HomeMy WebLinkAboutC16-148 Eagle County Investment PolicyEagle Gounty, Golorado
Investment Policy
INTRODUCTION AND SCOPE
Eagle County (the County), centrally located in the Rocky Mountains along Interstate 70,
is home to the internationally renowned ski resorts Vail and Beaver Creek. Eagle
County operates as a statutory county, with a three-member Board of County
Commissioners.
By approval of the Board of County Commissioners, Eagle County's Investment Policy
was adopted on October 13, 1992, by Resolution 92-128. This version of the InvestmentPolicy Wat approved by the Board of County Commissioners onq/X. ,2016 by Consent Agenda.
The following Investment Policy addresses the methods, procedures, and practices
which must be exercised to ensure effective and judicious fiscal and investment
management of the County's funds. This Investment Policy shall apply to the investment
management of those County funds listed in Annex I of this Investment Policy.
All cash, except for certain restricted funds also listed in Annex I of this Investment
Policy, shall be pooled for investment purposes. The investment income derived from
the pooled investment account shall be allocated to the pooled funds listed in Annex I
based upon the proportion of their respective average balances relative to the total
pooled balance.
INVESTMENT OBJECTIVES
The County's funds shall be invested in accordance with all applicable County policies
and codes, Colorado statutes, and Federal regulations, and in a manner designed to
accomplish the following objectives, which are listed in priority order:
. Preservation of capital and protection of investment principal.. Maintenance of sufficient liquidity to meet anticipated cash flows.. Diversification to avoid incurring unreasonable market risks.o Attainment of a market value rate of return.
DELEGATION OF AUTHORITY
In accordance with CRS 30-10-708, the Board of County Commissioners has granted
the County Treasurer (the "Treasurer") authority for conducting investment transactions.
The Deputy Treasurer and other authorized persons may be appointed to assist the
Treasurer in performing investment management functions. Persons authorized to
transact investment business for Eagle County are listed in Annex ll of this Investment
Policy.
The Treasurer shall establish written administrative procedures for the
County's investment program consistent with this lnvestment Policy.
operation of the
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faffi s,., nty Com ml sslon ers' Off lce
C16-148
The Treasurer may engage the support services of outside professionals in regard to its
investment program, so long as it can be clearly demonstrated that these services
produce a net financial advantage or necessary financial protection of the County's
financial resources. Such services may include engagement of financial advisors in
conjunction with debt issuance, portfolio management support, special legal
representation, third party custodial services, and independent rating services.
PRUDENCE
The standard of prudence to be used for managing the County's assets is the "prudent
investor" rule applicable to a fiduciary, which states that a prudent investor "shall
exercise the judgment and care, under circumstances then prevailing, which men of
prudence, discretion, and intelligence exercise in the management of the property of
another, not in regard to speculation but in regard to the permanent disposition of funds,
considering the probable income as well as the probable safety of capital." (CRS 15-1-
304, Standard for Investments.)
The County's overall investment program shall be designed and managed with a degree
of professionalism that is worthy of the public trust. The County recognizes that no
investment is totally riskless and that the investment activities of the County are a matter
of public record. Accordingly, the County recognizes that occasional measured losses
may occur in a diversified portfolio and shall be considered within the context of the
overall portfolio's return, provided that adequate diversification has been implemented
and that the sale of a security is in the best longterm interest of the County.
The Treasurer and other authorized persons acting in accordance with written
procedures and exercising due diligence shall be relieved of personal responsibility for
an individual security's credit risk or market price changes, provided that the deviations
from expectations are reported in a timely fashion to the Board of County
Commissioners and appropriate action is taken to control adverse developments.
ETHICS AND CONFLICTS OF INTEREST
Elected officials and employees involved in the investment process shall refrain from
personal business activity that could conflict with proper execution of the investment
program or that could impair or create the appearance of an impairment of their ability to
make impartial investment decisions. Employees and investment officials shall disclose
to the Treasurer any material financial interest they have in financial institutions that
conduct business with the County, and they shall subordinate their personal investment
transactions to those of the County.
The County adheres to the Government Finance Officers Association's Code of
Professional Ethics, a copy of which is available online at htto://www.qfoa.orq.
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3.
AUTHORIZED SECU RITIES AN D TRANSACTIONS
All investments shall be made in accordance with the Colorado Revised Statutes: CRS
11-10.5-101, et seq. Public Deposit Protection Act; CRS 24-75-601, et. seq. Funds -
Legal lnvestments; CRS 24-75-603, Depositories; and CRS 24-75-702, Local
Governments - authority to pool surplus funds. Any revisions or extensions of these
sections of the CRS will be assumed to be part of this Investment Policy immediately
upon being enacted.
The Treasurer has further restricted the investment of County funds to the following
types of securities and transactions:
1. U.S. Treasurv Obligations: Treasury Bills, Treasury Notes, Treasury Bonds, and
Treasury Strips with maturities not exceeding five years from the date of trade
settlement.
2. Federal Instrumentalitv Securities: Debentures, discount notes, callable securities,
step-up securities, and stripped principal or coupons with maturities not exceeding
five years from the date of trade settlement. Subordinated debt shall not be
purchased.
General Obliqations and Revenue Obliqations of state or local governments with a
maturitv not exceedinq five vears from the date of trade settlement. General
Obligations and Revenue Obligations of this state or any political subdivision of this
state must be rated at the time of purchase at least A- or the equivalent by at least
two nationally recognized statistical rating organizations (NRSROs). General
Obligations and Revenue Obligations of any other state or political subdivision of any
other state must be rated at the time of purchase at least AA- or the equivalent by at
least two NRSROS. Exposure to municipal bonds shall not exceed 25% of the
portfolio with no more than 5% held in any one issuer.
Corporate Debt with a maturity not exceeding three years from the date of trade
settlement, issued by any corporation or bank organized and operating within the
United States. The County hereby further authorizes investments in dollar
denominated securities issued by a corporation or bank that is organized and
operating within Canada or Australia, not to exceed a portfolio allocation of 10% per
each country. The debt must be rated at least AA-, Aa3 or the equivalent at the time
of purchase by at least two NRSROS. Subordinated debt shall not be purchased.The
combined exposure to corporate debt, commercial paper and bankers acceptances
shall not exceed 50% of the portfolio, with no more than 5% held in any one issuer.
Non-neqotiable Certificates of Deposit in any FDIC insured state or national bank
located in Colorado that is an eligible public depository as defined in CRS 11-10.5-
103. Certificates of deposit that exceed FDIC insurance limits shall be collateralized
as required by the Public Deposit Protection Act. The County shall limit the
aggregate value of Certificates of Deposit to no more than 25% of the County's total
portfolio, and the amount of Certificates of Deposit that can be purchased from any
one financial institution shall be limited to 5% of the County's total portfolio.
Commercial Paper with an original maturity of 270 days or less that is rated at least
A-1, P-1 or the equivalent at the time of purchase by at least two NRSROs. The
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5.
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aggregate investment in commercial paper, corporate debt and banker's
acceptances shall not exceed 50% of the County's total portfolio, and no more than
5% of the County's total portfolio may be invested in the obligations of any one
issuer.
6. Eliqible Banker's Acceptances with maturities not exceeding 180 days, issued by
banks domiciled in the U.S. and operating under U.S. banking laws. Banker's
Acceptances shall be rated A-1, P-1 or the equivalent at the time of purchase by at
least two NRSROs. The aggregate investment in banker's acceptances, corporate
debt and commercial paper shall not exceed 5Oo/o of the County's total portfolio, and
no more than 5% of the County's total portfolio may be invested in the obligations of
any one issuer.
7. Repurchase Aqreements with a defined termination date of 180 days or less
collateralized by U.S. Treasury securities with a maturity not exceeding 10 years.
For the purpose of this section, the term collateral shall mean purchased securities
under the terms of the County's approved Master Repurchase Agreement. The
purchased securities shall have a minimum market value including accrued interest
of 102 percent of the dollar value of the transaction. Collateral shall be held in the
County's custodial bank as safekeeping agent, and the market value of the collateral
securities shall be marked-to-the-market daily.
Repurchase Agreements shall be entered into only with dealers who have executed
a Master Repurchase Agreement with the County and who are recognized as
Primary Dealers by the Federal Reserve Bank of New York or with firms that have a
Primary Dealer within their holding company structure.
8. Local Government lnvestment Pools authorized under CRS 24-75-702 that: are "no-
load" (i.e., no commission or fee shall be charged on purchases or sales of shares);
have a constant net asset value of $1.00 per share; Iimit assets of the fund to
securities authorized by state statute; have a maximum stated maturity and weighted
average maturity in accordance with Rule 2a-7 of the Investment Company Act of
1940 and have a rating of AAAm or the equivalent by each NRSRO that rates the
pool.
9. Monev Market Mutual Funds registered under the Investment Company Act of 1940
that are "no-load" (i.e. no commission or fee shall be charged on purchases or sales
of shares); have a constant net asset value of $1.00 per share); limit assets of the
fund to securities authorized by state statute; have a maximum stated maturity and
weighted average maturity in accordance with Rule 2a-7 of the Investment Company
Act of 1940 and have a rating of AAAm or the equivalent by each NRSRO that rates
the fund.
Securities that have been downgraded below minimum ratings described herein may be
sold or held at the County's discretion. The portfolio will be brought back into compliance
with lnvestment Policy guidelines as soon as is practical.
The foregoing list of authorized securities shall be strictly interpreted. Any deviation from
this list must be pre-approved by the Treasurer in writing.
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I NVESTMENT DIVERSIFICATION
The County shall diversify its investments to avoid incurring unreasonable risks inherent
in over-investing in specific instruments, individual financial institutions, or maturities.
Nevertheless, the asset allocation in the portfolio should be flexible depending upon the
outlook for the economy, the securities market, and the County's anticipated cash flow
needs. The County shall limit investments to a maximum percentage of the portfolio as
follows:
INVESTMENT MATURITY AND LIQUIDITY
Investments shall be limited to maturities not exceeding five years from the date of trade
settlement unless othenruise approved in writing by the Treasurer. The maximum
weighted average maturity for the portfolio shall be 2.5 years. The County's investable
funds will be invested to meet cash flow projections. Core funds (those funds that the
County will not need for expected, short-term liabilities) will be identified through cash
flow projections so that they can be invested longer-term when market conditions are
favorable for such strategies.
In the case of callable securities, the first call date shall be used as the maturity date if,
in the opinion of the Treasurer, there is little doubt that the security will be called on that
call date. The final maturity date shall be used to disclose the maximum maturity liability
in the County's financial reports.
COMPETITIVE TRANSACTIONS
With the exception of deposits, all investment transactions shall be conducted
competitively with authorized broker/dealers. At least three broker/dealers shall be
contacted for each transaction and their bid and offering prices shall be recorded. lf the
County is offered a security for which there is no other readily available competitive
offering, then the Treasurer will document quotations for comparable or alternative
securities.
SELECTION OF BROKERYDEALERS
The Treasurer shall maintain a list of broker/dealers approved for investment purposes,
and it shall be the policy of the County to purchase securities only from those authorized
firms.
Security Types
(Aggregated when applicable)
Maxo/o
Portfolio
Max % Per
lssuer
Non-negotiable Certificates of Deposit 25%SYo
General Obligation and Revenue Obligation Debt 25To 5%
3orporate Debt, Commercial Paper and Bankers Acceptances 50%5o/o
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To be eligible, a firm must meet at least one of the following criteria:
1. be recognized as a Primary Dealer by the Federal Reserve Bank of New York or
have a primary dealer within its holding company structure,
1. report voluntarily to the Federal Reserve Bank of New York, or
3. Qualify under Securities and Exchange Commission (SEC) Rule 15c3-1 (Uniform
Net Capital Rule).
The County may engage the services of an investment advisory firm to assist in the
management of the portfolio. Such investment advisors may utilize their own approved
list of broker/dealers. Such approved brokers shall comply with the criteria listed above
and the list shall be provided to the County on an annual basis or upon request.
In the event that an investment advisor is not used by the County, the Treasurer will
select broker/dealers on the basis of their expertise in public cash management and their
ability to provide service to the County's account. Each authorized firm shall be required
to submit and annually update a County approved broker/dealer Information Request
Form that includes the firm's most recent financial statements.
The County may purchase commercial paper from direct issuers even though they are
not on the approved broker/dealer list as long as the commercial paper meets the criteria
outlined in the Section, "Authorized Securities and Transactions" of this Investment
Policy.
SELECTION OF BANKS
Banks shall be approved by written resolution by the Board of County Commissioners to
provide depository and other banking services for the County. To be eligible for
authorization, a bank must be a member of the FDIC and shall qualify as an eligible
public depository as defined in CRS 1 1-10.5-103. A list of approved banks is included in
Annex lll of this Investment Policy.
SAFEKEEPING AND CUSTODY
The Treasurer shall approve one or more banks to provide safekeeping and custodial
services for the County. Custodian banks shall be selected on the basis of their ability to
provide service to the County's account and the competitive pricing of their services. A
County approved custody agreement shall be executed with each custodian bank prior
to utilizing that bank's safekeeping and custody services. To be eligible for designation
as the County's safekeeping and custodian bank, a financial institution shall qualify as an
eligible public depository as defined in CRS 1 1-10.5-103.
The purchase and sale of securities and repurchase agreement transactions shall be
settled on a delivery versus payment basis. Ownership of all securities shall be
perfected in the name of the County. Sufficient evidence to title shall be consistent with
modern investment, banking and commercial practices.
All investment securities purchased by the County will be delivered by book entry and
will be held in third-party safekeeping by the County approved custodian bank, its
correspondent bank or the Depository Trust Company (DTC).
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The County's custodian will be required to furnish the County monthly reports of holdings
of custodied securities as well as a report of monthly safekeeping activity.
PERFORMANCE BENCHMARKS
The investment and cash management portfolio shall be designed to attain a market rate
of return throughout budgetary and economic cycles, taking into account prevailing
market conditions, risk constraints for eligible securities, and cash flow requirements.
Eagle County shall use a dynamic benchmark rate of return for the County's investment
portfolio which corresponds to the yield for the current US Treasury security that
matches the weighted average maturity of the portfolio. All fees involved with managing
the portfolio should be included in the computation of the portfolio's rate of return.
REPORTING
Monthly, the Treasurer shall prepare a report listing the investments held by the County,
the current market valuation of the investments and performance results. The report
shall include a summary of investment earnings during the period. Porffolio reports
prepared for the County shall be compliant with all Governmental Accounting Standards
Board requirements.
POLICY REVISIONS
This Investment Policy shall be reviewed annually and may be amended as conditions
warrant. Policy annexes may be updated by the Treasurer as necessary, provided the
changes in no way affect the substance or intent of this Investment Policy.
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Eagle County, Colorado Investment Policy prepared by:
Approved as to legalform: ,u'
",1 //.- J //' 1-"
Approved:
Eagle County, Colorado
Bryan R, Treu, County Attorney
Eagle County, Colorado
a^t", f /7Q ,2016
County Commissioners
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Annex I
Contributing Special Funds
The contributing special funds to the pooled investment portfolio that will be allocated
proportionate investment income are:
Offsite Road lmprovement
School Dedication
Emergency 911
E.V. Transportation
E.V. Trails
R.F. Transportation
R.F. Trails
Emergency Reserve Fund
Transportation Vehicle Replacement Fund
Open Space Fund
Open Space Reserve Fund
Public Health Fund
The following funds are restricted funds and are not included in the pooled investment
portfolio:
Alpine Bank Health lnsurance
Eagle County Reimbursement
Public Trustee Salary Accounts
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Annex ll
Authorized Personnel
The following persons are authorized to transact investment business and wire funds for
investment purposes on behalf of Eagle County, Colorado:
Mari Renzelman, Treasurer
Anissa Berge, Deputy Treasurer
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Annex lll
Approved Banks and Savings and Loans
The following depositories have been approved by Eagle County, Colorado.
Alpine Bank
American National Bank
CoBiz Bank, NA
FirstBank of Avon
Centennial Bank
U.S. Bank NA
Wells Fargo Bank, NA
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