Chapter 3.40 PUBLIC DEPOSITORIES AND INVESTMENTS

Chapter 3.40
PUBLIC DEPOSITORIES AND INVESTMENTS Revised 10/21

Sections:

3.40.010 Definitions.

3.40.020 Establishment of the municipal treasury.

3.40.030 Deposit of public funds – Designation of public depositories.

3.40.040 Deposit and investment powers.

3.40.050 Authorized investments. Revised 10/21

3.40.060 Limit to final maturity of investments. Revised 10/21

3.40.070 Disposition of interest received from investment.

3.40.080 Treatment of service charge by depository.

3.40.090 Prohibited acts.

3.40.095 Investment policy. Revised 10/21

3.40.010 Definitions.

(A) As used in this chapter, “repurchase agreement” means an agreement:

(1) Involving the purchase and guaranteed resale of securities between two parties; and

(2) That may be entered into for a fixed term or arranged on an open or a continuing basis as a continuing contract that:

(a) Operates like a series of overnight repurchase agreements;

(b) Is renewed each day with the repurchase rate and the amount of funds invested determined daily; and

(B) As used in this chapter, “municipality” means the municipal government of the town of Highland, its executive departments and any and all utilities operated by it. [Ord. 1270 § 1, 2005. Code 2000 § 36.01].

3.40.020 Establishment of the municipal treasury.

(A) There is hereby established the treasury of the municipal corporation.

(B) The municipal treasury is composed of the following:

(1) All moneys collected by the municipality under any law of this state or of the town providing for the collection of revenue for lawful public purposes;

(2) All moneys borrowed on the credit of the municipality by the clerk-treasurer or any other authorized agent of the municipality;

(3) All moneys derived from the sale of property belonging to or held in trust by the municipality;

(4) All moneys and securities belonging to, lent to, or held in trust by the municipality, where no other disposition of them is required by law;

(5) All income derived in any manner from any money or property specified in this section;

(6) Every fee, perquisite, or bonus received by any public officer or employee in the discharge of his duties;

(7) All moneys appropriated to the payment of any part of the interest on the public debt; and all moneys from any source paid, belonging, or accruing to the municipality for the use of the municipality or to a municipal fund for any purpose.

(C) The municipal treasury shall be divided into the general fund and such other funds as are created by statute or by ordinance.

(D) The general fund consists of all moneys paid into the municipal treasury, which are not by operation of a statute, ordinance, or requirement of the donor dedicated to another fund or for another purpose. [Ord. 1270 § 1, 2005. Code 2000 § 36.02].

3.40.030 Deposit of public funds – Designation of public depositories.

(A) The town of Highland through its clerk-treasurer may deposit public funds in a financial institution only if the financial institution:

(1) Is a depository eligible to receive state funds; and

(2) Has a principal office or branch that qualifies under IC 5-13-8-9 to receive public funds of the town.

(B) The clerk-treasurer shall deposit funds not later than the business day following the receipt of funds on business days of the depository in depositories designated in this chapter, according to the following:

(1) All financial institutions located in the corporate boundaries of the town of Highland are approved to serve as public depositories of the municipality as long as the financial institution is also listed as an approved depository of state funds, and satisfies the provisions of subsection (A) of this section.

(2) Public funds deposited under this chapter shall be deposited in the same form in which they were received.

(C) Any depository designated under this chapter may resign as a depository and relinquish all public funds on deposit with the depository. The resignation is effective after 30 days’ notice in writing to the state Board of Finance and after settlement with the town clerk-treasurer for all public funds on deposit with the depository. [Ord. 1270 § 1, 2005. Code 2000 § 36.03].

3.40.040 Deposit and investment powers.

(A) Except as provided in IC 5-13-9-1(b) and 5-13-9-2.5, in addition to any other statutory power to make investments, the clerk-treasurer as fiscal officer of the municipality, under the guidelines herein established, and policies that the fiscal officer may issue and reduce to writing, may invest any funds held by the fiscal officer in accordance with IC 5-13-9.

(B) The funds that may be invested under IC 5-13-9 and this chapter include money raised by bonds issued for a future specific purpose, sinking funds, depreciation reserve funds, gift, bequest or endowment, funds described in HMC 3.40.020 and any other funds available for investment.

(C) Nothing in this chapter shall be construed to be in derogation of the authority of the clerk-treasurer as set forth in IC 36-5-6-6. [Ord. 1270 § 1, 2005. Code 2000 § 36.04].

3.40.050 Authorized investments. Revised 10/21

(A) The clerk-treasurer as fiscal officer of the municipality may invest or reinvest any funds that are held by the officer and available for investment in any of the following:

(1) Securities backed by the full faith and credit of the United States Treasury or fully guaranteed by the United States and issued by any of the following:

(a) The United States Treasury.

(b) A federal agency.

(d) A federal government sponsored enterprise.

(2) Securities fully guaranteed and issued by any of the following:

(a) A federal agency.

(b) A federal instrumentality.

(d) Municipal securities issued by an Indiana local governmental entity, a quasi-governmental entity related to the state, or a unit of government, municipal corporation, or special taxing district in Indiana, if the issuer has not defaulted on any of the issuer’s obligations within the 20 years preceding the date of the purchase.

(B) If an investment under subsection (A)(1) of this section is made at a cost in excess of the par value of the securities purchased, any premium paid for the securities shall be deducted from the first interest received and returned to the fund from which the investment was purchased, and only the net amount is considered interest income.

(C) The clerk-treasurer may sell any securities acquired and may do anything necessary to protect the interests of the funds invested, including the exercise of exchange privileges which may be granted with respect to maturing securities in cases where the new securities offered in exchange meet the requirements for initial investment.

(D) The clerk-treasurer is the legal custodian of securities under this chapter. The clerk-treasurer shall accept safekeeping receipts or other reporting for securities from:

(1) A duly designated depository as prescribed in IC 5-13; or

(2) A financial institution located either in or out of Indiana having custody of securities with a combined capital and surplus of at least $10,000,000 according to the last statement of condition filed by the financial institution with its governmental supervisory body.

(E) The clerk-treasurer may invest or reinvest funds that are held by the officer and available for investment in 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 USC 80a et seq.).

(1) The investments described in this subsection may not exceed 50 percent of the funds held by the officer and available for investment.

(2) The investments described in this subsection shall be made through depositories designated by the state Board of Finance as depositories for state deposits under IC 5-13-9.5.

(3) The portfolio of an investment company or investment trust described in this subsection must be limited to the following:

(a) Direct obligations of the United States.

(b) Obligations issued by any of the following:

1. A federal agency.

2. A federal instrumentality.

3. A federal government sponsored enterprise.

(4) The form of securities of or interests in an investment company or investment trust described in subsection (E)(3) of this section must be rated as one of the following:

(a) AAA, 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.

(5) The form of securities in an investment company or investment trust described in subsection (E)(4)(a) is considered to have a stated final maturity of one day.

(F) The clerk-treasurer may enter into, with any funds that are held by the officer and available for investment, repurchase agreements:

(1) With depositories designated by the state Board of Finance as depositories for state deposits under IC 5-13-9.5; and

(2) Involving the town’s purchase and guaranteed resale of any interest-bearing obligations issued or fully insured or guaranteed by the United States, a United States government agency, an instrumentality of the United States, or a federal government sponsored enterprise.

(3) The depository shall determine daily that the amount of money in this type of agreement must be fully collateralized by interest-bearing obligations as determined by their current market value. The collateral for this type of agreement is not subject to the provisions of IC 5-13-9-2(c).

(4) If the market value of the obligations being held as collateral falls below the level required under subsection (F) of this section or a higher level established by agreement, the depository shall deliver additional securities to the political subdivision to make the agreement collateralized to the applicable level. The collateral involved in a repurchase agreement entered into under this section is not subject to the maturity limitation provided in IC 5-13-9-5.6.

(5) The clerk-treasurer may invest in repurchase agreements without entering into a contract under IC 5-13-11 for an investment cash management system.

(G) The clerk-treasurer may invest or reinvest any funds that are held by the officer and available for investment in obligations issued, assumed, or guaranteed by the International Bank for Reconstruction and Redevelopment or the African Development Bank.

(H) The clerk-treasurer may invest or reinvest any funds that are held by the officer and available for investment in participations in loans, pursuant to the provisions of IC 5-13-9-3.5.

(I) The clerk-treasurer may deposit, invest, or reinvest any funds that are held by the officer and available for investment in transaction accounts issued or offered by a designated depository of the town for the rates and terms agreed upon periodically by the officer making the investment and the designated depository.

(J) The clerk-treasurer may deposit, invest, or reinvest any funds that are held by the officer and available for investment in certificates of deposit issued or offered by a designated depository of the town.

(1) The investing officer making a deposit in a certificate of deposit shall obtain quotes of the specific rates of interest for the term of that certificate of deposit that each designated depository will pay on the certificate of deposit.

(2) Quotes may be solicited and taken by telephone. A memorandum of all quotes solicited and taken shall be retained by the investing officer as a public record of the town under IC 5-14-3. A deposit made under this subsection (J) shall be placed in the designated depository quoting the highest rate of interest.

(3) If more than one depository submits a quote of the highest interest rate quoted for the investment, the deposit may be placed in any or all of the designated depositories quoting the highest rate in the amount or amounts determined by the investing officer, in the investing officer’s discretion.

(4) If the clerk-treasurer believes it to be desirable to solicit quotes for certificates of deposit in a financial institution located outside of the boundaries of the town, the clerk-treasurer must act according to the provisions of IC 5-13-9-5.

(K) The clerk-treasurer may participate in joint investment funds as authorized in and according to the provisions of IC 5-13-9-10. [Ord. 1270 § 1, 2005; Ord. 1749 § 1, 2021. Code 2000 § 36.05].

3.40.060 Limit to final maturity of investments. Revised 10/21

(A) Except as otherwise provided in subsection (B) of this section, any investment made under the authority of this chapter must have a stated final maturity of not more than two years for a fund not described in IC 5-13-9-5.6(1) or (2) or after the date of purchase or entry into a repurchase agreement;

(B) An investment described in HMC 3.40.050(A)(2)(d) may have a maturity for more than two years but not more than five years, pursuant to IC 5-13-9-5.7. [Ord. 1270 § 1, 2005; Ord. 1749 § 2, 2021. Code 2000 § 36.06].

3.40.070 Disposition of interest received from investment.

(A) All interest derived from an investment made under the authority granted by HMC 3.40.050(E) shall be deposited, except as otherwise provided by law, in the general fund of the investment authority or in any other fund its governing body designates specifically or by written policy or instruction of the municipal fiscal officer, subject to the modifications and limitations in this section.

(B) Interest from the following investments shall be receipted as follows:

(1) Interest from investments of funds of a political subdivision that are traceable to United States government funds must be receipted to the fund of which they are a part, if required by federal law or regulation.

(2) Interest from investments of funds controlled by court orders must be receipted to that fund unless otherwise designated by the court order.

(C) The clerk-treasurer may apply the interest derived from the investment of the proceeds from bonded indebtedness or local tax levies to the appropriate redemption bond interest or sinking fund for the bonded indebtedness, subject to the terms of the relevant bond ordinance or resolution.

(D) If meter deposits of a municipally owned utility are invested, the interest earned on the investment may be applied to and used in the operation or depreciation fund of the municipally owned utility as determined by its governing body or by written policy or instruction of the municipal fiscal officer.

(E) Interest from the investment of the public funds of the town of Highland or its executive department or any blended component unit may not be paid personally or for the benefit of any public officer. [Ord. 1270 § 1, 2005. Code 2000 § 36.07].

3.40.080 Treatment of service charge by depository.

Any authorized service charge or fee imposed by a public depository must be considered in the computation of the interest rate for determining which depositories are entitled to investments as prescribed by HMC 3.40.050(I) and (J). If the total service charge cannot be computed before the investment, the investing officer shall estimate the service charge and adjust the interest rate based on this estimate. The service charge may be paid by direct charge to the deposit or other account or in any other manner mutually agreed upon by the investing officer and the depository. [Ord. 1270 § 1, 2005. Code 2000 § 36.08].

3.40.090 Prohibited acts.

The clerk-treasurer may not (A) purchase securities on margin nor (B) open a securities margin account for the investment of public funds. [Ord. 1270 § 1, 2005. Code 2000 § 36.09].

3.40.095 Investment policy. Revised 10/21

A written policy is adopted pursuant to IC 5-13-9-5.7 and shall be complementary and a companion to the policies set forth in this chapter. The written policy shall be published and included in the code as Chapter VI of its special regulations title. The written investment policy will be in force until its expiration on October 1, 2025, unless revised, renewed or repealed sooner by the fiscal body. [Ord. 1749 § 3, 2021].