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HomeMy WebLinkAboutAgenda - Agenda Packets - Regular Meeting 8/19/2014 AGENDA JOINT REGULAR MEETING OF THE SAN JACINTO CITY COUNCIL AND THE SUCCESSOR AGENCY TO THE CITY OF SAN JACINTO REDEVELOPMENT AGENCY August 19, 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 Awards for Fourth of July Parade winners 1.5.2 Presentation from WRCOG (Western Riverside Council of Governments) 1.6 MAYOR/COUNCIL MEMBER REPORTS/DISCUSSIONS 1.7 Late items 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. 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 City Council Agenda August 19, 2014 Page 2 of 3 the Severe Winter Storms that began on April 29, 2014 / Approve / City Clerk 3A.2 Waiver of Full Reading of Ordinance(s), and Reading by Title Only / Approve / City Clerk, City Attorney 3A.3 Minutes of August 5th, 2014 - Regular Meeting / Approve / City Clerk 3A.4 Warrants and Disbursements - July 2014 / Approve / Finance Director 3A.5 Statement of Investment Policy / Approve / Finance Director 3A.6 Budget Adjustment - Waste Water Fund / Approve / Finance Director 3B CONSENT CALENDAR - SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN JACINTO 4. PUBLIC HEARING 4.1 Resolution Authorizing the Annexation of Territory into the 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 / Approve / City Manager, City Attorney 4.2 CR&R Delinquent Solid Waste Tax Roll Placement for Calendar Year 2013 / Approve / Finance Director 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 2014 Downtown Improvements Project (CIP 11-006) and 2014 Residential Slurry Seal & Authorization to Advertise for Bids / Approve / City Engineer 5.2 Investment Portfolio Review with Advisors / Approve / Finance Director 6. CLOSED SESSION 6.1 CLOSED SESSION - CITY COUNCIL 6.1.1 CONFERENCE WITH LABOR NEGOTIATORS Agency Negotiators: Tim Hults, City Manager & Roger Crawford, Deputy City Attorney Represented Parties: San Jacinto Management Association & Service City Council Agenda August 19, 2014 Page 3 of 3 Employees International Union, Local 721 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 14th Day of August, 2014, as required by law. Richard Miller, City Clerk August 19, 2014 TO: The Honorable Mayor and Members of the City Council FROM: Rick Miller, City Clerk SUBJECT: Continuance of the Proclamation of the Local State of Emergency due to the Severe Winter Storms that began on April 29, 2014 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 Wind Storms that began on April 29, 2014. DISCUSSION: On April 30, 2014 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 8:00 a.m. on April 29, 2014. 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 to eighty thousand dollars). Budgetary assistance and reimbursement is available from Federal Emergency Management Agency (F.E.M.A.) PACKET PAGE: 1 AGENDA ITEM 3A.1 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 3506 PACKET PAGE: 2 AGENDA ITEM 3A.1 PACKET PAGE: 3AGENDA ITEM 3A.1 PACKET PAGE: 4AGENDA ITEM 3A.1 August 19, 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: 5 AGENDA ITEM 3A.2 August 19, 2014 TO: The Honorable Mayor and Members of the City Council FROM: Rick Miller, City Clerk SUBJECT: Minutes of August 5th, 2014 - Regular Meeting RECOMMENDATION: Staff recommends that the City Council, by motion, approve the draft minutes of the August 5, 2014 – Regular Meeting. ATTACHMENTS · Draft Minutes of the August 5, 2014 – Regular Meeting PACKET PAGE: 7 AGENDA ITEM 3A.3 ACTION MINUTES JOINT REGULAR MEETING OF THE SAN JACINTO CITY COUNCIL AND THE SUCCESSOR AGENCY TO THE CITY OF SAN JACINTO REDEVELOPMENT AGENCY August 5, 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 Alonso Ledezma 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 6:30 p.m. 1.2 Roll Call Present: Bartel, Kotyuk, Ruiz, Ledezma Absent: Miller M/S/C (Bartel/Ruiz) moved to excuse the absence of Council Member Scott Miller. Motion carried 4/0. Ayes: Bartel, Kotyuk, Ruiz, Ledezma Nays: None Absent: Miller Abstain: None 1.3 Invocation Assistant City Manager Mike Emberton gave the invocation 1.4 Pledge of Allegiance Ken Kidby led the Pledge of Allegiance 1.5 Special Presentations 1.5.1 Recognition of 4th of July Parade Winners This was cancelled and moved to a future meeting. PACKET PAGE: 9 AGENDA ITEM 3A.3 Action Minutes August 5, 2014 ____________________________________________________________________________________Page 2 of 4 1.6 MAYOR / COUNCIL MEMBER REPORTS / DISCUSSIONS Council Members gave their reports. 2. PUBLIC COMMENTS: Public Speakers: · Dr. Sharon Sohmer – Parkside Village · Debra Williams – Building Resilient Communities – Arc of Safety Forum · Howard Tounget – · Jim Pangrazzi – 408 S. Kirby, San Jacinto, CA · Brenda Coolbaugh – “Every 9 seconds” · Michael Dutkowski – Polish American Congress · Rebecca Sandoval - 3. JOINT CONSENT CALENDARS 9SECTIONS 3A DND 3B) 3A CONSENT CALENDAR 3A.1 Continuance of the Proclamation of the Local State of Emergency due to the Severe Winter Storms that began on April 29, 2014 / Approve / City Clerk 3A.2 Waiver of Full Reading of Ordinance(s), and Reading by Title Only / Approve / City Clerk, City Attorney 3A.3 Assessment District 2003-1 (AD 2003-1) Slurry Seals / Approve / Finance Director 3A.4 Minutes of July 15, 2014 - Regular Meeting / Approve / City Clerk 3A.5 Second Reading (Adoption) of Ordinance 14-10 Repealing Chapter 9.38 of the San Jacinto Municipal Code Regarding Loitering by Registered Sex Offenders. / Approve / City Attorney 3A.6 Treasurer's Report at June 30, 2014 / Approve / City Treasurer 3A.7 Resolution No. 3528 - Amending section 5.1 of the City Council Handbook / Approve / City Manager PACKET PAGE: 10 AGENDA ITEM 3A.3 Action Minutes August 5, 2014 ____________________________________________________________________________________Page 3 of 4 A member of the public, Jim Pangrazzi requested to speak on Item 3A.7. M/S/C (Kotyuk/Bartel) moved to approve the Consent Calendar. Motion carried 4/0. Ayes: Bartel, Kotyuk, Ruiz, Ledezma Nays: None Absent: Miller Abstain: None 4. PUBLIC HEARING None 5. STAFF REPORTS 5.1 Consider Second Reading of 6.5% Utility Users Tax Ordinance (Ordinance No. 14-09) and Placement of the Ordinance on the November 4, 2014 Ballot. / Approve / City Manager City Manager Tim Hults gave the staff report. Public Speakers: · Mark Sohmer · Joanna Rollins · Mark Denney · Jim Pangrazzi · Tom Garnella · Fred Rodriguez M/S/C (Bartel/Kotyuk) moved to approve Item 5.1 as presented. Motion carried 4/0. Ayes: Bartel, Kotyuk, Ruiz, Ledezma Nays: None Absent: Miller Abstain: None Mayor Alonso Ledezma recessed the Regular Meeting of the City Council and adjourned the meeting at 7:37 p.m. and reconvened in Closed Session for the City Council at 7:40 p.m. The meeting was adjourned in the honor of Roger Bartel. 6. CLOSED SESSION 6.1 CLOSED SESSION - CITY COUNCIL PACKET PAGE: 11 AGENDA ITEM 3A.3 Action Minutes August 5, 2014 ____________________________________________________________________________________Page 4 of 4 6.1.1 CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION (Paragraph (1) of subdivision (d) of Section 54956.9) Name of Case: City of San Jacinto v. Ocean Springs LLC; Riverside County Superior Court Case No. 10010048 There was no reportable action. 6.2 CLOSED SESSION - SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN JACINTO NONE 7. ADJOURNMENT With no further business before the City Council, Mayor Alonso Ledezma adjourned the Regular Meeting of the City Council at 8:05 p.m. City of San Jacinto ______________________ Alonso Ledezma, Mayor ATTEST: ___________________ Richard Miller, City Clerk Approved as read: _______ Approved as amended: ____ PACKET PAGE: 12 AGENDA ITEM 3A.3 August 19, 2014 TO: The Honorable Mayor and Members of the City Council FROM: Thomas Prill, Finance Director SUBJECT: Warrants and Disbursements – July 2014 RECOMMENDATION: Staff recommends that the City Council review and approve Warrants and Disbursements for the period of July 1 through July 31, 2014 in the amount of $ 2,567,381.37. DISCUSSION: The City Council in its oversight role formally reviews disbursements of City funds made by Accounts Payable warrants, bi-weekly payrolls and electronic funds (wire) transfers. The following information is provided for such review and approval: Warrants/Wire Pay Date Amount Accounts Payable: # 109323-109599 Various $ 1,910,118.71 Payroll: Pay Period # 14 # 21961-21976 07/10/2014 $ 122,948.09 Includes Warrants, Direct Deposits, Taxes, Garnishments Payroll: Pay Period # 15 # 21977-21991 07/24/2014 $ 126,382.07 Includes Warrants, Direct Deposits, Taxes, Garnishments Electronic Funds Various $ 407,932.50 Total Disbursements – Period of July 1-31, 2014 $ 2,567,381.37 Prepared by: Judy Kelley, Account Clerk II Known Councilmember Conflicts: Check #’s 109426, 109481, 109538. FISCAL IMPACT: Expenditures by warrant, payroll direct deposit and electronic funds (wire) transfers have been appropriated. Attachments: Accounts Payable Warrant Register – July 1-31, 2014 Electronic Funds Transfer Report – July 1-31, 2014 Note: Payroll information is on file in the Finance Department. 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BACKGROUND: Section 53646 of the Government Code of the State of California requires the City to review its Statement of Investment Policy annually and make revisions if necessary. The City Council last reviewed and approved the policy on September 18, 2012, with some recommended changes. The Statement of Investment Policy is legally required and provides authority to invest in allowable securities and within specified durations as detailed within the guidelines of the adopted policy. The policy cannot be more liberal than that allowed by California Government Code §53600 et. seq.; however, it can be more restrictive. At the September 18, 2012 Council meeting, changes recommended by the Finance Subcommittee were discussed and approved. DISCUSSION: The primary objectives of the Statement of Investment policy are to ensure the following: Legality: Sections 53601 and 53635 of the Government Code outlines what investments are allowable for California agencies. Safety: It is the primary duty and responsibility of the Treasurer to protect, preserve and maintain cash and investments on behalf of the citizens of the City of San Jacinto. Generally, the higher the yield, the greater the risk an investment carries. Maturity: The longer an investment is held, the greater the degree of market risk (the risk that changes in the financial market will reduce the value of a security). Investment in instruments with varying maturities provides a natural hedge against changes in interest rates. PACKET PAGE: 55 AGENDA ITEM 3A.5 Liquidity: To meet disbursement requirements, an adequate portion of the investment portfolio should be liquid and easily converted to cash, such as in an investment pool or money market. Risk: The investment portfolio shall be designed to attain a market- average rate of return throughout budgetary and economic cycles, taking into account risk constraints. Yields should become a consideration only after the basic requirements of legality, safety, maturity, and liquidity have been met. The previous Investment Policy has been updated only with current dates and signatures, with no other changes. Since there are no significant changes, only the new policy is attached. ALTERNATIVES: 1. Approve the recommended investment policy and corresponding resolution. 2. Do not approve the recommended investment policy and corresponding resolution, and provide staff with direction. FISCAL IMPACT: The recommended changes will not result in a fiscal impact. ATTACHMENTS: 1. Resolution No. ____ 2. Recommended Statement of Investment Policy (as Exhibit A of Resolution) PACKET PAGE: 56 AGENDA ITEM 3A.5 STATE OF CALIFORNIA) RESOLUTION NO. ____ COUNTY OF RIVERSIDE)ss CITY OF SAN JACINTO) A RESOLUTION OF THE CITY OF SAN JACINTO, CALIFORNIA, REVISING THE STATEMENT OF INVESTMENT POLICY WHEREAS, Section 53646 of the Government Code of the State of California requires that the Treasurer or Chief Fiscal Officer shall annually render to the legislative body of his/her agency for review and/or amendment, a Statement of Investment Policy; and WHEREAS, any changes to the City’s Statement of Investment must be considered in public session of legislative body; and WHEREAS, the City’s Statement of Investment Policy was last reviewed on September 18, 2012, with changes; and WHEREAS, the City’s Statement of Investment Policy has not been significantly revised. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of San Jacinto hereby rescinds previous investment policy resolutions and approves the Statement of Investment Policy, as attached hereto in Exhibit “A”. APPROVED, PASSED and ADOPTED this 19th day of August 2014, by the following vote: Ayes: Nays: Abstain: Absent: City of San Jacinto _____________________ Alonso Ledezma, Mayor ATTEST: _________________________ Richard Miller, City Clerk PACKET PAGE: 57 AGENDA ITEM 3A.5 EXHIBIT “A” PACKET PAGE: 58 AGENDA ITEM 3A.5 CITY OF SAN JACINTO STATEMENT OF INVESTMENT POLICY I. INTRODUCTION The City of San Jacinto’s (City) investment program will conform with federal, state, and other legal requirements, including California Government Code Sections 16429.1-16429.4, 53600-53609 and 53630-53686. The following investment policy addresses the methods, procedures and practices, which must be exercised to ensure effective and judicious fiscal and investment management of the City’s funds. It is the policy of the City to invest public funds in a manner that will provide a market rate of return, given its requirements for preserving principal and meeting the daily cash flow demands of the City. All investments will comply with this Investment Policy and governing laws. This Investment Policy was endorsed and adopted by the City’s governing body (City Council) and is effective as of August 19, 2014. This Investment Policy replaces any previous Investment Policy of the City. II. PUBLIC TRUST All participants in the investment process shall act as custodians of the public trust. Investment officials shall recognize that the investment portfolio is subject to public review and evaluation. The overall program shall be designed and managed with a degree of professionalism that is worthy of the public trust. In a diversified portfolio, it must be recognized that occasional measurement losses are inevitable, and must be considered within the context of the overall portfolio’s investment return, provided that adequate diversification has been implemented. III. SCOPE This Investment Policy applies to all the City’s financial assets and investment activities with the following exceptions: A. Proceeds of debt issuance shall be invested in accordance with the City’s general investment philosophy as set forth in this policy; however, such proceeds are invested in accordance with permitted investment provisions of their specific bond indentures. Pooling of Funds: Except for cash in certain restricted and special funds, the City will consolidate cash and reserve balances from all funds to maximize investment earnings and to increase efficiencies with regard to investment pricing, safekeeping and administration. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles. PACKET PAGE: 59 AGENDA ITEM 3A.5 IV. GENERAL OBJECTIVES The overriding objectives of the investment program are to preserve principal, provide sufficient liquidity, and manage investment risks. 1. Safety: It is the primary duty and responsibility of the City Treasurer to protect, preserve and maintain cash and investments placed in his/her trust on behalf of the citizens of the City. Safety of principal is the foremost objective of the investment program. Investments will be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective will be to mitigate credit risk and interest rate risk. 2. Liquidity: The investment portfolio will remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. Since all cash requirements cannot be anticipated, investments in securities shall be those with active secondary or resale markets. 3. Return: The investment portfolio will be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints for safety and liquidity needs. Yields should become a consideration only after the basic requirements of safety and liquidity have been met. V. PRUDENCE, INDEMNIFICATION AND ETHICS A. Prudent Investor Standard: Management of the City’s investments is governed by the Prudent Investor Standard as set forth in the California Government Code 53600.3: “…all governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this chapter are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency. Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law.” In keeping with the objectives (Section IV), in addition to safeguarding the principle and maintaining the liquidity needs of the City, a prudent investor should also optimize return or yield to the greatest extent possible. B. Indemnification: The City Treasurer, Finance Director and other authorized persons responsible for managing City funds, acting in accordance with written procedures and the investment policy and exercising due diligence, will be relieved of personal PACKET PAGE: 60 AGENDA ITEM 3A.5 responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported within 30 days and appropriate action is taken to control adverse developments. C. Ethics: Officers and employees involved in the investment process are prohibited from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. VI. DELEGATION OF AUTHORITY A. Authority to manage the City’s investment program is derived from California Government Code Sections 53600 et seq. The City Council is responsible for the City’s cash management, including the administration of this Investment Policy. Management responsibility for the cash management of City funds is hereby delegated to the City Treasurer and the Finance Director. The City Treasurer and Finance Director will be responsible for all transactions undertaken and will establish a system of procedures and controls to regulate the activities of subordinate employees. B. The City may engage the services of one or more external investment managers to assist in the management of the City’s investment portfolio in a manner consistent with the City’s objectives. Such external managers may be granted discretion to purchase and sell investment securities in accordance with this Investment Policy. Such managers must be registered under the Investment Advisers Act of 1940. VII. AUTHORIZED FINANCIAL INSTITUTIONS, DEPOSITORIES, AND BROKER/DEALERS A list will be maintained of financial institutions and depositories authorized to provide investment services. In addition, a list will be maintained of approved security broker/dealers selected by conducting a process of due diligence. These may include "primary" dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15C3-1 (uniform net capital rule). A. The City Treasurer and Finance Director will determine which financial institutions are authorized to provide investment services to the City. Institutions eligible to transact investment business with the City include: 1. Primary government dealers as designated by the Federal Reserve Bank; 2. Nationally or state-chartered banks; 3. The Federal Reserve Bank; and, 4. Direct issuers of securities eligible for purchase. PACKET PAGE: 61 AGENDA ITEM 3A.5 B. Selection of financial institutions and broker/dealers authorized to engage in transactions with the City will be at the sole discretion of the City. C. All financial institutions which desire to become qualified bidders for investment transactions (and which are not dealing only with the investment adviser) must supply the Finance Director with a statement certifying that the institution has reviewed the California Government Code Section 53600 et seq. and the City’s Investment Policy. D. Selection of broker/dealers used by an external investment adviser retained by the City will be at the sole discretion of the investment adviser, provided they meet all of the requirements as stated. E. Public deposits will be made only in qualified public depositories as established by State law. Deposits will be insured by the Federal Deposit Insurance Corporation (FDIC), or, to the extent the amount exceeds the insured maximum, will be collateralized in accordance with State law. Financial institutions that do not offer FDIC insurance will not be invested in. A written contract of deposit of public funds must be obtained from the financial institution, indicating the institution’s policy and process of FDIC insurance and collateralization. VIII. DELIVERY, SAFEKEEPING AND CUSTODY, AND COMPETITIVE TRANSACTIONS A. Delivery-versus-payment: Settlement of all investment transactions will be completed using standard delivery-vs.-payment procedures. B. Third-party safekeeping: To protect against potential losses by collapse of individual securities dealers, and to enhance access to securities, interest payments and maturity proceeds, all securities owned by the City will be held in safekeeping by a third party bank custodian, acting as agent for the City under the terms of a custody agreement executed by the bank and the City. C. Competitive transactions: All investment transactions will be conducted on a competitive basis which can be executed through a bidding process involving at least three separate brokers/financial institutions or through the use of a nationally recognized trading platform. IX. AUTHORIZED AND SUITABLE INVESTMENTS All investments will be made in accordance with Sections 53600 et seq. of the Government Code of California and as described within this Investment Policy. Permitted investments under this policy will include: 1. Municipal Bonds. These include bonds of the City, the state of California, any other state, and any local Agency within the state of California. The bonds will be registered in the name of the City or held under a custodial agreement at a bank. The bonds shall be rated at the time of purchase within the 4 highest general PACKET PAGE: 62 AGENDA ITEM 3A.5 classifications established by a rating service of nationally recognized expertise in rating bonds of states and their political subdivisions. a. No more than 5% per issuer. 2. U.S. Treasury and other government obligations for which the full faith and credit of the United States are pledged for the payment of principal and interest. There are no limits on the dollar amount or percentage that the City may invest in U.S. Treasuries. 3. Federal Agency or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government-sponsored enterprises. There are no limits on the dollar amount or percentage that the City may invest in government-sponsored enterprises. 4. Banker’s acceptances, provided that: a. They are issued by institutions with short term debt obligations rated ”A1” or higher, or the equivalent, by at least two nationally recognized statistical-rating organization (NRSRO); and have long-term debt obligations which are rated ”A” or higher by at least two nationally recognized statistical rating organization; b. The maturity does not exceed 180 days; and, c. No more than 40% of the total portfolio may be invested in banker’s acceptances and no more than 5% per issuer. 5. Federally insured time deposits (Non-negotiable certificates of deposit) in state or federally chartered banks, savings and loans, or credit unions, provided that: a. The amount per institution is limited to the maximum covered under federal insurance; and, b. The maturity of such deposits does not exceed 5 years. 6. Time deposits (Non-negotiable certificates of deposit) in state or federally chartered banks, savings and loans, or credit unions in excess of insured amounts which are fully collateralized with securities in accordance with California law, provided that: a. No more than 20% of the portfolio will be invested in a combination of federally insured and collateralized time deposits; b. They are issued by institutions which have long-term debt obligations which are rated ”A” or higher by at least two nationally recognized statistical rating organization; and/or have short term obligations rated ”A1” or higher, or the PACKET PAGE: 63 AGENDA ITEM 3A.5 equivalent, by at least two nationally recognized statistical rating organization; and, c. The maturity of such deposits does not exceed 5 years. 7. Certificate of Deposit Placement Service (CDARS), provided that: a. No more than 30% of the total portfolio may be invested in a combination of certificates of deposit including CDARS; and, b. The maturity of CDARS deposits does not exceed five years. 8. Negotiable certificates of deposit (NCDs), provided that: a. They are issued by institutions which have long-term obligations which are rated ”A” or higher by at least two nationally recognized statistical rating organization; and/or have short term debt obligations rated ”A1” or higher, or the equivalent, by at least two nationally recognized statistical rating organization; b. The maturity does not exceed five years; and, c. No more than 30% of the total portfolio may be invested in NCDs and no more than 5% per issuer. 9. Repurchase agreements collateralized with securities authorized under Sections VI and VIII(2 and 3) of this policy maintained at a level of at least 102% of the market value of the repurchase agreements, provided that: a. The maximum maturity of repurchase agreements will be 1 year; b. There is no limit to the amount to be invested in repurchase agreements; c. Securities used as collateral for repurchase agreements will be delivered to the City’s custodian bank (See Section VII B); and, d. The repurchase agreements are the subject of a master repurchase agreement between the City and the provider of the repurchase agreement. The master repurchase agreement will be substantially in the form developed by the Securities Industry and Financial Markets Association (SIFMA). 10. Commercial paper, provided that: a. The maturity does not exceed 270 days from the date of purchase; b. The issuer is a corporation organized and operating in the United States with assets in excess of $500 million; PACKET PAGE: 64 AGENDA ITEM 3A.5 c. They are issued by institutions whose short term obligations are rated ”A1” or higher, or the equivalent, by at least two nationally recognized statistical rating organization; and whose long-term obligations are rated ”A” or higher by at least two nationally recognized statistical rating organization; and, d. No more than 25% of the portfolio is invested in commercial paper and no more than 5% per issuer. 11. State of California Local Agency Investment Fund (LAIF), provided that: a. No more than 70% of the total portfolio may be invested in LAIF, up to the maximum permitted balance; and, b. LAIF’s investments in instruments prohibited by or not specified in the City’s policy do not exclude it from the City’s list of allowable investments, provided that the fund’s reports allow the City Treasurer and Finance Director to adequately judge the risk inherent in LAIF’s portfolio. 12. Local government investment pools and Joint Powers Authority Pools a. Riverside County Investment Fund, no more than 70% of the total portfolio; and, b. JPA Pools, no more than 50% of the total portfolio. 13. Corporate medium term notes (MTNs), provided that: a. Such notes have a maximum maturity of five years; b. Are issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States; c. Are rated ”A” category or better by at least two nationally recognized statistical rating organization; and, d. Holdings of medium-term notes may not exceed 30% of the portfolio and no more than 5% per issuer. 14. Mortgage pass-through securities and asset-backed securities, provided that such securities: a. have a maximum stated final maturity of five years; b. be issued by an issuer having an “A” or higher rating for the issuer’s debt as provided by at least two nationally recognized statistical rating organization; PACKET PAGE: 65 AGENDA ITEM 3A.5 c. be rated in a rating category of “AA” or its equivalent or better by at least two nationally recognized statistical rating organization; and, d. Purchase of securities authorized by this subdivision may not exceed 20% of the portfolio. 15. Money market mutual funds that are registered with the Securities and Exchange Commission under the Investment Company Act of 1940: a. Provided that such funds meet either of the following criteria: 1. Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations; or, 2. Have retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience investing in the securities and obligations authorized by California Government Code Section 53601 (a through j) and with assets under management in excess of $500 million. b. Purchase of securities authorized by this subdivision may not exceed 20% of the portfolio, 10% per fund. 16. Mutual Funds that invest in securities and obligation as authorized by California Government Code Section 53601. X. PORTFOLIO RISK MANAGEMENT A. Prohibited investment vehicles and practices 1. State law notwithstanding, any investments not specifically described herein are prohibited, including, but not limited to futures and options. 2. In accordance with Government Code Section 53601.6, investment in inverse floaters, range notes, or mortgage derived interest-only strips is prohibited. 3. Investment in any security that could result in a zero interest accrual if held to maturity is prohibited. 4. Trading securities for the sole purpose of speculating on the future direction of interest rates is prohibited. 5. Purchasing or selling securities on margin is prohibited. PACKET PAGE: 66 AGENDA ITEM 3A.5 6. The use of reverse repurchase agreements, securities lending or any other form of borrowing or leverage is prohibited. 7. The purchase of foreign currency denominated securities is prohibited. B. Mitigating credit risk in the portfolio Credit risk is the risk that a security or a portfolio will lose some or all of its value due to a real or perceived change in the ability of the issuer to repay its debt. The City will mitigate credit risk by adopting the following strategies: 1. The diversification requirements included in Section VIII are designed to mitigate credit risk in the portfolio; 2. No more than 5% of the total portfolio may be invested in securities of any single issuer, other than the US Government, its agencies and enterprises; 3. The City may elect to sell a security prior to its maturity and record a capital gain or loss in order to improve the quality, liquidity or yield of the portfolio in response to market conditions or City’s risk preferences; and, 4. If securities owned by the City are downgraded by either Moody’s or S&P to a level below the quality required by this Investment Policy, it will be the City’s policy to review the credit situation and make a determination as to whether to sell or retain such securities in the portfolio. a. If a security is downgraded, the City Treasurer and Finance Director will use discretion in determining whether to sell or hold the security based on its current maturity, the economic outlook for the issuer, and other relevant factors. b. If a decision is made to retain a downgraded security in the portfolio, its presence in the portfolio will be monitored and reported monthly to the governing board. C. Mitigating market risk in the portfolio Market risk is the risk that the portfolio value will fluctuate due to changes in the general level of interest rates. The City recognizes that, over time, longer-term portfolios have the potential to achieve higher returns. On the other hand, longer-term portfolios have higher volatility of return. The City will mitigate market risk by providing adequate liquidity for short-term cash needs, and by making longer-term investments only with funds that are not needed for current cash flow purposes. The City further recognizes that certain types of securities, including variable rate securities, securities with principal paydowns prior to maturity, and securities with embedded options, will affect the market risk profile of the portfolio differently in different interest rate environments. The City, therefore, adopts the following strategies to control and mitigate its exposure to market risk: PACKET PAGE: 67 AGENDA ITEM 3A.5 1. The City will maintain a minimum of three months of budgeted operating expenditures in short term investments to provide sufficient liquidity for expected disbursements; 2. The maximum percent of callable securities (does not include “make whole call” securities as defined in the Glossary) in the portfolio will be 20%; 3. The maximum stated final maturity of individual securities in the portfolio will be five years, except as otherwise stated in this policy; and, 4. The duration of the portfolio will at all times be approximately equal to the duration (typically plus or minus 20%) of a Market Benchmark Index selected by the City based on the City’s investment objectives, constraints and risk tolerances. The City’s current Benchmark will be documented in the investment procedures manual. XI. INVESTMENT OBJECTIVES (PERFORMANCE STANDARDS AND EVALUATION) A. Overall objective: The investment portfolio will be designed with the overall objective of obtaining a total rate of return throughout economic cycles, commensurate with investment risk constraints and cash flow needs. B. Specific objective: The investment performance objective for the portfolio will be to earn a total rate of return over a market cycle which is approximately equal to the return on the Market Benchmark Index as described in the City’s investment procedures manual. XII. PROCEDURES AND INTERNAL CONTROLS A. Procedures The City Treasurer and Finance Director will establish written investment policy procedures in a separate investment procedures manual to assist investment staff with day-to-day operations of the investment program consistent with this policy. Such procedures will include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the City Treasurer and Finance Director. B. Internal Controls The City Treasurer and Finance Director are responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse. The internal control structure will be designed to provide reasonable assurance that these objectives are met. Internal controls will be described in the City’s investment procedures manual. XIII. REPORTING, DISCLOSURE AND PROGRAM EVALUATION A. Monthly reports PACKET PAGE: 68 AGENDA ITEM 3A.5 Monthly investment reports will be submitted by the City Treasurer to the City Council. These reports will disclose, at a minimum, the following information about the risk characteristics of the City’s portfolio: 1. An asset listing showing par value, cost and accurate and complete market value of each security, type of investment, issuer, and interest rate; 2. A one-page summary report that shows: a. Average maturity of the portfolio and modified duration of the portfolio; b. Maturity distribution of the portfolio; c. Average portfolio credit quality; and, d. Time-weighted total rate of return for the portfolio for the prior one month, three months, twelve months, year to date, and since inception compared to the Benchmark Index returns for the same periods; 3. A statement of compliance with investment policy, including a schedule of any transactions or holdings which do not comply with this policy or with the California Government Code, including a justification for their presence in the portfolio and a timetable for resolution; and, 4. A statement that the City has adequate funds to meet its cash flow requirements for the next six months. B. Annual reports 1. The investment policy will be reviewed and adopted at least annually within 120 days of the end of the fiscal year to ensure its consistency with the overall objectives of preservation of principal, liquidity and return, and its relevance to current law and financial and economic trends. 2. A comprehensive annual report will be presented in conjunction with the investment policy review. This report will include comparisons of the City’s return to the Benchmark Index return, suggest policies and improvements that might enhance the investment program, and will include an investment plan for the coming year. C. Periodic audit The City Treasurer may establish a process of periodic independent review by an external expert to assure compliance with internal controls. Prepared by: Thomas Prill, Finance Director PACKET PAGE: 69 AGENDA ITEM 3A.5 Approved as to legal form: ___________________________________ Jeffrey Ballinger, City Attorney Approved: _____________________________________ Alonso Ledezma, Mayor Date: August 19, 2014 PACKET PAGE: 70 AGENDA ITEM 3A.5 Appendix I Authorized Personnel The following investments (as defined in Section IX) can only be made by joint approval of the City Treasurer and Finance Director. When an external investment adviser is retained, approval of a proposed portfolio structure by the City Treasurer and Finance Director will suffice. Municipal bonds (City, State, Agency) U.S. Treasury obligations Federal Agency obligations Banker’s acceptances Time deposits, federally insured or collateralized, including CDARS Negotiable certificates of deposit Repurchase agreements Commercial paper Corporate medium term notes Mortgage pass-through and asset-backed securities Mutual funds The following investments (as defined in Section IX) can be made by the Finance Director or his designee: Money market mutual funds (non-brokered) Local Agency Investment Fund (LAIF) County Pooled Investment Funds Joint Powers Authority Pool Bank deposits, federally insured or collateralized PACKET PAGE: 71 AGENDA ITEM 3A.5 Appendix II GLOSSARY OF INVESTMENT TERMS© Agencies. Shorthand market terminology for any obligation issued by a government-sponsored entity (GSE), or a federally related institution. Most obligations of GSEs are not guaranteed by the full faith and credit of the US government. Examples are: FDIC. The Federal Deposit Insurance Corporation provides insurance backed by the full faith and credit of the US government to certain bank deposits and debt obligations. FFCB. The Federal Farm Credit Bank System provides credit and liquidity in the agricultural industry. FFCB issues discount notes and bonds. FHLB. The Federal Home Loan Bank provides credit and liquidity in the housing market. FHLB issues discount notes and bonds. FHLMC. Like FHLB, the Federal Home Loan Mortgage Corporation provides credit and liquidity in the housing market. FHLMC, also called “FreddieMac” issues discount notes, bonds and mortgage pass-through securities. FNMA. Like FHLB and FreddieMac, the Federal National Mortgage Association was established to provide credit and liquidity in the housing market. FNMA, also known as “FannieMae,” issues discount notes, bonds and mortgage pass-through securities. GNMA. The Government National Mortgage Association, known as “GinnieMae,” issues mortgage pass-through securities, which are guaranteed by the full faith and credit of the US Government. PEFCO. The Private Export Funding Corporation assists exporters. Obligations of PEFCO are not guaranteed by the full faith and credit of the US government. TVA. The Tennessee Valley Authority provides flood control and power and promotes development in portions of the Tennessee, Ohio, and Mississippi River valleys. TVA currently issues discount notes and bonds. Asked. The price at which a seller offers to sell a security. Average Life. In mortgage-related investments, including CMOs, the average time to expected receipt of principal payments, weighted by the amount of principal expected. Banker’s Acceptance. A money market instrument created to facilitate international trade transactions. It is highly liquid and safe because the risk of the trade transaction is transferred to the bank which “accepts” the obligation to pay the investor. Benchmark. A comparison security or portfolio. A performance benchmark is a partial market index, which reflects the mix of securities allowed under a specific investment policy. Bid. The price at which a buyer offers to buy a security. Broker. A broker brings buyers and sellers together for a transaction for which the broker receives a commission. A broker does not sell securities from his own position. Callable. A callable security gives the issuer the option to call it from the investor prior to its maturity. The main cause of a call is a decline in interest rates. If interest rates decline since an issuer issues securities, it will likely call its current securities and reissue them at a lower rate of interest. Callable securities have reinvestment risk as the investor may receive its principal back when interest rates are lower than when the investment was initially made. Certificate of Deposit (CD). A time deposit with a specific maturity evidenced by a certificate. Large denomination CDs may be marketable. PACKET PAGE: 72 AGENDA ITEM 3A.5 Collateral. Securities or cash pledged by a borrower to secure repayment of a loan or repurchase agreement. Also, securities pledged by a financial institution to secure deposits of public monies. Collateralized Mortgage Obligations (CMO). Classes of bonds that redistribute the cash flows of mortgage securities (and whole loans) to create securities that have different levels of prepayment risk, as compared to the underlying mortgage securities. Commercial Paper. The short-term unsecured debt of corporations. Cost Yield. The annual income from an investment divided by the purchase cost. Because it does not give effect to premiums and discounts which may have been included in the purchase cost, it is an incomplete measure of return. Coupon. The rate of return at which interest is paid on a bond. Credit Risk. The risk that principal and/or interest on an investment will not be paid in a timely manner due to changes in the condition of the issuer. Current Yield. The annual income from an investment divided by the current market value. Since the mathematical calculation relies on the current market value rather than the investor’s cost, current yield is unrelated to the actual return the investor will earn if the security is held to maturity. Dealer. A dealer acts as a principal in security transactions, selling securities from and buying securities for his own position. Debenture. A bond secured only by the general credit of the issuer. Delivery vs. Payment (DVP). A securities industry procedure whereby payment for a security must be made at the time the security is delivered to the purchaser’s agent. Derivative. Any security that has principal and/or interest payments which are subject to uncertainty (but not for reasons of default or credit risk) as to timing and/or amount, or any security which represents a component of another security which has been separated from other components (“Stripped” coupons and principal). A derivative is also defined as a financial instrument the value of which is totally or partially derived from the value of another instrument, interest rate, or index. Discount. The difference between the par value of a bond and the cost of the bond, when the cost is below par. Some short-term securities, such as T-bills and banker’s acceptances, are known as discount securities. They sell at a discount from par, and return the par value to the investor at maturity without additional interest. Other securities, which have fixed coupons, trade at a discount when the coupon rate is lower than the current market rate for securities of that maturity and/or quality. Diversification. Dividing investment funds among a variety of investments to avoid excessive exposure to any one source of risk. Duration. The weighted average time to maturity of a bond where the weights are the present values of the future cash flows. Duration measures the price sensitivity of a bond to changes in interest rates. (See modified duration). Federal Funds Rate. The rate of interest charged by banks for short-term loans to other banks. The Federal Reserve Bank through open-market operations establishes it. Federal Open Market Committee: A committee of the Federal Reserve Board that establishes monetary policy and executes it through temporary and permanent changes to the supply of bank reserves. Haircut: The margin or difference between the actual market value of a security and the value assessed by the lending side of a transaction (i.e. a repo). PACKET PAGE: 73 AGENDA ITEM 3A.5 Leverage. Borrowing funds in order to invest in securities that have the potential to pay earnings at a rate higher than the cost of borrowing. Liquidity: The speed and ease with which an asset can be converted to cash. Make Whole Call. A type of call provision on a bond that allows the issuer to pay off the remaining debt early. Unlike a call option, with a make whole call provision, the issuer makes a lump sum payment that equals the net present value (NPV) of future coupon payments that will not be paid because of the call. With this type of call, an investor is compensated, or "made whole." Margin: The difference between the market value of a security and the loan a broker makes using that security as collateral. Market Risk. The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates. Market Value. The price at which a security can be traded. Marking to Market. The process of posting current market values for securities in a portfolio. Maturity. The final date upon which the principal of a security becomes due and payable. Medium Term Notes. Unsecured, investment-grade senior debt securities of major corporations which are sold in relatively small amounts on either a continuous or an intermittent basis. MTNs are highly flexible debt instruments that can be structured to respond to market opportunities or to investor preferences. Modified Duration. The percent change in price for a 100 basis point change in yields. Modified duration is the best single measure of a portfolio’s or security’s exposure to market risk. Money Market. The market in which short-term debt instruments (Tbills, discount notes, commercial paper, and banker’s acceptances) are issued and traded. Mortgage Pass-Through Securities. A securitized participation in the interest and principal cash flows from a specified pool of mortgages. Principal and interest payments made on the mortgages are passed through to the holder of the security. Mutual Fund. An entity which pools the funds of investors and invests those funds in a set of securities which is specifically defined in the fund’s prospectus. Mutual funds can be invested in various types of domestic and/or international stocks, bonds, and money market instruments, as set forth in the individual fund’s prospectus. For most large, institutional investors, the costs associated with investing in mutual funds are higher than the investor can obtain through an individually managed portfolio. Premium. The difference between the par value of a bond and the cost of the bond, when the cost is above par. Prepayment Speed. A measure of how quickly principal is repaid to investors in mortgage securities. Prepayment Window. The time period over which principal repayments will be received on mortgage securities at a specified prepayment speed. Primary Dealer. A financial institution (1) that is a trading counterparty with the Federal Reserve in its execution of market operations to carry out U.S. monetary policy, and (2) that participates for statistical reporting purposes in compiling data on activity in the U.S. Government securities market. Prudent Person (Prudent Investor) Rule. A standard of responsibility which applies to fiduciaries. In California, the rule is stated as “Investments shall be managed with the care, skill, prudence and diligence, under the circumstances then prevailing, that a PACKET PAGE: 74 AGENDA ITEM 3A.5 prudent person, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims to accomplish similar purposes.” Realized Yield. The change in value of the portfolio due to interest received and interest earned and realized gains and losses. It does not give effect to changes in market value on securities, which have not been sold from the portfolio. Regional Dealer. A financial intermediary that buys and sells securities for the benefit of its customers without maintaining substantial inventories of securities and that is not a primary dealer. Repurchase Agreement (RP, Repo). Short-term purchases of securities with a simultaneous agreement to sell the securities back at a higher price. From the seller’s point of view, the same transaction is a reverse repurchase agreement. Safekeeping. A service to bank customers whereby securities are held by the bank in the customer’s name. Structured Note. A complex, fixed income instrument, which pays interest, based on a formula tied to other interest rates, commodities or indices. Examples include inverse floating rate notes which have coupons that increase when other interest rates are falling, and which fall when other interest rates are rising, and "dual index floaters," which pay interest based on the relationship between two other interest rates - for example, the yield on the ten-year Treasury note minus the Libor rate. Issuers of such notes lock in a reduced cost of borrowing by purchasing interest rate swap agreements. Total Rate of Return. A measure of a portfolio’s performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains, and losses in the portfolio. U.S. Treasury Obligations. Securities issued by the U.S. Treasury and backed by the full faith and credit of the United States. Treasuries are considered to have no credit risk, and are the benchmark for interest rates on all other securities in the US and overseas. The Treasury issues both discounted securities and fixed coupon notes and bonds. Treasury Bills. All securities issued with initial maturities of one year or less are issued as discounted instruments, and are called Treasury bills. The Treasury currently issues three- and six-month T-bills at regular weekly auctions. It also issues “cash management” bills as needed to smooth out cash flows. Treasury Notes. All securities issued with initial maturities of two to ten years are called Treasury notes, and pay interest semi-annually. Treasury Bonds. All securities issued with initial maturities greater than ten years are called Treasury bonds. Like Treasury notes, they pay interest semi-annually. Volatility. The rate at which security prices change with changes in general economic conditions or the general level of interest rates. Yield to Maturity. The annualized internal rate of return on an investment which equates the expected cash flows from the investment to its cost. Ó Copyright 2014 by Chandler Asset Management, Inc. PACKET PAGE: 75 AGENDA ITEM 3A.5 PACKET PAGE: 76 AGENDA ITEM 3A.5 August 19, 2014 TO: The Honorable Mayor and Members of the City Council FROM: Thomas Prill, Finance Director SUBJECT: Budget Adjustment - Waste Water Fund RECOMMENDATION: Staff recommends that the City Council, by motion, approve an increase in the appropriation of funds to the Waste Water Enterprise Fund, to retrofit the vactor truck. DISCUSSION: Included in the proposed 2014/15 Budget was $21,000 for the purchase of a “particulate matter filter” for the Waste Water diesel vactor truck. This purchase has been required by the State of California Air Resources Control Board. Since the Council did not approve the proposed 2014/15 Budget, instead relying on “continuing appropriations,” this specific expenditure was not appropriated. This specific expenditure exceeds the current amount of appropriations for the related accounts. Therefore, it is being brought forward to the Council as an adjustment to the current appropriations. The current amount of the order is about $16,000 (see attached). The source of funds for this expenditure would be the Air Quality Improvement Fund, which would reimburse the Waste Water Fund for the purchase. ALTERNATIVES: 1) Approve the appropriation adjustment. 2) Deny the appropriation adjustment and further direct staff. FISCAL IMPACT: The approval of this item would result in the following appropriation adjustments: #055-4170-450-3350 (R&M- Motor Vehicles) $16,000 #055-0000-399-5011 (Interfund Transfers In) ($16,000) #064-9000-450-5010 (Interfund Transfers Out) $16,000 ATTACHMENTS: Purchase Order documentation PACKET PAGE: 77 AGENDA ITEM 3A.6 PACKET PAGE: 79AGENDA ITEM 3A.6 PACKET PAGE: 80AGENDA ITEM 3A.6 PACKET PAGE: 81AGENDA ITEM 3A.6 PACKET PAGE: 82AGENDA ITEM 3A.6 PACKET PAGE: 83AGENDA ITEM 3A.6 PACKET PAGE: 84AGENDA ITEM 3A.6 PACKET PAGE: 85AGENDA ITEM 3A.6 PACKET PAGE: 86AGENDA ITEM 3A.6 PACKET PAGE: 87AGENDA ITEM 3A.6 PACKET PAGE: 88AGENDA ITEM 3A.6 PACKET PAGE: 89AGENDA ITEM 3A.6 August 19, 2014 TO: The Honorable Mayor and Members of the City Council FROM: Tim Hults, City Manager Jeff Ballinger, City Attorney SUBJECT: Resolution Authorizing the Annexation of Territory into the 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 RECOMMENDATION: Staff recommends the City Council hold the public hearing and adopt the Resolution Authorizing the Annexation of Territory to 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. DISCUSSION: The City Council and Planning Commission have identified the need for additional funding sources for police protection and fire protection and suppression services, especially those services that are created by new development within the City. In response to the need for additional funding for such services, the City Council formed Community Facilities District 2003-1 (the "CFD”) and the levy of special taxes therein. Previously, the Council declared its intention to annex territory to CFD No. 2003-1 by adopting Resolution No. 3523 entitled “A Resolution of the City Council of San Jacinto Declaring its Intention to Annex Territory into Community Facilities District No. 2003-1 and to Authorize the Levy of Special Taxes Therein”. The Council is asked to hold the public hearing and conduct the election for the annexation of territory to CFD No. 2003- 1 - Actions include: Holding the public hearing, conducting the special election, and directing the recording of an Amended Notice of Special Tax Lien. FISCAL IMPACT: The annexation of the territory into the CFD will have a beneficial impact to the City's budget in that, upon implementation of the proposed annexation, would assist in the funding of police protection and fire protection and suppression services. ATTACHMENTS: 1. Resolution Authorizing the Annexation of Territory No.____ 2. Resolution Certifying Election Results No._____ 3. Special Tax Report PACKET PAGE: 91 AGENDA ITEM 4.1 RESOLUTION NO. STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) CITY OF SAN JACINTO ) A RESOLUTION OF THE CITY COUNCIL OF SAN JACINTO, AUTHORIZING THE ANNEXATION OF TERRITORY TO COMMUNITY FACILITIES DISTRICT NO. 2003-1, AUTHORIZING THE LEVY OF A SPECIAL TAX AND SUBMITTING THE LEVY OF SPECIAL TAX TO QUALIFIED ELECTORS City of San Jacinto Community Facilities District No. 2003-1 Annexation No. 55 RESOLVED by the City Council (the “Council”) of the City of San Jacinto (the “City”), County of Riverside, State of California, that: WHEREAS, on July 15, 2014 the Council adopted Resolution No. 3523 entitled “A Resolution of the City Council of San Jacinto Declaring its Intention to Annex Territory into Community Facilities District No. 2003-1 and to Authorize the Levy of Special Taxes Therein” (the “Resolution of Intention to Annex”), stating its intention to annex certain territory into Community Facilities District No. 2003-1 (the “CFD”) pursuant to the Mello Roos Community Facilities Act of 1982, Section 53311, and following of the California Government Code (the “Act”); and WHEREAS, a copy of the Resolution of Intention to Annex, incorporating a description and map of the proposed boundaries of the annexation territory (the “Annexation No. 55”), stating the services to be provided, and the rate and method of special tax to be levied within the annexation territory to pay for the services, is on file with the City Clerk, and the provisions thereof are fully incorporated herein by reference; and WHEREAS, on the date hereof, the Council held a noticed public hearing as required by the Act and the Resolution of Intention to Annex relative to the proposed annexation territory to the CFD and the levy of special taxes in the annexation territory; and WHEREAS, at such hearing all interested persons desiring to be heard an all matters pertaining to the annexation territory to the CFD and the levy of special taxes within the annexation territory were heard and full and fair hearing was held; and WHEREAS, prior to the time fixed for the hearing, written protests have not been filed against the proposed annexation of territory to the CFD by (i) 50% or more of the registered voters, or six registered voters, whichever is more, residing in the existing CFD; or (ii) 50% or more of the registered voters, or six registered voters, whichever is more, residing in the territory proposed to be annexed; or (iii) owners of one-half or more of the area of land in the existing CFD; or (iv) owners of one-half or more of the area of land in the territory proposed to be annexed. PACKET PAGE: 93 AGENDA ITEM 4.1 WHEREAS, the annexation map of Annexation No. 55 has been filed with the County Recorder of Riverside County, which map shows the territory to be annexed in these proceedings, and a copy of the map is on file with the City Clerk. NOW, THEREFORE, it is hereby RESOLVED, DETERMINED AND ORDERED by the City Council of the City of San Jacinto as follows: SECTION 1. Recitals. The foregoing recitals are true and correct. SECTION 2. Prior Proceedings. All prior proceedings taken by this Council with respect to the CFD and the proposed annexation territory have been duly considered and are hereby determined to be valid an in conformity with the Act, and the CFD has been validly established pursuant to the Act. SECTION 3. Prior Resolution. The provision of the Resolution of Intention to Annex previously adopted by the Council for the CFD are by referenced incorporated herein. SECTION 4. Boundaries. The boundaries of the territory to be annexed to the CFD, as described in Annexation Map No. 55, is on file with the City Clerk and heretofore recorded in the Riverside County Recorder’s Office on July 23, 2014, in Book 77 at Page 27 of Maps of Assessment and Community Facilities Districts, Instrument No. 2014-0273388, is hereby approved, and incorporated herein by this reference, and shall be included within the boundaries of the CFD, and said territory is hereby ordered annexed to the CFD, subject to voter approval of the levy of special taxes therein as provided. SECTION 5. Voter Approval. Pursuant to the provision of the Act, the propositions of (i) the annexation of the annexation territory, and (ii) the levy of special taxes within the annexation territory shall be submitted to the voters of the annexation territory at an election called therefore as hereinafter provided. SECTION 6. Electors Determined. The Council hereby finds that fewer than 12 persons have been registered to vote within the territory proposed to be annexed for each of the 90 days preceding the close of the hearing heretofore conducted and concluded by the Council for the purpose of these annexation proceedings. Accordingly, and pursuant to Section 53326 of the Act, the Council finds that for purposes of these proceedings the qualified electors are the landowners within the annexation territory and that the vote shall be by said landowners, each having one vote for each acre or portion thereof such landowner owns in the annexation territory. SECTION 7. Applicable Laws. Pursuant to the Act, the election shall be conducted by mailed ballot under Section 4000 of the California Elections Code, provided, however, that for the purposes of setting the date for the election, Sections 53326 and 53327 of the Act shall govern. PACKET PAGE: 94 AGENDA ITEM 4.1 SECTION 8. Special Election Called. This Council hereby calls a special election to consider the measure described in the ballot referred to in Exhibit A hereto, which form is hereby approved. The special election shall be held in the meeting room of the Council immediately following adoption of this Resolution. The Council hereby further finds that the provision of the Act requiring a minimum of 90 days to elapse before said election is for the protection of the voters, and the voters have waived such requirement and the date for the election herein is established accordingly. SECTION 9. Election Official. The City Clerk is hereby designated as the official to conduct said election. It is hereby acknowledged that the City Clerk has on file the Resolution of Intention to Annex, a certified map of the proposed boundaries of the territory to be annexed to the CFD, and a sufficient description to allow the City Clerk to determine the boundaries of the territory to be annexed to the CFD. The voted ballot shall be returned to the City Clerk no later then immediately following the adoption of this Resolution, and when the qualified elector has voted the election shall be closed. This Council acknowledges that the City Clerk has caused to be delivered to the sole qualified elector of Annexation No. 55 a ballot in the form set forth in Exhibit A hereto. The ballot indicated the numbers of votes to be voted by the landowner, and was accompanied by all supplies and written instructions for the use and return of the ballot. SECTION 10. Effective. This resolution shall take effect upon its adoption. PASSED, APPROVED, AND ADOPTED this 19th day of August, 2014. City of San Jacinto Alonso Ledezma, Mayor ATTEST: ____________________ Richard Miller, City Clerk APPROVED AS TO FORM: Best, Best & Krieger __________________________ Jeffrey S. Ballinger, City Attorney PACKET PAGE: 95 AGENDA ITEM 4.1 I, Richard Miller, City Clerk of the City Council of San Jacinto, do hereby certify that the foregoing Resolution No. was adopted and approved at a regular meeting of the City Council of the City of San Jacinto held on the 19th day of August, 2014 by the following vote: AYES: NAYS: ABSENT: ABSTAINED: WITNESS MY HAND AND OFFICIAL SEAL this 19th day of August, 2014 Richard Miller, City Clerk City of San Jacinto PACKET PAGE: 96 AGENDA ITEM 4.1 EXHIBIT A City of San Jacinto Community Facilities District No. 2003-1 Annexation No. 55 OFFICIAL BALLOT SPECIAL TAX ELECTION This ballot is for a special, landowner election. You must return this ballot in the enclosed postage paid envelope to the office of the City Clerk of the City of San Jacinto no later than 6:30 p.m. on Tuesday, August 19, 2014, either by mail or in person. The City Clerk’s office is located at 595 S. San Jacinto Avenue, Building B, San Jacinto, California, 92583. To vote, mark a cross (X) on the voting line after the word “YES” or after the word “NO”. All marks otherwise made are forbidden. All distinguishing marks are forbidden and make the ballot void. If you wrongly mark, tear, or deface this ballot, return it to the City Clerk of the City of San Jacinto and obtain another. BALLOT MEASURE: Shall the City of San Jacinto, by and for its Community Facilities District No. 2003-1 (the “CFD”), be authorized to annually levy a special tax within the territory identified as Annexation No. 55 to the CFD in accordance with the rate and method of apportionment described in Resolution No. 3523 adopted by the Council of the City of San Jacinto on July 15, 2014? Yes: __________ No: __________ By execution in the space provided below, you also confirm your written waiver of the time limit pertaining to the conduct of the election and any requirement for analysis and arguments with respect to the ballot measure as such waivers are described and permitted by Section 53326(a) and 53327(b) of the California Government Code. Number of Votes: 5 Assessor’s Parcel Number: 436-450-019 Property Owner: Brosh SoCal Properties, Inc. By: PACKET PAGE: 97 AGENDA ITEM 4.1 Page 1 of 3 RESOLUTION NO. STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) CITY OF SAN JACINTO ) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JACINTO, DECLARING THE RESULTS OF A SPECIAL ANNEXATION LANDOWNER ELECTION AND DIRECTING THE RECORDING OF AN AMENDED NOTICE OF SPECIAL TAX LIEN City of San Jacinto Community Facilities District No. 2003-1 Annexation No. 55 RESOLVED by the City Council (the “Council”) of the City of San Jacinto (the “City”), County of Riverside, State of California, that: WHEREAS, the City Council of the City has previously formed a Community Facilities District pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, Section 53311, and following of the California Government Code (the “Act”). The existing Community Facilities District being designated as Community Facilities District No. 2003-1 (the “CFD”); and WHEREAS, in proceedings heretofore conducted by the Council pursuant to the Act, the Council has heretofore adopted a resolution entitled “A Resolution of the City of San Jacinto, Authorizing the Annexation of Territory to Community Facilities District No. 2003-1, Authorizing the Levy of a Special Tax and Submitting the Levy of the Special Tax to Qualified Electors” (the “Resolution of Annexation”) calling a special election of the qualified landowner electors in the territory of the land proposed to be annexed to the CFD. WHEREAS, pursuant to the terms of the Resolution of Annexation, adopted by the Council on this date, which is hereby incorporated herein by this reference, the special election has been held and the City Clerk has on file a Canvass and Statement Result of Election (the “Canvass”), a copy of which is attached hereto as Exhibit A; and WHEREAS, this Council has reviewed the Canvass and hereby approves said Canvass. NOW, THEREFORE, it is hereby RESOLVED, DETERMINED AND ORDERED by the City Council of the City of San Jacinto as follows: SECTION 1. Recitals. The foregoing recitals are true and correct. PACKET PAGE: 99 AGENDA ITEM 4.1 Page 2 of 3 SECTION 2. Issues Presented. The issues presented at the special election were (i) the annexation of territory to the CFD; and (ii) the levy of a special tax within the territory annexed to the CFD. SECTION 3. Measure Approved. Pursuant to the Canvass, the issues presented at the special election were approved by the landowners of the territory proposed for annexation to the CFD by more than two-thirds of the votes received at the special election. SECTION 4. Declaration of Annexation. The Council does hereby determine and declare that the annexed territory is now added to and becomes a part of the CFD. The Council, acting as the Legislative Body of the CFD, is hereby empowered to levy the authorized special tax within the annexation territory. SECTION 5. Authority to Levy. Pursuant to the voter approval, this Council may levy special taxes in the territory in the captioned annexation according to the rate and method of apportionment specified in the resolution of this Council entitled “A Resolution of the City Council of San Jacinto Declaring its Intention to Annex Territory into Community Facilities District No. 2003-1 and to Authorize the Levy of Special Taxes Therein” adopted on July 15, 2014. SECTION 6. Prior Proceedings. It is hereby found that all prior proceedings and actions taken by this Council with respect to the CFD and the territory annexed thereto were valid and in conformity with the Act. SECTION 7. Amendment to Notice of Lien. The City Clerk is hereby directed to complete, execute and cause to be recorded in the office of the County Recorder of the County of Riverside an amendment to the Notice of Special Tax Lien in the form required by the Act, such recording to occur no later than fifteen (15) days following adoption of this Resolution by the Council. SECTION 8. This Resolution shall take effect upon its adoption. PASSED, APPROVED, AND ADOPTED this 19th day of August, 2014. City of San Jacinto Alonso Ledezma, Mayor PACKET PAGE: 100 AGENDA ITEM 4.1 Page 3 of 3 ATTEST: ____________________ Richard Miller, City Clerk APPROVED AS TO FORM: Best, Best & Krieger __________________________ Jeffrey S. Ballinger, City Attorney I, Richard Miller, City Clerk of the City Council of San Jacinto, do hereby certify that the foregoing Resolution No. was adopted and approved at a regular meeting of the City Council of the City of San Jacinto held on the 19th day of August, 2014 by the following vote: AYES: NAYS: ABSENT: ABSTAINED: WITNESS MY HAND AND OFFICIAL SEAL this 19th day of August, 2014 Richard Miller, City Clerk City of San Jacinto PACKET PAGE: 101 AGENDA ITEM 4.1 A-1 EXHIBIT A City of San Jacinto Community Facilities District No. 2003-1 Annexation No. 55 CANVASS AND STATEMENT OF RESULT OF ELECTION I hereby certify that on August 19, 2014, I canvassed the returns of the election held on August 19, 2014, for the City of San Jacinto Community Facilities District No. 2003-1 Annexation No. 55 and the total number of votes cast in such election and the total number of votes cast for and against the measure are as follows and the totals as shown for and against the measure are full, true and correct: Qualified Landowner Votes Votes Cast Votes YES Votes NO City of San Jacinto Community Facilities District No. 2003-1 Annexation No. 55 Special Tax Election, September 2, 2014 __5__ _____ _____ _____ BALLOT MEASURE: Shall the City of San Jacinto, by and for its Community Facilities District No. 2003-1 (the “CFD”), be authorized to annually levy a special tax within the territory identified as Annexation No. 55 to the CFD in accordance with the rate and method of apportionment described in Resolution No. 3523 adopted by the Council of the City of San Jacinto on July 15, 2014? Yes: __________ No: __________ IN WITNESS WHEREOF, I HAVE HEREUNTO SET MY HAND on August, 19, 2014. By: Rick Miller, City Clerk City of San Jacinto PACKET PAGE: 102 AGENDA ITEM 4.1 City of San Jacinto Community Facilities District No. Annexation No. 55 Special Tax Report August 2014 Prepared by For and on behalf of the City of Community Facilities District No. 2003-1 City of San Jacinto 32605 Temecula Parkway, Suite 100 Temecula, CA 92592 Toll free: 800.676.7516 Fax: 951.296.1998 870 Market Street, Suite 1223 San Francisco, CA 94102 Toll free: 800.434.8349 Fax: 415.391.8439 Main Office 32605 Temecula Parkway, Suite 100 Temecula, CA 92592 Toll free: 800.676.7516 Fax: 951.296.1998 Regional Office 870 Market Street, Suite 1223 San Francisco, CA 94102 free: 800.434.8349 Fax: 415.391.8439 PACKET PAGE: 103 AGENDA ITEM 4.1 TABLE OF CONTENTS INTRODUCTION 1 DESCRIPTION OF SERVICES 2 BOUNDARIES OF CFD 3 COST ESTIMATE 4 Fiscal Year 2014/15 Maximum Special Tax Rates ................................................................ 4 RATE AND METHOD OF APPORTIONMENT 5 Term of Special Tax .............................................................................................................. 5 Manner of Collection ............................................................................................................. 5 APPENDICES 6 APPENDIX A – ANNEXATION MAP A APPENDIX B – RATE AND METHOD OF APPORTIONMENT B PACKET PAGE: 104 AGENDA ITEM 4.1 Community Facilities District No. 2003-1, Annexation No. 55 1 Special Tax Report Prepared by NBS on behalf of the City of San Jacinto – August 2014 INTRODUCTION The City Council (the “City Council”) of the City of San Jacinto (the “City”) did, pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982 (Sections 53311 and following, California Government Code; hereafter referred to as the “Act”), on July 15, 2014, adopt a resolution entitled the Resolution of the City Council of San Jacinto Declaring Its Intention to Annex Territory into Community Facilities District No. 2003-1 and to Authorize the Levy of Special Taxes therein (the “Resolution of Intention”). In the Resolution of Intention, the City Council approved the direction to prepare a written Community Facilities District Report (the “Report”), for the proposed City of San Jacinto Community Facilities District No. 2003-1, Annexation No. 55 (the “CFD”). In the Resolution of Intention, the City Council expressly ordered the preparation of a written Report for the CFD containing the following: 1. A brief description of the services to be funded by the CFD; and 2. An estimate of the fair and reasonable initial annual cost of providing the services, including the incidental expenses in connection therewith, any City administration costs and all other related costs. For particulars, reference is made to the Resolution of Intention for the CFD, as previously adopted on July 15, 2014 by the City Council. NOW, THEREFORE, the Report has been prepared by, or under the direction of the Finance Director of the City, the appointed responsible officer directed to prepare the Report or cause the Report to be prepared pursuant to the provisions of the Act and does hereby submit this Report containing the following information: · DESCRIPTION OF SERVICES. A description of the services that the City Council has determined to be eligible to be funded by the CFD. · BOUNDARIES OF THE CFD. The proposed boundaries of the CFD are those properties and parcels on which special taxes may be levied to pay for the costs and expenses of the services. · COST ESTIMATE. The initial maximum cost estimate for the CFD services and the anticipated initial maximum special tax revenue. · RATE AND METHOD OF APPORTIONMENT. The Rate and Method of Apportionment of Special Tax which was included in the Resolution of Intention and approved by the City Council. PACKET PAGE: 105 AGENDA ITEM 4.1 Community Facilities District No. 2003-1, Annexation No. 55 2 Special Tax Report Prepared by NBS on behalf of the City of San Jacinto – August 2014 DESCRIPTION OF SERVICES The type of services financed by the CFD and pursuant to the Act shall consist of those services described as follows: (a) police protection services, including but not limited to, criminal justice services, and (b) fire protection and suppression services. It is presently intended that the services will be provided, without preference or priority, to the existing territory in the CFD and the territory proposed to be annexed to the CFD. PACKET PAGE: 106 AGENDA ITEM 4.1 Community Facilities District No. 2003-1, Annexation No. 55 3 Special Tax Report Prepared by NBS on behalf of the City of San Jacinto – August 2014 BOUNDARIES OF CFD The boundaries of the CFD are those parcels on which special taxes may be levied and collected to pay for the costs and expenses of the CFD services. The territory included in the existing CFD is identified on the map of the district recorded as Instrument No. 2003-995886 in the office of the County Recorder for the County of Riverside on December 22, 2003 in Book 55 at Page 58-59 of Maps of Assessments and Community Facilities Districts, and as such map was amended as a result of prior annexations. The territory proposed to be annexed is identified on the Annexation Map recorded on July 23, 2014, in Book 77 at Page 27 of Maps of Assessment and Community Facilities Districts, Instrument No. 2014-0273388 in the office of County Recorder for the County of Riverside. The Annexation Map is on file with the City Clerk, to which reference is hereby made and a reduced copy of such map is set forth in Appendix A of this Report. PACKET PAGE: 107 AGENDA ITEM 4.1 Community Facilities District No. 2003-1, Annexation No. 55 4 Special Tax Report Prepared by NBS on behalf of the City of San Jacinto – August 2014 COST ESTIMATE Fiscal Year 2014/15 Maximum Special Tax Rates The initial maximum special tax rates are set forth in the Rate and Method of Apportionment for the District. The Fiscal Year 2014/15 maximum special tax rates are listed below. Land Use Class Description Maximum Special Tax Rate A Maximum Special Tax Rate B (1) 1 Single Family Property $472.44653356 per Unit $809.90834325 per Unit 2 Apartment Property 354.33490017 per Unit 607.43125744 per Unit 3 Non-Retail Commercial/Industrial Property 0.16063182 per Building Square Foot 0.27536884 per Building Square Foot N/A Undeveloped Property 0.00 per Acre 0.00 per Acre *The Maximum Special Tax rate increases annually based on the percentage change in the Los Angeles Consumer Price Index with a maximum annual increase of 6% and a minimum annual increase of 2% per fiscal year, as defined in the Rate and Method of Apportionment. Property exempt from the Special Tax includes retail commercial property, property owner association property, and public property. PACKET PAGE: 108 AGENDA ITEM 4.1 Community Facilities District No. 2003-1, Annexation No. 55 5 Special Tax Report Prepared by NBS on behalf of the City of San Jacinto – August 2014 RATE AND METHOD OF APPORTIONMENT All of the property located within the CFD, unless exempted by law or by the Rate and Method of Apportionment, shall be taxed for the purpose of providing necessary services for the District. Pursuant to Section 53325.3 of the Act, the tax imposed "is a special tax and not a special assessment, and there is no requirement that the tax be apportioned on the basis of benefit to any property." The special tax "may be based on benefit received by parcels of real property, the cost of making facilities or authorized services available to each parcel, or other reasonable basis as determined by the legislative body," although the special tax may not be apportioned on an ad valorem basis pursuant to Article XIIIA of the California Constitution. As shown in Appendix B, the adopted Rate and Method of Apportionment provides information sufficient to allow each property owner within the CFD to estimate the maximum special tax that he or she will be required to pay. Term of Special Tax The CFD special tax shall be levied as long as necessary to meet the annual special tax requirement. Manner of Collection The annual special tax shall be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that the CFD, may directly bill the special tax, and may collect special taxes at a different time or in a different manner as necessary to meet its financial obligations. PACKET PAGE: 109 AGENDA ITEM 4.1 Community Facilities District No. 2003-1, Annexation No. 55 6 Special Tax Report Prepared by NBS on behalf of the City of San Jacinto – August 2014 APPENDICES Annexation Map A Rate and Method of Apportionment B PACKET PAGE: 110 AGENDA ITEM 4.1 APPENDIX A – ANNEXATION MAP The annexation boundary map for the CFD is shown on the following page. The lines and dimensions of each lot or parcel within the CFD are those lines and dimensions shown on the maps of the County Assessor, at the time this report was prepared, and are incorporated by reference herein and made part of this Report. PACKET PAGE: 111 AGENDA ITEM 4.1 APPENDIX B – RATE AND METHOD OF APPORTIONMENT The following pages provide a copy of the CFD’s Rate and Method of Apportionment included in the Resolution of Intention approved by the City Council on July 15, 2014. PACKET PAGE: 112 AGENDA ITEM 4.1 August 19, 2014 TO: The Honorable Mayor and Members of the City Council FROM: Thomas Prill, Finance Director SUBJECT: CR&R Delinquent Solid Waste Tax Roll Placement for Calendar Year 2013 RECOMMENDATION: Staff recommends that the City Council conduct the public hearing and, by motion, adopt a resolution and report determining the amount of delinquent residential solid waste charges billed during calendar year 2013 and unpaid; determine that such delinquent charges constitute a special assessment and lien; and direct that such charges be collected via the Riverside County secured property tax roll. BACKGROUND: On December 17, 2012, the City Council approved a Second Amendment to the CR&R franchise agreement established in 2005. A provision of this amendment authorized collection of delinquent solid waste charges through the Riverside County secured property tax roll. On June 17, 2014, the City Council adopted Ordinance No. 14-08, amending Section 8.32.150 of Chapter 8.32 of Title 8 of the San Jacinto Municipal Code authorizing the placement of these charges on the tax roll. DISCUSSION: At specified intervals, CR&R sends notices to delinquent accounts including information on tax roll placement. Once an account becomes 90 days delinquent, if the account is held in a name other than the property owner, a letter is sent to the property owner informing them that the delinquent charges are subject to placement on the tax roll. In addition to these routine notices, CR&R sent a Notice of Public Hearing to the affected property owners in July. CR&R has provided the City with the list of the properties and amounts with 2013 charges that remain unpaid. This list has been available for public inspection through the City Clerk’s office since July 31, 2014. FISCAL IMPACT: This item has no fiscal impact. ATTACHMENTS: Proposed list of parcels to be submitted for placement on the tax roll. Resolution No. 3529 PACKET PAGE: 113 AGENDA ITEM 4.2 STATE OF CALIFORNIA ) RESOLUTION NO. 3529 COUNTY OF RIVERSIDE ) ss CITY OF SAN JACINTO ) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JACINTO, CALIFORNIA, ADOPTING A REPORT DETERMINING THE AMOUNT OF DELINQUENT RESIDENTIAL SOLID WASTE CHARGES BILLED DURING CALENDAR YEAR 2013 AND UNPAID; DETERMINING THAT SUCH DELINQUENT CHARGES CONSTITUTE A SPECIAL ASSESSMENT AND LIEN; AND DIRECTING THAT SUCH CHARGES BE COLLECTED VIA THE RIVERSIDE COUNTY TAX ROLL WHEREAS, pursuant to Sections 38790.1 and 25831 of the California Government Code and Section 8.32.150(C) of the San Jacinto Municipal Code, the City of San Jacinto is authorized to collect delinquent residential solid waste charges, including any accrued penalties (the “Delinquent Charges”) on the Riverside County property tax roll; and WHEREAS, pursuant to Sections 38790.1 and 25831 of the California Government Code and Section 8.32.150(C) of the San Jacinto Municipal Code, as applicable, the City Council desires to recover such Delinquent Charges that were billed at any time during Calendar Year 2013 and which remain unpaid, by forwarding them to the Riverside County Recorder/Clerk and Riverside County Auditor-Controller/Treasurer/Tax Collector to be recorded as a lien and collected as a special assessment on the tax roll in the same manner, by the same persons and at the same time, together with and not separate from, the general taxes, and has caused a written report (“Report”), a copy of which is attached hereto as Exhibit “A” and by this reference incorporated herein, to be prepared and filed with the City Clerk containing the description of each residential real property parcel which is subject to the Delinquent Charges and the amount of Delinquent Charges that remain unpaid by each such residential real property parcel; and WHEREAS, the City caused a notice of the filing of this Report and of the time and place of the public hearing thereon to be mailed to the record owner of each residential real property parcel subject to the Delinquent Charges, all in accordance with Sections 38790.1 and 25831 of the California Government Code and Section 8.32.150(C) of the San Jacinto Municipal Code; and WHEREAS, at the time stated in the notice on the 19th day of August, 2014, at 6:30 p.m., the City Council conducted the public hearing on the Written Report and heard and considered all objections or protests thereto, and has overridden said objections and protests; and PACKET PAGE: 115 AGENDA ITEM 4.2 WHEREAS, the Delinquent Charges and costs of lien shall constitute a lien and special assessment against the parcel or parcels of land described in the Report in accordance with Sections 38790.1 and 25831 of the California Government Code and Section 8.32.150(C) of the San Jacinto Municipal Code. NOW, THEREFORE, BE IT RESOLVED, FOUND, DETERMINED AND ORDERED BY THE CITY COUNCIL OF THE CITY OF SAN JACINTO, CALIFORNIA, AS FOLLOWS: SECTION 1: The City Council hereby finds and determines that the above Recitals are true and correct are incorporated herein. SECTION 2: The Report filed with the City Clerk contains the description of each residential real property parcel which is subject to the Delinquent Charges and the amount of Delinquent Charges to be imposed thereon, which were billed during Calendar Year 2013 and which remain unpaid, together with any accrued penalties, and the Report is therefore approved and adopted. SECTION 3: The Report with Delinquent Charges for Calendar Year 2013 shall be forwarded to the Riverside County Recorder/Clerk for recording of a lien, and forwarded to the Riverside County Auditor-Controller/Treasurer/Tax Collector for collection on the tax roll in the same manner, by the same person, at the same time, together with and not separate from the general taxes, as special assessments against the property to which they relate, and shall constitute liens on the property in the amount of the assessment to be added to the tax bill next levied against the property. SECTION 4: On or before the 20th day of August, 2014, the City Clerk is hereby directed to file with the Riverside County Recorder/Clerk and the Riverside County Auditor-Controller/Treasurer/Tax Collector a copy of the Report, with a statement endorsed thereon over his or her signature that this has been fully adopted by the City Council, together with a certified copy of this Resolution, and shall request that the Delinquent Charges be recorded as a lien against the parcels and collected on the tax bills as a special assessment for the taxable parcels in the City identified in the Report along with the ordinary ad valorem taxes to be levied on and collected from owners of said parcels. SECTION 5: The special assessment for the Delinquent Charges authorized herein is levied without regard to the valuation of the subject residential real properties. SECTION 6: If any provision of this Resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications, and to this end the provisions of this Resolution are declared to be severable. PACKET PAGE: 116 AGENDA ITEM 4.2 PASSED, APPROVED AND ADOPTED this 19th day of August, 2014 by the following vote: Ayes: Nays: Absent: Abstain: City of San Jacinto _____________________________ Alonso Ledezma, Mayor ATTEST: ______________________________ Rick Miller, City Clerk APPROVED AS TO FORM: ______________________________ City Attorney, City of San Jacinto Best Best & Krieger LLP PACKET PAGE: 117 AGENDA ITEM 4.2 EXHIBIT “A” List of Assessments PACKET PAGE: 118 AGENDA ITEM 4.2 Page 1 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 432-050-023 22.08$ 432-081-014 75.03$ 432-082-003 20.06$ 432-083-010 247.31$ 432-084-014 179.69$ 432-102-017 63.69$ 432-191-010 190.69$ 432-192-001 190.69$ 432-192-003 155.81$ 432-200-001 126.25$ 432-202-029 60.69$ 432-202-039 104.70$ 432-203-010 190.69$ 432-203-016 190.69$ 432-210-015 190.69$ 432-210-016 190.69$ 432-210-019 140.69$ 432-210-030 190.69$ 432-212-001 70.69$ 432-213-005 190.69$ 432-221-004 40.00$ 432-221-010 190.69$ 432-221-016 110.69$ 432-222-005 107.19$ 432-222-011 31.94$ 432-222-018 128.88$ 432-222-025 190.69$ 432-222-030 64.44$ 432-222-031 190.69$ 432-223-003 26.25$ 432-232-010 20.61$ 432-232-011 190.69$ 432-232-015 117.29$ 432-233-014 190.69$ 432-233-015 190.69$ 432-234-003 190.69$ 432-234-005 190.69$ 432-240-004 19.95$ 432-241-002 169.14$ 432-241-014 190.69$ 432-241-020 190.69$ PACKET PAGE: 119 AGENDA ITEM 4.2 Page 2 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 432-242-007 126.25$ 432-242-010 190.69$ 432-242-011 64.44$ 432-243-008 190.69$ 432-243-009 149.02$ 432-244-014 15.69$ 432-250-004 128.88$ 432-250-015 190.69$ 432-251-001 128.88$ 432-251-007 190.69$ 432-252-002 190.69$ 432-252-005 190.69$ 432-252-025 130.69$ 432-291-004 190.69$ 432-291-012 179.69$ 433-171-010 139.47$ 433-171-016 26.32$ 433-171-016 128.17$ 433-172-015 212.60$ 433-212-019 64.44$ 433-212-023 64.44$ 433-212-033 174.87$ 433-221-027 116.10$ 433-222-022 174.87$ 433-222-026 128.88$ 433-222-052 240.93$ 433-222-053 174.87$ 433-222-056 174.87$ 433-222-062 26.87$ 433-223-001 74.87$ 433-231-022 64.44$ 433-231-024 163.94$ 433-231-040 174.87$ 433-231-041 174.87$ 433-234-015 24.10$ 433-234-024 114.15$ 433-234-027 128.88$ 433-241-018 110.40$ 433-241-022 174.87$ 433-242-017 174.87$ 433-252-048 174.87$ PACKET PAGE: 120 AGENDA ITEM 4.2 Page 3 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 433-252-066 29.14$ 433-252-074 21.12$ 433-252-076 174.87$ 433-261-059 93.58$ 433-264-008 179.69$ 433-264-051 64.44$ 433-265-066 105.13$ 433-270-020 190.69$ 433-310-011 174.87$ 433-310-014 19.25$ 433-323-009 179.00$ 433-323-035 70.79$ 433-324-007 179.00$ 433-324-009 64.44$ 433-331-010 179.00$ 433-333-021 179.00$ 433-341-003 28.88$ 433-341-008 179.69$ 433-341-016 179.69$ 433-341-017 29.88$ 433-341-035 179.69$ 433-342-018 79.69$ 433-351-008 65.12$ 433-351-011 64.44$ 433-351-014 75.03$ 433-351-014 79.46$ 433-353-001 29.69$ 433-353-012 26.05$ 433-354-006 179.69$ 433-361-001 179.69$ 433-361-004 179.69$ 433-361-012 179.69$ 433-362-020 117.08$ 433-371-007 179.69$ 433-371-028 161.22$ 433-371-029 69.69$ 433-381-001 190.69$ 433-381-006 190.69$ 433-381-007 30.91$ 433-381-008 54.93$ 433-382-005 64.44$ PACKET PAGE: 121 AGENDA ITEM 4.2 Page 4 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 433-382-027 176.57$ 433-391-009 189.98$ 433-404-024 114.56$ 433-404-026 179.00$ 433-412-010 179.00$ 433-413-021 179.00$ 433-421-019 190.69$ 433-421-033 90.01$ 433-433-010 64.44$ 433-434-009 179.69$ 433-441-007 128.88$ 433-441-010 120.30$ 433-442-002 190.69$ 433-461-002 64.44$ 433-461-010 189.98$ 433-461-012 52.18$ 433-463-013 179.69$ 433-472-019 56.67$ 433-472-025 126.25$ 433-473-001 140.69$ 433-473-004 190.69$ 433-480-023 114.56$ 433-481-003 179.00$ 433-491-001 272.21$ 433-492-011 212.60$ 433-492-013 153.88$ 433-492-024 133.01$ 433-492-026 57.79$ 433-493-012 212.60$ 433-500-012 61.62$ 433-500-039 162.60$ 434-020-021 173.49$ 434-020-069 12.37$ 434-050-019 804.46$ 434-060-009 212.60$ 434-080-017 191.67$ 434-101-002 212.60$ 434-121-013 58.28$ 434-122-005 212.60$ 434-124-006 210.93$ 434-141-009 212.60$ PACKET PAGE: 122 AGENDA ITEM 4.2 Page 5 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 434-151-005 68.92$ 434-151-005 81.38$ 434-151-023 212.60$ 434-210-014 128.60$ 434-210-017 191.67$ 434-210-018 79.59$ 434-210-021 212.60$ 434-273-012 112.60$ 434-281-007 212.60$ 434-281-014 112.60$ 434-281-018 128.88$ 434-281-029 128.88$ 434-282-003 103.88$ 434-282-004 212.60$ 434-283-011 98.74$ 434-283-015 112.60$ 434-283-022 64.44$ 434-284-013 212.60$ 434-284-018 13.60$ 434-284-034 128.88$ 434-291-031 127.97$ 434-291-033 55.00$ 434-291-033 191.67$ 434-291-041 76.39$ 434-292-002 212.60$ 434-292-015 212.60$ 434-311-011 91.27$ 434-312-011 212.60$ 434-312-012 62.95$ 434-322-005 70.65$ 434-322-010 64.44$ 434-323-009 212.60$ 434-323-011 212.60$ 434-332-008 64.44$ 434-333-010 212.60$ 434-333-023 68.15$ 434-342-005 42.96$ 434-351-005 93.00$ 434-351-010 212.60$ 434-352-011 148.60$ 434-352-014 148.86$ PACKET PAGE: 123 AGENDA ITEM 4.2 Page 6 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 434-353-004 169.14$ 434-353-024 425.20$ 434-356-002 112.64$ 434-361-003 128.88$ 434-370-009 212.60$ 434-370-016 112.60$ 434-371-013 212.60$ 434-371-038 128.88$ 434-404-009 64.44$ 434-404-014 64.44$ 434-413-001 74.14$ 434-413-003 64.15$ 434-413-004 148.16$ 434-413-012 14.23$ 434-413-017 72.60$ 434-420-010 128.88$ 434-431-005 128.88$ 434-431-007 212.60$ 434-431-013 63.34$ 434-431-020 12.86$ 434-431-020 121.11$ 434-431-046 170.60$ 434-441-007 28.88$ 434-442-013 128.88$ 434-443-007 21.80$ 434-443-010 64.44$ 434-452-005 191.67$ 434-452-009 124.06$ 434-453-002 48.40$ 434-461-002 27.78$ 434-461-012 212.60$ 434-461-013 64.44$ 434-471-015 68.38$ 434-471-029 12.60$ 434-480-005 212.60$ 434-480-030 83.91$ 434-480-036 92.60$ 434-480-038 212.60$ 434-480-053 74.74$ 434-492-019 88.00$ 434-500-015 97.24$ PACKET PAGE: 124 AGENDA ITEM 4.2 Page 7 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 434-500-024 112.60$ 434-501-023 135.60$ 434-510-008 128.88$ 434-510-027 91.12$ 434-510-059 212.60$ 434-510-065 62.79$ 434-511-001 64.44$ 434-520-018 190.01$ 434-520-026 64.44$ 434-523-004 190.01$ 434-530-010 190.01$ 434-530-025 190.01$ 434-533-001 65.83$ 434-540-020 40.20$ 434-541-001 190.01$ 434-542-008 190.01$ 434-542-018 190.01$ 434-543-009 64.44$ 434-543-023 190.01$ 435-020-008 174.87$ 435-061-024 212.60$ 435-061-029 128.88$ 435-063-016 212.60$ 435-064-002 191.60$ 435-064-011 169.60$ 435-064-012 128.88$ 435-064-014 64.44$ 435-080-005 277.18$ 435-091-001 75.44$ 435-091-018 128.88$ 435-091-040 186.48$ 435-092-005 212.60$ 435-092-010 126.34$ 435-102-005 89.56$ 435-102-005 148.65$ 435-122-003 56.67$ 435-122-009 64.44$ 435-122-021 128.60$ 435-124-006 128.88$ 435-124-019 17.67$ 435-131-046 212.60$ PACKET PAGE: 125 AGENDA ITEM 4.2 Page 8 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 435-132-019 16.43$ 435-132-019 35.56$ 435-132-020 42.44$ 435-132-024 45.88$ 435-141-012 212.60$ 435-141-030 128.88$ 435-151-013 44.67$ 435-151-019 27.72$ 435-152-015 13.29$ 435-152-035 84.27$ 435-171-025 128.88$ 435-230-003 146.94$ 435-240-003 212.60$ 435-240-010 169.64$ 435-240-026 212.60$ 435-250-015 17.67$ 435-271-009 23.86$ 435-271-019 79.85$ 435-271-025 212.60$ 435-272-021 212.60$ 435-280-028 84.62$ 435-280-031 62.79$ 435-330-011 212.60$ 436-052-047 190.01$ 436-060-014 190.01$ 436-061-040 190.01$ 436-090-006 130.69$ 436-090-012 128.88$ 436-090-017 66.09$ 436-091-003 190.69$ 436-092-007 190.69$ 436-101-002 165.69$ 436-101-009 65.65$ 436-101-015 128.88$ 436-101-028 190.69$ 436-101-040 97.82$ 436-110-004 34.08$ 436-110-006 174.87$ 436-120-006 190.01$ 436-120-013 190.01$ 436-120-021 190.01$ PACKET PAGE: 126 AGENDA ITEM 4.2 Page 9 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 436-121-004 128.88$ 436-130-002 190.69$ 436-130-004 190.69$ 436-130-011 64.44$ 436-131-004 190.69$ 436-131-024 140.69$ 436-140-006 190.69$ 436-150-002 140.69$ 436-150-007 190.69$ 436-150-035 34.44$ 436-180-013 190.01$ 436-181-004 124.67$ 436-181-014 97.05$ 436-181-023 128.88$ 436-181-030 190.01$ 436-190-005 190.01$ 436-191-006 26.92$ 436-191-021 62.23$ 436-191-025 190.01$ 436-191-026 190.01$ 436-192-014 190.01$ 436-192-035 64.44$ 436-200-002 190.01$ 436-201-025 128.88$ 436-210-010 231.33$ 436-210-012 190.01$ 436-210-013 188.63$ 436-210-023 78.88$ 436-210-024 189.30$ 436-210-030 159.65$ 436-211-003 190.01$ 436-211-016 181.54$ 436-211-020 190.01$ 436-230-006 190.01$ 436-230-011 128.88$ 436-231-004 190.01$ 436-231-010 190.01$ 436-240-020 48.57$ 436-240-022 190.01$ 436-261-006 174.18$ 436-263-007 20.01$ PACKET PAGE: 127 AGENDA ITEM 4.2 Page 10 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 436-280-016 128.88$ 436-290-011 190.01$ 436-290-020 90.01$ 436-291-021 190.01$ 436-301-024 128.88$ 436-301-025 190.01$ 436-301-033 190.01$ 436-310-003 128.88$ 436-310-017 190.01$ 436-310-030 185.07$ 436-332-005 190.01$ 436-332-008 190.01$ 436-333-013 190.01$ 436-334-001 114.76$ 436-340-003 108.33$ 436-341-007 64.44$ 436-341-011 81.95$ 436-343-004 64.44$ 436-350-005 190.01$ 436-350-015 134.94$ 436-350-027 190.01$ 436-350-043 66.97$ 436-351-010 190.01$ 436-371-029 190.01$ 436-381-005 190.01$ 436-381-008 190.01$ 436-391-001 175.56$ 436-391-007 64.44$ 436-392-021 144.87$ 436-393-003 174.87$ 436-394-004 175.56$ 436-394-007 60.48$ 436-400-002 100.56$ 436-421-001 190.01$ 436-421-004 64.44$ 436-421-010 190.01$ 436-421-023 190.01$ 436-422-011 190.01$ 436-430-018 190.01$ 436-431-027 190.01$ 436-433-007 190.01$ PACKET PAGE: 128 AGENDA ITEM 4.2 Page 11 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 436-433-008 64.44$ 436-440-004 190.01$ 436-440-008 190.01$ 436-440-009 190.01$ 436-440-019 190.01$ 436-440-020 59.36$ 436-440-023 158.89$ 436-440-037 303.56$ 436-440-038 270.15$ 436-441-020 190.01$ 436-441-021 190.01$ 436-441-028 130.01$ 436-441-032 178.71$ 436-450-014 16.18$ 436-450-016 128.88$ 436-460-007 128.88$ 436-462-001 64.44$ 436-462-016 190.01$ 436-463-003 190.01$ 436-472-006 190.01$ 436-473-018 263.90$ 436-483-012 190.01$ 436-484-002 20.37$ 436-490-017 174.87$ 436-490-036 174.87$ 436-490-037 174.87$ 436-500-001 190.01$ 436-500-008 110.01$ 436-500-013 190.01$ 436-501-006 190.01$ 436-511-001 190.01$ 436-511-037 62.44$ 436-511-045 190.01$ 436-511-048 183.81$ 436-520-024 14.44$ 436-520-035 66.97$ 436-520-035 148.65$ 436-530-026 190.01$ 436-541-001 190.01$ 436-541-028 190.01$ 436-541-034 190.01$ PACKET PAGE: 129 AGENDA ITEM 4.2 Page 12 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 436-550-006 190.01$ 436-551-001 190.01$ 436-552-008 173.49$ 436-552-020 64.44$ 436-553-002 190.01$ 436-560-001 64.44$ 436-560-008 50.28$ 436-561-001 128.88$ 436-561-007 95.48$ 436-561-027 84.87$ 436-561-046 80.07$ 436-562-002 68.87$ 436-581-013 174.87$ 436-581-019 174.87$ 436-581-026 174.87$ 436-581-028 174.87$ 436-581-033 174.87$ 436-581-035 128.88$ 436-581-050 174.87$ 436-581-068 87.84$ 436-581-071 64.44$ 436-590-001 190.01$ 436-590-005 190.01$ 436-590-011 190.01$ 436-590-014 169.14$ 436-590-015 190.01$ 436-590-016 169.54$ 436-590-033 22.43$ 436-590-040 190.01$ 436-591-012 190.01$ 436-591-017 190.01$ 436-591-018 19.85$ 436-591-027 180.83$ 436-591-032 190.01$ 436-600-020 179.69$ 436-622-005 190.01$ 436-622-012 190.01$ 436-631-001 190.01$ 436-631-003 190.01$ 436-633-022 190.01$ 436-633-027 190.01$ PACKET PAGE: 130 AGENDA ITEM 4.2 Page 13 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 436-633-032 190.01$ 436-633-035 140.01$ 436-640-001 15.01$ 436-641-013 124.45$ 436-641-024 90.01$ 436-642-005 39.44$ 436-642-012 27.01$ 436-643-004 106.64$ 436-643-030 190.01$ 436-643-038 190.01$ 436-650-008 190.01$ 436-650-026 190.01$ 436-651-003 190.01$ 436-651-013 190.01$ 436-651-014 190.01$ 436-662-001 190.01$ 436-680-015 75.01$ 436-681-004 190.01$ 437-021-014 49.81$ 437-022-002 55.55$ 437-023-009 62.79$ 437-024-011 212.60$ 437-031-009 132.41$ 437-031-014 24.71$ 437-031-015 162.60$ 437-032-003 132.41$ 437-034-002 248.33$ 437-034-008 27.27$ 437-034-008 64.44$ 437-035-003 152.60$ 437-035-019 128.17$ 437-041-002 41.67$ 437-041-016 64.44$ 437-043-008 212.60$ 437-043-017 128.88$ 437-045-005 212.60$ 437-045-019 128.88$ 437-051-005 191.67$ 437-051-006 44.67$ 437-053-007 28.68$ 437-053-009 207.31$ PACKET PAGE: 131 AGENDA ITEM 4.2 Page 14 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 437-053-010 12.60$ 437-057-003 128.88$ 437-061-020 212.60$ 437-061-026 159.94$ 437-061-027 212.60$ 437-062-004 163.57$ 437-062-013 128.88$ 437-066-003 92.60$ 437-066-018 38.32$ 437-066-022 212.60$ 437-082-005 212.60$ 437-083-008 132.63$ 437-091-003 12.60$ 437-091-017 142.00$ 437-092-012 89.56$ 437-093-006 18.18$ 437-093-006 75.14$ 437-094-009 128.88$ 437-101-002 87.51$ 437-101-002 138.76$ 437-101-009 68.16$ 437-101-015 191.67$ 437-103-015 200.23$ 437-103-017 110.74$ 437-111-008 30.55$ 437-112-003 212.60$ 437-113-004 191.67$ 437-113-012 148.16$ 437-113-017 191.67$ 437-114-013 43.88$ 437-120-032 169.14$ 437-130-016 128.88$ 437-130-022 128.88$ 437-141-006 212.60$ 437-142-002 69.27$ 437-142-033 212.60$ 437-142-040 22.60$ 437-152-004 22.08$ 437-152-004 63.84$ 437-152-009 196.36$ 437-153-021 191.67$ PACKET PAGE: 132 AGENDA ITEM 4.2 Page 15 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 437-161-007 128.88$ 437-161-007 212.60$ 437-161-029 109.33$ 437-161-031 212.60$ 437-162-040 83.72$ 437-162-045 54.51$ 437-171-008 128.67$ 437-172-003 212.60$ 437-174-007 162.60$ 437-190-004 168.83$ 437-200-011 38.88$ 437-230-003 182.09$ 437-240-011 64.44$ 437-251-003 36.25$ 437-251-017 212.60$ 437-252-002 212.60$ 437-252-007 128.88$ 437-252-027 38.12$ 437-252-037 191.42$ 437-252-040 18.88$ 437-253-001 58.77$ 437-253-010 31.62$ 437-253-010 84.62$ 437-260-007 212.60$ 437-260-022 69.38$ 437-261-010 182.60$ 437-270-028 60.33$ 437-281-002 83.72$ 437-281-003 110.16$ 437-281-004 62.39$ 437-281-010 154.71$ 437-292-027 264.46$ 437-300-018 164.88$ 437-300-025 190.01$ 437-300-028 190.01$ 437-300-031 65.88$ 437-300-032 190.01$ 437-300-033 22.60$ 437-321-025 191.67$ 437-322-007 74.28$ 437-322-015 100.40$ PACKET PAGE: 133 AGENDA ITEM 4.2 Page 16 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 437-322-017 128.88$ 437-323-018 72.81$ 437-340-005 28.88$ 437-340-015 91.67$ 437-340-022 61.62$ 437-340-028 85.92$ 437-340-033 105.23$ 437-340-038 40.00$ 437-340-061 13.69$ 437-340-078 212.60$ 437-372-002 86.23$ 437-372-018 212.60$ 437-373-005 212.60$ 437-373-017 162.60$ 437-373-026 83.72$ 437-373-026 133.82$ 437-373-028 70.74$ 437-380-009 109.00$ 437-380-026 179.00$ 437-391-001 179.69$ 437-391-020 128.88$ 437-391-022 23.98$ 437-391-025 29.69$ 437-391-040 179.69$ 437-391-043 128.88$ 437-391-046 179.69$ 437-391-050 151.45$ 437-391-051 19.44$ 437-391-057 128.88$ 437-391-069 87.06$ 437-400-031 79.00$ 437-400-037 28.64$ 437-410-049 179.00$ 438-050-065 179.69$ 438-270-007 113.57$ 438-343-001 128.88$ 438-344-002 148.13$ 438-344-018 128.88$ 438-344-021 212.60$ 438-351-003 28.88$ 438-351-006 124.60$ PACKET PAGE: 134 AGENDA ITEM 4.2 Page 17 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 438-353-001 184.36$ 438-363-014 23.19$ 438-373-007 212.60$ 438-373-009 212.60$ 438-381-003 79.46$ 438-382-002 65.60$ 438-382-015 78.88$ 438-382-024 84.36$ 438-391-012 179.69$ 438-393-020 179.69$ 438-401-008 19.08$ 438-401-011 160.01$ 438-401-021 67.47$ 438-401-030 139.30$ 438-402-001 182.45$ 438-403-014 29.88$ 438-404-017 29.48$ 438-411-003 129.69$ 438-411-008 179.69$ 438-411-010 179.69$ 438-411-024 179.69$ 438-412-012 64.44$ 438-413-011 179.69$ 438-413-013 175.82$ 438-414-005 179.69$ 438-415-017 93.36$ 438-422-006 212.60$ 438-431-003 212.60$ 438-432-013 212.60$ 438-441-002 122.06$ 438-441-013 130.27$ 438-441-021 190.01$ 438-441-024 90.01$ 438-441-069 29.69$ 438-441-071 111.01$ 438-442-017 176.16$ 438-442-030 179.69$ 438-461-025 190.01$ 438-461-026 190.01$ 438-462-010 179.69$ 438-463-001 19.27$ PACKET PAGE: 135 AGENDA ITEM 4.2 Page 18 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 438-463-011 64.44$ 438-463-026 25.80$ 438-463-032 190.01$ 438-471-029 128.88$ 438-471-030 79.69$ 438-480-004 212.60$ 438-480-019 40.38$ 438-480-042 212.60$ 438-480-045 112.60$ 438-490-012 190.01$ 438-500-003 190.01$ 438-500-008 190.01$ 438-500-015 190.01$ 438-502-004 64.44$ 438-510-007 95.21$ 438-520-012 212.60$ 438-520-017 157.53$ 438-530-009 212.60$ 438-531-007 42.96$ 438-550-001 190.01$ 438-550-004 140.01$ 438-550-009 15.73$ 438-550-010 190.01$ 438-550-017 190.01$ 438-550-031 187.19$ 438-560-032 90.01$ 438-560-036 14.01$ 438-562-004 190.01$ 438-562-008 190.01$ 438-563-021 190.01$ 438-570-018 212.60$ 438-570-019 190.01$ 438-570-024 190.01$ 438-570-032 190.01$ 438-571-010 190.01$ 438-571-013 190.01$ 438-571-021 190.01$ 438-580-018 190.01$ 438-580-027 190.01$ 438-590-022 190.01$ 438-591-025 190.01$ PACKET PAGE: 136 AGENDA ITEM 4.2 Page 19 City of San Jacinto Tax Roll Placement - Tax Year 2014-2015 2013 CR&R Delinquent Solid Waste Charges County Fund 68-4947 - SJ CR&R Delinquent Solid Waste Assessor Parcel Number Amount 438-591-026 190.01$ 438-591-032 190.01$ 438-591-037 95.56$ 438-591-040 96.62$ 438-591-065 169.60$ 438-600-002 12.26$ 439-112-010 160.64$ 439-150-005 179.00$ 439-150-010 179.00$ 439-160-004 179.00$ 439-160-017 151.47$ 439-210-001 212.60$ 439-210-008 107.40$ 439-210-025 191.60$ 439-340-018 190.01$ 439-342-033 27.06$ 439-342-045 190.01$ 439-342-046 190.01$ 439-342-047 128.88$ 439-363-025 21.48$ 547-201-002 195.37$ 547-201-026 180.37$ 547-212-001 180.37$ 547-212-012 100.37$ 547-212-027 180.37$ 547-212-031 249.50$ 551-381-045 91.46$ 551-382-011 179.69$ 551-382-015 180.37$ 551-382-017 50.60$ 551-384-004 41.86$ 551-384-023 33.60$ 551-551-006 64.44$ 551-552-004 190.01$ 551-552-009 61.13$ 551-552-016 44.67$ 551-553-001 190.01$ 551-553-002 190.01$ 106,112.61$ PACKET PAGE: 137 AGENDA ITEM 4.2 August 19, 2014 TO: The Honorable Mayor and Members of the City Council FROM: Habib Motlagh, City Engineer SUBJECT: 2014 Downtown Improvements Project (CIP 11-006) and 2014 Residential Slurry Seal & Authorization to Advertise for Bids RECOMMENDATION: Staff recommends that the City Council, by motion, adopt the plans and specifications for the 2014 Downtown Improvements Project and direct the City Clerk to publicly advertise for bids. DISCUSSION: The adopted 2014-15 budget for capital improvements project include the miscellaneous downtown overlay project number 11-006 and recently adopted budget for various location slurry seal. This project will continue the City’s ongoing efforts to improve deteriorated pavements in older sections of the City and preventative maintenance in several residential tracts. Previous rehabilitation projects were built in 2005, 207, 009, 2011, and 2013. Attached to this report, please find an exhibit showing the areas that are to be improved as part of this project, in addition to the slurry seal project the pavement rehabilitation will take place on Virginia Way, Cedar Street, Scovell Avenue, 7th Street, Camino Los Banos, Miramar, and Peach Street. Slurry seal will take place at sixteen residential tracts. Complete copy of plans and specifications is available at City Clerk’s office for review. The preliminary schedule for his project is as follows: · August 19, 2014: Bid authorization, advertisement · September 9, 2014: Open bids · September 16, 2014: Award · October 6, 2014: Start of Construction During construction, several of the streets will need to be closed for a short time to allow the work to be completed. There will be one full road closure anticipated for Camino Los Banos between 1st Street and Peach Street. The Contractor is required to provide advanced notice to all residents, perform continuous street sweeping (twice a week for 4 weeks) and use blowers to clean streets, driveways from debris. The City Engineer’s office has completed preparation of the plans and specifications, and the project is now ready to advertise for bids and contractors. PACKET PAGE: 139 AGENDA ITEM 5.1 ALTERNATIVES: Approval: Adopt the plans and specifications and direct staff to proceed with advertisement. Denial: Do not approve this item as presented, and provide staff with further direction. FISCAL IMPACT: The available funding for the downtown pavement rehab (CIP 11-006) is roughly $550,000 with funding source from Gas Tax and Measure A. The available funding for residential slurry seal is $800,000. Upon opening of bids, staff will review the available budget and make any necessary recommendations for fully funding construction. No budget action is required. ATTACHMENTS: · Exhibit with locations of 2014 Downtown Improvements and Residential Slurry Seal Projects. PACKET PAGE: 140 AGENDA ITEM 5.1 PACKET PAGE: 141 AGENDA ITEM 5.1 PACKET PAGE: 143 AGENDA ITEM 5.1 August 19, 2014 TO: The Honorable Mayor and Members of the City Council FROM: Thomas Prill, Finance Director SUBJECT: Investment Portfolio Review with Advisors RECOMMENDATION: Receive and File DISCUSSION: In May 2012, the City Council approved the use of two Investment Advisors to control a portfolio of $10 million each. Chandler Asset Management has maintained one portfolio for 2 years and 2 months, while BLX has maintained another portfolio for 1 year and 10 months. Both Chandler and BLX will be in attendance to make brief presentations (attached) and to answer questions from the City Council. FISCAL IMPACT: N/A ATTACHMENTS: Investment Report – Chandler Asset Management Annual Portfolio Review – BLX PACKET PAGE: 145 AGENDA ITEM 5.2 CHANDLER ASSET MANAGEMENT 6225 Lusk Blvd | San Diego, CA 92121 | Phone 800.317.4747 | Fax 858.546.3741 | www.chandlerasset.com Investment Report City of San Jacinto, California Board Presentation – August 19, 2014 Period Ending July 31, 2014 PACKET PAGE: 147AGENDA ITEM 5.2 TABLE OF CONTENTS Economic Update Account Profile Portfolio Holdings SECTION 1 SECTION 2 SECTION 3 1PACKET PAGE: 148AGENDA ITEM 5.2 SECTION 1 Economic Update 2PACKET PAGE: 149AGENDA ITEM 5.2 During the past three months, the yield curve has flattened even as the Fed has been tapering its purchases of long-term Treasury bonds. Market participants have reacted to mixed domestic economic data and geopolitical tensions. These concerns have kept downward pressure on longer yields, although some of this pressure has recently dissipated. Economic Update    As expected, the Federal Open Market Committee left policy rates unchanged at its July 29-30 meeting, and announced another $10 billionreduction in asset purchases (to a level of $25 billion per month from $35 billion, comprised of $15 billion in treasuries and $10 billion in mortgage-backed securities).We expect the process of unwinding quantitative easing will be completed in October. Policy rates are expected to remain low for a considerable time after the taper is complete, and the Fed indicated that the rise in policy rates is likely to be slow. We believe the economy continues to expand at a modest pace,fueled by ongoing improvement in the labor market.The July employment report was softer than expected,but the prior two months were revised higher and the trailing three month average increase in nonfarm payrolls is 245,000.In July, nonfarm payrolls rose by 209,000.The unemployment rate edged up to 6.2%from 6.1%,but the participation rate also ticked up to 62.9%from 62.8%.Meanwhile,the manufacturing sector continued to show strength in July with the ISM manufacturing index rising to a stronger than expected 57.1 from 55.3 in June.Recent housing data has been mixed but consumer spending trends remain healthy. 3PACKET PAGE: 150AGENDA ITEM 5.2 GDP Source: U.S. Department of Commerce -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% GDP Qtrly % Change Real annualized GDP growth for the second quarter of 2014 was 4.0%, according to the advance estimate. The consensus forecast called for 3.1% growth in the second quarter.In particular, inventory investment and consumer spending helped to fuel the second quarter gain. First quarter GDP was revised to -2.1% vs. the previous report of -2.9%. 4PACKET PAGE: 151AGENDA ITEM 5.2 The yield on the two-year Treasury note rose in July, following an increase in June. Economic data has recently improved, reflecting a pickup in second quarter economic growth after a sluggish first quarter. The unwinding of quantitative easing by the Federal Reserve along with the anticipation of a potential fed funds rate hike next year have also put upward pressure on rates. Interest Rates Source: Bloomberg Yield on the Two-Year Note July 2012 through July 2014 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 5PACKET PAGE: 152AGENDA ITEM 5.2 During the past three months, the yield curve has flattened even as the Fed has been tapering its purchases of long-term Treasury bonds. Market participants have reacted to mixed domestic economic data and geopolitical tensions. These concerns have kept downward pressure on longer yields, although some of this pressure has recently dissipated. Yield Curves Source: Bloomberg April 30, 2014 and July 31, 2014 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4/30/14 7/31/14 6PACKET PAGE: 153AGENDA ITEM 5.2 SECTION 2 ACCOUNT PROFILE 7PACKET PAGE: 154AGENDA ITEM 5.2 OBJECTIVES Investment Objectives The investment objectives of the City of San Jacinto are first, to provide for the preservation of capital; second, to provide sufficient liquidity to meet all anticipated operating requirements and third, to earn a market rate of return that is commensurate with the first two objectives. Chandler Asset Management Performance Objectives Our performance objective for the City of San Jacinto is to earn a return that equals or exceeds the return on a market index of 1-3 year Treasury securities over time. Strategy In order to achieve this objective, we can invest the portfolio in money market instruments, government securities, and high quality corporate securities, in addition to other investment types as allowed by the City’s investment policy. The maximum maturity for any security in the portfolio is five years. 8PACKET PAGE: 155AGENDA ITEM 5.2 COMPLIANCE Category Standard Comment Local Agency Bonds No Limitation; BBB rated equivalent by a NRSRO Complies Treasury Issues No Limitation Complies Agency Issues No Limitation Complies Banker’s Acceptances 40% maximum; <180 days maturity; A-1 rated equivalent by at least two NRSROs Complies Commercial Paper 25% maximum; <270 days maturity; A-1 rated equivalent by at least two NRSROs Complies Negotiable Certificates of Deposit 30% maximum; A rated equivalent by at least two NRSROs Complies Medium Term Notes 30% maximum; A rated equivalent by at least two NRSROs Complies Money Market Mutual Funds 20% maximum; rated equivalent by at least two NRSROs Complies Mortgage Pass-throughs, CMOs and Asset Backed Securities 20% maximum; AA-rated issue; A-rated issuer Complies Local Agency Investment Fund - L.A.I.F.Currently not used by investment adviser Complies Prohibited Securities Inverse floaters; Ranges notes, Interest- only strips from mortgaged backed securities; Zero interest accrual securities Complies Issuer Maximum 5% per issuer for all non-government issuers Complies Maximum maturity 5 years Complies City of San Jacinto July 31, 2014 COMPLIANCE WITH INVESTMENT POLICY Assets managed by Chandler Asset Management are in full compliance with State law and with the City's investment policy. 9PACKET PAGE: 156AGENDA ITEM 5.2 Account Profile Total Market Value 10,102,015 10,098,461 Modified Duration 1.84 1.85 1.79 Average Quality**AAA AA+/Aa1 AA+/Aa1 Average Market Yield 0.50 %0.66 %0.55 % Average Purchase Yield n/a 0.75 %0.69 % Benchmark*Portfolio Portfolio Average Maturity (yrs)1.88 1.97 1.90 * 1-3 yr Treasury ** Benchmark is a blended rating of S&P, Moody's, and Fitch. Portfolio is S&P and Moody's respectively. City of San Jacinto 07/31/2014 04/30/2014 Portfolio Characteristics During the last three months, our portfolio re-balancing and re-investment activity invested about $1.3 million in order to maintain the desired portfolio strategy and structure. Recent purchases included a diversified mix of Agencies, Asset Backed, Corporate, and Commercial Paper securities with maturities ranging from October 2014 through March 2018. 10 10PACKET PAGE: 157AGENDA ITEM 5.2 Sector Distribution City of San Jacinto July 31, 2014 April 30, 2014 The portfolio sector allocation changed modestly as the Corporate and Asset Backed sectors slightly increased and was offset by a decrease in the Money Market Fund sector. 11 11PACKET PAGE: 158AGENDA ITEM 5.2 Investment Performance 1-3 yr Treasury 0.06 % 0.53 % 0.39 % N/A N/A N/A 0.49 % City of San Jacinto 0.06 % 0.74 % 0.50 % N/A N/A N/A 0.60 % Annualized 3 months 12 months 2 years 3 years 5 years 10 years Since Inception Total rate of return: A measure of a portfolio's performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains and losses in the portfolio. City of San Jacinto Period Ending July 31, 2014 Total Rate of Return Annualized Since Inception June 30, 2012 12 12PACKET PAGE: 159AGENDA ITEM 5.2 SECTION 3 PORTFOLIO HOLDINGS 13PACKET PAGE: 160AGENDA ITEM 5.2 ISSUERS 14PACKET PAGE: 161AGENDA ITEM 5.2 City of San Jacinto Annual Portfolio ReviewAnnual Portfolio Review June 30, 2014PACKET PAGE: 163AGENDA ITEM 5.2 TABLE OF CONTENTS Portfolio Details 1-3 1 Portfolio Performance 4-5 2 Portfolio Compliance 6 3 Portfolio StrategyReview & Outlook 7 4 Market Update 8-14 5 SECTION PAGE # TAB # CITY OF SAN JACINTO ANNUAL PORTFOLIO REVIEW JUNE 30, 2014 Market Update 8-14 5PACKET PAGE: 164AGENDA ITEM 5.2 CITY OF SAN JACINTO ANNUAL PORTFOLIO REVIEW JUNE 30, 2014 PORTFOLIO SUMMARY INFORMATION SECTOR & CREDIT QUALITY DISTRIBUTION Total Par Value 9,901,392 Market Value 10,059,964.81 Accrued Interest 34,823.30 Total Market Value 10,094,788.11 Amortized Book Value 10,046,177.54 Net Unrealized Gain/Loss 13,787.27 Effective Maturity 1.86 Effective Duration 1.83 Average Coupon 1.624% Average Yield on Cost 0.602% Average Yield on Market 0.523% Average S&P Rating AA Sector (U.S.) MVw/o Acc Cash & Equivalents 146,391.75 U.S. Treasuries 7,274,999.94 Federal Agencies 509,042.97 Corporates 2,129,530.15 1.5% 5.1% 21.2% COUPON DISTRIBUTION Coupon % MVw/o Acc Average Coupon 0% - 1% 2,280,436.47 0.819% 1% - 2% 4,066,958.90 1.309% 2% - 3% 3,170,149.97 2.225% 3% - 4% 384,300.37 3.460% 4% - 5% 5% - 6% 158,119.10 5.125% 6% - 7% 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 0%-1%1%-2%2%-3%3%-4%4%-5%5%-6%6%-7%$(000)MVw/oAcc 72.3% Cash& Equivalents U.S.Treasuries FederalAgencies Corporates S&P Quality MVw/o Acc AAA 146,391.75 AA 8,870,544.09 A 790,766.47 Below A 252,262.50 1.5% 88.2% 7.9%2.5% AAA AA A BelowA 1PACKET PAGE: 165AGENDA ITEM 5.2 CITY OF SAN JACINTO ANNUAL PORTFOLIO REVIEW JUNE 30, 2014 MATURITY DISTRIBUTION Maturity(Yrs) MVw/o Acc 0.00 - 0.49 554,600.35 0.50 - 0.99 126,530.87 1.00 - 1.49 1,735,400.22 1.50 - 1.99 2,688,585.42 2.00 - 2.49 2,846,062.77 2.50 - 2.99 2,108,785.18 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 6.771% 0.339% 0.14 0.50 - 0.99 5.107% 0.333% 0.96 1.00 - 1.49 15.806% 0.582% 1.29 1.50 - 1.99 27.629% 0.374% 1.76 2.00 - 2.49 28.222% 0.575% 2.26 2.50 - 2.99 16.466% 0.763% 2.68 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% 0.90% 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) 2PACKET PAGE: 166AGENDA ITEM 5.2 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% 07/01/14 146,392 146,391.75 0.010% 146,391.75 100.000 146,391.75 0.65 146,392.40 0.010% 0.00 Aaa AAA 0.00 0.00 1.46% Total Cash & Equivalents 146,392 146,391.75 0.010% 146,391.75 146,391.75 0.65 146,392.40 0.010% 0.00 Aaa AAA 0.00 0.00 1.46% U.S. TreasuryBonds 912828PS3 US Treasury Notes/Bonds 2.000% 01/31/16 450,000 05/02/13 471,199.22 0.272% 462,293.65 102.707 462,181.50 3,754.14 465,935.64 0.288% -112.15 Aaa AA+ 1.58 1.56 4.59% 912828QJ2 US Treasury Notes/Bonds 2.125% 02/29/16 450,000 06/04/13 470,847.66 0.419% 462,729.18 103.000 463,500.00 3,196.16 466,696.16 0.321% 770.82 Aaa AA+ 1.67 1.63 4.61% 912828QA1 US Treasury Notes/Bonds 2.250% 03/31/16 430,000 04/04/13 454,691.41 0.311% 444,529.56 103.301 444,193.44 2,431.97 446,625.41 0.358% -336.12 Aaa AA+ 1.75 1.72 4.42% 912828QF0 US Treasury Notes/Bonds 2.000% 04/30/16 450,000 06/04/13 469,775.39 0.472% 462,524.19 102.945 463,253.85 1,516.30 464,770.15 0.387% 729.66 Aaa AA+ 1.83 1.80 4.60% 912828QP8 US Treasury Notes/Bonds 1.750% 05/31/16 475,000 12/03/13 490,864.26 0.399% 487,244.05 102.531 487,023.20 704.06 487,727.26 0.423% -220.85 Aaa AA+ 1.92 1.89 4.84% 912828QR4 US Treasury Notes/Bonds 1.500% 06/30/16 450,000 10/02/13 461,636.72 0.548% 458,503.56 102.062 459,281.25 18.34 459,299.59 0.463% 777.69 Aaa AA+ 2.00 1.98 4.57% 912828QX1 US Treasury Notes/Bonds 1.500% 07/31/16 490,000 08/02/13 503,092.19 0.595% 499,165.00 102.078 500,182.69 3,065.88 503,248.57 0.497% 1,017.69 Aaa AA+ 2.08 2.05 4.97% 912828RF9 US Treasury Notes/Bonds 1.000% 08/31/16 470,000 09/04/13 471,615.63 0.883% 471,178.14 101.031 474,846.64 1,570.92 476,417.56 0.521% 3,668.50 Aaa AA+ 2.17 2.14 4.72% 912828RJ1 US Treasury Notes/Bonds 1.000% 09/30/16 250,000 11/04/13 253,076.17 0.571% 252,392.15 100.969 252,422.00 628.42 253,050.42 0.566% 29.85 Aaa AA+ 2.25 2.22 2.51% 912828RJ1 US Treasury Notes/Bonds 1.000% 09/30/16 225,000 03/04/14 227,645.51 0.538% 227,317.87 100.969 227,179.80 565.57 227,745.37 0.566% -138.07 Aaa AA+ 2.25 2.22 2.26% 912828RM4 US Treasury Notes/Bonds 1.000%10/31/16 450,000 01/06/14 453,515.63 0.719%452,924.98 100.937 454,218.75 758.15 454,976.90 0.595%1,293.77 Aaa AA+2.33 2.31 4.52% CITY OF SAN JACINTO ANNUAL PORTFOLIO REVIEW JUNE 30, 2014 912828RM4 US Treasury Notes/Bonds 1.000%10/31/16 450,000 01/06/14 453,515.63 0.719%452,924.98 100.937 454,218.75 758.15 454,976.90 0.595%1,293.77 Aaa AA+2.33 2.31 4.52% 912828RU6 US Treasury Notes/Bonds 0.875% 11/30/16 475,000 12/03/13 479,286.13 0.570% 478,474.59 100.617 477,931.64 352.03 478,283.67 0.617% -542.95 Aaa AA+ 2.42 2.39 4.75% 912828RX0 US Treasury Notes/Bonds 0.875% 12/31/16 450,000 02/03/14 453,251.95 0.623% 452,807.52 100.523 452,355.30 10.70 452,366.00 0.664% -452.22 Aaa AA+ 2.50 2.48 4.50% 912828SC5 US Treasury Notes/Bonds 0.875% 01/31/17 250,000 03/04/14 251,445.31 0.674% 251,287.46 100.445 251,113.25 912.47 252,025.72 0.701% -174.21 Aaa AA+ 2.58 2.55 2.50% 912828SJ0 US Treasury Notes/Bonds 0.875% 02/28/17 500,000 04/02/14 499,472.66 0.912% 499,515.87 100.367 501,835.94 1,462.30 503,298.24 0.736% 2,320.07 Aaa AA+ 2.67 2.63 4.99% 912828SM3 US Treasury Notes/Bonds 1.000% 03/31/17 450,000 05/02/14 451,828.13 0.858% 451,732.68 100.594 452,672.10 1,131.15 453,803.25 0.781% 939.42 Aaa AA+ 2.75 2.70 4.50% 912828SS0 US Treasury Notes/Bonds 0.875% 04/30/17 450,000 06/04/14 450,808.60 0.812% 450,789.73 100.180 450,808.59 663.38 451,471.97 0.811% 18.86 Aaa AA+ 2.83 2.79 4.48% Total U.S. TreasuryBonds 7,165,000 7,314,052.57 0.600% 7,265,410.18 7,274,999.94 22,741.94 7,297,741.88 0.541% 9,589.76 Aaa AA+ 2.20 2.17 72.32% Federal AgencyBonds 3137EACM9 Federal Home Loan Mortgage Corporation 1.750% 09/10/15 500,000 11/20/12 518,940.00 0.383% 508,136.60 101.809 509,042.97 2,697.92 511,740.89 0.233% 906.37 Aaa AA+ 1.17 1.18 5.06% Total Federal AgencyBonds 500,000 518,940.00 0.383% 508,136.60 509,042.97 2,697.92 511,740.89 0.233% 906.37 Aaa AA+ 1.17 1.18 5.06% Corporate Bonds 87612EAW6 Target Corp 1.125% 07/18/14 250,000 11/13/12 252,922.50 0.423% 250,081.86 100.036 250,089.50 1,273.44 251,362.94 0.407% 7.64 A2 A 0.08 0.05 2.49% 0258M0CZ0 American Express Credit Corp 5.125% 08/25/14 157,000 11/13/12 169,465.80 0.620% 158,064.97 100.713 158,119.10 2,816.19 160,935.29 0.448% 54.13 A2 A- 0.17 0.15 1.57% 824348AN6 Sherwin-Williams Co 3.125% 12/15/14 125,000 11/13/12 131,810.00 0.490% 126,504.31 101.225 126,530.87 173.61 126,704.48 0.447% 26.56 A3 A- 0.50 0.46 1.26% 372917AQ7 Genzyme Corp 3.625% 06/15/15 250,000 10/26/12 269,797.50 0.577% 257,254.47 103.108 257,769.50 402.78 258,172.28 0.373% 515.03 A1 AA 1.00 0.95 2.56% 14912L4M0 Caterpillar Fin Serv Crp 2.750% 06/24/15 250,000 10/26/12 263,980.00 0.616% 255,207.58 102.411 256,027.00 133.68 256,160.68 0.293% 819.42 A2 A 1.00 0.98 2.55% 24702RAL5 Dell Inc 2.300% 09/10/15 250,000 10/26/12 260,307.50 0.836% 254,334.67 100.905 252,262.50 1,772.92 254,035.42 1.532% -2,072.17 B1 B+ 1.17 1.17 2.51% 36962G4T8 General Electric Capital Corp 2.250% 11/09/15 450,000 10/25/12 467,185.50 0.966% 457,776.14 102.288 460,298.25 1,462.50 461,760.75 0.556% 2,522.11 A1 AA+ 1.33 1.34 4.58% 78008KBS1 Royal Bank of Canada 2.625% 12/15/15 250,000 10/25/12 264,480.00 0.746% 256,793.42 103.174 257,935.50 291.67 258,227.17 0.439% 1,142.08 Aa3 AA- 1.50 1.44 2.56% 459200GU9 IBMCorp 2.000% 01/05/16 108,000 10/26/12 112,639.68 0.632% 110,221.59 102.313 110,497.93 1,056.00 111,553.93 0.465% 276.34 Aa3 AA- 1.50 1.48 1.10% Total Corporate Bonds 2,090,000 2,192,588.48 0.700% 2,126,239.01 2,129,530.15 9,382.79 2,138,912.94 0.567% 3,291.14 A2 A 0.98 0.96 21.17% Portfolio Totals 1.624% 9,901,392 10,171,972.80 0.602% 10,046,177.54 101.601 10,059,964.81 34,823.30 10,094,788.11 0.523% 13,787.27 Aa1 AA 1.86 1.83 100% 3PACKET PAGE: 167AGENDA ITEM 5.2 PORTFOLIO PERFORMANCE CITY OF SAN JACINTO ANNUAL PORTFOLIO REVIEW JUNE 30, 2014 Total Return Current Prior 3 Prior 12 Year to 3-Years 5-Years 11/30/12 as of 06/30/2014 Month Months Months Date City of San Jacinto -0.03 0.35 1.01 0.50 - - 0.64 BofAMerrill 1-3 Year Treasury -0.04 0.27 0.76 0.41 0.63 1.18 0.51 Average Annualized Returns Notes: 1. Performance on trade-date basis, gross (i.e., before fees). 2. Merrill Lynch Indices provided by Bloomberg Financial Markets. 3. Includes money market fund in performance computations. 4. Returns presented for less than 12months are presented on an unannualized periodic basis 5. Returns presented for 12 months or longer are presented on an annualized basis. 6. Since inception performance is calculated from November 30,2012to present. 4PACKET PAGE: 168AGENDA ITEM 5.2 PORTFOLIO YIELD CITY OF SAN JACINTO ANNUAL PORTFOLIO REVIEW JUNE 30, 2014 Weighted Average Yield to Maturity at Cost Quarter to Year to Inception 6/30/2014 Date Avg. Date Avg. To Date Avg. ____________ ____________ ____________ _____________ 0.60 0.58 0.54 0.45 0.36 0.36 0.34 0.29 12-Month Avg. of 2-Year Treasury Yield The City of San Jacinto Annualized Effective Yield Coupon Accruals 13,329.06 Amortization/Accretion -8,336.11 Realized Gain/Loss 564.74 Total Portfolio Income 5,557.69 Monthly Average Book Value 10,036,870.98 Annualized Monthly Effective Yield 0.67 Annualized Effective Yield YTD 0.62 Annualized Effective Yield Inception To Date 1.21 0.000 0.100 0.200 0.300 0.400 0.500 0.600 0.700 Dec-12Jan-13Feb-13Mar-13Apr-13May-13Jun-13Jul-13Aug-13Sep-13Oct-13Nov-13Dec-13Jan-14Feb-14Mar-14Apr-14May-14Jun-14%YieldWeighted Average Yield at Cost City of San Jacinto 12-Month Avg. of 2-Year Treasury Yield Test Source:Bloomberg, L.P. 5PACKET PAGE: 169AGENDA ITEM 5.2 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 Issuer musthavelong-term debtrated A or higher and/or short-termdebt 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-termdebtrated A1 or higher by 2 NRSRO's, 5-year maturity limit Compliant IX. 1 MunicipalBonds Rated in 4 highestgeneralclassifications by nationally recognized rating service; 5% issuer limitation Compliant IX. 4 Bankers Acceptances Rated A1 or better and havelong termdebtrated 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.2 InverseFloaters, Range Notes, and IO Strips Prohibited Compliant IX. 14 Pass-Through Securities Issuer debtrated atleastA by 2 NRSRO; Mustberated in theAA category by 2 NRSRO's; 20% totalportfolio limit, 5-year maturity limit Compliant IX. 15 Money MarketFunds Registerd with SEC under 1940 Act, havehighestranking by 2 NRSRO's; Retained advisor registered (or exemptfromregistration) with 5 years experienceinvesting in securities authorized by CA 53601 and atleast$500 million of assets; 20% total portfolio 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 CITY OF SAN JACINTO ANNUAL PORTFOLIO REVIEW JUNE 30, 2014 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-termratings of A or higher by 2 NRSRO's; Maturity ≤ 270 days; 25% total portfolio limit; 5% issuer 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 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.A.2 Notes, and IO Strips Prohibited Compliant X.C.4 Portfolio Duration Limitation Averageportfolio duration willbemanaged to beapproximatly equalto the MarketBenchmark selected by theCity (typically +/- 20 of benchmark duration) Compliant 1 InFebruary2013, the Dell2.30% 9/10/2015 Bonds, CUSIP24702RAL5 (the“Dell Bonds”),weredowngradedby Moody’sInvestorService (“Moody’s”)toBaa1 fromA2. Inaddition, Fitch Ratings (“Fitch”) lowered theratings on theDellBonds to BB+ fromA. The downgradeto below the“A” category byboth Moody’sand Fitch caused the DellBonds to be out of compliance with the City’sInvestmentPolicy which requirescorporate mediumtermnotes tohave arating in the“A” categoryor betterbyat least two nationally recognized statistical rating organizations (“NRSRO’s”). Furthermore,Standard& Poor’s(“S&P”) downgradedtheDell Bonds to BBB fromA-in May 2013. In September2013, theDell bonds receivedadditional downgrades;S&P loweredratings to B+fromBBB and Fitch loweredratings to B+ fromBB+. Moody’sthenloweredratings to B1 from Baa1 in October2013. Based upon discussionsbetweenBLX GroupLLC (“BLX”) and theCity, the City has elected to retain theDell Bonds in theportfolio. This decision is basedupon the relatively short remainingtermto maturity of the DellBonds and theoutlook thatDell will maintain theresourcesto fully serviceits debtobligations. The City, togetherwith BLX, will continue to monitorthe status ofthe Dell Bonds and BLX will providemonthly status updates in accordance with the requirementsoftheInvestmentPolicy. Pleaseseetheaccompanying memorandumforfurtherdetails. 6PACKET PAGE: 170AGENDA ITEM 5.2 PORTFOLIO AND STRATEGY REVIEW PORTFOLIO AND STRATEGY OUTLOOK San Jacinto’s portfolio remains invested in high credit quality securities of appropriate maturity and duration. The portfolios are invested entirely in U.S. Treasury, Federal Agency, high quality corporate bonds. As shorter-term interest rates remained exceptionally low, BLX maintained portfolio duration generally neutral to its benchmark in order to protect against unexpected changes in the shape and slope of the yield curve. In addition to U.S. Treasury securities, BLX maintained a diversified allocation to U.S. Agency and high grade corporate securities in order to generate a yield premium relative to U.S. Treasuries. During the year, BLX reduced the portfolio’s allocation to U.S. Agency Measures of inflation and inflation expectations remain generally well contained and do not represent an imminent threat to the economy. Labor market conditions have improved but areas of weakness and slack remain. In recognition of improved economic conditions, the Federal Reserve initiated the tapering of its bond purchase program which is expected to conclude by October 2014. While the Fed continues to reiterate the data-dependent nature of interest rate policy, pricing in the Federal Funds futures markets suggests the first Fed rate hike is likely to occur in mid 2015. Should the economy perform consistent with Fed expectations, interest rates are likely to be pressured higher by the expectation of an approaching Fed rate hike. CITY OF SAN JACINTO ANNUAL PORTFOLIO REVIEW JUNE 30, 2014 securities as agency yield spreads to duration-matched Treasury securities narrowed. Furthermore, BLX allowed the duration of the corporate bond allocation to shorten during the year to protect against the potential risk of corporate yield spreads widening as interest rates increase. To avoid cashflow uncertainty and protect the portfolio duration from substantial and unpredictable movements, BLX continued to favor non- callable security structures. BLX continued to emphasize safety and liquidity in its management strategies and executed numerous rebalancing transactions designed to maintain an appropriate risk/return profile and supplement interest earnings. Please see Page 4 for portfolio return information. Looking ahead, total returns are likely to remain low and potentially negative in the quarters ahead as interest rates exhibit an upward bias and currently low yields provide little protection against market price depreciation. As a result, BLX may structure the portfolio duration modestly shorter than the benchmark with a focus on those areas of the curve offering superior roll value to mitigate unrealized market declines. BLX will continue to pursue prudent strategies for adding value which include opportunities that capitalize on sector spreads, yield curve value, duration rebalancing, optionality, and security swaps to generate additional earnings for the portfolio. 7PACKET PAGE: 171AGENDA ITEM 5.2 MARKET UPDATE The U.S. economy bounced back strongly in the second quarter of 2014 following a deeper-than-anticipated contraction during the first three months of the year. U.S. Gross Domestic Product (“GDP”) rose at a 4.0% annualized rate in the second quarter, surpassing median expectations of 3.0% according to a Bloomberg survey and helping to allay concerns that the first quarter’s performance was a precursor of more challenging days ahead. Personal consumption spending and business fixed investment rebounded nicely from the first quarter, contributing 1.69% and 0.91%, respectively, to overall growth. Growth in business inventories was the single-largest contributor to the second-quarter expansion, accounting for 1.66% of overall growth and suggesting some potential payback in the third quarter. Growth in the first quarter fell at a -2.1% annualized rate as frigid winter temperatures restrained economic activity and healthcare spending related to the implementation of the Affordable Care Act trailed expectations. While catching many market participants by surprise, the first quarter contraction was generally viewed as an aberration rather than a sign of significant deterioration in underlying fundamentals.In particular,spending related to -7.00% -5.00% -3.00% -1.00% 1.00% 3.00% 5.00% 7.00% GDP U.S. Chained 2005 Dollars QoQ │Seasonally AdjustedAnnualizedRate CITY OF SAN JACINTO ANNUAL PORTFOLIO REVIEW JUNE 30, 2014 significant deterioration in underlying fundamentals.In particular,spending related to the Affordable Care Act is expected to gather speed in future quarters and weather- related effects are generally transitory in nature. Nonetheless, the depth of the first- quarter contraction prompted many forecasters, including the Federal Reserve (the “Fed”), to lower their expectations for full-year 2014 growth. In what has become a trend, the Fed again reduced their central tendency forecast for full-year 2014 GDP growth to a range of between 2.1% - 2.3% at their June FOMC meeting from 2.8% - 3.2% in December 2013 and 3.0% - 3.5% in June of last year. The Institute for Supply Management (“ISM”) Indices provide timely and important insights into broader economic activity. The ISM Manufacturing Index held near a 4- month high in June 2014, closing the quarter at 55.3. Readings above 50 denote expansion while readings below 50 denote contraction. After slowing in the first three months of the year along with the broader economy, manufacturing activity in the U.S. has continued to expand and is helping to offset some of the cooling that has taken place in the housing sector. Year-to-date, the average monthly reading for the ISM Manufacturing Index is 54.3, compared to 53.6 for calendar year 2013. Service industries such as builders and retailers expanded in June 2014 at the second-fastest pace in nearly a year, suggesting growing momentum in the U.S. economy. The ISM Non-Manufacturing Index (which covers approximately 90% of the economy) was 56 in June, following May’s 56.3 reading which was the second strongest since February 2011. Expansion in the services and manufacturing sectors of the economy underscores a pick up in demand that is helping to support recovery in the labor markets. -9.00%Jun-06Dec-06June-07Dec-07June-08Dec-08June-09Dec-09June-10Dec-10June-11Dec-11Jun-12Dec-12Jun-13Dec-13Jun-14GDP 4per. Mov. Avg. (GDP )Source: Bureau of Economic Analysis 35 40 45 50 55 60 65 Jun-09Sep-09Dec-09Mar-10Jun-10Sep-10Dec-10Mar-11Jun-11Sep-11Dec-11Mar-12Jun-12Sep-12Dec-12Mar-13Jun-13Sep-13Dec-13Mar-14Jun-14ISM -Manufacturing ISM - Non-Manufacturing ISM - Non-ManufacturingEmployment Institute for Supply Management │Manufatcturing, Non-Manufacturing, & Employment Indicies Source: InstituteforSupplyManagement 8PACKET PAGE: 172AGENDA ITEM 5.2 MARKET UPDATE The pace of job creation in the U.S. continues to expand consistent with the below-average rate of overall economic growth. Year-to-date, nonfarm payroll creation has averaged 212K jobs per month, up from an average of 202K and 187K per month in calendar years 2013 and 2012, respectively. In addition, the unemployment rate has declined to 6.1% through June 2014 from 7.5% the same period last year. The augmented Federal U-6 unemployment rate, which adds back those citizens not working that consider themselves marginally attached to the labor force and those working only part time because of economic conditions, has also declined but remains persistently higher at 12.1% as of June 2014, compared to 14.2% the same period last year. Despite recent improvements, the slow pace of recovery in labor market conditions remains an area of concern. The Fed has indicated that prolonged unemployment and weak rates of labor force participation are particular areas of concern. Accordingly and in recognition of the complexities involved in evaluating overall labor market conditions, the Fed made important changes to its forward rate guidance. In particular, the Fed is now placing less importance on a 6.5% unemployment threshold and linking future monetary policy actions to a broad range of data designed to provide a more comprehensive 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% -275 -150 -25 100 225 350 475 600 (000)Nonfarm Payrolls(LeftAxis) Changein Nonfarm Payrolls and Unemployment Rate |Month over Month CITY OF SAN JACINTO ANNUAL PORTFOLIO REVIEW JUNE 30, 2014 0 5 10 15 20 25 30 35 40 45 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0%Jun-98Dec-98Jun-99Dec-99Jun-00Dec-00Jun-01Dec-01Jun-02Dec-02Jun-03Dec-03Jun-04Dec-04Jun-05Dec-05Jun-06Dec-06Jun-07Dec-07Jun-08Dec-08Jun-09Dec-09Jun-10Dec-10Jun-11Dec-11Jun-12Dec-12Jun-13Dec-13Jun-14U-6 Unemployment (Left Axis) Unemployment Mean Duration SA in Weeks(Right Axis) Source: BureauofLabor Statistics FederalU-6 Unemployment Rate & U.S.Unemployment Mean DurationSA |June1998to June 2014 monetary policy actions to a broad range of data designed to provide a more comprehensive view of underlying labor market health. Trends in initial claims for unemployment insurance suggest improvements in the pace of job creation and are likely to continue into the foreseeable future. Weekly initial jobless claims have averaged 327K per week year-to-date, down from 341K and 371K per week in 2013 and 2012, respectively. 5.00% 6.00% -525 -400 Jun-09Sep-09Dec-09Mar-10Jun-10Sep-10Dec-10Mar-11Jun-11Sep-11Dec-11Mar-12Jun-12Sep-12Dec-12Mar-13Jun-13Sep-13Dec-13Mar-14Jun-14UnemploymentRate (RightAxis) 4 per. Mov. Avg.(NonfarmPayrolls(LeftAxis)) Source: BureauofLabor Statistics -1000 -800 -600 -400 -200 0 200 400 600 200 250 300 350 400 450 500 550 600 650 700Y=NonfarmPayrollsX= InitialJoblessClaims NonfarmPayrolls and Initial Jobless Claims |RegressionAnalysis(June 1992through June 2014) Source: Bureau of Labor Statistics & Department of Labor 9PACKET PAGE: 173AGENDA ITEM 5.2 MARKET UPDATE The housing market underperformed other areas of the economy in the second quarter of 2014. New home sales declined by an average of -1.3% per month in the second quarter, punctuated by an -8.1% decline in June that marked the third-worst monthly decline since May 2010. Compared to year-ago levels, new home sales are down -11.5% through June to 406K annualized units. Sales of existing homes fared somewhat better, rising an average of 2.33% per month in the second quarter, up from an average of -1.24% per month the prior quarter. On a year-over-year basis, sales of existing homes were down -2.33% through June but better than the -7.46% annual rate through March. Home prices have stagnated in recent months as the price appreciation experienced over the preceding two years appears to have stretched affordability and limited investment-related transactions. The Case-Schiller 20-City composite price index fell -0.31% in May (most recent data available), marking the first decline in over two years and dragging year-over-year price gains to 9.3%, the smallest 12-month gain since February 2013. After plunging earlier in the year on the heels of frigid winter temperatures,confidence among U.S.homebuilders 3.50 4.00 4.50 5.00 5.50 6.00 6.50 7.00 150 300 450 600 750 900 1050 1200 1350 1500 MillionThousandNew Single Family Home Sales (Left Axis) Existing Single Family Home Sales (Right Axis) New & Existing Single Family Home Sales (SAAR) |June2002to June2014 CITY OF SAN JACINTO ANNUAL PORTFOLIO REVIEW JUNE 30, 2014 year on the heels of frigid winter temperatures,confidence among U.S.homebuilders has rebounded in recent months. The National Association of Home Builders/Wells Fargo sentiment index climbed to 49 in June from 45 in May. The index has spent five of the last six months below 50 with readings above 50 indicating a greater proportion of builders viewing conditions as good rather than poor. 3.00 3.50 0 150 Jun-02Dec-02Jun-03Dec-03Jun-04Dec-04Jun-05Dec-05Jun-06Dec-06Jun-07Dec-07Jun-08Dec-08Jun-09Dec-09Jun-10Dec-10Jun-11Dec-11Jun-12Dec-12Jun-13Dec-13Jun-14Source: National Association of Realtors & U.S. Census Bureau 0 10 20 30 40 50 60 70 80 90 -4.00% -3.00% -2.00% -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00%Jun-97Dec-97Jun-98Dec-98Jun-99Dec-99Jun-00Dec-00Jun-01Dec-01Jun-02Dec-02Jun-03Dec-03Jun-04Dec-04Jun-05Dec-05Jun-06Dec-06Jun-07Dec-07Jun-08Dec-08Jun-09Dec-09Jun-10Dec-10Jun-11Dec-11Jun-12Dec-12Jun-13Dec-13Jun-14Consumer Spending (YoY) - Left Axis NAHB Index - Right Axis Source : National Association of HomeBuilders & Bureau of Economic Analysis NAHB Index & Consumer Spending |June 1997 through June 2014 -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% -2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0%Nov-04May-05Nov-05May-06Nov-06May-07Nov-07May-08Nov-08May-09Nov-09May-10Nov-10May-11Nov-11May-12Nov-12May-13Nov-13May-14MoM % Change (Left Axis) YoY % Change (Right Axis) Source:Case-Shiller S&P/Case-ShillerComposite 20-City Home Price Index SA |MoM and YoY Percentage Change 10PACKET PAGE: 174AGENDA ITEM 5.2 MARKET UPDATE After exhibiting a deflationary trend during much of 2013, gauges of inflation have firmed in 2014 with year-over-year measures trending towards the Fed’s longer-term target of 2.0%. The core Consumer Price Index (“CPI”), which excludes food & energy prices, has risen by an average of 0.17% per month through June 2014, compared to an average of 0.14% per month in 2013 and is up 1.93% on a year-over-year basis, compared to 1.63% a year ago. Similarly, headline CPI has risen by an average of 0.22% per month through June 2014, double the 0.11% per month pace from 2013. On a year-over-year basis, headline CPI has risen 2.07%, compared to 1.75% for the same period last year. The Fed’s preferred measure of inflation, the Personal Consumption Expenditures Index (“PCE”), has risen by an average of 0.10% per month through June 2014, compared to 0.20% in 2013, weighed down by a -0.30% decline in January. On a year-over-year basis, however, the headline PCE index has risen 1.6% through June, compared to 1.40% for the same period last year. The core PCE index has risen an average of 0.13% per month year-to-date in 2014, compared to a 0.11% per month average pace in 2013. On a year-over-year basis,core PCE has risen 1.49%through June,up from 1.27%in -2.00% -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% CPI-U: All Items Less Food & Energy CPI-U: All Items Fed's Comfort Zone Consumer Price Index |All Items Less Food&EnergyandAll Items (YoY% Change) CITY OF SAN JACINTO ANNUAL PORTFOLIO REVIEW JUNE 30, 2014 On a year-over-year basis,core PCE has risen 1.49%through June,up from 1.27%in June of last year. While accelerating, current measures of inflation do not represent an immediate concern for the Fed. Similarly, forward-looking measures of inflation expectations (as measured by the 10-year TIPS spread) remain well anchored and supportive of the Fed’s continued process of tapering while maintaining an accommodative short-term rate policy. A continued trend towards higher inflation against a backdrop of improving economic data is consistent with market expectations of a mid- 2015 interest rate increase by the Fed. -3.00% -2.00%Jun-96Jun-97Jun-98Jun-99Jun-00Jun-01Jun-02Jun-03Jun-04Jun-05Jun-06Jun-07Jun-08Jun-09Jun-10Jun-11Jun-12Jun-13Jun-14CPI-U: All Items Less Food & Energy CPI-U: All Items Source: Bureau of Labor Statistics 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 2.00% 2.25% 2.50% 2.75% 3.00%Jun-07Dec-07Jun-08Dec-08Jun-09Dec-09Jun-10Dec-10Jun-11Dec-11Jun-12Dec-12Jun-13Dec-13Jun-1410-Year Treasury - 10-Year TIPS Spread Between 10-Year Treasury and TIPS Yields |June2006throughJune2014 Source: Bloomberg L.P. -2% -1% 0% 1% 2% 3% 4% 5% -2% -1% 0% 1% 2% 3% 4% 5%Jun-96Jun-97Jun-98Jun-99Jun-00Jun-01Jun-02Jun-03Jun-04Jun-05Jun-06Jun-07Jun-08Jun-09Jun-10Jun-11Jun-12Jun-13Jun-14U.S. GDP Personal Consumption Price Index YoY (Left Axis) U.S. GDP Personal Consumption Core Price Index YoY (Right Axis) Personal Consumption Expenditures Price Indicies YoY│June 1996 to June 2014 Source:BureauofEconomic Analysis Fed's Comfort Zone 11PACKET PAGE: 175AGENDA ITEM 5.2 MARKET UPDATE The U.S. federal budget deficit has declined significantly in recent years and appears poised to decline further this year. The Congressional Budget Office (“CBO”) estimates that under current law, the deficit will total $492 billion in fiscal year 2014, down from $1.4 trillion in 2009. At that level, the deficit would equal approximately 2.8% of gross domestic product (“GDP”) – near the average as a percent of GDP over the past 40 years. The CBO’s baseline projections provide a forecast for federal spending, revenues, and deficits over the next decade assuming current laws governing federal taxes and spending remain generally unchanged. Under these assumptions, the deficit is projected to decline further in 2015 to $469 billion. After 2015, however, deficits are projected to rise again, both in nominal dollar terms and relative to the size of the economy, as revenues are projected to grow at approximately the same pace as GDP while spending is projected to grow more rapidly. Under the CBO’s baseline projections, the faster pace of federal spending is buoyed by an aging U.S. population, the expansion of federal subsidies for health insurance, rising health care costs per beneficiary, and rising interest costs on the federal debt.By contrast,all federal spending aside from outlays on social -$1,500 -$1,250 -$1,000 -$750 -$500 -$250 $0 $250 $500 U.S. Federal Budget│Fiscal Years (Actual &Revised Forecast)BillionActual Surplus/Deficit CBO ForecastSurplus/Deficit: CBO BaselineForecast CITY OF SAN JACINTO ANNUAL PORTFOLIO REVIEW JUNE 30, 2014 costs on the federal debt.By contrast,all federal spending aside from outlays on social security, major health care programs, and net interest payments on the debt is projected to decline to its lowest percentage of GDP since 1940 – the earliest year for which comparable data is reported. The large budget deficits in recent years have substantially increased the federal debt level, which is now very high by historical standards both in nominal dollar terms and relative to the size of the economy. As of June 30, 2014, the total U.S. public debt outstanding (which includes both marketable debt held by the public and intergovernmental securities) stood at $17.63 trillion, or 101.95% of GDP. Such large and growing debt poses important economic risks and could have serious negative consequences including restraining future economic growth, reducing policy flexibility to deal with unexpected challenges, and ultimately increasing the risk of fiscal crisis in which investors demand higher interest rates to buy federal government debt. Reflecting continued fiscal discontent in Washington, the U.S. government entered a shutdown and curtailed most routine government operations between October 1 and October 16, 2013 after congress failed to enact legislation appropriating funds for fiscal year 2014. With only hours to spare before breaching the statutory debt limit, the House passed a Senate bill to fund the government and suspend the debt limit until early 2014. A subsequent $1.1 trillion spending bill was passed in early 2014 that would fund the government through September 30, 2014 and a separate debt-ceiling deal was reached, allowing the government to borrow money and pay its bills through March 2015. For the past four years, Congress has funded the government through a series of stopgap spending bills and funding extensions with numerous threats of shutdowns and U.S. Treasury debt defaults along the way. Meaningful fiscal reform that provides clarity to businesses and consumers remains a critical, yet still-missing ingredient to more durable economic performance. 20% 30% 40% 50% 60% 70% 80% 90% 100% 110%Jun-82Oct-83Feb-85Jun-86Oct-87Feb-89Jun-90Oct-91Feb-93Jun-94Oct-95Feb-97Jun-98Oct-99Feb-01Jun-02Oct-03Feb-05Jun-06Oct-07Feb-09Jun-10Oct-11Feb-13Jun-14Source: Congressional Budget Office U.S. Total Debt Outstanding as a Percent of GDP │June1982 throughJune201419641967197019731976197919821985198819911994199720002003200620092012 2015201820212024Source: Congressional Budget Office 12PACKET PAGE: 176AGENDA ITEM 5.2 MARKET UPDATE The Fed remained aggressively involved in providing monetary policy accommodation during the last year. In addition to maintaining the federal funds target rate in a range of between 0.00% and 0.25% for the fifth-straight year, the Fed continued its process of quantitative easing wherein the central bank expands the monetary base and purchases specified amounts of longer-term bonds. As of June 30th, the Fed’s balance sheet stood at nearly $4.4 trillion, up from approximately $900 billion prior to the financial crisis. In mid December 2013, the Fed finally declared its intent to begin reducing the pace of asset purchases beginning in January 2014 with a $10 billion reduction split evenly between U.S. Treasury securities and mortgage-backed securities. Consistent with market expectations, similar reductions in the pace of bond purchases were announced at each subsequent FOMC meeting with purchases totaling $35 billion per month as of June 30, down from the original pace of $85 billion per month. At the current pace of tapering, the Fed is anticipated to complete the quantitative easing program by October 2014. With the asset purchase program all but concluded, market attention has again shifted towards the timing of the first increase to the Federal Funds rate.While the Fed $800 $1,200 $1,600 $2,000 $2,400 $2,800 $3,200 $3,600 $4,000 $4,400 $4,800 U.S. Condition of All Federal Reserve Banks│Total Assets ($Billions) CITY OF SAN JACINTO ANNUAL PORTFOLIO REVIEW JUNE 30, 2014 shifted towards the timing of the first increase to the Federal Funds rate.While the Fed continues to reiterate the data-dependent nature of interest rate policy, pricing in the Federal Funds futures markets suggests the first Fed rate hike is likely to occur in mid 2015. Though rising, current measures of price inflation remain well contained despite concerns on the part of many market participants that the Fed’s extraordinarily accommodative policies could stoke future inflation pressures. In tandem with the expansion of the Fed’s balance sheet, reserve balances held by financial institutions at the Fed have reached historic levels. These reserves are the result of the Fed’s bond- buying programs, whereby financial institutions were credited with cash in the form of reserves in exchange for the Treasury or MBS bonds that they sold to the Fed. This dynamic largely explains why inflation pressures have remained subdued during the expansion of the Fed’s balance sheet. As long as these balances remain in the form of excess reserve balances, they are isolated from the real economy and therefore contribute very little to inflation pressures. To date, both the money multiplier (i.e., rate at which increases in the monetary base, which includes excess reserves, are transmitted into the real economy via loans) and the velocity of money (the rate at which money changes hands in the economy) have declined dramatically and remain extraordinarily subdued. In this way, the money created by the Fed via the quantitative easing programs has remained effectively sterilized. However, as economic activity accelerates, those financial institutions may likely find more attractive opportunities to lend out or invest these reserves which could lead to faster growth in money supply, an acceleration in the velocity of money, and inflationary pressures. While the Fed has noted several policy strategies designed to manage such inflation risks, they entail important judgments regarding when, how, and at what pace and magnitude to remove liquidity from the financial system with no historical precedent and a potentially high cost of error. 13 2 3 4 5 6 7 8 9 10 (200) 200 600 1,000 1,400 1,800 2,200 2,600 3,000 Jun-05Dec-05Jun-06Dec-06Jun-07Dec-07Jun-08Dec-08Jun-09Dec-09Jun-10Dec-10Jun-11Dec-11Jun-12Dec-12Jun-13Dec-13Jun-14Ratio$BillionsExcess Bank Reserves (Left Axis)M2/ Monetary Base (Right Axis) ExcessReservesand M2 | Excess Reserves Growth NotYetReflected in Growth ofM2 Source: Federal Reserve $400 $800 Jun-07Dec-07Jun-08Dec-08Jun-09Dec-09Jun-10Dec-10Jun-11Dec-11Jun-12Dec-12Jun-13Dec-13Jun-14Source: Federal ReservePACKET PAGE: 177AGENDA ITEM 5.2 MARKET UPDATE Political battles and a government shutdown in Washington, the long-awaited tapering announcement by the Fed, a deeper-than-anticipated contraction in Q1 2014 GDP, and growing geopolitical tensions in Eastern Europe and the Middle East conspired to provide bond investors with a bumpy ride over the 12-month period ended June 30, 2014. Two and ten-year Treasuries began the period with a continuation of the sell-off that began the preceding April with yields rising to 0.52% and 2.99%, respectively, in early September 2013 based upon speculation the Fed would commence the tapering of its asset purchase program. The Fed surprised markets by maintaining the pace of bond purchases in September, causing interest rates to retreat from their highest levels since mid 2011. As a result, two and ten-year Treasuries rallied into November sending yields lower. The rally proved short lived, however, as expectations of a December Fed taper announcement took hold and were eventually confirmed by the Fed in mid December. Two-year Treasury yields have since trended higher on continued Fed tapering and the expectation of an early/mid 2015 Fed interest rate increase. Geopolitical tensions have resulted in counter-trend flight-to-quality rallies along the way,but the trend of higher Interest Rates & Spreads Term to Maturity 06/30/14 03/31/14 12/31/13 06/28/13 90-Day Change 180-Day Change 12-Month Change 3MTreasury 0.02% 0.03% 0.07% 0.03% -0.01% -0.05% -0.01% 6MTreasury 0.06% 0.06% 0.09% 0.09% 0.01% -0.03% -0.03% 2YTreasury 0.46% 0.42% 0.38% 0.36% 0.04% 0.08% 0.10% 5YTreasury 1.63% 1.72% 1.74% 1.40% -0.09% -0.11% 0.24% 10YTreasury 2.53% 2.72% 3.03% 2.49% -0.19% -0.50% 0.04% 30YTreasury 3.36% 3.56% 3.97% 3.50% -0.20% -0.61% -0.14% Term Spreads 2's/5's TsySpread 1.17% 1.30% 1.36% 1.04% -0.13% -0.19% 0.13% 2's/10's TsySpread 2.07% 2.30% 2.65% 2.13% -0.23% -0.57% -0.06% 2's/30's TsySpread 2.90% 3.14% 3.59% 3.14% -0.24% -0.69% -0.24% Agency Spreads CITY OF SAN JACINTO ANNUAL PORTFOLIO REVIEW JUNE 30, 2014 resulted in counter-trend flight-to-quality rallies along the way,but the trend of higher short-term Treasury yields appears in place. Two-year Treasury notes closed the period at 0.46%, up 10 basis points (0.10%) from 0.36% in June 2013. By contrast, ten-year Treasury yields have trended lower over the last six months as heightened geopolitical risks, weaker-than-expected first quarter U.S. GDP growth, strong investor demand, and a narrowing of yield spreads on certain European sovereign debt increased the relative attractiveness of longer-term Treasuries. Agency Spreads 3MAgy/TsySpread 0.06% 0.03% 0.02% 0.03% 0.03% 0.04% 0.03% 6MAgy/TsySpread 0.04% 0.02% 0.04% 0.01% 0.02% 0.00% 0.03% 2YAgy/TsySpread 0.04% 0.04% 0.08% 0.15% 0.00% -0.03% -0.11% 5YAgy/TsySpread 0.08% 0.18% 0.29% 0.24% -0.11% -0.21% -0.16% AA Corporate Spreads 6MCP/TsySpread 0.20% 0.21% 0.19% 0.24% -0.02% 0.01% -0.04% 2YAACorp/TsySpread 0.35% 0.24% 0.29% 0.46% 0.11% 0.07% -0.11% 5YAACorp/TsySpread 0.33% 0.43% 0.49% 0.84% -0.10% -0.16% -0.51% Source:Bloomberg, L.P. 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 3-Month 6-Month 2-Year 5-Year 10-Year 30-Year% U.S. Treasury Yield Curve 06/30/14 12/31/13 06/28/13 1.25% 1.75% 2.25% 2.75% 3.25%Jun-12Jul-12Aug-12Sep-12Oct-12Nov-12Dec-12Jan-13Feb-13Mar-13Apr-13May-13Jun-13Jul-13Aug-13Sep-13Oct-13Nov-13Dec-13Jan-14Feb-14Mar-14Apr-14May-14Jun-1410-Year Treasury Yield 2and 10-YearTreasuryYields |Daily Yield History (June2012to June2014) 0.15% 0.25% 0.35% 0.45% 0.55%Jun-12Jul-12Aug-12Sep-12Oct-12Nov-12Dec-12Jan-13Feb-13Mar-13Apr-13May-13Jun-13Jul-13Aug-13Sep-13Oct-13Nov-13Dec-13Jan-14Feb-14Mar-14Apr-14May-14Jun-142-Year Treasury Yield Source: Bloomberg L.P. 14PACKET PAGE: 178AGENDA ITEM 5.2