(a) Policy Statement.
(1) It is the policy of the Village to invest public funds in a manner which will provide the maximum security, safety, and preservation of principal invested with secondary emphasis on achieving the highest yield, while meeting the daily cash flow demands of the Village and conforming to all applicable local, State and Federal statutes governing the investment of public funds by an Ohio municipality.
(2) The Treasurer is the investment officer for the Village, charged with the responsibility for the purchase and sale of investments and the carrying out of this Investment Policy.
(b) Scope. This Investment Policy applies to all financial assets of the Village, including State and Federal funds held by it. The Treasurer shall routinely monitor the contents of the Village’s investment portfolio, the available markets and relative value of competing investments and will adjust the portfolio accordingly.
(c) Prudence.
(1) Investments shall be made with the exercise of that degree of 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 the probable safety of their capital as well as the probable income to be derived.
(2) The standard of prudence to be used by the Treasurer shall be the “prudent investor” standards and shall be applied in the context of managing the overall portfolio. Acting in accordance with this Investment Policy and exercising due diligence shall relieve the Treasurer of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported to Council in a timely fashion and appropriate action is taken to control adverse developments.
(d) Objectives.
(1) Banks vary in services they provide, their service fees, interest rates on interim investments and the minimum compensating balances required for demand-deposit accounts. The Village’s objective is to obtain good banking services while minimizing the cost of banking services to the Village.
(2) To insure that the City will continue to receive the best service and rate available and that other financial institutions will have an equal opportunity to competitively bid in future years, the Village will seek competitive proposals for depositories of active funds at least every two years.
(3) The primary objectives, in priority order, of the Village’s investment activity shall be:
A. Safety: Safety of principal is the foremost objective of the investment program. Investments of the Village shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. To attain this objective the Village will diversify its investments to avoid incurring unreasonable and avoidable risks regarding specific security types or individual financial institutions.
B. Liquidity: The Village’s investment portfolio will remain sufficiently liquid to enable it to meet all operating requirements, which might be reasonably anticipated.
C. Return on Investment: The Village’s investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account this Investment Policy and the cash flow characteristics of the portfolio.
(e) Ethics and Conflict of Interest. Persons involved in the investment process shall refrain from personal business activity which could create a conflict with proper execution and management of the investment program, or which could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose to the Village any material financial interest in financial institutions that conduct business with the Village, and they shall further disclose any large personal financial or investment positions that could be related to, or affected by, the performance of the Village’s portfolio. All employees, officers and investment officials to the Village shall subordinate their personal investment transactions to those of the Village, particularly with regard to the timing of purchases and sales.
(f) Authorized Financial Dealers and Institutions.
(1) The Treasurer will maintain a list of financial institutions and approved security broker/dealers selected by credit worthiness, who maintain an office in the State of Ohio and are authorized to provide investment services and which qualify under Ohio R.C. 135.14(M)(1). These may include “primary” dealers or regional dealers that qualify under the Securities and Exchange Commission Rule 15C3-1 and are registered with the Ohio Department of Commerce to do business in the State.
(2) All financial institutions and broker/dealers which desire to become qualified suppliers of investment transactions to the Village must provide the Treasurer with audited annual financial statements, proof of good standing with the Comptroller of Currency or State banking regulators or National Association of Securities Dealers certification, proof of Ohio registration and biographical and regulatory information on the persons who are the primary contact with the entity. All financial institutions, broker/dealers and consultants which desire to conduct investment business with the Village must sign a copy of this Investment Policy, certifying they have read it, understand it and agree to abide by its contents.
(g) Authorized Investments. The Village is empowered by statute to invest in the following types of securities:
(1) U.S. Treasury Securities. United States Treasury bills, notes, bonds or other obligation or security issued by the United States Treasury or any other obligation guaranteed as to principal and interest by the United States.
(2) U.S. Governmental Agency Securities. Bonds, notes, debentures, or other obligations or securities issued by any federal government agency or instrumentally, including but not limited to:
A. Federal National Mortgage Association (FNMA)
B. Federal Farm Credit Bank (FFCB)
C. Federal Home Loan Bank (FHLB)
D. Federal Home Loan Mortgage Association (FHLMC)
E. Government National Mortgage Association (GNMA)
F. Student Loan Marketing Association (SLMA).
All such securities shall be direct issue of a federal government agency or instrumentality.
(3) Interim deposits. Interim deposits in duly authorized depositories of the Village, provided those deposits are property insured or collateralized as required by law.
(4) Ohio Government Securities. Bonds, notes and other obligations issued by the State of Ohio.
(5) No-load Money Market Mutual Funds. No-load money market mutual funds consisting exclusively of securities described in subsection (1) and (2) hereof and repurchase agreements secured by such obligations, provided all such investments under this subsection shall be made with a bank or savings and loan association eligible to be a depository for public funds of Ohio subdivisions and provided further that any such fund meets the requirements of Ohio R.C. Chapter 135, including that such fund not include any investment in a “derivative”.
(6) State Treasury Asset Reserve of Ohio. The State Treasury Asset Reserve of Ohio (“Star Ohio”) is a statewide investment pool managed by the treasurer of the State of Ohio similar in concept to a money market fund but available exclusively to political subdivisions of Ohio. State law sets the guidelines that determine the program’s investment practices.
(7) Repurchase Agreements. Overnight or term (not exceeding 30 days) repurchase agreements meeting the requirements of Ohio R.C. 135.14(E), with a bank or savings and loan association eligible to be a depository for public funds of Ohio subdivision or a member of the National Association of Securities Dealers.
(8) Certificates of deposits. Interest bearing certificates of deposits in banks and savings and loan associations organized under the laws of Ohio, and national banks organized under the laws of the United States, doing business and situated in Ohio, provided that any such deposits are secured by collateral as prescribed herein. (Collateralization requirements are detailed under Ohio R.C. 135.18 and 135.181.)
(9) Now accounts. Now accounts, super now account or any other similar account authorized by the Federal Reserve’s Depository Institutions’ Deregulation Committee.
(h) Diversification. The Village will diversify its investments by security, type and institution to minimize the risk of loss resulting in over concentration of assets in a specific maturity, specific issuer or specific class of securities.
(i) Maximum Maturities. To the extent possible, the Village will attempt to match its investments with anticipated cash flow requirements. Maximum final stated maturity will be five years. Unless matched to a specific obligation or debt of the Village, the Village will not directly invest in securities listed as (1) through (5) above maturing more than five years from the date of settlement if such securities bear interest at a fixed rate, and it will not directly invest in such securities maturing more than two years from the date of settlement if they bear interest at a variable rate.
(j) Safekeeping and Custody. All security transactions, including securities acquired subject to repurchase agreements, entered into by the Village shall be conducted on a delivery- versus-payment (DVP) basis. Purchased securities shall be held by a third party custodian, designated by the Treasurer, that is a Federal Reserve Bank or other “qualified trustee” within the meaning of Ohio R.C. 135.18(I), and the safekeeping of those securities for the benefit of the Village shall be evidenced by a safekeeping statement to the Treasurer listing the specific instrument, rate, maturity and other pertinent information. Purchased securities shall be released by the Village only upon verification that the principal and interest, or proceeds of sale of the securities, have been credited to the Village’s account.
(k) Prohibited Investment Practices. In addition to any other prohibitions in the Revised Code, the Village shall not:
(1) Contact to sell securities that have not yet been acquired on the speculation that prices will decline;
(2) Make any investment in “derivatives” as defined in Ohio R.C. 135.14(C);
(3) Invest in a fund established by another public body for the purpose of investing public money of other subdivisions unless the fund is either: STAR OHIO, or a fund created solely for the purpose of acquiring, constructing, owning, leasing or operating municipal utilities as authorized under Ohio R.C. 715.02 or Section 4 of Article XVIII of the Ohio Constitution;
(4) Enter into reverse repurchase agreements;
(5) Leverage current investments as collateral to purchase other assets;
(6) Invest in stripped principal or interest obligations of otherwise eligible obligations.
(l) Internal Controls. The Treasurer shall develop and maintain procedures for the operation of the Village’s investment program in accordance with this Investment Policy. These procedures shall be designed to prevent loss of the Village’s funds due to fraud, error, misrepresentation by third parties, unanticipated market changes or imprudent actions.
(m) Reporting. The Treasurer shall maintain a current inventory of all investment and shall report monthly to the Village council finance committee of all investment activity by means of a Treasurer’s Report.
(n) Education. The Treasurer shall participate in any beginning and/or continuing education training programs sponsored by the State Treasurer or State Auditor in which the Treasurer is required to participate pursuant to Ohio R.C. 117.44, 135.22 and 733.27. Through participation in those programs, the Treasurer will develop and maintain an enhanced background and working knowledge in investment, cash management, and ethics.
(o) Non-Binding Arbitration. The Treasurer may enter into a written investment or deposit agreement that includes a provision under which the parties agree to submit to non-binding arbitration (but not binding arbitration) to settle any controversy that may arise out of that agreement so long as such provision meets the requirements of the Revised Code and is specifically approved by Council.
(p) Investment Policy Adoption. This Investment Policy shall be adopted by Council and, upon adoption, filed in the office of the Auditor of State. The policy shall be reviewed on an annual basis by the Council Finance Committee, and any modifications made thereto must be approved by the Council and, upon adoption, filed in the office of the Auditor of State.
(q) Signature of All Parties Involved. A copy of the policy shall be forwarded to each broker/banker/dealer doing business with the entity for review and their signature.
Treasurer Investment Banker/Broker/Advisor Date: |
(Res. 1999-19. Passed 9-27-99.)