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HomeMy WebLinkAbout081920 - THCA - Agenda - Regular MeetingTRES HERMANOS CONSERVATION AUTHORITY BOARD OF DIRECTORS REGULAR MEETING AUGUST 19, 2020 AGENDA 6:00 p.m. CITY OF INDUSTRY COUNCIL CHAMBER 15651 E. STAFFORD STREET CITY OF INDUSTRY, CALIFORNIA Addressing the Authority. NOTICE OF TELEPHONIC MEETING: Chair, Steve Tye Vice -Chair, Ray Marquez Board Member, Nancy Lyons Board Member, Cathy Marcucci Board Member, Cory Moss Board Member, Peter Rogers Board Member, Newell Ruggles Pursuant to Section 3 of Executive Order N-29-20, issued by Governor Newsom on March 17, 2020, the regular meeting of the Tres Hermanos Conservation Authority shall be held telephonically. Members of the public shall be able to attend the meeting telephonically and offer public comment by joining the meeting by calling the following conference call number: 1-657-204-3264 and entering the Access Code: 488 091 621#. Please be advised that pursuant to the Executive Order, and to ensure the health and safety of the public, Council Chambers will not be open for the meeting, and all public participation must occur by telephone at the number set forth above. Pursuant to the Executive Order, and in compliance with the Americans with Disabilities Act, if you need special assistance to participate in the THCA meeting (including assisted listening devices), please contact the City Clerk's Office at (626) 333-2211 by 5:00 p.m. on Friday, August 14, 2020, to ensure that reasonable arrangements can be made to provide accessibility to the meeting. 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 August 19, 2020 PAGE 2 THCA Agenda 1. CALL TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL 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 to approve the Treasurer's Report for the month of June 2020 RECOMMENDED ACTION: Receive and file Report. 3.2 Consideration to approve the check register for the month of June 2020 RECOMMENDED ACTION: Receive and file Report. 4. OLD BUSINESS: There is none. 5. NEW BUSINESS: 5.1 Adopt the Statement of Investment Policy for the 2020-21 Fiscal Year RECOMMENDED ACTION: Adopt Resolution No. THCA 2020-02. 5.2 Arnold Reservoir Dam Repairs and Remediation Update RECOMMENDED ACTION: Receive and File. 5.3 Consideration of Property Maintenance and Security for Dwelling Unit located at Assessor's Parcel Number (APN) 1000-031-15-0000 RECOMMENDED ACTION: Review and Provide Direction. August 19, 2020 PAGE 3 THCA Agenda 6. AUTHORITY DIRECTOR COMMENTS: 7. ADJOURNMENT: The next regular Tres Hermanos Conservation Authority Meeting will be Wednesday, September 16, 2020 at 6:00 p.m. TRES HERMANOS CONSERVATION AUTHORITY ITEM NO. 3.1 TRES HERMANOS CONSERVATION AUTHORITY AGENDA NO. 3 STAFF REPORT Date: August 19, 2020 To: Chair and Board of Directors From: Troy Helling, Executive Director Subject: Treasurer's Report for the Month of June 2020 Recommendation: That the Authority receive and file the Treasurer's Report for the month of June 2020. Backaround/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 June 2020. Respectfully submitted, Christina Buhagiar Treasurer Attachments Reviewed by, Tr elling E use- hector Tres Hermanos Conservation Authority Treasurer's Report For the Month Ended June 30, 2020 Interest/ Book Maturity % of Description Cost Value Market Value Yield Date Portfolio Cash and Cash Equivalents Citizens Business Bank - Premium Money Market $ 173,032 $ 173,032 0.05% n/a 100.00% Total Investment Portfolio $ 173,032 $ 173,032 100.00% Blended Yield of Cash and Investments Benchmarks: LAIF 1.22% 6mo U.S. Treasury 0.18% 2yr U.S. Treasury 0.16% 5yr U.S. Treasury 0.29% I hereby certify that the investments are in compliance with the investment policy adopted by the the Board of Directors. The investment portfolio provides sufficient funds to meet the budgeted expenditures over the next six months. This report meets the requirements of Government Code Section 53646. Christina Buhagiar Treasurer Tres Hermanos Conservation Authority Statement of Revenues, Expenditures and Changes in Fund Balances For the Month Ended June 30, 2020 Revenues: Investment interest Rental income Contributions from member agencies Reimbursements Total Revenues Expenditures: Professional Services Legal services Office Supplies & Software Security services Weed Abatement Insurance Pest control Repairs & Maintenance Utilities Taxes & Licenses Bank Charges & Fees Total Expenditures Excess of revenues over (under) expenditures Fund Balances: Beginning of fiscal year Excess of revenues over (under) expenditures End of fiscal year Fund Balances by City: Chino Hills Diamond Bar Industry Total Fund Balances by City Revised Fiscal Year % Budget June To Date of Budget 2019/20 2020 2019/20 Used $ - $ 3 $ 54 - 7,700 696 7,721 100% 117,846 93,830 211,676 A 180% - (15) 607 - 125,546 94,514 220,058 175% 10,971 200 6,132 56% 68,677 700 51,773 75% 2,091 766 1,742 83% 34,587 6,322 39,736 115% 42,781 - 42,119 98% 17,502 1,575 18,770 107% 28,001 1,900 23,300 83% 47,000 - 20,538 44% 10,242 595 8,624 84% 7,413 - 5,583 75% - - 134 N/A 269,265 12,058 218,451 81 % $ (143,719) $ 82,456 $ 1,607 $ 165,025 1,607 $ 166,632 B $ 24,798 19,651 122,183 $ 166,632 A Includes a prepayment of $93,830 for FY 20-21 B The ending fund balance in the amount of $166,632 includes $6,400.52 in outstanding checks that are not included in the bank balance of $173,031.83. TRES HERMANOS CONSERVATION AUTHORITY ITEM NO. 3.2 TRES HERMANOS CONSERVATION AUTHORITY AGENDA NO. o� STAFF REPORT Date: August 19, 2020 To: Chair and Board of Directors From: Troy Helling, Executive Director Subject: Check Register Recommendation: That the Authority receive and file the check register for the month of June 2020. Background/Analysis: Pursuant to the Amended and Restated Tres Hermanos Conservation Authority Joint Powers Agreement Section 5.2 Disbursements, the check register of the Authority should be periodically reviewed by the Board. Attached for your review is the check register for the month of June 2020. Respectfully submitted, Christina Buhagiar Treasurer Attachments Reviewed by, Cxecutive li�Q'F ctor Tres Hermanos Conservation Authority JPA Transaction List by Vendor June 2020 Date Check # Vendor Memo/Description Amount 6/3/20 1147 Industry Security Services, Inc. Security - Apr 2020 $ (3,109.80) 6/3/20 1148 Amazon Envelopes (10.76) 6/3/20 1149 City of Chino Hills Water - 04/13/20 - 05/13/20 (188.65) 6/3/20 1150 Lance, Soil & Lunghard, LLP FY 2018-19 YE Audit issue (200.00) 6/24/20 1151 Industry Security Services, Inc. Security - May 2020 (3,211.76) 6/24/20 1152 City of Industry Trash - May 2020 (158.76) 6/24/20 1153 Janus Pest Management, Inc Squirrel/Pest Control - Apr 2020 (1,900.00) 6/24/20 1154 City of Chino Hills Water - 05/13/20 - 06/10/20 (248.05) 6/24/20 1155 Egoscue Law Group, Inc. Legal - May 2020 (700.00) 6/24/20 ACH Quickbooks Quickbooks FY 2020/21 (755.00) 6/24/20 1156 Alliant Insurance Services, Inc. Crime Insurance FY 2020/21 (1,575.00) Total $ (12,057.78) TRES HERMANOS CONSERVATION AUTHORITY ITEM NO. 5.1 TRES HERMANOS CONSERVATION AUTHORITY AGENDA NO. J % STAFF REPORT Date: August 19, 2020 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. 2020- 02 adopting the Statement of Investment Policy for the 2020-21 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. Additions and revisions have been made to the Authority's Investment Policy (See Exhibit A) for the 2020-21 fiscal year as a result of recommendations the City of Chino Hills received from the California Municipal Treasurers Association and are illustrated in the attached redline version. Respectfully submitted, Christina Buhagiar Treasurer Reviewed by, elling Ex utiv ' ector Attachments: Resolution - Adopting the Statement of Investment Policy for FY 2020-21 Exhibit A — THCA Statement of Investment Policy, FY 2020-21 Redline Version - THCA Statement of Investment Policy, FY 2020-21 RESOLUTION THCA NO. 2020- 02 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TRES HERMANOS CONSERVATION AUTHORITY ADOPTING THE STATEMENT OF INVESTMENT POLICY FOR THE 2020-21 FISCAL YEAR WHEREAS, the Tres Hermanos Conservation Authority (Authority) requests to adopt the Statement of Investment Policy for the 2020-21 fiscal year; and WHEREAS, the Statement of Investment Policy provides the Board of Directors shall annually review the Statement of Investment Policy. NOW, THEREFORE, BE IT RESOLVED, Section 1. Investments of the Authority's funds for the 2020-21 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 19th day of August 2020. Troy Helling Executive Director Tres Hermanos Conservation Authority Resolution THCA No. 2020- 02 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 19th day of August 2020, by the following Roll Call vote: AYES: BOARD MEMBERS: NOES: BOARD MEMBERS: ABSENT: BOARD MEMBERS: ABSTAIN: BOARD MEMBERS: Julie Gutierrez -Robles Secretary Tres Hermanos Conservation Authority Exhibit A TRES HERMANOS CONSERVATION AUTHORITY Statement of Investment Policy Fiscal Year 2020-21 I. 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. II. 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. 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. In a diversified portfolio, it must be further recognized that occasional measured losses are inevitable in a diversified portfolio due to economic, bond market, or individual security credit analysis. These occasional losses must be evaluated and considered within the context of the overall investment return. The "Prudent Investor" standard shall be applied in the context of managing the funds. The Treasurer and other investment employees, acting within the intent and scope of the Investment Policy and other written procedures and exercising due diligence, shall be -1- relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely manner and appropriate action is taken to control adverse developments. 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. 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. -2- 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 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 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 -3- 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. 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 X, 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. E. Reverse Repurchase Agreements shall not be directly used by the Authority. F. The purchase of foreign currency denominated securities is prohibited. XII. REVIEW OF INVESTMENT PORTFOLIO The Treasurer shall periodically, but no less than quarterly, review the portfolio to identify investments that do not comply with this investment policy and establish protocols for reporting major and critical incidences of noncompliance to the Authority. XIII. PERFORMANCE EVALUATION The investment portfolio shall be designed to attain a market -average rate of return throughout budgetary and economic cycles, taking into account the Authority's risk constraints, the cash flow characteristics of the portfolio, and state and local laws, ordinances or resolutions that restrict investments. The Treasurer shall monitor and evaluate the portfolio's performance relative to the chosen market benchmark(s), which will be included in the Treasurer's monthly report. The Treasurer shall select an appropriate, readily available index to use as a market benchmark. XIV. 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. -5- TRES HERMANOS CONSERVATION AUTHORITY OFFICE OF THE TREASURER BANK/SAVINGS AND LOAN QUESTIONNAIRE AND CERTIFICATION 1 Name of Firm: 2 Address: 3 Telephone No.( ) ( ) 0 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? we 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? 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. -7- - 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: 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. 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. CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced by a certificate. Large denomination CDs may be marketable. 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. DIVERSIFICATION. Dividing investment funds among a variety of investments to avoid excessive exposure to any one source of risk. 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. MARKET RISK. The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates. MARKET VALUE. The price at which a security can be traded. MATURITY. The price at which a security can be traded. MORTGAGE PASS -THROUGH SECURITIES. A securitized participation in the interest and principal cash flows from a specified pool of mortgages. Principal and interest payments made on the mortgages are passed through to the holder of the security. 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. PRUDENT PERSON (PRUDENT INVESTOR) RULE. A standard of responsibility which applies to fiduciaries. In California, the rule is stated as "Investments shall be managed with the care, skill, prudence and diligence, under the circumstances then prevailing, that a prudent person, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims to accomplish similar purposes." M 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. TOTAL RATE OF RETURN. A measure of a portfolio's performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains, and losses in the portfolio. 51111 Exhibit A TRES HERMANOS CONSERVATION AUTHORITY Statement of Investment Policy Fiscal Year 2019-202020-21 I. 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. II. 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 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. In a diversified portfolio, it must be further recognized that occasional measured losses are inevitable in a diversified portfolio due to economic, bond market, or individual security credit analysis. These occasional losses must be evaluated and considered within the context of the overall investment return. The "Prudent Investor" standard shall be applied in the context of managing the funds. The Treasurer and other investment employees, acting within the intent and scope of the Investment Policy and other written procedures and exercising due diligence, shall be -1- relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely manner and appropriate action is taken to control adverse developments. 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. 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. -2- 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 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. Al. 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 fe-r-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 -3- 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. 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. 13 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 X4VX, 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. E. Reverse Repurchase Agreements shall not be directly used by the Authority. F. The purchase of foreign currency denominated securities is prohibited. XII. REVIEW OF INVESTMENT PORTFOLIO The Treasurer shall periodically, but no less than quarterly, review the portfolio to identify investments that do not comply with this investment policy and establish protocols for reporting major and critical incidences of noncompliance to the Authority. XIII. PERFORMANCE EVALUATION The investment portfolio shall be designed to attain a market -average rate of return throughout budgetary and economic cycles, taking into account the Authority's risk constraints the cash flow characteristics of the portfolio, and state and local laws, ordinances or resolutions that restrict investments. The Treasurer shall monitor and evaluate the portfolio's performance relative to the chosen market benchmark(s), which will be included in the Treasurer's monthly report. The Treasurer shall select an appropriate, readily available index to use as a market henrhmark_ XII:XIV. 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. -5- 1 2 3 0 5 TRES HERMANOS CONSERVATION AUTHORITY OFFICE OF THE TREASURER BANK/SAVINGS AND LOAN QUESTIONNAIRE AND CERTIFICATION Name of Firm: Address: Telephone No (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? F-P E 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? so Lfflffl!_ 1 1 \MLAMI 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. -7- - 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: 1 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. CCU GB. The Federal CMrm rQrPedi4 Rank System nrnVideS merit and liquidity in the rR-rHLB—Trhre-Ca��� '_Me Loan RGFedit and linriidity in the oust TmurLet GI-ll R issues riicnnrint notes anti bond and liquidity in the housing market. FHLMC;, a!60 Galled to n FNMA, issues a n issues diSGEWnt notes, bands and mertgage pass threugh senrrrities u n alld nredat of the I S Government PEFCC The Droyate Expert Funding i'nrnnra iinenTassists exporters Qbligatinnc of PEF(;Q are not guaranteed by the full faith and Gredit of the US gGvernment. T,-: The —Tennessee Valley AuthGFity provides fl9ed rnntrnl and power and River �i�s. TVAnrrrrently issues dicnnrrnt notes and: hends. 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. CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced by a certificate. Large denomination CDs may be marketable. 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. DIVERSIFICATION. Dividing investment funds among a variety of investments to avoid excessive exposure to any one source of risk. 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. IN MARGIN. The difference between the market value of a security and the loan a broker makes using that security as collateral. MARKET RISK. The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates. MARKET VALUE. The price at which a security can be traded. MATURITY. The price at which a security can be traded. MORTGAGE PASS -THROUGH SECURITIES. A securitized participation in the interest and principal cash flows from a specified pool of mortgages. Principal and interest payments made on the mortgages are passed through to the holder of the security. 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 —prood-rep. A (4) that is a tradiRg GEAIRterpaFty with the Federal the U.S. C GE)Vernmon} coriiri}ioc m-rLo} PRUDENT PERSON (PRUDENT INVESTOR) RULE. A standard of responsibility which applies to fiduciaries. In California, the rule is stated as "Investments shall be managed with the care, skill, prudence and diligence, under the circumstances then prevailing, that a prudent person, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims to accomplish similar purposes." -10- 1! a YLAIM _ I IT, I Elm 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. TRF-As-mv R11 1 r, 411 seGWFffitieG issued with initial matwFities of one year OF less are as diSGOunted instruments, and aFe Galled Treasury bills. The Treasury GlArrently management" hills as needed to smooth GHt nosh flows Treasury notes, and nov interest semi_onnually. called TreastAFy bonds. Like T-FeasuFy notes, they pay interest semi annua4y-. TOTAL RATE of RETURN. A measure of a portfolio's performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains, and losses in the portfolio. -11- TRES HERMA NOS CONSERVATION AUTHORITY ITEM NO. 5.2 TRES HERMANOS CONSERVATION AUTHORITY AGENDA NO. s` a STAFF REPORT Date: August 19, 2020 To: Chair and Board of Directors From: Troy Helling, Executive Director Subject: Arnold Reservoir Dam Repairs and Remediation Update Recommendation: That the Authority receive and file an update to the Arnold Reservoir Dam Repairs and Remediation required pursuant to the Joint Powers Agreement for the Tres Hermanos Conservation Authority. Background/Analysis: The Arnold Reservoir Dam, officially the Chino Ranch #1 Dam (Dam No. 2025), located within Tres Hermanos, is annually inspected by the State of California Department of Water Resources. The inspection reports conclude that the dam and reservoir are safe for continued use. The reports also conclude with recommended actions that includes long term erosion protections, such as rip -rap, and filling rodent burrows with compacted crushed rock or compacted backfill to deter any further infestations. The Tres Hermanos Joint Powers Agreement ("Agreement") states that the City of Industry ("Industry") provide a one-time remediation for the Arnold Reservoir Dam, which is in need of erosion control measures, and that Industry would pay all costs associated with analyzing and engineering the remediation work. The plans and specifications will be submitted to each member Agency's City Engineer for review, at a cost to each Agency, not the Authority. Section 4.2 (B) of the Agreement reads: "Section 4.2 A Notwithstanding the above, Industry has identified that the Arnold Reservoir dam is in need of a one-time repair and requires remediation, to wit, the construction and/or installation of erosion control measures on the wet side of the earthen dam (the "Remediation Work"). At the time this Agreement was approved by the Members, Industry was still in the process of analyzing and engineering the Remediation Work. Industry agrees to complete this process and prepare plans and specifications for the Remediation Work, perform the Remediation Work and pay all costs associated with the Remediation Work. The plans and specifications shall be submitted to each Member's city engineer for their reasonable review and comment, at a cost to the respective Member, not the Authority. Any such comments shall be in writing and provided to Industry within seven (7) business days of receipt of the plans and specifications. The Members' city engineers shall work in good faith to resolve all comments, if any. As consideration for Industry's performance of and payment for the Remediation Work, the Authority agrees, at no cost to Industry, to cooperate and take all reasonable steps to assist Industry in securing the necessary permit, if any, to perform the Remediation Work and to issue an encroachment permit to Industry to perform the Remediation Work. The encroachment permit for the Remediation Work shall contain such conditions as are standard and customary for third parties performing work on the Members' public property, including, but not limited to, insurance and indemnity requirements, and shall be approved as to form by Authority's General Counsel. Notwithstanding the foregoing, Industry may satisfy the insurance and indemnity requirements of the encroachment permit by including the Authority, its appointed officials, officers, agents, and attorneys as additional insureds and indemnified parties in the contract awarding the Remediation Work; provided such provisions are reasonably satisfactory to, and approved in writing by, the Authority's General Counsel. After completion of the one-time Remediation Work, Industry shall not be responsible for any future repair, maintenance or other work to the Arnold Reservoir dam." Industry proposes to proceed with a test area to investigate if the dam repair can occur without draining the lake as a first option. Industry will complete the plans and specifications of a final design and move forward with authorization to bid approval and contract award for the work. The test area will not have full plans and specifications compared to a full remediation project so the costs will predominantly be for labor and equipment. As stated in Section 4.2 (B) of the Agreement, the test area scope and plan will be reviewed by the respective City Engineers of each agency. Both City Engineers of Diamond Bar and Chino Hills have reviewed the test area approach and have given approval to move forward. It should be noted that the erosion of the dam face is due to lapping water at the dam and is unlike erosion of running water as in a river. This pilot project will entail placing rip rap for about 100 feet along the face of the dam starting at the soft bottom and up to the highest water level. The rip rap elevations will be checked after a few days to evaluate any settlement which will provide a measure of the efficacy of this methodology for the dam repair. If unsuccessful, the second option will be employed, which is yet to be determined. In addition, the slope of the dam above the highest water level will be grouted to prevent incursion by burrowing rodents. Fiscal Impact: There is no fiscal impact to the Authority. TRES HERMANOS CONSERVATION AUTHORITY ITEM NO. 5.3 TRES HERMANOS CONSERVATION AUTHORITY AGENDA NO. J STAFF REPORT Date: August 19, 2020 To: Chair and Board of Directors From: Troy Helling, Executive Director IF1 Subject: Property Maintenance and Security for Dwelling Unit Located at Assessor's Parcel Number (APN) 1000-031-15-0000 Recommendation: It is recommended that the Board of Directors of the Authority review and provide direction to staff regarding ongoing property maintenance and security services for the dwelling unit located on Authority property and currently occupied by Ms. Cherie Wood. Background/Analysis: Located on the property at Assessor's Parcel Number (APN) 1000-031-15-0000 is the single-family residence currently occupied by Ms. Cherie Wood. Recently, Ms. Wood expressed concern for her safety and for an increase in rodents inside the house. In addition to rodent control and new security cameras, there is additional maintenance that is recommended to be performed including interior house painting, interior window shade replacement, structural inspection of old outbuildings, replacement of the dishwasher and the trimming of approximately 6 trees. The estimated cost is laid out in Table 1 below. For these proposed costs, staff intends to follow the purchasing policy of the City of Chino Hills as staff continues to develop a policy for the Authority. Table 1 - Summary of Proposed Maintenance Costs Rodent control ($2,200 first month + $64/month [$768 annually]) $2,968 Interior house painting (-1,850 sq. feet of wall @-$3/sq. foot) $6,000 Replace window interior shades (-13 windows materials + labor) $1,500 Structural Engineer Inspection of old outbuildings (barns) $3,240 Trim trees (pruning approx. 6 trees @ $250 each) $1,500 Replace Dishwasher $750 Install CCTV security cameras on tenant house ($400 camera kit + $1500 installation) $1,900 Install two Vosker V200 4G/LTE Cellular/solar powered Security Cameras $2 180 ($1,000 for cameras + $15/month cell plan [$180 annually]) Total: $20,038