89-96 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
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* Name changed to Key Corp.
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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
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Mayor - Presiding Officer CIty 01 Dublin III (I{cordanre w;;~: SHr:m 7"'1 ':15 n'~ <'1 (},. R vised
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ATTEST: ~~~
~.___n~_m~-. Clerk of Council, Dublin, Ohio
Clerk of Council
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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
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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,
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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
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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,
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Investment and Depository Policy
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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,
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- 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.
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Investment and Depository Policy
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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,
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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,
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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
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Investment and Depository Policy
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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
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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.
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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).
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Investment and Depository Policy
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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,
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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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