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HomeMy WebLinkAbout02-05-86 SS MINUTES OF THE SPECIAL SESSION HELD FEBRUARY 5, 1986 e PRESENT: Hager, Director Louloudis. Mayor lson, Commissioners Rodgers; Bateman~ anu City Manager Griffin, City Clerk Catron, Finance Poston, City Attorney Lang, and Deputy Clerk ABSENT: Commissioner Cox. CALL TO ORDER Mayor lson called the scheduled Special Session to order at 7:35 p.m.. Mayor lson then asked City Atty. Lang to give the Commission some background information on the financial policies and procedures for the City of Ocoee. Mr. Lang stated currently the value of the trust from GIC is unknown. Our certificate IS not a secured investment, therefore we will not get our full investment back. At this point we can expect 30 cents to ~0 cents on the dollar, and it could be a year or more before we get those funds. No interest will be paid on the amount either. We will be paid a prorata basis along with the other unsecured certificates. e Mr. Lang stated the City Charter provides that at the first meeting of each year the City Commission shall designate the depositories for that year. This has not been done in the past. After this is done, City of Ocoee public funds may only be deposited in those designated depositories. FDIC carries $100,000 of insurance on each designated account. FDIC is not willing to tell which accounts are definitely covered. They say each account with a designated use and designated custodian is covered with $100,000 worth of Insurance. Mr. Griffin asked It we set UP a designated account for tne Police Dept. and place monies in the account with designated custodians, but don't expend monies from the account, onlv earn interest and roll the account over, would we be covered by FDIC for those monies. Mr. Lang stated we could be put to test whether that account is truly used for the designated use. Mr. Griffin stated we could set up a desinnated account for the Building Dept. as an Enterprise Fund, because the Building Dept. generates revenue, unlike the Police Dept., Fire Dept., and Street Depts that do not generate revenue and are currently all under the General Fund. There ic no state law that requires who the City uses as a depository, but that chosen depository must follow the state requirements set for public funds. The state requires those depositories to carry 50~ collateral on the amount of public funds deposited in that depository or be FDIC insured. e Comm. they Bateman reminded the City Atty. that the City are discussing, 1.3 million dollars, are idle funds funds, 1 SPECIAL SESSION FEBRUARY 5, 1986 PAGE 2 - which are not earmarked or pledged to anythinq. Mr. realized this and stated as long as the funds are set specific segregated accounts with designated custodians, would be covered by FDIC. Lang into they e Jim Reed, President of Orange Bank in Ocoee, was present to explain to the Commission the collateral the bank currently has to offset the public funds deposited into the Bank, the assets and liabilities of the Bank, and so on. Orance Bank has 32 million in total deposits, surplus stock and capital. Orange Bank has 1.7 million in unencumbered government securities which are held by Sun Bank. The State law only requires they carry 1 million, so they have .7 million in excess already. This pledged money can not be sold or transferred by Orange Bank unless it is replaced, and Tallahassee must approve any collateral. If a bank is ln trouble, FDIC will usually require a bank merger. Mr. Reed stated there have been no mergers with Orange 8ank since 1961, only a name change, and all the employees work and live in Ocoee. Mr. Reed stated the more deposits Orange Bank has the more money they can loan out, which benefits the citlzens of Dcoee. Mr. Reed stated he would place 100% collateral on all of the City's funds and felt if the Bank closed next week, the City would get a faster payoff from the collateralized funds than with the FDIC. Mr. Reed stated he could insure the City funds with 100% collateral designated for those funds without insuring the other public fundS Orange Bank holds. Comm. Bateman asked how long it would take, if the Bank closed, to get a payoff from the securities pledged against the public funds. Mr. Reed could not answer. Comm. Rodgers felt more comfortable knowing that the City's fundS were collateralized 100%, instead of banking on the FDIC insurance. The Commission requested a letter from Mr. Jim Reed stating Orange Bank will cover our deposits will 100% collateral and Mr. Reed agreed to do so. Atty. Lang asked Mr. Reed if he could identify which securities are for the City of Ocoee's monies in writing, and Mr. Reed agreed to do so. The Commission also asked Atty. Lang to research what would happen in a situation where Orange Bank would close, and the City would have to draw from those securities. (worst case scenario) Mr. Lang is to check with the State and Federal Comptrollers office. Mr. Lang stated that the Feueral Comptroller will say it is a State law, and they deal with FDIC not collateral and the state may not have had a clalm to reference. - ~ c SPECIAL SESSION FEBRUARY 5, 1986 PAGE 3 e Comma Rodgers moved to adopt Resolution 86-02 designating Orange Bank, Tucker State Bank, Osceola Federal Bank, Sun Bank, and First Bankers otherwise known as First Union, otherwise known as Atlantic Bank as the financial institutions for 1986, and setting a flnancial POllCY. Comma Hager seconded, and after much discussion the vote was taken and carried unanimously. Mayor Ison and Comm. Rodgers felt the $400,000.00 the City has invested in Tucker State, Sun Bank, Osceola Federal, and First Bankers should come before the Commission upon maturity, for direction from the Commission where to transfer the monies. They will be agendaed when they mature. IYI~'. Reed sea~'ch i ng t ~'ans fe~"'s ()l'le bal'lk. also fOI"' wi 11 suggested the City have higher interest bearing loose more money than if trust in one bank as banks and making the the City leaves it in e Mayor Ison felt the elected officials of the City Should know where the funds are and should move them when it is necessary. Comm. Bateman felt the financial policy was good for the City, but felt Mr. Poston could transfer the funds, when they mature. Comma Bateman stated although the Commission authorizes Orange Bank as the depository for the City, the Commission is not responsible if Orange Bank should fail. Mr. Lang stated the City Charter provides that the Commission designates the depository, and must invest the surplus funds, although Mr. Poston can transfer funds from one authorized depository to another authorized depository. The Commission agreed to have a special session the first meeting of the fiscal year, each year in order to designate the depositories and review investments. Mayor Ison requested to go back to hand signing the checks for the monthly and weekly bills, but not payroll checks. Mayor Ison stated if he was out of town then Comma Rodgers could be called to sign the checks. He felt a Commissloner should be a co-signer on the checks. Mayor Ison stated this will improve the accountability to the public, and he did not mean to hurt feelings, it is because the elected officials are held responsible for the City's funds. COfrlfll. Bat efrlan p. m. . Comfll. unal'1 i mous 1 y. mc.ved to Rod ge~-"s adjourn the Special Session at 9:30 seCC<Yo::~~[...Lar"ied . DEPUTY CLERK LOULOUDIS 3 r -- c:- \ C( --- -' \,-, 1- , r '-~'1 (;1\_" \ \. \ ,- ( '"1 Legal DIVISion 1) (- I' . \ ---- I ' I ,J_O! ,'" I I' \ ~~ fEB ) FDIC Federal Deposit Insurance Corporation Washil1qton DC 20429 ~\~ (G ~ O~ ! I I " I _-:..~ ..../ 1\' : . ( -';oJ'\ .~'\,- I~j'h F. \"). ("',id C\ -~ pc J'Vc!J February 7, 1986 . /' \ ' r: ( (_ Cl. ct'r c t-J '- - ' , ! r- I ., N\ 11'-]'>;\ ) .,' j / Vs TI""",, (.~.;A) ~ r~nl \i,/ Mr. Kenton G. Griffin, MP~ City Manager City of Ocoee 150 Lakeshore Drive Ocoee, Florida 32761 (r ,,\ Iv ._e (-! 1 ~ (, ': ....:. <- l.'\." /( -.. 51' '" ! \ ,_ ."'-.J Dear Mr. Griffin: This will reply to your letter of January 24, 1986, in which you ask about FDIC insurance of public unit accounts. You state that the City of Ocoee has four certificates of deposit in an FDIC-insured bank in the name of "City of Ocoee General Fund" and other certificates in the names of "City of Ocoee Water Fund," "City of Ocoee Sewer Fund," etc. You ask for the extent of FDIC insurance coverage of these accounts. The deposit insurance coverage of public unit accounts is determined as follows: Section 330.8(a) of the FDIC regulations, 12 C.F.R. ~ 330.8(a), provides that each official custodian of funds of a State, county, municipality, or political subdivision thereof is insured up to $100,000 in the aggregate for time and savings deposits in an insured bank in the same state and up to $100,000 in the aggregate for demand deposits in an insured bank in the same State. Additional insurance coverage of up to $100,000 is provided for deposits in any form in an insured bank outside the State. Please be aware that, for insurance purposes, the official custodian of funds belonging to a public unit, rather than the public unit itself, is insured as the depositor. If there is more than one official custodian for the same public unit, the funds deposited by each custodian are separately insured up to $100,000 for time and savings deposits and $100,000 for demand deposits in an insured bank in the same State and $100,000 for deposits in any form in an insured bank outside the State. Depositing funds belonging to the same public unit in separate accounts solely for budgetary or accounting purposes does not increase insurance coverage. Thus, designating different titles for the accounts of the same custodian does not lead to separate insurance of those accounts. ,J)1 r .~~- Mr. Kenton G. Griffin - 2 - February 7, 1986 . In order to qualify as a "political subdivision" entitled to "public unit" status, an entity: 0) must have been expressly created or authorized as provided by State statute; (2) must have delegated functions as provided by State statute; and (3) must have funds allocated to it by statute or ordinance for its exclusive use and control 02 C.F.R ~ 330.8(c)). The term "political subdivision" also includes "drainage, irrigation, navigation, improvement, levee, sanitary, school or power districts, and bridge or port authorities and other special districts created by state statute or compacts between the States." Subordinate or nonautonomous divisions within political subdivisions do not satisfy those requirements. Your letter does not present any facts that indicate that the accounts in question belong to separately recognizable political subdivisions. Rather, it appears that they are all owned by the City of Ocoee and that their designation as separate ~ccounts is merely for accounting or budgetary purposes. Accordingly, it is my opinion that all the accounts listed would be insured in the aggregate to a maximum of $100,000. Finally, you ask for the length of time to recover your insured deposits in the event of the bank's fai lure and for the process which you must follow in order to receive your insured funds. In the event of the failure of an FDIC-insured bank, the depositor normally receives his or her insured deposit within three to five days from the date of the bank's closing. To receive your funds, simply present evidence of the deposits, such as your certificates, to the FDIC Claims Agent for the failed bank. . I am enclosing copies of two FDIC publications, "Your Insured Deposit" and "When a Bank Fails," which should help to answer some of your questions. Finally, if I can be of further assistance, please do not hes~tate to write or telephone me at (202) 389-4171. Sincerely, ~ ~ t"~ Fredric H. Karr Attorney Enclosures I