CSAFE and Bond Proceeds: When a Competitively Bid Investment Earns More

Whether a Colorado issuer should keep its bond proceeds in CSAFE turns on two things the pool does not decide for it: the fund's draw schedule and the investment term.

CSAFE's two funds are built around access, with daily or next-day liquidity at a rate the pool sets, while a competitively bid agreement fixes a rate for a term matched to the draws.

What CSAFE is and who can invest

CSAFE describes itself as a statutory trust that is not an agency, instrumentality or subdivision of the State of Colorado, open to Colorado municipalities, counties, school districts and special districts.

On its home page CSAFE says it has operated as a Colorado local government investment pool since 1988 and counts more than 670 local government participants.

That places it in the category the MSRB glossary defines as an investment pool established by a state or local governmental entity for investing the public funds of participating governmental units, whose participants buy shares or units, often in a trust; the general tradeoffs of local government investment pools are covered separately.

CSAFE runs two funds with different structures:

CSAFE describes Colorado Core as an enhanced cash fund, and the FAQ gives no rating date, so terms and ratings should be confirmed against the pool's current documents.

GFOA's best practice on pools generally notes that LGIPs are not registered with the SEC, that investments in them are not insured or guaranteed, and that the authorizing entity typically does not guarantee them.

In Colorado, C.R.S. §24-75-601.1(1)(i) lists local government investment pools organized pursuant to part 7 of that article among the state's legal investments of public funds, next to 2a-7 money market funds that seek a stable $1.00 NAV, U.S. Treasury securities and federal agency securities (§24-75-601.1(1)(a), (1)(b), (1)(k)).

Whether a particular pool's structure fits the statute's part 7 description is a legal determination for the issuer's counsel, and home-rule entities may have broader authority under their charters (§24-75-601.1(3)(b)); the full statutory list is on the Colorado permitted investments page.

How CSAFE's yield is set, and where the current one is

A pool yield is a portfolio figure: participants hold shares in a fund that invests public money collectively, so each fund's rate is whatever its portfolio produces, and a deposit buys no rate for the life of a project.

The two funds have different structures and objectives, a short-term stable-NAV fund in CSAFE Cash and the enhanced-cash Colorado Core, so each carries its own rate.

This page does not restate pool rates; they change daily and each pool publishes its own current figure, while mGIC posts today's reinvestment rates (Treasury yields, SOFR and SLGS links each business day).

CSAFE's home page adds that its investment advisor and general administrator work for only one pool, CSAFE, while a bid agreement's rate comes from providers competing against bid specifications written for one fund.

The practical test for a fund already in the pool is to compare your pool yield with real bids, because the pool rate says nothing about what the term market would pay for the same money.

For illustration, a gap of 10 basis points on $20 million for a full year is $20,000 (0.0010 × $20,000,000), before fee, collateral and withdrawal differences that bids also disclose.

Arbitrage and rebate tracking for proceeds held in a pool

The definitions are the starting point: under 26 CFR 1.148-1(b), a commingled fund is a fund holding gross proceeds together with more than $25,000 of other amounts invested collectively, and an open-end regulated investment company, such as a mutual fund, is expressly not a commingled fund.

CSAFE describes itself as a statutory trust, so where its shares fall in those definitions, and what follows for valuation and rebate, is a determination for tax counsel.

CSAFE's public FAQ material does not address arbitrage or rebate services, and its Information Statement is the document that would carry the operative terms.

GFOA lists arbitrage accounting for bond funds among the services a pool may offer, so it is a question to ask of any pool's documents.

The general mechanics are covered in the arbitrage section; the rebate conclusion for an issue belongs to tax counsel.

Liquidity: daily access vs a draw-matched agreement

CSAFE Cash offers daily liquidity at a stable $1.00 NAV and CSAFE Colorado Core next-day liquidity at a $2.00 share price, so the access difference between the funds is daily versus next-day.

A draw-matched agreement trades access for a term rate: the MSRB glossary's general definition of a GIC has it guaranteeing a fixed rate of return and a fixed maturity, while bond-proceeds GICs in practice carry a negotiated withdrawal schedule built to the draw schedule.

The tradeoff runs in both directions: pool shares leave on the pool's terms, which GFOA notes can include limits on deposits and withdrawals and advance-notice requirements, and a term agreement releases money on withdrawal provisions negotiated before closing; the mechanics are on the GIC withdrawal provisions page.

When a GIC, flex repo or Treasury portfolio beats CSAFE

No structure earns more in general: whether a bid investment outearns the pool depends on the fund's term, its draw schedule and the bids themselves.

Colorado law is explicit on the bid side: C.R.S. §24-75-601.1(1)(l)(I) authorizes guaranteed investment contracts, guaranteed interest contracts, annuity contracts and funding agreements when, at the time the contract is entered into, the provider or its guarantor is rated in one of the two highest categories by two or more NRSROs, whether on long-term credit, financial obligations, claims-paying ability or financial strength.

The same subsection carries the term rule: GICs generally may not exceed three years, longer terms are available only when the contract is bought with proceeds of the public entity's securities or COPs or with revenues pledged to them, and that longer-term authority never extends to proceeds held in escrow or otherwise to refund bonds (§24-75-601.1(1)(l)(III)(A)–(B)).

Bond proceeds are the case that branch addresses, since they are proceeds of the entity's securities.

Repurchase agreements have their own terms: Colorado repos on U.S. Treasury or agency securities must be collateralized at no less than 102% and marked to market at least weekly, with title or a perfected security interest transferred and delivery versus payment to a custodian, and a five-year maximum term unless the governing body authorizes longer (§24-75-601.1(1)(j)(I)–(VI)).

On procurement, §24-75-601.1(2.3) requires public entities to adopt eligible broker-dealer criteria for term securities but expressly excepts bond-proceeds investments, and a firm that sells a non-compliant instrument must buy it back on demand within one business day (§24-75-601.1(1.5), (2.3)).

The SEC, in Litigation Release No. 22183 (Dec. 8, 2011), described GICs, repos and forward purchase agreements as instruments tailored to a municipality's collateral and spend-down needs, and called competitive bidding run by bidding agents the most common way to establish their fair market value; the Treasury regulations' safe harbor for such bids is covered on the fair-market-value safe harbor page.

mGIC helps issuers structure, competitively bid and document guaranteed investment contracts, full-flex repurchase agreements and structured Treasury portfolios for bond proceeds, and sells none of them; the head-to-head with a pool is on the LGIP vs GIC comparison.

Using both: pool for near-term draws, bid the rest

The two are not mutually exclusive: where the bond documents give a fund investment flexibility, near-term draws can sit in pool shares while the longer tail is put out to bid, and bond counsel confirms the split fits the indenture.

Running the bid is defined work: bid specifications carry the draw schedule and the withdrawal, collateral and credit terms, qualified providers respond, and a Bidding Agent receives and compares the bids on rate and non-rate terms.

mGIC runs that solicitation as an independent municipal advisor and Bidding Agent, coordinates documentation and settlement with the provider's counsel and the financing team, and is paid by the winning provider rather than the issuer, with the fee disclosed.

An issuer holding proceeds in CSAFE today can start with a free, no-obligation reinvestment review.

Which funds may hold which investments, and how the arbitrage rules treat them, are determinations for bond counsel and tax counsel.

Last updated 2026-10-06.

This page is general educational information about municipal finance and federal and state rules as of the date shown. It is not legal, tax or investment advice, and it is not a recommendation about any particular investment. Product availability, legality and suitability depend on the issuer, jurisdiction, governing documents and transaction-specific facts. Final legal and tax determinations remain with the issuer's bond counsel, tax counsel and other advisors.