HomeMy WebLinkAbout2022 Resolution No. 0271
RESOLUTION NO. 27
SERIES OF 2022
A RESOLUTION AUTHORIZING THE ADOPTION OF THE
ENGLEWOOD FINANCIAL POLICIES: STRUCTURALLY BALANCED
BUDGET, FUND BALANCE POLICY, DEBT POLICY, INVESTMENT
POLICY AND THE AUDIT PROCUREMENT.
WHEREAS, in Resolution No. 51, Series of 2016, City Council adopted financial policies
for the City; and
WHEREAS, the policies were written through a collaboration of the PFM Group and the
Englewood Finance and Administrative Services Department based on best practice and industry
standard as recommended by the Government Finance Officers Association (GFOA); and
WHEREAS, City staff recommends revisions to the financial policies highlighted in the
attached exhibits, specifically the Fund Balance Policy at Exhibit B, and the Investment Policy at
Exhibit D, to reflect current markets and best practices.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF ENGLEWOOD, COLORADO, THAT:
Section 1. The City Council of the City of Englewood, Colorado hereby authorizes the adoption
of the Structurally Balanced Budget Policy, attached hereto as Exhibit A.
Section 2. The City Council of the City of Englewood, Colorado hereby authorizes the adoption
of the Fund Balance Policy, attached hereto as Exhibit B.
Section 3. The City Council of the City of Englewood, Colorado hereby authorizes the adoption
of the Debt Management Policy, attached hereto as Exhibit C.
Section 4. The City Council of the City of Englewood, Colorado hereby authorizes the adoption
of the Investment Policy, attached hereto as Exhibit D.
Section 5. The City Council of the City of Englewood, Colorado hereby authorizes the adoption
of the Audit Procurement Policy, attached hereto as Exhibit E.
ADOPTED AND APPROVED this 15th day of August, 2022.
_______________________
Othoniel Sierra, Mayor
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ATTEST:
Stephanie Carlile, City Clerk
I, Stephanie Carlile, City Clerk for the City of Englewood, Colorado, hereby certify the
above is a true copy of Resolution No. 27, Series of 2022.
Stephanie Carlile
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Exhibit A: Structurally Balanced Budget
I. POLICY STATEMENT
The City of Englewood is a political subdivision of the State, organized for the purpose of providing
municipal services to residents of the City as defined In the Charter. The City is governed by a seven-
member City Council. The Council's primary functions are to provide for the general operation and
personnel of the City, to oversee the property, facilities, and financial affairs of the City, and to establish
policies for the City. It is the Intention of the Council that this policy always be in compliance with the
requirements of the Governmental Accounting Standards Board (GASB) and be Informed by the
applicable Best Practices and Advisories developed by the Government Finance Officers Association
("GFOA"); however the Policy must also reflect the objectives and tolerances of the City. This Policy has
been drafted with reference to the guidance of the GFOA as of the date of adoption. It is understood that
the GFOA amends and modifies its guidance overtime.
The Council assigns to the City Manager or the Managers designee overall responsibility for budget
preparation, budget presentation and budget administration. For the purposes of this Policy, the City
Managers designee is presumed to be the Director of Finance and Administrative Services (the
"Director") who functions as the fiduciary entrusted to protect and enhance the City's financial condition.
The Director Is to periodically review the GFOA's Best Practices and Advisories and recommend
conforming modifications to this Policy as warranted.
II. POLICY PURPOSE AND SCOPE
This Policy will set guidelines for budget planning and procedures. The GFOA recommends that all state
and local governments adopt rigorous policies, for all operating funds, aimed at achieving and
maintaining a structurally balanced budget. A budget policy should include parameters for achieving and
maintaining structural balance where recurring revenues are equal to recurring expenditures in the
adopted budget.
The annual budget is the financial plan for the operation of the City. It provides the framework for both
expenditures and revenues for the year and translates into financial terms the programs and priorities of
the City. The guidelines contained in this Policy adhere to the Colorado Constitution and State Statutes
and reflect the recommended practices of the Government Finance Officers Association.
Ill. LEGAL REQUIREMENTS
The City is required to balance its budget each year as outlined in the City's Charter (X-1-81 through 96)
and the Colorado Revised Statutes (29-1-103). As established in the Charter, the budget shall contain a
balance between the total estimated expenditures and total anticipated revenue from all sources, taking
into account the estimated general fund cash surplus or deficit at the end of the current fiscal year. The
proposed budget shall be submitted to Council prior to September 15 of each year.
IV. PRESENTATION
Each year the Director shall cause to be prepared a budget preparation calendar which shall insure that all
deadlines established by law for budget presentation, hearings and adoption and for certification of
amounts to be raised by tax levies are met by the City. The budget calendar shall take into consideration
the possible need to submit a request to raise additional local revenue to a vote by the City's electorate.
The budget shall be presented in a summary format which is understandable by any lay person reviewing
the City's budget. The budget format shall itemize expenditures of the City by fund. It shall describe the
expenditure, show amount budgeted and amount estimated to be expended for the current fiscal year and
the amount budgeted for the ensuing fiscal year.
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The budget shall include a uniform summary sheet for each fund administered by the City that details the
beginning fund balance and anticipated ending fund balance for the budget year, the anticipated fund
revenues for the budget year, the anticipated transfers and allocations that will occur to and from the fund
during the budget year; the anticipated expenditures that will be made from the fund during the budget
year, and the amount of reserves in the fund.
The budget shall also disclose planned compliance with spending limitations outlined In Article X,
Section 20, of the Colorado Constitution.
V. DEFINITIONS OF KEY TERMS
The GFOA recommends identification of key terms related to structural balance. These include: recurring
and non-recurring revenues, recurring and non-recurring expenditures, and reserves.
A. Recurring Revenues are the portion of the City's revenues that can reasonably be expected to
continue year to year, with some degree of predictability.
B. Non-Recurring Revenues are unreliable sources of funds that are typically short in duration
and cannot be relied upon in future years.
C. Recurring /Expenditures appear in the budget each year. These expenditures should be those
that the City expects to fund every year in order to maintain current or status quo service
levels.
D. Non-Recurring Expenditures are obligations that are not expected to occur in future years. In
general, the City has a greater degree of flexibility to defer these expenditures.
E. Reserves are the portion of fund balance that is set aside as a hedge against risk as
contemplated in the Fund Balance Policy.
The City shall define all revenues and expenditures by these terms.
VI. STRUCTURAL BALANCE
The City shall adopt a structurally balanced budget, where recurring revenues equal or exceed recurring
expenditures. The budget shall identify how recurring revenues are aligned with or not aligned with
recurring expenditures. For a variety of reasons, true structural balance may not be possible for the City at
a given time. In such case, using reserves to balance the budget may be considered but only as
contemplated in the Fund Balance Policy. Enterprise Funds are presumed to be operated in the manner as
contemplated by TABOR and to that point would be expected to operate on a stand-alone basis.
Accordingly, any exchange of funds from the General Fund and any other Fund is presumed for purposes
of this Policy to reflect payment of internal service charges or to formally create a due to or due from, and
should be considered in the same manner as the Fund Balance Policy's use of fund balance.
This analysis and matching of revenues and expenditures helps inform the decision-making of the City. It
provides an explanation for any variances in the budget and maintains a "spend within our means·
approach to budgeting. Maintaining a structurally balanced budget is the basis for the current fiscal health
and long-term fiscal wellness of the City. In the short term, achieving fiscal health means understanding
the cast of all operations and the City's ability to pay. This Includes the establishment and maintenance of
reserves as recognized in the Fund Balance Policy. The continuous evaluation of City revenues and
expenditures along with long-term planning and program management allows the City to achieve overall
fiscal wellness.
VII. CHARGES AND FEES
The Director shall, on a periodic basis, evaluate the sufficiency and adequacy of current charges and fees.
This includes identifying the factors affecting the pricing of goods and services and the expectation of
recovering costs. For further guidance during the evaluation, staff should utilize the GFOA's Best Practice
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"Establishing Government Charges and Fees." Particular areas far identification and discussion include,
but are not limited to, the following:
A. Anticipated operation and maintenance expenditures:
B. Replacement and future costs of capital; and
C. Fund balance.
VIII. CAPITAL PROJECTS
Upon adoption of a capital budget or multi-year capital plan the City should present major capital
program highlights in the operating budget document. The City shall also discuss and quantify the
operating impact of capital projects in the budget document. The impacts should be identified on an
individual project basis but may be summarized. A greater level of detail and inflation should be provided
for non-routine capital projects than for routine projects, as non-routine projects may have a greater
impact on the operating budget.
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Exhibit B: Fund Balance Policy
I. POLICY STATEMENT
The City of Englewood is a political subdivision of the State, organized for the purpose of providing
municipal services to residents of the City as defined in the charter. The City is governed by a seven-
member City Council. The Council’s primary functions are to provide for the general operation and
personnel of the City, to oversee the property, facilities, and financial affairs of the City, and to establish
policies for the City. It is the intention of the Council that this policy always be in compliance with the
requirements of the Governmental Accounting Standards (GASB) and be informed by the applicable Best
Practices and Advisories developed by the Government Finance Officers Association ("GFOA").
However, the objectives and tolerances of the City must dictate the final form of the policy and adherence
thereto. The City Council directs the City Manager or the Manager's designee to implement this policy.
For the purpose of this Policy, the City Manager's designee is presumed to be the Director of Finance and
Administrative Services (the "Director") who functions as the fiduciary entrusted to protect and enhance
the City's financial condition.
II. PURPOSE AND SCOPE
This policy enables the City to prudently and responsibly address the implications of GASB Statement
No. 54, Fund Balance Reporting and Governmental Fund Definitions.
The GFOA recommends that all state and local governments adopt comprehensive written financial
management policies, including a formal policy on the level of fund balance maintained in the general
fund. As of the date of its adoption, this policy was crafted drawing upon GFOA's Best Practice
"Appropriate Level of Unrestricted Fund Balance in the General Fund" (approved September 2015), It is
understood that GASB and GFOA periodically adopt, amend and modify their respective Statements and
Best Practices and Advisories, The City Manager is to periodically review the promulgations of GASB
and GFOA among other relevant sources and, as warranted, recommend conforming modifications to this
policy.
This policy sets guidelines addressing the appropriate level of fund balance so as to mitigate current and
future risks. The policy is intended to enhance the quality of decisions about budgeting and net asset
management. Through this policy, the Council will oversee the process by which the City will manage for
revenue volatility, maintain adequate liquidity, manage and mitigate financial market risk, ensure stable
tax rates, and anticipate City commitments and assignments. This policy should be read in its entirely and
read in conjunction with other financial policies adopted by the City.
In accordance with General Accepted Accounting Principles, the term fund balance refers to the
difference between assets and liabilities under the modified accrual basis of accounting for governmental
funds. Unrestricted fund balance refers to the categories of fund balance that include only resources
without a constraint on spending or for which the constraint on spending is imposed by the government
itself. Unrestricted fund balance is a measure of economic stability, and adequate levels of unrestricted
fund balance will assure liquidity and will mitigate the risks associated with revenue fluctuations and
unanticipated expenditures. The adequacy of the general fund balance is a key credit consideration for the
rating agencies.
Ill. FUND BALANCE CONSIDERATIONS UNDER GASB NO. 54
GASB Statement No. 54 enhances the usefulness of fund balance information by providing clearer fund
balance classifications that can be more consistently applied and by clarifying the existing governmental
fund type definitions. Statement No. 54 establishes fund balance classifications that comprise a hierarchy
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based primarily on the extent to which a government is bound to honor constraints imposed upon the use
of the resources reported in governmental funds. Statement No. 54 guidelines classify governmental
funds' fund balances in the following categories, based on the relative severity of the spending constraints.
The final three categories are considered unrestricted categories, and such unrestricted fund amounts are
subject to the prerogative of the governmental entity.
A. NONSPENDABLE FUND BALANCES
This classification represents amounts that are inherently nonspendable. The amounts may be in a
nonspendable form (such as inventory, pre-paid rent, long term portion of notes receivable) or the
amounts may be required by legal or contractual provisions to be maintained intact (such as the corpus of
an endowment fund).
B. RESTRICTED FUND BALANCES
This classification includes amounts that are constrained to specific purposes. The constraints may be
externally imposed (for example by creditors, granters, bondholders) or imposed by law. Examples of
restricted fund balance for the City include grants, bond funds restricted for capital improvement projects,
and funds restricted for debt service.
C. UNRESTRICTED FUND BALANCE
(i) COMMITTED fund balance classification is comprised of amounts that are constrained by formal
action of the Council for a specific purpose(s). This classification may also include certain
contractual obligations to the extent that existing resources in the fund have been specifically
committed for use in satisfying such contractual requirements. Those funds committed by formal
action of Council cannot be released from committed status or used for another purpose without a
subsequent action of the Council. An example of committed fund balance for the City is the
capital reserve fund balance.
(ii) ASSIGNED fund balance classification is comprised of amounts that are intended for a specific
purpose as evidenced by the City's current adopted budget. The City Manager or the City
Manager's designee would have the authority to modify assigned fund balance.
(iii) UNASSIGNED fund balance classification is comprised of residual net resources, in excess of
the amounts in the foregoing categories. These amounts are available for any purpose, and are
reported only in the general fund. Unassigned fund balance is not appropriated and the
expenditure of any unassigned funds requires an action of the Council. Potential uses may be for
the following (not an all-inclusive list):
• Loan to another fund or component unit
• One-time operational requests such as feasibility studies, pilot projects/programs
• Capital projects (fund those that would reduce O&M spending first)
• Annual operating deficit due to extraordinary events, such as the 2008 housing
financial crisis and the COVID-19 pandemic or declared disasters
GASB Statement No. 54 further classifies rainy day funds or contingency funds as "stabilization
arrangements" and places specific restrictions on what qualifies for such designation. The formal action of
a governing body that imposes the parameters for these arrangements must identify and describe the
specific circumstances under which a need for funding would arise. Those circumstances should be such
that they would not be expected to occur routinely. The intended purpose must be sufficiently detailed
and reported as either RESTRICTED or COMMITTED depending on the source of the constraint. The
City establishes such contingency funds through the criteria and authorization required for establishing
such fund balances as described in the preceding paragraphs. In addition to RESTRICTED and
COMMITTED fund balances, the city may also set-aside UNASSIGNED fund balance as stabilization
arrangements.
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IV. CITY FUND SUMMARY
The following describes the City's major governmental funds:
General Fund. The general fund is the general operating fund of the City. It is used to account for all
financial resources except those required to be accounted for in other funds. By definition, unassigned
fund balance is reported in the General Fund. In other governmental funds, the unassigned classification
should be used only to report a deficit balance from overspending for specific purposes for which
amounts have been either restricted, committed, or assigned.
Special Revenue Fund. The special revenue fund ls used to account for the proceeds of specific revenue
sources that are restricted or committed to expenditure for specific purposes other than debt service or
capital projects.
Bond Redemption Fund. The bond redemption fund (debt service fund) accounts for and reports financial
resources that are restricted for the payment of principal and interest on long term general obligation debt
as a result of the issuance of general obligation bonds.
Capital Projects Building Fund. The capital projects building fund is used to account for and report
financial resources that are restricted, committed or assigned to expenditure of capital outlays, Including
the acquisition or construction of capital facilities and other capital assets.
Capital Reserve Fund. The capital reserve fund is used to accumulate resources, primarily general fund
support, committed for the acquisition renovation, and maintenance of capital assets.
V. POLICY DIRECTIVES & OPERATIONAL GUIDELINES
The GFOA recommends, at a minimum, that general purpose governments maintain aggregate
unrestricted fund balances in their general fund of no less than two months (16.67%) of regular general
fund operating revenues or expenditures, whichever is most predictable. The GFOA notes, however, that
larger government entitles may appropriately maintain a lesser level due to more predictable
contingencies, higher revenue diversification and thus less revenue volatility. All measures should be
applied within the context of long-term forecasting so as to avoid the risk of placing too much emphasis
on the level of unrestricted fund balance in the general fund at any one time. GFOA recognizes that
entities with a range of designated reserves may have sufficient liquidity to meet this defined standard
through inclusion of funds formally designated for other purposes, yet available for re-designation should
circumstances warrant. The following guidelines address the classification and the use of fund balance in
governmental funds:
1. The City will make an annual determination as to its targeted unrestricted fund balance level. In
determining this level of fund balance, the City will give consideration to revenue volatility and
predictability, perceived exposure to significant one-time outlays, liquidity pressures, and
ongoing commitments and assignments. It is understood that there will be discrepancies between
GAAP fund balance and budgetary fund balance, and this parameter shall refer to the GAAP
determined fund balance. Notwithstanding other requirements and fund balance designations as
described herein, it shall be the policy of the City to seek to maintain an unrestricted reserve in
the General Fund balance as follows: equal to 16.67%
A. An unrestricted reserve range of 12% to 21.4% based on the annual operating revenues or
expenditures whichever is more predictable,
B. As authorized by City Council, the unrestricted reserve may ratchet down to no lower
than the 12% range floor (or minimum) and used to off-set operating expenditures in
excess of revenues (operating deficit),
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C. Operating expenditures may be reduced to ensure the unrestricted reserve is maintained at
least 12% of annual operating revenues or expenditures whichever is more predictable.
D. As authorized by City Council, the unrestricted reserve may slide up to no higher than the
21.4% range ceiling (or maximum) based on operating revenues or expenditures
whichever is more predictable
E. Fund Balance in excess of the unrestricted reserve and restricted reserves (for example
TABOR emergency reserve) may be used for one-time operational or capital amounts
(examples identified in section III C (iii) UNASSIGNED fund balance above)
2. In accordance Article X, section 20(5) of the Colorado Constitution, the City shall maintain an
emergency reserve of 3% of fiscal year spending and shall evidence its compliance by restricting
the appropriate dollar amount within the appropriate Fund(s).
3. The City will establish reserve funds as required by the documents executed in conjunction with
the City's outstanding debt and other long-term obligations, if any, taking into account market
exigencies and exercising prudence In funding contingencies for specific risks. These reserve
funds may be restricted, assigned, or committed, depending on the documents executed and
underlying purpose(s).
4. Classifying fund balance amounts:
Fund balance classifications depict the nature of the net resources that are reported in a
governmental fund. An individual governmental fund may include nonspendable resources and
amounts that are restricted, committed, or assigned, or any combination of those classifications.
The general fund may also include an unassigned amount.
5. Encumbrance reporting
Encumbering amounts for specific purposes for which resources have already been restricted,
committed or assigned should not result in separate display of encumbered amounts. Encumbered
amounts for specific purposes will be classified as committed or assigned, as appropriate, based
on the definitions and criteria set forth In GASS Statement No. 54.
6. Prioritization of Fund Balance Use
When expenditure ls incurred for purposes for which both restricted and unrestricted (committed,
assigned, or unassigned) amounts are available, it shall be the policy of the City to consider
restricted amounts to be reduced first. When an expenditure is incurred for purposes for which
amounts in any of the unrestricted fund balance classifications could be used, it shall be the
policy of the City that committed amounts would be reduced first, followed by assigned amounts
and then unassigned amounts.
7. Minimum fund balances
To ensure that the minimum and maximum fund balances and unfunded liabilities are reviewed in
light of current fiscal realities, the Director will oversee a review of audited fund balances,
unfunded liabilities and current and forecast economic conditions. This review should occur
annually after the independent audit is completed and prior to budgeting for the ensuring fiscal
year.
8. Replenishing deficiencies
When the general fund balance falls below the minimum, the City will fulfill the required year-
end fund balance before any other budget allocations in the subsequent fiscal year, unless the
Council approves otherwise.
9. Non-Appropriated Operating Reserves
Should unassigned fund balance of the General Fund exceed amounts deemed prudent and
reasonable by the Council, the City shall consider such fund balance surpluses (refer to C.R.S.
22-44-105(1.5) et seq.) for one-time expenditure(s) that are nonrecurring in nature.
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Exhibit C: Debt Policy
I. POLICY STATEMENT
The City of Englewood is a political subdivision of the State, organized for the purpose of providing
municipal services to residents of the City as defined in the Charter. The City is governed by a seven-
member City Council. The Council's primary functions are to provide for the general operation and
personnel of the City, to oversee the property, facilities and financial affairs of the City, and to establish
policies for the City.
In general, debt policies should promote the illumination and evaluation of alignment - and potentially the
trade-offs - between adopted policy statements and fiscal imperatives of the enacting entity. It is the intent
that this Policy be informed by 'best practices and advisories" developed by organizations such as the
Government Finance Officers Association ("GFOA"); however the Policy must also reflect the objectives
and tolerances of the City. The GFOA recommends that all state and local governments adopt
comprehensive written debt management policies. This Policy has been drafted with reference to the
guidance of the GFOA as of the date of adoption. It is understood that the GFOA amends and modifies its
guidance over time.
The Council directs the City Manager or the Manager's designee to implement all policy. For The
purposes of this Policy, The City Manager's designee is presumed to be the Director of Finance and
Administrative Services (the "Director") who functions as the fiduciary entrusted to protect and enhance
the City's financial condition. The Director is to periodically review the GFOA's Best Practices and
Advisories and recommend conforming modifications to this Policy as warranted.
This Policy will set guidelines for the amount and type of debt to be issued by the City, the issuance
process, and the management of outstanding indebtedness. The Policy is intended to enhance the quality
of decisions about debt affordability, structure and management. Through this Policy, the Council will
oversee the process by which the City will manage its debt, certificates of participation, lease purchase
and other long-term obligations within available City resources, This Debt Policy should be read in its
entirety, and read in conjunction with other Policies adopted by the City.
Terms used within this Policy have the meanings assigned to them in the Glossary of Municipal
Securities Terms, published by the Municipal Securities Rulemaking Board.
II. POLICY PURPOSE AND SCOPE
This Policy addresses the methods, procedures, and practices that will ensure prudent management of the
City's debt. The guidelines contained in this Policy adhere to the Colorado Constitution and State Statutes
and reflect the recommended practices of the Government Finance Officers Association.
Long-term obligations may take the form of general obligation bonds or lease agreements. Certificates of
participation (COPs) may be created evidencing undivided interests in the right to payments under lease
purchase agreements. Short-term obligations, payable during the same fiscal year in which they are issued
(or immediately thereafter so long as payments are made from moneys in the budget for that fiscal year),
may take the form of lax anticipation notes or loan agreements, including loan agreements between the
City and the State Treasurer. General obligation bonds are debt under Colorado law and are multiple-
fiscal year financial obligations under the section of the Colorado Constitution known as the Taxpayer's
Bill of Rights (TABOR). Lease purchase agreements and COPs that are subject to annual appropriation,
and short-term obligations, are not debt or multiple fiscal year financial obligations and payments on them
are not debt service under Colorado law but are often referred to as "debt and "debt service" for purposes
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of this Policy. Those references are not intended to change the treatment of such obligations or payments
under Colorado law.
The issuance of debt has significant long-term implications for the City. Accordingly, consideration will
be given to the principles of equity (such that those who pay for the debt are those who benefit from the
facilities funded by the issuance of such obligations), essentiality (if the debt finances an asset, the
financed asset is essential to the City's core operation) and efficiency (the Identified revenue source is
sufficient to meet the debt service, and the cost of obtaining funds is less than competing alternatives).
This Debt Policy is not a comprehensive policy on the management of other City liabilities. This Debt
Policy does not address City pension obligations.
Ill. GENERAL OBLIGATION DEBT LIMITS UNDER COLORADO LAW
Section 104 of the Home Rule Charter of the City establishes a debt threshold of 3% of actual valuation
for all outstanding general obligation indebtedness of the City, other than for water bonds. General
obligation debt that has been refunded or deceased, either by immediate payment or redemption and
retirement or fully secured by legal defeasance obligations in an escrow account, is not to be deemed
outstanding for the purposes of determining compliance with debt limitations.
IV. LEASE FINANCING UNDER COLORADO LAW
Municipalities are authorized under Colorado law to enter into lease financings and to convey municipal
property to a lessor for the purpose of leasing it back. If the annual rent payable by the municipality is
subject to annual appropriation and does not exceed the fair rental value of the leased property and the
financing otherwise qualifies under applicable Colorado case law, the lease is not debt or a multiple-fiscal
year financial obligation under the Colorado Constitution and may be entered into without voter
authorization. The proceeds of lease financings generally must be used for capital projects. The
Constitutional and statutory rules applicable to lease financing are complicated. The City should always
consult with Colorado bond counsel before entering into a lease financing.
V. SHORT-TERM FINANCING
The City is authorized under by Colorado law to enter into short-term loans and to issue lax anticipation
notes for working capital purposes, provided that such loans are payable in the same fiscal year in which
they are issued (or immediately thereafter so long as payments are made from moneys in the budget for
that fiscal year).
VI. DEBT ISSUANCE FACTORS
The issuance of debt is subject to a set of terms that ensure oversight and fiscal prudence. This policy Is
consistent with the guidance provided by the GFOA as it relates to new and refunding issues, which
further encourages that legal advice be sought early in this process to raise key legal, tax, and financial
issues.
A. Debt shall comply with all applicable laws, regulations, and covenants and shall not be issued so
as to jeopardize the status of outstanding debt.
B. Long-term debt shall not be incurred to fund operations.
C. Capital Improvements may be financed utilizing the issuance of general obligation bonds, subject
to voter approval, or from time to time through lease purchase obligations.
D. Principal and Interest payment schedules will be structured to result in level debt service
payments, except for the refinancing of liabilities, in which case debt service may reasonably
reflect the structure of the liability being refinanced. In each case repayment structures may vary
when circumstances warrant.
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E. Debt Incurred will generally be limited to current interest serial or term maturities, but may be
sold in the form of capital appreciation bonds or other structures, including short-term securities
if circumstances warrant.
F. The average life of debt issued to finance assets shall be no greater than the projected average life
of the assets being financed.
G. The City may issue refunding bonds to reduce the interest cost on its outstanding debt or other
obligations for other purposes allowable under State law. It shall be the policy of the Council to
consider the advance refunding (refinancing) of any outstanding general obligation bonds when
such refunding will achieve present value savings of at least 3% compared to the debt service on
the obligations being refunded and a minimum net present value savings of $100,000; and will
not require extending the maturity of the bonds beyond that of the bonds being refunded. The
City should consider all available options, including maintaining the status quo (preserving the
opportunity to evaluate the refunding at a future point in time), when presented with a refunding
opportunity.
H. Refunding savings on current (non-advance) refunding bonds may be lower than the 3%
threshold, as consideration shall be given to such factors as the declining rate of savings
anticipated to be available as bonds reach their maturity date.
I. In certain circumstances a refunding that produces savings below the aforementioned thresholds
may be justified. One such circumstance is to refund an obligation to remove or alter the
covenants required in the original issue. Prudence shall dictate the decision by the City to refund
for non-economic reasons.
VII. DEBT AFFORDABILITY
The City shall conduct a Debt Affordability Study in advance of referendum presentation for the issuance
of general obligation bonds to the Council. The Study will be undertaken by the Director, with advisory
or consultancy support as required. Such planning analyses of debt affordability will serve to make
rational the assessment of the ability of the City to carry additional debt service. A Debt Affordability
Study signals to the public, to the rating agencies and to the investment community that the City is taking
seriously its fiduciary role in the oversight and management of its debt.
The Director shall evaluate and consider the results of the Debt Affordability Study when making
recommendations about the issuance of debt. The Study, along with the Director's review, may consider
the following factors:
A. An analysis of the operating strength and aggregate debt burden of the City, relative to peer
Cities, using metrics related to population, property values, wealth indicators and other such
credit factors;
B. An assessment of implications of the proposed financing for the City's rating and credit;
C. An analysis of financing and funding alternatives and a summary of the true interest cost of the
proposed financing; and
D. An overview of the plan in the context of other capital needs.
VIII. FORM OF DEBT
Debt issued by the City, whether as general obligation bonds or lease agreements, may be issued as fixed
rate obligations, with or without credit enhancements, and as short and long-term obligations. At the time
of adoption it is not expected that the City will entertain any obligation with a derivative structure.
However, prudence may dictate the consideration of derivatives in the future. Any consideration of a
financing utilizing derivatives shall necessitate a comprehensive and robust discussion amongst the
Council and Director prior to committing the City to any financing featuring derivatives.
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The ultimate form of debt shall be recommended by the Director for consideration and approval by
Council. Consideration shall be given to a number of factors as noted in prior sections of this Policy.
A. General Obligation Bonds
General Obligation debt is subject to voter approval. The City Council has the power to issue general
obligation bonds on behalf of the City for any public capital purpose or public project of an essential
nature to the City. General obligation debt may be incurred only by resolution, which cannot be repealed
until the debt has been fully paid. No general obligation debt can be created unless it has been approved
by a majority of the registered electors of the City, in an election held for that purpose. General
Obligation debt shall be structured on a level debt service basis with a maximum maturity of 20 years, but
terms may vary as conditions warrant. Debt service on general obligation debt is payable from a separate
mill levy that is deposited into the City's bond redemption fund.
B. Revenue Bonds
As a general rule, revenue bonds will be used to finance assets that generate revenue which repay the
obligation. Revenue bonds may be issued without approval of the registered electors of the City and are
not payable from a dedicated mill levy. Revenue bonds shall not be included in the calculation of
outstanding obligations counted towards the City's debt limit.
C. Lease Financings
Lease financings may be used for vehicles, buildings, and capital equipment. Lease financings are
generally used for long-lived assets that would not be affordable if funded on a lump sum or cash basis
during a single fiscal year. Lease financings are subject to approval by the City Council, and are not
subject to voter referendum if the annual rent payable by the City is subject to annual appropriation and
does not exceed the fair rental value of the leased property, and the financing otherwise qualifies under
applicable Colorado case law.
Criteria used to determine the use of lease financings Include the essentially of the assets to be funded,
that annual appropriations will be available as necessary to fund annual costs and/or there is assurance
that revenue enhancements or cost savings will be realized. In addition, other guidelines shall govern
lease purchase financings.
(I) Lease purchase financings will be secured by a lease payment related to the utilization by the
City of the assets financed, or other available assets of the City, as well as legally available
future revenues and appropriations.
(II) Annual lease appropriation payments as a percentage of the general fund shall be monitored
over time to set standards and metrics for the City going forward. In this assessment,
consideration must be given to the circumstance when a lease appropriation payment replaces
operating costs that would otherwise be incurred.
(III) The term of any lease transaction shall not exceed the estimated useful life of the assets
financed, and shall comply with additional restrictions governing average life and term as
provided by Colorado law.
(IV) Lease financings may be entered into directly with the owner of the leased property, a
financial institution, a nonprofit corporation or for profit entity. The preferred lessor for new
lease financings and refinancings of existing lease financings that involve the issuance of
certificates of participation will be a commercial bank acting as trustee.
IX. DEBT STRUCTURING PRACTICES
The following terms will govern the City in its debt structuring practices.
A. Interest shall not be capitalized for general obligation bonds. Interest may be capitalized for lease
financings as warranted, as determined by the Director.
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(I) to fund interest during construction and prior to financed assets being placed in service;
or
(II) to allow for the funding of interest costs during the budget year in which a transaction is
completed, or when budgeted resources may not be available.
B. Debt issued by the City may contain optional redemption features. The Director will determine
what is in the City's best interest in selecting appropriate dates and prices, taking into account
such items as the cost of funds and future financial flexibility.
C. In the structure of a debt offering, original issue premiums and discounts will be used as deemed
to be in the City's financial interest considering current investor demand, future cash flows and
expected interest rate savings.
D. Capital appreciation bonds and zero coupon bonds shall only be used if deemed to be in the City's
financial interest considering current investor demand, future cash flows and expected interest
rate savings.
E. When judged advantageous to the City, agreements providing credit enhancements with
municipal bond insurance companies, commercial banks or other financial entitles for the
purposes of acquiring letters of credit or bond insurance policies may be obtained.
(I) The projected net present value of the estimated debt service savings from the use of
credit enhancement must be greater than the fees and/or premium paid by the City to
obtain such credit support.
(II) A competitive process shall be used to procure credit enhancement providers.
F. When economically beneficial, the City shall seek to avail itself of options other than cash
funding a debt service reserve fund.
X. METHODS OF SALE
It is the interest of the City to issue debt using the method of sale or placement of obligations that is
expected to achieve the best sales results, at the least cost, taking into account both short-range and long-
range implications.
A. Conditions which inform the decision about the use of a competitive sale process include:
(I) the market is familiar and comfortable with the project being financed, the structure of
the financing, and the revenues to be used to pay debt service;
(II) the issue is appropriately sized to attract investors without a concerted effort; and
(III) Interest rates are stable and market demand is strong.
B. Conditions which inform the decision about the use of a negotiated sale process include:
(I) the transaction Is of significant size for the market;
(II) market timing will be a critical factor in garnering the lowest possible interest rate;
(III) the financing requires a complex or innovative structure;
(IV) the market has concerns about the credit quality of the debt; and
(V) the market is unfamiliar with the project, the structure of the financing, or the revenues to
be used to pay debt service.
C. Conditions which inform the decision about the use of a private placement include:
(I) small transaction size;
(II) time to market for transactions where time is of the essence; and
(III) transactions that have particular characteristics suited to one or a small number of
interested buyers.
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XI. CREDIT RATINGS
The Moody's 2009 Public Finance Rating Methodology states that "formalized debt planning and debt
policies provide bondholders with reassurances that debt burdens and operational debt costs will be kept
at manageable levels while ongoing capital needs continue to be met. Debt policies typically specify both
target debt burden levels and maximum allowable debt burden levels." (p.13) Standard and Poors
financial management assessment, conducted during the rating process, notes debt management policies
among the areas most likely to affect credit quality (p. 65, Public Finance Criteria, 2007).
The City recognizes the importance of maintaining good relations with bond rating agencies in order to
increase the financial market's understanding of the credit, which may affect the City's cost of borrowing.
The City will seek a rating on all new issues. Exceptions to this requirement are permissible, such as
when privately placing a transaction with an accredited investor or lending institution. As a matter of
general policy:
A. The City shall seek to maintain or improve its credit ratings;
B. The City shall obtain an underlying rating on debt which is credit enhanced; and
C. The City shall comply with all legal obligations regarding regular and ongoing disclosure of
financial and other information, and will proactively provide annual reports and other regularly
available financial information to those agencies which rate City obligations.
XII. DEBT MANAGEMENT
The Director shall be responsible for ongoing debt management of the City. As a matter of policy, the
City shall undertake the following as part of its ongoing debt management program.
A. The Director shall undertake periodic debt management performance reviews, no less than
annually, which will include regular review of the City's outstanding debt issues, and include an
analysis of net interest cost. Council shall receive periodic reports summarizing the debt
outstanding, amortization schedules, and key debt ratios, The reports will include a review of the
City Investment Policy and its consistency with this Debt Policy.
B. To the extent that there are one or more resolutions of the City Council that would allow for staff
to execute financing transactions within defined parameters, the Director shall inform Council
when any such authorized transaction is commenced. In the event that any such authorized
financing is not pursued when market conditions contemplated by such resolution are available,
the Council shall be informed.
C. The City shall comply with the applicable arbitrage regulations mandated by the Federal
Government.
D. The City recognizes the importance of ongoing, proactive and transparent dissemination of
information to the investment community, as the investors in City obligations, potential future
investors, commercial and investment banks, and other market participants constitute important
stakeholders for the long-term success of the City. For the benefit of its investors, the City will
post its most recent financial reports, official statements, policies and other fiscal information
relating to debt portfolio to the City website. In addition, the City provides certain information
relating to its outstanding bonds and notes to nationally recognized municipal securities
intonation repositories each year.
E. The City shall invest bond proceeds according to the City's Investment Policy.
XIII. LEGAL REVIEW
Prior to the issuance of any debt, the General Counsel of the City, in consultation with the Director, and
with the advice of retained expert legal counsel, shall secure an opinion that the proposed debt is
structured and issued in a manner which compiles with all applicable laws and regulations of the state and
federal governments. Bond Counsel will be retained, from a firm of national stature, to render opinions
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and prepare documents related to the issuance of debt. Such Bond Counsel shall have extensive
experience in public finance, securities regulation and tax issues.
XIV. ADVISORS, CONSULTANTS AND FINANCIAL SERVICES
The Director may retain finance or other consulting professionals when such expertise is required. Such
professionals may include, but not be limited to municipal advisors, bond trustees, registrar and paying
agents, escrow agents, underwriters, tender/remarketing agents, credit and liquidity facility providers, and
other professional services associated with debt financings. The selection and retention of finance
professionals shall conform to the City's policies/practices that govern the procurement of professional
services contracts.
XV. POLICY REVIEW AND REVISION
This Debt Policy shall be reviewed annually by the Director, and may be amended by the City Council as
conditions warrant.
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Exhibit D: Investment Policy
I.POLICY STATEMENT
The Finance Director 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, deposits
must be fully collateralized and investments appropriately authorized. The following Investment Policy
addresses the methods, procedures and practices which must be exercised to ensure effective and sound
fiscal management.
II. 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 for City
employee pension and retirement funds and 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.
Ill. 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 capital and the protection of investment principal.
• 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 Finance Director.
IV. DELEGATION OF AUTHORITY
The ultimate responsibility and authority for investment transactions involving the City resides with the
Finance Director (hereinafter referred to as the “Director”) who has been designated by the City Manager
as the Investment Officer in accordance with Englewood Municipal Code. The Director may appoint
other members of the City staff to assist 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 wire 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 under the Investment Advisers Act of 1940, to manage a portion of
the City’s assets. An appointed Investment Advisor may be granted limited investment discretion within
the guidelines of this 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.
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V. 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 is 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 developments.
VI. 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 City
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 those of the City particularly with regard to the timing of purchases and sales.
VII. ELIGIBLE INVESTMENTS AND TRANSACTIONS
All investments will be made in accordance with the 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 assumed 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 from the date of trade settlement.
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
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Farm Credit Banks (FFCB), with maturities not exceeding five years from the date of trade
settlement. Subordinated debt may not be purchased.
4. Repurchase Agreements with a termination date of 90 days or less utilizing 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 shall be entered into only with dealers who:
a) are recognized as Primary Dealers by the Federal Reserve Bank of New York, or with firms that
have a primary dealer within their holding company structure; and
b) have executed a City approved Master Repurchase Agreement. The Director shall maintain a file
of all executed Master Repurchase Agreements.
Collateral (purchased securities) shall be held by the City’s custodian bank as safekeeping agent, and the
market value of the collateral securities shall be marked-to-the-market daily.
For 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
years.
5. Reverse Repurchase 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 maturity of 10 years or less entered into by the City
with approved counterparties. These flexible repurchase agreements may be closed out in varying
amounts and at varying times at the option of the City. These agreements are deemed by both parties
to be purchases and sales of securities and are not loans.
All such flexible repurchase agreements shall meet the following criteria:
• Be determined as legal and valid for both parties;
• Collateral 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 Credit Bank, Federal Home Loan Bank,
Federal Home Loan Mortgage Corporation, Federal National Mortgage Association; or
b) An entity or organization which is not listed in paragraph a) above, but which is (1) created
by, or the creation of which is authorized by, legislation enacted by the United States
Congress and which is subject to control by the federal government which is at least as
extensive as that which governs an entity or organization listed in paragraph a) above, and (2)
rated in the highest rating category by Standard & Poor’s, Moody’s or Fitch.
• Have a fixed rate during the entire life of the agreement;
• The dollar amounts and periods of time when the City may draw funds out of the repurchase
agreement shall be agreed upon in writing by both parties and shall be part of the written repurchase
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 agreement 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 transaction;
• 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.
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
national 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.
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 U.S. government securities; 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 AAA/V1+ 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 rating agencies and not less than that by any, 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.
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 by at least two rating agencies and
not less than that by any.
12. Corporate Bonds and Bank Securities with a final maturity not exceeding three years from the date of
trade settlement, rated at least A- by Standard & Poor’s, A3 by Moody’s, or A- by Fitch at the time of
purchase by at least two rating agencies and not less than that by any. These ratings apply to the
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security being purchased and second, if the security is unrated, to the issuer, provided the security
contains no provision subordinating it from being a senior debt obligation of the issuer. Subordinated
debt may not be purchased. Bank securities includes negotiable certificates of deposit issued by
banks organized and operated in the United States; these securities are not deposits and are not
subject to the Public Deposit Protection Act. Authorized corporate bonds and bank securities shall be
U.S. dollar denominated and issued by corporations or banks organized and operated within the
United States. The City hereby further authorizes investments in dollar denominated securities issued
by a corporation or bank that is organized and operated 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 rating agencies and
not less than that by any if the issuer is located in Colorado. Municipal bonds must be rated AA- by
Standard & Poor’s, Aa3 by Moody’s or AA- by Fitch at the time of purchase by at least two rating
agencies and not less than that by any 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 minimum 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.
VIII. OTHER INVESTMENTS
It is the Intent of the City that the foregoing list of authorized securities be strictly interpreted. Any
deviation from list must be pre- approved by the Director In writing after approval by the City Manager.
IX. INVESTMENT DIVERSIFICATION
It is the intent of the City to diversify the investment instruments within the portfolio 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:
• 30% in Time Certificates of Deposit
• 30% in Commercial Paper, 5% in any one issuer or its affiliates or subsidiaries
• 30% in Bankers Acceptances, 5% in any one issuer or its affiliates or subsidiaries
• 30% in Corporate Bonds and Bank Securities; 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 and Bank Securities, Commercial Paper, and Bankers
Acceptances shall not exceed 50% of the portfolio with not more than 5% combined in investments in any
one issuer.
Tests for limitations on percentages of holdings apply to the composite of the entire portfolio of the City,
not to individual portfolios 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.
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X.I 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.
XI. SELECTION OF BROKER/DEALERS
The Director shall maintain a list of broker/dealers approved for investment purposes 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. The City’s external investment advisor may rely
on its own list of approved broker/dealers and that list shall be provided to the City on annual basis.
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 policy 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 direct issuers even though they are not on the approved
list of broker/dealers as long as they meet the criteria outlined in Item 11 of the Eligible Investments and
Transactions section of this Investment Policy.
XII. 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 which there is no other readily available competitive offering, then the
Director will document quotations for comparable or alternative securities.
XIII. 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 t 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 from the list. To be eligible for authorization, a bank shall qualify as a depository of
public funds in Colorado as defined in CRS 24-75-603.
XIV. SAFEKEEPING AND CUSTODY
The safekeeping and custody of securities owned by the City shall be managed 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 safekeeping or custodial agreement shall be executed with each custodian bank prior to
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utilizing that 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 purchase and sale of securities and 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 in third-party
safekeeping by the City’s designated custodian bank or the Depository Trust Company (DTC).
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 City as
“customer.”
All DTC eligible securities shall be held in the custodian bank’s Depository Trust Company (DTC)
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 a monthly report of securities held as well
as an account analysis report of monthly securities activity.
XV. 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 outlined 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.
XVI. 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 Director 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.
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XVII. 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.
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.
XVIII. 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.
This Investment Policy was approved by City Council on XXXX XX, 2022.
APPENDIX I
Authorized Personnel
The following persons are authorized to conduct investment transactions and wire transfer funds on behalf
of the City of Englewood:
Jackie Loh, Finance Director
Kevin Engels, Finance Manager
Christine Hart, Accounting Supervisor
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Exhibit E: Audit Procurement
In accordance with state law, the Comprehensive Annual Financial Report (CAFR) of the City shall be
audited annually, following the close of the fiscal year.
As contemplated in the City Charter, the Council shall appoint an independent certified public accountant
licensed to practice in Colorado and knowledgeable in government accounting to conduct the audit and
the audit shall contain the following:
1. Financial statements prepared in conformity with generally accepted governmental accounting
principles.
2. All funds and activities of the City.
3. A budget to actual comparison for each fund and activity.
4. The auditor’s opinion on the financial statements. If the opinion is anything other than
unqualified, the reason must be explained.
5. Disclosure of all instances of noncompliance with federal or state law.
6. A supplemental listing of all investments held by the City at the date of the financial statement.
7. A calculation of the City's fiscal year spending in accordance with the state constitution.
The auditor also shall make recommendations to the Council concerning its financial records, procedures
and related activities as may appear necessary or desirable and shall perform such other related services as
may be requested by the City Council.
The City's CAFR shall be prepared and presented in a manner consistent with applicable federal and state
laws, regulations, and rules in addition to the best practices of the Governmental Accounting Standards
Board and the Governmental Finance Officers Association.
Appointment of Auditor
To create a balance between independence, fresh perspectives, staff continuity, audit efficiency and
competitive pricing the City will solicit proposals for auditing services at least every six years. The
incumbent auditor is barred from responding to the solicitation unless the firm can indicate a rotation of
principals.
The Council shall annually approve the appointment of an auditor to audit the City's financial statements.
Only In unique and extraordinary circumstances, when it is deemed to be in the City's best interest, is the
Council to consider approving the appointment of the incumbent auditor for an additional single year
beyond a six-year period. In no event is an auditor to be retained to audit the City's financial statements
for more than seven consecutive years.
Nothing in this policy prohibits the Council from acting to limit the duration of the engagement in order
to protect the City's interests should the Council determine an early termination is warranted for
performance or pricing considerations or other criteria advantageous to protecting the City's reputation or
financial condition.
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