INVESTMENT OF CITY FUNDS AND MUNICIPAL BONDS (2-32-515 et seq.)

Municipal Code of Chicago tit. 2, ch. 2-32, art. VI

in effect

Municipal Code of Chicago § 2-32-515 Investment policy.

2-32-515 Investment policy. The Treasurer shall adopt a written investment policy which shall address the safety of the principal, liquidity of funds and return on investment. The policy shall be consistent with the provisions of this Code pertaining to investments. Subject to the requirements of this section, the Treasurer may amend the written policy from time to time. Copies of the written policy and any amendments thereto shall be kept on file with the City Clerk and the Comptroller, and shall be submitted annually, or if amended, no later than 30 days after such amendment, to the Chairman of the City Council Committee on Finance and the Chief Financial Officer. The written investment policy shall include material, relevant, and decision-useful sustainability factors to be considered by the Treasurer in evaluating investment decisions, including, but not limited to: (1) corporate governance and leadership factors; (2) environmental factors; (3) social capital factors; (4) human capital factors; and (5) business model and innovation factors, as provided under the Illinois Sustainable Investing Act, 30 ILCS 238/1, et seq. The written investment policy shall include a list of the top companies that are coal, oil, and gas reserve owners, ranked by the potential carbon emissions embedded in their reserves, which shall be updated by the Treasurer, at least annually. The Treasurer shall annually report to the Committee on Finance any changes, or whether there have been no changes, to the list. The Treasurer shall not invest any City funds in securities or other obligations of the companies on the list and shall divest from all securities or other obligations of the companies on the list, as soon as practicable or in accordance with the written investment policy. (Added Coun. J. 1-11-05, p. 40561, § 2; Amend Coun. J. 1-15-20, p. 12834, § 1; Amend Coun. J. 3-23-22, p. 45824, § 1)

Municipal Code of Chicago § 2-32-520 Authorized investments.

2-32-520 Authorized investments. The Comptroller and Treasurer jointly shall have authority to use any and all funds in the City treasury which are set aside for use for particular purposes and not immediately necessary for such purposes, for the purchase of the following classes of investments: (a) Interest-bearing general obligations of the United States and the State of Illinois; (b) United States treasury bills and other non-interest bearing general obligations of the United States or United States government agencies when offered for sale at a price below the face value of same, so as to afford the City a return on such investment in lieu of interest; (c) Tax anticipation warrants, municipal bonds, notes, commercial paper or other instruments representing a debt obligation issued by the City of Chicago; (d) Commercial paper which: (1) at the time of purchase, is rated in the two highest classifications by at least two accredited ratings agencies; and (2) matures not more than 270 days after the date of purchase; (e) Reverse repurchase agreement if: (1) the term does not exceed 90 days; (2) the maturity of the investment acquired with the proceeds of the reverse repurchase agreement does not exceed the expiration date of the reverse repurchase agreement; and (3) at the time of purchase, the total amount of the reverse repurchase agreements held in all funds does not exceed 5 percent of the total holdings across all funds. Reverse repurchase agreements may be transacted with primary dealers and financial institutions, provided that the City has on file a master repurchase agreement; (f) Certificates of deposit of banks or savings and loan associations designated as municipal depositories which are insured by federal deposit insurance or demand deposits in banks or savings and loan associations designated as municipal depositories which are insured by federal deposit insurance; provided that any amount of the deposit in excess of the federal deposit insurance shall be either: (1) fully collateralized at least 100 percent by: (i) marketable United States government securities marked to market at least monthly; (ii) bonds, notes, or other securities constituting the direct and general obligation of any agency or instrumentality of the United States; or (iii) bonds, notes or other securities constituting a direct and general obligation of any county, township, city, village, incorporated town, municipal corporation, or school district of the State of Illinois or of any other state, or of any political subdivision or agency of the State of Illinois or of any other state which are rated in either the AAA or AA rating categories by at least two accredited ratings agencies and maintaining such rating during the term of such investment; or (2) secured by a corporate surety bond issued by an insurance company licensed to do business in Illinois and having a claims-paying rating in the top rating category as rated by a nationally recognized statistical rating organization and maintaining such rating during the term of such investment; or (3) fully collateralized at least 100 percent by an irrevocable letter of credit issued in favor of the City of Chicago by the Federal Home Loan Bank, provided that the Federal Home Loan Bank's short-term debt obligations are rated in the highest rating category by at least one accredited ratings agency throughout the term of the certificate of deposit or deposit; (g) Bankers acceptance of banks whose senior obligations, at the time of purchase, are rated in either the AAA or AA rating categories by at least two accredited ratings agencies; (h) Tax-exempt securities exempt from federal arbitrage provisions applicable to investments of proceeds of the City's tax-exempt debt obligations; (i) Domestic money market mutual funds regulated by and in good standing with the Securities and Exchange Commission; provided that such money market mutual funds' portfolios are limited to investments authorized by this section; (j) Any other suitable investment instrument permitted by state laws governing municipal investments generally, subject to the reasonable exercise of prudence in making investments of public funds; (k) Except where otherwise restricted or prohibited, a non-interest-bearing savings account, non-interest-bearing checking account or other non-interest bearing demand account established in a national or state bank, or a federal or state savings and loan association, when, in the determination of the Treasurer, the placement of such funds in the non-interest bearing account is used as compensating balances to offset fees associated with that account that will result in cost savings to the City; (l) (1) Bonds of companies with assets exceeding $500,000,000 that, at the time of purchase, are rated investment grade by at least two accredited ratings agencies. Investments authorized by this subsection (1) shall, at the time of purchase, not exceed 35 percent of the total holdings across all funds (with no more than 35 percent of the total portfolio authorized by this subsection (l)(1) invested in any one market sector, out of a total market sector pool consisting of finance, energy, technology, consumer products, manufacturing, healthcare and transportation) and the maturity shall not exceed 30 years; (2) Bonds authorized by subsection (l)(1) where the principal is guaranteed with underlying assets such as bonds, currencies, and commodities. Bonds authorized by this subsection (l)(2) shall, at the time of purchase, not exceed 5 percent of the total holdings across all funds; (m) Debt instruments of international financial institutions, including but not limited to the World Bank and the International Monetary Fund, that, at the time of purchase, are rated within 4 intermediate credit ratings of the United States sovereign credit rating by at least two accredited ratings agencies, but not less than an A- rating, or equivalent rating. Investments authorized by this subsection (m) shall, at the time of purchase, not exceed 10 percent of the total holdings across all the funds, including principal and interest, and the maturity shall not exceed 10 years. For purposes of this subsection (m), an "international financial institution" means a financial institution that has been established or chartered by more than one country and the owners or shareholders are generally national governments or other international institutions such as the United Nations; (n) United States dollar denominated debt instruments of foreign sovereignties that, at the time of purchase, are rated within 4 intermediate credit ratings of the United States sovereign credit rating by at least two accredited ratings agencies, but not less than an A- rating or equivalent rating. The investments authorized by this subsection (n) shall, at the time of purchase, not exceed 10 percent of the total holdings across all funds, and the maturity shall not exceed 30 years; (o) Interest-bearing bonds of any county, township, city, village, incorporated town, municipal corporation, or school district, of the State of Illinois, of any other state, or of any political subdivision or agency of the State of Illinois or of any other state, whether the interest earned thereon is taxable or tax-exempt under federal law. The bonds shall be registered in the name of the City or held under a custodial agreement at a bank. The bonds shall be rated, at the time of purchase, not less than A-, or equivalent rating, by at least two accredited rating agencies with nationally recognized expertise in rating bonds of states and their political subdivisions. The bonds authorized by this subsection shall, at the time of purchase: (1) not have a maturity of more than 30 years from the date of purchase; and (2) not exceed 25 percent of the total holdings across all funds; provided that bonds linked to infrastructure projects shall not exceed 5 percent of the total holdings across all funds; (p) Bonds registered and regulated by the Securities and Exchange Commission and for which the full faith and credit of the State of Israel is pledged for payment; provided that the bonds have an A- rating or above or equivalent rating by at least two accredited ratings agencies. The bonds authorized by this subsection (p) shall, at the time of purchase, not exceed 1 percent of the total holdings across all funds, and the maturity shall not exceed 30 years; (q) Bonds, notes, debentures, or other similar obligations of agencies of the United States; (r) Interests in the CCCF as established by Section 2-32-622 of this Code that inure to the benefit of neighborhood economic development and which, in the aggregate, generate returns that are commensurate with the City's overall investment portfolio returns; provided that the amount of City funds invested in interests in the CCCF pursuant to this subsection shall not exceed the limits specified in Section 2-32-622(e) of this Code. (1) For the purposes of this subsection, the following definitions shall apply: "Annual Limit" shall mean the positive difference, if any, between the actual amount of investment earnings for the prior year on funds in the Corporate Fund not subject to Other Investment Restrictions and the budgeted amount of such investment earnings. "Eligible Funds" shall mean: (1) any funds in the Corporate Fund and/or in the Service Reserve and Concession Fund which are not subject to Other Investment Restrictions as determined jointly by the Comptroller and the Treasurer; and (2) any funds in the Corporate Fund or in the Service Reserve and Concession Fund, in either case which are subject to Other Investment Restrictions but only to the extent permitted by the applicable Other Investment Restrictions. Eligible Funds shall not include any proceeds of City debt obligations or any monies in any City enterprise fund. "Other Investment Restrictions" shall mean restrictions on eligible investments for City funds pursuant to federal law, state law, City ordinances (other than this section), or existing City contracts as determined jointly by the Comptroller and the Treasurer. (2) Commencing in 2020, in each year, Eligible Funds may be transferred to the CCCF from time to time, provided that the aggregate amount of such transfers during a year shall not exceed the Annual Limit for such year. All securities so purchased, excepting the bonds authorized in subsection (o), investments authorized in subsection (r) and tax anticipation warrants, municipal bonds, notes, commercial paper or other instruments representing a debt obligation of the City purchased under subsection (c), shall show on their face that they are fully payable as to principal and interest, where applicable, if any, within 30 years from the date of purchase. Except as provided in subsection (l)(2), neither the Comptroller nor Treasurer shall have authority, without the approval of the City Council, to (i) invest in financial agreements whose returns are linked to or derived from the performance of some underlying asset such as bonds, currencies or commodities, or (ii) borrow against or otherwise obligate City investments for the purpose of investment, other than for purposes of a security lending transaction conducted under Section 2-32-575. (Prior code § 7-41; Amend Coun. J. 1-11-91, p. 28759; Amend Coun. J. 7-29-92 p. 19377; Amend Coun. J. 12-21-94, p. 63416; Amend Coun. J. 11-5-03, p. 9539, § 1; Amend Coun. J. 11-7-07, p. 12472, § 1; Amend Coun. J. 11-3-10, p. 103032, § 1; Amend Coun. J. 10-5-11, p. 7950, § 1; Amend Coun. J. 11-15-12, p. 40470, § 1; Amend Coun. J. 2-5-14, p. 73625, § 1; Amend Coun. J. 9-24-15, p. 4761, § 1; Amend Coun. J. 11-16-16, p. 38042, Art. X, § 1; Amend Coun. J. 9-6-17, p. 54180, § 1; Amend Coun. J. 7-21-21, p. 32715, § 1)

Municipal Code of Chicago § 2-32-525 Minimum credit quality.

2-32-525 Minimum credit quality. Exclusive of investments made pursuant to Section 2-32-520(r), the total holdings across all funds held by the Treasurer shall have no less than an overall average rating of Aa or equivalent rating without regard to any refinement or gradation of rating category by numerical modifier or otherwise on a quarterly basis. (Added Coun. J. 9-24-15, p. 4761, § 1; Amend Coun. J. 11-16-16, p. 38042, Art. X, § 1; Amend Coun. J. 7-21-21, p. 32715, § 2)

Municipal Code of Chicago § 2-32-530 Investments from particular funds.

2-32-530 Investments from particular funds. Whenever it is deemed advisable by the comptroller and treasurer jointly to invest a particular fund, or any portion thereof, in any of the securities provided for by this chapter, or when the same is ordered by the city council, the comptroller and treasurer may make such investment for and on account of such particular fund. In such event the interest, when it becomes due, and the principal, when the same matures and is collected, shall be turned over to the credit of such particular fund so invested. To the extent that any such particular fund is so invested, it shall not share in the pro rata distribution of interest which may accrue to the aggregate of the funds used for the purchase of securities as herein provided for; provided, however, that such particular fund, as to the surplus which may remain therein after such investment, shall be entitled to its pro rata share of the interest which may accrue to the aggregate of the funds used as aforesaid. (Prior code § 7-42)

Municipal Code of Chicago § 2-32-540 Investments from aggregate of funds.

2-32-540 Investments from aggregate of funds. Any securities that may be in the custody of the city treasurer as a result of purchases made with monies of any particular funds, may be held by the treasurer as an investment from the aggregate of funds available in the city treasury, in accordance with the provisions of this chapter, if the comptroller and treasurer jointly deem it advisable to so change the ownership of same or any portion thereof. In case such change is so determined upon, the particular fund originally invested shall be credited with the amount of the principal and accrued interest up to the date of the transfer of the ownership of such securities from the particular fund to the aggregate of funds in the city treasury. (Prior code § 7-43)

Municipal Code of Chicago § 2-32-550 Investments in tax warrants.

2-32-550 Investments in tax warrants. In all cases where warrants in anticipation of taxes have been duly authorized and the comptroller shall find it necessary or expedient to sell them, or any portion thereof, the comptroller may turn such tax warrants over to the treasurer. Thereupon the treasurer shall purchase the same out of the aggregate of funds held in the city treasury to the extent that such may be invested without reducing the balance on hand below the amount immediately necessary to meet warrants drawn on the city treasury in the regular course of business. (Prior code § 7-44)

Municipal Code of Chicago § 2-32-570 Custody of securities.

2-32-570 Custody of securities. All securities purchased under the authority herein granted, unless resold or canceled and reissued for purposes of resale as herein provided for, shall be held in the custody of the treasurer until the principal and interest shall have been entirely paid and placed to the credit of the various funds or the particular fund from which the money has been withdrawn as authorized by this chapter. (Prior code § 7-45)

Municipal Code of Chicago § 2-32-575 Lending securities.

2-32-575 Lending securities. (a) The comptroller and city treasurer jointly may lend securities in the city treasury to a borrower upon such terms and conditions as may be mutually agreed in writing. Such agreement shall provide that during the period of the loan the city shall retain the right to receive, or collect from the borrower, all dividends, interest rights, or any distributions to which the city would have otherwise been entitled. The transfer of the securities shall be through a lending agent which is an approved municipal depository pursuant to Section 2-32-400. (b) The borrower shall deposit with the city treasurer as collateral for such loan cash or United States government securities equal to 102 percent of the market value of the securities at the time the loan is made, and shall increase the amount of collateral when the comptroller and the city treasurer request an additional amount because of a subsequent increase in the market value of the securities. (c) The period for which the securities may be lent shall not exceed one year, and the loan agreement may specify early termination by either party upon mutually agreed conditions. (d) The lending agent shall have the authority to invest the collateral on behalf of the city. Investment by the lending agent of the collateral shall not be subject to the restrictions of Section 2-32-520; provided however, that investment of the collateral shall be limited to investments approved by the comptroller and city treasurer in accordance with sound and prudent investment policies. (Added Coun. J. 11-5-03, p. 9539, § 1)

Municipal Code of Chicago § 2-32-580 Sale of securities.

2-32-580 Sale of securities. The comptroller and city treasurer may sell a security prior to maturity at such price that the comptroller and city treasurer shall deem advisable including at, above or below the purchase price of the security when in the determination of the comptroller and city treasurer the sale of the security is necessary to: (1) ensure sufficient amount of money on hand when the balance of cash in the city treasury has for any reason become less than the amount necessary for immediate use; (2) enhance the overall portfolio yield; (3) minimize further erosion and loss of investment principal; or (4) minimize the city's exposure to market and credit risks. The city treasurer shall cooperate with the comptroller in the cancellation and reissue of tax warrants sold in such a way that no duplication thereof shall take place. (Prior code § 7-46; Amend Coun. J. 11-7-07, p. 12472, § 1)

Municipal Code of Chicago § 2-32-590 Municipal bonds - Comptroller's endorsements.

2-32-590 Municipal bonds - Comptroller's endorsements. By the endorsement of the comptroller upon any bonds of the city payable to bearer, when presented for that purpose by the owner, such bonds shall become payable only to the party named in such endorsement, his assignees or legal representatives, anything on the face of such bonds to the contrary notwithstanding. The affidavit of the party presenting any such bonds, or his authorized agent or attorney, to the effect that he is the owner thereof, shall be sufficient evidence to the comptroller of such ownership. The endorsement of the comptroller may be in the following form: By virtue of the act of the general assembly of Illinois, the ordinances of the City of Chicago, and the consent of (A. B.) the owner of this bond, this bond is made payable only to said (A. B.), his assignees or legal representatives, anything on the face hereof to the contrary notwithstanding. (C. D.) Comptroller. (Prior code § 7-47)

Municipal Code of Chicago § 2-32-600 Municipal bonds - Repurchase conditions and procedures.

2-32-600 Municipal bonds - Repurchase conditions and procedures. The comptroller and treasurer shall have authority to repurchase municipal bonds, notes, commercial paper or other instruments representing a debt obligation of the city. The comptroller and treasurer are hereby authorized to use, for the purpose of making such repurchases, money out of any fund set aside for use for some particular purpose that is not immediately necessary for that purpose. Instruments repurchased under this section may be canceled or may be held in the custody of the city treasurer as provided in this chapter. (Prior code § 7-48; Amend Coun. J. 11-5-03, p. 9539, § 1)

Municipal Code of Chicago § 2-32-610 Treasurer's reviews and reports.

2-32-610 Treasurer's reviews and reports. (a) The treasurer shall conduct a review on a monthly basis of the current total holdings across all funds, including cash positions; portfolios, mark to market valuations; credit quality for each security; and additional compliance issues. (b) The treasurer shall, on or before the first day of February of each year, submit a report to the city council that details the performance of the total holdings across all funds held by the treasurer's office, including asset allocation, cash position and overall credit quality as of December 31 of the preceding year. (c) The treasurer shall, on or before the first day of February of each year, submit a report to the city council on the written investment policy for compliance as of December 31 of the preceding year, and present any recommendations for changes. (Added Coun. J. 9-24-15, p. 4761, § 1) Editor's note – Coun. J. 11-5-03, p. 9539, § 1, repealed former § 2-32-610, which pertained to repurchased bonds – custody and disposition.

Municipal Code of Chicago § 2-32-615 Training.

2-32-615 Training. Those persons under the supervision of the Treasurer who are authorized to execute investment transactions shall attend at least one investment training session within twelve (12) months after assuming their duties and shall receive not less than ten (10) hours of instruction relating to investment responsibilities during a two-year period that begins on the first day of the City's fiscal year following the initial ten (10) hours of instruction and consists of the two consecutive fiscal years after that date. The Treasurer is authorized to engage an independent third party with no preexisting contractual relationship with the Treasurer's office to provide this training, which shall include education in investment controls, security risks, market risks, diversification of investment portfolio and compliance with applicable laws. Any failure to comply with this Section 2-32-615 shall not invalidate any investment transaction undertaken by any person under the supervision of the Treasurer. (Added Coun. J. 11-16-16, p. 38042, Art. X, § 1)

Municipal Code of Chicago § 2-32-620 Comptroller - Authority to perform treasurer's securities duties when.

2-32-620 Comptroller - Authority to perform treasurer's securities duties when. If a vacancy exists in the office of city treasurer or the treasurer is absent from the city or otherwise incapacitated to perform his duties the comptroller and the mayor or either of them alone shall have authority to perform the functions of the comptroller and treasurer jointly in the purchase, repurchase, sale or resale of any securities or the investment of city funds as provided in Sections 2-32-520 to 2-32-610, inclusive. (Prior code § 7-49.1)

Municipal Code of Chicago § 2-32-622 Neighborhood economic development investments - Chicago Community Catalyst Fund.

2-32-622 Neighborhood economic development investments - Chicago Community Catalyst Fund. (a) Establishment. An investment vehicle is hereby established to be known as the Chicago Community Catalyst Fund (the "CCCF") into which City funds may be invested as described in Section 2-32-520(r) and this section. (i) The Treasurer, the Chief Financial Officer, the Comptroller, and the Corporation Counsel are each authorized and directed to take such steps, including the expenditure of duly appropriated funds, as may be necessary to provide organizational, governance, and administrative structure to the CCCF as a separate legal entity and to register, to the extent required, the CCCF as a qualified investment vehicle for the receipt and investment of both City and private investment funds. (ii) The transfer of City funds to the CCCF shall be conditioned upon adherence to this section. (iii) Prior to the CCCF's initial investment of monies in any Investment Fund (as defined in subsection (f) below), the Treasurer shall issue a report to the City Council on the organizational and administrative structure of the CCCF. (iv) The CCCF shall not issue debt on behalf of the City. (b) Purpose. The purpose of the CCCF is: (i) To invest its funds in one or more Investment Funds which will in turn invest their funds in businesses or organizations ("Project Investments") to achieve one or more of the following goals in the 77 community areas designated in Section 1-14-010 of this Code (the "Community Areas"): (1) sustain local economic growth: (2) support improvements to public infrastructure; (3) stimulate job creation and development; (4) catalyze commercial, residential and industrial growth and development in economically underserved Community Areas; (5) increase attractiveness for job creation and retention; and (6) increase accessibility for Community Areas to capital funding. (ii) To enable investment funds from other investors ("Other Investors") to be invested in one pooled investment vehicle to increase the overall amount of capital available for economic development throughout the City. (iii) To generate returns commensurate with the City's overall investment portfolio returns. (c) Governance. (i) The CCCF shall be directed and administered by a Board of Directors (or managers) (the "Board") that consists of seven (7) voting members ("Voting Members") chaired by the Treasurer. The Voting Members shall include, ex-officio, the Treasurer, the Chief Financial Officer, and the Commissioner of Planning and Development (collectively, the "Ex Officio Voting Members"). Four (4) additional Voting Members shall be appointed as follows: the Treasurer shall submit a list of ten (10) recommended Board members to the Mayor. Such recommended Board members shall have substantial expertise and experience in one or more of the following areas: oversight and management of investments: asset management; community loan fund or microfinance investing; economic development: social impact investing; infrastructure; and transactional experience related to investing. The Mayor shall in his sole discretion identify and appoint the CCCF's four (4) additional Voting Members. In making his appointments, the Mayor shall not be limited to, but shall give due consideration to, the individuals on the list submitted by the Treasurer. The Mayor's appointments shall be subject to approval by the City Council. The number of Voting Members may increase as necessary to include future Other Investors ("Investor Voting Members") of the CCCF as determined by the Board. Investor Voting Members shall be confirmed by a majority vote of the Voting Members which shall include any Investor Voting Members previously confirmed at a meeting in which a quorum is present as designated in the CCCF's bylaws. The total number of Voting Members may increase to a maximum of thirteen (13) to include such Investor Voting Members. Investor Voting Members shall serve for the duration of their investment with the CCCF. The Voting Members, excluding Ex Officio Voting Members and Investor Voting Members, initially appointed pursuant to this subsection (c) shall serve for the following terms as directed in the CCCF's bylaws: two members for a term commencing with the date of appointment of such members and ending on December 31, 2018; and two members for a term commencing with the date of appointment of such members and ending on December 31, 2019. Thereafter, Voting Members, excluding Ex Officio Voting Members and Investor Voting members, shall serve for a term of three years. Voting Members, excluding Ex Officio Voting Members and Investor Voting Members, may be re- appointed by the Mayor but such re-appointment shall be approved by the City Council. Each Voting Member appointed pursuant to this subsection (c) will serve until his or her successor is duly qualified and appointed. In the event of any vacancy in the position of any Voting Member (excluding Ex Officio Voting Members and Investor Voting Members), such vacancy shall be filled using the procedure described in the second paragraph of this subsection (c). Any appointment and associated City Council approval of Voting Members subsequent to the appointment of the initial Voting Members shall occur within one year of any vacancy created. Voting Members will not receive a salary for their service on the Board and will be compensated only for reasonable out-of-pocket expenses. Voting Members, excluding Ex Officio Voting Members and Investor Voting Members, will be subject to removal for cause by the Mayor. (ii) A non-voting Advisory Board shall also be established that shall consist of seven (7) members (the "Advisory Board Members"). The Advisory Board shall consist of three (3) members of the City Council, selected by that body (the "City Council Advisory Board Members"), and four (4) other members, appointed by the Board by majority vote at a meeting in which a quorum of Voting Members is present. The Advisory Board Members, excluding City Council Advisory Board Members, shall serve for the following terms as directed in the CCCF's bylaws: two members for a term commencing with the date of appointment of such members and ending on December 31, 2018; and two members for a term commencing with the date of appointment of such members and ending on December 31, 2019. Thereafter, Advisory Board Members, excluding City Council Advisory Board Members, shall serve for a term of three years. Each Advisory Board Member appointed pursuant to this subsection (c) will serve until his or her successor is duly qualified and appointed. In the event of any vacancy in the position of any Advisory Board Member (excluding City Council Advisory Board Members), such vacancy shall be filled using the procedure described in the immediately preceding paragraph above. If at any time any City Council Advisory Board Member shall cease to be a member of the City Council, his or her term as a City Council Advisory Board Member shall also cease and a member of the City Council shall be appointed to serve the remainder of such City Council Advisory Board Member's term. The members of the Advisory Board shall be representative of the diversity of the Community Areas. The Advisory Board shall provide guidance to the Board to ensure that the CCCF's investment strategy remains aligned with its original purpose. (iii) The Board shall adopt bylaws setting forth the CCCF's governance and administration by majority vote of the Voting Members at a meeting in which a quorum is present. (d) Conflict of interest. (i) Any Voting Member or Advisory Board Member who has a Financial Interest in any entity (an "Affiliated Entity") that is being considered by the CCCF to receive funds from the CCCF (whether directly as an Investment Fund or indirectly as a Project Investment), shall recuse himself or herself from any vote or debate of the Board regarding such Affiliated Entity. For purposes of this section, the term "Financial Interest" shall be defined as an interest held in an Affiliated Entity by such Voting Member or Advisory Board Member that is valued or capable of valuation in monetary terms with a current value of more than $1,000. All Voting Members and Advisory Board Members owe the CCCF a fiduciary duty (with the Ex Officio Voting Members having a primary fiduciary duty to the City), and accordingly are strictly prohibited from making decisions or recommendations on behalf of the CCCF for personal financial gain; provided, however, that this prohibition shall not apply to any personal financial gain of an Investor Voting Member arising from the investment in the CCCF of the funds of such Investor Voting Member or of an Other Investor whose investment of funds in the CCCF is represented on the Board by such Investor Voting Member. (ii) No Investment Fund shall invest in any Project Investment in which, to the knowledge of the Investment Fund, any Voting Member or Advisory Board Member has a Financial Interest; provided, however, that this prohibition shall not apply to any personal financial gain of an Investor Voting Member arising from the investment in the CCCF of the funds of such Investor Voting Member or of an Other Investor whose investment of funds in the CCCF is represented on the Board by such Investor Voting Member. (iii) No Other Investor, Voting Member or Advisory Board Member shall be retained by the CCCF to perform work for the CCCF. (e) Funding. Eligible Funds (as defined in Section 2-32-520(r) of this Code) may be transferred to the CCCF in amounts and at times as follows: (i) Initial funding period. During the period commencing on the effective date of this section and ending December 31, 2019, amounts of Eligible Funds may be transferred to the CCCF as follows: (A) In fiscal year 2017, or as soon as practicable thereafter, the Treasurer may transfer Eligible Funds to the CCCF in an amount up to $50,000,000. (B) In fiscal year 2018, the Treasurer may transfer Eligible Funds (which may include, subject to subsection (e)(iii) below, up to $37,500,000 of funds in the Service Concession and Reserve Fund) to the CCCF in an amount up to the greater of (1) $25,000,000 or (2) the Annual Limit for 2018. (C) In fiscal year 2019, the Treasurer may transfer Eligible Funds (which may include, subject to subsection (e)(iii) below, up to $37,500,000 of funds in the Service Concession and Reserve Fund) to the CCCF in an amount up to the greater of (1) $25,000,000 or (2) the Annual Limit for 2019. (ii) Ongoing funding. In fiscal year 2020 and thereafter, the Treasurer may transfer to the CCCF in each year Eligible Funds (which may include, subject to subsection (e)(iii) below, up to $37,500,000 of funds in the Service Concession and Reserve Fund) to the CCCF in an amount up to the Annual Limit for such year. (iii) Maximum limit on use of funds in the Service Concession and Reserve Fund. The aggregate amount of funds transferred from the Service Concession and Reserve Fund to the CCCF may not exceed $37,500,000. (iv) Returns. At the discretion of the Treasurer, investment earnings on Eligible Funds previously transferred to the CCCF may be reinvested by the Treasurer in the CCCF. (v) Limit for expenses. Up to five percent (5%) of each transfer of Eligible Funds pursuant to this subsection (e) may be expended on the costs of CCCF's initial organization, governance and administration. (f) Authorized investments. The CCCF shall adopt a fund-of-funds investment strategy by investing CCCF assets with persons or entities (each, an "Investment Fund") with proven track records and qualified as one or more of the following: (1) an investment manager duly registered with the Securities and Exchange Commission; (2) a registered investment adviser under the Illinois Securities Law of 1953; (C) a community development financial institution certified by the United States Department of the Treasury; (D) a bank, as defined in the Investment Advisers Act of 1940; or (E) a manager of assets pursuant to the terms of an agreement with a limited liability company, limited liability partnership, commingled investment fund, collective investment fund, or such other similar investment vehicle, provided that the investment manager of such investment vehicle qualifies under (A) through (D) of the above. Each Investment Fund shall invest its funds in Project Investments, which may include debt or equity, and shall administer its investments. The CCCF's bylaws shall set forth a process for selecting Investment Funds. The CCCF shall invest its funds in Investment Funds in accordance with the following: (i) All Project Investments by Investment Funds shall be made within one or more of the Community Areas, with priority given to Investment Funds that will make direct investments in Project Investments located in census tracts that are eligible for Community Reinvestment Act credit. (ii) No investment of CCCF funds in any Investment Fund shall be made without the affirmative vote of a majority of the Voting Members present at a meeting of the Board in which a quorum is present. (iii) Investments of CCCF funds shall be made in Investment Funds focused on real estate, infrastructure improvements, commercial developments, or small business investments in one or more of the Community Areas. (iv) In total, no more than twenty percent (20%) of the Eligible Funds transferred to the CCCF may be invested by the CCCF in any single Investment Fund. (v) No single Project Investment may receive an amount exceeding twenty percent (20%) of one Investment Fund's investment allocation from the CCCF. (g) Reporting. (i) Investment Funds which receive CCCF investment capital shall make a quarterly report to the Board detailing investment performance. (ii) The Treasurer shall report on the CCCF's performance (including a description of (1) amounts of Eligible Funds transferred by the Treasurer to the CCCF, (2) names of Other Investors and the amounts of such Other Investors' investments therein, (3) identity of Investment Funds receiving CCCF funds and amounts so invested therein, and (4) identity of Project Investments made by Investment Funds and amounts invested by the Investment Funds therein) to the City Council on an annual basis and such report shall be published. (h) Administration. In furtherance of organizing and administering the CCCF, the Board may retain staff and enter into and execute service agreements with outside providers for legal, investment management, accounting, audit and consultant expertise, including the expenditure of funds as shall be necessary or advisable in connection with such retention and execution. The Board is authorized to enter into investment agreements with Other Investors and with Investment Funds. (i) Conditions to receipt of CCCF investment capital. As a condition to the execution and delivery of any agreements authorized by this Section 2-32-622, such agreements will provide for the following: (i) The Board will, consistent with the purposes and objectives as described in this section, establish criteria for all investments received and made by the CCCF. (ii) The Board shall have no power to pledge the full faith and credit of the City nor shall any obligation issued by the CCCF in connection with any investment be a general obligation of the City. (iii) The Board will require Investment Funds to provide information satisfactory to the Board regarding Project Investments and investment strategies. (iv) The Board will be responsible for overseeing preparation and auditing of its financial statements, including full compliance with applicable generally accepted accounting principles. (v) The CCCF shall indemnify and hold harmless the Voting Members and the Advisory Board Members from and against all claims, demands, actions, suits, damages, liabilities. losses, settlements, judgments, costs and expenses (collectively, "Claims"), whether or not involving a third party claim, which arise out of or relate to their service on the Board, other than any Claim arising from the gross negligence or willful misconduct of any such Voting Member or Advisory Board Member. (j) City decisions and actions. The City shall make decisions and take actions as an owner or member of the CCCF as follows: (i) amendments to the CCCF's articles of incorporation (or organization) shall be approved by a majority of the Ex Officio Voting Members; (ii) determinations, within the parameters set by Section 2-32-622(e)(i) – (iv), of the amount and timing of the transfers of Eligible Funds to the CCCF shall be made by the Mayor; (iii) the liquidation, bankruptcy, merger, or sale of all or a substantial portion of the assets of the CCCF shall be subject to City Council approval; (iv) any transfer of a portion of the City's ownership or membership interests in the CCCF shall be approved by a majority of the Ex Officio Voting Members; provided, however, notwithstanding the foregoing, any transfer of the City's entire ownership or membership interests in the CCCF shall be subject to City Council approval; (v) the withdrawal of the City as an owner or member of the CCCF shall be subject to City Council approval; (vi) the determination of where the CCCF's books and records are to be located shall be approved by a majority of the Ex Officio Voting Members; and (vii) except as otherwise specified in this section, any decision to be made by the City as an owner or member of the CCCF shall be done by a majority vote of the Ex Officio Voting Members. (Added Coun. J. 11-16-16, p. 38042, Art. X, § 1; Amend Coun. J. 9-6-17, p. 54180, § 2)

Source: City of Chicago, Municipal Code of Chicago (American Legal Publishing, codelibrary.amlegal.com)URL: https://codelibrary.amlegal.com/codes/chicago/latest/chicago_il/0-0-0-2598071Fetched: 10/24/2026