Resolution 2739-02 I
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2 RESOLUTION NO. 2739-02
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A RESOLUTION OF THE BOARD OF DIRECTORS
4 OF THE SOUTH TAHOE PUBLIC UTILITY DISTRICT
AUTHORIZING CERTAIN STAFF TO CONDUCT
5 FINANCIAL TRANSACTIONS, SUPERSEDING
RESOLUTION NO. 2724-01
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7 WHEREAS, the Board of Directors needs the District's financial staff to conduct
8 business on behalf of the South Tahoe Public Utility District; and
9 WHEREAS, the Board of Directors of the South Tahoe Public Utility District
10 (District) authorizes Rhonda McFarlane, Chief Financial Officer, and Deborah Henderson,
11 Accounting Manager, following transactions:
12 1. Transfer funds between authorized bank accounts and investment pools.
13 2. Purchase or redeem investment instruments, as provided by the District's
w 14 Investment Policy.
15 3. Execute wire fund transfers between authorized District bank accounts.
16 4. Establish wire fund transfers or approve electronic fund transfers to pay
17 District obligations.
18 WHEREAS, the Board of Directors of the South Tahoe Public Utility District
19 authorizes Douglas Metz, Accounting Technician, to perform the following financial
20 transactions under the direction of or in the absence of either Rhonda McFarlane, Chief
21 Financial Officer, and Deborah Henderson, Accounting Manager.
22 1. Transfer funds between authorized bank accounts and investment pools.
23 2. Execute wire fund transfers between authorized District bank account.
24 3. Execute pre-established wire fund transfers to pay District obligations.
25 NOW, THEREFORE, BE IT RESOLVED, that this authorization will remain in full
26 force until the Board gives written notice to the contrary.
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Resolution No. 2739-02
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1 PASSED AND ADOPTED at a duly held Regular Meeting of the Board of Directors
2 of the South Tahoe Public Utility District on the 2nd day of May, 2002, by the following vote:
3 AYES: Directors Jones, Wallace, Schafer, Mosbacher
4 NOES: None
5 ABSENT: Diretor Becker
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9 adiliv (J))CaAe
10 Duane Wallace, Board President
South Tahoe Public Utility District
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12 ATTEST:
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14 a by Sh Clerk of the ,-oard and
Ex-officio cretary to the Board of Directors
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SOUTH TAHOE PUBLIC UTILITY DISTRICT
41160 STATEMENT OF INVESTMENT POLICY
Statement of Intent
This statement of investment policy is adopted to establish an overall policy and
procedures for the management and investment South Tahoe Public Utility District's
funds available for investment. 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 investment program shall be designed and managed with a degree of
professionalism worthy of the public trust. The District's primary investment
objectives,in order of priority, shall be:
A Safety: Safety of principal is the foremost objective of the District. Investments
shall be made in a manner that first seeks to ensure the preservation of capital in the
overall portfolio. And, second seeks to ensure that capital losses are avoided,
thw whether they be from securities defaults or erosion of market value.
B Liquidity: The investment portfolio shall be structured to provide sufficient
liquidity to enable the District to meet its 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 are highly recommended. Emphasis is on
marketable securities with low sensitivity to market risk.
C Yield: The investment program shall be designed with the objective of attaining a
market rate of return on its investments consistent with the constraints imposed by
its safety objective and cash flow considerations. Yield should become a
consideration only after the basic requirements of safety and liquidity have been
met.
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
460 aims..."
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Authorized individuals acting in accordance with this Policy and written procedures
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.
V Delegation of Authority
The Board of Directors has delegated management responsibility for the investment
program to the Chief Financial Officer who is designated as the Investment Officer of
the District. In the Chief Financial Officer's absence, the Accounting Manager shall
act as the Investment Officer. The Chief Financial Officer shall develop and maintain
administrative procedures for the operation of the investment program, consistent with
this investment policy.
All participants in the investment process shall act as custodians of the public trust.
Investment officials shall recognize that the investment 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.
VI Internal Controls
The Chief Financial Officer shall establish a system of internal controls, which shall
be reviewed annually by the independent auditor. The controls shall be designed to
prevent loss of public funds arising from fraud, error, misrepresentation,unanticipated
market changes or imprudent actions. Controls deemed most important include:
minimization of opportunities for collusion, separation of duties, separating
transaction authority from accounting and record keeping, 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 Investment Officer, or her designee, shall submit a monthly investment report to
the Board of Directors. The monthly reports shall include all investments held by the
District, and/or under the management of any outside party and shall include: a list of
security transactions; the type of investment; issuer; date of maturity; par and dollar
amount invested on all securities; current market value on all securities (including the
source of this valuation); a statement that the portfolio is in compliance with this
Policy or the manner in which it is not in compliance; and, a statement that the
District has the ability to meet its expenditure requirements for the next 6 months or
an explanation as to why sufficient money may not be available.
VIII Permitted Investments
Sections 53600 et. seq. of the California Government Code provide basic investment
limits and guidelines for government entities. Within the investments permitted by the
Government Code, the District seeks to further restrict eligible investments as
provided below. In the event an apparent discrepancy is found between this Policy
and the Government Code,the more restrictive parameters shall take precedence. The
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Investment Officer shall invest District moneys as directed by this Policy and only in
the investments specifically authorized in this section.
A U.S. Treasury Instruments. United States Treasury notes, bonds, bills or
certificates of indebtedness, or those for which the full faith and credit of the
United States is pledged for payment of principal and interest.
B Federal Agency and Instrumentality Securities. Federal agency or United
States government-sponsored enterprise obligations, participations, or other
instruments, including those issued by or fully guaranteed as to principal and
interest by federal agencies or United States government-sponsored enterprises.
The District should target a maximum allocation of 25% to callable Federal agency
securities.
Investments in Federal agency mortgage-backed pass-through securities or
collateralized mortgage obligations may not exceed 20% of the District's portfolio.
C U.S. Corporate Debt. Medium-term notes, defined as all corporate and
depository institution securities with a maximum remaining maturity of three (3)
years or less, issued by corporations organized and operating within the Untied
States or depository institutions licensed by the United States or any state and
operating within the United States. Eligible investments shall be rated "A" or
better by one or more nationally recognized rating services. A maximum of 30%
of the District's portfolio may be invested in this category.
D Negotiable Certificates of Deposit. Negotiable certificates of deposit issued by a
nationally or state-chartered bank or a state or federal association or by a state-
licensed branch of a foreign bank. Purchasers are limited to issuers whose short-
term debt is rated A-1/P-1. A maximum of 30% of the District's portfolio maybe
invested in this category.
E Commercial Paper. Commercial paper rated P1, Al, or F1 by either Moody's
Investor Service, Inc. (Moody's), Standard & Poor's (S&P) or Fitch Financial
Services, Inc. (Fitch). Commercial paper rated below P1, Al, or Fl by either
Moody's, S&P, or Fitch is not eligible for purchase. The corporation that issues
the commercial paper shall be organized and operating within the United States,
shall have total assets in excess of five hundred million dollars ($500,000,000),
and shall issue debt, other than commercial paper, if any, that is rated "A" or
higher by Moody's, S&P, or Fitch. Eligible commercial paper may not exceed
270 days maturity nor represent more than 10% of the outstanding paper of an
issuing corporation. A maximum of 30% of the District's portfolio may be
invested in this category.
F Bank Deposits. FDIC insured or fully collateralized demand deposit accounts,
savings accounts, market rate accounts, time certificates of deposits in state or
kire national banks located in California. As required by Government Code §53649,
the District shall have a signed contract with each financial institution with the
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District's funds on deposit. Any financial institution accepting the District's funds
for deposit must comply with the requirements of Government Code §53630 et
seq., including collateralization of deposits. The District may waive the
collateralization requirements for any portion of the deposit that is covered by
Federal deposit insurance. To be eligible to receive District deposits, the financial
institution must have received a minimum overall rating "satisfactory" in its most
recent evaluation of its record of meeting the credit needs of California
communities, as required by Government Code §53635 et. seq. A maximum of
20% of the District's portfolio may be invested in time certificates of deposit.
F Bankers' Acceptances. Bankers' acceptances otherwise known as bills of
exchange or time drafts that are drawn on and accepted by a domestic commercial
bank. Purchases are limited to issuers whose short-term debt is rated A-1/P-1
Banker's acceptances cannot exceed a maturity of 180 days. A maximum of 40%
of the District's portfolio maybe invested in this category.
G State of California's Local Agency Investment Fund (LAIF). If the District
has funds invested in LAIF, the District shall maintain on file LAIF's current
investment policy and its requirements for participation, including limitations on
deposits and withdrawals. In addition, the District's shall review annually
investment policies of LAIF to ascertain that its funds are invested in accordance
with the District's investment objectives. Furthermore, the District shall review
the provisions of these investment policies requiring internal controls on the
41110, investment process to ascertain that there is a division of responsibility in the
investment procedures.
H California Asset Management Trust. A California common law trust
established pursuant to Title 1, Division 7, Chapter 5 of the Government Code of
the State of California. CAMP must be rated "AAAm" to be eligible for
investment of District funds.
I Money Market Funds. Shares of beneficial interest issued by diversified
management companies that are money market funds registered with the
Securities and Exchange Commission under the Investment Company Act of 1940
(15 U.S.C. Sec. 80a-1 and following). The company shall have met either of the
following criteria: (a) attained the highest ranking or the highest letter and
numerical rating provided by not less than two nationally recognized statistical
rating organizations and (b) retained an investment adviser registered or exempt
from registration with the SEC with not less than five (5) years' experience
managing money market mutual funds with assets under management in excess of
five hundred million dollars ($500,000,000). A maximum of 20% of the District's
portfolio may be invested in this category.
J El Dorado County Pool. The District shall review at least annually the El
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
thy also review the provisions of these investment policies requiring internal controls
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on the investment process to ascertain that there is a division of responsibility in
the investment procedures.
IX Prohibited Investments:
Investments by the District in securities permitted by the California Government
Code, but not specifically approved by this investment policy are prohibited without
the prior approval of the Board. The District is prohibited from buying on margin or
from speculative buying. Furthermore, the District is prohibited from investing in
equity-linked securities or from entering into financial futures contracts, options, or
swaps. However, the District may purchase U.S. government securities which are
discount or securities bearing interest at a fixed rate; no floating rate securities may be
purchased for investment of District funds.
In accordance with California Government Code §53601.6, the District shall not
invest in floaters, range notes, mortgage derived interest-only strips, or any security
that could result in zero interest accrual if held to maturity.
X Term of Investments
The term of any investment may not exceed five years without express authority from
Board of Directors received at least 90 days preceding the investment purchase.
XI Diversification
The investment portfolio shall be diversified to avoid incurring unreasonable and
r► 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. In addition to the percentage limitations
specified in Section VIII Permitted Investments, the maximum amount of the
portfolio the District may invest with any one non-governmental issuer is 10%.
XII Credit Rating Changes
In the event a security held by the District is subject to a rating change that brings it
below the minimum credit ratings specified in this Policy, the Investment Officer
should disclose such information in the monthly investment report.
XIII Safekeeping
All cash and securities in the District's portfolio, including those that are being
managed by the Investment Officer, shall be held in safekeeping in the District's
name by a third party bank trust department, acting as agent for the District under the
terms of a custody agreement executed by the bank and the District.
All securities will be received and delivered using standard delivery versus payment
(DVP) procedures, the District's safekeeping agent will only release payment for a
security after the security has been properly delivered. The only exception to the
foregoing shall be depository accounts and securities purchases made with: (i) local
government investment pools; and, (ii) money market mutual funds, since the
purchased securities are not deliverable.
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XIV Securities Dealers
The District has authorized the Investment Advisor to use broker/dealers, which the
Investment Advisor has selected in accordance with its written selection policy. The
Investment Officer may also use broker/dealers meeting credit worthiness standards
established by the Investment Officer.
XV 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 investment 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 institutions that conduct business
within the District, and they shall further disclose any large personal
financial/investment positions that could be related to the performance of the District's
portfolio.
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