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Home My WebLink AboutAgenda Packet - EVWD Board of Directors - 04/27/2016REGULAR BOARD MEETING Closed Session Begins at 4:30 PM April 27, 2016 - 5:30 PM 31111 Greenspot Road, Highland, CA 92346 AGENDA "In order to comply with legal requirements for posting of agenda, only those items filed with the District Clerk by 12:00 p.m. on Wednesday prior to the following Wednesday meeting not requiring departmental investigation, will be considered by the Board of Directors". CALL TO ORDER ROLL CALL OF BOARD MEMBERS PUBLIC COMMENTS Any person wishing to speak to the Board of Directors is asked to complete a Speaker Card and submit it to the District Clerk prior to the start of the meeting. Each speaker is limited to three (3) minutes, unless waived by the Chairman of the Board. Under the State of California Brown Act, the Board of Directors is prohibited from discussing or taking action on any item not listed on the posted agenda. The matter will automatically be referred to staff for an appropriate response or action and may appear on the agenda at a future meeting. AGENDA - This agenda contains a brief general description of each item to be considered. Except as otherwise provided by law, no action shall be taken on any item not appearing on the following agenda unless the Board of Directors makes a determination that an emergency exists or that a need to take immediate action on the item came to the attention of the District subsequent to the posting of the agenda. 1.Approval of Agenda RECESS INTO CLOSED SESSION CLOSED SESSION 2.CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION [Government Code Section 54956.9(d)(1)] Name of Case: City of San Bernardino v. San Bernardino Valley Municipal Water District, et al., San Bernardino County Superior Court Case No. CIVDS1605532 5:30 PM RECONVENE MEETING PLEDGE OF ALLEGIANCE ROLL CALL OF BOARD MEMBERS ANNOUNCEMENT OF CLOSED SESSION ACTIONS ITEMS PUBLIC COMMENTS 3. APPROVAL OF CONSENT CALENDAR All matters listed under the Consent Calendar are considered by the Board of Directors to be routine and will be enacted in one motion. There will be no discussion of these items prior to the time the board considers the motion unless members of the board, the administrative staff, or the public request specific items to be discussed and/or removed from the Consent Calendar. a. Approve the April 13, 2016 regular board meeting minutes b. Investment Report for Quarter Ended March 31, 2016 NEW BUSINESS 4.Investment Policy Update and Approval of Resolution 5.Leadership Action Academy 6.Contract Amendment for Environmental Science Associates (ESA), EIR Consultant for the Sterling Natural Resource Center REPORTS 7.Board of Directors' Reports 8.General Manager/CEO Report 9.Legal Counsel Report 10.Board of Directors' Comments ADJOURN PLEASE NOTE: Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection in the District's office located at 31111 Greenspot Rd., Highland, during normal business hours. Also, such documents are available on the District's website at www.eastvalley.org subject to staff's ability to post the documents before the meeting. Pursuant to Government Code Section 54954.2(a), any request for a disability-related modification or accommodation, including auxiliary aids or services, that is sought in order to participate in the above-agendized public meeting should be directed to the District Clerk at (909) 885-4900 at least 72 hours prior to said meeting. 1 Minutes 4/13/2016 etb Draft Pending Approval EAST VALLEY WATER DISTRICT April 13, 2016 REGULAR BOARD MEETING MINUTES The Chairman of the Board called the meeting to order at 4:30 p.m. PRESENT:Directors: Carrillo, Coats, Morales, Shelton, Smith ABSENT:None STAFF: John Mura, General Manager/CEO; Brian Tompkins, Chief Financial Officer; Justine Hendricksen, District Clerk; Eileen Bateman, Sr. Administrative Assistant LEGAL COUNSEL: Jean Cihigoyenetche GUEST(s): Members of the public PUBLIC COMMENTS Chairman Coats declared the public participation section of the meeting open at 4:31 pm. There being no written or verbal comments, the public participation section was closed. APPROVAL OF AGENDA M/S/C (Carrillo-Shelton) that the April 13, 2016 agenda be approved as submitted. CLOSED SESSION The Board entered into Closed Session at 4:31 p.m. as provided in the Ralph M. Brown Act Government Code Sections 54956.9(b)(1) to discuss the item listed on the agenda. THE BOARD RECONVENED THE MEETING AT 5:30 P.M. Ms. Pekani led the flag salute. ROLL CALL PRESENT: Directors: Carrillo, Coats, Morales, Shelton, Smith ABSENT: None 2 Minutes 4/13/2016 etb ANNOUNCEMENT OF CLOSED SESSION ACTIONS With respect to Item #2: Legal Counsel noted for the record that prior to posting the agenda this item was considered anticipated litigation, however, it is now considered existing litigation; he also provided the current case number associated as CIVDS1605072. No reportable action. PRESENTATIONS AND CEREMONIAL ITEMS INTRODUCTION OF NEWLY HIRED EMPLOYEE - HUMBERTO ALARCON, METER READER I INTRODUCTION OF REPRESENTATIVES FROM DUBAI WATER AUTHORITY AND ESRI The General Manager/CEO introduced Humberto Alarcon, the District’s recently hired employee to the Board. He also introduced representatives from Dubai Water Authority and ESRI who were at the District to gain information on the partnerships between East Valley Water District and ESRI. This included how the District utilizes ESRI’s GIS Technology to increase efficiency, how mapping is integrated into our everyday work plan, master plan and modeling metadata quality for utility billing, landscape analysis and daily quality control measures on a daily basis. PUBLIC COMMENTS Chairman Coats declared the public participation section of the meeting open at 5:33 p.m. There being no written or verbal comments the public participation section was closed at 5:33 p.m. APPROVE THE MARCH 9, 2016 REGULAR BOARD MEETING MINUTES M/S/C (Carrillo-Smith) that the Board approve the March 9, 2016 regular board meeting minutes as submitted. APPROVE THE MARCH 23, 2016 REGULAR BOARD MEETING MINUTES M/S/C (Carrillo-Smith) that the Board approve the March 23, 2016 regular board meeting minutes as submitted. APPROVE THE MARCH 25, 2016 SPECIAL BOARD MEETING MINUTES M/S/C (Carrillo-Smith) that the Board approve the March 25, 2016 special board meeting minutes as submitted. 3 Minutes 4/13/2016 etb DISBURSEMENTS M/S/C (Carrillo-Smith) that the General Fund Disbursements #246898 through #247133 which were distributed during the period of February 1, 2016 through February 29, 2016, bank drafts and ACH Payments in the amount of $3,444,331.65 and $315,584.55 for payroll and benefit contributions, totaling $3,759,916.20 be approved. ACCEPT AND FILE THE FINANCIAL STATEMENTS AS OF, AND FOR THE PERIOD ENDED, FEBRUARY 29, 2016 M/S/C (Carrillo-Smith) that the Board accept and file the financial statements as of, and for the period ended, February 29, 2016 as submitted. DIRECTORS’ FEES AND EXPENSES FOR MARCH 2016 M/S/C (Carrillo-Smith) that the Board approve the Directors’ fees and expenses for March 2016 as submitted. PRESENTATION FROM DIVERSIFIED PACIFIC COMMUNITIES Mr. Pete Pitassi provided a brief overview of Diversified Pacific Communities project located within the District’s service area, and included information on the following items: project location, landscaping, home and site plans, eco-friendly feature and the schedule timeline for the project. Director Shelton welcomed Mr. Pitassi and the Diversified Pacific Communities to the District. Director Morales expressed his appreciation for the presentation provided by Diversified Pacific Communities. Vice Chairman Carrillo thanked Mr. Pitassi for his presentation and welcomed him to the District. Chairman Coats stated that he was impressed with the layout of the project and is happy to see that single-story homes are included in the site plans as well as the eco-friendly features. Information Only. CSDA BOARD OF DIRECTORS SUPPORT RESOLUTION The General Manager/CEO provided a brief overview of the California Special Districts Association (CSDA) and the structure of Board Members; he also reviewed Chairman Coats’ interest in his submittal of nomination paperwork to continue with the District’s efforts to increase regional partnerships and participation with other agencies. M/S/C (Morales-Carrillo) that the Board adopt Resolution 2016.12 to support 4 Minutes 4/13/2016 etb placing in nomination Ronald Coats as a member of the California Special Districts Association Southern Network Seat B Board Election. BOARD OF DIRECTORS’ REPORTS Director Shelton reported on the following: on March 3rd she attended a tour of the Anaheim Water Recycling Center, she stated that she was impressed by the facility and stated that this is the type of facility that the District is trying to accomplish; on April 5th she attended the Annual North Fork Shareholders meeting and on April 13th she attended the San Bernardino Valley Water Conservation District where they discussed providing land to the San Manuel Band of Mission Indians for cultural resources. Director Smith reported on the following: on March 3rd he attended a tour of the Anaheim Water Reclamation Demonstration Project, he was impressed with facility and invited everyone to view the site on YouTube; on March 29th he attended the Finance and Policy Committee meeting where they reviewed the Administrative Financial Policy updates; he stated that he received the General Manager/CEO’s evaluation results on March 25th and that he also attended the North Fork Water Shareholders meeting on April 5th. Director Morales reported on the following: On April 1st he attended East Valley Board of Realtors Association where he provided a District update and the progress of the Sterling Natural Resource Center; on April 4th he participated in the Association of California Water Agencies Region 9 meeting where they prepared for East Valley Water District’s presentation at the upcoming state wide trade convention in May, he also participated in an ACWA Region 9 meeting where he received legislative updates. Vice Chairman Carrillo had no reports at this time. Chairman Coats had no reports at this time. Information Only. GENERAL MANAGER/CEO REPORT The General Manager/CEO reported on the following: the District received notification regarding approval of the conservation adjustment request to account for population growth, this will change the District’s target conservation to 22%. He expressed his appreciation to staff for their efforts in completing the necessary tasks for the District to receive the conservation adjustment. The General Manager/CEO also reported that staff welcomed 5th grade students from Valley Prep School and provided a tour of District facilities and the Headquarters Building; staff also provided a conservation class to Girl Scout Troop 1250; that the first Conservation Commission training session will be held tomorrow at 6:00 p.m.; that the District will be hosting the Association of San Bernardino County Special Districts dinner this Monday at 6:00 p.m. and will be discussing Strategic Board Communications. He also stated that the District will be holding a Special Meeting, April 20th at 3:00 p.m. to prepare for the FY 2016-17 budget and discuss Program Goals and Objectives relating to the budget. 5 Minutes 4/13/2016 etb Information only. LEGAL COUNSEL REPORT No reports at this time. BOARD OF DIRECTORS’ COMMENTS Director Shelton congratulated staff on their amazing efforts in providing excellent customer service to our constituents, and thanked staff for preparing mapping locations of fire hydrants throughout the District to assist local Fire Departments. Director Smith stated that he will be having his weather based irrigation controller installed tomorrow and encouraged everyone to attend the Conservation Workshop on May 3rd at 9 a.m. Director Morales stated that it is a pleasure to support Chairman Coats with the CSDA Board Resolution and welcomed the conservation commission members in the audience and thanked them for their community service. Vice Chairman Carrillo thanked Mr. Martinez and Mrs. Malloy for their efforts in the Districts’ adjusted conservation target standard of 22%. Chairman Coats concurred with Director Morales and Vice Chairman Carrillo’s comments and also thanked Mr. Peng for his efforts in setting high standards for the District’s technology; he commended District staff and stated that he believes and knows that East Valley Water District has the right staff members in the right positions and it was expressed tonight with having representatives from Dubai come to see what our District is doing. The Chairman closed the meeting with the following statement, “Help insure your water future by supporting the Sterling Natural Water Resource Center”. Information only. ADJOURN The meeting adjourned at 6:11 p.m. _________________________ Ronald L. Coats, Chairman __________________________ John J. Mura, Secretary BOARD AGENDA STAFF REPORT Agenda Item #3.b. Meeting Date: April 27, 2016 To: Governing Board Members From: General Manager/CEO Subject: Investment Report for Quarter Ended March 31, 2016 RECOMMENDATION: Staff recommends that the Board of Directors accept and file the attached Investment Report for the quarter ended March 31, 2016. BACKGROUND / ANALYSIS: California Government Code §53646(b) requires the Treasurer or CFO of a local agency to submit a quarterly report on the agency’s investments to the legislative body of the agency within 30 days of the end of each quarter. Discussion The attached schedule shows all of the District’s cash and investments, restricted and unrestricted, as of March 31, 2016. Attachment A shows the investment securities purchased and retired during the quarter January to March 2016. Increases and decreases in highly liquid funds, such as LAIF, are explained in the narrative below. Unrestricted Investments LAIF The balance held in the Local Agency Investment Fund at the beginning of the quarter was $16,142,449. The District made two withdrawals, totaling $1,385,000, from LAIF in March; one to cover large checks to contractors, and the other to send to Union Bank to cover payments on District bonds due April 1st, 2016. In addition, interest earned during last quarter of $13,966 was posted to the account in January, resulting in an ending balance of $14,771,415. LAIF earnings for the quarter ended March 31st were $18,401, calculated at an apportionment rate of 0.46%; up from 0.37% which had been in effect for the previous quarter. The earnings were posted to the District’s account on April 15th, 2016. Citizen’s Business Bank (CBB) Wealth Management The total (book) value of the assets held with CBB decreased $1,328 to $5,516,214 during the quarter ended 3/31/16. The balance in this account is held both in a money market account ($524,264) and in a portfolio of Treasury and federal agency securities shown on Attachment A. Net interest payments received on securities in the District’s portfolio were $5,856 and funds held in money market accounts earned $257. Earnings were offset by a $5,385 amortization charge against premiums paid on the acquisition of certain bonds, and investment manager fees paid during the quarter were $2,056. There were no District transfers to or from this investment account during the quarter. The following schedule summarizes the activity for Unrestricted Investments during the Quarter ended March 31, 2016: Restricted Investments Trust accounts with Union Bank are used to safeguard funds which are restricted by bond covenants. These accounts contain bond proceeds, which are restricted for use on projects for which bonds were issued, and to receive fund transfers from the District for use by the Trustee to pay District bondholders. Union Bank – 2010 Revenue Bond Trust Accounts All bond proceeds from the 2010 Revenue Bond issue have been spent and the related Water and Sewer Acquisition trust accounts closed. The Revenue and Interest Accounts are used by the Trustee to receive funds from the District LAIF account (discussed above) and make payments to 2010 Revenue Bond holders on semi-annual payment dates of April 1st and October 1st. Union Bank – 2013 Revenue Bond Trust Accounts As of March 31, 2016, the District had $401,420 of unspent bond proceeds to pay for pipeline projects currently under construction. These funds should be depleted by the end of April when the District receives the final invoice from the City of Highland for the joint pipeline/storm drain project on 5th Street. The Revenue and Interest Accounts are used by the Trustee to receive funds from the District LAIF account and make payments to 2013 Revenue Bond holders on semi-annual payment dates of April 1st and October 1st. Summary Schedule of Union Bank Trustee Accounts The following schedule summarizes activity in the Union Bank accounts for the Quarter ended March 31, 2016: AGENCY IDEALS AND ENDEAVORS: Ideals and Endeavor II - Maintain An Environment Committed To Elevated Public Service (E) - Practice transparent & accountable fiscal management REVIEW BY OTHERS: This agenda item has been reviewed by the Finance and Policy Standing Committee. FISCAL IMPACT : There is no fiscal impact associated with this agenda item. Respectfully submitted: Recommended by: John Mura General Manager / CEO Brian Tompkins Chief Financial Officer ATTACHMENTS: Description Type Investment Report for the Quarter Ended March 31, 2016 Backup Material Attachment A - CBB Investment Activity Report Quarter Ended March 31, 2016 Backup Material EAST VALLEY WATER DISTRICT Investment Activity Quarter Ended March 31, 2016 Market Purch Units / Maturity Adjusted Cost Matured / Adjusted Cost Value Date Issuer CUSIP Yield Face Value Date 01/01/2016 Purchases Called 03/31/2016 03/31/2016 04/19/12 FHLB Series YP-2017 3133XNDB2 5.250% 26,793.11 06/15/17 31,136.35 1,536.14 29,600.21 27,953.77 09/16/13 Federal Home Loan Bank 313372Q80 2.580%02/26/16 100,000.00 100,000.00 -- 08/27/14 Tenn Valley Authority 880591EQ1 1.750% 272,000 10/15/18 274,769.92 274,769.92 277,230.56 02/20/15 Federal Home Loan Bank 3130A43J9 1.750%02/20/15 99,940.00 99,940.00 -- 01/27/16 Federal Home Loan Bank 3130A6XY8 2.000% 100,000 01/27/21 -100,000.00 100,000.00 100,462.00 03/03/14 US Treasury Note 912828SY7 0.625% 300,000 05/31/17 297,937.50 297,937.50 299,823.00 10/19/15 Fannie Mae 3136G0S28 1.700% 355,000 10/23/20 354,645.00 354,645.00 355,035.50 03/15/16 Fannie Mae 3136G3CK9 1.520% 300,000 06/15/20 -299,745.00 299,745.00 300,033.00 10/27/15 Freddie Mac 3134G3F88 1.500% 100,000 08/28/19 100,881.00 100,881.00 100,893.00 10/28/15 Freddie Mac 3134G73K5 1.700% 100,000 10/28/20 99,950.00 99,950.00 100,008.00 10/29/15 Freddie Mac 3134G7V65 1.450% 100,000 10/29/19 100,000.00 100,000.00 100,006.00 10/29/15 Freddie Mac 3134G7S28 1.350% 100,000 04/29/19 100,000.00 100,000.00 100,028.00 10/29/15 Freddie Mac 3134G72Q3 1.250% 200,000 04/29/19 200,000.00 200,000.00 200,004.00 10/29/15 Freddie Mac 3130A6NA1 1.400% 100,000 10/29/19 100,000.00 100,000.00 100,016.00 11/17/15 Freddie Mac 3134G76G1 1.050% 300,000 05/17/18 300,000.00 300,000.00 299,265.00 11/30/15 Freddie Mac 3134G82V0 1.900%11/25/20 199,920.00 199,920.00 -- 11/30/15 Fannie Mae 3136G2UN5 1.500% 100,000 05/30/19 100,000.00 100,000.00 100,348.00 11/30/15 Freddie Mac 3134G83X5 1.350% 200,000 11/26/18 200,000.00 200,000.00 200,132.00 02/27/12 Freddie Mac Series 3578 31398JVS9 4.500%09/15/16 9,193.73 9,193.73 -- 10/02/12 Freddie Mac 3134A4ZY3 5.750% 125,000 06/27/16 127,351.33 127,351.33 126,642.50 Activity (Book Value) Attachment A EAST VALLEY WATER DISTRICT Investment Activity Quarter Ended March 31, 2016 Market Purch Units / Maturity Adjusted Cost Matured / Adjusted Cost Value Date Issuer CUSIP Yield Face Value Date 01/01/2016 Purchases Called 03/31/2016 03/31/2016 Activity (Book Value) 11/23/12 US Treasury Note 912828MA5 2.750% 500,000 11/30/16 511,489.90 511,489.90 507,305.00 03/30/16 Federal Home Loan Bank 3130A7GD1 1.800% 200,000 03/30/21 -200,000.00 200,000.00 200,068.00 08/13/13 Federal Farm Credit Bank 3133ECWV2 0.300% 200,000 12/07/16 199,660.00 199,660.00 200,312.00 12/02/13 US Treasury Note 912828UE8 0.750% 500,000 12/31/17 496,020.51 496,020.51 500,175.00 05/06/15 Freddie Mac 3134G6A37 1.740%05/06/20 99,853.00 99,853.00 -- 09/30/15 Freddie Mac 3134G7UY5 2.000%09/30/20 100,000.00 100,000.00 -- 10/29/15 Freddie Mac 3134G7U82 1.750% 500,000 10/29/20 499,900.00 499,900.00 500,035.00 11/23/15 Freddie Mac 3134G76C0 1.200% 300,000 11/23/18 300,000.00 300,000.00 300,048.00 11/30/15 Freddie Mac 3134G86F1 2.050%11/25/20 100,000.00 100,000.00 -- 4,978,793 5,102,648.24 599,745.00 710,442.87 4,991,950.37 4,995,823.33 Attachment A BOARD AGENDA STAFF REPORT Agenda Item #4. Meeting Date: April 27, 2016 Discussion Item To: Governing Board Members From: General Manager/CEO Subject: Investment Policy Update and Approval of Resolution RECOMMENDATION: Staff recommends that the Board of Directors approve Resolution 2016.10 updating the Statement of Investment Policy 7.6 for fiscal year 2016-17. BACKGROUND / ANALYSIS: In July of 2015, staff brought a revised and updated Statement of Investment Policy for the Board’s consideration, which policy had been thoroughly reviewed for compliance with state statutes, and revised to include certain investment types that, although permitted by state guidelines, had not previously been included in the District’s investment policy. The revised investment policy was submitted to the California Municipal Treasurer’s Association (CMTA) for review, and for certification that the District’s policy is compliant with state statutes and industry best practices. The District received the certification (attached) along with suggestions from CMTA program reviewers to make the policy even stronger. Based on those suggestions, the following sections have been added to the proposed 2016-17 Investment Policy: Discussions on Interest Rate Risk and Credit Risk (page 1) Review of the Investment Portfolio to ensure ongoing compliance with the policy (page 7) Periodic review of Investment Pools/Mutual Funds to ensure underlying assets are in compliance with the policy (page 7) AGENCY IDEALS AND ENDEAVORS: Ideals and Endeavor II - Maintain An Environment Committed To Elevated Public Service (E) - Practice transparent & accountable fiscal management REVIEW BY OTHERS: This agenda item has been reviewed by the Finance and Policy Standing Committee. FISCAL IMPACT : There is no fiscal impact associated with this agenda item. Respectfully submitted: Recommended by: John Mura General Manager / CEO Brian Tompkins Chief Financial Officer ATTACHMENTS: Description Type Resolution 2016.10 Resolution Letter Exhibit A - Statement of Investment Policy 7.6 Cover Memo Exhibit B - CMTA Certification Exhibit East Valley Water District Resolution 2016.10 Page 1 of 2 RESOLUTION NO. 2016.10 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE EAST VALLEY WATER DISTRICT ESTABLISHING AN INVESTMENT POLICY FOR PUBLIC FUNDS WHEREAS, the Board of Directors of the East Valley Water District (the “District”) desires to maintain a formal policy regarding the investment of public funds pursuant to the requirements of Government Code Sections 5921 and 53600 et seq.; and WHEREAS, the Board of Directors of the District has employed qualified staff to invest those funds in accordance with the law and the terms of the District’s investment policy , as well as in a manner that advances the District’s investment objectives of safety, liquidity and yield; and NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the District that the East Valley Water District Investment Policy attached hereto as Exhibit “A” and incorporated in full herein by this reference is hereby adopted as the formal investment policy of the District; and BE IF FURTHER RESOLVED that the General Manager and the Treasurer/Chief Financial Officer of the District are hereby authorized and directed to invest the District’s funds in a manner consistent with the terms hereof and in accordance with any further directions of the District’s Board of Directors; and BE IT FURTHER RESOLVED that this Resolution supersedes Resolution No. 2015.08 adopted by the Board of Directors of the District on July 22, 2015. This Resolution shall take effect on July 1, 2016. PASSED, APPROVED and ADOPTED this 27th day of April, 2016 ROLL CALL: Ayes: Noes: Absent: Abstain: Ronald L. Coats, Board President East Valley Water District Resolution 2016.10 Page 2 of 2 April 27, 2016 I HEREBY CERTIFY that the foregoing is a full, true and correct copy of Resolution 2016.10 adopted by the Board of Directors of East Valley Water District at its Regular Meeting held April 27, 2016. John J. Mura, Secretary, Board of Directors EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2016 Policy No: 7.6 Page 1 of 14 Purpose The purpose of this policy is to establish guidelines for the prudent investment of East Valley Water District funds in conformance with California Government Code requirements. Funds will be managed to provide for daily cash flow requirements and to meet the objectives of this policy. Policy It is the policy of the District to invest public funds in a manner which ensures the safety and preservation of capital while meeting reasonably anticipated operating needs, achieving a reasonable rate of return, and conforming to all state and local statutes governing the investment of public funds. Scope This policy applies to the investment of all operating funds; it does not apply to investments held in trust for the District retirement plan, or post-employment health benefits, as these investments are subject to policies established by the plan trustees. Indenture agreements specify how bond proceeds will be invested, but generally they will be invested in securities permitted by this policy. Invested funds are accounted for, and are identified in, the District’s Comprehensive Annual Financial Report. Objectives As specified in CGC §53600.5, when investing and managing public funds, the primary objectives, in priority order, of the District’s investment activities shall be: 1.Safety: Safety of principal is the foremost objective of the investment program. Investments of the East Valley Water District shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio by mitigating certain risks. Some of those risks are: A. Interest Rate Risk – the District will minimize the risk that the market value of securities in the portfolio will fall due to changes in general interest rates by: Exhibit "A" EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2016 Policy No: 7.6 Page 2 of 14 Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operation and avoiding the need to sell securities on the open market prior to maturity. Investing operating funds primarily in short-term securities money market mutual funds, or investment pools. B. Credit Risk – the risk that an issuer or other counterparty to an investment will not fulfill its obligations, will be reduced by: Limiting investments to higher rated securities as further described in this policy. Diversifying the investment portfolio so that potential losses on individual securities will be reduced. 2.Liquidity: The investment portfolio will remain sufficiently liquid to enable the East Valley Water District to meet all operating requirements that might be reasonably anticipated. 3.Return on Investments: The investment portfolio shall be designed with the objective of attaining the best yield or returns on investments, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives. Prudence The standard of prudence to be used by District officials involved in the investment program shall be the “prudent investor” standard and shall be applied in the context of managing the overall portfolio. The meaning of the standard of prudent investor is explained in CGC Section 53600.3, which states that “when investing, reinvesting, purchasing, acquiring, exchanging, selling or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency.” EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2016 Policy No: 7.6 Page 3 of 14 The CFO/Treasurer and delegated investment officers, acting in accordance with written procedures and this Policy and exercising due diligence, shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. Delegation of Authority The authority of the District’s Board of Directors to invest District funds is derived from California Government Code (CGC) section 53601. Section 53607 of the CGC grants the Board the authority to delegate that authority to the District’s Chief Financial Officer/Treasurer. Such delegation shall expire and be renewed annually, by Board Resolution, in conjunction with the annual investment policy review. The CFO/Treasurer shall be responsible for all transactions undertaken, and shall establish a system of controls to regulate the activities of subordinate officials in the absence of the Treasurer. All transactions will be reviewed by the Treasurer on a regular basis to ensure compliance with this Policy. No Person may engage in an investment transaction except as provided under the terms of this Investment Policy and the procedures established by the Treasurer. Ethics and Conflicts of Interest Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program or which could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose to the District’s General Manager/CEO any material financial interest in financial institutions that conduct business within the District, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the District. Authorized Broker-Dealers The CFO/Treasurer will maintain a list of approved financial institutions authorized to provide investment services to the public agency in the State of California. These may include primary dealers authorized to buy and sell government securities in direct dealings with the Federal Reserve Bank of New York, or regional dealers that qualify under Securities and Exchange Commission Rule 15C33-1 (uniform net capital rule). EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2016 Policy No: 7.6 Page 4 of 14 All Broker Dealers who desire to conduct investment transactions with the District must supply the CFO/Treasurer with the following: Audited Financial Statements Proof of Financial Industry Regulatory Authority (FINRA) certification Proof of State of California registration Completed broker/dealer questionnaire (except Certificate of Deposit counterparties) Certification of having read the District’s investment policy and depository contracts Authorized and Suitable Investments The East Valley Water District as empowered by California Government Code (CGC) §53600, et. Seq., establishes the following as authorized investment: A. Local Agency Investment Fund (LAIF). The District may invest in the Local Agency Investment Fund established by the State Treasurer for the benefit of local agencies (CGC §16429.1). The fund must have 24 hour liquidity. There is no limitation on the percentage of the District portfolio that may be invested with LAIF. B. United States Treasury Securities. United States Treasury notes, bonds, or bills for which the full faith and credit of the United States is pledged for the payment of principal and interest (CGC §53601(b)). There is no limitation as to the percentage of the District’s portfolio that may be invested in these securities, however, maximum investment maturities are limited to five years. C. Federal Agency Obligations. The District is permitted to invest in federal agency or United States government sponsored enterprise obligations, participations, mortgage backed securities or other instruments, including those issued by or fully guaranteed as to principal and interest by Federal agencies or United States government sponsored enterprises (CGC §53601(f)). Maximum maturity is limited to five years. There is no limitation as to percentage of the District’s portfolio that may be invested in agencies. D. Bank Depository Accounts. The District may invest in insured or collateralized certificates of deposit, savings accounts, market rate accounts, or other bank deposits issued by a state or national bank, savings and loan associations, or state or federal credit unions located in California (CGC §53630 et. Seq.). A written EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2016 Policy No: 7.6 Page 5 of 14 depository contract is required with all institutions that hold District deposits requiring that deposits be collateralized in accordance with the CGC. The Treasurer may waive collateral requirement for the portion of any deposit insured pursuant to federal law. Securities placed in a collateral pool must provide coverage for at least 110 percent of all deposits that are placed in the institution. Acceptable pooled collateral is governed by CGC §53651. Real estate mortgages are not considered acceptable collateral by the District, even though they are permitted in CGC §53651(m). All financial institutions holding District deposits are required to provide the District with a regular statement of pooled collateral. This report will state that they are meeting the 110 percent collateral rule, a listing of all collateral with location and market value, plus an accountability of the total amount of deposits secured by the pool. Deposits are allowable in any institution that insures its deposits with the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), and a maximum deposit of up to the federal insurance limits may be deposited in any one institution without collateral. No bank shall receive District deposits in excess of the federal insurance limits that has a long-term debt rating by Moody’s investors Service, Standard & Poor’s, or Fitch Ratings of less that ‘A’. The maximum maturity is restricted to three years. In accordance with CGC §53638, no deposit shall exceed the shareholder’s equity of any depository bank, nor shall a deposit exceed the total net worth of any institution. No deposits shall be made at a state or federal credit union if a member of the Board of Directors or the General Manager/CEO or CFO/Treasurer of the District serves on the Board of Directors or a committee of the credit union. E. Municipal Securities. Registered treasury notes or bonds issued by the State of California or any of the other 49 states, including bonds payable solely out of the revenues from a revenue producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any states (CGC §53601 (c)(d)). Bonds, notes, or other evidence of debt issued by a local agency within the State of California, including issues by East Valley Water District. This includes bonds payable solely out of revenue form a revenue-producing property owned, controlled, or operated by the local agency, or by an authority of the local agency (CGC §53601 EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2016 Policy No: 7.6 Page 6 of 14 (a)(e)). Securities must have a debt rating of at least ‘AA’ by an NRSRO. Maximum maturity is limited to five years from date of purchase, and holdings of this type of security are limited to a maximum of 20% of the District’s investment portfolio. F. Commercial Paper. Commercial paper of “prime” quality of the highest ranking of the highest letter and number rating as provided for by a Nationally Recognized Statistical Rating Organization (NRSRO) and must be issued only by general corporations that are organized and operating within the United States and have total assets in excess of $500 million. The general corporation must have an A rating or better on debt other than commercial paper, if any, assigned by an NRSRO (CGC §53601(h)). Purchases shall not exceed 5% of the outstanding paper of the issuing corporation, and maximum maturity is restricted to 270 days. This type of investment shall not exceed 15% of the District’s investment portfolio. G. Placement Service Deposits. The District may invest in Certificates of Deposit placed with a private sector entity that assists in the placement of deposits with eligible financial institutions located in the United States (CGC §53601.8). The full amount of the principal and the interest that may be accrued during the maximum term of each deposit shall at all times be insured by federal deposit insurance. Placement Service Deposits, in combination with bank certificates of deposit shall not exceed 25% of the value of the District’s investments at any time. The maximum investment maturity will be restricted to three years. H. Medium Term Notes. The District may invest in corporate and depository institution debt securities issued by corporations organized and operating within the United States, or by depository institutions licensed by the United States or any state and operating within the United States (CGC §53601(k)). Securities eligible for investment under this section shall be rate “AA” or better by an NRSRO. The maximum maturity is restricted to five years, and investment in this category of security shall not exceed 30 percent of the District’s investible funds, and not more than 5 percent from a single issuer. I. Money Market Funds. Shares of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission (CGC §53601(l)(2)). EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2016 Policy No: 7.6 Page 7 of 14 The Company shall either 1) have attained the highest ranking or the highest letter and numerical rating provided by not less than two NRSROs or 2) retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years of experience managing money market mutual funds with assets under management in excess of five hundred million dollars ($500,000,000). A maximum of 15% of the District’s investible funds can be invested in Money Market Mutual funds. J. Local Government Investment Pools. Shares of beneficial interest in an investment pool created by a joint powers authority organized pursuant to CGC §6509.7 and that invest in securities and obligations authorized in the California Government Code (CGC §53601(p)). Investment is limited to pools that seek to maintain a stable Net Asset Value (NAV) and must be rated at least AA or better by an NRSRO. A maximum of 25% of the District’s portfolio may be invested in Local Government Investment Pools. K. Prohibited Investments. Under the provision of CGC §53601.6 and §53631.5, the District shall not invest any funds covered by this Investment Policy in inverse floaters, range notes, interest-only strips derived from mortgage pools or any investment that may result in a zero interest accrual if held to maturity. Review of Investment Portfolio The securities held by East Valley Water District must be in compliance with the above section “Authorized and Suitable Investments” at the time of purchase. Because some securities may not comply with this section subsequent to the date of purchase, the CFO/Treasurer shall at least quarterly review the portfolio to identify those securities that do not comply. The CFO/Treasurer shall establish procedures to report to the District’s Board of Directors, major and critical incidences of noncompliance identified through the review of the portfolio. Investment Pools / Mutual Funds When the District’s investment portfolio includes Investment Pools and Mutual Funds, as permitted in the section “Authorized and Suitable Investments”, the CFO/Treasurer shall as a matter of due diligence, monitor the assets held by the pools/funds. At least quarterly, the CFO/Treasurer will conduct an investigation to determine the following: EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2016 Policy No: 7.6 Page 8 of 14 1.A description of eligible investment securities, and a written statement of investment policy and objectives. 2.A description of interest calculation and how it is distributed, and how gains and losses are treated. 3.A description of how the securities are safeguarded (including the settlement processes), and how often the securities are priced and the program audited. 4.A description of who may invest in the program, how often, what size deposit and withdrawal are allowed. 5.A schedule for receiving statements and portfolio listings. 6.Are reserves, retained earnings, etc. utilized by the pool/fund? 7.A fee schedule, and when and how it is assessed. 8.Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds? Safekeeping and Custody Agreements To protect against potential losses caused by collapse of individual securities dealers, all securities owned by the East Valley Water District shall be kept in safekeeping by a third party bank trust department, acting as agent for the District under the terms of a custody agreement executed by the bank and the District. All securities will be received and delivered using standard delivery versus payment (DVP) procedures with the Districts custodial bank, and evidenced by safekeeping receipts. Diversification and Maximum Maturities The District will diversify its investment by security type and institution. With the exception of US Treasury securities, and the Local Agency Investment Fund or other authorized pools, no more than 30% of the District’s total investment portfolio will be invested in a single security type of with a single financial institution. To the extent possible, East Valley Water District will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the District will not directly invest in securities maturing more than 5 years from the date of EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2016 Policy No: 7.6 Page 9 of 14 purchase. Reserve funds may be invested in securities exceeding 5 years if the maturity of such investments is made to coincide as nearly as practicable with the expected use of the funds. Internal Controls The external auditors will annually review the investments and general activities associated with the investment program. This review will provide internal control by assuring compliance with the Investment Policy and District policies and procedures. Performance Standards The investment portfolio will be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints, and the cash flow needs. The District’s investment strategy is passive. The performance of the District’s investment portfolio will be evaluated and compared to an appropriate benchmark in order to assess the success of the investment portfolio relative to the District’s Safety, Liquidity, and Return on Investments objectives. Investment Reporting In accordance with California Government Code §53646, the CFO/Treasurer will prepare a quarterly Investment Report and render the report to the Board of Directors no later than 30 days after the close of each calendar quarter. The report shall provide the type of investment, issuers, the date of maturity, par values and market values of each investment, transactions occurring during the reporting period, and identification of funds managed by third party managers. The report will also include 1) certification that all investment transactions have been made in compliance with the District’s Investment Policy, and 2) a statement that the District has the ability to meet all of its expenditure requirements during the next six months. Policy Adoption Adoption. This policy shall be reviewed annually with the Board of Directors and adopted by Board Resolution. EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2016 Policy No: 7.6 Page 10 of 14 Amendments. Any changes to the policy, or persons charged with maintaining internal controls over investments, must be approved the Board. Glossary of Terms (Note: All words of a technical nature should be included. Following is an example of common treasury terminology.) Agencies: Federal agency securities and/or Government-sponsored enterprises. Benchmark: A comparative base for measuring the performance or risk tolerance of the investment portfolio. A benchmark should represent a close correlation to the level of risk and the average duration of the portfolio’s investments. Broker: A broker brings buyers and sellers together for a commission. Certificate of Deposit (CD): A time deposit with a specific maturity evidenced by a Certificate. Large-denomination CDs are typically negotiable. Collateral: Securities, evidence of deposit or other property, which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. Comprehensive Annual Financial Report (CAFR): The official annual report of the (East Valley Water District). It includes five combined statements for each individual fund and account group prepared in conformity with GAAP. It also includes supporting schedules necessary to demonstrate compliance with finance-related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section. Coupon: (a) The annual rate of interest that a bond’s issuer promises to pay the bondholder on the bond’s face value. (b) A certificate attached to a bond evidencing interest due on a payment date. Dealer: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. Delivery versus Payment: There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities. Derivatives: (1) Financial instruments whose return profile is linked to, or derived from, the movement of one or more underlying index or security, and may include a leveraging EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2016 Policy No: 7.6 Page 11 of 14 factor, or (2) financial contracts based upon notional amounts whose value is derived from an underlying index or security (interest rates, foreign exchange rates, equities, or commodities). Discount: The difference between the cost price of a security and its maturity when quoted at lower than face value. A security selling below original offering price shortly after sale also is considered to be at a discount. Diversification: A Dividing investment funds among a variety of securities offering independent returns. Duration: A measure of the sensitivity of the price (the value of principal) of a fixed- income investment to a change in interest rates. Duration is expressed as a number of years. Rising interest rates mean falling bond prices, while declining interest rates mean rising bond prices. Federal Credit Agencies: Agencies of the Federal government set up to supply credit to various classes of institutions and individuals (e.g., S & L’s, small business firms, students, farmers, farm cooperatives, and exporters). Federal Deposit Insurance Corporation (FDIC): A federal agency that insures bank deposits, currently up to $250,000 per entity. Federal Funds Rate: The rate of interest at which Federal funds are traded. This rate is currently pegged by the Federal Reserve through open-market operations. Federal Home Loan Banks (FHLB): Government sponsored wholesale banks (currently 12 regional banks), which lend funds and provide correspondent banking services to member commercial banks, thrift institutions, credit unions, and insurance companies. The mission of the FHLBs is to liquefy the housing related assets of its members who must purchase stock in their district Bank. Federal National Mortgage Association (FNMA): FNMA, like GNMA was chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal corporation working under the auspices of the Department of Housing and Urban Development (HUD). It is the largest single provider of residential mortgage funds in the United States. Fannie Mae, as the corporation is called, is a private stockholder-owned corporation. The corporation’s purchases include a variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages. FNMA’s securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all security holders will receive timely payment of principal and interest. EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2016 Policy No: 7.6 Page 12 of 14 Federal Reserve System: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks, and about 5,700 commercial banks that are members of the system. Government National Mortgage Association (GNMA or Ginnie Mae): Securities influencing the volume of bank credit guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations, and other institutions. Security holder is protected by full faith and credit of the U.S. Government. Ginnie Mae securities are backed by the FHA, VA, or FHA mortgages. The term “pass-throughs” is often used to describe Ginnie Maes. Liquidity: A liquidity asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes. Local Government Investment Pool (LGIP): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment. Market Value: The price at which a security is trading and could presumably be purchased or sold. Master Repurchase Agreement: A written contract covering all future transactions between the parties to repurchase-reverse repurchase agreements that establishes each party’s rights in the transactions. A master agreement will often specify, among other things, the right of the buyer-lender to liquidate the underlying securities in the event of default by the seller borrower. Maturity: The date upon which the principal or stated value of an investment becomes due and payable. Money Market: The marker in which short-term debt instruments (bills, commercial paper, bankers’ acceptances, etc.) are issued and traded. Offer: The price asked by a seller of securities. (When you are buying securities, you ask for an offer.) See Asked and Bid. Portfolio: Collection of securities held by an investor. Primary Dealer: A group of government securities dealers who submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2016 Policy No: 7.6 Page 13 of 14 and Exchange Commission (SEC)-registered securities broker-dealers, banks, and a few unregulated firms. Prudent Person Rule: An investment standard. In some states the law requires that a fiduciary, such as a trustee, may invest money only in a list of securities selected by the custody state-the so-called legal list. In other states the trustee may invest in a security if it is one which would be bought by a prudent person of discretion and intelligence who is seeking a reasonable income and preservation of capital. Qualified Public Depositories: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits. Rate of Return: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond the current income return. Repurchase Agreement (REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security “buyer” in effect lends the “seller” money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. Reverse Repurchase Agreement (Reverse REPO): A reverse-repurchase agreement (reverse repo) involves an investor borrowing cash from a financial institution in exchange for securities. The investor agrees to repurchase the securities at a specified date for the same cash value plus an agreed upon interest rate. Although the transaction is similar to a repo, the purpose of entering into a reverse repo is quite different. While a repo is a straightforward investment of public funds, the reverse repo is a borrowing. Safekeeping: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank’s vaults for protection. Secondary Market: A market made for the purchase and sale of outstanding issues following the initial distribution. Securities & Exchange Commission: Agency created by Congress to protect investors in securities transactions by administering securities legislation. Sec Rule 15(C)3-1: See Uniform Net Capital Rule. EAST VALLEY WATER DISTRICT Administrative Policies & Programs Policy Title: Investment Policy Original Approval Date: July 22, 2015 Last Revised: April 27, 2016 Policy No: 7.6 Page 14 of 14 Structured Notes: Notes issued by Government Sponsored Enterprises (FHLB, FNMA, SLMA, etc.) and Corporations, which have imbedded options (e.g., call features, step-up coupons, floating rate coupons, and derivative-based returns) into their debt structure. Their market performance is impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the shape of the yield curve. Treasury Bills: A non-interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months, or one year. Treasury Bonds: Long-term coupon-bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities of more than 10 years. Treasury Notes: Medium-term coupon-bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities from two to 10 years. Uniform Net Capital Rule: Securities and Exchange Commission requirement that member firms as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted into cash. Yield: The rate of annual income return on an investment, expressed as a percentage. (a) Income Yield is obtained by dividing the current dollar income by the current market price for the security. (b) Net Yield or Yield to Maturity is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond. Revised: April 27, 2016 Exhibit "B" BOARD AGENDA STAFF REPORT Agenda Item #5. Meeting Date: April 27, 2016 Discussion Item To: Governing Board Members From: General Manager/CEO Subject: Leadership Action Academy RECOMMENDATION: This report is provided to the Board of Directors for its information only. BACKGROUND / ANALYSIS: In an effort to maximize staff capabilities through ongoing professional development and support succession planning efforts, the District partnered with Dennis Boylin, Certified Professional Behavioral Analyst and President of Boylin Management Institute, to conduct the Leadership Action Academy. The Leadership Action Academy is a six (6) month program designed to provide emerging District leaders with finely developed management and leadership skills through group discussion and skill practicing techniques. In addition, participants either individually or in a team create a project that will enhance productivity and efficiency or save the District money. During the Academy graduation ceremony, graduates present their ideas and recommendations to the management team to show the level of hard work and dedication that was put into their projects. Due to the impressive nature of the projects and presentations, one team will be highlighted to provide the Board of Directors with insight into the effectiveness of this program. AGENCY IDEALS AND ENDEAVORS: Ideals and Endeavor II - Maintain An Environment Committed To Elevated Public Service (D) - Maximize staff and Governing Board capabilities through ongoing professional development REVIEW BY OTHERS: This agenda item has been reviewed by the senior and executive management team. FISCAL IMPACT : There is no fiscal impact associated with this agenda item. Respectfully submitted: Recommended by: John Mura General Manager / CEO Kerrie Bryan HR/Risk and Safety Manager ATTACHMENTS: Description Type Leadership Action Academy Presentation Presentation APRIL 27, 2016CUSTOMIZED LEADERSHIP ACADEMY FACILITATED BY: DENNIS BOYLIN LEADERSHIP ACADEMY OVERVIEW •The Academy is a 6 month program designed to provide emerging District leaders with finely developed management and leadership skills covering the following course content: 2 Active Listening Coaching to Improve Performance Leadership VS Management Emotional Intelligence Presentation Skills Managing Conflict Managing Change Problem Solving Active Listening Goal Setting Action Planning UNIQUE APPROACH •Limited Group Size –Maximum 15 participants 3 UNIQUE APPROACH •Spaced Learning –Assures behavioral changes –Allows time to apply and review techniques 4 Spaced Learning Traditional Learning UNIQUE APPROACH •Team or Individual Project –Improve productivity/efficiency –Save money –Customer relations 5 MEETINGS •The Academy meets twice per month in 2-hour sessions –Review progress on projects –Review on-the-job application –Enhance skill development 6 GRADUATION •At the end of the 6 month period participants: –Present and make recommendations of their projects to Senior and Executive Management –Are awarded Certificates of Achievement 7 APRIL 27, 2016RELIABLE ALTERNATIVE CASH PAYMENT OPTIONS PROJECT TEAM: Carol Cales Nate Paredes Aaron Albrecht PROJECT OVERVIEW & GOALS •Project Description: –To provide more flexible payment options through convenient locations throughout the district. •Organization Impact: –It will provide world class public service by providing cutting edge technology to our customers for more convenient and reliable payment centers. •GOALS: –Cost savings –Better time management for staff –Allocate savings to fund the District Organizational Ideals and Endeavors –Improve customer satisfaction 9 ACTION STEPS: STEP 1 10 •STEP 1: –Cost analysis of existing kiosks –Implementation and operating cost for: •PayNearME •Cash Tie •RESULTS: –Kiosk Annual Operating Cost: Annual Rent for both locations 12,000 Cash Courier 14,000 Software Support 3,000 Internet Connection 18,000 Staff Labor and Burden 19,500 Total 66,500 Average Per Transaction Cost 6.52 ACTION STEPS: STEP 1 (Cont’d) 11 •RESULTS (Continued): –Cash Tie •Implementation Cost $20,000 (waived if 5 year contract is signed) •Cost per transaction is a percentage of the payment amount (2.5% to 3% negotiated) •Expected average fee per transaction: $2.25 (i.e. $90 X 2.5%) – PayNearMe •Implementation Cost $0 •Cost per transaction is a Flat Rate of $1.49 ACTION STEPS: STEP 1 (Cont’d) 12 •SUMMARY OF RESULTS (Continued): Summary of Results:Kiosk Cash Tie P ayNearMe Annual Operating 66,500.00 23,000.00 15,200.00 Average Cost Per Transaction 6.52 2.25 1.49 Savings if Implemented - 43,500.00 51,300.00 $0.00 $10,000.00 $20,000.00 $30,000.00 $40,000.00 $50,000.00 $60,000.00 $70,000.00 Kiosk Cash Tie PayNearMe ANNUAL OPERATING COST ACTION STEPS: STEP 2 13 •Research and Analyze areas of cash paying customers: ACTION STEPS: STEP 2 (Cont’d) 14 –Kiosk Operating Hours: •Rio Ranch/Super Penny Mart •Total Availability: 15 hours – PayNearMe centers • 7-eleven -Family Dollar -CVS Pharmacy •Total Availability: 24 hours –Cashtie •CVS Pharmacy –Walmart •Total Availability: 17 hours •Summary of Results: –More convenient locations and hours of availability ACTION STEPS: STEP 3 15 •Cashtie –Meeting take away: •Cashtie was not willing to provide hands on support during implementation •Representative was lacking product and implementation knowledge •No Marketing •PayNearMe –Meeting take away: •PayNearMe will provide full support during implementation •Already affiliated with our Billing Service Company •Free Marketing •Representative was professional and knowledgeable of implementation process and product ACTION STEPS: STEP 4 16 •Cost Analysis to implement with Tyler –There are no direct cost to implement Cashtie or PayNearMe –Both options will process payment through an upload file similar to: •Lockbox services through Citizens Business Bank •OPAY (customers who pay through bank’s bill pay option) •Results: –No additional staff training on processing payment files and no additional cost to implement with Tyler ACTION STEPS: STEP 5 17 •Research other agencies using PayNearMe: –City of Fairfield, California –City of Santa Rosa, California –City of Tracy •Results: –Satisfied with Implementation –Positive Customers Feedback –Significant costing savings SAMPLE BILL & MESSAGING 18 PHONE APP 19 Four ways to obtain barcode: 1.Bill 2.Call Customer Service 3.Logon to website 4.Phone App PROPOSED IMPLEMENTATION •Project overall results: –Kiosks are expensive to operate and maintain at the current locations –Identified two viable payment options that are more flexible and convenient •Recommendation: –Implement PayNearMe –Phase out Kiosks slowly at current locations –New home for Kiosks –Furthering the District’s Vision 20 PROPOSED IMPLEMENTATION (Cont’d) Timeline: 21 SIGN AGREEMENT ADVERTISE NEW PAYMENT OPTIONS PayNearMePROGRAM GO LIVE! JULY 2016 TERMINATE ALL KIOSKS SERVICES 6 & 12 MONTH REVIEW AND EVALUATION NEW HOME FOR KIOSK NEW HOME FOR THE KIOSKS •Sterling Natural Resource Center 22 FURTHERING THE DISTRICT’S VISION •The implementation of this project will support the District’s vision by: –Providing world class public service to all customers within our District –Efficiently using resources: •Staff Time •Financial resources (Savings: $52K) 23 TRANSLATION OF SAVINGS •The saving of $52,000 is equivalent: –Annual Interest earnings on $16M invested in the Local Agency Investment Fund (LAIF) at the current rate of 0.37% 24 TRANSLATION OF SAVINGS (Cont’d) •The saving of $52,000 is equivalent: –Approximately two light duty service trucks 25 TRANSLATION OF SAVINGS (Cont’d) •The saving of $52,000 is equivalent: –1 Full Time Customer Service Representative 26 TRANSLATION OF SAVINGS (Cont’d) •The saving of $52,000 is equivalent: –Replace and upgrade all District staff desktops 27 TRANSLATION OF SAVINGS (Cont’d) •The saving of $52,000 is equivalent: –Provide funding for Emergency Operations Center (EOC) equipment 28 TRANSLATION OF SAVINGS (Cont’d) •The saving of $52,000 is equivalent: –Physical security equipment 29 TRANSLATION OF SAVINGS (Cont’d) •The saving of $52,000 is equivalent: –Develop and contribute to the District’s reserve accounts for unforeseeable events •New State mandates and regulations •Natural Disasters impacting District property and infrastructure 30 BOARD AGENDA STAFF REPORT Agenda Item #6. Meeting Date: April 27, 2016 Discussion Item To: Governing Board Members From: General Manager/CEO Subject: Contract Amendment for Environmental Science Associates (ESA), EIR Consultant for the Sterling Natural Resource Center RECOMMENDATION: Authorize the General Manager to recommend to San Bernardino Valley Municipal Water District (Valley District) a contract amendment for Environmental Science Associates (ESA) for providing services for the conducting various studies for a Biological Assessment report. BACKGROUND / ANALYSIS: ESA was selected through a competitive selection process as the District’s consultant to assist with the preparation of the Environmental Impact Report (EIR) for the Sterling Natural Resource Center (SNRC). The Board took formal action last year to authorize the General Manager to execute the Professional Services Agreement and the subsequent Amendment No. 1 with ESA to provide services required for completion of the EIR and permitting. Since the District has applied for a State Revolving Fund (SRF) grant and loan which consists of federal monies through EPA, one of the requirements is that the State Water Resources Control Board (SWRCB) has to consult with the Federal agencies on behalf of EPA prior to disbursing federal funds. The EIR has been completed and certified and contains appropriate mitigation measures for the habitat of Santa Ana Sucker. As such, US Fish and Wildlife Service (Service) has to be consulted under a provision known as Section 7 Consultation. In addition, SWRCB has requested that the US Army Corp of Engineers be simultaneously consulted since City Creek is Waters of the US. A Biological Assessment report therefore needs to be prepared to be given to the Service so they can prepare their opinion on the project. The current amendment is to seek approval for this Biological Assessment report and associated funding such that the Section 7 Consultation with federal agencies can be completed as a part of the SRF application. Under a Framework Agreement between EVWD and the San Bernardino Valley Municipal Water District the contract has been assigned to Valley District. The Framework Agreement enables collaboration between the two agencies within the San Bernardino Valley region to advance their integrated recycled water management objectives. The authority requested under the current item will move the process forward to complete the related studies for the Biological Assessment report required for the SRF application for the SNRC program. AGENCY IDEALS AND ENDEAVORS: Ideals and Endeavor I - Encourage Innovative Investments To Promote Sustainable Benefits (A) - Develop projects and programs to ensure safe and reliable services (B) - Manage and identify methods to conserve natural resources (E) - Actively seek alternative supply resources REVIEW BY OTHERS: The Engineering Department, the CFO and District’s Legal Counsel have reviewed this item. FISCAL IMPACT : The fiscal impact associated with this agenda item is the consultant fees for a contract amendment in the amount of $199,550 for the EIR consultant ESA increasing the overall contract amount from $492,395 to $691,945. The work performed by ESA will be reimbursable to the District from SRF grant and/or loan funding. Respectfully submitted: Recommended by: John Mura General Manager / CEO Jean Cihigoyenetche District Counsel