Chapter 135
POLICIES
ARTICLE I
Procurement Policy
Section 135.010. Gifts and Rebates. [Ord. No. 310 §7, 10-11-1997]
The City Clerk and every other officer and employee of the City are expressly prohibited from accepting, directly or indirectly, from any person, company, firm or corporation to which any purchase order or contract is, or might, be awarded any rebate, gift, money, or anything of value over twenty-five dollars ($25.00), except where given for the use and benefit of the City. Violation of the provisions of this Section shall, upon conviction thereof, be punished as provided by State and local laws as well as forfeit their office or employment.
Section 135.020. Formal Contract Procedure. [Ord. No. 310 §9, 10-11-1997]
All supplies and contractual services, except as otherwise provided in this Article, when the estimated cost thereof shall exceed two thousand five hundred dollars ($2,500.00), shall be purchased by formal, written contract from the lowest responsible bidder, after due notice inviting proposals. All sales of personal property which have become obsolete and unusable, wherein the estimated value shall exceed two thousand five hundred dollars ($2,500.00), shall be sold by formal written contract to the highest responsible bidder, after due notice inviting proposals.
Section 135.030. Notice Defined. [Ord. No. 310 §10, 10-11-1997]
A. The notice required by Section 135.040 shall consist of the following, for items valued over two thousand five hundred dollars ($2,500.00) on public works projects:
1. Notice inviting bids shall be published once in at least one (1) official newspaper of the City and at least five (5) days preceding the last day set for the receipt of proposals. The newspaper notice required herein shall include a general description of the articles to be purchased or sold, shall state where bid blanks and specifications may be secured, and the time and place for opening bids.
2. The City Clerk shall also solicit sealed bids from all responsible prospective suppliers who have requested their names to be added to a “bidders’ list,” which the Clerk shall maintain, by sending them a copy of such newspaper notice or such other notice as will acquaint them with the proposed purchase or sale. In any case, invitations sent to vendors on the bidders’ list shall be limited to commodities that are similar in character and ordinarily handled by the trade group to which the invitations are sent.
3. The City Clerk shall also advertise all pending purchases or sales by a notice posted on the public bulletin board in the City Hall.
4. The City Clerk shall also solicit sealed bids by direct mail request to prospective vendors, and by telephone, and by eletronic means, as may seem to be in the best interest of the City.
Section 135.040. Bid Opening Procedure. [Ord. No. 310 §11, 10-11-1997]
Bids shall be submitted sealed to the City Clerk and shall be identified as bids on the envelope. They shall be opened in public at the time and place stated in the public notices. A tabulation of all bids received shall be posted for public inspection.
Section 135.050. Lowest Responsible Bidder. [Ord. No. 310 §12, 10-11-1997]
A. Contracts shall be awarded to the lowest responsible bidder. Bids shall not be accepted from, nor contracts awarded to, a contractor who is in default on the payment of taxes, licenses or other monies due the City. In determining “lowest responsible bidder,” in addition to price, the following shall be considered:
1. The ability, capacity and skill of the bidder to perform the contract or provide the service required;
2. Whether the bidder can perform the contract or provide the service promptly, or within the time specified, without delay or interference;
3. The character, integrity, reputation, judgment, experience and efficiency of the bidder;
4. The quality of performance of previous contracts or services;
5. The previous and existing compliance by the bidder with laws and ordinances relating to the contract or service;
6. The sufficiency of the financial resources and ability of the bidder to perform the contract or provide the service;
7. The quality, availability and adaptability of the supplies or contractual services to the particular use required;
8. The ability of the bidder to provide future maintenance and service for the use of the subject of the contract;
9. The number and scope of the conditions attached to the bid.
Section 135.060. Bids Accepted. [Ord. No. 310 §13, 10-11-1997]
All bids shall be accepted or rejected by the Board of Aldermen. When the award is not given to the lowest bidder, a full and complete statement of the reasons for placing the order elsewhere shall be entered upon the journal of the Board.
Section 135.070. Tie Bids. [Ord. No. 310 §14, 10-11-1997]
If all bids received or the lowest bids received are the same total amount or unit price, quality and service being equal, the contract shall be awarded to a local bidder. Where there is no local low bidder, the award shall be made on the basis of a drawing of lots, to be held in public.
Section 135.080. Emergency Purchases. [Ord. No. 310 §16, 10-11-1997]
In case of an apparent emergency which requires immediate purchase of supplies or contractual services, the Board of Aldermen may authorize the purchase at the lowest obtainable price of any supplies or contractual services regardless of the amount of the expenditure. A full explanation of the circumstances of an emergency purchase shall be recorded in the journal of the Board of Aldermen.
Section 135.090. through Section 135.160. (Reserved)
ARTICLE II
Investment Policy
Section 135.170. Purpose. [Ord. No. 412 §1]
A. The purpose of this Investment Policy shall be to establish the investment objectives and provide a set of investment parameters to govern the type, quality, diversification and term of investment in order to realize the investment objectives of the City of Laddonia, Missouri.
B. The City will contract with a financial institution (or institutions) which shall serve as a primary depository and assist in developing an investment strategy consistent with this Statement of Investment Policy.
Section 135.180. Scope. [Ord. No. 412 §2]
A. This policy applies to the investment of all operating funds of the City of Laddonia, Missouri. Longer-term funds, including investments of employees’ retirement funds and proceeds from certain bond issues, are covered by a separate policy.
B. Except for cash in certain restricted and special funds, the City of Laddonia will consolidate cash balances from all funds to maximize investment earnings. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles.
C. Investment through external programs, facilities and professionals operating in a manner consistent with this policy will constitute compliance.
Section 135.190. Investment Objectives. [Ord. No. 412 §3]
The investment objectives of the City of Laddonia are to maximize return on investment while minimizing the risk on funds designated for term investment. The primary objectives of the investment activity shall be legality, safety, liquidity, yield and the provision of a capital base sufficient to meet the needs of the City. Funds shall be invested only within the legal guidelines set forth in the Constitution and the Statutes of the State of Missouri and in accordance with the ordinances of the City of Laddonia. Any investment alternatives outside these guidelines are not permissible. Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The investment portfolio shall remain sufficiently liquid to meet all of the operation requirements that may be reasonably anticipated based on past expenditures and budgeted expenditures. This is accomplished by structuring the portfolio so that the securities mature current with cash needs to meet anticipated demands. Furthermore, since all possible cash demands cannot be anticipated, the portfolio should consist largely of securities with active secondary or resale markets. The investment portfolio shall be designed with the objective of attaining market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity. Return on investment is of least importance compared to the safety and liquidity objectives described and outlined above. At all times, the City of Laddonia shall maintain prudent investment strategies and adjust the portfolio within the guidelines of this policy to take advantage of market conditions, to increase return and/or reduce risk. All investments shall be in accordance with State law. The City of Laddonia shall maintain liquid deposit balances in depository accounts in a sum sufficient to meet the City’s short term cash flow needs as same may vary from time to time.
Section 135.200. Standards of Care. [Ord. No. 412 §4]
A. All participants in the investment process shall act responsibly as custodians of the public trust. The standard of prudence to be applied by the personnel of the Investment Division is the “prudent investor” rule, which states: “Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived.”
B. Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions. Employees and investment officials shall disclose any material interests in financial institutions with which they conduct business. They shall further disclose any personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with which business is conducted on behalf of the City.
C. Authority to manage the investment program is granted to the City Treasurer. Responsibility for the operation of the investment program is hereby delegated to the City Treasurer, who shall act in accordance with the established written procedures and internal controls for the operation of the investment program consistent with this investment policy. Procedures should include references to safekeeping, delivery vs. payment, investment accounting, repurchase agreements, wire transfer agreements, and collateral/depository agreements. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the City Treasurer. The City Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials.
D. The City Treasurer is responsible for establishing and maintaining an internal control structure that will be reviewed annually with the City’s independent auditor. The internal control structure shall be designed to ensure that the assets of the City are protected from loss, theft or misuse and to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that 1) the cost of control should not exceed the benefits likely to be derived and 2) the valuation of costs and benefits require estimates and judgments by management. The internal controls shall address the following points:
1. Control of collusion.
2. Separation of transaction authority from accounting and record keeping.
3. Custodial safekeeping.
4. Avoidance of physical delivery securities.
5. Clear delegation of authority to subordinate staff members.
6. Written confirmation of transactions for investments and wire transfers.
Section 135.210. Appropriate Investments. [Ord. No. 412 §5]
Funds designated for term investment by the City of Laddonia shall be placed in securities deemed acceptable and in accordance with portfolio target allocations. The following are acceptable investments:
A. Direct obligations of the U.S. Government and any bonds or other obligations guaranteed as to the payment of principal and interest by the U.S. Government.
B. Obligations of agencies sponsored by the U.S. Government including, but not limited to, the following list:
1. Federal Intermediate Credit Banks.
2. Federal Home Loan Banks.
3. Federal National Mortgage Association Residential Financing Securities.
4. Banks for Cooperatives.
5. Federal Farm Credit Banks.
6. Export-Import U.S. Guaranteed Bonds.
7. Government National Mortgage Corporation.
8. Federal Home Loan Mortgage Corporation.
9. Student Loan Marketing Association.
10. Small Business Administration.
11. Financing Corporation.
12. Resolution Funding Corporation.
13. Tennessee Valley Authority.
14. SBA Guaranteed Loan Pool Certificates.
15. World Banks.
C. Certificate of deposit (PAC-packaged affiliate certificates-CD Program).
D. Overnight and term repurchase agreement.
Section 135.220. Investment Restrictions and Prohibited Transactions. [Ord. No. 412 §6]
A. To provide for the safety and liquidity of the funds of the City of Laddonia, the investment portfolio will be subject to the following restrictions:
1. Borrowing for investment purposes (sometimes known as “leverage”) is prohibited.
2. Instruments known as “structured notes” (e.g., inverse floaters, bridged floaters and equity-linked securities) are not permitted. Investment in any instrument which is commonly considered a “derivative” instrument (e.g., options, futures, swaps, caps, floors and collars) is prohibited.
3. Contracting to sell security not yet acquired in order to purchase other securities for purposes of speculating on developments or trends in the market is prohibited.
Section 135.230. Implementation Procedures and Guidelines — Investment Authority and Process. [Ord. No. 412 §8]
All investments shall be made, retained or sold only upon the authority of the Board of Aldermen of the City of Laddonia. The banking institution chosen to serve as a primary depository into which City funds have been deposited shall secure authority by written communication.
Section 135.240. Investment Planning Review. [Ord. No. 412 §9]
A. The City of Laddonia recognizes that all investments go through cycles. Therefore, a plan review will be made as needed. This will enable the City of Laddonia to adjust to changes occurring in the financial markets plus new information that may call for requirement alterations.
B. To assist the City of Laddonia in this review, the depository institution shall provide the following information on at least an annual basis:
1. Economic outlook (for community and overall).
2. Investment options and recommendations.
3. Performance/measurement including:
a. Asset allocation strategy review.
b. Detailed portfolio review.
c. Analysis of costs and fees.
Section 135.250. Securities Safekeeping. [Ord. No. 412 §10]
A. The depository institution shall hold and safeguard cash and securities and shall collect the income and principal thereof when due. The depository institution shall retain principal collections subject to the direction of the City of Laddonia.
B. All securities will be registered in the name of the City of Laddonia unless otherwise specifically instructed in writing by the Finance Committee.
C. The depository institution shall receive processing and safekeeping fees as agreed to by the City of Laddonia, Missouri, in accordance with its schedule of fees presented by the depository institution and accepted formally by the Board of Aldermen of the City of Laddonia, Missouri.
Section 135.260. Securities Acceptable As Collateral To Secure Deposits. [Ord. No. 412 §11]
A. The following securities are hereby designated as acceptable collateral for City funds on deposit:
1. Marketable Treasury securities of the United States.
2. The following debt securities of the State of Missouri and its State authorities:
a. General obligations debt securities issued by the State of Missouri.
b. Revenue bonds issued by the Missouri Board of Public Buildings or Department of Natural Resources.
c. Revenue bonds of the Missouri Housing Development Commission, Missouri Health and Education Facilities Authority, Missouri Higher Education Loan Authority, Missouri Environmental Improvement and Energy Resources Authority, Missouri Agricultural and Small Business Development Authority, Missouri Industrial Development Board, or State-owned educational institutions, so long as any of the above are rated “A” or better by Moody’s or Standard & Poor’s (M1 on notes), or are secured by a Federal agency guarantee (directly or through guaranteed loans).
3. General obligation bonds of any City in this State having a population of not less than two thousand (2,000).
4. General obligation bonds of any County of this State.
5. General obligation bonds, approved and registered, of any school district situated in this State.
6. General obligation bonds, approved and registered, of any special road district in this State.
7. General obligation State bonds of any of the fifty (50) States.
8. Debt securities of the Federal Farm Credit System.
9. Debt securities of the Federal Home Loan Banks (FHLB).
10. Other debt securities guaranteed by the United States or its agencies or instrumentalities, as follows:
a. Debt securities of the Federal National Mortgage Association (FNMA), including mortgage-backed securities.
b. Debt securities of the Student Loan Marketing Association (SLMA).
c. Debt securities of the Government National Mortgage Association (GNMA), including mortgage-backed securities.
d. Debt securities of the Federal Home Loan Mortgage Corporation (FHLMC), including mortgage-backed securities.
e. Guaranteed Loan Pool Certificates of the Small Business Administration (SBA).
f. Federal Home Administration insured notes (CBOs).
g. Public housing notes and bonds (“project notes and bonds”) issued by public housing agencies, guaranteed as to the payment of principal and interest by the government of the United States or any agency or instrumentality thereof.
h. Debt securities of the Resolution Funding Corporation.
11. Bonds of any political subdivision established under the provisions of Section 30, Article VI, of the Constitution of Missouri.
12. Tax anticipation notes issued by any County of Class One in Missouri.
13. Surety bonds issued by an insurance company licensed under the laws of the State of Missouri whose claims-paying ability is rated in the highest category of Deff & Phelps, A.M. Best, Standard & Poor’s or Moody’s. The face amount of such surety bond shall be at least equal to the portion of the deposit to be secured by the surety bond.
14. Planned amortization class (PAC) collateralized mortgage obligations (CMO) issued by FNMA, FHLMC or GNMA having a weighted average life that does not exceed three (3) years and passes the FFIEC High Risk Stress Test. These CMOs will be valued at seventy-five percent (75%) of market value.
B. Please make note of the following:
1. The above securities are acceptable as collateral for deposits, but generally are NOT eligible as investments.
2. Revenue bonds are acceptable only under Subsection (A)(2).
3. Treasury CUBES are not acceptable.
4. FHLB zeros are not acceptable.
5. All mortgage-backed securities are valued at ninety percent (90%) of the market value.
6. Strips and zones are not acceptable.
7. All non-book-entry registered securities must be in a nominee name.
8. FHLMC mortgage cash flow obligations are not acceptable.
9. SBA pool certificates are valued at seventy-five percent (75%) of market value.
10. The market value of collateral must be one hundred percent (100%) or greater of the amount of State time deposits (including interest to maturity) plus demand deposits with the depository, less the amount, if any, which is insured by the Federal Deposit Insurance Corporation, or the National Credit Unions Share Insurance Fund. All securities pledged as collateral by the depository will be held by the City in a segregated account. All collateral pledged must be delivered in bearer form, book-entry form, or in the case of fully registered certificates, placed into the nominee of the custodian.