Loading...
HomeMy WebLinkAbout 14-22 Approving Investment PolicyRESOLUTION NO. / qf / 2- A RESOLUTION APPROVING AN INVESTMENT POLICY FOR THE TOWN OF FIRESTONE WHEREAS, pursuant to C.R.S. § 31-20-303(1)(b), the Board of Trustees may, by resolution, authorize the investment of all or any part of Town funds and moneys in securities or forms of investment meeting the investment requirements of C.R.S. § 24-75-601, et seq.; and WHEREAS, there has been presented to the Board of Trustees for adoption a proposed Investment Policy, which policy establishes guidelines for the effective and judicious fiscal and investment management of Town funds; and WHEREAS, the Board of Trustees finds that the adoption of such policy is authorized by law and by this Resolution to desires to adopt said polices, NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF TRUSTEES OF THE TOWN OF FIRESTONE, COLORADO, Section 1. The Town of Firestone Investment Policy, a copy of which is attached hereto, is hereby approved by the Board of Trustees of the Town of Firestone. Section 2. All resolutions and policies or portions thereof previously adopted that are inconsistent or conflicting with the policies adopted by this Resolution are hereby repealed to the extent of such inconsistency or conflict. INTRODUCED, READ, and ADOPTED this day of �,��(r-�'i� , 2014. Larissa M�ec Town Clerk F%RES?,®�, TOWN F FIRESTONE, COLORAnn L) 8,•° rows °°°� 10 m =° � Chad Auer g f�� Mayor ® �0iry 1 TOWN OF FIRESTONE INVESTMENT POLICY POLICY It is the policy of the Town of Firestone ("the Town") to invest public funds in a manner that will provide preservation of capital, meet the daily liquidity needs of the Town, diversify the Town's investments, conform to all local and state statutes governing the investment of public funds, and generate market rates of return. This Investment Policy addresses the methods, procedures and practices which must be exercised to ensure effective and judicious fiscal and investment management of the Town 's funds. It replaces any previous investment policy or investment procedures of the Town. SCOPE This Investment Policy shall apply to all funds accounted for in the Town's Comprehensive Annual Financial Report. Cash may be pooled for investment purposes. The investment income derived from the pooled investment account (as well as year-end calculated gain or loss on investments) shall be allocated to the contributing funds based upon the proportion of the respective balances relative to the total pooled balance in the investment portfolio. Interest earnings shall be distributed to the individual Town funds on a monthly basis. The investment income from investment of cash which is not part of the pooled account shall be distributed to the contributing fund. INVESTMENT OBJECTIVES The Town's principal investment objectives are: • Preservation of capital and protection of investment principal. • Maintenance of sufficient liquidity to meet anticipated cash flows. • Attainment of a market rate of return. • Diversification to avoid incurring unreasonable market risks. • Conformance with all applicable Town policies, State statutes and Federal regulations. The Town of Firestone Director of Finance, who performs the duties of Town Treasurer (hereafter "Director of Finance") is vested with responsibility for managing the Town's investment program and for implementing this Investment Policy. The Director of Finance may delegate the authority to conduct investment transactions and to manage the operation of the investment portfolio to other specifically authorized staff members. No person may engage in an investment transaction except as expressly provided under the terms of this Investment Policy. The Director of Finance shall establish procedures and internal controls for the operation of the Town's investment program, designed to prevent loss of public funds due to fraud, error, misrepresentation and imprudent actions. The Director of Finance within the Director's procurement authority may engage the support services of outside investment advisors with respect to its investment program, so long as it can be demonstrated that these services produce a net financial advantage or necessary financial protection of the Town's financial resources. PRUDENCE The standard of prudence to be used for managing the Town's investment program is the "prudent investor" standard 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." (Colorado Revised Statutes 15-1-304, Standard for Investments.) The Town's overall investment program shall be designed and managed with a degree of professionalism that is worthy of the public trust. The Town recognizes that no investment is totally without risk and that its investment activities are a matter of public record. Accordingly, the Town 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 Town. The Director of Finance and other authorized persons acting in accordance with established procedures and exercising good faith and due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided appropriate action is taken to control adverse developments and any deviations from expectations are reported to the Town Board of Trustees in the next monthly financial report. ETHICS AND CONFLICTS OF INTEREST Town officials and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the Town's investment program or that could impair or create the appearance of an impairment of their ability to make impartial investment decisions. Town officials and employees shall disclose to the Director of Finance any material financial interest they have in financial institutions that conduct business with the Town. Town officials and employees shall subordinate their personal investment transactions to those of the Town, and shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the Town. Town of Firestone Investment Policy Page 2 Town of Firestone Investment Policy Page 3 AUTHORIZED SECURITIES AND TRANSACTIONS All investments will be made in accordance with the Colorado Revised Statutes as follows: C.R.S. 11-10.5-101, et seq., Public Deposit Protection Act; C.R.S. Title 24, Article 75, Parts 6 (Funds -Legal Investments) and 7; (Investment Funds - Local Government Pooling), This Investment Policy further restricts the investment of Town funds to the following types of securities and transactions: 1. U.S. Treasury Obligations: Obligations issued by, fully guaranteed by, or to which the full credit of the United States Treasury is pledged including Treasury bills, Treasury notes, Treasury bonds and Treasury STRIPS; provided that such obligations have maturity dates 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 maturity dates not exceeding five years from the date of trade settlement issued by the following only: Federal National Mortgage Association (FNMA), Federal Farm Credit Banks (FFCB), Federal Land Bank, Federal Home Loan Banks (FHLB), the Governmental National Mortgage Association (GNMA), and the Federal Home Loan Mortgage Corporation (FHLMC). 3. Certificates of Deposit (CD) with a maturity not exceeding five years in any 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. Certificates of deposit that exceed FDIC insurance limits shall be collateralized as required by the Public Deposit Protection Act. Negotiable CD's with a maturity not to exceed five years and principal investment (plus one year's accrued interest) not to exceed the FDIC insured limit at the time of purchase. 4. Local Government Investment Pools authorized under C.R.S. 24-75-702 that: a) are "no-load" (no commission or fee shall be charged on purchases or sales of shares); b) limit assets of the pool to those authorized by state statute, and c) are rated in highest rating category by one or more NRSROs. 5. Money Market Mutual Funds registered under the Investment Company Act of 1940 that: 1) are "no-load" (no commission or fee shall be charged on purchases or sales of shares); 2) have a constant net asset value of $1.00 per share; 3) limit assets of the fund to those authorized by state statute; 4) have a maximum stated maturity and weighted average maturity in accordance with Rule 2a-7 of the Investment Company Act of 1940; and 5) have a rating of AAA or the equivalent by one or more NRSROs, or if the fund's assets are at least one billion dollars. The foregoing list of authorized securities and transactions shall be strictly interpreted. Any deviation from this list must be pre -approved by the Town Board of Trustees. The Town may, from time to time issue bonds, the proceeds of which must be invested to meet specific cash flow requirements. In such circumstances and notwithstanding the paragraph immediately above, the reinvestment of debt issuance or related reserve Town of Firestone Investment Policy Page 4 funds may, upon the advice of Bond Counsel or financial advisors, deviate from the provisions of this Investment Policy with the written approval of the Director of Finance. INVESTMENT DIVERSIFICATION The Town 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 investment portfolio should be flexible depending upon the outlook for the economy, the securities markets and the Town's anticipated cash flow needs. INVESTMENT MATURITY AND LIQUIDITY The investment portfolio shall remain sufficiently liquid to meet all cash requirements that may be reasonably anticipated. To the extent possible, investments shall be matched with anticipated cash flows and known future liabilities. Investments shall be limited to maturities not exceeding five years from the date of trade settlement. SAFE EEPING AND CUSTODY The Board of Trustees by resolution shall approve one or more banks to provide safekeeping and custodial services for the Town. A Town approved safekeeping agreement shall be executed with each custodian bank. Each financial institution that holds Town securities in safekeeping is known as a "custodian" bank. The Town's safekeeping banks shall qualify as eligible public depositories as defined in C.R.S. 11- 1 M. 103. The purchase and sale of securities shall be settled on a delivery versus payment basis. Ownership of all securities shall be perfected in the name of the Town. 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 Town will be delivered by either book entry or physical delivery and will be held in third - party safekeeping by the Town approved custodian bank, its correspondent bank or the Depository Trust Company (DTC). All Fed wireable book entry securities shall be evidenced by a safekeeping receipt or a customer confirmation issued to the Town 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 Town as "customer." All Depository Trust Company (DTC) eligible securities shall be held in the custodian bank's DTC participant account and the custodian bank shall issue a safekeeping receipt evidencing that the securities are held for the Town as "customer." The Town's custodian will be required to furnish the Town a monthly report of safekeeping activity, including a list of month -end holdings. Town of Firestone Investment Policy Page 5 I_ ILI 10F�fG1KC!3=9 =3 =1 LL . ►�3'I IU1 M'3 The investment 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 performance of the investment portfolio shall be compared to the average yield on the U.S. Treasury security that most closely corresponds to the investment portfolio's weighted average effective maturity. When comparing the performance of the investment portfolio, all fees involved with managing it shall be included in the computation of its rate of return net of fees. REPORTING The Director of Finance will submit, at a minimum, a quarterly report to the Town Board listing the investments held by the Town. POLICY REVISIONS This Investment Policy shall be reviewed annually by the Director of Finance and Town Board of Trustees and may be amended by the Town Board of Trustees as conditions warrant. Town of Firestone Investment Policy Page 6