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HomeMy WebLinkAboutR05-004 Adoption of an Investment Policy Commissioner moved adoption of the following Resolution: BOARD OF COUNTY COMMISSIONERS COUNTY OF EAGLE, STATE OF COLORADO RESOLUTION NO. 2005 - ADOPTION OF AN INVESTMENT POLICY WHEREAS, the provisions of g30-10-708, C.RS., as amended, and of 911-47-101 et seq., C.RS., 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.RS. g24-75-601.1 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 g24-75-701 et seq, C.RS., Eagle County may pool certain monies in its treasury with similar monies of other Colorado jurisdictions, according to the condition and requirements ofthe statute; and WHEREAS, on January 27,2004, by Eagle County Resolution No. 2004-12, the Board adopted Eagle County's Investment Policy, which the Board would now like to update. 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 and approved. 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 County Treasurer of Eagle County be, and hereby is, authorized to invest all or part of such funds and monies, in those securities set forth in C.RS. 924-75-601.1 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. 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. Sll-1O.5-101 et seq., and Sll-47-101 et seq., as amended, conceming protection of deposits of public monies, (2) is not properly insured pursuant to C.R.S. S24-75-603, as amended, or (3) is not otherwise in full compliance with any other applicable statute or law conceming investments or deposits by counties. THAT, pursuant to S24-75-701 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. THAT, this Investment Policy is effective as of the date of this resolution until further order of the Board. MOVED, READ AND ADOPTED by the Board of County Commissioners of the , (, County of Eagle, State of Colorado, at its regular meeting held the I i( day of January, 2005. COUNTY OF EAGLE, STATE OF COLORADO, By and Through Its OF UNTY COMMISSIONERS County Commissioner Commissioner seconded adoption of the foregoing resolution. The roll having been called, the vote was as follows: Commissioner Menconi Commissioner Stone Commissioner Runyon This Resolution passed by vote of the Board of County Commissioners of the County of Eagle, State of Colorado. G: VKS\reso lutions\ Treasurer\ Treasurer\Investment policy. DOC Eagle County, Colorado Investment Policy INTRODUCTION AND SCOPE Eagle County, centrally located in the Rocky Mountains along Interstate 70, is home to the internationally renowned ski areas, 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 fifth revision was approved by the Board of County Commissioners on January 27, 2004 by Resolution 2004-012. The following Investment Policy addresses the methods, procedures and practices which must be exercised to enswe effed; ve c!2lldjudic;iom> fr.5e~ al',d-irrvt::::rtrnet'tl 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 principal investment objectives are: . 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. . Conformance with all applicable County policies, and State and Federal regulations. 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 II of this Investment Policy. EXHIBIT Page 1 i \'t ~,l\ 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 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 are inevitable 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 which 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 included in Annex VI of this Investment Policy. Page 2 January _, 2005 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 11-47-101, et seq. Savings and Loan Association Public Deposit Protection Act; CRS 24-75-601, et. seq. Funds - Legal Investments; CRS 24-75-603, et seq. Depositories; and CRS 24-75-701 and 702, et seq. Investment Funds - Local Government Pooling. 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. Treasury Obliqations: Treasury Bills, Treasury Notes. Treasury Bonds and Treasury Strips with maturities not exceeding five years from the date of purchase. 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 purchase issued by the following only: Federal National Mortgage Association (FNMA), Federal Farm Credit Banks (FFCB), Federal Home Loan Banks (FHLB), and Federal Home Loan Mortgage Corporation (FHLMC). 3. Commercial Paper with an original maturity of 270 days or less that is rated at least A-1 by Standard & Poor's, P-1 by Moody's, or F1 by Fitch at the time of purchase by each service that rates the commercial paper. If the commercial paper issuer has senior debt outstanding, the senior debt must be rated at least A+ by Standard & Poor's, A1 by Moody's, or A+ by Fitch by each service that rates the issuer. 4. Eliqible Banker's Acceptances with an original maximum maturity not exceeding 180 days, issued on domestic banks or branches or foreign banks domiciled in the U.S. and operating under U.S. banking laws. Banker's Acceptances shall be rated P-1 by Moody's, A-1 by Standard & Poor's or F-1 by Fitch at the time of purchase. If the issuing bank has senior long-term debt outstanding, it shall be rated, at the time of purchase AA by Standard & Poor's, Aa by Moody's, or AA by Fitch. 5. 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. Broker/dealers who have an executed County approved Master Repurchase Agreements are listed in Annex III of this Investment Policy. Page 3 January _' 2005 Approved counterparties to repurchase agreements shall have at least a short-term debt rating of A-1 or the equivalent and a long-term debt rating of A or the equivalent from one or more nationally recognized organizations which regularly rates such obligations. 6. Local Government Investment Pools authorized under CRS 24-75-702 that: are "no- load" (i.e.. no commission fees 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 in this Investment Policy; have a maximum stated maturity and weighted average maturity in accordance with Federal Securities Law Regulation 2a- 7 and have a rating of AAAm by Standard & Poor's, Aaa by Moody's or AAAfV1 + by Fitch. 7. Monev Market Mutual Funds registered under the Investment Company Act of 1940 that are "no-load" (Le. no commission 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 in this Investment Policy; have a maximum stated maturity and weighted average maturity in accordance with Federal Securities Regulation 2a- 7 and have a rating of AAAm by Standard & Poor's, Aaa by Moody's or AAAfV1 + by Fitch. 8. Non-neqotiable Certificates of Deposit in any state bank, national bank, or state or federal savings and loan association located in Colorado that is a member of the Federal Deposit Insurance Corporation and is a state approved depository per CRS 24-75-603. Certificates of deposit that exceed FDIC insurance limits shall be collateralized as required by the Public Deposit Protection Act or the Savings and Loan Association Public Deposit Protection Act. The County shall limit the aggregate value of Certificates of Deposit to no more than 25% of the County's portfolio, and the amount of Certificates of Deposit that can be purchased from any one financial institution shall be limited to 25% of that institution's unimpaired capital. 9. General Obliqation Debt with a final maturity not exceeding three years issued by any state of the United States or any political subdivision, institution, department, agency, instrumentality, or authority of any state that is (1) rated at least AA by Standard & Poor's, Aa by Moody's or AA by Fitch at the time of purchase by each service that rates the entity; (2) insured by MBIA or AMBAC (as long as MBIA and AMBAC maintain their AAA credit rating) or (3) escrowed to maturity with U.S. Treasury obligations as collateral. No more than 5% of the County's total portfolio may be invested General Obligation Debt of anyone issuer. 10. Revenue Obligation Debt with a final maturity not exceeding three years issued by any state of the United States or any political subdivision, institution, department, agency, instrumentality, or authority of any state that is (1) rated at least AA by Standard & Poor's, Aa by Moody's or AA by Fitch at the time of purchase by each service that rates the entity; (2) insured by MBIA or AMBAC (as long as MBIA and AMBAC maintain their AAA credit rating) or (3) escrowed to maturity with U.S. Treasury obligations as collateral. No more than 5% of the County's total portfolio may be invested Revenue Obligation Debt of anyone issuer. Page 4 January _, 2005 NOTE: No more than 25% of the County's total portfolio may be invested in any combination of General Obligation and Revenue Obligation Debt. It is the intent of the Treasurer that the foregoing list of authorized securities be strictly interpreted. Any deviation from this list must be pre-approved by the Treasurer in writing. INVESTMENT DIVE RSIFICA TION It is the intent of the County to diversify the investments within the portfolio to avoid incurring unreasonable risks inherent in over investing in specific instruments, individual financial institutions or maturities. The asset allocation in the portfolio should, however, 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: Non-neqotiable Certificates of Deposit: 25%. Combined General Obliqation and Revenue Ob/iqation Debt: 25%, 5% per issuer. INVESTMENT MATURITY AND LIQUIDITY Investments shall be limited to maturities not exceeding five years from the date of purchase unless otherwise approved in writing by the Treasurer. The maximum weighted average maturity for the portfolio shall be 2.5 years. The County shall maintain at least 10% of its total investment portfolio in instruments maturing in 60 days or less. The balance of 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 competitively transacted with broker/dealers who have been authorized by the County. At least three broker/dealers shall be contacted for each transaction and their bid and offering prices shall be recorded. A record shall be maintained by the County of all bids and offerings for security transactions in order to ensure that the County receives competitive pricing. 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. Page 5 January _' 2005 When purchasing original issue instrumentality securities, no competitive offerings will be required as all dealers in the selling group offer those securities at the same original issue price. SELECTION OF BROKER/DEALERS AND FINANCIAL INSTITUTIONS ACTING AS BROKER/DeALERS The Treasurer shall maintain a list of authorized broker/dealers and financial institutions which are approved for investment purposes, and it shall be the policy of the County to purchase securities only from those authorized institutions and 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, 2. report voluntarily to the Federal Reserve Bank of New York, or 3. Meet the securities dealer's capital adequacy requirements of the New York Federal Reserve Bank and provide written certification to the County that the requirements have been met on a continuous basis for the previous twelve-month period. Broker/dealers and other financial institutions will be selected by the Treasurer on the basis of their expertise in public cash management and their ability to provide service to the County's account. Each institution that has been authorized by the Treasurer shall be required to submit and annually update a County approved broker/dealer Information Request Form which includes the firm's most recent financial statements. The Treasurer shall maintain a file of the most recent broker/dealer information request forms as well as written certifications indicating that each broker/dealer has received a copy of this Investment Policy. A list of authorized broker/dealers is included in Annex IV of this Investment Policy. 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 AND SAVINGS AND LOANS AS DEPOSITORIES AND AS PROVIDERS OF GENERAL BANKING SERVICES Banks and savings and loans 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 or savings and loan must be a member of the FDIC and shall qualify as a depository of public funds in Colorado as defined in CRS 24- 75-603. A list of approved banks and savings and loans is included in Annex V of this Investment Policy. Page 6 January _, 2005 SAFEKEEPING AND CUSTODY The Treasurer shall approve one or more financial institutions 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 a depository of public funds in Colorado as defined in C.R.S. 24-75-603. 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, except non-negotiable Certificates of Deposit, Local Government Investment Pools and Money Market Mutual Funds, purchased by the County will be delivered by either book entry or physical delivery and will be held in third- party safekeeping by the County approved custodian bank, its correspondent bank or the Depository Trust Company (DTC). All Fed wireable book entry securities owned by the County shall be evidenced by a safekeeping receipt or a customer confirmation issued to the County by the custodian bank stating that the securities are held in the Federal Reserve system in a Customer Account for the custodian bank which will name the County as "customer." All DTC eligible securities shall be held in the custodian bank's Depository Trust Company (DTC) participant account and the custodian bank shall issue a safekeeping receipt evidencing that the securities are held for the County as "customer." All non-book entry (physical delivery) securities shall be held by the custodian bank's correspondent bank and the custodian bank shall issue a safekeeping receipt to the County evidencing that the securities are held by the correspondent bank for the County. 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 value 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. In no case shall the benchmark Page 7 January _, 2005 yield be less than the monthly average yield of the Colorado Local Government Liquid Asset Trust (COLOTRUST) measured on an annualized basis. All fees involved with managing the portfolio should be included in the computation of the portfolio's rate of return. REPORTING An investment report shall be prepared monthly, 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 the Governmental Accounting Standards Board Statement No. 31. 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. Prepared by: Karen L. Sheaffer, Treasurer Eagle County, Colorado Approved as to legal form: Diane Mauriello" County Attorney Eagle County, Colorado Approved: Chairperson Eagle County Board of County Commissioners Date: Page 8 January _' 2005 Annex I Contributing Special Funds The contributing special funds to the pooled investment portfolio that will be allocated proportionate investment income are: Offsite School Dedication Emergency 911 E.V. Transportation E.V. Trails R.F. Transportation R.F. Trails Emergency Reserve Fund Transportation Vehicle Replacement Fund The following funds are restricted funds and are not included in the pooled investment portfolio: Alpine Bank Health Insurance Eagle County Reimbursement Public Trustee Salary Accounts Eagle River Cleanup Page 9 January _' 2005 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: Karen Sheaffer, Treasurer Margo Painter, Deputy Treasurer Mari Renzelman, Accounting Technician Page 10 January _' 2005 Annex III Master Repurchase Agreement The following broker/dealers have an executed Master Repurchase Agreement on file with Eagle County. Colorado: Bane of America Securities, LLC Mizuho Securities USA Inc. Morgan Stanley DW, Inc. Page 11 January _' 2005 Annex IV Approved Broker/Dealers The following broker/dealers have been approved by Eagle County, Colorado. Bane of America Securities, LLC Citigroup Global Markets, Inc. Harris Nesbitt Corp. Lehman Brothers Inc. Merrill Lynch Mizuho Securities USA Inc. Morgan Stanley UBS Financial Services Inc. Page 12 January _.' 2005 Annex V Approved Banks and Savings and Loans The following depositories have been approved by Eagle County, Colorado. Alpine Bank CoBiz Bank. NA FirstBank of Avon Wells Fargo Bank, NA WestStar Bank Page 13 January _' 2005 Annex VI Government Finance Officers Association Code of Professional Ethics The Government Finance Officers Association of the United States and Canada is a professional organization of public officials united to enhance and promote the professional management of government financial resources by identifying, developing, and advancing fiscal strategies, policies and practices for the public benefit. To further these objectives, all government finance officers are enjoined to adhere to legal, moral and professional standards of conduct in the fulfillment of their professional responsibilities. Standards of professional conduct as set forth in this code are promulgated in order to enhance the performance of all persons engaged in public finance. I. Personal Standards Government finance officers shall demonstrate and be dedicated to the highest ideals of honor and integrity in all public and personal relationships to merit the respect, trust and confidence of governing officials, other public officials, employees, and of the public. . They shall devote their time, skills and energies to their office both independently and in cooperation with other professionals. . They shall abide by approved professional practices and recommended standards. II. Responsibility as Public Officials Government finance officers shall recognize and be accountable for their responsibilities in the public sector. . They shall be sensitive and responsive to the rights of the public and its changing needs. . They shall strive to provide the highest quality of performance and counsel. . They shall exercise prudence and integrity in the management of funds in their custody and in all financial transactions. . They shall uphold both the letter and the spirit of the constitution, legislation and regulations governing their actions and report violations of the law to the appropriate authorities. III. Professional Development Government finance officers shall be responsible for maintaining their own competence, for enhancing the competence of their colleagues, and for providing encouragement to those seeking to enter the field of government finance. Finance officers shall promote excellence in the public sector. Page 14 January _' 2005 Annex VI (cont.) Government Finance Officers Association Code of Professional Ethics IV. Professional Integrity-Information Government finance officers shall demonstrate professional integrity in the issuance and management of information. . They shall not knowingly sign, subscribe to, or permit the issuance of any statement or report which contains any misstatement or which omits material fact. . They shall prepare and present statements and financial information pursuant to applicable practices and guidelines. . They shall respect and protect privileged information to which they have access by virtue of their office. . They shall be sensitive and responsive to inquiries from the public and the media, within the framework of state or local government policy. V. Professional Integrity-Relationships Government finance officers shall act with honor, integrity and virtue in all professional relationships. . They shall exhibit loyalty and trust in the affairs and interests of the government they serve, within the confines of this Code of Ethics. . They shall not knowingly be a party to or condone any illegal or improper activity. . They shall respect the rights, responsibilities and integrity of their colleagues and other public officials with whom they work and associate. . They shall manage all matters of personnel within the scope of their authority so that fairness and impartiality govern their decisions. . They shall promote equal employment opportunities, and in doing so, oppose any discrimination, harassment, or other unfair practices. VI. Conflict of Interest Government finance officers shall actively avoid the appearance of or the fact of conflicting interests. . They shall discharge their duties without favor and shall refrain from engaging in any outside matters of financial or personal interest incompatible with the impartial and objective performance of their duties. . They shall not, directly or indirectly, seek or accept personal gain which would influence, or appear to influence, the conduct of their official duties. . They shall not use public property or resources for personal or political gain. Page 15 January _' 2005