HomeMy WebLinkAbout1987-17 Adopting an Investment Policy for the Town of VailY ~
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ORDINANCE NO. 17
Series of 1987
AN ORDINANCE ADgPTING AN INVESTMENT POLICY
FOR THE TOWN OF UAII..
WHEREAS, the Town Council deems the investment policy of the Town of Vail a
matter of local concern; and
WFlEREAS, the Town Council wishes to adopt an investment policy for the Totivr7
which sets forth appropriate guidelines for the investment of Towr~ of Vail (~unds.
NOW, THEREFORE, be it ordained by the Town Council of the Town of Vail,
Colorado, as follows:
1. The Town Council of the Town of Vail, Colorado hereby adopts Vai~i Town
Council Policy Statement 87-1 Investment Policy attached hereto and incorporated in
this Ordinance by reference.
2. If any part, section, subsection, sentence, clause or phrase of this
Ordinance is for any reason held to be invalid, such decision shall not affect the
validity of the rerraaining portions of this Ordinance; and the Town Council hereby
declares it would have passed this Ordinance, and each part, section, subsection,
sentence, clause or phrase thereof, regardless of the fact that any one or more
parts, sections, subsections, sentences, clauses ar phrases be declared invalid.
3. The Town Council hereby finds, determines and declares that this Ordinance
is necessary and proper far the health, safety and welfare of the Town of ail and
the inhabitants thereof.
4. The repeal or the repeal and reenactment of any prov~isian of the Vail
Municipal Code as provided in this Ordinance shall riot affect any right which has
accrued, any duty imposed, any violation that occurred prior to the effective date
hereof, any prosecution commenced, nor any other action ar proceedings as commenced
under or by virtue of the provision repealed or repealed and reenacted. The repeal
of any provision hereby shal] not revive any provision or any ordinance previously
repealed or superseded unless expressly stated herein.
INTRODl1CED, READ AND APPROVED ON FIRST READING T(~IS 18i;h day of Aua~ast ,
1987, and a public hearing shall be held on this ordinance on the 18th day of
August 1987, at 7:30 p.m. in the Council Chambers of the Vaii Municipal
Building, Vail, Colorado.
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Ordered published in full this l~t}L day of u4u.. 1987.
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Paul R. Johnsto~,( Mayor
ATTEST: ~/
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Pamela A. Brandmeyer, Town Clerk
INTROpE1CED, REAP AND APPROUE.p ON SECOiVp REAPING AiVD ORDEREp PUBLISHEp
by title only this 1st day of September 1987.
Al'TEST:
Pamela A. Brandmeyer, Tod w~~k
Pau1-`R: Johnsto. , Mayor--~
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VAIL TOWN COUNCIL
COUNCIL POLICY STATEMENT 87-1
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INVESTMENT POLICY
SECTION I. STATEMENT OF PURPOSE
The Investment Policy of the Vail Town Council for the Town of
Vail represents the financial boundaries within which its cash
management process will operate.
Areas covered by this policy include:
II. Scope of Financial Funds to be Invested
III. Investment Objectives
IV. Delegation of Authority far Investment Decisions
V. Investment Prudence
VI. Investment Instruments in which the Town May
Invest, Diversification of the Investment
Portfolio, and Minimum Maturity Portfolio
Schedules
VII. Financial Institutions in Which the Town May Invest
VIII. Establishment of an Investment Committee
IX. Provisions for Interim and Annual Reporting
Cash management goals shall be developed within the constraints of
this policy statement. Goals shall include:
A. A total percentage of cash to be invested. The Town
shall have 100% of Town funds invested.
B. Percentage of Return (Yield). A target yield should be
stated as a goal. This target yield goal shall be
presented in the annual operating budget.
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C. Total Dollar Return Gaa1. Combines the goals of
percentage of cash available and the percentage of yield
to obtain a total dollar return goal.
SECTION TT. SCOPE
This investment policy applies to all financial funds of the Town
of Vail (hereby referred to as the "Town") These funds are
accounted for in the Towns comprehensive Annual Financial Report
and currently include the:
General Fund
Capital Projects Fund
Construction Funds
Special Revenue Funds:
Real Estate Transfer Tax
Parking Fee Fund
Conservation Trust Fund
Enterprise Funds:
Internal Service - Fleet Maintenance Fund
Internal Service - Health Insurance
Debt Service Fund
Special Assessment Funds
Monies held by the Colorado State Treasurer and Eagle County
Treasurer during tax collection periods shall be governed by State
of Calarado and Eagle County investment policies and are not
subject to the provisions of this policy.
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SECTION III. INVESTMENT OBJECTIVES
The format objectives of the Town is to ensure the safety of
principal. Each investment transaction shall first seek to ensure
capital losses are avoided, whether they are from default of
securities or erosion of market value. The Town, as its second
major objective, seeks to attain market rates of return on its
investments. Market rate objectives must be consistent with
constraints imposed by the primary objective of the safety of
principal, internal cash flow considerations and any Town of Vail
ordinance, restricting the placement of public monies.
Speculative investments will not be allowed. Speculative
investments are those attempting to gain market premium
appreciation thraugh short term market volatility resulting in
increased risk and loss exposure. The Town will not purchase
a security which cannot be held to maturity. This does not mean
an investment cannot be sold prior to maturity.
SECTION IV. DELEGATION OF AUTHORITY
Management responsibility for the investment program is held by
the Town Manager and appointed designees. Na employee may engage
in an investment transaction except as provided under the terms of
this policy and any procedures which may be established by the
Tawn Manager. The Town Manager shall approve investments made
through investment documentation.
Tt shall be the duty of the Controller to manage the day-to-day
operations of the portfolio, and place actual purchase/sell orders
with institutions. Tn the absence of the Controller, the
Administrative Services Director shall assume these duties.
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The authority for the investment philosophy and selection of
investment managers far the Town of Vail Employee Pension Plan and
the Town of Vail Police and Fire Employees Pension Plan shall be
the responsibility of the Pension Plan Trustee as defined in the
pension plan document.
SECTION V. PRUDENCE
Investments shall be made with reasonable financial judgement and
care, under circumstances than prevailing, which persons of
prudence, discretion and intelligence exercise in the management
of their own affairs, not for speculation, but for investment,
considering the primary objective of safety of principal as well
as the secondary objective of the obtainment of market rates of
return.
Investment officers acting in accordance with written procedures
and exercising due prudence shall be relieved of personal
responsibility for an individual security's credit risk or market
price changes, provided deviations from expectation are reported
in an timely fashion, and appropriate action is taken to control
adverse developments.
SECTION VT. INVESTMENT INSTRUMENTS
As a unit of local government in the State of Colorado the Town of
Vail is restricting itself to the following type of securities:
1. Savings accounts, certificate of deposit and other time
accounts of commercial banks insured by the Federal
Deposit Insurance Corporation.
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2, Securities of savings and loan associations' share or
investment certificate of which are insured by the
Federal Savings and Loan insurance Corporation.
3. Treasury Bills, Treasury Notes, Treasury Bonds and
Federal. agencies securities which are guaranteed by the
full faith and credit of the United States of America.
Other securities, such as Fannie Maes, which are not
backed by the full faith and credit of the United
States, may be purchased on a full delivery vs payment
basis where the securities are used as collateral and
are delivered at the time the Town releases funds for
their purchase.
4. Commercial paper issued by corporations organized in the
United States with assets exceeding $500,OOd,00Q,
5. Colorado Public Investment Pools. The Town may
participate in a Colorado Public Investment Pool, the
Colorado Local Government Liquid Asset Trust or other
similar local government pools organized in conformity
with Part 7 of Article 75 of Title 2~4, CRS, which
provides specific authority for pooling of local
government funds.
6. Money Market funds or short intermediate term bond funds
investing in U.S. Agency Securities guaranteed by the
U.S. Government.
In addition, the Town may participate in repurchase agreements
provided the securities for the agreement are included in 1
through ~ above. As a matter of policy, the Town must take
delivery of the securities purchased through a repurchase
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agreement or have required collateralized securities in a
restricted account located at the Federal Reserve Bank if the
terms of the agreement is greater than ~.4 days. Repurchase
agreements with terms less than 14 days shall be held in
safekeeping by a banker or broker in a designated trust
department. Repurchase agreements involving non--deliverable
securities shall only be held by the Federal Reserve Bank or by
another commercial banking institution's trust department which is
not owed or controlled by the borrowing institution. Pledged
securities under repurchase agreements must be based on market
value, not face value. When entering a repurchase agreement where
delivery is not required, the Town shall obtain a safekeeping
receipt for the specific security(ies) purchased. Repurchase
agreements involving pooled collateral shall be avoided.
Repurchase agreements shall only be purchased from banking
institutions or primary brokerage firms. Primary brokerage firms
shall only be used nn a full delivery vs payment basis for
repurchase agreements.
It is the general. policy of the Town to concentrate its investment
efforts in, but not to be limited to, U.S. Treasury obligations,
Certificates of Deposit and Super Now Accounts issued by financial
institutions located in the Town or Eagle County. Investments
will be selected on the following basis:
1. The institution offering the investment must meet all
the criteria as stated in, the "Financial Institutions",
Section VII of this policy statement.
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2. The duration of the investment must coincide with cash
requirements determined by the Controller of the Tawn to
meet short term or long term needs.
3. The rate of interest on the investment must be at least
equivalent to the average rate of return available in
the market place.
Certificate of Deposit Investments in excess of $100,000 sha11 use
an informal bidding procedure where rates will be received from at
least two institutions with the investment placed with the highest
bidder provided the institution meets the Town's investment
criteria as stated in Section V. Certificate of Deposit
investments in the amount of $1a0,aa0 or less shall have a yield
analysis performed in comparing the selected investment to others
similar in nature. The Town may place an investment with a local
institution that is not the highest bidder, provided the bid is
not more than 25 basis points below the highest bidder. U.S.
Agency and Corporate Commercial Paper investments shall use a
formal bidding procedure where rates will be received from at
least two institutions with the investment placed with the highest
yielding bidder provided the institution meets the Town's
investment criteria. Short Term (1 year or less) U.S. Treasury-
bills or notes which do not exceed $250,000 are not required to
use the aforementioned bidding process due to the limited
variation of yields for such instruments. However, bid
comparisons are to be chosen randomly, to ensure that quality
pricing is being obtained by the Town on instruments not requiring
a bid process. It is the responsibility of the Controller to
demonstrate compliance with this section. A local institution is
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defined as a bank ox savings and loan association doing business
inside the corporate limits of the Town of Vail and/or Eagle
County.
All investments will be in the name of the Town of Vail and in
mast cases it will be a general policy of the Town to pool all
available operating cash into a Treasury Cash Management
investment portfolio. However, a specific investment purchased by
a specific fund shall incur all earnings and expenses to that
particular fund. Interest earnings from pooled funds shall be
allocated to all participating funds in the following order:
A. Payment of interest earnings shall be allocated to
designated funds from its specific investments.
B, Payment to the General Fund of an amount equal to
the total annual bank service charges as incurred by the
general fund far all operating funds as included in the
annual operating budget.
C. Payment to the General Fund of a management fee equal to
5a of the annual pooled cash fund investment earnings.
D. Payment to each fund of an amount based on the average
monthly cash balance included in the common portfolio
for the earning period.
All money market investment securities will be held in safekeeping
at financial institutions or in shares with mutual funds.
Safekeeping account receipts will be held by the Tawn's Finance
Division.
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PORTFOLIO DIVERSIFICATION
The Town will diversify use of investment instruments to avoid
incurring unreasonable risks inherent in overinvesting in specific
instruments, individual financial institutions or investment
maturities.
Maximum Percent
Diversification by Instrument: of Portfolio
Money Market & Super Now Accounts
with Commercial Banks 1000
Money Market Funds and Mutual Funds
of U.S. Government Guaranteed Securities 50%
U.S. Treasury Obligations
(Bills, Notes & Bonds) 1000
U.S. Government Agency Securities
and Instruments of Government
Sponsored Corporations 500
Repurchase Agreements (Repos) 500
Certificate of Deposit (CDs)
Commercial Banks 1000
Certificate of Deposit (CDs)
Savings & Loan Association 150
Local Government Investment Pool 50%
Corporate Commercial Paper 20%
Diversification by Financial Institution:
Repurchase Agreements {Repos}
No more than 20% of the total investment portfolio
shall be secured in Repos with any one institution.
Certificates of Deposit (CDs) - Commercial Banks
No more than 330 of the total investment portfolio shall
be secured in any one commercial bank's CDs. The Colorado
Public Deposit Protection Act (P.D.P.A.) provides
collateralization of public monies accounts in excess of
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$1gq,00q with U.5. Treasury, U.S. Agency, Colorado
Municipal Bond or 65% of Real Estate Mortgage face value
investments.
Certificates of Deposit (CDs} and Passbook Savings Accounts
-Savings & Loan Associations
No more than $100,000 in CDs shall be secured in any one
Savings and Loan institution.
Local Government Guaranteed Securities or Money Market
accounts backed by U.S. Government Securities
No more than $2,000,000 shall be secured in a local
government investment pool.
Corporate Commercial Paper
No mare than $500,000 may be secured in any one Triple A
(AAA) Corporate Security.
MATURITY SCHEDULING
Investment maturities for operating funds shall be scheduled to
coincide with projected cash flow needs, taking into account
large routine expenditures (payroll, bond payments) as well as
considering sizeable blocks of anticipated revenue (sales tax,
property tax). Maturities in this category shall be timed to
comply with the following guidelines:
MATURITY SCHEDULE PORTFOLIO MINIMUMS
Under 12 months
Under 24 months
75d
850
xa
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The average maturity of the portfolio shall never exceed 2 years.
SECTION VIZ. FINANCIAL INSTITUTIONS
As stated in Section V, it is the general policy of the Town to
purchase Money Market accounts, certificates of deposit and other
time accounts primarily from financial institutions located in the
Town of Vail and/or Eagle County. United States government
securities are to be purchased through the facilities of
commercial banks or a securities institution as designated by the
Securities Exchange Commission {S.E.C.).
Financial institutions will be required to meet the following
criteria in order to receive Town funds for investment:
1. Insurance Public Funds shall be deposited only in
financial institutions insured by the Federal Deposit
Insurance Corporation or Federal Savings & Loan
insurance Corporation.
2. Collateral The amount of Town of Vail deposits or
investments not insured by agency of the federal
government shall be collateralized by securities or
mortgages in an amount equal to the market value of that
amount of invested funds plus unpaid interest earnings.
3. Size The amount of Town of Vail deposits or investments
not collateralized or insured by an agency of the
federal government shall not exceed 3~% of the net worth
or capital stock and surplus of the institution.
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4. Disclosure A) Each financial institution maintaining
.invested funds in excess of $100,000 shall furnish
corporate authorities a copy of all statements of
resources and liabilities which it is required to
furnish to the State Commission of Banks and Trust
Companies or the Controller of Currency. The Town shall
not invest in excess of $100,000 in banking institutions
which do not disclose to the Town a current listing of
securities pledged for collateralization of public
monies. B) Each securities dealer shall provide
monthly and quarterly reports filed pursuant to U.s.
Treasury Department regulations. Each mutual fund sha11
provide a prospectus and statement of additional
information.
SECTION VIII. INVESTMENT COMMITTEE
There is hereby created an investment committee, consisting of the
Town Manager, Administrative Services Director, and the Finance
Controller. Members of the committee will meet at least quarterly
to determine general strategies and to monitor results. Minutes
of the decisions made by the investment committee shall be kept on
file in the Town Clerk's Office. The committee shall include in
its review and deliberations such topics as: potential risks,
authorized depositaries, rate of return, maturity structure and
investment transactions. The committee's authority shall not
apply to investments of the Town of Vail Employee's Pension Fund.
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SECTION IX. REPORTING-INTERIM AND ANNUAL
The Finance Controller will submit a quarterly investment report
which discloses all quarterly transactions. The report will be
reviewed in detail by the investment committee and the committee
shall expand or alter the contents of the report as deemed
necessary. This information will be included in the letter of
transmittal written by the Controller. A quarterly or semi-annual
investment report shall be given to the Tnwn Council.
The effective date of this policy shall. be the 1st day of
September 19 87 .
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Paul Johns on, Mayor
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