MAPLETON – Council here authorized township staff to enter into an agreement with a co-mingled investment initiative, ONE Investment Program (OIP), on July 9.
Formed in 1993 by Municipal Finance Officers’ Association (MFOA) and Association of Municipalities of Ontario (AMO), OIP offers municipalities and broader Ontario public sectors more competitive rates of return on investments.
The program offers four investment options and a high-interest savings account while also providing no fees or penalties for investment or redemption at any time.
The minimum investment or redemption for any portfolio is $5,000.
“It would provide a more comfortable option, should we engage, in terms of looking at determining better options for our surplus funds,” explained director of finance John Morrison.
“As you can see with this group, they have banded together some larger municipalities and have developed some expertise in terms of dealing with the legislation.”
Currently, most of the township’s surplus funds are earning interest at 2.2% in an RBC Bank account.
According to a report prepared by Morrison, “At this time, with the given market conditions, RBC has no other investment options that offered a higher return for the cash on hand other than a locked GIC (guaranteed investment certificate) for four years at 2.26%.”
Other investment options offered by RBC that could offer higher returns fall outside of legislation, the report states.
By pooling their money, OIP members, including the City of Barrie and the Town of Whitby, “have gone out into the investment community and obtained better rates,” Morrison told council.
“If you looked at some of the returns as late as April they are doing the same thing with their pooled monies and they are getting 2.4%.”
He added, “They have obviously struck a better deal with one of their banks in order to get that kind of rate and the reason they would be able to do it is they simply have more money than the Township of Mapleton does and that’s why we would be engaging them.”
Morrison said examples of surplus funds the township could invest in the OIP could be cemetery trust funds and money set aside for restrictive purposes, such as its environmental service reserve fund.
Councillor Dennis Craven compared the OIP to an individual investing in mutual funds.
“So someone like me with hardly any money to invest at all, very little, could I compare it to me investing in mutual funds?” asked Craven.
Morrison clarified that an individual would be able to make more money through mutual funds, but the idea would effectively be the same.
Though council gave the go ahead for the program, it will meet in August to discuss the township’s investment policy and what money it wants to invest in the OIP.
“The council should see this as a two-step process; the first is to allow the township to enter into an agreement with this body. The second step would be what we are going to discuss in August, which would be the revision of our investment policy,” said Morrison.
The earliest the township would likely invest money into the program would be September.