Item No. 8d_supp . 
Meeting Date: May 8, 2018 
Statement of Investment Policy Amendment 
to add the Washington State Local Government Investment Pool 
Commission Request

Port's Investment Portfolio: Opportunity for Diversification 
Recommendation for action: 
Add the Washington State Local Government Investment Pool (LGIP) to
the list of authorized investments in the Port's investment Policy 
Staff recommends adding the LGIP as an option for investing a portion
of cash for short-term liquidity needs 
Many other large local entities include the LGIP in short-term liquidity
and investment strategies 

Objectives: increase portfolio diversification and lower risks. 
Details about Port's Investment Pool previously provided to Commission 
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Investments: Background & Policy 
Authorized investments are       The investment policy is reviewed
made in accordance with and        periodically, and amended as
subject to restrictions of the          appropriate to address changes in
Revised Code of Washington         law, market conditions or follow
best practices. 
(RCW) 36.29.020. 
Last amendment: June 5, 2012.
Commission resolution first       Staff recommends adding the State's
approved Port investment           Local Government Investment Pool
policy, adopted as of June 11,        (LGIP). 
2002. 
State laws limits the types of investments the Port can invest in.
The Port's Investment Policy is included in the documents set. 
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Liquidity & Investments  Port's Investment Portfolio 
12/31/2017 
Liquidity management (short & long term) 
MORTGAGE-             REPURCHASE
BACKED               AGREEMENTS 
Short term:                                       SECURITIES -          5.1% 
HIGH GRADE 
6.4% 
Have sufficient cash available to pay all Port
disbursement, timely 
Investments primarily in Repurchase Agreements
(REPOs) (REPO definition in Appendix) 
Long term use of and reliance on REPOs. Due to     TREASURY                                  FEDERAL
NOTES                                                       AGENCIES 
changing market conditions affecting REPO          38.3%                                     44.3% 
availability, need to diversify into other shortterm
investment options. 
Adding the LGIP supports investments for short
term liquidity 
FEDERAL
AGENCIES
Long term:                                        DISCOUNT
NOTES 
Invest excess funds for longer term liquidity needs                6.0% 

Short term investments primarily in REPOs.  Adding LGIP supports short term liquidity 
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What is the LGIP? 
Local Government Investment Pool 
Voluntary investment vehicle
operated by State Treasurer's office
since 1986 
Serves as an investment vehicle for
eligible governmental entities to
invest cash surpluses 
Operates as an investment pool, like
a money market fund 
It is a safe, liquid, diversified and
competitive investment option 

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LGIP Participants 
@ 644 local governmental accounts:- 
all 39 counties, (including King County) 
larger cities (including Seattle, Auburn, Lacey,
Redmond), 
colleges & universities, 
special districts (including Seattle Housing Authorities,
Sound & Pierce Transits, Clark & Snohomish Counties Public
Utilities) 
Option to invest all or a portion of surplus
cash. 
Smaller entities who may not have the
resources to manage their own investments
might invest all surplus cash. 
Many large entities include the LGIP in
short-term liquidity and investment
strategies. 
Port plans to invest a portion of cash
for short-term liquidity needs 
Both the Port of Tacoma & the Northwest Seaport Alliance currently invest a portion
of their cash in the LGIP. NWSA Commission approved the LGIP in January 2016. 
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LGIP Characteristics 
LGIP's diversified pool of investments
are primarily money market instruments
that are: 
Short term: 
Average maturity 60 days 
Maximum maturity 397 days 
high-quality, 
highly liquid. 
The LGIP has an investment policy; its
objectives are similar to those of the Port
of Seattle's: 
safety of principal, maintaining 
liquidity to meet cash flows, and 
yield, providing a competitive interest rate 
The same State laws (RCW) 36.29.020) limiting authorized investments apply to the LGIP 
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LGIP Characteristics
cont'd 

While the LGIP is considered a safe, liquid, and
competitive investment option, 
Investment in the LGIP is not a bank deposit,
and is not insured or guaranteed by the FDIC,
the State of Washington, or any other
governmental agency. 
The LGIP supports Port's investment policy objectives: safety, liquidity and yield 
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Summary of LGIP benefits 
Benefits of the LGIP for the Port: 
Daily access and availability, 
even when REPO or other options are not 
Can accommodate the size, and precise timing requirements of the Port 
Competitive rates: LGIP recent daily yield ranges:
December 2017 - 1.16% to 1.38% (vs. Port REPO 1.03% to 1.46%) 
January 2018 - 1.36% to 1.44% (vs. Port REPO 1.25% to 1.46%) 
Gain access to State Treasurer's resources (portfolio management & credit
analysis teams) 
High quality, diversified option 
Risk mitigation, available if/when other options are not 
Low cost: Estimated annual fees  less than 0.01% 
Loss record  no losses 

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Steps for adding the LGIP 
Request Commission approval, with two resolutions: 
1.   Adopt a Port of Seattle resolution to restate the Port of Seattle
Investment Policy, adding the Washington State Local Government
Investment Pool (LGIP), under Section 9, Authorized Investments. 
2.   Adopt - Office of the Washington State Treasurer (OST) LGIP
Resolution, authorizing the investment of The Port of Seattle funds
in the Washington State Local Government Investment Pool (LGIP)
maintained by the OST. 

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Appendix: 


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What is a Repurchase Agreement (REPO)? 
At agreement opening: 
Port "lends" cash to a Broker/Dealer (B/D)
Cash 
at agreed upon interest rate and term*1          Port                      Broker/Dealer 
B/D sends collateral*2 equal to 102% to                   Collateral 
105% of cash amount 
Port's custody bank
*1 Typically 1 day, 60 days maximum; & *2 in the form of high quality                             releases cash only when
U.S. government securities ; both as per Port's Investment Policy.                             collateral received 

Port's custody bank returns                                  At maturity: 
collateral only when cash &
interest received                                           The Port receives cash + interest from
B/D and returns the collateral 
Collateral 
Port                         Broker/Dealer 
Cash + interest 
REPO is a collateralized short-term investment contract 
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Repurchase Agreements (REPO) 
Benefits of REPOs to the Port: 
Daily access 
Size(can accommodate the size range (from $5 to 100 million or more) for the Port's daily & monthly
cyclical needs) 
Timing(executed in seconds at or before investment markets opening) 
Secure, high quality collateral(collateral must comply with statute & Port's investment policy, and
be 102%/105% of the REPO amount) 
Competitive rate 
Changing Market Conditions impact availability of REPOs 
Less Broker/Dealer participation 
Less collateral available: 
Federal government and agencies have reduced debt issues for several years 
Increasing occasions when there is no REPO availability to the Port 
Other alternatives do not have the size, or available at precise times 
Port's long term use/reliance needs to be modified due to market changes 
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End of presentation 

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