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010-99 Ordinance RECORD OF ORDINANCES Form No. 30043 Dayton Legal Blank Co. 10-99 Passed----------- -------19--- - Ordmance o._____________________ _ An Ordinance Authorizing the Modification of the City's Investment Policy WHEREAS, the City of Dublin has an Investment Policy that has been adopted by ~ City Council; and WHEREAS, the Investment Policy establishes the policies and guidelines to be followed for the investment of interim and inactive monies of the City; and WHEREAS, it is recommended that the Investment Policy be modified to provide amore detailed description of authorized investments, extend the maximum maturity dates and allow for the use of an investment advisor. NOW, THEREFORE, BE IT ORDAINED, by the Council of the City of Dublin, State of Ohio, of the elected members concurring that: ion 1. The attached Investment Policy is hereby adopted. The Investment Policy maybe amended or modified by approval of City Council. S ion 2. The Director of Finance shall be relieved from any liability for the loss of public monies deposited or invested pursuant to and in compliance with the City's Investment Policy. ~ ion 3. That this Ordinance shall take effect and be in force in accordance with Section 4.04 (b) of the Dublin City Charter. a~ Passed this ~ day of , 1999. i Mayor -Presiding Officer ATTEST: ~ , Clerk of Council T:\DATA\FINANCE\IN VESTS\ORD. WPD CITY OF DUBLIN Memo To: Members of Dublin City Council From: Tim Hansley, City Manager Date: January 28, 1999 Re: Ordinance No. 10-99, Amending the City's Investment Policy Initiated by: Marsha I. Grigsby, Director of Finance Vikki L. Vincent, Director of Accounting & Auditing The attached ordinance proposes amendments to the current investment policy. As Council will recall from the budget hearings, we discussed using an investment advisor and included the necessary funding in the 1999 Operating Budget. After researching and interviewing investment advisors, we intend to enter into an agreement with the United American Capital Corporation (UACC) for investment advisory services. Mr. Yacobozzi, President of UACC, has extensive investment management experience, with specific experience in public funds. The state's investment pool (STAR Ohio) was originally developed and managed by Mr. Yacobozzi. With Mr. Yacobozzi's assistance, we have reviewed the City's Investment Policy and are recommending the following modifications: • Further define eligible investments (i.e. commercial paper, found on page 4 of the modified Investment Policy. The previous Policy specified a Moody's rating of P-1 or a Standard & Poor's rating of A-1. The modified Policy specifies a Moody's rating of P 1 or P2 and a Standard & Poor's rating of Al+, Al or A2). • Extend the maximum maturity of investments from two years to five years, unless the investment is matched to a specific obligation or debt of the City. Section 135.14 of the Ohio Revised. Code, which was amended on September 27, 1996 by Senate Bill 81, extended investment maturities allowed by law from two years to five years for government entities. • Allow for the use of an outside investment advisor. The City's Investment Policy is conservation with the highest priority given to the safety of the City's funds. We are confident that the modified policy and the use of UACC as the City's investment advisor will further diversify the City's investments and result in a higher yield, while maintaining the safety of funds invested. If you have any questions, please do not hesitate to contact Marsha or Vikki. CITY OF DUBLIN, OHIO INVESTMENT POLICY I. Introduction The purpose of this investment policy is to establish the definition(s) of eligible investments of the City of Dublin, Ohio (hereinafter referred to as the "City"), including guidelines and parameters regarding the investment management of the City's investment funds [hereinafter referred to as the "Portfolio"]. This investment policy, as approved by City Council, shall serve to define authorized } investments and eligible investment transactions of the City. Such eligible investments may be derived from, or based upon Chapter 135.14 ORC, and/or include certain other investments not authorized or defined under 135.14 ORC. Investments not defined under 135.14 ORC, but authorized pursuant to this investment policy, are considered as authorized investments of the City. That this Ordinance shall take effect and be in force in accordance with Section 4.04 (b) of the Dublin City Charter. This policy includes [totally or partially] sections of the statute in order to describe certain eligible investments. In some sections, the policy places further limits upon the use eligible investments or investment transactions. II. Scone This policy applies to all financial assets of the City of Dublin. Such funds are accounted for in the City's Comprehensive Annual Financial Report (CAFR), and includes all funds of the reporting entity. III. INVESTMENT OBJECTIVES The investment objectives of the City, in priority order, include: ,~.d A. Safety of principal Safety of principal is the foremost objective of the investment program. The investment of City funds shall be conducted in a manner that seeks to ensure the preservation of capital within the context of the following criteria: o Market risk (interest rate risk) The market value of securities in the City's portfolio will increase or decrease based upon changes in the general level of interest rates. The effects of market value fluctuations will be minimized by (1) maintaining adequate liquidity so that current obligations can be met without a sale of securities; (2) diversification of maturities; (3) diversification of assets. 1 o Credit Risk Credit risk is the risk of loss due to the failure of a security issuer to pay principal or interest, or the failure of the issuer to make timely payments of principal or interest. Eligible investments affected by credit risk include certificates of deposit, commercial paper, bankers acceptances, and corporate medium term notes. Credit risk will be minimized by (1) diversifying ~ assets by issuer; (2) ensuring that required, minimum credit quality ratings exist prior to the purchase of commercial paper, bankers acceptances, and corporate medium term notes; and (3) maintaining adequate collateralization of certificates of deposit. B. Liquidity The portfolio shall remain sufficiently liquid to meet all current obligations of the City. Minimum liquidity levels [as a percentage of average investable funds] maybe established in order to meet all current obligations. The portfolio may also be structured so that securities mature concurrently with cash needs. C. Yield/Return The portfolio shall be managed to consistently attain a market rate of return throughout budgetary and economic cycles. Whenever possible, and consistent with risk limitations and prudent investment management, the City will seek to augment returns above the market average rate of return through the implementation of active portfolio management strategies. 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 within the context of managing an overall portfolio. Investment officers or registered investment advisors, acting in accordance with established procedures and the 2 approved investment policy, and exercising due diligence, shall be relieved of 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 pursuant to 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 the 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. V. Authorized Investments (itemizedl -U.S. Treasury Bills, Notes, and Bonds; various federal agency securities including issues of Federal National Mortgage Assn. (FNMA), Federal Home Loan Mortgage Corp. (FHLMC), Federal Home Loan Bank (FHLB), Federal Farm Credit Bank (FFCB), Student Loan Marketing Assn. (SLMA), Government National Mortgage Association (GNMA), and other agencies or instrumentalities of the United States. GNMA mortgage-backed, pass-through securities are considered as eligible investments of the City and are not derivative securities, as defined under 135.14(C). Collateralized mortgage obligations (CMOs) of any kind are expressly prohibited. Eligible investments include securities that maybe "called" [by the issuer] prior to the final maturity date. Any eligible investment may be purchased at a premium or a discount. All federal agency securities shall be direct issuances of federal government agencies or instrumentalities. 3 _ a -Interim deposits in the eligible institutions applying for interim moneys as provided in Section 135.08 ORC. Certificates of deposit must be collateralized with a 10% market value cushion. Either 135.18 (individual assignment method) or 135.181 (pooling method) shall apply regarding the collateralization of City deposits. -No-load money market mutual funds, as defined in 135.14(B)(5), rated in the highest category by at least one nationally recognized rating agency, investing exclusively in the same types of eligible securities as defined in Division B(1) or B(2) under 135.14 ORC, and repurchase agreements secured by such obligations. Eligible money market funds shall comply with 135.01 ORC, regarding ' limitations and restrictions. -Commercial paper issues of companies incorporated under the laws of the United States, rated Al+, Al or A2 by Standard & Poor's and P1 or P2 by Moody's. The maximum maturity of commercial paper shall be 270 days from the date of purchase. Investments in commercial paper shall not exceed 10% of the average portfolio, based upon the calculation methodology approved by the Finance Director. -Bankers acceptances issued by any bank domiciled in the State of Ohio or bankers acceptances issued by any domestic bank rated in the highest category by one of two nationally recognized rating agencies. Investments in bankers acceptances shall not exceed 10% of the average portfolio, based upon the calculation methodology approved by the Finance Director. -Repurchase agreements with any eligible institution mentioned in section 135.03 ORC, or any eligible securities dealer pursuant to (M) of 135.14 ORC of this section, except that such eligible securities dealers shall be restricted to primary government securities dealers. Repurchase agreements will settle on a delivery vs payment basis with repo collateral held at a qualified custodian or agent, designated by the City. Eligible repo collateral is restricted to securities listed in division (B)(1) or (B)(2) under 135.14 ORC. The market value of securities subject to a repurchase agreement must exceed the principal value of the repo amount by at least 2%. Prior to the execution of any repo transaction, a master repurchase agreement will be signed by the City and the eligible parties. -Medium term notes issued by a domestic corporation having assets in excess of $500 million, provided that such medium term notes have a maximum maturity of five years and are rated [at the time of purchase] by Standard & Poor's or Moody's under the following limitations: Standard & Poor's Moody's A+ (2-yr max maturity) Al (2-yr max maturity) A (2-yr max maturity) A2 (2-yr max maturity) A- (2-yr max maturity) A3 (2-yr max maturity) AA+ (3-yr max maturity) Aal (3-yr max maturity) 4 AA (3-yr max maturity) Aa2 (3-yr max maturity) AA- (3-yr max mahzrity) Aa3 (3-yr max maturity) AAA (maturities > 3 years) Aaa (maturities > 3 years) If a security has a split rating, the higher of the two ratings shall be used to determine the eligibility for investment purposes. In no event shall a corporate security [at the time of purchase] be rated less than A- by Standard & Poor's or less than an A3 by Moody's. The aggregate total of all corporate medium term notes shall not exceed 15% of the average portfolio, based upon purchase cost or book value. The average portfolio calculation methodology w shall be approved by the Director of Finance. No more than $1 million (par value) shall be invested in a single issuer. Commercial paper and bankers acceptances shall not be considered when calculating the maximum holdings in any single issuer. -The state treasurer's investment pool [STAR OHIO], pursuant to Section 135.45 ORC. -The use of derivative securities, as defined in 135.14 (C), is expressly prohibited. -All eligible investments will mature within five years from the date of settlement, unless the investment is matched to a specific obligation or debt of the City, and the investment is specifically approved by the Director of Finance. VI. Safekeeping and Custody Securities purchased for the City will be held in safekeeping by a qualified trustee [hereinafter referred to as the "Custodian"), as provided in Section 135.37 ORC. Securities held in safekeeping by the custodian will be evidenced by a monthly statement describing such securities. The custodian may safekeep the City's securities in (1) Federal Reserve Bank book entry form; (2) Depository Trust Company (DTC) book entry form in the account of the custodian or the custodian's correspondent bank; or (3) Non-book entry (physical) securities held by the custodian or the custodian's correspondent bank. All securities transactions will settle using standard delivery-vs-payment (DVP) procedures. The records of the custodian shall identify such securities in the name of the City. VII. Director of Finance and an Investment Advisory Committee The City may establish an investment advisory committee which shall meet quarterly to review the investment portfolio of the City. Specific areas of review include the investment inventory, transactions for the period, and realized income. Any amended policy that has been approved by the City Council shall be filed with the Auditor of State. 5 / ' VIII. Internal Controls The Director of Finance is responsible for establishing and maintaining an internal control structure designed to reasonably ensure that the investment assets of the City are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurances that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed teh 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 .b auditor. This review will provide internal control by assuring compliance with policies an procedures. IX. 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 and other portfolio income will be credited to the fund proportionate to the amount invested. X. Portfolio Reporting The City shall maintain an inventory of all portfolio assets. A description of each security will include security type, issue/issuer, cost [original purchase cost or current book value], par value ~ [maturity value], maturity date, settlement date [delivery versus payment date of purchased or sold securities], and any coupon [interest] rate. The investment report will also include a record of all security purchases and sales. Regularly issued reports will include a monthly portfolio report and a quarterly portfolio report to the Director of Finance, detailing the current inventory of all securities, all investment transactions, any income received [maturities, interest payments, and sales], and any expenses paid. The report will also include the purchase yield of each security, the average- weighted yield and average-weighted maturity of the portfolio. The portfolio report shall state the name(s) of any persons or entity effecting transactions on behalf of the City. XI. INVESTMENT ADVISORS ~ZUALIFIED DEALERS AND FINANCIAL INSTITUTIONS The City may retain the services of a registered investment advisor. The investment advisor will manage the City's portfolio, or a portion thereof, and will be responsible for the investment and 6 reinvestment of City's investment assets, including the execution of investment transactions. Upon the request of the Director of Finance, the investment advisor will attend meetings and/or City Council meetings to discuss all aspects of the City's portfolio, including market conditions affecting the value of the City's investments. The investment advisor will be required to issue monthly and quarterly portfolio reports as defined under section VIII of this investment policy ["Portfolio Reporting"]. The investment advisor may transact business (execute the purchase and/or sale of securities) with eligible Ohio financial institutions, primary securities dealers regularly reporting to the New York Federal Reserve Bank, and regional securities firms or broker dealers licensed with the Ohio Department of Commerce, Division of Securities, to transact business in the State of Ohio. The Finance Director may, at any time, add or delete broker/dealers or eligible financial institutions. Additions or deletions to the list of approved broker/dealers or financial institutions may be made by the Finance Director based upon recommendations of the City's investment advisor. All such broker/dealers and financial institutions transacting investment business with the City are required to sign the approved investment policy as an acknowledgment and understanding of the contents of said policy. XII. Sale of Securities Prior to Maturity Portfolio assets may be liquidated or sold prior to maturity under the following conditions: (1) To meet additional liquidity needs (2) To purchase another security to increase yield or current income (3) To purchase another security to lengthen or shorten maturity (4) To realize any capital gains and/or income (5) To increase investment quality Such transactions maybe referred to as a "sale and purchase" or a "bond swap". For purposes of this section, redeemed shall also mean "called" in the case of a callable security. XIII. Procedures for the Purchase and Sale of Securities Securities will be purchased or sold through approved broker/dealers on a "best price and execution" basis. All such investment transactions will be communicated by facsimile transmission to the Director of Finance or to an authorized representative, designated by the Director of Finance. A purchase or sale of securities will be represented by transaction advices issued by the City's investment advisor which will describe the transaction, including par value, coupon (if any), maturity 7 date, and cost. A facsimile transmission will also be sent to the City's designated custodian bank and will serve as an authorization to said custodian to receive or deliver securities versus payment. Confirmation advices, representing the purchase or sale of securities, will be issued by the eligible broker/dealer and sent to the investing authority. Copies of such advices will be sent to the City's investment advisor. XIV. Statements of Compliance This investment policy has been approved by City Council and filed with the Auditor of State, pursuant to 135.14 (N)(1) ORC. Any amendments to this policy will be filed with the Auditor of State within fifteen days of the effective date of the amendment. The investment portfolio will be managed in accordance with the parameters specified within this policy. Performance of the portfolio will be periodically monitored and compared to an appropriate benchmark. All brokers, dealers, and financial institutions executing transactions initiated by the City or the City's investment advisor have signed the approved investment policy. The City's investment advisor is registered with the Securities and Exchange Commission and possesses public funds investment management experience; specifically in the area of state and local government investment portfolios. The investment advisor has additionally signed the approved investment policy and the signed policy is filed with the Director of Finance. The Director of Finance will be responsible for providing regular reports to City Council. Such reports will accurately describe all portfolio assets, including transaction activity for the period. The City's investment policy shall be adopted by Ordinance and modifications must be approved by City Council. 8 ACTION SHEET DUBLIN CITY COUNCIL DATE: 2/16/99 ORDINANCE/RESOLUTION N0. Ordinance 10-99 v~-ITLE Mr. Ms. Hide Mayor Mr. Mr. Mrs. Mr. Adamek Pittaluga Krans McCash Reiner Boring Peter son Introduced Refer to P&Z Waive 3-time Reading Waive 3-time Reading Emergency Amend Take off Table Table `TOTE comments and Notes: Office of the City Manager 5200 Emerald Parkway • Dublin, Ohio 43017-1006 ciTY of nus[,tty ! Phone: 614-761-6500 • Fax: 614-889-0740 Memo To: Members of Dublin City Council From: Timothy C. Hansley, City Manager Date: February 9, 1999 Re: Ordinance No. 10-99, Modification of the City's Investment Policy Initiated by: Marsha I. Grigsby, Director of Finance Per request of Council Member Adamek, attached please find a copy of the City's current Investment Policy. The Ordinance is scheduled for public hearing and adoption at the February 16, 1999 City Council meeting. T:\PER\DKP\99\ 119-9-MG. WPD CITY OF DUBLIN Investment Policy I. Policv 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. 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 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 being assumed. 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. Investment and Depository Policy Page 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 S 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. 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 Page 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 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 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 11-6). 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) 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)12). 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. 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.