PART I, ADMINISTRATIVE LEGISLATION

Chapter 31, INVESTMENT POLICY

[HISTORY: Adopted by the Board of Trustees of the Village of Honeoye Falls 12-20-1993. Amendments noted where applicable.]

GENERAL REFERENCES
Procurement policy -- See Ch. 42.

§ 31-1. Introduction.

Pursuant to General Municipal Law and Local Finance Law and regulations contained in the Village Law, the Village of Honeoye Falls hereby adopts the following policy and procedures as it pertains to the Village's investments.

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§ 31-2. Applicability.

The Village Board of Trustees would like to maximize interest income on all funds not immediately needed for payment obligations. This investment policy applies to all Village moneys and other financial resources available for investment on its own behalf or on behalf of any other entity when acting as agent for the other entity.

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§ 31-3. Objectives.

The primary objectives of the Village's investment activities are, in priority order:

  1. Legal: to conform with all applicable federal, state and other legal requirements.
  2. Safety: to adequately safeguard principal.
  3. Liquidity: to provide sufficient liquidity to meet all operating requirements.
  4. Yield: to obtain a reasonable rate of return.

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§ 31-4. Delegation of authority.

  1. The Village Board of Trustees delegates the authority to make the day-to-day investment decisions, within the guidelines and limitations of this policy, to the Village Treasurer, as Chief Fiscal Officer.
  2. The Treasurer shall establish written procedures which shall provide adequate internal controls to ensure a satisfactory level of accountability regarding the management of Village funds.
  3. The Treasurer is also authorized to utilize the advisory services of municipal consulting firms in planning the timing, amount, maturity, bidding, placement and reporting on any investments made. Investment decisions should be made in consultation with the Village's financial consultant.

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§ 31-5. Prudence and ethical activity.

  1. All participants in the investment process shall seek to act responsibly as custodians of the public trust and shall avoid any transaction that might impair public confidence in the Village of Honeoye Falls Board of Trustees to govern effectively.
  2. 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 safety of the principal as well as the probable income to be derived.
  3. All participants 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.

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§ 31-6. Diversification of investments.

It is the policy of the Village of Honeoye Falls to diversify its deposits and investments among financial institutions by investment instrument and by maturity scheduling.

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§ 31-7. Internal controls and operating procedure.

  1. The Treasurer is responsible for establishing and maintaining an internal control structure to provide reasonable, but not absolute, assurance that deposits and investments are safeguarded against loss from unauthorized use or disposition and that transactions are executed with management's authorizations and recorded properly and are managed in compliance with applicable laws and regulations.
  2. The Village Board of Trustees authorizes the Treasurer to use electronic transfer of funds among the approved banking institutions to assist in the movement of moneys. Each such transfer shall be specifically identified in the original journal entry as a "wire transfer" and subsequently supported by the bank confirmation notice to provide an audit trail.
  3. All investments shall be documented in written reports to the Village Board of Trustees outlining the details of each investment and the bids received thereon. Monthly reporting of investments should be made to the Village Board of Trustees.
  4. All Village employees who are involved with the transaction of Village funds are bonded through the Village's insurance program.
  5. This policy will automatically be updated by any new investment legislation that pertains to Village investments passed by the State of New York. This policy will be reviewed annually by the Village Board of Trustees.

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§ 31-8. Designation of depositaries and investment institutions.

The Village Board of Trustees authorizes the use of commercial banks or trust companies (not savings banks or associations) located and licensed to do business in New York State. The use of private brokerage or investment firms is not authorized by this policy (see General Municipal Law § 11, Local Finance Law § 165, Subdivision b).

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§ 31-9. Collateralizing of deposits.

In accordance with the provisions of General Municipal Law, § 10, all deposits of the Village, including certificates of deposit and special time deposits, in excess of the amount insured under the provisions of the Federal Deposit Insurance Act shall be secured:

  1. By a pledge of eligible securities with an aggregate market value equal to the aggregate amount of deposits from the categories designated in Appendix A to this policy.
  2. By an eligible irrevocable letter of credit issued by a qualified bank other than the bank with the deposits in favor of the Village for a term not to exceed 90 days with an aggregate value equal to 140% of the aggregate amount of deposits and the agreed upon interest, if any.
  3. By an eligible surety bond payable to the Village for an amount equal at least to 100% of the aggregate amount of deposits and the agreed upon interest, if any, executed by an insurance company authorized to do business in New York State, whose claims-paying ability is rated in the highest category by at least two nationally recognized statistical rating organizations.

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§ 31-10. Safekeeping and collateralization.

  1. Eligible securities used for collateralizing deposits shall be held by the depositary and/or a third party bank or trust company subject to security and collateral agreements at the discretion of the Village.
  2. The security agreement shall provide that eligible securities are being pledged to secure Village deposits, together with agreed upon interest, if any, and any costs or expenses arising out of the collection of such deposits upon default.
  3. The custodial agreement shall provide that securities held by the bank or trust company or agent of and custodian for the Village will be kept separate and apart from the general assets of the custodial bank or trust company.

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§ 31-11. Authorized investments.

  1. As authorized by § 11 of the General Municipal Law, the Village Board of Trustees authorized the Treasurer to invest moneys, not required for immediate expenditure for terms not to exceed its projected cash flow needs, in the following types of investments:
    1. Special time deposit accounts.
    2. Certificates of deposit.
    3. Obligations of the United States of America.
    4. Obligations guaranteed by agencies of the United States of America where the payment of principal and interest are guaranteed by the United States of America.
    5. Obligations of the State of New York.
    6. Obligations issued pursuant to Local Finance Law § 24.00 or 25.00 (with approval of the State Comptroller) by any municipality, school district or district corporation other than the Village of Honeoye Falls.
    7. Obligations of public authorities, public housing authorities, urban renewal agencies and industrial development agencies whose enabling legislation authorizes such investments.
  2. All investment obligations shall be payable or redeemable at the option of the Village of Honeoye Falls within such times as the proceeds will be needed to meet expenditures for purposes for which the moneys were provided and, in the case of obligations purchased with the proceeds of bonds or notes, shall be payable or redeemable at the option of the Village of Honeoye Falls within two years of the date of purchase.

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§ 31-12. Authorized financial institutions and dealers.

The Village shall maintain a list of financial institutions and dealers for investment purposes. The Treasurer, by authority of the Board of Trustees, in consultation with the Village's financial consultant, is responsible for evaluating the financial position and maintaining a list of proposed depositories, trading partners and custodians.

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§ 31-13. Purchase of investments.

  1. The Treasurer is authorized to contract for the purchase of investments:
    1. Directly, or through a repurchase agreement, from an authorized trading partner.
    2. By participation in a cooperative investment program with another authorized government entity or entities where such program meets all the requirements established by the Office of the State Comptroller and the specific program has been authorized by the Village Board.
    3. By utilizing an ongoing investment program with an authorized trading partner pursuant to a contract authorized by the Village Board.
  2. In order to facilitate the acquisition of repurchase agreements, a master repurchase agreement shall be executed with any authorized repo dealer, and shall comply with all rules and regulations as described in § 10 of the General Municipal Law.

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§ 31-14. Repurchase agreements and underlying security.

Securities purchased under repurchase agreements (repos) shall be limited to obligations of the United States of America or obligations whose principal and interest are guaranteed or insured by the United States of America. The term of repos shall be mutually agreed upon by both parties. Each repo shall be confirmed, in writing, by the seller, and each security purchased under a repo shall be specifically identified, segregated from the assets of the seller and delivered for safekeeping into an account designated and controlled by the Village. Each seller shall enter into a master repurchase agreement with the Village which shall specify the rights and obligations of the Village and the seller in all repo transactions.

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Appendix A

Schedule of Eligible Securities.

  1. Obligations issued or fully insured or guaranteed as to the payment of principal and interest by the United States of America, an agency thereof or a United States government sponsored corporation.
  2. Obligations partially insured or guaranteed by any agency of the United States of America at a proportion of the market value of the obligation that represents the amount of the insurance or guaranty.
  3. Obligations issued or fully insured or guaranteed by the State of New York, obligations issued by a municipal corporation, school district or district corporation of such State or obligations of any public benefit corporation which under a specific state statute may be accepted as security for deposit of public moneys.
  4. Obligations of counties, cities and other governmental entities of a state, other than the State of New York, having the power to levy taxes that are backed by the full faith and credit of such governmental entity and rated in one of the three highest rating categories by at least one nationally recognized statistical rating organization.
  5. Obligations of domestic corporations rated in one of the two highest rating categories by at least one nationally recognized statistical rating organization.
  6. Any mortgage related securities, as defined in the Securities Exchange Act of 1934, as amended, which may be purchased by banks under the limitations established by bank regulatory agencies.
  7. Commercial paper and bankers' acceptances issued by a bank, other than the bank, rated in the highest short term category by at least one nationally recognized statistical rating organization and having maturities of not longer than 60 days from the date they are pledged.
  8. Zero coupon obligations of the United States Government marketed as treasury strips.

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