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HomeMy WebLinkAboutResolution Fort Worth Local Development Corporation (FWLDC) FWLDC-2025-10RESOLUTION NO. FWLDC-2025-10 FORT WORTH LOCAL DEVELOPMENT CORPORATION RESOLUTION OF THE BOARD OF TRUSTEES Adopting an Investment Policy for the Fort Worth Local Development Corporation WHEREAS, the Fort Worth Local Development Corporation (the "LDC"), a Texas non- profit corporation, was created in 1987 to assist the City of Fort Worth ("City") with, among other things, the creation of jobs and other economic development activities in the City; WHEREAS, staff recommends the LDC adopt an investment policy and strategy in order to define the parameters in which the LDC's investments are to be managed and to implement reasonable standards for the LDC's cash management and investment operations ( the "Investment Policy"); WHEREAS, staff in the Economic Development and Financial Management Services Departments have reviewed similar policies of the City and other City -affiliated corporations and prepared the attached, which they believe is sound and which they recommend be adopted; and WHEREAS, the LDC's Board of Trustees (the "Board") wishes to adopt the Investment Policy as proposed by staff, with such adoption to be effective immediately. NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF TRUSTEES OF THE FORT WORTH LOCAL DEVELOPMENT CORPORATION THAT: The Board approves and adopts the document attached hereto as Exhibit A as the Investment Policy for the Corporation. 2. This Resolution and the attached Investment Policy take effect on adoption. AND IT IS SO RESOLVED. Adopted April 22, 2025. FORT WORTH LOCAL DEVEL PMENT CORPORATION By: Gyna M. Bivens, President Attest: Ja e e S. Goodall, Corporate Secretary Exhibit A Tort Worth Local Development Corporation Investment Policy and Strategy I. Introduction The Fort Worth Local Development Corporation ("Corporation") was created as a Texas non- profit corporation to assist the City of Fort Worth ("City") as beneficiary by providing direct or indirect assistance and benefit through means determined by the Board of Trustees. The Corporation's specific activities include, but are not be limited to, (1) encouraging, fostering and promoting the renovation, construction, rehabilitation and establishment of economic development facilities and related infrastructure within the City; (2) administering programs to provide financial assistance to qualified applicants within the City, including establishment of one or more revolving loan funds for the purpose of making loans to qualified applicants related to job creation and economic development activity within the City; (3) financing infrastructure improvements within the City; and (4) making loans, grants, or other forms of financial assistance available to qualified applicants relating to job creation and economic development activity within the City. It is the policy of the Corporation that the administration of its funds and the investment of those funds shall be handled in a manner that promotes the highest public trust. Investments shall be made in a manner which will provide the maximum security of principal by setting guidelines for investment diversification by both type and maturity while meeting the Corporation daily cash flow needs. This Investment Policy and Strategy is established to define the parameters within which investments are to be managed and to implement reasonable standards for the Corporation's cash management and investment operations ("Investment Policy"). The purpose of this document is to establish and describe overarching investment policy, provide investment strategy and guidelines, and set specific rules and parameters governing investment practices. This Investment Policy formalizes the framework for the Corporation's investment activities that must be exercised to ensure effective and judicious fiscal and investment management of its funds. The guidelines are intended to be broad enough to allow any Investment Officer (defined below) or Authorized Signatory Agent, the Treasurer, Assistant Treasurer, and others handling the Corporation's funds to function properly within the parameters of responsibility and authority, yet specific enough to adequately safeguard the Corporation's investment assets. II. Governing Authority All investment and cash management activities shall be conducted in full compliance with the Corporation's Articles of Incorporation and its Bylaws, as may be amended from time to time, as well as all applicable state and federal laws, rules and regulations. Texas laws governing the investment of public funds are found in the Public Funds Investment Act, Chapter 2256 of the Texas Government Code ("PFIA"). Collateral requirements for all public funds deposits in Texas are found in the Public Funds Collateral Act, Chapter 2257 of the Texas Government Code. All of the Corporation's investments will be made in accordance with these statutes. As directed by the Corporation's Board of Trustees ("Board"), the Corporation's Authorized Signatory Agents and Treasurer are authorized to promulgate reasonable procedures to ensure effective and judicious management of Corporation funds which align with this Investment Policy. III. Scope This Investment Policy applies to all public funds in the custody of the Corporation that are not required by law to be deposited in the state treasury by the PFIA and that the Corporation has authority to invest. These funds are reported in the City of Fort Worth's Annual Comprehensive Financial Report. IV. Objectives The Corporation shall manage and invest its assets with the following major objectives, listed in order of priority: 1. Safety Consistent with the requirements of the PFIA, safety of principal is the foremost objective of the Corporation's investment program. All aspects of cash and investment management operations shall be designed to ensure the safety and integrity of the Corporation's financial assets. Investments shall be undertaken in a manner that seeks to ensure the preservation of principal, mitigating credit and interest rate risk. Each investment transaction shall be conducted in a manner to minimize principal losses. All cash and investment management activities shall be done in a manner that promotes and is reflective of public trust. 2. Liquidity Each investment portfolio shall be structured to timely meet expected cash flow needs and associated obligations in a manner that results in the lowest cost to the Corporation. This objective shall be achieved by matching investment maturities with forecasted cash outflows and maintaining an additional liquidity buffer for unexpected liabilities. 3. Diversification Each portfolio shall be diversified by market sector and maturity in order to manage market risk. 4. Yield Each investment portfolio shall be designed with the objective of attaining a reasonable market rate of return throughout economic cycles, taking into account the investment risk constraints of safety and liquidity needs. The benchmarks for each portfolio shall be designed for their comparability to the expected average cash flow patterns of the portfolio. The investment program shall seek to augment returns above the applicable benchmark consistent with risk limitations identified herein and prudent investment policies and practices. V. Strategies The Corporation may maintain and manage two portfolios in which funds are pooled for investment purposes: a Short -Term Portfolio and a Long -Term Portfolio. The Short -Term Portfolio shall be used to manage that portion of the Corporation's assets that, based on analysis of historic cash flow patterns, is projected to be needed to meet the Corporation's cash flow needs within the one-year planning and forecast horizon. The Long -Term Portfolio shall be used to manage that portion of the Corporation's assets that, based on analysis of historic cash flow patterns and current projections, is not needed to meet the Corporation's cash flow needs within the one-year planning and forecast horizon and is therefore available and suitable for longer -term investment. Operating within appropriately established administrative and procedural parameters outlined in this Investment Policy, the Corporation shall aggressively pursue optimum financial rewards in each portfolio, while simultaneously controlling related expenditures. Cash management functions shall be conducted in a manner that promotes the best financial and administrative interests of the Corporation. The strategies used are intended to ensure compliance with the statutes and address suitability of the investments, preservation of principal, liquidity, marketability of securities, diversification controls and reasonably attainable yield. The strategies will utilize competitive bidding practices and other controls as established by this policy for all transactions. The investment strategy for each portfolio incorporates the specific considerations and the unique characteristics of the fund groups represented in that portfolio. Each portfolio shall be invested in high credit quality investments. For the Short -Term Portfolio, the Corporation shall pursue a strategy which fully utilizes its cash assets to obtain a competitive yield while also allowing the Corporation to meet projected cash flow needs, to minimize the cost of liquidity, and to maintain the objectives set forth in this policy. The investment strategy for the Long -Term Portfolio will be focused on appreciation while also meeting the objectives set forth in this Investment Policy. VI. Standard of Care The standard of prudence to be used for all Corporation investments shall be the "prudent person" standard as established by the PFIA and shall be applied in the context of overall management of investments. The "prudent person" standard states that: Investments shall be made with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of their capital and the probable income to be derived. Investment Officers (defined below) acting in accordance with promulgated procedures and this Investment Policy and exercising due diligence shall be held accountable for any individual security's credit risk or market price changes but shall not be personally liable for deviations from expectations so long as deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. VII. Responsibility and Delegation of Authority A. Board of Trustees By law the Board retains ultimate fiduciary responsibility for each portfolio. The Board is to annually review and adopt the Investment Policy. In addition, the Board is responsible for designating one or more individuals to serve as Investment Officers. B. Investment Officers By adoption of this Investment Policy in accordance with the PFIA, the Board designates and appoints the individuals holding the following positions to serve as Investment Officers to serve in accordance with Texas law and be responsible for the investment of Corporation funds consistent with this Investment Policy: the Corporation's Treasurer, Assistant Treasurer, and each properly designated Authorized Signatory Agent. Investment Officers will be responsible for investment decisions and activities. The Corporation may further contract with a registered Investment Advisor to advise in the management of each portfolio. The Investment Officers and Investment Advisor shall seek to act responsibly as custodians of the public trust. No Investment Officer may engage in an investment transaction except as provided under the terms and procedures adopted in accordance with this Investment Policy. The Investment Officers and Investment Advisor are responsible for creating and maintaining portfolios in accordance with this Investment Policy, providing timely reporting to the Board, and establishing procedures and controls for the process and financial counterparties (brokers, banks, pools). The Investment Officers and Investment Advisor shall act in accordance with established written procedures and internal controls for the operation of the investment program consistent with this Investment Policy. Training In accordance with the PFIA, all Investment Officers shall (i) within twelve months after assuming investment duties, attend at least one training session of at least ten hours and (ii) every two years thereafter, attend eight hours of training, with the first such two-year period beginning on the first day of the Corporation's fiscal year after the year in which the Investment Officer takes the initial training. Training shall be provided by professional organizations authorized in accordance with Texas law and designated by the City's Investment Committee. Ethics and Disclosures Officers and employees (and any Corporation employees who act on the Corporation's behalf) involved in the investment process shall refrain from any personal activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial investment decisions. Investment Officers shall refrain from undertaking any personal investment transactions with the same individual with whom business is conducted on behalf of the Corporation. In addition, all Investment Officers shall file disclosure statements in accordance with the requirements of the Public Funds Act as applicable. C. Investment Advisor The Corporation may engage the services of a Securities and Exchange Commission registered Investment Advisor (registered under the Investment Advisors Act of 1940) to assist in the management of an investment portfolio in a manner consistent with the Corporation's objectives and policies. All security transactions will be approved by the Corporation's Treasurer or Assistant Treasurer prior to the Investment Advisor taking action. Approval may be in the form of a phone call, email, facsimile or other written communication. The Investment Advisor may not be granted total discretion in the management of funds. VIII. Authorized Financial Institutions, Depositories, and Broker/Dealers The Investment Officers shall use financial institutions, broker/dealers, and depositories that have been authorized to provide investment services by the City's Investment Committee or by the Board. All counter -parties will be selected through a process of due diligence. Due diligence requires competitive transactions and delivery versus payment settlement. The Corporation will furnish counter -parties with the Corporation action authorizing the Investment Officers or Investment Advisor to establish and maintain accounts for the purpose of purchasing and selling securities authorized under Texas law and this Investment Policy. Certification Consistent with Section 2256.005(1) of the PFIA, the Board requires that any business organization offering to engage in an investment transaction with the Corporation must be provided with a copy of this Investment Policy, with "business organization" defined as "an investment pool or investment management firm under contract with an investing entity to invest or manage the entity's investment portfolio that has accepted authority granted by the entity under the contract to exercise investment discretion in regard to the investing entity's funds." The Board also requires the business organization must provide the Corporation with a written instrument (in a form acceptable to both parties) executed by a representative of the business organization that substantially acknowledges that the business organization has: a. received and reviewed the Corporation's Investment Policy; and b. implemented reasonable procedures and controls in an effort to preclude investment transactions with the Corporation that are not authorized by this's Investment Policy. Any material changes to the Investment Policy will require re -certification by all authorized firms. IX. Authorized Investments The PFIA lists all possible authorized investments available to Texas public entities that are subject to the PFIA. The Board has determined that the Corporation shall invest only in those investments authorized below as such investments are further defined by the PFIA. If this Investment Policy provides for a lower stated maximum maturity or other more restrictive condition on an authorized investment, that more restrictive requirement controls. If changes are made to state law to allow for additional possible authorized investments, such investments will not be authorized by the Corporation until this Investment Policy is modified and adopted by the Board. All investment transactions will be made on a competitive basis. 1. Direct obligations of the United States Treasury. 2. Obligations of United States government agencies and instrumentalities, including mortgage -backed securities and collateralized mortgage obligations which pass the Federal Reserve's bank test. 3. FDIC -insured and/or collateralized certificates of deposit as allowed by law. 4. FDIC -insured brokered certificates of deposit securities from a bank in any US state, delivered versus payment to the Corporation's safekeeping agent. Before purchase, the Investment Officers or Investment Advisor must verify the FDIC status of the bank to ensure that the bank is FDIC -insured. 5. Public funds investment pools as permitted by Government Code 2256.016. 6. Commercial Paper as permitted by Government Code 2256.013 for the limited purpose of investing in public funds investment pools. X. Collateralization Time and Demand Pledged Collateral All time and demand deposits shall be secured above FDIC coverage by pledged collateral. In order to anticipate market changes and provide a level of security for all funds, collateral will be maintained and monitored by the pledging depository at 102% of the market value of principal and accrued interest on the deposits. The bank shall monitor and maintain the margins on a daily basis. All collateral shall be subject to inspection and audit by the Corporation, its Treasurer, Assistant Treasurer, or auditors. Collateral pledged to secure deposits shall be held by an independent financial institution outside the holding company of the depository, approved by the Investment Officers, in accordance with a safekeeping agreement executed under the terms of the Financial Institutions, Reform, Recovery, and Enforcement Act. Authorized Collateral Consistent with the Public Funds Collateral Act and further restricted by this Investment Policy, acceptable collateral for time and demand deposits and repurchase agreements shall include only: - Obligations of the U.S. Government, its agencies and instrumentalities, including mortgage -backed securities and CMO that pass the bank test, and - Obligations of any U.S. state, city, county or authority rated at least A by two nationally recognized statistical rating organizations. XI. Internal Controls The Investment Officers have the responsibility for establishing and maintaining an internal control structure designed to provide reasonable assurance that assets are protected from loss, theft, or misuse. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived, and, the valuation of costs and benefits requires ongoing estimates and judgments by management. The internal controls shall address the following points at a minimum: - Control of collusion, - Separation of transaction authority from accounting and record keeping, - Custodial safekeeping, - Clear delegation of authority, - Written documentation on all transactions, and - Review, maintenance and monitoring of security procedures. Consistent with the PFIA, a compliance audit of management controls on investments and adherence to this Investment Policy shall be conducted in conjunction with the Corporation's annual external financial audit. The Investment Officers will develop and maintain internal procedures, describing use of bank balances, calculation of the Corporation's liquidity needs, daily investment procedures, investment transaction documentation, and distribution of reports, at a minimum. XII. Safekeeping All security transactions will be settled on a delivery versus payment basis. Securities owned by the Corporation will be held by the Corporation's depository or other Corporation -contracted safekeeping institution independent from any security transactions. All safekeeping contracts will be executed in writing. The safekeeping agent shall provide documentation of all securities and evidenced by safekeeping receipts/reports indicating ownership by the Corporation. XIII. Reporting Quarterly Reporting Consistent with the PFIA, the Investment Officers or Investment Advisor will prepare and submit a report to the Board no less than quarterly. The report will comply with the requirement of the PFIA and will contain, at a minimum, the following information for each portfolio (Short -Term and Long -Term): a. a detailed description of each investment position as of the date of the report, including book and market values and purchase yield; b. individual transactions (buy/ sell, maturities, calls) during the period; C. summary statements for each portfolio including: (1) beginning and ending book value for the reporting period, (2) beginning and ending market value for the reporting period, (3) change in market value (volatility measure) for the reporting period, (4) total earnings for the reporting period, (5) weighted average maturity ("WAM") at the beginning and end of the period, and (6) actual yield and benchmark yield for the reporting period. d. securities lending income stated as a separate amount and also expressed as a part of the overall actual -yield calculation, with overall yield shown in comparison to benchmark; e. asset allocation by maturity and market sector; f. compensating balances maintained at depositories at its earned credit rate ("ECR") stated as a separate amount and expressed as a part of the overall actual -yield calculation, with overall yield shown in comparison to benchmark; and g. overall blended yield (taking into account both securities lending and ECR revenues) in comparison to benchmark. The quarterly report shall include a statement of compliance for each portfolio as it relates to this Investment Policy and shall be signed by each Investment Officer and Investment Advisor. In order to maintain the transparency of the program, the reports shall be made easily available and clear and concise for the reader. Prices used for calculation of market values will be obtained from an independent source. XIV. Investment Policy Adoption The Investment Policy shall be reviewed and adopted by the Board at least annually. The adopting instrument shall identify any changes made to the Investment Policy. XV. Adoption Policy Reviewed and Approved: Date Comments April 22, 2025 Initial Adoption