Chapter 3.04
INVESTMENT POLICY
Sections:
3.04.060 Delegation of authority.
3.04.070 Ethics and conflicts of interest.
3.04.080 Authorized financial dealers and institutions.
3.04.090 Authorized and suitable investments.
3.04.140 Investment policy review.
3.04.010 Declaration.
The town council declares that the town’s cash management and investment practices have a significant impact on the operation of town government. Therefore, the town council adopts the policies set forth in this chapter, which shall be referred to as the town of Concrete investment policy. [Ord. 450 § 1, 2000]
3.04.020 Policy.
It is the policy of the town of Concrete to invest public funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the entity and conforming to all state and local statutes governing the investment of public funds. Cash may, at the discretion of the clerk-treasurer, be invested separately by fund or be commingled into a common investment portfolio and earnings from such portfolio distributed at least quarterly. [Ord. 450 § 2, 2000]
3.04.030 Scope.
This investment policy supersedes any previous investment policy and applies to all financial assets of the town. These funds are accounted for in the town’s comprehensive annual financial report and include:
(1) General fund (current expense);
(2) Special revenue funds;
(3) Capital project funds;
(4) Reserve funds;
(5) Other funds created by the town council. [Ord. 450 § 3, 2000]
3.04.040 Prudence.
Investments shall be made with such judgment and care, under circumstances then prevailing, as 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 the 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 or council and mayor direction 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. Deviations from expectations shall be reported in a timely fashion and appropriate action will be taken to control adverse developments.
All participants in the investment process will seek to act responsibly as custodians of the public trust. The investment officer shall recognize that the investment portfolio is subject to public scrutiny and evaluation. In addition, the overall investment program shall be designed and administered with a degree of professionalism worthy of the public trust. The investment officer shall also refrain from any transaction that might knowingly impair public confidence in the town’s ability to govern effectively. [Ord. 450 § 4, 2000]
3.04.050 Objectives.
The primary objectives, in priority order, of the town’s investment activities shall be:
(1) Safety. Safety of principal is the foremost objective of the investment program. Investments of the town shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. To attain this objective, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio.
(2) Liquidity. The town’s investment portfolio will remain sufficiently liquid to enable the town to meet all operating requirements, which might be reasonably anticipated.
(3) Return on Investments. The town investment portfolio shall be designed with the objective of attaining a rate of return throughout budgetary and economic cycles, commensurate with the town’s investment risk constraints and cash flow characteristics of the portfolio.
(4) Local Institutions. Local institutions shall be given preference when they are, in the judgment of the clerk-treasurer, competitive with other institutions. [Ord. 450 § 5, 2000]
3.04.060 Delegation of authority.
The town clerk-treasurer is designated as the investment officer of the town of Concrete. The clerk-treasurer shall establish written procedures for the operation of the investment program consistent with this investment policy and approval by the mayor. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the clerk-treasurer and approved by the mayor. The clerk-treasurer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. [Ord. 450 § 6, 2000]
3.04.070 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. Employees and investments officials shall disclose to the mayor and town council any material financial interest in financial institutions that conduct business with the town, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the town’s portfolio, particularly with regard to the time of purchases and sales. [Ord. 450 § 7, 2000]
3.04.080 Authorized financial dealers and institutions.
The clerk-treasurer will maintain a list of financial institutions authorized to provide investment services. No public deposit shall be made except in a qualified public depository as established by state law.
A current audited financial statement is required to be on file for each financial institution in which the town invests. [Ord. 450 § 8, 2000]
3.04.090 Authorized and suitable investments.
(1) The town shall limit its investments to those allowed by RCW 35A.740.050, 35.39.030, 35.39.032, 35.39.034, and Chapters 39.58 and 39.59 RCW as they now exist or may hereafter be amended. In general, and by way of illustration only, and not by way of limitation, these investments include the following:
(a) United States bonds;
(b) United States certificates of indebtedness;
(c) Bonds or warrants of the state;
(d) General obligations or utility revenue bonds or warrants of its own or of any other city or town in the state;
(e) Its own bonds or warrants of a local improvement district which are within the protection of the local improvement guaranty fund law; and
(f) In any other investments authorized by law for any other taxing districts.
(2) The clerk may invest in the following instruments, which the town has determined, fall within the allowable investments authorized by RCW 35.40.050:
(a) Obligations of United States Government and its agencies.
(b) Certificates of deposit of financial institutions (either banks or thrifts) which are qualified public depositories and which are in accordance with the restrictions placed on such deposits.
(c) Savings or time accounts in banks, trust companies, savings and loan associations, and mutual savings banks which are conducting business in this state, up to the amount of the insurance afforded such accounts by the Federal Deposit Insurance Corporation or by the Federal Savings and Loan Insurance Corporation. Savings or time deposits may exceed federal insurance limits if such excess is insured by the Washington Public Deposit Protection Commission (WPDPC).
(d) The Washington State Local Government Investment Pool. [Ord. 450 § 9, 2000]
3.04.100 Diversification.
The town will diversify its investments by security type and institution. With the exception of U.S. Treasury Securities and the Washington State Local Government Investment Pool, no more than $1,000,000 of the town’s total investment portfolio will be invested in a single security type or with a single financial institution. [Ord. 450 § 10, 2000]
3.04.110 Maximum maturities.
(1) To the extent possible, the town will attempt to match its investments with anticipated cash flow requirements, holding investments to maturity whenever possible. The town will not directly invest in securities maturing more than 10 years from the date of purchase, provided the average maturity of all town investments shall not exceed five years.
(2) Reserve funds may be invested in securities exceeding five years if the maturity of such investments are made to coincide as nearly as practicable with the expected use of the funds. [Ord. 450 § 11, 2000]
3.04.120 Internal control.
The clerk-treasurer shall establish a system of internal controls, which shall be reviewed annually by the state auditor. This review will provide internal control by assuring compliance with policies and procedures. [Ord. 450 § 12, 2000]
3.04.130 Reporting.
The clerk-treasurer is charged with the responsibility of including a report on investment activity and returns in the town’s comprehensive annual financial report. This report shall contain such information as the clerk-treasurer and State Auditor deem appropriate. [Ord. 450 § 13, 2000]
3.04.140 Investment policy review.
The town’s investment policy as adopted by the ordinance codified in this chapter shall be reviewed on an annual basis by the clerk-treasurer. The clerk-treasurer shall recommend to the town council such modifications as may be deemed advisable. [Ord. 450 § 14, 2000]