(a) The Director of Finance, before making the initial deposit in a public depository pursuant to an award made under Section 179.03 or pursuant to an investment in a certificate of deposit under Section 179.05(b)(7) shall require the institution designated as the depository to pledge to and deposit with him, as security for the repayment of all public moneys to be deposited in the depository during the period of designation pursuant to the award, eligible securities of aggregate market value equal to the excess of the amount of public moneys to be at the time so deposited, over and above such portion or amount of such moneys as is at such time insured by the Federal Deposit Insurance Corporation or by any other agency or instrumentality of the federal government or of the State of Ohio as may be approved by the Mayor and Director of Law, or the Director of Finance may require such institution to deposit with him surety company bonds or other insurance policies approved by the Mayor and Director of Law which, when executed, shall be for an amount equal to such excess amount. In the case of any deposit other than the initial deposit made during the period of designation, the amount of the aggregate market value of securities required to be pledged and deposited, or of the surety company bonds required to be deposited or the other insurance coverage required, shall be equal to the difference between the amount of public moneys on deposit in such public depository plus the amount to be so deposited, minus such portion or amount of the aggregate as is at the time insured as provided in this section. The Director of Finance may require additional eligible securities to be deposited to provide for any depreciation which may occur in the market value of any of the securities so deposited.
(b) The following securities shall be eligible for the purposes of this section:
(1) Bonds, notes or other obligations of the United States; or bonds, notes or other obligations guaranteed as to principal and interest by the United States or those for which the faith of the United States is pledged for the payment of principal and interest thereon, by language appearing in the instrument specifically providing such guarantee or pledge and not merely by interpretation or otherwise;
(2) Bonds, notes, debentures or other obligations or securities issued by any federal government agency, or the export-import bank of Washington; bonds, notes or other obligations guaranteed as to principal and interest by the United States or those for which the faith of the United States is pledged for the payment of principal and interest thereon, by interpretation or otherwise and not by language appearing in the instrument specifically providing such guarantee or pledge;
(3) Bonds and other obligations of this State;
(4) Bonds and other obligations of any county, township, school district, municipal corporation, including the City or other legally constituted taxing subdivision of this State, which is not at the time of such deposit, in default in the payment of principal or interest on any of its bonds or other obligations, for which the full faith and credit of the issuing subdivisions is pledged;
(5) Bonds of other states of the United States which have not during the ten (10) years immediately preceding the time of such deposit defaulted in payments of either interest or principal on any of their bonds; and
(6) Obligations guaranteed as to principal and interest by the Ohio student loan commission.
(c) If the depository fails to pay over any part of the deposit made therein as provided by law, the Director of Finance shall sell at public sale any of the bonds or other securities deposited with him pursuant to this section or Ohio R.C. 131.09. Thirty (30) days' notice of such sale shall be given in a newspaper of general circulation at the county seat of the county in which the office of the Director is located. Pursuant to Ohio R.C. 135.18(C), when a sale of bonds or other securities has been so made and upon payment to the Director of the purchase money, the Director shall transfer such bonds or securities whereupon the absolute ownership of such bonds or securities shall pass to the purchasers, and any surplus remaining after deducting the amount due the State or subdivision and expenses of sale shall be paid to the depository.
(d) An institution designated as a depository may, by written notice to the Director designate a qualified trustee and deposit the eligible securities required by this section with the trustee for safekeeping for the account of the Director and the institution as a depository, as their respective rights to and interests in such securities under this section may appear and be asserted by written notice to or demand upon the trustee pursuant to Ohio R.C. 135.18(D). In such case, the Director shall accept the written receipt of the trustee describing the securities which have been deposited with the trustee by the depository, a copy of which shall also be delivered to the depository. Thereupon all such securities so deposited with the trustee are, pursuant to Ohio R.C. 135.18(D), deemed to be pledged with the Director of Finance and to be deposited with him, for all the purposes of this section.
(e) Council may make provisions for the exchange and release of securities and the substitution of other eligible securities therefor except where the depository has deposited eligible securities with a trustee for safekeeping as provided in this section.
(f) When the depository has deposited eligible securities described in subsection (b)(1) hereof with a trustee for safekeeping, the depository may at any time substitute or exchange eligible securities described in subsection (b)(1) having a current market value equal to or greater than the current market value of the securities then on deposit and for which they are to be substituted or exchanged, without specific authorization from Council or the Director of such substitution or exchange.
(g) When the depository has deposited eligible securities described in subsection (b)(2) to (6) hereof with a trustee for safekeeping, the depository may at any time substitute or exchange eligible securities having a current market value equal to or greater than the current market value of the securities then on deposit and for which they are to be substituted or exchanged without specific authorization of Council or the Director of any such substitution or exchange only if:
(1) The Director has authorized the depository to make such substitution or exchange on a continuing basis during a specified period without prior approval of each substitution or exchange. Such authorization may be effected by the Director sending to the trustee a written notice stating that substitution may be effected on a continuing basis during a specified period which shall not extend beyond the end of the period of designation during which the notice is given. The trustee may rely upon such notice and upon the period of authorization stated therein and upon the period of designation stated therein.
(2) No continuing authorization for substitution has been given by the Director, the depository notifies the Director and the trustee of an intended substitution or exchange, and the Director fails to object to the trustee as to the eligiblity or market value of the securities being substituted within ten (10) calendar days after the date appearing on the notice of proposed substitution. The notice to the Director and to the trustee shall be given in writing and delivered personally or by certified or registered mail with a return receipt requested. The trustee may assume in any case that the notice has been delivered to the Director. In order for objections of the Director to be effective, receipt of the objections shall be acknowledged in writing by the trustee.
(3) The Director gives written authorization for a substitution or exchange of specific securities.
(h) The depository shall notify the Director of any such substitution or exchange under subsection (g)(1) or (2) hereof. Upon request from the Director, the trustee shall furnish a statement of the securities pledged against such public deposits.
(i) Pursuant to Ohio R.C. 135.18(I), any federal reserve bank or branch thereof located in this State, without compliance with Ohio R.C. 1109.03, 1109.04, 1109.17 and 1109.18 or this chapter and without becoming subject to Ohio R.C. 1109.15 or any other law of Ohio relative to the exercise by corporations of trust powers generally, is qualified to act as trustee for the safekeeping of securities, under this section. Pursuant to Ohio R.C. 135.18(I), any institution mentioned in Ohio R.C. 135.03 which holds a certificate of qualification issued by the superintendent of banks or any institution complying with Ohio R.C. 1109.03, 1109.04, 1109.17 and 1109.18, is qualified to act as trustee for the safekeeping of securities, other than those belonging to itself, under this section and such Ohio R.C. 135.18. Pursuant to Ohio R.C. 135.18, upon application to him in writing by any such institution, the superintendent of banks shall investigate the applicant and ascertain whether or not it has been authorized to execute and accept trusts in Ohio and has safe and adequate vaults and efficient supervision thereof for the storage and safekeeping within Ohio of such securities. If the superintendent finds that the applicant has been so authorized and does have such vaults and supervision thereof, he shall, pursuant to Ohio R.C. 135.18, approve the application and issue a certificate to that effect, the original or any certified copy of which shall be conclusive evidence that the institution therein named is qualified to act as trustee for the purposes of this section with respect to securities other than those belonging to itself.
Notwithstanding the fact that a depository is required to pledge eligible securities in certain amounts to secure deposits of public moneys, a trustee shall have no duty or obligation to determine the eligibility, market value or face value of any securities deposited with the trustee by a depository. This applies in all situations including, without limitation, a substitution or exchange of securities.
Pursuant to Ohio R.C. 135.18, any charges or compensation of a designated trustee for acting as such under this section shall be paid by the depository and in no event shall be chargeable to the City or to the Director or to any officer of the City. Pursuant to Ohio R.C. 135.18, such charges or compensation shall not be a lien or charge upon the securities deposited for safekeeping prior or superior to the rights to and interests in such securities of the City or of the Director. Pursuant to Ohio R.C. 135.18 the Director and his bondsmen or surety shall be relieved from any liability to the City or to the depository for the loss or destruction of any securities deposited with a qualified trustee pursuant to this section.
(Ord. 95-1981. Passed 10-5-81; Ord. 153-2021. Passed 12-6-21.)