Title
The Board of Water Commissioners for the City of Detroit, Water and Sewerage Department recommends adoption of an amendment to the DWSD Investment Policy and also authorizes the Director to take such other action as may be necessary to accomplish the intent of this vote.
Body
Agenda of December 14, 2016
Item No. 16-0198
Adoption of Amendment to DWSD Investment Policy
TO: The Honorable
Board of Water Commissioners
City of Detroit, Michigan
FROM: Marcus Hudson, Chief Financial Officer
Water and Sewerage Department
RE: Adoption of Amendment to “DWSD Investment Policy”
MOTION
Upon recommendation of Marcus Hudson, Chief Financial Officer, the Finance Committee of the Board of Water Commissioners for the City of Detroit, Water and Sewerage Department recommends adoption of an amendment to the DWSD Investment Policy and also authorizes the Director to take such other action as may be necessary to accomplish the intent of this vote.
JUSTIFICATION
DWSD’s current investment policy grants a significant amount of investment responsibility with the Treasury Manager but does not require a commensurate amount of investment experience. Currently, DWSD has approximately $50 - $75 million to invest in market securities; investment should ensure a matching of interest and capital appreciation with capital expenditures. Given the level of autonomy to DWSD to invest in securities, a certain level of experience should be required to place the organization’s assets at any level of risk.
BACKGROUND
Recently DWSD received $57 million in water bond financing from the GLWA October issuance of $1.3 billion in bonds (~$300 million in new money). Funds received are sufficient to fund the next three years of capital expenditures identified in DWSD’s Capital Improvement Program. DWSD management also anticipates Sewer bond financing in an amount required to fund two to three years of expenditures in the Sewer Capital Improvement Program will occur within the next year. As bond proceeds are received en masse and begin accruing interest upon receipt, it is imperative that DWSD prudently invest excess funds in restricted risk financial instruments as soon as possible.