2023 New York Laws › GMU - General Municipal › Article 3-A - Cooperative Investments › 43 - Required Elements of a Cooperative Investment Agreement.

§  43.  Required elements of a cooperative investment agreement. Every
cooperative investment  agreement  shall  contain,  at  a  minimum,  the
following:
1.      a   description   of  the  creation,  membership,  powers  and
responsibilities  of the governing board of the  cooperative  investment
agreement  as  set  forth  in sections forty-four and forty-five of this
article.
2. a statement  designating  one  of  the  participants  as  the  lead
participant.   Moneys   to  be  invested  pursuant  to  the  cooperative
investment  agreement  and  the  investments  made   pursuant   to   the
cooperative  investment  shall  be  held  in  the  custody of   the lead
participant on behalf of all the  participants.  Moneys  or  investments
held   in  the  custody  of  the  lead  participant  on  behalf  of  the
participants shall not be commingled with other moneys or investments of
the lead participant.
3. a statement that each participant shall have an undivided  interest
in  moneys and investments held by the lead participant on behalf of the
participants in the proportion that the total  amount  of  contributions
made  by  that participant bears to the total amount of contributions by
all the participants.
4. a statement of the investment policy applicable to investments made
pursuant to  the agreement.  This investment policy shall conform to the
requirements of section thirty-nine  of  this  chapter  and  shall  also
include:
(a)  a  statement  of  the governing board's intention to maintain the
value of each participant's interest in the cooperative investments at a
stable value of one dollar,
(b) a statement of the types  of  investments  authorized  by  section
eleven  of  this  chapter  in  which  moneys  may  be invested under the
agreement and, if deemed appropriate, further limitations pertaining  to
matters   such   as the use of repurchase agreements and the purchase of
variable rate and structured obligations,
(c)  a  statement  of  the  maximum  time  remaining  to  maturity  of
individual  investments  permitted  under  the agreement and the maximum
weighted average maturity   of all  investments  made  pursuant  to  the
agreement  as  are  deemed  necessary  to  fulfill the investment policy
stated in the agreement and  to ensure that a  participant's  investment
will  be  available when needed to meet expenditures; provided, however,
that the maximum time remaining to maturity   of individual  investments
shall  not  exceed  three  hundred  ninety-seven  days  and  the maximum
weighted average maturity of all investments  shall  not   exceed  sixty
days.  Compliance  under  the  cooperative investment agreement with the
maturity limitations stated in this subdivision shall be  deemed  to  be
compliance  with the requirements of paragraph a of subdivision three of
section eleven of this chapter, and
(d)  standards  for  the  diversification  of  investments,  including
diversification with respect to types of investments and firms with whom
the governing board transacts business.
5.  the  participants' rights   to   make   contributions and  receive
distributions,  the  frequency with which earnings will be   distributed
to  the  participants,  and the circumstances, if   any,  under which  a
participant's rights to make contributions or receive distributions  may
be limited or deferred.
6.  a  description  of  the  manner  in which expenses incurred by the
governing board in administering the cooperative  investment  agreement,
including,  but  not  limited  to, the cost of procuring the services of
professionals to assist the governing  board,  the  compensation  of  an
executive   director,   if   one   is  appointed,  and  other  costs  of

administering the investments made pursuant to the agreement, are to  be
apportioned among the participants.
7.  a  description  of the methodology, including, but not limited to,
the amortized cost method, that will be utilized to establish the  value
of  each  participant's  interest  in  investments  made pursuant to the
agreement, including the value of contributions  and distributions,  and
the calculation of yield thereon.
8.    a  provision requiring that the market value of investments made
pursuant to the agreement shall  be  determined  at  least  monthly  and
whenever the method  of valuation authorized  by  the agreement does not
accurately   reflect  the  value  of  participants'  interests  in  such
investments.
9. a provision requiring that, at least once a month, the portfolio of
investments made pursuant to the agreement be tested for sensitivity  to
changes  in interest rates. This provision must require that the testing
methodology adopted by the board  be  reasonably  designed  to  reliably
quantify  the effect   of   a   change   in interest rates on the market
value of the portfolio.
10.  a  provision  requiring  that  the  governing  board  secure   an
irrevocable  letter  of  credit  in  an  amount  sufficient to cover any
potential  losses  as  quantified pursuant  to the  testing described in
subdivision nine of this section. The cost of such irrevocable letter of
credit shall be deemed to  be  an  expense  incurred  by  the  board  in
administering the investments made pursuant to the agreement.
11.  a statement that the governing board may procure  the services of
professionals such as an administrator, investment advisor,  independent
auditor,  custodial bank, and any  other professional  services it deems
appropriate  to  assist  the   governing   board   in   fulfilling   its
responsibilities   under   the   agreement,   provided   that:  (a)  the
professionals  who  will  render  such  services,  individually      and
collectively,  shall  meet  all qualifications deemed appropriate by the
governing  board;   (b) the procurement of such  services  shall  be  in
compliance  with  section one  hundred  four-b  of this chapter, subject
to a request for proposal process at least every three years;  (c)   the
contracts   for   such   services   shall  ensure  compliance  with  the
requirements of sections ten and eleven of this  chapter;  and  (d)  the
charges,    fees and   other compensation   for any  contracted services
shall be clearly stated in written service contracts.
12. a  provision  requiring  that  each  participant  receive  written
confirmation of each  contribution made  by  or distribution made to the
participant  no  later  than the following business day after which  the
contribution  or distribution occurs.
13. a provision requiring that  each  participant  receive  a  monthly
statement  that  sets  forth the following information for the preceding
month: (a) all activity  by  the  participant;  (b)  the  value  of  the
participant's  interest under the agreement at the  beginning and end of
the month; and  (c) an itemization of all  investments  held  under  the
agreement   as   of the end  of the month, including the market value of
each investment as of that date.
14. a provision  requiring  that  each    participant  and  the  state
comptroller   receive  immediate  notification    of  any    event    or
circumstance that may require a deferral of distributions or  may  cause
investment  losses not anticipated by  the  investment policy and of any
other material adverse event relating to the investments  made  pursuant
to the agreement.
15.  a provision requiring that a certified public accountant annually
conduct an audit,  in  accordance  with  generally  accepted  government
auditing  standards,  of  the  activities  undertaken  pursuant  to  the

agreement. A copy of this annual audit  shall  be  distributed  to  each
participant  and  to  the state comptroller within ninety days after the
close of the fiscal year established under the agreement.
16. a provision requiring  that  each  participant  annually  receive,
and each prospective participant  receive  prior  to their participation
in  the    agreement,  an  information statement that includes,   at   a
minimum,  the following:  (a) a brief history of the agreement;  (b)   a
description    of    the  organization  and  terms  of  the  cooperative
investment agreement, including the powers and responsibilities of   the
governing   board  and  the qualifications of any professionals retained
under the   agreement; (c) a description of the  investment  objectives,
policies  and  practices  contained in the agreement   including   those
pertaining  to liquidity,  methodology  for determining    participants'
interests,  distribution  of    earning and calculation of yield;  (d) a
description of the current investments held under the agreement;  (e)  a
listing of any fees or charges to be incurred  by  participants; and (f)
a  description of the required procedures for initiation and termination
of participation in the agreement.
17. a provision requiring  that  all  participants   receive at  least
once  a  year  a   report detailing the following  information  for  the
preceding  twelve months:  (a)  the portfolio of  investments  currently
held  pursuant  to  the  agreement,  including, for each investment, the
market  value,   time remaining   to   maturity,   interest  earned  and
realized,  and  unrealized gains and losses;  (b) the overall investment
results, yield and weighted average maturity; (c) a  list of   the  fees
paid  for  all  professional services procured  under the agreement; and
(d) a statement of all other expenses incurred by the governing board in
administering the investments made pursuant to the agreement.
18. a provision requiring that,  if  the  governing  board  obtains  a
rating  from  a  nationally  recognized statistical rating organization,
such rating and any subsequent changes  therein  be  disclosed  to  each
participant.