Page 289 - Colleyville FY21 Budget

a. maturing in less than 1 year 102%
b. maturing in 1-5 years 105%
c. maturing in more than 5 years 107%

Revenue Bonds
a. maturing in less than 1 year 105%
b. maturing in 1-5 years 110%
c. maturing in more than 5 years 115%

Collateral shall be audited annually be the City's independent auditor and may
be audited by the City at anytime during normal business hours of the
safekeeping bank.

Arbitrage

The Tax Reform Act of 1986 places limitations on the City's yield from
investing certain tax-exempt bond proceeds, debt service funds and reserve
funds. The rebate provisions require that the City compute earnings on
investments from certain issues of bonds on a periodic basis to determine if
rebate is required.

To determine the City's arbitrage position, the City is required to calculate the
actual yield earned on the investment of the funds and compare it to the yield
that would have been earned if the funds had been invested at a rate equal
to the yield on the applicable bonds sold by the City. The rebate provisions
state that periodically (not less than once every five years and not later than
sixty days after maturity of the bonds), the City is required to pay the United
States Treasury a rebate of any excess earnings. These restrictions require
extreme precision in the monitoring and record keeping of investments,
particularly in computing yields to ensure compliance. Failure to comply can
dictate that the bonds become taxable, retroactively from the date of
issuance.

The investment strategy for bond funds which fall under the arbitrage
provisions of the Tax Reform Act of 1986, is that the City will attempt to earn
maximum allowable bond yield with market conditions permitting.

Reporting Requirements
The Chief Financial Officer and Accounting Manager shall issue a written report
quarterly to the Audit Committee and City Council concerning the City's
investment transactions for the preceding quarter and describing in detail the

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