Item 13
VALLEY CLEAN ENERGY ALLIANCE
Staff Report - Item 13
____________________________________________________________________________________ TO: Board of Directors
FROM: Edward Burnham, CFO / Treasurer
SUBJECT: Treasury and Finance Update
DATE: April 9, 2026
RECOMMENDATION:
1. Adopt a resolution approving a one-year extension of the Second Amended and Restated Credit Agreement with River City Bank, including a revolving line of credit not to exceed $11,000,000
2. Authorize the Executive Officer to conduct any final negotiations, implement the approval, and sign all necessary documents related to the extension of the two-year Second Amended and Restated Credit Agreement with River City Bank.
3. Ratify the County of Yolo Investment Policy for the calendar year 2026 as the Investment policy applicable to VCE.
OVERVIEW
The purpose of this staff report is to (1) authorize the CEO to execute a 1-year extension with RCB, (2) ratify the County of Yolo Investment Policy for 2026, and (3) receive a preliminary update on 2026 Treasury and Investment improvements.
As detailed in the body of this report, VCE maintains a disciplined approach to assessing financial risks resulting from external challenges and continues to bolster its financial strength to maintain VCE’s A-investment credit rating.
BACKGROUND
At the December 14, 2023, meeting, the Board appointed VCE’s CFO to perform the treasurer's functions. The role of the Treasurer is threefold and focuses on three areas:
• Banking and Cash Management – Day-to-day transactions are ordinarily approved according to the delegation of authority provided to the executive staff of VCE. However, the Treasurer retains the authority to select the banking institutions to be used and to collaborate with staff to manage cash flow, ensuring that investing or financing occurs as needed. • Investing – The Treasurer is responsible for investing funds in accordance with law and according to the agency’s investment policy.
• Debt and Financing – The Treasurer participates as a key team member in debt and financing decisions in accordance with policies on borrowing, debt, and obligations. At the July 14, 2022, meeting, VCE adopted the Debt Policy to comply with SB1029 (requires public agencies seeking financing to have a debt policy), which became effective in 2018.
At the April 11, 2024 Board meeting, the Board approved Item 16, including a resolution extending for a Second Amended and Restated Credit Agreement with River City Bank for 2 years ending in April 2026.
Revolving Line of Credit (RLOC) with RCB
The current RLOC Agreement has a limit of $7,000,000 available for cash advances and/or letters of credit and an additional $4,000,000 credit facility available for Letters of Credit, for a total RLOC of $11,000,000. Since August 2018, VCE has not drawn cash on the RLOC. VCE currently has a $270,000 letter of credit issued for the PG&E Financial Security Requirement required by CPUC regulations for all CCAs. VCE reduced the need for a $3.8M letter of credit issued as optional financial security for PPA pricing discounts that provide power cost savings upon establishing its A- investment-grade credit rating in October 2025.
Analysis
As part of the VCE investment approach, the Treasurer manages cash flow forecasts to determine the capacity to invest VCE Funds. This included reviewing the investment policy, which requires that funds be invested first in safe, then liquid, assets to meet agency needs, and third to seek yields on investments (Att. A – County of Yolo Investment Policy).
In determining the ability to invest, the Treasurer reviewed existing agreements within the River City Bank Revolving Line of Credit (RLOC) Agreement, which states:
Section 10.4 Exclusive Deposit Relationship. Borrower shall maintain all of Borrower’s deposit accounts exclusively with Lender. If this covenant is not satisfied, as determined by Lender, it will not constitute an Event of Default, but the Applicable Rate on all outstanding Notes will immediately increase by an additional 2.00 percentage margin. This margin shall continue to apply to each succeeding interest rate change that may apply thereafter, so long as this covenant is not satisfied.
Section 10.11. Investments, Acquisitions, Loans, Advances, and Guarantees. Borrower shall not directly or indirectly, make, retain or have any investments (whether through purchase of stock or obligations or otherwise) in, or loans or advances (other than for travel advances and other similar cash advances made to employees in the ordinary course of business) to any other Person, or acquire any substantial part of the assets or business of any other Person or division thereof, or be or become liable as endorser, guarantor, surety or otherwise for any debt, obligations or undertaking of any other Person, or otherwise agree to provide funds for payment of the obligations of another, or supply funds thereto or invest therein or otherwise assure a creditor of another against loss, or apply for or become liable to the issuer of a letter of credit which supports an obligation of another, or subordinate any claim or demand it may have to the claim or demand of any other person.
Effectively, these restrictions limit deposits to River City Bank and investment options to its offerings.
River City Bank does, however, offer a money market account that allows for earning interest on deposits. Valley Clean Energy has opened a Money Market Account with RCB that provides same day liquidity and generally pegs its interest rate to that of the Local Agency Investment Fund (LAIF) at the state level, (paid 5.76% annual interest rate for month as of March 13, 2026 (Attachment B / Attachment C)), though the interest rate can be adjusted at the option of RCB at any time to reflect changing market conditions.
This option was appropriate for VCE, given that the agency was growing its cash position to establish VCE’s A investment-grade credit rating. Over the next 6 months, VCE will review its current treasury approach to ensure funds are invested first in safe, then liquid, investments that return appropriate yields.
• Use of Surety Bonds – VCE has begun to establish the use of Surety Bonds as a substitute for letters of credit from the line of credit for FSR requirements with PG&E. This will provide savings and increase VCE's liquidity.
• Issuance of an RFP for Banking Services – VCE will issue an RFP for banking services, including lines of credit, to understand market conditions and terms in order to reduce restrictions on funds for investments without increasing risks to funds. • Issuance of an RFP for Investment Advisory Services – VCE will issue an RFP for investment services to understand market conditions, possible liquidity risks, and estimated earnings for investments on reserve funds.
• Alternative Solutions – VCE will evaluate additional solutions such as pooled investments, including the County of Yolo, that may provide additional advantages to investing individually.
Staff will begin this process during the second quarter, perform a comprehensive review of all possible scenarios, and return to the Board with the results and recommendations. In addition, staff will release the RFP for Enterprise Resource Planning (ERP) system. This ERP will be integral in providing additional cash flow planning, tracking, and reconciliations in a more complex financial structure.
These steps lay the foundation of the next steps in implementation of VCE’s Strategic Plan Goals:
• Goal 1 - Financial Strength and;
• Goal 6 - Organizational Growth, development, and effectiveness These actions are designed to optimize VCE‘s ability to provide long-term rate affordability and competitiveness with PG&E.
RCB Services Extension
Staff proposes extending the current RCB Revolving line of credit as outlined below for 1 year to execute the above.
River City Bank Terms – Revolving Line of Credit
The following key terms are summarized from the agreement with RCB. • Type of Financing: Commercial Revolving Line of Credit • Maximum Amount: $11,000,000, with a $7,000,000 sublimit for cash advances • Maturity: April 15, 2027 (one year from the current 4/15/2026 maturity date) • Interest Rate: Variable rate, Floating at the one (1) month U.S. Treasury Bill Yield + 2.00%, subject to a 2.00% floor (unchanged)
• Fees:
o Loan Fee: 0.50% of the total RLOC commitment, payable upon loan closing o Documentation Fee: $500, payable upon loan closing, provided that Borrower approves the use of Bank’s standard form documents.
o Non-Use Fee: 0.10% of the average unused RLOC amount per annum, payable annually upon each anniversary of the RLOC
Collateral/Pledged Assets
RCB shall maintain a perfected security interest in 1st lien position via a UCC filing and security agreement in each of the following:
• Restricted Debt Service Reserve Account (“DSRA”) (interest-bearing) maintained at RCB in the minimum amount of $1,100,000.
• A security agreement that covers (i) the right of set-off to all of Borrower’s deposit accounts not otherwise encumbered by outside liens, and (ii) a pledge on Borrower revenues. • A UCC-1 perfected blanket lien filing covering all Accounts, Revenues, Resource Adequacy Contracts, and the Debt Service Reserve Account.
• No junior liens will be permitted on any Collateral.
Covenants
The RLOC is currently subject to the following loan covenants, which will be maintained for the renewal term:
• Rate Covenant: VCE shall set customer rates at levels to cover all annual costs, inclusive of debt service.
• Adj. Tangible Unrestricted Net Position: VCE will maintain a minimum Adjusted Tangible Unrestricted Net Position of $17,500,000, measured annually as of each fiscal year end. • Change in Net Position: VCE must achieve a minimum cumulative change in net position of $1.00 for each fiscal year.
• Leverage Ratio: VCE shall maintain a total Liabilities to total Adjusted Tangible Unrestricted Net Position ratio not any time greater than 1:50 : 1:00, measured quarterly as of each calendar quarter.
Conclusion
Based on the report above, VCE staff plan to continue using the River City MMA and ICS accounts with excess funds to invest, while VCE performs a comprehensive review of Treasury and Investment Services. Staff requests that the VCE Board ratify the County of Yolo Investment Policy for 2026 and authorize the CEO to execute a one-year extension of the $11,000,000 RLOC facility, as set forth in the Second Amended and Restated Credit Agreement (RLOC Agreement).
Attachments
Attachment A - Resolution authorizing the Executive Officer to execute an extension of the Credit Agreement with the River City Bank
Attachment B – County of Yolo Investment Policy 2026
Attachment C – River City Materials on Public Money Market Account Attachment D – River City Materials on Public Fund ICS Account Item 13
VALLEY CLEAN ENERGY ALLIANCE
RESOLUTION NO. 2026-XXX
RESOLUTION OF THE BOARD OF DIRECTORS OF VALLEY CLEAN ENERGY ALLIANCE
AUTHORIZING THE EXTENSION OF ITS REVOLVING LINE OF CREDIT WITH RIVER CITY BANK WHEREAS, Valley Clean Energy Alliance (“VCE”) was formed as a community choice aggregation agency (“CCA”) on November 16, 2016, Under the Joint Exercise of Power Act, California Government Code sections 6500 et seq., among the County of Yolo, and the Cities of Davis and Woodland, to reduce greenhouse gas emissions, provide electricity, carry out programs to reduce energy consumption, develop local jobs in renewable energy, and promote energy security and rate stability in all of the member jurisdictions. The City of Winters, located in Yolo County, was added as a member of VCE and a party to the JPA in December of 2019; and, WHEREAS, the City of Winters, located in Yolo County, was added as a member of VCE and a party to the VCE in December of 2019;
WHEREAS, pursuant to a Resolution adopted on May 10, 2018, the Board of Directors of VCE (the “Board”) approved the execution of a credit agreement and related documents thereto (collectively and as previously amended and extended, the “Credit Facility”) with River City Bank (“RCB”), pursuant to which RCB agreed to provide credit working capital to meet VCE’s liquidity needs and RCB also agreed to provide certain credit enhancements; WHEREAS, pursuant to a Resolution adopted on March 10, 2022, the Board of Directors of VCE (the “Board”) approved a Second Amended and Restated Credit Agreement (the “Agreement”) with River City Bank, including a revolving line of credit not to exceed $11,000,000 and a term loan for approximately $1.1M;
WHEREAS, pursuant to a Resolution adopted on April 11, 2024, the Board of Directors of VCE (the “Board”) approved a two year extension of the Second Amended and Restated Credit Agreement (the “Agreement”) with River City Bank;
WHEREAS, the Credit Facility currently has a limit of $7,000,000 available for cash advances and/or letters of credit and an additional $4,000,000 credit facility available for Letters of Credit, for a total maximum amount of $11,000,000;
WHEREAS, RCB is willing to extend the Credit Facility for one year ending in April 2027 pursuant to the terms set forth in the Amendment; and
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NOW, THEREFORE, the Board of Directors of Valley Clean Energy Alliance resolves as follows:
Section 1. The foregoing recitals are true and correct.
Section 2. The Board of Directors (the “Board”) of Valley Clean Energy Alliance (“VCE”) hereby approves the executive officer and his designees as authorized representatives of VCE (each an “Authorized Representative” and collectively, the “Authorized Representatives”) in connection with the negotiation and execution of the one-year extension the Amendment, including such related amendments deemed necessary or advisable by the Authorized Representative executing the Amendment extending the term of the Agreement, and any ancillary documents relating thereto.
Section 3. The Board hereby approves each Authorized Representative, acting singly, to execute and deliver the extension, and any related ancillary documents necessary to implement the Amendment Terms and in such form and substance as may be approved by such Authorized Representative, in consultation with General Counsel to VCE, as in the best interests of VCE, the execution thereof to be conclusive evidence of such approval.
Section 4. The Board hereby approves each Authorized Representative, acting singly, to borrow and authorize advances or the issuance of letters of credit from time to time under the Agreement Revolving Credit Facility in such amounts as in their judgment should be borrowed and to provide security for the obligations of VCE under the Agreement, including, without limitation, a pledge of the net revenues of VCE, and to execute and deliver any requests or other documents and agreements as such Authorized Representative may, in his or her discretion, deem reasonably necessary or proper in order to carry into effect the provisions of the Amended Revolving Credit Facility.
Section 5. The Authorized Representatives, the Board Secretary, and the Board Chair and all other appropriate officials of the VCE are hereby authorized and directed to execute such other agreements, documents and certificates as may be necessary to effect the purposes of this resolution.
Section 6. The Board hereby approves all acts, transactions or agreements undertaken, prior to the adoption of these resolutions by any of the officers of VCE, or their designees, in its name and for its account in connection with the foregoing matters, are hereby ratified, confirmed and adopted by VCE.
Section 7. This Resolution shall take effect immediately upon its adoption. ///
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PASSED, APPROVED AND ADOPTED, at a regular meeting of the Valley Clean Energy Alliance, held on the _____ day of ________ 2026, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
___________________________________
Jesse Loren, VCE Chair
___________________________________
Alisa M. Lembke, VCE Board Secretary
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CALIFORNIA GOVERNMENT CODE
Title 5. Local Agencies
Division 2. Cities, Counties, and Other Agencies
Part 1. Powers and Duties Common to Cities, Counties, and Other Agencies Chapter 4. Financial Affairs
Article 1. Investment of Surplus
53600. As used in this article, "local agency" means county, city, city and county, including a chartered city or county, school district, community college district, public district, county board of education, county superintendent of schools, or any public or municipal corporation.
SECTION 53601.8 Excerpt [As amended, effective January 1, 2020 [SECTION 53635.8 is similar to Section 53601.8]
Notwithstanding any other provision of this code, a local agency that has the authority under law to invest funds, at its discretion, may invest a portion of its surplus funds in deposits at a commercial bank, savings bank, savings and loan association, or credit union that uses a private sector entity that assists in the placement of deposits. The following conditions shall apply:
(a) The local agency shall choose a nationally or state-chartered commercial bank, savings bank, savings and loan association, or credit union in this state to invest the funds, which shall be known as the “selected” depository institution. (b) The selected depository institution may use a private sector entity to help place local agency deposits with one or more commercial banks, savings banks, savings and loan associations, or credit unions that are located in the United States and are within the network used by the private sector entity for this purpose.
(c) The selected depository institution shall request that the local agency inform it of depository institutions at which the local agency has other deposits, and the selected depository institution shall provide that information to the private sector entity. (d) Any private sector entity used by a selected depository institution to help place its local agency deposits shall maintain policies and procedures requiring all of the following:
(1) The full amount of each deposit placed pursuant to subdivision (b) and the interest that may accrue on each such deposit shall at all times be insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration. (2) Every depository institution where funds are placed shall be capitalized at a level that is sufficient, and be otherwise eligible, to receive such deposits pursuant to regulations of the Federal Deposit Insurance Corporation or the National Credit Union Administration, as applicable.
(3) At the time of the local agency’s investment with a selected depository institution and no less than monthly thereafter, the private sector entity shall ensure that the local agency is provided with an inventory of all depository institutions in which deposits have been placed on the local agency’s behalf, that are within the private sector entity’s network. (4) Within its network, the private sector entity shall ensure that it does not place additional deposits from a particular local agency with any depository institution identified pursuant to subdivision (c) as holding that local agency’s deposits if those additional deposits would result in that local agency’s total amount on deposit at that depository institution exceeding the Federal Deposit Insurance Corporation or the National Credit Union Administration insurance limit.
(e) If a selected depository uses two or more private sector entities to assist in the placement of a local agency’s deposits, the selected depository shall ensure that it does not place additional deposits from a particular local agency with a depository institution if those additional deposits would result in that local agency’s total amount on deposit at that depository institution exceeding the Federal Deposit Insurance Corporation or the National Credit Union Administration insurance limit. (f) The selected depository institution shall serve as a custodian for each such deposit. (g) On the same date that the local agency’s funds are placed pursuant to subdivision (b) by the private sector entity, the selected depository institution shall receive an amount of insured deposits from other financial institutions that, in total, are equal to, or greater than, the full amount of the principal that the local agency initially deposited through the selected depository institution pursuant to subdivision (b).
(h) Notwithstanding subdivisions (a) to (g), inclusive, a credit union shall not act as a selected depository institution underthis section unless both of the following conditions are satisfied:
(1) The credit union offers federal depository insurance through the National Credit Union Administration. (2) The credit union is in possession of written guidance or other written communication from the National Credit Union Administration authorizing participation of federally insured credit unions in one or more deposit placement services and affirming that the moneys held by those credit unions while participating in a deposit placement service will at all times be insured by the federal government. (i) It is the intent of the Legislature that this section shall not restrict competition among private sector entities that provide placement services pursuant to this section.
(j) The deposits placed pursuant to this section shall be subject to Section 53638 and shall not, in total, exceed 50 percent of the agency’s funds that may be invested for this purpose.
(k) This section shall remain in effect until January 1, 2026, and as of that date is repealed. (Amended (as amended by Stats. 2015, Ch. 181, Sec. 1) by Stats. 2019, Ch. 619, Sec. 1. (AB 945) Effective January 1, 2020. Repealed as of January 1, 2026, by its own provisions. See later operative version, as amended by Sec. 3 of Stats. 2019, Ch. 619.) Member FDIC
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