Section 36-1-14-3 - Investment of proceeds from certain capital assets; establishment of charitable nonprofit foundation; board of trustees; investment powers and limitations; nonvoting advisors(a) This section applies to a county in which the total amount received by the county (either before July 1, 2015, or after June 30, 2015) or that will be received by the county from the sale of a capital asset exceeds fifty million dollars ($50,000,000).(b) As used in this section, "foundation" means a charitable nonprofit foundation established under subsection (c).(c) The county legislative body and the county fiscal body may, by adopting substantially similar ordinances, establish a charitable nonprofit foundation to hold some or all of the proceeds of the sale of the capital asset in trust for the benefit of the county. A county legislative body and a county fiscal body may adopt ordinances under this subsection before, after, or at the time of the sale of the capital asset. The members of the county legislative body and the members of the county fiscal body shall serve as the board of trustees of a foundation established under this section. A member's term on the board of trustees expires when the member's term on the county legislative body or the county fiscal body expires.(d) The board of trustees of a foundation established under this section shall contract with investment managers, investment advisors, investment counsel, trust companies, banks, or other finance professionals to assist the board in its investment program. Money held by the foundation must be invested in accordance with the terms of an investment policy statement developed by the board of trustees with an investment advisor that:(1) is approved by the board of trustees; and(2) complies with the diversification, risk management, and other fiduciary requirements common to the management of charitable foundations, including that the funds of the foundation must be invested according to the prudent investor rule. However, the investment policy statement may not allow the foundation to invest in any investments in which the political subdivision that established the foundation is not permitted to invest under the Constitution of the State of Indiana. The investment policy statement must include the limitation on the investment in equities specified in subsection (f) and may include a formal spending policy as authorized in subsection (g).
(e) Money held by the foundation: (1) may be invested in any legal, marketable securities; and(2) is not subject to any other investment limitations in the law, other than the limitations under this section and the limitations in the investment policy statement.(f) The total amount of the funds invested by a foundation in equity securities under this section may not exceed fifty-five percent (55%) of the total value of the portfolio of funds invested by the foundation under this section. However: (1) an investment that complies with this subsection when the investment is made remains legal even if a subsequent change in the value of the investment or a change in the value of the total portfolio of funds invested by the foundation causes the percentage of investments in equity securities to exceed the fifty-five percent (55%) limit on equity securities; and(2) if the total amount of the funds invested by a foundation in equity securities exceeds the fifty-five percent (55%) limit on equity securities because of a change described in subdivision (1), the investments by the foundation must be rebalanced to comply with the fifty-five percent (55%) limit on equity investments not later than one hundred twenty (120) days after the equity investments first exceed that limit.(g) The investment policy statement approved by the board of trustees under subsection (d) may include a formal spending policy for:(1) a spending rate of up to five percent (5%) multiplied by a five (5) year moving average of quarterly market values with the distributable amount for each year determined on a specified date; or(2) in the case of a foundation that was established less than ten (10) years ago, an interim spending rate of up to five percent (5%) multiplied by a moving average consisting of all available quarterly market values since the date the foundation was established; to the extent consistent with Section 4942 of the Internal Revenue Code.
(h) The following apply if a foundation is established under this section: (1) The county legislative body shall determine the amount of the proceeds from the sale of the capital asset that shall be transferred by the county fiscal officer to the foundation.(2) The principal amount of the donation to the foundation consists of the following:(A) The amount transferred to the foundation under subdivision (1).(B) Any donations, gifts, or other money received from any private source.(C) Any investment income that is: (i) earned on the principal of the donation; and(ii) added to the principal of the donation as provided in subdivision (3).(3) To the extent that investment income earned on the principal amount of the donation during a calendar year exceeds five percent (5%) of the amount of the principal at the beginning of the calendar year, that excess investment income shall, for purposes of this section, be added to and be considered a part of the principal amount of the donation.(4) An expenditure or transfer of any money that is part of the principal amount of the donation may be made only upon unanimous approval of the board of trustees.(5) The foundation must be audited annually by an independent third party auditor.(6) The board of trustees must meet at least quarterly to receive a quarterly compliance and performance update from the investment advisor. Three (3) nonvoting advisors who are officers of different county designated depositories shall attend the quarterly meetings in an advisory capacity to assist the board of trustees: (A) in reviewing the compliance and performance report from the investment advisor; and(B) in reviewing the annual audit required by subdivision (5). The three (3) nonvoting advisors may not vote on any action of the board of trustees. The board of trustees shall by majority vote select the three (3) depositories from which the three (3) nonvoting advisors will be chosen. Each of the three (3) depositories selected under this subdivision shall select an officer of the depository to serve as one (1) of the three (3) nonvoting advisors. Each nonvoting advisor shall serve a term of three (3) years, and the nonvoting advisor shall continue to serve until a successor is selected. However, to provide for staggered terms, the board of trustees shall provide that the initial term of one (1) nonvoting advisor is one (1) year, the initial term of one (1) nonvoting advisor is two (2) years, and the initial term of one (1) nonvoting advisor is three (3) years. For purposes of avoiding a conflict of interest, a financial institution for which a nonvoting advisor is an officer (and any affiliate of such a financial institution) may not receive a commission or other compensation for investments made by the foundation under this section.
Amended by P.L. 40-2021,SEC. 1, eff. 4/8/2021.Added by P.L. 139-2015, SEC. 3, eff. 7/1/2015.