HomeMy WebLinkAboutOrd2022-013 - SCC 5.15 Sponsored by: Bower
Introduction: August 22,2022
Public Hearing: September 12, 2022
Enactment: September 12, 2022
CITY OF SEWARD,ALASKA
ORDINANCE 2022-013
AN ORDINANCE OF THE SEWARD CITY COUNCIL, AMENDING
SEWARD CITY CODE CHAPTER 5.15 INVESTMENT AND
COLLATERALIZATION OF PUBLIC FUNDS
WHEREAS, administration desires to amend Chapter 5.15 to update to current processes
and appropriate terminology as part of a comprehensive review of the Seward City Code.
NOW,THEREFORE,THE CITY OF SEWARD ORDAINS that:
Section 1. Seward City Code Chapter 5.15 is hereby amended to read as follows (new
language is in bolded italics and underlined and deleted language is stricken):
Chapter 5.15 Investment and Collateralization of Public Funds
5.15.010—Purpose.
This chapter is intended to govern the investment and collateralization of funds under the control
of the city of Seward. This chapter shall not apply to any funds controlled by a separate trust
indenture.
5.15.015—Defmitions.
For the purposes of this chapter,unless the context otherwise requires,the terms listed below shall
be defined as follows:
Authorized investment. Means an investment as defined in section 5.15.020 of this code.
Bank Means a state or federally chartered commercial or mutual bank, savings and loan
association or credit union located in the United States and having insurance of accounts through
the appropriate federal insuring agency of the United States.
Certificate of deposit. Means a non-negotiable certificate of deposit or other depository
agreement issued, or to be issued, to the city by a bank.
city. Means the City of Seward, Alaska.
Rated bank Means:
1. A bank, all of whose debt issues are rated at least "A" or its equivalent by a nationally
recognized rating service;
2. A bank whose letters of credit secure third-party debt issues rated at least "A" or its
equivalent by a nationally recognized rating service; or
3. A bank which is a subsidiary of a one-bank holding company, all of whose commercial
paper has the highest rating given by a nationally recognized rating service, or whose debt
issues are rated at least "A" or its equivalent by a nationally recognized service.
CITY OF SEWARD,ALASKA
ORDINANCE 2022-013
5.15.016 Authorization.
A. The city manager is authorized to work with the finance director to open and/or close bank
accounts with approval of the city council.
B. The city manager is authorized to work with the finance director to make investments on
behalf of the city, following the guidelines outlined in this chapter.
5.15.020—Authorized investments.
In order to provide maximum security for the investment of public funds and to provide the greatest
interest revenue consistent with safety, only the following investments of the city's funds will be
authorized:
A. (4)Obligations of, or obligations insured or guaranteed by, the United States or an agency or
instrumentality of the United States;
B. (2)Commercial paper maturing within nine months issued by corporations or businesses and
having the highest rating of a nationally recognized rating service;
C. (3)Banker's acceptances accepted by a rated bank and eligible for rediscount with,or purchase
by, federal reserve system banks;
D. (4)Negotiable certificates of deposit issued by rated banks;
E. (5)Certificates of deposit in a bank,provided that, if at any time the city shall have on deposit
in any one bank an amount in excess of the limits of federal insurance, including all principal
and accrued interest,then suek the amounts which exceed the limits of federal insurance shall
111
be secured as provided in section 5.15.025 of this Code;
F. (6)Repurchase agreements with:
1. (a) The city's bank of account and which are entered into in conjunction with the city's
zero-balance ("sweep") demand deposit account and secured by obligations insured or
guaranteed by the United States or agencies or instrumentalities of the United States; or
2. (19) Rated banks or primary dealers in government securities and secured by obligations
insured or guaranteed by the United States, or agencies or instrumentalities of the United
States, with the collateralization to be assigned as provided in section 5.15.025 of this
Code;
G. (7) Federally insured deposits in banks or deposits collateralized by eligible collateral as
described in section 5.15.025.
H. (8) Investments through the Alaska Municipal League Investment Pool, Inc., an investment
pool and nonprofit corporation established under AS 37.23.
5.15.025—Collateral required to secure certificates—of deposits.
A. (a)Eligible collateral.
of depesit7Deposits in excess of insurance of accounts through the appropriate federal insuring
agency of the United States, must be secured by collateral valued as set forth in this chapter
and conforming to the other requirements of this section.
1. The following collateral will be accepted and valued at current market value, determined
by the bank (subject to audit by the city). Pledged collateral shall be reevaluated at least
CITY OF SEWARD,ALASKA
ORDINANCE 2022-013
monthly at the then-current market value, based on the closing bid price as quoted by the
Wall Street Journal or a market-maker in the pledged security:
a. Obligations of,or obligations insured or guaranteed by,the United States or an agency
or instrumentality of the United States;
b. General obligation bonds and notes issued and insured or guaranteed by the state of
Alaska, an agency or instrumentality of the state, or other political subdivision of the
state, which are rated at least "A" or its equivalent by a nationally recognized rating
service;
c. Revenue bonds issued by the state of Alaska, an agency or instrumentality of the state,
or other political subdivision of the state, which are rated at least "A" or its equivalent
by a nationally recognized rating service;
d. Corporate debt securities rated at least "AA" or its equivalent by a nationally
recognized rating service;
e. General obligation bonds issued by states and municipalities in the United States
outside of Alaska rated at least "A" or its equivalent by a nationally recognized rating
service.
B. ( )Ownership; encumbrance of collateral. Pledged collateral must be owned by the bank and,
except for the assignment required under subsection(d)of this section,the bank must keep the
pledged collateral free and clear of liens, security interests or encumbrances and will not
release, assign, sell,mortgage, lease, transfer,pledge or grant a security interest in, encumber,
substitute or otherwise dispose of or abandon any part or all of the pledged collateral without
the written authorization of the city.
C. (e) Substitution of collateral.
1. Notwithstanding any other provisions of this chapter,the city reserves the right to review,
from time to time, any and all collateral proposed or submitted by a bank to secure
deposits, and if the city determines that the collateral does not meet
the requirements of this chapter, or otherwise determines that the public funds are not
adequately secured by the collateral, the city may demand additional collateral or
substitution of collateral.
2. gush The additional collateral or substitution of collateral may be demanded if the
aggregate value of the federally insured portions of certificates of deposit and the value of
pledged collateral, as determined pursuant to subsection (d) of this section, falls below or
is less than the total amount of principal and interest due upon maturity of certificates of
deposit deposits issued-held by a bank.
3. In the event any other property pledged by the bank no longer is eligible as collateral to
secure deposits,the bank shall,within three business days,notify the
city,in writing,of sueh the decline in value and/or loss of acceptable credit rating and shall
pledge either additional or substitute collateral meeting the requirements of this chapter.
D. 413 Security agreement; tri party agreement.
1. A bank ' holding deposits shall enter into a security agreement
with the city for all property pledged as collateral and which shall assign to the city the
bank's interests in the property. The security agreement shall identify all property pledged
CITY OF SEWARD,ALASKA
ORDINANCE 2022-013
111
to the city and shall set out the authority of the city to demand a substitution of collateral
and to exercise assignment or other rights under subsection F. of this section. The security
agreement shall be at the expense of the bank' holding the
deposits.
2. Collateral pledged by a bank shall be kept in escrow accounts with another bank("escrow
bank") acceptable to the city pursuant to an agreement between the bank, the escrow bank
and the city. Sueli The agreement shall give the city control over pledged collateral
submissions to, and withdrawals from,the escrow account. The receipt of the collateral by
the escrow bank shall be further evidenced by telephonic assurance, provided to the city
within twenty-four hours of receipt of collateral, and a depository receipt received by the
city within a reasonable time following award of the bid or notification or demand for
substitute collateral. The escrow agreement and arrangements and maintenance thereof
shall be at the expense of the bank holding the
deposit
E. (e)Reports; access to records.
1. A bank bidding on certificates of deposit, or having outstanding certificates of deposit,
shall, within 45 days of the end of each fiscal quarter,provide the city a copy of access to
its balance sheet prepared in accordance with generally accepted accounting principles
consistently applied; or,if a bank does not prepare its reports in accordance with generally
accepted accounting principles, such the reports prepared in accordance with state or
federal regulatory requirements shall be provided available to the city.
2. On or before the tenth day of each month, a bank which has outstanding certificates of
deposit shall deliver to the city's finance director treasurer-of-the-city a list,prepared as of
the last day of the previous month and certified by an officer of the bank, setting forth the
principal amount and then-current market value of all pledged collateral.
3. The city shall, to the extent not expressly prohibited by law, at all times during normal
business hours have free access to,the right of inspection of,and the right to make extracts
from, any records of the bank relating to part or all of the collateral, and the bank will
deliver to the city the originals or true copies of stieh the papers and instruments relating
to any or all of the collateral as the city may request.
4. Upon request, a bank bidding on certificates of deposit, or which has outstanding
certificates of deposit,shall provide the city with reports of examinations by state or federal
regulatory agencies and reports by the bank's independent auditors.
F. ( Noncompliance.
1. In the event a bank defaults in the payment of principal or interest due upon maturity of a
certificate of deposit, or otherwise fails to comply with the provisions of this chapter,
including the security and escrow agreements provided for in subsection(d)of this section,
the city may:
a. Call all or a portion of the certificates of deposit issued by the bank;
b. Sell, exchange, transfer or otherwise dispose of the pledged collateral to recover the
principal and interest due upon maturity of the certificate of deposit and all costs
incurred by the city as a result of such the sale, exchange,transfer or disposal;
CITY OF SEWARD,ALASKA
ORDINANCE 2022-013
c. Take other action available under the security and escrow agreements provided for in
subsection(d)of this section; or
d. Take other action available to it at law or equity.
2. To the extent not prohibited by law, the bank shall hold the city harmless from any
forfeiture or loss of interest or other penalty or cost,including attorney fees, imposed upon
or incurred by the city by reason of its early withdrawal of any or all certificates of deposit
issued by the bank.
5.15.030. -Certificates of deposit restrictions.
After reviewing a bank's financial position and determining that sueh the a limit is necessary to
assure the safety of city funds, the city may limit the total amount of principal and interest due
upon maturity of all certificates of deposit issued by that bank.
5. S5 Bid" s or-autth Fize iiinvestmeelntts
Investment Pool Tn of a ea eat; e 1 e mn„fth: ehapte the :t, shalt „l :t bias
in-aee
,rdance with then ced„res set f rth :n this section
(1) Notices to bid shall he .delivered r by mail r b y other electronic ..,
including
telephonern„thorize.l by the city to:
e Those eligible hanks , with o+ ces in the city ..which have o4 re.l bids ,i ed
the cityw� i�tateG'nc-6�est-to receive nottices to bi with n
h S„ch other eligible banks or dealers as the city ma.w elect
Except n set f rth :n this section o hank or dealer shall have a ght to r ot:
LAVV� , n e e e e
(2) Notices to bid shall set forth:
appropriate. The ci eserves the right to cancel a all notices-to bi , ; h 1
hart f r n e d n at a time, n nd the c cellation of a notice to bid will
(3) Bids m . be delivere,] to the city : r by mail r by other electronic R
rl,ng t epho th h' d t to bi '11 he
ii3 @1vPr`vi�c-a�-acicnAFi� tl�PrE �o•-vi�Or-cnircnmircir�cv-cr-vicr=Jrirrvc
ted after the time et f.-th th t' T th t bi d th t
.......�"y...., .,...... .11.. llll. J.. l.,l ill 111 ll�zlvclv��r^rcna-rcv'c-irc--nv-vmsZav-roovi=v'�cr�criv--vicJ
(1) Bids-shall-be-seed-separately for eac th„riz d tm t identified b.w a nt
per a calculated a 360 day ,e Bids f r„ortions of the authorized t t
1l Vl 141u1M111 V.4lVMaMaV�s Vii K ✓VV 4FL� ''Vul. Y111V 1V1 1JV111V11J Vl 111V GLui
may ben ptell b.w the eity at its discretion
r dealer which.
CITY OF SEWARD,ALASKA
ORDINANCE 2022-013
µ A t the time of bid ffe n t t h , t a th h pt h
��.. uav aaaaav va vau va.va aaab, va ua isilin2G�iIA 7=P2V7RCGCrCPi1 nTVIILijJc�GT"V�r'[ILCJ
re
jected a bid ., .,rdft aer its ., 0„tan-e by the cit..• o'
„tstanding rtif; tem f .leposit hose tot l
— f-i�w�c��@�tl�e--bi �ccr�rriva�cTer-avpvan�rnv��cvtur
arnount-ef-pFineipal-and4nterest-Elue-ex-c-eeds-a4imit-established-fer-that-bank-under
(-6)13e-cityreserv@sthe-right to accept or-zejec a all bids, in-whele-or-iri-paFtrfor-ally
(7) A bank er de lo.. ., arded a bid m ,st honor its c mitment to a the authorized
investment-pursuant-to-the-tefnis-of-this-ehapterrthe-invitatien-to-bid-and-its-bid,
Section 2. This ordinance shall take effect ten(10) days following its enactment.
ENACTED BY THE CITY COUNCIL OF THE CITY OF SEWARD,ALASKA,the
12th day of September, 2022.
THE IT 0 EW ,ALASKA
Christy Terry, Mayo
AYES: Calhoon, Casagranda, Osenga, McClure, DeMoss, Terry
NOES: None
ABSENT: Wells
ABSTAIN: None
ATTEST:
Brenda J. Ball MMC
City Clerk SEAL •
(City Seal) ; ] ',,'l'F 1. 11 .•
°• OFAL1 `ts
'sisal,/le�t���
City Council Agenda Statement
Meeting Date: August 22, 2022
To: City Council
Through: Janette Bower, City Manager
From: Carmen Jackson, CPA, LLC and Deputy Finance Director Sully Jusino
Agenda Item: Ordinance 2022-013: Amending Seward City Code Chapter 5.15 Investment
and Collateralization of Public Funds
Background and justification:
The purpose of this ordinance is to amend Chapter 5.15 to establish appropriate employee
authorizations, clarify allowable investments and update outdated language to comply with current
City and industry practices.
The section has been amended as follows:
Amended Ordinance
code section Page # Amendment
New section enacted to establish formal authority to the
5.15.016 Authorization 1 City Manager and Finance Director for the investment and
management of the Ci 's funds.
Bulleted and subsection G has been amended to expand
5.15.020 Authorized investments 2 the definition of allowable investments to include
collateralized deposits, which is in-line with current
practice and industry standards.
5.15.025 Collateral required to Bulleted and updated to allow third party collateral ization
secure deposits 2 of standard bank deposits as well as certificates of deposit
in excess of FDIC insurance.
5.15.030 Certificates of deposit 4 Grammatical amendment
restrictions
5.15.035 Bid provisions for The section has been repealed to agree with current
authorized investments 5 practice and because the act of bidding public investments
is no longer industry standard or required.
Comprehensive and Strategic Plan Consistency Information
This legislation is consistent with (citation listed):
Comprehensive Plan:
Strategic Plan:
Other:
Certification of Funds
Total amount of funds listed in this legislation: $ 0
This legislation (✓):
Creates revenue in the amount of: $
Creates expenditure in amount of: $
Creates a savings in the amount of: $
✓ Has no fiscal impact
198
Funds are (✓):
Budgeted Line item(s):
Not budgeted
✓ Not applicable
Unassigned Fund Balance and Available Unrestricted Cash Balance Information
Fund (✓):
General SMIC Electric Wastewater
Boat Harbor Parking F1 Wat F1 Healthcare
Motor Pool Other
Unassigned Fund Balance*: $ *unaudited numbers
Available Unrestricted Cash Balance*: $
Finance Signature:
Attorney Review
✓ Yes Attorney Signature:
Not applicable Comments:
Administration Recommendation
e✓ Adopt Ordinance
Other:
199