HomeMy WebLinkAbout2016 Resolution No. 092•
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RESOLUTION NO. _ic
SERIES OF 2016
A RESOLUTION APPROVING AN AGREEMENT FOR INVESTMENT ADVISORY
SERVICES BETWEEN CUTWATER INVESTOR SERVICES CORP. (d.b.a. INSIGHT
INVESTMENT) AND THE CITY OF ENGLEWOOD.
WHEREAS, in 1991 the City entered into an agreement with American Money Management
Associates, Inc. (AMMA) for investment management services; and
WHEREAS, in 1996 AMMA merged with MBIA Asset Management; and
WHEREAS, in 2010 Cutwater Asset Management assumed the investment management
services formerly offered by MBIA Asset Management; and
WHEREAS, in 2016 the City issued a request for proposal for investment advisory services
and Insight Investment, a subsidiary of Bank of New York, Mellon was selected to provide
investment management services for the City's Investment portfolio; and
WHEREAS, the passage of this Resolution approves an investment advisory agreement with
Cutwater Investor Services Corp. (d.b.a. Insight Investment) which includes investment and
reinvestment of the City's assets within the City's guidelines.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
ENGLEWOOD, COLORADO, THAT:
Section 1. The "Insight Investment -Investment Advisory Agreement" between Cutwater
Investor Services Corp. (d.b.a. Insight Investment), attached hereto as Exhibit A, is hereby
accepted and approved by the Englewood City Council.
Section 2. The Mayor is hereby authorized to sign said Agreement for and on behalf of the
City of Englewood, Colorado.
ADOPTED AND APPROVED this 1st day of August, 20 .
I, Loucrishia A. Ellis, City Clerk for the City of Englewood,
above is a true copy of Resolution No. 9~, Series of 2016 .
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Insight Investment
INVESTMENT ADVISORY AGREEMENT
This Agreement, dated as of the _. _ day of . 2016 ("Agreement"); is entered into by and
between Cutwater Investor Services Corp. (d/b/a Insight Investment) (''Adviser") and City Englewood
("Client"). The parties hereto agree as follows: ·
1. Account Assets
Client hereby appoinL,; Adviser as. its irtvestrhent adviser to direct, in its sole discretion and without prior
consultation or approval of Client, the investment a,nd reinvestment of the asset.s in Client's account (the
"Account';) on the follow ing terms and conditions. Client may, upon Wlitten notice tei Adviser; add to or
remove assets from the Account. Adviser is under no obligation to hold any contributed assets and is
authorjzed to engage in an orderly liquidation of such assets as promptly as practicable to establish Clicnes
investment portfolio. Any and all assets (including, without limitation, debt or equity securities, other
financial instruments and cash) from time to time in, or identified for, the Account shall hereafter be referred
to as the "Account Assets".
2. Investment Se1yjces
Without Client's prior consent to each transaction and subject to the Investment Guidelines (defined betow),
Adviser shall have full disc1•etiortary authority as agent and attorney-in-fact, with full power of sub~titution
a,nd full authority in Client's hame, with respect to the Account to (a) buy, sell, hold, exchange, convert, advise
on, or otherwise deal in any manner in any Account Assets as permitted under the Investment Guidelines; (b)
place orders for the execution of s1;1ch Account Assets and other transactions with or th!'ough such brokers,
dealers, counterparties, issuers, ;igents or arrangers as Adviser may select; ( c) negot;iate, execute and amend
(as applicable), on behalf of the Client, such brokerage, and other agreements and documents as Adviser
deems necessary or appropriate in connection with the Account's investment activities or the performance of
the Adviser's duties hereunder.
The Client agrees that the Adviser assumes no responsibility or liability, for any Client investments for wh ich
the Adviser has not been appointed as investment adviser. The Client understands that this Agreement does
not require or obligate the Adviser to provide legal or tax advice services to the Client and that the Adviser is
not providing such services to the Client.
3. Investment Guidelines
The Adviser agrees to supervise and direct the investment ()f the Account with regard to the written
investment objectives and policies a,nd in accordance with restrictions applicable to the Account ("Investment
Guidelines") attached hereto as Exhibit A, which may be amended in writing from time to time upon the
mutual agreement of the parties. Client also shall provide Adviser with any additional information that
Adviser may reasonably request to assist it in managing the Account. Unless otherwise indicated in the
Investment Guidelines there are no restrictions on (i) the types or categories of investments in which the
Adviser may invest on beha1f of the Client, (ii) the markets on which transactions may be carried out or [iii)
the amount or proportion of the Account that may be invested in any category of investment or in any one
investment. Client is solely responsib1e for ensuring that the Investment Guidelines comply with the laws,
rules, regulations, and the policies and procedures that are applicable to the Account.
The Client acknowledges that compliance with the Investment Guidelines wil1 be monitored as of close of
each business day (defined as each day the New York Stock Exchange is open for business). The Investment
Guidelines shall not be deemed to be breached as a result of the occurrence of any of the following even ts: (i)
any changes in price or va1ue of any investment which is brought about solely through movements in the
market; (ii) any change in the composition of any bend1mark set out in the Investment Guidelines; (iii) any
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iss11e, redemption or cancellation of investments by, or capital reconstruction of, a company or issuer whose
securities are held in the.Account or to which the Account has exposuJ'e; (iv) any change in rating of an
ilwestment held in the Account or to Which the Account has exposure, or ahy issuer of any such investment;
(v) any change in Investment Guidelines d.irected by the Client, including changes to lists of restricted
securities; or ( vi) any addition or withdrawal of cash or other assets by the Client.
4. Custody
Adviser shall ha:ve no responsibility for the custody of the Account Assets. The Client shall select a
("Custodian") to hold the Account Assets in safekeeping for the Client and to take all necessary steps to settle
purchases, sales and dther transactions under this Agreement made by Adviser, including delivery of
certificates, payment of funds, c.ollection of income, dividends, a:nd other distributions, and such other acts as
may be necessary to fulfill such custodial responsibilities. Client authorizes Adviser to give Custodian
instructions for the. purchase, sale, coriVe1 'sion, redemption, exchange or retention of any security, cash or
cash equivalent or other investment for the Account Adviser shall give notice and proper instructions with
respect to transactions in such reasonable manner as shall be agreed upon with the Custodian and Client. The
Adviser will not have custody or possession of the assets of the Account of the Client or authority to effect
withdrawals or deposits in the Account and shall not be liable for any act or omission of the Custodian. The
Client shall be solely responsible for all fees involved with any custodial arrangements. Client shall notify
Adviser prior to making any changes to the Custodian,
5. Legal Actions; Proxy and Corporate Actions
The Client agrees that Adviser shall not be responsible fot, and shall incur no liability, in connection with the
handling of any legal proceedings, including class actions and bankruptcies ( each, a "Legal Action"), with
respect to.securities purchased or held in the Account. Client and/or its Custodian will handle matters
relating to any Legal Action and Adviser shall not have any obligations relating thereto.
Client will, or will direct its Custodian to, send to Adviser or its agent (i) all proxy solicitation material and
other related material, including interim reports, annual reports and other issuer mailings respect to the
Accot1nt as well as all mc;1teriaJs and information relating to corporate reorganization matters ( e.g.,
conversfons, tender and exchange offers, mergers, stock splits, rights offerings, recapitalizations;
amendments, modifications or waivers or other rights or powers) ( collectively, "Proxy and Corporate Action
Material''). Adviser shall have full discretionary authority as agent and attorney-in-fact, with full power of
substitution and full authority in Client's name, with respectto the Account to act and vote upon all Proxy and
Corporate Action Material and Adviser may, at its discretion, elect to use one or more third parties in fulfi11ing
its obligations hereunder; Client understands that even if it has appointed Adviser to receive and act upon the
Proxy and Corporate Action Material, Client may receive certain other issuer-related communications
regarding investments in the Account and will be responsible for providing Adviser with any applicable
instructions or directions contemplated by such communication. Clientmay obtain a copy of Adviser's proxy
voting policies upon request.
6. Client Reporting
The Adviser will make available to the Client periodic reports. The Adviser does not assume responsibility for
the accuracy of information or dat.a furnished by the Client, the Custodian or any other person or firm. The
Client acknowledges that the Custodian's statements are the official records of the Account Ass.ets.
7. Allocation of Brokerage
When placing orders for the execution of transactions for the Account, the Adviser will take into
consideration available prices and other relevant factors such as, without limitation, execution capabilities,
dealer spreads or commissions, settlement and clearance capabilities; willingness to commit capital as a
principal, size and difficulty of the transaction, research and other services provided by such broker-dealers.
The Adv'isei' will exercise good faith in seeking to obtain the best price and execution for each transaction for
the Account; however, transactions will not always be executed at the lowest available price. The Adviser
shall not be liable to the Client for any act or omission of any broker or dealer selected by the Adviser.
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In plating orders for the Account, Advisei• may effed transactions independently or purchase or sell the
same or similar Account Assets for several clients (inclUditi_g clients of affiliated advisers) at approximately
the saine titne. In the. event that Adviser aggregates such orders to seek best execution or to negotiate more
favorable commission rates than mighthave been obtained had Adviser placed such m'ders independently,
Adviser will allocate such orders in a manner it considers to be fair and equitable among its clients.
Adviser may give a copy of this Agreement to any broker-dealer or other party to a transaction for the
Account, or the Custodian, as evidence of Adviser's authority to act for the Account.
8. Valuation
The Adviser will value the securities in the Account based upon prices obtained from an independent pricing
.source(s]. Where prices cannot be obtained from such an independent source, Adviser will value that
security in a good faith manher to reflect the fair market value thereof. The Client acknowledges that the
Custodian is the pricing agent for the Client's books and records and other custodial reporting purposes.
9. Delegation
In performing its obligations under this Agreement, Client authorizes Adviser, at its own discretion and
without the consent of the Client, to delegate any back-and middle,office functions and either non•
discretionary investment management services to any affiliate of Adviser as well as third party service
providers subject to confidentiality agreements.
10. Fees
The compensation of the Adviser for its services under this Agreement shall be calculated and paid in
accordance with the Fee Schedule in Exhibit B, as the same may be amended from titne to time by mutual
agreement of the Clientand the Adviser.
11. other Expenses
The Account shall be responsible for all expenses relatecl to. trading the assets of the. Account, including but
not limited to, brokerage commissions, dealer spreads, exchange service fees, taxes; an.ct interest on Account-
related loans and debit balances.
12. Limitation of Liability
Adviser does .not guarantee the performance of the Account or any specific level of performance or the
success of any investment decision or strategy that Adviser may employ. Clientunderstands that investment
decisions made for the Account are subject to various market, currency, economic, political or business risks,
and that those investment decisions will not always be profitable. Adviser will manage only the Account
Assets and property held in the Account, and in making investment decisions for the Account, Adviser will
not consider any other investments owned by the Client Because Adviser may provide advice to Client
regarding only a portion of the Account's assets, Adviser shall not be responsible to ensure that the
Account's assets, viewed in their entirety,are sufficiently diversified.
Adviser will exercise reasonable care in its performance of investment advisory services on the Client's
behalf. Except for fraud, gross negligence or willful misconduct, none of the Adviser, its affiliates or its
delegates, nor any of their respective officers, directors, employees or agents shall be liable hereunder for any
actions performed or omitted to be performed or for any errors of judgment in managing the Account.
Notwithstanding anything in this Agreement to the contrary, to the extent permitted by law, each party
waives all rights to claim punitive or consequential damages .
13. Services to Other Clients
It is understood that the Adviser and its affiliates perform i.nvestment advisory services and related services
for other clients. The Client agrees that the Adviser may give advice and take .action with respect to any of its
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other clients, including proprietary accounts, which may differ from advice given, or the timing, or nature of
action taken, with respect to the AC:::(:ount
Nothing in this Agreement shall be construed to prevent Adviser or any affiliate of Adviser or any of its
directors, officers, employees, or affiliates ("Affiliated Persons'') in any way from purchasing or selling any
same or similar Account Assets for its or their-own accounts prior to, simultaneously with, or subsequent to
any recommendation or action taken with respect to the Account, or to impose upon Adviser any obligation
to purchase or sell for the Account any security which Adviser or any of its Affiliated Persons may purchase
or sell for its or their own accounts or for the account of any advisory, brokerage or other type of client.
The Client acknowledges that Adviser ot its affiliates may, from time to time, come into possession of material
non-public or other confidential information that may restrict the Adviser's ability to enter into transaction
on behalf of the Account, and Adviser will have no liabilityirt connection therewith.
14. Representations by the Client
The Client represents that the terms of this Agreement do not violate any obligation by which the Client is
bound, whether arising by contract, operation of law, or otherwise, and that this Agreement has been duly
authorized by appropriate action and is binding upon the Client in accordance with its terms,
The Client agrees that the Adviser may use Client's name in the Adviser's p'romotional material and may
provide the Client's name and contact details in response to certain RFP requests for client contact
inforrnation.
15. Representations by the Adviser
The Adviser represen~s that it is a registered investment adviser under the provisions of the Investment
Advisers Act of 1940, as amended ("the Act"). This Agreement has been duly authorized by appropriate
action and is binding upon the Adviser in accordance with its terms.
The Adviser shall act in accordance with the prudent investor rule and other applicable provisions for
delegated fiduciaries set forth in the Colorado Uniform Prudent Investor Act -15-1-1-101, et seq. of the
Colorado Revised Code, as may be amended.
16. Acknowledgment of Receipt of Brochure (Form ADV Part 2A)
The Client hereby acknowledges receipt of the Adviser's Brochure (Form ADV, Part 2A) in compliance with
Rule 204-3 of the Act. By signing this Ag1·eement, Client acknowledges its understanding and approval of
Adviser's policies and procedures, including its broker-dealer and counterparty selection practices and.
execution and allocation of orders described in Adviser's written disclosure statement.
17. Notices
Any notice, report, account statement, instruction or other communication required or contemplated by this
Agreement shall be in writing and, unless otherwise provided in this Agreement, will be deemed to have been
given (b) when delivered in person, (c) when dispatched by electronic mail, (d) when dispatched by facsimile
(confirmed in writing by electronic mail or U.S. mail simultaneously dispatched) or (d) one (1) business day
after having been dispatched by a nationally recognized overnight courier service to the appropriate party at
the address set forth below. All notices and other communications shall be deemed effective when received,
iti writing, at the addresses appearing below. Receipt of written notice shall be presumed if mailed postpaid
by registered or certified mail, return receipt requested. Each party shall be entitled to presume the
correctness of the address below until notified in writing to the contrary. The Client hereby consents to the
Adviser's use of electronic maf) to satisfy its disclosure delivery requirements under the federal securities
laws (including the Adviser's obligation to deliver its Form ADV), and to deliver any other reports and
documents. Such consent shall be effective for the duration of this Agreement, unless the Client revokes such
consent in writi!)g.
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Ifto Client:
If to Adviser:
City of Englewood, Colorado
1000 Englewood Pkwy
Englewood, Colorado 80110
Attention: Finance and Administrative Services
Facsimile: _30_3_-_78_3_-_68_9_6 ____ _
Email:
Insight Investment
200 Park.Avenue, 7th Floor
New York, New York 10166
Attention: Client Service
Email: dientservicena@insightinvestment.com
18, Termination: Assignment: Amendment
This Agreement ma:y be terminated at any time by either party giving to the other at least thirty (30) days'
prior notice of such termination confirmed in writirtg. Ifany fees have been paid in advance, the Adviser will
refund to the Client a pro-rata share of the fee. Termination of the Agreement will not affect (i) the validity of
any action pteviously taken by Adviser under this Agreement or (ii) liabilities or obligations of the Client in
respect to the Account from transactions initiated before termination. Upon the termination of this
Agreement, Adviser will have no obligation to recommend or take. any action with regard to the Account
Assets .. The Client authorizes the Custodian to debit from the Account any
management fees that remain unpaid as of the termination date.
No assignment, as that term is defined in the Act, of this Agreement shalI be made by either party without the
consent of the other. This Agreement may be amended or modified at any time by mutual agreement in
writing.
19 .. C.mID.t~
This Agreement may be ex:ecuted in two or more counterparts, each one of which shall be deemed to be an
original.
20. Governing Law;_Arbitration
This Agreement shall be governed by, interpreted, constn1ed and enforced in accordance With the laws of the
State of New York, without giving effect to any conflict or chpice of law provisions of that State.
All disputes arising out of or in connection with this agreement and the services performed under this
agreement shall be finally resolved by arbitration in Denver, Colorado under the Commercial Arbitration
Rules of the American Arbitration Association by a single arbitrator appointed in accordance with the said
Rules, The parties acknowledge that they are waiving their right to seek remedies in court, including the right
to a ju1ytrial. For the avoidance of doubt; the arbitrator shall· not be empowered to award punitive damages.
A party mu.st provide written notice of any such dispute at least sixty (60) days prior to initiating any such
arbitration, After such written notice is provided, the parties shall engage in good faith negotiations in an
effort to resolve the dispute.
The costs of the. proceedings shall he borne equally by the parties (however, each party shall beat its own
attorneys' and experts' fees). Payments .otherwise due under this agreement which are not the subject of the
arbitrated dispute shall not be withheld on account of any dispute, referred to arbitration.
No discovery other than an exchange of documents relating to the. dispute shall be permitted. All documents
and information exchanged by the parties in any such arbitration shall be treated as confidential by the party
receiving the document or information. Any arbitration award issued shall also be maintained as
confidential by the parties, except where·the disclosure of such information is required by law or regulation.
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The parties acknowledge that: (i) Arbitration is final ; (ii) Pre -arbitration discovery is more limited than and
different from court proceedings; (iii) The arbitration award ts not required to include factual findings or
legal reasoning, and a party's right to appeal or seek modifications of the award are strict!Ylimited.
21. Entire Agreement
This Agreement constitutes the entire agreemet1t of the parties with respect to the martage~ent of the
Account. The Exhibits referenced herein are incorporated intothis Agreement
22. Confidentiality
The parties to this Agreement shall not disclose information of a con(idential nature acquired in
consequence of it, exceptfor information which is or becomes within the public domain (other than by
reason of a breach of this clause}; or which they may be entitled or bound to disclose by applicable. law or
regulation; or which is requested by regulatory or fiscal authorities; auditors, or court of competent
jurisdiction or pursuant to similar legal process. Adviser may disclose information in relation to the Client to
a) its officers, employees, affiliates, delegates and agents, b) other third parties (including, without
limitation, custodians, brokers, counterparties, and trade data repositories) in connection with the
pedonnance of its services heteunder or to assist or enable the effective management of the Client's
Account, as well as financial accounting, insurance and risk purposes, provided they are subject to similar
restrictions on further disclosure of such confidential infotrriation. In the event either party receives an
"open records request" under Colorado law, the receiving party shall promptly notify the other party.
23. Force Majeure
Notwithstanding anything in this Agreement to the contrary, Adviser shall not be responsible or liable for its
failure to perform under this Agreement or for any losses to the Account resulting from any event beyond the
reasonable control of Adviser, or its agents, including but not limited to nationalization, strikes, expropriation,
devaluation, seizure, or similar action by any governmental authority, de facto or de jure; or enactment,
promulgation, imposition or enforcement by any such governmental authority of currency restrictions,
exchange controls, levies or other charges affecting the Account's property; or the breakdown, failure ot
malfunction of any utilities or telecornmunications systems;. or any order or regulation of any banking or
securities industry1 including changes in market rules and conditions affecting the execution or settlement of
transactions; or acts of war, terrorism, insurrection or revolution; or acts of God or any other similar event
Adviser shall use commercially reasonable efforts to mitigate any losses resulting from such events and shall
maintain a commercially reasonable business recovery plan. This Section shall survive the termination of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective
representatives as of the date first above written.
City of Englewood
APPROVED BY:
ADDRESS:
Cutwater Investor Seivices Corp.
d/b/a Insight Investment
BY:
ADDRESS:
Name: Joe Jefferson
Title: Mayor
1000 Englewood Pkwy
Englewood, CO. 80110
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Name: E. Gerard Berrigan
Title: Head of U.S. Fixed Income
200 Park Avenue, 7th Floor
New York, NY 10166
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EXHIBlTA
INVESTMENT GUIDELINES
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RESOLUTIONNO. ~
SERJES OF 2014
A RESOLUTION APPROVING AMENDING TIIE CITY OF ENGLEWOOD INVESTMENT
POLICY.
WHEREAS, !he Englewood City Council approvedResoltitioµ No, 79, Series of 2006,
accepting changes and updates to the City's Investment Policy; and
WHEREAS, the Englewood City Council approved Resolution No. 84, Series of 2011,
accepting changes and updates to the City of Englewood's Investment Policy; and
WHEREAS, the passage of this proposed Resolution amends the existing Investment Policy
with changes and updates; and
WHEREAS, the Investment Policy is applicable to the investment of all funds not
immediately needed for the operating expenditures/expenses of the City, except for the
Firefighters Pension Fund, the Vohmteer Firefighters Fund, the Police Officers Pension Fund and
the Non-Emergency Employees Pension Fund; and
WHEREAS. the Investment Polley focuses on four main tenents:
• Preservation of Capital
• Liquidity to Meet Disbursement Needs
• Diversification to Reduce Risk
• Obtain a Market Rate of Return; and
WHEREAS, the changes involve clarifying language, restricting over-investing in one issuer,
adding additional investment opportunities, and requiring broker/dealers provide financial
information.
NOW, THEREFORE, BE IT RESOLVED BY TIIE CITY COUNCIL OF THE CITY OF
ENGLEWOOD, COLORADO, AS FOLLOWS:
Section 1. The City Council of the City of Englewood, Colorado, hereby approves amending
the City of Englewood Investment Policy, attached hereto as Exhibit A.
ADOPTED AND APPROVED this 3rd of November, 2014.
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I, Loucrishia A. Ellis, City Clerk for the City of Englewood, Colorado, hereby certify the
above is a true copy of Resolution No.~ Series of 2014.
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City of Englewood, Colorado
INVESTMENT POLICY
The Director of Finance and Administrative Services. of the City of Englewood, Colorado is
charged with the responsibility to prudently and properly manage any and all funds of the City.
Because these funds may be called upon, it is essential that absolute maturity horizons are
identifiable for the purpose of liquidity. Moreover, these funds must be fully collateralized, and
appropriately authorized. The following Investment Policy addresses the methods, procedures
and practices which must be exercised to ensure effective and sound fiscal management.
SCOPE
This Investment Policy shall apply to the investment of all financial assets and all funds of the City
of Englewood (hereafter referred to as the "City") over which it exercises financial control, except
the City of Englewood Firefighters Pension Fund, Volunteer Firefighters Pension Fund, Police
Officers Pension Fund, the Non-Emergency Employees Retirement Plan Fund and other City
employee retirement plans.
In order to effectively make use of the City's cash resources, all monies shall be pooled into one
investment account and accounted for separately. The investment income derived from this
account shall be distributed to the various City. funds in accordance with Englewood Municipal
Code, 4-1-2-A.
OBJECTIVES
The City's funds shall be invested in accordance with all applicable, City policies, Colorado
statutes, and Federal regulations, and in a manner designed to accomplish the following
objectives, which are listed in priority order:
• Preservation of capftal and the protection of investment prlncipal.
• Maintenance of sufficient liquidity to meet anticipated disbursements and cash flows .
• Diversification to avoid incurring unreasonable risks regarding securities owned .
• Attainment of market rate of return equal to or higher than the performance measure
established by the Director of Finance ahd Administrative Services.
DELEGATION OF AUTHORITY
The ultimate responsibility and authority for investment transactions involving the City resides with
the Director of Finance and Administrative Services (hereinafter referred to as the "Director") who
has been designated by the City Manager as the Investment Officer in accordance with
Englewood Municipal Co<;fe. The Director may appoint other members of the City staff to assist
him in the cash management and investment function . Persons who are authorized to transact
business and wire funds on behalf of the City will be designated by the Director by the wfre
transfer agreement executed with the City's approved depository for bank services (see Appendix
I).
The Director shall be responsible for all investment decisions and activities, and shall establish
written administrative procedures for the operation of the City's investment program consistent
with this Investment Policy. The Investment Officer acting within these procedures shall not be
held personally liable for specific investment transactions .
The Director may in his discretion appoint one or more Investment Advisors, registered with the
Securities and Exchange Commission undet the Investment Advisers Act of 1940 , to manage a
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portion of the City's assets. An appointed Investment Advisor may be granted limited investment
discretion within the guidelines of thi$ Investment Policy with regard to the City's assets placed
under its management. An Investment Advisor can only be appointed after consultation with and
approval by the City Manager.
PRUDENCE
The standard of prudence to be used for managing the City's assets is the "prudent investor" rule,
which states. that a. prudent investor "shall exercise the judgment and care, under the
circumstances then prevailing, which men of prudence, discretion, and intelligence exercise in the
management of the property of another, not in regard to speculation but in regard to the
permanent disposition of funds, considering the probable income as well as the probable safety of
capital.." (CRS 15-1-304; Standard for Investments.)
The City's overall investment program shall be designed and managed with a degree of
professionalism that i.s worthy of the public trust. The City recognizes that no investment is totally
without risk and that the investment activities of the City are a matter of public record.
Accordingly, the City recognizes that occasional measured losses may occur in a diversified
portfolio and shall be considered within the context of the portfolio's overall return, provided that
adequate diversification has been implemented and that the sale of a security is in the best long-
term interest of the City.
The Director and other authorized persons acting in accordance with established procedures 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 to the City Council and appropriate action is taken to control adverse deve.lopments .
ETHICS AND CONFLICTS OF INTEREST
All City 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 investment officials shall disclose
to the Cfty Manager any material. financial interest in financial institutions that conduct business
with the City, and they shall further disclose any large personal financial/investment positions that
could be related to the performance .of the City's portfolio. Employees shall subordinate their
personal investment transactions to thcise of the City particularly with regard to the timing of
purchases and sales,
ELIGIBLE INVESTMENTS AND TRANSACTIONS
All investments will be made in accordance with t.he Colorado Revised Statutes (CRS) as follows:
CRS 11-10.5-101, et seq. Public Deposit Protection Act; CRS 11-47-101, et seq. Savings and
Loan Association Public Deposit Protection Act; CRS 24-75-601, et seq. Funds-Legal
Investments: CRS 24-75-603, et seq. Depositories; and CRS 24-75-701, .et seq. Local
governments ~ authority to pool surplus funds. Any revisions or extensions of these sections of
the CRS will be assumecl to be part of this Investment Policy immediately upon being enacted.
As a home rule City, Englewood may adopt a list of acceptable investment instruments differing
from those outlined in CRS 24-75-601, et seq. Funds-Legal Investments . Funds of the City of
Englewood covered by this Investment Policy may be invested in the following types of securities
and transactions:
1. U.S. Treasury Obligations: Treasury Bills, Treasury Notes and Treasury Bonds with maturities
not exceeding five years frorn the date of trade settlement.
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2. Treasury Strips (book-entry U.S. Treasury securities whose coupons have been removed)
with maturities not exceeding five years from the date of trade settlement.
3 . Federal Instrumentalities -Debentures , Discount Notes, Medium-Term Notes , Callable
Securities and Step-up Securities issued by the following only : Federal National Mortgage
Association (FNMA), Federal Home Loan Bank (FHLB), Federal Home Loan Mortgage
Corporation (FHLMC) and Federal Farm Credit Banks (FFCB), w ith maturities not exceeding
five years from the date of trade settlement. Subord inated debt may not be purchased.
4. Repu rchase Agreements wi t h a termination date of 90 days or less util izing U.S. Treasury and
Federal Instrumentality securities listed above , collateralized at a minimum market value of
102 percent of the dollar value of the transaction with the accrued interest accumulated on the
collateral included in the calculation.
Repurchase agreements sha ll be entered into on ly with dealers who :
a) are recogn ized as Primary Dealers by the Federal Reserve Bank of New York , or with
firms that have a primary dealer within their hold ing company structure ; and
b) have executed a City approved Master Repurchase Agreement (see Appendix II). The
Director shall maintain a file of all executed Master Repurchase Agreements .
Collateral (purchased securities) shall be held by the City's custod i an bank as safekeeping
agent, and the market value of the collateral securities shall be rnarked-to-the-market daily.
Fo r the purposes of this section, the term "collateral" shall mean "purchased securities" under
the terms of the City approved Master Repurchase Agreement. In no case will the maturity of
the collateral exceed 10 yea rs.
5. Reverse Repu rchase Agreements with a maturity of 90 days or less executed only against
securities owned by the City and collateralized by the same type of security reversed .
6. Flexible Repurchase Agreements with a final matu rity of 10 years or less entered into by the
City with appr-oved counterparties. These flexible repurchase agreements may be closed out
in vary ing amounts and at varying times at the option of the City . These agreements are
deemed by both parties to be purchases and sales of secu ri ties and are not loans.
All such flexible repurchase agreements shall meet the following criteria:
• Be determined as legal and valid for both parties;
• Co ll atera l shall be limited to:
a) Securities issued by , guaranteed by , or for which the credit of any of the following is
pledged for payment: the United States, Federal Farm Cred it Bank, Federal Land
Bank , Federal Home Loan Ba nk, Federal Horn e Loan Mortgage Corpo ration , Federal
National Mortgage Associat ion, Export Import Bank or the Government National
Mortgage Association; or
b) Securities issued by, guaranteed by , or for which the credit of the following is pledged
for payment: An entity or organization which is not lis.ted in paragraph a) above , but
which is (1) created by, or the creation of which is author ized by , leg islation enacted
by the United States Congress and wh ich is subject to control by the f ederal
governmen t which is at least as extensive as that which governs an entity or
organization listed in paragraph a) above , and (2) rated in its highest rating category
by one or more nationally recognized organizations which regularly rate such
obligations.
• Have a fi xed rate during the entire life of the ag reement ;
• Th e do llar amounts and periods of time when the City may draw funds out of the
repurchase agreement shall be agreed upon in wri ting by both parties and shall be part of
the wr itten repu rchase agreement exercised by the City and the approved counterparty;
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• The City has the option of varying the dollar amount and the timing of the draw down by
an agreed upon percentage of the anticipated draw down and a specified number of days.
The City and the counterparty to the agreernenf will specify the details of the allowable
variance when the agreement is structured. In addition, the City may draw down in
excess of the variance up to the remaining balance in the agreement for a bona fide,
unanticipated cash need;
• Collateral shall have a minimum market value (including accrued interest accumulated) of
at least 102 percent of the dollar value of the trai1Saction;
• Repurchase agreements shall be entered into only with dealers who are authorized by the
Director and have executed a City approved Master Repurchase Agreement;
• The Director shall maintain a file of all executed Master Repurchase Agreements;
• The title. to or a perfected security interest in securities, along with any necessary transfer
documents, must be transferred and actually delivered to, and shall be held by, the City's
third-party custodian bank acting as safekeeping agent. The market value of the
collateral securities shall be marked-to-the-market at least weekly based on the closing
bid price at the time the custodian for the collateral issues its monthly statement to the
City.
For the purpose of the section, the term "collateral'' shall mean "purchased securities'' under
the terms of the City approved Master Repurchase Agreement. In no case will the maturity of
the collateral exceed 10 years.
7. Time Certificates of Deposit with a maximum maturity of five years or savings accounts in
state or nat1onal banks or state or federally chartered savings banks operating in Colorado
that are state approved depositories (as evidenced by a certificate issued by the State
Banking Board) and are insured by the FDIC . Certificates of deposit that exceed the FDIC
insured amount shall be collateralized in accordance with the Colorado Public Deposit
Protection Act The collateral shall have a market value equal to or exceeding · 102 percent of
the difference between the insured amount and the City's total deposits for all funds within the
institution.
8. Money Market Mutual Funds registered under the Investment Company Act of 1940 that: 1)
are "no-load" (i.e,: no commission or fee shall be charged on purchases or sales of shares);
2) have a constant net asset value per share of $1.00; 3) limit assets of the fund to securities
authorized by state statute; 4) have a maximum stated maturity and weighted average
maturity in accordance with Rule 2a-7 of the Investment Company Act of 1940; and 5) have a
rating of AAAm by Standard and Poor's, Aaa by Moody's or AAAN1 + by Fitch.
9. Local Government Investment Pools as authorized under CRS 24-75-702.
10. Prime Bankers Acceptances, rated at least A-1 by Standard & Poor's, P-1 by Moody's, or F1
by Fitch at the time of purchase by at least two services that rate them, with a maturity of six
months or less issued on domestic banks or branches of foreign banks domiciled in the U.S.
and operating under U.S. banking laws. Accepting banks must have a senior debt rating of
A2 by Moody's and A by Standard & Poor's.
11. Prime Commercial Paper with a maturity of 270 days or less which, at the time of purchase, is
rated at least A-1 by Standard & Poor's, P-1 by Moody's, or F-1 by Fitch.
a) At !he time of purchase, the commercial paper must be rated by at least two of the
above stated rating agencies at the stated minimum rating.
b) If the commercial paper issuer has senior debt outstanding, the senior debt must be
rated at least A2 by Moody's, A by Standard and Poor's, or A by Fitch .
12. Corporate Bonds issued by a corporation or bank with a final maturity not exceeding three
years from the date of trade settlement, rated at least AA-by Standard & Poor's, Aa3 by
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Moody's, or AA-by Fitch at the time of purchase by at least two services . Authorized
corporate bond~ shall be U .S. dollar denominated and issued by corporations organized and
operating within the United States . The City hereby further authorizes investments in dollar
denominated securities issued by a corporation or bank that is organized and operating within
Canada or Australia, not to exceed 10% per country at the time of purchase.
13. General or Revenue obligations of any state in the United States or any political subdivision ,
institution, or authority of such a government entity. Municipal bonds must be rated A-by
Standard & Poor's, A3 by Moody's, or A-by Fitch at the time of purchase by at least two
services if the issuer is located in Co lorado. Municipal bonds must be rated M-by Standard
& Poor's,. Aa3 by Moody's or AA-by Fitch at tl1e time of purchase by at least two services if
the issuer is located outside the state of Colorado. The maximum maturity for municipal
bonds is five years.
Securities that have been downgraded below min i mum ratings described herein may be sold or
held at the City's discretion . The portfolio will be brought back into compliance with Investment
Policy guidelines as soon as is practical.
OTHER INVESTMENTS
It is the intent of the City that the foregoing list of authorized securities be strictly interpreted . Any
deviation from this list must be pre-approved by the Director in writing after approval by the City
Manager.
INVESTMENT DIVERSIFICATION
It is the intent of the City to diversify the investment instruments within the portfol io to avoid
incurring unreasonable risks inherent in over investing in specific instruments, individual financial
institutions or maturities . The asset allocation in the portfolio should, however, be flexible
depending upon the outlook for the economy, the securities market, and the City's cash flow
needs .
The City may invest to the following maximum limits within each category:
• 50% in Certificates of Deposit
• 40% in Commercial Paper, 5% in any one issuer or its affiliates or subsid iaries
• 20% in Bankers Acceptances, 5% in any one Issuer or its affiliates or subsidiaries
• 30% in Corporate Bonds ; 5% in any one issuer or its affiliates or subsidiaries
• 30% in Municipal Bonds, 5% in any one issuer
The aggregate investment in Corporate Bonds , Commercial Paper, and Bankers Acceptances
shall not exceed 50% of the portfolio .
Tests for limitations on percentages of holdings apply to the composite of the entire portfolio of the
City, not to individual portfo lios maintained by the City. Percentage limitations used for
measurements are based on the percentage of cost value of the portfolio at the time of purchase.
INVESTMENT MATURITY AND LIQUIDITY
Investments shall be limited to maturities not exceeding five years from the date of trade
settlement. In addition , the weighted average final maturity of the total portfolio shall at no time
exceed three years . ·
SE LECTION OF BROKER/DEALERS.
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The Director shall maintain a list of broker/dealers approved tot investment purposl:ls (see
Appendix 111), and it shall be the policy of the City to purchase securities only from those
authorized firms.
To be eligible, a firm must meet at least one of the following criteria:
1. be recognized as a Primary Dealer by the Federal Reserve Bank of New York or have a
primary dealer within their holding company structure,
2. report voluntarily to the Federal Reserve Bank of New York,
3. qualify under Securities and Exchange Commission .(SEC) Rule 15c-3 (Uniform Net Capital
Rule). ·
Broker/dealers will be selected by the Director on the basis of their expertise in public cash
management and their ability to provide service to the. City's account. In the event that an external
investment advisor is not used in the process of recommending a particular transaction in the
City's portfolio, any authorized broker/dealer from whom a competitive bid is obtained for the
transaction will attest' in writing that he/she has received a copy of this po.Hey and shall submit and
annually update a City approved Broker/Dealer Information Request form which includes the
firm's most recent financial statements.
The City may purchase Commercial Paper from dlrect issuers even though they are not on the
approved list of broker/c;lealers as long as they meet the criteria outllhei:j in Item 11 of the Eligible
Investments and Transactions section ofthis Investment Policy.
COMPETITIVE TRANSACTIONS
Each investment transaction shall be competitively transacted with authorized broker/dealers. At
least three broker/dealers shall be contacted for each transaction and their bid and offering prices
shall be recorded.
If the City is offered a security for whiGh there is no other readily available competitive offering,
then. the Director will document quotations for comparable or alternative securities.
SELECTION OF BANKS AS DEPOSITORIES AND PROVIDERS OF GENERAL BANKING
SERVICES
The City shall maintain a list of banks 'approved to provide banking services or from whom the City
may purchase certificates of deposit. Banks in the judgment of the Director no longer offering
adequate safety to the City will be removed frorn the list. To be eligible for authorization, a bank
shall qualify as a depository of public funds in Colorado as defined in CHS 24-75~603 .
SAFEKEEPING AND CUSTODY
The safekeeping and custody of securities owned by the City shall be mahaged in accordance
with applicable Federal and Colorado laws and regulations.
The Director shall approve one or more banks to provide safekeeping and custodial services for
the City. A City approved Safekeeprng Agreement shall be executed with each custodian bank
prior to utilizing th~t bank's safekeeping services, To be eligible, a bank shall qualify as a
depository of public funds in the State of Colorado as defined in CRS 24-75-603 and be a Federal
Reserve member financial institution.
Custodian banks will be selected on the basis of their ability to provide service to the City's
account and the competitive pricing of their safekeeping related services. The City's designated
custodian bank is set forth in Appendix IV of this Investment Policy .
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The purchase and sale of securities c:1nd repurchase agreement transactions shall be settled on a
delivery versus payment basis. Ownership of all securities shall be perfected: in the name of the
City, and sufficient evidence. to title shall be consistent with modern investment, banking and
commercial practices .
All investments purchased by the City shall be delivered by book entry and will be held ln third-
party safekeeping by the City's designated custodian bank or the Depository Trust Company
(OTC).
All Fed wireable book entry securities owned by the City shall be evidenced by a safekeeping
receipt or a customer confirmation issued to the City by the custodian bank stating that the
securities are held in the Federal Reserve system in a Customer Account for the custodian bank
which will name the C[ty as "customer.''
All DTC eligible securities shall be held in the custodian bank's Depository Trust Company (OTC)
participant account and the custodian bank shall issue a safekeeping receipt evidencing that the
securities are held for the City as "customer."
The City's custodian will be required to furnish the City with c:1 monthly rep.ort of securities held as
well as.an account analysis report of monthly securities activity.
PROVISIONS FOR ARBITRAGE
The City periodically issues debt obligations which are subject to the provisions of the Tax Reform
Act of 1986 (section 148F), Arbitrage Rebate Regulations. Due to the legal complexities of
arbitrage law and the necessary immunization of yield levels, the procedures undertaken in the
reinvestment of all or a portion of the proceeds of such debt issuance may extend beyond those
outiined in this Investment Policy. The Director, upon advice from Bond Counsel and financial
advisors, may alter provisions of this Investment Policy for arbitrage related investments as may
be necessary to conform with federal arbitrage regulations. In all cases, however, investments
will be.• in compliance with Colorado Revised Statutes. This section is only applicable to City funds
subject to arbitrage restrictions.
REPORTING
An investment report shall be prepared, at least on a monthly basis, listing the investments held
by the City, the current market valuation of the investments and performance results . The
monthly investment report shall be submitted in a timely manner to the City Manager and the City
Council. A record shall be maintained by the Department of Finance and Administrative Services
of all bids and offerings for securities transactions in order to ensure that the City receives
competitive pricing.
The City has established reporting and accounting standards for callable U.S. Instrumentality
securities. Callable securities may be retired at the issuer's option prior to the stated maximum
maturity. All securities holding reports for the City shall disclose the stated maturity as well as the
first call date of each callable security held. In the case of callable securities which are purchased
priced to the first call date and, in the opinion of the Director, have an overwhelming. probability of
being called on the first call date, weighted average maturity, amortization as well as yield shall be
calculated using the first call date. The Director may, however, choose to use a further call date
maturity date for reporting purposes when conditions mandate.
PERFORMANCE REVIEW
The Director and the City Manager shall meet at least quarterly to review the portfolio's adherence
to appropriate risk levels and to compare the portfolio's total return to the established investment
objectives and goals.
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The Director shall periodically establish a benchmark yield for the City's investments which shall
be equal to the average yield on the U.S. Treasury security which most closely corresponds to the
portfolio's actual effective weighted average maturity. When comparing the performance of the
City's portfolio, all fees and expenses involved with managing the portfolio should be included in
the computation of the portfolio's rate of return .
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POLICY REVISIONS
This Investment Policy will be reviewed periodically by the Director and may be amended as
conditions warrant by the City Manager and the City Council.
Prepared by:
/s/
Frank Gryglewicz
Director of l=inance and Administrative
Services
Approved by City Council
September 17, 1990
Amended by City Council
December 16, 1991
Amended by City Council
April 5, 1993
Amended by City Council
June 20, 2005
Amended by City Council
November 3, 2008
Amended by City Council
February 18, 2012
State of Colorado, County of Arapahoe:
Prepared by:
/s/ _____________ _
Kevin Engels
Accounting Manager
Amended by City Council
September 5, 1995
Amended by City Council
December 15, 1997
Amended by City Council
February 7, 2000
Amended by City Council
October 16, 2006
Amended by City Council
October 3, 2011
Amended by City Council
February 19, 2013
I, Loucrjshia A, Ellis, City Clerk in and for the City of Englewood, in the State aforesaid, do hereby
certify that the foregoing is a full, true and correct copy .of the Investment Policy as the same
appears upon the records of my office which are in my custody ,
Given under by hand and official seal, this __ ,
/s/
Louctishia A. Ellis
City Clerk
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APPENDIX I
Authorized Personnel
The following persons are authorized to conduct investment transactions and wire transfer funds
on behalf of the City of Englewood:
Kevin Engels, Accounting Manager
Kathy Cassai, Accountant
Christine Hart, Accountant
Frank Gryglewicz, Director of Finance and Administrative Services
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APPENDIX II
Repurch.;1se Agreements
The following firms have executed a City approved Master R~purchase Agreement with the City of
Englewood.
Banc of.America Securities, LLC
Morgan Stanley OW Inc.
Agreements maintained in separate file.
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APPENDIX Ill
Authorized Broker/Dealers and Financial Institutions
The following firms are approved for investment purposes by the City of Englewood.
Barclays Capital
Citigroup Global Markets, Inc.
Jefferies & Company, Inc.
J.P. Morgan Securities lnc;
Merrill Lynch, Pierce, Fenner & Smith Inc
Mizuho Securities USA Inc.
Morgan Stanley Smith Barney
Raymond James & Associates
RBC Capital Markets Corporatloh
UBS Financial Services Inc .
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APPENDIX IV
Designated Custodial Banks
The following bank is authorized as the designated custodial bank for the City of Englewood:
Wells Fargo Institutional Retirement and Trust
17 40 Broadway
MAC# C7300-105
Denver; CO 80274
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EXHIBIT B
FEE SCHEDULE
The Fee Schedule applicable to the Account is as follows:
Assets
Up to and including the first $25 million
Amounts over $25 million
Annual Fee
10 basis points (.10%)
7 basis points (.07%)
The fees for investment advisory services will be charged monthly based on tl-ie average market value of the
cash and securities in the Account (an average cif last month's ending market value and the current month's
ending market value). A pro rata portion of the annual fee (1/12) is billed each month for which this
Agreement is in effect.
Monthly fees are based on the schedule outlined above, but at no time shall the monthly fee be less than
$2,000 .
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COUNCIL COMMUNICATION
Meeting Date: Agenda Item: Subject: Approval of
11ci Investment Advisory
August 1, 2016 Agreement
Initiated By : Department of Finance and Staff Source: Kathleen Rinkel , Director of
Administrative Services Finance and Administrative Services
PREVIOUS COUNCIL ACTION
In 1991 the City entered into a professional services agreement with American Money
Management Associates , Inc. (AMMA) for investment management services . In 1996 AMMA
merged w ith MBIA Asset Management. In 2010 Cutwater Asset Management assumed the
investment management services formerly offered by MBIA Asset Management.
RECOMMENDED ACTION
Staff recommends Council approve, by resolution, a new Agreement for Investment Advisory
services to include Investment and reinvestment of the City's assets within the City's guidelines .
BACKGROUND, ANALYSIS, AND ALTERNATIVES IDENTIFIED
In 2016 the City issued a request for proposal for investment advisory services . Four firms were
identified as finalists and the City has selected Insight Investment, a subsidiary of Bank of New
York, Mellon to provide investment management services for the City's investment portfolio.
FINANCIAL IMPACT
The fees for the investment advisory services are based on the average market value of the
City's investment portfolio . The City 's investment portfolio is approximately $53 ,000 ,000. At the
current market value , the yearly fees are approximately $45 ,000 .
LIST OF ATTACHMENTS
Investment Advisory Agreement for approval