Court Opinion

ID: 3790704
Source: CourtListenerOpinion
Date Created: 2016-07-06 07:38:14.683906+00
Date Added: 2024-06-11T13:56:56.558255
License: Public Domain

CITIES AND TOWNS
(1) Meter deposit funds of municipally owned utilities may be invested in certificates of deposit in savings and loan institutions or banks which are covered by one of the federal insurance corporations; and (2) that the interest earned from the investment of such meter deposit funds may be placed either in the general fund of the government subdivision, in the sinking fund of the subdivision, or in the meter deposit fund for distribution therefrom.  The Attorney General is in receipt of your request for an opinion in which you ask the following questions: 1. Do the provisions of 11 Ohio St. 10 [11-10] (1971) authorize municipally owned utilities to invest meter deposit funds in certificates of deposit in savings and loan institutions or banks? If the answer is in the negative, can the municipalities by resolution provide such authorization to a City Treasurer? 2. Under 11 Ohio St. 35-105 [11-35-105] and 11 Ohio St. 35-106 [11-35-106] of the new Municipal Code, can interest earned by the investment of the meter deposit fund be paid over to the customer or must such interest be expended for the operation and maintenance of the utility? In response to your first question, it should be noted that 11 Ohio St. 10 [11-10] has been superseded by 11 Ohio St. 35-105 [11-35-105] (1977) of the new Municipal Code effective July 1, 1978. This new provision permits investment of funds pursuant to the directions of 62 Ohio St. 348.1 [62-348.1] (1977). The plain reading of this statute indicates that one type of investment permitted for these monies is "(c) in savings accounts or savings certificates of savings and loan associations, banks and trust companies, to the extent that such accounts or certificates are fully insured by the Federal Savings and Loan Insurance Corporation or the Federal Deposit Insurance Corporation." To the extent that such certificates of deposit are insured by one of these federal agencies, it is permissible to invest meter deposit fund monies in certificates of deposit from savings and loan institutions or banks.  In reference to your second question, 11 Ohio St. 35-105 [11-35-105] (1977) directs that meter deposit funds shall be invested in the manner provided for in 62 Ohio St. 348.1 [62-348.1] (1977). The last sentence of that statute provides for the disposition of any interest received from such investments as follows: ". . . PROVIDED, that the income received from said investment may be placed in the general fund of the governmental sub-division to be used for governmental operation or in the sinking fund or the fund from which the investment was made." The plain reading of this provision would indicate that income received from meter deposit funds could be (1) placed in the general fund of the government sub-division to be used for governmental operations; (2) placed in the sinking fund or (3) placed in the fund from which the investment was made, in this case the meter deposit fund. However, in your question you referenced, 11 Ohio St. 35-106 [11-35-106] (1977) which deals with the sale of any securities purchased as investment of the meter deposit fund. It states in part: "The proceeds of the sale shall be disposed of in the following manner: an amount of money equal to the amount invested in the bonds sold shall be placed in the fund from which the investment was made. The balance shall be considered to be profit derived from the investment and shall be placed in the fund from which the operation and maintenance expenses of the utility, for which the meter deposits invested were collected or paid." This latter section, by its own terms only deals with the disposition of the proceeds from the sale of any securities purchased as investments for the meter deposit funds and does not control the disposition of any interest paid on such investments.  It is, therefore, the opinion of the Attorney General that (1) meter deposit funds of municipally owned utilities may be invested in certificates of deposit in savings and loan institutions or banks which are covered by one of the federal insurance corporations; and (2) that the interest earned from the investment of such meter deposit funds may be placed either in the general fund of the government subdivision, in the sinking fund of the subdivision, or in the meter deposit fund for distribution therefrom.  (GLENN McLOUGHLIN) (ksg)