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HomeMy WebLinkAbout89-96 Ordinance I .. RECORD OF' ORDINANCES Dayton Legal Blank Co. Form No, 30043 o 89-96 P assed______________'mm_m____m_m__ .____m_J 9 _u_ u_ Ordmance No o____mnmmm-m A ORDINANCE EXTENDING THE CITY OF DUBLIN'S DESIGNATION OF FINANCIAL INSTITUTIONS AS PUBLIC DEPOSITORIES AS PROVIDED FOR BY ORDINANCE 85-94 AND DECLARING AN ,.... EMERGENCY , WHEREAS, Section 135,Ol(L) of the Ohio Revised Code provides that any municipal t ~ corporation which has adopted a charter may by ordinance set forth special provisions with respect to the deposit or investment of its public monies; and WHEREAS, the electors of the City of Dublin have adopted a charter and established by Ordinance direction for the investment of interim and inactive monies of the Municipality; and WHEREAS, Ordinance 85-94 authorized that the active funds depository designation of the City of Dublin be awarded for the two-year period commencing November 1, 1994 to Bank One, Columbus NA; and WHEREAS, applications for interim deposits were received from the following financial institutions up to the following amounts: Bank One, Columbus $40,000,000 Fifth Third Bank 20,000,000 Heartland Bank 2,000,000 Huntington National Bank 50,000,000 National City Bank 20,000,000 State Savings Bank 5,000,000 Society Bank * 50,000,000 - . * Name changed to Key Corp. ... WHEREAS, minor revisions have been made to the investment policy, and WHEREAS, Ordinance 85-94 authorized that the depository agreement contain a renewal clause that may be used by the City to extend the depository designation period for one (1) additional year commencing on November 1, 1996. NOW, THE'tFORE, BE IT ORDAINED, by the Council of the City of Dublin, State of Ohio,mn _._u_ of the elected members concurring that: Se.ction.l. That the active funds depository designation for the City of Dublin be extended for one (1) additional year commencing on November 1,1996. S.edion2. That the attached investment policy is hereby approved. Section 1. That the Director of Finance is authorized and directed to enter into the necessary agreements to implement this policy and to invest public monies pursuant to and in compliance with the terms of such policy. S.e..c.tiorL4. That the Director of Finance shall be relieved from any liability for the loss of any public monies deposited or invested pursuant to and in compliance with such policy. ",..... SectionS That this Ordinance be, and the same hereby is, declared to be an emergency measure in order for the extended depository agreements to be effective on November 1, .... 1996, and therefore, this Ordinance shall take effect and be in force immediately upon its passage. Passed this '7-1'h day of__U(tjOb<:'Ln _, 1996 _.___.______....__m ~~~ I !1n"~', , ","' . ,,,.d..L.\. r'na r.o;l'es of t~'is C..;!'p,v,~,(f'a/-R-;_"-i.. h.t" __._.___... _.__.......' ____ __.________, __u_... _____.'_n__.._ ' I '. ' . ,.. "n"'~ "'"".. ,0'1 were oste( Mayor - Presiding Officer CIty 01 Dublin III (I{cordanre w;;~: SHr:m 7"'1 ':15 n'~ <'1 (},. R vised ... ,,- t, I; e "1l0 ~l ATTEST: ~~~ ~.___n~_m~-. Clerk of Council, Dublin, Ohio Clerk of Council f;1""'.,_"'''''"..-;'''~_.'>''...f'~_ l'l II ~~"l1"'''''''','''''^C~'''''X" . I N T E R MEMO 0 F F I C E To: Members of Dublin City Council ", From: Timothy C. Hansley, City Manager Subject: Extension of Depository Designation ..~,~; Date: September 5, 1996 Initiated by: Marsha L Grigsby, Director of Finance In October 1994, City Council adopted Ordinance No. 85-94 designating Bank One, Columbus as the City's depository for active funds for a period of two (2) years commencing on November 1, 1994, The Ordinance also provided that the depository agreement contain a renewal clause that would allow the City to extend the depository period for one (1) additional year, The Administration is satisfied with the service that has been provided by Bank one and is requesting the depository designation be extended for the additional year, We will prepare a Request For Proposal (RFP) as we have in the past prior to recommending a depository designation for the period commencing November 1, 1997. We have also revised our investment policy, The revisions are minor and do not change the types of investments we are authorized to utilize, The City has had an investment policy for many years and standard procedure has been to approve the policy as part of the depository designation process. If you have any questions please contact Marsha, - L t:\per\dkp\96\128 - I'il:" _. , "-.-'" .';"-"~""'"""~ . CITY OF DUBLIN Investment and Depository Policy I. Policy It is the policy of the City of Dublin to invest public funds in a manner which will provide maximum security with the highest investment return while meeting the daily cash flow demands of the City and conforming to applicable state and local statutes governing the ".'" investment of public funds, ... ~."i II. Scope This policy applies to all financial assets of the City of Dublin, These funds are accounted for in the City's Comprehensive Annual Financial Report, and includes all funds of the reporting entity, III. Objectives The primary objectives, in priority order, of the City's investment activities shall be: 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 capital in the overall portfolio, The objective will be to mitigate credit risk and interest rate risk. 1. Credit Risk Credit risk is the risk of loss due to the failure of the security issuer or backer, Credit risk may be mitigated by: * Limiting investments to the safest types of securities. The City shall invest only ~ in securities where there is certainty of receiving full par value plus accrued interest, at the securities' legal final maturity. * Pre-qualifying the financial institutions, broker/dealers, intermediaries, and '*'H"" advisors with which an entity will do business; and * Diversifying the investment portfolio so that potential losses on individual securities will be minimized, 2. Interest Rate Risk Interest rate risk is the risk that the market value of securities in the portfolio will fall due to changes in general interest rates, The City will mitigate interest rate risk by: * Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity; and * By investing operating funds primarily in short-term securities, - Investment and Depository Policy Page 2 . B. Liquidity The City's investment portfolio will remain sufficiently liquid to enable the City to meet operating requirements which might be reasonably anticipated, C. Return on Investments The City's investment portfolio shall be designed with the objective of maximizing the rate of return throughout budgetary and economic cycles, taking into account the investment risks and liquidity constraints. The City's investments are limited to relatively low risk securities in anticipation of earning a fair return relative to the risk r-- being assumed, I - IV. Standards of Care A. Prudence Investments shall be made with the exercise of that degree of judgement 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 investments officials shall be the "prudent person" standard and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with written procedures and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. B. Delegation of Authority Management responsibility for the investment program is hereby delegated to the Director of Finance per the City Charter, The Director of Finance shall establish written - procedures for the operation of the investment program consistent with this investment policy, Such procedures shall include explicit delegation of authority to persons """'''' responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Director of Finance. The Director of Finance shall be responsible for all transactions undertaken and shall establish a system of internal controls to regulate the activities of subordinate officials. C. Ethics and Conflicts of Interest Officers and employees 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 officials shall disclose to the City Manager any material financial interests in financial institutions with which they conduct business, They shall further disclose any personal financial or investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the City. !...... . ~.~.._- . . .~--,~---~ -~"""';O,_"____' ..,','.- --_.-<,,~--=""- Investment and Depository Policy P'age 3 . V. Safekeeping and Custody A. Authorized Financial Dealers and Institutions The Director of Finance will maintain a list of financial institutions authorized to provide investment services, In addition, a list will also be maintained of approved security broker/dealers selected by credit worthiness (a minimum capital requirement of $10,000,000 and at least five years of operation) who are authorized to provide investment services to the City, These may include "primary" dealers or regional dealers that qualify under Securities & Exchange Commission Rule 15C3-1 (uniform net capital) ."..... and that are registered with the Ohio Department of Commerce to do business in the State of Ohio, lh<.. All financial institutions and broker/dealers who desire to become qualified bidders for investment transactions must supply the following as appropriate: * audited financial statements * proof of National Association of Securities Dealers (NASD) certification * proof of state registration * certificate of having read the entity's investment policy Periodic reviews of the financial condition and registrations will be conducted by the Department of Finance, Financial institutions and broker/dealers designated as depositories will be approved by City Council through Ordinance, B. Internal Controls The Director of Finance is responsible for establishing and maintaining an internal control structure designed to reasonably ensure that the assets of the entity are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met, The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived and, (2) the valuation of costs and benefits requires estimates and judgements by management, --- The Director of Finance shall establish a process for annual independent review by an ..,... external auditor. This review will provide internal control by assuring compliance with policies and procedures. VI. Authorized Instruments A. Investment Types The following investments will be permitted by this policy: 1. United States and Federal Agency and Instrumentality Obligations a. 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. b. Bonds, notes, debentures, or any 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 - Investment and Depository Policy P'age 4 ' Corporation, Government National Mortgage Association, and Student Loan Market Association, c, All federal agency or instrumentality securities must be direct issuances of the federal agency or instrumentality, Investments in derivatives and in stripped principal or interest principal or interest obligations of eligible obligations are strictly prohibited, 2. Non-Negotiable Interest Bearing Time Certificates of Deposit and Savings Accounts Non-negotiable Interest Bearing Time Certificates of Deposits and savings ".... accounts in banks organized under the laws of this State, national banks i' organized under the laws of the United States, doing business and situated in ....., this State, savings and loan associations located in this State and organized under Federal law and under Federal supervision, provided that any such deposits and savings accounts are secured by collateral as prescribed herein, 3. Negotiable Interest Bearing Time Certificates of Deposit Negotiable Interest Bearing Time Certificates of Deposit issued by institutions, provided that any such deposits are secured by collateral as prescribed herein, 4. Bankers Acceptances Bankers Acceptances which are eligible for purchase by the Federal Reserve System, 5. Repurchase Agreements Repurchase Agreements of a bank or savings and loan association organized under the laws of the United States or any State thereof, provided a master repurchase agreement is signed, 6. Commercial Paper/Corporate Bonds JI!IIl"l"IlI Commercial notes of any United States company provided that such notes are rated "prime" (P-1) by Moody's Investors Service and (A-1) by Standard and Poor's. ....,.. Collateralized commercial paper. Medium term corporate notes rated "prime" (P-1) by Moody's Investors Service and (A-1) by Standard and Poor's. 7. Money Market Funds Money market funds whose portfolios consist of the foregoing (1-6), 8. Now Accounts Now Accounts, Super Now Accounts or any other similar account authorized by the Federal Reserve's Depository Institution's Deregulation Committee, 9. State Treasury Asset Reserve of Ohio (STAR Ohio) ST AR Ohio is an investment pool managed by the Ohio Treasurer of State, offered to subdivisions of the State as defined in Section 135.45(E)(2). '- _~ I ~ - ~.".> . Investment and Depository Policy Page 5 B. Collateralization Collateralization will be required on two types of investments: Certificates of Deposits and Repurchase Agreements, In order to anticipate market changes and provide a level of security for all funds, the collateralization level will be 110% of the deposit. Collateral may be through a single pool of securities pledged toward all deposits of public funds held by the depository. Collateral shall be held by an independent third "".... party. Each financial institution with which the City has Certificates of Deposits and/or Repurchase Agreements shall provide a detailed quarterly statement of all securities ...... pledged to the pool, The right of collateral substitution is granted, XII. Investment Parameters A. Diversification The City of Dublin will diversify its investments by security type and institution. With the exception of U,S, Treasury securities and authorized pools, no more than 50% of the City of Dublin's total investment portfolio will be invested in a single security type or with a single financial institution. B. Competitive Bidding The purpose of competitive bidding is to strengthen the investment program in terms of level and consistency of performance. All sales of securities will be bid competitively and, to the extent practical, all investments will be placed with vendors yielding the highest returns to the City, The right is reserved to reject the bid yielding the highest return of interest on any investment if inconsistent with the city investment strategy, i.e" maturity, risk, liquidity, etc, "'"""" Price and rate quotations on all trades may be obtained from sources within and outside the City, In the case of the sale of securities or the purchase of securities where all other factors are considered by the Director of Finance to be equal, placement will be ~%# made in favor of the banking institution situated within the City if two bids or more are the same, As stated in this policy, the City will competitively bid and invest part or all of its surplus or excess funds outside the designated central depository bank. However, this practice will not limit the central depository bank from competitively bidding on the City's investment business as would any other financial institution, C. Maximum Maturities To the extent possible, the City will attempt to match its investments with anticipated cash flow requirements, All investments will mature within two (2) years from the date of settlement. XIII. Pooling of Funds The Director of Finance is authorized to pool cash balances from the several different funds of the City for investment purposes, Interest on these investments will be credited to the fund proportionate to the amount invested, '.-"'tiI: f ,'~""' ","~~""o,~,"""" ....,~....~".~" . Investment and Depository Policy Page 6 IX. Performance Standards The investment portfolio will be managed in accordance with the parameters specified within this policy, The portfolio should obtain a market average rate of return during a market/economic environment of stable interest rates, The City employs a passive investment strategy recognizing safety and liquidity as higher objectives than return. Portfolio performance will be monitored by reviewing the average Fed Funds rate, - The Director of Finance will be responsible for providing regular reports to City Council about the City's investment activities. The report should include at least the details of the City's - portfolio by institution and instruments. X. Adoption The City's investment policy shall be adopted by Ordinance and modifications must be approved by City Council. ~ "~J:~' "~