The objectives of the Cattaraugus County Economic Sustainability and Growth Corporation (“CCESGC”) Investment Policy are as follows, in priority order:
- to conform with all applicable federal, state and other legal requirements (legal);
- to adequately safeguard principle (safety);
- to provide sufficient liquidity to meet all operating requirements (liquidity); and
- to obtain a reasonable rate of return (yield).
All investments made pursuant to this investment policy shall comply with the following conditions:
All participants in the investment process shall seek to act responsibly as custodians of the public trust and shall avoid any transactions that might impair public confidence in CCESGC to govern effectively.
Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the safety of the principal, as well as the probable income, to be derived.
All participants 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.
It is the policy of CCESGC to diversify its deposits and investments by financial institution, by investment instrument, and by maturity scheduling, whenever possible. Furthermore, CCESGC shall avoid having bank balances in excess of $1,000,000 with any one institution.
The County Treasurer is responsible for establishing and maintaining an internal control structure to provide reasonable, but not absolute, assurance that deposits and investments are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly, and are managed in compliance with applicable laws and regulations.
Collateralizing of Deposits
In accordance with the provisions of the General Municipal Law, all deposits of CCESGC, including certificates of deposit and special time deposits, in excess of the amount insured under the provisions of the Federal Deposit Insurance Act shall be secured:
- by a pledge of "eligible securities" with an aggregate "market value" as provided by General Municipal Law, equal to the aggregate amount of deposits from the categories designated in the Appendix to this policy; or
- by an eligible "irrevocable letter of credit" issued by a qualified bank other than the bank with the deposits in favor of the government for a term not to exceed 90 days with an aggregate value equal to 140% of the aggregate amount of deposits and the agreed upon interest, if any. A qualified bank is one whose commercial paper and other unsecured short-term debt obligations are rated in one of the three highest rating categories by at least one nationally recognized statistical rating organization or by a bank that is in compliance with applicable federal minimum risk-based capital requirements; or
- by an eligible surety bond payable to the government for an amount at least equal to 100% of the aggregate amount of deposits and the agreed upon interest, if any, executed by an insurance company authorized to do business in New York State, whose claims-paying ability is rated in the highest rating category by at least two national recognized statistical rating organization.
Safekeeping and Collateralization
Eligible securities used for collateralizing deposits shall be held by a custodial bank or trust company subject to security and custodial agreements.
The security agreement shall provide that eligible securities are being pledged to secure CCESGC deposits together with agreed upon interest, if any, and any costs or expenses arising out of the collection of such deposits upon default. It shall also provide the conditions under which the securities may be sold, presented for payment, substituted or released and the events which will enable CCESGC to exercise its rights against the pledged securities. In the event that the securities are not registered or inscribed in the name of CCESGC, such securities shall be delivered in a form suitable for transfer or with an assignment in blank to CCESGC or its custodial bank.
The custodial agreement shall provide that securities held by the bank or trust company, or agent of and custodian for, CCESGC, be kept separate and apart from the general assets of the custodial bank or trust company and will not, in any circumstances, be commingled with or become part of the backing for any other deposit or other liabilities. The agreement should also describe that the custodian shall confirm the receipt, substitution, or release of the securities. The agreement shall provide for the frequency of revaluation of eligible securities and for the substitution of securities when a change in the rating of a security may cause ineligibility. Such agreement shall include all provisions necessary to provide the County a perfected interest in the securities.
Securities pledged as collateral for CCESGC deposits shall be monitored no less frequently than monthly.
As authorized by law, CCESGC authorizes the Treasurer to invest monies not required for immediate expenditure for terms not to exceed its projected cash flow needs in the following types of investments:
- Special time deposit accounts;
- Certificates of deposit;
- Obligations of the United States of America;
- Obligations of the State of New York;
- Obligations guaranteed by agencies of the United States of America where the principal and interest are guaranteed by the United States of America;
- Any other eligible security listed on the attached appendix.
All investment obligations shall be payable or redeemable at the option of CCESGC within such times as it is anticipated the proceeds will be needed to meet expenditures for purposes for which the monies were provided and, in the case of obligations purchased with the proceeds of bonds or notes, shall be payable or redeemable at the option of CCESGC within two years of the date of purchase.
Authorized Financial Institutions and Dealers
CCESGC shall maintain a list of financial institutions and dealers approved for investment purposes. All financial institutions with which the local government conducts business must be credit worthy. Banks shall provide their most recent Consolidated Report of Condition (Call Report) at the request of CCESGC. Security dealers not affiliated with a bank shall be required to be classified as reporting dealers affiliated with the New York Federal Reserve Bank, as primary dealers. The County Treasurer is responsible for evaluating the financial position and maintaining a listing of proposed depositaries, trading partners and custodians. Such listing shall be evaluated at least annually.
Purchase of Investments
All purchased obligations, unless registered or inscribed in the name of CCESGC, shall be purchased through, delivered to and held in the custody of a bank or trust company. Such obligations shall be purchased, sold or presented for redemption or payment by such bank or trust company only in accordance with prior written authorization from the County Treasurer. All such transactions shall be confirmed in writing to CCESGC by the bank or trust company. Any obligation held in the custody of a bank or trust company shall be held pursuant to a written custodial agreement as described in General Municipal Law Section 10.
The custodial agreement shall provide that securities held by the bank or trust company, as agent of and custodian for CCESGC, will be kept separate and apart from the general assets of the custodial bank or trust company and will not, in any circumstances, be commingled with or become part of the backing for any other deposit or other liabilities. The agreement shall describe how the custodian shall confirm the receipt and release of the securities. Such agreement shall include all provisions necessary to provide CCESGC a perfected interest in the securities.
Repurchase agreements are authorized subject to the following restrictions:
- All repurchase agreements must be entered into subject to a Master Repurchase Agreement.
- Trading partners are limited to banks or trust companies authorized to do business in New York State and primary reporting dealers.
- Obligations shall be limited to obligations of the United States of America and obligations guaranteed by agencies of the United States of America.
- No substitution of securities will be allowed.
- The custodian shall be a party other than the trading partner.
Operations, Audit, and Reporting
The Treasurer shall authorize the purchase and sale of all securities and certificates of deposit on behalf of CCESGC. Oral directions concerning the purchase or sale of securities shall be confirmed in writing. The County shall pay for purchased securities upon the delivery or book-entry thereof.
CCESGC will encourage the purchase and sale of securities and certificates of deposit through a competitive or negotiated process involving telephone solicitation of at least three bids for each transaction for investments exceeding a two week period.
At the time independent auditors conduct the annual audit of the accounts and financial affairs of CCESGC, the independent auditors shall audit the investments of CCESGC for compliance with the provisions of these Investment Guidelines.
Within 60 days of the end of each of the first three quarters of the fiscal year, the County Treasurer shall prepare and submit to the Finance Committee of CCESGC a yearly investment report which indicates new investments, the inventory of existing investments, and other such matters as deemed appropriate.
Within 120 days of the end of the fiscal year, the Treasurer shall prepare and submit to the Finance Committee an annual investment report; recommendations for change in these Investment Guidelines; the investment income record; a list of total fees, commissions or other charges, if any, paid to a Custodial Bank and other such matters as deemed appropriate.
The CCESGC Board of Directors shall review this Investment Policy and Guidelines annually. The provisions of this Investment Policy and Guidelines, and any amendments hereto, shall take effect prospectively, and shall not invalidate the prior selection of any Custodial Bank or prior investment.
Schedule of Eligible Securities
- Obligations issued, or fully insured or guaranteed as to the payment of principal and interest, by the United States of America, an agency thereof or a United States government sponsored corporation.
- Obligations partially insured or guaranteed by any agency of the United States of America, at a proportion of the Market Value of the obligation that represents the amount of the insurance or guaranty.
- Obligations issued or fully insured or guaranteed by the State of New York, obligations issued by a municipal corporation, school district or district corporation of such state or obligations of any public benefit corporation which under a specific state statute may be accepted as security for deposit of public monies.
- Obligations issued by states (other than the State of New York) of the United States rated in one of the three highest rating categories by at least one nationally recognized statistical rating organization.
- Obligations of counties, cities and other governmental entities of a state other than the State of New York having the power to levy taxes that are backed by the full faith and credit of such governmental entity and rated in one of the three highest rating categories by at least one nationally recognized statistical rating organization.
- Any mortgage related securities, as defined by the Securities Exchange Act of 1934, as amended, which may be purchased by banks under the limitations established by bank regulatory agencies.
- Commercial paper and bankers' acceptances issued by a bank, other than the Bank, rated in the highest short term category by at least one nationally recognized statistical rating organization and having maturities not longer than 60 days from the day they are pledged.
- Zero coupon obligations of the United States government marketed as Treasury Strips.
Adopted: April 18, 2018