The Kenai Peninsula Borough Assembly passed an ordinance that would amend borough code to add a new subparagraph under Authorized Investments – to form a general policy on derivatives for the Borough’s Land Trust Investment Fund. According to KPB 5.10.200(B), the fund may invest in two categories – Financial Assets and Non-Financial Assets outlined in sections (B) and (C).
Assembly member Tyson Cox:
“What this is for, at our last meeting, we had discussed what to do with some of the Land Trust Funds and how we would have that fund work with the investments that we are putting it in and what was advised by Alaska Permanent Capital Management was that we should do this ordinance so that it says that we will add acceptable allowable investments as they relate to derivatives because some of the financial products they use have those within those products. So that is what we will be voting on for that tonight.”
According to Brandi Harbaugh, Finance Director for the Kenai Peninsula Borough, Alaska Permanent Capital Management, recommended that borough code include a general policy on derivatives that may be used within the products as a portfolio management tool with the purpose of creating or enhancing exposure to an asset class or implementation strategy.
In passing Ordinance 2021-37, the amendment will allow Alaska Permanent Capital Management the tools necessary to manage the portfolio to achieve the expected rate of return effectively while maintaining an acceptable level of risk by fully collateralizing embedded leverage and limiting net exposure to less than that of the asset value. As investments are time sensitive, hearing on shortened time is requested to prevent undue delay in the implementation of an allocation plan.
Ordinance 2021-37 unanimously passed the Kenai Peninsula Borough Assembly.