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HomeMy Public PortalAbout13623ORDINANCE NO. 13623 AN ORDINANCE, repealing Ordinance No. 12010 and Resolution No. 3009, to provide for the selection of Approved Depositary Banks and Approved Securities Dealers, the making and terms of time and demand deposits and Authorized Investments, the form of security for safekeeping of District funds, the approval of Authorized District Representatives for purposes of signing of checks and making of transfers of District funds, the furnishing of surety bonds for Authorized District Representatives, and reports of the Secretary-Treasurer to the Board of Trustees of the District with respect to the deposit and investment of District funds. BE IT ORDAINED BY THE BOARD OF TRUSTEES OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT: Section 1. Investment Policy. The Secretary-Treasurer shall prepare, maintain and adhere to a written investment policy which shall include an asset allocation plan which limits the total amount of District funds which may be invested in any particular investment authorized by law. The Secretary-Treasurer shall present a copy of such policy to the Board of Directors annually or at any time the written investment policy is amended, attached hereto as Exhibit "A" Section 2. Time and Demand Deposits - Approved Depositary Banks/Contracts. A. The Secretary-Treasurer shall maintain a list of banks or trust companies, situated in the District, approved for deposit of District funds ("Approved Depositary Banks"). The list of Approved Depositary Banks, attached hereto as Exhibit "B", is hereby approved; provided that such list may be modified from time to time by resolution of the Board of Trustees of the District. B. The Secretary-Treasurer shall determine, by the exercise of his best judgment, the amount of District funds that are not immediately needed for the purpose to which such funds are applicable, and shall keep on demand deposit in Approved Depositary Banks the amount of District funds which he has so determined are needed for current operating expenses of the District and disburse the same as authorized by state law and the District's Plan. C. Within the parameters of the Secretary-Treasurer's written investment policy, the Secretary-Treasurer shall place the District funds which he has determined are not immediately needed for the purpose to which said funds are applicable, on time deposit drawing interest in Approved Depositary Banks, or place them outright or by repurchase agreement in Authorized Investments described in Section 3 of this Ordinance, as he in the exercise of his best judgment determines to be in the best overall interest of the District, giving due consideration to: (1) The preservation of such moneys; (2) The liquidity needs of the District; (3) The comparative yield to be derived therefrom; (4) The effect upon the economy and welfare of the people of Missouri of the removal or withholding from banking institutions in the District of all or some such District funds and investing same in obligations authorized in section 15, article IV of the Missouri Constitution; and (5) All other factors which to him/her as a prudent Secretary-Treasurer seem to be relevant to the welfare of the District in the light of the circumstances at the time prevailing. In making such deposits or investments, the Secretary-Treasurer shall follow the applicable investment strategy submitted to the Board of Trustees of the District as a part of his monthly report as required by Section 4 of this Ordinance; provided that the Secretary-Treasurer may make investments or deposits, which are not consistent with such investment strategy, when such action is, in the judgment of the Secretary-Treasurer, in the best interest of the District, taking into consideration the factors set forth in this Section, provided the Secretary-Treasurer will note such action in his next monthly report to the Board of Trustees of the District. D. In placing moneys on demand or time deposit, the Secretary-Treasurer shall use his best efforts to obtain three quotes from Approved Depositary Banks and shall place such funds with the Approved Depositary Bank selected by him/her, taking into consideration the quote of such Approved Depositary Bank and the factors set forth in Section C above. The Secretary-Treasurer shall maintain a record of all quotes received. The Secretary-Treasurer may place such funds with an Approved Depositary Bank, without obtaining quotes, when such action is, in the judgment of the Secretary-Treasurer, in the best interest of the District taking into consideration the factors set forth in Section C above, provided that the Secretary-Treasurer shall note such action in his next monthly report to the Board of Trustees of the District. E. The Executive Director and Secretary-Treasurer of the District are authorized and directed to execute a contract with each Approved Depositary Bank holding funds of the District. The contract shall be in substantially the form of Exhibit "C" attached hereto with such changes therein as shall be approved by the Executive Director, Secretary- Treasurer and General Counsel of the District, provided that such officers' signatures on such contract shall constitute conclusive evidence of the approval thereof. Section 3. Authorized Investments - Approved Securities Dealers -Contracts. A. The Secretary-Treasurer may subscribe for or purchase outright or by repurchase agreement obligations of the United States government which are lawful for investment of the District's funds under state law and the District's Plan ("Authorized Investments") which he, in the exercise of his best judgment, believes to be the best for investment of District funds at the time and in payment therefor may withdraw moneys from any bank account, demand or time, maintained by him/her. The Secretary-Treasurer may bid on subscriptions for such Authorized Investments in accordance with his best judgment. Such Authorized Investments may be purchased from any primary government securities dealer certified as such by the New York Federal Reserve Bank, from any Authorized Depositary Bank or from any securities dealer with offices in the District selected by the Secretary-Treasurer and approved by resolution of the Board of Trustees of the District ("Approved Securities Dealers"). The Secretary-Treasurer shall maintain a list of Approved Securities Dealers. The list of such Approved Securities Dealers, attached hereto as Exhibit "D", is hereby approved; provided that such list may be modified from time to time by resolution of the Board of Trustees of the District. The Secretary-Treasurer shall provide for the safekeeping of all such Authorized Investments so acquired in the same manner that securities pledged to secure the repayment of District funds deposited in Approved Depositary Banks are kept by him/her pursuant to law. The Secretary-Treasurer may hold any such Authorized Investments so acquired by him/her until its maturity or prior thereto may sell the same outright for a negotiated fee as he, in the exercise of his best judgment, deems necessary or advisable for the best interest of the District in the light of the circumstances at the time prevailing. The Secretary-Treasurer may pay all costs and expenses reasonably incurred by him/her in connection with the subscription, purchase, sale, collection, safekeeping or delivery of all such Authorized Investments at any time acquired by him/her. In purchasing or selling Authorized Investments the Secretary-Treasurer shall use his best efforts to obtain two quotes from Approved Securities Dealers and shall purchase or sell Authorized Investments with the Approved Securities Dealers selected by him/her, or from the Direct-Purchasing method through Bloomberg from the Approved commercial paper list Exhibit G attached hereto, taking into consideration the quote of such Approved Securities Dealers, the costs and expenses to be paid by the District in connection with such transaction, and the factors set forth in Section 2C above. The Secretary-Treasurer shall maintain a record of all quotes received. The Secretary-Treasurer may purchase or sell Authorized Investments, without obtaining quotes, when such action is in the judgment of the Secretary-Treasurer, in the best interest of the District taking into consideration the factors set forth in Section 2C above, provided that the Secretary-Treasurer shall note such action in his next monthly report to the Board of Trustees of the District. The Secretary-Treasurer shall purchase and sell securities at the price and execution that is most beneficial to the District. The liquidity requirements and the interest rate shall be analyzed to determine the optimal investment maturities prior to requesting bids or offers. Investments shall be purchased and sold through a competitive bid/offer process. Bids/offers for securities of comparable maturity, credit and liquidity shall be received from at least two financial institutions, if possible. Such competitive bids/offers shall be documented on the investment manager’s trade documentation. Supporting documentation from Bloomberg, Wall Street Journal, or other financial information system shall be filed with trade documentation as evidence of general market prices when the purchase or sale was affected. B. The Executive Director and Secretary-Treasurer of the District are authorized and directed to execute a contract with each Approved Depositary Bank or each Approved Securities Dealer with whom the District enters into a repurchase agreement. The contract shall be in substantially the form of Exhibit "C" attached hereto with such changes therein as shall be approved by the Executive Director, Secretary-Treasurer, and General Counsel of the District, provided that such officers' signatures on such contract shall constitute conclusive evidence of the approval thereof. Section 4. Secretary-Treasurer's Report. The Secretary-Treasurer shall prepare a monthly report to the Board of Trustees of the District relating to the deposit and investment of District funds pursuant to this Ordinance. The Secretary-Treasurer's monthly report shall include a prospective overview of the Secretary-Treasurer's investment strategy for the deposit and investment of District funds for the next succeeding monthly period and a report regarding the deposit and investment of District funds for the preceding monthly period including the performance of such funds for the reporting period. The District reports all holdings of Securities by portfolio on the web page daily for review as well as monthly (CFR) comprehensive financial reporting of asset allocation and compliance with Investment Policy. Section 5. Security for Safekeeping of District Funds. For the security of the funds deposited by the Secretary-Treasurer under the provisions of this Ordinance, the Secretary- Treasurer shall, from time to time, submit a list of acceptable securities to be approved by resolution of the Board of Trustees of the District and the Secretary-Treasurer shall require of the Approved Depositary Banks as security for the safekeeping and payment of deposits, securities from the list provided for in this section, which list may include only securities of the kind and character permitted by state law and the District's Plan ("Approved Collateral"). The list of Approved Collateral, attached hereto as Exhibit "F" is hereby approved; provided that such list may be modified from time to time by resolution of the Board of Trustees of the District. Such securities shall be delivered to the Secretary-Treasurer or to a disinterested banking institution or safe depositary, as escrow agent or trustee, as directed by the Secretary-Treasurer. All securities will be held by third-party custodian designated by the Secretary-Treasurer and evidenced by safekeeping receipts. All trades where applicable will be executed by delivery vs. payment (DVP) to ensure that securities are deposited in an approved financial institutions prior to the release of funds. Section 6. Authorized District Representatives. All requests for transfers of funds from District accounts to other accounts of the District maintained at the same Approved Depositary Bank, other than transfers by check, may be authorized by telephonic, telegraphic, oral or written request received from an Authorized Representative of the District. A transfer of funds from District accounts in favor of third parties shall be authorized only at the request of any two Authorized Representatives of the District. All checks drawn on any accounts of the District shall be signed, either manually or by means of a check-signing machine, by any Authorized Representative of the District; provided that checks of $5,000 or more may not be signed by means of a check signing machine or other facsimile and must be signed by the manual signatures of two Authorized Representatives of the District. The Authorized Representatives of the District, which include the Secretary-Treasurer, Assistant Secretary- Treasurer, General Counsel, and of the District are hereby approved; provided that the Board of Trustees may, from time to time, by resolution change such Authorized Representatives of the District. Section 7. Official Bonds. The Secretary-Treasurer of the District shall, before entering upon the discharge of his duties hereunder, give bond in the sum of not less than $1,000,000 to the District and any other Authorized Representative of the District shall give bond in the sum of not less than $500,000; provided that the District may purchase such bond in additional amounts which the Executive Director deems in the best interest of the District, taking into consideration the security of District funds as well as the cost of such bond. The bond shall be furnished with a surety company authorized to do business in the State of Missouri and shall be in such form as may be prescribed by the General Counsel of the District. The bond shall be filed in accordance with Section 7.070 of the District Plan. Section 8. Prior Ordinances. The provisions contained in this ordinance shall take the place of and supersede the provisions of all prior ordinances or resolutions relating to the same subject matter which are herewith inconsistent, including but not limited to Ordinance Nos. 7879, adopted August 9, 1989 and 10908, adopted February 8, 2001, and such ordinances are hereby repealed. Section 9. FDIC Limits. Deposits at FDIC-insured institutions are now insured up to at least $250,000 per depositor through December 31, 2013. On January 1, 2014, the standard insurance amount will return to $100,000 per depositor for all account categories except for IRAs and other certain retirement accounts which will remain at $250,000 per depositor. Section 10. Check 21 Act. The District follows the law related to the Check 21 Act. The Check 21 was enacted on October 28, 2004. The law allows the recipient of the original paper check to create a digital version of the original check, into an electronic format thereby eliminating the need for further handling of the physical document. Section 11. Electronic Payments. The District issues payments using the EFT Electronic Funds Transfer process and adheres to the same approvals and guide lines as the issuance of checks. This is the District’s preferred method of payment. The foregoing Ordinance was adopted June 13, 2013. EXHIBIT B LIST OF APPROVED DEPOSITARY BANKS Bancorp South Bank of America, N.A. BMO Harris Bank Boulevard Bank Bremen Bank & Trust Company Carrollton Bank Cass Commercial Bank Citizens National Bank Commerce Bank of St. Louis Commerce Trust Commercial Bank of Westport Eagle Bank and Trust Company of Missouri Enterprise Bank & Trust EverBank FCB South County Bank Fifth Third Bank First Financial Bank First National Bank of St. Louis (Central Bancompany) Founders Bank Heartland Savings Bank Lindell Bank & Trust Company Main Street Bank & Trust (Lock-Box /Firstech Pay Station Pass Through) Montgomery 1st National Bank Northern Trust Bank PNC Bank Pulaski Bank Regions Bank, N.A. Reliance Bank Rockwood Bank Royal Banks Saint John’s Bank & Trust Company St. Louis Bank Southern Commercial Bank The Bank of New York* The Business Bank of St. Louis The Private Bank UMB Trust US Bank *Paying Agent Institutions Only EXHIBIT C DEPOSITARY CONTRACT FOR DEPOSITS OF THE METROPOLITAN ST. LOUIS SEWER DISTRICT THIS CONTRACT, made the _____ day of_________________, 200__, between the Secretary-Treasurer of The Metropolitan St. Louis Sewer District (hereinafter the "District") and ___________ ______________ (hereinafter the "Depositary"); WITNESSETH: Pursuant to the provisions of Section 7.080 of the District's Plan and Ordinance No.__________ of the District, Depositary has been selected as a depositary of moneys of the District; and it is hereby agreed as follows: 1. Demand Accounts. The Secretary-Treasurer of the District will from time to time deposit moneys with Depositary on demand deposit. The District agrees to establish and maintain with Depositary the following demand deposit accounts:___________ _______________________________________________. Depositary agrees to safely keep the demand deposits made hereunder, to promptly collect all checks, drafts and other instruments of exchange deposited with it under this contract, and to pay out such sums as the District may draw by check or other transfer as hereinafter provided. 2. Certification of Deposit. The Secretary-Treasurer of the District will from time to time purchase certificates of deposit from the Depositary. The rates of interest, basis of calculation of interest, time of payment of interest and maturity of each such certificate of deposit shall be as agreed to by the District and the Depositary at the time of purchase. 3. Collateral for Deposits. The Secretary-Treasurer shall from time to time provide the Depositary a list of approved securities ("Securities"), which may be provided as collateral for District deposits. The current list of Securities is attached hereto as Addendum A. To secure the safekeeping of the moneys deposited under this contract, Depositary will deliver Securities, in an amount at least equal in market value to the amount of deposits of District and its subdistricts in the Depositary hereunder, as directed by the Secretary-Treasurer. Such Securities shall be delivered to the Secretary-Treasurer or to a disinterested banking institution or safe depositary, as escrow agent or trustee (the "Custodian") as directed by the Secretary- Treasurer in writing. The current written direction of the Secretary-Treasurer as to the Custodian for such Securities is attached hereto as Addendum B. Depositary does hereby grant, bargain, convey and pledge a security interest in any and all Securities deposited with the Secretary- Treasurer of the District or the Custodian in accordance with the terms of this contract. Upon an increase in the deposits of the District in the Depositary, the Depositary will make additional deposits of Securities with the Secretary-Treasurer or Custodian, equal in market value to the amount by which such deposits have increased. Upon a decrease in the deposits of the District in the Depositary, the Secretary-Treasurer of the District shall consent to a withdrawal of deposits of Securities in such amounts as will insure that all deposits are fully collateralized in the amount required hereunder. 4. Accounting and Safekeeping of Securities. The Secretary-Treasurer of the District may from time to time inspect or request an accounting of the securities to determine that they are kept and maintained as required in paragraph 3. Any expenses charged by the Custodian for the deposit, safekeeping and inspection of said securities shall be paid by Depositary. If in any case, or at any time, the Secretary-Treasurer of the District determines that the Securities given by Depositary do not satisfactorily secure the deposits made or to be made hereunder, the District may require additional or substitute security to be given and Depositary shall furnish additional or substitute security as is satisfactory to the Secretary-Treasurer of the District. 5. Substitution of Securities. The Depositary may, at any time with the consent of the Secretary-Treasurer, withdraw any of the Securities deposited to secure the safekeeping of the moneys deposited hereunder upon depositing in lieu thereof other Securities of like kind and character and at least equal in market value to the Securities withdrawn. Securities so deposited will be pledged to secure payment by the Depositary of District funds as directed by the District pursuant to the provisions hereof, and such Securities shall be released and delivered to the District on its sole demand made to the Custodian, in the event that the Depositary should fail to pay such secured funds, or any part thereof, as directed by the District pursuant to the provisions hereof, and that securities so released and delivered to the District shall be converted into money and the District shall use the same in lieu of such secured funds. 6. Statement of Accounts. Depositary shall, at times specified in writing by the Secretary-Treasurer of the District, render a statement showing the daily balance, or amount of money, held by it under this contract and shall include with such statement all cancelled checks drawn on any accounts of the District covered by such statement. 7. Conversion of Securities. In the event that Depositary defaults in any manner in performing any of the terms and conditions of this contract between the parties or fails to keep safely the moneys deposited with it, or to pay any demand ordered by the Secretary-Treasurer of the District, the Secretary-Treasurer of the District shall be authorized forthwith without notice, advertisement or demand and at public or private sale to convert into money the Securities deposited by Depositary or as many of them as may be necessary to pay the whole amount of the moneys deposited; and District may purchase at the then market value any or all of the Securities sold at any such sale. 8. Charges for Services. The District will be responsible for all charges for services provided by Depositary, as mutually agreed in the attached Pricing Schedule, Addendum C. The Depositary agrees to give the District 60 days advance written notice prior to the effective date of any changes in Pricing Schedule, Addendum C. The Depositary will bill the District monthly for charges for services and will not automatically debit any account of the District maintained with the Depositary for such charges. The Depositary retains its right to set off against any such account for charges which remain unpaid 30 days from date of billing, provided that if the District disputes any charge within such 30 day period the Depositary's right to set off with respect to such disputed charge may only be exercised for such charges which remain unpaid 30 days following notice by the District to the Depositary that such charge is in dispute. 9. Transfer of Funds. The Depositary is authorized to honor, execute and charge to the District's account at the Depositary all telephonic, telegraphic, oral or written requests received from an Authorized Representative of the District for transfers of funds from District accounts to other accounts of the District maintained with Depositary, provided that a transfer of funds from District Accounts in favor of third parties, other than a transfer by check, shall be made by the Depositary at the request of any two Authorized Representatives of the District. The names, offices, manual signatures and facsimile signatures of individuals presently serving as Authorized Representatives of the District are set forth on Addendum D. The Executive Director and Secretary-Treasurer of the District shall notify the Depositary in writing of any changes in such Authorized Representatives of the District. 10. Checks of the District. The Depositary is authorized to honor, execute and charge to the District's accounts at the Depositary all checks drawn on any such accounts, signed either manually or by means of a check signing machine, by any Authorized Representative of the District as set forth in Addendum D; provided that checks of $5,000 or more may not be signed by means of a check signing machine or other facsimile but only by manual signature and checks of $5 000 or more must be signed by the manual signatures of two Authorized Representatives of the District. Check 21 Act. The District follows the law related to the Check 21 Act. The Check 21 was enacted on October 28, 2004. The law allows the recipient of the original paper check to create a digital version of the original check, into an electronic format thereby eliminating the need for further handling of the physical document. Section 11. Electronic Payments. The District issues payments using the EFT Electronic Funds Transfer process and adheres to the same approvals and guide lines as the issuance of checks. This is the District’s preferred method of payment. 11. Assignment. Depositary shall not transfer by assignment, subcontract or otherwise any interest in this contract without the prior written consent of the Secretary- Treasurer of the District. 12. Access. Depositary shall permit reasonable access by the Secretary-Treasurer of the District for purposes of performing audit procedures relating to any aspect of services provided by Depositary to District in connection with this contract. 13. Records. Depositary shall maintain complete records relating to deposits made hereunder in accordance with state and federal laws, rules and regulations. No listing, report or other material generated from date covered by this contract may be disclosed or transferred by Depositary to any other person, except as required by state and federal laws, rules and regulations, and then only after notice to the Secretary-Treasurer of the District. 14. Term. This contract shall continue in force and effect until ________________, provided that such contract shall automatically renew on each June 30 for an additional one-year period unless Depositary is notified by the Secretary-Treasurer of the District that this contract will terminate on such June 30; provided, however, that each party reserves the right to terminate this contract at any time on giving sixty (60) days written notice to the other party of its intention to do so, and this contract shall continue in effect until so terminated. 15. Depositary Resolution. There is attached hereto a certified copy of the resolution adopted by the Board of Directors of Depositary authorizing the execution and delivery of this contract by the officers of Depositary, whose names are affixed on behalf of Depositary. 16. Modification. This Agreement and Addendum may be modified or amended only in writing and agreed to by both parties. 17. Applicable Law. This Agreement and all sections thereof shall be governed by the laws of the State of Missouri. 18. Additional Services. The Depositary and the District mutually agree that the Depositary shall perform certain additional banking services as described in Addendum E under the terms and conditions as described in Addendum E, which is incorporated herein by reference; provided that in the event of conflicts between this contract and Addendum E, as to the services described in Addendum E the provisions of such Addendum shall control.] IN TESTIMONY WHEREOF, the parties have executed this contract in duplicate and hereunto subscribed their names and affixed their seals as of the date first above written. THE METROPOLITAN ST. LOUIS SEWER DISTRICT By ______________________________ Executive Director of The Metropolitan St. Louis Sewer District ATTEST: _____________________________ Secretary-Treasurer ATTEST: _____________________________ Secretary or Assistant Secretary Approved as to form: _____________________________ General Counsel EXHIBIT D LIST OF APPROVED SECURITIES DEALERS Primary Government Securities Dealers* Bank of Nova Scotia, New York Agency BMO Capital Markets Corp. BNP Paribas Securities Corp. Barclays Capital Inc. Cantor Fitzgerald & Co. Citigroup Global Markets Inc. Credit Suisse Securities (USA) LLC Daiwa Capital Markets America Inc. Deutsche Bank Securities Inc. Goldman, Sachs & Co. HSBC Securities (USA) Inc. Jefferies LLC J.P. Morgan Securities LLC Merrill Lynch, Pierce, Fenner & Smith Inc. Mizuho Securities USA Inc. Morgan Stanley & Co. LLC Nomura Securities International, Inc. RBC Capital Markets Corporation RBS Securities Inc. SG Americas Securities, LLC UBS Securities LLC * Such Primary Government Securities Dealers shall be those certified as such, from time to time, by the New York Federal Reserve Bank. Current list dated March 1, 2013. Securities Dealers in the District Blaylock Robert Van, LLC Comerica Securities, Inc. Edward D. Jones First Bankers Banc Securities, Inc. FTN Financial Capital Markets Great Pacific Securities Piper Jaffray & Co Raymond James l Morgan Keegan Siebert Branford Shanks & Co., LLC Stifel Nicolaus & Co., Inc. Sterling Investments Stern Brothers & Co. Wells Fargo Institutional Brokerage District Authorized Depositary Banks EXHIBIT E LIST OF APPROVED COLLATERAL The securities described below are hereby designated as acceptable collateral for state funds on deposit, as required by Section 30.270 RSMo (as amended). The State Treasurer reserves the right to refuse to accept as collateral any security or securities on this list, or to request the submission of an alternate acceptable security or securities, if, in the sole discretion of the State Treasurer, the State Treasurer determines that such action will provide greater security for the deposit of state funds. The securities described below are designated as acceptable collateral for the deposit of state funds. The listing is not intended to serve as, and should not be considered as a listing of legally authorized investment instruments. 1. Marketable Treasury securities of the United States. 2. Bonds or certificates of participation (COP’s) issued by the State of Missouri with an investment grade long-term rating from one of the Nationally Recognized Statistical Ratings Organizations (NRSRO’s) or are secured by a federal agency guarantee (directly or through guaranteed loans), to include the following: a. General obligation debt securities issued by the State of Missouri. b. Revenue bonds issued by the Missouri Board of Public Buildings or Department of Natural Resources. c. Revenue bonds of the Missouri Housing Development Commission, Missouri Health and Education Facilities Authority, Missouri Higher Education Loan Authority, Missouri Environmental Improvement and Energy Resources Authority, Missouri Agricultural and Small Business Development Authority, Missouri Industrial Development Board, or State-owned educational institutions. d. Certificates of Participation issued by the Missouri Board of Public Buildings or Public Fund Commissioners. 3. Bonds or certificates of participation with an investment grade long-term rating from one of the NRSRO’s issued by of any of the following agencies: a. Any city in this state having a population of not less than two thousand b. Any county of this state c. Any school district situated in this state d. Any special road district in this state e. Bonds of any political subdivision established under the provision of Article VI, Section 30 of the Constitution of Missouri (City and County of St. Louis) f. Any of the fifty states within the United States of America 4. Debt securities guaranteed by the United States or its agencies or instrumentalities, as follows: a. Debt securities of the Federal Farm Credit System b. Debt securities of the Federal Home Loan Banks c. Debt securities of the Federal National Mortgage Association (“Fannie Mae”) d. Debt securities of the Student Loan Marketing Association e. Debt securities of the Tennessee Valley Authority (TVA) f. Debt securities of the Federal Agricultural Mortgage Corporation (“Farmer Mac”) g. Debt securities of the Government National Mortgage Association (“Ginnie Mae”). h. Debt securities of the Federal Home Loan Mortgage Corporation (“Freddie Mac”) i. Guaranteed Loan Pool Certificates of the Small Business Administration (SBA) j. Federal Home Administration insured notes (CBOs). k. Public housing notes and bonds (“project notes and bonds”) issued by public housing agencies, guaranteed as to the payment of principal and interest by the government of the United States of any agency or instrumentality thereof. l. Debt securities of the Resolution Funding Corporation (REFCORP). Collateralization margins for pass-through mortgage-backed securities, SBA pool certificates and collateralized mortgage obligations shall differ from debentures issued by such agencies. The only type of Collateralized Mortgage Obligations (CMO) that the Treasurer’s Office will accept are Planned Amortization Classes (PAC’s), Targeted Amortization Classes (TAC’s) and sequential pay classes. Furthermore, Collateralized Mortgage Obligations must have a weighted average life not to exceed five years and pass the FFIEC High Risk Stress Test. No Strips, Z bonds, Mortgage Derivatives or Zeros are acceptable. 5. Tax anticipation notes issued by any county of class one in Missouri with an investment grade short-term rating from one of the Nationally Recognized Statistical Ratings Organizations (NRSRO’s) 6. Surety bonds issued by an insurance company licensed under the laws of the State of Missouri whose claims-paying ability is rated in the highest category by Duff & Phelps, A.M. Best, Standard & Poors, or Moody’s. The face amount of such surety bond shall be at least equal to the portion of the deposit to be secured by the surety bond. 7. Irrevocable standby Letter of Credit issued by a Federal Home Loan Band possessing the highest rating issued by at least one NRSRO. 8. Bonds or certificates of participation issued by local government agencies within the fifty states provided such instruments are rated in the highest category by at least one NRSRO. The State Treasurer shall determine the collateralization margin (or “haircut”) for each security type listed above, which may change from time to time subject to market conditions and other factors, but in no event shall be greater than the maximum limits allowed by law. The current collateralization requirements by security type are provided on Attachment “A”. The total market value of collateral must be equal to or greater than the collateralization margin set by the State Treasurer of the total amount of state time deposits (including accrued interest to maturity) plus demand deposits with the depository, less the amount, if any, which is insured by the Federal Deposit Insurance Corporation, or the National Credit Unions Share Insurance Fund. All securities pledged as collateral by the depository will be held by the Missouri State Treasurer, in a segregated account. All collateral pledged must be delivered in bearer for, book-entry form, or in the case of fully registered certificates, placed into the nominee name of the custodian. COLLATERALIZATION REQUIREMENTS FOR DISTRICT DEPOSITS No. Security Collateralization Margin (“Haircut”) 1. United States Treasuries 102% 2. State of Missouri Bonds/Debt 102% 3. Local/State Debt a. Any city in this state having a population of not less than two thousand 102% b. Any county of this state 102% c. Any school district situated in this state 102% d. Any special road district in this state 102% e. Bonds and COP’s of any political subdivision established under the provision of Article VI, Section 30 of the Constitution of Missouri (City and County of St. Louis) 102% f. Any of the fifty state within the United States of America 102% 4. U.S. Agency Securities Agency Debentures 102% SBA Loan Pools 105% Agency Mortgage-Backed Securities 105% Agency CMO’s (PACs, TACs, and SEq. Bonds only) 105% 5. Tax anticipation notes issued by any county of class one in Missouri 102% 6. Surety bonds 100% 7. FHLB Letter of Credit 100% 8. Out-of-state Municipal Bonds/COP’s 102% The foregoing Ordinance was adopted June 9, 2005 by the following vote – Ayes: H. Crumpton, D.J. Hayes, C. Karam, M.A. Rhodes, and R.J. Baer. Nayes: None. ADDENDUM B DIRECTION REGARDING CUSTODIAN OF SECURITIES ADDENDUM C PRICING SCHEDULE ADDENDUM D AUTHORIZED REPRESENTATIVES OF THE DISTRICT Title Name Signature Facsimile Secretary-Treasurer _________________ ___________________ ______________ Assistant Secretary-Treasurer _________________ ___________________ ______________ General Counsel _________________ ___________________ ______________ ADDENDUM E ADDITIONAL SERVICES EXHIBIT A THE METROPOLITAN ST. LOUIS SEWER DISTRICT PUBLIC FUNDS INVESTMENT POLICY January 12, 2012 THE METROPOLITAN ST. LOUIS SEWER DISTRICT PUBLIC FUNDS INVESTMENT POLICY I. PURPOSE The purpose of this Public Funds Investment Policy (this "Policy") is to outline the standards applicable to the investment of public funds of the Metropolitan St. Louis Sewer District (the "District") and to describe the investments permitted. II. SCOPE OF INVESTMENT POLICY A. General The Policy applies to all Operating Funds of the Metropolitan St. Louis Sewer District. The operating funds of the District for purposes of this policy include: • Cash and investment balances in the Construction Escrow Fund; • Cash and investment balances in the various Operation, Maintenance and Construction; Improvement funds; • Cash and investment balances in the General Fund; • Cash and investment balances in the various Construction Funds; • Cash and investment balances of the various bond funds including but not limited to the construction or project funds, debt reserve funds, arbitrage rebate funds, and bond sinking funds: • Cash and investment balances of any special revenue fund of the District including but limited to the Improvement fund; • Any pooled investment fund used for operating purposes as defined above; • And any escrowed deposit(s) associated with the District’s operations. Longer-term funds, including investment in employees’ retirement funds and deferred compensation arrangements as well as proceeds from certain bond issues, are covered by separate policy. This section does not apply to the District's pension funds. Any new fund created by the District's Board of Trustees (the "Board"), unless specifically exempted by the Board or by law, and shall be presumed to be within the scope of this section. B. Pooling of Funds Except for cash in certain restricted and special funds, the District will consolidate cash balances from all funds to obtain economies of scale. Investment income will be allocated to various funds based on their respective participation and in accordance with generally accepted accounting principals. C. External Management of Funds Investment through external programs, facilities and professionals operating in a manner consistent with this Policy will constitute compliance. III. OBJECTIVES A. General Subject to the legal restrictions on investments imposed by the Missouri Constitution, Missouri State Statute and the Plan of the Metropolitan St. Louis Sewer District, as amended (the "Plan") and District Ordinances, the District's primary objectives in its investment activities, in order of priority, shall be: 1. SAFETY: Preservation of principal is the foremost objective of the District's investment program. Investments of the District shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective will be to mitigate credit and interest rate risk. a. Credit Risk The District will minimize credit risk, the risk of loss due to the failure of the security issuer or backer, by: 1) Pre-qualifying the financial institutions, broker/dealers, intermediaries, and advisors with which the District will do business; and 2) Diversifying the portfolio so that potential losses on individual securities will be minimized. b. Interest Rate Risk The District will minimize the risk that the market value of securities in the portfolio will fall due to changes in general interest rates, by: 1) Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity; and 2) Investing operating funds primarily in short-term securities. 2. LIQUIDITY: The District's investment portfolio shall remain sufficiently liquid to meet all operating and debt service obligations that may be reasonably anticipated. This is accomplished by structuring the portfolio so that the securities mature with cash needs to meet anticipated demands. Furthermore, since all possible cash demands cannot be anticipated, the portfolio should consist largely of securities with active secondary or resale markets. A portion of the portfolio also may be placed in bank deposits or repurchase agreements that offer same-day or next-day liquidity for short-term funds. 3. YIELD: The District's investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the Safety and Liquidity objectives stated above. Return on investment is of secondary importance compared to the Safety and Liquidity objectives described above. The core of investments are limited to relatively low risk securities in anticipation of earning a fair return relative to the risk assumed. Securities shall not be sold prior to maturity except when: 1) Sale of a security with declining credit may minimize the risk of loss of principal; 2) A security swap would improve the quality, yield, or target duration in the portfolio; or 3) Liquidity needs of the portfolio require that the security be sold. 4. LOCAL ECONOMIC BENEFIT: While satisfying the objectives of Safety, Liquidity and Yield, the District shall seek to place investments with financial institutions that demonstrate a strong record of investing in, and supporting the local economy through the institutions' lending practices. 5. SOCIAL POLICY: While satisfying the objectives of Safety, Liquidity and Yield, investment decisions should further the District's social policies established by the District's Board. IV. STANDARD OF CARE All participants in the investment process shall act responsibly as custodians of public trust. The standard of prudence to be used by investment officials shall be the "prudent investor" rule, which states, “Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived.” V. ETHICS AND CONFLICTS OF INTEREST Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions. Employees and investment officials shall disclose any material interests in financial institutions with which they conduct business. They shall further disclose any personal financial or investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking personal investment transactions with individuals with whom business is conducted on behalf of the District. VI. DELEGATION AND SCOPE OF AUTHORITY Authority to manage the investment program of the District is granted to the Secretary Treasurer, with approval of the Board, as derived from Section 7.020 of the Plan. The Secretary-Treasurer shall act in accordance with the established written procedures and internal controls for the operation of the investment program consistent with this Policy. Procedures should include references to: safekeeping, delivery vs. payment, investing and accounting, repurchase agreements, wire transfer agreements, and collateral/depository agreements. No person may engage in an investment transaction except as provided under the terms of this Policy and the procedures established by the Board. The Secretary-Treasurer shall be responsible for all transactions undertaken and shall establish procedures to regulate the activities of subordinate officials. VII. INTERNAL CONTROLS The Secretary-Treasurer shall establish a system of internal controls designed to ensure that the assets of the District are protected from loss, theft or misuse. The internal controls shall be designed to provide reasonable assurance that these objectives are met. Reasonable assurance recognizes that (1) the cost of a control should not exceed the anticipated benefits likely to be derived and (2) the valuation of costs and benefits requires estimates and judgments by the Secretary-Treasurer. Accordingly, the Secretary- Treasurer shall establish a process for annual independent review by an external auditor to assure compliance with this Policy and the procedures set by the Secretary-Treasurer. The internal controls shall address the following: a. Control of collusion; b. Separation of transaction authority from accounting and record keeping; c. Custodial safekeeping; d. Avoidance of bearer or physical delivery securities; e. Clear delegation of authority to staff members; f. Written confirmation of telephone transactions; and g. Development of a wire transfer agreement with the lead bank and third party custodian. h. Steps to show evidence of review and approval of daily journal vouchers i. Procedures to formalize the monthly reconciliation j. Verify by recalculation the price of securities Broker confirmations should be mailed directly to the District’s accounting department for control purposes. Accounting should then match the trade details of the confirmation against the trade information provided by the District’s Treasury staff. All trades where applicable will be executed by delivery vs. payment (DVP) to ensure that securities are deposited in eligible financial institutions prior to release of funds. All securities shall be perfected in the name or for the account of the Metropolitan St. Louis Sewer District and shall be held by a third-party custodian as evidenced by safekeeping receipts. VIII. SUITABLE AND AUTHORIZED INVESTMENTS 1. Investment Types Consistent with the Plan, the following investments will be permitted by this Policy: A. United States Government & Agency Debt 1. Obligations of the United States Government (minimum portfolio percentage of 5%); 2.Obligations of any agency or instrumentality of the United States (no more than 30% of the total market value of the portfolio may be invested in obligations issued by any one governmental agency or instrumentality of the United States); B. Fixed Income Investments secured by FDIC insurance and/or collateral 1. Fixed Income investments such as but not limited to time certificates of deposit secured by collateral as required by statute and in the section "Collateralization" of this Policy; 2. Repurchase agreements maturing and payable within 90 days and secured by collateral as required by statute and in the section "Collateralization" of this Policy; 3. Deposits with "Approved Depository Banks" (defined below), provided the Approved Depository Banks shall give a bond equal to the deposit, with good and sufficient sureties, or the deposit of collateral as required by statute and in the section "Collateralization" of this Policy. C. Other Fixed Income Debt issued by Commercial Enterprises: It should be noted that investments in the following instruments require an additional level of care and prudence when undertaken by an Investment Officer. Because these investments are in commercial credits as opposed to governmental credt, or subject to the added safety of collateral, the risk of loss of principal is significantly higher for the following investments than for those in the prior categories. Added financial training and education is required for the Investment personnel that participate in and/or manage the commercial paper program, also outside professional management is encouraged. 1. Banker’s Acceptances. Bills of exchange or time drafts on and accepted by a commercial bank, otherwise known as bankers’ acceptances. An issuing bank must have received the highest letter and numerical ranking (i.e. A1 / P1) by at least two nationally recognized statistical rating organizations (NRSRO’S). Must be issued by domestic commercial banks. Purchases of bankers’ acceptances may not exceed 180 days to maturity. No more than 5% of the total market value of the portfolio may be invested in bankers’ acceptances of any one issuer and no more than 25% of the entire portfolio may be invested in banker’s acceptances.; and 2. Commercial Paper Commercial paper which has received the highest letter and numerical ranking (i.e., A1 / P1) by at least two nationally recognized statistical rating organizations (NRSRO’s). Eligible paper is further limited to issuing corporations that have a total commercial paper program size in excess of $250,000,000 and have long-term debt ratings, if any, of “A” or better from at least one NRSRO. Purchases of commercial paper may not exceed 180 days to final maturity. Consideration should be given to the diversification by industry type within the portfolio of commercial paper investments. Consideration should be given to avoiding sectors that may exhibit characteristics of undue risk, and potential illiquidity should be avoided. Asset-backed commercial paper programs that are eligible for purchase should be fully supported programs that provide adequate diversification by asset type (trade receivables, credit card receivables, auto loans, etc.). No arbitrage programs or commercial paper issued by Structured Investment Vehicles (SIV)’s) shall be considered. No more than 5% of the total market value of the portfolio may be invested in commercial paper of any one issuer. No more than 25% of the entire investment portfolio may be invested in Commercial Paper. Commercial paper issuers will be subject to an on-going credit review and a daily news research analysis and monitoring program will be established and maintained. 2. Security Selection The following list represents the entire range of United States agency securities that the Metropolitan St. Louis Sewer District will consider and which shall be authorized for the investment of funds by the District. • U.S. Government Agency Coupon and Zero Coupon Securities. Bullet coupons bonds with no embedded options. • U.S. Government Agency Discount Notes. Purchased at a discount with maximum maturities of one (1) year. • U.S. Government Callable Securities. Restricted to securities callable at par only with final maturities of five (5) years. • U.S. Government Step-Up Securities. The coupon rate is fixed for an initial term. At coupon date, the coupon rate rises to a new, higher fixed term. Restricted to securities with final maturities of five (5) years. A Procurement The following items are included by the District and are are not necessarily embodied in State Law or in the model investment policy sponsored by the Missouri Treasurer’s Office 1. Competitive Process all securities purchased on behalf of the District, where possible, for the investment portfolio shall be acquired by competitive bid with a three bid minimum and that purchase shall be evidenced by at least two individuals 2. Approved Depository Bank "Approved Depository Banks" means any bank, trust company, or savings and loan, selected by the Secretary-Treasurer and approved by the Board. 3. Approved Commercial Paper List all purchases of Commercial Paper and Banker’s Acceptances are restricted to the District’s “Approved Credit List” of viable Commercial Paper and Banker’s Acceptances issuers/providers. Prior to purchasing a Commercial Paper or Banker’s Acceptance investment, a credit review of the issuer should be completed and documented in a brief report, and, if approved, the issuer’s name should be added to the “Approved Credit List” of issuers. The list should be monitored for changes in credit quality and an updated review of each issuer should be performed at least annuall y. 4. Repurchase Agreement Counter Parties Repurchase transactions will be executed only with Primary Dealers or financial institutions located in the State of Missouri that qualify under Securities & Exchange Commission Rule 15C3-1 (Uniform Net Capital Rule) with whom the District has executed a Master Repurchase Agreement. In addition, local financial institutions, with which there is a Master Repurchase Agreement, may be used for late-in-the-day transactions or regular cash account sweeps. In all cases, repurchase agreements shall be collateralized as provided in the section "Collateralization" of this Policy. IX. INVESTMENT RESTRICTIONS To provide for the safety and liquidity of the District's funds, the investment portfolio will be subject to the following restrictions: a. Borrowing for investment purposes ("Leverage") is prohibited. b. Instruments known as Structured Notes (e.g. inverse floaters, leverage floaters, and equity-linked securities) are not permitted. Investment in any instrument, which is commonly considered a "derivative" instrument (including options, futures, swaps, caps, floors and collars), is prohibited c. Contracting to sell securities not yet acquired in order to purchase other securities for purposes of speculating on developments or trends in the market is prohibited. d. No more than 5% of the total market value of the portfolio may be invested in commercial paper and/or banker's acceptances (combined) issued by any one commercial bank or any one issue/provider. X. COLLATERALIZATION Collateralization will be required on (1) repurchase agreements, (2) time certificates of deposit and (3) deposits with banking institutions. All securities pledged as collateral shall be held in a segregated account on behalf of the District by an independent third party with whom the District has a current custodial agreement and that has been designated by the Secretary-Treasurer and the Board as eligible to serve in such capacity. Clearly marked evidence of ownership (safekeeping receipt) must be supplied to the District and retained. The right of collateral substitution may be granted. The market value of any collateral shall be measured on the 15th day and last day of each month, or more frequently if determined by the Secretary-Treasurer. In the event the market value of the collateral no longer satisfies the collateralization level required, then the repurchase agreement provider or depository, as appropriate, shall provide additional collateral within two business days to satisfy the required level. The maturity of the pledged collateral shall not exceed the maximum specified in the Section "Maximum Maturity" of this Policy. Repurchase Agreements. In order to anticipate potential market changes and provide a level of security for all funds, the collateralization level shall be 103% of the amount of the repurchase agreement and shall be based on the market value of principal and accrued interest of the pledged collateral. Acceptable collateral for repurchase agreements shall consist of U.S. Treasury obligations or obligations of U.S. government agencies or instrumentalities that are eligible to be delivered via the Federal Reserve's Fed wire book entry system Securities will be delivered to the District's designated Custodial Agent. Funds and securities will be transferred on a delivery vs. payment basis. Time Certificates of Deposit and Deposits with Banking Institutions. In order to anticipate potential market changes and provide a level of security for all funds, the collateralization level shall be 103% of the amount of the time deposits and demand deposits with any depository (less the amount, if any, which is subject to federal deposit insurance) and shall be based on the market value of principal and accrued interest of the pledged collateral. Acceptable collateral for time certificates of deposit and deposits with banking institutions shall consist of U.S. Treasury obligations or other interest-bearing securities guaranteed as to principal and interest by the U.S. or an agency or instrumentality of the U.S. (and approved by the state Secretary-Treasurer). All securities, which serve as collateral against the deposits of a banking institution, must be safe kept at a non-affiliated custodial facility. Banking institutions pledging collateral against deposits must, in conjunction with the custodial agent, furnish the necessary custodial receipts within five business days from the settlement date. The District shall have a depository contract and pledge agreement with each bank that will comply with the Financial Institutions, Reform, Recovery and Enforcement Act of 1989 (FIRREA). This will ensure that the District's security interest in collateral pledged to secure deposits is enforceable against the receiver of a failed financial institution. XI. MAXIMUM MATURITIES To the extent possible, the District shall attempt to match its investments with its anticipated cash flow requirements. Investments in repurchase agreements shall mature and become payable in not more than 90 days from the date of purchase. The District will not directly invest in securities or make a time deposit with a stated maturity of more than five (5) years from the date of purchase. The District’s weighted average maturity will not exceed three (3) years and will be consistent with the investment objectives for the funds being managed. Because of inherent difficulties in accurately forecasting cash flow requirements, a portion of the portfolio should be continuously invested in readily available funds such as in bank deposits or overnight repurchase agreements to ensure that appropriate liquidity is maintained to meet ongoing obligations XII. DIVERSIFICATION The investments shall be diversified to minimize the risk of loss resulting from over concentration of assets in specific maturity, specific issuer, or specific class of securities. Diversification strategies shall be established and periodically reviewed. At a minimum, diversification standards by security type and issuer shall be: a. U.S. treasuries and securities having principal And/or interest guaranteed by the U.S. Government ....................................... 100% b. Collateralized time and demand deposits ........................................................ 100% c. U.S. Government agencies, and government Sponsored enterprises ........................................................................................ 60% d. Collateralized repurchase agreements .......................................... no more than 50% e. U.S. Government agency callable securities................................ no more than 30% f. Commercial Paper ........................................................................ no more than 25% g. Bankers' Acceptances .................................................................. no more than 25% XIII. AUTHORIZED SECURITIES DEALERS AND DEPOSITORY BANKS Pursuant to the Plan, the Secretary-Treasurer shall maintain a list of Authorized Depository Banks and Securities Dealers. The Secretary-Treasurer shall select those financial institutions that, in his or her opinion, will be most commensurate with the safety of District funds. In order to assist the Board, the Secretary-Treasurer shall employ a formal competitive procurement process for selecting financial institutions for the deposit of District funds, as well as for selecting broker/dealers for purchase of securities and for other banking-related services. Securities Dealers. For brokers and dealers of government securities the Secretary- Treasurer shall select only primary government dealers that report daily to the New York Federal Reserve Bank or meet the Uniform Net Capital Rule (Rule 15C3-1) of the Securities and Exchange Commission, any Authorized Depository Bank, or any securities dealer with offices in the District or otherwise approved by the Secretary- Treasurer. Any firm seeking to qualify as a securities dealer shall supply the Secretary- Treasurer, on behalf of the Board, the information requested by Secretary-Treasurer as a part of the review process described above. The requested information shall be determined by the Secretary-Treasurer. XIV. PERFORMANCE BENCHMARK The investment portfolio as maintained is invested to provide funds as needed and specified by the direction of the various departments of the District. Given this strategy, the basis used to determine whether market yields are being achieved shall be the Merrill Lynch 1 – 3 Year U.S. Treasury Index.. For the purposes of performance measurement, the District seeks to calculate the return of the investment portfolio on a total market value return basis. XV. REPORTING The Secretary-Treasurer shall provide the Board investment reports which provide a clear and accurate picture of the current status of the investment portfolio. The Secretary-Treasurer's report should include comments on the fixed income markets and economic conditions and such other matters as Secretary-Treasurer's believes necessary. The monthly report shall also include a prospective overview to the Secretary-Treasurer's investment strategy for the succeeding monthly period. The report shall contain schedules that provide the following: a. A listing of individual securities held by the District should be made available on the District’s website. b. For each individual security listed, the report shall include: coupon, yield, par value, amortized book value and market value; c. Percentage of the portfolio represented by each investment category; d. For any time certificates of deposit, deposits with banking institutions or any repurchase agreements, a listing of the collateral pledged to such investments; and e. Additional information related to the portfolio as the Secretary-Treasurer deems necessary. XVI. CONFLICTS WITH CONSTITUTION OF MISSOURI The Plan provides that the District may invest "funds not immediately needed for the purpose to which said funds are applicable, in the same manner as the state treasurer may invest funds of the State of Missouri pursuant to Section 15, Article IV of the Constitution of Missouri, as amended from time to time." This Policy is intended to conform to the provisions of the Constitution of Missouri and to provide the District the same investment alternatives and limitations as the state treasurer under the Constitution of Missouri. In interpreting the provision of this Policy, the provision of Section 15, Article IV of the Constitution of Missouri, as amended from time to time, shall govern and provisions of this Policy shall be interpreted in a manner consistent therewith. XVII. ADOPTION OF POLICY Exemption. Any investment currently held that does not meet the guidelines of this Policy shall be exempt from the requirements of this Policy. At maturity or liquidation, such monies shall be reinvested only as provided by this Policy. Adoption. This Policy shall be adopted by resolution of the District. The Policy shall be reviewed annually by the Board and recommended changes will be presented to the Board for consideration.