J.P. Morgan Request for Clarification/Question

Transcription

1 Collier County Clerk of the Circuit Court Request for Proposals RFP Banking Services Request for Clarifications and General Questions Question RFP Section Number RFP Page Number J.P. Morgan Request for Clarification/Question 1. II. Account Structure 11 It appears you have other BOC, COCC and SOE (ZBA) Payroll accounts dedicated to just issuing payroll checks. Do you print those checks in-house? Is there a reason you don t have the payroll ACH transactions and checks drawn off the same BOCC, COCC or SOE bank account? We print payroll checks in house. The current account set up is in place to aid reconciliation. 2. II. Account Structure 12 The Clerk indicated the use of TPA s for managing your Group Benefits, Flexible Benefits, Property & Casualty and Workers Compensation payments. Please describe the daily reporting process and timing that you receive from these TPAs. Also describe the level of access to the transaction details and history needed, when performing your daily research tasks? Are inquiries received and managed directly by the Clerk, or the TPA? We receive check registers from the TPAs as checks are issued and on a monlthy basis we receive assistance with any reconcilement issues. Most inquiries are handled by the TPA. 3. III.C. Electronic Cash Mgmt 15 Please describe any new system development initiatives that the Clerk has in scope for How do you foresee your banking partner s involvement for a successful effort? We have no initatives in scope at this time. We see our bank providing a means of allowing us to maximize invested balances by utilizing controlled disbursements and advancing availability by leveraging deposit technologies. 4. III.C. Electronic Cash Mgmt 15 Please clarify the Clerk s requested capability of removing a check or ACH from a file. We want to be sure we understand if this is for a completed payment that was already sent out, or a pending payment instruction within the bank. The removal would only be requested for a pending payment. 5. III.C. Electronic Cash Mgmt 15 Please describe any current EDI reporting services in place with your current provider, allowing the Clerk to post incoming ACH remittance addenda detail for your incoming vendor payments. We noted an EDI Pass Through fee for a small volume of monthly items and wanted to understand the process currently in place. In cases where we need certain ACH addenda in a readable format our current provider adds the capability. 1

2 Collier County Clerk of the Circuit Court Request for Proposals RFP Banking Services Request for Clarifications and General Questions 6. III.L & M. Retail and Wholesale Lockbox 7. III.L & M. Retail and Wholesale Lockbox 8. III.L & M. Retail and Wholesale Lockbox 9. III.L & M. Retail and Wholesale Lockbox Does each lockbox deposit to a single account? Wholesale yes; Retail yes What type of process is used to capture items for the volume identified as image cash letter clearing? Image cash letter clearing is not used in processing the wholesale or retail lockbox transactions Can you provide a copy of the current retail and wholesale lockbox processing instructions? Yes, please see attachments related to wholesale. Retail lockbox process does not have formal instructions just stub formatting specifications. Utilites has internal upload procedures Can you provide a breakdown of your monthly lockbox volumes including correspondence and unprocessable items for both retail and wholesale? Wholesale 5 th 3rd batch summary report shows 4,998 documents scanned throught the EMS lockbox for May, as of May 30, Retail 25,940 lockbox items processed for April III.L & M. Retail and Wholesale Lockbox Are there seasonal peaks in remittance volumes? If yes, please identify. Wholesale = Yes, the peak season is January to May. Retail no, because Utilities has an availability charge and as such every customer is billed every month. 11. III.L & M. Retail and Wholesale Lockbox 12. III.L & M. Retail and Wholesale Lockbox 13. III.L & M. Retail and Wholesale Lockbox Will the lockbox provider receive cash and/or credit card payments in the lockbox? If yes, what is the anticipated volume? Wholesale no; Retail no Are there any sort requirements (i.e. items/payments that need to be batched separately)? Wholesale no; Retail no Is balancing required? What percentage of payments is not balanced checks paying amounts different than the remittance document? Wholesale no; Retail if check and stub do not balance they are sent to Utilities Department. Exact percentage is unavailable at this time. 2

3 Collier County Clerk of the Circuit Court Request for Proposals RFP Banking Services Request for Clarifications and General Questions 14. III.L & M. Retail and Wholesale Lockbox 15. III.L & M. Retail and Wholesale Lockbox 16. III.L & M. Retail and Wholesale Lockbox 17. III.L & M. Retail and Wholesale Lockbox 18. III.L & M. Retail and Wholesale Lockbox Can the lockbox provider process payments that are not balanced to the remittance detail for retail and wholesale? Wholesale yes; Retail no Do you currently send any payments to the lockbox from your office? If yes, what is the monthly volume for retail and wholesale? Wholesale no; Retail no What detail data information do you require to review and post transactions for retail and wholesale? Wholesale Account information and amount; Retail - Utilities receives all stubs and checks to ensure total posting and to see if a customer tried to change addresses For wholesale on average, approximately how many invoices and documents are received with each remittance? Usually 4 to 5 for Wholesale On average, approximately how many documents are included with a retail and a wholesale remittance? Are the remittance documents double sided? Wholesale 4 to 5 double sided; Retail generally a check and a stub. 19. III.L & M. Retail and Wholesale Lockbox 20. III.L & M. Retail and Wholesale Lockbox In what format do you require images delivered by transmission or on-line browser? Wholesale online; Retail prefer to view online For retail, what is your average monthly billing volume? What percentage of payments come in by check, ACH Debit, on-line billpay (ex: chase.com) and credit card? Total average number of bills per month is 52,792 for the period September 2013 to April Approximately 52% comes in by check/cash, 21% by ACH draft, 20% by credit card and 7% by interactive voice response. 21. III.L & M. Retail and Wholesale Lockbox 22. III.L & M. Retail and Wholesale Lockbox What percentage of your remitters return the coupon? Wholesale 99%; Retail 98% With retail, what percentage of remittances are single check, single coupon? We do not have this statistic available, but the vast majority is one to one. 3

4 Collier County Clerk of the Circuit Court Request for Proposals RFP Banking Services Request for Clarifications and General Questions 23. III.L & M. Retail and Wholesale Lockbox What percentage of retail remittances received are multiples? Multiples being defined as single check/multiple remittance documents or multiple checks/single remittance documents. We do not have this statistic available, but the vast majority is one to one. 24. III.L & M. Retail and Wholesale Lockbox 25. III.L & M. Retail and Wholesale Lockbox 26. III.L & M. Retail and Wholesale Lockbox 27. III.L & M. Retail and Wholesale Lockbox 28. III.L & M. Retail and Wholesale Lockbox 29. III.L & M. Retail and Wholesale Lockbox 30. III.L & M. Retail and Wholesale Lockbox 31. III.L & M. Retail and Wholesale Lockbox 32. III.L & M. Retail and Wholesale Lockbox For retail, are bills sent out with return window envelopes? What percentage of items are returned with window envelopes? Yes, they are sent out with return window envelopes. We have no statistics available on the second question Is there information on the back of the retail coupon such as an address change that must be imaged? No If you have a retail scanline, does it contain a check digit? If so, can you provide a copy of the check digit routine? We have not historically had a check digit If you have a scanline, can you provide a breakdown of the information contained in the retail scanline? Please see retail example previously provided Can the lockbox provider process payments identified as multiples? As unbalanced? Wholesale yes; Retail yes, but it cannot be unbalanced In retail, what are the processing rules for items identified as unbalanced with the coupon amount? They are sent to the Utilities Department and posted manually How are items processed that do not have a retail coupon? If there is an account number written on the check the processor will process the check to that account With retail lockbox, how are the items that do not match the customer number file handled? They are sent to the Utilities Department Do you or will you accept credit card payments in the lockboxes? Wholesale no; Retail no. 4

5 Collier County Clerk of the Circuit Court Request for Proposals RFP Banking Services Request for Clarifications and General Questions 33. III.L & M. Retail and Wholesale Lockbox 34. III.Q. Merchant Services Are Canadian checks received in the lockboxes? Are these items processed or returned? What is the monthly volume? Wholesale yes, they are received and processed, volume unknown; Retail yes, this does happen and check is deposited by the processor, volume unknown. 21 Please provide a list of the terminal make, model and quantity that is used for each of the entity/department accepting card payments. Please see attached schedule of equipment by location. 35. III.Q. Merchant Services 21 Please provide a list of the software name and version number that is used for each of the entity/department accepting card payments. Please see attached schedule. In most cases the terminal transmission is via dial up to a third party software. 36. III.Q. Merchant Services 21 You have provided total volumes, can you please provide the annual dollar volume and number of transactions by card type (Visa, MC, Discover, AmEx) for each department/entity accepting credit card payments. We have provided actual volumes for April 2014 as part of an earlier request. Total annual volume and dollar amounts across all departments accepting cards are approximately 300,000 trasnactions with a dollar value of approximately $30M. Due to time constraints some of the reporting capabilities from third party providers the approx. card volumes are as follows: AMEX 31,000, VISA 148,000, MC 57,000, DISCOVER 6,000 and 1,000 debit card transactions. The remaining 47,000 transactions (airports, growth management and parks and recreation) are allocated across the various card providers and the third pary data was not readily available. The approximate dollar amounts are as follows: AMEX - $3.5M, VISA - $13.3M, MC - $7.0M, DISCOVER - $500K and debit cards $100K. The remaining dollar amount of $5.6M is allocated across the various card providers and the third party data was not readily available. Please see Banking Services Merchant Statements Parts 1 and III.Q. Merchant Services 21 The RFP states that there are certain merchant services processors that must be integrated. Please provide details on who these companies are and what services are provided. Are these software solutions or actual processors who process payment and fund the County? The merchant services providers are actual processors who fund the County. 5

6 Collier County Clerk of the Circuit Court Request for Proposals RFP Banking Services Request for Clarifications and General Questions 38. III.R. Miscellaneous Banking Requirements 22 ATM Questions 1. Please provide a copy of your ATM services contract or describe service agreement with existing provider. o The current ATMs are being provided free of charge by Fifth Third Bank. 2. Please provide total number of ATMs and location details for each (address, lobby, cafeteria, etc). o Two locations: Collier Area Transit (CAT) Lobby, Collier County Government Center Collier County Courthouse Annex First Floor, 3315 Tamiami Trail East, Naples, FL For the locations needing ATM s: How many employees are located at each location? How much additional foot traffic is expected in the area the ATM will be located? o The CAT ATM was used 169 times during April 2014, the Courthouse Annex location was used 752 times during April Exhibit A EDM Monthly Service Fee 10 Please provide number of Remote Deposit Capture (RDC) check scanners and check scanner model for each location. We currently have three RDC scanners. They are all Digital Check Teller Scan TS-240 s. All RDCs are located in the Utiities Department. 40. Exhibit A CHK Unencoded Items Deposited 20,000 and CHK Encoded Items Deposited 24,000 - What is the deposit method (ex: lockbox, branch deposit, vault deposit, remote deposit, armored courier etc.) for the 44,000 checks identified as CHK Unencoded and CHK Encoded (ex. 10% RDC, 60% Vault, 10% Branch, Lockbox 20%)? Encoded checks have the dollar figure and check number included on the check; we do not have statistics on the breakdown of encoded to unencoded by type of deposit, Overall the amounts are approximately 20% branch, 70% Retail lockbox and 10% wholesale lockbox. 41. Exhibit A Deposit Administration Fee 100,000 Please elaborate on the services provided under Deposit Administration Fee. This is an FDIC fee; please note that this fee is waived on the analysis items provided earlier. 6

7 Collier County Clerk of the Circuit Court Request for Proposals RFP Banking Services Request for Clarifications and General Questions 42. Exhibit A Commercial Deposits 2,000 What is the deposit method (ex: branch deposit, vault deposit, remote deposit, lockbox etc.) for the 2,000 deposits identified as Commercial Deposits (ex. 10% RDC, 60% Vault, 10% Branch, 20% Lockbox)? The 2,000 items related to commercial deposits are 100% branch, and relate to deposits with a corresponding deposit slip coded by location. 43. Exhibit A Biller Direct Prem Receivable TR 1) Please provide type of payments accepted by your Biller Direct Prem Receivable solution (Utilities, License, Permits, Citations). Biller Direct was a web payment portal used until approximately February of 2014 to process Utilities payments online. The service has since been migrated to a third party provider, Collector Solutions Incorporated. 2) What is your current process for accepting electronic payments via your Biller Direct Prem Receivable service? The Biller Direct service is not currently used. a.does Collier County host their site internally? If not, who are your third party developers for the site? Collier County did not host their site internally. 3) How do you currently handle billing procedures? a.if a service provider currently handles billing, who is that third party? The Biller Direct service is not currently used. 4) What payment methods do you currently accept via your Biller Direct Prem Receivable service? a.credit cards (which ones), Debit Card, ACH, echeck All major cards were accepted. 5) For each Payment type given (e.g. Utilities, Citation Payments), and for each Payment Method (e.g. ACH and Credit Card), please give us the following information if available- estimated if need be): a.whether the County prefers for the biller direct e-payment solution and related processing costs to be (A) absorbed by the County or (B) funded by the payer through convenience fees? 7

8 Collier County Clerk of the Circuit Court Request for Proposals RFP Banking Services Request for Clarifications and General Questions The online traffic citations paid via the Clerk s agency (via Vantiv) are funded through a convenience fee paid by the user. The discounts and fees of the online Utilities payment options (provided by Collector Solutions Incorporated) will be absorbed by the County. The County also takes online payments for growth management (via Magicwrighter) related fees and parks and recreation event fees (via Active), these are supported by a third party providers and the charge is passed on to the cardholder as a convenience fee. b. What is your total annual transaction volume (# Transactions)? Again, the Biller Direct solution is not currently used, but the total annual online transaction volume being handled by third parties is approximately 200,000 transactions (based on annualized April 2014 numbers). c. What is your total annual transaction value (in dollars collected)? The dollar value of the 200,000 transactions disclosed above is approximately $25M. d. Please distribute the # transactions across the in-scope payment channels (e.g., % via lockbox, % via web (echeck), % via web (card), % via IVR (echeck), % via IVR (card), % via POS, etc) The 200,000 transactions handled online would be allocated approximately as follows: 75% Web (Card) and 25% - IVR (Card) e. What is the average payment amount by payment type? $130 Web (Card) and $116 IVR (Card) f. Are there seasonal peaks to the payments (i.e. more in January etc)? January to May are generally higher volume, but the high percentage of Utility transactions mitigates the seasonality. 44. Exhibit A BKG CNTR Deposited Cash 900,000 Please provide total monthly cash deposited at a Branch and total monthly cash deposited at a Vault. All items are deposited at a branch location, estimated monthly amount is $900, Exhibit A ECL: Image Cash Letter Files Please elaborate on what service is provided under ECL: Image Cash Letter Files. 8

9 Collier County Clerk of the Circuit Court Request for Proposals RFP Banking Services Request for Clarifications and General Questions An ECL was used for processing red light running traffic citations prior to the program being cancelled. This service is no longer provided. 46. Exhibit A RLBX Exception Item Please elaborate on the service that the Clerk is receiving under RLBX Exception Item. The current provider overnights the exception item to the Utilities Department for necessary action. 47. Please provide a copy of your investment policy. Please see attached copy of the investment policy. 9

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52 Collier County, Florida Merchant Services Activity Site Provider Notes Hardware Software Collier County - Growth Management Magicwrighter All payments are made online (PC, smartphone) with a 2.75% service charge paid by the cardholder. All cards are accepted N/A N/A and the hardware, software and compliance requirements are met by the third party provider, Magicwrighter. Visa, MC and Discover post next day at depository bank, AMEX after 3 days. ACH payments are also accepted and posted after two business days. Company only offers daily reporting. Collier County Utilities - Online/IVR Collector Solutions Incorporated Payments are made via online/ivr using Visa, MC, Discover and AMEX. All hardware, software, compliance and support N/A N/A are provided for a blanket fee of 2.35%. Fee is paid by the Utilities Department. Collier County Utilities - OTC Vantiv Vantiv hosts payment server, communication is via Hypercom and a phone line. Discount rate paid is 1.92% for Visa and Discover, 4-Hypercoms 2 yr N/A 1.93% for Mastercard and $-0- for AMEX. Additional non-qualifying surcharges apply as well as network fees and per transaction fees old model - owned of $.10 for AMEX, $.05 for Visa and Mastercard and breach assist and compliance and regulatory fees. Fees are paid by the County. by Public Utilities Collier County Utilities - North Naples Vantiv Vantiv hosts payment server, communication is via Hypercom and a phone line. Discount rate paid is 1.92% for Visa and Discover, 3-Hypercoms 2 yr N/A 1.93% for Mastercard and $-0- for AMEX. Additional non-qualifying surcharges apply as well as network fees and per transaction fees old model - owned of $.10 for AMEX, $.05 for Visa and Mastercard and breach assist and compliance and regulatory fees. Fees are paid by the County. by Public Utilities Collier County - Landfill Vantiv Vantiv hosts payment server, communication is via Hypercom and a phone line. Discount rate paid is 1.92% for Visa and Discover, 3-Hypercoms 2 yr N/A 1.93% for Mastercard and $-0- for AMEX. Additional non-qualifying surcharges apply as well as network fees and per transaction fees old model - owned of $.10 for AMEX, $.05 for Visa and Mastercard and breach assist and compliance and regulatory fees. Fees are paid by the County. by Public Utilities Collier County - Naples Recycling Center Vantiv Vantiv hosts payment server, communication is via Hypercom and a phone line. Discount rate paid is 1.92% for Visa and Discover, 1-Hypercom 2 yr N/A 1.93% for Mastercard and $-0- for AMEX. Additional non-qualifying surcharges apply as well as network fees and per transaction fees old model - owned of $.10 for AMEX, $.05 for Visa and Mastercard and breach assist and compliance and regulatory fees. Fees are paid by the County. by Public Utilities Collier County - Marco Recycling Center Vantiv Vantiv hosts payment server, communication is via Hypercom and a phone line. Discount rate paid is 1.92% for Visa and Discover, 1-Hypercom 2 yr N/A 1.93% for Mastercard and $-0- for AMEX. Additional non-qualifying surcharges apply as well as network fees and per transaction fees old model - owned of $.10 for AMEX, $.05 for Visa and Mastercard and breach assist and compliance and regulatory fees. Fees are paid by the County. by Public Utilities Collier County - Immokalee Vantiv Vantiv hosts payment server, communication is via Hypercom and a phone line. Discount rate paid is 1.92% for Visa and Discover, 1-Hypercom 2 yr N/A 1.93% for Mastercard and $-0- for AMEX. Additional non-qualifying surcharges apply as well as network fees and per transaction fees old model - owned of $.10 for AMEX, $.05 for Visa and Mastercard and breach assist and compliance and regulatory fees. Fees are paid by the County. by Public Utilities Collier County - North Collier Recycling Vantiv Vantiv hosts payment server, communication is via Hypercom and a phone line. Discount rate paid is 1.92% for Visa and Discover and 1-Hypercom 2 yr N/A 1.93% for Mastercard. Additional non-qualifying surcharges apply as well as network fees and per transaction fees old model - owned of $.10 for AMEX, $.05 for Visa and Mastercard and breach assist and compliance and regulatory fees. Fees are paid by the County. by Public Utilities

53 Collier County - Parks and Recreation Parking/Beaches Vantiv Vantiv hosts payment server, communication is via hand held bluetooth swipers. Discount rate paid is 1.92% for Visa and Discover, 4 Ingenico IW 250 swipers 1.93% for Mastercard and $-0- for AMEX. Additional non-qualifying surcharges apply as well as network fees and per transaction fees Bluetooth of $.10 for Visa and Mastercard and compliance and regulatory fees. Fees are paid by the County. enabled - leased N/A Collier County - Domestic Animal Services Vantiv Vantiv hosts payment server, communication is via two leased Omni 3730 readers. Discount rate paid is 1.92% for Discover, 1.945% for 2 leased Omni 3730 N/A Mastercard and % for Visa. Additional non-qualifying surcharges apply as well as network fees, lease fees and per transaction readers - leased fees of $.10 for AMEX, $.05 for Visa and Mastercard and breach assist and compliance and regulatory fees. Fees are paid by the County. Collier County Clerk - Traffic Vantiv Payments are made online using Visa, MC, Discover and AMEX. All hardware, software, compliance and support N/A N/A are provided by Vantiv. Clerk pays a $.10 per transaction fee on Visa and MC, as well as chargeback fees and third party credit fees. The card holder pays a convenience fee for paying by credit card. Collier County - Parks and Recreation Active Web - Agency (BCC) charges an "event fee" and cardholder pays Active 6.5% of the event fee plus $.50 with a minimum service N/A N/A charge of $2.00. If the event fee is $150-$500 the service charge will be 3.5% plus $5.00, above $500 the service charge is 2.5% plus $ Cardholder pays the service charge. Site is maintained by Active. Active Over the counter (via hosted payment server) - Active service charge is 3.00%, with a minimum charge of $1.00. Nine Parkeon Strada Cardease 2.0 and Agency (BCC) pays the service charge. Hosted payment server is maintained by Active. Terminals Monetra 7.0 Marco Executive Airport Ascent Ascent Aviation provides merchant services processing for the County's three airports: Marco, Immokalee and Everglades All cards Vx570 N/A are accepted, including Multiservice cards and Avcards. The service charge paid varies depending upon the card presented. Immokalee Airpark Ascent Rates generally range from 1.95% (Avcard) to 3.50% (Multiservice - Nonqual). This fee is paid by the airport. Everglades Airpark Ascent

54 Collier County, Florida Investment Policy SCOPE Investment policy applies to all financial assets under the direct control of the Board of County Commissioners. INVESTMENT OBJECTIVES Primary Objectives: 1. Preservation of capital and protection of investment principal. 2. Maintain sufficient liquidity to meet reasonably anticipated operating and capital requirements. 3. Match assets to liabilities, to the extent possible. Secondary Objectives: 1. Maximize return and preserve purchasing power as measured by a noted market index such as the Consumer Price Index. 2. Control risks and diversify investments through appropriate oversight and regular reporting. PERFORMANCE MEASURES Objective is to exceed the annual yield of the Florida Local Government Surplus Trust Fund (SBA). PRUDENCE AND ETHICAL STANDARDS: 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. The standard of prudence to be used by investment officials shall be the "prudent person" standard and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with written procedures and the 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 appropriate action is taken to control adverse developments. Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose to the Chief Financial Officer any material financial interests in financial institutions that conduct business within this jurisdiction and they shall further disclose any material personal financial/investment positions that could be related to the performance of the portfolio. Employees and officers shall subordinate their personal investment transactions to those transactions made in the portfolio, particularly with regard to the time of purchase and sales. Employees shall also disclose any gifts or entertainment received as a result of their employment in regard to the investments of Collier County. Bond swaps are appropriate when undertaken in conformity with the prudent person test and overall portfolio objectives in order to (a) increase yield to maturity without affecting the asset liability match; (b) reduce maturity while maintaining or increasing the yield to maturity or (c) increase portfolio quality without affecting the asset liability match while maintaining or increasing the yield to maturity. The County should not, however, have a policy against selling securities at a loss if undertaken in connection with prudent portfolio management. Page 1

55 AUTHORIZED INVESTMENTS 1. Florida Local Government Surplus Trust Fund (SBA) 2. US Government Securities - Direct Obligations 3. US Federal Agencies - Backed by Full Faith and Credit of US Government 4. US Federal Instrumentalities - US Federal Agency Securities Not Backed by Full Faith and Credit of US Government, except for Student Loan Marketing Association 5. Certificates of Deposit - Collateralized with US Government Securities or Federal Agencies 6. Repurchase Agreements (As defined herein) 7. Fixed Income Mutual Funds - Collateralized with US Government Securities or Federal Agencies 8. Domestic Bankers Acceptances - Rated "AA" or higher, and inventory based 9. Prime Commercial Paper - Rated "A-l" and "P-l". 10. Tax-Exempt Obligations - Rated "AA" or higher and issued by state or local governments 11. Now Account - Fully collateralized in accordance with Chapter 280 Florida Statutes, limited to Depository Bank/Concentration Bank Limitation on Variable Rate Securities - Acceptable only if the rate is a straight floating rate that is set in a direct as opposed to inverse, relationship to a single index. Limitations on Mortgage Securities (CMOs) 1. Issued only by US Federal Agencies or US Federal Instrumentalities, 2. Pass the Federal Financial Investment Examination Council (FFIEC) test at time of purchase, and 3. Have an average life or seven (7) years or less and have an absolute final maturity or no more than fifteen (15) years at zero PSA. The term "zero PSA" means that all interest and principal payments are guaranteed to be made by the slated final maturity assuming no prepayments. Specifically prohibited investments include, but are not limited to: 1. Interest only strips of mortgage backed securities 2. Leveraged bonds 3. Structured notes or financings other than mortgage securities that meet the provisions of this investment policy (permit callable and step up coupons) 4. Variable rate securities that set a rate based on an inverse relationship to an index 5. Variable rate debt that sets a rate based on more than a single index MATURITY AND LIQUIDITY REQUIREMENTS The objective will be to match investment cash flow and maturity with known cash needs and anticipated cash flow requirements (i.e., match assets to liabilities) to the extent possible. Investment of funds shall have final maturities of not more than five (5) years, except for: 1. SBA - No stated final maturity 2. Certificates of Deposit - 1 Year 3. Repurchase Agreement - 90 Days 4. Bankers Acceptance Days 5. Prime Commercial Paper Days 6. Fixed Income Mutual Funds - No stated final maturity. However, underlying US Government Securities and Federal Agencies have average maturity of one year. 7. Mortgage Securities - Have an average life of seven (7) years or less and have an absolute final maturity of no more than fifteen (15) years at zero PSA. Page 2

56 MATURITY AND LIQUIDITY REQUIREMENTS (continued) Utilization of Mortgage Securities: 1. Mortgage securities shall not be used to match liabilities that are reasonably definable as to amount and disbursement date. 2. Mortgage securities should only be used to invest funds associated with reserves or liabilities that are not associated with a specifically identified cash flow schedule. 3. Mortgage securities should be used to prudently enhance the return on the portfolio. Exception for Refunding Bond Escrows - US Government Securities and Federal Agencies deposited into an escrow in connection with the refunding of a County bond issue can have a final maturity of more than five years. PORTFOLIO COMPOSITION This policy recognizes that the portfolio operates in a dynamic environment. Therefore, in the event the maximum allowable percentages are exceeded due to cash flow demands within the portfolio after the date of the purchase of the security, this policy does not force the sell of the security prior to maturity. Maximum Investment Type % of Portfolio 1. Florida Local Government Surplus Trust Fund (SBA)* 50% 2. US Government Securities 100% 3. US Federal Agencies** 100% 4. US Federal Instrumentalities** 100% 5. Certificates of Deposit 30% 6. Repurchase Agreements 20% 7. Fixed Income Mutual Funds 10% 8. Domestic Bankers Acceptance 10% 9. Prime Commercial Paper 10% 10. Tax-Exempt Obligations 10% * Does not include bond proceeds invested in construction funds established under a bond resolution. Funds in the NOW ACCOUNT will not be considered a part of the portfolio for purposes of this section. RISK AND DIVERSIFICATION Collier County will diversify its investments by security type, specific maturity, dealer or bank through which financial instruments are bought or sold. Subject to the limitations under Portfolio Composition, the following are the limits on individual issuers or dealer or bank: No limitations on SBA, Now Account, US Government Securities, US Federal Agencies or US Federal Instrumentalities. Limitations on other investments are 10% of total portfolio. AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS The Chief Financial Officer will maintain a list of the financial institutions authorized to provide investment services. These shall include "primary" dealers and regional dealers that (1) qualify under Securities & Exchange Commission Rule 15C3 (Uniform Net Capital Rule), (2) have capital of at least $50,000,000 and Page 3

57 AUTHORIZED INVESTMENT INSTITUTIONS AND DEALERS (continued) (3) have an institutional sales office and an institutional sales professional domiciled in Florida. No public deposit shall be made except in a qualified public depository as established by state laws. All financial institutions and broker/dealers who desire to become qualified bidders for investment transactions must supply the Chief Financial Officer with the following: 1. audited financial statements, 2. certification that no material adverse events have occurred since the issue of their most recent financial statements, 3. proof of National Association of Securities Dealers, the registration (where applicable) or other securities registration, 4. proof of state registration, when required, 5. certification of having read and agreeing to abide by the Investment Policy and depository contracts in place in Collier County, and 6. a copy of the firm's established internal oversight and review guidelines controlling business with governmental entities. Each financial institution and broker/dealer must also agree to notify the Chief Financial Officer in the event of material adverse events affecting their capital adequacy. Each institution and broker/dealer shall provide their written mark up schedule and guidelines to the Chief Financial Officer. Each institution and broker/dealer shall disclose to the Chief Financial Officer any proposed trade that would exceed the guidelines prior to executing the trade. The Chief Financial Officer shall do a background check on each broker with whom the County does business which shall, at a minimum, consist of contacting the State or NASD for regulatory & disciplinary dates which are maintained on brokers. An annual review of the financial condition and registration of qualified bidders will be conducted by the Chief Financial Officer. A current audited financial statement is required to be on file for each financial institution and broker/dealer authorized to provide investment services. Criteria for addition to or deletion from the lists will be based on the following: (1) state law, Board of County Commissioners Ordinance Code, or Investment Policy requirements where applicable, (2) perceived financial difficulties, (3) consistent lack of competitiveness, (4) lack or experience or familiarity of the account representative in providing service to large institutional accounts, (5) request of the institution or broker/dealer, and (6) when deemed in the best interest of the Board of County Commissioners. If there are at least 10 trades executed in a single year through other than a competitive bid process, no more than 30% of the total dollar amount of sales and trades executed through other than a competitive bid process can be conducted with a single dealer. THIRD-PARTY CUSTODIAL AGREEMENTS All security transactions, including collateral for repurchase agreements, entered into by Collier County shall be conducted on a delivery-versus-payment (DVP) basis. All securities shall be properly designated as an asset of the Board or County Commissioners. Securities will be held by a third party custodian authorized by the Chief Financial Officer and evidenced by safekeeping receipts or advice of the transaction. The third party custodian shall be a third party custodian bank or other third party custodial institution with certified fiduciary powers, chartered by the United Stares Government or the State of Florida and have combined capital and surplus of at least $100,000,000. The Chief Financial Officer will execute third party custodial agreements approved by the Board of County Commissioners with the banks and depository institutions. Such agreement will include letters of authority Page 4

58 THIRD-PARTY CUSTODIAL AGREEMENTS (continued) from the Chief Financial Officer with details as to responsibilities of each party, notification of security purchases, sales, delivery, repurchase agreements and wire transfers, safekeeping and transaction costs, procedures in case of wire failure or other unforeseen mishaps including liability of each party. MASTER REPURCHASE AGREEMENTS 1. Each firm involved in a repurchase agreement must execute the County's Master Repurchase Agreement which will be based on the Public Securities Association (PSA) Master Repurchase Agreement. 2. A third party custodian shall hold collateral for all repurchase agreements with a term of more than one business day. 3. Collateral requirements will be based on economic and financial conditions existing at the time of execution, as well as the credit risk of the institution which enters into the repurchase agreement with the County. The market value of the collateral shall not be less than the following: Maturity of US Government US Federal Agencies Mortgage Backed Securities Securities and Instrumentalities* Securities Under 1 Year 101% 102% 103% 1 to 5 Years 102% 103% 104% Over 5 Years 103% 104% 105% *Excluding mortgage backed securities. 4. Collateral shall be marked to market at least weekly. 5. Substitution of collateral is permitted. BID REQUIREMENT The Chief Financial Officer shall utilize the competitive bid process to sell and purchase securities, subject only to the exceptions noted in the Investment Policy. After the Chief Financial Officer has determined the approximate maturity date based on cash flow needs and market conditions and has analyzed and selected one or more optimal types of investment, a minimum of three (3) banks or dealers must be contacted to ask for offerings of securities that fit the investment criteria. Documentation must be collected to insure that the securities meet Investment Policy guidelines and that price levels executed are consistent with market levels at the time. When selling securities, a minimum of three (3) dealer bids will be sought. Documentation of all transactions must be maintained. Examples of when the competitively bid process can be passed, include: 1. When time constraints due to unusual circumstances preclude the use of the competitive bidding process. 2. When no active market exists for the issue being traded due to the age or depth of the issue, (On a "work-out" basis). 3. When a security is unique to a single dealer, for example a private placement. 4. When the transaction involved new issues or issues on the "when issued" market. If the maturing investment is a certificate of deposit, one of the contacts made shall be the present holder of the funds subject to portfolio diversification requirements in the Investment Policy. Due to the cost of safekeeping, one business day repurchase agreements less than $1,000,000, and the overnight sweep repurchase agreement associated with the Now Account will not be bid. The Depository Bank/Concentration Bank shall be selected through a competitive process on a periodic basis that takes into account the quality and scope of service. Page 5

59 INTERNAL CONTROLS The Chief Financial Officer shall establish and monitor a set of written internal controls designed to protect the County's financial assets and ensure proper accounting and reporting of the transactions. The Chief Financial Officer shall establish an annual process of independent review by an external auditor which will serve as an internal control by assuring compliance with policies and procedures. Internal controls will encompass at a minimum the following issues: 1. transfers of all funds (purchases, sales, etc.), 2. separation of functions including transaction authority from accounting and record-keeping, 3. custodial safekeeping, 4. avoidance of delivery of bearer-form or non-wireable securities, 5. delegation of authority to subordinate staff members, 6. written confirmation of telephone transactions, 7. supervisory control of employee actions, 8. identification and minimization of authorized investment officials, 9. documentation of decisions and transactions, and 10. documentation of complete description of mortgage securities purchased and yield tables at purchase date. CONTINUING EDUCATION Each individual responsible for making investment decisions including the Chief Financial Officer, shall annually complete eight hours of continuing education in subjects or courses of study related to investment practices and products. Evidence of such education will be maintained by each individual and available for inspection. REPORTING Annual, quarterly and monthly reports of assets will be presented to the Board. The following items will be included in the reports at least annually: OTHER 1. Securities in the portfolio by type, book value, income earned, market value, final maturity and average life. 2. Information on activity in the account, and 3. Performance based on total rate of return which includes earned income as well as realized and unrealized gains and losses. 1. Grandfather existing securities in the portfolio to reduce the possibility of having to sell financial assets before maturity at a loss. 2. Any and all exceptions to the Investment Policy require majority vote of the Board of County Commissioners. Page 6