HomeMy WebLinkAbout2023-03-16 - Board of Directors Meeting Agenda PacketYorba Linda
Water District
AGENDA
YORBA LINDA WATER DISTRICT
BOARD OF DIRECTORS REGULAR MEETING
Thursday, March 16, 2023, 3:00 PM
1717 E Miraloma Ave, Placentia CA 92870
1. PARTICIPATION INSTRUCTIONS
This meeting will be held in person. For public convenience, the meeting can also be accessed via
internet-based service or telephone as indicated below. For questions regarding participation, please call
the Board Secretary at (714) 701-3020.
Computer/Mobile Device: https://us06web.zoom.us/i/83095218464
Telephone: (669) 444-9171 or (669) 900-6833
Meeting ID: 830 9521 8464
2. CALL TO ORDER
3. PLEDGE OF ALLEGIANCE
C :T9 MOT_1"
Brett R. Barbre, President
Trudi DesRoches, Vice President
Phil Hawkins, Director
Tom Lindsey, Director
J. Wayne Miller, PhD, Director
5. ADDITIONS/DELETIONS TO THE AGENDA
Items may be added to the agenda upon determination by a two-thirds vote of the Board, or a
unanimous vote if only three Directors are present, that there is a need to take immediate action which
came to the District's attention subsequent to the agenda being posted. (GC 54954.2(b)(2))
6. PUBLIC COMMENTS
Any individual wishing to address the Board (or Committee) is requested to identify themselves and state
the matter on which they wish to comment. If the matter is on the agenda, the Chair will recognize the
individual for their comment when the item is considered. No action will be taken on matters not listed on
the agenda. Comments are limited to three minutes and must be related to matters of public interest
within the jurisdiction of the Water District. (GC 54954.3)
7. ACTION CALENDAR
This portion of the agenda is for items where staff presentations and Board (or Committee) discussions
are needed prior to formal action.
7.1. Award of Professional Services Agreement for Investment Advisory Services
Recommendation. That the Board of Directors. (1) authorize the General
Manager to execute a Professional Services Agreement for Investment Advisory
Services and Arbitrage Rebate Calculation Services with PFM Asset
Management LLC; and (2) adopt Resolution No. 2023 -XX Authorizing Yorba
Linda Water District to Join With Other Public Agencies as a Participant of the
California Asset Management Program (CAMP) and to Invest in Shares of the
Trust and in Individual Portfolios.
8. DISCUSSION ITEMS
Page 1 of 134
This portion of the agenda is for matters that cannot reasonably be expected to be concluded by action
of the Board (or Committee) at the meeting, such as technical presentations, drafts of proposed policies,
or similar items for which staff is seeking advice and counsel. Time permitting, it is generally in the
District's interest to discuss these more complex matters at one meeting and consider formal action at
another meeting. This portion of the agenda may also include items for information only.
8.1. Proposed Water and Sewer Development Fees for Fiscal Year 2023-24
8.2. Draft Budget for Fiscal Year 2023-24 (Operating Revenue, Supplies and
Services, Other Key Updates)
9. CLOSED SESSION
The Board may hold a closed session on items related to personnel, labor relations and/or litigation. The
public is excused during these discussions.
9.1. Conference with Labor Negotiators
Pursuant to Section 54957.6 of the California Government Code
Agency Designated Representative: General Manager
Employee Organization: Yorba Linda Water District Employees Association
10. REPORT FROM CLOSED SESSION
11. ADJOURNMENT
11.1. The next regular Board meeting is scheduled Thursday, April 6, 2023 at 3:00
p.m.
Items Distributed to the Board Less Than 72 Hours Prior to the Meeting
Non-exempt materials related to open session agenda items that are distributed to a majority of the Board of
Directors (or Committee Members) less than seventy-two (72) hours prior to the meeting will be available for
public inspection in the lobby of the District's Administrative building located at 1717 E Miraloma Ave, Placentia
CA 92870 during regular business hours. When practical, these materials will also be posted on the District's
website at https://ylwd.com/. (GC 54957.5)
Accommodations for the Disabled
Requests for disability -related modifications or accommodations, including auxiliary aids or services, required for
participation in the above -posted meeting should be directed to the Board Secretary at (714) 701-3020 at least 24
hours in advance. (GC 54954.2(a))
Page 2 of 134
ITEM NO. 7.1.
Yorba Linda
Water District
AGENDA REPORT
MEETING DATE: March 16, 2023
TO: Board of Directors
FROM: Mark Toy, General Manager
STAFF CONTACTS: Delia Lugo, Finance Manager
SUBJECT: Award of Professional Services Agreement for Investment Advisory
Services
RECOMMENDATION:
That the Board of Directors: (1) authorize the General Manager to execute a Professional Services
Agreement for Investment Advisory Services and Arbitrage Rebate Calculation Services with PFM
Asset Management LLC; and (2) adopt Resolution No. 2023 -XX Authorizing Yorba Linda Water
District to Join With Other Public Agencies as a Participant of the California Asset Management
Program (CAMP) and to Invest in Shares of the Trust and in Individual Portfolios.
SUMMARY:
Staff was tasked with securing professional treasury management and investment management
services, to safely and effectively manage available District reserve funds and available bond
proceeds for investment(s). The goal was to seek a better return than current District investments
while maintaining the District's long-standing priorities of safety, liquidity, and yield (in that order).
In response, staff coordinated efforts with Fieldman Rolapp, the District's Municipal Advisor, to
develop a Request for Proposals ("RFP") for Investment Advisory Services. On January 5, 2023, staff
issued the RFP to four independent, external investment advisory firms with a deadline of January
19, 2023, for them to submit their response. Three out of the four external firms responded and
submitted responses by the specified deadline, all of whom met the listed criteria. A Review
Committee evaluated the submitted proposals based on: experience and expertise in managing
funds for public agencies that protects principal, provides liquidity, and maximizes earnings while
complying with all applicable regulations; the thoroughness of their investment advisory approaches;
and the overall cost of their services.
The Review Committee conducted interviews with two of the responding firms. As a result, staff
recommends PFM Asset Management LLC ("PFM") to serve as the District's investment managers.
PFM will manage the District's investments as set forth below and also provide required Arbitrage
Rebate Calculation Services for all active debt issuances of the District.
PFM's investment strategies are as follows:
An active management strategy is proposed for investment of the District's available reserve
balances with the objectives of safety, liquidity, and yield with permitted investments outlined in the
Page 3 of 134
California Government Code and the District's Investment Policy. Fees for an active management
strategy are 9 basis points (0.09%) on the first $50 million is assets under management and 7 basis
points (0.07%) on assets in excess of $50 million, subject to a monthly minimum fee of $3,333.
California Asset Management Program ("CAMP") is proposed for the investment of the District's
liquid funds. CAMP is a California Joint Powers Authority in which the District will become a member.
CAMP offers two distinct options for managing short-term and liquidity options: (1) the Cash Reserve
Portfolio ("CAMP Pool"), a fully liquid, stable net asset value investment option that offers daily
liquidity, competitive returns, and unlimited transactions, and (2) CAMP Term, a fixed-rate investment
option which offers securities with maturities ranging from 60 days to one year. As of January 12,
2023, management and investment fees for CAMP Pool are 0.11 % when shareholders buy and hold
shares in the Pool; and such fees for the CAMP Term Portfolio program are 0.22% when
shareholders buy and hold shares in the program.
A one-time portfolio structuring is proposed for the investment of the District's available 2022A
bond proceeds. One-time portfolio structuring is subject to a one-time bidding agent fee of $17,500,
where all or a portion of these fees may potentially, pending District counsel's determination, be
considered a "qualified administrative cost" under IRS regulations and guidelines.
Pertinent documents providing key information are included for reference and/or discussion as they
pertain to the proposed services from PFM.
PFM Asset Management LLC staff, as well as staff from Fieldman Rolapp, were available at the
regular Board meeting on March 2, 2023, to present the attached slide deck and respond to
questions from the Board of Directors. Following discussion, this item was deferred to the budget
workshop meeting on March 16, 2023, so the full Board could be present for deliberation.
ATTACHMENTS:
1. 01/05/23 - RFP for Investment Advisory Services
2. 02/09/23 - PFMAM Presentation for YLWD Staff
3. 03/02/23 - PFMAM Presentation for YLWD BOD
4. Resolution No. 2023 -XX - Joining CAMP
Page 4 of 134
YORBA LINDA WATER DISTRICT
Request for Proposals for
Investment Advisory Services
On behalf of the Yorba Linda Water District, (the "District"), we are distributing this Request for
Proposals for investment advisory services in connection with the investment of (i) certain proceeds
from the sale of the District's Revenue Bonds Series 2022A (the "2022 Bonds"); (ii) certain reserves
of the District.
Currently, the District expects to draw down the 2022 Bonds' proceeds in amounts as set forth in
Exhibit A.
The District will provide its estimated use of reserves to the winning bidder. Currently, the District
has approximately $40.6 million in total unrestricted reserves and $20 million in restricted reserves
(2022 bond proceeds).
The District will provide an updated draw schedule to the firm selected prior to the finalization of an
investment strategy. Attached hereto as Exhibit B are the definitions of Permitted Investments from
the Indenture in connection with the 2022 Bonds. The District's Investment Policy is attached as
Exhibit C.
Submittal information:
Responses are to be delivered electronically to Mr. Mark Toy, General Manager, Mr. Doug Davert,
Assistant General Manager, Ms. Delia Lugo, Finance Manager and Sophia Phuong of the District, and
Mr. Robert Port and Ms. Lora Carpenter of Fieldman, Rolapp & Associates no later than 4:00 PM
pacific time on January 19, 2023.
Mark Toy
Doug Davert
Delia Lugo
Sophia Phuong
Robert Porr
Lora Carpenter
mto T a,ylwd.com
ddavert kylwd.com
dlugoona,ylwd.com
sphuongkv1wd.com
rrporr(kheldman.com
lcarpenterkfieldman.com
Responses should be no more than fifteen pages, including any appendices or attachments.
All requests for additional information or questions regarding this RFP shall be directed to Robert
Port and Lora Carpenter in writing via email by January 12, 2023.
Yorba Linda WD - Investment Advisory Services RFP
Page 5 of 134
The selected firm will be responsible for:
1. Recommending to the District an investment strategy for the 2022 Bonds' Project
Fund that prioritizes safety, liquidity and yield in connection with the District's current
and forecasted balances.
2. Recommending to the District an investment strategy for the reserve funds that
prioritizes safety, liquidity and yield in connection with the District's current and
forecasted balances.
3. Analyzing various investment strategies and recommending to the District an
investment approach, including comparing the benefits and drawbacks of a passive
versus a managed investment approach to purchasing a portfolio of securities, if a
portfolio of securities is recommended.
4. Preparing bid specifications, materials and packages in connection with the
solicitation, purchase and settlement of investments.
5. Managing the process of settling securities between any provider of securities and the
District.
6. Representing the District in connection with the negotiation of terms and conditions
for an Investment Agreement and working with the District to close such investments
(if such is recommended and solicited).
7. Reviewing the District's Investment Policy and providing advice and
recommendations on the authorized investments.
The Project Team
Fieldman, Rolapp & Associates, Inc. is the Municipal Advisor to the District and Stradling Yocca
Carlson & Rauth serves as Bond Counsel.
Selection Considerations & Criteria
The District intends to select a firm with highly relevant qualifications to provide investment advisory
services for similar issues and objectives. Selection criteria will include written responses to the
questions below, firm qualifications and fees.
The District reserves the right to negotiate fees prior to the selection of an investment advisory firm.
The District further reserves the right to select one or more firms or to reject all proposals.
I. QUALIFICATIONS
1. Provide an overview of your firm's investment advisory practice, including the number of
years in business and your licenses. Describe your firm's capability related to providing
investment advisory services in connection with the 2022 Bonds' proceeds. Describe the
2
Yorba Linda WD - Investment Advisory Services RFP
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process your firm would take to provide advice to the District. Include the process you would
take, if selected, to bid out securities.
2. Taking into account the current estimated balances, forecasts and language in Exhibit A and
Exhibit B, provide a comparison, detailing advantages and disadvantages of investing the bond
proceeds in an Investment Agreement versus purchasing a portfolio of securities and provide
a quantitative example of the two strategies.
3. Provide your firms recommendation on any changes to the authorized investments, or
investment objectives located in the District's existing Investment Policy found in Exhibit C.
II. EXPERIENCE
1. Include a description of assets under management ("AUM") over the past 5, 3 and 1 years.
Provide and explanation of the changes in AUM.
2. List or summarize your firm's experience in the investment of tax-exempt bond proceeds in
the last 5 years.
3. Provide three (3) references from water/ sewer municipalities for related services including the
name of business, address, contact name and telephone number and a description of work
performed. Only include issuers for which advice and services were provided within the last
36 months in California.
4. Provide the proposed lead advisor's background and experience over the last 5 years in
connection with the services described herein.
5. Provide a description of the services your firm provides related to investment advisory
services, including but not limited to arbitrage rebate compliance/ calculations.
III. FEES
Provide a detailed summary of your proposed fees and expenses for the proposed engagement and
any assumptions used in deriving this fee structure. Please provide fees and expenses in connection
with:
1. Recommending and purchasing a portfolio of securities;
2. Purchasing individual securities;
3. Fees for active management of the portfolio of securities; and
4. Bidding and settling an Investment Agreement
5. Breakdown of any annual administrative fees for the above referenced investment
options.
3
Yorba Linda WD - Investment Advisory Services RFP
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EXHIBIT A
ESTIMATED DRAW SCHEDULE FOR 2022 BONDS'
PROCEEDS
Date
Draws*
Balance
2/1/2023
$741,557
$741,557
3/1/2023
$11,247,844
$1,989,401
4/1/2023
$11,347,844
$3,337,246
5/1/2023
$11,726,289
$5,063,534
6/1/2023
$1,913,719
$6,977,253
7/1/2023
$3,027,301
$10,004,555
8/1/2023
$1,613,639
$11,618,194
9/1/2023
$1,307,498
$12,925,692
10/1/2023
$1,2275456
$14,153,148
11/1/2023
$1,8555052
$16,008,200
12/1/2023
$1,6875868
$17,696,069
1/1/2024
$1,218,639
$18,914,707
2/1/2024
$1,085,293
$20,000,000
*Draws are preliminary, subject to change.
4
Yorba Linda WD - Investment Advisory Services RFP
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EXHIBIT B
2022 BONDS' PERMITTED INVESTMENTS
Permitted Investments. The term "Permitted Investments" means any of the following which
at the time are legal investments under the laws of the State for moneys held hereunder and
then proposed to be invested therein:
(A) for all purposes, including defeasance investments in refunding escrow
accounts: (1) cash (insured at all times by the Federal Deposit Insurance Corporation or
otherwise collateralized with obligations described in clause (2) below); (2) direct obligations
of (including obligations issued or held in book entry form on the books of) the Department
of the Treasury of the United States of America; (3) U.S. Treasury Certificates, Notes and
Bonds (including State and Local Government Series); (4) Resolution Funding Corp. strips
(only the interest component of REFCORP strips which have been stripped by request to the
Federal Reserve Bank of New York in book entry form are acceptable); (5) Pre -refunded
municipal bonds rated "Aaa" by Moody's and "AAA" by S&P. If however, the issue is only
rated by S&P (i.e., there is no Moody's rating), then the pre -refunded bonds must have been
pre -refunded with cash, direct U.S. or U.S. guaranteed obligations, or "AAA" rated pre -
refunded municipals to satisfy this condition; and (6) Obligations issued by the following
agencies which are backed by the full faith and credit of the U.S.: a. U.S. Export -Import Bank
(Eximbank): Direct obligations or fully guaranteed certificates of beneficial ownership; b.
Farmers Home Administration: Certificates of beneficial ownership; c. Federal Financing
Bank; d. General Services Administration: Participation Certificates; e. U.S. Maritime
Administration: Guaranteed Title XI financing; and f. U.S. Department of Housing and Urban
Development: Project Notes, Local Authority Bonds, New Communities Debentures - U.S.
government guaranteed debentures, U.S Public Housing Notes and Bonds - U.S. government
guaranteed public housing notes and bonds; and
(B) for all purposes other than defeasance investments in refunding escrow
accounts:
(1) direct obligations of the United States of America (including
obligations issued or held in book -entry form on the books of the Department of the Treasury,
and CATS and TIGRS) or obligations of the principal of and interest on which are
unconditionally guaranteed by the United States of America;
(2) obligations of any of the following federal agencies which obligations
represent the full faith and credit of the United States of America: the Export -Import Bank;
Farmers Home Administration; General Services Administration; United States Maritime
5
Yorba Linda WD - Investment Advisory Services RFP
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Administration; Government National Mortgage Association; United States Department of
Housing & Urban Development; Federal Financing Bank; and Federal Housing
Administration Debentures;
(3) obligations of any of the following federal agencies which obligations
do not represent the full faith and credit of the United States of America, including the Federal
Home Loan Bank System; Federal Home Loan Mortgage Corporation (FHLMC); Federal
National Mortgage Association (FNMA); Student Loan Marketing Association; Resolution
Funding Corp.; and Farm Credit System;
(4) commercial paper which is rated at the time of purchase in the single
highest classification, "A-1" by S&P and "P-1" by Moody's;
(5) investments in a money market fund rated "AAAm", "AAAm-G" or
"AA -m" or better by S&P, or "Aaa", "Aal" or "Aa2" or better by Moody's, including any fund
for which the Trustee or an affiliate acts as investment advisor or provides other services;
(6) Certificates of deposit secured at all times by collateral described in (A)
and/or (B) (1) above. Such certificates must be issued by commercial banks, savings and loan
associations or mutual savings banks, including the Trustee and its affiliates. The collateral must
be held by a third party and the Trustee must have a perfected first security interest in the collateral;
(7) Certificates of deposit (including those of the Trustee, its parent and its
affiliates), savings accounts, deposit accounts or money market deposits;
(8) Investment Agreements, including GICs, Forward Purchase Agreements
and Reserve Fund Put Agreements;
(9) Federal Funds or bankers acceptances with a maximum term of one year
of any bank, including the Trustee and its affiliates, which has an unsecured, uninsured and
unguaranteed obligation rating of "Prime -I" or "A3" or better by Moody's and "A-1" or "A"
or better by S&P;
(10) Repurchase agreements provide for the transfer of securities from a
dealer bank or securities firm (seller/borrower) to the Trustee or the District, as applicable, and
the transfer of cash from the Trustee or the District, as applicable, to the dealer bank or
securities firm with an agreement that the dealer bank or securities firm will repay the cash plus
a yield to the Trustee or theDistrict, as applicable, in exchange for the securities at a specified
date;
1. Repurchase agreements must be between the municipal entity and a dealer
bank or securities firm.
a. Primary dealers on the Federal Reserve reporting dealer list which are rated
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Yorba Linda WD - Investment Advisory Services RFP
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"A" or better by Standard & Poor's Corporation and Moody's Investor Services; or
b. Banks rated "A" or above by S&P and Moody's.
2. The written contract must include the following:
a. Securities which are acceptable for transfer are: (1) Direct U.S.
Governments;or (2) Federal agencies backed by the full faith and credit of the U.S. government
(and FNMA & FHLMC);
b. The term of the Repurchase agreement may be up to 30 days;
C. The collateral must be delivered to the Trustee or the District, as applicable,
trustee (if the trustee is not supplying the collateral) or third party acting as agent for the trustee
(if the trustee is supplying the collateral) before/ simultaneous with payment (perfection by
possession of certificates securities).
d. The securities must be valued weekly, marked -to -market at current market
price plus accrued interest. The value of collateral must be equal to 104% of the amount of cash
transferred by the Trustee or the District, as applicable, to the dealer bank or security firm under
the repurchase agreement plus accrued interest. If the value of the securities held as collateral
slips below the 104% of the value of the cash transferred by the Trustee or the District, as
applicable, then additional cash and/or acceptable securities must be transferred. If, however, the
securities used as collateral are FNMA or FHLMC, then the value of collateral must equal 105%.
3. Legal opinion which must be delivered to the Trustee and the District: the
Repurchase Agreement meets guidelines under state law for legal investment of public funds;
(11) The Local Agency Investment Fund of the State of California created
pursuant to Section 16429.1 of the California Government Code; and
(12) Unsecured certificates of deposit, time deposits, money market
deposits, demand deposits and bankers' acceptances of any bank (including those of Trustee,
its parent and itsaffiliates) the short-term obligations of which are rated on the date of purchase
"A-1" or better by S&P, "P-1" or better by Moody's or "Fl" or better by Fitch.
Yorba Linda WD - Investment Advisory Services RFP
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EXHIBIT C
YLWD INVESTMENT POLICY
Yorba Linda WD - Investment Advisory Services RFP
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Policies and Procedures
Policy No.:
Adoption Method
Effective Date:
Last Revised:
Prepared By:
Applicability:
Yorba Linda
Water District
3010-004
Resolution No. 18-12
July 1, 2018
July 1, 2017
Delia Lugo, Finance Manager
District Wide
POLICY: PUBLIC FUNDS INVESTMENT
TABLE OF CONTENTS
Section
1.0
Policy
Section
2.0
Scope
Section
3.0
Delegation of Authority
Section
4.0
Investment Objectives
Section
5.0
Prudence
Section
6.0
Ethics and Conflicts of Interest
Section
7.0
Authorized Broker/Dealers
Section
8.0
Authorized Investments
Section
9.0
Review of Investment Portfolio
Section
10.0
Investment Pools
Section
11.0
Collateralization
Section
12.0
Safekeeping and Custody
Section
13.0
Diversification and Maximum Maturities
Section 14.0 Internal Controls
Section 15.0 Performance Standards
Section 16.0 Reporting
Section 17.0 Investment Policy Adoption
Appendix A Description of Authorized Investments and Restrictions
Appendix B Glossary
3010-004 Public Funds Investment Policy
Page 1 of 14
Page 13 of 134
1.0 POLICY
1.1 It is the policy of the Yorba Linda Water District ("District") to invest public
funds in a manner which ensures the safety and preservation of capital while
meeting reasonably anticipated operating expenditure needs, achieving a
reasonable rate of return and conforming to all state and local statutes
governing the investment of public funds.
1.2 The purpose of this policy is to provide guidelines for the prudent investment
of funds of the District and to outline the policies for maximizing the efficiency
of the District's cash management. The District's goal is to enhance the
economic status of the District consistent with the prudent protection of the
District's investments. This investment policy has been prepared in
conformance with all pertinent existing laws of the State of California.
2.0 SCOPE
2.1 This Investment Policy applies to all funds and investment activities of the
District, except for the proceeds from capital project financing instruments,
which are invested in accordance with provisions of their specific documents.
These funds are accounted for as Enterprise Funds and are identified in the
District's Comprehensive Annual Financial Report.
3.0 DELEGATION OF AUTHORITY
3.1 The authority of the Board of Directors to invest funds is derived from Section
53601 of the California Government Code ("CGC"). Section 53607 of the
CGC grants the Board of Directors the authority to delegate that authority,
for a one-year period, to the District's Treasurer. Therefore, management
responsibility for the investment program is hereby delegated to the District's
Treasurer, who shall be responsible for all transactions undertaken and shall
establish a system of controls to regulate the activities of subordinate officials
and their procedures in the absence of the Treasurer. The Treasurer shall
establish procedures for the management of investment activities, including
the activities of staff consistent with this Policy.
3.2 The Treasurer may retain the services of an outside investment advisor or
manager as approved by the Board to assist with the District's investment
program. Any investment advisor selected shall make all investment
decisions and transactions in strict accordance with State law, and this
Policy.
4.0 INVESTMENT OBJECTIVES
4.1 The primary objectives, in priority order, of the District's investment activities
shall be:
4.1.1 Safety: Safety and preservation of principal is the foremost
objective of the investment program. Investments shall be selected
in a manner that seeks to ensure the preservation of capital in the
District's overall portfolio. This will be accomplished through a
program of diversification and maturity limitations, more fully
described in Section 13, in order that potential losses on individual
3010-004 Public Funds Investment Policy
Page 2 of 14
Page 14 of 134
securities do not exceed the income generated from the remainder
of the portfolio.
4.1.2 Liquidity: The District's investment portfolio will remain sufficiently
liquid to enable the District to meet all operating requirements which
might be reasonably anticipated. Securities should mature
concurrent with cash needs to meet anticipated demands.
4.1.3 Return on Investments: The District's investment portfolio shall
be designed with the objective of attaining the best yield or returns
on investments, taking into account the investment risk constraints
and liquidity needs. Return on investment is of secondary
importance compared to the safety and liquidity objectives.
5.0 PRUDENCE
5.1 The standard of prudence to be used by the designated representative shall
be the "prudent investor" standard and shall be applied in the context of
managing the overall portfolio. The meaning of the standard of prudent
investor is explained in CGC Section 53600.3, which states that "when
investing, reinvesting, purchasing, acquiring, exchanging, selling or
managing public funds, a trustee shall act with care, skill, prudence, and
diligence under the circumstances then prevailing, including, but not limited
to, the general economic conditions and the anticipated needs of the agency,
that a prudent person acting in a like capacity and familiarity with those
matters would use in the conduct of funds of a like character and with like
aims, to safeguard the principal and maintain the liquidity needs of the
agency."
5.2 The Treasurer and delegated investment officers, acting in accordance with
District procedures and the Policy and exercising due diligence, shall be
relieved of personal responsibility for an individual security's credit risk or
market price changes, provided deviations from expectations are reported in
a timely fashion and appropriate action is taken to control adverse
developments.
5.3 Investments shall be made with judgment and care - under circumstances
then prevailing - which persons of prudence, discretion and intelligence
exercise in the management of their own affairs, not for speculation, but for
investment, considering the probable safety of their capital as well as the
probable income to be derived.
6.0 ETHICS AND CONFLICTS OF INTEREST
6.1 Officers and employees involved in the investment process shall refrain from
personal business activity that could conflict with proper execution of the
investment program, or which could impair their ability to make impartial
investment decisions. Employees and investment officials shall disclose to
the District's General Manager any material financial interests in financial
institutions that conduct business with the District's boundaries, and they
shall further disclose any large personal financial/investment positions that
could be related to the performance of the District.
3010-004 Public Funds Investment Policy
Page 3 of 14
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7.0 AUTHORIZED BROKER/DEALERS
7.1 The Treasurer will maintain a list of authorized broker/dealers and financial
institutions that are approved for investment purposes. Broker/dealers will
be selected for credit worthiness and must be authorized to provide
investment services in the State of California. These may include "primary"
dealers or regional dealers that qualify under Securities & Exchange
Commission Rule 15(C)3-1 (uniform net capital rule). No public deposit will
be made by the broker/dealer except in a qualified public depository as
established by the established state laws. Before a financial institution or
broker/dealer is used, they are subject to investigation and approval by the
Treasurer or his/her designated representative, and must submit the
following:
7.1.1 Certification of having read and understood this investment policy
resolution and agreeing to comply with the District's investment
policy;
7.1.2 Proof of Federal Investment Regulatory Authority certification;
7.1.3 Proof of State of California registration;
7.1.4 Audited financial statements for the institution's three (3) most
recent fiscal years;
7.1.5 References of other public -sector clients that similar services are
provided to.
7.2 If a third party investment advisor is authorized to conduct investment
transactions on the District's behalf, the investment advisor may use their
own list of approved independent broker/dealers and financial institutions.
The investment advisor's approved list must be made available to the District
upon request.
8.0 AUTHORIZED INVESTMENTS
8.1 The District is provided a broad spectrum of eligible investments under the
CGC Sections 53601 et seq. Authorized investments shall also include, in
accordance with CGC section 16429.1 et seq., investments into the Local
Agency Investment Fund (LAIF) and the Orange County Treasurer's
Commingled Investment Pool in accordance with CGC section 53684. Within
the investments permitted by the CGC, the District seeks to further restrict
eligible investment to the investments listed in Section 8.3 below.
Percentage holding limits listed in this section apply at the time the security
is purchased. Ratings, where shown, specify the minimum credit rating
category required at purchased without regard to +/- or 1,2,3 modifiers, if any.
8.2 The purchase of any investment permitted by the CGC, but not listed as an
authorized investment in this Policy is prohibited without the prior approval of
the Board of Directors.
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8.3 Within the context of these limitations, the following investments are
authorized:
TABLE 1
Permitted Investments*/
CA Government Code
YLWD
Deposits
% of Portfolio Limits /
% of Portfolio Limits /
Maturity Limits
Maturity Limits
Bank Deposits#
No % limit, 5 years
No % limit, 5 years
CD Placement Service#
30% limit, 5 years
30% limit, 5 years
Local Agency Investment
No % or maturity limit
No % or maturity limit
Fund (LAIF)^
County Pooled Investment
No % or maturity limit
No % or maturity limit
Funds
Joint Powers Authority Funds
No % or maturity limit
No % or maturitylimit
(CaITRUST & CAMP)^
U.S. Treasury Obligations
No % limit, 5 years
No % limit, 5 years
U.S. Agency Obligations
No % limit, 5 years
No % limit, 5 years
Negotiable Certificates of
30% portfolio, 5 years
30% portfolio, 5
Deposit
years
Money Market Funds*
20%, 10% per issuer, no
20%, 10% per issuer,
limit
no limit
Medium -Term (or Corporate)
30% portfolio, 5 years
30% portfolio, 5
Notes*
years
Bankers Acceptances*
40%, 30% per issuer, 180
10% max, 5% per
days
issuer, 180 days
Commercial Paper*
25%, 10% per issuer, 270
25% max, 5% per
days
issuer, 270 days
* See Appendix A for more detailed descriptions and additional restrictions.
^ See Section 10.0 for additional restrictions.
* See Section 11.0 for additional restrictions.
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9.0 REVIEW OF INVESTMENT PORTFOLIO
9.1 The securities held by the District must be in compliance with Section 8
Authorized Investments at the time of purchase. The Treasurer shall at least
quarterly review the portfolio to verify that all securities are in compliance with
Section 8 Authorized Investments. In the event a security held by the District
is subject to a credit rating change that brings it below the minimum credit
ratings specified in Appendix A Authorized Investments, the Treasurer
should notify the Board of Directors of the change. The course of action to
be followed will then be decided on a case-by-case basis, considering such
factors as the reason for the change, prognosis for recovery or further rate
drops, and the market price of the security.
10.0 INVESTMENT POOLS
10.1 A thorough investigation of any investment pool or mutual fund is required
prior to investing, and on a continual basis. The investigation will, at a
minimum, obtain the following information:
10.1.1 A description of eligible investment securities, and a written
statement of investment policy and objectives;
10.1.2 A description of interest calculations and how it is distributed, and
how gains and losses are treated;
10.1.3 A description of how the securities are safeguarded (included the
settlement processes), and how often the securities are priced and
the program audited;
10.1.4 A description of who may invest in the program, how often and what
size deposit and withdrawal are allowed;
10.1.5 A schedule for receiving statements and portfolio listings;
10.1.6 Are reserves, retained earnings, etc. utilized by the pool/fund;
10.1.7 A fee schedule and when and how it is assessed;
10.1.8 Is the pool/fund eligible for bond proceeds and/or will it accept such
proceeds;
11.0 COLLATERALIZATION
11.1 Bank Deposits: Under provisions of the CGC, California banks and
savings and loan associations are required to secure the District's deposits
by pledging eligible securities with a value of 110% of principal and accrued
interest. State law also allows financial institutions to secure District
deposits by pledging first trust deed mortgage notes having a value of
150% of the District's total deposits.
11.2 Waiver of Security: The Treasurer, at his/her discretion and in
accordance with CGC section 53653, may waive security for the portion of
any deposits as is insured pursuant to federal law.
3010-004 Public Funds Investment Policy
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12.0 SAFEKEEPING AND CUSTODY
12.1 All security transactions entered into by the District shall be conducted on
a delivery -versus -payment basis. Securities will be held by a third party
custodian designated by the Treasurer and evidenced by safekeeping
receipts. The only exception to the foregoing shall be depository accounts
and securities purchases made with (i) local government investment pools,
and (ii) money market mutual funds, since those purchased securities are
not deliverable.
13.0 DIVERSIFICATION AND MAXIMUM MATURITIES
13.1 The District will diversify its investments by security type and institution.
With the exception of U.S. Treasuries, U.S. Agency Securities, FDIC
Insured Certificates of Deposit and authorized pools, no more than 30% of
the District's total investment portfolio will be invested in a single security
type or with a single financial institution.
13.2 To the extent possible, the District will attempt to match its investments with
anticipated cash flow requirements. Unless matched to a specific cash flow
and approved in advance by the Board of Directors, the District will not
directly invest in securities maturing more than 5 years from the date of
purchase.
14.0 INTERNAL CONTROLS
14.1 The external auditors will annually review the investments and general
activities associated with the investment program. This review will provide
internal control by assuring compliance with the Investment Policy and
District policies and procedures.
15.0 PERFORMANCE STANDARDS
15.1 The investment portfolio will be designed with the objective of obtaining a
rate of return throughout budgetary and economic cycles, commensurate
with the investment risk constraints and the cash flow needs.
15.2 The performance of the District's investment portfolio will be evaluated and
compared to an appropriate benchmark in order to assess the success of
the investment portfolio relative to the District's Safety, Liquidity and Return
on Investments objectives. This review will be conducted annually by the
District Treasurer.
16.0 REPORTING
16.1 Subject to CGC sections 53607 and 53646(b), the Treasurer will provide
monthly and quarterly investment reports to the Board of Directors which
provide a clear picture of the status of the current investment portfolio. The
reports shall comply with the reporting requirements of CGC sections
53607 and 53646(b), respectively.
17.0 INVESTMENT POLICY ADOPTION
17.1 The District's Investment Policy will be adopted by resolution of the Board
of Directors. The policy will be reviewed on an annual basis and
modification, if any, must be approved by the Board of Directors.
3010-004 Public Funds Investment Policy Page 7 of 14
Page 19 of 134
APPENDIX A
DESCRIPTION OF AUTHORIZED INVESTMENTS AND RESTRICTIONS
The following descriptions of authorized investments, maximum maturities and limits are
included here to assist in the administration of this policy.
1) BANK DEPOSITS
The District may make bank deposits in accordance with California Government
Code section 53630 et seq., which requires collateral. Per California
Government Code Section, there are three classes of deposits: (a) inactive
deposits, (b) active deposits and (c) interest-bearing active deposits. The
collateral requirements apply to both active deposits (checking and savings
accounts) and inactive deposits (non-negotiable time certificates of deposit).
The maximum maturity shall be five years. No limit will be placed on the
percentage total invested in this category.
2) CD PLACEMENT SERVICE — Government Code Sections 53601.8 and 53653.8
The District may invest in collateralized certificates of deposits in accordance
with the requirements in California Government Code Sections 53601.8 and
53635.8. Purchases of certificates of deposit pursuant to Government Code
Sections 53601.8, 53653.8, and 53601 shall not, in total, exceed 30 percent of
District's investment portfolio. The maximum maturity is limited to five years.
3) THE STATE LOCAL AGENCY INVESTMENT FUND (LAIF) — Government
Code Section 16429.1
The LAIF is a special fund in the California State Treasury and an investment
alternative for California's local governments and special districts created and
governed pursuant to CGC Section 16429.1 et seq. and managed by the State
Treasurer's Office. The District, with the consent of the Board of Directors, is
authorized to remit money not required for the District's immediate need, to the
State Treasurer for deposit in this fund for the purpose of investment. Principal
may be withdrawn on one day's notice. The fees charged by LAIF are limited by
statute. Investment of District funds in LAIF shall be subject to investigation and
due diligence prior to investing, and on a continual basis to a level of review
described in Section 10 Investment Pools. No limit will be placed on the
percentage total in this category.
4) ORANGE COUNTY TREASURER'S COMMINGLED INVESTMENT POOL
(OCCIP) — Government Code Section 53684
The OCCIP is a money market investment pool managed by the Orange County
Treasurer's Office. OCCIP is more fully described in the glossary at Appendix
B. The District has no funds invested in OCCIP at this time. Investment of
District funds in OCCIP would be subject to investigation and due diligence prior
to investing, and on a continual basis to a level of review described in Section 10
Investment Pools. There is no maturity limit. No limit will be placed on the
percentage total in this category.
5) THE INVESTMENT TRUST OF CALIFORNIA (CALTRUST) — Government
Code Section 53601(p)
The Investment Trust of California (CaITRUST) is a local government investment
pool organized as a joint powers authority pursuant to California Government
3010-004 Public Funds Investment Policy
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Code Section 6509.7. Wells Capital Management, a wholly-owned subsidiary of
Wells Fargo, is the portfolio manager for each of the CalTRUST funds.
Investment of District funds in CalTRUST shall be subject to investigation and
due diligence prior to investing, and on a continual basis to a level of review
described in Section 10 Investment Pools. No limit will be placed on the
percentage total in this category.
6) CALIFORNIA ASSET MANAGEMENT PROGRAM (CAMP) — Government
Code Section 53601(p)
The Trust is currently governed by a Board of five Trustees, all of whom are
officials or employees of Public Agencies. The Trustees are responsible for
setting overall policies and procedures for the Trust. The Program's Investment
Adviser and Administrator is Public Financial Management, Inc. The amounts
deposited in this category shall be limited to bond proceeds and are to be
invested for the purpose of arbitrage management only. The District has no
funds invested in CAMP at this time. Investment of District funds in OCCIP would
be subject to investigation and due diligence prior to investing, and on a continual
basis to a level of review described in Section 10 Investment Pools. Proceeds
may be invested in the Treasury Portfolio and/or the Money Market Portfolio.
There is no maturity limit. No limit will be placed on the percentage total in this
category.
7) U.S. TREASURY OBLIGATIONS — Government Code Section 53601(b)
United States Treasury notes, bonds, bills or certificates of indebtedness, or
those for which the faith and credit of the United States are pledged for the
payment of principal and interest. The maximum maturity shall be limited to five
years. No limit will be placed on the percentage total invested in this category.
8) U.S. AGENCY OBLIGATIONS — Government Code Section 53601(f)
Federal agency or United States government-sponsored enterprise senior debt
obligations, participations, mortgaged -backed securities or other instruments,
including those issued by or fully guaranteed as to principal and interest by
Federal agencies or United States government-sponsored enterprises.
Examples of these securities include Federal National Mortgage Association,
Federal Farm Credit Bank, Federal Home Loan Mortgage Corporation and
Federal Home Loan Bank. The maximum maturity shall be limited to five years
with no limit placed on the percentage total in this investment category.
9) NEGOTIABLE CERTIFICATES OF DEPOSIT — Government Code Section
53601(i)
Investments are limited to deposits issued by a nationally or state -chartered
bank, a savings association or a federal association (as defined by Section 5102
of the Financial Code), a state or federal credit union, or by a state -licensed
branch of a foreign bank.
Individual investments shall be limited to Federal Deposit Insurance Corporation -
insured limits of $250,000. Purchases of certificates of deposit pursuant to
Government Code Sections 53601.8, 53653.8, and 53601 shall not, in total,
exceed 30 percent of District's investment portfolio. The maximum maturity is
limited to five years.
3010-004 Public Funds Investment Policy
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10) MONEY MARKET FUNDS— Government Code Section 53601(1)(2)
Shares of a beneficial interest issued by diversified management companies that
are money market funds registered with the Securities and Exchange
Commission.
The company shall have met either of the following criteria: (A) attained the
highest ranking or the highest letter and numerical rating provided by not less
than two nationally recognized rating services and (B) retained an investment
adviser registered or exempt from registration with the Securities and Exchange
Commission with not less than five years of experience managing money market
mutual funds with assets under management in excess of five hundred million
dollars ($500,000,000). There is no maturity limit. A maximum of 20 percent of
the portfolio may be invested in this category, and a maximum of 10 percent of
the portfolio may be invested in any single issuer.
If the District has funds invested in a money market fund, a copy of the fund's
information statement shall be maintained on file. In addition, the Treasurer
should review the fund's summary holdings on a quarterly basis.
11) MEDIUM-TERM (OR CORPORATE) NOTES — Government Code Section
53601(k)
Medium-term notes are defined as all corporate and depository institution debt
securities with a maximum remaining maturity of five years or less. The
corporation must be domestic, the notes must be domestic and the notes must
be issued in the United States. The corporation must be rated A or its equivalent
or better by a nationally recognized rating service. The maximum maturity is
limited to five years and the maximum percentage allowable for investment is 30
percent of the investment portfolio in the aggregate.
12) BANKERS' ACCEPTANCES — Government Code Section 53601 (g)
Bankers' acceptances, otherwise known as bills of exchange or time drafts, are
drawn on and accepted by a commercial bank. Purchases are limited to bankers'
acceptances issued by domestic or foreign banks, which are eligible for purchase
by the Federal Reserve System. Eligible bankers' acceptances are restricted to
issuing financial institutions with a short-term debt rating of at least "A-1" or its
equivalent by a nationally recognized rating service. The maximum term may
not exceed 180 days and the maximum percentage allowable for investment is
10 percent of the portfolio in the aggregate, and 5% for an individual issuer.
13) COMMERCIAL PAPER— Government Code Section 53601(h)
Commercial paper rated the highest ranking or of the highest letter and number
ratings as provided for by a nationally recognized rating service. The entity that
issues the commercial paper shall meet either of the following two sets of criteria:
(1) The corporation shall be organized and operating within the United States,
shall have total assets in excess of $500,000,000, and shall have debt, other
than commercial paper, if any, that is rated A or higher by a nationally recognized
rating service. (2) The corporation shall be organized within the United States as
a special purpose corporation, trust, or limited liability company, has program
wide credit enhancements including, but not limited to, over collateralization,
letters of credit, or surety bond; has commercial paper that is rated "A-1" or
higher, or equivalent by a nationally recognized statistical -rating organization.
Eligible commercial paper may not exceed 270 days' maturity and may not
represent more than the 25 percent of the investment portfolio in the aggregate,
and 5% for an individual issuer.
3010-004 Public Funds Investment Policy Page 10 of 14
Page 22 of 134
APPENDIX B
GLOSSARY
AGENCIES: Federal agency securities and/or Government-sponsored enterprises
ASKED: The price at which securities are offered.
BANKERS' ACCEPTANCE (BA): A draft or bill or exchange accepted by a bank or trust
company. The accepting institution guarantees payment of the bill, as well as the issuer.
BENCHMARK: A comparative base for measuring the performance or risk tolerance of
the investment portfolio. A benchmark should represent a close correlation to the level of
risk and the average duration of the portfolio's investments.
BID: The price offered by a buyer of securities. (When you are selling securities, you ask
for a bid.) See Offer.
BROKER: A broker brings buyers and sellers together for a commission.
CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by
a Certificate. Large -denomination CD's are typically negotiable.
COLLATERAL: Securities, evidence of deposit or other property, which a borrower
pledges to secure repayment of a loan. Also refers to securities pledged by a bank to
secure deposits of public monies.
COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual report
of the District. It includes five combined statements for each individual fund and account
group prepared in conformity with GAAP. It also includes supporting schedules necessary
to demonstrate compliance with finance -related legal and contractual provisions,
extensive introductory material, and a detailed Statistical Section.
COUPON: (a) The annual rate of interest that a bond's issuer promises to pay the
bondholder on the bond's face value. (b) A certificate attached to a bond evidencing
interest due on a payment date.
DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying
and selling for his own account.
DEBENTURE: A bond secured only by the general credit of the issuer.
DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery
versus payment and delivery versus receipt. Delivery versus payment is delivery of
securities with an exchange of money for the securities. Delivery versus receipt is delivery
of securities with an exchange of a signed receipt for the securities.
DERIVATIVES: (1) Financial instruments whose return profile is linked to, or derived from,
the movement of one or more underlying index or security, and may include a leveraging
factor, or (2) financial contracts based upon notional amounts whose value is derived from
an underlying index or security (interest rates, foreign exchange rates, equities or
commodities).
3010-004 Public Funds Investment Policy Page 11 of 14
Page 23 of 134
DISCOUNT: The difference between the cost price of a security and its maturity when
quoted at lower than face value. A security selling below original offering price shortly after
sale also is considered to be at a discount.
DISCOUNT SECURITIES: Non-interest bearing money market instruments that are
issued a discount and redeemed at maturity for full face value (e.g., U.S. Treasury Bills.)
DIVERSIFICATION: Dividing investment funds among a variety of securities offering
independent returns.
DURATION: A measure of the sensitivity of the price (the value of principal) of a fixed-
income investment to a change in interest rates. Duration is expressed as a number of
years. Rising interest rates mean falling bond prices, while declining interest rates mean
rising bond prices.
FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply
credit to various classes of institutions and individuals, e.g., S&L's, small business firms,
students, farmers, farm cooperatives, and exporters.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that
insures bank deposits, currently up to $250,000 per entity.
FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is
currently pegged by the Federal Reserve through open -market operations.
FEDERAL HO LOAN BANKS (FHLB): Government sponsored wholesale banks
(currently 12 regional banks), which lend funds and provide correspondent banking
services to member commercial banks, thrift institutions, credit unions and insurance
companies. The mission of the FHLBs is to liquefy the housing related assets of its
members who must purchase stock in their district Bank.
FEDERAL NATIONAL MO TGAGE ASSOCIATION (FNMA): FNMA, like GNMA was
chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal
corporation working under the auspices of the Department of Housing and Urban
Development (HUD). It is the largest single provider of residential mortgage funds in the
United States. Fannie Mae, as the corporation is called, is a private stockholder -owned
corporation. The corporation's purchases include a variety of adjustable mortgages and
second loans, in addition to fixed-rate mortgages. FNMA's securities are also highly liquid
and are widely accepted. FNMA assumes and guarantees that all security holders will
receive timely payment of principal and interest.
FEDERAL RESERVE SYSTEM: The central bank of the United States created by
Congress and consisting of a seven member Board of Governors in Washington, D.C., 12
regional banks and about 5,700 commercial banks are members of the system.
GOVERNMENT NATIONAL MO TGAGE ASSOCIATION (GNMA or Ginnie Mae):
Securities influencing the volume of bank credit guaranteed by GNMA and issued by
mortgage bankers, commercial banks, savings and loan associations, and other
institutions. Security holder is protected by full faith and credit of the U.S. Government.
Ginnie Mae securities are backed by the FHA, VA or FHA mortgages. The term "pass-
throughs" is often used to describe Ginnie Maes.
LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without
a substantial loss of value. In the money market, a security is said to be liquid if the spread
between bid and asked prices is narrow and reasonable size can be done at those quotes.
3010-004 Public Funds Investment Policy Page 12 of 14
Page 24 of 134
LOCAL GOVERNMENT INVESTMENT POOL (LGIP): The aggregate of all funds from
political subdivisions that are placed in the custody of the State Treasurer for investment
and reinvestment.
MARKET VALUE: The price at which a security is trading and could presumably be
purchased or sold.
MASTER REPURCHASE AGREEMENT: A written contract covering all future
transactions between the parties to repurchase—reverse repurchase agreements that
establishes each party's rights in the transactions. A master agreement will often specify,
among other things, the right of the buyer -lender to liquidate the underlying securities in
the event of default by the seller borrower.
MATURITY: The date upon which the principal or stated value of an investment becomes
due and payable.
MONEY MARKET: The market in which short-term debt instruments (bills, commercial
paper, bankers' acceptances, etc.) are issued and traded.
OFFER: The price asked by a seller of securities. (When you are buying securities, you
ask for an offer.) See Asked and Bid.
OPEN MARKET OPERATIONS: Purchases and sales of government and certain other
securities in the open market by the New York Federal Reserve Bank as directed by the
FOMC in order to influence the volume of money and credit in the economy. Purchases
inject reserves into the bank system and stimulate growth of money and credit; sales have
the opposite effect. Open market operations are the Federal Reserve's most important
and most flexible monetary policy tool.
PORTFOLIO: Collection of securities held by an investor.
PRIMARY DEALER: A group of government securities dealers who submit daily reports
of market activity and positions and monthly financial statements to the Federal Reserve
Bank of New York and are subject to its informal oversight. Primary dealers include
Securities and Exchange Commission (SEC) -registered securities broker-dealers,
banks, and a few unregulated firms.
PRUDENT PERSON RULE: An investment standard. In some states the law requires that
a fiduciary, such as a trustee, may invest money only in a list of securities selected by the
custody state—the so-called legal list. In other states the trustee may invest in a security
if it is one which would be bought by a prudent person of discretion and intelligence who
is seeking a reasonable income and preservation of capital.
QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim
exemption from the payment of any sales or compensating use or ad valorem taxes under
the laws of this state, which has segregated for the benefit of the commission eligible
collateral having a value of not less than its maximum liability and which has been
approved by the Public Deposit Protection Commission to hold public deposits.
RATE OF RETURN: The yield obtainable on a security based on its purchase price or its
current market price. This may be the amortized yield to maturity on a bond the current
income return.
3010-004 Public Funds Investment Policy Page 13 of 14
Page 25 of 134
REPURCHASE AGREEMENT (REPO): A holder of securities sells these securities to an
investor with an agreement to repurchase them at a fixed price on a fixed date. The
security "buyer" in effect lends the "seller" money for the period of the agreement, and the
terms of the agreement are structured to compensate him for this.
SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities
and valuables of all types and descriptions are held in the bank's vaults for protection.
SECONDARY MARKET: A market made for the purchase and sale of outstanding issues
following the initial distribution.
SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect
investors in securities transactions by administering securities legislation.
SEC RULE 15(C)3-1: See Uniform Net Capital Rule.
STRUCTURED NOTES: Notes issued by Government Sponsored Enterprises (FHLB,
FNMA, SLMA, etc.) and Corporations, which have imbedded options (e.g., call features,
step-up coupons, floating rate coupons, and derivative -based returns) into their debt
structure. Their market performance is impacted by the fluctuation of interest rates, the
volatility of the imbedded options and shifts in the shape of the yield curve.
TREASURY BILLS: A non-interest bearing discount security issued by the U.S. Treasury
to finance the national debt. Most bills are issued to mature in three months, six months,
or one year.
TREASURY BONDS: Long-term coupon -bearing U.S. Treasury securities issued as
direct obligations of the U.S. Government and having initial maturities of more than 10
years.
TREASURY NOTES: Medium-term coupon -bearing U.S. Treasury securities issued as
direct obligations of the U.S. Government and having initial maturities from two to 10 years.
UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that
member firms as well as nonmember broker-dealers in securities maintain a maximum
ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital
ratio. Indebtedness covers all money owed to a firm, including margin loans and
commitments to purchase securities, one reason new public issues are spread among
members of underwriting syndicates. Liquid capital includes cash and assets easily
converted into cash.
YIELD: The rate of annual income return on an investment, expressed as a percentage.
(a) INCOME YIELD is obtained by dividing the current dollar income by the current market
price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield
minus any premium above par or plus any discount from par in purchase price, with the
adjustment spread over the period from the date of purchase to the date of maturity of the
bond.
3010-004 Public Funds Investment Policy Page 14 of 14
Page 26 of 134
pfml asset
management
Yorba Linda Water
District
Investment Management and Advisory Services
February 9, 2023
(213) 999-7203
pfmam.com
PFM Asset Management LLC
Sarah Meacham, Managing Director
NOT FDIC INSURED: NO BANK GUARANTEE: MAY LOSE VALUE
Chris Harris, CFA, CAIA, Director
Lesley Murphy, Director
Page 27 of 134
About PFMAM
Page 28 of 134
Sarah Meacham
Managing Director
Engagement Oversight
18 years in the
industry/PFMAM
I
tf-
Richard Babbe
Senior Managing Consultant
Relationship Manager
34 years in the industry and
24 years with PFMAM
Chris Harris, CFA, CAIA
Director
Bond Proceeds Strategy
Oversight
15 years in the
industry/PFMAM
Michael Steinbrook
Director
Arbitrage Rebate Oversight
19 years in the industry and
19 years with PFMAM
Lesley Murphy
Director
Relationship Liaison
15 years in the industry and
14 years with PFMAM
Jeremy King
Key Account Manager
15 years in the industry and
8 years with PFMAM
Robert Cheddar, CFA
Managing Director
Senior Portfolio Manager
24 years in the industry and
17 years with PFMAM
1
Page 29 of 134
42 years of experience
Over 240 investment
professionals
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grade fixed income and multi -asset
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Liquidity management
Enhanced cash
Bond proceeds investments
1 -to 3-, 1- to 5-, and 1- to 10 -year
mandates
► Philosophy and mission consistent with
public sector objectives
Safety
Liquidity
Yield
Source: Assets under management as of December 31, 2022. Total
41 employee data as of September 30, 2022.
$202.4b
Total assets nationwide
$153.6b
Discretionary assets under management
$48.8b
Assets under advisement
L
National Reach:
PFMAM Offices
For Institutional Investor or Investment Professional 2
Use Only — This material is not for inspection by,
distribution to, or quotation to the generlRagWi80 of 134
► Trusted advisor in the California finance community since 1989
• PFMAM serves 183 clients in the state of California
• Regular educators for CSMFO, CMTA, CSDA, ACWA, and CACTTC
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► Significant experience with Code and Investment Policy
development
Membership on CMTA Investment Policy Certification Committee
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CALIFORNIA
Contra Costa Water District
• Cucamonga Valley Water District
• Metropolitan Water District of
Southern California
• Modesto Irrigation District
Oro Loma Sanitary District
• Padre Dam Municipal Water
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Sacramento Suburban Water
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• San Bernardino Valley Municipal
Water District
• Santa Margarita Water District
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Union Sanitary District
14.5b
)TAL ASSETS
CALIFORNIA
As of December 31, 2022. Total assets in California includes $37.5 billion in discretionary assets under management and an additional $27.0 billion in 3
non -discretionary assets under advisement. Please see important disclosures.
Page 31 of 134
OBJECTIVE ACHIEVED THROUGH...
• Hiph-quality investments
Safety • Continuous monitoring of portfolio holdings
• Diversification
• Cash flow analysis and projections
Liquidity • Segregation of funds
• Highl illiquid investment securities
• Recommendations based on relative value
Return opportunities
• Disciplined duration management
4
Page 32 of 134
Passive Strategies: Ideal for funds with
conservative, straightforward permitted
investments and predictable liquidity
needs
► Project funds with unretainable positive
arbitrage
Capitalized interest funds
► One-time fees with subsequent
restructuring or reinvestment opportunities
for separate fees
Active Management: Ideal for funds
with expansive permitted investments
and/or uncertain liquidity needs
► Project funds
► Operating funds
► Reserve Funds
PASSIVE
STRATEGI AN
ACTIVE
MANAGEMENT
Periodic/ad-hoc monitoring
Real-time monitoring of
holdings through time
Wholesale restructurings to
More frequent trades to
rebalance to target
manage duration and/or
liquidity
No ability to take advantage of
Greater ability to take
short-term opportunities
advantage of short-term
securities mispricings
May require substantial
Enhanced ability to add
changes in market conditions
incremental net value
to add value
No fiduciary responsibility
Advisor has fiduciary
once portfolio is structured
responsibility
5
Page 33 of 134
Approach to
Investing the
District's Bond
Proceeds
Page 34 of 134
► Three dedicated groups for services related
to bond proceeds
► Arbitrage rebate and tax compliance
specialists
► Active and passive strategies to
reinvest proceeds
Specialized Bond Proceeds Reporting
2,591 I $213.4b
Transactions Assets Since 2010
40 400
0 30 300 u,
0
20 , 200 m
N
10 ' _ I I 100
Q
0 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
� Market Value Number of Transactions
[mnB�w 0.i6,,f1F9, neudn
FRD,[[i[D DRAWS v ACTUAL DRAWS
Thought Leadership & Education on
Bond Proceeds Investment
BEE
For illustrative purposes only. Bond proceeds related transaction and asset data through December 31, 2022. 6
Page 35 of 134
Thought Leadership & Education on
Bond Proceeds Investment
BEE
For illustrative purposes only. Bond proceeds related transaction and asset data through December 31, 2022. 6
Page 35 of 134
30+ years 50,000+ 300+
arbitrage rebate experience calculations since 1989 unique/annual clients
► Fully dedicated professionals focused
on one service — arbitrage rebate
compliance
► Technical Proficiency
► Market Presence
► Depth of Resources
► IRS Audit Experience
Data as of December 31, 2022.
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Arbitrage Rebate Calculation Volume
2018-2022
2018 2019 2020 2021 2022
■ Total Arbitrage Rebate & Yield Restriction ■ Spending Exception
7
Page 36 of 134
What is my credit How does this instrument or
risk, and how can Iinvestment strategy provide
manage it? 16 liquidity for both expected and
unforeseen draws?
What is the yield of the instrument or
�► What are the rebate investment strategy, and how can my
implications of my return change through time? Does this
reinvestment strategy? reflect my view of market conditions? How
does this instrument or investment strategy
manage market and reinvestment risk?
8
Page 37 of 134
► Specifics of bond issuance changes the risk -reward dynamic because of arbitrage
rebate and yield restriction considerations
PFMAM cannot provide tax or legal advice. Please see important disclosures.
For Institutional Investor or Investment
Professional Use Only — This material is 9
not for inspection by, distributi�atg�or�8 134
quotation to the general publi �JJ
RISK FACTOR
STRATEGY
Credit
Liquidity
Reinvestment
Same day, which is a
MMF/LAIF
Function of underlying fund
function of cut-off times;
Yield of fund will tend to
holdings
redemption fees or gates
follow short-term rates
may apply
Passively structured
Liquid underlying securities;
Yields locked in;
portfolio
Government -only
logistical considerations if
reinvestments will occur at
liquidity needs to be raised
prevailing short-term rates
Structured Investment
100% exposure to
No secondary market;
(AA -rated counterparty)
counterparty
notification requirements for
Yields locked in
draws
PFMAM cannot provide tax or legal advice. Please see important disclosures.
For Institutional Investor or Investment
Professional Use Only — This material is 9
not for inspection by, distributi�atg�or�8 134
quotation to the general publi �JJ
► Specifics of bond issuance changes the risk -reward dynamic if earnings above
arbitrage yield will be subject to rebate
*As of February 7, 2023, and subject to change. Assumes no change to draw schedule or portfolio composition and reinvestment of
idle cash at yield of portfolio. PFMAM cannot provide tax or legal advice. Please see important disclosures in the Appendix section. 10
Page 39 of 134
RETURN CONSIDERATION
STRATEGY
Initial Gross Yield
Estimated Net Earnings ($)
Additional Considerations
Yield will change with
MMF/LAIF
2.51%
$243,800
underlying market conditions;
no out-of-pocket costs
Passively structuredo
Potential to treat fee as
portfolio
4.80%
$446,375
qualified administrative cost
(QAC)
Structured Investment
Fees may be treated as a
(AA -rated counterparty)
5.03%
$448,700
QAC; nominal incremental
net earnings
*As of February 7, 2023, and subject to change. Assumes no change to draw schedule or portfolio composition and reinvestment of
idle cash at yield of portfolio. PFMAM cannot provide tax or legal advice. Please see important disclosures in the Appendix section. 10
Page 39 of 134
Portfolio
$20,411,705
Par Amount (Total)'
Original Cost (Total)'
$20,000,000
Weighted Average Maturity
176 days
Average Life of Draw Schedule
176 days
Average Gross Yield (IRR)
4.80%
Estimated Gross Earning S2
$466,375
Estimated Portfolio FeeS2
$20,000
Estimated Net Earnings2
$446,375
Sector Allocation
■ Generic MMF
4%
■ Fed. Agn. Disc.
Note ■ U.S. Treasury
54% Note
21%
■ U.S. Treasury Bill
21%
Portfolio Cash Flows vs Estimated Draws
($ in millions)
Estimated Portfolio Cash Flows Estimated Draws
--*--Estimated Ending Cash Balance
$3.5
$3.0
$2.5 —
$2.0
$1.5
$1.0
$0.5
$0.0
M M M M M M CO co M M co It
N N N N N N N N N N N N N
O O M 7 7� N U O N c6 N
IL Q Q fn O Z 0 IL
[1] Sample portfolio as of February 7, 2023, including cash balances. 11
[2] Estimated gross earnings and estimated portfolio fees are for the period February 7, 2023, through February 1, 2024.
Please see important disclosures in the Appendix section. Page 40 of 134
► 2 -Year Spending Exception Example
► 2022A Bonds must be a "Construction" issue
► At least 75% of the project is construction
► Must meet each benchmark, no catch-up allowed
2022A Acquisition Fund $24,256,249
Expected • $500,000
Denominator $24,756,249
❑V
Issue Date
7/28/2022
W
MP
Pel
6 months
1/28/2023
10%'
$2,475,624.90 ? Yes No
❑V
12 months
7/28/2023
45%
$11,140,312.05 ?
Yes / No
18 months
1/28/2024
75%
$18,567,186.75 ?
Yes / No
Q
24 months
7/28/2024
100%**
$24,756,249.00 ?
Yes / No
For illustrative purposes only, assumes expected interest earnings during the life of the project, final benchmark based on actual earnings. 12
**De minimis (lesser of 3% or $250K) and reasonable retainage (5% spent in 12 months) exceptions may apply for last benchmark.
Page 41 of 134
District hires
PFMAM
PHASE ONE
Information Collection & Analysis
► Meet with District staff to discuss investment goals
and risk tolerances
► Review the District's Permitted Investments and
offer suggestions, if necessary
Begin placing trades
and initial investments
PHASE TWO
Recommendations & Confirmation
► Discuss strategy recommendations
with the District
► District approves investment strategy
► PFMAM confirms strategy with Trustee
► Review/confirm anticipated spending patterns in the and Bond Counsel as necessary
context of arbitrage rebate requirements
Agreement executed and delivered I Complete all administrative documentation, authorizations, and procedures
Coordinate appropriate permissions with Trustee
Total Estimated Time Between Contract Signing and Trade Execution = 2 Weeks
13
41 Page 42 of 134
Approach to
Managing the
District's
Reserves
Page 43 of 134
1 Investment Policy Review
Cash Flow Analysis
Strategy Development and Implementation
✓ Consider adding additional investment sectors to Investment Policy
✓ Create an optimized portfolio structure by allocating funds into "Liquidity" and a
"Core" portfolio
✓ Leverage other teams within PFMAM to enhance overall investment program
14
Page 44 of 134
Initially Annually Continually Nq
Examine current Policy in Review and address Monitor and enforce
relation to: changes to Code compliance
► Industry standards and Reassess authorized ► Monitor changes to
best practices list of investments Code and best
► Code requirements Reevaluate maturity practices
Diversification and
limits and benchmark Provide accurate and
► timely information
maturity standards Discuss strategy
► Risk tolerance and implementation
preferences
► Reporting standards
and requirements
15
Page 45 of 134
► We work with public agency organizations
to review impactful legislation for California
public agencies
► We serve on the Investment Policy
Certification Committees for CMTA and
APT US&C
► We help our clients develop strong
investment policies that meet the long-term
needs of their agencies
Source: the District's Investment Policy as of July 2018 and information
provided during the procurement process.
100%
80%
60%
40%
20%
0%
Current Allocation vs California Investment
Universe
O a 0 a iB 2 Q 0_ c c m a
a) o g � a) o
O U C J Q U
Q 0 0 TO
C N O <n 7
cn E a� Q
Zi E in O ECO
CO
> z E
c O
a U L)
D ami a
U o a)
O Of
d
T
C
7
O
U
■ Current Allocation IPS Limit OCA State Code
16
Page 46 of 134
► Determines optimal liquidity allocation
• Identify short-term vs. long-term
• Short-term assets should be the primary
source for near-term disbursements
• Core assets are designed for long-term growth
► Enhances cash management
• Better understanding of cash flow seasonality
► Identifies an optimal allocation of funds to
maximize investment income
• Improve earnings potential by extending
average maturity
• Reduce budgetary uncertainty
Sample Client
Historical Analysis of Portfolio
$40
$35
$30
y $25
c
° $20
$15
$10
$5
$0
Mar -20 Mar -21
Historical Short-term Portfolio
Mar -22
Modeled Core
17
Page 47 of 134
Initially
► Prioritize safety,
liquidity, and return in
discussing a broad
investment strategy
► Select benchmark to
measure risk and return
of investments
► Collectively approve
investment strategy
Continually
► Actively trade within the
portfolio to reflect relative
value opportunities among
sectors, maturities, and
issuers
► Monitor compliance before
and after trades are
executed
► Coordinate trade
settlement
► Provide educational
trainings and
communication pieces,
including market
commentaries,
whitepapers, and
podcasts.
Quarterly/Annually
► Review performance
reporting
► Revisit cash flows,
investment policy, and
benchmark
► Confirm how strategy
was implemented and
will be going forward
18
Page 48 of 134
Meetings and Communication
► Comprehensive quarterly portfolio discussions to review
portfolio activity, strategy, liquidity requirements, and general
market conditions
► Discussions as needed to discuss liquidity needs
► Available as needed as general investment resource
Comprehensive Reporting
► GASB 31, 40 compliant
► Monthly statements
► Performance reports
► Budget assistance — earnings forecasts
► Up-to-date information on secure site
Education and Training
► Monthly and quarterly updates
► Commentaries and whitepapers
► Webinars and week-long seminars
► Customized in-person sessions
REPORTING
QUARTERLY MARKET SUMMARY
Economic Snep—
Portfolio Characteristics
High quality
Well -diversified
•oo �ovo�.a� � roti MaKlmiw Income
��� >� .,• Reduced earnings -1.
Sector Allocation
• Aa Mss
p% • UaT�ury
.an•ae+.a..a�.saw.—.r, • Nego4abk GD
,e...aiwwe��LLeire i.mweamausm.—,...�ammew 5%
• FalealAW
15%
asset
PFM Asset .......c
Annual Ecl
and Finan(
Markets W
The Economic Outlook for 2022 a
11 2—
aaoam_lo�er. gi=n
Duration 2.70 years
2.
men 70 y.-
3—
earsGa Yield 0.56%
Gross Annoal Income Difference+ 8570,000
Duration Distribution
qo%
0%
ONGOING CONTENT
Short Duration Strategies
are Worth a Look
ne Vab roar, m'Aq m
pfm 1 asset
management
aaiw� nie einrrnmAn. A' aib Wn. u�u em�immn � nmea�me9m m w,t+
f
19
Page 49 of 134
Portfolio Statistics
Duration
2.42 years
Gross Yield
4.35%
0
Credit Quality
• AA
100%
50%
40%
30%
20%
10%
0%
■ U.S. Treasury
100%
Sector Allocation
Duration Distribution
0-1 yr 1-2 yr 2-3 yr 3-4 yr
• Data Source: Bloomberg. Data as of February 7, 2023.
• Sample portfolio structured by PFMAM. Please see important disclosures at the end of this presentation.
Nib
4-5 yr
20
Page 50 of 134
Portfolio Statistics
Duration
2.42 years
Gross Yield
4.53%
■ AA
64%
Credit Quality
50%
A
23% 40%
30%
■ BBB
2% 20%
10%
• AAA
11% 0%
■ Negotiable C
3%
Federal Agency
10%
U.S. Treasury
42%
Sector Allocation
■ Corporate
Notes
25%
ABS
6%
■ Supranational
4%
4i;
Agency MBS
7%
Municipal
3%
Duration Distribution
0-1 yr 1-2 yr 2-3 yr 3-4 yr 4-5 yr
11111114 • Data Source: Bloomberg. Data as of February 7, 2023. 21
00 • Sample portfolio structured by PFMAM. Please see important disclosures at the end of this presentation.
Page 51 of 134
District hires
PFMAM
PHASE ONE
Information Collection & Analysis
► Meet with District staff to understand existing
investment program, risk tolerances, and goals
► Perform full cash flow analysis
► Review the District's Investment Policy and offer
suggestions
Begin placing trades
and initial investments
PHASE TWO
Recommendations & Confirmation
► Discuss strategy recommendations
with the District
► Select benchmark(s)
► Approve investment strategy
Agreement executed and delivered I Complete all administrative documentation, authorizations, and procedures
Add Investment Policy rules to PFMAM's compliance system I Establish the District's portfolio data on PFMAM's accounting system
Assist the District in establishing a custodial relationship, if necessary
Total Estimated Time Between Contract Signing and Initial Trades = 4 Weeks
22
41 Page 52 of 134
Liquidity Option:
California Asset
Management
Program
("CAMP")
Page 53 of 134
Cash Reserve Portfolio (Pool)
Rated AAAm by Standard & Poorsl
Same-day liquidity (11:00 a.m. PST cut-off)
Unlimited transactions via wire, ACH, or check
Online account management
Option to open multiple sub -accounts
No minimum investment
Interest paid monthly
No additional out of pocket expenses
Specialized services for bond proceeds
Question 2
Ideal For:
o =
0
Operating
Funds
.It
Proceeds of Separate
Debt Issues Accounting
1. Please see important disclosures at the end of this presentation.
CK. Page 54 of 134
CAMP Term
Question 2
Rated AAAf by Fitch Ratings' Plan around your interest income stream
Opportunities to seek competitive interest rates Diversify your portfolio's maturity structure
Ladder maturities to meet known Minimum investment of $1 million
cash flow needs
Maturities range from 60 days to 1 year
Select from a wide range of maturity dates
Ideal For:
Known Revenue
and Expenditure
Streams
1. Please see important disclosures at the end of this presentation.
Ct --Page55'bi 134
Why PFMAM?
Page 56 of 134
aYorba
Water
Linda
District
PFMAM:
Supporting the
District's
Mission
As the District remains focused on achieving its mission of providing reliable water
and sewer services to protect public health and the environment with financial
integrity, we will stand beside you as your investment partner.
Our ideas will be designed to help the District protect and grow its financial
resources so that it will remain fiscally strong.
• Long history of prudent advice for the stewardship of California public sector funds
• Fiduciary committed to acting in the best interest of our clients
• Specialized resources for both bond proceeds and reserves
• Customized approach aligned to your needs
• Culture of safety, compliance, and transparency
25
Page 57 of 134
Thank you'.
Q uestions?
pf m *1 asset
management
Page 58 of 134
Appendix
Page 59 of 134
PFM ASSET MANAGEMENT LLC
ARBITRAGE REBATE COMPLIANCE SERVICES FEE SCHEDULE
BASE FEE
Service
Fee
Report Fee — one of the following will apply, per issue:
Annual report, gross proceeds subject to arbitrage rebate
$1,5 DO
Semi-annual report, spending exception analysis
$1,0D0
Annual report, bona fide debt service fund testing only
$750
ADDITIONAL FEES
Per report, as appropriate
Service
Fee
Variable Rate Issue
+$5D0 -$1,0D0
Computation Periods in Excess of 12 Months — one of the following will
apply, per issue:
Additional year or fraction thereof, outstanding gross proceeds
+$5D0
Additional year or fraction thereof, bona fide debt service fund
+$250
testing only
OPTIONAL SERVICES
Evaluating various elections and applications To be negotiated separately
Training, Post Issuance Compliance Consulting
HOURLY RATE FEE, IF APPLICABLE
Managing Director
$350
Director
$3D0
Senior Managing Consultant
$250
AnalystlSenior Analyst
$2D0
AssociateiSenior Associate
$150
26
Page 60 of 134
Investment advisory services are provided by PFM Asset Management LLC ("PFMAM"), an investment
adviser registered with the U.S. Securities and Exchange Commission and a subsidiary of U.S. Bancorp
Asset Management, Inc. ("USBAM"). USBAM is a subsidiary of U.S. Bank National Association ("U.S.
Bank"). U.S. Bank is a separate entity and subsidiary of U.S. Bancorp. U.S. Bank is not responsible for
and does not guarantee the products, services or performance of PFMAM. The information contained is
not an offer to purchase or sell any securities. Additional applicable regulatory information is available
upon request.
For more information regarding PFMAM's services please visit www.pfmam.com.
27
Page 61 of 134
[1 ] Estimated market yields as of February 07, 2023. Source: Bloomberg.
Investments have not been executed. Actual rates and security availability may vary at time of placement.
[2] Estimated earnings are based on settlement on February 07, 2023, and assumes no trading in the portfolio.
[3] Generic MMF is quoted based on the S&P Government LGIP 7 -day net yield (source: Bloomberg), as of February 06, 2023.
[4] Reinvestment and average yields are calculated assuming a constant overnight interest rate of 4.21 %. Actual reinvestment rates will vary.
[5] Yields on investments are presented based on corresponding basis (actual/actual, actual/360, 30/360) depending on security type.
The Average Gross and Net Yields are computed on the internal rate of return of the cashflows generated by the portfolio, on an actual/actual basis.
[6] Investment management fees for a one-time portfolio purchase are $20,000.
[7] Past performance is not indicative of future results.
PFM Asset Management LLC ("PFMAM") is an investment adviser registered with the U.S. Securities and Exchange Commission and a subsidiary of U.S. Bancorp
Asset Management, Inc. ("USBAM"). USBAM is a subsidiary of U.S. Bank National Association ("U.S. Bank"). U.S. Bank is a separate entity and subsidiary of U.S.
Bancorp. U.S. Bank is not responsible for and does not guarantee the products, services or performance of PFMAM.
'I[�\�1�6Y�1:7��7►[�l 7_1►1:�ei�L1:7_1►�� �J I_\'��i�9 �9_1��1�►[�\t_\�7�1i>±9��
28
Page 62 of 134
Sample portfolios are provided for illustrative purposes only and are not a recommendation.
P. Portfolios based on assumed investment noted on each respective page.
► Yield source Bloomberg as of February 7, 2023.
► Security universe sourced from Bloomberg and Market Axess and further limited to those issuers permitted by
PFMAM's internal Approved Credit List.
Actual yields and security availability may vary at time of purchase.
► As economic and market conditions may change in the future, so may PFMAM's recommendations as to the
sale and purchase of securities in the portfolio.
29
Page 63 of 134
CAMP Disclaimer
CAMP® is a registered trademark and the CAMP logos and designs are trademarks owned by the California Asset
Management Trust (Trust). This information is for institutional investor use only, not for further distribution to retail
investors, and does not represent an offer to sell or a solicitation of an offer to buy or sell any fund or other security.
Investors should consider the Trust's investment objectives, risks, charges and expenses before investing in the Trust.
This and other information about the Trust is available in the Trust's current Program Guide, which should be read
carefully before investing. A copy of the Trust's Program Guide may be obtained by calling 1-800-729-7665 or is
available on the Trust's website at www.camponline.com. While the Cash Reserve Portfolio seeks to maintain a stable
net asset value of $1.00 per share and the CAMP Term Portfolio seeks to achieve a net asset value of $1.00 per share
at the stated maturity, it is possible to lose money investing in the Trust. An investment in the Trust is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Shares of the Trust are
distributed by PFM Fund Distributors, Inc., member Financial Industry Regulatory Authority (FINRA) (www.finra.org)
and Securities Investor Protection Corporation (SIPC) (wwwsioc.orq). PFM Fund Distributors, Inc. is an affiliate of PFM
Asset Management LLC.
Standard & Poor's fund ratings are based on analysis of credit quality, market price exposure, and management.
According to Standard & Poor's rating criteria, the AAAm rating signifies excellent safety of investment principal and a
superior capacity to maintain a $1.00 per share net asset value. However, it should be understood that the rating is not a
"market" rating nor a recommendation to buy, hold or sell the securities.
—Page 64 0), 34
CAMP Disclaimer Continued
For a full description on rating methodology, visit Standard & Poor's website
(http://www.standardandpoors.com/ratings/en US/web/guest/home).
The AAAf rating reflects Fitch Ratings' ("Fitch') review of the Term program's investment and credit guidelines, the
portfolio's credit quality and diversification, as well as the capabilities of PFM Asset Management LLC as investment
adviser. It indicates the highest underlying credit quality (or lowest vulnerability to default). However, it should be
understood that this rating is not a "market" rating nor a recommendation to buy, hold or sell the securities. For a full
description on rating methodology visit www. fitchratin-gs. com.
PFM Asset Management LLC ("PFMAM') serves as CAMP's Program Administrator, Investment Adviser and Rebate
Calculation Agent. PFMAM specializes in meeting the investment needs of public agencies. PFMAM is registered as an
investment adviser with the Securities and Exchange Commission ("SEC') under the Investment Advisers Act of 1940.
C1
age 65 �f`134
pfml asset
management
Yorba Linda Water
District
Investment Management and Advisory Services Overview
March 2, 2023
(213) 999-7203
pfmam.com
PFM Asset Management LLC
Sarah Meacham, Managing Director
NOT FDIC INSURED: NO BANK GUARANTEE: MAY LOSE VALUE
Lesley Murphy, Director
Page 66 of 134
Sarah Meacham
Managing Director
Engagement Oversight
18 years in the
industry/PFMAM
Richard Babbe
Senior Managing Consultant
Relationship Manager
34 years in the industry and
24 years with PFMAM
Chris Harris, CFA, CAIA
Director
Bond Proceeds Strategy
Oversight
15 years in the
industry/PFMAM
Michael Steinbrook
Director
Arbitrage Rebate Oversight
19 years in the industry and
19 years with PFMAM
11
Lesley Murphy
Director
Relationship Liaison
15 years in the industry and
14 years with PFMAM
Jeremy King
Key Account Manager
15 years in the industry and
8 years with PFMAM
Robert Cheddar, CFA
Managing Director
Senior Portfolio Manager
24 years in the industry and
17 years with PFMAM
1
Page 67 of 134
42 years of experience
Over 240 investment
professionals
► Specialists in customized, investment-
grade fixed income and multi -asset
portfolios
► Fixed income strategies include:
Liquidity management
Enhanced cash
Bond proceeds investments
1 -to 3-, 1- to 5-, and 1- to 10 -year
mandates
► Philosophy and mission consistent with
public sector objectives
• Safety
• Liquidity
Yield
Source: Assets under management as of December 31, 2022. Total
employee data as of September 30, 2022.
$202.4b
Total assets nationwide
$153,96b
Discretionary assets under management
$48.8b
Assets under advisement
L
National Reach:
PFMAM Offices
For Institutional Investor or Investment Professional 2
Use Only — This material is not for inspection by,
distribution to, or quotation to the generfRagle!Z8 of 134
► Trusted advisor in the California finance community since 1989
• PFMAM serves 183 clients in the state of California
• Regular educators for CSMFO, CMTA, CSDA, ACWA, and CACTTC
• Membership on CSMFO Professional Standards Committee
• Membership on GFOA Treasury and Investment Management Committee
• Investment advisor to the California Asset Management Program ("CAMP")
► Significant experience with Code and Investment Policy
development
• Membership on CMTA Investment Policy Certification Committee
• Membership on AP&T Investment Policy Certification Committee
California presence — Los Angeles and San Francisco offices
-ALlfuRNIP
Contra Costa Water District
• Cucamonga Valley Water District
• Metropolitan Water District of
Southern California
• Modesto Irrigation District
• Oro Loma Sanitary District
• Padre Dam Municipal Water
District
Sacramento Suburban Water
District
San Bernardino Valley Municipal
Water District
• Santa Margarita Water District
Silicon Valley Clean Water
• Union Sanitary District
14.5b
)TAL ASSETS
CALIFORNIA
As of December 31, 2022. Total assets in California includes $37.5 billion in discretionary assets under management and an additional $27.0 billion in 3
non -discretionary assets under advisement. Please see important disclosures.
Page 69 of 134
OBJECTIVE ACHIEVED THROUGH...
• High-quality investments
Safety • Continuous monitoring of portfolio holdings
• Diversification
• Cash flow analysis and projections
Liquidity • Segregation of funds
• Highly liquid investment securities
• Recommendations based on relative value
Return opportunities
• Disciplined duration management
4
Page 70 of 134
STRATEGY
RETURN CONSIDERATION
Initial Gross Yield
Estimated Net Earnings ($)
Additional Considerations
Passively structuredo
Potential to treat fee as
portfolio
4.80%
$446,375
qualified administrative cost
(QAC)
*Sample Project Fund Portfolio
(Govt Only; One -Time Purchase)
Sector Allocation
■ Generic MMF
4%
Fed. Agn. Disc.
Note ■ U.S. Treasury
54% Note
21%
U.S. Treasury
Bill
21%
Portfolio Cash Flows vs Estimated Draws
$3.5
Estimated Portfolio Cash Flows
$3.0 � Estimated Draws
$2.5 Estimated Ending Cash Balance
$2.0
$1.5
$1.0
$0.5
$0.0
co M M Cl) M M Cl) M M M M V V
N N N N N N N N N N N N N
>+ C 3 Q U 1 U C
LL Q 2 ---) M Q Cl) 0 Z 0 LL
'Sample portfolio as of February 7, 2023, including cash balances. Subject to change. Assumes no change to draw schedule or portfolio composition and reinvestment of
idle cash at yield of portfolio. PFMAM cannot provide tax or legal advice. Please see important disclosures in the Appendix section. 5
Page 71 of 134
1 Investment Policy Review
Cash Flow Analysis
Strategy Development and
Implementation
Current Allocation vs California Investment
Universe
100% ■ Current Allocation
80% IPS Limit
60% OCA State Code
40%
20
o% ❑ n ❑ n ❑
(n U N LL LL
U m <° J
2 Q U O O N d Q
�z 0_ 7� F0 o
U o E
U > Z E
c o
U
Sample Client
Historical Analysis of Portfolio
$40
$35 Historical Short-term Portfolio
•
$30 Modeled Core
c $25
0
$20
$15
$10
$5
$0
Mar -20 Mar -21
Mar -22
6
Page 72 of 134
n❑
Q
�wU)
c
m
n
m
Q
O
O E
O
c
s
Q
U
CO
Sample Client
Historical Analysis of Portfolio
$40
$35 Historical Short-term Portfolio
•
$30 Modeled Core
c $25
0
$20
$15
$10
$5
$0
Mar -20 Mar -21
Mar -22
6
Page 72 of 134
Liquidity Option:
California Asset
Management
Program
("CAMP")
Page 73 of 134
Introduction to the California Asset Management Program (CAMP)
CAMP is a California Joint Powers Authority established in 1989 to provide California public
agencies with professional investment services.
INVESTMENT OBJECTIVE To earn a high rate of return while preserving principal and providing liquidity. The Pool seeks
to maintain a stable NAV of $1.00 per share and the TERM Portfolio seeks to achieve a NAV of $1.00 per share at the stated
maturity.
CASH RESERVE PORTFOLIO (POOL) A short-term cash reserve portfolio and cash management vehicle permitted as
an investment for all local agencies under California Government Code Section 53601(p).
TERM PORTFOLIO A fixed rate, fixed term portfolio rated AAAf by Fitch Ratings and permitted as an investment for all
local agencies under California Government Code Section 53601(p).
Cash Reserve Portfolio (Pool)
Diversification as of January 31, 2023 Performance (3o -Day Net Yield' %)
Credit Quality Distribution
(Standard & Poor's Fund Ratings]
A -1+
24.2%
AAAm
A. 1.646 AA-
Sector Composition
Corporate
Notes
2.3%
Federal—
Agencies
ederal—Agencies
5.2%
Negotiable r
Certificates
of Deposit
25.6%
1. Please see important disclosures at the end of this presentation.
Money U -s- 5.00%v 4.5390%
Market Fund Treasuries ¢ 50%v 4.3661%
1.s% 1"6%
v 3 9103%
Supranationals 4.001°
0.6%
3.00°/v 2sts5°k
Repurchase
2.50%v 2.3o3s%
Agreements 2,000% t. %
33.5%
1.50°/v s.13ss5h
1.00°/v 08292%
049B9%
0.50°/0 0.2595%
O.DO°/v 0.0608% = ■ 11
Commercial
Paper
29.5%
`y 10 ;L 11�1 10, rL 11�1 fpl .p, 1L1 _01 `� rp
C1' Page 74 of 134
Thank you!
Q uestions?
pf m I asset
management
Page 75 of 134
Investment advisory services are provided by PFM Asset Management LLC ("PFMAM"), an investment
adviser registered with the U.S. Securities and Exchange Commission and a subsidiary of U.S. Bancorp
Asset Management, Inc. ("USBAM"). USBAM is a subsidiary of U.S. Bank National Association ("U.S.
Bank"). U.S. Bank is a separate entity and subsidiary of U.S. Bancorp. U.S. Bank is not responsible for
and does not guarantee the products, services or performance of PFMAM. The information contained is
not an offer to purchase or sell any securities. Additional applicable regulatory information is available
upon request.
For more information regarding PFMAM's services please visit www.pfmam.com.
8
Page 76 of 134
[1] Estimated market yields as of February 07, 2023. Source: Bloomberg.
Investments have not been executed. Actual rates and security availability may vary at time of placement.
[2] Estimated earnings are based on settlement on February 07, 2023, and assumes no trading in the portfolio.
[3] Generic MMF is quoted based on the S&P Government LGIP 7 -day net yield (source: Bloomberg), as of February 06, 2023.
[4] Reinvestment and average yields are calculated assuming a constant overnight interest rate of 4.21 %. Actual reinvestment rates will vary.
[5] Yields on investments are presented based on corresponding basis (actual/actual, actual/360, 30/360) depending on security type.
The Average Gross and Net Yields are computed on the internal rate of return of the cashflows generated by the portfolio, on an actual/actual basis.
[6] Investment management fees for a one-time portfolio purchase are $20,000.
[7] Past performance is not indicative of future results.
PFM Asset Management LLC ("PFMAM") is an investment adviser registered with the U.S. Securities and Exchange Commission and a subsidiary of U.S. Bancorp
Asset Management, Inc. ("USBAM"). USBAM is a subsidiary of U.S. Bank National Association ("U.S. Bank"). U.S. Bank is a separate entity and subsidiary of U.S.
Bancorp. U.S. Bank is not responsible for and does not guarantee the products, services or performance of PFMAM.
NOT INSURED NO BANK GUARANTEE MAY LOSE VALUE NOT A DEPOSIT
9
Page 77 of 134
CAMP Disclaimer
CAMP® is a registered trademark and the CAMP logos and designs are trademarks owned by the California Asset Management Trust
(Trust). This information is for institutional investor use only, not for further distribution to retail investors, and does not represent an
offer to sell or a solicitation of an offer to buy or sell any fund or other security. Investors should consider the Trust's investment
objectives, risks, charges and expenses before investing in the Trust. This and other information about the Trust is available in the
Trust's current Program Guide, which should be read carefully before investing. A copy of the Trust's Program Guide may be obtained
by calling 1-800-729-7665 or is available on the Trust's website at www.camponline.com. While the Cash Reserve Portfolio seeks to
maintain a stable net asset value of $1.00 per share and the CAMP Term Portfolio seeks to achieve a net asset value of $1.00 per
share at the stated maturity, it is possible to lose money investing in the Trust. An investment in the Trust is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency. Shares of the Trust are distributed by PFM Fund
Distributors, Inc., member Financial Industry Regulatory Authority (FINRA) (www.finra.orp) and Securities Investor Protection
Corporation (SIPC) (www.sipc.orp). PFM Fund Distributors, Inc. is an affiliate of PFM Asset Management LLC.
Standard & Poor's fund ratings are based on analysis of credit quality, market price exposure, and management. According to
Standard & Poor's rating criteria, the AAAm rating signifies excellent safety of investment principal and a superior capacity to maintain
a $1.00 per share net asset value. However, it should be understood that the rating is not a "market" rating nor a recommendation to
buy, hold or sell the securities. For a full description on rating methodology, visit Standard & Poor's website
(http://www.standardandpoors.com/ratings/en US/web/guesyhome).
The AAAf rating reflects Fitch Ratings' ("Fitch') review of the Term program's investment and credit guidelines, the portfolio's credit
quality and diversification, as well as the capabilities of PFM Asset Management LLC as investment adviser. It indicates the highest
underlying credit quality (or lowest vulnerability to default). However, it should be understood that this rating is not a "market" rating nor
a recommendation to buy, hold or sell the securities. For a full description on rating methodology visit www. fitchratings. com.
30 -day yield as of the last day of the month. The 30 -day yield represents the net change, exclusive of capital changes and income
other than investment income, in the value of a hypothetical account with a balance of one share (normally $1.00 per share) over a
thirty -day base period expressed as a percentage of the value of one share at the beginning of the thirty -day period. This resulting net
change in account value is then annualized by multiplying it by 365 and dividing the result by 30.
PFM Asset Management LLC ("PFMAM) serves as CAMP's Program Administrator, Investment Adviser and Rebate Calculation
Agent. PFMAM specializes in meeting the investment needs of public agencies. PFMAM is registered as an investment adviser with
the Securities and Exchange Commission ("SEC') under the Investment Advisers Act of 1940.
CAMP® is a registered trademark and the CAMP logos and designs are trademarks owned by the California Asset Management Trust
(Trust).
—Page �8 oo
f 134
RESOLUTION NO. 2023 -XX
RESOLUTION OF THE BOARD OF DIRECTORS
OF THE YORBA LINDA WATER DISTRICT
AUTHORIZING YORBA LINDA WATER DISTRICT (THE "PUBLIC AGENCY")
TO JOIN WITH OTHER PUBLIC AGENCIES AS A PARTICIPANT
OF THE CALIFORNIA ASSET MANAGEMENT TRUST AND TO INVEST IN SHARES
OF THE TRUST AND IN INDIVIDUAL PORTFOLIOS
WHEREAS, Section 6509.7 of Title 1, Division 7, Chapter 5 of the Government
Code of the State of California (the "Joint Exercise of Powers Act")
provides that, if authorized by their legislative or other governing
bodies, two or more public agencies that have the authority to invest
funds in their treasuries may, by agreement, jointly exercise that
common power;
WHEREAS, under Sections 6500 and 6509.7(b) of the Joint Exercise of Powers Act,
a "public agency" includes, but is not limited to, any California
county, county board of education, county superintendent of
schools, city, public corporation, public district, regional
transportation commission, state department or agency, any joint
powers authority formed pursuant to the Joint Exercise of Powers Act
by public agencies or any nonprofit corporation whose membership
is confined to public agencies or public officials;
WHEREAS, public agencies that constitute local agencies, as that term is
defined in Sections 53600 of Title 5, Division 2, Part 1, Chapter 4, Article
2 of the Government Code of the State of California (the "California
Government Code"), are authorized pursuant to Section 53601 (p), to
invest all money belonging to, or in the custody of, a local agency
not required for its immediate need in shares of beneficial interest
issued by a joint powers authority organized pursuant to Section
6509.7 of the California Government Code that invests in the
securities and obligations authorized in subdivisions (a) to (q),
inclusive, of Government Code Section 53601;
WHEREAS, the California Asset Management Trust (the "Trust") was established,
pursuant to and in accordance with the Joint Exercise of Powers Act,
by a Declaration of Trust, made as of December 15, 1989, as
subsequently amended from time to time (the "Declaration of Trust"),
as a vehicle for public agencies to jointly exercise their common
power to invest the proceeds of debt issues and Public Agency
surplus funds;
Resolution No. 2023 -XX Joining as Participant of California Asset Management Trust 1 of 3
Page 79 of 134
WHEREAS, pursuant to and in accordance with the Joint Exercise of Powers Act,
the Public Agency desires to join the other public agencies which are
or will be Participants of the Trust by adopting and executing the
Declaration of Trust, a form which is on file in the office of the
Treasurer;
WHEREAS, the Public Agency is a "public agency" as that term is defined in
Sections 6500 and 6509.7(b) of the Joint Exercise of Powers Act and
a "local agency" as that term is defined in Section 53600 of the
California Government Code;
WHEREAS, the Public Agency is otherwise permitted to be a Participant of the
Trust and to invest funds in the Trust and in the individual portfolios to
be managed by the Investment Adviser to the Trust ("Individual
Portfolios"); and
WHEREAS, a program guide describing the Trust and the Individual Portfolios (the
"Program Guide") is on file in the office of the Treasurer.
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Yorba Linda
Water District as follows:
Section 1. The Public Agency shall join with other public agencies pursuant to
and in accordance with the Joint Exercise of Powers Act by
executing the Declaration of Trust and thereby becoming a
Participant in the Trust, which Declaration of Trust is hereby approved
and adopted. A copy of the Declaration of Trust, which is available
in the office of the Treasurer shall be filed with the minutes of the
meeting at which this Resolution was adopted. The Board President
is hereby authorized to execute, and the Board Secretary is hereby
authorized to attest and deliver, the Declaration of Trust.
Section 2. The Public Agency is hereby authorized to purchase shares in the Trust
from time to time with available funds of the Public Agency, and to
redeem some or all of those shares from time to time as such funds
are needed.
Section 3. The Public Agency is hereby authorized to invest available funds of
the Public Agency from time to time in one or more Individual
Portfolios managed by the Investment Adviser to the Trust and
described in the Program Guide.
Resolution No. 2023 -XX Joining as Participant of California Asset Management Trust 2 of 3
Page 80 of 134
Section 4. The appropriate officers, agents and employees of the Public
Agency are hereby authorized and directed in the name and on
behalf of the Public Agency to take all actions and to make and
execute any and all certificates, requisitions, agreements, notices,
consents, warrants and other documents, and any changes,
amendments, modifications, or waivers thereto which they, or any of
them, might deem necessary or appropriate in order to accomplish
the purposes of this Resolution.
Section 5. This Resolution shall take effect at the earliest date permitted by law.
PASSED AND ADOPTED this 16th day of March 2023 by the following called vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
Brett R. Barbre, President
Yorba Linda Water District
ATTEST:
Annie Alexander, Board Secretary
Yorba Linda Water District
Reviewed as to form by General Counsel:
Andrew B. Gagen, Esq.
Kidman Gagen Law LLP
Resolution No. 2023 -XX Joining as Participant of California Asset Management Trust 3 of 3
Page 81 of 134
ITEM NO. 8.1.
Yorba Linda
Water District
AGENDA REPORT
MEETING DATE: March 16, 2023
TO: Board of Directors
FROM: Mark Toy, General Manager
STAFF CONTACTS: Rosanne Weston, Engineering Manager
Delia Lugo, Finance Manager
SUBJECT: Proposed Water and Sewer Development Fees for Fiscal Year 2023-24
SUMMARY:
Staff will present and discuss the proposed Water and Sewer Development Fees for FY 2023-24
included in the attached slide deck.
1. Slide Deck - Development Fees - REVISED
Page 82 of 134
YL
W
PROPOSED
WATER AND SEWER
DEVELOPMENT FEES
FY 2023-24
Budget Workshop 3
YLWD:
Rosanne Weston, Engineering Manager
_i
Delia Lugo, Finance Manager
Raftelis:
Sudhir Pardiwala, Executive Vice President
3/16/2023 Board of Directors Workshop
k
Water Service Development Fees
• New Meter Connection Fees
• Construction Meter Connection Fees
• Meter Tampering Penalties
• Hydrant Tampering Penalties
• Miscellaneous Water Service Fees
• Meter Size Change Fee
• Backflow Device Monitoring Fee
• Single Service Fee
• Water Capacity Fees
• 3 Examples
• Water Deposit Fees
All fees that include YLWD
labor costs will be adjusted
upon Board approval of
Salaries and Related
Expenses included in FY23-24
program budget
Page 84 of 134
New Meter Connection Fees
1 $840
1 '/2 $1,440
2 $1,780
> 2 Incurred Costs
Within Incurred Costs
Traffic Area
$850 $10
$1,400 $ (40)
$1,780 $0
Incurred Costs TBD
Incurred Costs TBD
Page 85 of 134
Construction Meter Connection Fees
Fee Increase or
Activity FY22-23 Fees 7v FY23-24 Fees (Decrease)
Deposit
New Account Setup
Meter Use
Move to a New
Location
YLWD Backflow
Certification
Temporary Water
Service - 2 X
Commodity Rate Per
100 CF (1 Unit)
$2,060 per Meter $3,360 per Meter $1,300 per
Meter
$40 per Occurrence $40 per Occurrence $0 per
Occurrence
$6.20 per Day $9.20 per Day $3.00 per Day
$125 per Occurrence $140 per Occurrence $15 per
Occurrence
$85 per Occurrence *N/A ($85)
$6.28 per Unit
$5.80 per Unit (Pending calculated $0.48 per Unit
pass-through)
* An approved, tested/certified backflow prevention device to be
provided and installed by Developer at time of meter installation.
Page 86 of 134
Meter Tampering Penalties
$250 + Incurred Costs of
Inspection, Repair, $ 1,000 +Incurred Costs of
1st Calibration and Estimated Inspection, Repair, Calibration
and Estimated Usage
Usage
$750
$1,500 + Incurred Costs of
Inspection, Repair, $ 2.500 +Incurred Costs of
2nd Calibration and Estimated Inspection, Repair, Calibration $1,000
and Estimated Usage
Usage
$1,780 + Incurred Costs of
Inspection, Repair, $ 5,000 +Incurred Costs of
3rd Calibration and Estimated Inspection, Repair, Calibration $3,220
and Estimated Usage
Usage
Page 87 of 134
Hydrant Tampering Penalties
$250 + Incurred Costs of $ 1,000 + Incurred Costs
1 st Inspection, Repair and of Inspection, Repair $750
Estimated Usage and Estimated Usage
2nd
3rd
$1,500 + Incurred Costs of
Inspection, Repair and
Estimated Usage
$1,780 + Incurred Costs of
Inspection, Repair and
Estimated Usage
$ 2,500 + Incurred Costs
of Inspection, Repair
and Estimated Usage
$ 5,000 + Incurred Costs
of Inspection, Repair
and Estimated Usage
$1,000
$3,220
Page 88 of 134
Miscellaneous Water Service Fees
Change of
Meter Size Incurred Cost Incurred Cost TBD
Fee
Backflow
Device
Monitoring
Fee
Single
Service Fee
$3.55 per Month
$1,275
$3.63 per month
$1,930
$.08 per month
$655
Page 89 of 134
Water Service Capacity Fees
(Adequate Water Main Fronts Property)
5/8
25
$6,450
$12,311
$5,861
3/4
5,586
$6,450
$12,311
$5,861
1
18,100
$6,450
$12,311
$5,861
1-1/2
610
$6,450
$24,622
$18,172
2
1,116
$6,450
$39,395
$32,945
3
41
$6,450
$86,177
$79,727
4
3
$6,450
$155,119
$148,669
6
1
$6,450
$320,087
$313,637
Page 90 of 134
Water Service Capacity Fees
(Developer to Construct Water Main in Front of Property)
5/8
25
$6,450
$8,840
$2,390
3/4
5,586
$6,450
$8,840
$2,390
1
18,100
$6,450
$8,840
$2,390
1-1/2
610
$6,450
$17,679
$11,229
2
1,116
$6,450
$28,287
$21,837
3
41
$6,450
$61,878
$55,428
4
3
$6,450
$111,380
$104,930
6
1
$6,450
$229,832
$223,382
Page 91 of 134
Example No. 1
Single Family Residence Water Service Fees
(Adequate Water Main Fronts Property)
Single $1,275 $1,930 $655
Service
Capacity $6,450 $12,311 $5,861
New 1 -inch
Meter $840 $850 $10
Total Fees: $8,565 $15,091 $6,526
Page 92 of 134
Example No. 2
Restaurant (Low Demand) Water Service Fees
(Adequate Water Main Fronts Property)
W119
Fee Type FY22-23 Fees FY23-24 Fees
Single
$2,550
$3,860 $1,310
Service
(2 x $1,275)
(2 x $1,930)
Capacity
(Based on
$12,900
$51,706
$38,806
two meters)
(2 x $6,450)
($39,395 +$12,311)
New 2 -inch
$1,780
$1,780 $0
Meter
New 1 -inch
Irrigation $840 $850 $10
Meter
Total Fees: $18,070 $58,196 $40,126
Page 93 of 134
Water Service Initial Deposit Fees For More
Complex Developments
5 or less
$10,665
$14,570
$3,905
6-10
$17,070
$19,550
$2,480
11-20
$24,085
$24,200
$115
21-30
$30,980
$31,910
$930
31-40
$38,855
$39,300
$445
41-50
$45,245
$44,550
$(695)
51-99
$52,935
$51,420
$(1,515)
100 and
higher
$65,505
$66,400
$895
Fees include reimbursement to District for: Plan check, Inspection, GIS, Administrative, Legal
Review and other project costs.
Additional deposits will be assessed if required to reimburse District for all project related costs.
Unused deposit funds will be refunded to the Developer upon close out of project.
Page 94 of 134
Example No. 3
Master Metered Development (Apartments) - 48 Units
Water Service Fees
Developer Constructs Water Main in Front of Property - Requires Developer Deposit
-- Increase .
-- •- I -- -- (Decrease)
Difference in
Initial Deposit $45,245 $44,550 YLWD incurred
YLWD incurred costs YLWD incurred costs costs
Capacity
(Based on two, 2 $12,900 $56,574 $43,674
inch meters) (2 x $6,450) (2 x $28,287)
Two (2 inch Meters) $3,560 $3,560 $0
(2 x $1,780) (2 x $1,780 )
$43,674+
Total Fees: $16,460 + YLWD $60,134 + YLWD difference in
incurred costs incurred costs YLWD incurred
costs
Page 95 of 134
Sewer Service Development Fees
• Single Service Fee
• Sewer Tampering Penalties
• Sewer Capacity and Frontage Fees
• Sewer Deposit Fees
• Sewer System Developer Reimbursement Program
All fees that include YLWD
labor costs will be adjusted
upon Board approval of
Salaries and Related
Expenses included in FY23-24
program budget
Page 96 of 134
Fee
Single Sewer Service Fee
FY22-23 OL
FY23-24
Single Service Fee $1,680
$1,720
Sewer Tampering Penalties
$40
$250 + Incurred Costs of $ 1000 + Incurred Costs
1 st Inspection, Repair and of Inspection, Repair $750
Estimated Usage and Estimated Usage
�J
3rd
$1,500 + Incurred Costs
of Inspection, Repair
and Estimated Usage
$1,780 + Incurred Costs
of Inspection, Repair
and Estimated Usage
$ 2500 + Incurred Costs
of Inspection, Repair
and Estimated Usage
$ 5000 + Incurred Costs
of Inspection, Repair
and Estimated Usage
$1,000
$3,220
Page 97 of 134
Sewer Service Capacity and Frontage Fees
Adequate Sewer Main Fronts Property and Not Subject to Developer
Reimbursement Program
Single Family
Residence
(75 LF Frontage $2,620
1 Unit/1 Lateral
Connection)
Apartments
(48 Units, 300 LF $2,620
Frontage, 1
sewer
connection)
Restaurant Low
Demand
(4,000 sf, 600 LF $2,620
Frontage, 1
Lateral
Connection)
$11,625
$46,500
$93,000
$14,245 1 $794 $5,763 $6,557
(Flat Rate)
$49,120 0.82 $31,252
$23,052 $54,304
(0.82 x $794
($5,763 x
x 48 units)
300 LF/75 LF)
$95,620 1.9 $6,034
$46,104 $52,138
(1.9 x $794
($5,763 x
x
600 LF/75 LF
4,000
SF/1000 SF)
...
$5,184
($43,482)
Page 98 of 134
Sewer Service Initial Deposit Fees For More
Complex Developments
Number of FY22-23 FY23-24 Deposit Increase
Connections Deposit Deposit or (Decrease)
5 or less
$9,620
$10,080
$460
6-10
$12,175
$12,880
$705
11-20
$16,020
$20,070
$4,050
21-30
$19,390
$23,790
$4,400
31-40
$23,795
$28,730
$4,935
41-50
$29,090
$33,650
$4,560
51-99
$41,485
$40,150
$(1,335)
100 and higher
$61,605
$50,860
$(10,745)
Fees include reimbursement to District for: Plan check, Inspection, GIS, Administrative, Legal
Review, and other project costs.
Additional deposits will be assessed if required to reimburse District for all project related costs.
Unused deposit funds will be refunded to the Developer upon close out of project.
Page 99 of 134
Sewer Service Capacity Fees - No Frontage Fee
Developer to Construct Sewer Main in Front of Property - Requires Developer Deposit
Single Family
Residence
(75 LF Frontage $2,620 $2,620 1 $794 ($1,826)
1 Unit/1 Lateral
Connection)
Apartments
(48 Units, 300 LF $2,620 $2,620 0.82 $31,252 $28,632
Frontage, 1 sewer
(0.82 x $794
connection) x 48 units)
Restaurant Low
Demand
(4,000 sf, 600 LF $2,620 $2,620 1.9 $6,034 $3,414
Frontage, 1 Lateral (1.9 x $794 x
Connection) 4,000 SF/1000 SF)
Page 100 of 134
Developer Sewer System Reimbursement
Program Scenario - Developer + 3 Homes
CONNECTS TO SEWER
YEAR 9
F
ELOPER
HOME #4
0
W
U
ry
H
U)
Z
O
U
ry
w
w
U)
CONNECTS TO SEWER
YEAR 2
CONNECTS TO SEWER
YEAR 6
LAIb i GNU YLvVD SEWER
Page 101 of 134
Current 30 -Year
Developer Sewer System Reimbursement Program
(Reimbursement Amounts Paid to Developer for 3 Homes)
$35,000
z $30,000
D
$25,000
z
7 $20,000
LU
U)
� $15,000
m
ry $10,000
$5.000
0
40
Page 102 of 134
Proposed 10 -Year
Developer Sewer System Reimbursement Program
(Reimbursement Amounts Paid to Developer for 3 Homes)
S35,000
530,000
D
D
$25,000
z
w 520,000
w
W
ry
S15,000
m
� S10,000
$5,000
M
1 2 3 4 5 6 7 8 9 10 10+
YEARS
Page 103 of 134
Thank you'.
Questions ?
Page 104 of 134
ITEM NO. 8.2.
Yorba Linda
Water District
AGENDA REPORT
MEETING DATE: March 16, 2023
TO: Board of Directors
FROM: Mark Toy, General Manager
STAFF CONTACTS: Delia Lugo, Finance Manager
SUBJECT: Draft Budget for Fiscal Year 2023-24 (Operating Revenue, Supplies and
Services, Other Key Updates)
SUMMARY:
Staff will present and discuss the proposed FY 2023-24 program budgets for Operating Revenues,
Non -Operating Revenues, and Supplies and Services.
ATTACHMENTS:
1. Slide Deck - Budget Workshop - REVISED
Page 105 of 134
Yorba Linda
Water District
Page 106 of 134
Overview
•Revenue
• Summary of Rates & Other Considerations
• Supplies & Services
• Memberships & Conferences
• Requested Budget Items
• Non -Operating Expenses
• Revised Variable Costs Budget
• Summary of FY2023-24 Budget
• Effects on Revenue & Variable Costs With Various BPP %
Page 107 of 134
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Revenue
V3 3/16/2023 Board of Directors Workshop
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20,000
18,000
16,000
14,000
}
Q) 12,000
10,000
Q 8,000
6,000
4,000
2,000
Retail Water Consumption
Retail Consumption in Acre -Feet
16,943 Acre -Feet
Prior Year Projected Budget
FY2021-22 FYE2022-23 FY2023-24
Consumption in Acre -Feet 12021 Rate Study Assumptions
FY2023-24 Budget Calculation
Retail water consumption is calculated from historic trends and production demand. "PT" is Pass -Through.
Page 109 of 134
Prior Year
Projected
Budget
FY2021-22
FYE2022-23
FY2023-24
Consumption (CCF)
7,947,657
7,438,025
7,776,493
Consumption in Acre -Feet
18,245 AF
17,075 AF
17,852 AF
Revenue ($)
$ 21,202,766
$ 20,664,096
$ 24,347,261
Consumption Unit Price
$ 2.64 / Unit
$ 2.88 + PT $ 0.02 = $ 2.90
$ 3.14 + Excludes PT = $ 3.14
FY2023-24 Budget Calculation
Retail water consumption is calculated from historic trends and production demand. "PT" is Pass -Through.
Page 109 of 134
Revenue Analysis
Revenue
FY24 Budget Analysis
$20,000,000
$18,000,000
$16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$0 Water Water
Water Revenue Revenue
Revenue Service Property
(Residenti (Commer (Landsca Charges Tax - CFC
al) cial & Fire pe/Irrigati
Det.) on)
■ FY22 Prior Year 15,861,493 1,606,688 3,839,467 13,358,664 2,940,151
■ FY23 YE Projections 15,131,715 1,648,228 3,993,721 14,729,859 3,300,357
■ FY24 Budget 18,187,401 1,872,434 4,406,855 16,076,351 3,597,389
Page 110 of 134
9
I=
-I&
PFAS
Sewer
Sewer
Other
Other
Impact
Charge
Parcel
Operating
Interest
Property
Non -
Assessme
Income
Tax
Operating
Fee
Revenue
nts
Revenue
Revenue
889,401
2,870,431
333,965
1,31 1,232
179,375
2,157,211
174,376
0
3,077,368
356,954
1,297,318
740,623
2,351,079
1,313,774
0
3,582,947
410,497
1,327,217
948,000
2,402,796
635,458
Page 110 of 134
Revenue Rate Study Comparison
2021 Rate Study Assumptions
FY2021-22 FY2022-23 FY2023-24
Operating Revenue $ 40,843,348 $ 43,675,424 $ 47,762,775
Non -Operating
Revenue 2,883,985 2,885,451 2,957,883
$ 43,727,333 $ 46,560,875 $ 50,720,658
Historic & Future Revenue
Prior Year Projected Budget
FY2021-22 FYE2022-23 FY2023-24
Operating Revenue $ 43,01 1,492 $ 43,535,520 $ 49,461,092
Non -Operating
Revenue 2,510,962 4,405,476 3,986,254
$ 45,522,457 $ 47,940,996 $ 53,447,346
Variance from Assumptions
Rate Study Variance $ $ 1,795,124 $ 1,380,121 $ 2,726,688
Rate Study Variance % 4% 3% 5%
FY24 Budget Revenue
$60,000,000 $43,727,333 $46,560,875 $50,720,658
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
Prior Year Projected Budget
FY2021-22 FYE2022-23 FY2023-24
Operating Revenue Non -Operating Revenue
X2021 Rate Study Assumptions
Page 111 of 134
I
Summary of Rates
& Other
Considerations
V3 3/16/2023 Board of Directors Workshop
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Effect on a Residential Monthly Customer Bill
1 " Meter - 20 CCF
Current Assumptions
Monthly Water Related Charges
$105.02
$114.06
$114.06
Monthly Sewer Related Charges
$10.41
$11.97
$11.35
Capital Finance Charge
$10.32
$11.25
$11.25
Cost increase of $11.53
Percentage increase of 9.17°Jo
Page 113 of 134
FY2023-24 Proposed Rates
Water Rates
$3.14 • .- � --
Commodity 5/8 $ 32.86 5/8
$ 81.00
Rate 3/4
$ 32.86 3/4 $ 81.00
Plus Pass- 1 $ 51.26 1 $ 135.00
Through 1 1 /21 1 /2
$ Will be $ 97.20 $ 269.76
determined 2 $ 152.33 2 $ 431.28
at a later
date. 3 $ 326.96 3 $ 943.08
4 $ 584.28 4 $ 1,697.16
6 $ 1,475.75 6 $ 4,310.16
Sewer Rates
hidp�� owl ..-
Residential - SFR $ 11.97
Residential Master Metered -
MFR $ 11.52
Commercial $ 11.97
4
$
9.34
6
$
24.45
8
$
50.55
10
$
89.79
Tier 1 (0-7 ccfs per month) $ 0.00
Tier 2 (8+ ccfs per month) $ 0.46
Page 114 of 134
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Supplies &
Services
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Supplies &Services Analysis
Historic Trends - Supplies & Services
FY22, FY23 Projections, FY24 Budget
$3,000,000
$2,500,000
H
_a $2,000,000
0
$1,500,000
$1,000,000
$218,493
$495,559
$302,156
$369,974
$42,586
$90,914
$500,000
$0
Contractual
Data Processing
District Meetings
Dues &Communications
Fees &Permits
Services
g, Events
Memberships
� 2022 Actuals
126,852
596,057
275,126
32,159
97,802
396,273
2023 Projections
195,555
630,143
442,790
49,406
93,536
457,431
X2024 Budget
210,140
719,531
499,950
67,995
110,625
499,300
X2021 Rate Study
218,493
495,559
302,156
42,586
90,914
369,974
Variances Explanations for Impactful Expenses - 2024 Budget to 2023 Projections
Contractual Services - The increase of 14% from FY23 Projections is due to adding Security Monitoring for multiple
locations; Increase costs specifically in janitorial, landscape, and additional phones for employees.
Data Processing - The increase of 13% from FY23 Projections is due to new software Microsoft 365 moved from FY23 to
FY24, and increase in software license costs and services.
District Events - The increase of 38% from FY23 Projections is due to increased costs for tours, open house, employee
events.
Page 116 of 134
Supplies &Services Analysis Cont.
$3,000,000
$2,500,000
$2,000,000
0
0
v). $1,500,000
$1,000,000 $304,931
$500,000 _
$0 hd
Historic Trends - Supplies & Services
FY22, FY23 Projections, FY24 Budget
$659,753
$1,245,591
$146,425
Non Capital
Equipment
204,497
231,502
327,100
146,425
$33,962
Office Expense
38,173
42,936
47,550
33,962
Variances Explanations for Impactful Expenses - 2024 Budget to 2023 Projections
Insurance - The increase of 35% from FY23 Projections is due to premium increases of 10% for liability and 20% for property
insurance.
Maintenance - The increase of 70% from FY23 Projections is due to adding Electrical Meters to Well 12, 19 & Chlorine
Buildings, Fairmont Reservoir Cleaning & Repairs; Increase cost in the pavement program inherited from City of Yorba
Linda and also costs specifically in asphalt paving, concrete repairs, SCADA Maintenance, water pipeline repairs.
PFAS - The increase of 102% from FY23 Projections is due to replacing the resin.
Non -Capital Equipment - The increase of 41 % from FY23 Projections is due to adding new Gas Detectors, Rewiring
Reservoir Intrusion Alarms at various locations and additional SCADA equipment.
Page 117 of 134
Insurance
Maintenance
Materials
PFAS
2022 Actuals
279,464
1,416,390
801,046
94,501
2023 Projections
359,300
1,804,170
1,281,394
864,251
2024 Budget
485,000
3,049,400
1,258,300
1,749,000
—0--2021 Rate Study
304,931
561,146
659,753
1,245,591
$146,425
Non Capital
Equipment
204,497
231,502
327,100
146,425
$33,962
Office Expense
38,173
42,936
47,550
33,962
Variances Explanations for Impactful Expenses - 2024 Budget to 2023 Projections
Insurance - The increase of 35% from FY23 Projections is due to premium increases of 10% for liability and 20% for property
insurance.
Maintenance - The increase of 70% from FY23 Projections is due to adding Electrical Meters to Well 12, 19 & Chlorine
Buildings, Fairmont Reservoir Cleaning & Repairs; Increase cost in the pavement program inherited from City of Yorba
Linda and also costs specifically in asphalt paving, concrete repairs, SCADA Maintenance, water pipeline repairs.
PFAS - The increase of 102% from FY23 Projections is due to replacing the resin.
Non -Capital Equipment - The increase of 41 % from FY23 Projections is due to adding new Gas Detectors, Rewiring
Reservoir Intrusion Alarms at various locations and additional SCADA equipment.
Page 117 of 134
Supplies &Services Analysis Cont.
$3,000,000 Historic Trends - Supplies & Services
FY22, FY23 Projections, FY24 Budget
$2,500,000
N
`a $2,000,000
o $900,528
0
` $1,500,000
$1,000,000
$302,720
$51,313
$45,176
0
$8,840
$189,663
$89,317
$500,000
Professional
Professional
Travel &
Uncollectible
Utilities
Vehicle
Board Election
Development
Services
Conferences
Accounts
Expenses
� 2022 Actuals
40,826
1,170,750
22,629
18,114
185,453
501,600
2023 Projections
51,819
1,706,583
45,880
25,000
382,874
701,372
137,000
� 2024 Budget
92,893
1,537,770
101,420
15,000
400,000
755,400
0
X2021 Rate Study
51,313
900,528
45,176
8,840
189,663
302,720
89,317
Variances Explanations for Impactful Expenses - 2024 Budget to 2023 Projections
Professional Development - The increase of 79% from FY23 Projections is due to additional Certification Training & Class A,
and GIS training.
Travel & Conferences - The increase of 121% from FY23 Projections is due reverting back to normal attendance to
conferences by staff in person.
Page 118 of 134
Supplies &Services -Rate Study Comparison
2021 Rate Study Assumptions
Supplies & Services -
Water $
Supplies & Services -
Sewer
Historic & Future
Supplies & Services -
Water
Supplies & Services -
Sewer
FY2021-22 FY2022-23 FY2023-24
4,959,410 $ 5,533,227 $
982,065 1,002,617
5,941,475 $ 6,535,844 $
6,059,045
1,023,626
7,082,671
Prior Year Projected Budget
FY2021-22 FYE2022-23 FY2023-24
$ 5,311,474 $ 8,339,893 $ 10,184,029
FY24 Budget Supplies & Services
$14,000,000
$12,000,000 $7,082,671
$10,000,000 $6,535,844
$8,000,000 $5,941,475
$6,000,000
$4,000,000
$2,000,000
,.
986,248 1,162,600 1,796,348 Prior Year Projected Budget
FY2021-22 FYE2022-23 FY2023-24
$ 6,297,722 $ 9,502,493 $ 11,980,377 Supplies & Services - Water Supplies & Services - Sewer
X2021 Rate Study Assumptions
Variance from Assumptions
Rate Study Variance $ $ 356,247 $ 2,966,649 $ 4,897,706
Rate Study Variance % 6% 45% 69%
Page 119 of 134
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Memberships &
Conferermummm
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Agency -wide Memberships
(Estimated FY23-24 Costs for Boara Feeaoack)
American Water Works Association (AWWA)
Association of California Cities - Orange County (ACC -OC)
Association of California Water Agencies (ACWA)
California Association of Sanitation Agencies (CASA)
California Association of Mutual Water Companies (CalMutuals)
California Special Districts Association (CSDA)
National Endangered Species Act Reform Coalition (NESARC)
Orange County Business Council (OCBC)
Orange County Water Association (OCWA)
Placentia Chamber of Commerce
Southern California Water Coalition (SCWC)
Urban Water Institute (UWI)
Yorba Linda Chamber of Commerce
$5,000
Regulatory alerts and advisories; discounted access to AWWA standards and
employee technical training; includes six (6) employee memberships and agency
regional membership with CA -NV AWWA.
Partner with key leaders in public and private sectors; develop public policy goals and
$5,000 3 improve delivery of public services; opportunity to sponsor and speaker at event;
discounted registration for events.
Legislative and regulatory representation on state and federal levels; access to
$27,000 1 benefits and insurance programs through ACWA-JPIA; educational resources and
employee training; discounted registration for events.
$6,500 1 Legislative advocacy on local, state, and federal levels; information on regulatory
issues; discounted registration for events.
Legislative advocacy on local and state levels; facilitate operational and education
$5,000 3 resources to ensure effective operation and governance of mutual water companies
and small water systems in CA.
$9,500 1 Legislative advocacy on state level; educational resources and employee training;
discounted registration for events.
$1,000 3 National coalition dedicated to improving the Endangered Species Act; legislative
advocacy for proposals being considered by Congress and federal agencies.
$5,000 3 Partner with key leaders in business, local government, and non-profit sectors; promote
economic development and quality of life.
$250 1 Beginning FY21-22 unlimited Director/employee membership for flat price; discounted
registration for in-person events.
Establish and maintain positive relationships with local businesses, residents, and
$825 1 government agencies to encourage community involvement and economic growth;
discounted registration for events.
$1,000 2 Represents regional water interests and stakeholders in public and private sectors;
promotes public education on critical water issues.
$1,000 2 Promote public education on water economics, water policy, and water resource
management; discounted registration for events.
Establish and maintain positive relationships with local businesses, residents, and
$800 1 government agencies; encourage economic, civic, and industrial success of local
community; discounted registration for events.
*Staff ranking provided should Board desire to modify budget allocation for agency -wide memberships.
received from individual Directors varied and Board discussion was requested.
Page 121 of 134
Directors' Conference Attendance
(Estimated FY23-24 Costs for Board Feedback)
Conference / Event Description dg Estimated Cost Meetings
[Sacramento - As Needed] 2,000
ACWA-JPIA/ACWA Semi -Annual Conferences (2 Dir) 6,500
[Indian Wells - Nov 28-30, 2023] [Sacramento - May 7-9, 2024]
AWWA Annual Conference (2 Dir) 2,000
[Anaheim - Jun 10-13, 2024]
CA -NV AWWA Annual Conference (2 Dir) 1,50L
[Las Vegas - Oct 23-26, 2023]
CASA Annual Conference (1 Dir) 1,100
[Monterey - Sep 13-15, 2023]
CRWUA Annual Conference (2 Dir) 2,500
[Las Vegas - Dec 13-15, 2023]
UWI Semi -Annual Conferences (2 Dir) 4,000
[San Diego - Aug 23-25, 2023] [Palm Springs - Feb 2024]
OCBC Advocacy Summit - Sacramento (1 Dir)
[Sacramento - March 2024] 1,500
ACC -OC Advocacy Summit (1 Dir) I
[Sacramento - March 2024] 1,200
ACC -OC Advocacy Summit (1 Dir) ■
[Washington DC - April 2024] 2,000
CSDA Annual Conference (2 Dir)
[Monterey - Aug 28-31, 2023]
*Estimates in red text were excluded in the first draft of the FY23-24 budget
based on historical Director attendance. These events can be included
and/or other events added if desired by the Board. Feedback received from
individual Directors varied and Board discussion was suggested.
Page 122 of 134
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Requested
I Budget It
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Budget Items Requested by
Board of Directors for Discussion
Budget Items 44--1
Water Bottle donation to the Richard Nixon Foundation
360 Cases of Water * (8,640 Bottles)
Quarterly District Wide Newsletter Mailer
(A printed newsletter sent every 3 months to the
District's 25,437 customers)
nn gtAnF
Estimated to increase the supplies & services budget by
$6,150.
Estimated to increase the supplies & services budget by
$100,000 ($25,000 per mailing).
Page 124 of 134
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Non -Operating
Expenses
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Non -Operating Expenses - Rate Study
Comparison
2021 Rate Study Assumptions
FY2021-22 FY2022-23 FY2023-24
Interest Expense $ 1,438,919 $ 1,374,681 $ 1,306,331
Other Expense 153,907 156,985 160,124
$ 1,592,826 $ 1,531,666 $ 1,466,455
Historic & Future
Prior Year
FY2021-22
Projected
FYE2022-23
Budget
FY2023-24
Interest Expense $ 1,249,313 $ 2,092,379 $ 2,604,419
Other Expense $ 21,141 $ 391,555 $ 18,625
$ 1,270,454 $ 2,483,934 $ 2,623,044
Variance from Assumptions
Rate Study Variance $ $ (322,372)
Rate Study Variance % -20%
$ 952,268 $ 1,156,589
62% 79%
Page 126 of 134
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Rev'i'sed Variable
Costs Budget
V3 3/16/2023 Board of Directors Workshop
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Revised -Variable Costs Detail
Revision Explanation
Variable Costs have been adjusted because the District received updated fixed costs from MWDOC.
2021 Rate Study Assumptions
Historic & Future Variable Costs
FY2021-22
FY2022-23
FY2022-23
FY2023-24
Groundwater Purchases
$ 4,491,632
$ 6,998,164
$ 6,998,164
$ 7,138,127
OCWD Annexation Fee
531,906
542,544
542,544
553,395
Power Costs
1,283,301
1,347,466
1,347,466
1,414,839
Import Water Purchases
10,562,707
5,447,368
5,447,368
5,719,737
MWDOC Fixed Costs
832,046
857,008
857,008
882,718
14,1 14,625
$ 17,701,592
$ 15,192,550
$ 15,192,550
$ 15,708,816
Historic & Future Variable Costs
Prior Year
Projected
Budget FY2023-24
Revised Budget
FY2021-22
FYE2022-23
Presented on 2/16/23
FY2023-24
Groundwater Purchases
$ 3,520,814
$ 8,746,315
$ 10,216,190
$ 10,216,190
OCWD Annexation Fee
645,141
688,612
736,815
736,815
Power Costs
1,299,314
2,630,993
3,349,129
3,349,129
Import Water Purchases
14,1 14,625
3,041,360
3,379,757
3,379,757
MWDOC Fixed Costs
1,023,492
1,162,338
1,401,420
1,289,952
$ 20,603,386
$ 16,269,619
$ 19,083,311
$ 18,971,843
Rate Study Variance $
$ 2,901,794
$ 1,077,069
$ 3,374,495
$ 3,263,027
Variance %
16%
M.
21%
21 %
Page 128 of 134
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Ow Summary of
FY2023=24 Budget
V3 3/16/2023 Board of Directors Workshop
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Financial Summary - Consolidated
Revenue
Revenue (Operating)
Revenue (Non -Operating)
Total Revenue
Rate Study Assumptions
Variance
Prior Year Projected Budget
FY2021-22 FYE2022-23 FY2023-24
$ 43,01 1,492
2,510,962
$ 45,522,454
$ 43,727,333
4%
Expenses
Expenses (Operating):
Variable Costs
$ 20,603,386
Salary Related Expenses
-
Supplies & Services
6,297,722
Expenses (Non -Operating)
1,270,454
Total Expenses
$ 28,171,562
$ 43,535,520
4,405,476
$ 47,940,996
$ 46,560,875
3%
$ 16,269,619
9,502,493
2,483,934
$ 28,256,046
$ 49,461,092
3,986,254
$ 53,447,346
$ 50,720,658
5%
$ 18,971,843
11,980,377
2,623,044
$ 33,575,264
Rate Study Assumptions Amounts will be added when section above is complete.
Variance
Page 130 of 134
Financial Summary - Water
Revenue
Prior Year
FY2021-22
Revenue (Operating)
$ 36,679,443
Revenue (Non -Operating)
5,329,915
Total Revenue
$ 42,009,358
Rafe Study Assumptions
$ 40,519,621
Variance %
4%
Expenses
Expenses (Operating):
Variable Costs
Salary Related Expenses
Supplies & Services
Expenses (Non -Operating)
Total Expenses
$ 20,603,386
5,31 1,474
1,251,753
$ 27,166,613
Projected
FYE2022-23
$ 36,708,322
7,474,583
$ 44,182, 905
$ 42,892,602
3%
$ 16,269,619
8,339,893
2,480,657
$ 27,090,169
Budget
FY2023-24
$ 41,796,028
7,399,009
$ 49,195,037
$ 46, 516, 980
6%
$ 18,971,843
10,184,029
2,616,744
$ 31,772,616
Rafe Study Assumptions Amounts will be added when section above is complete.
Variance
Page 131 of 134
Financial Summary - Sewer
Page 132 of 134
Prior Year
Projected
Budget
Revenue
FY2021-22
FYE2022-23
FY2023-24
Revenue (Operating)
$
3,391,898
$
3,526,841
$
4,067,674
Revenue (Non -Operating)
121,198
231,250
184,635
Total Revenue
$
3,513,096
$
3,758,091
$
4,252,309
Rafe Study Assumptions
$
3,207,712
$
3,668,273
$
4,203,678
Variance %
10%
2%
1
Expenses
Expenses (Operating):
Salary Related Expenses
$
-
$
-
$
-
Supplies & Services
986,248
1,162,600
1,796,348
Expenses (Non -Operating)
18,701
3,277
6,300
Total Revenue
$
1,004,949
$
1,165,877
$
1,802,648
Rate Study Assumptions
Amounts will be added when section above is complete.
Variance
Page 132 of 134
I
Effects on Revenue
& Variable Costs
With Various BPP 7o
V3 3/16/2023 Board of Directors Workshop
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BPP
Demand
Effects on Revenue & Variable Costs With
Various BPP 7
Current Budget
Scenario 1
Scenario 2
Scenario 3
85%
77%
80%
85%
19,227.4
19,227.4
19,227.4
18,379.9
GW 16,372.1 14,804.3 15,373.6 15,674.4
IMP 2,855.3 4,423.1 3,853.8 2,705.5
Current Budget Scenario 1 Scenario 2 Scenario 3
Revenues
Non -Consumption Revenue 29,100,085 29,100,085 29,100,085 29,100,085
Consumption Revenue 24,347,261 24,347,261 24,347,261 23,312,031
Total Revenue $ 53,447,346 $ 53,447,346 $ 53,447,346 $ 52,412,116
Change from Original Budget - - - (1,035,230)
Variable Costs
Groundwater Purchases
10,216,190
9,237,883
9,593,126
9,780,826
OCWD Annexation Fee
736,815
736,815
736,815
736,815
Power Costs
3,349,129
3,071,848
3,172,511
3,205,681
Import Water Purchases
3,379,757
5,338,971
4,625,257
3,201,121
MWDOC Fixed Costs
1,289,952
1,289,952
1,289,952
1,289,952
Total Variable Costs $
18,971,843
$ 19,675,469
$ 19,417,661
$ 18,214,395
Change from Original Budget
-
703,626
445,818
(757,448)
Net Income $ 34,475,503 $ 33,771,877 $ 34,029,685 $ 34,197,721
Change from Original Budget - (703,626) (445,818) (277,782)
Page 134 of 134