The city's investment policy for interim and inactive funds conforms to the requirements of the Uniform Depository Act of the State of Ohio (Ohio R.C. Chapter 135). The requirements of the Act provide a safe, conservative framework for investment of city funds.
(A) Objectives and guidelines.
(1) The primary objective shall be the preservation of capital and protection of principal while earning investment interest.
(2) In investing public funds, the Investment Committee will strive to exceed or at least equal the market average rate of return on the investment 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 Treasurer to meet reasonable anticipated operating requirements.
(4) Since all possible cash demands cannot be anticipated, the investment portfolio should consist of securities with active resale markets, and with no measure of possible principal erosion in response to interest rate shifts.
(5) Safety and liquidity is most important. Investments are limited to low risk securities with the expectation of earning a fair return relative to the risk assumed.
(B) The Investment Committee consists of the Auditor, Law Director and the Mayor. The Auditor and Deputy Auditor are charged with the responsibility for the operation of the city's investment program and are required to report to the Investment Committee on a regular basis. They are also directed to refrain from personal business activity that could conflict with the execution and management of the investment program or impair their ability to make impartial investment decisions. The Auditor shall maintain a monthly inventory report, a monthly portfolio report, and a quarterly investment report of all obligations and securities held in the city's investment portfolio. A copy of these reports shall be filed with the board of county commissioners.
(C) Authorized financial institutions.
(1) All eligible financial institutions must meet the requirements of the Uniform Depository Act; have a full service facility located in the city; and have a current Agreement for Deposit of Interim and Active Funds with the city.
(2) A list of authorized institutions shall be maintained by the Treasurer. Additions and deletions to this list shall be made when deemed in the city's best interest by the City Council.
(D) Authorized investments.
(1) Interim funds are identified as funds not needed for immediate use but which will be needed before the end of the current depository designation and may be invested or deposited in the following securities:
(a) Bonds, notes or other obligations guaranteed as to principal and interest by the United States;
(b) Bonds, notes, debentures or other obligations or securities issued by federal government agencies, including but not limited to the Fifth Third Bank, Star Bank and Provident Bank (all securities must be direct issuances of the federal agency or instrumentality);
(c) Repurchase agreements collateralized by securities enumerated above (repurchase agreements shall be transacted only through banks with which the Treasurer [Deputy Treasurer] has signed a Master Repurchase Agreement);
(d) Bonds and other obligations of the State of Ohio;
(e) The State Treasury Asset Reserve of Ohio (STAR Ohio); and
(f) The city may also invest any monies not required within a period of six months in bonds, notes or other obligations guaranteed as to principal and interest by the United States.
(2) The maximum maturity of any eligible investment is (two) years from the date of settlement, unless the investment is matched to the specific obligation or debt of the city.
(3) Investments in derivatives and in stripped principal or interest obligations of eligible obligations are strictly prohibited. A derivative is a financial instrument or contract or obligation whose value or return is based upon or linked to another asset or index, or both, separate from the financial obligation, trust account, or instrument that is created from an obligation of a federal agency or instrumentality or is created from both is considered a derivative instrument.
(E) Collateral.
(1) Any public depository in which the city places deposits must pledge as collateral eligible securities of aggregate market value equal to the excess of deposits not insured by the Federal Deposit Insurance Corporation (FDIC). The securities pledged as collateral are pledged to a pool for each individual financial institution in amounts equal to at least 110% of the carrying value of all public deposits held by each institution. Obligations that may be pledged as collateral are limited to obligations of the United States and its agencies and obligations of any state, county, municipal corporation or other legally constituted authority of any other state or any instrumentality of such county, municipal corporation or other authority.
(2) Any and all financial institutions initiating investment transactions with the city or executing transactions initiated by the city must acknowledge by signing below their agreement to comply with the provision of this investment policy.
Auditor, Law Director, Authorized
City of Reading City of Reading Officer
Date Date Financial Institution
Date
(Ord. 97-05, passed 1-21-97)