(a) Definitions. For the purpose of this section, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
(1) ELIGIBLE DEPOSITORY. Any institution described in R.C. § 135.03.
(2) ELIGIBLE INVESTMENT. Any investment described in division (c)(1) hereof.
(3) DELIVERY VERSUS PAYMENT. Delivery versus payment is delivery of securities with an exchange of money for the securities.
(4) DERIVATIVE SECURITY. 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, but shall not include a written repurchase agreement that satisfies the provisions of division (c)(1)E. hereof.
(5) INTERIM DEPOSITS. All public monies in the treasury of the city or monies coming lawfully into the possession of the Director of Finance and are not needed for immediate use but will be needed before the end of the period of designation.
(6) INVESTMENT POOL. A fund established by another subdivision (including a county), the Director of Finance, the Governing Board or the Investing Authority (as each of those terms is defined in R.C. § 135.01), if that fund was established for the purpose of investing the interim deposits of other subdivisions, but shall not include the Ohio Subdivision’s Fund created pursuant to R.C. § 135.45.
(7) QUALIFIED SECURITIES DEALER. A securities dealer who is a member of the Financial Industry Regulatory Authority, Inc.
(8) QUALIFIED TRUSTEE. A qualified trustee as described in R.C. § 135.18 of the Uniform Depository Act.
(9) REVERSE REPURCHASE AGREEMENT. A repurchase agreement under the terms of which the Director of Finance or such Director of Finance’s designee agrees to sell securities owned by the city to a purchaser and agrees with that purchaser to unconditionally repurchase such securities.
(10) UNIFORM DEPOSITORY ACT. R.C. Chapter 135 and all amendments thereto.
(b) Provisions.
(1) Scope. All interim deposits of the city as may be prescribed by the Director of Finance, except as otherwise hereinafter provided, may be invested by the Director of Finance or his or her designee in the eligible investments described in division (c) hereof, which eligible investments shall be purchased only through or from eligible depositories designated pursuant to the Uniform Depository Act or a qualified securities dealer as defined in division (a) hereof. However, interim deposits held by a trustee or escrow agent under a trust agreement, trust indenture or escrow agreement between the city and such trustee or escrow agent in connection with, or related to, an issue of bonds, notes or other obligations of the city may be invested in any investments permitted by such trust agreement, trust indenture or escrow agreement or as are approved by the rating agency or rating agencies rating such bonds, notes or other obligations, or interim deposits specifically exempted by ordinance from this division (b) may be invested as permitted in such ordinance or other ordinance related to such interim deposits. The Director of Finance is authorized to pool cash balances of the several funds of the city for investment hereunder.
(2) Objectives. The achievement of sound fiscal management for the city requires effective investment of the interim deposits of the city. To that effect, the following investment objectives shall be applied in the investment of interim deposits.
A. Safety. The primary objective of the city’s investment policy is the preservation of capital and the protection of investment principal. Subject to the provisions of division (b)(3)B. hereof, each investment transaction shall seek to first ensure that capital losses measured against the investment portfolio as a whole are avoided, whether they be from securities’ defaults or the erosion of market value.
B. Liquidity. The city’s investments shall remain sufficiently liquid to enable the city to meet its operating requirements that might reasonably be anticipated.
C. Yield. In the investment of the interim deposits of the city, the Director of Finance and any designee of the Director of Finance as permitted hereunder shall strive to attain a market-average rate of return throughout budgetary and economic cycles, taking into account the city’s investment risk constraints and the cash flow characteristics of the portfolio, but shall avoid assuming unreasonable investment risks. Yield as an objective of this policy is of least importance compared to safety and liquidity.
(3) Minimizing investment risk. The city acknowledges that investment risk can result from a default by the issuer of the investment, changes in the market price of the investment or technical complications leading to temporary illiquidity of an investment. The following investment limitations are directed at minimizing the effect of such investment risks:
A. To minimize the risk of default by the issuer of the investment:
1. Interim deposits of the city shall be invested only in eligible investments permitted under division (c) hereof, except as otherwise permitted under division (b)(1) hereof.
2. No more than 20% of the city’s interim deposits shall be invested in the aggregate of the eligible investments described in divisions (c)(1)C. and D. hereof (excluding bonds, notes and other obligations of the city).
3. The Finance Director shall determine appropriate maximum allocations of the city’s interim deposits available to be invested in the aggregate of the eligible investments described in divisions (c)(1)E. and H. hereof.
4. No more than 55% of the city's interim deposits shall be invested in the aggregate of the eligible investments described in divisions (c)(1)G., H. and I. hereof.
5. No interim deposits of the city shall be invested in any derivative security, reverse repurchase agreement or investment pool or, except as otherwise provided in this section, in any stripped principal or interest obligation of any eligible investment.
6. The use of leveraging by the city solely as a speculative investment strategy is prohibited under this investment policy. As used herein, LEVERAGING shall mean the use of any of the city’s current assets as collateral for the purpose of purchasing other assets.
7. The issuance of taxable notes by the city solely for the purpose of arbitrating their proceeds is prohibited under this investment policy.
8. Contracting for the sale of securities that have not yet been acquired by the city for the purpose of purchasing such securities at a later date on the speculation that their price will decline is prohibited under this investment policy.
B. To minimize the risk of changes in the market price of an eligible investment:
1. Any eligible investment made pursuant to this section with the exception of eligible investments described in divisions (c)(1)C. and D. hereof shall mature within five years from the date of settlement unless the eligible investment is matched to a specific obligation or debt of the city; provided, however, that no investment shall be made in any eligible investment hereunder unless the Director of Finance or the authorized designee of such Director of Finance reasonably expects that the eligible investment can be held until its maturity and, with respect to any investment of the city’s interim deposits in the Ohio Subdivision’s Fund created pursuant to R.C. § 135.45, the limitation of this division (b) shall not be construed as restricting the maturity date of any individual asset in which the Fund shall invest;
2. If at any time the city has no eligible investments maturing within the next succeeding two calendar months from such time, and at such time the Director of Finance reasonably expects that a portion of such eligible investments may have to be liquidated to pay the costs of operating the city at some time during such next succeeding two calendar months, any additional interim deposits coming into the custody of the Director of Finance or such Director’s designee, to the extent the Director of Finance or the Director’s designee reasonably expects such interim deposits to be needed to pay the costs of operating the city during such two calendar months, shall be invested only in short-term eligible investments with a maturity that will allow the Director of Finance or the Director’s designee to have available (without the need for sale of such eligible investments in the secondary market) the proceeds of such eligible investments at such a time that such proceeds can be timely applied to meeting such operating expenses of the city; and
3. Notwithstanding anything herein to the contrary, nothing in division (b)(2)A. or (b)(3)B. hereof shall be construed to prohibit such Director of Finance or such designee from selling such eligible investment prior to its maturity, or to impose liability on such Director of Finance or such designee for any loss occasioned by the sale of any eligible investment otherwise made in accordance with this section at a price or prices lower than its cost or balance, if the liquidity needs of the city required such a sale or if the yield on the reinvestment of the sale proceeds of such eligible investment, after taking into account the loss incurred in connection with such sale, will exceed the yield that the city otherwise would have earned if it had held the original eligible investment to the earlier of its maturity date or the maturity date of the eligible investment purchased with such sale proceeds.
(4) Standard of care. Investment of the interim deposits of the city shall be made with the exercise of that degree of judgment and care, under circumstances then prevailing, that 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 foregoing standard shall be applied to the investment portfolio of the city as a whole.
(5) Authority to invest interim deposits. The Director of Finance is hereby authorized and directed to invest the interim deposits of the city in accordance with the provisions of this section. The Director of Finance may delegate the authority to invest the interim deposits of the city hereunder to another employee or employees of the city, provided that any such delegation shall be in a writing that shall be filed with the Mayor, and such a delegation shall be effective for all purposes of this section unless the Mayor disapproves such a delegation within ten days of receipt of such written delegation. Such a delegation may be for a limited or unlimited period of time; provided that, if such delegation is for an unlimited period of time, revocation of such delegation shall be effective only if made in a written instrument signed by the Director of Finance and termination of the employment by the city of such employee shall automatically terminate such employee’s authority to invest the interim deposits of the city hereunder without the need for a written instrument.
(6) Conflicts of interest.
A. Officers and employees of the city 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 city, or that could impair their ability to make impartial decisions regarding the city’s investments, and from undertaking personal investment transactions with the same individual or company with whom business is conducted on behalf of the city, unless, with respect to the preceding item, such officer and employee shall disclose in a writing filed with the Council of the city that such officer or employee has undertaken, is undertaking and/or will undertake personal investment transactions with the same individual or company, whose name shall be set forth in the filing, with whom business is conducted on behalf of the city and such an undertaking would not constitute a violation of R.C. § 102.03 or 2921.42.
B. Officers and employees of the city involved in making investment decisions shall disclose to the Council of the city any material interests in eligible institutions or qualified securities dealers with which they conduct investment business on behalf of the city, and any personal investment positions that could materially affect, or be materially affected by, the performance of the investment portfolio of the city.
(7) Periodic reports with respect to eligible investments. The Director of Finance shall prepare at least quarterly an investment report, including a management summary, describing the investment portfolio at the end of the quarterly or other period, details of compliance metrics, the transactions made over such period, and the performance of the investment portfolio relative to an appropriate benchmark as determined by the Director of Finance. Such report shall include a list by maturity date of all eligible investments (including, without limitation, a description of the obligation or security that includes the type, original cost, par value, maturity date, coupon interest rate and yield to maturity) for the period covered by such report and held at the end of such period; and the percentage of the total portfolio that each type of investment represents. A copy of such report shall be delivered to the Council and the Mayor.
(8) Authorized purchasers and sellers of eligible investments. Purchases and sales of eligible investments hereunder shall be made only from or to, as the case may be, an eligible depository or a qualified securities dealer, which in either case has acknowledged to the city in writing that, in the case of such a party that initiates investment transactions with the city, it has received a copy of this section, and it will not sell to the city any investment security prohibited hereunder or not included as an eligible investment within the investment securities described in division (c) hereof or, in the case of such a party that executes investment transactions initiated by the city, it has received a copy of this section and it comprehends the investment policy stated herein. The Director of Finance shall biannually review the financial condition and registration of each eligible depository and qualified securities dealer with or through whom the interim deposits of the city are invested.
(9) Purchases and sales of eligible investments by the city. The Director of Finance, or such Director of Finance’s designee, shall purchase an eligible investment hereunder for cash at a price not in excess of the current market price, which price shall be deemed to be the best price as determined hereunder and shall sell any eligible investments for cash and for a sum not less than their current market price, which price shall be deemed to be the best price as determined hereunder. Except as otherwise provided in division (b)(10)B. hereof, with respect to an overnight repurchase agreement, all purchases and sales of eligible investments hereunder shall be made only on a delivery versus payment basis. With respect to the purchase or sale of any eligible investment other than the eligible investments described in divisions (c)(1)I. and J. hereof, the Director of Finance or such Director of Finance’s designee, subject to the provisions of division (b)(8) hereof and except as otherwise provided in this division (b)(9), shall purchase or sell any eligible investment at the best price based upon at least two bids if the eligible investment is offered as such from any of the parties described in division (b)(8) hereof. If there is no readily available competitive offering on the same specific eligible investment, then the Director of Finance shall document quotations for comparable or alternative eligible investments. When purchasing original issue instrumentality securities, no competitive offerings will be required as all dealers in the selling group offer those securities at the same original issue price. As used in the immediately preceding sentence, in connection with any purchase of an eligible investment, the BEST PRICE shall mean that price which produces the highest yield to maturity with respect to such eligible investment and, in connection with the sale of an eligible investment, the “best price” shall mean the highest price with respect to such eligible investment; provided, however, that in any case where there are two or more bids at the best price, the Director of Finance or such Director of Finance’s designee may, in his or her absolute discretion, determine which of such bids constitutes the best price. The Director of Finance or his or her designee shall keep a written record of the bids taken with respect to each purchase or sale of an eligible investment. If the city utilizes the services of an investment advisor and grants such investment advisor the authority to execute investment transactions on behalf of the city, then the investment advisor will retain documentation of the competitive pricing execution on each transaction and will provide such documentation upon request.
(10) Registration, custody and safekeeping of eligible investments.
A. If any eligible investments purchased pursuant to this section are to be issued to a designated payee or to the order of a designated payee, the name of the Director of Finance and the title of his or her office shall be so designated. If any such eligible investments are registrable either as to principal or interest, or both, then such eligible investments shall be registered in the name of the Director of Finance as such.
B. With respect to each eligible investment, the Director of Finance shall obtain a document evidencing, in the case of a book-entry security, and confirming, in the case of a certificated security held by other than the Director of Finance, each such investment. The Director of Finance is responsible for the safekeeping of all eligible investments and documents evidencing such eligible investments acquired by the Director of Finance. All eligible investments acquired as investments under this section by the Director of Finance on behalf of the city, whether in certificated or book-entry form, may be held on behalf of the city by a qualified trustee. Such qualified trustee shall provide to the Director of Finance a copy of each document evidencing or confirming such eligible investments which such qualified trustee receives and shall be required to report to the Director of Finance or to the Auditor of the state or a duly authorized independent auditor of the city at any time upon request of such party the identity and location of the document evidencing each eligible investment made hereunder and held by such qualified trustee. In lieu of such custody, such eligible investments or documents evidencing or confirming such eligible investments may be held in a safe or other secure place at the office of the Director of Finance. With respect to any repurchase agreement that matures on the business day that immediately succeeds the business day on which such repurchase agreement was entered into, if the participating institution is a designated depository of the city for the current period of designation, the securities that are the subject of the repurchase agreement may be held in trust by the participating institution on behalf of the city, notwithstanding anything to the contrary in this division (b)(10)B..
(11) Internal controls with respect to eligible investments. The Director of Finance shall establish and maintain an internal control structure designed to ensure that the assets of the city are protected against theft, loss or misuse, and in connection therewith, shall maintain written procedures relating to such internal control.
(12) Exemptions from this policy and general law.
A. Any investment of interim deposits which, on the effective date of this section, does not qualify as an eligible investment under this section (each an “ineligible investment”) may, notwithstanding anything herein to the contrary, be held until the first to occur of either its maturity or its sale; provided, however, that if the investment does not have a maturity date, it may be held no later than five years from the effective date of this section. The proceeds of any sale of an ineligible investment shall be reinvested, if at all, only in an eligible investment.
B. The city and the Director of Finance, any designee of the Director of Finance pursuant to this section, and any other official of the city, being governed by a charter adopted under Article XVIII of the Ohio Constitution, and special provisions regarding the investment of the city’s interim deposits having been made through the passage of this section, are hereby exempted, except as otherwise expressly provided herein, from the provisions of the general laws of the state, including, without limitation, the Uniform Depository Act, applicable to the investment of the interim deposits of the city.
(13) Annual review of policy amendments. This section shall be reviewed on an annual basis by the Director of Finance and the Finance Committee of Council to determine if amendments to this section are required in order to further the best interests of the city in connection with the management of its investment portfolio.
(c) Eligible investments.
(1) The Director of Finance or his or her designee may invest in any of the following classifications of obligations which are hereby determined to be eligible for investment of the interim deposits of the city (“eligible investments”):
A. United States Treasury bills, notes and bonds (including stripped principal or interest obligations of such issuances), 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;
B. Bonds, notes, debentures or other obligations or securities issued by any federal government agency or instrumentality (excluding stripped principal or interest obligations of such issuances), 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; provided that such securities shall be direct issuances of federal government agencies or instrumentalities;
C. Bonds and notes of the state rated in not less than the third-highest rating category by a nationally-recognized rating agency with respect to such bonds or notes, as to which there is no default of principal, interest or coupons;
D. Bonds and notes of any municipal corporation, including the city, or any county, township or other political subdivisions of the state rated in not less than the third-highest rating category by a nationally-recognized rating agency with respect to such bonds or notes as to which there is no default of principal, interest or coupons, the bonds or notes must be payable from the general revenues of the political subdivision and backed by the full faith and credit of the political subdivision, the city is not the sole purchaser of the bonds or notes at original issue provided, however, that bonds and notes of the city shall not be required to have a rating in order to be an eligible investment hereunder;
E. A written repurchase agreement between the Director of Finance or such Director of Finance’s designee and any eligible depository or any qualified securities dealer if, and only if, under the terms of such agreement, the Director of Finance or such Director of Finance’s designee purchases for the city, and such institution agrees unconditionally to repurchase within a period of not more than 30 days, securities described in division (c)(1)A. or B. hereof that will mature or are redeemable within five years from the date of purchase. However, the market value of such securities subject to a repurchase agreement that matures on the business day immediately succeeding the business day on which such repurchase agreement was entered into shall be at least 102% of the principal amount of the repurchase agreement, and on any other business day after the business day described in the immediately preceding item, shall be at least 102% of the principal amount of the repurchase agreement. Further, the repurchase agreement shall contain the requirement that for each transaction pursuant to such agreement the eligible depository or qualified securities dealer shall provide all of the following information: the par value of the securities subject to such agreement; the type, coupon rate, if any, and maturity date of the securities; and a numerical identifier generally accepted in the securities industry that designates the securities.
F. Certificates of deposit of eligible depositories which may provide (and, if so, it shall be shown on their face) that the amount of such deposit is payable upon written notice a specified period before the date of the scheduled maturity, provided that security for the repayment of any such certificates of deposit is provided in accordance with R.C. § 135.18;
This includes investments in certificates of deposit administered through the Certificate of Deposit Account Registry Service (“CDARS”). Eligibility of this investment is outlined in R.C. § 135.144 and would also apply to any other program that is deemed to meet the requirements of such statute.
G. Commercial paper issued by an entity as outlined in R.C. § 135.14(B)(7)(a) rated at the time of acquisition in the single highest classification by at least two nationally-recognized rating agencies with a term to maturity of 270 days or less such that the investment in commercial paper of a single issuer shall not exceed in the aggregate five percent of the city's interim monies available for investment at time of acquisition:
H. Corporate bonds or notes with a maturity of three years or less issued by corporations that are incorporated under the laws of the United States and that are operating within the United States, or by depository institutions that are doing business under authority granted by the United States or any state and that are operating with the United States provided that such obligations are rated in the second highest or higher category by at least two nationally recognized standard rating services at the time of acquisition;
I. Bankers’ acceptances drawn on and accepted by banks that are insured by the federal deposit insurance corporation with a remaining term to maturity of 180 days or less;
J. No-load money market mutual funds registered by the Securities and Exchange Commission consisting exclusively of obligations described in divisions (c)(1)A. and B. hereof; and
K. The Ohio Subdivision’s Fund created pursuant to R.C. § 135.45.
(2) The Director of Finance and his or her designee, the Mayor and the members of Council shall not be held accountable or personally liable for any loss occasioned by the sale of any eligible investment authorized pursuant to division (c)(1) hereof at prices lower than its cost or balance. Any loss or expense in making such sale shall be payable as other expenses of the city.
(3) The members of Council, the Mayor, and the Director of Finance and the Director of Finance’s designees shall not be personally liable for or with respect to the purchase of any eligible investments authorized as investments pursuant to division (c)(1) hereof, and the members of Council and the Mayor shall not be personally liable for any unauthorized deposit or investment by the Director of Finance or such Director of Finance’s designee.
(4) Upon the expiration of the term of office of the Director of Finance, or in the event of a vacancy in the office of the Director of Finance by reason of death, resignation, removal from office or otherwise, the Director of Finance or his or her legal representative shall transfer and deliver to his or her successor all eligible investments held by him or her. For the eligible investments so transferred and delivered, such Director of Finance shall be credited with, and his or her successor shall be charged with, the amount of money invested in such eligible investments. Records regarding the investments held by the city shall be communicated to the successor in the certificate of transition as provided for in the requirements of R.C. § 117.171.
(5) Whenever eligible investments acquired under this section mature and become due and payable, the Director of Finance shall present them for payment according to their tenor and shall collect the monies payable thereon. The monies so collected shall be treated as interim deposits subject to the provisions of this section, with respect to their reinvestment, and the Uniform Depository Act, with respect to their deposit.
(6) The Director of Finance or his or her designee shall maintain accounts in which he or she shall make appropriate entries of all transactions relating to the investment of interim deposits.
(7) Interest earned on any eligible investments authorized by this section shall be collected by the Director of Finance and credited by him or her to the proper fund of the city as required by law.
(Ord. 1996-234, passed 1-6-1997; Ord. 2014-184, passed 9-15-2014; Ord. 2019-59, passed 4-15-2019; Ord. 2021-79, passed 4-19-2021)