The City Council for the City of Warsaw hereby adopts the following investment policy and strategy with respect to the investment of all funds, as required by KRS 66.480.
(A) The city hereby authorizes the City Clerk to invest the city's funds pursuant to the terms and conditions of applicable statutes and this section:
(1) Obligations of the United States and of its agencies and instrumentalities, including obligations subject to repurchase agreements, provided that delivery of these obligations subject to repurchase agreements is taken either directly or through an authorized custodian. The investments may be accomplished through repurchase agreements reached with sources including, but not limited to, national or state banks chartered in Kentucky;
(2) Obligations and contracts for future delivery or purchase of obligations backed by the full faith and credit of the United States or a United States government agency, including but not limited to:
(a) United States Treasury;
(b) Export-Import Bank of the United States;
(c) Farmers Home Administration;
(d) Government National Mortgage Corporation and
(e) Merchant Marine bonds;
(3) Obligations of any corporation of the United States government including but not limited to:
(a) Federal Home Loan Mortgage Corporation;
(b) Federal Farm Credit Banks;
(c) Bank for Cooperatives;
(d) Federal Intermediate Credit Banks;
(e) Federal Land Banks;
(f) Federal Home Loan Banks;
(g) Federal National Mortgage Association; and
(h) Tennessee Valley Authority;
(4) Certificates of deposit issued by or other interest bearing account of any bank or savings and loan institution which are insured by the Federal Deposit Insurance Corporation or similar entity or which are collateralized to the extent uninsured by any obligations permitted by KRS 41.240(4);
(5) Uncollateralized certificates of deposit issued by any bank or savings and loan institution rated in one of the three highest categories by a nationally recognized rating agency.
(6) Bankers' acceptances of banks rated in one of the three highest categories by a nationally recognized rating agency;
(7) Commercial paper rated in the highest category by a nationally recognized rating agency.
(8) Bonds or certificates of indebtedness of this state and of its agencies and instrumentalities;
(9) Securities issued by a state or local government, or any instrumentality or agency thereof, in the United States, and rated in one of the three highest categories by a nationally recognized rating agency; and
(10) Shares of mutual funds, each of which shall have the following characteristics:
(a) The mutual funds shall be an open-ended diversified investment company registered under the Federal Reserve Investment company registered under the Federal Investment Company act of 1940 as amended;
(b) The management company of the investment company shall have been in operation for at least five years,
(c) All of the securities in the mutual fund shall be eligible investments under this policy.
(B) The investment authority outlined above shall be subject to the following limitations:
(1) An investment authorized by (A)(5), (A)(6), (A)(7), (A)(8) or (A)(9) herein shall not be made by the City Clerk without prior approval by the City Council.
(2) The amount of money invested at any time by the county in one or more of the categories of investments authorized by (A)(5), (A)(6), (A)(7), (A)(8) and (A)(9) of this section shall not exceed 20% of the total amount of money invested by the city;
(3) The city shall not purchase any investment on a margin basis or through the use of any similar leveraging technique; and
(4) The City Clerk shall not make any investment where by stated maturity is greater than five years from the date of purchase without prior approval by the fiscal court.
(C) The city hereby adopts the following standard for written agreement pursuant to which investments are made:
(1) The City Clerk and the Mayor shall review and execute all written agreements pursuant to which investments authorized by this policy are made.
(2) The City Clerk shall maintain copies for review by the City Council of all such written agreements for all investments of the city.
(D) The city hereby adopts the following procedures for monitoring controls, deposit or retention of investments and collateral:
(1) When collateral is required for city funds invested at a bank or savings and loan pursuant to (A)(4) of this policy, the collateral shall be held by a third-party custodian;
(2) The City Clerk shall determine for each investment made pursuant to this policy whether to take possession of the legal document evidencing the investment or to leave it with an authorized custodian.
(3) The City Clerk shall make monthly reports to the City Council on the status of the city's invested funds; and
(4) The City Clerk shall abide by all monitoring controls recommended by the city's auditor unless directed otherwise by the City of Warsaw.
(E) The city hereby adopts the following standard for diversification of investments, including diversification with respect to the types of investments and firms with which the city transacts business;
(1) Because of the negligible credit risk associated with the investments authorized hereunder in (A)(1), (2), (3) and (4), there shall not be a required diversification as to these types of investments for investments authorized hereunder in (A)(5), (6), (7), (8) and (9) the required diversification as to type of investment is set out herein. Investment in mutual funds authorized hereunder are subject to the above-stated diversification requirements for the types of investments held in the mutual funds;
(2) The City Clerk shall utilize appropriate strategies for laddering the maturities of the city's investments in order to provide protection against interest rate fluctuations and to meet the city's liquidity needs;
(3) The City Council shall select the investment firms with which the city shall transact business and in making its election will take into consideration the investment firm's experience, the capitalization of the investment firm, or any other factors the City Council deems appropriate in determining whether the firm is capable and qualified to transact business with the city. The Council as part of its election process shall determine whether it is desirable to diversity the investment firms with which the City Council transacts business.
(Ord. 1995-003, passed 3-13-95)