129.10 INVESTMENT POLICY.
(a) Scope. All Public Moneys of the City not kept as a cash reserve in the vault of the treasury of the City as may be prescribed by the Director of Finance, except as otherwise hereinafter provided, shall be invested by the Director of Finance or his designee in the Eligible Investments described in Section 129.11 hereof, which Eligible Investments shall be purchased only through or from Eligible Depositories designated pursuant to Section 129.05 or Qualified Securities Dealer as defined in subsection (g) of this Section 129.10; provided, however, that Public Moneys (i) held by a trustee or escrow agent under a trust agreement, trust indenture or escrow agreement between the City and such trustee or escrow agent in connection with, or related to, an issue of bonds, notes or other obligations of the City may be invested in any investments permitted by such trust agreement, trust indenture or escrow agreement or as are approved by the rating agency or rating agencies rating such bonds, notes or other obligations or (ii) specifically exempted by ordinance from this Section 129.10 may be invested as permitted in such ordinance or other ordinance related to such Public Moneys. The Director of Finance is authorized to pool cash balances of the several funds of the City for investment hereunder.
(b) Objective. The achievement of sound fiscal management for the City requires effective investment of the Public Moneys of the City. To that effect, the following investment objectives shall be applied in the investment of Public Moneys:
(1) The primary objective of the City's investment policy is the preservation of capital and the protection of investment principal. Subject to the provisions of subsection (c)(2) of this Section 129.10, each investment transaction shall seek to first ensure that capital losses are avoided, whether they be from securities defaults or erosion of market value.
(2) In the investment of the Public Moneys of the City, the Director of Finance and any designee of the Director of Finance as permitted hereunder shall strive to attain a market-average rate of return throughout budgetary and economic cycles, taking into account the City's investment risk constraints and the cash flow characteristics of the portfolio, but shall avoid assuming unreasonable investment risks.
(3) Investment of the Public Moneys of the City shall be made with the exercise of that degree of judgment and care, under circumstances then prevailing, that persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation but for investment, considering the probable safety of their capital as well as the probable income to be derived.
(4) The City's investments shall remain sufficiently liquid to enable the City to meet its operating requirements that might reasonably be anticipated.
(c) Minimizing Investment Risk. The City acknowledges that investment risk can result from (i) a default by the issuer of the investment, (ii) changes in the market price of the investment or (iii) technical complications leading to temporary illiquidity of an investment. The following investment limitations are directed at minimizing the effect of such investment risks:
(1) To minimize the risk of default by the issuer of the investment:
B. No more than fifty percent (50%) of the City’s Public Moneys shall be invested in repurchase agreements with any one Eligible Depository; no more than twenty-five percent (25%) of the City’s Public Moneys shall be invested in repurchase agreements with any one Qualified Securities Dealer; no more than seventy-five percent (75%) of the City’s Public Moneys shall be invested in the Ohio Subdivision’s Fund created pursuant to Section 135.45 of the Ohio Revised Code; and no more than twenty-five percent (25%) of the City’s Public Moneys shall be collectively invested in (i) commercial paper notes permitted under Section 129.11(a)(10) hereof and (ii) bankers acceptances as permitted under Section 129.11(a)(11) hereof.
C. No Public Moneys of the City shall be invested in any Derivative Security, Reverse Repurchase Agreement or Investment Pool. As used herein (i) “Derivative Security” shall means a financial instrument or contract or obligation whose value or return is based upon or linked to another asset or index or both separate from the financial instrument, contract or obligation itself, but shall not include a written repurchase agreement that satisfies the provisions of subsection (a)(6) of Section 129.11 hereof; (ii) “Reverse Repurchase Agreement” shall mean a repurchase agreement under the terms of which the Director of Finance or such Director’s designee agrees to sell securities owned by the City to a purchaser and agrees with that purchaser to unconditionally repurchase such securities; and (iii) “Investment Pool” shall mean a fund established by another Subdivision (including a County), Treasurer, Governing Board or Investing Authority (as each of those terms is defined in Section 135.01 of the Ohio Revised Code), if that fund was established for the purpose of investing the public moneys of other subdivisions, but shall not include the Ohio Subdivision’s Fund created pursuant to Section 135.45 of the Ohio Revised Code.
D. The use of “leveraging” solely as a speculative investment strategy is prohibited. As used herein “leveraging” shall mean the use of any of the City’s current assets as collateral for the purpose of purchasing other assets.
(2) To minimize the risk of changes in the market price of an Eligible Investment, any Eligible Investment made pursuant to Sections 129.10 and 129.11 hereof shall mature within two years from the date of settlement unless the Eligible Investment is matched to a specific obligation or debt of the City and will be held until its maturity; provided, however, that no investment shall be made in any Eligible Investment hereunder unless the Director of Finance or the authorized designee of such Director reasonably expects that the Eligible Investment can be held until its maturity; provided, further, however, that nothing in this subsection (c)(2) or subsection (b)(1) of this Section 129.10 shall be construed to prohibit such Director of Finance or such designee from selling such Eligible Investment prior to its maturity, or to impose liability on such Director of Finance or such designee for any loss occasioned by the sale of any Eligible Investment otherwise made in accordance with Sections 129.10 and 129.11 at prices lower than its cost or balance, if the liquidity needs of the City required such as sale or if the yield on the reinvestment of the sale proceeds of such Eligible Investment, after taking into account the loss incurred in connection with such sale, will exceed the yield that the City otherwise would have earned if it had held the original Eligible Investment to the earlier of (i) its maturity date or (ii) the maturity date of the Eligible Investment purchased with such sale proceeds.
(d) Authority to Invest Public Moneys. The Director of Finance is hereby authorized and directed to invest the Public Moneys of the City in accordance with the provisions of Sections 129.10 and 129.11. The Director of Finance may delegate the authority to invest the Public Moneys of the City hereunder to another employee or employees of the City, provided that any such delegation shall be in a writing that shall be filed with and approved by the Investment Advisory Committee established under subsection (e) hereof. Such a delegation may be for a limited or unlimited period of time; provided that, if such delegation is for an unlimited period of time, (i) revocation of such delegation shall be effective only if made in a writing instrument signed by the Director of Finance and filed with the Investment Advisory Board and (ii) termination of the employment by the City of such employee shall automatically terminate such employee’s authority to invest the Public Moneys of the City hereunder without the need for a written instrument.
(e) Investment Advisory Committee.
(1) There shall be established for the City an Investment Advisory Committee. The City’s Investment Advisory Committee shall consist of the following five (5) members: two members of the Council of the City; the Director of Finance; the Mayor or his written designee; and the Director of Law. Members of the Investment Advisory Committee shall receive no additional compensation for the performance of their duties as members of such Committee. The Investment Advisory Committee shall elect is own chairman who shall preside at each meeting of such Committee.
(2) The Investment Advisory Committee shall review and approve any investment procedures established under this Section 129.10 in furtherance of the investment policies set forth in these Sections 129.10 and 129.11. The Investment Advisory Committee shall meet at least once every six months at the call of its chairman to review and approve any investment procedures not theretofore approved, to review the reports provided for in subsection (f) hereof and to advise the Director of Finance with respect to the City’s investments.
(f) Periodic Reports with Respect to Eligible Investments. The Director of Finance shall prepare an investment report for each calendar quarter of the City’s fiscal year, which shall be a public record available for inspection under Section 149.43 of the Ohio Revised Code. Such report shall list in detail the inventory of all Eligible Investments (including, without limitation, a description of the obligation or security that includes the type, cost, par value, maturity date, coupon interest rate and yield to maturity) at the beginning and end of such quarterly period, all purchases, sales and maturities of Eligible Investments during such quarterly period, all income and profits and/or losses realized during such quarterly period, and the market price of each Eligible Investment as of the beginning and end of such quarterly period, or if an Eligible Investment was sold prior to the end of such quarterly period, the sale price of such Eligible Investment. A copy of such report shall be sent to each member of the Investment Advisory Committee and each member of Council not later than the tenth (10th) day of the month immediately following the end of such a quarterly period.
(g) Authorized Purchasers from and Sellers to the City of Eligible Investments. Purchases and sales of Eligible Investments hereunder shall be made only from or to, as the case may be, an Eligible Depository designated pursuant to Section 129.05 hereof or a Qualified Securities Dealer, in either case which has acknowledged in writing that it has received a copy of Sections 129.10 and 129.11 hereof and has covenanted in connection with such acknowledgment that such a party shall not sell to the City any investment security prohibited hereunder or not included as an Eligible Investment within the investment securities described in Section 129.11 hereof. As used herein, a “Qualified Securities Dealer” shall mean a securities dealer who is a member of the National Association of Securities Dealers, Inc., approved by the Investment Advisory Committee.
(h) Purchases and Sales of Eligible Investments by the City. The Director of Finance or such Director’s designee (i) shall purchase an Eligible Investment hereunder for cash at a price not in excess of the current market price, which shall be deemed to be the best price as determined hereunder and (ii) shall sell any Eligible Investments for cash and for a sum not less than their current market price, which price shall be deemed to be the best price as determined hereunder. Except as otherwise provided in subsection (i)(2) below with respect to an overnight repurchase agreement, all purchases and sales of Eligible Investments hereunder shall be made only on a delivery versus payment basis. With respect to the purchase or sale of any Eligible Investment other than the Eligible Investments described in Sections 129.11(a)(8) and (9), the Director of Finance or such Director’s designee, subject to the provisions of subsection (g) hereof and except as otherwise provided in this subsection (h), shall purchase or sell any Eligible Investment at the best price based upon at least two bids from any of the parties described in subsection (g) hereof. As used in the immediately preceding sentence, (i) in connection with any purchase of an Eligible Investment, the “best price” shall mean that price which produces the highest yield to maturity with respect to such Eligible Investment and (ii) in connection with the sale of an Eligible Investment, the “best price” shall mean the highest price with respect to such Eligible Investment; provided, however, that in any case where there are two or more bids at the best price, the Director of Finance or such Director’s designee may, in their absolute discretion, determine which of such bids constitute the best price. The Director of Finance or the designee shall keep a written record of the bids taken with respect to each purchase or sale of an Eligible Investment.
(i) Registration, Custody and Safekeeping of Eligible Investments.
(1) If any Eligible Investments purchased pursuant to Section 129.10 and 129.11 are to be issued to a designed payee or to the order of a designated payee, the name of the Director of Finance and the title of his office shall be so designated. If any such Eligible Investments are registrable either as to principal or interest, or both, then such Eligible Investments shall be registered in the name of the Director of Finance as such.
(2) The Director of Finance is responsible for the safekeeping of all Eligible Investments and documents evidencing such Eligible Investments acquired by such Director. Except as otherwise provided in this subsection (i), all Eligible Investments acquired as investments under Sections 129.10 and 129.11 hereof by the Director of Finance on behalf of the City shall be deposited for safekeeping with a qualified trustee as provided in Section 135.18 of the Ohio Revised Code. Such qualified trustee shall be required to report to the Director of Finance, the City’s Investment Advisory Committee, the Auditor of the State of Ohio or a duly authorized independent auditor of the City at any time upon request of such party the identity and location of the document evidencing each Eligible Investment held by such qualified trustee. In lieu of such custody but only with respect to Eligible Investments issued in certificated form, such Eligible Investments may be safekept in a safe deposit box or vault belonging to an Eligible Depository. Such safe deposit box or vault shall be opened only upon the order of the Director of Finance, such Director’s designee hereunder or a person duly authorized as the Acting Director of Finance in the presence of one or more of the Director of Finance, the Director of Law, the Mayor or persons duly authorized as Acting Directors of Finance or Law or Acting Mayor. With respect to any repurchase agreement that matures on the business day that immediately succeeds the business day on which such repurchase agreement was entered into, if the participating institution is a designated depository of the City for the current period of designation, the securities that are the subject to the repurchase agreement may be held in trust by the participating institution on behalf of the City, notwithstanding anything to the contrary in this subsection (i).
(j) Internal Grounds with Respect Eligible Investments. Annually in connection with the audit of the City’s financial statements, the Director of Finance shall cause the auditor performing such audit to audit the investments of the City made during the fiscal year of such audit and shall cause such auditor to include with such auditor’s report on the City’s financial statements a separate report with respect to such investments’ compliance with the provisions of Section 129.10 and 129.11 hereof.
(k) Exemption from General Law. The City, the Director of Finance and any employee of the City designated in accordance with subsection (d) of this Section 129.10, being governed by a Charter adopted under Article XVIII, Ohio Constitution, and making special provisions regarding the investment of the City’s Public Moneys through the passage of this ordinance, are hereby exempted, except as otherwise expressly provided herein, from the provisions of the general laws of the State of Ohio, including, without limitation, Chapter 135 of the Ohio Revised Code, applicable to the investment of the Public Moneys of the City.
(Ord. 2004-178. Passed 12-7-04.)