SF 2255

as introduced - 88th Legislature (2013 - 2014) Posted on 05/16/2014 09:37am

A bill for an act
relating to deposits and investments of public funds; granting the Metropolitan
Council additional investment authority; making certain conforming technical
changes; amending Minnesota Statutes 2012, sections 118A.03, subdivision 5;
118A.04, subdivisions 7, 8; 118A.07; 473.543, subdivision 3.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2012, section 118A.03, subdivision 5, is amended to read:

Subd. 5.

Withdrawal of excess collateral.

A financial institution may withdraw
excess collateral or substitute other collateral after giving written notice to the
deleted text begin governmental deleted text end new text begin government new text end entity and receiving confirmation. The authority to return any
delivered and assigned collateral rests with the government entity.

Sec. 2.

Minnesota Statutes 2012, section 118A.04, subdivision 7, is amended to read:

Subd. 7.

Temporary general obligation bonds.

Funds may be invested in general
obligation temporary bonds of the same deleted text begin governmental deleted text end new text begin government new text end entity issued under
section 429.091, subdivision 7, 469.178, subdivision 5, or 475.61, subdivision 6.

Sec. 3.

Minnesota Statutes 2012, section 118A.04, subdivision 8, is amended to read:

Subd. 8.

Debt service funds.

Funds held in a debt service fund may be used to
purchase any obligation, whether general or special, of an issue which is payable from the
fund, at such price, which may include a premium, as shall be agreed to by the holder, or
may be used to redeem any obligation of such an issue prior to maturity in accordance
with its terms. The securities representing any such investment may be sold by the
deleted text begin governmental deleted text end new text begin government new text end entity at any time, but the money so received remains part of
the fund until used for the purpose for which the fund was created. Any obligation held in
a debt service fund from which it is payable may be canceled at any time unless otherwise
provided in a resolution or other instrument securing obligations payable from the fund.

Sec. 4.

Minnesota Statutes 2012, section 118A.07, is amended to read:

118A.07 ADDITIONAL INVESTMENT AUTHORITY.

Subdivision 1.

Authority provided.

As used in this section, "governmental entity"
means a city with a population in excess of 200,000 deleted text begin or deleted text end new text begin , new text end a county that contains a city of
that size new text begin , or the Metropolitan Council new text end . If a governmental entity meets the requirements of
subdivisions 2 and 3, it may exercise additional investment authority under subdivisions 4,
5, and 6.

Subd. 2.

Written policies and procedures.

Prior to exercising any additional
authority under subdivisions 4, 5, and 6, the governmental entity must have written
investment policies and procedures governing the following:

(1) the use of or limitation on mutual bond funds or other securities authorized or
permitted investments under law;

(2) specifications for and limitations on the use of derivatives;

(3) the final maturity of any individual security;

(4) the maximum average weighted life of the portfolio;

(5) the use of and limitations on reverse repurchase agreements;

(6) credit standards for financial institutions with which the deleted text begin government
deleted text end new text begin governmental new text end entity deals; and

(7) credit standards for investments made by the deleted text begin government deleted text end new text begin governmental new text end entity.

Subd. 3.

Oversight process.

Prior to exercising any authority under subdivisions 4,
5, and 6, the governmental entity must establish an oversight process that provides for
review of the deleted text begin government deleted text end new text begin governmental new text end entity's investment strategy and the composition
of the financial portfolio. This process shall include one or more of the following:

(1) audit reviews;

(2) internal or external investment committee reviews; and

(3) internal management control.

Additionally, the governing body of the governmental entity must, by resolution,
authorize its treasurer to utilize the additional authorities under this section within
their prescribed limits, and in conformance with the written limitations, policies, and
procedures of the governmental entity.

If the governing body of a governmental entity exercises the authority provided in
this section, the treasurer of the governmental entity must annually report to the governing
body on the findings of the oversight process required under this subdivision. If the
governing body intends to continue to exercise the authority provided in this section for the
following calendar year, it must adopt a resolution affirming that intention by December 1.

Subd. 4.

Repurchase agreements.

A deleted text begin government deleted text end new text begin governmental new text end entity may enter
into repurchase agreements as authorized under section 118A.05, provided that the
exclusion of mortgage-backed securities defined as "high-risk mortgage-backed securities"
under section 118A.04, subdivision 6, shall not apply to repurchase agreements under this
authority if the margin requirement is 101 percent or more.

Subd. 5.

Reverse repurchase agreements.

Notwithstanding the limitations
contained in section 118A.05, subdivision 2, the deleted text begin county deleted text end new text begin governmental entity new text end may enter
into reverse repurchase agreements to:

(1) meet cash flow needs; or

(2) generate cash for investments, provided that the total securities owned shall be
limited to an amount not to exceed 130 percent of the annual daily average of general
investable monies for the fiscal year as disclosed in the most recently available audited
financial report. Excluded from this limit are:

(i) securities with maturities of one year or less; and

(ii) securities that have been reversed to maturity.

There shall be no limit on the term of a reverse repurchase agreement. Reverse
repurchase agreements shall not be included in computing the net debt of the governmental
entity, and may be made without an election or public sale, and the interest payable
thereon shall not be subject to the limitation in section 475.55. The interest shall not be
deducted or excluded from gross income of the recipient for the purpose of state income,
corporate franchise, or bank excise taxes, or if so provided by federal law, for the purpose
of federal income tax.

Subd. 6.

Options and futures.

A deleted text begin government deleted text end new text begin governmental new text end entity may enter
into futures contracts, options on futures contracts, and option agreements to buy or sell
securities authorized under law as legal investments for deleted text begin counties deleted text end new text begin governmental entities new text end ,
but only with respect to securities owned by the governmental entity, including securities
that are the subject of reverse repurchase agreements under this section that expire at or
before the due date of the option agreement.

Sec. 5.

Minnesota Statutes 2012, section 473.543, subdivision 3, is amended to read:

Subd. 3.

Where to deposit; how to invest.

The moneys on hand in said funds
and accounts may be deposited in the official depositories of the council or invested as
hereinafter provided. The amount thereof not currently needed or required by law to be
kept in cash on deposit may be invested in obligations authorized for the investment of
public funds by deleted text begin section 118A.04 deleted text end new text begin chapter 118A new text end . Such moneys may also be held under
certificates of deposit issued by any official depository of the council.

Sec. 6. new text begin APPLICATION.
new text end

new text begin Section 5 applies in the counties of Anoka, Carver, Dakota, Hennepin, Ramsey,
Scott, and Washington.
new text end