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HomeMy WebLinkAbout12 Investment Policy and Treasurer's DelegationAgendaItem#12:•TRUCKEEDONNERPublicUtilityDistrictACTIONTo:BoardofDirectorsFrom:ReginaWiseDate:November06,2019Subject:ReviewoftheDistrict’sinvestmentPolicyandConsiderationofthe—DelegationofAuthoritytotheTreasurer1.WHYTHISMATTERISBEFORETHEBOARDOnlytheBoardcanmodifytheDistrict’sInvestmentPolicyanddelegateauthoritytotheTreasurertoperformdutiesasdescribedintheDistrict’sInvestmentPolicy.2.HISTORYTheBoardreviewstheDistrict’sInvestmentPolicyannually.TheinvestmentpolicywaslastreviewedonNovember6,2018andwasnotrevised.Eachyear,theBoarddelegatesauthoritytotheTreasurertoperformcertaindutiesasdescribedintheDistrict’sinvestmentpolicyinaccordancewithSection53607oftheCaliforniaGovernmentCode.Section53607states,“Theauthorityofthelegislativebodytoinvestortoreinvestfundsofalocalagency,ortosellorexchangesecuritiessopurchased,maybedelegatedforaone-yearperiodbythelegislativebodytothetreasurerofthelocalagency,whoshallthereafterassumefullresponsibilityforthosetransactionsuntilthedelegationofauthorityisrevokedorexpires,andshallmakeamonthlyreportofthosetransactionstothelegislativebody.Subjecttoreview,thelegislativebodymayrenewthedelegationofauthoritypursuanttothissectioneachyear.”Attachment1isSection3.20.012oftheDistrictCodedescribingtheDistrict’sInvestmentPolicy.3.NEWINFORMATIONBaseduponareviewbytheDistrict’sTreasurer,ReginaWise,thepolicycontinuestomeettheneedsoftheDistrict.Norevisionstotheinvestmentpolicyareproposed.Attachment2providesabriefsummaryoftheDistrict’sinvestmentsasofSeptember30,2019.ThemajorityoftheDistrict’sinvestmentsareinCalifornia’sLocalAgencyInvestmentFund(LAIF),PlacerCountyTreasurer’sInvestmentPortfolio(PCTIP),andUtah’sPublicTreasurers’InvestmentFund(UPTIF). Attachment3showsthelast12monthsyieldsforeachfund:LAIFhasyielded235%;PCTIPhasyielded1.99%;andUPTIFyielded2.84%annually.MaintainingsafetyoftheprincipalistheforemostobjectivewiththeDistrict’scurrentinvestmentsandthecurrentinvestmentsareconsistentwiththeDistrict’sInvestmentPolicy.4.FISCALIMPACTThefiscalimpactofthisitemvariesontherateofreturnthroughcertaininvestments,asthepolicyallows.5.RECOMMENDATION1)ReviewtheDistrict’sinvestmentpolicyasdescribedinSection3.20.012andprovidedirectionasneeded;and2)DelegateauthoritytoReginaWise,DistrictTreasurer,toinvestDistrictfundsforFY20accordingtotheDistrict’sInvestmentPolicy.‘::;L;iofrz..ReginaWiseMichaelD.HolleyFinance&AccountingManagerGeneralManager Attachment13.20.012InvestmentPolicy3.20.012.1InvestmentAuthorityInaccordancewithSection53600etseq.oftheGovernmentCodeoftheStateofCalifornia,theauthoritytoinvestpublicfundsisexpresslydelegatedtotheBoardofDirectorsforsubsequentdelegationtotheTreasurer.TheTreasureroftheDistrictreceivesdirectionandauthoritytoinvestanyandallDistrictfundsfromtheBoardofDirectorsoftheDistrict.3.20.012.2StatementofObjectivesPersection53600.5oftheCaliforniaGovernmentCode,theprimaryobjectiveoftheTreasurershallbetosafeguardtheprincipalofthefundsunderhis/hercontrolwheninvestingpublicfunds.Thesecondaryobjectiveshallbetomeetallliquidityrequirementsandthethirdobjectiveshallbetoachieveanacceptablereturnonthefundsunderhis/hercontrol.Inorderofpriority,threefundamentalcriteriashallbefollowedintheinvestmentprogram:1.Safety-Safetyofprincipalistheforemostobjectiveoftheinvestmentprogram.Investmentsshallbeundertakeninamannerthatseekstoensurethepreservationofcapitalintheoverallportfolio.Theobjectivewillbetomitigatecreditriskandinterestraterisk.a)CreditRisk:TheDistrictwillminimizecreditrisk,theriskoflossduetothefailureofthesecurityissuerorbacker,by:I.Limitinginvestmentstothesafesttypesofsecurities.ii.Pre-qualifyingthefinancialinstitutions,broker/dealers,intermediariesandadviserswithwhichtheDistrictwilldobusiness(custodialrisk).iii.Diversifyingtheinvestmentportfoliosothatpotentiallossesonindividualsecuritieswillbeminimized(concentrationofrisk).b)InterestRateRisk:TheDistrictwillminimizetheriskthatthemarketvalueofsecuritiesintheportfoliowillfallduetochangesingeneralinterestrates,by:i.Structuringtheinvestmentportfoliosothatsecuritiesmaturetomeetcashrequirementsforongoingoperations,therebyavoidingtheneedtosellsecuritiesontheopenmarketpriortomaturity.ii.Investingoperatingfundsprimarilyinshorter-termsecurities,moneymarketmutualfunds,orsimilarinvestmentpools. 2.Liquidity—InanefforttoensurethattheDistrict’sportfoliowillbesufficientlyliquidtomeetcurrentandanticipatedoperatingrequirements,periodiccashflowanalysiswillbeperformed.Investmentsshallbemadesothatthematuritydateiscompatiblewithcashflowneedsandsafetyofprincipal.3.Yield—Investmentsshallbeundertakentoproduceanacceptablerateofreturnafterfirstconsideringsafetyofprincipalandliquidityandtheprudentinvestorstandard.InvestmentStrategy—TheportfoliowillbemanagedtomeettheDistrict’scashflowneeds.Themaximummaturityofanysecuritywillnotexceed5yearsexceptasspecificallynotedbelow.AllinvestmentactivityshallbeconsistentwithprudentinvestorstandardandinaccordancewiththeauthorizedinvestmentsincludedunderDistrictCode3.20.012.5.3.20.012.3PrudentInvestorStandardAsapplicabletotheDistrict,theprudentinvestorstandardisastandardofconductwherebyanypersonauthorizedtomakeinvestmentdecisionsonbehalfoftheDistrictactswithcare,skill,prudenceanddiligenceunderthecircumstancesthenprevailing,includingbutnotlimitedto,thegeneraleconomicconditionsandtheanticipatedneedsoftheDistrict,thataprudentpersonactinginlikecapacityandfamiliaritywiththosematterswoulduseintheconductoffundsofalikecharacterandwithlikeaims,tosafeguardtheprincipalandmeettheliquidityneedsoftheDistrict.3.20.012.4PortfolioAnyreferencetotheportfolioshallmeanthetotaloftheDistrict’scashandsecuritiesundermanagementbytheTreasurer.ExceptforcashincertainBoarddesignated,restrictedandspecialfunds,theDistrictwillconsolidatecashandreservebalancesfromallfundstomaximizeinvestmentearningsandtoincreaseefficiencieswithregardtoinvestmentpricing,safekeeping,andadministration.Investmentincomewillbeallocatedtothevariousfundsoraccountsbasedontheirrespectiveparticipationandinaccordancewithgenerallyacceptedaccountingprinciples.TheTreasurermayinvestinanysecurityauthorizedforinvestmentundertheCaliforniaGovernmentCode,subjecttothelimitationsdescribedherein:1.MaturityLimitations—a)Theaggregatematurityofthetotalportfoliomustnotexceedfive(5)yearsforthegeneraloperatingfundsoftheDistrict.b)Fundswhichrepresentdebtservicereservefundsmaybeinvesteduptoatermoftenyears,aslongastheperiodinvesteddoesnotexceedthetermofthedebtrepayment.c)InvestmentsofrestrictedfundsheldfortheDonnerLakeAssessmentDistrictthatarenotexpectedtobeneededtopaydebtserviceontheSRFloanmaybeinvesteduptothetermoftheSRFloan. U)ConstructionfunUsmaybeinvesteUtomatureonorbeforetheUatefundsareexpectedtobeneededforconstructionpurposes.2.InvestmentTransactions—thepurchaseofanyinvestmentotherthanthosepurchaseddirectlyfromtheissuershallbe,totheextentpossible,fromafirmdesignatedasaPrimaryDealerbytheFederalReserveofNewYork.3.SaleofSecurities—Securitiesmaybesoldtoprovideneededliquidity,torestructuretheportfoliotoreduceriskortoincreasetheexpectedreturnoftheportfolio.Innoinstanceshallasaleofsecuritiesbeusedforspeculativepurposes.AllsalesaretobereportedtotheBoardonamonthlybasis.4.ProhibitedInvestments—Prohibitedinvestmentsincludeinversefloaters,rangenotes,interestonlystripsderivedfromapoolofmortgages(CollateralizedMortgageObligations),andanysecuritythatcouldresultinzerointerestaccrualifheldtomaturity.(Zerointerestaccrualmeansthesecurityhasthepotentialtorealizezeroearningsdependinguponthestructureofthesecurity.Zerocouponbondsandsimilarinvestmentsthatstartbelowthefacevaluearelegalbecausetheirvaluedoesincrease.)5.Safekeepinga)AllsecuritiestransactionsenteredintobytheDistrictshallbeconductedonadeliveryversuspayment(DVP)basis.b)SecuritiesshallbeheldbyanindependentcustodiandesignatedbytheTreasurerandheldinsafekeepingpursuanttoasafekeepingagreement.c)AllfinancialinstitutionswhichprovidesafekeepingservicesfortheDistrictshallberequiredtoprovidereportsorsafekeepingreceiptsdirectlytotheTreasurertoverifysecuritiestakenintotheirpossession.3.20.012.5AuthorizedInvestments1.TheDistrict’sauthorizedcommercialbankinaninterestbearingcheckingorsavingsaccount.TheTreasurerisauthorizedtomakedailydepositsandwithdrawalsforpurposesofthesafekeepingofDistrictmoniesandpaymentsofDistrictfinancialobligations.2.LocalAgencyInvestmentFund(LAIF)DepositsforthepurposeofinvestmentintheLocalAgencyInvestmentFundoftheStateofCaliforniaTreasurymaybemadeuptothemaximumamountpermittedbyStateTreasurypolicy.AnyLAIFinvestmentsmadebytheDistrictshallbeconsideredtobeshort-terminnatureeveniftheLAIFhasinvestedinindividuallonger-termsecurities.TheTreasurerisauthorizedtomakeregulartransferstoandfromLAIFuptothelimitoftransactionsestablishedbytheLAIFinvestmentpolicyforpurposesofmeetingtheDistrict’sdailycashflowneedsandearninginterestonsurplusfunds. 3.AnyotherinvestmentsauthorizedandlistedintheGovernmentCodeSections53600-53609.TheTreasurerwillconsultwiththeBoardofDirectorswhenrecommendinganyoftheinvestmentswithinthesesectionsotherthansubsections1and2above.Fromtimetotime,theBoardmayalsoconsultwithaninvestmentprofessionalpursuanttoTitle3.20.012.2Section1a)ii.EachinvestmentwillbespecificallyauthorizedbytheBoardofDirectors.4.BondproceedsandreservefundswillbeinvestedonlyinpermittedinvestmentsorauthorizedinvestmentsdefinedintheTrustAgreementforeachparticularfinancingwhichhaspreviouslybeenapprovedbytheBoardofDirectors(GovernmentCodeSection53601I).TheTreasurerwillconsultwiththeFinancialAdvisororTrusteeonthefinancingforinvestmentrecommendationstosubmittotheBoardofDirectorsforapproval.TheTreasurerisauthorizedtoinvestfundsinamoneymarketfundorLAIFwiththeTrusteependinginvestmentofthosefundsinalonger-terminvestment,whichwillbeapprovedbytheBoardofDirectors.3.20.012.6ReportingInaccordancewithSection53646oftheCaliforniaGovernmentCode,theTreasurershallsubmitaquarterlyreporttotheBoardofDirectorswithin30daysfollowingtheendofthequartercoveredbythereport.Thereportshallincludeinvestmentactivity,includingyieldandearnings,andthestatusofcashbydepository.3.20.012.7InternalControlsAnnually,theDistrictwillhaveanindependentauditbyanexternalauditor.Thisauditwillprovideinternalcontrolbyassuringcompliancewithpoliciesandprocedures.3.20.012.9AnnualReviewofInvestmentPolicyTheInvestmentPolicyshallbesubmittedatleastannuallytotheBoardofDirectorsforadoption.Thepolicyshallbereviewedannuallytoensureitsconsistencywiththeoverallobjectivesofpreservationofprincipal,liquidity,yieldanditsrelevancetocurrentlawandfinancialandeconomictrends.Thereviewwillalsoincludethereviewofthediversificationoftheinvestmentsintheportfolioandthecustodialriskoftheportfolio.AnymodificationsmadetheretomustbeapprovedbytheBoardofDirectors. LECTRIC FUNDS General Fund Facilities Fees Electric Rate Reserve Capital Replacement Fund Deferred Liabilites ReservelPOB Fund Electric Vehicle Reserve AB 32 Fund Total Electric Investments ATER FUNDS General Fund Facilities Fees 2015 COP Funds DSC and Operating Reserve Fund Reserve for Future Meters West River St.Assessment District Deferred Liabilites Reserve Prepaid Connection Fees DLAD Fund DLAD Surcharge DLAD Investment SRF Reserve and Payment Fund TSA SAD II Improvement Fund Water Vehicle Reserve Prop 55 Reserve Fund Total Water Investments ELLO ROOS -OLD GREENWOOD Total Mello Roos -Old Greenwood Prior Year Market Adjustment Current Year Market Adjustment Cumulative Market Adjustment Total Investments at Market Value $13069784 $801 3,537 $8,886,754 Placer County September interest earnings is not available at the time of report compilation due to software upgrades at Placer County. TRUCKEE DONNER PUD INVESTMENT BALANCES As of Quarter Ended 0913012018 Utah Public LAIF Placer 1 Investment Fund Fidelity Mmkt Morgan Stanley Dreyfus Treasury Federated US Federal 2.06%2.60%Govt 57 Treas Sec Port Security Treas Cash Res Farm Credit FThIh,flIh,flh,I 57•L P.A,.f...flik,I flCL flIh,I flC/.flh,I 1CL flIh,5.25%-Matures 3121 US Bank Checking Matures Daily Cash 0.00%-...j ..,...—--.-‘-..,--...,..--..,...-----.j -.--..j -Total $6,142,664 $115,652 $1,592,954 $0 $0 $0 $0 $0 $784,746 $2,480 $8,638,49l 0 0 546,364 0 0 0 0 0 0 0 546,36 0 4,012,914 1,531,294 0 0 0 0 0 0 0 5,544,20i 1,005,976 2,105,432 984,231 0 0 0 0 0 0 0 4,095,63l 1,005,976 0 0 0 0 241,854 0 0 0 0 1,247,83 0 0 851,934 0 0 0 0 0 0 0 851,93 779,390 0 0 0 0 0 0 0 0 0 779,391 $8,934,006 $6,233,997 $5,506,776 $0 $0 $241,854 $0 $0 $784,746 $2,480 $21,703,861 $1,325,855 $113,153 415,708.37 $0 $0 $0 $0 $0 $0 $0 $1,854,71i 0 0 895,158 0 0 0 0 0 0 0 895,151 0 0 0 735,269 0 0 0 0 0 0 735,261 205,536 1,731,350 0 0 0 0 0 0 0 0 1,936,881 0 0 440,143 0 0 0 0 0 0 0 440,14 0 0 36,319 0 0 0 0 0 0 0 36,311 0 0 101,353 0 0 0 0 0 0 0 101,35 0 0 81,581 0 0 0 0 0 0 0 81,58 0 0 667,272 0 0 0 0 0 652,234 0 1,319,50 0 0 139,936 0 0 0 0 0 0 0 139,931 0 0 0 0 0 0 0 1 698,880 0 0 1,698,881 814,230 0 0 0 0 0 0 0 0 0 814,231 0 0 17,521 0 0 0 0 0 0 0 17,52 0 0 228,950 0 0 0 0 0 0 0 228,951 0 0 325,131 0 0 0 0 0 0 0 325,13 $2,345,620 $1,844,502 $3,349,072 $735,269 $0 $0 $0 $1,698,880 $652,234 $0 $10,625,571 $0 $0 $0 $0 $287,106 $0 $0 $0 $0 $0 $287,lOi $0 $0 $0 $0 $287,106 $0 $0 $0 $0 $0 $287,lOi $1,807,547 $0 $0 $0 $0 $0 $1,148,321 $0 $0 $0 $2,955,861 $1,807,547 $0 $0 $0 $0 $0 $1,148,321 $0 $0 $0 $2,955,861 $13,087,173 $8,078,500 $8,855,848 $735,269 $287,106 $241,854 $1,148,321 $1,698,880 $1,436,980 $2,480 $35,572,412 ($4,152)($45,396)$29,101 $0 $0 $0 $0 $119,633 $0 $0 $991 81 (13,237)(19,567)1,805 0 0 0 0 (66,997)0 0 (97,991 ($17,389)($64,963)$30,906 $0 $0 $0 $0 52,636 $0 $0 $1,191 ELLO ROOS -GRAY’S CROSSING Total Mello Roos -Gray’s Crossing Total Investments ARKET ADJUSTMENTS $735,269 $287,106 $241,854 $1,148,321 $1,751,516 $1,436,980 ..$2480 $3557360: 0) 0 3 CD Attachment3TruckeeDonnerPUDInvestmentFunds12MonthsHistoryLAf?ciEUPTIF1YRT-BILLOctober20182.14%1.78%2.65%2.59%November20182.21%1.76%2.74%2.60%December20182.29%1.78%2.80%2.54%January20192.36%2.13%2.91%2.47%February20192.39%2.16%2.98%2.46%March20192.44%1.96%3.00%2.32%April20192.45%2.12%2.98%2.31%May20192.45%2.12%2.90%2.15%June20192.43%2.03%2.90%1.87%July20192.38%2.08%2.87%1.94%August20192.34%1.96%2.73%1.72%September20192.28%1.96%2.60%1.71%12MonthAverageYield2.35%1.99%2.84%2.22%