HomeMy WebLinkAboutTR-3-95 THE CORPORATION OF THE MUNICIPALITY OF CLARINGTON
REPORT
Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE File#
Date: February 6, 1995 Res. # Ca :?
By-Law#
Report#: TR-3 9a File#:
Subject: REVIEW OF MUNICIPAL INVESTMENT POLICY
Recommendations:
It is respectfully recommended that the General Purpose and Administration Committee recommend
to Council the following:
1. THAT Report TR-3-95 be received;
2. THAT the attached Schedule"A",along with it's supporting Appendix"A"and "A-1",
be approved as the current Investment Policy for the Corporation of the Municipality
of Clarington for surplus General Fund, Reserves, Reserve Fund and Trust Fund
monies;
3. THAT Appendix "A" and "A-1" be amended from time to time to reflect the current
status of any bank or institution being considered for investement; and
4. THAT the investment procedures (attached Schedule "B"), be received for
information.
BACKGROUND AND COMMENTS:
At the March 16, 1992 General Purpose and Administration meeting, report TR-19-92 was approved
establishing the Municipality's current investment policy. Since that time, the value of the portfolio
has increased significantly due primarily to the funds received through the 1993 Ontario Hydro
Agreement, as well as the collection of Development Charges levies. The balance of the General
Fund and Reserve Funds investments outstanding as of December 31, 1991 was $18,409,707. After
payment of the final 1994 school levies, the balance of the General Fund and Reserve Funds
investments at December 31, 1994 is approximately $32,000,000.
The existing policy authorizes the placement of short term investments. This is generally considered
to be less than one year. Since a substantial portion of the Reserve Fund monies will not be
required until several years into the future, the Municipality would earn a much greater yield on its
investments if it invested in longer term instruments, .
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TR-3-95 Page-2
The existing policy also places a limit of 30% of the value of the portfolio to be placed within a
single institution. Given that each institution offers securities held by other institutions (ie. a Bank
of Nova Scotia bankers acceptance can be purchased through the Bank of Montreal) often at a higher
rate than the original institution is offering, this limit does not reflect the actual spread of the
individual investments among the institutions. Also, the Municipality traditionally receives higher
rates from certain banks and if the 30% limit is already reached,the Municipality is forced to accept
a lower rate from another institution.
The attached revised policy will provide the Municipality with greater investment returns while still
ensuring the security of the investment portfolio.
Respectfully submitted, Reviewed by,
ZZ
M ke X. Marano, H.BSc., A.M.C.T., W.H. Stockwell,
Treasurer. Chief Administrative Officer.
MM/NT/hjl
Attachments
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SCHEDULE A
REPORT #TR-3-95
CORPORATION OF
THE MUNICIPALITY OF CLARINGTON
SHORT TERM/LONG TERM INVESTMENT POLICY FOR SURPLUS
GENERAL FUND, RESERVES, RESERVE FUND, AND TRUST FUNDS
LEGISLATIVE AUTHORITY
Section 167(2) of the Municipal Act R.S.O. 1990 provides the legislative authority to invest monies
not immediately required for current operating purposes.
Section 163 of the Municipal Act R.S.O. 1990 provides the legislative authority to invest monies
raised for a reserve fund and its earnings in such securities as allowed under the Trustee Act.
POLICY
1. TYPES OF INVESTMENT
That the Municipality of Clarington place investments in those instruments permitted under
the Municipal Act and the Trustees Act of Ontario, and more specifically only those issued
or guaranteed by the following institutions (See Appendix A and A-1 for current listing):
(i) The Government of Canada
(ii) The Provinces of Canada
(iii) Ontario Municipal Governments as defined in the Municipal Affairs Act
(iv) Schedule A and B banks
2. PLACEMENT OF INVESTMENT
That the Municipality be permitted to take advantage of investments offered by qualified
investment brokerage houses, such as RBC Dominion Securities and/or Wood Gundy Inc.,
and financial institutions as circumstances dictate.
Schedule A Page 2
3. LIMITATIONS AND DIVERSIFICATION OF PORTFOLIO HOLDINGS
That the following limitations be placed on investments with any one financial institution
based on the issuer of the investment according to the rating supplied by a qualified bond
rating service,per attached Appendix A and A-1,taking into account the overall value of the
investment portfolio.
That the mix of investments be maintained of holdings in the portfolio with a minimum of
20% R-1 high, maximum 70% R-1 middle and maximum 10% R-1 low.
INVESTMENT INSTITUTION LIMIT
Government of Canada No limit
Provinces of Canada Maximum 30% of portfolio
Schedule A Banks Maximum 30% of portfolio
Schedule B Banks Maximum 10% of portfolio
Ontario Municipal Governments Maximum 20% of portfolio
Municipal Investment Pools Maximum 30% of portfolio
4. TERM OF INVESTMENTS
Investments in long term bonds shall be limited to $15 million or 50% of the Reserve Fund
investment portfolio balance, whichever is less. The maximum investment term will not
exceed five (5) years, except for Ontario Municipal Government and Municipal Investment
Pool Investments.
5. Municipal Investment Pools, as mentioned above, includes the CHUMS Money Market Fund
and the LAS Pooled Investments program offered by the Municipal Finance Officers
Association and the Association of Municipalities of Ontario. These funds will be combined
under the new "ONE" fund May 1, 1995. A By-Law will be forthcoming, as soon as a draft
is available from "ONE".
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APPENDIX A
REPORT #TR-3-95
Rating Schedule As Of April 29, 1994
(Dominion Bond Rating Services Limited)
SCHEDULE A BANKS SCHEDULE B BANKS
R-1(High) Morgan Bank of Canada
Credit Suisse Canada
Union Bank of Switzerland (Canada)
Swiss Bank Corporation (Canada)
Deutsche Bank (Canada)
R-1(Mid) Royal Bank of Canada The Bank of Tokyo Canada
Toronto Dominion Bank Hong Kong Bank of Canada
Canadian Imperial Bank of
Commerce
Bank of Montreal
Bank of Nova Scotia
National Westminster Bank
of Canada
Montreal Trust Co.
Canada Trust Co.
National Bank of Canada
Royal Trust
Barklays Bank of Canada
R-1(Low) Fuji Bank Canada
Industrial Bank of Japan (Canada)
Mitsubishi Bank of Canada
Bank of America (Canada)
Laurentian Bank of Canada
Appendix A-1
iNDED(OE FEDERAL & PROVINCIAL RATINGS - SHORT TERM DEf1T
Apt-it Z1,1994
LASt Y1 date Com anv Name Debt Mated Ratio -
CANADA&OUAl21�I1T`6�S
03121n4 GOVERNMENT OF CANADA Short Term Dabs.Cda lc Fomign Qsrrenq R-1(higb)
03/21/94 C-aaada Mortgage and Housing Corp.(CMHC) Short term nabs.Cdn&Foreign Currency R-1(hlgh)
03121/94 Canadian Wheat Board,The Short Tam Liab&Cdo&Forcign Curreocir R-1(high)
03121/94 Export Development Corporation Short Term l:iabtic Cdn&Foreign Curren<.y R-1(high)
03,21194 lrcderal Business Development Bank Short Term Bair.Cdn&Foreign Curmnc;r R-1(hfgh)
03.'21/94 Mobil Canada Hibernia Finaacc Ltd Commercial Page,Cda&Foreign Cuf,y R-1(high)
03.,"11194 NHA Mortgage-Backed Securities Short Tam Liabilities,Canadian C toewt R-1(high)
03121/94 Pctro-Canada Hibernia Partnership C.ommerdal Paper,Cdo&Foreign Qrrorl:y R-1(high)
PROVINCES_&gVARANIEF_S
Q3/24M- PROVINCE,OFAL�i;&TA Short Tam Liabilities R-1(add)•.
0...''1.241".34 Alberta Municipal Finaace C4rponaoa Short Teitn Liabilities R-1(mid)
00026 PROVINCE OF BRITISH COLUMBIA Stwrt Term Liabililiw R-1(tnld)
01304 British Columbia Hydro&Power Authority Shod Term liabilities R-1(0nid)
INWOZ13 British Columbia Municipal FruanceAuthority Short Tetm Liabilities R-1(mio
OW02M PROVINCE OF MANITOBA �
Short Term Liabilities'
R-I(!aw)
111241513 The Manitoba Hydro-Electric Board Short Tam LiabifWi s R-1(low)
I x129/93 Manitoba Telephone System Short Term Liabilities R-1(low)
04/204 PROVINCE OF NEW BRUNSWICK Short Tam Liabilities P,1(low)
04126194 New Brunswick Pow"Corporation Short Term Liabilities R-I(tow)
0412$144 New Brunswi.k Municipal Finaacc Corporation Short Tcrw Liabilities R-I(low)
(4/Z81514 PROVINCE,OIL N6WFO(MLAND Short Term Liabilities R-2(mid)
(WIS44 Newfoundland and LabadorHydm Short Term Liabilities R-2(mid)
(K%194 Newfoundland Municipal Finance Corporation Short Term Liabilities R-2(uad)
1011M PROVINCE OF NOVA SCOTIA Short Term Liabilities R2 ugh)
10r4193 Nova Scotia Municipal Franco Corp, ShortTcrm Liabilities P-2 NO)
01118194 PROVENCE,OF ONTARIO Short Term Liabilities R-1(mid)
,11118/94 Ontario Hydro Short Term Liabilities R-1(mid)
17113019E PROVINCE OF PRINCE EDWARD ISLAND Short Term Uabifities R-1(low)
12/22193 PROVINCE OF QUEBEC Short Tema UaWiti<s R-1(low)
IZW43 Hydm-Quebec Short Term Liabilities R-1(fow)
03123/94 PRO VTNG'EOFSASKkTCHEWAN Slrort Term Uabilitics, R.2(big'
02)0f194 Saskatchewan Power Carp Short Term Liabilities R-2(high)
02)01194 Saskatchewan Telecommunications Short Term Liabilities R-2(high)
SCHEDULE B
REPORT #TR-3-95
INVESTMENT PROCEDURES
1. That Deputy Treasurer or alternate under the direction of the Treasurer shall be
responsible for the placement of short and long term investments. Subject to the
limitations of this policy staff will invest at the highest interest rate available.
2. That Deputy Treasurer or alternate under the direction of the Treasurer shall determine
the amount of funds and terms for which placements can be arranged within the limits
of policy.
3. Competitive bidding will be obtained, when possible, before the placement of any
investment.
4. All investments shall receive the approval of the Treasurer.
5. For information purposes a monthly statement of investments outstanding shall be
submitted to Town Council.
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