[HISTORY: Adopted by the Town Board of the Town of Berne 12-9-1992 by Res. No. 46. Amendments noted where applicable.]
The objectives of the Investment Policy of the Town of Berne are to minimize risk; to insure that investments mature when the cash is required to finance operations; and to insure a competitive rate of return.
In accordance with this policy, the Town Supervisor or his/her designee is hereby authorized to invest all funds, including proceeds of obligations and reserve funds, in:
Certificates of deposit issued by a bank or trust company authorized to do business in New York State;
Time deposit accounts in a bank or trust company authorized to do business in New York State;
Obligations of New York State;
Obligations of the United States Government;
Repurchase agreements involving the purchase and sale of direct obligations of the United States;
With the approval of the State Comptroller, in revenue anticipation notes or tax anticipation notes of other towns and school districts.
All investments made pursuant to this Investment Policy shall comply with the following conditions.
Certificates of deposit shall be fully secured by insurance of the Federal Deposit Insurance Corporation or by obligations of New York State or obligations of the United States or obligations federal agencies the principal and interest of which are guaranteed by the United States, or obligations of New York State school districts. Collateral shall be delivered to the Town or a custodial bank with which the Town has entered into a custodial agreement. The market value of collateral shall at all times equal or exceed the principal amount of the certificate of deposit, and shall be monitored periodically.
Collateral shall not be required with respect to the direct purchase of obligations of New York State, obligations of the United States, and obligations of federal agencies the principal and interest of which are guaranteed by the United States Government.
Repurchase agreements. Every repurchase agreement shall provide for payment to the seller only upon the seller's delivery of obligations of the United States to the custodial bank designated by the Town, or in the case of book-entry transaction, when the obligations of the United States are credited to the custodian's Federal Reserve account. The seller shall not be entitled to substitute securities. Repurchase agreements shall be generally for periods of 30 days or less. The custodial bank shall confirm all transactions in writing to insure that the Town's ownership of the securities is properly reflected on the records of the custodial bank.
Payment shall be made by or on behalf of the Town for obligations of New York State, obligations the principal and interest of which are guaranteed by the United States, United States obligations, certificates of deposit, and other purchased securities upon the delivery thereof to the custodial bank, or in the case of a book-entry transaction, when the purchased securities are credited to the custodial bank's Federal Reserve System account. All transactions shall be confirmed in writing.
Written contracts are required for repurchase agreements, certificates of deposit, and custodial undertakings. With respect to the purchase of obligations of U.S., New York State, or other governmental entities, etc. in which monies may be invested, the interests of the Town will be adequately protected by conditioning payment on the physical delivery of purchased securities to the Town or custodian, or in the case of book-entry transactions, on the crediting of purchased securities to the custodian's Federal Reserve System account. All purchases will be confirmed in writing to the Town.
It is, therefore, the policy of the Town, to require written contracts as follows:
Written contracts shall be required for all repurchase agreements. Only credit-worthy banks and primary reporting dealers shall be qualified to enter into a repurchase agreement with the Town. The written contract shall provide that only obligations of the United States may be purchased, and the Town shall make payment upon delivery of the securities or appropriate book-entry of the purchased securities. No specific repurchase agreement shall be entered into unless a master repurchase agreement has been executed between the Town and the trading partners. While the term of the master repurchase agreement may be for a reasonable length of time, a specific repurchase agreement shall not generally exceed 30 days.
Written agreements shall be required for the purchase of all certificates of deposit.
A written contract shall be required with the custodial bank.
A commercial bank or trust company chartered by the State of New York shall be designated to act as custodial bank of the Town's investments. However, securities may not be purchased through a repurchase agreement with the custodial bank.
All trading partners must be creditworthy. Their financial statements must be submitted annually to the Town Supervisor to determine satisfactory financial strength.
Investments in time deposits and certificates of deposit are to be made with commercial banks or trust companies as required by law.
When purchasing eligible securities the seller shall be required to transfer the securities to the Town's custodial bank.
Repurchase agreements shall be entered into only with banks or trust companies or registered primary reporting dealers. Sound credit judgments must be made with respect to trading partners in repurchase agreements. It is not assumed that inclusion on a list of Federal Reserve is automatically adequate evidence of creditworthiness.
Repurchase agreements should not be entered into with small undercapitalized trading firms.
The Town Supervisor or designee shall authorize the purchase and sale of all securities and execute contracts for repurchase agreements and certificates of deposit on behalf of the Town. Oral directions concerning the purchase or sale of securities shall be confirmed in writing. The Town shall pay for purchased securities upon the simultaneous delivery or book-entry thereof.
The Town will encourage the purchase and sale of securities through a competitive process involving telephone solicitation of at least three bids for each transaction.
At the time of the audit of the accounts and financial affairs of the Town, the auditors shall audit the investments and investment proceeds of the Town for compliance with the provisions of this Investment Policy.