HomeMy WebLinkAbout20052577.tiff RESOLUTION
RE: AMENDMENT TO WELD COUNTY INVESTMENT POLICY
WHEREAS, the Board of County Commissioners of Weld County, Colorado, pursuant to
Colorado statute and the Weld County Home Rule Charter, is vested with the authority of
administering the affairs of Weld County, Colorado, and
WHEREAS, by resolution on March 5, 2003, the Weld County Investment Policy was
adopted, and
WHEREAS, the Investment Committee recommends changes to said Investment Policy,
and
WHEREAS, after review, the Board deems it advisable to adopt said policy, with
amendments, a copy of which is attached hereto and incorporated herein by reference.
NOW,THEREFORE, BE IT RESOLVED by the Board of County Commissioners of Weld
County, Colorado,that the Amended Weld County Investment Policy be, and hereby is, adopted.
The above and foregoing Resolution was,on motion duly made and seconded,adopted by
the following vote on the 31st day of August, A.D., 2005.
BOARD OF COUNTY COMMISSIONERS
WELD COUNTY, COLORADO
,
ATTEST: 4 '�444 IELk% �-t 7 -
it .� a, illiam H rke, Chair
Weld County Clerk to the ': , `""'� te
BY: Set) CO �.t ( s)r. . �h . eile, Pro-Tem
Deputy Clerk to the Boar?%1' -j • cA, I E
:Pert
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eppiO DAST `)'.asden
County orney EXCUSED
Glenn Vaad
Date of signature: WV
2005-2577
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WELD COUNTY
INVESTMENT POLICY
I. INTRODUCTION
Section 6-1 of the Weld County Home Rule charter was amended by the Weld County voters on November
8,2001,making the office of County Treasurer appointed by the Board of Weld County Commissioners,
effective January 1, 2003. In order to fulfill their fiduciary responsibilities concerning the Treasurer's
investments the Board of Weld County Commissioners decided that an oversight committee,known as the
Investment Advisory Committee,should be created which includes the Treasurer, Director of Finance and
Administration,Controller and the Chair, and Chair Protem of the Board of Weld County Commissioners.
This Investment Policy replaces any previous Investment Policy or Investment Procedures of Weld County.
The investment guidelines outlined below have been written to comply with various regulatory
requirements under which Weld County operates.
This Investment Policy was endorsed and recommended for adoption by the Weld County Investment
Advisory Committee on August 23,2005.The Board of Weld County Commissioners adopted the policy
on
II. SCOPE
The following investment policy addresses the methods,and procedures which must be exercised to ensure
effective and judicious fiscal and investment management of the County's funds. This policy shall apply to
the investment management of all financial assets and funds under control of the County except for its
employee retirement system fund,which is organized and administered separately by the Weld County
Retirement Board. These investment transactions/activities are accounted for in the government's annual
financial report and include the following:
•General fund,
•Special Revenue funds,
•Debt Service funds.
•Capital Projects funds,
•Enterprise fund,
•Internal Service funds,
•Trust and Agency funds-Expendable Trust funds&Agency funds,and
•Any new fund created by the governing body,unless specifically exempted by the
governing body
III. INVESTMENT OBJECTIVES
All funds which are held for future disbursement shall be deposited and invested by the County in
accordance with Colorado State Statutes and ordinances and resolutions enacted by the Board of Weld
County Commissioners in a manner to accomplish the following objectives:
1. Safety of Funds: Safety of principal is the foremost objective of the investment program. Investments
shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The.
objective will be to mitigate credit risk and interest rate risk.
a) Credit Risk.The County will minimize credit risk,the risk of loss due to the
failure of the security issuer,by
• Limiting investments to the safest types of securities;
•Pre-qualifying the financial institutions,broker/dealers,and advisors
with which the County does business,and
•Diversifying the investment portfolio so that potential losses on individual
securities will be minimized.
2005-2577
b)Interest Rate Risk: The County will minimize the risk that the market value of securities in the
portfolio will fall due to changes in general interest rates by:
•Structuring the investment portfolio so that securities mature sufficiently close to cash
requirements for ongoing operations,thereby minimizing the potential need to sell
securities on the open market prior to maturity and
•Investing operating funds primarily in short-to intermediate-term securities,approved
local government investment pools,approved money market mutual funds and
repurchase agreements.
2. Liquidity of Funds:The investment portfolio shall remain sufficiently liquid to meet all operating
requirements that may be reasonably anticipated.To ensure that adequate funds are available to
pay the County's projected financial obligations, investments will be purchased that reasonably
match the anticipated cash disbursements of the County.
Since all possible cash demands cannot be anticipated,the portfolio shall consist largely of
securities with active secondary or resale markets so that the potential for a realized loss, if an
early liquidation of a security is necessary, will be minimized.
A core of stable funds may be identified through cash flow analysis that is available for investing
in longer-term securities.Although the market value of these longer--term securities may
fluctuate significantly,the fluctuation will not affect the liquidity of the portfolio since they can be
held to maturity in all but extreme circumstances.
3. Yield: The County's portfolio shall earn a competitive market rate of return on available funds
throughout budgetary and economic cycles. In meeting this objective,investment management
personnel will take into account the County's investment risk constraints and cash flow needs.
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 free of risk 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 this policy has been followed and that the sale of a
security prior to maturity is in the best long-term interest of the County.
IV. DELEGATION OF AUTHORITY
Authority to manage the investment program is granted to the Treasurer derived from Article I I of the
Weld County Home Rule Charter.Responsibility for the operation of the investment program is hereby
delegated to the Treasurer, who shall carry out established written procedures and internal controls for the
operation of the investment program consistent with this investment policy. Procedures shall include
references to: safekeeping, delivery vs.payment,investment accounting,repurchase agreements and
banking services contracts.No person may engage in an investment transaction except as provided under
the terms of this policy and the procedures established by the Treasurer.The Treasurer shall be responsible
for all transactions undertaken and shall establish a system of controls to regulate the activities of
subordinate officials.
The Treasurer may engage the support services of outside professionals, so long as it can be demonstrated
that these services produce a net financial advantage and necessary financial protection of the County's
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 appraisal of
independent rating services.
V. PRUDENCE AND INDEMNIFICATION
The standard of prudence,as defined by the Colorado Revised Statutes,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 their capital"(CR5 15-1-304, Standard for Investments.)
The Director of Finance,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 deviations from expectations are reported in a timely
fashion and the liquidity and the sale of securities are carried out in accordance with the terms of this
policy.The
Treasurer will be responsible for ensuring that sufficient liquidity exists to maintain the County's
operations in the event of adverse market conditions or claims.
VI. ETHICS AND CONFLICTS OF INTEREST
As noted in Section 16-9(2)(b)of the Weld County Home Rule Charter: "Neither the Treasurer nor
employees of the Treasurer's Office shall have any proprietary interest in any financial institution in which
the County maintains deposits."
VII. ELIGIBLE INVESTMENTS AND TRANSACTIONS
All investments will be made in accordance with the Colorado Revised Statutes(CRS) as follows 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 11-60-101,et seq.U.S.Agency Obligations;CRS 24-75-601, et seq.
Funds-Legal Investments for Governmental Units; CRS 24-75-603,et seq.Depositories; and CRS 24-75-
701,et seq. Local Governments-Local Government Pooling. Any revisions on extensions of these sections
of the CRS will be assumed to be part of this policy immediately upon being enacted.
This investment policy further restricts the investment of County funds to the following types of securities
and transactions:
1. Treasury Obligations: Treasury bills,Treasury notes,Treasury bonds and Treasury STRIPS with
maturities not exceeding five years from the date of purchase.
2. Federal Instrumentality Securities: Debentures,discount notes,global securities,callable securities
and stripped principal on 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),Federal Home Loan Mortgage
Corporation(FHLMC),and Student Loan Marketing Association(SLMA). For the purposes of
this paragraph,a `weighted average life"will not constitute a stated final maturity.To be
approved,federal instrumentality securities must be rated AAA by either Moody's or Standard&
Poor's.
3. Eligible Bankers Acceptances with an original maximum maturity not exceeding 90 days, issued
on domestic banks or branches of foreign banks domiciled in the U.S. and operating under U.S.
banking laws with a minimum of$250 million combined capital and surplus(CRS 24-75-601.10,
whose senior long-term debt is rated,at the time of purchase AA by Standard&Poor's,Aa by
Moody's,or AA by Fitch IBCA,Duff and Phelps and deposits of the issuing bank must be insured
by the Federal Deposit Insurance Corporation(FDIC).
4. Repurchase Agreements with a defined termination date of 180 days or less collateralized by U. S.
Treasury and agency securities listed in item 1 and 2 above with a maturity not exceeding 10
years.Title must transfer to the County of Weld or the County must have a perfected security
interest.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 fixed coupon rate and an original minimum market value including accrued
interest of 102 percent of the dollar value of the transaction and the collateral maintenance level
shall be 102 percent. 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 based on that
day's bid price.
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 with the
Market Reports Division of the Federal Reserve Bank of New York.A copy of the County's
approved Master Repurchase Agreement is included in Annex III and a list of dealers who have an
executed Master Repurchase Agreements with the County are listed in Annex III.
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 on more
nationally recognized organizations which regularly rates such obligations.
5. Local Government Investment Pools authorized under CRS 24-75-701,702 which:
1)are"no-load"(i.e.,no commission fees shall be charged on purchases on sales of shares); 2)
have an objective of maintaining a constant daily net asset value per share(usually$1.00 per
share); 3) limit assets of the fund to securities authorized in this investment policy;4)have a
maximum stated maturity and weighted average maturity in accordance with Federal Securities
Law Regulation 2A-7;and 5)have a rating of AAAm by Standard&Poor's or AAA by Moody's
or AAA/V-1+by Fitch IBCA,Duff&Phelps.
6. Time Certificates of Deposit or savings accounts in state or national banks or in state or federally
chartered savings and loans which are state approved depositories per CR5 24-75-603,et seq. (as
evidenced by a certificate issued by the State Banking Board)and are insured by the FDIC.
Certificates of deposit which exceed the FDIC insured amount shall be collateralized in
accordance with the Colorado Public Deposit Protection Act.
7. Money Market Mutual Funds registered under the Investment Company Act of
1940 which: 1)are"no-load"(i.e.,no commission fee shall be charged on purchases or sales of
shares); 2)have a policy to maintain a constant daily net asset value per share(usually$1.00); 3)
limit assets of the fund to those securities authorized in this Policy;4)have a maximum stated
maturity and weighted average maturity in accordance with Federal Securities Regulation 2A-7;
and 5)are rated either AAAm by Standard&Poor's or AAA by Moody's or Fitch Investors
Service.
It is the intent of the County that the foregoing list of authorized securities be strictly interpreted. Any
deviation from this list must be pre-approved by the Board of Weld County Commissioners in writing.
VIII. INVESTMENT DIVERSIFICATION
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.
A minimum of 50%of the investment assets of the County will be maintained in those securities listed in
items 1,2,4,and 5 under Eligible Investments and Transactions.
IX. INVESTMENT MATURITY AND LIQUIDITY
Investments shall be limited to maturities not exceeding five years unless otherwise approved in writing by
the Board of Weld County Commissioners for special circumstances(e.g.the reinvestment of bond
proceeds). In addition,the weighted average maturity of the total portfolio shall at no time exceed 2 years.
The County shall maintain at least 10%of its total investment portfolio in instruments maturing in 90 days
or less.
In the case of callable securities,the first call date shall be used as the maturity date for investment
purposes if, due to the level of interest rates, the security is likely to be called prior to maturity.If due to the
level of interest rates,the callable security is likely to go to maturity,then that date will be used as the final
maturity. In all cases for accounting purposes,however,the final maturity date of the callable securities
shall be used as the maturity of the security in order to disclose the maximum maturity liability in the
County's financial reports.
X.COMPETITIVE TRANSACTIONS
Each investment transaction shall be competitively transacted with broker/dealers who have been
authorized by the County. Securities shall be purchased at the then best offering price based on the market
conditions at that time. In the case of a sale of a security,at least three broker/dealers shall be contacted for
each transaction and their bid and offering prices shall be recorded.
XI. SELECTION OF BROKER/DEALERS AND FINANCIAL INSTITUTIONS ACTING AS BROKER/
DEALERS AND FINANCIAL INSTITUTIONS PROVIDING INVESTMENT SERVICES.
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/investment bank,bank,or savings and loan institution must meet at least one of the
following criteria:
1. Be recognized as a Primary Dealer by the Market Reports Division of the Federal Reserve Bank of
New York,
2. Report voluntarily to the Market Reports Division of the Federal Reserve Bank of New York,
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.(The capital requirements are found in the
New York Federal Reserve Bath publication entitled,Capital Adequacy Guidelines for
Governmental Securities Dealers), or
4. Be an FDIC member and be listed as an"Eligible Public Depository"as prepared by the State
Banking Board for banks and for Savings and Loans to be approved as an"Eligible Public
Depository"by the Colorado division of Financial services.
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
broker/dealer 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 Controller shall maintain a file of the most recent Broker/Dealer Information Forms
submitted by each firm approved for investment purposes.Broker/Dealers shall also attest in writing that
they have received a copy of this policy.
A list of approved Broker/Dealers,Banks, and Savings&Loan institutions is included in various
"Resolutions"performed by the Board of County Commissioners of Weld County,Colorado.
XII. SELECTION OF BANKS AND SAVINGS AND LOANS(DESIGNATION UNDER CRS 11-10.5-
106(Banks)and CRS.11-47-105 (Savings&Loan))AS DEPOSITORIES AND PROVIDERS OF
GENERAL BANKING SERVICES AND ASSET POOLS AS DEPOSITORIES
The Treasurer shall maintain a list of authorized banks,savings and loans,and public asset pools as
depositories for Weld County funds which are approved by the Board of Weld County Commissioners by
resolution per CRS 30-10-708 to provide depository and other banking services for the County.To be
eligible for authorization, a bank is required to be designated an eligible public depository by the state
banking board and a savings and loan must be designated an eligible public depository by the state
commissioner of financial services. Additionally banks or savings and loans in the judgment of the
Treasurer no longer offering adequate safety to the County,will be removed from the list.The list will be
updated at least annually to insure current compliance. Depositories shall be selected through the County's
procurement process,which shall include a formal request for proposal issued every five years.
XIII. SAFEKEEPING AND CUSTODY
The Treasurer shall approve one or more financial institutions to provide safekeeping and custodial services
for the County.A County approved Safekeeping Agreement shall be executed with each custodian bank
prior to utilizing that bank's safekeeping services.To be eligible for designation as the County's
safekeeping and custodian bank, a financial institution shall meet the following criteria:
1.Have a Sheshunoff Public Finance Peer Group Rating of 20 or better on a scale of zero to one hundred
with one hundred being the highest quality for the most recent reporting quarter before the time of
selection; or
2.Have a PMA Financial Network,Inc. overall mating of three minus or better on a scale of one to five
with one being the highest quality for the most recent reporting quarter before the time of selection.
Custodian banks will be selected on the basis of their ability to provide service to the
County's account and the competitive pricing of their safekeeping related services.
Custodian banks shall be selected through the County's procurement process,which shall
include a formal request for proposal issued every five years.
The Controller/Treasurer shall obtain a copy of the FFIEC Consolidated Reports of Condition and Income
(Call Report)to the County on each approved safekeeping financial institution alter the end of the June and
December calendar quarters.The Controller/Treasurer shall also maintain a file of the credit rating analysis
reports performed for each approved financial institution that performs safekeeping and custody services.
It is the intent of the County that all purchased securities be perfected in the name of the County. Sufficient
evidence to title shall be consistent with modem investment,banking and commercial practices.
All investment securities,except non-negotiable certificates of deposit and money market funds,purchased
by the County will be delivered by either book entry or physical delivery and will be held in third-party
safekeeping by a County approved custodian bank, its correspondent New York bank or the Depository
Trust Corporation(DTC).
The County's perfected ownership of all book entry securities shall be evidenced by a safekeeping receipt
on a related document issued to the County by the custodian bank that acts as the County's safekeeping
agent.The safekeeping receipt shall state that the securities are held in the Federal Reserve system either in
a Customer Account/i 030 for the custodian bank which will name the County as customer"or in a Trust
Account/ 1050 with the trust department named as agent for the County.
All non-book entry(physical delivery) securities shall be held by the custodian bank's correspondent bank
in New York City and the custodian bank shall issue a safekeeping receipt or a related document to the
County evidencing that the securities are held by the correspondent bank for the County. The County may
utilize the services of the Depository Trust Corporation(DTC) as a depository for delivery of non-wireable
securities.
All custodies securities that are registered shall be registered in the name of the County or in the name of a
nominee of the County or in the name of the custodian or its nominee or,if in a clearing corporation, in the
name of the clearing corporation or its nominee.
The County's custodian will be required to furnish the County with monthly reports of holdings of custody
securities as well as an account analysis report of monthly securities activity.
XIV. PERFORMANCE BENCHMARKS
The County of Weld shall use as a goal a dynamic benchmark rate of return for the County's investment
portfolio that corresponds to the yield for the current U.S.Treasury security that matches the weighted
average maturity of the portfolio. However, it is intended that the benchmark yield should not 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.
The Treasurer shall present to the Investment Advisory Committee of Weld County,at least quarterly a
review of the current investments and the portfolio's adherence to appropriate risk levels and a comparison
between the portfolio's total return and the established investment objectives and goals.
XV.REPORTING
Accounting and reporting on the County's investment portfolio shall conform to Generally Accepted
Accounting Principles(GAAP)and the Governmental Accounting Standards
XVII. POLICY REVISIONS
This investment policy shall he reviewed annually by the Director of Finance and Treasurer and may be
amended by the Investment Advisory Committee of Weld County as conditions warrant.The data
contained in the annexes to this policy may be updated by the Treasurer as necessary,provided the changes
in no way affect the substance or intent of this policy.
Exhibit I
Authorized Personnel
The following persons are authorized to transact investment business and wire funds for investment
purposes on behalf of the Weld County:
Donald Warden,Director of Finance
Donald Mueller Treasurer
Sue Young,Chief Deputy Treasurer
Page 1 of 1
Carol Harding
From: Don Mueller
Sent: Tuesday, August 23, 2005 4:30 PM
To: Carol Harding
Cc: Don Warden
Subject: Investment Policy
Attachments: Investment Policy for Adoption.doc
Attached is the revised investment policy that is to be submitted to the Commissioners for adoption by Resolution.
The adoption of this revised policy was recommended at a meeting today of the investment committee. Please
contact me should you have any questions. Thanks.
8/25/2005
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