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HomeMy WebLinkAbout85-94 Ordinance " ,"..~~~.- " ''''~~~' - "'~ T'jJ]ij, U [f'f ,. :t':~"~',~*,,:""I'"' a'~~r , RECORD OF ORDINANCES Dayton Legal Blank Co. Form No. 30043 85-94 P assed_______mu un _m. m___.__m.m_ um. m_19 -----.-. Ordinance No .____._._______________._ AN ORDINANCE DESIGNATING FINANCIAL INSTITUTIONS AS PUBLIC DEPOSITORIES AND DECLARING AN EMERGENCY WHEREAS, proposals, including applications, for active and interim funds of the City of Dublin have been received from the following financial institutions up to the following amounts: Financial Institutions Active Funds Interim Funds Bank One, Columbus $10,000,000 $40,000,000 Fifth Third Bank 10,000,000 20,000,000 Heartland Bank N/A 2,000,000 Huntington National Bank 25,000,000 50,000,000 National City Bank N/A 20,000,000 NBD Bank Not given Not given Society National Bank Not given 50,000,000 State Savings Bank N/A 5,000,000 WHEREAS, Section 135.01(L) of the Ohio Revised Code provides that any municipal 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 the Charter provides that the Treasury Investment Board shall establish directions for the investment of interim and inactive monies of the City; NOW, T~REFORE, BE IT ORDAINED, by the Council of the City of Dublin, State of ..-.. Ohio, elected members concurring: Section 1. That the active funds of the City of Dublin be awarded for the two-year ...... period commencing November 1, 1994 to Bank One, Columbus. Section 2. That the depository agreements for active and interim funds contain a renewal clause that may be utilized by the City of Dublin to extend the depository period for one (1) additional year. Section 3. That the attached Investment and Depository Policy is hereby approved. Said policy may be amended or modified by approval of City Council. Section 4. 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 said policy. Section 5. 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 said policy. Section 6. That this ordinance be, and the same hereby is, declared to be an emergency measure for the preservation of public peace, health or welfare of the residents of this City, and therefore this ordinance shall take effect and be in force immediately upon its passage. ",...- Passed this J yt?( day of () (!;-t' 0 b -c r-. 1 994 -.,- ~preSiding Officer ATTEST: I ~ ~~ Clerk of Council ""-""~~""--""~~ ....,.'~....,....~"'"-"'~'",'-- ~C_'.-~~." -"._^ _4__e.e . e.e____~."__"e, MEMORANDUM TO: Members of Dublin City Council FROM: Timothy C. Hansley, City Manager SUBJECT: Ordinance Designating Financial Institutions As Public Depositories DATE: September 6, 1994 INITIATED BY: Marsha I. Grigsby, Director of Finance Section 135.12 of the Ohio Revised Code requires governmental entities to designate public depositories for public moneys. The City's current depository agreements expire on November 1, 1994. A Request For Proposal (RFP) was prepared and distributed to financial institutions with branch offices located within the City of Dublin. The RFP was distributed on July 15, 1994 with an August 12, 1994 deadline for the financial institutions to submit a proposal. We received seven proposals, with two of the proposers expressing interest in inactive funds only. We also received a proposal from one financial institution after the deadline due to an error by the financial institution. Their proposal was accepted; however, they were informed their proposal for active funds would not be considered. Interim funds are awarded based on quotes taken at the time the funds are available to invest; therefore, their proposal for interim funds was accepted. The RFP was used as a means to select one financial institution to provide ..... depository and banking services for the City's active funds. The proposals received were evaluated on the following criteria, but not necessarily in the order presented. . Least total cost to the City, whether by direct charges or compensating balance. . Legal and other qualifications met by the proposer. . Financial strength and experiences of the proposer. . Availability of the services as requested in the RFP. . Identification of optional services. The services of Mr. Denham Pride, an independent consultant, were obtained to assist in the evaluation of the proposals. Mr. Pride has been used in the past for this service, as well as others. "..;,~..... I Memorandum September 6, 1994 Page Two The selection process came down to two proposers, Bank One and Fifth Third Bank. The following information was used in making a final determination. . The total estimated annual charges, based on an estimated number of transactions, from Fifth Third were slightly less ($819) than the estimated annual charges from Bank One. However, Fifth Third's proposals stated the fees will vary depending on actual activity and they would like to review them on a semi-annual basis. Bank One's per item fees identified would remain the same throughout the depository period and therefore are a known factor. . If we choose to maintain a compensating balance in lieu of service charges, Bank One would require a lower compensating balance which would result in more funds being available to invest. . The City maintains a checking account balance in an amount that is determine to be appropriate to meet current cash needs. In order that these funds are still earning interest we use what is referred to as a "sweep account". Bank One's sweep account interest rate is set weekly and at the time their proposal was submitted they were paying 3.30%. Bank One calculates interest on a daily basis, credits the interest to the account on a daily basis and does not require a minimum balance. Fifth Third stated their interest is set based on market condition and at the time of the proposal they were paying 2.5% interest. They calculate interest on daily basis, but only credit the account on a monthly basis, and they require a minimum balance of $10,000. The apparent difference in the interest rate for the sweep, over the course of 1'",,"' a year, would result in an account at Bank One earning significantly more interest. After evaluating the proposals received, I recommend the depository for the City's active funds be awarded to Bank One, Columbus. They are our current depository for active funds. We have maintained an excellent working relationship with Bank One over the last few years. They have always been very helpful and easy to work with. Based on our past working relationship with Bank One and their proposal submitted, I feel they will provide the City with the services needed at the least overall cost to the City. 161 :94 -,,~-'~""''''~'''''~~~'.''~''< ~"--'-..,_...~-~~--, .'...,'"" ~,,~'"'-',~~;-'" . 1i.' t,'" ~"~'~^"~~~'~"'--"~_\'-'" <,,'. CITY OF DUBLIN Investment and Depository Policy September, 1994 I. Obiectives and Guidelines The following investment and deposit objectives will be applied in the management of the City funds. A. The primary objective of the City's investment activities is the preservation of capital and the protection of investment principal. B. In investing public funds, the City will strive to maximize the return on the portfolio, but will avoid assuming unreasonable investment risks. C. The City's investment portfolio will remain sufficiently liquid to enable the City to meet operating requirements which might be reasonably anticipated. D. The City will diversify its investments to avoid incurring unreasonable and avoidable risks regarding specific security types or individual financial institutions. E. Banks vary in the services they provide, their service fees, interest rates on interim investments, and the minimum compensating balances required for demand-deposit accounts. The City's objective is to obtain good banking services while minimizing cost to the City. 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 desired. II. Active DeDositorv In order to minimize the service charges, the City shall maintain the general checking, Mayor's Court, and payroll account in one depository located within the City of Dublin. The award will be based on proposals submitted which itemize costs to be charged. III. Maturitv To the extent possible, the City will attempt to match its investments with anticipated cash flow requirements. Funds determined to be available which are not anticipated to be utilized for current fiscal year cash flow requirements may be invested in securities maturing more than two (2) years from the date of purchase provided said securities can be converted to cash through trade in a secondary market prior to maturity. IV. Diversitv A. No more than 20% of the City's investment portfolio will be placed with any particular issuer of commercial paper; and ,-,; "'"'''""__''''''',"~~.==,'r~~'..~',.~~,,,~" ~'--~ . - ~~ """"", -,~-~.,._-,_.....~" Investment and Depository Policy September, 1994 Page Two IV. Diversity (Continued) B. The City's investment with any individual financial institution shall not constitute more than 30% of said institution's public funds. V. Authorized Financial Institutions and Dealers Securities shall be purchased only through financial institutions located within the United States or through "primary securities dealers" as designated by the Federal Reserve Bank. A list of these authorized institutions and dealers will be maintained by the Director of Finance. The Director of Finance: A. May make additions to the authorized list when the investment and deposit policy requirements are met; B. Shall make deletions from the list (i) if and as directed by ordinance of City Council, (ii) upon failure of the financial institution to meet the foregoing investment and deposit policy requirements or (iii) upon request of the financial institution or dealer; and C. May make deletions from the list based on the following criteria or circumstances: 1. Perceived financial difficulties of the financial institution or dealer; 2. Consistent lack of competitiveness by the financial institution or dealer; 3. lack of experience or familiarity of the account representative in providing service to large institutional accounts; or 4. When deemed in the best interest of the City. VI. Instruments Authorized The Director of Finance may invest on behalf of and in the name of the City in the following instruments at a price not exceeding their fair market value: A. Government Securities 1. Negotiable direct obligations of the U.S. or obligations issued by Federal agencies, the principal and interest of which are unconditionally guaranteed by the United States, including derivative products, and bonds, notes, debentures, or other obligations or securities issued by any Federal government agency or instrumentality, whether or not they are guaranteed by the United States, including but not be limited to, the following: Direct Obliaations: Treasury bills Treasury notes Treasury strips Obliaations of Federal Aaencies: Small Business Association (SBA) Federal Home Administration (FmHA) General Services Administration (GSA) Export-Import Bank (EximBank) Tennessee Valley Authority (TV A) Maritime Administration '__~'.",~"'~*''''''~'''''h","",...~~' ,~, -~"~"- ~-,'~"" ._'"'.".~'_..'",'_"_o~ Investment and Depository Policy September. 1994 Page Three A. Government Securities (Continued) 2. Due to market risks, the Director of Finance is prohibited from investing on behalf of the City, in mortgage-backed investments and stripped mortgage- backed securities. B. Non-Neaotiable Interest Bearina Time Certificates of DeDosit and Savinas Accounts Non-negotiable Interest Bearing Time Certificates of Deposits and savings accounts in banks organized under the laws of this State, national banks 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. C. Neaotiable Interest Bearina Time Certificates of DeDosit Negotiable Interest Bearing Time Certificates of Deposit issued by institutions which are ranked nationally as being in the top fifty (50) in asset and deposit size within their industry, as disclosed annually by Business Week Magazine, provided that any such deposits are secured by collateral as prescribed herein. D. Bankers AcceDtance Bankers Acceptances which are eligible for purchase by the Federal Reserve System and which are issued by institutions which are ranked nationally as being in the top fifty (50) in asset and deposit size, as disclosed annually by Business Week Magazine, within their industry. E. ReDurchase Aareements and Reverse Purchase Aareements Repurchase Agreements of a bank or savings and loan association organized under the laws of the United States or any State thereof and Reverse Repurchase Agreements for negotiable direct obligations of the United States, Federal agencies, and Federal instrumentalities of the following types: 1. United States Treasury bills and notes. 2. Government National Mortgage Association (GNMA). 3. Federal Farm Credit Bank obligations. 4. Federal Home Loan Bank obligations. F. Commercial PaDer/CorDorate Bonds 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. G. Monev Market Funds Money market funds whose portfolios consist of the foregoing (A-F). ""-""""' '",,'. - .~-~"..._,..._"._".,"_. " 'rr 1"'".> Investment and Depository Policy September. 1994 Page Four H. Now Accounts Now Accounts. Super Now Accounts or any other similar account authorized by the Federal Reserve's Depository Institution's Deregulation Committee. I. State Treasurv Asset Reserve of Ohio (Star Ohio) STAR 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). VII. Collateralization of Non-Neaotiable Interest Bearina Time Certificates of DeDosit and Savinas Accounts A. All deposits of City funds in non-negotiable interest bearing time certificates of deposit made by the City and all savings accounts or NOW Accounts of the City shall be secured by pledged collateral in an amount equal to at least 110% of the deposit less an amount insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation. All securities shall be pledged at market value. The following securities shall be eligible to be pledged as collateral for purposes of this section: 1. Bonds. notes or other obligations of the United States; or bonds. notes or other obligations guaranteed as to principal and interest by the United States or those for which the faith of the United States is pledged for the payment of principal and interest thereon. by language appearing in the instruments specifically providing such guarantee or pledge and not merely by interpretation or otherwise; 2. Bonds. notes. debentures or other obligations or securities issued by any Federal Government agency. or other obligations guaranteed as to principal and interest by the United States or those for which the faith of the United States is pledged for the payment of principal and interest thereon. by interpretation or otherwise and not by language appearing in the instruments specifically providing such guarantee or pledge; 3. Bonds and other obligations of this State; 4. Bonds and other obligations of any county. township. school district. municipal corporation. or other legally constituted taxing subdivision of this State. which is not at the time of such deposit. in default in the payment of principal or interest or any of its bonds or other obligations. for which the full faith and credit of the issuing subdivision is pledged; 5. Bonds of other states of the United States which have not during the ten years immediately preceding the time of such deposit defaulted in payments of either interest or principal on any of their bonds; Any and all securities pledged as collateral by any institution where City investments have been made shall be delivered either to the Director of Finance as security for the repayment of public monies or to an independent third party financial institution approved by the Director of Finance serving as trustee (the trustee) under a trust agreement. Fees and expenses of the trustee shall be paid by the depository. - "','.,'-_,"'i...~ d """,...,"-'.,,~,''''',''''''''''i''','''''''','~=~'''';.;,'~,;.:'~ '.'..:4 'Ii,' if ':'1' $ii::..' ,,,"' , Investment and Depository Policy September, 1994 Page Five VII. Collateralization of Non-Neaotiable Interest Bearina Time Certificates of DeDosit and Savinas Accounts (Continued) B. When the depository has deposited eligible securities as described in this policy with trustee for safekeeping, the depository may at any time substitute or exchange eligible securities having a current market value equal to or greater than the current market value of the securities then on deposit and for which they are to be substituted or exchanged only: 1. If the Director of Finance has authorized the depository to make such substitution or exchange on a continuing basis during a specified period without prior approval of each substitution or exchange. Such authorization may be affected by the Director of Finance by sending to the trustee a written notice stating that substitution may be affected on a continuing basis during a specified period which shall not extend beyond the end of the period of designation during which the notice is given. The trustee may rely upon such notice, and upon the period of authorization stated therein; 2. If no continuing authorization for substitution or exchange has been given by the Director of Finance, the depository notifies the Director of Finance and the trustee of an intended substitution or exchange, and the Director of Finance fails to object to the trustee within ten business days after the date appearing on the notice of proposed substitution. The notice to the Director of Finance and to the trustee shall be given in writing and delivered personally or by certified or registered mail with a return receipt requested. The trustee may assume in such case that the notice has been delivered to the Director of Finance. 3. If the Director of Finance gives written authorization for a substitution or exchange of specific securities. The depository shall notify the Director of Finance of any substitution or exchange of securities authorized by this policy. Upon request from the Director of Finance, the depository and/or the trustee shall furnish a detailed statement of the securities pledged to the funds of the City. The detailed statement will provide the value of all securities pledged at face value and the then current market value. C. With the approval of the Director of Finance, a depository may provide collateral for deposits of City funds in non-negotiable interest bearing time certificates of deposit and for savings accounts or now accounts of the City through a single pool of securities pledged toward all deposits of public funds held by the depository. The "pooled collateral" option is subject to the following conditions: 1. Securities committed to the pool must have a market value at least equal to 110% of all public monies on deposit with the depository including the amount covered by Federal deposit insurance. -""-'~'~ ~"""""-1<"'~"">k.,....'''''''''''"'''''''____'''_'_''_'"'-O''-''''''''';_"''''''''''''''''"'''''l''''''-~~>''' Investment and Depository Policy September, 1994 Page Six VII. Collateralization of Non-Neaotiable Interest Bearina Time Certificates of Deoosit and Savinas Accounts (Continued) 2. The securities eligible for deposit in the pool shall be those described in paragraph A of this section. 3. The securities constituting the pool shall be delivered to a trustee as described in paragraph A of this section. Fees and expenses of the trustee shall be paid by the depository. 4. If the depository fails to pay over any part of the deposits due the City, the Director of Finance may request the trustee to deliver to the Director of Finance any of the securities on deposit with the trustee, not to exceed the amount necessary to produce an amount equal to the deposits made by the City and not paid over to the City, less the portions of the deposits covered by federal deposit insurance, plus any accrued interest due on the deposits; and in any event, not to exceed the City's proportional security interest in the market value of the pool as of the date of the depository's failure to pay over the deposits as such interest and value are determined by the trustee. The Director of Finance shall have the option to sell such securities. Any surplus remaining after deducting the amount due the City and expenses of the sale shall be paid to the depository. 5. The institution will provide a detailed Quarterly statement of the face and market value of all securities pledged to the pool within 30 days of the end of each Quarter. 6. If at any time the market value of the pool is less than 110% of all public deposits held by the trustee, it is the responsibility of the depository to immediately add sufficient securities to the pool in an amount that will bring the market value of the pool to at least 110% of all public funds on deposit with the trustee. 7. Failure of the institution to abide by any of the provisions of this section is cause for immediate suspension of the institution as a Qualified depository for any City funds. VIII. Comoetitive Biddina 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 investments 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. - , Investment and Depository Policy September, 1994 Page Seven IX. ReDortino The Director of Finance will be responsible for providing regular reports (at least quarterly) 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. Poolino of Funds ;i~; 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. XI. Policy Chanoe The policies as stated herein may be changed only with the approval of City Council.