HomeMy Public PortalAboutBy-law 2023-32 Adopt Investment PolicyCORPORATION OF THE MUNICIPALITY OF TWEED
BY-LAW NO, 2023-32
Being a By-law to Adopt an Investment Policy for the Municipality of Tweed, and to
Repeal By-law No. 2021-27.
WHEREAS Section 418 (1) of the Municipal Act, 2001, S.O. 2001, c. 25, as
amended, provides that a municipality may invest in prescribed securities, in
accordance with the prescribed rules, money that it does not require immediately
including,
(a) money in a sinking, retirement or reserve fund;
(b) money raised or received for the payment of a debt of the municipality or interest
on the debt; and
(c) proceeds from the sale, loan or investment of any debentures;
AND WHEREAS Section 418.1 (1) of the Municipal Act, 2001, S.O. 2001, c. 25, as
amended, provides that a municipality may invest money that it does not require
immediately in any security;
AND WHEREAS Section18 (1) of O. Reg. 438/97 requires that the Council of a
municipality shall adopt and maintain an investment policy in relation to investing;
AND WHEREAS Section 10 of 0. Reg. 43/18 sets out the requirements for prudent
investments by a municipality;
AND WHEREAS the Council of the Corporation of the Municipality of Tweed has
considered these requirements in the drafting of an investment policy;
NOW THEREFORE the Council of the Corporation of the Municipality of Tweed
enacts as follows:
1. THAT the Investment Policy attached hereto as Schedule `Al to this By-law be
adopted as the Investment Policy for the Municipality of Tweed and form part
of this By-law.
2. THAT By-law No. 2021-27 be repealed in its entirety.
3. THAT this By-law shall come into force and take effect immediately upon the
passing thereof by the Council of the Corporation of the Municipality of Tweed.
Read a first, second, and third and final time, passed, signed, and sealed in open
Council this 25th day of April, 2023.
MAYOR
Schedule 'A' to By-law No. 2023-32
THE CORPORATION OF THE MUNICIPALITY OF TWEED
SUBJECT:
Investment Policy
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1.0 Definitions
(a) "Council" shall mean the elected Mayor and Council of the Corporation of the
Municipality of Tweed;
(b) "Municipality" shall mean the Corporation of the Municipality of Tweed;
(c) "Treasurer" shall mean the Treasurer or designate appointed by the Corporation
of the Municipality of Tweed;
(d) ONE Investment Program: A local government investment pool in which
Ontario municipalities may invest. ONE Investment Program is operated by Local
Authorities Service Limited (a wholly owned subsidiary of the Association of
Municipalities of Ontario), together with CHUMS Financing Corporation (a wholly
owned subsidiary of the Municipal Finance Officers' Association of Ontario).
(e) "Portfolio" shall mean the collection of securities held by the Corporation of the
Municipality of Tweed.
2.0 Purpose
The purpose of this investment policy is to set out the guiding principles and
establish a statement of the investment policies and goals for the purpose of
investing public funds while meeting the related statutory requirements.
3.0 Scope
The Investment Policy applies to all financial assets of The Corporation of the
Municipality of Tweed held within the following:
• General Funds;
• Reserve Funds; and
• Funds held in Trust with the Municipality of Tweed.
THE CORPORATION OF THE MUNICIPALITY OF TWEED
SUBJECT:
Investment Policy
PAGE 2 of 7
4.0 Governing Principles
The municipality shall adhere to the following guiding principles in the consideration,
purchase, disposal, and administration of any municipally held investments:
4.1. Adherence to Statutory Requirements
All investment activities shall be governed by the Ontario Municipal Act, 2001 as
amended. Investments, unless further limited by Council, will be those deemed
eligible under Ontario Regulation 438/97, or as authorized by subsequent
provincial regulations.
4.2. Preservation of Capital
All investment decisions will be based upon the preservation of the value of the
invested principal. This is accomplished by limiting the types of investments to a
maximum percentage of the total portfolio, and by limiting the amount invested
within individual institutions to a maximum percentage of the total portfolio.
Staff shall endeavor to mitigate credit, market value, and interest rate risk as
follows:
Credit Risk
• Limiting investments to safer types of securities based on credit ratings;
• Vetting investment alternatives offered by the financial institutions,
brokers/dealers, intermediaries, and advisors against the stated credit limits
Market Value Risk
• Diversifying the investment portfolio so that potential losses (if any) on
individual securities will be minimized
Interest Rate Risk
• Structuring the investment portfolio so that securities mature to meet ongoing
cash flow requirements, thereby reducing the need to sell securities on the
open market prior to maturity;
• Investing operating funds primarily in shorter -term securities or approved
liquid investment pools;
• Use and diversification of longer -term holdings to mitigate effects of interest
rate volatility.
THE CORPORATION OF THE MUNICIPALITY OF TWEED
SUBJECT:
Investment Policy
PAGE 3 of 7
4.3. Maintenance of Liquidity
The investment portfolio shall remain sufficiently liquid to meet all operating and
cash flow requirements and limit temporary borrowing requirements. This shall
be done, where possible, by structuring the portfolio such that securities mature
concurrent with anticipated cash demands. Furthermore, since all possible cash
demands cannot be anticipated, the portfolio shall consist largely of securities
with active secondary or resale markets. A portion of the portfolio may be place
in eligible investment pools which offer liquidity for short-term funds.
4.4. Earning a Competitive Rate of Return
The rate of return on the investment portfolio will be optimized to the maximum
extent possible given the investment objectives of legality, safety of principal and
the need to maintain adequate liquidity. Return on investment is of secondary
importance compared to the safety and liquidity objectives described above.
Normally longer -term investments offer higher yields than shorter -term
investments. Investments will be made to obtain the most advantageous yields
while at the same time ensuring that the funds can be made available to meet
expected cash requirements. The composition of the portfolio, including its term
and class of investments will be adjusted within the guidelines of this policy to
take advantage of market opportunities which arise to enhance the rate of return
on the portfolio.
5.0 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 throughout the budgetary and economic cycles, commensurate with the
investment risk constraints and cash flow needs of the Municipality.
Short-term funds will be compared to the return on the three-month Government of
Canada Treasury Bills and the One Fund's Money Market Fund. Long-term funds
will be compared to the Bank of Canada's one-year Treasury Bill rate. Furthermore,
prime interest rates and other applicable market rates (i.e. Banker's Acceptance)
may be utilized to provide a useful benchmark for investment performance with
consideration to limitations due to the Ontario Municipal Act, 2001 as amended.
Market yields, at the very least, should exceed the rate given by the Municipality's
general bank account.
THE CORPORATION OF THE MUNICIPALITY OF TWEED
SUBJECT:
Investment Policy
PAGE 4of7
6.0 Eligible Investments
In accordance with Ontario Regulation 438/97 or as authorized by subsequent
provincial regulations, the Municipality is not authorized to invest in securities other
than those listed in the Regulation.
7.0 Authorized Investment Dealers
The Municipality is authorized to invest funds through the investment arm of various
Schedule 1 banks in Canada, as well as in the One Investment Program's High
Interest Savings Account (HISA) and/or the One Investment Program's Canadian
Government Bond Portfolio. If an investment opportunity not provided through a
Schedule 1 bank or the ONE Fund offers a better return while adhering to all
guidelines within this policy, the Treasurer or designate must provide a report to
Council for approval before entering into any investment agreements.
The Municipality authorizes One Investment's portfolio under By -Law 2023-32 as an
allowable investment option for the Municipality, as the securities held in the ONE
Portfolios consist of highly -rated, diversified investment instruments that are
guaranteed to be eligible investments as defined in O.Reg 438/97 (as amended)
under the Municipal Act.
8.0 Responsibilities
8.1. CAO or others as directed by Council:
8.1.1. Obtain adequate insurance coverage to guard against any losses that
may occur due to misappropriation, theft, or other unscrupulous acts of
fraud with respect to the Municipality's financial assets.
8.2. Treasurer or Designate:
8.2.1. Responsible for providing to Council each year, or upon request of
Council, an investment report as outlined below;
8.2.2. Enter into agreements with banks, investment dealers and brokers; and
other financial institutions for the purchase, sale, redemption, issuance,
transfer, and safekeeping of securities, all in the name of the Municipality;
8.2.3. Execute and sign administrative and trading investment agreements on
behalf of the Municipality;
THE CORPORATION OF THE MUNICIPALITY OF TWEED
SUBJECT:
Investment Policy
PAGE 5of7
8.2.4. Responsible for ensuring that the credit rating of any securities held in the
investment portfolio are being monitored regularly and any material
negative changes are communicated a timely manner as may be
appropriate;
8.2.5. Develop and maintain all necessary operating procedures for effective
control and management of the investments, and reasonable assurance
that the Municipality's investments are properly managed and adequately
protected.
9.0 Investment Reporting
The Treasurer or designate shall provide an annual investment report to Council
which includes, at a minimum, the requirements set forth in Ontario Regulation
438/97, as amended. Under the current regulations,, the investment report shall
contain the following:
(a) A listing of investment portfolios held at the end of the reporting period;
(b) A statement about the performance of the portfolio of investments of the
Municipality during the period covered by the report;
(c) A statement made by the Treasurer or designate as to whether or not, in their
opinion, all investments were made in accordance with the investment policies
and goals adopted by the Municipality;
(d) A record of the date of each portfolio transaction; and
(e) Such other information that the Council may require, or that, in the opinion of the
Treasurer or designate, should be included.
10.0 Standard of Care
10.1. Prudence
Investments shall be made with judgment and care, under circumstances then
prevailing, following the prudent person principle of investment management,
and considering the probable safety of their principal as well as the probable
income to be derived. Consideration will be given to obtaining independent legal
and/or financial advice in circumstances in which the Municipality believes
additional expertise is warranted.
THE CORPORATION OF THE MUNICIPALITY OF TWEED
SUBJECT:
Investment Policy
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Investment staff acting in accordance with written procedure, this investment
policy and exercising due diligence, shall be relieved of personal responsibility
for an individual security's credit risks or market price changes, provided
deviations from expectations are reported in a timely fashion and the liquidation
or the sale of securities are carried out in accordance with the terms of this
policy.
10.2. Ethics and Conflicts of interest
Staff involved in the investment process shall refrain from personal business
activity that could conflict with the proper execution and management of the
investment policy, or that could impair their ability to make impartial decisions.
Employees and investment officials shall disclose any material interests in
financial institutions with which they conduct business. They shall further
disclose any personal financial/investment positions that could be related to the
performance of the investment portfolio. Staff shall not undertake personal
investment transactions with the same individual with whom business is
conducted on behalf of the Municipality.
10.3. Delegation of Authority
The Investment Policy and any amendments thereto must be adopted by
Council. This policy will delegate to the Treasurer the authority to make
investments which comply with this policy, pursuant to section 418(5) of the
Ontario Municipal Act, 2001 as amended. The Treasurer has overall
responsibility for the prudent investment of the Municipality's portfolio.
10.4. Safekeeping and Custody
All investments shall be held for safekeeping in the name of the Municipality by
financial institutions approved by Council. The depository shall issue a
safekeeping receipt to the Municipality for each investment transaction, listing
the specific instrument, rate, maturity, and other pertinent information. On a
monthly basis, the depository will provide reports which list all investment
activity, the book value of holdings, the market value as of month -end and
income earned by the investments.
THE CORPORATION OF THE MUNICIPALITY OF TWEED
10.5. Records Management
Records and files will be kept according to the Municipality's By-law for the
Retention Periods for Documents, Records, and Other Papers of the
Municipality, as amended.
10.6. Policy Review
This policy shall be presented to Council for review and update, if applicable,
every two years, in the first year of each elected Council, or as deemed
necessary by Council or the Treasurer.