(a) Scope. Council hereby directs that the investing authority of the City shall reside with the Finance Director (the "Treasurer") or acting Finance Director in accordance with this investment policy. This policy is designed to cover all monies under the control of the Finance Director and those that comprise the core investment portfolio of the City. Notwithstanding the policies detailed below, Ohio R.C. Chapter 135 will be adhered to at all times.
(b) Objectives and Guidelines. The following investment objectives will be applied in the management of the City's funds:
(1) The primary objective shall be the preservation of capital and protection of principal while earning investment interest.
(2) In investing public funds, the Finance Director will strive to achieve a fair and safe average rate of return on the investment portfolio over the course of budgetary and economic cycles, taking into account State law, safety considerations and cash flow requirements.
(3) The investment portfolio shall remain sufficiently liquid to enable the Finance Director to meet reasonably anticipated operating requirements.
(4) The investment portfolio should be diversified in order to avoid incurring potential losses regarding individual securities which may not be held to maturity, whether by erosion of market value or change in market conditions.
(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) The Finance Director, acting in accordance with written procedures and this investment policy, and exercising due diligence, shall be relieved of personal responsibility for an individual security is credit risk or market price changes, provided that the deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.
(7) To maintain the portfolio's current characteristics and/or to enhance its yield, swapping (i.e. the simultaneous sale of one security and the purchase of another) will be permitted, provided that the loss, if any, on the sale is recovered in one-half the time or less remaining to maturity of the security being sold.
(8) Bank account relationships will be managed in order to secure adequate services while minimizing costs. Deposits should be concentrated in single accounts except where audit control considerations dictate otherwise.
(c) Authorized Financial Institutions and Dealers. U.S. Treasury and Agency Securities purchased outright shall be purchased only through financial institutions located within the State of Ohio or through primary securities dealers as designated by the Federal Reserve Board.
Repurchase Agreements shall be transacted only through banks located within the State of Ohio with which the Finance Director has signed a Master Repurchase Agreement as required in Ohio R.C. Chapter 135.
The market value of the securities subject to the repurchase agreement must exceed the principal value of the repurchase agreement by at least two percent. Securities subject to repurchase agreements must be marked to market daily.
Certificates of Deposit shall be transacted through commercial banks or savings and loans with FDIC or FSLIC coverage which are located within the State of Ohio and qualify as eligible financial institutions under Ohio R.C. Chapter 135.
A list of authorized institutions and dealers shall be maintained with the investing authority. Additions and deletions to this list shall be made when deemed in the best interest of the investing authority.
(d) Maturity. To the extent possible, the Finance Director will attempt to match investments with anticipated cash flow requirements. Unless matched to a specific cash flow requirement, the Finance Director will not directly invest in securities maturing more than five years from the date of purchase.
(e) Derivatives. Investments in derivatives and in stripped principal or interest obligations of eligible obligations are strictly prohibited. A derivative means a financial instrument, contract or obligation whose value or return is based upon or linked to another asset or index, or both, separate from the financial instrument, contract or obligation itself. Additionally, any security, obligation, trust account or instrument that is created from an obligation of a Federal agency or instrumentality, or from both, is considered a derivative instrument.
(f) Allowable Investments. The Finance Director may invest in any instrument or security authorized in Ohio R.C. Chapter 135, as amended. A copy of the appropriate Ohio R.C. section will be kept with this policy.
(g) Collateral. All deposits shall be collateralized pursuant to Ohio R.C. Chapter 135.
(h) Reporting. The investing authority shall establish and maintain an inventory of all obligations and securities acquired by the investing authority. The inventory shall include the description of the security, its type, the cost, its par value, the maturity date, the settlement date and the coupon rate. The investing authority shall produce a monthly portfolio report detailing the current inventory of all obligations and securities, all transactions during the month, income received and investment expenses paid, and the names of any persons effecting transactions on behalf of the investment authority.
Any agreements for the deposit, investment or management of public money, including investment advisory agreements entered into pursuant to this policy, may, but need not, include a nonbinding arbitration clause and may not include a binding arbitration clause.
Pursuant to Ohio R.C. Chapter 135, all brokers, dealers and financial institutions initiating transactions with the investment authority by giving advice or making investment policy, or executing transactions initiated by the investment authority, must acknowledge their agreement to abide by the rules and regulations of Ohio R.C. Chapter 135, any future addendums thereto and this investment policy.
(Ord. 96-41. Passed 9-3-96.)