development Division (817) 850 -7940. Additional information can also be found on the Internet at www.hud.gov. co HOME Investment Partnership Grant PY 2011 H Project Information Form 1. Applicant City Name: City of North Richland Hills 2. Type of Project(s) desired — more than one can be selected: X Homebuyer assistance (down payment and closing cost) X Homeowner rehabilitation 3. Project Address (Street name with block number if applicable e.g., 5000 Block of Main St., Name of City] ) North Richland Hills, Texas Zip Code: 76180 / 76182 / 76118 4. Estimated total number of persons serviced by the activity if known Unknown 5. Amount of HOME funds requested —Maximum $300,000: $100,000 6. Required Match Amount (30% of #5 requested amounts above): $30,000 7. Applicant Contact Person(s): Name - Jo Ann Stout Phone — 817 - 427 -6650 Email - Lstout @nrhtx.com 8. Date of Submittal: January 26, 2011 9. Attachments: (No attachments required for Rehabilitation Projects) ❑ Project Maps ❑ Attach map of area to be served (Highlight specific site if applicable) ❑ FEMA Flood Map (FIRM) identifying area of activity /project, if applicable ❑ MAPSCO coordinates and copy of map indicating project site, if applicable ❑ City Demographics ❑ City Financial Resources �'� °UNT;:•., HOME Investment Partnership Grant PY 2011 Fully describe proposed project including problem or deficiency to be improved; and complete scope of housing activity to be undertaken: The City of North Richland Hills has several older neighborhoods that are showing the first stages of decline. The quality of housing stock is deteriorating and rental rates are increasing. The City wants to stabilize these neighborhoods. Not only do they hold historical value as being the first homesteads of the City but they also offer a different housing mix than found in other parts of the City. To stabilize these neighborhoods the City wants to help those residents improve their homes and promote ownership in the area. The City of North Richland Hills has recently expanded its popular Neighborhood Initiative Program (NIP) to include larger exterior and interior repairs. The City is increasing its contribution to projects and is partnering with community groups to provide funding and labor to larger housing rehabilitation projects. Participants in NIP must meet HUD income guidelines for the HOME program. The Neighborhhod Initiative Program completed its first Home Rehabilitation Blitz in 2010, where several churches and volunteers helped low income families with major and minor repairs. We had over 500 volunteers along with local church involvement and completed 19 projects. We have requested a meeting with the Tarrant County Home Rehabilitation staff to begin working hand and hand in bringing our volunteers forward to assist in completing these projects. We are very hopeful that 2011 will bring us several HOME rehabilitation success stories! Stable neighborhoods have residents who are committed to their community. That commitment is promoted by home ownership. The City works to promote home ownership through its participation in both federal and county programs. The City hopes to continue that support through the HOME program. RESOLUTION NO. 2011 -002 A RESOLUTION AGREEING TO MEET MATCH CONTRIBUTION REQUIREMENTS FOR THE EXPENDITURES UNDER THE TARRANT COUNTY HOME INVESTMENT PROGRAM FOR PROGRAM YEAR 2011. WHEREAS, the HOME Program was created by the National Affordable Housing Act of 1990 (NAHA) and is intended to provide decent affordable housing to lower income households, expand the capacity of nonprofit housing providers , strengthen the ability of state and local government to provide housing and leverage private- sector participation; and, WHEREAS, Tarrant County is a Participating Jurisdiction under the HOME investment Partnerships Program in accordance with Sec. 92.105; and, WHEREAS, The City of North Richland Hills is a member of the Tarrant County Urban County Community Development/HOME Consortium and is eligible to participate in the HOME Program; and WHEREAS, The City of North Richland Hills has requested $100,000.00 in HOME funding to be expended on HOME eligible activities within the City's jurisdiction and has agreed to meet all applicable matching contribution requirements in accordance with Secs. 92.218, 92.219 and 92.220; NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS: SECTION 1. The City of North Richland Hills hereby agrees to commit $30,000.00 in match contribution to affordable housing for all activities undertaken through the HOME program for the year 2011. PASSED AND APPROVED on the 24th day of January, 2011. CITY OF NORTH RICHLAND HILLS By: Oscar Trevino, Mayor ATTEST: Patricia Hutson, City Secretary APPROVED AS TO FORM AND LEGALITY: George A. Staples, City Attorney CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Patricia Hutson Agenda No. F.2 Subject: GN 2011 -006 Calling May 14, 2011 City Council Election and Authorizing a Joint Election Agreement with Other Tarrant County Political Subdivisions and Contract for Election Services with Tarrant County - Resolution No. 2011 -003 Summary: The City Council is required by the Texas Election Code to order the city's General Election of Officials. The approval of Resolution No. 2011 -003 will order the city's Election for May 14, 2011. The Resolution also authorizes the city to hold its election jointly with other Tarrant County entities and to contract with Tarrant County to administer the joint election. General Description: In accordance with State law the city's General Election of Officials will be held on May 14, 2011. Resolution No. 2011 -003 orders the election to elect persons to the offices of Council Places 1, 3, 5 and 7 for two year terms of office. Candidate filing will begin on February 12 and will continue through March 14, 2011. The proposed resolution establishes election day voting locations, provides for the appointment of election officials, provides for early voting and election day procedures and authorizes a joint election agreement and contract for election services with Tarrant County. As in previous years, the city's election will be held jointly with other Tarrant County political entities holding an election with the city entering into a contract with Tarrant County to administer the joint election. The proposed resolution authorizes the Mayor to execute the contract with the county. Tarrant County will be holding a meeting on January 20 with the participating entities to discuss the joint election including contracting procedures, early voting and Election Day polling places, tabulation of votes, election night returns, runoffs, etc. It is anticipated that the election contract will be similar to previous contracts with the county and will include the following provisions: • Tarrant County Elections Administrator will serve as the administrator of the Joint Election with each participating entity remaining responsible for decisions and actions as required by law. • Early voting will be conducted jointly with all participating entities beginning on May 2, 2011 and ending on May 10, 2011 at the locations and times established by the county. North Richland Hills voters may vote early at the North Richland Hills Recreation Center or at any of the other joint early voting locations. • Early voting by personal appearance will be conducted exclusively on the county's eSlate Electronic Voting System. On Election Day, voters will have a choice between the eSlate electronic voting system or a paper ballot that is scanned using Tarrant County's EScan voting system. • Ballots that contain ballot content for more than one joint participant because of overlapping territory will be arranged in the following order: Independent School District, City, Tarrant Regional Water District, Tarrant County College District and other political subdivisions. • On Election Day, North Richland Hills voters will vote at their designated polling location — City Hall, Dan Echols Senior Center or Bursey Road Senior Center. • The Tarrant County Elections Administrator will release unofficial cumulative totals and precinct returns of the election as precincts report to the central and remote tabulating stations and the returns are tabulated. The unofficial cumulative totals and precinct returns will be released to the joint participants, candidates, press and general public by distribution of hard copies at the central counting station (2700 Premier Street, Fort Worth) and by posting to the county web site. On Election night, the county will not allow the release of the results printed on the tapes produced by the voting equipment to any participating entity at any of the remote collection sites or by phone from the individual polling locations. Each participating entity will receive their election results from either the county's central counting station or county website. • Election expenses will be allocated among the participating entities according to a formula based on the average cost per election day polling place (unit cost) as determined by adding together the overall expenses and dividing the expenses equally among the total number of polling places. Costs for polling locations will be pro -rated equally among the participants using the polling location. • The Elections Administrator will be the general custodian of the voted ballots and all records of the Joint Election. State law requires that the Election Order include the location of each early voting location. Because the county will not be able to finalize the list of all early voting locations until late March or early April, the City Council will need to approve an amended resolution at a later date that lists the locations of each early voting location throughout the county. In the event a run -off election should be needed, Resolution No. 2011 -003 sets June 18 as the run -off date and provides for early voting days and times. Tarrant County has requested that all entities hold their run -off elections on June 18 so the run -off date and early voting days and times will be uniform throughout the county. The terms of the contract with Tarrant County may be extended to the run -off election. Recommendation Approve Resolution No. 2011 -003 RESOLUTION NO. 2011 -003 WHEREAS, the regular election for the City of North Richland Hills, as set forth by the Texas Election Code, is required to be held on May 14, 2011, at which time the voters will elect City Council Places 1, 3, 5 and 7; and WHEREAS, in accordance with Section 271.002 of the Texas Election Code, the City election will be conducted jointly with other political subdivisions in Tarrant County; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS: Section 1: THAT an election is hereby called to elect City Council Places 1, 3, 5 and 7 to serve until May of 2013, or until their successors are duly elected and qualified. Such election shall take place on the 14th day of May, 2011, from 7:00 a.m. until 7:00 p.m. Section 2: Qualified persons may file as candidates by filing with the City Secretary between the hours of 8:00 a.m. and 5:00 p.m., Monday through Friday, beginning February 12, 2011, and ending March 14, 2011. Each application for a place on the ballot shall be accompanied by either a filing fee of One Hundred Fifty ($150.00) Dollars payable to the City, or, in lieu of the filing fee, a Petition seeking the candidate's name to be placed on the ballot. Such Petition must be signed by at least one hundred fifty (150) qualified voters of the City. Forms for the Petition shall be furnished to potential candidates by the City Secretary. Section 3: The location of polling places for this joint election are designated pursuant to Section 271.003 of the Texas Election Code, and the Council finds that the following locations can most adequately and conveniently serve the voters in this election, and that these locations will facilitate the orderly conduct of the election: PRECINCT VOTING LOCATION Precinct One (includes County voting precincts City Hall, 7301 Northeast Loop 820 3214, 3324, 3333, 3041, 3364, 3366 & 3416) Precinct Two (includes County voting precincts Dan Echols Senior Adult Center 3140, 3215, 3289, 3325, 3326, 3399, 3424, 6801 Glenview Drive 3631, 3633, 3634, 4620 & 4629) Precinct Three (includes County voting precincts Bursey Road Senior Adult Center 3063, 3049, 3177, 3209, 3365, 3367, 3387, 7301 Bursey Road 3507, 3527, 3543, 3580 & 3584) Section 4: Early voting will be held jointly with other political subdivisions in Tarrant County beginning on May 2, 2011 and will continue through May 10, 2011 at the locations established by Tarrant County on the dates and times as follows or as may be amended by Tarrant County: May 2 -6 8:00 a.m. to 5:00 p.m. May 7 7:00 a.m. to 7:00 p.m. May 8 11:00 a.m. to 4:00 p.m. May 9 -10 7:00 a.m. to 7:00 p.m. Section 5: All resident qualified electors of the City shall be permitted to vote at said election and, on the day of the election, such electors shall vote at the polling place designated for the Election Precinct in which they reside. Section 6: The election shall be conducted pursuant to the election laws of the State of Texas. Section 7: Should a runoff election be required following the canvass of the May 14, 2011 election, the Council hereby orders that a runoff election be held on Saturday, June 18, 2011. The polling place on Election Day for the runoff election shall be at the same polling places as those of the original election, and the hours of voting shall be between 7:00 a.m. and 7:00 p.m. Early voting by personal appearance shall be held at the same locations set out in Section 3 hereof on each day that is not a Saturday, Sunday, or an official State Holiday, beginning on Monday, June 6, 2011, and continuing through Tuesday, June 14, 2011 between the hours of 8:00 A.M. and 5:00 P.M. except June 11 and June 13 -14 when voting will be between the hours of 7:00 A.M. and 7:00 P.M. and June 12 when voting will be between the hours of 11:00 A.M. and 4:00 P.M. Section 8: Steve Raborn is hereby appointed to serve as the Early Voting Clerk and the Election Administrator's permanent county employees are appointed as deputy early voting clerks. The Tarrant County Election Administrator may appoint other deputy early voting clerks as necessary. The address of the Early Voting Clerk is 2700 Premier Street, P.O. Box 961011, Fort Worth 76161 -0011. Section 9: The Mayor is authorized to execute a joint election agreement and contract for election services with Tarrant County whereby Tarrant County will provide all material, supplies and personnel to hold the election contemplated hereby, including any runoff election which may be required, and will be responsible for coordinating, supervising and administering the joint election This resolution shall be construed with any action of the governing bodies of other Tarrant County political subdivisions providing for the conduct of a joint election as herein contemplated. AND IT IS SO RESOLVED. PASSED AND APPROVED on the 24th day of January, 2011. CITY OF NORTH RICHLAND HILLS By: Oscar Trevino, Mayor ATTEST: Patricia Hutson, City Secretary APPROVED AS TO FORM AND LEGALITY: George A. Staples, City Attorney CITY OF NORTH RICHLAND HILLS Department: Finance Council Meeting Date: 1 -24 -2011 Presented by: Larry Koonce Agenda No. F.3 Subject: GN 2011 -007 Approve Investment Strategy and Investment Policy - Resolution No. 2011 -004 Summary 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 and Investment Policy. General Description: The city contracted with Public Financial Management, LLC ( "PFM ") to provide Investment Advisory Services on October 1, 2009. PFM is providing on -going and annual review of the city's Investment Policy and Investment Strategy, ensuring the policy follows the guidelines of the Texas Government Code 2256, Public Funds Investment Act ( "PFIA "), as well as adhering to local policy. The annual review, as mandated by the PFIA, will occur each year before or after the city's new fiscal year begins. As well, any changes, edits or additions will always be guided by PFIA guidelines in the following order, Safety, Liquidity and Yield. Upon staff review and advice from PFM there are no recommended changes to the City of North Richland Hills Investment Policy or Strategy at this time. Advisors and staff will monitor the upcoming legislative session for changes that would impact the city. The current Policy and Strategy are attached for Council review and consideration. Recommendation Approve Resolution No. 2011 -004. NRH RESOLUTION NO. 2011 -004 BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS: 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 Policy January 24, 2011, including all revisions and changes required under state law or recommended by City staff. This Investment Policy replaces the investment policy dated December 14, 2009. The City Council has also reviewed and approved the City of North Richland Hills' Investment Strategy document, as prepared by the City's Investment Committee. PASSED AND APPROVED this the 24th day of January, 2011. CITY OF NORTH RICHLAND HILLS By: Oscar Trevino, Mayor ATTEST: Patricia Hutson, City Secretary APPROVED AS TO FORM AND LEGALITY: George A. Staples, City Attorney APPROVED AS TO CONTENT: Larry Koonce, Director of Finance CITY OF NORTH RICHLAND HILLS INVESTMENT STRATEGY JANUARY 24, 2011 "M" 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, and the adopted Investment Policy and Investment Strategy. In accordance with the Public Funds Investment Act (Texas Government Code 10, Chapter 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 Optimization of interest earnings 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. The City's Funds shall be analyzed and invested according to the following major fund types: I. Operating Funds II. Capital Improvement Funds Ill. Debt Service Funds IV. General Fund Balance Reserve V. Revenue Bond Reserves INVESTMENT STRATEGY In order to minimize risk of loss on a sale because of fluctuating market prices, investment maturities will not exceed the anticipated cash flow requirements of the funds. In general, the City will structure the investment portfolio so that investments mature to meet cash requirements for ongoing operations. From time to time, securities may be purchased at a 2 premium or traded for other securities to improve yield, maturity or credit risk. For these transactions, a loss may be incurred for accounting purposes to achieve optimal investment return, provided any of the following occurs with respect to the replacement security: A. The yield has been increased, or B. The maturity has been reduced or lengthened, or C. The quality of the investment has been improved. Investment guidelines by fund type are as follows: I. Operating Funds The City of North Richland Hills Operating Funds are as follows: • General Fund • Special Revenue Funds • Special Investigation Fund • Drainage Utility Fund o Crime Control and Prevention District Fund o Promotional Fund o Economic Development Fund o Donations Fund o Parks and Recreation Facilities Development Fund o Grant Fund • Gas Development Fund • Traffic Safety Fund • Enterprise Funds • Utility Fund • Aquatic Park Fund • Golf Course Fund • Internal Service Funds o Facilities /Construction Management Fund o Fleet Services Fund o Self- Insurance Fund o Information Services Fund • Capital Projects Funds o General CIP Fund o Permanent Street Maintenance Fund o Sidewalk Maintenance Fund • Component Units o Tax Increment Financing District 1 (TIF #1) 3 o Tax Increment Financing District 2 (TIF #2) 1) Suitability - Any investment eligible in the Investment Policy is suitable for the Operating Funds. 2) Safety of Principal - All investments shall be in 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 be less than 730 days and restricting the maximum allowable maturity to five years, the price volatility of the overall portfolio will be minimized. 3) Marketability - Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Active electronically traded markets will define an efficient secondary market. 4) 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. 5) 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 not to exceed the weighted average maturity allowed by the Investment Policy, and through diversification by market sector. 6) Yield - Attaining a competitive market yield for comparable securities and portfolio restrictions is the desired objective. The City's portfolio shall be designed with the purpose of obtaining an optimized rate of return, through budgetary and economic cycles, commensurate with the investment risk, policy constraints, and cash flow requirements. 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 buildings as well as the acquisition of capital assets. 1) Suitability - Any investment eligible in the Investment Policy is suitable for Capital Improvement Funds. 4 2) Safety of Principal - All investments shall be in 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. 3) Marketability - Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Active electronically traded markets will define an efficient secondary market. 4) 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. 5) Diversification - Market conditions and arbitrage regulations influence and limit the selection and the laddering of maturities of fixed rate investments for bond proceeds and other construction and capital improvement funds. When investing these types of funds, every effort will be made to at least meet the maximum allowed yield, and to select and ladder maturities to meet the cash flow needs of the funds. Maturities should not exceed the normal life of the underlying projects supported by the fund. 6) 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 an optimized rate of return, through budgetary and economic cycles, commensurate with the investment risk, policy constraints and cash flow requirements. 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 from various other funds. The Sales Tax Revenue Debt Service Fund is funded solely from transfers from the Park and Recreation Facilities Development Fund. 1) Suitability - Any investment listed as eligible in the Investment Policy is suitable for the Debt Service Funds. 5 2) Safety of Principal - All investments shall be in high quality securities with no perceived default risk. The maximum allowable investment in commercial paper shall be limited to 10% 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. 3) Marketability - Securities with active and efficient secondary markets are not necessary as the event of an unanticipated cash requirement is not probable. 4) 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. 5) Diversification - Market conditions influence the attractiveness of fully extending maturities to the next unfunded payment date. At no time shall the debt service schedule be exceeded in an attempt to bolster yield. 6) Yield - Attaining a competitive market yield for comparable securities and portfolio restrictions is the desired objective. The City's portfolio shall be designed with the purpose of obtaining an optimized rate of return, through budgetary and economic cycles, commensurate with the investment risk, policy constraints and cash flow requirements. 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. 1) Suitability - Any investment eligible in the Investment Policy is suitable for General Fund Balance Reserves. 2) 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 in 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 6 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. 3) Marketability - Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Active electronically traded markets will define an efficient secondary market. 4) 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. 5) 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 through diversification by market sector. 6) Yield - Attaining a competitive market yield for comparable securities and portfolio restrictions is the desired objective. The City's portfolio shall be designed with the purpose of obtaining an optimized rate of return, through budgetary and economic cycles, commensurate with the investment risk, policy constraints and cash flow requirements. V. Revenue Bond Reserves Debt service reserves are required by bond covenants for a particular revenue bond issue. 1) Suitability - Any investment eligible in the Investment Policy is suitable for Debt Service Fund Reserves. 2) 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 in 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. 3) Marketability - Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Active electronically traded markets will define an efficient secondary market. By utilizing the yield advantages of fixed income securities, maximum yield should be attained while meeting cash 7 requirements. 4) 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. 5) Diversification - Market cycle risk will be reduced by diversifying the appropriate maturity structure throughout three years and through diversification by market sector. 6) 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 an optimized rate of return, through budgetary and economic cycles, commensurate with the investment risk, policy constraints and cash flow requirements. 8 "MH CITY OF NORTH RICHLAND HILLS INVESTMENT POLICY JANUARY 24, 2011 TABLE OF CONTENTS Page Preface 1 I. Purpose and Objectives 3 II. Scope 5 III. Responsibility and Control 6 IV. Investment Committee 8 V. Suitable and Authorized Investments 9 VI. Investment Parameters 12 VII. Investment Procedures 13 VIII. Custodial Credit Risk Management 15 IX. Arbitrage 17 X. Depositories 17 XI. Investment Policy Adoption 18 APPENDICES Page A. City of North Richland Hills Ordinance Num ber 2079 21 B. Investment Bid Form 23 C. Security Information Worksheet 24 D. Broker /Dealer Rotation Procedures 25 E. Trading History by Broker 27 F. Broker /Dealer Questionnaire 29 G. Approved Securities Dealers 37 H. Primary Dealers 38 I. TBMA Master Repurchase Agreement 39 J. Public Funds Investment Act of 1997 51 K. Public Fund Collateral Act of 1993 85 L. Inter -local Agreements 99 M. Glossary 109 "M" 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 viable and material revenue to all operating and capital funds. Investment income 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. 1 "M" I. PURPOSE AND OBJECTIVES A. Purpose 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 Texas law as defined in Government Code 10, Chapter 2256, known as the Public Funds Investment Act (the Act), and local law. - safety 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 investment income for the City's portfolio The City is required under the Public Funds Investment Act, Section 5, to adopt a formal written Investment Policy regarding the investment of its funds and funds under its control. 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. The City of North Richland Hills' Ordinance Number 2079 (See Appendix A) states that all investment activities and procedures shall be governed by a written Investment Policy. The Investment Policy addresses the methods, procedures, and practices that must be exercised to ensure the effective and judicious management of the City's funds. B. Objectives The City shall manage and invest its cash with four primary objectives, listed in the order of priority: safety, liquidity, public trust, and yield, expressed as optimization of investment income. The safety of the principal invested always remains the primary objective. All investments shall be designed and managed in a manner responsive to the public trust and consistent with state and local law. An aggressive cash management program and investment policy will be pursued by the Investment Officer to take advantage of investment interest as viable and material revenue to all operating and capital funds. Cash management is defined as the process of managing monies in order to ensure maximum cash availability and maximum investment income on short -term investments of idle cash. The City's portfolio shall be designed and managed in a manner responsive to the public trust. Income from investments will be used in a manner that will best serve the interests of the City of North Richland Hills. 1. Safety Safety of invested principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective will be to mitigate credit and interest rate risk. a. Credit Risk and Concentration of Credit Risk 3 The City will minimize credit risk, the risk of loss due to the failure of the issuer or backer of the investment, and concentration of credit risk, the risk of loss attributed to the magnitude of investment in a single issuer, by: (1) Limiting investments to the safest types of investments, (2) Pre - qualifying the financial institutions and broker /dealers with which the City will do business, and (3) Diversifying the investment portfolio to minimize potential losses on individual issuers. b. Interest Rate Risk The City will manage the risk that the investment income and the market value of investments in the portfolio will fall due to changes in the general interest rates by: (1) Structuring the investment portfolio so that investments mature to meet cash requirements for ongoing operations. From time to time, securities may be purchased at a premium or traded for other securities to improve yield, maturity or credit risk. For these transactions, a loss may be incurred for accounting purposes to achieve optimal investment return, provided any of the following occurs with respect to the replacement security: A. The yield has been increased, or B. The maturity has been reduced or lengthened, or C. The quality of the investment has been improved. (2) Investing operating funds primarily in certificates of deposit, shorter - term securities, money market mutual funds, or local government investment pools functioning as money market mutual funds, (3) Diversifying maturities and staggering purchase dates to minimize the impact of market movements over time, and (4) Limiting the maximum weighted average maturity of the investment portfolio to 730 days. 2. Liquidity The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by structuring the portfolio so that investments mature concurrent with cash needs to meet anticipated demands. Because all possible cash demands cannot be anticipated, a portion of the portfolio will be invested in shares of money market mutual funds or local government investment pools that offer same -day liquidity. 4 3. Public Trust All participants in the City's investment process shall seek to act responsibly as custodians of the public trust. Investment officers shall avoid any transaction that might impair public trust in the City's ability to govern effectively. 4. Yield (Optimization of Investment Income) The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. 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. However, this policy does not apply to the assets administered for the benefit of the City by outside agencies. These funds are accounted for in the City's Comprehensive Annual Financial Report and include: Operating Funds • General Fund • 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 • Grant Fund • Gas Development Fund • Traffic Safety Fund • Utility Fund • Aquatic Park Fund • Golf Course Fund • Facilities /Construction Management Fund • Fleet Services Fund • Self- Insurance Fund • Information Services Fund • General CIP Fund • Permanent Street Maintenance Fund • Sidewalk Maintenance Fund • Tax Increment Financing District 1 (TIF #1) • Tax Increment Financing District 2 (TIF #2) Capital Improvement Funds 5 Debt Service Funds General Fund Balance Reserve Revenue Bond Reserves The City will consolidate cash balances from all funds with the exception of bond proceeds to optimize investment income. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles. III. RESPONSIBILITY AND CONTROL A. Delegation of Authority This Investment Policy and the outlining of investment practices and authorities is compiled in accordance with the Public Funds Investment Act, which requires the adoption of rules governing investment policies and strategies and the designation of an Investment Officer, as well as City Ordinance Number 2079 which designates investment officers and provides prudent investment rules. Collateral requirements are created in accordance with the Public Funds Collateral Act (Texas Government Code 10, Chapter 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. B. Quality and Capability of Investment Management The City shall provide periodic training in investments for the designated Investment Officers and other investment personnel through courses and seminars offered by professional organizations, associations, and other independent sources approved by the Investment Committee in order to ensure the quality and capability of investment management in compliance with the Public Funds Investment Act. C. Training Requirements In accordance with the Public Funds Investment Act, all authorized Investment Officers shall attend an investment training session no less often than once every two years commencing on September 1, 1997 and shall receive not less than ten hours of instruction relating to investment responsibilities. A newly appointed Investment Officer must attend a training session of at least ten hours of instruction within twelve months 6 of taking over or assuming duties. The two year period is determined based on the anniversary of the last ten hours of instruction received. The investment training session shall be provided by an independent source approved by the Investment Committee. For purposes of this policy, an "independent source" from which investment training shall be obtained shall include a professional organization, an institution of higher education, or any other sponsor other than a business organization that the City may engage in an investment transaction. D. 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 control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. Accordingly, the 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: • Minimize risk 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 E. 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. 7 F. Indemnification 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 the effects of such 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. G. 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 personal 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. IV. INVESTMENT COMMITTEE An Investment Committee shall be established 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 Assistant Director of Finance 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. 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. 8 The Investment Committee shall perform the following functions: 1. Approve the process of selecting authorized dealers, brokers, investment advisors, and safekeeping agents /custodians used by the City. 2. 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. 3. 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. 4. Advise the Investment Officer as to recommendations regarding investment strategy and portfolio performance. 5. Approve the purchase of any securities with maturities over three (3) years. 6. 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. 7. 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. SUITABLE AND AUTHORIZED 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 intention of being 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 City funds governed by this policy may be invested in the instruments described below, all of which are authorized by Chapter 2256 of Government Code 10 (Public Funds Investment Act), with further restrictions imposed by local ordinances. Investments of City funds in any instrument or security not authorized for investment under the Act and City ordinance is strictly prohibited. The City will not be required to liquidate an investment that becomes unauthorized, for reasons other than loss of rating, subsequent to its purchase. All prudent measures will be taken to liquidate an investment that is downgraded to less than the required minimum rating. 9 A. Authorized Investments 1. Obligations of the United States, its agencies, and instrumentalities 2. Collateralized Mortgage Obligations ( "CMOs ") 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 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 a depository institution that has its main office or a branch office in the State of Texas. The certificate of deposit must be guaranteed or insured by the Federal Deposit Insurance Corporation or its successor, and secured by obligations in a manner and amount as provided by law 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 outflows. Repurchase agreements must be: secured by obligations of the United States or its agencies and instrumentalities; pledged to the City or held in the City's name; deposited at the same time the investment is made; and have a defined termination date. Flexible repurchase agreements (Flex - Repos) 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). Flex - Repos may be utilized on new bond issues as deemed necessary and advantageous to the City. 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 average stated maturity of 90 days or less, maintain a stable net asset value of $1 per share, and provide the City with a prospectus and other information required by the Securities Exchange Act of 1934 or the Investment Company Act of 1940. b. No -load Mutual Funds are acceptable investments provided they are regulated by the Securities and Exchange Commission, have an average weighted maturity of less than two years, are invested exclusively in obligations as expressed in Section 2256, subchapter A, are continuously rated not less than AAA or it's equivalent by at least one nationally recognized credit rating agency, and conform to all requirements under the 10 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 circular or other similar disclosure instrument that contains specific and detailed information required by the Act. Additionally, the pool shall 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 (Appendix G.) Authorized pools must maintain credit ratings no lower than AAA or AAAm or an equivalent rating 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 Inter -local Agreement to be executed with the State or Inter -local 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 I for approved inter -local agreements.) 9. Corporate Obligations — The authorized staff may invest in corporate obligations issued by financial institutions that participate in the FDIC's Temporary Liquidity Guarantee Program and are fully insured by the FDIC and are guaranteed by the full faith and credit of the United States Government. 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 (Collateralized Mortgage Obligations (CMO) - derived Interest Only Strips), 2. Obligations whose payment represent 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, 11 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, and 7. Guaranteed Investment Contracts. VI. INVESTMENT PARAMETERS A. Diversification 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 optimizing interest opportunities. To assure diversification of financial institutions, business involving two party transactions (i.e. repurchase agreements) with any one 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 Depositories for Municipal Funds (Chapter 105, Local Government Code), the Public Funds Investment Act (Chapter 10, Government Code), and City Ordinance Number 2079 authorize depositories and define allowable investment programs for municipal governments. It is the policy of the City to purchase only securities authorized by both the Public Funds Investment Act and Section V., subsection 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: 12 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 (indirectly through investment pools) 10% 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 3 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 for efficient and effective placement, a singular repurchase agreement can be utilized for the investment of bond proceeds, which exceeds the 50% limitation. VII. 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 City 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 Broker /Dealers 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. The Investment Committee shall at least annually, review, revise, and adopt a list of qualified brokers that are authorized to engage in investment transactions with the City. 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 "). 13 Those firms that request to become qualified bidders for securities transactions, including financial institutions, banks, money market mutual funds, and local government investment pools, will be required to provide a completed broker /dealer questionnaire that provides information regarding creditworthiness, experience, and reputation. Additional requirements include a certification stating that the firm has received, read, understood, and agreed to comply with the City's investment policy and implemented reasonable procedures and controls to preclude investment transactions that are not authorized by the City's investment policy. A blank broker /dealer questionnaire with certification 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 approve all broker /dealers and shall also have the ability to limit the number of authorized securities dealers /banks doing business 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. It is the policy of the City to purchase securities from those institutions on investment manager's approved list. The City authorizes the investment manager to engage in security transactions with broker /dealers on a carefully monitored broker /dealer list. The Investment Committee shall at least annually review the list of broker /dealers with investment manager. B. Investment Transactions It is the policy of the City of North Richland Hills to require competitive bidding for all individual security purchases and sales except for transactions with money market mutual funds and local government investment pools. A minimum of three bids must be obtained to ensure a competitive price for the transaction. All investment transactions must be approved by the Assistant Director of Finance, or the Director of Finance, or, in their absence, an authorized Investment Officer. Appendix B contains the Investment Bid Form, Security Information Worksheet, Broker /Dealer Rotation Procedures, and Trading History by Broker worksheets 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 delivery versus payment ( "DVP ") basis, with the exception of investment pools and mutual funds. 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 and City Ordinance Number 2079 require the preparation of quarterly management reports and an annual report of all investment transactions of the City be presented to the City Council. The fourth quarter report for the fiscal year will be considered as the annual report. 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: 14 1. A summary narrative of investment activity and portfolio performance over the Period 2. Size and composition of portfolio at the beginning and end of the reporting period 3. List all investments according to the fund for which they were purchased 4. Beginning and ending book and market value for all securities held 5. Beginning and ending book and market value for the total portfolio 6. All additions and changes to the market value during the period 7. State the compliance of the portfolio to the investment policy and the Public Funds Investment Act 8. Yield 9. Diversification of investments 10. Total sales, maturities, and purchases 11. Accrued interest 12. 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 the City Council. 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. Vlll. CUSTODIAL CREDIT RISK MANAGEMENT A. Safekeeping and Custodial Agreements 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 with 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. 15 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. B. Collateral Policy Consistent with the requirements of Texas law as defined in Government Code 10, Chapter 2257, known as the Public Funds Collateral Act, it is the policy of the City to require full collateral iz ation 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: 1. FDIC insurance coverage 2. 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 3. Obligations of the United States, its Agencies, and Instrumentalities 4. 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 "A" 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 non - depository 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 coverage. Collateral is valued at current market plus interest accrued through the date of the valuation. Collateral shall be marked to market daily to determine if adequate collateral ization 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% 102% 1 year to 5 years 102% 105% Over 5 years 103% 110% 16 Collateral levels should be maintained during an investment transaction. The amount placed in the bank to cover the cost of a security 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 which 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 Chapter 2257, Public Funds Collateral Act, substitution and release of collateral must be approved by the governing body. City of North Richland Hills Ordinance Number 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. ARBITRAGE The Tax Reform Act of 1986 (Title 26 U.S.C. Section 148) 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 17 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. X. DEPOSITORIES The Texas City Depository Act, Local Government Code Chapter 105, 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 to serve as its primary depository(ies) to maximize investment capabilities and minimize banking cost. The depository designation does not limit investment activity to one financial institution. The consideration the City of North Richland Hills will use to execute a banking services contract will include: • Ability of Bank to perform and provide the required and requested services • Reputation of bidder and quality of services provided • Cost of banking services • Interest paid on interest bearing accounts and deposits • Earnings credit calculation on account balances • Completeness of proposal and agreement to points outlined in the request for proposals • Convenience of locations • Previous service relationship with the City • Financial strength and stability of institution 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 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. A performance review will be conducted at least once every six months by the Investment Committee to evaluate the working relationship between the City and the depository bank. 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 ninety days or lose the depository contract. 18 XI. INVESTMENT POLICY ADOPTION The investment policy shall be adopted by ordinance or resolution of the City Council. It is the City's intent to comply with state laws and regulations. The policy shall be reviewed annually by the Investment Committee and the City Council. City Ordinance Number 2079 states that policy revisions that require enactment due to updates of applicable state or federal laws may be authorized by the City Manager; however, other significant revisions must be approved by the City Council. 19 APPENDIX 20 "M" Appendix A ORDINANCE NO. 79 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 Richland 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, 13E IT ORDAINED BY THE CITY COUNCIL OF THE CITY 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 shall be deposited into the depository bank at the end of each business day or as early 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. 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 authorized by the City Manager. Any other significant alterations to the Investment Policy must be approved by the City Council. Section 2. Investment Q7 iectives 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 providing the highest rate of return, 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. 21 Appendix A Section 3. Designated icial$ 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. M ement Reports 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. RCpeeal of Previous Ordinances Ordinance No. 2076 is hereby repealed. Section 6. Severability 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: r Tommy Bro wn ayor ATTEST: Secretary AP77; FORM AND LEGALITY: Att mey 22 Appendix B N ITTH KICH LAND H I L L S City of Choice e INVESTMENT BID FORM Trade Date/ Time: Investment Account: Desired Security: Desired Par Value: Desired Maturity: Broker Security Maturity Coupon YTM YTC Call Date 1 2 3 4 5 Purchase: Sell: Settlement Date Comments Accepted K:I ACCTIinvestments \Formsllnvestment Bid Form.xls 23 Appendix C N(#)K H KICH L A D H I L L 5 City of Choice SECURITY INVESTMENT WORKSHEET NAME OF SECURITY: CUSIP #: COUPON / DISC RATE: YIELD TO MATURITY /CALL: MATU R ITY /CAL L DAT E: PAR VALUE: TRADE DATE: SETTLEMENT DATE: PRINCIPAL: reonlD ACCRUED INTEREST: $0.00 PURCHASE PRICE: $0.00 SAFEKEEPING ACCT: 259091 NAME OF BROKER: TIME OF TRADE: ENTERED BY: FAX TO: BANK OF AMERICA SAFEKEEPING PHONE 1- 800 - 657 -9529 FAX # 980- 233 -7446 APPROVED BY: FUND: CONSOLIDATED CASH J.E. /Group # K:I ACCTIInvestments\FormslSecurity Information Worksheet.xls 24 Appendix D BrokerlDealer Rotation Procedures 1. Open the broker rotation file located at K:\ACCT\InvestmentslForms\broker rotation YYYY.xis (YYYY= numerical year), 2. Three brokers are selected on the basis of successful bids for the previous investment purchase and on rotation in alphabetical order within the group of approved brokers. For each investment purchase, bids are requested from each of these three brokers: a. The successful bidder will remain in the bidding group for the next investment purchase. b. The two unsuccessful bidders will be rotated out of the bidding group for the next purchase. c. The next two brokers in alphabetical order will be rotated into the bidding group for the next investment purchase. 3. The three brokers selected for the bidding group are noted on the Investment Bid Form. Once bids are received from all three brokers and the successful bidder has been approved, the investment is purchased. 4. Using the completed and approved Investment Bid Form from the previous investment purchase as a source document, record the Yield to Maturity ("YTM") and/or Yield to Call ("YTC") percentage for each bid on the Trading History by Broker [Trading History-YTM] worksheet of this file. Recording an entry in the row for a broker will automatically increase the Number of Times Selected value for that broker. However, in the case of a successful bid by a broker, the Number of Times Awarded Bid value will need to be manually updated. 5. For the successful bidder, format the cell containing the YTMfYTC percentage in bold text with a light green background. Copy the name of the Successful broker to the light green highlighted box at the top left of the page, This indicates that they will be Included in the next bidding group. 6. For the unsuccessful bidders, copy each bidders name to one of the two boxes below the green highlighted box with the successful bidder's name. This indicates that these two brokers will be rotated out of the bidding group for the next investment purchase. 7. In the spreadsheet column for the next investment purchase: a. Format the cells for the unsuccessful bidders with a tan color background. This shows they are excluded from the bidding group for the next investment purchase. 25 Appendix Q b. For the successful bidder and the two brokers who follow the last unsuccessful broker in alphabetical order, leave the background of the cells clear. These will be the brokers included in the bidding group for the next investment purchase. c. For all remaining brokers who will not be included in the bidding group for the next investment purchase, format the cells with a tan color background. 8. Add footnotes to the Trading History by Broker as necessary. 9. Open the document K:\ACCTl nvestments\Forms\Bidform.xis. On the [newform) worksheet in this file, note the names and contact information of the selected bidding group of brokers in the appropriate space and save the document file. The contact information is found on the [Contact list] worksheet in this file. This file will be further updated with information concerning .purchase of the new investment at a later time. 26 City of North Richland Hills Trading History by Broker Appendix E FY 08 -09 First Southwest Remains in bidding group for next investment purchase Great Pacific Remains in bidding group for next investment purchase. Morgan - Keegan Rotates into bidding group for next investment purchase Number of Times r Firm 10/30 11130 12/31 I Selected I Awarded Bid 1 Duncan- Williams 0 0 2 First Empire 0 0 3 First Southwest 0 0 4 Great Pacific 0 0 5 Morgan - Keegan 0 0 6 Multi -Bank Securities 0 0 7 Seattle Northwest 0 0 8 Simmons First 0 0 9 Southwest Securities 0 0 10 Vining Sparks 0 0 11 Wells Fargo 0 0 12 BOA - CD 0 0 Investment purchased based on highest yield for the desired maturity Highest yield offered per broker Out of bidding group for this rotation 27 "M" Appendix F 1 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 29 Appendix F RH City of North Richland Hills Broker /Dealer Questionnaire 9. Which instruments are offered regularly by your local desk? [ ] T -bills [ ] BAs (domestic) [ ] Treasury notes/bonds [ ] Commercial paper [ ] GNMAs [ ] Bank CDs [ ] FHLMCs [ ] 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 30 Appendix F RH 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 [ ] NYSE [ ] Comptroller of currency [ ] 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 31 Appendix F RH 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. 32 Appendix F 1*41%j RH City of North Richland Hills Broker /Dealer Questionnaire 23. Provide the 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 supporttlimit 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 33 Appendix F RH 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. 34 Appendix F RH 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: 35 "M" Appendix G City of North Richland Hills Approved Securities Dealers As of January 27, 2009 Securities Dealers Duncan - Williams, Inc. First Empire, Inc. First Southwest Company Great Pacific Securities Morgan, Keegan, & Company, Inc. Multi -Bank Securities, Inc. Seattle - Northwest Securities Corporation Simmons First Investment Group Southwest Securities Vining- Sparks IBG, LP Wells Fargo Brokerage Services, LLC Investment Pools TexPool LOGIC MBIA CLASS TexSTAR 37 Appendix H City of North Richland Hills Primary Securities Dealers As of January 27, 2009 No primary dealers are currently approved. 38 Appendix I Master Repurchase Agreement St, ptP.nhe/lQ9G Version lJa(*d*no[ Between: aod�-_- 1. AncJicuhD|ty Flom ^' dnictmhl tlic par moYoni - il.r|rlto transaction's ill nh10 One party �����) agrees to transfer m the other ('Buve") securities or othe assets ("Secuddeo~\against theoraooler o[bmclssbyBuycr, with moi111LOtaneoumagreemumby Buyer To Tmo/fPrTO selleraucb3ecudtiesata date opnaJooroo demand, against the transfer nf funds hy Seller EacL such transaction shall. be reforred uohe/eiouma~7\nnyncr\on and, un|reorb*wise agreed k governed by UotsA ioc-udiog any auppleuneotadteromorcoodjtioom contained tn&noesI hereto and \nF#y other annexeakderi8fiedliarbnoribemeiz'am applicable hereunder. 3. T}zOo}doom bA ~&rtufIoxuivpooy with znapectMoany porLy,(U the corucucocunlioottyaoc�partvaxdel) tor of ally cmoepr[roc."rediz'8 'under az)ybu��rupcy, insolvency, zuorguoixaUoo,h4a|daVou.zupa|/`rt' um, dissolution, de"Iogucocyuzsinzilazkaiv,qz such party occk\u8tacuppointoicntnrdccdon nfnrpceh/er,connervaior,trnm|ae,rowrmhmnorobnilaroU]ciu|k^rwouhpuriyoranyn''bstnn p o f it p �y, ol the co-wening of any me.cting of creditors for purposes of M uzYyuueb case or proceeding oryoo�tnBsudluoa"pm1n\ooeoiure|ecLiuzl. 8U ftl*mucozzuy/cc' onentmy any such Case orp*oceed|ngnguin��x/�hDor��nrm mentuc election, or the filing against u party ofunapp]icut|un for a -orotecUre decree under the Drov|uimjsnrn Act mflQY().`vtk.t (&) :IS connamxdnonrnnc Ucr.e\ycontostzclhysudzpzv- in the entry ofuuordcr forzellef, such coappoint z/us/(ucelec&uo Uuroffeuz,o/(C) imnotdsodmyadx1cbiul5 days, Azj tie om&u0by such party nfogeuerd ossiguozcoz for The bmooflto[ creditors, or(b) the admission tcwritio0byoucbpar�ofoucu party's inability to p mjchyu�y'9dr�bta»xtheyhecomedue� ( "Additional Purchased Securl.rics", Sccuritic-s provided by Se`lcr to Puye purs"allt to Paragriph 4(a) hereof, 39 Appendix I (cc) "RtlyeCs Wrgln ATi.QdrIA ", With respect tc any` Trails tction as of any date, , te amount obtained by a i ?.cation of rh Bi.iyer's Mrs.;ir Percentage to the Reiyarchase Price .For such Transaction as of such date; (d) "Buyer's Margin Pc:rccn .a.ge', vritli respect tc, aTJ `1i�ar►';ar�t;a:i as U ally ciatr, a percentage (which row y be equal to the Scllcr's .N rgin Fercenta.ge agreec'l to by Buyer anct Seller or, Irl fhH at ►sc =rrc..e of ally such agreement, tie percentage bbta'aed by di ng the Market Value of the: P 1JYc:haSod `;ec;c.►rlttes on the l .se Date by the Purchase Price mn tiic Purchase Laic for such Transaction; (c,) "� confirmation' the ntedztitig specified in Paragraph 3(b) hereof; (t) " loco re", %vith respect to any Security at any tiute, any lirirrihal thereof and all interest, divi.deridls or other distributions thereon, (;l "Pylargir_ Defic •- ", the meaning spc Med in N-ragrapl: 4(a`,� hereof; (h) ")'Margin Excess ", the nieani r e spPdf"ieri in Para naph 4(b) hereof: "'Nlargin Notice Deadline ", the time agreed to by the parties in the relevai7' Confirmation, Annex T hereto or otherwise as tine deadline for giving notice requiring same day satisfac Linn of iiargin maintenance obligations as l r svidedl. iii Parairapli 4 aei'eo (or, i i the absence c any such agrceiicnt, the deadiln.; for smli piir1w) se, s esrabi t shed) .ri acccrf1m wit"i rrta.rkei prarricei; "M rket Value ", with respect to =y Sectcrities as of any dare, the price for s lei t sec nritI' s on such clate obtained fron-i a generally recogrized source agreed to by the parties or the most rec.'er closing bicl q uotation frurn su h a source, plus accrued Income to the extent not lrcluded therein (Other than any Inccmwi c:r(:dlitoCl o- transferred. to, ur '.Pitllecl io tlr. oblikatforrs Of, Seller pursuant to Paragraph 5 hcrcof)� as of stock daitd (tanf► contrary t s n ; t Imm'] iee .for such Securities): (k) 'Price Ditferenttai ", with respoct to any Transaction as cif any clatP, tine agl;regate acnciutit obtw ied by daily application of the Pricing Rate for such Transaction to the Purchase Price for such Transaction cm a 360 d� {y f er year basis for tine actual number of days diur- ing th , period commencing; on (and inclucl #,i 1:he Iit.acltase Date for such TiElnsaction r: c] end:inG or ()jut exc•ludlti�i the date of ctetermina':lon (reduced b_y any amount of such Price Differential previously paid by Seller to Buyer kviiii respect to such TransL cOon); (lj ";iron ng Rate' tl:e per ammin percentage _'ate for deterrninw.lon of the Pricc Differential; (m) "?Anne Pate ", the p.7mc rate of U.S. coi`ninercial )ranks as publisr,ed iii `I'1•e Wall Street aurtial (or, if .pore than one such Tate is punt Its., d, the average of such rates), (n) "Narilase Date", tho dat' nr which Purchased Sec utlt.it�s w'e' to l e t► .nsie rec` l y 5�ller to Rr ► y � r; ,eptembo 1996 Nbster Repwchase Agmt:r ❑ent 40 Appendix 1 (o) "Purchase Price ", (1) on tbp P inchme bate, the prise at which Purchased Securities are transferred by Seller to Buyer, and (it) hereafter, except where Duycr and Seller agree oth envise, suc17 - price Increased by the amountof any cash transferred by P yer to Seller P - suant to Paragraph 4(li) l iereor and decreased': by the amount of any cash transferred by Seller to 111irSURT11, to Paragraph 4(a) hereof or applied to reduce Seller's obligations under clause (it) of Paragraph 5 hereof, ( n) "Warr 1rad= Securities", the Securities transferred`. by Seller to Buyer in a Transaction here , under, and any Securities substituted therefor in accordance ce with Paragraph 9 hereof.1 he term "Ptrrelzaseci Securities' \k"t]'i r•eSlrert to any'1).ansac tic n at anytime also shall include Arlditional't=rc :haled Securities delivered pursuant to Paragraph 4 (al hereof and shall exclude Securities returned pursuant to Paragraph 4(b) hereof; (co "Repurchase Date ", tfte date on which Seller is to rcpurchasc the Purchased Securitics from Buyer, including any date deiertrrinerl by air rlaication of Llre provistoni of Parragraph 3 (c) or 11 hereof; (r, " Repurchase Price", the price at which Purchased Securities are to be transferred] frow Buyer to Sealer upon te:rrnin.,t.iOrr of a Trat_sartion, which wiLl be detenT rind In each case (inciuciii g Transactions terminable upon demand) as the sung of the Purchaso Price and the Price Differential as of the date of sirch del Prrnii?a!10 1. (s) "Seller's Margin A_niount', with resp .ct to any Tr•ansac ton as of any date, the amorist obtained by application of [he SePEr T "S Margin Pew..emage to the Repurchase Price for , —i'I'ransaction as of such date; (,) "Seller's Margin Pcrccntar ° , With respect to any T ansaction as Or rely date, a peed er�ta e (%vbicli pray be e(pial to the Buyer's Margin Percentage) agreed to by Buyer and Seller or, in the absence of any such agreement, the percentage obtaured by ci viding the Market Value of the Purchased Securities ern the PitrrltasN Date by the Purchase Price on the t itrrhai;e Date Cur such Transaction, 3. Initiation: Confirination; Teruiitiatiun (a) An agreement to enter into a Transaction may he made orally err In vvi rep; tit the irri Lia- tion of either Duvcr or Seller. On tba NrchaSe DFte for Lhe. Transaction, Lire Purchased Sir :ririitles Shall be transferred to Buyer or its agent against th-te transfer of the Purchase Price to an account of Seller, (b) Upon agreeing to enter into a Transaction hereunder; Buyer or Seller (or bath), as shall be agreed, shall promptly deliver to the other party a writrerr coxrrirrrr ri.;cirn of each Transaction (a "C'.onfir•rrrat.itin "). Tlie. Conflrmatfon shall describe the.Puzchased Securities (including CUSIP number, if any'), identify Byer acrd Seller and set forth (�.) the Purchase Date, (1i) the Ptirclvase. P (i'i) Lhe R Date, unless the 'Iransawm. rr is to be terminable on demand, (It) the Pricing Rate or Repurchase Price applicable _o the Transaction, and (v) any additional terms or conditions of the Transaction not inconsistent will tl•ris Afire - erne -ni Yttr. Co_r irritation, to e her with this Ag-cement, shhal' constltlite coriclips ve evic:ience o.f Lire - .errrts geed betvveer_ Buyer and S; li rvvitlr respect to the Transaction to wtieh the Confirmation relates, unless with Scprcrnber 1996 MasL:r Rcpurchr sc Agreement 41 Appendix I resi",t to [lie Cerlfirrnation specific objection Is madc promptly after receipt thereof. In the event of any conflict between the terrns of such Confirmation and this Agreement, this rlgrPement shall prevail. (c) Ln the case or" Transartion3 terminable upon demand, such demand shall be made by Bt^,yer or Setter, no later than such time as is customary in accordance, with rnarket prac- Cce, by telepbnrre or othervrise or. cr prior to the business day on wl such tern n will be effective. On the date specified in such dernand, or on tl - ie da e fixed for terrnina- ticn in thr case of Z ansactlons having a fixed term, termination of the Transaction vAll be effected by transfer to Seller or l -s agent of the Purcbasrzs Seel-11 ilies and any Income in respec thereof received try Buyer (and not previously credited or trans -orrod to, or applied to th4 obligations of, Se ler pur to Panagr.- 1ph . 1;ereof) against the transfer of the Repurchwie Price to an account of Buyer. 4. Margfut Maititeiiaitce (a) If at ar.y tirne the aogrega.[e \,'larket Value of ail Purchased Securities subject to all Transactions In which a parti4alar party hereto is acting as Buyer is less than the aggre- gate Buyer's Margin Amov -rt for all such Transactions (a "Margin Deficit "), then Buyer may by notice to Seller require Sciler in such Transactions, at Seller's option, to transfer to Buyer cmh or aciciit:ional Securities reasonably acceptable to Buyer ('Additional Purchased Securities"), so that the cash and aggregate M.a®kat Value of the Purchased Securities, Including any such Additional Purchased Securities, will Thereupon equal or exceed such aggregate Butler's Margin Amount (decreased by the arnourrt of any Margin Pjefi t as of such date arising from any Trmnsactions in which such Buyer is acting as S eller, . (la) If at any time the aggregate �,'Iarkct Value of all Furchased Securitieg subject to all Tr In whictr a particular party hereto is acting as Seller exceeds tie aggregate Se1er s Margin Amount for all such Transactions at surh (Irma (p, "k4 °argln hXCe &S "), then Seller rrray by notice to Buyer reciulre Buyer in such Transactions, at Buyer's option, to transfer cash or Purchased Securities to Seiler, so Th2t the aeg -vgate fVlar'rel Value of the Purc; Sm n ' les, after deduction of any such cash or arty ?urchased Securities so transferred, will thereupon not exceed such aggregate Seller's Margin Amount (1rarre;4.8F l by the arrkount of any Margin F-xcess as of such date arising from any Transactions in which such Sclic r is acting -is Buyer), (c) If any notice is given by Buyer or Seller tinder subparagrapb (a) or (b) of tliis Pavagtnplr at or before the Margin Notice Deadline on any business clay, the party receiving such notice shall. transfer cash or Additional .Puxhased Securit :es as pmvle in such srthpara; graph no latpw ttran [ire close of business in the relevant market on such. day. It any such notice is gjvc - after the Margin Notice Deadline, t1r? party re ^eivi rig surlet inertia= sbAll tra.osfer south cash or Securities no later than the close of busess in the rcicvant Market on the next business day following such notice. (d) Any cash tranrsffrrccl pursuant to this Paragraph shall be attributed to such 'lransac[torts m shall be agreed upon by Buyer and Seller. September 19961 siwr itupurchasQ Agruement 42 Appendix I (e) Seller and Buyer n agree, with rcspccCto any or all Transactions hereunder, that the respective rig L)f Buyer urSeller (or both) under subparagraphs (a) and (b) of - this Paragraph may bocxci7cisedonly where.o Margin F."ehc)tor Margin Exreso the case may be, exceeds a specified, dollar a=unt or a specified percentago of the Repurchase Prices for such Transactions (whIch amoortorDoreorage shall be. o��t.-) )yR/ver aod prior [ueuLeriog Into any ouct,Thanmction,). (D Seller and 8oyermay a8rpo with respect no any or all Transactions boroundcr, that the respective rights nC Buyer and Seller under subparagraphs (a) and (b) cf this Parauropb to require the elimination of a Margin Dcficlt or a Max gin Excess, as the case inay be, mmyheemRtdsnd Whenever such a &{uz@io Deficit orMargin Excess exists with respect to any single Transaction bmrouoduc(calculatadwithout rpgmrd|o any n/hmr.6annacMon voutaodb'- under th 5. TuzonumPpviueoLo SmDecuhudl beaodiled to receive an amount equal to all Income paid ordistrlbu 000r in respect o[ the Securities that \x not ofheriv Seller, uu the [aD extent it would ho nu entitled LC the SerudUsm had not been sold to8uyor Buyer shall, umthe parties may agree with respect to any Transaction (ur.in the absence uI any such aKroeu-eo�.eo Buyer sbad1reu' uooablydetermiueiuizx timcztion).on the datc such Income iu paid ord1st/1bxfted either (A trmnx/ertonrcrefflm (he account o/ Seller such Income with reoppCtioonyEbrcbaad 5ecuddos oub oct to ouubIbsouactioo or (|A with nNpeuL iu lncor/e paid in xxyb apply the Income payment pr payments k> reduce the amount, if any, toboTraoobrnzdnoDuyorbv Seller upon termination n[mob'1iao�xdoo Buyer shall not bo obligated to take any action pursuant to the prececlin@sentence (A) to the ox"cot that such action would result lu the cre- ation ufaMxroioDofIc|t,unlmwydori6erek/uryi/uL�aoounsb derewiih Seiler transfers /o Buyer casti or Additional Purclayud Jecundcnou[Ocboz tnChooioao such Margin Deficit, or (B) ifan Event ofDaPault with respect to Seller tux occurred and (uttien continuing utthe dtne such Eucooz io paid ocd|m,r}boted 6. Security Interest Althougli the partlom inrerd i all 'fi-ansac tions hereunder be sales and purchases and not louus linve pledgad. to 311yer as Security for the performance by Seller of its obItgaricrs under each suril Transaction, and shall be deemed to have granted to Buyer a security interest ill, all of the Puf-.hased Seclidlieswith respect to all Transactions hereunder and all Income ther and other proceeds thereof. 7. Pmyzoeot and Transfer OnlemodfiervvbemvnmDyxgoed available funds. All Securities transferred byooaparty hereto to the other party N shall be1u stArAhle. fnrm for transfer or shall. be accompaniedby duty executed insTrutnents of transfer oz assignment 1ublank and such other docuneucatlon as the party rexelv|ngpnys*m ino may reasonably request, (i|)alio||b* transferred ooihe book-entry syzLenoofuBndei'alReserve Bank, or (Iii) shall be transf by any othc method mutually acceptable to Seller an d BlIver. Sup/c,mho,I996Bu,u,Bepucdm,oA&m*ni,ot 43 Appendix 1 8. Segregation of Purchased Securities To the extent required by applicable law, all Purchased Secuxities 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 lioldp.r, inci rrding a finandal or securities Intermediary or a clearing corpo ration. All of Seller's interest in the Purchased Securities shall },ass TO 311yrr OH the P1,11CI ase Late and, unless otherwise agreed by Buyer and Seiler, nothing in this Agreement slaall pro elude Buyer from engaging in repurchase transaci.iors wills the Purchased Securities or other- wise selling, trarrsfea-rirrg, pledging or hypothecating the Purchased Scculritics, but no such transaction shall relieve Buyer of Its obligations to rr•ans °er P rvhased'Securities [o Seller pur- suant to Par graph 3, 4 or 11 hereof, or of Buyer's obligation to credit or pay Income to, or apply Income to the obligations of, Seller prri:suant to PaniiepAph 5 hereof. Required Disclosure for Transactions in Which the Seller Retains Custody of the Purchased Securities Seller is not permitted to substitu c otl securities fo< those stiblec:t to this Ag :- cernent and therefore must keep Buyer's securities segregated at all times, unless in this Agreement Buyer grants Seller the right to substitute, other xorm if Bayer grants the right. to substi_ute, Iris means that Bayer's securities will likely be commingled with Seller's own securities during the trading day. F irye.r is advise(;. that, clur any raiding day that Buyer's securities are commingled with Sellers securities, they [wil] * [may] 'k" be subject to liens gra need by Seller to [Its clearing bank]' [third parties] " and may be used by Seller for deliveries on other securities transactions, Wherever the securities are commingled, SAler's ability to re segregate subsritute sec ur•iiic =.s for Buyer will be subject to Selle's ability to satisfy [the cicar ing] * [any] " lien or to obtain substitrrt? seriirififs. Language t© be used under 17 CY—R, 0403.4(e) if Seller is a grvernmant sFrnrririPA broker or dealer anther than a financial institution. Language to be used under 17 CYR. 3403.5 (d) if Seller is a financial instittoior;. 9, Substltutiotl (a) Seller rnay, sutbJect tv agreement with and accepiarice by Buyer, substitute other Securities for any Purchased Securities. Such substitution shall be made by transfer TO Payer of gl,r.(.h. other Securities and transfer i.o Seller of such PulrchasedSeeurities. After substitution. the substituted Securities shall be deemed to be Purchased Sec iiritirs. ,b) In Transactions in which Sealer retains custody of Purchased Senirlhes, the parties expressly agree drat. Brayer shall be deemed, for purposes of subparagraph (a) of th[s Pa_mgraph, to have agroed to and accepted in this Agreement subsril ntioft by Seller o- darer Ser.tir tea for Purchased Securities; provided, however, that such other Securities shall have a Market Value at least equal to the Market Value of (lie Purchased Securities for which they are substituted. September 1996 Muster Repurchasc Agreement 44 Appendix I 1O.Representatioils Each cf Buyer acd Seller ,e.prmpnts aid warrants mtl7,eother that 1 it is duly autho to emmuieuoddeliver this Agreement, to enter Into TrRnmacT|nnso*n/oopiuted. hareundisaz^d to perform its obligations hereunder and has ta�en all necessary action to authorize such eze mu11ou,del|w*ynnJDofurzaouo it will euga0ebz such Transactions uxFo|oc|pal(or,if agreed In writing, in the form of an annew [ieretn Or Olhel'wise, iIj advance of any T.-ansac by the other party be/e.iu,auoBeuz for ad�c�`oodp�nnipnA,(n) the po-ounsigning this o» Agreeentou�abcbu�bdulyuudho/iz*drodnannz/liybplo|[(ucoobebalfmfuoymucr! dHxdcmslydnoiFal) has obtained all authorizations of any gnvnrumeotoYhody required in connection with this Ageemeo\ and the Iraosacrlonx hereunder and such ou.Tho hxmhoouare.io8d\(bo:e and eff'ecL and M the cxocWtioo, delivery and oerformwo*eoythis Agreement and the Iranuocrionmbere/odar will riot violate any b/v, ordinance, churccby |nwo`rule a toitor any o8c000auntby*b1cbbh bound erbvehich any o[Its -assets are affected. On the Purcliase Dale for any Transaction Buyer and SeHer shall eachbc c}*aoudiurepeotaU the horegoioAnCprCSCoturimmmndk by It. 11.Eve/o bso[T]e[anlL {o the, event. dmLNSeLlo falls to transfer or Dwyer fails to pmzbase9urcbna�dSFcorlties upon the ap?licobic Purchase Date (||) Seller Ni� 10 repou or Buyer fails 1n transfer PurchnxedSe,n'demo1Jo:1 the applicable Repurchase Date, AU1 Seller or Buyer fails tomill- ply with Paragraph 4 liceof,(Iv) Buyer falls, a:ler one business clay's notice, tomm ply with Para(naphSheeo[(v) an Act of Insolvency occurs with respect to Seller mrBijyer,(vi)uny representation made by Seller or Huyea'st',all have been Incorrect or untrue In any mat renp*r| when made or repeated or&cm:dho have baso made ncoapeuted.nr6iA8e|lormr Bnyerobo1] aelr no the other Its Inability to, or its intention no| k\ perfooaaoy of its obb8- a�oo:beenoder(Pnd/am^£hendofDefault°): i a.) The onndefaultin8party ir2y, at Its option (which option shall be deenied in bavc-, be.e..li mueoisodiozmediakelyupootheorvunmoreu[unActnfIosolvenc |)*/2�U,,uliaxe occurred bereuudcr and, upon da exercise orCe*niedexemiwew[»uxb option, the Repurchase Date/b, each lcao sac LiOnhereunder shall, itlt has not a�rcudy ounnoeU.bodoeudImmediately to occur (except that, iu the m*ntthatUi�tPmo6aae DatetbraoyIianuoorionbomnotye(uccuoedaao[Lheduteo/socbsxmzc|ocordmoomd exercise, such Tiarisaction shall be deemed immed m tic eled). The nondefaulting pazty shall (except ijpnu the occurrence. of an Ac of Insolvency give notice to tbc Cietxu|t|n�y��Lfo[ the sxa�iaenf such op�ooaxyrno��z[yauproct|ra0e. (b Tn all '|\nnyuxUouain which the c1efauDtio@par�lyac�ugse��Uerifthonond��/�l�n& parryexerbaoorbdeammdnnbaveemerisudLhmupi1oorpfel=edtuIuuubporugrapb(a) o[rbixPbnRe,mph,(I)�bedp�o]�oA�e���ob���ouslo such 7lnnxoot}mrm|orepou�'asr all Pus Securitlos, at the Reliurrham Price therefor on the Repurchase Date cleter- rrilred ,n*xuudaonop/itbuubpara8zupb(o)oftNmPuruBzup& Immediately due and payable, (ii) all |ncorrie paid a2er such enecclmeordeenmedexerc shall be. r*alned by the nondefaulring party and applied to the agarega unpaiti Repurchase Prices and any other mninonts owing � [he de.��aulttnQparty hereunder, and U}|\ dhodefauliiogps7*tv shall immediately deliver to the uno&Jaub,ug party any Purchased Securities subject to such 7roouuctlonythpn in rhedprucltz/Upack/n posses- sion orcontrol. September |9V6Masicr Repurchase Agrccmcn` 45 Appendix I (c) In all 'Eansactions In which the defaulting party is acting as Buyer, upon tender by the nnnder.aultirlgTarty of piymert of'the aggregate Repurchase Pnce.% for all suct.l. Trans, ctions, all rtgni, Title. and intH'esr in atiJ entitiement to all Purchased Securities s :itrjeCl, kr such Transactions steal: be deemed transferred to tbR rixrncle[Aulting party, and the defaulting party shall del Iver all such Purchased Securities to the nondetaulting party. (d) If the nondefaulting party exercises or is deemed to have exercised the option referred tc in subparagraph (a) of this Paragraph, The nondefaOt.Ing part :y, without prior notice io the defaulting p;irty, may: (I) as to '1 raiisactions in , �vhich the defaulting party is acting as Seller, (A) irnm diately sell, in a recognized nry_arket (or orherwtsr- in a c:ornmercially reasonable rnanncr) at such price or prices sis (tie nondefaulting party may reasonably decm satisfactory any or all Purchased Securities sribjKt: To such Transactions and apply the proceeds thereof to t aggregate unpaid P.epurchase Prices and any other amounts nwing by the defaulting party hereunchr r or (B) in its sole discretion elect, in lieu of selling all ur a portion of such Purchased Securities, to give the. defatilLini; party c,r4dit fur such Purchased Securities in an ariotuit equal to the price therefor on such.dar_e, obtair:ed from a generally recognized source or the most re errt closing bid quotation from such a sour against tire. aggregate unpaid Repurchase Priccs and any other amo owing by the defaulting_ party heremi(l 3r; wid (ii,) as to Transactions in which the cefaulting partly is acting as Buyer, (A) Immediately purchase, in a recoraired rnar (or otherwise in a commercially reasonable man - net at such price or prices as =he. nondefaulting, party may reasonably deem sarisfac- tory, secur ivies ( "Replacement Securities") of the same: class and amatint as any Purchased Securities that are nor delivered by the defaulting party to the nondefauit i n; pa: `y as required hereunder or (B) in its sole dlscretion OC irr Bell of pureltas- Inc Replacemont Seciirlties, to be. deerned to have purchased Replacement Sc:ctrritics AT fie price therefor on such date, obtained from a generally recognized source or the most recent closing, offer quotation from such a source. Unlcss otheiivise provided in Annex I, the parties ackno% and agrc-:- that (1,) the Securities subject to any "Transaction heretirider are insauarients traded in a recognized ntarker, (2) 1 n the absence of a generally recognized, source for prtces or hild or offer cluo- tations for any Security, th nondctatiNng party may e- stablish the source therefor in its sole: discretion and (3) all prices bids and offers shall be determined teaether with accrued Incorme (exce=pt to the extent contrprry to market practice with respect to tho rel eva r;r. Securities) (e) As to 'transactioris In which the defaulting party Is acting as hiiyer, the de= auhing party shall be liable to the noir defauitirig party for any excess of the price paid (or deemed paid) by the nondefaulting party for Rcplacc vent S(-c:, dries over the Rep phase Price for &.c Purchased Ser.u:rities replaced h=ereby and for any amounts payable by the defaulting party under Paragraph 5 he=reof or otherwise hereunder. f) For p,r rroses a Luis P aragraph 11, the Repurchase Price for eacli, 'li hereunder ir respect of which the defa.r'ting I)Nrty is ac ling as Biujer shall not increase above tae Scpternher 199 Master Repurcliase A- ree,neut 46 Appendix I uomurdofsuch Repurchase Price for such Transaction dotcrnzomdaxo[thedate,cftbe exercise ordeec ill-.00udefaud\nA party of tbeoption referred toiuoub- ,)zr-agnzpb(a)nf this Paragraph. (u) The dabadLinRpur7ci shall Ue liable 10 the moodo8or"tiuQ party for (1) iheomoonto(nll rcasnnobhlegal prmrhsrexi)ensemizicurredby the 000defaulliog party 2uconnection with orooureouitofuu Event of Default, AA unmnumnont. equal uo the cost (Incl4ding 211 fFes, expenses and commissions) of entering Into replacement tmnsactions and entering Into or terminating hedge trans,2( in connectionwidi or as a result of no��or/(o|U�uud�.audOt|]any other loss, duoiu8e, cost or expense directly arising ur resulting froni the occurrance of mii Event of Default in respect of a Transaction. ( To the exteocpermiftedb` applicable law, the defaulting party shall bohabbto the ocn defaulting party for iutccestunaoyaonouuts ow by the dm8noldu6paz(yhereunder, from rbedate !Lhe defaulting party becomes liable for such amounts boruudorootilsuch amounts are (A paid. lo full by the deCaulr�u2pxrt9mr (1i) satisfied \n full ky the exercise n�tbeomn��Iuu{UoApoziy�dQ�imbena��dezIo��m��mouoyonoz�zynldo�ydzodefault iogpartYcwthe 000deDaibiogyonyuoder this Paragraph ll(b) shall beat o rate equal bz Uha8zEaLeroI the Pricing Rate for the mb"ol the Prime Rate. (8 l'heoundetaultiog pzrvy shall have, bu addition zo its ri8ktsbeeuuder any riAhro^rlhep m\xeuvpilah'etnitunduruflyoderuAreeueut or applicable buv I%. Single Agreement fluver and Seller a4nowleclAe that, anct have entered hereinto and will enter into each Zcanaoxdonbercuodcc In coosldoraUon of and In /vg|nnue U1/oo Je -�ac| Gmi bere cunstitute a single business and contractual relationship and havc bc made in consideration of each Other. Accordingly, each u[ Buyer azid Seller agrees (1)zouerf,co all of its obligations in respect of each Transaction hercunder, and fliat a c it the perfnr- mance of aoy si teli oh't-ga shall constitute a default by It In respect of al.' Transactions heoeuricer, A that caohof them shall be entitled onserorfduhmvuod apply property held by ifiem Iti respec-L of at iv 'Fran sacdon against obligations owing to them in respect of any other TraouuctiooubonamzdaraodG(AthoL�) oymenW.(JoDvenuy and other transfers coudebveidzer of daaz In remmctof any IraxoacUon mhal'br dcnozod to bmveboeo /oode bn onnoidcmtion of Payinents, delivel other transfers in respect of any otherTransactions hereunder, and the obl48uijococo make uoyomcbyaymsuts a8guez each oUber and uaxed. 13.Nodcew and Other Corinnouioattnos A,?ymndaJ\zmiices may bogiven bya party zo the other bv mail, farninni|e.telegraph.zuemsei/gerorudiieruoaero the a spec in Annex 11 here or so sent to such party at any other place spec-Ified in a ratice of change oy address heremMe'rpceiireJby the uChoz All notices, denuaoum and requests hereun- der nuuybe made oro��tobocoo�roz dp«oozocly Ionvdd m8.ocbv as specified in the prccecLnSsentence. Soptcmber!Y96Masun Repurchase xureo .ent 47 Appendix 1 14. Entire Agrcement; Severability This .agreement shall supersede any existing �qreetanent ;s herwepn the parties containing gen- eral tr:rrrts all(] txrntfilions for repurchase transactions. Each provision and agrcomont horcin shall be treated as separate and indcpcnccnt ftom any other provi&ri n or ag:- eernew lie: - Pin and shall be enforceaYe note upstanding the unenforceability of any such other provision or agreement. 15. Non- assignalaility; Termination (a) The rights and obligations of the parties under this Ag,reerre:rit anc tinder ally T;12 rrsactinn Shall not be assigned by either party without the prior written consent of the other party, and any such assignment without the print written cr�,rrtiert; of ttit ,tiller Tarry shall be null acid void, Subject to the foregoing this Agreement and any Transactions shall be binding upon and shall inure to the benefi t of the parties arid their respective successors and assigns. 'Mis Agreement rnav be terminated by either party `upon giving w ten notice to the other, except that f -iis .Agree.rnent Shall, nct'tWltl7sirr °:ditlg s °rrch ttorice, remairn app tcable to am; Transactions then outstanding, (1 Srihprirag;ralAj (a of this °aragraph 15 shall net preclude a party from assigning, charg- ing or othcrwisc dealing with all or ally pa •t of its ITAO. 14 in any sure payable to it under Ni agraph 11 hereof. 18. Governing Law ` hts Ag °eerrreut. shall be gcyeerned by the lays of the State of Ncw York without giving :affect to the conflict of! aw principles thereof. 17. No Waivers, Etc. No express or implied waiver of any Event of Default by tither party shall consti`ute a waiver of any other Event of Default and no exercise of any remedy hereunder by ar:y party shall constitute a waiver of its right to exercise airy uther remedy hereunder. No modification or waiver of any provision of this Agreement and no consent by any par-iy to a drparhtre. herc- frorn shall be effective r_rnlr±ss ar=d until such shall be in writing and curly executed by both of Lhe parties hereto. Without Ifinitation on any of the faregoi +ng, the failtnr: to glve a notice p _ur- suant to Paragraph 4(a) or 4 (b) hereof will tart cnrrsr:i wLe a waiver of any right to do so at a h ter da te. 18. Use of Employee Plan Assets (a) If assets of an employee benefit plan subJuct to auy provision of the Employee Re rernen Incorne. Secnr•ity Act of 197 ("FRISA:') are intended to be used by cithcr party hereto (tr =e 'Plan Party ") :7 a Transaction, the Flan Party shall so uutify the other party prior to the Transai(Ain ti. 'fTl:e Plan Party shall represent In writing to the other party that the Transaction does rot constitute a prohib ted transaction Under ER1SA or is othenvise exf.nnl:t ther t-fl a m, and the other party rry ?r-jceed in relialicc thereon but shall not be required so to proceed. September I996 Master R , .purcbase Agreement 48 Appendix I (b) Sut,leci. to the last sentence of subparagraph (a) of this Paragraph, any such Transaction shall prcceed only if 5e11 =:r furnishes or has fut-itished ro Buyer its rrost recent available auct,ted statement of its -financial condition and its most recent subsequent unau6ted statement of its !1n211c1al curtdl un, (c) By entering into aTransacrion pursi:carir to this 'Panagraph, Seller shall he deemed (i) to Lpieser<t to Buyer that since tine date of Seller's latest such financial statements, there Ims been ro material adverse change in Seller's firtars.;IBI cor :di Lion wlic_=i Seller has riot dis- closed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited statcnimts of its finandal condition as they are issued, so long as it is a Seller in any out - standing Transaction involving a Plan Party. 19. Intent () 'I lie parties recogliize tha each Transaction is a "repurchase agror mmC as that ierm is defined in Section 11D 1 of Tithe 11 of r`ste l JTTIted States C Dcle, as arne-nded (except insofar as the tYpe of Securities subject to such Transaction or the term of such Tlransacdo n would reader such definition inaialali.(,'able), ane a "securities contract" es that term is de_'rtied in Section 7'11 of Title 11 of the United States Code, as ar e:ided (except insofar as the type of assets s jhJect to such Transaction would render such der nition inapplica- ble). (b) It Is understood that either party's right to liquidate Securities delivered to it Its curinec- ,lon wish Transactions hereunder or to exercise any other remedies pursuant to Paragraph I hereof is a contractual right to IirluldatP si.reh'l.zansaclion as described in Sections 555 and 55 of'1 11 of the United States Code, as amended. (c) The parties agree= and ackno%vledge shat if a party het--to is an "insured depository lnsti- ution" as such term is defined , 2 the rc( -er21 Deposi`r. Ins Trance Act, as amt= -td(-d ("FDIA° , T11 H) each "li:ansaction hemtmder is a "qualified financial contract, as that term Is defined in FDU1 and any rules, ord .rs nr policy slater teats tltere._mder (excepl insofar as IN- type of assets subject to such Transaction would render s7ach definition inapplica bie),. (G) It Is understood that this Agreement: consi itutas a "ne Ing contract" as defined in and sntijec t to "Title N of fate Federal Deposit Insurance Corporation Itrprovmient Act of 19 ( "MICIX) and each payment entitienienr and pgment cr.alig Ilor3 urieler any Tra i sacr on her•emider shall constitute a "covered contractual payment entitlement" or "coverzd contractual payment obligation", respectively, as defined in and subject to I' DI- "IA (excepi. insofar as one or both of the parties is not a "tnanctal institution" as that temi is d-2fined in F'DICIA). 2O. Disclostire Relatiii; to Certain Federal Protections The parties acknowledge. thar '1hq hsve been advised that: (a') iin the case of Transactlons In which one of the parties is broker or d alWr n gisterec vvith the Securities and Exchange Commission ( " SF+C ") urid .:r Section 15 of the Socw ities Exchange ct of 1934 ( Act'), the Secumtlei Investcr PrceteeLtun Corporation has Septeiiibcr 19961viasLcr Rcpurchasc Afire ment 49 Appendix I taken th= position thal, the provisions of the Securities Investor Protection Act of 1970 ( °SIPN' ) do not protect the other party A -h rp-spprct to any ° I:iai►saction heieurrlier; (b) in the case of Transaeticns in which one of the pa - ties is a gowrnme.j It securl.tles broker or a government securities dealer registered with the SEC under Section 15C of the 1931 Act, SIPA will not provide protection to the atlier Party With respetrt to any `Ii'ansaction hereunder,* and (c in the : ase of Transar:lit rrs in which one of the par les is a financia institution, funds held by the finanda institution pursuant to a Transaction hereirndpr are not a deposit and tl,erefnrr are o_ instr -ed hy the federal Depos': Insurance Corporation or the National CreGit Union Share Insurance rrind, as applicable. ('donne of Party] [Mime of Party] Iii,'. By, Title: l"i i le: Clare: Date: SepmtjL 1996 MuWWr Rvpurdimc Agrccmenl. 50 Appendix J 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. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995. 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: 51 Appendix J (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, 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 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 orfederal bank, a savings bank, or a state or federal credit union, a member of the loan committee forthe bankor branch of the bank or a person authorized by corporate resolution to act on behalf of and bind the banking institution; 52 Appendix J (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 managementfirm registered underthe Investment Advisers Act of 1940 (15 U.S.C. Section 80b -1 etseq.) or, if notsubjectto 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. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 1421, Sec. 1, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 1454, Sec. 1, eff. Sept. 1, 1999. 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; 53 Appendix J (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 contractwith an investment managementfirm 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 or 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. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1999, 76th Leg., ch. 1454, Sec. 2, eff. Sept. 1, 1999. 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 bythe Veterans' Land Board as authorized by Chapter 161, 162, or 164, Natural Resources Code; 54 Appendix J (5) registry funds deposited with the county or district clerk under Chapter 117, Local Government Code; or (6) a deferred compensation plan that qualifies under either Section 401(k) or 457 of 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. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 505, Sec. 24, eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1421, Sec. 2, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 62, Sec. 8.21, eff. Sept. 1, 1999; Acts 1999, 76th Leg., ch. 1454, Sec. 3, eff. Sept. 1, 1999. 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; 55 Appendix J (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; (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 56 Appendix J (6) 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 off icerto 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 person 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 person 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 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 57 Appendix J pool for which an officer of the entity is assigned by law the function of investing its funds. Text of subsec. (h) as amended by Acts 1997, 75th Leg., ch. 685, Sec. 1 (h) An officer or employee of a commission created under Chapter 391, Local Government Code, is ineligible to be an investment officer for the commission under Subsection (f) if the officer or employee is an investment officer designated under Subsection (f) for another local government. Text of subsec. (h) as amended by Acts 1997, 75th Leg., ch. 1421, Sec. 3 (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 related 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 58 Appendix J 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. Q) 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 instrument in a form acceptable to the investing entity and the business organization substantiallyto 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 59 Appendix J dependenton an analysis of the makeup ofthe entity's entire portfolio or requires an interpretation of subjective investment standards. (1) 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 (o), 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. Subject to a risk assessment and to the legislative audit committee's approval of including a review by the state auditor in the audit plan under Section 321.013, the state auditor may review information provided under this section. If review by the state auditor is approved by the legislative audit committee, the state auditor may, based on its review, require a state agency to also 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. (o) 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. 60 Appendix J Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 685, Sec. 1, eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1421, Sec. 3, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 1454, Sec. 4, eff. Sept. 1, 1999; Acts 2003, 78th Leg., ch. 785, Sec. 41, eff. Sept. 1, 2003. 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: (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, overwhich 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. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995. Sec. 2256.007. INVESTMENT TRAINING; STATE AGENCY BOARD MEMBERS AND OFFICERS. 61 Appendix J 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. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 1421, Sec. 5, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 1454, Sec. 6, eff. Sept. 1, 1999; Acts 2001, 77th Leg., ch. 69, Sec. 4, eff. May 14, 2001. 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 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 62 Appendix J (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. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 73, Sec. 1, eff. May 9,1997; Acts 1997, 75th Leg., ch. 1 421, Sec. 4, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 1454, Sec. 5, eff. Sept. 1, 1999. 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 from an independent source 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 and containing at least 10 hours of instruction 63 Appendix J relating tothe treasurer's or officer's responsibilities underthis subchapter within 12 months after taking office or assuming duties; and (2) except as provided by Subsections (b) and (e), 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 from an independent source 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. The treasurer or chief financial officer of an investing entity created under authority of Section 52(b), Article 111, or Section 59, Article XVI, Texas Constitution, and that has fewer than five full -time employees is not required to attend training required by this section unless the person is also the investment officer of the entity. (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 64 Appendix J (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 flowfrom 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. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1999, 76th Leg., ch. 1454, Sec. 7, eff. Sept. 1, 1999; Acts 2001, 77th Leg., ch. 558, Sec. 1, eff. Sept. 1, 2001. Sec. 2256.010. AUTHORIZED INVESTMENTS: CERTIFICATES OF DEPOSIT AND SHARE CERTIFICATES. (a) A certificate of deposit or share certificate is an authorized investment under this subchapter if the certificate is issued by a depository institution that has its main office or a branch office 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, 65 Appendix J 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 lawfor deposits of the investing entity. (b) In addition to the authority to invest funds in certificates of deposit under Subsection (a), an investment in certificates of deposit made in accordance with the following conditions is an authorized investment under this subchapter: (1) the funds are invested by an investing entity through a depository institution that has its main office or a branch office in this state and that is selected by the investing entity; (2) the depository institution selected by the investing entity under Subdivision (1) arranges for the deposit of the funds in certificates of deposit in one or more federally insured depository institutions, wherever located, for the account of the investing entity; (3) the full amount of the principal and accrued interest of each of the certificates of deposit is insured by the United States or an instrumentality of the United States; (4) the depository institution selected by the investing entity under Subdivision (1) acts as custodian for the investing entity with respect to the certificates of deposit issued for the account of the investing entity; and (5) at the same time that the funds are deposited and the certificates of deposit are issued for the account of the investing entity, the depository institution selected by the investing entity under Subdivision (1) receives an amount of deposits from customers of other federally insured depository institutions, 66 Appendix J wherever located, that is equal to or greater than the amount of the funds invested by the investing entity through the depository institution selected under Subdivision (1). Amended by Acts 1995, 74th Leg., ch. 32, Sec. 1, eff. April 28, 1995; Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 1421, Sec. 6, eff. Sept. 1, 1997; Acts 2005, 79th Leg., ch. 128, Sec. 1, eff. Sept. 1, 2005. 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 67 Appendix J 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. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995. 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: (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; 68 Appendix J (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. Added by Acts 2003, 78th Leg., ch. 1227, Sec. 1, eff. Sept. 1, 2003. Sec. 2256.012. AUTHORIZED INVESTMENTS: BANKER'S ACCEPTANCES. A bankers' acceptance is an authorized investment underthis 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 69 Appendix J 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. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995. 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: (A) two nationally recognized credit rating agencies; or (B) one nationally recognized credit rating agency and isfully secured by an irrevocable letter of credit issued by a bank organized and existing under the laws of the United States or any state. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995. Sec. 2256.014. 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 70 Appendix J 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. (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); (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 any one mutual fund described in Subsection (a) or (b) in an amount that exceeds 10 percent of the total assets of the mutual fund. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 1421, Sec. 7, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 1454, Sec. 8, eff. 71 Appendix J Sept. 1, 1999. 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, (4) the price of the guaranteed investment contract must take into account the 72 Appendix J 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. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 1421, Sec. 8, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 1454, Sec. 9, 10, eff. Sept. 1, 1999. 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; 73 Appendix J (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 safekeep 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; (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, average dollar- weighted 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 74 Appendix J stated maturities of more than one year; (D) 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; (1) 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. (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 Securities 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 75 Appendix J 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 underthis chapter, an investment pool must be continuously rated no lowerthan AAA or AAA -m or at an equivalent rating by at least one nationally recognized rating service. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 1421, Sec. 9, eff. Sept. 1, 1997. Sec. 2256.017. EXISTING INVESTMENTS. An entity is not required to liquidate investments that were authorized investments at the time of purchase. Added by Acts 1995, 74th Leg., ch. 76, Sec. 5.46(x), eff. Sept. 1, 1995; Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995. Amended by Acts 1997, 75th Leg., ch. 1421, Sec. 10, eff. Sept. 1, 1997. 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. 76 Appendix J Added by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995. Amended by Acts 1997, 75th Leg., ch. 1421, Sec. 11, eff. Sept. 1, 1997. 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: (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 orthat 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. Added by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995. 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 77 Appendix J 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. Added by Acts 1999, 76th Leg., ch. 405, Sec. 48, eff. Sept. 1, 1999. Sec. 2256.0205. AUTHORIZED INVESTMENTS; DECOMMISSIONING TRUST. (a) In this section: (1) "Decommissioning trust" means a trust created to provide the Nuclear Regulatory Commission assurance that funds will be available for decommissioning purposes as required under 10 C.F.R. Part 50 or other similar regulation. (2) "Funds" includes any money held in a decommissioning trust regardless of whether the money is considered to be public funds under this subchapter. (b) In addition to other investments authorized under this subchapter, a municipality that owns a municipal electric utility that is engaged in the distribution and sale of 78 Appendix J electric energy or natural gas to the public may investfunds held in a decommissioning trust in any investment authorized by Subtitle B, Title 9, Property Code. Added by Acts 2005, 79th Leg., ch. 121, Sec. 1, eff. Sept. 1, 2005. Sec. 2256.021. EFFECT OF LOSS OF REQUIRED RATING. An investmentthat requires a minimum rating underthis 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. Added by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995. 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. Added by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995. Amended by Acts 2003, 78th Leg., ch. 785, Sec. 42, eff. Sept. 1, 2003. Sec. 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; 79 Appendix J (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 (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 governments investment policy; and (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 80 Appendix J 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. Added by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995. Amended by Acts 1997, 75th Leg., ch. 1421, Sec. 12, eff. Sept. 1, 1997. 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. Added by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995. Sec. 2256.025. SELECTION OF AUTHORIZED BROKERS. The governing body of an entity subject to this subchapter or the designated investment 81 Appendix J 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. Added by Acts 1997, 75th Leg., ch. 1421, Sec. 13, eff. Sept. 1, 1997. 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. Added by Acts 1997, 75th Leg., ch. 1421, Sec. 13, eff. Sept. 1, 1997. 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. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995. 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. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995. 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 82 Appendix J 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. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 1423, Sec. 8.67, eff. Sept. 1, 1997. 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- Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 1423, Sec. 8.68, eff. Sept. 1, 1997. 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. Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 1423, Sec. 8.69, eff. Sept. 1, 1997. 83 "M" Appendix K GOVERNMENT CODE CHAPTER 2257. COLLATERAL FOR PUBLIC FUNDS SUBCHAPTER A. GENERAL PROVISIONS Sec. 2257.001. SHORT TITLE. This chapter may be cited as the Public Funds Collateral Act. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.002. DEFINITIONS. In this chapter: (1) "Bank holding company" has the meaning assigned by Section 31.002(a), Finance Code. (2) "Control" has the meaning assigned by Section 31.002(a), Finance Code. (3) "Deposit of public funds" means public funds of a public entity that: (A) the comptroller does not manage under Chapter 404; and (B) are held as a demand or time deposit by a depository institution expressly authorized by law to accept a public entity's demand or time deposit. (4) "Eligible security" means: (A) a surety bond; (B) an investment security; (C) an ownership or beneficial interest in an investment security, other than an option contract to purchase or sell an investment security; (D) a fixed -rate collateralized mortgage obligation that has an expected weighted average life of 10 years or less and does not constitute a high - risk mortgage security; or 85 Appendix K (E) a floating -rate collateralized mortgage obligation that does not constitute a high -risk mortgage security. (5) "Investment security" means: (A) an obligation that in the opinion of the attorney general of the United States is a general obligation of the United States and backed by its full faith and credit; (B) a general or special obligation issued by a public agency that is payable from taxes, revenues, or a combination of taxes and revenues; or (C) a security in which a public entity may invest under Subchapter A, Chapter 2256. (6) "Permitted institution" means: (A) a Federal Reserve Bank; (B) a clearing corporation, as defined by Section 8.102, Business & Commerce Code; (C) a bank eligible to be a custodian under Section 2257.041; or (D) a state or nationally chartered bank that is controlled by a bank holding company that controls a bank eligible to be a custodian under Section 2257.041. (7) "Public agency" means a state or a political or governmental entity, agency, instrumentality, or subdivision of a state, including a municipality, an institution of higher education, as defined by Section 61.003, Education Code, a junior college, a district created under Article XVI, Section 59, of the Texas Constitution, and a public hospital. 86 Appendix K (8) "Public entity" means a public agency in this state, but does not include an institution of higher education, as defined by Section 61.003, Education Code. (9) "State agency" means a public entity that: (A) has authority that is not limited to a geographic portion of the state; and (B) was created by the constitution or a statute. (10) "Trust receipt" means evidence of receipt, identification, and recording, including: (A) a physical controlled trust receipt; or (B) a written or electronically transmitted advice of transaction. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.48(a), eff. Sept. 1, 1995; Acts 1995, 74th Leg., ch. 914, Sec. 5, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 254, Sec. 1, eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 891, Sec. 3.22(4), eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1423, Sec. 8.70, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 62, Sec. 7.63, eff. Sept. 1, 1999. Sec. 2257.0025. HIGH -RISK MORTGAGE SECURITY. (a) For purposes of this chapter, a fixed -rate collateralized mortgage obligation is a high -risk mortgage security if the security: (1) has an average life sensitivity with a weighted average life that: (A) extends by more than four years, assuming an immediate and sustained parallel shift in the yield curve of plus 300 basis points; or (B) shortens by more than six years, assuming an immediate and sustained parallel shift in the yield curve of minus 300 basis points; and 87 Appendix K (2) is price sensitive; that is, the estimated change in the price of the mortgage derivative product is more than 17 percent, because of an immediate and sustained parallel shift in the yield curve of plus or minus 300 basis points. (b) For purposes of this chapter, a floating -rate collateralized mortgage obligation is a high -risk mortgage security if the security: (1) bears an interest rate that is equal to the contractual cap on the instrument; or (2) is price sensitive; that is, the estimated change in the price of the mortgage derivative product is more than 17 percent, because of an immediate and sustained parallel shift in the yield curve of plus or minus 300 basis points. Added by Acts 1997, 75th Leg., ch. 254, Sec. 2, eff. Sept. 1, 1997. Sec. 2267.003. CHAPTER NOT APPLICABLE TO DEFERRED COMPENSATION PLANS. This chapter does not applyto funds that a public entity maintains or administers under a deferred compensation plan, the federal income tax treatment of which is governed by Section 401(k) or 457 of the Internal Revenue Code of 1986 (26 U.S.C. Sections 401(k) and 457). Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2267.004. CONFLICT WITH OTHER LAW. This chapter prevails over any other law relating to security for a deposit of public funds to the extent of any conflict. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2267.006. CONTRACT GOVERNS LEGAL ACTION. A legal action brought by or against a public entity that arises out of or in connection 88 Appendix K with the duties of a depository, custodian, or permitted institution under this chapter must be brought and maintained as provided by the contract with the public entity. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. SUBCHAPTER B. DEPOSITORY; SECURITY FOR DEPOSIT OF PUBLIC FUNDS Sec. 2257.021. COLLATERAL REQUIRED. A deposit of public funds shall be secured by eligible security to the extent and in the manner required by this chapter. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.022. AMOUNT OF COLLATERAL. (a) Except as provided by Subsection (b), the total value of eligible security to secure a deposit of public funds must be in an amount not less than the amount of the deposit of public funds: (1) increased by the amount of any accrued interest; and (2) reduced to the extent that the United States or an instrumentality of the United States insures the deposit. (b) The total value of eligible security described by Section 45.201(4)(D), Education Code, to secure a deposit of public funds of a school district must be in an amount not less than 110 percent of the amount of the deposit as determined under Subsection (a). The total market value of the eligible security must be reported at least once each month to the school district. (c) The value of a surety bond is its face value. (d) The value of an investment security is its market value. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 89 Appendix K 2003, 78th Leg., ch. 201, Sec. 46, eff. Sept. 1, 2003. Sec. 2257.023. COLLATERAL POLICY. (a) In accordance with a written policy approved by the governing body of the public entity, a public entity shall determine if an investment security is eligible to secure deposits of public funds. (b) The written policy may include: (1) the security of the institution that obtains or holds an investment security; (2) the substitution or release of an investment security; and (3) the method by which an investment security used to secure a deposit of public funds is valued. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.024. CONTRACT FOR SECURING DEPOSIT OF PUBLIC FUNDS. (a) A public entity may contract with a bank that has its main office or a branch office in this state to secure a deposit of public funds. (b) The contract may contain a term or condition relating to an investment security used as security for a deposit of public funds, including a term or condition relating to the: (1) possession of the collateral; (2) substitution or release of an investment security; (3) ownership of the investment securities of the bank used to secure a deposit of public funds; and (4) method by which an investment security used to secure a deposit of public funds is valued. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1999, 76th Leg., ch. 344, Sec. 5.006, eff. Sept. 1, 1999. 90 Appendix K Sec. 2257.025. RECORDS OF DEPOSITORY. (a) A public entity's depository shall maintain a separate, accurate, and complete record relating to a pledged investment security, a deposit of public funds, and a transaction related to a pledged investment security. (b) The comptroller or the public entity may examine and verify at any reasonable time a pledged investment security or a record a depository maintains under this section. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.16, eff. Sept. 1, 1997. Sec. 2257.026. CHANGE IN AMOUNT OR ACTIVITY OF DEPOSITS OF PUBLIC FUNDS. A public entity shall inform the depository for the public entity's deposit of public funds of a significant change in the amount or activity of those deposits within a reasonable time before the change occurs. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. SUBCHAPTER C. CUSTODIAN; PERMITTED INSTITUTION Sec. 2257.041. DEPOSIT OF SECURITIES WITH CUSTODIAN. (a) In addition to other authority granted by law, a depository for a public entity other than a state agency may deposit with a custodian a security pledged to secure a deposit of public funds. (b) At the request of the public entity, a depository for a public entity other than a state agency shall deposit with a custodian a security pledged to secure a deposit of public funds. (c) A depository for a state agency shall deposit with a custodian a security pledged to secure a deposit of public funds. The custodian and the state agency shall agree in 91 Appendix K writing on the terms and conditions for securing a deposit of public funds. (d) A custodian must be approved by the public entity and be: (1) a state or national bank that: (A) is designated by the comptroller as a state depository; (B) has its main office or a branch office in this state; and (C) has a capital stock and permanent surplus of $5 million or more; (2) the Texas Treasury Safekeeping Trust Company; (3) a Federal Reserve Bank or a branch of a Federal Reserve Bank; or (4) a federal home loan bank. (e) A custodian holds in trust the securities to secure the deposit of public funds of the public entity in the depository pledging the securities. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 1010, Sec. 1, eff. June 17, 1995; Acts 1997, 75th Leg., ch. 891, Sec. 3.17, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 344, Sec. 5.007, eff. Sept. 1, 1999. Sec. 2257.042. DEPOSIT OF SECURITIES WITH PERMITTED INSTITUTION. (a) A custodian may deposit with a permitted institution an investment security the custodian holds under Section 2257.041. (b) If a deposit is made under Subsection (a): (1) the permitted institution shall hold the investment security to secure funds the public entity deposits in the depository that pledges the investment security; (2) the trust receipt the custodian issues under Section 2257.045 shall showthat the custodian has deposited the security in a permitted institution; and 92 Appendix K (3) the permitted institution, on receipt of the investment security, shall immediately issue to the custodian an advice of transaction or other document that is evidence that the custodian deposited the security in the permitted institution. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.043. DEPOSITORY AS CUSTODIAN OR PERMITTED INSTITUTION. (a) A public entity other than a state agency may prohibit a depository or an entity of which the depository is a branch from being the custodian of or permitted institution for a security the depository pledges to secure a deposit of public funds. (b) A depository or an entity of which the depository is a branch may not be the custodian of or permitted institution for a security the depository pledges to secure a deposit of public funds by a state agency. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.044. CUSTODIAN AS BAILEE. (a) A custodian under this chapter or a custodian of a security pledged to an institution of higher education, as defined by Section 61.003, Education Code, whether acting alone or through a permitted institution, is for all purposes the bailee or agent of the public entity or institution depositing the public funds with the depository. (b) To the extent of any conflict, Subsection (a) prevails over Chapter 8 or 9, Business & Commerce Code. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.045. RECEIPT OF SECURITY BY CUSTODIAN. On receipt of an investment security, a custodian shall: (1) immediately identify on its books and records, by book entry or another 93 Appendix K method, the pledge of the security to the public entity; and (2) promptly issue and deliver to the appropriate public entity officer a trust receipt for the pledged security. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.046. BOOKS AND RECORDS OF CUSTODIAN; INSPECTION. (a) A public entity's custodian shall maintain a separate, accurate, and complete record relating to each pledged investment security and each transaction relating to a pledged investment security. (b) The comptroller or the public entity may examine and verify at any reasonable time a pledged investment security or a record a custodian maintains under this section. The public entity or its agent may inspect at any time an investment security evidenced by a trust receipt. (c) The public entity's custodian shall file a collateral report with the comptroller in the manner and on the dates prescribed by the comptroller. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.18, eff. Sept. 1, 1997. Sec. 2257.047. BOOKS AND RECORDS OF PERMITTED INSTITUTION. (a) A permitted institution may apply book entry procedures when an investment security held by a custodian is deposited under Section 2257.042. (b) A permitted institution's records must at all times state the name of the custodian that deposits an investment security in the permitted institution. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.048. ATTACHMENT AND PERFECTION OF SECURITY INTEREST. (a) A security interest that arises out of a depository's pledge of a security to secure a 94 Appendix K deposit of public funds by a public entity or an institution of higher education, as defined by Section 61.003, Education Code, is created, attaches, and is perfected for all purposes under state law from the time that the custodian identifies the pledge of the security on the custodian's books and records and issues the trust receipt. (b) A security interest in a pledged security remains perfected in the hands of a subsequent custodian or permitted institution. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. SUBCHAPTER D. AUDITS AND EXAMINATIONS; PENALTIES Sec. 2257.061. AUDITS AND EXAMINATIONS. As part of an audit or regulatory examination of a public entity's depository or custodian, the auditor or examiner shall: (1) examine and verify pledged investment securities and records maintained under Section 2257.025 or 2257.046; and (2) report any significant or material noncompliance with this chapter to the comptroller. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.19, eff. Sept. 1, 1997. Sec. 2257.062. PENALTIES. (a) The comptroller may revoke a depository's designation as a state depository for one year if, after notice and a hearing, the comptroller makes a written finding that the depository, while acting as either a depository or a custodian: (1) did not maintain reasonable compliance with this chapter; and (2) failed to remedy a violation of this chapter within a reasonable time after receiving written notice of the violation. 95 Appendix K (b) The comptroller may permanently revoke a depository's designation as a state depository if the comptroller makes a written finding that the depository: (1) has not maintained reasonable compliance with this chapter; and (2) has acted in bad faith by not remedying a violation of this chapter. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.19, eff. Sept. 1, 1997. Sec. 2257.063. MITIGATING CIRCUMSTANCES. (a) The comptroller shall consider the total circumstances relating tothe performance of a depository or custodian when the comptroller makes a finding required by Section 2257.062, including the extent to which the noncompliance is minor, isolated, temporary, or nonrecurrent. (b) The comptroller may not find that a depository or custodian did not maintain reasonable compliance with this chapter if the noncompliance results from the public entity's failure to comply with Section 2257.026. (c) This section does not relieve a depository or custodian of the obligation to secure a deposit of public funds with eligible security in the amount and manner required by this chapter within a reasonable time after the public entity deposits the deposit of public funds with the depository. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.19, eff. Sept. 1, 1997. Sec. 2257.064. REINSTATEMENT. The comptroller may reinstate a depository's designation as a state depository if: (1) the comptroller determines that the depository has remedied all violations of this chapter; and 96 Appendix K (2) the depository assures the comptroller to the comptroller's satisfaction that the depository will maintain reasonable compliance with this chapter. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.19, eff. Sept. 1, 1997. SUBCHAPTER E. EXEMPT INSTITUTIONS Sec. 2257.081. DEFINITION. In this subchapter, "exempt institution" means: (1) a public retirement system, as defined by Section 802.001; or (2) the permanent school fund, as described by Section 43.001, Education Code. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1997, 75th Leg., ch. 165, Sec. 6.31, eff. Sept. 1, 1997. Sec. 2257.082. FUNDS OF EXEMPT INSTITUTION. An exempt institution is not required to have its funds fully insured or collateralized at all times if: (1) the funds are held by: (A) a custodian of the institution's assets under a trust agreement; or (B) a person in connection with a transaction related to an investment; and (2) the governing body of the institution, in exercising its fiduciary responsibility, determines that the institution is adequately protected by using a trust agreement, special deposit, surety bond, substantial deposit insurance, or other method an exempt institution commonly uses to protect itself from liability. 97 Appendix K Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.083. INVESTMENT; SELECTION OF DEPOSITORY. This chapter does not: (1) prohibit an exempt institution from prudently investing in a certificate of deposit; or (2) restrict the selection of a depository by the governing body of an exempt institution in accordance with its fiduciary duty. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. 98 Appendix L RES4T,UTTON NO. 90 -04 viEREAS, the City of taorth Richland Hills is an agency or political subdivision of the State of Texas (the "Participant ") and is ergxwwered to delegate to a public funds investment pool the authority to invest funds and to act as custodian of investments purchased with local investment funds; and Wes, it is in the best interest of the Participant and its inI13bitants to invest local funds in investments that yield the highest possible rate of return while providing necessary safekeepinq and protection of the principal; and WHEREAS, the Treasurer of the State of Texas acting by and through the Texas Treasury Safekeeping "Trust Company (the "Trust Cctuypanya) has created "TexPool ", a public funds investment pool to effectuate the goals of providing invesbnents at the highest possible yield and maintaining complete safety of the funds of the Participant, MI THETtETORE, be it resolved as follows: 1. That the City of North Richland Hills establish an account in its name with the Trust Corcpany's Public Funds Investment Pool. "TexPool" for the purpose of transmitting local funds for investment by the Trust Ccmpazuy in TexPool. 2. That the following individuals whose signatures appear below are offirxxs or employees of the Participant and are each hereby authorized to transmit funds to the Trust Company for investment in TexPool and are each further authorized to withdraw funds from time to time, to issue letters of instruction., and to take all other actions deemed necessary or appropr for the investment of local funds: tJame: Lee Maness Title: Director of rinance Signature: ' r c4�� Name: Jim Cook Title: Asst. Director of Finance Signature: - !e' i -`�? � <r� Name: Camelia Fisher Title: Senior Staff Accountant Signature: 99 Appendix L Resolution 96 -39 Local Government Investment Cooperative Resolution RESOLUTION APPROVING AND AUTHORIZING EXECU710ty OF AN INTEFLLOCAL AGREEMENT FOR PARTICIPATION IN A PUBLIC FUNDS INVESTMENT cOOPERA7TvE (rHE "COOPERATIVE "), DESIGNATING THE BOARD OF DMECTORS OF THE COOPERATIVE AS AN AGENCY AND INSTRUMENTALITY TO SUPERVISE THE COOPERATIVE, APPROVING INVESTMENT POLICIES OF THE COOPERATIVE, APPOINTING AUTHORIZED REPRESENTATIVES AND DESIGNATING INVESTMENT OFFICERS WHEREAS, the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, as amended (the 'Interlocal Act'), permits any "local government' to contract with one or more other 'local governments" to perform 'governmental functions and services, including investment of public fiends (as such phrases are defined in the Interlocal Act); WHEREAS, the Interlocal. Act au horixes the contracting parties to any interlocal agreement to contract with agencies of the State of Texas, within the meaning of Chapter 772 of the Government Code, WHEREAS, the Act permits the contracting parties to any interlocal agreement to create an administrative agency to supervise the performance of such interlocal agreement and to employ personnel and engage 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 2255 of the Texas Government Code, 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 eligible public funds investment pool, under the terms and conditions set forth in PFIA; WIGS, City of North Richland bills (the `Government Entity ") desires to enter into that certain Interlocal Agreement (the "Agreement"), a copy of which is presented with this Resolution and is incorporated herein by reference, and to become a participant in a public funds investment pool created thereunder and under PFIA, to be known as Local Government Investment Cooperativt (the 'Cooperative'); WHEREAS, the Government Entity is a Government Entity as defined in the Agreement; and Rs"utioa 100 Appendix L WIEREAS, the Government Entity desires to cause administration of the Cooperative to be performed by a board of directors (the 'Board'), which shall be an administrative agency created under the Interlocal Act; and WFIEREAS, t.7e Government Entity desires to designate the Board as its agency and instrumentality with authority to supervise performmuce of the Agreement, employ personnel and engage in other administrative activities and provide other administrative to execute the terms of the Agreement; services necessary WHEREAS, each capitalized term used i-t this Resolution and rot otherwiw defined has the same meaning assigned to it in the Agreement; NOW, THEREFORE, BE IT RESOLVED: 1. The Agreement is hereby approved and adopted and, upon execution thereof by an Authorized Representative (defined below) and receipt of the Government Entity's application to join the Cooperative by the Administrator, the Government En fu tity shall become a Participant in the Cooperative for the purpose of iravcsting its available funds therein from time to time in accordance with its terms. 2. The Board is hereby designated as an agency and instrumentality of the Government Entity, and the Board shall have the authority to supervise performance of the Agreement and the Cooperative, employ personnel and engage in other administrative activities and provide ether administrative services necessary to execute the terms of the Agreement. 3. The investment policies of the Cooperative, as set forth in the document entitled Investment Policies, as summarizt in the Information 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 money invested in the Cooperative, and any existing investment policies of the Government Entitle in conflict therewith shall not apply to investments in the Cooperative. 4. The following officers, officials or employees of the Government Entity are hereby designated as 'Authorized Representatives" within the meaning of the Agreement, with full power and authority to: execute the Agreement, an application to join the Cooperative and any other documents required to become a Participant; deposit money to and withdraw money from, the Government Entity's Cooperative account from time to time in accordance 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: RawlUdam .Z. 101 Appendix L Signature: Printed Name: Bret Starr Title: Accountant f Signature: L ' IV Printed Name: Jackie Theriot Title: Accounting Manager r ' Signature: Printed Name: Charles Harris Title: Finance Director In accordance with Cooperative procedures, an Authorized Representative shall promptly notify the Cooperative in writing of any changes in who is serving as Authorised Representatives. S. In addition to the foregoing Authorized Representatives, each Investment Officer of the Cooperative appointed by the Board from time to time is hereby designated as an investment officer of the Government Entity and. as such, shall have responsibility for investing the share of Cooperative assets representing funds 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 of holding the share of Cooperative assets representing funds of the Government Enti ty. PASSER AND APPROVED this 5 day of March _ , 19.,, ATTEST: By: B .Ieanette Rewis, City Secretary To,my Brown, Mayor Printed name and title _ Printed Name and Title ' SEAL Raalut;aa -3- 102 Appendix L Additional Party Agreement 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 Interlocal 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. Executed this LJt rda y o f March 1g96. City of Angth Rirhland Hill. Name of Government Entity By. AuthorizeOltepmsentative Tommy Brown Mayor _ Printed Name and Title ACCEP'T'ED: Local G ent Investment Cooperative e By: LOG C Administrator PATRICK SHTNKLE, V.P. Printed Name and Title -to- tatertocat Atreemeut 103 Appendix L Resolution No. 2001 -046 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 [tie 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 313/96, as supplemented on 12131!98 (the "Statement "), 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 Jaruary 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 RICI.ILAND 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 Koonco, 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 arc true: and correct and adopts the preamble as part of the operative provisions of this Resolution; and be it further 104 Appendix L 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: F J Chi Patricia Hfson, City Secretary APPROV S TO LEGAL Rex McEntire, Attorney for the City APPROVED AS TO CONTENT: Larry Ko ce, Director of Finance 105 Appendix L Resolution No. 2003 -023 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 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 4/8102 (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 Government 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 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 RICHtAND 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 106 Appendix L 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 adapted 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 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. PASSED,4, ,ND APPROVED this 24th day of February 2003. ED: C7 Trevi ; k�tr ATTEST: r __ _ Patricia Hutson, City Secretary _ APPROV TO LEGALITY: George Stop es, ttorney for the City APPROVED AS TO CONTENT: arry Ko c , Director of Finance 107 "M" Appendix M GLOSSARY OF COMMON TREASURY TERMINOLOGY Acenied Interest: The accumulated interest due on a bond as of the last interest payment ma& by the issuer. Agency: A debt security issued by a federal or federally sponsored agency. Federal agencies are backed by the full faith and credit of the U.S. Government. Federally sponsored agencies (FSAs) are backed by each particular agency with a market perception that there is an implicit government guarantee. An example of federal agency is the Government National Mortgage Association (GIN'MA). An example of a FSA is the Federal rational Mortgage Association (FNMA). Amortization: The systematic reduction of the amount owed on a debt issue through periodic payments of principal. Asked: The price at *hick securities are offered. Average Life: The average length of time that an issue of set7ial bonds and/or tram bonds with a mandatory sinking fund feature is expected to be outstanding. Basis Point: A unit of measurement used in the valuation of fixed- income securities equal to 11 1 100 of a percent of yield. E.g., "114" of 1 percent is equal to 25 basis points, Bid: The indicated price at which a buyer is willing to purchase a security or commodity. Book Value: The value at which a security is carried on the inventory lists or other financial records of an investor. The book value may differ significantly from the security's current value in the market. Broker: A broker brings buyers and sellers together for a conunission paid by the initiator of the transaction or by both sides; he does not position, In the money market, brokers are active in markets in which banks buy and sell money and in interdealer markets. Callable Bond: A bond issue in which all or part of its outstanding principal arriount may be redeemed before maturity by the issuer under specified conditions, Call Price: The price at which an issuer may redeem a bond prior to maturity. The price is usually at a slight premium to the bond's original issue price to compensate the holder for loss of income and ownership. Call Risk: The risk to a bondholder that a bond may be redeemed prior to maturity, Cash Sale/Purchase: A transaction vvhieh calls for delivery and payment of securities on the same day that tine transaction is initiated. Certificate of Deposit (CD): A time deposit with a specific maturity evidenced by a certificate. Large- denornination CD's are typically negotiable. 109 Appendix M Collateralization: Process by which a borrower pledges securities, property, or other deposits for the purpose of securing the repayment of a loan and/or security. Commercial paper: An unsecured short -term promissory note issued by corporations, with maturities ranging from 2 to 270 days. Comprehensive Annual Financial Report (CAFR): The official annual report for the City of Mesquite. It includes combined statements and basic financial statements for each individual fund and account group prepared in conformity with GAAP. It also includes supporting schedules necessary to demonstrate compliance with finance- related legal and contractual provision, extensive introductory material, and a detailed statistical section. Conveuty: A measure of a bond's price sensitivity to changing interest rates. A .high convexity indicates greater sensitivity of a bond's price to interest rate changes. Coupon Rate: The annual rate of interest received by an investor from the issuer of certain types of fixed - income securities. Also known as the "interest rate," Credit Quality: The measurement of the financial strength of a bond issuer. This measurement helps an investor to understand an issuer's ability to make timely interest payments and repay the loan principal upon maturity. Generally, the higher the credit quality of a bond issuer, the lower the interest rate paid by the issuer because the risk of default is lower. Credit quality ratings are provided by nationally recognized rating agencies. Credit Risk: The risk to an investor that an issuer will default in the payment of interest: andlor principal on a security. Current field (Current Return): A yield calculation determined by dividing the annual interest received on a security by the current market price of that security. Dealer: A deaf, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. Debenture: A bond secured only by the general credit of the issuer. Delivery versus Payment: Theme are two methods of delivery of securities. delivery versus payment and delivery versus receipt(also called free). Delivery versus payment is delivery of securities with at exchange of money for the securities. Delivery versus receipt is the delivery of securities with an exchange of a signed receipt for the securities. Derivative Security: Financial instnunent created from, or whose value depends upon, one or more underlying assets or indexes of asset values. Discount: The amount by which the par value of a security exceeds the price paid for the security. Discount Securities: Non- interest bearing money market instruments that are issued at a discount and redeemed at maturity for full face value, c.g., US. Treasury Bills. 110 Appendix M Diversification: A process of investing assets among a range of security types by sector, maturity and quality rating. Duration: A measure of the timing of the cash flotiv°s, such as the interest payments and the principal repayment, to be received from a given fined- income security. This calculation is based on three variables: term to maturity, coupon rate, and yield to maturity. The duration of a security is a. useful indicator of its price volatility for given changes in interest rates. Fair Value: The amount at which an investment could be exehanged in a current transaction between willing parties, other than in a forced or liquidation sale. Federal Funds (Fed Funds): Funds placed in Federal Reserve banks by depository institutions in excess of current reserve requirements. These depository institutions may lead fed fiends to each other overnight or on a longer basis. They may also transfer funds emong each other on a same -day basis through the Federal Reserve banking system►. Fed funds are considered to be immediately available funds. Federal Funds Rate: interest rate charged by one institution lending federal funds to the other. Federal Credit Agencies: Agencies of the Federal government set up to supple credit to various classes of institutions and individuals, e.g. S &L's, small business firms, students, farmers, farm cooperatives, and exporters. Federal Deposit Insurance Corporation (FDIC): A federal agency that insures bank deposits, currently up to $100,000 per deposit. Federal Home Loan Banks (FHLB): The institutions that regulate and lend to savings and loan associations. The Federal Hoene Loan Banks play a role analogous to that played by the Federal Reserve Banks vis -a -vis member commercial banks. Federal National Mortgage .Association (FNMA): FNAA, like GNMA, was chartered under the Federal National Mortgage Association Act in 1938. FINMA is a federal corporation working under the auspices of the Department of Housing and Urban Development, H.U.D. It is the largest single provider of residential mortgage funds in the United States. Fannie Mae, as the corporation is called, is a private stockholder - owned corporation. Tlzc corporation's purchases include a variety of adjustable mortgages and second loans in addition to fixed -rate mortgages. FNIMA's securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all security holders will receive timehr payment of principal and interest. Federal Open Market Committee (FOMC): Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents, The President of tale New York Federal Reserve Bank is a permanent member while the other Presidents serve on a. rotating basis. The Committee periodically meets to set Federal Reserve guidelines regarding; purchases and sales of Government Securities in the open - market as a means of influencing the volume of battle credit acid money. 111 Appendix M Federal Reserve System: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks and about 5,700 corrunercial banks that are members of the system. Government National Mortgage Association (GNMA or Ginnie Mae): Securities guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations, and other institutinns. Security holder is protected by full faith and credit of the U.S, Government. Ginnie Mae securities are backed by FHA, WA or FMHM mortgages. The term pass through is often used to describe Ginnie Mites. Government Securities: An obligation of the U.S. government, backed by the full faith and credit of the government. These securities are regarded as the highest quality of investment securities available in the U.S. securities market. See "Treasury Bills, Notes, and Bonds." Interest Mate: See "Coupon Rate." Interest Rate Risk: The risk associated with declines or rises in interest rates which cause an investment in a fixed- income security to increase or decrease in value. Internal Controls: An internal control structure designed to ensure that the assets of the entity are protected from loss, theft, or misuse. The internal control structure is designed to provide reasonable assurance that these obiectives are met. The concept of reasonable assurance recognized that 1)the cost of a control should not exceed the benefits likely to be derived and ?) the valuation of costs and benefits requires estimates and judgments by management. Internal controls should address the following points: Control of collusion Collusion is a situation where two or more employees are working in conjunction to defraud their employer. Separation of transaction authority from accounting and record keeping By separating the person who authorizes or performs the transaction f - am the people who record or otherwise account for the transaction, a separation of duties is achieved. Custodial safekeeping Securities purchased from any bank or dealer including appropriate collateral (as defined by state law) shall be placed with an independent third party ror custodial safekeeping. Inverted Yield Curve: A chart. formation that illustrates long -term securities having lower yields than short-term securities. This configuration usually occurs during periods of high inflation coupled with low levels of confidence in the economy and a restrictive monetary policy. Investment Policy: A concise and clear statement of the obiectives and parameters formulated by an investor or investment mrr.ager for a Portfolio of investment securities. Investment-grade Obligations: An investment instrument suitable for purchase: by institutional investors under the prudent person rule. Investment -grade is restricted to those obligations rated BBB or higher by a rating agency, Liquidity: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the phoney market, a security is said to be liquid if the spread between bid and asked prices i3 narrow and reasonable size can be done at those quotes. 112 Appendix M Local Government Investment Pool (LGIP): An investment by local governments in which their money is pooled as a inethmi for managing local funds. Mark -to- market: The process whei the book value or collateral value of a security is adjusted to reflect its current market value. Market Risk: The risk that the value of a security will rise or decline as a result of changes in market conditions. Market Value: Current market price of a security. Master Repurchase Agreement: To protect investors, many public investors will request that repurchase agreements be preceded by a master repurchase agreement between the investor and the financial institution or dealer. The master agreement should define the nature of the transaction, identify the relationship between the parties, establish normal practices regarding ownership and custody of the collateral securities during the term of the investment, provide remedies in the case of default by either party and clarify issues of ownership. The master repurchase agreement protects the investor by eliminating the uncertainty of ownership and hence, allowing investors to liquidate collateral if a bank or dealer defaults during the tenn of the agreement. Maturity: The date an which payment of a financial obligation is due. The final stated maturity is the date on which the issuer must retire a bond and pay the face value to the bondholder. See "weighted Average maturity." Money market: The market in which short -tern debt instruments (bills, commercial paper, bankers' acceptances, etc.) are issued and traded. Money Market Mutual Fund: Mutual Pands that invest solely in money market instruments. Mutual Fund: An investment company that pools money and can invest in a variety of securities, including fixed- income securities and money market instruments. Mutual funds are regulated by the Investment Company Act of 1940. National Association of Securities Dealers (NA-0): A self- regulatory organization (SRO) of brokers and dealers in the over -the- counter securities business. Its regulatory mandate includes authority over fnw that distribute mutual fund shares as well as other securities. Net Asset Value: The market value of one share of an investment company, such as a mutual fund. This figure is calculated by totaling a fiend's assets which includes securities, cash, and any accrued earnings, subtracting this from the fund's liabilities and dividing this total by the number of shares outstanding. This is calculated once a (Lay based on the closing price for each security in the fund's portfolio. No Load Mutual Fund: A mutual fund which does not levy a sales charge on the purchase of its shares. 113 Appendix M Nominal Yield: the stated rate of interest that a bond pays its current owner, based on par value of the security. It is also known as the "coupon," Coupon rate," or " interest rate." Offer. An indicated price at which market participants are willing to sell a security or commodity. Also referred to as the "ask price." Open Market Operations: Purchases and sales of government and certain other securities in the open market by the New York Federal Reserve Sank as directed by the F ©MC in order to influence the volume of money and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and credit; sales have the opposite effect. Open market operations are the Feileral reserve's most important and most flexible monetary policy tool. Par: Face value or principal value of a bond, typically $1,4 00 per bond. Portfolio: Collection of securities held by an investor. Positive Yield Curve: A chart formation that illustrates short -term securities having; lower yields than long -term securities, Premium: The amount by which the price paid for a security exceeds the security's par value. Prime state: A preferred interest rate charged by commercial' banks to their most creditworthy customers. Many interest rates are keyed to this rate. Primary Dealer: A group of government securities dealers that submit daily reports of market activity and positions and monthly financial statements to The Federal .Reserve Bank of New York and are subject to it infonnal oversight. Primary dealers include Securities and .Exchange Commission (SEC) registered securities broker - dealers, banks and a few unregulated firms. Principal: The face value or par value of a debt instrument. Also may refer to the amount of capital invested in a given security. Prospectus: A legal document that must be provided to any prospective purcbaser of a new securities offering registered with the SEC. This can include information on the issuer, the issuer's business, the proposed use of proceeds, the experience of the issuer's management, and certain certified financial statements. Prudent Person Rule: An investment standard outlining the fiduciary responsibilities of public funds investors relating to investment practices. (qualified Public Depositories: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem. taxes under the laws of the state, which has segregated for the ber:cfit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits. 114 Appendix M Rate of Return; The yield obtainable on a security based on its purchase price or its current market price. This ;nay be the amortized yield to maturity on a bond or the current income return. Reinvestment Risk: The risk that a fixed income investor will be unable to reinvest income proceeds from a security Bolding at the same rate of return currently generated by that holding. Repurchase Agreement (RP or RF1 1 0): An agreement of one party to purchase securities at a specified price from a second party and a simultaneous agreement by the first party to resell the securities at a specified price to the second party on demand or at a specified date. Safekeeping: Holding of assets (e.g. securities) by a financial institution. SEC Rule 150-1: Sce uniform net capital rule. Secondary Market: A market made for the purchase and sale of outstanding issues following the initial distribution. Securities & Exchange Commission: Agency created by Congress to protect investors in securities transactions by administering securities legislation. Serial Bond: A bond issue, usually of municipality, with various maturity dates scheduled at regular intervals until the entire issue is retired. Sinking Fund: Money accumulated on a regular basis in a separate custodial account that is used to redeem debt securities or pretbrred stock issues. Swap: Trading one asset for another. Term Bond: Bonds comprising a large part of all of a particular issue which come due in a Single maturity. The issuer usually afire" to make periodic payments into a sinking fund for mandatory redemption of term bonds before maturity. Total Return: The sutrt of all investment income plus changes in the capital value of the portfolio. For mutual funds, return on an investment is composed of share price appreciation plus any realized dividends or capital gains. This is calcutatcd by taking the fallowing components during a certain time period. (Price Appreciation) +(Uividends paid)-`(Capital gains) =Total Return Treasury Bills A non- interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months or one year in tninirnum denominations of $10,000.00. The yields on bills are monitored closely in the money markets for signs of interest rate trends. Treasury Band: long -tarn U.S. Treasury securities having initial maturities of more than ten years, Treasury Notes; Intermediate term coupon baring U.S. Treasury sccuril,its laving initial maturities from one to ten years. Currently, the longest outstanding maturity for such securities is 30 years. 115 Appendix M Uniform Net Capital Rule: Securities and Exchange Commission requirement that member firths as well as nonmember broker - dealers in securities maintain a maximum ration of indebtedness to liquid capital of 15 to 1: also called net capital rule and net capital ratio. Indebtedness covers all nnoney owed to a firm, including margin loaiis and commitments to purchase securities. This is one reason new public issues are spread among members of underwriting syndicates. Uquid capital includes cash and assets easily converted into cash. Volatility: A degree of fluctuation in the price and valuation of securities. Volatility Risk Rating: A rating system to clearly indicate the level of volatility and other non - credit risks associated with securities and certain bond funds. The ratings for bond funds range from this: that have extremely low sensitivity to chanting market conditions and offer the greatest stability of the return ( "aaa" by S &P; "V -I" by Fitch) to those that are highly sensitive with currently identifiable market volatility risk ( "ece" by S&P, "V -10" by Fitch). Weighted Average'Maturity (WAM): The average maturity of all the securities that comprise a portfolio. According to SEC rule 2A -7, the WAM for SEC registered money market mutual funds may not exceed 90 days and no one security may have a maturity that exceeds 397 days. When issued (WI): A conditional transaction in which an authorized new security has not been issued. All "when issued" transactions are settled when the actual security is issued. Yield: The rate of annual income retum on an investment, expressed as a percentage. (a) Income Yield is obtained by dividing the current dollar income by the current market price of the security. (b) Net Yield or Yield to Maturity is the current income yield minus any premium above par or plus any discount from par n purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond.. Yield-to-call (Yl'C): The rate of return an investor earns from a bond assuuning the bond is redeemed (called) prior to its nominal maturity date. Yield Curve -A graphic representation that depicts the relationship at a given point in time between yields and maturity for bonds that are identical in every way except maturity. A normal yield curve may be alternatively referred to a positive yield curve. Yield -to- maturity: The rate of return yielded by a debt security held to maturity when both interest payments and the investor's potential capital gain or loss are included in the calculation of return. Zero- coupon Securities: Security that is issued at a discount and makes no periodic interest payments. The rate of return consists of a gradual accretion of the principal of the security and is payable at par upon maturity. 116 CITY OF NORTH RICHLAND HILLS Department: City Manager's Office Council Meeting Date: 1 -24 -2011 Presented by: Karen Bostic Agenda No. F.4 Subject: GN 2011 -008 Approve Suspension of the February 14, 2011 Effective Date of Oncor Electric Delivery's Request To Increase Rates - Resolution No. 2011 -005 Summary Oncor Electric Delivery Company ( "Oncor" or "the Company ") filed an application on or about January 7, 2011 with cities retaining original jurisdiction seeking to increase system -wide transmission and distribution rates by $353 million. The Company asks the city to approve a 14.6% increase in residential rates, a 15.5% increase in commercial rates, and a 25.9% increase in street lighting rates. According to Oncor, rates would increase by approximately $60 on an annual basis for an average residential customer. The attached resolution suspends the February 14, 2011 effective date of the Company's rate increase for the maximum period permitted by law to allow the city, working in conjunction with the Steering Committee of Cities Served by Oncor, to evaluate the filing, determine whether the filing complies with law, and if lawful, to determine what further strategy, including settlement, to pursue. General Description The City of North Richland Hills is a member of a 146 -city coalition known as the Steering Committee of Cities Served by Oncor ( "Steering Committee "). The Steering Committee has been in existence since the late 1980s. It took on a formal structure in the early 1990s when cities served by the former TXU gave up their statutory right to rate case expense reimbursement in exchange for higher franchise fee payments. Empowered by city resolutions and funded by per capita assessments, the Steering Committee has been the primary public interest advocate before the Public Utility Commission, the courts, and the Legislature on electric utility regulation matters for the last 20 years. The current filing comes 15 months following the implementation of Oncor's last rate increase. That case is currently on appeal. As mentioned above, Oncor is seeking to increase system -wide transmission and distribution rates by $353 million. The attached resolution suspends the effective date of the rate increase by 90 days. Doing so will allow time to study and investigate the application. The effective date of the rate increase application is February 14, 2011. The resolution also authorizes the Steering Committee, consistent with the city's resolution approving membership in the Steering Committee, to act on behalf of the city at the local level in settlement discussions, in preparation of a rate ordinance, on appeal of the rate ordinance to the PUC, and on appeal to the courts. Negotiating clout and efficiency are enhanced by the city cooperating with the Steering Committee in a common review and common purpose. Additionally, rate case expenses are minimized when the Steering Committee hires one set of attorneys and experts who work under the guidance and control of the Executive Committee of the Steering Committee. Also included in the resolution is reimbursement to the Steering Committee for its reasonable rate case expenses. Legal counsel and consultants approved by the Executive Committee of the Steering Committee will submit monthly invoices that will be forwarded to Oncor for reimbursement. No individual city incurs liability for payment of rate case expenses by adopting a suspension resolution. Finally, the resolution recites that the resolution was passed at a meeting that was open to the public and that the consideration of the resolution was properly noticed, as well as provides that both Oncor and Steering Committee counsel will be notified of the city's action by sending a copy of the approved and signed resolution to certain designated individuals. Recommendation Approve Resolution No. 2011 -005. RESOLUTION NO. 2011 -005 RESOLUTION OF THE CITY OF NORTH RICHLAND HILLS SUSPENDING THE FEBRUARY 14, 2011, EFFECTIVE DATE OF ONCOR ELECTRIC DELIVERY COMPANY'S REQUESTED RATE CHANGE TO PERMIT THE CITY TIME TO STUDY THE REQUEST AND TO ESTABLISH REASONABLE RATES; APPROVING COOPERATION WITH THE STEERING COMMITTEE OF CITIES SERVED BY ONCOR TO HIRE LEGAL AND CONSULTING SERVICES AND TO NEGOTIATE WITH THE COMPANY AND DIRECT ANY NECESSARY LITIGATION AND APPEALS; FINDING THAT THE MEETING AT WHICH THIS RESOLUTION IS PASSED IS OPEN TO THE PUBLIC AS REQUIRED BY LAW; REQUIRING NOTICE OF THIS RESOLUTION TO THE COMPANY AND LEGAL COUNSEL FOR THE STEERING COMMITTEE WHEREAS, on or about January 7, 2011, Oncor Electric Delivery Company ( Oncor), pursuant to PURA §§ 33.001 and 36.001 filed with the City of North Richland Hills a Statement of Intent to increase electric transmission and distribution rates in all municipalities exercising original jurisdiction within its service area effective February 14, 2011; and WHEREAS, the City of North Richland Hills is a member of the Steering Committee of Cities Served by Oncor ( "Steering Committee ") and will cooperate with the 146 similarly situated city members and other city participants in conducting a review of the Company's application and to hire and direct legal counsel and consultants and to prepare a common response and to negotiate with the Company prior to setting reasonable rates and direct any necessary litigation; and WHEREAS, PURA § 36.108 grants local regulatory authorities the right to suspend the effective date of proposed rate changes for ninety (90) days after the date the rate change would otherwise be effective; and WHEREAS, PURA § 33.023 provides that costs incurred by Cities in ratemaking activities are to be reimbursed by the regulated utility. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF NORTH RICHLAND HILLS, TEXAS: SECTION 1. THAT the February 14, 2011 effective date of the rate request submitted by Oncor on or about January 7, 2011, be suspended for the maximum period allowed by law to permit adequate time to review the proposed changes and to establish reasonable rates. SECTION 2. THAT as indicated in the City's resolution approving membership in the Steering Committee, the Executive Committee of the Steering Committee is authorized to hire and direct legal counsel and consultants, negotiate with Oncor, make recommendations regarding reasonable rates, and to intervene and direct any necessary administrative proceedings or court litigation associated with an appeal of a rate ordinance and the rate case filed with the City or Public Utility Commission. SECTION 3, THAT the City's reasonable rate case expenses shall be reimbursed by Oncor on a monthly basis. SECTION 4, THAT it is hereby officially found and determined that the meeting at which this Resolution is passed is open to the public as required by law and the public notice of the time, place, and purpose of said meeting was given as required. SECTION 5, THAT a copy of this Resolution shall be sent to Oncor, care of Autry Warren, Oncor Electric Delivery Company, LLC, 1601 Bryan St., 23r Floor, Dallas, Texas 75201 and to Geoffrey Gay, General Counsel to the Steering Committee, at Lloyd Gosselink Rochelle & Townsend, P.C., P.O. Box 1725, Austin, Texas 78767 -1725. PASSED AND APPROVED this the 24th day of January, 2011. CITY OF NORTH RICHLAND HILLS By: Oscar Trevino, Mayor ATTEST: Patricia Hutson, City Secretary APPROVED AS TO FORM AND LEGALITY: George A. Staples, City Attorney APPROVED AS TO CONTENT: Karen Bostic, Assistant City Manager CITY OF NORTH RICHLAND HILLS Department: Public Works Council Meeting Date: 1 -24 -2011 Presented by: JCates /MCurtis Agenda No. F.5 Subject: PU 2011 -003 Authorize the Purchase and Installation of Equipment from Consolidated Traffic Controls in the amount of $190,900 to replace the existing Loop Detectors Summary This item is to request authorization to purchase video detection system at signalized intersections along Boulevard 26 from Glenview Drive to Walker Boulevard, Smithfield Road from Chapman Drive to Starnes Road and Glenview Drive from Rufe Snow to Vance Road. This project includes a turn key implementation by Consolidated Traffic Controls, Inc. in the amount $190,900. General Description The intersections identified for this project currently use a pavement vehicle detection system that consists of small electrical current wires. Pavement vehicle detection systems create a lot of maintenance problems and fail frequently. Temperature changes and precipitation cause interference with the operation and pavement failure or movement of the pavement will cause the wires to break. When the system fails the signal light is affected, leading to traffic delays and an increase in fuel consumption and air pollution. The new video vehicle detection equipment is not effected by weather conditions or pavement failure /deterioration and has a life expectancy of up to 10 years. Council approved funding for the Video Vehicle Detection System in the 2010/2011 budget. This project includes a turn key implementation of video detection at 14 intersections. The Local Government Code states that the purchases made through a cooperative purchasing agreement satisfy any state law that would require the city to solicit competitive bids. The City of North Richland Hills is a member of several inter -local groups and utilized an existing contract with Consolidated Traffic Controls, Inc through Houston - Galveston Area Council (H -GAC) to obtain quotes for equipment and installation. Consolidated Traffic Controls, Inc. has completed several projects in the past for the North Richland Hills' Public Works Department and continues to maintain an outstanding relationship with the city. Recommendation Authorize the purchase of the video detection equipment and installation in the amount of $190,900 from Consolidated Traffic Controls, Inc. CONTRACT PRICING WORKSHEET Contract t PE - -09 Frc aretl 12/8/2010 For Catalog & Price Sheet Type Purchases No.: P 1 agvt City of North Richland Hills, Texas Contnetec ;Consolidated Traffic Controls, Inc. Agency CC �rc Cmylon Cre mm, Street Supervisor P a K•d l Bry+m y Jo Phone: '-817427.6459 ['hone: 1800448 -8841 For :917427.6444 Fax: X800 -448- 8850 Entail: i scromeeftwilXcorn Email: bjones&tc- traffic.conr catalog/ Pike Sheet xaffic Control, Enforcement & Signal Preemption Equipment SVamc General Dweiption LEK Video Daketim SpAem ofpramad: � ..y i , attach ;Cddrttunal��Yir�YlfNetniti C'af'aloR/ Pt4Se Ctraet Iter�ts tscZir,•, puydntuil itentixx Iiek'± <. 4 Quail i Descriptton Urrlt Pr ` Total 44 1 Video IQ Color Camera 1750? 77000 11 W Camera Video IQ Card 5325 5857 11 ;Cain Rack with Power Suppt+' 460: 1I 4 Cntnera lnierface Paucl. 833; 9163 11 115' Vxieo 10 {.able_ + f T r t 151 1265 r 44U' Canters Pi tml� 5831 25652 0 i i 0 132 t •.Vidco System Installation 1501 19 0 Total From Other Sheets, If Any: Subtotal A: 196515 I# LTaptrbk�isedlJlidtrgv # ccis�or�iir5rt tii�rit�nsriFetiilzrB�lo+ti 14r+ch 1dcLhi,irnl8 i.Itl4ew rs % IVot2; lJnlmbhyhe f Itcnla are, iic rizi�lr'iz no{ svl rattled atxl wsQ . at t oittra4tofs t itl.t Quail DoscripHon i Unit Pr Total 11 !Color Video Monitor 2251 2475 I1 Computer Mouse IS' 165 44 '•,Camera Mounting Bracket 133! 5852 I 0 Total Front Other Sheets, If Any Subtotal B. 8492 Check: The total cost ofUnpublished Options (Subtotal B) cannot exceed 25 %of the total from: For tlrls transaction the percentage eis yy�� Section A. 1 vtllel .>,lletil dnfr4 Prscgl'intt, Ti wile -°st lfre[>it I ilu T2eaQ� or, A�iscelktrteouCh +roi� Discount -47707 Subtotal C: -47707 bel vet y Ante 30 to 45 Drys ARa I}, Tot tl PctrclYnse Price { + 3tCj 157. CONTRAA17f PRICING WORKSHEET Contract 1 For Catalog &Price Sltcef Type Purchases Nn.: � -{l Prepared: 4 1218/7010 ! of Nonh Richland Hills. Texas � Cdnnctor. �Gonsofiideted TeaMo K ar4tM�ls Lrc. ptr JC s>4ou Cremetm, Street Supe#visor prr}y; Ii3tyon Dates Mom 1817 427 -6459 Piano: ?800448 -8841 t Aw ...9$17427 - M44 tree: 800449.8$50 'Wh lgcremeetJ(e tvhsx.00,n emaa: bjoae tr etc - traffic cam. Casoiaa Prise 3noor L. rafric. Control, Lnkwwruent & SiSual Ptoemption Csiuipme,it Kam <s C.axtrN Arrcriprtan t;Ei[ Mdse Dettottea System atPradueRc C +tri1» 71'rtcc7xhctt lfiiibsutgpuiltnetii itctniab Slelais Y'laslt alrlitiawl i9srt 1f lyer sstrx ._ Q+tan Dtsrrlpiinn = Unit Pr Total 9 f Video IQ Color Canton 175 01 1575 } t3 Camera Video IQ Card �« _ � y 4917 14751 3 Part) FLAclt Stith pon ar 4ttl,t,ls 460 138 3 (.1 Tomcat Iaitrface Pan:i ' 833E 2471 3 i 1't Video 10 Cahly .. h : 1ISJ 34 9' C'nittera Pilttntl f i S08i 3572 , s Isoi 40 27 Video Systom lnstaliation 0 i Total From tither Sbeeis, If Arty: Subtotal A: 43347 6 lTrfpttirllxt d Stlniu 1�cgi rpa� or 'i«xticri #cite ltnrnto Clrinxt 1itch Jtldiiliital �lttct tE i�tct :ir+' 1�Iatrt; l lnpttlittth�k1 lleet:t ere, an >• x�ttich +)rrr oyA ratfiaittfiect aycF�ptir.ed us +,'cMto 1:•icl, t {fuan Description Unit Pr Total 3 Plor Woo Mrmitar 2251 67 3 WOrol)eter MOUSC ! 15; 45 9 Townes R ouminp Bracket 133j i { r.. � a 9 q i Total From tither Sheets, if ,% Subtotal Bt 1917 i Yteck The total cost ai Unpuh{ishad ()pti<wts (Suhintai F3) cattrwrratered 25�k oY'tltn total Irxxn; For this transaction the pttaerit the ix: 4 °. Seciian A. `. tt(irr 4titrrsalitt ¢ [1cat[iita� Cr tU4; Lsiri(htt t6M l2eadx or Rtie3laau on# tlr rpge4` Discount 11664 Subtotal Q l MY, Deliver y, Ate to 45 Days Alit) CITY OF NORTH RICHLAND HILLS Department: Police Council Meeting Date: 1 -24 -2011 Presented by: Mike Hamlin Agenda No. F.6 Subject: GN 2011 -009 Amend the Code of Ordinances by adding Restricted Residency - Ordinance No. 3125 Summary The Police Department is seeking Council approval for an ordinance regulating the residency of certain persons convicted or adjudicated of certain offenses involving a victim younger than 17 years of age. Persons required to register as sex offenders stemming from offenses in which the victim was younger than 17 years of age are prohibited from residing within 1,000 feet of locations where children commonly gather. General Description Currently, the City has no regulations governing the residential location of persons that were convicted or adjudicated for certain offenses as defined in Chapter 62 (Sex Offender Registration Program) of the Code of Criminal Procedure. The Texas Local Government Code allows for the creation of ordinances necessary to protect health, life, and property and to preserve the good government, order, and security of its citizens. When persons convicted or adjudicated for crimes couched in Chapter 62 of the Code of Criminal Procedure and are monitored as a part of community supervision, certain residency regulations are imposed upon them regarding residing within certain distances of areas where children tend to gather (i.e., playground, school, video arcade facility, youth center, public swimming pools, day care facilities). This residency restriction is imposed as a preventative measure to protect potential future child victims. Once these certain offenders are released from community supervision, statutorily and generally, they are required to continue to participate in the sex offender registration process, with no residency restrictions. This registration process is usually accomplished through the local law enforcement agency over which the offender resides and /or works. This ordinance will regulate the residency of persons who have been convicted or adjudicated for offenses in which the victim(s) was /were younger than 17 years of age. The ordinance will prohibit these specific offenders from residing within 1,000 feet of a location where children tend to gather, regardless of temporary or permanent residency. Upon approval, registrants who already live within the restricted areas in North Richland Hills will not be required to move or relocate. The ordinance stipulates that, generally, distances are determined from boundary line to boundary line. In cases of multiple dwellings on a single property, distances are determined by either building or drive access of the registrant's residence to the property line of the premise where children commonly gather. The ordinance protects the residency of registrants that were established prior to the ordinance; those who offended as minors and were not convicted as an adult; those who are minors; and those who established residency and a protected location opened or established afterwards. Recommendation: Approve Ordinance No. 3125 ORDINANCE NO. 3125 AN ORDINANCE AMENDING CHAPTER 50, MISCELLANEOUS OFFENSES, OF THE CODE OF ORDINANCES OF THE CITY OF NORTH RICHLAND HILLS, TEXAS, AND ADDING A NEW ARTICLE IV RESTRICTING THE RESIDENCE OF CERTAIN SEX OFFENDERS 1,000 FEET OF ANY DEFINED PREMISES WHERE CHILDREN COMMONLY GATHER, INCLUDING A PLAYGROUND, SCHOOL, DAY- CARE FACILITY, VIDEO ARCADE FACILITY, PUBLIC OR PRIVATE YOUTH CENTER, OR PUBLIC SWIMMING POOL; PROVIDING THAT CULPABLE MENTAL STATE IS NOT REQUIRED FOR COMMITTING AN OFFENSE UNDER THIS REGULATION; PROVIDING AFFIRMATIVE DEFENSES; ESTABLISHING A PENALTY; PROVIDING THAT THIS ORDINANCE SHALL BE CUMULATIVE; PROVIDING FOR SEVERABILITY; PROVIDING FOR INJUNCTIONS; PROVIDING FOR PUBLICATION AND PROVIDING AN EFFECTIVE DATE. WHEREAS, the City Council of the City of North Richland Hills finds and declares that sex offenders in areas where children tend to gather constitutes a serious threat to public safety; and WHEREAS, the City Council finds that establishing a policy to restrict the property available for residency to sex offenders will provide better protection for children gathering in the City; and WHEREAS, the City Council finds from the evidence that the recidivism rate for released sex offenders is significant, especially for those who commit their crimes against children; and WHEREAS, the City Council finds from the evidence that restrictions on the proximity of sex offenders to schools or other facilities that might create temptation to repeat offenses are one way to minimize the risk of recidivism; and WHEREAS, the Texas Code of Criminal Procedure provides a 1,000 foot safety zone for children, as a condition of community supervision for those convicted of certain sexual offenses; and WHEREAS, the United States 8 th Circuit Court of Appeals issued an opinion in the case of Doe v. Miller, 405 F. 3d 700 (8 Cir. 2005), in which the Court upheld similar residency restrictions contained in the State of Iowa Statutes and found the restrictions to be constitutional; and, WHEREAS, the City of North Richland Hills has the authority, pursuant to Texas Local Government Code, to adopt such provisions in order to protect the health, safety, and welfare of its residents; and, WHEREAS, the Attorney General of the State of Texas has opined that municipalities may enact ordinances restricting the residence of registered sex offenders; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF NORTH RICHLAND HILLS, TEXAS: SECTION 1. That Chapter 50 of the Code of Ordinances of the City of North Richland Hills, Texas is hereby amended by adding a new Article IV, "Regulation of Sex Offender Residency" which shall read as follows: "Article IV Regulation of Sex Offender Residency Sec. 50-50. Definitions For the purposes of this Article, the following terms, words, and the derivations thereof shall have the meanings given herein. "Database" means a computerized central database, maintained by the Department of Public Safety, containing information required for sex offender registration. "Minor" means a person younger than seventeen (17) years of age. "Permanent Residence" means a place where a person abides, lodges, or resides for fourteen (14) or more consecutive days. "Temporary Residence" means a place where a person abides, lodges or resides for a period of fourteen (14) or more days in the aggregate during any calendar year and which is not the person's permanent address, or a place where a person routinely abides, resides or lodges for a period of four or more consecutive or nonconsecutive days in any month and which is not the person's permanent residences. Sec. 50 -51. Offenses For each person required to register as a sex offender pursuant to Chapter 62, Code of Criminal Procedure, because of a reportable conviction or adjudication involving a victim younger than 17 years of age, it is unlawful for that person to establish a permanent residence or temporary residence within 1,000 feet of any defined premise where children commonly gather, including a playground, school, day care facility, video arcade facility, public or private youth center, or public swimming pool, as those terms are defined in the Health and Safety Code of the State of Texas. It is unlawful to let or rent any place, structure or part thereof, with the knowledge that it will be used as a permanent residence or temporary residence by any person prohibited from establishing such permanent residence or temporary residence pursuant to the terms of this article, if such place, structure or part thereof, is located within 1,000 feet of any premises where children commonly gather, including a playground, school, day care facility, video arcade facility, public or private youth center, public swimming pool, as defined in the Health and Safety Code of the State of Texas. Nothing in this provision shall require any person to sell or otherwise dispose of any real estate or home acquired or owned prior to the conviction of the person as a sex offender. Sec. 50 -52. Evidentiary Matters; Measurements It shall be prima facie evidence that this Section applies to such a person if that person's record appears on the Database and the Database indicates that the victim was younger the 17 years of age. For the purposes of determining the minimum distance separation, the requirement shall be measured by following a straight line from the outer property line of the permanent or temporary residence to the nearest property line of the premises where children commonly gather, as described herein above, or, in the case of multiple residences on one property, the distance requirement shall be measured from the nearest portion of the building or structure used as a permanent or temporary residence by the sex offender or the parking lot or driveway providing access thereto, whichever is closest to the nearest property line of the premises where children commonly gather, as described herein above. A map depicting the prohibited areas shall be created by the City and maintained by the City. The City shall review the map annually for changes. Said map will be available to the public through the North Richland Hills Police Department. Sec. 50 -53. Culpable Mental State Not Required: Neither allegation nor evidence of a culpable mental state is required for the proof of an offense defined by this Section. Sec. 50 -54. Affirmative Defenses It is an affirmative defense to prosecution if any of the following conditions apply: The person required to register on the Database established the permanent or temporary residence and has complied with all of the sex offender registration laws of the State of Texas, prior to the date of the adoption of this ordinance. The person required to register on the Database was a minor when he or she committed the offense requiring such registration and was not convicted as an adult. The person required to register on the Database is a minor. The premises where children commonly gather, as specified herein, within 1,000 feet of the permanent or temporary residence of the person required to register on the Database was opened after the person established the permanent or temporary residence and complied with all sex offender registration laws of the State of Texas. The information on the Database is incorrect, and, if corrected, this Section would not apply to the person who was erroneously listed in the Database. Sec. 50-55. Penalty Any person, firm, corporation, agent or employee thereof who commits an offense under the provisions of this Article shall be guilty of a misdemeanor and upon conviction thereof shall be fined an amount not to exceed Five Hundred and No /100 Dollars ($500.00) for each offense. Each day that a violation is permitted to exist shall constitute a separate offense. Sec. 50 -56. Injunctive relief Any violation of this Article can be enjoined by a suit filed in the name of the City of North Richland Hills in a court of competent jurisdiction, and this remedy shall be in addition to any penal provision in this ordinance or in the Code of the City of North Richland Hills." SECTION 2: Effect on other Ordinances This ordinance shall be cumulative of all provisions of ordinances and of the Code of Ordinances of the City of North Richland Hills, Texas, as amended, except when the provisions of this ordinance are in direct conflict with the provisions of such ordinances and such Code, in which event, the conflicting provisions of such ordinances and such Code are hereby repealed. SECTION 3 Severability It is hereby declared to be the intention of the City Council that the sections, paragraphs, sentences, clauses and phrases of this ordinance are severable and, if any phrase, clause, sentence, paragraph or section of this ordinance shall be declared unconstitutional or otherwise invalid by the final judgment or decree of any court of competent jurisdiction, such invalidity shall not affect any of the remaining phrases, clauses, sentences, paragraphs and sections of this ordinance, since the same would have been enacted by the city council without the incorporation in this ordinance of any such invalid phrase, clause, sentence, paragraph or section SECTION 4: The City Secretary is hereby authorized and directed to cause the publication of the descriptive caption and penalty clauses of this ordinance as an alternative method of publication provided by law. SECTION 5: This ordinance shall be in full force and effect immediately upon passage. AND IT IS SO ORDAINED. PASSED AND APPROVED this 24th day of January, 2011. CITY OF NORTH RICHLAND HILLS By: Oscar Trevino, Mayor ATTEST: Patricia Hutson, City Secretary APPROVED AS TO FORM AND LEGALITY: George A. Staples, City Attorney APPROVED AS TO CONTENT: Jimmy Perdue, Director of Public Safety CITY OF NORTH RICHLAND HILLS Department: Information Services Council Meeting Date: 1 -24 -2011 Presented by: Kyle Spooner Agenda No. F.7 Subject: PU 2011 -004 Authorize the purchase of replacement of point -of -sale system for NRH2O Family Waterpark from Centaman Inc. in the amount of $161,375 Summary Council is being requested to authorize the purchase of a new point -of -sale (POS) system used for guest ticketing, retail food sales management and inventory, and group sales ticketing management. This is a replacement for NRH2O's existing software system purchased for the 2001 Season. General Description NRH2O, as an enterprise fund, relies heavily on its point of sale system for sales of tickets, passes and group outings. This system also allows for the sale of food, beverage and retail items throughout the park. The current system has become outdated as continued feature development has all but stopped and the company's staff has shrunk from multiple employees down to one or two. As the park relies on this system for the collection of approximately $4,000,000 in revenue annually, this system's stability and set of features is of utmost importance to the continued operation of the park. Replacing the existing system with one that offers up to date features will allow NRH2O to remain competitive in the market and will allow for greater efficiencies, specifically in the areas of food and beverage inventory. Food and beverage sales are the number two revenue stream for the park after admissions (tickets and passes). Funding for this project is contained in the 2010/11 Capital Improvement Budget in the amount of $175,000. The city issued a request for proposals in October and received eight responses from various vendors. An evaluation committee including representatives from Information Services, Human Resources, Parks & Recreation and NRH2O reviewed the responses and selected three companies to interview: Centaman Systems, Siriusware and Gateway Ticketing Systems. After receiving demonstrations from each company, the committee recommended Centaman Systems, Inc. be awarded the contract to replace the POS system at NRH2O. Centaman Systems has been in operation since 1991, supplying ticketing and venue management systems worldwide to the leisure, tourism, education, and government markets. Centaman has a substantial team behind its development and support and operates seven offices throughout Australia, New Zealand, and the United States. Centaman is a member of the International Association of Amusement Parks and Attractions (IAAPA) and the World Waterpark Association (WWA). Recommendation Authorize the purchase of the replacement of the point of sale system for NRH2O in the amount of $161,375. CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Agenda No. G.0 Subject: EXECUTIVE SESSION ITEMS CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Agenda No. G.1 Subject: Action on Any Item Discussed in Executive Session Listed on Work Session Agenda CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Agenda No. H.0 Subject: INFORMATION AND REPORTS CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Councilman Scott Turnage Agenda No. H.1 Subject: Announcements - Councilman Turnage Announcements The City of North Richland Hills will host its annual Daddy- Daughter Valentine Dance on Saturday, February 5th. Ages 3 to 7 are invited to dance from 6 p.m. to 7:30 p.m., while ages 8 to 16 are invited from 8 p.m. to 9:30 p.m. The cost is $8 per person. Tickets are on sale at the NRH Recreation Center. For more details, please call 817 - 427 -6600. Volunteers from AARP will be at the North Richland Hills Public Library each Monday from February 7th through April 11 th to assist people with their tax returns. Taxpayers of all ages are eligible for this free service. Appointments are required. To make an appointment or get more information, please call the Library at 817 - 427 -6814. Kudos Korner Every Council Meeting, we spotlight our employees for the great things they do. Joe Slinkard, Matt Visser, Becca Collins, Jenny Cort and Christi Garcia, Police Department — A resident recently called to express her deep appreciation and thanks to those in the Police Department who helped her after she had been defrauded and lost every penny. The police investigated her case and helped her with the bank paperwork in order to recover her money. They also helped her pay a month of rent and electricity so she would not lose her apartment. As a senior citizen with no family, she is thankful that someone was there to help. It is clear that the NRH Police Department truly cares for its residents, she said. CITY OF NORTH RICHLAND HILLS Department: City Secretary Council Meeting Date: 1 -24 -2011 Presented by: Agenda No. H.2 Subject: Adjournment