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HomeMy WebLinkAbout2021/06/28 - Special Meeting AgendaCITY OF RANCHO CUCAMONGA SPECIAL MEETING AGENDA CITY COUNCIL/FIRE PROTECTION DISTRICT June 28, 2021 – 5:00 PM Council Chambers 10500 Civic Center Drive Rancho Cucamonga, CA 91730 A. CALL TO ORDER Pledge of Allegiance Roll Call:         Mayor Michael Mayor Pro Tem Kennedy Council Members Hutchison, Scott and Spagnolo B.PUBLIC COMMUNICATIONS This is the time and place for the general public to address the City Council on any item listed on the agenda. State law prohibits the City Council from addressing any issue not previously included on the Agenda. The City Council may receive testimony and set the matter for a subsequent meeting. Comments are to be limited to five minutes per individual or less, as deemed necessary by the Mayor, depending upon the number of individuals desiring to speak. C. CONSENT CALENDAR C1.Consideration to Approve and Adopt Revised Statements of Investment Policy for the City of Rancho Cucamonga and the Rancho Cucamonga Fire Protection District. (CITY/FIRE) C2.Consideration to Approve the Following to be in Compliance with Governmental Accounting Standards Board (GASB) Statement No. 54:  1) Updated Fund Balance Policy; 2) a Resolution Committing to the Level of Fiscal Reserves for the City of Rancho Cucamonga; and 3) a Resolution Committing to the Level of Fiscal Reserves for the Rancho Cucamonga Fire Protection District. (RESOLUTION NO. 2021­052) (RESOLUTION NO. FD2021­018) (CITY/FIRE) C3.Consideration to Approve Updated City General Fund Reserve Funding Goals Policy. (CITY) C4.Consideration of Approval of Revisions to Amended Fiscal Year 2020/21 Appropriations. (CITY) C5.Consideration to Approve the Temporary Roadside Memorials on Public Property and Right­ of­Way Policy. (CITY) C6.Consideration to Adopt the Capital Improvement Program for Fiscal Year 2021/22. (CITY) D. CITY MANAGER'S STAFF REPORT(S) D1.Consideration to Adopt the Fiscal Year 2021/22 Budget and the Article XIIIB Appropriations Limit for Fiscal Year 2021/22. (RESOLUTION NO. 2021­050, RESOLUTION NO. 2021­051) (CITY) D2.Consideration to Adopt the General Fund Preliminary Budget, Approve a Resolution Adopting the General Fund Appropriations Limit for Fiscal Year 2021/22, and set Approval of a Final Budget for the July 21, 2021 Board Meeting. (RESOLUTION NO. FD 2021­015) (FIRE) D3.Consideration of a Resolution Adopting a Budget in the Amount of $2,594,050 and a Resolution Approving an Appropriation Limit in the Amount of $4,456,979 for Fiscal Year 2021/22 in Community Facilities District (CFD) No. 88­1. (RESOLUTION NO. FD 2021­016) (RESOLUTION NO. FD 2021­017) (FIRE) D4.Consideration of a Resolution Adopting a Budget in the Amount of $7,000,470 and a Resolution Approving the Appropriations Limit in the Amount of $17,149,398 for Fiscal Year 2021/22 in Communities Facilities District (CFD) No. 85­1. (RESOLUTION NO. FD 2021­013) (RESOLUTION NO. FD 2021­014) (FIRE) E. ADJOURNMENT CERTIFICATION I, Linda A. Troyan, MMC, City Clerk Services Director of the City of Rancho Cucamonga, or my designee, hereby certify under penalty of perjury that a true, accurate copy of the foregoing agenda was posted on at least twentyfour (24) hours prior to the meeting per Government Code 54954.2 at 10500 Civic Center Drive, Rancho Cucamonga, California and on the City's website. LINDA A. TROYAN, MMC CITY CLERK SERVICES DIRECTOR If you need special assistance or accommodations to participate in this meeting, please contact the City Clerk's office at (909) 477­2700. Notification of 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility. Listening devices are available for the hearing impaired.  Page 1 4 48 57 63 CITY OF RANCHO CUCAMONGASPECIAL MEETINGAGENDACITY COUNCIL/FIRE PROTECTION DISTRICTJune 28, 2021 – 5:00 PMCouncil Chambers10500 Civic Center DriveRancho Cucamonga, CA 91730A. CALL TO ORDERPledge of AllegianceRoll Call:         Mayor Michael                Mayor Pro Tem Kennedy                Council Members Hutchison, Scott and SpagnoloB.PUBLIC COMMUNICATIONSThis is the time and place for the general public to address the City Council on any item listedon the agenda. State law prohibits the City Council from addressing any issue not previouslyincluded on the Agenda. The City Council may receive testimony and set the matter for asubsequent meeting. Comments are to be limited to five minutes per individual or less, asdeemed necessary by the Mayor, depending upon the number of individuals desiring tospeak.C. CONSENT CALENDARC1.Consideration to Approve and Adopt Revised Statements of Investment Policy for the City ofRancho Cucamonga and the Rancho Cucamonga Fire Protection District. (CITY/FIRE)C2.Consideration to Approve the Following to be in Compliance with Governmental AccountingStandards Board (GASB) Statement No. 54:  1) Updated Fund Balance Policy; 2) aResolution Committing to the Level of Fiscal Reserves for the City of Rancho Cucamonga; and3) a Resolution Committing to the Level of Fiscal Reserves for the Rancho Cucamonga FireProtection District. (RESOLUTION NO. 2021­052) (RESOLUTION NO. FD2021­018)(CITY/FIRE)C3.Consideration to Approve Updated City General Fund Reserve Funding Goals Policy. (CITY)C4.Consideration of Approval of Revisions to Amended Fiscal Year 2020/21 Appropriations. (CITY) C5.Consideration to Approve the Temporary Roadside Memorials on Public Property and Right­ of­Way Policy. (CITY) C6.Consideration to Adopt the Capital Improvement Program for Fiscal Year 2021/22. (CITY) D. CITY MANAGER'S STAFF REPORT(S) D1.Consideration to Adopt the Fiscal Year 2021/22 Budget and the Article XIIIB Appropriations Limit for Fiscal Year 2021/22. (RESOLUTION NO. 2021­050, RESOLUTION NO. 2021­051) (CITY) D2.Consideration to Adopt the General Fund Preliminary Budget, Approve a Resolution Adopting the General Fund Appropriations Limit for Fiscal Year 2021/22, and set Approval of a Final Budget for the July 21, 2021 Board Meeting. (RESOLUTION NO. FD 2021­015) (FIRE) D3.Consideration of a Resolution Adopting a Budget in the Amount of $2,594,050 and a Resolution Approving an Appropriation Limit in the Amount of $4,456,979 for Fiscal Year 2021/22 in Community Facilities District (CFD) No. 88­1. (RESOLUTION NO. FD 2021­016) (RESOLUTION NO. FD 2021­017) (FIRE) D4.Consideration of a Resolution Adopting a Budget in the Amount of $7,000,470 and a Resolution Approving the Appropriations Limit in the Amount of $17,149,398 for Fiscal Year 2021/22 in Communities Facilities District (CFD) No. 85­1. (RESOLUTION NO. FD 2021­013) (RESOLUTION NO. FD 2021­014) (FIRE) E. ADJOURNMENT CERTIFICATION I, Linda A. Troyan, MMC, City Clerk Services Director of the City of Rancho Cucamonga, or my designee, hereby certify under penalty of perjury that a true, accurate copy of the foregoing agenda was posted on at least twentyfour (24) hours prior to the meeting per Government Code 54954.2 at 10500 Civic Center Drive, Rancho Cucamonga, California and on the City's website. LINDA A. TROYAN, MMC CITY CLERK SERVICES DIRECTOR If you need special assistance or accommodations to participate in this meeting, please contact the City Clerk's office at (909) 477­2700. Notification of 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility. Listening devices are available for the hearing impaired.  Page 2 65 69 77 82 85 89 CITY OF RANCHO CUCAMONGASPECIAL MEETINGAGENDACITY COUNCIL/FIRE PROTECTION DISTRICTJune 28, 2021 – 5:00 PMCouncil Chambers10500 Civic Center DriveRancho Cucamonga, CA 91730A. CALL TO ORDERPledge of AllegianceRoll Call:         Mayor Michael                Mayor Pro Tem Kennedy                Council Members Hutchison, Scott and SpagnoloB.PUBLIC COMMUNICATIONSThis is the time and place for the general public to address the City Council on any item listedon the agenda. State law prohibits the City Council from addressing any issue not previouslyincluded on the Agenda. The City Council may receive testimony and set the matter for asubsequent meeting. Comments are to be limited to five minutes per individual or less, asdeemed necessary by the Mayor, depending upon the number of individuals desiring tospeak.C. CONSENT CALENDARC1.Consideration to Approve and Adopt Revised Statements of Investment Policy for the City ofRancho Cucamonga and the Rancho Cucamonga Fire Protection District. (CITY/FIRE)C2.Consideration to Approve the Following to be in Compliance with Governmental AccountingStandards Board (GASB) Statement No. 54:  1) Updated Fund Balance Policy; 2) aResolution Committing to the Level of Fiscal Reserves for the City of Rancho Cucamonga; and3) a Resolution Committing to the Level of Fiscal Reserves for the Rancho Cucamonga FireProtection District. (RESOLUTION NO. 2021­052) (RESOLUTION NO. FD2021­018)(CITY/FIRE)C3.Consideration to Approve Updated City General Fund Reserve Funding Goals Policy. (CITY)C4.Consideration of Approval of Revisions to Amended Fiscal Year 2020/21 Appropriations.(CITY)C5.Consideration to Approve the Temporary Roadside Memorials on Public Property and Right­of­Way Policy. (CITY)C6.Consideration to Adopt the Capital Improvement Program for Fiscal Year 2021/22. (CITY)D. CITY MANAGER'S STAFF REPORT(S)D1.Consideration to Adopt the Fiscal Year 2021/22 Budget and the Article XIIIB AppropriationsLimit for Fiscal Year 2021/22. (RESOLUTION NO. 2021­050, RESOLUTION NO. 2021­051)(CITY)D2.Consideration to Adopt the General Fund Preliminary Budget, Approve a Resolution Adoptingthe General Fund Appropriations Limit for Fiscal Year 2021/22, and set Approval of a FinalBudget for the July 21, 2021 Board Meeting. (RESOLUTION NO. FD 2021­015) (FIRE)D3.Consideration of a Resolution Adopting a Budget in the Amount of $2,594,050 and aResolution Approving an Appropriation Limit in the Amount of $4,456,979 for Fiscal Year2021/22 in Community Facilities District (CFD) No. 88­1. (RESOLUTION NO. FD 2021­016)(RESOLUTION NO. FD 2021­017) (FIRE)D4.Consideration of a Resolution Adopting a Budget in the Amount of $7,000,470 and aResolution Approving the Appropriations Limit in the Amount of $17,149,398 for Fiscal Year2021/22 in Communities Facilities District (CFD) No. 85­1. (RESOLUTION NO. FD 2021­013)(RESOLUTION NO. FD 2021­014) (FIRE) E. ADJOURNMENT CERTIFICATION I, Linda A. Troyan, MMC, City Clerk Services Director of the City of Rancho Cucamonga, or my designee, hereby certify under penalty of perjury that a true, accurate copy of the foregoing agenda was posted on at least twentyfour (24) hours prior to the meeting per Government Code 54954.2 at 10500 Civic Center Drive, Rancho Cucamonga, California and on the City's website. LINDA A. TROYAN, MMC CITY CLERK SERVICES DIRECTOR If you need special assistance or accommodations to participate in this meeting, please contact the City Clerk's office at (909) 477­2700. Notification of 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility. Listening devices are available for the hearing impaired.  Page 3 DATE:June 28, 2021 TO:Mayor and Members of the City Council President and Members of the Boards of Directors FROM:John R. Gillison, City Manager INITIATED BY:Lori E. Sassoon, Deputy City Manager/Administrative Services Tamara L. Oatman, Finance Director SUBJECT:Consideration to Approve and Adopt Revised Statements of Investment Policy for the City of Rancho Cucamonga and the Rancho Cucamonga Fire Protection District. (CITY/FIRE) RECOMMENDATION: Staff recommends that the City Council/Board of Directors approve and adopt the attached revised Statements of Investment Policy for the City of Rancho Cucamonga (City) and the Rancho Cucamonga Fire Protection District (District). BACKGROUND: California Government Code Section 53646(a)(2) requires that the City/District Treasurer or Chief Fiscal Officer annually renders to the City Council/Board of Directors a Statement of Investment Policy, which shall be considered at a public meeting. Further, the City Council/Fire Board shall also consider any modifications to the investment policy at a public meeting. On August 5, 2020, the City entered into a three-year contract with PFM Asset Management LLC (“PFM”) for professional investment advisory services. As part of their contract, PFM annually reviews the City’s and District’s investment policies for potential revisions to ensure the City’s and District’s compliance with Government Code and to ensure that the policy accommodates the investment strategies agreed to by the City/District and PFM. On November 18, 2020, the City Council/Fire Board approved and adopted the City’s and District’s revised 2020 Statements of Investment Policy. ANALYSIS: PFM recently completed their review of the City of Rancho Cucamonga’s and the Rancho Cucamonga Fire Protection District’s Investment Policies (the “Policies”). As written, PFM stated that the Policies are in compliance with California Government Code (the “Code”) statutes regulating the investment of public funds. However, they recommended certain Policy updates related to Senate Bill 998, which took effect on January 1, 2021. Following is a summary of the Bill’s amendments to Code along with PFM’s recommendations that were implemented in the 2021 Policies: Page 4 Page 2 7 8 2 Code Amendment: Eliminates the 10% limit on the outstanding commercial paper of any one issuer and establishes a combined 10% per issuer limit on commercial paper and corporate notes. Policy Impact: Eliminated the 10% limit on the outstanding commercial paper of any one issuer as it is no longer in the Code. There is no need for the City/District to incorporate the new 10% combined per issuer limit on commercial paper and corporate notes as the City/District already have a more restrictive 5% per issuer limit that applies across all corporate sectors. Code Amendment: Allows local agencies that have more than $100 million of investment assets under management to invest up to 40% in commercial paper (the prior limit was 25% for all agencies other than a county or a city and county). Policy Impact: Although the City’s/District’s portfolios currently make limited use of commercial paper, the Policy limit was increased to match the current Code limit to retain the investment flexibility allowed by Code. As the District currently has less than $100 million of investments, the 40% commercial paper limit would not be applicable to the Fire District at this time. Code Amendment: Modified Government Code Section 53601.6 that prohibits certain types of investments. Policy Impact: As the Policies do not currently reference Code Section 53601.6, a section was added to the Policies that addresses the requirements of this Code Section. Related terms were added to each Policy’s Glossary to define listed prohibited investments. The attached Policies for the City and District have been reviewed and approved by the City Treasurer and the District Treasurer, respectively. FISCAL IMPACT: None. COUNCIL MISSION / VISION / GOAL(S) ADDRESSED: These policies support the City Council’s/Fire Board’s fiduciary roles as custodians of the public’s resources by providing guidelines for the prudent investment of the City’s/District’s idle cash and outlining policies essential to ensuring the safety and financial strength of the City’s/District’s investment portfolios. ATTACHMENTS: Attachment 1 – Statement of Investment Policy 2021-City Attachment 2 – Statement of Investment Policy 2021-Fire Page 5 /dzK&ZE,KhDKE' ^ddDEdK& /Es^dDEdWK>/z ϮϬϮϭ WƌĞƉĂƌĞĚďLJƚŚĞĚŵŝŶŝƐƚƌĂƟǀĞ^ĞƌǀŝĐĞƐ'ƌŽƵƉ :ŝŵ,ĂƌƌŝŶŐƚŽŶ͕dƌĞĂƐƵƌĞƌ >Žƌŝ͘^ĂƐƐŽŽŶ͕ĞƉƵƚLJŝƚLJDĂŶĂŐĞƌͬĚŵŝŶŝƐƚƌĂƟǀĞ^ĞƌǀŝĐĞƐ ĞƉƵƚLJdƌĞĂƐƵƌĞƌ dĂŵĂƌĂ>͘KĂƚŵĂŶ͕&ŝŶĂŶĐĞŝƌĞĐƚŽƌ ATTACHMENT 1 Page 6 CITY OF RANCHO CUCAMONGA STATEMENT OF INVESTMENT POLICY TABLE OF CONTENTS Introduction ........................................................................................................ 1 Scope .................................................................................................................. 1 Delegation of Authority ................................................................................... 1-2 Prudence ............................................................................................................ 2 Objective ......................................................................................................... 2-3 Ethics and Conflicts of Interest ......................................................................... 3-4 Authorized Financial Dealers and Institutions ..................................................... 4 Authorized and Suitable Investments .............................................................. 4-8 Prohibited Investments ....................................................................................... 8 Review of Investment Portfolio .......................................................................... 8 Investment Pools ............................................................................................. 8-9 Collateralization .................................................................................................. 9 Safekeeping and Custody .................................................................................... 9 Diversification ................................................................................................... 10 Maximum Maturities ........................................................................................ 10 Internal Control ................................................................................................ 10 Performance ................................................................................................ 10-11 Reporting .......................................................................................................... 11 Investment Policy Adoption .............................................................................. 12 Glossary ....................................................................................................... 13-19 Page 7 Statement of Investment Policy Page 1 CITY OF RANCHO CUCAMONGA STATEMENT OF INVESTMENT POLICY 1.0 INTRODUCTION This Statement of Investment Policy (“Policy”) provides guidelines for the prudent investment of the City of Rancho Cucamonga’s (“City”) idle cash and outlines the policies essential to ensuring the safety and financial strength of the City’s investment portfolio. This Policy is based on the principles of prudent money management and conforms to all federal, state, and local laws governing the investment of public funds. The goal of this Policy is to enhance the economic status of the City by protecting its pooled cash and to invest public funds to: 1. Meet the daily cash flow needs of the City; 2. Comply with all laws of the State of California regarding investment of public funds; and 3. Achieve a reasonable rate of return while minimizing the potential for capital losses arising from market changes or issuer default. 2.0 SCOPE This Policy applies to the investment activities of all funds of the City. These funds are accounted for in the City’s Comprehensive Annual Financial Report (CAFR) and include: General Fund, Special Revenue Funds, Debt Service Funds, Capital Project Funds, Proprietary Funds, as well as Agency Funds and a Private-Purpose Trust Fund. Bond proceeds shall be invested in accordance with the requirements and restrictions outlined in bond documents as approved by the City Council. If the bond documents are silent as to the permitted investments, the bond proceeds will be invested in the securities permitted by this Policy. Notwithstanding the other provisions of this Policy, the percentage limitations listed elsewhere in this Policy do not apply to bond proceeds. 3.0 DELEGATION OF AUTHORITY The City Council, as permitted under California Government Code §53607, delegates the responsibility to manage the City’s investment portfolio to the City Treasurer for a period of one- year, unless revoked. Subject to review, the City Council may renew the delegation of authority each year. The City Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials, and their procedures, in the absence of the City Treasurer. Pursuant to Government Code §1190, the City Page 8 Statement of Investment Policy Page 2 Treasurer appoints the Deputy City Manager/Administrative Services to act as Deputy Treasurer with responsibility to manage the City’s investment portfolio on a daily basis. The City Treasurer/Deputy Treasurer will maintain on file a written authorization designating those individuals to whom daily investment activities, such as carrying out the City Treasurer's/Deputy Treasurer’s investment instructions, confirming treasury transactions, and other routine activities, have been delegated. As authorized by the City Council, the City may also utilize the services of an independent investment advisor to assist with the investment program under the supervision of the City Treasurer/Deputy Treasurer. The investment advisor shall follow this Policy and such other written instructions as are provided by the City. The investment advisor shall never take possession of the City’s funds or assets. 4.0 PRUDENCE All persons authorized to make investment decisions on behalf of the City are trustees and therefore fiduciaries subject to the prudent investor standard, as described in Government Code section 53600.3 which states: 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. The City Treasurer/Deputy Treasurer and authorized persons acting in accordance with this Policy and the “prudent investor” standard 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 manner and appropriate action is taken to control adverse developments, whenever possible. 5.0 OBJECTIVE The objective of the investment portfolio is to meet the short- and long-term cash flow demands of the City. To achieve this objective, the portfolio will be structured to provide safety of principal and liquidity, while then providing a reasonable return on investments. Page 9 Statement of Investment Policy Page 3 The authority governing investments for municipal governments is set forth in Government Code Sections 53600 et seq. City strategy has been to limit investments more stringently than required under state law. The primary objectives of investment activities, in order of priority are: 1. Safety - Safety and risk associated with an investment refers to the potential loss of principal, interest, or combination thereof. The City only invests in those instruments that are considered safe. Each investment transaction shall be undertaken in a manner that seeks to ensure, whenever possible, that all capital losses are avoided, whether from securities default, broker/dealer default, or erosion of market value. The City shall seek to preserve principal by mitigating two types of risk: credit risk and market risk. • Credit risk, defined as the risk of loss due to failure of the issuer of a security, shall be mitigated by investing in only very safe securities and by diversifying the investment portfolio so that the failure of any one issuer would not unduly harm the City’s cash flow. • Market risk, defined as the risk of market value fluctuations due to overall changes in the general level of interest rates, shall be mitigated by structuring the portfolio to align with the City’s anticipated cash flow needs. It is explicitly recognized, however, that in a diversified portfolio, occasional measured losses may occur and must be considered within the context of overall investment return and liquidity needs. 2. Liquidity - Liquidity is an important investment quality especially when the need for unexpected funds occasionally occurs. The City’s investment portfolio will remain sufficiently liquid to enable the City to meet operating requirements that might be reasonably anticipated. 3. Yield - The City’s investment portfolio shall be designed with the objective of attaining a reasonable market rate of return throughout budgetary and economic cycles, commensurate with the City’s investment risk constraints as long as it does not diminish the objectives of Safety and Liquidity. 6.0 ETHICS AND CONFLICTS OF INTEREST The City Treasurer/Deputy Treasurer 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 officers shall disclose any material financial interest in financial institutions that conduct business with the City, and they shall further disclose any personal financial/investment positions that could be affected by the performance of the City’s operations and functions or by the management of the City’s investment program. The Treasurer/Deputy Page 10 Statement of Investment Policy Page 4 Treasurer and investment employees are required to file annual disclosure statements as required by the Fair Political Practices Commission (FPPC). 7.0 AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The City Treasurer/Deputy Treasurer shall only execute investment transactions with those direct issuers authorized by this Policy (LAIF, LGIPs, money market funds, and banks). All other investment transactions will be conducted through the City’s investment advisor who will maintain their own list of approved issuers, brokers/dealers, and financial institutions with which to conduct transactions on the City’s behalf. 8.0 AUTHORIZED AND SUITABLE INVESTMENTS The City is further governed by California Government Code Sections 53600 et. seq. to invest in specific types of securities. The City has further limited the types of securities in which it may invest. In the event an apparent discrepancy is found between this Policy and the Government Code, the more restrictive parameters will take precedence. Percentage holding limits listed in this Policy apply at the time the security is purchased. Credit ratings, where shown, specify the minimum credit rating category required at purchase. In the event a security held by the City is subject to a credit rating change that brings it below the minimum credit ratings specified in this Policy, the City Treasurer/Deputy Treasurer should notify the City Council of the change in the next monthly investment report. The course of action to be followed will then be decided on a case-by-case basis, considering such factors as the reason for the change, prognosis for recovery or further rate drops, and the market price of the security. Any security not listed in Section 8.0 is not a valid investment for the City. The concise list of approved securities is as follows: • United States Treasury Securities: United States Treasury Bills, Bonds, and Notes or those instruments for which the full faith and credit of the United States are pledged for payment of principal and interest. There is no limit on the percentage of the portfolio that can be invested in this category. • United States Federal Agencies: Obligations issued by Federal Agencies or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government-sponsored enterprises. There is no limit on the percentage of the portfolio that can be invested in this category. • Supranational Securities: United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank Page 11 Statement of Investment Policy Page 5 for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank. The maximum remaining maturity for supranational obligations must be five years or less, and they must be eligible for purchase and sale within the United States. These investments must be rated in a rating category of “AA” or better by a NRSRO. There is a 30% limit on the percentage of the portfolio that can be invested in this category. The maximum remaining maturity of any investment in this category shall not exceed five- years. • Municipals Notes or Bonds: Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state. Registered treasury notes or bonds of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states, in addition to California. Bonds, notes, warrants, or other evidences of indebtedness of a local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. Purchases are limited to securities rated in a rating category of “A” (long-term) or “A-1” (short-term) or their equivalents or better by a Nationally Recognized Statistical Rating Organization (“NRSRO”). (The minimum rating shall apply to any issuer, irrespective of any credit enhancement). There is a 30% limit on the percentage of the portfolio that can be invested in this category. • Negotiable Certificates of Deposit: Negotiable certificates of deposit issued by a nationally or state-chartered bank, a savings association or a federal association, a state or federal credit union, or by a federally licensed or state-licensed branch of a foreign bank. Purchases are limited to securities rated in a rating category of “A” (long-term) or “A-1” (short-term) or their equivalents or better by an NRSRO. There is a 30% limit on the percentage of the portfolio that can be invested in this category. • Asset-Backed Securities: A mortgage passthrough security, collateralized mortgage obligation, mortgage-backed or other pay-through bond, equipment lease-backed certificate, Page 12 Statement of Investment Policy Page 6 consumer receivable passthrough certificate, or consumer receivable-backed bond. Securities shall be rated in a rating category of “AA” or its equivalent or better by an NRSRO. There is a 20% limit on the percentage of the portfolio that can be invested in this category. The maximum remaining maturity of any investment in this category shall not exceed five- years. • Medium-Term Notes: Medium-Term Notes are defined as all corporate and depository institution debt securities. They must be issued by corporations organized and operating within the United States. Notes eligible for investment shall be rated in a rating category of “A” or its equivalent or better by an NRSRO. There is a 30% limit on the percentage of the portfolio that can be invested in this category. The maximum remaining maturity of any investment in this category shall not exceed five- years. • Bankers’ Acceptances: Bankers’ acceptances, otherwise known as bills of exchange or time drafts, that are drawn on and accepted by a commercial bank. Purchases are limited to issuers that have short-term debt rated in a rating category of “A-1” or its equivalent or higher by an NRSRO. There is a 40% limit on the percentage of the portfolio that can be invested in this category. The maximum maturity shall not exceed 180 days. • Commercial Paper: Must be of “prime” quality of the highest ranking or of the highest letter and number rating as provided for by an NRSRO. The entity that issues the commercial paper shall meet all the following conditions: (i) is organized and operating in the United States as a general corporation, (ii) has total assets in excess of five hundred million dollars ($500,000,000), and (iii) has debt other than commercial paper, if any, that is rated in a rating category of “A” or its equivalent or higher by an NRSRO. There is a 40% limit on the percentage of the portfolio that can be invested in this category (the limit is 25% for agencies that have less than $100 million of investment assets). The maximum maturity shall not exceed 270 days. • Repurchase Agreements (Repos): An executed Master Repurchase Agreement is required between the City and the broker dealer or financial Institution. The market value of securities that underlies a repurchase agreement shall be valued at 102 percent or greater of the funds Page 13 Statement of Investment Policy Page 7 borrowed against those securities and the value shall be adjusted no less than quarterly. Collateral is restricted to U.S. Treasury and Federal Agency securities. There is a 20% limit on the percentage of the portfolio that can be invested in this category. The maximum maturity of any investment in this category shall not exceed one year. • State of California Local Agency Investment Fund (LAIF): The Local Agency Investment Fund (LAIF) is a State of California managed investment pool established by the State Treasurer for the benefit of local agencies. There is no limit on the percentage of the portfolio that can be invested in this category. The maximum investment in LAIF accounts is dependent upon limits established under the Local Agency Investment Fund guidelines and not Government Code. • Joint Powers Authority (JPA) Investment Pool: Shares of beneficial interest issued by a joint powers authority organized pursuant to Section 6509.7 that invests in the securities and obligations authorized in Government Code. Whenever the City has any funds invested in a LGIP, the City Treasurer/Deputy Treasurer shall maintain on file a copy of the LGIP’s current information statement and periodically review the LGIP’s investments. There is no limit on the percentage of the portfolio that can be invested in this category. • Money Market Funds (“MMF”): Government Money Market Funds meeting either of the following criteria: (A) Attained the highest ranking or the highest letter and numerical rating provided by not less than two NRSROs, or (B) Retained an investment advisor with not less than five years’ experience and registered or exempt from registration with the SEC, with assets under management in excess of five hundred million dollars ($500,000,000). Whenever the City has any funds invested in an MMF, the City Treasurer/Deputy Treasurer shall maintain on file a copy of the MMF’s current information statement. A maximum of 20% of the City’s portfolio may be invested in this category. There is a 20% limit on the percentage of the portfolio that can be invested in this category. • Bank Deposits: FDIC insured or collateralized demand deposit accounts, savings accounts, market rate accounts, certificates of deposits and other types of bank deposits in financial institutions located in California. The amount on deposit in any financial institution shall not exceed the shareholder's equity. To be eligible to receive City deposits, the financial institution must have received a minimum overall satisfactory rating, under the Community Redevelopment Act, for meeting the credit needs of California Communities in its most recent evaluation. Bank deposits are required to be collateralized as specified under Government Code Section 53630 et seq. The City Treasurer/Deputy Treasurer, at his/her discretion, may Page 14 Statement of Investment Policy Page 8 waive the collateralization requirements for any portion that is covered by federal deposit insurance. The City shall have a signed agreement with any depository accepting City funds per Government Code Section 53649. There is no limit on the percentage of the portfolio that may be invested in this category. There is no limit on the percentage of the portfolio that can be invested in this category. However, a maximum of 10 percent of the portfolio may be invested in time deposits. 9.0 PROHIBITED INVESTMENTS Any security type or structure not specifically approved by this policy is hereby specifically prohibited. Security types which are thereby prohibited include, but are not limited to, inverse floaters, derivatives, range notes, interest only strips that are derived from a pool of mortgages, or in any investment that could result in zero interest accrual if held to maturity. 10.0 REVIEW OF INVESTMENT PORTFOLIO The securities held by the City must be in compliance with Section 8.0 “Authorized and Suitable Investments” at the time of purchase. If, subsequent to the date of purchase, a security is determined to be no longer in compliance with Section 8.0, the City Treasurer/Deputy Treasurer shall report the non-compliant security to the City Council and shall include a disclosure in the monthly Investment Report if the security is held at the date the report is prepared. The City’s external, independent auditors perform an annual review of the City’s Investment Policy, investment process, and related internal controls. The annual review process is performed as part of the City’s annual external financial audit. 11.0 INVESTMENT POOLS The Local Agency Investment Fund (LAIF) is a voluntary investment alternative for California’s local governments and special districts authorized by the California Government Code. LAIF is a State of California managed investment pool established by the State Treasurer for the benefit of local agencies. The City’s participation in LAIF was approved by the City Council with other authorized investments in July 1987. It is a permitted investment with the knowledge that the fund may invest in some vehicles allowed by statute but not otherwise authorized under the City’s authorized investments. All securities in LAIF are purchased under the authority of Government Code Sections 16430 and 16480. All investments are purchased at market value, and market valuation is conducted monthly. Page 15 Statement of Investment Policy Page 9 The City may also invest in shares of beneficial interest issued by a joint powers authority (“JPA”) organized pursuant to Section 6509.7 of the California Government Code that invests in the securities and obligations specified in the code and which shall retain an investment advisor that meets the following criteria: 1. Be registered or exempt from registration with the Securities and Exchange Commission; 2. Have assets under management in excess of five hundred million dollars ($500,000,000), and 3. Have not less than five (5) years of experience investing in the securities and obligations authorized herein. 12.0 COLLATERALIZATION All bank deposits must be FDIC insured or collateralized in accordance with Government Code Section 53630 et seq. 13.0 SAFEKEEPING AND CUSTODY To protect against potential losses by the collapse of individual securities dealers, all trades will be transacted on a delivery-versus-payment (DVP) basis. This means that the securities shall be delivered to the City’s designated custodian upon receipt of the payment by the City. The securities shall be held in safekeeping by a third-party custodian, acting as agent for the City under the terms of a custody agreement executed by the bank and City. The third-party custodian shall be required to issue a monthly safekeeping report to the City that lists the specific investment, rate, maturity and other pertinent information. The only exception to the foregoing shall be depository accounts and security purchases made with investment pools and certificates of deposit since the purchased securities are not deliverable. Evidence of these investments will be held in the City’s vault. No outside broker/dealer or advisor may have access to City funds, accounts or investments, and any transfer of funds to or through an outside broker/dealer must be approved by the City Treasurer/Deputy Treasurer. The City strives to maintain the level of investment of all funds as near 100% as possible, through daily and projected cash flow determinations. Idle cash management and investment transactions are the responsibility of the City Treasurer/Deputy Treasurer. Page 16 Statement of Investment Policy Page 10 14.0 DIVERSIFICATION It is the policy of the City to diversify its investment portfolio. Assets shall be diversified to eliminate the risk of loss resulting from over-concentration of assets in a specific issuer, security type, and maturities. Diversification strategies shall be determined and revised periodically. The purpose of diversifying is to reduce overall portfolio risks while attaining an average market rate of return; therefore, it needs to be conceptualized in terms of maturity, instrument types and issuer. To promote diversification, no more than 5% of the portfolio may be invested in the securities of any one issuer, regardless of security type; excluding U.S. Treasuries, federal agencies, supranationals, and pooled investments such as LAIF, money market funds, or local government investment pools. 15.0 MAXIMUM MATURITIES To the extent possible, the City will attempt to match security maturities to anticipated cash flow requirements. Where this Policy does not list a specific maturity limit, the maximum maturity of individual investments shall not exceed a maturity of five years from the trade date unless the City Council has granted authority to make that investment either specifically or as a part of an investment program approved by the City Council no less than three months prior to the investment. 16.0 INTERNAL CONTROL The City Treasurer/Deputy Treasurer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse. The procedures should include references to individuals authorized to execute transactions or transfers, safekeeping agreements, repurchase agreements, wire transfer agreements, collateral/depository agreements and banking services contracts, as appropriate. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgement by management. The City Treasurer/Deputy Treasurer shall establish an annual process of independent review by an external auditor. This review will provide internal control by assuring compliance with policies and procedures set forth in this Policy. Also, see Section 9.0 of this Policy. 17.0 PERFORMANCE The investment performance of the City’s operating portfolio shall be evaluated and compared to an appropriate benchmark in order to assess the success of the investment program relative to the City’s Safety, Liquidity, and Yield objectives. This review will be conducted annually with Page 17 Statement of Investment Policy Page 11 the City Treasurer, City Manager, Deputy City Manager/Administrative Services, and Finance Director, and, if necessary, consideration will be given to making adjustments to future investment strategies as market conditions permit. 18.0 REPORTING The City Treasurer shall prepare and submit a monthly investment report to the City Council and City Manager, which shall include all securities, excluding those held by and invested through trustees. The report shall include the following: • A monthly report of transactions. • The type of investment, name of the issuer, date of purchase, date of maturity, par and dollar amount invested in all securities. • The weighted average maturity of the investments. • Any funds, investments, or programs including loans that are under the management of contracted parties. • A description of the compliance with this Policy. • A statement of the City’s ability to meet its pooled expenditure requirements for the next six months or provide an explanation as to why sufficient money shall or may not be available. • The investment portfolio report shall include current market value information for all investments. A monthly market value will be obtained for each security owned by the City. For purposes of reporting, the market value of each security may be obtained from the City’s custodian bank or other pricing source(s) utilized by the City’s investment advisor. The City Treasurer shall be responsible for reviewing and modifying investment guidelines as conditions warrant and is required to submit same for re-approval to the City Council on an annual basis with or without changes. However, the City Treasurer may, at any time, further restrict the items approved for purchase as deemed appropriate. The basic premise underlying the City’s investment philosophy is, and will continue to be, to ensure that money is always safe and available when needed. Page 18 19.0 INVESTMENT POLICY ADOPTION The City's Investment Policy shall be reviewed and approved annually by the City Council. Any modifications made to the Investment Policy must be approved by the City Council. Jim Harrington City Treasurer City of Rancho Cucamonga Statement of Investment Policy Date Page 12 Page 19 Statement of Investment Policy Page 13 GLOSSARY OF TERMS The glossary is provided for general information only. It is not to be consider a part of the Policy for determining Policy requirements or terms. AGENCIES: Agencies of or sponsored by the Federal government set up to supply credit to various classes of institutions. Examples include Federal Home Loan Banks (FHLB), Federal Farm Credit Bank (FFCB), Federal Home Loan Mortgage Corporation (FHLMC), and Federal National Mortgage Association (FNMA). ASKED: The price at which securities are offered by a selling party to a buying party. ASSET-BACKED SECURITIES (ABS): Securities whose income payments and hence value is derived from and collateralized (or "backed") by a specified pool of underlying assets which are receivables. The pools of underlying assets can comprise common payments credit cards, auto loans, mortgage loans, and other types of assets. Interest and principal are paid to investors from borrowers who are paying down their debt. BANKERS’ ACCEPTANCE (BA): A draft, bill, or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer. BASIS POINT: One basis point is one-hundredth of a percent (i.e., 0.01%). BEAR MARKET: A period of generally pessimistic attitudes and declining market prices. BENCHMARK: A comparative base for measuring the performance or risk tolerance of the investment portfolio. A benchmark should represent a close correlation to the level of risk and the average duration of the portfolio’s investments. BID: The price offered by a buyer of securities. (When selling securities, you ask for a bid.) BOND EQUIVALENT YIELD: The basis on which yields on notes and bonds are quoted. BOOK VALUE (COST VALUE): The value at which a debt security is shown on the holder’s balance sheet. Book value is acquisition cost less amortization of premium or accretion of discount. BROKER/DEALER: An individual or firm that brings buyers and sellers together in a securities transaction. BULL MARKET: A period of generally optimistic attitudes and increasing market prices. Page 20 Statement of Investment Policy Page 14 CALLABLE SECURITIES: A security that is redeemable by the issuer before the scheduled maturity. Bonds are usually called when the interest rates fall so significantly that the issuer can save money by floating new bonds at lower rates. CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a Certificate. Large denomination CD’s are typically negotiable. COLLATERAL: Securities, evidence of deposit or other property, which a borrower pledges to secure repayment of a loan. Also, refers to securities pledged by a bank to secure deposits of public monies. COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual report of the City of Rancho Cucamonga. It includes five combined statements for each individual fund and account group prepared in conformity with Generally Accepted Accounting Principles (GAAP). It also includes supporting schedules necessary to demonstrate compliance with GAAP, finance-related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section. CORPORATE MEDIUM-TERM NOTE: Corporate and depository institution debt securities with a maximum remaining maturity of five years or less, 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. COUPON: (a) The annual rate of interest that a bond’s issuer promises to pay the bondholder on the bond’s face value. (b) A certificate attached to a bond evidencing interest due on a payment date. DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. DEBENTURE: A bond secured only by the general credit of the issuer. DELIVERY VERSUS PAYMENT (DVP): Delivery of securities with a simultaneous exchange of money for the securities. DERIVATIVES: Financial products dependent for their value on (or derived from) an underlying financial instrument, a commodity, or an index. 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 at a discount. Page 21 Statement of Investment Policy Page 15 DISCOUNT SECURITIES: Non-interest bearing, money market instruments that are issued at a discount and redeemed at maturity for full face value, e.g. U.S. Treasury Bills. DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns. FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits up to $250,000 per deposit. FEDERAL FUNDS RATE: The interest rate charged by one institution lending federal funds to another. 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, second loans, and fixed-rate mortgages. FNMA’s securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all security holders will receive timely payment of principal and interest. FEDERAL OPEN MARKET COMMITTEE (FOMC): Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a permanent member, while the other Presidents serve on a rotating basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases and sales of Government Securities in the open market to influence the volume of bank credit and money. FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and comprising 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. GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB): The independent organization that establishes and improves standards of accounting and financial reporting for the United States, state and local governments. Page 22 Statement of Investment Policy Page 16 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 FMHM mortgages. The term “pass-through” is often used to describe Ginnie Maes. INTEREST ONLY STRIP: Investments created by separating the principal and interest portions of a debt security or pool of securities into separate investments. Interest only strips are most common with mortgage-backed securities. The investor benefits if interest rates rise and principal repayments slow, but if interest rates fall and principal repayments accelerate, the investor will receive less interest. Once the principal amount has been repaid, interest payments stop, and the value of an interest only strip falls to zero. INVERSE FLOATER: Debt securities that have a floating coupon rate that adjusts inversely to movements in a benchmark interest rate. They can offer a hedge against falling interest rates. However, the structure of these investments can magnify changes in the security’s market value. Furthermore, if interest rates rise, the investor may end up with a security that pays little to no interest with a diminished security value. INVESTMENT AGREEMENTS: An agreement with a financial institution to borrow public funds subject to certain negotiated terms and conditions concerning collateral, liquidity and interest rates. LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss. LOCAL AGENCY INVESTMENT FUND (LAIF): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment. LOCAL GOVERNMENT INVESTMENT POOL (LGIP): A type of pooled investment program formed by a joint powers authority in which funds from its local agency investors are aggregated together for investment purposes. MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold. MARKET RATE OF RETURN: A rate of return commensurate with the market for similar securities (maturity, credit rating, duration and liquidity) would be considered a market rate of return. Page 23 Statement of Investment Policy Page 17 MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase–reverse, repurchase agreements that establishes each party’s rights in the transactions. A master agreement will often specify, among other things, the right of the buyer-lender to liquidate the underlying securities in the event of default by the seller-borrower. MATURITY: The date upon which the principal or stated value of an investment becomes due and payable. MONEY MARKET: The market in which short-term debt instruments (bills, commercial paper, bankers’ acceptances, etc.) are issued and traded. NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO): A credit rating agency approved by the U.S. Securities and Exchange Commission (SEC) that provides credit ratings that are used by the U.S. government and investors as benchmarks. Examples include Standard & Poor’s Corporation, Moody’s Investor Services, Inc. and Fitch, Inc. OFFER: The price asked by a seller of securities. (When buying securities, you ask for an offer.) OPEN MARKET OPERATIONS: Federal Reserve activity. Under the Federal Reserve Act, the Fed uses purchases and sales of Government and Federal Agency securities to add to or subtract from commercial bank reserves. Goals are to sustain economic growth, high employment and reasonable price stability. PAPER GAIN OR LOSS: Term used for unrealized gain or loss on securities being held in a portfolio based on comparison of current market quotes and their original cost. This situation exists if the security is held while there is a difference between cost value (book value) and the market value. PORTFOLIO: Collection of securities held by an investor. PRIMARY DEALER: A group of government securities dealers who submit daily reports of market activity, positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission (SEC) registered securities broker/dealers, banks and a few unregulated firms. PRUDENT INVESTOR STANDARD: An investment standard to be followed by those authorized to make investment decisions on behalf of a local agency. Those authorized 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 that agency. Page 24 Statement of Investment Policy Page 18 RANGE NOTE: A structured investment that pays interest as long as a benchmark interest rate is within a specified interest rate range. These securities provide higher than market interest rates, but the investor will not receive any interest if the benchmark interest rate moves outside the specified range. The investor is betting interest rates will remain relatively stable. 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. SAFEKEEPING: The service to customers by banks and trust companies when the bank or trust company stores the securities for protection, receives coupon payments and redeems issues at maturity. SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following the initial distribution of securities. 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. SUPRANATIONALS: Development banks that share the same goal of providing an improved standard of living in their member countries, but each having different mandates. There are three banks (supranationals) in which California local agencies can invest in their debt obligations; the International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC) and Inter-American Development Bank (IADB). 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 over 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 one 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 15-1; 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. Liquid capital includes cash and assets easily converted to cash without penalty. Page 25 Statement of Investment Policy Page 19 YIELD: The rate of annual income return on an investment, expressed as a percentage. YIELD TO MATURITY: The current income yield on an investment, minus any premium above par, or plus any discount from par in the purchase price with the adjustment spread over the period from date of purchase to maturity of the bond. Page 26 ZE,KhDKE' &/ZWZKdd/KE/^dZ/d ^ddDEdK& /Es^dDEdWK>/z ϮϬϮϭ WƌĞƉĂƌĞĚďLJƚŚĞĚŵŝŶŝƐƚƌĂƟǀĞ^ĞƌǀŝĐĞƐ'ƌŽƵƉ >Žƌŝ͘^ĂƐƐŽŽŶ͕dƌĞĂƐƵƌĞƌ dĂŵĂƌĂ>͘KĂƚŵĂŶ͕&ŝŶĂŶĐĞŝƌĞĐƚŽƌ ATTACHMENT 2Page27 RANCHO CUCAMONGA FIRE PROTECTION DISTRICT STATEMENT OF INVESTMENT POLICY TABLE OF CONTENTS Introduction ........................................................................................................ 1 Scope .................................................................................................................. 1 Delegation of Authority ................................................................................... 1-2 Prudence ............................................................................................................ 2 Objective ......................................................................................................... 2-3 Ethics and Conflicts of Interest ......................................................................... 3-4 Authorized Financial Dealers and Institutions ..................................................... 4 Authorized and Suitable Investments .............................................................. 4-8 Prohibited Investments ....................................................................................... 8 Review of Investment Portfolio .......................................................................... 8 Investment Pools ............................................................................................. 8-9 Collateralization .................................................................................................. 9 Safekeeping and Custody .................................................................................... 9 Diversification ................................................................................................... 10 Maximum Maturities ........................................................................................ 10 Internal Control ................................................................................................ 10 Performance ................................................................................................ 10-11 Reporting .......................................................................................................... 11 Investment Policy Adoption .............................................................................. 12 Glossary ....................................................................................................... 13-19 Page 28 Statement of Investment Policy Page 1 RANCHO CUCAMONGA FIRE PROTECTION DISTRICT STATEMENT OF INVESTMENT POLICY 1.0 INTRODUCTION This Statement of Investment Policy (“Policy”) provides guidelines for the prudent investment of the Rancho Cucamonga Fire Protection District’s (“District”) idle cash and outlines the policies essential to ensuring the safety and financial strength of the District’s investment portfolio. This Policy is based on the principles of prudent money management and conforms to all federal, state, and local laws governing the investment of public funds. The goal of this Policy is to enhance the economic status of the District by protecting its pooled cash and to invest public funds to: 1. Meet the daily cash flow needs of the District; 2. Comply with all laws of the State of California regarding investment of public funds; and 3. Achieve a reasonable rate of return while minimizing the potential for capital losses arising from market changes or issuer default. 2.0 SCOPE This Policy applies to the investment activities of all funds of the Rancho Cucamonga Fire Protection District. These funds are accounted for in the City’s Comprehensive Annual Financial Report (CAFR) and include: General Fund, Special Revenue Funds, Debt Service Funds, Capital Project Funds, Proprietary Funds, as well as Agency Funds and a Private-Purpose Trust Fund. Bond proceeds shall be invested in accordance with the requirements and restrictions outlined in bond documents as approved by the President and Members of the Board of Directors. If the bond documents are silent as to the permitted investments, the bond proceeds will be invested in the securities permitted by this Policy. Notwithstanding the other provisions of this Policy, the percentage limitations listed elsewhere in this Policy do not apply to bond proceeds. 3.0 DELEGATION OF AUTHORITY The President and Members of the Board of Directors, as permitted under California Government Code §53607, delegate the responsibility to manage the District’s investment portfolio to the District Treasurer for a period of one-year, unless revoked. Subject to review, the President and Members of the Board of Directors may renew the delegation of authority each year. The District Treasurer shall be responsible for all transactions undertaken and shall establish a system of Page 29 Statement of Investment Policy Page 2 controls to regulate the activities of subordinate officials, and their procedures, in the absence of the District Treasurer. Pursuant to Government Code §1190, the District Treasurer appoints the Finance Director to act as Deputy Treasurer with responsibility to manage the District’s investment portfolio on a daily basis. The District Treasurer/Deputy Treasurer will maintain on file a written authorization designating those individuals to whom daily investment activities, such as carrying out the District Treasurer's/Deputy Treasurer’s investment instructions, confirming treasury transactions, and other routine activities, have been delegated. As authorized by the President and Members of the Board of Directors, the District may also utilize the services of an independent investment advisor to assist with the investment program under the supervision of the District Treasurer/Deputy Treasurer. The investment advisor shall follow this Policy and such other written instructions as are provided by the District. The investment advisor shall never take possession of the District’s funds or assets. 4.0 PRUDENCE All persons authorized to make investment decisions on behalf of the District are trustees and therefore fiduciaries subject to the prudent investor standard, as described in Government Code section 53600.3 which states: 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. The District Treasurer/Deputy Treasurer and authorized persons acting in accordance with this Policy and the “prudent investor” standard 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 manner and appropriate action is taken to control adverse developments, whenever possible. 5.0 OBJECTIVE The objective of the investment portfolio is to meet the short- and long-term cash flow demands of the District. To achieve this objective, the portfolio will be structured to provide safety of principal and liquidity, while then providing a reasonable return on investments. Page 30 Statement of Investment Policy Page 3 The authority governing investments for municipal governments is set forth in Government Code Sections 53600 et seq. District strategy has been to limit investments more stringently than required under state law. The primary objectives of investment activities, in order of priority are: 1. Safety - Safety and risk associated with an investment refers to the potential loss of principal, interest, or combination thereof. The District only invests in those instruments that are considered safe. Each investment transaction shall be undertaken in a manner that seeks to ensure, whenever possible, that all capital losses are avoided, whether from securities default, broker/dealer default, or erosion of market value. The District shall seek to preserve principal by mitigating two types of risk: credit risk and market risk. • Credit risk, defined as the risk of loss due to failure of the issuer of a security, shall be mitigated by investing in only very safe securities and by diversifying the investment portfolio so that the failure of any one issuer would not unduly harm the District’s cash flow. • Market risk, defined as the risk of market value fluctuations due to overall changes in the general level of interest rates, shall be mitigated by structuring the portfolio to align with the District’s anticipated cash flow needs. It is explicitly recognized, however, that in a diversified portfolio, occasional measured losses may occur and must be considered within the context of overall investment return and liquidity needs. 2. Liquidity - Liquidity is an important investment quality especially when the need for unexpected funds occasionally occurs. The District’s investment portfolio will remain sufficiently liquid to enable the District to meet operating requirements that might be reasonably anticipated. 3. Yield - The District’s investment portfolio shall be designed with the objective of attaining a reasonable market rate of return throughout budgetary and economic cycles, commensurate with the District’s investment risk constraints as long as it does not diminish the objectives of Safety and Liquidity. 6.0 ETHICS AND CONFLICTS OF INTEREST The District Treasurer/Deputy Treasurer 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 officers shall disclose any material financial interest in financial institutions that conduct business with the District, and they shall further disclose any personal financial/investment positions that could be affected by the performance of the District’s Page 31 Statement of Investment Policy Page 4 operations and functions or by the management of the District’s investment program. The District Treasurer/Deputy Treasurer and investment employees are required to file annual disclosure statements as required by the Fair Political Practices Commission (FPPC). 7.0 AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The District Treasurer/Deputy Treasurer shall only execute investment transactions with those direct issuers authorized by this Policy (LAIF, LGIPs, money market funds, and banks). All other investment transactions will be conducted through the District’s investment advisor who will maintain their own list of approved issuers, brokers/dealers, and financial institutions with which to conduct transactions on the District’s behalf. 8.0 AUTHORIZED AND SUITABLE INVESTMENTS In the event an apparent discrepancy is found between this Policy and the Government Code, the more restrictive parameters will take precedence. Percentage holding limits listed in this Policy apply at the time the security is purchased. Credit ratings, where shown, specify the minimum credit rating category required at purchase. In the event a security held by the District is subject to a credit rating change that brings it below the minimum credit ratings specified in this Policy, the District Treasurer/Deputy Treasurer should notify the President and Members of the Board of Directors of the change in the next monthly investment report. The course of action to be followed will then be decided on a case-by-case basis, considering such factors as the reason for the change, prognosis for recovery or further rate drops, and the market price of the security. Any security not listed in Section 8.0 is not a valid investment for the District. The concise list of approved securities is as follows: • United States Treasury Securities: United States Treasury Bills, Bonds, and Notes or those instruments for which the full faith and credit of the United States are pledged for payment of principal and interest. There is no limit on the percentage of the portfolio that can be invested in this category. • United States Federal Agencies: Obligations issued by Federal Agencies or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government-sponsored enterprises. There is no limit on the percentage of the portfolio that can be invested in this category. • Supranational Securities: United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank Page 32 Statement of Investment Policy Page 5 for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank. The maximum remaining maturity for supranational obligations must be five years or less, and they must be eligible for purchase and sale within the United States. These investments must be rated in a rating category of “AA” or better by a NRSRO. There is a 30% limit on the percentage of the portfolio that can be invested in this category. The maximum remaining maturity of any investment in this category shall not exceed five- years. • Municipals Notes or Bonds: Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state. Registered treasury notes or bonds of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states, in addition to California. Bonds, notes, warrants, or other evidences of indebtedness of a local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. Purchases are limited to securities rated in a rating category of “A” (long-term) or “A-1” (short-term) or their equivalents or better by a Nationally Recognized Statistical Rating Organization (“NRSRO”). (The minimum rating shall apply to any issuer, irrespective of any credit enhancement). There is a 30% limit on the percentage of the portfolio that can be invested in this category. • Negotiable Certificates of Deposit: Negotiable certificates of deposit issued by a nationally or state-chartered bank, a savings association or a federal association, a state or federal credit union, or by a federally licensed or state-licensed branch of a foreign bank. Purchases are limited to securities rated in a rating category of “A” (long-term) or “A-1” (short-term) or their equivalents or better by an NRSRO. There is a 30% limit on the percentage of the portfolio that can be invested in this category. • Asset-Backed Securities: A mortgage passthrough security, collateralized mortgage obligation, mortgage-backed or other pay-through bond, equipment lease-backed certificate, Page 33 Statement of Investment Policy Page 6 consumer receivable passthrough certificate, or consumer receivable-backed bond. Securities shall be rated in a rating category of “AA” or its equivalent or better by an NRSRO. There is a 20% limit on the percentage of the portfolio that can be invested in this category. The maximum remaining maturity of any investment in this category shall not exceed five- years. • Medium-Term Notes: Medium-Term Notes are defined as all corporate and depository institution debt securities. They must be issued by corporations organized and operating within the United States. Notes eligible for investment shall be rated in a rating category of “A” or its equivalent or better by an NRSRO. There is a 30% limit on the percentage of the portfolio that can be invested in this category. The maximum remaining maturity of any investment in this category shall not exceed five- years. • Bankers’ Acceptances: Bankers’ acceptances, otherwise known as bills of exchange or time drafts, that are drawn on and accepted by a commercial bank. Purchases are limited to issuers that have short-term debt rated in a rating category of “A-1” or its equivalent or higher by an NRSRO. There is a 40% limit on the percentage of the portfolio that can be invested in this category. The maximum maturity shall not exceed 180 days. • Commercial Paper: Must be of “prime” quality of the highest ranking or of the highest letter and number rating as provided for by an NRSRO. The entity that issues the commercial paper shall meet all the following conditions: (i) is organized and operating in the United States as a general corporation, (ii) has total assets in excess of five hundred million dollars ($500,000,000), and (iii) has debt other than commercial paper, if any, that is rated in a rating category of “A” or its equivalent or higher by an NRSRO. There is a 25% limit on the percentage of the portfolio that can be invested in this category. The maximum maturity shall not exceed 270 days. • Repurchase Agreements (Repos): An executed Master Repurchase Agreement is required between the Rancho Cucamonga Fire Protection District and the broker dealer or financial Institution. The market value of securities that underlies a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities and the value Page 34 Statement of Investment Policy Page 7 shall be adjusted no less than quarterly. Collateral is restricted to U.S. Treasury and Federal Agency securities. There is a 20% limit on the percentage of the portfolio that can be invested in this category. The maximum maturity of any investment in this category shall not exceed one year. • State of California Local Agency Investment Fund (LAIF): The Local Agency Investment Fund (LAIF) is a State of California managed investment pool established by the State Treasurer for the benefit of local agencies. There is no limit on the percentage of the portfolio that can be invested in this category. The maximum investment in LAIF accounts is dependent upon limits established under the Local Agency Investment Fund guidelines and not Government Code. • Joint Powers Authority (JPA) Investment Pool: Shares of beneficial interest issued by a joint powers authority organized pursuant to Section 6509.7 that invests in the securities and obligations authorized in Government Code. Whenever the District has any funds invested in a LGIP, the District Treasurer/Deputy Treasurer shall maintain on file a copy of the LGIP’s current information statement and periodically review the LGIP’s investments. There is no limit on the percentage of the portfolio that can be invested in this category. • Money Market Funds (“MMF”): Government Money Market Funds meeting either of the following criteria: (A) Attained the highest ranking or the highest letter and numerical rating provided by not less than two NRSROs, or (B) Retained an investment advisor with not less than five years’ experience and registered or exempt from registration with the SEC, with assets under management in excess of five hundred million dollars ($500,000,000). Whenever the District has any funds invested in an MMF, the District Treasurer/Deputy Treasurer shall maintain on file a copy of the MMF’s current information statement. A maximum of 20% of the District’s portfolio may be invested in this category. There is a 20% limit on the percentage of the portfolio that can be invested in this category. • Bank Deposits: FDIC insured or collateralized demand deposit accounts, savings accounts, market rate accounts, certificates of deposits and other types of bank deposits in financial institutions located in California. The amount on deposit in any financial institution shall not exceed the shareholder's equity. To be eligible to receive District deposits, the financial institution must have received a minimum overall satisfactory rating, under the Community Redevelopment Act, for meeting the credit needs of California Communities in its most recent evaluation. Bank deposits are required to be collateralized as specified under Government Code Section 53630 et seq. The District Treasurer/Deputy Treasurer, at his/her discretion, Page 35 Statement of Investment Policy Page 8 may waive the collateralization requirements for any portion that is covered by federal deposit insurance. The District shall have a signed agreement with any depository accepting District funds per Government Code Section 53649. There is no limit on the percentage of the portfolio that may be invested in this category. There is no limit on the percentage of the portfolio that can be invested in this category. However, a maximum of 10 percent of the portfolio may be invested in time deposits. 9.0 PROHIBITED INVESTMENTS Any security type or structure not specifically approved by this policy is hereby specifically prohibited. Security types which are thereby prohibited include, but are not limited to, inverse floaters, derivatives, range notes, interest only strips that are derived from a pool of mortgages, or in any investment that could result in zero interest accrual if held to maturity. 10.0 REVIEW OF INVESTMENT PORTFOLIO The securities held by the District must be in compliance with Section 8.0 “Authorized and Suitable Investments” at the time of purchase. If, subsequent to the date of purchase, a security is determined to be no longer in compliance with Section 8.0, the District’s Treasurer/Deputy Treasurer shall report the non-compliant security to the President and Members of the Board of Directors and shall include a disclosure in the monthly Investment Report if the security is held at the date the report is prepared. The City’s external, independent auditors perform an annual review of the District’s Investment Policy, investment process, and related internal controls. The annual review process is performed as part of the City’s annual external financial audit. 11.0 INVESTMENT POOLS The Local Agency Investment Fund (LAIF) is a voluntary investment alternative for California’s local governments and special districts authorized by the California Government Code. LAIF is a State of California managed investment pool established by the State Treasurer for the benefit of local agencies. The District’s participation in LAIF was approved by the President and Members of the Board of Directors with other authorized investments in July 1987. It is a permitted investment with the knowledge that the fund may invest in some vehicles allowed by statute but not otherwise authorized under the District’s authorized investments. All securities in LAIF are purchased under the authority of Government Code Sections 16430 and 16480. All investments are purchased at market value, and market valuation is conducted monthly. Page 36 Statement of Investment Policy Page 9 The District may also invest in shares of beneficial interest issued by a joint powers authority (“JPA”) organized pursuant to Section 6509.7 of the California Government Code that invests in the securities and obligations specified in the code and which shall retain an investment advisor that meets the following criteria: 1. Be registered or exempt from registration with the Securities and Exchange Commission; 2. Have assets under management in excess of five hundred million dollars ($500,000,000), and 3. Have not less than five (5) years of experience investing in the securities and obligations authorized herein. 12.0 COLLATERALIZATION All bank deposits must be FDIC insured or collateralized in accordance with Government Code Section 53630 et seq. 13.0 SAFEKEEPING AND CUSTODY To protect against potential losses by the collapse of individual securities dealers, all trades will be transacted on a delivery-versus-payment (DVP) basis. This means that the securities shall be delivered to the District’s designated custodian upon receipt of the payment by the District. The securities shall be held in safekeeping by a third-party custodian, acting as agent for the District under the terms of a custody agreement executed by the bank and District. The third-party custodian shall be required to issue a monthly safekeeping report to the District that lists the specific investment, rate, maturity and other pertinent information. The only exception to the foregoing shall be depository accounts and security purchases made with investment pools and certificates of deposit since the purchased securities are not deliverable. Evidence of these investments will be held in the City’s vault. No outside broker/dealer or advisor may have access to District funds, accounts or investments, and any transfer of funds to or through an outside broker/dealer must be approved by the District Treasurer/Deputy Treasurer. The City strives to maintain the level of investment of all funds as near 100% as possible, through daily and projected cash flow determinations. Idle cash management and investment transactions are the responsibility of the District Treasurer/Deputy Treasurer. Page 37 Statement of Investment Policy Page 10 14.0 DIVERSIFICATION It is the policy of the District to diversify its investment portfolio. Assets shall be diversified to eliminate the risk of loss resulting from over-concentration of assets in a specific issuer, security type, and maturities. Diversification strategies shall be determined and revised periodically. The purpose of diversifying is to reduce overall portfolio risks while attaining an average market rate of return; therefore, it needs to be conceptualized in terms of maturity, instrument types and issuer. To promote diversification, no more than 5% of the portfolio may be invested in the securities of any one issuer, regardless of security type; excluding U.S. Treasuries, federal agencies, supranationals, and pooled investments such as LAIF, money market funds, or local government investment pools. 15.0 MAXIMUM MATURITIES To the extent possible, the District will attempt to match security maturities to anticipated cash flow requirements. Where this Policy does not list a specific maturity limit, the maximum maturity of individual investments shall not exceed a maturity of five years from the trade date unless the President and Members of the Board of Directors has granted authority to make that investment either specifically or as a part of an investment program approved by the Board no less than three months prior to the investment. 16.0 INTERNAL CONTROL The District Treasurer/Deputy Treasurer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the District are protected from loss, theft or misuse. The procedures should include references to individuals authorized to execute transactions or transfers, safekeeping agreements, repurchase agreements, wire transfer agreements, collateral/depository agreements and banking services contracts, as appropriate. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgement by management. The District Treasurer/Deputy Treasurer shall establish an annual process of independent review by an external auditor. This review will provide internal control by assuring compliance with policies and procedures set forth in this Policy. Also, see Section 9.0 of this Policy. 17.0 PERFORMANCE The investment performance of the District’s operating portfolio shall be evaluated and compared to an appropriate benchmark in order to assess the success of the investment program relative to the City’s Safety, Liquidity, and Yield objectives. This review will be conducted annually Page 38 Statement of Investment Policy Page 11 with the District’s Treasurer, and Finance Director, and, if necessary, consideration will be given to making adjustments to future investment strategies as market conditions permit. 18.0 REPORTING The District Treasurer shall prepare and submit a monthly investment report to the President and Members of the Board of Directors and City Manager, which shall include all securities, excluding those held by and invested through trustees. The report shall include the following: • A monthly report of transactions. • The type of investment, name of the issuer, date of purchase, date of maturity, par and dollar amount invested in all securities. • The weighted average maturity of the investments. • Any funds, investments, or programs including loans that are under the management of contracted parties. • A description of the compliance with this Policy. • A statement of the District’s ability to meet its pooled expenditure requirements for the next six months or provide an explanation as to why sufficient money shall or may not be available. • The investment portfolio report shall include current market value information for all investments. A monthly market value will be obtained for each security owned by the District. For purposes of reporting, the market value of each security may be obtained from the District’s custodian bank or other pricing source(s) utilized by the District’s investment advisor. The District Treasurer shall be responsible for reviewing and modifying investment guidelines as conditions warrant and is required to submit same for re-approval to the President and Members of the Board of Directors on an annual basis with or without changes. However, the District Treasurer may, at any time, further restrict the items approved for purchase as deemed appropriate. The basic premise underlying the District’s investment philosophy is, and will continue to be, to ensure that money is always safe and available when needed. Page 39 Page 40 Statement of Investment Policy Page 13 GLOSSARY OF TERMS The glossary is provided for general information only. It is not to be consider a part of the Policy for determining Policy requirements or terms. AGENCIES: Agencies of or sponsored by the Federal government set up to supply credit to various classes of institutions. Examples include Federal Home Loan Banks (FHLB), Federal Farm Credit Bank (FFCB), Federal Home Loan Mortgage Corporation (FHLMC), and Federal National Mortgage Association (FNMA). ASKED: The price at which securities are offered by a selling party to a buying party. ASSET-BACKED SECURITIES (ABS): Securities whose income payments and hence value is derived from and collateralized (or "backed") by a specified pool of underlying assets which are receivables. The pools of underlying assets can comprise common payments credit cards, auto loans, mortgage loans, and other types of assets. Interest and principal are paid to investors from borrowers who are paying down their debt. BANKERS’ ACCEPTANCE (BA): A draft, bill, or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer. BASIS POINT: One basis point is one-hundredth of a percent (i.e., 0.01%). BEAR MARKET: A period of generally pessimistic attitudes and declining market prices. BENCHMARK: A comparative base for measuring the performance or risk tolerance of the investment portfolio. A benchmark should represent a close correlation to the level of risk and the average duration of the portfolio’s investments. BID: The price offered by a buyer of securities. (When selling securities, you ask for a bid.) BOND EQUIVALENT YIELD: The basis on which yields on notes and bonds are quoted. BOOK VALUE (COST VALUE): The value at which a debt security is shown on the holder’s balance sheet. Book value is acquisition cost less amortization of premium or accretion of discount. BROKER/DEALER: An individual or firm that brings buyers and sellers together in a securities transaction. BULL MARKET: A period of generally optimistic attitudes and increasing market prices. Page 41 Statement of Investment Policy Page 14 CALLABLE SECURITIES: A security that is redeemable by the issuer before the scheduled maturity. Bonds are usually called when the interest rates fall so significantly that the issuer can save money by floating new bonds at lower rates. CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a Certificate. Large denomination CD’s are typically negotiable. COLLATERAL: Securities, evidence of deposit or other property, which a borrower pledges to secure repayment of a loan. Also, refers to securities pledged by a bank to secure deposits of public monies. COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual report of the City of Rancho Cucamonga. It includes five combined statements for each individual fund and account group prepared in conformity with Generally Accepted Accounting Principles (GAAP). It also includes supporting schedules necessary to demonstrate compliance with GAAP, finance-related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section. CORPORATE MEDIUM-TERM NOTE: Corporate and depository institution debt securities with a maximum remaining maturity of five years or less, 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. COUPON: (a) The annual rate of interest that a bond’s issuer promises to pay the bondholder on the bond’s face value. (b) A certificate attached to a bond evidencing interest due on a payment date. DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. DEBENTURE: A bond secured only by the general credit of the issuer. DELIVERY VERSUS PAYMENT (DVP): Delivery of securities with a simultaneous exchange of money for the securities. DERIVATIVES: Financial products dependent for their value on (or derived from) an underlying financial instrument, a commodity, or an index. 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 at a discount. Page 42 Statement of Investment Policy Page 15 DISCOUNT SECURITIES: Non-interest bearing, money market instruments that are issued at a discount and redeemed at maturity for full face value, e.g. U.S. Treasury Bills. DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns. FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits up to $250,000 per deposit. FEDERAL FUNDS RATE: The interest rate charged by one institution lending federal funds to another. 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, second loans, and fixed-rate mortgages. FNMA’s securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all security holders will receive timely payment of principal and interest. FEDERAL OPEN MARKET COMMITTEE (FOMC): Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a permanent member, while the other Presidents serve on a rotating basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases and sales of Government Securities in the open market to influence the volume of bank credit and money. FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and comprising 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. GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB): The independent organization that establishes and improves standards of accounting and financial reporting for the United States, state and local governments. Page 43 Statement of Investment Policy Page 16 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 FMHM mortgages. The term “pass-through” is often used to describe Ginnie Maes. INTEREST ONLY STRIP: Investments created by separating the principal and interest portions of a debt security or pool of securities into separate investments. Interest only strips are most common with mortgage-backed securities. The investor benefits if interest rates rise and principal repayments slow, but if interest rates fall and principal repayments accelerate, the investor will receive less interest. Once the principal amount has been repaid, interest payments stop, and the value of an interest only strip falls to zero. INVERSE FLOATER: Debt securities that have a floating coupon rate that adjusts inversely to movements in a benchmark interest rate. They can offer a hedge against falling interest rates. However, the structure of these investments can magnify changes in the security’s market value. Furthermore, if interest rates rise, the investor may end up with a security that pays little to no interest with a diminished security value. INVESTMENT AGREEMENTS: An agreement with a financial institution to borrow public funds subject to certain negotiated terms and conditions concerning collateral, liquidity, and interest rates. LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss. LOCAL AGENCY INVESTMENT FUND (LAIF): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment. LOCAL GOVERNMENT INVESTMENT POOL (LGIP): A type of pooled investment program formed by a joint powers authority in which funds from its local agency investors are aggregated together for investment purposes. MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold. MARKET RATE OF RETURN: A rate of return commensurate with the market for similar securities (maturity, credit rating, duration and liquidity) would be considered a market rate of return. Page 44 Statement of Investment Policy Page 17 MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase–reverse, repurchase agreements that establishes each party’s rights in the transactions. A master agreement will often specify, among other things, the right of the buyer-lender to liquidate the underlying securities in the event of default by the seller-borrower. MATURITY: The date upon which the principal or stated value of an investment becomes due and payable. MONEY MARKET: The market in which short-term debt instruments (bills, commercial paper, bankers’ acceptances, etc.) are issued and traded. NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO): A credit rating agency approved by the U.S. Securities and Exchange Commission (SEC) that provides credit ratings that are used by the U.S. government and investors as benchmarks. Examples include Standard & Poor’s Corporation, Moody’s Investor Services, Inc. and Fitch, Inc. OFFER: The price asked by a seller of securities. (When buying securities, you ask for an offer.) OPEN MARKET OPERATIONS: Federal Reserve activity. Under the Federal Reserve Act, the Fed uses purchases and sales of Government and Federal Agency securities to add to or subtract from commercial bank reserves. Goals are to sustain economic growth, high employment and reasonable price stability. PAPER GAIN OR LOSS: Term used for unrealized gain or loss on securities being held in a portfolio based on comparison of current market quotes and their original cost. This situation exists if the security is held while there is a difference between cost value (book value) and the market value. PORTFOLIO: Collection of securities held by an investor. PRIMARY DEALER: A group of government securities dealers who submit daily reports of market activity, positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission (SEC) registered securities broker/dealers, banks and a few unregulated firms. PRUDENT INVESTOR STANDARD: An investment standard to be followed by those authorized to make investment decisions on behalf of a local agency. Those authorized 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 that agency. Page 45 Statement of Investment Policy Page 18 RANGE NOTE: A structured investment that pays interest as long as a benchmark interest rate is within a specified interest rate range. These securities provide higher than market interest rates, but the investor will not receive any interest if the benchmark interest rate moves outside the specified range. The investor is betting interest rates will remain relatively stable. 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. SAFEKEEPING: The service to customers by banks and trust companies when the bank or trust company stores the securities for protection, receives coupon payments and redeems issues at maturity. SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following the initial distribution of securities. 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. SUPRANATIONALS: Development banks that share the same goal of providing an improved standard of living in their member countries, but each having different mandates. There are three banks (supranationals) in which California local agencies can invest in their debt obligations; the International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC) and Inter-American Development Bank (IADB). 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 over 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 one 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 15-1; 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. Liquid capital includes cash and assets easily converted to cash without penalty. Page 46 Statement of Investment Policy Page 19 YIELD: The rate of annual income return on an investment, expressed as a percentage. YIELD TO MATURITY: The current income yield on an investment, minus any premium above par, or plus any discount from par in the purchase price with the adjustment spread over the period from date of purchase to maturity of the bond. Page 47 DATE:June 28, 2021 TO:Mayor and Members of the City Council President and Members of the Boards of Directors FROM:John R. Gillison, City Manager INITIATED BY:Tamara L. Oatman, Finance Director SUBJECT:Consideration to Approve the Following to be in Compliance with Governmental Accounting Standards Board (GASB) Statement No. 54: 1) Updated Fund Balance Policy; 2) a Resolution Committing to the Level of Fiscal Reserves for the City of Rancho Cucamonga; and 3) a Resolution Committing to the Level of Fiscal Reserves for the Rancho Cucamonga Fire Protection District. (RESOLUTION NO. 2021-052) (RESOLUTION NO. FD2021-018) (CITY/FIRE) RECOMMENDATION: It is recommended that the City Council/Board of Directors approve the following to be in compliance with Governmental Accounting Standards Board (GASB) Statement No. 54: 1) updated Fund Balance Policy; 2) a Resolution committing to the level of fiscal reserves for the City of Rancho Cucamonga (City); and 3) a Resolution committing to the level of fiscal reserves for the Rancho Cucamonga Fire Protection District (District). BACKGROUND: On a regular basis, the Governmental Accounting Standards Board (GASB) adopts new policies and procedures that apply to public entities. In February 2009, GASB issued Statement No. 54, which applies to Fund Balance Reporting and Governmental Fund Type Definitions (GASB 54). Since 2011, in order to be in compliance with GASB 54, the City Council/Board of Directors has approved a Fund Balance Policy and a resolution committing to the level of reserves for the City of Rancho Cucamonga and for the Rancho Cucamonga Fire Protection District. ANALYSIS: In order to accommodate any changes to these commitments that may become necessary due to changes in operations or changes in City Council goals, staff will annually bring this policy and resolution before the City Council/Board of Directors for approval at the end of each fiscal year. The following updates (City- and District-related) have been made to the policy: A new committed fund balance was created for Economic Development Strategic Reserve for the acquisition and development of key properties to promote economic development that will benefit the City as a whole and, potentially, generate ongoing revenues to the City whenever feasible through negotiated agreements with third parties (including but not limited to land leases or public-private partnerships). Establishment of this reserve is a City Council goal, established in the spring of 2021. The funding goal Page 48 Page 2 7 8 3 for this reserve is the equivalent of the current value of a 10-acre mixed-use site on Foothill Boulevard as of January 1 of each year. A new committed fund balance was created for Seasonal Weather Emergency Reserve for unanticipated costs incurred due to damage resulting from severe weather emergencies such as wind, flood, fire, extreme heat, extreme cold, and other forces of nature. The reserve will provide funding for these costs without impacting the City’s operating budget and will be appropriated by the City Council on an as needed basis when extreme seasonal weather emergencies occur. No updates were required for District-related reserves. The Fund Balance Policy, in conjunction with the City General Fund Reserve Funding Goals Policy, provides guidelines for building City/District reserves in support of future needs for capital replacement, resiliency in the event of an economic downturn, and planned enhancements to the services and facilities available to the citizens of Rancho Cucamonga. The Fund Balance Policy is presented to the City Council/Board of Directors for review and approval. The attached Resolutions formally establish the City of Rancho Cucamonga’s and the Rancho Cucamonga Fire Protection District’s fund balance commitments for the fiscal year ending June 30, 2021. FISCAL IMPACT: None. COUNCIL MISSION / VISION / GOAL(S) ADDRESSED: Not applicable. ATTACHMENTS: Attachment 1 – Fund Balance Policy Attachment 2 – Resolution (City) Attachment 3 – Resolution (Fire) Page 49 PURPOSE This Fund Balance Policy establishes the procedures for the reporting of unrestricted fund balance in the City General Fund and Fire District financial statements. Certain commitments and assignments of fund balance will help ensure that there will be adequate financial resources to protect the City against unforeseen circumstances and events such as revenue shortfalls and unanticipated expenditures. The policy also authorizes and directs the Finance Director to prepare financial reports which accurately categorize fund balance as per Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. GENERAL POLICY Fund balance is essentially the difference between the assets and liabilities reported in a governmental fund. There are five separate components of fund balance, each of which identifies the extent to which the City/Fire District is bound to honor constraints on the specific purposes for which amounts can be spent. •Nonspendable fund balance (inherently nonspendable) •Restricted fund balance (externally enforceable limitations on use) •Committed fund balance (self-imposed limitations on use) •Assigned fund balance (limitation resulting from intended use) •Unassigned fund balance (residual net resources) The first two components listed above are not addressed in this policy due to the nature of their restrictions. An example of nonspendable fund balance is inventory. Restricted fund balance is either imposed by law or constrained by grantors, contributors, or laws or regulations of other governments. This policy is focused on financial reporting of unrestricted fund balance, or the last three components listed above. These three components are further defined below. Committed Fund Balance The City Council (which also acts as the Board of Directors for the Rancho Cucamonga Fire Protection District), as the City’s highest level of decision-making authority, may commit fund CITY OF RANCHO CUCAMONGA RANCHO CUCAMONGA FIRE PROTECTION DISTRICT FUND BALANCE POLICY POLICY NO.: ___-__ EFFECTIVE: June 15, 2011 REVISED: June 28, 2021 APPROVED: ATTACHMENT 1Page50 FUND BALANCE POLICY PAGE 2 OF 5 balance for specific purposes pursuant to constraints imposed by formal actions taken, such as an ordinance or resolution. These committed amounts cannot be used for any other purpose unless the City Council/Fire Board removes or changes the specified use through the same type of formal action taken to establish the commitment. City Council/Fire Board action to commit fund balance needs to occur within the fiscal reporting period; however, the amount can be determined subsequently. • Changes in Economic Circumstances The City’s General Fund balance committed for changes in economic circumstances is established at a goal of a nine month reserve, or 75% of the City General Fund operating budget for the upcoming fiscal year. The Fire District’s fund balance committed for changes in economic circumstances is established at a goal of a nine month reserve, or 75% of the Fire District’s operating budget for the upcoming fiscal year. The specific uses of this commitment include: 1) the declaration of a state or federal state of emergency or a local emergency as defined in Rancho Cucamonga Municipal Code Section 2.36.020; or 2) a change in economic circumstances in a given fiscal year that results in revenues to the City/Fire District being insufficient to cover expenditures for one or more fiscal years. The City Council/Fire Board may, by the affirming vote of four members, change the amount of this commitment and/or the specific uses of these monies. • City Facilities Capital Repair The City’s General Fund balance committed for City facilities capital repair and property acquisition is established at a minimum goal of 50% of capital assets value comprised of construction in progress (excluding infrastructure), building improvements, and improvements other than building for governmental activities, excluding assets owned by the Rancho Cucamonga Fire Protection District. • Fire District Facilities Capital Repair The Fire District’s fund balance committed for the Fire District facilities capital repair is hereby committed to a minimum goal of 50% of capital assets value comprised of construction in progress (excluding infrastructure), building improvements, and improvements other than building for public safety-fire activities. • Working Capital The City’s General Fund balance committed for Working Capital is established at a goal of a minimum of 5% of the City's General Fund operating budget for the upcoming fiscal year. The Fire District’s fund balance committed for Working Capital is established at a goal of a minimum of 50% of the District’s operating budget for the upcoming fiscal year. • Self-Insurance The City’s General Fund balance and the Fire District’s fund balance committed for payment of Workers’ Compensation, General Liability, and Employment Practices Liability claims is established at a minimum goal of eight times the City’s and the District’s total yearly SIRs for all types of insurance coverage. Page 51 FUND BALANCE POLICY PAGE 3 OF 5 • PASIS Workers’ Compensation Tail Claims The Fire District’s fund balance committed for payment of outstanding Workers’ Compensation claims remaining after the District’s withdrawal from PASIS is established at a goal equal to the most recent fiscal year end Claims Cost Detail Report from the District’s third-party administrator plus 15%. • Employee Leave Payouts The City’s General Fund balance and the Fire District’s fund balance committed for employee leave payouts as valued in accordance with the City’s labor contracts as of the last day of the fiscal year. • Vehicle and Equipment Replacement The Fire District’s fund balance committed for the replacement of fire safety vehicles and equipment as determined based on the District’s replacement criteria is established at a minimum goal of 50% of District vehicle and equipment replacement value. • Law Enforcement The City’s General Fund balance committed for public safety purposes, including operations, equipment, capital outlay, capital facilities, personnel, and booking fees. The funding goal for this reserve is the equivalent of 100% of the most recently approved Schedule A from the San Bernardino County Sheriff’s Department. • Economic Development Strategic Reserve The City’s General Fund balance committed for the acquisition and development of key properties to promote economic development that will benefit the City as a whole and, potentially, generate ongoing revenues to the City whenever feasible through negotiated agreements with third parties (including but not limited to land leases or public-private partnerships). Establishment of this reserve is a City Council goal, established in the spring of 2021. The funding goal for this reserve is the equivalent of the current value of a 10-acre mixed-use site on Foothill Boulevard as of January 1 of each year. • Seasonal Weather Emergency Reserve The City’s General Fund balance committed for unanticipated costs incurred due to damage resulting from severe weather emergencies such as wind, flood, fire, extreme heat, extreme cold, and other forces of nature. The reserve will provide funding for these costs without impacting the City’s operating budget and will be appropriated by the City Council on an as needed basis when extreme seasonal weather emergencies occur. Assigned Fund Balance Amounts that are constrained by the City/Fire District’s intent to be used for specific purposes, but are neither restricted nor committed, should be reported as assigned fund balance. This policy hereby delegates the authority to assign amounts to be used for specific purposes to the City Page 52 FUND BALANCE POLICY PAGE 4 OF 5 Manager and/or Finance Director for the purpose of reporting these amounts in the annual financial statements. The following are a few non-exclusive examples of assigned fund balance. • Economic and Community Development Special Services The City’s General Fund balance assigned for contracts, special services, or projects associated with Economic and Community Development (ECD) special projects or ECD initiatives/Council goals (such as economic strategy and Development Code contract services) as well as a one-year value of staffing costs for Planning, Building and Safety, and Engineering (not including capital and project management). • Habitat Mitigation and Sphere of Influence Issues This reserve provides for ancillary costs related to annexation of the sphere area, including mitigation issues and legal challenges. Another area covered by this reserve is the creation of a multi-species habitat conservation plan as well as acquisition of habitat conservation land. • Community Services Programs-Recreation The City’s General Fund balance assigned for non-recurring costs to support community services programs, including a wide variety of classes, special events, and recreational activities sponsored by the Community Services Department. The initial funding of this reserve resulted from the combining of the Department’s recreational and community activities that were accounted for in a separate Special Fund into the General Fund effective with the Fiscal Year 2020/21 Budget. The fund balance remaining in the Recreation Services Fund as of June 30, 2020 was closed out to the City’s General Fund. • Community Services Programs-Cultural Arts The City’s General Fund balance assigned for non-recurring costs to support community services programs, including a wide variety of classes, theatrical performances, and cultural activities sponsored by the Community Services Department. The initial funding of this reserve resulted from the combining of the Department’s cultural and theatrical activities that were accounted for in a separate Special Fund into the General Fund effective with the Fiscal Year 2020/21 Budget. The fund balance remaining in the Victoria Gardens Cultural Center Fund as of June 30, 2020 was closed out to the City’s General Fund. Unassigned Fund Balance These are residual positive net resources of the General Fund and Fire District funds in excess of what can properly be classified in one of the other four categories. Fund Balance Classification The accounting policies of the City/Fire District consider restricted fund balance to have been spent first when an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available. Similarly, when an expenditure is incurred for purposes for which Page 53 FUND BALANCE POLICY PAGE 5 OF 5 amounts in any of the unrestricted classifications of fund balance could be used, the City/Fire District considers committed amounts to be reduced first, followed by assigned amounts and then unassigned amounts. This policy is in place to provide a measure of protection for the City/Fire District against unforeseen circumstances and to comply with GASB Statement No. 54. No other policy or procedure supersedes the authority and provisions of this policy. Page 54 RESOLUTION NO. 21-XXX RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA COMMITTING TO THE LEVEL OF FISCAL RESERVES FOR THE CITY OF RANCHO CUCAMONGA WHEREAS, the Rancho Cucamonga City Council desires to protect existing services; and WHEREAS, the Rancho Cucamonga City Council desires to be prepared for emergencies; and WHEREAS, the Rancho Cucamonga City Council desires to maintain good fiscal management and fiscal structure to operate a municipal corporation; and WHEREAS, the Rancho Cucamonga City Council desires to maintain the financial strength required to obtain beneficial bond ratings for the City. NOW, THEREFORE, the City Council of the City of Rancho Cucamonga, California does hereby resolve on this 28th day of June 2021 that the level of fiscal reserves maintained by the City of Rancho Cucamonga as of fiscal year end are committed to the goals as outlined in the City’s Fund Balance Policy, attached to this resolution as Exhibit A. PASSED, APPROVED, AND ADOPTED this 28th day of June 2021. ATTACHMENT 2Page55 Resolution No. FD 21-XXX RESOLUTION NO. FD 21-XXX RESOLUTION OF THE BOARD OF DIRECTORS OF THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT, SAN BERNARDINO COUNTY, CALIFORNIA COMMITTING TO THE LEVEL OF FISCAL RESERVES FOR THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT WHEREAS, the Rancho Cucamonga Fire Protection District Board desires to protect existing services; and WHEREAS, the Rancho Cucamonga Fire Protection District Board desires to be prepared for emergencies; and WHEREAS, the Rancho Cucamonga Fire Protection District Board desires to maintain good fiscal management and fiscal structure to operate a municipal corporation. NOW, THEREFORE, the Board of Directors of the Rancho Cucamonga Fire Protection District, San Bernardino, California does hereby resolve on this 28th day of June 2021 that the level of fiscal reserves maintained by the Rancho Cucamonga Fire Protection District as of fiscal year end are committed to the goals as outlined in the District’s Fund Balance policy, attached to this resolution as Exhibit A. PASSED, APPROVED, AND ADOPTED this 28th day of June 2021. ATTACHMENT 3Page56 DATE:June 28, 2021 TO:Mayor and Members of the City Council FROM:John R. Gillison, City Manager INITIATED BY:Tamara L. Oatman, Finance Director SUBJECT:Consideration to Approve Updated City General Fund Reserve Funding Goals Policy. (CITY) RECOMMENDATION: It is recommended that the City Council approve the updated City General Fund Reserve Funding Goals Policy. BACKGROUND: This City General Fund Reserve Funding Goals Policy establishes the methodology for the funding goals for each of the City General Fund reserves, including the replacement of vehicles, equipment, and computer equipment/technology. This policy, which was initially approved by the City Council in June 2012, formalizes the City General Fund reserves, establishes some new ones, and sets quantifiable goals for each reserve. The following updates were made to the policy: The funding goal for “Habitat Mitigation and Sphere of Influence issues” was reduced from $10,000,000 to $8,000,000 due to the recent annexation of property in the northeastern section of the City which reduced the remaining sphere for the City. The funding goal for “City computer equipment/technology replacement” reserve was increased from 105% of applicable capital assets value to 110%. The “Economic Development Strategic Reserve” funding goal has been added to the policy to establish a funding goal for the acquisition and development of key properties to promote economic development that will benefit the City as a whole and, potentially, generate ongoing revenues to the City whenever feasible through negotiated agreements with third parties (including but not limited to land leases or public-private partnerships). The funding goal for this reserve is established at $10,000,000, which is the equivalent of the current value of a 10-acre mixed-use site on Foothill Boulevard. The funding goal will be adjusted annually based on the current value as of January 1 of each year. The “Seasonal Weather Emergency Reserve” funding goal has been added to the policy to establish a funding goal for unanticipated costs incurred due to damage resulting from severe weather emergencies such as wind, flood, fire, extreme heat, extreme cold, and other forces of nature. The funding goal is established at $405,000, which is equal to 75% of the highest cost severe weather event in the three most recent fiscal years. Page 57 Page 2 7 8 4 ANALYSIS: In accordance with the policy, upon the completion of the City’s annual audit, the Finance Director prepares a schedule summarizing the funding status of each reserve for use by the City Manager in future budgetary planning. This policy does not apply to reserves determined to be non-spendable in accordance with the City’s Fund Balance Policy nor does it apply to reserves that pertain to outstanding encumbrances (i.e., purchase orders) or unrealized gain on investments (GASB31) as of fiscal year end. FISCAL IMPACT: None. COUNCIL MISSION / VISION / GOAL(S) ADDRESSED: Not applicable. ATTACHMENTS: Attachment 1 – Policy Page 58 PURPOSE This City General Fund Reserve Funding Goals Policy establishes the methodology for the funding goals for each of the City General Fund reserves, including the replacement of vehicles, equipment, and computer equipment/technology. This policy does not apply to reserves determined to be nonspendable in accordance with the City’s Fund Balance Policy nor does it apply to reserves that pertain to outstanding encumbrances (i.e., purchase orders) or unrealized gain on investments (GASB31) as of fiscal year end. Upon the completion of the City’s annual audit, this policy directs the Finance Director to prepare a schedule summarizing the funding status of each reserve as of the audit date. This schedule will serve as a tool for budgetary planning for the funding of each reserve. GENERAL POLICY Following is a detailed description of the methodology for the funding goals for each of the City General Fund reserves referred to above. Self-insurance The funding goal for this reserve is established at nine times the Self-Insured Retention (SIR) in each program (Workers’ Compensation, General Liability, and Employment Practices Liability) to allow for nine full limit claims in any one year. The SIR is essentially the City’s deductible in each program. Those numbers are calculated as follows: Workers’ Compensation ($250,000 SIR) is $2,250,000; General Liability ($500,000 SIR) is $4,500,000; and Employment Practices ($250,000 SIR) is $2,250,000. The total proposed reserve is $9,000,000. This level of reserves protects the City’s assets by ensuring adequate funding in the event of multiple large claims against the City. Employee leave payouts The funding goal for this reserve is established at 100% of the current value of vacation, sick leave, and comp time payouts per the respective City MOUs. CITY OF RANCHO CUCAMONGA CITY GENERAL FUND RESERVE FUNDING GOALS POLICY POLICY NO.: ___-__ EFFECTIVE: June 13, 2013 REVISED: June 28, 2021 APPROVED: ATTACHMENT 1Page59 CITY GENERAL FUND RESERVE FUNDING GOALS POLICY PAGE 2 OF 4 PERS rate stabilization The funding goal for this reserve is established at a level equal to the value of projected rate increases identified in the respective annual CalPERS actuarial valuation for five fiscal years after the year of financial reporting. The related reserve is restricted as the funds have been placed in the PARS Post-Employment Benefits Trust, which is a restricted asset on the City’s balance sheet. City facilities capital repairs The funding goal for City facilities capital repair is established at a minimum goal of 50% of capital assets value comprised of construction in progress (excluding infrastructure), building improvements, and improvements other than buildings for governmental activities, excluding assets owned by the Rancho Cucamonga Fire Protection District. Changes in economic circumstances The funding goal for changes in economic circumstances is established at a nine-month reserve, or 75% of the City General Fund operating budget for the upcoming fiscal year. Law enforcement The funding goal for this reserve is the equivalent of 100% of the most recently approved Schedule A from the San Bernardino County Sheriff’s Department. Economic and community development special services The funding goal for this reserve is $5,000,000 to pay for contract services, special services, or projects associated with Economic and Community Development (ECD) special projects or ECD initiatives/Council goals (such as economic strategy and Development Code contract services) as well as a one-year value of staffing costs for Planning, Building and Safety, and Engineering (not including capital and project management). Funding for this reserve would be provided by unspent revenue from Planning, Building and Safety, and Engineering (not including capital and project management) on an annual basis. Habitat Mitigation and Sphere of Influence issues The funding goal for this reserve is established at $8,000,000. This reserve provides for ancillary costs related to annexation of the sphere area, including mitigation issues and legal challenges. Another area covered by this reserve is the creation of a multi-species habitat conservation plan as well as acquisition of habitat conservation land. The overall funding goal will be increased each fiscal year based on the increase in the City’s assessed valuation for the upcoming fiscal year per the City’s property tax consultant. Page 60 CITY GENERAL FUND RESERVE FUNDING GOALS POLICY PAGE 3 OF 4 Working capital The funding goal for the City’s General Fund working capital reserve is established at a goal of a minimum of 5% of the City's General Fund operating budget for the upcoming fiscal year. Animal Center facility replacement This reserve is established to fund the future replacement of the Animal Center facility. The funding goal for this reserve is equivalent to the estimated construction cost of the future Center. General Plan update The funding goal is equal to the cost to update the City’s General Plan based on the most recent contract awarded, increased annually for the CPI as of each fiscal year end. The funding source for this reserve is a 10% General Plan Maintenance Fee collected on all applicable Building and Safety Services Department and Planning Department services. City infrastructure The funding goal for City infrastructure is established at a minimum goal of 50% of infrastructure assets value comprised of road system (excluding right of way), monuments, storm drain system, and off-road trails system for governmental activities. 800 MHz radio system replacement This reserve is established to fund the future acquisition or replacement of the City’s 800 MHz radios, as well as the City’s proportionate share of the Countywide radio infrastructure. The funding goal is established at 100% of the replacement cost of the radios and 100% of the proportionate cost of the Countywide radio infrastructure. Mobile Home Park Program The Building and Safety Department is responsible for enforcing the State mobile home laws and has adopted the State’s related schedule of fees. One of the fees collected is retained by the City to cover the cost of mandatory inspections performed by the Building and Safety Department in accordance with Title 25. The fee also covers the cost of educational materials and related printing services. The funding goal for this reserve is equal to the cost of a contract inspector for the mobile home park inspections for eight parks within the City. City vehicle and equipment replacement The funding goal is established at 105% of capital assets value comprised of vehicles and equipment for governmental activities, excluding assets owned by the Rancho Cucamonga Fire Protection District. The reserve is accounted for in the City’s Equipment and Vehicle Replacement Internal Service Fund (Fund 712). Page 61 CITY GENERAL FUND RESERVE FUNDING GOALS POLICY PAGE 4 OF 4 City computer equipment/technology replacement The funding goal is established at 110% of capital assets value comprised of computer equipment/technology for governmental activities, excluding assets owned by the Rancho Cucamonga Fire Protection District. The reserve is accounted for in the City’s Computer Equipment and Technology Replacement Internal Service Fund (Fund 714). Community Development information technology The funding goal of this reserve is equal to the implementation costs to replace and/or upgrade the City’s land management software (Accela) combined with three years’ worth of the City’s Cost Allocation Plan (CAP) allocations to support the annual costs associated with Department of Innovation and Technology staff time, maintenance contracts, and general administrative allocations for the City’s land management software. The funding source for this reserve is a 7% Technology Fee collected on all applicable Building and Safety Services Department, Engineering Department, and Planning Department services. The reserve is accounted for in the City Technology Fee Fund (Fund 020). Economic Development Strategic Reserve This reserve is established to fund the acquisition and development of key properties to promote economic development that will benefit the City as a whole and, potentially, generate revenue to the City on an ongoing basis whenever feasible through negotiated agreements with third parties (including but not limited to public-private partnerships and land leases). The funding goal is established at $10,000,000, which is the equivalent of the current value of a 10-acre mixed-use site on Foothill Boulevard. The funding goal will be adjusted annually based on the current value as of January 1 of each year. After initial funding, the reserve balance may fluctuate when properties are sold or acquired. Seasonal Weather Emergency Reserve This reserve is established to provide a dedicated funding source for unanticipated costs incurred due to damage resulting from severe weather emergencies such as wind, flood, fire, extreme heat, extreme cold, and other forces of nature. The funding goal is established at 75% of the highest cost severe weather event in the three most recent fiscal years. Page 62 DATE:June 28, 2021 TO:Mayor and Members of the City Council FROM:John R. Gillison, City Manager INITIATED BY:Tamara L. Oatman, Finance Director SUBJECT:Consideration of Approval of Revisions to Amended Fiscal Year 2020/21 Appropriations. (CITY) RECOMMENDATION: It is recommended that the City Council approve the revisions to the Amended Fiscal Year 2020/21 Appropriations as submitted. BACKGROUND: On May 5, 2021, the City Council approved the Amended Fiscal Year (FY) 2020/21 Appropriations. Subsequent to the approval of the amended appropriations, it was determined that certain line items within the amended appropriations would be insufficient to fund the remainder of the fiscal year or required an adjustment based on information that became available subsequent to the approval. Consequently, it is necessary for staff to submit revisions to certain line items included in the amended appropriations. The reasons for the revisions are noted in the table below. ANALYSIS: In order to ensure that sufficient funding is available for all known expenditures, staff is requesting the City Council approve the revisions to the Amended FY 2020/21 Appropriations as detailed in the following table: Page 63 Page 2 7 8 5 FISCAL IMPACT: The net impact across all funds requiring revisions is a decrease of $12,227,270 in expenditures and a decrease of $12,184,230 in revenues. COUNCIL MISSION / VISION / GOAL(S) ADDRESSED: Not applicable. ATTACHMENTS: None. Page 64 DATE:June 28, 2021 TO:Mayor and Members of the City Council FROM:John R. Gillison, City Manager INITIATED BY:Matthew Burris, Deputy City Manager William Wittkopf, Public Works Services Director SUBJECT:Consideration to Approve the Temporary Roadside Memorials on Public Property and Right-of-Way Policy. (CITY) RECOMMENDATION: Staff recommends that the City Council approve and adopt the Temporary Roadside Memorials on Public Property and Right-of-Way Policy. BACKGROUND: Roadside Memorials are typically installed by grieving friends and family members who have lost someone along a specific segment of road or an intersection within the City. Public Works Services is usually made aware of the placement of Roadside Memorials by direct observation by field staff, when a phone call is received from the public, or an RC2GO request is submitted. Roadside Memorials can pose a liability for the City when placed in the public right-of-way for extended periods of time. These memorials also present a concern for road users as they may cause a distraction which can lead to an accident. These Roadside Memorials may consist of items blocking the path of travel for pedestrians, items interfering with traffic control devices, or items found on City streets creating a potential problem for motorists. Other items such as lighted candles in glass containers are a fire and safety issue. On April 12, 2012 Public Works Services implemented the Work Practice Directive for Temporary Roadside Memorials on Public Property and Right-of-Ways. The Directive was intended to provide Public Works staff with direction when managing Roadside Memorials in the public right- of-way. The proposed policy will update and supersede this work practice and create a policy for Public Works Services and the RC-CAN team to follow. ANALYSIS: Public Works Services tries to balance the need for families and loved ones to grieve while ensuring the public right-of-way remains safe. Public Works staff are responsible for reporting these Roadside Memorials to their supervisor prior to taking any action. The Streets Superintendent or Supervisor will inspect the site, determine whether the Roadside Memorial is within the public right-of-way, document with photographs, and determine if any immediate action is required. As part of the proposed policy, once the site is inspected and the information is reviewed by the Streets Superintendent, the following steps will be taken: Page 65 Page 2 8 1 2  A RC2GO request will be generated for each Roadside Memorial with photographs attached. Any immediate action taken will be noted.  All subsequent actions taken will be noted on the RC2GO request, including attachment of additional photographs as necessary.  The original RC2GO request will be set for follow-up in 30 days by the Public Works Services Director.  The RC-CAN Team will attempt to contact the family or other responsible person(s) to coordinate the removal of the memorial before any action is taken.  The Director will review all Roadside Memorials after 30 days to approve the removal by Public Works. All items removed by Public Works Services from the site of a Roadside Memorial shall be handled with the utmost care and respect. Items shall be carefully removed, small items boxed together, labeled as to the location and date of removal, and all items transported to the Public Works Service Center (PWSC). Perishable items, such as flowers and plants, will not be stored but will be carefully disposed of at the PWSC. Items will be stored for a period of 60 to 90 days. Items collected will be released to family members or responsible person(s) of the Roadside Memorial honoree upon request. Items which cause hazardous conditions, or have the potential to be a hazard to the public, are subject to immediate removal, and include, but are not limited to:  Items blocking or interfering with the view or travel of pedestrians or traffic  Items blocking or interfering with traffic control devices  Items located on the roadway surface  Lighted candles  Glass candle holders and other glass containers  Large glass or ceramic figurines, pots, or similar items  Large signs or banners Public Works staff shall not move or relocate these specific items placed at a Roadside Memorial to restore pedestrian or vehicular visibility or access. Such items shall be removed and stored. Staff recommends approval of the proposed policy originally derived from the Work Practice Directive for Temporary Roadside Memorials on Public Property and Right-of-Ways. FISCAL IMPACT: The typical cost to remove a Roadside Memorial from the public right-of-way is $166. This cost includes the vehicle and a Public Works staff member to perform the work. This amount is minimal when compared to the potential cost the City could be faced with if the Roadside Memorial is found to be the cause of a collision due to the items in the public right-of-way. COUNCIL MISSION / VISION / GOAL(S) ADDRESSED: This policy encompasses the City Council’s core values of promoting a safe and healthy community for all, as well as working together cooperatively and respectfully with each other, staff, and all stakeholders. ATTACHMENTS: Attachment I – Memorandum Policy Page 66 ATTACHMENT 1 PURPOSE: To establish a policy for the acceptable duration of ad hoc memorials on public property and rights-of-way (hereinafter “Roadside Memorials”) and provide direction for staff in maintaining City property and the public right-of-way when Roadside Memorials are present. BACKGROUND: The Public Works Department is usually made aware of the placement of Roadside Memorials by direct observation by field staff, when a phone call is received from the public, or an RC2GO request is submitted. These Roadside Memorials may consist of items blocking the path of travel for pedestrians, items interfering with traffic control devices, or items found on City streets creating a potential problem for motorists. These objects can present a concern for road users as they may cause a distraction which can lead to an accident. Other items such as lighted candles in glass containers are a fire and safety issue. These Roadside Memorials pose a liability for the City being placed in the public right-of-way for extended periods of time. POLICY: The Public Works Department tries to balance the need for families and loved ones to grieve while not allowing a safety hazard in the public right-of-way. Public Works crews are responsible for reporting these Roadside Memorials to their supervisor prior to taking any action. The Streets Superintendent or Supervisor will inspect the site, determine whether the Roadside Memorial is within the public right-of-way, document with photographs, and determine if any immediate action is required. Once the site is inspected and the information is reviewed by the Streets Superintendent, the following steps will be taken: 1. A RC2GO request will be generated for each Roadside Memorial with photographs attached. Any immediate action taken will be noted. 2. All subsequent actions taken will be noted on the RC2GO request, including attachment of additional photographs as necessary. 3. The original RC2GO request will be set for follow-up in 30 days by the Public Works Services Director. 4. The RC-CAN Team will attempt to contact the family or other responsible person(s) to coordinate the removal of the memorial before any action is taken. 5. The Director will review all Roadside Memorials after 30 days to approve the removal by Public Works is required. DATE:June 28, 2021 TO:Matthew Burris, Deputy City Manager William Wittkopf, Public Works Services Director FROM:John R. Gillison, City Manager SUBJECT:TEMPORARY ROADSIDE MEMORIALS ON PUBLIC PROPERTY AND RIGHT-OF-WAY POLICY MEMORANDUM (Public Works Department) Page 67 TEMPORARY ROADSIDE MEMORIALS ON PUBLIC PROPERTY AND RIGHT-OF-WAY POLICY JUNE 28, 2021 PAGE 2 Removal and Storage of Property All items removed by Public Works Services from the site of a Roadside Memorial shall be handled with the utmost care and respect. Items shall be carefully removed, small items boxed together, labeled as to the location and date of removal, and all items transported to the Public Works Service Center (PWSC). Perishable items, such as flowers and plants, will not be stored but will be carefully disposed of at the PWSC. Items will be stored for a period of 60 to 90 days. Items collected will be released to family members or responsible person(s) of the Roadside Memorial honoree upon request. Hazardous Items Items causing hazardous conditions, or have the potential to be a hazard to the public, are subject to immediate removal, and include, but are not limited to: • Items blocking or interfering with the view or travel of pedestrians or traffic • Items blocking or interfering with traffic control devices • Items located on the roadway surface • Lighted candles • Glass candle holders and other glass containers • Large glass or ceramic figurines, pots, or similar items • Large signs or banners Public Works staff shall not move or relocate items placed at a Roadside Memorial to restore pedestrian or vehicular visibility or access. Such items shall be removed and stored. cc Albert Espinoza, Deputy Public Works Director Ernest Ruiz, Streets Superintendent Richard Favela, Maintenance Supervisor Page 68 DATE:June 28, 2021 TO:Mayor and Members of the City Council FROM:John R. Gillison, City Manager INITIATED BY:Jason C. Welday, Director of Engineering Services/City Engineer Justine Garcia, Deputy Director of Engineering Services SUBJECT:Consideration to Adopt the Capital Improvement Program for Fiscal Year 2021/22. (CITY) RECOMMENDATION: Staff recommends that the City Council Adopt the Fiscal Year 2021/22 Capital Improvement Program. BACKGROUND: Each fiscal year, a Capital Improvement Program (CIP) is required to be adopted by the City Council per Government Code 65401. The CIP consists of a multi-year plan for the planning, designing and construction of citywide infrastructure improvements. A copy of Government Code 65401 has been included as Attachment 1. The CIP is a vital piece of the City’s Annual Operating Budget as it dictates major capital expenditures obligated in any given year. The CIP consists of a multi-year plan for citywide infrastructure improvements. Each year, the City budgets for funded projects which will occur during said fiscal year. The list of projects contained in the CIP addresses both the City’s long and short-term capital goals and reflect the desires of the community, as well as projects that serve operational and maintenance needs. ANALYSIS: The CIP Summary Index has been categorized by corresponding Departments and project names are in alphabetical order within each section. Individual project sheets include a short summary, cost, and year funded and can be viewed on the City’s CIP Viewer online at: https://regis.maps.arcgis.com/apps/webappviewer/index.html?id=8c4e09a7fc5e450eb262d95be 71e8b6e Prior to the recommendation of approval of the CIP to City Council each year, staff presents the CIP to the Planning Commission to ensure conformity with the adopted General Plan. It should be noted that since the approval of Planning Commission Resolution 21-35, two projects listed under Engineering Services, “Hellman Avenue Sidewalk Improvements” and “School Crosswalk Improvements”, have been deleted from the 2021/22 CIP. These projects are funded by Community Development Block Grant (CDBG) funds and due to the need to utilize funds in a timely manner, project timelines have been shifted and contract awards have been appropriated Page 69 Page 2 8 2 6 in the fiscal year 2020/21 budget year. No other changes to the CIP have been made or are anticipated. FISCAL IMPACT: Projects are funded from a variety of sources including Development Impact Fees, Measure I, Gas Tax, and miscellaneous grants. The CIP for Fiscal Year 2021-22 proposes 59 projects totaling just over $62,000,000 to be executed in the upcoming fiscal year. In addition, there are 29 projects totaling just over $126,000,000 identified as future and unfunded. COUNCIL MISSION / VISION / GOAL(S) ADDRESSED: The City’s Engineering staff works with all Departments within the City to develop and implement an economically feasible CIP that embodies the City’s public infrastructure needs. This item addresses the City Council’s vision for the City by ensuring the construction of high-quality public improvements that promote a world class community and also supports the City Council’s Core Value of promoting and enhancing a safe and healthy community for all. ATTACHMENTS: Attachment 1 - Government Code 65401 Attachment 2 - Fiscal Year 2021/2022 Capital Improvement Program Summary Index Page 70 Government Code 65401. If a general plan or part thereof has been adopted, within such time as may be fixed by the legislative body, each county or city officer, department, board, or commission, and each governmental body, commission, or board, including the governing body of any special district or school district, whose jurisdiction lies wholly or partially within the county or city, whose functions include recommending, preparing plans for, or constructing, major public works, shall submit to the official agency, as designated by the respective county board of supervisors or city council, a list of the proposed public works recommended for planning, initiation or construction during the ensuing fiscal year. The official agency receiving the list of proposed public works shall list and classify all such recommendations and shall prepare a coordinated program of proposed public works for the ensuing fiscal year. Such coordinated program shall be submitted to the county or city planning agency for review and report to said official agency as to conformity with the adopted general plan or part thereof. Attachment 1 096 Page 71 General Plan Reference(s)No.Project Account Amount Account Amount Account Amount Community Services CS-1.3 1 Central Park - Amphitheatre Grant Opportunity 0 Grant Opportunity 0 Grant Opportunity 8,500,000 11,000,000 11204015650/2058120-0 0 11204015650/2058120-0 0 11204015650/2058120-0 1,500,000 Unknown 0 Unknown 0 Unknown 1,000,000 CS-1.3 2 Central Park - Dog Park 12744015650/2022274-0 223,240 12744015650/2022274-0 2,686,760 12744015650/2022274-0 0 3,737,450 11743035650/2022174-0 0 11743035650/2022174-0 201,760 11743035650/2022174-0 0 11204015650/2022120-0 0 11204015650/2022120-0 625,690 11204015650/2022120-0 0 CS-1.3 3 Central Park - Trailhead and Gardens 11204015650/1871120-0 14,030 11204015650/1871120-0 0 11204015650/1871120-0 0 6,014,030 Grant Opportunity 0 Grant Opportuntiy 0 Grant Opportunity 6,000,000 CS-1.1, CS-1.2, PF-1.3 4 Citywide Parks Master Plan 11204015650/2042120-0 29,000 11204015650/2042120-0 250,000 11204015650/2042120-0 0 279,000 PF-1.1, PF-1.2, PF-1.4 5 Cultural Center - Courtyard Redesign 10250015650/1894025-0 424,580 10250015650/1894025-0 190,000 10250015650/1894025-0 2,935,000 3,549,580 CS-1.2 6 Etiwanda Creek Park Phase II 11204015650/1664120-0 295,210 11204015650/1664120-0 0 11204015650/1664120-0 5,035,000 5,330,210 CS-1.8, CS-1.9 7 Garcia Park - Ball Field Lights 11393035650/1981139-0 20,000 11393035650/1981139-0 0 11393035650/1981139-0 460,000 480,000 PF-1.4, CM-4.4 8 Hermosa Street Beautification 11103165650/2060110-0 0 11103165650/2060110-0 15,000 11103165650/2060110-0 150,000 165,000 CS-6.5 9 Pacific Electric Trail Improvements 11204015650/2059120-0 0 11204015650/2059120-0 25,000 11204015650/2059120-0 47,000 360,000 12744015650/2059274-0 0 12744015650/2059274-0 0 12744015650/2059274-0 288,000 CS-1.8 10 Quakes Scoreboard Replacement 1025001-5607 0 1025001-5607 0 1025001-5607 650,000 650,000 Total Community Services Totals: 31,565,270$ General Plan Reference(s)No.Project Total Project Cost Account Amount Account Amount Account Amount Engineering Services CM-4.4 1 5th Street: Lucas Ranch Road to Hermosa Avenue Pavmenet Rehabilitation 11773035650/2077177-0 0 11773035650/2077177-0 67,500 11773035650/2077177-0 0 67,500 CM-5.1 2 6th Street at BNSF Spur Crossing West of Etiwanda 11243035650/1839124-0 74,360 11243035650/1839124-0 150,000 11243035650/1839124-0 1,250,000 3,000,000 Unknown 0 Unknown 0 Unknown 1,525,640 CM-4.4 3 6th Street- Charles Smith Avenue-Hyssop Dr: Pavement Rehab 11743035650/2071174-0 0 11743035650/2071174-0 74,250 11743035650/2071174-0 0 74,250 CM-1.4, CM-3.10 4 ADA Ramps at Various Locations 11773035650/1150177-0 890,000 11773035650/1150177-0 250,000 11773035650/1150177-0 0 1,140,000 CM-4.1, CM-4.3 5 Advance Traffic Management System- Phase 2 11243035650/2004124-0 0 11243035650/2004124-0 6,382,000 11243035650/2004124-0 0 7,472,000 10250015650/2004025-0 0 10250015650/2004025-0 90,000 10250015650/2004025-0 0 Grant Opportunity 0 Grant Opportunity 1,000,000 Grant Opportunity 0 CM-4.1 6 Archibald Avenue @ Victoria Street-Traffic Sig Install 11243035650/1510124-0 0 11243035650/1510124-0 0 11243035650/1510124-0 715,000 715,000 1,006,060$ 2021/22 Funded Future/Unfunded 3,994,210$ 26,565,000$ CITY OF RANCHO CUCAMONGA - CAPITAL IMPROVEMENT PROGRAM - FISCAL YEAR 2021/22 Prior Yr Funding Prior Yr Funding 2021/22 Funded Future/Unfunded Total Project Cost Prior Yr Funding 2021/22 Funded Future/Unfunded Page 1 of 5Attachment 2Page72 CITY OF RANCHO CUCAMONGA - CAPITAL IMPROVEMENT PROGRAM - FISCAL YEAR 2021/22 CM-4.4 7 Archibald Avenue: 210 Freeway to 19th St- Pavement Rehabilitation 11763035650/2074176-0 0 11763035650/2074176-0 101,250 11763035650/2074176-0 0 101,250 CM-1.1, CM4.4 8 Banyan from Milliken Ave to Rochester Ave-Pavement Rehab 11773035650/2033177-0 0 11773035650/2033177-0 60,000 11773035650/2033177-0 520,000 580,000 CM-4.4 9 Banyan Street: Garnet Street-Beryl St Pavement Rehabilitation 11743035650/2073174-0 0 11743035650/2073174-0 87,750 11743035650/2073174-0 0 87,750 CM-4.4 10 Center Ave Pavement Rehabilitation Project 11743035650/2008174-0 0 11743035650/2008174-0 475,000 11743035650/2008174-0 0 475,000 CM-4.4 11 Cherry Avenue-Wilson to City Limit- Pavement Rehabilitation 11743035650/2070174-0 0 11743035650/2070174-0 222,750 11743035650/2070174-0 0 222,750 PS-7.2 12 Cucamonga Storm Drain Ph3-CLOMR- FEMA 11123035650/1928112-0 3,208,683 11123035650/1928112-0 175,000 11123035650/1928112-0 0 3,383,683 CM-2.1 13 Day Creek Channel Bike Trail 11052085650/2014105-0 8,260 11052085650/2014105-0 208,740 11052085650/2014105-0 0 620,000 12143035650/2014214-0 4,450 12143035650/2014214-0 398,550 12143035650/2014214-0 0 CM-1.1, CM-4.1 14 East Ave at Highland Avenue-Traffic Control Device 11243035650/1958124-0 42,000 11243035650/1958124-0 540,000 11243035650/1958124-0 0 582,000 CM-1.6 15 Etiwanda Avenue Grade Separation 11813035650/1922181-0 10,500,000 11813035650/1922181-0 12,500,000 11813035650/1922181-0 52,150,000 75,150,000 RC-4.1 16 Etiwanda Ave from Arrow Rte to Whittram Ave-Electric and Fiber Line Extension 17053035650/1999705-0 0 17053035650/1999705-0 311,000 17053035650/1999705-0 0 311,000 CM-1.1, CM-1.2 17 Etiwanda Ave-East Side Widening 11773035650/2002177-0 5,000 11773035650/2002177-0 0 11773035650/2002177-0 0 850,000 11243035650/2002124-0 20,000 11243035650/2002124-0 825,000 11243035650/2002124-0 0 CM-1.1 CM-4.4 18 Etiwanda Avenue: Foothill Blvd to Wilson Ave-Pavement Rehab 11773035650/2007177-0 50,000 11773035650/2007177-0 0 11773035650/2007177-0 2,550,000 2,600,000 PF-8.1, PF-8.2 19 Fiber Optic Interconnect 11243035650/2061124-0 15,000 11243035650/2061124-0 660,000 11243035650/2061124-0 0 675,000 CM-1.1 CM-4.4 20 Foothill Blvd: Grove Ave to San Bernardino Rd 1001xxx5650/1964001-0 12,500 1001xxx5650/1964001-0 0 1001xxx5650/1964001-0 0 1,489,500 11983035650/1964198-0 37,000 11983035650/1964198-0 120,000 11983035650/1964198-0 600,000 12744015650/1964124-0 0 12744015650/1964124-0 0 12744015650/1964124-0 720,000 CM-1.1 CM-4.4 21 Foothill Boulevard-Pavement Rehabilitation 11793035650/2055179-0 0 11793035650/2055179-0 2,565,000 11793035650/2055179-0 0 2,565,000 CM-4.4 22 Haven Avenue: Lemon- Wilson: Pavement Rehabilitation 11743035650/2072174-0 0 11743035650/2072174-0 479,250 11743035650/2072174-0 0 479,250 CS-6.4 23 Heritage Park Bridge Replacements 18473035650/1963847-0 150,240 18473035650/1963847-0 500,000 18473035650/1963847-0 0 1,398,405 32885015650/1963288-0 148,165 32885015650/1963288-0 600,000 32885015650/1963288-0 0 CM-4.4 24 Hermosa Ave- Pavement Rehabilitation 11773035650/2076177-0 0 11773035650/2076177-0 101,250 11773035650/2076177-0 0 101,250 CM-1.1, CM-1.2 25 Hermosa Ave- Foothill Blvd to Church St- Pavement Rehab 11743035650/2075174-0 0 11743035650/2075174-0 607,500 11743035650/2075174-0 0 607,500 CM-1.1 CM-4.4 26 Local Overlay at Various Locations 11773035650/1022177-0 490,000 11773035650/1022177-0 0 11773035650/1022177-0 0 2,860,000 11793035650/1022179-0 550,000 11793035650/1022179-0 0 11793035650/1022179-0 0 11743035650/1022174-0 0 11743035650/1022174-0 1,820,000 11743035650/1022174-0 0 Page 2 of 5Page73 CITY OF RANCHO CUCAMONGA - CAPITAL IMPROVEMENT PROGRAM - FISCAL YEAR 2021/22 CM-1.1 CM-4.4 27 Local Slurry Seal Pavement Rehabilitation @ Various Locations 11743035650/1022174-0 277,000 11743035650/1022174-0 280,000 11743035650/1022174-0 0 557,000 HE-4.3.1 28 Pecan Avenue: Whittram Ave to Arrow Rte- Street Improvements 12043145650/2038204-0 10,000 12043145650/2038204-0 0 12043145650/2038204-0 469,000 685,000 Unknown 0 Unknown 0 Unknown 206,000 PF-1.4, RC-4.2 29 RCMU Electric Substation #2 17053035650/2063705-0 0 17053035650/2063705-0 0 17053035650/2063705-0 3,070,000 3,070,000 PF-1.4, RC-4.2 30 RCMU Line Extension Design to Etiwanda Heights 17053035650/2064705-0 0 17053035650/2064705-0 0 17053035650/2064705-0 2,010,000 2,010,000 CM-1.1 CM-4.4 31 Rochester Avenue: 6th St to Arrow Rte- Pavement Rehab 11773035650/2000177-0 0 11773035650/2000177-0 700,000 11773035650/2000177-0 0 700,000 CM-1.1 CM-4.4 32 Rochester Avenue: Base Line Rd-Highland Ave: Pavement Rehab 11793035650/1935179-0 0 11793035650/1935179-0 1,917,000 11793035650/1935179-0 0 1,917,000 RC-4.1, RC-4.2 33 The Resort Parkway (North) RCMU Distribution 17053035650/2037705-0 0 17053035650/2037705-0 5,000 17053035650/2037705-0 30,000 35,000 CM-4.1 34 Upgrade LT Phases at Multiple Locations 11243035650/2079124-0 18,000 11243035650/2079124-0 90,350 11243035650/2079124-0 0 343,150 Grant Opportunity 0 Grant Opportunity 162,600 Grant Opportunity 0 11743035650/2079174-0 0 11743035650/2079174-0 72,200 11743035650/2079174-0 0 CM-1.1 CM-4.4 35 Whittram Avenue from Etiwanda Creek to Hickory Avenue 12043145650/2032204-0 13,000 12043145650/2032204-0 0 12043145650/2032204-0 240,000 253,000 CM-1.2, CM-1.3 36 Youngs Canyon Road-Extension from Koch Place to Cherry Avenue 18132035650/1601813-0 856,000 18132035650/1601813-0 0 18132035650/1601813-0 2,644,000 13,816,000 Unknown 0 Unknown 0 Unknown 10,316,000 Total Engineering Services Totals:130,926,738$ General Plan Reference(s)No.Project Account Amount Account Amount Account Amount Fire District PS-1.1, PS-2.1, PS-2.3, PS-2.4 1 Fire District-8th Street Station 179 32885015650/2057288-0 716,770 32885015650/2057288-0 0 32885015650/2057288-0 11,728,500 12,445,270 PS-1.1, PS-2.1, PS-2.3, PS-2.4 2 Fire District-Town Center Station 178 32885015650/1645288-0 575,000 32885015650/1645288-0 14,800,000 32885015650/1645288-0 0 15,375,000 Total Fire District Totals: 27,820,270$ General Plan Reference(s)No.Project Account Amount Account Amount Account Amount Library PF-3.1, PF-3.2 1 Paul A. Biane Library-Second Story and Beyond Project 13296015650/1867329-0 3,375,660 13296015650/1867329-0 1,225,000 13296015650/1867329-0 899,340 6,900,000 10250015650/1867025-0 0 10250015650/1867025-0 725,000 10250015650/1867025-0 675,000 Total Library Totals:6,900,000$ Prior Yr Funding 2021/22 Funded Future/Unfunded 17,379,658$ 34,598,940$ 79,015,640$ Prior Yr Funding 2021/22 Funded Future/Unfunded Prior Yr Funding 2021/22 Funded Future/Unfunded 3,375,660$ 1,950,000$ 1,574,340$ 1,291,770$ Total Project Cost Prior Yr Funding 2021/22 Funded Future/Unfunded Total Project Cost 14,800,000$ 11,728,500$ Prior Yr Funding 2021/22 Funded Future/Unfunded Page 3 of 5Page74 CITY OF RANCHO CUCAMONGA - CAPITAL IMPROVEMENT PROGRAM - FISCAL YEAR 2021/22 General Plan Reference(s)No.Project Account Amount Account Amount Account Amount Police Department PF-1.1, PS-4.3 1 Police Station Operational and COVID- Related Lobby Improvements 1127701-5602 0 1127701-5602 170,000 1127701-5602 0 170,000 Total Police Department Totals:170,000$ General Plan Reference(s)No.Project Account Amount Account Amount Account Amount Public Works PF-1.4 1 Beryl Park East - All Inclusive Playground Replacement 1141303-5607 0 1141303-5607 40,000 1141303-5607 0 40,000 PF-1.1, PF-1.4 2 Beryl Park East-Tennis Court LED Light Replacements 1141303-5607 0 1141303-5607 50,000 1141303-5607 0 50,000 PF-1.1 3 Citywide HVAC & Lighting Controls 10250015650/1978025-0 0 10250015650/1978025-0 50,000 10250015650/1978025-0 0 50,000 CM-2.1 4 Citywide Concrete Repair 10013185650/1991001-0 1,175,000 10013185650/1991001-0 200,000 10013185650/1991001-0 800,000 2,975,000 11773035650/1991177-0 300,000 11773035650/1991177-0 100,000 11773035650/1991177-0 400,000 PF-1.4 5 Civic Center ADA & Covid Improvements 1025001-5602 82,230 1025001-5602 1,302,400 1025001-5602 0 1,384,630 PF-1.1 6 Civic Center HVAC-Plant Replacement 10250015650/2029025-0 173,000 10250015650/2029025-0 1,500,000 10250015650/2029025-0 0 1,673,000 PF-1.4 7 Council Chamber-Carpet & Seating Replacement 1025001-5602 0 1025001-5602 10,000 1025001-5602 0 10,000 PF-1.1, PF-1.4 8 Etiwanda Creek Park-LED Lighting Replacement 1137303-5607 0 1137303-5607 100,000 1137303-5607 0 100,000 CS-2.5 9 Fleet Shop-Rental Space 1025001-5602 70,000 1025001-5602 150,000 1025001-5602 0 220,000 PF-1.4 10 Heritage Park-Equestrian Center Roof Replacement 1848303-5607 0 1848303-5607 150,000 1848303-5607 0 150,000 PF-1.4 11 Heritage Park-Pedestrian Trail Replacement 1848303-5607 0 1848303-5607 150,000 1848303-5607 0 150,000 PF-1.1, PF-1.4 12 Heritage Park-Senior Baseball Field LED Light Replacement 1848303-5607 0 1848303-5607 100,000 1848303-5607 0 100,000 PF-1.1, PF-1.4 13 Heritage Park-Solar Pathway Lighting 1848303-5607 0 1848303-5607 90,000 1848303-5607 0 90,000 PF-1.1, PF-1.4 14 LMD 1-Drought Tolerant Landscaping 11413035650/2056130-0 0 11413035650/2056130-0 50,000 11413035650/2056130-0 0 50,000 PF-1.4 15 LMD 10-Landscape Renovation 1140303-5607 0 1140303-5607 150,000 1140303-5607 0 150,000 PF-1.1, PF-1.4 16 LMD 2-Paseo Lighting Retrofits 11313035650/1716131-0 567,550 11313035650/1716131-0 300,000 11313035650/1716131-0 364,890 1,232,440 LU-10.3, LU-10.6 17 LMD 2-Water Conservation/Landscape Renovation 11313035650/1787131-0 863,030 11313035650/1787131-0 700,000 11313035650/1787131-0 2,100,000 3,663,030 2021/22 Funded Future/Unfunded -$ 170,000$ -$ Prior Yr Funding 2021/22 Funded Future/Unfunded Prior Yr Funding 2021/22 Funded Future/Unfunded Total Project Cost Total Project Cost Prior Yr Funding Page 4 of 5Page75 CITY OF RANCHO CUCAMONGA - CAPITAL IMPROVEMENT PROGRAM - FISCAL YEAR 2021/22 LU-10.3, LU-10.6 18 LMD 4R-Water Conservation/Landscape Renovation 11343035650/1787134-0 617,960 11343035650/1787134-0 700,000 11343035650/1787134-0 2,100,000 3,417,960 PF-1.1, PF-1.4 19 LMD 6-Drought Tolerant Landscaping 11363035650/2056136-0 0 11363035650/2056136-0 50,000 11363035650/2056136-0 0 50,000 PF-1.1, PF-1.4 20 Red Hill Park-Solar Pathway Lighting 1848303-5607 0 1848303-5607 90,000 1848303-5607 0 90,000 PF-1.1, PF-1.4 21 Traffic Signal Battery Backup System Replacement 11743035650/1980174-0 247,500 11743035650/1980174-0 127,500 11743035650/1980174-0 255,000 1,380,000 17120015650/1980712-0 300,000 17120015650/1980712-0 150,000 17120015650/1980712-0 300,000 CM-4.1 22 Traffic Signal Modification 11743035650/2035174-0 176,000 11743035650/2035174-0 200,000 11743035650/2035174-0 800,000 1,176,000 LU-3.4 23 Urban Forest Master Plan Unknown 0 Unknown 0 Unknown 200,000 200,000 Total Public Works Totals: 18,362,060$ 4,572,270$ 6,509,900$ 7,319,890$ Prior Yr Funding 2021/22 Funded Future/Unfunded Page 5 of 5Page76 DATE:June 28, 2021 TO:Mayor and Members of the City Council FROM:John R. Gillison, City Manager INITIATED BY:Tamara L. Oatman, Finance Director SUBJECT:Consideration to Adopt the Fiscal Year 2021/22 Budget and the Article XIIIB Appropriations Limit for Fiscal Year 2021/22. (RESOLUTION NO. 2021-050, RESOLUTION NO. 2021-051) (CITY) RECOMMENDATION: It is recommended that the City Council approve the resolutions adopting the Fiscal Year 2021/22 Budget and the Article XIIIB Appropriations Limit for Fiscal Year 2021/22. BACKGROUND: Each year, the City of Rancho Cucamonga proposes a one-year program of service through the adoption of the annual budget. In conjunction with the adoption of the annual budget, the State of California Constitution, Article XIIIB, requires that an appropriations limit be established annually by the City Council. The factor used to develop the appropriations limit is the C.P.I. change and the change in the City’s population per the State of California Department of Finance. ANALYSIS: On June 18, 2021, the City Council held a workshop to review the appropriation requests for Fiscal Year 2021/22. The attached resolution adopts that one-year budget following the Council’s deliberations at the publicly held budget study session. The budget is summarized as follows: FISCAL YEAR 2021/22 BUDGET General Fund $ 95,160,410 Library Services $ 5,604,780 Special Funds $100,445,100 Total $201,210,290 Based on the factors of the Gann Limit (a C.P.I. change of 5.73% and a population change of 0.05%), the City’s Fiscal Year 2021/22 appropriations limit is $96,566,482. The City’s Fiscal Year 2021/22 appropriations subject to this limit total $71,964,130. It is anticipated that the City will be at 74.52% of its Gann Limit at June 30, 2022. The additional resolution adopts the annual appropriations limit as required by Article XIIIB of the State Constitution. FISCAL IMPACT: The proposed resolutions establish the City of Rancho Cucamonga’s spending plan for Fiscal Year 2021/22 and ensure the City’s compliance with Article XIIIB of the State Constitution. Page 77 Page 2 7 8 6 COUNCIL MISSION / VISION / GOAL(S) ADDRESSED: The adoption of the Fiscal Year 2021/22 Budget supports the City Council’s core value of providing and nurturing a high quality of life for all by demonstrating the active, prudent fiscal management of the City’s financial resources in order to support the various services the City provides to all Rancho Cucamonga stakeholders. ATTACHMENTS: Attachment 1 – Resolution (Budget Adoption) Attachment 2 – Resolution (Appropriations Limit) Page 78 1 3 5 1 ATTACHMENT 1 RESOLUTION NO. 21-XXX RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA ADOPTING THE CITY’S FISCAL YEAR 2021/22 BUDGET WHEREAS, the Rancho Cucamonga City Council held one workshop to review the appropriation requests for Fiscal Year 2021/22 on June 18, 2021; and WHEREAS, the Rancho Cucamonga City Council held a public meeting on the General City Budget; and WHEREAS, this public meeting was noticed in accordance with applicable laws and held on June 28, 2021. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Rancho Cucamonga, California does hereby resolve on this 28th day of June 2021, as follows: SECTION 1: Adoption of Fiscal Year 2021/22 Budget. The City of Rancho Cucamonga budget for Fiscal Year 2021/22, on file in the office of the Finance Director, is hereby adopted in the amount of $201,210,290. This budget total includes appropriations for both the general and other special purpose funds. SECTION 2: Transfers of Funds Between and/or Within Appropriations. The City Council of the City of Rancho Cucamonga may transfer funds between funds or activities set forth in the budget. The City Manager may transfer funds between appropriations within any fund as set forth in the budget and may transfer appropriations between activities within any cost center in the same fund. SECTION 3: Transfers of Funds Between Funds. Transfers of funds between funds as shown throughout the fund transfer sections of the budget shall be made as expenditures warrant such transfers. SECTION 4: Disbursements. The City Manager and the Finance Director, or the duly designated representative, are hereby empowered and authorized to disburse funds pursuant to appropriations provided for in the Fiscal Year 2021/22 Budget and have the responsibility to establish procedures and to administratively implement and control the budget on all matters, except direct expenditures by Councilmembers which require Council approval. The City Manager, or the duly designated representative, is hereby empowered and authorized to make an annual contribution to the PARS Public Agencies Post-Employment Benefits Trust for the City in an amount not to exceed $300,000 and for the Fire District in an amount not to exceed $1,000,000. The contribution is at the discretion of the City Manager based on the results of operations for each fiscal year and is not mandatory. SECTION 5: Additional Appropriations. The City Council may amend this budget to add or delete appropriations. Page 79 1 3 5 1 SECTION 6: Personnel. The City Manager is hereby empowered and authorized to develop and fill additional positions as deemed necessary to conduct City operations provided funding is available in the budget. PASSED, APPROVED, AND ADOPTED this 28th day of June 2021. Page 80 RESOLUTION NO. 21-XXX RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA ESTABLISHING AN APPROPRIATIONS LIMIT PURSUANT TO ARTICLE XIIIB OF THE CALIFORNIA STATE CONSTITUTION FOR FISCAL YEAR 2021/22 WHEREAS, Article XIIIB of the State of California provides that the total annual appropriations subject to limitation of the State and of each local government shall not exceed the appropriations limit of such entity of government for the prior year adjusted for changes in the cost of living and population except as otherwise provided in said Article XIIIB; and WHEREAS, pursuant to said Article XIIIB of the Constitution of the State of California, the City Council of the City of Rancho Cucamonga deems it to be in the best interests of the City of Rancho Cucamonga to establish an appropriations limit for Fiscal Year 2021/22; and WHEREAS, the Finance Director of the City of Rancho Cucamonga has determined that said appropriations limit for Fiscal Year 2021/22 be established in the amount of $96,566,482. NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Rancho Cucamonga, California does hereby resolve that an appropriations limit for Fiscal Year 2021/22 pursuant to Article XIIIB of the Constitution of the State of California be established in the amount of $96,566,482 and the same is hereby established. BE IT FURTHER RESOLVED that said appropriations limit herein established may be changed as deemed necessary by resolution of the City Council. PASSED, APPROVED, AND ADOPTED this 28th day of June 2021. ATTACHMENT 2Page81 DATE:June 28, 2021 TO:President and Members of the Board of Directors FROM:John R. Gillison, City Manager INITIATED BY:Ivan Rojer, Fire Chief Tamara L. Oatman, Finance Director Darci Vogel, Fire Business Manager Michelle Cowles, Management Analyst II SUBJECT:Consideration to Adopt the General Fund Preliminary Budget, Approve a Resolution Adopting the General Fund Appropriations Limit for Fiscal Year 2021/22, and set Approval of a Final Budget for the July 21, 2021 Board Meeting. (RESOLUTION NO. FD 2021-015) (FIRE) RECOMMENDATION: Staff recommends that the Fire Board: 1. Adopt the Rancho Cucamonga Fire Protection District General Fund Preliminary Budget in the amount of $57,169,640, which is a combination of $38,050,430 General Fund operational expenditures, $210 Fire Technology Fee Fund expenditures, and $19,119,000 Capital Reserve expenditures; 2. Approve a Resolution adopting the General Fund's Article XIIIB Appropriations Limit in the amount of $45,019,980 for Fiscal Year 2021/22; and 3. Set approval of a final budget for the July 21, 2021 Board Meeting. BACKGROUND: The Fire Protection District Law (Health & Safety Code Section 13800, et seq.), Chapter 7, requires the Fire Board on or before June 30 of each year to adopt a preliminary budget. On or after July 1 of each year, the amounts set forth in the preliminary budget, except obligations for fixed assets and new permanent employee positions, are deemed appropriated until the Board adopts the final budget. On or before October 1 of each year, after making any changes in the preliminary budget, the Board shall adopt a final budget. The final budget shall establish its appropriation limit pursuant to the State of California Constitution, Article XIIIB (Gann Limit). Additionally, a copy of the final budget must be forwarded to the auditor of each county in which the District is located. As noted above, the Government Code requires that an appropriations limit be established annually by the Fire Board based on the final budget. Historically, the District's final budget has mirrored the preliminary budget. As such, the District's appropriations limit is calculated in conjunction with the adoption of the preliminary budget. The factor used to develop the appropriations limit is the C.P.I. change and the change in the City's population per the State of California Department of Finance. Page 82 Page 2 8 1 7 ANALYSIS: On June 18, 2021, the Fire Board held a workshop to review the appropriation requests for Fiscal Year 2021/22, which included specific discussion regarding the preliminary budget. The proposed budget continues to meet the Council/Fire Board's direction of operating independently. The Fire District was able to achieve a proposed, balanced operational budget through a combination of moderate revenue growth and continued improvements of operational and administrative efficiencies. Based on the factors of the Gann Limit (a C.P.I. change of 5.73% and a population change of 0.05%) per the State of California Department of Finance, the District's Fiscal Year 2021/22 General Fund's appropriations limit is $45,019,980. The District's Fiscal Year 2021/22 General Fund appropriations subject to this limit total $27,629,780. It is anticipated that the District will be at 61.37% of its Gann Limit at June 30, 2022. The attached Resolution adopts the annual appropriations limit as required by Article XIIIB of the State Constitution. Please refer to the City Manager's Executive Summary for specific details regarding the Fire District's General Fund Preliminary Budget. The advertised public hearing for adoption of the Fire District General Fund Final Budget is set for July 21, 2021. FISCAL IMPACT: The actions taken by the Fire Board will establish the Rancho Cucamonga Fire Protection District's preliminary spending plan for Fiscal Year 2021/22 and ensure the District's compliance with the Gann Limit. COUNCIL MISSION / VISION / GOAL(S) ADDRESSED: This item brings together portions of the Council's vision and core values. The delivery of vital fire and life safety services to residents, visitors, and businesses, through an innovative combination of risk reduction and emergency response programs, promotes and enhances a safe and healthy community for all. ATTACHMENTS: Attachment 1 – Resolution No. FD 2021-015 Page 83 Resolution No. FD 21-xxx – Page 1 of 1 ATTACHMENT 1 RESOLUTION NO. FD 21-XXX A RESOLUTION OF THE BOARD OF DIRECTORS OF THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT, SAN BERNARDINO COUNTY, CALIFORNIA, ADOPTING A GENERAL FUND APPROPRIATIONS LIMIT FOR FISCAL YEAR 2021/22 PURSUANT TO ARTICLE XIIIB OF THE CALIFORNIA CONSTITUTION WHEREAS, Article XIIIB of the Constitution of the State of California provides that the total annual appropriations subject to limitation of the State and of each local government for the prior year be adjusted for change in the cost of living and population except as otherwise provided in Sections (5), (7) and (8) of said Article XIII-B. These exclusions are: Debt Service Funds, Revenue Bonds, Federal Funds and Grants, Contingencies, Emergencies, Enterprise Funds, Capital Improvement Carry-Overs, Capital Equipment, Intra-Governmental Service Funds, Reserves for Workers Compensation, Long-Term Disability, Retirement, Unemployment and other reserve funds that are deemed reasonable and proper per the aforementioned sections; and WHEREAS, pursuant to said Article XIIIB of the Constitution of the State of California, the Board of Directors of the Rancho Cucamonga Fire Protection District deems it to be in the best interest of the Rancho Cucamonga Fire Protection District to establish a General Fund appropriations limit for Fiscal Year 2021/22; and WHEREAS, the Rancho Cucamonga Fire Protection District has determined that said General Fund’s appropriations limit for Fiscal Year 2021/22 be established in the amount of $45,019,980. NOW, THEREFORE, the BOARD OF DIRECTORS OF THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT HEREBY RESOLVES, that a General Fund appropriations limit for Fiscal Year 2021/22 pursuant to Article XIII-B of the Constitution of the State of California be established in the amount of $45,019,980 and the same is hereby established. BE IT FURTHER RESOLVED that said appropriations limit herein established may be changed as deemed necessary by resolution of the Board of Directors. PASSED, APPROVED, AND ADOPTED this 28th day of June 2021. Page 84 DATE:June 28, 2021 TO:President and Members of the Board of Directors FROM:John R. Gillison, City Manager INITIATED BY:Ivan Rojer, Fire Chief Tamara L. Oatman, Finance Director Darci Vogel, Fire Business Manager Michelle Cowles, Management Analyst II SUBJECT:Consideration of a Resolution Adopting a Budget in the Amount of $2,594,050 and a Resolution Approving an Appropriation Limit in the Amount of $4,456,979 for Fiscal Year 2021/22 in Community Facilities District (CFD) No. 88-1. (RESOLUTION NO. FD 2021-016) (RESOLUTION NO. FD 2021-017) (FIRE) RECOMMENDATION: Staff recommends that the Fire Board adopt resolutions approving the budget in the amount of $2,594,050 and approving the appropriations limit for $4,456,979, which is an amount equal to the maximum authorized special taxes, which could be levied in Fiscal Year 2021/22 in Mello- Roos Community Facilities District No. 88-1. BACKGROUND: On April 4, 1989, the qualified voters approved the formation of Mello-Roos Community Facilities District No. 88-1 and authorized the District to annually levy a special tax to provide for fire protection services within northeast Etiwanda. On May 19, 1989, the Board adopted an ordinance authorizing the levy of a special tax in CFD 88-1. The ordinance authorizes the District, by resolution, to annually levy the special tax for purposes of land acquisition, fire station construction, purchase of equipment and operations, and maintenance costs (which includes personnel) to provide fire protection services within CFD 88-1. Fiscal Year 2021/22 is the thirty-third (33) consecutive year the District has levied a special tax to provide required revenues for capital improvements (land, fire station facility, equipment) and fire protection services (personnel, operations, and maintenance) within this CFD. Because CFD 88- 1 does not currently generate sufficient funds to support the total annual staffing costs, supplemental funding is necessary through the Fire District's General Fund budget. ANALYSIS: On June 18, 2021, the Fire Board held a workshop to review the appropriation requests for Fiscal Year 2021/22. The attached resolution adopts that one-year budget following the Board’s deliberations at the publicly held budget study session. Based on the factors of the Gann Limit (a C.P.I. change of 5.73% and a population change of 0.05%) per the State of California Department of Finance, the District’s CFD No. 88-1 Fiscal Year Page 85 Page 2 8 1 9 2021/22 appropriations limit is $4,456,979. The attached resolution adopts the annual appropriations limit as required by Article XIIIB of the State Constitution. FISCAL IMPACT: The proposed resolutions establish CFD 88-1’s spending plan for Fiscal 2021/22 and ensure the CFD’s compliance with Article XIIIB of the State Constitution. COUNCIL MISSION / VISION / GOAL(S) ADDRESSED: This item brings together portions of the Council's vision and core values. The delivery of vital fire and life safety services to residents, visitors, and businesses, through an innovative combination of risk reduction and emergency response programs, promotes and enhances a safe and healthy community for all. ATTACHMENTS: Attachment 1 – Resolution No. FD 2021-016 Attachment 2 – Resolution No. FD 2021-017 Page 86 Resolution No. FD 21-xxx – Page 1 of 1 ATTACHMENT - 1 RESOLUTION NO. FD 21-xxx A RESOLUTION OF THE BOARD OF DIRECTORS OF THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT, CITY OF RANCHO CUCAMONGA, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, APPROVING AND ADOPTING A BUDGET FOR COMMUNITY FACILITIES DISTRICT NO. 88-1 FOR FISCAL YEAR 2021/22 WHEREAS, the Board of Directors of the Rancho Cucamonga Fire Protection District (formerly Foothill Fire Protection District, hereinafter referred to as the "legislative body") has initiated proceedings, held a public hearing, conducted an election and received a favorable vote from the qualified electors relating to the levy of a special tax in a community facilities district, all as authorized pursuant to the terms and provisions of the "Mello-Roos Community Facilities Act of 1982", as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California. This Community Facilities is designated as COMMUNITY FACILITIES DISTRICT NO. 88-1 (hereinafter referred to as the "District"); and WHEREAS, this legislative body has received and reviewed a budget for Fiscal Year 2021/22 for the District. NOW, THEREFORE, the BOARD OF DIRECTORS OF THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT HEREBY RESOLVES, determines, and orders as follows: SECTION 1: Adoption of Budget. The Board of Directors hereby approves and adopts the budget designated: "Mello-Roos Community Facilities District No. 88-1 Annual Budget for Fiscal Year 2021/22" and is on file in the office of the District and available for public inspection. PASSED, APPROVED, and ADOPTED this 28th day of June 2021. Page 87 Resolution No. FD 21-xxx – Page 1 of 1 ATTACHMENT - 2 RESOLUTION NO. FD 21-XXX A RESOLUTION OF THE BOARD OF DIRECTORS OF THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT, SAN BERNARDINO COUNTY, CALIFORNIA, ADOPTING AN APPROPRIATIONS LIMIT FOR COMMUNITY FACILITIES DISTRICT NO. 88-1 FOR FISCAL YEAR 2021/22 PURSUANT TO ARTICLE XIIIB OF THE CALIFORNIA CONSTITUTION WHEREAS, the Board of Directors of the Rancho Cucamonga Fire Protection District (formerly Foothill Fire Protection District, hereinafter referred to as the "legislative body") has initiated proceedings, held a public hearing, conducted an election and received a favorable vote from the qualified electors relating to the levy of a special tax in a community facilities district, all as authorized pursuant to the terms and provisions of the "Mello-Roos Community Facilities Act of 1982", as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California. This Community Facilities District is designated as COMMUNITY FACILITIES DISTRICT NO. 88-1 (hereinafter referred to as the "District"); and WHEREAS, as a result of such election, the qualified electors of the District authorized the establishment of an Article XIII-B appropriations limit for the District equal to the maximum authorized special taxes which may be levied in any fiscal year; and WHEREAS, this legislative body desires to establish the appropriations limit for the District for Fiscal Year 2021/22. NOW, THEREFORE, the BOARD OF DIRECTORS OF THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT HEREBY RESOLVES, determines and orders as follows: SECTION 1. Appropriations Limit. This legislative body hereby establishes the appropriations limit for Community Facilities District No. 88-1 for Fiscal Year 2021/22 in an amount equal to $4,456,979. SECTION 2. Approval by Electorate. This legislative body hereby finds and determines that the foregoing appropriations limit has been authorized by the qualified electors of the District at a special election held on April 4, 1989, in the manner provided by law. PASSED, APPROVED, and ADOPTED this 28th day of June 2021. Page 88 DATE:June 28, 2021 TO:President and Members of the Board of Directors FROM:John R. Gillison, City Manager INITIATED BY:Ivan Rojer, Fire Chief Tamara L. Oatman, Finance Director Darci Vogel, Fire Business Manager Michelle Cowles, Management Analyst II SUBJECT:Consideration of a Resolution Adopting a Budget in the Amount of $7,000,470 and a Resolution Approving the Appropriations Limit in the Amount of $17,149,398 for Fiscal Year 2021/22 in Communities Facilities District (CFD) No. 85-1. (RESOLUTION NO. FD 2021-013) (RESOLUTION NO. FD 2021-014) (FIRE) RECOMMENDATION: Staff recommends the Fire Board adopt the proposed Resolutions approving the Mello-Roos CFD No. 85-1 annual budget for Fiscal Year 2021/22 for $7,000,470 and the Appropriations Limit for $17,149,398. BACKGROUND: Since Fiscal Year 1986/87, the Board has annually adopted a CFD budget to provide for operations and maintenance costs attributable to providing fire protection services within CFD No. 85-1. The proposed budget for Fiscal Year 2021/22 provides funding for a portion of the personnel and operational costs necessary to maintain existing fire and life safety services within CFD boundaries. The remaining operational and maintenance costs within the CFD are provided through the Fire District’s General Fund budget. When the Fire District’s CFD No. 85-1 was approved by the voters in 1985, an appropriations limit was established at $1,775,000 (1985 costs for operations and maintenance). To adjust the maximum spending authority (appropriations limit) to meet increased costs for operations and maintenance, the voters authorized the District to adjust the limit annually. This adjustment is based on the same methodology used in calculating public agency Prop. 4 spending limits under Article XIIIB of the State of California Constitution. The factors used to develop the appropriations limit are the C.P.I. change and the change in the City’s population. ANALYSIS: On June 18, 2021, the Fire Board held a workshop to review the appropriation requests for Fiscal Year 2020/21. The attached Resolution adopts that one-year budget following the Board’s deliberations at the publicly held budget study session. Based on the factors of the Gann Limit (a C.P.I. change of 5.73% and a population change of 0.05%) per the State of California Department of Finance, the District’s CFD No. 85-1 Fiscal Year Page 89 Page 2 8 1 8 2021/22 appropriations limit is $17,149,398. The District’s CFD No. 85-1 Fiscal Year 2021/22 appropriations subject to this limit total $6,340,660. It is anticipated that the District will be at 36.97% of its Gann Limit at June 30, 2022. The attached Resolution adopts the annual appropriations limit as required by Article XIIIB of the State Constitution. FISCAL IMPACT: The proposed Resolutions establish CFD 85-1’s spending plan for Fiscal Year 2021/22 and ensures the CFD’s compliance with Article XIIIB of the State Constitution. COUNCIL MISSION / VISION / GOAL(S) ADDRESSED: This item brings together portions of the Council's vision and core values. The delivery of vital fire and life safety services to residents, visitors, and businesses, through an innovative combination of risk reduction and emergency response programs, promotes and enhances a safe and healthy community for all. ATTACHMENTS: Attachment 1 - Resolution No. FD 2021-013 Attachment 2 - Resolution No. FD 2021-014 Page 90 Resolution No. FD 21-xxx – Page 1 of 1 ATTACHMENT - 1 RESOLUTION NO. FD 21-xxx A RESOLUTION OF THE BOARD OF DIRECTORS OF THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT, SAN BERNARDINO COUNTY, CALIFORNIA, APPROVING AND ADOPTING A BUDGET FOR MELLO-ROOS COMMUNITY FACILITIES DISTRICT NO. 85-1 FOR FISCAL YEAR 2021/22 WHEREAS, a special election was held in the Mello-Roos Community Facilities District No. 85-1 (the "Community Facilities District") of the Rancho Cucamonga Fire Protection District (formerly Foothill Fire Protection District, the "District"), on Tuesday, December 10, 1985; and WHEREAS, because of the election, more than two-thirds (2/3) of the qualified electors voted in favor of a proposition to authorize the levy of a special tax for fire suppression services and facilities, to establish an appropriations limit based upon changes in cost of living and changes in population; and WHEREAS, the Board of Directors has received and reviewed a budget for Fiscal Year 2021/22 for the Community Facilities District. NOW, THEREFORE, the BOARD OF DIRECTORS OF THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT HEREBY RESOLVES, determines and orders as follows: SECTION 1. Adoption of Budget. The Board of Directors hereby approves and adopts the budget designated: Mello-Roos Community Facilities District No. 85-1 Annual Budget for Fiscal Year 2021/22 A copy of said budget is on file in the office of the District and available for public inspection. SECTION 2. Filing of Budget. The Secretary is hereby authorized and directed to forward a certified copy of this resolution and a copy of the budget to the Office of the Auditor- Controller for the County of San Bernardino. PASSED, APPROVED, and ADOPTED this 28th day of June 2021. Page 91 Resolution No. FD 21-xxx – Page 1 of 1 ATTACHMENT - 2 RESOLUTION NO. FD 21-xxx A RESOLUTION OF THE BOARD OF DIRECTORS OF THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT, SAN BERNARDINO COUNTY, CALIFORNIA, ADOPTING AN APPROPRIATIONS LIMIT FOR MELLO-ROOS COMMUNITY FACILITIES DISTRICT NO. 85-1 FOR FISCAL YEAR 2021/22 PURSUANT TO ARTICLE XIIIB OF THE CALIFORNIA CONSTITUTION WHEREAS, a special election was held in the Mello-Roos Community Facilities District No. 85-1 (the "Community Facilities District") of the Rancho Cucamonga Fire Protection District (formerly Foothill Fire Protection District, the "District"), on Tuesday, December 10, 1985; and WHEREAS, as a result of the election, more than two-thirds (2/3) of the qualified electors voted in favor of a proposition to authorize the levy of a special tax for fire suppression services and facilities, to establish an appropriations limit and to annually adjust the special tax and appropriations limit based upon changes in cost of living and changes in population; and WHEREAS, the Board of Directors desires to establish the appropriations limit for the Community Facilities District 85-1 for Fiscal Year 2021/22; NOW, THEREFORE, the BOARD OF DIRECTORS OF THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT HEREBY RESOLVES, determines and orders as follows: SECTION 1. Appropriations Limit. This Board of Directors hereby establishes the Fiscal Year 2021/22 appropriations limit for the Community Facilities District No. 85-1 at $17,149,398 based on the factors of the Gann limit (a C.P.I. change of 5.73% and a population change of 0.05%) per the State of California Department of Finance. SECTION 2. Approval of Electorate. This Board of Directors hereby finds and determines that the foregoing appropriations limit has been established by the qualified electorate at a special election held on December 10, 1985, in the manner provided by law. SECTION 3. Filing. The Secretary is hereby authorized and directed to file a certified copy of this resolution with the Board of Supervisors for San Bernardino County and with the office of the Auditor-Controller for the State of California. PASSED, APPROVED and ADOPTED this 28th day of June 2021. Page 92