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City of Cleveland Codified Ordinances, Chapter #179
PART ONE — ADMINISTRATIVE CODETitle XIII — Fiscal ManagementChapter 179 — Sinking FundComplete to June 30, 2007
CROSS REFERENCES
Sinking Fund Commission, Charter § 110
Sinking Fund, RC 739.01, 5705.09
Receipt of moneys from sale of bonds and notes, CO 177.08
Records of bonds and notes issued by City, CO 177.12
As used in this chapter, the following terms shall have the following meanings:
(a) "Sinking Fund": the Sinking Fund provided for in this chapter, which constitutes the Bond Retirement Fund of the City required by RC 5705.09(C).
(b) "Sinking Fund Commission": the commission consisting of the Mayor, the Director of Finance, and the President of the Council, established pursuant to Section 110 of the Charter of the City of Cleveland to manage and control the Sinking Fund in the manner provided by ordinance and by general law to the extent not provided by ordinance.
(c) "Escrow Agent": the agent designated by the Sinking Fund Commission pursuant to Section 179.02 for the purposes set forth in this chapter.
(d) "Debt Charges": the principal of and call premium, if any, and interest on general obligation bonds or notes of the City.
(e) "Voted Obligations": general obligation bonds of the City authorized by vote of the electors and notes issued in anticipation of such bonds.
(f) "Unvoted Tax Supported Obligations": general obligation bonds of the City, not authorized by vote of the electors, and notes issued in anticipation of such bonds, other than Self-Supporting Obligations, payable from ad valorem property taxes levied within the limitations provided by law, irrespective of whether such bonds or notes are secured by other receipts of the City in addition to such ad valorem property taxes, and including any such general obligation bonds, and notes issued in anticipation of such bonds, which are not or cease to be Self-Supporting Obligations.
(g) "Self-Supporting Obligations": general obligation bonds of the City, and notes issued in anticipation of such bonds, issued for permanent improvements (as defined in RC 133.01) which constitute or are part of an Enterprise of the City, to the extent that the City's Self-Supporting Revenues from such Enterprise are sufficient and available to meet the annual debt charges on such bonds issued or to be issued for the purposes of such Enterprise. "Voted Self-Supporting Obligations" are Self-Supporting Obligations which are Voted Obligations; "Unvoted Self-Supporting Obligations" are all other Self-Supporting Obligations.
(h) "Self-Supporting Revenues": the annual income to the City, including charges, prices, fees, and rentals, from the operation or ownership of an Enterprise, after deducting therefrom the City's annual cost of operation and maintenance (other than depreciation) of such Enterprise and any payments or deposits required to be made by the City under any ordinance, trust indenture, trust agreement or other agreement which pertains to revenue or mortgage revenue bonds or notes issued for the purposes of such Enterprise or which otherwise creates a prior pledge or lien on such income for payments of any obligations other than debt charges on general obligation bonds or notes of the City.
(i) "Enterprise": a water system, electric power or distribution system, airports, or ports, or any motor vehicle parking system, solid waste collection, disposal, or recovery system or other facility, or group or system of facilities, determined to be an enterprise for purpose of this chapter pursuant to an ordinance authorizing the issuance of Self-Supporting Obligations for the purposes of such system or facility.
(j) "Ten-Mill Limitation": the ten-mill limitation defined in RC 5705.02.
(Ord. No. 944-96. Passed 6-10-96, eff. 6-19-96)
For the purposes set forth in this chapter, the Sinking Fund Commission shall designate as Escrow Agent a bank incorporated under the laws of this State or for the United States which has its principal office in the State of Ohio and which has a reported capital and surplus of not less than $100,000,000.00. The Sinking Fund Commission shall select the Escrow Agent by soliciting proposals and receiving bids and shall designate as Escrow Agent the bank which satisfies the requirements set forth in the preceding sentence of this section and which the Sinking Fund Commission determines to have submitted the lowest and best proposal. The Sinking Fund Commission shall enter into a written contract with the Escrow Agent, which contract shall incorporate by reference this chapter and applicable provisions of ordinances providing for the issuance or securing of bonds or notes. The Sinking Fund Commission may at any time designate a successor Escrow Agent in accordance with the provisions of this section. The provisions of Chapter 127 with respect to depositaries and the deposit of moneys of the City with depositaries shall not apply to the Escrow Agent or the deposit with the Escrow Agent of moneys for the credit of Sinking Fund accounts.
(Ord. No. 1748-80. Passed 10-8-80, eff. 10-8-80)
The following accounts shall be established for the Sinking Fund:
(a) Voted Obligations Account to be held for and applied solely to the payment of debt charges on Voted Obligations;
(b) Unvoted Tax Supported Obligations Account to be held for and applied solely to the payment of debt charges on Unvoted Tax Supported Obligations (other than the payment of principal on bond anticipation notes except for the amount of such notes required to be retired pursuant to RC 133.22 if such notes are outstanding for more than five (5) years);
(c) Unvoted Self-Supporting Obligations Account to be held for and applied solely to the payment of debt charges on Unvoted Self-Supporting Obligations; and
(d) Unvoted Bond and Note Redemption Account to be held for and applied solely to the payment of debt charges and accrued interest on unvoted general obligation bonds, and notes issued in anticipation of such bonds, which are to be retired from the proceeds of the issuance of renewal notes, or bonds or refunding bonds, or from special assessments or other monies transferred for such purposes.
The Sinking Fund Commission may from time to time establish sub-accounts within any of the accounts of the Sinking Fund described in subsections (a) through (d) of this section, provided that each such sub-account shall be for a purpose or purposes within the purposes of such account and shall not be inconsistent with any other provision of this chapter, or any ordinance authorizing the issuance of bonds or notes.
(Ord. No. 944-96. Passed 6-10-96, eff. 6-19-96)
Upon designation of the Escrow Agent pursuant to Section 179.02, the Sinking Fund Commission shall transfer to and deposit with the Escrow Agent all moneys and investments held in the Sinking Fund or in any other fund of the City for the payment of debt charges on Voted Obligations, Unvoted Tax Supported Obligations, and Unvoted Self-Supporting Obligations, and shall direct that such moneys and investments be credited to the following accounts:
(a) All such moneys and investments derived from collections of ad valorem property taxes levied outside the ten-mill limitation for the then current budget year shall be credited to the Voted Obligations Account;
(b) All such moneys and investments derived from collection of ad valorem property taxes within the ten-mill limitation for the then current budget year shall be credited to the Unvoted Tax Supported Obligations Account;
(c) All such moneys and investments held for the payment of debt charges on voted Self-Supporting Obligations shall be credited to the Voted Obligations Account;
(d) All such moneys and investments held for the payment of debt charges on Unvoted Self-Supporting Obligations shall be credited to the Unvoted Self-Supporting Obligations Account; and
(e) All such moneys and investment which represent the proceeds of renewal notes or bonds or refunding bonds, special assessments, or other moneys to be applied to the payment of debt charges on unvoted general obligation bonds, and notes issued in anticipation of such bonds, shall be credited to the Unvoted Bond and Note Redemption Account.
Upon the designation of any successor Escrow Agent pursuant to Section 179.02, the moneys and investments of the Sinking Fund, including each such account, shall be transferred promptly to such Successor Escrow Agent.
(Ord. No. 944-96. Passed 6-10-96, eff. 6-19-96)
In addition to the deposit of moneys and investments to the Voted Obligations Account required by subsections (a) and (c) of Section 179.04, the Sinking Fund Commission shall deposit or cause to be deposited with the Escrow Agent revenues to be credited to the Voted Obligations Account as follows:
(a) The Sinking Fund Commission shall instruct the County Auditor of Cuyahoga County that, upon each distribution or advance of ad valorem property taxes to the City (including payments pursuant to RC 321.24(F) and 323.156), the County Auditor shall issue a separate warrant to the Escrow Agent to be credited to the Voted Obligations Account, which warrant shall represent the portion of such distribution or advance allocable to levies outside the ten-mill limitation for payment of debt charges on Voted Obligations.
(b) The Sinking Fund Commission shall deposit or cause to be deposited with the Escrow Agent for the credit of the Voted Obligations Account, such revenues (including Self-Supporting Revenues), other than revenues derived from levies of ad valorem property taxes, which are to be applied to the payment of debt charges on Voted Obligations pursuant to ordinances providing for the issuance or securing of Voted Obligations, tax budgets, appropriation measures, or law; provided, however, that the Sinking Fund Commission shall deposit or cause to be deposited with the Escrow Agent such Self-Supporting Revenues for the credit of the Voted Obligations Account only if and to the extent available after application of the Self-Supporting Revenues of an Enterprise to the payment of all debt charges on unvoted general obligations issued for such Enterprise by deposit thereof with the Escrow Agent for the credit of the Unvoted Self-Supporting Obligations Account.
(Ord. No. 1748-80. Passed 10-8-80, eff. 10-8-80)
In addition to the deposit of moneys and investments to the Unvoted Tax Supported Obligations Account required by subsection (b) of Section 179.04, the Sinking Fund Commission shall deposit or cause to be deposited with the Escrow Agent revenues to be credited to the Unvoted Tax Supported Obligations Account as follows:
(a) The Sinking Fund Commission shall instruct the County Auditor of Cuyahoga County that, upon each distribution or advance of ad valorem property taxes to the City (including payments pursuant to RC 321.24(F) and 323.156), the County Auditor shall issue a separate warrant to the Escrow Agent to be credited to the Unvoted Tax Supported Obligations Account, which warrant shall represent the portion of such distribution or advance allocable to levies within the ten-mill limitation for payment of debt charges on Unvoted Tax Supported Obligations.
(b) The Sinking Fund Commission shall deposit or cause to be deposited with the Escrow Agent for the credit of the Unvoted Tax Supported Obligations Account such revenues, other than Self-Supporting Revenues and revenues derived from levies of ad valorem property taxes, which are to be applied to the payment of debt charges on Unvoted Tax Supported Obligations pursuant to ordinances providing for the issuance or securing of bonds or notes, tax budgets, appropriation measures, or law.
(Ord. No. 1748-80. Passed 10-8-80, eff. 10-8-80)
In addition to the deposit of moneys and investments to the Unvoted Self-Supporting Obligations Account required by subsection (d) of Section 179.04, the Sinking Fund Commission shall deposit or cause to be deposited with the Escrow Agent for the credit of the Unvoted Self-Supporting Obligation Account the Self-Supporting Revenues to the extent necessary to pay debt charges on Unvoted Self-Supporting Obligations pursuant to ordinances providing for the issuance or securing of Unvoted Self-Supporting Obligations, tax budgets, appropriation measures, or law.
(Ord. No. 1748-80. Passed 10-8-80, eff. 10-8-80)
In addition to the deposit of moneys and investments to the Unvoted Bond and Note Redemption Account required by subsection (c) of Section 179.04, the Sinking Fund Commission shall deposit or cause to be deposited with the Escrow Agent for the credit of the Unvoted Bond and Note Redemption Account: any proceeds from the issuance of unvoted general obligation bonds or revenue or mortgage revenue bonds, or notes issued in anticipation of such bonds, which are to be used for the purpose of retiring, renewing, or refunding such bonds or notes; any other money transferred for such purpose; and any proceeds from cash payments or advance payments of special assessments in anticipation of which bonds or notes were issued.
(Ord. No. 63410-A. Passed 9-22-24)
Note: Former section 179.09 was repealed by Ord. No. 944-96, passed 6-10-96, eff. 6-19-96.
With respect to any deposit with the Escrow Agent of revenues which the Sinking Fund Commission is required to make or cause to be made to various Sinking Fund accounts pursuant to Sections 179.05 through 179.08, inclusive, the Sinking Fund Commission shall make such deposits or cause such deposits to be made in such amounts and at such times (pursuant to ordinances providing for the issuance or securing of bonds or notes where applicable provision is made) to allow for the payment of debt charges from such accounts in the amounts and at the times required by the ordinances and agreements pertaining to the various obligations for the payment of the debt charges on which such accounts are respectively held. The Escrow Agent shall, at the times and in the amounts required by such ordinances and agreements, make disbursements from the appropriate Sinking Fund accounts to the paying agents responsible for the payment of debt charges on the various obligations.
(Ord. No. 944-96. Passed 6-10-96, eff. 6-19-96)
The Sinking Fund Commission shall not authorize, and the Escrow Agent shall not make, any transfer from any Sinking Fund account to any other Sinking Fund account or to any other fund except for (a) the transfer of funds in the Reserve Account to the Unvoted Tax Supported Obligations Account and the Unvoted Self-Supporting Obligations Account in connection with the elimination of the Reserve Account, and (b) in the event there are no longer outstanding any obligations for the payment of debt charges on which a Sinking Fund account is held, then the Sinking Fund Commission may authorize and instruct the Escrow Agent in writing to transfer the balance in such account to any other Sinking Fund account.
(Ord. No. 944-96. Passed 6-10-96, eff. 6-19-96)
(a) Subject to the restrictions set forth in this section, the Sinking Fund Commission shall, by written instruction, direct the investment by the Escrow Agent of moneys credited to the various Sinking Fund accounts. The Sinking Fund Commission shall authorize and the Escrow Agent shall effect the investment of moneys credited to the Sinking Fund accounts only in the following obligations:
(1) Direct obligations of the United States of America or obligations, the timely payment of the principal of and interest on which is fully guaranteed by the United States of America;
(2) Certificates of deposit, demand deposits or time deposits of any state bank or trust company or national banking association, including the Escrow Agent or any affiliate of the Escrow Agent, which is a member of the Federal Deposit Insurance Corporation (FDIC), (including any investment in pools of those certificates of deposit, demand deposits or time deposits owned by the bank, trust company or national banking association), provided that any such certificate of deposit, demand deposit or time deposit is
(A) Continuously and fully insured by FDIC, or
(B) Issued by an entity that has (or guaranteed by an entity's parent holding company that has) either unsecured, unguaranteed and uninsured commercial paper rated in the highest rating category, or unsecured, unguaranteed and uninsured long-term obligations rated in the third highest or higher rating category, by a rating service or agency that maintains a rating on obligations of the City payable from any of the Sinking Fund accounts, or
(C) Fully secured, to the extent not insured by FDIC, by obligations of the type described in paragraph (1) above (i) that have a market value at all times at least equal to the uninsured principal amount of the deposit, (ii) that are held by the Escrow Agent (except in case of a certificate of deposit, demand deposit or time deposit of the Escrow Agent) or any Federal Reserve Bank or depository of the United States of America, as custodian for the institution issuing the deposit, together with the undertaking of such institution, in form satisfactory to the Escrow Agent, that the aggregate market value of the obligations securing such deposit at all times will be maintained in an amount meeting the requirements of this subparagraph (C), and (iii) in which the Escrow Agent has a prior perfected first lien and which are not subject to any third-party claims;
(3) Repurchase agreements collateralized by securities described in paragraph (1) above with any registered broker/dealer under the jurisdiction of the Securities Investors' Protection Corporation or any state bank or trust company or national banking association, including the Escrow Agent, if such broker/dealer, bank or trust company has (or its parent holding company has, if it provides a guarantee of the obligation) unsecured, uninsured and unguaranteed commercial paper rated in the highest rating category, or unsecured, uninsured and unguaranteed long-term obligations rated in the third highest or higher rating category, by a rating service or agency that maintains a rating on obligations of the City payable from any of the Sinking Fund accounts, provided that:
(A) A master repurchase agreement or specific written repurchase agreement governs the transaction,
(B) The securities are held by the Escrow Agent or an independent third party acting solely as agent for the Escrow Agent free and clear of any lien, and such third party is (i) a Federal Reserve Bank, or (ii) a bank that is a member of the FDIC and that has combined capital, surplus and undivided profits of not less than $50,000,000, and the Escrow Agent shall have received written confirmation from such third party that it holds such securities, free of any lien, as agent for the Escrow Agent,
(C) A perfected first security interest in such securities under the Uniform Commercial Code or book entry procedures prescribed by federal regulations, is created for the benefit of the Escrow Agent (as demonstrated by an opinion of counsel upon which the Escrow Agent may rely as to perfection and priority),
(D) The repurchase agreement has a term of 30 days or less, or the Escrow Agent will value the collateral securities no less frequently than once every seven days and will liquidate the collateral securities if any deficiency in the required collateral percentage is not restored within two business days of such valuation,
(E) The fair market value of the securities in relation to the amount of the repurchase obligation, including principal and interest, is equal to at least 100%;
(4) Investment contracts (which term shall not include repurchase agreements) fully collateralized by securities described in paragraph (1) above, with an institution that has (or its parent holding company has, if it provides a guarantee of the obligation) either unguaranteed and uninsured commercial paper rated in the highest rating category, or unsecured, unguaranteed and uninsured long-term obligations rated in the third highest or higher rating category, by a rating service or agency that maintains a rating on obligations of the City payable from any of the Sinking Fund accounts;
(5) Obligations of any state of the United States of America or any political subdivision of any state, other than the City, for the payment of which the full faith and credit of the state or political subdivision is pledged, provided that such obligations are rated in the second highest or higher rating category by a rating service or agency that maintains a rating on obligations of the City payable from any of the Sinking Fund accounts; and
(6) Investments in the pooled investment program established in the custody of the Treasurer of the State pursuant to Section 135.45 of the Ohio Revised Code for investment of money by political subdivisions of the State.
(b) With respect to moneys credited to any Sinking Fund account, the Sinking Fund Commission shall authorize and the Escrow Agent shall effect the investment of such moneys only in obligations which shall mature (or be redeemable at the option of the holder) at such times and in such amounts as to allow the Escrow Agent to make all required payments of debt charges from such account in a timely manner.
(c) In order to fulfill the Escrow Agent's duty under Section 179.10 to make disbursements from the various Sinking Fund accounts in the amounts and at the times required for the payment of debt charges from such accounts, the Escrow Agent shall, if and to the extent necessary for that purpose, sell or redeem any investment held to the credit of any such account from which such a disbursement is to be made, and the Escrow Agent may do so without any further authorization by the Sinking Fund Commission, the City, or any officer of the City.
(d) The income from any investment made pursuant to this section (including interest, proceeds from sale or redemption, and other income) shall be credited to the Sinking Fund account for which such investment was made.
(e) To prevent bonds or notes issued by the City from becoming "arbitrage bonds" under Section 103(c) of the Internal Revenue Code and regulations promulgated thereunder, the Sinking Fund Commission shall, from time to time as necessary for that purpose, authorize and instruct the Escrow Agent in writing to (1) restrict the yield received on the investment of moneys held in any Sinking Fund account or earnings thereon, and (2) take other actions consistent with the provisions of this chapter with respect to the application of such moneys or earnings thereon.
(Ord. No. 944-96. Passed 6-10-96, eff. 6-19-96)
The Escrow Agent shall promptly notify the Sinking Fund Commission in writing of all deposits to the credit of any Sinking Fund account, all disbursements and transfers from any Sinking Fund account, all investments of moneys in any Sinking Fund account, and all sales or redemptions of such investments. In addition the Escrow Agent upon request of the Sinking Fund Commission, shall furnish the Sinking Fund Commission with a statement of the current balances in each of the Sinking Fund accounts. Such notices and statements shall be furnished to other parties as may be required by any ordinance authorizing the issuance of bonds or notes.
(Ord. No. 1748-80. Passed 10-8-80, eff. 10-8-80)
(a) The Sinking Fund Commission shall keep a full and detailed statement of the City's outstanding obligations and shall furnish such a statement to the Council at least once a year, which statement, together with information regarding annual receipts and disbursements, investments, and investment income of the various Sinking Fund accounts, shall be published in any annual report published by the City.
(b) On or before the first Monday in May in each year, the Sinking Fund Commission shall submit to Council a budget, setting forth in itemized form the amount of money needed in the following year for the required payments of debt charges in that year from the various Sinking Fund accounts and for the operating expenses of the Sinking Fund Commission, including the cost of the Escrow Agent and of any trustee for bonds or notes payable from the Sinking Fund. Council shall include such amount in the annual City budget which the City must submit to the County Auditor pursuant to RC Chapter 5705.
(c) On or before November 15th of each year, the Sinking Fund Commission shall submit an estimate of the amount of money needed in the following year for the required payments of debt charges in that year from the various Sinking Fund accounts and for the operating expenses of the Sinking Fund Commission, including the cost of the Escrow Agent and of any trustee for bonds or notes payable from the Sinking Fund. Such amount shall be included in the Mayor's annual appropriation request and the City's appropriation measures.
(Ord. No. 1748-80. Passed 10-8-80, eff. 10-8-80)
With respect to any transfer or deposit of moneys, investments, or revenues which this chapter requires the Sinking Fund Commission to make or cause to be made for the credit of any account of the Sinking Fund, the Director of Finance, the Treasurer, the Commissioner of Accounts, the Administrator of the Division of Taxation, and all other appropriate officials and employees of the City shall take all actions necessary and appropriate to effect such transfer or deposit.
(Ord. No. 1748-80. Passed 10-8-80, eff. 10-8-80)
(a) The Sinking Fund Commission shall consist of the Mayor, the Director of Finance, and the President of Council. The Mayor shall be the President, and the Director of Finance shall be the Secretary of the Sinking Fund Commission. The members of the Sinking Fund Commission shall serve as such without compensation.
(b) The Sinking Fund Commission shall appoint an Assistant Secretary and may also appoint such other employees as may from time to time be necessary for the conduct of the business of the Sinking Fund Commission.
(Ord. No. 1748-80. Passed 10-8-80, eff. 10-8-80)
(a) The Sinking Fund Commission shall hold meetings on such dates and at such times as the Sinking Fund Commission may from time to time determine and may, at each such meeting, perform all such duties and functions and take all such actions which this chapter and any ordinance authorizing the issuance of bonds or notes authorizes the Sinking Fund Commission to perform and take. All meetings of the Sinking Fund Commission shall be open to the public. The Sinking Fund Commission may adopt rules consistent with this chapter for the calling of and conduct of business at such meetings.
(b) The Secretary (or, in his absence, the Assistant Secretary) of the Sinking Fund Commission shall act as Secretary of all meetings of the Sinking Fund Commission and shall make a written record of the proceedings thereat. The Secretary shall maintain and be the custodian of such records and shall cause such records to be open to the public for inspection at all reasonable times.
(Ord. No. 1748-80. Passed 10-8-80, eff. 10-8-80)
The Secretary of the Sinking Fund Commission may, on behalf of and pursuant to authorization by the Sinking Fund Commission, take all actions which the Sinking Fund Commission is required or authorized to take under this chapter other than designation of the Escrow Agent or a successor Escrow Agent pursuant to Section 179.02 (including, without limitation, causing deposits to be made with the Escrow Agent for the Credit of Sinking Fund accounts, establishing sub-accounts in the Sinking Fund, authorizing transfers from Sinking Fund accounts, and authorizing and instructing the Escrow Agent as to investments of moneys in Sinking Fund accounts), and the Secretary may do so without the prior authorization of specific actions by the Sinking Fund Commission; provided that the Secretary shall make a written record of all such actions and shall maintain such records with the records of the Sinking Fund Commission in accordance with Section 179.17(b), and provided further that the Secretary shall take no action pursuant to this section which is contrary to or inconsistent with any resolution, instruction, or other action of the Sinking Fund Commission.
(Ord. No. 1748-80. Passed 10-8-80, eff. 10-8-80)
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