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HomeMy WebLinkAboutRES 2007-34 - Board TRUCKEE DONNER Resolution No. 2007= 34 ADOPTING A REVISED INVESTMENT POLICY WHEREAS, the Board of Directors of the Truckee Donner Public Utility District last updated its investment policy in resolution#2006-33 on December20, 2006; and WHEREAS, the Board of Directors wishes to update its investment policy (see Exhibit A attached) to ensure the District's compliance with Government Code Sections 53600 through 53609; and WHEREAS, Section 53607 of the Government Code states that certain investment related duties may be delegated to the Treasurer of the District for a one-year period; and WHEREAS, it is the intent of the Board that the investment policy be reviewed and adopted on an annual basis; NOW THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby adopt Exhibit A entitled Investment Policy; and BE IT FURTHER RESOLVED, that the Board of Directors does hereby authorize the Treasurer to perform the duties listed in the policy for one year pursuant to Government Code Section 53607. PASSED AND ADOPTED by the Board of Directors at a meeting duly called and held within the District on December 19, 2007 by the following roll call vote: AYES: Directors Aguera, Hemig, Sutton, Taylor and Thomason ABSTAIN: None NOES:None ABSENT: None TRUCKEE DONNER LIC UTILITY DISTRICT By Tim F. Taylor, Presi ent ATTEST: ,./� John ri Clerk he B EXHIBIT A TRUCKEE DONNER PUBLIC UTILITY DISTRICT INVESTMENT POLICY I. INVESTMENT AUTHORITY In accordance with Section 53600 et seq. of the Government Code of the State of California, the authority to invest public funds is expressly delegated to the Board of Directors for subsequent delegation to the Treasurer. The Treasurer of the District receives direction and authority to invest any and all District funds from the Board of Directors of the District. II. STATEMENT OF OBJECTIVES Per section 53600.5 of the California Government Code, the primary objective of the Treasurer shall be to safeguard the principal of the funds under his/her control when investing public funds. The secondary objective shall be to meet all liquidity requirements and the third objective shall be to achieve a return on the funds under his/her control. In order of priority, three fundamental criteria shall be followed in the investment program: 1. Safety - 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 District will minimize credit risk, the risk of loss due to the failure of the security issuer or backer, by: i. Limiting investments to the safest types of securities. ii. Pre-qualifying the financial institutions, broker/dealers, intermediaries and advisers with which the District will do business (custodial risk). iii. Diversifying the investment portfolio so that potential losses on individual securities will be minimized (concentration of risk). b. Interest Rate Risk: The District will minimize the risk that the market value of securities in the portfolio will fall due to changes in general interest rates, by: i. Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity. Res 2006-33, 2007-34 Investment Policy ii. Investing operating funds primarily in shorter-term securities, .. money market mutual funds, or similar investment pools. 2. Liquidity — In an effort to ensure that the District's portfolio will be sufficiently liquid to meet current and anticipated operating requirements, periodic cash flow analysis will be performed. Investments shall be made so that the maturity date is compatible with cash flow needs and safety of principal. 3. Yield — Investments shall be undertaken to produce an acceptable rate of return after first considering safety of principal and liquidity and the prudent investor standard. Investment Strategy — The portfolio will be managed to meet the District's cash flow needs. The maximum maturity of any security will not exceed 5 years except as specifically noted below. All investment activity shall be consistent with prudent investor standard and in accordance with the authorized investments included under Section V of this policy. III. PRUDENT INVESTOR STANDARD As applicable to the District, the prudent investor standard is a standard of conduct whereby any person authorized to make investment decisions on behalf of the District acts with care, skill, prudence and diligence under the circumstances then prevailing, including but not limited to, the general economic conditions and the anticipated needs of the District, that a prudent person acting in like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and meet the liquidity needs of the District. IV. PORTFOLIO Any reference to the portfolio shall mean the total of the District's cash and securities under management by the Treasurer. Except for cash in certain restricted and special funds, the District will consolidate cash and reserve balances from all funds to maximize investment earnings and to increase efficiencies with regard to investment pricing, safekeeping, and administration. Investment income will be allocated to the various funds or accounts based on their respective participation and in accordance with generally accepted accounting principles. The Treasurer may invest in any security authorized for investment under the California Government Code, subject to the limitations described herein: 1. Maturity Limitations— a. The aggregate maturity of the total portfolio must not exceed five (5) years for the general operating funds of the District. b. Funds which represent debt service reserve funds may be invested up to a term of ten-years, as long as the period invested does not exceed that of the term of the debt repayment. 2 Res 2006-33, 2007-34 Investment Policy c. Investments of restricted funds held for the Donner Lake Assessment District that are not expected to be needed to pay debt service on the SRF loan may be invested up to the term of the SRF loan. d. Construction funds may be invested to mature on or before the funds are expected to be needed for construction purposes. 2. Investment Transactions — the purchase of any investment other than those purchased directly from the issuer shall be to the extent possible from a firm designated as a Primary Dealer by the Federal Reserve of New York. 3. Sale of Securities — Securities may be sold to provide needed liquidity, to restructure the portfolio to reduce risk or to increase the expected return of the portfolio. In no instance shall a sale of securities be used for speculative purposes. All sales are to be reported to the Board on a monthly basis. 4. Prohibited Investments — Prohibited investments include inverse floaters, range notes, interest only strips derived from a pool of mortgages (Collateralized Mortgage Obligations), and any security that could result in zero interest accrual if held to maturity. (Zero interest accrual means the security has the potential to realize zero earnings depending upon the structure of the security. Zero coupon bonds and similar investments that start below the face value are legal because their value does increase.) ., 5. Safekeeping a. All securities transactions entered into by the District shall be conducted on a delivery versus payment (DVP) basis. b. Securities shall be held by an independent custodian designated by the Treasurer and held in safekeeping pursuant to a safekeeping agreement. c. All financial institutions which provide safekeeping services for the District shall be required to provide reports or safekeeping receipts directly to the Treasurer to verify securities taken into their possession. V. AUTHORIZED INVESTMENTS 1. The District's authorized commercial banking institution in an interest bearing checking or savings account. The Treasurer is authorized to make daily deposits and withdrawals for purposes of the safekeeping of District monies and payments of District financial obligations. 2. Local Agency Investment Fund (LAIF) — Deposits for the purpose of investment in the Local Agency Investment Fund of the State of California Treasury may be made up to the maximum amount permitted by State Treasury policy. Any LAW investments made by the District shall be considered to be short-term in nature even if the LAW has invested in individual longer-term securities. The Treasurer is authorized to make regular transfers to and from LAW up to the limit of transactions established by the LAW investment policy for purposes of meeting the District's daily cash flow needs and earning interest on surplus funds. 3 Res 2006-33, 2007-34 Investment Policy 3. Any other investments authorized and listed in the Government Code Sections 53600-53609. The Treasurer will consult with the Board of Directors when recommending any of the investments within these sections other than numbers 1 and 2 above. From time to time, the Board may also consult with an investment professional pursuant to Section 1 a ii above. Each investment will be specifically authorized by the Board of Directors. .- 4. Bond proceeds and reserve funds will be invested only in permitted investments or authorized investments defined in the Trust Agreement for each particular financing which has previously been approved by the Board of Directors (Government Code Section 53601 1). The Treasurer will consult with the financial advisor or Trustee on the financing for investment recommendations to bring to the Board of Directors for approval. The Treasurer is authorized to invest funds in a money market fund with the Trustee pending investment of those funds in a longer term investment which will be approved by the Board of Directors. VI. REPORTING In accordance with Section 53646 of the California Government Code, the Treasurer shall submit a quarterly report to the Board of Directors within 30 days following the end of the quarter covered by the report. The report shall include investment activity, including yield and earnings, and the status of cash by depository. VII. INTERNAL CONTROLS Annually, the Truckee Donner Public Utility District will have an independent audit by an external auditor. This audit will provide internal control by assuring compliance with policies and procedures. Vill. PARTIES AUTHORIZED TO ACT IN THE EVENT OF THE ABSENCE OF THE TREASURER In the event of the absence of the Treasurer, the following positions are authorized to make necessary and authorized investments pursuant to Section V of this policy: General Manager Assistant General Manager Finance and Accounting Manager IX. ANNUAL REVIEW OF INVESTMENT POLICY The Investment Policy shall be submitted at least annually to the Board of Directors for adoption. The policy shall be reviewed annually to ensure its consistency with the overall objectives of preservation of principal, liquidity, yield and its relevance to .., current law and financial and economic trends. The review will also include the review of the diversification of the investments in the portfolio and the custodial risk of the portfolio. Any modifications made thereto must be approved by the Board of Directors. 4 Res 2006-33, 2007-34 Investment Policy