ALP 6

COLOTRUST for short -term investments of certain bond proceeds, borrower
loan repayments held for debt service and other funds on hand.
• Repurchase agreements — federal regulations control the bidding process for
the investment of bond proceeds. Only a limited number of financial
institutions, that meet the Authority's criteria, participate in the bidding
process. Since these repurchase agreements are fully collateralized, a
concentration limit is not established.
2. Liquidiry
The investment portfolio shall remain sufficiently liquid to meet all operating
requirements that may be reasonably anticipated. This is accomplished by structuring the
portfolio so that securities mature concurrent with cash needs to meet anticipated
demands (static liquidity). Furthermore, since all possible cash demands cannot be
anticipated. the portfolio should consist largely of securities with active secondary or
resale markets (dynamic liquidity). Alternatively, a portion of the portfolio may be
placed in money market mutual funds or local government investment pools that offer
same -day liquidity for short-term funds.
3. Yield
The investment portfolio shall be designed with the objective of attaining a competitive
rate of return throughout budgetary and economic cycles, taking into account the
investment risk constraints and liquidity needs. Return on investment is of secondary
importance compared to the safety and liquidity objectives described above. Investments
are limited to relatively low risk securities in anticipation of earning a fair return relative
to the risk being assumed. Securities shall generally be held until maturity with the
following exceptions:
• A security with declining credit may be sold early to minimize loss of
principal.
• Liquidity needs of the portfolio require that the security be sold.
1V. Standards of Care
1. Prudence
The standard of prudence to be used by investment officers 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 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.
The "prudent person" standard states that, "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."
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Approved and Adopted December 1. 2006