§ 2-134. Investment of temporarily idle funds.

(a)

In this section, unless the context otherwise requires:

(1)

Eligible depository means any commercial or savings bank, or savings and loan association, having either a branch in this state or its principal place of business in this state and insured by the Federal Deposit Insurance Corporation or its successor or any other insuring instrumentality of the United States according to the applicable federal law.

(2)

Eligible financial dealer or institution means an investment dealer or institution that has been approved by the city treasurer or his designee to provide investment services or instruments to the city. The city shall maintain a listing of these eligible financial dealers and institutions and reserves the right to require additional information as necessary in order to evaluate any of the same.

Securities dealers not affiliated with a bank shall be required to be classified as reporting dealers affiliated with the New York Federal Reserve Banks, as primary dealers, or meet certain other criteria as set forth by the city.

(3)

Permissible instruments means investment instruments with a maturity date no greater than five (5) years that are one (1) of the following:

a.

Deposits in one or more federally insured banks or savings and loan associations placed in accordance with the procedures prescribed in Arizona Revised Statutes § 35-323.01.

b.

Interest-bearing savings accounts in banks and savings and loan institutions doing business in Arizona whose accounts are insured by federal deposit insurance for their industry, but only if deposits in excess of the insured amount are secured by the eligible depository to the same extent and in the same manner as required under Arizona Revised Statutes Title 35, Chapter 2, Article 2.1.

c.

Obligations issued or guaranteed by the United States government or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations or instrumentalities.

d.

Bonds, notes or other evidences of indebtedness of this state or any of its counties, incorporated cities or towns, school districts or special taxing districts, including registered warrants, substitute checks and electronic funds transfers that bear interest pursuant to Arizona Revised Statutes § 11-635.

e.

Bonds, notes or evidences of indebtedness of any county, municipal district, municipal utility or special taxing district of any state that are payable from revenues, earnings or a special tax specifically pledged for the payment of the principal and interest on the obligations, and for the payment of which a lawful sinking fund or reserve fund has been established and is being maintained, but only if no default in payment on principal or interest on the obligations to be purchased has occurred within five years of the date of investment, or, if such obligations were issued less than five years before the date of investment, no default in payment of principal or interest has occurred on the obligations to be purchased nor any other obligations of the issuer within five years of the investment.

f.

Bonds, notes or evidences of indebtedness issued by any county improvement district or municipal improvement district of any state to finance local improvements authorized by law, if the principal and interest of the obligations are payable from assessments on real property within the improvement district. An investment shall not be made if:

i.

The face value of all such obligations, and similar obligations outstanding, exceeds fifty percent of the market value of the real property, and if improvements on which the bonds or the assessments for the payment of principal and interest on the bonds are liens inferior only to the liens for general ad valorem taxes.

ii.

A default in payment of principal or interest on the obligations to be purchased has occurred within five years of the date of investment, or, if the obligations were issued less than five years before the date of investment, a default in the payment of principal or interest has occurred on the obligations to be purchased or on any other obligation of the issuer within five years of the investment.

g.

Certificates of deposits in eligible depositories.

h.

Negotiable or brokered certificates of deposit issued by a nationally or state chartered bank or savings and loan association that are rated within the top three (3) rating categories by Moody's Investors Service, Standard and Poor's Corporation, or other nationally recognized statistical rating organizations (NRSROs).

i.

Commercial paper of prime quality that is rated within the top two ratings by a NRSRO. All commercial paper must be issued by corporations organized and doing business in the United States.

j.

Bonds, debentures, and notes, or other evidence of indebtedness that are denominated in United States dollars and that carry a minimum "A" or better rating, at the time of the purchase, from at least two NRSROs.

k.

Repurchase agreements with a maximum maturity of one hundred eighty days.

l.

Money market funds whose underlying investments are securities allowed by state law, registered under the Investment Company Act of 1940 (54 Stat. 789; 15 United States Code sections 80a-1 through 80a-64), as amended.

m.

The pooled investments funds established by the state treasurer pursuant to Arizona Revised Statutes § 35-326.

(4)

Temporarily idle funds means public monies which are not immediately required to meet normal operating needs of the city.

(b)

Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in their own affairs, considering the required safety of their capital as well as the expected income to be derived.

(c)

The city treasurer or his designee, shall invest all temporarily idle funds among eligible financial dealers or institutions, in permissible instruments, at the highest rate of return available, recognizing overall liquidity and credit considerations assuring that all deposits are fully collateralized as established by city charter and by City Code.

(d)

Collateral as required in subsection (c) shall be valued at market not in excess of par. Collateral shall be held by an independent third party who maintains a current custodial agreement with the city.

(e)

In investing public funds, the city shall strive to maximize the return on the investment portfolio, but will avoid assuming unreasonable investment risks, as the primary objective of the city's investment activities is the preservation of capital and the protection of investment principal.

(f)

The city's investment practice requires delivery of the investment security by eligible financial dealers or institutions against payment to the third party custodian for the city, which will accept and safekeep the security in the name of the city. The third party custodian shall issue a safekeeping receipt to the city listing the specific instrument, rate, maturity, and other pertinent information.

(g)

Purchases of investments will be bid competitively and, when consistent with city policy, i.e., maturity, risk, liquidity, etc., investments will be placed with vendors yielding the highest returns.

(Code 1972, §§ 2-631—2-634; Ord. No. 1817, § 1, 9-16-85; Ord. No. 2512, § 1, 2-1-93; Ord. No. 2720, § 1, 11-1-94; Ord. No. 3998, § 1, 1-24-12; Ord. No. 4375, § 1, 11-26-18)

Charter reference

Authority to invest funds, art. 6, § 15.