Page 43 - CityofColleyvilleFY23AdoptedBudget
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Collateral shall be "marked to market" monthly by the Finance Manager. The following percentages constitute
            the minimum market value for collateral instruments that are pledged for the City's Certi cates of Deposit and
            demand deposits.
            Form of Collateral Pledged Collateral Ratio

                . U.S. Treasury bills, notes, and bonds
                   a. maturing within 1 year 102%
                   b. maturing in 1-5 years 105%
                    c. maturing in more than 5 years 110%

                . Actively traded U.S. Government Agency securities
                   a. maturing in less than 1 year 103%
                   b. maturing in 1-5 years 107%
                    c. maturing in more than 5 years 115%
                . GNMA mortgage pass through securities 115%



                . Entities in the State of Texas bonds

                  General Obligation Bonds
                   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  ve 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.



            Repor ting Requirements






                City of Colleyville | Budget Book 2023                                                     Page 43
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