(a) Any municipal funds or county funds that a municipal or county governing body determines are not presently needed for other purposes may be invested in any obligations in which sinking funds are now authorized to be invested, pursuant to Section 11-81-19, and, in addition, in any of the following:

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Terms Used In Alabama Code 11-81-21

  • Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Escrow: Money given to a third party to be held for payment until certain conditions are met.
  • following: means next after. See Alabama Code 1-1-1
  • Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
  • state: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Alabama Code 1-1-1
  • United States: includes the territories thereof and the District of Columbia. See Alabama Code 1-1-1
(1) Direct obligations of (including obligations issued or held in book entry form on the books of) the Department of the Treasury of the United States of America;
(2) Obligations of any of the following federal agencies, which obligations represent the full faith and credit of the United States of America:

a. Farmers Home Administration.
b. General Services Administration.
c. U.S. Maritime Administration.
d. Small Business Administration.
e. Government National Mortgage Association (GNMA).
f. U.S. Department of Housing and Urban Development (HUD).
g. Federal Housing Administration (FHA).
(3) U.S. dollar-denominated deposit accounts and certificates of deposit with banks or savings associations which are qualified public depositories under Chapter 14A of Title 41.

(4) Pre-refunded public obligations, defined as bonds or other obligations of any state of the United States of America or of any agency, instrumentality, or local governmental unit of any such state which fulfill all of the following:

a. Are not callable at the option of the obligor prior to maturity or as to which irrevocable notice has been given by the obligor to call on the date specified in the notice .
b. Are fully secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or obligations described in subdivision (1) , which may be applied only to the payment of such principal of, and interest and redemption premium, if any, on , the bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to the irrevocable instructions referred to in paragraph a., as appropriate, and the fund is sufficient, as verified by an independent certified public accountant, to pay principal of and interest and redemption, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to in paragraph a., as appropriate.
c. Are rated, based on the escrow, in the highest rating category of Standard & Poor’s Corporation and Moody’s Investors Service, Inc., or any successors thereto.
(5)

a. Interests, however evidenced, in any common trust fund or other collective investment fund maintained by any national or state chartered bank, trust company or savings association having trust powers, or securities of or other interests in any open-end management type investment company or investment trust registered under the Investment Company Act of 1940, as from time to time amended, so long as all of the following requirements are met at the time of purchase and during the term of investment:

1. At least 65% of the portfolio of such common trust fund, collective investment fund, or investment company or investment trust must consist of investments authorized in subdivisions (1), (2), (3), or (4) .
2. The remainder of the portfolio , if any, but in no case more than 35 percent, may consist only of one or more of the following investments:

(i) Obligations issued or guaranteed by any of the following agencies: Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC), including FNMA, and FHLMC participation certificates, Federal Land Banks, Central Bank for Cooperatives, Federal Intermediate Credit Banks, Student Loan Marketing Association, and Federal Home Loan Banks.
(ii) Mortgage related securities (as that term is defined in Section 3(a)(41) of the Securities Exchange Act of 1934 (15 U.S.C. § 78c(a)(41)).
(iii) Repurchase agreements fully collateralized by obligations, securities, or investments otherwise authorized under this subdivision, so long as the common trust fund, collective investment fund, investment company, or investment trust takes possession and delivery of the collateral for any repurchase agreement either directly or through an authorized custodian.
b. The fact that any financial institution making an investment as described in paragraph a. on behalf of the municipality or county, or any affiliate of such financial institution, is providing services to the investment company or investment trust as an investment advisor, sponsor, distributor, custodian, transfer agent, registrar, or otherwise, and is receiving reasonable remuneration for such services, shall not preclude such institution from making the investment in the securities of such investment company or investment trust; provided, however, that with respect to any account for municipal funds or county funds to which fees are charged for such services, the said financial institution shall disclose , by prospectus, account statement, or otherwise, to the beneficiary of such account or, to any third party directing investments, the basis , expressed as a percentage of asset value or otherwise, upon which the fee is calculated.
(6) Commercial paper with the highest credit rating at the time of purchase.
(7) Banker’s acceptances.
(b) The terms “municipal funds” and “county funds” as used in this section shall include all general, special, permanent, trust, and other funds, regardless of source or purpose, held or administered by any county, city, or town, or by any officer or agency thereof, in the State of Alabama.
(c) Investments of municipal funds or county funds shall be made by the officer or agency controlling their disposition. the county, city, or town, or official or agency thereof, may at any time sell obligations purchased pursuant to this section, and the money received from the sale and the interest and profits on the investment shall be credited to the fund from which the investment was made. Any obligation purchased pursuant to this section may be deposited for safekeeping with any bank, trust company, or savings association organized either under the laws of the State of Alabama or of the United States.
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