(a) Definitions.
(1) “Eligible Investment" means any investment described in subsection (i) hereof.
(2) "Investment Advisor" means a person or entity which the Council has determined has the experience, and training, to provide advice and recommendations in regard to overall portfolio investment strategy as well as individual investments of Village funds with whom the Village has contracted in writing to provide such advice and such recommendations.
(3) “Public Moneys" means all moneys in the treasury of the Village or moneys coming lawfully into possession of the Treasurer.
(4) "Qualified Securities Dealer" means a securities dealer who is a member of the National Association of Securities Dealers, Inc.
(5) “Uniform Depository Act" means Chapter 135 of the Ohio Revised Code ("ORC"), and all amendments thereto.
(b) Treasury Investment Board. There is hereby established a Treasury Investment Board, consisting of the Treasurer and not less than two members of Council who shall be appointed by Council and shall be, ex-officio, members of the Finance Committee of Council.
(c) Scope. All public moneys of the Village on deposit with an Eligible Depository (any institution described in ORC 135.03) may be invested by the Treasurer or such official's designee, or by the Village's Investment Advisor, upon approval of the Treasurer or such official's designee in the Eligible Investments described below. The Treasurer is authorized to pool cash balances of the several funds of the Village for investment.
(d) Objectives. The achievement of sound fiscal management for the Village requires effective investment of the Public Moneys of the Village. To that effect, the following investment objectives which shall all be of equal priority shall be applied in the investment of Public Moneys of the Village, with the achievement of each such objective being measured against the investment portfolio as a whole and not against an individual Eligible Investment:
(1) Safety of Principal. Credit risk shall be minimized by diversifying and maintaining adequate collateralization. Market risk shall be minimized by maintaining adequate liquidity so that current obligations can be met without a sale of securities; diversification of maturities; and diversification of assets.
(2) Liquidity. The Village's investments shall remain sufficiently liquid to enable the Village to meet its operating requirements that might reasonably be anticipated.
(3) Yield. The portfolio shall be managed to consistently attain a market rate of return throughout budgetary and economic cycles.
(e) Investment of Public Monies. The Treasurer is responsible for insuring that personnel follow the established investment policy. The Treasurer is authorized and directed to invest the Public Moneys of the Village in accordance with the provisions of this policy. The Treasurer may delegate the authority to invest the Public Moneys of the Village hereunder to an. employee or employees of the Village, or the Village's Investment Advisor.
The Treasurer is authorized and directed to recommend to Council an Investment Advisor to manage and invest Public Monies in a manner consistent with the Village of Gates Mills Investment Policy. Council must approve the selection of the Investment Advisor and any contract pertaining to the Advisor's services. The Treasurer, at the Treasurer's discretion and consistent with the Investment Advisor contract, may terminate the Investment Advisor contract and recommend a new Investment Advisor to Village Council. The Treasurer may also, at the Treasurer's discretion, recommend one or more additional Investment Advisors to Council.
Once approved by Village Council, each approved Investment Advisor may execute the purchase and/or sale of Public Monies on behalf of the Village in a manner consistent with this section without the prior approval of the Treasurer. Each Advisor will be provided a copy of this section of the Codified Ordinances, as amended from time to time, and each Investment Advisor shall agree in writing to comply with the provisions of this section.
Officers and employees of the Village involved in making investment decisions shall refrain from personal business activity that could conflict with the proper execution and management of the investment program of the Village, or that could impair their ability to make impartial decisions regarding the Village's investments.
The Treasurer and the Treasurer's designee, the Mayor, the Law Director and Councilmembers shall not be held accountable or personally liable for any loss occasioned by the sale of any eligible investment if the investment policy has been followed. Council shall take appropriate measures to protect and defend these individuals.
The Treasurer or the Treasurer's designee, shall maintain accounts in which the Treasurer shall make appropriate entries of all transactions relating to the investment of Public Moneys. Interest earned on any eligible investments shall be collected and credited to the proper fund of the Village as required by law.
(f) Minimizing Investment Risk. The Village acknowledges that investment risk can result from:
(1) A default by the issuer of the investment,
(2) Changes in the market price of the investment, or
(3) Technical complications leading to temporary loss of liquidity of an investment.
To minimize the effect of such investment risks the following investment limitations shall be adhered to, except as otherwise may be approved by the Council, and a written record of which approval shall be maintained:
(1) The Village's investment with any individual issuer shall not constitute more than 5% of such issuer's total outstanding issue in banker's acceptances, commercial paper or corporate securities.
(2) The aggregate total of all corporate securities shall not exceed 50% of the Village's invested Public Moneys.
(3) Eligible investment instruments shall have a maturity not exceeding ten (10) years from the date of settlement of the investment.
(4) The weighted average maturity of all Eligible Investment instruments (exclusive of any investment in the Ohio Subdivisions Fund created pursuant to ORC Section 135.45) shall not exceed seven (7) years.
(5) The maturity of any security issued by any federal government agency or instrumentality, which is an Eligible Investment Instrument pursuant to this Section, may exceed ten (10) years, and shall not be used in the calculation of the weighted average maturity identified above. (Mortgage -backed GNMA, FNMA)
(g) Standard of Care. Investment of Public Moneys of the Village shall be made with exercise of that degree of judgement and care, under circumstances then prevailing, that persons of prudence, discretion and intelligence exercise in the management of their own affairs, considering the probable safety of their capital as well as the probable income to be derived. The foregoing standard shall be applied to the investment portfolio of the Village as a whole.
(h) Eligible Investments. The following obligations are eligible for investment of the Public Moneys of the Village ("Eligible Investments"):
(1) U.S. Treasury Bills, Notes, and Bonds or any other obligation or security issued by the United States Treasury or any other obligation guaranteed as to principal and interest by the United States;
(2) Bonds, notes, debentures or other obligations of or securities issued by any federal government agency or instrumentality, including, but not limited to, the Federal National Mortgage Association, Federal Home Loan Bank, Federal Farm Credit Bank, Federal Home Loan Mortgage Corporation, and Government National Mortgage Association;
(3) Bonds and notes of the State of Ohio;
(4) Bonds and Notes of any county, township, school district, municipal corporation, or other legally constituted taxing subdivision of the State of Ohio, which is not at the time of such investment, in default in the payment of principal on any of its obligations, provided that all of the following apply:
A. The debt is payable from the general revenues and backed by the full faith and credit of the political subdivision.
B. The debt is rated at the time of purchase in not less than the third highest rating category by a nationally recognized rating agency.
C. The Village is not the sole buyer of the issue.
(5) Certificates of Deposit from eligible institutions whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC), provided that such institutions maintain banking operations within the State of Ohio.
(6) No more than 25% investment of funds in No-load money market mutual funds rated in the highest category by at least one nationally recognized rating agency, investing exclusively in the same types of eligible securities as described in items 1 and 2 above and registered or required to be registered under the Investment Company Act of 1940, as amended;
(7) Repurchase agreements for no more than 30 days with any eligible institution mentioned in ORC 135.32. The market value of securities subject to a repurchase agreement must exceed the principal value of the repo amount by at least 2%;
(8) Bankers acceptances drawn on and accepted by banks; provided that the issuer of the bankers acceptances is, at the time of acquisition, rated in the highest short-term rating category of a nationally recognized rating agency;
(9) Commercial paper issues of companies incorporated under the laws of the United States, rated no lower than the third highest rating category with a maximum maturity of 270 days from the date of purchase; and
(10) Medium term notes issued by a corporation domiciled within the United States and having assets in excess of $500 million, provided that such notes have a maximum maturity of 8 years and are rated, at the time of purchase, by Standard & Poor's, Moody's or Fitch under the following limitations:
Standard & Poor’s and/or Fitch | Moody’s |
A+ (2-yr max maturity) | A1 (2-yr max maturity) |
A (2-yr max maturity) | A2 (2-yr max maturity) |
A- (2-yr max maturity) | A3 (2-yr max maturity) |
AA+ (3-yr max maturity) | Aa1 (3-yr max maturity) |
AA (3-yr max maturity) | Aa2 (3-yr max maturity) |
AA- (3-yr max maturity) | Aa3 (3-yr max maturity) |
AAA (maturity > 3 years) | Aaa (maturity > 3 years) |
If a security has a split rating, the higher of the two (2) ratings shall be used to determine the eligibility for investment purposes. In no event shall a corporate security, at the time of purchase, be rated less than A- by Standard & Poor's or less than an A3 by Moody's.
(11) The state treasurer's investment pools (STAR OHIO and STAR PLUS), pursuant to ORC 135.45,
(12) General obligation and revenue bonds of any non-Ohio municipal corporation, provided that all of the following apply:
A. The debt is payable from the general revenues and backed by the full faith and credit of the political subdivision.
B. The debt is rated at the time of purchase in not less than the third highest rating category by a nationally recognized rating agency.
C. The Village is not the sole buyer of the issue.
(i) Prohibited Investments and Practices. Derivative investments, reverse repurchase agreements, stripped principal or interest obligations of issuances, issuance of taxable notes for purposes of arbitrage, contracting to sell securities that have not been acquired on the speculation that bond prices will decline, leveraging of current investments as collateral to purchase other investments, and any other investment not herein defined as an Eligible Investment.
(j) Sale of Securities Prior to Maturity. Securities may be redeemed or sold prior to maturity under the following conditions:
(1) To meet additional liquidity needs;
(2) To purchase another security to increase yield or current income;
(3) To purchase another security to lengthen or shorten maturity;
(4) To realize any capital gains and/or income; or
(5) To increase investment quality.
(k) Restrictions on Investments. All restrictions or limitations placed on the acquisition of an Eligible Investments shall apply at the time of purchase. Should a breach of this policy occur subsequent to the purchase of an Eligible Investment, the Investment Advisor shall notify the Treasurer for the Village of Gates Mills within thirty (30) days to discuss what action to take with respect to any investment or security that is in breach of this policy, including, but not limited to, holding the security that is in breach. (Ord. 2017-28. Passed 9-8-17.)
(l) Safekeeping and Custody. Securities purchased for the Village of Gates Mills will be held in safekeeping by a trustee (“custodian”) approved by Village Council. Securities held in safekeeping by the custodian will be evidenced by quarterly (calendar) statements describing such securities. The custodian may safe keep the Village’s securities in (1) Federal Reserve Bank book entry form; (2) Depository Trust Company (DTC) book entry form in the account of the custodian or the custodian’s correspondent bank, or (3) non-book entry (physical) securities held by the custodian or the custodian’s correspondent bank. All securities transactions will settle using standard delivery-vs.-payment procedures. The records of the custodian shall identify such securities in the name of the investing authority. (Ord. 2017-33. Passed 9-12-17.)
(m) Statements of Compliance. This investment policy has been approved by the Treasurer and the Council of the Village of Gates Mills and filed with the Auditor of State, pursuant to ORC 135.35(K)(1).
All brokers, dealers, and financial institutions executing transactions initiated by the Treasurer have signed the approved investment policy.
Any amendments to this policy will be filed with the Auditor of State within fifteen days of the effective date of the amendment. The policy and any amendments thereof will be filed at the following address:
Auditor of State
ATTN: Clerk of the Bureau
P.O. Box 1140
Columbus, Ohio 43216-1140
(Ord. 2017-28. Passed 9-8-17.)