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A. This chapter applies to the investment of all city moneys, unless otherwise provided expressly by code.

B. The city investment portfolio shall be managed so that the portfolio, as a whole, meets the objectives set forth below. All persons selecting investments for city moneys shall adhere to these objectives, which are listed in order of relative importance.

1. Safety. 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 risk and interest rate risk.

a. Credit Risk. The city will minimize credit risk, the risk of loss due to the failure of the security issuer or backer, by:

i. Limiting investments to high quality investment grade securities;

ii. Pre-qualifying the financial institutions, broker/dealers, intermediaries, and advisers with which the city will do business; and

iii. Diversifying the investment portfolio so that potential losses on individual securities will be minimized.

b. Interest Rate Risk. The city will minimize the risk that the market value of securities in the portfolio will fall due to changes in general interest rates, by:

i. Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity; and

ii. Investing operating funds primarily in shorter-term securities, money market mutual funds, or similar investment pools.

2. Liquidity. Maintaining sufficient liquidity to meet the city’s cash flow requirements by structuring the portfolio so that securities mature concurrent with cash needs to meet anticipated demands. Since all possible cash demands cannot be anticipated, the portfolio should consist largely of securities with active secondary or resale markets. A minimum daily cash requirement will be established by the finance director, which may be placed in money market mutual funds or local government investment pools which offer security and same-day liquidity for short-term funds.

3. Yield. Achieving a reasonable market rate of return relative to treasury yields as a benchmark 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. Securities shall not be sold prior to maturity with the following exceptions:

a. A security with declining credit may be sold early to minimize loss of principal.

b. Liquidity needs of the portfolio require that the security be sold.

c. Duration adjustments so long as the security sold and purchased is in the best interest of the portfolio keeping safety and liquidity first.

C. Notwithstanding the above objectives, no person shall invest city moneys in a manner which violates any provision of this chapter. (Ord. 12-08 § 2, 2012)