Chapter 3.25
INVESTMENT
Sections:
3.25.030 Standard of investment practice and review.
3.25.040 Objectives and permissible investment instruments.
3.25.050 Performance standards.
3.25.060 Ethics and conflicts of interest.
3.25.070 Reporting and policy review.
3.25.080 Depositories designated.
3.25.010 Policy.
It is the policy of the city to invest public funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the city and conforming to the statutes of the state of Indiana governing the investment of public funds, including but not limited to IC 5-13-9 et seq. [Res. 2001-327. Code 2000 § 33.080.]
3.25.020 Scope.
This investment policy applies to all financial assets of the city, unless specifically exempted by state or federal law. These funds are accounted for in the annual city financial report and include:
(A) The following governmental funds:
(1) General fund.
(B) The following special revenue funds:
(1) Motor vehicle highway fund;
(2) Local road and street fund;
(3) Parks and recreation fund;
(4) Law enforcement continuing education fund;
(5) Emergency cleanup fund;
(6) State grant fund.
(C) The following capital project funds:
(1) Cumulative capital improvement fund;
(2) Redevelopment capital fund;
(3) Park nonreverting capital fund;
(4) HUD fund;
(5) Water improvement fund;
(6) Water construction fund;
(7) Wastewater improvement fund;
(8) Wastewater construction fund.
(D) The following enterprise funds:
(1) Water operating and maintenance fund;
(2) Wastewater operating and maintenance fund.
(E) The following debt service (sinking) funds:
(1) Water bond and interest fund;
(2) Wastewater bond and interest fund.
(F) The following fiduciary (trust and agency) funds:
(1) Police pension fund;
(2) Donation fund;
(3) Escrow fund;
(4) Water customer deposit fund.
(G) The following internal service funds:
(1) Payroll fund;
(2) Levy excess fund;
(3) Petty cash fund;
(4) Police operations fund;
(5) Self insurance reserve fund.
(H) Any new fund established by the Common Council, unless specifically exempted. [Res. 2001-327. Code 2000 § 33.081.]
3.25.030 Standard of investment practice and review.
(A) Investments shall be made with judgment 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 subject to the deposit and investment guidelines set forth in IC 5-13-9 et seq.
(B) The standard of prudence to be used by investment officials shall be the “prudent persons” standard and shall be applied in the context of managing an overall portfolio. The Clerk-Treasurer as an Indiana municipal investment officer is governed by the bond and surety requirements set forth in IC 5-4-1 et seq. Personal liability of investing officers as set forth in the state law still attains. However, investing officers acting in accordance with written policies and procedures as set forth in state law, any recognized supplemental authorities and the local investment policy, exercising due diligence shall be relieved of personal liability; provided, that Indiana law allows. [Res. 2001-327. Code 2000 § 33.082.]
3.25.040 Objectives and permissible investment instruments.
The primary objectives, in priority order, of city investment activities shall be:
(A) Safety. Safety of principal is the foremost objective of the investment program. Investments of the city shall be undertaken in a manner that seeks to ensure the preservation of capital. To obtain this objective, diversification to the extent that such is consistent with Indiana investment and deposit law is required. As stated in IC 5-13-9 et seq., investments are limited to the following instruments:
(1) Securities backed by the full faith and credit of the United States Treasury which includes direct obligations of the United States and obligations of a federal agency, a federal instrumentality, or a governmental enterprise that are fully guaranteed by the United States.
(2) Investment accounts offered by a designated public depository.
(3) Repurchase or resale agreements with depositories designated by the Indiana State Board of Finance, provided such monies are fully collateralized.
(4) Obligations issued, assumed, or guaranteed by the International Bank for Reconstruction or the AD Bank.
(5) Investments commonly known as money market mutual funds that are in the form of securities of or interests in an open-end, no-load, management-type investment company or investment trust registered under the provisions of the federal Investment Company Act of 1940, as amended (15 U.S.C. Section 80a et seq.). In addition, this investment must be authorized by action of the Common Council and undertaken pursuant to the provisions of IC 5-13-9-2.5. The form of securities of or interests in an investment company or investment trust herein described must be rated as one of the following:
(a) AAAm, or its equivalent, by Standard and Poor’s Corporation or its successor.
(b) Aaa, or its equivalent, by Moody’s Investors Service, Inc. or its successor.
(B) Liquidity. Investments of the city shall be undertaken in a manner that enables it to remain sufficiently liquid in order to meet all operating disbursing requirements and/or capital projects disbursing requirements which might be reasonably anticipated. To obtain this objective, cash flow estimates and project expensing timetables will be developed to the extent that such is consistent with Indiana investment and depository law. In addition, the following guidelines will be observed:
(1) Investments for funds deemed available for periods of 74 days or less, the investing officer will as much as possible utilize pursuant to IC 36-1-7 et seq., or other investment instrument that permits the greatest liquidity and fund movement without corresponding loss of return or penalty;
(2) Investments for funds deemed available for periods of over 74 days, the investing officer will as much as possible utilize time instruments such as certificates of deposit or similar instruments that provide a greater yield and preserve safety for funds for which liquidity is less critical;
(3) In order to balance the objectives of liquidity and minimize idleness of fund balances, all operating cash should be maintained as much as possible in interest bearing draft, checking, or negotiable orders of withdrawal accounts.
(C) Return on Investment. The investment portfolio of the city shall be designed or undertaken with the objective of attaining a rate of return throughout budgetary and economic cycles, commensurate with the city’s investment risk constraints and the cash flow characteristics of the portfolio. [Res. 2001-327. Code 2000 § 33.083.]
3.25.050 Performance standards.
(A) The investment portfolio shall be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with cash flow needs and with the investment risk constraints established by IC 5-13-9 et seq.
(B) Market Yield (Benchmark). The city’s investment strategy is to combine a combination of passive and active strategies as follows:
(1) The passive strategy is to utilize, as much as possible, interest bearing checking accounts for the operational cash flow needs.
(2) In addition, the city will employ as much as possible a three-pronged active investment methodology, some of which is set forth in AMC 3.25.040(A)(2).
(a) The city will employ certificates of deposit for those proceeds where liquidity in under 74 days is not an issue.
(b) The city will employ repurchase agreements or sweep accounts in order to provide coverage for funds usually idle and not placed either in the local government investment pool (LGIP), certificate of deposit, or other permissible instruments.
(c) The city will employ the LGIP in order to increase yield on funds for which liquidity demands are such as to make suitable the use of either the sweep account or the certificate of deposit and still comply with this policy.
(C) Based upon the strategy outlined in this section, the basis used by the Clerk-Treasurer to determine whether yields are being achieved shall be the 90-day Treasury bill (T-bill) rate. [Res. 2001-327. Code 2000 § 33.084.]
3.25.060 Ethics and conflicts of interest.
Officials 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. Officials and employees shall disclose to the Mayor and to the Clerk-Treasurer in writing any material financial interests in financial institutions that conduct business within their jurisdiction, and they shall further disclose any large personal financial investment positions that could be related to the performance of the city. [Res. 2001-327. Code 2000 § 33.085.]
3.25.070 Reporting and policy review.
(A) The Clerk-Treasurer shall provide at least annually a written report, to be available to the public and to the Common Council, providing relevant information regarding the investment activities of the city for the immediately preceding fiscal year just ended.
(B) The Clerk-Treasurer shall review the investment policy at least annually and make such changes as may be required by state law, by action of the Common Council, or as may be desirable to optimize the investing function for the public interest. [Res. 2001-327. Code 2000 § 33.086.]
3.25.080 Depositories designated.
The Clerk-Treasurer is hereby authorized to deposit, invest, and reinvest monies as determined and identified by the Clerk-Treasurer in any financial institution identified eligible by the Indiana Board of Depositories and located within the city corporate limits. [Ord. 1408-2012; Ord. 1149-2004. Code 2000 § 33.087.]