[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.
A.
In accordance with this policy, the Chief Fiscal Officer
is hereby authorized to invest all funds, including proceeds of obligations
and reserve funds, in:
(1)
Certificates of deposit issued by a bank or trust company
authorized to do business in New York State.
(2)
Time deposit accounts in a bank or trust company authorized
to do business in New York State.
(3)
Obligations of New York State.
(4)
Obligations of the United States Government.
(5)
Repurchase agreements involving the purchase and sale
of direct obligations of the United States.
C.
Reserve funds may be invested in obligations of the local
government.
D.
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:
A.
Collateral.
(1)
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.
(2)
Securities purchased through a repurchase agreement shall
be valued to market at least weekly.
(3)
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.
B.
Delivery of securities.
(1)
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.
(2)
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.
C.
Written contracts.
(1)
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.
(2)
It is therefore the policy of the City of Hornell to
require written contracts as follows:
(a)
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.
(b)
A written contract shall be required with the custodial
bank.
D.
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.
E.
Financial strength of institutions.
(1)
Investments in time deposits and certificates of deposit
are to be made with banks or trust companies.
(2)
When purchasing eligible securities, the seller shall
be required to deliver the securities to the custodial bank.
(3)
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.
(4)
Repurchase agreements should not be entered into with
undercapitalized repurchase trading firms.
(5)
A margin of 5% or higher of the market value of purchased
securities in repurchase agreements must be maintained.
A.
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.
B.
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.
C.
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.
D.
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.
E.
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.
F.
The Common Council of the City of Hornell shall review
and approve the annual investment report, if practicable, at its second meeting
in September.
G.
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.
H.
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.
