(A)   Scope of policy.  The investment policy applies to the investment activities of all funds under the jurisdiction of the City except the Fire and Police Pension Funds.  The investment policy will also apply to any new funds or temporary funds placed under the jurisdiction of the City.  The Illinois State Statutes will take precedence except where this policy is more restrictive wherein this policy will take precedence.
   (B)   Objectives.  The purpose of this investment policy is to establish cash management and investment guidelines for the stewardship of public funds under the jurisdiction of the City.  The specific objectives of this policy will be as follows:
      (1)   Safety.  The security of monies, whether on hand or invested, shall be the primary concern of the Treasurer in selecting depositories or investments.
      (2)   Liquidity.  The investment portfolio shall remain sufficiently liquid to meet all operating requirements, which might be reasonably anticipated.
      (3)   Return.  The Treasurer shall seek to attain a market average or better rate of return throughout budgetary and economic cycles, taking into account risk, constraints, cash flow, and legal restriction on investment.
      (4)   Local considerations.  The Treasurer shall have preference to depositories located within the City provided that the described objectives are met, and such investments would be in compliance with all other conditions and limitations of this investment policy; however, the Treasurer may approve qualified depositories regardless of location.
   (C)   Guidelines.  To assist in attaining the stated objectives, the following guidelines shall be observed:
      (1)   Investments shall be undertaken in a manner that seeks to insure preservation of capital in the overall portfolio.  To avoid unreasonable risks, diversification of investments is required.
      (2)   The portfolio should remain sufficiently liquid to meet operating requirements, which may reasonably be anticipated.  Cash flows shall be reviewed quarterly.
      (3)   To maximize earnings, all funds shall be deposited/invested within two working days at prevailing rates or better.
      (4)   All investments shall be selected on the basis of competitive bids.
   (D)   Diversification.  To avoid unreasonable risks, diversification of the investment portfolio shall be consistent with the objectives in the investment policy.  Commercial paper shall not exceed 10% of the investment portfolio.
   (E)   Responsibility.  All investment of funds under the control of the Treasurer is the direct responsibility of the Treasurer.  The Treasurer shall be responsible for all transactions and shall establish a system of controls for all authorized subordinates who are directly involved in the assistance of such investment activities.
   (F)   Performance measures (bench mark).  The use of U.S. Treasury bills, average Fed Fund rate, Illinois Funds, or other stable markets can be used to determine whether market yields are being achieved.
   (G)   Periodic review.  The Treasurer should establish annual independent review for internal control, which assures compliance within the investment policy.  This will be accomplished with external auditors.
   (H)   Reporting.  All investment transactions shall be recorded by the Treasurer.  A report will be generated, at least monthly, listing all active investments, location of investments, maturity of investments, interest rate and other pertinent information deemed necessary.  This report will be submitted monthly to the City Council.
   (I)   Investment vehicles.  The City shall limit its investments to those allowed by law as set out in ILCS Ch. 30, Act 235, § 2.  A summary of allowable securities follows:
      (1)   Notes, bonds, certificates of indebtedness, treasury bills, or other securities, which are guaranteed by the full faith and credit of the United States of America as to principal and interest.
      (2)   Bonds, notes, debentures, or other similar obligations of the United States of America or its agencies.
      (3)   Interest bearing accounts, certificates of deposit or interest bearing time deposits or any other investment constituting direct obligations of any bank as defined by the Illinois Banking Act.
      (4)   Short-term obligations (corporate paper) of corporations organized in the United States with assets exceeding $500,000,000 if:
         (a)   Such obligations are rated at the time of purchase within the three highest classifications established by at least two standard rating services and which mature not later than 180 days from the date of purchase, and
         (b)   Such purchases do not exceed ten percent of the corporation's outstanding obligations, or
         (c)   In money market mutual funds registered under the Investment Company Act of 1940.
      (5)   Money market mutual funds registered under the Investment Company Act of 1940, provided that the portfolio of any such money market mutual fund is limited to obligations described in subsections (I) (1) or (I) (2) of this section and to agreements to repurchase such obligations.
      (6)   And any other authorized investments provided under the Illinois Public Funds Investment act as in effect from time to time.
   (J)   Financial institutions.  The Treasurer with the concurrence of the City Council will have the sole responsibility to select which financial (Illinois Funds, banks, savings and loan, credit unions and other non-banks) institutions will be depositories for the City.  Any financial institution, upon meeting the requirements of the Illinois Compiled Statutes and of this policy, may request to become a depository for the City.  The City will take into consideration security, size, location, financial condition, service, fees, competitiveness, and the community relations involvement  of the financial institution when choosing depositories.
   (K)   Collateralization. 
      (1)   At all times in order to meet the objective of safety of capital, the Treasurer will require deposits in excess of the Federally insured amount to be collateralized to the extent of 110% and evidenced by an approved written agreement.
      (2)   Eligible collateral instruments and collateral rates (market value divided by deposit) are as follows:
         (a)   Negotiable obligations of the United States Government;   =110%
         (b)   Negotiable obligations of any agency or instrumentality of the United States Government backed by the full faith and credit of the United States Government;    =110%
         (c)   Negotiable obligations of the State which are rated A or better by Moodys or Standard and Poors;   =110%
         (d)   Negotiable obligations of the City which are rated A or better by Moodys or Standard and Poors;   =110%
      (3)   Maturity of acceptable collateral shall not exceed 120 months.
      (4)   The ratio of fair market value of collateral to the amount of funds secured shall be reviewed weekly and additional collateral will be requested when the ratio declines below the level required.
      (5)   Safekeeping of collateral. 
         (a)   Third party safekeeping is required for all collateral. To accomplish this, the securities will be held at a safekeeping depository as approved from time to time by the Treasurer.
         (b)   Safekeeping will be documented by an approved written agreement.  Substitution, exchange or release of securities held in safekeeping may be done upon two days prior written notice to the Treasurer.
         (c)   When collateral is expended, the Treasurer should receive a copy of the financial institution’s board minutes, indicating the Board of Directors’ approval.
   (L)   Safekeeping of securities.  Securities, unless held physically by the Treasurer, require third party safekeeping.  The Treasurer will have the sole responsibility for selecting safekeeping agents.  Safekeeping will be documented by an approved written agreement.
   (M)   Standard of care. 
      (1)   Investment shall be made with judgement 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 possible income to be derived.  The Treasurer shall be the Chief Investment Officer.
      (2)   In maintaining its investment portfolio, the Treasurer shall avoid any transaction that might impair public confidence in the City.  The above standards are established as standards for professional responsibility and shall be applied in the context of managing the portfolio.
      (3)   Treasurer acting in accordance with this investment policy and procedures as have been or may be established and exercising due diligence shall be relieved of personal liability for an individual security’s credit risk or market changes.
   (N)   Security controls.  Only the Treasurer is authorized to establish financial accounts for the City, subject to this policy.  Any three of the following office holders are authorized to sign on financial accounts of the City: Treasurer, Mayor, Comptroller and Clerk.
(Ord. 8060, passed 12-21-99; Am. Ord. 8684, passed 1-5-10)