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Home My WebLink AboutAgenda - Agenda Packets - Regular Meeting 2/4/2014 AGENDA JOINT REGULAR MEETING OF THE SAN JACINTO CITY COUNCIL AND THE SUCCESSOR AGENCY TO THE CITY OF SAN JACINTO REDEVELOPMENT AGENCY February 4, 2014, 6:30 p.m. 625 South Pico Avenue San Jacinto Community Center, San Jacinto, CA 92583 1. ORGANIZATION 1.1 Call to Order 1.2 Roll Call 1.3 Invocation 1.4 Pledge of Allegiance 1.5 Special Presentations 1.5.1 Climate Action Plan Update presentation from WRCOG 1.6 Mayor / Councilmember Reports / Discussions 2. PUBLIC COMMENTS Now is the time for the public to address the Council on any subject within the jurisdiction of the City Council not listed on the agenda. A limitation of three (3) minutes shall be set for each person desiring to address the City Council. 2.1 City Manager’s Report on previous month’s public comments 3. JOINT CONSENT CALENDARS (SECTIONS 3A AND 3B) The matters listed under Consent Calendars are considered routine and will be enacted by one motion by City Council Members in the form listed. There will be no separate discussion on these items prior to the motion unless members of the City Council, staff or the public requests a specified item be removed and/or discussed. If an item is pulled, it will be heard after the balance of the Consent Calendar has been voted on. 3A CONSENT CALENDAR - CITY COUNCIL 3A.1 Continuance of the Proclamation of the Local State of Emergency due to the Severe Winter Storms that began on December 17, 2010 / Approve / City Clerk, City Attorney City Council Agenda February 4, 2014 Page 2 of 3 3A.2 Waiver of Full Reading of Ordinance(s), and Reading by Title Only / Approve / City Clerk, City Attorney 3A.3 Final Parcel Map 36466 / Approve / City Engineer 3A.4 Minutes of January 21, 2014 / Approve / City Clerk 3A.5 Repeal Declaration of Local Emergency - Resolution 3352 / Approve / Public Works Director, Streets Supervisor 3A.6 Resolution No. 3495 / Consideration and Action on City Manager's Bond / Approve / City Clerk 3A.7 Treasurer's Report at December 31, 2013 / Approve / City Treasurer 3B CONSENT CALENDAR - SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN JACINTO 4. PUBLIC HEARING 5. STAFF REPORTS At the end of the scheduled City Department items, anyone wishing to discuss a consent calendar item should come forward upon invitation of the Mayor; state their name, address, and the consent calendar item number pulled. Speakers should limit comments to three (3) minutes. 5.1 Award of Contract / Community Development Block Grant Downtown Road Improvements (CIP 13-002) / Approve / City Engineer, Economic Development Manager 5.2 Request for Additional Appropriations / Capital Improvement Project 11-013 (Kuhns Property) / Approve / Development Director 6. CLOSED SESSION 6.1 CLOSED SESSION - CITY COUNCIL 6.1.1 CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION (Paragraph (1) of subdivision (d) of Section 54956.9) Case: United States of America v. City of San Jacinto; Case No. EDCV12-1966 6.1.2 CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION (Paragraph (1) of subdivision (d) of Section 54956.9) Case: Bilal-Varney, et al. v. City of San Jacinto; Case No. EDCV12- City Council Agenda February 4, 2014 Page 3 of 3 02191 6.2 CLOSED SESSION - SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN JACINTO 7. ADJOURNMENT If you challenge any action of the City Council in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the City Council (c/o the City Clerk) at, or prior to, the public hearing. CHALLENGE TO LAND USE DECISIONS: Any person seeking to challenge a decision regarding land use made by the City Council as a result of a proceeding in which by law a hearing is required to be given, shall be required to commence that action 90 days following the date on which the decision of the City Council becomes final as provided in Code of Civil Procedure Section 1094.6. Please refer to Code of Civil Procedure Section 1094.6 to determine how to calculate when a decision becomes final. It is the intention of the City of San Jacinto to comply with the Americans with Disabilities Act (ADA) in all respects. If, as an attendee or a participant at this meeting, or in meetings on a regular basis, you will need special assistance beyond what is normally provided, the City will attempt to accommodate you in every reasonable manner. Please contact City Hall at (951) 537-6358, at least 48 hours prior to the meeting to inform us of your particular needs and to determine if accommodation is feasible. Any writing related to an agenda item for an open session of a regular meeting of the City Council that is distributed less than 72 hours prior to the meeting will be made available for public inspection at the City Clerk's office, located at 595 South San Jacinto Avenue, San Jacinto, California, and at the regular meeting location - City of San Jacinto Community Center, 625 South Pico Avenue, San Jacinto, California - at the time the writing is distributed to a majority of the City Council DOCUMENTS RELATED TO OPEN SESSION AGENDAS (SB 343) -- Any public record, relating to an open session agenda item, that is distributed within 72 hours prior to the meeting is available for public inspection at the public counter located in the Administration Building of City Hall, 595 S San Jacinto Avenue, San Jacinto, CA 92583 I, Richard Miller, City Clerk of the City of San Jacinto, do hereby certify that I caused to be posted the foregoing agenda this 30th Day of January, 2014, as required by law. Richard Miller, City Clerk Ferbuary 4, 2014 TO: The Honorable Mayor and Members of the City Council FROM: Tim Hults, City Manager SUBJECT: Continuance of the Proclamation of the Local State of Emergency due to the Severe Winter Storms that began on December 17, 2010 RECOMMENDATION: Staff recommends that the City Council, by motion, approve to the continuance of the Proclamation of the Local State of Emergency due to the Severe Winter Storms that began on December 17, 2010. DISCUSSION: On December 22, 2010, the Director of Emergency Services/City Manager proclaimed the existence of a local emergency resulting from the severe and damaging winter storms that began on or about 12:00 a.m. (midnight) on December 17, 2010. Government Code section 8630 requires the City Council to ratify any local emergency proclaimed by a local official such as the Director of Emergency Services/City Manager within seven days. Thereafter, the City Council shall at least once every 30 review the need for continuing the local emergency. ALTERNATIVES: 1) Consent to the continuance of the Proclamation of the Local State of Emergency (Staff Recommendation). 2) Do Not Consent to the continuance. FISCAL IMPACT: The City’s ability to obtain or continue to receive federal, state or regional disaster/emergency relief funding may be impacted if the City Council does not Consent to continue the proclamation of the local state of emergency. Substantial budgetary impacts are apparent for recovery efforts to include substantial employee overtime salaries; purchases of materials, supplies and equipment; use of private contractors/force labor; and other repairs to city right-of-way facilities (Preliminary estimates range from thirty five to fifty thousand dollars). Budgetary assistance and PACKET PAGE: 1 AGENDA ITEM 3A.1 reimbursement is available from Federal Emergency Management Agency (F.E.M.A.) for related costs for limited recovery efforts to critical infrastructure including: electrical, power, telecommunications, water supply, public safety, and transportation. ATTACHMENTS: · Copy of Resolution Number 3352 PACKET PAGE: 2 AGENDA ITEM 3A.1 STATE OF CALIFORNIA) RESOLUTION NO. 3352 COUNTY OF RIVERSIDE )ss CITY OF SAN JACINTO A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JACINTO CONFIRMING THE CITY MANAGER/DIRECTOR OF EMERGENCY SERVICES, PROCLAMATION OF THE EXISTENCE OF A LOCAL EMERGENCY WHEREAS, section 2,36.060(A)(1) of the San Jacinto Municipal Code empowers the Director of Emergency Services/City Manager to proclaim a local emergency if the City Council is not in session and requires that the City Council shall take action to ratify the proclamation within seven days thereafter; and WHEREAS, on December 17, 2010, a series of winter storms began in Southern California, bringing high winds and significant amounts of precipitation statewide, and continued for several days; and WHEREAS, these storms have caused injuries, flooding, and heavy rain throughout Southern California; and WHEREAS, these storms have caused power outages for several thousand customers throughout Southern California; and WHEREAS, homes and other property have been damaged by the severe weather; and WHEREAS, flooding has interfered with transportation throughout Southern California; and WHEREAS, conditions of extreme peril to the safety of persons and property have arisen within the City of San Jacinto, as a result of severe and long lasting rains, which began on or about 12:00 am. (midnight) on the 17th day of December, 2010, at which time the City Council of the City of San Jacinto was not in session; and WHEREAS, these conditions are or are likely to be beyond the control of the services, personnel, equipment, and facilities of the City of San Jacinto; and WHEREAS, on December 21, 2010, the County of Riverside declared a local emergency: and WHEREAS, the City does hereby find that the above described conditions of extreme peril did warrant and necessitate the proclamation of the existing of a local emergency within the City of San Jacinto; and PACKET PAGE: 3 AGENDA ITEM 3A.1 WHEREAS, the City Council of the City of San Jacinto was not in session on December 22, 2010, and could not immediately be called into session; and WHEREAS, the City Manager acting as the Director of Emergency Services did proclaim the existence of a local emergency within the City of San Jacinto on the 22nd of December 2010. NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of San Jacinto that the Proclamation of Existence of a Local Emergency, as issued by the Director of Emergency Services/City Manager on December 22, 2010, is hereby ratified and confirmed. BE IT FURTHER RESOLVED that the local emergency shall be deemed to continue to exist until its termination is proclaimed by the City Council of the City of San Jacinto, and that until such time, the City Council shall review, at each of its regularly scheduled meetings until the local emergency is terminated, the need for continuing the local emergency. BE IT FURTHER RESOLVED that City staff is hereby authorized and directed to take any action that may be necessary or convenient to assist in obtaining federal, state or regional disaster/ emergency relief funding. BE IT FURTHER RESOLVED that the City Manager or his designee is hereby designated as the authorized representative of the City of San Jacinto for the purpose of receipt, processing and coordination of all inquiries and requirements necessary to obtain county, state and federal relief assistance, and; BE IT FURTHER RESOLVED that the City Clerk shall forward a copy of this resolution to the Governor, to the State Office of Emergency Services, to the Riverside County Emergency Services Division, and to all other appropriate county, state and federal agencies with an interest therein; and ADOPTED by the City Council of the City of San Jacinto at a special / emergency meeting of said Council held on the 28th day of December 2010, by the following vote: Ayes: Bartel, Di Memmo, Ledezma, Miller Nays: None Absent: Kotyuk Abstain: None City of San Jacinto \4'n6,)V7 Scott Miller, Mayor 2 PACKET PAGE: 4 AGENDA ITEM 3A.1 ATTEST: Rick Miller, City Clerk APPROVED AS TO FORM: BEST, BEST & KRIEGER LLP 3 PACKET PAGE: 5 AGENDA ITEM 3A.1 February 4, 2014 TO: The Honorable Mayor and Members of the City Council FROM: Rick Miller, City Clerk Jeff Ballinger, City Attorney SUBJECT: Waiver of Full Reading of Ordinance(s), and Reading by Title Only RECOMMENDATION: Staff recommends that the City Council, by motion, waive the full reading of any and all ordinances on this meeting’s agenda, and authorize their reading by title only. BACKGROUND: Government Code Section 36934 requires that all ordinances shall be read in full either at the time of their introduction or their passage. However, Government Code Section 36934 allows the waiver of this requirement by regular motion adopted by majority vote if the title of the ordinance is read. This waiver can be accomplished at the time of each ordinance action, or as a standing waiver, accomplished as a consent calendar motion. In order to stream-line the process for the passage of ordinances, the City Attorney and staff propose the second option, which is the waiver of any and all ordinances on this agenda. ALTERNATIVES: Approval: Approve the addition of the attached language to all future agendas of the City Council, thus waiving the full reading of all future ordinances. Denial: Do not approve the agenda language and, instead, before the passage of any ordinance and after the reading of its title, make a motion that must be adopted by majority vote that allows a waiver of the full reading. FISCAL IMPACT: None PACKET PAGE: 7 AGENDA ITEM 3A.2 February 4, 2014 TO: The Honorable Mayor and Members of the City Council FROM: Habib Motlagh, City Engineer SUBJECT: Final Parcel Map 36466 RECOMMENDATION: By motion, 1) Approve Final Parcel Map 36466 and 2) authorize the City Clerk to release the final parcel map for recordation to the Title Company. DISCUSSION: Final Parcel Map 36466 is division of 3.42 acres into 2 commercial units. The project is located along State Street and Ramona Blvd. On September 6, 2012 the Planning Commission approved the tentative tract map. Since this is a financing map, no Subdivision Improvement Agreement is required and the required monumentation is set. Final Parcel Map 36466 substantially complies with the requirements of the Subdivision Map Act, the City of San Jacinto Subdivision Ordinance, and General Plan. FISCAL IMPACT: All cost has been covered by the applicant. ATTACHMENTS: · Reduced Copy of Tr. 36466 (3 Sheets) PACKET PAGE: 9 AGENDA ITEM 3A.3 PACKET PAGE: 11 AGENDA ITEM 3A.3 PACKET PAGE: 12 AGENDA ITEM 3A.3 PACKET PAGE: 13 AGENDA ITEM 3A.3 February 4, 2014 TO: The Honorable Mayor and Members of the City Council FROM: Rick Miller, City Clerk SUBJECT: Minutes of January 21, 2014 RECOMMENDATION: Staff recommends that the City Council, by motion, approve the draft minutes of the Regular Meeting held January 21, 2014. ATTACHMENTS · Draft Minutes of January 21, 2014, Regular Meeting PACKET PAGE: 15 AGENDA ITEM 3A.4 ACTION MINUTES JOINT REGULAR MEETING OF THE SAN JACINTO CITY COUNCIL AND THE SUCCESSOR AGENCY TO THE CITY OF SAN JACINTO REDEVELOPMENT AGENCY January 21, 2014 6:30 p.m. 625 S. Pico Ave San Jacinto Community Center, San Jacinto, CA 92583 1. ORGANIZATION 1.1 Call to Order Mayor Pro Tem Crystal Ruiz called the Regular Meeting of the San Jacinto City Council and the successor agency to the City of San Jacinto Redevelopment Agency to order at 6:31 p.m. 1.2 Roll Call Present: Bartel, Kotyuk, Miller, Ruiz Absent: Ledezma M/S/C (Kotyuk/Miller) moved to excuse Mayor Ledezma. Motion carried 4/0. Ayes: Bartel, Kotyuk, Miller, Ruiz Nays: None Absent: Ledezma Abstain: None 1.3 Invocation Pastor Dennis Cromey gave the invocation. 1.4 Pledge of Allegiance Council Member Scott Miller led the Pledge of Allegiance 1.5 Special Presentations There were no special reports 1.6 MAYOR / COUNCIL MEMBER REPORTS / DISCUSSIONS Council Members gave their reports. 2. PUBLIC COMMENTS: No public comments . PACKET PAGE: 17 AGENDA ITEM 3A.4 Action Minutes January 21, 2014 ____________________________________________________________________________________Page 2 of 4 3. CONSENT CALENDAR 3A CONSENT CALENDAR - CITY COUNCIL 3A.1 Continuance of the Proclamation of the Local State of Emergency due to the Severe Winter Storms that began on December 17, 2010 / Approve / City Clerk, City Attorney 3A.2 Waiver of Full Reading of Ordinance(s), and Reading by Title Only / Approve / City Clerk, City Attorney 3A.3 Participation in the Riverside County Mortgage Credit Certificate Program / Approve / Management Analyst 3A.4 Warrants and Disbursements - December 2013 / Approve / Finance Director 3A.5 Minutes of January 7, 2014 - Regular Meeting / Approve / City Clerk 3A.6 Independent Accountants' Report on Agreed-Upon Procedures Applied to Appropriations Limit Worksheets for the Year Ended June 30, 2013 / Approve / Finance Director 3A.7 Approval of Supplemental Law Enforcement Service Account (SLESA) Grant Spending Plan (FY 2013-2014) / Approve / Police Chief 3B CONSENT CALENDAR - SUCCESSOR AGENCY TO REDEVELOPMENT AGENCY OF CITY OF SAN JACINTO M/S/C (Miller/Bartel) moved to approve the Consent Calendar. Motion carried 4/0. Ayes: Bartel, Kotyuk, Miller, Ruiz Nays: None Absent: Ledezma Abstain: Kotyuk abstained from warrant #107404, 107511 on Item 3A.4 4. PUBLIC HEARING 4.1 Resolution Authorizing the Annex of Territory into Community Facilities District No. 2003-1 and Declaring the Results of a Special Annexation Landowner Election and Directing the Recording of an Amended Notice of Special Tax Lien City Attorney Jeff Ballinger presented the staff report and recommended that this item be tabled until further notice for review by the City Attorney’s office, the Special District Consultant and City Staff. PACKET PAGE: 18 AGENDA ITEM 3A.4 Action Minutes January 21, 2014 ____________________________________________________________________________________Page 3 of 4 M/S/C (Kotyuk/Miller) to remove Item 4.1 until further notice. Motion carried 4/0 Ayes: Bartel, Kotyuk, Miller, Ruiz Nays: None Abstain: Ledezma Absent: None 5. STAFF REPORTS 5.1 Annual Financial Report, SAS 114 Report and GAS Report for the Fiscal Year Ended June 30, 2013 Finance Director Tom Prill presented a brief staff report and introduced Gardenya Duran and Scott Manno of Rogers, Anderson, Malody & Scott (RAMS). Ms Duran gave a brief overview of the audit process for the City Council. M/S/C (Kotyuk/Miller) moved to approve the Item 5.1 as presented. Motion carried 4/0. Ayes: Bartel, Kotyuk, Miller, Ruiz Nays: None Absent: Ledezma Abstain: None 5.2 Approval of Supplemental Law Enforcement Service Fund (SLESF) Grant Spending Plan (FY 2012-2013) Police Chief Steve Mike presented the staff report. M/S/C (Miller/Kotyuk) moved to approve Item 5.2 with a revised plan and budget amendment increasing expenditures an additional $100,000. Motion carried 4/0. Ayes: Bartel, Kotyuk, Miller, Ruiz Nays: None Absent: Ledezma Abstain: None Mayor Pro Tem Ruiz recessed the Regular Meeting of the City Council and adjourned the meeting at 7:15 p.m. and reconvened in Closed Session for the City Council at 7:20 p.m. 6. CLOSED SESSION 6.1.1 CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION (Paragraph (1) of subdivision (d) of Section 54956.9) Case: United States of America v. City of San Jacinto; Case No. EDCV12- 1966 There was no reportable action. PACKET PAGE: 19 AGENDA ITEM 3A.4 Action Minutes January 21, 2014 ____________________________________________________________________________________Page 4 of 4 6.1.2 CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION (Paragraph (1) of subdivision (d) of Section 54956.9) Case: Bilal-Varney, et al. v. City of San Jacinto; Case No. EDCV12-02191 There was no reportable action. 6.2 CLOSED SESSION - SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN JACINTO 7. ADJOURNMENT With no further business before the City Council, Mayor Pro Tem Ruiz adjourned the Regular Meeting of the City Council at 8:15 p.m. ______________________ Alonso Ledezma, Mayor ATTEST: ___________________ Richard Miller, City Clerk Approved as read: ________ Approved as amended: ____ PACKET PAGE: 20 AGENDA ITEM 3A.4 February 4, 2014 TO: The Honorable Mayor and Members of the City Council FROM: Lynn Merrill, Interim Public Works Director Barry Mulcock, Streets Supervisor SUBJECT: Repeal Declaration of Local Emergency – Resolution 3352 RECOMMENDATION: Staff recommends that the City Council, by motion, rescind both Proclamation of Local Emergency dated December 22, 2010, and Resolution 3352 adopted by City Council dated December 28, 2010. DISCUSSION The City of San Jacinto experienced extreme rain events beginning December 17, 2010 through January 11, 2011, causing dangerous conditions to the public, and substantial flooding and damage to City infrastructure. As such, a Proclamation of Local Emergency was declared and signed by City Manager and Director of Emergency Services Tim Hults on December 22, 2010. At a special City Council meeting held December 28, 2010, Council, by motion, adopted Resolution 3352 declaring a Local Emergency. As of April 2011, all rain event related damages, hazardous conditions, and employee overtime costs were rectified and completed by meeting the conditions stipulated in the application for financial assistance. The final disaster assistance reimbursement was received from the State of California Department of Transportation on January 28, 2014, to close-out all claims, invoices, and disaster assistance applications related to the December 2010 rain events. FISCAL IMPACT Funds in the amount of $184,788.00 were received on January 28, 2014. ATTACHMENTS · Copy of Resolution No. 3352 dated December 28, 2010 · Copy of Proclamation dated December 22, 2010 PACKET PAGE: 21 AGENDA ITEM 3A.5 PACKET PAGE: 23AGENDA ITEM 3A.5 PACKET PAGE: 24AGENDA ITEM 3A.5 PACKET PAGE: 25AGENDA ITEM 3A.5 PACKET PAGE: 27AGENDA ITEM 3A.5 PACKET PAGE: 28AGENDA ITEM 3A.5 February 4, 2014 TO: The Honorable Mayor and Members of the City Council FROM: Rick Miller, City Clerk SUBJECT: Resolution No. 3495 / Consideration and Action on City Manager's Bond RECOMMENDATION: Staff recommends that the city council, by motion, Approve and Adopt Resolution No. 3495 approving the City Manager’s Bond BACKGROUND: San Jacinto Municipal Code, section 2.12.030 requires the City Manager to furnish a corporate surety bond. On January 7, 2010, the city council determined the bond amount for the City Manager to be five thousand dollars ($5,000). Government Code section 36520 goes on to say, “The city council shall approve all bonds.” When approved, the City Manager’s bond shall be filed with the mayor. ALTERNATIVES: 1) Review and approve Resolution approving Bond (City Attorney Recommendation). 2) Disapprove Bond and Direct Staff to Draft Resolution to that effect. BUDGETARY IMPACT: The approval of this Resolution is not likely to have any significant budgetary impact ATTACHMENTS: · Resolution 3495 · Copy of City Manager’s Bond PACKET PAGE: 29 AGENDA ITEM 3A.6 -1- STATE OF CALIFORNIA ) RESOLUTION NO. 3495 COUNTY OF RIVERSIDE)ss CITY OF SAN JACINTO ) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JACINTO, CALIFORNIA, APPROVING BOND FOR CITY MANAGER WHEREAS, San Jacinto Municipal Code, section 2.12.030 provides, “The city manager shall furnish a corporate surety bond to be approved by the city council in such sum as may be determined by the city council, for the performance of his or her official duties as required by law”; and WHEREAS, Government Code section 36520 further provides that “The city council shall approve all bonds. When approved, the city manager’s bond shall be filed with the mayor”; and NOW, THEREFORE, BE IT RESOLVED determined and ordered by the City Council of the City of San Jacinto: SECTION 1. The City Council of the City of San Jacinto hereby approves the bond dated as of January 14th, 2014, presented on February 4, 2014 on behalf of Mr. Timothy Hults. SECTION 2. The City Clerk shall certify as to the adoption of this resolution. This resolution shall be effective immediately upon adoption. PASSED, APPROVED and ADOPTED, this 4th day of February, 2014 by the following vote: Ayes: Nays: Absent: Abstain: City of San Jacinto __________________________ by Alonso Ledezma, Mayor PACKET PAGE: 31 AGENDA ITEM 3A.6 -2- ATTEST: ________________________ Richard Miller, City Clerk APPROVED AS TO FORM: BEST, BEST & KRIEGER, LLP ___________________________ Jeffrey S. Ballinger, City Attorney PACKET PAGE: 32 AGENDA ITEM 3A.6 PACKET PAGE: 33AGENDA ITEM 3A.6 PACKET PAGE: 34AGENDA ITEM 3A.6 February 4, 2014 TO: The Honorable Mayor and Members of the City Council FROM: Kaleena Richards, City Treasurer SUBJECT: Treasurer’s Report at December 31, 2013 RECOMMENDATION: Receive and File Treasurer’s Report for December 31, 2013. BACKGROUND: The Treasurer’s Report is required to be presented to the governing body at least quarterly in accordance with California Government Code Section 53600 et. seq. DISCUSSION: Total Cash and City Investments increased 5.23% during the month. This includes cash, cash in bank and cash with trustee. The attached Treasurer’s report is a “snapshot” report of our cash position on the last day of the month in all of our accounts. A section demonstrating compliance with the adopted Investment Policy, a schedule of CDs, and a chart depicting historical interest rates for certain positions is also included. Detailed statements of investments from Chandler Asset Management and BLX Group have also been included. Also attached is a “Memorandum” from BLX Group regarding the downgrade of Dell bonds held as investments. Please read this document, as it explains an exception to the adopted Investment Policy. Although this is an exception currently, it was in compliance with our Policy when purchased. The downgrade does affect the investment’s market value, so if the investment were to be sold today, it would be sold at a significant loss. Also attached are statements from both Chandler Asset Management and BLX Group in regards to the question recently posed by Councilmember Kotyuk. FISCAL IMPACT: None. PACKET PAGE: 35 AGENDA ITEM 3A.7 ATTACHMENTS: Treasurer’s Report for the month ending December 31, 2013. E-mailed statements from Chandler Asset Management and BLX Group PACKET PAGE: 36 AGENDA ITEM 3A.7 PACKET PAGE: 37AGENDA ITEM 3A.7 PACKET PAGE: 38AGENDA ITEM 3A.7 City of San JacintoSchedule of Certificates of Deposits12/31/2013ComputedInterestLast Interest Principal Withdrawal AccruedTerm Rate Yield Open Date Maturity Paid Date Amount Interest at Maturity Balance InterestBank of Hemet161726525 36 Months 1.45% 1.460% 12/20/2010 12/20/2013 12/19/2013 500,000.00 22,237.00 (522,237.00) - - 4921048525 36 Months 1.35% 1.358% 1/20/2011 1/20/2014 12/19/2013 500,000.00 20,076.74 520,076.74 234.03 1.40% 1.41%1,000,000.00 42,313.74 (522,237.00) 520,076.74 234.03 Rabobank5368512979 No 10 36 Months 1.65% 1.663% 2/17/2011 2/17/2014 12/16/2013 500,000.00 24,248.97 524,248.97 360.42 5368512979 No 11 36 Months 1.40% 1.409% 3/17/2011 3/17/2014 12/16/2013 500,000.00 19,936.74 519,936.74 303.30 5368512979 No 12 36 Months 1.40% 1.409% 4/21/2011 4/21/2014 12/20/2013 500,000.00 19,041.34 519,041.34 222.03 1.48% 1.49%1,500,000.00 63,227.05 - 1,563,227.05 885.75 TOTAL2,500,000.00 105,540.79 (522,237.00) 2,083,303.79 1,119.79 PACKET PAGE: 39 AGENDA ITEM 3A.7 11.52Interest Rates - 1/11 to 12/13LAIFCAMP00.51/112/113/114/115/116/117/118/119/1110/1111/1112/111/122/123/124/125/126/127/128/129/1210/1211/1212/121/132/133/134/135/136/137/138/139/1310/1311/1312/13LAMMA-BoHPIMMA-RaboCDsPACKET PAGE: 40 AGENDA ITEM 3A.7 Monthly Account Statement +(314)-418-3441 Linda Brimm US Bank CustodianChandler Team For questions about your account, please call (800) 317-4747 or Email operations@chandlerasset.com City of San Jacinto December 1, 2013 through December 31, 2013 Information contained herein is confidential. We urge you to compare this statement to the one you receive from your qualified custodian. Prices are provided by IDC, an independent pricing source. 6225 Lusk Boulevard | San Diego, CA 92121 | Phone 800.317.4747 | Fax 858.546.3741 | www.chandlerasset.comPACKET PAGE: 41AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 1 Cont/WD -944 Income Earned 5,460 5,763 Cost Value 10,162,137 10,156,586 Book Value 10,018,121 10,021,991 Par 9,900,184 9,917,727 Market Value 10,043,685 10,023,015 Total Market Value 10,083,780 10,064,059 Accrued Interest 40,096 41,044 ACCOUNT SUMMARY Beg. Values as of 11/30/13 End Values as of 12/31/13 80.5 % Bank of Tokyo-Mit UFJ 2.0 % Berkshire Hathaway 2.0 % First American Govt Oblig Fund 3.5 % Federal Farm Credit Bank 11.9 % Federal Home Loan Bank 13.2 % Federal National Mortgage Assoc 15.8 % Federal Home Loan Mortgage Corp 16.0 % Government of United States 16.1 % TOP ISSUERS Issuer % Portfolio Average S&P/Moody Rating AA+/Aa1 Average Market YTM 0.55 % Average Life 1.70 yrs Average Final Maturity 1.72 yrs Average Purchase YTM 0.63 % Average Duration 1.67 Average Coupon 1.55 % PORTFOLIO CHARACTERISTICS CREDIT QUALITY (S&P)MATURITY DISTRIBUTIONSECTOR ALLOCATION 1-3 Year Govt/A Rated or better Corporate -0.13 %0.14 %0.55 %0.55 %N/A N/A N/A 0.78 %1.18 % 1-3 yr Treasury -0.14 %0.06 %0.36 %0.36 %N/A N/A N/A 0.45 %0.68 % City of San Jacinto -0.19 %0.13 %0.33 %0.33 %N/A N/A N/A 0.54 %0.81 % PERFORMANCE REVIEW Total Rate of Return Current Latest Year Annualized Since As of 12/31/2013 Month 3 Months To Date 1 Yr 3 Yrs 5 Yrs 10 Yrs 6/30/2012 6/30/2012 Portfolio Summary As of 12/31/2013 City of San Jacinto Account #10167 PACKET PAGE: 42AGENDA ITEM 3A.7 Category Standard CommentLocal Agency Bonds No Limitation; BBB rated equivalent by a NRSROCompliesTreasury Issues No Limitation CompliesAgency Issues No Limitation CompliesBanker’s Acceptances 40% maximum; <180 days maturity; A-1 rated equivalent by at least two NRSROsComplies Commercial Paper 25% maximum; <270 days maturity; A-1 rated equivalent by at least two NRSROsCompliesNegotiable Certificates of Deposit 30% maximum; A rated equivalent by at least two NRSROsComplies Medium Term Notes 30% maximum; A rated equivalent by at least two NRSROsCompliesMoney Market Mutual Funds 20% maximum; rated equivalent by at least two NRSROsCompliesMortgage Pass-throughs, CMOs and Asset Backed Securities20% maximum; AA-rated issue; A-rated issuerComplies Local Agency Investment Fund - L.A.I.F. Currently not used by investment adviser CompliesProhibited Securities Inverse floaters; Ranges notes, Interest-only strips from mortgaged backed securities; Zero interest accrual securitiesCompliesIssuer Maximum 5% per issuer for all non-government issuersCompliesMaximum maturity 5 years Complies City of San JacintoDecember 31, 2013COMPLIANCE WITH INVESTMENT POLICY Assets managed by Chandler Asset Management are in full compliance with State law and with the City's investment policy.PACKET PAGE: 43 AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 3 - Other Dispositions $0.00 - Maturites $200,000.00 - Calls $235,902.94 - MMF Withdrawals $944.17 +/- Realized Gain/Loss $0.00 - Security Transfers $0.00 +/- Net Accretion ($7,741.59) ($7,741.59) Gain/Loss on Dispositions - Principal Paydowns $0.00 Total Dispositions $557,865.54 Amortization/Accretion + Security Purchases $120,971.64 + Money Market Fund Purchases $448,506.03 + Money Market Contributions $0.00 - Security Withdrawals $0.00 $0.00 Acquisition Dispositions - Security Sales $0.00 - Money Market Fund Sales $121,018.43 + Security Contributions $0.00 + Security Transfers $0.00 Total Acquisitions $569,477.67 Ending Book Value $10,021,991.30 BOOK VALUE RECONCILIATION Beginning Book Value $10,018,120.76 Interest from Calls/Redemption $2,942.09 Principal Paydown $0.00 Accrued Interest Paid $46.79 Calls/Redemption (Principal)$235,902.94 Withdrawals $944.17 Security Purchase $120,971.64 Total Acquisitions $448,506.03 Disposition Principal on Maturities $200,000.00 Acquisition Contributions $0.00 Interest on Maturities $0.00 Total Dispositions $121,962.60 Interest Received $9,660.91 Dividend Received $0.09 Security Sale Proceeds $0.00 Accrued Interest Received $0.00 Ending Book Value $351,727.39 CASH TRANSACTION SUMMARY BEGINNING BALANCE $25,183.96 Reconciliation Summary As of 12/31/2013 City of San Jacinto California Account #10167 PACKET PAGE: 44AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 4 3135G0KM4 FNMA Note 0.5% Due 5/27/2015 200,000.00 06/12/2012 0.53 % 199,828.00 199,918.47 100.27 0.31 % 200,530.00 94.44 1.99 % 611.53 Aaa AA+ 1.40 1.40 3133EADW5 FFCB Note 0.55% Due 8/17/2015 200,000.00 06/21/2013 0.48 % 200,310.00 200,234.78 100.12 0.48 % 200,242.00 409.44 1.99 % 7.22 Aaa AA+ 1.63 1.62 313370JB5 FHLB Note 1.75% Due 9/11/2015 275,000.00 01/11/2013 0.38 % 284,933.00 281,341.52 102.30 0.39 % 281,314.83 1,470.49 2.81 % (26.69) Aaa AA+ 1.70 1.67 3135G0BJ1 FNMA Note 1.125% Due 6/27/2014 195,000.00 06/06/2012 0.37 % 198,011.97 195,710.82 100.48 0.13 % 195,945.36 24.38 1.95 % 234.54 Aaa AA+ 0.49 0.49 3137EACD9 FHLMC Note 3% Due 7/28/2014 190,000.00 06/22/2012 0.40 % 200,286.03 192,804.06 101.60 0.21 % 193,040.76 2,422.50 1.94 % 236.70 Aaa AA+ 0.57 0.57 31331J2S1 FFCB Note 1.5% Due 11/16/2015 290,000.00 06/25/2012 0.57 % 299,065.40 295,008.67 102.13 0.36 % 296,190.05 543.75 2.95 % 1,181.38 Aaa AA+ 1.88 1.85 3133XXP43 FHLB Note 3.125% Due 3/11/2016 270,000.00 06/14/2012 0.79 % 293,180.04 283,585.37 105.65 0.53 % 285,248.79 2,578.13 2.86 % 1,663.42 Aaa AA+ 2.19 2.12 313371NW2 FHLB Note 1.375% Due 12/11/2015 225,000.00 11/16/2012 0.39 % 231,723.00 229,267.33 101.85 0.42 % 229,165.88 171.88 2.28 % (101.45) Aaa AA+ 1.95 1.92 31331VGU4 FFCB Note 4.875% Due 12/16/2015 250,000.00 06/12/2012 0.65 % 286,602.00 270,401.11 108.70 0.41 % 271,745.00 507.81 2.71 % 1,343.89 Aaa AA+ 1.96 1.89 3133ECFV1 FFCB Note 0.43% Due 1/29/2016 225,000.00 02/21/2013 0.45 % 224,896.50 224,926.75 99.98 0.44 % 224,955.22 408.50 2.24 % 28.47 Aaa AA+ 2.08 2.06 31398AVD1 FNMA Note 2.75% Due 2/5/2014 285,000.00 06/07/2012 0.30 % 296,521.98 285,664.36 100.24 0.21 % 285,684.00 3,178.54 2.87 % 19.64 Aaa AA+ 0.10 0.09 3137EABX6 FHLMC Note 2.5% Due 1/7/2014 190,000.00 06/22/2012 0.31 % 196,365.00 190,068.07 100.03 0.48 % 190,063.65 2,295.83 1.91 % (4.42) Aaa AA+ 0.02 0.02 313373JR4 FHLB Note 1.375% Due 5/28/2014 290,000.00 06/06/2012 0.35 % 295,834.80 291,191.27 100.50 0.14 % 291,463.34 365.52 2.90 % 272.07 Aaa AA+ 0.41 0.41 31331KAH3 FFCB Note 1.125% Due 2/27/2014 200,000.00 06/20/2012 0.33 % 202,658.00 200,245.95 100.15 0.15 % 200,303.80 775.00 2.00 % 57.85 Aaa AA+ 0.16 0.16 31398AXJ6 FNMA Note 2.5% Due 5/15/2014 290,000.00 06/14/2012 0.35 % 301,881.30 292,277.67 100.88 0.15 % 292,537.50 926.39 2.92 % 259.83 Aaa AA+ 0.37 0.37 3137EACB3 FHLMC Note 2.5% Due 4/23/2014 190,000.00 06/18/2012 0.32 % 197,628.50 191,269.53 100.74 0.12 % 191,405.24 897.22 1.91 % 135.71 Aaa AA+ 0.31 0.31 31398AVZ2 FNMA Note 2.75% Due 3/13/2014 285,000.00 06/22/2012 0.34 % 296,744.28 286,332.02 100.52 0.17 % 286,471.74 2,351.25 2.87 % 139.72 Aaa AA+ 0.20 0.20 AGENCY 43814CAC3 Honda Auto Receivables 2013-1 A3 0.48% Due 11/21/2016 121,000.00 12/17/2013 0.50 % 120,971.64 120,972.11 100.03 0.46 % 121,033.88 16.13 1.20 % 61.77 NR AAA 2.89 1.22 Total ABS 121,000.00 0.50 % 120,971.64 120,972.11 0.46 % 121,033.88 16.13 1.20 % 61.77 NR AAA 2.89 1.22 ABS Holdings Report As of 12/31/13 City of San Jacinto Account #10167 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody S&P Maturity Duration PACKET PAGE: 45AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 5 713448BX5 Pepsico Inc. Note 0.75% Due 3/5/2015 125,000.00 06/05/2012 0.83 % 124,732.50 124,885.51 100.25 0.53 % 125,315.25 302.08 1.25 % 429.74 A1 A- 1.18 1.17 191216AX8 Coca Cola Company Note 0.75% Due 3/13/2015 125,000.00 06/18/2012 0.63 % 125,421.25 125,184.59 100.32 0.49 % 125,395.63 281.25 1.25 % 211.04 Aa3 AA- 1.20 1.19 40428HPG1 HSBC USA Inc Note 2.375% Due 2/13/2015 125,000.00 06/26/2012 1.90 % 126,497.50 125,637.10 102.04 0.54 % 127,545.88 1,138.02 1.28 % 1,908.78 A2 A+ 1.12 1.10 24422ERA9 John Deere Capital Corp Note 1.6% Due 3/3/2014 120,000.00 06/06/2012 0.57 % 122,121.60 120,205.42 100.22 0.35 % 120,258.24 629.33 1.20 % 52.82 A2 A 0.17 0.17 94974BET3 Wells Fargo Corp Note 3.75% Due 10/1/2014 120,000.00 06/26/2012 1.27 % 126,600.00 122,186.65 102.55 0.35 % 123,057.12 1,125.00 1.23 % 870.47 A2 A+ 0.75 0.74 US CORPORATE 31846V203 First American Govt Obligation Fund 351,727.39 Various 0.00 % 351,727.39 351,727.39 1.00 0.00 % 351,727.39 0.00 3.49 % 0.00 Aaa AAA 0.00 0.00 Total Money Market Fund FI 351,727.39 N/A 351,727.39 351,727.39 0.00 % 351,727.39 0.00 3.49 % 0.00 Aaa AAA 0.00 0.00 MONEY MARKET FUND FI 06538CBD2 Bank of Tokyo Mitsubishi NY Discount CP 0.21% Due 2/13/2014 200,000.00 10/15/2013 0.21 % 199,860.00 199,949.83 99.97 0.21 % 199,949.83 0.00 1.99 % 0.00 P-1 A-1 0.12 0.12 Total Commercial Paper 200,000.00 0.21 % 199,860.00 199,949.83 0.21 % 199,949.83 0.00 1.99 % 0.00 P-1 A-1 0.12 0.12 COMMERCIAL PAPER 3137EADC0 FHLMC Note 1% Due 3/8/2017 220,000.00 08/20/2012 0.86 % 221,392.60 220,974.82 100.16 0.95 % 220,358.38 690.56 2.20 % (616.44) Aaa AA+ 3.19 3.12 3137EADJ5 FHLMC Note 1% Due 7/28/2017 220,000.00 09/25/2013 1.17 % 218,563.40 218,661.91 99.37 1.18 % 218,610.48 935.00 2.18 % (51.43) Aaa AA+ 3.58 3.49 3137EACT4 FHLMC Note 2.5% Due 5/27/2016 180,000.00 07/12/2012 0.61 % 193,012.20 188,070.51 104.66 0.55 % 188,386.74 425.00 1.88 % 316.23 Aaa AA+ 2.41 2.34 3137EACW7 FHLMC Note 2% Due 8/25/2016 190,000.00 06/14/2012 0.82 % 199,262.31 195,846.38 103.41 0.70 % 196,481.28 1,330.00 1.97 % 634.90 Aaa AA+ 2.65 2.57 3135G0MZ3 FNMA Note 0.875% Due 8/28/2017 325,000.00 05/06/2013 0.73 % 326,956.50 326,659.42 98.73 1.23 % 320,880.30 971.61 3.20 % (5,779.12) Aaa AA+ 3.66 3.58 313378A43 FHLB Note 1.375% Due 3/9/2018 235,000.00 06/21/2013 1.54 % 233,211.65 233,409.43 99.14 1.59 % 232,983.70 1,005.28 2.32 % (425.73) Aaa AA+ 4.19 4.04 3137EADL0 FHLMC Note 1% Due 9/29/2017 200,000.00 11/14/2013 1.06 % 199,540.00 199,555.29 98.83 1.32 % 197,657.40 511.11 1.97 % (1,897.89) Aaa AA+ 3.75 3.65 Total Agency 5,620,000.00 0.58 % 5,798,408.46 5,693,425.51 0.52 % 5,691,665.44 25,289.63 56.81 % (1,760.07) Aaa AA+ 1.70 1.66 AGENCY Holdings Report As of 12/31/13 City of San Jacinto Account #10167 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody S&P Maturity Duration PACKET PAGE: 46AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 6 912828TD2 US Treasury Note 0.25% Due 7/15/2015 200,000.00 10/15/2013 0.31 % 199,781.92 199,807.68 100.00 0.25 % 200,007.80 230.98 1.99 % 200.12 Aaa AA+ 1.54 1.54 912828PE4 US Treasury Note 1.25% Due 10/31/2015 195,000.00 06/07/2012 0.46 % 200,203.19 197,803.01 101.66 0.34 % 198,229.59 417.47 1.97 % 426.58 Aaa AA+ 1.83 1.81 912828PQ7 US Treasury Note 1% Due 1/15/2014 200,000.00 06/25/2012 0.31 % 202,133.48 200,052.59 100.03 0.23 % 200,062.40 923.91 2.00 % 9.81 Aaa AA+ 0.04 0.04 912828PZ7 US Treasury Note 1.25% Due 3/15/2014 195,000.00 06/14/2012 0.30 % 198,222.72 195,368.74 100.23 0.10 % 195,457.08 727.21 1.95 % 88.34 Aaa AA+ 0.20 0.20 912828SY7 US Treasury Note 0.625% Due 5/31/2017 210,000.00 07/25/2013 0.96 % 207,318.28 207,621.76 98.70 1.01 % 207,260.13 115.38 2.06 % (361.63) Aaa AA+ 3.42 3.36 912828NV8 US Treasury Note 1.25% Due 8/31/2015 195,000.00 06/06/2012 0.38 % 200,454.56 197,805.86 101.59 0.29 % 198,100.11 828.21 1.98 % 294.25 Aaa AA+ 1.67 1.64 912828RF9 US Treasury Note 1% Due 8/31/2016 215,000.00 10/12/2012 0.48 % 219,283.92 217,943.68 100.94 0.64 % 217,015.63 730.52 2.16 % (928.05) Aaa AA+ 2.67 2.62 912828QA1 US Treasury Note 2.25% Due 3/31/2016 195,000.00 12/14/2012 0.38 % 206,868.23 203,109.96 103.99 0.46 % 202,784.79 1,120.98 2.03 % (325.17) Aaa AA+ 2.25 2.19 Total US Treasury 1,605,000.00 0.45 % 1,634,266.30 1,619,513.28 0.42 % 1,618,917.53 5,094.66 16.14 % (595.75) Aaa AA+ 1.72 1.70 US TREASURY 68389XAN5 Oracle Corp Note 1.2% Due 10/15/2017 200,000.00 08/13/2013 1.78 % 195,402.00 195,819.18 98.41 1.64 % 196,811.60 506.67 1.96 % 992.42 A1 A+ 3.79 3.68 459200GU9 IBM Corp Note 2% Due 1/5/2016 120,000.00 06/05/2012 0.98 % 124,288.80 122,410.40 102.64 0.68 % 123,163.32 1,173.33 1.24 % 752.92 Aa3 AA- 2.01 1.96 742718DV8 Procter & Gamble Co Note 1.45% Due 8/15/2016 190,000.00 11/14/2012 0.71 % 195,156.60 193,615.29 101.46 0.89 % 192,772.67 1,040.78 1.93 % (842.62) Aa3 AA- 2.62 2.56 594918AG9 Microsoft Note 1.625% Due 9/25/2015 125,000.00 06/27/2012 0.65 % 128,893.75 127,080.18 102.08 0.42 % 127,603.50 541.67 1.27 % 523.32 Aaa AAA 1.73 1.71 278642AB9 Ebay Inc Note 1.625% Due 10/15/2015 125,000.00 06/12/2012 0.91 % 127,943.75 126,577.10 101.95 0.53 % 127,439.75 428.82 1.27 % 862.65 A2 A 1.79 1.76 48126EAA5 JP Morgan Note 2% Due 8/15/2017 125,000.00 05/06/2013 1.35 % 128,341.25 127,833.31 101.44 1.59 % 126,794.25 944.44 1.27 % (1,039.06) A3 A 3.62 3.46 037833AH3 Apple Inc Note 0.45% Due 5/3/2016 200,000.00 05/22/2013 0.54 % 199,466.00 199,574.69 99.27 0.76 % 198,548.00 145.00 1.97 % (1,026.69) Aa1 AA+ 2.34 2.32 674599CB9 Occidental Petroleum Note 1.75% Due 2/15/2017 120,000.00 01/11/2013 1.11 % 123,064.80 122,345.36 100.34 1.64 % 120,412.80 793.33 1.20 % (1,932.56) A1 A 3.13 3.01 084670BD9 Berkshire Hathaway Note 1.9% Due 1/31/2017 200,000.00 08/13/2013 1.39 % 203,422.00 203,048.40 102.30 1.14 % 204,603.20 1,593.89 2.05 % 1,554.80 Aa2 AA 3.09 2.97 Total US Corporate 2,020,000.00 1.05 % 2,051,351.80 2,036,403.18 0.86 % 2,039,721.21 10,643.61 20.37 % 3,318.03 A1 AA- 2.17 2.12 US CORPORATE Holdings Report As of 12/31/13 City of San Jacinto Account #10167 CUSIP Security Description Par Value/Units Purchase Date Book Yield Cost Value Book Value Mkt Price Mkt YTM Market Value Accrued Int. % of Port. Gain/Loss Moody S&P Maturity Duration PACKET PAGE: 47AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 7 TOTAL MARKET VALUE PLUS ACCRUED 10,064,059.31 TOTAL PORTFOLIO 9,917,727.39 0.63 % 10,156,585.59 10,021,991.30 0.55 % 10,023,015.28 41,044.03 100.00 % 1,023.98 Aa1 AA+ 1.72 1.67 PACKET PAGE: 48AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 8 Security Withdrawal 12/04/2013 31846V203 840.00 First American Govt Obligation Fund 1.000 840.00 0.00 840.00 0.00 Maturity 12/27/2013 313371UC8 200,000.00 FHLB Note 0.875% Due 12/27/2013 100.000 200,000.00 0.00 200,000.00 0.00 Subtotal 200,000.00 200,000.00 0.00 200,000.00 0.00 Paydown 12/21/2013 43814CAC3 0.00 Honda Auto Receivables 2013-1 A3 0.48% Due 11/21/2016 100.000 0.00 48.40 48.40 0.00 Subtotal 0.00 0.00 48.40 48.40 0.00 Call 12/19/2013 74005PAQ7 115,000.00 Praxair Note 5.25% Due 11/15/2014 104.482 0.29 %120,154.30 570.21 120,724.51 0.00 Call 12/16/2013 983024AE0 115,000.00 Wyeth Note 5.5% Due 2/1/2014 100.651 0.28 %115,748.64 2,371.88 118,120.52 0.00 Subtotal 230,000.00 235,902.94 2,942.09 238,845.03 0.00 Sale 12/20/2013 31846V203 121,018.43 First American Govt Obligation Fund 1.000 121,018.43 0.00 121,018.43 0.00 Subtotal 121,018.43 121,018.43 0.00 121,018.43 0.00 DISPOSITIONS Purchase 12/16/2013 31846V203 118,120.52 First American Govt Obligation Fund 1.000 118,120.52 0.00 118,120.52 0.00 Purchase 12/19/2013 31846V203 120,724.51 First American Govt Obligation Fund 1.000 120,724.51 0.00 120,724.51 0.00 Purchase 12/16/2013 31846V203 6,093.75 First American Govt Obligation Fund 1.000 6,093.75 0.00 6,093.75 0.00 Purchase 12/02/2013 31846V203 0.09 First American Govt Obligation Fund 1.000 0.09 0.00 0.09 0.00 Purchase 12/11/2013 31846V203 1,546.88 First American Govt Obligation Fund 1.000 1,546.88 0.00 1,546.88 0.00 Purchase 12/20/2013 43814CAC3 121,000.00 Honda Auto Receivables 2013-1 A3 0.48% Due 11/21/2016 99.977 0.50 %120,971.64 46.79 121,018.43 0.00 Purchase 12/27/2013 31846V203 200,000.00 First American Govt Obligation Fund 1.000 200,000.00 0.00 200,000.00 0.00 Purchase 12/27/2013 31846V203 1,971.88 First American Govt Obligation Fund 1.000 1,971.88 0.00 1,971.88 0.00 Purchase 12/23/2013 31846V203 48.40 First American Govt Obligation Fund 1.000 48.40 0.00 48.40 0.00 Subtotal 569,506.03 569,477.67 46.79 569,524.46 0.00 TOTAL ACQUISITIONS 569,506.03 569,477.67 46.79 569,524.46 0.00 ACQUISITIONS Transaction Ledger 11/30/13 Thru 12/31/13 City of San Jacinto Account #10167 Transaction Type Settlement Date CUSIP Quantity Security Description Price Acq/Disp Yield Amount Interest Pur/Sold Total Amount Gain/Loss PACKET PAGE: 49AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 9 Dividend 12/02/2013 31846V203 25,183.96 First American Govt Obligation Fund 0.000 0.09 0.00 0.09 0.00 Subtotal 25,183.96 0.09 0.00 0.09 0.00 Interest 12/27/2013 3135G0BJ1 195,000.00 FNMA Note 1.125% Due 6/27/2014 0.000 1,096.88 0.00 1,096.88 0.00 Interest 12/27/2013 313371UC8 200,000.00 FHLB Note 0.875% Due 12/27/2013 0.000 875.00 0.00 875.00 0.00 Interest 12/16/2013 31331VGU4 250,000.00 FFCB Note 4.875% Due 12/16/2015 0.000 6,093.75 0.00 6,093.75 0.00 Interest 12/11/2013 313371NW2 225,000.00 FHLB Note 1.375% Due 12/11/2015 0.000 1,546.88 0.00 1,546.88 0.00 Subtotal 870,000.00 9,612.51 0.00 9,612.51 0.00 TOTAL OTHER TRANSACTIONS 895,183.96 9,612.60 0.00 9,612.60 0.00 OTHER TRANSACTIONS Security Withdrawal 12/27/2013 31846V203 104.17 First American Govt Obligation Fund 1.000 104.17 0.00 104.17 0.00 Subtotal 944.17 944.17 0.00 944.17 0.00 TOTAL DISPOSITIONS 551,962.60 557,865.54 2,990.49 560,856.03 0.00 DISPOSITIONS Transaction Ledger 11/30/13 Thru 12/31/13 City of San Jacinto Account #10167 Transaction Type Settlement Date CUSIP Quantity Security Description Price Acq/Disp Yield Amount Interest Pur/Sold Total Amount Gain/Loss PACKET PAGE: 50AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 10 313371NW2 FHLB Note 1.375% Due 12/11/2015 11/16/2012 11/19/2012 225,000.00 229,453.91 0.00 0.00 229,267.33 1,460.94 1,546.88 171.88 257.82 0.00 186.58 (186.58) 71.24 0.00 71.24 313370JB5 FHLB Note 1.75% Due 09/11/2015 01/11/2013 01/16/2013 275,000.00 281,659.63 0.00 0.00 281,341.52 1,069.44 0.00 1,470.49 401.05 0.00 318.11 (318.11) 82.94 0.00 82.94 31331VGU4 FFCB Note 4.875% Due 12/16/2015 06/12/2012 06/13/2012 250,000.00 271,286.88 0.00 0.00 270,401.11 5,585.94 6,093.75 507.81 1,015.62 0.00 885.77 (885.77) 129.85 0.00 129.85 31331KAH3 FFCB Note 1.125% Due 02/27/2014 06/20/2012 06/21/2012 200,000.00 200,379.71 0.00 0.00 200,245.95 587.50 0.00 775.00 187.50 0.00 133.76 (133.76) 53.74 0.00 53.74 31331J2S1 FFCB Note 1.5% Due 11/16/2015 06/25/2012 06/26/2012 290,000.00 295,235.67 0.00 0.00 295,008.67 181.25 0.00 543.75 362.50 0.00 227.00 (227.00) 135.50 0.00 135.50 278642AB9 Ebay Inc Note 1.625% Due 10/15/2015 06/12/2012 06/15/2012 125,000.00 126,652.08 0.00 0.00 126,577.10 259.55 0.00 428.82 169.27 0.00 74.98 (74.98) 94.29 0.00 94.29 24422ERA9 John Deere Capital Corp Note 1.6% Due 03/03/2014 06/06/2012 06/11/2012 120,000.00 120,309.82 0.00 0.00 120,205.42 469.33 0.00 629.33 160.00 0.00 104.40 (104.40) 55.60 0.00 55.60 191216AX8 Coca Cola Company Note 0.75% Due 03/13/2015 06/18/2012 06/21/2012 125,000.00 125,197.71 0.00 0.00 125,184.59 203.13 0.00 281.25 78.12 0.00 13.12 (13.12) 65.00 0.00 65.00 084670BD9 Berkshire Hathaway Note 1.9% Due 01/31/2017 08/13/2013 08/16/2013 200,000.00 203,132.32 0.00 0.00 203,048.40 1,277.22 0.00 1,593.89 316.67 0.00 83.92 (83.92) 232.75 0.00 232.75 037833AH3 Apple Inc Note 0.45% Due 05/03/2016 05/22/2013 05/28/2013 200,000.00 199,559.24 0.00 0.00 199,574.69 70.00 0.00 145.00 75.00 15.45 0.00 15.45 90.45 0.00 90.45 Fixed Income Income Earned 11/30/13 Thru 12/31/13 City of San Jacinto Account #10167 CUSIP Security Description Trade Date Settle Date Units Book Value: Begin Book Value: Acq Book Value: Disp Book Value: End Prior Accrued Inc. Received Ending Accrued Total Interest Accr. Of Discount Amort. Of Premium Net Accret/Amort Income Earned Unreal G/L Total Income PACKET PAGE: 51AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 11 3137EACB3 FHLMC Note 2.5% Due 04/23/2014 06/18/2012 06/19/2012 190,000.00 191,620.91 0.00 0.00 191,269.53 501.39 0.00 897.22 395.83 0.00 351.38 (351.38) 44.45 0.00 44.45 3137EABX6 FHLMC Note 2.5% Due 01/07/2014 06/22/2012 06/25/2012 190,000.00 190,419.80 0.00 0.00 190,068.07 1,900.00 0.00 2,295.83 395.83 0.00 351.73 (351.73) 44.10 0.00 44.10 3135G0MZ3 FNMA Note 0.875% Due 08/28/2017 05/06/2013 05/07/2013 325,000.00 326,697.95 0.00 0.00 326,659.42 734.64 0.00 971.61 236.97 0.00 38.53 (38.53) 198.44 0.00 198.44 3135G0KM4 FNMA Note 0.5% Due 05/27/2015 06/12/2012 06/13/2012 200,000.00 199,913.52 0.00 0.00 199,918.47 11.11 0.00 94.44 83.33 4.95 0.00 4.95 88.28 0.00 88.28 3135G0BJ1 FNMA Note 1.125% Due 06/27/2014 06/06/2012 06/07/2012 195,000.00 195,835.32 0.00 0.00 195,710.82 938.44 1,096.88 24.38 182.82 0.00 124.50 (124.50) 58.32 0.00 58.32 3133XXP43 FHLB Note 3.125% Due 03/11/2016 06/14/2012 06/15/2012 270,000.00 284,111.80 0.00 0.00 283,585.37 1,875.00 0.00 2,578.13 703.13 0.00 526.43 (526.43) 176.70 0.00 176.70 3133ECFV1 FFCB Note 0.43% Due 01/29/2016 02/21/2013 02/22/2013 225,000.00 224,923.75 0.00 0.00 224,926.75 327.88 0.00 408.50 80.62 3.00 0.00 3.00 83.62 0.00 83.62 3133EADW5 FFCB Note 0.55% Due 08/17/2015 06/21/2013 06/25/2013 200,000.00 200,247.05 0.00 0.00 200,234.78 317.78 0.00 409.44 91.66 0.00 12.27 (12.27) 79.39 0.00 79.39 313378A43 FHLB Note 1.375% Due 03/09/2018 06/21/2013 06/25/2013 235,000.00 233,377.16 0.00 0.00 233,409.43 736.01 0.00 1,005.28 269.27 32.27 0.00 32.27 301.54 0.00 301.54 313373JR4 FHLB Note 1.375% Due 05/28/2014 06/06/2012 06/07/2012 290,000.00 291,442.49 0.00 0.00 291,191.27 33.23 0.00 365.52 332.29 0.00 251.22 (251.22) 81.07 0.00 81.07 313371UC8 FHLB Note Due 12/27/2013 06/20/2012 06/21/2012 0.00 200,076.90 0.00 200,000.00 0.00 748.61 875.00 0.00 126.39 0.00 76.90 (76.90) 49.49 0.00 49.49 Income Earned 11/30/13 Thru 12/31/13 City of San Jacinto Account #10167 CUSIP Security Description Trade Date Settle Date Units Book Value: Begin Book Value: Acq Book Value: Disp Book Value: End Prior Accrued Inc. Received Ending Accrued Total Interest Accr. Of Discount Amort. Of Premium Net Accret/Amort Income Earned Unreal G/L Total Income PACKET PAGE: 52AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 12 43814CAC3 Honda Auto Receivables 2013-1 A3 0.48% Due 11/21/2016 12/17/2013 12/20/2013 121,000.00 0.00 120,971.64 0.00 120,972.11 0.00 1.61 16.13 17.74 0.47 0.00 0.47 18.21 0.00 18.21 40428HPG1 HSBC USA Inc Note 2.375% Due 02/13/2015 06/26/2012 06/29/2012 125,000.00 125,685.51 0.00 0.00 125,637.10 890.63 0.00 1,138.02 247.39 0.00 48.41 (48.41) 198.98 0.00 198.98 31398AXJ6 FNMA Note 2.5% Due 05/15/2014 06/14/2012 06/15/2012 290,000.00 292,804.60 0.00 0.00 292,277.67 322.22 0.00 926.39 604.17 0.00 526.93 (526.93) 77.24 0.00 77.24 31398AVZ2 FNMA Note 2.75% Due 03/13/2014 06/22/2012 06/25/2012 285,000.00 286,913.60 0.00 0.00 286,332.02 1,698.13 0.00 2,351.25 653.12 0.00 581.58 (581.58) 71.54 0.00 71.54 31398AVD1 FNMA Note 2.75% Due 02/05/2014 06/07/2012 06/08/2012 285,000.00 286,252.80 0.00 0.00 285,664.36 2,525.42 0.00 3,178.54 653.12 0.00 588.44 (588.44) 64.68 0.00 64.68 3137EADL0 FHLMC Note 1% Due 09/29/2017 11/14/2013 11/15/2013 200,000.00 199,545.21 0.00 0.00 199,555.29 344.44 0.00 511.11 166.67 10.08 0.00 10.08 176.75 0.00 176.75 3137EADJ5 FHLMC Note 1% Due 07/28/2017 09/25/2013 09/27/2013 220,000.00 218,630.10 0.00 0.00 218,661.91 751.67 0.00 935.00 183.33 31.81 0.00 31.81 215.14 0.00 215.14 3137EADC0 FHLMC Note 1% Due 03/08/2017 08/20/2012 08/21/2012 220,000.00 221,000.83 0.00 0.00 220,974.82 507.22 0.00 690.56 183.34 0.00 26.01 (26.01) 157.33 0.00 157.33 3137EACW7 FHLMC Note 2% Due 08/25/2016 06/14/2012 06/15/2012 190,000.00 196,033.80 0.00 0.00 195,846.38 1,013.33 0.00 1,330.00 316.67 0.00 187.42 (187.42) 129.25 0.00 129.25 3137EACT4 FHLMC Note 2.5% Due 05/27/2016 07/12/2012 07/13/2012 180,000.00 188,355.78 0.00 0.00 188,070.51 50.00 0.00 425.00 375.00 0.00 285.27 (285.27) 89.73 0.00 89.73 3137EACD9 FHLMC Note 3% Due 07/28/2014 06/22/2012 06/25/2012 190,000.00 193,221.97 0.00 0.00 192,804.06 1,947.50 0.00 2,422.50 475.00 0.00 417.91 (417.91) 57.09 0.00 57.09 Income Earned 11/30/13 Thru 12/31/13 City of San Jacinto Account #10167 CUSIP Security Description Trade Date Settle Date Units Book Value: Begin Book Value: Acq Book Value: Disp Book Value: End Prior Accrued Inc. Received Ending Accrued Total Interest Accr. Of Discount Amort. Of Premium Net Accret/Amort Income Earned Unreal G/L Total Income PACKET PAGE: 53AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 13 912828PQ7 US Treasury Note 1% Due 01/15/2014 06/25/2012 06/26/2012 200,000.00 200,169.03 0.00 0.00 200,052.59 755.43 0.00 923.91 168.48 0.00 116.44 (116.44) 52.04 0.00 52.04 912828PE4 US Treasury Note 1.25% Due 10/31/2015 06/07/2012 06/08/2012 195,000.00 197,933.09 0.00 0.00 197,803.01 208.74 0.00 417.47 208.73 0.00 130.08 (130.08) 78.65 0.00 78.65 912828NV8 US Treasury Note 1.25% Due 08/31/2015 06/06/2012 06/07/2012 195,000.00 197,949.16 0.00 0.00 197,805.86 619.48 0.00 828.21 208.73 0.00 143.30 (143.30) 65.43 0.00 65.43 742718DV8 Procter & Gamble Co Note 1.45% Due 08/15/2016 11/14/2012 11/19/2012 190,000.00 193,732.40 0.00 0.00 193,615.29 811.19 0.00 1,040.78 229.59 0.00 117.11 (117.11) 112.48 0.00 112.48 74005PAQ7 Praxair Note Due 11/15/2014 06/26/2012 06/29/2012 0.00 119,938.13 0.00 120,154.30 0.00 268.33 570.21 0.00 301.88 216.17 0.00 216.17 518.05 0.00 518.05 713448BX5 Pepsico Inc. Note 0.75% Due 03/05/2015 06/05/2012 06/08/2012 125,000.00 124,877.22 0.00 0.00 124,885.51 223.96 0.00 302.08 78.12 8.29 0.00 8.29 86.41 0.00 86.41 68389XAN5 Oracle Corp Note 1.2% Due 10/15/2017 08/13/2013 08/16/2013 200,000.00 195,725.46 0.00 0.00 195,819.18 306.67 0.00 506.67 200.00 93.72 0.00 93.72 293.72 0.00 293.72 674599CB9 Occidental Petroleum Note 1.75% Due 02/15/2017 01/11/2013 01/16/2013 120,000.00 122,409.08 0.00 0.00 122,345.36 618.33 0.00 793.33 175.00 0.00 63.72 (63.72) 111.28 0.00 111.28 594918AG9 Microsoft Note 1.625% Due 09/25/2015 06/27/2012 06/29/2012 125,000.00 127,182.21 0.00 0.00 127,080.18 372.40 0.00 541.67 169.27 0.00 102.03 (102.03) 67.24 0.00 67.24 48126EAA5 JP Morgan Note 2% Due 08/15/2017 05/06/2013 05/09/2013 125,000.00 127,899.75 0.00 0.00 127,833.31 736.11 0.00 944.44 208.33 0.00 66.44 (66.44) 141.89 0.00 141.89 459200GU9 IBM Corp Note 2% Due 01/05/2016 06/05/2012 06/08/2012 120,000.00 122,512.20 0.00 0.00 122,410.40 973.33 0.00 1,173.33 200.00 0.00 101.80 (101.80) 98.20 0.00 98.20 Income Earned 11/30/13 Thru 12/31/13 City of San Jacinto Account #10167 CUSIP Security Description Trade Date Settle Date Units Book Value: Begin Book Value: Acq Book Value: Disp Book Value: End Prior Accrued Inc. Received Ending Accrued Total Interest Accr. Of Discount Amort. Of Premium Net Accret/Amort Income Earned Unreal G/L Total Income PACKET PAGE: 54AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 14 31846V203 First American Govt Obligation Fund Various Various 351,727.39 25,183.96 448,506.03 121,962.60 351,727.39 0.00 0.09 0.00 0.09 0.00 0.00 0.00 0.09 0.00 0.09 06538CBD2 Bank of Tokyo Mitsubishi NY Discount CP 0.21% Due 02/13/2014 10/15/2013 10/16/2013 200,000.00 199,913.67 0.00 0.00 199,949.83 0.00 0.00 0.00 0.00 36.16 0.00 36.16 36.16 0.00 36.16 Cash & Equivalent 983024AE0 Wyeth Note Due 02/01/2014 06/06/2012 06/11/2012 0.00 115,943.66 0.00 115,748.64 0.00 2,108.33 2,371.88 0.00 263.55 0.00 195.02 (195.02) 68.53 0.00 68.53 94974BET3 Wells Fargo Corp Note 3.75% Due 10/01/2014 06/26/2012 06/29/2012 120,000.00 122,434.95 0.00 0.00 122,186.65 750.00 0.00 1,125.00 375.00 0.00 248.30 (248.30) 126.70 0.00 126.70 912828TD2 US Treasury Note 0.25% Due 07/15/2015 10/15/2013 10/18/2013 200,000.00 199,797.03 0.00 0.00 199,807.68 188.86 0.00 230.98 42.12 10.65 0.00 10.65 52.77 0.00 52.77 912828SY7 US Treasury Note 0.625% Due 05/31/2017 07/25/2013 07/26/2013 210,000.00 207,562.59 0.00 0.00 207,621.76 3.61 0.00 115.38 111.77 59.17 0.00 59.17 170.94 0.00 170.94 912828RF9 US Treasury Note 1% Due 08/31/2016 10/12/2012 10/15/2012 215,000.00 218,037.47 0.00 0.00 217,943.68 546.41 0.00 730.52 184.11 0.00 93.79 (93.79) 90.32 0.00 90.32 912828QA1 US Treasury Note 2.25% Due 03/31/2016 12/14/2012 12/17/2012 195,000.00 203,416.55 0.00 0.00 203,109.96 747.32 0.00 1,120.98 373.66 0.00 306.59 (306.59) 67.07 0.00 67.07 912828PZ7 US Treasury Note 1.25% Due 03/15/2014 06/14/2012 06/15/2012 195,000.00 195,525.33 0.00 0.00 195,368.74 518.47 0.00 727.21 208.74 0.00 156.59 (156.59) 52.15 0.00 52.15 TOTAL Fixed Income 9,366,000.00 9,793,023.13 120,971.64 435,902.94 9,470,314.08 40,095.92 12,556.21 41,044.03 13,504.32 486.03 8,263.78 (7,777.75) 5,726.57 0.00 5,726.57 Income Earned 11/30/13 Thru 12/31/13 City of San Jacinto Account #10167 CUSIP Security Description Trade Date Settle Date Units Book Value: Begin Book Value: Acq Book Value: Disp Book Value: End Prior Accrued Inc. Received Ending Accrued Total Interest Accr. Of Discount Amort. Of Premium Net Accret/Amort Income Earned Unreal G/L Total Income PACKET PAGE: 55AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 15 TOTAL Cash & Equivalent 551,727.39 225,097.63 448,506.03 121,962.60 551,677.22 0.00 0.09 0.00 0.09 36.16 0.00 36.16 36.25 0.00 36.25 TOTAL PORTFOLIO 9,917,727.39 10,018,120.76 569,477.67 557,865.54 10,021,991.30 40,095.92 12,556.30 41,044.03 13,504.41 522.19 8,263.78 (7,741.59) 5,762.82 0.00 5,762.82 Income Earned 11/30/13 Thru 12/31/13 City of San Jacinto Account #10167 CUSIP Security Description Trade Date Settle Date Units Book Value: Begin Book Value: Acq Book Value: Disp Book Value: End Prior Accrued Inc. Received Ending Accrued Total Interest Accr. Of Discount Amort. Of Premium Net Accret/Amort Income Earned Unreal G/L Total Income PACKET PAGE: 56AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 16 02/25/2014 Interest 3137EACW7 190,000.00 FHLMC Note 2% Due 8/25/2016 0.00 1,900.00 1,900.00 02/21/2014 Paydown 43814CAC3 121,000.00 Honda Auto Receivables 2013-1 A3 0.48% Due 11/21/2016 0.00 48.40 48.40 02/17/2014 Interest 3133EADW5 200,000.00 FFCB Note 0.55% Due 8/17/2015 0.00 550.00 550.00 02/27/2014 Maturity 31331KAH3 200,000.00 FFCB Note 1.125% Due 2/27/2014 200,000.00 1,125.00 201,125.00 02/13/2014 Maturity 06538CBD2 200,000.00 Bank of Tokyo Mitsubishi NY Discount CP 0.21% Due 2/13/2014 200,000.00 0.00 200,000.00 02/13/2014 Interest 40428HPG1 125,000.00 HSBC USA Inc Note 2.375% Due 2/13/2015 0.00 1,484.38 1,484.38 02/05/2014 Maturity 31398AVD1 285,000.00 FNMA Note 2.75% Due 2/5/2014 285,000.00 3,918.75 288,918.75 02/15/2014 Interest 742718DV8 190,000.00 Procter & Gamble Co Note 1.45% Due 8/15/2016 0.00 1,377.50 1,377.50 02/15/2014 Interest 674599CB9 120,000.00 Occidental Petroleum Note 1.75% Due 2/15/2017 0.00 1,050.00 1,050.00 02/15/2014 Interest 48126EAA5 125,000.00 JP Morgan Note 2% Due 8/15/2017 0.00 1,250.00 1,250.00 Feb 2014 685,000.00 16,419.66 701,419.66 01/15/2014 Maturity 912828PQ7 200,000.00 US Treasury Note 1% Due 1/15/2014 200,000.00 1,000.00 201,000.00 01/21/2014 Paydown 43814CAC3 121,000.00 Honda Auto Receivables 2013-1 A3 0.48% Due 11/21/2016 0.00 48.40 48.40 01/15/2014 Interest 912828TD2 200,000.00 US Treasury Note 0.25% Due 7/15/2015 0.00 250.00 250.00 01/05/2014 Interest 459200GU9 120,000.00 IBM Corp Note 2% Due 1/5/2016 0.00 1,200.00 1,200.00 01/07/2014 Maturity 3137EABX6 190,000.00 FHLMC Note 2.5% Due 1/7/2014 190,000.00 2,375.00 192,375.00 01/29/2014 Interest 3133ECFV1 225,000.00 FFCB Note 0.43% Due 1/29/2016 0.00 483.75 483.75 01/31/2014 Interest 084670BD9 200,000.00 Berkshire Hathaway Note 1.9% Due 1/31/2017 0.00 1,900.00 1,900.00 01/28/2014 Interest 3137EADJ5 220,000.00 FHLMC Note 1% Due 7/28/2017 0.00 1,100.00 1,100.00 01/28/2014 Interest 3137EACD9 190,000.00 FHLMC Note 3% Due 7/28/2014 0.00 2,850.00 2,850.00 Jan 2014 390,000.00 11,207.15 401,207.15 Cash Flow Report From 12/31/2013 City of San Jacinto Account #10167 Payment Date Transaction Type CUSIP Quantity Security Description Principal Amount Income Total Amount PACKET PAGE: 57AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 17 04/15/2014 Interest 278642AB9 125,000.00 Ebay Inc Note 1.625% Due 10/15/2015 0.00 1,015.63 1,015.63 04/01/2014 Interest 94974BET3 120,000.00 Wells Fargo Corp Note 3.75% Due 10/1/2014 0.00 2,250.00 2,250.00 Apr 2014 190,000.00 8,107.78 198,107.78 03/25/2014 Interest 594918AG9 125,000.00 Microsoft Note 1.625% Due 9/25/2015 0.00 1,015.63 1,015.63 03/29/2014 Interest 3137EADL0 200,000.00 FHLMC Note 1% Due 9/29/2017 0.00 1,000.00 1,000.00 03/31/2014 Interest 912828QA1 195,000.00 US Treasury Note 2.25% Due 3/31/2016 0.00 2,193.75 2,193.75 03/09/2014 Interest 313378A43 235,000.00 FHLB Note 1.375% Due 3/9/2018 0.00 1,615.63 1,615.63 03/11/2014 Interest 313370JB5 275,000.00 FHLB Note 1.75% Due 9/11/2015 0.00 2,406.25 2,406.25 03/08/2014 Interest 3137EADC0 220,000.00 FHLMC Note 1% Due 3/8/2017 0.00 1,100.00 1,100.00 03/03/2014 Maturity 24422ERA9 120,000.00 John Deere Capital Corp Note 1.6% Due 3/3/2014 120,000.00 960.00 120,960.00 03/05/2014 Interest 713448BX5 125,000.00 Pepsico Inc. Note 0.75% Due 3/5/2015 0.00 468.75 468.75 03/11/2014 Interest 3133XXP43 270,000.00 FHLB Note 3.125% Due 3/11/2016 0.00 4,218.75 4,218.75 03/15/2014 Maturity 912828PZ7 195,000.00 US Treasury Note 1.25% Due 3/15/2014 195,000.00 1,218.75 196,218.75 03/21/2014 Paydown 43814CAC3 121,000.00 Honda Auto Receivables 2013-1 A3 0.48% Due 11/21/2016 0.00 48.40 48.40 03/13/2014 Maturity 31398AVZ2 285,000.00 FNMA Note 2.75% Due 3/13/2014 285,000.00 3,918.75 288,918.75 03/13/2014 Interest 191216AX8 125,000.00 Coca Cola Company Note 0.75% Due 3/13/2015 0.00 468.75 468.75 Mar 2014 600,000.00 20,633.41 620,633.41 02/28/2014 Interest 912828RF9 215,000.00 US Treasury Note 1% Due 8/31/2016 0.00 1,075.00 1,075.00 02/28/2014 Interest 3135G0MZ3 325,000.00 FNMA Note 0.875% Due 8/28/2017 0.00 1,421.88 1,421.88 02/28/2014 Interest 912828NV8 195,000.00 US Treasury Note 1.25% Due 8/31/2015 0.00 1,218.75 1,218.75 Feb 2014 685,000.00 16,419.66 701,419.66 Cash Flow Report From 12/31/2013 City of San Jacinto Account #10167 Payment Date Transaction Type CUSIP Quantity Security Description Principal Amount Income Total Amount PACKET PAGE: 58AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 18 07/05/2014 Interest 459200GU9 120,000.00 IBM Corp Note 2% Due 1/5/2016 0.00 1,200.00 1,200.00 07/15/2014 Interest 912828TD2 200,000.00 US Treasury Note 0.25% Due 7/15/2015 0.00 250.00 250.00 Jul 2014 198,672.57 7,832.15 206,504.72 06/16/2014 Interest 31331VGU4 250,000.00 FFCB Note 4.875% Due 12/16/2015 0.00 6,093.75 6,093.75 06/21/2014 Paydown 43814CAC3 121,000.00 Honda Auto Receivables 2013-1 A3 0.48% Due 11/21/2016 0.00 48.40 48.40 06/27/2014 Maturity 3135G0BJ1 195,000.00 FNMA Note 1.125% Due 6/27/2014 195,000.00 1,096.88 196,096.88 06/11/2014 Interest 313371NW2 225,000.00 FHLB Note 1.375% Due 12/11/2015 0.00 1,546.88 1,546.88 Jun 2014 195,000.00 8,785.91 203,785.91 05/21/2014 Paydown 43814CAC3 121,000.00 Honda Auto Receivables 2013-1 A3 0.48% Due 11/21/2016 0.00 48.40 48.40 05/16/2014 Interest 31331J2S1 290,000.00 FFCB Note 1.5% Due 11/16/2015 0.00 2,175.00 2,175.00 05/03/2014 Interest 037833AH3 200,000.00 Apple Inc Note 0.45% Due 5/3/2016 0.00 450.00 450.00 05/15/2014 Maturity 31398AXJ6 290,000.00 FNMA Note 2.5% Due 5/15/2014 290,000.00 3,625.00 293,625.00 05/27/2014 Interest 3135G0KM4 200,000.00 FNMA Note 0.5% Due 5/27/2015 0.00 500.00 500.00 05/31/2014 Interest 912828SY7 210,000.00 US Treasury Note 0.625% Due 5/31/2017 0.00 656.25 656.25 05/28/2014 Maturity 313373JR4 290,000.00 FHLB Note 1.375% Due 5/28/2014 290,000.00 1,993.75 291,993.75 05/27/2014 Interest 3137EACT4 180,000.00 FHLMC Note 2.5% Due 5/27/2016 0.00 2,250.00 2,250.00 May 2014 580,000.00 11,698.40 591,698.40 04/21/2014 Paydown 43814CAC3 121,000.00 Honda Auto Receivables 2013-1 A3 0.48% Due 11/21/2016 0.00 48.40 48.40 04/15/2014 Interest 68389XAN5 200,000.00 Oracle Corp Note 1.2% Due 10/15/2017 0.00 1,200.00 1,200.00 04/23/2014 Maturity 3137EACB3 190,000.00 FHLMC Note 2.5% Due 4/23/2014 190,000.00 2,375.00 192,375.00 04/30/2014 Interest 912828PE4 195,000.00 US Treasury Note 1.25% Due 10/31/2015 0.00 1,218.75 1,218.75 Apr 2014 190,000.00 8,107.78 198,107.78 Cash Flow Report From 12/31/2013 City of San Jacinto Account #10167 Payment Date Transaction Type CUSIP Quantity Security Description Principal Amount Income Total Amount PACKET PAGE: 59AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 19 09/09/2014 Interest 313378A43 235,000.00 FHLB Note 1.375% Due 3/9/2018 0.00 1,615.63 1,615.63 09/05/2014 Interest 713448BX5 125,000.00 Pepsico Inc. Note 0.75% Due 3/5/2015 0.00 468.75 468.75 09/08/2014 Interest 3137EADC0 220,000.00 FHLMC Note 1% Due 3/8/2017 0.00 1,100.00 1,100.00 Sep 2014 8,215.01 14,529.06 22,744.07 08/31/2014 Interest 912828NV8 195,000.00 US Treasury Note 1.25% Due 8/31/2015 0.00 1,218.75 1,218.75 08/15/2014 Interest 742718DV8 190,000.00 Procter & Gamble Co Note 1.45% Due 8/15/2016 0.00 1,377.50 1,377.50 08/17/2014 Interest 3133EADW5 200,000.00 FFCB Note 0.55% Due 8/17/2015 0.00 550.00 550.00 08/15/2014 Interest 48126EAA5 125,000.00 JP Morgan Note 2% Due 8/15/2017 0.00 1,250.00 1,250.00 08/13/2014 Interest 40428HPG1 125,000.00 HSBC USA Inc Note 2.375% Due 2/13/2015 0.00 1,484.38 1,484.38 08/15/2014 Interest 674599CB9 120,000.00 Occidental Petroleum Note 1.75% Due 2/15/2017 0.00 1,050.00 1,050.00 08/28/2014 Interest 3135G0MZ3 325,000.00 FNMA Note 0.875% Due 8/28/2017 0.00 1,421.88 1,421.88 08/31/2014 Interest 912828RF9 215,000.00 US Treasury Note 1% Due 8/31/2016 0.00 1,075.00 1,075.00 08/21/2014 Paydown 43814CAC3 121,000.00 Honda Auto Receivables 2013-1 A3 0.48% Due 11/21/2016 8,443.86 44.93 8,488.79 08/25/2014 Interest 3137EACW7 190,000.00 FHLMC Note 2% Due 8/25/2016 0.00 1,900.00 1,900.00 Aug 2014 8,443.86 11,372.44 19,816.30 07/28/2014 Maturity 3137EACD9 190,000.00 FHLMC Note 3% Due 7/28/2014 190,000.00 2,850.00 192,850.00 07/28/2014 Interest 3137EADJ5 220,000.00 FHLMC Note 1% Due 7/28/2017 0.00 1,100.00 1,100.00 07/21/2014 Paydown 43814CAC3 121,000.00 Honda Auto Receivables 2013-1 A3 0.48% Due 11/21/2016 8,672.57 48.40 8,720.97 07/31/2014 Interest 084670BD9 200,000.00 Berkshire Hathaway Note 1.9% Due 1/31/2017 0.00 1,900.00 1,900.00 07/29/2014 Interest 3133ECFV1 225,000.00 FFCB Note 0.43% Due 1/29/2016 0.00 483.75 483.75 Jul 2014 198,672.57 7,832.15 206,504.72 Cash Flow Report From 12/31/2013 City of San Jacinto Account #10167 Payment Date Transaction Type CUSIP Quantity Security Description Principal Amount Income Total Amount PACKET PAGE: 60AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 20 11/03/2014 Interest 037833AH3 200,000.00 Apple Inc Note 0.45% Due 5/3/2016 0.00 450.00 450.00 11/21/2014 Paydown 43814CAC3 121,000.00 Honda Auto Receivables 2013-1 A3 0.48% Due 11/21/2016 7,756.90 35.07 7,791.97 11/16/2014 Interest 31331J2S1 290,000.00 FFCB Note 1.5% Due 11/16/2015 0.00 2,175.00 2,175.00 11/27/2014 Interest 3137EACT4 180,000.00 FHLMC Note 2.5% Due 5/27/2016 0.00 2,250.00 2,250.00 11/27/2014 Interest 3135G0KM4 200,000.00 FNMA Note 0.5% Due 5/27/2015 0.00 500.00 500.00 11/30/2014 Interest 912828SY7 210,000.00 US Treasury Note 0.625% Due 5/31/2017 0.00 656.25 656.25 Nov 2014 7,756.90 6,066.32 13,823.22 10/21/2014 Paydown 43814CAC3 121,000.00 Honda Auto Receivables 2013-1 A3 0.48% Due 11/21/2016 7,986.02 38.27 8,024.29 10/31/2014 Interest 912828PE4 195,000.00 US Treasury Note 1.25% Due 10/31/2015 0.00 1,218.75 1,218.75 10/01/2014 Maturity 94974BET3 120,000.00 Wells Fargo Corp Note 3.75% Due 10/1/2014 120,000.00 2,250.00 122,250.00 10/15/2014 Interest 278642AB9 125,000.00 Ebay Inc Note 1.625% Due 10/15/2015 0.00 1,015.63 1,015.63 10/15/2014 Interest 68389XAN5 200,000.00 Oracle Corp Note 1.2% Due 10/15/2017 0.00 1,200.00 1,200.00 Oct 2014 127,986.02 5,722.65 133,708.67 09/13/2014 Interest 191216AX8 125,000.00 Coca Cola Company Note 0.75% Due 3/13/2015 0.00 468.75 468.75 09/21/2014 Paydown 43814CAC3 121,000.00 Honda Auto Receivables 2013-1 A3 0.48% Due 11/21/2016 8,215.01 41.55 8,256.56 09/11/2014 Interest 313370JB5 275,000.00 FHLB Note 1.75% Due 9/11/2015 0.00 2,406.25 2,406.25 09/11/2014 Interest 3133XXP43 270,000.00 FHLB Note 3.125% Due 3/11/2016 0.00 4,218.75 4,218.75 09/30/2014 Interest 912828QA1 195,000.00 US Treasury Note 2.25% Due 3/31/2016 0.00 2,193.75 2,193.75 09/29/2014 Interest 3137EADL0 200,000.00 FHLMC Note 1% Due 9/29/2017 0.00 1,000.00 1,000.00 09/25/2014 Interest 594918AG9 125,000.00 Microsoft Note 1.625% Due 9/25/2015 0.00 1,015.63 1,015.63 Sep 2014 8,215.01 14,529.06 22,744.07 Cash Flow Report From 12/31/2013 City of San Jacinto Account #10167 Payment Date Transaction Type CUSIP Quantity Security Description Principal Amount Income Total Amount PACKET PAGE: 61AGENDA ITEM 3A.7 Execution Time: 1/3/2014 12:33:26 PMChandler Asset Management - CONFIDENTIAL Page 21 12/11/2014 Interest 313371NW2 225,000.00 FHLB Note 1.375% Due 12/11/2015 0.00 1,546.88 1,546.88 12/21/2014 Paydown 43814CAC3 121,000.00 Honda Auto Receivables 2013-1 A3 0.48% Due 11/21/2016 7,527.63 31.97 7,559.60 12/16/2014 Interest 31331VGU4 250,000.00 FFCB Note 4.875% Due 12/16/2015 0.00 6,093.75 6,093.75 Dec 2014 7,527.63 7,672.60 15,200.23 Total 2,998,601.99 130,047.53 3,128,649.52 Cash Flow Report From 12/31/2013 City of San Jacinto Account #10167 Payment Date Transaction Type CUSIP Quantity Security Description Principal Amount Income Total Amount PACKET PAGE: 62AGENDA ITEM 3A.7 City of San Jacinto MONTHLY PORTFOLIO REPORT Prepared by BLX Group for the Period Ended December 31, 2013PACKET PAGE: 63AGENDA ITEM 3A.7 CITY OF SAN JACINTO MONTHLY PORTFOLIO REPORT DECEMBER 31, 2013 PORTFOLIO SUMMARY INFORMATION SECTOR & CREDIT QUALITY DISTRIBUTION Total Par Value 9,785,236 Market Value 10,002,138.64 Accrued Interest 42,702.96 Total Market Value 10,044,841.60 Amortized Book Value 10,008,270.22 Net Unrealized Gain/Loss -6,131.58 Effective Maturity 1.85 Effective Duration 1.81 Average Coupon 1.827% Average Yield on Cost 0.470% Average Yield on Market 0.496% Average S&P Rating AA Sector (U.S.) MVw/o Acc Cash & Equivalents 65,236.37 U.S. Treasuries 6,378,107.12 Federal Agencies 1,414,323.85 Corporates 2,144,471.30 0.7% 63.8% 14.1% 21.4% COUPON DISTRIBUTION Coupon % MV w/o Acc Average Coupon 0% - 1% 1,444,423.14 0.602% 1% - 2% 3,400,025.12 1.473% 2% - 3% 4,606,832.77 2.234% 3% - 4% 389,077.12 3.461% 4% - 5% 5% - 6% 161,780.49 5.125% 6% - 7% 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 0%-1%1%-2%2%-3%3%-4%4%-5%5%-6%6%-7%$(000)MVw/oAcc Cash& Equivalents U.S.Treasuries FederalAgencies Corporates 0.7% 88.9% 8.0%2.5% AAA AA A BelowA S&P Quality MVw/o Acc AAA 65,236.37 AA 8,887,311.41 A 798,653.36 Below A 250,937.50PACKET PAGE: 64AGENDA ITEM 3A.7 CITY OF SAN JACINTO MONTHLY PORTFOLIO REPORT DECEMBER 31, 2013 MATURITY DISTRIBUTION Maturity(Yrs) MVw/o Acc 0.00 - 0.49 65,236.37 0.50 - 0.99 850,407.61 1.00 - 1.49 2,013,376.37 1.50 - 1.99 2,205,804.20 2.00 - 2.49 2,702,688.95 2.50 - 2.99 2,164,625.14 3.00 - 3.49 0.00 3.50 - 3.99 0.00 4.00 - 4.49 0.00 4.50 - 4.99 0.00 5.00+0.00 500 1,000 1,500 2,000 2,500 3,000 $(000)MVw/oAcc DURATION & YIELD DISTRIBUTION 5.00+0.00 0 0.00-0.490.50-0.991.00-1.491.50-1.992.00-2.492.50-2.993.00-3.493.50-3.994.00-4.494.50-4.995.00+Eff Dur % Held (MV) YTW Eff Dur 0.00 - 0.49 0.652% 0.010% 0.00 0.50 - 0.99 9.782% 0.331% 0.77 1.00 - 1.49 24.038% 0.315% 1.27 1.50 - 1.99 20.565% 0.665% 1.72 2.00 - 2.49 27.924% 0.488% 2.24 2.50 - 2.99 17.039% 0.673% 2.67 3.00 - 3.49 3.50 - 3.99 4.00 - 4.49 4.50 - 4.99 5.00+ 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0.80% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%0.00-0.490.50-0.991.00-1.491.50-1.992.00-2.492.50-2.993.00-3.493.50-3.994.00-4.494.50-4.995.00+Yield(%)MarketValuePercentage(%)EffectiveDuration Bucket %of Market Value (Left Axis) PortfolioYield(RightAxis)PACKET PAGE: 65AGENDA ITEM 3A.7 CITY OF SAN JACINTO MONTHLY PORTFOLIO REPORT DECEMBER 31, 2013 PORTFOLIO HOLDINGS Purchase Original Yield Amortized Market Market Value Accrued Market Value Yield Gain/ Moody's S&P Effective Effective % Market CUSIP Issuer Name Coupon Maturity Par Value Date Cost Value on Cost Book Value Price w/o Accrued Interest w/ Accrued on Market Loss Rating Rating Maturity Duration Value Cash & Equivalents FGVXX First American Government Obligations - Class Y 0.010% 01/01/14 65,236 65,236.37 0.010% 65,236.37 100.000 65,236.37 0.27 65,236.64 0.010% 0.00 Aaa AAA 0.00 0.00 0.65% Total Cash & Equivalents 65,236 65,236.37 0.010% 65,236.37 65,236.37 0.27 65,236.64 0.010% 0.00 Aaa AAA 0.00 0.00 0.65% U.S. TreasuryBonds 912828LZ1 US Treasury Notes/Bonds 2.125% 11/30/14 430,000 04/04/13 443,639.06 0.193% 437,562.48 101.773 437,625.62 803.30 438,428.92 0.184% 63.14 Aaa AA+ 0.92 0.91 4.38% 912828MH0 US Treasury Notes/Bonds 2.250% 01/31/15 480,000 03/05/13 498,431.25 0.227% 490,485.12 102.227 490,687.68 4,519.57 495,207.25 0.193% 202.56 Aaa AA+ 1.08 1.07 4.91% 912828MR8 US Treasury Notes/Bonds 2.375% 02/28/15 480,000 03/05/13 500,212.50 0.243% 491,837.36 102.504 492,018.72 3,873.48 495,892.20 0.218% 181.36 Aaa AA+ 1.17 1.14 4.92% 912828NP1 US Treasury Notes/Bonds 1.750% 07/31/15 450,000 11/04/13 461,654.30 0.252% 460,623.68 102.332 460,494.00 3,295.52 463,789.52 0.274% -129.68 Aaa AA+ 1.58 1.55 4.60% 912828PS3 US Treasury Notes/Bonds 2.000% 01/31/16 450,000 05/02/13 471,199.22 0.272% 466,125.84 103.281 464,765.40 3,766.30 468,531.70 0.417% -1,360.44 Aaa AA+ 2.08 2.03 4.65% 912828QJ2 US Treasury Notes/Bonds 2.125% 02/29/16 450,000 06/04/13 470,847.66 0.419% 466,501.50 103.648 466,417.80 3,249.14 469,666.94 0.429% -83.70 Aaa AA+ 2.17 2.11 4.66% 912828QA1 US Treasury Notes/Bonds 2.250% 03/31/16 430,000 04/04/13 454,691.41 0.311% 448,630.69 103.992 447,166.41 2,471.91 449,638.32 0.462% -1,464.28 Aaa AA+ 2.25 2.19 4.47% 912828QF0 US Treasury Notes/Bonds 2.000% 04/30/16 450,000 06/04/13 469,775.39 0.472% 465,894.04 103.453 465,538.95 1,541.44 467,080.39 0.508% -355.09 Aaa AA+ 2.33 2.28 4.65% 912828QP8 US Treasury Notes/Bonds 1.750% 05/31/16 475,000 12/03/13 490,864.26 0.399% 490,394.79 102.898 488,767.40 730.77 489,498.17 0.540% -1,627.39 Aaa AA+ 2.42 2.37 4.89% 912828QR4 US Treasury Notes/Bonds 1.500% 06/30/16 450,000 10/02/13 461,636.72 0.548% 460,597.60 102.305 460,371.09 18.65 460,389.74 0.570% -226.51 Aaa AA+ 2.50 2.45 4.60% 912828QX1 US Treasury Notes/Bonds 1.500% 07/31/16 490,000 08/02/13 503,092.19 0.595% 501,328.16 102.281 501,177.88 3,075.82 504,253.70 0.609% -150.28 Aaa AA+ 2.58 2.52 5.01% 912828RF9 1.000%470,000 09/04/13 471,615.63 0.883%471,444.24 100.937 474,406.25 1,596.96 476,003.21 0.644%2,962.01 Aaa AA+2.67 2.62 4.74%912828RF9 US Treasury Notes/Bonds 1.000%08/31/16 470,000 09/04/13 471,615.63 0.883%471,444.24 100.937 474,406.25 1,596.96 476,003.21 0.644%2,962.01 Aaa AA+2.67 2.62 4.74% 912828RJ1 US Treasury Notes/Bonds 1.000%09/30/16 250,000 11/04/13 253,076.17 0.571%252,914.77 100.859 252,148.50 638.74 252,787.24 0.684%-766.27 Aaa AA+2.75 2.70 2.52% 912828RU6 US Treasury Notes/Bonds 0.875%11/30/16 475,000 12/03/13 479,286.13 0.570%479,180.93 100.320 476,521.42 365.38 476,886.80 0.764%-2,659.51 Aaa AA+2.92 2.87 4.76% T otal U.S.Treasury Bonds 6,230,000 6,430,021.89 0.422%6,383,521.20 6,378,107.12 29,946.98 6,408,054.10 0.458%-5,414.08 Aaa AA+2.08 2.04 63.77% Federal Agency Bonds 3137EADD8 Federal Home Loan Mortgage Corporation 0.500%04/17/15 450,000 10/31/12 451,539.00 0.360%450,810.70 100.327 451,472.85 462.50 451,935.35 0.246%662.15 Aaa AA+1.33 1.29 4.51% 3135G0KM4 Federal National Mortgage Association 0.500%05/27/15 450,000 01/04/13 451,665.00 0.344%450,980.72 100.265 451,192.50 212.50 451,405.00 0.310%211.78 Aaa AA+1.42 1.40 4.51% 3137EACM9 Federal Home Loan Mortgage Corporation 1.750%09/10/15 500,000 11/20/12 518,940.00 0.383%511,503.49 102.332 511,658.50 2,697.92 514,356.42 0.365%155.01 Aaa AA+1.67 1.66 5.12% T otal Federal Age ncy Bonds 1,400,000 1,422,144.00 0.363%1,413,294.91 1,414,323.85 3,372.92 1,417,696.77 0.309%1,028.94 Aaa AA+1.48 1.46 14.14% Corporate Bonds 87612EAW6 Target Corp 1.125%07/18/14 250,000 11/13/12 252,922.50 0.423%250,952.42 100.401 251,001.50 1,273.44 252,274.94 0.389%49.08 A2 A+0.58 0.54 2.51% 0258M0CZ0 American Express Credit Corp 5.125%08/25/14 157,000 11/13/12 169,465.80 0.620%161,562.74 103.045 161,780.49 2,816.19 164,596.68 0.426%217.75 A2 A-0.67 0.64 1.62% 824348AN6 Sherwin-Williams Co 3.125%12/15/14 125,000 11/13/12 131,810.00 0.490%128,130.95 102.404 128,004.62 173.61 128,178.23 0.597%-126.33 A3 A 1.00 0.95 1.28% 372917AQ7 Genzyme Corp 3.625%06/15/15 250,000 10/26/12 269,797.50 0.577%261,001.10 104.429 261,072.50 402.78 261,475.28 0.564%71.40 A1 AA 1.50 1.42 2.61% 14912L4M0 Caterpillar Fin Serv Crp 2.750%06/24/15 250,000 10/26/12 263,980.00 0.616%257,828.51 103.147 257,866.75 133.68 258,000.43 0.611%38.24 A2 A 1.50 1.45 2.58% 24702RAL5 Dell Inc 2.300%09/10/15 250,000 10/26/12 260,307.50 0.836%256,121.47 100.375 250,937.50 1,772.92 252,710.42 2.069%-5,183.97 B1 B+1.67 1.64 2.51% 36962G4T8 General Electric Capital Corp 2.250%11/09/15 450,000 10/25/12 467,185.50 0.966%460,588.51 103.061 463,774.95 1,462.50 465,237.45 0.588%3,186.44 A1 AA+1.83 1.82 4.64% 78008KBS1 Royal Bank of Canada 2.625%12/15/15 250,000 10/25/12 264,480.00 0.746%259,087.93 103.674 259,186.00 291.67 259,477.67 0.728%98.07 Aa3 AA-2.00 1.91 2.59% 459200GU9 IBM Corp 2.000%01/05/16 108,000 10/26/12 112,639.68 0.632%110,944.11 102.636 110,846.99 1,056.00 111,902.99 0.677%-97.12 Aa3 AA-2.00 1.96 1.11% T otal Corporate Bonds 2,090,000 2,192,588.48 0.699%2,146,217.74 2,144,471.30 9,382.79 2,153,854.09 0.748%-1,746.44 A2 A+1.48 1.43 21.44% Portfolio T otals 1.827%9,785,236 10,109,990.74 0.470%10,008,270.22 102.217 10,002,138.64 42,702.96 10,044,841.60 0.496%-6,131.58 Aa1 AA 1.85 1.81 100% 08/31/16US Treasury Notes/BondsPACKET PAGE: 66AGENDA ITEM 3A.7 CITY OF SAN JACINTO MONTHLY PORTFOLIO REPORT DECEMBER 31, 2013 PORTFOLIO TRANSACTIONS Trade Settle Unit Amortized Unit Sale/Purchased Total Cost/ Net Date Date Quantity Security Coupon Maturity Par Value Cost Book Value Price Principal Accrued Interest Proceeds Gain/Loss Purchases 12/03/13 12/05/13 475,000 US Treasury Notes/Bonds 1.750% 05/31/16 475,000 103.34 490,864.26 114.18 490,978.44 12/03/13 12/05/13 475,000 US Treasury Notes/Bonds 0.875% 11/30/16 475,000 100.90 479,286.13 57.09 479,343.22 Total Purchases 950,000 970,150.39 171.27 970,321.66 Sales 12/03/13 12/05/13 475,000 Federal Home Loan Mortgage Corporation 4.750% 01/19/16 475,000 109.17 518,539.38 109.26 518,985.00 8,523.61 527,508.61 445.62 12/03/13 12/05/13 450,000 Federal National Mortgage Association 0.375% 03/16/15 450,000 100.03 450,135.89 100.20 450,886.50 370.31 451,256.81 750.61 Total Sales 925,000 968,675.27 969,871.50 8,893.92 978,765.42 1,196.23PACKET PAGE: 67AGENDA ITEM 3A.7 CITY OF SAN JACINTO MONTHLY PORTFOLIO REPORT DECEMBER 31, 2013 PORTFOLIO INTEREST EARNINGS Beginning Adjusted Ending Security Accrued Purchased Sold Interest Earned Amortization/ Interest Accrued Symbol Description Coupon Maturity Interest Interest Interest Received Interest Accretion Earned Interest U.S. TreasuryBonds 912828LZ1 US Treasury Notes/Bonds 2.125% 11/30/14 25.10 0.00 0.00 0.00 778.19 -703.33 74.86 803.30 912828MH0 US Treasury Notes/Bonds 2.250% 01/31/15 3,609.78 0.00 0.00 0.00 909.78 -821.79 87.99 4,519.57 912828MR8 US Treasury Notes/Bonds 2.375% 02/28/15 2,897.24 0.00 0.00 0.00 976.24 -866.21 110.04 3,873.48 912828NP1 US Treasury Notes/Bonds 1.750% 07/31/15 2,632.13 0.00 0.00 0.00 663.38 -570.57 92.81 3,295.52 912828PS3 US Treasury Notes/Bonds 2.000% 01/31/16 3,008.15 0.00 0.00 0.00 758.15 -655.82 102.33 3,766.30 912828QJ2 US Treasury Notes/Bonds 2.125% 02/29/16 2,430.25 0.00 0.00 0.00 818.89 -645.30 173.58 3,249.14 912828QA1 US Treasury Notes/Bonds 2.250% 03/31/16 1,647.94 0.00 0.00 0.00 823.97 -701.77 122.20 2,471.91 912828QF0 US Treasury Notes/Bonds 2.000% 04/30/16 770.72 0.00 0.00 0.00 770.72 -576.37 194.35 1,541.44 912828QP8 US Treasury Notes/Bonds 1.750% 05/31/16 0.00 114.18 0.00 0.00 616.59 -469.47 147.12 730.77 912828QR4 US Treasury Notes/Bonds 1.500% 06/30/16 2,824.73 0.00 0.00 -3,375.00 568.92 -358.08 210.84 18.65 912828QX1 US Treasury Notes/Bonds 1.500% 07/31/16 2,456.66 0.00 0.00 0.00 619.16 -369.85 249.31 3,075.82 912828RF9 US Treasury Notes/Bonds 1.000% 08/31/16 1,194.48 0.00 0.00 0.00 402.49 -45.46 357.03 1,596.96 912828RJ1 US Treasury Notes/Bonds 1.000% 09/30/16 425.82 0.00 0.00 0.00 212.91 -89.36 123.55 638.74 912828RU6 US Treasury Notes/Bonds 0.875% 11/30/16 0.00 57.09 0.00 0.00 308.29 -105.20 203.10 365.38 Total U.S. TreasuryBonds 23,923.00 171.27 0.00 -3,375.00 9,227.68 -6,978.58 2,249.11 29,946.98 Federal AgencyBonds 3135G0HG1 Federal National Mortgage Association 0.375% 03/16/15 351.56 0.00 -370.31 0.00 18.75 -1.46 17.29 0.00 3137EADD8 Federal Home Loan Mortgage Corporation 0.500% 04/17/15 275.00 0.00 0.00 0.00 187.50 -53.23 134.27 462.50 3135G0KM4 Federal National Mortgage Association 0.500% 05/27/15 25.00 0.00 0.00 0.00 187.50 -59.34 128.16 212.50 3137EACM9 Federal Home Loan Mortgage Corporation 1.750% 09/10/15 1,968.75 0.00 0.00 0.00 729.17 -576.01 153.16 2,697.92 3134A4ZT4 Federal Home Loan Mortgage Corporation 4.750% 01/19/16 8,272.92 0.00 -8,523.61 0.00 250.69 -280.05 -29.36 0.00 Total Federal AgencyBonds 10,893.23 0.00 -8,893.92 0.00 1,373.61 -970.09 403.52 3,372.92PACKET PAGE: 68AGENDA ITEM 3A.7 CITY OF SAN JACINTO MONTHLY PORTFOLIO REPORT DECEMBER 31, 2013 PORTFOLIO INTEREST EARNINGS (CONTINUED) Beginning Adjusted Ending Security Accrued Purchased Sold Interest Earned Amortization/ Interest Accrued Symbol Description Coupon Maturity Interest Interest Interest Received Interest Accretion Earned Interest Corporate Bonds 87612EAW6 Target Corp 1.125% 07/18/14 1,039.06 0.00 0.00 0.00 234.37 -148.92 85.45 1,273.44 0258M0CZ0 American Express Credit Corp 5.125% 08/25/14 2,145.67 0.00 0.00 0.00 670.52 -598.00 72.52 2,816.19 824348AN6 Sherwin-Williams Co 3.125% 12/15/14 1,801.22 0.00 0.00 -1,953.13 325.53 -278.20 47.33 173.61 372917AQ7 Genzyme Corp 3.625% 06/15/15 4,178.82 0.00 0.00 -4,531.25 755.21 -640.61 114.59 402.78 14912L4M0 Caterpillar Fin Serv Crp 2.750% 06/24/15 2,998.26 0.00 0.00 -3,437.50 572.92 -448.09 124.83 133.68 24702RAL5 Dell Inc 2.300% 09/10/15 1,293.75 0.00 0.00 0.00 479.17 -305.28 173.88 1,772.92 36962G4T8 General Electric Capital Corp 2.250% 11/09/15 618.75 0.00 0.00 0.00 843.75 -480.33 363.42 1,462.50 78008KBS1 Royal Bank of Canada 2.625% 12/15/15 3,026.04 0.00 0.00 -3,281.25 546.87 -392.13 154.74 291.67 459200GU9 IBMCorp 2.000% 01/05/16 876.00 0.00 0.00 0.00 180.00 -123.52 56.48 1,056.00 Total Corporate Bonds 17,977.57 0.00 0.00 -13,203.13 4,608.34 -3,415.08 1,193.24 9,382.79 Cash & Equivalents FGVXX First American Government Obligations - Class Y 0.010% 01/01/14 0.17 0.00 0.00 -0.17 0.27 0.00 0.27 0.27 Total Cash & Equivalents 0.17 0.00 0.00 -0.17 0.27 0.00 0.27 0.27 Portfolio Totals 52,793.97 171.27 -8,893.92 -16,578.30 15,209.90 -11,363.75 3,846.14 42,702.96PACKET PAGE: 69AGENDA ITEM 3A.7 CITY OF SAN JACINTO MONTHLY PORTFOLIO REPORT DECEMBER 31, 2013 PORTFOLIO CASH LEDGER Trade Settle Date Date Activity Description Amount Cash 12/01/13 Beginning Balance 0.00 12/02/13 Addition to Portfolio 0.17 12/03/13 Withdrawal from Portfolio -0.17 12/31/13 Ending Balance 0.00 First American Government Obligations - Class Y 12/01/13 Beginning Balance 35,749.7312/01/13 Beginning Balance 35,749.73 12/02/13 12/02/13 Transfer from Delayed Interest Account 4,568.75 12/03/13 12/03/13 Transfer from MMF Dividend 0.17 12/03/13 12/05/13 Sale Federal National Mortgage Association 450,886.50 12/03/13 12/05/13 Sale Federal Home Loan Mortgage Corporation 518,985.00 12/03/13 12/05/13 Purchase US Treasury Notes/Bonds -490,864.26 12/03/13 12/05/13 Purchase US Treasury Notes/Bonds -479,286.13 12/03/13 12/05/13 Accrued Interest Federal National Mortgage Association 370.31 12/03/13 12/05/13 Accrued Interest Federal Home Loan Mortgage Corporation 8,523.61 12/03/13 12/05/13 Accrued Interest US Treasury Notes/Bonds -114.18 12/03/13 12/05/13 Accrued Interest US Treasury Notes/Bonds -57.09 12/16/13 12/16/13 Interest Genzyme Corp 4,531.25 12/16/13 12/16/13 Interest Royal Bank of Canada 3,281.25 12/16/13 12/16/13 Interest Sherwin-Williams Co 1,953.13 12/24/13 12/24/13 Interest Caterpillar Fin Serv Crp 3,437.50 12/27/13 Withdrawal from Portfolio -104.17 12/31/13 12/31/13 Interest US Treasury Notes/Bonds 3,375.00 12/31/13 Ending Balance 65,236.37PACKET PAGE: 70AGENDA ITEM 3A.7 Policy Section CITY OF SAN JACINTO MONTHLY PORTFOLIO REPORT DECEMBER 31, 2013 PORTFOLIO PERFORMANCE Total Return Current Prior 3 Prior 12 Year to Inception 3-Years 5-Years 11/30/12 as of 12/31/2013 Month Months Months Date 11/30/12 City of San Jacinto -0.13 0.14 0.47 0.47 0.51 - - 0.47 BofAMerrill 1-3 Year Treasury -0.14 0.06 0.36 0.36 0.39 0.78 1.09 0.36 Average Annualized Returns PACKET PAGE: 71AGENDA ITEM 3A.7 CITY OF SAN JACINTO MONTHLY PORTFOLIO REPORT DECEMBER 31, 2013 PORTFOLIO COMPLIANCE Section Description Compliance Requirement BLXComment IX. 2 U.S. Treasury No limitations Compliant IX. 3 FederalAgency No limitations Compliant IX. 7 CDARS 30% limitin combination of CD's (including CDARS); 5-year maturity limit Compliant IX. 8 NegotiableCD's Issuer musthavelong-term debtrated A or higher and/or short-termdebt rated A1 or higher by 2 NRSRO's; Maturity ≤to 5 years, 30% totalportfolio Compliant IX. 5 Federally Insured Time Deposits Limited to amounts covered under federalinsurance; 5-year maturity limit Compliant IX. 6 TimeDeposits Fully collateralized per CA law, 20% limitwhen combined with IX. 5; Issuer musthavelong-termdebt rated A or higher or short-termdebt rated A1 or higher by 2 NRSRO's, 5-year maturity limit Compliant IX. 1 MunicipalBonds Rated in 4 highestgeneral classifications by nationally recognized rating service; 5% issuer limitation Compliant IX. 4 Bankers Acceptances Rated A1 or better and havelong term debtrated A or better by 2 NRSRO's; Maturity ≤ to 180 days, 40% total portfolio limit, 5% issuer limit Compliant Section Description Compliance Requirement BLXComment IX. 16 MutualFunds Authorized by CA GovernmentCodeSection 53601 Compliant X.A.1 Futures and Options Prohibited Compliant X.A.3 PotentialZero Accruals Prohibited Compliant X.A.2 InverseFloaters, Range Notes, and IO Strips Prohibited Compliant IX. 14 Pass-Through Securities Issuer debtrated at leastA by 2 NRSRO; Mustberated in theAA category by 2 NRSRO's; 20% totalportfolio limit, 5-year maturity limit Compliant IX. 15 Money Market Funds Registerd with SECunder 1940 Act, havehighestranking by 2 NRSRO's; Retained advisor registered (or exemptfrom registration) with 5 years experienceinvesting in securities authorized by CA 53601 and atleast$500 million of assets; 20% totalportfolio limit, 10% per fund limit Compliant CorporateBonds Corporations organized and operating in theU.S. or depository institutions licensed by theU.S. or any stateand operating in theU.S.; Rated in theA category or better by 2 NRSRO's, 5-year maturity limit; 30% totalportfolio limit, 5% issuer limit Compliance Exception Noted1 IX. 13 1 In February 2013,the Dell 2.30%9/10/2015Bonds, CUSIP24702RAL5(the “Dell Bonds”), were downgraded by Moody’s Investor Service (“Moody’s”) to Baa1 from A2. In addition, Fitch Ratings (“Fitch”) lowered the ratings on the Dell Bonds to BB+ from A. The downgrade to below the “A” category by both Moody’s and Fitch caused the Dell Bonds to be out of compliance with the City’s Investment Policy which requires corporate medium term notes to have a rating in the “A” category or better by at least two nationally recognized statistical rating organizations (“NRSRO’s”). Furthermore,Standard & Poor’s (“S&P”)downgraded the Dell Bonds to BBB from A- in May 2013. In September 2013,the Dell bonds received additional downgrades; S&Plowered ratings to B+ from BBB and Fitch lowered ratings to B+ from BB+. Moody’s then lowered ratings to B1 from Baa1 in October 2013. Based upon discussions between BLX Group LLC (“BLX”) and the City, the City has elected to retain the Dell Bonds in the portfolio. This decision is based upon the relatively short remaining term to maturity of the Dell Bonds and the outlook that Dell will maintain the resources to fully service its debt obligations. The City, together with BLX, will continue to monitor the status of the Dell Bonds and BLX will provide monthly status updates in accordance with the requirements of the Investment Policy. Please see the accompanying memorandum for further details. IX. 11 LAIF 70% totalportfolio limit, up to themaximumpermitted balance Compliant IX. 12 LocalGovernment InvestmentPools RiversideCounty InvestmentFund limited to 70% of theportfolio; JPA Pools limited to 50% of theportfolio Compliant IX. 9 RepurchaseAgreements Collateralized at102% in accordancewith policy; 1-year maturity limit, no % portfolio limit, collateralheld by custodian bank; Subjectto master repurchaseagreementsubstantially in SIFMA's form Compliant IX. 10 CommercialPaper Issuer is organized and operating in theU.S. with assets of atleast$500 million; Issuer short-term ratings of A1 or higher and long-term ratings of A or higher by 2 NRSRO's; Maturity ≤ 270 days; 25% total portfolio limit; 5% issuer limit Compliant IX. 8 NegotiableCD's rated A1 or higher by 2 NRSRO's; Maturity ≤to 5 years, 30% totalportfolio limit, 5% issuer limit Compliant X.A.3 PotentialZero Accruals Prohibited Compliant X.A.5 Purchases on Margin Prohibited Compliant X.A.6 ReverseRepos & Leverage Prohibited Compliant X.A.7 Foreign $ Securities Prohibited Compliant X.B.2 SingleIssuer Limitation 5% issuer limitation, exceptU.S. Governmentand its agencies & enterprises Compliant X.C.2 CallableSecurities 20% of totalportfolio (excluding MakeWholeCallsecurities) Compliant X.C.3 MaximumMaturity Individualsecurity maturities limited to 5 years or less Compliant X.C.4 Portfolio Duration Limitation Averageportfolio duration willbemanaged to beapproximatly equalto the MarketBenchmark selected by theCity (typically +/- 20 of benchmark duration) CompliantPACKET PAGE: 72AGENDA ITEM 3A.7 TO CITY OF SAN JACINTO FROM BLX GROUP LLC DATE DECEMBER 31, 2013 RE DOWNGRADE OF DELL BO On October 29, 2013, the group (the “Dell/Silver Lake Group”) comprised of Dell’s Chairman and Chief Executive Officer, Michael Dell (“Mr. Dell”), and private equity firm Silver Lake Partners completed the leveraged buyout transaction (the “Go-Private Transaction”) that they first introduced on February 5, 2013 and later amended on August 2, 2013. The Dell/Silver Lake Group funde debt financing arrangements, cash equity contributions, and cash on hand at Dell and its subsidiaries. As of month end, the City’s Dell Bonds (“Dell Bonds”) hold a rating of B+ by S&P, B1 by Moody’s, and B+ During the month, the price of the Dell Bonds trended higher and the yield trended lower. As reflected in Table 1, the average observed closing price for the Dell Bonds on December 30 on November 29th. The average observed closing yield on the Dell Bonds was 2.07% on December 30 compared to 1.94% at the end of November. The average observed spread to a duration closed December at 180 basis points (1.80%) compared to 170 basis points (1.70%) As of month’s end, Interactive Data, a leading provider of security pricing services, values the Dell Bonds at a market price of 100.38, up from 100.13 at the end of November. Based upon the City’s amortized cost of 102.45, this market price indication equates to an unrealized loss of approximately $5,200, which when adjusted for interest earned to date, results in a net unrealized loss of approximately $2,700 or realized gain or loss would depend upon marke Based upon discussions between BLX Group LLC (“BLX”) and the City, the City has elected to retain the Dell Bonds in the portfolio rather than sell and realize a market loss on the position. This de relatively short remaining term to maturity of the Dell Bonds and the outlook that a post Dell will maintain the resources to fully service its debt obligations. The City, together with BLX, will continue to monitor the status of the Dell Bonds and BLX will provide monthly status updates in accordance with the requirements of the Investment Policy. M e m o r a n d u m CITY OF SAN JACINTO DOWNGRADE OF DELL BONDS IN CITY INVESTMENT PORTFOLIO On October 29, 2013, the group (the “Dell/Silver Lake Group”) comprised of Dell’s Chairman and Chief Dell (“Mr. Dell”), and private equity firm Silver Lake Partners completed the leveraged Private Transaction”) that they first introduced on February 5, 2013 and later amended on August 2, 2013. The Dell/Silver Lake Group funded the $24.9 billion Go-Private Transaction with debt financing arrangements, cash equity contributions, and cash on hand at Dell and its subsidiaries. As of month end, the City’s Dell Bonds (“Dell Bonds”) hold a rating of B+ by S&P, B1 by Moody’s, and B+ During the month, the price of the Dell Bonds trended higher and the yield trended lower. As reflected in Table 1, the average observed closing price for the Dell Bonds on December 30th was 100.386 compared to 100.620 rage observed closing yield on the Dell Bonds was 2.07% on December 30 compared to 1.94% at the end of November. The average observed spread to a duration-matched Treasury closed December at 180 basis points (1.80%) compared to 170 basis points (1.70%)at the end of November. As of month’s end, Interactive Data, a leading provider of security pricing services, values the Dell Bonds at a market price of 100.38, up from 100.13 at the end of November. Based upon the City’s amortized cost of arket price indication equates to an unrealized loss of approximately $5,200, which when adjusted for interest earned to date, results in a net unrealized loss of approximately $2,700 or -1.02%. Of course, any realized gain or loss would depend upon market conditions and security pricing at the time of sale. Based upon discussions between BLX Group LLC (“BLX”) and the City, the City has elected to retain the Dell Bonds in the portfolio rather than sell and realize a market loss on the position. This decision is based upon the relatively short remaining term to maturity of the Dell Bonds and the outlook that a post-Go Dell will maintain the resources to fully service its debt obligations. The City, together with BLX, will continue to monitor the status of the Dell Bonds and BLX will provide monthly status updates in accordance with the requirements of the Investment Policy. M e m o r a n d u m On October 29, 2013, the group (the “Dell/Silver Lake Group”) comprised of Dell’s Chairman and Chief Dell (“Mr. Dell”), and private equity firm Silver Lake Partners completed the leveraged Private Transaction”) that they first introduced on February 5, 2013 and later Private Transaction with debt financing arrangements, cash equity contributions, and cash on hand at Dell and its subsidiaries. As of month end, the City’s Dell Bonds (“Dell Bonds”) hold a rating of B+ by S&P, B1 by Moody’s, and B+by Fitch. During the month, the price of the Dell Bonds trended higher and the yield trended lower. As reflected in Table was 100.386 compared to 100.620 rage observed closing yield on the Dell Bonds was 2.07% on December 30th matched Treasury at the end of November. As of month’s end, Interactive Data, a leading provider of security pricing services, values the Dell Bonds at a market price of 100.38, up from 100.13 at the end of November. Based upon the City’s amortized cost of arket price indication equates to an unrealized loss of approximately $5,200, which when adjusted 1.02%. Of course, any t conditions and security pricing at the time of sale. Based upon discussions between BLX Group LLC (“BLX”) and the City, the City has elected to retain the Dell cision is based upon the Go-Private-Transaction Dell will maintain the resources to fully service its debt obligations. The City, together with BLX, will continue to monitor the status of the Dell Bonds and BLX will provide monthly status updates in accordance with the PACKET PAGE: 73 AGENDA ITEM 3A.7 Table 1: TRACE Trade History Date High Low Last Avg High 11/29/2013 100.684 100.557 100.684 100.620 1.977 12/2/2013 100.500 99.875 99.875 100.188 2.372 12/3/2013 100.562 99.485 100.375 100.023 2.600 12/4/2013 100.500 100.272 100.272 100.386 2.140 12/5/2013 100.625 100.625 100.625 100.625 1.934 12/6/2013 100.505 100.210 100.285 100.357 2.176 12/9/2013 100.769 100.250 100.625 100.509 2.152 12/10/2013 100.720 99.750 100.720 100.235 2.446 12/11/2013 101.844 100.400 101.844 101.122 2.063 12/12/2013 101.225 100.750 100.750 100.987 1.857 12/13/2013 100.875 100.194 100.625 100.535 2.184 12/16/2013 100.885 100.470 100.775 100.678 2.021 12/17/2013 100.535 100.135 100.520 100.335 2.219 12/18/2013 101.191 99.898 100.745 100.545 2.360 12/19/2013 100.655 100.385 100.535 100.520 2.069 12/20/2013 100.750 100.350 100.500 100.550 2.089 12/23/2013 101.171 99.998 100.745 100.584 2.300 12/26/2013 101.437 100.572 100.572 101.004 1.954 12/27/2013 100.500 100.500 100.500 100.500 1.997 12/30/2013 101.250 99.521 99.521 100.386 2.591 Monthly Average:100.868 100.192 100.548 100.530 2.185 Price 98 99 100 101 102 103 104 PriceGraph1: Dell Bond Price 50 100 150 200 250 300 SpreadGraph3: Dell Bond Spread High Low Last Avg Vol(M) Trds Dlr Buy Dlr Sell 1.977 1.904 1.904 1.940 800 5 300 2.372 2.009 2.372 2.191 289 6 100 163 2.600 1.973 2.081 2.286 10,838 23 4,118 3,000 2.140 2.007 2.140 2.074 1,100 3 50 1,000 1.934 1.934 1.934 1.934 1,000 1 0 1,000 2.176 2.004 2.132 2.090 248 6 190 2.152 1.849 1.933 2.001 6,282 11 2,615 1,000 2.446 1.877 1.877 2.162 1,253 12 287 750 2.063 1.221 1.221 1.642 340 7 10 110 1.857 1.579 1.857 1.718 1,015 2 0 1,015 2.184 1.783 1.930 1.983 7,923 19 3,628 2,011 2.021 1.776 1.841 1.898 2,269 16 250 1,720 2.219 1.982 1.991 2.100 2,660 12 1,420 1,000 2.360 1.592 1.856 1.976 334 12 32 2.069 1.908 1.980 1.989 729 8 249 2.089 1.850 2.000 1.970 1404 8 1,165 2.300 1.599 1.853 1.950 110 3 10 1.954 1.437 1.954 1.695 85 7 45 1.997 1.997 1.997 1.997 24 2 12 2.591 1.545 2.591 2.068 672 4 501 170 2.185 1.785 1.976 1.985 2,030 9 773 684 Yield Dealer to Client Volume(M) Source:Bloomberg Source:Bloomberg 0.80 1.30 1.80 2.30 2.80 3.30 YieldGraph2: Dell Bond Yield 9 10 11 12 13 14 15 PriceGraph4: Dell Equity Price City of San Jacinto December 31, 2013 Page 2 D→D Dlr Sell Vol(M) 0 300 500 163 -63 26 3,000 1,118 3,720 1,000 -950 50 1,000 -1,000 0 6 184 52 1,000 1,615 2,667 750 -463 216 110 -100 220 1,015 -1,015 0 2,011 1,617 2,284 1,720 -1,470 299 1,000 420 240 5 27 297 0 249 480 0 1,165 239 50 -40 50 5 40 35 0 12 12 170 331 1 684 88 573 Source: Bloomberg and BLX Group LLC Dealer to Client Volume(M) Net Source:Bloomberg Source:Bloomberg PACKET PAGE: 74 AGENDA ITEM 3A.7 For the best experience, open this PDF portfolio in Acrobat X or Adobe Reader X, or later. Get Adobe Reader Now! PACKET PAGE: 75AGENDA ITEM 3A.7 M e m o r a n d u m TO: THOMAS PRILL FROM: MARK CREGER DATE: JANUARY 27, 2014 RE: IMPLICATIONS OF THE FED TAPERING ANNOUNCEMENT ON FIXED INCOME MARKETS AND THE CITY OF SAN JACINTO PORTFOLIO STRATEGY BLX Group LLC (“BLX”) is pleased to provide this written response to questions posed by members of the City Council of the City of San Jacinto (the “City”) regarding the potential implications to fixed income markets and the City’s portfolio strategy of the announcement that the Federal Reserve (the “Fed”) will begin to taper the pace of its large scale asset purchase program beginning in January 2014. Background As the City is aware, the financial crisis of 2007/2008 (the “Financial Crisis”) is considered by many economists to be the worst such event since the Great Depression of the 1930’s. Triggered by the bursting of the U.S. housing bubble, the Financial Crisis resulted in the near collapse of systemically critical global financial institutions, the national bailout of banking institutions, the failure of major businesses, significantly elevated foreclosure activity, major downturns in global equity markets, the loss of trillions of dollars in U.S. consumer wealth, and a downturn in economic activity that lead to the 2008-2012 global recession and contributed to the European sovereign debt crisis. In response to the Financial Crisis, the Fed acted aggressively to support the financial system and broader economy. In particular, the reduction in the target federal funds rate from 5.25% in September 2007 to effectively zero in December 2008 was an extraordinarily rapid easing in the stance of monetary policy. In addition, the Fed implemented a number of new and innovative programs designed to support the liquidity of financial institutions and foster improved conditions in financial markets. These programs led to significant changes in the Fed's balance sheet. While many of the crisis-related programs have expired or been closed, the Fed continues to take actions designed to fulfill its dual monetary policy objectives of maximum employment and price stability. In recent years, many of these actions have focused primarily on the large-scale purchase of longer-term securities in an effort to lower longer-term interest rates, ease overall financial conditions, promote increased economic activity, and raise the rate of inflation. Given the severity of the downturn, the Fed determined that lowering short-term policy rates to near zero and attempting to influence future rate expectations through enhanced forward guidance language would not be sufficient to counter the economic and financial effects of the Financial Crisis. Indeed, once the Fed reduced the target federal funds rate to effectively zero, no further conventional policy easing was possible. As a result, the Fed elected to utilize alternative and unconventional methods to further ease financial conditions and encourage spending. Thus, in an effort to reduce longer-term interest rates, such as those on mortgages, the Fed initiated a series of large-scale purchases of longer- term Treasury, agency, and agency mortgage-backed securities. On November 25, 2008, the Fed announced the first such large-scale asset purchase program (“QE1”) wherein it would purchase up to $600 billion in agency debt and related mortgage-backed securities. On March 18, 2009, the Fed PACKET PAGE: 77 AGENDA ITEM 3A.7 City of San Jacinto January 27, 2014 Page 2 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 4,500,000 1/3/2007 1/3/2008 1/3/2009 1/3/2010 1/3/2011 1/3/2012 1/3/2013 1/3/2014 FederalReserveBalance Sheet ($Millions) Traditional SecurityHoldings LongTermTreasury Purchases Lendingto Financial Institutions Liquidityto KeyCredit Markets FedAgencyDebtMortgage-Backed SecuritiesPurch announced that QE1 would be expanded to include the purchase of an additional $750 billion of agency debt and related mortgage-backed securities and $300 billion of Treasury securities. QE1 ended in March 2010. On November 3, 2010, the Fed announced its second large-scale asset purchase program (“QE2”) wherein it would purchase an additional $600 billion in Treasury securities at the rate of $75 billion per month. QE2 ended in June 2011. At the conclusion of its September 21, 2011 FOMC meeting, the Fed announced the implementation of a maturity extension program referred to as “Operation Twist.” Under the provisions of Operation Twist, the Fed would purchase $400 billion of Treasury securities with maturities between 6 and 30 years and fund such purchases through the sale of currently held Treasury securities with maturities of less than 3 years. In this way, Operation Twist was intended to exert additional downward pressure on longer-term interest rates without fostering the same kind of inflationary concerns associated with the money creation and balance sheet expansion required by QE1 and QE2. In June 2012, the Fed announced that Operation Twist would be expanded to include an additional $267 billion of longer-term Treasury purchases and extended until the end of 2012. On September 13, 2012, the Fed announced its third large-scale asset purchase program (“QE3”). This new round of asset purchases provided for an open-ended commitment to purchase $40 billion of agency mortgage-backed securities per month until labor market conditions improved “substantially.” On December 12, 2012, QE3 was expanded to replace the sterilized Treasury maturity extensions associated with Operation Twist and include additional open-ended Treasury purchases of $45 billion per month. QE3 continues today; though as detailed below, the Fed has begun to reduce or “taper” the pace of security purchases. The cumulative and combined effects of the above-referenced large-scale asset purchase programs (QE1, QE2, and QE3, collectively “QE”) have resulted in a massive expansion of the Fed’s balance sheet and the U.S. monetary base. As reflected in Fig 1, prior to the Financial Crisis (January 2007), the Fed’s balance sheet was valued at approximately $850 billion. Today, the Fed’s balance sheet has been expanded to a value of more than $4 trillion, or more than 4.5 times its pre-crisis level. Some market participants remain concerned that this massive expansion of the Fed’s balance sheet may undermine the value of the dollar and foster a greater-than-desired acceleration of inflation and/or an increase to forward-looking inflation expectations. However, to date and as further detailed in later pages, such excessive inflation pressures have yet to materialize. In light of currently benign rates of inflation and perceptions of excess economic capacity (e.g., low rates of employment and below-potential rates of economic growth), the Fed to continues to view the primary risk to the U.S. economy to be that of weak growth as opposed to accelerating inflation. Against this backdrop and despite the recently announced Fig 1 Source: Federal Reserve Bank of St. Luis PACKET PAGE: 78 AGENDA ITEM 3A.7 City of San Jacinto January 27, 2014 Page 3 tapering in the pace of QE3 asset purchases, the Fed is likely to maintain the highly accommodative posture of monetary policy into the foreseeable future. Fed Tapering Announcement On December 18, 2013, the Federal Reserve announced that it would begin to reduce or “taper” the pace of asset purchases associated with its QE3 program. Beginning in January, the Fed will taper its $85 billion per month bond purchases by $10 billion split equally between a $5 billion reduction in Treasury purchases and a $5 billion reduction in mortgage-backed security purchases. In the accompanying statement, the Fed expressed their view that the economy had strengthened sufficiently to begin reducing stimulus noting: “In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the Committee decided to modestly reduce the pace of its asset purchases. Beginning in January, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $35 billion per month rather than $40 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $40 billion per month rather than $45 billion per month.” To help alleviate investor concerns, the Fed reminded investors that tapering was not a tightening of monetary policy as its balance sheet will continue to expand, just at a slightly more moderate pace. In addition, the Fed altered its language regarding forward rate guidance to mitigate a potentially adverse market reaction to its tapering decision noting: “The Committee now anticipates, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 percent, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal.” Previous to this announcement, the Fed had indicated it may consider raising the federal funds rate when the unemployment rate reached 6.5%. However, recent declines in the unemployment rate, currently at 6.7%, have had more to do with declines in labor force participation than robust job creation. As a result, the Fed’s conditional commitment to keep short-term rates near zero “well past” the current unemployment threshold is designed to communicate a continuation of policy accommodation and anchor shorter-term interest rates. In BLX’s view, this change in forward guidance is perhaps the most important element of the Fed’s recent decision. As discussed in later pages, shorter-term interest rates (e.g., 1-3 year Treasury yields) are more sensitive to change and expectations for change in the Fed’s short rate policy than they are to the tapering of the Fed’s asset purchase program. Because the City’s portfolio is invested in such shorter-term securities, changes in the Fed’s short rate policy will have more of a direct impact on investment performance than the Fed’s tapering actions. Looking forward, the Fed made a point to reiterate that, like all monetary policy, its decision to taper will remain data dependent. Should the economy continue to perform generally consistent with the Fed’s expectations, further tapering of a similar amount (e.g., approximately $10 billion per month) are likely to be announced at future FOMC meetings. At this pace, the Fed would conclude the tapering process by approximately the end of 2014. Moreover, the data-dependent nature of the tapering process implies a potentially faster pace of tapering could be implemented should the pace of economic PACKET PAGE: 79 AGENDA ITEM 3A.7 City of San Jacinto January 27, 2014 Page 4 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 1/24/2012 7/24/2012 1/24/2013 7/24/2013 1/24/2014 Select Treasury Rates 2-YrTreasury 5-YrTreasury 10-YrTreasury Tapering Expectations PostTaper Announcement Source:Bloomberg improvement accelerate. By contrast, the Fed reserves the right to taper at a somewhat slower pace should economic conditions deteriorate sufficiently relative to the Fed’s expectations. As discussed in later pages, the fixed income markets appear to have come to terms with the Fed’s expected moderate pace of tapering and have stabilized significantly relative to previous months. Importantly, the Fed’s tapering announcement is only the first step in what will surely be a long process of monetary normalization. Implications of Tapering on Fixed Income Markets In BLX’s view, the Fed’s tapering announcement is not, in and of itself, a meaningful tightening of monetary conditions. By updating its forward rate guidance and extending the period of time that short-term interest rates are likely to remain near zero, the commencement of tapering and eventual end of QE3 do not automatically imply rising short-term interest rates. As a result, the immediate and direct implications of the Fed’s tapering announcement have been generally limited. However, looking ahead the commencement of tapering and eventual cessation of QE stimulus has the potential to affect the economy and fixed income markets through rising interest rates. As reflected in Fig 2, Treasury bond yields have already risen significantly since May (when the May FOMC statement made it clear that tapering was only a matter of time) and reflect a pricing in of tapering expectations. After the tapering announcement, Treasury yields have stabilized and currently reflect expectations that the Fed will taper incrementally at a pace of approximately $10 billion per FOMC meeting. The interest rate increases experienced to date, while slowing certain interest rate sensitive sectors of the economy, have been generally manageable by the broader economy. Looking forward, BLX anticipates that mid and longer maturity Treasury yields will rise further, but likely at a more gradual pace than that seen over the preceding months. Moreover, significant and rapid increases to longer- term interest rates raise the risk of slowing an already fragile U.S. economy. In this way, such rapid increases to longer-term interest rates would likely be somewhat self correcting as the prospect of slower growth raises the demand of safe-haven assets like U.S. Treasury securities. Similarly, the trajectory of tapering is, as the Fed has indicated, dependent upon the economy performing in line with its expectations. Should longer-term interest rates rise at a pace deemed to be detrimental to U.S. growth prospects, the Fed retains the right to adjust its tapering plans as necessary to limit longer-term rate increases and promote stronger growth. Although the anchoring effect of the Fed’s forward guidance language on short-term interest rates does extend to certain mid-term maturities, it is less effective than QE3 itself, which is now a diminishing influence. Accordingly, the process of Fed tapering will likely continue the trend of previous months towards further yield curve steepening (i.e., yields on longer-term Treasuries rising by more than short- term Treasuries). Moreover, while risks still appear weighted more towards higher yields and volatility, Fig 2 PACKET PAGE: 80 AGENDA ITEM 3A.7 City of San Jacinto January 27, 2014 Page 5 0.00 500,000.00 1,000,000.00 1,500,000.00 2,000,000.00 2,500,000.00 3,000,000.00 3,500,000.00 4,000,000.00 4,500,000.00 12/1/19957/1/19962/1/19979/1/19974/1/199811/1/19986/1/19991/1/20008/1/20003/1/200110/1/20015/1/200212/1/20027/1/20032/1/20049/1/20044/1/200511/1/20056/1/20061/1/20078/1/20073/1/200810/1/20085/1/200912/1/20097/1/20102/1/20119/1/20114/1/201211/1/20126/1/2013FederalReserve Balance Sheet and Excess Bank Reserves US Condition of AllFederal ReserveBanks Total Assets US Aggregate ReservesDepository Institutions ExcessReservesNSA Source:FederalReserve 1.50 1.60 1.70 1.80 1.90 2.00 2.10 2.20 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 12/1/19957/1/19962/1/19979/1/19974/1/199811/1/19986/1/19991/1/20008/1/20003/1/200110/1/20015/1/200212/1/20027/1/20032/1/20049/1/20044/1/200511/1/20056/1/20061/1/20078/1/20073/1/200810/1/20085/1/200912/1/20097/1/20102/1/20119/1/20114/1/201211/1/20126/1/2013The Money Money Multiplier and Velocity of Money (M2) MoneyMultiplier (LeftAxis) Bloomberg Velocity of Money M2 Money Supply (Right Axis) Source:FederalReserveandBloomberg given the significant re-pricing experienced in the months preceding the tapering announcement, BLX’s view is that future interest rate increases related to the tapering are unlikely to be of a greater magnitude than those already experienced. Looking ahead, certain important risks to the economy and financial markets remain as a result of the Fed’s unprecedented accommodation and efforts to normalize policy. In particular, the Fed has significant experience in guiding the economy by adjusting short-term policy rates (e.g., the federal funds and discount rates) and influencing future rate expectations. By contrast, however, the economic and market impact of purchasing large volumes of longer-term assets, and the associated expansion of reserves in the banking system, are much less understood. It is important to note that the Fed has funded its purchase of securities via QE by crediting the accounts that banks hold with them with newly created dollars. As reflected in Fig 3, the increase in the size of the Fed’s balance sheet has resulted in a massive expansion in the monetary base and the creation of enormous quantities of excess bank regulatory reserves. Prior to the Financial Crisis, banks carried almost no reserves above required regulatory levels. However, as reflected in Fig 4, with the expansion of the Fed’s balance sheet to over $4 trillion, excess regulatory reserves have ballooned to an unprecedented $1.9 trillion. Historically, banks converted such increases to the monetary base (which includes excess bank reserves) into spendable monetary aggregates like “M2” at a rate of approximately 8.5x thanks to a fractional reserve banking system. However, this so-called “money multiplier” (M2/Monetary base) has plummeted to just 3.5x after reaching a peak of nearly 9.5x in 2008. Moreover, the velocity of money has also plummeted in recent years. The velocity of money measures the frequency at which one unit of currency (as measured by a monetary aggregate like M2) is used to purchase domestic goods and services. It is calculated by dividing nominal Gross Domestic Product (“GDP”) by a monetary aggregate such as M2. Low rates in the velocity of money indicate that money is not changing hands via transactions within the domestic economy as quickly as it once did. In light of the historically depressed Fig 3 Fig 4 PACKET PAGE: 81 AGENDA ITEM 3A.7 City of San Jacinto January 27, 2014 Page 6 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 12/1/19996/1/200012/1/20006/1/200112/1/20016/1/200212/1/20026/1/200312/1/20036/1/200412/1/20046/1/200512/1/20056/1/200612/1/20066/1/200712/1/20076/1/200812/1/20086/1/200912/1/20096/1/201012/1/20106/1/201112/1/20116/1/201212/1/20126/1/201312/1/20136/1/2014Measures of Core Inflation US CPI Urban Consumers Less Food & Energy YoY NSA US Personal Consumption Expenditure CorePriceIndex YoY SA Source:BureauofLaborStatisticsand BureauofEconomic Analysis levels of both the money multiplier and the velocity of money, it is not surprising that, as reflected in Fig 5, current rates of inflation remain below the Fed’s longer term target of 2.00%. Currently low rates of inflation notwithstanding, a significant concern of many market participants (BLX included) is that normalization in the money multiplier and/or an increase in the velocity of money have the potential to be very inflationary. Similarly, a loss of confidence in the Fed’s ability to manage such an inflationary flare up could lead to a similarly dangerous acceleration in future inflation expectations that could propel interest rates higher. While this dynamic has yet to unfold, it remains an important area of potential risk. Currently, credit creation, which is the primary transmission mechanism by which such increases to the monetary base and bank reserves are converted into easily spendable monetary aggregates (like M2), is sluggish due to less demand for loans and fewer creditworthy borrowers seeking credit. However, a shift in bank behavior towards more inflationary use of current excess reserves is possible as the economy and confidence recover. As a result, this dynamic will deserve careful attention going forward for signs of a potential increase in rates of inflation, a potential policy change by the Fed, and higher interest rates generally. Implications of Tapering on City of San Jacinto Portfolio Strategy As previously mentioned, shorter-term interest rates (e.g., 1-3 year Treasury yields) are more sensitive to actual or expected changes to the federal funds rate than they are to the tapering of the Fed’s asset purchase program. Per the City’s Investment Policy and Procedures, the City’s investment portfolio is benchmarked to the Bank of America/Merrill Lynch 1-3 Year Treasury Index (the “Index”). In selecting this Index, the City has effectively defined that long-term risk/return profile that best meets its circumstances and risk tolerances. As the name implies, the Index is comprised of U.S. Treasury securities with maturities between one and three years. As of December 31, 2013, the Index had an average maturity of 1.86 years and an effective duration of 1.83. For comparison, the portion of the City’s portfolio managed by BLX was structured with an average maturity of 1.85 years and an effective duration of 1.81 as of the same period end. Per the City’s Investment Policy, portfolio duration shall be maintained within a band of approximately +/- 20% of the Index duration. Because the Fed’s tapering activities are not expected to have a meaningful impact on shorter-term Treasury rates, BLX does not anticipate enacting any significant strategic changes for the City’s portfolio in response. Due to its short maturity, the City’s portfolio will likely be more directly affected by actual and expected changes to the federal funds rate. As previously mentioned, in announcing the tapering decision, the Fed altered its forward guidance language to reiterate the point that tapering was not a tightening of monetary policy and that short-term interest rates will likely be maintained at or near current levels for an extended period. In BLX’s view, a tightening of monetary policy via increases to the Fig 5 PACKET PAGE: 82 AGENDA ITEM 3A.7 City of San Jacinto January 27, 2014 Page 7 federal funds rate is unlikely to occur before sometime in 2015, and potentially later. As a result, BLX will continue to manage the City’s portfolio utilizing the same disciplined and prudent strategies. For reference, BLX seeks opportunities to add value and enhance portfolio return through the disciplined and conservative management of four primary variables: Shape of yield curve:Like the general level of interest rates, yield spreads between maturity points change as the shape and slope of the yield curve adjusts with market expectations. Yield curve analysis enables BLX to identify opportunities across the term structure of interest rates by recommending the allocation of investments to those areas of the yield curve (within client-specific liquidity constraints) which afford the greatest potential for return in the prevailing and anticipated market environment. Sector/quality spreads:Within the context of an appropriately diversified portfolio, the allocation of assets to those sectors which afford relative-value opportunities can add significantly to portfolio performance. BLX analyzes the relative movement in yield relationships to identify pricing inefficiencies and relative value opportunities. Fundamental analysis is utilized to compare the current risk in the economy to the relative yield premium, or spread, received by holding securities other than U.S. Treasury securities. Value opportunities are then identified by comparing such yield premiums relative to historical relationships. In general, and within investment policy and other prudent parameters, overweighting those sectors which afford greater relative value can enhance portfolio return over time. Duration:Portfolio returns can be enhanced by making subtle and prudent changes to the duration relative to the interest rate environment and outlook. In short, reducing portfolio duration in a rising interest rate environment can reduce interest rate risk, mitigate the related depreciation of market value, and provide liquidity with which to take advantage of the higher interest rate environment. Conversely, extending portfolio duration in a declining interest rate environment can reduce reinvestment rate risk and maximize the market value appreciation associated with falling interest rates. Importantly, long-term performance is best enhanced by making only subtle duration adjustments relative to the benchmark (e.g., +/- 20%) and avoiding outright interest rate speculation. Issue selection:Individual security selection is based on the assessment of relative value and the analysis of each security’s contribution to total portfolio risk. BLX recommends aggressively "shopping" for all securities to identify individual securities which provide the opportunity to add incremental yield relative to the market while controlling overall portfolio risks. Importantly, BLX’s investment strategy does not include attempts at predicting the direction, magnitude, and pace of future interest rate changes, but rather is focused on the disciplined and conservative application of prudent fixed income management principles applied consistently over time and throughout market cycles. In our judgment, attempts at market timing generally expose the portfolio to greater risk and volatility with no consistent and repeatable improvements to long-term expected return. Thank you for the opportunity to provide this written response. The fixed income markets are likely to remain volatile in 2014 as the Fed begins to scale back its stimulus programs and investors contemplate how evolving economic data may factor into the Fed’s decision making process. The decision to begin tapering the bond purchase program represents the first step in what will likely prove to be a very long process of normalizing monetary policy. We hope the information contained herein is helpful to the City and responsive to its inquiry. As always, please let us know if you have any questions or require any additional information. PACKET PAGE: 83 AGENDA ITEM 3A.7 February 4, 2014 TO: The Honorable Mayor and Members of the City Council FROM: Habib Motlagh, City Engineer Sharon Paisley, Development Director SUBJECT: Award of Contract / Community Development Block Grant Downtown Road Improvements (CIP 13-002) RECOMMENDATION: Staff recommends that the City Council, by motion, award the contract for the 2013 Community Development Block Grant (CDBG) Downtown Road Improvements project to KAD Paving, approve the allocation of funds for contingency and soft costs, and approve a budget transfer of $400,000 from CIP 11-006 (“Downtown Street Improvements”). DISCUSSION: Previously, the City Engineer’s office prepared plans and specifications for the 2013 CDBG Downtown Road Improvements project (CIP 13-002), and obtained approval of the specifications from the Riverside County Economic Development Agency (EDA). This approval was necessary due to the use of CDBG funds on the project. The bid opening for the 2013 Downtown Road Improvements project took place on Tuesday, January 7, 2014. A total of seven bids were received, ranging from a low of $684,800 up to $1,199,000. The low bid was submitted by KAD Paving of Yucaipa. Subsequent to the bid opening, the City received a protest of the bid results from another contractor, Hardy and Harper. Their protest letter is attached, along with a response from KAD Paving indicating their ability and readiness to perform the work in accordance with their bid. City staff and the City Attorney's office investigated the matter, and determined that KAD Paving had submitted a fully responsible, responsive bid and the City may move forward with the award of contract. Furthermore, staff checked with the Riverside County EDA and received confirmation that we may move forward with award of contract to KAD without putting the CDBG funds at risk. Therefore, staff recommends that the City Council deny the protest from Hardy and Harper and formally accept the bid from KAD. The City Engineer has discussed this recommendation with Hardy & Harper. PACKET PAGE: 85 AGENDA ITEM 5.1 The attached exhibit showing the locations at which work will occur as part of this project. Work is scheduled to begin in late February. The contract has a 45-day duration; thus, it will be completed in April. During construction, several of the streets will need to be closed for a short time to allow the work to be completed. Full road closures will be for through traffic only. ALTERNATIVES: Approval: Approve item as presented. Denial: Disapprove item and provide staff with direction on how to proceed. FISCAL IMPACT: The project cost is as follows: Bid amount: $684,800 Contingency & Soft Costs: $85,200 TOTAL COST: $770,000 The available budget for CIP 13-002 per the approved 2013-14 budget is roughly $370,000. The source of funding is CDBG. In addition to the CDBG funds currently committed to CIP 13-002, there is another line item in the CIP Budget for 11-006, titled “Downtown Street Improvements.” This project currently has funding of over $900,000. Staff recommends that a budget transfer be made from CIP project 11-006 to project 13-002 to fully fund the construction. The project funding would be as follows: · $370,000 (CDBG funds) · $400,000 (Gas tax funds, transfer from CIP 11-006) TOTAL FUNDING: $770,000 ATTACHMENTS: · Exhibit showing construction locations for 2013 CDBG Downtown Improvements project · Summary of bid results from 1/7/2014 · Protest letter from Hardy & Harper · Response letter from KAD Paving PACKET PAGE: 86 AGENDA ITEM 5.1 PACKET PAGE: 87 AGENDA ITEM 5.1 PACKET PAGE: 89 AGENDA ITEM 5.1 01/10/2014 FRI 18:14 FAX 001 ********************* *** FAX TX REPORT *** TRANSMISSION OK JOB NO. 0252 DESTINATION ADDRESS 19516543672 SUBADDRESS DESTINATION ID ST. TIME Ol/10 18:14 TX/RX TIME 00' 23 PGS. 2 RESULT OK ~~~~~~~ ~~~N ~~~ ,~,x~.wnr~r~~aave, SAPiTh ANA, GRI.IFORNin 9270tl ~7t4) gaa.tntl9 Mnx (774) 04b•2061 S7A'1'~ LIC, NP. 21d2o2 V{A FACSIMILE 95'1 ~i~A-3G72 ,~ FE1~-EX January 1 b, X014 CITY O~ SAN JAGINTt~ 5~5 S. ~~r~ J~~ina Ave., Bldg. /~ San J~cinta, CA X2593 Atfin: Habib Motlagh RE: Bid Rro~~~ti ~~ty of fan Jacinto -X0'13 Downtown street Improvement 1'raj~ct our File N~.: GF/7'~21~ Dear Mr. 11/Intla~}~: Phase ~~cept this Garrespond~nc~ as Hardy and Harper, Inc.' ("N&H") forms) protest to the bid of the apparent Ic~w bidder on the above-ref~r~nced project ("Rroj~ct"), K A Q I'avir~g company dba K A [J ~n~ineering ("KAa"). H&M hay conducted a preliminary revt~w of iCAp's bid far the project, end it ~pp~~rs that tCAD did riot designate all 5ub~canfiractors who will perform work that exc~~ds 0.5% of KAD's total bid price in violation ~f the project specifications and California ~aver-nn~ent Code ~ 4100 ~ti seq, (Sep pg. 6, #22.) for example, traffic loops are a{~proxim~t~ly $5,000 fOr this PPOj~Ct. K/~b does not hive the ~r.,,r,nrF~~o r.nr .r it lirrsn~c~rl Fn r~arfnrm i'hi!a ralA~f►'it'~I ~nrnrk 11'CCa~'~ F►,rti7prm~r~_ PACKET PAGE: 91 AGENDA ITEM 5.1 ~ar~er, ~r~c. ui~ coc~t~r~t 1312 E. WARNER AVE. SANTA ANA, CALIFORNIA 32705 (714) 444-1831 Fax {Tl4) 444-2801 STATE LIC. NO. 215952 VIA FACSIMILE (951) 654-3672 & FED-EX January 10, 2014 CITY OF SAN JACINTO 595 S. San Jacino Ave., Bidg. A San Jacinto, CA 92593 Attn: Habib Motlagh RE: Bid Protest City of San Jacinto - 2013 Downtown Street Improvement Project Our File No.: GF/77219 Dear Mr. Motlagh: Please accept this correspondence as Hardy and Harper, Inc.'s ("H&H") formal protest to the bid of the apparent low bidder on the above-referenced project ("Project"), K A D Paving Company dba K A D Engineering ("KAD"). H&H has conducted a preliminary review of KAD's bid for the project, and it appears that KAD did not designate all subcontractors who will perform work that exceeds 0.5% of KAD's total bid price in violation of the project specifications and California Government Code § 4100 et seq. (See pg. 6, #22.) For example, traffic loops are approximately $5,000 for this Project. KAD does not have the expertise nor is it licensed to perform this electrical work itself. Furthermore, KAD did not list a subcontractor for the manholes and utility adjustments, and KAD generally does not self-perform this work. Moreover, KAD's bid does not contain evidence of a good-faith effort to comply with the requirements of Section 3 of the Housing and Community Development Act of 1968. 1834570 (2) PACKET PAGE: 92 AGENDA ITEM 5.1 Habib Motlagh RE: Bid Protest City of San Jacinto - 2013 Downtown Street Improvement Project Our File No.: GF/77219 Letter of January 10, 2014 Page 2 Finally, it appears that there is no corporate seal affixed on KAD's bid for the Project. H&H requests that the City of San Jacinto investigate these issues promptly. If the City reaches the same conclusion, KAD's bid would be rendered non- responsive. H&H additionally requests that the Project be awarded to the second lowest responsive bidder. Thank you for your attention to these important issues. Very truly yours, HARDY &HARPER, ING. COREY KIRSCHNER Vice President ckirschner(a~hardyandharper.com 1834570 (2) PACKET PAGE: 93 AGENDA ITEM 5.1 \ 1836712 (2) VIA FACSIMILE (951) 654-3672 & E-MAIL January 15, 2014 CITY OF SAN JACINTO 595 S. San Jacino Ave., Bldg. A San Jacinto, CA 92593 Attn: Habib Motlagh RE: Bid Protest City of San Jacinto - 2013 Downtown Street Improvement Project Our File No. : GF/77219 Dear Mr. Motlagh: Thank you for forwarding copies of K A D Paving Company dba K A D Engineering’s (“KAD”) bid for the above-referenced project. It is not Hardy & Harper’s intent to “hassle” KAD or the City, but we do wish to ensure that all parties are held to the same standard with regard to the applicable laws. Upon further review, it appears that page fifteen of the bid does not have an attest for KAD (which purports to be a corporation). Furthermore, on page nineteen, it appears that KAD failed to affix a corporate seal, and KAD did not attest (sign) to the anti-trust document under penalty of perjury. “A bid is responsive if it promises to do what the bidding instructions demand.” (Taylor Bus Service, Inc. v. San Diego Bd. of Education (1987) 195 Cal.App.3rd 1331, 1341.) “Responsiveness can be determined from the face of the bid and the bidder at least has some clue at the time of submission that problems might exist.” (Id. at 1342.) Here, KAD did not properly attest to the bid documents at PACKET PAGE: 95 AGENDA ITEM 5.1 Mr. Habib Motlagh RE: Bid Protest City of San Jacinto - 2013 Downtown Street Improvement Project Our File No. : GF/77219 Letter of January 15, 2014 Page 2 1836712 (2) (2) instances in the bid itself. Because KAD did not follow the instructions on the bid forms, KAD’s bid must be declared non-responsive. H&H requests that the Project be awarded to the second lowest responsive bidder. Thank you for your attention to these important issues. Very truly yours, HARDY & HARPER, INC. /s/ Dan T. Maas DAN T. MAAS CEO dtmaas@me.com ASH:bab PACKET PAGE: 96 AGENDA ITEM 5.1 ATTN: HABIB MOTLAGH CITY OF FERRIS 201 EAST MAIN STREET SAN JACINTO, CA 92583 DATE: 1/10/14 RE: 2013 DOWNTOWN STREET IMPROVEMENT PROJECT It has come to our attention here at KAD Paving that there has been some doubt brought up in our capabilities of performing and executing the 2013 Downtown Street Improvement Project that we had recently been awarded as low bidder on 1/07/ 2014. We are not quite sure why these doubts have surfaced being that we have successfully conducted much larger public works projects for the likes of many other cities such as: Rancho Santa Margarita, Rediands, Carlsbad, Beamnont, Yucaipa, Loma Linda, etc. KAD Paving feels more than 100% confident in the process of executing the project with the bid amoimt proposed of $684,800.00. There are a number of reasons that enables KAD Paving to bid aggressively. Some of these reasons we wish to keep in house and some others we credit to owning all of our equipment, a sharp and skilled foreman/ crew/staff, perfect logistics and the knack of zero errors for a job done right. KAD Paving is an accomplished and adept company that is equipped to manage any and all of your paving concerns. KAD's skillfuhiess by virtue of possessing its special knowledge in the paving industry has stemmed down from a long line of heritage dating back to the early part of the 20* century. We at KAD Paving would like to assure the city of San Jacinto to count on us for a job done exactly right, all while being cost efficient. We look forward to serving the city of San Jacinto. If you may have any other questions or concerns please contact us at our offices: (909) 790 - 3366. Thank you. President/CEO KAD Paving Co. License: 937845 (A, C-12) Best regards. X PACKET PAGE: 97 AGENDA ITEM 5.1 February 4, 2014 TO: The Honorable Mayor and Members of the City Council FROM: Sharon Paisley, Development Director SUBJECT: Request for Additional Appropriations / Capital Improvement Project 11-013 (Kuhns Property) RECOMMENDATION: Staff recommends that the City Council, by motion, appropriate additional funding in the amount of $28,223.86 for cultural resources surveys and monitoring, the abatement of asbestos and lead based paint, demolition, hazardous waste disposal, and consultant project management services related to the former Kuhns Property (CIP 11-013). DISCUSSION: In an effort to eliminate blight and stimulate commercial development, the San Jacinto Redevelopment Agency, on August 5, 2010, authorized the purchase of 4.71 acres on State Street and Kuhns Drive. At that time, the property consisted of 15 substandard units, six of which were vacant. The remaining units comprised of 10 households consisting of 26 individuals, all of whom were subsequently relocated. The California Supreme Court eliminated Redevelopment on June 30, 2011. Since no other financial resources were available, the City Council allocated $100,000 from the General Fund in the Fiscal Year 2012/13 Capital Improvement Budget for the estimated costs associated with a cultural resources survey, abatement, demolition and related work. By the end of Fiscal Year 2012/13, there was a deficit of $8,800. Because of the $8,800 carryover, only $111,200 was available from the $120,000 allocated in the Fiscal Year 2013/14 General Fund Budget The cultural resources surveys conducted on the property in 2011 and 2012 revealed that a portion of the site was the location of the original Estudillo Adobe. As a result, monitoring was required during the demolition of the site in order to prevent damaging any potential subsurface historical material thereby adding unanticipated costs. On November 8, 2012, the City Clerk reviewed and opened six bids ranging from $66,460.00 to $226,315.00 for the abatement of asbestos and lead based paint. Thereafter, on January 14, 2013, the City Council awarded the bid $66,460.00 to Vizion’s West. The project commenced on February 26, 2013. While the abatement was underway, several buildings caught fire, triggering additional environmental PACKET PAGE: 99 AGENDA ITEM 5.2 evaluation and permits from the South Coast Air Quality Management District. Moreover, led based nails were discovered during the abatement process which required special remediation, thus resulting in increased costs. Thereafter, bids were solicited for the demolition of the project ranging from $56,000.00 to $147,000.00; and the project was awarded to the low bidder, C.R. Gann for $56,000.00. The demolition was completed on December 20, 2013. The total project cost was $139,423.86. After all the bills were tallied, there is a deficit of $28,223.86. The difference will be borne by the General Fund. The recommended budget adjustment is: General Fund Inter-Fund transfers 010-2500-425-5010 $28,223.86 Related CIP revenue and expenditure accounts (Fund 199) $28,223.86 ALTERNATIVES: 1) Approve the recommended appropriations. 2) Deny recommendation and provide staff direction. FISCAL IMPACT: As proposed, an increase in budget to this CIP Project (#11-013) will directly impact the General Fund. PACKET PAGE: 100 AGENDA ITEM 5.2