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HomeMy WebLinkAboutR23-035 Authorizing the ECHDA to Adopt an Investment and Banking Policy DocuSign Envelope ID:DA5B1984-7409-48DC-98AA-4FD1D420216B Commissioner McQueeney moved adoption of the following resolution: EAGLE COUNTY HOUSING AND DEVELOPMENT AUTHORITY RESOLUTION NO. 2023- 035 RESOLUTION AUTHORIZING THE EAGLE COUNTY HOUSING AND DEVELOPMENT AUTHORITY TO ADOPT AN INVESTMENT AND BANKING POLICY WHEREAS,the Eagle County Housing and Development Authority("ECHDA") is a county housing authority organized pursuant to Colorado Revised Statutes Title 29, Article 4, Part 5, and C.R.S. §§ 29-4-505(1)(f) and 29-4-209(1)(p) gives county housing authorities the power to invest moneys held in reserve or sinking funds or any moneys not required for immediate disbursement in property; and WHEREAS,the Eagle County Housing and Development Authority does not currently have an investment and banking policy and it is lawful for the authority-to invest its funds not immediately required to be disbursed in order to take advantage of short-term investments and maximize net interest earnings; and WHEREAS,the Eagle County Housing and Development Authority desires to create an investment and banking policy in certain securities as 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 Eagle County Housing and Development Authority Board for such period in excess of five years; and WHEREAS,pursuant to §24-75-701 et seq, C.R.S. and adopted by the ECHDA Board through Resolution No. 2021-044, ECHDA may pool certain monies with similar monies of other Colorado jurisdictions, according to the condition and requirements of the statute; and WHEREAS,the Eagle County Housing and Development Authority would like to formalize an Investment and Banking Policy. NOW,THEREFORE, BE IT RESOLVED BY THE EAGLE COUNTY HOUSING AND DEVELOPMENT AUTHORITY: THAT, the Investment and Banking Policy attached hereto as Exhibit A is hereby adopted. THAT,the Board hereby finds, determines and declares that this resolution is necessary for the health, safety, and welfare of the citizens of Eagle County. 1 DocuSign Envelope ID:DA561984 7409-48DC 98AA-4FD1D420216B p MOVED,READ,AND ADOPTED by the Board of the Eagle County Housing and Development Authority at its regular meeting held this 16th day of May , 2023. c-- DocuSigned by: � , EAGLE COUNTY HOUSING AND �y DEVELOPMENT AUTHORITY \�oF�� ATTEST: -DocuSigned by: Ina. 0-1t5Vlun, By: Cork to the oard of Kathy Chandler-Henry County Commissioners Chair DocuSigne d by:C s doxy A 1F7R21V1RFl14 7 Matt Scherr Commissioner rDocuSigned by: 1� CMAC128fW17A Jeanne McQueeney Commissioner Commissioner scherr seconded adoption of the foregoing resolution. The roll having been called, the vote was as follows: Commissioner Chandler-Henry Absent Commissioner Scherr Aye Commissioner McQueeney Aye This resolution passed by 2/0 vote of the Board of the Eagle County Housing and Development Authority of the County of Eagle, State of Colorado 2 DocuSign Envelope ID:DA5B1984-7409-48DC-98AA-4FD1D420216B Eagle Housing and Development Authority-Investment and Banking Policy INTRODUCTION AND SCOPE The Eagle County Housing and Development Authority ("ECHDA") is located in Eagle County, Colorado, in the Rocky Mountains, and home to two world class ski resorts of Vail and Beaver Creek. The service area of ECHDA includes the top of Vail Pass,west into the Glenwood Canyon, and a portion of the Roaring Fork Valley in El Jebel and Basalt. The municipalities within the service area include Vail, Minturn, Red Cliff, Avon, Edwards, Wolcott, Eagle, Gypsum, Dotsero, and Basalt. Housing for local residents has been long known to be a challenge in the rural, resort areas within Colorado and across the western United States.While the employment opportunities are plentiful, the type of jobs, many of which are low-paying, combined with the high cost of housing has situated the local resident at a disadvantage to the second home buyer. With median home prices well above $1,200,000, many local residents find housing to be their greatest challenge. This investment and banking policy("Investment Policy")addresses the methods,procedures, and practices which must be exercised to ensure effective and judicious fiscal and investment and banking management of ECHDA funds. This Investment Policy shall apply to the management of all ECHDA funds. INVESTMENT OBJECTIVES ECHDA funds shall be invested in accordance with all applicable policies and codes, Colorado statutes,and Federal regulations,and in a manner designed to accomplish the following objectives: • 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 Through this policy,the Board of Commissioners of the Eagle County Housing and Development Authority has granted the Eagle County Government Chief Financial Officer (the "CFO") authority for conducting investment and banking transactions. The Eagle County Government Finance Director,Executive Director of ECHDA, and other authorized persons,may be appointed to assist the CFO in performing investment management and banking functions. Persons authorized to transact investment and banking business for Eagle County Housing and Development Authority are listed in Annex I of this Investment Policy. The CFO may engage the support services of outside professionals in regard to the investment program for the purpose of producing financial advantage or additional protection of ECHDA's 3 DocuSign Envelope ID:DA5B1984-7409-48DC-98AA-4FD1D420216B 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 ECHDA'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.) ECHDA's overall investment program shall be designed and managed with a degree of professionalism that is worthy of the public trust. ECHDA recognizes that no investment is totally riskless and that the investment activities of ECHDA are a matter of public record. Accordingly, ECHDA 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 ECHDA. The CFO and other authorizedpersons actingin accordance with this Investment Policyand 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 Commissioners of ECHDA and that appropriate action is taken to control adverse developments. ETHICS AND CONFLICTS OF INTEREST Persons 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. Investment officials shall disclose to the CFO any material financial interest they have in financial institutions that conduct business with ECHDA, and they shall subordinate their personal investment transactions to those of ECHDA. ECHDA adheres to the Government Finance Officers Association's Code of Professional Ethics, a copy of which is available online at http://www.gfoa.org. 4 DocuSign Envelope ID:DA5B1984-7409-48DC-98AA-4FD1D420216B AUTHORIZED SECURITIES AND 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 Investments; 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 CFO has further restricted the investment of ECHDA 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 Any security issued by, fully guaranteed by, or for which the full credit of the following is pledged for payment: The federal farm credit bank,the federal land bank,a federal home loan bank,the federal agricultural mortgage corporation,the federal home loan mortgage corporation,the federal national mortgage association, the export-import bank, the Tennessee Valley Authority, the government national mortgage association, the world bank, or an entity or organization that is not listed in this paragraph but that is created by, or the creation of which is authorized by, legislation enacted by the United States congress and that is subject to control by the federal government that is at least as extensive as that which governs an entity or organization listed in this paragraph. With the exception of the federal agricultural mortgage corporation such securities shall be rated in the AA category or the equivalent at the time of purchase by at least two nationally recognized statistical rating organizations (NRSROs). Such securities shall have maturities not exceeding five years from the date of trade settlement. Subordinated debt may 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. 4. 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. ECHDA 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. 5 DocuSign Envelope ID:DA5B1984-7409-48DC-98AA-4FD1D420216B 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 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(PDPA). 6. Negotiable Certificates of Deposit ("Negotiable CDs") with a maturity not exceeding three years from the date of trade settlement and issued by any bank. Negotiable CDs must be U.S. dollar-denominated and must, at the time of purchase, have either a) a long-term rating in the A category or the equivalent by at least two NRSROs, or b) short-term ratings of A-1 or the equivalent by two NRSROs. Negotiable CDs are not subject to PDPA. 7. 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. 8. Eligible 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 9. 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 ECHDA'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 ECHDA'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 ECHDA 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. 10. Local Government Investment Pools(LGIPs) authorized under CRS 24-75-701 et seq. which: 1) seek to maintain a constant daily net asset value per share; 2) limit assets of the fund to securities authorized by CRS 24-75-601 et seq.; and 3)have a rating in the highest category by any NRSRO. 11. Money 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. 6 DocuSign Envelope ID:DA5B1984-7409-48DC-98AA-4FD1 D420216B • Securities that have been downgraded below minimum ratings described herein may be sold or held at the CFO'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 CFO in writing. INVESTMENT DIVERSIFICATION ECHDA 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 ECHDA's anticipated cash flow needs. ECHDA shall limit investments to a maximum percentage of the portfolio as follows: General Obligation and Revenue Obligation Debt 15% 5% Corporate Debt 25% 5% Commercial Paper 25% 5% Bankers Acceptances 25% 5% on-negotiable Certificates of Deposit 10% 5% egotiable Certificates of Deposit 5% 25% Repurchase Agreements 25% 5% Local Government Investment Pools 100% 50% Money Market Mutual Funds 100% 50% INVESTMENT MATURITY AND LIQUIDITY Investments shall be limited to maturities not exceeding five years from the date of trade settlement unless otherwise approved in writing by the CFO. Excluding bond proceed investments, the maximum weighted average maturity for the portfolio shall be 2.5 years. ECHDA's investable funds will be invested to meet cash flow projections. Funds that ECHDA 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 CFO, there is little doubt that the security will be called on that call date. The final 7 DocuSign Envelope ID:DA5B1984-7409-48DC-98AA-4FD1D420216B maturity date shall be used to disclose the maximum maturity liability in ECHDA's financial reports. SELECTION OF BROKER/DEALERS The CFO shall maintain a list of broker/dealers approved for investment purposes, and it shall be pp p � the policy of ECHDA 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, or 3. Qualify under Securities and Exchange Commission (SEC) Rule 15c3-1 (Uniform Net Capital Rule). ECHDA 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 ECHDA on an annual basis or upon request. In the event that an investment advisor is not used by ECHDA,the CFO will select broker/dealers on the basis of their expertise in public cash management and their ability to provide service to ECHDA's account. ECHDA 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 Commissioners of ECHDA to provide depository and other banking services for ECHDA. 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 11-10.5-103. A list of approved banks is included in Annex II of this Investment Policy. SAFEKEEPING AND CUSTODY The CFO shall approve one or more banks to provide safekeeping and custodial services for ECHDA. Custodian banks shall be selected on the basis of their ability to provide service to ECHDA's account and the competitive pricing of their services. An ECHDA 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 ECHDA's safekeeping and custodian bank, a financial institution shall qualify as an eligible public depository as defined in CRS 11-10.5-103. 8 DocuSign Envelope ID:DA5B1984-7409-48DC-98AA-4FD1D420216B 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 Eagle County Housing and Development Authority. Sufficient evidence to title shall be consistent with modem investment,banking and commercial practices. All investment securities purchased by ECHDA will be delivered by book entry and will be held in third-party safekeeping by the ECHDA approved custodian bank, its correspondent bank or the Depository Trust Company(DTC). ECHDA's custodian will be required to furnish ECHDA monthly reports of holdings of custodied securities as well as a report of monthly safekeeping activity. PERFORMANCE BENCHMARKS AND REPORTING 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. All fees involved with managing the portfolio should be included in the computation of the portfolio's rate of return. The CFO shall prepare regular reports listing the investments held by ECHDA,the current market valuation of the investments and performance results. The report shall include a summary of investment earnings during the period. POLICY REVISIONS This Investment Policy shall be reviewed annually and may be amended as conditions warrant. Policy annexes may be updated by the CFO as necessary, provided the changes in no way affect the substance or intent of this Investment Policy. 9 DocuSign Envelope ID:DA5B1984-7409-48DC-98AA-4FD1D420216B Annex I Authorized Personnel The following persons are authorized to transact investment and banking business on behalf of the Eagle County Housing and Development Authority: • Jill Klosterman, Eagle County Government Chief Financial Officer • Anna Earl, Eagle County Government Finance Director • Kimberly Bell Williams, Executive Director of Eagle County Housing and Development Authority 10 DocuSign Envelope ID:DA5B1984-7409-48DC-98AA-4FD1D420216B Annex II Approved Banking Partners The following depositories are approved for use by the Eagle County Housing and Development Authority and its affiliates. • Alpine Bank • ANB Bank • Community Banks of Colorado • CityWide Banks • FirstBank • JP Morgan Chase Bank • US Bank • Wells Fargo Bank,NA 11