(a) The following investment and deposit objectives shall be applied in the management of municipal funds:
(1) The primary objective of the municipality’s investment activities shall be the preservation of capital and the protection of investment principal.
(2) The Finance Director shall strive to maximize the return on the portfolio, but shall avoid assuming unreasonable investment risks.
(3) The municipality’s investment portfolio shall remain sufficiently liquid to enable the municipality to meet operating requirements which might reasonably be anticipated.
(4) The municipality’s investments shall be diversified to avoid the assumption of unreasonable and avoidable risks associated with specific types of securities or individual financial situations.
(5) 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.
(6) A factor in determining which depository should hold the municipality’s public funds shall be the municipality’s desire to obtain the best possible banking services at the least possible cost.
(b) To the extent possible, the municipality’s active, interim and inactive investments shall be made so as to complement its anticipated cash flow requirements.
(c) Securities shall be purchased only through financial institutions located within the State of Ohio or through “primary securities dealers” as designated by the Federal Reserve Bank. A list of these institutions shall be maintained by the Finance Director. The Finance Director:
(1) May make additions to the authorized list when the investment and deposit policy requirements are met;
(2) Shall make deletions from the list:
A. If and as directed by ordinance of Council;
B. Upon failure of the financial institution to meet the foregoing investment and deposit policy requirements; or
C. Upon request of the financial institution or dealer.
(3) May make deletions from the list if he or she determines or has reason to believe that:
A. The financial institution or dealer is experiencing financial difficulties;
B. There is consistent lack of competitiveness by the financial institution or dealer;
C. The account representative handling the municipality’s account lacks experience or familiarity in providing service to large institutional accounts; or
D. It is in the best interests of the municipality.
(d) The Finance Director may invest on behalf of and in the name of the municipality in the following instruments at a price not exceeding their fair market value:
(1) Government securities, including:
A. Negotiable direct obligations of the United States or obligations issued by federal agencies the principal and interest on which are unconditionally guaranteed by the United States, and bonds, notes, debentures or other obligations or securities issued by any federal government agency, whether or not they are guaranteed by the United States, including, but not limited to, the following.
1. Direct obligation:
a. Treasury bills;
b. Treasury notes;
c. Treasury bonds;
d. STAR Ohio.
2. Obligations of the following federal agencies:
a. Government National Mortgage Associations (GNMA);
b. Small Business Association (SBA);
c. Federal Housing Administration (FHA);
d. Farmers Home Administration (FMHA);
e. General Services Administration (GSA).
B. Obligations of the Federal Farm Credit Banks, Export-Import Bank of Washington, Federal Home Loan Mortgage Corporation or Federal Home Loan Bank or its district banks, including Federal Home Loan Mortgage Corporation participation certificates, or obligations guaranteed by the Government National Mortgage Association.
(2) Non-negotiable interest-bearing time certificates of deposits and savings accounts in banks organized under the laws of this state, national banks organized under the laws of the United States doing business and situated in this state, savings and loan associations under state supervision, or savings and loan associations located in this state and organized under federal law and under federal supervision, provided that any such deposits and savings accounts are secured by collateral as provided in division (e) hereof.
(3) Bankers acceptances which are eligible for purchase by the Federal Reserve System and which are issued by institutions which are ranked nationally as being in the top 50 in asset and deposit size within their industry.
(4) Repurchased agreements of a bank or savings and loan association organized under the laws of the United States or any state thereof and reverse repurchase agreements for negotiable direct obligations of the United States, federal agencies and federal instrumentalities as follows.
A. U.S. Treasury bills and notes;
B. Government National Mortgage Association (GNMA);
C. Federal Farm Credit Bank obligations;
D. Federal Home Loan Bank obligations.
(5) Now Accounts, Super Now Accounts or any other similar account authorized by the FDIC.
(e) Municipal funds deposited pursuant to divisions (d)(2) and (5) hereof shall be secured by collateral pledged at market value in an amount equal to at least 100% of the deposit less the amount insured by the Federal Deposit Insurance Corporation. The following securities shall be eligible to be pledged as collateral:
(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 instruments 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 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 instruments 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 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 subdivision is pledged; and
(5) Bonds of other states of the United States which have not, during the ten years immediately preceding the time of such deposit, defaulted in payments of either interest or principal on any of their bonds.
(f) Any securities pledged as collateral pursuant to division (e) hereof shall be delivered either to the Finance Director or to an independent financial institution approved by the Finance Director to serve as trustee (herein referred to as the “trustee”) under a trust agreement therefor entered into between the municipality and such institution in a form approved by the Director of Law. Fees and expenses of the trustee shall be paid by the depository.
(g) If the depository fails to pay over any part of a deposit due the municipality, the Finance Director shall have the option of selling, in the manner determined by the Finance Director, any of the securities deposited pursuant to the provisions of this section. If the bonds or other securities are on deposit with the trustee, the Finance Director may request the trustee to deliver to the Finance Director any of the securities so deposited, and the Finance Director shall have the option to sell such securities in the manner determined by the Finance Director. When a sale of securities has been made, upon payment to the Finance Director of the purchase money, the Finance Director shall transfer such securities to the purchaser, whereupon the absolute ownership of such securities shall pass to the purchaser. Any surplus remaining after deducting the amount due the municipality and expenses of the sales shall be paid to the depository.
(h) When a depository has deposited securities with the trustee in accordance with division (f) hereof, the depository may 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 only if one of the following is true.
(1) The Finance Director gives written authorization for such substitution or exchange.
(2) The Finance 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. Written authorization shall be sent to the trustee stating that substitution may be made on a continuing basis during a specified period under the conditions specified therein.
(3) No continuing authorization for substitution or exchange has been given by the Finance Director, the depository has notified the Finance Director and the trustee of an intended substitution or exchange, and the Finance Director has failed to object to the trustee within ten business days after receipt by the Finance Director of the notice of proposed substitution. The notice to the Finance Director and to the trustee shall be given in writing and delivered personally or by certified or registered mail with a return receipt requested.
(i) The depository shall notify the Finance Director of any substitution or exchange of securities authorized pursuant to division (h) hereof. Upon request from the Finance Director, the depository and the trustee shall each furnish a detailed statement setting forth the face and market values of all securities pledged.
(j) With the approval of the Finance Director, a depository may provide collateral for municipal funds deposited pursuant to divisions (d)(2), (3) and (5) hereof through a single pool of securities pledged for deposits of all public funds held by the depository, subject to the following conditions.
(1) Securities committed to the pool must have a market value at least equal to 110% of all public monies on deposit with the depository, including the amount covered by federal deposit insurance.
(2) The securities eligible for deposit in the pool shall be those described in division (e) hereof.
(3) The securities constituting the pool shall be delivered to a trustee as described in division (f) hereof. Fees and expenses of the trustee shall be paid by the depository.
(4) If the depository fails to pay over any part of the deposit due the municipality, the Finance Director may request the trustee to deliver to the Finance Director any of the securities on deposit with the trustee, provided the value of the securities delivered does not exceed the amount necessary to produce an amount equal to the municipal deposits made and not paid over, less the portions of such deposits covered by the federal deposit insurance, plus any accrued interest due on the deposits. In any event, the value of such securities shall not exceed the municipality’s proportional interest in the market value of the pool as of the date of the depository’s failure to pay over the deposits. The Finance Director shall have the option to sell the securities in such manner as determined by the Finance Director. Any surplus remaining after deducting the amount due the municipality and expenses of the sale shall be paid to the depository.
(5) Within 30 days of the end of each calendar quarter, the trustee shall provide a detailed statement setting forth the face and market values of all securities pledged to the pool and the total of all public funds on deposit.
(6) If at any time the market value of the pool is less than 110% of all public deposits held by the trustee, the depository shall immediately add securities to the pool sufficient to bring the market value of the pool to at least 110% of all public funds on deposit with the trustee.
(7) Failure of the institution to comply with any of the provisions of this section shall be cause for the immediate suspension of the institution as a qualified depository for any municipal funds.
(k) The Finance Director is hereby authorized and directed to invest the municipality’s funds so as to yield the highest returns consistent with the municipality’s investment principals provided in division (a) hereof and applicable investment strategy.
(l) Price and rate quotations for all investments may be obtained from sources within or outside the municipality.
(m) The Finance Director is hereby authorized and directed to prepare and distribute a request for proposals for banking services in such form as may be approved by the Director of Law. Such a request shall be made as often as deemed appropriate by the Finance Director, but in no case less often than every three years.
(n) The Finance Director is hereby authorized and directed to seek completion in the investment of all municipal funds and may invest all or part of such funds outside the designated central depository bank. However, the central depository bank may bid for such investments just as any other financial institution.
(o) Upon request of the Manager, the Mayor and Council, the Finance Director shall provide reports of the municipality’s investments to the Manager, the Mayor and Council.
(p) The Finance Director is authorized to pool cash balances from the several funds of the municipality for investment purposes.
(q) The Finance Director and the Manager, the Mayor and Council shall be relieved from any liability for the loss of any public monies deposited or invested pursuant to and in compliance with this section, including, but not limited to, losses occasioned by the sale of any instruments, securities or obligations, the closing of any deposit accounts and the failure of any depository, and any deposits or investments heretofore made by the Finance Director in conformity with this section and in contemplation of the passage of the same are hereby ratified and confirmed.
(Ord. 96-O-1590, passed 12-30-1996)