Florida Senate - 2025                             CS for SB 1674
       
       
        
       By the Committee on Community Affairs; and Senators Calatayud,
       Fine, and Polsky
       
       
       
       
       578-03102-25                                          20251674c1
    1                        A bill to be entitled                      
    2         An act relating to unrated bonds; amending s. 218.415,
    3         F.S.; prohibiting local governments from requiring
    4         minimum bond ratings for certain investments;
    5         providing an effective date.
    6          
    7  Be It Enacted by the Legislature of the State of Florida:
    8  
    9         Section 1. Subsection (5) of section 218.415, Florida
   10  Statutes, is amended to read:
   11         218.415 Local government investment policies.—Investment
   12  activity by a unit of local government must be consistent with a
   13  written investment plan adopted by the governing body, or in the
   14  absence of the existence of a governing body, the respective
   15  principal officer of the unit of local government and maintained
   16  by the unit of local government or, in the alternative, such
   17  activity must be conducted in accordance with subsection (17).
   18  Any such unit of local government shall have an investment
   19  policy for any public funds in excess of the amounts needed to
   20  meet current expenses as provided in subsections (1)-(16), or
   21  shall meet the alternative investment guidelines contained in
   22  subsection (17). Such policies shall be structured to place the
   23  highest priority on the safety of principal and liquidity of
   24  funds. The optimization of investment returns shall be secondary
   25  to the requirements for safety and liquidity. Each unit of local
   26  government shall adopt policies that are commensurate with the
   27  nature and size of the public funds within its custody.
   28         (5) LISTING OF AUTHORIZED INVESTMENTS.—The investment
   29  policy shall list investments authorized by the governing body
   30  of the unit of local government, subject to the provisions of
   31  subsection (16). The investment policy authorized by the
   32  governing body of the unit of local government may not require a
   33  minimum bond rating for investments authorized pursuant to
   34  paragraph (16)(f). Investments not listed in the investment
   35  policy are prohibited. If the policy authorizes investments in
   36  derivative products, the policy must require that the unit of
   37  local government’s officials responsible for making investment
   38  decisions or chief financial officer have developed sufficient
   39  understanding of the derivative products and have the expertise
   40  to manage them. For purposes of this subsection, a “derivative”
   41  is defined as a financial instrument the value of which depends
   42  on, or is derived from, the value of one or more underlying
   43  assets or index or asset values. If the policy authorizes
   44  investments in reverse repurchase agreements or other forms of
   45  leverage, the policy must limit the investments to transactions
   46  in which the proceeds are intended to provide liquidity and for
   47  which the unit of local government has sufficient resources and
   48  expertise.
   49         Section 2. This act shall take effect July 1, 2025.