124-97 OrdinanceRECORD OF ORDINANCES
Dayton Legal Blank Co. Form No. 30043
Ordinance No.___
124-97
Passed__________.
19-- --
AN ORDINANCE DESIGNATING FINANCIAL INSTITUTIONS AS
PUBLIC DEPOSITORIES
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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, NA $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 30,000,000
Key Bank Not given Not given
Star Bank 10,000,000 50,000,000
State Savings Bank N/A 10,000,000
National City Bank 10,000,000 20,000,000
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 legislation may be adopted to establish policy for the
investment of interim and inactive monies of the City; and
WHEREAS, the City of Dublin has prepared a Request For Proposal (RFP) for the
deposit of active and interim funds; and
WHEREAS, the RFP was distributed to financial institutions located within the City
and to investment firms in which investment discussions have taken place.
NOW, THEREFORE, BE IT ORDAINED, by the Council of the City of Dublin,
State of Ohio, ~_ of the elected members concurring that:
Section 1. That the active funds of the City of Dublin be awarded for the two-year
period commencing November 1, 1997 to Bank One, Columbus.
Section 2. That the depository agreements for active and interim funds contain a
renewal clause that maybe 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 to utilize the option to invest
interim funds through the firms of Merrill Lynch and Company, A.G. Edwards &
Sons, Inc., and Everen Securities, Inc. provided the firms remain eligible as further
described in the investment policy and provided a contract has been entered into
between the City and the investment firm whereby the investment firm agrees to
comply with the City's Investment Policy.
RECORD OF ORDINANCES
Dayton Legal Blank Co. Form No. 30043
Ordinance No._124-97_(Continued) Passed____________________ _19________
Section 5. 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 6. 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.
Passed this ~ day of ~ ~G~ ~JC/, 1997.
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Mayor -Presiding Officer
ATTEST:
Clerk of Council
1 hereby certify that copies of this Ordinance/R+ea were posted 9n ttx~
City of Dublin in accordance with Section 731.25 of the CQliv P2~i~ed t~a~~,
~~. Clerl of C cil, Dublin, io
T:\PER\DKP\97\127-7-MG. WPD
CITY OF DUBLIN
Memo
~~:. Department of Finance
5200 Emerald Parkway
Dublin, Ohio 43017-1006
Phone: 614-761-6500
Fax: 614-889-0740
To: Members of City Council
From: Timothy C. Hansley
Date: August 29, 1997
Re: Ordinance No. 124-97 - Designating Financial Institution As Public Depository
Initiated by: Marsha I Grigsby, Director of Finance `"~~-
Charles T. Coleman, Assistant Finance Director
Section 135.12 of the Ohio Revised Code requires governmental entities to designate public depositories
for public moneys. The City of Dublin's (the City) current depository agreements expire on November 1,
1997.
A Request for Proposal (RFP) was prepared with the intent of selecting one financial institution to provide
depository and banking services for the City's active deposits, to gather information on other options
provided by the banks, and to accept applications for interim funds. The RFP was distributed on July 3,
1997 with a July 25, 1997 deadline. We received eight proposals from financial institutions, with two
proposers expressing interest in interim funds only. We also received proposals from three investment
security brokerage firms for the investment of interim funds.
The proposals for the deposit of active funds were evaluated on the following criteria, but not necessarily
in the order presented:
• Least total cost to the City
• 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 the optional services
• Quality of the response to the RFP
Memorandum
August 29, 1997
Page Two
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.
The selection process for the active deposits came down to three proposers, Bank One, Fifth Third Bank
of Columbus, and National City Bank. After evaluating the proposals received, we recommend the
depository for the City's active funds be awarded to Bank One. The following information was used in
making a final determination:
• The total costs of banking services for the active deposits, including the cost of providing the
availability of credit cards, were as follows:
Bank One, Columbus $22,572.38
Fifth Third Bank of Columbus 21,632.91
National City Bank 24,771.20
• Bank One is our current depository for active funds. We have maintained an excellent working
relationship with Bank One over the last eight (8) years and have found them to be very helpful
and responsive.
• The charges quoted by Bank One are less than the current charges we are paying. We feel this is
a reflection of their desire to continue to be our provider for banking services.
• Bank One has three branches within the City of Dublin, which is more than any of the other banks.
• 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 to invest.
• A significant amount of time has been invested by the City in the development of a system of
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making automated debits to the accounts of Community Recreation Center customers for the
payment of their annual passes. If we choose a depository other than Bank One, we would need
`~ to utilize their software, which involves start-up costs and the implementation of new technical
processes. Also, with any change, initial problems are encountered and this could potentially
effect the service that is provided to our customers.
In addition to selecting a depository for active funds, part of the process that we went through is to accept
applications for inactive funds. The financial institutions that applied are indicated on the attached
ordinance. We have also received proposals from security investment firms to assist in providing
brokerage services for the investment of interim funds. We would like to have the the option of utilizing
these firms provided they remain eligible as described in the investment policy and they can provide
eligible investments at a lower cost than the competition.
We have also had recent discussions with an investment advisor and will be evaluating the benefits of
utilizing such a service.
If you have any questions, please do not hesitate to call.
S:\finance\banlafp
CITY OF DUBLIN
Investment and Depository Policy
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.
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
$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 Obli ations
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 (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)
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).
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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 1 10% 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
~.tl. 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.
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