5.14.050 Authorized investments.
A. To provide maximum security for the investment of public funds and to provide the greatest interest revenue consistent with safety.
B. The finance director shall manage an internal portfolio consistent with WMC 5.14.030. The internal portfolio shall have a duration of less than one year and be specifically designed for daily cash flow needs or short-term funds.
C. The finance director shall contract for the service of an external portfolio manager to complement and supplement the internal portfolio. The external portfolio manager shall report to the finance director and council and shall exercise the judgment and care under the circumstances then prevailing which an institutional investor of ordinary prudence, discretion, and intelligence exercises in the management of large investments entrusted to it not in regard to speculation but in regard to the permanent disposition of funds, considering probable safety of capital as well as probable income. The external manager shall not be the same as that of the custodial bank as referenced in WMC 5.14.080.
D. City moneys shall be invested only in the following instruments. All securities purchased by the city, and all other city investments, must mature not later than the time indicated below, measured from the settlement date of the city’s investment transaction:
1. U.S. government obligations, U.S. government agency obligations, and U.S. government instrumentality obligations, which have a liquid market with a readily determinable market value and are insured or guaranteed by the United States or agencies or instrumentalities of the United States: five years. Securities in these asset classes with maturities longer than five years would be permitted if they have coupon rates that adjust periodically;
2. Repurchase agreements that are documented by a written agreement, and are fully collateralized by delivery of government related obligations as referenced in subsection (D)(1) of this section, to an independent third-party custodian, which meet a margin requirement of 102 percent of the principal and unpaid accrued interest: two years;
3. Certificates of deposit and other deposits at banks and savings and loan associations collateralized as provided in WMC 5.14.080: three years;
4. Uncollateralized deposits at banks and savings and loan associations, to the extent that the deposits are insured by the Federal Deposit Insurance Corporation (FDIC) or the Federal Savings and Loan Insurance Corporation: three years;
5. Bonds and notes which are issued by any state or political subdivision thereof, and which are rated A or higher by a nationally recognized statistical rating organization: five years;
6. Prime commercial paper graded A1 or higher by a Moody’s Investor’s Service, Inc., and P1 or higher by Standard and Poor’s Corporation, or equivalent by a nationally recognized statistical rating organization: 270 days;
7. Prime bankers’ acceptances offered by the 50 largest banks: 180 days;
8. U.S. dollar denominated corporate obligations issued by corporations organized and operated within the United States: five years. Corporate obligations shall be rated as follows:
a. One year or less A rated by two major nationally recognized statistical rating agencies;
b. One to two years AA rated by at least one major nationally recognized statistical rating agency;
c. Two to four years AA rated by two major nationally recognized statistical rating agencies; and
d. Four to five years AAA rated by two major nationally recognized statistical rating agencies.
9. Money market mutual funds that adhere to SEC Rule 2a-7.
10. The Alaska Municipal League Investment Pool, Inc., made in accordance with the terms of that pool’s “Common Investment Agreement.”
11. Special assessments of the city authorized by WMC Chapter 5.20. Total principal investment is not to exceed $250,000 at the end of any fiscal year. The rate the city shall receive when investing in special assessments is the prime rate plus two percent on the date the ordinance confirming the assessment roll is enacted by the council.
E. No person shall invest any city moneys in any instrument which is not listed in subsection (D) of this section. This prohibition includes but is not limited to, investment of city moneys in any mutual fund (except as otherwise provided in subsection (D)(9) of this section), common or preferred stock, precious metals, option contracts, or futures contracts.
F. This chapter represents the maximum amount of authority and discretion which the finance director may utilize in investing city moneys. Nothing in this chapter shall be construed, however, to prohibit the finance director from adopting standards, rules, policies and procedures which are more restrictive than those contained in this chapter. The enumeration in this chapter of instruments which are authorized for city investments shall not be construed as requiring the finance director to invest in all, or any particular, instrument contained in said list at any given time. The finance director may invest in some or all of said instruments as he or she deems appropriate. Similarly, the enumeration of instruments which are acceptable as collateral for city investments shall not be construed as requiring the finance director to accept all or any particular instrument contained in said list at any given time. The finance director may accept some of said instruments, and reject others, in his or her discretion. (Ord. 12-40 § 2, 2012; Ord. 12-08 § 2, 2012)