[HISTORY: Adopted by the Common Council of the City of Hornell 2-8-1988. Amendments noted where applicable.]
The objectives of the investment policy of the City of Hornell are to minimize risk; to ensure that investments mature as the cash is required to finance operations; and to ensure a competitive rate of return.
In accordance with this policy, the Chief Fiscal Officer is hereby authorized to invest all funds, including proceeds of obligations and reserve funds, in:
Certificates of deposit issued by a bank or trust company authorized to do business in New York State.
Time deposit accounts in a bank or trust company authorized to do business in New York State.
Obligations of New York State.
Obligations of the United States Government.
Repurchase agreements involving the purchase and sale of direct obligations of the United States.
Reserve funds may be invested in obligations of the local government.
Other local government officials receiving money in their official capacity must deposit such funds in negotiable order withdrawal accounts.
Investments made pursuant to this investment policy shall comply with the following conditions:
Certificates of deposit shall be fully secured by insurance of the Federal Deposit Insurance Corporation or by obligations of New York State or obligations of the United States or obligations of federal agencies, the principal and interest of which are guaranteed by the United States, or obligations of New York State local governments. Collateral shall be delivered to the local government or a custodial bank with which the local government has entered into a custodial agreement. The market value of collateral shall at all times equal or exceed the principal amount of the certificate of deposit.
Securities purchased through a repurchase agreement shall be valued to market at least weekly.
Collateral shall not be required with respect to the direct purchase of obligations of New York State, obligations of the United States and obligations of federal agencies, the principal and interest of which are guaranteed by the United States Government.
Delivery of securities.
Repurchase agreements. Every repurchase agreement shall provide for payment to the seller only upon the seller's delivery of obligations of the United States to the custodial bank designated by the local government or, in the case of a book-entry transaction, when the obligations of the United States are credited to the custodian's Federal Reserve bank account. The seller shall not be entitled to substitute securities. Repurchase agreements shall be for periods of 30 days or less. The custodial bank shall confirm all transactions, in writing, to ensure that the local government's ownership of the securities is properly reflected on the records of the custodial bank.
Payment shall be made by or on behalf of the local government for obligations of New York State, obligations the principal and interest of which are guaranteed by the United States, United States obligations, certificates of deposit and other purchased securities upon delivery thereof to the custodial bank or, in the case of a book-entry transaction, when the purchased securities are credited to the custodial bank's Federal Reserve System account. All transactions shall be confirmed in writing.
Written contracts are required for repurchase agreements and custodial undertakings. With respect to the purchase of obligations of the United States, New York State or other governmental entities, etc., in which moneys may be invested, the interests of the local government will be adequately protected by conditioning payment on the physical delivery of purchased securities to the local government or custodian or, in the case of book-entry transactions, on the crediting of purchased securities to the custodian's Federal Reserve System account. All purchases will be confirmed, in writing, to the City of Hornell.
It is therefore the policy of the City of Hornell to require written contracts as follows:
Written contracts shall be required for all repurchase agreements. Only credit-worthy banks and primary reporting dealers shall be qualified to enter into a repurchase agreement with the local government. The written contract shall provide that only obligations of the United States may be purchased, and the local government shall make payment upon delivery of the securities or appropriate book-entry of the purchased securities. No specific repurchase agreement shall be entered into unless a master repurchase agreement has been executed between the local government and the trading partners. While the term of the master repurchase agreement may be for a reasonable length of time, a specific repurchase agreement shall not exceed 30 days.
A written contract shall be required with the custodial bank.
Designation of custodial bank. Only banks chartered by the State of New York are designated to act as custodial banks of the City of Hornell's investments. However, securities may not be purchased through a repurchase agreement with the custodial bank.
Financial strength of institutions.
Investments in time deposits and certificates of deposit are to be made with banks or trust companies.
When purchasing eligible securities, the seller shall be required to deliver the securities to the custodial bank.
Repurchase agreements shall be entered into only with banks or trust companies or registered and primary reporting dealers in government securities. Sound credit judgments must be made with respect to trading partners in repurchase agreements. It is not assumed that inclusion on a list of the Federal Reserve is automatically adequate evidence of credit-worthiness.
Repurchase agreements should not be entered into with undercapitalized repurchase trading firms.
A margin of 5% or higher of the market value of purchased securities in repurchase agreements must be maintained.
The Chief Fiscal Officer or, in the absence of the Chief Fiscal Officer, the Deputy Fiscal Officer shall authorize the purchase and sale of all securities and execute contracts for repurchase agreements and certificates of deposit on behalf of the city. The city shall pay for repurchased securities upon the delivery or book-entry thereof.
The city shall require the purchase and sale of securities and certificates of deposit through a competitive or negotiated program involving telephone solicitation of at least two bids for each transaction.
At the time independent auditors conduct the annual audit of the accounts and financial affairs of the city, the independent auditors shall audit the investments of the city for compliance with the provisions of these investment guidelines.
Within 60 days of the end of each of the first three quarters of the fiscal year, the Chief Fiscal Officer shall prepare and submit to the Finance Committee of the city a quarterly investment report which indicates new investments, the inventory of existing investments and such other matters as the Chief Fiscal Officer deems appropriate.
Within 120 days of the end of the fiscal year, the Chief Fiscal Officer shall prepare and submit to the Finance Committee an annual investment report; recommendations for change in these investment guidelines; the result of the annual independent audit; the investment income record; a list of total fees, commissions or other charges, if any, paid to the custodial bank; and such other matters as the Chief Fiscal Officer deems appropriate.
The Common Council of the City of Hornell shall review and approve the annual investment report, if practicable, at its second meeting in September.
At least annually and, if practicable, at the second meeting in October of the Common Council, the members shall review and amend, if necessary these investment guidelines.
The provisions of these investment guidelines and any amendments hereto shall take effect prospectively and shall not invalidate the prior selection of any custodial bank or prior investment.