HomeMy WebLinkAboutAgenda 07-09-2026; 8-i - Approval of Transit Tax Staff Working Group Financial Policies and Procedures 1
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: July 9, 2026
Action Agenda
Item Number: 8-i
SUBJECT: Approval of Transit Tax Staff Working Group Financial Policies and
Procedures
DEPARTMENT: Transportation
ATTACHMENT(S): INFORMATION CONTACT:
1. Revised Financial Policies and Sarah Williamson, Interim
Procedures — Mark-up Version Transportation Director, 919-245-
2. Revised Financial Policies and 2102
Procedures — Clean Copy
PURPOSE: To approve updated Financial Policies and Procedures for the Transit Tax Staff
Working Group.
BACKGROUND: In 2023, an updated Interlocal Agreement (ILA)forTransit Governance between
the Orange County Board of County Commissioners (BOCC), Triangle West Transportation
Planning Organization (TWTPO) Board and the GoTriangle Board of Trustees was executed. The
ILA included Financial Policies and Procedures.
Key goals at the time that were encapsulated within the ILA, and the attached Financial Policies
and Procedures were:
1. Greater municipal involvement in Transit Plan/Annual Work Program
development/implementation and representation on the SWG.
2. BOCC is a governing body, with authority to approve Annual Work Program/Transit Plan.
3. Parties endeavor to streamline project agreements.
4. BOCC and additional ILA parties will receive progress and financial report updates on a
cyclical basis.
5. Greater clarity on funding sources and application for Work Program/Transit Plan
development/implementation.
In support of these goals, at the Business meeting on December 9, 2025, the Board of
Commissioners unanimously voted to instruct the Staff Working Group to "pause all work plan
amendments until annual agreements are in place and the financial policies and procedures are
revised, enhancing transparency, and suitable and acceptable to finance staff and governing
boards of the member local governing organizations."
On December 10, 2025, the Staff Working Group (SWG) for Transit Governanance approved a
Financial Policies and Procedures Subcommittee, with the stated purpose, "The Staff Working
Group (SWG) Financial Policies and Procedures (FPP) Subcommittee will enhance transparency
regarding the utilization of Transit Tax funds in Orange County. Members will work to establish a
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level of accountability that is both suitable and acceptable to finance staff and governing boards
at each of the member local government organizations." Orange County was designated to chair
the subcommittee.
After multiple efforts to collaborate with the SWG Chair on subcommittee membership, Orange
County Transportation staff completed a review of regional best practices with Wake and Durham
counties, and sought input from partner departments (including the Finance and Administartive
Services Department and County Attorney's Office) to draft a revision to the Financial Policies
and Procedures.
The revisions were presented to the Staff Working Group for feedback on May 20, 2026. To date,
no feedback has been received from the SWG.
On May 21, 2026, the SWG Chair appointed a new subcommittee on Financial Policies and
Procedures, without a stated purpose or meeting schedule, with the subcommittee to be chaired
by the Tax District Administrator.
The BOCC approved an update to the Increased Cost of Existing Service (ICES) Policy, page 12
of the Transit Governance Financial Policies and Procedures, at the Business meeting on June
2, 2026.
Other important updates to the policy are listed below.
• Establishment of a fund balance and liquidity policies in alignment with Orange County
policies, page 3.
• Increase in financial reporting from annually to quarterly in alignment with regional
practices, page 4.
• Establishment of policies for the transfer of funds between projects, pages 4 and 5.
• Restrictions on the movement of funds between operting and capital, pages 4 and 5.
• Establishment of a vehicle replacement policy to align with Federal Transit Administration
(FTA) standards, page 6.
• Establishment of a CIP reserve in alignment with regional practices, page 5.
• Requirement for capital projects to be prioritied within financial constraints, page 5.
• Establishment of documentation requirements for reimbursement payments in alignment
with regional practices, page 7.
• Updates to debt service coverage, bond issuance and debt service policies as
recommended by the Finance Department, page 9.
• Updates to the Cost Per Hour policy to align with FTA standards, page 15.
• Establishment of a three year review cycle for the Financial Policies and Procedures, page
16.
The GoTriangle Board of Directors is also required to approve the update before it can be
implemented.
FINANCIAL IMPACT: There are no direct financial impacts associated with this item.
ALIGNMENT WITH STRATEGIC PLAN: This item supports:
• GOAL 4: MULTI-MODAL TRANSPORTATION
OBJECTIVE 1. Identify priorities and resources necessary to implement the Orange
County Transit Plan.
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OBJECTIVE 2. Increase community awareness of all modes of transportation including
transit, bike and pedestrian, vehicle, and all other modes.
OBJECTIVE 3. Support road projects that address congestion and reduce commute time
using the County's Complete Streets policy.
OBJECTIVE 4. Coordinate transit investments with municipal and county land use
planning to reduce vehicle miles travelled and to provide more equitable access to
shopping, employment, medical centers, college campuses, etc.
OBJECTIVE 5. Invest in implementing the County' s Safe Routes to Schools plan.
OBJECTIVE 6. Update transportation related plans to provide more multi-modal options
including rural Orange County.
RECOMMENDATION(S): The Manager recommends that the Board approve the updated
Financial Policies and Procedures for the Transit Tax Staff Working Group.
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Triangle Tax District Formatted:Font:(Default)Calibri Light,14 pt,Not
Orange County— \ Formatted:Indent:Left: 0",First line: 0",Space
Before: 0 pt,After: 12 pt,Line spacing: single
Financial Policies and Guidelines Formatted:Indent:Left: 0",Space After: 12 pt,Line
spacing: single
Formatted:Space After: 12 pt
Updated May 2026 Formatted:Font:(Default)Calibri Light,Not Bold
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Contents Formatted:Underline,Font color:Auto
~~ Formatted:Underline
Acronyms and Abbreviations........................................................................................................................2
8�ge Operating Fund Balance and Liquidity Policy and Guidelines.........................................................23_-,,_— Formatted:Font:Not Bold
Fund Balance and Liquidity Policy:..........................................................................................................2Formatted:Font:Not Bold3 ��_
Formatted:Space Before: 0 pt,After: 12 pt
Procedures...........................................................................................................................................24
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5
OFange Capital Fund Balance Policy and Guidelines................................................................................26
Procedures;.........................................................................................................................................36
8r-aege-Ge*nty-Transit Billing,Payment and Reimbursement Policy and Guidelines..................................48 Formatted:Font:Not Bold
Guidelines=...............................................................................................................................................48 Formatted:Font:Not Bold
,Debt Policy and Guidelines........................................................................................................................H 10 Formatted:Font:Not Bold
Debt Policy a...................................................................................,,....,.....,..................,..........,..............g10 Formatted:Font:Not Bold
Debt Gu delines................................................................................................................Debt Guidelines
................................................................................................................................................................10
Inefeased Gest of Existing-Senr ees(ICES'......................................9lncreased Cost of Existing Services(ICES) — Formatted:Font:Not Bold
....................................................................................................................................................................13
--j Formatted:Font:Not Bold
CaFFyeveNPe;iCY...........................................................................................................................................I I
Capital......................................................................................................................................................I I
Bus OpeFatingCastPeF l4eUF P0166y....................................................12Bus Operating Cost Per Hour Policy Formatted:Font:Not Bold
....................14
FutureUpdates...........................................................................................................................................15
Formatted:Font:Not Bold
€xkibit A:G9T-Fi nglen�a..eialo�i'e+es$e PFAGP'�I"es ff9F FefeFenceT_43ExhibitA:GoTriangle Financial Formatted:Space Before: 0 pt,After: 12 pt
Policies&Procedures(for reference)............................. ...................17 Formatted:Font:Not Bold
Exhibit B:Orange County Investment Policy..............................................................................................30
�— Formatted:Space Before: 0 pt,After: 12 pt
Formatted:Space After: 12 pt
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Acronyms and Abbreviations
ACFR Annual Comprehensive Financial Re ort Formatted:Font:(Default)+Body(Calibri),11 pt
WP Annual Work Prosram Formatted:Font:(Default)+Body(Calibri),11 pt
CHT Cha el Hill Transit
CIP Capital Improvement Plan Formatted:Space After: 0 pt
CPH Cost Per Hour Formatted Table
DSRF Debt Service Reserve Fund Formatted:Font:11 pt
FTA Federal Transit Administration
GASB Governmental Account Standards BoardFormatted:Font:(Default)+Body(Calibri),11 pt
'
ICES Increased Cost of Existing Service Formatted:Font:11 pt
Formatted:Font:(Default)+Body(Calibri),11 pt
OPT _Orange Count Public Transi Formatted:Space After: 0 pt
Formatted:Font:11 pt
Formatted:Font:(Default)+Body(Calibri),11 pt
SWG Staff Working Group VIII,\
TD Tax District Administration Administrator Formatted:Font:11 pt
IIII Formatted:Font:(Default)+Body(Calibri),11 pt
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Formatted Table
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Formatted Table
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11 pt
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Formatted Table
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Formatted Table
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9FaRge Operating Fund Balance and Liquidity Policy and Guidelines Formatted:Indent:Left: 0",Space Before: Opt,After:
12 pt
Purpose Formatted:Font:(Default)Calibri Light,13 pt,
Underline
=As administrator of the Triangle Tax District,GoTriangle will maintain sound financial practices including Formatted:Underline
minimum fund balance and liquidity requirements.
The Fund Balance Management Policy is intended to address the needs of the tax district,in the event of
unanticipated and unavoidable occurrences which could adversely affect the financial condition of the tax Commented[SW1]:From orange County BocC Policies
district and thereby jeopardize the continuation of necessary public services.This policy will ensure the tax
district maintains adequate fund balance and reserves to provide the capacity to:
1. Provide sufficient cash flow for daily financial needs, Formatted:Numbered+Level:1 +Numbering Style:
1,2,3,...+Start at:1 +Alignment:Left+Aligned at:
2. Secure and maintain investment grade bond ratings, 0.25'+Indent at: 0.5"
3. Offset significant economic downturns or revenue shortfalls,and
4. Provide funds for unforeseen expenditures related to emergencies.
Formatted:Indent:Left: 0",Space Before: 0 pt,After:
12 pt,Line spacing: single
Fund Balance and Liquidity Policy-
-- Formatted:Underline
It is the policy of the Triangle Tax District to maintain both minimum fund balance and cash reserve Formatted:Indent:Left: 0",Space Before: 0 pt,After:
requirements.Based on the funding sources and responsible fiscal management,the Orange County 12 pt
Operating Fund will maintain a fund balance to be used as a resource for expected and unexpected,but
agreed upon,financial demands and to demonstrate strong liquidity to credit rating agencies as well as
federal and state governments.
This information will be used to support applications for additional funding towards Orange County Transit r12pt,
atted:Indent:Left: 0",Space Before: 0 pt,After:
projects,including applications for the issuance of debt,and request federal and state grant resources. Line spacing: single
• A minimum of 90 days unrestricted cash must be maintained in the Orange Operating Fund.-GCash,- Formatted:Right: 0",Bulleted+Level:1 +Aligned at:
is defined as'on-deposit'in the bank account. 0.25'+Indent at: 0.5"
• The amount of unassigned fund balance maintained during each fiscal year should not fall below Formatted:Not Highlight
8%percent of budgeted general fund operating expenditures,as recommended by the North
Carolina1Local Government Commission. Commented[SW2]:From orange county BOCC Policies
Formatted:Not Highlight
• To the extent that the general fund unassigned fund balance exceeds 17%percent,the balances
may be utilized to fund capital expenditures or pay down outstanding debt. Formatted:Not Highlight
Formatted:Right: 0",Space Before: 0 pt,After: 12 pt,
The policy should be administered under the following requirements: Line spacing: single,Bulleted+Level:1 +Aligned at:
• 0.25'+Indent at: 0.5"
•_AII restricted,committed,assigned and unassigned fund balance,as defined in Governmental Formatted:Indent:Left: 0",Space After: 12 pt,Line
Account Standards Board(GASB)Statement 54,may be used in the calculation of the minimum spacing: single
fund balance requirement. Formatted:Right: 0",Space Before: 0 pt,After: 12 pt,
Line spacing: single,Bulleted+Level:1 +Aligned at:
0.25'+Indent at: 0.5"
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•_Funds may only be spent in accordance with the external guidelines and enabling legislation as
defined in Article II of the Orange County Transit Governance ILA.
•_Idle funds as defined in N.C.G.S.159-30 will be invested in accordance with applicable North
Carolina General Statutes and GoTriangle's investment guidelines,attached as Exhibit A.
Agencies may transfer or re-allocate up to 15%of funding for a single operating proiect to another
operating project excluding Cost Per Hour,so long as they do so as part of the quarterly amendment
process.
Agencies do not have the ability to transfer or re-allocate money from operating programs/projects to
capital.
Agencies may only change or update the scope of operating programs/projects through the quarterly
amendment process.
Formatted:Indent:Left: 0",First line: 0",Space
Before: 0 pt,After: 12 pt,Line spacing: single
Operating;Fund Balance and Liquidity Procedures= — Formatted:Font.13 pt
The Orange County Transit Financial Model for the Orange Operating Fund will include projections of fund Formatted:Font:13 pt,Underline
balance and annual expenditures. Formatted:Indent:Left: 0",Space Before: 0 pt,After:
12 pt
�nnual CLuarterly reporting will be provided by GoTriangle to the Staff Working Group(SWGI,Orange Formatted:Indent:Left: 0",Right: 0",Space Before: o
County Board of Commissioners, CNG nnTWTPO Policy Board,and GoTriangle Board of Trustees in t,After: 12 t,Lines spacing: single
� P P P 9� 9
writing.This will-wh4e4 w4allow a review of budget compared to actuals for the Orange Operating Fund. Commented[Sw3]:From wake FPP
Additionally,this a+fnaai-g221 erly review will ensure that sufficient fund balance will be available at year
end to meet the adopted reserve requirement as defined above.
The Orange County Transit Annual Work Program will include funds allocated,if needed,to maintain the
Orange Operating Fund balance to meet financial policy guidelines.To demonstrate progress and
compliance with this policy,Gee-the Tax District Administrator will include a calculation of this
liquidity measure within the statistical section of its Annual Comprehensive Financial Report("ACFR")and
on its quarterly reports.
Operating Carry Over
Dollars appropriated in the operating fund will lapse at the end of the year as of June 30. t- Formatted•Normal,Right: 0", No bullets or
numbering
Any unutilized operating funds will be returned to the operating fund balance for futureprogramming.
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Formatted:Indent:Left: 0",Space Before: 0 pt,After:
12 pt,Line spacing: single
FaRge Capital Fund Balance Policy and Guidelines Formatted:Font.16 pt
\ Formatted:Indent:Left: 0",Space Before: 0 pt,After:
PuYpOSe: 12 pt
As administrator of the Triangle Tax District,GoTriangle will maintain sound financial practices including Formatted:Font:(Default)Calibri Light,13 pt,Underline
minimum fund balance requirements.
Formatted:Indent:Left: 0",Space After: 12 pt,Line
spacing: single
Formatted:Space After: 12 pt,Line spacing: single
Capital Fund Balance Policy- Formatted:Font:(Default)Calibri Light,13 pt,
Underline
It is the policy of the Triangle Tax District to maintain a minimum capital fund balance.Based on the nature :::J
Formatted Indent:Left: 0",Right: 0",Space Before: 0
of the funding sources and responsible fiscal management,the Orange e pt,After: 12 pt,Line spacing: single
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QFange Capital Fund will maintain a fund balance to act as a resource for capital project funding shortfalls. – Formatted:Indent:Left: 0",Right: 0",Space Before: 0
pt,After: 12 pt,Line spacing: single
The target fund balance for the Orange Capital Fund will be five PeFGeRt(5%�of a 10 yea r rel ling
the Orange County Transit Multi-Year Vision Plan's 10-year
Capital Improvement Plan(CIP).
The policy should be administered under the following requirements: Formatted:Indent:Left: 0",Space Before: 0 pt,After:
12 pt
• In addition to the reserve of the 5%of the CIP reserve the Orange County financial plan will also
keep a minimum of 25%of the annual operating bud>;et.� Commented[SW4]:From Durham County FPP with slight
modification
The five peFeet(5%j fund balance will be separate and apart from project contingency budgeted ' —
Formatted:Right: 0",Space Before: 0 pt,After: 12 pt,
as a part of individual projects appropriated in the Orange Capital Fund. Line spacing: single,Bulleted+Level:1 +Aligned at:
0.25"+Indent at: 0.5"
• Idle funds as defined by N.C.G.S.159-30 will be invested in accordance with applicable North r ---_
Carolina General Statutes and GoTriangle's investment guidelines,attached as Exhibit A. Formatted:Space After: 12 pt,Line spacing: single
Capital protects should be prioritized within financial constraints.Top priorities include:
1. repairing critical infrastructure(over replacement),
2. safety improvements and upgrades,
3. ensuring regulatory compliance,
4. modernization to boost efficiency and equity,
5. multimodal and active transportation,and
6. asset management(investing in maintenance facilities and fleet replacement).
All capital projects should align with adopted strategic goals to serve Orange County residents. _ Formatted:Indent:Left: 0",First line: 0",Space After:
12 pt,Line spacing: single
Capital funds are meant for long-term investments.Agencies may transfer or re-allocate up to 5%of
funding for a single capital project to another capital project,so long as they do so as either part of the
annual work program development,or quarterly amendment process.Funds transferred out of a proiect
can only be replaced via a new project request in the annual work program,not by quarterly amendments.
Agencies do not have the ability to transfer or re-allocate money from capital programs/projects to
operating.
Agencies may only change or update the scope of capital programs/protects through the quarterly
amendment process.
Vehicle replacements funded in full or part by the tax district must be in alignment with FTA Useful Life
Benchmarks.
Capital funds that are not utilized as scheduled may be released and made available for future capital Formatted:Normal, No bullets or numbering
projects upon recommendation from the Orange County Staff Working Group.
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Capital Fund Balance Procedures= Formatted:Font:13 pt,Underline
Formatted:Indent:Left: 0",Space Before: 0 pt,After:
Projections of the fund balance as a percentage of the Orange County Transit Annual Work Program's CIP 12 pt
will be maintained,demonstrating future compliance with this policy.To demonstrate progress and Formatted:Indent:Left: 0"
compliance with this policy,GoTriangle will include a calculation within the statistical section of its ACFR_
and on its quarterly repgrt5. Commented[SWS]:From Wake County FPP
Capital Carry Over
The Tax District will work towards development and maintaining a capital reserve fund,in alignment with Formatted:Normal,Right: 0", No bullets or
the fund balance policy. numbering
Capital project allocations as defined by the transit plan will be reserved and can be drawn on throughout
the life of the project as per annual work plan programming.
Capital reserve fund dollars appropriated within the annual programming are available for reimbursement
requests for the duration of each project unless subsequently amended by Board of Commissioners action
or until project closeout.
Upon prosect closeout,any leftover funds(surplus)will be released and made available for future capital
projects upon recommendation from the Orange County Staff Working Group.
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Orange County Transit Billing, Payment and Reimbursement PoIicy and - - Formatted:Indent:Left: 0",Space Before: 0 pt,After:
Guidelines 12 pt,Line spacing: single
Purpose= ' Formatted:Font:(Default)Calibri Light,13 pt,
Underline
As administrator of the Triangle Tax District,GoTriangle will be responsible for the billing,payment and
reimbursement of funds that support approved expenditures as part of the Orange County Transit Multi-
Year Vision Plan.
P0: IICy. Formatted:Font:(Default)Calibri Light,13 pt,
Underline
=1t is the policy of the Orange Operating Fund and the Orange Capital Fund and participating local Formatted:Underline
governments and other entities to maintain strong billing,payment and reimbursement practices.,
-- Formatted:Font:(Default)Calibri Light,13 pt
Billing,Payment and Reimbursement Guidelines= Formatted:Underline
Formatted:Indent:Left: 0",Space Before: 0 pt,After:
Transit expenditures by the participating local governments and other entities are to be budgeted annually. 12 pt
and recommended by the SWG and adopted by the Orange County Board of Commissioners and
Formatted:Indent:Left: 0",Right: 0",Space Before: 0
GoTriangle Board of Trustees.
pt,After: 12 pt,Line spacing: single
The adopted budget ordinances for the Orange Operating Fund,the Orange Capital Fund,and the
operating funding agreements and/capital funding agreements with the participating partners are the
controlling documents for billing,payments,and reimbursement.
Dollars appropriated in the Orange Capital Fund are appropriated pursuant to Section 13.2 of N.C.G.S.
Chapter 159 and therefore do not lapse at the end of the year and are available for reimbursement
requests for the duration of the respective project unless subsequently amended by Board action or
project closeout.
Capital dollars may not be used for operating,and operating dollars may not be used for Capital projects.If
dollars are not used in the specified time frame,the carryover policy will be implemented.
Reimbursement payments made for expenditures in conjunction with appropriations from the Orange
Operating Fund and the Orange Capital Fund will be made to the participating local governments and
other participants after GoTriangle Finance Department has received a request for reimbursement using
the pre-established Orange County Transit template and associated required documentation.
Per Section 7.06 of the Transit Governance Interlocal Agreement,all parties to the ILA have the right to Commented[SW6]:From Durham County FPP
review any records related to the funding of Tax District operations or projects.
Formatted:Indent:Left: 0.5"
Required IDocumentationl J Formatted:Font:Not Bold
- r Formatted:Indent:Left: 0.5",Bulleted+Level:2+
• Reimbursement template(Excel File) Aligned at: 0.25"+Indent at: 0.5"
• General Ledger(GL)Detail Report for each project—the GL report provides details of the Formatted:Font:Not Bold
transactions that have been posted against a specified project/account.These details should Formatted:Font:Not Bold
include but are not limited to,the posting date,vendor name,and transaction amount. Formatted:Font:Not Bold
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13
• Performance Metrics.—the sponsor agency should choose a performance metric(s)associated ;- Formatted:Font:Not Bold
with each operating project and report on the metric(s)with each reimbursement request.
Whenever possible,the metric(s)should align with FTA required performance data and/or
agency strategic plans Formatted:Font:Not Bold
Preferred Documentation Formatted:Indent:Left: 0.5"
In addition to the required documentation specified above,protect sponsors are encouraged to. Formatted:Font:Not Bold
provide, of vendor invoices..Invoices_provide full transparency and accountability for project Formatted:Not Highlight
expenditures funded through the Transit Plan_consistent with the internal policies and procedures
established by the Oran a CountV Government Finance De artment. Formatted:Font:Not Bold
F.,-.tt,d-Not Highlight
Documentation for each project sponsor's reimbursement request should be uploaded to the SharePoint Formatted Font:Not Bold
site managed by GoTriangle.
Formatted:Not Highlight
Formatted:Font:Not Bold
Formatted:Not Highlight
Formatted:Font:Not Bold
GoTriangle's reimbursement requests will be paid following review by the Staff Working Group Formatted:Font:Not Bold
Administrator.All other reimbursement requests will be reviewed by 6eT-FiaA#ethe Tax District Formatted Not Highlight
Administrator.Upon approval,GoTriangle will send payment to all parties.
Formatted:Font:Not Bold
No duplicative payments for services/programs/protects will be made.No programs/services/protects will Formatted:Font:Not Bold
be funded at greater than 100%either directly from the transit tax,or when transit tax is combined with
Formatted:Font:Not Bold
state and federal funding.
Formatted:Font:Not Bold
Payments will be made in accordance with the North Carolina Local Government Budget and Fiscal Control Formatted:Font:Not Bold
Act.
Formatted:Space After: 12 pt
Submissions for reimbursement may be done as often as is efficient and effective for the local participating \ Formatted:Indent:Left: 0",Space Before: 0 pt,After:
entity;however,disbursements from GoTriangle are recommended to be completed quarterly but will be 12 pt,Line spacing: single
no more frequent than on a monthly basis. Formatted:Indent:Left: 0",Space After: 12 pt,Line
spacing: single
Advance payments,.,d/oF establis.., eRt of a....,.I.....cap tat Fund fee specific e..rr,,. .#a..,.,, may be
Formatted:Indent:Left: 0",First line: 0",Right: 0",
considered by GoTriangle. Space Before: 0 pt,After: 12 pt,Line spacing: single
The request for reimbursement and supporting documentation should be submitted either in writing or by
electronic means as specified in the terms of the operating and capital agreements.
Reimbursement requests will include a statement signed by the requesting agency's Finance Officer or
designee,stating funds were spent in accordance with the Orange County Transit's Annual Work Program
and associated laws,rules and regulations,and the request for funds includes items due and payable.
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Projects that involve federal funding agreements pax/-will require additional documentation and review Formatted:Indent:Left: 0",Space Before: 0 pt,After:
that will be incorporated in project agreements. 12 pt,Line spacing: single
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Debt Policy and Guidelines Formatted:Indent:Left: 0",Space Before: 0 pt,After:
12 pt
Puy rpose- '; Formatted:Font:(Default)Calibri Light,13 pt,
Underline
As administrator of the Triangle Tax District,GoTriangle may issue debt to support approved capital Formatted:Indent:Left: 0",Right: 0",Space Before: 0
projects in the Orange County Transit Multi-Year Vision Plan.It is the goal of the SWG that debt issuances pt,After: 12 pt,Line spacing: single
will strive to obtain favorable ratings available for transit financing.The debt policy outlines the
requirements and criteria set forth to achieve this goal and to advance the Orange County Transit Multi-
Year Vision Plan.
pebt Policy' Formatted:Underline
Formatted:Indent:Left: 0",Space Before: 0 pt,After:
It is expected that debt will periodically be issued by GoTriangle in support of the Orange County Transit 12 pt
Multi-Year Vision Plan under the following requirements:
Formatted:Indent:Left: 0",Space Before: 0 pt,After:
•_Any debt to be issued will be reviewed and recommended by the SWG,approved by the Orange .- 12 pt,Line spacing: single
County Board of Commissioners,and approved and authorized by the GoTriangle Special Tax Board Formatted:Indent:Left: 0.25",Bulleted+Level:1 +
(pursuant to N.C.G.S.160A-167). Aligned at: 0.33"+Indent at: 0.58"
•_Per North Carolina Law,debt issuances will be approved by the Local Government Commission. Formatted:Space Before: 0 pt,After: 12 pt,Bulleted
I
+Level:1 +Aligned at: 0.25"+Indent at: 0.5"
•_Debt service payments will be made in accordance with the North Carolina Local Government Formatted:Right: 0",Space Before: 0 pt,After: 12 pt,
Budget and Fiscal Control Act. Line spacing: single,Bulleted+Level:1 +Aligned at:
0.25"+Indent at: 0.5"
•_Any proposed debt issuance will be evaluated using prospective revenue expenditure amounts,as
modeled in the Orange County Transit Financial Model,which is mutually agreed to by the SWG.
The Orange Transit Financial Model assumptions will be agreed to annually by the SWG through
coordination efforts defined in the Governance ILA.
Debt Guidelines= Formatted:Underline
Formatted:Indent:Left: 0",Space Before: 0 pt,After:
Debt issuances that are incorporated as part of the financial model will be modeled using the following 12 pt
guidelines:
Formatted:Indent:Left: 0",Space Before: 0 pt,After:
• It is the goal that all rated debt issued on behalf of approved capital projects in the Orange Count 12 pt,Line spacing: single
g pP p� P 1 g Y
Transit Multi-Year Vision Plan will obtain a rating no lower than Al(Moody's)or A+(S&P/Fitch)and
preferabley in a double-A category.
.—Actions recommended by the SWG,or adopted by the Orange County Board of Commissioners and Formatted:Space Before: 0 pt,After: 12 pt,Line
GoTriangle Board of Trustees shall not diminish the financial health of Orange Operating and/or spacing: single,Bulleted+Level:1 +Aligned at: 0.25"
Orange Capital Funds. +Indent at: 0.5"
•_Debt will be issued to ensure sufficient flexibility to meet future obligations outlined in the Orange -- Formatted:Right: 0",Space Before: 0 pt,After: 12 pt,
County Transit Multi-Year Vision Plan and to take advantage of opportunities based on market Line spacing: single,Bulleted+Level:1 +Aligned at:
conditions. 0.25"+Indent at: 0.5"
The gross debt service coverage ratio will not go below 2 times(2X)gross revenue to annual debt
service,excluding short-term principal payments.
o Gross revenue is defined as Orange County Locally Dedicated Transit Funding Sources as
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16
stated in Section 2 of the Orange County Transit Governance ILA,plus additional farebox
revenue attributed to services funded by Orange County Locally Dedicated Transit
Funding Sources plus any federal funds received.
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The debt service coverage(i.e.,the ability to pay debt service after operations)will not go below -- Formatted:Space Before: 0 pt,After: 12 pt,Line
1.25 times(1.25X)annual debt service excluding principal payments on short-term debt. spacing: single,Bulleted+Level:1 +Aligned at: 0.25"
+Indent at: 0.5"
o Debt service coverage is defined as Orange County Locally Dedicated Transit Funding Formatted:Right: 0",Space Before: 0 pt,After: 12 pt,
Sources,plus additional fare box revenue attributed to services funded by Orange County Line spacing: single,Bulleted+Level:1 +Aligned at:
Locally Dedicated Transit Funding sources plus and federal funds received,less the sum of 0.83"+Indent at: 1.08"
expenses for tax district administration,and transit operations.
•_Upon the full funding of reserves,any cash that maintains the Orange Transit plan in accordance
with above mentioned rules may be used as cash funding for capital projects to provide additional
sources of funding for capital projects to minimize debt levels.
•_Future bonds issued will conform and adhere to: Formatted:Space Before: 0 pt,After: 12 pt,Bulleted
+Level:1 +Aligned at: 0.25"+Indent at: 0.5"
o Additional bonds test contained in bond documents, Formatted:Font:(Default)+Body(Calibri)
o Bond indenture must require no less than 1.25x or 1.50x Covera on combinedmaximu Formatted:Bulleted+Level:1 +Aligned at: 0.83"+
annual debt service before issuing new parity debt,and Indent at: 1.08"
Commented[SW7]:From Finance
o Debt service coverage ratios of the Orange Operating Funds and Orange Capital Funds 4Formatted Font:(Default)+Body(Calibri),Not Bold
Debt Policies
Formatted:Font:(Default)+Body(Calibri)
• A Debt Service Reserve Fund("DSRF")will be established for debt issuances where the DSRF 4 Formatted:Font:(Default)+Body(Calibri)
creates a lower cost of funds and does not exceed the minimum amount permitted under federal Formatted:Font:(Default)+Body(Calibri)
tax law. � ,
Formatted:Space Before: 0 pt,After: 12 pt,Bulleted
•_Investment of bond proceeds will be in accordance with all applicable North Carolina statutes and +Level:1 +Aligned at: 0.83"+Indent at: 1.08"
federal tax law,equal to the least of 10%of bond proceeds,MADS,or 125%of average annual Formatted:Space Before: 0 pt,After: 12 pt,Line
debt service. spacing: single,Bulleted+Level:1 +Aligned at: 0.83"
+Indent at: 1.08"
•_Debt will be structured in a manner consistent with the useful life of related projects,not to Formatted:Space Before: 0 pt,After: 12 pt,Line
exceed a final maturity of 3-`.30 years.Principal amortization will be level debt service or faster, spacing: single,Bulleted+Level:1 +Aligned at: 0.25"
except for deferrals of principal in connection with construction period financing or short-term +Indent at: 0.5"
financing related to future receipt of federal and/or state funds. Formatted:Right: 0",Space Before: 0 pt,After: 12 pt,
Line spacing: single,Bulleted+Level:1 +Aligned at:
—Debt issued in support of the Orange County Transit Multi-Year Vision Plan will be authorized under-, 0.25"+Indent at: 0.5"
Commented[SW8]:From Finance
• N.C.G.S.160A-20.Alternative debt instruments may be evaluated and utilized subject to
recommendation by the SWG and approved by the Orange County Board of Commissioners and Formatted:Space Before: 0 pt,After: 12 pt,Bulleted
GoTriangle Board of Trustees. +Level:1 +Aligned at: 0.25"+Indent at: 0.5"
Formatted:Right: 0",Space Before: 0 pt,After: 12 pt,
•_The combined liquidity position of the Orange Capital and Operating Funds shall be a minimum of Line spacing: single,Bulleted+Level:1 +Aligned at:
180 days unrestricted cash to meet the needs of the Orange County Transit Multi-Year Vision Planl. 0.25"+Indent at: 0.5"
Formatted:Bulleted+Level:1 +Aligned
Indent at: 0.5"
Commented[SW9]:Not in Durham County FPP
• If a project sponsor seeks repayment for debt issued outside of the Orange County Transit Multi
Year Vision Plan it will be paid after all debt service and operating expenses of the plan have been Formatted:Right: 0",Space Before: pt,After: 12
Line spacing: single,Bulleted+Level::1 +Aligned at::
paid and will subordinate to as debt issued by Tax District Administration.Debt payments 0.25"+Indent at: 0.5"
reimbursed to the project sponsor will be identified as a yearly capital project and included in all
14
18
Capital Improvement programs(CIP)upon initial approval.
Select SWG mpFnhpF,;^f P.AA-;s ee •^�voting members,or representatives designated by voting
members(if/when applicable),will participate in the following:
•_RFP and/or selection process of: Formatted:Space Before: 0 pt,After: 12 pt,Bulleted
+Level:1 +Aligned at: 0.25"+Indent at: 0.5"
o Financial Advisor;Investment Consultant for GT-ian#e—he tax district administrator{as -
Formatted:Space Before: 0 pt,After: 12 pt,Bulleted
+Level:2+Aligned at: 0.83"+Indent at: 1.08"
15
19
o Underwriter(s);Bond Counsel;and any other necessary roles related to GoTriangle debt Formatted:Right: 0",Space Before: 0 pt,After: 12 pt,
financing in support of the Orange County Transit Multi-Year Vision Plan Line spacing: single,Bulleted+Level:2+Aligned at:
0.83"+Indent at: 1.08"
o Providing assistance as needed for guidance associated with debt issuances to include
interactions with rating agencies.
16
20
Increased Cost of Existing Services (ICES) Formatted:Indent:Left: 0",Space Before: 0 pt,After:
12 pt
UPDATE Spring 2023—Parties and Implementation Partners will refer to legacy language from prior Formatted:Right: 0"
Transit Governance ILA to define how operators can seek funding to support increased cost of services.
This language is shown below.
The Orange County Transit Multi-Year Vision Plan(Plan)provides that all funding for bus services will be Formatted:Indent:Left: -0",Right: 0",Space Before:
appropriated based on the supporting financial plan/model to Chapel Hill Transit(CHT),GoTriangle,and 0 pt,After: 12 pt,Line spacing: single
Orange Public Transit(OPT).The use of these bus service funds shall be limited to the support of new bus
services above and beyond the existing transit system services in place at the time of the adoption of the
local option%cent sales tax in November of 2012.However,CHT and OPT may use a portion of the bus
service funds provided in the Plan to pay for the increased cost of existing services during the duration of
this Agreement in the manner described below.
The"CHT Share"shall be a percentage derived by dividing the CHT local expenditures for bus services each
year by the total of local expenditures for bus services by both CHT and OPT in that year.The"OPT Share"
shall be a percentage derived by dividing the OPT local expenditures for bus services each year by the total
of local expenditures for bus services by both CHT and OPT in that year.The respective CHT and OPT local
expenditures for bus services in any year shall be based initially upon the audited financial statements for
the fiscal year ending June 30,2011,Local bus services expenditures shall include assigned overhead
without any consideration of federal or state financial assistance.The determiRa e of the ruT S"^F^;]Ad
^enditWes f^•bus seFy ^by la^'l .The determination of the CHT Share and OPT Share will be made
each year thereafter for CHT based upon the most recent audited annual local expenditures for bus service
and for OPT based upon an end of year financial statement for the transportation services department bus
service attested to by the Chief Financial Officer of Orange County as to its accuracy and completeness.
CHT may use a portion of the bus services funds provided in the Plan up to a maximum amount that equals
the CHT Share percentage of the prior year total receipts from the Orange County local vehicle registration
fee of$7.00 permitted by Article 52 of N.C_G S.105.OPT may use a portion of the bus services funds
provided in the Plan up to a maximum amount that equals the OPT Share percentage of the prior year total
receipts from the Orange County local vehicle registration fee of$7.00 permitted by Article 62 of N_C.G.S.
105.
The suggested scenario/formula below is drafted for future consideration by parties and
implementation partners upon the next deliberation of the Multi-Year Transit Vision Plan.
_Purpose= — Formatted:Font:(Default)Calibri Light,13 pt,
Underline
Transit operators in Orange County are able to use one Locally Dedicated Transit Funding Source(the
County Vehicle Registration Tax,pursuant to N.C.G.S.105-570,which is levied at$7.00 per year)to
supplement projected increased costs of existing,or baseline,services that were in operation prior to the
passage of the County's%cent sales tax dedicated to public transportation investment.
ICES Policy- Formatted:Font:(Default)Calibri Light,13 pt,
Underline
An equitable formula is to be used by the Tax District Administrator in determining annual allocations of
available funds from the projects County Vehicle Registration Tax for each fiscal year to a11-Chapel Hill
17
21
Transit and Orange Public Transit ser•Ices••^thin OFange County(Chapel u❑i TFan ,.
QFan.^Public Transit&GaTFiangle4.GOTrlangle shall only become eligible for ICES if there is a reallocation
of vehicle rental proceeds to share the proceeds with Chapel Hill Transit and Orange Public Transit.
Variables include: Formatted:Indent:Left: 0",Space Before: 0 pt,After:
12 pt
• Total Revenue Service Hours for Fixed Route Bus Services,per provider,at the end of FY2013 ` — Formatted:Space Before: 0 pt,After: 12 pt
• Total Expenditures for Fixed Route Bus Services,per provider,at the end of FY2013
• Average annual historical cost escalation rate,per provider,from FY2013 to current fiscal year
18
22
• Ceost escalation rate set by the Tax District Administrator for upcoming Formatted:Space Before: 0 pt,After: 12 pt
fiscal year
Step one:Calculate ratio of Fixed Route Bus Revenue Service Hours operated by each agency in OrangeFormatted-:Indent:Left: 0",Space Before: 0 pt,After:
County at the end of FY2013. 12 pt,Line spacing: single
NOTE:GoTriangle will need to account for estimated number of hours of revenue service and Formatted:Space Before: 0 pt,After: 12 pt,Line
associated costs operated ONLY within Orange County at end of FY2013. spacing: single
Step two:Apply the ratio of each operator's revenue service hours to the upcoming fiscal year's County Formatted•Indent:Left: 0",Space Before: 0 pt,After:
Vehicle Registration Tax projected amount.These three individual ratios will be applied in Step five. 12 pt,Line spacing: single
Step three:calrul^^*e Calculate the estimated increased cost of services from FY2013 by escalating Total
Expenditures for Fixed Route Bus Services,per provider,at the end of FY2013(see NOTE for GoTriangle
above)using the average annual historical cost escalation rate,per provider,from FY2013 to current fiscal
year.
Step four:Through agency coordination,a mutually agreed upon escalation rate will be used to calculate
the upcoming fiscal year's projected costs for the continuation of baseline services from FY2013.
Step five:Apply the ratios realized in Step two to each operator's projected costs calculated in Step four.
This will indicate level of funding needed to support those FY2013 baseline services and associated
increased cost of those services in the upcoming fiscal year.
IF the sum of ICES calculated for the upcoming fiscal year for each agency in step five is greater than the
available amount of funding projected to be available from the County Vehicle Registration Tax funding
source,then each agency and its governing jurisdiction are responsible for funding for the balance from
other local funding sources not already dedicated to supporting local public transportation investments.
If the sum of ICES calculated for the upcoming fiscal year for each agency in step five is less than the
available amount of funding projected to be available from the County Vehicle Registration Tax funding
source,then the SWG will advise the Tax District and associated governing bodies on appropriate
allocation into reserves.
Data used in the above steps,as well as calculation sheets,shall be pulled down from FTA databases by the Formatted:Space After: 12 pt,Line spacing: single
TDA and F Pa AR the-ti..".°..:..*rite at-a�maintainecl on the SharePoint site4W4heJT
DistFir*Adrninis*•a*^-.Calculation sheets shall be included in the T""^ *•k-*'&TDA's update to the SWG at
least annually and be made available to the public via the agenda packet for the meeting when the
presentation is made.Draft sheets will be circulated to agencies receiving ICES,for
confirmation/validation,at least 60 days prior to the annual report.
To account for scale difference in operations costs,neither Chapel Hill Transit aenor Orange Public Transit
shall receive less than 10 percent of the ICES allocation in any given year.
19
23
Ga rrye for Dr,I„-" - Formatted:Indent:Left: 0",Space Before: 0 pt,After:
12 pt
Formatted:Space Before: 0 pt,After: 12 pt
Formatted:Underline
Formatted:Indent:Left: 0",Space After: 12 pt
Orange County Tax Distr ct w 11 work towards development and mainta n ng a Gapital- — Formatted:Font:11 pt
reserve fi�r,.JRd
Formatted:Right: 0",Space Before: 0 pt,After: 12 pt,
Capital projeGt alleGations as defined by the trans4 plan will be reserved and ran be Line spacing: single
Capital reserve fund dollars aPPFE)PFiated within the annual prOgraMPRing aFe available
amended by Bewd o..+inn n n+il n nn+Glesee t
Upon project nlnoon + any leftover funds(surplus)will be released and.nade
Formatted:Underline
Formatted:Indent:Left: 0",Space Before: 0 pt,After:
DellaFs appFapriatQd in the opeFating fund will lapse at the end of the yeaF
12 pt
30 Formatted:Font:11 pt
Formatted:Right: 0",Space Before: 0 pt,After: 12 pt,
Line spacing: single
20
24
Bus Operating Cost Per Hour Policy Formatted:Indent:Left: 0",Space Before: 0 pt,After:
12 pt
F - Formatted:Space Before: 0 pt,After: 12 pt
Transit a.,...des..,.II hp r mhi ir,;Pd far the following east eategeries: �
Formatted:Indent:Left: 0",Space After: 12 pt
•—Operations Formatted:Space Before: 0 pt,After: 12 pt
•--€uei
Formatted:Indent:Left: 0",Right: 0",Space Before: 0
agreements,planning,finaReial management,management of eaRtracts with operators Ar intederal pt,After: 12 pt,Line spacing: single
eapital puFehases,leasing of faeolities,non operations fadlity maintenanee,ete.Those costs may be
Annual Work Preg-1 Commented[SW10]:Do we need this if we are following
FTA guidelines?
The approval of the a Annual weFk Work{aFeg a+rProram will include at}estimated e%6-Costs per- '-- Formatted:Right: 0"
Per#HourCPH for revenue hours for each agency at an overall rate across all services.Agencies may
choose to but cannot be required to receive reimbursements for fixed route revenue hours and demand
response&ei�.sesrevenue hours separately.
Starting in FY27,Tl+im�Cost Per#Hour should shall be consistent with the transit agency's overall eest
Cost Per bHour as reported to the Federal Transit Administration(FTA),in alignment with FTA
rules paid through other funding seuree&during the most recent reporting period available on the FTA
website when the AWP is being developed,plus 2.5%.
As sueh,the Tran,;it Plan-and'Aral funding growth rates qhn-i'd lap rensiqtpnt whpn
for any new-- Formatted:Indent:Left: 0",Right: 0",Space Before: 0
eF Rded sen•mees.If any agency requests an increase that exceeds 2.5%compared to the previous pt,After: 12 pt,Line spacing: single
year's WArk Plan FTA reported CPH,t•,^that agency will be eReeuFagemreguired to submit a
second quarter amendment that will include documentation to the Staff Working Group to verify their
budgets meetto meet this policy and be;nelidded as art of the. ndat,,,,,of the^ ,,,,..ent
egi+es>.CPH amendment requests will be considered and adopted through the same processes as other
amendments.
the starting paint plus 2.59%O e for the fell.,,.,i...,yeaFs Gest per hour.
Reimbursements will be made based on the estimated cost per hour for quarters 1,2,and 3.Quarter 4 will
include a reconciliation based on the actual annual cost per hour.Transit agencies are expected to
complete the P44ka Orange Transit Reimbursement year-end reconciliation template that is included in
the reimbursement template. The cost per hour that is listed in the reconciliation template should be
consistent with other funding source cost per hours across the transit agency's network,and as reported
to the FTA.
' Formatted:Indent:Left: 0",Right: 0",Space Before: 0
pt,After: 12 pt,Line spacing: single
GoTriangle will use a consistent cost per hour across all three County Transit Plans(i.e.,Durham,Orange$r
21
25
and Wake Counties).
22
26
Future Updates
The Triangle Tax District Orange County Financial Policies and Procedures should be reviewed every three
years for effectiveness,or immediately upon significant regulatory changes,in accordance with the
Interlocal Agreement.
23
27
Exhibit A: GoTriangle Financial Policies & Procedures (for reference) Formatted:Indent:Left: 0",Space Before: Opt,After:
12 pt
[INSERT GOTRIANGLE FINANCIAL POLICIES&PROCEDURES DOCUMENTAS EXHIBIT A]
24
28
' Formatted:Space After: 12 pt
Formatted:Spce Before: 0 pt,After: 12 pt
Formatted:Space After: 12 pt
I
•
Triangle
GoTriangle Investment Guidelines F— Formatted:Space Before: 0 pt,After: 12 pt,Line
Exhibit A spacing: single
29
Approved Issue Finance and Administrative Services 1-3-08 Formatted:Space Before: 0 pt,After: 12 pt
Formatted:Font:11 pt
Formatted:Space After: 12 pt
' Formatted:Font:11 pt
3.0 FINANCIAL Formatted:Space Before: 0 pt,After: 12 pt
3.10 INVESTMENT POLICY&PROCEDURE Formatted:Space After: 12 pt
3.10.1 Investment Policy Formatted:Justified,Space Before: 0 pt,After: 12 pt
A. TTA shall remain 100% invested at all times with the exception of
moneys held for petty cash or moneys held in a compensating
balance account. (100% invested refers to actual investments as well
as the use of interest bearing checking accounts).
B. G.S. 159-30(c) authorizes TTA to invest in obligations of the United
States of America or obligations fully guaranteed both as to principal
and interest by the United States of America; obligations of the State
of North Carolina; bonds and notes of any North Carolina local
government or public authority; obligations of certain non-guaranteed
federal agencies; certain high quality issues of commercial paper and
banker's acceptances; and the North Carolina Capital Management
Trust,a money market fund.
C. Eligible deposits and investments are limited to those restricted by the
federal government (refer to the North Carolina Department of the
State Treasurer Policies Manual, Cash Management tab, beginning
with page 16). The guidelines state that proper diversification of the
investment portfolio must be achieved in order to minimize risks
brought on by economic and market changes.
D. Collateralization for deposits shall be in accordance with Title 20,
Chapter 7 of the North Carolina Administrative Code (NCAC). All
deposits for TTA shall be fully protected through deposit insurance
and eligible collateral securities pursuant to 20 NCAC 7. The
Financial Reporting Manager shall notify the TTA depository when an
account is opened that the moneys deposited are public funds subject
to collateralization and shall file a "Public Deposit Status Report"with
each depository and the State Treasurer promptly after June 30. The
Financial Reporting Manager shall maintain a file of the list of financial
institutions using the Pooling Method from the Department of the
State Treasurer. There shall be a signed escrow agreement with a
third party escrow agent for each Dedicated Method depository that
holds uninsured deposits, unless the escrow agent is the Federal
Home Loan Bank or the Federal Reserve
Formatted:Space Before: 0 pt,After: 12 pt
Financial Policies and Procedures Manual Formatted:Space Before: 0 pt,After: 12 pt,Line
Triangle Transit Authority spacing: single
30
-1 Formatted:Font:11 pt
31
Formatted:Space Before: 0 pt,After: 12 pt
Formatted:Font:11 pt
3.0 FINANCIAL Formatted:Font:11 pt
Formatted:Space After: 12 pt,Linespacing: single
Formatted:Space Before: 0 pt,After: 12 pt
Bank. The Financial Reporting Manager shall request and receive Formatted:Font:11 pt
timely confirmations of collateral pledged by Dedicated Method Formatted:Space After: 12 pt
institutions. A file of all pledges of collateral and a record of pledged
securities per Dedicated Method depository shall be maintained by
the Financial Reporting Manager. There shall be no releases or
substitutions of collateral securities resulting in a decrease in the
market value of securities pledged by Dedicated Method depositories
without prior approval by the Chief Financial Officer. The Financial
Reporting Manager shall request and receive a statement of collateral
pledged from each Dedicated Method institution at least quarterly
including the total par and market value of the securities.
E. The Chief Financial Officer shall be responsible for obtaining custody Formatted:Justified,Space Before: 0 pt,After: 12 pt
and providing safekeeping of securities and deposit certificates
according to G.S. 159-30(d). All securities purchased by TTA shall be
delivered (or book entered)to the Authority's custodian and placed in
its custody account in the name of TTA. All such custodial
agreements shall be between TTA and the custodian in the name of
TTA. Certificates of deposit purchased by TTA shall be delivered to
the Financial Reporting Manager.
F. The Financial Reporting Manager shall ensure proper diversification
of the investment portfolio in order to minimize risks brought on by
economic and market changes.
G. Diversification by Financial Institution:
1. No more than 50% of TTA's moneys shall be invested in any
obligation that does not bear the full faith and credit of the United
States of America.
2. No more than 50% of TTA's total moneys shall be placed with a
single financial institution.
3. No more than 25% of the overall portfolio shall be invested in the
securities of a single issuer, except for the U.S. Treasury or U.S.
backed instruments(i.e. GNMA's)
4. No more than 10% of the portfolio shall be invested in a regular
savings account.
5. No more than 10% of the portfolio shall be invested in overnight
securities or in highly marketable, short-term securities which can
be quickly sold to meet liquidity needs.
Formatted:Space After: 12 pt
32
' Formatted:Space Before: 0 pt,After: 12 pt
3- _ Financial Policies and Procedures Manual Formatted:Font:11 pt
2
Triangle Transit Authority Formatted:Space Before: 0 pt,After: 12 pt
33
Formatted
Formatted
Formatted
Formatted
Formatted
3.0 FINANCIAL Formatted
Formatted
Formatted
Formatted
Formatted
Formatted
H. Diversification by Classes of Securities: Formatted
Formatted
Formatted
Type of Security Maximum percentage Formatted
U.S. Treasury Certificates,Bonds,Notes, Formatted
and Bills. Formatted
100%of Portfolio Formatted
Formatted
Formatted
Obligations of U.S.Government-sponsored Formatted
entities(Instrumentality)
75%of Portfolio r' Formatted
Formatted
Collateralized Governmental Mortgage ,,.,
Formatted
Obligations of Government sponsored Formatted
enterprises(i.e.Freddie Mac or Fannie Formatted
Mae) 10%of Portfolio
r Formatted
Collateralized Governmental Mortgage Formatted
Obligations of Ginnie Mae
40%of Portfolio �� Formatted
Formatted
Formatted
North Carolina State and Local Bonds 50%of Portfolio Formatted
Formatted
Certificates of Deposit 100%of Portfolio _ Formatted
Formatted
Commercial papers,Bankers Acceptance 25%of Portfolio Formatted
Formatted
Formatted
NCCMT Certified Mutual Funds 100%of Portfolio Formatted
Formatted
As required for overnight Formatted
cash flow,or 25%
Repurchase Agreement Formatted
Formatted
Formatted
Formatted
Formatted
Formatted
Formatted
Formatted
Formatted
Formatted
Formatted
Formatted
34
Ginnie Mae Pools 50%of Portfolio Formatted:Space After: 12 pt,Line spacing: single
Formatted:Space After: 12 pt,Line spacing: single
• Formatted:Font:11 pt
I. Maturities Schedule: Formatted:Space Before: 0 pt,After: 12 pt
1. Short Term Portfolio: No less than $500,000 of the total Formatted:Space After: 12 pt
investment portfolio shall mature within seven days. No less than Formatted:Justified,Space Before: 0 pt,After: 12 pt
25%of the portfolio shall mature in 90 days.
2. Intermediate Term Portfolio: the average maturity of the portfolio
shall not exceed five years.
3. Long Term Portfolio: The average maturities of this portfolio shall
not exceed twenty years.Any exceptions must be approved by the
Chief Financial Officer. Reasons for exceptions may include
anticipated higher market yields.
Note: The North Carolina Capital Management Trust (NCCMT) Formatted:Space Before: Opt,After: 12 pt
maintains this level of diversification for issuers and industries;
therefore, a unit of government's investment with the NCCMT would
not be subject to these limits.
J. The Financial Reporting Manager shall constantly monitor the
investment portfolio and make adjustments as necessary.
Financial Policies and Procedures Manual 3-3 Formatted:Font:11 pt
Triangle Transit Authority
Formatted:Space Before: 0 pt,After: 12 pt,Line
spacing: single
35
Formatted:Space Before: 0 pt,After: 12 pt
Formatted:Font:11 pt
3.0 FINANCIAL Formatted:Font:11 pt
Formatted:Space After: 12 pt,Line spacing: single
Formatted:Space Before: 0 pt,After: 12 pt
K. The Financial Reporting Manager shall review daily the cash position Formatted:Font:11 pt
of TTA and decide what moneys can be deposited or Invested for Formatted:Justified,Space After: 12 pt
certain periods of time. If any deposits or investments are to be made,
the Financial Reporting Manager will make this determination and
then institute a bidding process for TTA's moneys as follows:
1. For eligible investment vehicles, the Financial Reporting Manager l Formatted:Justified,Space Before: 0 pt,After: 12 pt
shall solicit offers from an approved list of financial institutions and
broker/dealers. The Financial Reporting Manager shall review the
various offers and determine the appropriate investment vehicle,
considering such factors as the safety of the investment, the rate,
and the maturity. All interest rates shall be quoted on a discount
basis. For securities purchased by TTA, the Financial Reporting
Manager shall instruct the seller that securities are to be delivered
to TTA's escrow agent, who will disburse moneys The Financial
Reporting Manager will be responsible for notifying the financial
institution that placed the highest bid.
2. Wire transfers, both incoming and outgoing, shall be handled by
an individual other than the person receiving the telephone quotes
(usually the Chief Financial Officer). Wires will be processed by
the institution's deadline with written confirmation forwarded the
next business day. These confirmations will be documented by
the Financial Reporting Manager and delivered to the Chief
Financial Officer for review.
3. An individual shall be assigned by the Chief Financial Officer to
monitor the safekeeping of securities, both owned by TTA and
pledged for TTA's deposit. Once securities are escrowed, this
individual shall receive timely written confirmations from the
safekeeping agent acknowledging delivery of the specified
securities. These confirmations shall be recorded and forwarded
to the Chief Financial Officer for review.
3.10.2 Investment Procedure
A. The Chief Financial Officer determines moneys available for
investment, usually in the form of excess cash either in the checking
account or in the North Carolina Capital Management Trust, or
proceeds from the maturity of a security. The Financial Reporting
Manager calls approved financial institutions and gets quotes on
desired securities. Quotes with pertinent information such as CUSIP
number, coupon rate, maturity value, etc. are faxed to the Financial
Reporting Manager. The Financial
Formatted:Space Before: 0 pt,After: 12 pt
3- Formatted:Space Before: 0 pt,After: 12 pt
4
36
Financial Policies and Procedures Manual Formatted:Font:11 pt
Tri
an
gle
Tr
an
sit
Au
tho
rlt
y
37
Formatted:Space Before: 0 pt,After: 12 pt
Formatted:Font:11 pt
3.0 FINANCIAL Formatted:Font:11 pt
Formatted:Space After: 12 pt,Linespacing: single
Formatted:Space Before: 0 pt,After: 12 pt
Reporting Manager submits these quotes to the Chief Financial Officer for Formatted:Font:11 pt
review. Formatted:Space After: 12 pt
B. The Chief Financial Officer evaluates the purchase options and yields, 4 Formatted:Justified,Space Before: 0 pt,After: 12 pt
and checks to see if they are in accordance with the desired portfolio
mix as specified in the policy above. Securities are typically
purchased by TTA in blocks of $500,000 and
$1,000,000. 4 Formatted:Space Before: 0 pt,After: 12 pt
C. When a decision has been made on the purchase, the Financial Formatted:Justified,Space Before: 0 pt,After: 12 pt
Reporting Manager calls the financial institution to purchase the
instrument at the quoted price. A total cost of the purchase is
obtained which, if relevant, will include accrued interest paid to the
previous holder. Also at this time, arrangements are made for the
settlement date of the purchase. The financial institution executes the
electronic purchase and delivers the certificates to TTA's custodial
bank where they are held in trust.
D. If funds are not readily available in the money market account with the
custodial trust for settlement then the Financial Reporting Manager
must wire funds from another TTA account(i.e. the checking account
or the general investment account held with the North Carolina Capital
Management Trust). Funds must be wired from the North Carolina
Capital Management Trust by 12:00 noon and from the financial
institution by 4:00
p.m. This transaction is documented on a wire transfer form [see E Formatted:Space After: 12 pt
Exhibit 3-C], which is also used as the source to record the journal
entry to the general ledger.
E. The Financial Reporting Manager notifies, by telephone, the Formatted:Justified,Space Before: 0 pt,After: 12 pt
custodian's trust department that a security has been purchased and
gives them the total cost,settlement date,date that funds will arrive(if
applicable), and identifies the sender of the funds. The contact at the
trust department calls their operation center to advise of the incoming
wire.
F. The Financial Reporting Manager prepares a letter to the trust
operations department for notification of the purchase. The letter is
first faxed and later mailed. One copy is sent to the contact at the
trust department and one copy is retained for file purposes and for
support documentation for the wire transfer.
G. A confirmation is sent to the Financial Reporting Manager by the
financial institution from which the security was purchased and is
retained in TTA's file. The custodian's month-end statement will
reflect the purchase transaction.
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Financial Policies and Procedures Manual -5 - Formatted:Font:11 pt
Triangle Transit Authority
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3.0 FINANCIAL Formatted:Font:11 pt
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H. An investment schedule is maintained by the Financial Reporting Formatted:Font:11 pt
Manager, which depicts the cash and investment portfolio, along with Formatted:Justified,Space After: 12 pt
expected income and other pertinent information (i.e. maturity date,
CUSIP numbers, etc.) This schedule is used to record the interest
accruals to the general ledger and to reconcile to the general ledger.
I. A semi-annual report, entitled Report of Cash & Investments [see Formatted:Justified,Space Before: 0 pt,After: 12 pt
Exhibit 3-D], is filed in January and July to report the investment
portfolio and market values to the NC Local Government Commission
for compliance purposes. The Financial Reporting Manager is
responsible for completing and filing this form. The form is reviewed
and signed by the Chief Financial Officer.
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April 5,2011
April 5,2011
This standard of prudence shall be applied in the context of managing the overall portfolio. The
Financial Services Director, acting in accordance with North Carolina General Statues, this
policy, and written administrative procedures and exercising due diligence shall be relieved of
SCOPE personal responsibility for an investment credit risk, provided deviations from expectations are
reported in a timely fashion and appropriate action is taken to control adverse developments.
This pc Formatted:Font:11 pt
accour ETHICS AND CONFLICTS OF INTEREST
the Ca: Formatted:Space Before: 0 pt,After: 12 pt
opportt To avoid the appearance of potential conflict of interest or favoritism to a particular bank or
Report broker; the Financial Services Director or any delegate employee who has investment
combir responsibilities, shall make full disclosure to the County Manager of any relationship or
applies dealings with any financial institution that has business dealings with the County. This
funds E disclosure need not include normal banking or brokerage relationships that are at normal
market rates and conditions available to the general public. Investment officials of banks and
OBJET other institutions shall be familiar with N.C. General Statutes and County policy regarding gifts
and favors and shall act accordingly.
Funds
30 Ca:STATUTORY AUTHORIZATION
County
presen The legal limitations of local government investments are defined in N.C.G.S. 159-30.
cash nn Accordingly, the following classes of securities are indicative of the investments utilized by
manag Orange County:
will alw
amoun A. Obligations of the United States or obligations fully guaranteed both as to principal and
interest by the United States.
RESP(B ,Obligations of the Federal Financing Bank, the Federal Farm Credit Bank, the Bank for
In accc Cooperatives, the Federal intermedliate Credit Bank, the Federal Land Banks, the Federal
respon Home Loan Banks, the Federal Home Loan Mortgage Corporation, the Federal National
respon Mortgage Association, the Government National Mortgage Association, the Federal Housing
admini:'`''`dministration,the Farmers Home Administration and the U.S. Postal Service.
consist C. Obligations of the State of North Carolina.
The stt D. Bonds and notes of any North Carolina local government or public authority, subject to such
Investc restrictions as the Secretary of the Local Government Commission may impose.
circum:
in the r E. Deposits at interest or purchase of certificates of deposit with any bank, savings and loan
probab association or trust company in North Carolina, provided such deposits or certificates of
deposit are fully collateralized.
F. Prime quality commercial paper bearing the highest rating of at least one nationally
recognized rating service and rot bearing a rating below the highest (A9, P19 F1) by any
nationally recognized rating service which rates the particular obligation.
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April 5,2011
G. Bankers'Acceptances provided that the accepting bank or its holding company is either(1)
incorporated in the State of North Carolina or (2) has outstanding publicly held obligations
bearing the highest rating of at least one nationally recognized rating service and not bearing a
rating below the highest (Aaa or AAA) by any nationally recognized rating service which rates
the particular obligations.
H. Participating shares in a mutual fund for local government investment (such as the N.C.
Cash Management Trust)which is certified by the N.C. Local Government Commission.
ADMINISTRATIVE RESTRICTIONS
In addition to the previously noted limitations on appropriate securities, Orange County's
investment activities are further restricted in the following manner:
A. It is the policy of Orange County to diversify its investment portfolio. Assets held shall be
diversified to eliminate the risk of loss resulting from the over concentration of assets in a
specific maturity, a specific issuer or a specific class of securities. Diversification shall be
determined and revised periodically by the Investment Officer. Portfolio maturities shall be
staggered to avoid undue concentration of assets in a specific maturity sector. Maturities
selected shall provide for stability of income and reasonable liquidity.
B. Orange County recognizes that investment risks can result from issuer defaults, market
price changes or various technical complications leading to temporary illiquidity. Portfolio
diversification is employed as a way to minimize default risk. No individual investment
transaction shall be undertaken that Jeopardizes the capital position of the overall portfolio. In
the event of a default by a specific issuer, the Financial Services Director shall review and, if
appropriate, proceed to liquidate securities having comparable credit risks.
C. No investments in Repurchase Agreements shall be made unless the underlying collateral
shall be placed in safekeeping in the trust department of a third-party designated by the
County.
D. The combined total investment in commercial paper and bankers' acceptances shall not
exceed thirty five percent (35%) of the total portfolio and the investment in commercial paper
or bankers' acceptances of a single issuer shall not exceed (35%) of the total portfolio at the
time of investment.
E. No investment shall be made in any security with a maturity greater than five (5)years from
the date of purchase.
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April 5,2011
SELECTION OF SECURITIES
The Financial Services Director will determine which instruments shall be purchased and sold
and the desired maturity date(s)that are in the best interest of the County. The selection of an
instrument will involve the evaluation of, but not be limited to;the following factors:
A. Cash flow projections and requirements.
B. Current market conditions.
C. Overall portfolio balance and makeup.
CUSTODY AND SAFEKEEPING OF SECURITIES
Orange County will maintain a third party safekeeping account for all investments (generally
provided by the County's primary bank). Transactions should be processed on a delivery
versus payment basis. Some securities, primarily certificates of deposit, will not be kept in the
third party safekeeping account, but will be kept by the Financial Services Director in the vault
of the Finance Services Department.
INTERNAL CONTROLS
The Financial Services Director is responsible for establishing a system of internal controls.
These controls are designed to prevent losses of public funds arising from fraud, employee
error, and misrepresentation by third parties or imprudent actions by County employees.
REPORTING
The Financial Services Director shall maintain a monthly investment report. The report shall
include a general description of the portfolio in terms of investment securities, maturities, yields
and other features. The report will show investment earnings for the month and fiscal year-to-
date, including the annualized earned yield percentage for the portfolio. The report will
compare actual investment earnings with budgeted earnings.
Approved April 5;2011
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Triangle Tax District
Orange County
Financial Policies and Guidelines
Updated May 2026
Contents
Acronyms and Abbreviations........................................................................................................................2
Operating Fund Balance and Liquidity Policy and Guidelines........................................................................3
Fund Balance and Liquidity Policy.............................................................................................................3
Procedures.............................................................................................................................................4
Capital Fund Balance Policy and Guidelines ..............................................................................................6
Procedures.............................................................................................................................................6
Transit Billing, Payment and Reimbursement Policy and Guidelines.............................................................8
Guidelines..................................................................................................................................................8
DebtPolicy and Guidelines..........................................................................................................................10
DebtPolicy............................................................................................................................................... 10
DebtGuidelines....................................................................................................................................... 10
Increased Cost of Existing Services(ICES).................................................................................................... 13
Bus Operating Cost Per Hour Policy ............................................................................................................14
FutureUpdates...........................................................................................................................................15
Exhibit A:GoTriangle Financial Policies&Procedures(for reference) ........................................................17
Exhibit B: Orange County Investment Policy ..............................................................................................30
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Acronyms and Abbreviations
ACFR Annual Comprehensive Financial Report
AWP Annual Work Program
CHT Chapel Hill Transit
CIP Capital Improvement Plan
CPH Cost Per Hour
DSRF Debt Service Reserve Fund
FTA Federal Transit Administration
GASB Governmental Account Standards Board
ICES Increased Cost of Existing Service
OPT Orange County Public Transit
SWG Staff Working Group
TDA Tax District Administration/Administrator
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Operating Fund Balance and Liquidity Policy and Guidelines
Purpose
As administrator of the Triangle Tax District,GoTriangle will maintain sound financial practices including
minimum fund balance and liquidity requirements.
The Fund Balance Management Policy is intended to address the needs of the tax district, in the event of
unanticipated and unavoidable occurrences which could adversely affect the financial condition of the tax
district and thereby jeopardize the continuation of necessary public services.This policy will ensure the tax
district maintains adequate fund balance and reserves to provide the capacity to:
1. Provide sufficient cash flow for daily financial needs,
2. Secure and maintain investment grade bond ratings,
3. Offset significant economic downturns or revenue shortfalls, and
4. Provide funds for unforeseen expenditures related to emergencies.
Fund Balance and Liquidity Policy
It is the policy of the Triangle Tax District to maintain both minimum fund balance and cash reserve
requirements. Based on the funding sources and responsible fiscal management,the Orange County
Operating Fund will maintain a fund balance to be used as a resource for expected and unexpected, but
agreed upon,financial demands and to demonstrate strong liquidity to credit rating agencies as well as
federal and state governments.This information will be used to support applications for additional funding
towards Orange County Transit projects, including applications for the issuance of debt, and request
federal and state grant resources.
• A minimum of 90 days unrestricted cash must be maintained in the Orange Operating Fund. Cash is
defined as 'on-deposit' in the bank account.
• The amount of unassigned fund balance maintained during each fiscal year should not fall below
8% percent of budgeted general fund operating expenditures, as recommended by the North
Carolina Local Government Commission.
• To the extent that the general fund unassigned fund balance exceeds 17% percent, the balances
may be utilized to fund capital expenditures or pay down outstanding debt.
The policy should be administered under the following requirements:
• All restricted, committed, assigned and unassigned fund balance, as defined in Governmental
Account Standards Board (GASB) Statement 54, may be used in the calculation of the minimum
fund balance requirement.
• Funds may only be spent in accordance with the external guidelines and enabling legislation as
defined in Article II of the Orange County Transit Governance ILA.
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• Idle funds as defined in N.C.G.S. 159-30 will be invested in accordance with applicable North
Carolina General Statutes and GoTriangle's investment guidelines, attached as Exhibit A.
Agencies may transfer or re-allocate up to 15%of funding for a single operating project to another
operating project excluding Cost Per Hour, so long as they do so as part of the quarterly amendment
process.
Agencies do not have the ability to transfer or re-allocate money from operating programs/projects to
capital.
Agencies may only change or update the scope of operating programs/projects through the quarterly
amendment process.
Operating Fund Balance and Liquidity Procedures
The Orange County Transit Financial Model for the Orange Operating Fund will include projections of fund
balance and annual expenditures.
Quarterly reporting will be provided by GoTriangle to the Staff Working Group (SWG), Orange County
Board of Commissioners,TWTPO Policy Board, and GoTriangle Board of Trustees in writing.This will allow
a review of budget compared to actuals for the Orange Operating Fund. Additionally, this quarterly review
will ensure that sufficient fund balance will be available at year end to meet the adopted reserve
requirement as defined above.
The Orange County Transit Annual Work Program will include funds allocated, if needed,to maintain the
Orange Operating Fund balance to meet financial policy guidelines.To demonstrate progress and
compliance with this policy, the Tax District Administrator will include a calculation of this liquidity
measure within the statistical section of its Annual Comprehensive Financial Report ("ACFR")and on its
quarterly reports.
Operating Carry Over
Dollars appropriated in the operating fund will lapse at the end of the year as of June 30.
Any unutilized operating funds will be returned to the operating fund balance for future programming.
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Capital Fund Balance Policy and Guidelines
Purpose
As administrator of the Triangle Tax District,GoTriangle will maintain sound financial practices including
minimum fund balance requirements.
Capital Fund Balance Policy
It is the policy of the Triangle Tax District to maintain a minimum capital fund balance. Based on the nature
of the funding sources and responsible fiscal management,the Orange Capital Fund will maintain a fund
balance to act as a resource for capital project funding shortfalls.
• The target fund balance for the Orange Capital Fund will be 5%of the Orange County Transit Multi-
Year Vision Plan's 10-year Capital Improvement Plan (CIP).
The policy should be administered under the following requirements:
• In addition to the reserve of the 5%of the CIP reserve the Orange County financial plan will also
keep a minimum of 25%of the annual operating budget.
• The 5%fund balance will be separate and apart from project contingency budgeted as a part of
individual projects appropriated in the Orange Capital Fund.
• Idle funds as defined by N.C.G.S. 159-30 will be invested in accordance with applicable North
Carolina General Statutes and GoTriangle's investment guidelines, attached as Exhibit A.
Capital projects should be prioritized within financial constraints.Top priorities include:
1. repairing critical infrastructure (over replacement),
2. safety improvements and upgrades,
3. ensuring regulatory compliance,
4. modernization to boost efficiency and equity,
5. multimodal and active transportation, and
6. asset management(investing in maintenance facilities and fleet replacement).
All capital projects should align with adopted strategic goals to serve Orange County residents.
Capital funds are meant for long-term investments. Agencies may transfer or re-allocate up to 5%of
funding for a single capital project to another capital project, so long as they do so as either part of the
annual work program development, or quarterly amendment process. Funds transferred out of a project
can only be replaced via a new project request in the annual work program, not by quarterly amendments.
Agencies do not have the ability to transfer or re-allocate money from capital programs/projects to
operating.
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Agencies may only change or update the scope of capital programs/projects through the quarterly
amendment process.
Vehicle replacements funded in full or part by the tax district must be in alignment with FTA Useful Life
Benchmarks. Capital funds that are not utilized as scheduled may be released and made available for
future capital projects upon recommendation from the Orange County Staff Working Group.
Capital Fund Balance Procedures
Projections of the fund balance as a percentage of the Orange County Transit Annual Work Program's CIP
will be maintained, demonstrating future compliance with this policy.To demonstrate progress and
compliance with this policy, GoTriangle will include a calculation within the statistical section of its ACFR
and on its quarterly reports.
Capital Carry Over
The Tax District will work towards development and maintaining a capital reserve fund, in alignment with
the fund balance policy.
Capital project allocations as defined by the transit plan will be reserved and can be drawn on throughout
the life of the project as per annual work plan programming.
Capital reserve fund dollars appropriated within the annual programming are available for reimbursement
requests for the duration of each project unless subsequently amended by Board of Commissioners action
or until project closeout.
Upon project closeout, any leftover funds(surplus)will be released and made available for future capital
projects upon recommendation from the Orange County Staff Working Group.
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Orange County Transit Billing, Payment and Reimbursement Policy and
Guidelines
Purpose
As administrator of the Triangle Tax District, GoTriangle will be responsible for the billing, payment and
reimbursement of funds that support approved expenditures as part of the Orange County Transit Multi-
Year Vision Plan.
Policy
It is the policy of the Orange Operating Fund and the Orange Capital Fund and participating local
governments and other entities to maintain strong billing, payment and reimbursement practices.
Billing, Payment and Reimbursement Guidelines
Transit expenditures by the participating local governments and other entities are to be budgeted annually
and recommended by the SWG and adopted by the Orange County Board of Commissioners and
GoTriangle Board of Trustees.
The adopted budget ordinances for the Orange Operating Fund,the Orange Capital Fund, and the
operating funding agreements and capital funding agreements with the participating partners are the
controlling documents for billing, payments, and reimbursement.
Dollars appropriated in the Orange Capital Fund are appropriated pursuant to Section 13.2 of N.C.G.S.
Chapter 159 and therefore do not lapse at the end of the year and are available for reimbursement
requests for the duration of the respective project unless subsequently amended by Board action or
project closeout.
Capital dollars may not be used for operating, and operating dollars may not be used for Capital projects. If
dollars are not used in the specified time frame,the carryover policy will be implemented.
Reimbursement payments made for expenditures in conjunction with appropriations from the Orange
Operating Fund and the Orange Capital Fund will be made to the participating local governments and
other participants after GoTriangle Finance Department has received a request for reimbursement using
the pre-established Orange County Transit template and associated required documentation.
Per Section 7.06 of the Transit Governance Interlocal Agreement, all parties to the ILA have the right to
review any records related to the funding of Tax District operations or projects.
Required Documentation
• Reimbursement template (Excel File)
• General Ledger(GL) Detail Report for each project—the GL report provides details of the
transactions that have been posted against a specified project/account.These details should
include but are not limited to,the posting date,vendor name, and transaction amount.
• Performance Metrics—the sponsor agency should choose a performance metric(s) associated
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with each operating project and report on the metric(s) with each reimbursement request.
Whenever possible,the metric(s) should align with FTA required performance data and/or
agency strategic plans.
Preferred Documentation
In addition to the required documentation specified above, project sponsors are encouraged to
provide copies of vendor invoices. Invoices provide full transparency and accountability for project
expenditures funded through the Transit Plan, consistent with the internal policies and procedures
established by the Orange County Government Finance Department.
Documentation for each project sponsor's reimbursement request should be uploaded to the SharePoint
site managed by GoTriangle.
GoTriangle's reimbursement requests will be paid following review by the Staff Working Group
Administrator.All other reimbursement requests will be reviewed by the Tax District Administrator. Upon
approval, GoTriangle will send payment to all parties.
No duplicative payments for services/programs/projects will be made. No programs/services/projects will
be funded at greater than 100%either directly from the transit tax, or when transit tax is combined with
state and federal funding.
Payments will be made in accordance with the North Carolina Local Government Budget and Fiscal Control
Act.
Submissions for reimbursement may be done as often as is efficient and effective for the local participating
entity; however, disbursements from GoTriangle are recommended to be completed quarterly but will be
no more frequent than on a monthly basis.
Advance payments may be considered by GoTriangle.
The request for reimbursement and supporting documentation should be submitted either in writing or by
electronic means as specified in the terms of the operating and capital agreements.
Reimbursement requests will include a statement signed by the requesting agency's Finance Officer or
designee, stating funds were spent in accordance with the Orange County Transit's Annual Work Program
and associated laws, rules and regulations, and the request for funds includes items due and payable.
Projects that involve federal funding agreements will require additional documentation and review that will
be incorporated in project agreements.
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Debt Policy and Guidelines
Purpose
As administrator of the Triangle Tax District, GoTriangle may issue debt to support approved capital
projects in the Orange County Transit Multi-Year Vision Plan. It is the goal of the SWG that debt issuances
will strive to obtain favorable ratings available for transit financing.The debt policy outlines the
requirements and criteria set forth to achieve this goal and to advance the Orange County Transit Multi-
Year Vision Plan.
Debt Policy
It is expected that debt will periodically be issued by GoTriangle in support of the Orange County Transit
Multi-Year Vision Plan under the following requirements:
• Any debt to be issued will be reviewed and recommended by the SWG, approved by the Orange
County Board of Commissioners,and approved and authorized by the GoTriangle Special Tax Board
(pursuant to N.C.G.S. 160A-167).
• Per North Carolina Law,debt issuances will be approved by the Local Government Commission.
• Debt service payments will be made in accordance with the North Carolina Local Government
Budget and Fiscal Control Act.
• Any proposed debt issuance will be evaluated using prospective revenue expenditure amounts, as
modeled in the Orange County Transit Financial Model,which is mutually agreed to by the SWG.
The Orange Transit Financial Model assumptions will be agreed to annually by the SWG through
coordination efforts defined in the Governance ILA.
Debt Guidelines
Debt issuances that are incorporated as part of the financial model will be modeled using the following
guidelines:
• It is the goal that all rated debt issued on behalf of approved capital projects in the Orange County
Transit Multi-Year Vision Plan will obtain a rating no lower than Al (Moody's)or A+ (S&P/Fitch) and
preferably in a double-A category.
• Actions recommended by the SWG, or adopted by the Orange County Board of Commissioners and
GoTriangle Board of Trustees shall not diminish the financial health of Orange Operating and/or
Orange Capital Funds.
• Debt will be issued to ensure sufficient flexibility to meet future obligations outlined in the Orange
County Transit Multi-Year Vision Plan and to take advantage of opportunities based on market
conditions.
• The gross debt service coverage ratio will not go below 2 times (2X)gross revenue to annual debt
service, excluding short-term principal payments.
o Gross revenue is defined as Orange County Locally Dedicated Transit Funding Sources as
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stated in Section 2 of the Orange County Transit Governance ILA, plus additional farebox
revenue attributed to services funded by Orange County Locally Dedicated Transit
Funding Sources plus any federal funds received.
• The debt service coverage (i.e.,the ability to pay debt service after operations) will not go below
1.25 times (1.25X) annual debt service excluding principal payments on short-term debt.
o Debt service coverage is defined as Orange County Locally Dedicated Transit Funding
Sources, plus additional fare box revenue attributed to services funded by Orange County
Locally Dedicated Transit Funding sources plus and federal funds received, less the sum of
expenses for tax district administration, and transit operations.
• Upon the full funding of reserves, any cash that maintains the Orange Transit plan in accordance
with above mentioned rules may be used as cash funding for capital projects to provide additional
sources of funding for capital projects to minimize debt levels.
• Future bonds issued will conform and adhere to:
o Additional bonds test contained in bond documents,
o Bond indenture must require no less than 1.25x or 1.50x coverage on combined maximum
annual debt service before issuing new parity debt,and
o Debt service coverage ratios of the Orange Operating Funds and Orange Capital Funds
Debt Policies
• A Debt Service Reserve Fund ("DSRF")will be established for debt issuances where the DSRF
creates a lower cost of funds and does not exceed the minimum amount permitted under federal
tax law.
• Investment of bond proceeds will be in accordance with all applicable North Carolina statutes and
federal tax law, equal to the least of 10%of bond proceeds, MADS, or 125%of average annual
debt service.
• Debt will be structured in a manner consistent with the useful life of related projects, not to
exceed a final maturity of 30 years. Principal amortization will be level debt service or faster,
except for deferrals of principal in connection with construction period financing or short-term
financing related to future receipt of federal and/or state funds.
• Debt issued in support of the Orange County Transit Multi-Year Vision Plan will be authorized under
• N.C.G.S. 160A-20.Alternative debt instruments may be evaluated and utilized subject to
recommendation by the SWG and approved by the Orange County Board of Commissioners and
GoTriangle Board of Trustees.
• The combined liquidity position of the Orange Capital and Operating Funds shall be a minimum of
180 days unrestricted cash to meet the needs of the Orange County Transit Multi-Year Vision Plan.
• If a project sponsor seeks repayment for debt issued outside of the Orange County Transit Multi-
Year Vision Plan it will be paid after all debt service and operating expenses of the plan have been
paid and will subordinate to as debt issued by Tax District Administration. Debt payments
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reimbursed to the project sponsor will be identified as a yearly capital project and included in all
Capital Improvement programs (CIP) upon initial approval.
• Select SWG voting members, or representatives designated by voting members(if/when applicable),
will participate in the RFP and/or selection process of:
o Financial Advisor; Investment Consultant for the tax district administrator
o Underwriter(s); Bond Counsel; and any other necessary roles related to GoTriangle debt
financing in support of the Orange County Transit Multi-Year Vision Plan
o Providing assistance as needed for guidance associated with debt issuances to include
interactions with rating agencies.
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Increased Cost of Existing Services (ICES)
UPDATE Spring 2023—Parties and Implementation Partners will refer to legacy language from prior
Transit Governance ILA to define how operators can seek funding to support increased cost of services.
This language is shown below.
The Orange County Transit Multi-Year Vision Plan (Plan) provides that all funding for bus services will be
appropriated based on the supporting financial plan/model to Chapel Hill Transit(CHT), GoTriangle, and
Orange Public Transit(OPT).The use of these bus service funds shall be limited to the support of new bus
services above and beyond the existing transit system services in place at the time of the adoption of the
local option Y2 cent sales tax in November of 2012. However, CHT and OPT may use a portion of the bus
service funds provided in the Plan to pay for the increased cost of existing services during the duration of
this Agreement in the manner described below.
The "CHT Share" shall be a percentage derived by dividing the CHT local expenditures for bus services each
year by the total of local expenditures for bus services by both CHT and OPT in that year.The "OPT Share"
shall be a percentage derived by dividing the OPT local expenditures for bus services each year by the total
of local expenditures for bus services by both CHT and OPT in that year.The respective CHT and OPT local
expenditures for bus services in any year shall be based initially upon the audited financial statements for
the fiscal year ending June 30, 2011, Local bus services expenditures shall include assigned overhead
without any consideration of federal or state financial assistance. The determination of the CHT Share and
OPT Share will be made each year thereafter for CHT based upon the most recent audited annual local
expenditures for bus service and for OPT based upon an end of year financial statement for the
transportation services department bus service attested to by the Chief Financial Officer of Orange County
as to its accuracy and completeness.
CHT may use a portion of the bus services funds provided in the Plan up to a maximum amount that equals
the CHT Share percentage of the prior year total receipts from the Orange County local vehicle registration
fee of$7.00 permitted by Article 52 of N.C.G.S. 105. OPT may use a portion of the bus services funds
provided in the Plan up to a maximum amount that equals the OPT Share percentage of the prior year total
receipts from the Orange County local vehicle registration fee of$7.00 permitted by Article 62 of N.C.G.S.
105.
The suggested scenario/formula below is drafted for future consideration by parties and
implementation partners upon the next deliberation of the Multi-Year Transit Vision Plan.
Purpose
Transit operators in Orange County are able to use one Locally Dedicated Transit Funding Source (the
County Vehicle Registration Tax, pursuant to N.C.G.S. 105-570, which is levied at$7.00 per year)to
supplement projected increased costs of existing, or baseline, services that were in operation prior to the
passage of the County's%cent sales tax dedicated to public transportation investment.
ICES Policy
An equitable formula is to be used by the Tax District Administrator in determining annual allocations of
available funds from the projects County Vehicle Registration Tax for each fiscal year to Chapel Hill Transit
and Orange Public Transit. GoTriangle shall only become eligible for ICES if there is a reallocation of vehicle
rental proceeds to share the proceeds with Chapel Hill Transit and Orange Public Transit.
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Variables include:
• Total Revenue Service Hours for Fixed Route Bus Services, per provider,at the end of FY2013
• Total Expenditures for Fixed Route Bus Services, per provider, at the end of FY2013
• Average annual historical cost escalation rate, per provider,from FY2013 to current fiscal year
• Cost escalation rate set by the Tax District Administrator for upcoming fiscal year
Step one: Calculate ratio of Fixed Route Bus Revenue Service Hours operated by each agency in Orange
County at the end of FY2013.
NOTE: GoTriangle will need to account for estimated number of hours of revenue service and
associated costs operated ONLY within Orange County at end of FY2013.
Step two:Apply the ratio of each operator's revenue service hours to the upcoming fiscal year's County
Vehicle Registration Tax projected amount.These three individual ratios will be applied in Step five.
Step three: Calculate the estimated increased cost of services from FY2013 by escalating Total
Expenditures for Fixed Route Bus Services, per provider, at the end of FY2013 (see NOTE for GoTriangle
above) using the average annual historical cost escalation rate, per provider,from FY2013 to current fiscal
year.
Step four:Through agency coordination, a mutually agreed upon escalation rate will be used to calculate
the upcoming fiscal year's projected costs for the continuation of baseline services from FY2013.
Step five: Apply the ratios realized in Step two to each operator's projected costs calculated in Step four.
This will indicate level of funding needed to support those FY2013 baseline services and associated
increased cost of those services in the upcoming fiscal year.
IF the sum of ICES calculated for the upcoming fiscal year for each agency in step five is greater than the
available amount of funding projected to be available from the County Vehicle Registration Tax funding
source, then each agency and its governing jurisdiction are responsible for funding for the balance from
other local funding sources not already dedicated to supporting local public transportation investments.
If the sum of ICES calculated for the upcoming fiscal year for each agency in step five is less than the
available amount of funding projected to be available from the County Vehicle Registration Tax funding
source,then the SWG will advise the Tax District and associated governing bodies on appropriate
allocation into reserves.
Data used in the above steps, as well as calculation sheets, shall be pulled down from FTA databases by the
TDA and maintained on the SharePoint site. Calculation sheets shall be included in the TDA's update to the
SWG at least annually and be made available to the public via the agenda packet for the meeting when the
presentation is made. Draft sheets will be circulated to agencies receiving ICES,for
confirmation/validation, at least 60 days prior to the annual report.
To account for scale difference in operations costs, neither Chapel Hill Transit nor Orange Public Transit
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shall receive less than 10 percent of the ICES allocation in any given year.
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Bus Operating Cost Per Hour Policy
The approval of the Annual Work Program will include estimated Costs Per Hour(CPH)for revenue hours
for each agency at an overall rate across all services.Agencies may choose to but cannot be required to
receive reimbursements for fixed route revenue hours and demand response revenue hours separately.
Starting in FY27, Cost Per Hour shall be consistent with the transit agency's overall Cost Per Hour as
reported to the Federal Transit Administration (FTA), in alignment with FTA rules, during the most recent
reporting period available on the FTA website when the AWP is being developed, plus 2.5%.
If any agency requests an increase that exceeds 2.5%compared to the previous year's FTA reported CPH,
that agency will be required to submit a second quarter amendment that will include documentation to the
Staff Working Group to verify their budgets to meet this policy. CPH amendment requests will be
considered and adopted through the same processes as other amendments.
Reimbursements will be made based on the estimated cost per hour for quarters 1, 2, and 3. Quarter 4 will
include a reconciliation based on the actual annual cost per hour.Transit agencies are expected to
complete the Orange Transit Reimbursement year-end reconciliation template that is included in the
reimbursement template. The cost per hour that is listed in the reconciliation template should be
consistent with other funding source cost per hours across the transit agency's network, and as reported
to the FTA.
GoTriangle will use a consistent cost per hour across all three County Transit Plans(i.e., Durham, Orange
and Wake Counties).
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Future Updates
The Triangle Tax District Orange County Financial Policies and Procedures should be reviewed every three
years for effectiveness, or immediately upon significant regulatory changes, in accordance with the
Interlocal Agreement.
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Exhibit A: GoTriangle Financial Policies & Procedures (for reference)
[INSERT GOTRIANGLE FINANCIAL POLICIES&PROCEDURES DOCUMENT AS EXHIBIT A]
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Triangle
GoTriangle Investment Guidelines
Exhibit A
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Approved Issue Finance and Administrative Services 1-3-08
3.0 FINANCIAL
3.10 INVESTMENT POLICY& PROCEDURE
3.10.1 Investment Policy
A. TTA shall remain 100% invested at all times with the exception of
moneys held for petty cash or moneys held in a compensating
balance account. (100% invested refers to actual investments as well
as the use of interest bearing checking accounts).
B. G.S. 159-30(c) authorizes TTA to invest in obligations of the United
States of America or obligations fully guaranteed both as to principal
and interest by the United States of America; obligations of the State
of North Carolina; bonds and notes of any North Carolina local
government or public authority; obligations of certain non-guaranteed
federal agencies; certain high quality issues of commercial paper and
banker's acceptances; and the North Carolina Capital Management
Trust, a money market fund.
C. Eligible deposits and investments are limited to those restricted by the
federal government (refer to the North Carolina Department of the
State Treasurer Policies Manual, Cash Management tab, beginning
with page 16). The guidelines state that proper diversification of the
investment portfolio must be achieved in order to minimize risks
brought on by economic and market changes.
D. Collateralization for deposits shall be in accordance with Title 20,
Chapter 7 of the North Carolina Administrative Code (NCAC). All
deposits for TTA shall be fully protected through deposit insurance
and eligible collateral securities pursuant to 20 NCAC 7. The
Financial Reporting Manager shall notify the TTA depository when an
account is opened that the moneys deposited are public funds subject
to collateralization and shall file a "Public Deposit Status Report" with
each depository and the State Treasurer promptly after June 30. The
Financial Reporting Manager shall maintain a file of the list of financial
institutions using the Pooling Method from the Department of the
State Treasurer. There shall be a signed escrow agreement with a
third party escrow agent for each Dedicated Method depository that
holds uninsured deposits, unless the escrow agent is the Federal
Home Loan Bank or the Federal Reserve
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Bank. The Financial Reporting Manager shall request and receive
timely confirmations of collateral pledged by Dedicated Method
institutions. A file of all pledges of collateral and a record of pledged
securities per Dedicated Method depository shall be maintained by
the Financial Reporting Manager. There shall be no releases or
substitutions of collateral securities resulting in a decrease in the
market value of securities pledged by Dedicated Method depositories
without prior approval by the Chief Financial Officer. The Financial
Reporting Manager shall request and receive a statement of collateral
pledged from each Dedicated Method institution at least quarterly
including the total par and market value of the securities.
E. The Chief Financial Officer shall be responsible for obtaining custody
and providing safekeeping of securities and deposit certificates
according to G.S. 159-30(d). All securities purchased by TTA shall be
delivered (or book entered) to the Authority's custodian and placed in
its custody account in the name of TTA. All such custodial
agreements shall be between TTA and the custodian in the name of
TTA. Certificates of deposit purchased by TTA shall be delivered to
the Financial Reporting Manager.
F. The Financial Reporting Manager shall ensure proper diversification
of the investment portfolio in order to minimize risks brought on by
economic and market changes.
G. Diversification by Financial Institution:
1. No more than 50% of TTA's moneys shall be invested in any
obligation that does not bear the full faith and credit of the United
States of America.
2. No more than 50% of TTA's total moneys shall be placed with a
single financial institution.
3. No more than 25% of the overall portfolio shall be invested in the
securities of a single issuer, except for the U.S. Treasury or U.S.
backed instruments (i.e. GNMA's)
4. No more than 10% of the portfolio shall be invested in a regular
savings account.
5. No more than 10% of the portfolio shall be invested in overnight
securities or in highly marketable, short-term securities which can
be quickly sold to meet liquidity needs.
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H. Diversification by Classes of Securities:
Type of Security Maximum percentage
U.S. Treasury Certificates, Bonds, Notes,
and Bills.
100% of Portfolio
Obligations of U.S. Government-sponsored
entities (Instrumentality)
75% of Portfolio
Collateralized Governmental Mortgage
Obligations of Government sponsored
enterprises (i.e. Freddie Mac or Fannie
Mae) 10% of Portfolio
Collateralized Governmental Mortgage
Obligations of Ginnie Mae
40% of Portfolio
North Carolina State and Local Bonds 50% of Portfolio
Certificates of Deposit 100% of Portfolio
Commercial papers, Bankers Acceptance 25% of Portfolio
NCCMT Certified Mutual Funds 100% of Portfolio
As required for overnight
cash flow, or 25%
Repurchase Agreement
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Ginnie Mae Pools 50% of Portfolio
I. Maturities Schedule:
1. Short Term Portfolio: No less than $500,000 of the total
investment portfolio shall mature within seven days. No less than
25% of the portfolio shall mature in 90 days.
2. Intermediate Term Portfolio: the average maturity of the portfolio
shall not exceed five years.
3. Long Term Portfolio: The average maturities of this portfolio shall
not exceed twenty years. Any exceptions must be approved by the
Chief Financial Officer. Reasons for exceptions may include
anticipated higher market yields.
Note: The North Carolina Capital Management Trust (NCCMT)
maintains this level of diversification for issuers and industries;
therefore, a unit of government's investment with the NCCMT would
not be subject to these limits.
J. The Financial Reporting Manager shall constantly monitor the
investment portfolio and make adjustments as necessary.
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3.0 FINANCIAL
K. The Financial Reporting Manager shall review daily the cash position
of TTA and decide what moneys can be deposited or invested for
certain periods of time. If any deposits or investments are to be made,
the Financial Reporting Manager will make this determination and
then institute a bidding process for TTA's moneys as follows:
1. For eligible investment vehicles, the Financial Reporting Manager
shall solicit offers from an approved list of financial institutions and
broker/dealers. The Financial Reporting Manager shall review the
various offers and determine the appropriate investment vehicle,
considering such factors as the safety of the investment, the rate,
and the maturity. All interest rates shall be quoted on a discount
basis. For securities purchased by TTA, the Financial Reporting
Manager shall instruct the seller that securities are to be delivered
to TTA's escrow agent, who will disburse moneys The Financial
Reporting Manager will be responsible for notifying the financial
institution that placed the highest bid.
2. Wire transfers, both incoming and outgoing, shall be handled by
an individual other than the person receiving the telephone quotes
(usually the Chief Financial Officer). Wires will be processed by
the institution's deadline with written confirmation forwarded the
next business day. These confirmations will be documented by
the Financial Reporting Manager and delivered to the Chief
Financial Officer for review.
3. An individual shall be assigned by the Chief Financial Officer to
monitor the safekeeping of securities, both owned by TTA and
pledged for TTA's deposit. Once securities are escrowed, this
individual shall receive timely written confirmations from the
safekeeping agent acknowledging delivery of the specified
securities. These confirmations shall be recorded and forwarded
to the Chief Financial Officer for review.
3.10.2 Investment Procedure
A. The Chief Financial Officer determines moneys available for
investment, usually in the form of excess cash either in the checking
account or in the North Carolina Capital Management Trust, or
proceeds from the maturity of a security. The Financial Reporting
Manager calls approved financial institutions and gets quotes on
desired securities. Quotes with pertinent information such as CUSIP
number, coupon rate, maturity value, etc. are faxed to the Financial
Reporting Manager. The Financial
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3.0 FINANCIAL
Reporting Manager submits these quotes to the Chief Financial Officer for
review.
B. The Chief Financial Officer evaluates the purchase options and yields,
and checks to see if they are in accordance with the desired portfolio
mix as specified in the policy above. Securities are typically
purchased by TTA in blocks of $500,000 and
$1,000,000.
C. When a decision has been made on the purchase, the Financial
Reporting Manager calls the financial institution to purchase the
instrument at the quoted price. A total cost of the purchase is
obtained which, if relevant, will include accrued interest paid to the
previous holder. Also at this time, arrangements are made for the
settlement date of the purchase. The financial institution executes the
electronic purchase and delivers the certificates to TTA's custodial
bank where they are held in trust.
D. If funds are not readily available in the money market account with the
custodial trust for settlement then the Financial Reporting Manager
must wire funds from another TTA account (i.e. the checking account
or the general investment account held with the North Carolina Capital
Management Trust). Funds must be wired from the North Carolina
Capital Management Trust by 12:00 noon and from the financial
institution by 4:00
p.m. This transaction is documented on a wire transfer form [see
Exhibit 3-C], which is also used as the source to record the journal
entry to the general ledger.
E. The Financial Reporting Manager notifies, by telephone, the
custodian's trust department that a security has been purchased and
gives them the total cost, settlement date, date that funds will arrive (if
applicable), and identifies the sender of the funds. The contact at the
trust department calls their operation center to advise of the incoming
wire.
F. The Financial Reporting Manager prepares a letter to the trust
operations department for notification of the purchase. The letter is
first faxed and later mailed. One copy is sent to the contact at the
trust department and one copy is retained for file purposes and for
support documentation for the wire transfer.
G. A confirmation is sent to the Financial Reporting Manager by the
financial institution from which the security was purchased and is
retained in TTA's file. The custodian's month-end statement will
reflect the purchase transaction.
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3.0 FINANCIAL
H. An investment schedule is maintained by the Financial Reporting
Manager, which depicts the cash and investment portfolio, along with
expected income and other pertinent information (i.e. maturity date,
CUSIP numbers, etc.) This schedule is used to record the interest
accruals to the general ledger and to reconcile to the general ledger.
I. A semi-annual report, entitled Report of Cash & Investments [see
Exhibit 3-D], is filed in January and July to report the investment
portfolio and market values to the NC Local Government Commission
for compliance purposes. The Financial Reporting Manager is
responsible for completing and filing this form. The form is reviewed
and signed by the Chief Financial Officer.
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April 5- 2D 11
This standard of prudence shall be applied in the context of managing the overall portfolio. The
Financial Services Director: acting in accordance with North Carolina General Statues, this
policy, and written administrative procedures and exercising due diligence shall be relieved of
personal responsibility for an investment credit risk. provided deviations from expectations are
reported in a timely fashion and appropriate action is taken to control adverse developments.
ETHICS AND CONFLICTS OF INTEREST
To avoid the appearance of potential conflict of interest or favoritism to a particular bank or
broker.. the Financial Services Director or any delegate employee who has investment
responsibilities, shall make full disclosure to the County Manager of any relationship or
dealings with any financial institution that has business dealings with the County. This
disclosure need not include normal banking or brokerage relationships that are at normal
market rates and conditions available to the general public. Investment officials of banks and
other institutions shall be familiar with N.C. General Statutes and County policy regarding gifts
and favors and shall act accordingly,
STATUTORY AUTHORIZATION
The legal limitations of local government investments are defined in N.C.G.S. 159-30.
Accordingly: the following classes of securltles are indicative of the investments utilized by
Orange County:
A. Obligations of the United States or obligations fully guaranteed bath as to principal and
interest by the United States.
B. Obligations of the Federal Financing Bank, the Federal Farm Credit Bank, the Bank for
Cooperatives. the Federal Intermediate Credit Bank, the Federal Land Banks, the Federal
Home Loan Banks, the Federal Home Loan Mortgage Corporation: the Federal National
Mortgage Association. the Government National N-lortgage Association, the Federal Housing
Administration, the Farmers Home Administration and the U.S. Postal Service.
C. Obligations of the State of North Carolina.
D. Bonds and notes of any North Carolina local government or public authority. subject to such
restrictions as the Secretary of the Local Government Commission may impose.
E. Deposits at interest or purchase of certificates of deposit with any bank,. savings and loan
association or trust company} in North Carolina, provided such deposits or certificates of
deposit are fully collateralized.
F. Prime quality commercial paper bearing the highest rating of at least one nationally
recognized rating service and rot bearing a rating below the highest Al! P11 F1.) by any
nationally recognized rating service which rates the particular obligation.
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C. Bankers' Acceptances provided that the accepting bank or its holding company is either (1)
incorporated in the State of North Carolina or (2) has outstanding publicly held obligations
bearing the highest rating of at least one nationally recognized rating service and not bearing a
rating below the highest (Aaa or AAA) by any nationally recognized rating service which rates
the particular obligations.
H. Participating shares in a mutual fund for local government investment such as the N.C.
Cash Management Trust) which is certified by the N.C. Local Government Commission.
ADMINISTRATIVE RESTRICTIONS
In addition to the previously noted limitations on appropriate securities, Orange County's
investment activities are further restricted in the following manner:
A. It is the policy of Orange County to diversify its investment portfolio. Assets held shall be
diversified to eliminate the risk of loss resulting from the over concentration of assets in a
specific maturity, a specific issuer or a specific class of securities. Diversification shall be
determined and revised periodically by the Investment Officer. Portfolio maturities shall be
staggered to avoid undue concentration of assets in a specific maturity sector. Maturities
selected shall provide for stability of income and reasonable liquidity.
B. Orange County recognizes that investment risks can result from issuer defaults, market
price changes or various technical complications leading to temporary illiquidity. Portfolio
diversification is employed as a way to minimize default risk. No individual investment
transaction shall be undertaken that jeopardizes the capital position of the overall) portfolio. In
the event of a default by a specific issuer, the Financial Services Director shall review and, if
appropriate, proceed to liquidate securities having comparable credit risks.
C. No investments in Repurchase Agreements shall be made unless the underlying collateral
shall be placed in safekeeping in the trust department of a third-party designated by the
County.
D. The combined total investment in commercial paper and bankers' acceptances shall not
exceed thirty five percent (35%) of the total portfolio and the investment in commercial paper
or bankers' acceptances of a single issuer shall not exceed (35%) of the total portfolio at the
time of investment.
E. No investment shall be made in any security with a maturity greater than five (5) years from
the date of purchase.
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SELECTION OF SECURITIES
The Financial Services Director will determine which instruments shall be purchased and sold
and the desired maturity date(s) that are in the best interest of the County. The selection of an
instrument will involve the evaluation of, but not be limited to, the following factors
A. Cash flow projections and requirements.
B. Current market conditions.
C. Overall portfolio balance and makeup.
CUSTODY AND SAFEKEEPING OF SECURITIES
Orange County will maintain a third party safekeeping account for all investments (generally
provided by the County's primary bank). Transactions should be processed on a delivery
versus payment basis. Some securities, primarily certificates of deposit: will not be kept in the
third party safekeeping account, but will be kept by the Financial Services Director in the vault
of the Finance Services Department.
INTERNAL CONTROLS
The Financial Services Director is responsible for establishing a system of internal controls.
These controls are designed to prevent losses of public funds arising from fraud: employee
error. and misrepresentation by third parties or imprudent actions by County employees.
REPORTING
The Financial Services Director shall maintain a monthly investment report. The report shall
include a general description of the portfolio in terms of investment securities, maturities, yields
and other features. The report will show investment earnings for the month and fiscal year-to-
date, including the annualized earned ;yield percentage for the portfollo. The report will
compare actual investment earnings with budgeted earnings.
Approved April 5. 2011
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