[R.O. 2012 §155.010; Ord. No. 456 §1, 3-7-2000]
A.
This
policy applies to the investment of all operating funds of the City.
1.
Pooling of funds. Except for cash in certain restricted
and special funds, the City will consolidate cash balances from all
funds to maximize investment earnings. Investment income will be allocated
to the various funds based on their respective participation and in
accordance with the generally accepted accounting principles.
2.
External management of funds. Investment through
external programs, facilities and professionals operating in a manner
consistent with this policy will constitute compliance.
[R.O. 2012 §155.020; Ord. No. 456 §1, 3-7-2000]
A.
Safety. Safety of principal is the foremost objective of
the investment program. Investments shall be undertaken in a manner
that seeks to ensure the preservation of capitol in the overall portfolio.
The objective will be to minimize credit risk and interest rate risk.
1.
Credit risk. The City will minimize credit risk,
the risk of loss due to the failure of the security issuer or backer,
by:
a.
Pre qualifying the financial institutions, brokers/dealers, intermediaries,
and advisors with which the City will do business. Diversifying the
portfolio so that potential losses on individual securities will be
minimized.
2.
Interest rate risk. The City will minimize the risk
that the market value of securities in the portfolio will fall due
to changes in general interest rates, by:
B.
Liquidity. The investment portfolio shall remain sufficiently
liquid to meet all operating requirements that may be reasonably anticipated.
This is accomplished by structuring the portfolio so that securities
mature concurrent with cash needs to meet anticipated demands.
C.
Yield. The investment portfolio shall be designed with the
objectives of attaining a market rate of return throughout budgetary
and economic cycles, taking into account the investment risk constraints
and liquidity needs. Return on investment is of secondary importance
to the safety and liquidity objectives described above. The core of
investments are limited to relatively low risk securities in anticipation
of earning a fair return relative to the risk being assumed. Securities
shall not be sold prior to maturity with the following exceptions:
[R.O. 2012 §155.030; Ord. No. 456 §1, 3-7-2000]
A.
Prudence. The standard of care to be used by investment
officials shall be the "prudent person" standard and shall be applied
in the context of managing an overall portfolio.
B.
Ethics And Conflicts Of Interest. Officers and employees
involved in the investment process shall refrain from personal business
activity that could conflict with the proper execution and management
of the investment program, or that could impair their ability to make
impartial decisions. Employees and investment officials shall disclose
any material interests in financial institutions in which they conduct
business. They shall further disclose any personal financial/ investment
positions that could be related to the performance of the investment
portfolio. Employees and officials shall refrain from undertaking
personal investment transactions with the same individual with which
business is conducted on behalf of the City.
C.
Delegation Of Authority. Authority to manage the investment
program is granted to the City Administrator, hereinafter referred
to as investment officer and derived from the State Statutes or Constitution.
Responsibility for the operation of the investment program is hereby
delegated to the investment officer, who shall act in accordance with
the established written procedures and internal controls for the operation
of the investment program consistent with this investment policy.
Procedures should include references to: safekeeping, delivery vs.
payment, investment accounting, repurchase agreements, wire transfer
agreements, and collateral/depository agreements. No person may engage
in an investment transaction except as provided under the terms of
this policy and the procedures established by the investment officer.
The investment officer shall be responsible for all transactions undertaken
and shall establish a system of controls to regulate the activities
of subordinate officials.
[R.O. 2012 §155.040; Ord. No. 456 §1, 3-7-2000]
A.
The
investment officer is responsible for establishing and maintaining
an internal control structure that will be reviewed annually with
the City's independent auditor. The internal control structure shall
be designed to ensure that the assets of the City, are protected from
loss, theft or misuse and to provide reasonable assurance that these
objectives are met. The concept of reasonable assurance recognizes
that:
B.
The
internal controls shall address the following points:
1.
Control of collusion.
2.
Separation of transaction authority from accounting and record keeping.
3.
Custodial safekeeping.
4.
Clear delegation of authority to subordinate staff members.
5.
Written confirmation of transactions for investments and wire transfers.
6.
Development of a wire transfer agreement.
[R.O. 2012 §155.050; Ord. No. 456 §1, 3-7-2000]
A.
Investment Types. In accordance with and subject to restrictions
imposed by current Statutes, the following list represents the entire
range of investments that the City will consider and which shall be
authorized for the investments of funds by the City.
1.
United States Treasury securities. The City may
invest in obligations of the United States government for which the
full faith and credit of the United States are pledged for the payment
of principal interest.
2.
United States agency securities. The City may invest
in obligations issued or guaranteed by any agency of the United States
Government.
3.
Repurchase agreements. The City may invest in contractual
agreements between the City and commercial banks or primary government
securities dealers. The purchaser in a repurchase agreement (repo)
enters into a contractual agreement to purchase Treasury and government
agency securities while simultaneously agreeing to resell the securities
at predetermined dates and prices.
4.
Collateralized public deposits. Instruments issued
by financial institutions which state that specified sums have been
deposited for specified periods of time and at specified rates of
interest. Such deposits are required to be backed by acceptable collateral
securities as dictated by State Statute.
5.
Commercial paper. The City may invest in commercial
paper issued by domestic corporations, which has received the highest
rating issued by Moody's Investor Services, Inc. or Standard and Poor's
Corporation. Eligible paper is further limited to issuing corporations
that have total assets in excess of five hundred million dollars ($500,000,000.00).
[R.O. 2012 §155.060; Ord. No. 456 §1, 3-7-2000]
A.
To
provide for the safety and liquidity of the City's funds, the investment
portfolio will be subject to the following restrictions:
1.
Borrowing for investment purposes ("Leverage") is prohibited.
2.
Instruments known as Structured Notes (e.g., inverse floaters, leveraged
floaters, and equity-linked securities) are not permitted. Investment
in any instrument, which is commonly considered a "derivative" investment
(e.g., options, futures, swaps, caps, floors, and collars), is prohibited.
3.
Contracting to sell securities not yet acquired in order to purchase
other securities for purposes of speculating on developments or trends
in the market is prohibited.
4.
No more than fifty percent (50%) of the total market value of the
portfolio may be invested in commercial paper of any one issuer.
