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Resolution 1995-552 ,...:.. - SEP 2 6 1995 RESOLUTION NO. 95-552 ^ RESOLUTION ENACTED PURSUANT 1'0 COLLIER COUNTY ORDINANCE IlO. 87-65 APPROVING AND ADOPTING A CASH MANAGEMENT AND INVESTMENT POLICY WHEREAS, Collier County Ordinance 110. 87-65 provides that thl! Board of County Commissioners shall establish by resolution a Cash ManC)gement and Investm8nt Policy for the Clerk tc the Board to purchase and sell investment securities at prevailing market prices/rates on behalf of and in the name of the Board of County Commissioners .....hen sufficient surplus funds have accumulated in the accounts of the Board of Count.y Commissioners or when the Board has on hand or has accumulcted monies by reason of the sale of its o......n securi- ties; arid WHJ;REAS, the Board adopted Resoll/tion No. 87-65 on October 13, 1987 which provided for and approved and adopted an Investment Policy .....hich has been in effect since its adoption; and WHEREAS, the Board has de:ermined tflnt it is appropriate and i:1 the best interests of Collier County to revise its Investm.~nt Policy pursuant to the requirements of Section 218.415, Florida Statutes (1995); and WH ::REAS I the Clerk to the Board has recently prepared and tenjered a revised Cash Management and Investment Policy ......hich neets the requ ircments of Section 218.415, Florida Statute; (1995); and WHEREAS, the Clerk and the Board have together subse- quently drafted a revised Cash ManagernBnt and Investment Policy (hereinafter "Investment Policy") to be adopted by the Board prior to October 1, 1995. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF COLLIER COUNTY, FLORIDA, that: 1. The Investment Pol icy attached hereto as Exhibit "Aft is hereby approved and adopted. 2. Resolution Uo. 87-248 and the Investment Policy attached thereto are hereby superseded. ....:. - SEP 2 6 1995 This Resolution adopted this 26th day of September, 1995 after notion, second and majority vote favoring same. ATTEST: DWIGHT E. BROCK, Clerk ~' -~ /' > V_H~ ~., @<' Approved. as to form and .'.lega1 sufficiency: BOARD OF COUNTY COMMISSIONERS COLLIER COUNTY, FLORIDA /JL ATTHEWS, Chairman j? /-"/lS- ILqf~: We I Chief Assistant d,wllw/].t522 _ A_ .'.'----.--,--- .-~--~--_.. ^--"__~'__'__h ~ SEP 2 6 1995 ~~- Collier County, Florida Investment Policy SCOPE Investment policy applies to all financial as.';ets under the direct control of the Board of COUnly Commissic ners. INVESTM ENT OBJECTIVES Primary Otjectiycs: I, Preservation of capilal and protection of investment princlp~ll. 2. Maintain sufficient liquidity to meet rcaSOrutbly Jlllicip;lfed opcrflting and c<lpilal requirements. J. M;llch assets 10 Ilabililies. 10 the exlent possible. Secondary l)bjcctivcs: I. Ma:l(imi7-C return and preserve purchils:ng power ~s mcas'il(,~d hy a noted m:nket inde,'l; such as the Consumer Price Index. 2. Control risks and diversify investments through appropriate :,ycrsight and regular reponing. PERFORMANCE MEASURES Objective is to exceed the annual yield of the Florida Local Government Surplus Trust Fund (SBA). PRUDENCE AND ETHICAL STANDARDS Investment! shall be m.:Jde with judgment and CMC (under eirCllmSI<lnccs then prevailing) "hich persons of prudeno:, discretion and intelligence exercise in Ihe managcm~nt of their 0'\11 affairs. nol for speculation, but for investment. considering the probable s.1fety of their cC'lpital :'IS well as the probable income 10 I::e derh'td. The sti'lnd.1rd of prudence to be used by investment ofTid;ds sh;lll be the "pmdcnt person" standard and shall be applied in the context of managing an OVCT:111 portfolio. In....estment officers acting in ac ::ordance wilh written procedures and the investment policy and exercising duc diligcnce sh<lll be lelicvcd of personal responsibility for an individual security's crCtiir risk or market price changes. provided dniations from expectalions arc reported in a timely fashion and appropri<1tc action is taken 10 control adVt_TSC dc:vclopmcnts. Officcrs and employees involved in thc investment process shall rcfr<1in from person.1l business ,1ctivity that could o>nflict with propcr c:'l:ccution of the inv~tment program, or which could impair Iheir :Ibiliry to make imp<H1ial investment decisions. Employccs and in....cstment oITiciats shall disclose 10 the Chief Fin:lnci;lI O-licer any malerial financial interests in fin<tncial institutions Ih:tt conduct business wllhin this jurisdiction lnd they shail further disclose any m'lterial pcrsonal fin<lnci:ll/in\'cslment positions Ihal could be related t,) the performance of the ponfolio. Employees and officers .sh:IlI subordinale lheir personal invcstment lr;ms.1ctions to those lrans.lctions m<lde in the ponfolio, p<lnicul:trly with rcg;lfd 10 the lunc of purchase anj sales, Employccs shall also disclose any gins or enlertainmC'nl received as a result of their emplo)'mcnl in rcgard 10 the inyestments of Collier County. EXllrB IT A "3 f Co. ~-"~"'~"--'-_.'~'_"__'__"'O"~"""~___""~"'."._'~_'..,......___,...~,~.,".._"~.u~,_...~" 2 SEP 2 6 1995 ,~. .,. Bond swar.s arc appropriate when undertaken in conformity with the pmdcnt person lest and over;]ll portfolio ohjcctivcs in order 10 (a) incrC3se yield 10 m.llurity \,,'ilhout affcding the assel li;'lbililY match: (b) reduce malurity while m<linlaining or incrc:lsing the yield 10 m;llurity or (c) increase portfolio quality y,ithout aff.X'ting the asset liability match while maintaining or inCrc.1sing the yield to m:llurity. The Counly should not. however, have a ~Iicy against selling SC<'llritics at a loss if undcrtJkcn in connection with prudent portfolio management. AUTHORIZED INVESTMENTS ]. Florida l...oc1l Government Sllrplus TnJSl Fund (SnA) 2. US Go\.'cmmcnl Securities. Direct Obligalions J. US Federal Agencies - [lacked by Full Faith and Credit of US Government 4. US Federal fnstrumcnl<llitics . US Federal Agency Sccnritlc$ Not B;}cked by Full F<1ilh <1nd Credit orus Government, e:'(cept for Student Loan Marketing As.sociation 5. Certificates of Deposit - Collateralized with US Government Securities or Federal Agencies 6 Repurchase Agrccments (As defined herein) 7. Fixed Income ~hllU:ll Funds - Collatcr;1lizcd with US Government Securities or Pedcr(ll Agencies R. Domestic Bankers Acceptances. R,1tcd "A"" or higher, Cl'ld InventOf)' based 9. Prime Commcrcl<1l Paper - Rated "A-I" nod "p.j"', ;:nd bncked by a LOC rated "^A" or higher 10 Tax-E.'(empt Oblig:ltions - R;!led "A A" or higher Clnd isst1vJ bY' state or loc<ll governmenrs II. Now Account - Fully collatcr<1lized in accordance with CharIer no Florid;} Statutes. limllcd 10 Depo:;ilory BankJConcentrntion Rink Limilations on Variable Rate Securities - Acceptable only iflhe rate is a straight naating rate that is set in a direct, as opposed to inyerse, relationship to a single index. Limitations on M0r1g.1ge Securities (CMOs) I. Isslled only by US Feder<11 Agencies or liS Feder;!:1 fnstnJTTlCnlaliiics. 2. P<1SS the Feder<11 Fin<1ncl:J1 Investmenl E.umin<11ion Conncd (FFIEC) lest <11 lime of pllrchnsc. and 3. Have an average life of five (5) yc;us or le$s and have;1n ;lhsolulC linnl m;uurity of no more than fifteen (1.5) yc.1rs ilt lero PSA The term "zero PSA ~ means th:Jt all interest :Jnd principal p;l)"mCnlS <lfe gllar;!:nleed 10 be mJdc by the Sl:w:d fin;)1 m;)turity nssllming no prepaymcnts Specifically prohibited invcstmcnts include, but are not limited to. 1. Interest only strips nf mortgage hacked s.ccurilles 2. Lcvcraged bonds J StnJctured notes or financings other than mortg;1ge sccmitles lh;)l meellhe provisions of the this investment policy (pcnnit call;!:hle :'lnd step up coupons) 4. V~riable mte securities lh;lt set a rale based on an inverse rcl,1lionship 10 <1n index 5. Variable r;tte debt Ih;H sets a r;l!e b:lscd on more th.ln (J single index MA TURIl Y AND LIQUIDITY REQUIHr.~lF.NTS The objccti,'c will be to match investment cash now and m;1turity with known c:lsh needs <1nd antlcip;1ted cash flow requirements (i.e.. match assets to liabilities) to the extent pos;,lhlc. /31]) , '. .'-".",.~,~"' ,,', ~.",","."",~_._'.,.."-",,...,." ". '~'''''''''''''''''-''''-'<'.'-"'' ,- 1 SEP 2 6 1995 :---". ....- Inyestment of funds shall have final maturities of not morc than five (.5) ycrjrs. except for: I. SBA - No stJItcd final maturity. 2. Certificates of Deposit - 1 Year 1. Repurchase Agn:cm<:nt! - 90 Days 4. Banker. Aro:ptances - 120 days 5. Prime Commercial Paper - 120 Days 6. fixed Income Mutual Funds - No slated final malmity. However, undcrlyrng US Government Securities and Feder;]l Agencies have <l\'cragc maturity of one year. 7. Mort~ge Securities. Have IIn average life of live (5) years {)f less rmd have an .:ib<;olnlc fin;!! maturity of no morc th.1n fifteen (15) Yc.1rs at zero PSA. Utilization .)f Mortgage Securities: 1. Mortgage securities shall not b<:: Ilscd 10 mmch li:lbililics lh,11 arc rc.1sonably definable as (0 amount and disburscment date. 2. Mortgage securities should only be used 10 invest fUrids as~ocatcd \\<'ith reserves or liabilities that are not associ<1led with a specifically identified cash flow schedule 3. Mortgage securities should be used 10 prudently enhance the ~:tllm on the portfolio. Exception br Refunding Bond Escrcm-s - US Government Securities and Federal Agencies deposlIcd into an escrow ~,ccount in connection \lrith the refunding of a County bond 15S11C c;!n have a final mJlurity of more than five years. PORTFOLIO COMPOSITION Investment T,'t)C I. Florida Local Government Surplus Trust Fund (SBA)' 2. US Government Securities 3. US Federal Agencies" 4. US Federallnstmmentalitics.. 5. Ccrtific;:HCS of Deposit 6. Repurchase Agreements 7. Fi:o<cd Income Mutual Funds 8. Domestic Bankers Acceptanccs 9. Prime Commercial Pi1pcr 10. Tax-E:'(cmpt ObligaTions Maximum % of Portfolio 50% 100% 100% 50% 30% 200/0 10% 10% 10% 10% . Docs not include bond proceeds invested in constmclion funds established undcr a bond resolution .. Limilali(,ns on Mortgage Securities. Limited to 25% of the tOlal portfolio. Funds in the Now Account will r:at be considercd a part of the portfolio for purposes of this section RISK AND .DIVERSIFICATION Collier County will diversify its investments by sccmily type. specific nl:1lurit)'. de<llcr or bank through which fin..1ocial instruments arc bought or sold. Subject 10 the limitations undcr Portfolio Composition. the follO\..iog arc thc limits on individual issllers or dC:1lcr or b,1nk. No limitations on SBA. Now Account. US Governmcnt Securities. US Federal Agencies or US Fedcrallnstrument<llilies. Limitations on of her investments arc 10% of total portfolio /3 ? IE <. ~-.<...- ."...~~"--..,_._--~~--_._~~. ,.~...~...._.._..,,--~~- -~"'-~'_.'-'-~"--'- -"'" .' I' II' \ ' ' , , 4 SEP 2 6 1995 :-.'~ AUTHORIZED INVESTMF:NT INSTITUTIONS AND DEALERS The Chid Financial Officcr \\il! maintain a list or the financial institutions authorized to provide investment services. These shall include "primary" dealers and region.'ll dealers that (I) qualify under Securities &. Exchange Commission Rule ISCJ (Unirorm Net Capital Rule), (2) have capital or at least S50,OOO,OOO 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 stale laws, All financlal institutions and broker/dealers who desire to become qU<1lilicd bidders for investment transactions must supply the Chief Financinl Olliccr with the following I. audited financial st;!lcmcnts. 2. ccnifiC'ltion thai no rnarerial lIdvcrsc C'vents have occurred since the isslIe of their most recent financial statemenL'), J. proof of National Association of Securities Dealcrs, thc rCf.istralion (whcrc applicable) or other securities registration. 4. proof of stale registration. when required. 5. certification of h..1\;ng read and agreeing to abide by Ihe [m'estmenr Policy and depository contracts in place in Collier County, and 6. a eopyofthe firm's established intern;!1 oversight and review guidelines controlling business \\ith governmental entities. Each financial institution and broker/dealer must also agree to notify the Chief Finzncial Officer in the cvent of material adYCT5e events affccting lheir capital adcqu.1CY. Each institution and broker/dc.1Icr shall provide their written mark up schedule and guidcJin~ to Ihe ChiefFinaflcial Officer. Each institution and broker/dcalc:r shall disclose fa Ihe Chief Financial Officer any proposed trade that would exceed the guidelines rrior 10 executing Ihe trade. The Chief Financial Officer shall do a background ::heck on each broker wilh whom the County docs business which shall. at a minimum. consist o(cont:J(.'\ing lhe Sf;!te or NASD for regublory & disciplinClry d.1tes which :ire maintained on brokers. An annual rcview of the financi:ll condition and rcgistr;llion of qu.1lificd bidders \\;11 be conducted by thc Chicf Fin3n~ial Officer. A current audited financial st;ttcment is rcquired to be on file for e.1ch financi:11 institution and broker/dealer :luthori7..cd to provide investment services. Critcri:l for nddition to or deletion from the Iis:s ,viII be based on the following: (1) st:!te law. Board of County Commissioncrs Ordinilncc Code, or Investment Policy requirements where applicable. (2) pcr:cived financial difficullies. (3) consistent leek of competitiveness, (4) lack of experience or familiarity (Jf the account representative in providing sovice to large institutional accounts, (5) request of the institution or broker/de.1Ier. and (6) when deemd in the best interest of the Board of County Commissioners. If lhere a at least 10 trades e:'(ccuted in a single YCJr through other th:ln <1 competitive bid process. no more than 3)% of (he total dollar <lmounl of s<lles nnd tr;"ldes c.xectlted lhrough other lhnn ., compctili\'c bid process (an be conducted ,\ith a single dealer. TIIIRD-PAltTY CUSTODIAL AGRF:EMENTS All security tl(lns.1ctions, including collatcrnl for rcpurchase <Igreemcnts, cntercd into by Collicr County shall be concucted on a delivcry.\'ersus.paymcnt (DVP) b<lsis. All sccurilie~; shalt be properly designated as an a-;:scl of the Bo.1rd of County Commissioners. Securilies will be held by a Ihird party custodian aulhorizCll by the Chief Financial Officer and evidenced by /3'/ r ,'.' ."--""_'--",._.~-<" .~~~<._."". --. -"..~""."~.,.- '-'-"- -.., 5 SEP I. 6 1995 safekeeping receipts or advice of the transaction. The third p,lny cllslodian shall be a third party custodian t.ank or other third party custodial insti1tllion with certified flduci;H)' powers, ch<1rtcrcd by the United StaTCS Government or the Slale of Florida and haye combined c.lpilal and surplus of :Jt lc;1St SIOO,OOO.O)() The Chief financial Officer will eXCCUlc third party custodial flgrccmcnts approved by the Board of County Commissioners with the banks and depository institutions. Such agreement will include lelters of authority from the Chief Financial Officcr with details as to responsibilities of c..lch part)', notification of security pUlchascs. S<'Ilcs. deliyery, repurchase agreements and \Vire tr,,"sfers. s.afekeeping and lfilns.lclion costs, procedures in case of wire failure or other unforeseen mishaps including litlbility of each party. MASTER REPURCHASE AGREEMENTS I. Each firm involved in a repurchase agreement must execute lhc County's Mastcr Rcpurchase Agrccment which ....,ill be based on the Public Sccurities Assocj(ltion (PSA) Master Repurchase Agreement. 2. A third party custodian shall hold collateral for all repurch,lsc agreements "lth a lerm of more than one business day, 3. COHalcrJl rcquirements will be based on economic and fin;1:lci;d conditions existing (It the time of execution. as \\-'ell as the crcdit risk of the institution which enters into the rcpnrch<1sc agreement \\-ith the County. The markct value of the co!l:"lleral shall not be less Ih:in the following: Matu:ityof Securities US Govcrnment ~~91ritj~ US Fcderal Agenci:s and rnt~!.tJJ,m~D.!i1JqlS-s. Mortg,ge B,cked ~~cunti.f,<; Under I Y""r I to 5 Years Ovcr 5 Years 101% 102% 103% 102"1/'1 10)% IO.t% 10.1% IO.t% 105% . E (eluding mortgage backed securities. 4. ColI,ter,1 shall be m,rked 10 m,rkel at least weekly. 5. Substitution of collatcral is pcrmilled !lID REOU,REMENT The Chief Financial Omcer shall utilize the competitive bid process Ii) sell and purchasc sccmities. subject only 10 the exceptions notcd in the lnvestment Policy. Afier the Chief Financial Officer has detcnnincd Ihe approximate maturity date based on cash flow nceds and market conditions and has analyzcd an~ selected one or more optimal types of investmenl, a minimum of three 0) banks or dc;i1crs must be cont.lCtcd to ask for offerings of securities that fit the invcstment crileri<l. Documentation Inust be collectcd 10 hsurc that the securities meet Investment Policy guidelines :md that price levels exeC11ted :1re consistent with market levels at the time. When selling securities, a minimum of three (3) dealer bids will be sought. Documentalion of.111 trans.actions must be maintained Examples of when the Compefitively bid process can be p:lssed. include: I. Whcn time constrainls duc to unllsual cirCllmSt:lnCcS preclllde lhe Ilse of thc compctiti\'c bidding process. 2. When no activc m;uket exists for thc issue being traded due to fhe :lge or depth of the isslle. [On a "work-out" basis). 3. When a security is uniquc 10 a singlc dealer. for example a privi1te pl;Jcement. 4. When thc transaction im'olvcd new issues or issues on the "when issued" market. 13' c.- ,...W._.._____.."...,. ._,,___....__....~._,....__.=- .~_,,_ _~~...~.."'.~ 6 SEP 2 5 1995 If the matUling invcstment is a ccnific..1tc of deposit. one of the contilcts m;Jdc shall be the present holder of the fund$ subject to ponfolio diversification requirements in the rnvestment Policy. Due to (h..: cost of safekeeping, one business day repurchase agreements less than S 1.000,000, rind the overnight sweep repurchase agreement associated with the Now Account will not be bid. The Dcposi~.ory Bank/Concentration Bank shall be selected through;] competitive process on il. pcriodic basis th.at lakes into account the qualit)' and scopt: of service, INTERNAL CONTROLS The Chief Financial Officer shall establish and mcnilor a set of wnllcn internill controls designed to protect the COtlnty's financial assets and cnsure propcr <lccounting and reporting of the transactions. The Chief Financial Officcr shall establish an annual process of indcpcnden.. rcview by an external auditor which will s~rYc as an internal control by assuring compliance ",.ith policies and procedures. Internal con:rols will encompass at a minimum the following issuc:s: I. tnmsfcrs of all funds (purchases, sales, etc.), 2. separation of functions including tranS<jction authority from accouming and record-keeping. 3. custodia! safekeeping, 4. avoidance of dclh.'cry ofbcarer-form or non-wirC:1ble sccuntles. 5. delegation of authority to subordin(lte starr members, 6. written confirmation of telephone transactions, 7. supervisory control of employee actions, 8. identification and minimization ofauthorizcd investment orficials. 9. tjocumenLation of decisions and trnnsactil.'ns, and 10. documentation of complete description nf mortgage securities purchased and yield tables at purchase date. REPORTING Annual. qU:Hterly and monthly reports of assels willlx:: pre.scnted to the Board. The following items will be included i 1 the reports at least :tnmJ.11Iy: I. ~';(curities in the portfolio by type, book value, income e:uned. market value, final maturity and 2.. eragc life. 2. rdormation on activity in the ttCcount, and 3. Performance based on total rate of return which includes C::1rncd income as welt as rc.11il.ed and unrealized g.1ins and losses. OTHER 1. (jrandfalher existing securities in the portfolio to reduce lhe possibility of having lO sell linancial assets before maturity at a loss. 2. I\ny and all c:xceptions to the Invcstment Policy rcqIJirc majority vole of the Board of County {~ommis5(oners /3' /I ...~-.~~~._.._~.._~,_........_~--~.__._--,,^-,.....---.,~..