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Backup Documents 02/23/2010 Item #16E3 16E3 ORIGINAL DOCUMENTS CHECKLIST & ROUTING SLIP TO ACCOMPANY ALL ORIGINAL DOCUMENTS SENT TO THE BOARD OF COUNTY COMMISSIONERS OFFICE FOR SIGNATURE Print on pink paper. Attach to original document Original documents should be hand delivered to the Board Office. rhe completed routing slip and original documents tire 10 be forwarded to the Board OfTice only after the Board has takcn action on the item) ROUTING SLIP Complete routing lines # I through #4 as appropriate for additional signatures, dales, and/or information needed. IFthe document is already complete with the exceotion of the Chairman's si!:mature, draw a line throue:h routine lines # I through #4, comn]cte the checklist, and forward to Sue Filson (line #5'- ~oute to Addr~,~see(s) Office Initials Date List In routing order l. 2. 3. , 4. Jennifer B. White County Attorney ~.-B> V 5. Ian Mitchell, BCC Office Operations Board of County Commissioners .0-- '!J I-z.,/IO 6. Minutes and Records Clerk of Court's Office PRIMARY CONTACT INFORMATION (The primary contact is the holder of the original document pending BCe approval. Normally the primary contact is the person who created/prepared the executive summary, Primary contact information is needed in the event one of the addressees above, including Sue Filson, need to contact stafT for additional or missing infomlation. All original documents needing the Bee Chairman's signature are to he delivered to the BCe office only ilfier the Bee has acted to approve the item) Name of Primary Staff Jennifer B. White Phone Number 239-252-8400 Contact Agenda Date Item was 2/23/10 Agenda Item Number 16E3 AODfoved bv the BCC Type of Document Resolution J, () ID --if 'J. Number of Original I Attached Documents Attached I. INSTRUCTIONS & CHECKLIST Initial the Yes column or mark "N/A" in the Not Applicable column, whichever is a ro riate. Original document has bcen signed/initialed for legal sufficiency. (All documents to be signed by the Chairman, with the exception of most letters, must be reviewed and signed by the Office of the County Attorney. This includes signature pages 1T0m ordinances, resolutions, etc. signed by the County Attorney's Office and signature pages from contracts, agreements, etc. that have been fully executed by all parties except the BCC Chairman and Clerk to the Board and ossibl State Officials.) All handwritten strike-through and revisions have been initialed by the County Attorney's Office and all othcr arties excc t the BCC Chairman and the Clerk to the Board The Chairman's signature line date has been entcrcd as the date ofBCC approval of the document or the final ne otiated contract date whichever is a licable. "Sign here" tabs are placed on the appropriate pages indicating where the Chairman's si nature and initials are required. In most cases (some contracts are an exception), the original document and this routing slip should be provided to Sue Filson in the BCC office within 24 hours of BCC approval. Some documents are time sensitive and require forwarding to Tallahassee within a certain time frame or the BCC's actions are nullified. Be aware of 'our deadlines! The document was approved by the BCC on '(enter date) and all changes made during the meeting have been incorporate in t Ie attached document. The Count Attorne 's Office has reviewed the chan es, if a licable. Yes (Initial) JBW N/A (Not A licable) 2. 3. 4. 5. 6. NA JBW JBW JBW, later than 24 hours. JBW I: Forms! County Forms/ BCC Forms/ Original D()cuments Routing Slip \V\VS Original 9.03.04, Revised] .26.05, Revised 2,24.05 04-COA-O t 023/390 16E3 MEMORANDUM Date: March 29, 2010 To: Jennifer White, Assistant County Attorney\ County Attorney's Office From: Ann Jennejohn, Deputy Clerk Minutes & Records Department Re: Resolution 2010-42: Creating the Caracara Prairie Preserve (formerly known as Starnes) Trust Fund for managing the Caracara Prairie Preserve in perpetuity and authorizing necessary budget amendments Attached, please find a copy of the document referenced above, Item #16E3, adopted by the Board of County Commissioners on February 23, 2010. lfyou should have any questions, please contact me at 252-8406. Thank you. Attachment 16E 3 RESOLUTION NO. 2010- 42 A RESOLUTION OF THE BOARD OF COUNTY COMMISSIONERS OF COLLIER COUNTY, FLORIDA, CREATING AN ENDOWMENT TRUST FUND TO ENSURE THAT ADEQUATE FUNDS ARE A V AILABLE TO MANAGE THE CARACARA PRAIRIE PRESERVE IN PERPETUITY SO THAT SUCH FUNDS WILL NOT BE USED FOR OTHER PURPOSES WHICH IS A PREREQUlSTE TO GENERATE P ANTHER HABIT A T CREDITS ON THE PROPERTY FOR THE PURPOSE OF MITIGATING ENVIRONMENTAL IMPACTS CREATED BY COUNTY PROJECTS AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, on December 17,2007, Collier County acquired approximately 367.7 acres of real property ("Property") for use in the Conservation Collier program in accordance with Ordinance No. 02-63, as amended ("Conservation Collier Implementation Ordinance); and WHEREAS, Collier County desires to also use the Property to generate Panther Habitat Units ("PHUs") in order to mitigate environmental impacts created by County projects; and WHEREAS, the concurrent use of the Property in the Conservation Collier program and to generate PHUs is consistent with the goals, objectives and policies of the Conservation Collier program; and WHEREAS, the Conservation Collier Implementation Ordinance established a Conservation Collier Management Trust Fund for the preservation, enhancement, restoration, conservation and maintenance of properties acquired for use in the Conservation Collier program; and WHEREAS, United States Fish and Wildlife Services ("USFWS") requires Collier County to create a separate endowment trust to ensure that adequate funds are available to manage the Caracara Prairie Preserve in perpetuity as a prerequisite to the generation of PHUs; and WHEREAS, USFWS standard approved documents, as modified for use by Collier County, for the creation of the trust, investment policy and trust assets are attached hereto as Exhibits "'A," "B," He," ""0," and "E," respectively. NOW, THEREFORE BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF COLLIER COUNTY, FLORIDA, that: I. An endowment fund/trust is established to ensure that adequate funds are available to manage the Caracara Prairie Preserve in perpetuity and not used for other ~'-'__~~".~,.,._ .- _..__.__.~_ . ".,--.- "'~'~___~'_~T_"___'_~'_. 16E3 purposes as more specifically described in Exhibits "A," "B," "C," "D," and "E," attached hereto. This Resolution is adoptio? t~is . ,1,Vc\ day adopted after motion; second and majority vote favoring Fe. b/\,U Cc)--4-' 20 I O. ~ARD OF COUNTY COMMISSIONERS OF COLLIER COUNTY, FLORIDA By: ~W. ~ Fred W. Coyle, CHAIR N ATTEST: \ 'cO:. DW~O~'r"B. r.>R0C.~t,CLERK . tl4{~'}j\"-. (). L. >>"._._~~~Ierk ~".li{ and legal suffici~ncy:." . . '. Jenni(~\;~~ ~ Assistant County Attorney /tem# I i.L1~3 ~~::,da d -o-3-Qcl 2 16E 3 Exhibit "A" ESTABLISHMENT OF THE CARACARA PRAIRIE PRESERVE CONSERV A nON BANK ENDOWMENT FUND TRUST RECITALS A. The United States Fish and Wildlife Service (the "Service") and the Collier County Board of County Commissioners ("Collier County") have entered into the Caracara Prairie Preserve Conservation Bank Agreement (the "Conservation Bank Agreement"), dated , wherein the Service approved the Caracara Prairie Preserve Conservation Bank project (the "Conservation Bank") described below, which will be established and operated by Collier County. B. Collier County is the owner and/or agent of approximately 367.7 acres of real property (the "Property") located in Collier County, Florida, and more completely described in Exhibit "B" attached hereto. The Property comprises the Conservation Bank. C. Pursuant to the Conservation Bank Agreement, Collier County has agreed to and is obligated to manage and maintain the Property in perpetuity to preserve its habitat and conservation values for the federally-listed Florida panther (Puma conca/or coryi) and crested caracara (Caracara cheriway) ( the "Covered Species") and other species that are dependent on the Property in accordance with the Conservation Bank Agreement and other related documents, including, but not limited to, a conservation easement (the "Conservation Easement") granted by Collier County and Corkscrew Regional Ecosystem Watershed Land and Water Trust to the Caracara Prairie Preserve Endowment Fund Trust and a Habitat Management Plan (the "Management Plan"), as approved by the Service. The Conservation Bank Agreement and its related documents arc incorporated herein by reference. D. Pursuant to the Conservation Bank Agreement and the authority of the Service, the Collier County Clerk of Courts ("Finance Director") is authorized and directed to establish a separate cost center within Conservation Collier Fund 174. Funds budgeted annually within this cost center will be specifically dedicated for the management costs of the Caracara Prairie Preserve property for the interim period through credit sell out. The Finance Director will transfer into the cost center a minimum lump sum amount equal to $408,600 from Conservation Collier Land Management Fund 174 Reserves. E. Pursuant to the Conservation Bank Agreement and the authority of the Service, Collier County is authorized and directed to establish a separate endowed account (the "Endowment Fund"), with, among other things, funds that Collier County 3 16E3 collects from the sale and/or conveyance of conservation credits on the Property. Upon bank establishment, the Board will deposit into the Endowment Fund a minimum amount equal to $370.45 per conservation credit sold until the principal of the Endowment Fund totals $763,200. F. The accrued interest and earnings from the Endowment Fund shall be used exclusively to fund the permanent management and maintenance of the Property. The Finance Director shall provide to the Service an annual "Financial Report of the Trust," as more particularly described in Section 3.5 of this document. G. Collier County intends to establish a trust, Caracara Prairie Preserve Conservation Bank Endowment Fund Trust (the "Trust"), and to contribute to the Trust certain assets that shall be held therein. The assets shall consist of, but will not be limited to, the Conservation Easement, the Interim Management Account, and the Endowment Fund. H. Collier County will receive, manage, and distribute monies to protect and maintain the Property in accordance with the Conservation Bank Agreement and its related documents, including, but not limited to, the Management Plan. I. Collier County has developed and agrees to abide by an investment policy (the "Investment Policy"), as set forth in Exhibit "C," to protect the corpus of the Endowment Fund principal. The direct investment decisions for the Trust Fund will be in accordance with the Collier County Investment Policy described in Exhibit "'0". NOW, THEREFORE, IN CONSIDERATION of the foregoing Recitals and the following covenants and obligations herein contained, Collier County hereby establishes the Trust and agrees that the Trust shall be comprised, held and disposed of as follows: 1. Establishment of Trust 1.1 Assignment to Trust. Collier County hereby agrees to assign to the Trust the assets described in Exhibit "E," attached hereto. 1.2 Trust Estate. Collier County agrees to hold, administer, and distribute any and all property transferred to the Trust at any time (the "Trust Estate") in trust in accordance with the terms and conditions of this Trust Document. 2. Distribution of Trust Estate The Finance Director will hold and distribute the income and principal of the Trust Estate as follows: 4 16E3 2.1 Distributions of Income and Principal. The Finance Director will distribute the income and principal, in accordance with Section 4.2 of this document, to or for the benefit of Collier County or an assignee in a manner consistent with the purposes and intent of the Conservation Bank Agreement and its related documents, including, but not limited to, the Management Plan. The County Manager or designee is authorized to request distributions to or for the benefit of the Grantor and/or the Service to pay any costs and expenses reasonably incurred in and related to the managemettt of the Property, including, but not limited to, property taxes, contracts, equipment, materials, and signage, and in a manner consistent with the Conservation Bank Agreement, the Conservation Easement, and the Management Plan. 2.2 Benefit/Detriment. Collier County acknowledges that the income, expenses, gains and losses of this Trust inure to the benefit/detriment of the Caracara Prairie Preserve Conservation Bank and its habitat values. Pursuant to the Conservation Bank Agreement, Collier County will establish the Trust and manage, among other things, the Endowment Fund and make distributions to or for the benefit of Collier County so that Collier County may fulfill its obligations under the Conservation Bank Agreement. 2.3 Transfer of Property. It is anticipated that the Endowment Fund will be used for the purposes of maintaining the Property as set forth in the Conservation Bank Agreement and the Management Plan. Collier County acknowledges that the Property may be transferred to a third party or otherwise. If the Property is transferred, however, this transfer must be concurred with by the Service. This concurrence will not be unreasonably withheld by the Service. Collier County may transfer the Endowment Fund to another party upon written agreement between Collier County and the Service. 2.4 Interim Management Account. The Interim Management Account shall be maintained by Collier County until such time that the Endowment Fund Target Amount is achieved, at which time the Interim Management Account may be terminated and all funds (excepting interest to be retained by Collier County) shall be transferred to the Endowment Fund. 2.5 Endowment Fund. Collier County will not be authorized to withdraw or otherwise transfer the principal of the Endowment Fund without written approval from the Service. 2.6 Termination of Trust. It is anticipated that the Trust will last in perpetuity because the obligation to manage and maintain the Property and to fund the costs and expenses associated with the management 5 16E3 and maintenance of the Property are obligations that continue in perpetuity as covenants running with the land. If, however, the purposes of the Trust have been fulfilled, and it becomes necessary to terminate the Trust, the assets may be retained by Collier County or may be distributed a) to an organization determined by the Internal Revenue Service to be tax exempt for one or more purposes within the meaning of Section 50I(e)(3) of the Internal Revenue Code or corresponding section of any future federal tax code or b) to the Service or federal government for a public purpose. 3. Trustee 3.1 Appointment of Trustee. The Collier County Board of County Commissioners is hereby appointed as Trustee. 3.2 Appointment of Successor Trustee by the USFWS. If the Collier County Board of County Commissioners fails to uphold and adhere to the practices and principles of this Trust Agreement, the Conservation Bank Agreement and its related documents, including, but not limited to, the Management Plan and the Conservation Easement, and/or the Investment Policy, upon thirty (30) days advance written notice to the Trustee by the USFWS, the Trustee shall be removed, and the Grantor and the USFWS may appoint a Successor Trustee. 3.3 Appointment of Successor Trustee by Court. Ifno one is appointed by the provisions of the preceding subparagraphs because there is no one able and willing to act as a Trustee, a court of competent jurisdiction shall appoint a successor Trustee. 3.4 Duty of Sue cess or Trustee. No Trustee shall have any responsibility for the acts or omissions of any prior Trustee or any duty to investigate the accounts or administration of any prior Trustee or any duty to take action to obtain redress for any breach of fiduciary duty of any prior Trustee. 3.5 Accounting to USFWS. The Trustee, or its designee, shall render periodic accounts of the administration of the Trust to the USFWS. In no event, however, shall the accounting be rendered less than once each year in the "Financial Report of Trust." The Financial Report of Trust (the "Financial Report") shall consist of copies of the Trust's monthly statements and an annual trust accounting that shall include annual reports regarding expenditures and reimbursements as well as income and contributions. The USFWS' written approval of the Financial Report shall be a complete approval protection of the Trustee as to all matters and transactions stated or shown by the accounting. The failure of the USFWS to transmit to the Trustee either (I) the written approval of such 6 16E 3 accounting, or (2) a written objection to the accounting with reasons specified, within ninety (90) days after the Trustee's submission of the Financial Report to the USFWS shall constitute the USFWS' approval. 3.6 Replacement of Trustee. A Trustee, including any corporate Trustee, shall cease acting as a Trustee and a Successor Trustee shall be appointed by the Grantor and the USFWS to replace the Trustee upon the occurrence of any one of the following events: (a) The dissolution of a corporate Trustee as determined by applicable state law. (b) The bankruptcy of a Trustee. The term "bankruptcy" shall include any of the following: (i) the filing ofa voluntary petition under any federal or state law for the relief of debtors including the filing of a voluntary petition under any Chapter of Title I I of the United States Code; (ii) the continued pendency of an involuntary proceeding under any such law on the 60'" day after its tiling, or the entry of an order for relief under any such involuntary proceeding, whichever occurs first; (iii) the making of a general assignment for the benefit of the Trustee's creditors; (iv) the seizure by a sheriff, receiver or trustee of a substantial portion of the Trustee's assets. (c) The Trustee notifies the USFWS in writing thirty (30) days prior to the intended transfer of the Trustee's responsibilities to a USFWS approved third-party entity. (d) The USFWS proves that the Trustee has acted with gross negligence or willful misconduct. 3.7 Bond of Trustee. No bond shall be required of any Trustee, absent an affirmative showing of good cause to a court having jurisdiction over the Trust. 3.8 Liabilitv of Trustee. No Trustee, Co-Trustee or Successor Trustee shall be personally liable for a Trustee's acts or failure to act, except for willful misconduct or gross negligence. 4. Management Powers 4.1 Amend the Investment Policv. Collier County may from time to time amend the Investment Policy upon written approval of the Service. 4.2 Power to Act. To carry out the Investment Policy and fulfill the purposes of the Trust, the Board of County Commissioners through its 7 16E3 County Manager or designee shall have the power to do the following acts, to the extent consistent with Florida law: (a) Insure the Trust Estate against damage or loss and Collier County against liability. (b) Request disbursements from the Trust to pay the costs of undertaking activities for the perpetual management of the Conservation Bank in accordance with the Conservation Bank Agreement and its related documents, including, but not limited to, the Management Plan. The County Manager or designee is also authorized to request sums from the Trust to reimburse persons for the costs of management expenditures and to refund Collier County such amounts as the Service specifies in writing. (c) Execute and deliver all instruments, which will accomplish or facilitate the exercise of the powers vested in Collier County. (c) Act without court approval if the action is otherwise proper. 5. General Administrative Provisions The following general administrative provisions shall govern the Trust: 5.1 Governing Law: Severabilitv. The validity and construction of any provision of the Trust shall be governed by the laws of the State of Florida. If any provision of the Trust is determined to be invalid or unenforceable, the remaining provisions hereof shall nevertheless be carried into effect. 5.2 Spendthrift. No interest in the principal or income of this Trust shall be transferred, assigned, anticipated, encumbered or subject to claims of creditors or others or to legal process prior to its actual receipt by the beneficiary. 5.3 Uniform Principal and Income Act. The allocation of receipts and expenses between principal and income accounts shall be governed by the Florida Uniform Principal and Income Act, as amended. The Finance Director shall determine how to allocate receipts or expenses that are not governed by the Act or defined or specified in the Conservation Bank Agreement and in this Trust Document. 5.4 Entire Agreement. This Trust Document constitutes the entire agreement and understanding between the parties. This Trust Document supersedes all prior and contemporaneous agreements, representations or understandings regarding the Endowment Fund, if 8 16E3 any, whether written or oral, with the exception of those provisions of the Conservation Bank Agreement and its related documents, including, but not limited, to the Conservation Easement and Management Plan. 5.5 Notices. The individual named below shall be the representative (the "Representative") of Collier County for purposes of this Trust document. Notices shall be made in writing and may be delivered in person, by mail, by telecopy (facsimile), or by electronic mail (email). Notices shall be etTective only when received at the address of the appropriate Service representative to be notified. Any change in the contact information for the Representative shall be communicated in writing to the Service within ten (10) business days of the change. Collier County Board of County Commissioners Conservation Collier Program Altn: Principal Environmental Specialist 3301 Tamiami Trail Naples, FL 34112 If to the Service: U.S. Fish and Wildlife Service Altn: Field Supervisor South Florida Ecological Services Office 1339 20th Street Vero Beach, Florida 32960-3559 5.6 Nondiscrimination. In the performance of obligations and responsibilities under this Trust Document, Collier County will not discriminate against any person because of race, color, national origin, handicap, religion, or gender. 5.7 No Obligation. Nothing in this Trust Document may be construed to obligate the United States or the Service to any current or future expenditure of resources in advance of the availability of appropriations from Congress. 5.8 No Limit. Nothing contained in this Trust Document is intended to limit the authority of the Service to seek civil or criminal penalties or otherwise fulfill its enforcement responsibilities under applicable laws. This Trust Document is not a substitute for compliance with applicable Federal laws. 5.9 Nonexclusive Arrangement. This Trust Document shall not make or be deemed to make any party to the Trust Document an agent for or the partner of any other party. This Document neither creates nor 9 16E3 should it be construed to create an exclusive arrangement between the United States and Collier County. 5.10 Irrevocable Trust. The Trust is irrevocable unless revocation is approved in writing by Collier County and the Service. 5.11 Amendment of Trust. The terms of the Trust may be amended at any time as Collier County and the Service shall agree in written instrument. 6. Definitions 6.1 Person. The term "person" includes an individual, trust, estate, partnership, association, company, corporation, or other entity. 6.2 Principal. The terms "principal" or "corpus" mean the principal sum or capital, as distinguished from interest or income, which constitutes the main body of the Trust. APPROVED: By: U.S. Fish and Wildlife Service Date: 10 16E3 Exhibit "B" CARACARA PRAIRIE PRESERVE CONSERVATION BANK ENDOWMENT FUND TRUST PROPERTY DESCRIPTION The Caracara Prairie Preserve Conservation Bank consists of approximately 367.7 acres located in Collier County, Florida, as more particularly described in the legal description attached hereto. LEGAL DESCRIPTION: PROPERTY TAX IDENTIFICATION NUMBER: 00053080006 LEGAL DESCRIPTION: WEST HALF (W1/2) OF SECTION 30, TOWNSHIP 46 SOUTH, RANGE 28 EAST, OF COLLIER COUNTY, FLORIDA AND PROPERTY TAX IDENTIFICATION NUMBER: 00053080200 LEGAL DESCRIPTION: NORTHWEST QUARTER (NW1/4) OF NORTHEAST QUARTER (NE1/4) OF SECTION 30, TOWNSHIP 46 SOUTH, RANGE 28 EAST, OF COLLIER COUNTY, FLORIDA 16 E 3 Exhibit "c" CARACARA PRAIRIE PRESERVE CONSERVATION BANK ENDOWMENT FUND TRUST INVESTMENT POLICY INTRODUCTION This Investment Policy has been adopted specifically for the Caracara Prairie Preserve Conservation Bank Fund Trust and may be amended by the Board of County Commissioners as necessary from time to time. The mission of the Fund and this Investment Policy is to establish and facilitate a clear understanding of the Fund's objectives, goals, and guidelines. PURPOSE & OBJECTIVES The Caracara Prairie Preserve Conservation Bank Endowment Fund Trust has been established to provide funding for the maintenance and land stewardship of the Caracara Prairie Preserve Conservation Bank (Project) for the protection of the natural resources on the Property and the Florida panther (Puma conca/or coryi), crested caracara (Caracara cheriway), and other species that are dependent on these lands in perpetuity. This funding shall be accomplished, in accordance with the Collier County Investment Policy (Exhibit "0"), through a prudent strategy of investment set to maintain and increase the purchasing power of the Endowment Fund, without putting the principal value of these funds at imprudent risk. The Endowment Fund shall be a composite of: I. Assets and funds generated from the sale or conveyance of conservation credits (Principal funds). 2. Successful investment performance, in accordance with the Collier County Investment Policy (Exhibit "0"), to primarily fund the maintenance and land stewardship of the Project. 3. A conservative payout policy of the interest and earnings of the Endowment Fund to ensure the annual land stewardship responsibilities and habitat management operations of the Project. INVESTMENT GOALS Investment goals for the Caracara Prairie Preserve Conservation Bank Endowment Fund Trust are to: 16E3 I. Satisfy the requirements of the Caracara Prairie Preserve Conservation Bank Agreement and its associated documents, including the Management Plan, the Conservation Easement and the Caracara Prairie Preserve Conservation Bank Endowment Fund Trust Document. 2. Earn a total return of two and one-half percent or more in excess of inflation as measured by the Consumer Price Index. SPENDING POLICY Distributions will be made in accordance with the Endowment Trust Document and the Conservation Bank Agreement and its associated documents, including, but not limited to, the Management Plan and Conservation Easement. Spending for the Project will be based upon both annual operating and maintenance requirements and expenditures for long-term replacement of capital improvements. Exceptions to the projected annual expenditures for the Conservation Bank can be implemented only if they assist in the land stewardship goals of the Conservation Bank's natural resources, while protecting the financial viability of the Endowment Fund. This Endowment Fund is designated to support the costs related to the management, land stewardship, and administrative costs of the Conservation Bank and the Endowment Fund only. ASSET ALLOCATION, INVESTMENT MANAGEMENT STYLE The target asset allocation for the investment portfolio is determined by the Finance director, in accordance with the Collier County Investment Policy (Exhibit "D"), to facilitate the achievement of the Endowment Fund's long-term investment objectives within the established risk parameters. INVESTMENT PERFORMANCE REVIEW The County Manager or designee is required to: I. Accept and deliver to the Finance Director, funds received from the sale or conveyance of conservation credits on the Property. 2. Recommend guidelines ("Investment Guidelines") to the Board of County Commissioners for a recommended Investment Policy. 3. Identify and resolve disputes between Collier County and the Service. 4. Review all policies, objectives, and guidelines annually. Any modifications to this Investment Policy will be presented to the Service. 5. Notify the Service within thirty days (30) after the County Manager's or designee's knowledge of a declinc in the principal of the Fund after the Fund has attained principal in the amount 01'$763,200 [Endowment Target Amount]. PROHIBITED TRANSACTIONS RULE COMPLIANCE The following transactions are prohibited: 2 16E3 1. Any disbursement from the Fund that would result in a reduction in the Fund's principal unless the County Manager or designee has provided thirty (30) days advance written notice to the Service and the Service approves such disbursement. The Service' failure to transmit to the County Manager or designee either (1) a written approval of the disbursement or (2) a written objection to the disbursement within thirty (30) days of the Service' receipt of the notice shall constitute an approval. 2. Disbursements from the Fund for any purpose inconsistent with the objectives stated herein; in the Caracara Prairie Preserve Conservation Bank Endowment Trust Resolution; and in the Conservation Agreement and its associated documents, including, but not limited to, the Management Plan. 3 16E3 Exhibit "D" Collier County, Florida Investment Policy SCOPE Investment policy applies to all financial assets under the direct control of the Board of County Commissioners. INVESTMENT OBJECTIVES Primary Objectives: I. Preservation of capital and protection of investment principal. 2. Maintain sufficient liquidity to meet reasonably anticipated operating and capital requirements. 3. Match assets to liabilities, to the extent possible. Secondary Objectives: I. Maximize return and preserve purchasing power as measured by a noted market index such as the Consumer Price Index. 2. Control risks and diversify investments through appropriate oversight and regular reporting. PERFORMANCE MEASURES Objective is to exceed the annual yield of the Florida Local Government Surplus Trust Fund (SBA). PRUDENCE AND ETHICAL STANDARDS. Investments shall be made with judgment and care (under circwnstances then prevailing) which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. The standard of prudence to be used by investment officials shall be the "prudent person" standard and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with written procedures and the investment policy 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 appropriate action is taken to control adverse developments. Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or 4 16E3 which could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose to the Chief Financial Officer any material financial interests in financial institutions that conduct business within this jurisdiction and they shall further disclose any material personal financial/investment positions that could be related to the performance of the portfolio. Employees and officers shall subordinate their personal investment transactions to those transactions made in the portfolio, particularly with regard to the time of purchase and sales. Employees shall also disclose any gifts or entertainment received as a result of their employment in regard to the investments of Collier County. Bond swaps are appropriate when undertaken in conformity with the prudent person test and overall portfolio objectives in order to (a) increase yield to maturity without affecting the asset liability match; (b) reduce maturity while maintaining or increasing the yield to maturity or (c) increase portfolio quality without affecting the asset liability match while maintaining or increasing the yield to maturity. The County should not, however, have a policy against selling securities at a loss if undertaken in connection with prudent portfolio management. AUTHORIZED INVESTMENTS 1. Florida Local Government Surplus Trust Fund (SBA) 2. US Government Securities - Direct Obligations 3. US Federal Agencies - Backed by Full Faith and Credit of US Government 4. US Federal Instrumentalities - US Federal Agency Securities Not Backed by Full Faith and Credit of US Government, except for Student Loan Marketing Association 5. Certificates of Deposit - Collateralized with US Government Securities or Federal Agencies 6. Repurchase Agreements (As defined herein) 7. Fixed Income Mutual Funds - Collateralized with US Government Securities or Federal Agencies 8. Domestic Bankers Acceptances - Rated "AA" or higher, and inventory based 9. Prime Commercial Paper - Rated "A-I" and "P_l". 10. Tax-Exempt Obligations - Rated "AA" or higher and issued by state or local governments 11. Now Account - Fully collateralized in accordance with Chapter 280 Florida Statutes, limited to Depository Bank/Concentration Bank Limitation on Variable Rate Securities - Acceptable only if the rate is a straight floating rate that is set in a direct as opposed to inverse, relationship to a single index. Limitations on Mortgage Securities (CMOs) 5 16E3 I. Issued only by US Federal Agencies or US Federal Instrumentalities, 2. Pass the Federal Financial Investment Examination Council (FFIEC) test at time of purchase, and 3. Have an average life or seven (7) years or less and have an absolute final maturity or no more than fifteen (15) years at zero PSA. The term "zero PSA" means that all interest and principal payments are guaranteed to be made by the slated final maturity assuming no prepayments. Specifically prohibited investments include, but are not limited to: I. Interest only strips of mortgage backed securities 2. Leveraged bonds 3. Structured notes or financings other than mortgage securities that meet the provisions of this investment policy (permit callable and step up coupons) 4. Variable rate securities that set a rate based on an inverse relationship to an index 5. Variable rate debt that sets a rate based on more than a single index MATURITY AND LIQUIDITY REQUIREMENTS The objective will be to match investment cash flow and maturity with known cash needs and anticipated cash flow requirements (i.e., match assets to liabilities) to the extent possible. Investment of funds shall have final maturities of not more than five (5) years, except for: 1. SBA - No stated final maturity 2. Certificates of Deposit - I Year 3. Repurchase Agreement - 90 Days 4. Bankers Acceptance - 180 Days 5. Prime Commercial Paper - 180 Days 6. Fixed Income Mutual Funds - No stated final maturity. However, underlying US Government Securities and Federal Agencies have average maturity of one year. 7. Mortgage Securities - Have an average life of seven (7) years or less and have an absolute final maturity of no more than fifteen (15) years at zero PSA. Utilization of Mortgage Securities: 1. Mortgage securities shall not be used to match liabilities that are reasonably definable as to amount and disbursement date. 2. Mortgage securities should only be used to invest funds associated with reserves or liabilities that are not associated with a specifically identified cash flow schedule. 6 16E 3 3. Mortgage securities should be used to prudently enhance the return on the portfolio. Exception for Refunding Bond Escrows - US Government Securities and Federal Agencies deposited into an escrow in connection with the refunding of a County bond issue can have a final maturity of more than five years. PORTFOLIO COMPOSITION This policy recognizes that the portfolio operates in a dynamic environment. Therefore, in the event the maximum allowable percentages are exceeded due to cash flow demands within the portfolio after the date of the purchase of the security, this policy does not force the sell of the security prior to maturity. I. 2. 3. 4. 5. 6. 7. 8. 9. 10. Investment Tvve Florida Local Government Surplus Trust Fund (SBA)' US Government Securities US Federal Agencies" US Federal Instrumentalities" Certificates of Deposit Repurchase Agreements Fixed Income Mutual Funds Domestic Bankers Acceptance Prime Commercial Paper Tax-Exempt Obligations Maximum % of Portfolio 50% 100% 100% 100% 30% 20% 10% 10% 10% 10% , Does not include bond proceeds invested in construction funds established under a bond resolution. Funds in the NOW ACCOUNT will not be considered a part ofthe portfolio for purposes of this section. RISK AND DIVERSIFICATION Collier County will diversify its investments by security type, specific maturity, dealer or bank through which financial instruments are bought or sold. Subject to the limitations under Portfolio Composition, the following are the limits on individual issuers or dealer or bank: . No limitations on SBA, Now Account, US Government Securities, US Federal Agencies or US Federal Instrumentalities. . Limitations on other investments are 10% of total portfolio. 7 16E3 AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS The Chief Financial Officer will maintain a list of the financial institutions authorized to provide investment services. These shall include "primary" dealers and regional dealers that (I) qualify under Securities & Exchange Commission Rule l5C3 (Uniform Net Capital Rule), (2) have capital of at least $50,000,000 and (3) have an institutional sales office and an institutional sales professional domiciled in Florida. No public deposit shall be made except in a qualified public depository as established by state laws. All financial institutions and broker/dealers who desire to become qualified bidders for investment transactions must supply the Chief Financial Officer with the following: I. audited financial statements, 2. certification that no material adverse events have occurred since the issue of their most recent fi nancial statements, 3. proof of National Association of Securities Dealers, the registration (where applicable) or other securities registration, 4. proof of state registration, whcn required, 5. certification of having read and agreeing to abide by the Investment Policy and depository contracts in place in Collier County, and 6. a copy of the firm's established internal oversight and review guidelines controlling business with governmental entities. Each financial institution and broker/dealer must also agree to notify the Chief Financial Officer in the event of material adverse events affecting their capital adequacy. Each institution and broker/dealer shall provide their written mark up schedule and guidelines to the Chief Financial Onker. Each institution and broker/dealer shall disclose to the Chief Financial Officer any proposed trade that would exceed the guidelines prior to executing the trade. The Chief Financial Officer shall do a background check on each broker with whom the County does business which shall, at a minimum, consist of contacting the State or NASD for regulatory & disciplinary dates which are maintained on brokers. An annual review of the financial condition and registration of qualified bidders will be conducted by the Chicf Financial Officer. A current audited financial statement is required to be on file for each financial institution and broker/dealer authorized to provide investment services. Critcria for addition to or deletion from the lists will be based on the following: (I) state law, Board of County Commissioners Ordinance Code, or Investment Policy requirements where applicable, (2) perceived tinancial difficulties, (3) consistent lack of competitiveness, (4) lack or experience or familiarity of the account representative in providing service to large institutional accounts, (5) request of the institution or broker/dealer, and (6) when deemed in the best interest of the Board of County Commissioners. 8 16E3 If there are at least 10 trades executed in a single year through other than a competitive bid process, no more than 30% of the total dollar amount of sales and trades executed through other than a competitive bid process can be conducted with a single dealer. THIRD-PARTY CUSTODIAL AGREEMENTS All security transactions, including collateral for repurchase agreements, entered into by Collier County shall be conducted on a delivery-versus-payment (DVP) basis. All securities shall be properly designated as an asset of the Board or County Commissioners. Securities will be held by a third party custodian authorized by the Chief Financial Officer and evidenced by safekeeping receipts or advice of the transaction. The third party custodian shall be a third party custodian bank or other third party custodial institution with certified fiduciary powers, chartered by the United States Government or the State of Florida and havc combined capital and surplus of at least $100,000,000. The Chief Financial Officer will execute third party custodial agreements approved by the Board of County Commissioners with the banks and depository institutions. Such agreement will include letters of authority from the Chief Financial Officer with details as to responsibilities of each party, notification of security purchases, sales, delivery, repurchase agreements and wire transfers, safekeeping and transaction costs, procedures in case of wire failure or other unforeseen mishaps including liability of each party. MASTER REPURCHASE AGREEMENTS 1. Each firm involved in a repurchase agreement must execute the County's Master Repurchase Agreement which will be based on the Public Securities Association (PSA) Master Repurchase Agreement. 2. A third party custodian shall hold collateral for all repurchase agreements with a term of more than one business day. 3. Collateral requirements will be based on economic and financial conditions existing at the time of execution, as well as the credit risk of the institution which enters into the repurchase agreement with the County. The market value of the collateral shall not be less than the following: Maturity of Backed Securities US Government US Federal Agencies Mortgage Securities and instrumentalities- Securities Under 1 Year 1 to 5 Years Over 5 Years 101% 102% 103% 102% 103% 104% 103% 104% 105% -Excluding mortgage backed securities. 9 16E3 4. Collateral shall be marked to market at least weekly. 5. Substitution of collateral is permitted. BID REOUIREMENT The Chief Financial Officer shall utilize the competitive bid process to sell and purchase securities, subject only to the exceptions noted in the Investment Policy. After the Chief Financial Officer has determined the approximate maturity date based on cash flow needs and market conditions and has analyzed and selected one or more optimal types of investment, a minimum of three (3) banks or dealers must be contacted to ask for offerings of securities that fit the investment criteria. Documentation must be collected to insure that the securities meet Investment Policy guidelines and that price levels executed are consistent with market levels at the time. When selling securities, a minimum of three (3) dealer bids will be sought. Documentation of all transactions must be maintained. Examples of when the competitively bid process can be passed, include: I. When time constraints due to unusual circumstances preclude the use of the competitive bidding process. 2. When no active market exists for the issue being traded due to the age or depth of the issue, (On a "work-out" basis). 3. When a security is unique to a single dealer, for example a private placement. 4. When the transaction involved new issues or issues on the "when issued" market. Ifthe maturing investment is a certificate of deposit, one of the contacts made shall be the present holder of the funds subject to portfolio diversification requirements in the Investment Policy. Due to the cost of safekeeping, one business day repurchase agreements less than $1,000,000, and the overnight sweep repurchase agreement associated with the Now Account will not be bid. The Depository Bank/Concentration Bank shall be selected through a competitive process on a periodic basis that takes into account the quality and scope of service. INTERNAL CONTROLS The Chief Financial Officer shall establish and monitor a set of written internal controls designed to protect the County's financial assets and ensure proper accounting and reporting of the transactions. Thc Chief Financial Officer shall establish an annual process of independent review by an external auditor which will serve as an internal control by assuring compliance with policies and procedures. Internal controls will encompass at a minimum the following issues: 10 16E 3 1. transfers of all funds (purchases, sales, etc.), 2. separation of functions including transaction authority from accounting and record-keeping, 3. custodial safekeeping, 4. avoidance of delivery of bearer-form or non-wireable securities, 5. delegation of authority to subordinate staff members, 6. written confirmation of telephone transactions, 7. supervisory control of employee actions, 8. identification and minimization of authorized investment officials, 9. documentation of decisions and transactions, and 10. documentation of complete description of mortgage securities purchased and yield tables at purchase date. CONTINUING EDUCATION Each individual responsible for making investment decisions including the Chief Financial Officer, shall annually complete eight hours of continuing education in subjects or courses of study related to investment practices and products. Evidence of such education will be maintained by each individual and available for inspection. REPORTING Annual, quarterly and monthly reports of assets will be presented to the Board. The following items will be included in the reports at least annually: 1. Securities in the portfolio by type, book value, Income earned, market value, final maturity and average life. 2. Information on activity in the account, and 3. Performance based on total rate of return which includes earned income as well as realized and unrealized gains and losses. OTHER I. Grandfather existing securities in the portfolio to reduce the possibility of having to sell financial assets before maturity at a loss. 2. Any and all exceptions to the Investment Policy require majority vote of the Board of County Commissioners. II 16E3 Exhibit "E" CARACARA PRAIRIE PRESERVE CONSERV A nON BANK ENDOWMENT FUND TRUST TRUST ASSETS Pursuant to the Caracara Prairie Preserve Conservation Bank Agreement, approved by the Service, Collier County will transfer, into a separate cost center, funds specifically dedicated for the management of the Caracara Prairie Preserve property for the interim period through credit sell out. A lump sum amount equal to $408,600 will be transferred into the cost center from Conservation Collier Land Management Fund 174 Reserves. Collier County shall also make deposits into the Endowment Fund in an amount equal to $370.45 per credit sold, until the principal of the Endowment Fund totals $763,200. 12