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HomeMy WebLinkAboutR20-028 Adoption of an Amended Investment and Banking Policy DocuSign Envelope ID:BE215214-23FC-441A-9C5A-ED7ADBF1DE6D Commissioner 5e4+ 4..s_ moved adoption of the following resolution: BOARD OF COUNTY COMMISSIONERS COUNTY OF EAGLE,STATE OF COLORADO RESOLUTION NO. 2020- I 1 ADOPTION OF AN AMENDED INVESTMENT AND BANKING POLICY WHEREAS,the provisions of§30-10-708,C.R.S.,as amended, and of§11-47-101 et seq.,C.R.S., provide that the County Treasurer shall deposit all funds and monies of whatever kind that come into her possession by virtue of her office, in her name as such treasurer, in one or more state banks, national banks having their principal office in the State of Colorado,or in savings and loan associations having their principal offices in this state which have theretofore been approved and designated by written resolution duly adopted by a majority vote of the board of County Commissioners of the county of Eagle,state of Colorado("Board"),which shall be entered into its minutes;and WHEREAS,the Board by an adopted written resolution may authorize the County Treasurer to invest all or part of such funds and monies, in those securities set forth in C.R.S.§24-75-601.1 if the period from the date of purchase of the security to its maturity date is five years or less or if authorized by the Board for such period in excess of five years;and WHEREAS, pursuant to§24-75-701 et seq,C.R.S., Eagle County may pool certain monies in its treasury with similar monies of other Colorado jurisdictions, according to the condition and requirements of the statute;and WHEREAS,the Board would like to update Eagle County's Investment Policy. NOW,THEREFORE,BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF EAGLE,STATE OF COLORADO: THAT,the Investment Policy attached hereto as Exhibit"A" is hereby adopted. THAT,the County Treasurer of Eagle County be,and hereby is, authorized and approved to deposit all funds and monies of whatever kind that come into the Treasurer's possession by virtue of the office in her name as such Treasurer in accordance with the Investment Policy. THAT,the Treasurer shall ensure that no Eagle County monies are deposited, or continue to be deposited, in any national bank,state bank,savings and loan association,or other institution or investment which (1)is not in full compliance with applicable provisions of C.R.S. §11-10.5-101 et seq., ovr signsnvempwm:esu1oz14-2opc-4*1*-9ooA-Eo7*uaF1osoo and0l1'47'1O1etseq, asomended,conuernin8protecthunofdepositsufpub|icmonies (2)is not properly insured pursuant to C.R.S. §24-75-603,as amended, or(3) is not otherwise in full compliance with any other applicable statute or law concerning investments or deposits by counties. THAT,this Investment Policy is effective as of the date of signing until further order of the Board. MOVED, READ AND ADOPTED by the Board of County Commissioners of the County of 4/7/2020 Eagle,State of Colorado, at its regular meeting held COUNTY OF EAGLE,STATE OF COLORADO, By and Through Its BOARD OF COUNTY COMMISSIONERS r—m""nw=o*` r—»=uw"ew' ATTEST' ggLA2-:t4y4ggr4 ' NL'�"� ` %���ABy: lcArt [karktothe8pdu���— Henry County Commissioners County Commissioners Chair DocuSIgned by: Ccitar Commissioner Commissioner me M» 1)—~-i seconded adoption of the foregoing resolution. The roll having been called, the vote was as follows: Commissioner Chandler-Henry CommissionerW1cDueeney .� ~ Commissioner Scherr This resolution passed by / A vote of the Board of County Commissioners of the County of Eagle, State of Colorado DocuSign Envelope ID:BE215214-23FC-441A-9C5A-ED7ADBF1DE6D Eagle County,Colorado Amended 2020 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. The County operates as a statutory county,with a three-member Board of County Commissioners. The Board of County Commissioners for Eagle County first adopted the County's Investment Policy on October 13, 1992, by Resolution 92-128. The Board of County Commissioners approved this version of the Investment Policy on , 2020 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. • Attainment of a market value rate of return. DELEGATION OF AUTHORITY In accordance with C.R.S. § 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 1 DocuSign Envelope ID:BE215214-23FC-441A-9C5A-ED7ADBF1DE6D performing investment management functions. Annex II lists the persons authorized to transact investment business for the County. The Treasurer shall establish written administrative procedures for the operation of the County's investment program consistent with this Investment Policy. The Treasurer may engage the support services of outside professionals in regard to her investment program, so long as she can clearly demonstrate 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." C.R.S. § 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 long-term 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 2 DocuSign Envelope ID:BE215214-23FC-441A-9C5A-ED7ADBF1DE6D 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 http://www.gfoa.org. AUTHORIZED SECURITIES AND TRANSACTIONS All investments shall be made in accordance with the following Colorado laws: C.R.S. § 11- 10.5-101, et seg. Public Deposit Protection Act; C.R.S. § 24-75-601, et. seq. Funds - Legal Investments; C.R.S. § 24-75-603, Depositories; and C.R.S. § 24-75-702, Local Governments — authority to pool surplus funds. Any revisions or extensions of these sections of the Colorado Revised Statutes 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. Treasury Obligations: Treasury Bills, Treasury Notes, Treasury Bonds, and Treasury Strips with maturities not exceeding five years from the date of trade settlement. 2. Federal Instrumentality 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. 3. General Obligations and Revenue Obligations of state or local governments with a maturity not exceeding five years 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. 4. Corporate Debt: 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. 5. Non-negotiable Certificates of Deposit: Non-negotiable Certificates of Deposits ("CD") in any Federal Deposit Insurance Corporation ("FDIC") insured state or national bank located 3 DocuSign Envelope ID:BE215214-23FC-441A-9C5A-ED7ADBF1DE6D in Colorado that is an eligible public depository as defined in C.R.S. § 11-10.5-103. CDs that exceed FDIC insurance limits shall be collateralized as required by the Public Deposit Protection Act. The County shall limit the aggregate value of CDs to no more than 25% of the County's total portfolio, and the amount of CDs that can be purchased from any one financial institution shall be limited to 5%of the County's total portfolio. 6. Commercial Paper: 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 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. 7. Eligible Banker's Acceptances: Eligible banker's acceptances with maturities not exceeding 180 days, issued by banks domiciled in the United States and operating under U.S. banking laws. Eligible 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 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. 8. Repurchase Agreements: Repurchase agreements 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. 9. Local Government Investment Pools: Local government investment pools authorized under C.R.S. § 24-75-702 that qualify as follows: 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 pool. 10. Money Market Mutual Funds: Money market mutual funds registered under the Investment Company Act of 1940 that qualify as follows: are no-load; have a constant net asset value of $1.00 per share); limit assets of the fund to securities authorized by state statute; have a 4 DocuSign Envelope ID:BE215214-23FC-441A-9C5A-ED7ADBF1DE6D 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. 11. Municipal Bonds with a maturity not exceeding five years from the date of trade settlement, issued by a state or local governments with a final maturity not exceeding five years from the date of trade settlement. Such obligations of Colorado issuers (or any political subdivision, institution, department, agency, instrumentality, or authority of the state) shall be rated at least "A" or the equivalent at the time of purchase by at least two NRSROs. Such obligations of any other governmental entity shall be rated at least"AA"or the equivalent at the time of purchase by at least two NRSROs. For obligations authorized in this section, the County shall limit the combined total of investments to no more than 15%of the County's investment portfolio, and no more than 5%of the County's investment portfolio may be invested in the obligations of any one issuer. 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 Investment 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. INVESTMENT 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: Security Types Max % Max % Per Portfolio Issuer (Aggregated when applicable) Non-negotiable CDs 25% 5% General Obligation and Revenue Obligation Debt 25% 5% Corporate Debt, Commercial Paper and Bankers Acceptances 50% 5% Municipal Bonds issued by state and local governments 15% 5% INVESTMENT MATURITY AND LIQUIDITY 5 DocuSign Envelope ID:BE215214-23FC-441A-9C5A-ED7ADBF1DE6D Investments shall be limited to maturities not exceeding five years from the date of trade settlement unless otherwise 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. 6 DocuSign Envelope ID:BE215214-23FC-441A-9C5A-ED7ADBF1DE6D 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. If 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 BROKER/DEALERS The Treasurer shall maintain a list of broker/dealers approved for investment purposes, and it shall be the County's policy to purchase securities only from those authorized firms. 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; 2. Report voluntarily to the Federal Reserve Bank of New York; 3. Qualify under Securities and Exchange Commission 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 shall provide the list of broker/dealers 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 of 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 C.R.S. § 11-10.5-103. A list of approved banks is included in Annex III of this Investment Policy. 7 DocuSign Envelope ID:BE215214-23FC-441A-9C5A-ED7ADBF1DE6D 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 C.R.S. § 11-10.5-103. 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. 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. The County shall use a dynamic benchmark rate of return for the County's investment portfolio which corresponds to the yield for the current U.S. 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. Portfolio reports prepared for the County shall be compliant with all Governmental Accounting Standards Board requirements. 8 DocuSign Envelope ID:BE215214-23FC-441A-9C5A-ED7ADBF1DE6D 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. 9 DocuSign Envelope ID:BE215214-23FC-441A-9C5A-ED7ADBF1DE6D Eagle County, Colorado Investment Policy prepared by: Teak Simonton, Treasurer Eagle County, Colorado Approved as to legal form: Eagle County, Colorado Approved: Chair Eagle County Board of County Commissioners Date: , 2020 10 DocuSign Envelope ID:BE215214-23FC-441A-9C5A-ED7ADBF1DE6D Annex I Contributing Special Funds The contributing special funds to the pooled investment portfolio that will be allocated proportionate investment income are: The General Fund School Land Dedication Emergency 911 E.V. Transportation E.V. Trails R.F. Transportation R.F. Trails Capital Improvements Open Space Fund Mental Health Conservation Trust Fund The following funds are restricted funds and are not included in the pooled investment portfolio: Health Insurance Eagle County Reimbursement Public Trustee Salary Accounts 11 DocuSign Envelope ID:BE215214-23FC-441A-9C5A-ED7ADBF1DE6D Annex II Authorized Personnel The following persons are authorized to transact investment business and wire funds for investment purposes on behalf of Eagle County, Colorado: Teak Simonton, Treasurer Anissa Berge, Chief Deputy Treasurer Brandi Resa, Deputy Treasurer 12 — —DocuSign Envelope ID:BE215214-23FC-441A-9C5A-ED7ADBF1DE6D Annex III Approved Banks and Savings and Loans The following depositories have been approved by Eagle County, Colorado. Alpine Bank FirstBank of Avon Wells Fargo Bank,NA 13