RESOLUTION NO. 3663

ARESOLUTION  of the Port Commission of the Port of Seattle
restating the Port of Seattle Statement of Investment
Policy;  authorizing  its  implementation  by  the
Treasurer of the Port and repealing Resolutions No.
3569 and No. 3589 in their entirety.

WHEREAS, on December 11, 2001, the Port Commission adopted Resolution No. 3476
appointing the Chief Financial Ofcer of the Port as the Treasurer of the Port ("Treasurer")
pursuant to RCW 53.36.010; and

WHEREAS, the Treasurer developed a Port of Seattle Statement of Investment Policy
("Policy") in order to facilitate the exercise ofthe Treasurer's responsibilities; and

WHEREAS, pursuant to Resolution No. 3487, the Port Commission adopted the Policy
effective June 11, 2002; and

WHEREAS, consistent with the Association of Public Treasurers of the United States
and Canada and the Government Finance Ofcers' Association best practices, the Chief
Financial Ofcer completed a review of the Policy resulting in the Port Commission's adoption
of Resolution No. 3569 on December 12, 2006; and

WHEREAS, on October 23, 2007 the Port Commission adopted Resolution No. 3589
that amended section ten of the Port of Seattle Statement of Investment Policy; and

WHEREAS, the investment objectives ofthe Policy are to ensure the safety of the
principal, maintain liquidity of the Port's investment portfolio and seek a yield reecting a
market rate of return; and

WHEREAS, Port of Seattle staff (Port staff) recommend that the requirements
concerning Repurchase Agreements be amended to allow Port staff to enter into Agreements
with Port-approved brokers and nancial institutions; and

WHEREAS, Port staffrecommends that the Repurchase Agreement Collateral be
extended to the overall maturity limits of the current policy, which is ten years; and

WHEREAS, Port staff also recommends a number ofhousekeeping edits to the current
investment policy that are depicted in Exhibit A to clarify and correct language.

NOW, THEREFORE, BE IT RESOLVED by the Port Commission ofthe Port of

Seattle that:

Section 1.  Resolutions No. 3569 and 3589 are repealed.

Section 2.  The restated Port of Seattle Statement of Investment Policy is adopted as

provided in Exhibit A.

ADOPTED by the Port Commission ofthe Port of Seattle at a regular meeting thereof,

held this   5% day of   55 no 2        ,
2012, and duly authenticated in open

session by the signatures of the Commissioners voting in favor thereof and the seal of the

Commission.
GAEL E'ARLETON
JOHN CRElGl-lTON

BILL BRYANT

ROB HOLLAHD



Port Commission

PORT OF SEATTLE

STATEMENT OF INVESTMENT POLICY

Exhibit A
To Resolution No. 3663

POLICY

It shall be the policy of the Port of Seattle (the "Port") to manage its investments in order to preserve
principal while maximizing income and maintaining liquidity to meet anticipated cash needs and to conform
to all statutes governing the investment of public funds.

INVESTMENT OBJECTIVES

The primary investment objectives of the Port, in priority order, are as follows:

1.  Safety - Safety of principal is the foremost objective of the Port's investment program. Investments
shall be selected in a manner that seeks to insure the preservation of capital in the portfolio. This will be
accomplished through security selection, portfolio diversication, and maturity limitations, as more fully
described below.

2.  Liquidity  The Port's investment portfolio shall remain sufciently liquid to meet all cash ow
requirements that may be reasonably anticipated.

3.  Yield  The portfolio shall be managed with the objective of attaining a market rate of return throughout
economic cycles, taking into account investment risk constraints and liquidity needs. Return on
investment is of least importance compared to the objectives of safety and liquidity.

SCOPE

This policy covers all funds managed by the Port as reported in the Port's Annual Financial Report unless
specifically excluded by this policy. This policy does not apply to the Port's deferred compensation funds,
employee pension, health and welfare inds, or other funds managed by third party administrators.

This investment policy does not cover any moneys collected and held by King County or the State of
Washington until such time as those moneys are remitted to the Port of Seattle.
All investments shall comply with federal and state laws and this policy. Funds related to the issuance of
tax-exempt debt shall at all times be invested and otherwise treated in accordance with Internal Revenue
Service rules and regulations.

STANDARDS OF CARE

Prudence - The standard of prudence to be used by investment personnel shall be the "Prudent Investor
Rule," and shall be applied in the context of managing the overall portfolio at all times:

Investments shall be made with judgment and care, under circumstances then
prevailing, which persons of prudence, discretion and intelligence exercise in the
management of their own affairs, not for speculation, but for investment, considering,
in priority order, the probable safety and liquidity of their capital as well as the
probable income to be derived.

Investment personnel acting in accordance with this policy and exercising due diligence shall be relieved of
personal liability for an individual security's credit risk or market price changes, provided deviations from
expectations are promptly reported and appropriate action is taken to control adverse consequences.

Ethics and Conict of Interest - Ofcers and employees involved in the investment process shall refrain
from personal business activity that could conict with proper execution of the investment program or that
could impair their ability to make impartial decisions. Investment ofcials and personnel shall disclose to
the Port's General Counsel any material nancial interests in nancial institutions that conduct business
with the Port, and shall further disclose any personal nancial/investment positions that could be related to
the performance of the Port's portfolio.

DELEGATION OF AUTHORITY

Authority to manage the Port's investment program shall reside with the Chief Financial Ofcer, appointed
Port Treasurer pursuant to Resolution No. 3476. The Treasurer shall be accountable for all investment
transactions and shall establish written procedures and internal controls designed to insure that the Port's
assets are protected from loss, theft or misuse. The Treasurer may delegate the day-to-day duties and
responsibilities related to the Port's investment program.

SAFEKEEPING AND CUSTODY

All transactions involving authorized investments shall be settled on a delivery versus payment (DVP)
basis. All securities shall be held at the Port's safekeeping agent, or that agent's representative in New York
City, or the agent's account at the Federal Reserve Bank.

SECURITIES LENDING

The Treasurer may enter into one or more contracts with the custodial banks or nancial institutions, or any
one of them, holding the Port's securities for the lending of all or part of these securities to reputable brokers
and nancial institutions to earn additional investment revenue or fees from such loans, provided that
collateral equal to at least 102% of the market value of loaned securities shall be continuously maintained.

FINANCIAL INSTITUTIONS AND SECURITIES DEALERS

The Treasurer shall maintain a list of nancial institutions and security broker/dealers authorized to provide
investment services to the Port. Firms eligible to provide such services must meet the following criteria:

Financial Institutions

Banks: The Port may make deposits and purchase CDs only from banks that are qualied public
depositories as determined by the Washington Public Deposit Protection Commission (PDPC). The
Treasurer shall monitor the net worth and nancial condition of these institutions on an ongoing basis, and
may restrict and/or exclude any institution based on such evaluation.

Approved Securities Dealers

Primary Dealers: Security Dealers that can buy and sell Government Securities and deal directly with the
Federal Reserve Bank of New York.

Secondary Dealers: The Port will transact securities with Secondary Dealers having an ofce in the State
of Washington, doing investment business with other public entities in the State, that have a minimum
capitalization of $10 million and retained earnings of $1 million.

Security broker/dealers engaged in investment transactions with the Port must have demonstrated knowledge
and expertise in public sector investing and shall certify, in writing, that the dealer has read, understands, and
agrees to comply with this investment policy. Dealers shall also provide the Port with annual audited
2

nancial statements. Should concerns arise regarding a dealer's nancial condition, business practices, or
compliance with the Port's investment policy, the rm may be restricted from conducting business with the
Port at the sole discretion of the Treasurer.

AUTHORIZED INVESTMENTS

In accordance with and subject to restrictions embodied in Revised Code of Washington (RCW) 36.29.020,
the following investments are authorized by this policy:

A.  Certicates of Deposit (CDs) with qualied public depositories as dened in RCW 39.58.

B.   Certicates, notes, bonds, bills, or other obligations of the US. government or its agencies, or of any
corporation wholly owned by the US. government, all of which are secured by the full faith and credit
of the United States for the repayment of principal and interest.
Obligations ofUS. govemmentsponsored corporations eligible as collateral for advances to member
banks as determined by the Board of Governors of the Federal Reserve System. These include, but are
not limited to, Federal Home Loan Bank bonds or notes, Federal Farm Credit Bank consolidated notes
and bonds, Federal National Mortgage Association notes, debentures and bonds, Federal Home Loan
Mortgage Corporation bonds or notes. In addition, the following mortgage backed securities of these
agencies are allowed for purchase including: (1) collateralized mortgage pools having a stated nal
maturity not exceeding the maturity limits of this policy and (2) planned amortization and sequential
pay classes of collateralized mortgage obligations collateralized by 15-year agency-issued pooled
mortgage securities and having a stated nal maturity not exceeding the maturity limits of this policy.
Bankers' Acceptances purchased in the secondary market. Bankers' Acceptance purchases are limited
to the largest 50 world banks as listed each July in the American Banker. The banks must meet Tier
one and Tier two capital standards.
Commercial Paper authorized by RCW 43.84.080(7) purchased from the secondary market, consistent
with policy of the State Investment Board. Any changes to the State Investment Board Guidelines
will be communicated in writing to the Commission as soon as possible.
Repurchase Agreements structured with securities eligible for purchase (as dened in B through E
above), provided that a Master Repurchase Agreement and Annex(es) have been executed with the
contra-party.
1)  All securities used in a repurchase agreement shall be priced to reect current market conditions.
2) Repurchase Agreements ("Repos") will not exceed 60 days in duration and will be collateralized
in excess of 102% if under 30 days and 105% from 30  60 days. The collateral must be marked
to market no less frequently than daily, and additional collateral posted if necessary. Pricing shall
be rendered at a price the Port could reasonably expect to receive ifthose securities were sold on
the open market (bid side of the market). The maturity ofthe underlying collateral cannot exceed
ten years.
3) Collateral on Repurchase Agreements shall be delivered to the Port's Safekeeping Agent as
described in Section 6. Any excess collateral requirement will be determined at the time of the
transaction, as specied in the Master Repurchase Agreement.

Reverse Repurchase Agreements ("Reverse Repos") not exceeding 60 days in duration. When used
for yield enhancement rather than cash management purposes, only "matched book" transactions will
be utilized, meaning that the maturity date of the security furnished as collateral is identical to the end
date of the reverse repo transaction. Reverse Repos will only be executed with Approved Security
Dealers or Financial Institutions.
Municipal Bonds of the State of Washington and any local government of the State of Washington or
general obligation bonds of a state other than the State of Washington and general obligation bonds of
a local government of a state other than the State of Washington. RCW 39.59.020 prohibits purchase
of municipal revenue bonds ofjurisdictions outside the State of Washington. At the time of purchase,

3

these bonds must have one of the three highest credit ratings of a nationally recognized rating agency
(i.e. "A" or better).

Investments shall n_ot be made in the following securities:
Corporate stocks
*"EQWWDOW?    Corporate bonds
Foreign Government Obligations
Futures Contracts

Investments in Commodities

Real Estate

Limited Partnerships
Negotiable Certicates of Deposit
Inverse Floaters

"Interest Only" and "Principal Only" Mortgage Backed Securities

DIVERSIFICATION

Portfolio risk shall be mitigated by diversication with respect to security class and issuer. The following
limitations shall apply:

TXE of Securities                  Maximum Holding
US. Treasury Bills, Certicates,          100% of portfolio
Notes and Bonds

US. Government Agency            60% of portfolio
Securities (*)
Agency Mortgage-Backed Securities       10% of portfolio
Certicates of Deposit                15% of portfolio
5% per Issuer

Bankers' Acceptances               20% of portfolio
5% per bank

Commercial Paper                 20% of portfolio
3% per issuer
Repurchase Agreements
Overnight                   15% of portfolio
Term Only                 25% of portfolio

Reverse Repurchase Agreements          5% of portfolio

Municipal Securities                 20% of portfolio
5% per issuer

C") U. S. Government Agency Discount Notes shall not apply toward maximum Agency limitations. In
addition, Discount Notes cannot exceed 20% of the Portfolio.

ll.  MATURITY RESTRICTIONS

The investment program shall be administered in a manner that will ensure adequate liquidity to meet
reasonably anticipated cash needs. Purchases shall attempt to match, but should not exceed, the anticipated
need for the funds. To thher ensure the satisfaction of these needs, securities purchased shall have a
maximum maturity not longer than ten (10) years from settlement date.

12. PORTFOLIO STRATEGY STANDARD

The portfolio shall maintain a 2.0 target (modied) duration standard plus or minus 50 basis points.

13. POLICY EXCEPTIONS

No immediate transaction is required if any policy exception or a sudden unexpected change in portfolio
size causes the category holdings to exceed their limits, or the portfolio duration to fall outside of target.
Subsequent investment transactions will work towards bringing the portfolio into compliance with the above
guidelines within a reasonable amount of time. Within fteen (15) days of an exception, staff will notify the
audit committee and identify a plan and estimated time for returning the portfolio to its policy parameters.
Weekly reports will be submitted to the audit committee until the portfolio is within its established policy
parameters.

14. PERFORMANCE STANDARDS

The portfolio shall be managed to obtain a market rate of return through economic cycles and consistent with
the Port's investment objectives. Portfolio performance shall be benchmarked against the Merrill Lynch
Treasury/Agency 3 Year Index for the period oftime being evaluated.

15. INDEPENDENT REVIEW

Annually, the Washington State Auditor's Ofce and external auditors will review the Port's investments
and investment controls to ensure effective and appropriate controls exist. A periodic review of investments
and controls, by the Port's internal auditor, will also occur.

16.  REPORTING

At least annually, the Treasurer will provide an investment report to the Port Commission.