AGENDA - Finance Advisory Committee - 20150526FINANCE
ADVISORY COMMITTEE
MEETING AGENDA
TUESDAY,MAY 26,2015
5:30 P.M.
HOLLAND ROOM
AURORA TOWN HALL
PUBLIC RELEASE
May 22,2015
TOWN OF AURORA
FINANCE ADVISORY COMMITTEE
MEETING AGENDA
DATE:Tuesday,May 26,2015
TIME AND LOCATION:5:30 p.m.,Holland Room,Aurora Town Hall
1.DECLARATION OF PECUNIARY INTEREST AND GENERAL NATURE THEREOF
2.APPROVAL OF THE AGENDA
RECOMMENDED:
THAT the agenda as circulated by Legal and Legislative Services be approved.
3.RECEIPT OF THE MINUTES
Finance Advisory Committee Meeting Minutes of April 28,2015 pg.1
RECOMMENDED:
THAT the Finance Advisory Committee Meeting Minutes of April 28,2015,be
received for information.
4.DELEGATIONS
5.CONSIDERATION OF ITEMS
1.Memorandum from Chief Administrative Officer pg.6
Re:Costs for Citizen Budget Survey
RECOMMENDED:
THAT the memorandum regarding Costs for Citizen Budget Survey be
received for information.
Finance Advisory Committee Meeting Agenda
Tuesday,May 26,2015 Page 2 of 2
2.CFS15-028 –Updated Investment Policy –Draft for Discussion pg.8
RECOMMENDED:
THAT Report No.CFS15-028 be received;and
THAT the comments from the Finance Advisory Committee discussion
be referred back to staff for incorporation into a final revised Investment
Policy,to be presented at a future Finance Advisory Committee meeting.
6.NEW BUSINESS
7.ADJOURNMENT
TOWN OF AURORA
FINANCE ADVISORY COMMITTEE
MEETING MINUTES
Date:Tuesday,April 28,2015
Time and Location:5 p.m.,Leksand,Aurora Town Hall
Committee Members:Councillor Michael Thompson (Chair),Councillor Harold Kim,and
Mayor Geoffrey Dawe
Member(s)Absent:None
Other Attendees:Councillor John Abel,Councillor Tom Mrakas,Neil Garbe,Chief
Administrative Officer,Dan Elliot,Director of Corporate and Financial
Services/Treasurer,Jason Gaertner,Manager of Financial Planning,
Stephen Huycke,Town Clerk,and Samantha Kong,
Council/Committee Secretary
The Town Clerk called the meeting to order at 4:55 p.m.
APPOINTMENT OF COMMITTEE CHAIR
The Town Clerk opened the floor to nominations for Chair of the Finance Advisory Committee for
the 2014-2018 Term.
Mayor Dawe nominated Councillor Thompson as Chair of the Finance Advisory Committee (FAC).
There being no other nominations,Councillor Thompson was appointed Chair of the Committee.
Councillor Thompson assumed the Chair at 5:02 p.m.
1.DECLARATION OF PECUNIARY INTEREST AND GENERAL NATURE THEREOF
There were no declarations of pecuniary interest under the Municipal Conflict of Interest Act.
2.APPROVAL OF THE AGENDA
Moved by Mayor Dawe
Seconded by Councillor Kim
THAT the agenda as circulated by Legal and Legislative Services be approved.
CARRIED
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3.RECEIPT OF THE MINUTES
None
4.DELEGATIONS
(a)Paul Duggan,Director of Audit Services,York Region and Travis Waite,
Senior Internal Auditor,York Region
Re:N6 Internal Audit Services
Mr.Duggan and Mr.Waite were present to provide an overview of the N6 Internal
Audit Services which brings systematic and disciplined approaches to evaluate and
improve the effectiveness of risk management,control,and governance processes.
Mr.Duggan identified and examined areas of risk and discussed the Town’s 2015
Audit Plan.
Moved by Mayor Dawe
Seconded by Councillor Kim
THAT the delegation by Paul Duggan and Travis Waite be received for information.
CARRIED
5.CONSIDERATION OF ITEMS
1.Memorandum from Town Clerk
Re:Finance Advisory Committee –Terms of Reference
The Chair noted that the recommended revisions to section 6 of the approved FAC
Terms of Reference,titled “Meetings,Times and Locations”were to ensure that the
Committee has the flexibility to schedule its meetings to accommodate the attendance
of all Committee members.
Moved by Councillor Kim
Seconded by Mayor Dawe
THAT the memorandum regarding Finance Advisory Committee –Terms of
Reference be received;and
THAT the Finance Advisory Committee Terms of Reference be amended to reflect
the changes recommended by staff.
CARRIED
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2.2015 Budget Process Debrief –Discussion
Staff noted that the 2015 budget process has progressed well to date and stated
that the approach towards service levels has allowed Council to focus on areas of
interest.Staff further noted that a key performance indicators (KPI)report card
would be brought to Council in the near future.Staff recommended that a multi-year
budget approach should be implemented throughout the coming years and that a
line-by-line approach should be exercised at the Committee level.Staff further
recommended that a budget target be determined at the beginning of the budget
process.The Committee agreed that a multi-year budget approach should be
implemented as a high level strategy with latitude to acquire detail to address
variances.It was suggested that a detailed view of the budget be presented in the
first year of the Council Term to determine a baseline for the upcoming budget
years,or alternatively focusing detailed reviews on one or two departments each
year on a planned cycle.
Moved by Mayor Dawe
Seconded by Councillor Kim
THAT the comments of the Finance Advisory Committee regarding 2015 Budget
Process Debrief be referred to staff for consideration.
CARRIED
3.CFS15-021 –Multi-Year Budget Approach
Staff presented an overview of the implementation of multi-year budgets which
would improve the operational efficiency of the municipality through improved long
range planning and integration of Strategic Plan objectives,as well as promote
discussion of service levels,rather than considering each budget line item
throughout the Corporation annually.Staff indicated that such an approach would
allow Council to consider the budget across a longer time horizon and plan for
service level changes.The Committee expressed support for a multi-year budget
approach and inquired about the establishment of guiding principles and a
municipal price index (MPI),as well as the incorporation of new services each year.
The Committee suggested that a budget workshop be included as part of the
Council orientation for new Councillors.
Moved by Councillor Kim
Seconded by Mayor Dawe
THAT Report No.CFS15-021 be received;and
THAT the comments of the Finance Advisory Committee regarding Report No.
CFS15-021 be referred to staff for consideration.
CARRIED
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4.Memorandum from Director of Corporate &Financial Services/Treasurer
Re:Financial Information Systems –Pending Replacement Request
Staff provided a brief overview of the systemic constraints with the current financial
system that were identified prior to 2015 and noted that they have been working to
optimize the existing systems in an attempt to bring internal resolutions to the issues.
Staff further stated that a detailed report outlining the need for a financial system
replacement would be presented to Council and would seek a mid-year budget
amendment to add consulting funding to the 2016 capital budget.The Committee
supported the request to replace the current financial information system and inquired
about the types of financial systems that the N6 municipalities possess.
Moved by Mayor Dawe
Seconded by Councillor Kim
THAT the memorandum regarding Financial Information Systems –Pending
Replacement Request be received for information.
CARRIED
5.Agenda Items for Future Meetings –Discussion
-Citizen Budget
-Investment Income
-Other
Staff introduced agenda items to be considered at future meetings,which were
approved by the Committee.
Moved by Councillor Kim
Seconded by Mayor Dawe
THAT the Agenda Items for Future Meetings,as identified by the Finance Advisory
Committee,be referred to staff.
CARRIED
6.NEW BUSINESS
None
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7.ADJOURNMENT
Moved by Councillor Kim
Seconded by Mayor Dawe
THAT the meeting be adjourned at 6:35 p.m.
CARRIED
COMMITTEE RECOMMENDATIONS ARE NOT BINDING ON THE TOWN UNLESS
ADOPTED BY COUNCIL AT A LATER MEETING.
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MEMORANDUM
DATE:May 26,2015
TO:Finance Advisory Committee
FROM:Neil Garbe,Chief Administrative Officer
RE:Costs for Citizen Budget Survey
RECOMMENDATIONS
THAT the memorandum regarding Costs for Citizen Budget Survey be received for
information.
BACKGROUND
In July 2014,Town staff formed a working group to design and implement a Citizen Budget
online interactive survey with staff from Open North,a non-profit company that creates
online tools for citizen engagement.
The Citizen Budget survey offered interested residents the option to provide feedback on 13
core programs and services offered by the Town,by indicating whether funding should be
increased,decreased or remain the same.
The 2014 survey cost $6,000 plus HST,which was taken from Website Re-design budget.
In April 2015,the staff working group re-convened to discuss the next Citizen Budget
consultation.Further to a conference call discussion with Open North,the costs in the
accompanying table were provided for consideration.
Similar costs to the 2014 survey were anticipated for the 2015 consultation,with funds to be
taken from the Corporate Communications Events and Promotions budget.
100 John West Way
Box 1000
Aurora,Ontario
L4G 6J1
Phone:905-727-3123 ext.4744
Email:ngarbe@aurora.ca
www.aurora.ca
Town of Aurora
Office of the CAO
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May 26,2015 -2-Costs for Citizen Budget Survey
Costs:
Services Amount 2 Years 3 Years
Base package $5,000 $10,000 $15,000
Customizations
Tax impact breakdown (Town,Region,Province)$0 $0 $0
Dynamic pie charts $1,000 $2,000 $3,000
Impact bars $1,000 $2,000 $3,000
Summary table $1,000 $2,000 $3,000
Subtotal $8,000 $16,000 $24,000
10%discount for full payment up-front -$1,600
15%discount for full payment up-front $-3,600
Subtotal $8,000 $14,400 $20,400
HST $1,040 $1,872 $2,652
Total $9,040 $16,272 $23,052
Customizations:
1.Dynamic pie charts offer an interactive element by allowing information to pop-up
when the user hovers over the graphic.
In the 2014 survey,this feature was used.
2.Impact bars dynamically display text information based on user selection.
In the 2014 survey,this information was presented in static format.
3.Summary tables display user selection as well as before and after results based
on the user’s selections.
In the 2014 survey,before and after results were displayed dynamically.
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FINANCE ADVISORY COMMITTEE REPORT CFS15-028
SUBJECT:Updated Investment Policy –Draft for Discussion
FROM:Dan Elliott,Director,Corporate &Financial Services -Treasurer
DATE:May 26,2015
RECOMMENDATIONS
THAT Report No.CFS15-028 be received;and
THAT the comments from the Finance Advisory Committee discussion be
referred back to staff for incorporation into a final revised Investment Policy,to
be presented at a future Finance Advisory Committee meeting.
PURPOSE OF THE REPORT
The Town’s Investment Policy guides decisions and activities for the management of
the Town’s investment portfolio,comprised substantially of surplus operating cash,and
reserve fund balances.This report introduces for discussion an updated investment
policy document,with the intent that Committee’s discussion may influence a final draft
to be presented at a future meeting of Committee.
BACKGROUND
Municipalities are restricted by provincial legislation in regard to the types of financial
investments which can be acquired to optimize the yield of idle cash holdings.Section
418 of the Municipal Act,2001,S.O.2001,c.25 as amended (the “Act”),coupled with a
regularly updated regulation O.Reg.438/97.The current Investment Policy of the Town,
Corporate Policy #61,was last updated in 2003.Since that time,a few minor changes
have occurred in the Regulations which constrain eligible investments.
Further,the current trend amongst municipalities,such as Markham,has been to move
away from specific duplication of bits of the regulation limits,rather now set general
goals and objectives,followed by a referral to the regulation for eligible investment
types.
One key development within the investment regulations in the last few years has been
the introduction of certain Canadian corporate equity products.The only way to
participate in this is through acquisition of a participation interest in The ONE
Investment Program’s equities fund,managed jointly by AMO/LAS and the Municipal
Finance Officers Association.The ONE Investment Program offers a number of pooled,
professionally managed funds with differing short or long term focuses,including a
TOWN OF AURORA
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May 26,2015 -2 -Report No.CFS15-028
money market fund,a bond fund and an equities fund.Our previous policy did not
specifically permit this pooled participation,with the proposed replacement policy
allowing it.
COMMENTS
The revised policy has stepped back from specifying asset mix limits,product mix limits,
and moved to a more flexible guidance allowing the policy to remain applicable
regardless of the swings in the economics of the market place and interest rates.The
new policy allows for changes to occur without update should the Regulations change.
This happens since the Regulation,as amended from time to time,is the limiting criteria
for the proposed policy document and is attached to it.
By open reference to the current regulation,the participation in the ONE Investment
Program is permitted in the new policy,which is currently not permitted through silence
in the prescriptive style current policy.(A separate enabling participation bylaw of
council is required to establish transaction accounts with the Program.)
The new policy also references directly the financial controls and authorities in place
managing the actual approvals process of investment purchase transactions.Each
purchase requires a same day wire transfer to the broker account,using specific
electronic approvals by two different persons,each equipped with special two-factor
authentication codes for use on the TD Bank’s secure on-line banking wire transfer
service.The process is set out in the Town’s Cheque Signing and Banking Authorities
By-law #5614-14.
Discussion of the Finance Advisory Committee should include whether or not FAC is
satisfied with the absence of specific asset mix limits,product mix limits,or sector limits.
Staff administering the policy are required by the policy to ensure preservation and
protection of capital through diversification.For some in governance,this may be
enough assurance,for others,specific mix limits contained in the policy may be
required.
LINK TO STRATEGIC PLAN
Reviewing and updating the Town’s investment policy to allow participation in emerging
investment vehicles and opportunities contained within the current restrictive regulations
supports the Strategic Plan guiding principles of improved accountability and
transparency of the municipal government,while building and maintaining the fiscal
strength and sustainability of the organization,and by extension,the community.
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May 26,2015 -3 -Report No.CFS15-028
ALTERNATIVE(S)TO THE RECOMMENDATIONS
Staff intend to incorporate comments of the Committee into a final draft version of the
Investment Policy,and report back to Committee at a future meeting for review and
approval.
FINANCIAL IMPLICATIONS
The Provincial Regulations have been developed and are continually monitored by the
Province,AMO,and the Municipal Finance Officers Association (MFOA)for adequacy,
security,safety,yet also for flexibility and opportunity.
The Town currently invests in compliance with its own policy and the regulations of
Ontario.With the limited number of transactions,and the very limited selection of
investment products,Town staff currently identify their investment need,(value and
term)and solicit offers from a selection of preselected brokers across the country.The
product with the highest net yield rate,most closely matching our term needs is the
selected purchase for the day.Each broker holds the actual investments on the Town’s
behalf,and monitor’s them for continued relevance given changes in the market place.
Most investments are intended to be held to maturity,although occasionally they are
sold on positive recommendations by the brokers to optimize yields of the portfolio
overall.Staff work closely with the individual brokers on understanding market trends
and recommendations.Unfortunately,hiring an experienced portfolio manager in-house
is cost prohibitive for the Town,as the salary demand would be prohibitive,but also the
volume of activity for such does not match the need for a full time staffer.Hiring a
contract manager only adds to our portfolio carrying costs and diminishes net returns of
the portfolio.With the very restrictive limits on the types of investments allowable,and
the few transactions made,it is difficult to suggest the Town could benefit from the
engagement of a specialist portfolio manager on a long term basis.
The Town has not experienced any difficulties in communication,compliance or custody
matters with any of its brokers while using the current processes,policy and reviews.
CONCLUSIONS
Staff have drafted an updated Investment Policy for the Town of Aurora.It has been
fashioned after review and consultation on the investment policies of several
municipalities.The new policy retains the same risk averse,conservative investment
strategies of the previous policy,however,it simply defers to the prevailing provincial
regulations for municipalities,which limit investment options to only highly conservative
and mostly guaranteed products.Following Committee discussion,staff will make
applicable amendments and bring back a final draft proposed for adoption to a future
Finance Advisory Committee meeting.
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Topic:Investments Affects:Finance Staff Only
Section:Financial Planning Replaces:June 25,2003
Effective Date:June 1,2015 Revision Date:tbd
Prepared By:Corporate and Financial Services Approval Authority:Council
PURPOSE
The purpose of this investment policy is to ensure integrity of the investment management process.
POLICY STATEMENT
The Town will manage the investment of surplus cash,in accordance with the Provisions of the Municipal Act,
2001,S.O.2001,c.25 as amended (the “Act”)and regulations thereto,including the current O.Reg.438/97 –
Eligible Investments and Related Financial Agreements.
APPLICATION
All Town employees who are responsible for the control,administration and reporting of investments
managed by the Corporation.
In order of priority,the investment objectives of the Town are:
1.Legality of Investments
2.Preservation of Principal
3.Maintenance of Liquidity
4.Maximization of the Rate of Return
1.Legality of investments
The legal authority to invest funds comes from the Act.Investments shall be in conformity with O.Reg.438/97
–Eligible Investments and Related Financial Agreements (See Schedule 1).
The Town shall not invest in a security that is expressed or payable in any currency other than Canadian
dollars.
2.Preservation of principal
Investments shall be undertaken in a manner that seeks to ensure the preservation of principal in the overall
portfolio.Investments shall be made with judgement and care,not for speculation,but for investment,
considering the probable safety of the principal invested as well as the probable income derived.
TOWN OF AURORA
Corporate and Financial Services
Corporate Policies,Programs and Procedures
Investment Policy –Policy No.61 (DRAFT)
Attachment #1
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Corporate and Financial Services –Investment Policy (DRAFT)Page 2 of 16
This policy acts to minimize credit risk,i.e.the risk of loss due to the failure of the security issuer or backer,by
limiting investments to the safest types of security investments and diversifying the investment portfolio so that
potential losses on individual securities will be minimized.The limits imposed by the Province of Ontario in
regulation shall act as the limitations on investment types and vehicles for these purposes.
Staff shall endeavor to mitigate credit and interest rate risk as follows:
Credit Risk:
Limiting investments to safer types of securities;
Pre-qualif ying the financial institutions,broker/dealers,intermediaries,and advisers with which
the Corporation does business;
Diversif ying the investment portfolio so that potential losses on individual securities will be
minimized;and
Setting dollar limits on the size of portfolio investments in asset sectors (fixed income and
equities)and in individual credit names.
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;
Diversif ying longer-term holdings to mitigate effects of interest rate volatility;
Use of Forward Rate Agreements when appropriate;and
Investing in shares or equities of Canadian corporations through the ONE Investment
Program.
3.Maintenance of liquidity
The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be
reasonably anticipated.
All investments will be interest bearing in nature,either discounted or interest bearing.Equity capital gains are
limited only to investments in the ONE Investment Program equity funds.
The Town’s investment portfolio should be well staggered,with investments of at least 1-10 years.This ladder
approach will allow investments to mature at various times,and allow the Town the opportunity to build up the
portfolio based on market conditions/opportunities.Where known,maturity dates will approximate estimated
need for capital funding based on the Town’s Asset Management and Capital Investment Plan.Short term
investments of terms with less than one year will be used for investment of excess cash and managing the
cash flow requirements of daily operations,and the remittance of taxes and development charges to York
Region and the school boards.
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Corporate and Financial Services –Investment Policy (DRAFT)Page 3 of 16
A portion of the portfolio may be place in the approved local government investment pool (ONE Investment
Program)which offers compliance and liquidity.
4.Maximization rate of return
The investment portfolio shall be designed with the goal of maximizing the long term rate of return throughout
budgetary and economic cycles,taking into account the investment risk constraints and liquidity needs.Staff
will explore and utilize any eligible investment vehicles in building the Town’s investment portfolio.
The investment portfolio shall seek to augment returns consistent with or above industry thresholds,with risk
limitations identified herein and prudent investment principles.
To take advantage of short-term fluctuations in interest rates,securities may be sold prior to maturity.
Investments shall be purchased once multiple bids are received and analysed.The highest yielding bid,which
meets the Town’s cash flow requirements,will be accepted.If the highest yielding bid is not selected,an
explanation describing the rationale shall be provided.The Town staff involved will retain written records of
each transaction,including the name of the financial institutions,rates quoted,description of the security,
investment selected,and any special considerations that had an impact on the decision.
With the goal of maximizing the long term rate of return on its investments,staff may utilize eligible investment
vehicles for which there is a sole available supplier,such as the ONE Investment Program products.In
instances such as this,multiple bids will not be solicited.
STANDARD OF CARE
Prudence and Risk Tolerance
Investments shall be made with judgement and care,under circumstances then prevailing,with which persons
of prudence,discretion and intelligence would exercise in the management of their own affairs,not for
speculation,but for investment,considering the probable safety of their principal as well as the probable
income to be derived.
Investment officers and employees exercising due diligence and acting in accordance with written procedures
and this Policy 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.
Within the limits of the investment types permissible by Regulation,the Town of Aurora will ensure the portfolio
remains diversified in investment term durations,product types,issuers and risk ratings so as to minimize
market and credit risk exposures to the Town.The Town has low risk tolerance with respect to its investment
of funds,all of which are to be used for municipal purposes to the benefit of the community,and treated with
the utmost of care.
Forward rate agreements will not be used without the specific authorization of Council in appropriate
circumstances.
Ethics and Conflicts of Interest
Officers and employees involved in the investment process shall refrain from personal business activity that
could conflict with the proper execution and management of the investment program,or that could impair their
ability to make impartial investment decisions.Officers and employees involved in the investment procedures
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.Officers and employees shall not undertake personal investment transactions with the
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Corporate and Financial Services –Investment Policy (DRAFT)Page 4 of 16
same individual with whom business is conducted on behalf of the Town.Any such disclosures of conflict or
potential perceived conflict shall be made in writing to the Chief Administrative Officer.
ADMINISTRATIVE PROCEDURES
All investment transactions are to be recorded and interest earnings distributed in accordance with Town
policies and generally accepted accounting principles for municipalities.
Reporting Procedures
The Treasurer shall prepare and provide to Council each year an investment report.
The investment report shall contain:
A statement about the performance of the investments during the period covered by the report;
A description of the estimated proportion of the total investments that are invested in its own long-
term and short-term securities to the total investment of the Town and a description of the change,
in any,in that estimated proportion since the previous year’s report;
A statement by the Treasurer as to whether or not,in their opinion,all investments are consistent
with the investment policies and goals of the Town;
Listing of all investments by maturity date;
Percentage of total portfolio that each type of investment represents.
Authorized Financial Institutions and Brokers/Dealers
The following is a current list of all financial institutions authorized to provide investment services to the Town
of Aurora.This list will be maintained and updated as the business environment changes:
TD Canada Trust
CIBC Wood Gundy
BMO Nesbitt Burns Inc.
RBC Dominion Securities Inc.
Scotia McLeod Inc.
Raymond James Ltd.
ONE Investment Program
Related Policies and Documents
Town By-law #5614-14 Persons Authorized to sign cheques and other banking related authorities on behalf of
the Town.See Schedule #2 for extract of Investment transaction details.
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SCHEDULE 1
ELIGIBLE INVESTMENTS UNDER THE MUNICIPAL ACT
ONTARIO REGULATION 438/97
ELIGIBLE INVESTMENTS AND RELATED FINANCIAL AGREEMENTS
1.A municipality does not have the power to invest under section 418 of the Act in a security
other than a security prescribed under this Regulation.O.Reg.438/97,s.1;O.Reg.
399/02,s.1.
2.The following are prescribed,for the purposes of subsection 418 (1)of the Act,as securities
that a municipality may invest in:
1.Bonds,debentures,promissory notes or other evidence of indebtedness issued or
guaranteed by,
i.Canada or a province or territory of Canada,
ii.an agency of Canada or a province or territory of Canada,
iii.a country other than Canada,
iv.a municipality in Canada including the municipality making the investment,
iv.1 the Ontario Strategic Infrastructure Financing Authority,
v.a school board or similar entity in Canada,
v.1 a university in Ontario that is authorized to engage in an activity described
in section 3 of the Post-secondary Education Choice and Excellence Act,
2000,
v.2 the board of governors of a college established under the Ontario
Colleges of Applied Arts and Technology Act,2002,
vi.a local board as defined in the Municipal Affairs Act (but not including a school
board or a municipality)or a conservation authority established under the
Conservation Authorities Act,
vi.1 a board of a public hospital within the meaning of the Public Hospitals
Act,
vi.2 a non-profit housing corporation incorporated under section 13 of the
Housing Development Act,
vi.3 a local housing corporation as defined in section 24 of the Housing
Services Act,2011,or
vii.the Municipal Finance Authority of British Columbia.
2.Bonds,debentures,promissory notes or other evidence of indebtedness of a
corporation if,
i.the bond,debenture or other evidence of indebtedness is secured by the
assignment,to a trustee,as defined in the Trustee Act,of payments that Canada
or a province or territory of Canada has agreed to make or is required to make
under a federal,provincial or territorial statute,and
ii.the payments referred to in subparagraph i are sufficient to meet the amounts
payable under the bond,debenture or other evidence of indebtedness,including
the amounts payable at maturity.
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Corporate and Financial Services –Investment Policy (DRAFT)Page 6 of 16
3.Deposit receipts,deposit notes,certificates of deposit or investment,acceptances or
similar instruments the terms of which provide that the principal and interest shall be fully
repaid no later than two years after the day the investment was made,if the receipt,
note,certificate or instrument was issued,guaranteed or endorsed by,
i.a bank listed in Schedule I,II or III to the Bank Act (Canada),
ii.a loan corporation or trust corporation registered under the Loan and Trust
Corporations Act,or
iii.a credit union or league to which the Credit Unions and Caisses Populaires Act,
1994 applies.
3.1 Deposit receipts,deposit notes,certificates of deposit or investment,acceptances or
similar instruments the terms of which provide that the principal and interest shall be fully
repaid more than two years after the day the investment was made,if the receipt,note,
certificate or instrument was issued,guaranteed or endorsed by,
i.a bank listed in Schedule I,II or III to the Bank Act (Canada),
ii.a loan corporation or trust corporation registered under the Loan and Trust
Corporations Act,
iii.a credit union or league to which the Credit Unions and Caisses Populaires Act,
1994 applies.
4.Bonds,debentures,promissory notes or other evidence of indebtedness issued or
guaranteed by an institution listed in paragraph 3.
5.Short term securities,the terms of which provide that the principal and interest shall be
fully repaid no later than three days after the day the investment was made,that are
issued by,
i.a university in Ontario that is authorized to engage in an activity described in
section 3 of the Post-secondary Education Choice and Excellence Act,2000,
ii.the board of governors of a college established under the Ontario Colleges of
Applied Arts and Technology Act,2002,or
iii.a board of a public hospital within the meaning of the Public Hospitals Act.
6.Bonds,debentures,promissory notes,other evidence of indebtedness or other securities
issued or guaranteed by the International Bank for Reconstruction and Development.
6.1.Bonds,debentures,promissory notes or other evidence of indebtedness issued or
guaranteed by a supranational financial institution or a supranational governmental
organization,other than the International Bank for Reconstruction and Development.
7.Asset-backed securities,as defined in subsection 50 (1)of Regulation 733 of the
Revised Regulations of Ontario,1990 made under the Loan and Trust Corporations Act.
7.1 Bonds,debentures,promissory notes or other evidence of indebtedness issued by a
corporation that is incorporated under the laws of Canada or a province of Canada,the
terms of which provide that the principal and interest shall be fully repaid more than five
years after the date on which the municipality makes the investment.
7.2 Bonds,debentures,promissory notes or other evidence of indebtedness issued by a
corporation that is incorporated under the laws of Canada or a province of Canada,the
terms of which provide that the principal and interest shall be fully repaid more than one
year and no later than five years after the date on which the municipality makes the
investment.
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8.Negotiable promissory notes or commercial paper,other than asset-backed securities,
maturing one year or less from the date of issue,if that note or commercial paper has
been issued by a corporation that is incorporated under the laws of Canada or a
province of Canada.
8.1 Shares issued by a corporation that is incorporated under the laws of Canada or a
province of Canada.
9.Bonds,debentures,promissory notes and other evidences of indebtedness of a
corporation incorporated under section 142 of the Electricity Act,1998.
10.Bonds,debentures,promissory notes or other evidence of indebtedness of a corporation
if the municipality first acquires the bond,debenture,promissory note or other evidence
of indebtedness as a gift in a will and the gift is not made for a charitable purpose.
11.Securities of a corporation,other than those described in paragraph 10,if the
municipality first acquires the securities as a gift in a will and the gift is not made for a
charitable purpose.
12.Shares of a corporation if,
i.the corporation has a debt payable to the municipality,
ii.under a court order,the corporation has received protection from its creditors,
iii.the acquisition of the shares in lieu of the debt is authorized by the court order,
and
iv.the treasurer of the municipality is of the opinion that the debt will be
uncollectable by the municipality unless the debt is converted to shares under the
court order.O.Reg.438/97,s.2;O.Reg.265/02,s.1;O.Reg.399/02,s.2;O.
Reg.655/05,s.2;O.Reg.607/06,s.1;O.Reg.39/07,s.1;O.Reg.373/11,s.1.
2.1 A security is prescribed for the purposes of subsection 418 (1)of the Act as a security
that a municipality may invest in if,
(a)the municipality invested in the security before January 12,2009;and
(b)the terms of the municipality’s continued investment in the security have been
changed pursuant to the Plan Implementation Order of the Ontario Superior
Court of Justice dated January 12,2009 (Court file number 08-CL-7440)and
titled “In the matter of the Companies’Creditors Arrangement Act,R.S.C.1985,
c.C-36 as amended and in the matter of a plan of compromise and arrangement
involving Metcalfe &Mansfield Alternative Investments II Corp.et al”.O.Reg.
292/09,s.1.
3.(1)A municipality shall not invest in a security under subparagraph 1 iii,v.1,v.2,vi.1,
vi.2 or vi.3 or paragraph 3.1 or 4 of section 2 unless the bond,debenture,promissory
note or evidence of indebtedness is rated,
(a)REVOKED:O.Reg.265/02,s.2 (1).
(b)by Dominion Bond Rating Service Limited as “AA(low)”or higher;
(b.1)by Fitch Ratings as “AA-”or higher;
(c)by Moody’s Investors Services Inc.as “Aa3”or higher;or
(d)by Standard and Poor’s as “AA-”or higher.O.Reg.438/97,s.3 (1);O.Reg.
265/02,s.2 (1);O.Reg.399/02,s.3 (1);O.Reg.655/05,s.3 (1,2);O.Reg.
607/06,s.2;O.Reg.39/07,s.2.
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(2)REVOKED:O.Reg.655/05,s.3 (3).
(2.1)A municipality shall not invest in a security under paragraph 6.1 of section 2 unless the
security is rated,
(a)by Dominion Bond Rating Service Limited as “AAA”;
(b)by Fitch Ratings as “AAA”;
(c)by Moody’s Investors Services Inc.as “Aaa”;or
(d)by Standard and Poor’s as “AAA”.O.Reg.655/05,s.3 (4).
(3)A municipality shall not invest in an asset-backed security under paragraph 7 of section
2 that matures more than one year from the date of issue unless the security is rated,
(a)by Dominion Bond Rating Service Limited as “AAA”;
(a.1)by Fitch Ratings as “AAA”;
(b)by Moody’s Investors Services Inc.as “Aaa”;or
(c)by Standard and Poor’s as “AAA”.O.Reg.265/02,s.2 (2);O.Reg.399/02,s.3
(2);O.Reg.655/05,s.3 (5).
(4)A municipality shall not invest in an asset-backed security under paragraph 7 of section 2
that matures one year or less from the date of issue unless the security is rated,
(a)by Dominion Bond Rating Service Limited as “R-1(high)”;
(a.1)by Fitch Ratings as “F1+”;
(b)by Moody’s Investors Services Inc.as “Prime-1”;or
(c)by Standard and Poor’s as “A-1+”.O.Reg.265/02,s.2 (2);O.Reg.399/02,s.3
(3);O.Reg.655/05,s.3 (6).
(4.1)A municipality shall not invest in a security under paragraph 7.1 of section 2 unless the
security is rated,
(a)by Dominion Bond Rating Service Limited as “AA(low)”or higher;
(b)by Fitch Ratings as “AA-”or higher;
(c)by Moody’s Investors Services Inc.as “Aa3”or higher;or
(d)by Standard and Poor’s as “AA-”or higher.O.Reg.292/09,s.2 (1).
(4.2)A municipality shall not invest in a security under paragraph 7.2 of section 2 unless the
security is rated,
(a)by Dominion Bond Rating Service Limited as “A”or higher;
(b)by Fitch Ratings as “A”or higher;
(c)by Moody’s Investors Services Inc.as “A2”;or
(d)by Standard and Poor’s as “A”.O.Reg.292/09,s.2 (1).
(5)A municipality shall not invest in a security under paragraph 8 of section 2 unless the
promissory note or commercial paper is rated,
(a)by Dominion Bond Rating Service Limited as “R-1(mid)”or higher;
(a.1)by Fitch Ratings as “F1+”;
(b)by Moody’s Investors Services Inc.as “Prime-1”;or
(c)by Standard and Poor’s as “A-1+”.O.Reg.265/02,s.2 (2);O.Reg.399/02,s.3
(4);O.Reg.655/05,s.3 (8).
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(6)If an investment made under subparagraph 1 iii,v.1,v.2,vi.1,vi.2 or vi.3 of section 2 or
paragraph 3.1,4,6.1,7,7.1,7.2 or 8 of section 2 falls below the standard required by
this section,the municipality shall sell the investment within 180 days after the day the
investment falls below the standard.O.Reg.292/09,s.2 (2).
(6.1)Subsection (6)does not apply with respect to an investment made by a municipality
under paragraph 7 of section 2 on a day before the day this subsection comes into force.
O.Reg.292/09,s.2 (3).
(7)A municipality shall not invest in a security under paragraph 9 of section 2 unless,at the
time the investment is made and as long as it continues,the investment ranks,at a
minimum,concurrently and equally in respect of payment of principal and interest with all
unsecured debt of the corporation.O.Reg.265/02,s.2 (2).
(8)A municipality shall not invest in a security under paragraph 9 of section 2 unless,at the
time the investment is made,the total amount of the municipality’s investment in debt of
any corporation incorporated under section 142 of the Electricity Act,1998 that would
result after the proposed investment is made does not exceed the total amount of
investment in debt,including any interest accrued on such debt,of the municipality in
such a corporation that existed on the day before the day the proposed investment is to
be made.O.Reg.265/02,s.2 (2).
(9)Any investment made under paragraph 9 of section 2,including any refinancing,renewal
or replacement thereof,may not be held for longer than a total of 10 years from the date
such investment is made.O.Reg.265/02,s.2 (2).
(10)Subsections (7),(8)and (9)do not prevent a municipality from holding or disposing of a
security described in paragraph 9 of section 2 issued by a corporation incorporated
under section 142 of the Electricity Act,1998,if the municipality acquired the security
through a transfer by-law or otherwise under that Act.O.Reg.655/05,s.3 (9).
(11)A municipality shall sell an investment described in paragraph 10 or 11 of section 2
within 90 days after ownership of the investment vests in the municipality.O.Reg.
655/05,s.3 (9).
(12)REVOKED:O.Reg.292/09,s.2 (4).
4.(1)A municipality shall not invest more than 25 per cent of the total amount in all sinking and
retirement funds in respect of debentures of the municipality,as estimated by its
treasurer on the date of the investment,in short-term debt issued or guaranteed by the
municipality.O.Reg.438/97,s.4 (1).
(2)In this section,“short-term debt”means any debt,the terms of which provide that the
principal and interest of the debt shall be fully repaid no later than 364 days after the
debt is incurred.O.Reg.438/97,s.4 (2).
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4.1 (1)A municipality shall not invest in a security under paragraph 7 of section 2 or in a
promissory note or commercial paper under paragraph 8 of section 2 unless,on the date
that the investment is made,
(a)the municipality itself is rated,or all of the municipality’s long-term debt
obligations are rated,
(i)by Dominion Bond Rating Service Limited as “AA(low)”or higher,
(i.1)by Fitch Ratings as “AA-”or higher,
(ii)by Moody’s Investors Services Inc.as “Aa3”or higher,or
(iii)by Standard and Poor’s as “AA–”or higher;or
(b)the municipality has entered into an agreement with the Local Authority Services
Limited and the CHUMS Financing Corporation to act together as the
municipality’s agent for the investment in that security,promissory note or
commercial paper.O.Reg.265/02,s.3;O.Reg.399/02,s.4;O.Reg.655/05,s.
4 (1,2).
(1.1)A municipality shall not invest in a security under paragraph 7.1 or 8.1 of section 2
unless,on the date the investment is made,the municipality has entered into an
agreement with the Local Authority Services Limited and the CHUMS Financing
corporation to act together as the municipality’s agent for the investment in the security.
O.Reg.655/05,s.4 (3).
(1.2)Subsection (1.1)does not apply to investments in securities by the City of Ottawa if all
of
the following requirements are satisfied:
1.Only the proceeds of the sale by the City of its securities in a corporation
incorporated under section 142 of the Electricity Act,1998 are used to make the
investments.
2.The investments are made in a professionally-managed fund.
3.The terms of the investments provide that,
i.where the investment is in debt instruments,the principal must be repaid
no earlier than seven years after the date on which the City makes the
investment,and
ii.where the investment is in shares,an amount equal to the principal
amount of the investment cannot be withdrawn from the fund for at least
seven years after the date on which the City makes the investment.
4.The City establishes and uses a separate reserve fund for the investments.
5.Subject to paragraph 6,the money in the reserve fund,including any returns on
the investments or proceeds from their disposition,are used to pay capital costs
of the City and for no other purpose.
6.The City may borrow money from the reserve fund but must repay it plus interest.
O.Reg.655/05,s.4 (3).
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(2)The investment made under clause (1)(b)or described in subsection (1.1),as the case
may be,must be made in the One Investment Program of the Local Authority Services
Limited and the CHUMS Financing Corporation with,
(a)another municipality;
(b)a public hospital;
(c)a university in Ontario that is authorized to engage in an activity described in
section 3 of the Post-secondary Education Choice and Excellence Act,2000;
(d)the board of governors of a college established under the Ontario Colleges of
Applied Arts and Technology Act,2002;
(d.1)a foundation established by a college mentioned in clause (d)whose purposes
include receiving and maintaining a fund or funds for the benefit of the college;
(e)a school board;or
(f)any agent of an institution listed in clauses (a)to (d.1).O.Reg.265/02,s.3;O.
Reg.655/05,s.4 (4);O.Reg.607/06,s.3;O.Reg.292/09,s.3;O.Reg.52/11,
s.1.
5.A municipality shall not invest in a security issued or guaranteed by a school board or
similar entity unless,
(a)the money raised by issuing the security is to be used for school purposes;and
(b)REVOKED:O.Reg.248/01,s.1.O.Reg.438/97,s.5;O.Reg.248/01,s.1.
6.(1)A municipality shall not invest in a security that is expressed or payable in any currency
other than Canadian dollars.O.Reg.438/97,s.6 (1).
(2)Subsection (1)does not prevent a municipality from continuing an investment,made
before this Regulation comes into force,that is expressed and payable in the currency of
the United States of America or the United Kingdom.O.Reg.438/97,s.6 (2).
7.(1)Before a municipality invests in a security prescribed under this Regulation,the council
of the municipality shall,if it has not already done so,adopt a statement of the
municipality’s investment policies and goals.O.Reg.438/97,s.7.
(2)In preparing the statement of the municipality’s investment policies and goals under
subsection (1),the council of the municipality shall consider,
(a)the municipality’s risk tolerance and the preservation of its capital;
(b)the municipality’s need for a diversified portfolio of investments;and
(c)obtaining legal advice and financial advice with respect to the proposed
investments.O.Reg.265/02,s.4.
(3)REVOKED:O.Reg.655/05,s.5.
(4)In preparing the statement of the municipality’s investment policies and goals under
subsection (1)for investments made under paragraph 9 of section 2,the council of the
municipality shall consider its plans for the investment and how the proposed investment
would affect the interest of municipal taxpayers.O.Reg.265/02,s.4.
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8.(1)If a municipality has an investment in a security prescribed under this Regulation,the
council of the municipality shall require the treasurer of the municipality to prepare and
provide to the council,each year or more frequently as specified by the council,an
investment report.O.Reg.438/97,s.8 (1).
(2)The investment report referred to in subsection (1)shall contain,
(a)a statement about the performance of the portfolio of investments of the
municipality during the period covered by the report;
(b)a description of the estimated proportion of the total investments of a municipality
that are invested in its own long-term and short-term securities to the total
investment of the municipality and a description of the change,if any,in that
estimated proportion since the previous year’s report;
(c)a statement by the treasurer as to whether or not,in his or her opinion,all
investments are consistent with the investment policies and goals adopted by the
municipality;
(d)a record of the date of each transaction in or disposal of its own securities,
including a statement of the purchase and sale price of each security;and
(e)such other information that the council may require or that,in the opinion of the
treasurer,should be included.O.Reg.438/97,s.8 (2);O.Reg.655/05,s.6.
(2.1)The investment report referred to in subsection (1)shall contain a statement by the
treasurer as to whether any of the following investments fall below the standard required
for that investment during the period covered by the report:
1.An investment described in subparagraph 1 iii,v.1,v.2,vi.1,vi.2 or vi.3 of
section 2.
2.An investment described in paragraph 3.1,4,6.1,7,7.1,7.2 or 8 of section 2.
3.An investment described in subsection 9 (1).O.Reg.292/09,s.4.
(3)Upon disposition of any investment made under paragraph 9 of section 2,the council of
the municipality shall require the treasurer of the municipality to prepare and provide to
the council a report detailing the proposed use of funds realized in the disposition.O.
Reg.265/02,s.5.
8.1 If an investment made by the municipality is,in the treasurer’s opinion,not consistent
with the investment policies and goals adopted by the municipality,the treasurer shall
report the inconsistency to the council of the municipality within 30 days after becoming
aware of it.O.Reg.655/05,s.7.
9.(1)Despite this Regulation,an investment by a municipality in bonds,debentures or other
indebtedness of a corporation made before March 6,1997 may be continued if the bond,
debenture or other indebtedness is rated,
(a)REVOKED:O.Reg.265/02,s.6.
(b)by Dominion Bond Rating Service Limited as “AA(low)”or higher;
(b.1)by Fitch Ratings as “AA-”or higher;
(c)by Moody’s Investors Services Inc.as “Aa3”or higher;or
(d)by Standard and Poor’s as “AA-”or higher.O.Reg.438/97,s.9 (1);O.Reg.
265/02,s.6;O.Reg.399/02,s.5;O.Reg.655/05,s.8.
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(1.1)Despite subsection 3 (4.1),an investment in a security under paragraph 7.1 of section 2
made on a day before the day this subsection comes into force may be continued if the
security is rated,
(a)by Dominion Bond Rating Service Limited as “A”or higher;
(b)by Fitch Ratings as “A”or higher;
(c)by Moody’s Investors Services Inc.as “A2”;or
(d)by Standard and Poor’s as “A”.O.Reg.292/09,s.5 (1).
(2)If the rating of an investment continued under subsection (1)or (1.1)falls below the
standard required by that subsection,the municipality shall sell the investment within
180 days after the day the investment falls below the standard.O.Reg.438/97,s.9 (2);
O.Reg.292/09,s.5 (2).
FORWARD RATE AGREEMENTS
10.(1)A municipality that enters into an agreement to make an investment on a future date in
a security prescribed by section 2 may enter one or more forward rate agreements with
a bank listed in Schedule I,II or III to the Bank Act (Canada)in order to minimize the
cost or risk associated with the investment because of fluctuations in interest rates.O.
Reg.655/05,s.9.
(2)A forward rate agreement shall provide for the following matters:
1.Specifying a forward amount,which is the principal amount of the investment or
that portion of the principal amount to which the agreement relates.
2.Specifying a settlement day,which is a specified future date.
3.Specifying a forward rate of interest,which is a notional rate of interest applicable
on the settlement day.
4.Specifying a reference rate of interest,which is the market rate of interest
payable on a specified future date on an acceptance issued by a bank listed in
Schedule I,II or III to the Bank Act (Canada).
5.Requiring a settlement payment to be payable on the settlement day if the
forward rate and the reference rate of interest are different.O.Reg.655/05,s.9.
(3)A municipality shall not enter a forward rate agreement if the forward amount described
in paragraph 1 of subsection (2)for the investment whose cost or risk the agreement is
intended to minimize,when added to all forward amounts under other forward rate
agreements,if any,relating to the same investment,would exceed the total amount of
the principal of the investment.O.Reg.655/05,s.9.
(4)A municipality shall not enter a forward rate agreement unless the settlement day under
the agreement is within 12 months of the day on which the agreement is executed.O.
Reg.655/05,s.9.
(5)A municipality shall not enter a forward rate agreement if the settlement payment
described in paragraph 5 of subsection (2)exceeds the difference between the amount
of interest that would be payable on the forward amount calculated at the forward rate of
interest for the period for which the investment was made and the amount that would be
payable calculated at the reference rate of interest.O.Reg.655/05,s.9.
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(6)A municipality shall not enter a forward rate agreement except with a bank listed in
Schedule I,II or III to the Bank Act (Canada)and only if the bank’s long-term debt
obligations on the day the agreement is entered are rated,
(a)by Dominion Bond Rating Service Limited as “A(high)”or higher;
(b)by Fitch Ratings as “A+”or higher;
(c)by Moody’s Investors Service Inc.as “A1”or higher;or
(d)by Standard and Poor’s as “A+”or higher.O.Reg.655/05,s.9.
11.(1)Before a municipality passes a by-law authorizing a forward rate agreement,the council
of the municipality shall adopt a statement of policies and goals relating to the use of
forward rate agreements.O.Reg.655/05,s.9.
(2)The council of the municipality shall consider the following matters when preparing the
statement of policies and goals:
1.The types of investments for which forward rate agreements are appropriate.
2.The fixed costs and estimated costs to the municipality resulting from the use of
such agreements.
3.A detailed estimate of the expected results of using such agreements.
4.The financial and other risks to the municipality that would exist with,and without,
the use of such agreements.
5.Risk control measures relating to such agreements,such as,
i.credit exposure limits based on credit ratings and on the degree of
regulatory oversight and the regulatory capital of the other party to the
agreement,
ii.standard agreements,and
iii.ongoing monitoring with respect to the agreements.O.Reg.655/05,s.9.
12.(1)If a municipality has any subsisting forward rate agreements in a fiscal year,the
treasurer of the municipality shall prepare and present to the municipal council once in
that fiscal year,or more frequently if the council so desires,a detailed report on all of
those agreements.O.Reg.655/05,s.9.
(2)The report must contain the following information and documents:
1.A statement about the status of the forward rate agreements during the period of
the report,including a comparison of the expected and actual results of using the
agreements.
2.A statement by the treasurer indicating whether,in his or her opinion,all of the
forward rate agreements entered during the period of the report are consistent
with the municipality’s statement of policies and goals relating to the use of
forward rate agreements.
3.Such other information as the council may require.
4.Such other information as the treasurer considers appropriate to include in the
report.O.Reg.655/05,s.9.
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SCHEDULE 2
Extract from Town By-law #5614-14
Being a By-law to provide for persons authorized to sign cheques and other
banking authorities on behalf of the Town.
1.THAT all cheques issued by the Town upon the Town’s general bank account shall require
two (2)signatures and shall be signed:
(a)firstly,by any one (1)of the following officers or employees of the Town:
i.the Treasurer;or
ii.the Manager of Accounting &Revenues –Deputy Treasurer;or
iii.the Manager of Financial Planning –Deputy Treasurer;
(b)and secondly,by any one (1)of the following officials,officers or employees of the
Town:
i.the Mayor;or
ii.the Deputy Mayor;or
iii.the Acting Mayor;or
iv.the Chief Administrative Officer;or
v.the Town Solicitor;or
vi.the Town Clerk;or
vii.the Director of Parks &Recreation Services.
…
6.THAT the Treasurer or his/her designate be and is hereby authorized to establish business
relationships,accounts,and enter into agreements on behalf of the Town with investment
brokers or financial institutions for the purposes of purchasing,trading,and holding financial
investments as deemed appropriate by the Treasurer or his/her designate from time to time.
7.THAT the purchase of financial investments and all wire transfers of funds from the Town’s
general bank account shall be made only to the benefit of those investment brokers or financial
institutions pre-approved in writing with the Town’s lead bank.The execution of any necessary
or ancillary documents required to perform any of the actions set out in this paragraph shall be
signed in the same manner as provided for in paragraph 1 of this By-law.
8.THAT with respect to the actual purchase of investment transactions,the transaction shall be
approved in writing in two (2)stages,and using the secured wire payments facility of the
Town’s lead bank,as follows:
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(a)firstly,by any one (1)of the following officers or employees of the Town:
i.a Financial Analyst;or
ii.the Manager of Financial Planning –Deputy Treasurer;
(b)and secondly,by any one (1)of the following officers or employees of the Town:
i.the Treasurer;or
ii.the Manager of Accounting &Revenues –Deputy Treasurer;or
iii.the Manager of Financial Planning –Deputy Treasurer;
and the same person may not approve any subject transaction in both stages.
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No.61
Page 1 of 11
Town of Aurora
Administration Procedure No.61
Subject:Investment Policy Effective:June 25,2003
Authority:Council Revised:
TABLE OF CONTENTS
Section I -Scope and Objectives Page 2
Section II -Standard of Care Page 4
Section III -Eligible Investments and Parameters Page 5
Section IV -Reporting Requirements Page 6
Section V -Safekeeping and Custody Page 7
Section VI -Responsibilities Page 7
Section VII -Eligible Investments and Sector Limitations Page 8
Section VIII -Portfolio Term Limitations Page 9
Section IX -Definitions Page 10
Attachment #2
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No.61
Page 2 of 11
Investment Policy Update Effective:June 25,2003
Section I -Scope and Objectives
THAT the Town’s Investment Policy be adopted as follows:
Scope:This policy constitutes the Town’s policy governing the effective and
efficient management of surplus and idle cash resources within the
general,capital,reserve and reserve funds.
Objectives:The policy establishes the following as its core objectives:
Adherence to statutory requirements for eligible investments;
Preservation and security of capital;
Maintenance of necessary liquidity;and
Realizing a competitive rate of return.
Adherence to Statutory Requirements
This policy applies to the management of all monies of the Operating Fund,Capital Fund,
Reserve and Reserve Funds.Section 418 of the Municipal Act,2001 (as amended)governs
investments made by municipalities as prescribed in Ontario Regulation 438/97 as amended by
Ontario Regulation 265/02.In exercising the statutory responsibility of a Municipal Treasurer,
the Director of Finance/Treasurer for the Town of Aurora is responsible for the administration of
this policy in compliance with the requirements prescribed in the Municipal Act,2001 as
amended from time to time.
Preservation and Security of Capital
The Town’s investment policy is directed toward the preservation and security of capital
identified for specific future uses and purposes such as (but not limited to)levy requisitions of
the Regional Municipality of York,the Boards of Education and the Town’s own requirements.
Investments shall be undertaken in a manner that seeks to ensure the preservation of capital
within the overall investment portfolio.Credit and interest rate risks are to be mitigated as
follows:
Credit Risk:
Limiting investments to guaranteed securities;
Pre-qualifying the financial institutions,brokers/dealers,intermediaries and advisers
with whom the Town completes transactions for eligible investments subject to approval
by the Director of Finance;
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Section I -Scope and Objectives (Con’t)
Credit Risk (Con’t):
Diversifying the investment portfolio so to manage risk of poor performance on
individual securities or overall economic conditions.
Interest Rate Risk:
Structuring the investment portfolio so the securities mature to meet on-going 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;and
Diversifying longer-term holdings to match term exposure to requirements of underlying
reserve funds and to mitigate effects of interest rate volatility.
Maintenance of Necessary Liquidity
The investment portfolio shall remain sufficiently liquid to meet all operating and cash flow
requirements.This shall be done where possible by structuring the portfolio such that securities
mature concurrent with anticipated cash flow demands.Furthermore,since all possible cash
demands cannot be anticipated,the portfolio shall consist largely of securities with active
secondary or resale markets.
Realizing Competitive Rate of Return
Without compromising other objectives,the Town shall maximize the rate of return earned on its
portfolio by implementing a sound investment strategy as part of its investment program.Trends
in economic variables will be monitored including interest rates and inflationary pressures.
Diversification,as well as ensuring safety of principal by limiting exposure to credit,sector or
term risks,also provides opportunities to enhance investment returns of the Town’s portfolio by
means of prudent and timely adjustments to the asset mix.
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Section II -Standard of Care
Prudent Investment Principles
Investments shall be made in accordance with the policy,under the prevailing circumstances.
Consideration of the probable safety of principal,as well as income to be derived,should be of
utmost importance.Town staff,acting in accordance with this policy and other corporate
policies &procedures and having exercised due diligence,shall be relieved of personal
responsibility for any individual security’s credit risk or market price changes,provided
deviations from expectations are reported in a timely manner and the liquidation or sale of such
securities are carried out in accordance with the terms of this policy.
Ethics and Conflicts of Interest
Employees involved in the investment process shall refrain from personal business activity that
could conflict with the proper execution and management of the Town’s investment program,or
that could impair their ability to make impartial investment decisions.Employees involved in
investment procedures 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 Town’s investment portfolio.Town employees
and financial institution officers shall not undertake personal investment transactions with the
same individual with whom business is conducted on behalf of the Town.
Delegation of Authority
The Director of Finance/Treasurer has overall responsibility for establishing and implementing a
prudent investment strategy for the Town’s portfolio in a manner consistent with this policy.The
Director of Finance/Treasurer shall be responsible for all transactions undertaken,and shall
exercise control over any staff delegated to implement the investment program.
Competitive Selection of Investment Instruments
All security purchase/sale transactions will be completed through a competitive process and with
financial institutions approved by the Director of Finance/Treasurer.The Town will accept an
offer to purchase,which (a)has the highest rate of return for the investment term required;and
(b)optimises the investment objectives of the overall portfolio.When selling a security,the
Town will select the bid that generates the highest sale price.
It will be the responsibility of the Director of Finance/Treasurer to produce and retain written
records of each transaction,including the names of financial institutions solicited,rate quoted,
description of the security,investment selected,and any special considerations that had an
impact on the final decision.
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Section III -Eligible Investments and Parameters
Eligible Investments
The following are eligible investments:
Bonds,debentures,or other evidences of indebtedness of or guaranteed by the
Government of Canada,the Province of Ontario,or another province of Canada;
Bonds,debentures,term deposits,deposit receipts,deposit notes,certificates of
instruments issued,accepted,guaranteed or endorsed by any bank in Schedule I or II to
the Bank Act (Canada)or by credit unions and trust companies as defined in the Credit
Unions and Caisses Populaires Act;and
Bonds,debentures or promissory notes of a metropolitan,regional or district
municipality,a school board,or a local board as defined in the Municipal Act.
All eligible investments must meet or exceed the minimum credit rating as defined in Section
VII of this policy and are to be used in conjunction with the sector limitations noted in the below
under the reference Investment Parameters.
Investment Parameters
The investment parameters shall be achieved through diversification by:
Limiting investments to avoid over-concentration in securities of a specific type,from a
specific issuer or sector (excluding Government of Canada instruments);
Limiting investments in securities to those that have higher credit ratings;
Investing in securities with varying maturities;and
Investing in mainly liquid,marketable securities,which have an active secondary market,
to ensure that appropriate liquidity is maintained in order to meet on-going cash flow
requirements.
In order to promote diversification in the Town’s portfolio holdings,percentage weightings for
sector and security type shall be established and maintained (See Section VII).
To the extent possible,the Town shall match its term structure with anticipated cash flow
requirements.Unless matched to specific cash flow requirements,the Town will not directly
invest in securities maturing more than ten (10)years from the date of purchase.Reserve Funds
and other longer-term investment horizons may be invested in securities exceeding the ten (10)
years if the maturity of such investments are made to coincide,as near as possible,with the
expected use of such funds.The final column of Section VII sets out the maximum term in order
to ensure liquidity requirements are maintained.
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Section IV -Reporting Requirements
Reports to Council
The Director of Finance/Treasurer shall provide an investment report to Council annually.The
report will include the following:
Listing of individual securities held at the end of the preceding fiscal year;
Realized and unrealized gains or losses resulting from appreciation or depreciation by
listing the cost and market value of securities over the one-year duration;
Percentage of total portfolio which each type of investment represents;
Summary statement about the performance of the investment portfolio during the period
covered by the report;
An estimated ratio of the total long-term and short-term securities compared to the total
investments and a description of the change,if any,in that estimated proportion since the
last year’s report;
A statement (opinion)by the Director of Finance/Treasurer as to whether or not all
investments were made in accordance with the investment policies and objectives
adopted by the Town and in compliance with the Municipal Act;and
Such other information that Council may require or that,in the opinion of the Director of
Finance/Treasurer,should be included.
Performance Benchmarks
The investment portfolio will be managed in accordance with the parameters specified within
this policy.Short-term funds will be compared to the return on the Scotia McLeod’s Capital 30
day Treasury Bill Index and the 91 day Treasury Bill Index as well as the ONE Funds Money
Market Fund.Long-term funds will be compared to the Scotia McLeod’s Capital –All
Government –Bond Index and the ONE Funds Bond Fund.
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Section V -Safekeeping and Custody
The custody and safekeeping of the Town’s investments is held off site with the broker from
whom the investment was purchased.All securities shall be held in the name of the Corporation
of the Town of Aurora.
The brokerage organization shall issue a confirmation receipt to the Town listing specific
investment instrument details,rate,maturity and other pertinent information.On a monthly (or
quarterly basis depending on the broker)the broker will also provide reports which list all
securities held for the Town,the book value of the holdings and the market value of the holdings
as of the month (period)end date.
Section VI -Responsibilities
The responsibilities of the Director of Finance/Treasurer are as follows:
Enters into arrangements with banks,investments dealers,brokers and other financial
institutions for the purchase,sale,redemption,issuance,transfer and safekeeping of
securities;
Executes and signs documents on behalf of the Corporation of the Town of Aurora and
performs all other related acts in the day-to-day operation of the investment and cash
management program;
Develops and maintains all necessary operating procedures for the effective control and
management of the investment function and reasonable assurance that the Corporation’s
investments are properly managed and adequately protected;and
Ensures that adequate insurance coverage to guard against any losses that may occur due
to misappropriation,theft,or other acts of fraud with respect to the Corporation’s
financial assets.
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Section VII -Eligible Investments and Sector Limitations
Minimum
Credit Rating
(DBRS)1
Money
Market
Rating
Investment Type /Sector
Exposure Limitation 2
(maximum)
Sector Term
Limitation
(maximum)
Federal 3 (Canada)AAA R-1 high 100 %20 years
Provincial 4 AA R-1 mid 80 %20 years
A R-1 mid 20 %10 years
BBB R-1 mid 10 %5 years
Provincial Total Maximum =80%of portfolio
Municipal
Regional or Other
Municipalities
AA or A 40 %10 years
Banks
Schedule I Banks R-1 mid/low 75 %5 years
Schedule II Banks,
Credit Unions and
Trust Companies
R-1 mid 15 %6 months
Bank Total Maximum =75%of portfolio
1.DBRS =Dominion Bond Rating Service
2.Exposure %limitations to be applied to the par value of the total portfolio
3.Includes Federal Government Guarantees
4.Includes Provincial Government Guarantees
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Section VIII -Portfolio Term Limitations
Term Limitations Percentage of Portfolio by Term
(maximum)
Less than 90 days 100 %
Less than 1 year 100 %
From 1 year up to,
but not including 5 years 70 %
From 5 years up to,
but not including 10 years 70 %
From 10 years up to 20 years 50 %
Over 20 years 10 %
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Section IX -Definitions
Money Market Ratings
Rating Definition
R-1 (high)Short-term debt rated R-1 (high)is of the highest quality,and
indicates an entity that possesses unquestioned ability to repay
current liabilities as they fall due.
Entities rated in this category normally maintain strong liquidity
positions,conservative debt levels and profitability which is both
stable and above average.
R-1 (mid)Debt rated R-1 (mid)is of superior credit quality and in most cases,
ratings in this category differ from R-1 (high)credits to only a
small degree.
R-1 (low)High quality debt with a strong degree of safety regarding timely
repayment of financial obligations.
Dominion Bond Rating Service (DBRS)–Investment Grade Obligations
Rating Definition
AAA Highest rating possible where the capacity to pay interest and repay
principal is extremely strong.
AA Has a very strong capacity to pay interest and repay principal and
differs from AAA to a small degree.
A Has a very strong capacity to pay interest and repay principal,but
more susceptible to adverse developments than the higher rated
categories.
BBB Average to adequate capacity to pay interest and repay principal.
Current levels of protection are adequate but adverse economic
conditions are more likely to lead to a weakening capacity to fulfil
financial obligations.
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Section IX -Definitions (Con’t)
Other Definitions:
Credit Risk:the risk to an investor that an issuer will default in its
obligation to pay interest and/or principal on a security.
Diversification:the process of investing assets among a range of
security types,across business sectors,with varying
term and quality of credit rating.
Duration:a measure of the timing of cash flows,such as the
interest payment and principal repayment dates,to be
received from a fixed-income investment instrument.
The calculation is based on three variables:term to
maturity,coupon rate and yield to maturity.The
duration of an investment instrument is a useful
indicator of its price volatility in relation to fluctuations
in interest rates.
Interest Rate Risk:the risk associated with declines or rises in interest
rates,which result in the fixed-income investment
instrument to increase or decrease in value.
Investment-grade Obligations:an investment instrument suitable for purchase by
institutional investors under the prudent person rule.
Investment-grade is restricted to those obligations rated
BBB or higher by a recognized rating agency.
Liquidity:a measure of an asset’s convertibility to cash.
Market Risk:the risk that the value of a security will rise or decline
as a result of changes in capital market conditions.
Market Value:current market price of a security.
Maturity:the date on which payment of a financial obligation is
due and payable.The final stated maturity date is the
date on which the issuer must retire a bond and pay the
face value to the bondholder.
Safekeeping:the role of holding assets (e.g.securities)by a financial
institution on behalf of the investor.
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TOWN OF AURORA
ADDITIONAL ITEMS
FOR FINANCE ADVISORY COMMITTEE
Tuesday,May 26,2015
5:30 p.m.
Holland Room
Item 3 –Memorandum from Chief Administrative Officer
Re:Citizen Budget Survey –Original Script
RECOMMENDED:
THAT the memorandum regarding Citizen Budget Survey –Original Script be
received for information.
MEMORANDUM
DATE:May 26,2015
TO:Finance Advisory Committee
FROM:Neil Garbe,Chief Administrative Officer
RE:Citizen Budget Survey –Original Script
RECOMMENDATIONS
THAT the memorandum regarding Citizen Budget Survey –Original Script be
received for information.
BACKGROUND
Attached for additional information is the Citizen Budget Survey original script.
ATTACHMENT
Attachment No.1 –Citizen Budget Survey original script
100 John West Way
Box 1000
Aurora,Ontario
L4G 6J1
Phone:905-727-3123 ext.4744
Email:ngarbe@aurora.ca
www.aurora.ca
Town of Aurora
Office of the CAO
Finance Advisory Committee -Additional Items
Tuesday,May 26,2015 Item 3 Page -1
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Attachment No.1
Finance Advisory Committee -Additional Items
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Community Planning:
How would
Co:mmtunlty Planning Is delivered by the SeiVices which
is responsible lor long-range strategic planning, land use, heritage planning, economic development,
dig~al mapping and environmental initiatives.
Increased SD!mdlna could result in: "~""""'' application proces•sing, mnproV€>0 "'J"''""'' mv consullallon
processes.
Decreased spending could result in higher application lees, longer apj)lic.aflctn processing limes and
fewer community consultations.
Servtces are delivered by and Sa !Vices This department is
responsible for administration and enforcement of the Ontar!o Code and Municipal Byliaws.
it is else for of Animal a contracted service and prollides customer
service the Town's Access Aurora Customer Service unit
The BBS mandate is to healthy, sale and harmonious communities with Access Aurora
serving the community as a hub for information and connection to services.
Increased spending could result in: increased hours of patrollenloroement, increased presence in
the commLJnity and at Town events, response of sel\llces after normal
business additional on-line serllices.
and at Town events, wail times and response times.
How
How would you Animsl Control?
Infrastructure and Environmental Services:
would
Town owned assets related to and facilities, tralns~>on:ati<)n n,elwork!L water and sewer
supplies, solid waste management and fleet.
Finance Advisory Committee -Additional Items
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IES provides fleet management services for Town owned equipment, including management,
procurement and maintenance of equipment. IES also manages the construction, operation and
maintenance of all buildings and facilities owned or leased by the Town.
Increased spending could result in: more street sweeping, quicker pothole repair, additional street
banners, flags and seasonal decorations .
Decreased spending could result in fewer rounds of street sweeping, longer waits for pothole repair,
fewer changes of street banners , flags and seasonal decorations.
How would you adjust your property tax funding to Snow Management & Plowing
Operations?
Snow Management/Plowing Operations are delivered by IES.
Increased spending could result in : more snow plowing on streets and sidewalks, quicker completion
of snow plowing cycles, real-time plow tracking available online, windrow clearing.
Decreased spending could result In fewer rounds of snow plowing or longer times to complete snow
plowing cycles.
How would you adjust your property tax funding to Solid Waste Management?
Solid Waste Management is administered by IES.
Increased spending could result in more frequent collections, curbside small battery collections and
more frequent e-waste events.
Decreased spending could result in less frequent collections, fewer a-waste events and other
limitations on size and quantity of materials picked-up curbside.
How would you adjust your property tax funding to Municipal Facilities?
Municipal Facilities are administered by the IES .
Increased spending could result In: earlier minor repairs, ear1ier replacement of worn or damaged
components, more frequent cleanings, longer hours of operations, lower room rental rates or
additional operational staff on location.
Decreased spending could result in delays to minor repairs of worn or damaged components, fewer
cleanings, fewer hours of operation or higher room rental rates.
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Parks and Recreation Services :
How would you adjust your property tax funding to Community Programs?
Community Programs are provided by the Parks and Recreation Services (PAS) department, which
is responsible for construction and maintenance of parks, development and delivery of community
and heritage programs and facilitation of sports, fitness, creative and social programs in recreational
facilities and green spaces.
Increased spending could result in additional programs, reduced fees, additional community events,
enhancements to community events, additional support for those with special needs, or more
frequent replacement of equipment and supplies.
Decreased spending could result in fewer programs, higher fees, fewer community events and less
frequent replacement of equipment and supplies.
How would you adjust your property tax funding to Parks, Trails and Open Spaces?
Parks Trails and Open Spaces are administered by PAS.
Increased spending could result in additional sports field maintenance, additional tree and shrub
planting, additional planters and baskets along roadways, more benches and picnic tables,
increased weed removal, increased litter pick-up in parks and on trails.
Decreased spending could result in less sports field maintenance, less frequent grass cutting, less
tree and shrub planting, fewer planter and baskets, fewer benches and picnic tables and less weed
removal and litter pick-up in parks and on trails.
How would you adjust your property tax funding to Cultural Services?
Cultural Services are administered by PAS.
Increased spending could result in: more programs at the Aurora Museum, increased marketing and
promotion of cultural resources within the community.
Decreased spending could result in fewer programs at the Aurora Museum or less marketing and
promotion of cultural resources in the community.
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Fire and Emergency Services:
How would you adjust your property tax funding to Fire & Emergency Services?
Fire & Emergency Services are delivered to the Town of Aurora and Town of Newmarket by Central
York Fire Services (CYFS). CYFS is a consolidated fire service that provides excellence in fire
protection , prevention , fire education and emergency services to both communities.
Increased spending could result in more training resources for first responders , more prevention
programs to the community and schools, increased door-to-door education, increased assistance to
seniors' homes .
Decreased spending could result in less specialized equipment to use in emergencies, fewer training
opportunities, fewer prevention programs or fewer door-to-door campaigns.
Infrastructure Rehabilitation and Replacement:
How would you adjust your property tax funding to Infrastructure Rehabilitation and
Replacement Contributions?
Infrastructure Rehabilitation and Replacement Contributions are administered by IES.
Increased spending could result in: earlier repair & replacement of town infrastructure such as
recreation & other facilities, roads, sidewalks, street lights and playground equ ipment; earlier
replacement of fleet and equipment, more utility vehicles, minimization I stabilization of future annual
required tax increases, reduction of the Town's infrastructure deficit.
Decreased spending could result in delayed repair & replacement of town infrastructure , fleet and
equipment or fewer utility vehicles, greater volatility in annual required tax increases, requirement for
town to accept a greater infrastructure deficit.
Aurora Public Library:
How would you adjust your property tax funding to Aurora Public Library?
Aurora Public Library supports the cultural and educational life of Aurora by providing a wide variety
of Information In print, electronic and digital formats, programming for all ages and access to current
technologies. In 2013, 654,033 items were borrowed and 13,424 people of all ages attended 764
programs. Staff responded to 17,420 reference and reader's advisory questions and 6 ,136
technology , software and social media support requests.
Increased spending could result in: expanded hours of operation , increased programs, more choice
and better availability of ebooks, streaming/downloadable content and research resources , improved
Finance Advisory Committee -Additional Items
Tuesday, May 26,2015 Item 3 Page - 6
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access to emerging digital technologies and enhanced support and service for students and lifelong
learners.
Decreased spending could result in fewer hours of operations, fewer programs, fewer ebooks
available and fewer resources for students and lifelong learning programs.