HomeMy WebLinkAbout051519 - Agenda - Regular MeetingTRES HERMANOS CONSERVATION AUTHORITY
REGULAR BOARD OF DIRECTORS MEETING
MAY 15, 2019 AGENDA
6:00 p.m.
CITY OF INDUSTRY
COUNCIL CHAMBER
15651 E. STAFFORD STREET
CITY OF INDUSTRY, CALIFORNIA
1. CALL TO ORDER
PLEDGE OF ALLEGIANCE
Cory Moss, Chair
Carol Herrera, Vice -Chair
Catherine Marcucci, Board Member
Ray Marquez, Board Member
Peter Rogers, Board Member
Newell Ruggles, Board Member
Steve Tye, Board Member
2. PUBLIC COMMENTS: At this time, members of the public may address the
Authority regarding any items within the subject matter jurisdiction of the
Authority provided NO action or discussion may be taken on any item not
appearing on the agenda, except the Authority may BRIEFLY respond to
statements made or questions posed. Comments are limited to five minutes per
speaker.
3. CONSENT CALENDAR:
3.1 Consideration of the Minutes of the March 20, 2019 regular meeting and
the March 27, 2019 special meeting.
Recommended Action: Approve as submitted.
Copies of staff reports or other written documentation relating to agenda items are on file in the Office of the City
Clerk at Industry City Hall, and are available for public inspection. If requested, the agenda will be made available
in an alternative format to a person with disability as required by Section 202 of the Americans with Disabilities Act
of 1990. If you have questions regarding an agenda item, please contact the Authority Secretary at (626) 333-2211
during regular business hours.
In an effort to comply with the requirements of Title II of the Americans with Disabilities Act of 1990, the Tres
Hermanos Conservation Authority requires that any person in need of any type of special equipment, assistance or
accommodation(s) in order to communicate at a public meeting, must inform the Authority Secretary a minimum
of 72 hours prior to the scheduled meeting.
1383679.1
May 15, 2019 PAGE 2 THCA Agenda
3.2 Consideration to approve the Treasurer's Report for the month of March
2019
4.
5.
.1
7.
A
RECOMMENDED ACTION: Approve the Treasurer's Report.
3.3 Consideration to approve the check register for the months of March and
April 2019
RECOMMENDED ACTION: Approve the check register,
OLD BUSINESS:
There is none,
NEW BUSINESS:
5.1 Consideration to adopt the Statement of Investment Policy
Consideration of Resolution No. THCA 2019-05 – A RESOLUTION OF
THE BOARD OF DIRECTORS OF THE TRES HERMANOS
CONSERVATION AUTHORITY ADOPTING THE STATEMENT OF
INVESTMENT POLICY FOR THE 2019-20 FISCAL YEAR
RECOMMENDED ACTION
AUTHORITY DIRECTOR COMMENTS:
CLOSED SESSION:
Adopt Resolution No. THCA 2019-05
7.1 Public Employee Appointment pursuant to Government Code Section
54957
Title: General Counsel
7.2 Conference with Legal Counsel pursuant to Government Code Section
54956.9—Existing Litigation.
San Gabriel Valley Water and Power, LLC v. City of Chino Hills, et al.
San Bernardino Superior Court Case No: CIVDS 1904434
ADJOURNMENT: The next regular Tres Hermanos Conservation Authority
Meeting will be Wednesday, June 19, 2019 at 6:00 p.m.
TRES HERMA NOS CONSERVATION AUTHORITY
ITEM NO. 3.1
TRES HERMANOS CONSERVATION AUTHORITY
REGULAR BOARD OF DIRECTORS MEETING MINUTES
CITY OF INDUSTRY, CALIFORNIA
MARCH 20, 2019
PAGE 1
1. CALL TO ORDER
The Regular Meeting of the Tres Hermanos Conservation Authority, Board of
Directors, was called to order by Chair Cory Moss at 6:00 p.m. in the City of Industry
Council Chamber, 15651 East Stafford Street, California.
FLAG SALUTE
The flag salute was led by Board Member Steve Tye.
ROLL CALL
PRESENT: Cory Moss, Chair
Carol Herrera, Vice Chair
Catherine Marcucci, Board Member
Ray Marquez, Board Member
Peter Rogers, Board Member
Newell Ruggles, Board Member
Steve Tye, Board Member
STAFF PRESENT: Troy Helling, Executive Director; David DeBerry, General
Counsel; Dan Fox, Deputy Executive Director; and Julie Robles, Authority Secretary.
2. PUBLIC COMMENTS
There were none.
3. CONSENT CALENDAR
3.1 CONSIDERATION OF THE MINUTES OF THE FEBRUARY 7, 2019 SPECIAL
MEETING AND THE FEBRUARY 20, 2019 SPECIAL MEETING
3.2 CONSIDERATION TO APPROVE THE CHECK REGISTER FROM FEBRUARY
1, 2019 THROUGH FEBRUARY 28, 2019
TRES HERMANOS CONSERVATION AUTHORITY
REGULAR BOARD OF DIRECTORS MEETING MINUTES
CITY OF INDUSTRY, CALIFORNIA
MARCH 20, 2019
PAGE 2
3.3 CONSIDERATION TO APPROVE THE TREASURER'S REPORT FOR THE
MONTH OF FEBRUARY 2019, CHECK REGISTER FROM FEBRUARY 1, 2019
THROUGH FEBRUARY 28, 2019
MOTION BY VICE CHAIR HERRERA, AND SECOND BY BOARD MEMBER
MARCUCCI TO APPROVE THE CONSENT CALENDAR WITH THE CHANGE
OF THE WORD ENSURED TO ENSUED ON MEETING MINUTES OF
FEBRUARY 7, 2019, ITEM 6.2. MOTION CARRIED 7-0, BY THE FOLLOWING
VOTE:
AYES
NOES.
ABSENT
ABSTAIN
4. OLD BUSINESS
MARCUCCI, MARQUEZ, ROGERS,
RUGGLES, TYE, V/C HERRERA,
C/MOSS
NONE
NONE
NONE
4.1 UPDATE DISCUSSION REGARDING INSURANCE.
Assistant City Manager Bing Hyun gave an update. We are very close to securing a
five million dollar Liability Insurance Policy. Executive Director Troy Helling said the
next step is to run it by the City Council and bring it back to the next Tres Hermanos
Conservation Authority (THCA) meeting.
4.2 PROVIDE DIRECTION REGARDING PROCESS FOR RETAINING GENERAL
COUNSEL SERVICES.
General Counsel, David DeBerry gave two options. One being an option for a full
blown RFP in which he stated is a lot of work and may have conflict with any one of
the three cities. Second option is for the three attorneys to narrow it down to six or
eight names of well qualified attorneys.
The Authority agreed for the three attorneys to bring in three proposals to narrow it
down for the Authority to then make a chose.
TRES HERMANOS CONSERVATION AUTHORITY
REGULAR BOARD OF DIRECTORS MEETING MINUTES
CITY OF INDUSTRY, CALIFORNIA
MARCH 20, 2019
PAGE 3
Estimated cost being $10k to $12k a year, requiring 35 to 40 hours.
5. NEW BUSINESS
5.1 APPOINT AN INDEPENDENT AUDIT FIRM FOR FISCAL YEAR 2018-2019.
City Manager Troy Helling provided a staff report. Per the amended and restated Tres
Hermanos Conservation Authority Joint Powers Agreement, under Section 3.8 under
Treasurer Section, the Board shall annually appoint a Certified Public Accountant to
perform an independent audit. The city of Chino Hills recommended using Lance,
Soll, & Lunghard, LLP since they are familiar with this firm and have been using them
since 2015 for audits in Chino Hills. Our direction to the Board is to appoint Lance,
Soll, & Lunghard, LLP to do this independent audit.
MOTION BY BOARD MEMBER ROGERS, AND SECOND BY BOARD MEMBER
MARCUCCI TO APPOINT LANCE, SOLL & LUNGHARD, LLP AS THE
INDEPENDENT AUDIT FIRM FOR FISCAL YEAR 2018-19. MOTION CARRIED 7-
0, BY THE FOLLOWING VOTE:
AYES: BOARD MEMBERS
No-
;••-� ;
MARCUCCI, MARQUEZ, ROGERS,
RUGGLES, TYE, V/C HERRERA,
C/MOSS
NONE
NONE
NONE
5.2 CONSIDERATION TO ADOPT RESOLUTION NO. THCA 2019-03
ESTABLISHING A STATEMENT OF INVESTMENT POLICY FOR THE 2018-2019
FISCAL YEAR.
City Manager Troy Helling provided a staff report. Per the amended and restated Tres
Hermanos Conservation Authority Joint Powers Agreement, Section 3.8 under
Treasurer Section - this will be annually adopted by the Board of Directors. There
does need to be a correction on the Resolution with Chair Cory Moss for signature
instead of myself, Executive Director, Troy Helling, and add Authority Secretary, Julie
Gutierrez -Robles to the last page of the resolution.
TRES HERMANOS CONSERVATION AUTHORITY
REGULAR BOARD OF DIRECTORS MEETING MINUTES
CITY OF INDUSTRY, CALIFORNIA
MARCH 20, 2019
PAGE 4
MOTION BY BOARD MEMBER TYE, AND SECOND BY BOARD MEMBER
MARCUCCI TO ADOPT RESOLUTION NO. THCA 2019-03 ESTABLISHING A
STATEMENT OF INVESTMENT POLICY FOR THE 2018-2019 FISCAL YEAR AS
AMENDED. MOTION CARRIED 7-0, BY THE FOLLOWING VOTE:
AYES: BOARD MEMBERS
MARCUCCI, MARQUEZ, ROGERS,
RUGGLES, TYE, V/C HERRERA,
C/MOSS
NONE
NONE
NONE
5.3 CONSIDERATION TO ADOPT RESOLUTION NO. THCA 2019-04
AUTHORIZING THE INVESTMENT OF MONIES IN THE LOCAL AGENCY
INVESTMENT FUNDS.
There does need to be a correction on the Resolution with Chair Cory Moss for
signature instead of myself, Executive Director, Troy Helling, and add Authority
Secretary, Julie Gutierrez -Robles to the last page of the resolution.
MOTION BY VICE CHAIR HERRERA, AND SECOND BY BOARD MEMBER
RUGGLES TO ADOPT RESOLUTION NO. THCA 2019-04 AUTHORIZING THE
INVESTMENT OF MONIES IN THE LOCAL AGENCY INVESTMENT FUNDS AS
AMENDED. MOTION CARRIED 7-0, BY THE FOLLOWING VOTE:
F 0 Mi. -.9. • . .
6. AUTHORITY DIRECTOR COMMENTS:
There was none.
MARCUCCI, MARQUEZ, ROGERS,
RUGGLES, TYE, V/C HERRERA,
C/MOSS
NONE
NONE
NONE
TRES HERMANOS CONSERVATION AUTHORITY
REGULAR BOARD OF DIRECTORS MEETING MINUTES
CITY OF INDUSTRY, CALIFORNIA
MARCH 20, 2019
PAGE 5
7. CLOSED SESSION
Authority Secretary Robles announced there was a need for Closed Session as follows:
7.1 Conference with Legal Counsel pursuant to Government Code Section 54956.9 -
Existing Litigation.
San Gabriel Valley Water and Power, LLC v. City of Chino Hills, et al.
San Bernardino Superior Court Case No: CIVDS 1904434
There were no public comments on the Closed Session item.
Chair Moss recessed the meeting into Closed Session at 6:15 p.m.
RECONVENE CITY COUNCIL MEETING
Chair Moss reconvened the meeting at 6:35 a.m. All members of the Tres Hermanos
Conservation Authority were present.
Chair Moss reported out of Closed Session.
With regard to Closed Session items 7.1, nothing to report out.
8. ADJOURNMENT
There being no further business, the Tres Hermanos Conservation Authority (THCA)
Regular Board of Directors meeting adjourned at 6:35 p.m.
CORY MOSS
CHAIR
JULIE ROBLES
AUTHORITY SECRETARY
TRES HERMANOS CONSERVATION AUTHORITY
SPECIAL BOARD OF DIRECTORS MEETING MINUTES
CITY OF INDUSTRY, CALIFORNIA
MARCH 27, 2019
PAGE 1
1. CALL TO ORDER
The Special Meeting of the Tres Hermanos Conservation Authority Board of Directors
was called to order by Chair Cory Moss at 9:16 a.m. at the Diamond Bar Center, 1600
Grand Avenue, Diamond Bar, California.
FLAG SALUTE
The flag salute was led by Board Member Peter Rogers.
ROLL CALL
PRESENT: Cory Moss, Chair
Carol Herrera, Vice Chair
Catherine Marcucci, Board Member
Ray Marquez, Board Member
Peter Rogers, Board Member
Newell Ruggles, Board Member
Steve Tye, Board Member
STAFF PRESENT: Troy Helling, Executive Director; David DeBerry, General
Counsel; Dan Fox, Deputy Executive Director; and Julie Robles, Authority Secretary.
2. PUBLIC COMMENTS
Jim Gallagher, resident of Chino Hills and Robin Smith, resident of Diamond Bar and
member of the Sierra Club, both thanked the three cities for forming this Authority and
preserving the Tres Hermanos property.
Chair Moss recessed the meeting at 9:18 a.m.
Chair Moss reconvened the meeting at 9:53 a.m. at the Tres Hermanos Ranch. All
members of the Tres Hermanos Conservation Authority were present.
TRES HERMANOS CONSERVATION AUTHORITY
SPECIAL BOARD OF DIRECTORS MEETING MINUTES
CITY OF INDUSTRY, CALIFORNIA
MARCH 27, 2019
PAGE 2
3. TRES HERMANOS RANCH PRESS CONFERENCE
Chair Cory Moss thanked everyone for joining today to celebrate the historic
Tres Hermanos Ranch partnership between the cities of Chino Hills,
Diamond Bar and Industry and made introductions of all Board Members.
Vice Chair Herrera then introduced the Mayors, Council Members and
elected representatives of the three cities that were present.
Chair Cory Moss gave a history of the Tres Hermanos Ranch. "After years
of history among our three cities, and months of negotiations, we came to
understand that by putting aside our differences and working together, we
had an incredible opportunity to do something good for our communities,
and for our region. One thing that was always clear, city leaders and our
residents alike treasure the beauty of this land."
Vice Chair Herrera spoke "Through the Authority, no plans for this property
can move forward unless all three cities support the plan. Now we each
have the opportunity to represent our communities best interests and our
communities can be part of the process as we meet each month to discuss
how best to move forward with this critically important regional resource."
Board Member Rogers then thanked the City Managers and City Attorneys
for the roles they played in moving to the finish line. They are to be
commended. "We are on this land together for the first time to celebrate the
fact that we have formed this new partnership for the Tres Hermanos Ranch
and together we will meet, our agendas will be posted, the public will be
welcomed, and we will begin to discuss and process our goals moving
forward."
Chair Cory Moss invited all three Cities Council Members to sign a
proclamation to commemorate this new Authority.
Pictures were taken.
TRES HERMANOS CONSERVATION AUTHORITY
SPECIAL BOARD OF DIRECTORS MEETING MINUTES
CITY OF INDUSTRY, CALIFORNIA
MARCH 27, 2019
PAGE 3
4. ADJOURNMENT
There being no further business, the Tres Hermanos Conservation Authority (THCA)
Regular Board of Directors meeting adjourned at 10:18 a.m.
CORY MOSS
CHAIR
JULIE ROBLES
AUTHORITY SECRETARY
TRES HERMA NOS CONSERVATION AUTHORITY
ITEM NO. 3.2
TRES HERMANOS CONSERVATION AUTHORITY AGENDA NO. 3.2
STAFF REPORT
Date: May 15, 2019
To: Chair and Board of Directors
From: Troy Helling, Executive Director
Subject: Treasurer's Report for the Month of March 2019
Recommendation:
That the Authority receive and file the Treasurer's Report for the month of March 2019.
Background/Analysis:
Pursuant to the Amended and Restated Tres Hermanos Conservation Authority Joint
Powers Agreement Section 5.3 Accounts, the Treasurer must verify and report in
writing, at least quarterly, the amount of money held for the Authority, the amount of
interest earnings, revenues, and expenditures since the last report.
Attached for your information is the Treasurer's Report for the month of March 2019.
Respectfully submitted,
��yv;
Christina Buhagiar
Treasurer
Attachments
Reviewed by,
Troy�Helling _"
Executive Director
TRES HERMANOS CONSERVATION AUTHORITY
TREASURER'S REPORT
March 31, 2019
I. Funds Held by Authority:
Cash
Citizens Business Bank - Premium Money Market
Total Funds Held by Authority
II. Cash Flow Transactions:
Fund
General Fund
Market Interest
Cost Value Rate
$ 170,531 $ 170,531 0.15%
$ 170,531 $ 170,531
Beginning Ending
Cash Balance Cash Cash Cash Balance
03/01/19 Receipts Disbursements 03/31/19
$ 90,409 $ 110,228 $ (30,106) $ 170,531
III. Certifications:
In accordance with the California Government Code, the Treasurer certifies that sufficient
liquidity is available to meet the Authority's anticipated expenditure requirements for the six
months ending September 30, 2019.
i%
E10,00k,11
Christina Buhagiar
Treasurer
Tres Hermanos Conservation Authority
Statement of Revenues, Expenditures and Changes in Fund Balances
March 31, 2019
Fiscal Year Fiscal Year
18/19 17/18
Revenues:
Investment interest $ 104 $ 139
Rental income 625 -
Contributions from member agencies 109,591 -
Total Revenues 110,320 139
Expenditures:
Audit services
1,970
1,910
Legal services
21,328
-
Security services
8,424
-
Utilities
354
-
Miscellaneous
100
-
Total Expenditures
32,176
1,910
Excess of revenues over (under) expenditures
$ 78,144
$ (1,771)
Fund Balances:
Beginning of fiscal year
$ 92,387
$ 94,158
Excess of revenues over (under) expenditures
78,144
(1,771)
End of fiscal year
$ 170,531
$ 92,387
TRES HERMANOS CONSERVATION AUTHORITY
ITEM NO. 3.3
TRES HERMANOS CONSERVATION AUTHORITY AGENDA NO. 3.3
STAFF REPORT
Date: May 15, 2019
To: Chair and Board of Directors
From: Troy Helling, Executive Director
Subject: Check Register
Recommendation:
That the Authority approve the check registers for the months of March and
April 2019.
Background/Analysis:
In order to maintain good accounting practices, the check register of the Authority should
be periodically reviewed and approved by the Authority.
Attached for your review and approval are the check registers for the months of March
and April 2019.
Respectfully submitted,
Christina Buhagiar
Treasurer
Attachments
Reviewed by,
Tro4yell rn9
Executive Director
Tres Hermanos Conservation Authority JPA
CHECK REGISTER
March 2019
DATE
TRANSACTION TYPE
NUM
POSTING
MEMO/DESCRIPTION
AMOUNT
03/21/2019
Check
1010
Yes
02.15.2019 - 02.21.2019
-2,355.44
03/21/2019
Check
1011
Yes
03.01.2019 - 03.07.2019
-2,187.12
03/21/2019
Check
1012
Yes
02.22.2019 - 02.28.2019
-2,187.12
03/21/2019
Check
1015
Yes
General Legal Services - Invoice #62117
-21,327.64
SGVWP V. City of Chino, ET AL. - Invoice
#62118
03/21/2019
Check
1014
Yes
01.21.2019 - 02.18.2019
-685.00
03/21/2019
Check
1013
Yes
Voided - General Legal Services - Invoice
0.00
#62117
SGVWP V. City of Chino, ET AL. - Invoice
#62118
03/21/2019
Check
1009
Yes
02.12.2019 - 02.14.2019
-1,009.44
03/29/2019
Check
1016
Yes
Billing period 02.01.19 - 03.05.19 (32 days)
-155.92
03/29/2019
Check
1017
Yes
03.01.19 - 03.31.19
-144.83
03/29/2019
Check
1018
Yes
03.01.19 - 03.31.19
-53.68
Total
-30,106.19
Tuesday, April 30, 2019 11:47 AM GMT -7 1/1
Tres Hermanos Conservation Authority JPA
CHECK REGISTER
April 2019
DATE
TRANSACTION TYPE
NUM
POSTING
MEMO/DESCRIPTION
AMOUNT
04/02/2019
Check
1019
Yes
03.08.2019 - 03.21.2019
-4,374.24
04/11/2019
Check
1020
Yes
Period 03.20.2019 - 03.20.2019
-15,997.67
04/11/2019
Check
1021
Yes
Billing period 02.04.2019 - 03.13.2019
-245.84
04/11/2019
Check
1022
Yes
03.22.2019 - 04.04.2019
-5,179.44
04/11/2019
Check
1023
Yes
March Electricity
-224.72
04/18/2019
Check
1024
Yes
Tres Hermanos Office Supplies
-49.61
04/18/2019
Check
1025
Yes
Services Rendered 03.31.2019
-8,896.48
04/18/2019
Check
1026
Yes
Billing period 03.05.19 - 04.03.19 (29 days)
-51.76
04/18/2019
Check
1027
Yes
04.01.19 - 04.30.19
-107.25
04/18/2019
Check
1028
Yes
Deposit
-565.00
04/18/2019
Check
1029
Yes
Tres Hermanos - 1250 Grand Ave, Chino Hills
-158.76
04.01.19 - 04.30.19
04/18/2019
Check
1030
Yes
Pest Control
-5,700.00
04/29/2019
Check
1031
Yes
Billing period 02.05.19 - 04.03.19
-215.91
Service Establishment Charge $25.00
04/29/2019
Check
1032
Yes
04.05.2019 - 04.18.2019
-4,374.24
04/29/2019
Check
1033
Yes
Water usage 03.13.2019 - 04.10.2019
-195.84
Total -46,336.76
Tuesday, April 30, 2019 11:45 AM GMT -7 1/1
TRES HERMA NOS CONSERVATION AUTHORITY
ITEM NO. 5.1
TRES HERMANOS CONSERVATION AUTHORITY AGENDA NO. 5.1
STAFF REPORT
Date: May 15, 2019
To: Chair and Board of Directors
From: Troy Helling, Executive Director
Subject: Adopt the Statement of Investment Policy
Recommendation:
That the Board of Directors adopt Resolution THCA No. 2019- 05 adopting the Statement
of Investment Policy for the 2019-20 Fiscal Year.
Background/Discussion:
Pursuant to the Amended and Restated Tres Hermanos Conservation Authority Joint
Powers Agreement Section 3.8 Treasurer, an investment policy will need to be annually
adopted by the Board of Directors, as required by the State of California Government
Code section 53646, and consistent with Government Code sections 16429.1, 53601,
53635, and 53684, as they may be amended.
Respectfully submitted,
'�7
Z�e
Christina Buhagiar
Treasurer
Attachments
Reviewed by,
o elf ;g
Ex-ecufive Director
RESOLUTION THCA NO. 2019- 05
A RESOLUTION OF THE BOARD OF DIRECTORS OF
THE TRES HERMANOS CONSERVATION AUTHORITY
ADOPTING THE STATEMENT OF INVESTMENT
POLICY FOR THE 2019-20 FISCAL YEAR
WHEREAS, the Tres Hermanos Conservation Authority (Authority) requests to
adopt the Statement of Investment Policy for the 2019-20 fiscal year; and
WHEREAS, the Statement of Investment Policy provides the Board of Directors
shall annually review the Statement of Investment Policy; and
NOW, THEREFORE, BE IT RESOLVED,
Section 1. Investments of the Authority's funds for the 2019-20 fiscal year shall
be made in accordance with the Authority's Statement of Investment Policy attached to
this Resolution as Exhibit "A".
Section 2. The policy adopted by this Resolution is in addition to and
supplements any other legal requirements.
Section 3. The Statement of Investment Policy adopted by this Resolution
supersedes all investment policies previously adopted by the Board of Directors.
Section 4. The Treasurer must make a monthly report of any investment
transactions to the Board of Directors as required by Government Code section 53607.
PASSED, APPROVED, AND ADOPTED this 15th day of May, 2019.
Cory Moss
Chair
Tres Hermanos Conservation Authority
Julie Gutierrez -Robles
Authority Secretary
Tres Hermanos Conservation Authority
Resolution THCA No. 2019- 05
ATTEST:
I, Julie Gutierrez -Robles, Secretary of the Tres Hermanos Conservation
Authority, do hereby certify that the foregoing Resolution was duly and regularly passed,
approved and adopted by the Board of Directors of the Tres Hermanos Conservation
Authority, at its regular meeting held on the 15th day of May, 2019, by the following Roll
Call vote:
AYES: BOARD MEMBERS:
NOES: BOARD MEMBERS:
rAS :•�'9] TC
��: ►I__1I•_
Julie Gutierrez -Robles
Secretary
Tres Hermanos Conservation Authority
Exhibit A
TRES HERMANOS CONSERVATION AUTHORITY
Statement of Investment Policy
Fiscal Year 2019-20
1. POLICY
It is the policy of the Tres Hermanos Conservation Authority ("Authority") to meet the short
and long-term cash flow demands of the Authority in a manner which will provide for the
safety of principal and sufficient liquidity while providing an investment return. The
purpose of this Statement of Investment Policy ("Investment Policy") is to outline a
process of the investment of Authority funds in a prudent manner in order to meet
Authority objectives.
11. SCOPE
This Investment Policy applies to all investment activities and financial assets of the
Authority held by the Authority and its agents and trustees.
III. DELEGATION OF AUTHORITY
Pursuant to the Authority's By -Laws the Treasurer shall perform the duties as authorized
in Section 6506 et seq. of the Government Code.
Where the Board of Directors delegates the responsibility for investing the Authority's
funds to the Treasurer, if the Treasurer is absent or otherwise unavailable to make
investments, the Treasurer delegates those responsibilities to the Finance Manager at
the City of Chino Hills. Investments made by the Finance Manager will be restricted to
the State of California Local Agency Investment Fund ("LAIF"). The Treasurer may
delegate to subordinates the execution of daily investment transactions. These
investment transactions shall be approved by the Treasurer.
IV. PRUDENCE
All investments purchased shall have daily liquidity or a final stated maturity date upon
which the full principal value of the security will be received. Although the investment will
mature at full principal value, it is recognized that the market will vary throughout the life
of the security.
V. OBJECTIVE
The objective of the investment portfolio is to meet the short and long-term cash flow
demands of the Authority. To achieve this objective, the portfolio will be structured to
provide safety of principal and liquidity while then providing a return on investments.
-1-
The following criteria, in priority order, shall govern all investment decisions.
A. Safety of Principal
Investments of the Authority shall be undertaken in a manner that seeks to
ensure that capital losses are minimized, whether from institution default or
erosion of the market value of securities. The Authority shall seek to
preserve principal by mitigating the two types of risk in order of importance:
1) credit risk, and 2) market or interest rate risk.
Credit Risk. Credit risk, defined as the risk of loss due to failure of
an issuer of a security, shall be mitigated by purchasing Treasuries
or high-grade securities. All investments beyond Treasury securities
will be diversified so that the failure of any one issuer would not
unduly harm the Authority's cash flow. Credit risk shall also be
mitigated by pre -qualifying financial institutions, broker/dealers,
intermediaries and advisors with which the Authority does business.
2. Market or Interest Rate Risk. Interest rate risk is the risk that the
market value of securities in the portfolio will fall due to changes in
general interest rates. Interest rate risk may be mitigated by
structuring the funds so that securities mature to meet cash
requirements for ongoing operations, thereby avoiding the need to
sell securities on the open market prior to maturity, and by investing
operating funds primarily in shorter -term securities. The cash flow is
updated on a daily basis and will be considered prior to the
investment of securities, which will reduce the necessity to sell
investments for liquidity purposes. Long-term securities shall not be
purchased for the sole purpose of short-term speculation. Securities
shall not be sold prior to maturity with the following exceptions: 1) a
declining credit security would be sold early to minimize loss of
principal, 2) a security swap would improve the quality, yield, or
target duration in the portfolio, or 3) liquidity needs of the portfolio
require that the security be sold. Purchases of investments will be
restricted to securities with a final stated maturity not to exceed five
(5) years.
B. Liquidity
The funds shall remain sufficiently liquid to meet all operating requirements
that may be reasonably anticipated.
C. Return on Investments
The funds shall be designed to attain a return on investments through
budgetary and economic cycles, taking into account the investment risk
-2-
constraints and liquidity needs. Return on investment is of least importance
compared to the safety and liquidity objectives described above. The core
of investments are limited to relatively low risk securities in anticipation of
earning a fair return relative to the risk being assumed.
VI. ETHICS AND CONFLICTS OF INTEREST
The Treasurer and other 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. The
Treasurer and investment employees shall disclose any material interests in financial
institutions with which they conduct business. They shall further disclose any personal
financial/investment positions that could be related to the performance of the investment
portfolio and shall refrain from undertaking personal investment transactions with the
same individual with whom business is conducted on behalf of their entity. The Treasurer
and investment employees are required to file annual disclosure statements as required
by the Fair Political Practices Commission (FPPC). During the course of the year, if there
is an event subject to disclosure that could impair the ability of the Treasurer or investment
employees to make impartial decisions, the Board of Directors will be notified in writing
within 10 days of the event.
VII. SAFEKEEPING OF SECURITIES
Investments in LAIF are undeliverable and are not subject to delivery or third -party
safekeeping. The Treasurer shall not be responsible for securities delivered to and
receipted for by a financial institution until they are withdrawn from the financial institution
by the Treasurer.
On a monthly basis, the custodial asset statement shall be reconciled with the month end
portfolio holdings. On an annual basis, the external auditor confirms investment holdings.
VIII. REPORTING
Pursuant to Section 53607 and Section 53646 of the Government Code, the Treasurer
shall render a report to the Board of Directors containing detailed information on all
investments and moneys of the Authority. The report will be submitted on a monthly basis
and be provided to the Board of Directors within 30 days following the end of the month.
The report will contain the following information on the funds that are subject to this
Investment Policy: 1) the type of investment, name of the insurer, date of maturity, cost
in each investment, 2) the market value and source of the valuation, 3) a description of
the compliance with the statement of Investment Policy, and 4) a statement denoting the
Authority's ability to meet its pool's expenditure requirements for the next six months, and
5) transactions for the period.
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IX. INTERNAL CONTROLS
The Treasurer shall develop a system of internal investment controls and a segregation
of responsibilities of investment functions in order to assure an adequate system of
internal control over the investment function. The objectives of an internal control
structure are to provide management with reasonable, but not absolute, assurance that
assets are safeguarded against loss from unauthorized use or disposition, and that
transactions are executed in accordance with management's authorization and recorded
properly to permit the preparation of general purpose financial statements in accordance
with generally accepted accounting principles. Because of inherent limitations in any
internal control structure, errors or irregularities may nevertheless occur and not be
detected.
X. AUTHORIZED INVESTMENTS
The Authority's investments are governed by California Government Code, Sections
53600 et seq. Within the investments permitted by the Code, the Authority seeks to further
restrict eligible investments to the guidelines listed below. In the event a discrepancy is
found between this policy and the Code, the more restrictive parameters will take
precedence. Percentage holding limits and credit limits listed in this section apply at the
time the security is purchased.
STATE OF CALIFORNIA LOCAL AGENCY INVESTMENT FUND (LAIF), provided
that:
• The Authority may invest up to the maximum amount permitted by LAIF.
• LAIF's investments in instruments prohibited by or not specified in the Authority's
policy do not exclude the investment in LAIF itself from the Authority's list of
allowable investments, provided LAIF's reports allow the Treasurer to adequately
judge the risk inherent in LAIF's portfolio.
XI. PROHIBITED INVESTMENTS AND TRANSACTIONS
A. The Authority shall not invest any funds in inverse floaters, range notes, or
mortgage derived, interest -only strips.
B. The Authority shall not invest any funds in any security that could result in
zero interest accrual if held to maturity. However, the Authority may hold
prohibited instruments until their maturity dates. The limitation in this
subdivision shall not apply to Authority investments in shares of beneficial
interest issued by diversified management companies registered under the
Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1, and following) that
are authorized for investment pursuant to Section XIV, above.
C. No credit union may act as a selected depository institution under Section
53601.8 or Section 53635.8 for certificates of deposit.
D. The Authority shall not purchase or sell securities on margin.
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E. Reverse Repurchase Agreements shall not be directly used by the
Authority.
F. The purchase of foreign currency denominated securities is prohibited.
XII. POLICY REVIEW
In accordance with amended Section 53646 of the Government Code, the Treasurer will
annually render a Statement of Investment Policy for review by the Board of Directors to
ensure its consistency with the overall objectives of preservation of principal, liquidity, and
return, and its relevance to current law, financial and economic trends, and to meet the
needs of the Authority.
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(ATTAC H M E N T "A")
TRES HERMANOS CONSERVATION AUTHORITY
OFFICE OF THE TREASURER
BANK/SAVINGS AND LOAN QUESTIONNAIRE AND CERTIFICATION
1 Name of Firm:
2 Address:
3 Telephone No.( ) ( )
112
5
(Local) (Nat. Headquarters)
Primary Representative: Manager:
Name: Name:
Title: Title:
Tel. No.( ) Tel. No. ( )
What are the Total Assets of the Bank/Savings and Loan?
6 What is the current Net Worth Ratio of your institution?
7 What was the Net Worth Ratio for the Previous Year?
W'7
What is your required Capital Ratios?
A. Tangible Capital Ratio
B. Core Capital Ratio
C. Risk -Based Capital Ratio
What are your Ratings (i.e., S&P, Moody's, Thompson, Fitch)?
10 What is the date of your Fiscal Year -End?
A. Has there been a year during the past three years in which the
Bank/Savings and Loan did not make a profit?
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(ATTACHMENT "A")
11 Have you read the California Government Code Section 53630 through 53684
pertaining to the State's requirements governing the deposit of monies by Local
Agencies? [ ] YES [ ] NO
12 Amounts above the FDIC insurance coverage must be collateralized as specified
in the Government Code. Where is the collateral for Deposits held?
Has there ever been a failure to fully collateralize? If Yes, please attach
explanation.
13 What is the education level of the Primary Contact(s)?
14 How many years of related experience does the Primary Contact(s) have?
15 What transaction documents and reports would we receive?
16 What information would you provide to our Treasurer?
17 Describe the precautions taken by your Bank/Savings and Loan to protect the
interest of the public when dealing with government agencies as depositors or
investors.
18 Please provide your Contract of Deposit of Moneys pre -signed and sealed by your
institution, as well as, any signature cards that you may require.
19 Please provide your Wiring Instructions:
20 Please provide your Bank/Savings and Loan most recent certified financial
statement. In addition, an audited financial statement must be provided within 120
days of your fiscal year-end.
11FA
(ATTACHMENT "A")
- CERTIFICATION -
I hereby certify that I have personally read the Authority's Investment Policy and the
California Government Codes pertaining to the investments and deposits of the Authority,
and have implemented reasonable procedures and a system of controls designed to
preclude imprudent investment activities arising out of transactions conducted between
our firm and the Authority. I understand however, that our firm is not obligated to
monitor the percentage limits on the investments as described in the policy. All
sales personnel will be routinely informed of the Authority's investment objectives,
horizon, outlook, strategies and risk constraints whenever we are so advised. We pledge
to exercise due diligence in informing the Authority's Treasurer of all foreseeable risks
associated with financial transactions conducted with our firm. I attest to the accuracy of
our responses to your questionnaire.
NOTE: Completion of Questionnaire is only part of the Authority's
Certification process and DOES NOT guarantee that the applicant will
be approved to do business with the Authority.
SIGNED: DATE:
COUNTERSIGNED: DATE:
(ATTACHMENT "B")
Glossary of Investment Terms
AGENCIES. Shorthand market terminology for any obligation issued by a government-
sponsored entity (GSE), or a federally related institution. Most obligations of GSEs
are not guaranteed by the full faith and credit of the US government. Examples are:
FFCB. The Federal Farm Credit Bank System provides credit and liquidity in the
agricultural industry. FFCB issues discount notes and bonds.
FHLB. The Federal Home Loan Bank provides credit and liquidity in the housing
market. FHLB issues discount notes and bonds.
FHLMC. Like FHLB, the Federal Home Loan Mortgage Corporation provides credit
and liquidity in the housing market. FHLMC, also called "FreddieMac" issues
discount notes, bonds and mortgage pass-through securities.
FNMA. Like FHLB and FreddieMac, the Federal National Mortgage Association
was established to provide credit and liquidity in the housing market. FNMA,
also known as "FannieMae," issues discount notes, bonds and mortgage pass-
through securities.
GNMA. The Government National Mortgage Association, known as "GinnieMae,"
issues mortgage pass-through securities, which are guaranteed by the full faith
and credit of the US Government.
PEFCO. The Private Export Funding Corporation assists exporters. Obligations of
PEFCO are not guaranteed by the full faith and credit of the US government.
TVA. The Tennessee Valley Authority provides flood control and power and
promotes development in portions of the Tennessee, Ohio, and Mississippi
River valleys. TVA currently issues discount notes and bonds.
BROKER. A broker brings buyers and sellers together for a transaction for which the broker
receives a commission. A broker does not sell securities from his own position.
COLLATERAL. Securities or cash pledged by a borrower to secure repayment of a loan or
repurchase agreement. Also, securities pledged by a financial institution to secure
deposits of public monies.
CREDIT RISK. The risk that principal and/or interest on an investment will not be paid in a
timely manner due to changes in the condition of the issuer.
DEALER. A dealer acts as a principal in security transactions, selling securities from and
buying securities for his own position.
DURATION. The weighted average time to maturity of a bond where the weights are the
present values of the future cash flows. Duration measures the price sensitivity of
a bond to changes in interest rates. (See modified duration).
LIQUIDITY. The speed and ease with which an asset can be converted to cash.
LOCAL AGENCY INVESTMENT FUND (LAIF). A voluntary investment fund open to government
entities and certain non-profit organizations in California that is managed by the
State Treasurer's Office.
MARGIN. The difference between the market value of a security and the loan a broker
makes using that security as collateral.
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(ATTACHMENT "B")
MODIFIED DURATION. The percent change in price for a 100 basis point change in yields.
Modified duration is the best single measure of a portfolio's or security's exposure
to market risk.
PRIMARY DEALER. A financial institution (1) that is a trading counterparty with the Federal
Reserve in its execution of market operations to carry out U.S. monetary policy, and
(2) that participates for statistical reporting purposes in compiling data on activity in
the U.S. Government securities market.
REPURCHASE AGREEMENT. Short-term purchases of securities with a simultaneous
agreement to sell the securities back at a higher price. From the seller's point of
view, the same transaction is a reverse repurchase agreement.
SAFEKEEPING. A service to bank customers whereby securities are held by the bank in the
customer's name.
TREASURY BILLS. All securities issued with initial maturities of one year or less are issued
as discounted instruments, and are called Treasury bills. The Treasury currently
issues three- and six-month T-bills at regular weekly auctions. It also issues "cash
management" bills as needed to smooth out cash flows.
TREASURY NOTES. All securities issued with initial maturities of two to ten years are called
Treasury notes, and pay interest semi-annually.
TREASURY BONDS. All securities issued with initial maturities greater than ten years are
called Treasury bonds. Like Treasury notes, they pay interest semi-annually.
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