Arapahoe County officials agree in principle to allow longer bond maturities with limits

Arapahoe County Treasurer Michael Westerberg asked the Board of County Commissioners to update the county's annual investment policy to allow the treasurer to purchase debt securities with maturities longer than five years, and the board agreed in principle to a seven-year maximum maturity and a limit of 10% of the county's portfolio in investments that exceed five years.

Westerberg told commissioners the change would follow the state's investment statute and be subject to credit-quality and safety tests. "I put in 10 years as the first parameter," he said, adding later that "10 years is the absolute max I would ever, under any conditions, be comfortable with." He recommended a lower practical ceiling if commissioners preferred.

The request comes during the board's annual review of the county's financial institution and investment policy. Westerberg explained staff had reviewed the prior-year resolution and the relevant state statute (Colorado Revised Statutes A7 24-75-6011) and proposed language that would let the treasurer buy longer-dated, government-backed credit-grade securities under defined conditions. He emphasized three criteria that must be met before buying beyond five years: the purchase must be in the county's best interest, a safe investment, and conform to the statute's permitted categories.

Commissioners focused on liquidity risk and portfolio diversification. Commissioner Jeff Baker and others asked how long a new maturity should be; several commissioners suggested testing a shorter expansion before considering the ten-year ceiling. "I think anything that's at least six gives me the flexibility I need," Westerberg said, describing why the county might occasionally buy the tail end of a long bond issue in order to capture favorable yields.

Commissioners and staff raised technical and operational clarifications: the statute sets a $5,000,000 par-value limit per individual security, and Westerberg said the county's bond portfolio is about $180,000,000 with only roughly 2.6' to 2.8% currently invested in securities with maturities beyond five years. Finance staff suggested a percentage cap to limit how much of the portfolio could be locked into longer maturities and proposed a 10% cap as reasonable.

The board directed staff to prepare a revised resolution for formal consideration that would: allow treasurer purchases of securities with maturities up to seven years (the working preference of the majority of commissioners), include a limit that no more than 10% of the total portfolio be invested in securities maturing beyond five years at any one time, and require timely notification to the board after any such purchase (Westerberg said he would notify the chair within 24 hours). Westerberg noted the resolution must be adopted yearly and can be changed in future years.

No formal roll-call motion or recorded vote took place during the discussion; commissioners verbally signaled consensus to draft the resolution with the parameters above and to bring the item back for formal adoption. County attorneys and finance staff said they would work with the treasurer to clear statutory wording (for example, the definition of "maturity date" and whether the settlement date or original issuance date controls) before returning a draft.

Next steps: staff will prepare the updated resolution language and related materials reflecting the seven-year maximum and 10% cap for a future meeting, and legal and finance staff will confirm statutory wording and implementation details before formal board action.