(a) The following investment and deposit objectives shall be applied in the management of City funds:
(1) The primary objective of the City's investment activities shall be the preservation of capital and the protection of investment principal.
(2) The Director of Finance shall strive to maximize the return on the portfolio, but shall avoid assuming unreasonable investment risks.
(3) The City's investment portfolio shall remain sufficiently liquid to enable the City to meet operating requirements which might reasonably be anticipated.
(4) The City's investments shall be diversified to avoid the assumption of unreasonable and avoidable risks associated with specific types of securities or individual financial institutions.
(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 City's public funds shall be the City's desire to obtain the best possible banking services at the least possible cost.
(b) To the extent possible, the City's investments shall be made so as to complement its anticipated cash flow requirements. Unless matched to a specific cash flow requirement, investments in securities maturing more than one year from the date of purchase shall not be made.
(c) Securities shall be purchased only through financial institutions located within the State or through primary securities dealers as designated by the Federal Reserve Bank. A list of these institutions shall be maintained by the Director. The 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; and
(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 City's account lacks experience or familiarity in providing service to large institutional accounts; or
D. It is in the best interest of the City.
(d) The Director may invest, on behalf of and in the name of the City, 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 of 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 obligations, which shall include:
a. Treasury bills;
b. Treasury notes;
c. Star Ohio;
2. Obligations of the following Federal agencies:
a. The Government National Mortgage Association (GNMA);
b. The Small Business Administration (SBA);
c. The Federal Housing Administration (FHA);
d. The Farmers Home Administration (FMHA);
e. The General Services Administration (GSA);
B. Obligations of the Federal Farm Credit Banks, the Export-Import Bank of Washington, the Federal Home Loan Mortgage Corporation or the Federal Home Loan Bank or its district banks, including Federal Home Loan Mortgage Corporation participation certificates, or obligations guaranteed by the GNMA.
(2) Non-negotiable interest-bearing time certificates of deposit 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 subsection (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 fifty in asset and deposit size within their industry.
(4) Repurchase 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. 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 Federal Deposit Insurance Corporation (FDIC).
(e) All City funds deposited pursuant to paragraphs (d)(2) and (5) hereof shall be secured by collateral pledged at market value in an amount equal to at least 100 percent of the deposit less the amount insured by the FDIC. 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 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 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 subsection (e) hereof shall be delivered either to the Director or to an independent financial institution approved by the Director to serve as Trustee (herein referred to as "the Trustee") under a trust agreement therefor entered into between the City and such institution in a form approved by the Municipal Attorney. 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 City, the Director shall have the option of selling, in the manner determined by the 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 Director may request the Trustee to deliver to the Director any of the securities so deposited, and the Director shall have the option to sell such securities in the manner determined by the Director. When a sale of securities has been made, then, upon payment to the Director of the purchase money, the 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 City and expenses of the sale shall be paid to the depository.
(h) When a depository has deposited securities with the Trustee in accordance with subsection (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) If the Director gives written authorization for such substitution or exchange;
(2) If 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. 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) If the depository, when no continuing authorization for substitution or exchange has been given by the Director, shall notify the Director and the Trustee of an intended substitution or exchange and the Director fails to object to the Trustee within ten business days after receipt by the Director of 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.
(i) The depository shall notify the Director of any substitution of exchange of securities authorized pursuant to subsection (h) hereof. Upon request from the 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 Director, a depository may provide collateral for City funds deposited pursuant to paragraphs (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 percent of all public moneys on deposit with the depository, including the amount covered by FDIC.
(2) The securities eligible for deposit in the pool shall be those described in subsection (e) hereof.
(3) The securities constituting the pool shall be delivered to a Trustee as provided in subsection (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 City, the Director may request the Trustee to deliver to the Director any of the securities on deposit with the Trustee, provided that the value of the securities delivered shall not exceed the amount necessary to produce an amount equal to the City deposits made and not paid over, less the portions of such deposits covered by the FDIC, plus any accrued interest due on the deposits. In any event, the value of such securities shall not exceed the City'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 Director shall have the option to sell the securities in such manner as determined by the Director. Any surplus remaining after deducting the amount due the City and expenses of the sale shall be paid to the depository.
(5) Within thirty 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 percent 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 percent of all public funds on deposit with the Trustee.
(7) Failure of the institution to abide by any of the provisions of this section shall be cause for the immediate suspension of the institution as a qualified depository for any City funds.
(k) The Director is hereby authorized and directed to invest the City's funds so as to yield the highest returns consistent with the City investment principals provided in subsection (a) hereof and applicable investment strategy.
(l) Price and rate quotations for all investments may be obtained from sources within or outside the City.
(m) The 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 Director, but in no case less often than every five years. Each request for proposals shall contain the following:
(1) A statement which provides that to ensure that the City will receive the best service possible, no financial institution shall receive deposits of the City funds without an open and fair competitive process and that all financial institutions have an equal opportunity to competitively bid in future years.
(2) A list of requirements which the depository must meet in order to maintain the depository agreement in good standing.
(3) A description of the accounts required to be maintained under the depository agreement and of the specifics of operation related thereto.
(4) A statement of guidelines for the investment of the City's funds.
(5) A list of services required by the City under the depository agreement, together with guidelines for the calculation of service charges and for the subsequent provision of additional services.
(6) A list of the criteria upon which the financial strength of each institution submitting a proposal will be evaluated.
(7) A statement of the instructions for submitting a proposal.
(8) A description of the selection process and of the procedure for submitting questions relating to the request for proposals.
(n) The Director is authorized and directed to seek competition in the investment of all City funds and may invest all or part of such funds outside the designated central depository bank, provided that the central depository bank may bid for such investments as any other financial institution.
(o) Upon request of the City Manager, the Mayor and Council, the Director shall provide reports of the City's investments to the Manager, the Mayor and Council.
(p) The Director is authorized to pool cash balances from the several funds of the City for investment purposes.
(Ord. 27-92. Passed 10-12-92; Ord. 16-02. Passed 8-12-02.)