CCPD Resolution No. 10 Exhibit A Exhibit"A"
CRIME CONTROL
PREVENTION DISTRICT
(CCPD)
BA YTOWN,TEXAS
INVESTMENT POLICY
I--CPS Board ACUo
Submitted for approval 10/16/07
Revised 4/14/09
Baytown Crime Control Prevention District
Investment Policy
Table of Contents
I.Policy 1
IL Scope I
III.General Objectivcs
A.Safety 1
B.Liquidity
C.Yield
IV.Standards of Care
A.Prudence
B.Ethics and Conflicts of Interest 3
C.Delegation of Authority 3
D.Training 3
V.Safekeeping and Custody
A.Authorized Financial Dealers and Institutions 4
B.Internal Controls 4
C.Delivery Vs.Payment 5
VI.Suitable and Authorized Investments
A.Eligible Investments 5
B.Collateralization 11
V I I.Investment Parameters
A.Diversification 12
B.MaXimum Nlaturities 12
V I 11.Investment Strategies 12
1X.Reporting v
A.Methods 1
B.Performance Standards I
C.Markins?to Market 13
EXHIBITS
A-Authorized Investment Officials 14
B-Statement of Ethics and Conflicts of Interest 15
C-Approved Broker/Dealers,Financial Institutions and Investment Pools 16
D-Certification by Business Organization 17
E-Investment Strategy 18
13aytown Crime Control Prevention District
Investment Policy
Baytown Crime Control Prevention District
Investment Policy
1.Policy
It is the policy of the Baytown Crime Control Prevention District(the"CCPD")to
administer and invest its funds in a manner that will preserve the principal and
maintain the liquidity while meeting the daily cash flow requirements of the CCPD.
The CCPD will conform to all federal,state and local statutes rules and regulations
governing the investment of the CCPD's funds.
The CCPD's policy is to hold investments to maturity,however,securities may be
sold in order to minimize the potential loss of principal on a security whose credit
quality has declined;to swap into another security which would improve the quality,
yield or target duration of the portfolio;or to meet un:utticipated liquidity needs of the
portfolio.
Not less than annually,the CCPD Board shall adopt it written instrument by
resolution stating that it has reviewed the Investment Policy and investment strategies
and that the written instrument so adopted shall record any changes made to the
Investment Policy or investment strategics.
I1.Scope
This investment policy applies to all the investment activities of the CCPD.These
funds are accounted for in the CCPD's Annual Financial Report and include all
financial assets of all funds managed for CCPD by the City of Baytown,including but
not limited to tax revenues,charges for services,bond proceeds,and interest income.
111.General Objectives
The primary objectives,in priority order,of the CCPD's investment activities shall be
safety,liquidity,and yield:
A.Safety-Safety of the principal is the foremost objective of the investment
program.Investments shall be undertaken in a manner that seeks to
ensure the preservation of capital in the overall portfolio.The objective
will be to minimize credit risk and interest rate risk.
i.Credit Risk-The CCPD will minimize credit risk,the risk of loss
due to the failure of the security issuer or backer,by:
•Limiting,investments to the safest types of securities
•Pre-qualifying the financial institutions,broker/defilers,
intermediaries,and advisers with which the CCPD will do
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Baytown Crime Control Prevention District
Investment Policy
•Diversifying the investment portfolio so that potential losses on
individual securities will be minimized
ii.Interest Rate Risk-The CCPD will minimize the risk that the
market value of securities in the portfolio will fail due to changes
in general interest rates,by:
•Structuring the investment portfolio so that securities mature to
meet cash requirements for ongoing,operations,thereby
avoiding the need to Sell securities on the open market prior to
maturity
•Investing operating funds primarily in shorter-term securities,
money market mutual funds,or similar investment pools
B.Liquidity-The investment portfolio shall remain sufficiently liquid to
meet all operating requirements that may be reasonably anticipated."This
is accomplished by structuring the portfolio so that securities mature
concurrent with cash needs to meet anticipated demands.Furthermore,
since all possible cash demands cannot be anticipated,the portfolio shall
consist largely of securities with active secondary or resale markets.A
portion of the portfolio also may be placed in money market mutual funds
or local government investment pools that offer same-day liquidity for
short-terin funds.
C.Yield-The investment portfolio shall be designed with the objective of
attaining a market rate of return throughout budgetary and economic
cycles,taking into account the investment risk constraints and liquidity
needs.Return on investment is of secondary importance compared to the
safety and liquidity objectives described above.The core of investments
is limited to relatively low risk securities in anticipation of earnint a fair
return relative to the risk being assumed,Securities shall not be sold prior
to maturity with the following exceptions:
•A security with declining credit may he sold early to minimize loss of
principal
•Liquidity needs of the portfolio require that the security be sold
IV.Standards of Care
A.Prudence-The standard of prudence to be used by investing 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 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,provided deviations from
expectations are reported in a timely fashion and the liquidity and the sale
of securities are carried out in accordance with the terms of this policy.
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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 probable safety of their capital as well as
the probable income to be derived.
B.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 and management of the investment
program,or that could impair their ability to make impartial investment
decisions.Employees and investment officials shall disclose to the CCPD
and the Texas Ethics Commission any material financial interests in
financial institutions that conduct business with the CCPD.They shall
further file a disclosure statement with the Texas Ethics Commission and
the CCPD that includes any large personal financial/investment positions
that could be related to the performance of the investment portfolio.See
Exhibit B.
C.Delegation of Authority-Authority to manage the CCPD's investment
program is granted to the Director of Finance,hereinafter referred to as
investment officer.This authority is derived from the Local Government
Code Chapter 377,and the City of Baytown City Charter Article VI1,
Section 67(9).Responsibility for the operation of the investment program
is hereby delegated to the investment officer,who shall.let in accordance
with established written procedures and internal controls for the operation
of the investment program consistent with this investment policy.
Procedures should include reference to:safekeepin delivery vs.payment,
investment accounting,repurchase agreements,wire transfer agreements,
and collateral/depositary agreements.Such procedures shall include
explicit delegation of authority to persons responsible for investment
transactions.(See Exhibit A)No person may engage in an investment
transaction except as provided under the terms of this policy and the
procedures established by the investment officer.The investment officer
shall be responsible for all transactions undertaken and shall establish a
system of controls to regulate activities of subordinate officials.
D.Training-Investment Officials shall attend at least one investment
training session within 12 months after taking office or assuming duties,
and shall attend an investment training session not less than once in a two-
year period and receive not less than 10 hours of instruction relating to
investment responsibilities.The CCPD shall provide the training through
courses and seminars offered by professional organizations and
associations in order to insure the duality and capability of the CCPD's
investment personnel making investment decisions in compliance with
Public Funds Investment Act(PFIA).Professional organizations and
associations that may provide investment training included the
Government"Treasurer's Organization of'Texas.the University of North
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Texas,the Government Finance Officers Association of Texas,or the
Texas Municipal League.
V.Safekeeping and Custody
A.Authorized Financial Dealers and Institutions-Tile investment officer
will maintain a list of financial institutions and security broker/dealers
authorized to provide investment services(Exhibit C).These may include
"primary"dealers or regional dealers.No public deposit shall he made
except in a qualified public depository as established by state laws.
All financial institutions and broker/dealers who desire to become qualified
bidders for investment transactions must supply the investment officer with
the following as appropriate:
•Audited financial statements
•Proof of National Association of Securities Dealers(NASD)
certification
•Proof of state registration
•Completed broker/dealer questionnaire(Exhibit D)
•Certification by a qualified representative of the firm that the firm
has a)received and reviewed the CCPD's Investment Policy and b)
has implemented reasonable procedures and controls in an effort to
preclude investment transactions that are not authorized by the
CCPD's Investment Policy,except to the extent that this
authorization is dependent on an analysis of the makeup of the
CCPD's entire portfolio or requires an interpretation of subjective
investment standards.
The CCPD Board shall at least annually review,revise and adopt a list of
qualified brokers that are authorized to engage in investment transactions
with the CCPD.
B.Internal Controls-The investment officer is responsible for establishing
and maintaining an internal control structure designed to ensure that the
assets of the CCPD are protected from loss,theft or misuse.The internal
control structure shall be designed to provide reasonable assurance that
these objectives are met.The concept of reasonable assurance recognizes
that(1)the cost of it control should not exceed the benefits likely to be
derived and(2)the valuation of costs and benefits requires estimates and
judgments by management.
Accordingly,the investment officer shall establish a process for an annual
independent review by an external auditor to assure compliance with
policies and procedures.The internal controls shall address the following
points:
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•Control of collusion
•Separation of transaction authority from accounting and record
keeping
•Custodial safekeeping
•Avoidance of physical delivery securities
•Clear delegation of authority to subordinate staff members
•Written confirmation of transactions for investments and wire
transfers
•Development of a wire transfer agreement with the lead bank and
third party custodian
C.Delivery vs.Payment-All trades where applicable will be executed by
delivery vs.payment(DVP)to ensure that securities are deposited in an
eligible financial institution prior to the release of funds.Securities and
collateral will be held in the CCPD's name by a third-party custodian as
evidenced by safekeeping receipts.
VI.Investments
A.Eligible Investments-Assets of the CCPD may be invested in the
following instruments described below.All of these investments are
authorized by Chapter 2256 of the Government Code(Public Funds
Investment Act).
An investment that requires a minintttm rating under this section does not
qualify as an authorized investment during the period the investment does
not have the minimum rating.The CCPD shall take all prudent measures
consistent with this investment Policy to liquidate an investment that does
not have the minimum rating.
1.Obligations of,or Guaranteed by Governmental Entities
(a)Except as provided by Subsection(b),the following are authorized
investments tinder this subchapter:
(i)obligations,including letters of credit,of the United States or
its agencies and instrumentalities:
(ii)direct obligations of this state or its agencies and
instrumentalities;
(iii)collateralized mortgage obligations directly issued by a
federal agency or instrumentality of the United States,the
underlying security for which is guaranteed by an agency or
instrumentality of the United States:
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(iv)other obligations,the principal and interest of which are
unconditionally guaranteed or insured by,or backed by the full
faith and credit of,this state or the United States or their
respective agencies and instrumentalities:
(v)obligations of states,agencies,counties,cities,and other
political subdivisions of any state rated as to investment quality
by a nationally recognized investment rating Firm not less than A
or its equivalent:and
(b)The following are not authorized investments under this section:
(i)obligations whose payment represents the coupon payments
on the outstanding principal balance of the underlying mortgage-
backed security collateral and pays no principal:
(ii)obligations whose payment represents the principal stream of
cash flow from the underlying mortgage-backed security
collateral and bears no interest;
(iii)collateralized mortgage obligations that have a stated final
maturity date of greater than 10 years:and
(iv)collateralized mortgage obligations the interest rate of which
is determined by an index that adjusts opposite to the changes in
a market index.
2.Certificates of Deposit and Share Certificates
A certificate of deposit is an authorized investment under this
subchapter if the certificate is issued by a state or national bank
domiciled in this state,a savings bank domiciled in this state,or a state
or federal credit union domiciled in this state and is:
(i)guaranteed or insured by the Federal Deposit Insurance
Corporation or its successor or the National Credit Union Share
Insurance Fund or its successor:
(ii)secured by obligations that are described by Section 1(a),
including mortgage backed securities directly issued by a federal
agency or instrumentality that have a market value of not less
than the principal amount of the certificates,but excluding those
mortgage backed securities of the nature described by Section
1(b):or
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(iii)secured in any other manner and.amount provided by law for
deposits of the investing entity.
3.Repurchase Apreements
(a)A fully collateralized repurchase agreement is an authorized
investmen►under this subchapter if the repurchase agreement:
(i)has a defined termination(late;
(ii)is secured by obligations described by Section I(a)(i);and
(iii)requires the securities being purchased by the CCPD to be
pledged to the CCPD,held in the CCPD's name,and deposited at
the time the investment is nxtde with the CCPD or with a third
party selected and approved by the CCPD:and
(iv)is placed through a primary governincrit securities dealer,as
defined by the Federal Reserve,or a financial institution doing
business in this state.
(b)In this section,"repurchase agreement"means a simultaneous
agreement to buy,hold for a specified time,and sell back at a future
date obligations described by Section I(a)(i),at a market value at the
time the funds:are disbursed of not less than the principal amount of
the funds disbursed.The term includes a direct security repurchase
agreement and a reverse security repurchase agreement.
(c)Notwithstanding any other law,the terns of any reverse security
repurchase agreement may not exceed 90 days after the date the
reverse security repurchase agreement is delivered.
(d)Money received by an entity under the terms of a reverse security
repurchase agreement shall be used to acquire additional authorized
investments,but the term of the authorized investments acquired must
mature not later than the expiration date stated in the reverse security
repurchase agreement.
4.Mutual Funds
(a)A no-loads money market nlutttal funds is an authorized investment
under this subchapter if the mutual fund:
(i)is registered%vith and regulated by the Securities and
Exchange Commission;
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(ii)provides the investing entity with a prospectus and other
information required by the Securities Exchange Act of 1934(15
U.S.C.Section 78a et seq.)or the Investment Company Act of
1940(15 U.S.C.Section 80a-1 et se(l.):
(iii)has a dollar-weighted average stated maturity of 90 days or
fewer;and
(iv)includes in its investment objectives the maintenance of a
stable net asset value of$1 for cacti share.
(b)In addition to a no-load money market mutual fund permitted as an
authorized investment in Subsection(a).a no-load mutual fund is an
authorized investment under this subchapter if the mutual fund:
(i)is registered with the Securities and Exchange Commission;
(ii)has an average weighted maturity of less than two years:
(iii)is invested exclusively in obligations approved by this
subchapter:
(iv)is continuously rated as to investment quality by at least one
nationally recognized investment rating firm of not less than
AAA or its equivalent:and
(v)conforms to the requirements set forth in Sections 5(b)and
(c)relating to the eligibility of investment pools to receive and
invest funds of investing entities.
(c)Tlic CCPD is not authorized by this section to:
(i)invest in the aggregate more than 15 percent of its monthly
average fund balance,excluding bond proceeds and reserves and
other funds held for debt service,in mutual funds described in
Subsection(b):
(ii)invest any portion of bond proceeds,reserves and funds held
for debt service,in mutual fonds described in Subsection(b):or
(iii)invest its funds or funds under its control,including bond
proceeds and reserves and other funds held for debt service,in
any one mutual fund described in Subsection(a)or(b)in an
amount that exceeds 10 percent of the total assets of the mutual
fund.
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5.Investment Pools
(a)The CCPD may invest its funds and funds under its control through
an eligible:investment pool if'the CCPD Board by rule,order,
ordinance,or resolution,as appropriate,authorizes investment in the
particular pool.An investment pool shall invcst the funds it receives
front entities in authorized investments permitted by this subchapter.
(b)To be eligible to receive funds from and invest funds on behalf of
the CCPD under this section.an investment pool must furnish to the
investment officer or other authorized representative of the CCPD an
offering circular or other similar disclosure instrument that contains,at
a minimum,the following information:
(i)the types of investments in which money is allowed to be
invested:
(ii)the maximum average dollar-weighted maturity allowed,
based on the stated maturity date,of the pool;
(iii)the maximum stated maturity date any investment security
within the portfolio has;
(iv)the objectives of the pool;
(v)the size of the pool;
NO the names of the members of the advisory board of the pool
and the dates their terms expire;
(vii)the custodian battle that will safekeep the pool's assets;
(viii)whether the intent of the pool is to maintain a net asset
value of one dollar acid the risk of market price fluctuation;
(ix)whether the only source of payment is the assets of the pool
at market value or whether there is a secondary source of
payment,such as insurance or guarantees,and a description of
the secondary source of payment:
(x)the name and address of the independent auditor of the pool:
(xi)the requirements to be satisfied for an entity to deposit funds
in and withdraw funds from the pool and any deadlines or other
operating policies required for the entity to invcst funds in and
withdraw funds from the pool:and
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(xii)tite performance history of the pool,including yield,average
dollar-weighted maturities,and expense ratios.
(c)To maintain eligibility to receive funds from and invest funds on
behalf of the CCPD under this section,an investment pool must
furnish to the investment officer or other authorized representative of
the CCPD:
(i)investment transaction confirmations,and
(ii)a monthly report that contains,at it minimum,the following
information:
(A)the types and percentage breakdown of securities in
which the pool is invested:
(B)the current average dollar-weighted maturity,based on
the stated maturity date,of the pool:
(C)the current percentage of the pool's portfolio in
investments that have stated Maturities of more than one
year:
(D)the book value versus the market value of the pool's
portfolio,using amortized cost valuation:
(E)the size of the pool-
(F)the number of participants in the pool:
(G)the custodian basil:that is safekeeping the assets of the
pool:
(H)it listing of daily transaction activity of the entity
1�
participating in the pool:
(l)the yield and expense ratio of the pool;
(J)the portfolio managers of the pool:and
(K)any changes or addenda to the offering circular.
(d)The CCPD by contract may delegate to an investment pool the
authority to hold legal title as custodian o1'investments purchased with
its local funds.
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(e)In this section,"yield"shall be calculated in accordance with
regulations governing the registration of open-end management
investment companies under the Investment Company Act of 1940,as
promulgated from time to dine by the federal Securities and Exchange
Commission.
(f)To be eligible to receive funds from and invest funds on behalf of
the CCPD under this section,a public funds investment pool created to
function as a money market mutual fund must mark its portfolio to
market daily,and,to the extent reasonably possible,stabilize at a$1
net asset value.If the ratio of the market value of the portfolio divided
by the book value of the portfolio is less than 0.995 or greater than
1.005,portfolio holdings shall be sold as necessary to maintain the
ratio between 0.995 and 1.005.
(g)To be eligible to receive funds from and invest funds on behalf of
the CCPD under this section,a public funds investment pool must
have an advisory board composed:
(i)equally of participants in the pool and other persons who do
not have a business relationship with the pool and are qualified to
advise the pool,fora public funds investment pool created under
Chapter 791 and managed by a state agency:or
(ii)of participants in the pool and other persons who do not have
a business relationship with the pool and are qualified to advise
the pool,for other investment pools.
(h)To maintain eligibility to receive funds from and invest funds on
behalf of the CCPD under this section,an investment pool must be
continuously rated no lower than AAA or AAA-m or at an equivalent
rating by at least one nationally recognized rating service.
B.Collateralization-Collateralization will be required on two types of
investments:certificates of deposit and repurchase(and reverse)
agreements.In order to anticipate market changes and provide a level of
security for all funds,the Collateralization level will be one hundred two
percent(102%)of market value of principal and accrued interest.
Collateral will be held in the CCPD's name by an independent third party
with whom the CCPD has a current custodial agreement.A clearly
marked evidence of ownership(safekeeping receipt)must be supplied to
the CCPD and retained.The right of collateral substitution is granted.
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C.Existing;Investments-Any investment currently held that does not meet
the guidelines of this policy,but were authorized investments at the time
of purchase,is not required to be liquidated.
VII.Investment Parameters
A.Diversification-The investments shall be diversified by security type
and institution.With the exception of U.S.Treasury securities and
authorized pools,the CCPD will diversify the entire portfolio to comply
with the investment strategy;however,in no case shall any single
investment transaction be more than five-percent(5%)of the entire
portfolio.
B.Maximum Maturities-To the extent possible,the CCPD shall attempt to
match its investments with anticipated cash now requirements.Unless
matched to a specific cash flow,the CCPD will not directly invest in
securities maturing more than five(5)years from the date of purchase.
VIII.Investment Strategies
The CCPD maintains separate portfolios for individual funds or groups of
funds that are managed according to the terms of this Policy and the
corresponding investment strategies listed in Exhibit C.The investment
strategy for portfolios established after the annual Investment Policy review
and adoption will be managed in accordance with the terms of this Policy and
applicable agreements until the next annual review when a specific strategy
will be adopted.
llte CCPD maintains a pooled fund group that is an aggregation of[lie
majority of CCPD funds including tax receipts,enterprise fund revenues,fine
and fee revenues,as well as some,but not all,bond proceeds,and grants.This
portfolio is maintained to meet anticipated daily cash needs for CCPD
operations,capital projects and debt service.In order to ensure the ability of
the CCPD to meet obligations and to minimize potential liquidation losses,the
dollar-weighted average stated maturity of the Investment Pool shall not
exceed 2 years.The objectives of this portfolio are to ensure safety of
principal;ensure adequate investment liquidity;limit market and credit risk
tlirough diversification;and attain the best feasible yield in accordance with
lie objectives and restrictions set for in this Policy
IX.Reporting
•Methods-'The investment officer shall prepare an investment report
at least quarterly,including a management summary that provides an
analysis of the status of the current investment portfolio and
transactions made over the last quarter.This management summary
will be prepared in a manner consistent with the requirements of
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Section 2256.023(Internal Management Reports)of the PRA,and
that will allow the CCPD to ascertain whether investment activities
during the reporting period have conformal to the investment policy.
The report should be provided to the CCPD Board
An independent auditor shall fonnally review the quarterly reports
prepared under this section at least annually,and that auditor shall report
the results of the review to the CCPD Board.
•Performance Standards-The investment portfolio shall be managed
in accordance with the objectives specified in this policy(safety,
liquidity,yield).The portfolio should obtain a market average rate of
return(luring a market economic environment of stable interest rates.
The basis used by the investment officer to determine wlicther market
yields are being achieved shall be the three(3)month U.S.Treasury
Bill.
•Marking to Market-The market value of the portfolio shall be
calculated at least monthly and a statement of the market value of the
portfolio shall be issued at least quarterly.The market value of each
investment shall be obtained from a source such as the Wall Street
Journal,a reputable brokerage firm or security pricing service and
reported on the investment reports.
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EXHIBIT A
Baytown Crime Control Prevention District
Authorized Investment Otlicials
Cynthia Pearson,City of Ba}7own Director of Finance
Andrea S.Deaton,City of Baytown Assistant Director of Finance
Rena Dobbs.City of Baytown Treasurer
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EXHIBIT It
Baytown Critne Control Prevention District
Statement of Ethics and Conflicts of Interest
Investment officials for the Baytown Crime Control Prevention District shall refrain from
personal business relationships with business organizations that could conflict with the proper
execution of the investment program,or which could impair their ability to make partial
investment decisions.This would only apply to personal business relationships with business
organizations that have been approved by the Board of Directors to conduct investment
transactions with tilt;Baytown Crime Control Prevention District.
An investment official is considered to have a personal business relationship with a
business organization if:
(1)The invesunent official owns 10 percent or more of the voting stock or shares of
the business organization or owns$5,000 or more of the fair market value of the
business.
(2)Funds received by the investment official from the business organization exceed
10 percent of the investment official's gross income for the previous year.
(3)The investment official has acquired from the business organization during the
previous year investments with it book value of$2,500 or more for the personal
account of the investment official.
1 do hereby certify that I do not have a personal business relationship with any business
organization approved to conduct investment transactions with the Baytown Crime Control
Prevention District,nor am I related within the second degree by affinity or consanguinity,as
determined under Chapter 573,to an individual seeking to sell an investment to the Baytown
Crime;Control Prevention District as of the date of this statement.
Cit f Baytown
In tm ffici
Cy tl a Mrsonv Date
City of Baytown Director of Finance
Andrea S.Deaton Date
City�stf Baytown Assistant Director of Finance
TM�-zz_&VW 41)qk�
Renea Dobbs Date
City of Baytown Treasurer
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EXHIBIT C
Baytown Crime Control Prevention District
Approved I3roker/Dealers,Financial Institutions and Investment Pools
Broker/Dealers
First Southwest Asset Management
Coastal Securities
Duncan-Williams,Inc.
Morgan Stanley
Public Depositories
JP Morgan Chase,NA(Primary)
Investment Pools
TexPool
TexSTAR
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CXHIBI'C D
Bnyfown Crime Control Prevention District
Certification by Business Organization
ct[7!e t
Baytown Crime Control Prevention District
CIO City of Baytown,Texas
(Attn:Designated Invesonew ofJici(l)
P O Box 424
Baytown,TX 77522-0424
Dear Mr/s.(investment ofrciai):
This certification is executed on behalf of the Baytown Crime Control Prevention District(the
Investor)and(the Business Organization)
pursuant to the Public Funds Investment Act,Chapter 2256,Texas Government Code,(the Act)
in connection with investment transactions conducted between the Investor and Business
Organization.
The undersigned Qualified Representative of the Business Organization hereby certifies on behalf
of the Business Organization that:
I.The undersigned is a Qualified Representative of the Business Organization offering to enter
an investment transaction with the Investor(Note:as such terms are used in the Public Funds
Investment Act,chapter 2256,Texas Local Government Code)and:
2.The Qualified Representative of the Business Organization has received and reviewed the
Investment Policy furnished by the Investorand;
3.The Qualified Representative of the Business Organirultion has implemented reasonable
procedures and controls in an effort to preclude investment transactions conducted between
the Business Organization and the Investor that are not authorized by the Investor's
investment policy,except to the extent that this authorization is dependent on an analysis of
the makeup of the investor's entire portfolio or requires and interpretation of the subjective
investment standards.
Qualitted Representative of the Business Organization
Signed By:
Name
Title
Date
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EXHIBIT F.
INVI,'�STIII:N'I'S'1'1ZA'1'EGY
The Baytown Crime Control Prevention District's investment portfolio will be designed
and managed to ensure that it will meet all the requirements established by the Baytown
Crime Control Prevention District investment policy and the Public Funds investment
Act.The overall investment strategy outlined in the investment policy has been further
relined in this investment strategy statement by the following fund types.
Operating Funds:
Operating Funds generally have greater cash flow needs than other I'nnds types.
Tile operating fund portfolio may consist of any approved investment type with
the understanding that the financial requirements of the operating funds will
dictate the maturity dates of the investment.At utmost importance is the
preservation and safety of the investment principal.
Additionally each investment will be viewed for its liquidity and marketability of
the investment if the need arises to liquidate the investment before maturity.The
final determining factors for the investment strategy will be the diversification of
the investment portfolio and the yield of the investment.
To achieve short-term needs of one(1)to one hunched and eighty(180)days,
funds will be invested in approved investment pools.I'or longer-term needs of six
(6)months to five(5)years,funds will be invested in approved investments with
objective.~prioritized as follows:
1)understanding the suitability of the investment to the financial
requirements of the Baytown Crime Control Prevention District:
2)preservation and safety of principal;
3)liquidity-.
4)marketability of the investment if the need arises to liquidate the
investment before maturity;
5)diversification of the investment portfolio;and
6)yield.
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Baytown Crime Control Prevention District
Investment Policy
INVESTMENT STRATEGY(Continued)
Debt Service Funds.
The debt service requirements are usually semi-annual,thus allowing the
investment strategy to mirror debt obligation payment dates.The strategy for
debt service Curds allows greater flexibility since the actual requirements are
known into the future.Investments will still meet the adopted policies;however,
planning maturity dates to match debt requirement dates will be the primary
objective.
The investment instruments will be primarily in approved investment types with
maturities at six or twelve months established to match debt requirement dates.
Shorter-term investment may be used to meet these objectives and longer-term
investments may be used when fund balance reserves exceed one year's debt
service requirements.
To achieve this strategy the following objectives are prioritized to evaluate
investment opportunities:
1)understanding the suitability of the investment to the financial
requirements of the Baytown Crime Control Prevention District;
2)preservation and safety of principal;
3)yield;
4)marketability of the investment if the need arises to liquidate the
investment before maturity;
5)diversification of the investment portfolio;and
6)liquidity.
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Baytown Crime Control Prevention District
Investment Policy
INVE STNIE-NT STRATEGY(Continued)
Capital Improvement Funds:
Bond proceeds can be invested over the life of the project:however,the exact
disbursement of the funds is not always known.The investment objective of the
capital improvement funds is to schedule maturities to maximize investment
earnings while preserving principle.The key to an effective strategy is to be
aware of the project needs and match maturities to the period funds are needed.
The investment objective for capital projects funds is still to match investment
maturities with funding needs.As short-term needs are recognized investment
maturities will be moved into approved investment pools to meet financial
requirements.Longer-tern needs will be invested with the following objectives
as prioritized for capital improvement funds:
1)understanding the suitability of the investment to the financial
requirements of the Baytown Crime Control Prevention District:
2)preservation and safety of principal:
3)diversification of the investment portfolio:
a)yield:
5)liquidity:and
6)marketability of the investment if the need arises to liquidate the
investment before maturity,
20
Baytown Crime Control Prevention District
Investment Policy
INN'ESTIME,NT STRATEGY(Continued)
Reserve Funds:
Certain reserve funds have been established as required by bond covenants.The
investment objective is to invest reserve funds to the extent that maturities are
established to the limit of the investment policy or to the end of the bond
requirements whichever is shorter.
The overall investment strategy for reserve funds will not rely on invcstmcnt
pools;however,the use of pools is not prohibited.Longer-term investment
objectives are prioritized as follows:
1)understanding the suitability of the investment to the financial
requirements of the Baytown Crime Control Prevention District;
2)diversification of the investment portfolio;
3)preservation and safety of principal;
4)yield;
5)liquidity;and
6)marketability of the investment if the need arises to liquidate the
investment before maturity.
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