(a) Subject to the restrictions set forth in this section, the Sinking Fund Commission shall, by written instruction, direct the investment by the Escrow Agent of moneys credited to the various Sinking Fund accounts. The Sinking Fund Commission shall authorize and the Escrow Agent shall effect the investment of moneys credited to the Sinking Fund accounts only in the following obligations:
(1) Direct obligations of the United States of America or obligations, the timely payment of the principal of and interest on which is fully guaranteed by the United States of America;
(2) Certificates of deposit, demand deposits or time deposits of any state bank or trust company or national banking association, including the Escrow Agent or any affiliate of the Escrow Agent, which is a member of the Federal Deposit Insurance Corporation (FDIC), (including any investment in pools of those certificates of deposit, demand deposits or time deposits owned by the bank, trust company or national banking association), provided that any such certificate of deposit, demand deposit or time deposit is
A. Continuously and fully insured by FDIC; or
B. Issued by an entity that has (or guaranteed by an entity’s parent holding company that has) either unsecured, unguaranteed and uninsured commercial paper rated in the highest rating category, or unsecured, unguaranteed and uninsured long-term obligations rated in the third highest or higher rating category, by a rating service or agency that maintains a rating on obligations of the City payable from any of the Sinking Fund accounts; or
C. Fully secured, to the extent not insured by FDIC, by obligations of the type described in paragraph (1) above (i) that have a market value at all times at least equal to the uninsured principal amount of the deposit, (ii) that are held by the Escrow Agent (except in case of a certificate of deposit, demand deposit or time deposit of the Escrow Agent) or any Federal Reserve Bank or depository of the United States of America, as custodian for the institution issuing the deposit, together with the undertaking of such institution, in form satisfactory to the Escrow Agent, that the aggregate market value of the obligations securing such deposit at all times will be maintained in an amount meeting the requirements of this subparagraph C., and (iii) in which the Escrow Agent has a prior perfected first lien and which are not subject to any third-party claims;
(3) Repurchase agreements collateralized by securities described in paragraph (1) above with any registered broker/dealer under the jurisdiction of the Securities Investors’ Protection Corporation or any state bank or trust company or national banking association, including the Escrow Agent, if such broker/dealer, bank or trust company has (or its parent holding company has, if it provides a guarantee of the obligation) unsecured, uninsured and unguaranteed commercial paper rated in the highest rating category, or unsecured, uninsured and unguaranteed long-term obligations rated in the third highest or higher rating category, by a rating service or agency that maintains a rating on obligations of the City payable from any of the Sinking Fund accounts, provided that:
A. A master repurchase agreement or specific written repurchase agreement governs the transaction;
B. The securities are held by the Escrow Agent or an independent third party acting solely as agent for the Escrow Agent free and clear of any lien, and such third party is (i) a Federal Reserve Bank, or (ii) a bank that is a member of the FDIC and that has combined capital, surplus and undivided profits of not less than fifty million dollars ($50,000,000.00), and the Escrow Agent shall have received written confirmation from such third party that it holds such securities, free of any lien, as agent for the Escrow Agent;
C. A perfected first security interest in such securities under the Uniform Commercial Code or book entry procedures prescribed by federal regulations, is created for the benefit of the Escrow Agent (as demonstrated by an opinion of counsel upon which the Escrow Agent may rely as to perfection and priority);
D. The repurchase agreement has a term of thirty (30) days or less, or the Escrow Agent will value the collateral securities no less frequently than once every seven (7) days and will liquidate the collateral securities if any deficiency in the required collateral percentage is not restored within two (2) business days of such valuation;
E. The fair market value of the securities in relation to the amount of the repurchase obligation, including principal and interest, is equal to at least one hundred percent (100%).
(4) Investment contracts (which term shall not include repurchase agreements) fully collateralized by securities described in paragraph (1) above, with an institution that has (or its parent holding company has, if it provides a guarantee of the obligation) either unguaranteed and uninsured commercial paper rated in the highest rating category, or unsecured, unguaranteed and uninsured long-term obligations rated in the third highest or higher rating category, by a rating service or agency that maintains a rating on obligations of the City payable from any of the Sinking Fund accounts;
(5) Obligations of any state of the United States of America or any political subdivision of any state, other than the City, for the payment of which the full faith and credit of the state or political subdivision is pledged, provided that such obligations are rated in the second highest or higher rating category by a rating service or agency that maintains a rating on obligations of the City payable from any of the Sinking Fund accounts; and
(6) Investments in the pooled investment program established in the custody of the Treasurer of the State pursuant to RC 135.45 for investment of money by political subdivisions of the State.
(b) With respect to moneys credited to any Sinking Fund account, the Sinking Fund Commission shall authorize and the Escrow Agent shall effect the investment of such moneys only in obligations which shall mature (or be redeemable at the option of the holder) at such times and in such amounts as to allow the Escrow Agent to make all required payments of debt charges from such account in a timely manner.
(c) In order to fulfill the Escrow Agent’s duty under Section 179.10 to make disbursements from the various Sinking Fund accounts in the amounts and at the times required for the payment of debt charges from such accounts, the Escrow Agent shall, if and to the extent necessary for that purpose, sell or redeem any investment held to the credit of any such account from which such a disbursement is to be made, and the Escrow Agent may do so without any further authorization by the Sinking Fund Commission, the City, or any officer of the City.
(d) The income from any investment made pursuant to this section (including interest, proceeds from sale or redemption, and other income) shall be credited to the Sinking Fund account for which such investment was made.
(e) To prevent bonds or notes issued by the City from becoming “arbitrage bonds” under Section 103(c) of the Internal Revenue Code and regulations promulgated thereunder, the Sinking Fund Commission shall, from time to time as necessary for that purpose, authorize and instruct the Escrow Agent in writing to (1) restrict the yield received on the investment of moneys held in any Sinking Fund account or earnings thereon, and (2) take other actions consistent with the provisions of this chapter with respect to the application of such moneys or earnings thereon.
(Ord. No. 944-96. Passed 6-10-96, eff. 6-19-96)