Senate Bill No.
141–Committee on
Government Affairs
CHAPTER..........
AN ACT relating to local government finance; revising provisions relating to the investment by certain local governments of collateral obtained by the local government in exchange for lending securities from its investment portfolio; revising provisions relating to the investment and reinvestment by certain municipalities of the proceeds of bonds or other municipal securities; and providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN
SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
Section 1. NRS 355.178 is hereby amended to read as follows:
355.178 1. The governing body of a city whose population is
150,000 or more or a county whose population is 100,000 or more
may lend securities from its investment portfolio if:
(a) The investment portfolio has a value of at least
$100,000,000;
(b) The treasurer of the city or county:
(1) Establishes a policy for investment that includes
provisions which set forth the procedures to be used to lend
securities pursuant to this section; and
(2) Submits the policy established pursuant to subparagraph
(1) to the city or county manager and prepares and submits to the
city or county manager a monthly report that sets forth the securities
that have been lent pursuant to this section and any other
information relating thereto, including, without limitation, the terms
of each agreement for the lending of those securities; and
(c) The governing body receives collateral from the borrower in
the form of cash or marketable securities that are:
(1) Authorized pursuant to NRS 355.170, if the collateral is
in the form of marketable securities; and
(2) At least 102 percent of the value of the securities
borrowed.
2. The governing body of a city or consolidated municipality
whose population is 60,000 or more but less than 150,000 may lend
securities from its investment portfolio if:
(a) The investment portfolio has a value of at least $50,000,000;
(b) The governing body is currently authorized to lend securities
pursuant to subsection 5;
(c) The treasurer of the city or consolidated municipality:
(1) Establishes a policy for investment that includes
provisions which set forth the procedures to be used to lend
securities pursuant to this section; and
(2) Submits the policy established pursuant to subparagraph
(1) to the manager of the city or consolidated municipality and
prepares and submits to the manager of the city or consolidated
municipality a monthly report that sets forth the securities that have
been lent pursuant to this section and any other information relating
thereto, including, without limitation, the terms of each agreement
for the lending of those securities; and
(d) The governing body receives collateral from the borrower in
the form of cash or marketable securities that are:
(1) Authorized pursuant to NRS 355.170, if the collateral is
in the form of marketable securities; and
(2) At least 102 percent of the value of the securities
borrowed.
3. The governing body of a city, county or consolidated
municipality may enter into such contracts as are necessary to
extend and manage loans pursuant to this section.
4. [Any] The total of investments made by a particular city,
county or consolidated municipality with collateral received
pursuant to subsection 1 or 2 must [mature not later] have an
average weighted maturity of not more than 90 days . [after the date
on which the securities are lent.]
5. The governing body of a city or consolidated municipality
whose population is 60,000 or more but less than 150,000 shall not
lend securities from its investment portfolio unless it has been
authorized to do so by the State Board of Finance. The State Board
of Finance shall adopt regulations that establish minimum standards
for granting authorization pursuant to this subsection. Such an
authorization is valid for 2 years and may be renewed by the State
Board of Finance for additional 2-year periods.
6. As used in this section, “average weighted maturity”
means the average length of time until the securities in which a
particular city, county or consolidated municipality has invested
with collateral received pursuant to subsection 1 or 2 will mature
or be redeemed by their issuers, with the length of time of each
individual security proportionally weighted according to the total
dollar amount that the particular city, county or consolidated
municipality has invested in that individual security with collateral
received pursuant to subsection 1 or 2.
Sec. 2. NRS 350.659 is hereby amended to read as follows:
350.659 The governing body of a municipality whose
population is 50,000 or more, subject to any contractual limitations
from time to time imposed upon the municipality by any ordinance
authorizing the issuance of outstanding securities of the
municipality or by any trust indenture or other proceedings
appertaining thereto, may cause to be invested and reinvested,
except as otherwise provided in NRS 350.698, any proceeds of
taxes, any pledged revenues and any proceeds of bonds or other
municipal securities issued hereunder for which the amount of the
principal of the original issuance was [$40,000,000] $10,000,000 or
more in an investment contract that is collateralized with securities
issued by the Federal Government or agencies of the Federal
Government if:
1. The collateral has a market value of at least 102 percent of
the amount invested and any accrued unpaid interest thereon;
2. The municipality receives a security interest in the collateral
that is fully perfected and the collateral is held in custody for the
municipality or its trustee by a third-party agent of the municipality
which is a commercial bank authorized to exercise trust powers;
3. The market value of the collateral is determined not less
frequently than weekly and, if the ratio required by subsection 1 is
not met, sufficient additional collateral is deposited with the agent of
the municipality to meet that ratio within 2 business days after the
determination; and
4. The party with whom the investment contract is executed is
a commercial bank, or that party or a guarantor of the performance
of that party is:
(a) An insurance company which has a rating on its ability to
pay claims of not less than “Aa2” by Moody’s Investors Service,
Inc., or “AA” by Standard and Poor’s Ratings Services, or their
equivalent; or
(b) An entity which has a credit rating on its outstanding long-
term debt of not less than “A2” by Moody’s Investors Service, Inc.,
or “A” by Standard and Poor’s Ratings Services, or their equivalent.
Sec. 3. This act becomes effective upon passage and approval.
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