New York Codes, Rules and Regulations › Title 9 - EXECUTIVE DEPARTMENT › Subtitle S - Division of Housing and Community Renewal › Chapter III - Low Rent Housing › Subchapter D - Accounting Manual For Public Housing Agencies › Part 1645 - Investments › Subpart 1645-1 - Investment Policy › Section 1645-1.2 - Types of investments

Current through Register Vol. 46, No. 28, July 10, 2024
The Public Housing Law permits authorities to invest
						  funds held in reserves, or any funds not required for immediate disbursement in
						  property or securities which are legal investments for savings banks. The law,
						  however, imposes a further restriction on the investment of development funds
						  of State-aided projects. Such development funds may be invested only in such
						  securities as are approved by the State Comptroller. In most instances, the
						  Comptroller has limited development fund investments to U.S. government
						  obligations maturing not more than one year from date of purchase. In some
						  instances, however, the Comptroller has permitted development funds to be
						  invested in 13-month obligations. The Law, in effect directs local agencies to
						  place safety and security of the principal above all other considerations. The
						  investments (other than development fund investments), which may be made by a
						  local agency, are therefore, limited to deposits in savings banks, savings and
						  loan associations, certain types of bonds and similar obligations so that the
						  income element to be accounted for will, ordinarily, be in the form of
						  interest. Local agencies should consult with the division, and secure its
						  approval prior to making investments. The division is prepared to make
						  recommendations of legal investments at all times. While the division will
						  insist on the prompt investment of all excess funds, its recommendations with
						  respect to specific investments are strictly advisory and not mandatory. For
						  the investment of development fund or administration fund balances in excess of
						  immediate needs and a reasonable allowance for working capital, the division
						  recommends short-term U.S. government securities, such as U.S. treasury bills,
						  treasury notes and certificates of indebtedness. For the investment of
						  replacement reserve funds the division recommends long-term U.S. government
						  securities, Federal National Mortgage Association Notes and deposits in savings
						  accounts of savings banks insured by the Federal Deposit Insurance Corporation
						  and savings and loan associations insured by the Federal Savings and Loan
						  Insurance Corporation. For painting and decorating reserve funds or operating
						  improvement reserve funds, short term U.S. government securities and Federal
						  Home Loan Bank Notes are recommended. For vacancy and collection loss reserves
						  the division recommends these funds be invested in three to five year U.S.
						  government securities and Federal National Mortgage Association Notes. The
						  division does not recommend the investment of security deposit funds. All
						  securities recommended by the division will be normally selected with a view to
						  obtaining the maximum yield over the period it is anticipated the security will
						  be held, inasmuch as there is ordinarily a direct relationship between the
						  yield and both the maturity date of the security and the time it is held. The
						  date on which it is anticipated that the invested funds will be required is,
						  therefore, an important factor in the selection of securities for investment.
						  For example, the yield on a series "K" United States savings bond, redeemed
						  after one year from purchase date is only 1.16 per cent. The yield on the same
						  bond, if held 12 years to maturity is 2.76 per cent. It is evident that series
						  "K" bonds would be suitable for long term investments, such as replacement
						  reserve funds, but not for investment, such as painting and decorating reserve
						  funds, which has a maximum turnover of three years. For the latter investment,
						  a security having a shorter maturity, such as a treasury note or certificate of
						  indebtedness, would give a higher yield over the anticipated holding period. In
						  selecting securities for investment, the division also considers
						  diversification of the portfolio held by each local agency. This results in
						  greater flexibility when the need arises for the "cashing in" of securities to
						  meet current reserve fund needs. In compliance with New York State Banking
						  Department regulations [see 3 NYCRR Banking], all reserve funds deposited in
						  savings banks and savings and loan associations must be of a long-term
						  investment nature. To comply with this directive the division recommends
						  deposit of funds in these savings institutions only if it is anticipated that
						  such funds will remain on deposit a minimum of five years.