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HomeMy WebLinkAbout02-23-89-06 - Resolution - 02/23/1989RESOLUT!0N NO. 02-23-89-06 A RESOLUTION APPROVING AND AUTHORIZING THE IMPLEMENTATION OF THE CITY OF COLLEGE STATION INVESTMENT POLICY. WHEREAS, the goal of the City of College Station is to create an investment policy to insure the safety of all funds entrusted to the City, while making available those funds for the payment of all necessary obligations of the City and providing for the investment of all funds not immediately required in interest bearing securities; and WHEREAS, the safety of the principal invested shall always be the primary concern of the City of College Station; and WHEREAS, the management of monies in order to insure maximum cash availability and maximum yields on a short term investment is a primary goal of the City of College Station; NOW, THEREFORE, be it resolved by the City Council of the City of College Station that the attached document shall be the investment policy of the City of College Station, providing for an active cash management policy to be pursued by the City in order to maximize investment interest as a viable and material revenue source while still providing maximum cash availability. PASSED and APPROVED this the 23rd day of 1989. INVESTI,~ENT POLICY I. INTRODUCTION: GOAL. The goal of the City of College Station Investment Policy shall be to ensure the safety of all funds entrusted to the City (SAFETY), the availability of those funds for the payment of all necessary obligations of the City (LIQUIDITY), and to provide for the investment of all funds, not immediately required, in interest-bearing securities (YIELD). The safety of the principal invested shall always be the primary concern. Cash management is defined as the process of managing monies in order to ensure maximum cash availability and maximum yields on short-term investments. It is concerned with what happens between the point that revenue is earned and an expense payment clears the bank. The City shall maintain a comprehensive cash management program which include collection of accounts receivable on a timely basis, vendor payment in accordance with invoice terms and State law, and prudent investment of its available cash. Effective cash management is recognized as essential to good fiscal management. An active cash management policy will be pursued by the City in order to maximize investment interest as a viable and material revenue source to all operating and capital funds. SCOPE. This Investment Policy of the City of College Station shall include all investment activities of any fund of the City. AMENDMENTS. This policy may be amended from time to time as the City Council may so desire, or as State law may require. II. RESPONSIBILITY: PURPOSE. The purpose of this section is to establish an Investment Officer for the City of College Station and define the authority of the Investment Officer. RESPONSIBILITY AND DESIGNATION. The Director of Finance is the City's Investment Officer and is responsible for the City's comprehensive cash management program, including the administration of these investment policies. The Director of Finance shall maintain timely, accurate and systematic records of all securities, maturities and earnings. The investment office shall be responsible for establishing written procedures for cash management. The Investment Officer shall be responsible for the development and updating on a periodic basis of a cash forecast for the City. This cash forecast will provide information essential to properly structure investment 007139 maturities to meet required disbursement of funds. The Investment officer is also responsible for developing and maintaining expertise in the areas of market evaluation, market timing, and economic forecasting. Professional training and outside experts will be used as appropriate to meet the overall policy goal of maximizing interest earnings within the constraints of portfolio safety and liquidity. Responsibility and authority for investment transactions resides with the Investment Officer. The Investment Officer is fully authorized to buy and sell investments in accordance with the goals and objectives of the City's investment strategy. Certain signatory responsibilities are shared by bonded officials for the purpose of providing continuity of the City's investment program in the absence of the Investment Officer. Positions authorized are: City Manager Director of Finance Deputy Director of Finance/Budget Officer BONDING REQUIREMENTS. Each of the above-authorized positions designated to serve as the Investment Officer or designee in the absence of the City's Investment Officer shall be bonded employees. All participants in the investment process shall act responsibly as custodians of the public trust. INVESTMENT COMMITTEE. There shall be formed an investment committee consisting of the Director of Finance, the Deputy Director of Finance/Budget Officer and the City Manager. That committee is charged with the responsibility of investment portfolio compliance with State statutes and these policies. That committee shall also have the responsibility of reviewing and approving all broker/dealer relationships on the recommendation of the City's Investment Officer. The committee shall meet at least on a quarterly basis. Any two of the three members shall constitute a quorum. The Director of Finance shall serve as chairman of the committee, and written records of investment committee meetings shall be maintained. III. STATUTORY GUIDELINES: PUBLIC FUNDS INVESTMENT ACT OF 1987, AS AMENDED FROM TIME TO TIME. This legislation, adopted by the Texas Legislature in 1987, defines the legal investment options of Texas municipalities and has included a provision requiring a written investment policy. Under terms of this legislation, legal investment options are: 1. Obligations of the United States or its agencies and instrumentalities; 2. Direct obligations of the State of Texas or its agencies; 3. Other obligations, the principal and interest on which are unconditionally guaranteed or insured by the State of Texas or the United States; 4. Investment grade obligations of the State of Texas and political subdivision; 5. Certificates of Deposit issued by state and national banks domiciled in this state which are either insured by the F.D.I.C. or secured by legal collateral; 6. Repurchase agreements which are fully collateralized, with third-party safekeeping of collateral, purchased through a "primary" government securities dealer or state or national bank domiciled in the State of Texas. Collateral of repurchase agreements must meet certain requirements. NOTE: The complete text of HB 1488 is attached as Exhibit I and is made a part of these investment policies. IV. INVESTMENT OBJECTIVES: The investments purchased under the provisions of this Investment Policy shall be managed to maintain liquidity for meeting the City's needs for cash and to limit potential market risks in periods of rising interest rates which depress the market value of securities. As a guideline, maturity of securities should not exceed more than two years for cash management purposes, with the optimum weighted average maturity of less than one year. Investments in securities of a longer maturity than two years are considered prudent for funds maintained for capital construction, and debt service funds, if necessary to meet projected disbursement schedules. As a general guideline, the City of College Station's cash management portfolio shall be designed with the objective of meeting, over the course of full market cycles, the average return on three-month U.S. Treasury Bills, or the average rate of federal funds, whichever is higher. These indices are considered benchmarks for riskless investment transactions and therefore comprise a standard for the portfolio's rate of return. The investment program shall seek to augment rates of return above this level. In a diversified portfolio, measured losses are inevitable and must be considered within the context of the overall portfolio. The objective in investment of construction funds is at least to match inflation increases in construction costs. Active portfolio management includes the practice of selling securities prior to maturity, using the proceeds to purchase other securities. Such "swaps" are performed for a variety of valid reasons: To lengthen maturities as interest rates rise, to secure market profits and shorten maturities as interest rates fall, and to take advantage of the differences in relative yield between different types of securities and varying maturities. "Swap" analysis is the responsibility of the City Investment Officer and the decision to execute the "swap" rests with him. To protect the portfolio from imprudent trading, no security may be sold until such time as the current market value of the security plus interest earned from date of purchase is at least equal to the purchase price of that security. V. AUTHORIZED INVESTMENTS ELIGIBLE DEPOSITORIES. Ail state and national banks located in the State of Texas, which are insured by the Federal Deposit Insurance Corporation (F.D.I.C.). The financial condition of the bank shall be considered prior to establishing any accounts with that bank. The City shall subscribe to a bank rating service to obtain timely information. Banking Services shall be maintained separately from Investment Services. At least every third year, the City shall solicit requests for proposals for banking services from state and national banks located in the City. The Director of Finance shall be responsible for recommending a written banking services agreement for approval by the City Council. That agreement shall include such provisions for transaction unit costs, account and wire transfer fees, and account reporting services. The agreement shall include provision for collateralization of demand account balances in excess of F.D.I.C. insurance and provide for independent, third-party safekeeping of that collateral. A copy of the current agreement is attached as Exhibit II to this policy. ELIGIBLE SECURITIES DEALERS. Securities dealers and banks which are the approved and designated dealers of the Federal Reserve Bank of New York - "Primary Dealers". A current list of "Primary Dealers" is attached as Appendix A. Securities dealers and banks which are not designated as "Primary Dealers", but which are approved individually by the City of College Station Investment Committee. 007142 Ce Investment activity in repurchase agreements shall be limited to "Primary" dealers and State and national banks domiciled in the State of Texas, evidenced by a fully-executed Master Repurchase Agreement on file with the City (copy attached as Exhibit III). Dw Prior to commencing investment activity with any security dealer, a "Broker/Dealer Questionnaire and Certification" must be completed and on file with the City (copy attached as Exhibit IV). All securities dealers must furnish annual financial reports to the City. ELIGIBLE INVESTHENTS. Obligations of the United States Government or its agencies including, but not limited to, the following: 1. U.S. Treasury Bills, Notes and Bonds 2. Federal Home Loan Bank 3. Federal National Mortgage Corporation 4. Government National Mortgage Corporation Ail securities shall be purchased on a delivery-versus- payment basis through a third-party safekeeping account. The City shall authorize the release of its funds only after it has received notification from the safekeeping bank that a purchased security has been received in the City's safekeeping account. This notification may be oral, but shall be followed up in writing with the original safekeeping receipt within twenty-four hours. B. Repurchase agreements made in compliance with Texas State Statutes. Repurchase collateral shall be perfected and delivered to an unaffiliated third-party safekeeping account. Repurchase agreements shall be collateralized at a minimum of 101 percent of the purchase price of the repurchase agreement and marked-to-market on a weekly basis. Collateral provided must be those securities otherwise authorized by state statutes for outright purchases. Collateral may be substituted only with the oral authorization of the Investment Officer, followed by written confirmations within twenty-four hours. The City considers repurchase agreements to be simultaneous purchases and sales of securities as outlined in the Master Repurchase Agreement and not as collateralized loans. However, the underlying securities may be referred to as "Collateral". A reverse repurchase agreement is considered a simultaneous sale and repurchase of a security. Reverse repurchase agreements ("Securities Lending") are not a 007143 normal and prudent component of cash management and are prohibited by this policy. C. Time certificates of deposit or savings accounts in state or national banks located within the State of Texas. All deposits must be insured to the level of $100,000 through the F.D.I.C. Investment in eligible pooled Certificate of Deposits programs (PAC's) is authorized under this section. All deposits in excess of $100,000 shall be collateralized by those securities otherwise authorized by state statutes for outright purchases, deposited into an unaffiliated third-party safekeeping institution with collateral held in the City's name. All deposits will be collateralized at a minimum of 101 percent of the purchase price and marked-to-market on a weekly basis. Collateral may be substituted only with the oral authorization of the Investment Officer, followed by written confirmations within twenty-four hours. The City shall take all prudent and necessary steps to assure the solvency of the financial institution and the adequacy of collateral for deposits in excess of $100,000, with interest rates sufficient to warrant investment. VI. ALLOCATION OF ASSETS: Diversification of investments as to investment type and term to maturity serve to reduce both market risk and interest rate uncertainty. Asset allocation shall be: MAXIMUM MINIMUM 1. U.S. Government Treasury Securities 90% 25% 2. U.S. Government Agency Securities 70(*) 0 3. Repurchase Agreements 70 0 4. Bank Certificates of Deposit 40 0 5. Liquidity Funds: Demand Deposit Accts 10 2-1/2 (*) U.S. Government Agency Securities are authorized investments under Texas State statutes and are a "moral" obligation of the treasury. They are not, however, full faith and credit instruments as are Treasury Bills and Notes. For that reason, they carry higher interest rates than like-maturity Treasury Bills and Notes. Agency securities, with a maturity longer than six months from date of purchase, are further restricted to a maximum of 30% of the total portfolio. In addition, securities of any individual agency with maturities longer than six months are restricted to a maximum of 10% of the total portfolio. 007 44 VII. HIGHEST YIELD REQUIREMENT: The City's funds shall be invested in instruments or accounts that yield the highest possible rate of return while providing the desired maturity schedule, level of liquidity, and necessary protection of principal as required by these policies and State law. VIII. BIDDING REQUIREMENTS: As prescribed by State Statutes, the City shall solicit bids prior to the purchase of any investment instrument. For each such purchase, a minimum of three phone bids will be received, with bid documentation maintained on file. It is the Investment Officer's responsibility to determine prudent maturity and liquidity, and to assess the potential for market gains or losses caused by fluctuating interest rates during the term of the investment. IX. POOLING OF ASSETS: To maximize the effective investment of assets, all funds needed for general obligations of the City should be pooled into one account for investment purposes. The income derived from this account will be distributed to the various funds based on their average balances on a periodic basis. Proceeds of bond issues shall not be pooled with other assets of the City, but shall be maintained in the fund issuing bonds with interest earnings on these invested proceeds recorded directly to that fund. Under provisions of the Tax Reform Act, yields on investment of bond proceeds must be calculated for each bond issue and excess arbitrage earnings rebated to the Treasury. The City shall maintain investment records to provide for monitoring and annual calculation of these yields. X. STANDARD OF ETHICS: Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment programs, or which could impair their ability to make impartial investment decisions. Employees and Investment Officials shall disclose to the City Manager any material financial interests in financial institutions that conduct business with the City of College Station, and shall further disclose any large personal financial or investment positions that could be related to the performance of the City's portfolio. Employees and Investment Officers shall subordinate their personal investment transactions to those of this jurisdiction, particularly with regard to the timing of purchases and sales. 007145 XI. REPORTING: As required by law, the Director of Finance shall submit annually to the City Council an investment report outlining the City's investment transactions for the preceding year and describing the investment position of the City as of the date of the report. Earnings on investments shall be compared to benchmark indicators to indicate relative portfolio performance. Quarterly reports, in addition to the required annual report, will be provided to the City Council, City Manager, and Investment Committee (example attached as Exhibit V). XII. AUDITING: State and local laws require an annual audit of the financial records of the City. That audit will include a review of all investment activity for the year to review compliance with these investment procedures. Included in the audit review will also be a review of internal controls as pertains to investment of City funds and appropriate investment documentation. Annual audit procedures will also include verification of collateral held by the City for both bank deposits in excess of F.D.I.C. insurance and repurchase agreement transactions. XIII. INDEMNITY: The Investment Officer and Investment Committee shall be personally indemnified in the event of investment loss provided that investments are made in full compliance with these policies. 007146 APPENDIX A LIST OF THE GOVERNMENT SECURITIES DEALERS REPORTING TO THE MARKET REPORTS DIVISION OF THE FEDERAL RESERVE BANK OF NEW YORK Bank of'America, NT & SA Bankers Trust Company Bear, Stearns & Co. Briggs, Schaedle & Co., Inc. Carroll McEntee & McGinley Incorporated Chase Manhattan Government Securities, Inc. Chemical Bank Citibank, N.A. Continental Illinois National Bank and Trust Company of Chicago Crocker National Bank Discount Corporation of New York Donaldson, Lufkin & Jenrette Securities Corporation Drexel Burnham Lambert Government Securities, Inc. The First Boston Corporation First Interstate Bank of California First National Bank of Chicago Goldman, Sachs & Co. Greenwich Capital Markets, Inc. Harris Trust and Savings Bank E.F. Hutton & Company, Inc. Kidder, Peabody & Co., Incorporated Kleinwort Benson Government Securities, Inc. Aubrey G. Lanston & Co., Inc. Lehman Government Securities, Inc. Manufacturers Hanover Trust Company Merrill Lynch Government Securities, Inc. Morgan Guaranty Trust Company of New York Morgan Stanley & Co. Incorporated The Northern Trust Company Paine Webber Incorporated Wm. E. Pollock Government Securities, Inc. Prudential-Bache Securities, Inc. Refco Partners Salomon Brothers, Inc. Smith Barney Government Securities, Inc. Dean Witter Reynolds, Inc. L.F. Rothschild Unterberg, Tomlin, Thomson, McKinnon Securities, Inc. Security Pacific National Bank 007147 C C By Hammond Substitute the following for H.B. No. 1488: By Berlan~a No. 1488 No. 1488 1 2 3 4 S 6 / 8 9 10 11 12 13 14 15 17 18 20 21 22 --~ 23 A BILL TO SE ENTITLED AN ACT ~eLa~n9 to the investment of public BE IT ENACTED BY THE LEGISLATURE O~ THE STATE OE TEXAS: SECTION 1. SHORT TITLE This Act may be cited as The Public ~unds Investment Act o~ 1987. SECTION 2. AUTHORIZED INVESTMEHT5. (a) An ~ncorporated city or to~n, a county, a public school dlstr~ct, an institution hxqh.~r education as deigned by Section 6!.003 of :he Education Code, or any nonpro~£t corporation acting on behal~ of any of those entities may, in accordance ~ith this Act, purchase, sell, and ~nvest its funds and funds under its control xn the following: (1) obligations oi the United States or its agencies and (2) direct obligations of the State of Texas or its agencies; (3) other obligations, the principal o£ and interest on ~ich are un¢ondi~lon&lly guarsnteed or ~nsu~ed by the State Texas or the United (4) obligations o£ states, agencies, counties, cities, and other political subdivisions of any state hav~n9 been rated as ~nvestment cluaki~y by a na~ionaILy recognized investment ra~lng ~rm and having received a rating of not Less than A or its eclu~valent~ (S) certificates of deposit issued by state and 007148 ! 2 3 4 5 $ ? 9 17 2O 25 banks domiciled in thxs state that are: (A) ~uaranteed or insured by the Federal Corporation, or its successor: or C.$.H.B. No. 14~8 Deposl~ Insurance are described ~y Subdiv~s~ons (1)-(4) of this subsection, which are :n=enced ~o tncLude a~l direct agency or znstrumental=ty issued mo~:gage backed securities rated AAA by a na=iona%ly recognized rating agency, or by Chapter 726, Acts of the 67th Cegislature, Regular Sesslot~, 1~81 (Article 2529b-~, Vernon'e Texas Cxvil Statutes), and the: have a market va~ue of not less than the principal amount of th~ cer~lficates; and (~) fully co1%atera~ized direct repurchase agreements having a defined termination date, secured by o~Zlga:xons described by Subdivision (1) of this subsection, pledged w~th a th~r~ party selected or approved by the political entity, and placed through a primary government securities dealer, as defined by the Fedeval Resevve, or a bank domiciled ~n this state. (c) In thxs section, "repurchase agreement" means a simultaneous agreement ~o buy, hold for a specxfxed time. and :ken sell back at a fu%ure date. obLi~ations described by Subsec~:on (a)(1) of this section, the principal and interest of which are guaranteed by ~he Un,ted States or any of its agencies, in market value of not less titan ~he pvlncipa~ amout~t Of t! · funds d~sbu~sed. / ~ $£CT ~ON 3 ~QS. [ t~%'e~met~t~ f:~a¥ ~e made et~ ~ ~' fl~e~ competitive bids are taken from three sources at Zees: one of which ~s a bank domiciled in this state. S£CT~ON 4. STANDARD OF CARE. Investments shal% be made w~th 007149 1 2 3 5 6 7 9 12 17 20 21 22 23 24 2S 26 27 C.S.H.S. No. 1488 judgment and care, under c~rcumstances then prevailing, thac persons of prudence, discretion, and LnteLL:gence exercise Ln :he management of their own affairs, not for specular:on, but for ~nvestment, considering the probable safety of their cap~tai as well as the probable zncome to be derxved. SECTION 5. WRITTEN POLICIES. Investments shall be made accordance with written policies approved by the governing body. The investment policies must address L~qu~d~ty, diversif~cat~on, safety of principal, yield, maturity, and quality and capability of investment management, with primary emphasis on safety and L~guxdity. SECTION $. NONAPPLICATION TO RETIREMENT EUN~S. Th~s Act does not apply to the investment of funds under the control of a public retirement system, as defined by Section 12.001(2), Title 1lOB, Revised Statutes. SECTION 7. AUTHORITY IS ADDITIONAL. The authority granted by thzs Act is in addition to that granted by other law. SECTION 8. Section Sl.O03(b), Education Code, ~s amended read as follows: (b) The funds may [shai~l be depose:ed :n the depository bank or banks or may be invested as au:hot,ted by the ~u~L~c rurds Investment Act of lg8?. ~unds that are to be deposited ~n depository bank or banks must be de,os:ted ~th~n seven days ~rom the dace of collection. SECTION g. EHERGENCY. The importance of this legislation and the crowded condition of the calendars in both houses create an emergency and an imperative public necessity that the 007150 C.S.H.B. No. 1488 constitutional rule ~equ~ring bills to be read on three several days ~n each house be suspended, and this rule ~s hereby suspended, and that this Act take eEfect and be zn force from and after passage, and it is so enacted. 007151 CITY OF COLLEGE STATION, TEXAS REQUEST FOR PROPOSAL BANK DEPOSITORY AGREEMENT JULY, 1988 007152 TABL£ OF CONTENTS Ve VI. VII. VIIi. IX. Introduction .......................................... ! Calendar of Events .................................... 2 Criteria For Evaluation ............................... 2 Account A. B. C. D. E. F. G. Activities .................................... 3 Number of Accounts ............................... 3 Services and Fees ................................ A Pledge Requirements .............................. ~ Bank Statements .................................. 5 Method of Payment and Reporting .................. 5 Availability of Funds ............................ 5 SUPER NOW Rates .................................. 5 Pledge Requirements ................................... 5 A. Securities Pledges ............................... 5 B. Reporting Requirements ........................... 6 C. Safekeeping ...................................... 6 D. Substitutions .................................... 6 Investment Activities ................................. 7 A. Direct Rate Alternative .......................... 7 B. Certificates of Deposit .......................... 7 C. Interest Rate Calculations ....................... 7 Overdrafts And Loan Provisions ........................ 7 A. Overdraft Provisions ............................. 7 B. Short-Term Loan Provisions ....................... 8 Other A. B. C. D. E. F. Stipulations .................................... 8 Regulation Notices ............................... 8 Wire Transfers ................................... 8 Right To Cancel Contract ......................... 8 Right To Audit Records ........................... 8 Financial Reports ................................ 8 Term Of The Agreement ............................ 9 Bidding A. B. C. D. E. F. Instructions/Requirements ..................... 9 Date, Time, Location ............................. 9 Responding To This Request ....................... 9 Additional Information ........................... 9 Right To Reject Bids ............................. 9 Other Stipulations ............................... 9 Bid Bond ......................................... 9 Other Miscellaneous ................................... 9 A. Periodic Review .................................. B. RFP And Resulting Contract ...................... C. Bid Advertisement ............................... 10 D. Designating Officials ........................... 007153 INTRODUCTION Page I of 11 The City of College Station (City) is seeking applications from eligible institutions to be the Banking Services Depository for the City. The philosophy incorporated into this Request For Proposal is to solicit comparable market rates to be paid on short-term investment of funds and to pay for all services provided by the Bank, The bid should be viewed from this basis as City intends to separately and individually bid each block of investment funds under authorization of current state law. Completion of Section VI - Investment Activities - is optional at the discretion of bidder. Bidder's decision not to complete this section will not disqualify bidder. The contract period shall be three years beginning October l, 1988. Contract may be extended for a period not to exceed ninety (90) days until the successor Depository shall have been duly selected and qualified according to state laws. At the outset. the City wishes to communicate the primary objectives of the Depository agreement, it is an important component of the overall treasury and debt management program of the City of College Station with the following objectives: o To seek banking services matters; a Bank that is both capable of providing and willing to be attentive to the City's money o To maximize the total dollars earned by the City on invested monies tn order to be prudent and effective custodians of the taxpayers' financial resources; o To maintain depository Bank; and a good working relationship with the o To adequately compensate the Depository Bank for services provided and to allow a reasonable profit to be earned. This Request For Proposal, or "RFP", is intended to serve as the bid form for the Depository agreement. There are several blanks to fill in and questions to be answered. The Depository agreement shall be prepared based on the bidder's response to this RFP. In order to receive City consideration, Bidder must state all points and attach all requested materials to its reply. Attachments will be appropriate tn order to answer some of the enclosed questions, The City has designated the Director of Finance as coordinator for and contact person of the bidding process. The City desires to enter into a contract that will maximize the City's interests. City staff members will be happy to answer all questions pertaining to this RFP. 00715,4 TARGET DATE July lA, 1988 July 18, 1988 July 18, 1988 July 25, 1988 August 1, 1988 August 11, 1988 October 1, 1988 Page 2 of 10 II. CALENDAR OF EVENTS DESCRIPTION OF EVENTS Present RFP to City Council for approval. Host a bidder's conference at 10:00 A.H. to review RFP and approach and content. Advertise Bank Depository notice in the newspaper. Receive proposals from interested banks, 2:00 P.N. at City Hall. Review recommendation with the City Council and award the contract. New Bank Depository contract period begins. iii. CRITERIA FOR EVALUATION The City staff shall revie~ the submitted proposals carefully. The recommendations shall be based on the bid determined to be best on behalf of the City and the taxpayers. As an indication of what will be considered in the evaluation of the proposals, the following areas are listed: 0 0 0 0 0 Ability to perform the requested services. Agreement to points outlined tn this REP. Interest rates paid on liquidity funds. Cost of banking services. Financial stability of the Bank. 007155 IV. ACCOUNT ACTIVITIES Page 3 of tO A. The City intends to establish the following bank accounts: ACCOUNT NAHE TYPE OPERATING FUNDS General Operating Fund Payroll Municipal Court Cash Bond Utility Operating Fund Utility Deposit/Refund Sanitation Operating Fund Tax Collector Hotel/Motel Fund Medical Benefit Fund Fireman's Pension Fund Community Development Fund Parks Escrow Fund Energy Project Computer Project Fund SuperNow SuperNow SuperNow SuperNow SuperNow SuperNow SuperNow SuperNow SuperNow SugerNow SuperNow SuperNow SuperNow SuperNow CAPITAL PROJECTS FUNDS General Obligation 1982 General Obligation 1982 Il General Obligation 1984 Utility Revenue Bond 1981 Utility Revenue Bond 1982 Utility Revenue Bond 1982 Il Utility Revenue Bond 1984 SuperNow SuperNow SuperNow SuperNow SuperNow SuperNow SuperNow DEBT SERVICE 1985 Refunding [ & S Debt Service Fund SuperNow SuperNow The City reserves the right to open or close any number or type of accounts throughout the period of the agreement as it deems necessary. The City is currently in the process of purchasing a new computer system for Finance and Accounting. It is projected that the new system will include pooled cash functions. That should significantly reduce the number of accounts required by the City, but not the total transaction volume. 007156 Page 4 of 10 The services vhich should bm made available to the City include but are not limited to the following: FEE CHARGED/ UNIT ESTIMATED VOLUME OPERATING DEBT CAPITAL TOTAL FUNDS SERVICE PROJECT ALL FUNDS FUNDS ACCOUNTS DESCRIPTION OF SERVICE 14/mo 2/mo 7/mo 40B/mo 27/mo iS/mo 21,O00/mo 23/mo 20/mo O/mo Accounts to 23/mo Maintain 450/mo Deposit Tickets / 14/mo 21,037/mo Items Deposited .' i. 10.00 2. .10 3. .10 ~. . l0 3, SOO/mo 49/mo 3,569/mo items Paid O/mo 162/mo Return items ~' 46,390/yr Printed Checks 5. 1.25 162/mo See 6. Attach. 1 45, O00/¥r i,200/yr lSO/yr See 7. Attach~ 1 3,600/yr 500/yr 200/¥r Printed Deposit 4,300/yr Tickets '. 10.00 iS/yr 72/yr O/yr 87/yr Wire Services 9. 17.50 75/yr O/yr lO/yr Stop Payment 85/¥r Requested See Attach. 2 BOO/mo O/mo O/mo Encoding of 800/mo Drafts None YES YES YES Coin Wrappers YES Furnished 12. 15. O0 22/em O/es O/es Night Depository 22/es Bags 13. 60.00 i/es O/es O/em Safe Deposit Boxes l/ea ¢i2xl2xlO) 1.00 M/O 1% fee T/C 3.00 C/C lO/es O/em O/em Honey Orders, Travelers Checks L lO/em Cashiers Checks The balances maintained in the Super Now accounts must be collateralized in the same manner and under the same stipulations as outlined in the Pledge Requirements section. The maximum ledger balances are estimated to be $4,0OO,OOO tn the aggregate. The average balances under a pooled cash plan are projected to be in the range of $1,000,000. 0071§7 Page S of lO Bank statements shall be rendered within four (4) working days after the close of the calendar month. The statement shall include deposits made on the last day of the period. The City intends to pay for all account services provided by the Bank as set forth in Section IV-B. The method expected to be us&d for the payment of these services shall be the direct payment method. The City shall require an account analysis each month which shall also show average ledger balances, average uncollected funds, average collected balances, interest rates and the amount of interest paid. Please submit a sample of the monthly account analysis statement that shall be provided to the City of College Station. (See Attachment 3) The City shall receive same day credit for all funds deposited by 2:00 P.M. and drawn on a bank located in the City of College Station, and next day credit for all funds deposited by S:O0 P.M. The funds shall be investible for any investment transactions that can be executed. If not invested, the funds shall earn interest at whatever rate is being paid for SUPER NOW accounts. See below.* Please provide a detailed explanation of the Bank's policy and methodology used tn the setting of rates paid on SUPER NOW accounts. Also, provide a schedule of all rates paid on SUPER NOW accounts since January 1, i987. Specifically indicate if rates are applied to ledger balances or collected balances. Indicate when the rates change and if they are based on a market rate such as T-Bill discount or yield rate, or federal funds rate. (See ~t~ac~ment 4) V. PLEDGE/REqUIREMENTS As security for the deposits of the City of College Station, the Bank shall pledge to the City securities equal to the largest total balances the City of College Station maintains in the Bank, less the amount of coverage provided by the Federal Deposit Insurance Corporation (F.D.I.C.) These aggregate balances are estimated to be $4,000,000 maximum plus the investment in C.D.'s with the Bank. The securities comprising the pledge shall be calculated using market value. The securities so pledged, the amounts thereon and the time for pledging same shall satisfy the requirements of Texas Local Government Code, Chapter 105, et. seq. Depositories for Municipal Funds, 1987. As an exception to this section, the City will receive credit for deposit items according to th~ current availability schedule of its item processing clearing bank. 007158 Page 6 of 10 The Bank shall provide the City a report of securities pledged at the end of each month or at any time requested by the City Manager, the Finance Director or a designated representative. This report should reflect the following information at the end of each month: Total pledged securities itemized by: Name. Type/Description. Par Value. Harket Value at Heath End. Maturity Date. ~oody's or Standard & Poor's Rating. The securities pledged shall be held in safekeeping by a financial institution (bank) that is separate and unaffiliated from the Depository Bank and approved by City. The original copy of all security receipts shall be filed with the Finance Director of the City of College Station. City shall reimburse the Depository Bank for safekeeping charges, if any. Specify the safekeeping charges that shall apply: See below * . Please submit a copy of a safekeeping agreement and the name of the Trustee Bank recommended to be used in the event you are awarded the Bank Depository contract. Final approval of the safekeeping depository rests with the City. The safekeeping agreement shall clearly state that the Trustee is instructed to release the collateralized securities to City if City has determined that the Bank has failed to pay on any accounts, including but not limited to matured investments in certificates of deposit, or City has determined that City's funds are tn Jeopardy for any reason whatsoever, including but not limited to involuntary closure or change of ownership, and whether the instructions for release must be formally requested by the City Council by ordinance or resolution. (See Attachment 5) The Safekeeping Agreement shall have signatories from the Trustee Bank, the Depository Bank and the City of College station. De Any substitutions of the securities or reductions in the total amount pledged shall be made only by and with proper written authorization approved by the City Manager, the Finance Director, or a designated representative. The City shall approve all securities pledged. In the case of a reduction, the Bank shall provide in writing that collateral shall be available when needed to meet normal City balance increases throughout the year. Any state or local government bonds pledged shall have a rating of "A-i" or better by Moody's Investor Services. * - C. Any charges incurred by the Bank in performance of this requirement will be identified and billed to the City in the monthly billing statement. 007159 Ae Page 7 of 10 VI. INVESTMENT ACTIVITIES Direct Investment Alternative. desires a Depository agreement flexibility in City to invest Oovernment, the discretion, and the City, to obligations, The City of College Station which provides full legal investments. Since state law now allows the in direct debt securities of the U.S. City shall have the right, at its sole based on maturities and liquidity needs of select direct investment in government Certificates of Deposit. The City shall retain the right to bid each investment block when the funds become available and a decision is made by the City to place the funds in a time deposit. The City shall, in these cases, allow any banking institution within the City of College Station to bid as well as any banking institution within the State of Texas, providing that collateral requirements are met. Instruments eligible for investing public funds for the City of College Station include Packaged Affiliate Certificates (PAC's) offered by holding company banks within the State of Texas. These funds can be distributed up to $100,000 in each of the banks, each being insured by the F.D.i.C. Additional distributions above the SLOO,OOO FDIC limits may be distributed if approved collateral is pledged to secure funds above FDIC limits as stipulated tn Section V. A-D. Interest Calculations. Interest on all certificates on deposit shall be computed on an actual day basis, and the tnt.rest shall be paid to the City of College Station on the maturity date. Payment shall be made by crediting the bank account. The Finance Director shall be notified by the Bank of the tnt.rest amount one day before the maturity date. Interest calculations shall include the first day in the investment period but shall not include the day of maturity. Ae Note: Vii. OVERDRAFTS AND LOAN PROVISIONS The City does not intend to have a net overdraft position throughout the course of the contract. An overdraft shall be defined as a negative demand balance in the City accounts collectively, not by individual account. Should an overdraft occur stipulations shall apply: in the aggregate, the following 1. The maximum number of days the overdraft shall be allowed is 3 days 2. The maximum amount of the net overdraft to be al lowed shall be $ greater of $100,000 or balance of CD's on deposit. NCNB-Texas National 3. The interest rate shall be Bank prime rate per ann~ computed on an actual daybasis, vv7160 To compensate Bank for overpayment of interest in event of overdraft in an individual account, a charqe eoual to the current interest rate Paid Page 8 of 10 Be Be In the event a check or checks shall be presented for payment on any account or accounts maintained by the City of College Station, where there shall be insufficient funds for the purpose of paying checks, then the Depository Bank agrees to promptly notify the Finance Director of the City of College Station, by telephone or other means, of the overdraft situation, and to provide the Finance Director a period not exceeding one business day to respond to such overdraft. The Bank agrees to loan funds to the City of College Station on a short-term basis, if needed, for operational purposes and for capital expenditures only. Specify the terms and conditions by which the loan funds to the City on a short-term basis: Bank shall 1. The maximum number of days for the 90 days . loan is 2. The maximum amount of the loan shal I be $ 500,000 . Requests in excess of $500,000 will be considered on a per-case basis. NCNB Texas National 3. The interest rate sha l I be Bank Prime rate per annum computed on an actual day basis. VIII. OTHER STIPULATIONS The successful bidder shall notify the City in writing within ten (lO) days of any changes in Federal or State regulations or laws that would thereafter affect the Depository agreement. The Bank shall also notify the City of any additional services that become available to the City throughout the contract period. Notification of wire transfers shall be made within one hour of the transaction and a duplicate copy furnished to the City within twenty-four hours. In the event it would be ruled illegal under the provisions of any Federal or State Statutes or regulations for the Bank to pay interest in the manner outlined in this RFP, then the City expressly reserves the right and privilege to cancel the contract and to re-bid the Depository services. The Bank's records relating to the City of College Station's accounts shall be open to review by designated City staff members or City appointed independent auditors during normal business hours. The proposing Bank shall submit a copy of the last annual financial statements along with the last two quartsrly FDIC call reports. (See Attachment 6) 007161 ~age 9 o~ lO The term of the contract period shall be for three years beginning October 1, 1988, and ending September 30, 1991, or thereafter until a successor Depository has been selected. This contract shall be automatically extended up to ninety (90) days if the City is actively proceeding with re-bidding procedures but, for whatever reason, cannot finalize the bidding or selection process by the end of the three year period, September 30, 1991. Continuance of the contract must be approved by both parties on an annual basis and may be cancelled by either party, for any reason, annually on the contract renewal date. Be Fe IX, BIDDING REQUIREMENTS Sealed bids or proposals clearly marked "Depository Application" shall be delivered to the following person by 2:00 P.M., August ~, 1988: Purchasing Agent City of College Station ~10~ Texas Avenue P.O. Box 9960 College Station, TX 77842 NO BID SHALL BE RECEIVED AFTER 2:00 P.M. The proposing Bank shall use this RFP form as the OFFICIAL BID FORM to submit rates and to answer questions. Any alterations, changes or deletions to this RFP shall be grounds for the City to disregard and reject the RFP and the bid. The City reserves the right to request additional information or to moot with representatives from proposing organizations to discuss points in the proposal before and after submission, any and all of which may be used in forming a recommendation. The City. reserves the right to reject any and all proposals. The Bidder states that it is a banking institution chartered under laws of the United States or of the State of Texas. Bidder shall supply a bid bond of $25,000. Bid bond shall be tn the fora of a cashiers check, and shall be returned to each bidder upon final acceptance and approval of successful bidder. X. OTHER MISCELLANEOUS The City of College Station shall require a review meeting at least once every six months to evaluate the working relationship between the City and the Depository Bank. The objective shalt be to address any problem and tosee ]O 162 responsible solution. Page 10 of 10 Ce De The final appointment of a Depository Bank shall be made by the College Station City Council. This request for proposal has been reviewed and approved by the City Council and the City Attorney. The bidder may be required to enter into a contract which incorporates all of the obligatory points in this RFP. Otherwise, an ordinance shall be adopted accepting the Bank's RFP as the OFFICIAL BID FORH with accompanying related schedules and materials called for in this RFP. This Request for Proposal has been duly advertised and is being offered for consideration to financial institutions inside the corporate limits of the City of College Station, as permitted by state laws. Upon being awarded the contract, the Depository Bank shall designate an individual to be the official contact person for all correspondence. The City of College Station shall do the same. The Bank shall be responsible for training and communicating the terms of this contract to Bank Employees. This proposal is submitted by the following person duly authorized to act on behalf of the Bank: Rom R. Kirkwood Marvin L. Zin~nerman Executive Vice President Senior Vic~ ~r~.~i~nt anr~ ~n~] ]er Officer's Na~e and Title (Please Print) .~ NCNB Texas National Bank ( College Station branch) Name of Bank P. O. Box 2860 College Station, Tx. 77841 (409) 846-5721 Address and Telephone Number 007163 TELEPHONE/FUNDS (WIRE) TRANSFER AGREff24ENT WITH REPUBLIC~ANK A&M Gentlemen= This company (corporation/bank), City of College Station (the "Company") from time to time requests by means of telephonic, telegraphic, oral or written requests or orders, the transfer of funds in amounts not to exceed the bal- ance on deposit from the Company's account(s) maintained at RepublicBank A&M, College Statzon, Texas ("Bank"} to other banks for credit to persons/accounts designated by this Company; and ~--' THE BA~K is unable to obtain their normal written instructions and authorization~ THEP~EFORE, in consideration of the Bank's acting upon telegraphic and oral request~ for the transfer of funds and forebearing their requirement of written instructions, commencing Auq~mt 4 , 19 88 we hereby authorize you to: (1) Honor, execute and charge to our accounts(s) at the Bank, all telephonic, telegraphic, oral or written requests or orders for the transfer of funds when such requests or orders are received from an authorized representative of the company listed in Form A (an "Authorized Representative") and are made in compliance with the Bank's transfer procedures. You may: A. Transfer funds from specific Co=~any account(e) with the Bank to any othez specified Com~oany bank account(s), whether such account(s) are with the Bank or other bank(s)~ and B. Transfer funds from Co=~any account(s) with the Bank to any account(s) of the third party, whether such third party account(s) are with the Bank or other bank(s). (2) (3) Record all telephonic instructions received by the Bank's Wire Transfer Depart merit from the Company and retain the recordings for sixty-one (61) days (the pericx~ for Company notification of discrepancies) following such requests. We agree to report any discrepancies between the Company's records of these and the Bank's Wire Transfer Department in writing within thirty (30) days after the statement date. Failure to notify the Bank of any discrepancies within the 61.day period will relieve the Bank of any liability. Act upon all transfer requests on the date received prior to the deadline required by the Bank, and to use any means for the transmission of funds the Bank may consider suitable and charge the appropriate account for any direct charge to the Bank for the transfer. (4) Transfer funds based upon predetermined criteria described in written instruc- tions to the Bank sig~d by an authorized representative of the Company. It is understood that this funds transfer service (including oral transfer request) is provided as a convenience to this qompany and in consideration of obligations of the Bank hereunder, we= Release the Bank from responsibility for any inaccuracy, interruption, delay or failure in transmission and indemnify and hold the Bank harmless against claims based thereon,when same are occasioned by any circumstances beyond the Bank's control. (2) Subject to paragraph (2) above, agree that compensation, if any, for the loss of interest or uss of funds due the company as a result of a B-=~k error or of the Batik's failure =o execute a transfer request on the date received, when received prior to the Bank's deadline, and when such executzon or error is within the Bank's control, will be for a period not exceeding sixty-one days (the Company Notification of Discrepancies period) or the date of actual trane far or error correction whichever comes first, and will be in the form of eith of th~ following at the Bank's option= 007 64 (3) (4) a) Adjust the aggregate ledger and collected balances of the Company's account to reflect properly in the average balances on ~he account analyai, s the amounts that would have resulted had no error occured. b) Reimbursement by check not exceeding the average Fed Funds interest rate, less reserves when applicable, for the period and amount in question, com- puted on a daily basis. Assume full responsibility for all transfers made by the Bank in good faith in accordance wi~h these procedures and agree that the Bank shall be conclusively deemed to have exercised ordinary care if it has followed the procedures or if the Company has not followed them. Agree that the transfer requests will at no time exceed the account's collected balance as determined by the Funds (wire) Transfer Department of the Bank. Agree to Supply the Bank, in addition to Form A, any other information that the Bank may reasonably request, including but not limited to~ money amounts, accounts to be affected, date of transfers, supplemental instructions, and fur- =her evidence of any authorized representative's authority to transfer funds or to do any other act contemplated under these procedures. Agree that =he Bank may change these procedures upon writ=eh notice to =he Company. This authority shall remain in force and effect until either par~y shall give written no=ice =o =he other party of revocation. Da=ed: ACCEPTED: Rep~blicBank A&M ,2, O0 7165 PiJblic Securities Association 40 Broad Street, New York, NY 10004-2373 Telephone (212) 809-7000 PSR MASTER REPURCHASE AGREEMENT Dated aa of , and 1. Applicability From time to time the parties hereto may enter into transactions in which one party ("Seller") agrees to transfer to the other ("Buyer") securities or financial instruments ("Securities") against the transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such Seoudties at a date certain or on demand, against the transfer of funds by Seller. Each such transaction shall be referred to herein as a 'Transaction" and shall be governed by this Agreement, including any supplemental terms or conditions contained in Annex I hereto, unless otherwise agreed in writing. 2. Definitions (a) "Act of Insolvency", with respect to any party, (i) the commencement by such party as debtor of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law, or such party seeking the appointment of a receiver, trustee, custodian or similar official for such party or any substantial part of its property, or (ii) the commencement of any such case or proceeding against such paJly, or another seeking such an appointment, or the filing against a party of an application for a protective decree under the provisions of the Securities Investor Protection Act of 1970, which (A) is consented to or not timely contested by such party. (B) results in the entry of an order for relief, such an appointment, lite issuance of such a protective decree or the entry of an order having a similar effect, or (C) is not dismissed within 15 days, (iii) the making by a party of a general assignment for the benefit of creditors, or (iv) the admission in writing by a party of such party's inability to pay such party's debts as they become due; (b) "Additional Purchased Securities". Securities provided by Seller to Buyer pursuant to Pam_-graph 4(a) hereof; (c) "Buyer's Margin Amount", with respect to any Transaction as of any date, the amount obtained by application of a percentage (which may be equal to the percentage that is agreed to as the Seller's Margin Amount under subparagraph (q) of this Paragraph), agreed to by Buyer and Seller prior to entering into the Transaction, to the Repurchase Price for such Transaction as of such date; (d) "Confirmation", the meaning specified in Paragraph 3(b) hereof; (e) "Income'; with respect to any Security at any time, any principal thereof then payable and all interest, dividends or other distributions thereon; (f) "Margin Deficit'; the meaning specified in Paragraph 4(a) hereof; (g) "Margin Excess'; the meaning specified in Paragraph 4(b) hereof; (h) "Market Value'; with respect to any Securities as of any data, the price for such Securities on such date obtained from a generally recognized source agreed to by the parties or the most recent closing bid quotation from such a source, plus accrued Income to the extent not included therein (other then any Income credited or transferred to. or applied to the obligations of, Seller pursuant to Paragraph 5 hereot) as of such date (unless contrary to market practice for such Securities); (i) "Pdce Differential", with respect to any Transaction hereunder as of any date, the aggregate amount obtained by daily application of the Pricing Rate for such Transaction to the Purchase Price for such Transaction on a 360 day per year basis for the actual number of days during the period commencing on (and including) the Purchase Date for such Transaction and ending on (but excluding) the date of determination (reduced by any amount of such Price Differential previously paid by Seller to Buyer with respect to such Transaction); -, O07166 .(j) "Pricing Rate", the per annum percentage rate for determination of the Price Differential; (k) "Prime Rate", the pdme rate of U.S. money center commercial banks as published in The I~;/I Sheet Journal; (I) "Purchase Date'; the date on which Purchased SecudtJes are transferred by Seller to Buyer; (m) "Purchase Price", (i) on the Purchase Date, the pdce at which Purchased Securities are transferred by Seller to Buyer, and (ii) thereafter, such price increased by the amount of any cash transferred by Buyer to Seller pursuant to Paragraph 4(b) hereof and decreased by the amount of any ~ transferred by Seller to Buyer pursuant to Paragraph 4(a) hereof or applied to reduce Seller's obligations under clause (ii) of Paragraph 5 hereof; (n) "Purchased Securities", the Securities transferred by Seller to Buyer in a Transaction hereunder, and any Securities substituted therefor in accordance with Paragraph 9 hereof. The term "Purchased Securities" with respect to any Transaction at any time also shall include Additional Purchased Securities delivered pursuant to Paragraph 4(a) and shall exclude Securities returned pursuant to Paragraph 4(b); (o) "Repurchase Date", the date on which Seller is to repurchase the Purchased Securities from Buyer, including any date determined by application of the provisions of Paragraphs 3(c) or 11 hereof; (p) "Repurchase Price", the price at which Purchased Securities are to be transferred from Buyer to Seller upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the Price Differential as of the date of such determination, increased by any amount determined by the application of the provisions of Paragraph 11 hereof; (q) "Seller's Margin Amount'; with respect to any Transaction as of any date, the amount obtained by application of a percentage (which may be equal to the percentage that is agreed to as the Buyer's Margin Amount under subparagraph (c) of this Paragraph), agreed to by Buyer and Seller prior to entering into the Transaction, to the Repurchase Price for such Transaction as of such date. 3. Initiation; Confirmation; Termination (a) An agreement to enter into a Transaction may be made orally or in writing at the initiation of either Buyer or Seller. On the Purchase Date for the Transaction, the Purchased Securities shall be transferred to Buyer or its agent against the transfer of the Purchase Price to an account of Seller. (b) Upon agreeing to enter into a Transaction hereunder, Buyer or Seller (or beth), as shall be agreed, shall promptly deliver to the other party a written confirmation of each Transaction (a "Confirmation"). The Confirmation shall describe the Purchased Securities (including CUSIP number, if any), identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase Price, (iii) the Repurchase Date, unless the Transaction is to be terminable on demand, (iv) the Pricing Rate or Repurchase Price applicable to the Transaction, and (v) any additional terms or conditions of the Transaction not inconsistent with this Agreement. The Confirmation, together with this Agreement, shall constitute conclusive evidence of the terms agreed between Buyer and Seller with respect to the Transaction to which the Confirmation relates, unless with respect to the Confirmation specific objection is made promptly after receipt thereof. In the event of any conflict between the terms of such Confirmation and this Agreement, this Agreement shall prevail. (c) In the case of Transactions terminable upon demand, such demand shall be made by Buyer or Seller, no later than such time as is customary in accordance with market practice, by telephone or otherwise on or prior to the business day on which such termination will be effective. On the date specified in such demand, or on the date fixed for termination in the case of Transactions having a fixed term, termination of the Transaction will be effected by transfer to Seller or its agent of the Purchased Securities and any Income in respect thereof received by Buyer (and not previously credited or transferred to, or applied to the obligations of, Seller pursuant to Paragraph 5 hereof) against the transfer of the Repurchase Price to an account of Buyer. 4. Margin Maintenance (a) If at any time the aggregate Market Value of ail Purchased Securities subject to all Transactions in which a particular party hereto is acting as Buyer is less than the aggregate Buyers Margin Amount for all such Transactions (a "Margin Deficit"), then Buyer may by notice to Seller require Seller in such Transactions, at Sellers option, to transfer to Buyer cash or additional Securities reasonably acceptable to Buyer ("Additional Purchased Securities"), so that the cash and aggregate Market Value of the Purchased Securities, including any such Additional Purchased Securities, will thereupon equal or exceed such aggregate Buyer's Margin Amount (decreased by the amount of any Margin Del'mit as of such date arising "bom any Transactions in which such Buyer is acting as Seller). : (b) If at any time the aggregate Market Value of all Purchased Securities subject to ail Transactions in which a particular party hereto is acting as Seller exceeds the aggregate Sellers Margin Amount for all such Transactions at such time (a "Margin Excess"), than Seller may by notice to Buyer require Buyer in such Transactions, at Buyer's option, to transfer cash or Purchased Securities to Seller, so that the aggregate Market Value of the Purchased Securities, after deduction of any such cash or any Purchased Securities so transferred, will thereupon not exceed such aggregate Seller's Margin Amount (increased by the arnount of any Margin Excess u of such date arising from any Transactions in which such Seller ia acting as Buyer). (c) Any cash transferred pursuant to this Paragraph shall be attributed to such Transactions as shall be agreed upon by Buyer and Seller. 007i 67 (d) Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the respec~ve rights of Buyer or Seller (or both) under subparagraphs (a) and (b) of this Paragraph may be exercised only where a Margin Deficit or Margin Excess exceeds a specified dollar amount or a specified percentage of the Repurchase Prices for such Transactions (which amount or percentage shall be agreed to by Buyer a~,d Seller prior to entering into any such Transactions). (e) Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the respective rights of Buyer and Seller under subparagraphs (a) and (b) of this Paragraph to require the elimination of a Margin Deficit or a Margin Excess, as the case may be, may be exemised whenever such a Margin Deficit or Margin Excess exists with respect to any single Transaction hereunder (calculated without regard to any other Transaction outstanding under this Agreement). 5. Income Payments Where a particular Transection's term extends over an Income payment date on the Securities subject to that Transaction, Buyer shall, as the parties may agree with respect to such Transaction (or, in the absence of any agreement, as Buyer shall reasonably determine in its discretion), on the date such Income is payable either (i) transfer to or credit to the account of Seller an amount equal to such Income payment or payments with respect to any Purchased Securities subiect to such Transaction or (ii) apply the Income payment or payments to reduce the amount to be transferred to Buyer by Seller upon termination of the Transaction. Buyer shall not be obligated to take any action pursuant to the preceding sentence to the extent that such action would result in the creation of a Margin Deficit, unless pdor thereto or simultaneously therewith Seller transfers to Buyer cash or Additional Purchased Securities sufficient to eliminate such Margin Deficit. 6. Security Interest Although the parties intend that all Transactions hereunder be sales and purchases and not loans, in the event any such Transactions are deemed to be loans, Seller shall be deemed to have pledged to Buyer as security for the performance by Seller of its obligations under each such Transaction, and shall be deemed to have granted to Buyer a secudty interest in, all of the Pumhased Securities with respect to all Transactions hereunder and all proceeds thereof. 7. Payment and Transfer Unless otherwise mutually agreed, all transfers of funds hereunder shall be in immediately available funds. All Securities transferred by one party hereto to the other party (i) shall be in suitable form for transfer or shall be accompanied by duly executed instruments of transfer or assignment in blank and such other documentation as the party receiving possession may reasonably request, (ii) shall be transferred on the book-entry system of a Federal Reserve Bank, or (iii) shall be transferred by any other method mutually acceptable to Seller and Buyer. As used herein with respect to Securities, "transfer" is intended to have the same meaning as when used in Section 8-313 of the New Yori< Uniform Commercial Code or, where applicable, in any federal regulation governing transfers of the Securities. 8. Segregation of Purchased Securities To the extent required by applicable law, all Purchased Securities in the possession of Seller shall be may be accomplished by appropriate ldenUfication on the books and records of the holder, including a financial agreed by Buyer and Seller, nothing in this Agreement shall preclude Buyer from engaging in repurchase transactions with the Purchased Securities or othen~ise pledging or hypothecating the Purchased Securities, but no such transaction shall relieve Buyer of its obligations to transfer Pumhased Securities to Seller pursuant to Paragraphs 3, 4 or 11 hereof, or of Buyers obligation to credit or pay Income to, or apply Income to the obligations of, Seller pursuant to Paragraph 5 hereof. Required Diocioeum for Transactions in Whi,--h the Seller Retains Custody of the Purchased Securities Seller is not permitted to substitute other securities for those subject to this Agreement and therefore must keep Buyer's .s~curities segregated at all times, unless in this Agreement Buyer grants Seller the right to substitt~te oth~ securities, ff Buyer grants the right to substitute, this means that Buyer's securities will likel~be commingled with Sellers own securities during the trading day. Buyer is advised that, during any trading day that BuyeCs securities are commingled with Sellers securities, ma./[wilq' [may]" be subject to r r= granted by to ciear g bank]' [third parties]*' and may be used by Seller for deliveries on other securities transactions. Whenever the securities are commingled, SelleCs ability to reeegregate substitute securities for Buyer will be 'Language to be u~4d under 17 C.F.R. ~103.4(e) II Seler i~ a govemmenl ,ecu~i# broker of al#let olher Itmn a flnand~al ~. *'Language to be u~d under 17 C.KFL ~103.5(d) II Seler i~ a rmanctal ina~ution. 14 007168 9..Sub~titutlmt (a) Seller may, subject to agreement with and acceptance by Buyer, substitute other Securities for any Purchased Securities. Such substitution shall be made by transfer to Buyer of such other Securities and transfer to Seller of such Purchased Securities. After substitution, the substituted Securities shall be deemed (b) In Transactions in which the Seller retains custody of Purchased Securities, the parties expressly agree that Buyer shall be deemed, for purposes of subparagraph (a) of this Paragraph, to have agreed to and accepted in this Agreement substitution by Seller of other Securities for Pumhased Securities; provided, however, that such other Securities shall have a Market Value at least equal to the Market Value of the Purchased Securities for which they are substituted. 10. Repmeentaflona Each of Buyer and Seller represents and warrants to the other that (i) it is duly authorized to execute and deliver this Agreement, to enter into the Transactions contemplated hereunder and to perform its obligations hereunder and has taken all necessary action to authorize such execution, delivery and performance, (ii) it will engage in such Transactions as principal (or, if agreed in writing in advance of any Transaction by the other party hereto, as agent for a disclosed principal), (iii) the person signing this Agreement on its behalf is duly autlxxized to do so on its behalf (or on behalf of any such disclosed principal), (iv) it has obtained ail authorizations of any governmental body required in connection with this Agreement and the Transactions hereunder and such ~fdx)rizations are in full force and effect and (v) the execution, delivery and performance of this Agreement and the Transactions hereunder will not violate any law, ordinance, charter, by-law or rule applicable to it or any agreement by which it is bound or by which any of its assets are affected. On the Purchase Date for any Transaction Buyer and Seller shall each be deemed to repeat all the foregoing representations made by it. 11. Evente of Default In the event that (i) Seller fails to repurchase or Buyer fails to transfer Purchased Securities upon the applicable Repurchase Date, (ii) Seller or Buyer fails, after one business day's notice, to comply with Paragraph 4 hereof, (iii) Buyer falls to comply with Paragraph 5 hereof, (iv) an Act of Insolvency occurs with respect to Seller or Buyer, (v) any representation made by Seller or Buyer shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated, or (vi) Seller or Buyer shall admit to the other its inability to, or its intention not to, perform any of its obligations hereunder (each an "Event of Default"): (a) At the option of the nondefaulting party, exercised by written notice to the defaulting party (which option shall be deemed to have been exercised, even if no notice is given, immediately upon the occurrence of an Act of Insolvency), the Repurchase Date for each Transaction hereunder shall be deemed immediately to occur. (b) In all Transactions in which the defaulting party is acting as Seller, if the nondefaulting party exercises or is deemed to have exercised the option referred to in subparagraph (a) of this Paragraph, (i) the defaulting pady's obligations hereunder to repurchase all Purchased Securities in such Transactions shall thereupon become immediately due and payable, (ii) to the extent permitted by applicable law, the Repurchase Price with respect to each such Transaction shall be increased by the aggregate amount obtained by daily application of (x) the greater of the Pricing Rate for such Transaction or the Prime Rate to (y) the Repurchase Price for such Transaction as of the Repurchase Date as determined pursuant to subparagraph (a) of this Paragraph (decreased as of any day by (A) any amounts retained by the nondefaulting party with respect to such Repurcha~ Price pursuant to clause (iii) of this subparagraph, (B) any proceeds from the sale of Purchased Securities pursuant to subparagraph (d)(i) of this Paragraph, and (C) any amounts credited to the account of the defaulting party pursuant to subparagraph (e) of this Paragraph) on a 360 day per year basis for the actual number of days during the period from and including the date of the Event of Default giving rise to such option to but excluding the date of payment of the Repurchase Price as so increased, (iii) all Income paid after such exercise or deemed exercise shall be retained by the nondefaulting party and applied to the aggregate unpaid Repurchase Prices owed by the defaulting party, and (iv) the defaulting party shall immediately deliver to the (c) In all Transactions in which the defaulting party is acting as Buyer, upon tender by the nondefaulting party of payment of the aggregate Repurchase Prices for all such Transactions, the defaulting party's right, lille and interest in all Purchased Securities subject to such Transactions shall be deemed transferred to the nondefaulting party, and the defaulting party shall deliver all such Purchased Securities to the nondefaulting party. (d) After one business days notice to the defaulting party (which notice need not be given if an Act of Insolvency shall have occurred, and which may be the notice given under subparagraph (a) of this Paragraph or the notice referred to in clause (ii) of the first sentence of this Paragraph), the nondefaulting party may: (i) as to Transactions in which the defaulting party is acting as Seller, (A) immediately sell, in a recognized market at such price or prices as the nondefauiting party may reasonably deem satisfactory, any or all Purchased Securities subject to such Transactions and apply the proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder 007169 i or (B) in its sole discretion ek~t, in lieu of selling all or a portion of ~uch Purcha~d ~cu~ie~, to give the defaulting party credit for such Purchased Securities in an amount equal to the price therefor on such date, obtained from a generally recognized source or the most recent dosing bid quotation from such a source, against the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder; and (ii) as to Transactions in which the defaulting party is acting as Buyer, (A) purchase securities ("Replacement Securities") of the same class and amount u any Purchased Securities that eJ'e not delivered by the defaulting party to the nondefaulting party as required hereunder or (B) in its sole Securities at the price therefor on such date, obtained from a generally recognized source or the most recent closing bid quotation from such a source. (e) As to Transactions in which the defaulting party is acting as Buyer, the defaulting party shall be liable to the nondefaulting party (i) with respect to Purchased Securities (other than Additional Purchased Securities), for any excess of the price paid (or deemed paid) by the nondefaulting party for Replacement Securities therefor over the Repurchase Price for such Purchased Securities and (ii) with respect to Additional Purchased Securities, for the price paid (or deemed paid) by the nondefaultiog party for the Replacement Securities therefor. In addition, the defaulting party shall be liable to the nondefaulting party for interest on such remaining liability with respect to each such purchase (or deemed purchase) of Replacement Securities from the date of such purchase (or deemed purchase) until paid in full by Buyer. Such interest shall be at a rate equal to the greater of the Pricing Rate for such Transaction or the Prime Rate. (f) For purposes of this Paragraph 11, the Repurchase Price for each Transaction hereunder in respect of which the defaulting party is acting as Buyer shall not increase above the amount of such Repurchase Price for such Transaction determined as of the date of the exercise or deemed exercise by the nondefaulting party of its option under subparagraph (a) of this Paragraph. (g) The defaulting party shall be liable to the nondefaulting party for the amount of all reasonable legal or other expenses incurred by the nondefaulting party in connection with or as a consequence of an Event of Default, together with interest thereon at a rate equal to the greater of the Pricing Rate for the relevant Transaction or the Prime Rate. (h).The nondefaulting party shall have, in addition to its rights hereunder, any rights otherwise available to it under any other agreement or applicable law. 12. Single Agreement Buyer and Seller acknowledge that, and have entered hareinto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that, all Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of each other. Accordingly, each of Buyer and Seller agrees (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, (ii) that each of them shall be entitled to set off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transactions hereunder and (iii) that payments, deliveries and other transfers mede by either of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Transactions hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted. 13. Notices and Other Communications Unless another address is specified in writing by the respective party to whom any noUce or other com- munication is to be given hereunder, all such notices or communications shall be in writing or confirmed in writing and delivered at the respective addresses set forth in Annex II attached hereto. 14. Entire Agreement; Severability This Agreement shall suparse~e any exisUng agreements between the parties containing general terms and conditions for repurchase trans~cti~. Each provision and agreement herein shall be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement. 15. Non-assignability; Termination The rights and obligations of the parties under this Agreement and under any Transaction shall not be assigned by either party without the prior written consent of the other party. Subject to the foregoing, this Agreement and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. This Agreement may be cancelled by either party upon giving written notice to the other, except that this Agreement shall, notwithstanding such notice, remain applicable to any Transactions then outstanding. 007170 16. Governing Law This Agreement shall be governed by the laws of the State of New York without giving effect to the conflict of law principles thereof. 17. No Wliverl, Etc. No express or implied waiver of any Event of Default by either party shall constitute a waiver of any other Event of Default and no exercise of any remedy hereunder by any party shall constitute a waiver of its right to exercise any other remedy hereunder. No modification or waiver of any provision of this Agreement and no .co.ns,e, nt by any party to a departure herefrom shall be effective unless and until such shall be in writing and duly executed by both of the parties hereto. Without limitation on any of the foregoing, the failure to give a notiCe pursuant to subparagraphs 4(a) or 4(b) hereof will not constitute a waiver of any right to do so at a later date. 18. Use of Employee Plan A~ats (a) If assets of an employee benefit plan subject to any provision of the Employee Retirement Income Security Act of 1974 ("ERISA:') are intended to be used by either party hereto (the "Plan Party") in a Transaction, the Plan Party shall so notify the other party prior to the Transaction. The Plan Party shall represent in writing to the other party that the Transaction does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and the other party may proceed in reliance thereon but shall not be required so to proceed. (b) Subject to the last sentence of subparagraph (a) of this Paragraph, any such Transaction shall proceed only if Seller furnishes or has furnished to Buyer its most recent available audited statement of its financial condition and its most recent subsequent unaudited statement of its financiai condition. (c) By entering into a Transaction pursuant to this Paragraph, Seller shall be deemed (i) to represent to Buyer that since the date of Seller's latest such financial statements, there has been no material adverse change in Seller's financial condition which Seller has not disclosed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited statements of its financial condition as they are issued, so long as it is a Seller in any outstanding Transaction involving a Plan Party. 19. Intent (a) The padJes recognize that each Transaction is a "repurchase agreement" as that term is defined in Section 101 of Title 11 of the United States Code, as amended (except insofar es the type of Securities subiact to such Transaction or the term of such Transaction would render such definition inaPldicable), and a '*securities contract" as that term is defined in Section 741 of Title 11 of the United States Code, as amended. hereunder or to exercise any other remedies pursuant to Paragraph 11 hereof, is a contractual right to liquidate such Transaction as described in Sections 555 and 559 of Title 11 of the United States Code, as amended. 20. Di~clo~ure Relating to Certain Federal Protections The parlies acknowledge that they have been advised that: (a) in the case of Transactions in which one of the parties is a broker or dealer registered with the Securities and Exchange Commission ("SEC") under Section 15 of the Securities Exchange Act of 1934 ("1934 Act"), the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 ("SIPA") do not protect the other party with respect to any Transaction hereunder; (b) in the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and (c) in the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant to · Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation, the Federal ~avings and Loan Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable. [Name ol Palty] T~e T~le Date Date 007171 ANNEX I SUPPLEMENTAL TERMS AND CONDITIONS Buy-sell Interpretation. Because the Buyer is a governmental entity, both parties agree that all transactions conducted pursuant to this agreement must be interpreted as purchases and sales of securities. Governing Law. The laws of the State of Texas govern the investments of public entities and all transactions pursuant to this agreement. All purchased securities shall be lawful for purposes of governmental investments in the State of Texas. Delivery. Notwithstanding the provisions of paragraph 7 (Payment and Transfer), all transactions shall be accomplished through "delivery vs. payment." Substitution. In the event that Seller substitutes securities for any purchased securities, Seller shall absorb all costs associated with such transfer, and Seller is hereby given the written consent of College Station to substitute securities of equal to or greater than the value of the original purchased securities provided that Seller uses the "deliver out" purchase method and provided further that prior to delivery Seller obtains College Station's verbal consent. The maturity of securities substituted by Seller will not exceed the maturity of the originally purchased securities unless the parties otherwise agree prior to the substitution. Margin Ratios. For purposes of calculating the margin amount, the ratio of 101~ shall be applied to the market value of all purchased securities. Market Value. in determining market value, dealers' bid prices shall be used and accrued interest shall be included. Margin Maintenance. For term repurchase agreements, the custodian, or the Seller upon margin call from Buyer, shall automatically maintain the required'margin amount to compensate for any market price losses. Purchased Securities. All purchased securities must be marketable instruments for which price information is available on regular business days in financial newspapers of national circulation or other media suitable to Buyer. 007172 IO. Purchased Securities Delivery Instructions. Purchased securities should be delivered to the City's third party custodian as follows: First City National Bank of Houston ABA# 123OOOO10 CREDIT TO~ City of College Station ACCT# 1-2A75-9 Authorized Personnel. Those individuals identified below or their successors in the designated positions, may execute transactions pursuant to this agreement~ Ron Ragland, City Nanager William P. Harrison, Director of Finance Olenn Schroeder, Deputy Director of Finance 007173 GOVERNMENT FINANCE OFFICERS ASSOCIATION RECOMMENDED BROKER/DEALER QUESTIONNAIRE AND CERTIFICATION NAME OF FIRM: ADDRESS: (Local) (National Offices) TELEPHONE: PRIMARY REPRESENTATIVE/MANAGER/PARTNER-IN-CHARGE Primary Representative(s) Name: Title: Telephone No: MANAGER/PARTNER-IN-CHARGE Name: Title: Telephone No: Name: Name: Title: Title: Telephone No: Telephone No: Are you a primary dealer in U.S. Government Securities?: [ ] Yes [ ] No What was your firm's total volume in U.S. Government and Agency Securities last year? Firmwide # Transactions (Securities purchase & sale only) Local Office # Transactions (including repurchase agreements) 007174 Page Two Vhich of the following instruments are offered regularly by your local desk? [ ] T-Bills [ ] Bank CDs [ ] Treasury Notes/Bonds [ ] S & L CDs [ ] BAs (Domestic) [ ] Agencies (Specify) [ ] BAs (Foreign) Instrumentalities Commercial Paper Other (Specify) Identify the personnel who will be trading with or quoting securities to our agency's employees. Name Title Telephone Number Please identify your moat directly comparable public sector clients in our geographical area. Entity Contact Person Telephone No. Client Since 007175 lO. ii. Page Three Has a public sector client ever claimed in writing that your firm was responsible for investment losses? If so, explain. Has your firm or any of your employees ever been subjected to a regulatory or state/federal agency investigation for alleged improper, fraudulent, disputable or unfair activities related to the sale of securities? If so, explain. How many and what Last Year? Last Month? percentage of your transactions failed last month? Last Year? 13. Please explain your normal these fiduciary systems? custody and delivery process. Who audits 13. What reports, transactions, confirmations and paper trail will receive? we Please include samples of research reports provides to public sector clients. that your firm regularly iS. What training would you provide to our employees and officers? investment 16. Does your firm consistently comply with the Federal Reserve Bank's capital adequacy guidelines? By what factor (i.5x, 2x, etc.) does your firm presently exceed the capital adequacy guidelines measure of risk? Include certified documentation of your capital adequacy as measured by the Federal Reserve standards. 17. Please provide certified financial statements and regarding your firm's capitalization. other indicators 18. Describe the precautions taken by your firm to protect the Interest of the public when dealing with government agencies as investors. 007176 --CERTIFICATION-- Page Four hereby certify that I have personally read the statutes of the State of .xas pertaining to the investments of municipal funds, and have tplemented reasonable procedures and a system of controls designed to eclude imprudent investment activities arising out of transactions Jnducted between our firm and municipal clients. Ail sales personnel will ~ routinely informed of your investment objectives, horizon, outlook. :rategie~ and risk constraints whenever we are so advised, We pledge to ~ercise due diligence in informing you of all foreseeable risks associated ith financial transactions conducted with our firm. I attest to the :curacy of our responses to your questionnaire. IGNED: DATE: IGNED: DATE= ,IGNED= DATEr ;OL ERSIGNED: DATE= [Company president or person tn charge of operations.) government securities 0-071 77 OF COLLEGE STATION Box 9960 1101 Texas Avenue College Station, Texas 778z~2-0960 (~09) 76~,-3.555 MEMORANDUM TO: FROM: DATE: SUBJECT: Ron Ragland, City Manager Bill Harrison, Finance Direoto'~--~ January 31, 1989 ~uarterly Financial Report Please find attached quarterly financial reports for the fiscal year 1989 first quarter ending December 31, 1988. These have been prepared on a cash basis as the result of operations. Please note that these are unaudited reports and that year-end entries to post such items as depreciation have not been made. SUMMARY: During the three months covered by this report, October 1, 1985 through December 31, ~988, financial operations of the City of College Station behaved as anticipated. All departments of the city are operating within budget appropriations and revenues have been generally consistent with projections. Fiscal year 1989 is the second year of the scheduled five-year restructuring of utility rates to reduce the dependence on electric revenues. Financial results indicate that this pro,eot is proceeding on schedule. Financial difficulties in the Sanitation and Hotel/Motel funds have been addressed in the fiscal year 1989 budget and the changes made appear to have been effective. In this report, budget-actual comparisons have been made between actual cash revenues and expendituree and the approved budget. Cash flow statements have also been prepared showing the not results of operations by fund and also comparing the last fiscal year of fifteen months to this fiscal year-to-date of three months. INVESTMENTS The first quarter of fiscal 1989 initiated the change in investment policy for the city, authorized by the investment resolution approved by the Council in 1988. Prior to October 1, 1988, all investments of city funds were through contract with our local depository, NCNB Texas National Bank - A&M 8ranch. Under that contract, the city specified the maturity date for a certificate of deposit and the bank paid us an interst rate equal to the like-maturity Treasury Bill rate plus ~5 basis points (15/lOOth of one percent). For the fifteen months of fiscal year 1988, the city earned $2,aG6,?S0 on an average portfolio balance of $~0 million for an annualized rat. of r.turn of 6.S8 . 007178 Mr. Ron Eagtand Page 2 Compared to common benchmarks for investment portfolio performance, our rate of re%urn last year is as follows: $ 988 RA?; OF RETtTR~ 0.07 $.58% 6.52% 0.06 0.05 0.04 0.03 0.02 0.01 0.00 5.27% COLI~EGE STATZON 10-BILL INDEX The tO-bill index rate is a roll[n8 index, nationally used, and published on a monthly basis as a benchmark for evaluation cash management portfolios with biweekly payment and payroll requirements. It consists of ten hypothetical treasury bill investments, with an average maturity of approximately 80 days. Every other Thursday, a T-bill matures and proceeds are reinvested alternately in three-month or six-month T-bills. The money market rate used here for comparison is that of a state pooled investment fund, purchasing only short term investments and only those types of investments which are [e~ai investments under current state law in Texas. Under the new banking contract effective October i, 1988, investments have been separated from traditional banking services, allowing the city to invest in the full range of investments legal under state law. As of December 31, 1988, the city's investments portfolio consisted of the following: Bank Demand Accounts Overnight Repurchase Agmts Insured Cert. of Deposits U.S. Gov't Obligations Government Agency Notes S 2, 33~,, 000 7. 1% 5,615,000 17.0 4,350,000 13. 1 13,280,000 ~0.2 7, ~,65,000 22.6 TOTAL $33,0~5,000 100.0% 007179 Mr. Eon Eagland Sanuary 3~, 1~89 Page 3 At December 3~, 19G8, the weighted average rate of return on the entire portfolio was G,3G%, Interest rates have been rising since the spring of ~988 as a result of Federal Reserve tightening of the monetary system to control inflation. The combination of these rising interest rates and the city's freedom in investments have resulted in this large increase in portfolio returns. Total investments returns for fiscal 1989 will depend on the trend in interest rates over the balance of the fiscal year; however, earnings should easily surpass the budgeted returns of ?%. GASN-FLOW ANALYSIS In cash-basis accounting, revenues are generally recorded in the month earned and expenditures, with the exception of payroll, generally recorded in the month following the true cost of operations. For that reason, expenditures on a cash basis are always understated. As an example, electric utility --venues shows three months of operation, while wholesale power purchased ~lects only two monthly payments. December power consumption will be paid for in January. GENERAL FUND Sales Tax: Sales tax revenues will fluctuate with new development and with the health of the local economy. This revenue source is also directly related to the level of enrollment at the university. Sales tax revenues have been strong, reaching $4,189,100 for the fifteen months ending September 30, 1988. For the first quarter of 1989, revenues of $970,247 are on target to meet the annual budget of $3,850,000. Property Tax: Local property taxes tend to be a reasonably secure source for funding municipal operations and debt service. Property tax collections, on a direct comparison basis, have remained essentially level with last year. For fiscal year 1988, the distribution of the total tax levy of 38 cents per $100 valuation was split 29 cents debt service and 9 cents General Fund. This year, that split is 24 cents debt service and 14 cents General Fund. 90% of property tax revenues are received in the months of November-FebruarY while expenditures in the debt service fund are concentrated in February and August. UTILITY FUND: Ongoing monitoring of utility revenues becomes an essential part of the ~get process due to the effect of outside influences on revenues. Hot, dry summers and cold winters will tend to increase both water and electric consumption and related revenues, while a cool summer will depress revenues. The graphs of utility fund revenue 007180 Mr. Hen Ragland January 31, 1989 Page 4 included in this report plot actual year-to-date revenues against the historical annual distribution of revenues. Due to a dry fall, water revenues are up, while sewer and electric revenues have behaved as projected. As noted above, the large excess of revenues over expenditures is not an accurate representation. [n the revenue/expenditure analysis for the utility fund, all items are on a cash basis with the exception of debt servie. That item is a proration of actual annual liability. SANITATION FUND: The fiscal year 1988 budget for the Sanitation Fund was prepared with an intentional drawdown of reserves of approximately 1500,000. By freezing the administrative transfer to the General Fund at June 30, 1988, we were able to exceed that goal and end the amended year with a deficit of $418,600. As part of the 1989 budget process, sanitation rates were increased to a level to provide for the long-term stability of this fund. HOTEL/MOTEL FUND: Two years ago, June 30, 1988, this fund had a fund balance of $209,100. During fiscal year 1987, program expenditures exceeded revenues by $154,800, leaving a fund balance on June 30, 1987 of $54,300. During the fifteen months of fiscal year 1988, expenditures again exceeded revenues although at a slower pace. As of September 50, 1988, the Hotel/Motel Fund had totally drawn down available balances in the fund and ended the year with a negative fund balance of $1,200. As part of the 1989 budget, City Council approved a contingency budget of $100,000, providing revenues were sufficient to cover higher funding levels. First quarter revenues of $16&,824, including revenues from the summer Texas Games, are not yet sufficient to fund higher expenditure levels. 007181