(A) (1) This policy is applicable to all public funds belonging to Summit Township and in the custody of the Township Treasurer.
(2) These funds are accounted for in the Summit Township comprehensive annual financial report.
(B) (1) The Summit Township Treasurer or his or her designee is authorized to manage funds belonging to the township, including depositing funds in approved institutions and administrating investments in conformance with M.C.L.A. § 41.77 and the policies as set forth in this section.
(2) Also, the Township Treasurer or his or her designee is authorized to hire an outside money manager to invest township funds in securities which are legal (authorized) for direct purchase.
(C) The Board approves financial banks as depositories of township funds such as: Citizens Bank, Comerica, Flagstar, Republic Bank, LaSalle Bank, American One Federal Credit Union, County National Bank, and MBIA Asset Management as administrator of the Michigan CLASS Pool.
(D) (1) The Treasurer shall recommend financial institutions for approval for the safekeeping of township funds based on an evaluation of the performance and solvency of the institution, as well as past performance in exercising due care and prudence in managing the custody of township funds held in trust, if applicable.
(2) The Treasurer shall periodically evaluate approved and potential financial depositories and shall make recommendation as to appropriate changes in approved depositories when warranted.
(E) The Treasurer may elect to have certificates and other evidence of investments held by a financial institution, provided that the financial institution presents to the Township Treasurer sufficient documentation and acknowledgment of the investment instruments held on behalf of the township.
(F) In determining safekeeping and custody qualifications, financial institutions must document a minimum capital requirement of at least $10,000,000 and at least 5 years of operation. All financial institutions and brokers/dealers shall be pre-qualified by supplying the following:
(1) Audited financial statements;
(2) Proof of NASD certification or FDIC insurance;
(3) Proof of state registration; and
(4) Certification of having read, understood, and agreement to comply with the Summit Township investment policy.
(G) The Treasurer shall annually examine the financial condition and registrations of qualified financial institutions and brokers/dealers by obtaining annual updates of the information listed above.
(H) When the Treasurer’s analysis of the township’s cash flow requirements reveals that surplus funds will not be required to meet current expenditures for a specific length of time, the Treasurer is authorized to make prudent investments for a length of time that will provide a reasonable return on investment, yet seek to ensure that the funds will be available when needed and will not be exposed to undue risk. The Treasurer is authorized to invest township funds into lawful investments authorized under M.C.L.A. § 129.91. These are the following instruments:
(1) In bonds, securities, and other obligations of the United States, or an agency or instrumentality of the United States;
(2) In certificates of deposit, savings accounts, deposit accounts, or depository receipts of a bank which is a member of the Federal Deposit Insurance Corporation or a savings and loan association which is a member of the Federal Savings and Loan Insurance Corporation or a credit union which is insured by the National Credit Union Administration, but only if the bank, savings and loan association, or credit union meeting all criteria as a depository of public funds contained in state law;
(3) In commercial paper rated at the time of purchase within the 2 highest classifications established by not less than 2 standard rating services and which matures not more than 270 days after the date of purchase. Not more than 50% of any fund may be invested in commercial paper at any time;
(4) Mutual funds registered under the Investment Company Act of 1940, Title 1 of Chapter 686, 54 Stat. 789, 15 U.S.C. §§ 80a-1 to 80a-3 and 80a-4 to 80a-64, with the authority to purchase only investment that are legal for direct investment according to state law. This authorization is limited to funds whose intention is to seek to maintain a net asset value of 1 dollar per share;
(5) Investment pools composed of investment obligations described in subdivision (a) through (g) of Act 20 PA 143, as amended through 12-31-1997, if purchased through an inter-local agreement under the Urban Cooperation Act of 1967, Public Act 7 of 1967 (Extra Session), being M.C.L.A. § 124.512; and
(6) The policy authorizes investment in investment pools organized under the Surplus Funds Investment Pool Act, Public Act 367 of 1982, being M.C.L.A. §§ 129.11 - 129.118.
(I) The objectives of this policy are foremost, to maintain safety of principal of township funds; secondarily, to maintain a diversified investment portfolio, maintain adequate liquidity, and achieve a market rate of return on relatively safe investment instruments. To accomplish these objectives, decisions and actions involving the township’s investment portfolio shall meet the following criteria.
(1) Safety.
(a) Safety of principal is the foremost objective of Summit Township’s investment practices.
(b) Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall investment portfolio.
(c) The Treasurer shall minimize credit risk by investing only in the safer types of securities, pre-qualifying financial institutions, brokers/dealers, intermediaries, and advisers with whom the township will do business; and diversifying the investment portfolio so that the impact on the investment portfolio resulting from losses on individual securities will be minimized.
(2) Diversification.
(a) The investments shall be diversified by avoiding over concentration in securities from a specific issuer or business sector, excluding U.S. Treasury securities.
(b) Investments shall have varying maturities.
(c) Investment instrument selection shall avoid high credit risks and shall include use of readily available funds, such as local government investment pools or mutual funds to maintain sufficient liquidity.
(3) Liquidity.
(a) The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated.
(b) Securities shall have maturity dates concurrent with cash flow needs.
(c) Securities with active secondary or resale markets, as well as money market mutual funds offering same-day liquidity for short-term funds shall also be used to ensure liquidity.
(d) The Treasurer shall minimize interest rate risk by avoiding the need to sell securities prior to maturity and investing operating funds primarily in short-term securities, money market mutual funds, or similar public investment pools.
(e) Securities shall not normally be sold prior to maturity except to minimize loss of principal to improve the quality; yield or target duration in the portfolio, or to meet liquidity needs.
(4) Return on investment.
(a) The investment portfolio shall be designed to attain a market average rate of return during budgetary and economic cycles while taking into account investment risk constraints and liquidity needs.
(b) Return on investment is of secondary importance compared to safety and liquidity objectives.
(c) The core of investments is limited to relatively low-risk securities, and a fair rate of return relative to risk is assumed.
(J) (1) The Treasurer shall make the investments and only the investments as a prudent person would make in dealing with the property of another, having in view the preservation of the principal and the amount and regularity of the income to be derived.
(2) Investment officer acting in accordance with written procedures and this investment policy 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 and the liquidity and the sale of securities are carried out in accordance with the terms of this policy.
(3) The standard of prudence to be used shall be the “fiduciary” standard and shall be applied in context of managing an overall portfolio.
(K) The Treasurer shall refrain from personal business activity that could conflict with the proper execution and management of township investments, or that could impair the Treasurer’s ability to make impartial investment decisions.
(L) The Treasurer shall annually provide a written report to the Township Board concerning the investment of township funds.
(M) (1) The township shall comply with all applicable statutory standards for investment of public funds as they now exist or as they may be subsequently amended.
(2) Any provision of this section that conflicts with applicable statutory requirements and standards is void.
(Res. passed 1-14-2003; Am. Res. passed 2-11-2003; Am. Res. passed 11-14-2006)