HomeMy WebLinkAbout2023-06-15 - Board of Directors Meeting Agenda PacketYorba Linda
Water District
AGENDA
YORBA LINDA WATER DISTRICT
BOARD OF DIRECTORS REGULAR MEETING
Thursday, June 15, 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:nLLPS://USUtDWeU.ZUUITI.US/l/oyt.50[UtDy)OO
Telephone: (669) 444-9171 or (669) 900-6833
Meeting ID: 897 3870 6988
2. CALL TO ORDER
3. PLEDGE OF ALLEGIANCE
4. ROLL CALL
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))
5.1. AB 2449 Teleconference Requests
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. Positions on Federal Legislation
Recommendation: That the Board of Directors consider taking positions on S.
1427 — Agriculture PFAS Liability Protection Act; S. 1429 — Resource
Management PFAS Liability Protection Act; S. 1430 — Water Systems PFAS
Liability Protection Act; and S. 1432 — Fire Suppression PFAS Liability
Protection Act; S. 1433 — Airports PFAS Liability Protection Act.
7.2. Memorandum of Understanding (MOU) with Metropolitan Water District of
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Southern California (Metropolitan) for Joint Heli -Hydrant Project
Recommendation: That the Board of Directors authorize the General Manager
to execute an MOU with Metropolitan, subject to approval as to form by legal
counsel, for the District's participation in the joint Heli -Hydrant Project at the
Robert B. Diemer Water Treatment Plant.
7.3. 2023 Water Quality Report
Recommendation: That the Board of Directors approve the 2023 Water Quality
Report and instruct staff to make it available on the District's website and submit
it to the State Water Resources Control Board, Division of Drinking Water,
pursuant to State and Federal law regarding electronic delivery.
7.4. First Amendment to Professional Services Agreements (PSAs) for On -Call
Geotechnical Services
Recommendation: That the Board of Directors authorize staff to amend the
PSAs with Hushmand Associates, Inc. and Leighton Consulting, Inc. to increase
the not -to -exceed amount of the combined agreements by $150,000 for a new
not -to -exceed combined amount of $500, 000.
7.5. Financial Reserves Policy for Fiscal Year 2023-24
Recommendation: That the Board of Directors adopt Resolution No. 2023 -XX
adopting a Financial Reserves Policy for Fiscal Year 2023-24 and rescinding
Resolution No. 2022-15.
7.6. Amendments to Public Funds Investment Policy
Recommendation: That the Board of Directors adopt Resolution No. 2023 -XX
amending the Public Funds Investment Policy and rescinding Resolution No.
18-12.
7.7. Amendments to Purchasing Policy
Recommendation: That the Board of Directors adopt Resolution No. 2023 -XX
amending the Purchasing Policy and rescinding Resolution No. 2022-16.
7.8. Claim for Damages filed by Theresa Tallon
Recommendation: That the Board of Directors reject the claim filed by Theresa
Tallon and refer the claim to ACWA JPIA for further handling.
8. 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.
8.1. Conference with Legal Counsel - Anticipated Litigation
Initiation of Litigation Pursuant to Paragraph (4) of Subdivision (d) of Section
54956.9 of the California Government Code
Number of Potential Cases: One
8.2. Conference with Legal Counsel - Existing Litigation
Pursuant to Paragraph (1) of Subdivision (d) of Section 54956.9 of the California
Government Code
Name of Case: YLWD v. Alex Winsberg (Orange County Superior Court - Case
No. 30-2022-01284814-C U -O R -CJ C )
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8.3. 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
8.4. Conference with Labor Negotiators
Pursuant to Section 54957.6 of the California Government Code
Agency Designated Representative: General Manager
Unrepresented Employees: All Unrepresented Classifications
8.5. Public Employee Performance Evaluation
Pursuant to Section 54957 of the California Government Code
Title: General Manager
9. ADJOURNMENT
9.1. The next regular Board meeting is scheduled Thursday, July 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 3 of 191
ITEM NO. 7.1.
Yorba Linda
Water District
MEETING DATE:
TO:
FROM:
STAFF CONTACTS:
SUBJECT:
RECOMMENDATION:
AGENDA REPORT
June 15, 2023
Board of Directors
Mark Toy, General Manager
Doug Davert, Assistant General Manager
Positions on Federal Legislation
That the Board of Directors consider taking positions on:
S. 1427 — Agriculture PFAS Liability Protection Act
S. 1429 — Resource Management PFAS Liability Protection Act
S. 1430 — Water Systems PFAS Liability Protection Act
S. 1432 — Fire Suppression PFAS Liability Protection Act
S. 1433 — Airports PFAS Liability Protection Act
SUMMARY:
The District works to influence legislation and funding opportunities in Sacramento and Washington,
D.C., to promote fiscal stability, preserve local control, and support regulatory streamlining. The
YLWD Legislative Platform serves as the guide by which the District actively engages with legislation
through monitoring and communications activities. The Board approves positions on state legislation
and directs staff and consultants to advocate, oppose, or closely watch how the bill progresses
through the state legislature.
BACKGROUND:
S. 1427 — Agriculture PFAS Liability Protection Act
Link to the Full Bill Text
S.1427 would ensure farms and ranches are not liable for PFAS contamination should the U.S.
Environmental Protection Agency finalize a rule designating PFAS substances as hazardous under
the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).
S. 1429 — Resource Management PFAS Liability Protection Act
Link to the Full Bill Text
S.1429 would ensure waste management operators are not liable for PFAS contamination should the
U.S. Environmental Protection Agency finalize a rule designating PFAS substances as hazardous
under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).
Page 4 of 191
S. 1430 — Water Systems PFAS Liability Protection Act
Link to the Full Bill Text
S.1430 would ensure municipal water districts are not liable for PFAS contamination should the U.S.
Environmental Protection Agency finalize a rule designating PFAS substances as hazardous under
the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).
S. 1432 — Fire Suppression PFAS Liability Protection Act
Link to the Full Bill Text
S.1432 would ensure fire suppression entities are not liable for PFAS contamination should the U.S.
Environmental Protection Agency finalize a rule designating PFAS substances as hazardous under
the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).
S. 1433 — Airports PFAS Liability Protection Act
Link to the Full Bill Text
S.1433 would ensure airports are not liable for PFAS contamination should the U.S. Environmental
Protection Agency finalize a rule designating PFAS substances as hazardous under the
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).
PRIOR RELEVANT BOARD ACTION:
The Board of Directors adopted the 2023 Legislative Platform on November 16, 2022.
STRATEGIC PLAN INITIATIVES:
G1 5A - Meeting with lobbyists, representatives, and regulators at all levels (local/state/federal).; G1
5B - Actively participate with existing water/sewer organizations on regulatory and emerging issues.;
G4 2D - Communicate emerging water quality and sewer issues/regulations.
ATTACHMENTS:
1. 2023 Legislative Platform Final
2. TPA May 2023 Monthly Report
3. YLWD Bill Positions Matrix
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Yorba Linda
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LEGISLATIVE
PLATFORM
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Purpose, Process, & Guiding Principles..............................................................................................................2
LegislativePositions.............................................................................................................................................. 3
WaterSupply............................................................................................................................................. 3
WaterQuality............................................................................................................................................3
WaterUse Efficiency................................................................................................................................ 3
Environment............................................................................................................................................... 4
Energy........................................................................................................................................................ 4
Fiscal........................................................................................................................................................... 4
LocalControl.............................................................................................................................................5
Other.......................................................................................................................................................... 5
ylwd.com 1 714-701-3000 1 1717 Miraloma Ave, Placentia CA 92870 1
Page 7 of 191
®Yorba Linda
Water District 2023 LEGISLATIVE PLATFORM
ylwd.com 1 714-701-3000 1 1717 Miraloma Ave, Placentia CA 92870 2
Page 8 of 191
GUIDING PRINCIPLES
PURPOSE
This document serves as the guide by which the Yorba Linda
Water District (YLWD) actively engages with legislation through
Seek funding opportunities for
monitoring and communications activities. The 2023 YLWD
YLWD projects through grants,
appropriations, or other means.
Legislative Platform represents the District's position on current or
Help YLWD access additional
future issues that have the potential to impact the District or its
funding sources that will
interests.
promote local reliability projects.
Support measures that promote
Below are the Guiding Principles and Policy Statements that will
fiscal stability, predictability,
financial independence, and
allow District staff and consultants to address 2023 legislative and
preserve the District's financial
regulatory issues promptly, without precluding the consideration
independence. Oppose
of additional legislative and budget issues that may arise during
measures that do not provide
the legislative session.
adequate funding to the District
such as unfunded mandates or
Furthermore, the 2023 Legislative Platform is an important
mandated costs with no
guarantee of local
advocacy tool to present and deliver to elected officials who
reimbursement or offsetting
represent the YLWD service area locally or in Sacramento and
benefits.
Washington D.C. Sharing policy statements and positions on
common legislative and regulatory issues with elected officials
helps to shape policy decisions and positions YLWD to be a
Preserve and protect the
leader in the community for legislative and regulatory topics.
District's powers, duties, andprerogatives to operate within its
service area and to determine
PROCESS
the policy direction of local
affairs, and oppose legislation
Legislative positions will be recommended by YLWD staff and the
that preempts local authority.
District's legislative advocates and submitted to the Board of
Local agencies should preserve
authority and accountability for
Directors for their consideration
revenues raised and services
In times where the legislative position of the District is unable to
provided, including maintaining
the ability to charge for services
go to the Board of Directors in time before it is acted upon in the
rendered or collect proportional
Legislature, as long as it is in line with the adopted legislative
impact, connection, or capacity
platform or the position taken is the same as any local agency
fees.
partners or association agencies including but not limited to the
Support Regulatory
Association of California Water Agencies (ACWA), Metropolitan
Streamlining
Water District of Southern California (MWDSC), the Municipal
Support legislation that aims to
Water District of Orange County (MWDOC), Orange County
streamline the regulatory
Water District (OCWD), Orange County Sanitation District (OCSD)
environment by reducing
the California Special District's Association (CSDA), Community
regulation, reviewing regulation,
Water Systems Alliance (CWSA), or the California Association of
or proposing regulations without
affecting YLWD's ability to
Sanitation Agencies (CASA), the Board President can sign
operate safely and effectively.
position letters on behalf of the District. If the Board President
Oppose redundant regulatory
takes any legislative position due to this process, the legislative
processes or procedures that
increase costs and add time to
position will still be brought before the next Board of Directors
projects without justifiable
meeting after the fact for discussion and direction.
benefits
ylwd.com 1 714-701-3000 1 1717 Miraloma Ave, Placentia CA 92870 2
Page 8 of 191
]Water Yorba Linda
District
LEGISLATIVE POSITIONS
Water Supply
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• Support legislation that improves the supply and security of water to the Yorba Linda Water
District service area, including stormwater capture and dry weather runoff.
• Support legislation that aims to increase water recycling, potable reuse, groundwater
recharge, above ground storage, and surface water development.
• Support legislation that encourages, funds, and maintains water recycling systems like the
Ground Water Replenishment System that is managed by Orange County Water District.
• Support legislation and policies that provide for a solution to the problems in the Sacramento -
San Joaquin River Delta that strikes a balance between agricultural demands and urban
water needs.
• Support funding opportunities that provide local reliability, conveyance, and storage facilities
for YLWD.
• Support declaring water desalination as extraordinary supply.
• Support desalination projects where the cost provides good value because of the resilience
achieved.
• Reward districts that can prove their water use is recycled 100%.
Water Quality
• Oppose legislation or policies that add redundant water testing, water quality, or
environmental constraints to YLWD.
• Support legislation and funding that helps agencies meet state and federal water quality
standards.
• Support legislation or regulations that aim to provide source -control measures at no cost to the
District to prevent contaminants such as PFAS/PFOA from entering the water supply.
Water Use Efficiency
• Oppose legislation that establishes water conservation and water use efficiency programs that
unreasonably constrain YLWD or its customers.
• Oppose measures that fail to recognize augmented or alternative water supplies as an
efficient use of water, or that fail to provide an adequate incentive for investments in such
water, for potable or non -potable reuse.
• Oppose measures that require water efficiency standards or performance measures that are
infeasible, not practical, or fail to achieve a positive cost -benefit ratio.
ylwd.com 1 714-701-3000 1 1717 Miraloma Ave, Placentia CA 92870 3
Page 9 of 191
]Water Yorba Linda
District
LEGISLATIVE POSITIONS (Continued)
Environment
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• Support the goals of National Endangered Species Act Reform Coalition (NESARC).
• Support legislation that aims to clarify, streamline, and modernize the California Environmental
Quality Act (CEQA).
• Support unique solutions and partnerships to collectively address and respond to natural
disasters such as wildfires, including the continued use and expansion of Heli -Hydrants and
emergency generators.
• Support policies and legislation that help fund the cleanup and removal of PFAS/PFOA
contaminants from groundwater supplies.
• Support polluter -pays principles when assigning responsibility for the contamination and
cleanup of environmentally destructive substances.
• Support legislation or regulations that discourage the flushing of wipes or other foreign
substances through the sewer system, unless they meet certain performance standards.
• Oppose assigning superfund liability to water districts who treat water to remove PFAS.
Energy
• Oppose legislation that increases the cost of electricity or other utilities for YLWD.
• Support legislation and policies that recognize hydroelectric power as a clean, renewable
energy source and that its generation and use meet the greenhouse gas emission reduction
compliance requirements called for in the Global Warming Solutions Act of 2006 (AB 32) and
subsequent related legislation.
• Monitor and support any legislative development that would provide relief for the use of diesel
emergency power generators during State of Emergency events affecting the local electrical
utility.
• Oppose the removal of natural gas as a viable energy source.
Fiscal
• Support the development of bond or general fund programs for water supply development,
including new surface and groundwater storage, water quality, recycled water, desalination,
and water use efficiency related programs.
• Oppose legislation that places unnecessary or unfair regulations on pension liabilities.
• Support an equitable approach to the disbursement of State Revolving Fund revenues for a
wide variety of projects.
• Oppose legislation and regulations that tax water as a public goods charge and redistributes
the revenue throughout the State.
• Support state and federal revenue sources for water infrastructure projects that address water
quality and reliability issues for disadvantaged and income -limited communities and residents
that are not based upon regressive taxes.
• Support the protection of local revenue for use by special districts and the maintenance of
reserve accounts of water agencies.
• Support efforts that seek to bring federal sources of funding to California for water
infrastructure development and water management.
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]Water Yorba Linda
District
LEGISLATIVE POSITIONS (Continued)
Local Control
41YA «del[►yW_71 I kyla»_71 I U] all kTA
• Oppose legislation that seeks to diminish or alter the authority of the Board of Directors to
manage the District's water systems or operations, impose unreasonable unfunded state
mandated programs, or increase fees or taxes on YLWD customers.
• Oppose legislation that would degrade YLWD's authority in the area of public contracts,
procurement, financial administration, public records, and human resources.
• Oppose legislation that would dissolve YLWD or transfer its duties to other agencies.
• Oppose legislation that would affect YLWD's ability to protect and secure critical infrastructure
from cyber or physical threats and damages.
• Oppose legislation that places mandates, or otherwise modifies the governance structure of
special districts, joint powers authorities, or other local government entities.
• Support legislation that eliminates regulations between employees and employers that place
undue fiscal harm on special districts.
• Oppose legislation that mandates additional duties upon special districts to facilitate public
meetings or transparency without cause or funding.
• Oppose legislation that prevents water agencies from recovering sufficient revenues from
connection and capacity fees and oppose legislation that restricts the ability of agencies to
charge fees for services.
Other
Monitor legislation that would change or expand current prevailing wage requirements.
Oppose legislation that creates additional water agencies within or inclusive of the YLWD
service area outside of the LAFCO process, or without the support of residents and local public
agencies.
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Page 11 of 191
T1IED
TPA
MEMORANDUM
To: Yorba Linda Water District
From: Townsend Public Affairs
Date: June 2, 2023
Subject: State and Federal Legislative Monthly Report
State Leaislative Update
The month of May saw the rapid approach of the State budget and first house bill deadlines as
lawmakers worked to pass legislation out of their respective house of origin before June 2 and
agree on a budget framework before June 15. In addition to movement on the budget and
legislative fronts, May also featured notable legal action related to the implementation of
campaign finance reforms, executive action on infrastructure project streamlining, and
assessments on the effectiveness of the State's organic waste recycling regulations. Below is an
overview of pertinent state actions from the month of May.
State Budget
On May 12, Governor Newsom released the May Revision of his budget proposal for the 2023-
2024 fiscal year. The "May Revise" edition of the budget framework reflects revised revenue and
expenditure estimates for both the current and budget years and allows the Administration and
the Legislature to reconcile and reconfigure spending plans appropriately.
In total, the May spending plan includes $224 billion in General Fund spending, with a projected
$31.5 billion budget shortfall. Since January, the budget shortfall has increased by approximately
$9 billion, which is within the range the Administration was expecting.
To address the increase in the budget deficit, the May Revises proposes:
• $3.7 billion in borrowing (for a total of $4.9 billion when combined with the Governor's
January Budget proposal)
• $3.3 billion in fund shifts (for a total of $7.5 billion)
• $1.1 billion in unspent fund reductions (for a total of $6.7 billion)
• $695 million in funding delays (for a total of $8.1 billion over multiple years)
• $450 million safety net reserve withdrawal
• The May Revise proposes no new trigger reductions but maintains the $3.9 billion in
triggered reductions from the January Budget proposal
Despite the budget uncertainties and the need for careful spending practices, the Governor
emphasized that his Administration is not modeling for an impending recession, but taking into
account the potential for a "mild recession" in the coming years, which could further impact the
budget to the tune of an additional $40 billion shortfall. He stressed the need to maintain and
expand reserve resources, which now stand at $37.2 billion total — a $1.6 billion increase from
January's budget framework proposal.
Pagel
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Concerning spending cuts and deferrals, the May Revise proposes maintaining spending cuts by
pulling back on unallocated one-time spending funds, shifting to future bonds, and instituting
funding delays. A notable takeaway from the proposal includes an emphasis on bonds. During
his presentation, the Governor noted his behind -the -scenes work and support for a multi -billion
dollar climate investment bond including Assembly Member Garcia's legislative proposal AB
1567, along with a bond to reform the State's behavioral health system and build more mental
health housing.
Governor Newsom iterated that despite the uncertainty and projected revenue losses, his
Administration is committed to stabilizing investments in education, homelessness, housing,
healthcare/mental health, climate, public safety, and jobs. A high-level overview of proposed
changes to these programs is outlined below.
Homelessness: Funding allocations remain mostly stabilized for homelessness support
dollars. This includes maintaining prior budget commitments of $3.4 billion and $1 billion for
HHAP Round 5. As with the January Budget Proposal, the Governor reiterated the need for local
accountability for the use of homeless support dollars to ensure homeless reduction target goals
are being met. The May Revision includes a $500 million one-time Mental Health Services Fund
in 2023-24 in lieu of General Funds for the Behavioral Health Bridge Housing Program, effectively
eliminating the Governor's Budget proposed delay of $250 million General Fund to 2024-25.
Housing: Similar to homelessness investments, housing spending will remain mostly stabilized,
with no new proposed funding and some cuts. This includes $350 million in proposed spending
cuts to programs related to new home buying programs that have not been fully allocated. During
his presentation, the Governor iterated the need for local accountability in completing housing
elements and building units to meet regional needs in accordance with State housing law. In lieu
of new investments, he noted his support for streamlining and accountability related legislative
proposals.
Health Care/Mental Health: The May Revision maintains funding to expand full -scope Medi -Cal
eligibility to all income -eligible Californians, regardless of citizenship status. It also maintains over
$8 billion in various behavioral health investments. Of note is an increase in funding for CARE
Court implementation in the amount of $140 million for the second cohort of counties to be brought
into compliance with the program. The Governor noted there would be additional movement in
the behavioral health spheres, with the release of bond language for behavioral health continuum
reform in the coming week.
Climate: The May Revision maintains $2.7 billion in a multi-year wildfire and forest resilience
package and adds $290 million for a flood risk reduction package to reduce flood risk and enhance
flood system resilience. The Administration also continues to engage the Legislature in pursuing
a climate bond over the coming months. As a result of lower revenue projections and a resulting
increase in the budget problem, the May Revision includes an additional $1.1 billion in General
Fund shifts across climate resilience programs that would be bond eligible.
The Governor's May Revision to the January budget proposal traditionally catalyzes more intense
spending negotiations with the Legislature. Lawmakers have until June 15th to pass a budget for
the next fiscal year. In response to the May Revise proposal, legislative leaders noted their
support for careful spending practices and the hopeful passage of bonds to fund climate and
capital investments but noted their dedication to programs omitted from the proposal, such as
transportation and childcare investments.
Page 2
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Following the release of the May Revise, the Legislative Analyst's Office (LAO) issued a report
on the implications and feasibility of enacting the Governor's revised 2023-24 State budget. LAO
serves as the state's nonpartisan analyst for all things related to the budget. The office describes
itself as the "eyes and ears" of the Legislature to ensure that the executive branch is implementing
legislative policy in a cost-efficient and effective manner. In its assessment of the Governor's
proposal, the LAO provided some key assessments including:
It estimates that the budget deficit is actually $34.5 billion — which is greater than the $31.5
billion estimate provided by the Administration.
It notes that there is less than a one -in -six chance the State can afford the May Revision
spending level across the five-year period, given projections that the State faces operating
deficits throughout the multiyear window.
It encourages the use of reduced one-time spending and reserve funds to extend budget
capacity for the state to sustain core, ongoing programs.
These insights and recommendations are likely to influence budget negotiations between the
Legislature and the Administration. Lawmakers held a series of budget informational hearings in
the final weeks of May to discuss and recommend changes to various spending programs
proposed by the Administration. The Legislature's budget framework is set to be internally
completed in early June, which will kick off further discussions on how to reconcile differences.
State Legislature
The month of May featured two major legislative deadlines bills must pass in order to advance to
the second house: the Appropriations Suspense File hearings, and the House of Origin deadline.
On May 18, both the Senate and Assembly Appropriations Committees held their "suspense file"
hearings, wherein hundreds of bills were held under submission and will not move forward for the
remainder of the Legislative Session. The appropriations suspense process was borne out of a
desire for fiscal prudence and essentially serves as a filter for the hundreds of bills introduced
each year that are deemed to have a significant fiscal impact on the State's finite resources.
Bills may be held under submission for a number of reasons - their structure may be duplicative
to existing budget spending proposals, bill authors may have identified other bills within their
portfolio as having a greater priority, or a bill may be deemed politically unfeasible for several
reasons. Given the budget constraints this year with an anticipated deficit, legislators were more
inclined to halt the progression of bills with big price tags.
Suspense file hearings are done in rapid speed, with Appropriations Chairs reading the outcomes
of hundreds of bills. This year, the Assembly Appropriations Suspense file featured 755 bills, of
which 221 were held under submission (29%). The Senate Appropriations Suspense file featured
416 bills, of which 90 bills were held under submission (22%).
Because May's suspense file hearings mark the first iteration of two, more bills tend to pass out
of their house of origin's suspense file than the suspense file hearing in the second house. This
can be somewhat attributed to the political favorability of bills authored by colleagues within the
same house.
Page 3
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Following the outcomes of the suspense file hearings, the last week of May featured another
major legislative hurdle for bills — the House of Origin deadline. The House of Origin deadline
marks the last day for any bill introduced in the Senate or Assembly to pass off the floor and into
the second house for consideration. Both houses considered hundreds of bills throughout the
week. Below is a summary of various priority bill outcomes, organized by issue area:
Proposed Statewide Bonds
• AB 531 (Irwin) enacts the Veterans Housing and Homeless Prevention Bond Act of 2024
to authorize the issuance of bonds in an amount not to exceed $600,000,000 to provide
additional funding for the VHHPA.
This measure passed off of the Assembly Floor on 5/30 on an 80-0 vote.
• AB 1657 (Wicks) enacts the Affordable Housing Bond Act of 2024, which authorizes the
issuance of $10 billion in general obligation bonds, upon approval by voters at the March
5, 2024, statewide primary election. Bond funds would be used to fund new and
existing affordable rental housing and homeownership programs.
This measure passed off of the Assembly Floor on 5/31 on a 61-13 vote.
• AB 1567 (Garcia) enacts the Safe Drinking Water, Wildfire Prevention, Drought
Preparation, Flood Protection, Extreme Heat Mitigation, Clean Energy, and Workforce
Development Bond Act of 2024, which if approved by the voters, would authorize the
issuance of bonds in the amount of $15,995,000,000.
This measure passed off of the Assembly Floor on 5/31 on a 63-0 vote.
• SB 638 (Eggman) enacts the Climate Resiliency and Flood Control Bond Act of 2024,
which places a $6 billion general obligation bond before voters in the November 2024
general election to finance flood control efforts. SB 638's enactment is contingent upon
the passage of another bond measure, SB 867 (Allen).
This measure passed off of the Senate Floor on 5/31 on a 36-2 vote.
• SB 834 (Portantino) enacts the California Family Home Construction and Homeownership
Bond Act of 2023 which authorizes the issuance of bonds in the amount of
$25,000,000,000. Bond funds would be used to provide secondary mortgage loans to
qualified homebuyers and loans to qualified homebuilders for predevelopment
infrastructure improvements.
This measure passed off of the Senate Floor on 5/30 on a 28-9 vote.
SB 867 (Allen) enacts the Drought, Flood, and Water Resilience, Wildfire and Forest
Resilience, Coastal Resilience, Extreme Heat Mitigation, Biodiversity and Nature -Based
Climate Solutions, Climate Smart Agriculture, Park Creation, and Outdoor Access, and
Clean Energy Bond Act of 2024, which, if approved by the voters, would authorize the
issuance of bonds in the amount of $15,500,000,000. SB 867's enactment is contingent
upon the passage of another bond measure, SB 638 (Eggman).
This measure passed off of the Senate Floor on 5/31 on a 33-5 vote.
Water and Sanitation
AB 246 (Papan) would prohibit any person from manufacturing, distributing, selling, or
offering for sale in the state any menstrual products that contain regulated PFAS.
Page 4
Page 15 of 191
This measure passed off of the Assembly Floor on 5/15 on a 70-0 vote.
• AB 727 (Weber) would prohibit a person from manufacturing, selling, delivering,
distributing, holding, or offering for sale in the state a cleaning product that contains
regulated PFAS.
This measure passed off of the Assembly Floor on 5/15 on a 62-2 vote.
• AB 460 (Bauer -Kahan) enhances the ability of the State Water Resources Control Board
to issue interim orders to protect water rights and deter unlawful conduct. This bill would
apply with respect to water held under any basis of right.
This measure passed off of the Assembly Floor on 5/30 on a 43-20 vote.
• AB 1337 (Wicks) - authorizes the State Water Resources Control Board to adopt
regulations to ensure water is used in the public's interest and to implement regulations
through orders curtailing water use under any claim of right.
This measure passed off of the Assembly Floor on 5/30 on a 45-20 vote.
• SB 23 (Caballero) requires various State Agencies to take final action on water quality
certifications issued under the federal Clean Water Act and issue permits in specific
timeframes for water supply and flood risk reduction projects.
This measure failed to pass the Senate Appropriations Committee and is now a two-
year bill
Brown Act Reform/Open Meetings
• AB 557 (Hart) eliminates the sunset date on provisions of law allowing local agencies to
use teleconferencing without complying with specified Ralph. M Brown Act (Brown Act)
requirements during a proclaimed state of emergency.
This measure passed off of the Assembly Floor on 5/15 on a 78-0 vote.
• AB 817 (Pacheco) allows a subsidiary body of a local government to use teleconferencing,
with certain requirements.
This measure failed to pass the Assembly Local Government Committee and is now
a two-year bill
Governance and Transparency
• AB 1637 (Irwin) requires local governments to switch to a .gov domain. The measure took
amendments to push out the timeline for compliance from 2025 to 2026.
This measure passed off of the Assembly Floor on 5/30 on a 56-4 vote.
Court Upholds Campaign Contribution Limit Law Imposed on Local Officials
In late May, a Superior Court rejected a lawsuit challenging the constitutionality of a new law
prohibiting local elected officials from voting on matters involving the people and organizations
who contribute to their campaigns.
SB 1439 (Glazer, Statutes of 2022) went into effect earlier this year. The new law requires local
elected officials to recuse themselves from votes and discussions involving anyone who has
contributed more than $250 to their campaigns. The prohibition covers contributions made 12
months before and after the vote. A similar requirement already existed for officials appointed to
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Page 16 of 191
local and state boards, but SB 1439 expanded California's Political Reform Act to include most
elected officials as well. The FPPC subsequently issued clarifying actions to prohibit the measure
from applying retroactively, before its enactment.
In response to its passage, a coalition of special interest groups filed a lawsuit alleging the law is
overly broad, improperly alters the state's Political Reform Act, and infringes on free speech
protections related to the right to petition governments. The plaintiffs behind the lawsuit included
the Family Business Association of California, California Restaurant Association, California
Retailers Association, California Building Industry Association, California Business Properties
Association, and the California Business Roundtable — all of which expressed their
disappointment over the ruling.
The Fair Political Practices Commission, the state agency tasked with implementing and enforcing
the law, served as the defendant in the case and was represented by the California Attorney
General's Office. FPPC Chair Richard Miadich said the Commission has continued to work on
establishing regulations to fully implement the law, despite the lawsuit, and plans to adopt those
new rules in June.
Governor Newsom Unveils Sweeping Plan to Speed Up Infrastructure Proiects
On May 19, Governor Newsom announced plans to unveil a sweeping package of legislation and
an executive order to make it easier to build transportation, clean energy, water, and other
infrastructure across California. The package is designed to capitalize on federal funds passed
by the Biden Administration to boost climate -minded construction projects. The State is estimated
to receive $180 billion in state and federal funds for infrastructure in California over the next
decade.
As the first step in the process, Governor Newsom signed an executive order that will instruct
various government agencies to work together and create an infrastructure strike team, which in
theory will target projects that need to be completed and make sure they get across the finish line.
The remaining 11 -bill package is designed to shorten the contracting process for infrastructure
and water projects, limit timelines for CEQA and other environmental litigation to no more than
nine months, and simplify permitting processes for complicated projects like the Sacramento -San
Joaquin River Delta tunnel project to deliver water to Southern California. The Governor noted
that these processes are already in place for expedited permitting and construction for NBA
arenas as well as other megadevelopments across the state.
Omitted from the package is any direct focus on environmental streamlining for housing
production. When asked at the press conference why these policies were not included, the
Governor noted that there are "numerous legislative proposals that he looks forward to signing"
that will address these issues. This likely includes AB 1633 by Assembly Member Ting, which
clarifies that it is a violation of the Housing Accountability Act (HAA) for a local jurisdiction to deny
in bad faith an environmental clearance to which an urban infill housing development is legally
entitled.
During his presentation, the Governor noted he would fold the package into the State Budget
trailer bill process which must pass both houses of the Legislature by June 15. The Legislature
and the Administration are in the process of negotiating the final details of the fiscal blueprint with
Governor Newsom's office. As of yet, no official language related to the package has been
released. However, with history as a guide, this package will likely be pushed through with the
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expeditiousness exercised during last year, wherein the Governor pushed through a major climate
change mitigation package with extreme urgency in the final weeks of the Legislative Session.
Federal Legislative Update
The month of May saw several developments on the federal appropriations front, actions related
to federal water supplies, and the announcement of major policy initiatives in the issue areas of
sustainability and homelessness. Below is an overview of pertinent federal actions from the month
of May.
House Passes Debt Limit Bill with Biaartisan Suaaort to Avert Default
On May 31, the House overwhelmingly passed legislation negotiated by President Biden and
Speaker Kevin McCarthy to suspend the debt ceiling and set federal spending limits. The measure
would defer the federal debt limit for two years — allowing the government to borrow unlimited
sums as necessary to pay its obligations — while imposing two years of spending caps and a
string of policy changes that Republicans demanded in exchange for allowing the country to avoid
a disastrous default. Additional information on key provisions can be found below:
Funding Provisions
• The measure imposes separate spending caps on security and nonsecurity programs,
which have been standard in the previous acts that raised the ceiling in the past.
• Nondefense spending for FY 24 will be stabilized at 2023 levels and will be capped at
$703.7 billion and for FY 25 at $712.7 billion
• Defense spending will be capped for FY24 at $886.3 billion and for FY 25 at $895.2 billion.
COVID-19 Funds
The package rescinds unspent monies provided under any of the laws enacted in 2020
for COVID-19 relief, as well as the 2021 reconciliation package.
This provision will only extend to communities that have not yet obligated their funding.
Work Requirements
• Current law requires most able-bodied adults between the ages of 18 and 49 without
dependents to work or attend training programs for at least 80 hours a month if they want
to receive more than three months of SNAP benefits within a three-year period. The bill
phases in higher age limits for those work requirements, bringing the maximum age to 54
by 2025.
• But as part of the compromise with Democrats, the provision is slated to expire five years
later. At that time, the maximum age for the work requirements would drop back down to
49.
Changes to Temporary Assistance to Needy Families (TANF)
• For households utilizing Temporary Assistance to Needy Families (TANF) benefits, the
deal would make adjustments to a credit that allows states to require fewer recipients to
work, updating and readjusting the credit to make it harder for states to avoid. The credit,
called the "caseload reduction credit," allows states to reduce the number of people
subject to work requirements based on the decline in the number of people on the TANF
rolls in that state as compared to the number of people receiving the assistance in 2005.
", Page 7
Page 18 of 191
• House Republicans wanted to move the year of comparison to 2022, which would have
initially reset the credits to close to zero for every state. Under the compromise bill, states
can gain credits for their caseload reduction since 2015. The bill would also make other
adjustments to TANF, including eliminating some small cash payments to families.
Changes to Supplemental Nutrition Assistance Program (SNAP)
• Under current rules, individuals ages 18 through 49 can't receive SNAP benefits for more
than three months in three years if they don't meet additional work requirements.
• The measure would expand work requirements for "able-bodied adults without
dependents" under the Supplemental Nutrition Assistance Program to individuals up to
the age of 51 starting in fiscal 2023, 53 starting in fiscal 2024, and 55 starting in fiscal
2025.
• The measure would exempt homeless individuals, veterans, or certain individuals in foster
care from the work rules that apply to able-bodied adults without dependents.
• States would have to apply the work requirement provisions to any application for initial
certification or recertification beginning 90 days after the bill's enactment.
• The work requirement changes would sunset on Oct. 1, 2030, to allow Congress to
reevaluate.
• The measure would also modify the number of exemptions that state agencies can provide
to the work requirements, so the average number of exemptions doesn't exceed 8% of all
covered recipients beginning in fiscal 2024, instead of 12%.
• The Agriculture Department would be required to make public all available state waiver
requests and agency approvals, including supporting data from the state and relevant
documents on the waivers' use.
Student Loans
• The measure will end federal student loan payment suspension sixty days after June 30
and would not allow the Department of Education to implement a similar measure through
executive action unless authorized by Congress. This has no substantive effect on current
measures being decided by the courts.
Southwest States Strike Deal on Water Management and Distribution for Colorado River
In late May, the Biden-Harris Administration announced new investments that will help improve
and protect the stability and sustainability of the Colorado River System. Current and future
funding is needed to help increase water conservation, improve water efficiency, protect critical
environmental resources, and prevent the Colorado River System's reservoirs from falling to
critically low elevations that would threaten water deliveries and power production.
The funding, part of the President's Investing in America agenda, follows an historic consensus
system conservation proposal announced that commits to measures to conserve at least 3 million -
acre feet of system water through the end of 2026 when the current operating guidelines are set
to expire.
To date, the Interior Department has announced the following investments for Colorado River
Basin states, which will yield hundreds of thousands of acre-feet of water savings each year once
these projects are complete:
$281 million for 21 water recycling projects that are expected to increase annual water
capacity by 127,000 acre-feet annually;
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Page 19 of 191
• Up to $233 million in water conservation funding for the Gila River Indian Community,
including $83 million for a water pipeline project and an additional $50 million from the
Inflation Reduction Act through the Lower Colorado River Basin System Conservation and
Efficiency Program, which will also provide similar investments in 2024 and 2025;
• Over $73 million for infrastructure repairs on water delivery systems, $19.3 million in fiscal
year 2022 and another $54 million announced last month;
• $71 million for 32 drought resiliency projects to expand access to water through
groundwater storage, rainwater harvesting, aquifer recharge and water treatment; and
• $20 million in new water storage and groundwater storage investments.
U.S. Supreme Court Rules to Overturn Rule on Waters of the United States
On May 25 the U.S. Supreme Court issued a ruling in the case Sackett v. EPA determining that
EPA had overstepped its authorities in regulating Waters of the United States (WOTUS). In the
ruling, the Supreme Court put new limits on the Clean Water Act, slashing the EPA's power to
protect wetlands and effectively invalidating President Joe Biden's contested Waters of the US
rule.
The ruling could give companies a freer hand to discharge pollutants and could let developers
construct more new houses without getting federal approval. It's a victory for property -rights
advocates and a defeat for environmentalists and President Joe Biden's Administration.
While some Republicans are applauding the news, EPA Administrator Michael Regan said the
agency is reviewing the ruling and considering its next steps. The Administration will have to tread
carefully as they do not have a lot of wiggle room to regulate wetlands that are not clearly
connected to navigable waters.
Because the court decision only applies to federal jurisdiction, it will be important to see whether
states increase the scope of their regulation over wetlands, keeping in mind that the Biden
Administration rule is already enjoined in 27 states after they filed lawsuits challenging it.
The 1972 Clean Water Act gives the federal government control over "waters of the United
States," including rivers and lakes. Writing for five members of the court, Justice Samuel Alito
noted that wetlands are covered only if they have a continuous surface connection to one of those
major waterways.
Senate Committee on Environment and Public Works Holds Hearing on US Army Corps of
Engineers Budgets and Implementation of the 2022 Water Resources Development Act
On May 3, 2023 the Senate Committee on Environment and Public Works held a hearing to
receive testimony from the US Army Corps of Engineers on the agency's FY2024 budget request.
Testifying were Michael Connor, the Assistant Secretary for Civil Works and Lt. Gen. Scott
Spellmon, the USACE Commanding General.
The witnesses spoke to the Corps' ability to implement the 2022 Water Resources Development
Act (WRDA) and the unprecedented funding the Corps has received through the infrastructure
laws.
Of note was an exchange with Senator Ben Cardin of Maryland where Asst. Sec. Connor spoke
to the importance of Environmental Infrastructure authorities authorized through WRDA and the
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Page 20 of 191
Corps' ability to deliver the projects. Mr. Connor stated that the EI authorities are the most
oversubscribed program at this point in time. The Army Corps is for the first time using the
President's budget request to request funding for EI authorities and called the effort a "turning
point" in their recognition of the value of the program.
U.S. Army Corps of Engineers Issues Call for Protects for Inclusion in Annual 2024 Report to
Congress
The U.S. Army Corps of Engineers is required to submit to Congress a report that identifies, for
potential congressional authorization, completed feasibility reports, proposed feasibility studies
submitted by non -Federal interests, proposed modifications to authorized water resources
development projects or feasibility studies, and proposed modifications to environmental
infrastructure program authorities.
Congress in turn uses this report to appropriate funding for the named projects. Non-federal water
project sponsors can submit their projects to the Army Corps for consideration in the 2024 report.
This submission window opened on May 5, 2023 and will close on August 28, 2023.
Projects that are submitted to the Army Corps must meet all the following criteria:
• Are related to the missions and authorities of the Corps of Engineers (Corps); involve a
proposed or existing Corps' water resources project or effort whose primary purpose is
flood and storm damage reduction, commercial navigation, or aquatic ecosystem
restoration, municipal or agricultural water supply. Proposals for recreation or hydropower
are eligible for inclusion if undertaken in conjunction with a flood or coastal storm damage
reduction, commercial navigation, aquatic ecosystem restoration, or municipal or
agricultural water supply project or effort.
• Require specific congressional authorization.
• Have not been congressionally authorized.
• Have not been included in the main table of a previous annual report.
• If authorized could be carried out by the Corps of Engineers.
Additional information on the process, including an FAQ and information on how to submit projects
can be found here.
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1'1RTAC
State
Bills of Interest
Page 22 of 191
AUTHOR
ProposedBILL
NYC
ACWA - Sponsor
AB 30
Ward [D]
The bill would require the Department of Water Resources to research,
develop, and implement new observations, prediction models, novel
CASA - NYC
forecasting methods, and tailored decision support systems to improve
CSDA - Support
predictions of atmospheric rivers and their impacts on water supply,
MWD - NYC
flooding, post -wildfire debris flows, and environmental conditions.
MWDOC - Watch
OCWD - Support
OC San - NYC
AB 62
Mathis [R]
TWO YEAR BILL - Establishes a statewide goal to increase above- and
Support if
ACWA - Favor
below -ground water storage capacity by a total of 3.7 million acre-feet
Amended
CASA - NYC
(MAF) by the year 2030 and a total of 4.0 MAF by the year 2040.
CSDA - Watch
Requires the State Water Resources Control Board (State Water Board)
MWD - NYC
and the Department of Water Resources (DWR) to design and
MWDOC - Watch
implement measures through a variety of diversion, storage, and
OCWD - NYC
conveyance techniques to achieve the statewide goal.
OC San - NYC
AB 234
Bauer -Kahan [D]
TWO YEAR BILL - Would prohibit a synthetic polymer microparticle from
Support
ACWA - NYC
being placed on the market in this state as a substance on its own or,
CASA - Support In
where the synthetic polymer microparticles are present to confer a
Concept
sought-after characteristic, in mixtures in a concentration equal to or
CSDA - Watch
greater than 0.01 % by weight.
MWD - NYC
MWDOC - NYC
OCWD - NYC
OC San - Support
AB 246
Papan [D]
Prohibits, commencing January 1, 2025, a person from manufacturing,
Support
ACWA - NYC
distributing, selling, or offering for sale in the state any menstrual
CASA - Support
products that contain regulated PFAS. Provides that, upon an action
CSDA - Watch
brought by the Attorney General, a city attorney, a county counsel, or a
MWD - NYC
district attorney, a person or entity that violates the PFAS restrictions of
MWDOC - NYC
this bill shall be liable for a civil penalty not to exceed five thousand
OCWD - NYC
dollars ($5,000) for a first violation, and not to exceed ten thousand
OC San - Support
dollars ($10,000) for each subsequent violation
Page 22 of 191
1'1RTAC
State
Bills of Interest
ML
AUTHOR
M M"MW jm�
AB 334
Rubio [D]
This bill would establish that an independent contractor, who meets
NYC
ACWA - Favor
specified requirements, is not an officer for purposes of being subject to
CASA - Support
the prohibition on being financially interested in a contract. The bill would
CSDA - Support
authorize a public agency to enter into a contract with an independent
MWD - NYC
contractor who is an officer for a later phase of the same project if the
MWDOC - NYC
independent contractor did not participate in the making of the
OCWD - NYC
subsequent contract and specified requirements are met.
OC San - Support
AB 460
Bauer -Kahan [D]
Grants the State Water Resources Control Board (State Water Board)
NYC
ACWA - Oppose
authority to issue an interim relief order to enforce the reasonable use
CASA - NYC
doctrine, public trust doctrine, water rights, and other provisions of water
CSDA - Watch
law. Increases penalties for specified violations from $500 per day to
MWD - NYC
$10,000 per day and $2,500 per acre-foot (AF) of water illegally diverted.
MWDOC - Oppose
Authorizes the State Water Board to commence an interim relief
OCWD - Oppose
proceeding on its own motion or upon the petition of an interested party.
OC San - NYC
AB 557
Hart [D]
This bill would extend abbreviated teleconferencing provisions when a
NYC
ACWA - Favor
declared state of emergency is in effect, or in other situations related to
CASA - Support
public health, as specified, indefinitely. The bill would also extend the
CSDA - Sponsor
period for a legislative body to make the above-described findings related
MWD - NYC
to a continuing state of emergency and social distancing to not later than
MWDOC - Support
45 days after the first teleconferenced meeting, and every 45 days
OCW D - Support
thereafter, in order to continue to meet under the abbreviated
OC San - NYC
teleconferencing procedures.
AB 727
Weber [D]
Prohibits, commencing January 1, 2025, a person or entity from
NYC
ACWA - NYC
manufacturing or selling a cleaning product containing PFAS. Prohibits,
CASA - Sponsor
commencing January 1, 2025, a person or entity from manufacturing,
CSDA - Watch
selling, delivering, distributing, holding, or offering for sale in commerce
MWD - NYC
in this state a cleaning product containing any of the following:
MWDOC - NYC
a) Intentionally added PFAS; or,
OCWD - NYC
b) PFAS in a product or product component at or above the following
OC San - Support
thresholds:
i) Commencing January 1, 2025, 50 parts per million.
ii) Commencing January 1, 2027, 25 parts per million.
Page 23 of 191
1'1RTAC
State
Bills of Interest
Page 24 of 191
AUTHORBILL
0 -
AB 755
Papan [D]
This bill would require a public entity, as defined, that conducts a cost -of-
Oppose
ACWA - Oppose
service analysis, as defined, to identify the total incremental costs
CASA - Sponsor
incurred by all the major water users, as described, in the single-family
CSDA - Watch
residential class and the total incremental costs that would be avoided if
MWD - NYC
major water users met a specified efficiency goal. The bill would also
MWDOC - Oppose
require both of those costs to be made publicly available by posting the
OCWD - NYC
information in the public entity's cost -of -service analysis.
OC San - Support
AB 838
Connolly [D]
TWO YEAR BILL - Requires, beginning January 1, 2025, and thereafter
Oppose
ACWA - Oppose
at intervals determined by the State Water Resources Control Board
CASA - NYC
(State Water Board), a public water system to provide to the State Water
CSDA - Watch
Board specified information and data related to the average water bill
MWD - NYC
paid by customers and the public water system's completed and planned
MWDOC - Watch
efforts to replace aging infrastructure.
OCWD - NYC
OC San - NYC
AB 1337
Wick [D]
Authorizes the State Water Resources Control Board to adopt
NYC
ACWA - Oppose
regulations to ensure water is used in the public's interest and to
CASA - Oppose
implement regulations through orders curtailing water use under any
CSDA - Neutral
claim of right, even those prior to 1914.
MWD - NYC
MWDOC - Oppose
OCWD - Oppose
OC San - NYC
AB 1423
Schiavo [D]
Would, commencing January 1, 2024, require a manufacturer or installer
NYC
ACWA - NYC
of a covered surface, defined as artificial turf or a synthetic surface that
CASA - NYC
resembles grass, proposing to design, sell, or install a field with a
CSDA - Watch
covered surface to any party to notify the party at the earliest possible
MWD - NYC
date that the covered surface contains regulated PFAS, as defined. The
MWDOC - NYC
bill would also prohibit, commencing January 1, 2024, a public entity,
OCWD - NYC
including a charter city, charter county, city, or county, any public or
OC San - NYC
private school serving pupils in kindergarten or any of grades 1 to 12,
inclusive, a public institution of higher education, other than the University
of California, or a private institution of higher education from purchasing
or installing a covered surface containing regulated PFAS
Page 24 of 191
1'1RTAC
State
Bills of Interest
Page 25 of 191
AUTHORBILL
-
AB 1567
Garcia [D]
Would enact the Safe Drinking Water, Wildfire Prevention, Drought
NYC
ACWA - Support If
Preparation, Flood Protection, Extreme Heat Mitigation, Clean Energy,
Amended
and Workforce Development Bond Act of 2024, which, if approved by the
CASA - Support if
voters, would authorize the issuance of bonds in the amount of
Amended
$15,995,000,000 pursuant to the State General Obligation Bond Law to
CSDA - Watch
finance projects for safe drinking water, wildfire prevention, drought
MWD - NYC
preparation, flood protection, extreme heat mitigation, clean energy, and
MWDOC - Watch
workforce development programs.
OCWD - NYC
OC San - NYC
AB 1572
Friedman [D]
(1)Existing law establishes various state water policies, including the
NYC
ACWA -
policy that the use of water for domestic purposes is the highest use of
Watch/Amend
water.This bill would make legislative findings and declarations
CASA - NYC
concerning water use, including that the use of potable water to irrigate
CSDA - Oppose
nonfunctional turf is wasteful and incompatible with state policy relating to
Unless Amended
climate change, water conservation, and reduced reliance on the
MWD - NYC
Sacramento -San Joaquin Delta ecosystem. The bill would direct all
MWDOC - Oppose
appropriate state agencies to encourage and support the elimination of
Unless Amended
irrigation of nonfunctional turf with potable water. This bill contains other
OCWD - NYC
related provisions and other existing laws.
OC San - NYC
AB 1594
Garcia [D]
Requires any state regulation that seeks to require, or otherwise compel,
Support
ACWA - Favor
the procurement of medium- and heavy-duty zero -emission vehicles
CASA - NYC
(ZEV) to ensure that those vehicles can support a public agency utility's
CSDA - Support
ability to maintain reliable water and electric service, respond to disasters
MWD - NYC
in an emergency capacity, and provide mutual aid assistance statewide
MWDOC - Support
and nationwide.
OCWD - Support
OC San - Support
Page 25 of 191
1'1RTAC
State
Bills of Interest
Page 26 of 191
AUTHOR
McKinnor [D]
-
Would require, on and after January 1, 2029, that all new washing
NYC
ACWA - Watch
AB 1628
machines offered for sale in California for residential, commercial, or
CASA - Support if
state use contain a microfiber filtration system, as defined, with a mesh
Amended
size not greater than 100 micrometers.
CSDA - Watch
MWD - NYC
MWDOC - NYC
OCWD - NYC
OC San - NYC
AB 1637
Irwin [D]
This bill, no later than January 1, 2027, would require a local agency, as
Oppose
ACWA - Watch
defined, that maintains an internet website for use by the public to ensure
CASA - NYC
that the internet website utilizes a ".gov" top-level domain or a ".ca.gov"
CSDA - Oppose
second -level domain and would require a local agency that maintains an
Unless Amended
internet website that is noncompliant with that requirement to redirect that
MWD - NYC
internet website to a domain name that does utilize a ".gov" or ".ca.gov"
MWDOC - Watch
domain. This bill, no later than January 1, 2027, would also require a
OCWD - NYC
local agency that maintains public email addresses to ensure that each
OC San - NYC
email address provided to its employees utilizes a ".gov" domain name or
a ".ca.gov" domain name.
SB 3
Dodd [D]
Current law authorizes the State Water Resources Control Board to
Oppose
ACWA - Watch
provide for the deposit into the Safe and Affordable Drinking Water Fund
CASA - NYC
of certain moneys and continuously appropriates the moneys in the fund
CSDA - Watch
to the state board for grants, loans, contracts, or services to assist
MWD - NYC
eligible recipients. This bill would require the board to, upon appropriation
MWDOC - NYC
by the Legislature, expend moneys to provide training statewide to
OCWD - NYC
community water systems with between 15 and 200 service connections
OC San - NYC
to meet compliance with the Water Shutoff Protection Act.
SB 23
Caballero [D]
TWO YEAR BILL - This bill requires CDFW and the Water Boards, for
Support
ACWA - Sponsor
water supply projects and flood risk reduction projects, to issue a final
CASA - NYC
LSAA or take final action on water quality certifications issued pursuant
CSDA - Support
to either Porter -Cologne or under the federal CWA, as applicable, within
MWD - NYC
specific timeframes.
MWDOC - Support
OCWD - Support
OC San - NYC
Page 26 of 191
1'1RTAC
State
Bills of Interest
Page 27 of 191
SB 48
Becker [D]
This bill requires the California Energy Commission (CEC) along with
Oppose
ACWA - Watch
other agencies, to develop to a state strategy to achieve state goals for
CASA - NYC
energy and greenhouse gas (GHG) emissions from existing buildings.
CSDA - Watch
Amended to remove water in the scope.
MWD - NYC
MWDOC - Watch
OCWD - NYC
OC San - NYC
SB 366
Caballero [D]
The bill would require the department, in coordination with the California
Support
ACWA - Support
Water Commission, the State Water Resources Control Board, other
CASA - Support if
state and federal agencies as appropriate, and the stakeholder advisory
Amended
committee to develop a comprehensive plan for addressing the state's
CSDA - Support
water needs and meeting specified water supply targets established by
MWD - NYC
the bill for purposes of "The California Water Plan." This bill revises and
MWDOC - Support
recasts the California Water Plan (Water Plan) and requires the Water
OCWD - Watch
Plan, commencing with the 2028 update, to be a comprehensive plan for
OC San - NYC
addressing the state's water needs and meeting water specified long-
term supply targets.
SB 470
Alvarado -Gil [D]
This bill codifies, until January 1, 2026, the Urban Water Community
NYC
ACWA - Favor
Drought Relief program and the Small Community Drought Relief
CASA - NYC
program in the Department of Water Resources to provide grants for
CSDA - Support
interim or immediate drought relief, as specified. This bill authorizes
MWD - NYC
these programs, when certain conditions are met, to fund projects that
MWDOC - NYC
provide benefits in addition to drought relief, including projects that
OCWD - NYC
reduce the risk of wildfire for entire neighborhoods and communities
OC San - NYC
through water delivery system improvements for fire suppression
purposes, as specified.
Page 27 of 191
1'1RTAC
State
Bills of Interest
BILL
AUTHOR
SUMMARY
I im
PYLWD
OSITION
OTHER
I POSITIONS
SB 867
Allen [D]
This bill enacts the Drought, Flood, and Water Resilience, Wildfire, and
NYC
ACWA - Support If
Forest Resilience, Coastal Resilience, Extreme Heat Mitigation,
Amended
Biodiversity, and Nature -Based Climate Solutions, Climate Smart
CASA - Support if
Agriculture, Park Creation and Outdoor Access, and Clean Energy Bond
Amended
Act of 2024, which authorizes a $15.5 billion bond to be placed before
CSDA - Watch
voters at an unspecified future election.
MWD - NYC
MWDOC - Watch
OCWD - NYC
OC San - NYC
Legend:
NYC - Not Yet Considered
ACWA - Association of California Water Agencies
CASA - California Association of Sanitation Agencies
CSDA - California Special Districts Association
Page 28 of 191
ITEM NO. 7.2.
Yorba Linda
Water District
AGENDA REPORT
MEETING DATE: June 15, 2023
TO: Board of Directors
FROM: Mark Toy, General Manager
STAFF CONTACTS: Doug Davert, Assistant General Manager
Malissa Muttaraid, Interim Public Affairs Officer
SUBJECT: Memorandum of Understanding (MOU) with Metropolitan Water District of
Southern California (Metropolitan) for Joint Heli -Hydrant Project
RECOMMENDATION:
That the Board of Directors authorize the General Manager to execute an MOU with Metropolitan,
subject to approval as to form by legal counsel, for the District's participation in the joint Heli -Hydrant
Project at the Robert B. Diemer Water Treatment Plant.
BACKGROUND:
Yorba Linda Water District (YLWD) and Metropolitan have facilities in the City of Yorba Linda. Both
agencies have a mutual desire to enhance resilience to wildland fires, protect critical water
infrastructure, and aid the surrounding communities.
YLWD has successfully designed and built two heli -hydrants in fire -prone locations, providing a
reliable water source for firefighting helicopters during active wildfires. Therefore, YLWD can
leverage its expertise to collaborate with Metropolitan in constructing a heli -hydrant at the Robert B.
Diemer Plant.
In September 2022, YLWD obtained matching funds of up to $500,000.00 from the United States
Forest Service (USFS) to construct a new heli -hydrant. After many discussions between both
agencies, it would be best to collaborate on constructing one joint heli -hydrant, including a helipad,
located at the Diemer Plant. This collaboration will allow the parties to maximize the value of the
grant and its benefits. YLWD is providing grant funds and expertise from its previously constructed
heli -hydrants. Metropolitan will provide both real property, an ideal location for its construction, and
long-term operation.
The MOU for the Joint Heli -Hydrant Project has been reviewed by both agencies' legal counsel and
is seeking the signature approval of both agencies' Boards of Directors.
REVIEWED BY GENERAL COUNSEL: Yes
ATTACHMENTS:
1. MOU for YLWD and Metropolitan Heli -hydrant Project
2. Exhibit A - Federal Financial Assistance Grant Award
Page 29 of 191
MEMORANDUM OF UNDERSTANDING
BETWEEN YORBA LINDA WATER DISTRICT AND
THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA
FOR THE JOINT HELI -HYDRANT PROJECT
THIS MEMORANDUM OF UNDERSTANDING REGARDING THE JOINT HELI -HYDRANT
PROJECT ("MOU") is made and entered into on 2023, by and between
the YORBA LINDA WATER DISTRICT, a local public agency, created and operating under
authority of Division 12 of the California Water Code ("YLWD") and THE METROPOLITAN
WATER DISTRICT OF SOUTHERN CALIFORNIA, a public corporation incorporated under
the Metropolitan Water District Act of the State of California (Stats. 1969, Ch. 209 as
amended) ("Metropolitan") (collectively referred to herein as "Parties" or individually
as a "Party").
RECITALS
WHEREAS, both Parties have facilities within the City of Yorba Linda, and the treated
imported water from Metropolitan's Robert B. Diemer Water Treatment Plant ("Diemer
Plant") is a major source of water to YLWD's customers. YLWD and Metropolitan have a
long history of mutual courtesy, cooperation, and accommodation.
WHEREAS, the Diemer Plant is located at 3972 Valley View Ave, Yorba Linda, CA 92886, in
a location that is prone to wildland fires.
WHEREAS, the Parties have a mutual desire to enhance resilience to wildland fires, protect
critical water infrastructure, and aid the community in the protection of homes,
businesses, and key environmental assets.
WHEREAS, YLWD previously and successfully designed and constructed two helicopter
dip tanks ("Heli -Hydrants") in fire prone locations, which provided a reliable water source
to firefighting helicopters during active wildfires and thus, YLWD can provide its expertise
in partnering with Metropolitan to construct a Heli -Hydrant at the Diemer Plant.
WHEREAS, YLWD continues to work closely with the California Department of Forestry and
Fire Protection ("Cal Fire") and the Orange County Fire Authority ("OCFA") to validate
and improve its two existing Heli -Hydrants.
WHEREAS, in September 2022, YLWD secured 1:1 matching funds through the United
States Forest Service ("USFS") in an amount up to $500,000.00 to construct a new heli -
hydrant. A copy of the Federal Financial Assistance Award of Domestic Grant 22 -DG -
11052012 -135,
2 -DG -
11052012 -135, dated September 22, 2022 ("Grant") is attached hereto as Exhibit A.
WHEREAS, after applying for this Grant, YLWD learned that Metropolitan was considering
construction of a separate heli -hydrant in the same general area as its Diemer Plant.
WHEREAS, after discussions, the Parties agreed that it would be best to collaborate on the
construction of one joint heli -hydrant, including a helipad, located at the Diemer Plant
("Diemer Heli -Hydrant"). This collaboration will allow the Parties to maximize the value of
the Grant and its benefits. YLWD is providing both Grant funds and expertise from its
MOU Between YLWD and Metropolitan for Joint Heli -Hydrant Project 1 of 7
Page 30 of 191
previously constructed Heli -Hydrants, and Metropolitan is providing both real property,
which is an ideal location for its construction, and long-term operation.
WHEREAS, Subject to approval by USFS, the Grant may be shared with Metropolitan for
construction of the Diemer Heli -Hydrant.
WHEREAS, Instead of the Parties constructing two separate Heli -Hydrants near each other,
YLWD and Metropolitan desire to enter this MOU to jointly work together to fund,
construct, and operate a single Heli -Hydrant and supporting improvements, the Diemer
Heli -Hydrant.
WHEREAS, The Parties agree that the Diemer Heli -Hydrant would significantly enhance fire
protection capabilities at the Diemer facility and surrounding community and wildland
areas to the benefit of both Parties and the public.
UNDERSTANDING AND COMMITMENT
NOW, THEREFORE, in consideration of the above Recitals, the Parties hereby understand
and commit to the following:
A. Contingencies. The Parties understand that this MOU is contingent on USFS's
approval of Metropolitan as a subrecipient of the Grant and the execution of any
required agreements necessary for that approval.
B. Use of Grant Funds for the Diemer Heli -Hydrant. Subject to the foregoing
contingencies, the Parties intend to use the $500,000 in Grant funding along with
their respective monetary and in-kind contributions, listed below, to jointly construct
the Diemer Heli -Hydrant that is currently estimated to cost approximately
$1,013,250.00. Metropolitan will design and construct the Diemer Heli -Hydrant, and
own and operate it after construction is completed. YLWD will review the design
and construction of the Diemer Heli -Hydrant. Unless additional extensions are
granted by USFS, the funding under the Grant will expire on March 31, 2025. So, the
Parties acknowledge that time is of the essence to expend the Grant funds and
the Parties agree to work cooperatively to do so in a timely manner.
C. Metropolitan will provide:
1. Real property at the Diemer Plant east/northeast of OC -51
a. Value of the real property to be appraised by Metropolitan; and
b. Appraised value to be included as part of the "match" for federal funding
if approved by USFS.
2. Water supply from gravity -fed water source at sufficient flow and pressure to
operate the Diemer Heli -Hydrant and a fire hydrant.
3. Up to $480,000 in funds for the design and construction of the Diemer Heli -
Hydrant.
MOU Between YLWD and Metropolitan for Joint Heli -Hydrant Project 2 of 7
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4. Project management, design, and construction of the Diemer Heli -Hydrant
and appurtenances.
5. Provide adequate documentation to USFS and YLWD to satisfy requirements of
the Grant.
6. Site access for purposes of constructing the Diemer Heli -Hydrant, training, and
tours subject to reasonable advance planning and mutual approval.
7. Site security of the Diemer Heli -Hydrant.
8. Ongoing Operations and Maintenance of the Diemer Heli -Hydrant.
9. Connection to the Metropolitan SCADA system for operation and monitoring
of the Diemer Heli -Hydrant.
D. YLWD will provide:
1. Up to $500,000 in Grant funding.
2. Coordination with Cal -Fire and OCFA to ensure design and operational
conditions are acceptable to both agencies.
3. Up to $200,000 funding for costs in excess of the USFS Grant funding and
Metropolitan funding contribution.
4. Technical advice to Metropolitan's project manager and design and
construction teams using prior experiences from the design, construction, and
operation of two existing YLWD Heli -Hydrants.
5. Federal grant reporting.
E. Both Parties:
1. Will use the funds contributed by the USFS, Metropolitan, and YLWD to fund
direct expenses for equipment purchase and supplies, and outside consultants
and contractors (if applicable) used to design and construct the Diemer Heli -
Hydrant.
2. Are responsible for their own direct and indirect costs (e.g., incidental staff
labor, legal services, etc.), not specifically included in Sections C and D above.
3. Will track staff labor costs and other project related costs for reporting
purposes, and will follow all federal procurement requirements as specified in
the grant award and applicable federal rules.
4. Upon dedication of the Diemer Heli -Hydrant, YLWD and Metropolitan
organizational logos commemorating the partnership and participation of
MOU Between YLWD and Metropolitan for Joint Heli -Hydrant Project 3 of 7
Page 32 of 191
both Metropolitan and YLWD shall be appropriately displayed at the
construction site subject to mutual approval.
5. Comply with all terms and conditions of the award.
F. General Terms and Conditions:
1. Recitals. The above Recitals are true and correct.
2. Construction of Water Facilities. The Parties acknowledge the provisions of
California Government Code § 53091 with respect to the construction of
water/wastewater facilities, including the Diemer Heli -Hydrant.
3. Waiver of Fees. The Parties agree to waive any Party fees for services regarding
the Diemer Heli -Hydrant, including but not limited to, reviews, permits,
inspections, design review, and the like.
4. Meet and Confer. If an issue arises that is not contemplated by this MOU, then
the Parties agree to meet and confer on such issue and make a good faith
effort to resolve the issue at the staff level.
5. Approval of this MOU. The Parties each understand and agree that this MOU
shall be subject to the approval of the respective Board of Directors for both
YLWD and Metropolitan.
6. Party Ordinances or Policies. Except for Section D.3 (Waiver of Fees), this MOU
does not amend or supplement any existing or future Party ordinance, policy,
or legal requirement that addresses subject matter in this MOU. If any
language in this MOU conflicts with language in a Party ordinance or policy,
the ordinance or policy shall prevail.
7. No Monetary Damages / Indemnification. The intent of this MOU is to
coordinate actions of government agencies serving the same geographic
region. Except as provided in Section 8 below, neither Party is entitled to
monetary damages of any kind from the other Party, including damages for
economic loss, lost profits, or any other economic or consequential damages
of any kind for any alleged default or breach of this MOU. However, the duty
for a Party to indemnify, hold harmless or defend the other Party as required by
any permit or other grant of authority by one Party to the other remains valid
and is not extinguished by this MOU.
8. Termination and Dispute Resolution. Because the source of up to $500,000 of
YLWD funding for design and construction of the Diemer Heli -Hydrant is derived
from the USFS Grant and termination of this MOU and/or construction for any
reason would cause the Parties to lose that Grant funding or a portion thereof,
both Parties agree that termination of this MOU may cause significant financial
harm to both Parties. If either Party terminates this MOU for any reason, then
the Parties shall meet and confer, in good faith, within 30 days of providing
written notice of termination to resolve the financial harm caused by the
MOU Between YLWD and Metropolitan for Joint Heli -Hydrant Project 4 of 7
Page 33 of 191
termination, including loss of the USFS Grant funding. Termination of this MOU
shall only be made upon a showing of good cause and only after the Parties
have mutually determined how to address any outstanding Grant funding to
avoid harm to either Party and to avoid delay of constructing the Diemer Heli -
Hydrant. Termination shall be upon 180 days written notice to the other Party
addressed to the General Manager of the Party at the principal business /
office of the Party. If the meet and confer process does not resolve the
financial harm caused by termination, then the Parties are free to pursue
litigation to resolve the financial harm. Neither Party is entitled to consequential
or indirect damages and each Party agrees its damages are limited to its
respective funding contributions excluding the Grant funding.
9. Audit by Federal Government. In the event of an audit by the federal
authorities, the Parties agree to cooperate fully in such audit process and
provide documentation necessary to complete the audit. In the event of any
dispute related to an audit or the apportionment of responsibility for any
corrective action required by an audit, the Parties agree to use the Dispute
Resolution Process in the preceding paragraph above.
10. No Impact on Prior Agreements / Compliance with Law. Nothing in this MOU
terminates or otherwise impacts any other agreements or arrangements
between the Parties unless specifically included within this MOU. All obligations
within this MOU are to be interpreted and undertaken in compliance with all
applicable local, state and federal laws. To the extent such local, state, or
federal laws are amended, this MOU is to be interpreted and obligations
undertaken in compliance with such amended laws without need of
amending this MOU.
11. Entire Agreement and Amendments. This MOU and Exhibit A and all related
Grant documents represent the entire and integrated agreement between
the Parties and supersedes all prior negotiations, representations, or
agreements, either written or oral. This MOU may be amended only by written
instrument signed by both Parties.
12. Electronic Signatures and Counterparts. This MOU may be executed in one or
more counterparts, and by the Parties in separate counterparts, each of which
when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement. The Parties further
agree that facsimile signatures or signatures scanned into .pdf format and sent
by electronic mail shall be deemed original signatures.
(Signatures on the following page)
MOU Between YLWD and Metropolitan for Joint Heli -Hydrant Project 5 of 7
Page 34 of 191
SIGNATURE PAGE FOR THE MEMORANDUM OF UNDERSTANDING
YORBA LINDA WATER DISTRICT
By
Richard Mark Toy, General Manager
APPROVED AS TO FORM
By
Andrew B. Gagen, General Counsel
Kidman Gagen Law LLP
THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA
By By
Adel Hagekhalil, General Manager
APPROVED AS TO FORM
By
Catherine M. Stites
Chief Deputy General Counsel
Attachment:
Exhibit A - Federal Financial Assistance Award of Domestic Grant 22 -DG -1 1052012-135,
dated September 22, 2022.
MOU Between YLWD and Metropolitan for Joint Heli -Hydrant Project 6 of 7
Page 35 of 191
EXHIBIT A
Federal Financial Assistance Award of Domestic Grant
22 -DG -1 1052012-135, dated September 22, 2022
MOU Between YLWD and Metropolitan for Joint Heli -Hydrant Project 7 of 7
Page 36 of 191
FEDERAL FINANCIAL ASSISTANCE
AWARD OF DOMESTIC GRANT 22 -DG -11052012-135
Between The
YORBA LINDA WATER DISTRICT (INC)
And The
USDA, FOREST SERVICE
PACIFIC SOUTHWEST REGION, FIRE AND AVIATION MANAGEMENT
Project Title: Helicopter Hydrant
Upon execution of this document, an award to the Yorba Linda Water District (Inc),
hereinafter referred to as "YLWD," in the amount of $500,000.00, is made under the
authority of the Consolidated Appropriations Act of 2022, P.L. 117-103. The Federal
Assistance Listing (formerly Catalog of Federal Domestic Assistance - CFDA) number and
name are 10.723, Community Project Funding - Congressionally Designated Funding.
YLWD accepts this award for the purpose described in the application narrative. Your
application for Federal financial assistance, dated September 15, 2022, and the attached
Forest Service provisions, `Forest Service Award Provisions,' are incorporated into this
letter and made a part of this award.
This authority requires a match of 1:1. Your organization has agreed to provide match in the
amount of $658,333.29, as shown in the attached application, financial plan and narrative.
This is an award of Federal financial assistance. Prime and sub -recipients to this award are
subject to the OMB guidance in subparts A through F of 2 CFR Part 200 as adopted and
supplemented by the USDA in 2 CFR Part 400. Adoption by USDA of the OMB guidance in 2
CFR 400 gives regulatory effect to the OMB guidance in 2 CFR 200 where full text may be
found.
Electronic copies of the CFRs can be obtained at the following internet site: www.ecfr.gov. If
you are unable to retrieve these regulations electronically, please contact your Grants and
Agreements Office at 505-382-9982.
The following administrative provisions apply to this award:
A. LEGAL AUTHORITY. YLWD shall have the legal authority to enter into this award,
and the institutional, managerial, and financial capability to ensure proper planning,
management, and completion of the project, which includes funds sufficient to pay the
non -Federal share of project costs, when applicable.
B. PRINCIPAL CONTACTS. Individuals listed below are authorized to act in their
respective areas for matters related to this award.
r4
Caring for the Land and Serving People Printed on Recycled Paper V
Page 37 of 191
Award Number: 22 -DG -11052012-135
,Principal Cooperator Contacts;
Cooperator Program Contact
Cooperator Administrative Contact
Richard Mark Toy
Alison Martin
1717 E. Miraloma Ave.
1717 E. Miraloma Ave.
Placentia, CA 92870-6623
Placentia, CA 92870-6623
Telephone: 714-701-3023
Telephone: 714-701-3023
Email: mtoy9ylwd.com
Email: arnartin@ylwd.com
Principal Forest Service Contacts;
Forest Service Program Manager
Contact
Forest Service Administrative Contact
Barb Geringer
Wendy Yun
1323 Club Drive
1323 Club Drive
Vallejo, CA 94592
Vallejo, CA 94592
Telephone: 202-577-4827
Telephone: 707-562-8928
E: hacbara.99isiger_frazier a usda.gnLy
Email: =ndy_yun@usda. v
C. SYSTEM FOR AWARD MANAGEMENT REGISTRATION REQUIREMENT
(SAM). YLWD shall maintain current information in the System for Award
Management (SAM) until receipt of final payment. This requires review and update to
the information at least annually after the initial registration, and more frequently if
required by changes in information or award term(s). Additional information about
registration procedures may be found at the SAM Internet site at www.sarn.gov.
D. .ADVANCE & REIMBURSABLE PAYMENTS FINANCIAL ASSISTANCE.
Advance and reimbursable payments are approved under this award. Only costs for
those project activities approved in (1) the initial award, or (2) modifications thereto,
are allowable. Requests for payment must be submitted on Standard Form 270 (SF -
270), Request for Advance or Reimbursement, and must be submitted no more than
monthly. In order to approve a Request for Advance Payment or Reimbursement, the
Forest Service shall review such requests to ensure advances or payments for
reimbursement are in compliance and otherwise consistent with OMB, USDA, and
Forest Service regulations.
Advance payments must not exceed the minimum amount needed or no more than is
needed for a 30 -day period, whichever is less. If the Recipient receives an advance
payment and subsequently requests an advance or reimbursement payment, then the
request must clearly demonstrate that the previously advanced funds have been filly
expended before the Forest Service can approve the request for payment. Any funds
advanced, but not spent, upon expiration of this award must be returned to the Forest
Service.
The Program Manager reserves the right to request additional information prior to
approving a payment.
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Award Number: 22 -DG -11052012-135
The invoice must be sent by one of Send a copy to:
three methods:
EMAIL (preferred): SM.FS.asc_gaftsda.gov
FAX: 877-687-4894
Barb Geringer:
barbara.geringenfrazier&sda.gov
POSTAL: Albuquerque Service Center
Payments — Grants & Agreements
101 B Sun Ave NE
Albuquerque. NM 87109
E. INDIRECT COST RATES. YLWD has elected to not assess indirect against this
award.
F. PRIOR WRITTEN APPROVAL. YLWD shall obtain prior written approval pursuant
to conditions set forth in 2 CFR 200.407.
G. MODIFICATIONS. Modifications within the scope of this award must be made by
mutual consent of the parties, by the issuance of a written modification signed and
dated by all properly authorized signatory officials, prior to any changes being
performed. Requests for modification should be made, in writing, at least 30 days prior
to implementation of the requested change. The Forest Service is not obligated to fund
any changes not properly approved in advance.
H. PERIOD OF PERFORMANCE. This agreement is executed as of the date of the
Forest Service signatory official signature.
The end date, or expiration date is 0613012023. This instrument may be extended by a
properly executed modification. See Modification Provision above.
Page 3 of 19
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Award Number: 22 -DG -11052012-135
I. AUTHORIZED REPRESENTATIVES. By signature below, each party certifies that
the individuals listed in this document as representatives of the individual parties are
authorized to act in their respective areas for matters related to this award. In witness
whereof the parties hereto have executed this award.
Wo&A
RICHARD MARK TOY,
YOLAI V DA SALDIANA Igitaned hyY0U1NDA
°o 0o azz_os.�a07-19,12
SALDANA
YOLANDA SALDANA, Deputy Director for Date
JAMIE GAMBOA, Director Fire & Aviation
Management U.S. Forest Service, Pacific Southwest
Region
The authority and the format of this award have been reviewed and approved for
Forest Service Grants Management Specialist
Page 4 of 19
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Award Number: 22 -DG -11052012-135
ATTACHMENT A: FOREST SERVICE AWARD PROVISIONS
A. COLLABORATIVE ARRANGEMENTS. Where permitted by terms of the award and
Federal law, YLWD a may enter into collaborative arrangements with other
organizations to jointly carry out activities with Forest Service funds available under
this award.
B. FOREST SERVICE LIABILITY TO THE RECIPIENT. The United States shall not be
liable to YLWD for any costs, damages, claims, liabilities, and judgments that arise in
connection with the performance of work under this award, including damage to any
property owned by YLWD or any third party.
C. NOTICES. Any notice given by the Forest Service or YLWD will be sufficient only if
in writing and delivered in person, mailed, or transmitted electronically by e-mail or
fax, as follows:
To the Forest Service Program Manager, at the address specified in the award.
To YLWD, at the address shown in the award or such other address designated
within the award.
Notices will be effective when delivered in accordance with this provision, or on the
effective date of the notice, whichever is later.
D. SUBAWARDS. Prior approval is required to issue subawards under this grant. The
intent to subaward must be identified in the approved budget and scope of work and
approved in the initial award or through subsequent modifications. Approval of each
individual subaward is not required, however the cooperator must document that each
sub -recipient does NOT have active exclusions in the System for Award Management
(sam.gov).
The Cooperator must also ensure that they have evaluated each subrecipient's risk in
accordance with 2 CFR 200.332 (b).
Any subrecipient under this award must be notified that they are subject to the OMB
guidance in subparts A through F of 2 CFR Part 200, as adopted and supplemented by
the USDA in 2 CFR Park 400. Any sub -award must follow the regulations found in 2
CFR 200.331 through .333.
All subawards $30,000 or more must be reported at fsrs.gov in compliance with 2 CFR
170. See Attachment B for full text,
E. FINANCIAL STATUS REPORTING. A Federal Financial Report, Standard Form SF -
425 (and Federal Financial Report Attachment, SF -425A, if required for reporting
multiple awards), must be submitted quarterly. These reports are due 30 days after the
reporting period ending March 31, June 30, September 30 and December 31. The final
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Award Number: 22 -DG -11052012-135
SF -425 (and SF -425A, if applicable) must be submitted either with the final payment
request or no later than 120 days from the expiration date of the award. These forms
may be found at https://www. rg ants.gov/web/grants/forms.html.
F. PROGRAM PERFORMANCE REPORTS. The recipient shall perform all actions
identified and funded in application/modification narratives within the performance
period identified in award.
In accordance with 2 CFR 200.301, reports must relate financial data to performance
accomplishments of the federal award.
YLWD shall submit quarterly performance reports. These reports are due 30 days after
the reporting period ending March 31, June 30, September 30 and December 31. The
final performance report shall be submitted either with YLWD's final payment request,
or separately, but not later than 120 days from the expiration date of the award.
G. NOTIFICATION. YLWD shall immediately notify the Forest Service of developments
that have a significant impact on the activities supported under this award. Also,
notification must be given in case of problems, delays or adverse conditions that
materially impair the ability to meet the objectives of the award. This notification must
include a statement of the action taken or contemplated, and any assistance needed to
resolve the situation.
H. CHANGES IN KEY PERSONNEL. Any revision to key personnel identified in this
award requires notification of the Forest Service Program Manager by email or letter.
I. USE OF FOREST SERVICE INSIGNIA. In order for YLWD to use the Forest Service
insignia on any published media, such as a Web page, printed publication, or
audiovisual production, permission must be granted by the Forest Service's Office of
Communications (Washington Office). A written request will be submitted by Forest
Service, Program Manager, to the Office of Communications Assistant Director, Visual
Information and Publishing Services prior to use of the insignia. The Forest Service
Program Manager will notify YLWD when permission is granted.
FUNDING EQUIPMENT. Federal funding under this award is not available for
reimbursement of YLWD's purchase of equipment. Equipment is defined as having a
fair market value of $5,000 or more per unit and a useful life of over one year.
Supplies are those items that are not equipment.
K. PUBLIC NOTICES. It is Forest Service's policy to inform the public as fully as
possible of its programs and activities. YLWD is encouraged to give public notice of
the receipt of this award and, from time to time, to announce progress and
accomplishments.
YLWD may call on Forest Service's Office of Communication for advice regarding
public notices. YLWD is requested to provide copies of notices or announcements to
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Award Number: 22 -DG -11052012-135
the Forest Service Program Manager and to Forest Service's Office Communications as
far in advance of release as possible.
L. DISPUTES.
1. Any dispute under this award shall be decided by the Signatory Official. The
Signatory Official shall furnish YLWD a written copy of the decision.
2. Decisions of the Signatory Official shall be final unless, within 30 days of receipt of
the decision of the Signatory Official, YLWD appeal(s) the decision to the Forest
Service's Director Fire & Aviation Management. Any appeal made under this
provision shall be in writing and addressed to the Director Fire & Aviation
Management, Pacific Southwest Region, USDA, Forest Service, Vallejo, CA
94592. A copy of the appeal shall be concurrently furnished to the Signatory
Official.
3. In order to facilitate review on the record by the Director Fire & Aviation
Management, YLWD shall be given an opportunity to submit written evidence in
support of its appeal. No hearing will be provided.
4. A decision under this provision by the Director Fire & Aviation Management is
final.
5. The final decision by the Director Fire & Aviation Management does not preclude
YLWD from pursuing remedies available under the law.
M. AWARD CLOSEOUT. YLWD must submit, no later than 120 calendar days after the
end date of the period of performance, all financial, performance, and other reports as
required by the terms and conditions of the Federal award.
Any unobligated balance of cash advanced to YLWD must be immediately refunded to
the Forest Service, including any interest earned in accordance with 2 CFR 200.344(d).
If this award is closed without audit, the Forest Service reserves the right to disallow
and recover an appropriate amount after fully considering any recommended
disallowances resulting from an audit which may be conducted later.
N. TERMINATION. This award may be terminated, in whole or part pursuant to 2 CFR
200.340.
O. DEBARMENT AND SUSPENSION. YLWD shall immediately inform the Forest
Service if they or any of their principals are presently excluded, debarred, or suspended
from entering into covered transactions with the federal government according to the
terms of 2 CFR Part 180. Additionally, should YLWD or any of their principals
receive a transmittal letter or other official federal notice of debarment or suspension,
then they shall notify the Forest Service without undue delay. This applies whether the
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Award Number: 22 -DG -11052012-135
exclusion, debarment, or suspension is voluntary or involuntary. The Recipient shall
adhere to 2 CFR Part 180 Subpart C in regards to review of sub -recipients or contracts
for debarment and suspension.
All subrecipients and contractors must complete the form AD -1048, Certification
Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion, Lower Tier
Covered Transactions. Blank forms are available electronically. Completed forms
must be kept on file with the primary recipient.
P. MEMBERS OF CONGRESS. Pursuant to 41 U.S.C. 22, no member of, or delegate to,
Congress shall be admitted to any share or part of this award, or benefits that may arise
therefrom, either directly or indirectly.
Q. TRAFFICKING IN PERSONS.
1. Provisions applicable to a Recipient that is a private entity.
a. You as the Recipient, your employees, Subrecipients under this award, and
Subrecipients' employees may not:
(1) Engage in severe forms of trafficking in persons during the period of time
that the award is in effect;
(2) Procure a commercial sex act during the period of time that the award is in
effect; or
(3) Use forced labor in the performance of the award or subawards under the
award.
b. We as the Federal awarding agency may unilaterally terminate this award,
without penalty, if you or a Subrecipient that is a private entity:
(1) Is determined to have violated a prohibition in paragraph a.I of this award
term; or
(2) Has an employee who is determined by the agency official authorized to
terminate the award to have violated a prohibition in paragraph a. l of this
award term through conduct that is either:
i. Associated with performance under this award; or
ii. Imputed to you or the subrecipient using the standards and due
process for imputing the conduct of an individual to an organization
that are provided in 2 CFR part 180, "OMB Guidelines to Agencies
on Government wide Debarment and Suspension
(Nonprocurement)," .
2. Provision applicable to a Recipient other than a private entity. We as the Federal
awarding agency may unilaterally terminate this award, without penalty, if a
subrecipient that is a private entity:
a. Is determined to have violated an applicable prohibition in paragraph a.I of this
award term; or
b. Has an employee who is determined by the agency official authorized to
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Award Number: 22 -DG -11052012-135
terminate the award to have violated an applicable prohibition in paragraph a.I
of this award term through conduct that is either—
(1) Associated with performance under this award; or
(2) Imputed to the subrecipient using the standards and due process for
imputing the conduct of an individual to an organization that are provided
in 2 CFR part 180, "OMB Guidelines to Agencies on Governmentwide
Debarment and Suspension (Nonprocurement),"
3. Provisions applicable to any recipient.
a. You must inform us immediately of any information you receive from any
source alleging a violation of a prohibition in paragraph a.I of this award term.
b. Our right to terminate unilaterally that is described in paragraph a.2 or b of this
section:
(1) Implements section 106(g) of the Trafficking Victims Protection Act of
2000 (TVPA), as amended (22 U.S.C. 7104(g)), and
(2) Is in addition to all other remedies for noncompliance that are available to
us under this award.
c. You must include the requirements of paragraph a. l of this award term in any
subaward you make to a private entity.
4. Definitions. For purposes of this award term:
a. "Employee" means either:
(1) An individual employed by you or a subrecipient who is engaged in the
performance of the project or program under this award; or
(2) Another person engaged in the performance of the project or program
under this award and not compensated by you including, but not limited to,
a volunteer or individual whose services are contributed by a third party as
an in-kind contribution toward cost sharing or matching requirements.
b. "Forced labor" means labor obtained by any of the following methods: the
recruitment, harboring, transportation, provision, or obtaining of a person for
labor or services, through the use of force, fraud, or coercion for the purpose of
subjection to involuntary servitude, peonage, debt bondage, or slavery.
c. "Private entity":
(1) Means any entity other than a State, local government, Indian tribe, or
foreign public entity, as those terms are defined in 2 CFR 175.25.
(2) Includes:
i. A nonprofit organization, including any nonprofit institution of
higher education, hospital, or tribal organization other than one
included in the definition of Indian tribe at 2 CFR 175.25(b).
ii. A for-profit organization.
d. "Severe forms of trafficking in persons," "commercial sex act," and
"coercion" have the meanings given at section 103 of the TVPA, as amended
(22 U.S.C. 7102).
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Award Number: 22 -DG -11052012-135
R. DRUG-FREE WORKPLACE.
YLWD agree(s) that it will publish a drug-free workplace statement and provide a
copy to each employee who will be engaged in the performance of any
project/program that receives federal funding. The statement must
a. Tell the employees that the unlawful manufacture, distribution, dispensing,
possession, or use of a controlled substance is prohibited in its workplace;
b. Specify the actions YLWD will take against employees for violating that
prohibition; and
c. Let each employee know that, as a condition of employment under any award,
the employee:
(1) Shall abide by the terms of the statement, and
(2) Shall notify YLWD in writing if they are convicted for a violation of a
criminal drug statute occurring in the workplace, and shall do so no more
than 5 calendar days after the conviction.
2. YLWD agree(s) that it will establish an ongoing drug-free awareness program to
inform employees about
a. The dangers of drug abuse in the workplace;
b. The established policy of maintaining a drug-free workplace;
c. Any available drug counseling, rehabilitation and employee assistance
programs; and
d. The penalties that you may impose upon them for drug abuse violations
occurring in the workplace.
3. Without the Program Manager's expressed written approval, the policy statement
and program must be in place as soon as possible, no later than the 30 days after
the effective date of this instrument, or the completion date of this award,
whichever occurs first.
4. YLWD agrees to immediately notify the Program Manager if an employee is
convicted of a drug violation in the workplace. The notification must be in
writing, identify the employee's position title, the award number of each award on
which the employee worked. The notification must be sent to the Program
Manager within 10 calendar days after YLWD learns of the conviction.
Within 30 calendar days of learning about an employee's conviction, YLWD must
either
a. Take appropriate personnel action against the employee, up to and including
termination, consistent with the requirements of the Rehabilitation Act of 1973
(29 USC 794), as amended, or
b. Require the employee to participate satisfactorily in a drug abuse assistance or
rehabilitation program approved for these purposes by a Federal, State or local
health, law enforcement, or other appropriate agency.
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Award Number: 22 -DG -11052012-135
S. PROHIBITION AGAINST USING FUNDS WITH ENTITIES THAT REQUIRE
CERTAIN INTERNAL CONFIDENTIALITY AGREEMENTS.
1. The recipient may not require its employees, contractors, or subrecipients seeking to
report fraud, waste, or abuse to sign or comply with internal confidentiality
agreements or statements prohibiting or otherwise restricting them from lawfully
reporting that waste, fraud, or abuse to a designated investigative or law
enforcement representative of a Federal department or agency authorized to receive
such information.
2. The recipient must notify its employees, contractors, or subrecipients that the
prohibitions and restrictions of any internal confidentiality agreements inconsistent
with paragraph (1) of this award provision are no longer in effect.
3. The prohibition in paragraph (1) of this award provision does not contravene
requirements applicable to any other form issued by a Federal department or agency
governing the nondisclosure of classified information.
4. If the Government determines that the recipient is not in compliance with this award
provision, it;
a. Will prohibit the recipient's use of funds under this award in accordance with
sections 743, 744 of Division E of the Consolidated Appropriations Act, 2016,
(Pub. L. 114-113) or any successor provision of law; and
b. May pursue other remedies available for the recipient's material failure to
comply with award terms and conditions.
T. ELIGIBLE WORKERS. YLWD shall ensure that all employees complete the I-9 form
to certify that they are eligible for lawful employment under the Immigration and
Nationality Act (8 U.S.C. 1324(a)). YLWD shall comply with regulations regarding
certification and retention of the completed forms. These requirements also apply to
any contract or supplemental instruments awarded under this award.
U. FREEDOM OF INFORMATION ACT (FOIA). Public access to award or agreement
records must not be limited, except when such records must be kept confidential and
would have been exempted from disclosure pursuant to Freedom of Information
regulations (5 U.S.C. 552). Requests for research data are subject to 2 CFR 315(e).
Public access to culturally sensitive data and information of Federally -recognized
Tribes may also be explicitly limited by P.L. 110-234, Title VIII Subtitle B §8106
(2009 Farm Bill).
V. TEXT MESSAGING WHILE DRIVING. In accordance with Executive Order (EO)
13513, "Federal Leadership on Reducing Text Messaging While Driving," any and all
text messaging by Federal employees is banned: a) while driving a Government owned
vehicle (GOV) or driving a privately owned vehicle (POV) while on official
Government business; or b) using any electronic equipment supplied by the
Government when driving any vehicle at any time. All Cooperators, their Employees,
Volunteers, and Contractors are encouraged to adopt and enforce policies that ban text
messaging when driving company owned, leased or rented vehicles, POVs or GOVs
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Award Number: 22 -DG -11052012-135
when driving while on official Government business or when performing any work for
or on behalf of the Government.
W. PROMOTING FREE SPEECH AND RELIGIOUS FREEDOM. As a recipient of
USDA financial assistance, you will comply with the following:
1. Do not discriminate against applicants for sub -grants on the basis of their religious
character.
2. 7 Code of Federal Regulations (CFR) part 16.3(a), Rights of Religious
Organizations.
3. Statutory and National policy requirements, including those prohibiting
discrimination and those described in Executive Order 13798 promoting free speech
and religious freedom, 2 CFR 200.300.
X. PROHIBITION ON CERTAIN TELECOMMUNICATIONS AND VIDEO
SURVEILLANCE SERVICES OR EQUIPMENT. The cooperator (including
subrecipients) is responsible for compliance with the prohibition on certain
telecommunications and video surveillance services or equipment identified in 2 CFR
200.216. See Public Law 115-232, Section 889 for additional information.
In accordance with 2 CFR 200.216, the grantee (including subrecipients) is prohibited
from obligating or expending loan or grant funds for covered telecommunications
equipment or services to:
(1) procure or obtain, extend or renew a contract to procure or obtain;
(2) enter into a contract (or extend or renew a contract) to procure; or
(3) obtain the equipment, services or systems.
Y. BUILD AMERICA, BUY AMERICA (OMB Memo M-22-11). Recipients of an award
of Federal financial assistance from a program for infrastructure are hereby notified that
none of the funds provided under this award may be used for a project for infrastructure
unless:
1. All iron and steel used in the project are produced in the United States --this means
all manufacturing processes, from the initial melting stage through the application
of coatings, occurred in the United States;
2. All manufactured products used in the project are produced in the United States—
this means the manufactured product was manufactured in the United States; and
the cost of the components of the manufactured product that are mined, produced,
or manufactured in the United States is greater than 55 percent of the total cost of
all components of the manufactured product, unless another standard for
determining the minimum amount of domestic content of the manufactured product
has been established under applicable law or regulation; and
3. All construction materials are manufactured in the United States—this means that
all manufacturing processes for the construction material occurred in the United
States. This excludes cement and cementitious materials, aggregates such as stone,
sand, or gravel, or aggregate binding agents or additives.
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Award Number: 22 -DG -11052012-135
The Buy America preference only applies to articles, materials, and supplies that are
consumed in, incorporated into, or affixed to an infrastructure project. As such, it does
not apply to tools, equipment, and supplies, such as temporary scaffolding, brought to
the construction site and removed at or before the completion of the infrastructure
project. Nor does a Buy America preference apply to equipment and furnishings, such
as movable chairs, desks, and portable computer equipment, that are used at or within
the finished infrastructure project, but are not an integral part of the structure or
permanently affixed to the infrastructure project.
Waivers
When necessary, recipients may apply for, and the agency may grant, a waiver from
these requirements. The agency should notify the recipient for information on the
process for requesting a waiver from these requirements.
1. When the Federal agency has made a determination that one of the following
exceptions applies, the awarding official may waive the application of the domestic
content procurement preference in any case in which the agency determines that:
a. Applying the domestic content procurement preference would be inconsistent
with the public interest;
b. The types of iron, steel, manufactured products, or construction materials are
not produced in the United States in sufficient and reasonably available
quantities or of a satisfactory quality; or
c. The inclusion of iron, steel, manufactured products, or construction materials
produced in the United States will increase the cost of the overall project by
more than 25 percent.
A request to waive the application of the domestic content procurement preference
must be in writing. The agency will provide instructions on the format, contents, and
supporting materials required for any waiver request. Waiver requests are subject to
public comment periods of no less than 15 days and must be reviewed by the Made in
America Office.
There may be instances where an award qualifies, in whole or in part, for an existing
waiver.
Definitions
"Construction materials" includes an article, material, or supply—other than an item of
primarily iron or steel; a manufactured product; cement and cementitious materials;
aggregates such as stone, sand, or gravel; or aggregate binding agents or additives—
that is or consists primarily of:
• Non-ferrous metals;
• Plastic and polymer -based products (including polyvinylchloride, composite
building materials, and polymers used in fiber optic cables);
• Glass (including optic glass);
• Lumber; or
• Drywall.
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Award Number: 22 -DG -11052012-135
"Domestic content procurement preference" means all iron and steel used in the project
are produced in the United States; the manufactured products used in the project are
produced in the United States; or the construction materials used in the project are
produced in the United States.
"Infrastructure" includes, at a minimum, the structures, facilities, and equipment for, in
the United States, roads, highways, and bridges; public transportation; dams, ports,
harbors, and other maritime facilities; intercity passenger and freight railroads; freight
and intermodal facilities; airports; water systems, including drinking water and
wastewater systems; electrical transmission facilities and systems; utilities; broadband
infrastructure; and buildings and real property. Infrastructure includes facilities that
generate, transport, and distribute energy.
"Project" means the construction, alteration, maintenance, or repair of infrastructure in
the United States.
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Award Number: 22 -DG -11052012-135
ATTACHMENT B: 2 CFR PART 170
Appendix A to Part 170—Award Term
I. Reporting Subawards and Executive Compensation
a. Reporting of first-tier subawards.
1. Applicability. Unless you are exempt as provided in paragraph d. of this award term, you
must report each action that equals or exceeds $30,000 in Federal funds for a subaward to
a non -Federal entity or Federal agency (see definitions in paragraph e. of this award
term)-
2.
erm).2• Where and when to report.
i. The non -Federal entity or Federal agency must report each obligating action
described in paragraph a.1. of this award term to http://www.fsrs.gov.
ii. For subaward information, report no later than the end of the month following the
month in which the obligation was made. (For example, if the obligation was made on
November 7, 2010, the obligation must be reported by no later than December 31,
2010.)
3. What to report You must report the information about each obligating action that the
submission instructions posted at hitp:Ilwww.fsrs.gov spec.
b. Reporting total compensation of recipient executives for non -Federal entities.
1. Applicability and what to report. You must report total compensation for each of your
five most highly compensated executives for the preceding completed fiscal year, if—
i. The total Federal funding authorized to date under this Federal award equals or
exceeds $30,000 as defined in 2 CFR 170.320;
ii. in the preceding fiscal year, you received—
(A) 80 percent or more of your annual gross revenues from Federal procurement
contracts (and subcontracts) and Federal financial assistance subject to the
Transparency Act, as defined at 2 CFR 170.320 (and subawards), and
(B) $25,000,000 or more in annual gross revenues from Federal procurement
contracts (and subcontracts) and Federal financial assistance subject to the
Transparency Act, as defined at 2 GFR 170.320 (and subawards); and,
iii. The public does not have access to information about the compensation of the
executives through periodic reports filed under section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal
Revenue Code of 1986. (To determine if the public has access to the compensation
information, see the U.S. Security and Exchange Commission total compensation
filings at http://www.sec.zovlanswerslexecomp.htm.)
2 • Where and when to report. You must report executive total compensation described in
paragraph b. 1. of this award term:
i. As part of your registration profile at https_//www.sam.gov.
ii. By the end of the month following the month in which this award is made, and
annually thereafter.
c. Reporting of Total Compensation of Subrecipient Executives.
1 • Applicability and what to report. Unless you are exempt as provided in paragraph d. of
this award term, for each first-tier non -Federal entity subrecipient under this award, you
shall report the names and total compensation of each of the subrecipient's five most
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Award Number: 22 -DG -11052012-135
highly compensated executives for the subrecipient's preceding completed fiscal year,
if—
i. in the subrecipient's preceding fiscal year, the subrecipient received—
(A) 80 percent or more of its annual gross revenues from Federal procurement
contracts (and subcontracts) and Federal financial assistance subject to the
Transparency Act, as defined at 2 CFR 170.320 (and subawards) and,
(B) $2.5,000,440 or more in annual gross revenues from Federal procurement
contracts (and subcontracts), and Federal financial assistance subject to the
Transparency Act (and subawards); and
ii. The public does not have access to information about the compensation of the
executives through periodic reports filed under section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal
Revenue Code of 1986. (To determine if the public has access to the compensation
information, see the U.S. Security and Exchange Commission total compensation
filings at http://www.sec.govlanswerslexecomp.htm.)
2. Where and when to report. You must report subrecipient executive total compensation
described in paragraph c.1. of this award term:
i. To the recipient.
ii. By the end of the month following the month during which you make the subaward.
For example, if a subaward is obligated on any date during the month of October of a
given year (i.e., between October 1 and 31), you must report any required
compensation information of the subrecipient by November 30 of that year.
d. Exemptions.
If, in the previous tax year, you had gross income, from all sources, under $300,000, you are
exempt from the requirements to report:
i. Subawards, and
ii. The total compensation of the five most highly compensated executives of any
subrecipient.
e. Definitions. For purposes of this award term:
1. Federal Agency means a Federal agency as defined at 5 U.S.C. 551(1) and further
clarified by 5 U.S.C. 552(f).
2. Non -Federal entity means all of the following, as defined in 2 CFR part 25:
i. A Governmental organization, which is a State, local government, or Indian tribe;
ii. A foreign public entity;
iii. A domestic or foreign nonprofit organization; and,
iv. A domestic or foreign for-profit organization
3. Executive means officers, managing partners, or any other employees in management
positions.
4. Subaward:
i. This term means a legal instrument to provide support for the performance of any
portion of the substantive project or program for which you received this award and
that you as the recipient award to an eligible subrecipient.
ii. The term does not include your procurement of property and services needed to carry
out the project or program (for further explanation, see 2 CFR 200.331).
iii. A subaward may be provided through any legal agreement, including an agreement
that you or a subrecipient considers a contract.
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Award Number: 22 -DG -11052012-135
5. Subrecipient means a non -Federal entity or Federal agency that:
i. Receives a subaward from you (the recipient) under this award; and
ii. Is accountable to you for the use of the Federal funds provided by the subaward.
6. Total compensation means the cash and noncash dollar value earned by the executive
during the recipient's or subrecipient's preceding fiscal year and includes the following
(for more information see 17 CFR 229.402(c)(2)).
END OF ATTACHMENT B: 2 CFR PART 170
Page 17 of 19
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Award Number: 22 -DG -11052012-135
ATTACHMENT C: WHISTLEBLOWER NOTICE
Whistleblowers perform an important service to USDA and the public when they come
forward with what they reasonably believe to be evidence of wrongdoing. They should never
be subject to reprisal for doing so. Federal law protects federal employees as well as personal
services contractors and employees of Federal contractors, subcontractors, grantees, and
subgrantees against reprisal for whistleblowing. USDA bears the responsibility to ensure
that nothing in a non -disclosure agreement which a contractor, subcontractor,
grantee, or subgrantee requires their employees to sign should be interpreted as limiting
their ability to provide information to the Office of Inspector General (OIG).
41 U.S.C. § 4712 requires the head of each executive agency to ensure that its contractors
inform their workers in writing of the rights and remedies under the statute.
Accordingly, it is illegal for a personal services contractor or an employee of a Federal
contractor, subcontractor, grantee, or subgrantee to be discharged, demoted, or otherwise
discriminated against for making a protected whistleblower disclosure. In this context, these
categories of individuals are whistleblowers who disclose information that the individual
reasonably believes is evidence of one of the following:
• Gross mismanagement of a Federal contract or grant;
• A gross waste of Federal funds;
• An abuse of authority relating to a Federal contract or grant;
• A substantial and specific danger to public health or safety; or
• A violation of law, rule, or regulation related to a Federal contract (including the
competition for or negotiation of a contract) or grant.
To be protected under 41 U.S.C. § 4712, the disclosure must be made to one of the
following:
• A Member of Congress, or a representative of a committee of Congress;
• The OIG;
• The Government Accountability Office (GAO);
• A Federal employee responsible for contract or grant oversight or management
at USDA;
• An otherwise authorized official at USDA or other law enforcement agency;
• A court or grand jury; or
• A management official or other employee of the contractor, subcontractor, or
grantee who has the responsibility to investigate, discover, or address
misconduct.
Under 41 U.S.C. § 4712, personal services contractors as well as employees of contractors,
subcontractors, grantees, or subgrantees may file a complaint with OIG, who will investigate
the matter unless they determine that the complaint is frivolous, fails to allege a violation of
the prohibition against whistleblower reprisal, or has been addressed in another proceeding.
OIG's investigation is then presented to the head of the executive agency who evaluates the
facts of the investigation and can order the contractor, subcontractor, grantee, or subgrantee
Page 18 of 19
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Award Number: 22 -DG -11052012-135
to take remedial action, such as reinstatement or back pay.
Federal Acquisition Regulation (FAR) Subpart 3.903, Whistleblower Protections far
Contractor Employees, Policy, prohibits government contractors from retaliating against a
contract worker for making a protected disclosure related to the contract. FAR Subpart
3.909-1 prohibits the Government from using funds for a contract with an entity that requires
its employees or subcontractors to sign internal confidentiality statements prohibiting or
restricting disclosures of fraud, waste, or abuse to designated persons. This prohibition does
not contravene agreements pertaining to classified information. The regulation also requires
contracting officers to insert FAR clause 52.203-17, Contractor Employee Whistleblower
Rights and Requirement to Inform Employees of Whisileblower Rights, in all solicitations and
contracts that exceed the Simplified Acquisition Threshold as defined in FAR Subpart 3.908.
This clause requires notification to contractor employees that they are subject to the
whistleblower rights and remedies referenced in 41 U.S.C. § 4712.
In order to make a complaint alleging any of the violations mentioned above, one should
complete the DIG Hotline form located at: haps:Ilwww.usda.gov/oig/hotline. For additional
information, they may also visit the WPC's webpage at: https:llwww.usda. og v/oi&/Wpc or
they may directly contact the WPC at QIGWPC&oig.usda.jaov.
Page 19 of 19
Page 55 of 191
ITEM NO. 7.3.
Yorba Linda
Water District
AGENDA REPORT
MEETING DATE: June 15, 2023
TO: Board of Directors
FROM: Mark Toy, General Manager
STAFF CONTACTS: Rosanne Weston, Engineering Manager
John DeCriscio, Operations Manager
Malissa Muttaraid, Interim Public Affairs Officer
Ariel Bacani, Assistant Engineer III
SUBJECT: 2023 Water Quality Report
RECOMMENDATION:
That the Board of Directors approve the 2023 Water Quality Report and instruct staff to make it
available on the District's website and submit it to the State Water Resources Control Board, Division
of Drinking Water, pursuant to State and Federal law regarding electronic delivery.
SUMMARY:
The purpose of this report is to inform customers of the quality of the water they are receiving. Since
1990, California public water utilities have been required to provide annual water quality reports to
their customers. This report is also known as the Consumer Confidence Report (CCR), which covers
water quality testing and analysis from January to December of the previous calendar year. State
and Federal laws require that this annual water quality report be provided to every customer by July
1 st to ensure that customers are informed of the quality of their drinking water.
BACKGROUND:
Since 2013, State and Federal laws allow electronic delivery of the annual water quality report. As a
result, the District has published the report via its website at www.ylwd.com, which has saved printing
and distribution costs. Hard copies of the report are available upon request. The District plans to
provide information on the report's availability in customers' June and July billing cycles.
In 2022, over 23,000 analyses were conducted to ensure that the water provided by the District met
all State and Federal drinking water regulations. In some cases, the District has gone beyond what is
required by State and Federal laws by providing additional monitoring for contaminants of concern.
Staff is pleased to report that the District has met all water quality standards from State and Federal
drinking water regulations. Attached is a copy of the District's 2023 Water Quality Report for review
and consideration by the Board.
PRIOR RELEVANT BOARD ACTION:
On June 14, 2022, the Board of Directors approved the 2022 Water Quality Report and its
Page 56 of 191
distribution.
STRATEGIC PLAN INITIATIVES:
G4 2B — Publish annual report and infographics.
ATTACHMENTS:
2023 Water Quality Report
Page 57 of 191
YL
W
110101111
WATER UU9
IFPnRT
This report provides essential information
about where your water comes from
and the work we perform each day to ensure
the water delivered to your tap is safe to drink.
It also provides data about what is in your
water and how our water quality tests
compared to Federal and State
drinking water standards in 2022.
Page 58 of 191
����' �J� !I��rl J�\I 1hrPJ
ince 1990, California public water utilities have provided
annual Water Quality Reports to their customers. This
year's report, also known as the "Consumer Confidence
Report," covers water quality testing from January to
December 2022, unless otherwise specified.
The Yorba Linda Water District's (District) annual Water
Quality Report is prepared in compliance with the
regulations called for in the 1996 reauthorization of the Safe
Drinking Water Act (SDWA). The reauthorization charged the
United States Environmental Protection Agency (USEPA) with
updating and strengthening the tap water regulatory
program. USEPA and the State Water Resources Control
Board, Division of Drinking Water (DDW), are responsible for
establishing water quality standards.
To ensure that your tap water is safe to drink, USEPA and
DDW prescribe regulations that limit the amount of specific
contaminants in water provided by water systems. The State
and Federal governments require that this annual Water
Quality Report be provided to every
customer to ensure you are informed
of your water quality. As in years past,
the water delivered to your home
meets or exceeds the standards
required by the state and federal
regulatory agencies.
In 2022, we conducted over 23,000
analyses and are proud to report that
our water system has never violated
any water quality standard from state
and federal drinking water regulations.
In some cases, we go beyond what is
This report contains important information
about your drinking water. Translate it,
or speak with someone who understands it.
Este informe contiene informaci6n
importance sobre su agua potable.
Traduzcalo, o hable con alguien
que to comprenda.
� ,q 4-o o, f ,02„
L tIJ)�_ �F �f?±_�±E1713*JAA
"u I ff —To
required by providing additional monitoring for contami-
nants that may have health risks.
We encourage you to read this report and contact us with
any questions you may have.
Investing in a Resilient Future
Yorba Linda Water District continually invests in its infrastructure to meet
the needs of its customers. The Fairmont Booster Pump Station and the
Natural Gas Backup Generator installation at Elk Mountain Booster Pump
Station exemplify the District's commit-
ment to resiliency, reliability, and ,
safety.,
The Fairmont Booster Pump Station
increases the District's capability to use
Fairmont
either groundwater from the Orange IF
Booster Pump Station
County Groundwater Basin or imported
water from MWD's Robert B. Diemer Plant. By optimizing the existing
infrastructure, the Fairmont Booster Pump Station strengthens the water
distribution system and improves flexibility to use available water resources.
The installation of the Natural Gas Backup Generator at the Elk Mountain
Booster Pump Station provides backup power in
the event of power loss in order to maintain
water service to YLWD customers.
These projects enhance water delivery
capabilities, improve operational efficiency,
and mitigate interruptions in services due to
wildfires, Public Safety Power Shutoffs, and other
emergencies. With these investments, Yorba
Linda Water District reaffirms its commitment to meeting the community's
water needs while embracing sustainability and resilience for the future.
-2-
Page 59 of 191
c r \\I r) Fjc> >���J s71 -f h I J I J I �J 1� �� �J1111U'� �_�
Introduction
Your drinking water is constantly monitored from source to
tap for both regulated and unregulated constituents.
Drinking water quality testing programs are carried out by
Orange County Water District (OCWD) for groundwater,
Metropolitan Water District of Southern California (MWD) for
treated surface water, and Yorba Linda Water District for the
drinking water distribution system.
Sources of Supply
The District's water supply
consists of groundwater
from the Orange County
groundwater basin and
water imported from
Northern California and
the Colorado River by
MWD.
Local Groundwater (Chlorine Disinfection)
Groundwater is sourced from the Orange County ground-
water basin, an approximately 350 square mile natural
aquifer beneath most of northern and central Orange
County. The Yorba Linda Water District and more than 20
cities and retail water districts pump from the groundwater
basin to provide water to homes and businesses.
We treat groundwater to drinking water standards at our
state-of-the-art
PFAS Water
Treatment Plant
in Placentia. We
use chlorine to
disinfect the
groundwater
entering the
distribution
system.
Imported Water (Chloramine Disinfection)
In 2022, we imported approximately 21 % of the water served.
The District obtains water from the local wholesaler, Municipal
Water District of Orange County. The water is imported from
Northern California via the California Aqueduct and the
Colorado River via the Colorado River Aqueduct.
This water is treated by MWD at the Robert B. Diemer water
treatment plant in Yorba Linda. MWD treats the water to
meet drinking water standards and disinfects the water with
chloramines, a combination of chlorine and ammonia.
The Source of Your Water
Can Change Throughout the Year
Your water source depends on where you live or work within
the boundaries of our community. To maximize the delivery
of groundwater, we may change our operating dynamics,
resulting in a source water change from imported water
to groundwater at different times throughout the year.
Since the water sources may vary, you may notice a
difference in the water's taste or hardness (mineral content).
However, none of these factors affect the quality and safety
of your water.
We Invite You The Board of Directors invites the public to participate in their meetings. L _
to Learn More Regular meetings are on the first Thursday of each month at 3:00 p.m.
They are held at the District's Administration building at 1717 East Miraloma
About Your Avenue in Placentia.
Water System For more information about the District or your water service, please visit
our website at www.ylwd.com or call (714) 701-3000.
-3- Page 60 of 191
To Safeguard Against Issues that May Affect Your Health
WE COMPLY WITH ALL STATE AND FEDERAL WATER QUALITY REGULATIONS
Basic Information About
Drinking Water Contaminants
The sources of drinking water (both public tap water and
bottled water) include rivers, lakes, streams, ponds, reservoirs,
springs, and groundwater. As water travels over the surface
of the land or through the ground, it dissolves naturally
occurring minerals. Water
also picks up substances
resulting from animals or
from human activity.
Therefore, drinking water,
including bottled water,
may reasonably be
expected to contain at
least small amounts of
some contaminants. However, contaminant presence does
not necessarily indicate that water poses a health risk.
More information about contaminants and potential health
effects can be obtained by calling the USEPA's Safe Drinking
Water Hotline (1-800-426-4791).
Contaminants that may be present in source water include:
♦ Microbial contaminants, such as viruses and bacteria,
which may come from sewage treatment plants, septic
systems, agricultural livestock operations, and wildlife.
(A standard treatment process that includes
sedimentation, filtration, and disinfection can eliminate
Cryptosporidium
contamination that may
be found in surface
(imported) water.
Cryptosporidium is a
microscopic organism
from animal or human
waste that can cause
diarrhea, fever, and other gastrointestinal maladies when
ingested);
♦ Pesticides and herbicides that may come from a variety
of sources such as agriculture, urban stormwater runoff,
and residential uses;
♦ Inorganic contaminants, such as salts and metals that
can be naturally occurring or result from urban
stormwater runoff, industrial or domestic wastewater
discharges, oil and gas production, mining, or farming;
♦ Organic chemical contaminants, including synthetic and
volatile organic chemicals that are by-products of
industrial processes and petroleum production and can
also come from gas stations, urban stormwater runoff,
agricultural applications, and septic systems;
♦ Radioactive contaminants that naturally exist or result
from oil and gas production and mining activities.
Special Risk Populations
Some individuals may be more
vulnerable to possible contaminants
in drinking water than the general
population. Immunocompromised
persons such as persons with cancer
undergoing chemotherapy, persons
who have undergone organ trans-
plants, some elderly persons, infants, persons infected with
HIV/AIDS, or persons with immune system disorders can be
particularly at risk of infection. These persons should seek
advice from their health care providers about drinking
water.
The USEPA/Center for Disease Control guidelines on appropriate
means to lessen the risks of infection by Cryptosporidium
or other microbial contaminants are available from the
Safe Drinking Water Hotline (1-800-426-4791).
Fluoride
Naturally occurring fluoride is
present in the Orange County
groundwater basin.
In 1995, the California Legislature
passed a bill mandating all large
water agencies to fluoridate their
supplies, but only if the state or another entity provides the
agencies with funding. To date, the state has not
appropriated funds to implement fluoridation. As a result,
the District does not add fluoride to groundwater.
MWD began fluoridation of the drinking water it imports
to Southern California in November of 2007. Because
the District has two water sources, you may receive
fluoridated, non -fluoridated, or a blend of fluoridated
and non -fluoridated water.
If you wish to know the approximate level of fluoride in your
tap water or specific water service area, please call the
District at (714) 701-3000 and ask for the Water Quality Division.
You can find additional information about the fluoridation of
drinking water through the following sources:
U.S. Centers for Disease Control and Prevention
www.cdc.gov/fluoridation • 1 -888 -CDC -INFO (1-888-232-4636)
State Water Resources Control Board, Division of Drinking Water
www.waterboards.ca.gov/drinking-water/certlic/
drinkingwater/Fluoridation.html
American Dental Association
www.ada.org/en/public-programs/advocating-for-the-
public/fluoride-and-fluoridation/ada-fluoridation-resources
-4-
American Water Works Association www.awwa.org
Page 61 of 191
r
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2022 Metropolitan of Southern California-
•Surface Waterit
y_
r
QL
PIAG Average Range ot
MCL
Chemical MCL (MCLG) Amount Detections
Violation? Typical Source of Chemical
�+
Radiologicals -Tested in 2020 and 2022
L
L
/
Gross Alpha Particle Activity (pCi/L) 15 (0) ND ND -3
No Erosion of Natural Deposits
G
V y
Gross Beta Particle Activity (pCi/L) 50 (0) 6 ND -9
No Decay of Natural and Man-made Deposits
Uranium (pCi/L) 20 0.43 2 1 -3
No Erosion of Natural Deposits
. 1�
Inorganic Chemicals - Tested in 2022
-Q y
Aluminum (ppm) 1 0.6 0.14 0.085-0.21
No Treatment Process Residue, Natural Deposits
�j
Barium (ppm) 1 2 0.107 0.107
No Refinery Discharge, Erosion of Natural Deposits
Fluoride (ppm) 2 1 0.7 0.7-0.8
No Water Additive for Dental Health
G
Secondary Standards* -Tested in 2022
i
'
Aluminum (ppb) 200* 600 140 85-210
No Treatment Process Residue, Natural Deposits
f i.
Chloride (ppm) 500* n/a 101 98-104
No Runoff or Leaching from Natural Deposits
C, _
Color (Color Units) 15* n/a 1 1
No Naturally -occurring Organic Materials
16
•
Odor (Threshold Odor Number) 3* n/a 3 3
No Naturally -occurring Organic Materials
�.
Specific Conductance (pmho/cm) 1,600* n/a 988 965-1,010
No Substances that Form Ions in Water
'
Sulfate (ppm) 500* n/a 221 213-229
No Runoff or Leaching from Natural Deposits
Total Dissolved Solids (ppm) 1,000* n/a 628 608-648
No Runoff or Leaching from Natural Deposits
"
[
3
Unregulated Chemicals - Tested in 2022
a- -
Alkalinity, total as CaCO3 (ppm) Not Regulated n/a 126 125- 127
n/a Runoff or Leaching from Natural Deposits
r -y (
Boron (ppm) NL = 1 n/a 0.13 0.13
n/a Runoff or Leaching from Natural Deposits
_
}�
Calcium (ppm) Not Regulated n/a 68 66-70
n/a Runoff or Leaching from Natural Deposits
Hardness, total as CaCO3 (ppm) Not Regulated n/a 278 275-281
n/a Runoff or Leaching from Natural Deposits
J
Hardness, total (grains/gallon) Not Regulated n/a 16 16
n/a Runoff or Leaching from Natural Deposits
_ C.
Magnesium (ppm) Not Regulated n/a 25 24-26
n/a Runoff or Leaching from Natural Deposits
J,
pH (pH units) Not Regulated n/a 8.1 8.1
n/a Hydrogen Ion Concentration
1
7
Potassium (ppm) Not Regulated n/a 4.6 4.4-4.8
n/a Runoff or Leaching from Natural Deposits
Sodium (ppm) Not Regulated n/a 98 95-102
n/a Runoff or Leaching from Natural Depositsi
Total Organic Carbon (ppm) TT n/a 2.5 2.3-2.6
n/a Various Natural and Man-made Sources
]
ppb = parts per billion; ppm = parts per million; pCi/L = picoCuries per liter; pmho/cm = micromhos per centimeter; ND = not detected;
!
Q
MCL = Maximum Contaminant Level; (MCLG) = federal MCL Goal; PHG = California Public Health Goal;
a
NL = Notification Level; n/a = not applicable; IT = treatment technique
Chemical is regulated by a secondary standard.Turbidity - combined filter effluent Treatment Turbidity
TT
r
metropolitan Water District Diemer Filtration Plant Technique
Violation?
Q
1) Highest single turbidity measurement (NTU) 0.3 0.03
No Soil Runoff
2) Percentage of samples less than or equal to 0.3 NTU 95% 100%
No Soil Runoff
c
Turbidity is a measure of the cloudiness of the water, an indication of particulate matter, some of which might include harmful microorganisms. NTU = nephelometric turbidity units
C
-
Low turbidity in Metropolitan's treated water is a good indicator of effective filtration. Filtration is called a "treatment technique" (Tr).
•'
A treatment technique is a required process intended to reduce the level of chemicals in drinking water that are difficult and sometimes impossible to measure directly.
0 O
4Unregulated
Chemicals Requiring
_Notification
Average
Range of Most Recentr
Chemical Level IPHG Amount
Detections Sampling Date
0
Germanium (ppb) n/a n/a 0.1
ND -0.4 2018
00
Manganese (ppb)** 50* n/a 1.9
0.8-2.7 2018
**Manganese
-
is regulated with a secondary standard of 50 ppb but was not detected, based on the detection limit for purposes of reporting of 20 ppb.�c'
Q
0
Manganese was included as part of the unregulated chemicals requiring monitoring.
r
Ce
'Table
Legend What are water Quality Standards?
Measurement Information
L
What is a Water Quality Goal? Drinking water standards established by the USEPA and DOW set limits for
substances that may affect consumer health or aesthetic qualities of drinking
To ensure that tap water is safe to drink, USEPA and DOW prescribe regulations that limit the
amount of specific contaminants in water provided by public water systems. The U.S. Food and
r]
In addition to mandatory water quality standards, USEPA and water. The charts in this report show the following types of water quality
Drug Administration regulations and California law also establish limits for contaminants in
d
the DOW have set voluntary water quality goals for some standards:
bottled water that provide the same protections for public health.
-
_ n
contaminants. Unfortunately, water quality goals are often set at 6 Maximum Contaminant Level (MCL): The highest level of a contaminant
The tables list all the drinking water contaminants that the District detected above the reporting
such low levels that they are not achievable in practice and are allowed in drinking water. Primary MCLs are set as close to the PHGs (or
limits during the 2022 calendar year.
/� t
7
not directly measurable. Nevertheless, these goals provide MCLGs) as is economically and technologically feasible.
The presence of these contaminants in the water does not necessarily indicate that the water
) V r
helpful guidance and directions for water management . Maximum Residual Disinfectant Level (MRDL): The level of a disinfectant
poses a health risk. Unless otherwise noted, the data presented in this table is from testing
practices. The charts in this report include three types of water added for water treatment that may not be exceeded at the consumer's
done from January 1 through December 31, 2022. The DDW requires monitoring for specific
�F
J d
quality goals: tap,
contaminants less often than every year because the concentrations of these contaminants are
^
6 Maximum Contaminant Level Goal (MCLG): The cwntami- 6 Secondary MCLS: Set to protect drinking water's odor, taste, and
not expected to vary significantly from year to year. Thus, some of the data, though
nant level in drinking water below which there is no known or appearance,
representative of current water quality, is more than one year old. The District contracts with
^
expected health risk. The USEPA sets MCLGs. 6 Primary Drinking Water Standard: MCLS, monitoring and reporting
state -certified, independent laboratories to perform most water quality testing.
^
6 Maximum Residual Disinfectant Level Goal (MRDLG): The requirements, and water treatment requirements for contaminants that
How are Contaminants Measured?
'
R -
level of a disinfectant added for water treatment below which affect health.
there is no known or expected health risk. The USEPA sets 6 Regulatory Action Level (AL): The concentration of a contaminant that, if
6 Parts per million (ppm) or 6 Parts per billion (ppb) or 6 Parts per trillion (ppt) or
milligrams per liter (mg/L) micrograms per liter (pg/L) nanograms per liter (ng/L)
s^
+
7 -
MRDLGs. exceeded, triggers treatment or other requirements that a water system
What Do the Abbreviations Represent?
-
. Public Health Goals (PHG): The contaminant level in drinking must follow.
. pCi/L = picoCuries per liter . ND = not detected
water that does not pose a significant health risk. The 6 Notification Level (NL): The level above which a water agency is required
6 NTU = nephelometric turbidity units • n/a = not applicable
•7
California Environmental Protection Agency, Office of to notify its governing body if an unregulated contaminant is found in its
4 TON = Threshold Odor Number • NL = Notification Level
Environmental Health Hazard Assessment, sets PHGs. drinking water.
. pmho/cm =micromhos per centimeter
-�jr
. n•^�
Ir �
-�� n' a a^.� Pag�62 of
191 ,
-+'S _ 4�
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1W Z.
J
w7
j� V Radiologicals
J �
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V 4
Gross Alpha (pCi/L) 15 (0) <3 ND -4.58 No 2022 Erosion of Natural Deposits
Uranium (pCi/L) 20 0.43 7 2.9-12 No 2022 Erosion of Natural Deposits
Inorganic Chemicals
J a
Arsenic (ppb)
10
0.004
3.5
1.8-4.8
No
2022
Erosion of Natural Deposits
_ ?
Barium (ppm)
1
2
<0.1
ND -0.111
No
2022
Erosion of Natural Deposits
NL = 1
Fluoride (ppm)
2
1
0.5
0.44-0.53
No
2022
Erosion of Natural Deposits
n/a
Nitrate (ppm as N)
10
10
1.3
0.82-1.95
No
2022
Fertilizers, Septic Tanks
-
Nitrate+Nitrite (ppm as N)
10
10
1.3
0.82— 1.95
No
2022
Fertilizers, Septic Tanks
r L
Secondary Standards*
2022
9
Hardness, total (ppm as CaCO3)
Not Regulated
n/a
332
292 — 370
n/a
Chloride (ppm)
500'
n/a
127
119— 139
No
2022
Erosion of Natural Deposits
2022
Manganese (ppb)
50*
n/a
<20
ND -22
No
2022
Erosion of Natural Deposits
Odor (threshold odor number)
3*
n/a
<1
ND -2
No
2022
Naturally -occurring Organic Materials
PerfluorohexanoicAcid (ppt)
Specific Conductance (pmho/cm)
1,600*
n/a
1,101
1,060-1,130
No
2022
Erosion of Natural Deposits
❑
Sulfate (ppm)
500*
n/a
147
125— 174
No
2022
Erosion of Natural Deposits
n/a
Surfactants (MBAs) (ppb)
500*
n/a
<20
ND -20
n/a
2022
Municipal and Industrial Waste Discharges
7.8
Total Dissolved Solids (ppm)
Turbidi (NTU)
1,000*
5*
n/a
n/a
672
01
630-727
ND -015
No
No
2022
2022
Erosion of Natural Deposits
Pr„ i„ fr) .. ire
J a
Unregulated Chemicals
Alkalinity, total (ppm as CaCO3)
Not Regulated
n/a
236
215-258
n/a
2022
<= average is less than the detection limit for reporting purposes; MCL = Maximum Contaminant Level, (MCLG) = federal MCL Goal; PHG
Bicarbonate (ppm as HCO3)
Not Regulated
n/a
288
262-315
n/a
2022
_
on (ppm)
NL = 1
n/a
0.25
0.23-0.27
n/a
2022
0 Jj
Bromide (ppm)
Not Regulated
n/a
0.18
0.13-0.23
n/a
2022
-
Calcium (ppm)
Not Regulated
n/a
101
82.6-116
n/a
2022
j
Hardness, total (grains/gal)
Not Regulated
n/a
19
17-22
n/a
2022
9
Hardness, total (ppm as CaCO3)
Not Regulated
n/a
332
292 — 370
n/a
2022
Magnesium (ppm)
Not Regulated
n/a
21
18.7-22.8
n/a
2022
Perfluoro Butane Sulfonic Acid (ppt)
NL= 500
n/a
NO
NO
n/a
2022
Perfluoro Hexane Sulfonic Acid (ppt)
NL = 3
n/a
NO
NO
n/a
2022
D
PerfluorohexanoicAcid (ppt)
Not Regulated
n/a
ND
ND
n/a
2022
Qp
Perfluorooctane SulfonicAcid (ppt)
NL = 6.5
n/a
NO
NO
n/a
2022
a
Perfluorooctanoic Acid (ppt)
NL = 5.1
n/a
NO
ND
n/a
2022
pH (pH units)
Not Regulated
n/a
7.8
7.7-7.9
n/a
2022
Potassium (ppm)
Not Regulated
n/a
5.7
4.4-7.8
n/a
2022
Sodium (ppm)
Not Regulated
n/a
97
83.6-103
n/a
2022
Total Organic Carbon (ppm)
Not Regulated
n/a
0.96
0.82-1.3
n/a
2022
00
Vanadium (ppb)
NL = 50
n/a
4.2
3.1 —6.7
n/a
2022
Erosion of Natural
Erosion of Natural
Erosion
Various
Sources
n ions .fir
al Deposits G
al Deposits Q
and Man-made Sources
al Deposits; Industrial Discharge
Manganese was included as part of the unregulated chemicals requiring monitoring.
� I ,
- a About Lead in Tap Water
a�
n
e O
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CC C[
a a or C,
LIf
present, elevated levels of lead can cause
ppb = parts -per billion; ppm = parts -per million; pCi/L = picoCuries per liter; NTU = nephelometric turbidity units; ND = not detected; n/a
= not applicable; pmho/cm = micromho per centimeter
water and reuse it for another
f
_ 7
serious health problems, especially for
<= average is less than the detection limit for reporting purposes; MCL = Maximum Contaminant Level, (MCLG) = federal MCL Goal; PHG
= California Public Health Goal
- 1�
pregnant women and young children. Lead
. ,
*Contaminant is regulated by a secondary standard to maintain aesthetic qualities (taste, odor, color).
in drinking water is primarily from materials
- If you are concerned about lead in your
O�n
4�.
Unregulated Chemicals Requiring
_vRange
Monitoring
water, you may wish to have your water
Chemical Notification Levely— PHdOWAverage Amount
of Detections Most Recent
SamplingDate
.
' -
'
Bromide (ppm) n/a n/a 0.23
0.204 — 0.259
2019
-
drinking water but cannot control the variety of materials
used in customer plumbing components. When your
Germanium (ppb) n/a n/a <0.3
NO -0.3
2019
water has been sitting for several hours, you can minimize
g Y
There are no known lead service lines for potable water in the
p
Manganese (ppb)** 50* n/a 10.7
10.5-10.8
2019
District. However, please see the chart titled "Lead and Copper
Total Organic Carbon (Unfiltered) (ppm) n/a n/a 1.14
0.76-1.83
2019
r p
Manganese was included as part of the unregulated chemicals requiring monitoring.
� I ,
- a About Lead in Tap Water
a�
n
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CC C[
a a or C,
LIf
present, elevated levels of lead can cause
water and reuse it for another
f
_ 7
serious health problems, especially for
beneficial purpose, such as watering
] -
- 1�
pregnant women and young children. Lead
4 plants.
in drinking water is primarily from materials
- If you are concerned about lead in your
e
' �.�jr,
-
and components associated with service
lines home
r
water, you may wish to have your water
and plumbing.
tested. Information on lead in drinking
.
The District is responsible for providing safe
i
water, testing methods, and steps you can
-
drinking water but cannot control the variety of materials
used in customer plumbing components. When your
take to minimize exposure is available from the Safe Drinking
Water Hotline or on the web at: www.epa.gov/safewater/lead.
_
water has been sitting for several hours, you can minimize
g Y
There are no known lead service lines for potable water in the
p
c
�-
_
the potential for lead exposure by flushing your tap for
District. However, please see the chart titled "Lead and Copper
90.
30 seconds to 2 minutes before using water for drinking or
flushed
Action Levels for Residential Taps" on page 7 for more District-
cooking. If you do so, you may wish to collect the
specific information.
^�_ :
'�.,'
-1 n '/
n'a .� �rPag�63
•r,•. Ate. r^
of 191 ,
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Disinfectant Residual and Disinfection By -Products
Chlorine Residual (ppm)* (4/4) 1.82 1.25-1.68 No Disinfectant Added for Treatment
L
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Q.
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ction Vj
Haloacetic Acids (ppb)"" 60 11 2.1 — 15 No Byproducts of Chlorine Disinfection `
Aesthetic Quality
Color (Color Units) 15*** ND ND No Natural ly-occurinq organic materials
Odor (Threshold Odor Number) 3*** ND ND No Natural ly-occuring organic materials
Turbidity (NTU) 5*** 0.16 ND— 1.4 No Erosion of natural deposits
Eight locations in the distribution system are tested quarterly for total trihalomethanes and haloacetic acids. Thirty-seven locations are tested monthly for color, odor and turbidity.
MRDL = Maximum Residual Disinfectant Level; MRDLG = Maximum Residual Disinfectant Level Goal; NTLI = nephelometric turbidity unit; ND = not detected
*Compliance is determined based on a running annual average (RAA); the highest RAA is included as the average.
**Compliance is determined based on a locational running annual average (LRAA); the highest LRAA is included as the average.
***Chemical is regulated by a secondary standard to maintain aesthetic qualities (color, odor, and taste).
Lead (ppb) 15 0.2 ND 0/33 No Internal corrosion of household water plumbing systems;
discharges from industrial manufacturers;
erosion of natural deposits
Copper (ppm) 1.3 0.3 0.4 0/33 No Internal corrosion of household water plumbing systems;
discharges from industrial manufacturers;
erosion of natural deposits
Every three years, at least 30 residences are tested for lead and capper at -the -tap. The most recent set of 33 samples were collected in lune 2021.
The District completed an assessment of Its Wells 1, 5, 7, 10, and 12 In January 1999. The wells are considered most vulnerable
to contaminants produced by the following activities: gas stations; dry cleaners; metal plating/finishing/fabricating plants;
Lead was detected in 1 home; none exceeded the Action Level. Copper was detected in 25 homes; none exceeded the Action Level.
7 _
The regulatory Action Level is the concentration at which, if exceeded in more
than ten percent of the homes tested, triggers treatment or other requirements that a water system must follow.
The Yorba Linda Water District complied with the lead and copper Action Levels.
a�4Unregulated
`�
Requiring Monitoring in the Distribution
aChemical
Notification Level
PHG AverageDetections Sampling Date
MWD at (800) CALL -MWD (225-5693).
Place, Suite 150, Santa Ana, California 92707.
Bromochloroacetic Acid (ppb) n/a
n/a 4.9 1.8 — 8.5 2019
rr�
Bromodichloroacetic Acid (ppb) n/a
n/a 2.5 1.2-3.8 2019
9
Disinfectant Residual and Disinfection By -Products
Chlorine Residual (ppm)* (4/4) 1.82 1.25-1.68 No Disinfectant Added for Treatment
L
F
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Q.
L
ction Vj
Haloacetic Acids (ppb)"" 60 11 2.1 — 15 No Byproducts of Chlorine Disinfection `
Aesthetic Quality
Color (Color Units) 15*** ND ND No Natural ly-occurinq organic materials
Odor (Threshold Odor Number) 3*** ND ND No Natural ly-occuring organic materials
Turbidity (NTU) 5*** 0.16 ND— 1.4 No Erosion of natural deposits
Eight locations in the distribution system are tested quarterly for total trihalomethanes and haloacetic acids. Thirty-seven locations are tested monthly for color, odor and turbidity.
MRDL = Maximum Residual Disinfectant Level; MRDLG = Maximum Residual Disinfectant Level Goal; NTLI = nephelometric turbidity unit; ND = not detected
*Compliance is determined based on a running annual average (RAA); the highest RAA is included as the average.
**Compliance is determined based on a locational running annual average (LRAA); the highest LRAA is included as the average.
***Chemical is regulated by a secondary standard to maintain aesthetic qualities (color, odor, and taste).
Lead (ppb) 15 0.2 ND 0/33 No Internal corrosion of household water plumbing systems;
discharges from industrial manufacturers;
erosion of natural deposits
Copper (ppm) 1.3 0.3 0.4 0/33 No Internal corrosion of household water plumbing systems;
discharges from industrial manufacturers;
erosion of natural deposits
"
Every three years, at least 30 residences are tested for lead and capper at -the -tap. The most recent set of 33 samples were collected in lune 2021.
The District completed an assessment of Its Wells 1, 5, 7, 10, and 12 In January 1999. The wells are considered most vulnerable
to contaminants produced by the following activities: gas stations; dry cleaners; metal plating/finishing/fabricating plants;
Lead was detected in 1 home; none exceeded the Action Level. Copper was detected in 25 homes; none exceeded the Action Level.
7 _
The regulatory Action Level is the concentration at which, if exceeded in more
than ten percent of the homes tested, triggers treatment or other requirements that a water system must follow.
The Yorba Linda Water District complied with the lead and copper Action Levels.
a�4Unregulated
Chemicals
Requiring Monitoring in the Distribution
aChemical
Notification Level
PHG AverageDetections Sampling Date
MWD at (800) CALL -MWD (225-5693).
Place, Suite 150, Santa Ana, California 92707.
Bromochloroacetic Acid (ppb) n/a
n/a 4.9 1.8 — 8.5 2019
rr�
Bromodichloroacetic Acid (ppb) n/a
n/a 2.5 1.2-3.8 2019
9
Chlorodibromoacetic Acid (ppb) n/a
n/a 4.1 1.1 —5.5 2019
Dibromoacetic Acid
6.5 1.5-9.7 2019
Q
(ppb) n/a
n/a
Dichloroacetic Acid (ppb) n/a
MCLG = 0 2 0.8-3.7 2019
'
Monobromoacetic Acid (ppb) n/a
n/a 0.78 ND — 1.7 2019
Tribromoacetic Acid (ppb) n/a
n/a 4.5 ND — 5.7 2019
Trichloroacetic Acid (ppb) n/a
MCLG = 20 0.74 ND — 1.4 2019
10
f
_
Source Water Assessments
0
Imported (MWD) Water Assessment
Groundwater Assessment
Every five years, DDW requires MWD to examine possible
Vulnerability assessments of potential sources of contamination for Wells 20 and 21 were conducted in
sources of drinking water contamination in its State Water
June 2011 and June 2014, respectively. The groundwater sources are considered most vulnerable to the
Project and Colorado River source waters.
following activities not associated with detected contaminants: chemical/petroleum processing/storage
�zntwar The most recent surveys for MWD's
FAO,
facilities; historic gas stations; metal plating/finishing/fabricating plants; automobile repair shops;
source waters are the Colorado
furniture repair and manufacturing; junk/scrap/salvage yards; machine shops; NPDES/WDR permitted discharges; photo
^
f River Watershed Sanitary Survey —
processing/printing; recreational area surface water use; sewer collection systems; oil wells; gas stations; plastic/synthetic
producers; above ground storage tanks; artificial recharge projects using non potable water; car washes; construction/demolition
2020 Update, and the State Water
Project Watershed Sanitary Survey
staging areas; dredging; hardware/lumber/part stores; parking lots; transportation corridors; water supply wells; body shops,
_ ,,
GTE •�
aN cn�c4 — 2021 Update.
automobile repair shops; electrical/electronic manufacturing; fleet/truck/bus terminals; dry cleaners; appliance/electronic repair;
medical/dental offices/clinics; office buildings; surface water; decommissioned inactive underground storage tanks; upgraded
Water from the Colorado River is most
and/or registered underground storage tanks; monitoring wells; hospitals, and parks.
vulnerable to contamination from recreation, urban/
Vulnerability assessments of potential sources of contamination for Wells 19 and 18 were completed in May 2004 and September
stormwater runoff, increasing urbanization in the water-
wastewater. Likewise, water from
2005, respectively. The groundwater sources are considered most vulnerable to the following activities not associated with detected
shed, and supplies
contaminants: gas stations; dry cleaners; metal plating/finishing/fabricating plants; plastic/synthetic producers; underground
7
'
Northern California's State Water Project are most
injection of commercial/industrial discharges; underground storage tanks; agricultural drainage; fertilization, pesticide and herbicide
vulnerable to contamination from urban/stormwater
application; automobile -body and repair shops; sewer collection systems; food processing, and chemical/petroleum processing/storage.
runoff, wildlife, agriculture, recreation, and wastewater.
A vulnerability assessment of potential sources of contamination for Well 15 was completed in April 2003. These groundwater
USEPA also requires MWD to complete one Source Water
sources are considered most vulnerable to the following activities not associated with detected contaminants: chemical/petroleum
Assessment (SWA) that utilizes information collected in
processing/storage; metal plating/finishing/fabricating; and plastics/synthetics production.
the watershed sanitary survey s MWD completed its SWA
"
in December 2002. The SWA is used to evaluate the
The District completed an assessment of Its Wells 1, 5, 7, 10, and 12 In January 1999. The wells are considered most vulnerable
to contaminants produced by the following activities: gas stations; dry cleaners; metal plating/finishing/fabricating plants;
—
7 _
vulnerability of water sources to contamination and helps
determine whether more protective measures are needed.
plastic/synthetic producers; underground injection of commercial/industrial discharges; underground storage tanks; agricultural
drainage; fertilization, pesticide and herbicide application; automobile -body and repair shops; and chemical/petroleum
-
A copy of the most recent summary of either Watershed
processing/storage.
•5 {
Sanitary Survey or the SWA can be obtained by calling
A copy of the complete assessment is available at State Water Resources Control Board, Division of Drinking Water at 2 MacArthur
MWD at (800) CALL -MWD (225-5693).
Place, Suite 150, Santa Ana, California 92707.
�-
'may.,' n•^�
a WPage,-64
n _�
1 n r /
Of 191 ,
Leading the Way:
Nation's Largest Ion Exchange HAS Treatment Facility
In December 2021, we began operating an
ion exchange (IX) treatment plant to remove
perfluoroalkyl and polyfluoroalkyl substances
(PFAS) from local well water. Our award-
winning treatment plant is the largest of its kind
in the United States.
PFAS are a group of thousands of manmade,
heat -resistant chemicals prevalent in the
environment and commonly used in consumer
i
products to repel water, grease, and oil. Since
the 1940s, they have been used to
manufacture everyday household products
such as make-up, frying pans, pizza boxes, and various
industrial applications. Due to their prolonged use, PFAS are
detected in water sources throughout the United States,
including the Orange County groundwater basin. Despite
playing no role in releasing PFAS
into the environment, water
providers must find ways to
remove it from their local water
supplies.
We partnered with the Orange
County Water District to rapidly
construct a treatment plant to
remove PFAS from groundwater
and ensure that we continue to
meet all state and federal
drinking water standards.
h>i
Located at our existing headquarters in Placentia, the PFAS
Treatment Plant uses an IX treatment system of highly
porous resin that acts like powerful magnets that adsorb
and hold onto contaminants. It consists of 6 pre -filters, 22 IX
HAS can be found in:
Nonstick Firefi htin
Cookware Cosmetics g B
Foams
Food Clothing
Furniture Packaging g
Water Conservation is Always a Priority
Southern California has an arid climate and the need for
wise water use must remain a part of everyone's daily lives.
Simple water saving acts like the ones listed here can save
countless gallons of water every day.
• Check your sprinkler system for leaks, overspray, and
broken sprinkler heads and repair promptly. This can
save countless gallons each time you water.
• Water plants in the early morning. It reduces
evaporation and ensures deeper watering.
For other conservation tips and additional ways to save
water, please visit www.ylwd.com/community/wateruse/.
vessels, a booster pump station, an
emergency backup generator, and an
onsite chlorine treatment system.
During treatment, contaminants such
as PFAS are removed from the water
before entering the distribution system.
The facility is capable of treating up to
25 million gallons per day.
For additional information on PFAS and
OCWD's comprehensive and robust
response, please visit www.ocwd.com/
what-we-do/water-quality/pfas.
Where Can You Learn More?
There's a wealth of information on the internet about Drinking
Water Quality and water issues in general. Some good sites
to begin your own research are:
Metropolitan Water District of So. California:
www.mwdh2o.com
California Department of Water Resources:
www.water.ca.gov
The Water Education Foundation:
www.watereducation.org
To learn more about Water Conservation & Rebate Information:
www.bewaterwise.com • www.ocwatersmart.com
Yorba Linda Water District
1717 E Miraloma Avenue • Placentia, CA 92870
(714) 701-3000 • www.ylwd.com
—8—
Page 65 of 191
ITEM NO. 7.4.
Yorba Linda
Water District
AGENDA REPORT
MEETING DATE: June 15, 2023
TO: Board of Directors
FROM: Mark Toy, General Manager
STAFF CONTACTS: Rosanne Weston, Engineering Manager
Reza Afshar, Senior Engineer
SUBJECT: First Amendment to Professional Services Agreements (PSAs) for On -
Call Geotechnical Services
RECOMMENDATION:
That the Board of Directors authorize staff to amend the PSAs with Hushmand Associates, Inc. and
Leighton Consulting, Inc. to increase the not -to -exceed combined amount of the agreements by
$150,000 for a new not -to -exceed combined amount of $500,000.
SUMMARY:
The District utilizes on-call geotechnical services consultants to support its Capital Improvement
Projects and maintenance projects. The Board previously authorized the District staff to enter into
separate agreements with two (2) consulting firms for a combined not -to -exceed amount of $350,000
and 3 -year terms. District staff has determined that the authorized budget is not sufficient to cover
the cost of the projects that are planned through the existing terms of the agreements and is
requesting authorization to add $150,000 to the budget for a new not -to -exceed combined amount of
$500,000.
FISCAL IMPACT:
Contract Award: $350,000
First Amendment Amount: $150,000
Total Amount/New Not -to Exceed Amount: $500,000
BACKGROUND:
On November 23, 2021, the District entered into separate agreements with Hushmand Associates,
Inc. and Leighton Consulting, Inc. for On -Call Geotechnical Services for the District projects on an
"as -needed" basis. The terms of the PSAs were three (3) years, which will expire on November 23,
2024, with the District's option to extend the PSA for up to two additional years. The District has
utilized the services of both consultants on multiple CIP and maintenance projects in FY21-22 and
FY22-23, and will need geotechnical support for FY23-24 and FY24-25. The previously authorized
budget has been exhausted sooner than expected due to the increased number of CIP and
maintenance projects undertaken by the District. District staff has determined that an additional
$150,000 is needed to cover the cost of the upcoming projects through the original 3 -year term of the
Page 66 of 191
agreements (November 23, 2024). At the end of the original term of the agreements, the District will
have the discretion to extend these agreements which will require the Board's authorization to add
additional budget, or to issue a new Request For Proposal and select qualified consultants for future
projects.
PRIOR RELEVANT BOARD ACTION:
On October 13, 2021, the Board of Directors authorized the execution of separate Professional
Services Agreements with Leighton Consulting, Inc. and Hushmand Associates, Inc.
REVIEWED BY GENERAL COUNSEL:
Yes
STRATEGIC PLAN INITIATIVES:
G1 4A - Address infrastructure needs by updating/implementing Asset Management Plan (AMP);
G1 4B - Address infrastructure needs by updating/implementing Capital Improvement Plan (CIP);
G3 2B - Address the District's future infrastructure needs; G3 2C - Evaluate and maintain sustainable
operations.
ATTACHMENTS:
1. Amendment to On -Call PSA with Hushmand Associates, Inc.
2. Amendment to On -Call PSA with Leighton Consulting, Inc.
Page 67 of 191
First Amendment to Agreement No. 2021-0062
FIRST AMENDMENT
TO PROFESSIONAL SERVICES AGREEMENT
BETWEEN THE YORBA LINDA WATER DISTRICT
AND
HUSHMAND ASSOCIATES, INC.
THIS FIRST AMENDMENT ("Amendment") to the Professional Services Agreement
between Yorba Linda Water District and Hushmand Associates, Inc. is entered into on
by and between the YORBA LINDA WATER DISTRICT, a local public agency, created and
operating under Authority of Division 12 of the California Water Code ("District") and
HUSHMAND ASSOCIATES, INC. ("Consultant") (collectively referred to herein as the
"Parties").
A. On November 23, 2021, the Parties entered into an Agreement for On -Call
Geotechnical Services for the District to request services on a Task Order basis. Capitalized terms
used in this Amendment, without being separately defined herein, shall have the same meaning as
defined in the Agreement. Pursuant to Section 15.0 of the Agreement, the Parties desire to amend
the Agreement.
B. The original not -to -exceed value of the Agreement was $350,000 and needs to be
increased by $150,000 for the District's capital improvement projects planned for the next two
fiscal years through the existing term of the Agreement (until 11/23/2024). The Parties desire to
increase the not -to -exceed amount by $150,000 for a new not -to -exceed amount of $500,000.
AGREEMENT
In consideration of the mutual covenants and conditions set forth herein, the Parties agree
to amend the Agreement, as follows:
1. The foregoing recitals are true and correct.
2. Section 2.0 - Compensation is amended to increase by $150,000 the total amount
for all Task Orders issued by the District for a new not -to -exceed value of $500,000.
3. The District does not guarantee Consultant will be selected to provide Services or
guarantee a minimum number of hours. The District may (a) use other on-call consultants to
perform Services or (b) self -perform any Services.
4. Except as explicitly set forth in this Amendment, all other terms and conditions
of the Agreement shall remain in full force and effect.
Page 68 of 191
First Amendment to Agreement No. 2021-0062
5. This Amendment may be executed in one or more counterparts, all counterparts
shall be valid and binding on the Party executing them and all counterparts shall together
constitute one and the same document for all purposes.
IN WITNESS WHEREOF, the Parties executed this Amendment as of the
date Effective Date above.
(signatures on following page)
2
Page 69 of 191
KIDMAN GAGEN LAW,
LLP
APPROVED AS TO FORM:
Andrew B. Gagen
District Counsel
APPROVED AS TO FORM:
Attorney
Printed Name
LI -A
Reviewer:
3
First Amendment to Agreement No. 2021-0062
YORBA LINDA WATER
DISTRICT
Richard Mark Toy
General Manager
Rosanne P. Weston
Engineering Manager
HUSHMAND ASSOCIATES, INC.
By:
Printed Name
Page 70 of 191
First Amendment to Agreement No. 2021-0061
FIRST AMENDMENT
TO PROFESSIONAL SERVICES AGREEMENT
BETWEEN THE YORBA LINDA WATER DISTRICT
AND
LEIGHTON CONSULTING, INC.
THIS FIRST AMENDMENT ("Amendment") to the Professional Services Agreement
between Yorba Linda Water District and Leighton Consulting, Inc. is entered into on
by and between the YORBA LINDA WATER DISTRICT, a local public agency, created and
operating under Authority of Division 12 of the California Water Code ("District") and
LEIGHTON CONSULTING, INC. ("Consultant") (collectively referred to herein as the
"Parties" and individually as "Party").
RECITALS
A. On November 23, 2021, the Parties entered into an Agreement for On -Call
Geotechnical Services for the District to request services on a Task Order basis. Capitalized terms
used in this Amendment, without being separately defined herein, shall have the same meaning as
defined in the Agreement. Pursuant to Section 15.0 of the Agreement, the Parties desire to amend
the Agreement.
B. The original not -to -exceed value of the Agreement was $350,000 and needs to be
increased by $150,000 for the District's capital improvement projects planned for the next two
fiscal years through the existing term of the Agreement (until 11/23/2024). The Parties desire to
increase the not -to -exceed amount by $150,000 for a new not -to -exceed amount of $500,000.
AGREEMENT
In consideration of the mutual covenants and conditions set forth herein, the Parties agree
to amend the Agreement, as follows:
The foregoing recitals are true and correct.
2. Section 2.0 - Compensation is amended to increase by $150,000 the total amount
for all Task Orders issued by the District for a new not -to -exceed value of $500,000.
3. The District does not guarantee Consultant will be selected to provide Services or
guarantee a minimum number of hours. The District may (a) use other on-call consultants to
perform Services or (b) self -perform any Services.
4. Except as explicitly set forth in this Amendment, all other terms and conditions
of the Agreement shall remain in full force and effect.
Page 71 of 191
First Amendment to Agreement No. 2021-0061
5. This Amendment may be executed in one or more counterparts, all counterparts
shall be valid and binding on the Party executing them and all counterparts shall together
constitute one and the same document for all purposes.
IN WITNESS WHEREOF, the Parties executed this Amendment as of the
date Effective Date above.
(signatures on following page)
2
Page 72 of 191
KIDMAN GAGEN LAW,
LLP
APPROVED AS TO FORM:
Andrew B. Gagen
District Counsel
APPROVED AS TO FORM:
Attorney
Printed Name
LI -A
Reviewer:
3
First Amendment to Agreement No. 2021-0061
YORBA LINDA WATER
DISTRICT
Richard Mark Toy
General Manager
Rosanne P. Weston
Engineering Manager
LEIGHTON CONSULTING, INC.
By:
Printed Name
Page 73 of 191
ITEM NO. 7.5.
Yorba Linda
Water District
AGENDA REPORT
MEETING DATE: June 15, 2023
TO: Board of Directors
FROM: Mark Toy, General Manger
STAFF CONTACTS: Delia Lugo, Finance Manager
SUBJECT: Financial Reserves Policy for Fiscal Year 2023-24
Recommendation:
That the Board of Directors adopt Resolution No. 2023 -XX adopting a Financial Reserves Policy for
Fiscal Year 2023-24 and rescinding Resolution No. 2022-15.
Summary:
Attached is the proposed Financial Reserves Policy for Fiscal Year 2023-24.
Maintaining adequate reserves is an essential aspect of sound financial management. A reserve
policy provides guidelines for sound financial management to maintain financial solvency and
mitigate financial risks associated with revenue instability, volatile capital costs, and emergencies.
Adopting and adhering to a sustainable reserve policy enhances financial transparency and helps
achieve or maintain services and mitigate fiscal emergencies such as natural disasters, asset
failures, and pandemics, and provides stability in the case of legislative and regulatory changes.
Moreover, adequate reserves are required to meet coverage covenants for existing debt.
Upon review of the District's current reserve balances and the approved FY 2023-24 Operating and
Capital Improvement Project Budgets, staff is recommending that the funding of all listed reserves be
set at least to the minimum target levels.
In order for the District to maintain its current AA+ ratings from S&P and Fitch Ratings, meet or
exceed all debt covenants, and better the District's chances to enhance its credit rating and reduce
future borrowing costs, it is recommended that the total "unrestricted" water reserves balance be at
least $40.1 million be June 30, 2024 to maintain the minimum 365 days in cash calculation policy
requirement.
ATTACHMENTS:
1. 3010-005-POL - Financial Reserves Policy - REDLINE
2. Resolution No. 2023 -XX - Financial Reserves Policy
3. 3010-005-POL - Financial Reserves Policy - FINAL
Page 74 of 191
YORBA LINDA WATER DISTRICT
FINANCIAL RESERVES
3010-005-POL
Dept/Div: Finance Approved By: Resolution No. 28222023 -XX
Effective Date: July 1, 20222023 Applicability: n;S+� + eDistrict Wide
Supersedes: Resolution No. 2021 302022-15 See Also: N/A
1.0 General Policy
Maintaining adequate reserves is an essential part of sound financial management. The Yorba
Linda Water District Board of Directors realizes the importance of reserves in providing reliable
service to its customers, well-maintained infrastructure for current and future customers,
financing capital projects as well as capital repair and replacement, and the ability to
respond to changing circumstances. Interest derived from reserve balances shall be credited
to the reserve account from which it was earned.
2.0 Categories
Yorba Linda Water District (YLWD or District) shall accumulate, maintain and segregate its
reserve funds into the following categories:
■ Board Designated Unrestricted Reserves; and
■ Board Designated Restricted Reserves.
3.0 Scope
This policy will assist the Board of Directors in establishing:
■ Minimum and Maximum Funding Levels, with target goals as a percentage of maximum
funding level for each reserve fund, unless otherwise noted;
■ Requirements for the use of reserve funds; and
■ Periodic review requirements for each reserve.
4.0 Periodic Review
Staff and the YLWD Board shall review the reserve balances and targets annually as a part of
the annual budget process. The Finance Staff will continue to review all reserve and
investment balances monthly, with a quarterly report going to the full Board. Any changes
must be approved by resolution of the District Board of Directors. Changes can include, but
are not limited to, establishment of additional reserve funds, changes in reserve target levels,
and changes in types of reserve categories.
5.0 Designated Unrestricted and Restricted Reserves
5.1 Board Designated Unrestricted Reserves
These are reserve funds earmarked for the purpose of funding such items as new capital
facilities, repair or replacement of existing facilities, and general operating reserves
Page 1 of 6
Page 75 of 191
YORBA LINDA WATER DISTRICT
3010-005-POL
designated for a specific purpose and use by the Board of Directors. All reserves in this
category will be funded at least to the recommended minimum level. As a means for the
District to retain its AA+ ratings, the targeted total reserve balance is 365 days in cash at
the end of the fiscal year.
5.1.1 Operating Reserve.
5.1.1.1 Definition and Purpose - Established to cover temporary cash flow
deficiencies that occur as a result of timing differences between the
receipt of operating revenue and expenditure requirements and
unexpected expenditures occurring as a result of doing business.
5.1.1.2 Funding_ Level - The District's current funding levels will be a minimum of
25% and a maximum of 50% of the annual operating budget, including
interest expense, for both the water and sewer funds. In the event this
fund falls below its minimum funding level, the Board will act to restore the
balance above the minimum funding level within twelve (12) months from
the date that the fund fell below the minimum level.
Levels
Water
Sewer
Minimum
25-%
25-%
Maximum
50-%
50-%
Levels Water Sewer
Minimum $9,2R�;?10,020,705 $757,07-5928,497
Maximum $19,7792,31520,041,411 $1,514,150856,995
5.1.1.3 Events or Conditions Prompting the Use of the Operating Reserve - This
reserve may be utilized as needed to pay outstanding operating
expenditures prior to the receipt of anticipated operating revenues.
5.1.2 Emergency Reserve
5.1.2.1 Definition and Purpose - Established to provide protection recovery to the
District and its customers for losses arising from an unplanned event or
circumstance (i.e. fires, earthquakes or financial emergencies). The
reserve level combined with YLWD's existing insurance policies should
adequately protect YLWD and its customers in the event of a loss.
5.1.2.2 Funding Level - Established at a minimum level equal to 5% and a
maximum level equal to 10% of the net capital assets for both the District's
water and sewer funds. In the event this fund falls below its minimum
funding level, the Board will act to restore the balance above the
minimum funding level within twelve (12) months from the date that the
fund fell below the minimum level.
Page 2 of 6
Page 76 of 191
YORBA LINDA WATER DISTRICT
3010-005-POL
Levels Water Sewer
Minimum -5-% -5-%
Maximum 10-% 10-%
Levels Water Sewer
Minimum $5,445,96378,680 $1,901,974883,232
Maximum $10,991,24-2757,359 $3,303,943766,463
5.1.2.3 Events or Conditions Promotina the Use of the Emeraencv Reserve - This
reserve shall be utilized to cover unexpected losses experienced by the
District as a result of a disaster or other unexpected loss. Any
reimbursement received by the District from insurance companies as a
result of a submitted claim shall be deposited back into the reserve as
replenishment for the loss.
5.1.3 Capital Replacement Reserve
5.1.3.1 Definition and Purpose - Established to provide funding for general use on
capital projects as well as capital repair and replacement funding as the
District's infrastructure deteriorates over its expected useful life. In
addition, funding is to provide for non-scheduled capital asset repair and
replacement and other capital related expenses.
5.1.3.2 Funding Level - The minimum target level for each reserve fund is the
current Fiscal Year capital budget and the maximum is the current year
plus 1000 of the subsequent Fiscal Year capital budget. The target levels
in these reserve funds will fluctuate depending on the capital
improvement plan and timing of the projects. Therefore, no target level
will be established. In the event these fund falls below the minimum
funding level, the Board will act to restore the balance above the
minimum funding level within twelve (12) months from the date that the
fund fell below the minimum level.
Levels
Water
Sewer
Minimum
$4 4 ,�312,944,595
$7-37;0001,461,405
nna.,o,nurrn ,
ell 21,227,89-8
$2,772,0 nn
5.1.3.3 Events or Conditions Promotina the Use of the Cabital Replacement
Reserve - Through the annual budget process, staff shall recommend
anticipated asset replacement and capital improvement projects. The
Board of Directors shall take action to approve recommended project
appropriations from the capital replacement reserve. Should unplanned
replacement be necessary during any fiscal year, the Board of Directors
may take action to amend the budget and appropriate needed funds
as required.
5.1.4 Rate Stabilization Reserve
Page 3 of 6
Page 77 of 191
YORBA LINDA WATER DISTRICT
3010-005-POL
5.1.4.1 Definition and Purpose - Established to assist in smoothing out water rate
increases. This reserve is governed by the District's bond covenants and
funds deposited into this reserve are treated as operating revenues in the
fiscal year designated by the District and will be treated as such in fiscal
years of such designation for the purposes of computing the District's debt
service coverage ratio.
5.1.4.2 Funding Level evel - Established at a minimum level of 5% and maximum level
of 20% of budgeted water sales for the current fiscal year. The Board of
Directors have the option of funding the Rate Stabilization Reserve at a
lower level.
Levels Water
Minimum -5-%
Maximum 20-%
Levels Water
Minimum $1,871,94-42,369,801
Maximum $7,4849,479,204
5.1.4.3 Events or Conditions Prompting the Use of the Rate Stabilization Reserve -
The reserve can be used during any year where other revenues are not
sufficient to meet the required debt service coverage ratio or when the
maximum level in the reserve is reached.
5.1.5 Metropolitan Water District ("MWD") Contingency Reserve
5.1.5.1 Definition and Purpose - Imported water purchased from MWD is
approximately double the cost of groundwater at current rates, and
MWD rates may fluctuate more in the future. While imported water is
always a part of the YLWD portfolio, YLWD budgets using groundwater for
approximately 75% or more of its supply and budgets using imported
water from MWD for approximately 25% or less of its supply. However, in
extreme circumstances, YLWD may be, and has been, forced to rely 100%
on MWD imported water at significant and unbudgeted additional
expense. The MWD Contingency Reserve is established as a means to
offset the additional cost of providing water to its customers in the event
the District is forced to rely on increased purchases of MWD imported
Page 4 of 6
Page 78 of 191
YORBA LINDA WATER DISTRICT
3010-005-POL
water due to an interruption in the groundwater supply. While identified
for this purpose, this reserve fund shall be unrestricted.
5.1.5.2 Funding Level - The MWD Contingency Reserve shall be funded in an
amount equal to the cost of purchasing MWD imported water to meet
100% of the demand required to serve YLWD customers for one full year.
This reserve fund shall be initially funded and accumulated over a period
of ten (10) years from adoption and shall be supplemented each year
thereafter to adjust for annual increases in MWD rates. The projected
amount (20212024 dollars) of funding to establish this reserve fund over 10
years is approximately $20,000,000. It is anticipated that the annual
transfers to this reserve fund will adjust each fiscal year to account for
inflation and any increases in the MWD rates during this funding period.
Levels
Water
Target
$2,000,000
5.1.5.3 Events or Conditions Promr)tina the Use of the MWD Continaencv Reserve
- While unrestricted, the reserve may be used during any fiscal year where
the District is forced to purchase imported water due to an interruption in
the ground water supply or related circumstance necessitating increased
purchases of MWD imported water.
5.2 Board Designated Restricted Reserves
These are funds held to either satisfy limitations set by external requirements established
by creditors, grant agencies or law, or to only be used for a specific purpose. Examples
include stipulated bond covenants and reserves held with a fiscal agent.
5.2.1 Conservation Reserve
5.2.1.1 Definition and Purpose - Established to provide funding for District -wide
conservation efforts.
5.2.1.2 Funding Level - Funding shall be established as the net result of
administrative penalties assessed less allowed expenditures of each fiscal
year.
Levels Water
Minimum $0
Maximum $406,014108,936
5.2.1.3 Events or Conditions Prompting the Use of the Conservation Reserve - This
reserve may be used to fund district -wide conservation efforts in relation
to, but not limited to, salary and related, maintenance, and material
expenses for leak detection, -conservation efforts, and other allowable
expenses outside the normal cost of service for each fiscal year.
5.2.2 Employee Liability Reserve
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YORBA LINDA WATER DISTRICT
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5.2.2.1 Definition and Purpose - The purpose is to cover employees' accrued
vacation and other compensatory time and to ensure the complete
funding associated with the liability incurred for employees whom have
met the requirements necessary for district paid health benefits at
retirement.
5.2.2.2 Funding_ Level - Funding for €Y23FY24 shall be established at a minimum
target level of $309,902316,919.
Levels
Water
Sewer
Target
$263,41-7269,664
$46,48547,255
5.2.2.3 Events or Conditions Prompting the Use of the Employee Liabilities Reserve
- This reserve may be used in the event that operating funds are not
adequate to meet vacation, compensatory and sick time paid out or
retiree medical cost obligations within the current year.
Page 6 of 6
Page 80 of 191
RESOLUTION NO. 2023 -XX
RESOLUTION OF THE BOARD OF DIRECTORS
OF THE YORBA LINDA WATER DISTRICT
ADOPTING THE FINANCIAL RESERVES POLICY FOR
FISCAL YEAR 2023-24 AND RESCINDING RESOLUTION NO. 2022-15
WHEREAS, the purpose of the Yorba Linda Water District's (YLWD) Financial
Reserves Policy is to ensure that the District continues to have
sufficient funding available to meet its operating, non-operating,
capital and debt service obligations; and
WHEREAS, adequate reserves and sound financial policies maintain YLWD's
bond ratings in the capital markets, provide financing flexibility and
sustain debt covenant compliance; and
WHEREAS, the District has completed a comprehensive Asset Management
Plan and has prepared a rate study and five-year financial plan; and
WHEREAS, the Financial Reserves Policy recommends establishing various
reserve categories, defines the purpose and use of these funds and
identifies target levels and priority funding of the reserves; and
WHEREAS, the Board of Directors desires to adopt a new Financial Reserves
Policy for Fiscal Year 2023-24.
NOW THEREFORE BE IT RESOLVED by the Board of Directors of the Yorba Linda
Water District as follows:
Section 1. That the Yorba Linda Water District Financial Reserves Policy (3010-
005-POL) as attached hereto is hereby adopted and deemed
effective July 1, 2023.
Resolution No. 2023 -XX Adopting the Financial Reserves Policy for Fiscal Year 2023-24 1
Page 81 of 191
Section 2. That Resolution No. 2022-15 is hereby rescinded effective July 1, 2023.
PASSED AND ADOPTED this 15th day of June 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 Adopting the Financial Reserves Policy for Fiscal Year 2023-24 2
Page 82 of 191
YORBA LINDA WATER DISTRICT
FINANCIAL RESERVES
Dept/Div: Finance
Effective Date: July 1, 2023
Supersedes: Resolution No. 2022-15
1.0 General Policy
Approved By:
Applicability:
3010-005-POL
Resolution No. 2023 -XX
District Wide
See Also: N/A
Maintaining adequate reserves is an essential part of sound financial management. The Yorba
Linda Water District Board of Directors realizes the importance of reserves in providing reliable
service to its customers, well-maintained infrastructure for current and future customers,
financing capital projects as well as capital repair and replacement, and the ability to
respond to changing circumstances. Interest derived from reserve balances shall be credited
to the reserve account from which it was earned.
2.0 Categories
Yorba Linda Water District (YLWD or District) shall accumulate, maintain and segregate its
reserve funds into the following categories:
■ Board Designated Unrestricted Reserves; and
■ Board Designated Restricted Reserves.
3.0 Scope
This policy will assist the Board of Directors in establishing:
■ Minimum and Maximum Funding Levels, with target goals as a percentage of maximum
funding level for each reserve fund, unless otherwise noted;
■ Requirements for the use of reserve funds; and
■ Periodic review requirements for each reserve.
4.0 Periodic Review
Staff and the YLWD Board shall review the reserve balances and targets annually as a part of
the annual budget process. The Finance Staff will continue to review all reserve and
investment balances monthly, with a quarterly report going to the full Board. Any changes
must be approved by resolution of the District Board of Directors. Changes can include, but
are not limited to, establishment of additional reserve funds, changes in reserve target levels,
and changes in types of reserve categories.
5.0 Designated Unrestricted and Restricted Reserves
5.1 Board Designated Unrestricted Reserves
These are reserve funds earmarked for the purpose of funding such items as new capital
facilities, repair or replacement of existing facilities, and general operating reserves
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YORBA LINDA WATER DISTRICT
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designated for a specific purpose and use by the Board of Directors. All reserves in this
category will be funded at least to the recommended minimum level. As a means for the
District to retain its AA+ ratings, the targeted total reserve balance is 365 days in cash at
the end of the fiscal year.
5.1.1 Operating Reserve.
5.1.1.1 Definition and Purpose - Established to cover temporary cash flow
deficiencies that occur as a result of timing differences between the
receipt of operating revenue and expenditure requirements and
unexpected expenditures occurring as a result of doing business.
5.1.1.2 Funding Level - The District's current funding levels will be a minimum of
25% and a maximum of 50% of the annual operating budget, including
interest expense, for both the water and sewer funds. In the event this
fund falls below its minimum funding level, the Board will act to restore the
balance above the minimum funding level within twelve (12) months from
the date that the fund fell below the minimum level.
Levels
Water
Sewer
Minimum
25%
25%
Maximum
50%
50%
Levels
Water
Sewer
Minimum
$10,020,705
$928,497
Maximum
$20,041,411
$1,856,995
5.1.1.3 Events or Conditions Prompting the Use of the Operating Reserve - This
reserve may be utilized as needed to pay outstanding operating
expenditures prior to the receipt of anticipated operating revenues.
5.1.2 Emergency Reserve
5.1.2.1 Definition and Purpose - Established to provide protection recovery to the
District and its customers for losses arising from an unplanned event or
circumstance (i.e. fires, earthquakes or financial emergencies). The
reserve level combined with YLWD's existing insurance policies should
adequately protect YLWD and its customers in the event of a loss.
5.1.2.2 Funding Level - Established at a minimum level equal to 5% and a
maximum level equal to 10% of the net capital assets for both the District's
water and sewer funds. In the event this fund falls below its minimum
funding level, the Board will act to restore the balance above the
minimum funding level within twelve (12) months from the date that the
fund fell below the minimum level.
Levels
Water
Sewer
Minimum
5%
5%
Maximum
10%
10%
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YORBA LINDA WATER DISTRICT
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Levels
Water
Sewer
Minimum
$5,378,680
$1,883,232
Maximum
$10,757,359
$3,766,463
5.1.2.3 Events or Conditions Promotina the Use of the Emeraencv Reserve - This
reserve shall be utilized to cover unexpected losses experienced by the
District as a result of a disaster or other unexpected loss. Any
reimbursement received by the District from insurance companies as a
result of a submitted claim shall be deposited back into the reserve as
replenishment for the loss.
5.1.3 Capital Replacement Reserve
5.1.3.1 Definition and Purpose - Established to provide funding for general use on
capital projects as well as capital repair and replacement funding as the
District's infrastructure deteriorates over its expected useful life. In
addition, funding is to provide for non-scheduled capital asset repair and
replacement and other capital related expenses.
5.1.3.2 Funding Level - The minimum target level for each reserve fund is the
current Fiscal Year capital budget and the maximum is the current year
plus 100% of the subsequent Fiscal Year capital budget. The target levels
in these reserve funds will fluctuate depending on the capital
improvement plan and timing of the projects. Therefore, no target level
will be established. In the event these fund falls below the minimum
funding level, the Board will act to restore the balance above the
minimum funding level within twelve (12) months from the date that the
fund fell below the minimum level.
Levels
Water
Sewer
Minimum
$12,944,595
$1,461,405
5.1.3.3 Events or Conditions Promotina the Use of the Caoital Reolacement
Reserve - Through the annual budget process, staff shall recommend
anticipated asset replacement and capital improvement projects. The
Board of Directors shall take action to approve recommended project
appropriations from the capital replacement reserve. Should unplanned
replacement be necessary during any fiscal year, the Board of Directors
may take action to amend the budget and appropriate needed funds
as required.
5.1.4 Rate Stabilization Reserve
5.1.4.1 Definition and Purpose - Established to assist in smoothing out water rate
increases. This reserve is governed by the District's bond covenants and
funds deposited into this reserve are treated as operating revenues in the
fiscal year designated by the District and will be treated as such in fiscal
years of such designation for the purposes of computing the District's debt
service coverage ratio.
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5.1.4.2 Funding Level - Established at a minimum level of 5% and maximum level
of 20% of budgeted water sales for the current fiscal year. The Board of
Directors have the option of funding the Rate Stabilization Reserve at a
lower level.
Levels
Water
Minimum
5%
Maximum
20%
Levels
Water
Minimum
$2,369,801
Maximum
$9,479,204
5.1.4.3 Events or Conditions Promotina the Use of the Rate Stabilization Reserve -
The reserve can be used during any year where other revenues are not
sufficient to meet the required debt service coverage ratio or when the
maximum level in the reserve is reached.
5.1.5 Metropolitan Water District ("MWD") Contingency Reserve
5.1.5.1 Definition and Purpose - Imported water purchased from MWD is
approximately double the cost of groundwater at current rates, and
MWD rates may fluctuate more in the future. While imported water is
always a part of the YLWD portfolio, YLWD budgets using groundwater for
approximately 75% or more of its supply and budgets using imported
water from MWD for approximately 25% or less of its supply. However, in
extreme circumstances, YLWD may be, and has been, forced to rely 100%
on MWD imported water at significant and unbudgeted additional
expense. The MWD Contingency Reserve is established as a means to
offset the additional cost of providing water to its customers in the event
the District is forced to rely on increased purchases of MWD imported
water due to an interruption in the groundwater supply. While identified
for this purpose, this reserve fund shall be unrestricted.
5.1.5.2 Funding Level - The MWD Contingency Reserve shall be funded in an
amount equal to the cost of purchasing MWD imported water to meet
100% of the demand required to serve YLWD customers for one full year.
This reserve fund shall be initially funded and accumulated over a period
of ten (10) years from adoption and shall be supplemented each year
thereafter to adjust for annual increases in MWD rates. The projected
amount (2024 dollars) of funding to establish this reserve fund over 10
years is approximately $20,000,000. It is anticipated that the annual
transfers to this reserve fund will adjust each fiscal year to account for
inflation and any increases in the MWD rates during this funding period.
Levels Water
Target $2,000,000
5.1.5.3 Events or Conditions Prompting the Use of the MWD Contingency Reserve
-While unrestricted, the reserve may be used during any fiscal year where
the District is forced to purchase imported water due to an interruption in
Page 4 of 5
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the ground water supply or related circumstance necessitating increased
purchases of MWD imported water.
5.2 Board Designated Restricted Reserves
These are funds held to either satisfy limitations set by external requirements established
by creditors, grant agencies or law, or to only be used for a specific purpose. Examples
include stipulated bond covenants and reserves held with a fiscal agent.
5.2.1 Conservation Reserve
5.2.1.1 Definition and Purpose - Established to provide funding for District -wide
conservation efforts.
5.2.1.2 Funding Level - Funding shall be established as the net result of
administrative penalties assessed less allowed expenditures of each fiscal
year.
Levels
Water
Minimum
$0
Maximum
$108,936
5.2.1.3 Events or Conditions Promptina the Use of the Conservation Reserve - This
reserve may be used to fund district -wide conservation efforts in relation
to, but not limited to, salary and related, maintenance, and material
expenses for leak detection, conservation efforts, and other allowable
expenses outside the normal cost of service for each fiscal year.
5.2.2 Employee Liability Reserve
5.2.2.1 Definition and Purpose - The purpose is to cover employees' accrued
vacation and other compensatory time and to ensure the complete
funding associated with the liability incurred for employees whom have
met the requirements necessary for district paid health benefits at
retirement.
5.2.2.2 Funding_ Level - Funding for FY24 shall be established at a minimum target
level of $316,919.
Levels
Water
Sewer
Target
$269,664
$47,255
5.2.2.3 Events or Conditions Prompting the Use of the Employee Liabilities Reserve
- This reserve may be used in the event that operating funds are not
adequate to meet vacation, compensatory and sick time paid out or
retiree medical cost obligations within the current year.
Page 5 of 5
Page 87 of 191
ITEM NO. 7.6.
Yorba Linda
Water District
AGENDA REPORT
MEETING DATE: June 15, 2023
TO: Board of Directors
FROM: Mark Toy, General Manager
STAFF CONTACTS: Delia Lugo, Finance Manager
SUBJECT: Amendments to Public Funds Investment Policy
RECOMMENDATION:
That the Board of Directors adopt Resolution No. 2023 -XX amending the Public Funds Investment
Policy and rescinding Resolution No. 18-12.
SUMMARY:
The California Government Code (CGC) requires that "the treasurer or chief fiscal officer of a local
entity render to the legislative body of the local agency and any oversight committee of that local
agency, a statement of investment policy, which should be considered at a public meeting."
The Investment Policy for the Yorba Linda Water District ("the District") establishes procedures that
are formulated in compliance with governing provisions of law (Government Code Sections 53600 et
seq.) for a prudent and systemic investment program in support of the District's overall mission. The
District's Treasurer shall annually prepare or cause to be prepared a statement of investment policy
and such policy, and any changes thereto, shall be reviewed and approved by the Board at a public
meeting (CGC 53646(a)).
As such, the attached policy is being presented for the Boards review and approval. Staff from the
District and PFM Asset Management (PFM) coordinated efforts to review and update the District's
Investment Policy ("Policy"). PFM has made recommendations to update/clarify various Policy terms
and to enable the District to leverage the resources and expertise of an investment advisor.
Attached, in support of the recommended updates/clarifications, is PFM's write-up of their review of
the Policy.
Staff recommends that the Board approve the amended Policy by adopting Resolution No. 2023 -XX.
ATTACHMENTS:
1. PFM Review of YLWD Public Funds Investment Policy
2. 3010-004-POL - Public Funds Investment Policy - REDLINE
3. Resolution No. 2023 -XX - Public Funds Investment Policy
4. 3010-004-POL - Public Funds Investment Policy - FINAL
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Memorandum
To: Delia Lugo, Finance Manager
Yorba Linda Water District
From: Sarah Meacham, Managing Director
Richard Babbe, Senior Managing Consultant
Julius Rees, Analyst
PFM Asset Management LLC
Re: 2023 Investment Policy Review
May 31, 2023
We completed our review of Yorba Linda Water District's (the "District") Investment Policy (the
"Policy") dated July 1, 2018. As written, the District's Policy is consistent with the applicable
California Government Code ("Code") sections regulating the investment of public funds. We,
however, made several recommendations for the District's consideration to update/clarify various
Policy terms and to enable the District to leverage the resources and expertise of an investment
advisor.
Our recommendations are summarized by Policy section below. In addition, we have attached a
marked -up copy of the Policy to illustrate how the District could implement the recommendations.
We have also attached two whitepaper documents providing overviews on the supranational and
asset-backed security sectors.
2.0 Scope.
We are recommending a change to the Policy to address Statement No. 98 of the
Governmental Accounting Standards Board, dated October 2021. This Statement
establishes the term annual comprehensive financial report and its acronym ACFR. That
new term and acronym replace instances of comprehensive annual financial report and its
acronym CAFR. The requirements of this Statement are effective for fiscal years ending
after December 15, 2021. Included with this memo is the GASB Statement No. 98, which
provides additional information on the change.
7.1.0 Authorized Broker/Dealers.
As minor clarifications, we noted that it is only the District that would make deposits with a
public depository. In addition, the correct name for the regulatory body for broker/dealers is
the Financial Industry Regulatory Authority also know by the acronym FINRA.
8.3 Authorized Investments — Table 1.
To provide the District with additional investment flexibility and utilize the additional
expertise of its investment advisor, we recommend the District add municipal obligations,
supranationals, and asset-backed securities to the Policy's list of authorized investments.
We believe that the Code is sufficiently conservative, so we listed the holding limits as
provided by the Code. For credit sensitive investment types, we recommend implementing
an additional per issuer limit of 5%. Given their government backing and high credit quality
we recommend a 10% per issuer limitation for Supernationals.
Page 89 of 191
Consistent with Code, we recommend the District revise the Policy to permit all types of
Placement Service Deposits rather than just placement service Certificates of Deposits. In
addition, the Code was also changed several years ago to delink the percentage holding
limits for Placement Service Deposits and Negotiable CDs.
For clarity, we recommend the Policy show the current investment limit for the Local Agency
Investment Fund of $75 million, as specified by the State Treasurer.
13.1 Diversification.
For clarity, we recommend the Policy reference the percentage limitations outlined in
Section 8.3, noting that the 5% per issuer limitation applies across investment types.
We also noted that it is only the District that would make deposits with a public depository.
In addition, the correct name for the regulatory body for broker/dealers is the Financial
Industry Regulatory Authority also know by the acronym FINRA.
Appendix A
We recommend the District update this section to match the changes we recommended in
Section 8.3 of the Policy. In addition, the SEC -defined term for the rating agencies is
Nationally Recognized Statistical Rating Organization or NRSRO.
Appendix B
We recommend the District update this section to match the changes we recommended in
Section 2.0 and Section 8.3 of the Policy.
Although no Policy changes are required, we also wanted to bring to your attention two recent
Code changes that were part of Senate Bill 1489, which took effect January 1, 2023. SB 1489
lengthened the reporting deadline for submitting quarterly reports in Code section 53646 (b)(1) to
45 days from 30 days. The change provides local agencies with more time to prepare the report,
recognizing the time needed to collect data and finish the report. As the Policy does not
reference a specific reporting deadline, no Policy changes are necessary.
SB 1489 also clarified that an investment's remaining maturity is to be measured from the
settlement date of the purchase to its final maturity (the Bill further specifies that the forward
settlement date of an investment cannot exceed 45 days from the trade date). The Code had not
previously indicated whether a security's remaining maturity at purchase was to be calculated
from the trade or settlement date. By specifying that an investment's remaining maturity is
calculated from the settlement date, the change offers local agencies more opportunities to
consider new issue five-year securities. The remaining maturity on a five-year new issue security
may exceed five years if calculated to the trade date but not if calculated to the settlement date.
As neither trade nor settlement date are referenced in the Policy, no Policy changes are
necessary.
Please let us know if you have any questions or if you would like to set up a time to discuss.
Thank you.
2
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Supranationals:
A World of Opportunity
Perspectives I December 2022
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Fixed-income investors continue to face challenging market conditions. It remains increasingly difficult to find
attractive investment opportunities in bonds issued by U.S. federal agencies and government-sponsored
enterprises (GSEs). A key contributing factor is lack of supply of federal agency/GSE debt, which has historically
been a mainstay of most conservative portfolios. Investors may want to look beyond traditional U.S. government
securities to examine the additional opportunity that supranational bonds (or supranationals) can offer. Investing in
supranationals can provide a way to diversify a portfolio, maintain a high degree of liquidity, increase credit quality
and modestly enhance portfolio returns. In this edition of PFMAM Perspectives, we will provide an overview of
the supranational, sovereign, and non -U.S. federal agency (SSA) markets and focus on the characteristics of
supranationals that may make them desirable for inclusion in high-quality fixed-income portfolios.
An Overview of the SSA Market
The SSA market is made up of:
► Supranational bonds, which are issued by multi -national organizations that transcend national boundaries.
Examples include the International Bank for Reconstruction and Development (also known as the World
Bank), African Development Bank and Asian Development Bank.
► Sovereign bonds, which are issued by a country's national government. Examples include debt from
Canada, the Netherlands and Sweden.
► Non -U.S. federal agency bonds, which are issued by a
federal agency of a non -U.S. sovereign government and may
be guaranteed by that government. Examples include KfW, the
German government-owned development bank and CADES, the
French government-owned social security finance federal agency.
While issuers in the SSA market issue bonds payable in many
currencies, we will only discuss investment characteristics and
opportunities for debt payable in U.S. dollars.
The SSA market is an important component of the overall U.S. dollar-
denominated bond market. Exhibit 1 on the following page shows that
securities in the SSA market now represent 5.9% of the broad ICE
BofA U.S. Corporate, Government & Mortgage Index, markedly larger
than the 0.19% represented by the traditional U.S. federal agency
bond market.' As shown in the middle bar chart, of that amount,
supranational bonds represent approximately 20%. Supranational
bonds are further broken down by individual issuer in the rightmost bar.
For our purposes, we will focus specifically on supranationals and their
role in fixed-income portfolios.
1 The ICE BofA U.S. Corporate, Government & Mortgage Index includes SSA and federal agency issues with a maturity of one year
or longer, a minimum issue size of $250 million, and an average credit rating of at least Baa3 (as of 9/28/2022).
1 PFM Asset Management LLC I For Institutional Investor or Investment Professional Use Only —
This material is not for inspection by, distribution to, or quotation to the general public.
Page 91 of 191
U.S. Agency, 0.19%
SSA, 5.9%
Agency
MBS&
Covered
Bonds
23.7%
Corporate
24.5%
Treasury
45.7%
U.S. Corp, Govt
& Mtge Index
Exhibit 1: Composition of the BofA Merrill Lynch U.S. Corporate,
Government & Mortgage Index
Foreign Muni
5.3%
Foreign Gov Guar.
8.7%
U.S. Taxable Muni
9.6%
Supranational
20.0%
SSA Sector
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ESM, 1.8%
IFC 2.1%
AfDd, 2.2%
EBRD, 2.4%
AIIB, 4.0%
Other
8.1%
IAD B
15.8%
ASIA
17.8%
Supranationals
Source: Bloomberg; as of 9/28/2022. IBRD: International Bank for Reconstruction and Development; ASIA: Asian Development Bank; IADB:
Inter -American Development Bank; AIIB: Asian Infrastructure Investment Bank; EBRD: European Bank for Reconstruction & Development;
AFDB: African Development Bank; IFC: International Finance Corporation; ESM: European Stability Mechanism.
What are Supranationals?
Supranational organizations are international financial institutions that are generally established by agreements
among nations, with member nations contributing capital and participating in management. These agreements
provide for limited immunity from the laws of member countries. Bonds issued by these institutions are part of the
broader class of SSA sector bonds. Supranational bonds finance economic and infrastructure development and
support environmental protection, poverty reduction, and renewable energy around the globe. For example, the
World Bank (IBRD), International Finance Corporation (IFC), and African Development Bank (AfDB) have "green
bond" programs specifically designed for energy resource conservation and management. Most supranationals
have strong operating histories and benefit from their broad, diverse membership.
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Since supranationals finance development loans with typical terms of five to 15 years, they tend to issue bonds
with intermediate maturities, closely matching the needs of many short- and intermediate-term investors. This
is also the maturity range preferred by global central banks and commercial banks which typically hold these
issuances on their balance sheets. Exhibit 2 below displays the maturity distribution of outstanding supranational
debt; as shown in the chart, roughly 77% of outstanding debt has a maturity of five years or less.
30%
25%
20%
15%
10%
5%
0%
Exhibit 2: Maturity Distribution of Outstanding Supranational Debt
0-2 2-3 3-4 4-5
Source: BofA Merrill Lynch Index.
Supranational debt is issued in a variety
of currencies, including U.S. dollars and
many other key currencies such as euros,
British pounds, and Japanese yen. U.S.
dollar-denominated securities are traded
in U.S. markets by primary dealers and
settle through the normal Federal Reserve
settlement systems.
Buyers of these securities include non -U.S.
institutional investors, commercial banks,
foreign central banks, sovereign wealth
funds, and large U.S. institutional investors.
A more detailed breakdown of buyers by
investor type is shown in Exhibit 3.
5-6 6-7 7-8 8-9 9-10 10-20 20-30
Maturity (Years)
Exhibit 3: Supranational Investor Base
by Investor Type, 2013 Year to Date
■ Other
4%
Insurance/Pension Fund
6%
Central
Bank
21%
Asset
Manager
34%
Source: Barclays Research; as of February 2022.
Banks
35%
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Involvement of the United States Government in the Supranational Market
Certain supranationals are considered to be "instrumentalities" of the United States, and as such, their securities
are exempt from registration under securities laws because U.S. participation is authorized by an Act of Congress
and U.S. officials control or participate in managing the organization. For example, the U.S. Secretary of Treasury
sits on the Board of Governors at the World Bank and has veto power over each loan considered for approval.
Because of the oversight by officials in the U.S. government, the objectives of these organizations are generally
aligned with U.S. interests.
Exhibit 4: Largest AAA -Rated Supranationals
Three supranationals are based in the U.S. and headquartered in Washington, D.C.:
► International Bank for Reconstruction and Development (IBRD or World Bank), which helps reduce
poverty by promoting sustainable economic development through loans and related assistance for projects
and programs in developing member countries;
► International Finance Corporation (IFC), which provides loans and makes equity investments in private
entities in order to support economic growth and development; and
► Inter -American Development Bank (IADB), which provides long-term financing to governments and other
public- sector entities, as well as some private -sector borrowers, in Latin America and the Caribbean.
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Credit Quality of Supranationals
Supranationals typically have excellent credit quality driven by:
► Multi -national ownership and commitment;
► A long and successful operating history;
► Significant capital from a diverse capital base, resulting in strong capital ratios;
► Conservative lending and risk management practices; and
► Strong supervision and management representative of multiple sovereign governments.
The majority of the largest supranationals are rated AAA/Aaa by Standard & Poor's and Moody's Investors
Service, respectively. As shown in Exhibit 5 below, 95% of U.S. dollar-denominated debt in the ICE BofA U.S.
Corporate, Government & Mortgage Index carries an average rating of AAA. These supranationals maintained
their AAA ratings even after Standard & Poor's downgraded the U.S. government from AAA to AA+ in 2011.
Using Supranationals in a Portfolio
There are many reasons for investors to consider
investments in supranational debt, but one of
the biggest reasons is the continued decrease in
the supply of federal agency bonds and notes.
GSE supply continues to dwindle on account of
the market and governance factors related to
the conservatorship of the two largest issuers,
Fannie Mae and Freddie Mac. Congress has yet
to determine a clear path for restructuring the
U.S. mortgage finance marketplace, but all signs
point to eventually arriving at a much smaller
role for Fannie Mae and Freddie Mac. In fact,
the Federal Housing Finance Agency (FHFA)
— the conservator for the GSEs — has stated
that one of its main priorities continues to be the
contraction of the GSEs' balance sheets.
While U.S. federal agency supply is widely
expected to remain constrained, the market for
Exhibit 5: Credit Quality of U.S. Dollar -Denominated
Supranationals in the ICE BofA U.S. Corporate,
Government & Mortgage Index
A 13613
AA 0.5% 1.0%
Source: Barclays Research; as of February 2022.
supranationals and other SSA debt is forecasted to grow. The ICE BofA U.S. Corporate, Government & Mortgage
Index now contains $383 billion in outstanding U.S. dollar-denominated debt of supranational institutions. Some
issuers, like the World Bank, have short-term discount note programs as well.
For investors whose portfolios contain a significant allocation to U.S. agencies or GSEs, adding supranationals
could be a way to incorporate a new investment opportunity that offers comparable credit quality and liquidity.
Moreover, investing in supranationals have the potential to provide a yield advantage over traditional GSEs,
although this is generally modest when investing in the highest-rated issuers. Domestic investors may limit
purchases to debt issued in U.S. dollars. For conservative investors, supranational debt offers an expanded
opportunity set for stable investments that have weathered multiple economic and political crises.
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Investors may also hold supranationals because they can
add diversification benefits to a fixed-income portfolio.
Unlike U.S. agencies/GSEs, whose lending activity is
concentrated within the U.S. housing sector, supranationals
provide loans to a diverse group of borrowers and
receive capital from a variety of sources across the globe.
Likewise, the ownership of these organizations are spread
among many different nations, which can provide stability
throughout global market cycles. Supranationals achieve
funding diversification through a large base of different
global investors and through issuance in a variety of global
markets. Finally, since most portfolio holdings of U.S.
federal agency debt are concentrated in just a few of the
largest GSE issuers, further benefits are gained through
diversification by issuer.
Furthermore, supranational organizations serve a higher
purpose, helping to promote economic development for
nations across the globe and supporting environmental
protection and renewable energy. As mentioned earlier
in the paper, the World Bank, IFC, and AfDB have "green
bond" programs focusing on energy resource conservation
and management. These objectives are similar to those of
public and not-for-profit entities who may consider investing
in supranational debt.
Investment Policy Considerations
Investing in supranationals should start with a review of
the investment policy and any governing statutes. Some
pfml asset
management
POTENTIAL BENEFITS OF INVESTING
IN SUPRANATIONALS
► Introduces an additional asset class, and thus
a broader opportunity set
► An alternative to the shrinking quantity of
U.S. agencies
No. Can enhance portfolio diversification by sector
and issuer
► Adds an element of global exposure, but not
currency risk for U.S. dollar-denominated
issues
No. Desirable characteristics that may include:
• High ratings, with many of the largest issuers
rated AAA
• Active secondary markets with generally
good liquidity
• Availability in a wide range of maturities
• Often a modest yield advantage over
traditional U.S. agencies
• Supporting a higher purpose—providing
economic and humanitarian support around
the globe
• Environmentally -oriented "green bond"
programs from certain issuers
policies may permit specific supranationals, while others
may permit investments in instrumentalities of the United
States government. Certain supranationals are characterized as U.S. instrumentalities. Investing in SSAs,
including sovereign bonds and non -U.S. agencies, generally requires broader authority such as the authority to
invest in obligations of foreign governments and their agencies payable in U.S. dollars.
Thus, in some cases, state statutes may need to be changed in order to permit investing in supranationals or
other securities in the SSA sector. The recommended allocation for any specific portfolio would depend on a
number of factors, including the portfolio's investment objectives, risk constraints, range of permitted investments,
and return targets.
Investment Risks
Similar to any investment opportunity, investors should be aware of potential risks associated with supranationals.
Although the supply of USD supranationals has remained essentially consistent year over year, the market for
these securities is not as large or well-developed as the U.S. Treasury or federal agency market, so liquidity,
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pfml asset
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while strong, is somewhat less than that of Treasuries or agencies. Each organization also has credit risk to its
lending counterparties and the projects being funded. However, in most cases, supranationals have the ability
to access their member nations for additional capital contributions, which provides a backstop during distressed
market environments.
Lastly, like all rated debt securities, supranationals could be downgraded if their underlying finances weaken, or if
the credit standing of member countries becomes impaired in some way.
Key Takeaways
We believe that supranational bonds should be considered for high-quality investment portfolios that have
historically relied on a substantial allocation to federal agency debt. Supranationals may play a beneficial role in
portfolios by broadening the opportunity set and enhancing diversification by sector and issuer, while maintaining
a high degree of liquidity and credit quality.
Investors should carefully review their investment policies for applicability and take the time to understand
the potential benefits and risks of investing in supranationals. PFMAM can offer assistance to any institutional
investor seeking to expand its investment universe into supranationals—a growing investment sector in a world of
shrinking opportunities.
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 FDIC INSURED: NO BANK GUARANTEE: MAY LOSE VALUE
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Page 97 of 191
Why Consider Asset -Backed
Securities Now?
Defining Asset -Backed Securities (ABS)
pfm) asset
management
ABS are notes backed by underlying pools of financial assets such as automobile loans and leases, credit
card receivables, equipment leases, student loans and others used by a diverse investor base. Some investors
prefer securities with a longer duration or a higher yield that might be more esoteric in nature with lower liquidity.
Meanwhile, others may prefer securities with shorter cash flows, higher credit quality and a higher degree of
liquidity. In this discussion, we will focus our comments on the latter, which includes prime auto, credit card and
equipment receivables.
While some ABS might have a "bulleted" structure, where the principal is paid at maturity, most ABS deals
comprise multiple classes of securities, or "tranches," each with a different coupon, expected cash flows, and
risk characteristics and they pay principal and interest on a monthly basis. Asset-backed securities can serve as
a component of fixed-income portfolios, offering investment diversification and the opportunity for higher yields
relative to comparable -duration U.S. Treasuries and other government securities.
An ABS structure includes three key parties: the sponsor, the trust and the investor. In most cases, the sponsor —
a bank, credit card issuer or retail finance company — transfers the loans or receivables to a separate trust, which
is established to legally own and securitize the assets. The trust then issues the ABS notes and is responsible for
paying principal and interest in a timely manner.
HOW DO ASSET BACK SECURITIES WORK?
A-4• AAA Aaa i $133,300 j 3.71%: SEQ 3.6 yrs
nAA AA $19,530 :4.42%: SUB 4.1 yrs
A sponsor issues debt securities using
principal and interest payments from loans,
credit receivables, leases, etc. The underlying
loan payments or credit receivables are used
to make debt service payments on the
securities.
Securities are grouped based on expected
payment window and credit quality. These
groups are called tranches. Quality is based
on how likely it is that investors will get their
money back.
Principal f
securities in Interest rate
the tranche paid on the
principal
Payment Window
f8/2022
Weighted Average Lif,
Investor priority for
repayment in case of default.
SEQ is sequential, SUB is
subordinated.
8/2023 8/2024 8/2025 8/2026 8/2027
Principal & Interest
Interest
All data provided for illustrative purposes only.
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Page 98 of 191
Ratings Typical Tranche Structure
Underlying Loans
Securities
Fitch Moody's Balance Coupon Type WAL
F1+ P-1 $231,810 2.37%: SEQ 0.2 yrs
OIIII O
A-2�
\J
AAA Aaa ! $256,690 3.50% SEQ 1.1 yrs
Sponsor -created]
A'3�
AAA Aaa $356,200 3.64%:: SEQ 2.4 yrs
Trust
A-4• AAA Aaa i $133,300 j 3.71%: SEQ 3.6 yrs
nAA AA $19,530 :4.42%: SUB 4.1 yrs
A sponsor issues debt securities using
principal and interest payments from loans,
credit receivables, leases, etc. The underlying
loan payments or credit receivables are used
to make debt service payments on the
securities.
Securities are grouped based on expected
payment window and credit quality. These
groups are called tranches. Quality is based
on how likely it is that investors will get their
money back.
Principal f
securities in Interest rate
the tranche paid on the
principal
Payment Window
f8/2022
Weighted Average Lif,
Investor priority for
repayment in case of default.
SEQ is sequential, SUB is
subordinated.
8/2023 8/2024 8/2025 8/2026 8/2027
Principal & Interest
Interest
All data provided for illustrative purposes only.
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Page 98 of 191
pfm) asset
management
Key Characteristics of ABS
1. Credit Enhancements. Unlike most corporate securities, ABS are typically credit -enhanced, which means
they contain features that raise their credit quality above that of the underlying assets. These characteristics
increase the likelihood that investors will receive the promised cash flows. The following are examples of credit
enhancements:
► Excess Spread — the difference between the interest rate on the underlying collateral and the bond coupon
and deal costs.
► Cash Reserve Account — additional funds set aside by the issuer to provide extra internal liquidity for ABS
investors.
No, Overcollateralization — the amount of collateral in excess of ABS issued.
► Senior/Subordinate Structure — subordinated tranches absorb losses due to defaulted loans up to their value
before senior tranches are affected. As a result, subordinate tranches typically offer investors a higher yield
due to their increased credit risk. This feature provides investors with the option to invest in a tranche that
best suits their preferences and risk tolerance.
2. Added Value Over Time. ABS is an asset class that can potentially offer a high degree of safety with returns
in excess of those of duration -matched Treasury bonds and higher risk-adjusted returns compared to other
sectors. The chart below shows excess returns (or the additional return over a comparable duration treasury) for
an index of AAA rated autos:
1.60%
1.40%
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
N ND
AAA Auto ABS Excess Return %
N' �� NO N �� �� q� q,N
Source: Bloomberg, ICE BofA AAA U.S. Fixed Rate Automobile Asset Backed Securities Index.
3. Large and Liquid Market. ABS issuance was $582 billion in 2021 of which $192 billion came from autos, credit
cards and equipment, which was the highest level in the post -financial crisis era.' Overall, the ABS market has
more than $1.5 trillion outstanding and has been slowly but steadily increasing over the past few years.
I "U.S. Asset Backed Securities Statistics," Securities Industry and Financial Markets Association (August 2, 2022). https://www.
sifma.org/resources/research/us-asset-backed-securities-statistics/.
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pfm) asset
management
Our Approach to ABS
PFM Asset Management (PFMAM) conducts a rigorous credit review and monitoring process specifically for ABS,
going beyond simply accepting assigned ratings and instead focusing on the structure, collateral quality, credit
enhancements and history of the parties to the deal. This process includes a review of the sponsor, the historical
performance of similar deals (especially the default and recovery rates), an analysis of the collateral, underwriting
criteria and geographic diversification of the pools.'
Additionally, the firm conducts or reviews stress tests that assess the effectiveness of credit enhancements in
protecting the tranches we would consider purchasing. After a purchase is made, we monitor the issue to ensure
its performance meets expectations, and we conduct monthly surveillance on all ABS owned in our clients'
portfolios. We focus on deals that offer the combination of features desired by our clients: high-quality credit
profile, safety characteristics, and relative value to other sectors.
Why Is PFMAM Recommending ABS Now?
For decades, investors have considered ABS to be a secure
Prime auto loans and
Ford, Toyota, Honda, Nissan
and profitable addition to fixed-income portfolios. With the
leases
reduction in the supply of some high-quality sectors like
Credit card receivables American Express, CapitalOne,
agency debt, which have long been a mainstay of public
Chase, Citibank
sector portfolios, high-quality alternative investments like
Equipment loans and
John Deere, CNH, Kubota
ABS are rising in popularity. At the same time, yield spreads
leases
in ABS may be attractive relative to federal agencies,
corporates or other sectors, depending on market environments.
Recently, some have expressed concern about an increased probability of a recession. Rising unemployment
could lead to increased delinquencies or defaults on certain types of receivables, such as auto loans or credit
cards. We do expect some normalization of losses from the extremely low levels we have seen recently. That
said, credit enhancements discussed earlier should provide enough protection to avoid impairment on senior
tranches of these securities.
Adding ABS provides another investment option for high-quality portfolios, allowing PFMAM another opportunity
to help enhance returns and diversify portfolios for our clients.
For more information about this report, please contact your PFMAM representative or James Sims at
simsa(@pfmam.com.
2 Credit research is a shared service, consisting of resources from U.S. Bancorp Asset Management, as well as PFM Asset
Management. Credit related activities include participation from Compliance, Legal, and Risk personnel.
James Sims, CFA
Senior Portfolio Manager
simsj@pfmam.com
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 FDIC INSURED: NO BANK GUARANTEE: MAY LOSE VALUE
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[w]
Policies and Procedures
Policy No.:
Adoption Method:
XX 18-12 Effective Date
Last Revised:
Prepared By:
Applicability:
Yorba Linda
Water District
3010-004
Resolution No. 2023 -
July 1, 282023
July 1, 2872018
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 20
Page 101 of 191
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 AnRual FiY aRGial R Annual Comprehensive
Financial ReportA( CFR).
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 20
Page 102 of 191
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
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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 breker dealer -District 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 Financial Industryede al Invest en 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.
3010-004 Public Funds Investment Policy
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Page 104 of 191
8.3 Within the context of these limitations, the following investments are
authorized:
TABLE 1
Permitted Investments*/
CA Government Code
% of Portfolio Limits /
YLWD
% of Portfolio
Deposits
Maturity Limits
Limits / Maturity
Limits
Bank Deposits#
No % limit, 5 years
No % limit, 5 years
SD -Placement Service#
30% limit, 5 years
30% limit, 5 years
Local Agency Investment
Ne %$75 million, nom
Ne$75 million, no
Fund (LAIF)^
maturity limit
maturity limit
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
Municipal Obligations
No % limit, 5 years
Ne -30% limit, 5 years
ABS/MBS
20% limit, 5 years
20% portfolio, 5% per
issuer, 5 years
Supranationals
30% limit, 5 years
30% portfolio, %°
per issuer, 5 years
Negotiable Certificates of
30% portfolio, 5 years
30% portfolio, 5%
Deposit#
per issuer,_5 years
Money Market Funds*
20%, 100% p r n0
20%, 51 nod per
limit
no limit
Medium -Term (or Corporate)
30% portfolio, 10% per
30% portfolio, 5%
Notes*
issuer �ri With
per issuer, 5 years
5 years
Bankers Acceptances*
40%, 30% per issuer, 180
10% max, 5% per
days
issuer, 180 days
3010-004 Public Funds Investment Policy
Page 5 of 20
Page 105 of 191
Commercial Paper*
25%, 10% per issuer_
25% max, 5% per
medium -ter
issuer, 270 days
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.
3010-004 Public Funds Investment Policy
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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.
The percentage limits for each investment type are listed in Section 8.3.
With the exception of U.S. Treasuries, U.S. Agency Securities,_,
Supranationals'FDIC Bank insured GeFtifiGates of Deposits and authorized
pools, no more than 305% of the District's total investment portfolio will be
invested +n -with a single issuer across investment typesSeGurity typo „r with
a single finannial insfit ifien
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
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of Directors. The policy will be reviewed on an annual basis and
modification, if any, must be approved by the Board of Directors.
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APPENDIXA
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 DEPOSITS — Government Code Sections 53601.8
and 53653.8
The District may invest in G^Ilateral izer! insured GeFtifiGates ofbank deposits in
accordance with the requirements in California Government Code Sections
53601.8 and 53635.8. Purchases Of GeFt fiGatesof deposit suaR
Government Code SeGtiens 53601.8, 53653.8, and 536 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. Ne limit will be plaGed eR the
perGentage total in this +o,,,,r,,.A maximum of $75 million of the portfolios funds
can be invested in LAIF, the limit imposed by the Treasurer's office. There is no
limit for bond proceeds.
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
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Code Section 53601(p)
Shares of beneficial interest issued by a joint powers authority organized
pursuant to Code Section 6509.7 that invests in the securities and obligations
authorized in subdivisions (a) to (r), inclusive. Each share shall represent an
equal proportional interest in the underlying pool of securities owned by the joint
powers authority.
The Investment Trust of California (CaITRUST) is a local government investment
pool organized as a joint powers authority pursuant to California Government_
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Code Section 6509.7.
is the current 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 Trustees, all of whom are
officials of Public Agencies. The Trustees are responsible
for setting overall policies and procedures for the Trust. The Program's
Investment Adviser and Administrator is Pl_lbliro i„-AR'cam"^- ge.rneptPFM
Asset Management, IRGLLC.
limitedFeeds a -aire ♦cP--bie meted for the purpose of arbitrage
The Di�-int hoc no flund n�iosted in CAMP At this T,�� mar-r���v--rarrc`�-Irrvc ter— �-rr r-rrc.
Investment of Districtfunds in OCCIP CAMP would be subjectto 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
and/or the
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 federally licensed
or state -licensed branch of a foreign bank.
Individual investments shall be limited to Federal Deposit Insurance Corporation -
insured limits of $250,000. Purchases
G�off/�n�epgottiiaGblle� certificates of deposit
p irs cont Gey m t Cede SeGti�s 5.2-6tt1 .8, �. dti�-d Q and 53601 shall not
,�a�te��er�et��Q , �-�,-�o� ,
in total, exceed 30 percent of District's investment portfolio. The maximum
maturity is limited to five years.
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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 natmenally Nationally Rr-ecognized Statistical Rt-ating Organizations
("NRSRO")�ervc� vicev 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, anal a maximum of 10 nor^ont of the portfolio may be invoctorl in
any c inglo is efor
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 in a rating category
of"A°' or its equivalent or better by an nationally reGegnized rating ser„iGeNRSRO.
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 an notionally ro^nnnized rating Son,i^oNRSRO. 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 an NRSRO natinnaliy reGGgnmzed ra+inn coni 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 as
a general corporation, shall have total assets in excess of $500,000,000, and
shall have debt, other than commercial paper, if any, that is rated in a rating
category of "A" or its equivalent or higher by an NRSRO national) ro^nnni�orJ
ratino coniino
(2) The corporation shall be organized within the United States as a special
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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 an NRSRO
Eligible commercial paper may not exceed 270 days' maturity and may
represent more than the 25 percent of the investment portfolio in the aggregate,
and 5% for an individual issuer.
14) ASSET-BACKED AND MORTGAGE-BACKED SECURITIES — Government Code
Section 53601 (o)
A mortgage passthrough security, collateralized mortgage obligation, mortgage-
backed or other pay -through bond, equipment lease -backed certificate, consumer
receivable passthrough certificate, or consumer receivable -backed bond. Securities
eligible for investment under this subdivision shall be rated in a rating category of "AX
or its equivalent or better by an NRSRO and have a maximum remaining maturity of
five years or less. Purchase of securities authorized by this subdivision shall not
exceed 20 percent of the investment portfolio in the aggregate and 5% for an individual
issuer.
15) MUNICIPALS —Government Code Section 53601(c -e)
(c) Registered state warrants or treasury notes or bonds of this state, including bonds
Payable solely out of the revenues from a revenue-producing property owned,
controlled, or operated by the state or by a department, board, agency, or authority of
the state. U Registered treasury notes or bonds of any of the other 49 states in
addition to California, including bonds payable solely out of the revenues from a
revenue-producing property owned, controlled, or operated by a state or by a
department, board, agency, or authority of any of the other 49 states, in addition to
California. (e) Bonds, notes, warrants, or other evidences of indebtedness of a local
agency within this state, including bonds payable solely out of the revenues from a
revenue-producing property owned, controlled, or operated by the local agency, or by
a department, board, agency, or authority of the local agency. The maximum maturity
on municipal obligations will be five years and no more than 30% of the District's
investments in aggregate will be invested in this sector.
4-3)16) SUPRANATIONALS —Government Code Section 53601(8)
United States dollar denominated senior unsecured unsubordinated obligations
issued or unconditionally guaranteed by the International Bank for Reconstruction
and Development, International Finance Corporation, or Inter -American Development
Bank, with a maximum remaining maturity of five years or less, and eligible for
purchase and sale within the United States. Investments under this subdivision shall
be rated in a rating category of "AK or its equivalent or better by an NRSRO and
shall not exceed 30% of the investment portfolio in aggregate and 10% for an
individual issuer.CommeMial
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APPENDIX B
GLOSSARY
AGENCIES: Federal agency securities and/or Government-sponsored enterprises.
ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR): 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.
ASKED: The price at which securities are offered.
A55L I-BAGKLU ANU MURTGAUL-BAUKLU SECURITIES: A mortgage passthrough
security, collateralized mortgage obligation, mortgage-backed or other pay -through bond,
equipment lease -backed certificate, consumer receivable passthrough certificate, or consumer
receivable -backed bond.
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 nffinial annual report
of
greup prepared in GeRfeFFnity with GAAP. it also inGludes supperting SGheduleS ReGessary
e
extensive intredI IGtGFy material, and a detailed StatlstiGal Sentien
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
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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).
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 HOME 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 MORTGAGE 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 MORTGAGE ASSOCIATION (GNMA or Ginnie Mae):
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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.
LOCAL GOVERNMENT INVESTMENT POOL (LGIP): The aggregate of all funds from
political subdivisions that are placed in the custody of a government entity 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.
MUNICIPAL OBLIGATIONS: Registered state warrants or treasury notes or bonds of the
50 states, including bonds payable solely out of the revenues from a revenue-producing
property owned, controlled, or operated by a state or by a department, board, agency, or
authority in any of the 50 states.
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.
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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.
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.
SUPRANATIONAL: United States dollar denominated senior unsecured unsubordinated
obligations issued or unconditionally guaranteed by the International Bank for
Reconstruction and Development, International Finance Corporation, or Inter -American
Development Bank.
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.
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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.
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RESOLUTION NO. 2023 -XX
RESOLUTION OF THE BOARD OF DIRECTORS
OF THE YORBA LINDA WATER DISTRICT
AMENDING THE PUBLIC FUNDS INVESTMENT POLICY
AND RESCINDING RESOLUTION NO. 18-12
WHEREAS, California Government Code (CGC) Section 53600-53686 sets forth
guidelines for the investment of public funds; and
WHEREAS, the current Yorba Linda Water District Public Funds Investment Policy
was adopted by Resolution No. 18-12 on June 5, 2018; and
WHEREAS, the District is in possession of public funds that are not required for
immediate expenditure, and are available for investment; and
WHEREAS, a policy setting forth guidelines for the investment of said funds is
necessary for compliance with the principles of sound financial
management; and
WHEREAS, the Board of Directors of the Yorba Linda Water District desire to adopt
the Investment Policy set forth herein.
NOW, THEREFORE, BE IT RESOLVED by Board of Directors of the Yorba Linda Water
District as follows:
Section 1. That the Yorba Linda Water District Public Funds Investment Policy
(3010-004-POL) as attached hereto is hereby adopted and deemed
effective June 15, 2023.
Section 2. That Resolution No. 18-12 is hereby rescinded effective June 15, 2023.
PASSED AND ADOPTED this 15th day of June 2023 by the following called vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
Brett R. Barbre, President
Yorba Linda Water District
Resolution No. 2023 -XX Amending the Public Funds Investment Policy and Rescinding Resolution No. 18-12
Page 121 of 191
ATTEST:
Annie Alexander, Board Secretary
Yorba Linda Water District
Reviewed as to form by General Counsel:
Andrew Gagen, Esq.
Kidman Gagen Law, LLP
Resolution No. 2023 -XX Amending the Public Funds Investment Policy and Rescinding Resolution No. 18-12
Page 122 of 191
YORBA LINDA WATER DISTRICT
Dept/Div: Finance
Effective Date: June 15, 2023
PUBLIC FUNDS INVESTMENT
Approved By
Applicability
Supersedes: V3 Effective July 1, 2018 See Also
TABLE OF CONTENTS
1.0 Policy
2.0 Scope
3.0 Delegation of Authority
4.0 Investment Objectives
5.0 Prudence
6.0 Ethics and Conflicts of Interest
7.0 Authorized Broker/Dealers
8.0 Authorized Investments
9.0 Review of Investment Portfolio
10.0 Investment Pools
11.0 Collateralization
12.0 Safekeeping and Custody
13.0 Diversification and Maximum Maturities
14.0 Internal Controls
15.0 Performance Standards
16.0 Reporting
17.0 Investment Policy Adoption
3010-004-POL
Resolution No. 2023 -XX
District Wide
N/A
Appendix A Description of Authorized Investments and Restrictions
Appendix B Glossary
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
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as Enterprise Funds and are identified in the District's Annual Comprehensive Financial
Report (ACFR).
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 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
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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 Conflict 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.
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 District 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 Financial Industry 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.
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8.0 Authorized Investments
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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 123 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.
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
Placement Service#
30% limit, 5 years
30% limit, 5 years
Local Agency Investment
$75 million, no maturity limit
$75 million, no
Fund (LAIF)�
maturity limit
County Pooled Investment
No % or maturity limit
No % or maturity limit
FundsA
Joint Powers Authority Funds
No % or maturity limit
No % or maturity limit
(CaITRUST & CAMP)A
U.S. Treasury Obligations
No % limit, 5 years
No % limit, 5 years
U.S. Agency Obligations
No % limit, 5 years
No % limit, 5 years
Municipal Obligations
No % limit, 5 years
30% limit, 5 years
ABS/MBS
20% limit, 5 years
20% portfolio, 5% per
issuer, 5 years
Supranationals
30% limit, 5 years
30% portfolio, 10% per
issuer, 5 years
Negotiable Certificates of
30% portfolio, 5 years
30% portfolio, 5% per
Deposit
issuer, 5 years
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Money Market Funds*
20%, no limit
20%, no limit
Medium -Term (or Corporate)
30% portfolio, 10% per issuer
30% portfolio, 5% per
Notes*
combined with commercial
issuer, 5 years
paper, 5 years
Bankers Acceptances*
40%, 30% per issuer, 180 days
10% max, 5% per
issuer, 180 days
25%, 10% per issuer,
25% max, 5% per
Commercial Paper*
combined with medium-term
issuer, 270 days
notes, 270 days
* See Appendix A for more detailed descriptions and additional restrictions.
A See Section 10.0 for additional restrictions.
# See Section 11.0 for additional restrictions.
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;
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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.
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 (1) local government
investment pools, and (2) 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. The percentage
limits for each investment type are listed in Section 8.3. With the exception of U.S.
Treasuries, U.S. Agency Securities, Supranationals, Bank Deposits and authorized pools, no
more than 5% of the District's total investment portfolio will be invested with a single issuer
across investment types.
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
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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.
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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.
A. 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.
B. Placement Service Deposits - Government Code Sections 53601.8 and 53653.8
The District may invest in insured bank deposits in accordance with the requirements in
California Government Code Sections 53601.8 and 53635.8. Purchases shall not, in total,
exceed 30 percent of District's investment portfolio. The maximum maturity is limited to five
years.
C. 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. A maximum of $75 million of the portfolios funds can be invested in LAIF, the
limit imposed by the Treasurer's office. There is no limit for bond proceeds.
D. 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.
E. The Investment Trust of California (CaITRUST) - Government Code Section 53601(p)
Shares of beneficial interest issued by a joint powers authority organized pursuant to Code
Section 6509.7 that invests in the securities and obligations authorized in subdivisions (a) to (r),
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inclusive. Each share shall represent an equal proportional interest in the underlying pool of
securities owned by the joint powers authority.
The Investment Trust of California (CaITRUST) is a local government investment pool organized
as a joint powers authority pursuant to California Government Code Section 6509.7. BlackRock
is the current portfolio manager for each of the CaITRUST funds. Investment of District funds in
CaITRUST 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.
F. California Asset Management Program (CAMP) - Government Code Section 53601 (p)
The Trust is currently governed by a Board of seven Trustees, all of whom are finance officials
of Public Agencies. The Trustees are responsible for setting overall policies and procedures for
the Trust. The Program's Investment Adviser and Administrator is PFM Asset Management, LLC.
Investment of District funds in CAMP 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 Cash Reserve Portfolio ("Pool") and/or the Term
Portfolio ("Term"). There is no maturity limit. No limit will be placed on the percentage total in
this category.
G. 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.
H. 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.
I. 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 federally licensed or state -licensed branch of a foreign bank.
Individual investments shall be limited to Federal Deposit Insurance Corporation -insured limits
of $250,000. Purchases of negotiable certificates of deposit shall not, in total, exceed 30
percent of District's investment portfolio. The maximum maturity is limited to five years.
J. 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.
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The company shall have met either of the following criteria:
1. Attained the highest ranking or the highest letter and numerical rating provided by not
less than two Nationally Recognized Statistical Rating Organizations (NRSRO); and
2. 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.
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.
K. 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 in a rating category of "A" or its equivalent or better by an NRSRO. 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.
L. 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 an NRSRO. 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.
M. 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 an NRSRO. 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 as a general
corporation, shall have total assets in excess of $500,000,000, and shall have debt, other
than commercial paper, if any, that is rated in a rating category of "A" or its equivalent
or higher by an NRSRO.
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 an NRSRO. Eligible
commercial paper may not exceed 270 days' maturity and may not represent more than
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the 25 percent of the investment portfolio in the aggregate, and 5% for an individual
issuer.
N. Asset -Backed and Mortgage -Backed Securities - Government Code Section 53601 (o)
A mortgage passthrough security, collateralized mortgage obligation, mortgage-backed or
other pay -through bond, equipment lease -backed certificate, consumer receivable
passthrough certificate, or consumer receivable -backed bond. Securities eligible for investment
under this subdivision shall be rated in a rating category of "AA" or its equivalent or better by an
NRSRO and have a maximum remaining maturity of five years or less. Purchase of securities
authorized by this subdivision shall not exceed 20 percent of the investment portfolio in the
aggregate and 5% for an individual issuer.
O. Municipals - Government Code Section 53601(c -e)
(c) Registered state warrants or treasury notes or bonds of this state, including bonds payable
solely out of the revenues from a revenue-producing property owned, controlled, or operated
by the state or by a department, board, agency, or authority of the state. (d) Registered treasury
notes or bonds of any of the other 49 states in addition to California, including bonds payable
solely out of the revenues from a revenue-producing property owned, controlled, or operated
by a state or by a department, board, agency, or authority of any of the other 49 states, in
addition to California. (e) Bonds, notes, warrants, or other evidences of indebtedness of a local
agency within this state, including bonds payable solely out of the revenues from a revenue-
producing property owned, controlled, or operated by the local agency, or by a department,
board, agency, or authority of the local agency. The maximum maturity on municipal
obligations will be five years and no more than 30% of the District's investments in aggregate will
be invested in this sector.
P. Supranationals - Government Code Section 53601(q)
United States dollar denominated senior unsecured unsubordinated obligations issued or
unconditionally guaranteed by the International Bank for Reconstruction and Development,
International Finance Corporation, or Inter -American Development Bank, with a maximum
remaining maturity of five years or less, and eligible for purchase and sale within the United
States. Investments under this subdivision shall be rated in a rating category of "AA" or its
equivalent or better by an NRSRO and shall not exceed 30% of the investment portfolio in
aggregate and 10% for an individual issuer.
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APPENDIX B
GLOSSARY
A. Agencies: Federal agency securities and/or Government-sponsored enterprises.
B. Annual Comprehensive 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.
C. Asked: The price at which securities are offered.
D. Asset -Backed and Mortage-Backed Securities: A mortgage passthrough security,
collateralized mortgage obligation, mortgage-backed or other pay -through bond,
equipment lease -backed certificate, consumer receivable passthrough certificate, or
consumer receivable -backed bond.
E. 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.
F. 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.
G. Bid: The price offered by a buyer of securities. (When you are selling securities, you ask for a
bid.) See Offer.
H. 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.
J. 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.
K. Coupon:
1. The annual rate of interest that a bond's issuer promises to pay the bondholder on the
bond's face value.
2. A certificate attached to a bond evidencing interest due on a payment date.
L. Dealer: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and
selling for his own account.
M. Debenture: A bond secured only by the general credit of the issuer.
N. 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
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exchange of money for the securities. Delivery versus receipt is delivery of securities with an
exchange of a signed receipt for the securities.
O. 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).
P. 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.
Q. 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.)
R. Diversification: Dividing investment funds among a variety of securities offering independent
returns.
S. 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.
T. 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.
U. Federal Deposit Insurance Corporation (FDIC): A federal agency that insures bank deposits,
currently up to $250,000 per entity.
V. 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.
W. Federal Home 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.
X. Federal National Mortgage 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.
Y. 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.
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Z. Government National Mortgage 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.
AA. 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.
BB. Local Government Investment Pool (LGIP): The aggregate of all funds from political subdivisions
that are placed in the custody of a government entity for investment and reinvestment.
CC. Market Value: The price at which a security is trading and could presumably be purchased or
sold.
DD. 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.
EE. Maturity: The date upon which the principal or stated value of an investment becomes due
and payable.
FF. Money Market: The market in which short-term debt instruments (bills, commercial paper,
bankers' acceptances, etc.) are issued and traded.
GG. Municipal Obligations: Registered state warrants or treasury notes or bonds of the 50 states,
including bonds payable solely out of the revenues from a revenue-producing property
owned, controlled, or operated by a state or by a department, board, agency, or authority
in any of the 50 states.
HH. Offer: The price asked by a seller of securities. (When you are buying securities, you ask for an
offer.) See Asked and Bid.
II. 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.
JJ. Portfolio: Collection of securities held by an investor.
KK. 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.
LL. 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—
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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.
MM. 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.
NN. 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.
00. 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.
PP. 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.
QQ. Secondary Market: A market made for the purchase and sale of outstanding issues following
the initial distribution.
RR. Securities & Exchange Commission: Agency created by Congress to protect investors in
securities transactions by administering securities legislation.
SS. SEC Rule 15(C)3-1: See Uniform Net Capital Rule.
TT. 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.
UU. Supranational: United States dollar denominated senior unsecured unsubordinated
obligations issued or unconditionally guaranteed by the International Bank for Reconstruction
and Development, International Finance Corporation, or Inter -American Development Bank.
VV. 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.
WW. 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.
XX. 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.
YY. 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
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securities, one reason new public issues are spread among members of underwriting
syndicates. Liquid capital includes cash and assets easily converted into cash.
ZZ. Yield: The rate of annual income return on an investment, expressed as a percentage.
1. Income Yield is obtained by dividing the current dollar income by the current market
price for the security.
2. 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.
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Yorba Linda
Water District
MEETING DATE:
TO:
FROM:
STAFF CONTACTS:
SUBJECT:
Recommendation:
AGENDA REPORT
June 15, 2023
Board of Directors
Mark Toy, General Manager
Delia Lugo, Finance Manager
Amendments to Purchasing Policy
ITEM NO. 7.7.
That the Board of Directors adopt Resolution No. 2023 -XX amending the Purchasing Policy and
rescinding Resolution No. 2022-16.
Summary:
From time to time it is necessary to review the Purchasing Policy in effect and make modifications
that appropriately represent District procedures and processes, public policy demands, current
economic conditions, and ensures compliance with uniform guidance for federal awards.
Attached is the amended Purchasing Policy and its associated Resolution for the Board of Directors'
consideration. The revisions made to the policy include an update to Table 1 that presents
procurement limits and contract signature authority limits by employee Classification Title, the
addition of Section 11.0 Procurement Procedures Pertaining to Federal Grants, as well as clarifying
language and/or content for other sections throughout the policy document.
Attachments:
1. 3010-007-POL - Purchasing Policy - REDLINE
2. Resolution No. 2023 -XX - Purchasing Policy
3. 3010-007-POL - Purchasing Policy - FINAL
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Dept/Div:
Finance
Approved By:
Resolution No. 20232 -XX
Effective Date:
June a -4X, 2023-2
Applicability:
Districtwide
Supersedes:
Resolution No. 2022-162021
See Also:
N/A
1.0 General Policy
1.1 This Yorba Linda Water District Purchasing Policy ("Policy") establishes policies and
procedures for the District to (a) bid and purchase services, materials, equipment, and
supplies (referred to collectively as "Services and/or Materials"), pursuant to Government
Code Section 54201 et seq., and (b) bid and award Public Works projects.
1.2 This Policy establishes the Board of Directors' (the "Board") approved policies and
procedures regarding the Procurement of Services and Materials and Public Works
projects, including expenditure authorization and limits, competitive proposal and
bidding requirements, and general Procurement procedures. All purchases of Services or
Materials and Public Works projects to be paid by the District must adhere to the authority
level and dollar limits of this Policy as set forth in Section 2.0, except as otherwise provided
by specific terms and exceptions in this Policy.
2.0 Authorization
2.1 By adoption of this Policy, the Board is authorizing the General Manager and other
designated representatives to exercise certain duties and responsibilities that are
essential for the day-to-day operation of the District.
2.2 The General Manager may delegate the Procurement of Services and Materials and
Public Works projects to those staff members given specific authority, consistent with the
terms of this Policy.
2.3 Delegation of purchasing authority may be through the authorized use of Purchasing
Cards, Purchase Orders, check requests, or other written authorization. All such purchases
will be made in conformity with the policies and procedures prescribed within this Policy.
2.4 The Board -established Procurement limits and Contract signatory authorities are listed in
Table 1 below. These limits are applicable on a per-expenditure/per-Contract basis, not
on an aggregated basis, for unrelated activities.
Table 1
Procurement Limits and Contract Signatory Authority
Title
Expenditures
Contract Signature Authority
$75,001 and over with Board
General Manager
Up to $75,000
Authorization; up to $75,000
without Board Authorization.
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Assistant General Manager
Up to $50,000
Up to $50,000
Department Managers
Up to $25,000
Up to $25,000
Budget Analyst, Customer Service
Billing Administrator, Principal
Engineer, Public Affairs Officer,
Records Mgmt Administrator,
U to 5,000
p $
None
o
cnk,. G- ,-
e„ RtGRtAccounting
Supervisor, Senior Engineer, Senior
Executive Assistant, Senior IS
Administrator, Superintendents
Administrative Personnel
Up to $2,000
None
3.0 Definitions
The terms referenced in this policy shall have the meanings as defined below:
3.1 Administrative Personnel - District administrative employees authorized by the General
Manager to purchase miscellaneous items, food, and travel in support of District functions
includes Executive Assistant, Human Resources Analyst, Operations Lead Staff, and any
other administrative position as authorized by the General Manager.
3.2 Amendment - A written change or addition to a legal document which, when properly
executed, has the same legal validity of the original document.
3.3 Board - The Board of Directors of Yorba Linda Water District.
3.4 Change Order - A written Amendment modifying the terms of an existing Contract or
Purchase Order.
3.5 Consultant - Any person, firm, or entity that provides or offers to provide Professional
Services to the District.
3.6 Contract - Written agreement authorizing a contractor, Consultant, supplier, or service
provider to provide Services or Materials, or Public Works, in accordance with the material
requirements, conditions, or scope of work stated in the Contract.
3.7 Contractor - Any person, firm, or entity that submits a bid, proposal, or Contract in
connection with a procurement or service. This term also includes any person who
conducts business as an agent or representative of the contractor.
3.8 District - Yorba Linda Water District.
3.9 Emergency- A situation in which unforeseen circumstances present an immediate risk of
harm or hazard to real or personal property, the public health, safety, welfare, or District
personnel or property, or threaten serious interruption of District operations.
3.10 General Manager - General Manager of the District or the person appointed by the
Board to act in the capacity of the General Manager and authorized to administer this
Policy on their behalf.
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3.11 Invitation to Bid - A formal process for soliciting sealed bids from qualified prospective
suppliers or Public Works Contractors.
3.12 Multiple Year Contract - A Contract for the purchase of Services, Materials, or Public
Works for (a) a multiple year term or (b) that may contain provisions to extend
performance by exercising optional renewal periods. A Multiple Year Contract does not
obligate the District beyond the initial award period and shall not provide for a
cancellation payment to the Contractor if options are not exercised
3.13 Non -Discretionary Purchases - Payments to utilities, temporary employment services,
insurance providers, healthcare providers and national, federal, state, or local agencies
that relate to routine obligations and expenses essential to the District's ability to provide
service to customers and that have been approved in fiscal year operating or capital
budgets.
3.14 Non -Professional Services - Services other than Professional Services, including, but not
limited to, supply and maintenance services.
3.15 Procurement - The purchase or lease of Services or Materials, or Public Works.
3.16 Procurement Card - A form of charge card (also referred to as a P -Card or Purchasing
Card) that allows for goods to be purchased without using a Purchase Order
3.17 Professional Services - Any type of special service or advice in financial, economic,
accounting, engineering, legal or administrative matters by persons specially trained and
experienced and competent to perform the special services required. (Gov't Code §
53060.) Such services include but are not limited to architectural; engineering;
environmental; financial; land surveying; construction management; audits; training
services; legal services; preparation of planning or studies; SCADA integration; technology
application development; and personnel, job classification and benefit studies.
3.18 Public Works - As defined by California Public Code Section 22002, are public projects,
which include construction, reconstruction, alteration, renovation, improvement,
demolition, and repair work involving any publicly owned, leased, or operated facility.
Maintenance work is not considered a public project for purposes of this definition.
3.19 Purchase Order (PO) - An authorization, under a standardized form in which the party
designated as the "provider" is to provide Services and Materials for which the District
agrees to pay.
3.20 Request for Proposal (RFP) - A solicitation used for the Procurement of Professional Services
and Non -Professional Services. Prospective suppliers or Consultants submit proposals
based on requested information and are evaluated/awarded based on pre -established
criteria.
3.21 Request for Quotes (RFQ) - A solicitation used for Procurement of construction Services or
Materials.
3.22 Requisition (REQ) - The procedural method by which departments may request a PO for
the purchase of materials, supplies or equipment. Requisitions are entered into the
District's ERP system application.
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3.23 Single Source Purchase - Procurement where: (a) there is a compelling reason for only
one source, a preferred brand, like material, homeland security goods, services, etc., to
be procured; or (b) the commodity is unique, including, but not limited to, acquisition of
data processing, telecommunications and word processing equipment, goods and
services; or (c) the purchase of a specific brand name, make or model is necessary to
match existing District equipment or facilitate effective maintenance and support; or (d)
when it is in the best interest of the District to extend or renew a Contract from a previous
contract period, based on satisfactory service, reasonable prices, avoidance of start-up
costs, avoidance of interruptions to District business, or good business practices. Such a
Procurement of $25,000 or greater must be presented to the Board of Directors at the
next regular scheduled meeting.
3.24 Sole Source Purchase - Procurement where only one viable source exists. This is usually
due to legal restrictions of patent rights and copyrights, a proprietary process, warranty
issues, original equipment, etc. Such a Procurement of $25,000 or greater must be
presented to the Board at the next regular scheduled meeting.
4.0 General Procurement Policies
4.1 Procurement practices shall comply with laws, regulations, and guidelines of the State of
California and any other applicable law and provisions of grant or funding contracts, if
applicable.
4.2 Any employee/individual affecting any Procurement outside of the policies and
procedures established by this Policy and without General Manager or Board
authorization to do so, may be subject to disciplinary action and/or termination in
accordance with District policies.
4.3 Expenditures and Contract awards must be authorized by the appropriate authorization
level indicated in Table 1.
4.3.1 Separating or dividing Contracts into smaller components for the purpose of
bringing the cost of one or more Contracts below any specified sum to avoid a
requirement in any section of this Policy or any policy incorporated herein is strictly
prohibited. Contracts may be divided only to meet unique scheduling of a project
or to accommodate necessary time frames. In addition, no specifications shall be
drafted in such a manner as to limit competitive bidding or solicitation directly or
indirectly to any one specific vendor, or any specific brand, product, thing, or
service, except for those items that are approved as exempt from competitive
bidding or solicitation requirements as provided in Section 7.1.3.
4.4 Purchase amounts include taxes and the cost of shipping, freight fees, and any other
charges billed by the supplier or Contractor for purposes of the authorization limits under
this Policy.
4.5 Purchase authorization and expenditure limits in Table 1, and competitive solicitation
requirements in Table 2 and as further set forth in this Policy, are on a per purchase/per
Contract basis and shall not be applied as an aggregate limit to any vendor, supplier,
Contractor or Consultant.
4.6 With the exception of the General Manager, in the absence of an authorized signatory for
a given request, authorization will be obtained from the next highest authority in Table 1.
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In the case where the next highest authority is absent, then authorization will be obtained
by an authorized signatory in order of rank and availability.
4.7 The District may use electronic commerce whenever practicable or cost-effective. The
District may accept electronic signatures and records in connection with the District
Procurement, as permitted by applicable law.
5.0 Procurement Methods
The following methods are available to initiate a purchase request or to pay for Services and
Materials or Public Works:
5.1 Requisition/Purchase Order - Staff that require Services and Materials to carry out the
defined duties of their positions shall submit Requisitions, in advance, for purchases in
accordance with this Policyand other applicable procedures and policies of the District.
Staff will generate a Purchase Order from the Requisition.
5.1.1 Complete the Requisition form or Requisition data entry screen to request that
Services or Materials are ordered.
5.1.1.1 Allow at least two (2) working days of lead time.
5.1.1.2 Provide complete name and address of selected vendor.
5.1.1.3 Indicate the purpose of the Purchase Order.
5.1.1.4 Describe the Services or Materials clearly and specifically. Include make,
model, manufacturer's part number, catalog number or vendor catalog
page number, if available. Indicate color, size, or any option required.
5.1.1.5 Indicate the quantity and unit price for each Service or Material.
5.1.1.6 Note whether the Services or Materials are taxable.
5.1.1.7 Note any freight charges.
5.1.1.8 Must indicate a valid General Ledger account number(s), and correct
projects number(s).
5.1.1.9 Indicate the date the Services or Materials are needed.
5.1.1.10 Attach any required price quotes and data that supports the requested
purchase, if available.
5.1.1.11 Seek appropriate approvals as required in Table 1.
5.1.1.12 Purchases shall not be split to circumvent Contract signatory
authorizations as set in Table 2.
5.1.1.13 Submit Purchase Order for processing.
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5.1.2 Upon approval and receipt of a fully executed purchase Requisition, the Purchase
Order will be systematically assigned the next consecutive number.
5.1.2.1 The original Purchase Order will be given back to the originator or sent to
the vendor.
5.1.2.2 A copy of the approved Purchase Order, and any supporting documents,
will be forwarded to Accounts Payable for processing.
5.1.2.3 A copy of the approved Purchase Order will be forwarded to the
Warehouse pending receipt of goods.
5.1.2.4 An electronic record of the Requisition/Purchase Order will be kept within
the purchasing system for historical purposes.
5.2 Check Request - A check request can be used to initiate payment for certain limited
Services or Materials without a Purchase Order. Check requests can be used to request
payment for Non -Discretionary Purchases, services rendered, subscriptions, membership
dues, workshop/seminar/conference registrations, use of facilities, etc.
5.3 CAL -Card and Other Procurement Cards - Designated staff may be assigned a CAL -Card
for miscellaneous purchases. Purchases using the CAL -Card are subject to the terms and
conditions of the District Cardholder Procurement Card Agreement and any other
applicable District procurement card policies or procedures. Professional Services are not
to be acquired on CAL -Cards due to lack of insurance and indemnification language
associated with these services. CAL -Card limits may be increased for a specific
authorized user with the approval of the General Manager subject to the authorization
limits as set in Table 1. Use of all other Procurement Cards are subject to the terms of this
Policy and to any set terms provided at the time of card issuance to the designated staff
and any subsequent Amendments to such terms, and other applicable District policies
(Refer to Exhibit A).
5.4 Contracts - Provisions shall be made, either through specifications or procedures
established by the District, for verification of the references and financial responsibility of
the contracting parties prior to the award of a Contract. After award, all Contracts shall
be executed on behalf of the District by the appropriate authorized signatory indicated
in Table 1. In no case shall any Contract be made if sufficient funds are not budgeted
and appropriated and not available to make payment promptly upon delivery or
completion, or in accordance with a progress payment schedule, unless otherwise
authorized and approved by the Board or approved by the General Manager as
provided for in Section 6.2 (Emergency).
5.4.1 Contracts for Non -Professional Services, Professional Services, and Public Works shall
be executed when an expenditure exceeds $5,000 (except in the event of an
Emergency).
5.4.2 Multiple Year Contracts are allowed when in the best interests of the District as
determined, and executed by the General Manager.
5.4.2.1 For purposes of Procurement authorization, the dollar value of a Multiple
Year Contract shall be the total Contract value, including optional
renewal periods. Once initially approved in accordance with the Policy
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requirements, any optional renewals may then be authorized by the
General Manager at the time of renewal, regardless of the dollar amount,
provided the pre -priced option is consistent with the terms of the Contract
as initially approved.
6.0 Exceptions to Pre -Authorization
6.1 Non -Discretionary Purchases - Do not require Board approval for payment, including
those that exceed the General Manager limit of $75,000. Purchase Orders are not
required for Non -Discretionary Purchases that pertain to payments to utilities, insurance
providers, heath care providers, payroll, and national, federal, state or local agencies
that relate to routine obligations and expenses essential to the District's ability to provide
service to customers and that have been approved in fiscal year operating budgets.
6.2 Emergency Work/Services - The General Manager, Assistant General Manager, or the
assigned Operations or Engineering Manager may authorize Emergency expenditures for
work, Services, and/or Supplies where the cost exceeds $75,000 without prior Board
approval. The Board shall be notified of any expenditures for Emergency work, Services
and/or Supplies exceeding the General Manager's authorization limit at the next
regularly scheduled Board meeting.
6.3 Purchase Requests - Require no prior authorization or signatory approval under Table 1 to
replenish the District's warehouse inventory within established inventory re -order levels.
7.0 Competitive Selection Process
7.1 General - A competitive selection process for Procurement of Services and Materials, and
for Public Works projects, is required in accordance with the limits as set forth in Table 2
below (subject to certain exceptions, qualifications or limitations as further set forth
below).
Table 2
Competitive Solicitation Process - Requirements
Purchase Amount
Solicitation Requirement
$25,000 and under
One Quote
$25,001 - $50,000
Two Quotes
$50,001 - $75,000
Three Quotes
$75,001 and over
RFP or RFQ or Invitation to Bid Process
Required
7.1.1 Competitive Solicitation - Submission
7.1.1.1 All quotes, bids, and proposals must be in writing. An email is acceptable
for expenditures of $75,000 and under.
7.1.1.2 RFP, RFQ, and Invitation to Bid submissions must be in writing and be in
substantial compliance with terms in the solicitation, or as otherwise
required by law, or may be disqualified.
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7.1.1.3 Quotes, bids, and proposal documentation shall be retained pursuant to
the District's record retention policy.
7.1.2 Exceptions from Competitive Solicitation Process - Generally, solicitation of bids or
proposals is preferable whenever practicable. In addition to the exceptions stated
under Section 7.3.2, the competitive solicitation requirements established in Table
2 may be waived when any of the following criterion is applicable:
7.1.2.1 Sole Source Purchases.
7.1.2.2 Single Source Purchases.
7.1.2.3 Emergency expenditures.
7.1.2.4 After a reasonable attempt has been made to obtain competitive
quotes/ responses and it has been determined that (a) no additional
suppliers/providers/Contractors/Consultants can be located; (b) the
District has a lack of response from
suppliers/providers/Contractors/Consultants to a competitive solicitation;
or, (c) when sufficient, satisfactory bids/proposals are not received, based
on the District's sole discretion.
7.1.2.5 Purchases to replenish the District's warehouse inventory within
established inventory re- order levels.
7.1.2.6 As provided by law.
7.1.3 It shall be at the discretion of the General Manager or Assistant General Manager
and the initiating Department Manager(s) to determine whether an expenditure
meets a criterion listed herein to be exempt from a competitive solicitation, subject
to any Board authorization. Such expenditures that meet a criterion will be
presented to the Board of Directors at publicly held meeting.
7.2 Public Works - Contracts for Public Works projects shall conform to applicable
requirements for Public Works Contracts under State law, including but not limited to
requirements relating to (a) listing of subcontractors, (b) posting of a payment bond in
an amount not less than 100% of the total Contract amount for all Public Works Contracts
over $25,000, and (c) payment of prevailing wages for all Contracts for Public Works
exceeding $1,000 or as otherwise required by statute.
Unless specifically waived by the District with the approval of the General Manager and
District's legal counsel, the District shall require performance bonds for all Public Works
Contracts in an amount not less than 100% of the total Contract amount. Public Works
Contracts let by an Invitation to Bid may be awarded (a) to the lowest responsive,
responsible bidder, and (b) in accordance with (i) State law, (ii) the District's standard
Public Works Contract documents, and (iii) Section 11.0 below.
7.3 Professional Services (over $75,000) - RFPs will be initiated pursuant to the limits set forth
in Table 2 when the Contract is anticipated to exceed $75,000, unless the District's needs
mandate uniquely qualified services, in which case only one proposal from a qualified
firm may be solicited. Professional Services may be engaged in accordance with
California Government Code §4525 et seq., and on the basis of demonstrated
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competence and qualifications for the types of services to be performed and at fair and
reasonable prices to the District.
7.3.1 Professional Engineering Services - The District may request proposals for
engineering services when the Contract amount is anticipated to exceed $25,000,
and up to $75,000. For engineering services anticipated to exceed $75,000, RFPs
will be initiated pursuant to the limits set forth in Table 2.
7.3.2 On Call Engineering Services - The District may solicit RFPs for on-call engineering
services and enter agreements for on-call engineering services. Entering into an
agreement qualifies Consultant to perform services for the District on a task order
basis, but it does not entitle Consultant to any compensation or a right to perform
services on any scope of work or particular task order for the District. When the
District needs services for task(s), it will submit a scope of work to Consultant
requesting task proposals. If Consultant's task proposal is selected by the District,
Consultant represents and warrants to District that it is fully qualified and available
to perform the services for, and as requested by, the District.
7.3.3 Exceptions from Competitive Solicitation Process - Professional Services - In
addition to the exception for "uniquely qualified services" set forth under Section
7.3, the following criteria shall apply as exceptions to the competitive solicitation
requirements set forth under Table 2 for Professional Services where such
requirements would otherwise apply:
7.3.3.1 For Professional Services estimated to cost $25,000 or less, staff may
request a proposal from one (1) qualified Consultant.
7.3.3.2 For Public Works projects where the project design is scheduled in phases,
the related Professional Services may be negotiated with the Consultant
that performed the work for a prior phase, if (a) the Consultant performed
satisfactory work on the prior phase(s) in terms of quality, schedule, and
estimated design costs and (b) a satisfactory Contract can be
negotiated.
7.3.3.3 For Professional Services in which it is impracticable to comply with the
selection process because of the unique, exploratory, or experimental
nature of the project, staff may request a proposal from one (1) qualified
Consultant.
7.4 Rejecting Competitive Responses - In response to an Invitation to Bid, RFQ, or RFP, the
District may reject a bid or other response which is in any way incomplete, irregular,
amplified, unqualified, conditional, or otherwise not in compliance with the solicitation
documents in all material respects and in accordance with law. The District may (a)
waive any informality, irregularity, immaterial defects, or technicalities in any bids or other
responses received; and/or (b) cancel an Invitation for Bid or RFP/RFQ, or reject all bids
or responses for any other reason, which indicates the cancellation or rejection of all bids
or responses is (i) in the best interest of the District, and (ii) in accordance with law.
Rejection of all bids or responses or cancellation of competitive solicitations, including
determinations to re -bid, or re -solicit are subject to the same level of authority which is
required to award a Contract as provided under Table 1, and as required by law.
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7.5 Awarding Contracts - Consistent with Section 11.0 below, the District reserves the right to
award Contracts based upon the best interests of the District as determined by the District
in its sole discretion.
8.0 Change Orders
8.1 Change Orders may be issued from time to time as required by changes in the
specifications or conditions of a project, services performed, or materials to be issued.
8.1.1 Change Orders - PO Only - Change Orders up to 10% (to a maximum additional
$1,000) of the original PO amount may be issued by the appropriate Department
Managerwithout further approvals. A revised Purchase Order Requisition must be
completed and approved at the appropriate authorization levels under Table 1
for any Change Order request exceeding the original amount by more than 10%
or the $1,000 limit.
8.1.2 Change Orders - Formal Contracts and Amendments
8.1.2.1 For Contracts and/or Amendments under $75,000:
Change Orders up to 10% of the original Contract amount can be
approved by the appropriate authorization levels as outlined in Table
1 up to a maximum total Contract amount of $75,000 without Board
approval.
• Board approval is required for Change Order requests exceeding the
original Contract amount by more than 10%, or resulting in a total
Contract amount over $75,000.
8.1.2.2 For Contracts and/or Amendments $75,001 and over:
Change Orders up to 10% (to a maximum additional $75,000) of the
original Contract amount can be approved by the appropriate
authorization levels as outlined in Table 1 without Board approval.
Board approval is required for Change Order requests exceeding the
original Contract amount by more than 10%, or resulting in a $75,000
increase.
8.1.3 Change Order Exceeding Limits
A Change Order exceeding the Change Order limits set forth in this article may
be authorized by the General Manager prior to Board approval if, in the General
Manager's determination, any of the following circumstances exist:
8.1.3.1 A delay in Change Order authorization could result in a negative financial
impact to the District.
8.1.3.2 A delay in Change Order authorization could result in damage to or
impairment of the operations of a District facility.
8.1.3.3 An Emergency exists which requires immediate work/services.
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The Board shall be notified of any Change Order authorization exceeding the
General Manager's authorization limit at the next regularly scheduled Board
meeting.
9.0 Ethical Procurement Conflict of Interest
9.1 Board members, District officers and employees shall not be financially interested in any
Contract made by them in their official capacity. (Government Code Sections 1090 and
1091.5). Board Members, District officers, and employees shall not participate in any way
to influence a governmental decision in which he/she knows or has reason to know that
he/she has a financial interest. (Government Code Section 87100 et seq.)
9.2 Any District employee (other than Administrative Personnel not under Designated Positions
in the District's Conflict of Interest Code) authorized under this Policy to make or enter into
purchases on behalf of the District will complete a Statement of Economic Interests (Form
700) and comply with the District's Conflict of Interest Code.
9.3 Confidential or proprietary information must be handled with due care and proper
consideration of ethical and legal ramifications and governmental regulations.
9.4 Purchasing activities must be performed in accordance with all applicable laws and
District policies.
9.5 Any employee/individual who violates the standards set forth in this Section may be
subject to disciplinary action consistent with District personnel policies.
10.0 Emergency Procurement Procedures
10.1 In the event that the District declares an Emergency, the District may procure the
necessary equipment, Services, and Materials in response to that Emergency without
following the purchasing procedures prescribed by this Policy.
10.2 General Manager Authority
10.2.1 The Board has authorized the General Manager, or their designee, to approve
Emergency Procurements described in Section 10.1.
10.2.2 If the Emergency Procurement exceeds the General Manager's approval
authority, the General Manager, or their designee, shall report to the Board, at its
next meeting, the reasons justifying why the Emergency did not permit time to
comply with the District's purchasing requirements and why the purchase was
necessary to respond to the Emergency.
10.3 Board Ratification
10.3.1 After the District makes an Emergency Procurement, it shall make a finding based
on substantial evidence set forth in the minutes of its meeting that the Emergency
did not permit time to comply with the District's purchasing requirements, and that
the purchase was necessary to respond to the Emergency.
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10.4 Federally Declared Emergencies; Procurement and Contracting Requirements
10.4.1 In the event of an Emergency declared by the President of the United States, the
District must comply with Federal procurement standards as a condition of
receiving public assistance funding from the Federal Emergency Management
Agency (FEMA) for Contract costs for eligible work. FEMA funding is governed by
Title 2 of the Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards.
10.4.2 Federal Emergency Procurement Procedures
10.4.2.1 Micro Purchases
■ Purchases within the micro -purchase threshold (e.g. currently set at
purchases of $103,000 or less but periodically adjusted for inflation)
may be awarded without soliciting competitive quotations if the
District considers, in its sole discretion, the price to be reasonable.
■ To the extent practicable, the District must distribute micro -purchases
equitably among qualified suppliers.
10.4.2.2 Small Purchases
■ Purchases within the simplified acquisition threshold (e.g. currently set
at purchases of $250,000 or less) shall not be required to be formally
bid.
■ Price quotations must be received from no less than three (3) sources.
10.4.2.3 Formal Sealed Bidding
■ Formal, sealed bidding is required for purchases greater than the
simplified acquisition threshold, which is currently set at $250,000, or as
may be adjusted by the Federal Acquisition Regulation, pursuant to
48 CFR Section 2.101.
■ The District must publicly advertise the invitation for Bids and publicly
open all bids at the time and place prescribed in the Invitation to Bid.
■ Any Contracts awarded pursuant to this procedure may be to the
lowest responsible bidder submitting a responsive bid and shall be for
a firm fixed price.
10.4.2.4 Solicitation of Competitive Proposals
■ When the nature of a Procurement does not lend itself to formal,
sealed bidding (e.g. Professional Services), the District may solicit
competitive proposals.
■ A Request for Proposals (RFP) must be publicly advertised, and the
District must solicit proposals from an adequate number of sources.
The RFP must identify all evaluation factors and their relative
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importance; however, the numerical or percentage ratings or weight
need not be disclosed.
■ Any Contract awarded based on the competitive proposal
Procurement process cannot be based exclusively on price or price -
related factors.
■ If a Contract is awarded, it may be to the responsible firm whose
proposal is most advantageous to the District ("best value"), with price
and other factors considered.
10.4.3 Federal Emergency Noncompetitive Procurements
10.4.3.1 Contracts may be procured through a noncompetitive proposal only
when:
■ The item is only available from a single source;
■ The public exigency or Emergency for the requirement will not permit
a delay resulting from competitive solicitation;
■ The District authorizes noncompetitive proposals, as otherwise
permitted by the Purchasing Policy; or
• Competition is deemed inadequate after the solicitation of a number
of sources.
10.4.4 Federal Emergency Contracting with Small and Minority Firms, Women's Business
Enterprises, and Labor Area Surplus Firms
10.4.4.1 The District must conduct all necessary affirmative steps to ensure the use
of minority businesses, women's business enterprises, and labor surplus
area firms when possible, as set forth in 2 CFR Section 200.321.
10.4.4.2 The District has developed Contract templates that include requirements
for bidders to take those affirmative steps to secure involvement by those
firms, as outlined in 2 CFR Section 200.321 (b).
10.4.5 Federal Emergency Cost or Price Analysis
10.4.5.1 The District shall perform a cost or price analysis in connection with every
Procurement, including Contract modifications, in excess of the simplified
acquisition threshold. While the method and degree of analysis depends
on the facts surrounding the particular Procurement, the District must, at
a minimum, make independent estimates before receiving bids or
proposals.
10.4.5.2 The District shall negotiate profit as a separate element of the price for
each Contract in which there is no price competition and in all cases
where a cost analysis is performed as required by 2 CFR Section
200.323 (b) .
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10.4.6 Federal Emergency Payment Procedures
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10.4.6.1 Contracts entered into pursuant to this Section 10.4 shall utilize only fixed-
price, cost -reimbursement, or, to a limited extent, time and materials
payment methods.
10.4.6.2 Time and Materials (T&M) Contracts
■ T&M Contracts should be used rarely, and the use of T&M Contracts
should be limited to a reasonable time period (e.g., no more than 70
hours) based on circumstances during which the District cannot
define a clear scope of work.
■ The District shall only enter into a T&M Contract if all of the following
apply:
- No other Contract was suitable;
- The contract has a guaranteed maximum price that the
Contractor exceeds at its own risk; and
- The District provides a high degree of oversight to obtain
reasonable assurance that the Contractor is using efficient
methods and effective cost controls.
■ The District must define the scope of work as soon as possible to
enable Procurement of a more acceptable type of Contract (i.e.,
non-T&M).
10.4.6.3 Separate Invoicing
■ All purchases made during a proclaimed Emergency shall require
separate invoicing from routine (i.e., non -Emergency related)
purchases. All invoices shall state the Services or Materials provided
and shall specify where the Services or Materials were delivered. All
invoices shall specify the location(s) where the Services or Materials
were used, if possible. Any invoice which fails to properly identify the
Emergency nature of the purchase and provide details as to the
date(s) and location(s), as appropriate, shall not be paid until such
information is provided by the vendor and re -submitted in correct
form.
10.4.6.4 Auditing of Invoices for Debris Removal
■ All invoices for debris clearance and removal shall be audited prior to
payment to the vendor. Vendors shall be notified of the requirement
prior to award of any Contract for debris clearance and/or removal.
Audits shall be in accordance with procedures for debris removal
monitoring specified in FEMA's Publication 325, Debris Management
Guide.
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11.0 Procurement Procedures Pertaining to Federal Grants
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4"11.1 In the event that the District is identified as a recipient or sub -recipient of a Federal
Government Grant or any Pass -Through Federal Grant, the District will be required to
comply with the Federal Uniform Guidance (2 C.F.R. Part 200) standards and procedures
as listed in Exhibit B. This Guidance establishes requirements by -grantees when procuring
goods and services needed to carry out a Federal award.
4"ll2.0 County Water District Status
49712.1 The District is a County Water District and therefore is not mandated by State law to
competitively bid any purchases, including those for Public Works projects and/or capital
expenditures. (Associated Builders & Contractors, Golden Gate Chapter, Inc. v. Contra
Costa Water District (1995) 37 Cal.AppAth 468.) The District has discretion to enter into
non -bid Contracts for Public Works, to procure Services and Materials, to contract for
design -build work, to utilize job -order contracting and to enter into Cooperative
Purchasing arrangements for the design, construction, and maintenance of Public Works,
or undertake any other form of contracting determined to be in the District's best interest,
except as otherwise expressly restricted by law. Notwithstanding this lack of legal
mandate and contractual discretion, District staff shall make a good faith effort to
support the Competitive Selection Process described in Section 7.
44-:013.0 Policy Revisions
44413.1 This Policy will be maintained and revised by the General Manager or their designated
representatives in consultation with the District's legal counsel, subject to approval by the
Board. This Policy will be reviewed regularly and revisions will occur whenever applicable
Federal, State, or local regulations change or otherwise as the need arises and in the
discretion of the Board.
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EXHIBIT A
PROCUREMENT CARD POLICY
1.0 Purpose
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The Procurement Card Program was developed to allow designated full-time regular
employees the capability to purchase, with predefined spending limits, certain types of items
directly from the merchant thus reducing the cost associated with low -value purchasing
activity. The purpose of this policy is to identify the conditions in which employees will be issue
a Procurement Card and the rules for its use.
2.0 General Information
Authorization to use this Card is restricted to the CARDHOLDER ONLY and MAY NOT BE USED
FOR PERSONAL PURCHASES.
2.1 Employees will not use District Procurement Cards for personal expenses even if the intent
is to reimburse the District later.
2.2 Procurement Cards must not be used for purchases when the cardholder has personal
interest in the merchant or knowledge that a purchase would create a conflict of interest.
2.3 Before receiving a Procurement Card, employees will sign a "Cardholder Procurement
Card Agreement" and receive a copy of the Policies and Procedures setting forth their
obligations under this program.
2.4 The Procurement Card is supplemented to the procurement process. As with other
procurement methods the following conditions must be met when using the Procurement
Card:
2.4.1 The Procurement Card should be used whenever possible in lieu of petty cash or
low dollar Requisitions from point of sale vendors.
2.4.2 Purchases shall not be split to circumvent transaction limits as set in Table 1 of this
Procurement Policy.
2.4.3 Each single purchase may be comprised of multiple items, but the total including
tax and freight cannot exceed the single purchase dollar limit on the Procurement
Card.
2.4.4 Every purchase using the Procurement Card must adhere to all provisions of the
Procurement Policy.
3.0 Procurement Card Role Definitions
3.1 Cardholder - The cardholder is the District employee whose name appears on the
Procurement card.
3.2 Approver: The Approver is the person who is responsible for reviewing the charges for a
group of cardholders to ensure that purchases are appropriate and allowed.
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3.3 Program Administrator: The Program Administrator provides overall administration and
oversight of the Procurement Card program.
4.0 Responsibilities
4.1 Cardholders: Cardholders Safeguard the Procurement Card, provide itemized receipts
for all transactions, allocate the transactions, and sign off on the transactions in a timely
basis.
4.2 Approvers: Approvers review transactions of cardholders for adherence to policies and
procedures, ensure that all transactions are properly coded, and all disputed charges
are correctly reported.
4.3 The Cardholder and Approver are required to review and approve the individual
cardholder transactions and submit to Accounts Payable within the established time
frame specified by Finance Manager. This is critical to allow Accounts Payable to make
payment within specified time limits.
4.4 Failure to meet approval deadlines can result in the following:
4.4.1 First Failure - Verbal/electronic warning.
4.4.2 Second Failure - Written warning and notification to the appropriate Department
Manager and possible suspension of card privileges.
4.4.3 Third Failure - Suspension of card privileges. Restoration of card privileges requires
approval by the Finance Manager.
5.0 Procurement Audits
To ensure the continued success of the Procurement Card Program, periodic, random audits
will be performed by the Finance Department. The purpose of the audits will be to ensure the
cardholders are adhering to established policies and procedures.
6.0 Use of Procurement Card for Travel and Meals
Procurement cards may be used for approved travel in accordance with the District's travel
policy.
7.0 Card Restrictions
The Procurement Card is not to be used for services of any kind, leases, or repairs excluding
auto when traveling, due to insurance requirements and the complexity of IRS 1099 reporting.
Department Managers may apply additional restrictions on card use. It is the responsibility of
the cardholder to know what their department's restrictions are.
8.0 Misuse of a Procurement Card
8.1 The following situations are a few examples of "misuse" of a Procurement Card:
8.1.1 Purchases using the Procurement Card for personal benefit of the employee.
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8.1.2 Assignment or transfer of an individual Procurement Card to an unauthorized
person.
8.1.3 Purchases from family, friends or relatives where there is personal gain or a conflict
of interest, perceived or real.
8.2 Any variance, misuse, and/or violation of the policy and processes set forth will be
considered improper use of the card. This may result in card cancellation, disciplinary
action, up to and including termination.
9.0 Return of Merchandise
In the event the cardholder determines that an item must be returned for any reason, the item
and credit card receipt must be returned to the merchant/vendor as soon as possible. At no
time is the cardholder allowed to accept a store gift card or cash in lieu of a credit adjustment
to the Procurement Card. Cardholder is responsible for allocating and signing off on both the
purchase and the credit transactions in a timely manner.
10.0 Disputes
All transactions should be monitored for validity and disputed transactions must be reported
to the Program Administrator. To process a dispute, consult the Program Administrator.
11.0 Lost or Stolen Cards
When a Procurement Card is lost or stolen during normal business hours the Cardholder must
notify their Approver and the Program Administrator immediately. If it is after hours the
Cardholder must notify the issuing bank directly.
12.0 Separation, Transfer or Revocation of Card Privileges
Upon leaving the District, transferring to another Department or loss of Procurement Card
privileges, the Cardholder must return their Procurement Card to Human Resources.
Concurrent with surrendering the card, the cardholder must deliver documentation to their
supervisor of all outstanding transactions.
The General Manager, Assistant General Manager, or Department Managers have absolute
discretion to suspend or revoke a Cardholder's privileges at any time and for any reason.
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EXHIBIT B
FEDERAL REQUIREMENTS
1.0 Regulations for Procurement of Property or Services Stemming from Federal Aid
3010-007-POL
1.1 This section shall apply to the awarding of sub -grants and contracts by the District
stemming from federal grants to the District. This section shall have the same application
on the awarding of sub -grants and contracts by the District stemming from state, county
or other non-federal government entity grants originating as federal grants.
2.0 Procurement Standards
2.1 The District shall maintain a contract administration system which ensures contractors
perform in accordance with the terms, conditions and specifications of their contracts or
purchase orders.
2.2 The District shall maintain written standards of conduct covering conflicts of interest and
governing the actions of its employees engaged in the selection, award and
administration of contracts. No employee, officer or agent of the District shall participate
in selection, or in the award or administration of a contract supported by federal funds if
a conflict of interest, real or apparent, would be involved. Such a conflict would arise
when:
2.2.1 The employee, officer or agent;
2.2.2 Any member of his or her immediate family
2.2.3 His or her partner; or
2.2.4 An organization which employs, or is about to employ, any of the above, has a
financial or other interest in or a tangible personal benefit from a firm considered
for award.
2.3 The District's officers, emolovees or agents will neither solicit nor accept gratuities, favors
or anything of monetary value from contractors, potential contractors, or parties to sub -
agreements. Such a conflict will not arise where the financial interest is not substantial or
the gift is an unsolicited item of nominal intrinsic value. The District's standards of conduct
provide for disciolinary actions to be applied for violations of such standards by officers,
employees, or agents of the District.
2.4 The District shall not enter into a contract with a non -Federal entity has a parent, affiliate,
or subsidiary organization that is not a state, local government or Indian tribe, unless the
non -Federal entity maintains written standards of conduct covering organizational
conflicts of interest. Organizational conflicts of interest mean due to relationships with a
parent company, affiliate, or subsidiary organization, the non -Federal entity is unable or
appears to be unable to be impartial in conducting a procurement action involving a
related organization.
2.5 The District shall avoid acquisition of unnecessary or duplicative items. Consideration will
be given to consolidating or breaking out procurements to obtain a more economic
purchase. Where appropriate, an analysis will be made of lease versus purchase
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alternatives, and any other appropriate analysis to determine the most economical
approach.
2.6 The District shall consider entering into state and local intergovernmental agreements or
inter -entity agreements where appropriate for procurement or use of common or shared
goods and services.
2.7 The District shall consider using Federal excess and surplus property in lieu of purchasing
new equipment and property whenever such use is feasible and reduces project costs.
2.8 The District shall consider using value engineering clauses in contracts for construction
projects of sufficient size to offer reasonable opportunities for cost reductions. Value
engineering is a systematic and creative analysis of each contract item or task to ensure
its essential function is provided at the overall lower cost.
2.9 The District shall make awards only to responsible contractors possessing the ability to
perform successfully under the terms and conditions of a proposed procurement.
Consideration will be given to such matters as contractor integrity, compliance with
public oolicv. record of bast performance and financial and technical resources.
2.10 The District shall maintain records sufficient to detail the history of procurement. These
records will include, but are not necessarily limited to the following: rationale for the
method of procurement, selection of contract type, contractor selection or rejection and
the basis for the contract price.
2.11 The District shall use time and material type contracts only
2.11.1 After a determination is made that no other contract is suitable; and
2.11.2 If the contract includes a ceiling price the contractor exceeds at their own risk.
2.12 The District alone shall be responsible, in accordance with good administrative practice
and sound business judgment, for the settlement of all contractual and administrative
issues arising out of procurements. These issues include, but are not limited to, source
evaluation, protests, disputes and claims. These standards do not relieve the District of
any contractual responsibilities under its contracts.
3.0 Competition
3.1 The District will conduct procurement transactions in a manner providing full and open
competition. To ensure objective contractor performance and eliminate unfair
competitive advantage, contractors developing or drafting specifications, requirements,
statements of work, or invitations for bids or requests for proposals shall be excluded from
competing for such procurements.
3.2 The District shall conduct procurements in a manner prohibiting the use of statutorily or
administratively imposed in-state or local geographical preferences in the evaluation of
bids or proposals, except in those cases where applicable Federal statutes expressly
mandate or encourage geographic preference. When contracting for architectural and
engineering (A/E) services, geographic location may be a selection criteria provided its
application leaves an appropriate number of qualified firms, given the nature and size of
the project, to compete for the contract.
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3.3 The District shall have written procedures for procurement transactions. These procedures
will ensure that all solicitations:
3.3.1 Incorporate a clear and accurate description of the technical requirements for
the material, product or service to be procured. Such description shall not, in
competitive procurements, contain features which unduly restrict competition.
The description may include a statement of the qualitative nature of the material,
product or service to be procured, and when necessary, shall set forth those
minimum essential characteristics and standards to which it must conform if it is to
satisfy its intended use. Detailed product specifications should be avoided. When
it is impractical or uneconomical to make a clear and accurate description of the
technical requirements, a brand name or equal description may be used to define
the performance or other salient requirements of procurement. The specific
features of the named brand which must be met by offerors shall be clearly stated;
and
3.3.2 Identify all requirements which the offerors must fulfill and all other factors to be
used in evaluating bids or proposals.
3.4 The District shall ensure prequalified lists of persons, firms or products that are used in
acquiring goods and services are current and include enough qualified sources to ensure
maximum open and free competition. The District shall not preclude potential bidders
from qualifying during the solicitation period.
4.0 Methods of Procurement to be Followed
The District shall use one of the following methods of procurement:
4.1 Procurement by Micro -Purchases. Procurement by micro-burchase is the acauisition of
supplies or services, the aggregate dollar amount of which does not exceed the micro -
purchase threshold as set by the Federal Acquisition Regulation at 48 CFR Subpart 2.1
(Definitions) and adjusted periodically for inflation. As of the date of this ordinance, the
micro -purchase threshold is $10,000.
4.2 Procurement by Small Purchase Procedures. Small purchase procedures are those
relatively simple and informal procurement methods for securing services, supplies or
other property that do not cost more than the simplified acquisition threshold as set by
the Federal Acquisition Regulation at 48 CFR Subpart 2.1 (Definitions) and in accordance
with 41 U.S.C. 1908 and periodically adjusted for inflation. If small purchase procedures
are used, price or rate quotations shall be obtained from an adequate number of
qualified sources. As of the date of this ordinance, the simplified acquisition threshold is
250,000.
4.3 Procurement by Sealed Bids (Formal Advertising). Bids are publicly solicited and a firm -
fixed -price contract (lump sum or unit price) is awarded to the responsible bidder whose
bid, conforming to all the material terms and conditions of the invitation for bids, is the
lowest in price.
1 For sealed biddina to be feasible. the followina conditions should be
4.3.1.1 A complete, adequate, and realistic specification or purchase
description is available;
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4.3.1.2 Two or more responsible bidders are willing and able to compete
effectively for the business; and
4.3.1.3 The procurement lends itself to a firm -fixed-price contract and the
selection of the successful bidder can be made principally based on
price.
4.3.2 If sealed bids are used, the following requirements apples
4.3.2.1 The invitation forbids will be publicly advertised and bids shall be solicited
from an adequate number of known suppliers, providing them sufficient
time prior to the date set for opening the bids;
4.3.2.2 The invitation for bids, which will include any specifications and pertinent
attachments, shall define the items or services for the bidder to properly
respond;
4.3.2.3 All bids will be publicly opened at the time and place prescribed in the
invitation for bids;
4.3.2.4 A firm -fixed-price contract award will be made in writina to the lowest
responsive and responsible bidder. Where specified in bidding
documents, factors such as discounts, transportation cost and life cycle
costs shall be considered in determining which bid is lowest. Payment
discounts will only be used to determine the low bid when prior
experience indicates that such discounts are usually taken advantage of;
and
4.3.2.5 If there is a sound documented reason, any or all bids may be rejected.
4.4 Procurement by Competitive Proposals. The techniaue of competitive proposals is
normally conducted with more than one source submitting an offer, and either a fixed-
price or cost -reimbursement type contract is awarded. It is generally used when
conditions are not appropriate for the use of sealed bids. If this method is used, the
following requirements a
4.4.1 Requests for proposals shall be publicized and identify all evaluation factors
including relative importance. Any response to publicized requests for proposals
shall be honored to the maximum extent practical;
4.4.2 Proposals will be solicited from an adequate number of qualified sources;
4.4.3 The District shall conduct technical evaluations of the proposal received and for
selecting awardees;
4.4.4 Awards will be made to the responsible firm whose or000sal is most advantaaeous
to the oroaram, with price and other factors considered: and
4.4.5 The District may use competitive proposal procedures for qualifications -based
procurement of architectural/engineering (A/E) professional services whereby
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competitors' qualifications are evaluated and the most qualified competitor is
selected, subiect to negotiation of fair and reasonable compensation. The
method, where price is not used as a selection factor, can only be used in
procurement of A/E professional services. It cannot be used to purchase other
types of services though A/E firms are a potential source to perform the proposed
effort.
4.5 Procurement by noncompetitive proposals is procurement through solicitation of a
proposal from only one source and may be used only when one or more of the following
circumstances applies:
4.5.1 The item is available only from a single source;
4.5.2 The public exigency or emergency for the requirement will not permit a delay
resulting from competitive solicitation;
4.5.3 The Federal awarding agency or pass-through entity expressly authorizes
noncomoetitive or000sals in a written reauest from the District: or
4.5.4 After solicitation of multiple sources, competition is determined inadequate.
4.6 Contracting with Small and Minority Businesses, Women's Business Enterprises and Labor
Surplus Area Firms.
4.6.1 The District shall take all necessary affirmative steps to assure that minority
businesses, women's business enterprises and labor surplus area firms are used
when possible.
4.6.2 Affirmative steps include:
4.6.2.1 Placing qualified small and minority businesses and women's business
enterprises on solicitation lists;
4.6.2.2 Assuring that small and minority businesses and women's business
enterprises are solicited whenever they are potential sources;
4.6.2.3 Dividing total requirements, when economically feasible, into smaller tasks
or quantities to permit maximum participation by small and minority
businesses and women's business enterprises;
4.6.2.4 Establishing delivery schedules, where the requirement permits, which
encourage participation by small and minority businesses and women's
business enterprises;
4.6.2.5 Using the services and assistance, as appropriate, of such organizations
as the Small Business Administration and the Minority Business
Development Agency of the Department of Commerce; and
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4.6.2.6 Requiring the prime contractor, if subcontracts are to be let, to take the
affirmative steps listed in subsections 4.6.2.1 through 4.6.2.6 of this section.
4.7 Contracts Cost and Price
4.7.1 The District shall perform a cost or Brice analvsis in every orocurement action
exceeding the simplified acquisition threshold including contract modifications.
The method and degree of analysis will be dependent on the facts surrounding
each procurement situation. As a starting point, the District shall make
independent estimates before receiving bids or proposals.
4.7.2 Costs or prices based on estimated costs for contracts under the Federal award
will be allowable only to the extent that costs incurred or cost estimates included
in negotiated prices would be allowable for the District under Subpart E - Cost
Principles of Title 2, Subtitle A, Part 200 (Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awardsl.
4.7.3 The cost olus a Dercentaae of cost and oercentaae of construction cost methods
of contractina shall not be used.
4.8 Federal Awarding Agency or Pass -Through Entity Review
4.8.1 The District shall make available, upon request of the Federal awarding agencv or
pass-through entity, technical specifications on proposed procurements where
the Federal awarding agency or pass-through entity believes such review is
needed to ensure that the item or service specified is the one being proposed for
purchase.
4.8.2 The District shall make available upon request, for the Federal awarding agency
or pass-through entity pre -procurement review, procurement documents, such as
requests for proposal or invitations for bids, or independent cost estimates when:
4.8.2.1 The District's procurement procedures or operation fails to comply with
the procurement standards of Title 2, Subtitle A, Part 200, Subsection
200.324;
4.8.2.2 The procurement is expected to exceed the simplified acquisition
threshold and is to be awarded without competition or onlv one bid or
offer is received in response to a solicitation:
4.8.2.3 The procurement, which is expected to exceed the simplified acquisition
threshold, specifies a "brand name" product;
4.8.2.4 The proposed contract is more than the simplified acquisition threshold
and is to be awarded to other than the apparent low bidder under a
sealed bid procurement: or
4.8.2.5 A proposed modification chanaes the scope of a contract or increases
the contract amount by more than the simplified acquisition threshold.
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4.8.3 The District may be exempted from the pre -procurement review in subsection 4.8.2
above if the Federal awarding agency or pass-through entity determines that its
procurement systems comply with the standards set forth in Title 2, Subtitle A, Part
200, or the District self -certifies compliance with such standards if self -certification
is permitted by the Federal awarding agency or pass-through entity.
4.9 Bonding Requirements. For public projects, the District shall require bid guarantees,
performance bonds, and payment bonds consistent with Title 2, Part 200, Section 200.325
of the Code of Federal Regulations.
4.10 Contract Provisions. The District's contracts shall contain the provisions in Appendix II to
Title 2, Subtitle A, Part 200 - Contract Provisions for non -Federal Entity Contracts Under
Federal Awards, as applicable.
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RESOLUTION NO. 2023 -XX
RESOLUTION OF THE BOARD OF DIRECTORS
OF THE YORBA LINDA WATER DISTRICT
AMENDING THE PURCHASING POLICY
AND RESCINDING RESOLUTION NO. 2022-16
WHEREAS, from time to time it is necessary for the Board of Directors to review the
Yorba Linda Water District's Purchasing Policy and make modifications
that reflect current District procedures, public policy demands and
economic conditions; and
WHEREAS, the Board of Directors desires to amend the Policy last adopted by
Resolution No. 2022-16 on June 14, 2022.
NOW, THEREFORE, the Board of Directors of Yorba Linda Water District does find,
determine, and resolve:
Section 1: That the Yorba Linda Water District Purchasing Policy (3010-007-POL)
as attached hereto is hereby adopted and deemed effective June
15, 2023.
Section 2: That Resolution No. 2022-16 is hereby rescinded effective June 15,
2023.
PASSED AND ADOPTED this 15th day of June 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 Modifying the District's Purchasing Policy and Rescinding Resolution No. 2022-16
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I PURCHASING I
Dept/Div: Finance Approved By: Resolution No. 2023 -XX
Effective Date: June 15, 2023 Applicability: District Wide
Supersedes: Resolution No. 2022-16 See Also: N/A
1.0 General Policy
1.1 This Yorba Linda Water District Purchasing Policy ("Policy") establishes policies and
procedures for the District to (a) bid and purchase services, materials, equipment, and
supplies (referred to collectively as "Services and/or Materials"), pursuant to Government
Code Section 54201 et seq., and (b) bid and award Public Works projects.
1.2 This Policy establishes the Board of Directors' (the "Board") approved policies and
procedures regarding the Procurement of Services and Materials and Public Works
projects, including expenditure authorization and limits, competitive proposal and
bidding requirements, and general Procurement procedures. All purchases of Services or
Materials and Public Works projects to be paid by the District must adhere to the authority
level and dollar limits of this Policy as set forth in Section 2.0, except as otherwise provided
by specific terms and exceptions in this Policy.
2.0 Authorization
2.1 By adoption of this Policy, the Board is authorizing the General Manager and other
designated representatives to exercise certain duties and responsibilities that are
essential for the day-to-day operation of the District.
2.2 The General Manager may delegate the Procurement of Services and Materials and
Public Works projects to those staff members given specific authority, consistent with the
terms of this Policy.
2.3 Delegation of purchasing authority may be through the authorized use of Purchasing
Cards, Purchase Orders, check requests, or other written authorization. All such purchases
will be made in conformity with the policies and procedures prescribed within this Policy.
2.4 The Board -established Procurement limits and Contract signatory authorities are listed in
Table 1 below. These limits are applicable on a per-expenditure/per-Contract basis, not
on an aggregated basis, for unrelated activities.
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Table 1
3010-007-POL
Procurement Limits and Contract Signatory Authority
Title
Expenditures
Contract Signature Authority
$75,001 and over with Board
General Manager
Up to $75,000
Authorization; up to $75,000
without Board Authorization.
Assistant General Manager
Up to $50,000
Up to $50,000
Department Managers
Up to $25,000
Up to $25,000
Budget Analyst, Customer Service
Billing Administrator, Principal
Engineer, Public Affairs Officer,
Records Mgmt Administrator,
Up to $5,000
None
Accounting Supervisor, Senior
Engineer, Senior Executive
Assistant, Senior IS Administrator,
Superintendents
Administrative Personnel
Up to $2,000
None
3.0 Definitions
The terms referenced in this policy shall have the meanings as defined below:
3.1 Administrative Personnel - District administrative employees authorized by the General
Manager to purchase miscellaneous items, food, and travel in support of District functions
includes Executive Assistant, Human Resources Analyst, Operations Lead Staff, and any
other administrative position as authorized by the General Manager.
3.2 Amendment - A written change or addition to a legal document which, when properly
executed, has the same legal validity of the original document.
3.3 Board - The Board of Directors of Yorba Linda Water District.
3.4 Change Order - A written Amendment modifying the terms of an existing Contract or
Purchase Order.
3.5 Consultant - Any person, firm, or entity that provides or offers to provide Professional
Services to the District.
3.6 Contract - Written agreement authorizing a contractor, Consultant, supplier, or service
provider to provide Services or Materials, or Public Works, in accordance with the material
requirements, conditions, or scope of work stated in the Contract.
3.7 Contractor - Any person, firm, or entity that submits a bid, proposal, or Contract in
connection with a procurement or service. This term also includes any person who
conducts business as an agent or representative of the contractor.
3.8 District - Yorba Linda Water District.
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3.9 Emergency- A situation in which unforeseen circumstances present an immediate risk of
harm or hazard to real or personal property, the public health, safety, welfare, or District
personnel or property, or threaten serious interruption of District operations.
3.10 General Manager - General Manager of the District or the person appointed by the
Board to act in the capacity of the General Manager and authorized to administer this
Policy on their behalf.
3.11 Invitation to Bid - A formal process for soliciting sealed bids from qualified prospective
suppliers or Public Works Contractors.
3.12 Multiple Year Contract - A Contract for the purchase of Services, Materials, or Public
Works for (a) a multiple year term or (b) that may contain provisions to extend
performance by exercising optional renewal periods. A Multiple Year Contract does not
obligate the District beyond the initial award period and shall not provide for a
cancellation payment to the Contractor if options are not exercised
3.13 Non -Discretionary Purchases - Payments to utilities, temporary employment services,
insurance providers, healthcare providers and national, federal, state, or local agencies
that relate to routine obligations and expenses essential to the District's ability to provide
service to customers and that have been approved in fiscal year operating or capital
budgets.
3.14 Non -Professional Services - Services other than Professional Services, including, but not
limited to, supply and maintenance services.
3.15 Procurement - The purchase or lease of Services or Materials, or Public Works.
3.16 Procurement Card - A form of charge card (also referred to as a P -Card or Purchasing
Card) that allows for goods to be purchased without using a Purchase Order
3.17 Professional Services - Any type of special service or advice in financial, economic,
accounting, engineering, legal or administrative matters by persons specially trained and
experienced and competent to perform the special services required. (Gov't Code §
53060.) Such services include but are not limited to architectural; engineering;
environmental; financial; land surveying; construction management; audits; training
services; legal services; preparation of planning or studies; SCADA integration; technology
application development; and personnel, job classification and benefit studies.
3.18 Public Works - As defined by California Public Code Section 22002, are public projects,
which include construction, reconstruction, alteration, renovation, improvement,
demolition, and repair work involving any publicly owned, leased, or operated facility.
Maintenance work is not considered a public project for purposes of this definition.
3.19 Purchase Order (PO) - An authorization, under a standardized form in which the party
designated as the "provider" is to provide Services and Materials for which the District
agrees to pay.
3.20 Request for Proposal (RFP) - A solicitation used for the Procurement of Professional Services
and Non -Professional Services. Prospective suppliers or Consultants submit proposals
based on requested information and are evaluated/awarded based on pre -established
criteria.
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3.21 Request for Quotes (RFQ) - A solicitation used for Procurement of construction Services or
Materials.
3.22 Requisition (REQ) - The procedural method by which departments may request a PO for
the purchase of materials, supplies or equipment. Requisitions are entered into the
District's ERP system application.
3.23 Single Source Purchase - Procurement where: (a) there is a compelling reason for only
one source, a preferred brand, like material, homeland security goods, services, etc., to
be procured; or (b) the commodity is unique, including, but not limited to, acquisition of
data processing, telecommunications and word processing equipment, goods and
services; or (c) the purchase of a specific brand name, make or model is necessary to
match existing District equipment or facilitate effective maintenance and support; or (d)
when it is in the best interest of the District to extend or renew a Contract from a previous
contract period, based on satisfactory service, reasonable prices, avoidance of start-up
costs, avoidance of interruptions to District business, or good business practices. Such a
Procurement of $25,000 or greater must be presented to the Board of Directors at the
next regular scheduled meeting.
3.24 Sole Source Purchase - Procurement where only one viable source exists. This is usually
due to legal restrictions of patent rights and copyrights, a proprietary process, warranty
issues, original equipment, etc. Such a Procurement of $25,000 or greater must be
presented to the Board at the next regular scheduled meeting.
4.0 General Procurement Policies
4.1 Procurement practices shall comply with laws, regulations, and guidelines of the State of
California and any other applicable law and provisions of grant or funding contracts, if
applicable.
4.2 Any employee/individual affecting any Procurement outside of the policies and
procedures established by this Policy and without General Manager or Board
authorization to do so, may be subject to disciplinary action and/or termination in
accordance with District policies.
4.3 Expenditures and Contract awards must be authorized by the appropriate authorization
level indicated in Table 1.
4.3.1 Separating or dividing Contracts into smaller components for the purpose of
bringing the cost of one or more Contracts below any specified sum to avoid a
requirement in any section of this Policy or any policy incorporated herein is strictly
prohibited. Contracts may be divided only to meet unique scheduling of a project
or to accommodate necessary time frames. In addition, no specifications shall be
drafted in such a manner as to limit competitive bidding or solicitation directly or
indirectly to any one specific vendor, or any specific brand, product, thing, or
service, except for those items that are approved as exempt from competitive
bidding or solicitation requirements as provided in Section 7.1.3.
4.4 Purchase amounts include taxes and the cost of shipping, freight fees, and any other
charges billed by the supplier or Contractor for purposes of the authorization limits under
this Policy.
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4.5 Purchase authorization and expenditure limits in Table 1, and competitive solicitation
requirements in Table 2 and as further set forth in this Policy, are on a per purchase/per
Contract basis and shall not be applied as an aggregate limit to any vendor, supplier,
Contractor or Consultant.
4.6 With the exception of the General Manager, in the absence of an authorized signatory for
a given request, authorization will be obtained from the next highest authority in Table 1.
In the case where the next highest authority is absent, then authorization will be obtained
by an authorized signatory in order of rank and availability.
4.7 The District may use electronic commerce whenever practicable or cost-effective. The
District may accept electronic signatures and records in connection with the District
Procurement, as permitted by applicable law.
5.0 Procurement Methods
The following methods are available to initiate a purchase request or to pay for Services and
Materials or Public Works:
5.1 Requisition/Purchase Order - Staff that require Services and Materials to carry out the
defined duties of their positions shall submit Requisitions, in advance, for purchases in
accordance with this Policyand other applicable procedures and policies of the District.
Staff will generate a Purchase Order from the Requisition.
5.1.1 Complete the Requisition form or Requisition data entry screen to request that
Services or Materials are ordered.
5.1.1.1 Allow at least two (2) working days of lead time.
5.1.1.2 Provide complete name and address of selected vendor.
5.1.1.3 Indicate the purpose of the Purchase Order.
5.1.1.4 Describe the Services or Materials clearly and specifically. Include make,
model, manufacturer's part number, catalog number or vendor catalog
page number, if available. Indicate color, size, or any option required.
5.1.1.5 Indicate the quantity and unit price for each Service or Material.
5.1.1.6 Note whether the Services or Materials are taxable.
5.1.1.7 Note any freight charges.
5.1.1.8 Must indicate a valid General Ledger account number(s), and correct
projects number(s).
5.1.1.9 Indicate the date the Services or Materials are needed.
5.1.1.10 Attach any required price quotes and data that supports the requested
purchase, if available.
5.1.1.11 Seek appropriate approvals as required in Table 1.
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5.1.1.12 Purchases shall not be split to circumvent Contract signatory
authorizations as set in Table 2.
5.1.1.13 Submit Purchase Order for processing.
5.1.2 Upon approval and receipt of a fully executed purchase Requisition, the Purchase
Order will be systematically assigned the next consecutive number.
5.1.2.1 The original Purchase Order will be given back to the originator or sent to
the vendor.
5.1.2.2 A copy of the approved Purchase Order, and any supporting documents,
will be forwarded to Accounts Payable for processing.
5.1.2.3 A copy of the approved Purchase Order will be forwarded to the
Warehouse pending receipt of goods.
5.1.2.4 An electronic record of the Requisition/Purchase Order will be kept within
the purchasing system for historical purposes.
5.2 Check Request - A check request can be used to initiate payment for certain limited
Services or Materials without a Purchase Order. Check requests can be used to request
payment for Non -Discretionary Purchases, services rendered, subscriptions, membership
dues, workshop/seminar/conference registrations, use of facilities, etc.
5.3 CAL -Card and Other Procurement Cards - Designated staff may be assigned a CAL -Card
for miscellaneous purchases. Purchases using the CAL -Card are subject to the terms and
conditions of the District Cardholder Procurement Card Agreement and any other
applicable District procurement card policies or procedures. Professional Services are not
to be acquired on CAL -Cards due to lack of insurance and indemnification language
associated with these services. CAL -Card limits may be increased for a specific
authorized user with the approval of the General Manager subject to the authorization
limits as set in Table 1. Use of all other Procurement Cards are subject to the terms of this
Policy and to any set terms provided at the time of card issuance to the designated staff
and any subsequent Amendments to such terms, and other applicable District policies
(Refer to Exhibit A).
5.4 Contracts - Provisions shall be made, either through specifications or procedures
established by the District, for verification of the references and financial responsibility of
the contracting parties prior to the award of a Contract. After award, all Contracts shall
be executed on behalf of the District by the appropriate authorized signatory indicated
in Table 1. In no case shall any Contract be made if sufficient funds are not budgeted
and appropriated and not available to make payment promptly upon delivery or
completion, or in accordance with a progress payment schedule, unless otherwise
authorized and approved by the Board or approved by the General Manager as
provided for in Section 6.2 (Emergency).
5.4.1 Contracts for Non -Professional Services, Professional Services, and Public Works shall
be executed when an expenditure exceeds $5,000 (except in the event of an
Emergency).
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5.4.2 Multiple Year Contracts are allowed when in the best interests of the District as
determined, and executed by the General Manager.
5.4.2.1 For purposes of Procurement authorization, the dollar value of a Multiple
Year Contract shall be the total Contract value, including optional
renewal periods. Once initially approved in accordance with the Policy
requirements, any optional renewals may then be authorized by the
General Manager at the time of renewal, regardless of the dollar amount,
provided the pre -priced option is consistent with the terms of the Contract
as initially approved.
6.0 Exceptions to Pre -Authorization
6.1 Non -Discretionary Purchases - Do not require Board approval for payment, including
those that exceed the General Manager limit of $75,000. Purchase Orders are not
required for Non -Discretionary Purchases that pertain to payments to utilities, insurance
providers, heath care providers, payroll, and national, federal, state or local agencies
that relate to routine obligations and expenses essential to the District's ability to provide
service to customers and that have been approved in fiscal year operating budgets.
6.2 Emergency Work/Services - The General Manager, Assistant General Manager, or the
assigned Operations or Engineering Manager may authorize Emergency expenditures for
work, Services, and/or Supplies where the cost exceeds $75,000 without prior Board
approval. The Board shall be notified of any expenditures for Emergency work, Services
and/or Supplies exceeding the General Manager's authorization limit at the next
regularly scheduled Board meeting.
6.3 Purchase Requests - Require no prior authorization or signatory approval under Table 1 to
replenish the District's warehouse inventory within established inventory re -order levels.
7.0 Competitive Selection Process
7.1 General - A competitive selection process for Procurement of Services and Materials, and
for Public Works projects, is required in accordance with the limits as set forth in Table 2
below (subject to certain exceptions, qualifications or limitations as further set forth
below).
Table 2
Competitive Solicitation Process - Requirements
Purchase Amount
Solicitation Requirement
$25,000 and under
One Quote
$25,001 - $50,000
Two Quotes
$50,001 - $75,000
Three Quotes
$75,001 and over
RFP or RFQ or Invitation to Bid Process Required
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7.1.1 Competitive Solicitation - Submission
3010-007-POL
7.1.1.1 All quotes, bids, and proposals must be in writing. An email is acceptable
for expenditures of $75,000 and under.
7.1.1.2 RFP, RFQ, and Invitation to Bid submissions must be in writing and be in
substantial compliance with terms in the solicitation, or as otherwise
required by law, or may be disqualified.
7.1.1.3 Quotes, bids, and proposal documentation shall be retained pursuant to
the District's record retention policy.
7.1.2 Exceptions from Competitive Solicitation Process - Generally, solicitation of bids or
proposals is preferable whenever practicable. In addition to the exceptions stated
under Section 7.3.2, the competitive solicitation requirements established in Table
2 may be waived when any of the following criterion is applicable:
7.1.2.1 Sole Source Purchases.
7.1.2.2 Single Source Purchases.
7.1.2.3 Emergency expenditures.
7.1.2.4 After a reasonable attempt has been made to obtain competitive
quotes/ responses and it has been determined that (a) no additional
suppliers/providers/Contractors/Consultants can be located; (b) the
District has a lack of response from
suppliers/providers/Contractors/Consultants to a competitive solicitation;
or, (c) when sufficient, satisfactory bids/proposals are not received, based
on the District's sole discretion.
7.1.2.5 Purchases to replenish the District's warehouse inventory within
established inventory re- order levels.
7.1.2.6 As provided by law.
7.1.3 It shall be at the discretion of the General Manager or Assistant General Manager
and the initiating Department Manager(s) to determine whether an expenditure
meets a criterion listed herein to be exempt from a competitive solicitation, subject
to any Board authorization. Such expenditures that meet a criterion will be
presented to the Board of Directors at publicly held meeting.
7.2 Public Works - Contracts for Public Works projects shall conform to applicable
requirements for Public Works Contracts under State law, including but not limited to
requirements relating to (a) listing of subcontractors, (b) posting of a payment bond in
an amount not less than 100% of the total Contract amount for all Public Works Contracts
over $25,000, and (c) payment of prevailing wages for all Contracts for Public Works
exceeding $1,000 or as otherwise required by statute.
Unless specifically waived by the District with the approval of the General Manager and
District's legal counsel, the District shall require performance bonds for all Public Works
Contracts in an amount not less than 100% of the total Contract amount. Public Works
Contracts let by an Invitation to Bid may be awarded (a) to the lowest responsive,
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responsible bidder, and (b) in accordance with (i) State law, (ii) the District's standard
Public Works Contract documents, and (iii) Section 11.0 below.
7.3 Professional Services (over $75,000) - RFPs will be initiated pursuant to the limits set forth
in Table 2 when the Contract is anticipated to exceed $75,000, unless the District's needs
mandate uniquely qualified services, in which case only one proposal from a qualified
firm may be solicited. Professional Services may be engaged in accordance with
California Government Code §4525 et seq., and on the basis of demonstrated
competence and qualifications for the types of services to be performed and at fair and
reasonable prices to the District.
7.3.1 Professional Engineering Services - The District may request proposals for
engineering services when the Contract amount is anticipated to exceed $25,000,
and up to $75,000. For engineering services anticipated to exceed $75,000, RFPs
will be initiated pursuant to the limits set forth in Table 2.
7.3.2 On Call Engineering Services - The District may solicit RFPs for on-call engineering
services and enter agreements for on-call engineering services. Entering into an
agreement qualifies Consultant to perform services for the District on a task order
basis, but it does not entitle Consultant to any compensation or a right to perform
services on any scope of work or particular task order for the District. When the
District needs services for task(s), it will submit a scope of work to Consultant
requesting task proposals. If Consultant's task proposal is selected by the District,
Consultant represents and warrants to District that it is fully qualified and available
to perform the services for, and as requested by, the District.
7.3.3 Exceptions from Competitive Solicitation Process - Professional Services - In
addition to the exception for "uniquely qualified services" set forth under Section
7.3, the following criteria shall apply as exceptions to the competitive solicitation
requirements set forth under Table 2 for Professional Services where such
requirements would otherwise apply:
7.3.3.1 For Professional Services estimated to cost $25,000 or less, staff may
request a proposal from one (1) qualified Consultant.
7.3.3.2 For Public Works projects where the project design is scheduled in phases,
the related Professional Services may be negotiated with the Consultant
that performed the work for a prior phase, if (a) the Consultant performed
satisfactory work on the prior phase(s) in terms of quality, schedule, and
estimated design costs and (b) a satisfactory Contract can be
negotiated.
7.3.3.3 For Professional Services in which it is impracticable to comply with the
selection process because of the unique, exploratory, or experimental
nature of the project, staff may request a proposal from one (1) qualified
Consultant.
7.4 Rejecting Competitive Responses - In response to an Invitation to Bid, RFQ, or RFP, the
District may reject a bid or other response which is in any way incomplete, irregular,
amplified, unqualified, conditional, or otherwise not in compliance with the solicitation
documents in all material respects and in accordance with law. The District may (a)
waive any informality, irregularity, immaterial defects, or technicalities in any bids or other
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responses received; and/or (b) cancel an Invitation for Bid or RFP/RFQ, or reject all bids
or responses for any other reason, which indicates the cancellation or rejection of all bids
or responses is (i) in the best interest of the District, and (ii) in accordance with law.
Rejection of all bids or responses or cancellation of competitive solicitations, including
determinations to re -bid, or re -solicit are subject to the same level of authority which is
required to award a Contract as provided under Table 1, and as required by law.
7.5 Awarding Contracts - Consistent with Section 11.0 below, the District reserves the right to
award Contracts based upon the best interests of the District as determined by the District
in its sole discretion.
8.0 Change Orders
8.1 Change Orders may be issued from time to time as required by changes in the
specifications or conditions of a project, services performed, or materials to be issued.
8.1.1 Change Orders - PO Only - Change Orders up to 10% (to a maximum additional
$1,000) of the original PO amount may be issued by the appropriate Department
Manager without further approvals. A revised Purchase Order Requisition must be
completed and approved at the appropriate authorization levels under Table 1
for any Change Order request exceeding the original amount by more than 10%
or the $1,000 limit.
8.1.2 Change Orders - Formal Contracts and Amendments
8.1.2.1 For Contracts and/or Amendments under $75,000:
Change Orders up to 10% of the original Contract amount can be
approved by the appropriate authorization levels as outlined in Table
1 up to a maximum total Contract amount of $75,000 without Board
approval.
■ Board approval is required for Change Order requests exceeding the
original Contract amount by more than 100, or resulting in a total
Contract amount over $75,000.
8.1.2.2 For Contracts and/or Amendments $75,001 and over:
Change Orders up to 100 (to a maximum additional $75,000) of the
original Contract amount can be approved by the appropriate
authorization levels as outlined in Table 1 without Board approval.
■ Board approval is required for Change Order requests exceeding the
original Contract amount by more than 10%, or resulting in a $75,000
increase.
8.1.3 Change Order Exceeding Limits
A Change Order exceeding the Change Order limits set forth in this article may
be authorized by the General Manager prior to Board approval if, in the General
Manager's determination, any of the following circumstances exist:
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8.1.3.1 A delay in Change Order authorization could result in a negative financial
impact to the District.
8.1.3.2 A delay in Change Order authorization could result in damage to or
impairment of the operations of a District facility.
8.1.3.3 An Emergency exists which requires immediate work/services.
The Board shall be notified of any Change Order authorization exceeding the
General Manager's authorization limit at the next regularly scheduled Board
meeting.
9.0 Ethical Procurement Conflict of Interest
9.1 Board members, District officers and employees shall not be financially interested in any
Contract made by them in their official capacity. (Government Code Sections 1090 and
1091.5). Board Members, District officers, and employees shall not participate in any way
to influence a governmental decision in which he/she knows or has reason to know that
he/she has a financial interest. (Government Code Section 87100 et seq.)
9.2 Any District employee (other than Administrative Personnel not under Designated Positions
in the District's Conflict of Interest Code) authorized under this Policy to make or enter into
purchases on behalf of the District will complete a Statement of Economic Interests (Form
700) and comply with the District's Conflict of Interest Code.
9.3 Confidential or proprietary information must be handled with due care and proper
consideration of ethical and legal ramifications and governmental regulations.
9.4 Purchasing activities must be performed in accordance with all applicable laws and
District policies.
9.5 Any employee/individual who violates the standards set forth in this Section may be
subject to disciplinary action consistent with District personnel policies.
10.0 Emergency Procurement Procedures
10.1 In the event that the District declares an Emergency, the District may procure the
necessary equipment, Services, and Materials in response to that Emergency without
following the purchasing procedures prescribed by this Policy.
10.2 General Manager Authority
10.2.1 The Board has authorized the General Manager, or their designee, to approve
Emergency Procurements described in Section 10.1.
10.2.2 If the Emergency Procurement exceeds the General Manager's approval
authority, the General Manager, or their designee, shall report to the Board, at its
next meeting, the reasons justifying why the Emergency did not permit time to
comply with the District's purchasing requirements and why the purchase was
necessary to respond to the Emergency.
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10.3 Board Ratification
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10.3.1 After the District makes an Emergency Procurement, it shall make a finding based
on substantial evidence set forth in the minutes of its meeting that the Emergency
did not permit time to comply with the District's purchasing requirements, and that
the purchase was necessary to respond to the Emergency.
10.4 Federally Declared Emergencies; Procurement and Contracting Requirements
10.4.1 In the event of an Emergency declared by the President of the United States, the
District must comply with Federal procurement standards as a condition of
receiving public assistance funding from the Federal Emergency Management
Agency (FEMA) for Contract costs for eligible work. FEMA funding is governed by
Title 2 of the Code of Federal Regulations (CFR) Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards.
10.4.2 Federal Emergency Procurement Procedures
10.4.2.1 Micro Purchases
■ Purchases within the micro -purchase threshold (e.g. currently set at
purchases of $10,000 or less but periodically adjusted for inflation) may
be awarded without soliciting competitive quotations if the District
considers, in its sole discretion, the price to be reasonable.
■ To the extent practicable, the District must distribute micro -purchases
equitably among qualified suppliers.
10.4.2.2 Small Purchases
■ Purchases within the simplified acquisition threshold (e.g. currently set
at purchases of $250,000 or less) shall not be required to be formally
bid.
■ Price quotations must be received from no less than three (3) sources.
10.4.2.3 Formal Sealed Bidding
■ Formal, sealed bidding is required for purchases greater than the
simplified acquisition threshold, which is currently set at $250,000, or as
may be adjusted by the Federal Acquisition Regulation, pursuant to
48 CFR Section 2.101.
■ The District must publicly advertise the invitation for Bids and publicly
open all bids at the time and place prescribed in the Invitation to Bid.
■ Any Contracts awarded pursuant to this procedure may be to the
lowest responsible bidder submitting a responsive bid and shall be for
a firm fixed price.
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10.4.2.4 Solicitation of Competitive Proposals
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■ When the nature of a Procurement does not lend itself to formal,
sealed bidding (e.g. Professional Services), the District may solicit
competitive proposals.
■ A Request for Proposals (RFP) must be publicly advertised, and the
District must solicit proposals from an adequate number of sources.
The RFP must identify all evaluation factors and their relative
importance; however, the numerical or percentage ratings or weight
need not be disclosed.
■ Any Contract awarded based on the competitive proposal
Procurement process cannot be based exclusively on price or price -
related factors.
■ If a Contract is awarded, it may be to the responsible firm whose
proposal is most advantageous to the District ("best value"), with price
and other factors considered.
10.4.3 Federal Emergency Noncompetitive Procurements
10.4.3.1 Contracts may be procured through a noncompetitive proposal only
when:
■ The item is only available from a single source;
■ The public exigency or Emergency for the requirement will not permit
a delay resulting from competitive solicitation;
■ The District authorizes noncompetitive proposals, as otherwise
permitted by the Purchasing Policy; or
■ Competition is deemed inadequate after the solicitation of a number
of sources.
10.4.4 Federal Emergency Contracting with Small and Minority Firms, Women's Business
Enterprises, and Labor Area Surplus Firms
10.4.4.1 The District must conduct all necessary affirmative steps to ensure the use
of minority businesses, women's business enterprises, and labor surplus
area firms when possible, as set forth in 2 CFR Section 200.321.
10.4.4.2 The District has developed Contract templates that include requirements
for bidders to take those affirmative steps to secure involvement by those
firms, as outlined in 2 CFR Section 200.321(b).
10.4.5 Federal Emergency Cost or Price Analysis
10.4.5.1 The District shall perform a cost or price analysis in connection with every
Procurement, including Contract modifications, in excess of the simplified
acquisition threshold. While the method and degree of analysis depends
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on the facts surrounding the particular Procurement, the District must, at
a minimum, make independent estimates before receiving bids or
proposals.
10.4.5.2 The District shall negotiate profit as a separate element of the price for
each Contract in which there is no price competition and in all cases
where a cost analysis is performed as required by 2 CFR Section
200.323(b).
10.4.6 Federal Emergency Payment Procedures
10.4.6.1 Contracts entered into pursuant to this Section 10.4 shall utilize only fixed-
price, cost -reimbursement, or, to a limited extent, time and materials
payment methods.
10.4.6.2 Time and Materials (T&M) Contracts
■ T&M Contracts should be used rarely, and the use of T&M Contracts
should be limited to a reasonable time period (e.g., no more than 70
hours) based on circumstances during which the District cannot
define a clear scope of work.
■ The District shall only enter into a T&M Contract if all of the following
apply:
- No other Contract was suitable;
- The contract has a guaranteed maximum price that the
Contractor exceeds at its own risk; and
- The District provides a high degree of oversight to obtain
reasonable assurance that the Contractor is using efficient
methods and effective cost controls.
■ The District must define the scope of work as soon as possible to
enable Procurement of a more acceptable type of Contract (i.e.,
non-T&M).
10.4.6.3 Separate Invoicing
■ All purchases made during a proclaimed Emergency shall require
separate invoicing from routine (i.e., non -Emergency related)
purchases. All invoices shall state the Services or Materials provided
and shall specify where the Services or Materials were delivered. All
invoices shall specify the location(s) where the Services or Materials
were used, if possible. Any invoice which fails to properly identify the
Emergency nature of the purchase and provide details as to the
date(s) and location(s), as appropriate, shall not be paid until such
information is provided by the vendor and re -submitted in correct
form.
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10.4.6.4 Auditing of Invoices for Debris Removal
All invoices for debris clearance and removal shall be audited prior to
payment to the vendor. Vendors shall be notified of the requirement
prior to award of any Contract for debris clearance and/or removal.
Audits shall be in accordance with procedures for debris removal
monitoring specified in FEMA's Publication 325, Debris Management
Guide.
11.0 Procurement Procedures Pertaining to Federal Grants
11.1 In the event that the District is identified as a recipient or sub -recipient of a Federal
Government Grant or any Pass -Through Federal Grant, the District will be required to
comply with the Federal Uniform Guidance (2 C.F.R. Part 200) standards and procedures
as listed in Exhibit B. This Guidance establishes requirements by grantees when procuring
goods and services needed to carry out a Federal award.
12.0 County Water District Status
12.1 The District is a County Water District and therefore is not mandated by State law to
competitively bid any purchases, including those for Public Works projects and/or capital
expenditures. (Associated Builders & Contractors, Golden Gate Chapter, Inc. v. Contra
Costa Water District (1995) 37 Cal.App.4th 468.) The District has discretion to enter into
non -bid Contracts for Public Works, to procure Services and Materials, to contract for
design -build work, to utilize job -order contracting and to enter into Cooperative
Purchasing arrangements for the design, construction, and maintenance of Public Works,
or undertake any other form of contracting determined to be in the District's best interest,
except as otherwise expressly restricted by law. Notwithstanding this lack of legal
mandate and contractual discretion, District staff shall make a good faith effort to
support the Competitive Selection Process described in Section 7.
13.0 Policy Revisions
13.1 This Policy will be maintained and revised by the General Manager or their designated
representatives in consultation with the District's legal counsel, subject to approval by the
Board. This Policy will be reviewed regularly and revisions will occur whenever applicable
Federal, State, or local regulations change or otherwise as the need arises and in the
discretion of the Board.
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EXHIBIT A
PROCUREMENT CARD POLICY
1.0 Purpose
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The Procurement Card Program was developed to allow designated full-time regular
employees the capability to purchase, with predefined spending limits, certain types of items
directly from the merchant thus reducing the cost associated with low -value purchasing
activity. The purpose of this policy is to identify the conditions in which employees will be issue
a Procurement Card and the rules for its use.
2.0 General Information
Authorization to use this Card is restricted to the CARDHOLDER ONLY and MAY NOT BE USED
FOR PERSONAL PURCHASES.
2.1 Employees will not use District Procurement Cards for personal expenses even if the intent
is to reimburse the District later.
2.2 Procurement Cards must not be used for purchases when the cardholder has personal
interest in the merchant or knowledge that a purchase would create a conflict of interest.
2.3 Before receiving a Procurement Card, employees will sign a "Cardholder Procurement
Card Agreement" and receive a copy of the Policies and Procedures setting forth their
obligations under this program.
2.4 The Procurement Card is supplemented to the procurement process. As with other
procurement methods the following conditions must be met when using the Procurement
Card:
2.4.1 The Procurement Card should be used whenever possible in lieu of petty cash or
low dollar Requisitions from point of sale vendors.
2.4.2 Purchases shall not be split to circumvent transaction limits as set in Table 1 of this
Procurement Policy.
2.4.3 Each single purchase may be comprised of multiple items, but the total including
tax and freight cannot exceed the single purchase dollar limit on the Procurement
Card.
2.4.4 Every purchase using the Procurement Card must adhere to all provisions of the
Procurement Policy.
3.0 Procurement Card Role Definitions
3.1 Cardholder - The cardholder is the District employee whose name appears on the
Procurement card.
3.2 Approver: The Approver is the person who is responsible for reviewing the charges for a
group of cardholders to ensure that purchases are appropriate and allowed.
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3.3 Program Administrator: The Program Administrator provides overall administration and
oversight of the Procurement Card program.
4.0 Responsibilities
4.1 Cardholders: Cardholders Safeguard the Procurement Card, provide itemized receipts
for all transactions, allocate the transactions, and sign off on the transactions in a timely
basis.
4.2 Approvers: Approvers review transactions of cardholders for adherence to policies and
procedures, ensure that all transactions are properly coded, and all disputed charges
are correctly reported.
4.3 The Cardholder and Approver are required to review and approve the individual
cardholder transactions and submit to Accounts Payable within the established time
frame specified by Finance Manager. This is critical to allow Accounts Payable to make
payment within specified time limits.
4.4 Failure to meet approval deadlines can result in the following:
4.4.1 First Failure - Verbal/electronic warning.
4.4.2 Second Failure - Written warning and notification to the appropriate Department
Manager and possible suspension of card privileges.
4.4.3 Third Failure - Suspension of card privileges. Restoration of card privileges requires
approval by the Finance Manager.
5.0 Procurement Audits
To ensure the continued success of the Procurement Card Program, periodic, random audits
will be performed by the Finance Department. The purpose of the audits will be to ensure the
cardholders are adhering to established policies and procedures.
6.0 Use of Procurement Card for Travel and Meals
Procurement cards may be used for approved travel in accordance with the District's travel
policy.
7.0 Card Restrictions
The Procurement Card is not to be used for services of any kind, leases, or repairs excluding
auto when traveling, due to insurance requirements and the complexity of IRS 1099 reporting.
Department Managers may apply additional restrictions on card use. It is the responsibility of
the cardholder to know what their department's restrictions are.
8.0 Misuse of a Procurement Card
8.1 The following situations are a few examples of "misuse" of a Procurement Card:
8.1.1 Purchases using the Procurement Card for personal benefit of the employee.
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8.1.2 Assignment or transfer of an individual Procurement Card to an unauthorized
person.
8.1.3 Purchases from family, friends or relatives where there is personal gain or a conflict
of interest, perceived or real.
8.2 Any variance, misuse, and/or violation of the policy and processes set forth will be
considered improper use of the card. This may result in card cancellation, disciplinary
action, up to and including termination.
9.0 Return of Merchandise
In the event the cardholder determines that an item must be returned for any reason, the item
and credit card receipt must be returned to the merchant/vendor as soon as possible. At no
time is the cardholder allowed to accept a store gift card or cash in lieu of a credit adjustment
to the Procurement Card. Cardholder is responsible for allocating and signing off on both the
purchase and the credit transactions in a timely manner.
10.0 Disputes
All transactions should be monitored for validity and disputed transactions must be reported
to the Program Administrator. To process a dispute, consult the Program Administrator.
11.0 Lost or Stolen Cards
When a Procurement Card is lost or stolen during normal business hours the Cardholder must
notify their Approver and the Program Administrator immediately. If it is after hours the
Cardholder must notify the issuing bank directly.
12.0 Separation, Transfer or Revocation of Card Privileges
Upon leaving the District, transferring to another Department or loss of Procurement Card
privileges, the Cardholder must return their Procurement Card to Human Resources.
Concurrent with surrendering the card, the cardholder must deliver documentation to their
supervisor of all outstanding transactions.
The General Manager, Assistant General Manager, or Department Managers have absolute
discretion to suspend or revoke a Cardholder's privileges at any time and for any reason.
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EXHIBIT B
FEDERAL REQUIREMENTS
1.0 Regulations for Procurement of Property or Services Stemming from Federal Aid
3010-007-POL
1.1 This section shall apply to the awarding of sub -grants and contracts by the District
stemming from federal grants to the District. This section shall have the same application
on the awarding of sub -grants and contracts by the District stemming from state, county
or other non-federal government entity grants originating as federal grants.
2.0 Procurement Standards
2.1 The District shall maintain a contract administration system which ensures contractors
perform in accordance with the terms, conditions and specifications of their contracts or
purchase orders.
2.2 The District shall maintain written standards of conduct covering conflicts of interest and
governing the actions of its employees engaged in the selection, award and
administration of contracts. No employee, officer or agent of the District shall participate
in selection, or in the award or administration of a contract supported by federal funds if
a conflict of interest, real or apparent, would be involved. Such a conflict would arise
when:
2.2.1 The employee, officer or agent;
2.2.2 Any member of his or her immediate family;
2.2.3 His or her partner; or
2.2.4 An organization which employs, or is about to employ, any of the above, has a
financial or other interest in or a tangible personal benefit from a firm considered
for award.
2.3 The District's officers, employees or agents will neither solicit nor accept gratuities, favors
or anything of monetary value from contractors, potential contractors, or parties to sub -
agreements. Such a conflict will not arise where the financial interest is not substantial or
the gift is an unsolicited item of nominal intrinsic value. The District's standards of conduct
provide for disciplinary actions to be applied for violations of such standards by officers,
employees, or agents of the District.
2.4 The District shall not enter into a contract with a non -Federal entity has a parent, affiliate,
or subsidiary organization that is not a state, local government or Indian tribe, unless the
non -Federal entity maintains written standards of conduct covering organizational
conflicts of interest. Organizational conflicts of interest mean due to relationships with a
parent company, affiliate, or subsidiary organization, the non -Federal entity is unable or
appears to be unable to be impartial in conducting a procurement action involving a
related organization.
2.5 The District shall avoid acquisition of unnecessary or duplicative items. Consideration will
be given to consolidating or breaking out procurements to obtain a more economic
purchase. Where appropriate, an analysis will be made of lease versus purchase
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alternatives, and any other appropriate analysis to determine the most economical
approach.
2.6 The District shall consider entering into state and local intergovernmental agreements or
inter -entity agreements where appropriate for procurement or use of common or shared
goods and services.
2.7 The District shall consider using Federal excess and surplus property in lieu of purchasing
new equipment and property whenever such use is feasible and reduces project costs.
2.8 The District shall consider using value engineering clauses in contracts for construction
projects of sufficient size to offer reasonable opportunities for cost reductions. Value
engineering is a systematic and creative analysis of each contract item or task to ensure
its essential function is provided at the overall lower cost.
2.9 The District shall make awards only to responsible contractors possessing the ability to
perform successfully under the terms and conditions of a proposed procurement.
Consideration will be given to such matters as contractor integrity, compliance with
public policy, record of past performance and financial and technical resources.
2.10 The District shall maintain records sufficient to detail the history of procurement. These
records will include, but are not necessarily limited to the following: rationale for the
method of procurement, selection of contract type, contractor selection or rejection and
the basis for the contract price.
2.11 The District shall use time and material type contracts only:
2.11.1 After a determination is made that no other contract is suitable; and
2.11.2 If the contract includes a ceiling price the contractor exceeds at their own risk.
2.12 The District alone shall be responsible, in accordance with good administrative practice
and sound business judgment, for the settlement of all contractual and administrative
issues arising out of procurements. These issues include, but are not limited to, source
evaluation, protests, disputes and claims. These standards do not relieve the District of
any contractual responsibilities under its contracts.
3.0 Competition
3.1 The District will conduct procurement transactions in a manner providing full and open
competition. To ensure objective contractor performance and eliminate unfair
competitive advantage, contractors developing or drafting specifications, requirements,
statements of work, or invitations for bids or requests for proposals shall be excluded from
competing for such procurements.
3.2 The District shall conduct procurements in a manner prohibiting the use of statutorily or
administratively imposed in-state or local geographical preferences in the evaluation of
bids or proposals, except in those cases where applicable Federal statutes expressly
mandate or encourage geographic preference. When contracting for architectural and
engineering (A/E) services, geographic location may be a selection criteria provided its
application leaves an appropriate number of qualified firms, given the nature and size of
the project, to compete for the contract.
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3.3 The District shall have written procedures for procurement transactions. These procedures
will ensure that all solicitations:
3.3.1 Incorporate a clear and accurate description of the technical requirements for
the material, product or service to be procured. Such description shall not, in
competitive procurements, contain features which unduly restrict competition.
The description may include a statement of the qualitative nature of the material,
product or service to be procured, and when necessary, shall set forth those
minimum essential characteristics and standards to which it must conform if it is to
satisfy its intended use. Detailed product specifications should be avoided. When
it is impractical or uneconomical to make a clear and accurate description of the
technical requirements, a brand name or equal description may be used to define
the performance or other salient requirements of procurement. The specific
features of the named brand which must be met by offerors shall be clearly stated;
and
3.3.2 Identify all requirements which the offerors must fulfill and all other factors to be
used in evaluating bids or proposals.
3.4 The District shall ensure prequalified lists of persons, firms or products that are used in
acquiring goods and services are current and include enough qualified sources to ensure
maximum open and free competition. The District shall not preclude potential bidders
from qualifying during the solicitation period.
4.0 Methods of Procurement to be Followed
The District shall use one of the following methods of procurement:
4.1 Procurement by Micro -Purchases. Procurement by micro -purchase is the acquisition of
supplies or services, the aggregate dollar amount of which does not exceed the micro -
purchase threshold as set by the Federal Acquisition Regulation at 48 CFR Subpart 2.1
(Definitions) and adjusted periodically for inflation. As of the date of this ordinance, the
micro -purchase threshold is $10,000.
4.2 Procurement by Small Purchase Procedures. Small purchase procedures are those
relatively simple and informal procurement methods for securing services, supplies or
other property that do not cost more than the simplified acquisition threshold as set by
the Federal Acquisition Regulation at 48 CFR Subpart 2.1 (Definitions) and in accordance
with 41 U.S.C. 1908 and periodically adjusted for inflation. If small purchase procedures
are used, price or rate quotations shall be obtained from an adequate number of
qualified sources. As of the date of this ordinance, the simplified acquisition threshold is
$250,000.
4.3 Procurement by Sealed Bids (Formal Advertising). Bids are publicly solicited and a firm -
fixed -price contract (lump sum or unit price) is awarded to the responsible bidder whose
bid, conforming to all the material terms and conditions of the invitation for bids, is the
lowest in price.
4.3.1 For sealed bidding to be feasible, the following conditions should be present:
4.3.1.1 A complete, adequate, and realistic specification or purchase
description is available;
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4.3.1.2 Two or more responsible bidders are willing and able to compete
effectively for the business; and
4.3.1.3 The procurement lends itself to a firm -fixed-price contract and the
selection of the successful bidder can be made principally based on
price.
4.3.2 If sealed bids are used, the following requirements apply:
4.3.2.1 The invitation for bids will be publicly advertised and bids shall be solicited
from an adequate number of known suppliers, providing them sufficient
time prior to the date set for opening the bids;
4.3.2.2 The invitation for bids, which will include any specifications and pertinent
attachments, shall define the items or services for the bidder to properly
respond;
4.3.2.3 All bids will be publicly opened at the time and place prescribed in the
invitation for bids;
4.3.2.4 A firm -fixed-price contract award will be made in writing to the lowest
responsive and responsible bidder. Where specified in bidding
documents, factors such as discounts, transportation cost and life cycle
costs shall be considered in determining which bid is lowest. Payment
discounts will only be used to determine the low bid when prior
experience indicates that such discounts are usually taken advantage of;
and
4.3.2.5 If there is a sound documented reason, any or all bids may be rejected.
4.4 Procurement by Competitive Proposals. The technique of competitive proposals is
normally conducted with more than one source submitting an offer, and either a fixed-
price or cost -reimbursement type contract is awarded. It is generally used when
conditions are not appropriate for the use of sealed bids. If this method is used, the
following requirements apply:
4.4.1 Requests for proposals shall be publicized and identify all evaluation factors
including relative importance. Any response to publicized requests for proposals
shall be honored to the maximum extent practical;
4.4.2 Proposals will be solicited from an adequate number of qualified sources;
4.4.3 The District shall conduct technical evaluations of the proposal received and for
selecting awardees;
4.4.4 Awards will be made to the responsible firm whose proposal is most advantageous
to the program, with price and other factors considered; and
4.4.5 The District may use competitive proposal procedures for qualifications -based
procurement of architectural/engineering (A/E) professional services whereby
competitors' qualifications are evaluated and the most qualified competitor is
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selected, subject to negotiation of fair and reasonable compensation. The
method, where price is not used as a selection factor, can only be used in
procurement of A/E professional services. It cannot be used to purchase other
types of services though A/E firms are a potential source to perform the proposed
effort.
4.5 Procurement by noncompetitive proposals is procurement through solicitation of a
proposal from only one source and may be used only when one or more of the following
circumstances applies:
4.5.1 The item is available only from a single source;
4.5.2 The public exigency or emergency for the requirement will not permit a delay
resulting from competitive solicitation;
4.5.3 The Federal awarding agency or pass-through entity expressly authorizes
noncompetitive proposals in a written request from the District; or
4.5.4 After solicitation of multiple sources, competition is determined inadequate.
4.6 Contracting with Small and Minority Businesses, Women's Business Enterprises and Labor
Surplus Area Firms.
4.6.1 The District shall take all necessary affirmative steps to assure that minority
businesses, women's business enterprises and labor surplus area firms are used
when possible.
4.6.2 Affirmative steps include:
4.6.2.1 Placing qualified small and minority businesses and women's business
enterprises on solicitation lists;
4.6.2.2 Assuring that small and minority businesses and women's business
enterprises are solicited whenever they are potential sources;
4.6.2.3 Dividing total requirements, when economically feasible, into smaller tasks
or quantities to permit maximum participation by small and minority
businesses and women's business enterprises;
4.6.2.4 Establishing delivery schedules, where the requirement permits, which
encourage participation by small and minority businesses and women's
business enterprises;
4.6.2.5 Using the services and assistance, as appropriate, of such organizations
as the Small Business Administration and the Minority Business
Development Agency of the Department of Commerce; and
4.6.2.6 Requiring the prime contractor, if subcontracts are to be let, to take the
affirmative steps listed in subsections 4.6.2.1 through 4.6.2.6 of this section.
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4.7 Contracts Cost and Price
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4.7.1 The District shall perform a cost or price analysis in every procurement action
exceeding the simplified acquisition threshold including contract modifications.
The method and degree of analysis will be dependent on the facts surrounding
each procurement situation. As a starting point, the District shall make
independent estimates before receiving bids or proposals.
4.7.2 Costs or prices based on estimated costs for contracts under the Federal award
will be allowable only to the extent that costs incurred or cost estimates included
in negotiated prices would be allowable for the District under Subpart E - Cost
Principles of Title 2, Subtitle A, Part 200 (Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards).
4.7.3 The cost plus a percentage of cost and percentage of construction cost methods
of contracting shall not be used.
4.8 Federal Awarding Agency or Pass -Through Entity Review
4.8.1 The District shall make available, upon request of the Federal awarding agency or
pass-through entity, technical specifications on proposed procurements where
the Federal awarding agency or pass-through entity believes such review is
needed to ensure that the item or service specified is the one being proposed for
purchase.
4.8.2 The District shall make available upon request, for the Federal awarding agency
or pass-through entity pre -procurement review, procurement documents, such as
requests for proposal or invitations for bids, or independent cost estimates when:
4.8.2.1 The District's procurement procedures or operation fails to comply with
the procurement standards of Title 2, Subtitle A, Part 200, Subsection
200.324;
4.8.2.2 The procurement is expected to exceed the simplified acquisition
threshold and is to be awarded without competition or only one bid or
offer is received in response to a solicitation;
4.8.2.3 The procurement, which is expected to exceed the simplified acquisition
threshold, specifies a "brand name" product;
4.8.2.4 The proposed contract is more than the simplified acquisition threshold
and is to be awarded to other than the apparent low bidder under a
sealed bid procurement; or
4.8.2.5 A proposed modification changes the scope of a contract or increases
the contract amount by more than the simplified acquisition threshold.
4.8.3 The District may be exempted from the pre -procurement review in subsection 4.8.2
above if the Federal awarding agency or pass-through entity determines that its
procurement systems comply with the standards set forth in Title 2, Subtitle A, Part
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200, or the District self -certifies compliance with such standards if self -certification
is permitted by the Federal awarding agency or pass-through entity.
4.9 Bonding Requirements. For public projects, the District shall require bid guarantees,
performance bonds, and payment bonds consistent with Title 2, Part 200, Section 200.325
of the Code of Federal Regulations.
4.10 Contract Provisions. The District's contracts shall contain the provisions in Appendix II to
Title 2, Subtitle A, Part 200 - Contract Provisions for non -Federal Entity Contracts Under
Federal Awards, as applicable.
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ITEM NO. 7.8.
Yorba Linda
Water District
AGENDA REPORT
MEETING DATE: June 15, 2023
TO: Board of Directors
FROM: Mark Toy, General Manager
STAFF CONTACTS: Georgina Knight, Human Resources and Risk Manager
SUBJECT: Claim for Damages filed by Theresa Tallon
RECOMMENDATION:
That the Board of Directors reject the claim filed by Theresa Tallon and refer the claim to ACWA JPIA
for further handling.
SUMMARY:
On May 23, 2023, the District received a claim filed by Theresa Tallon alleging property damage
stemming from a District water shutoff to replace a valve. Claimant alleges the shutoff caused her
water softener to fail. Claimant alleges our employees released the resin media into her plumbing
system when they turned the bypass valve on her water softener.
District staff conducted an investigation into the allegation of property damage and concluded that the
District is not responsible for the water softener failure.
The supporting documents related to the claim are on file and available for review in the office of the
General Manager.
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