The Mobility Brothers, Inc. - Statement of Work
DATE: July 9, 2025
CUSTOMER: GETAC Inc.
PROJECT: Dock Swap and Cradlepoint Refresh
CLIENT: Brea, CA PD
SOW #: 070925.4
This is a Statement of Work ("SOW") by and between The Mobility Brothers, Inc. (herein referred to as "MOBILITY”) and GETAC Inc. (herein referred to as “GETAC”) for Brea, California Police Department, (herein referred to as “BREA”) with the following project specific terms and conditions:
Metrics
Design, plan, collaborate, prepare, and execute a clear and well-defined deployment plan for GETAC while successfully installing the dock swap solution for BREA.
A total of 31 police vehicles.
31 vehicles: Remove the CF-33 docking stations and power supplies, replace with S510 docking stations and new power supply.
31 vehicles: remove Cradlepoint R600 and replace with Cradlepoint R980.
Run Cradlepoint Verify application to confirm connectivity and assignment in Brea PD Net Cloud Manager account.
8 vehicles already have the antenna upgrade for the Cradlepoint R980 23 vehicles: Remove existing antenna and replace with new antenna for Cradlpoint R980 using existing hole.
Follow The Mobility Brothers antenna installation SOP to assure proper seal on new antennas.
Installation, Processes and Documentation
1. Preparation & Battery Test
Ignition off.
Use battery tester to record standing voltage & health 12.4 V).
2. Complete installation, including QC check.
3. Installation Photos for SmartSheet
Full-Sized Picture of vehicle
Asset Number
Vin Label
Pre Installation set up
Docusign Envelope ID: BBA93525-6081-4940-9C1E-54FC7F59D0D5
Odometer Running (including warning lights)
Existing Solution Serial Number
Gamber Johnson Dock Serial Number
Final installation
4. SmartSheet Entry
Upload photos & screenshots.
Enter data fields (Battery test, VIN, asset #, year/make/model, dock serial number , CP serial, etc.
Submit button to upload.
5. MOBILITY Documentation
Complete MOBILITY Installation Completion Document (ICD) with all pertinent vehicle data, solution serial numbers and details.
MOBILITY ICD will be signed by the BREA onsite POC at the end of each shift and accepting installations as complete to BREA requirements.
Enter ALL ICD data and pictures into the MOBILITY Smartsheet platform at the completion of each individual installation, take and load pictures into Smartsheet.
Vehicles will be inspected for the removal of any, and all installation debris.
Solution packaging and installation debris will be disposed of in a BREA approved trash receptacle.
MOBILITY will provide GETAC and BREA any escalated issues on a real time basis, a weekly summary report, and join any requested project update calls at GETAC discretion.
At the conclusion of the project, Smartsheet will be converted to an .xls document and provided to GEATC and BREA. Any changes, additions, reductions, or adjustments in this Scope of Work must be mutually agreed upon by all parties, in writing, by way of a signed change order document.
Manpower
MOBILITY will deploy 1 senior PM
Access: Monday thru Saturday, 8am to 8pm PST
Docusign Envelope ID: BBA93525-6081-4940-9C1E-54FC7F59D0D5
Services include project plan design, project management, schedule management, site management, miscellaneous installation supplies, data reporting.
Insurance: MOBILITY has issued a COI naming GETAC and BREA as additionally insured.
Signature Agreement
The terms and conditions as outlined above in this SOW are acknowledged and agreed to byGETAC on July 9, 2025.
CUSTOMER: MOBILITY:
GETAC The Mobility Brothers, Inc. By: By: Doug Huber
Name: Name: Doug Huber
Title: Title: Director, National Accounts
Date: Date: 7.9.25
Docusign Envelope ID: BBA93525-6081-4940-9C1E-54FC7F59D0D5 MODEL: SN:
Getac’s warranty obligations for this hardware product are limited to the terms set forth below:
Getac, Inc. warrants this Getac-branded rugged computer against defects in materials and workmanship under normal use and damage that occurs due to accidental acts and exposure to environmental conditions for a period of FIVE (5) YEARS from the date of purchase by the original end-user purchaser or from the Getac shipping date, if no valid proof of purchase presented by end-user (“Warranty Period”). This warranty only applies to products sold by Getac or its Authorized Distributors or Dealers and only where the products are used and serviced within North America or its Authorized Service Providers’ territories. Warranty coverage only applies to service carried out by a Getac Authorized Service Provider.
If a hardware defect arises and a valid claim is received within the Warranty Period, at its option and to the extent permitted by law, Getac will either repair the defect at no charge, using new or refurbished replacement parts, or exchange the product with a product that is new or which has been manufactured from new or serviceable used parts and is at least functionally equivalent to the original product. A replacement product or part, including a user installable part that has been installed in accordance with instructions provided by Getac, assumes the remaining warranty of the original product or ninety (90) days from the date of replacement or repair, whichever provides longer coverage for you. When a product or part is exchanged, any replacement product becomes your property and the replaced item becomes Getac’s property.
Parts provided by Getac in fulfillment of its warranty obligation must be used in products for which warranty service is claimed.
Exclusions and Limitations
This Limited Warranty applies only to Getac-branded hardware products manufactured by or for Getac that can be identified by the “Getac” trademark, trade name, or logo affixed to them. The Limited Warranty does not apply to any non-Getac hardware products, co-branded hardware products (whether or not displaying a “powered by Getac” trademark, trade name, or logo affixed to them) or any software, even if packaged or sold with Getac hardware. Manufacturers, suppliers, or publishers, other than Getac, may provide their own warranties to the end user purchaser, but Getac, in so far as permitted by law, provides their products “as is”.
Software distributed by Getac with or without the Getac brand name (including, but not limited to system software) is not covered under this Limited Warranty. Refer to the licensing agreement accompanying the software for details of your rights with respect to its use. Getac does not warrant that the operation of the product will be uninterrupted or error-free. Getac is not responsible for damage arising from failure to follow instructions relating to the product’s use.
Batteries supplied with the product are covered under the warranty for one (1) year from date of purchase.
A battery furnished under the warranty is covered for the remaining period of the one year warranty on the original battery or ninety (90) days from the date of replacement or repair, whichever provides longer coverage for you.
The LCD, touchscreen, hard drive/SSD, motherboard, and keyboard are limited to one repair/replacement per part component per 12 month period for damage that occurs due to accidental acts and exposure to environmental conditions.
This warranty does not apply to:
(a) loss or theft;
(b) fire;
(c) submersion;
(d) acts of god;
(e) acts of war;
(f) virus-inflicted damage;
(g) intentional misuse or abuse;
(h) improper maintenance or modification by
anyone other than Getac or a Getac
Authorized Service Provider;
(i) a product or part that has been modified to
alter functionality or capability without the
written permission of Getac;
(j) a product on which any Getac serial number
has been removed or defaced;
(k) data recovery from hard drive failure;
(l) all consumable items; such as screen protection
films, logo badges, labels, cleaning cloths,
carry cases, manuals, cables, straps, belts,
holsters, tethers, and harnesses and any other
options and accessories not listed above or
covered under a separate warranty.
(m)to cosmetic damage that does not affect the
functionality of the system, including but not
limited to scratches, dents and numerals,
letters, icons and symbols silkscreened onto
unit keycaps and numerals, letters, icons and
symbols silkscreened onto unit cabinet; or
(n) negligence
(o) operation of product outside the published
environmental or electrical parameters
(p) use of supplies or parts not meeting Getac’s
specifications
Docusign Envelope ID: BBA93525-6081-4940-9C1E-54FC7F59D0D5 5 6 1 8 8 8 0 0 0 0 0 7 R 0 0
THIS PRODUCT IS NOT INTENDED FOR USE AS OR PART OF NUCLEAR EQUIPMENT/SYSTEMS, AIR TRAFFIC
CONTROL EQUIPMENT/SYSTEMS, OR AIRCRAFT COCKPIT EQUIPMENT/SYSTEMS, OR ANY OTHER SYSTEMS THAT REQUIRE FAIL-SAFE PERFORMANCE. GETAC WILL NOT BE RESPONSIBLE FOR ANY LIABILITY RESULTING FROM THE USE OF THIS PRODUCT ARISING OUT OF THE FOREGOING USES. AIRCRAFT COCKPIT EQUIPMENT/SYSTEMS include class 2 Electronic Flight Bag (EFB) Systems and Class 1 EFB Systems when used during critical phases of flight (e.g. during take-off and landing) and/or mounted onto the aircraft. Class 1 EFB Systems and 2 EFB Systems are defined by FAA: AC (Advisory Circular) 120-76A or JAA: JAA TGL (Temporary Guidance Leaflets) No. 36.
TO THE EXTENT PERMITTED BY LAW, THIS WARRANTY AND REMEDIES SET FORTH ABOVE ARE EXCLUSIVE
AND IN LIEU OF ALL OTHER WARRANTIES, REMEDIES AND CONDITIONS, WHETHER ORAL OR WRITTEN, STATUTORY, EXPRESS OR IMPLIED. AS PERMITTED BY APPLICABLE LAW, GETAC SPECIFICALLY DISCLAIMS ANY
AND ALL STATUTORY OR IMPLIED WARRANTIES, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND WARRANTIES AGAINST HIDDEN OR LATENT DEFECTS. IF GETAC CANNOT LAWFULLY DISCLAIM STATUTORY OR IMPLIED WARRANTIES THEN
TO THE EXTENT PERMITTED BY LAW, ALL SUCH WARRANTIES SHALL BE LIMITED IN DURATION TO THE
DURATION OF THIS EXPRESS WARRANTY AND TO REPAIR OR REPLACEMENT SERVICE AS DETERMINED BY GETAC IN ITS SOLE DISCRETION. No Getac reseller, agent, or employee is authorized to make any modification, extension, or addition to this warranty. If any term is held to be illegal or unenforceable, the legality or enforceability of the remaining terms shall not be affected or impaired.
EXCEPT AS PROVIDED IN THIS WARRANTY AND TO THE EXTENT PERMITTED BY LAW, GETAC IS NOT
RESPONSIBLE FOR DIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM ANY
BREACH OF WARRANTY OR CONDITION, OR UNDER ANY OTHER LEGAL THEORY, INCLUDING BUT NOT LIMITED TO LOSS OF USE; LOSS OF REVENUE; LOSS OF ACTUAL OR ANTICIPATED PROFITS (INCLUDING LOSS OF PROFITS ON CONTRACTS); LOSS OF THE USE OF MONEY; LOSS OF ANTICIPATED SAVINGS; LOSS OF BUSINESS; LOSS OF OPPORTUNITY; LOSS OF GOODWILL; LOSS OF REPUTATION; LOSS OF, DAMAGE TO OR CORRUPTION OF DATA; OR ANY INDIRECT OR CONSEQUENTIAL LOSS OR DAMAGE HOWSOEVER CAUSED INCLUDING THE REPLACEMENT OF EQUIPMENT AND PROPERTY, ANY COSTS OF RECOVERING, PROGRAMMING, OR REPRODUCING ANY PROGRAM OR DATA STORED OR USED WITH GETAC PRODUCTS AND ANY FAILURE TO MAINTAIN THE CONFIDENTIALITY OF DATA STORED ON THE PRODUCT. THE FOREGOING
LIMITATION SHALL NOT APPLY TO DEATH OR PERSONAL INJURY CLAIMS, OR ANY STATUTORY LIABILITY FOR INTENTIONAL AND GROSS NEGLIGENT ACTS AND/OR OMISSIONS. GETAC DISCLAIMS ANY
REPRESENTATION THAT IT WILL BE ABLE TO REPAIR ANY PRODUCT UNDER THIS WARRANTY OR MAKE A PRODUCT EXCHANGE WITHOUT RISK TO OR LOSS OF THE PROGRAMS OR DATA.
Obtaining Warranty Service
Please access and review the online help resources at www.getac.com before requesting warranty service.
If the product is still not functioning properly after making use of these resources, please contact a Getac representative at (949) 681-2950. A Getac representative will help determine whether your product requires service and, if it does, will inform you how Getac will provide it. Getac will provide warranty service on products that are tendered or presented for service during the warranty period, as permitted by law. In accordance with applicable law, Getac may require that you furnish proof of purchase and/or comply with registration requirements before receiving warranty service. You may be responsible for shipping and handling charges to obtain service under this warranty.
In any instance in which Getac issues a Service Request Number (SR #), Getac must receive the product(s) for repair prior to the expiration of the warranty period in order for the repair(s) to be covered by the limited warranty service.
If your product is capable of storing data or software programs, you should make periodic backup copies of the data and programs contained on the product’s hard drive or other storage media to protect your data and as a precaution against possible operational failures. Before you deliver your product for warran- ty service, it is your responsibility to keep a separate backup copy of the system software, application software and data, and disable any security passwords. You will be responsible for reinstalling all such software, data and passwords. Getac and its authorized service providers are not liable for any damage to or loss of any programs, data or other information stored on any media, or other non-Getac product or part not covered by this warranty. Recovery and reinstallation of system and application software and user data are not covered under this limited warranty.
Trademarks are property of their respective owners. (c) 2017 Getac Technology Corporation. All rights reserved. Bumper-to-Bumper Warranty Getac Five (5) Year Docusign Envelope ID: BBA93525-6081-4940-9C1E-54FC7F59D0D5 RUGGED. RELIABLE. RESPONSIVE.
Rev A1 GAMBERJOHNSON.COM 800.487.9220 | [email protected]
GAMBER-JOHNSON WARRANTY INFORMATION
We proudly offer a limited warranty on all Gamber-Johnson products.
Gamber-Johnson warrants to the reseller and the original end user of any Gamber-Johnson product that it will be free from defects in materials and workmanship for the warranty time period.
The remedies for a defect in material or workmanship are limited to repair or replacement of any non-conforming product.
Gamber-Johnson will repair or replace, without charge, any Gamber-Johnson product that does not conform to its warranty only if a Reseller or an original end user gives us notice of a defect in material or workmanship within the warranty time period stated on page 2:
Mounting Systems (non-electronic products) — All non-electronic products purchased after Dec. 31st, 2009 are protected by Gamber-Johnson’s limited lifetime warranty. For any warranty related issues of products purchased prior to Dec. 31st 2009, please contact your Gamber-Johnson’s authorized reseller. All Zirkona products come with a standard one year product warranty.
Specific 3rd Party Supplied Products — For all products purchased through Gamber-Johnson that are supplied from a 3rd party company (i.e. iKey, Brother, Lind Electronics, All Fleet Solutions, etc.) are warranted by the specific manufacturer of that product. Please see individual specifications on these products for further warranty information.
Mobile Docking Stations & Electronic Products — Warranty time period (from date of original factory shipment) for printed circuit boards, docking connectors, electronic components may vary. Please see individual specifications on these products for further warranty information.
Any failure of any Gamber-Johnson product that is due to damage or misuse, such as excessive force, improper installation, cosmetic wear, exposure to liquid spills, moisture or application of power in excess of specified rating theft, fire or natural disaster is not covered by this warranty. The warranty is void on electronic products if the warranty label is removed or altered.
For standard warranty claims, Gamber-Johnson will provide return shipping for covered product. The customer is responsible for packaging and shipping to Gamber-Johnson.
GAMBER-JOHNSON WILL NOT BE RESPONSIBLE FOR ANY INCIDENTIAL, CONSEQUENTIAL (INCLUDING LOSS OF BUSINESS OR PROFITS) OR PUNITIVE DAMAGES DUE TO FAILURE OF A GAMBER-JOHNSON PRODUCT.
INCIDENTAL, CONSEQUENTIAL AND PUNITIVE DAMAGES ARE EXCLUDED FROM THIS LIMITED WARRANTY.
THE FOREGOING WARRANTY IS A LIMITED WARRANTY. THERE ARE NO OTHER WARRANTIES, EXPRESS
OR IMPLIED, WHICH EXTEND BEYOND THE DESCRIPTION OF THE WARRANTIES ON THE FACE HEREOF INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF FITNESS AND MERCHANTABILITY.
Docusign Envelope ID: BBA93525-6081-4940-9C1E-54FC7F59D0D5 RUGGED. RELIABLE. RESPONSIVE.
Rev A1 GAMBERJOHNSON.COM 800.487.9220 | [email protected]
GAMBER-JOHNSON EXTENDED WARRANTY
Extended warranty programs are available to add an additional 1 or 2 years of standard warranty to your mobile docking station or rugged USB hubs. The extended warranty must be purchased at the time of the product purchase. The extended warranties on docking stations and rugged USB hubs are subject to the same terms and exclusions as the standard warranty for docking stations and electronic products.
GAMBER-JOHNSON PRODUCT FACTORY WARRANTY EXTENDED 1 YEAR EXTENDED 2 YEAR Dell laptop and tablet docking stations 3 years
Panasonic Toughbook® and
Toughpad® docking stations 3 years
Zebra Tablet docking stations 3 years
Getac Laptop and Tablet docking stations 3 years
Samsung Tablet docking stations 3 years
Rugged USB Hub 3 years
Gamber-Johnson cradles 3 years
IPad docking station 1 year
Gamber-Johnson keyboards 1 year
Gamber-Johnson touch screens 1 year
Docusign Envelope ID: BBA93525-6081-4940-9C1E-54FC7F59D0D5 RUGGED. RELIABLE. RESPONSIVE.
Rev A1 GAMBERJOHNSON.COM 800.487.9220 | [email protected]
GAMBER-JOHNSON EXTENDED SERVICE PLAN
Gamber-Johnson Extended Service Plan builds on our standard warranty and includes the following benefits: • Extends our standard warranty to 5-years (3-Year standard warranty + 2 additional years) • Accidental damage coverage • Expedited service and free shipping
• Two FREE PCB replacements and two FREE RF Pass thru (GPS/LAN/WAN) cables per serial number for the life of the contract
The Extended Service Plan is available on most docking stations and must be purchased at the time of product purchase.
Any failure of any Gamber-Johnson product that is due to intentional misuse or damage, cosmetic wear, theft, fire or natural disaster is not covered by this warranty.
GAMBER-JOHNSON WILL NOT BE RESPONSIBLE FOR ANY INCIDENTAL, CONSEQUENTIAL (INCLUDING LOSS OF BUSINESS OR PROFITS) OR PUNITIVE DAMAGES DUE TO FAILURE OF A GAMBER-JOHNSON PRODUCT.
INCIDENTAL, CONSEQUENTIAL AND PUNITIVE DAMAGES ARE EXCLUDED FROM THIS LIMITED WARRANTY.
THE FOREGOING WARRANTY IS A LIMITED WARRANTY. THERE ARE NO OTHER WARRANTIES, EXPRESS
OR IMPLIED, WHICH EXTEND BEYOND THE DESCRIPTION OF THE WARRANTIES ON THE FACE HEREOF INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF FITNESS AND MERCHANTABILITY.
GAMBER-JOHNSON EXTENDED SERVICE PLAN – AVAILABLE ON…
Dell
• Tablet Docking Station
• Laptop Docking Station
Panasonic
• Toughbook® and Toughpad® Docking Stations
Zebra
• Tablet Docking Stations
Getac
• Laptop and Tablet Docking Stations
Samsung
• Tablet Docking Stations
Rugged USB Hub
Docusign Envelope ID: BBA93525-6081-4940-9C1E-54FC7F59D0D5 RUGGED. RELIABLE. RESPONSIVE.
Rev A1 GAMBERJOHNSON.COM 800.487.9220 | [email protected]
END-OF-LIFE POLICY
Product Life Cycle Overview and EOL Notifications
Periodically, Gamber-Johnson may find it necessary to discontinue products for a number of reasons, including decline in competitiveness, or decreased sales of a product. Obsolescence can also occur because a newer version of a product has become available. Finally, products may become obsolete if replacement parts are no longer available, or when the cost of replacement parts or repairs is higher than the cost of a new item.
Gamber-Johnson is committed to making the transition from such products to new offerings as simple as possible. As part of this, when a product reaches its end of life (EOL), Gamber-Johnson will move the product from its current product category and place it into the discontinued category under the Products tab. Gamber-Johnson will include the initial EOL notification, Last Order Date (LOD), and End-of-Support (EOS) milestone dates, as described below.
Resellers may continue to purchase product up until the LOD. Gamber-Johnson will honor our Limited Lifetime Warranty as long as it is purchased no later than the LOD. Gamber-Johnson will continue to provide technical support and service for product up until the announced EOS date (based on warranty). In the event that a product or its parts are no longer available during the warranty period, Gamber-Johnson will replace the item with a comparable product if available. Please note that some components are dependent on OEM availability (example: boards and components used in docking stations) and replacement parts are dependent on their product offering.
END-OF-SUPPORT (EOS) POLICY
Mounting Systems (non-electronic)
Gamber-Johnson is committed to providing service/repair on your mounting system for the life of the product within the warranty policy guidelines. We will repair, replace with an equivalent product, or refund your purchase price of any defect found in material or workmanship of any nonconforming product.
Docking Stations and Electronic Products
Gamber-Johnson is committed to providing service/repair on all mobile docking stations for a minimum of five (5) years after last order date LOD. Our ability to provide this service is dependent on availability of electronic products from our OEM suppliers.
The electronic products listed on the next page are no longer serviced/supported by Gamber-Johnson Gamber-Johnson will service electronic products up to 5 years after the product is End-of-Life (EOL). This is, however, dependent on OEM availability of electronic components.
Docusign Envelope ID: BBA93525-6081-4940-9C1E-54FC7F59D0D5 Quote and Purchase Addendum
Quoted Date: July 9, 2025 Quote Number: 1378657
Quote Expiration: December 15, 2025 Prepared By: Tally Gochis Services Include
• Project Management and Installation – Motorola Solutions will assign a Flex Project Manager as the agency’s single point of contact. This individual will coordinate Motorola's expert staff as needed to ensure a smooth upgrade transition.
Included in Quote
• Getac S510 MDTs
• MDT Accessories & Services
• Cradlepoint Routers
• Installation
• Project Management ($360.00)
Package Quote
$496,219.01
*Sales Tax Not Included
Pricing Breakdown
Hardware and Services (without taxes) $496,219.01
7.75% Tax Rate on Hardware $26,705.74
Total Amount with Taxes Included $522,924.75
Product and Services Description
Part# MFG Part# Vendor
Name Description Qty Ext. Price
GET-SU573CFASSCX SU573CFASSCX GETAC
S510 - Intel Core Ultra 7 155U Processor + Thunderbolt 4 x 2, 15.6 + Windows Hello Webcam, Microsoft Windows
11 Pro x64 with 32GB RAM + TAA, 512GB PCIe SSD (Main
storage, user swappable), Sunlight Readable (Full HD LCD + Touchscreen + Stylus) + HF RFID, US KBD + US Power
Cord, Membrane Backlit KBD, WIFI + BT + 5G Sub-6 w/
dedicated GPS + Passthrough, Battery x 2, Without any
extra option, 3 Year Limited Warranty
79 $305,505.64
GET-GE-SVSRNFX5Y GE-SVSRNFX5Y GETAC ( Bumper to Bumper )+ Extended Warranty- Semi-Rug Laptop (Year 1,2,3,4 & 5) 79 $45,743.29
GET-5433GA890501 5433GA890501 GETAC
S510 - Gamber Johnson, 7160-1929-00, Vehicle Dock
with port replication, with screen support (ex. vehicle adapter)
31 $18,743.06
GET-GDDSU2 GDDSU2 GETAC Getac DS100 USB-C Docking Station w/135 W AC Adaptor(US) 41 $6,732.52
GET-5653GB550005 5653GB550005 GETAC
Getac Essentials, Monitoring, Cloud-Based, SelfManaged, 5 Year, Per Device (No Uploading of Personal Data of Any Kind)
79 $10,175.12
GET-GE-SVSYHDM1L GESVSYHDM1L GETAC Initial Disk Imaging - Per Unit (qty needs to match # of computers ordered) 79 $2,486.20
GET-GE-SVSYHDS1D GE-SVSYHDS1D GETAC Disk Imaging Consulting Service - Per Day (5 days required) 5 $9,618.29
GE-GJGPESP5Y GE-GJGPESP5Y GETAC
Extended Service Plan - Gamber Johnson, for Getac S410
(Year 1 - 5) - Gamber Johnson, GJ ESP2, Extended Service Plan, 5, Years
31 $5,028.39
GET-590GBL000515 590GBL000515 GETAC LIND, GE1963-5322, 120W DC/DC Adapter 33 $5,384.01 GET-590GBL001564 590GBL001564 GETAC CradlePoint R980, MB03-R980-5GD-A, 5G-Global 3 year NetCloud Mobile Essentials 31 $38,888.32
GET-590GBL001565 590GBL001565 GETAC
Panorama Mako Dome kit, LG-IN2445, L G M H M4 B -6-
60 -24-58 , 4 4 MiMo 4G/5G, up to 6 6 MiMo WiFi +
GPS/GNSS Vehicle Antenna
23 $8,225.28
GET-GTC-MBBREAPDFD GTCMBBREAPDFD GETAC
Mobility Brothers Installation: Brea Police and Fire
department project including dock swap, power
installation/wiring. Cradlepoint installation; includes travel and lodging expenses; per vehicle charge
23 $29,179.50
GET-GTC-MBBREAPDFD GTCMBBREAPDFD GETAC
Mobility Brothers Installation: Brea Police and Fire
department project including dock swap, power
installation/wiring, antenna installation; includes travel and lodging expenses; per vehicle charge.
8 $10,149.39
Payment Terms
• Customer agrees to pay all invoices within thirty (30) business days of invoice date
The Customer’s signature below constitutes its agreement to purchase the licenses, products and/or services according to the terms quoted by Motorola Solutions within this document. This document shall serve as an addendum to the Purchase Agreement previously entered into between the Customer and Spillman Technologies. The terms and conditions of the Purchase Agreement, as well as the related License Agreement and Support Agreement, shall apply to the items quoted herein.
Customer affirms that a purchase order or notice to proceed is not required for contract performance or for subsequent years of service, if any, and that sufficient funds have been appropriated in accordance with applicable law. The Customer will pay all invoices as received from Motorola and any changes in scope will be subject to the change order process as described in this Agreement. At the time of execution of this Agreement, the Customer will provide all necessary reference information to include on invoices for payment in accordance with this Agreement.
Brea Police Department
Customer Name Authorized Signature
Date Print Name and Title
Bill To Address Ship To Address
The Mobility Brothers, Inc. - Statement of Work
DATE: July 9, 2025
CUSTOMER: GETAC Inc.
PROJECT: Dock Swap and Cradlepoint Refresh
CLIENT: Brea, CA PD
SOW #: 070925.4
This is a Statement of Work ("SOW") by and between The Mobility Brothers, Inc. (herein referred to as "MOBILITY”) and GETAC Inc. (herein referred to as “GETAC”) for Brea, California Police Department, (herein referred to as “BREA”) with the following project specific terms and conditions:
Metrics
• Design, plan, collaborate, prepare, and execute a clear and well-defined deployment plan for GETAC while successfully installing the dock swap solution for BREA. • A total of 31 police vehicles.
• 31 vehicles: Remove the CF-33 docking stations and power supplies, replace with S510 docking stations and new power supply.
• 31 vehicles: remove Cradlepoint R600 and replace with Cradlepoint R980. • Run Cradlepoint Verify application to confirm connectivity and assignment in Brea PD Net Cloud Manager account.
• 8 vehicles already have the antenna upgrade for the Cradlepoint R980 • 23 vehicles: Remove existing antenna and replace with new antenna for Cradlpoint R980 using existing hole.
• Follow The Mobility Brothers antenna installation SOP to assure proper seal on new antennas.
Installation, Processes and Documentation
1. Preparation & Battery Test
• Ignition off.
• Use battery tester to record standing voltage & health (≥ 12.4 V).
2. Complete installation, including QC check.
3. Installation Photos for SmartSheet
• Full-Sized Picture of vehicle
• Asset Number
• Vin Label
• Pre Installation set up
• Odometer Running (including warning lights)
• Existing Solution Serial Number
• Gamber Johnson Dock Serial Number
• Final installation
4. SmartSheet Entry
• Upload photos & screenshots.
• Enter data fields (Battery test, VIN, asset #, year/make/model, dock serial number , CP serial, etc. • Submit button to upload.
5. MOBILITY Documentation
• Complete MOBILITY Installation Completion Document (ICD) with all pertinent vehicle data, solution serial numbers and details.
• MOBILITY ICD will be signed by the BREA onsite POC at the end of each shift and accepting installations as complete to BREA requirements.
• Enter ALL ICD data and pictures into the MOBILITY Smartsheet platform at the completion of each individual installation, take and load pictures into Smartsheet. • Vehicles will be inspected for the removal of any, and all installation debris. • Solution packaging and installation debris will be disposed of in a BREA approved trash receptacle. • MOBILITY will provide GETAC and BREA any escalated issues on a real time basis, a weekly summary report, and join any requested project update calls at GETAC discretion. • At the conclusion of the project, Smartsheet will be converted to an .xls document and provided to GEATC and BREA.
• Any changes, additions, reductions, or adjustments in this Scope of Work must be mutually agreed upon by all parties, in writing, by way of a signed change order document.
Manpower
• MOBILITY will deploy 1 senior PM
• Access: Monday thru Saturday, 8am to 8pm PST
• Services include project plan design, project management, schedule management, site management, miscellaneous installation supplies, data reporting.
Insurance: MOBILITY has issued a COI naming GETAC and BREA as additionally insured.
Signature Agreement
The terms and conditions as outlined above in this SOW are acknowledged and agreed to by GETAC on July 9, 2025.
CUSTOMER: MOBILITY:
GETAC The Mobility Brothers, Inc.
By: By: Doug Huber
Name: Name: Doug Huber
Title: Title: Director, National Accounts
Date: Date: 7.9.25
Getac Five (5) Year
Bumper-to-Bumper Warranty
MODEL: SN:
Getac’s warranty obligations for this hardware product are limited to the terms set forth below:
Getac, Inc. warrants this Getac-branded rugged computer against defects in materials and workmanship under normal use and damage that occurs due to accidental acts and exposure to environmental conditions for a period of FIVE (5) YEARS from the date of purchase by the original end-user purchaser or from the Getac shipping date, if no valid proof of purchase presented by end-user (“Warranty Period”). This warranty only applies to products sold by Getac or its Authorized Distributors or Dealers and only where the products are used and serviced within North America or its Authorized Service Providers’ territories.
Warranty coverage only applies to service carried out by a Getac Authorized Service Provider.
If a hardware defect arises and a valid claim is received within the Warranty Period, at its option and to the extent permitted by law, Getac will either repair the defect at no charge, using new or refurbished replacement parts, or exchange the product with a product that is new or which has been manufactured from new or serviceable used parts and is at least functionally equivalent to the original product. A replacement product or part, including a user installable part that has been installed in accordance with instructions provided by Getac, assumes the remaining warranty of the original product or ninety (90) days from the date of replacement or repair, whichever provides longer coverage for you. When a product or part is exchanged, any replacement product becomes your property and the replaced item becomes Getac’s property. Parts provided by Getac in fulfillment of its warranty obligation must be used in products for which warranty service is claimed.
Exclusions and Limitations
This Limited Warranty applies only to Getac-branded hardware products manufactured by or for Getac that can be identified by the “Getac” trademark, trade name, or logo affixed to them. The Limited Warranty does not apply to any non-Getac hardware products, co-branded hardware products (whether or not displaying a “powered by Getac” trademark, trade name, or logo affixed to them) or any software, even if packaged or sold with Getac hardware. Manufacturers, suppliers, or publishers, other than Getac, may provide their own warranties to the end user purchaser, but Getac, in so far as permitted by law, provides their products “as is”.
Software distributed by Getac with or without the Getac brand name (including, but not limited to system software) is not covered under this Limited Warranty. Refer to the licensing agreement accompanying the software for details of your rights with respect to its use. Getac does not warrant that the operation of the product will be uninterrupted or error-free. Getac is not responsible for damage arising from failure to follow instructions relating to the product’s use.
Batteries supplied with the product are covered under the warranty for one (1) year from date of purchase.
A battery furnished under the warranty is covered for the remaining period of the one year warranty on the original battery or ninety (90) days from the date of replacement or repair, whichever provides longer coverage for you.
The LCD, touchscreen, hard drive/SSD, motherboard, and keyboard are limited to one repair/replacement per part component per 12 month period for damage that occurs due to accidental acts and exposure to environmental conditions.
This warranty does not apply to:
(a) loss or theft;
(b) fire;
(c) submersion;
(d) acts of god;
(e) acts of war;
(f) virus-inflicted damage;
(g) intentional misuse or abuse;
(h) improper maintenance or modification by
anyone other than Getac or a Getac
Authorized Service Provider;
(i) a product or part that has been modified to
alter functionality or capability without the
written permission of Getac;
(j) a product on which any Getac serial number
has been removed or defaced;
(k) data recovery from hard drive failure;
(l) all consumable items; such as screen protection
films, logo badges, labels, cleaning cloths,
carry cases, manuals, cables, straps, belts,
holsters, tethers, and harnesses and any other
options and accessories not listed above or
covered under a separate warranty.
(m) to cosmetic damage that does not affect the
functionality of the system, including but not
limited to scratches, dents and numerals,
letters, icons and symbols silkscreened onto
unit keycaps and numerals, letters, icons and
symbols silkscreened onto unit cabinet; or
(n) negligence
(o) operation of product outside the published
environmental or electrical parameters
(p) use of supplies or parts not meeting Getac’s
specifications
Getac Five (5) Year
Bumper-to-Bumper Warranty
THIS PRODUCT IS NOT INTENDED FOR USE AS OR PART OF NUCLEAR EQUIPMENT/SYSTEMS, AIR TRAFFIC
CONTROL EQUIPMENT/SYSTEMS, OR AIRCRAFT COCKPIT EQUIPMENT/SYSTEMS, OR ANY OTHER SYSTEMS THAT REQUIRE FAIL-SAFE PERFORMANCE. GETAC WILL NOT BE RESPONSIBLE FOR ANY LIABILITY RESULTING FROM THE USE OF THIS PRODUCT ARISING OUT OF THE FOREGOING USES. AIRCRAFT COCKPIT EQUIPMENT/SYSTEMS include class 2 Electronic Flight Bag (EFB) Systems and Class 1 EFB Systems when used during critical phases of flight (e.g. during take-off and landing) and/or mounted onto the aircraft. Class 1 EFB Systems and 2 EFB Systems are defined by FAA: AC (Advisory Circular) 120-76A or JAA: JAA TGL (Temporary Guidance Leaflets) No. 36.
TO THE EXTENT PERMITTED BY LAW, THIS WARRANTY AND REMEDIES SET FORTH ABOVE ARE EXCLUSIVE
AND IN LIEU OF ALL OTHER WARRANTIES, REMEDIES AND CONDITIONS, WHETHER ORAL OR WRITTEN, STATUTORY, EXPRESS OR IMPLIED. AS PERMITTED BY APPLICABLE LAW, GETAC SPECIFICALLY DISCLAIMS
ANY AND ALL STATUTORY OR IMPLIED WARRANTIES, INCLUDING, WITHOUT LIMITATION, WARRANTIES
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND WARRANTIES AGAINST HIDDEN OR LATENT DEFECTS. IF GETAC CANNOT LAWFULLY DISCLAIM STATUTORY OR IMPLIED WARRANTIES THEN
TO THE EXTENT PERMITTED BY LAW, ALL SUCH WARRANTIES SHALL BE LIMITED IN DURATION TO THE
DURATION OF THIS EXPRESS WARRANTY AND TO REPAIR OR REPLACEMENT SERVICE AS DETERMINED BY GETAC IN ITS SOLE DISCRETION. No Getac reseller, agent, or employee is authorized to make any modification, extension, or addition to this warranty. If any term is held to be illegal or unenforceable, the legality or enforceability of the remaining terms shall not be affected or impaired.
EXCEPT AS PROVIDED IN THIS WARRANTY AND TO THE EXTENT PERMITTED BY LAW, GETAC IS NOT
RESPONSIBLE FOR DIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM ANY
BREACH OF WARRANTY OR CONDITION, OR UNDER ANY OTHER LEGAL THEORY, INCLUDING BUT NOT LIMITED TO LOSS OF USE; LOSS OF REVENUE; LOSS OF ACTUAL OR ANTICIPATED PROFITS (INCLUDING LOSS OF PROFITS ON CONTRACTS); LOSS OF THE USE OF MONEY; LOSS OF ANTICIPATED SAVINGS; LOSS OF BUSINESS; LOSS OF OPPORTUNITY; LOSS OF GOODWILL; LOSS OF REPUTATION; LOSS OF, DAMAGE TO OR CORRUPTION OF DATA; OR ANY INDIRECT OR CONSEQUENTIAL LOSS OR DAMAGE HOWSOEVER CAUSED INCLUDING THE REPLACEMENT OF EQUIPMENT AND PROPERTY, ANY COSTS OF RECOVERING, PROGRAMMING, OR REPRODUCING ANY PROGRAM OR DATA STORED OR USED WITH GETAC PRODUCTS AND ANY FAILURE TO MAINTAIN THE CONFIDENTIALITY OF DATA STORED ON THE PRODUCT. THE FOREGOING
LIMITATION SHALL NOT APPLY TO DEATH OR PERSONAL INJURY CLAIMS, OR ANY STATUTORY LIABILITY FOR INTENTIONAL AND GROSS NEGLIGENT ACTS AND/OR OMISSIONS. GETAC DISCLAIMS ANY
REPRESENTATION THAT IT WILL BE ABLE TO REPAIR ANY PRODUCT UNDER THIS WARRANTY OR MAKE A PRODUCT EXCHANGE WITHOUT RISK TO OR LOSS OF THE PROGRAMS OR DATA.
Obtaining Warranty Service
Please access and review the online help resources at www.getac.com before requesting warranty service.
If the product is still not functioning properly after making use of these resources, please contact a Getac representative at (949) 681-2950. A Getac representative will help determine whether your product requires service and, if it does, will inform you how Getac will provide it. Getac will provide warranty service on products that are tendered or presented for service during the warranty period, as permitted by law. In accordance with applicable law, Getac may require that you furnish proof of purchase and/or comply with registration requirements before receiving warranty service. You may be responsible for shipping and handling charges to obtain service under this warranty.
In any instance in which Getac issues a Service Request Number (SR #), Getac must receive the product(s) for repair prior to the expiration of the warranty period in order for the repair(s) to be covered by the limited warranty service.
If your product is capable of storing data or software programs, you should make periodic backup copies of the data and programs contained on the product’s hard drive or other storage media to protect your data and as a precaution against possible operational failures. Before you deliver your product for warranty service, it is your responsibility to keep a separate backup copy of the system software, application software and data, and disable any security passwords. You will be responsible for reinstalling all such software, data and passwords. Getac and its authorized service providers are not liable for any damage to or loss of any programs, data or other information stored on any media, or other non-Getac product or part not covered by this warranty. Recovery and reinstallation of system and application software and user data are not covered under this limited warranty.
Trademarks are property of their respective owners. (c) 2017 Getac Technology Corporation. All rights reserved. 5 6 1 8 8 8 0 0 0 0 0 7 R 0 0
RUGGED. RELIABLE. RESPONSIVE.
Rev A1
GAMBERJOHNSON.COM 800.487.9220 | [email protected]
GAMBER-JOHNSON WARRANTY INFORMATION
We proudly offer a limited warranty on all Gamber-Johnson products.
Gamber-Johnson warrants to the reseller and the original end user of any Gamber-Johnson product that it will be free from defects in materials and workmanship for the warranty time period.
The remedies for a defect in material or workmanship are limited to repair or replacement of any non-conforming product.
Gamber-Johnson will repair or replace, without charge, any Gamber-Johnson product that does not conform to its warranty only if a Reseller or an original end user gives us notice of a defect in material or workmanship within the warranty time period stated on page 2:
Mounting Systems (non-electronic products) — All non-electronic products purchased after Dec. 31st, 2009 are protected by Gamber-Johnson’s limited lifetime warranty. For any warranty related issues of products purchased prior to Dec. 31st 2009, please contact your Gamber-Johnson’s authorized reseller. All Zirkona products come with a standard one year product warranty.
Specific 3rd Party Supplied Products — For all products purchased through Gamber-Johnson that are supplied from a 3rd party company (i.e. iKey, Brother, Lind Electronics, All Fleet Solutions, etc.) are warranted by the specific manufacturer of that product. Please see individual specifications on these products for further warranty information.
Mobile Docking Stations & Electronic Products — Warranty time period (from date of original factory shipment) for printed circuit boards, docking connectors, electronic components may vary. Please see individual specifications on these products for further warranty information.
Any failure of any Gamber-Johnson product that is due to damage or misuse, such as excessive force, improper installation, cosmetic wear, exposure to liquid spills, moisture or application of power in excess of specified rating theft, fire or natural disaster is not covered by this warranty. The warranty is void on electronic products if the warranty label is removed or altered.
For standard warranty claims, Gamber-Johnson will provide return shipping for covered product. The customer is responsible for packaging and shipping to Gamber-Johnson.
GAMBER-JOHNSON WILL NOT BE RESPONSIBLE FOR ANY INCIDENTIAL, CONSEQUENTIAL (INCLUDING LOSS OF BUSINESS OR PROFITS) OR PUNITIVE DAMAGES DUE TO FAILURE OF A GAMBER-JOHNSON PRODUCT.
INCIDENTAL, CONSEQUENTIAL AND PUNITIVE DAMAGES ARE EXCLUDED FROM THIS LIMITED WARRANTY.
THE FOREGOING WARRANTY IS A LIMITED WARRANTY. THERE ARE NO OTHER WARRANTIES, EXPRESS
OR IMPLIED, WHICH EXTEND BEYOND THE DESCRIPTION OF THE WARRANTIES ON THE FACE HEREOF INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF FITNESS AND MERCHANTABILITY.
RUGGED. RELIABLE. RESPONSIVE.
Rev A1
GAMBERJOHNSON.COM 800.487.9220 | [email protected]
GAMBER-JOHNSON EXTENDED WARRANTY
Extended warranty programs are available to add an additional 1 or 2 years of standard warranty to your mobile docking station or rugged USB hubs. The extended warranty must be purchased at the time of the product purchase. The extended warranties on docking stations and rugged USB hubs are subject to the same terms and exclusions as the standard warranty for docking stations and electronic products.
GAMBER-JOHNSON PRODUCT
Dell laptop and tablet docking stations
FACTORYWARRANTY
3 years
EXTENDED 1 YEAR
EXTENDED 2 YEAR
Panasonic Toughbook® and
Toughpad® docking stations 3 years
Zebra Tablet docking stations 3 years
Getac Laptop and Tablet docking stations 3 years
Samsung Tablet docking stations 3 years
Rugged USB Hub 3 years
Gamber-Johnson cradles 3 years ✘ ✘
IPad docking station 1 year ✘ ✘
Gamber-Johnson keyboards 1 year ✘ ✘
Gamber-Johnson touch screens 1 year ✘ ✘
RUGGED. RELIABLE. RESPONSIVE.
Rev A1
GAMBERJOHNSON.COM 800.487.9220 | [email protected]
GAMBER-JOHNSON EXTENDED SERVICE PLAN
Gamber-Johnson Extended Service Plan builds on our standard warranty and includes the following benefits:
• Extends our standard warranty to 5-years (3-Year standard warranty + 2 additional years) • Accidental damage coverage
• Expedited service and free shipping
• Two FREE PCB replacements and two FREE RF Pass thru (GPS/LAN/WAN) cables per serial number for the life of the contract
The Extended Service Plan is available on most docking stations and must be purchased at the time of product purchase.
Any failure of any Gamber-Johnson product that is due to intentional misuse or damage, cosmetic wear, theft, fire or natural disaster is not covered by this warranty.
GAMBER-JOHNSON WILL NOT BE RESPONSIBLE FOR ANY INCIDENTAL, CONSEQUENTIAL (INCLUDING LOSS OF BUSINESS OR PROFITS) OR PUNITIVE DAMAGES DUE TO FAILURE OF A GAMBER-JOHNSON PRODUCT.
INCIDENTAL, CONSEQUENTIAL AND PUNITIVE DAMAGES ARE EXCLUDED FROM THIS LIMITED WARRANTY.
THE FOREGOING WARRANTY IS A LIMITED WARRANTY. THERE ARE NO OTHER WARRANTIES, EXPRESS
OR IMPLIED, WHICH EXTEND BEYOND THE DESCRIPTION OF THE WARRANTIES ON THE FACE HEREOF INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF FITNESS AND MERCHANTABILITY.
GAMBER-JOHNSON EXTENDED SERVICE PLAN – AVAILABLE ON…
Dell
• Tablet Docking Station
• Laptop Docking Station
Panasonic
• Toughbook® and Toughpad® Docking Stations
Zebra
• Tablet Docking Stations
Getac
• Laptop and Tablet Docking Stations
Samsung
• Tablet Docking Stations
Rugged USB Hub
RUGGED. RELIABLE. RESPONSIVE.
Rev A1
GAMBERJOHNSON.COM 800.487.9220 | [email protected]
END-OF-LIFE POLICY
Product Life Cycle Overview and EOL Notifications
Periodically, Gamber-Johnson may find it necessary to discontinue products for a number of reasons, including decline in competitiveness, or decreased sales of a product. Obsolescence can also occur because a newer version of a product has become available. Finally, products may become obsolete if replacement parts are no longer available, or when the cost of replacement parts or repairs is higher than the cost of a new item.
Gamber-Johnson is committed to making the transition from such products to new offerings as simple as possible. As part of this, when a product reaches its end of life (EOL), Gamber-Johnson will move the product from its current product category and place it into the discontinued category under the Products tab. Gamber-Johnson will include the initial EOL notification, Last Order Date (LOD), and End-of-Support (EOS) milestone dates, as described below.
Resellers may continue to purchase product up until the LOD. Gamber-Johnson will honor our Limited Lifetime Warranty as long as it is purchased no later than the LOD. Gamber-Johnson will continue to provide technical support and service for product up until the announced EOS date (based on warranty). In the event that a product or its parts are no longer available during the warranty period, Gamber-Johnson will replace the item with a comparable product if available. Please note that some components are dependent on OEM availability (example: boards and components used in docking stations) and replacement parts are dependent on their product offering.
END-OF-SUPPORT (EOS) POLICY
Mounting Systems (non-electronic)
Gamber-Johnson is committed to providing service/repair on your mounting system for the life of the product within the warranty policy guidelines. We will repair, replace with an equivalent product, or refund your purchase price of any defect found in material or workmanship of any nonconforming product.
Docking Stations and Electronic Products
Gamber-Johnson is committed to providing service/repair on all mobile docking stations for a minimum of five (5) years after last order date LOD. Our ability to provide this service is dependent on availability of electronic products from our OEM suppliers.
The electronic products listed on the next page are no longer serviced/supported by Gamber-Johnson Gamber-Johnson will service electronic products up to 5 years after the product is End-of-Life (EOL). This is, however, dependent on OEM availability of electronic components.
COMPANY: COMPANY:
ATTENTION: ATTENTION:
ADDRESS: ADDRESS:
CITY/ST/ZIP: CITY/ST/ZIP:
PHONE: PHONE:
EMAIL: EMAIL:
QTY UNIT COST EXT COST
Hardware
31 $ 807.45 $ 25,030.95
41 $ 233.27 $ 9,563.99
79 $ 224.18 $ 17,710.38
33 $ 224.18 $ 7,398.01
79 $ 43.26 $ 3,417.54
5 $ 2,643.35 $ 13,216.77
31 $ 2,148.12 $ 66,591.66
23 $ 416.26 $ 9,574.03
79 $ 5,939.16 $ 469,193.96
16 $ 238.55 $ 3,816.74
$ 625,514.01
Labor
23 $ 1,825.15 $ 41,978.50
8 $ 1,825.15 $ 14,601.22
$ 56,579.71
Warranties
79 $ 839.86 $ 66,348.94
31 $ 203.06 $ 6,294.74
$ 72,643.68
SUB-TOTAL 625,514.01 $
TAX (10.5%) 65,678.97 $
LABOR/SERVICES 56,579.71 $
WARRANTIES 72,643.68 $
FREIGHT 2,823.38 $
GRAND TOTAL 820,416.37 $
PO # DATE
Hardware Subtotal
installation; includes travel and lodging expenses; per vehicle charge.
NOTES:
30% restocking fee will apply to returns and/or canceled purchase orders.
ADDITIONAL NOTES: CUSTOMER APPROVAL SIGNATURE
Quote good for 30 days.
Final pricing determined w/ customer pickup & delivery to Commline's bay GE-SVSRNFX5Y
Brea, California 92821
( Bumper to Bumper )+ Extended Warranty- Semi-Rug Laptop (Year 1,2,3,4 & 5) 5433GA890501 S510 - Gamber Johnson, 7160-1929-00, Vehicle Dock with port replication, (714) 671-4490
mailto:[email protected]
BILL TO: SHIP TO:
City of Brea PD same as billing
Cliff Flaugher
1 Civic Center Circle
Labor Subtotal
Without any extra option, 3 Year Limited Warranty
GE-SVSYHDS1D DISK IMAGING CONSULTING SERVICE - PER DAY
13700 Cimarron Ave, Gardena, CA 90249
(Main) 310.390.8003 (Fax) 310.390.4393
www.CommlineInc.com
REQUEST FOR QUOTE
Joseph Kim
DATE: SALES REP:
[email protected]
6/26/2025
MODEL # DESCRIPTION
Brea PD laptops, routers, antennas, installation etc
GE-SVSYHDM1L Disk Image Management - Per System (MOQ 150 units) GE-GJDKEXT2Y GJ dock extended warrant YR 4/5
GDDSU2 Getac DS100 USB-C Docking Station (US)
5653GB550005 Getac Essentials, Monitoring, Cloud-Based, Self-Managed, 5 Year Per Device 590GBL000515 3RD-PARTY ITEM LIND, GE1963-5322, 120W DC/DC Adapter including dock swap, power installation/wiring, Cradlepoint and antenna SU573CFASSCX S510 - Intel Core Ultra 7 155U Processor + Thunderbolt 4 x 2, 15.6 + Windows Hello Webcam, Microsoft Windows 11 Pro x64 with 32GB RAM + TAA, 512GB PCIe SSD (Main storage, user swappable), Sunlight Readable (Full HD LCD + installation; includes travel and lodging expenses; per vehicle charge.
GTC-MBBREAPDFD Mobility Brothers Installation: Brea Police and Fire department project 590GBL000639 Vehicle mounting equipment; Universal Seat Mounted Base, Gamber-Johnson Labor Subtotal
Touchscreen + Stylus) + HF RFID, US KBD + US Power Cord, Membrane Backlit KBD, WIFI + BT + 5G Sub-6 w/ dedicated GPS + Passthrough, Battery x 2, with screen support (ex. vehicle adapter)
including dock swap, power installation/wiring, Cradlepoint and antenna GTC-MBBREAPDFD Mobility Brothers Installation: Brea Police and Fire department project (5G modem 4FF SIM slots, embedded eSIM), no AC power supply or antennas) AT&T FirstNet Ready. Cradlepoint Certified Antennas by Panorama LG-IN2445 Low Profile Dome Black, 7 in 1 Antenna: 4x MiMo 2G/3G/4G LTE, 2x 2.4/5GHz Wi-Fi, GPS/GNSS, 5m/16 cables for use with a single modem IBR1700-1200M. (No Uploading Personal Data) Available only on Android 12 & beyond MB03-R980-5GD-A 3-yr NetCloud Mobile Performance Router Essentials, R980 Router with WiFi
QUOTE
Date
6/26/2025
Quote #
062625BP
Customer Information
City of Brea
Cliff Flaugher
1 Civic Center Circle
Brea, CA, 92821
Terms
Net 30
Project Delivery Date
7/26/2025
Rep
MT
Phone #
We Appreciate & Value Your Business!!!
Customer E-mail
[email protected]
Certified SBE #19486, DBE #40914, OCTA# 39991,
CUCP#35922, MBE & WBE, POLB # 250398,
Los Angeles METRO# 7881
FEIN# 20-2777132
Delivery Lead time 4-6 weeks (unless otherwise noted) from date of purchase unliess otherwise noted.
Prices are good for 30 days and may be subject to change without notice **Some Options & Upgrade costs applicable to time of original purchase only NET 30 Terms for Govt Orders. Due to highly discounted prices quoted, there will be a 3% processing fee for any orders placed with a credit card.
Prepaid Company check or bank wire transfer with PO or Net30 OAC. VISA, M/C, American Express Cards Accepted All International Orders -Prepaid Wire Transfer ($30 Wire Fee Applies) All California purchases require $4 LCD Disposal Fee per unit & applicable sales taxes All Customs Fee, Duties & Taxes & shipping costs are the responsibility of purchaser Please check specifications carefully! Due to Customization -All Sales are final! Send Orders to: [email protected] NEW MAILING ADDRESS!!!
P.O. BOX 4363
Westminster, CA 92684
www.DuraTechUSA.com
714-898-2171
TOTAL
Item Description Qty Cost Total
SU573CFASSCX S510 - Intel Core Ultra 7 155U
Processor + Thunderbolt 4 x 2,
15.6" + Windows Hello Webcam,
Microsoft Windows 11 Pro x64 with
32GB RAM + TAA, 512GB PCIe
SSD (Main storage, user
swappable), Sunlight Readable
(Full HD LCD + Touchscreen +
Stylus) + HF RFID, US KBD + US
Power Cord, Membrane Backlit
KBD, WIFI + BT + 5G Sub-6 w/
dedicated GPS + Passthrough,
Battery x 2, Without any extra
option, 3 Year Limited Warranty
79 4,648.4469 367,227.31T
GE-SVSRNFX5Y Getac (Bumper to Bumper) +
Extended Warranty - Semi Rug
Laptop (Year 1,2,3,4 &5)
79 625.53 49,416.87
5433GA890501 S510 - Gamber Johnson,
7160-1929-00, Vehicle Dock with
port replication, with screen
support (ex. vehicle adapter)
31 601.40 18,643.40T
GE-GJDKEXT2Y GJ dock extended warrant YR 4/5 31 149.88 4,646.28
QUOTE
Date
6/26/2025
Quote #
062625BP
Customer Information
City of Brea
Cliff Flaugher
1 Civic Center Circle
Brea, CA, 92821
Terms
Net 30
Project Delivery Date
7/26/2025
Rep
MT
Phone #
We Appreciate & Value Your Business!!!
Customer E-mail
[email protected]
Certified SBE #19486, DBE #40914, OCTA# 39991,
CUCP#35922, MBE & WBE, POLB # 250398,
Los Angeles METRO# 7881
FEIN# 20-2777132
Delivery Lead time 4-6 weeks (unless otherwise noted) from date of purchase unliess otherwise noted.
Prices are good for 30 days and may be subject to change without notice **Some Options & Upgrade costs applicable to time of original purchase only NET 30 Terms for Govt Orders. Due to highly discounted prices quoted, there will be a 3% processing fee for any orders placed with a credit card.
Prepaid Company check or bank wire transfer with PO or Net30 OAC. VISA, M/C, American Express Cards Accepted All International Orders -Prepaid Wire Transfer ($30 Wire Fee Applies) All California purchases require $4 LCD Disposal Fee per unit & applicable sales taxes All Customs Fee, Duties & Taxes & shipping costs are the responsibility of purchaser Please check specifications carefully! Due to Customization -All Sales are final! Send Orders to: [email protected] NEW MAILING ADDRESS!!!
P.O. BOX 4363
Westminster, CA 92684
www.DuraTechUSA.com
714-898-2171
TOTAL
Item Description Qty Cost Total
GDDSU2 Getac DS100 USB-C Docking
Station w/135 W AC Adaptor(US)
41 182.57 7,485.37T
5653GB550005 Getac Essentials, Monitoring,
Cloud-Based, SelfManaged, 5 Year, Per Device (No
Uploading of Personal
Data of Any Kind)
79 175.48 13,862.92T
590GBL000515 GETAC : 3RD-PARTY ITEM LIND,
GE1963-5322, 120W DC/DC
Adapter
33 165.47 5,460.51T
GE-SVSYHDM1L Initial Disk Imaging - Per Unit (qty
needs to match # of computers
ordered)
79 33.55 2,650.45
GE-SVSYHDS1D Disk Imaging Consulting Service -
Per Day (5 days required)
5 2,068.90 10,344.50
GTC-MBBREAPDFD Mobility Brothers Installation: Brea
Police project including dock swap,
power installation/wiring,
Cradlepoint installation including
external antenna; includes travel
and lodging expenses; per vehicle
charge.
23 1,428.50 32,855.50
QUOTE
Date
6/26/2025
Quote #
062625BP
Customer Information
City of Brea
Cliff Flaugher
1 Civic Center Circle
Brea, CA, 92821
Terms
Net 30
Project Delivery Date
7/26/2025
Rep
MT
Phone #
We Appreciate & Value Your Business!!!
Customer E-mail
[email protected]
Certified SBE #19486, DBE #40914, OCTA# 39991,
CUCP#35922, MBE & WBE, POLB # 250398,
Los Angeles METRO# 7881
FEIN# 20-2777132
Delivery Lead time 4-6 weeks (unless otherwise noted) from date of purchase unliess otherwise noted.
Prices are good for 30 days and may be subject to change without notice **Some Options & Upgrade costs applicable to time of original purchase only NET 30 Terms for Govt Orders. Due to highly discounted prices quoted, there will be a 3% processing fee for any orders placed with a credit card.
Prepaid Company check or bank wire transfer with PO or Net30 OAC. VISA, M/C, American Express Cards Accepted All International Orders -Prepaid Wire Transfer ($30 Wire Fee Applies) All California purchases require $4 LCD Disposal Fee per unit & applicable sales taxes All Customs Fee, Duties & Taxes & shipping costs are the responsibility of purchaser Please check specifications carefully! Due to Customization -All Sales are final! Send Orders to: [email protected] NEW MAILING ADDRESS!!!
P.O. BOX 4363
Westminster, CA 92684
www.DuraTechUSA.com
714-898-2171
TOTAL
Item Description Qty Cost Total
GTC-MBBREAPDFD Mobility Brothers Installation: Brea
Police project including dock swap,
power installation/wiring,
Cradlepoint install (antenna already
installed); includes travel and
lodging expenses; per vehicle
charge.
8 1,428.50 11,428.00
MB03-R980-5GD-A CradlePoint R980, 5G-Global 3
year NetCloud Mobile Essentials,
31 1,459.00 45,229.00T
LG-IN2445 7-in-1 (5G) Dome with 5m of
pre-installed cables (& optional
Radio) 4-Cell, 2-WiFi, GPS,
23 330.0363 7,590.83T
CA LCD Disposal Fee CALIFORNIA LCD DISPOSAL FEE 79 4.00 316.00 Sales Tax 7.75% 36,076.20
$613,233.14
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City Council Regular Meeting
Communication
September 16, 2025
Item No. 6E.
Consideration and Approval of Easement Agreements with TPA VI, LLC for the Purchase of the City’s Lease Interests in Wireless Telecommunication Sites at 101 South Brea Boulevard and 400 North Kraemer Boulevard
TO PREPARED BY
Honorable Mayor and City Council Members Marie Dao, Senior Management Analyst
DEPARTMENT HEAD APPROVAL CITY MANAGER APPROVAL
Jason Killebrew, Assistant City Manager/Community
Development Director
Kristin Griffith, City Manager
RECOMMENDATION
Staff recommends that the City Council take the following actions:
1. Find the below-mentioned Easement Agreements exempt from CEQA pursuant to CEQA Guidelines Section 15061(b)(3);
2. Approve Easement Agreements and related closing documents with TPA VI, LLC (TowerPoint) for purchase of the City’s lease interests in wireless telecommunications sites located at 101 South Brea Boulevard and 400 North Kraemer Boulevard (Attachments A through F);
3. Adopt Resolutions (Attachments G and H) approving execution of the Easement Agreements and authorizing the City Manager to execute such Easement Agreements and all related closing documents upon completion of TowerPoint's title search/commitments as described in Attachment I;
4. Authorize the City Manager to administratively make non-substantive revisions to the Easement Agreements and related closing documents as necessary or appropriate;
5. Amend the Fiscal Year 2025-27 City’s General Fund (110) Operating Budget to:
a. Appropriate up to $1,785,000 in one-time revenue from the new Easement Agreements; and b. De-obligate up to $194,075 (for this budget cycle) in revenue due to the new Easement Agreements’ purchase of the City’s interests in the two existing wireless leases.
BACKGROUND/DISCUSSION
On December 17, 2002, the City entered into a Communications Facility Lease ("lease agreement") with Los Angeles SMSA Limited Partnership, dba Verizon Wireless by AirTouch Cellular (Verizon), to install their communications equipment on the top of the elevator tower at the Downtown Parking Structure, located at 101 South Brea Boulevard. This lease agreement was originally set to expire in 2022, but was extended for an additional five years, with an option to extend for a final five-year term. It is unknown at this time if Verizon will choose to extend the lease agreement beyond December 2027.
On December 2, 2008, the City entered into an additional lease agreement with Verizon to install their communications equipment on the top of the hose tower at Fire Station 3, located at 400 North Kraemer Boulevard.
This lease agreement had an initial 10-year term, with two optional five-year extensions.
On July 14, 2015, the Fire Station 3 lease agreement was amended to accommodate Verizon’s request to perform improvements to the equipment and structure. The amended lease agreement also resulted in a rent increase, with no change to the term. This lease agreement is scheduled to expire in December 2028, with no additional extensions remaining.
In September 2022 and May 2025, representatives for Verizon contacted the City with requests to modify the lease agreements. City staff engaged in negotiations; however, no agreements were reached.
Additionally, in May 2025, TowerPoint contacted the City with proposals to acquire the City’s interests in the two existing wireless telecommunications lease areas (lease areas). TowerPoint owns, operates, and develops wireless communications towers throughout North America. TowerPoint works with public entities across the country to provide immediate capital, while creating efficiency through its Cell Site Management service. TowerPoint’s California portfolio includes the Cities of Monrovia and Sierra Madre, South Whittier Elementary School District, Sonoma Valley Unified School District, Mountains Community Hospital in Lake Arrowhead, and Lakeside Fire Protection District in San Diego.
The proposals from TowerPoint offer a lump-sum payment for each site, as follows:
Location 101 South Brea Boulevard 400 North Kraemer Boulevard Lump-Sum Payment $870,000 $915,000
The total payment for both sites would be approximately $1,785,000, (minus closing adjustments).
Such a deal with TowerPoint involves execution of an Easement Agreement and related closing documents (Agreements) for each lease area. The terms of the proposed Easement Agreements for both sites include, but are not limited to:
Granting the existing easements and lease agreements at 101 South Brea Boulevard and 400 North Kraemer Boulevard to TowerPoint for a 55-year term
City to continue maintenance of the properties in a commercially reasonable condition to allow the permitted use of the easement
Should a new telecommunications tenant (other than Verizon) execute a lease agreement for space within the easement/s, construction plans shall be reviewed and approved by the City prior to construction Should a new or replacement (Verizon) telecommunications tenant execute a lease agreement for space within the easement/s, TowerPoint shall share 50% of the new tenant’s rent payments with the City New lease agreements shall have terms consistent with Verizon’s lease agreements, which include, but are not limited to:
Tenant shall maintain the lease area in good condition and repair, free from hazards or risk to public health, safety, or welfare
Tenant must maintain its levels of electromagnetic radiation within all applicable standards established by the Federal Communications Commission and/or any other governmental authority having jurisdiction
Tenant shall maintain specific insurance coverage
Currently, the City receives annual rental income from the lease agreements as follows:
Location 101 South Brea Boulevard 400 North Kraemer Boulevard Annual Rental Revenue $45,986 $48,204
The total annual rental revenue from both sites currently is $94,190.
While the existing lease agreements currently provide the City with revenue, there is the risk that Verizon could abandon one or both of the sites after, or prior to, expiration, resulting in a potential loss of revenue for the City if a new tenant is not obtained. The City does not have significant access to, or relationships with, wireless providers; therefore, the feasibility of finding a future replacement tenant is unknown.
In executing the Easement Agreements and related closing documents with TowerPoint, the responsibility of managing the lease agreements would shift from the City to TowerPoint, who has direct relationships with wireless telecommunications providers. As such, staff anticipates TowerPoint would be better suited to secure future tenants more feasibly. Also, the City will benefit by receiving a lump-sum payment from TowerPoint, without having to manage the leases directly. By obtaining an upfront, lump-sum payment, public entities are able to transfer the risk of potential cell site decommissioning and loss of future monthly rents.
ENVIRONMENTAL ASSESSMENT
The proposed Easement Agreements are exempt from the requirements to prepare environmental documentation per CEQA Guidelines Section 15061(b)(3), because it is limited to executing agreements that would specify the terms of the proposed acquisition of the City’s interests in the two existing wireless telecommunications lease areas and as such, the proposed agreements will not result in a direct or reasonably foreseeable indirect physical change in the environment and will not have a significant effect on the environment. Therefore, no further environmental review is necessary.
FISCAL IMPACT/SUMMARY
By approving the Easement Agreements with TowerPoint for the two wireless telecommunications facility leases, the City’s General Fund will receive up-front revenue of $1,785,000, subject to closing adjustments. After accounting for the de-obligation of the two existing leases totaling $194,075, the net fiscal impact to the General Fund is $1,590,725 of additional revenues. Additionally, the City may realize future revenue if TowerPoint successfully secures new tenants to locate wireless telecommunications equipment within the designated lease areas.
Attachments
Attachment A - Easement Agreement for 101 South Brea Boulevard.pdf Attachment B - Easement Agreement for 400 North Kraemer Boulevard.pdf Attachment C - Escrow Agreement for 101 South Brea Boulevard.pdf Attachment D - Escrow Agreement for 400 North Kraemer Boulevard.pdf Attachment E - Assignment of Lease for 101 South Brea Boulevard.pdf Attachment F - Assignment of Lease for 400 North Kraemer Boulevard.pdf Attachment G - Resolution for Easement Agreement for 101 South Brea Boulevard.pdf Attachment H - Resolution for Easement Agreement for 400 North Kraemer Boulevard.pdf Attachment I - Closing Document Approval Letter.pdf
Asset File #: TWPS0548556 Page 1 of 11 3155825.2
Record and Return to:
Joseph Mangus
TitleVest Agency, LLC
110 E. 42nd Street, 10th Floor
New York, NY 10017
TitleVest Title No.: TCA989413
Prepared by:
Jon L. Lober
TPA VI, LLC
1170 Peachtree Street, Suite 1650
Atlanta, GA 30309
SPACE ABOVE THIS LINE RESERVED FOR RECORDER’S USE
EASEMENT AGREEMENT
This telecommunication easement and lease assignment agreement (“Agreement”) is made and shall be effective on the ____ day of ____________________, 2025 (“Effective Date”), by and between the City of Brea, a California municipal corporation (“Grantor”) and TPA VI, LLC, a Delaware limited liability company (“Grantee”).
1. Grantor’s Property and the Telecom Tenant Lease. Grantor represents and warrants that it holds fee simple title to certain real property located at 155 West Birch Street, Brea, California 92821-4929, as more fully described in the legal description attached hereto as Exhibit A (the “Parent Property”).
Grantor and Verizon Wireless (the “Telecom Tenant”) are parties to that certain lease agreement, including all amendments and modifications thereto, cited in Exhibit B and incorporated by reference herein (the “Telecom Tenant Lease”).
2. Grant of Easement. For the sum of TEN AND NO/100 DOLLARS and other good and valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge as paid on or about the Effective Date along with the purchase price pursuant to the settlement statement executed contemporaneously with this Agreement (“Purchase Price”), Grantor grants and conveys unto Grantee, its successors and assigns, an exclusive easement (subject to the Telecom Tenant Lease) for the Permitted Use defined herein, together with a non-exclusive access easement for ingress and egress to and from the exclusive easement, seven days per week, twenty-four hours per day and a non-exclusive utility easement to install, replace and maintain utilities servicing the exclusive easement, including, Asset File #: TWPS0548556 Page 2 of 11 3155825.2
but not limited to the installation of power and telephone service cable, wires, switches, boxes and the like as may be required by the Permitted Use (collectively “Easement” as further described in Exhibit C). Grantor shall permit Grantee, Easement Tenant(s) (as hereinafter defined), and any of their affiliates, customers, tenants, subtenants, lessees, sublessees, licensees, successors and/or assigns together with any of the employees, contractors, consultants, and or agents of the foregoing to use the Easement for the installation, construction, operation, maintenance, repair, modification, relocation, replacement and removal of improvements and equipment (“Equipment”) for the facilitation of telecommunications uses, utility energy storage systems, communications uses and other related uses, including, but not limited to, any uses permitted by the Telecom Tenant Lease (“Permitted Use”).
Grantor represents that there is no pending or threatened action that would adversely affect Grantor’s ability to enter into this Agreement or grant the Easement and that entering into this Agreement will not violate or conflict with any provision of Grantor’s organizational documents (if Grantor is an organization) or conflict with the provisions of any agreement to which Grantor is a party. Grantor further represents and warrants that Grantee shall have peaceful and quiet possession and enjoyment of the Easement during the term of this Agreement without any disturbance of Grantee’s possession or Permitted Use hereunder.
3. Term. Commencing on the Effective Date, the term of this Agreement and the Easement shall be for fifty-five (55) years (the “Term”) and this Agreement and the Easement shall terminate on ___________________2080. Upon notice to Grantor as provided herein, Grantee may surrender the Easement to Grantor and execute such documents reasonably required to terminate the Agreement and the Easement. Grantor may not unilaterally terminate the Agreement or Easement, but if the Easement is not used for the Permitted Use for a period of three (3) years the Easement shall be deemed abandoned and shall terminate upon Grantor’s notice of such default to Grantee as provided herein. Sections 12 and 13 shall survive expiration or termination of this Agreement and shall remain in effect in perpetuity, subject to applicable law.
4. Assignment of Lease, Renewal and Right of Replacement. Grantor hereby assigns to Grantee all of Grantor’s right, title and interest in the Telecom Tenant Lease for the Term, including the right to renew the Telecom Tenant Lease throughout the Term. Grantee shall provide Grantor written notice of any extension of the Telecom Tenant Lease beyond the renewal and extension terms included in the Telecom Tenant Lease as of the Effective Date hereof. Except as provided herein, Grantee agrees to assume all of Grantor’s rights and obligations under the Telecom Tenant Lease. If Telecom Tenant is obligated under the Telecom Tenant Lease to pay to Grantor any fees (other than base rent and any escalations thereto) for the purpose of utility service or access or tax reimbursement, Grantor shall continue to be entitled to such fees, although Grantee may collect and distribute same to Grantor.
Grantor shall continue to perform all obligations of the lessor under the Telecom Tenant Lease which relate to the use, ownership, and maintenance of the Parent Property so that Grantee may fulfill all the obligations under the Telecom Tenant Lease without breaching any provision therein, including, but not limited to, Grantor maintaining the Parent Property in a commercially reasonable condition to allow the Permitted Use of the Easement. Grantor represents and warrants that it has delivered to Grantee true and correct copies of the Telecom Tenant Lease and that Grantor owns 100% of the lessor/landlord’s interest in the Telecom Tenant Lease, including the right to collect all rent thereunder. Grantor represents that there is no pending or threatened action that would adversely affect the Telecom Tenant Lease, the Permitted Use, or Grantor’s ability to enter into this Agreement or grant the Easement. To the best of Grantor’s knowledge, no party to the Telecom Tenant Lease has breached or is in default of their respective obligations under the Telecom Tenant Lease and no party has requested or discussed a modification or termination of the Telecom Tenant Lease. If during the Term the Telecom Tenant terminates the Telecom Tenant Lease or otherwise vacates the Parent Property, Grantee may lease all or a portion of the Easement to a replacement telecommunications tenant (“Replacement Telecom Tenant”) on terms consistent with the Telecom Tenant Lease and no Replacement Telecom Tenant Lease shall include any new or additional obligation of the Grantor and no terms of Replacement Asset File #: TWPS0548556 Page 3 of 11 3155825.2
Telecom Tenant Lease shall be materially more adverse to Grantor than the replaced Telecom Tenant Lease (“Replacement Telecom Tenant Lease”). Any Replacement Telecom Tenant Lease shall include the requirement that the Replacement Telecom Tenant: (i) remove (as applicable) its equipment, the tower, and personal property and restore the leased premises on the Parent Property as nearly as practicable to its original condition, reasonable wear and tear excepted upon termination of its lease; (ii) provide indemnity to Grantor for the actions of Replacement Telecom Tenant, and (iii) include Grantor as an additional insured to Replacement Telecom Tenant’s insurance. For any Replacement Telecom Tenant, Grantor shall have the right to review and approve construction plans for Replacement Telecom Tenant prior to commencement of construction and such approval shall not be unreasonably conditioned, delayed or withheld and such approval shall be without further compensation to Grantor.
Approval shall be deemed given by Grantor where Grantor has failed to respond within sixty (60) days of notice as provided herein. Any such Replacement Telecom Tenant shall occupy the Easement rather than locating on other portions of the Parent Property.
5. Rent Sharing. When a new telecommunications tenant (“Rent Share Tenant”) executes a lease for space within the Easement and commences rent payment, Grantee will collect such rent with Grantee retaining fifty percent (50%) of the rent collected and Grantee remitting fifty percent (50%) of the rent collected to Grantor. Grantee’s rent sharing payments shall be remitted within thirty (30) days of each collection. Notwithstanding the foregoing, Grantee shall be entitled to collect and retain rent from all telecommunications tenants within the Easement in an amount equal to the rent scheduled in the existing Telecom Tenant Lease, including scheduled escalators (“Minimum Scheduled Rent”). Should the rent collected equal an amount less than the Minimum Scheduled Rent, such deficit (“Minimum Scheduled Rent Deficit”) shall accrue and shall be applied against any and all future rents collected within the Easement, until collected rent payments fully offset the total Minimum Scheduled Rent Deficit. Grantee is permitted and authorized to enter into leases with Rent Share Tenants subject to the requirements for leasing to Replacement Telecom Tenants as set forth in Section 4 and subject to written Grantor approval as provided for therein.
6. Grantor Cooperation and Non-interference. Grantor agrees to reasonably cooperate with Grantee and/or Telecom Tenant, Replacement Telecom Tenant and Rent Share Tenant (collectively, “Easement Tenants”) in obtaining all licenses, permits or authorizations from all applicable governmental and/or regulatory entities and in acquiring any necessary upgrades to or relocation of utility service to support the Permitted Use. Notwithstanding the foregoing, any such land use application, permit, license or other document submitted shall be subjected to the standard review process and may ultimately be approved or denied by the governmental authority vested with the authority to approve or deny such submittal. Grantor shall not interfere with any construction in the Easement so long as such construction is to support the Permitted Use and has been approved by Grantor in writing to the extent required hereunder or by law, and is proceeding pursuant to a building permit or other required municipal or governmental approvals. Grantor shall not, nor shall Grantor permit its lessees, licensees, employees, invitees or agents to, use any portion of the Parent Property or the Easement in a way which materially interferes with the operations of the Easement Tenants who shall have peaceful and quiet possession and enjoyment of the Easement. Grantor may not induce or invite any Easement Tenants to use or lease space in direct competition with Grantor’s Easement Tenants within the Easement.
7. Assignment. Grantee may pledge, assign, mortgage, grant a security interest, or otherwise encumber its interest created by this Agreement. Grantee may freely assign this Agreement in part or in its entirety, and any or all of its rights hereunder, including the right to receive rent payments subject to the consent requirements of this section. Grantee and Grantor hereby expressly agree that Grantee has the right, in its sole discretion and without the prior consent of Grantor, to assign its interest in this Agreement to any person or entity that satisfies all of the following criteria: (i) has a net worth or market capitalization comparable to that of Grantee; and (ii) either: (x) is a wireless telecommunications provider, (y) has as a primary business the operation of telecommunications tower sites or rooftop antenna sites on a Asset File #: TWPS0548556 Page 4 of 11 3155825.2
national scale or (z) controls, is controlled by or is under common control with Grantee. Additionally, Grantee and Grantor hereby expressly agree that Grantee has the right to assign its interest in this Easement to any other person or entity with the prior written consent of Grantor, which consent shall not be unreasonably withheld, conditioned or delayed. Upon the absolute assumption of such assignee of all of the obligations of Grantee under this Agreement then Grantee will be relieved of all obligations and liabilities hereunder. An assignment of this Agreement shall not be deemed a termination.
8. Taxes and Other Obligations. All taxes and other obligations that are or could become liens against the Parent Property or any subdivision of the Parent Property containing the Easement, whether existing as of the Effective Date or hereafter created or imposed, shall be paid by Grantor prior to delinquency or default. Grantor shall be solely responsible for payment of all taxes and assessments now or hereafter levied, assessed or imposed upon the Parent Property, or imposed in connection with the execution, delivery, performance or recordation hereof, including without limitation any sales, income, documentary or other transfer taxes. If Grantor fails to pay when due any taxes or other obligations affecting the Parent Property, Grantee shall have the right but not the obligation to pay such and demand payment therefor from Grantor, which payment Grantor shall make within ten (10) days of such demand by Grantee.
9. Insurance. During the Term, Easement Tenants shall maintain general liability insurance as required under their respective lease. Grantor shall maintain any insurance policies in place on the Parent Property or as required under the Telecom Tenant Lease.
10. Subordination and Non-Disturbance. Grantee agrees to subordinate this Agreement to any existing or future mortgage or deed of trust on the Parent Property ("Security Instrument"), provided the beneficiary or secured party ("Secured Party") under the Security Instrument agrees for itself and its successors in interest and assigns that Grantee's rights under this Agreement and rights to the Easement shall remain in full force and effect and shall not be affected or disturbed by the Secured Party in the exercise of Secured Party's rights under the Security Instrument during the Term, including Grantee's right to collect and retain, in accordance with the terms of this Agreement, all rents, fees and other payments due from Easement Tenants. Such non-disturbance agreement must apply whether Secured Party exercises its rights under the Security Instrument, including foreclosure, sheriff's or trustee's sale under the power of sale contained in the Security Instrument, and any other transfer, sale or conveyance of Grantor's interest in the Parent Property under peril of foreclosure, including, without limitation to the generality of the foregoing, an assignment or sale in lieu of foreclosure.
11. Mutual General Indemnification. To the extent permitted by law, Grantor and Grantee shall each indemnify and hold harmless the other against any and all claims, damages, costs and expenses (including reasonable attorney’s fees and disbursements) caused by or arising out of the indemnifying party’s breach of this Agreement or the negligent acts or omissions or willful misconduct on the Parent Property by the indemnifying party or the employees, agents, or contractors of the indemnifying party.
Any requirements of Grantor in this Section 11 are subject to applicable provisions of the California Government Code.
12. Environmental Representations and Indemnification.
a. Grantor represents and warrants that, to the best of Grantor’s knowledge, no pollutants or other toxic or hazardous substances, as defined under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. 9601 et seq., or any other federal or state law, including any solid, liquid, gaseous, or thermal irritant or contaminant, such as smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste (including materials to be recycled, reconditioned or reclaimed) (collectively, “Hazardous Substances”) have been, or shall be discharged, disbursed, released, stored, treated, generated, disposed of, or allowed to Asset File #: TWPS0548556 Page 5 of 11
3155825.2
escape or migrate (collectively referred to as the “Release”) on or from the Parent Property.
Neither Grantor nor Grantee shall introduce or use any Hazardous Substances on the Parent Property or the Easement in violation of any applicable federal, state or local environmental laws.
b. Grantor and Grantee each agree to defend, indemnify, and hold harmless the other from and against any and all administrative and judicial actions and rulings, claims, causes of action, demands and liability including, but not limited to, damages, costs, expenses, assessments, penalties, fines, cleanup, remedial, removal or restoration work required by any governmental authority, losses, judgments and reasonable attorneys’ fees that the indemnified party may suffer or incur due to the existence or discovery of any Hazardous Substances on the Parent Property caused by the other party. Grantee shall not be responsible for and shall not defend, indemnify or hold harmless Grantor for any Release of Hazardous Substances on or before the Effective Date.
13. Dispute Resolution and Notice.
a. Jurisdiction and venue under this Agreement shall be in Orange County, California. The parties may enforce this Agreement and their rights under applicable law, and may seek specific performance, injunction, appointment of a receiver and any other equitable rights and remedies available under applicable law. Money damages may not be an adequate remedy for the harm caused to a party by a breach or default by the other party hereunder, and each party waives the posting of a bond. The prevailing party shall be entitled to an award of its reasonable attorneys’ fees and costs. Neither party shall be liable to the other for consequential, indirect, speculative or punitive damages.
b. The non-defaulting party shall provide written notice of a default under this Agreement or under an Easement Tenants’ lease, not more than thirty (30) days from discovery of the default.
From the date of such notice, the defaulting party shall have thirty (30) days to cure the default, unless the default cannot reasonably be cured within thirty (30) days in which case the defaulting party shall have such additional time as necessary to cure the default so long as the defaulting party has commenced to cure the default and is diligently pursuing completion of the cure.
c. All communications shall be delivered by certified mail, return receipt requested or by a nationally recognized overnight courier to the address beneath each party’s signature block or such other address as advised to the other party pursuant to this Section. Notice shall be deemed given upon receipt if by certified mail, return receipt requested or one (1) business day following the date of sending, if sent by nationally recognized overnight courier service or upon attempted delivery if delivery is refused or if delivery is impossible because of failure to provide reasonable means for accomplishing delivery. Grantor shall provide Grantee with copies of all written notices or communications received from any Easement Tenant, or its agents. Grantee shall provide Grantor copies of all written notices received from any Easement Tenant or its agents if such written notice includes a breach of any Easement Tenant Lease beyond any applicable cure period therein and/or any notice of termination of such Easement Tenant Lease.
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14. Miscellaneous.
a. The terms and conditions of the existing Telecom Tenant Lease shall govern over any conflicting term of this Agreement. Notwithstanding anything to the contrary contained in this Agreement, Grantor and Grantee acknowledge that this Agreement is subject and subordinate to the Telecom Tenant Lease.
b. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and the successors and assigns of the parties to this Agreement. It is the intention of the parties hereto that all of the various rights, obligations, restrictions and easements created in this Agreement shall run with the Parent Property upon which the Easement is located and be binding upon all future owners and lessees of the Parent Property and all persons claiming under them for the Term.
c. Casualty. Grantor will endeavor to provide written notice to Grantee of any material casualty affecting the Easement within five (5) business days of Grantor’s actual awareness of the casualty, provided that Grantor shall have no obligation whatsoever with respect to any damage on the Easement caused by any casualty not caused by Grantor. Grantee will provide written notice to Grantor of any material casualty affecting the Easement within five (5) business days of Grantee’s actual awareness of the casualty. In the event of any casualty of the Easement in whole or in part, Grantee and Grantor shall be entitled to pursue their own claims under each party’s own insurance policies.
d. Condemnation. In the event of any condemnation of the Easement in whole or in part, each party shall be entitled to pursue their own separate awards in the condemnation proceeding. If such condemnation results in Grantee no longer being able to use the Easement as provided herein, Grantee shall be entitled to receive any condemnation proceeds attributable to the value of the Easement as determined by the condemning authority, or in the event of an appeal, a Court of competent jurisdiction.
e. Bankruptcy. Grantee does not consent to rejection in bankruptcy, and Grantor shall provide notice and a copy of any bankruptcy or related filing to Grantee and Grantee’s Lender. f. Severability. If any provision contained in this Agreement (or any portion of such provision) shall be held to be invalid, illegal, or unenforceable, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement (or any portion of any such provision.)
g. Counterparts. This Agreement may be executed in separate counterparts with each counterpart deemed an original and all of which together shall constitute a single agreement. h. Entire Agreement. This Agreement and any documents, certificates, instruments and agreements referred to herein constitute the entire agreement between Grantor and Grantee.
Without limiting the generality of the foregoing, Grantor acknowledges that it has not received or relied upon any advice of Grantee or its representatives regarding the merits or tax consequences of this Agreement.
[Signature pages and exhibits follow]
Asset File #: TWPS0548556 Page 7 of 11 3155825.2
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date on page one above.
GRANTOR: CITY OF BREA, CA
_______________________________________________
Kristin Griffith
City Manager
Grantor Notice Address:
City of Brea
1 Civic Center Circle
Brea, CA 92821
Asset File #: TWPS0548556 Page 8 of 11 3155825.2
}ss.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date on page one above.
GRANTEE: TPA VI, LLC
_______________________________________________
Jon L. Lober, General Counsel
Grantee Notice Address:
TPA VI, LLC
1170 Peachtree Street, Suite 1650
Atlanta, GA 30309
Attn: Chief Executive Officer
With a copy to:
TPA VI, LLC
1170 Peachtree Street, Suite 1650
Atlanta, GA 30309
Attn: General Counsel
STATE OF GEORGIA
COUNTY OF FULTON
On this ______ day of _______________________, 2025, before me, the undersigned notary public, personally appeared Jon L. Lober, and proved to me through satisfactory evidence of identification, which was personal knowledge/driver’s license/passport/ ________ (circle one), to be the person whose name is signed on the preceding or attached document, and acknowledged to me that he/she signed it voluntarily for its stated purpose as General Counsel of TPA VI, LLC.
________________________________
{affix notary seal or stamp} Notary Public
My Commission Expires: 4/4/2029
Asset File #: TWPS0548556 Page 9 of 11 3155825.2
EXHIBIT A
LEGAL DESCRIPTION OF THE PARENT PROPERTY
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EXHIBIT B
TELECOM TENANT LEASE
That certain Communications Facility Lease dated December 17, 2002, by and between Brea Redevelopment Agency, a public entity and Los Angeles SMSA Limited Partnership d/b/a Verizon Wireless by AirTouch Cellular, its general partner, as amended by that certain First Amendment to Communications Facility Lease dated June 17, 2020, by and between City of Brea and Los Angeles SMSA Limited Partnership, dba Verizon Wireless
Asset File #: TWPS0548556 Page 11 of 11 3155825.2
EXHIBIT C
EASEMENT AREA DESCRIPTION
In the event of a discrepancy between the area actually occupied by the Telecom Tenant’s equipment and the area described below, the described area shall be understood to also include any portion of the actual used area not captured by the description or as may have been granted to the Telecom Tenant that is currently outlined in each Telecom Tenant Lease referenced in Exhibit B. Grantor or Grantee may elect to engage a professional surveyor, the product of which may be substituted upon the other party’s acceptance for the contents herein. The part of the Parent Property described in Exhibit A hereto, on which any equipment exists on the Effective Date together with the portion of the Parent Property described below:
The portion of the Parent Property, including the portion of rooftop of the parking structure and inside that certain building commonly known as 101 South Brea Blvd., Brea, California 92821 (“Building”), that is co-extensive with the area leased under each Telecom Tenant Lease referenced in Exhibit B attached hereto, and the area on the rooftop of the Building necessary for the installation, construction, operation, maintenance, repair, modification, addition, expansion, relocation, replacement and removal of Equipment necessary for the Permitted Use.
Expanded Easement Area
That certain additional lease area measuring up to the equivalent total of five hundred fifty (500) square feet in a location to be determined by the telecommunications tenant collocating on the rooftop of that certain building on the Parent Property described herein with such location approved by the Grantor, such approval not to be unreasonably withheld, conditioned or delayed.
NON-EXCLUSIVE UTILITY EASEMENT and NON-EXCLUSIVE ACCESS EASEMENT SPACE The part of the Parent Property, described in Exhibit A hereto, on which any equipment exists on the Effective Date together with the portion of the Parent Property used by utility providers and leased by Grantor as the lease premises under each Telecom Tenant Lease including but not limited as follows:
Utilities and Telecommunications. Grantee is herein granted, consistent with each Telecom Tenant Lease, a non-exclusive easement in, to, under and over the portions of the Parent Property for ingress and egress to the Easement, shaft ways, chase ways, soffits, risers, columns, crawl spaces, rafters, or any other space for placement of cables, wiring, etc., which is necessary to install, operate and maintain the telecommunications equipment and/or personal property, together with the right to use such easement for the development, repair, maintenance and removal of utilities and/or cables providing service to the Easement and any related activities and uses.
Access. Grantee is herein granted, consistent with each Telecom Tenant Lease, all rights of ingress and egress to and from the Easement, across the Parent Property described in Exhibit A hereto, providing access to a publicly dedicated roadway, including but not limited to South Brea Blvd., along with the right to use such access easement for the development, repair, maintenance and removal of utilities providing service to the Easement and any related activities and uses.
Asset File #: TWPS0548555 Page 1 of 11
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Record and Return to:
Joseph Mangus
TitleVest Agency, LLC
110 E. 42nd Street, 10th Floor
New York, NY 10017
TitleVest Title No.: TCA989413
Prepared by:
Jon L. Lober
TPA VI, LLC
1170 Peachtree Street, Suite 1650
Atlanta, GA 30309
SPACE ABOVE THIS LINE RESERVED FOR RECORDER’S USE
EASEMENT AGREEMENT
This telecommunication easement and lease assignment agreement (“Agreement”) is made and shall be effective on the ____ day of ____________________, 2025 (“Effective Date”), by and between the City of Brea, a California municipal corporation (“Grantor”) and TPA VI, LLC, a Delaware limited liability company (“Grantee”).
1. Grantor’s Property and the Telecom Tenant Lease. Grantor represents and warrants that it holds fee simple title to certain real property located at 400 North Kraemer Blvd., Brea, California 92821, as more fully described in the legal description attached hereto as Exhibit A (the “Parent Property”).
Grantor and Verizon Wireless (the “Telecom Tenant”) are parties to that certain lease agreement, including all amendments and modifications thereto, cited in Exhibit B and incorporated by reference herein (the “Telecom Tenant Lease”).
2. Grant of Easement. For the sum of TEN AND NO/100 DOLLARS and other good and valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge as paid on or about the Effective Date along with the purchase price pursuant to the settlement statement executed contemporaneously with this Agreement (“Purchase Price”), Grantor grants and conveys unto Grantee, its successors and assigns, an exclusive easement (subject to the Telecom Tenant Lease) for the Permitted Use defined herein, together with a non-exclusive access easement for ingress and egress to and from the exclusive easement, seven days per week, twenty-four hours per day and a non-exclusive utility easement to install, replace and maintain utilities servicing the exclusive easement, including, but not limited to the installation of power and telephone service cable, wires, switches, boxes and the Asset File #: TWPS0548555 Page 2 of 11
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like as may be required by the Permitted Use (collectively “Easement” as further described in Exhibit C). Grantor shall permit Grantee, Easement Tenant(s) (as hereinafter defined), and any of their affiliates, customers, tenants, subtenants, lessees, sublessees, licensees, successors and/or assigns together with any of the employees, contractors, consultants, and or agents of the foregoing to use the Easement for the installation, construction, operation, maintenance, repair, modification, relocation, replacement and removal of improvements and equipment (“Equipment”) for the facilitation of telecommunications uses, utility energy storage systems, communications uses and other related uses, including, but not limited to, any uses permitted by the Telecom Tenant Lease (“Permitted Use”).
Grantor represents that there is no pending or threatened action that would adversely affect Grantor’s ability to enter into this Agreement or grant the Easement and that entering into this Agreement will not violate or conflict with any provision of Grantor’s organizational documents (if Grantor is an organization) or conflict with the provisions of any agreement to which Grantor is a party. Grantor further represents and warrants that Grantee shall have peaceful and quiet possession and enjoyment of the Easement during the term of this Agreement without any disturbance of Grantee’s possession or Permitted Use hereunder.
3. Term. Commencing on the Effective Date, the term of this Agreement and the Easement shall be for fifty-five (55) years (the “Term”) and this Agreement and the Easement shall terminate on __________________2080. Upon notice to Grantor as provided herein, Grantee may surrender the Easement to Grantor and execute such documents reasonably required to terminate the Agreement and the Easement. Grantor may not unilaterally terminate the Agreement or Easement, but if the Easement is not used for the Permitted Use for a period of three (3) years the Easement shall be deemed abandoned and shall terminate upon Grantor’s notice of such default to Grantee as provided herein. Sections 12 and 13 shall survive expiration or termination of this Agreement and shall remain in effect in perpetuity, subject to applicable law.
4. Assignment of Lease, Renewal and Right of Replacement. Grantor hereby assigns to Grantee all of Grantor’s right, title and interest in the Telecom Tenant Lease for the Term, including the right to renew the Telecom Tenant Lease throughout the Term. Grantee shall provide Grantor written notice of any extension of the Telecom Tenant Lease beyond the renewal and extension terms included in the Telecom Tenant Lease as of the Effective Date hereof. Except as provided herein, Grantee agrees to assume all of Grantor’s rights and obligations under the Telecom Tenant Lease. If Telecom Tenant is obligated under the Telecom Tenant Lease to pay to Grantor any fees (other than base rent and any escalations thereto) for the purpose of utility service or access or tax reimbursement, Grantor shall continue to be entitled to such fees, although Grantee may collect and distribute same to Grantor.
Grantor shall continue to perform all obligations of the lessor under the Telecom Tenant Lease which relate to the use, ownership, and maintenance of the Parent Property so that Grantee may fulfill all the obligations under the Telecom Tenant Lease without breaching any provision therein, including, but not limited to, Grantor maintaining the Parent Property in a commercially reasonable condition to allow the Permitted Use of the Easement. Grantor represents and warrants that it has delivered to Grantee true and correct copies of the Telecom Tenant Lease and that Grantor owns 100% of the lessor/landlord’s interest in the Telecom Tenant Lease, including the right to collect all rent thereunder. Grantor represents that there is no pending or threatened action that would adversely affect the Telecom Tenant Lease, the Permitted Use, or Grantor’s ability to enter into this Agreement or grant the Easement. To the best of Grantor’s knowledge, no party to the Telecom Tenant Lease has breached or is in default of their respective obligations under the Telecom Tenant Lease and no party has requested or discussed a modification or termination of the Telecom Tenant Lease. If during the Term the Telecom Tenant terminates the Telecom Tenant Lease or otherwise vacates the Parent Property, Grantee may lease all or a portion of the Easement to a replacement telecommunications tenant (“Replacement Telecom Tenant”) on terms consistent with the Telecom Tenant Lease and no Replacement Telecom Tenant Lease shall include any new or additional obligation of the Grantor and no terms of Replacement Telecom Tenant Lease shall be materially more adverse to Grantor than the replaced Telecom Tenant Asset File #: TWPS0548555 Page 3 of 11
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Lease (“Replacement Telecom Tenant Lease”). Any Replacement Telecom Tenant Lease shall include the requirement that the Replacement Telecom Tenant: (i) remove (as applicable) its equipment, the tower, and personal property and restore the leased premises on the Parent Property as nearly as practicable to its original condition, reasonable wear and tear excepted upon termination of its lease; (ii) provide indemnity to Grantor for the actions of Replacement Telecom Tenant, and (iii) include Grantor as an additional insured to Replacement Telecom Tenant’s insurance. For any Replacement Telecom Tenant, Grantor shall have the right to review and approve construction plans for Replacement Telecom Tenant prior to commencement of construction and such approval shall not be unreasonably conditioned, delayed or withheld and such approval shall be without further compensation to Grantor.
Approval shall be deemed given by Grantor where Grantor has failed to respond within sixty (60) days of notice as provided herein. Any such Replacement Telecom Tenant shall occupy the Easement rather than locating on other portions of the Parent Property.
5. Rent Sharing. When a new telecommunications tenant (“Rent Share Tenant”) executes a lease for space within the Easement and commences rent payment, Grantee will collect such rent with Grantee retaining fifty percent (50%) of the rent collected and Grantee remitting fifty percent (50%) of the rent collected to Grantor. Grantee’s rent sharing payments shall be remitted within thirty (30) days of each collection. Notwithstanding the foregoing, Grantee shall be entitled to collect and retain rent from all telecommunications tenants within the Easement in an amount equal to the rent scheduled in the existing Telecom Tenant Lease, including scheduled escalators (“Minimum Scheduled Rent”). Should the rent collected equal an amount less than the Minimum Scheduled Rent, such deficit (“Minimum Scheduled Rent Deficit”) shall accrue and shall be applied against any and all future rents collected within the Easement, until collected rent payments fully offset the total Minimum Scheduled Rent Deficit. Grantee is permitted and authorized to enter into leases with Rent Share Tenants subject to the requirements for leasing to Replacement Telecom Tenants as set forth in Section 4 and subject to written Grantor approval as provided for therein.
6. Grantor Cooperation and Non-interference. Grantor agrees to reasonably cooperate with Grantee and/or Telecom Tenant, Replacement Telecom Tenant and Rent Share Tenant (collectively, “Easement Tenants”) in obtaining all licenses, permits or authorizations from all applicable governmental and/or regulatory entities and in acquiring any necessary upgrades to or relocation of utility service to support the Permitted Use. Notwithstanding the foregoing, any such land use application, permit, license or other document submitted shall be subjected to the standard review process and may ultimately be approved or denied by the governmental authority vested with the authority to approve or deny such submittal. Grantor shall not interfere with any construction in the Easement so long as such construction is to support the Permitted Use and has been approved by Grantor in writing to the extent required hereunder or by law, and is proceeding pursuant to a building permit or other required municipal or governmental approvals. Grantor shall not, nor shall Grantor permit its lessees, licensees, employees, invitees or agents to, use any portion of the Parent Property or the Easement in a way which materially interferes with the operations of the Easement Tenants who shall have peaceful and quiet possession and enjoyment of the Easement. Grantor may not induce or invite any Easement Tenants to use or lease space in direct competition with Grantor’s Easement Tenants within the Easement.
7. Assignment. Grantee may pledge, assign, mortgage, grant a security interest, or otherwise encumber its interest created by this Agreement. Grantee may freely assign this Agreement in part or in its entirety, and any or all of its rights hereunder, including the right to receive rent payments subject to the consent requirements of this section. Grantee and Grantor hereby expressly agree that Grantee has the right, in its sole discretion and without the prior consent of Grantor, to assign its interest in this Agreement to any person or entity that satisfies all of the following criteria: (i) has a net worth or market capitalization comparable to that of Grantee; and (ii) either: (x) is a wireless telecommunications provider, (y) has as a primary business the operation of telecommunications tower sites or rooftop antenna sites on a national scale or (z) controls, is controlled by or is under common control with Grantee. Additionally, Asset File #: TWPS0548555 Page 4 of 11
3155825.2
Grantee and Grantor hereby expressly agree that Grantee has the right to assign its interest in this Easement to any other person or entity with the prior written consent of Grantor, which consent shall not be unreasonably withheld, conditioned or delayed. Upon the absolute assumption of such assignee of all of the obligations of Grantee under this Agreement then Grantee will be relieved of all obligations and liabilities hereunder. An assignment of this Agreement shall not be deemed a termination.
8. Taxes and Other Obligations. All taxes and other obligations that are or could become liens against the Parent Property or any subdivision of the Parent Property containing the Easement, whether existing as of the Effective Date or hereafter created or imposed, shall be paid by Grantor prior to delinquency or default. Grantor shall be solely responsible for payment of all taxes and assessments now or hereafter levied, assessed or imposed upon the Parent Property, or imposed in connection with the execution, delivery, performance or recordation hereof, including without limitation any sales, income, documentary or other transfer taxes. If Grantor fails to pay when due any taxes or other obligations affecting the Parent Property, Grantee shall have the right but not the obligation to pay such and demand payment therefor from Grantor, which payment Grantor shall make within ten (10) days of such demand by Grantee.
9. Insurance. During the Term, Easement Tenants shall maintain general liability insurance as required under their respective lease. Grantor shall maintain any insurance policies in place on the Parent Property or as required under the Telecom Tenant Lease.
10. Subordination and Non-Disturbance. Grantee agrees to subordinate this Agreement to any existing or future mortgage or deed of trust on the Parent Property ("Security Instrument"), provided the beneficiary or secured party ("Secured Party") under the Security Instrument agrees for itself and its successors in interest and assigns that Grantee's rights under this Agreement and rights to the Easement shall remain in full force and effect and shall not be affected or disturbed by the Secured Party in the exercise of Secured Party's rights under the Security Instrument during the Term, including Grantee's right to collect and retain, in accordance with the terms of this Agreement, all rents, fees and other payments due from Easement Tenants. Such non-disturbance agreement must apply whether Secured Party exercises its rights under the Security Instrument, including foreclosure, sheriff's or trustee's sale under the power of sale contained in the Security Instrument, and any other transfer, sale or conveyance of Grantor's interest in the Parent Property under peril of foreclosure, including, without limitation to the generality of the foregoing, an assignment or sale in lieu of foreclosure.
11. Mutual General Indemnification. To the extent permitted by law, Grantor and Grantee shall each indemnify and hold harmless the other against any and all claims, damages, costs and expenses (including reasonable attorney’s fees and disbursements) caused by or arising out of the indemnifying party’s breach of this Agreement or the negligent acts or omissions or willful misconduct on the Parent Property by the indemnifying party or the employees, agents, or contractors of the indemnifying party.
Any requirements of Grantor in this Section 11 are subject to applicable provisions of the California Government Code.
12. Environmental Representations and Indemnification.
a. Grantor represents and warrants that, to the best of Grantor’s knowledge, no pollutants or other toxic or hazardous substances, as defined under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. 9601 et seq., or any other federal or state law, including any solid, liquid, gaseous, or thermal irritant or contaminant, such as smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste (including materials to be recycled, reconditioned or reclaimed) (collectively, “Hazardous Substances”) have been, or shall be discharged, disbursed, released, stored, treated, generated, disposed of, or allowed to escape or migrate (collectively referred to as the “Release”) on or from the Parent Property.
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Neither Grantor nor Grantee shall introduce or use any Hazardous Substances on the Parent Property or the Easement in violation of any applicable federal, state or local environmental laws.
b. Grantor and Grantee each agree to defend, indemnify, and hold harmless the other from and against any and all administrative and judicial actions and rulings, claims, causes of action, demands and liability including, but not limited to, damages, costs, expenses, assessments, penalties, fines, cleanup, remedial, removal or restoration work required by any governmental authority, losses, judgments and reasonable attorneys’ fees that the indemnified party may suffer or incur due to the existence or discovery of any Hazardous Substances on the Parent Property caused by the other party. Grantee shall not be responsible for and shall not defend, indemnify or hold harmless Grantor for any Release of Hazardous Substances on or before the Effective Date.
13. Dispute Resolution and Notice.
a. Jurisdiction and venue under this Agreement shall be in Orange County, California. The parties may enforce this Agreement and their rights under applicable law, and may seek specific performance, injunction, appointment of a receiver and any other equitable rights and remedies available under applicable law. Money damages may not be an adequate remedy for the harm caused to a party by a breach or default by the other party hereunder, and each party waives the posting of a bond. The prevailing party shall be entitled to an award of its reasonable attorneys’ fees and costs. Neither party shall be liable to the other for consequential, indirect, speculative or punitive damages.
b. The non-defaulting party shall provide written notice of a default under this Agreement or under an Easement Tenants’ lease, not more than thirty (30) days from discovery of the default.
From the date of such notice, the defaulting party shall have thirty (30) days to cure the default, unless the default cannot reasonably be cured within thirty (30) days in which case the defaulting party shall have such additional time as necessary to cure the default so long as the defaulting party has commenced to cure the default and is diligently pursuing completion of the cure.
c. All communications shall be delivered by certified mail, return receipt requested or by a nationally recognized overnight courier to the address beneath each party’s signature block or such other address as advised to the other party pursuant to this Section. Notice shall be deemed given upon receipt if by certified mail, return receipt requested or one (1) business day following the date of sending, if sent by nationally recognized overnight courier service or upon attempted delivery if delivery is refused or if delivery is impossible because of failure to provide reasonable means for accomplishing delivery. Grantor shall provide Grantee with copies of all written notices or communications received from any Easement Tenant, or its agents. Grantee shall provide Grantor copies of all written notices received from any Easement Tenant or its agents if such written notice includes a breach of any Easement Tenant Lease beyond any applicable cure period therein and/or any notice of termination of such Easement Tenant Lease.
14. Miscellaneous.
a. The terms and conditions of the existing Telecom Tenant Lease shall govern over any conflicting term of this Agreement. Notwithstanding anything to the contrary contained in this Agreement, Grantor and Grantee acknowledge that this Agreement is subject and subordinate to the Telecom Tenant Lease.
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b. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and the successors and assigns of the parties to this Agreement. It is the intention of the parties hereto that all of the various rights, obligations, restrictions and easements created in this Agreement shall run with the Parent Property upon which the Easement is located and be binding upon all future owners and lessees of the Parent Property and all persons claiming under them for the Term.
c. Casualty. Grantor will endeavor to provide written notice to Grantee of any material casualty affecting the Easement within five (5) business days of Grantor’s actual awareness of the casualty, provided that Grantor shall have no obligation whatsoever with respect to any damage on the Easement caused by any casualty not caused by Grantor. Grantee will provide written notice to Grantor of any material casualty affecting the Easement within five (5) business days of Grantee’s actual awareness of the casualty. In the event of any casualty of the Easement in whole or in part, Grantee and Grantor shall be entitled to pursue their own claims under each party’s own insurance policies.
d. Condemnation. In the event of any condemnation of the Easement in whole or in part, each party shall be entitled to pursue their own separate awards in the condemnation proceeding. If such condemnation results in Grantee no longer being able to use the Easement as provided herein, Grantee shall be entitled to receive any condemnation proceeds attributable to the value of the Easement as determined by the condemning authority, or in the event of an appeal, a Court of competent jurisdiction.
e. Bankruptcy. Grantee does not consent to rejection in bankruptcy, and Grantor shall provide notice and a copy of any bankruptcy or related filing to Grantee and Grantee’s Lender. f. Severability. If any provision contained in this Agreement (or any portion of such provision) shall be held to be invalid, illegal, or unenforceable, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement (or any portion of any such provision.)
g. Counterparts. This Agreement may be executed in separate counterparts with each counterpart deemed an original and all of which together shall constitute a single agreement. h. Entire Agreement. This Agreement and any documents, certificates, instruments and agreements referred to herein constitute the entire agreement between Grantor and Grantee.
Without limiting the generality of the foregoing, Grantor acknowledges that it has not received or relied upon any advice of Grantee or its representatives regarding the merits or tax consequences of this Agreement.
[Signature pages and exhibits follow]
Asset File #: TWPS0548555 Page 7 of 11
3155825.2
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date on page one above.
GRANTOR: CITY OF BREA CA
_______________________________________________
Kristin Griffith
City Manager
Grantor Notice Address:
1 Civic Center Circle
Brea, CA 92821
Asset File #: TWPS0548555 Page 8 of 11
3155825.2
}ss.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date on page one above.
GRANTEE: TPA VI, LLC
_______________________________________________
Jon L. Lober, General Counsel
Grantee Notice Address:
TPA VI, LLC
1170 Peachtree Street, Suite 1650
Atlanta, GA 30309
Attn: Chief Executive Officer
With a copy to:
TPA VI, LLC
1170 Peachtree Street, Suite 1650
Atlanta, GA 30309
Attn: General Counsel
STATE OF GEORGIA
COUNTY OF FULTON
On this ______ day of _______________________, 2025, before me, the undersigned notary public, personally appeared Jon L. Lober, and proved to me through satisfactory evidence of identification, which was personal knowledge/driver’s license/passport/ ________ (circle one), to be the person whose name is signed on the preceding or attached document, and acknowledged to me that he/she signed it voluntarily for its stated purpose as General Counsel of TPA VI, LLC.
________________________________
{affix notary seal or stamp} Notary Public
My Commission Expires:
Asset File #: TWPS0548555 Page 9 of 11
3155825.2
EXHIBIT A
LEGAL DESCRIPTION OF THE PARENT PROPERTY
Asset File #: TWPS0548555 Page 10 of 11
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EXHIBIT B
TELECOM TENANT LEASE
That certain Communications Facility Lease dated December 2, 2008, by and between City of Brea, a municipal corporation and Los Angeles SMSA Limited Partnership, a California limited partnership, d/b/a Verizon Wireless, by AirTouch Cellular, its general partner, as amended by that certain First Amendment to Communications Facility Lease dated July 14, 2015, by and between City of Brea, a municipal corporation and Los Angeles SMSA Limited Partnership, dba Verizon Wireless Asset File #: TWPS0548555 Page 11 of 11
3155825.2
EXHIBIT C
EASEMENT AREA DESCRIPTION
In the event of a discrepancy between the area actually occupied by the Telecom Tenant’s equipment and the area described below, the described area shall be understood to also include any portion of the actual used area not captured by the description or as may have been granted to the Telecom Tenant that is currently outlined in each Telecom Tenant Lease referenced in Exhibit B. Grantor or Grantee may elect to engage a professional surveyor, the product of which may be substituted upon the other party’s acceptance for the contents herein. The part of the Parent Property described in Exhibit A hereto, on which any equipment exists on the Effective Date together with the portion of the Parent Property used and leased by Grantor as the existing lease premises under each Telecom Tenant Lease including but not limited as follows:
The rooftop and interior of that certain existing hose tower (“Hose Tower”) adjacent to the building commonly known as 400 North Kraemer Blvd., Brea, California 92821 (“Building”);; including the interior portion of the Hose Tower to allow for installation of antennas. Also and including any area inside the Building or on ground level of the Parent Property that is co-extensive with the area leased under each Telecom Tenant Lease referenced in Exhibit B attached hereto.
NON-EXCLUSIVE UTILITY EASEMENT and NON-EXCLUSIVE ACCESS EASEMENT SPACE The part of the Parent Property, described in Exhibit A hereto, on which any equipment exists on the Effective Date together with the portion of the Parent Property used by utility providers and leased by Grantor as the lease premises under each Telecom Tenant Lease including but not limited as follows:
Utilities and Telecommunications. Grantee is herein granted, consistent with each Telecom Tenant Lease, a non-exclusive easement in, to, under and over the portions of the Parent Property for ingress and egress to the Easement, shaft ways, chase ways, soffits, risers, columns, crawl spaces, rafters, or any other space for placement of cables, wiring, etc., which is necessary to install, operate and maintain the telecommunications equipment and/or personal property, together with the right to use such easement for the development, repair, maintenance and removal of utilities and/or cables providing service to the Easement and any related activities and uses.
Access. Grantee is herein granted, consistent with each Telecom Tenant Lease, all rights of ingress and egress to and from the Easement, across the Parent Property described in Exhibit A hereto, providing access to a publicly dedicated roadway, including but not limited to North Kraemer Blvd, along with the right to use such access easement for the development, repair, maintenance and removal of utilities providing service to the Easement and any related activities and uses.
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3154953.3
THIS ESCROW AGREEMENT made and entered into this ______ day of ______________________, 2025, by and between CITY OF BREA CA (hereinafter referred to as "Seller"); TPA VI, LLC (hereinafter referred to as "Purchaser"); (Seller and Purchaser are sometimes hereinafter referred to jointly as “Parties and individually as “Party”) and TitleVest Agency, LLC (hereinafter referred to as "Escrow/Settlement Agent");
WITNESSETH
WHEREAS, Seller and Purchaser have entered into an agreement for the purchase and sale of a 55-year easement to a portion of that certain property more particularly described on attached "EXHIBIT A" attached hereto (hereinafter referred to as the "Property"); and WHEREAS, Purchaser and Seller desire to have Escrow/Settlement Agent receive original executed documents, receive proceeds from Purchaser and disburse such proceeds according to the instructions set forth below.
NOW, THEREFORE, in consideration of the premises and of good and valuable consideration the receipt and sufficiency whereof is hereby acknowledged, the parties hereto hereby covenant and agree as follows:
1. Purchaser and Seller hereby appoint TitleVest Agency, LLC as Escrow/Settlement Agent hereunder.
2. Purchaser shall deliver to Escrow/Settlement Agent the Purchaser’s Closing Costs, as set forth on the Purchaser’s Settlement Statement, in the form of a wire transfer to an account so designated by Escrow/Settlement Agent. Such account shall have immediate availability to funds as to not delay funding of Seller’s proceeds.
3. The Escrow/Settlement Agent agrees to hold and disburse such funds, in accordance with the executed Settlement Statement, as hereinafter provided.
4. Upon receipt of the required “Closing Documents” as noted on Closing Instruction Letter attached hereto as Exhibit “B” and the Purchaser’s closing costs as noted in Item #2 above, Escrow/Settlement Agent shall timely deliver the Seller’s Proceeds to Seller, as directed by Seller pursuant to the Seller Disbursement Authorization on Exhibit ‘C’. Escrow/Settlement Agent is specifically given permission to withhold a reserve to pay and/or secure evidence of payment of delinquent taxes, interest and penalties, if any.
5. Upon funding of the Seller’s Proceeds, Escrow/Settlement Agent will forward the appropriate original documents for recordation in the appropriate jurisdiction and title to the estate purchased shall be considered vested in Purchaser and the document shall be considered binding and enforceable.
6. In the event that the contemplated sale shall not take place, upon written notification from both Purchaser and Seller the Escrow/Settlement Agent shall deliver any funds received to Purchaser or as otherwise instructed by the parties hereto. Original documents shall be returned or destroyed as instructed by the parties hereto.
7. The Parties hereto covenant and agree that in performing any of its duties under this Agreement, Escrow/Settlement Agent shall be reimbursed by the responsible party for any loss or damage (including reasonable in-house or outside attorney’s fees and expenses) which it may incur as a result of serving as Escrow/Settlement Agent hereunder, except for any loss, costs or damage arising out of its willful default or gross negligence. Accordingly, Escrow/Settlement Agent shall not incur any liability with respect to any action taken or omitted to be taken in reliance upon any document, including any written notice of instruction provided for in the Escrow Agreement, not only as to its due execution and the validity and effectiveness of its provisions, but also to the truth and accuracy of any information contained therein, which Escrow/Settlement Agent shall in good faith believe (a) to be genuine, (b) to Asset File #: TWPS0548555 Page 2 of 7
3154953.3
have been signed or presented by a proper person or persons, and/or (c) to conform with the provisions of this Escrow Agreement. In no event shall Escrow/Settlement Agent’s liability exceed the amount of its fee for acting as Escrow/Settlement Agent.
8. In the event of a dispute between any of the parties hereto sufficient in the sole discretion of Escrow/Settlement Agent to justify its doing so, Escrow/Settlement Agent shall be entitled to tender unto the registry or custody of any court of competent jurisdiction all money or property in its hands held under the terms of this Escrow Agreement, together with such legal pleading as it deems appropriate, and thereupon be discharged. Escrow/Settlement Agent shall be reimbursed for all costs and fees incurred, including reasonable attorney fees, from the unsuccessful Party or out of the escrow if no judicial determination is made.
9. With regard to any transfer taxes or title related charges which are required to be paid by the responsible party for payment in connection with this transaction, the responsible party for payment hereby agrees to pay to TitleVest Agency, LLC ("Title Company") promptly upon demand, any shortfall in any such transfer taxes or charges that should have been charged and collected from the responsible party for payment but were not for whatever reason including a County Clerk’s, Recorder’s or Registry's clerical error or oversight in collecting such transfer taxes or title related charges. The Parties further agree, if requested by the Title Company, to promptly and fully cooperate and adjust any clerical error, correction or omission of any document, if deemed necessary or desirable by the Title Company. Excess transfer taxes, if any, shall be held by the Title Company for up to six (6) months following the closing, pending possible assessment or re-assessment by the taxing authority.
10. This document may be executed in counterparts and such counter parted signatures shall be considered as a whole. Facsimile signature of this Escrow Agreement, and any instructions, directions or requests, made among the parties hereto shall be deemed to be reliable, binding and enforceable upon such parties.
11. In the event any of the original executed documents deposited in escrow misstate or inaccurately reflect information contained therein, and such misstatement or inaccuracy is due to a mistake on the part of clerical error, then in such event Purchaser or Seller shall, upon request by the other and in order to correct such misstatement or inaccuracy, execute such new documents as may be deemed necessary to remedy such inaccuracy or mistake, or slip sheet pages of documents to remedy such inaccuracy or mistake upon receipt of written approval by the parties to the original executed document. Further, Purchaser and Seller agree that in such event they will provide joint direction to Escrow Agent to revise the documents accordingly.
IN WITNESS WHEREOF, the undersigned have caused this instrument to be duly executed and its seal to be affixed thereto as of the day and year first above written.
SELLER: CITY OF BREA CA
BY: _______________________________________________
Kristin Griffith, City Manager
ADDRESS: 1 Civic Center Circle
Brea, CA 92821
PHONE:
Asset File #: TWPS0548555 Page 3 of 7
3154953.3
IN WITNESS WHEREOF, the undersigned have caused this instrument to be duly executed and its seal to be affixed thereto as of the day and year first above written.
PURCHASER: TPA VI, LLC
BY: _____________________________________________
NAME: JON L. LOBER
TITLE: GENERAL COUNSEL
ADDRESS: 1170 PEACHTREE STREET, SUITE 1650
ATLANTA, GEORGIA 30309
PHONE: 678-775-0360
FAX: 678-775-0361
Asset File #: TWPS0548555 Page 4 of 7
3154953.3
IN WITNESS WHEREOF, the undersigned have caused this instrument to be duly executed and its seal to be affixed thereto as of the day and year first above written.
ESCROW AGENT: TITLEVEST AGENCY, LLC
BY: ____________________________
NAME: Joseph Mangus
TITLE: Escrow Agent
ADDRESS: 110 East 42nd Street, 10th Floor
New York, NY 10017
PHONE: 646-429-3125 (direct)
FAX: 212-757-0466 (fax)
EMAIL: [email protected]
[email protected]
Asset File #: TWPS0548555 Page 5 of 7
3154953.3
EXHIBIT A
Asset File #: TWPS0548555 Page 6 of 7
3154953.3
EXHIBIT ‘B’
Closing Instruction Letter
1) Seller and Purchaser to execute in Counterpart this Escrow Agreement. Facsimile or Originals to be provided to TitleVest Agency, LLC (1 Copy or Original) 2) Seller and Purchaser to Execute, Notarize and Witness the Easement Agreement and other required documents in form for recording/filing, together with recording/filing fees and transfer taxes. Original fully executed document to be forwarded to TitleVest Agency, LLC (2 Originals) 3) Seller and Purchaser to execute the Settlement Statement and forward originals to TitleVest Agency, LLC (1 Original or Copy-with 1 Original to be received within 2 business days of closing)
4) Seller to provide Owners Affidavit executed and notarized by all Sellers. (1 Original). 5) Seller to provide Corporate Resolution executed or other documentation confirming authorization for execution of the Easement Agreement. (1 Original or Copy). 6) Seller to complete Exhibit ‘C’ of this Escrow Agreement. In the event the Seller Disbursement Authorization is not completed as enclosed the Escrow Agent shall forward Sellers Proceeds via standard U.S. Mail to the address for Seller as set forth with its signature above. 7) If there is one or more mortgages on this property the Seller is to provide a fully executed Subordination Non-Disturbance and Attornment Agreement from all Lender’s listed as Mortgagee’s on the Mortgage Schedule of the Title Report. 8) If Seller is an LLC, then the following must be provided prior to closing:
a. Proof of due formation:
i. Proof of filing of the Articles of Organization with the Secretary of State; ii. Proof of publication of the Article of Organization (or a notice containing the substance of the articles).
b. Articles of Organization and Operating Agreement must be produced and reviewed; additional exceptions may be raised upon review of same. c. Proof is required that there has been no change in the make-up or composition of the organization, and that there have been no amendments to the Articles of Organization or Operating Agreement. Proof is required that the party or parties executing instruments on behalf of the organization have authority to act.
Asset File #: TWPS0548555 Page 7 of 7
3154953.3
EXHIBIT C
SELLER DISBURSEMENT AUTHORIZATION
RE: 250 Water Tower Drive, Corning, Arkansas 72422 Escrow No.: TCA989416
PROCEEDS/FUNDS DISBURSEMENT INSTRUCTIONS: The undersigned directs that the proceeds/funds due will be disbursed in the following manner:
[ ] Held for pick up at this office (ID will be required) [ ] Sent via overnight delivery [ ] Mail to: _____________________________________________________________________________ [ ] Other: ______________________________________________________________________________ [ ] Sent via wire transfer
(if checked, Attach wiring instructions of receiving bank or fill in below. With cyber fraud on the increase, we suggest you mail, use an overnight service or hand-deliver any items containing banking or other private information and not send via email.)
Please Note: Modified or amended disbursement instructions must be signed by the parties at an office of TitleVest Agency, LLC. Proof of identity will be required.
Funds disbursed to other than record owner must be in writing with authorized approval by TitleVest Agency, LLC and possibly buyer/borrower's lender on a TILA-RESPA Integrated Disclosure (TRID) regulated loan.
Receiving Banks may impose a charge for the receipt of any wire transfers.
Escrow Holder is not responsible for delays in wiring caused by time restrictions of the Federal Reserve Board or late confirmation of recording.
When funds are sent to a bank outside the United States, Escrow Holder shall not be responsible or liable for any loss or expense incurred as a result of currency exchange rates, delays in availability of funds, or delays due to the U.S. bank or foreign bank requiring additional information. Escrow Holder shall have no liability or responsibility after properly initiating the outgoing wire transfer. For best results on an outgoing international wire transfer, the international bank should provide written wire instructions.
Bank Name: _____________________________________________________ Name on Acct: _____________________________________________________ Account No.: _____________________________________________________ FEDWIRE Routing No.: _____________________________________________________ Any further instructions: _____________________________________________________
Date: ________________________
SELLER: CITY OF BREA CA
BY: _______________________________________________
Kristin Griffith, City Manager
Best Phone No:
Forwarding Address:
Asset File #: TWPS0548555 Page 1 of 7
3154953.3
THIS ESCROW AGREEMENT made and entered into this ______ day of ______________________, 2025, by and between CITY OF BREA CA (hereinafter referred to as "Seller"); TPA VI, LLC (hereinafter referred to as "Purchaser"); (Seller and Purchaser are sometimes hereinafter referred to jointly as “Parties and individually as “Party”) and TitleVest Agency, LLC (hereinafter referred to as "Escrow/Settlement Agent");
WITNESSETH
WHEREAS, Seller and Purchaser have entered into an agreement for the purchase and sale of a 55-year easement to a portion of that certain property more particularly described on attached "EXHIBIT A" attached hereto (hereinafter referred to as the "Property"); and WHEREAS, Purchaser and Seller desire to have Escrow/Settlement Agent receive original executed documents, receive proceeds from Purchaser and disburse such proceeds according to the instructions set forth below.
NOW, THEREFORE, in consideration of the premises and of good and valuable consideration the receipt and sufficiency whereof is hereby acknowledged, the parties hereto hereby covenant and agree as follows:
1. Purchaser and Seller hereby appoint TitleVest Agency, LLC as Escrow/Settlement Agent hereunder.
2. Purchaser shall deliver to Escrow/Settlement Agent the Purchaser’s Closing Costs, as set forth on the Purchaser’s Settlement Statement, in the form of a wire transfer to an account so designated by Escrow/Settlement Agent. Such account shall have immediate availability to funds as to not delay funding of Seller’s proceeds.
3. The Escrow/Settlement Agent agrees to hold and disburse such funds, in accordance with the executed Settlement Statement, as hereinafter provided.
4. Upon receipt of the required “Closing Documents” as noted on Closing Instruction Letter attached hereto as Exhibit “B” and the Purchaser’s closing costs as noted in Item #2 above, Escrow/Settlement Agent shall timely deliver the Seller’s Proceeds to Seller, as directed by Seller pursuant to the Seller Disbursement Authorization on Exhibit ‘C’. Escrow/Settlement Agent is specifically given permission to withhold a reserve to pay and/or secure evidence of payment of delinquent taxes, interest and penalties, if any.
5. Upon funding of the Seller’s Proceeds, Escrow/Settlement Agent will forward the appropriate original documents for recordation in the appropriate jurisdiction and title to the estate purchased shall be considered vested in Purchaser and the document shall be considered binding and enforceable.
6. In the event that the contemplated sale shall not take place, upon written notification from both Purchaser and Seller the Escrow/Settlement Agent shall deliver any funds received to Purchaser or as otherwise instructed by the parties hereto. Original documents shall be returned or destroyed as instructed by the parties hereto.
7. The Parties hereto covenant and agree that in performing any of its duties under this Agreement, Escrow/Settlement Agent shall be reimbursed by the responsible party for any loss or damage (including reasonable in-house or outside attorney’s fees and expenses) which it may incur as a result of serving as Escrow/Settlement Agent hereunder, except for any loss, costs or damage arising out of its willful default or gross negligence. Accordingly, Escrow/Settlement Agent shall not incur any liability with respect to any action taken or omitted to be taken in reliance upon any document, including any written notice of instruction provided for in the Escrow Agreement, not only as to its due execution and the validity and effectiveness of its provisions, but also to the truth and accuracy of any information contained therein, which Escrow/Settlement Agent shall in good faith believe (a) to be genuine, (b) to Asset File #: TWPS0548555 Page 2 of 7
3154953.3
have been signed or presented by a proper person or persons, and/or (c) to conform with the provisions of this Escrow Agreement. In no event shall Escrow/Settlement Agent’s liability exceed the amount of its fee for acting as Escrow/Settlement Agent.
8. In the event of a dispute between any of the parties hereto sufficient in the sole discretion of Escrow/Settlement Agent to justify its doing so, Escrow/Settlement Agent shall be entitled to tender unto the registry or custody of any court of competent jurisdiction all money or property in its hands held under the terms of this Escrow Agreement, together with such legal pleading as it deems appropriate, and thereupon be discharged. Escrow/Settlement Agent shall be reimbursed for all costs and fees incurred, including reasonable attorney fees, from the unsuccessful Party or out of the escrow if no judicial determination is made.
9. With regard to any transfer taxes or title related charges which are required to be paid by the responsible party for payment in connection with this transaction, the responsible party for payment hereby agrees to pay to TitleVest Agency, LLC ("Title Company") promptly upon demand, any shortfall in any such transfer taxes or charges that should have been charged and collected from the responsible party for payment but were not for whatever reason including a County Clerk’s, Recorder’s or Registry's clerical error or oversight in collecting such transfer taxes or title related charges. The Parties further agree, if requested by the Title Company, to promptly and fully cooperate and adjust any clerical error, correction or omission of any document, if deemed necessary or desirable by the Title Company. Excess transfer taxes, if any, shall be held by the Title Company for up to six (6) months following the closing, pending possible assessment or re-assessment by the taxing authority.
10. This document may be executed in counterparts and such counter parted signatures shall be considered as a whole. Facsimile signature of this Escrow Agreement, and any instructions, directions or requests, made among the parties hereto shall be deemed to be reliable, binding and enforceable upon such parties.
11. In the event any of the original executed documents deposited in escrow misstate or inaccurately reflect information contained therein, and such misstatement or inaccuracy is due to a mistake on the part of clerical error, then in such event Purchaser or Seller shall, upon request by the other and in order to correct such misstatement or inaccuracy, execute such new documents as may be deemed necessary to remedy such inaccuracy or mistake, or slip sheet pages of documents to remedy such inaccuracy or mistake upon receipt of written approval by the parties to the original executed document. Further, Purchaser and Seller agree that in such event they will provide joint direction to Escrow Agent to revise the documents accordingly.
IN WITNESS WHEREOF, the undersigned have caused this instrument to be duly executed and its seal to be affixed thereto as of the day and year first above written.
SELLER: CITY OF BREA CA
BY: _______________________________________________
Kristin Griffith, City Manager
ADDRESS: 1 Civic Center Circle
Brea, CA 92821
PHONE:
Asset File #: TWPS0548555 Page 3 of 7
3154953.3
IN WITNESS WHEREOF, the undersigned have caused this instrument to be duly executed and its seal to be affixed thereto as of the day and year first above written.
PURCHASER: TPA VI, LLC
BY: _____________________________________________
NAME: JON L. LOBER
TITLE: GENERAL COUNSEL
ADDRESS: 1170 PEACHTREE STREET, SUITE 1650
ATLANTA, GEORGIA 30309
PHONE: 678-775-0360
FAX: 678-775-0361
Asset File #: TWPS0548555 Page 4 of 7
3154953.3
IN WITNESS WHEREOF, the undersigned have caused this instrument to be duly executed and its seal to be affixed thereto as of the day and year first above written.
ESCROW AGENT: TITLEVEST AGENCY, LLC
BY: ____________________________
NAME: Joseph Mangus
TITLE: Escrow Agent
ADDRESS: 110 East 42nd Street, 10th Floor
New York, NY 10017
PHONE: 646-429-3125 (direct)
FAX: 212-757-0466 (fax)
EMAIL: [email protected]
[email protected]
Asset File #: TWPS0548555 Page 5 of 7
3154953.3
EXHIBIT A
Asset File #: TWPS0548555 Page 6 of 7
3154953.3
EXHIBIT ‘B’
Closing Instruction Letter
1) Seller and Purchaser to execute in Counterpart this Escrow Agreement. Facsimile or Originals to be provided to TitleVest Agency, LLC (1 Copy or Original) 2) Seller and Purchaser to Execute, Notarize and Witness the Easement Agreement and other required documents in form for recording/filing, together with recording/filing fees and transfer taxes. Original fully executed document to be forwarded to TitleVest Agency, LLC (2 Originals) 3) Seller and Purchaser to execute the Settlement Statement and forward originals to TitleVest Agency, LLC (1 Original or Copy-with 1 Original to be received within 2 business days of closing)
4) Seller to provide Owners Affidavit executed and notarized by all Sellers. (1 Original). 5) Seller to provide Corporate Resolution executed or other documentation confirming authorization for execution of the Easement Agreement. (1 Original or Copy). 6) Seller to complete Exhibit ‘C’ of this Escrow Agreement. In the event the Seller Disbursement Authorization is not completed as enclosed the Escrow Agent shall forward Sellers Proceeds via standard U.S. Mail to the address for Seller as set forth with its signature above. 7) If there is one or more mortgages on this property the Seller is to provide a fully executed Subordination Non-Disturbance and Attornment Agreement from all Lender’s listed as Mortgagee’s on the Mortgage Schedule of the Title Report. 8) If Seller is an LLC, then the following must be provided prior to closing:
a. Proof of due formation:
i. Proof of filing of the Articles of Organization with the Secretary of State; ii. Proof of publication of the Article of Organization (or a notice containing the substance of the articles).
b. Articles of Organization and Operating Agreement must be produced and reviewed; additional exceptions may be raised upon review of same. c. Proof is required that there has been no change in the make-up or composition of the organization, and that there have been no amendments to the Articles of Organization or Operating Agreement. Proof is required that the party or parties executing instruments on behalf of the organization have authority to act.
Asset File #: TWPS0548555 Page 7 of 7
3154953.3
EXHIBIT C
SELLER DISBURSEMENT AUTHORIZATION
RE: 250 Water Tower Drive, Corning, Arkansas 72422 Escrow No.: TCA989416
PROCEEDS/FUNDS DISBURSEMENT INSTRUCTIONS: The undersigned directs that the proceeds/funds due will be disbursed in the following manner:
[ ] Held for pick up at this office (ID will be required) [ ] Sent via overnight delivery [ ] Mail to: _____________________________________________________________________________ [ ] Other: ______________________________________________________________________________ [ ] Sent via wire transfer
(if checked, Attach wiring instructions of receiving bank or fill in below. With cyber fraud on the increase, we suggest you mail, use an overnight service or hand-deliver any items containing banking or other private information and not send via email.)
Please Note: Modified or amended disbursement instructions must be signed by the parties at an office of TitleVest Agency, LLC. Proof of identity will be required.
Funds disbursed to other than record owner must be in writing with authorized approval by TitleVest Agency, LLC and possibly buyer/borrower's lender on a TILA-RESPA Integrated Disclosure (TRID) regulated loan.
Receiving Banks may impose a charge for the receipt of any wire transfers.
Escrow Holder is not responsible for delays in wiring caused by time restrictions of the Federal Reserve Board or late confirmation of recording.
When funds are sent to a bank outside the United States, Escrow Holder shall not be responsible or liable for any loss or expense incurred as a result of currency exchange rates, delays in availability of funds, or delays due to the U.S. bank or foreign bank requiring additional information. Escrow Holder shall have no liability or responsibility after properly initiating the outgoing wire transfer. For best results on an outgoing international wire transfer, the international bank should provide written wire instructions.
Bank Name: _____________________________________________________ Name on Acct: _____________________________________________________ Account No.: _____________________________________________________ FEDWIRE Routing No.: _____________________________________________________ Any further instructions: _____________________________________________________
Date: ________________________
SELLER: CITY OF BREA CA
BY: _______________________________________________
Kristin Griffith, City Manager
Best Phone No:
Forwarding Address:
Asset File #: TWPS0548556
Record and Return to:
Name: Joseph Mangus
Address: TitleVest Agency, LLC
110 East 42nd Street, 10th Floor
New York, NY 10017
TitleVest Title #: TCA989413
Prepared by:
Jon L. Lober
TPA VI, LLC
1170 Peachtree Street, Suite 1650
Atlanta, GA 30309
ASSIGNMENT OF LEASE
To be effective on __________________________, 2025, and in consideration of One Dollar ($1) and other good and valuable consideration paid by the undersigned party hereto executing this instrument as assignee TPA VI, LLC, a Delaware limited liability company, with principal offices at 1170 Peachtree Street, Suite 1650, Atlanta, Georgia 30309 (hereinafter referred to as “Assignee”) to the undersigned party hereto executing this instrument as assignor CITY OF BREA CA, with principal offices located at 1 Civic Center Circle, Brea, California 92821 (hereinafter referred to as “Assignor”), the receipt and sufficiency thereof being hereby acknowledged, Assignor, subject to that certain Easement Agreement which is recorded contemporaneous to recording of this instrument, does hereby transfer, set over and assign to the Assignee all of Assignor’s right, title and interest in and to the lease(s) and/or tenancy(ies) upon certain Property owned by Assignor (Legal Description attached as Exhibit A) referenced below and in Exhibit B attached hereto, in which the Assignor has any right, title and interest currently existing and relating to:
That certain Communications Facility Lease dated December 17, 2002, by and between Brea Redevelopment Agency, a public entity and Los Angeles SMSA Limited Partnership d/b/a Verizon Wireless by AirTouch Cellular, its general partner, as amended by that certain First Amendment to Communications Facility Lease dated June 17, 2020, by and between City of Brea and Los Angeles SMSA Limited Partnership, dba Verizon Wireless
Assignor represents that Assignor has no knowledge of any default now outstanding by Assignor in his capacity as the landlord/lessor under the Tenancy.
Asset File #: TWPS0548556
Assignee hereby assumes and agrees to faithfully perform and discharge any and all obligations of the landlord/lessor in and to the hereby assigned lease(s) and/or tenancy(ies) subsequent to the date hereof, subject to that certain Easement Agreement.
Subject to that certain Easement Agreement, Assignee agrees to hold Assignor harmless and indemnified from any and all loss, cost, damage and expenses, which Assignor may incur on account of Assignee’s failure to perform and discharge any and all obligations of lessor and landlord in and to the herein assigned lease and/or tenancy subsequent to the date hereof. Assignor agrees to hold Assignee harmless and indemnified from any and all loss, cost, damage and expenses, which Assignee may incur for claims related to activity prior to the date hereof.
The above shall be binding upon and inure to the benefit of Assignor and Assignee and their respective heirs, executors, legal representatives, successors and assigns.
SIGNATURES FOLLOW
Asset File #: TWPS0548556
IN WITNESS WHEREOF, Assignor has caused this instrument to be signed and sealed on its behalf this ______day of ____________________, 2025.
Assignor: CITY OF BREA CA
_______________________________________________
Kristin Griffith
City Manager
1 Civic Center Circle
Brea, California 92821
Asset File #: TWPS0548556
}ss.
IN WITNESS WHEREOF, Assignee has caused this instrument to be signed and sealed on its behalf this ______day of ____________________, 2025.
Assignee: TPA VI, LLC
_______________________________________________
Jon L. Lober
General Counsel
1170 Peachtree Street, Suite 1650
Atlanta, Georgia 30309
678-775-0360
678-775-0361
STATE OF GEORGIA
COUNTY OF FULTON
On this ______ day of ________________________, 2025, before me, the undersigned notary public, personally appeared Jon L. Lober, and proved to me through satisfactory evidence of identification, which was personal knowledge/driver’s license/passport/ ________ (circle one), to be the person whose name is signed on the preceding or attached document, and acknowledged to me that he/she signed it voluntarily for its stated purpose as General Counsel of TPA VI, LLC. __________________________________
{affix notary seal or stamp} Notary Public
My Commission Expires: 4/4/2029
Asset File #: TWPS0548556
EXHIBIT A
LEGAL DESCRIPTION
Asset File #: TWPS0548556
EXHIBIT B
DESCRIPTION OF TELECOM TENANT LEASE(S)
That certain Communications Facility Lease dated December 17, 2002, by and between Brea Redevelopment Agency, a public entity and Los Angeles SMSA Limited Partnership d/b/a Verizon Wireless by AirTouch Cellular, its general partner, as amended by that certain First Amendment to Communications Facility Lease dated June 17, 2020, by and between City of Brea and Los Angeles SMSA Limited Partnership, dba Verizon Wireless Asset File #: TWPS0548555
Record and Return to:
Name: Joseph Mangus
Address: TitleVest Agency, LLC
110 East 42nd Street, 10th Floor
New York, NY 10017
TitleVest Title #: TCA989416
Prepared by:
Jon L. Lober
TPA VI, LLC
1170 Peachtree Street, Suite 1650
Atlanta, GA 30309
ASSIGNMENT OF LEASE
To be effective on __________________________, 2025, and in consideration of One Dollar ($1) and other good and valuable consideration paid by the undersigned party hereto executing this instrument as assignee TPA VI, LLC, a Delaware limited liability company, with principal offices at 1170 Peachtree Street, Suite 1650, Atlanta, Georgia 30309 (hereinafter referred to as “Assignee”) to the undersigned party hereto executing this instrument as assignor CITY OF BREA CA, with principal offices located at 1 Civic Center Circle, Brea, California 92821 (hereinafter referred to as “Assignor”), the receipt and sufficiency thereof being hereby acknowledged, Assignor, subject to that certain Easement Agreement which is recorded contemporaneous to recording of this instrument, does hereby transfer, set over and assign to the Assignee all of Assignor’s right, title and interest in and to the lease(s) and/or tenancy(ies) upon certain Property owned by Assignor (Legal Description attached as Exhibit A) referenced below and in Exhibit B attached hereto, in which the Assignor has any right, title and interest currently existing and relating to:
That certain Communications Facility Lease dated December 2, 2008, by and between City of Brea, a municipal corporation and Los Angeles SMSA Limited Partnership, a California limited partnership, d/b/a Verizon Wireless, by AirTouch Cellular, its general partner, as amended by that certain First Amendment to Communications Facility Lease dated July 14, 2015, by and between City of Brea, a municipal corporation and Los Angeles SMSA Limited Partnership, dba Verizon Wireless
Assignor represents that Assignor has no knowledge of any default now outstanding by Assignor in his capacity as the landlord/lessor under the Tenancy.
Asset File #: TWPS0548555
Assignee hereby assumes and agrees to faithfully perform and discharge any and all obligations of the landlord/lessor in and to the hereby assigned lease(s) and/or tenancy(ies) subsequent to the date hereof, subject to that certain Easement Agreement.
Subject to that certain Easement Agreement, Assignee agrees to hold Assignor harmless and indemnified from any and all loss, cost, damage and expenses, which Assignor may incur on account of Assignee’s failure to perform and discharge any and all obligations of lessor and landlord in and to the herein assigned lease and/or tenancy subsequent to the date hereof. Assignor agrees to hold Assignee harmless and indemnified from any and all loss, cost, damage and expenses, which Assignee may incur for claims related to activity prior to the date hereof.
The above shall be binding upon and inure to the benefit of Assignor and Assignee and their respective heirs, executors, legal representatives, successors and assigns.
SIGNATURES FOLLOW
Asset File #: TWPS0548555
IN WITNESS WHEREOF, Assignor has caused this instrument to be signed and sealed on its behalf this ______day of ____________________, 2025.
Assignor: CITY OF BREA CA
_______________________________________________
Kristin Griffith
City Manager
1 Civic Center Circle
Brea, California 92821
Asset File #: TWPS0548555
}ss.
IN WITNESS WHEREOF, Assignee has caused this instrument to be signed and sealed on its behalf this ______day of ____________________, 2025.
Assignee: TPA VI, LLC
_______________________________________________
Jon L. Lober
General Counsel
1170 Peachtree Street, Suite 1650
Atlanta, Georgia 30309
678-775-0360
678-775-0361
STATE OF GEORGIA
COUNTY OF FULTON
On this ______ day of ________________________, 2025, before me, the undersigned notary public, personally appeared Jon L. Lober, and proved to me through satisfactory evidence of identification, which was personal knowledge/driver’s license/passport/ ________ (circle one), to be the person whose name is signed on the preceding or attached document, and acknowledged to me that he/she signed it voluntarily for its stated purpose as General Counsel of TPA VI, LLC. __________________________________
{affix notary seal or stamp} Notary Public
My Commission Expires: 4/4/2029
Asset File #: TWPS0548555
EXHIBIT A
LEGAL DESCRIPTION
Asset File #: TWPS0548555
EXHIBIT B
DESCRIPTION OF TELECOM TENANT LEASE(S)
That certain Communications Facility Lease dated December 2, 2008, by and between City of Brea, a municipal corporation and Los Angeles SMSA Limited Partnership, a California limited partnership, d/b/a Verizon Wireless, by AirTouch Cellular, its general partner, as amended by that certain First Amendment to Communications Facility Lease dated July 14, 2015, by and between City of Brea, a municipal corporation and Los Angeles SMSA Limited Partnership, dba Verizon Wireless
3155851.1 1
RESOLUTION NO. _____________________
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BREA, CALIFORNIA,
APPROVING THE EXECUTION OF EASEMENT AGREEMENT BY AND BETWEEN
THE CITY OF BREA AND TPA VI, LLC, A DELAWARE LIMITED LIABILITY
COMPANY AND AUTHORIZING THE CITY MANAGER OF THE CITY OF BREA TO
SIGN SUCH EASEMENTAGREEMENT ON BEHALF OF THE CITY OF BREA AND
TO EXECUTE ALL CLOSING DOCUMENTS RELATED TO SUCH EASEMENT
AGREEMENT, INCLUDING AN ASSIGNMENT OF LEASE
WHEREAS, the City Council of the City of Brea authorized the City Manager to enter negotiations for granting of a 55-year Easement Agreement (the “Easement Agreement”) as to the City’s interest in an existing cell tower site (the “Site”) located at 101 South Brea Blvd., Brea, California; and
WHEREAS, pursuant to the direction of the City Council, the City Manager negotiated the terms of the Easement Agreement for the Site in substantial compliance with the terms and provisions of the Letter of Intent dated August 20, 2025, with TowerPoint Acquisitions, LLC; and WHEREAS, the terms of the Easement Agreement provide for transfer of the City’s interest in the Site for placement of telecommunications facilities to TPA VI, LLC for a lump sum of $870,000.00; and
WHEREAS, pursuant to the provisions of state statutes and Brea City Code Section
2.04.060(M), the City Manager is granted the authority to sign written contracts and conveyances entered into and made by the City as authorized by ordinance, resolution, or other official action of the City Council; and
WHEREAS, pursuant to the provisions of state statutes and the Brea City Code, the City Clerk is authorized to acknowledge the execution of all instruments executed by the City which required acknowledgment.
NOW THEREFORE, BE IT HEREBY RESOLVED AND ORDERED BY THE CITY COUNCIL OF THE CITY OF BREA THAT a Easement Agreement by and between the City of Brea and TPA VI, LLC, a Delaware limited liability company, in the form presented, is hereby approved and authorized for execution.
NOW, THEREFORE, BE IT FURTHER RESOLVED THAT the City Manager of the City of Brea, Kristin Griffith, is hereby authorized to execute the Easement Agreement on behalf of the City of Brea.
3155851.1 2
NOW, THEREFORE, BE IT FURTHER RESOLVED THAT The City Manager of the City of Brea, Kristin Griffith, is hereby authorized to execute on behalf of the City of Brea, all closing documents required to close the transaction described in the Easement Agreement and the Letter of Intent.
The provisions of this Resolution shall become effective immediately upon adoption.
DULY PASSED AND ADOPTED this _____ day of _______________, 2025.
CITY OF BREA:
_________________________________ ___________________________________ Kristin Griffith, City Manager
ATTEST:
_________________________________ ___________________________________ ________________, City Clerk _________________, Jeryn Fletcher APPROVED AS TO FORM:
_________________________________ ___________________________________ _______________, City Attorney
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
3155851.1 3
3155851.1 1
RESOLUTION NO. _____________________
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BREA, CALIFORNIA,
APPROVING THE EXECUTION OF EASEMENT AGREEMENT BY AND BETWEEN
THE CITY OF BREA AND TPA VI, LLC, A DELAWARE LIMITED LIABILITY
COMPANY AND AUTHORIZING THE CITY MANAGER OF THE CITY OF BREA TO
SIGN SUCH EASEMENTAGREEMENT ON BEHALF OF THE CITY OF BREA AND
TO EXECUTE ALL CLOSING DOCUMENTS RELATED TO SUCH EASEMENT
AGREEMENT, INCLUDING AN ASSIGNMENT OF LEASE
WHEREAS, the City Council of the City of Brea authorized the City Manager to enter negotiations for granting of a 55-year Easement Agreement (the “Easement Agreement”) as to the City’s interest in an existing cell tower site (the “Site”) located at 400 North Kraemer Blvd., Brea, California; and
WHEREAS, pursuant to the direction of the City Council, the City Manager negotiated the terms of the Easement Agreement for the Site in substantial compliance with the terms and provisions of the Letter of Intent dated August 20, 2025, with TowerPoint Acquisitions, LLC; and WHEREAS, the terms of the Easement Agreement provide for transfer of the City’s interest in the Site for placement of telecommunications facilities to TPA VI, LLC for a lump sum of $870,000.00; and
WHEREAS, pursuant to the provisions of state statutes and Brea City Code Section
2.04.060(M), the City Manager is granted the authority to sign written contracts and conveyances entered into and made by the City as authorized by ordinance, resolution, or other official action of the City Council; and
WHEREAS, pursuant to the provisions of state statutes and the Brea City Code, the City Clerk is authorized to acknowledge the execution of all instruments executed by the City which required acknowledgment.
NOW THEREFORE, BE IT HEREBY RESOLVED AND ORDERED BY THE CITY COUNCIL OF THE CITY OF BREA THAT a Easement Agreement by and between the City of Brea and TPA VI, LLC, a Delaware limited liability company, in the form presented, is hereby approved and authorized for execution.
NOW, THEREFORE, BE IT FURTHER RESOLVED THAT the City Manager of the City of Brea, Kristin Griffith, is hereby authorized to execute the Easement Agreement on behalf of the City of Brea.
3155851.1 2
NOW, THEREFORE, BE IT FURTHER RESOLVED THAT The City Manager of the City of Brea, Kristin Griffith, is hereby authorized to execute on behalf of the City of Brea, all closing documents required to close the transaction described in the Easement Agreement and the Letter of Intent.
The provisions of this Resolution shall become effective immediately upon adoption.
DULY PASSED AND ADOPTED this _____ day of _______________, 2025.
CITY OF BREA:
_________________________________ ___________________________________ Kristin Griffith, City Manager
ATTEST:
_________________________________ ___________________________________ ________________, City Clerk _________________, Jeryn Fletcher APPROVED AS TO FORM:
_________________________________ ___________________________________ _______________, City Attorney
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
3155851.1 3
1170 Peachtree Street Atlanta, Georgia 30309
www.towerpoint.com
September 10, 2025
City of Brea
1 Civic Center Circle
Brea, CA 92821
RE: Approval of Closing Documents for cell sites located at 101 South Brea Blvd., Brea, California 92821 and 400 North Kraemer Blvd., Brea, California 92821(“Properties”) To whom it may concern:
TPA VI, LLC (“TowerPoint”) has delivered electronic copies of an Easement Agreement, an Assignment of Lease and an Escrow Agreement (“Closing Documents”) for each of the above referenced Properties to the City of Brea. These documents have been approved by TowerPoint.
Our due diligence is otherwise complete, but we are waiting on our title searches/title commitments for the Properties to confirm there are no liens or other matters that would delay closing. Once we have the title commitments we will have completed our due diligence and we can proceed to our formal approval allowing us to sign the Closing Documents.
We appreciate your consideration in reviewing and approving these transactions. We look forward to closing!
Best Regards,
TowerPoint
Jon Lober
General Counsel
CITYof BREA
City Council Regular Meeting
Communication
September 16, 2025
Item No. 6F.
Investment Policy Guidelines for the City of Brea's Employee Benefits Fund Pension Plan
TO PREPARED BY
Honorable Mayor and City Council Members Faith Madrazo, Financial Services Manager, Revenue
DEPARTMENT HEAD APPROVAL CITY MANAGER APPROVAL
Monica Lo, Administrative Services Director Kristin Griffith, City Manager
RECOMMENDATION
Staff recommends that the City Council take the following action:
1. Review and approve the Investment Policy Guidelines for the City of Brea’s Employee Benefits Fund Pension Plan through Public Agency Retirement Services (PARS).
BACKGROUND/DISCUSSION
On November 17, 2015, the Brea City Council approved participation in the Public Agencies Post-Employment Benefit Trust Program, establishing the City’s Employee Benefits Fund Pension Plan. The Plan is administered by Public Agencies Retirement Services (PARS) through an irrevocable Section 115 Trust, enabling the City to prefund its pension obligations.
Key Benefits of Participation
City Oversight: The City retains full control over the investment strategy and portfolio risk tolerance.
Enhanced Investment Flexibility: Trust assets can be invested in a broader range and higher-yielding potential than those available to General Fund assets.
Pension Rate Stabilization: Funds can be used to offset unexpected increases in CalPERS contribution rates.
Improved Credit Profile: Participation may positively influence the City’s bond rating.
Asset Accessibility: Funds remain accessible at any time, provided they are used to meet pension-related obligations.
Investment Policy Guidelines
Collaborative Development: Guidelines are established by PARS, PFM Asset Management (the Plan’s Investment Advisor), and the City’s Investment Advisory Committee (IAC).
Purpose: To clearly define investment objectives, guide long-term strategy through market fluctuations, and establilsh roles and responsibilities for:
Trustee
Investment Manager
Investment Advisory Committee
Ongoing Oversight
The Investment Advisory Committee (IAC), in coordination with PARS and PFM, conducts an annual review of the Investment Policy Guidelines.
The current strategy follows a "Balanced Objective"—aiming for both income growth and principal appreciation.
No changes have been recommended for the upcoming review cycle.
COMMISSION/COMMITTEE RECOMMENDATION
At the Investment Advisory Committee meeting held on July 28, 2025, the Committee reviewed the Investment Policy Guidelines for the City of Brea's Employee Benefits Fund Pension Plan and recommended them for City Council consideration.
FISCAL IMPACT/SUMMARY
There is no fiscal impact for approving the Investment Policy Guidelines.
Attachments
2025-07 Investment Policy Statement - 115 Pension Brea - Balanced.pdf
INVESTMENT POLICY STATEMENT
FOR
CITY OF BREA
SECTION 115 TRUST PENSION FUND
2 TABLE OF CONTENTS
SECTION PAGE
Purpose ......................................................................................................................................... 3 Investment Authority .................................................................................................................... 3 Statement of Investment Objectives ............................................................................................. 4 Investment Guidelines .................................................................................................................. 5 Time Horizon
Liquidity and Diversification
Asset Allocation
Rebalancing Philosophy
Risk Tolerance
Performance Expectations
Selection of Investment Managers ................................................................................................ 7 Guidelines for Portfolio Holdings ................................................................................................ 7 Direct Investments by Advisor
Limitations on Managers’ Portfolios
Portfolio Risk Hedging
Prohibited Portfolio Investments
Safekeeping
Control Procedures ....................................................................................................... ………..10 Review of Investment Objectives
Review of Investment Performance
Voting of Proxies
Adoption of Investment Policy Statement………………………………………………………11
3 The City of Brea “City” has established a section 115 Trust known as the City of Brea Section 115 Pension Trust (the “Trust”). This Trust will be used to invest monies to fund the City’s unfunded liability in the California Public Employee Retirement System (“CalPERS”). The City Council of Brea (“Council”) has given authority to the Plan Administrator to establish and adopt the investment Policy Statement (“Policy Statement”) for the following purposes.
Purpose
Funds set aside in the Section 115 Trust are safeguarded from diversion to other budgetary uses and generally may be invested in a broader range of securities than would typically be permitted for public agency operating funds, potentially increasing earnings. Therefore, higher returns can improve the City’s ability to meet future pension obligations. An additional advantage of holding funds in the Trust rather than contributing an equivalent amount directly to CalPERS is that the City retains control over the timing and amount of disbursements from the Trust. Retaining control of the funds in the Trust provides the flexibility to meet current or accrued liabilities based on the financial circumstances at that time. The City also controls the timing of contributions to the Trust.
The main investment objective of the Trust is to achieve long-term growth of Trust assets by maximizing long-term rate of return on investments and minimizing risk of loss.
The purpose of this Policy Statement is to achieve the following:
1. Document investment objectives, performance expectations, and investment guidelines for Fund assets.
2. Establish an appropriate investment strategy for managing all Trust assets, including an investment time horizon, risk tolerance ranges, and asset allocation to provide sufficient diversification and overall return over the long-term time horizon of the Trust.
3. Establish investment guidelines to control overall risk and liquidity.
4. Establish periodic performance reporting requirements to monitor investment results and confirm that the investment policy is being followed.
5. Comply with fiduciary, prudence, due diligence, and legal requirements for Trust assets.
Investment Authority
The Council has appointed the City Manager to be the Plan Administrator, (the “Administrator”) to oversee certain policies and procedures related to the operation and administration of the Trust. The Administrator will have authority to implement the investment policy and guidelines in the best interest of the Trust to best satisfy the purposes of the Trust. In implementing this Policy Statement, the Administrator believes it may delegate certain functions to:
4 1. An investment advisor (“Advisor”) to assist the Administrator in the investment process and to maintain compliance with this Policy Statement. The Advisor may assist the Administrator in establishing investment policy objectives and guidelines. The Advisor will adjust asset allocation for the Trust subject to the guidelines and limitations set forth in this Policy Statement. The Advisor will also select investment managers (“Managers”) and strategies consistent with its role as a fiduciary for the Trust. The investment vehicles allowed may include mutual funds, commingled trusts, separate accounts, limited partnerships and other investment vehicles deemed to be appropriate by the Advisor. The Advisor is also responsible for monitoring and reviewing investment managers; measuring and evaluating performance; and other tasks as deemed appropriate in its role as Advisor for Trust assets. The Advisor may also select investments with discretion to purchase, sell, or hold specific securities, such as Exchange Traded Funds, that will be used to meet the Trust’s investment objectives. The Advisor shall never take possession of securities, cash or other assets of the Trust, all of which shall be held by the custodian. The Advisor must be registered with the Securities and Exchange Commission.
2. A custodian selected by the Trust to maintain possession of physical securities and records of street name securities owned by the Trust, collect dividend and interest payments, redeem maturing securities, and effect receipt and delivery following purchases and sales. The custodian may also perform regular accounting of all assets owned, purchased, or sold, as well as movement of assets into and out of the Trust.
3. A trustee appointed by the Trust, such as a bank trust department, if the Trust does not have its own Trustees, to assume fiduciary responsibility for the administration of Trust assets; provided, however, that if the Administrator shall have appointed an investment advisor, then any trustee appointed under this paragraph shall have no authority with respect to selection of investments.
4. Specialists such as attorneys, auditors, actuaries and, retirement plan consultants to assist the Administrator in meeting its responsibilities and obligations to administer Trust assets prudently.
Statement of Investment Objectives
The investment objectives of the Trust are as follows:
1. To invest assets of the Trust in a manner consistent with the following fiduciary standards:
(a) all transactions undertaken must be for the sole interest of Trust beneficiaries, and (b) assets are to be diversified in order to minimize the impact of large losses from individual investments.
2. To provide for funding and anticipated withdrawals on a continuing basis for payment of benefits and reasonable expenses of operation of the Trust.
3. To enhance the value of Trust assets in real terms over the long-term through asset appreciation and income generation, while maintaining a reasonable investment risk profile.
4. Subject to performance expectations over the long-term, to minimize principal fluctuations over the Time Horizon (as defined below).
5 5. To achieve a long-term level of return commensurate with contemporary economic conditions and equal to or exceeding the investment objective set forth in this Policy Statement under the section labeled “Performance Expectations”.
Investment Guidelines
Within this section of the Policy Statement, several terms will be used to articulate various investment concepts. The descriptions are meant to be general and may share investments otherwise considered to be in the same asset class. They are:
"Growth Assets" - a collection of investments and/or asset classes whose primary risk and return characteristics are focused on capital appreciation. Investments within the Growth Assets category can include income and risk mitigating characteristics, so long as the predominant investment risk and return characteristic is capital appreciation. Examples of such investments or asset classes are:
domestic and international equities or equity funds, private or leveraged equity, and certain real estate investments.
"Income Assets" - a collection of investments and/or asset classes whose primary risk and return characteristics are focused on income generation. Investments within the Income Assets category can include capital appreciation and risk mitigating characteristics, so long as the primary investment risk and return characteristic is income generation. Examples of such investments or asset classes are:
fixed income securities, guaranteed investment contracts, and certain real estate investments. "Real Return Assets" - a collection of investments and/or asset classes whose primary risk and return characteristics are focused on real returns, net of inflation. Investments within the Real Return category may include, but are not limited to, inflation protected securities, commodities, certain real estate investments, natural resources, and liquid alternatives.
Time Horizon
The Trust’s investment objectives are based on a long-term investment horizon (“Time Horizon”) of five years or longer. Interim fluctuations should be viewed with appropriate perspective. The Administrator has adopted a long-term investment horizon such that the risks and duration of investment losses are carefully weighed against the long-term potential for appreciation of assets. However, this portfolio of assets is viewed by the City as the first pool of assets that would be utilized to support pension expenses.
As such, the time horizon for this portfolio could be less than five years based on budget conditions, or any increase in expenses arising from CalPERS.
6 Liquidity and Diversification
In general, the Trust may hold some cash, cash equivalent, and/or money market funds for near-term Trust benefits and expenses (the “Trust Distributions”). Remaining assets will be invested in longer-term investments and shall be diversified with the intent to minimize the risk of long-term investment losses.
Consequently, the total portfolio will be constructed and maintained to provide diversification with regard to the concentration of holdings in individual issues, issuers, countries, governments or industries.
Asset Allocation: Balanced (Strategic Blend)
The Administrator believes that to achieve the greatest likelihood of meeting the Trust’s investment objectives and the best balance between risk and return for optimal diversification, assets will be invested in accordance with the targets for each asset class as follows to achieve an average total annual rate of return that is equal to or greater than the Trust’s target rate of return over the long-term, as described in the section titled “Performance Expectations”.
Asset Weightings
Asset Classes Range Target
Growth Assets
Domestic Equity 20% - 50% 36%
International Equity 10% - 36% 18%
Other 0% - 20% 6%
Income Assets
Fixed Income
Other
25% - 50%
0% - 20%
38%
0%
Real Return Assets 0% - 20% 0%
Cash Equivalents 0% - 20% 2%
The Advisor and each Manager will be evaluated against their peers on the performance of the total funds under their direct management.
Rebalancing Philosophy
The asset allocation range established by this Policy Statement represents a long-term perspective. As such, rapid unanticipated market shifts or changes in economic conditions may cause the asset mix to fall outside Policy Statement ranges. When allocations breach the specified ranges, the Advisor will rebalance the assets within the specified ranges. The Advisor may also rebalance based on market conditions.
7 Risk Tolerance
Subject to investment objectives and performance expectations, the Trust will be managed in a style that seeks to minimize principal fluctuations over the established Time Horizon.
Performance Expectations
Over the long-term, five years or longer, the performance objective for the Trust will be to achieve an average total annual rate of return that is equal to or greater than the Trust’s blended benchmark target rate. Additionally, it is expected that the annual rate of return on Trust assets will be commensurate with the then prevailing investment environment. Measurement of this return expectation will be judged by reviewing returns in the context of industry standard benchmarks, peer universe comparisons for individual Trust investments and blended benchmark comparisons for the Trust in its entirety.
Selection of Investment Managers
The Advisor shall prudently select appropriate Managers to invest the assets of the Trust. Managers must meet the following criteria:
The Manager must provide historical quarterly performance data compliant with Global Investment Performance Standards (GIPS®), Securities & Exchange Commission (“SEC”), Financial Industry Regulatory Agency (“FINRA”) or industry recognized standards, as appropriate. The Manager must provide detailed information on the history of the firm, key personnel, support personnel, key clients, and fee schedule (including most-favored-nation clauses). This information can be a copy of a recent Request for Proposal (“RFP”) completed by the Manager or regulatory disclosure.
The Manager must clearly articulate the investment strategy that will be followed and document that the strategy has been successfully adhered to over time. The investment professionals making the investment decisions must have a minimum of three (3) years of experience managing similar strategies either at their current firm or at previous firms. Where other than common funds such as mutual funds or commingled trusts are utilized, the Manager must confirm receipt, understanding and adherence to this Policy Statement and any investment specific policies by signing a consent form provided to the Manager prior to investment of Trust assets.
Guidelines for Portfolio Holdings
Direct Investments by Advisor
Every effort shall be made, to the extent practical, prudent and appropriate, to select investments that have investment objectives and policies that are consistent with this Policy Statement (as outlined in the following sub-sections of the “Guidelines for Portfolio Holdings”). However, given the nature of the 8 investments, it is recognized that there may be deviations between this Policy Statement and the objectives of these investments.
Limitations on Portfolio Holdings
EQUITIES
No more than 5% of the total equity portfolio valued at market may be invested in the common equity of any one corporation; ownership of the shares of one company shall not exceed 5% of those outstanding; and not more than 40% of Equity valued at Market may be held in any one sector [excluding Mutual Funds and/or ETFs], as defined by Bloomberg (BB) Sector standards.
Domestic Equities. Other than the above constraints, there are no quantitative guidelines as to issues, industry or individual security diversification. However, prudent diversification standards should be developed and maintained by the Manager.
International Equities. The overall non-U.S. equity allocation should include a diverse global mix that is comprised of the equity of companies from multiple countries, regions and sectors.
FIXED INCOME
Fixed Income
The fixed income portion of the account will use individual bonds for the core bond portfolio.
Investment Manager may allocate assets among various sectors and industries, as well as varying maturities and credit quality that are consistent with the overall goals and objectives of the portfolio.
OTHER ASSETS (ALTERNATIVES)
Diversifying (Liquid Alternatives): Primary objective shall be to enhance the risk-return profile of the overall portfolio. This can be accomplished by using liquid alternative strategies that may enhance returns at a reasonable level of risk or reduce volatility while providing a reasonable level of return.
These asset classes may differ from traditional public market asset classes due to the use of certain strategies including short-selling, leverage, and derivatives. Liquid alternatives may also invest across asset classes. For purposes of asset allocation targets and limitations, liquid alternatives funds will be categorized under the specific asset class of the fund. For example, a long/short U.S. equity fund will be categorized as “Other” in the Growth Assets category while a long/short credit fund will be categorized as “Other” in the Income Assets category. Multi-strategy liquid alternatives funds that cannot be easily categorized under one asset class will be included in “Other” under either the Growth Assets or Income Assets category depending on the risk-return profile of the strategy.
Real Assets: Real assets are typically physical assets that have intrinsic worth due to their substance and properties. Real assets are primarily used for their lower correlation to traditional assets (i.e. stocks and 9 bonds) and their inflation hedging properties. Categories of real asset investments include, but are not limited to, real estate, infrastructure, land, farmland, timberland, precious metals, and commodities.
Public real assets are publicly traded and liquid. The benefit of lower correlation investments is that, when implemented correctly, these investments can potentially improve a portfolio’s expected riskadjusted return over the long-term. The real assets category can be extended to include other forms of assets that offer similar inflation hedging properties such as pooled vehicles holding: commodities contracts, Treasury Inflation Protected Securities (“TIPS”), index-linked derivative contracts, certain forms of intellectual property, and the equity of companies in businesses thought to hedge inflation. For purposes of asset allocation targets and limitations, real assets may be categorized as “Other” under either the Growth Assets or Income Assets category or in the Real Return Assets category, depending on the nature and risk/return profile of the investment.
CASH EQUIVALENTS
Cash equivalents shall be held in funds complying with Rule 2(a)-7 of the Investment Company Act of 1940.
Portfolio Risk Hedging
Portfolio investments designed to hedge various risks including volatility risk, interest rate risk, etc. are allowed to the extent that the investments are not used for the sole purpose of leveraging Trust assets.
One example of a hedge vehicle is an exchange traded fund (“ETF”) which takes short positions.
Prohibited Investments
Except for purchase within authorized investments, securities having the following characteristics are not authorized and shall not be purchased: letter stock and other unregistered securities, direct commodities or commodity contracts, or private placements (with the exception of Rule 144A securities). Further, derivatives, options, or futures for the sole purpose of direct portfolio leveraging are prohibited. Direct/physical ownership of real estate, natural resource properties such as oil, gas or timber and the purchase of collectibles is also prohibited.
Safekeeping
All assets of the Trust shall be held by a custodian approved by the Administrator for safekeeping of Trust assets. The custodian shall produce statements on a monthly basis, listing the name and value of all assets held, and the dates and nature of all transactions in accordance with the terms in the Trust Agreement. Investments of the Trust not held as liquidity or investment reserves shall, at all times, be invested in interest-bearing accounts. Investments and portfolio securities may not be loaned. 10 Control Procedures
Review of Investment Objectives
The Advisor shall review annually and report to the Administrator the appropriateness of this Policy Statement for achieving the Trust’s stated objectives. It is not expected that this Policy Statement will change frequently. In particular, short-term changes in the financial markets should not require an adjustment in this Policy Statement.
Review of Investment Performance
The Advisor shall report on a quarterly basis to the Administrator to review the investment performance of the Trust. In addition, the Advisor will be responsible for keeping the Administrator advised of any material change in investment strategy, Managers, and other pertinent information potentially affecting performance of the Trust.
The Advisor shall compare the investment results on a quarterly basis to appropriate peer universe benchmarks, as well as market indices in both equity and fixed income markets. Examples of benchmarks and indexes that will be used include the Russell 3000 Index for broad U.S. equity strategies; S&P 500 Index for large cap U.S. equities, Russell 2000 Index for small cap U.S. equities, MSCI ACWI ex-U.S. Index for broad based non-U.S. equity strategies, MSCI Europe, Australasia, and Far East (EAFE) Index for developed markets international equities, Bloomberg US Aggregate Bond Index for fixed income securities, and the U.S. 91 Day T-bill for cash equivalents. The Russell 3000 Index will be used to benchmark the U.S. equities portfolio; the MSCI ACWI ex-U.S. Index will be used to benchmark the non-U.S. equities portfolio; the Bloomberg US Aggregate Bond Index will be used to benchmark the fixed income portfolio. The categories “Other” will be benchmarked against appropriate indices depending on the specific characteristics of the strategies and funds used.
Voting of Proxies
The Administrator recognizes that proxies are a significant and valuable tool in corporate governance.
The voting rights of individual stocks held in separate accounts or collective, common, or pooled funds will be exercised by the investment managers in accordance with their own proxy voting policies. The voting rights of funds will be exercised by the Advisor. 11 Adoption of Investment Policy Statement
Any changes and exceptions to this Policy Statement will be made in writing and adopted by the Administrator. Once adopted, changes and exceptions will be delivered to each Manager, as appropriate, by the Advisor.
Approved by the City of Brea Plan Administrator:
Member
____________
Date
CITYof BREA
City Council Regular Meeting
Communication
September 16, 2025
Item No. 6G.
Statement of Investment Policy for the City/Brea Successor Agency to the Brea Redevelopment Agency
TO PREPARED BY
Honorable Mayor and City Council Members Faith Madrazo, Financial Services Manager, Revenue
DEPARTMENT HEAD APPROVAL CITY MANAGER APPROVAL
Monica Lo, Administrative Services Director Kristin Griffith, City Manager
RECOMMENDATION
Staff recommends that the Successor Agency take the following action:
1. Review and approve the City of Brea/Successor Agency to the Brea Redevelopment Agency Statement of Investment Policy.
BACKGROUND/DISCUSSION
In accordance with City policy, the City Council is required to annually review and adopt the Investment Policy for both the City and the Successor Agency to the Brea Redevelopment Agency, as recommended by the Investment Advisory Committee.
In 2024, the Investment Policy underwent significant revisions and was submitted for certification through the California Municipal Treasurers Association (CMTA), where it successfully achieved certification. While the CMTA review committee provided discretionary feedback, Chandler Asset Management—the City’s portfolio manager—is not recommending any changes based on that feedback at this time.
However, minor updates have been incorporated to reflect changes approved by the City Council on February 4, 2025, through Resolution No. 2025-12. These updates pertain specifically to the composition of the Investment Advisory Committee, including the addition of an at-large committee member.
Since these adjustments are minor and do not affect the core investment strategies or objectives, re-certification of the Investment Policy is not recommended at this time.
COMMITTEE APPROVAL
At the Investment Advisory Committee meeting held on July 28, 2025, the Committee reviewed the Statement of Investment Policy for the City of Brea/Successor Agency to the Brea Redevelopment Agency and recommended it for City Council consideration.
FISCAL IMPACT/SUMMARY
There is no fiscal impact from the adoption of the Statement of Investment Policy.
Attachments
Brea CA Model Investment Policy - 2024 FINAL.pdf
Brea CA Model Investment Policy - 2025 PROPOSED (Redlined) 091625.pdf Brea CA Model Investment Policy - 2025 PROPOSED 091625.pdf City of Brea, California and Successor Agency
to the Brea Redevelopment Agency
Investment
Policy
ADOPTED
AUGUST 2024
CITY OF BREA / SUCCESSOR AGENCY TO THE BREA REDEVELOPMENT AGENCY
INVESTMENT POLICY
ADOPTED
AUGUST 20, 2024
CONTENTS
I. INTRODUCTION ..................................................................................................... 1 II. SCOPE.................................................................................................................. 1 III. PRUDENCE............................................................................................................ 1 IV. OBJECTIVES.......................................................................................................... 2 V. DELEGATION OF AUTHORITY .................................................................................. 2 VI. ETHICS AND CONFLICTS OF INTEREST....................................................................... 3 VII. INTERNAL CONTROLS ............................................................................................ 3 VIII. AUTHORIZED FINANCIAL INSTITUTIONS, DEPOSITORIES, AND BROKER/DEALERS ........... 4 IX. AUTHORIZED INVESTMENTS.................................................................................... 6 X. PROHIBITED INVESTMENT VEHICLES AND PRACTICES............................................... 11 XI. INVESTMENT POOLS/MUTUAL FUNDS .................................................................... 11 XII. COLLATERALIZATION .......................................................................................... 11 XIII. DELIVERY, SAFEKEEPING AND CUSTODY ................................................................ 12 XIV. MAXIMUM MATURITY ......................................................................................... 13 XV. RISK MANAGEMENT AND DIVERSIFICATION............................................................ 13 XVI. REVIEW OF INVESTMENT PORTFOLIO ..................................................................... 14 XVII. PERFORMANCE EVALUATION ................................................................................ 14 XVIII. REPORTING......................................................................................................... 15 XIX. REVIEW OF INVESTMENT POLICY........................................................................... 16 GLOSSARY OF INVESTMENT TERMS..................................................................................... 19 1 I. INTRODUCTION
The purpose of this investment policy is to identify various policies and procedures that will foster a prudent and systematic investment program designed to seek the City of Brea/Successor Agency to the Brea Redevelopment Agency’s (“City”) objectives of safety, liquidity and return on investment through a diversified investment portfolio. The ultimate goal is to enhance the economic status of the City while protecting its pooled funds. This policy also serves to organize and formalize the City’s investment-related activities, while complying with all applicable statutes governing the investment of public funds. This policy is written to incorporate industry best practices and recommendations from sources such as the Government Finance Officers Association (GFOA), California Municipal City Treasurer and/or Administrative Services Directors Association (CMTA), California Debt and Investment Advisory Commission (CDIAC) and the Association of Public City Treasurer and/or Administrative Services Directors (APT).
This investment policy was endorsed and adopted by the City Council and is effective as of the 20 day of August, 2024, and replaces any previous versions.
II. SCOPE
This policy covers all funds and investment activities under the direct authority of the City, as set forth in the State Government Code, Sections 53600 et seq., including: General Fund, Special Revenue Funds, Assessment Funds, Enterprise Funds, Internal Service Funds, Capital Projects Funds, Debt Service Funds, Reserve Funds, Fiduciary Funds, Trust and Agency Funds, and any other funds that may be created from time to time.
This policy does not apply to retiree health care savings/trust/plan(s) or deferred compensation plans.
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.
III. PRUDENCE
Pursuant to California Government Code, Section 53600.3, all persons authorized to make investment decisions on behalf of the City are trustees and therefore fiduciaries subject to the Prudent Investor Standard:
“…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 2 diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the City, 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 City. Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law.”
The Administrative Services Director and/or designee and other authorized persons responsible for managing City funds acting in accordance with written procedures and this investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price changes provided that the Administrative Services Director and/or designee or other authorized persons acted in good faith. Deviations from expectations of a security’s credit or market risk should be reported to the City Council in a timely fashion and appropriate action should be taken to control adverse developments.
IV. OBJECTIVES
The City’s overall investment program shall be designed and managed with a degree of professionalism worthy of the public trust. The overriding objectives of the program are to preserve principal, provide sufficient liquidity, and manage investment risks, while seeking a market-rate of return.
• SAFETY. 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. To attain this objective, the City will diversify its investments by investing funds among a variety of securities with independent returns. • LIQUIDITY. The investment portfolio will remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. • RETURN ON INVESTMENTS. 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.
V. DELEGATION OF AUTHORITY
Authority to manage the City’sinvestment program is derived from California Government Code, Sections 41006 and 53600 et seq.
The City Council is responsible for the management of the City’s funds, including the administration of this investment policy. Management responsibility for the cash management of the City’s funds is hereby delegated to the Administrative Services Director and/or designee.
3 The Administrative Services Director and/or designee will be responsible for all transactions undertaken and will establish a system of procedures and controls to regulate the activities of subordinate officials and employees. 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 Administrative Services Director and/or designee.
The City may engage the services of one or more external investment advisers, who are registered under the Investment Advisers Act of 1940, to assist in the management of the City’s investment portfolio in a manner consistent with the City’s objectives. External investment advisers may be granted discretion to purchase and sell investment securities in accordance with this investment policy.
The City's overall investment program shall be designed and managed with a degree of professionalism that is worthy of the public trust. The City recognizes that in a diversified portfolio, occasional measured losses may be inevitable and must be considered within the context of the overall portfolio’s return and the cash flow requirements of the City.
VI. ETHICS AND CONFLICTS OF INTEREST
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. Thus employees and officials involved in the investment process shall refrain from personal business activity that could create a conflict of interest or the appearance of a conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions.
Employees and investment officials shall disclose to any material interests in financial institutions with which they conduct business, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking any personal investment transactions with the same individual with whom business is conducted on behalf of the City.
VII. INTERNAL CONTROLS
The Administrative Services Director and/or designee is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the entity are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management.
Periodically, as deemed appropriate by the City and/or the City Council, an independent analysis by an external auditor shall be conducted to review internal controls, account activity and compliance with policies and procedures.
4 Investment Advisory Committee: An Investment Advisory Committee (“Committee”) is established to review and make recommendations on the Investment Policy and investment strategy of the City of Brea/Successor Agency to the Brea Redevelopment Agency and to strengthen the internal control of the management of the City's funds. The following are the duties and responsibilities of the Committee:
A. Purpose
1. To review and make recommendations on investment policy and investment strategy of the City of Brea/Successor Agency to the Brea Redevelopment Agency.
2. To review the City's investments on a periodic basis and to recommend any exceptions and/or changes to the policy, to the City Council for review and approval.
B. Composition of Committee
1. City Treasurer
2. City Council Member, who serves as the Chair (selected by the City Council)
3. Administrative Services Director
4. Financial Services Manager, Revenue
5. Three (3) Brea Citizens (selected by the City Council) C. Functions
1. Annually (or as needed):
a. To review and approve Statement of Investment Policy. b. To review the financial condition and registrations of qualified broker/dealers. (Only required when investments are managed by the City.)
2. Monthly or Quarterly:
a. To review the City's investments.
b. To recommend any modifications to the Investment Policy. c. To develop and carry out the ongoing investment strategy in accordance with the Investment Policy.
d. To provide a status report at a study session of the City Council as requested.
The function of the Committee is not to inhibit the daily operation of the Administrative Services Department, but to provide policy guidelines within which to work on a day-today basis. By this, it is meant that each individual trade need not be approved by the Committee at the time it is transacted provided that it falls within the scope of the Statement of Investment Policy.
Disclosure: Members of the Committee shall be required to comply with the Fair Political Practices Act reporting requirements (Form 700) on an annual basis and submit filings to the City Clerk’s Office.
VIII. AUTHORIZED FINANCIAL INSTITUTIONS, DEPOSITORIES, AND BROKER/DEALERS To the extent practicable, the Administrative Services Director and/or designee shall endeavor to complete investment transactions using a competitive bid process whenever possible. The Administrative Services Director and/or designee will determine which 5 financial institutions are authorized to provide investment services to the City. It shall be the City’s policy to purchase securities only from authorized institutions and firms.
The Administrative Services Director and/or designee shall maintain procedures for establishing a list of authorized broker/dealers and financial institutions which are approved for investment purposes that are selected through a process of due diligence as determined by the City. Due inquiry shall determine whether such authorized broker/dealers, and the individuals covering the City are reputable and trustworthy, knowledgeable and experienced in Public City investing and able to meet all of their financial obligations. These institutions may include "primary" dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15c3-1 (uniform net capital rule).
In accordance with Section 53601.5, institutions eligible to transact investment business with the City include:
• Institutions licensed by the state as a broker-dealer. • Institutions that are members of a federally regulated securities exchange. • Primary government dealers as designated by the Federal Reserve Bank and nonprimary government dealers. • Nationally or state-chartered banks.
• The Federal Reserve Bank.
• Direct issuers of securities eligible for purchase.
Selection of financial institutions and broker/dealers authorized to engage in transactions will be at the sole discretion of the City, except where the City utilizes an external investment adviser in which case the City may rely on the adviser for selection.
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 Administrative Services Director and/or designee with audited financials and a statement certifying that the institution has reviewed the California Government Code, Section 53600 et seq. and the City’s investment policy. The Investment Advisory Committee will conduct an annual review of the financial condition and registrations of such qualified bidders.
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, or, to the extent the amount exceeds the insured maximum, will be collateralized in accordance with State law.
Selection of broker/dealers used by an external investment adviser retained by the City will be at the sole discretion of the adviser. Where possible, transactions with broker/dealers shall be selected on a competitive basis and their bid or offering prices shall be recorded.
If there is no other readily available competitive offering, best efforts will be made to document quotations for comparable or alternative securities. When purchasing original issue instrumentality securities, no competitive offerings will be required as all dealers in the selling group offer those securities at the same original issue price. 6 IX. AUTHORIZED INVESTMENTS
The City’s investments are governed by California Government Code, Sections 53600 et seq. Within the investments permitted by the Code, the City seeks to further restrict eligible investments to the guidelines listed below. In the event a discrepancy is found between this policy and the Code, the more restrictive parameters will take precedence. Percentage holding limits listed in this section apply at the time the security is purchased.
Any investment currently held at the time the policy is adopted which does not meet the new policy guidelines can be held until maturity and shall be exempt from the current policy. At the time of the investment’s maturity or liquidation, such funds shall be reinvested only as provided in the current policy.
An appropriate risk level shall be maintained by primarily purchasing securities that are of high quality, liquid, and marketable. The portfolio shall be diversified by security type and institution to avoid incurring unreasonable and avoidable risks regarding specific security types or individual issuers.
1. MUNICIPAL SECURITIES include obligations of the City, the State of California and any local City within the State of California, provided that:
• The securities are rated in a rating category of “A” or its equivalent or better by at least one nationally recognized statistical rating organization (“NRSRO”). • No more than 5% of the portfolio may be invested in any single issuer. • No more than 30% of the portfolio may be in Municipal Securities. • The maximum maturity does not exceed five (5) years.
2. MUNICIPAL SECURITIES (REGISTERED TREASURY NOTES OR BONDS) of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, City, or authority of any of the other 49 states, in addition to California.
• The securities are rated in a rating category of “A” or its equivalent or better by at least one nationally recognized statistical rating organization (“NRSRO”). • No more than 5% of the portfolio may be invested in any single issuer. • No more than 30% of the portfolio may be in Municipal Securities. • The maximum maturity does not exceed five (5) years.
3. U.S. TREASURIES 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, provided that:
• The maximum maturity does not exceed five (5) years.
4. FEDERAL AGENCIES or United States Government-Sponsored Enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to 7 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 Federal City or Government-Sponsored Enterprises (GSEs), provided that:
• No more than 25% of the portfolio may be invested in any single City/GSE issuer. • The maximum maturity does not exceed five (5) years.
• The maximum percentage of callable Agency securities in the portfolio will be 5%.
5. BANKER’S ACCEPTANCES, provided that:
• They are issued by institutions which have short-term debt obligations rated “A-1” or its equivalent or better by at least one NRSRO; or long-term debt obligations which are rated in a rating category of “A” or its equivalent or better by at least one NRSRO.
• No more than 40% of the portfolio may be invested in Banker’s Acceptances. • No more than 5% of the portfolio may be invested in any single issuer. • The maximum maturity does not exceed 180 days.
6. COMMERCIAL PAPER, provided that the securities are issued by an entity that meets all of the following conditions in either paragraph (a) or (b) and other requirements specified below:
a. SECURITIES issued by corporations:
(i) A corporation organized and operating in the United States with assets more than $500 million.
(ii) The securities are rated “A-1” or its equivalent or better by at least one NRSRO.
(iii) If the issuer has other debt obligations, they must be rated in a rating category of “A” or its equivalent or better by at least one NRSRO. b. SECURITIES issued by other entities:
(i) The issuer is organized within the United States as a special purpose corporation, trust, or limited liability company.
(ii) The securities must have program-wide credit enhancements including, but not limited to, overcollateralization, letters of credit, or a surety bond. (iii)The securities are rated “A-1” or its equivalent or better by at least one NRSRO.
• No more than 10% of the outstanding commercial paper of any single issuer. • No more than 25% of the City’s investment assets under management may be invested in Commercial Paper.
• No more than 5% of the portfolio may be invested in any single issuer. • The maximum maturity does not exceed 270 days.
7. NEGOTIABLE CERTIFICATES OF DEPOSIT (NCDS), issued by a nationally or statechartered bank, a savings association or a federal association, a state or federal credit 8 union, or by a federally licensed or state-licensed branch of a foreign bank, provided that:
• The amount of the NCD insured up to the FDIC limit does not require any credit ratings.
• Any amount above the FDIC insured limit must be issued by institutions which have short-term debt obligations rated “A-1” or its equivalent or better by at least one NRSRO; or long-term obligations rated in a rating category of “A” or its equivalent or better by at least one NRSRO.
• No more than 30% of the total portfolio may be invested in NCDs (combined with CDARS).
• No more than 5% of the portfolio may be invested in any single issuer. • The maximum maturity does not exceed five (5) years.
8. FEDERALLY INSURED TIME DEPOSITS (Non-Negotiable Certificates of Deposit) in state or federally chartered banks, savings and loans, or credit unions, provided that:
• The amount per institution is limited to the maximum covered under federal insurance.
• No more than 20% of the portfolio will be invested in a combination of federally insured and collateralized time deposits.
• The maximum maturity does not exceed five (5) years.
9. COLLATERALIZED 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:
• No more than 20% of the portfolio will be invested in a combination of federally insured and collateralized time deposits.
• The maximum maturity does not exceed five (5) years.
10. CERTIFICATE OF DEPOSIT PLACEMENT SERVICE (CDARS), provided that:
• No more than 30% of the total portfolio may be invested in a combination of Certificates of Deposit, including CDARS.
• The maximum maturity does not exceed five (5) years.
11. COLLATERALIZED BANK DEPOSITS. City’s deposits with financial institutions will be collateralized with pledged securities per California Government Code, Section 53651.
There are no limits on the dollar amount or percentage that the City may invest in collateralized bank deposits.
12. REPURCHASE AGREEMENTS collateralized with securities authorized under California Government Code, maintained at a level of at least 102% of the market value of the Repurchase Agreement. There are no limits on the dollar amount or percentage that the City may invest, provided that:
9 • Securities used as collateral for Repurchase Agreements will be delivered to an acceptable third-party custodian.
• Repurchase Agreements are subject to 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).
• The maximum maturity does not exceed one (1) year.
13. STATE OF CALIFORNIA LOCAL CITY INVESTMENT FUND (LAIF), provided that:
• The City may invest up to the maximum amount permitted by LAIF. • LAIF’s investments in instruments prohibited by or not specified in the City’s policy do not exclude the investment in LAIF itself from the City’s list of allowable investments, provided LAIF’s reports allow the Administrative Services Director and/or designee to adequately judge the risk inherent in LAIF’s portfolio.
14. LOCAL GOVERNMENT INVESTMENT POOLS
• Approved State and County Investment Pools, including the County of Orange Investment Fund, together cannot exceed 60% of the maturity value of the portfolio at time of purchase, and no more than 40% of the maturity value at the time of purchase can be deposited in any one particular pool.
15. CORPORATE MEDIUM TERM NOTES (MTNS), provided that:
• The issuer is a corporation 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.
• The securities are rated in a rating category of “A” or its equivalent or better by at least one NRSRO.
• No more than 30% of the total portfolio may be invested in MTNs. • No more than 5% of the portfolio may be invested in any single issuer. • The maximum maturity does not exceed five (5) years.
16. ASSET-BACKED, MORTGAGE-BACKED, MORTGAGE PASS-THROUGH SECURITIES,
AND COLLATERALIZED MORTGAGE OBLIGATIONS FROM ISSUERS NOT DEFINED IN SECTIONS 3 AND 4 OF THE AUTHORIZED INVESTMENTS SECTION OF THIS POLICY, provided that:
• The securities are rated in a rating category of “AA” or its equivalent or better by a NRSRO.
• No more than 15% of the total portfolio may be invested in these securities. • No more than 5% of the portfolio may be invested in any single Asset-Backed or Commercial Mortgage security issuer.
• The maximum legal final maturity does not exceed five (5) years. 10 17. MUTUAL FUNDS AND MONEY MARKET MUTUAL FUNDS that are registered with the Securities and Exchange Commission under the Investment Company Act of 1940, provided that:
a. MUTUAL FUNDS that invest in the securities and obligations as authorized under California Government Code, Section 53601 (a) to (k) and (m) to (q) inclusive and that meet either of the following criteria:
(i) Attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or
(ii) 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 and with assets under management in excess of $500 million.
• No more than 10% of the total portfolio may be invested in shares of any one mutual fund.
b. MONEY MARKET MUTUAL FUNDS registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and issued by diversified management companies and meet either of the following criteria:
(i) Have attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or
(ii) Have retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience managing money market mutual funds with assets under management in excess of $500 million.
• No more than 20% of the total portfolio may be invested in the shares of any one Money Market Mutual Fund.
c. No more than 20% of the total portfolio may be invested in these securities.
18. SUPRANATIONALS, provided that:
• Issues are US dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank.
• The securities are rated in a rating category of “AA” or its equivalent or better by a NRSRO.
• No more than 15% of the total portfolio may be invested in these securities. • No more than 5% of the portfolio may be invested in any single issuer. • The maximum maturity does not exceed five (5) years.
11 X. PROHIBITED INVESTMENT VEHICLES AND PRACTICES
• State law notwithstanding, any investments not specifically described herein are prohibited, including, but not limited to futures and options. • In accordance with Government Code, Section 53601.6, investment in inverse floaters, range notes, or mortgage derived interest-only strips is prohibited. • Investment in any security that could result in a zero-interest accrual if held to maturity is prohibited. Under a provision sunsetting on January 1, 2026, securities backed by the U.S. Government that could result in a zero- or negative-interest accrual if held to maturity are permitted. Notification to the City Council, the Investment Advisory Committee, the City Treasurer, and the Administrative Services Director and/or designee will be given within two (2) business days when securities of this type are being added to the portfolio, this allows for full disclosure and understanding of the strategy given the market conditions.
• Trading securities for the sole purpose of speculating on the future direction of interest rates is prohibited.
• Purchasing or selling securities on margin is prohibited. • The purchase of foreign currency denominated securities is prohibited. • The purchase of a security with a forward settlement date exceeding 45 days from the time of the investment is prohibited.
XI. INVESTMENT POOLS/MUTUAL FUNDS
The City shall conduct a thorough investigation of any pool or mutual fund prior to making an investment, and on a continual basis thereafter. Administrative Services Director and/or designee shall develop a questionnaire which will answer the following general questions:
• A description of eligible investment securities, and a written statement of investment policy and objectives.
• A description of interest calculations and how it is distributed, and how gains and losses are treated.
• A description of how the securities are safeguarded (including the settlement processes), and how often the securities are priced and the program audited. • A description of who may invest in the program, how often, and what size deposit and withdrawal are allowed.
• A schedule for receiving statements and portfolio listings. • Are reserves, retained earnings, etc. utilized by the pool/fund? • A fee schedule, and when and how is it assessed.
• Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds? XII. COLLATERALIZATION
CERTIFICATES OF DEPOSIT (CDS). The City shall require any commercial bank or savings and loan association to deposit eligible securities with an agency of a depository approved by the State Banking Department to secure any uninsured portion of a Non-Negotiable 12 Certificate of Deposit. The value of eligible securities as defined pursuant to California Government Code, Section 53651, pledged against a Certificate of Deposit shall be equal to 150% of the face value of the CD if the securities are classified as mortgages and 110% of the face value of the CD for all other classes of security.
COLLATERALIZATION OF BANK DEPOSITS. This is the process by which a bank or financial institution pledges securities, or other deposits for the purpose of securing repayment of deposited funds. The City shall require any bank or financial institution to comply with the collateralization criteria defined in California Government Code, Section 53651.
REPURCHASE AGREEMENTS. The City requires that Repurchase Agreements be collateralized only by securities authorized in accordance with California Government Code:
• The securities which collateralize the repurchase agreement shall be priced at Market Value, including any Accrued Interest plus a margin. The Market Value of the securities that underlie a repurchase agreement shall be valued at 102% or greater of the funds borrowed against those securities. • Financial institutions shall mark the value of the collateral to market at least monthly and increase or decrease the collateral to satisfy the ratio requirement described above.
• The City shall receive monthly statements of collateral.
XIII. DELIVERY, SAFEKEEPING AND CUSTODY
DELIVERY-VERSUS-PAYMENT (DVP). All investment transactions shall be conducted on a delivery-versus-payment basis.
SAFEKEEPING AND CUSTODY. To protect against potential losses due to failure of individual securities dealers, and to enhance access to securities, interest payments and maturity proceeds, all cash and securities in the City’s portfolio shall be held in safekeeping in the City’s name by a third-party custodian, acting as agent for the City under the terms of a custody agreement executed by the bank and the City. All investment transactions will require a safekeeping receipt or acknowledgment generated from the trade. A monthly report will be received by the City from the custodian listing all securities held in safekeeping with current market data and other information.
Monthly trust statements are reconciled to the Investment Reports by the City’s Accountant. The City’s Accountant performs reconciliation of the monthly bank statements. The periodic review of the investment portfolio, including investment types, purchase price, market values, maturity dates, and investment yields as well as conformance to the stated investment policy will be performed by the Investment Advisory Committee.
The only exceptions to the foregoing shall be depository accounts and securities purchases made with: (i) local government investment pools; (ii) time certificates of deposit, and, (iii) mutual funds and money market mutual funds, since these securities are not deliverable. 13 XIV. MAXIMUM MATURITY
To the extent possible, investments shall be matched with anticipated cash flow requirements and known future liabilities.
The City will not invest in securities maturing more than five (5) years from the date of trade settlement, unless the City Council has by resolution granted authority to make such an investment.
XV. RISK MANAGEMENT AND DIVERSIFICATION
MITIGATING CREDIT RISK IN THE PORTFOLIO
Credit risk is the risk that a security or a portfolio will lose some or all 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:
• The diversification requirements included in the “Authorized Investments” section of this policy is designed to mitigate credit risk in the portfolio. • No more than 5% of the total portfolio may be deposited with or invested in securities issued by any single issuer unless otherwise specified in this policy. • The City may elect to sell a security prior to its maturity and record a capital gain or loss in order to manage the quality, liquidity or yield of the portfolio in response to market conditions or City’s risk preferences.
• If a security owned by the City is downgraded to a level below the requirements of this policy, making the security ineligible for additional purchases, the following steps will be taken:
• Any actions taken related to the downgrade by the investment manager will be communicated to the City Council, the Investment Advisory Committee, Administrative Services Director and/or designee within two (2) business days. • If a decision is made to retain the security, the credit situation will be monitored and reported to the City Council.
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 14 interest rate environments. The City, therefore, adopts the following strategies to control and mitigate its exposure to market risk:
• The City will maintain a minimum of six months of budgeted operating expenditures in short-term investments to provide sufficient liquidity for expected disbursements. • The maximum stated final maturity of individual securities in the portfolio will be five (5) years, unless the investment is for the Senior Low Cost Housing Subsidy Program, bond proceeds for the Reserve Fund, funded/capitalized interest fund; or the City Council has granted express authority to make that investment, either specifically or as part of an investment program approved by the City Council no more than three months prior to the investment.
• The duration of the portfolio will generally be approximately equal to the duration (typically, plus or minus 20%) of a Market Benchmark, an index selected by the City based on the City’s investment objectives, constraints and risk tolerances. • When possible, a minimum of 25% of the portfolio should be in maturities of one year or less.
XVI. REVIEW OF INVESTMENT PORTFOLIO
The Administrative Services Director and/or designee shall periodically, but no less than quarterly, review the portfolio to identify investments that do not comply with this investment policy and establish protocols for reporting major and critical incidences of noncompliance to the City Council.
XVII. PERFORMANCE EVALUATION
The investment portfolio shall be designed to attain a market-average rate of return throughout budgetary and economic cycles, taking into account the City’s risk constraints, the cash flow characteristics of the portfolio, and state and local laws, ordinances or resolutions that restrict investments.
The Administrative Services Director and/or designee shall monitor and evaluate the portfolio’s performance relative to the chosen market benchmark(s), which will be included in the Monthly/Quarterly Report of Investments or a similar type of report. With the advisement of the City’s outside Investment Manager (if applicable), the Administrative Services Director and/or designee shall select an appropriate, readily available index to use as a market benchmark.
15 XVIII.REPORTING
MONTHLY REPORTS
Monthly transaction reports will be submitted by the Administrative Services Director and/or designee to the City Council within 30 days of the end of the reporting period in accordance with California Government Code Section 53607.
These reports will disclose, at a minimum, the following information about the City’s portfolio:
1. An asset listing showing par value, cost and independent third-party fair market value of each security as of the date of the report, the source of the valuation, type of investment, issuer, maturity date and interest rate.
2. Transactions for the period.
3. A description of the funds, investments and programs (including lending programs) managed by contracted parties (i.e. LAIF; investment pools, outside money managers and securities lending agents)
4. 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. Percentage of the portfolio represented by each investment category; d. Average portfolio credit quality; and,
e. Time-weighted total rate of return for the portfolio for the prior one month, three months, twelve months and since inception compared to the City’s market benchmark returns for the same periods;
5. 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.
6. A statement that the City has adequate funds to meet its cash flow requirements for the next six months.
Reports are to be submitted to the City Council and City Manager by the 3rd City Council meeting following the end of the reporting month.
The Investment Advisory Committee will review the status of investments on a quarterly basis. These reports shall include the type of investment, institution, face amount, market value, book value, interest rate, date of maturity, compliance to the investment policy.
If the City has an outside Investment Manager, the Investment Manager shall periodically report on the activity and results of the funds being managed by the Investment Manager.
Additionally, the Investment Manager shall notify the Investment Advisory Committee when investment portfolios demonstrate low performance, if any, which occurs between each periodic report.
16 QUARTERLY REPORTS
The Administrative Services Director and/or designee will submit a quarterly investment report to the City Council which provides full disclosure of the City’s investment activities within 45 days after the end of the quarter.
ANNUAL REPORTS
A comprehensive annual report will be presented to the City Council. This report will include comparisons of the City’s return to the market benchmark return, suggest policies and improvements that might enhance the investment program, and will include an investment plan for the coming year.
XIX. REVIEW OF INVESTMENT POLICY
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.
Any recommended modifications or amendments shall be presented by Staff to the City Council for their consideration and adoption.
17 SEGREGATION OF RESPONSIBILITIES
(when an Outside Investment Manager is utilized)
FUNCTION RESPONSIBILITY
Develop formal Statement of Investment
Policy
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Recommend modifications to Investment
Policy
City Treasurer
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Review formal Statement of Investment
Policy and recommend a Council action
Investment Advisory Committee
Adopt formal Statement of Investment Policy City Council Select investments Outside Investment Manager
Execute investment transactions and fax or
email completed trade information to City
Outside Investment Manager
Review transactions for compliance with
investment policy
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Outside Investment Manager
Investment verification (match broker
confirmation to trade information provided by
outside Investment Manager to City
investment records)
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Record investment transactions into City's
accounting records
City Accountant
Reconcile investment records to accounting
records and bank statements and report any
variances to Administrative Services Director
and City Treasurer
City Accountant
Security All investment securities will be held in
safekeeping in the trust department of the
City's Depository Bank, or other third-party
custodian as designated by the Administrative
Services Director.
18 SEGREGATION OF RESPONSIBILITIES
(when Investment transactions are performed by City Staff)
FUNCTION RESPONSIBILITY
Develop formal Statement of Investment
Policy
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Recommend modifications to Investment
Policy
Administrative Services Director
Deputy Director of Administrative Services
Investment Advisory Committee
Review formal Statement of Investment
Policy and recommend a Council action
Investment Advisory Committee
Annually review and adopt a formal
Statement of Investment Policy
City Council
Select investments Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Approve transactions Administrative Services Director
Deputy Director of Administrative Services
Execute investment transactions Administrative Services Director Deputy Director of Administrative Services
Investment verification (match broker
confirmation to City investment records)
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Record investment transactions into City's
accounting records
City Accountant
Reconcile investment records to accounting
records and bank statements and report any
variances to Administrative Services Director
City Accountant
Security All investment securities will be held in
safekeeping in the trust department of the
City's Depository Bank, or other third-party
custodian as designated by the Administrative
Services Director.
19 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:
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.
ASSET BACKED SECURITIES. Securities supported by pools of installment loans or leases or by pools of revolving lines of credit.
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.
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 their 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, the issuer will likely call its current securities and reissue them at a lower rate of interest.
CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced by a certificate.
CERTIFICATE OF DEPOSIT ACCOUNT REGISTRY SYSTEM (CDARS). A private placement service that allows local agencies to purchase more than $250,000 in CDs from a single financial institution (must be a participating institution of CDARS) while still maintaining FDIC insurance coverage.
CDARS is currently the only entity providing this service. CDARS facilitates the trading of deposits between the California institution and other participating institutions in amounts that are less than $250,000 each, so that FDIC coverage is maintained.
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 BANK DEPOSIT. A bank deposit that is collateralized at least 100% (principal plus interest to maturity). The deposit is collateralized using assets set aside by the issuer such as Treasury securities or other qualified collateral to secure the deposit in excess of the limit covered by the Federal Deposit Insurance Corporation.
20 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.
COLLATERALIZED TIME DEPOSIT. Time deposits that are collateralized at least 100% (principal plus interest to maturity). These instruments are collateralized using assets set aside by the issuer such as Treasury securities or other qualified collateral to secure the deposit in excess of the limit covered by the Federal Deposit Insurance Corporation.
COMMERCIAL PAPER. The short-term unsecured debt of corporations.
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.
DEALER. A dealer acts as a principal in security transactions, selling securities from and buying securities for their 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 security to changes interest rates.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC). The Federal Deposit Insurance Corporation (FDIC) is an independent federal City insuring deposits in U.S. banks and thrifts in the event of bank failures. The FDIC was created in 1933 to maintain public confidence and encourage stability in the financial system through the promotion of sound banking practices.
FEDERALLY INSURED TIME DEPOSIT. A time deposit is an interest-bearing bank deposit account that has a specified date of maturity, such as a certificate of deposit (CD). These deposits are limited to funds insured in accordance with FDIC insurance deposit limits.
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.
LOCAL CITY INVESTMENT FUND (LAIF). A voluntary investment fund open to government entities and certain non-profit organizations in California that is managed by the State City Treasurer and/or Administrative Services Director’s Office.
LOCAL GOVERNMENT INVESTMENT POOL. Investment pools that range from the State City Treasurer and/or Administrative Services Director’s Office Local City Investment Fund (LAIF) to county pools, to Joint Powers Authorities (JPAs). These funds are not subject to the same SEC rules applicable to money market mutual funds.
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.
21 MARKET RISK. The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates.
MARKET VALUE. The price at which a security can be traded.
MATURITY. The final date upon which the principal of a security becomes due and payable. The investment’s term or remaining maturity is measured from the settlement date to final maturity.
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 (T-bills, discount notes, commercial paper, and banker’s acceptances) are issued and traded.
MONEY MARKET MUTUAL FUND. A mutual fund that invests exclusively in short-term securities.
Examples of investments in money market funds are certificates of deposit and U.S. Treasury securities. Money market funds attempt to keep their net asset values at $1 per share.
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.
MUNICIPAL SECURITIES. Securities issued by state and local agencies to finance capital and operating expenses.
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.
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO).
A credit rating City that the Securities and Exchange Commission in the United States uses for regulatory purposes. Credit rating agencies provide assessments of an investment's risk. The issuers of investments, especially debt securities, pay credit rating agencies to provide them with ratings. The three most prominent NRSROs are Fitch, S&P, and Moody's.
NEGOTIABLE CERTIFICATE OF DEPOSIT (CD). A short-term debt instrument that pays interest and is issued by a bank, savings or federal association, state or federal credit union, or state-licensed branch of a foreign bank. Negotiable CDs are traded in a secondary market.
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 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.”
REPURCHASE AGREEMENT. Short-term purchases of securities with a simultaneous agreement to sell the securities back at a higher price. From the seller’s point of view, the same transaction is a reverse repurchase agreement.
SAFEKEEPING. A service to bank customers whereby securities are held by the bank in the customer’s name.
SECURITIES AND EXCHANGE COMMISSION (SEC). The U.S. Securities and Exchange Commission (SEC) is an independent federal government City responsible for protecting investors, maintaining fair and orderly functioning of securities markets and facilitating capital formation. It was created by Congress in 1934 as the first federal regulator of securities markets. The SEC promotes full 22 public disclosure, protects investors against fraudulent and manipulative practices in the market, and monitors corporate takeover actions in the United States.
SECURITIES AND EXCHANGE COMMISSION SEC) RULE 15C3-1. An SEC rule setting capital requirement for brokers and dealers. Under Rule 15c3-1, a broker or dealer must have sufficient liquidity in order to cover the most pressing obligations. This is defined as having a certain amount of liquidity as a percentage of the broker/dealer's total obligations. If the percentage falls below a certain point, the broker or dealer may not be allowed to take on new clients and may have restrictions placed on dealings with current client.
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.
SUPRANATIONAL. A Supranational is a multi-national organization whereby member states transcend national boundaries or interests to share in the decision making to promote economic development in the member countries.
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 Tbills 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.
YIELD TO MATURITY. The annualized internal rate of return on an investment which equates the expected cash flows from the investment to its cost.
CITY[MF1] OF BREA / SUCCESSOR AGENCY TO THE BREA REDEVELOPMENT AGENCY
INVESTMENT POLICY
ADOPTEDADOPTED
AUGUST SEPTEMBER 1620, 20254
CONTENTS
I. INTRODUCTION ..................................................................................................... 1 II. SCOPE .................................................................................................................. 1 III. PRUDENCE ............................................................................................................ 1 IV. OBJECTIVES ........................................................................................................ 22 V. DELEGATION OF AUTHORITY ................................................................................ 22 VI. ETHICS AND CONFLICTS OF INTEREST..................................................................... 33 VII. INTERNAL CONTROLS .......................................................................................... 33 VIII. AUTHORIZED FINANCIAL INSTITUTIONS, DEPOSITORIES, AND BROKER/DEALERS ......... 44 IX. AUTHORIZED INVESTMENTS .................................................................................. 66 X. PROHIBITED INVESTMENT VEHICLES AND PRACTICES ........................................... 1111 XI. INVESTMENT POOLS/MUTUAL FUNDS ................................................................ 1111 XII. COLLATERALIZATION ...................................................................................... 1111 XIII. DELIVERY, SAFEKEEPING AND CUSTODY ............................................................ 1212 XIV. MAXIMUM MATURITY ..................................................................................... 1313 XV. RISK MANAGEMENT AND DIVERSIFICATION ........................................................ 1313 XVI. REVIEW OF INVESTMENT PORTFOLIO.................................................................. 1414 XVII. PERFORMANCE EVALUATION ............................................................................ 1414 XVIII. REPORTING ..................................................................................................... 1515 XIX. REVIEW OF INVESTMENT POLICY ....................................................................... 1616 GLOSSARY OF INVESTMENT TERMS ................................................................................. 1919 1 I. INTRODUCTION
The purpose of this investment policy is to identify various policies and procedures that will foster a prudent and systematic investment program designed to seek the City of Brea/Successor Agency to the Brea Redevelopment Agency’s (“City”) objectives of safety, liquidity and return on investment through a diversified investment portfolio. The ultimate goal is to enhance the economic status of the City while protecting its pooled funds. This policy also serves to organize and formalize the City’s investment-related activities, while complying with all applicable statutes governing the investment of public funds. This policy is written to incorporate industry best practices and recommendations from sources such as the Government Finance Officers Association (GFOA), California Municipal City Treasurer and/or Administrative Services Directors Association (CMTA), California Debt and Investment Advisory Commission (CDIAC) and the Association of Public City Treasurer and/or Administrative Services Directors (APT).
This investment policy was endorsed and adopted by the City Council and is effective as of the 16 20 day of SeptemberAugust, 20254, and replaces any previous versions.
II. SCOPE
This policy covers all funds and investment activities under the direct authority of the City, as set forth in the State Government Code, Sections 53600 et seq., including: General Fund, Special Revenue Funds, Assessment Funds, Enterprise Funds, Internal Service Funds, Capital Projects Funds, Debt Service Funds, Reserve Funds, Fiduciary Funds, Trust and Agency Funds, and any other funds that may be created from time to time.
This policy does not apply to retiree health care savings/trust/plan(s) or deferred compensation plans.
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.
III. PRUDENCE
Pursuant to California Government Code, Section 53600.3, all persons authorized to make investment decisions on behalf of the City are trustees and therefore fiduciaries subject to the Prudent Investor Standard:
“…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 2 diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the City, 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 City. Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law.”
The Administrative Services Director (may also be referred to as the Director of Administrative Services) and/or designee and other authorized persons responsible for managing City funds acting in accordance with written procedures and this investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price changes provided that the Administrative Services Director and/or designee or other authorized persons acted in good faith. Deviations from expectations of a security’s credit or market risk should be reported to the City Council in a timely fashion and appropriate action should be taken to control adverse developments.
IV. OBJECTIVES
The City’s overall investment program shall be designed and managed with a degree of professionalism worthy of the public trust. The overriding objectives of the program are to preserve principal, provide sufficient liquidity, and manage investment risks, while seeking a market-rate of return.
SAFETY. 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. To attain this objective, the City will diversify its investments by investing funds among a variety of securities with independent returns. LIQUIDITY. The investment portfolio will remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. RETURN ON INVESTMENTS. 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.
V. DELEGATION OF AUTHORITY
Authority to manage the City’s investment program is derived from California Government Code, Sections 41006 and 53600 et seq.
The City Council is responsible for the management of the City’s funds, including the administration of this investment policy. Management responsibility for the cash management of the City’s funds is hereby delegated to the Administrative Services Director and/or designee.
3 The Administrative Services Director and/or designee will be responsible for all transactions undertaken and will establish a system of procedures and controls to regulate the activities of subordinate officials and employees. 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 Administrative Services Director and/or designee.
The City may engage the services of one or more external investment advisers, who are registered under the Investment Advisers Act of 1940, to assist in the management of the City’s investment portfolio in a manner consistent with the City’s objectives. External investment advisers may be granted discretion to purchase and sell investment securities in accordance with this investment policy.
The City's overall investment program shall be designed and managed with a degree of professionalism that is worthy of the public trust. The City recognizes that in a diversified portfolio, occasional measured losses may be inevitable and must be considered within the context of the overall portfolio’s return and the cash flow requirements of the City.
VI. ETHICS AND CONFLICTS OF INTEREST
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. Thus employees and officials involved in the investment process shall refrain from personal business activity that could create a conflict of interest or the appearance of a conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions.
Employees and investment officials shall disclose to any material interests in financial institutions with which they conduct business, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking any personal investment transactions with the same individual with whom business is conducted on behalf of the City.
VII. INTERNAL CONTROLS
The Administrative Services Director and/or designee is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the entity are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management.
Periodically, as deemed appropriate by the City and/or the City Council, an independent analysis by an external auditor shall be conducted to review internal controls, account activity and compliance with policies and procedures.
4 Investment Advisory Committee: An Investment Advisory Committee (“Committee”) is established to review and make recommendations on the Investment Policy and investment strategy of the City of Brea/Successor Agency to the Brea Redevelopment Agency and to strengthen the internal control of the management of the City's funds. The following are the duties and responsibilities of the Committee:
A. Purpose
1. To review and make recommendations on investment policy and investment strategy of the City of Brea/Successor Agency to the Brea Redevelopment Agency.
2. To review the City's investments on a periodic basis and to recommend any exceptions and/or changes to the policy, to the City Council for review and approval.
B. Composition of Committee
1. City Treasurer
2. City Council Member, who serves as the Chair (selected by the City Council)
3. Administrative Services Director
4.3.Financial Services Manager, Revenue
5.4.FourThree (43) Brea Citizens (selected by the City Council) C. Functions
1. Annually (or as needed):
a. To review and approve Statement of Investment Policy. b. To review the financial condition and registrations of qualified broker/dealers. (Only required when investments are managed by the City.)
2. Monthly or Quarterly:
a. To review the City's investments.
b. To recommend any modifications to the Investment Policy. c. To develop and carry out the ongoing investment strategy in accordance with the Investment Policy.
d. To provide a status report at a study session of the City Council as requested.
The function of the Committee is not to inhibit the daily operation of the Administrative Services Department, but to provide policy guidelines within which to work on a day-today basis. By this, it is meant that each individual trade need not be approved by the Committee at the time it is transacted provided that it falls within the scope of the Statement of Investment Policy.
Disclosure: Members of the Committee shall be required to comply with the Fair Political Practices Act reporting requirements (Form 700) on an annual basis and submit filings to the City Clerk’s Office.
VIII. AUTHORIZED FINANCIAL INSTITUTIONS, DEPOSITORIES, AND BROKER/DEALERS To the extent practicable, the Administrative Services Director and/or designee shall endeavor to complete investment transactions using a competitive bid process whenever possible. The Administrative Services Director and/or designee will determine which 5 financial institutions are authorized to provide investment services to the City. It shall be the City’s policy to purchase securities only from authorized institutions and firms.
The Administrative Services Director and/or designee shall maintain procedures for establishing a list of authorized broker/dealers and financial institutions which are approved for investment purposes that are selected through a process of due diligence as determined by the City. Due inquiry shall determine whether such authorized broker/dealers, and the individuals covering the City are reputable and trustworthy, knowledgeable and experienced in Public City investing and able to meet all of their financial obligations. These institutions may include "primary" dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15c3-1 (uniform net capital rule).
In accordance with Section 53601.5, institutions eligible to transact investment business with the City include:
Institutions licensed by the state as a broker-dealer. Institutions that are members of a federally regulated securities exchange. Primary government dealers as designated by the Federal Reserve Bank and nonprimary government dealers. Nationally or state-chartered banks.
The Federal Reserve Bank.
Direct issuers of securities eligible for purchase.
Selection of financial institutions and broker/dealers authorized to engage in transactions will be at the sole discretion of the City, except where the City utilizes an external investment adviser in which case the City may rely on the adviser for selection.
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 Administrative Services Director and/or designee with audited financials and a statement certifying that the institution has reviewed the California Government Code, Section 53600 et seq. and the City’s investment policy. The Investment Advisory Committee will conduct an annual review of the financial condition and registrations of such qualified bidders.
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, or, to the extent the amount exceeds the insured maximum, will be collateralized in accordance with State law.
Selection of broker/dealers used by an external investment adviser retained by the City will be at the sole discretion of the adviser. Where possible, transactions with broker/dealers shall be selected on a competitive basis and their bid or offering prices shall be recorded.
If there is no other readily available competitive offering, best efforts will be made to document quotations for comparable or alternative securities. When purchasing original issue instrumentality securities, no competitive offerings will be required as all dealers in the selling group offer those securities at the same original issue price. 6 IX. AUTHORIZED INVESTMENTS
The City’s investments are governed by California Government Code, Sections 53600 et seq. Within the investments permitted by the Code, the City seeks to further restrict eligible investments to the guidelines listed below. In the event a discrepancy is found between this policy and the Code, the more restrictive parameters will take precedence. Percentage holding limits listed in this section apply at the time the security is purchased.
Any investment currently held at the time the policy is adopted which does not meet the new policy guidelines can be held until maturity and shall be exempt from the current policy. At the time of the investment’s maturity or liquidation, such funds shall be reinvested only as provided in the current policy.
An appropriate risk level shall be maintained by primarily purchasing securities that are of high quality, liquid, and marketable. The portfolio shall be diversified by security type and institution to avoid incurring unreasonable and avoidable risks regarding specific security types or individual issuers.
1. MUNICIPAL SECURITIES include obligations of the City, the State of California and any local City within the State of California, provided that:
The securities are rated in a rating category of “A” or its equivalent or better by at least one nationally recognized statistical rating organization (“NRSRO”). No more than 5% of the portfolio may be invested in any single issuer. No more than 30% of the portfolio may be in Municipal Securities. The maximum maturity does not exceed five (5) years.
2. MUNICIPAL SECURITIES (REGISTERED TREASURY NOTES OR BONDS) of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, City, or authority of any of the other 49 states, in addition to California.
The securities are rated in a rating category of “A” or its equivalent or better by at least one nationally recognized statistical rating organization (“NRSRO”). No more than 5% of the portfolio may be invested in any single issuer. No more than 30% of the portfolio may be in Municipal Securities. The maximum maturity does not exceed five (5) years.
3. U.S. TREASURIES 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, provided that:
The maximum maturity does not exceed five (5) years.
4. FEDERAL AGENCIES or United States Government-Sponsored Enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to 7 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 Federal City or Government-Sponsored Enterprises (GSEs), provided that:
No more than 25% of the portfolio may be invested in any single City/GSE issuer. The maximum maturity does not exceed five (5) years.
The maximum percentage of callable Agency securities in the portfolio will be 5%.
5. BANKER’S ACCEPTANCES, provided that:
They are issued by institutions which have short-term debt obligations rated “A-1” or its equivalent or better by at least one NRSRO; or long-term debt obligations which are rated in a rating category of “A” or its equivalent or better by at least one NRSRO.
No more than 40% of the portfolio may be invested in Banker’s Acceptances. No more than 5% of the portfolio may be invested in any single issuer. The maximum maturity does not exceed 180 days.
6. COMMERCIAL PAPER, provided that the securities are issued by an entity that meets all of the following conditions in either paragraph (a) or (b) and other requirements specified below:
a. SECURITIES issued by corporations:
(i) A corporation organized and operating in the United States with assets more than $500 million.
(ii) The securities are rated “A-1” or its equivalent or better by at least one NRSRO.
(iii) If the issuer has other debt obligations, they must be rated in a rating category of “A” or its equivalent or better by at least one NRSRO. b. SECURITIES issued by other entities:
(i) The issuer is organized within the United States as a special purpose corporation, trust, or limited liability company.
(ii) The securities must have program-wide credit enhancements including, but not limited to, overcollateralization, letters of credit, or a surety bond. (iii)The securities are rated “A-1” or its equivalent or better by at least one NRSRO.
No more than 10% of the outstanding commercial paper of any single issuer. No more than 25% of the City’s investment assets under management may be invested in Commercial Paper.
No more than 5% of the portfolio may be invested in any single issuer. The maximum maturity does not exceed 270 days.
7. NEGOTIABLE CERTIFICATES OF DEPOSIT (NCDS), issued by a nationally or statechartered bank, a savings association or a federal association, a state or federal credit 8 union, or by a federally licensed or state-licensed branch of a foreign bank, provided that:
The amount of the NCD insured up to the FDIC limit does not require any credit ratings.
Any amount above the FDIC insured limit must be issued by institutions which have short-term debt obligations rated “A-1” or its equivalent or better by at least one NRSRO; or long-term obligations rated in a rating category of “A” or its equivalent or better by at least one NRSRO.
No more than 30% of the total portfolio may be invested in NCDs (combined with CDARS).
No more than 5% of the portfolio may be invested in any single issuer. The maximum maturity does not exceed five (5) years.
8. FEDERALLY INSURED TIME DEPOSITS (Non-Negotiable Certificates of Deposit) in state or federally chartered banks, savings and loans, or credit unions, provided that:
The amount per institution is limited to the maximum covered under federal insurance.
No more than 20% of the portfolio will be invested in a combination of federally insured and collateralized time deposits.
The maximum maturity does not exceed five (5) years.
9. COLLATERALIZED 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:
No more than 20% of the portfolio will be invested in a combination of federally insured and collateralized time deposits.
The maximum maturity does not exceed five (5) years.
10. CERTIFICATE OF DEPOSIT PLACEMENT SERVICE (CDARS), provided that:
No more than 30% of the total portfolio may be invested in a combination of Certificates of Deposit, including CDARS.
The maximum maturity does not exceed five (5) years.
11. COLLATERALIZED BANK DEPOSITS. City’s deposits with financial institutions will be collateralized with pledged securities per California Government Code, Section 53651.
There are no limits on the dollar amount or percentage that the City may invest in collateralized bank deposits.
12. REPURCHASE AGREEMENTS collateralized with securities authorized under California Government Code, maintained at a level of at least 102% of the market value of the Repurchase Agreement. There are no limits on the dollar amount or percentage that the City may invest, provided that:
9 Securities used as collateral for Repurchase Agreements will be delivered to an acceptable third-party custodian.
Repurchase Agreements are subject to 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).
The maximum maturity does not exceed one (1) year.
13. STATE OF CALIFORNIA LOCAL CITY INVESTMENT FUND (LAIF), provided that:
The City may invest up to the maximum amount permitted by LAIF. LAIF’s investments in instruments prohibited by or not specified in the City’s policy do not exclude the investment in LAIF itself from the City’s list of allowable investments, provided LAIF’s reports allow the Administrative Services Director and/or designee to adequately judge the risk inherent in LAIF’s portfolio.
14. LOCAL GOVERNMENT INVESTMENT POOLS
Approved State and County Investment Pools, including the County of Orange Investment Fund, together cannot exceed 60% of the maturity value of the portfolio at time of purchase, and no more than 40% of the maturity value at the time of purchase can be deposited in any one particular pool.
15. CORPORATE MEDIUM TERM NOTES (MTNS), provided that:
The issuer is a corporation 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.
The securities are rated in a rating category of “A” or its equivalent or better by at least one NRSRO.
No more than 30% of the total portfolio may be invested in MTNs. No more than 5% of the portfolio may be invested in any single issuer. The maximum maturity does not exceed five (5) years.
16. ASSET-BACKED, MORTGAGE-BACKED, MORTGAGE PASS-THROUGH SECURITIES,
AND COLLATERALIZED MORTGAGE OBLIGATIONS FROM ISSUERS NOT DEFINED IN SECTIONS 3 AND 4 OF THE AUTHORIZED INVESTMENTS SECTION OF THIS POLICY, provided that:
The securities are rated in a rating category of “AA” or its equivalent or better by a NRSRO.
No more than 15% of the total portfolio may be invested in these securities. No more than 5% of the portfolio may be invested in any single Asset-Backed or Commercial Mortgage security issuer.
The maximum legal final maturity does not exceed five (5) years. 10 17. MUTUAL FUNDS AND MONEY MARKET MUTUAL FUNDS that are registered with the Securities and Exchange Commission under the Investment Company Act of 1940, provided that:
a. MUTUAL FUNDS that invest in the securities and obligations as authorized under California Government Code, Section 53601 (a) to (k) and (m) to (q) inclusive and that meet either of the following criteria:
(i) Attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or
(ii) 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 and with assets under management in excess of $500 million.
No more than 10% of the total portfolio may be invested in shares of any one mutual fund.
b. MONEY MARKET MUTUAL FUNDS registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and issued by diversified management companies and meet either of the following criteria:
(i) Have attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or
(ii) Have retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience managing money market mutual funds with assets under management in excess of $500 million.
No more than 20% of the total portfolio may be invested in the shares of any one Money Market Mutual Fund.
c. No more than 20% of the total portfolio may be invested in these securities.
18. SUPRANATIONALS, provided that:
Issues are US dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank.
The securities are rated in a rating category of “AA” or its equivalent or better by a NRSRO.
No more than 15% of the total portfolio may be invested in these securities. No more than 5% of the portfolio may be invested in any single issuer. The maximum maturity does not exceed five (5) years.
11 X. PROHIBITED INVESTMENT VEHICLES AND PRACTICES
State law notwithstanding, any investments not specifically described herein are prohibited, including, but not limited to futures and options. In accordance with Government Code, Section 53601.6, investment in inverse floaters, range notes, or mortgage derived interest-only strips is prohibited. Investment in any security that could result in a zero-interest accrual if held to maturity is prohibited. Under a provision sunsetting on January 1, 2026, securities backed by the U.S. Government that could result in a zero- or negative-interest accrual if held to maturity are permitted. Notification to the City Council, the Investment Advisory Committee, the City Treasurer, and the Administrative Services Director and/or designee will be given within two (2) business days when securities of this type are being added to the portfolio, this allows for full disclosure and understanding of the strategy given the market conditions.
Trading securities for the sole purpose of speculating on the future direction of interest rates is prohibited.
Purchasing or selling securities on margin is prohibited. The purchase of foreign currency denominated securities is prohibited. The purchase of a security with a forward settlement date exceeding 45 days from the time of the investment is prohibited.
XI. INVESTMENT POOLS/MUTUAL FUNDS
The City shall conduct a thorough investigation of any pool or mutual fund prior to making an investment, and on a continual basis thereafter. Administrative Services Director and/or designee shall develop a questionnaire which will answer the following general questions:
A description of eligible investment securities, and a written statement of investment policy and objectives.
A description of interest calculations and how it is distributed, and how gains and losses are treated.
A description of how the securities are safeguarded (including the settlement processes), and how often the securities are priced and the program audited. A description of who may invest in the program, how often, and what size deposit and withdrawal are allowed.
A schedule for receiving statements and portfolio listings. Are reserves, retained earnings, etc. utilized by the pool/fund? A fee schedule, and when and how is it assessed.
Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds? XII. COLLATERALIZATION
CERTIFICATES OF DEPOSIT (CDS). The City shall require any commercial bank or savings and loan association to deposit eligible securities with an agency of a depository approved by the State Banking Department to secure any uninsured portion of a Non-Negotiable 12 Certificate of Deposit. The value of eligible securities as defined pursuant to California Government Code, Section 53651, pledged against a Certificate of Deposit shall be equal to 150% of the face value of the CD if the securities are classified as mortgages and 110% of the face value of the CD for all other classes of security.
COLLATERALIZATION OF BANK DEPOSITS. This is the process by which a bank or financial institution pledges securities, or other deposits for the purpose of securing repayment of deposited funds. The City shall require any bank or financial institution to comply with the collateralization criteria defined in California Government Code, Section 53651.
REPURCHASE AGREEMENTS. The City requires that Repurchase Agreements be collateralized only by securities authorized in accordance with California Government Code:
The securities which collateralize the repurchase agreement shall be priced at Market Value, including any Accrued Interest plus a margin. The Market Value of the securities that underlie a repurchase agreement shall be valued at 102% or greater of the funds borrowed against those securities. Financial institutions shall mark the value of the collateral to market at least monthly and increase or decrease the collateral to satisfy the ratio requirement described above.
The City shall receive monthly statements of collateral.
XIII. DELIVERY, SAFEKEEPING AND CUSTODY
DELIVERY-VERSUS-PAYMENT (DVP). All investment transactions shall be conducted on a delivery-versus-payment basis.
SAFEKEEPING AND CUSTODY. To protect against potential losses due to failure of individual securities dealers, and to enhance access to securities, interest payments and maturity proceeds, all cash and securities in the City’s portfolio shall be held in safekeeping in the City’s name by a third-party custodian, acting as agent for the City under the terms of a custody agreement executed by the bank and the City. All investment transactions will require a safekeeping receipt or acknowledgment generated from the trade. A monthly report will be received by the City from the custodian listing all securities held in safekeeping with current market data and other information.
Monthly trust statements are reconciled to the Investment Reports by the City’s Accountant. The City’s Accountant performs reconciliation of the monthly bank statements. The periodic review of the investment portfolio, including investment types, purchase price, market values, maturity dates, and investment yields as well as conformance to the stated investment policy will be performed by the Investment Advisory Committee.
The only exceptions to the foregoing shall be depository accounts and securities purchases made with: (i) local government investment pools; (ii) time certificates of deposit, and, (iii) mutual funds and money market mutual funds, since these securities are not deliverable. 13 XIV. MAXIMUM MATURITY
To the extent possible, investments shall be matched with anticipated cash flow requirements and known future liabilities.
The City will not invest in securities maturing more than five (5) years from the date of trade settlement, unless the City Council has by resolution granted authority to make such an investment.
XV. RISK MANAGEMENT AND DIVERSIFICATION
MITIGATING CREDIT RISK IN THE PORTFOLIO
Credit risk is the risk that a security or a portfolio will lose some or all 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:
The diversification requirements included in the “Authorized Investments” section of this policy is designed to mitigate credit risk in the portfolio. No more than 5% of the total portfolio may be deposited with or invested in securities issued by any single issuer unless otherwise specified in this policy. The City may elect to sell a security prior to its maturity and record a capital gain or loss in order to manage the quality, liquidity or yield of the portfolio in response to market conditions or City’s risk preferences.
If a security owned by the City is downgraded to a level below the requirements of this policy, making the security ineligible for additional purchases, the following steps will be taken:
Any actions taken related to the downgrade by the investment manager will be communicated to the City Council, the Investment Advisory Committee, Administrative Services Director and/or designee within two (2) business days. If a decision is made to retain the security, the credit situation will be monitored and reported to the City Council.
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 14 interest rate environments. The City, therefore, adopts the following strategies to control and mitigate its exposure to market risk:
The City will maintain a minimum of six months of budgeted operating expenditures in short-term investments to provide sufficient liquidity for expected disbursements. The maximum stated final maturity of individual securities in the portfolio will be five (5) years, unless the investment is for the Senior Low Cost Housing Subsidy Program, bond proceeds for the Reserve Fund, funded/capitalized interest fund; or the City Council has granted express authority to make that investment, either specifically or as part of an investment program approved by the City Council no more than three months prior to the investment.
The duration of the portfolio will generally be approximately equal to the duration (typically, plus or minus 20%) of a Market Benchmark, an index selected by the City based on the City’s investment objectives, constraints and risk tolerances. When possible, a minimum of 25% of the portfolio should be in maturities of one year or less.
XVI. REVIEW OF INVESTMENT PORTFOLIO
The Administrative Services Director and/or designee shall periodically, but no less than quarterly, review the portfolio to identify investments that do not comply with this investment policy and establish protocols for reporting major and critical incidences of noncompliance to the City Council.
XVII. PERFORMANCE EVALUATION
The investment portfolio shall be designed to attain a market-average rate of return throughout budgetary and economic cycles, taking into account the City’s risk constraints, the cash flow characteristics of the portfolio, and state and local laws, ordinances or resolutions that restrict investments.
The Administrative Services Director and/or designee shall monitor and evaluate the portfolio’s performance relative to the chosen market benchmark(s), which will be included in the Monthly/Quarterly Report of Investments or a similar type of report. With the advisement of the City’s outside Investment Manager (if applicable), the Administrative Services Director and/or designee shall select an appropriate, readily available index to use as a market benchmark.
15 XVIII.REPORTING
MONTHLY REPORTS
Monthly transaction reports will be submitted by the Administrative Services Director and/or designee to the City Council within 30 days of the end of the reporting period in accordance with California Government Code Section 53607.
These reports will disclose, at a minimum, the following information about the City’s portfolio:
1. An asset listing showing par value, cost and independent third-party fair market value of each security as of the date of the report, the source of the valuation, type of investment, issuer, maturity date and interest rate.
2. Transactions for the period.
3. A description of the funds, investments and programs (including lending programs) managed by contracted parties (i.e. LAIF; investment pools, outside money managers and securities lending agents)
4. 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. Percentage of the portfolio represented by each investment category; d. Average portfolio credit quality; and,
e. Time-weighted total rate of return for the portfolio for the prior one month, three months, twelve months and since inception compared to the City’s market benchmark returns for the same periods;
5. 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.
6. A statement that the City has adequate funds to meet its cash flow requirements for the next six months.
Reports are to be submitted to the City Council and City Manager by the 3rd City Council meeting following the end of the reporting month.
The Investment Advisory Committee will review the status of investments on a quarterly basis. These reports shall include the type of investment, institution, face amount, market value, book value, interest rate, date of maturity, compliance to the investment policy.
If the City has an outside Investment Manager, the Investment Manager shall periodically report on the activity and results of the funds being managed by the Investment Manager.
Additionally, the Investment Manager shall notify the Investment Advisory Committee when investment portfolios demonstrate low performance, if any, which occurs between each periodic report.
16 QUARTERLY REPORTS
The Administrative Services Director and/or designee will submit a quarterly investment report to the City Council which provides full disclosure of the City’s investment activities within 45 days after the end of the quarter.
ANNUAL REPORTS
A comprehensive annual report will be presented to the City Council. This report will include comparisons of the City’s return to the market benchmark return, suggest policies and improvements that might enhance the investment program, and will include an investment plan for the coming year.
XIX. REVIEW OF INVESTMENT POLICY
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.
Any recommended modifications or amendments shall be presented by Staff to the City Council for their consideration and adoption.
17 SEGREGATION OF RESPONSIBILITIES
(when an Outside Investment Manager is utilized)
FUNCTION RESPONSIBILITY
Develop formal Statement of Investment
Policy
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Recommend modifications to Investment
Policy
City Treasurer
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Review formal Statement of Investment
Policy and recommend a Council action
Investment Advisory Committee
Adopt formal Statement of Investment Policy City Council Select investments Outside Investment Manager
Execute investment transactions and fax or
email completed trade information to City
Outside Investment Manager
Review transactions for compliance with
investment policy
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Outside Investment Manager
Investment verification (match broker
confirmation to trade information provided by
outside Investment Manager to City
investment records)
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Record investment transactions into City's
accounting records
City Accountant
Reconcile investment records to accounting
records and bank statements and report any
variances to Administrative Services Director
and City Treasurer
City Accountant
Security All investment securities will be held in
safekeeping in the trust department of the
City's Depository Bank, or other third-party
custodian as designated by the Administrative
Services Director.
18 SEGREGATION OF RESPONSIBILITIES
(when Investment transactions are performed by City Staff)
FUNCTION RESPONSIBILITY
Develop formal Statement of Investment
Policy
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Recommend modifications to Investment
Policy
Administrative Services Director
Deputy Director of Administrative Services
Investment Advisory Committee
Review formal Statement of Investment
Policy and recommend a Council action
Investment Advisory Committee
Annually review and adopt a formal
Statement of Investment Policy
City Council
Select investments Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Approve transactions Administrative Services Director
Deputy Director of Administrative Services
Execute investment transactions Administrative Services Director Deputy Director of Administrative Services
Investment verification (match broker
confirmation to City investment records)
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Record investment transactions into City's
accounting records
City Accountant
Reconcile investment records to accounting
records and bank statements and report any
variances to Administrative Services Director
City Accountant
Security All investment securities will be held in
safekeeping in the trust department of the
City's Depository Bank, or other third-party
custodian as designated by the Administrative
Services Director.
19 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:
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.
ASSET BACKED SECURITIES. Securities supported by pools of installment loans or leases or by pools of revolving lines of credit.
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.
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 their 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, the issuer will likely call its current securities and reissue them at a lower rate of interest.
CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced by a certificate.
CERTIFICATE OF DEPOSIT ACCOUNT REGISTRY SYSTEM (CDARS). A private placement service that allows local agencies to purchase more than $250,000 in CDs from a single financial institution (must be a participating institution of CDARS) while still maintaining FDIC insurance coverage.
CDARS is currently the only entity providing this service. CDARS facilitates the trading of deposits between the California institution and other participating institutions in amounts that are less than $250,000 each, so that FDIC coverage is maintained.
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 BANK DEPOSIT. A bank deposit that is collateralized at least 100% (principal plus interest to maturity). The deposit is collateralized using assets set aside by the issuer such as Treasury securities or other qualified collateral to secure the deposit in excess of the limit covered by the Federal Deposit Insurance Corporation.
20 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.
COLLATERALIZED TIME DEPOSIT. Time deposits that are collateralized at least 100% (principal plus interest to maturity). These instruments are collateralized using assets set aside by the issuer such as Treasury securities or other qualified collateral to secure the deposit in excess of the limit covered by the Federal Deposit Insurance Corporation.
COMMERCIAL PAPER. The short-term unsecured debt of corporations.
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.
DEALER. A dealer acts as a principal in security transactions, selling securities from and buying securities for their 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 security to changes interest rates.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC). The Federal Deposit Insurance Corporation (FDIC) is an independent federal City insuring deposits in U.S. banks and thrifts in the event of bank failures. The FDIC was created in 1933 to maintain public confidence and encourage stability in the financial system through the promotion of sound banking practices.
FEDERALLY INSURED TIME DEPOSIT. A time deposit is an interest-bearing bank deposit account that has a specified date of maturity, such as a certificate of deposit (CD). These deposits are limited to funds insured in accordance with FDIC insurance deposit limits.
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.
LOCAL CITY INVESTMENT FUND (LAIF). A voluntary investment fund open to government entities and certain non-profit organizations in California that is managed by the State City Treasurer and/or Administrative Services Director’s Office.
LOCAL GOVERNMENT INVESTMENT POOL. Investment pools that range from the State City Treasurer and/or Administrative Services Director’s Office Local City Investment Fund (LAIF) to county pools, to Joint Powers Authorities (JPAs). These funds are not subject to the same SEC rules applicable to money market mutual funds.
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.
21 MARKET RISK. The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates.
MARKET VALUE. The price at which a security can be traded.
MATURITY. The final date upon which the principal of a security becomes due and payable. The investment’s term or remaining maturity is measured from the settlement date to final maturity.
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 (T-bills, discount notes, commercial paper, and banker’s acceptances) are issued and traded.
MONEY MARKET MUTUAL FUND. A mutual fund that invests exclusively in short-term securities.
Examples of investments in money market funds are certificates of deposit and U.S. Treasury securities. Money market funds attempt to keep their net asset values at $1 per share.
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.
MUNICIPAL SECURITIES. Securities issued by state and local agencies to finance capital and operating expenses.
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.
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO).
A credit rating City that the Securities and Exchange Commission in the United States uses for regulatory purposes. Credit rating agencies provide assessments of an investment's risk. The issuers of investments, especially debt securities, pay credit rating agencies to provide them with ratings. The three most prominent NRSROs are Fitch, S&P, and Moody's.
NEGOTIABLE CERTIFICATE OF DEPOSIT (CD). A short-term debt instrument that pays interest and is issued by a bank, savings or federal association, state or federal credit union, or state-licensed branch of a foreign bank. Negotiable CDs are traded in a secondary market.
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 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.”
REPURCHASE AGREEMENT. Short-term purchases of securities with a simultaneous agreement to sell the securities back at a higher price. From the seller’s point of view, the same transaction is a reverse repurchase agreement.
SAFEKEEPING. A service to bank customers whereby securities are held by the bank in the customer’s name.
SECURITIES AND EXCHANGE COMMISSION (SEC). The U.S. Securities and Exchange Commission (SEC) is an independent federal government City responsible for protecting investors, maintaining fair and orderly functioning of securities markets and facilitating capital formation. It was created by Congress in 1934 as the first federal regulator of securities markets. The SEC promotes full 22 public disclosure, protects investors against fraudulent and manipulative practices in the market, and monitors corporate takeover actions in the United States.
SECURITIES AND EXCHANGE COMMISSION SEC) RULE 15C3-1. An SEC rule setting capital requirement for brokers and dealers. Under Rule 15c3-1, a broker or dealer must have sufficient liquidity in order to cover the most pressing obligations. This is defined as having a certain amount of liquidity as a percentage of the broker/dealer's total obligations. If the percentage falls below a certain point, the broker or dealer may not be allowed to take on new clients and may have restrictions placed on dealings with current client.
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.
SUPRANATIONAL. A Supranational is a multi-national organization whereby member states transcend national boundaries or interests to share in the decision making to promote economic development in the member countries.
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 Tbills 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.
YIELD TO MATURITY. The annualized internal rate of return on an investment which equates the expected cash flows from the investment to its cost.
CITY OF BREA / SUCCESSOR AGENCY TO THE BREA REDEVELOPMENT AGENCY
INVESTMENT POLICY
ADOPTED
SEPTEMBER 16, 2025
CONTENTS
I. INTRODUCTION ..................................................................................................... 1 II. SCOPE .................................................................................................................. 1 III. PRUDENCE ............................................................................................................ 1 IV. OBJECTIVES .......................................................................................................... 2 V. DELEGATION OF AUTHORITY .................................................................................. 2 VI. ETHICS AND CONFLICTS OF INTEREST....................................................................... 3 VII. INTERNAL CONTROLS ............................................................................................ 3 VIII. AUTHORIZED FINANCIAL INSTITUTIONS, DEPOSITORIES, AND BROKER/DEALERS ........... 4 IX. AUTHORIZED INVESTMENTS .................................................................................... 6 X. PROHIBITED INVESTMENT VEHICLES AND PRACTICES ............................................... 11 XI. INVESTMENT POOLS/MUTUAL FUNDS .................................................................... 11 XII. COLLATERALIZATION .......................................................................................... 11 XIII. DELIVERY, SAFEKEEPING AND CUSTODY ................................................................ 12 XIV. MAXIMUM MATURITY ......................................................................................... 13 XV. RISK MANAGEMENT AND DIVERSIFICATION ............................................................ 13 XVI. REVIEW OF INVESTMENT PORTFOLIO...................................................................... 14 XVII. PERFORMANCE EVALUATION ................................................................................ 14 XVIII. REPORTING ......................................................................................................... 15 XIX. REVIEW OF INVESTMENT POLICY ........................................................................... 16 GLOSSARY OF INVESTMENT TERMS ..................................................................................... 19 1 I. INTRODUCTION
The purpose of this investment policy is to identify various policies and procedures that will foster a prudent and systematic investment program designed to seek the City of Brea/Successor Agency to the Brea Redevelopment Agency’s (“City”) objectives of safety, liquidity and return on investment through a diversified investment portfolio. The ultimate goal is to enhance the economic status of the City while protecting its pooled funds. This policy also serves to organize and formalize the City’s investment-related activities, while complying with all applicable statutes governing the investment of public funds. This policy is written to incorporate industry best practices and recommendations from sources such as the Government Finance Officers Association (GFOA), California Municipal City Treasurer and/or Administrative Services Directors Association (CMTA), California Debt and Investment Advisory Commission (CDIAC) and the Association of Public City Treasurer and/or Administrative Services Directors (APT).
This investment policy was endorsed and adopted by the City Council and is effective as of the 16 day of September, 2025, and replaces any previous versions.
II. SCOPE
This policy covers all funds and investment activities under the direct authority of the City, as set forth in the State Government Code, Sections 53600 et seq., including: General Fund, Special Revenue Funds, Assessment Funds, Enterprise Funds, Internal Service Funds, Capital Projects Funds, Debt Service Funds, Reserve Funds, Fiduciary Funds, Trust and Agency Funds, and any other funds that may be created from time to time.
This policy does not apply to retiree health care savings/trust/plan(s) or deferred compensation plans.
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.
III. PRUDENCE
Pursuant to California Government Code, Section 53600.3, all persons authorized to make investment decisions on behalf of the City are trustees and therefore fiduciaries subject to the Prudent Investor Standard:
“…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 2 diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the City, 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 City. Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law.”
The Administrative Services Director (may also be referred to as the Director of Administrative Services) and/or designee and other authorized persons responsible for managing City funds acting in accordance with written procedures and this investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price changes provided that the Administrative Services Director and/or designee or other authorized persons acted in good faith. Deviations from expectations of a security’s credit or market risk should be reported to the City Council in a timely fashion and appropriate action should be taken to control adverse developments.
IV. OBJECTIVES
The City’s overall investment program shall be designed and managed with a degree of professionalism worthy of the public trust. The overriding objectives of the program are to preserve principal, provide sufficient liquidity, and manage investment risks, while seeking a market-rate of return.
SAFETY. 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. To attain this objective, the City will diversify its investments by investing funds among a variety of securities with independent returns. LIQUIDITY. The investment portfolio will remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. RETURN ON INVESTMENTS. 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.
V. DELEGATION OF AUTHORITY
Authority to manage the City’s investment program is derived from California Government Code, Sections 41006 and 53600 et seq.
The City Council is responsible for the management of the City’s funds, including the administration of this investment policy. Management responsibility for the cash management of the City’s funds is hereby delegated to the Administrative Services Director and/or designee.
3 The Administrative Services Director and/or designee will be responsible for all transactions undertaken and will establish a system of procedures and controls to regulate the activities of subordinate officials and employees. 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 Administrative Services Director and/or designee.
The City may engage the services of one or more external investment advisers, who are registered under the Investment Advisers Act of 1940, to assist in the management of the City’s investment portfolio in a manner consistent with the City’s objectives. External investment advisers may be granted discretion to purchase and sell investment securities in accordance with this investment policy.
The City's overall investment program shall be designed and managed with a degree of professionalism that is worthy of the public trust. The City recognizes that in a diversified portfolio, occasional measured losses may be inevitable and must be considered within the context of the overall portfolio’s return and the cash flow requirements of the City.
VI. ETHICS AND CONFLICTS OF INTEREST
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. Thus employees and officials involved in the investment process shall refrain from personal business activity that could create a conflict of interest or the appearance of a conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions.
Employees and investment officials shall disclose to any material interests in financial institutions with which they conduct business, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking any personal investment transactions with the same individual with whom business is conducted on behalf of the City.
VII. INTERNAL CONTROLS
The Administrative Services Director and/or designee is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the entity are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management.
Periodically, as deemed appropriate by the City and/or the City Council, an independent analysis by an external auditor shall be conducted to review internal controls, account activity and compliance with policies and procedures.
4 Investment Advisory Committee: An Investment Advisory Committee (“Committee”) is established to review and make recommendations on the Investment Policy and investment strategy of the City of Brea/Successor Agency to the Brea Redevelopment Agency and to strengthen the internal control of the management of the City's funds. The following are the duties and responsibilities of the Committee:
A. Purpose
1. To review and make recommendations on investment policy and investment strategy of the City of Brea/Successor Agency to the Brea Redevelopment Agency.
2. To review the City's investments on a periodic basis and to recommend any exceptions and/or changes to the policy, to the City Council for review and approval.
B. Composition of Committee
1. City Treasurer
2. City Council Member, who serves as the Chair (selected by the City Council)
3. Administrative Services Director
4. Four (4) Brea Citizens (selected by the City Council) C. Functions
1. Annually (or as needed):
a. To review and approve Statement of Investment Policy. b. To review the financial condition and registrations of qualified broker/dealers. (Only required when investments are managed by the City.)
2. Monthly or Quarterly:
a. To review the City's investments.
b. To recommend any modifications to the Investment Policy. c. To develop and carry out the ongoing investment strategy in accordance with the Investment Policy.
d. To provide a status report at a study session of the City Council as requested.
The function of the Committee is not to inhibit the daily operation of the Administrative Services Department, but to provide policy guidelines within which to work on a day-today basis. By this, it is meant that each individual trade need not be approved by the Committee at the time it is transacted provided that it falls within the scope of the Statement of Investment Policy.
Disclosure: Members of the Committee shall be required to comply with the Fair Political Practices Act reporting requirements (Form 700) on an annual basis and submit filings to the City Clerk’s Office.
VIII. AUTHORIZED FINANCIAL INSTITUTIONS, DEPOSITORIES, AND BROKER/DEALERS To the extent practicable, the Administrative Services Director and/or designee shall endeavor to complete investment transactions using a competitive bid process whenever possible. The Administrative Services Director and/or designee will determine which 5 financial institutions are authorized to provide investment services to the City. It shall be the City’s policy to purchase securities only from authorized institutions and firms.
The Administrative Services Director and/or designee shall maintain procedures for establishing a list of authorized broker/dealers and financial institutions which are approved for investment purposes that are selected through a process of due diligence as determined by the City. Due inquiry shall determine whether such authorized broker/dealers, and the individuals covering the City are reputable and trustworthy, knowledgeable and experienced in Public City investing and able to meet all of their financial obligations. These institutions may include "primary" dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15c3-1 (uniform net capital rule).
In accordance with Section 53601.5, institutions eligible to transact investment business with the City include:
Institutions licensed by the state as a broker-dealer. Institutions that are members of a federally regulated securities exchange. Primary government dealers as designated by the Federal Reserve Bank and nonprimary government dealers. Nationally or state-chartered banks.
The Federal Reserve Bank.
Direct issuers of securities eligible for purchase.
Selection of financial institutions and broker/dealers authorized to engage in transactions will be at the sole discretion of the City, except where the City utilizes an external investment adviser in which case the City may rely on the adviser for selection.
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 Administrative Services Director and/or designee with audited financials and a statement certifying that the institution has reviewed the California Government Code, Section 53600 et seq. and the City’s investment policy. The Investment Advisory Committee will conduct an annual review of the financial condition and registrations of such qualified bidders.
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, or, to the extent the amount exceeds the insured maximum, will be collateralized in accordance with State law.
Selection of broker/dealers used by an external investment adviser retained by the City will be at the sole discretion of the adviser. Where possible, transactions with broker/dealers shall be selected on a competitive basis and their bid or offering prices shall be recorded.
If there is no other readily available competitive offering, best efforts will be made to document quotations for comparable or alternative securities. When purchasing original issue instrumentality securities, no competitive offerings will be required as all dealers in the selling group offer those securities at the same original issue price. 6 IX. AUTHORIZED INVESTMENTS
The City’s investments are governed by California Government Code, Sections 53600 et seq. Within the investments permitted by the Code, the City seeks to further restrict eligible investments to the guidelines listed below. In the event a discrepancy is found between this policy and the Code, the more restrictive parameters will take precedence. Percentage holding limits listed in this section apply at the time the security is purchased.
Any investment currently held at the time the policy is adopted which does not meet the new policy guidelines can be held until maturity and shall be exempt from the current policy. At the time of the investment’s maturity or liquidation, such funds shall be reinvested only as provided in the current policy.
An appropriate risk level shall be maintained by primarily purchasing securities that are of high quality, liquid, and marketable. The portfolio shall be diversified by security type and institution to avoid incurring unreasonable and avoidable risks regarding specific security types or individual issuers.
1. MUNICIPAL SECURITIES include obligations of the City, the State of California and any local City within the State of California, provided that:
The securities are rated in a rating category of “A” or its equivalent or better by at least one nationally recognized statistical rating organization (“NRSRO”). No more than 5% of the portfolio may be invested in any single issuer. No more than 30% of the portfolio may be in Municipal Securities. The maximum maturity does not exceed five (5) years.
2. MUNICIPAL SECURITIES (REGISTERED TREASURY NOTES OR BONDS) of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, City, or authority of any of the other 49 states, in addition to California.
The securities are rated in a rating category of “A” or its equivalent or better by at least one nationally recognized statistical rating organization (“NRSRO”). No more than 5% of the portfolio may be invested in any single issuer. No more than 30% of the portfolio may be in Municipal Securities. The maximum maturity does not exceed five (5) years.
3. U.S. TREASURIES 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, provided that:
The maximum maturity does not exceed five (5) years.
4. FEDERAL AGENCIES or United States Government-Sponsored Enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to 7 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 Federal City or Government-Sponsored Enterprises (GSEs), provided that:
No more than 25% of the portfolio may be invested in any single City/GSE issuer. The maximum maturity does not exceed five (5) years.
The maximum percentage of callable Agency securities in the portfolio will be 5%.
5. BANKER’S ACCEPTANCES, provided that:
They are issued by institutions which have short-term debt obligations rated “A-1” or its equivalent or better by at least one NRSRO; or long-term debt obligations which are rated in a rating category of “A” or its equivalent or better by at least one NRSRO.
No more than 40% of the portfolio may be invested in Banker’s Acceptances. No more than 5% of the portfolio may be invested in any single issuer. The maximum maturity does not exceed 180 days.
6. COMMERCIAL PAPER, provided that the securities are issued by an entity that meets all of the following conditions in either paragraph (a) or (b) and other requirements specified below:
a. SECURITIES issued by corporations:
(i) A corporation organized and operating in the United States with assets more than $500 million.
(ii) The securities are rated “A-1” or its equivalent or better by at least one NRSRO.
(iii) If the issuer has other debt obligations, they must be rated in a rating category of “A” or its equivalent or better by at least one NRSRO. b. SECURITIES issued by other entities:
(i) The issuer is organized within the United States as a special purpose corporation, trust, or limited liability company.
(ii) The securities must have program-wide credit enhancements including, but not limited to, overcollateralization, letters of credit, or a surety bond. (iii)The securities are rated “A-1” or its equivalent or better by at least one NRSRO.
No more than 10% of the outstanding commercial paper of any single issuer. No more than 25% of the City’s investment assets under management may be invested in Commercial Paper.
No more than 5% of the portfolio may be invested in any single issuer. The maximum maturity does not exceed 270 days.
7. NEGOTIABLE CERTIFICATES OF DEPOSIT (NCDS), issued by a nationally or statechartered bank, a savings association or a federal association, a state or federal credit 8 union, or by a federally licensed or state-licensed branch of a foreign bank, provided that:
The amount of the NCD insured up to the FDIC limit does not require any credit ratings.
Any amount above the FDIC insured limit must be issued by institutions which have short-term debt obligations rated “A-1” or its equivalent or better by at least one NRSRO; or long-term obligations rated in a rating category of “A” or its equivalent or better by at least one NRSRO.
No more than 30% of the total portfolio may be invested in NCDs (combined with CDARS).
No more than 5% of the portfolio may be invested in any single issuer. The maximum maturity does not exceed five (5) years.
8. FEDERALLY INSURED TIME DEPOSITS (Non-Negotiable Certificates of Deposit) in state or federally chartered banks, savings and loans, or credit unions, provided that:
The amount per institution is limited to the maximum covered under federal insurance.
No more than 20% of the portfolio will be invested in a combination of federally insured and collateralized time deposits.
The maximum maturity does not exceed five (5) years.
9. COLLATERALIZED 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:
No more than 20% of the portfolio will be invested in a combination of federally insured and collateralized time deposits.
The maximum maturity does not exceed five (5) years.
10. CERTIFICATE OF DEPOSIT PLACEMENT SERVICE (CDARS), provided that:
No more than 30% of the total portfolio may be invested in a combination of Certificates of Deposit, including CDARS.
The maximum maturity does not exceed five (5) years.
11. COLLATERALIZED BANK DEPOSITS. City’s deposits with financial institutions will be collateralized with pledged securities per California Government Code, Section 53651.
There are no limits on the dollar amount or percentage that the City may invest in collateralized bank deposits.
12. REPURCHASE AGREEMENTS collateralized with securities authorized under California Government Code, maintained at a level of at least 102% of the market value of the Repurchase Agreement. There are no limits on the dollar amount or percentage that the City may invest, provided that:
9 Securities used as collateral for Repurchase Agreements will be delivered to an acceptable third-party custodian.
Repurchase Agreements are subject to 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).
The maximum maturity does not exceed one (1) year.
13. STATE OF CALIFORNIA LOCAL CITY INVESTMENT FUND (LAIF), provided that:
The City may invest up to the maximum amount permitted by LAIF. LAIF’s investments in instruments prohibited by or not specified in the City’s policy do not exclude the investment in LAIF itself from the City’s list of allowable investments, provided LAIF’s reports allow the Administrative Services Director and/or designee to adequately judge the risk inherent in LAIF’s portfolio.
14. LOCAL GOVERNMENT INVESTMENT POOLS
Approved State and County Investment Pools, including the County of Orange Investment Fund, together cannot exceed 60% of the maturity value of the portfolio at time of purchase, and no more than 40% of the maturity value at the time of purchase can be deposited in any one particular pool.
15. CORPORATE MEDIUM TERM NOTES (MTNS), provided that:
The issuer is a corporation 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.
The securities are rated in a rating category of “A” or its equivalent or better by at least one NRSRO.
No more than 30% of the total portfolio may be invested in MTNs. No more than 5% of the portfolio may be invested in any single issuer. The maximum maturity does not exceed five (5) years.
16. ASSET-BACKED, MORTGAGE-BACKED, MORTGAGE PASS-THROUGH SECURITIES,
AND COLLATERALIZED MORTGAGE OBLIGATIONS FROM ISSUERS NOT DEFINED IN SECTIONS 3 AND 4 OF THE AUTHORIZED INVESTMENTS SECTION OF THIS POLICY, provided that:
The securities are rated in a rating category of “AA” or its equivalent or better by a NRSRO.
No more than 15% of the total portfolio may be invested in these securities. No more than 5% of the portfolio may be invested in any single Asset-Backed or Commercial Mortgage security issuer.
The maximum legal final maturity does not exceed five (5) years. 10 17. MUTUAL FUNDS AND MONEY MARKET MUTUAL FUNDS that are registered with the Securities and Exchange Commission under the Investment Company Act of 1940, provided that:
a. MUTUAL FUNDS that invest in the securities and obligations as authorized under California Government Code, Section 53601 (a) to (k) and (m) to (q) inclusive and that meet either of the following criteria:
(i) Attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or
(ii) 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 and with assets under management in excess of $500 million.
No more than 10% of the total portfolio may be invested in shares of any one mutual fund.
b. MONEY MARKET MUTUAL FUNDS registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and issued by diversified management companies and meet either of the following criteria:
(i) Have attained the highest ranking or the highest letter and numerical rating provided by not less than two (2) NRSROs; or
(ii) Have retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience managing money market mutual funds with assets under management in excess of $500 million.
No more than 20% of the total portfolio may be invested in the shares of any one Money Market Mutual Fund.
c. No more than 20% of the total portfolio may be invested in these securities.
18. SUPRANATIONALS, provided that:
Issues are US dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank.
The securities are rated in a rating category of “AA” or its equivalent or better by a NRSRO.
No more than 15% of the total portfolio may be invested in these securities. No more than 5% of the portfolio may be invested in any single issuer. The maximum maturity does not exceed five (5) years.
11 X. PROHIBITED INVESTMENT VEHICLES AND PRACTICES
State law notwithstanding, any investments not specifically described herein are prohibited, including, but not limited to futures and options. In accordance with Government Code, Section 53601.6, investment in inverse floaters, range notes, or mortgage derived interest-only strips is prohibited. Investment in any security that could result in a zero-interest accrual if held to maturity is prohibited. Under a provision sunsetting on January 1, 2026, securities backed by the U.S. Government that could result in a zero- or negative-interest accrual if held to maturity are permitted. Notification to the City Council, the Investment Advisory Committee, the City Treasurer, and the Administrative Services Director and/or designee will be given within two (2) business days when securities of this type are being added to the portfolio, this allows for full disclosure and understanding of the strategy given the market conditions.
Trading securities for the sole purpose of speculating on the future direction of interest rates is prohibited.
Purchasing or selling securities on margin is prohibited. The purchase of foreign currency denominated securities is prohibited. The purchase of a security with a forward settlement date exceeding 45 days from the time of the investment is prohibited.
XI. INVESTMENT POOLS/MUTUAL FUNDS
The City shall conduct a thorough investigation of any pool or mutual fund prior to making an investment, and on a continual basis thereafter. Administrative Services Director and/or designee shall develop a questionnaire which will answer the following general questions:
A description of eligible investment securities, and a written statement of investment policy and objectives.
A description of interest calculations and how it is distributed, and how gains and losses are treated.
A description of how the securities are safeguarded (including the settlement processes), and how often the securities are priced and the program audited. A description of who may invest in the program, how often, and what size deposit and withdrawal are allowed.
A schedule for receiving statements and portfolio listings. Are reserves, retained earnings, etc. utilized by the pool/fund? A fee schedule, and when and how is it assessed.
Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds? XII. COLLATERALIZATION
CERTIFICATES OF DEPOSIT (CDS). The City shall require any commercial bank or savings and loan association to deposit eligible securities with an agency of a depository approved by the State Banking Department to secure any uninsured portion of a Non-Negotiable 12 Certificate of Deposit. The value of eligible securities as defined pursuant to California Government Code, Section 53651, pledged against a Certificate of Deposit shall be equal to 150% of the face value of the CD if the securities are classified as mortgages and 110% of the face value of the CD for all other classes of security.
COLLATERALIZATION OF BANK DEPOSITS. This is the process by which a bank or financial institution pledges securities, or other deposits for the purpose of securing repayment of deposited funds. The City shall require any bank or financial institution to comply with the collateralization criteria defined in California Government Code, Section 53651.
REPURCHASE AGREEMENTS. The City requires that Repurchase Agreements be collateralized only by securities authorized in accordance with California Government Code:
The securities which collateralize the repurchase agreement shall be priced at Market Value, including any Accrued Interest plus a margin. The Market Value of the securities that underlie a repurchase agreement shall be valued at 102% or greater of the funds borrowed against those securities. Financial institutions shall mark the value of the collateral to market at least monthly and increase or decrease the collateral to satisfy the ratio requirement described above.
The City shall receive monthly statements of collateral.
XIII. DELIVERY, SAFEKEEPING AND CUSTODY
DELIVERY-VERSUS-PAYMENT (DVP). All investment transactions shall be conducted on a delivery-versus-payment basis.
SAFEKEEPING AND CUSTODY. To protect against potential losses due to failure of individual securities dealers, and to enhance access to securities, interest payments and maturity proceeds, all cash and securities in the City’s portfolio shall be held in safekeeping in the City’s name by a third-party custodian, acting as agent for the City under the terms of a custody agreement executed by the bank and the City. All investment transactions will require a safekeeping receipt or acknowledgment generated from the trade. A monthly report will be received by the City from the custodian listing all securities held in safekeeping with current market data and other information.
Monthly trust statements are reconciled to the Investment Reports by the City’s Accountant. The City’s Accountant performs reconciliation of the monthly bank statements. The periodic review of the investment portfolio, including investment types, purchase price, market values, maturity dates, and investment yields as well as conformance to the stated investment policy will be performed by the Investment Advisory Committee.
The only exceptions to the foregoing shall be depository accounts and securities purchases made with: (i) local government investment pools; (ii) time certificates of deposit, and, (iii) mutual funds and money market mutual funds, since these securities are not deliverable. 13 XIV. MAXIMUM MATURITY
To the extent possible, investments shall be matched with anticipated cash flow requirements and known future liabilities.
The City will not invest in securities maturing more than five (5) years from the date of trade settlement, unless the City Council has by resolution granted authority to make such an investment.
XV. RISK MANAGEMENT AND DIVERSIFICATION
MITIGATING CREDIT RISK IN THE PORTFOLIO
Credit risk is the risk that a security or a portfolio will lose some or all 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:
The diversification requirements included in the “Authorized Investments” section of this policy is designed to mitigate credit risk in the portfolio. No more than 5% of the total portfolio may be deposited with or invested in securities issued by any single issuer unless otherwise specified in this policy. The City may elect to sell a security prior to its maturity and record a capital gain or loss in order to manage the quality, liquidity or yield of the portfolio in response to market conditions or City’s risk preferences.
If a security owned by the City is downgraded to a level below the requirements of this policy, making the security ineligible for additional purchases, the following steps will be taken:
Any actions taken related to the downgrade by the investment manager will be communicated to the City Council, the Investment Advisory Committee, Administrative Services Director and/or designee within two (2) business days. If a decision is made to retain the security, the credit situation will be monitored and reported to the City Council.
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 14 interest rate environments. The City, therefore, adopts the following strategies to control and mitigate its exposure to market risk:
The City will maintain a minimum of six months of budgeted operating expenditures in short-term investments to provide sufficient liquidity for expected disbursements. The maximum stated final maturity of individual securities in the portfolio will be five (5) years, unless the investment is for the Senior Low Cost Housing Subsidy Program, bond proceeds for the Reserve Fund, funded/capitalized interest fund; or the City Council has granted express authority to make that investment, either specifically or as part of an investment program approved by the City Council no more than three months prior to the investment.
The duration of the portfolio will generally be approximately equal to the duration (typically, plus or minus 20%) of a Market Benchmark, an index selected by the City based on the City’s investment objectives, constraints and risk tolerances. When possible, a minimum of 25% of the portfolio should be in maturities of one year or less.
XVI. REVIEW OF INVESTMENT PORTFOLIO
The Administrative Services Director and/or designee shall periodically, but no less than quarterly, review the portfolio to identify investments that do not comply with this investment policy and establish protocols for reporting major and critical incidences of noncompliance to the City Council.
XVII. PERFORMANCE EVALUATION
The investment portfolio shall be designed to attain a market-average rate of return throughout budgetary and economic cycles, taking into account the City’s risk constraints, the cash flow characteristics of the portfolio, and state and local laws, ordinances or resolutions that restrict investments.
The Administrative Services Director and/or designee shall monitor and evaluate the portfolio’s performance relative to the chosen market benchmark(s), which will be included in the Monthly/Quarterly Report of Investments or a similar type of report. With the advisement of the City’s outside Investment Manager (if applicable), the Administrative Services Director and/or designee shall select an appropriate, readily available index to use as a market benchmark.
15 XVIII.REPORTING
MONTHLY REPORTS
Monthly transaction reports will be submitted by the Administrative Services Director and/or designee to the City Council within 30 days of the end of the reporting period in accordance with California Government Code Section 53607.
These reports will disclose, at a minimum, the following information about the City’s portfolio:
1. An asset listing showing par value, cost and independent third-party fair market value of each security as of the date of the report, the source of the valuation, type of investment, issuer, maturity date and interest rate.
2. Transactions for the period.
3. A description of the funds, investments and programs (including lending programs) managed by contracted parties (i.e. LAIF; investment pools, outside money managers and securities lending agents)
4. 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. Percentage of the portfolio represented by each investment category; d. Average portfolio credit quality; and,
e. Time-weighted total rate of return for the portfolio for the prior one month, three months, twelve months and since inception compared to the City’s market benchmark returns for the same periods;
5. 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.
6. A statement that the City has adequate funds to meet its cash flow requirements for the next six months.
Reports are to be submitted to the City Council and City Manager by the 3rd City Council meeting following the end of the reporting month.
The Investment Advisory Committee will review the status of investments on a quarterly basis. These reports shall include the type of investment, institution, face amount, market value, book value, interest rate, date of maturity, compliance to the investment policy.
If the City has an outside Investment Manager, the Investment Manager shall periodically report on the activity and results of the funds being managed by the Investment Manager.
Additionally, the Investment Manager shall notify the Investment Advisory Committee when investment portfolios demonstrate low performance, if any, which occurs between each periodic report.
16 QUARTERLY REPORTS
The Administrative Services Director and/or designee will submit a quarterly investment report to the City Council which provides full disclosure of the City’s investment activities within 45 days after the end of the quarter.
ANNUAL REPORTS
A comprehensive annual report will be presented to the City Council. This report will include comparisons of the City’s return to the market benchmark return, suggest policies and improvements that might enhance the investment program, and will include an investment plan for the coming year.
XIX. REVIEW OF INVESTMENT POLICY
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.
Any recommended modifications or amendments shall be presented by Staff to the City Council for their consideration and adoption.
17 SEGREGATION OF RESPONSIBILITIES
(when an Outside Investment Manager is utilized)
FUNCTION RESPONSIBILITY
Develop formal Statement of Investment
Policy
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Recommend modifications to Investment
Policy
City Treasurer
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Review formal Statement of Investment
Policy and recommend a Council action
Investment Advisory Committee
Adopt formal Statement of Investment Policy City Council Select investments Outside Investment Manager
Execute investment transactions and fax or
email completed trade information to City
Outside Investment Manager
Review transactions for compliance with
investment policy
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Outside Investment Manager
Investment verification (match broker
confirmation to trade information provided by
outside Investment Manager to City
investment records)
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Record investment transactions into City's
accounting records
City Accountant
Reconcile investment records to accounting
records and bank statements and report any
variances to Administrative Services Director
and City Treasurer
City Accountant
Security All investment securities will be held in
safekeeping in the trust department of the
City's Depository Bank, or other third-party
custodian as designated by the Administrative
Services Director.
18 SEGREGATION OF RESPONSIBILITIES
(when Investment transactions are performed by City Staff)
FUNCTION RESPONSIBILITY
Develop formal Statement of Investment
Policy
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Recommend modifications to Investment
Policy
Administrative Services Director
Deputy Director of Administrative Services
Investment Advisory Committee
Review formal Statement of Investment
Policy and recommend a Council action
Investment Advisory Committee
Annually review and adopt a formal
Statement of Investment Policy
City Council
Select investments Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Approve transactions Administrative Services Director
Deputy Director of Administrative Services
Execute investment transactions Administrative Services Director Deputy Director of Administrative Services
Investment verification (match broker
confirmation to City investment records)
Administrative Services Director
Deputy Director of Administrative Services
Financial Services Manager, Revenue
Record investment transactions into City's
accounting records
City Accountant
Reconcile investment records to accounting
records and bank statements and report any
variances to Administrative Services Director
City Accountant
Security All investment securities will be held in
safekeeping in the trust department of the
City's Depository Bank, or other third-party
custodian as designated by the Administrative
Services Director.
19 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:
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.
ASSET BACKED SECURITIES. Securities supported by pools of installment loans or leases or by pools of revolving lines of credit.
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.
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 their 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, the issuer will likely call its current securities and reissue them at a lower rate of interest.
CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced by a certificate.
CERTIFICATE OF DEPOSIT ACCOUNT REGISTRY SYSTEM (CDARS). A private placement service that allows local agencies to purchase more than $250,000 in CDs from a single financial institution (must be a participating institution of CDARS) while still maintaining FDIC insurance coverage.
CDARS is currently the only entity providing this service. CDARS facilitates the trading of deposits between the California institution and other participating institutions in amounts that are less than $250,000 each, so that FDIC coverage is maintained.
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 BANK DEPOSIT. A bank deposit that is collateralized at least 100% (principal plus interest to maturity). The deposit is collateralized using assets set aside by the issuer such as Treasury securities or other qualified collateral to secure the deposit in excess of the limit covered by the Federal Deposit Insurance Corporation.
20 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.
COLLATERALIZED TIME DEPOSIT. Time deposits that are collateralized at least 100% (principal plus interest to maturity). These instruments are collateralized using assets set aside by the issuer such as Treasury securities or other qualified collateral to secure the deposit in excess of the limit covered by the Federal Deposit Insurance Corporation.
COMMERCIAL PAPER. The short-term unsecured debt of corporations.
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.
DEALER. A dealer acts as a principal in security transactions, selling securities from and buying securities for their 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 security to changes interest rates.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC). The Federal Deposit Insurance Corporation (FDIC) is an independent federal City insuring deposits in U.S. banks and thrifts in the event of bank failures. The FDIC was created in 1933 to maintain public confidence and encourage stability in the financial system through the promotion of sound banking practices.
FEDERALLY INSURED TIME DEPOSIT. A time deposit is an interest-bearing bank deposit account that has a specified date of maturity, such as a certificate of deposit (CD). These deposits are limited to funds insured in accordance with FDIC insurance deposit limits.
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.
LOCAL CITY INVESTMENT FUND (LAIF). A voluntary investment fund open to government entities and certain non-profit organizations in California that is managed by the State City Treasurer and/or Administrative Services Director’s Office.
LOCAL GOVERNMENT INVESTMENT POOL. Investment pools that range from the State City Treasurer and/or Administrative Services Director’s Office Local City Investment Fund (LAIF) to county pools, to Joint Powers Authorities (JPAs). These funds are not subject to the same SEC rules applicable to money market mutual funds.
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.
21 MARKET RISK. The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates.
MARKET VALUE. The price at which a security can be traded.
MATURITY. The final date upon which the principal of a security becomes due and payable. The investment’s term or remaining maturity is measured from the settlement date to final maturity.
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 (T-bills, discount notes, commercial paper, and banker’s acceptances) are issued and traded.
MONEY MARKET MUTUAL FUND. A mutual fund that invests exclusively in short-term securities.
Examples of investments in money market funds are certificates of deposit and U.S. Treasury securities. Money market funds attempt to keep their net asset values at $1 per share.
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.
MUNICIPAL SECURITIES. Securities issued by state and local agencies to finance capital and operating expenses.
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.
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO).
A credit rating City that the Securities and Exchange Commission in the United States uses for regulatory purposes. Credit rating agencies provide assessments of an investment's risk. The issuers of investments, especially debt securities, pay credit rating agencies to provide them with ratings. The three most prominent NRSROs are Fitch, S&P, and Moody's.
NEGOTIABLE CERTIFICATE OF DEPOSIT (CD). A short-term debt instrument that pays interest and is issued by a bank, savings or federal association, state or federal credit union, or state-licensed branch of a foreign bank. Negotiable CDs are traded in a secondary market.
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 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.”
REPURCHASE AGREEMENT. Short-term purchases of securities with a simultaneous agreement to sell the securities back at a higher price. From the seller’s point of view, the same transaction is a reverse repurchase agreement.
SAFEKEEPING. A service to bank customers whereby securities are held by the bank in the customer’s name.
SECURITIES AND EXCHANGE COMMISSION (SEC). The U.S. Securities and Exchange Commission (SEC) is an independent federal government City responsible for protecting investors, maintaining fair and orderly functioning of securities markets and facilitating capital formation. It was created by Congress in 1934 as the first federal regulator of securities markets. The SEC promotes full 22 public disclosure, protects investors against fraudulent and manipulative practices in the market, and monitors corporate takeover actions in the United States.
SECURITIES AND EXCHANGE COMMISSION SEC) RULE 15C3-1. An SEC rule setting capital requirement for brokers and dealers. Under Rule 15c3-1, a broker or dealer must have sufficient liquidity in order to cover the most pressing obligations. This is defined as having a certain amount of liquidity as a percentage of the broker/dealer's total obligations. If the percentage falls below a certain point, the broker or dealer may not be allowed to take on new clients and may have restrictions placed on dealings with current client.
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.
SUPRANATIONAL. A Supranational is a multi-national organization whereby member states transcend national boundaries or interests to share in the decision making to promote economic development in the member countries.
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 Tbills 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.
CITYof BREA
Communication
September 16, 2025
Item No. 6H.
Investment Policy Guidelines for the City of Brea's Other Post Employment Benefits (OPEB) Trust Fund
TO PREPARED BY
Honorable Mayor and City Council Members Faith Madrazo, Financial Services Manager, Revenue
DEPARTMENT HEAD APPROVAL CITY MANAGER APPROVAL
Monica Lo, Administrative Services Director Kristin Griffith, City Manager
RECOMMENDATION
Staff recommends that the City Council take the following action:
1. Review and approve the Investment Guidelines for the City's Other Post Employment Benefits (OPEB) Trust Fund through Public Agency Retirement Services (PARS).
BACKGROUND/DISCUSSION
On May 5, 2020, the City Council approved the Investment Guidelines for the City's OPEB Trust Program ("Plan"), adopting the Moderate Investment Objective recommended by the Investment Advisory Committee (IAC).
Strategic Asset Allocation
Strategic Asset Allocation Ranges
Cash Fixed Income Equity
0-20% 40%-60% 40%-60%
Policy: 5% Policy: 45% Policy: 50%
Investment Goals & Objectives:
Achieve a reasonable level of growth to fund both current and future obligations.
Outperform the policy benchmark over the life of the Plan.
Manage assets on a total return basis, considering both income and capital appreciation.
While capital preservation is important, the Plan embraces measured risk-taking to pursue higher long-term returns.
Purpose of the Investment Guidelines:
Ensure clear communication between the Plan sponsor and fiduciaries.
Confirm investment goals, objectives, and management policies.
Guide the construction of a diversified asset mix aligned with the Plan's needs, risk tolerance, and liquidity requirements.
Identify any investment restrictions or unique considerations.
Encourage a long-term perspective, especially during periods of short-term market volatility.
Contributions & Updates:
Due to the COVID-19 pandemic, the initial contribution was delayed.
The first contribution of $250,000 was made on May 13, 2024, followed by $175,000 on June 24, 2024.
At the April 22, 2024 IAC meeting, it was determined that the original 2020 recommendation for 12 month dollar cost averaging is no longer applicable due to the current low balance. Ongoing contributions will naturally achieve a dollar cost averaging effect over time.
Current Status:
There are no changes to the Investment Policy Guidelines for this year.
COMMISSION/COMMITTEE RECOMMENDATION
At the Investment Advisory Committee meeting held on July 28, 2025, the Committee reviewed the Investment Policy Guidelines for the City of Brea's Other Post Employment Benefits (OPEB) Trust Fund and recommended them for City Council consideration.
FISCAL IMPACT/SUMMARY
There is no fiscal impact for approving the Investment Policy Guidelines.
Attachments
2025-07 Template IPS City of Brea- OPEB - Moderate SB.pdf
INVESTMENT POLICY STATEMENT
FOR
CITY OF BREA
OTHER POST-EMPLOYMENT BENEFITS TRUST
2 TABLE OF CONTENTS
SECTION PAGE
Purpose ......................................................................................................................................... 3 Investment Authority .................................................................................................................... 3 Statement of Investment Objectives ............................................................................................. 4 Investment Guidelines .................................................................................................................. 5 Time Horizon
Liquidity and Diversification
Asset Allocation
Rebalancing Philosophy
Risk Tolerance
Performance Expectations
Selection of Investment Managers ................................................................................................ 7 Guidelines for Portfolio Holdings ................................................................................................ 7 Direct Investments by Advisor
Limitations on Managers’ Portfolios
Portfolio Risk Hedging
Prohibited Portfolio Investments
Safekeeping
Control Procedures ......................................................................................................... ………..9 Review of Investment Objectives
Review of Investment Performance
Voting of Proxies
Adoption of Investment Policy Statement………………………………………………………11 3 The City of Brea has established the City of Brea Other Post-Employment Benefits Trust (the “Trust”).
This Trust is intended to provide funding of non-pension post-employment benefits (“OPEB”) for those employees who meet the age and service requirements outlined in the plan document. The Trustees of the Trust hereby adopt this Investment Policy Statement (“Policy Statement”) for the following purposes.
Purpose
The main investment objective of the Trust is to achieve long-term growth of Trust assets by maximizing long-term rate of return on investments and minimizing risk of loss to fulfill the City’s current and long-term OPEB obligations.
The purpose of this Policy Statement is to achieve the following:
1. Document investment objectives, performance expectations and investment guidelines for Trust assets.
2. Establish an appropriate investment strategy for managing all Trust assets, including an investment time horizon, risk tolerance ranges and asset allocation to provide sufficient diversification and overall return over the long-term time horizon of the Trust.
3. Establish investment guidelines to control overall risk and liquidity.
4. Establish periodic performance reporting requirements to monitor investment results and confirm that the investment policy is being followed.
5. Comply with fiduciary, prudence, due diligence and legal requirements for Trust assets.
Investment Authority
The City Council has appointed a Plan Administrator (the “Administrator”) to oversee certain policies and procedures related to the operation and administration of the Trust. The Administrator will have authority to implement the investment policy and guidelines in the best interest of the Trust to best satisfy the purposes of the Trust. In implementing this Policy Statement, the Administrator believes it may delegate certain functions to:
1. An investment advisor (“Advisor”) to assist the Administrator in the investment process and to maintain compliance with this Policy Statement. The Advisor may assist the Administrator in establishing investment policy objectives and guidelines. The Advisor will adjust asset allocation for the Trust subject to the guidelines and limitations set forth in this Policy Statement. The Advisor will also select investment managers (“Managers”) and strategies consistent with its role as a fiduciary for the Trust. The investment vehicles allowed may include mutual funds, commingled trusts, separate accounts, limited partnerships and other investment vehicles deemed to be appropriate by the Advisor. The Advisor is also responsible 4 for monitoring and reviewing investment managers; measuring and evaluating performance; and other tasks as deemed appropriate in its role as Advisor for Trust assets. The Advisor may also select investments with discretion to purchase, sell, or hold specific securities, such as Exchange Traded Funds, that will be used to meet the Trust’s investment objectives. The Advisor shall never take possession of securities, cash or other assets of the Trust, all of which shall be held by the custodian. The Advisor must be registered with the Securities and Exchange Commission.
2. A custodian selected by the Trust to maintain possession of physical securities and records of street name securities owned by the Trust, collect dividend and interest payments, redeem maturing securities, and effect receipt and delivery following purchases and sales. The custodian may also perform regular accounting of all assets owned, purchased, or sold, as well as movement of assets into and out of the Trust.
3. A trustee appointed by the Trust, such as a bank trust department, if the Trust does not have its own Trustees, to assume fiduciary responsibility for the administration of Trust assets; provided, however, that if the Administrator shall have appointed an investment advisor, then any trustee appointed under this paragraph shall have no authority with respect to selection of investments.
4. Specialists such as attorneys, auditors, actuaries and, retirement plan consultants to assist the Administrator in meeting its responsibilities and obligations to administer Trust assets prudently.
Statement of Investment Objectives
The investment objectives of the Trust are as follows:
1. To invest assets of the Trust in a manner consistent with the following fiduciary standards:
(a) all transactions undertaken must be for the sole interest of Trust beneficiaries, and (b) assets are to be diversified in order to minimize the impact of large losses from individual investments.
2. To provide for funding and anticipated withdrawals on a continuing basis for payment of benefits and reasonable expenses of operation of the Trust.
3. To enhance the value of Trust assets in real terms over the long-term through asset appreciation and income generation, while maintaining a reasonable investment risk profile.
4. Subject to performance expectations over the long-term, to minimize principal fluctuations over the Time Horizon (as defined below).
5. To achieve a long-term level of return commensurate with contemporary economic conditions and equal to or exceeding the investment objective set forth in this Policy Statement under the section labeled “Performance Expectations”. 5 Investment Guidelines
Within this section of the Policy Statement, several terms will be used to articulate various investment concepts. The descriptions are meant to be general and may share investments otherwise considered to be in the same asset class. They are:
"Growth Assets" - a collection of investments and/or asset classes whose primary risk and return characteristics are focused on capital appreciation. Investments within the Growth Assets category can include income and risk mitigating characteristics, so long as the predominant investment risk and return characteristic is capital appreciation. Examples of such investments or asset classes are:
domestic and international equities or equity funds, private or leveraged equity, and certain real estate investments.
"Income Assets" - a collection of investments and/or asset classes whose primary risk and return characteristics are focused on income generation. Investments within the Income Assets category can include capital appreciation and risk mitigating characteristics, so long as the primary investment risk and return characteristic is income generation. Examples of such investments or asset classes are:
fixed income securities, guaranteed investment contracts, and certain real estate investments. "Real Return Assets" - a collection of investments and/or asset classes whose primary risk and return characteristics are focused on real returns, net of inflation. Investments within the Real Return category may include, but are not limited to, inflation protected securities, commodities, certain real estate investments, natural resources, and liquid alternatives.
Time Horizon
The Trust’s investment objectives are based on a long-term investment horizon (“Time Horizon”) of five years or longer. Interim fluctuations should be viewed with appropriate perspective. The Administrator has adopted a long-term investment horizon such that the risks and duration of investment losses are carefully weighed against the long-term potential for appreciation of assets.
Liquidity and Diversification
In general, the Trust may hold some cash, cash equivalent, and/or money market funds for near-term Trust benefits and expenses (the “Trust Distributions”). Remaining assets will be invested in longerterm investments and shall be diversified with the intent to minimize the risk of long-term investment losses. Consequently, the total portfolio will be constructed and maintained to provide diversification with regard to the concentration of holdings in individual issues, issuers, countries, governments or industries.
6 Asset Allocation: Moderate (Strategic Blend)
The Administrator believes that to achieve the greatest likelihood of meeting the Trust’s investment objectives and the best balance between risk and return for optimal diversification, assets will be invested in accordance with the targets for each asset class as follows to achieve an average total annual rate of return that is equal to or greater than the Trust’s target rate of return over the long-term, as described in the section titled “Performance Expectations”.
Asset Weightings
Asset Classes Range Target
Growth Assets
Domestic Equity 15% -5% 30%
International Equity 1% - 25% 15%
Other 0%-15% 5%
Income Assets
Fixed Income
Other
33% - 60%
0%- 15%
48%
0%
Real Return Assets 0% - 15% 0%
Cash Equivalents 0% - 20% 2%
The Advisor and each Manager will be evaluated against their peers on the performance of the total funds under their direct management.
Rebalancing Philosophy
The asset allocation range established by this Policy Statement represents a long-term perspective. As such, rapid unanticipated market shifts or changes in economic conditions may cause the asset mix to fall outside Policy Statement ranges. When allocations breach the specified ranges, the Advisor will rebalance the assets within the specified ranges. The Advisor may also rebalance based on market conditions.
Risk Tolerance
Subject to investment objectives and performance expectations, the Trust will be managed in a style that seeks to minimize principal fluctuations over the established Time Horizon. 7 Performance Expectations
Over the long-term, five years or longer, the performance objective for the Trust will be to achieve an average total annual rate of return that is equal to or greater than the Trust’s actuarial discount rate.
Additionally, it is expected that the annual rate of return on Trust assets will be commensurate with the then prevailing investment environment. Measurement of this return expectation will be judged by reviewing returns in the context of industry standard benchmarks, peer universe comparisons for individual Trust investments and blended benchmark comparisons for the Trust in its entirety.
Selection of Investment Managers
The Advisor shall prudently select appropriate Managers to invest the assets of the Trust. Managers must meet the following criteria:
The Manager must provide historical quarterly performance data compliant with Global Investment Performance Standards (GIPS®), Securities & Exchange Commission (“SEC”), Financial Industry Regulatory Agency (“FINRA”) or industry recognized standards, as appropriate. The Manager must provide detailed information on the history of the firm, key personnel, support personnel, key clients, and fee schedule (including most-favored-nation clauses). This information can be a copy of a recent Request for Proposal (“RFP”) completed by the Manager or regulatory disclosure.
The Manager must clearly articulate the investment strategy that will be followed and document that the strategy has been successfully adhered to over time. The investment professionals making the investment decisions must have a minimum of three (3) years of experience managing similar strategies either at their current firm or at previous firms. Where other than common funds such as mutual funds or commingled trusts are utilized, the Manager must confirm receipt, understanding and adherence to this Policy Statement and any investment specific policies by signing a consent form provided to the Manager prior to investment of Trust assets.
Guidelines for Portfolio Holdings
Direct Investments by Advisor
Every effort shall be made, to the extent practical, prudent and appropriate, to select investments that have investment objectives and policies that are consistent with this Policy Statement (as outlined in the following sub-sections of the “Guidelines for Portfolio Holdings”). However, given the nature of the investments, it is recognized that there may be deviations between this Policy Statement and the objectives of these investments.
8 Limitations on Portfolio Holdings
EQUITIES
No more than 5% of the total equity portfolio valued at market may be invested in the common equity of any one corporation; ownership of the shares of one company shall not exceed 5% of those outstanding; and not more than 40% of Equity valued at Market may be held in any one sector [excluding Mutual Funds and/or ETFs], as defined by Bloomberg (BB) Sector standards.
Domestic Equities. Other than the above constraints, there are no quantitative guidelines as to issues, industry or individual security diversification. However, prudent diversification standards should be developed and maintained by the Manager.
International Equities. The overall non-U.S. equity allocation should include a diverse global mix that is comprised of the equity of companies from multiple countries, regions and sectors.
FIXED INCOME
Fixed income securities of any one issuer shall not exceed 5% of the total bond portfolio at time of purchase. The 5% limitation does not apply to issues of the U.S. Treasury or other Federal Agencies.
OTHER ASSETS (ALTERNATIVES)
Diversifying (Liquid Alternatives): Primary objective shall be to enhance the risk-return profile of the overall portfolio. This can be accomplished by using liquid alternative strategies that may enhance returns at a reasonable level of risk or reduce volatility while providing a reasonable level of return.
These asset classes may differ from traditional public market asset classes due to the use of certain strategies including short-selling, leverage, and derivatives. Liquid alternatives may also invest across asset classes. For purposes of asset allocation targets and limitations, liquid alternatives funds will be categorized under the specific asset class of the fund. For example, a long/short U.S. equity fund will be categorized as “Other” in the Growth Assets category while a long/short credit fund will be categorized as “Other” in the Income Assets category. Multi-strategy liquid alternatives funds that cannot be easily categorized under one asset class will be included in “Other” under either the Growth Assets or Income Assets category depending on the risk-return profile of the strategy.
Real Assets: Real assets are typically physical assets that have intrinsic worth due to their substance and properties. Real assets are primarily used for their lower correlation to traditional assets (i.e. stocks and bonds) and their inflation hedging properties. Categories of real asset investments include, but are not limited to, real estate, infrastructure, land, farmland, timberland, precious metals, and commodities.
Public real assets are publicly traded and liquid. The benefit of lower correlation investments is that, when implemented correctly, these investments can potentially improve a portfolio’s expected riskadjusted return over the long-term. The real assets category can be extended to include other forms of assets that offer similar inflation hedging properties such as pooled vehicles holding: commodities 9 contracts, Treasury Inflation Protected Securities (“TIPS”), index-linked derivative contracts, certain forms of intellectual property, and the equity of companies in businesses thought to hedge inflation.
For purposes of asset allocation targets and limitations, real assets may be categorized as “Other” under either the Growth Assets or Income Assets category or in the Real Return Assets category, depending on the nature and risk/return profile of the investment.
CASH EQUIVALENTS
Cash equivalents shall be held in funds complying with Rule 2(a)-7 of the Investment Company Act of 1940.
Portfolio Risk Hedging
Portfolio investments designed to hedge various risks including volatility risk, interest rate risk, etc. are allowed to the extent that the investments are not used for the sole purpose of leveraging Trust assets.
One example of a hedge vehicle is an exchange traded fund (“ETF”) which takes short positions.
Prohibited Investments
Except for purchase within authorized investments, securities having the following characteristics are not authorized and shall not be purchased: letter stock and other unregistered securities, direct commodities or commodity contracts, or private placements (with the exception of Rule 144A securities). Further, derivatives, options, or futures for the sole purpose of direct portfolio leveraging are prohibited. Direct/physical ownership of real estate, natural resource properties such as oil, gas or timber and the purchase of collectibles is also prohibited.
Safekeeping
All assets of the Trust shall be held by a custodian approved by the Administrator for safekeeping of Trust assets. The custodian shall produce statements on a monthly basis, listing the name and value of all assets held, and the dates and nature of all transactions in accordance with the terms in the Trust Agreement. Investments of the Trust not held as liquidity or investment reserves shall, at all times, be invested in interest-bearing accounts. Investments and portfolio securities may not be loaned.
Control Procedures
Review of Investment Objectives
The Advisor shall review annually and report to the Administrator the appropriateness of this Policy Statement for achieving the Trust’s stated objectives. It is not expected that this Policy Statement will change frequently. In particular, short-term changes in the financial markets should not require an adjustment in this Policy Statement.
10 Review of Investment Performance
The Advisor shall report on a quarterly basis to the Administrator to review the investment performance of the Trust. In addition, the Advisor will be responsible for keeping the Administrator advised of any material change in investment strategy, Managers, and other pertinent information potentially affecting performance of the Trust.
The Advisor shall compare the investment results on a quarterly basis to appropriate peer universe benchmarks, as well as market indices in both equity and fixed income markets. Examples of benchmarks and indexes that will be used include the Russell 3000 Index for broad U.S. equity strategies; S&P 500 Index for large cap U.S. equities, Russell 2000 Index for small cap U.S. equities, MSCI ACWI ex-U.S. Index for broad based non-U.S. equity strategies, MSCI Europe, Australasia, and Far East (EAFE) Index for developed markets international equities, Bloomberg U.S. Aggregate Bond Index for fixed income securities, and the U.S. 91 Day T-bill for cash equivalents. The Russell 3000 Index will be used to benchmark the U.S. equities portfolio; the MSCI ACWI ex-U.S. Index will be used to benchmark the non-U.S. equities portfolio; the Bloomberg U.S. Aggregate Bond Index will be used to benchmark the fixed income portfolio. The categories “Other” will be benchmarked against appropriate indices depending on the specific characteristics of the strategies and funds used.
Voting of Proxies
The Administrator recognizes that proxies are a significant and valuable tool in corporate governance.
The voting rights of individual stocks held in separate accounts or collective, common, or pooled funds will be exercised by the investment managers in accordance with their own proxy voting policies. The voting rights of funds will be exercised by the Advisor. 11 Adoption of Investment Policy Statement
Any changes and exceptions to this Policy Statement will be made in writing and adopted by the Administrator. Once adopted, changes and exceptions will be delivered to each Manager, as appropriate, by the Advisor.
Approved by the City of Brea Plan Administrator:
Member
Date
CITYof BREA
City Council Regular Meeting
Communication
September 16, 2025
Item No. 6I.
Monthly Report of Investments for the City of Brea for Period Ended August 31, 2025
TO PREPARED BY
Honorable Mayor and City Council Members Faith Madrazo, Financial Services Manager, Revenue
DEPARTMENT HEAD APPROVAL CITY MANAGER APPROVAL
Monica Lo, Administrative Services Director Kristin Griffith, City Manager
RECOMMENDATION
Staff recommends that the City Council take the following action:
1. Receive and file the Monthly Report of Investments.
BACKGROUND/DISCUSSION
The Monthly Report of Investments is prepared in accordance with Government Code Sections (GCS) 41004 and 53607 and contains information on the City's investment activities for the month of August. Cash for day-to-day activities is deposited in the demand and interest-bearing checking accounts. The Local Agency Investment Fund (LAIF) is used for short-term investments and functions like a savings account. Additionally, on June 6, 2023, upon the recommendation of the Investment Advisory Committee, the City Council authorized the use of U.S. Treasury Bills and other short-term investments—referred to as the City’s Liquidity Account—as an alternative to the Local Agency Investment Fund (LAIF). This Liquidity Account was closed in July 2025, as LAIF had consistently outperformed it over several months. The remaining cash balance was subsequently transferred to the City’s main investment portfolio. The City’s investment portfolio is for long-term investments and is managed through Chandler Asset Management (Chandler). Together, the short and long-term investment accounts represent the City’s investment portfolio.
Attachment A includes an Investment Information Summary and a Monthly Account Statement prepared by Chandler. The book value represents the cost of investments, plus or minus amortization/accretion. As of August 31, 2025, the total market value of the managed investment portfolio, including accrued interest, was $98,367,053 as compared to $97,335,497 at July 31, 2025. The weighted average investment yield for August 31, 2025, was
3.79%, which was slightly higher than the prior month. The City’s Local Agency Investment Fund (LAIF) had a total market value, including accrued interest of $3,473,580 at August 31, 2025, which brings the total value of the City’s investment portfolio as of August 31, 2025 to $101,840,633 as compared to the balance of $105,790,885 at July 31, 2025.
The City has restricted cash and investments held in the post-employment benefits trust accounts for both Pension and Other Post Employment Benefits (OPEB), administered by PARS (PARS accounts), which are managed by PFM Asset Management (PFM) and the City's various bond reserve accounts, which are managed by Chandler.
Attachment A includes monthly statements from US Bank for the PARS accounts, as well as a portfolio report from Chandler for each bond reserve account that is invested. As of August 31, 2025, the market value of the PARS pension account, including short-term cash and accrued interest was $13,340,197 as compared to $13,105,508 from the prior month. The OPEB account had a market value of $478,891 as compared to $470,964 from the prior month. All other restricted cash investments (bond reserve accounts), including short-term cash and accrued interest, were $1,423,815 in comparison to $707,026 from the prior month.
Pursuant to the City's investment policy, except for LAIF, direct time certificates of deposit and money market mutual funds, all City investments are held by third-party custodians. The Bank of New York Mellon Trust Company, N.A. (BNY) holds accounts managed by Chandler and US Bank holds the PARS accounts managed by PFM, which acts as an agent of the City. All securities are held in the name of the City of Brea. The City of Brea has sufficient cash flow to meet its expected expenditures for the next six months.
FISCAL IMPACT/SUMMARY
In August, the City’s managed investment portfolio declined by $3,950,252, primarily due to withdrawals from the City"s LAIF account to cover monthly operating expenditures which included: $385,558 to Brea Disposal for July trash collection; $478,372 to CalDomestic for water purchased for July 2025 consumption; $416,317 to AON Risk Insurance of earthquake coverage; $275,705 to Western Golf Properties for July management fees; $163,386 to FC & MK Tomlinson for leased water share stock; $140,057 to the City of Anaheim for fire dispatch services; $118,690 to the County of Orange for animal shelter fees; and $279,195 to the Southern California Edison for electricity charges. In addition, the City incurred several one-time expenditures, which included $450,232 to Urban Habitat for Arovista Park construction (Progress Payment #14); $334,574 to Stephen Doreck Equipment Rentals for the Birch Street and Kraemer Blvd. Street Improvement Project; $395,633 and $315,955 transferred to the bond trustee for the 2017 Brea Plaza Public and 2019 Olinda Ranch Public Improvement CFD Bonds, respectively; $116,514 to De Novo Planning Group for General Plan consulting services; and $67,193 to Chevrolet of Carson for vehicle purchases.
Despite the overall decline in the City's managed investment portfolio, the PARS accounts experienced a gain of $242,116, primarily driven by favorable market performance. Additionally, the bond reserve accounts increased by $716,789, reflecting a combination of market appreciation and trustee payments, as previously noted.
Attachments
Attachmet A - City - August 2025.pdf
City of Brea
Cash and Investment Information
Book Market
Value Value*
Demand and Interest-Bearing Checking Accounts Citizen's Bank $ 4,100,282.85 $ 4,100,282.85 Local Agency Investment Fund LAIF $ 3,389,901.42 $ 3,473,580.55 Managed Investment Portfolio - CHANDLER Chandler/BNY $ 96,901,721.02 $ 98,367,052.75 PARS Post-Employment Benefits Trust - Pension** PFM/US Bank $ 12,239,543.89 $ 13,340,196.83 PARS Post-Employment Benefits Trust - OPEB** PFM/US Bank $ 453,801.45 $ 478,891.23 Fiscal Agent Cash & Investments**
2017 Brea Plaza Public Improvements CFD Bonds (CFD 2008-2) Chandler/BNY $ 1,102,217.96 $ 1,106,953.50 2019 Olinda Ranch Public Improvements CFD Bonds (CFD 1997-1) Chandler/BNY $ 316,000.06 $ 316,000.06 2019 Water Revenue Bonds Chandler/BNY $ 626.96 $ 626.96 2020 Water Revenue Refunding Bonds Chandler/BNY $ 201.85 $ 201.85 Sub-total - Fiscal Agent Cash & Investments $ 1,419,079.08 $ 1,423,814.62 Report Grand Total $ 118,504,329.71 $ 121,183,818.83
* Includes accrued interest on invested funds
** Reserve Fund
August 31, 2025
ATTACHMENT A