AN ORDINANCE relating to the City's investment policies, amending Seattle Municipal Code sections 5.06.010, 5.06.030, 5.06.040, and 5.06.050.

WHEREAS, the City Council and the Mayor are committed to high standards of financial management; and

WHEREAS, adopting and periodically updating financial policies are important steps towards assuring consistent and rational financial management; and

WHEREAS, investment policies are an essential component of financial policies; and

WHEREAS, existing investment policies sometimes refer to the "Director of Finance" and other times refer to the "Finance Director;" and

WHEREAS, the head of the Department of Finance is known as the Director of Finance, and the City Council wishes to standardize references to that officer in the Seattle Municipal Code as other amendments are made to Code sections; and

WHEREAS, the City Council and the Mayor have reviewed the City's investment policies and find that the reporting requirements are in need of updating; NOW THEREFORE

BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:

Section 1. Section 5.06.010 of the Seattle Municipal Code is amended as follows:

5.06.010. Investment authority.

A. As contemplated by RCW 35.39.032, the Finance Director of Finance, under the supervision of the Mayor, is authorized on behalf of the City to invest all moneys in the City Treasury which in his or her judgment are in excess of current City needs in:

1. United States bonds;

2. United States certificates of indebtedness;

3. Bonds or warrants of this state;

4. General obligation or utility revenue bonds or warrants of the City or of any other city or town in the state;

5. Bonds or warrants of a local improvement or condemnation award district of the City which is within the protection of the local improvement guaranty fund;

6. Repurchase agreements, reverse repurchase agreements, or bankers' acceptances; and

7. In oOther investments authorized by law. ; and

The Director of Finance is authorized to hold such investments for the credit of the funds for which purchased.

B. The Finance Director of Finance is further authorized to convert any investments within the City Treasury the securities, or any part thereof, into cash. and shall report to the City Council monthly all investment transactions.

Section 2. The introductory subsection of Section 5.06.030 of the Seattle Municipal Code is amended as follows:

5.06.030 Fund investments Interfund loans.

The Finance Director of Finance, after consulting with the Chair of the Finance Committee of the City Council, may in his or her discretion:

***

Section 3. Section 5.06.040 of the Seattle Municipal Code is amended as follows:

5.06.040 Investment policies.

A. The City's common investment portfolio(s) shall be managed to further this financial objective: to preserve principal while maximize income while preserving principal and maintaining liquidity to meet the City's needs for cash and maximizing income.

B. Investment decisions should further the City's social policies established by ordinance or policy resolutions of the City Council. A City social policy shall take precedence over furthering the City's financial objective when expressly authorized by City Council resolution or ordinance, except where otherwise provided by law or trust principles.

C. The Finance Director of Finance shall be guided by investmentprinciples contained in Resolution 26701 as amended or supplemented from time to time policies adopted from time to time by ordinance or resolution of the City Council .

Section 4. Section 5.06.050 of the Seattle Municipal Code is amended as follows:

5.06.050 Reports -Annual; quarterly.

A. Annual. An annual report regarding the City's investment program for the ensuing fiscal year shall be prepared by the Finance Director for adoption by the City Council by resolution. The report, due no later than October 15th, shall present a complete investment plan, including a discussion of the current market for investments, an analysis of portfolio liquidity vis-vis anticipated cash needs, and a forecast of anticipated yields for the ensuing year. This annual report shall incorporate any proposed revisions to City investment policies which the Finance Director shall find advisable, including but not limited to apportionment of interest by fund, and for interfund loans. An annual evaluation report, due no later than April 1st, shall also assess the City's performance in meeting its goals and compare its performance with the results of investments by other governmental entities in Washington and an assessment of its performance in meeting the City's social goals and objectives.

B. Quarterly. After the end of each quarter, the Finance Director shall file a report with the City Council on the performance of City investments. Among other information, each quarterly report shall describe any material change in the City's investment portfolio and its investment practices.

The Director of Finance shall file a monthly report with the City Council on the performance of City investments for the preceding month and fiscal year-to-date. Each monthly report shall include a discussion of:

1. The current investment market;

2. Any material change in the City's investment portfolio and practices;

3. The City's investment return as compared to the City's benchmark return, which shall be the rate of return used by the City Council when estimating investment earnings for the purpose of adopting the current year's budget;

4. The average maturity of the City's investment portfolio; and

5. On a quarterly basis, this report will also include, as an attachment, a list of the contents of the City's investment portfolio.

Section 5. This ordinance shall take effect and be in force thirty (30) days from and after its approval by the Mayor, but if not approved and returned by the Mayor within ten (10) days after presentation, it shall take effect as provided by Municipal Code Section 1.04.020.

Passed by the City Council the _____ day of ____________, 2001, and signed by me in open session in authentication of its passage this _____ day of _________________, 2001. _____________________________________ President _____________of the City Council

Approved by me this _____ day of _________________,2001. _______________________________________ Mayor

Filed by me this _____ day of ____________________, 2001. ___________________________________________ City Clerk

June 4, 2001 Version 5