[HISTORY: Adopted by the Town Board of the
Town of Rhinebeck 5-26-2009.[1] Amendments noted where applicable.]
[1]
Editor's Note: The resolution adopted 5-26-2009 also repealed
former Ch. 25, Investment Policy, adopted 3-9-1987.
This investment policy applies to all monies and other financial
resources available for investment by the Town of Rhinebeck. Public
monies must be deposited and invested in accordance with the following
statutes:
A.
General Municipal Law (GML).
(1)
Section 10 requires the designation of one or more banks or trust
companies for deposit of public funds and for the securing of deposits.
(2)
Section 11 allows for certain temporary investment of monies not
required for immediate expenditure.
(3)
Section 39 requires the adoption, by resolution, and annual Town
Board review of an investment policy.
The primary objectives of the Town of Rhinebeck's investment
policy, in priority order, are:
A.
Legal: to conform with all applicable federal, state and other legal
requirements.
B.
Safety: safety of principal is the foremost objective of the investment
program. The objective will be to mitigate credit risk and interest
risk.
C.
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/investments
mature concurrent with cash needs to meet anticipated demands. A portion
or all of the portfolio may be placed in money market funds that offer
same-day liquidity for short-term needs.
D.
Yield: the investment portfolio shall be designed with the objective
of attaining a market rate of return throughout the 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 the investments is limited to relatively low-risk investments
in anticipation of earning a fair return relative to the risk being
assumed.
The responsibility for administration of the investment policy
is delegated to the Supervisor or Town Board approved designee, who
shall establish and maintain an internal control structure to provide
reasonable, but not absolute, assurance that deposits and investments
are safeguarded against loss from unauthorized use or disposition.
Procedures shall include an adequate internal control structure to
provide a satisfactory level of accountability based on a database
or records incorporating description and amounts of investments, transaction
dates, and other relevant information and regulate the activities
of subordinate employees.
A.
All participants in the investment process shall seek to act responsibly
as custodians of the public trust and shall avoid any transaction
that might impair public confidence in the Town of Rhinebeck to govern
effectively.
B.
Investments and deposits 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 as
well as the probable income to be derived.
C.
All persons involved in the investment decision-making process shall
refrain from personal business activity that could conflict with proper
execution of the investment program or the deposit of the Town's
funds which could impair their ability to make impartial investment
decisions.
It is the policy of the Town of Rhinebeck to diversify its deposits
and investments by financial institution, by investment instrument
and by maturing scheduling.
A.
It is the policy of the Town of Rhinebeck for all monies collected
by any officer or employee of the Town to transfer those funds to
the designated bank within two business days of receipt, or within
the time period specified by law, whichever is shorter.
B.
The Supervisor is responsible for establishing and maintaining an
internal control structure to provide for reasonable, but not absolute,
assurance that deposits and investments are safeguarded against loss
from unauthorized use or disposition and that transactions are executed
in accordance with management's authorization and recorded properly
and are managed in compliance with applicable laws and regulations.
C.
The Supervisor or designee of the Town of Rhinebeck shall maintain
or cause to be maintained a proper record of all books, notes, securities
or other record of indebtedness held by the Town of Rhinebeck for
the purpose of investment. Such record shall identify the security,
the fund for which held and the place kept. Entries shall be made
showing the date of sale or other disposition and the amount realized
therefrom.
D.
The Supervisor or designee shall report to the Board on a quarterly
basis all investments of the Town of Rhinebeck, including type of
investment, maturity date, yield and gain/loss of investments. In
addition, the Supervisor or designee shall monitor/investigate current
yields from like investments from approved providers to insure the
Town of Rhinebeck is receiving competitive yields on idle funds.
In accordance with the provisions of General Municipal Law § 10,
all deposits of the Town of Rhinebeck, including certificates of deposit
in excess of the amount under the provision of the Federal Deposit
Insurance Act (FDIC), shall be secured:
A.
By a pledge of eligible securities with aggregate market value, as provided by General Municipal Law § 10, equal to the aggregate amount of deposits from the categories designated in Appendix A[1] to this chapter.
[1]
Editor's Note: Appendix A is located at the end of this chapter.
B.
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
at least 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.
C.
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 the State of New York, whose claims-paying ability
is rated in the highest rating category by at least two nationally
recognized statistical rating organizations.
A.
Eligible securities used for collateralizing deposits shall be held
by the designated depository and/or a third-party bank or trust company
subject to security and custodial agreements.
B.
The security agreement shall provide that eligible securities are
being pledged to secure local government deposits together with agreed-upon
interest, if any, and any costs or expenses arising out of 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 that will enable the local government to
exercise its rights against the pledged securities. In the event that
the securities are not registered or inscribed in the name of the
local government, such securities shall be delivered in a form suitable
for transfer or with an assignment in blank to the Town of Rhinebeck
or its custodial bank.
C.
The custodial agreement shall provide that securities held by the
bank or trust, or agent of and custodian for the local government,
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 of 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 local government a perfected
interest in the securities.
A.
The Town of Rhinebeck shall maintain a list of financial institutions
and trust companies authorized for the deposit of monies. All financial
institutions with which the Town conducts business must be credit
worthy. Banks must, upon request, provide their most recent Consolidated
Report of Condition (Call Report). Security dealers not affiliated
with a bank shall be required to be classified as reporting dealers
affiliated with the Federal Reserve Bank, as primary dealers. The
Supervisor or designee is responsible for evaluating the financial
position and maintaining a listing of current and proposed depositories,
trading partners and custodians. Such a listing shall be evaluated
annually.
As authorized by General Municipal Law, § 11, the
Town of Rhinebeck authorizes the Supervisor or designee to invest
monies not required for immediate expenditure for terms not to exceed
its projected cash flow needs in the following types of investments:
A.
Time deposit accounts.
B.
Certificates of deposit.
C.
Obligations of the United States of America.
D.
Obligations guaranteed by agencies of the United States of America
where the payment of principal and interest are guaranteed by the
United States of America.
E.
Obligations of the State of New York.
A.
The Supervisor is authorized to contract for the purchase of investments
as follows:
(1)
Directly, including through a repurchase agreement, from an authorized
trading partner.
(2)
By participation in a cooperative investment program with another
authorized governmental entity pursuant to Article 5G of the General
Municipal Law where the program meets all the requirements set forth
in the Office of the State Comptroller Opinion No. 88-46 and the specific
program has been authorized by the governing board.
(3)
By utilizing an ongoing investment program with an authorized trading
partner pursuant to a contract authorized by the Town Board. All purchased
obligations, unless registered or inscribed in the name of the Town
of Rhinebeck, shall be purchased through, delivered to, and held in
the custody of a bank or trust company.
B.
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 Supervisor, upon proper authorization
from the Town Board, where required by law. All such transactions
shall be confirmed, in writing, to the Town of Rhinebeck by the bank
or trust company.
C.
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 § 10. The custodial agreement shall
provide that securities held by the bank or trust company as agent
of and custodian for the Town of Rhinebeck 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 the Town of Rhinebeck a perfected interest in the securities.
Repurchase agreements are authorized subject to the following
restrictions:
A.
All repurchase agreements must be entered into subject to a master
repurchase agreement.
B.
Trading partners are limited to banks or trust companies authorized
to do business in New York State and primary reporting dealers.
C.
Obligations shall be limited to obligations of the United States
of America and obligations guaranteed by agencies of the United States
of America.
D.
No substitution of securities will be allowed.
E.
The custodian shall be a party other than the trading partner. Appendix A
