ALP 6

• Structuring the investment portfolio so that securities mature to meet cash
requirements for ongoing operations, thereby avoiding the need to sell
securities on the open market prior to maturity.
• Investing operating funds primarily in shorter -term securities, money market
mutual funds, or similar investment pools and limiting the average maturity of
the portfolio in accordance with this policy (see Section VII, Paragraph 2).
• Prohibiting investments in variable -rate investment vehicles.
• Limiting normal investment maturity dates to five years or less, except as
noted below.
• Investments contained in debt service reserve funds may have final maturity
dates of twenty years or more and require approval of the Authority's Board
of Directors, pursuant to the terms of related bond resolutions.
C. Custodial Credit Risk
Custodial credit risk is the risk that., in the event of the failure of the counterparty
(e.g., broker - dealer) to a transaction; the Authority will not be able to recover the
value of its deposit, investment or collateral securities that is in the possession of
another party. The Authority is potentially exposed to custodial credit risk on
balances in demand deposit accounts (checking), cash in accounts held by its
trustee and three -party repurchase agreements, which are not held in the
Authority's name.
• Demand deposit accounts are secured over and above the Federal Deposit
Insurance Corporation primary insurance in accordance with the Colorado
Public Deposit Protection Act (Article 10.5 of Title 1 l C.R.S.).
• Accounts maintained by the Authority's trustee periodically contain "fiduciary
funds awaiting investment or distribution" (or cash). Pursuant to OCC
Regulation 12 CFR 9.10; the trustee is required to provide collateral that is
pledged for all such cash balances; however, the collateral is not held in the
Authority's name.
• At the direction of the Authority, the trustee enters into three -party repurchase
agreements and the trustee is considered both the purchaser and custodian of
the investments. The investments are held in the collateral agent's account at
the Federal Reserve Bank in book entry form. Custodial risk is minimized by
complying with the terms of Section VI, Paragraph 2, Subparagraph (e) of this
policy, which governs repurchase agreements as authorized investments.
d. Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of the
investment in a single issuer. Due to the nature of the Authority's operations and
investment preferences, as discussed below, no concentration limits are
established in this policy, except as described in III.I .a. of this policy.
• Colorado State Treasurer's Pool — a majority of the Authority's funds,
excluding funds governed by bond resolutions, are invested in this pool. The
State maintains its own policy to control concentration of credit risk.
• Colorado Local Government Liquid Asset Trust (COLOTRl1ST -) — in addition
to general Authority invested cash, the Authority's loan programs use
Approved Id Adopted December ], 2006 2