HomeMy WebLinkAboutRES 2025-013RESOLUTION NO. 2025-013
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
GRAPEVINE, TEXAS, APPROVING THE CITY'S
INVESTMENT POLICY; AND PROVIDING AN EFFECTIVE
DATE
WHEREAS, the City' s Investment Policy requires annual adoption by resolution;
and
WHEREAS, all constitutional and statutory prerequisites for the approval of this
resolution have been met, including but not limited to the Open Meetings Act; and
WHEREAS, the City Council hereby declares that the approval of this resolution is in
the vest interests of the health, safety, and welfare of the public.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
GRAPEVINE, TEXAS:
Section 1. That all matters stated hereinabove are found to be true and correct and
are incorporated herein by reference as if copied in their entirety.
Section 2. The Investment Policy attached as Exhibit "A" is hereby adopted.
Section 3. That this resolution shall take effect from and after the date of its
passage.
PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF
GRAPEVINE, TEXAS on this the 16th day of September, 2025.
William D. Tate, Mayor
ATTEST:
J y is
Tara Brooks, City Secretary �
AWS TO FORM:
l (Z"
Matthew C.G. Boyle, City Attorney
INVESTMENT POLICY
Adopted:
May 6, 1997
Most Recent Revision/Review:
September 16, 2025
TABLE OF CONTENTS
INVESTMENT POLICY
PREFACE...................................................................................................... l
PURPOSE.............................................................................................2
A. Formal Adoption.............................................................................2
B. Scope..........................................................................................2
C. Review and Amendment....................................................................2
D. Investment Strategy..........................................................................3
II. INVESTMENT OBJECTIVES...................................................................3
A. Safety of Principal............................................................................3
B. Maintenance of Adequate Liquidity.......................................................4
C. Preservation of Public Trust.................................................................4
D. Diversification................................................................................4
E. Yield...........................................................................................4
III. INVESTMENT POLICIES.......................................................................4
A. Authorized Investments.....................................................................4
B. Unauthorized Investments..................................................................7
C. Protection of Principal......................................................................7
D. Investment Advisors and Investment Providers ........................................ I I
E. Responsibility and Controls...............................................................12
IV. BROKER/DEALER LIST.......................................................................15
V. PFIA LIST OF TRAINING SOURCES......................................................15
INVESTMENT STRATEGY STATEMENT
PREFACE....................................................................................................17
I. INVESTMENT STRATEGY....................................................................18
A. Operating Funds............................................................................18
B. Construction and Capital Improvement Funds.........................................19
C. Debt Service Funds........................................................................20
PREFACE
It is the policy of City of Grapevine that, giving due regard to the safety and risk of investment, all
available funds shall be invested in conformance with State and Federal Regulations, applicable
Bond Resolution requirements, adopted Investment Policy and adopted Investment Strategy.
Effective cash management is recognized as essential to good fiscal management. Fiscally
conservative and effective cash management and investment strategy development will be pursued
to take advantage of interest earnings as viable and material revenue to all City funds. The
portfolio of the City shall be designed and managed in a manner responsive to the public trust and
consistent with this Policy.
Investments shall be made with the primary objectives of:
1) Preservation and safety of city funds,
2) Maintenance of sufficient liquidity,
3) Preservation of public trust through prudent investment activities,
4) Diversification of investments, and
5) Optimization of return within acceptable risk constraints.
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I. PURPOSE
A. Formal Adoption
This Investment Policy is authorized by the City of Grapevine (the "City") in accordance
with Chapter 2256, Texas Government Code, the Public Funds Investment Act, and the
Public Funds Collateral Act Chapter 2257, Texas Government Code.
B. Scope
This Investment Policy applies to all of the investment activities of the City. These funds
are accounted for in the City's Annual Comprehensive Financial Report (ACFR) and
include:
1. General Fund
2. Special Revenue Funds
3. Capital Projects Funds
4. Enterprise Funds
5. Trust and Agency Funds, to the extent not required by law or existing contract to
be kept segregated and managed separately.
6. Debt Service Funds, including reserves and sinking funds, to the extent not required
by law or existing contract to be kept segregated and managed separately.
7. 4B Economic Development Corp. Sales Tax Fund
8. Crime Control District Sales Tax Fund
9. Community Quality of Life Fund
10. Convention and Visitors Bureau
11. Any new fund created by the City, unless specifically exempted from this Policy
by the City Council or by law.
This Policy establishes guidelines for who can invest City funds, how City funds will be
invested, and when and how a periodic review of investments will be made. In addition to
this Policy, bond funds (as defined by the Internal Revenue Service) shall be managed in
accordance with their issuing documentation and all applicable State and Federal Law.
This Investment Policy shall apply to all transactions involving the financial assets and
related activity for all the foregoing and future funds. However, this policy does not apply
to the assets administered for the benefit of the City by outside agencies under deferred
compensation programs.
All investments made with City funds prior to the adoption of this Investment Policy shall
be held or liquidated as determined by the Investment Officer to be in the financial best
interest of the City.
C. Review and Amendment
This Policy shall be reviewed and adopted by Resolution annually by the City Council.
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D. Investment Strategy
In conjunction with the annual Policy review, the City Council shall review the separate
written Investment Strategy for each of the City funds and adopt by Resolution. The
Investment Strategy must describe the investment objectives for each particular fund
according to the following priorities:
1. Investment suitability,
2. Preservation and safety of principal,
3. Liquidity,
4. Marketability prior to maturity of each investment,
5. Diversification, and
6. Yield.
II. INVESTMENT OBJECTIVES
A. Safety of Principal
The City shall manage and invest its cash with five primary objectives, listed in order of
priority: safety, liquidity, public trust, diversification and yield, expressed as optimization
of interest earnings. 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.
Safety of 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.
1. Credit Risk — The City will minimize credit risk, the risk of loss due to the failure
of the issuer or backer of the investment, by:
a) Limiting investments to the highest credit quality investments.
b) Pre -qualifying the financial institutions with which the City will do
business.
c) Diversifying the investment portfolio so that potential losses on individual
issuers will be minimized.
2. Interest Rate Risk — The City will minimize the risk that the interest earnings and
the market value of investments in the portfolio will fall due to changes in general
interest rates, by:
a) Structuring the investment portfolio so that investments mature to meet cash
requirements for ongoing operations, thereby avoiding the need to liquidate
investments prior to maturity.
b) Investing operating funds primarily in certificates of deposit, shorter -term
securities, money market mutual funds, or local government investment
pools.
c) Diversifying maturities and staggering purchase dates to minimize the
impact of market movements over time.
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B. Maintenance of Adequate Liquidity
The City's investment portfolio will remain sufficiently liquid to meet the cash flow
requirements that might be reasonably anticipated. Liquidity shall be achieved by
matching investment maturities with forecasted cash flow requirements; investing in
securities with active secondary markets; and maintaining appropriate portfolio
diversification.
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. In addition, a portion of the
portfolio will consist of financial institution deposits and securities with active secondary
or resale markets.
C. Preservation of 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
confidence in the City's ability to govern effectively.
D. Diversification
Diversification of the portfolio will include diversification by maturity and market sector
and the use of a number of institutions and brokers. The City will diversify its investments
to avoid unreasonable and avoidable risks.
E. Yield
The investment portfolio shall be designed with the objective of maintaining a reasonable
market yield 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.
III. INVESTMENT POLICIES
A. Authorized Investments
Only investments described below authorized by the Public Funds Investment Act are
eligible investments for the City. The City prefers up to 3 bids as applicable in a
competitive environment for all individual investment purchases and sales (excluding
transactions with money market mutual funds, local government investment pools, and
when issued securities, which are deemed to be made at prevailing market rates). The City
is not required to liquidate investments that were authorized at the time of purchase. All
prudent measures will be taken to liquidate an investment that is downgraded to less than
the required minimum rating. The City's funds governed by this Policy may be invested
in:
1. Obligations of Governmental Entities
The following are authorized investments for obligations of governmental agencies:
a) Obligations, including letters of credit, of the United States or its agencies
and instrumentalities, including the Federal Home Loan Banks;
b) Direct obligations of the State of Texas or its agencies and instrumentalities;
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c) Other obligations, the principal and interest on which are unconditionally
guaranteed, insured by, or backed by the full faith and credit of the State of
Texas or the United States or their respective agencies and instrumentalities;
d) Obligations of states, agencies, counties, cities, and other political
subdivisions of any State having been rated as to investment quality by a
nationally recognized investment rating firm and having received a rating
of not less than "A" or its equivalent; and
e) 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.
2. Guaranteed Investment Contracts
Guaranteed investment contracts will be authorized for bond proceeds if the
guaranteed investment contract:
a) has a defined termination date;
b) 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
c) is pledged to the City and deposited with the City or with a third party
approved by the City.
d) The stated maturities may not exceed five years.
3. Certificates of Deposit
Certificates of deposit issued by financial institutions that have their main office or
branch office in Texas with stated maturities of no greater than five years that are:
a) Organized under Texas law, the laws of another state, or federal law, that
has its main office or a branch office in Texas, or by a savings bank
organized under Texas law, the laws of another state, or federal law, that
has its main office or a branch office in Texas, or a state or federal credit
union having their main or branch office in Texas;
b) The depository institution selected by the City and arranges for the deposit
of the funds in certificates of deposits in one or more federally insured
depository institutions, wherever located for the account of the City; and
c) Guaranteed or insured by:
(1) The Federal Deposit Insurance Corporation (FDIC) or its
successors; or
(2) The National Credit Union Share Insurance Fund (NCUSIF) or its
successors; or
(3) Secured by obligations that are described by A.I. above, which are
intended to include all direct Federal agency or instrumentality
issued mortgage backed securities, but excluding those mortgage
backed securities of the nature described in Section 2256.009(b),
that have a market value of not less than the principal amount of the
certificates; or
(4) Secured in any other manner and amount provided by law for
deposits of the City; or
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(5) Governed by a Depository Agreement, as described in C.5. of this
section, that complies with Federal and State regulation to properly
secure a pledged security interest.
4. Repurchase Agreements
Fully collateralized repurchase agreements and reverse repurchase agreements as
defined by the Public Funds Investment Act, with a defined termination date that
are placed with a primary government securities dealer or financial institution doing
business in the State of Texas, and which are secured by obligations of the United
States or its agencies and instrumentalities and which are pledged in the City's
name and deposited with a third -party custodian bank approved by the City. A
Master Repurchase Agreement must be signed by the bank/dealer prior to
investment in a repurchase agreement. All repurchase agreement transactions will
be on a delivery vs. payment basis. Securities received for repurchase agreements
must have a market value greater than or equal to 102 percent at the time funds are
disbursed. Repurchase agreements should not exceed 120 days and reverse
repurchase agreements should not exceed 90 days, provided an executed PSA
Master Repurchase Agreement is on file with the City and the counter party bank
or dealer.
5. Money Market Mutual Funds
Money Market Mutual funds that are 1) registered and regulated by the Securities
and Exchange Commission, 2) have a dollar weighted average stated maturity of
60 days or less, 3) rated AAA by at least one nationally recognized rating service,
and 4) seek to maintain a net asset value of $1.00 per share. The City may not invest
funds under its control in an amount that exceeds 10% of the total assets of any
individual money market mutual fund or exceeds 15% of its monthly average fund
balance, excluding bond proceeds and reserves, and other funds held for debt
service in money market mutual funds.
6. Interest Bearing Financial Institution Accounts
Interest bearing financial institution deposits issued by state and national banks or
savings banks or a state or federal credit union having their main or branch office
in Texas that are guaranteed or insured by the FDIC or the NCUSIF, or their
successor organizations. Also included are collateralized interest -bearing deposits
that have secured the uninsured portion of deposits with allowed collateral per the
Investment Policy.
7. Investment Pools
Eligible local government investment pools, which 1) meet the requirements of
Chapter 2256.016 of the Public Funds Investment Act, 2) are rated no lower than
AAA or an equivalent rating by at least one nationally recognized rating service,
and 3) are authorized by resolution or ordinance by the Board, and whose
investment philosophy and strategy are consistent with this Policy and the City's
ongoing investment strategy. In addition, a local government investment pool
created to function as a money market mutual fund must mark its portfolio to the
market daily and, to the extent reasonably possible, stabilize at $1.00 net asset
value.
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8. Commercial Paper
Commercial Paper is an authorized investment under the Public Funds Investment
Act under Sec. 2256.013 of the Public Funds Investment Act which provides it
must:
a) have a stated maturity of 270 days or fewer from the date of its issuance;
and
b) is rated not less than A-1 or P-1 or an equivalent rating by at least:
(1) two nationally recognized credit rating agencies; or
(2) one nationally recognized credit rating agency and is fully secured
by an irrevocable letter of credit issued by a bank organized and
existing under the laws of the United States or any state.
B. Unauthorized Investments
1. The following are NOT authorized investments for the City:
a) Obligations whose payments represent the coupon payments on the
outstanding principal balance of the underlying mortgage -backed security
collateral and pays no principal (Interest Only CMO);
b) Obligations whose payments represent the principal stream of cash flow
from the underlying mortgage -backed security collateral and bears no
interest (Principal Only CMO);
c) Collateralized mortgage obligations that have a stated final maturity date of
greater than 10 years; and
d) Collateralized mortgage obligations, the interest rate of which is determined
by an index that adjusts opposite to the changes in the market index (Inverse
Floater CMO).
C. Protection of Principal
The City shall seek to control the risk of loss due to the failure of a security issuer or
grantor. Such risk shall be controlled by investing only in the safest types of securities as
defined in the Policy; by collateral ization as required by law; and through portfolio
diversification by maturity and type.
The purchase of individual securities shall be executed "delivery versus payment" (DVP)
through the City's Safekeeping Agent. By so doing, City's funds are not released until the
City has received, through the Safekeeping Agent, the securities purchased.
1. Diversification by Investment Type
Where appropriate, the investment portfolio shall be diversified in terms of investment
instruments, maturity, scheduling, and financial institutions to reduce risk of loss
resulting from over concentration of assets in a specific class of investments, specific
maturity, or specific issuer.
Diversification by investment type shall be guided by the following maximum
percentages of investment type as compared to the total investment portfolio at the time
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of each investment transaction:
a)
U.S. Treasury Bills/Notes/Bonds
100%
b)
U. S. Agencies & Instrumentalities
100%
c)
States, Counties, Cities, & Other
75%
d)
Certificates of Deposit
75%
e)
Money Market Mutual Funds
20%
i)
Eligible Investment Pools
100%
g)
Commercial Paper, excluding Investment Pools
20%
2. Bond Proceeds
Bond proceeds may be invested in a single security or investment if the City Manager
determines that such an investment is necessary to comply with Federal arbitrage
restrictions or to facilitate arbitrage record keeping and calculation.
3. Diversification by Investment Maturity
In order to minimize risk of loss due to interest rate fluctuations, investment maturities
will not exceed the anticipated cash flow requirements of the funds. Maturity
guidelines by fund are as follows (investment transactions made prior to the adoption
of this Policy are not subject to these guidelines):
a) Limiting investments to avoid overconcentration in investments from a
specific issuer or business sector (excluding obligations of governmental
agencies under III(A) and certificates of deposit that are fully insured and
collateralized in accordance with state and federal law;
b) Limiting investments that have higher credit risks (example: commercial
paper);
c) Diversify through investments with varying maturities; and
d) Continuously investing a portion of the portfolio in readily available funds
such as local government investment pools (LGIPs), money market funds
or overnight repurchase agreements to ensure that appropriate liquidity is
maintained in order to meet ongoing obligations.
Operating Funds
The weighted average days to maturity for the operating fund portfolio shall be
less than 360 days and the maximum allowable maturity shall be 5 years.
Construction and Capital Improvement Funds
The investment maturity shall generally be limited to the anticipated cash flow
requirement or the "temporary period," as defined by Federal tax law. During the
temporary period bond proceeds may be invested at an unrestricted yield. After the
expiration of the temporary period, bond proceeds subject to yield restriction shall
be invested considering the anticipated cash flow requirements of the funds and
market conditions to achieve compliance with the applicable regulations. The
maximum maturity for construction or capital improvement funds' investments
shall generally be no longer than the construction time required for a particular
project.
Debt Service Funds
Shall be invested to ensure adequate funding for each consecutive debt service
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payment. The Investment Officers shall invest in such a manner as not to exceed
an "unfunded" debt service date with the maturity of any investment. An unfunded
debt service date is defined as a coupon or principal payment date that does not
have cash or investment securities available to satisfy said payment. Funds that are
considered "bond proceeds" for arbitrage purposes may be invested using a more
conservative approach than the standard investment strategy when arbitrage rebate
rules require rebating excess earnings. All earnings in excess of the allowable
arbitrage earnings ("rebate liability") will be segregated and made available for any
necessary payments to the U.S. Treasury.
4. Ensuring Liquidity
Liquidity shall be achieved by anticipating cash flow requirements, by investing in
securities with active secondary markets and by investing in eligible financial
institution deposits, money market mutual funds, and local government investment
pools.
A security may be liquidated to meet unanticipated cash requirements, to re -deploy
cash into other investments expected to outperform current holdings, or otherwise to
adjust the portfolio.
5. Collateral
Consistent with the requirements of State law, the City requires all financial institution
deposits to be federally insured or collateralized with eligible securities or an approved
letter of credit issued by the Federal Home Loan Banks. Financial institutions serving
as City depositories will be required to sign a Depository Agreement with the City.
The collateral portion of the Agreement shall define the City's rights to the collateral
in case of default, bankruptcy, or closing and shall establish a perfected security interest
in compliance with Federal and State regulations, including:
1. The Agreement must be in writing;
2. The agreement must be executed by the financial institution and the City
contemporaneously with the acquisition of the asset;
3. The Agreement must be approved by the Board of Directors or the designated
committee of the financial institution and a copy of the meeting minutes must be
delivered to the City;
4. The Agreement must be part of the financial institution's "official record"
continuously since its execution.
a) Collateral Policy
Consistent with the requirements of the Public Funds Collateral Act, it is
the policy of the City to require full collateralization of all City funds on
deposit with a financial institution. In order to anticipate market changes
and provide a level of security for all funds, the collateralization level for
pledged securities and letters of credit will be 102% of market value of
principal and accrued or anticipated interest, less FDIC or NCUSIF
insurance. At its discretion, the City may require a higher level of
collateralization for certain investments. The City will send funds for
investment only when the collateral has been pledged and the City has
accepted.
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Securities pledged as collateral shall be held by an independent third -party
custodian. The Chief Financial Officer or designated Investment Officer is
responsible for entering into collateralization agreements with third party
custodians in compliance with this Policy. The agreements are to specify
the acceptable investments for collateral, including provisions relating to
possession of the collateral, the substitution or release of collateral,
ownership of securities, and the method of valuation of securities. A clearly
marked receipt displaying evidence of ownership must by supplied to the
City and retained. Collateral shall be reviewed at least monthly to assure
that the market value of the pledged securities is adequate.
b) Collateral Defined
The City shall accept only the following types of collateral and reserves
the right to accept or reject any form of pledged collateral, at its sole
discretion:
(1) Obligations of the United States or its agencies and
instrumentalities,
(2) Direct obligations of the state of Texas 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) Obligations of states, agencies, counties, cities, and other political
subdivisions of any state rated as to investment quality by a
nationally recognized rating firm not less than A or its equivalent
with a remaining maturity of five (5) years or less,
(5) A letter of credit issued to the City by the Federal Home Loan Bank.
c) Monitoring Collateral Adequacy
The City shall require monthly reports with market values of pledged
securities from all financial institutions with which the City has
collateralized deposits. The Investment Officers will monitor adequacy of
collateralization levels to verify market values and total collateral positions.
d) Additional Collateral
If securities pledged for a deposit falls below the par value of the deposit
plus accrued or anticipated interest and less FDIC or NCUSIF insurance,
the institution holding the deposit will notify the City and must pledge
additional securities no later than the end of the next succeeding business
day.
e) Security Substitution
Collateralized deposits often require substitution of securities. Any
financial institution requesting substitution must contact the Investment
Officers for approval and settlement. The substituted security's value will
be calculated and substitution approved if the substitution maintains a
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pledged value equal to or greater than the required security level. An
Investment Officer must provide written notification of the decision to the
bank or the third party agent holding the security prior to any security
release. Substitution is allowable for all transactions, but should be limited,
if possible, to minimize potential administrative problems and transfer
expense. The Investment Officers may limit substitution and assess
appropriate fees if substitution becomes excessive or abusive.
f) Subject to Audit
All collateral shall be subject to inspection and audit by the Chief Financial
Officer or the City's independent auditors.
6. Safekeeping Agreement
The City shall contract with a third -party custodian for the safekeeping of securities
owned by the City as part of its investment portfolio. Securities owned by the City
shall be evidenced by safekeeping receipts of the institution holding the securities.
D. Investment Advisors and Broker/Dealers
Investment Advisors and Broker/Dealers shall adhere to the spirit, philosophy and specific
term of this Policy and within the Standard of Care. Selection of Investment Advisors and
Broker/Dealers will be performed by the Investment Committee. The Investment
Committee will establish evaluation criteria, including:
1. Adherence to the City's policies and strategies;
2. Investment performance and transaction pricing within accepted risk constraints,
3. Responsiveness to the City's request for services, information and open
communication;
4. Understanding of the inherent fiduciary responsibility of investing public funds; and
5. Similarity in philosophy and strategy with the City's objectives.
Selected Investment Advisors shall provide quarterly portfolio reports and Broker/Dealers
shall provide timely transaction confirmations and monthly activity reports.
The Investment Committee will, at least annually, review, revise, and adopt the approved
list of Broker/Dealers utilized for the purchase of allowed securities. The approved list
will be provided to the City Council on an annual basis or at any time the list is modified.
Approved broker/dealers will be presented with a copy of this Investment Policy.
Business organizations eligible to transact investment business with the City shall be
presented a written copy of this Investment Policy. Additionally, the qualified
representative of the business organization seeking to transact investment business shall
execute a written instrument substantially to the effect that the registered principal has:
I . Received and thoroughly reviewed this Investment Policy, and
2. Acknowledged that the business organization has implemented reasonable procedures
and controls in an effort to preclude investment transactions conducted between the
City and the organization that are not authorized by the City's investment policy, except
to the extent that this authorization is dependent on an analysis of the makeup of the
City's entire portfolio or requires an interpretation of subjective investment standards.
3. Such instrument must be accepted by a qualified representative of the business.
Qualified representative(s) must meet the following criteria:
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a) 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:
(1) 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; or
(2) 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.
The City shall not enter into an investment transaction with a business organization prior
to receiving the written instrument described above.
E. Responsibility and Controls
1. Delegation of Authority to Invest
The City Council hereby designates the Investment Officers by Ordinance to be the
City Manager, with overall responsibilities to see that investment objectives are
accomplished and the Chief Financial Officer, Treasurer, or their designees are
vested and authorized with specific day-to-day performance of managing and
investment of the funds of the City.
Per Ordinance 2024-074 the City Council has established an Investment Committee
consisting of the City Manager, Chief Financial Officer, and Treasurer of the City.
The committee shall perform the following duties:
a) Review, revise, and approve at least annually a list of approved
broker/dealers for the purchase of allowed securities. The approved list
is to be provided to the City Council on an annual basis or at any time
the list is modified.
b) Review, revise, and approve a list of independent training sources. The
list will include professional organizations and associations providing
training required by the Public Funds Investment Act in order to ensure
the quality and capability of the City's Investment Officers in making
investment decisions.
c) Review the City's investment portfolio on a regular basis and determine
appropriate portfolio adjustments, oversee the City's investment
advisor, monitor compliance with the City's Investment Policy and
Strategy statements and perform other duties as necessary to maintain
the City's investment program.
2. Training
a) All Investment Officers of the City shall have a minimum of 10 hours
of Investment Training during the first consecutive 12 month period
after taking office or assuming duties, and then attend at least one
investment training accumulating eight hours for each consecutive 24
month period thereafter based on the City's fiscal year.
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b) Training as required in 2.(a) above is authorized to be provided from
one or more of the sources listed under PFL4 List of Training Sources,
included within this document.
3. Prudent Investment Management
The designated Investment Officers shall perform their duties in accordance with
the adopted Investment Policy and internal procedures. In determining whether an
Investment Officer has exercised prudence with respect to an investment decision,
the investment of all funds over which the Investment Officer had responsibility;
rather that the prudence of a single investment shall be considered. Investment
Officers acting in good faith and in accordance with these policies and procedures
shall be relieved of personal liability.
4. Standard of Care
The standard of care used by the City shall be the "prudent investor rule" and shall
be applied in the context of managing the overall portfolio within the applicable
legal constraints. The Public Funds Investment Act states:
"Investments shall be made with judgment and care, under
prevailing circumstances, that a person ofprudence, 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."
5. Standards of Ethics
The designated Investment Officers shall act as custodians of the public trust
avoiding any transaction which might involve a conflict of interest, the appearance
of a conflict of interest, or any activity which might otherwise discourage public
confidence. Investment Officers shall refrain from personal business activity that
could conflict with proper execution of the investment program, or which could
impair their ability to make impartial investment decisions. Additionally, all
Investment Officers shall file with the Texas Ethics Commission and the City a
statement disclosing any personal business relationship with an entity seeking to
sell investments to the City.
Each City Investment Officer shall disclose if he has a personal business
relationship with any financial firm doing business with the City, if the extent of
the business relationship meets any of the following conditions:
a) The Investment Officer owns 10% 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;
b) Funds received by the Investment Officers from the business organization
exceed 10% of the Investment Officer's gross income for the previous year;
or
c) 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.
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d) If the Investment Officer is related within the second degree by affinity or
consanguinity, as determined under the Government Code, to an individual
seeking to sell an investment to the City.
6. Establishment of Internal Controls
The City's Investment Officer will maintain a system of internal controls over the
investment activities of the City.
7. Reporting
Investment performance will be monitored and evaluated by the Investment
Officers. The Investment Officers will provide a quarterly comprehensive report
signed by all Investment Officers to the City Council. This investment report shall:
a) Describe in detail the investment position of the City;
b) State the reporting period beginning book and market value, additions or
changes to the book and market value during the period and ending book
and market value for the period of each pooled fund group;
c) State the reporting period beginning book and market value and reporting
period ending book and market value for each investment security by asset
type and fund type;
d) State the maturity date of each investment security;
e) Accrued interest and total earnings for reporting period;
f) State the percentage of total portfolio that each type of investment
represents; and
g) State the compliance of the investment portfolio with the City's Investment
Policy and strategy and the Public Funds Investment Act.
The City, in conjunction with its Annual Financial Audit, shall perform a
compliance audit of management controls on investments and adherence to the
City's Investment Policy and Investment Strategy Statement. The City's
independent auditor is required to review the Quarterly Investment Reports during
the annual audit of the City's Financial System and the result of the review shall be
reported to the City Council by that auditor.
8. Performance Standards
The City's investment portfolio will be managed in accordance with the parameters
specified within this policy. The 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 of the City.
Weighted average yield to maturity shall be the portfolio performance standard.
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CITY OF GRAPEVINE, TEXAS
BROKER/DEALER LIST
The following is a list of approved and authorized broker/dealers used for the City of Grapevine,
Texas. Each of the firms used from this list will provide compliance materials and a complete file
of those materials will be maintained by the City.
In accordance with Section 2256.025 of the Public Funds Investment Act, the list below is
approved by the Investment Committee and shall be maintained by the Chief Financial Officer and
corresponding staff.
Broker/Dealers:
Cantor Fitzgerald, LP
FHN Financial Securities Corp.
Hilltop Securities
J.P. Morgan Securities
Mischler Financial Group
Multi -Bank Securities
South State iDuncan Williams Securities Corp.
Wells Fargo Securities
Government Pools Authorized by City Council.
Local Government Investment Cooperative (LOGIC)
Texas Local Government Investment Pool (TexPool)
CITY OF GRAPEVINE, TEXAS
PFIA LIST OF TRAINING SOURCES
The following is a list of approved and authorized training sources for the City of Grapevine,
Texas. Certified training should be obtained every two fiscal years from an independent source for
all investment officers and delegees.
In accordance with § 2256.08 of the Public Funds Investment Act, the list below is approved by
the Investment Committee and shall be maintained by the Chief Financial Officer and
corresponding staff.
Training Sources:
Government Finance Officers Association of Texas (GFOAT)
Government Treasurers' Organization of Texas (GTOT)
North Central Texas Council of Governments (NCTCOG)
Texas Municipal League (TML)
University of North Texas (UNT) — Center for Public Management
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INVESTMENT STRATEGY STATEMENT
Adopted:
May 6, 1997
Most Recent Revision/Review:
September 16, 2025
PREFACE
It is the policy of the City of Grapevine (the "City") 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, the City's adopted Investment Policy and
adopted Investment Strategy.
In accordance with the Public Funds Investment Act, the City's investment strategies shall address
the following priorities (in order of importance):
1. Understanding the suitability of the investment to the financial requirements of the
City,
2. Preservation and safety of principal,
3. Liquidity,
4. Marketability of the investment prior to maturity,
5. Diversification of the investment portfolio, and
6. Yield.
Effective investment strategy development coordinates the primary objectives of the City's
Investment Policy and cash management procedures to enhance interest earnings and reduce
investment risk. Aggressive cash management will increase the available "investment period" and
subsequently interest earnings. Maturity selections shall be based on cash flow and market
conditions to take advantage of various interest rate cycles. The City's investment portfolio shall
be designed and managed in a manner responsive to the public trust and consistent with the
Investment Policy.
Each major fund type has varying cash flow requirements and liquidity needs. Therefore, specific
strategies shall be implemented considering the fund's unique requirements. The City's funds
shall be analyzed and invested according to the following major fund types:
1. Operating Funds
2. Construction and Capital Improvement Funds
3. Debt Service Funds
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I. INVESTMENT STRATEGY
In order to minimize risk of loss due to interest rate fluctuations, investment maturities will not
exceed the anticipated cash flow requirements of the funds. Investment guidelines by fund -type
are as follows:
A. Operating Funds
The City's Operating Funds are as follows:
General Fund Heritage Foundation Fund
Water and Sewer Fund Occupancy Tax Fund
TIF 1 & 2 Operating Fund Grant Fund
Lake Enterprise Fund Trust and Agency Fund
Convention & Visitors Bureau Fund Special Revenue Fund
Crime Control District Sales Tax Fund Community Quality of Life Fund
Permanent Capital Maintenance Fund
4B Economic Development Corp. Sales Tax Fund
All Non -Major Governmental Funds
1. Suitability
Any investment eligible in the Investment Policy is suitable for the Operating Funds.
2. Safety of Principal
All investments shall be of highest credit quality securities with no perceived default
risk. Market price fluctuations will occur. By managing the weighted average days to
maturity for the Operating Fund portfolio to less than 360 days and restricting the
maximum allowable maturity to 5 years, the price volatility of the overall portfolio will
be minimized.
3. Liquidity
The Operating Funds require the greatest short-term liquidity of any of the fund types.
Short-term investment pools and money market mutual funds shall provide daily
liquidity and may be utilized as a competitive yield alternative to fixed maturity
investments.
4. Marketability
Securities with active and efficient secondary markets are necessary in the event of an
unanticipated cash requirement. Historical market "spreads" between the bid and offer
prices of a particular security -type of less than a quarter of a percentage point shall
define an efficient secondary market.
5. Diversification
Investment maturities shall be staggered throughout the budget cycle 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.
6. Yield
Attaining a competitive market yield for comparable security -types and portfolio
restrictions is the desired objective. The yield of rolling one-year Treasury bill
portfolio shall be the minimum yield objective.
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B. Construction and Capital Improvement
The City's Construction and Capital Improvement related activities include:
Streets
General Facilities
Equipment
Recreation
Street Maintenance and Capital Replacement
Tax Increment Financing Districts #1 and #2
Community Quality of Life Fund
Convention & Visitors Bureau
1. Suitability
Any investment listed as eligible in the Investment Policy is suitable for Construction
and Capital Improvement Funds
2. Safety of Principal
All investments shall be of highest credit quality securities with no perceived default
risk. Market price fluctuations will, however, occur. By managing the Construction
and Capital Improvement Fund's portfolio to the anticipated expenditure schedule
market risk shall be reduced.
3. 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. A flexible repurchase agreement may be utilized
if disbursements are allowed in the amount necessary to satisfy any expenditure
request.
4. Marketability
Securities with active and efficient secondary markets are necessary in the event of an
unanticipated cash requirement. Historical market "spreads" between the bid and offer
prices of a particular security -type of less than a quarter of a percentage point shall
define an efficient secondary market.
5. Diversification
Market conditions and arbitrage regulations influence the attractiveness of staggering
the maturity of fixed rate investments for bond proceeds and other construction and
capital improvement funds. With bond proceeds, if investment rates exceed the
applicable arbitrage yield, the City is best served by locking in most investments. If
the arbitrage yield cannot be exceeded, then concurrent market conditions will
determine the attractiveness of diversifying maturities or investing in shorter and larger
amounts. At no time shall the anticipated expenditure schedule be exceeded in an
attempt to bolster yield with any City funds.
6. Yield
Achieving a positive spread to the applicable arbitrage yield is the desired objective for
bond proceeds. Non -bond proceed construction and capital project funds will target a
rolling portfolio of six-month Treasury bills.
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C. Debt Service Funds
The City's Debt Service Fund includes:
Debt Service Fund - General Obligations
Debt Service Fund - Tax Increment Financing Districts #1 and #2
1. Suitability
Any investment listed as eligible in the Investment Policy is suitable for the Debt
Service Funds.
2. Safety of Principal
All investments shall be of high quality securities with no perceived default risk.
Market price fluctuations will however occur. By managing the Debt Service Fund's
portfolio to not exceed the debt service payment schedule the market risk of the overall
portfolio will be minimized.
3. 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 short
term fixed maturity investments. A flexible repurchase agreement may be utilized if
disbursements are allowed in the amount necessary to satisfy any debt service payment.
4. Marketability
Securities with active and efficient secondary markets are less necessary, as the event
of an unanticipated cash requirement is not probable.
5. Diversification
Market conditions influence the attractiveness of fully extending maturity to the next
"unfunded" payment date. Generally, if investment rates are trending down, the City
is best served by locking in most investments. If interest rates are flat or trending up,
then concurrent market conditions will determine the attractiveness of extending
maturity or investing in shorter- term alternatives. At no time shall the debt service
schedule be exceeded in an attempt to bolster yield.
6. Yield
Attaining a competitive market yield for comparable security -types and portfolio
restrictions is the desired objective. The yield of an equally weighted, rolling three-
month Treasury bill portfolio shall be the minimum yield objective.
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