(a) Purpose. It is the policy of the Village to invest public funds in a manner which will provide the highest investment return with the maximum security, safety and preservation of principal while meeting the daily cash flow demands of the Village and conforming to all applicable statutes governing the investment of public funds by an Ohio municipality. The Fiscal Officer shall be the investment officer for the Village, charged with the responsibility for the purchase and sale of investments and the carrying out of this investment policy.
(b) Scope. This investment policy applies to all financial assets of the Village, including State and Federal funds held by it. The Fiscal Officer shall routinely monitor the contents of the Village's investment portfolio, the available markets and relative value of competing investments and will adjust the portfolio accordingly.
(c) Prudence. Investments shall be made with 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.
The standard of prudence to be used by the Fiscal Officer shall be the "prudent person" standard and shall be applied in the context of managing the overall portfolio. Acting in accordance with this investment policy and exercising due diligence shall relieve the Fiscal Officer of personal responsibility for an individual security's credit risk or market price changes, provided that deviations from expectations are reported to Council in a timely fashion and appropriate action is taken to control adverse developments.
(d) Objectives. The primary objectives, in priority order, of the Village's investment activities, shall be:
(1) Safety. Safety of principal is the foremost objective of the investment program. Investments of the Village shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. To attain this objective, diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio.
(2) Liquidity. The Village's investment portfolio will remain sufficiently liquid to enable it to meet all operating requirements which might be reasonably anticipated.
(3) Return on investment. The Village's investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account this investment policy and the cash flow characteristics of the portfolio.
(e) Ethics and Conflicts of Interest. Persons involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Employees and investment consultants shall disclose to the Village any material financial interests in financial institutions that conduct business within the Village and any large personal financial or investment positions that could be related to, or affected by, the performance of the Village's portfolio. All employees and officers of, and investment consultants to, the Village shall subordinate their personal investment transactions to those of the Village, particularly with regard to the timing of purchases and sales.
(f) Authorized Financial Dealers and Institutions. The Fiscal Officer will maintain a list of financial institutions and approved security brokers/dealers selected by credit worthiness who or which are authorized to provide investment services and qualify under Ohio R.C. 135.14(M)(1). These may include "primary" dealers or regional dealers who or which qualify under Securities and Exchange Commission Rule 15c 3-1 and are registered with the Ohio Department of Commerce to do business in the State.
All financial institutions and brokers/dealers who or which desire to become qualified suppliers of investment transactions to the Village must provide the Fiscal Officer with audited annual financial statements, proof of good standing with the Comptroller of Currency or State banking regulators or National Association of Securities Dealers certification, proof of Ohio registration and biographical and regulatory information on the persons who are the primary contact with the entity. All financial institutions, brokers/dealers and consultants who or which desire to conduct investment business with the Village must sign this investment policy, certifying that they have read it, understand it and agree to abide by its contents.
(g) Authorized Investments. The Village is empowered by statute to invest in the following types of securities:
(1) United States Treasury bills, notes, 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 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, Government National Mortgage Association and Student Loan Marketing Association. All such securities shall be direct issuances of Federal government agencies or instrumentalities.
(3) Interim deposits in duly authorized depositories of the Village, provided that such deposits are properly insured or collateralized as required by law;
(4) Bonds and other obligations of the State of Ohio;
(5) No-load money market mutual funds consisting exclusively of securities as described in paragraphs (g)(1) and (2) hereof, and repurchase agreements secured by such obligations, provided that all such investments under this paragraph shall be made with a bank or savings and loan association eligible to be a depository for public funds of Ohio subdivisions, and provided further that any such fund meets the requirements of Ohio R.C. Chapter 135, including that such fund not include any investment in a "derivative";
(6) Ohio Subdivision's Fund (STAROhio); and
(7) Overnight or term (not exceeding thirty days) repurchase agreements meeting the requirements of Ohio R.C. 135.14(E), with a bank or savings and loan association eligible to be a depository for public funds of Ohio subdivisions or a member of the National Association of Securities Dealers.
(h) Diversification. The Village will diversify its investments by security, type and institution. With the exception of direct obligations of the U.S. Treasury and STAROhio, no more than forty percent of the Village's total investment portfolio will be invested in a single security type or with a single financial institution.
(i) Maximum Maturities. To the extent possible, the Village will attempt to match its investments with anticipated cash flow requirements. No investment shall be made unless the Fiscal Officer, at the time of making the investment, reasonably expects it can be held to its maturity. Unless matched to a specific obligation or debt of the Village, the Village will not directly invest in securities as set forth in paragraphs (g)(1) to (5) hereof maturing more than five years from the date of settlement, provided that such five years shall be two years in the case of securities which bear interest at a variable rate based on an index and are otherwise eligible for investment.
(j) Safekeeping and Custody. All security transactions, including collateral for repurchase agreements, entered into by the Village shall be conducted on a delivery-versus- payment basis. Securities will be held by a third party custodian designated by the Fiscal Officer and evidenced by safekeeping receipts. Securities shall be pledged at the Federal Reserve Bank to collateralize all repurchase agreements with financial institutions. Pledge collateral will be released by the Village only after verification that the principal and interest have been credited to the Village's account.
(k) Prohibited Investment Practices. In addition to any other prohibitions in the Ohio Revised Code, the Village shall not:
(1) Contract to sell securities that have not yet been acquired on the speculation that prices will decline;
(2) Make any investment in "derivatives" as defined in Ohio R.C. 135.14(C);
(3) Invest in a fund established by another public body for the purpose of investing public money of other subdivisions unless the fund is either STAROhio or a fund created solely for the purpose of acquiring, constructing, owning, leasing or operating municipal utilities as authorized under Ohio R.C. 715.02 or Section 4 of Article XVIII of the Ohio Constitution;
(4) Enter into reverse repurchase agreements;
(5) Leverage current investments as collateral to purchase other assets; and
(6) Invest in stripped principal or interest obligations of otherwise eligible obligations.
(l) Internal Controls. The Fiscal Officer shall develop and maintain procedures for the operation of the Village's investment program in accordance with this investment policy. These procedures shall be designed to prevent loss of the Village's funds due to fraud, error, misrepresentation, unanticipated market changes or imprudent actions.
(m) Reporting. The Fiscal Officer shall maintain a current inventory of all investments including:
(1) A description of each security;
(2) The cost;
(3) Par value;
(4) Dates (beginning, settlement and maturity);
(5) Rates; and
(6) The seller.
The Fiscal Officer shall also prepare and distribute quarterly (or more frequently, if requested by Council) a list of all investments and a report on investment activity and returns.
(n) Education. The Fiscal Officer shall participate in any beginning and/or continuing education training program sponsored by the State Treasurer or the State Auditor in which the Fiscal Officer is required to participate pursuant to Ohio R.C. 117.44, 135.22 and 733.27. Through participation in those programs, the Fiscal Officer will develop and maintain an enhanced background and working knowledge in investment, case management and ethics.
(o) Nonbinding Arbitration. The Fiscal Officer may enter into a written investment or deposit agreement that includes a provision under which the parties agree to submit to nonbinding arbitration (but not binding arbitration) to settle any controversy that may arise out of that agreement so long as such provision meets the requirements of the Ohio Revised Code and is specifically approved by Council.
(p) Investment Policy Adoption. This investment policy shall be adopted by Council and, upon adoption, filed in the office of the Auditor of State. The policy shall be reviewed on an annual basis by the Council or a committee designated by it and any modifications made thereto must be approved by the Council and, upon adoption, filed in the office of the Auditor of State.
(Ord. 2635. Passed 7-9-18.)