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Resolution 2619 \., 1 2 3 4 5 6 7 8 9 10 J1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ...... \. ,-~ RESOLUTION NO. 2619 A RESOLUTION OF THE BOARD OF DIRECTORS OF SOUTH TAHOE PUBLIC UTILITY DISTRICT ADOPTING A STATEMENT OF INVESTMENT POLICY BE IT RESOLVED, by the Board of Directors of the South Tahoe Public Utility District, County of EI Dorado, State of California, as follows: WHEREAS, the South Tahoe Public Utility District enters into various investments ,from time to time on behalf of the District; and WHEREAS, the South Tahoe Public Utility District staff wish to update the Statement of Investment Policy to enhance the South Ta'hoe Public Utility District's opportunities for prudent and systematic investments. NOW, THEREFORE, BE IT RESOLVED, by the Board of Directors of the South Tahoe Public Utility District that: The attached STATEMENT OF INVESTMENT POLICY is hereby adopted and becomes a part of this Resolution by reference herein. PASSED AND ADOPTED by the Board of Di'rectors of South Tahoe Public Utility District at a duly held regular meeting on the 6th day of July, 1995 by the following vote: AYES: Strohm, Mason, Wallace, Jones, Mosbacher NOES: None ABSENT: None ~LJ~ DUANE WALLACE, PRESIDENT OF THE BOARD SOUTH TAHOE PUBLIC UTILITY DISTRICT ATTEST: , CLERK OF OARD E PUBLIC UTILITY DISTRICT \. SOUTH TAHOE PUBLIC UTILITY DISTRICT STATEMENT OF INVESTMENT POLICY I. Statement of Intent This statement of investment policy is adopted to establish an overall policy and procedures for the management and investment of surplus or idle funds of the South Tahoe Public Utility District. This policy is effective as of its adoption by the Board of Directors. It will be reviewed by the Board and readopted at least once each year. II. Scope of Policy This policy covers all funds and investment activities under the direct authority of the District. It does not cover funds related to District borrowing, which are controlled by documents related to each debt issue. III. Objectives The basic objectives of the District's investment policy are, in order of priority: . Safety: Investments shall be made in a manner which first seeks to ensure the preservation of capital in the overall portfolio. Each investment transaction shall seek to first ensure that capital losses are avoided, whether they be from securities defaults or erosion of market value. \., . Liquidity: Investments shall be made whose maturity date is compatible with cash flow requirements. An adequate percentage of the portfolio should be maintained in liquid short-term securities which can be converted to cash if necessary to meet disbursement requirements. Since all cash requirements cannot be anticipated, investments in securities with active secondary or retail markets is highly recommended. Emphasis is on marketable securities with low sensitivity to market risk. . Return on Investment: Yield should become a consideration only after the basic requirements of safety and liquidity have been met. . Diversification: The investment portfolio shall be diversified to avoid incurring unreasonable and avoidable risks regarding specific security types or individual financial institutions. The portfolio shall also be diversified with respect to the term of individual investments purchased by the District. . Public Trust: All participants in the investment process shall act as cus- todians of the public trust. Investment officials shall recognize that the in- vestment portfolio is subject to public review and evaluation. The overall program shall be designed and managed with a degree of professionalism that is worthy of the public trust. \.. 1 "" IV. Prudence The District adheres to the guidance provided by the "prudent investor rule," which obligates a fiduciary to "act with the care, skill, prudence, and diligence under the circumstances then prevailing, specifically including, but not by way of limitation, the general economic conditions and the anticipated needs of the trust and its beneficiaries, that a prudent person acting in the like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims..." [Civil Code ~2261(a)] V. Delegation of Authority The Finance Officer is designated as investment officer of the District, under the direction of the General Manager. The Finance Officer shall develop and maintain written administrative procedures for the operation of the investment program, consistent with this investment policy. ~ VI. Internal Controls The Finance Officer shall establish a system of written internal controls, which will be reviewed annually by the independent auditor. The controls will be designed to prevent loss of public funds due to fraud, error, misrepresentation, unanticipated market changes or imprudent actions. Controls deemed most im- portant include: minimization of opportunities for collusion, separation of duties, separating transaction authority from accounting and recordkeeping, custodial safekeeping, avoidance of bearer-form securities, specific limitation regarding securities losses and remedial actions, written confirmation of all transactions, minimizing the number of authorized investment officials, documentation of transactions and strategies, and proper review and approval of brokerage accounts and investment transactions. VII. Reporting The Finance Division shall submit a monthly investment report to the Board of Directors. The report will include the following information: . Type of investment . Institution . Maturity date . Amount of deposit or cost of security . Current market value of securities with maturity over 12 months . Rate of interest . Statement affirming that all investments conform to the policy . Statement that there are sufficient funds for the next 30 days' objectives VIII. Eligible Investments The Finance Officer shall invest District moneys as directed by this policy and and only in the investments specifically authorized in this section. \. 2 . Investments and Limitations: ~ PERMITTED INVESTMENTS/DEPOSITS LIMIT u.s. government securities (treasuries, agencies, instrumentalities) ................ Unlimited Certificates of deposit ............. Unlimited LAIF ......................... LAIF maximum (presently $20M) Passbook accounts ............ . . .. Unlimited; must be collateralized County pooled funds .............. Unlimited Commercial paper of "prime" quality of the highest ranking or highest rating, as further described in Government Code ~5360 1 (g) ....... 15% of portfolio Shares of beneficial interest issued by diversified management com- panies investing in securities and obligations authorized and meet- ing the conditions of Government Code ~53601(k) ................ 15% of portfolio . Term of Investments: The term of any investment may not exceed 3 years without express authority from the Board of Directors for each such investment. \. . Prohibition on Floating Rate: The District may purchase U.S. govern- ment securities which are discount or securities bearing interest at a fixed rate; no floating rate securities may be purchased for investment of District funds. . Investment Policies of Pools: The District shall review at least annually the investment policies of LAIF and the EI Dorado County investment pool to ascertain that its funds in these pools are invested in accordance with the District's investment objectives. The District shall also review the provi- sions of these investment policies requiring internal controls on the invest- ment process to ascertain that there is a division of responsibility in the in- vestment procedures. The District shall not invest in pools which do not provide adequate information on their investment policies and practices. IX. Leveraging No representative of the District is authorized to engage in margin transactions nor reverse repurchase agreements or any other form of borrowing money for in- vestment purposes under any circumstances. \. 3 \. X. Banks and Securities Dealers In selecting financial institutions for the deposit or investment of District funds, the Finance Officer shall consider the creditworthiness of institutions. The Finance Officer shall continue to monitor financial institutions' credit characteristics and financial history throughout the period in which District funds are deposited or invested. Each financial institution must certify to the District in writing that it has re- ceived and read a C9PY of the District's investment policy and that it will comply with that policy in its investment recommendations to the District. XI. Ethics and Conflicts of Interest Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the invest- ment program, or which could impair their ability to make impartial investment decisions. Such employees and investment officials shall disclose to the District Board and the General Manager any material financial interests in financial insti- tutions that conduct business within the District, and they shall further disclose any large personal financiaVinvestment positions that could be related to the performance of the District's portfolio. \. '- 4