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City of University Park. Texas - Investment Policy
APPENDICES
A. INVESTMENT LEGISLATION................................................................. 21
B. MASTER REPURCHASE AGREEMENT................................................48
C. BROKER/DEALER CERTIFICATION ..................................................... 56
ATTACHMENTS
1. BROKER/DEALER QUESTIONNAIRE.................................................... 5 8
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City of University Park. Texas - Investment Policy
PREFACE
The purpose of this document is to establish specific investment policy and strategy
guidelines for the City of University Park, Texas ("City") in order to achieve the goals of
safety, liquidity and yield for all investment activity. The City shall review its investment
strategies and policy not less than annually. This policy serves to satisfy the statutory
requirement, specifically the Public Funds Investment Act, Chapter 2256 of the Texas
Government Code (the "Act"), to define, adopt and review a formal investment strategy
and policy.
It is the policy of the City that all available funds shall be invested in conformance with
these legal and administrative guidelines.
Effective cash management is recognized as essential to good fiscal management. An
aggressive cash management and investment policy will be pursued to take advantage of
investment interest as viable and material revenue to all operating and capital funds. The
City's portfolio shall be designed and managed in a manner responsive to the public trust
and consistent with state and federal law.
Investments shall be made with the primary considerations of:
. Preservation of capital and protection of principal
. Maintenance of sufficient liquidity to meet operating needs
. Security of City funds and investments
. Diversification of investments to avoid unreasonable or foreseeable
risks
. Maximization of return on the portfolio
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SECTION 1
PURPOSE
City of University Park. Texas - Investment Policy
1. Purpose
1. Authorization
This Policy is to be authorized by the City Council in accordance with
Section 5 of the Public Funds Investment Act (Chapter 2256, Texas
Government Code), which requires the adoption of a formal written
Investment Policy.
2. Goal
The primary goal of the City of University Park's Investment Policy shall
be to ensure the safety of all funds entrusted to the City; to maintain the
availability of those funds for the payment of all necessary obligations of
the City; and to provide for the investment of all funds, not immediately
required, in interest-bearing securities or pooled investment products. The
safety of the principal invested shall always be the primary concern.
3. Scope
This Investment Policy of the City of University Park shall include all
investment activities of any fund of the City, except for the Firemen's
Relief and Retirement Fund, which is covered by a separate policy. In
addition to this Policy, bond funds, including debt service and reserve
funds, shall be managed by their governing resolution and federal law,
including the Tax Reform Act of 1986 and subsequent legislation. City
funds will be pooled for investment purposes.
4. Review and Amendment
This Policy may be amended from time to time as the City Council may so
desire, or as State Law may require. This Policy, which includes strategies
for each fund or pooled fund group, shall be adopted by resolution, rule, or
ordinance by the City Council and shall be reviewed annually by the City
Council. The fact that the Investment Policy has been reviewed and that
any amendments have been made must be recorded by resolution, rule or
ordinance.
SECTION 2
INVESTMENT OBJECTIVES
City of University Park. Texas - Investment Policy
2. INVESTMENT OBJECTIVES
The City shall manage and invest its cash with four objectives, listed in order of
priority: Preservation and Safety of Principal; Liquidity; Yield; and Prudence. All
investments shall be designed and managed in a manner responsive to the public trust
and consistent with State and Local Law.
The City shall maintain a comprehensive cash management program that includes the
prudent investment of available cash. Cash management is defined as the process of
managing monies in order to increase cash availability and interest earnings on short-
term investment of idle cash.
1. Preservation and Safety of Principal
The primary objective of City investment activity is the preservation of
principal in the overall portfolio. Each investment transaction shall be
conducted in a manner designed to avoid principal losses, whether they are
from securities defaults or erosion of market value. The manner in which
the City ensures safety of principal is presented in Section 4.2, "Ensuring
Safety of Principal."
2. Maintenance of Adequate Liquidity
The City investment portfolio shall be structured such that the City is able
to meet all obligations in a timely manner. Maintenance of adequate
liquidity is described in Section 4.3, "Ensuring Liquidity."
3. Return on Investments
Consistent with State law, the City shall seek to optImIze return on
investments within the constraints of safety and liquidity. Investments
(excluding assets managed under separate investment programs, such as in
arbitrage restrictive programs) shall be made in permitted obligations at
yields equal to or greater than the bond equivalent yield on United States
Treasury obligations of comparable maturity. Other appropriate
performance measures will be established by the Investment Committee.
Specific policies regarding investment rate of return are presented in
Section 4.4, "Achieving Investment Return Objectives."
For bond issues to which Federal yield or arbitrage restrictions apply, the
primary objectives shall be to obtain satisfactory market yields and to
minimize the costs associated with investment of such funds.
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City of University Park. Texas - Investment Policy
4. Prudence and Ethical Standards
The standard of prudence used by the City shall be the "prudent person
rule" and shall be applied in the context of managing the overall portfolio
within the applicable legal constraints. The prudent person rule is restated
below:
"Investments shall be made with judgment and care, under
circumstances then prevailing, which persons of prudence,
discretion and intelligence would 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."
In determining whether the Investment Officer(s) or Investment Advisor
under contract has exercised prudence with respect to an investment
decision, the determination shall be made taking into consideration the
investment of all funds over which the Officer/Advisor had responsibility
rather than a consideration as to the prudence of a single investment, and
whether the investment decision was consistent with the written Investment
Policy of the City.
The Investment Officers, acting in accordance with written procedures and
exercising due diligence, shall not be held personally responsible for a
specific security's credit risk or market price changes, provided that these
deviations are reported immediately.
Specific policies describing the City's prudence and ethical standards are
found in Section 4.5, "Responsibility and Controls."
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SECTION 3
INVESTMENT STRATEGY STATEMENT
City of University Park. Texas - Investment Policy
3. INVESTMENT STRATEGY STATEMENT
The City maintains portfolios that utilize four specific investment strategy
considerations designed to address the unique characteristics of the fund groups
represented in the portfolios.
1. The Operating Funds
The investment strategy for operating funds has as its primary objective the
assurance that anticipated cash flows are matched with adequate
investment liquidity. The secondary objective is to create a portfolio
structure which will experience minimal volatility during economic cycles.
This may be accomplished by purchasing quality, short- to medium-term
securities. The dollar weighted average maturity shall be calculated in
accordance with GASB requirements. The weighted average maturity of
operating funds shall not exceed 548 days. Securities may not be purchased
that have a final stated maturity date that exceeds five (5) years.
2. The Bond Debt Service Funds
The investment strategy for bond debt service fund( s) has as its primary
objective the assurance of investment liquidity adequate to cover the debt
service obligation on the required payment date. Securities purchased shall
not have a stated final maturity date that exceeds the next unfunded bond
debt service payment date.
3. Bond Reserve Funds
The investment strategy for bond reserve fund( s) has as its primary
objective the ability to generate a dependable revenue stream to the
appropriate debt service fund from securities with a low degree of
volatility. Securities should be of high quality and, except as may be
required by the Bond Ordinance specific to an individual issue, of short-to-
intermediate-term maturities. The stated final maturity dates of securities
held shall not exceed five (5) years.
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City of University Park. Texas - Investment Policy
4. Capital Projects Funds
The investment strategy for capital projects funds portfolios has as its
primary objective the assurance that anticipated cash flows are matched
with adequate investment liquidity. These portfolios should include at least
10% in highly liquid securities to allow for flexibility and unanticipated
project outlays. The stated final maturity dates of securities held should not
exceed the estimated project completion date.
To maximize the effective investment of assets, all funds needed for general
obligations may 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 the bonds
with interest earnings on these invested proceeds recorded directly to that fund.
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SECTION 4
SPECIFIC INVESTMENT POLICIES
City of University Park. Texas - Investment Policy
4. SPECIFIC INVESTMENT POLICIES
1. Eligible Investments
Investments described below are those authorized by the Public Funds
Investment Act (Chapter 2256, Texas Government Code), as amended,
which is included and made a part of this Policy as Appendix A. The
following list may not contain all of those securities that are authorized by
state statutes, but only those that the City Council wishes to include in their
portfolios. The purchase of specific issues may at times be further restricted
or prohibited because of current market conditions. City funds governed by
this Policy may be invested in:
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 or its agencies and instrumentalities.
4. obligations of states, agencies, counties, cities and other political
subdivisions of any state having been rated as to investment quality by a
nationally recognized investment rating firm and having received a
rating of not less than A or its equivalent.
5. fully collateralized direct repurchase agreements having a defined
termination date, secured by obligations described by subdivision 1 of
this subsection, pledged to the City, held in the City's name and
deposited at the time the investment is made with the City with a third
party selected and approved by the City, and placed through a primary
government securities dealer, as defined by the Federal Reserve, or a
[mancial institution doing business in Texas, and having a market value
(including accrued interest) of no less than the principal amount of the
funds disbursed;
6. certificates of deposit issued by a depository institution with a main
office or branch in Texas that are:
1. guaranteed or insured by the Federal Deposit Insurance
Corporation, or its successor; or,
2. secured by obligations that are described by 1 - 4 above, which are
intended to include all direct federal agency or instrumentality
issues that have a market value of not less than the principal amount
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City of University Park. Texas - Investment Policy
of the certificates or in any other manner and amount provided by
law for deposits of the City.
7. share certificates issued by state and federal credit unions with a main
office or branch in Texas that are:
1. guaranteed or insured by the National Credit Union Share
Insurance Fund, or its successor; or,
2. secured by obligations that are described by 1 - 4 above, which are
intended to include all direct federal agency or instrumentality
issues that have a market value of not less than the principal amount
of the certificates or in any other manner and amount provided by
law for deposits of the City.
8. SEC-regulated, no-load money market mutual funds with a dollar-
weighted average stated portfolio maturity of 90 days or less and
whose investment objectives include seeking to maintain a stable net
asset value of $1 per share. No more than 15% of the City's average
fund balance may be invested in money market mutual funds, and the
City may not invest funds under its control in an amount that exceeds
10% of the total assets of any individual money market mutual fund.
9. Local government investment pools organized in accordance with the
Interlocal Cooperation Act (Chapter 791, Texas Government Act) as
amended, whose assets consist exclusively of the obligations that are
allowed as a direct investment for funds subject to the Public Funds
Investment Act (Chapter 2256, Texas Government Code). A public
funds investment pool must be continuously rated no lower than AAA,
AAA-m or at an equivalent rating by at least one nationally recognized
rating service.
Eligible investment pools must be authorized by the City Council, by
rule, order, ordinance, or resolution, as appropriate. The City Council
has approved the Texas Local Government Investment Pool
("TexPool"), administered by the Texas State Comptroller; the Texas
Short Term Asset Reserve ("TexSTAR"); administered by JPMorgan
Chase and First Southwest Asset Management; and TexasTERM,
administered by PFM Asset Management LLC.
Investments in collateralized mortgage obligations are strictly prohibited.
These securities are also disallowed for collateral positions.
The City will not be required to liquidate investments that were authorized
investments at the time of purchase.
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City of University Park. Texas - Investment Policy
2. Ensuring Safety of Principal
Ensuring safety is accomplished through protection of principal and
safekeeping.
1. Protection of Principal
The City shall seek to control the risk of loss due to the failure of a security
issuer or guarantor. Such risk shall be controlled by:
1. investing only in the safest types of securities as defined in the
Policy,
2. qualifying the broker/dealer and financial institution with whom
the City will transact,
3. collateralization as required by law,
4. portfolio diversification, and
5. limiting maturity.
Settlement of all investment transactions, except those transactions
involving investments in mutual funds or local government investment
pools, must be made on a delivery versus payment basis. The purchase of
individual securities shall be executed "delivery versus payment" (DVP)
through the Federal Reserve System delivered to an authorized safekeeping
agent or "Trustee." By so doing, City funds are not released until the City
has received, through the Federal Reserve wire, the securities purchased.
The security shall be held in the name of the City by the Trustee. The
Trustee's records shall assure the notation of the City ownership of or
explicit claim on the securities. The original copy of the safekeeping
receipts shall be delivered to the City within twenty-four (24) hours of the
security's receipt by the Trustee.
1. Approved Broker/Dealers/Financial Institutions and Depositories
Investments shall only be made with those firms and institutions who
have acknowledged receipt and understanding of the City's Investment
Policy. The "qualified representative" of the business as defined in
Chapter 2256 of the Texas Government Code shall execute a written
certification to acknowledge receipt of the City's Investment Policy and
to acknowledge that the organization has implemented reasonable
procedures and controls to preclude imprudent investment activities
arising out of the investment transactions conducted between the entity
and the City. Should the City contract with an external investment
advisor to execute the investment strategy, including the negotiation
and execution of investment transactions, a managing officer of the
investment advisory firm may sign the written certification in lieu of the
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City of University Park. Texas - Investment Policy
broker/dealer firms. This certification must be included as part of the
investment advisory contract.
Securities and certificates of deposit shall only be purchased from those
institutions included on the City's list of broker/dealers and financial
institutions as approved by the Investment Committee. All securities
dealers shall provide the City with references from other public entities
that they are currently serving. This list of approved investment
providers must be reviewed at least annually by the City's Investment
Committee and shall be recorded in the Committee's meeting minutes.
The City's Finance Advisory Committee shall comprise the Investment
Committee.
All state and national banks located in the State of Texas, which are
insured by the Federal Deposit Insurance Corporation (FDIC) are to
be considered as eligible depositories. The financial condition of the
bank shall be considered prior to establishing any accounts with that
bank. The Finance Advisory Committee shall review the bids submitted
by depository candidates and make a recommendation to the City
Council for final approval.
2. Master Repurchase Agreement
It is the policy of the City to require each issuer of repurchase
agreements to sign a copy of the City's Master Repurchase Agreement.
An executed copy of this agreement must be on file before the City will
enter into any repurchase agreement with an issuer. (See Appendix B,
"Master Repurchase Agreement".)
3. Collateralization
Consistent with the requirements of State law, the City requires all
bank deposits (including time deposits) to be federally insured or
collateralized with eligible securities. Financial institutions serving as
City Depositories will be required to sign an Agreement with the City
and its safekeeping agent for the collateral, perfecting the City's rights
to the collateral in case of default, bankruptcy or closure.
The City shall not accept, as depository collateral, any security that is
not specifically allowed to be held as a direct investment by the City
portfolio (see 4.1). Repurchase agreements must also be collateralized
in accordance with State law. Each issuer of repurchase agreements is
required to sign a copy of the City's Master Repurchase Agreement.
An executed copy of this agreement must be on file before the City will
enter into any repurchase agreements with an issuer. (See Appendix B,
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City of University Park. Texas - Investment Policy
"Master Repurchase Agreement".) 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. "
Evidence of the pledged collateral shall be maintained by the Finance
Director or a third party financial institution. All collateral shall be
subject to inspection and audit by the Finance Director or the City
independent auditors.
(1) Allowable Collateral
1. Certificates of Deposit
Eligible securities for collateralization of certificates of
deposit are u.s. Treasury obligations and government
agency securities. The eligibility of specific issues may at
times be restricted or prohibited because of current
market conditions.
2. Repurchase Agreements
Collateral underlying repurchase agreements is limited
to u.s. government and agency obligations, which are
eligible for wire transfer (i.e. book entry) to the City's
designated safekeeping agent through the Federal
Reserve System.
(2) Collateral Levels
Collateral is valued at current market plus interest accrued
through the date of valuation.
1. Certificates of Deposit
The market value of collateral pledged for certificates of
deposit must at all times be equal to or greater than
102% of the par value of the certificate of deposit plus
accrued interest, less the amount insured by the FDIC or
its successors. Investment in eligible pooled Certificate
of Deposit programs is authorized under this section.
2. Repurchase Agreements
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City of University Park. Texas - Investment Policy
The market value of collateral required to be pledged
for repurchase agreements shall be a percentage of the
par value of the agreement plus accrued interest and
shall be maintained at the following levels:
Collateral
Maturity
u.s. Treasury
Securities
u.s. Government
Agency
1 year or less
1 year to 5 years
Over 5 years
102 %
102 %
103 %
102 %
103 %
104 %
(3) Monitoring Collateral Adequacy
1. Certificates of Deposit
The City requires monthly reports with market values of
pledged securities from all financial institutions with which the
City has certificates of deposit. The City's Investment Officer
will at least weekly monitor the adequacy of collateral.
2. Repurchase Agreements
Weekly monitoring by the City's Investment Officer of all
collateral underlying repurchase agreements is required. More
frequent monitoring may be necessary during periods of market
volatility.
(4) Margin Calls
1. Certificates of Deposit
If the collateral pledged for a certificate of deposit falls below
the 102% of the deposit, plus accrued interest less FDIC
insurance, the institution will be notified by the City and will be
required to pledge additional securities no later than the end of
the next succeeding business day.
2. Repurchase Agreements
If the value of the collateral underlying a repurchase agreement
falls below the margin maintenance levels specified above, the
City will make a margin call unless the repurchase agreement is
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City of University Park. Texas - Investment Policy
scheduled to mature within five business days and the amount is
deemed to be immaterial.
(5) Collateral Substitution
Collateralized investments and certificates of deposit often require
substitution of collateral. Any broker or financial institution
requesting substitution must contact the Investment Officer( s) for
approval and settlement. The substituted collateral's value will be
calculated and substitution approved if its value is equal to or
greater than the required value (See 4.2.1.3.2.2). The Investment
Officer or must give immediate notification of the decision to the
bank or the safekeeping agent holding the collateral. Substitution is
allowable for all transactions, but should be limited, if possible, to
minimize potential administrative problems and transfer expense.
The Investment Officer may limit substitution and assess
appropriate fees if substitution becomes excessive or abusive.
Collateral may be substituted only with the oral authorization of the
Investment Officer, followed by written confirmations within 24
hours.
(6) Collateral Reductions
Should the collateral's market value exceed the required amount,
any broker or financial institution may request approval from the
Investment Officer to reduce collateral. Collateral reductions may
be permitted only if the City's records indicate that the collateral's
market value exceeds the required amount. Written confirmations
of the collateral reduction should be received within 24 hours of the
Investment Officer's approval.
4. Portfolio Diversification
Risk of principal loss in the portfolio as a whole shall be minimized by
diversifying investment types according to the following limitations.
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City of University Park. Texas - Investment Policy
As discussed below, these limitations do not apply to bond proceeds.
Investment Type:
% of Portfolio
. U.S. Treasury Notes/Bonds/Bills
. U. S. Agencies
. Local Government Investment Pools
. Repurchase Agreements
. Certificates of Deposit
. Money Market Mutual Funds
100%
60%
50%
30%
30%
15%
It is the policy of the City to diversify its investment portfolio so that
reliance on anyone issuer or broker will not place an undue financial
burden on the City. Generally, the City should limit its repurchase
agreement exposure with a single firm to no more than 15% of the
value of the City's overall portfolio. To allow efficient and effective
placement of proceeds from any bond sales, these limits may be
exceeded for a maximum of five business days following the receipt of
bond proceeds.
(1) Bond Proceeds
Proceeds of a single bond issue may be invested in a single security
or investment if the Investment Committee determines that such an
investment is necessary to comply with Federal arbitrage
restrictions or to facilitate arbitrage record keeping and calculation.
5. Limiting Maturity
In order to minimize risk of loss due to interest rate fluctuations,
investment matuntIes will not exceed the anticipated cash flow
requirements of the funds. Maturity guidelines by funds are as follows:
(1) Operating Funds
The dollar weighted average days to final stated maturity shall be
548 days or less. The Investment Officer will monitor the maturity
level and make changes as appropriate.
(2) Bond Proceeds, Bond Reserves, Debt Service Funds
The investment maturity of bond proceeds (including reserves and
debt service funds) shall be determined considering:
1. the anticipated cash flow requirements of the funds, and;
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City of University Park. Texas - Investment Policy
2. the "temporary period" as defined by Federal tax law during
which time bond proceeds may be invested at an
unrestricted yield. After the expiration of the temporary
period, bond proceeds subject to yield restriction shall be
invested considering the anticipated cash flow requirements
of the funds.
3. Safekeeping
1. Safekeeping Agreement
The City shall contract with a bank or banks for the safekeeping of
securities either owned by the City as a part of its investment portfolio
or held as collateral to secure certificates of deposits or repurchase
agreements. The Safekeeping Agreement shall clearly define the
procedural steps for gaining access to the collateral should the City
determine that the City funds are in jeopardy. The safekeeping
institution, or Trustee, shall hold all aforementioned securities in an
account at the Federal Reserve Bank that specifies City ownership of
the account. The Safekeeping Agreement shall include the signatures of
authorized representatives of the City, the firm pledging the collateral
and the Trustee.
2. Safekeeping of Certificate of Deposit Collateral
All collateral securing certificates of deposit must be held by a third
party banking institution approved by the City, or collateral may be
held at the Federal Reserve Bank. The City's ownership in collateral
positions must be fully perfected.
3. Safekeeping of Repurchase Agreement Collateral
The securities that serve as collateral for repurchase agreements with
dealers must be delivered to a third-party custodian with whom the City
has established a third-party safekeeping agreement. The City's
ownership of all securities that serve as collateral for repurchase
agreements must be fully perfected.
3. Ensuring Liquidity
Liquidity shall be achieved by matching investment maturities with forecasted
cash flow requirements, by investing in securities with active secondary
markets, and by investing in eligible money market mutual funds (MMMF's)
and local government investment pools (LGIP's).
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City of University Park. Texas - Investment Policy
A security may be liquidated to meet unanticipated cash requirements, to re-
deploy cash into other investments expected to outperform current holdings, or
to otherwise adjust the portfolio.
4. Achieving Investment Return Objectives
Investment selection for all funds shall be based on legality, appropriateness,
liquidity, and risk/return considerations. The portfolios may be actively
managed to enhance overall interest income. Active management will take
place within the context of the "Prudent Person Rule." (see Section 2.4).
1. Securities Swaps
The City may take advantage of security swap opportunities to improve
portfolio yield. A swap which improves portfolio yield may be selected
even if the transaction results in an accounting loss.
2. Competitive Bidding
It is the policy of the City to require competitive bidding for all individual
security purchases except for those transactions with money market mutual
funds (MMMFs) and local government investment pools (LGIP's) which
are deemed to be made at prevailing market rates, and for government
securities purchased at issue through a primary dealer at auction price.
Rather than relying solely on yield, investment in MMMFs and LGIP's
shall be based on criteria determined by the Investment Committee,
including adherence to Securities and Exchange Commission (SEC)
guidelines for MMMFs when appropriate.
At least three bidders must be contacted in all transactions involving
individual securities. Competitive bidding for security swaps is also
required. Bids may be solicited in any manner provided by law. For those
situations where it may be impractical or unreasonable to receive three bids
for a transaction due to a rapidly changing market environment or to
secondary market availability, documentation of a competitive market
survey of comparable securities or an explanation of the specific
circumstance must be included with the transaction bid sheet. All bids
received must be documented and filed for auditing purposes.
3. Methods of Monitoring Market Price
The methods/sources to be used to monitor the price of investments that
have been acquired with public funds shall be from sources deemed reliable
by the Investment Officer, including primary or regional broker/dealers,
established financial institutions providing portfolio
management/accounting services, financial publications, such as the Wall
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City of University Park. Texas - Investment Policy
Street Journal, market information vendors such as Bloomberg or Telerate
and market pricing services.
4. Benchmark Rate of Return
As a general guideline, the City's cash management portfolio shall be
designed with the objective of regularly meeting the average return on
three-month U.S. Treasury Bills, or the average rate of 90-day Certificates
of Deposit. These indices are considered benchmarks for risk-free
investment transactions and therefore comprise a standard for the
portfolio's rate of return. Additional benchmarks may be developed and
recommended by the Investment Committee and used as a comparative
performance measures for the portfolio. Additional benchmarks that may
be considered for targeting by the Investment Committee include the
Constant Maturity Treasury Bill with the maturity that most closely
matches the weighted average maturity of the portfolio or a more
customized index made up of blended Merrill Lynch Treasury/Agency
indices.
The investment program shall seek to augment rates of return above this
threshold, consistent with legal restrictions and prudent investment
principles. In a diversified portfolio, measured losses are inevitable and
must be considered within the context of the overall portfolio.
5. Responsibility and Control
1. Authority to Invest
Authority to manage the City investment program is derived from a
resolution of the City. Those authorized by said resolution are designated
as Investment Officers of the City, and, in conjunction with the Investment
Committee, are responsible for investment decisions and activities. The
City reserves the right to contract with an external investment advisory firm
to manage the investment assets, and the resulting resolution will grant
investment authorization to the contracted firm. The Finance Director shall
establish written procedures for the operation of the investment program
consistent with this Investment Policy.
2. Bonding requirements/Standard of care
Each of the authorized investment officers shall be a bonded employee. All
participants in the investment process shall act responsibly as custodians of
the public trust and shall exercise the judgment and care, under prevailing
circumstances, that a prudent person would exercise in the management of
the person's own affairs.
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City of University Park. Texas - Investment Policy
3. Establishment of Internal Controls
The Finance Director is responsible for establishing and maintaining an
internal control structure designed to ensure that the assets of the entity are
protected from loss, theft or misuse. The internal control structure shall be
designed to provide reasonable assurance that the objectives are met. The
concept of reasonable assurance recognizes that (1) the cost of a control
should not exceed the benefits likely to be derived, and (2) the valuation of
costs and benefits requires estimates and judgments by management.
4. Standard of Ethics
City staff involved in the investment process shall refrain from personal
business activity that could conflict with proper execution of the investment
program, or which could impair the ability to make impartial investment
decisions.
City staff shall disclose to the City any material interests in financial
institutions that conduct business with the City, and they shall further
disclose positions that could be related to the performance of the City
portfolio. City staff shall subordinate their personal financial transactions to
those of the City, particularly with regard to the timing of purchases and
sales.
An investment officer of the City who has a personal business relationship
with an organization seeking to sell an investment to the City shall file a
statement disclosing that personal business interest. An investment officer
who is related within the second degree by affinity or consanguinity to an
individual seeking to sell an investment to the City shall file a statement
disclosing that relationship. A statement required under this subsection
must be filed with the Texas Ethics Commission and the governing body of
the City.
5. Training and Education
In accordance with the Public Funds Investment Act (Chapter 2256, Texas
Government Code), the designated Investment Officers, or those personnel
authorized to execute investment transactions, must attend periodic
investment training. State law requires that training relating to investment
responsibilities must be provided by an independent source as approved by
the Investment Committee. Personnel authorized to execute or approve
investment transactions must receive at least 10 hours of investment
training within each two-year period. Newly appointed investment officers
must attain at least 10 hours of instruction relating to the officer's
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City of University Park. Texas - Investment Policy
responsibility under the Act within 12 months after assuming investment
duties.
6. Investment Committee
An Investment Committee that is comprised of the membership of the
Finance Advisory Committee shall be established to determine
investment guidelines, general strategies, and monitor performance.
The Committee shall meet quarterly to review performance, strategy
and procedures. The Investment Committee shall include in its
deliberation such topics as: performance reports, economic outlook,
portfolio diversification, maturity structure, potential risk to the City
funds, authorized brokers and dealers, and the target rate of return on
the investment portfolio.
6. Reporting
Investment performance is continually monitored and evaluated by the Finance
Director. The Investment Officer(s) will provide detailed reports, as required
by the Public Funds Investment Act (Chapter 2256, Texas Government Code,
Section 2256.023) for the City on a quarterly basis.
The Finance Director shall submit a quarterly investment report signed by the
investment officers that summarizes current market conditions, economic
developments and anticipated investment conditions. The report shall
summarize investment strategies employed in the most recent quarter, and
describe the portfolio in terms of investment securities, maturities, risk
characteristics and shall explain the total investment return for the quarter.
The report will outline conformance to the restrictions of the Policy in the area
of diversification and term of maturity. The report will also compare the
performance of City's portfolio to appropriate benchmarks as determined by
the Investment Committee. The report shall summarize current market
conditions, economic developments and anticipated investment conditions. The
report shall also summarize investment strategies employed in the most recent
quarter, and describe the portfolio in terms of investment securities, maturities
and risk characteristics.
Within 60 days of the end of the fiscal year, the Finance Director or the
Investment Advisory firm shall present an annual report on the investment
program and investment activity. The report may be presented as a component
of the fourth quarter report to the City.
The quarterly investment report shall include a succinct management summary
that provides a clear picture of the status of the current investment portfolio
and transactions made over the last quarter. This management summary will be
18
City of University Park. Texas - Investment Policy
prepared in a manner which will allow the City to ascertain whether investment
activities during the reporting period have conformed to the Investment Policy.
The report will include the following:
1. A listing of individual securities held at the end of the reporting period.
2. Unrealized gains or losses resulting from appreciation or depreciation
by listing the beginning and ending book and market value of securities
for the period.
3. Additions and changes to the market value during the period.
4. Average weighted yield to maturity or total return performance of the
portfolio on entity investments as compared to applicable benchmarks.
5. Listing of investments by maturity date.
6. The percentage of the total portfolio which each type of investment
represents.
7. Statement of compliance of the City investment portfolio with State
Law and the investment strategy and policy approved by the City.
7. Compliance Audit
In conjunction with its annual financial audit, the City shall perform a
compliance audit of management controls on investments and adherence to the
City's established Investment Policies. The results of the audit shall be reported
to the Investment Committee and the governing body of the City.
8. Certification
A copy of this Investment Policy will be provided to the senior management of
any bank, dealer, broker or investment advisor wishing to transact investment
business directly with the City in order that it is apprised of the investment
goals of the City. Before business is transacted with the firm, a certification
(Appendix C) must be signed by a senior member of a firm. Should the City
contract with an external investment advisor to execute the entity's investment
strategy, including the negotiation and execution of investment transactions, a
managing officer of the investment advisory firm may sign the written
certification in lieu of the broker/dealer firms. This certification must be
included as part of the investment advisory contract.
19
SECTION 5
ADOPTING CLAUSE
City of University Park. Texas - Investment Policy
5. ADOPTING CLAUSE
This Investment Policy for the City of University Park, Texas is hereby adopted as of
the 5th day of September, 2006.
Mayor
Director of Finance
ATTEST:
City Secretary
48
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
UNIVERSITY PARK, TEXAS, ADOPTING THE INVESTMENT POLICY
OF THE CITY OF UNIVERSITY PARK HERETOFORE ADOPTED BY
RESOLUTION NO. 05-19; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, the Public Funds Investment Act, as amended, requires the City to adopt an
investment policy by rule, order, ordinance or resolution, and to review such policy not less than
annually; and
WHEREAS, the Public Funds Investment Act, as amended, requires the Treasurer, the
Chief Financial Officer, and the Investment Officers of the City to attend investment training; and
WHEREAS, the City of University Park approves of the investment training courses
sponsored by the Texas Municipal League and other independent sources; and
WHEREAS, the Treasurer, the Chief Financial Officer, and the Investment Officers of the
City have attended investment training courses as required by the Public Funds Investment Act;
and
WHEREAS, the attached investment policy complies with the Public Funds Investment
Act, as amended, and authorizes the investment of City funds in safe and prudent investments;
Now, Therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF UNIVERSITY
PARK, TEXAS:
SECTION 1.
That the City of University Park has complied with the
requirements of the Public Funds Investment Act, and the Investment Policy, as amended,
attached hereto as Exhibit "A" is hereby adopted as the Investment Policy of the City of
University Park, effective September 05, 2006.
SECTION 2.
That the following individuals are hereby designated as Investment
Officers for the City of University Park: Kent Austin, Director of Finance; Bob Livingston, City
Manager; and, Thomas Tvardzik, Controller.
SECTION 3. This resolution shall take effect from and after its passage, and it is
accordingly so resolved.
C:\DoclIments and Settings \mrilson \Local Settings \ Temporary Intel'l1et Files\OLK3I \Resollltion 1m 'est Policy 09-05-06.doc
DUL Y PASSED AND APPROVED by the City Council of the City of University Park,
Texas, on the 5th day of September, 2006.
APPROVED:
JAMES H. HOLMES, III, MAYOR
APPROVED AS TO FORM:
ATTEST:
CITY ATTORNEY
NINA WILSON, CITY SECRETARY
C:\DoclIments and Settings \mrilson \Local Settings \ Temporary Intel'l1et Files\OLK3I \Resollltion 1m 'est Policy 09-05-06.doc
19
AGENDA MEMO
(09/05/06 AGENDA)
DATE: August 27,2006
TO: Honorable Mayor and City Council
FROM: Christine Green, Purchasing Agent
SUBJECT: Revised Contract with Redflex Traffic Systems
At the August 22nd meeting, the City Council had some concerns about the Agreement
between the City of University Park and Redflex Traffic Systems, Inc. for the Photo Red Light
Enforcement Program.
Termination for Convenience
This contract is for a term of three (3) years. In the earlier version of the contract, the
Council expressed concern that the only way to terminate the contract was for cause. The
following language was added to the contract to allow the City to terminate for convenience.
The penalty fees for terminating before the three-year contract expires are included:
6.2. Termination for Convenience. The Customer may terminate this Agreement
without cause ("Termination for Convenience") at any time by giving thirty (30) days
written notice thereof to Redflex. In the event the Customer exercises its right to
Termination for Convenience, the Customer shall reimburse Redflex an amount equal
to the Unamortized Value, as hereinafter defined, of the direct labor costs and direct
material costs (not including Equipment costs and salvageable material costs) solely
associated with the installation of the Redflex Photo Red Light System at all
Intersection Approaches where such system( s) have been installed prior to the
effective date of Termination for Convenience (the "Reimbursable Costs"). Redflex
shall provide an itemization of the Reimbursable Costs, with supporting invoices and
labor expense documentation, to the Customer within thirty (30) days of the
completion of installation of the Redflex Photo Red Light System at each designated
Intersection Approach. Said Reimbursable Costs are currently estimated to equal
approximately $25,000 to $40,000 per Intersection Approach but, in no event, shall
said amount exceed $40,000 per Intersection Approach. For the purpose of this
section, the Unamortized Value for each Intersection Approach shall be derived as
follows: first, by multiplying the Reimbursable Costs by the number of complete
months remaining between the effective Termination for Convenience date and the
3800 UNIVERSITY BOULEVARD
UNIVERSITY PARK, TEXAS 75205
TELEPHONE (214) 363-1644
date that is 36 months after the Effective Date, and, then, by dividing said product by
the number of complete months between the date of the completion of installation of
the Redflex Photo Red Light System at said Intersection Approach and the date that
is 36 months after the Effective Date.
Indemnification and Liability
The Council expressed concern that the City is required to indemnify Redflex against the
willful misconduct of a City employee. Luanne Hanford, the City's Risk Manager, learned
through TML that liability claims arising from willful misconduct are not covered by the City's
insurance; however, assuming the claim would be a covered claim, if not arising from willful
misconduct, TML would provide a defense until willful misconduct was established. An
employee's willful misconduct is not necessarily the City's willful misconduct. This means that
the City may still be covered, even if the employee is not.
RECOMMENDATION:
Staff recommends authorizing the City Manager to approve the attached revised agreement
with Redflex for the Photo Red Light Enforcement Program.
3800 UNIVERSITY BOULEVARD
UNIVERSITY PARK, TEXAS 75205
TELEPHONE (214) 363-1644
AGREEMENT BETWEEN THE CITY OF UNIVERSITY PARK
AND RED FLEX TRAFFIC SYSTEMS, INC. FOR
PHOTO RED LIGHT ENFORCEMENT PROGRAM
This Agreement (this "Agreement") is made as of this _ day of August, 2006 by and
between Redflex Traffic Systems, Inc. with offices at 6047 Bristol Parkway 1st Floor,
Culver City, California 90230 ("Redflex"), and The City of University Park, a municipal
corporation, with offices at 3800 University Boulevard, University Park, Texas, 75205
(the "Customer").
RECITALS
WHEREAS, Redflex has exclusive knowledge, possession and ownership of certain
equipment, licenses, applications, and Notice of Violation processes related to digital
photo red light enforcement systems; and
WHEREAS, the Customer desires to engage the services of Redflex to provide certain
equipment, processes and back office services so that sworn police officers of the
Customer are able to monitor, identify and enforce red light running violations as
prescribed under Ordinance No. providing for Automated Traffic Signal
Enforcement (herein referred as the Photo Red Light Enforcement Program); and
WHEREAS, it is a mutual objective of both Redflex and the Customer to reduce the
incidence of vehicle collisions at the traffic intersections and city streets that will be
monitored pursuant to the terms of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained herein, and for
other valuable consideration received, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
AGREEMENT
1. DEFINITIONS. In this Agreement, the words and phrases below shall have the
following meanings:
1.1. "Authorized Officer" means the Police Project Manager or such other
individual(s) as the Customer shall designate to review Potential Violations and
to authorize the Issuance of Notice of Violations in respect thereto, and in any
event, a sworn police officer of the City of University Park, Texas, appointed by
the Chief of Police.
1.2. "Authorized Violation" means each Potential Violation in the Violation Data for
which authorization to issue a Notice of Violation in the form of an Electronic
Signature is given by the Authorized Officer by using the Redflex System.
1.3. "Notice of Violation" means the notice of a Violation, which is mailed or
otherwise delivered by Redflex to the violator on the appropriate Enforcement
Documentation in respect of each Authorized Violation.
1.4. "Confidential or Private Information" means, with respect to any Person, any
information, matter or thing of a secret, confidential or private nature, whether or
not so labeled, which is connected with such Person's business or methods of
operation or concerning any of such Person's suppliers, licensors, licensees,
customers or others with whom such Person has a business relationship, and
which has current or potential value to such Person or the unauthorized
disclosure of which could be detrimental to such Person, including but not
limited to:
1.4.1. Matters of a business nature, including but not limited to information
relating to development plans, costs, finances, marketing plans, data,
procedures, business opportunities, marketing methods, plans and strategies,
the costs of construction, installation, materials or components, the prices
such Person obtains or has obtained from its clients or customers, or at
which such Person sells or has sold its services; and
1.4.2. Matters of a technical nature, including but not limited to product
information, trade secrets, know-how, formulae, innovations, inventions,
devices, discoveries, techniques, formats, processes, methods, specifications,
designs, patterns, schematics, data, access or security codes, compilations of
information, test results and research and development projects. For
purposes of this Agreement, the term "trade secrets" shall mean the broadest
and most inclusive interpretation of trade secrets.
1.4.3. Notwithstanding the foregoing, Confidential Information will not include
information that: (i) was generally available to the public or otherwise part
of the public domain at the time of its disclosure, (ii) became generally
available to the public or otherwise part of the public domain after its
disclosure and other than through any act or omission by any party hereto in
breach of this Agreement, (iii) was subsequently lawfully disclosed to the
disclosing party by a person other than a party hereto, (iv) was required by a
com1 of competent jurisdiction to be described, or (v) was required by
applicable state law to be described.
1.5. "Designated Intersection Approaches" means the Intersection Approaches set
forth on Exhibit "A" attached hereto, and such additional Intersection
Approaches as Redflex and the Customer shall mutually agree upon from time to
time.
1.6. "Electronic Signature" means the method through which the Authorized Officer
indicates his or her approval of the issuance of aN otice of Violation in respect of
a Potential Violation using the Redflex System.
1.7. "Enforcement Documentation" means the necessary and appropriate
documentation related to the Photo Red Light Enforcement Program, including
but not limited to warning letters, violation notices (using City specifications), a
numbering sequence for use on all Notice of Violation, instructions to
accompany each issued Notice of Violation (including in such instructions a
description of basic adjudication procedures, payment options and information
regarding the viewing of images and data collected by the Redflex System),
chain of custody records, criteria regarding operational policies for processing
Notices of Violation (including with respect to coordinating with the Department
2
of Motor Vehicles), and technical support documentation for adjudication
personnel.
1.8. "Equipment" means any and all cameras, sensors, equipment, components,
products, software and other tangible and intangible property relating to the
Redflex Photo Red Light System(s), including but not limited to all camera
systems, housings, radar units, severs and poles.
1.9. "'Fine" means a monetary sum in the form of a civil penalty assessed for each
Notice of Violation.
1.10. "Governmental Authority" means any domestic or foreign government,
governmental authority, com1, tribunal, agency or other regulatory,
administrative or judicial agency, commission or organization, and any
subdivision, branch or department of any of the foregoing.
1.11. "Installation Date of the Photo Red Light Program" means the date on
which Redflex completes the construction and installation of at least one (1)
Intersection Approach in accordance with the terms of this Agreement so that
such Intersection Approach is operational for the purposes of functioning with
the Redlight Photo Enforcement Program.
1.12. "Intellectual PropeI1y" means, with respect to any Person, any and all
now known or hereafter known tangible and intangible (a) rights associated with
works of authorship throughout the world, including but not limited to
copyrights, moral rights and mask-works, (b) trademark and trade name rights
and similar rights, (c) trade secrets rights, (d) patents, designs, algorithms and
other industrial property rights, (e) all other intellectual and industrial property
rights (of every kind and nature throughout the universe and however
designated), whether arising by operation of law, contract, license, or otherwise,
and (f) all registrations, initial applications, renewals, extensions, continuations,
divisions or reissues hereof now or hereafter in force (including any rights in any
of the foregoing), of such Person.
1.13. "Intersection Approach" means a conduit of travel with up to four (4)
contiguous lanes from the curb (e.g., n011hbound, southbound, eastbound or
westbound) on which at least one (1) system has been installed by Redflex for
the purposes of facilitating Red Light Photo Enforcement by the Customer.
1.14. "Operational Period" means the period of time during the Term,
commencing on the Installation Date, during which the Photo Red Light
Enforcement Program is functional in order to permit the identification and
prosecution of Violations at the Designated City Streets and Intersection
Approaches by a sworn police officer of the Customer and the issuance of
Notices of Violation for such approved Violations using the Redflex System.
1.15. "Person" means a natural individual, company, Governmental Authority,
partnership, firm, corporation, legal entity or other business association.
1.16. "Police Proiect Manager" means the project manager appointed by the
Customer in accordance with this Agreement, who shall be a sworn police officer
and shall be responsible for overseeing the installation of the Intersection
Approaches and the implementation of the Redlight Photo Enforcement Program,
and which manager shall have the power and authority to make management
decisions relating to the Customer's obligations pursuant to this Agreement,
3
including but not limited to change order authorizations, subject to any
limitations set forth in the Customer's charter or other organizational documents
of the Customer or by the city council of the Customer.
1.17. "Potential Violation" means, with respect to any motor vehicle passing
through a Designated City Street and/or Intersection Approach, the data collected
by the Redflex System with respect to such motor vehicle, which data shall be
processed by the Redflex System for the purposes of allowing the Authorized
Officer to review such data and determine whether a Red Light Violation has
occUlTed.
1.18. "Proprietary Property" means, with respect to any Person, any written or
tangible property owned or used by such Person in connection with such
Person's business, whether or not such property is copyrightable or also qualifies
as Confidential Information, including without limitation products, samples,
equipment, files, lists, books, notebooks, records, documents, memoranda,
rep011s, patterns, schematics, compilations, designs, drawings, data, test results,
contracts, agreements, literature, correspondence, spread sheets, computer
programs and software, computer print outs, other written and graphic records
and the like, whether originals, copies, duplicates or summaries thereof, affecting
or relating to the business of such Person, financial statements, budgets,
projections and invoices.
1.19. "Redflex Marks" means all trademarks registered in the name of Redflex
or any of its affiliates, such other trademarks as are used by Redflex or any of its
affiliates on or in relation to Photo Red Light Enforcement at any time during the
Term this Agreement, service marks, trade names, logos, brands and other marks
owned by Redflex, and all modifications or adaptations of any of the foregoing.
1.20. "Redflex Proiect Manager" means the project manager appointed by
Redflex in accordance with this Agreement, or such other person as Redflex shall
designate by providing written notice thereof to the Customer from time to time,
who shall be responsible for overseeing the construction and installation of the
Designated Intersection Approaches and the implementation the Photo Red Light
Enforcement Program, and who shall have the power and authority to make
management decisions relating to Redflex's obligations pursuant to this
Agreement, including but not limited to change-order authorizations.
1.21. "Redflex Photo Red Light System" means, collectively, the SmartCam™
System, the SmartOpsTM System, the Redlight Photo Enforcement Program, and
all of the other equipment, applications, back office processes and digital red
light traffic enforcement cameras, sensors, components, products, software and
other tangible and intangible property relating thereto.
1.22. "Photo Red Light Enforcement Program" means the process by which the
monitoring, identification and enforcement of Violations is facilitated by the use
of certain equipment, applications and back office processes of Redflex,
including but not limited to cameras, flashes, central processing units, signal
controller interfaces and detectors (whether loop, radar or video loop) which,
collectively, are capable of measuring Violations and recording such Violation
data in the form of photographic images of motor vehicles.
4
1.23. "Photo Red Light Violation Criteria" means the standards and criteria by
which Potential Violations will be evaluated by sworn police officers of the
Customer, which standards and criteria shall include, but are not limited to, the
duration of time that a traffic light must remain red prior to a Violation being
deemed to have occurred, and the location(s) in an intersection which a motor
vehicle must pass during a red light signal prior to being deemed to have
committed a Violation, all of which shall be in compliance with all applicable
laws, rules and regulations of Governmental Authorities.
1.24. ''SmartCam™ System" means the proprietary digital redlight photo
enforcement system of Redflex relating to the Photo Red Light Enforcement
Program.
1.25. "SmartOpsTM System" means the proprietary back-office processes of
Redflex relating to the Photo Red Light Enforcement Program.
1.26. ''SmartScene™ System" means the proprietary digital video camera unit,
hardware and software required for providing supplemental violation data.
1.27. "Traffic Signal Controller Boxes" means the signal controller interface
and detector, including but not limited to the radar or video loop, as the case may
be.
1.28. "Violation" means any traffic violation contrary to the terms of the Texas
Transportation Code or any applicable rule, regulation or law of any other
Governmental Authority, including but not limited to operating a motor vehicle
contrary to traffic signals, and operating a motor vehicle without displaying a
valid license plate or registration.
1.29. "Violations Data" means the images and other Violations data gathered by
the Redflex System at the Designated City Streets and/or Intersection
Approaches.
1.30. "Warning Period" means the period that only warning notices and not
Notices of Violation shall be sent during the 30 day period commencing with the
installation of a traffic-control signal monitoring device.
2. TERM. The term of this Agreement shall commence as of the date hereof and shall
continue for a period of three (3) years after the Installation Date (the "Initial Term").
The Customer shall have the right, but not the obligation, to extend the term of this
Agreement for up to three (3) additional consecutive and automatic one (1) year
periods following the expiration of the Initial Term (each, a "Renewal Term" and
collectively with the Initial Term, the "Term"). The Customer may exercise the right
to extend the term of this Agreement for a Renewal Term by providing written notice
to Redflex not less than thirty (30) days prior to the last day of the Initial Term or the
Renewal Term, as the case may be.
3. SERVICES. Redflex shall provide the Photo Red Light Enforcement Program to the
Customer, in each case in accordance with the terms and provisions set forth in this
Agreement. This Agreement shall consist not only of the terms and conditions set
forth in this document but also the Redflex Traffic Systems USA Bid Proposal for
Automated Traffic Signal Enforcement System incorporated herein in its entirety
(Exhibit "G"). In the event of a conflict in interpretation, the documents shall control
5
in the order listed above. These documents shall be referred to collectively as
"Contract Documents."
3.1. INSTALLATION. With respect to the construction and installation of (1) the
Designated Intersection Approaches and the installation of the Redflex System at
such Designated Intersection Approaches, the Customer and Redflex shall have
the respective rights and obligations set forth on Exhibit "B" attached hereto.
3.2. MAINTENANCE. With respect to the maintenance of the Redflex System at the
Designated Intersection Approaches the Customer and Redflex shall have the
respective rights and obligations set fOI1h on Exhibit "C" attached hereto.
3.3. VIOLATION PROCESSING. During the Operational Period, Violations shall
be processed as follows:
3.3.1. All Violations Data shall be stored on the Redflex System;
3.3.2. The Redflex System shall process Violations Data gathered from the
Designated City Streets and/or Intersection Approaches into a format
capable of review by the Authorized Officer via the Redflex System;
3.3.3. The Redflex System shall be accessible by the Authorized Officer through
a virtual private network in encrypted format by use of a confidential
password on any computer equipped with a high-speed internet connection
and a web browser;
3.3.4. Redflex shall provide the Authorized Officer with access to the Redflex
System for the purposes of reviewing the pre-processed Violations Data
within an average of four (4) days of the gathering of the Violation Data
from the applicable Designated City Streets and/or Intersection Approaches
3.3.5. The Customer shall cause the Authorized Officer to review the Violations
Data and to determine whether a Notice of Violation shall be issued with
respect to each Potential Violation captured within such Violation Data, and
transmit each such determination in the form of an Electronic Signature to
Redflex using the software or other applications or procedures provided by
Redflex on the Redflex System for such purpose, and REDFLEX HEREBY
ACKNOWLEDGES AND AGREES THAT THE DECISION TO ISSUE A
NOTICE OF VIOLATION SHALL BE THE SOLE, UNILATERAL AND
EXCLUSIVE DECISION OF THE AUTHORIZED OFFICER AND
SHALL BE MADE IN SUCH AUTHORIZED OFFICER'S SOLE
DISCRETION (A "NOTICE OF VIOLATION DECISION"), AND IN NO
EVENT SHALL RED FLEX HAVE THE ABILITY OR
AUTHORIZA TION TO MAKE A NOTICE OF VIOLATION DECISION;
3.3.6. With respect to each Authorized Violation, Redflex shall print and mail a
Notice of Violation within two (2) days after Redflex's receipt of such
authorization; provided, however, during the Warning Period, warning
violation notices shall be issued in respect of all Authorized Violations;
3.3.7. Redflex shall provide a toll-free telephone number for the purposes of
answering citizen enquiries.
3.3.8. Redflex shall permit the Authorized Officer to generate rep011s as needed
using the Redflex Standard Report System.
3.3.9. Prior to the installation date of the Photo Red Light Program, Redflex
shall open and maintain a local customer office for the walk-in payment of
6
fines and a local mailing address in the Dallas metropolitan area to accept
payment by mail.
3.3.10. Upon Redflex's receipt of a written request from the Customer and in
addition to the Standard Reports, Redflex shall provide, without cost to the
Customer, reports regarding the processing and issuance of Notices of
Violation, the maintenance and downtime records of the Designated
Intersection Approaches and the functionality of the Redflex System with
respect thereto to the Customer in such format and for such periods as the
Customer may reasonably request; provided, however, Redflex shall not be
obligated to provide in excess of six (6) such reports in any given twelve
(12) month period without cost to the Customer;
3.3.11. Upon the Customer's receipt of a written request from Redflex, the
Customer shall provide, without cost to Redflex, reports regarding the
prosecution of Notices of Violation and the collection of fines, fees and
other monies in respect thereof in such format and for such periods as
Redflex may reasonably request; provided, however, the Customer shall not
be obligated to provide in excess of six (6) such rep011s in any given twelve
(12) month period without cost to Redflex;
3.3.12. Upon Redflex's receipt of a written request from the Customer at least
fourteen (14) calendar days in advance of the adjudication proceeding,
Redflex shall provide expert witnesses for use by the Customer in
prosecuting Violations; provided, however, the Customer shall use
reasonable best efforts to seek judicial notice in lieu of requiring Redflex to
provide such expert witnesses; and
3.3.13. During the three (3) month period following the Installation Date, Redflex
shall provide such training to police personnel as shall be reasonably
necessary in order to allow such personnel to act as expert witnesses on
behalf of the Customer with respect to the Redlight Enforcement Program.
3.4. PROSECUTION AND COLLECTION: COMPENSATION. The Customer shall
diligently prosecute all contested Notices of Violation before the hearing officer
and any appeal to Customer's municipal court. Redflex shall diligently prosecute
the collection of all Fines, contested or uncontested. All payments will be
collected and deposited into a Customer specified account and will be in direct
accordance with the Customer's guidelines. Redflex will employ a collection
service to collect delinquent payments with a goal of achieving a 70-80%
collection rate. Redflex shall have the right to receive, and the Customer shall be
obligated to pay, the compensation set forth on Exhibit "D" attached hereto.
3.5. OTHER RIGHTS AND OBLIGATIONS. During the Term, in addition to all of
the other rights and obligations set f011h in this Agreement, Redflex and the
Customer shall have the respective rights and obligations set forth on Exhibit "E"
attached hereto.
3.6. CHANGE ORDERS. The Customer may from time to time request changes to
the work required to be performed or the addition of products or services to those
required pursuant to the terms of this Agreement by providing written notice
thereof to Redflex, setting forth in reasonable detail the proposed changes (a
"Change Order Notice"). Upon Redflex's receipt of a Change Order Notice,
7
Redflex shall deliver a written statement describing the effect, if any, the
proposed changes would have on the pricing terms set forth in Exhibit "D" (the
"Change Order Proposal"), which Change Order Proposal shall include (i) a
detailed breakdown of the charge and schedule effects, (ii) a description of any
resulting changes to the specifications and obligations of the parties, (iii) a
schedule for the delivery and other performance obligations, and (iv) any other
information relating to the proposed changes reasonably requested by the
Customer. Following the Customer's receipt of the Change Order Proposal, the
parties shall negotiate in good faith and agree to a plan and schedule for
implementation of the proposed changes, the time, manner and amount of
payment or price increases or decreases, as the case may be, and any other
matters relating to the proposed changes; provided, however, in the event that
any proposed change involves only the addition of equipment or services to the
existing Designated Intersection Approaches, Designated City Vehicles, or the
addition of Intersection Approaches to be covered by the terms of this
Agreement, to the maximum extent applicable, the pricing terms set forth in
Exhibit "D" shall govern. Any failure of the parties to reach agreement with
respect to any of the foregoing as a result of any proposed changes shall not be
deemed to be a breach of this Agreement, and any disagreement shall be resolved
in accordance with Section 10.
4. License; Reservation of Ri2hts.
4.1. License. Subject to the terms and conditions of this Agreement, Redflex hereby
grants the Customer, and the Customer hereby accepts from Redflex upon the
terms and conditions herein specified, a non-exclusive, non-transferable license
during the Term of this Agreement to: (a) solely within the City of University
Park, access and use the Redflex System for the sole purpose of reviewing
Potential Violations and authorizing the issuance of Notice of Violations pursuant
to the terms of this Agreement, and to print copies of any content posted on the
Redflex System in connection therewith, (b) disclose to the public (including
outside of the City of University Park) that Redflex is providing services to the
Customer in connection with Photo Red Light Enforcement Program pursuant to
the terms of this Agreement, and (c) use and display the Redflex Marks on or in
marketing, public awareness or education, or other publications or materials
relating to the Photo Red Light Enforcement Program, so long as any and all
such publications or materials are approved in advance by Redflex.
4.2. RESERVATION OF RIGHTS. The Customer hereby acknowledges and agrees
that: (a) Redflex is the sole and exclusive owner of the Redflex System, the
Redflex Marks, all Intellectual Property arising from or relating to the Redflex
System, and any and all related Equipment, (b) the Customer neither has nor
makes any claim to any right, title or interest in any of the foregoing, except as
specifically granted or authorized under this Agreement, and (c) by reason of the
exercise of any such rights or interests of Customer pursuant to this Agreement,
the Customer shall gain no additional right, title or interest therein.
4.3. RESTRICTED USE. The Customer hereby covenants and agrees that it shall not
(a) make any modifications to the Redflex System, including but not limited to
any Equipment, (b) alter, remove or tamper with any Redflex Marks, (c) use any
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of the Redflex Marks in any way which might prejudice their distinctiveness,
validity or the goodwill of Redflex therein, (d) use any trademarks or other marks
other than the Redflex Marks in connection with the Customer's use of the
Redflex System pursuant to the terms of this Agreement without first obtaining
the prior consent of Red flex, or (e) disassemble, de-compile or otherwise perform
any type of reverse engineering to the Redflex System, the Redflex System,
including but not limited to any Equipment, or to any, Intellectual Property or
Proprietary Property of Redflex, or cause any other Person to do any of the
foregoing.
4.4. PROTECTION OF RIGHTS. Redflex shall have the right to take whatever
action it deems necessary or desirable to remedy or prevent the infringement of
any Intellectual Property of Redflex, including without limitation the filing of
applications to register as trademarks in any jurisdiction any of the Redflex
Marks, the filing of patent application for any of the Intellectual Property of
Redflex, and making any other applications or filings with appropriate
Governmental Authorities. The Customer shall not take any action to remedy or
prevent such infringing activities, and shall not in its own name make any
registrations or filings with respect to any of the Redflex Marks or the
Intellectual PropeI1y of Redflex without the prior written consent of Redflex.
4.5. INFRINGEMENT. The Customer shall use its reasonable best efforts to give
Redflex prompt notice of any activities or threatened activities of any Person of
which it becomes aware that infringes or violates the Redflex Marks or any of
Redflex's Intellectual Property or that constitute a misappropriation of trade
secrets or act of unfair competition that might dilute, damage or destroy any of
the Redflex Marks or any other Intellectual Property of Redflex. Redflex shall
have the exclusive right, but not the obligation, to take action to enforce such
rights and to make settlements with respect thereto. In the event that Redflex
commences any enforcement action under this Section 4.5, then the Customer
shall render to Redflex such reasonable cooperation and assistance as is
reasonably requested by Redflex, and Redflex shall be entitled to any damages or
other monetary amount that might be awarded after deduction of actual costs;
provided, that Redflex shall reimburse the Customer for any reasonable costs
incurred in providing such cooperation and assistance.
4.6. INFRINGING USE. The Customer shall give Redflex prompt written notice of
any action or claim action or claim, whether threatened or pending, against the
Customer alleging that the Redflex Marks, or any other Intellectual PropeI1y of
Redflex, infringes or violates any patent, trademark, copyright, trade secret or
other Intellectual PropeI1y of any other Person, and the Customer shall render to
Redflex such reasonable cooperation and assistance as is reasonably requested by
Redflex in the defense thereof; provided, that Redflex shall reimburse the
Customer for any reasonable costs incurred in providing such cooperation and
assistance. If such a claim is made and Redflex determines, in the exercise of its
sole discretion, that an infringement may exist, Redflex shall have the right, but
not the obligation, to procure for the Customer the right to keep using the
allegedly infringing items, modify them to avoid the alleged infringement or
replace them with non-infringing items.
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