Agenda (Appointed) - Finance Advisory Committee - 20250415Town of Aurora
Finance Advisory Committee
Meeting Agenda
Date:Tuesday, April 15, 2025
Time:5:45 p.m.
Location:Holland Room, Aurora Town Hall
Meetings are available to the public in person and via live stream on the Town’s YouTube channel.
To participate, please visit aurora.ca/participation.
Pages
1.Call to Order
2.Land Acknowledgement
3.Approval of the Agenda
4.Declarations of Pecuniary Interest and General Nature Thereof
5.Receipt of the Minutes
5.1 Finance Advisory Committee Meeting Minutes of February 18, 2025 1
That the Finance Advisory Committee meeting minutes of
Tuesday, April 15, 2025, be received for information.
1.
6.Delegations
7.Matters for Consideration
7.1 Memorandum from Senior Advisor, Financial Management; Re: Proposed
Water and Wastewater Rate Strategy
4
(Presentation to be provided by Sandeep Dhillon, Senior Advisor,
Financial Management)
That the memorandum regarding the Proposed Water and
Wastewater Rate Structure be received; and
1.
That the Finance Advisory Committee comments regarding the
proposed water and wastewater rate structure be received and
referred to staff for consideration and further action as
appropriate.
2.
7.2 Memorandum from Financial Management Advisor; Re: Annual
Investment Policy Review
25
That the memorandum regarding the annual investment policy
review be received; and
1.
That the Finance Advisory Committee comments regarding the
annual investment policy review be received and referred to staff
for consideration and further action as appropriate.
2.
7.3 Memorandum from Manager, Financial Management Services; Re:
Financial Risk Assessment – Possible US Tariffs
57
That the memorandum regarding the Financial Risk Assessment
of Possible US Tariffs be received; and
1.
That the Finance Advisory Committee comments regarding the
Financial Risk Assessment of Possible US Tariffs be received
and referred to staff for consideration and further action as
appropriate.
2.
8.New Business
9.Adjournment
Town of Aurora
Finance Advisory Committee
Meeting Minutes
Date:
Time:
Location:
Tuesday, February 18, 2025
5:45 p.m.
Holland Room, Aurora Town Hall
Committee Members: Mayor Tom Mrakas (Chair)
Councillor Harold Kim
Councillor Michael Thompson
Other Attendees: Doug Nadorozny, Chief Administrative Officer
Rachel Wainwright-van Kessel, Director, Finance
Patricia De Sario, Director, Corporate Services/Town Solicitor
Jason Gaertner, Manager, Financial Management
Laura Sheardown, Financial Management Advisor*
Linda Bottos, Council/Committee Coordinator
*Attended electronically
_____________________________________________________________________
1. Call to Order
The Chair called the meeting to order at 5:49 p.m.
2. Land Acknowledgement
The Committee acknowledged that the meeting took place on Anishinaabe lands,
the traditional and treaty territory of the Chippewas of Georgina Island,
recognizing the many other Nations whose presence here continues to this day,
the special relationship the Chippewas have with the lands and waters of this
territory, and that Aurora has shared responsibility for the stewardship of these
lands and waters. It was noted that Aurora is part of the treaty lands of the
Mississaugas and Chippewas, recognized through Treaty #13 and the Williams
Treaties of 1923.
Page 1 of 63
Finance Advisory Committee Meeting Minutes
February 18, 2025 2
3. Approval of the Agenda
Moved by Councillor Thompson
Seconded by Councillor Kim
That the agenda as circulated by Legislative Services be approved.
Carried
4. Declarations of Pecuniary Interest and General Nature Thereof
There were no declarations of pecuniary interest under the Municipal Conflict of
Interest Act, R.S.O. 1990, c. M.50.
5. Receipt of the Minutes
5.1 Finance Advisory Committee Meeting Minutes of January 21, 2025
Moved by Councillor Kim
Seconded by Councillor Thompson
1. That the Finance Advisory Committee Meeting Minutes of January 21,
2025, be received for information.
Carried
6. Delegations
None.
7. Matters for Consideration
7.1 Memorandum from Financial Management Advisor; Re: Line by Line Budget
Review of Corporate Services
The Committee reviewed and inquired about the budgeting and trends of
various line items and staff provided clarification. The Committee inquired
about any strategies being employed to reduce insurance costs and staff
advised on the practice of subrogation and the possibility of an insurance
pool being explored for York Region municipalities. The Committee
suggested the Town also continue to investigate collective approaches to
mitigate costs related to the services and consultants line item.
Page 2 of 63
Finance Advisory Committee Meeting Minutes
February 18, 2025 3
Moved by Councillor Thompson
Seconded by Councillor Kim
1. That the memorandum regarding Line by Line Budget Review of
Corporate Services be received; and
2. That the Finance Advisory Committee comments regarding Line by
Line Budget Review of Corporate Services be received and referred to
staff for consideration and further action as appropriate.
Carried
7.2 Memorandum from Financial Management Advisor; Re: ONE JIB Update –
Transition to Outsourced Chief Investment Officer (OCIO)
Staff provided an overview of the memorandum noting the transition to
the OCIO model will offer a much wider range of investment funds and
alternative investment opportunities for municipalities. The Committee
expressed a preference to not participate in the alternative investment
component of the OCIO’s offerings at this time. Staff provided clarification
on fees, the structure and more limited liquidity of alternative investments,
the role of the internal investment officer, the transition of current funds,
and the OCIO selection process.
Moved by Councillor Thompson
Seconded by Councillor Kim
1. That the memorandum regarding ONE JIB Update - Transition to
Outsourced Chief Investment Officer (OCIO) be received; and
2. That the Finance Advisory Committee comments regarding ONE JIB
Update - Transition to Outsourced Chief Investment Officer (OCIO) be
received and referred to staff for consideration and further action as
appropriate.
Carried
8. New Business
None.
9. Adjournment
That the meeting be adjourned at 6:19 p.m.
Page 3 of 63
100 John West Way
Aurora, Ontario
L4G 6J1
(905) 727-3123
aurora.ca
Town of Aurora
Memorandum
Finance
Re: Proposed Water and Wastewater Rate Strategy
To: Finance Advisory Committee
From: Sandeep Dhillon, Senior Advisor, Financial Management
Date: April 15, 2025
Recommendation
1. That the memorandum regarding the Proposed Water and Wastewater Rate Structure
be received; and
2. That the Finance Advisory Committee comments regarding the proposed water and
wastewater rate structure be received and referred to staff for consideration and
further action as appropriate.
Background
Presently the Town’s water and wastewater rate structure consists of a single variable
rate for both water and wastewater. As Town’s fixed costs for the delivery of water and
wastewater services continue to rise as infrastructure ages, so too does the need to
ensure an equitable distribution of this burden across all user rate payers. The Town
engaged DFA Infrastructure International Inc. to undertake a review of the existing water
and wastewater rates and recommend a future rate structure. In March 2024, DFA
presented the proposed fixed and variable water and wastewater rate strategies to
Council as part of a public consultation meeting which was followed by a staff prepared
detailed memo in May 2024 that addressed concerns raised by the residents at the
public consultation meeting.
The current memo provides an overview of the further analysis done by staff of the
impact of alternative rate structures on the Town as well as to the average Aurora
resident and seeks FAC guidance to proceed with one recommended rate structure.
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Water and Wastewater Rate Strategy
April 15, 2025 Page 2 of 9
Analysis
Each rate structure was assessed based upon guiding principles
When assessing each of the alternative rate structures, the following guiding principals
as summarized under Table 1 were considered.
Table 1
Guiding Principals
Rate Structure Description
Full Cost Recovery Ensures cost recover of all water /
wastewater system costs
Promote Conservation Encourages water conservation
Fair & Equitable Does not unduly favour one ratepayer
class over another
Ease of Administration Minimizes administrative effort and cost
Rate / Revenue Stability Minimizes annual swings in rates and
maximizes revenue predictability
Affordable/Minimizes shifts in
Burden
Should strive to minimize impact on
ratepayers
Defensible Must be transparent and defensible
Support Economic Development Promotes commercial/industrial growth
Two new water and wastewater rate structure options are presented for consideration
The proposed fixed and variable rate structure consists of a base charge, based on
meter size, which recovers the fixed cost associated with contributions to the water and
wastewater reserves for future infrastructure replacement and a volumetric charge
which recovers all variable costs based on volume consumption.
A base charge allows for the more equitable sharing of the fixed cost burden across all
potential users. Meaning all residents and businesses will contribute toward the fixed
cost recovery whether they consume water or not for a given billing period. Only those
who consume water or wastewater services would contribute toward the cost recovery
of a service’s variable costs through the volumetric charge.
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Water and Wastewater Rate Strategy
April 15, 2025 Page 3 of 9
Further, a base charge also allows for greater assurance of fixed cost recovery
regardless of the volume of water consumed each year. The amount of water sold each
year is variable, demand is impacted by weather and other factors. Under a current
single volumetric rate, the Town risks not being unable to fully recover all of its fixed
costs.
Under the single volumetric rate, all Town customers are billed based on a single
volumetric charge on all recorded water consumption. The combination of fixed and
single volumetric rate structure promotes greater cost recovery fairness and offers the
most transparent rate structure.
In consideration of water conservation promotion, a two-tiered volumetric charge is also
presented. The two-tiered volumetric charge option considers the basic water needs of
a household, providing water at a lower rate for the first 50 cubic meters per billing
cycle. Once an average consumption of 50 cubic meters per billing cycle is reached, a
higher rate will be charged for any water usage in excess of 50 cubic meters. A two-tier
variable rate structure will encourage water conservation and provide some financial
relief for basic water consumption needs as shown in Table 2.
Table 2
Current and Proposed Rate Structure Options
(based on average 2025 rates)
Option 1: 100% Variable - Current Structure
per cubic meter
Water $2.62
Wastewater $3.09
Combined $5.71
Option 2: Fixed & Single volumetric Charge - Proposed Rate Structure
Fixed Chage based on meter size
<1.5" 2" 3" to 6" >6"
Water $111 $334 $1,335 $4,340
Wastewater $84 $251 $1,004 $3,262
Combined $195 $585 $2,339 $7,602
Volumetric Charge:
per cubic meter
Water $2.21
Wastewater $2.78
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Water and Wastewater Rate Strategy
April 15, 2025 Page 4 of 9
Combined $4.99
Option 3: Base & tiered volumetric Charge - Proposed Rate Structure
Fixed Charge (based on meter size):
<1.5" 2" 3" to 6" >6"
Water $111 $334 $1,335 $4,340
Wastewater $84 $251 $1,004 $3,262
Combined $195 $585 $2,339 $7,602
Volumetric Charge:
0 to 200m3 >200m3
Water $2.09 $2.34
Wastewater $2.66 $2.91
Combined $4.75 $5.25
The total revenue/cost recovery under the current and proposed rate structures remains
unchanged
The objective of the proposed rate structures is to promote fairness, ensure water
conservation and maintain sustainable water and wastewater infrastructure. Therefore,
the overall revenue generated from each proposed rate structure remains the same, it is
only the distribution of each service’s cost recovery from customers that changes with
each option.
The proposed fixed and variable rate structures, options 2 and 3, consists of a base
charge based on meter size which recovers the fixed cost associated with contributions
to the water and wastewater reserves for future infrastructure replacement and a
volumetric charge which recovers all variable costs based on volume consumption.
The three presented options have varying impacts on the average water bill for residential
and commercial customers
Currently, the burden of fixed infrastructure cost lies more on higher consumption
residential and commercial customers. By introducing a fixed (base) rate charge, this
burden is shared equitably among all customers including vacant homes which
currently do not pay anything for water and wastewater as they have zero consumption.
A base charge allows for the more equitable sharing of the fixed cost burden across all
potential users. Meaning all residents and businesses will contribute toward the fixed
cost recovery whether they consume water or not. Only those who consume water or
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Water and Wastewater Rate Strategy
April 15, 2025 Page 5 of 9
wastewater services would contribute toward the cost recovery of these services’
variable costs through the volumetric charge. The presented water and wastewater rate
structure options have varying impact on customers based on their water usage as
shown in figure 1 and 2.
Figure 1
Impact on Average Volume Consumption Customers
Figure 2
Impact on Higher Volume Consumption Customers
Page 8 of 63
Water and Wastewater Rate Strategy
April 15, 2025 Page 6 of 9
Under option two, being the fixed and single volumetric rate structure, an average Town
resident’s water and wastewater bill will be $13 higher per billing cycle. However,
residents whose water and wastewater consumption are higher than 75 cubic meter per
billing cycle would recognize savings due to the more equitable distribution of the fixed
cost burden across all rate payers.
Under option three, being the fixed and two-tiered volumetric rate structure, an average
Town resident’s water and wastewater bill will be same as under the current rate
structure (100% variable rate) per billing cycle. However, residents with water and
wastewater consumption greater than 100 cubic meter per billing cycle will not enjoy
the true benefit of moving toward a fixed and variable rate structure as the tier 1
volumetric charge is discounted to benefit the average resident.
Each proposed rate structure has its own benefits and challenges with respect to the
guiding principles
Table 3 provides a summary of the benefits and challenges of the current and each
proposed rate structure. In order for Town staff to proceed further with a report to
Council, staff seeks guidance from the Finance Advisory Committee to recommend its
desired rate structure deciding between the two new proposed fixed and variable rate
structure options.
Table 3
Benefits and Challenges of Proposed Water and Wastewater Rate Structure
Page 9 of 63
Water and Wastewater Rate Strategy
April 15, 2025 Page 7 of 9
Option 1 Option 2 Option 3
Benefits and
Challenges
Variable Rate
Structure
Fixed and Single
Variable Rate
Fixed and Two -
Tiered Variable
Rate
Full Cost Recovery Ensures cost
recover of all water
/ wastewater
system costs
Ensures cost
recover of all
water /
wastewater
system costs
Ensures cost
recover of all water
/ wastewater
system costs
Promote
Conservation
Do not promote
conservation of
water
Do not promote
conservation of
water
Encourages water
conservation as the
higher
consumption
customers pay
higher water and
wastewater cost
due to 2-tier
variable charge
Ease of
Implementation
No change Status
quo
Staff to confirm one-time capital cost of
implementation of the new rate
structure in the water and wastewater
billing system and verify meter size
database with operations team for
accurate billing.
Page 10 of 63
Water and Wastewater Rate Strategy
April 15, 2025 Page 8 of 9
Option 1 Option 2 Option 3
Benefits and
Challenges
Variable Rate
Structure
Fixed and Single
Variable Rate
Fixed and Two -
Tiered Variable
Rate
Fair & Equitable Does not promote
fairness as the
higher water
consumption
customers bears
the burden of fixed
infrastructure cost
Promotes
fairness and does
not favour one
rate payer over
another
Promotes fairness
for fixed charge.
However, the
higher
consumption
customers pay
slightly more. For
example,
apartment
buildings,
commercial
customers, school
boards and senior
center.
Affordable/Minimizes
shifts in Burden
Favours the
average and lower
consumption
customers
Average rate
payers bill
increases by $13/
billing cycle
Strive for minimal
impact on average
ratepayers
Rate / Revenue
Stability
Minimal revenue
predictability due
to volume-based
revenue collection.
Minimizes annual
swings in rates
and maximizes
revenue
predictability
Minimizes annual
swings in rates and
maximizes revenue
predictability
If approved, the new water and wastewater rate structure would become effective in 2027
The Town’s May 1, 2025, water, and wastewater rates have already been approved, and
it will take time to roll out a change in the rate structure, therefore the first opportunity
to introduce any new rate structure would be in time for the Town’s May 1, 2027 rate
update. Table 4 presents a summary of the remaining key milestones in this review.
Table 4
Key Remaining Review Milestones
Page 11 of 63
Water and Wastewater Rate Strategy
April 15, 2025 Page 9 of 9
Date Milestone / Activity
March 26, 2024 Public Open House (Complete)
May 19, 2024 Finance Advisory Committee Update (Complete)
April 15, 2025 Finance Advisory Committee Update
September 9, 2025 Committee of the Whole
September 23, 2025 Council possible approval of alternative water &
wastewater rate structure
December, 2026 Council adoption of 2027 water & wastewater rates
based on the new recommended rate structure
March, 2027 May 1, 2027, water & wastewater rate by-law approval
Attachments
1. Water and Wastewater Proposed Rate Structure Presentation
Page 12 of 63
TOWN OF AURORAWater & Wastewater Rate Study Finance Advisory Committee%TVMP1th, 2025Page 13 of 63
•Overview of current rate structure•Existing customer base & Cost•Challenges of existing rate structure•Residential consumption pattern•Commercial consumption pattern•Proposed rate structure•Proposed rate structure impact toexisting customer base•Benefits/challenges of proposedrate structure•Next Steps2AgendaWater & Wastewater Rate Study%TVMP 1th, 2025Page 14 of 63
3Current Rate Structure - Option 1%TVMP 1th, 2025 Water & Wastewater Rate StudyWater and Wastewater No. of Customer 19090Budgetd Annual Water Consumption 5.5 Million m32025 Cost to be recovered from Water customers $14.5 million2026 Cost to be recovered from Wastewater customers $17.1 MillionCurrent Rate Structure 100% variable 2025 Average Water Rate (Jan - Dec) 2.62$ 2025 Average Wastewater Rate (Jan - Dec) 3.09$ Page 15 of 63
4Current Rate Structure Challenges %TVMP 1th, 2025 Water & Wastewater Rate Study•Inactive customers & vacant home do not pay for the infrastructurecost•Does not encourage water conservation•Revenues 100% dependent on level of consumption. Could result inbudget deficits due to low consumption and less revenues (e.g. inwet years)•Active users bears the burden of full infrastructure costPage 16 of 63
5Residential Consumption Pattern %TVMP 1th, 2025 Water & Wastewater Rate StudyPage 17 of 63
6Commercial consumption Pattern%TVMP 1th, 2025 Water & Wastewater Rate StudyPage 18 of 63
7Proposed Rate Structure – Option 2 %TVMP 1th, 2025 Water & Wastewater Rate StudyOption 2 Base & single volumteric Charge - Proposed Rate StructureWater_Fixed Charge Wastewater_Fixed charge Meter sizeAnnual Meter Charge Annual Meter Charge <1.5 111$ 84$ 2334$ 251$ 3-6 1,335$ 1,004$ >6 4,340$ 3,262$ Volumetric Charge 2025 Average Rate 2025 Average Rate Water 2.21$ Wastewater 2.78$ Page 19 of 63
%TVMPth, 2025 Water & Wastewater Rate Study8Proposed Rate Structure – Option 3 Option 3 Base & tiered volumteric Charge - Proposed Rate StructureWater_Fixed Charge Wastewater_Fixed charge Meter sizeAnnual Meter Charge Annual Meter Charge <1.5 111$ 84$ 2334$ 251$ 3-6 1,335$ 1,004$ >6 4,340$ 3,262$ Volumetric Charge Annual Water Consumption 2025 Average Rate 2025 Average Rate 0-200 m3 2.09$ 2.66$ 200+m3 2.34$ 2.91$ Page 20 of 63
%TVMP 1th, 2025 Water & Wastewater Rate Study9Rate Comparison – Average Consumption Page 21 of 63
%TVMP 1th, 2025 Water & Wastewater Rate Study10Rate comparison – High ConsumptionPage 22 of 63
%TVMP 1th, 2025 Water & Wastewater Rate Study11Next Steps Date Milestone / ActivitySeptember 9,2025 Committee of the WholeSeptember 23,2025Council possible approval of alternative water & wastewater rate structureDecember, 2026Council adoption of 2027 water & wastewater rates based on the new recommended rate structureMarch, 2027 May 1, 2027, water & wastewater rate by-law approvalPage 23 of 63
%TVMP 1th, 2025 Water & Wastewater Rate Study12Feedback……Thank youPage 24 of 63
100 John West Way
Aurora, Ontario
L4G 6J1
(905) 727-3123
aurora.ca
Town of Aurora
Memorandum
Finance
Re: Annual Investment Policy Review
To: Finance Advisory Committee
From: Laura Sheardown, Financial Management Advisor
Date: April 15, 2025
Recommendation
1. That the memorandum regarding the annual investment policy review be received;
and
2. That the Finance Advisory Committee comments regarding the annual investment
policy review be received and referred to staff for consideration and further action as
appropriate.
Background
In 2023, Council approved the transition of Aurora’s long-term investments to the ONE
Joint Investment Board (ONE JIB) which was completed in September 2023 with
Aurora’s investments seeing returns of 14.9 per cent since inception (as per Sept 2024
statement).
The ONE JIB’s Strategic Plan includes a key goal of growing the assets under its
management through the attraction of new large municipal members to the Prudent
Investor Program. On February 28, 2024, the ONE JIB agreed to proceed with the
implementation of an Outsourced Chief Investment Officer (OCIO). In support of the
transition to the OCIO model, the ONE JIB undertook a tender review process resulting
in the identification of Phillips, Hager & North Investment Management Ltd, (PH&N), a
wholly owned subsidiary of RBC Global Asset Management Inc. as the successful
bidder. The ONE JIB’s implementation of an OCIO further supports its goal of adding
new large municipal partners by making it more attractive to them by strengthening its
governance model.
Page 25 of 63
Annual Investment Policy Review
April 15, 2025 Page 2 of 2
On February 18, staff presented an orientation to the Finance Advisory Committee on
the Outsourced Chief Investment Officer (OCIO) framework. One key item of feedback
received from the Finance Advisory Committee was its desire that the Town not invest
in alternative investments which are available under this framework. The committee
requested that this desire be reflected in the Town’s upcoming investment policy
update.
As a member of the ONE JIB, the Town is required to re-visit its investment policy on an
annual basis to ensure its continued alignment with the Town’s risk tolerances and
objectives.
Analysis
Transition to OCIO
The Town of Aurora’s current Investment Policy has been updated (using track
changes) to incorporate the ONE JIBs transition to an OCIO framework and to ensure its
continued alignment with the desires of FAC and Council pertaining to the composition
of the Town’s short and long-term investments.
Some key changes made to this policy include wording updates that enable the
outsourcing of the management of the ONE JIB’s combined holdings to an OCIO. This
draft policy has also been updated to restrict the investment of Town funds in
alternative investments as per feedback received from the FAC.
Some specific wording changes include:
- Changes in terminology from short and long-term money to money required
immediately and money not required immediately
- Addition of an alterative investment section to the policy
- Addition of a listing of restricted special assets that are identified as investments
longer than 24 months, but not controlled by the ONE JIB
Attachments
1. TOA – Investment Policy Statement July 2025
Page 26 of 63
13197104.14
INVESTMENT POLICY STATEMENT
FOR
THE CORPORATION OF THE TOWN OF AURORA (the “Municipality”)
MARCH 7, 2023JULY 2025
Page 27 of 63
ii
13197104.14Investment Policy July 2025
TABLE OF CONTENTS
OVERVIEW ........................................................................................................................................................ 1
1. GLOSSARY AND DEFINITIONS ......................................................................................................... 2
2. PURPOSE AND LEGISLATIVE FRAMEWORK .............................................................................. 7
2.1 Purpose of Policy ............................................................................................................................. 7
2.2 Governing Legislation ..................................................................................................................... 8
2.3 Prudent Investor Standard ............................................................................................................. 9
3. MONEY REQUIRED IMMEDIATELY AND MONEY NOT REQUIRED IMMEDIATELY ........ 9
3.1 Determination of MNRI and MRI .................................................................................................. 9
3.2 Overview of Portfolios ................................................................................................................... 10
4. ROLES AND RESPONSIBILITIES .................................................................................................... 10
4.1 Role of ONE JIB ............................................................................................................................. 10
4.2 Role of Municipal Staff .................................................................................................................. 11
5. INVESTMENT ........................................................................................................................................ 11
5.1 MRI: Short-Term Funds ............................................................................................................... 11
5.1.1 Short-Term Funds: Investment Objectives ..................................................................... 12
5.1.2 Short-Term Funds: Eligible Investments ......................................................................... 13
5.2 MNRI: Long-Term Funds.............................................................................................................. 13
5.2.1 Long-Term Funds: Investment Objectives ....................................................................... 13
5.2.2 Long-Term Funds: Eligible Investments ........................................................................... 15
5.2.3 Long-Term Funds: Sinking Funds ..................................................................................... 15
5.2.4 Long-Term Funds: Local Distribution Corporation (LDC) Securities ......................... 15
5.2.5 Long-Term Funds: Other ..................................................................................................... 15
5.3 Third Party Trust Funds and Designated Funds ..................................................................... 16
5.4 Investment Management .............................................................................................................. 16
5.4.1 Investment Management of Short-Term Funds .............................................................. 16
5.4.2 Investment Management of Long-Term Funds............................................................... 16
5.5 Transition to Prudent Investor Regime ..................................................................................... 16
5.6 Investment Constraints ................................................................................................................. 17
5.6.1 Environmental, Social and Governance (ESG) Investing ............................................ 17
5.6.2 Securities Lending ................................................................................................................. 17
5.6.3 Derivatives ............................................................................................................................... 17
5.6.4 Use of Leverage ..................................................................................................................... 18
5.6.5 Pooled Funds.......................................................................................................................... 18
Page 28 of 63
iii
13197104.14Investment Policy July 2025
5.6.6 Currency Hedging .................................................................................................................. 18
5.7 Performance Monitoring, Rebalancing and Management .................................................... 19
5.7.1 Short-Term Funds ................................................................................................................. 19
5.7.2 Long-Term Funds .................................................................................................................. 19
6. ADMINISTRATIVE POLICIES ............................................................................................................ 19
6.1 Flow of Funds and Annual Municipal Budget .......................................................................... 19
6.1.1 Transfer to ONE JIB as Part of Budget Process ............................................................ 19
6.1.2 Transfer to Municipality as Part of the Budget Process ................................................ 19
6.2 Flow of Funds Otherwise than through the Budget Process................................................ 19
6.2.1 Surplus Funds ........................................................................................................................ 19
6.2.2 Contingencies ......................................................................................................................... 20
6.3 Valuation of Investments .............................................................................................................. 20
6.4 Voting Rights ................................................................................................................................... 20
6.5 Internal Controls ............................................................................................................................. 20
6.6 Custodians ....................................................................................................................................... 20
6.7 Reporting.......................................................................................................................................... 21
6.7.1 Short-Term Funds ................................................................................................................. 21
6.7.2 Long-Term Funds .................................................................................................................. 21
7. APPROVAL, SUBSEQUENT MODIFICATIONS AND EFFECTIVE DATE ............................. 22
7.1 Revocation / Amendment of Previous Investment Policy ..................................................... 22
7.2 Modifications to the IPS ................................................................................................................ 22
7.3 Effective Date .................................................................................................................................. 22
Appendix I: ONE JIB Agreement ............................................................................................................... 23
Appendix II: ONE External Portfolio Manager Mandates ..................................................................... 26
Schedule A Third Party Trust Funds and Designated Funds .............................................................. 27
Page 29 of 63
13197104.14
Town of Aurora
Investment Policy Statement
OVERVIEW
Municipalities that are subject to the Municipal Act, 2001 (the “Act”) have no general power
to invest money. Such powers must be found either in express provisions of the Act or by
necessary implication.
Historically, municipalities that are subject to the Act had very limited express investment
powers under section 418 of the Act. Section 418 continues to apply to all municipalities that
are subject to the Act unless they elect to pass a by-law pursuant to the new section 418.1.
Section 418 of the Act provides that “money that is not required immediately” (MNRI) can
only be invested in securities prescribed by the Province in O. Reg. 438/97 (the
“Regulation”). These prescribed securities are generally referred to as the “Legal List
Securities” and are included in Part I of the Regulation.
Effective January 1, 2019, the new section 418.1 of the Act came into force. Section 418.1
provides that MNRI can be invested under that section in any security, provided that in
making the investment the municipality exercises the care, skill, diligence and judgment that
a prudent investor would exercise in making the investment. If a municipality elects to pass
a by-law under section 418.1, the effect will be that its MNRI must be invested in
accordance with the prudent investor regime. The rules, conditions and procedures that
apply to investments under section 418.1 are set out in Part II of the Regulation.
Investing MNRI in Legal List Securities or in accordance with the prudent investor regime
are mutually exclusive alternatives. That is to say, section 418 does not apply to a
municipality that has adopted the prudent investor regime under section 418.1.
Every municipality, regardless of whether section 418 or 418.1 applies to it, has MNRI and
also money that is required immediately (MRI). Municipalities retain the management and
control of their MRI. The Act does not include any express provisions that deal with the
investment of MRI. However, it is consistent with prudent practice to invest such money
until it is actually spent, in order to preserve the capital value of that money. Accordingly, it
is necessarily implied that a municipality has the power to invest such money on a short
term basis. Because the Act is silent as to how municipalities are to deal with MRI and
because of the historical investment powers under the Act, a conservative approach is to
invest MRI in appropriate Legal List Securities.
Municipalities that elect to pass a by-law pursuant to the new section 418.1 include in their
investment policy:
(i) the basis upon which they distinguish between MNRI and MRI,
(ii) principles governing the investment of each category of money, and
(iii) This Investment Policy Statement (IPS) is intended to respond to the foregoing
requirements.
Page 30 of 63
2
13197104.14Investment Policy July 2025
Town of Aurora staff and Council understand that the funds being invested belong to the
residents of Aurora. This investment and procedures documentation will ensure that all
funds are invested with care, diligence and judgement of a prudent investor with a primary
objective of principal preservation while maximizing returns.
1. GLOSSARY AND DEFINITIONS
The following capitalized terms are defined terms which have the meanings set out below:
Act: means the Municipal Act, 2001, S.O. 2001, c. 25, as amended from time to time.
Agent: means any administrator, Custodian, payment servicer, portfolio manager,
investment counsel, consultant, banker, broker, dealer or other service provider engaged or
appointed by ONE JIB and authorized by ONE JIB to exercise any of the functions of ONE
JIB pursuant to a written agreement, in the manner and to the extent provided in the
Regulation and without limiting the generality of the foregoing, Agent includes ONE
Investment, and the Sub-Investment Manager.
Alternative Assets: means investments outside traditional investments such as equities,
fixed income, and cash which may include, hedge funds, private equity, natural resources,
real estate and infrastructure. Alternative investments are typically less liquid that traditional
investments and are appropriate only for allocations with a long investment horizon.
Asset Class: An asset class is a specific category of assets or investments, such as cash,
fixed income, equities, alternative investments, real estate etc.
Asset Mix (or Asset Allocation): means the proportion of each asset class in a portfolio.
Asset classes include bank deposits, money market securities, bonds and equities, among
other things.
Authorizing By-law: means a by-law of a Participating Municipality which authorizes: (i) the
approval of the Client Questionnaire and the adoption of the IPS; and (ii) the entering into of
the ONE JIB Agreement.the Municipality that authorizes it to invest its money and
investments that it does not require immediately in the OCIO offering of ONE JIB pursuant
to section 418.1 of the Act, to approve various documents, the entering into of agreements
including a Prudent Effective Date Agreement and the delegation of certain powers and
duties to ONE JIB/ONE Investment.
Benchmark: means an index that is representative of a specific securities market (e.g. the
S&P/TSX Composite Index, the FTSE/TMX 91 Day T-bill Index, etc.) against which
investment performance can be compared. Performance benchmarks refer to total return
indices in Canadian dollar terms.
CHUMS Financing Corporation (CHUMS): means a subsidiary of Municipal Finance
Officers’ Association of Ontario (MFOA) which, in conjunction with LAS, established ONE
Investment.
CFA Institute: refers to the global, not-for-profit professional association that administers
the Chartered Financial Analyst (CFA) and the Certificate in Investment Performance
Measurement (CIPM) curricula and examination programs worldwide, publishes research,
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conducts professional development programs, and sets voluntary, ethics-based professional
and performance reporting standards for the investment industry.
Credit Risk: means the possibility of a loss resulting from a borrower's failure to repay a
loan or meet contractual obligations. That is, the risk that a lender may not receive the owed
principal and interest.
Custodian: means a specialized financial institution that is responsible for safeguarding a
municipality's investments and is not engaged in "traditional" commercial or consumer/retail
banking. Global custodians hold investments for their clients in multiple jurisdictions around
the world, using their own local branches or other local custodian banks ("sub-custodians"
or "agent banks").
Designated Funds: means source(s) of money in which the municipality may have an
indirect interest but which the Municipality currently has no authority to invest. Designated
Funds are listed in Schedule B of this IPS.
Diversification: means a risk management technique that mixes a variety of investment
types within a portfolio to help mitigate portfolio risk. A diversified portfolio holds different
kinds of investments to improve the risk adjusted returns.
Derivative: A derivative is a contract between two or more parties whose value is based on
an agreed-upon underlying financial asset (like a security) or set of assets (like an index).
Common underlying instruments include bonds, commodities, currencies, interest rates,
market indexes, and stocks.
Environmental, Social and Governance (ESG) Investing: means considering and
integrating ESG factors into the investment process, rather than eliminating investments
based on ESG factors alone. Integrating ESG information can lead to more
comprehensive analysis of a company.
External Portfolio Managers: means external third-party investment management firms
whose investment offerings are accessed by ONE JIB directly or through services provided
to a Pooled Fund. External Portfolio Managers are agents authorized by ONE JIB in
accordance with Part II of the Regulation.
Interest Rate Risk: refers to the possibility that the value of a bond or other fixed- income
investment will suffer as the result of a change in interest rates. Interest rate risk can be
managed to help improve investment outcomes.
Internal Controls: means a system of controls that may include authorities, policies,
procedures, separation and segregation of duties, compliance checks, performance
measurement and attribution, reporting protocols, measures for safekeeping of property and
data, and the audit process.
Investment Plan: means the investment plan applicable to the Long-Term MoneyMNRI
investments and adopted by ONE JIB under the Regulation, as it may be amended from
time to time.
Investment Policy Statement (IPS): means the investment policy applicable to the
Municipality’s investments adopted and maintained by the Council of the Municipality for
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Long-Term MoneyMNRI under the Regulation, and for Short-Term MoneyMRI, as the same
may be amended from time to time. The IPS may also apply to the money and investments
held by the Municipality for the benefit of persons other than the Municipality itself and may
make reference to source(s) of money in which the Municipality may have an indirect
interest but which the Municipality has no authority to invest.
JIB: is short for Joint Investment Board and means a joint municipal service board that is
established under section 202 of the Act by two or more municipalities for the purposes of
Part II of the Regulation.
Legal List Securities: means the securities and other investments and financial
instruments that are included from time to time in Part I of the Regulation.
Leverage: means an instrument strategy of using borrowed money – specifically, the use of
various financial instruments or borrowed capital – to increase the potential return of an
investment. Typically leverage also tends to increase investment risks.
Liquidity: means the ability to turn an investment into cash relatively quickly, without a
substantial loss in value. For Example, a savings account is more liquid than real estate.
Local Authority Servivces (LAS): means an entity which, in conjunction with
MFOA/CHUMS, established ONE Investment.
Local Distribution Corporation or LDC: means a corporation incorporated under section
142 of the Electricity Act, 1998.
Long-Term Money: means the money that the municipality has defined as long-term and
characterized as money that is not required immediately by the Municipality as described in
section 5.2. Monies that are Long Term Money will be invested in accordance with the
Prudent Investor Standard.
Market Value: means the price at which a security is trading and could presumably be sold.
Also known as Fair Market Value it represents the current value of the investment.
Maturity: means the date upon which the principal or stated value of an investment
becomes due.
MNRI: means money that is not required immediately
Modern Portfolio Theory: means a theory of portfolio management that looks towards the
portfolio as a whole, rather than towards the prudence of each investment in the portfolio.
This is found in the CFA Institute Standards of Practice Handbook.
Money not Required Immediately (MNRI): means the money that is not required
immediately by the Municipality that will be under the control and management of ONE JIB
and as defined in this IPS that will be invested in accordance with the Prudent Investor
Standard.
Money Required Immediately (MRI): means the money that is required immediately by the
Municipality that remains under the control and management of the Municipality and, that
can be invested in accordance with the Legal List Securities or other applicable legislation.
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Municipal Services Corporation (MSC): means a corporation established under section
203 of the Act in accordance with the applicable regulation (Ontario Regulation 599/06).
MRI: means money required immediately.
Municipality: means The Corporation of the Town of Aurora.
OCIO Offering: means the comprehensive investment program made available through
ONE Investment as an agent for ONE JIB, where a qualified investment manager is
engaged to advise a Participating Municipality with regard to the investment of the
Participating Municipality’s MNRI and to invest and manage such MNRI in accordance with
the terms and conditions set out in the ONE JIB Agreement.
ONE Investment: means the not-for-profit corporation established by CHUMS and LAS
which provides certain management, administrative and other services to ONE JIB as its
agents.
ONE JIB: means ONE Joint Investment Board, established by certain founding
municipalities under section 202 of the Act as a JIB for purposes of Part II of the Regulation,
which is the duly appointed JIB for the Municipality, as constituted from time to time and
which acts in accordance with the Act, the Regulation, the ONE JIB Agreement, including
the Terms of Reference, this IPS and the Investment Plan.
ONE JIB Agreement: means the agreement effective as of the Prudent Effective Date,
entered into in accordance with the requirements of the Regulation, pursuant to which ONE
JIB has control and management of the Municipality’s Long-Term MoneyMNRI.
Outcome: in the context of the municipality’s IPS the word ‘outcome’ is used
interchangeably with ‘solutions’. Investment outcomes are a set of investment allocations
with varying risk/return characteristics. The outcomes assigned to each investor are
intended to reflect the needs and circumstances of the municipality. MNRI may be invested
into several outcomes based on the characteristics of the municipality’s accounts/reserves
and its saving and spending needs.
ONE JIB’s Outcome Framework: a set of Investment Outcomes designed by the ONE JIB
to categorize the potential goals of investing MNRI. Each Outcome has a unique Asset
Allocation with risk/return characteristics that are aligned with the intended use of the money
assigned to the outcome.
Operational: means the funds required to meet annual operating and capital plan needs.
Participating Municipality: means from time to time each of the municipalities for whom
ONE JIB acts as the JIB under the terms of the ONE JIB Agreement.
Pooled Fund: means a unit trust established under a trust instrument, generally not
available to the public, in which institutional, sophisticated or high net worth investors
contribute monies that are invested and managed by an External Portfolio Manager.
Monies are pooled or combined with monies of other investors.
Portfolio: means any collection of funds that are grouped together and required for specific
purposes.
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Proxy Voting: means a legal transfer to another party of a shareholder's right to vote
thereby allowing shareholders who cannot attend meetings to participate. External Portfolio
Managers usually vote proxies on behalf of their clients.
Prudent Effective Date: means the mutually agreed-upon date by the Municipality and
ONE Investment on which the prudent investor regime applies to the municipality as a
participating municipality.
Prudent Effective Date Agreement: means an agreement entered into by the Municipality
and ONE Investment that sets out the day on which the prudent investor regime starts to
apply to the Municipality.
Prudent Investor Standard: means the standard that applies when the Municipality
invests money that it does not require immediately under section 418.1 of the Act. It requires
the Municipality to exercise the care, skill, diligence and judgment that a prudent investor
would exercise in making such an investment and the standard does not restrict the
securities in which the Municipality can invest. The Prudent Investor Standard makes use of
Modern Portfolio Theory and applies the standard of prudence to the entire portfolio in
respect of the Municipality’s Long-Term MoneyMNRI rather than to individual securities. It
identifies the fiduciary's central consideration as the trade-off between risk and return as
found in the CFA Institute Standards of Practice Handbook.
Rebalancing: means the process of realigning the weightings of a portfolio of assets.
Rebalancing involves periodically buying or selling securities in a portfolio to maintain an
original or desired level of asset allocation or risk.
Regulation: means Ontario Regulation 438/97.
Restricted Special Assets: means investments specified by this IPS and held by the
Municipality as of the Prudent Effective Date, where ONE JIB is not able to exercise control.
Restricted Special Assets are listed in Schedule A of the IPS and are not considered to be
MNRI.
Risk: means the uncertainty of future investment returns or chance of loss of capital.
Risk Tolerance: means the financial ability and willingness to absorb a loss in return for
greater potential for gains.
Safekeeping: means the holding of assets (e.g. securirties) by a financial institution.
Securities Lending: means loaning a security to another market participant. The borrower
is required to deliver to the lender, as security for the loan, acceptable collateral with value
greater than the value of the securities loaned. The Securities Lending program is managed
by the Custodian or another appointed agent on behalf of investors. A Securities Lending
program is widely used by institutional investors to generate additional marginal returns on
the total portfolio.
Short-Term Money: means money that is required immediately by the Municipality as
described in section 5.1 and which remains under the control and management of the
Municipality. The money can be invested in appropriate Legal List Securities.
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Sinking Fund: means a fund established to fulfil the requirements to make annual
contributions in respect of various debenture issues wherein money is to be regularly set
aside for the payment of the principal of the debentures at maturity.
Sinking Fund Required Contributions (Annual Sinking Fund Requirement): means the
amount of money to be set aside each year for deposit into a sinking fund or a retirement
fund, as applicable, for each sinking fund and term debenture issue in accordance with the
Municipality’s debenture by-laws when such debentures are issued.
Sinking Fund Required Earnings: means the investment earnings needed for the Sinking
Fund Contributions to continue to grow to a value sufficient to repay the principal at maturity
for each issue of sinking fund and term debentures.
Sinking Fund Excess Earnings: means the investment earnings in excess of the required
earnings.
Sub-Investment Manager: means and asset management firm or investment consultant,
acting as a sub-investment manager for ONE JIB that provides investment advice and
professional services and is involved in the implementation and operational aspects of the
OCIO Offering, and that has full responsibility for the investment and management of a
Participating Municipality’s MNRI through ONE Investment, based on an IPS approved by
the Council of the municipality.
Third-Party Trust Funds: means money over which the Municipality exercises both
management and policy control but whose assets are not owned by the Municipality. These
funds are governed by a variety of agreements and, in some cases, by legislation. Some
funds may have externally mandated investment policies, and some may have investment
policies that are determined by the Municipality. Third-Party Trust Funds are listed in
Schedule B of this IPS.
Trust Fund: means a fund which consists of assets that have been converted or assigned
to a trustee to be administered as directed by agreement or statue. As a result, a trustee
holds title to the assets for the purposes of providing benefits, and being accountable, to the
beneficiary. The Municipality is the trustee of funds that are to be used for specific purposes
by the Municipality or any related parties.
2. PURPOSE AND LEGISLATIVE FRAMEWORK
2.1 Purpose of Policy
This IPS governs the investment of the Municipality's MNRI and MRl. It is intended,
among other things, to direct the Treasurer in the investment of MRI and to direct
ONE Joint Investment Board (ONE JIB) in the investment of MNRI by implementing
the Authorizing By-law 6502-23 pursuant to which the Municipality authorized the
establishment of guidelines for the prudent management of the Municipality's MNRI
pursuant to section 418.1 of the Act.
ln addition to the Municipality's MRI and MNRI, the Municipality is from time to time
entrusted with the management of money and investments for a third-party
beneficiary ("third party trust funds"), or Third-Party trust Funds. The Municipality’s
Third-Party Trust Funds are listed in Schedule B of this IPS.
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There are also source(s) of money in which the Municipality may have an indirect
interest but which the Municipality currently has no authority to invest. Such
source(s) of money, referred to in this IPS as "designated Designated fundsFunds",
are listed in Schedule A B attached heretoof this IPS. The designated Designated
funds Funds and the Restricted Special Assets, listed in Schedule A of this IPS, are
identified in this IPS for the sole purpose of enabling the Municipality to better see,
on an aggregated basis, the various financial assets in which the Municipality has an
interest. The Municipality is not responsible for the investment activities or
performance of designated funds.
ONE JIB is not responsible for the investment activities or performance of Third-
Party Trust Funds, Designated Funds or Restricted Special Assets.
The goals of this IPS are to:
● Define and assign responsibilities for investment of MRI and MNRI;
● Describe the Municipality’s responsibilities with respect to Restricted Special
Assets, tThird pParty tTrust fFunds and dDesignated fFunds;
● Ensure compliance with the applicable legislation;
● Direct ONE JIB as to the Municipality’s investment goals and risk tolerance;
● Provide guidance and limitations regarding the investments and their
underlying risks;
● Establish a basis of evaluating investment performance and the underlying
risks; and,
● Establish a reporting standard to Council.
This IPS applies to employees of the Municipality, to ONE JIB and to the employees
of ONE Investment. ONE JIB, the Treasurer, and any agent, sub-investment
manager or advisor providing services to ONE JIB in connection with the investment
of the portfolio shall accept and strictly adhere to this IPS.
2.2 Governing Legislation
Investments of MRI will, in accordance with this IPS, only be made in Legal List
Securities.
Investments of MNRI are governed by the Prudent Investor Standard in accordance
with Section 418.1 of the Act. This standard is similar to that which governs trustees
and pension fund administrators and creates a fiduciary responsibility. Prudent
investment in compliance with the Act and the Regulation enhances the potential for
the Municipality to earn improved risk-adjusted rates of return.
Money and investments that the Municipality holds as Restricted Special Assets,
tThird-pParty tTrust fFunds or has an interest in as dDesignated fFunds will be
subject to applicable legislation and any related agreements or instruments.
The Act provides that the Municipality, and therefore ONE JIB, must consider
the following criteria in planning investments of MNRI, in addition to other criteria
relevant to the circumstances:
● General economic conditions;
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● The possible effect of inflation or deflation;
● The role that each investment plays within the Municipality’s total portfolio of
investments;
● The expected total return from income and the appreciation of capital; and
● Needs for liquidity, regularity of income and preservation or appreciation of
capital.
2.3 Prudent Investor Standard
For MNRI, the standard to be used by the Municipality and ONE JIB shall be the
Prudent Investor Standard as required by section 418.1 of the Act and Part II of the
Regulation in the context of managing the Municipality’s MNRI and investments
thereof. Investments shall be made with the care, skill, diligence, and judgment,
taking into account the prevailing circumstances, that persons of prudence,
discretion and integrity would exercise in the management of investments,
considering the necessity of preserving capital as well as the need for income and
appreciation of capital. The Act includes a duty to obtain the advice that a prudent
investor would obtain under comparable circumstances.
Officers, employees and investment agents acting in accordance with written
procedures and the IPS and exercising due diligence shall take all necessary
actions to optimize performance of investments on a portfolio basis, taking into
account the prescribed risk and other parameters set out in this IPS and market
factors. The Municipality’s staff acting in accordance with written procedures and
this IPS, shall be relieved of personal responsibility for an investment’s performance,
provided underperformance relative to expectations is reported to Council and the
liquidation or sale of investments is carried out in accordance with this IPS.
3. MONEY REQUIRED IMMEDIATELY AND MONEY NOT REQUIRED IMMEDIATELY
3.1 Determination of MNRI and MRI
Determination of the Municipality’s MNRI is the responsibility of Council. In making
the determination, Council may consider:
● the time horizon within which the monies are needed to meet financial
obligations
● the purpose for which the monies have been collected or set aside and are
to be used
● the source of the money
● any combination of the foregoing
The Municipality’s MNRI will be comprised of money that is to be used to meet
financial obligations that become due more than 24 months from the date of receipt
of such money by the Municipality.
The Municipality has defined MNRI as money from the municipality’s own reserves,
reserve funds, sinking funds and current ONE Investments that will not be required
to meet financial obligations that become due more than 2 years from the receipt of
such money. The purpose of the money is to fund the municipality’s future capital,
operational and contingency needs.
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For certainty, all money and investments of the Municipality that have not been
identified as MNRI (other than Restricted Special Assets, tThird p-Party tTrust
fFunds and any dDesignated fFunds referenced in Section 2.1) shall be deemed for
purposes of this IPS to be MRI.
Determination of the Municipality’s MNRI and MRI may be modified at any time and
from time to time by action of Council and with respect to specific money by the
Treasurer in accordance with the provisions of Section 6.2.
Any changes in this IPS regarding the Municipality’s MNRI and MRI must be
communicated immediately in writing to ONE JIB.
3.2 Overview of Portfolios
The Municipality’s portfolios represent funds required for specific purposesavailable
to support Municipal needs. A high -level description of each of these portfolios and
their objectives is provided in Section 5 below. This IPS applies to the following
money of the Municipality, its agencies, boards and commissions including:
● MRI which is invested in Legal List Securities; and/or
● MNRI which is invested under the Prudent Investor Standard.
4. ROLES AND RESPONSIBILITIES
4.1 Role of ONE JIB
ONE JIB has been appointed by the Municipality in accordance with the
requirements of the Act and the Regulation and on the terms and conditions set out
in the ONE JIB Agreement (Appendix I).
ONE JIB exercises control and management of the Municipality’s MNRI and the
investments made by it in accordance with the objectives and risk tolerance
established in this IPS.
Among the responsibilities of ONE JIB are the following:
● Reviewing this IPS;
● Adopting and maintaining an Investment Plan that complies with this IPS;
● Engaging External Portfolio Managers, Custodians, administrators and other
investment professionals (Agents);
● Allocating the money and investments under its control and management
among External Portfolio Managers and their funds in compliance with this
IPS;
● Monitoring the performance of the OCIO Offering and Agents; and,
● Reporting to the Municipality.
The foregoing is subject to the more detailed terms and conditions contained in the
ONE JIB Agreement.
Commented [JG1]: Should there not be an OCIO role here?
Commented [LS2R1]: OCIO Managers are monitored by the
ONE JIB
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4.2 Role of Municipal Staff
This IPS is approved and adopted by Council with input from the Treasurer, and
from ONE JIB with respect to MNRI. MRI of the Municipality, andin addition to any
tThird-pParty tTrust fFunds, Designated Funds and Restricted Special Assets
referenced in Section 2.1, remain under the control and management of the
Treasurer.
Consistent with this IPS, the Treasurer is responsible for the implementation of the
investment program and the establishment of investment procedures which shall
include:
● Investment management of MRI and any tThird-pParty tTrust fFunds,
Designated Funds and Restricted Special Assets referenced in Section 2.1
by, or under the direction of, the Treasurer;
● The deposit or withdrawal of MNRI, under the explicit delegation of authority
regarding MNRI, and the investment thereof, to ONE JIB, which is
responsible for the control and management of such funds and investments;
and,
● A system of controls exercised by the Treasurer to regulate the activities of
Deputy Treasurers and Financial Management Advisors.
No person including, without limitation, ONE JIB, may engage in an investment
transaction except as provided under the terms of this IPS.
In the management of MRI of the Municipality, and any tThird-pParty tTrust fFunds,
Designated Assets and Restricted Special Assets referenced in Section 2.1, the
Treasurer may engage one or more agents and service providers. ONE Investment
can assist with the investment of the Municipality’s MRI, in Legal List Securities, and
with the investment of tThird-pParty tTrust fFunds, in accordance with the terms of
the applicable trust, if permitted, at the request of the Municipality.
4.3 Ethics and Conflicts of Interest
Individuals who are responsible for the Municipality’s Short-Term Portfolio shall
comply with the Municipality’s Conflict of Interest guidelines and any relevant
professional codes of conduct (e.g. the CPA Code of Professional Conduct).
ONE JIB, in its capacity as a joint municipal service board, in addition to being a
local board of each member Municipality is subject to a Code of Conduct as required
by the Municipal Act, 2001 (the “Act”). This Code of Conduct applies to the Chair
and the other Members of ONE JIB acting in their capacity as Members of ONE JIB.
5. INVESTMENT
5.1 MRI: Short-Term Money
The Municipality’s MRI is described in this IPS as Short-Term Money. Short-Term
Money consists of money that is needed to meet the short-term financial obligations
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of the Municipality coming due within 24 months from the date of receipt of such
money and are controlled and managed by the Treasurer.
5.1.1 Short-Term MoneyMRI: Investment Objectives
The main focus of the investment of MRI is cash management, and the interest
income generated by the investment of these monies contribute to municipal
revenues. To the extend possible, the Municipality shall attempt to match its
investments with anticipated obligations.
Capital Preservation is the paramount objective for MRI investments, and these
investments need to be highly liquid. Consequently, only high-quality investments
that are also Legal List Securities will be held in this portfolio. The Municipality may
invest in full liquid money market securities and deposit accounts. The Municipality
aims to maximize returns subject to the constraints set out in Part I of the
Regulation, as amended from time to time, with a view to preservice capital and to
further manage risk through diversification by issuer and credit quality.
The investment objectives, in the order of priority, for the Municipality for Short-Term
Money are:
● Compliance with Portfolio Restrictions: The legal authority to invest funds
comes from the Act. All investments acquired shall be in conformity with
portfolio restrictions and permissions set out in O. Reg. 438/97 – Eligible
Investments and Related Financial Agreements, as amended from time to
time. The Municipality shall not invest in a security that is expressed or
payable in any currency other than Canadian dollars.
● 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. Staff shall also endeavor to mitigate
credit and interest rate risk by: pre-qualifying the financial institutions,
brokers/dealers and advisors with which the Municipality does business;
diversifying the investment portfolio; structuring the investment portfolio so
that maturing securities meet ongoing cash flow requirements; and investing
operating funds primarily in shorter-term securities or approved liquid
investment pools.
● Maintenance of Liquidity: The investment portfolio shall remain sufficiently
liquid to meet all operating requirements that may be reasonably anticipated.
All non-equity investments shall be interest bearing in nature and equity
exposure will be limited to investments in the ONE Investment Program
equity funds. The Municipalities portfolio should be well staggered, using a
ladder approach which allows investments to mature at various times and
provides the Municipality the opportunity to build up the portfolio based on
market conditions/opportunities. A portion of the portfolio may be placed in
the ONE Investment Program, which offers compliance and liquidity.
● Maximization of the Rate of Return: The Investment Portfolio shall be
designed with the goal of maximizing the rate of return through budgetary
and economic cycles, considering the investment risk constraints and
liquidity needs. Staff will explore and utilize any eligible investment vehicles
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in building the Municipality’s investment portfolio. The investment portfolio
will be managed with prudent investor principles, to maximize returns within
established risk parameters. 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 Municipality’s cash flow requirements, will be
accepted. If the highest yielding bid is not selected, an explanation
describing the rationale shall be provided. 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 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.
5.1.2 Short-Term MoneyMRI: Eligible Investments
Short Term MoneyMRI may be invested in high quality, short-term investments that
are also Legal List Securities available from banks, dealers and other financial
institutions. Investments issued or guaranteed by approved institutions will be
permitted by this PolicyIPS, as deemed eligible by Ontario the Regulation 438/97 or
as authorized by subsequent provincial regulations.
5.2 MNRI: Long-Term Money
The Municipality’s MNRI is described in Section 3.2 as Long-Term Money 1. In
accordance with the ONE JIB Agreement and this IPS, ONE JIB has exclusive
control and management of the Long-Term Money2MNRI and the investments
made therewith.
From time to time, the Municipality may require money immediately to meet financial
obligations and may require ONE JIB to liquidate one or more investments in order
to generate money to meet those obligations. ONE JIB will select the investment(s)
to be liquidated. The timing of such liquidation will be determined by ONE JIB in
consultation with the Treasurer.
5.2.1 Long-Term MoneyMRI: Investment Objectives
In setting the objectives noted below, the Municipality has taken into account the
following considerations:
• Preservation of capital;
• Adequate liquidity that takes into account the needs of financial obligations
and reasonably anticipated budgetary requirements;
• Diversification by asset class, market, sector, issuer, credit quality and term
to maturity;
• Income and capital appreciation; and,
• Macro risks, such as inflation, economic growth and interest rates.
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Investment of MNRI is managed by ONE JIB in a way that balances investment
objectives, expected returns, and risk to evelop asset allocations that achieve the
Municipality’s financial objectives within stated risk tolerances. The municipality’s
investment objectives for its Long-Term Money (MNRI) can be achieved via
allocations to the Outcomes defined within the ONE JIB’s Outcome Framework. The
table below provides a summary of this framework.
Outcome
Category
Outcome Strategy Objective Risk Tolerance, Liquidity Investment Horizon
Cash Cash Preservation of Capital Low risk; high liquidity < 3 years
Stable
Return
Stable Return Income Generation; To
generate returns to fund
recurring needs
Moderate risk with
emphasis on growth and
stable returns, regular
liquidity
> 5 years (Perpetual)
Contingency Contingency Contributions for unexpected
and infrequent events
Higher risk; emphasis on
longer-term capital growth
with some liquidity
> 5 years (Perpetual)
Asset
Mgt
Reserves
Contributions
to generate
returns to
fund asset
management
reserves
Higher
risk;
emphasis
on
longer-
term
capital
growth
low
liquidity
> 10 years
(Perpetual)
Target Date Target Date 3-5 yrs Preservation of capital Low risk; high liquidity 3 – 5 years
Target
Date 5-10
yrs
Contributions
toward
capital
projects,
mitigate
inflation
impacts and
meet target
funding
requirements
Moderate
risk, liquid
5 – 10
years
Target
Date 10+
yrs
Contributions
toward
capital
projects,
mitigate
inflation
impacts and
meet target
funding
requirements
Higher
risk,
emphasis
on long-
term
inflation-
adjusted
growth
> 10 years
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13197104.14Investment Policy July 2025
Investment of long-term moneyMNRI is to be managed by ONE JIB, in a way that
balances the investment objectives, with a level of risk that is appropriate for the
municipality. The MNRI invested with ONE JIB will be broadly diversified to help
reduce the volatility of returns. Returns have an impact on revenues, as well as a
longer-term impact on future years’ budgets and should, at a minimum, keep pace
with inflation. To the extent possible, the Long-Term Money’s investment horizons
are aligned with the Municipality’s obligations and cash flow requirements and may
consist of liquid and non-liquid securities based on future cash flow requirements.
5.2.2 Long-Term MoneyMNRI: Eligible Investments
Eligible investments for Long-Term Money include any Pooled Fund or other
collective investment vehicle or institutional investment management product
sponsored approved or managedselected by ONE Investment for the Prudent
Investment Program (Prudent Investment Offering OCIO Offering), provided
always that the products and the selection of products comply in all material
respects with the IPS.
Additionally, nothing in this IPS prevents Long-Term MoneyMNRI from being held in
cash, short term money market instruments, or overnight deposits.
5.2.3 Long-Term MoneyMNRI: Sinking Funds
Not applicableSinking Funds are currently not applicable to the Municipality;
however, should any sinking funds be established in the future, they are to be
classified as MNRI and will be managed separately by ONE JIB.
5.2.4 Long-Term Money: Local Distribution Corporation (LDC) Securities
Not applicable to this Municipality.
5.2.5 Long-Term Funds: OtherRestricted Special Assets
Not applicable.With the exception of the Municipality’s investments held in the ONE
Investment Legal List Portfolios specified below, all existing assets, listed in
Schedule A of this IPS and held by the Municipality on the Prudent Effective Date,
shall be considered to be Restricted Special Assets, and shall not be held by ONE
JIB as MNRI. The Treasurer may choose to liquidate these investments and
determine that the proceeds are MNRI, to be invested as per this IPS and the
approved ONE JIB Investment Plan.
For certainty, Restricted Special Assets are not MNRI of the Municipality, and such
assets are not under the control or management of ONE JIB.
The ONE Investment Legal List Portfolio Investments, held by the Municipality, shall
be considered to be MNRI and transferred to ONE JIB to be invested as MNRI,
unless deemed by the Municipality to be MRI.
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13197104.14Investment Policy July 2025
5.3 Third Party Trust Funds and Designated Funds
Not applicable to this Municipality.
5.4 Investment Management
5.4.1 Investment Management of Short-Term MoneyMRI
The investment of Short-Term Funds shall be controlled and managed by the
Treasurer and his/her designate as documented in By-law #6212-19, Schedule “C”.
5.4.2 Investment Management of Long-Term MoneyMNRI
The investment of Long-Term MoneyMNRI shall be controlled and managed by
ONE JIB in accordance with this IPS and the ONE JIB Agreement.
Competent External Portfolio Managers shall be appointed by ONE JIB and they
shall enter into an agreement with ONE Investment that complies with this IPS and
Part II of the Regulation and provide compliance and performance reports. In
accordance with the applicable regulatory requirements, ONE JIB shall make any
External Portfolio Manager changes deemed in the best interest of the Municipality.
For each External Portfolio Manager, ONE Investment shall agree on a set of
operational guidelines including constraints, discretion limits, diversification and
quality standards, and performance expectations, which are documented in each
External Portfolio Manager’s guidelines.The selected Sub-Investment Manager shall
enter into an agreement with ONE Investment related to the OCIO Offering, that
complies with this IPS and Part II of the Regulation and will provide compliance and
performance reports to ONE JIB and ONE Investment. ONE JIB shall make any
investment management changes deemed in the best interest of the Municipality.
5.5 Transition to Prudent Investor Regime/ OCIO Offering
Until the Prudent Effective Date, the Municipality will continue to control and manage
its MRI, MNRI and investments in Legal List Securities. Some Legal List investments
were made with MRI and some with MNRI.
Upon and after the Prudent Effective Date, the control and management of money
and investments that are determined to be not required immediately shall be given
to ONE JIB. Nothing in this IPS requires that such investments need be liquidated or
disposed of. It is not contrary to this IPS for investments that the Municipality does
not require immediately to be held, and to continue to be held by ONE JIB, in
instruments such as term deposits, guaranteed investment certificates or principal
protected notes issued by a financial institution. They can be held to maturity and
invested upon receipt of cash proceeds.During the transition to the OCIO Offering
the Chair and Vice-Chair of ONE JIB have discretionary power to approve
temporary investments recommended by the Sub-Investment Manager that may not
be expressly described in this IPS but are, in the opinion of the Chair and Vice-
Chair, in the best interests of the Municipality and are entirely consistent with their
fiduciary obligations to the Municipality.
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13197104.14Investment Policy July 2025
Management of third-party trust funds and any designated funds is not directly
affected by the Prudent Effective Date.All MNRI that is not Third-Party Trust Funds,
Designated Fnds or Restricted Special Assets shall be provide to ONE JIB on the
Prudent Effective Date.
5.6 Investment Constraints
5.6.1 Environmental, Social and Governance (ESG) Investing
The Municipality supports ESG investing for Short-TermMRI and Long-Term
MoneyMNRI. The Town Municipality believes that well-managed companies are
those that demonstrate high ethical and environmental standards and respect for
their employees, human rights, and the communities in which they do business, and
that these actions contribute to long term financial performance.
For the investment of short-term fundsMRI will be done in compliance with the
investment objectives identified in section 5.1.1. Accommodating specific ESG
considerations may not be possible due to conflicts with the investment objectives.
The MunicipalityTown has chosen to monitor the developments of ESG factors and
will reconsider its approach to ESG investing for the Short-Term Portfolio as and
when appropriate to do so.
For the investment of Long-Term MoneyMNRI, ONE JIB is required to explore how
External Portfolio Managers are and consider how the OCIO is implementing
responsible investing principles at the time of hiring and during periodic reviews. It
may report on results periodically, if requested.
5.6.2 Securities Lending
For the investment of Short-Term MoneyMRI Ssecurities Llending is not permitted
through ONE Investment Program investments only.
For the investment of Long-Term FundsMNRI, the Municipality may invest in pooled
funds, and other investment funds that are managed by an External Portfolio
Managerthe Sub-Investment Manager who may engage in Securities Lending if the
policies of the External Portfolio ManagerOCIO permit such an action.
5.6.3 Derivatives
Derivatives may not be used for speculative purposesthe investment of MRI. They
may be used for the investment of Long-Term Money where they are fully covered
by a backing asset, e.g., as for currency or other hedging, to change portfolio
duration or in covered call strategies.
For the investment of MNRI, futures and forward contracts, options and other
derivative instruments may only be used to (a) create an asset mix position that
does not leverage the portfolio, (b) replicate the performance of a capital market
index, or (c) reduce risk as part of a hedging strategy.
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13197104.14Investment Policy July 2025
5.6.4 Use of Leverage
Nothing in this IPS prevents the use of leverage, provided it is prudent to do so.
Leverage is inherent in the use of certain types of investment strategies and
instruments. Where leverage is employed, ONE JIB (for MNRI) and the Treasurer
(for MRI) shall have in place monitoring procedures to manage overall exposure to
any counterparty. Leverage is not a strategy currently employed by ONE JIB but
may be considered at a later date.Leverages should not be exercised for speculative
purposes but may be used as a hedging tool.
5.6.5 Pooled Funds
All investment strategies may be pursued directly through holdings of corporate and
government issuers and indirectly via pooled funds and investment funds or any
combination thereof. The investment strategies may also include allocations to cash
or short-term investment vehicles.Investments in open-ended pooled funds, closed-
ended pooled funds, limited partnerships and other specialist corporate structures
(e.g. LLCs), are permitted provided that the assets of such funds are permissible
investments under this IPS or provided that any non-permitted investments are
disclosed by the Sub-Investment Manager. Within pooled funds, the External
Portfolio Manager’s policies will take precedence over this IPS.
5.6.6 Currency Hedging
The Short-Term PortfolioMRI Investment Portfolio will not utilize currency hedging.
The Municipality’s funding requirements are in Canadian dollars. However, some
exposure to foreign currencies in the Long-Term MNRI Investment Portfolio may be
advantageous to provide diversification and potentially enhance returns. Therefore,
it shall not be a violation of this IPS for investments in global mandates to be
unhedged, in whole or in part, where the diversification benefits embedded in the
currency exposure are considered to be beneficial or desirable by ONE JIB.
5.6.7 Alternative Asset Classes
The applicable legislation does not prevent the direct/indirect placement of the MNRI
in Alternative Asset Classes; this IPS restricts investments in alternative investments
for the purposes of management of MNRI under One JIB.
Alternative Asset Classes, such as infrastructure or real estate, may have
uncorrelated return characteristics with traditional Asset Classes that may improve
diversification within the portfolio, which may lead to better risk adjusted returns.
Typically, these investments may not be fully liquid and are only appropriate for
inclusion in portfolios with long investment horizons.
5.6.8 Prohibited Investments
Not applicable for this Municipality.
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13197104.14Investment Policy July 2025
5.7 Performance Monitoring, Rebalancing and Management
5.7.1 Short-Term MoneyMRI
For the investment of Short-Term MoneyMRI, Municipality staff will monitor the cash
flow needs of the Municipality on a periodic basis. Should the needs on the
Municipality no longer be met by the asset mix, staff will make changes, at the
discretion of the Treasurer, taking into consideration the Short-TermMRI Investment
objectives.
5.7.2 Long-Term MoneyMNRI
For the investment of Long-Term MoneyMNRI, ONE JIB shall establish parameters
for monitoring investments and rebalancing through policy or directly within the
investment plan.
Investments are expected to achieve returns at least equal to their benchmarks
measured over a rolling five-year period. At minimum, ONE JIB shall provide
reporting described in Section 6.6 7 that shows the Municipality’s holdings, declares
confirms compliance with this IPS and shows External Portfolio Managerreports on
the Sub-Investment Manager’s performance.
6. ADMINISTRATIVE POLICIES
6.1 Flow of Money and Annual Municipal Budget
6.1.1 Transfer to ONE JIB as Part of Annual Review Process
On an annual basis, as part of the Municipality’s Annual Review process, the
Municipality shall identify the amount, if any, of Long-Term MoneyMNRI that it
holds. Any Long-Term MoneyMNRI not already under the control and
management of ONE JIB shall be transferred to ONE JIB as soon as practicable.
6.1.2 Transfer to Municipality as Part of the Annual Review Process
On an annual basis, ONE JIB shall be notified by the Treasurer as to the amount, if
any, required by the Municipality from the Long-Term MoneyMNRI then under the
control and management of ONE JIB for the Municipality’s operational purposes.
Such amount shall be deemed to be Short-Term MoneyMRI and shall be returned to
the Municipality in a lump sum or by way of periodic payments, as directed by the
Treasurer.
6.2 Flow of Money Otherwise than through the Budget Process
6.2.1 Surplus Funds
The Short-Term FundsMRI captures revenues received by the Municipality during
each year after the approval of the Municipality’s budget for the year. Any amounts
deemed to be MNRI by the Treasurer at any such time during the year shall be
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13197104.14Investment Policy July 2025
transferred to ONE JIB to be under its management and control as Long-Term
MoneyMNRI. Amounts so transferred will be recorded annually in the Investment
Plan and allocated by ONE JIB in accordance with the Investment Plan.
6.2.2 Contingencies
The Treasurer is authorized, to direct ONE JIB to return any amounts determined by
the Treasurer to be required to meet expenditures for unexpected contingencies not
anticipated by the Municipality’s budget in force for that year, provided however that
the aggregate of the amounts to be returned to the Municipality under this Section
6.2.2 during the year shall not exceed 25% of the Long-Term MoneyMNRI under the
control and management of ONE JIB as at the date that the Municipality approved
its budget for the year (the Budgeted Long-Term MoneyMNRI). In determining the
Budgeted Long-Term MoneyMNRI for purposes of calculating the 25% limit, any
Long-Term MoneyMNRI to be transferred to the control and management of ONE
JIB in accordance with that year’s Annual Review pursuant to Section 6.1.1 shall be
included and any amount to be returned by ONE JIB to the Municipality pursuant to
Section 6.1.2 shall be excluded. ONE Investment should be made aware of material
transactions in advance to ensure the orderly sale of securities to fund withdrawals.
6.3 Valuation of Investments
Investments shall be valued according to the values provided by the Custodian(s).
For the investment of Long-Term MoneyMNRI, values of unitized vehicles shall be
valued according to the unit values published by the Custodian. Other investments
shall be valued at their market value when that is available from regular public
trading. If a market valuation of an investment is not available, then a fair value shall
be supplied by the External PortfolioSub-Investment Manager to the CustodianONE
Investment no less frequently than quarterly.
6.4 Voting Rights
Where External Portfolio Managers have been appointed, such External
PortfolioThe Sub-Investment Managers shall assume the responsibility of exercising
voting rights in respect of the Municipality’s MNRI and will report their voting policies
to ONE JIB annually. The Municipality may access these policies at any time.
6.5 Internal Controls
The Treasurer shall establish an annual process of review of all investments made
under this IPS. This review will provide internal control by assuring compliance with
governing legislation and with policies and procedures established by the Treasurer.
To the extent ONE JIB’s input is needed, these requirements will be communicated
in advance to ONE JIB.
6.6 Custodians
All municipal investments and assets of the investment portfolios shall be held by a
Custodian and any of the Custodian's sub-custodians or nominees. For Long-Term
MoneyMNRI, the Custodian shall be acceptable to ONE Investment.
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13197104.14Investment Policy July 2025
For Short-Term FundsMRI the following is a list of financial institutions authorized to
provide investment services to the Municipality. 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.
● Raymond James Ltd.
● Canaccord Genuity
● ONE Investment
6.7 Reporting
6.7.1 Short-Term MoneyMRI
For the investment of Short-Term FundsMRI, the Treasurer shall provide an annual
investment report to Council. The Investment report shall contain:
● A statement about the performance of the investments during the period
covered by the report;
● A statement by the Treasurer as to whether or not, in their opinion, all
investments are consistent with the investments policies and goals of the
Municipality;
● Listing of all investments by maturity date;
● Percentage of total portfolio that each type of investment represents; and
● Such other information that Council may request, or that the Treasurer may
consider pertinent.
6.7.2 Long-Term MoneyMNRI
The Regulation provides that ONE JIB shall submit an investment report to Council
in respect of the investment of Long-Term MoneyMNRI at least annually. This
report shall include the following.
● Investment performance during the period covered by the report;
● Asset mix of the total portfolio;
● A listing of individual investments held at the fund level at the end of the
reporting period showing, where appropriate book value, market value,
realized/unrealized gains/losses and actual income received;
● A list of all transactions including the security name, trade date, and the
purchase and/or sale price;
● A statement by the Treasurer as to whether all investments were made in
accordance with the IPS and as to whether all investments were made in
accordance with the Investment Plan; and
● Any other pertinent information in the opinion of the Treasurer.
All securities invested on behalf of the Municipality by ONE JIB or with the
assistance of ONE Investment shall be held for safekeeping in the name of the
Municipality by a Custodian.
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13197104.14Investment Policy July 2025
7. APPROVAL, SUBSEQUENT MODIFICATIONS AND EFFECTIVE DATE
7.1 Revocation / Amendment of Previous Investment Policy
This policy replaces any existing investment policy of the Municipality, in its entirety,
and all previous investment policies are revoked and repealed.
7.2 Modifications to the IPS
At least annually Council shall review the IPS and update it, if required. In the
course of reviewing the IPS, Council may request comments from the Treasurer with
respect to the investment of Short-Term MoneyMRI and from ONE JIB with respect
to the investment of Long-Term MoneyMNRI.
Following the Council’s review of the IPS, ONE JIB shall review the Investment Plan
and update it, if required.
At a minimum, the annual review will consider:
● the adequacy of funding for capital works;
● the Municipality’s ability to reduce other spending;
● flexibility of the timeframe to payout; and
● sensitivity to loss.
7.3 Effective Date
This IPS is adopted by Council of the Municipality effective DATE TBD. The
Treasurer is directed to sign a copy of this IPS to evidence approval and to deliver a
copy of this IPS to ONE JIB.
Signed by:
Treasurer
Date
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13197104.14
Schedule A
Restricted Special Assets
Other
Nesbitt Burns (Bank of Montreal)
• BMO Step-up Note (Mat Aug 24, 2031) $500,000
• BMO Accrual Note (Mat July 2, 2030) $1,134,000
• BMO Canadian Equity PP Dep Note S379 (Mat Mar 22, 2030) $2,000,000
• BMO Canadian Equity PP Dep Note S391 (Mat Nov 16, 2028) $747,000
• BMO Growth PP Dep Note S421 (Mat June 24, 2030) $750,000
• BMO PPN CAD Equity S622 (Mat Sept 22, 2031) $2,000,000
• BMO S&P/TSX Comp Cpn Dep Note S9 (Mat April 5, 2027) $1,750,000
• National Bank GIC (Mat Aug 23, 2027) $1,000,000
• BMO Accrual Note (Mat Sept 1, 2027) $1,000,000
• City of Toronto Bond (Mat Nov 9, 2029) $233,574.12
• BMO Step-up Note (Mat Mar 12, 2031) $4,000,000
• BMO Step-up Note (Mat Aug 13, 2031) $3,000,000
• City of Toronto Green Bond (Mat Sept 24, 2029) $794,400
Woods Gundy (CIBC)
• BMO Accrual Note (Mat Aug 17, 2036) $5,000,000
• CIBC Coupon Dep Note (Mat July 9, 2031) $1,500,000
• BNS Canadian Banks PPN (Mat May 5, 2031) $1,000,000
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13197104.14Investment Policy July 2025
Schedule B
Third-Party Trust Funds and Designated Funds
Third-Party Trust Funds
None
Designated Funds
None
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13197104.14Investment Policy July 2025
Appendix I: ONE JIB Agreement
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13197104.14
Appendix II: ONE External Portfolio Manager Mandates
Page 55 of 63
13197104.14Investment Policy July 2025
Schedule A
Third Party Trust Funds and Designated Funds
Third Party Trust Funds
1. None
Designated Funds
2. None
Page 56 of 63
100 John West Way
Aurora, Ontario
L4G 6J1
(905) 727-3123
aurora.ca
Town of Aurora
Memorandum
Finance
Re: Financial Risk Assessment – Possible US Tariffs
To: Finance Advisory Committee
From: Jason Gaertner, Manager, Financial Management Services
Date: April 15, 2025
Recommendation
1. That the memorandum regarding the Financial Risk Assessment of Possible US
Tariffs be received; and
2. That the Finance Advisory Committee comments regarding the Financial Risk
Assessment of Possible US Tariffs be received and referred to staff for consideration
and further action as appropriate.
Background
On January 20, 2025, a new United States of America (US) administration was sworn in.
The new government immediately adopted an aggressive stance toward its trading
partners, including Canada, threatening to deploy punishing tariffs on goods entering its
country.
Firstly, a reciprocal tariff and a retaliatory tariff are essentially the same. A reciprocal
tariff already exists; in this instance, the negatively impacted trading partner decides to
introduce its own tariff that matches the tariff currently levied on its exports. A
retaliatory tariff is a brand-new tariff that a trading partner levies on another’s goods
coming into its country. The economic effects of both these tariff types are exactly the
same.
After two previous false starts, on March 4 the US proceeded with its implementation of
a retaliatory tariff of 25 percent across the board on all Canadian and Mexican goods,
with the exception of Canadian energy and critical minerals (oil, gas, and potash) to
which a 10 percent tariff was applied. In response, Canada imposed its own 25 percent
tariff on a specified list of US goods totaling $30 billion which would be expanded to a
larger group of products totalling $155 billion in 21 days time should the trade war with
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Financial Risk Assessment – Possible US Tariffs
April 15, 2025 Page 2 of 7
the US continue. Further, the US increased its previously implemented across the board
retaliatory tariff on all Chinese good entering its country from 10 to 20 percent. In
response, China has implemented its own tariffs of up to 15 percent on select US good
imports. Trump exempted all Canada-United States-Mexico Agreement (CUSMA)
eligible goods from these tariffs, representing approximately 40 percent of Canadian
goods that are imported to the US.
On March 12, 2025, President Trump implemented a further retaliatory tariff of 25
percent on all imported steel and aluminium. In response, multiple impacted countries
such as China, the EU and Canada implemented further tariffs on select US good
imports. In particular, Canada extended its 25 percent tariff to $29.8 billion of additional
US good imports.
On April 3, 2025, the United States implemented reciprocal tariffs on all of its trading
partners. The degree of tariff impact was determined by the US’ perception of each
trading partner’s barriers to the import of US goods. Firstly, a baseline reciprocal tariff of
10 percent will be applied to all US trading partners with the exception of any countries
that are part of the CUSMA free trade agreement being Canada and Mexico. These
baseline tariffs were escalated for select trade partners who the US believes are taking
the greatest advantage of the United States. Any escalated reciprocal tariffs took effect
on April 9, 2025. It was noted that these reciprocal taxes would not ‘stack’ on top of the
25 percent retaliatory tariffs on steel & aluminium and automobiles.
It was also reaffirmed that the previously implemented retaliatory tariffs on non-CUSMA
eligible goods for Canada, Mexico and China would continue. Should these tariffs be
lifted for Canada and Mexico, these same goods would instead be subject to a 12
percent reciprocal tariff. However, China’s reciprocal tariff would stack on top of the
previously implemented retaliatory tariff of 20 percent bringing its total general good
impact to 54 percent.
In addition, the US implemented a retaliatory tariff of 25 percent on all automobiles
imported into the country on April 3, 2025. These tariffs are applicable only to the
portion of an automobile that is not US made; for example, if a Canadian assembled
automobile contains 40 percent US made parts, then only 60 percent of the vehicle’s
value would be subject to this tariff. The US has also announced that it intends to
implement a retaliatory tariff of 25 percent on all non-US made automobile part imports
on May 3, 2025. In response to this tariff, Canada has implemented a reciprocal tariff of
an equivalent value on all non-CUSMA compliant US automobile imports.
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Financial Risk Assessment – Possible US Tariffs
April 15, 2025 Page 3 of 7
President Trump also signaled to US trading partners his intent to implement retaliatory
tariffs on copper, pharmaceuticals, semi-conductors and lumber.
On February 25 Town of Aurora Council adopted a bylaw to amend the Town’s
Procurement By-law to protect the Town from trade treaty partners who are not acting
in good faith, while also supporting Canadian sourced procurements and suppliers.
The Finance Advisory Committee requested that staff undertake a Financial Risk
Assessment of the financial impacts to the Town of a trade war with the United States.
Analysis
US imposed tariffs on its trading partner goods that it imports will result in an indirect
financial impact to the Town, while Canadian imposed tariffs on US good imports will
have a direct financial impact.
US imposed tariffs will only impact the Town should it purchase a US good which itself
or its inputs have previously been subject to a US tariff. Further, any tariffs arising from
the consumption of Canadian energy in the construction or transport of a US good will
also have an indirect financial impact on the cost of US sourced goods to the Town. It is
assumed that any incremental costs due to tariffs will be passed onto the end
purchaser of a US good through its sticker price. Should an imported US good be
subject to a Canadian tariff, this cost would be added to that good’s sticker price.
Potential Town good purchases that may be impacted by tariffs
Table 1 presents a summary of applicable categories of goods that may be impacted by
retaliatory or reciprocal tariffs should the Town purchase them from the US directly
through a US vendor, or indirectly through a 3rd party Canadian vendor.
This table also estimates the possible degree of ‘tariff stacking’ that may occur further
inflating the cost of these goods to the Town. Potential tariff stacking is indicated by
more than one tariff type with a ‘yes’ for a possibly impacted good category. For
example, the inputs into the creation of US building materials may come from Canada
and the production/shipment of these products may use Canadian energy whose import
would be subject to US tariffs; in addition, the import of these finished US goods into
Canada would be subject to a Canadian tariff. It is assumed that all of these
incremental tariff costs will be passed onto the Town as the potential end purchaser of
these goods.
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Financial Risk Assessment – Possible US Tariffs
April 15, 2025 Page 4 of 7
Table 1
Potential Town Goods Impacted by Tariffs
Possible Impacted
Good
US Tariffs
CDN
Tariffs CDN
Goods
CDN
Energy
Mexican
Goods
Chinese
Goods
Reciprocal
Tariffs (All
Countries)
Building materials No Yes No No No Yes
Appliances No Yes No No No Yes
Manual / power hand
tools
No Yes No Yes Yes Yes
Oil and gasoline No Yes No No No No
Machinery &
Equipment
No Yes No No Yes Yes
Vehicles (all sizes) Yes Yes Yes No Yes Yes
IT equipment No Yes No Yes No No
Water Infrastructure No Yes No No No No
Clothing No Yes No Yes Yes Yes
Steel & Aluminum Yes Yes No No No Yes
Sports Equipment No Yes Yes Yes No Yes
Cast-iron products Yes Yes No Yes No Yes
Other Electronics No Yes No Yes Yes Yes
Electric Vehicles Yes Yes Yes No No Yes
Trucks Yes Yes Yes No No Yes
The financial impact of tariffs on the cost of US goods will depend upon the extent of
foreign inputs into each good’s production and the degree to which these foreign inputs
are subject to tariffs. The larger the number of foreign inputs subject to US tariffs, the
greater the effect of tariff stacking will be on the good’s sticker price. US good costs
may be further inflated by any retaliatory or reciprocal Canadian tariffs that the imported
US good is subject to. The far-right column reflects the currently imposed Canadian
tariffs upon each applicable good category; the bottom two rows of US goods may
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Financial Risk Assessment – Possible US Tariffs
April 15, 2025 Page 5 of 7
become subject to Canadian tariffs within 21 days should the US tariffs still be in place
at this time.
The general applicable categories of goods to the Town for which a Canadian tariff of
25 percent has been applied to date include:
All building materials (lumber, all bathroom fixtures)
All lighting fixtures
All appliances (stoves, refrigerators, washing machines, water heaters)
Manual / power hand tools (drills, saws, sanders)
All furniture
All clothing
Some equipment (HVAC, riding lawn mowers, chain saws, snow blowers)
Tires
Envelopes / printed material
Other Electronics
Steel
Aluminium
Should the US tariffs remain after 21 days, this list may grow to include the following
additional applicable US goods that will be subject to a 25 percent tariff:
Electric vehicles
Trucks
This list may be expanded further should Canada decide to respond to the US’ recently
announced automobile tariffs.
Early staff assessments have identified that the greatest potential financial impact to
the Town as a result of the trade war will be to its purchase of vehicles and vehicle parts
(all sizes and types), oil & gasoline and machinery & equipment. Further, in
consideration that approximately 25 percent of all municipal building supplies are
supplied from the US, it is anticipated that the Town’s building material costs will be
subject to inflationary pressures as a result of the trade war as well.
Further, the recently implemented 25 percent US retaliatory tariff and Canadian
reciprocal tariff on automobiles, steel and aluminium are expected to have a material
financial impact on the cost of vehicles and building supplies to the Town. Also, US
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Financial Risk Assessment – Possible US Tariffs
April 15, 2025 Page 6 of 7
reciprocal tariffs on assembled electronics and their components will very likely raise
the town’s costs for its IT equipment in particular.
An extended trade war will negatively impact the country’s overall economy
An extended trade war will negatively impact the country’s overall economy. Stagflation
is likely to result, upon which the usual Bank of Canada monetary levers will be
ineffective. Stagflation is defined as a period over which the economy experiences slow
to negative growth, high unemployment, and rising prices. It is anticipated that job
losses will occur across multiple sectors of the economy. The Bank of Canada predicts
that any extended trade war will result in a structural recession; meaning the economy
will not bounce back like it did after the pandemic. It will take time for the economy to
restructure itself to its new reality.
The Canadian and US stock markets have lost trillions in dollars of value to date in the
early days of this trade war. The S&P 500 has dropped by 10 percent. This market
decline is a further indicator that a recession is looming.
Any resultant economic contraction and increasing prices may result in Aurora citizens
experiencing challenges in paying their bills. The degree of impact will be heavily
dependent upon the US and Canadian tariffs imposed and the duration that they remain
effect.
It is anticipated that a trade war with the US will negatively affect the Canadian dollar’s
exchange rate
The Canadian dollar fell by close to 10 percent versus the US dollar commencing on the
date of the President’s announcement of US tariffs on Canadian goods. This event
offered an early indication of the impact that tariffs may have on the Canadian
exchange rate should the trade war continue over an extended period.
A reduced Canadian dollar exchange rate will result in savings for US producers for who
import Canadian components in the creation of their products which will help to
mitigate some of their tariff costs that may be passed onto its consumers via the US
good’s sticker price but is unlikely.
Further, a deteriorated exchange rate will effectively erode the Canadian dollar’s
purchasing power of imported goods and services resulting in further imported good
price inflation in addition to tariff driven inflation.
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Financial Risk Assessment – Possible US Tariffs
April 15, 2025 Page 7 of 7
Possible financial risk mitigation strategies
As tariffs and a weak exchange rate are expected to result in significant price inflation
of imported goods, the Town must strive to mitigate this risk. The best strategy that the
Town can deploy is to avoid this risk all together through minimizing its need to
purchase imported goods wherever possible. Some risk avoidance strategies might
include:
Explore the purchase of comparable alternatives that are available domestically,
or perhaps from a tariff friendly country
Delay the purchase of goods or any major Town facility construction project until
such time tariffs are lifted, if possible
Strive to collaborate with all applicable stakeholders such as York Region and
other municipalities, Aurora Economic Development Corporation, and the Aurora
Chamber of Commerce, to leverage local expertise and resources.
Legal Services and Procurement review existing contracts and add protective
measures to new agreements to help safeguard against tariff-related price
surges (underway)
Amend the Town’s procurement bylaw to support Canadian procurement and
provide greater flexibility to respond to tariff-related expenses (completed on
February 25)
With regard to the anticipated overall economic impacts of an extended trade war, both
the federal and provincial governments have announced multiple supporting mitigating
financial strategies.
Attachments
None
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