Farmersville City Council
June 12, 2023

Department Position Title FY 2023-2024
Administration City Manager 1
Administration Administrative Analyst 1
Administration Director of Finance & Administration 1
Administration Human Resources Manager 1
Administration Finance Manager 1
Administration Account Clerk I 1
Administration Account Clerk II 1
Departmental Subtotal 7
Public Works Public Works Director 1
Public Works Public Works Supervisor 1
Public Works Maintenance Worker 7
Public Works Public Works Crew Leader 1
Departmental Subtotal 10
Fire Battalion Chief 1
Fire Fire Captain 1
Fire Fire Lieutenant 2
Departmental Subtotal 4
Code Enforcement Code Enforcement Officer 2
Departmental Subtotal 2
Community Development Development Coordinator 1
Departmental Subtotal 1
Police Police Chief 1
Police Police Commander 1
Police Police Sergeant 4
Police Police Officer 11
Police Technical Service Clerk 2
Departmental Subtotal 19
Total Authorized Full-Time Positions 43
Authorized Full-Time Personnel Positions by Department

Position Department Fund Department Time & Cost Allocation City Manager Administration 01 404 30%
City Manager Administration 02 404 30%
City Manager Administration 04 404 30%
City Manager Administration 21 404 10%
City Manager Administration 100%
Administrative Analyst Administration 01 404 50%
Administrative Analyst Administration 02 404 25%
Administrative Analyst Administration 04 404 25%
Administrative Analyst Administration 100%
Director of Finance & Administration Administration 01 404 35% Director of Finance & Administration Administration 02 404 30% Director of Finance & Administration Administration 04 404 25% Director of Finance & Administration Administration 06 404 10% Director of Finance & Administration Administration 100% Time & Cost Allocation for Full-Time Positions 2023-2024

Position Department Fund Department Time & Cost Allocation Time & Cost Allocation for Full-Time Positions 2023-2024 Human Resources Manager Administration 01 404 50%
Human Resources Manager Administration 02 404 25%
Human Resources Manager Administration 04 404 25%
Human Resources Manager Administration 100%
Finance Manager Administration 01 404 35%
Finance Manager Administration 02 404 30%
Finance Manager Administration 04 404 25%
Finance Manager Administration 06 404 10%
Finance Manager Administration 100%
Account Clerk I Administration 01 404 5%
Account Clerk I Administration 02 404 40%
Account Clerk I Administration 04 404 40%
Account Clerk I Administration 06 404 15%
Account Clerk I Administration 100%

Position Department Fund Department Time & Cost Allocation Time & Cost Allocation for Full-Time Positions 2023-2024 Account Clerk II Administration 01 404 5%
Account Clerk II Administration 02 404 40%
Account Clerk II Administration 04 404 40%
Account Clerk II Administration 06 404 15%
Account Clerk II Administration 100%
Public Works Director Public Works 01 425 20%
Public Works Director Public Works 02 425 20%
Public Works Director Public Works 04 425 20%
Public Works Director Public Works 06 425 15%
Public Works Director Public Works 21 425 20%
Public Works Director Public Works 35 425 5%
Public Works Director Public Works 100%

Position Department Fund Department Time & Cost Allocation Time & Cost Allocation for Full-Time Positions 2023-2024 Public Works Supervisor Public Works 01 425 20%
Public Works Supervisor Public Works 02 425 30%
Public Works Supervisor Public Works 04 425 30%
Public Works Supervisor Public Works 21 425 15%
Public Works Supervisor Public Works 35 425 5%
Public Works Supervisor Public Works 100%
Public Works Crew Leader Public Works 01 425 20%
Public Works Crew Leader Public Works 02 425 35%
Public Works Crew Leader Public Works 04 425 35%
Public Works Crew Leader Public Works 21 425 10%
Public Works Crew Leader Public Works 100%
Maintenance Worker Public Works 01 425 35%
Maintenance Worker Public Works 02 425 20%
Maintenance Worker Public Works 04 425 20%
Maintenance Worker Public Works 21 425 25%
Maintenance Worker Public Works 100%

Position Department Fund Department Time & Cost Allocation Time & Cost Allocation for Full-Time Positions 2023-2024 Maintenance Worker Public Works 01 425 60%
Maintenance Worker Public Works 02 425 20%
Maintenance Worker Public Works 04 425 10%
Maintenance Worker Public Works 21 425 10%
Maintenance Worker Public Works 100%
Maintenance Worker Public Works 01 425 50%
Maintenance Worker Public Works 02 425 10%
Maintenance Worker Public Works 04 425 10%
Maintenance Worker Public Works 21 425 30%
Maintenance Worker Public Works 100%
Maintenance Worker Public Works 01 425 30%
Maintenance Worker Public Works 02 425 30%
Maintenance Worker Public Works 04 425 30%
Maintenance Worker Public Works 21 425 10%
Maintenance Worker Public Works 100%

Position Department Fund Department Time & Cost Allocation Time & Cost Allocation for Full-Time Positions 2023-2024 Maintenance Worker Public Works 01 425 10%
Maintenance Worker Public Works 02 425 30%
Maintenance Worker Public Works 04 425 30%
Maintenance Worker Public Works 21 425 30%
Maintenance Worker Public Works 100%
Maintenance Worker Public Works 01 425 10%
Maintenance Worker Public Works 02 425 30%
Maintenance Worker Public Works 04 425 30%
Maintenance Worker Public Works 21 425 30%
Maintenance Worker Public Works 100%
Maintenance Worker Public Works 01 425 10%
Maintenance Worker Public Works 02 425 30%
Maintenance Worker Public Works 04 425 30%
Maintenance Worker Public Works 21 425 30%
Maintenance Worker Public Works 100%

Position Department Fund Department Time & Cost Allocation Time & Cost Allocation for Full-Time Positions 2023-2024 Battalion Chief Fire 01 420 100%
Battalion Chief Fire 100%
Fire Captain Fire 01 420 100%
Fire Captain Fire 100%
Fire Lieutenant Fire 01 420 100%
Fire Lieutenant Fire 100%
Fire Lieutenant Fire 01 420 100%
Fire Lieutenant Fire 100%
Code Enforcement Officer Code Enforcement 01 415 100%
Code Enforcement Officer Code Enforcement 100%
Code Enforcement Officer Code Enforcement 01 415 100%
Code Enforcement Officer Code Enforcement 100%

Position Department Fund Department Time & Cost Allocation Time & Cost Allocation for Full-Time Positions 2023-2024 Development Coordinator Community Development 01 414 50% Development Coordinator Community Development 02 404 25% Development Coordinator Community Development 04 404 25% Development Coordinator Community Development 100%
Police Chief Police 01 411 100%
Police Chief Police 100%
Police Commander Police 01 411 100%
Police Commander Police 100%
Police Sergeant Police 01 411 100%
Police Sergeant Police 100%
Police Sergeant Police 01 411 100%
Police Sergeant Police 100%
Police Sergeant Police 01 411 100%
Police Sergeant Police 100%

Position Department Fund Department Time & Cost Allocation Time & Cost Allocation for Full-Time Positions 2023-2024 Police Sergeant Police 01 411 100%
Police Sergeant Police 100%
Police Officer Police 01 411 100%
Police Officer Police 100%
Police Officer Police 01 411 100%
Police Officer Police 100%
Police Officer Police 01 411 100%
Police Officer Police 100%
Police Officer Police 01 411 100%
Police Officer Police 100%
Police Officer Police 01 411 100%
Police Officer Police 100%

Position Department Fund Department Time & Cost Allocation Time & Cost Allocation for Full-Time Positions 2023-2024 Police Officer Police 01 411 100%
Police Officer Police 100%
Police Officer Police 01 411 100%
Police Officer Police 100%
Police Officer Police 01 411 100%
Police Officer Police 100%
Police Officer Police 01 411 100%
Police Officer Police 100%
Police Officer Police 14 411 100%
Police Officer Police 100%
Police Officer Police 14 411 100%
Police Officer Police 100%

Position Department Fund Department Time & Cost Allocation Time & Cost Allocation for Full-Time Positions 2023-2024 Technical Service Clerk Police 01 411 100%
Technical Service Clerk Police 100%
Technical Service Clerk Police 01 411 100%
Technical Service Clerk Police 100%
Grand 43

Fund Department FY 21 Actuals FY 22 Actuals FY 23 Budget FY 24 Proposed 01-General Fund 401-City Council $0 $15,502 $15,502 $15,502 01-General Fund 404-Administration $181,572 $592,076 $457,593 $382,031 02-Water 404-Administration $267,360 $322,293 $311,073 $337,741 04-Sewer 404-Administration $267,019 $299,077 $292,464 $318,612 06-Refuse 404-Administration $62,351 $70,586 $60,706 $64,455 21-Gas Tax 404-Administration $18,621 $22,115 $20,363 $24,182 01-General Fund 411-Police $2,000,640 $2,171,153 $2,158,401 $2,132,830 14-Police SLESF 411-Police $170,749 $207,114 $209,088 $188,876 01-General Fund 414-Community Development $46,019 $50,332 $43,180 $45,275 01-General Fund 415-Code Enforcement $70,598 $69,000 $146,659 $93,559 02-Water 415-Code Enforcement $0 $0 $0 $35,424
04-Sewer 415-Code Enforcement $0 $0 $0 $35,424
06-Refuse 415-Code Enforcement $0 $0 $0 $17,712
01-General Fund 420-Fire $297,543 $344,727 $422,559 $492,513 01-General Fund 425-Public Works $117,455 $200,908 $247,789 $265,685 02-Water 425-Public Works $219,680 $218,243 $221,411 $268,760 04-Sewer 425-Public Works $206,260 $216,103 $213,093 $260,043 06-Refuse 425-Public Works $24,870 $142,349 $26,965 $29,633 21-Gas Tax 425-Public Works $134,407 $143,235 $165,795 $208,978 35-Maintence District 425-Public Works $77,074 $18,267 $17,031 $16,211 Total $4,162,215 $5,087,578 $5,014,168 $5,217,945
Historical Payroll & Benefit Cost by Fund & Department

Position Range A B C D E F
City Manager 21 $184,145
Administrative Analyst 8© $60,960 $64,008 $67,208 $70,569 $74,097 $77,802 Development Coordinator 8© $58,805 $61,745 $64,832 $68,074 $71,477 $75,051 Human Resources Manager 8© $78,357 $82,275 $86,389 $90,708 $95,244 $100,006 Director of Finance & Administration 19 $111,402 $116,972 $122,821 $128,962 $135,410 $142,180 Finance Director 18 $96,215 $101,026 $106,077 $111,381 $116,950 $122,797 Finance Manager 17 $80,316 $84,332 $88,548 $92,976 $97,625 $102,506 Account Clerk I 1(b) $36,105 $37,910 $39,806 $41,796 $43,886 $46,080 Account Clerk II 2(a) $48,384 $50,803 $53,343 $56,010 $58,811 $61,751 Technical Service Clerk 1(a) $42,027 $44,128 $46,335 $48,651 $51,084 $53,638 Police Officer 5(b) $50,671 $53,204 $55,865 $58,658 $61,591 $64,670 Corporal 7 $53,217 $55,877 $58,671 $61,605 $64,685 $67,919 Police Sergeant 8(a) $67,907 $71,303 $74,868 $78,611 $82,542 $86,669 Police Commander 9(b) $96,016 $100,817 $105,858 $111,151 $116,708 $122,544 Police Chief 17 $137,107 $143,962 $151,160 $158,718 $166,654 $174,987 Code Enforcement Officer 5(a) $49,872 $52,365 $54,984 $57,733 $60,619 $63,650 Fire Chief 20 $117,384 $123,254 $129,416 $135,887 $142,681 $149,816 Battalion Chief 17 $88,576 $93,004 $97,655 $102,537 $107,664 $113,047 Fire Captain 8(b) $66,096 $69,401 $72,871 $76,515 $80,341 $84,358 Fire Lieutenant 5(a) $49,322 $51,788 $54,378 $57,097 $59,951 $62,949 Maintenance Worker 2(b) $37,351 $39,219 $41,180 $43,239 $45,401 $47,671 Public Works Crew Leader 3 $50,054 $52,557 $55,185 $57,944 $60,841 $63,883 Public Works Supervisor 9(a) $67,076 $70,430 $73,951 $77,649 $81,531 $85,608 Public Works Director 19 $89,879 $94,373 $99,092 $104,046 $109,248 $114,711 Salary Schedule Fiscal Year 2024
Tier 1

Position Range A B C D E F G H I
City Manager 21 184,145
Administrative Analyst 8© 60,960 62,865 64,829 66,855 68,945 71,099 73,321 75,612 77,975 Development Coordinator 8© 58,805 60,642 62,537 64,492 66,507 68,585 70,729 72,939 75,218 Human Resources Manager 8© 78,357 80,806 83,331 85,935 88,621 91,390 94,246 97,191 100,228 Director of Finance & Administration 19 111,402 114,883 118,473 122,176 125,994 129,931 133,991 138,179 142,497 Finance Director 18 96,215 99,222 102,322 105,520 108,817 112,218 115,725 119,341 123,070 Finance Manager 17 80,316 82,826 85,414 88,083 90,836 93,675 96,602 99,621 102,734 Account Clerk I 1(b) 36,105 37,233 38,397 39,596 40,834 42,110 43,426 44,783 46,182 Account Clerk II 2(a) 48,491 50,007 51,570 53,181 54,843 56,557 58,324 60,147 62,026 Technical Service Clerk 1(a) 42,027 43,340 44,695 46,091 47,532 49,017 50,549 52,129 53,758 Police Officer 5(b) 50,671 52,254 53,887 55,571 57,308 59,099 60,946 62,850 64,814 Corporal 7 53,217 54,880 56,595 58,363 60,187 62,068 64,007 66,008 68,070 Police Sergeant 8(a) 67,907 70,030 72,218 74,475 76,802 79,202 81,677 84,230 86,862 Police Commander 9(b) 96,016 99,017 102,111 105,302 108,593 111,986 115,486 119,095 122,816 Police Chief 17 137,107 141,392 145,810 150,367 155,066 159,911 164,909 170,062 175,376 Code Enforcement Officer 5(a) 49,872 51,430 53,037 54,695 56,404 58,167 59,984 61,859 63,792 Fire Chief 20 117,384 121,053 124,836 128,737 132,760 136,908 141,187 145,599 150,149 Battalion Chief 17 88,970 91,751 94,618 97,575 100,624 103,768 107,011 110,355 113,804 Fire Captain 8(b) 66,244 68,314 70,448 72,650 74,920 77,262 79,676 82,166 84,734 Fire Lieutenant 5(a) 49,322 50,864 52,453 54,092 55,783 57,526 59,323 61,177 63,089 Maintenance Worker 2(b) 37,351 38,518 39,722 40,963 42,243 43,564 44,925 46,329 47,777 Public Works Crew Leader 3 50,165 51,733 53,350 55,017 56,736 58,509 60,338 62,223 64,168 Public Works Supervisor 9(a) 67,076 69,172 71,334 73,563 75,862 78,232 80,677 83,198 85,798 Public Works Director 19 89,879 92,688 95,584 98,571 101,651 104,828 108,104 111,482 114,966 Salary Schedule Fiscal Year 2024
Tier 2

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Resolutions

RESOLUTION 2023-18

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FARMERVILLE ESTABLISHING FISCAL YEAR 2023-24 APPROPRIATIONS LIMIT PURSUANT TO ARTICLE XIIIB

OF THE CALIFORNIA CONSTITUTION
WHEREAS, Article XIIIB of the Constitution of the State of California places a limit on the annual appropriations of “proceeds of taxes” of state and local government; and WHEREAS, SB1352, Chapter 1205, 1980 Statutes, provides for implementation of Article XIIIB by defining various terms used in said article and prescribing procedures to be used in implementing specific provisions of the article, one such provision is that each year the governing body of each local jurisdiction shall, by resolution, establish its Appropriations Limit for the fiscal year; and
WHEREAS, pursuant to Article XIIIB of the Constitution of the State of California and SB1352, the City of Farmersville is required to establish its Appropriations Limit for fiscal year 2023-24; and WHEREAS, the Appropriations Limit computation for Fiscal Year 2023-24 is based on the change in California per capita personal income multiplied by the change in population for the City of Farmersville as provided by the State of California Department of Finance.

NOW, THEREFORE BE IT RESOLVED, by the City Council of the City of Farmersville as follows:

1. The Appropriations Limit for the City of Farmersville for the Fiscal Year 2023-24 is the sum of $ 5,852,542.30 as detailed in Schedule “A” attached hereto and by this reference incorporated herein.

PASSED, ADOPTED AND APPROVED this 12th day of June 2023 by the following vote:

Motion to Approve ________________; Second ____________________ AYES:

NOES:

ABSTAIN:

ABSENT:

Tina Hernandez
MAYOR of the City of Farmersville
Attest:

ROCHELLE GIOVANI

CITY CLERK

RESOLUTION 2023-019

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FARMERVILLE

ESTABLISHING A REVISED SALARY SCHEDULE FOR ALL PERSONNEL FOR FISCAL YEAR 2023-24
WHEREAS, Section 36506 of the Government Code of the State of California provides that the City Council shall, by Resolution or Ordinance, fix the compensation for all appointive officers and employees; and
WHEREAS, the City Council has heretofore by Resolution established salary schedules for all personnel groups of the City;
NOW, THEREFORE BE IT RESOLVED, by the City Council of the City of Farmersville as follows:

1. The Salary Schedule for all positions for the City of Farmersville for the Fiscal Year 2023- 24 as detailed in Schedule “A” attached hereto and by this reference incorporated herein.

PASSED, ADOPTED AND APPROVED this 12th day of June, 2023 by the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

Tina Hernandez
MAYOR of the City of Farmersville
Attest:

ROCHELLE GIOVANI

CITY CLERK

RESOLUTION 2023-17

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FARMERVILLE ADOPTING A BUDGET FOR THE CITY OF FARMERSVILLE FOR THE FISCAL YEAR 2023-24 WHEREAS, the City Council of the City of Farmersville is desirous of establishing an annual Budget spending plan for the Fiscal Year 2023-24, and
WHEREAS, the Farmersville City Council has reviewed and considered the draft budget documents and has received input from the public on May 8, 2023, and WHEREAS, the Budget for the twelve months ending June 30, 2024 document attached hereto and made a part of this Resolution, reflects the Fiscal Year 2023-24 Operating and Capital Budget for the City of Farmerville.

NOW, THEREFORE BE IT RESOLVED, by the City Council of the City of Farmersville as follows:

1. The Farmersville City Council does hereby adopt the Fiscal Year 2023-24 Budget for the City of Farmersville, as outlined in the attached Budget for the twelve months ending June 30, 2024.

2. The City Manager is hereby authorized to make expenditures and appropriations in accordance with the Budget as adopted, with the exception of those expenditures which require prior Council approval, in accordance with the adopted City ordinances, rules, and regulations.

PASSED, ADOPTED AND APPROVED this 12th day of June, 2023 by the following vote:

Motion to Approve ________________; Second ____________________ AYES:

NOES:

ABSTAIN:

ABSENT:

Tina Hernandez
MAYOR of the City of Farmersville
Attest:

ROCHELLE GIOVANI

CITY CLERK

RESOLUTION 2023-016

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FARMERVILLE

ADOPTING A CAPITAL IMPROVEMENT PLAN AND CAPITAL BUDGET FOR THE CITY OF FARMERSVILLE FOR THE FISCAL YEAR 2023-24 AND FIVE-YEAR PROJECTION THROUGH FISCAL YEAR 2027-28
WHEREAS, the City Council of the City of Farmersville is desirous of establishing an annual Capital Budget and Five-Year Capital Improvement Plan, and WHEREAS, the Farmersville City Council has reviewed and considered the draft Capital Budget and Capital Improvement Plan documents on February 27, 2023 and May 8, 2023, and WHEREAS, the Proposed Budget for the twelve months ending June 30, 2024 document has combined the revised Capital Budget and Five-Year Capital Improvement Plan and was reviewed on May 8, 2023;
WHEREAS, attached hereto the Proposed Budget for Fiscal Year 2022-2023 and made a part of this Resolution, reflects both the Fiscal Year 2022-2023 Operating and Capital Budget for the City of Farmerville.

NOW, THEREFORE BE IT RESOLVED, by the City Council of the City of Farmersville as follows:

1. The Farmersville City Council does hereby adopt the Fiscal Year 2023-24 Capital Budget and Five-Year Capital Improvement Plan projection for the City of Farmersville, as outlined in the attached Budget for the twelve months ending June 30, 2024.

2. The City Manager is hereby authorized to make expenditures and appropriations in accordance with the Budget as adopted, with the exception of those expenditures which require prior Council approval, in accordance with the adopted City ordinances, rules, and regulations.

PASSED, ADOPTED AND APPROVED this 12th day of June, 2023 by the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

Tina Hernandez
MAYOR of the City of Farmersville
Attest:

ROCHELLE GIOVANI

CITY CLERK

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Appendixes

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Debt Management Policy

Approved by City Council 02/26/2018

EXHIBIT A

CITY OF FARMERSVILLE

DEBT MANAGEMENT POLICY
Scope and Application
This Debt Management Policy sets forth certain debt management objectives and establishes overall parameters for issuing and administering debt for which the City or other Covered Entities (as defined hereafter) is financially obligated or is responsible for managing (“Debt Program”). Recognizing that cost-effective access to the capital markets depends on prudent management of the Debt Program, this Debt Management Policy has been adopted by resolution.

Debt Management Policy Review and Approval
This Policy, adopted by City Council/Board of Directors resolution, will be reviewed biennially by the Finance Director to ensure the Policy remains current.

It is the intention of the governing body that any modifications to this Policy will be reviewed by the City Council, unless otherwise directed by the City Council.

Any and all modifications to this Policy are subject to City Council approval by resolution.

Debt Management Objectives and Goals
This Policy is intended to comply with section 8855 of the California Government Code and to assist the Covered Entities in accomplishing each of the following objectives:
 Maintain a prudent balance of debt and equity in meeting long-term capital needs in the form of pay-as-you-go financing. Debt and equity balance will be considered when planning the use of debt financing to address facility needs and other public infrastructure, and will ensure against incurring a level of fixed debt obligation which denies an appropriate level of future operating flexibility.
 Maintain financial discipline, prudence and long term stability.  Ensure the Covered Entities’’ long-term ability to maintain an acceptable level of service to residents of the City of Farmersville.  Lower the cost of borrowing by maintaining high ratings and easy access to capital markets.

Approved by City Council 02/26/2018

 Establish and periodically review policies, goals, objectives and standards which will enable the Covered Entities to maintain or improve their credit ratings.
 Keep policy makers informed of the Covered Entities’ policies, goals and standards with regard to the issuance of debt.
 Facilitate approval of debt issuance using predetermined, certain policies.  Incorporate debt management practices into the City’s planning and project management activities.
 Support decisions based upon sound financial and management practices; reduce political influence in the debt issuance process.  Ensure financial controls are in place with respect to proceeds of debt issuances.
 Ensure compliance with applicable state and federal laws.  Full and timely repayment of debt.

Entities Covered
These policies establish the parameters within which debt may be issued by the City of Farmersville, Farmersville Housing Authority, and Farmersville Public Finance Authority and the Successor Agency to the Redevelopment Agency of the City of Farmersville (collectively, the “Covered Entities”). Additionally, these policies apply to debt issued by the Covered Entities on behalf of assessment, community facilities or other special districts, conduit-type financing by the City for multifamily housing or industrial development projects.

Supplemental policies, tailored to the specifics of certain types of financings, may be adopted by the City Council in the future. These supplemental policies may address, but are not limited to, the Covered Entities’ general obligation, lease revenue, enterprise, multifamily housing and land-secured financings.

Professional Assistance
The Covered Entities will use the services of independent financial/municipal advisors and bond counsel on all debt financings. The Finance Director shall have the authority to periodically select service providers as necessary to meet legal requirements and minimize the Covered Entities’ debt costs. Such services, depending upon the type of financing, which may include financial advisory, underwriting, trustee, verification agent, escrow agent, arbitrage consulting and special tax consulting.

The City Attorney’s Office shall be responsible for selection of bond counsel and, for publicly-issued debt, selection of disclosure counsel. Additionally, the City

Approved by City Council 02/26/2018

Attorney’s Office will be responsible for the selection of disclosure counsel in those circumstances where the City Attorney’s Office determines it to be necessary or desirable to retain disclosure counsel to generally advise the Covered Entities with respect to its obligations under state and federal securities-laws. The goal in selecting service providers, whether through a competitive process or otherwise, is to achieve an appropriate balance between service and cost.

Types and Purposes of Debt
The Covered Entities may use several types of municipal debt obligations to finance long-term capital projects and associated real property acquisitions, to the extent permitted by applicable law. Long-term debt is only issued to finance the acquisition and/or construction of capital improvements unless otherwise decreed by court order or adjudicated settlement. Long-term debt financing shall never be used to fund operating or maintenance costs. Prior to the issuance of debt, a reliable revenue source shall be identified to secure repayment of the debt. The following types and purposes of debt of the Covered Entities.

A. Long-term Borrowing: Long-term borrowing may be used to finance the acquisition or improvement of land, facilities or equipment for which it is appropriate to spread these costs over more than one budget year and, with respect to the Covered Entities, will be reflected in the Adopted Annual Capital Budget and Adopted Five-Year Capital Improvement Plan. Longterm borrowing may also be used to fund capitalized interest, costs of issuance, required reserves, and any other financing-related costs which may be legally capitalized. Long-term borrowing shall not be used to fund normal and re-occurring operating costs.

B. Short-term Borrowing: In general, short-term borrowing through financing vehicles, such as commercial paper and lines of credit, will be considered as an interim source of funding for a capital improvement in anticipation of long-term borrowing or for the acquisition of equipment, or any other purpose permitted under the California Government Code, including but not limited to Articles 7 and 7.6 of Chapter 4, of Part 1, of Division 2 of Title 5 thereof. Short-term debt may be issued for any purpose for which long-term debt may be issued, including capitalized interest and other financing-related costs. The final maturity of the debt issued to finance the project shall be consistent with the economic or useful life of the project and, unless the Covered Entity determine that extraordinary circumstances exist, must not exceed seven (7) years. The Covered Entity may also authorize the use of a short-term financing vehicle with a maturity longer than seven (7) years consistent with the useful life of

Approved by City Council 02/26/2018

the financed project if use of a short-term financing vehicle would be a beneficial component to the applicable debt portfolio. Additionally, shortterm borrowing may be considered if available cash is insufficient to meet short-term operating needs.

C. Assessment Bonds: Proceeds from Assessment Bonds may be used to finance local public improvements, provided that said improvements benefit the parcels of land to be assessed. Local streets, street lights, landscaping, sidewalks and sanitary sewers are some examples of local improvements commonly financed by assessment bonds.

D. General Obligation Bonds: General Obligation Bonds may only be issued with two-thirds approval of a popular vote. The California State Constitution (Article 16, Section 18) limits the use of the proceeds from General Obligation Bonds to “the acquisition or improvement of real property.” Libraries, parks and public safety facilities are all types of facilities which could be financed with General Obligation Bonds.

E. Enterprise Revenue Bonds: Enterprise Revenue Bonds finance facilities for a revenue producing enterprise, and are payable from revenue sources within that enterprise.

F. Lease Financing:
i) As used in this section, the term “lease financing” means any lease or sublease made between the Covered Entities and another party for the purpose of financing the acquisition, construction or improvement by the Covered Entities of real property or equipment.

By way of example and not limitation, the term “lease financing” includes certificates of participation, lease revenue bonds or lease revenue notes.
ii) Prior to bringing a lease financing to the City Council for approval, the Finance Director will perform initial due diligence on the project to be financed. The Finance Director’s due diligence review will include the following elements:
a. Any lease financing must have an identified revenue source for repayment, which may include the general fund, eligible special funds or project revenues.

Approved by City Council 02/26/2018

b. Prior to embarking on a lease financing in which project revenues are identified as the repayment source, a feasibility study will be performed to determine the volatility of the revenue and provide a sensitivity analysis on project revenue projections including worst/best case scenarios, including without limitation, the impact on any repayment source identified as the backstop to the project revenues as the repayment source.
c. The Finance Director will present the results of the due diligence review including any feasibility study to the City Council for review and consideration, in order to proceed with the preparation of the documents necessary for the lease financing, at least two-thirds majority approval by the City Council of the proposed plan of finance is required.
d. At the time the Finance Director brings forward the lease financing for City Council approval, the Finance Director will also provide the City Council with an update to the due diligence report and any feasibility study. Approval of the lease financing will require at least two-thirds majority approval by the City Council. iii) The provisions of this section will not apply to a refunding of a lease financing transaction.

G. Refunding Obligations: Periodic reviews of outstanding debt will be undertaken to identify refunding opportunities. Refunding will be considered (within federal tax law constraints) if and when there is a net economic benefit of the refunding. Refundings which are non-economic may be undertaken to achieve City objectives relating to changes in covenants, call provisions, operational flexibility, tax status, issuer, or the debt service profile. In general, refundings which produce a net present value savings of at least three percent (3%) of the refunded debt will be considered economically viable. Refundings which produce a net present value savings of less than three percent (3%) will be considered on a caseby-case basis. Refundings with negative savings will not be considered unless there is a compelling public policy objective which is accomplished by retiring the debt.

H. Tax and Revenue Anticipation Bonds or Notes.

I. Land-secured financings, such as special tax revenue bonds and limited obligation assessment bonds.

Approved by City Council 02/26/2018

J. Tax increment financings to the extent permitted under State law.

K. Debt may be publicly issued or privately placed and may be issued on either a long term basis or short-term basis consistent with the provisions of this Policy.

L. Other Obligations: There may be special circumstances when other forms of debt are appropriate and may be evaluated on a case-by-case basis. Such other forms include, but are not limited to non-enterprise revenue bonds, bond anticipation notes, grant anticipation notes and judgment or settlement obligation bonds.

Responsibility for Debt Management Activities
The City’s Finance Director will be responsible for managing and coordinating all activities related to the issuance and administration of debt under this policy, including the implementation of internal control procedures to ensure that the proceeds of debt will be directed to the intended use. The Finance Director shall be subject to City Manager’s direction and supervision. The Finance Director is charged with responsibility for the conduct of all City finance functions.

Additionally, the Finance Director serves as the chief financial officer of the Covered Entities is responsible for the oversight of the their ’financial affairs, including use of the proceeds of debt issued by the Covered Entities.

Covered Entities implementing debt-financed capital programs will work in partnership with the Finance Director to provide information and otherwise facilitate the issuance and administration of debt.

All long-term financing proposed transactions for capital improvements must be approved by the governing body of the Covered Entities. “Long-term financing” means financing which constitutes an obligation beyond one fiscal year. The Covered Entities must comply with all public hearing requirements applicable to the specific type of bond being approved.

A. Annual Debt Report and Other Reports
The Finance Director will prepare an annual debt report for review by the governing body of the Covered Entities for consideration. The content of the annual debt report will include a summary of the Covered Entities’’ credit ratings, outstanding and newly-issued debt, a discussion of anticipated debt issues,

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refunding opportunities, a review of legislative, regulatory and market issues, and an outline of any new or proposed changes to this Debt Management Policy. The Finance Director shall also be responsible for timely preparation of all reports mandated by law in connection with issuance of debt, including but not limited to under Government Code § 8855(i), (j) and (k) (i), including timely submittal to the governing bodies of the Covered Entities prior to submittal to the California Debt and Investment Advisory Commission.

B. Debt Administration Activities
The Finance Director is responsible for the Covered Entities’ debt administration activities, particularly investment of bond proceeds, monitoring compliance with bond covenants, implementing internal control procedures to ensure the use of proceeds of bonds and other debt will be directed to their intended use, monitoring use of facilities financed and tax-exempt debt, continuing disclosure, monitoring arbitrage compliance for tax-exempt debt, and ongoing interactions with credit rating agencies, all of which shall be centralized with the Office of the Finance Director.

C. Internal Control Procedures
Whenever reasonably possible, proceeds of debt used to finance capital improvements will be held by a third-party trustee and the Covered Entities will submit written requisitions for such proceeds. The Finance Director will execute each such requisition. The Finance Director will be responsible for selecting trustees and other fiscal agents associated with bond and certificate of participation issues. To the extent permitted by bond counsel, the rating agencies or any bond insurer, the Finance Director will serve as the Covered Entities’ fiscal agent on its debt transactions.

D. Method of Sale
Except to the extent a competitive process is required by law, the Finance Director under supervision of the City Manager shall be responsible for determining the appropriate manner in which to offer any securities to investors. The preferred method of sale is competitive bid. However, other methods such as negotiated sale and private placement may be considered on a case-by-case basis.

Debt Issuance
A. Debt Capacity

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The Covered Entities must keep outstanding debt within the limits of applicable law and all levels consistent with its credit worthiness objectives. Without limiting the foregoing, the Covered Entities must keep outstanding debt within the limits of the City’s requirementsand the Successor Agency will issue debt to refund its outstanding debt consistent with applicable law. In particular, the Covered Entities must assess the impact of new debt issuance on the long-term affordability of all outstanding and planned debt issuance. Such analysis recognizes that Covered Entities have limited capacity for debt service in their budget, and that each newly issued financing will obligate the Covered Entities to a series of payments until the bonds are repaid.

B. Credit Quality
The Covered Entities seek to obtain and maintain from rating agencies the highest possible credit ratings for all categories of short-term and long-term debt. The Covered Entities will not issue bonds directly or on behalf of others which do not carry investment grade ratings. However, the Covered Entities will consider the issuance of non-rated special assessment, community facilities, multifamily housing and special facility bonds.1
C. Structural Features
i) Debt Repayment
Debt will be structured for a period consistent with a fair allocation of costs to current and future beneficiaries of the financed capital project and, consideration will be given, The Covered Entities must structure their debt issues so that the maturity of the debt issued is consistent with the economic or useful life of the capital project to be financed.
ii) Variable-Rate Debt
The Covered Entities may choose to issue securities which pay a rate of interest which varies according to a pre-determined formula or results from a periodic remarketing of the securities. Such issuance must be consistent with applicable law and covenants of pre-existing bonds, and in an aggregate amount consistent with the Covered Entity’s’ creditworthiness objectives. When making the determination to issue bonds in a variable rate mode, consideration will be given in regards to the useful life of the project or facility being financed or refinanced

1 In most cases, a bond which cannot achieve an investment-grade rating will not be rated at all, because there is little value from a bond-marketing perspective in a below investment-grade rating.

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or the term of the project requiring the funding, market conditions and the overall debt portfolio structure when issuing variable rate debt for any purpose. iii) Derivatives
Derivative products2 may have application to certain Covered Entities borrowing programs. In certain circumstances these products can reduce borrowing cost and assist in managing interest rate risk. However, these products carry with them certain risks not faced in standard debt instruments. The Finance Director must evaluate the use of derivative products on a case-by-case basis to determine whether the potential benefits are sufficient to offset any potential costs.

Relationship to Capital Improvements Program or Budget Planning Goals and Objectives
The Covered Entities are committed to long term financial planning, maintaining appropriate reserve levels and employing prudent practices in governance, management and budget administration. The Covered Entities intend to issue debt for the purposes stated in this Debt Management Policy and to implement policy decisions incorporated in the Covered Entities’ annual operations and capital budgets-and the City’s five-year capital improvement plan. This Debt Management Policy is intended to ensure that debt levels and their related annual costs will advance the Covered Entities’ planning goals and objectives.

Debt Affordability Target Limitations
“Debt affordability” is considered in the policies established by the Covered Entities and financial and economic ratios recognized by rating agencies. Target ratios identified in this Debt Management Policy are guidelines and should be revisited as the Covered Entities’ capital program and financial resources change.

The principal affordability measures will be the follows:
 As a percent of budget: Consistent with market practices this ratio will be calculated as a percent of General Fund revenue, as a percent of General Fund revenue less General Fund intergovernmental revenue, and as a percent of operating expenditures. The Covered Entities will keep ratios at or below the median for California cities.

2 A derivative product is a financial instrument which “derives” its own value from the value of another instrument, usually an underlying asset such as a stock, bond or an underlying reference such as an interest rate index.

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 Tax rate threshold: The Covered Entities recognize taxpayer sensitivity to tax rates. The City may set a target limit for approving any such special obligations, for example where the aggregate tax would exceed 2% of assessed value of real property. However, bond issues which achieve a level of community support sufficient to satisfy the two-thirds (2/3) majority vote threshold will be deemed to be an exception to the guidelines for financial and economic measures insofar as an inconsistency may otherwise appear to exist.
 Rating agency ratios: The rating agencies, bond insurance companies and institutional investor analysts commonly rely on certain ratios to measure a jurisdiction’s debt load. In addition to the ratios of debt as a percent of revenues and expenditures, the rating agencies employ debt as a percent of assessed valuation; debt as a percent of personal income; and debt per capita.

These three ratios are not direct measures of issuer debt affordability, however they provide useful benchmarks by which the Covered Entities can compare to its peers and affect the way bond market participants view the Covered Entities. The Covered Entities’ goal is to maintain such measures at levels which are at or below the average of comparable counties. Moody’s Investors Services publishes debt measures for certain California public entities, which will be utilized as a source for comparison purposes.

The Covered Entities may determine that a particular improvement is of such high necessity to ensure the safety and welfare of their residents that it must incur obligations in excess of these thresholds. To the extent such thresholds are ever exceeded for such purposes, it is the intention of the Covered Entities to avoid future occurrences of debt or other fixed obligations until such thresholds are restored.

Disclosure Practices and Procedures
A. Statement of Policy
The Covered Entities are committed to full and complete primary (prior to issuance) and secondary (post issuance) market disclosure in accordance with disclosure requirements established by the Securities and Exchange Commission and Municipal Securities Rulemaking Board and other applicable legal authorities, as may be amended from time to time. The City is also committed to cooperating fully with rating agencies, institutional and individual investors, other levels of government, and the general public to share clear, timely and accurate financial information.

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B. Implementation of Policy Objectives
i) For purposes of this section, the following definitions apply “Continuing Disclosure Agreement” means the certificate or agreement entered into by the City in connection with the sale of bonds in order to satisfy the requirements of Securities and Exchange Rule 15c2-12 which requires the Covered Entities, as applicable, to provide specified information and annual reports while the bonds remain outstanding.
“Offering Document” means the document prepared by the City in connection with the sale of bonds to the public.
ii) Written Policies and Procedures
In order to carry out these policies objectives, the City Manager, in consultation with the City Attorney, will implement written disclosure policies and procedures related to the provision of financial and other relevant information to investors including preparation and review of Offering Documents before submission to the governing bodies of the Covered Entities for approval and compliance with Continuing Disclosure Agreements, and if required, the development and maintenance of an investor webpage on the City’s website as well as and other related topics.
iii) City Council Review and Approval of Offering Documents The City’s consideration of the approval of bonds and the Offering Documents related to the bonds is to be placed on the applicable City Council agenda as a new business matter and not on the Consent Calendar. Any Offering Document to be issued in connection with the sale of the bonds is to be transmitted to City Council in substantially final form for the City Council’s consideration and approval to release to investors, subject to any updating required to make the Offering Document accurate and complete. The City Council’s review will consider whether the Offering Document includes all material information to an investor in the bonds - meaning information where there is a substantial likelihood that the information would have actual significance in the deliberations of the reasonable investor. At the City Council meeting at which the proposed sale of bonds is considered, the City Council will have the opportunity to address questions to City staff and the professional advisors regarding the information presented in the Offering Document.

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iv) Responsibility for Disclosure
The City Manager and the Finance Director are the Covered Entities’ designated officials for communicating information concerning the Covered Entities’’ finances and other information about the Covered Entities which a reasonable investor would consider to be material in making a decision to purchase or sell debt issued by the Covered Entities.

Communications from other Covered Entities officials or employees regarding the City’s financial condition must not be considered to be official communications by the City to the investor marketplace unless otherwise approved by the City.

The reports re
Debt Administration – Investments, Use of Proceeds and Tax Compliance

A. Investment and use of Proceeds
Investments of proceeds of bonds or other forms of debt shall be consistent with federal tax requirements and any applicable State law requirements, and the City’s Investment Policy as modified from time to time, and with requirements contained in the governing documents. The Finance Director will be responsible for the implementation of internal control procedures to ensure that the proceeds of debt, regardless of tax status, will be directed to the intended use. This responsibility is in addition to the specific requirements related to the monitoring use of tax-exempt proceeds specified below.

B. Federal Tax Compliance
i) Responsible Department
The Finance Director will have primary responsibility for all ongoing tax compliance matters relating to tax-exempt debt issued by the Covered Entities.

The Finance Director, who may in turn consult with bond counsel, will be responsible for monitoring ongoing tax compliance matters relating to tax-exempt debt, including compliance with the arbitrage rebate requirements of section 148 of the Internal Revenue Code, as set forth below. It is contemplated that additional policies and procedures will be implemented by either or both the City Manager and the Finance Director to supplement the policies and procedures set forth in this Debt Management Policy.
ii) Arbitrage Compliance

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The Finance Director will maintain a system of record keeping and reporting to meet the arbitrage compliance requirements of federal tax law for tax-exempt debt.

In connection with this responsibility, the Finance Director must:
a) Program payment of required rebate amounts, if any, no later than 60 days after each 5-year anniversary of the issue date of bonds or notes, and no later than 60 days after the last bond or notes of each issue is redeemed; b) During the construction period of each capital project financed in whole or in part by bonds or notes, monitor the investment and expenditure of proceeds and consult with rebate experts as necessary, to determine compliance with any applicable exceptions from the arbitrage rebate requirements during each 6-month spending period up to 6 months, 18 months or 24 months, as applicable, following the issue date of the bonds or notes; and
c) Retain copies of all arbitrage reports and account statements as described below in “Record Keeping Requirements.”
C. Use of Tax-Exempt Debt and Facilities
The Finance Director, together with the applicable City department heads, will be responsible for:
 Monitoring the use of tax-exempt proceeds and the use of taxexempt financed or refinanced assets (e.g., facilities, furnishings or equipment) throughout the term of the debt to ensure compliance with covenants and restrictions set forth in the governing documents relating to the debt;
 Maintaining records identifying the assets or portion of assets which are financed or refinanced with proceeds of each issue of tax-exempt debt, including a final allocation of tax-exempt proceeds as described below under “Record Keeping Requirements”;
 Consulting with the City Attorney’s Office and bond counsel in the review of any contracts or arrangements involving use of tax-exempt financed or refinanced assets to ensure compliance with all covenants and restrictions set forth in the governing documents relating to the tax-exempt debt;

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 Maintaining records for any contracts or arrangements involving the use of tax-exempt financed or refinanced assets as described below under “Record Keeping Requirements”;
 Conferring at least annually with personnel responsible for taxexempt financed or refinanced assets to identify and discussing any existing or planned use of tax-exempt financed or refinanced assets, to ensure that those uses are consistent with all covenants and restrictions set forth in the governing documents relating to the tax-exempt debt; and  To the extent that the City discovers that any applicable tax restrictions regarding use of tax-exempt proceeds and tax-exempt-financed or refinanced assets will or may be violated, consulting promptly with the City Attorney’s Office and bond counsel to develop a course of action to remediate any identified violation.

D. Record Keeping Requirements
The Finance Director and other applicable City departments, as may be necessary, will be responsible for maintaining the following documents for the term of each issue of tax-exempt debt (including debt issued to refinance existing debt, if any) plus at least three (3) years:
 A copy of the closing transcript(s) and other relevant documentation delivered to the City at or in connection with closing of the issue of taxexempt, including any elections made by the City in connection therewith;  A copy of all material documents relating to capital expenditures financed or refinanced by tax-exempt debt proceeds, including (without limitation) construction contracts, purchase orders, invoices, trustee requisitions and payment records, draw requests for tax-exempt debt proceeds and evidence as to the amount and date for each draw down of tax-exempt debt proceeds, as well as documents relating to costs paid or reimbursed with tax-exempt debt proceeds and records identifying the assets or portion of assets which are financed or refinanced with tax-exempt debt proceeds, including a final allocation of tax-exempt debt proceeds;  A copy of all contracts and arrangements involving the use of taxexempt debt-financed or refinanced assets; and  A copy of all records of investments, investment agreements, arbitrage reports and underlying documents, including trustee statements, in

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connection with any investment agreements, and copies of all bidding documents, if any.

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Investment Policy

1 City of Farmersville Investment Policy
I. Governing Authority
Legality
The investment program shall be operated in conformance with governing legislation and other legal requirements laid out in section 2.04 of the Farmersville Municipal Code regarding the position of Treasurer / Chief Financial Officer and California Government Code Section 53601.

II. Scope
This policy applies to the investment of all funds, excluding the investment of employees' retirement funds.

1. Pooling of Funds
Except for cash in certain restricted and special funds, the City of Farmersville 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. Also, per SEC Rule 15B (Municipal Advisor Rule), the policy must clearly state whether or not the cash being pooled/invested includes municipal bond proceeds or not.

Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles.

III. General Objectives
The primary objectives of investment activities shall be safety, liquidity, and return:

1. Safety
Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective will be to mitigate credit risk and interest rate risk. a. Credit Risk
The City of Farmersville will minimize credit risk, which is the risk of loss of all or part of the investment due to the failure of the security issuer or backer, by:
• Limiting investments to the types of securities listed in Section VII of this Investment Policy • Pre-qualifying and conducting ongoing due diligence of the financial institutions, broker/dealers, intermediaries, and advisers with which the City will do business in accordance with Section V • Diversifying the investment portfolio so that the impact of potential losses from any one type of security or from any one individual issuer will be minimized. b. Interest Rate Risk
The City of Farmersville will minimize interest rate risk, which is the risk that the market value of securities in the portfolio will fall due to changes in market interest rates, by:
• Structuring the investment portfolio so that security maturities match cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity.
• Investing operating funds primarily in shorter-term securities, money market mutual funds, or similar investment pools and limiting individual security maturity as well as the average maturity

2 of the portfolio in accordance with this policy (see section VIII).

2. Liquidity
The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by structuring the portfolio so that securities mature concurrent with cash needs to meet anticipated demands (static liquidity).

Furthermore, since all possible cash demands cannot be anticipated, the portfolio should consist largely of securities with active secondary or resale markets (dynamic liquidity).

Alternatively, a portion of the portfolio may be placed in money market mutual funds or local government investment pools which offer same-day liquidity for short-term funds.

3. Return
The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. The core investments are limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. Securities shall generally be held until maturity with the following exceptions:
• A security with declining credit may be sold early to minimize loss of principal; • Selling a security and reinvesting the proceeds that would improve the quality, yield, or target duration in the portfolio may be undertaken;
• Unanticipated liquidity needs of the portfolio require that the security be sold.

IV. Standards of Care

1. Prudence
The standard of prudence to be used by investment officials shall be the "uniform prudent investor act" standard and shall be applied in the context of managing an overall portfolio. The Investment Officer 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 deviations from expectations are reported in a timely fashion and the liquidity and the sale of securities are carried out in accordance with the terms of this policy.

2. Ethics and Conflicts of Interest
Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions. Employees and investment officials shall disclose any material interests in financial institutions with which they conduct business, in accordance with applicable laws (City’s Conflict of Interest Policies, California Government Code section 1090, and the California Political Reform Act). They shall further disclose any personal financial/investment positions that could be related to the performance of the investment portfolio.

Employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the City of Farmersville.

3. Delegation of Authority
Authority to manage the investment program is granted to the Chief Financial Officer / Treasurer and

3 derived from City of Farmersville Municipal Code section 2.04 and California Government Code 53601. Responsibility for the operation of the investment program is hereby delegated to the Chief Financial Officer, who shall act in accordance with established written procedures and internal controls for the operation of the investment program consistent with this investment policy. At a minimum, procedures should include references to the following: safekeeping, delivery vs. payment, investment accounting, repurchase agreements, wire transfer agreements, and collateral/depository agreements.

No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Chief Financial Officer. The Chief Financial Officer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials.

V. Authorized Financial Institutions, Depositories, and Broker/Dealers

1. Authorized Financial Institutions, Depositories, and Broker/Dealers A list will be maintained of financial institutions and depositories authorized to provide investment services. In addition, a list will be maintained of approved security broker/dealers selected by creditworthiness and/or other factors, such as FINRA broker check.

All financial institutions and broker/dealers who desire to become qualified for investment transactions must supply the following as appropriate:
• Audited financial statements demonstrating compliance with state and federal capital adequacy guidelines
• Proof of Financial Industry Regulatory Authority (FINRA)certification (not applicable to Certificate of Deposit counterparties)
• Proof of state registration
• Completed broker/dealer questionnaire (not applicable to Certificate of Deposit counterparties) • Certification of having read and understood and agreeing to comply with the [entity's] investment policy.
• Evidence of adequate insurance coverage.

An annual review of the financial condition and registration of all qualified financial institutions and broker/dealers will be conducted by the Chief Financial Officer.

2. If a third party investment advisor is authorized to conduct investment transactions on the City’s behalf, the investment advisor may use its own list of approved broker/dealers and financial institutions for investment purposes. The investment advisor’s approved list must be made available to City upon request. In selecting financial institutions for the deposit or investment of City funds, the credit rating of these institutions will be considered. These financial institutions shall be authorized to provide investment services in California.

VI. Safekeeping and Custody

1. Delivery vs. Payment
All trades of marketable securities will be executed by delivery vs. payment (DVP) to ensure that securities are deposited in an eligible custody account prior to the release of funds.

2. Safekeeping
Securities will be held by an independent third-party custodian selected by the city as with all securities held in the City’s name (centralized, if possible). The safekeeping institution shall annually provide a copy of their most recent report on internal controls (Statement of Auditing Standards No.

4 70, or SAS 70).

3. Internal Controls
The Chief Financial Officer shall establish a system of internal controls, which shall be documented in writing. The internal controls shall be reviewed annually by the investment committee, where present, and with the independent auditor. The controls shall be designed to prevent the loss of public funds arising from fraud, employee error, mis-representation by third parties, unanticipated changes in financial markets, or imprudent actions by employees and officers of the City.

VII. Suitable and Authorized Investments

1. Investment Types
Consistent with the GFOA Policy Statement on State and Local Laws Concerning Investment Practices, California State Law, and other binding documents, the following investments will be permitted by this policy and in the following proportions:

Investment Type Maximum % or $ Maximum
Maturity
Minimum Required
Rating
Bank / Time Deposits None 5 years N/A
U.S. Treasuries None 5 years N/A
U.S. Agencies None 5 years N/A
Money Market Funds 20% (10% with one mutual fund) N/A N/A Bankers Acceptances 30% (5% with one bank) 180 days A1/P1 Commercial Paper 25% (5% with one firm) 270 days A1/P1
Negotiable CDs 30% (5% with one bank) 5 years A < 1 year AA < for 1-5 years
CDs non-negotiable
CDARS
30% (5% with one bank) 3 years N/A
Municipal Obligations 5% with on Agency 5 years A (except City’s own bonds)
Medium Term Notes 30% 5 years A
Supranationals 2% 5 years AAA
LAIF (State Pool) Per State Statute N/A N/A
Local Government
Investment Pools
(CSJVRMA, CAMP,
CLASS, etc).

None N/A N/A
Investment in derivatives of the above instruments shall require authorization by the appropriate governing authority.

It is the intent that investments shall be managed in such a way that any market price losses resulting from interest-rate volatility would be offset by coupon income and current income received from the overall portfolio over market cycles. To the extent possible, the City will attempt to match its investments with anticipated cash flow requirements.

Pursuant to Government Code Section 53601 et seq. the City may only invest in the following security types (See the Glossary section for a detailed description of each of these investment types):

5 A. U.S. Government Treasury Bills and Notes
B. U.S. Government Sponsored Enterprise Debt (GSE’s) (known as Agencies) C. Certificates of Deposit (non-negotiable) (CDs) – The City is authorized to use of private CD placement services by local agencies. This investment policy allows for the use of a placement service called the Certificate of Deposit Account Registry Service (CDARS), which acts as the master custodian for the placement of CDs. Through the use of this placement service, local banks that work with CDARS place one investment by the City and divide the deposit into individual CDs not to exceed $250,000, so that each individual CD is fully insured by the FDIC.

D. Bankers Acceptances (BA) – with an A1/P1 rating as provided for by a nationally recognized statistical-rating organization (NRSRO).

E. Commercial Paper - Prime commercial paper with an A1/P1 rating as provided for by a NRSRO.

Purchases must be limited to corporations organized and operating within the United States, and as a practical matter generally only those corporations operating within the State of California, having total assets in excess of $500 million, and having an "A" or higher rating for the issuer's debentures, other than commercial paper (as-provided by Moody's or Standard and Poor's rating services). In addition, purchases may not represent more than ten percent (10%) of the outstanding paper of an issuing corporation.

F. State of California Local Agency Investment Fund (LAIF) G. Local Government Investment Pools (LGIP) – Pooled investments providing shares in a California common law trust established pursuant to Title 1, Division 7, Chapter 5 of the Government Code of the State of California which invests exclusively in investments permitted by Section 53601 of Title 5, Division 2, Chapter 4 of the Government Code of California, as it may be amended. Examples include Central San Joaquin Valley Risk Management Authority Pooled Investment Account (CSJVRMA), California Asset Management Program (CAMP), California CLASS, and other pools provided that they meet the requirements stated above.

H. Domestic money market mutual funds – These must be registered with the Federal Securities and Exchange Commission (SEC), have over $500 million in total assets, be rated in the highest rating category by two nationally recognized rating services and only invest in:
a. U.S. Government or federal agency securities and repurchase agreements, b. Tax exempt obligations or other investment instruments specifically included in the local investment policy
I. Negotiable Certificates of Deposit - Must be issued by a nationally or state chartered bank or savings and loan association, or by a state licensed branch of a foreign bank.

J. Medium Term Corporate Notes - Notes issued by corporations organized and operating within the U.S. or by depository institutions licensed by the United States or any state and operating within the U.S. Must be rated “A” or better by a NRSRO. a. If a corporate note owned by the City is downgraded by either Moody’s or S&P to a level below the quality required by this Investment Policy, it shall be the City’s policy to review the credit situation and make a determination as to whether to sell or retain such a corporate note in the portfolio.

6 b. If a security is downgraded two grades below the level required by the City, the security shall be sold immediately.
c. If a security is downgraded one grade below the level required by this policy and matures within 6 months, the security will be held to maturity. The Chief Financial Officer may determine to sell the security if it is determined that there is a probability of default prior to maturity. If a decision is made to retain the security in the portfolio, its presence in the portfolio will be monitored and reported quarterly to the City Council.

K. Municipal Obligations – Must be rated “A” or better by a nationally recognized rating agency except for the City’s own bonds and bonds issued by the City’s former Redevelopment Agency and its Financing Authority, which may have any rating. Municipal Obligations include the following:
i. Registered state warrants or treasury notes or bonds of the State of California and bonds, notes, warrants, or other evidences of indebtedness of any local agency within California, including bonds payable solely out of the revenues from a revenue producing property owned, controlled, or operated by the state or local agency or by a department or agency of the state or local agency.
ii. Registered treasury notes or bonds of any of the 49 U.S. States in addition to the State of California, including bonds payable solely out of the revenues from a revenue producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 U.S. States, in addition to California.

L. Supranationals - Must be rated “AAA” or better by a nationally recognized rating a. agency and is U.S. dollar denominated senior unsecured unsubordinated obligations issued by the International Bank for Reconstruction and Development, International Finance Corporation, or the Inter-American Development Bank.

2. Collateralization
Where allowed by governing legislation and in accordance with the GFOA Recommended Practices on the Collateralization of Public Deposits, full collateralization will be required on all demand deposit accounts, including checking accounts and non-negotiable certificates of deposit (at least 102% per California Government Code).

3. Repurchase Agreements
Repurchase agreements shall be consistent with GFOA Recommended Practices on Repurchase Agreements and California Government Code.

VIII. Investment Diversification & Constraints

1. Diversification
It is the policy of the City of Farmersville to diversify its investment portfolios. To eliminate risk of loss resulting from the overconcentration of assets in a specific maturity, issuer, or class of securities, all cash and cash equivalent assets in all City of Farmersville funds shall be diversified by maturity, issuer, and security type. Diversification strategies shall be determined and revised periodically by the investment committee/investment officer for all funds except for the employee retirement fund.

7 In establishing specific diversification strategies, the following general policies and constraints shall apply: Portfolio maturities shall be staggered to avoid undue concentration of assets in a specific maturity sector. Maturities selected shall provide for stability of income and reasonable liquidity.

• Liquidity shall be assured through practices ensuring that the next disbursement date and payroll date are covered through maturing investments or marketable U.S. Treasury bills.
• Positions in securities having potential default risk (e.g., commercial paper) shall be limited in size so that in case of default, the portfolio’s annual investment income will exceed a loss on a single issuer’s securities.
• Risks of market price volatility shall be controlled through maturity diversification and duration management.
• The Chief Financial Officer shall establish strategies and guidelines for the percentage of the total portfolio that may be invested in securities other than repurchase agreements, Treasury bills, or collateralized certificates of deposit. The Chief Financial Officer shall conduct a quarterly review of these guidelines and evaluate the probability of market and default risk in various investment sectors as part of its considerations.

The following diversification limitations shall be imposed on the portfolio:

Any security type or structure not specifically approved by this policy and investment instructions is specifically prohibited. Security types, which are thereby prohibited to be purchased as defined by Government Code Section 53601.6 include, but are not limited to:
a) Complex derivative structures such as range notes, inverse floaters, or any other complex variable rate or structure note.
b) Interest-only strips that are derived from a pool of mortgages (i.e. Collateralized Mortgage Obligations), or any security that could result in zero interest accrual if held to maturity.
c) Mortgage and asset backed securities, and trade in options or future contracts.

2. Maximum Maturities
To the extent possible, the City of Farmersville shall attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the City will not directly invest in securities maturing more than five (5) years from the date of purchase or in accordance with governing legislation. The City shall adopt weighted average maturity limitations consistent with the investment objectives.

Reserve funds and other funds with longer-term investment horizons may be segregated into a long-term “core” investment portfolio and invested in securities exceeding five (5) years if the maturities of such investments are made to coincide as nearly as practicable with the expected use of funds as allowed by State law. The intent to invest in securities with longer maturities shall be disclosed in writing to the legislative body.

3. Competitive Bids
The Chief Financial Officer shall obtain competitive bids from at least three brokers or financial institutions on all purchases and sales of investment instruments transacted on the secondary market when practicable.

IX. Reporting

8 1. Methods
The Chief Financial Officer shall prepare an investment report monthly, according to California government code section 53607 and 53646(b) relative to the investment holdings and investment activity of the City.

The report shall include a management summary that provides an analysis of the status of the current investment portfolio and the individual transactions executed over the last quarter. This management summary will be prepared in a manner which will allow the City to ascertain whether investment activities during the reporting period have conformed to the investment policy.

The report will be provided to the City Manager, City Clerk, and the City Council. The report will include the following:
• Listing of individual securities held at the end of the reporting period including type, acquisition cost, book cost, and market value.
• Realized and unrealized gains or losses resulting from appreciation or depreciation by listing the cost and market value of securities over one-year duration that are not intended to be held until maturity (in accordance with Governmental Accounting Standards Board (GASB) requirements). • Average weighted return on investments as compared to applicable benchmarks. • Percentage of the total portfolio which each type of investment represents. • A statement that the investment portfolio is in compliance with the investment policy and is meeting the investment policy objectives

2. Performance Standards
The investment portfolio will be managed in accordance with the parameters specified within this policy. The portfolio should obtain a market average rate of return during a market/economic environment of stable interest rates. An appropriate benchmark(s) shall be established against which portfolio performance shall be compared on a regular basis. The benchmarks shall be reflective of the actual securities being purchased and risks undertaken, and the benchmarks shall have a similar weighted average maturity as the portfolio.

3. Marking to Market
The market value of the portfolio shall be calculated monthly and a statement of the market value of the portfolio shall be issued monthly. This will ensure that review of the investment portfolio, in terms of value and price volatility, has been performed consistent with the GFOA Recommended Practice on "Mark-to-Market Practices for State and Local Government Investment Portfolios and Investment Pools."
In accordance with Governmental Accounting Standards Board (GASB) Statement No. 31, “Accounting and Financial Reporting for Certain Investments”, as of June 30th of each Fiscal Year the City will report all investments in excess of one year at market value. Any change in the value of the investments will be recognized annually, as a part of interest income.

X. Policy Considerations

1. Amendments
This policy shall be reviewed on an annual basis. Any changes must be submitted by the investment officer and approved by the investment oversight committee or authoritative body acting in such capacity.

XI. Approval of Investment Policy

9 The investment policy shall be formally approved and adopted by the City Council and reviewed annually.

XII. Glossary
A
Accrued Interest: Coupon interest accumulated on a bond or note since the last interest payment or, for a new issue, from the dated date to the date of delivery.

Agencies: Federal agency securities and/or Government-sponsored enterprises. These include securities of government agencies such as, but not limited to: Federal National Mortgage Association (FNMA); Federal Home Loan Bank (FHLB); Government National Mortgage Association (GNMA); Community Development Corporation (CDC), Small Business Association (SBA), Federal Farm Credit Bank (FFCB) and Federal Home Loan Mortgage Corporation (FHLMC).

Arbitrage: Transactions by which securities are bought and sold in different markets at the same time for the sake of the profit arising from a yield difference in the two markets. The 1986 Tax Reform Act made this practice by municipalities illegal solely as a borrowing tactic, except under certain safe- harbor conditions.

Asked: The price at which securities are offered.

Asset Backed Securities: Securities that are supported by pools of assets, such as installment loans or leases, or by pools of revolving lines of credits. Asset-backed securities are structured as trusts in order to perfect a security interest in the underlying assets.

B
Bank Deposits: To deposit collateral in the form of currency that may be in the form of demand accounts (checking) or investments in accounts that have a fixed term and negotiated rate of interest.

Bank Notes: A senior, unsecured, direct obligation of a bank or U.S. branch of a foreign bank.

Bankers’ Acceptance (BA): These are bills of exchange or time drafts drawn on, and accepted by, commercial banks in the top 100 of the world, which are eligible for purchase by the Federal Reserve System. Acceptance of the draft obligates the bank to pay the bearer the face amount of the draft at maturity. In addition to the guarantee by the accepting bank, the transaction is secured with a specific commodity. The sale of the underlying goods will generate the funds necessary to liquidate the indebtedness. BAs are usually created to finance the import and export of goods, the shipment of goods within the United States and the storage of readily marketable staple commodities. BAs are sold at a discount from par and the amount and maturity date are fixed.

Basis Point: Refers to the yield on bonds. Each percentage point of yield in bonds equals 100 basis points (1/100% or 0.01%). If a bond yield changes from 7.25% to 7.39% that is an increase of 14 basis points.

Benchmark: A comparative base for measuring the performance or risk tolerance of the investment portfolio. A benchmark should represent a close correlation to the level of risk and the average duration of the portfolio’s investments.

Bid: The price offered by a buyer of securities. When you are selling securities, you ask for a bid. See Offer.

10 Bond Proceeds: The money paid to the issuer by the purchaser or underwriter of a new issue of municipal securities. These moneys are used to finance the project or purpose for which the securities were issued and to pay certain costs of issuance as may be provided in the bond contract.

Bonds: A debt obligation of a firm or public entity. A bond represents the agreement to repay the debt in principal and, typically, in interest on the principal.

Book Entry: The system maintained by the Federal Reserve, by which most money market securities are delivered to an investor’s custodial bank. The Federal Reserve maintains a computerized record of the ownership of these securities and records any changes in ownership corresponding to payments made over the Federal Reserve wire (delivery versus payment).

Book Value: The value at which a debt security is shown on the holder’s balance sheet. Book value is acquisition cost less amortization of any premium or discount.

Broker: A broker assists in the buying and selling of investments together for a commission.

C
Call Price: The price at which an issuer may redeem a bond before maturity Callable Bond: A bond issue in which all or a part of its outstanding principal amount may be redeemed before maturity by the issuer under specified conditions CALTRUST: a Joint Powers Authority created by public agencies to provide a convenient method for public agencies to pool their assets for investment purposes. CalTRUST is governed by a Board of Trustees made up of experienced local agency treasurers and investment officers. The Board sets overall policies for the program and oversees the activities of the investment manager and other agents.

CD Placement Service: A private cd 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 (Certificate of Deposit Account Registry System) 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.

Central San Joaquin Valley Risk Management Authority Pooled Investment Account (CSJVRMA):

CSJVRMA is a money market portfolio created for the 54 member Public Agencies of the CSJVRMA.

Similar to LAIF, this pool provides daily liquidity, money market returns and unlimited number of deposits and withdrawals. CSJVRMA pool may hold a broader range of securities that would not be eligible under the City investment criteria. Since CSJVRMA pool is subject to different statutory investment provisions, any such variances in their holdings are acceptable under this policy Certificate Of Deposit (CD): A time deposit with a maturity evidenced by a certificate See “NonNegotiable” and “Negotiable” Certificate of Deposit. Large-denomination CDs are typically negotiable.

Collateral: Securities, evidence of deposit or other property, which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies.

Commercial Paper: Unsecured promissory notes issued to finance short term credit needs, with maturities ranging from 2 to 270 days. Unsecured promissory notes are issued to finance short term credit needs. The paper must be of "prime" quality of the highest ranking, or of the highest letter and numerical

11 rating as provided by Moody's or Standard & Poor's. Eligible paper is further limited to issuing corporations that are organized and operate within the United States, have total assets in excess of $500 million, and have an 'A1-P1' rating for its debt from Moody's or Standard & Poor's.

Comprehensive Annual Financial Report (CAFR): The official annual report for the City. It also includes supporting schedules necessary to demonstrate compliance with finance-related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section.

Corporate Notes And Bonds: Debt instruments, typically unsecured, issued by corporations, with original maturities in most cases greater than one year and less than ten years. Medium term notes (MTN) are unsecured, corporate and depository institution debt obligations. Allowable medium term notes must be issued by corporations organized and operating within the United States (U.S.) or by depository institutions licensed by the U.S. or any state and operating within the U.S. MTNs must be rated “A” or better by Moody’s or Standard and Poor’s.

Coupon: (a) The annual rate of interest that a bond’s issuer promises to pay the bondholder on the bond’s face value and (b) a certificate attached to a bond evidencing interest due on a payment date.

Credit Rating: Various alphabetical and numerical designations used by institutional investors, Wall Street underwriters, and commercial rating companies to give relative indications of bond and note creditworthiness. Standard & Poor’s and Fitch Ratings use the same system, starting with their highest rating, of AAA, AA, A, BBB, BB, B, CCC, CC, C, and D for default. Moody’s Investors Service uses Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C, and D. Each of the services use pluses (+), minuses (-), or numerical modifiers to indicate steps within each category. The top four letter categories are considered investment grade ratings.

Credit Risk: The chance that an issuer will be unable to make scheduled payments of interest and principal on an outstanding obligation. Another concern for investors is that the market’s perception of a corporation’s credit will cause the market value of a security to fall, even if default is not expected.

CUSIP Number: The Committee on Uniform Security Information Procedures (CUSIP) Number refers to a security’s identification number assigned to each publicly traded security by the CUSIP Service Bureau operated by Standard & Poor’s for the American Bankers Association. The CUSIP Number is a ninecharacter identifier unique to the issuer, the specific issue and the maturity, if applicable (the first six characters identifying the issuer, the next two identifying the security and the last digit provides a check digit to validate the accuracy of the preceding CUSIP number).

Custodian: A bank or other financial institution that keeps custody of stock certificates and other assets.

D
Dealer: A dealer, as opposed to a broker, acts as a principal in all transactions; buying and selling for his/her own account.

Debenture: A bond secured only by the general credit of the issuer.

Defeased Bond Issues: Issues that have sufficient money to retire outstanding debt when due so that the agency is released from the contracts and covenants in the bond document.

Delivery Versus Payment: There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for

12 the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities.

Derivatives: Financial instruments whose return profile is linked to, or derived from, the movement of one or more underlying index or security, and may include a leveraging factor, or financial contracts based upon amounts whose value is derived from an underlying index or security (interest rates, foreign exchange rates, equities or commodities).

Discount: The difference between the cost price of a security and its maturity when quoted at lower than face value. A security selling below original offering price after sale is considered sold at a discount.

Discount Securities: Non-interest bearing money market instruments that are issued a discount and redeemed at maturity for full face value, e.g., U.S. Treasury Bills.

Diversification: Dividing investment funds among a variety of securities offering independent returns Duration: A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. Duration is expressed as a number of years. Rising interest rates mean falling bond prices, while declining interest rates mean rising bond prices.

E
Effective Duration: A measure of the price sensitivity of fixed-income investments, especially for those with embedded option features such as call options. As yields rise, the effective duration of a callable investment rises to reflect the fact that it has become less likely to be called. The more rates rise, the longer the effective duration will become, approaching the duration to maturity. The converse is true in a declining interest rate environment (that is, the more rates fall, the shorter the effective duration will become, approaching the duration to call). For securities without an embedded option, the duration to call, maturity, and effective duration are all the same.

Extendable Notes: Securities with maturity dates that can be extended by mutual agreement between the issuer and investor. When investing in these types of securities, the maturity date plus the stated extendable option must not exceed the time frames that are allowed in California Government Code or the investment policy for the investment type.

F
Federal Credit Agencies: Agencies of the Federal government set up to supply credit to various classes of institutions and individuals, e.g., banks, small business firms, students, farmers, farm cooperatives, and exporters.

Federal Deposit Insurance Corporation (FDIC): A federal agency that insures bank deposits, up to $250,000 per deposit.

Federal Funds Rate: The rate of interest at which Fed funds are traded. This rate is currently pegged by the Federal Reserve through open-market operations.

Federal Home Loan Banks (FHLB): Government sponsored wholesale banks which lend funds and provide correspondent banking services to member commercial banks, thrift institutions, credit unions and insurance companies. The mission of the FHLBs is to liquefy the housing related assets of its members who must purchase stock in their district Bank.

13 Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac): A United States government sponsored corporation.

Federal National Mortgage Association (FNMA or Fannie Mae): FNMA, like GNMA, was chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal corporation working under the auspices of the Department of Housing and Urban Development (HUD). It is the largest single provider of residential mortgage funds in the United States. Fannie Mae, is a private stockholder- owned corporation and its purchases include a variety mortgages and second loans, in addition to fixed rate mortgages. FNMA’s securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all security holders will receive timely payment of principal and interest.

Federal Open Market Committee (FOMC): Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a permanent member, while the other Presidents serve on a rotating basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases and sales of Government Securities in the open market as a means of influencing the volume of bank credit and money.

Federal Reserve System: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks and about 5,700 commercial banks that are members of the system.

Fiduciary: A person who holds something in trust for another and bears liability for its safekeeping.

First Tier Securities: Securities that have received short-term debt ratings in the highest category from the requisite nationally recognized statistical-rating organizations (NSROS), or are comparable unrated securities, or are issued by money market funds, or government securities. [See sec Rules: Paragraph (a)(12) of rule 2a-7]
G
Government Accounting Standards Board (GASB): A standard-setting body, which prescribes standard accounting practices for governmental units.

Government National Mortgage Association (GNMA or Ginnie Mae): Securities influencing the volume of bank credit guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations, and other institutions. Security holder is protected by full faith and credit of the U.S. Government. Ginnie Mae securities are backed by the FHA, VA or FMHA mortgages. The term “passthroughs” is often used to describe Ginnie Maes.

Guaranteed Investment Contracts (GICS): An agreement acknowledging receipt of funds for deposit, specifying terms for withdrawal, and guaranteeing a rate of interest.

H-K
Interest: The amount a borrower pays to a lender for the use of his or her money.

Interest Rate Risk: The potential for a decline in bond prices and the market value of bonds in the portfolio, due to rising market interest rates. In general, bond prices vary inversely with interest rates. The change in a bond’s price depends on several factors, including its maturity date. In general, bonds with longer maturities are more sensitive to changes in interest rates than bonds with shorter maturities. Similarly, bond funds with longer average portfolio maturities, such as the CalTRUST Medium-Term and Long-Term Accounts, will be more sensitive to interest rate changes than those with shorter average portfolio

14 maturities, such as the CalTRUST Short-Term account.

Investment Agreements: Investment agreements are contracts with respect to funds deposited by an investor. Investment agreements are often separated into those offered by banks and those offered by insurance companies. In the former case, they are sometimes referred to as “bank investment contracts.” L
Liquidity: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes.

Liquidity Risk: The chance that a security, sold prior to maturity, will be sold at a loss of value. For a local agency, the liquidity risk of an individual investment may not be as critical as how the overall liquidity of the portfolio allows the agency to meet its cash needs.

Local Agency Investment Fund (LAIF): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment. LAIF was created in the California State Treasury by Section 17429 GC. LAIF holds local government funds in trust in a state investment pool in order to provide safety, liquidity and the benefits of the investment pool yield for local government entities invested in LAIF.

M
Market Risk: The price at which a security is trading and could be presumably be purchased or sold.. In general, as interest rates fall, prices of fixed income securities rise. Similarly, as interest rates rise, prices fall. Market risk also is referred to as systematic risk that affects all securities within an asset class similarly.

Market Value: The price at which a security is trading and could presumably be purchased or sold on a specific date.

Master Repurchase Agreement: A written contract covering all future transactions between the parties to repurchase and reverse repurchase agreements that establish each party’s rights in the transactions. A master agreement will often specify, among other things, the right of the buyer-lender to liquidate the underlying securities in the event of default by the seller borrower.

Maturity: The date upon which the principal or stated value of an investment becomes due and payable.

Money Market: The market in which short-term debt instruments (bills, commercial paper, bankers’ acceptances, etc.) are issued and traded. Rule 2a-7 of the Investment Company Act applies to Money Market Funds, which mandates these funds to maintain certain standards, including a 13 month maturity limit and a 90 day average maturity on investments, to maintain a constant net asset value of $1.00.

Mortgage Backed Securities (MBS): Mortgage-backed securities (MBS) are created when a mortgagee or a purchaser of residential real estate mortgages creates a pool of mortgages and markets undivided interests or participations in the pool. MBS owners receive a prorata share of the interest and principal cash flows (net of fees) that are “passed through” from the pool of mortgages. MBS are complex securities whose cash flows are determined by the characteristics of the mortgages that are pooled together. Investors in MBS face prepayment risk associated with the option of the underlying mortgagors

15 to pre-pay or payoff their mortgage. Most MBS are issued and/or guaranteed by federal agencies and instrumentalities (e.g., Government National Mortgage Association (GNMA), Federal National Mortgage Association (FNMA), and Federal Home Loan Mortgage Corporation (FHLMC)).

Mortgage Pass-Through Obligations: Securities that are created when residential mortgages (or other mortgages) are pooled together and undivided interests or participations in the stream of revenues associated with the mortgages are sold.

Mutual Funds: An investment company that pools money and can invest in a variety of securities, including fixed-income securities and money market instruments.

N
National Association Of Securities Dealers (NASD): A self-regulatory organization (SRO) of brokers and dealers in the over the counter securities business. Its regulatory mandate includes authority over firms that distribute mutual fund shares as well as other securities.

16 Nationally Recognized Statistical Rating Organizations (NSROs): Credit rating agencies whose ratings are permitted to be used for regulatory purposes such as Securities and Exchange Commission.

Negotiable Certificate Of Deposit (NCD): A large denomination certificate of deposit which can be sold in the open market prior to maturity. Generally, it is a short-term debt instrument that usually 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. The majority of negotiable cds mature within six months, while the average maturity is two weeks. Negotiable cds are traded in a secondary market and are payable upon order to the bearer or initial depositor (investor). These instruments are supported only by the strength of the institution issuing them.

Net Asset Value (NAV): A term used in the mutual fund industry to determine the average price per share of a pool or mutual fund. How this measure varies over time provides information on whether the pool is stable or variable. NAV is the market value of all securities in a mutual fund, less the value of the fund’s liabilities, divided by the number of shares in the fund outstanding. Shares of mutual funds are purchased at the fund’s offered NAV.

Net Present Value: An amount that equates future cash flows with their value in the present terms.

Non-Negotiable Certificates Of Deposit: Funds deposited in nationally or state chartered bank or state or federal association for a specified period of time at a specified rate of interest. The first $250,000 is guaranteed by the Federal Deposit Insurance Corporation (FDIC) for banks, the Federal Savings and Loan Insurance Corporation (FSLIC) for savings and loan associations and the National Credit Union Share Insurance Fund (NCUSIF) for credit unions. CDs with a face value in excess of $250,000 must be collateralized at 110% of market value with pledged securities of the bank.

Note: A written promise to pay a specified amount to a certain entity on demand or on a specified date.

Usually bearing a short-term maturity of a year or less (though longer maturities are issued—see “Medium-Term Note”).

O
Offer: The price asked by a seller of securities. When you are buying securities, you ask for an offer. See Asked and Bid.

Open Market Operations: Purchases and sales of government and certain other securities in the open market by the New York Federal Reserve Bank as directed by the FOMC in order to influence the volume of money and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and credit; sales have the opposite effect. Open market operations are the Federal Reserve’s most important and most flexible monetary policy tool.

Options: A contract that gives the buyer the right to buy or sell an obligation at a specified price for a specified time. Exchange Traded Options are standardized option contracts that are actively traded on the Chicago Board of Exchange on a daily basis, whereas over the counter options are traded directly between the buyer and seller at agreed upon prices and conditions (the former type of option is therefore more liquid than the latter).

17 P-Q
Par Amount Or Par Value: The principal amount of a note or bond which must be paid at maturity. Par, also referred to as the “face amount” of a security, is the principal value stated on the face of the security. A par bond is one sold at a price of 100 percent of its principal amount.

Portfolio: Collection of securities held by an investor.

Premium: The amount by which the price paid for a security exceeds the security’s par value. Investors pay a premium to purchase a security when the return to the investor (yield) is lower than the stated coupon (interest rate) on the investment.

Price: Price is the amount of monetary consideration required by a willing seller and a willing buyer to sell an investment on a particular date.

Primary Dealer: A group of government securities dealers who submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include the Securities and Exchange Commission (SEC), registered securities broker-dealers and banks.

Principal: The face value or par value of a debt instrument, or the amount of capital invested in a given security.

Prospectus: A legal document that must be provided to any prospective purchaser of a new securities offering registered with the SEC that typically includes information on the issuer, the issuer’s business, the proposed use of proceeds, the experience of the issuer’s management, and certain certified financial statements (also known as an “official statement”).

Prudent Person Rule: An investment standard. In some states the law requires that a fiduciary, such as a trustee, may invest money only in a list of securities selected by the custody state, the so-called legal list.

In other states the trustee may invest in a security if it is one which would be bought by a prudent person of discretion and intelligence who is seeking an income and preservation of capital.

Qualified Public Depositories: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits.

R
Rate Of Return: The yield obtainable on a security based on its purchase price or its current market price.

This may be the amortized yield to maturity, on a bond it is the current income return.

Reverse Repurchase Agreements: An agreement of one party (for example, a financial institution) to purchase securities at a specified price from a second party (such as a public agency) and a simultaneous agreement by the first party to resell the securities at a specified price to the second party on demand or at a specified date.

18 Repurchase Agreement (RP OR REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security “buyer” in effect lends the “seller” money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. Dealers use RP extensively to finance their positions. One exception is when the Federal Reserve is said to be doing RP, it is lending money that is increasing bank reserves.

Risk: The uncertainty of maintaining the principal or interest associated with an investment due to a variety of factors.

Rule G-37 Of The Municipal Securities Rulemaking Board: Federal regulations to sever any connection between the making of political contributions and the awarding of municipal securities.

S
Safekeeping: A service to customers rendered by banks for a fee, whereby securities and valuables of all types and descriptions are held in the bank’s vaults for protection.

Safety: In the context of investing public funds, safety relates to preserving the principal of an investment in an investment portfolio; local agencies address the concerns of safety by controlling exposure to risks.

Secondary Market: A market made for the purchase and sale of outstanding issues following the initial distribution.

Securities & Exchange Commission: Agency created by Congress to protect investors in securities transactions by administering securities legislation.

SEC Rule 15C3-1: See Uniform Net Capital Rule.

Settlement Date: The date when a trade is cleared by delivery of securities against funds Structured Notes: Notes issued by Government Sponsored Enterprises (FHLB, FNMA, FHLB, etc.) and Corporations, which have imbedded options (e.g., call features, step-up coupons, floating rate coupons, and derivative based returns) into their debt structure. Their market performance is impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the shape of the yield curve.

Swap: A swap is any financial transaction that involves the simultaneous purchase of a security and the sale of another for the purpose of enhancing an investor’s portfolio. Swap transactions of interest to California public investors include portfolio swaps and interest rate swaps.

T
Tax And Revenue Anticipation Notes (TRANS): Notes issued in anticipation of receiving tax proceeds or other revenues at a future date.

Time Deposits: Issued by depository institutions against funds deposited for a specified length of time. Time deposits include instruments such as deposit notes. They are distinct from certificates of deposit (CDs) in that interest payments on time deposits are calculated in a manner similar to that of corporate bonds, whereas interest payments on CDs are calculated similar to that of money market instruments.

19 Treasury Bills: A non-interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months to one year.

Treasury Bonds: Long-term coupon-bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities of more than 10 years.

Treasury Notes: Medium-term coupon-bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities from two to 10 years.

Trustee: A financial institution with powers to act in a fiduciary capacity for the benefit of the bondholders in enforcing the terms of the bond contract.

U
Underwriter: A dealer that purchases a new issue of municipal securities for resale.

Uniform Net Capital Rule: Securities and Exchange Commission requirement that member firms as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted to cash.

U.S. Treasury Obligations: These are debt obligations of the U.S. Government sold by the Treasury Department in the forms of bills, notes, and bonds, for which the full faith and credit of the United States are pledged for the payment of principal and interest. Bills are short-term obligations that mature in one year or less and are sold at a discount. Notes are obligations that mature between one year and ten years. Bonds are long-term obligations that generally mature in ten years or more.

W-Z
Weighted Average Maturity (WAM): The average maturity of all the securities that comprise a portfolio that is typically expressed in days or years
Yield (Yield to Maturity, Yield to Call or Yield to Worst): The rate of annual income return on an investment, expressed as a percentage. Income yield is obtained by dividing the current dollar income by the current market price for the security. Net Yield or Yield to Maturity is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond.

Yield Curve: A graphical representation of the yield on bonds, notes or bills of the same type and credit risk at a specific date for maturities up to thirty years.

Zero Coupon Security: A security that is issued at a discount and makes no periodic interest payments. The rate of return consists of an accretion of the principal and is payable at par upon maturity.

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Minimum Fund Balance and Budgetary Uncertainty
Fund Policy

City of Farmersville: Financial Policies
Minimum Fund Balance and Budgetary Uncertainty Fund Policy The City will avoid the appropriation of fund balance for recurring operating expenditures (deficit spending). If at any time the utilization of a fund balance to pay for operating expenditures is necessary to maintain the quality or level of current services, and explanation of the circumstances of the utilization of fund balance and the strategy to arrest the future use of fund balance will be included in the annual budget message.

Therefore, the City will strive to maintain a General Fund Operating Cash Balance of unassigned cash balance equal to approximately 25% of the three-year moving average of the General Fund actual revenue received. This minimum fund balance is necessary to ensure the ongoing ability of the City to maintain the City’s needed credit ratings, meet unanticipated revenue shortfalls, short-term economic downturns, local disaster expenses, and shall remain exclusive of all other reserve funds. If the balance drops below the target amount the City will strive to replenish the fund as soon as possible.

The City shall also establish a General Fund Budgetary Uncertainty Fund to provide for contingency funding during extreme situations that threaten the ongoing operational abilities of the City. In order for the City to access and use this fund a Fiscal Emergency must be declared by the City Council. The City Council may then use the balance of the fund at its discretion to:
 Provide resources to make up for temporary decreased revenues, such as State subventions.  Provide temporary resources in the event of an economic downturn while expenditure reductions are also implemented.
 Provide resources to meet emergency expenditures in the case of flood, fire, earthquake, landslides, or other disaster(s).

The target for the Budgetary Uncertainty Fund shall be approximately 15% of a three-year moving average of actual General Fund revenues received (average two months of revenue). The initial funding of this fund shall be approximately 5% of the three-year moving average of actual General Fund revenues received.

Once some or all of the fund is used, the amount must be repaid to the fund as soon as possible within five years to the level set forth by this policy.

Unassigned cash balances in excess of the General Fund Operating Cash Balance and any potential annual adjustments to the Budgetary Uncertainty Fund will be appropriately budgeted through the Capital Budget of the City of Farmersville on an annual basis.

The balances and required levels of these funds will be examined annually and reported to City Council.

At that time any adjustments needed will be made and the policy will be evaluated and adjusted appropriately as well.

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Procurement Policy

CITY OF FARMERSVILLE
Procurement Policy
City of Farmersville
909 W. Visalia Road Farmersville, CA 93223
Phone 559.747.0458
Fax 559.747.6724
Updated February 2020

Table of Contents

CH A P TE R TITL E CH A P TE R OBJECTIVES
1 Introduction and Resolution
An Overview of Procurement … Introduce Farmersville procurement services, objectives, and ethical standards.
2 Overview of City Policies that… Overview of bidding, insurance, exceptions, and other policies affecting the procurement of goods and
services.
3 Procurement Methods Review of methods used in the acquisition of products and services.
4 Purchase Orders Familiarize the user with the purpose and usage of purchase orders and change orders.
5 Vendor Issues Provide information about contacting vendors, making purchase commitments, adding vendors to the
suppliers list, filing complaints about vendors, accepting vendor deliveries, and making payments to vendors.
6 Glossary of Procurement Terms Definition of common procurement terms.

Risk Matrix and Insurance Language
Approval Memo Form
Purchase Order Form
Appendix A
Appendix B
Appendix C
Appendix D
Appendix E
CUCCAC Manual
Purchasing Thresholds Matrixes

Introduction
This Procurement Policy document is intended to serve as a reference tool for City staff and departments. It details the policies and procedures of the City’s purchasing authority. It outlines all phases of the procurement process and clarifies the responsibilities of individual departments and staff, and explains the legal requirements affecting the City.

This guide will help City personnel familiarize themselves with procurement processes and enable them to timely and efficiently obtain the goods and services they need.

Quick Reference
Chapter 1 – An Overview of the Procurement System
Topic Page
What is Procurement 2
The City’s Procurement System 2
Procurement Authority 3
Objectives & Standards 3
Conflict of Interest Statement 4

An Overview of the Procurement System
Chapter Objective: This chapter is an introduction to City of Farmersville purchasing process − its service processes, objectives, and ethical standards.

What isProcurement?
Procurement is the process through which purchases are planned, solicitations issued, vendors selected, purchase orders issued, and goods or services are received.

The City of Farmersville desires to be both effective and efficient in purchasing with the goal of integrity woven throughout the process. Ethically purchasing goods and services with an emphasis is on the best value for the City’s dollar.

This is accomplished by ensuring that goods and services are of high quality, available when needed, not overpriced, and that taxpayers know that public funds are being spent wisely on its behalf and not for the personal benefit of government employees, officials, or their friends.

The City’s Procurement System
The City of Farmersville has adopted a decentralized procurement system, which is under the authority of the City Manager or his/her designee(s) as the City Purchasing Agent (PA) established by the Purchases section of the City’s Municipal Code. The decentralized purchasing is necessary due to the small amount of administrative staff and is functional because of the small size of the City. This means that the PA is ultimately responsible for procurement in general, but delegates his/her authority in limited measure to Department Heads within the City. The PA (or designee) therefore establishes leasing agreements; coordinates surplus sales; and most importantly, procures all commodities under $75,000 and services under $100,000 and certain construction services under $200,000.

The City of Farmersville therefore does not run a centralized Internal Service Fund (ISF) but purchases are made directly by each department, as applicable, while payment and oversight of purchases are maintained through a centralized accounts payable process in the Finance Department.
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Procurement Authority
The City derives its authority from two sources: local and state laws. Local law encompasses City Councils’ resolutions and directives. The two main sources giving authority to Procurement Services to purchase goods and services on behalf of the City are the Purchases Ordinance and the California Government Code.

Purchasing Ordinance. The City’s Municipal Code Chapter 3.16, "Purchases" was established by Ordinance 278 (passed and adopted in 1984), to govern the activities of the City. In general, it established that the PA shall have the duties and powers prescribed by the laws of the State of California relating to City Purchasing Agents, Public Contract Code, and Government Code. A full copy of the Code Section is available on the City’s website.

State and Federal Laws. State laws that are applicable to various City procurement activities can be found in the Government Code, the Civil Code, and the Public Contract Code (including the California Uniform Public Construction Cost Accounting Act; CUPCCAA).

Where pertinent, specific code sections are referenced throughout this policy. Federal law is applicable to City procurement activities any time federal funds are used for particular procurements, but specifically listed in Chapter 2 of this Policy.

Procurement Objectives & Standards of Conduct
The City’s procurement policy objectives and standards are applied to all transactions through the following values:
• Establish the legal authority of the procurement function within the City • Simplify, clarify, and reflect the laws governing procurement • Enable uniform procurement policies throughout the City • Build public confidence in public procurement
• Ensure the fair and equitable treatment of everyone who deals with the procurement system
• Provide for increased efficiency, economy, and flexibility in public procurement activities and maximize to the fullest extent the purchasing power of the City • Foster effective broad-based competition from all segments of the supplier community • Safeguard the integrity of the procurement system and protect against corruption, waste, fraud, and abuse
• Ensure appropriate public access to contracting information • Foster equal employment opportunities that are in line with legal requirements, in the policies and practices of suppliers and subcontractors wishing to do business with the City
The following ethics statements are applicable to all City employees who participate in the procurement process.
• City employees shall not obligate the City of Farmersville, financially or otherwise, by any means, including but not limited to purchase orders and contracts, when the employee has a personal, material, financial, or other interest in the obligation.

• Employees are prohibited from directly or indirectly soliciting or accepting any rebate, kickback, gift, gratuity, or favor for personal gain from any individual, corporation, or group.
• The City’s employees, directors, appointed or elected officials, volunteers, agents or contacts shall neither solicit nor accept gratuities, favors, gifts, consulting fees, trips, or anything having a monetary value in excess of fifty dollars ($50.00) from a vendor, potential vendor, family or employees of a vendor, contractor or parties to subcontractors.
• City employees, when purchasing an item(s) for personal use, must avoid the appearance of City representation. The employee shall pay all such purchases with his or her personal funds. When personal purchases are made under these circumstances, separate invoices or sales receipts must be issued by the supplier.

Such invoices must bear the employee's name, home address, and phone number and may not be delivered to the City. Employees may not solicit, or accept, discounts, reduced prices, or other benefits from suppliers because of employees’ position with the City.

Procurement Process Conflicts of Interest
There will be uniform and equitable application of the Standards of Conduct of the City of Farmersville involving all activities associated with the procurement of goods and services.

This section also defines responsibility to identify and prevent real or apparent Conflicts of Interest.

Prior to the issuance of a procurement solicitation, informational and research contacts with prospective vendors may be made for the purpose of gathering data. However, in making such contacts, employees, officers, Council Members, and agents shall avoid any commitment or implication of a possible future award.

Accordingly, no request for complimentary services or supplies, which may imply an obligation on the part of the City, shall be made. Requests for testing services, product samples, or demonstrations, and free trips to examine vendor products are to be avoided.

Whenever procurement is in process (e.g., during the solicitation, evaluation, negotiation, and award phases) all contacts with potential contractors or vendors shall be made through the Purchasing Agent or designee(s).

Employees, officers, directors, and agents of the City are also subject to the laws of the City and State of California concerning conflicts of interest. Monetary penalties and, in some cases, criminal penalties are imposed by California law for violations. In addition, City employees are subject to discipline for a violation that could lead to or result in termination of employment in addition to consequences relative to the California Fair Political Practices Commission (FPPC).

Gratuities and Kickbacks
No member of the groups listed above will neither solicit nor accept gratuities, favors or

anything of monetary value from contractors, potential contractors, or parties to subagreements. Anyone failing to adhere to the above will be subject to any disciplinary proceeding deemed appropriate by the City of Farmersville.

Personal Conflicts of Interest
No City employee, officer, Council member, agent or contact shall participate in the selection, award or administration of a third party contract or other agreement if a real or apparent conflict of interest would be involved. Such a conflict of interest arises, whether real or apparent, when any of the following has a financial or other interest in the firm(s) considered or selected for award:
a) An employee, officer, board member, or agent of the City; b) Any member of their immediate family, including but not limited to, husband, wife, father, mother, brother, sister, son, daughter, father-in-law, mother-in-law, son-in-law, and daughter-in-law;
c) Their partner or business associate; or
d) A company or organization which is about to employ any of the above.

Apparent or Appearance of Conflict is based on a reasonableness standard i.e. would a reasonable person with knowledge of all material facts believe there appears to be a conflict?
Organizational Conflict of Interest
An organizational conflict of interest may be real or apparent and arises where, because of other activities, financial interests, relationships, or contracts – a contractor is unable, or potentially unable, to render impartial assistance or advice to the City. Such a conflict exists in circumstances where the contractor’s objectivity is or might be impaired or where the contractor has an unfair competitive advantage.

Organizational conflicts lead to two (2) distinct problems - bias or an unfair competitive advantage.
a) Bias is a situation where an advisor is placed in a position that creates an incentive to distort advice or decision making.
b) Unfair competitive advantage occurs when one contractor has information not available to other contractors in the normal course of business. For example, an unfair competitive advantage would occur when a contractor developing specifications or work statements has access to information that the City has paid the contractor to develop, or information which the City has furnished to the contractor for its work, when that information has not been made available to the public and to other offerors. Because this information enhances the contractor’s competitive position in the procurement process, it represents an unfair competitive advantage over other offerors.

The City’s procurement activities shall be structured to ensure full and open competition and to eliminate or minimize any unfair competitive advantage in circumstances where an organizational conflict, real or apparent, is presented. Appropriate structural steps are dependent upon the particular circumstances surrounding the procurement and might include: prohibiting the contractor from participating in the procurement, the bid process or in evaluation of bids, fully disclosing all information to all prospective offerors for a reasonable amount of time, adjustment of specifications to address any potential advantage, among others.

Confidential Information
No member of the groups listed above shall furnish advice or services to a firm which is bidding on or planning to bid on a contract with the City, or which is doing business presently with the City. No member shall use confidential information for his or her actual or anticipated personal gain, or the actual or anticipated personal gain of any other person related to them by blood, marriage, or by common commercial or financial interest.

Anyone failing to adhere to the above will be subject to any disciplinary proceeding deemed appropriate by the City of Farmersville.

Quick Reference
Chapter 2 – Overview of County Policies Affecting Procurement Topic Page
Bidding Policies 8
Exceptions to Bidding 18
Unauthorized Purchases 21
Written Contracts 21
Insurance Requirements 21
Prevailing Wages 22
Surety and Performance Bonds 22
Settlements and Other Agreements 23
Outside Legal Services 23

City Policies that Affect Procurement
Chapter Objective: Provide an overview of City policies affecting the procurement of goods and services and provide instructions for compliance.

Bidding Policies
It is the City’s policy to develop maximum competition for all purchases and to make awards based on the lowest responsive and responsible bid received. A responsive bidder is one who responds to all of the significant requirements outlined in the solicitation. A responsible bidder is one who is deemed to be capable of supplying the goods or services requested.

The City’s goal through purchasing is to achieve the best overall value by securing goods and services at the lowest cost possible commensurate with quality and other relevant requirements.

Commodities (Materials & Equipment)
$1 to $10,000 – Administrative Process
Competitive bidding is not required. At the Buyer’s discretion, the purchase can be made with the vendor recommended by the department. Many purchases can be made with purchase cards by the department staff members with the approval of the Department Head.
$10,001 to $25,000 – Administrative Process
Competitive bidding is not required, but approval by the PA is required by memo. After approval is granted, the purchase can be made with the vendor recommended by the department.
$25,001 to $75,000 − Written Quotes
Competitive bidding is required. The respective department acquires approval from the PA and then issues a written Request for Quotation. The number of vendors contacted varies, depending on the dollar amount of the purchase and the time available, but three is preferred. Award is made to the lowest responsive and responsible bidder. In 2

the case of capital (defined as an asset anticipated to have a useful life of over 1 year and a purchase cost over $5,000) the item must be on the adopted Capital Budget for the year.

Over $75,000 − Formal Bids and RFPs / RFQs
Competitive bidding is required. Staff must acquire approval to go to bid or RFP / RFQ from City Council before issuing either a formal sealed Invitation for Bids (IFB) or Request for Proposals (RFP), depending on the type of procurement. The number of vendors contacted will vary depending on the dollar amount of the purchase and the time available, but three is preferred. A purchase order (PO) is required.

Award is made to the lowest responsive and responsible bidder, in the case of IFBs.

In the case of RFPs, award is made in accordance with the evaluation criteria, terms, and conditions stated therein.

Typically, commodity items are procured using a bid process where an award is made to the lowest responsive and responsible bidder. However, in some instances an RFP may be used. The PA must gain authorization from City Council to approve the PO.

Services (Non-Construction)
$1 to $10,000 – Administrative Process
Competitive bidding is not required. At the Buyer’s discretion, the purchase can be made with the vendor recommended by the department. Many purchases can be made with purchase cards by the department staff members with the approval of the Department Head.
$10,001 to $25,000 – Administrative Process
Competitive bidding is not required, but approval by the PA is required by memo.

After approval is granted, the purchase can be made with the vendor recommended by the department.
$25,001 to $50,000 − Written Quotes
Competitive bidding is required. The respective department acquires approval from the PA and then issues a written Request for Quotation. The number of vendors contacted varies, depending on the dollar amount of the purchase and the time available, but three is preferred. Award is made to the lowest responsive and responsible bidder.

Over $50,000 – Formal Bids or RFPs / RFQs (and contract) Competitive bidding is required. Staff must acquire approval to go to bid or RFP / RFQ from City Council before issuing either a formal sealed Invitation for Bids (IFB) or Request for Proposals (RFP), depending on the type of procurement. Typically, the RFP process is used for services. The number of vendors contacted will vary depending on the dollar amount of the purchase and the time available, but three is preferred. Award is made to the lowest responsive and responsible bidder in the case of IFBs. In the case of RFPs, the award is Contract
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made in accordance with the evaluation criteria, terms, and conditions stated therein.

Services above $100,000 require City Councils’ approval When a service contract is utilized by multiple City departments, staff will be responsible for tracking encumbrances and obtaining Council approval as needed.

Services (Construction)
$1 to $10,000 – Administrative Process
Competitive bidding is not required. At the Buyer’s discretion, the purchase can be made with the vendor recommended by the department. Many purchases can be made with purchase cards by the department staff members with the approval of the Department Head.
$10,001 to $25,000 – Administrative Process
Competitive bidding is not required, but approval by the PA is required by memo. After approval is granted, the purchase can be made with the vendor recommended by the department.
$25,001 to $60,000 − Written Quotes
Competitive bidding is required. The respective department issues a written Request for Quotation. The number of vendors contacted will vary, depending on the dollar amount of the purchase and the time available. Award is made to the lowest responsive and responsible bidder and approved by the PA.
$60,001 to $200,000 − Informal Bid
Informal bids will be solicited in accordance with the California Uniform Public Construction Cost Accounting Procedures (CUPCCAP) alternative bidding procedures.

The award is approved by the City Council.

Services above $200,000 require City Councils’ approval Competitive bidding is required. Staff must acquire approval to go to bid or RFP / RFQ from City Council before issuing either a formal sealed Invitation for Bids (IFB) or Request for Proposals (RFP), depending on the type of procurement. Typically, the RFP process is used for services. The number of vendors contacted will vary depending on the dollar amount of the purchase and the time available, but three is preferred. Award is made to the lowest responsive and responsible bidder in the case of IFBs. In the case of RFPs, the award is made in accordance with the evaluation criteria, terms, and conditions stated therein.

Federally Funded Projects / Grants Procurement (2 CFR 200) Council on Financial Assistance Reform Priorities (COFAR) goal is to reduce risk of waste, fraud, and abuse while reducing administrative burdens through the establishment of a Uniform Administrative Requirement, Cost Principles, and Audit Requirement for Federal Awards (2 CFR 200). The City of Farmersville’s policy related to Federally-funded projects and/or grant is established to reflect this goal and be in compliance with 2 CFR 200.

As a result, the City will operate with the following regulation for the procurement of property or services stemming from federal aid. This section shall apply to the awarding of sub-grants and contracts by the City stemming from federal grants to the City. This section shall have the same application on the awarding of sub-grants and contracts by the City stemming from state, county or other non-federal government entity grants originating as federal grants.

A. Determination of Federal Awards Requirements for Pass-thru Agencies, Subrecipients, and Contractors (200.330 & 200.331)

1. The City may concurrently receive Federal awards as a recipient, a subrecipient, and a contractor, depending on the substance of its agreements with Federal awarding agencies and pass-through entities.

Therefore, the City will make a case-by-case determination for each agreement it makes for the disbursement of Federal program funds that the party receiving the funds in the role of a subrecipient or a contractor.

The City will comply with any additional guidance to support these determinations from the awarding agency provided such guidance does not conflict with this section.

1. A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. For purposes of making a determination as a subrecipient the City will consider the following characteristics of a Federal assistance relationship:
a. Determines who is eligible to receive what Federal assistance; b. Has its performance measured in relation to whether objectives of a Federal program were met;
c. Has responsibility for programmatic decision making; d. Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and
e. In accordance with its agreement, uses the Federal funds to carry out a program for a public purpose specified in authorizing statute, as opposed to providing goods or services for the benefit of the pass-through entity.

2. A contract is for the purpose of obtaining goods and services for the City’s own use and creates a procurement relationship with the contractor. For purposes of making a determination as a contractor the City will consider the following characteristics of a procurement relationship:

a. Provides the goods and services within normal business operations;
b. Provides similar goods or services to many different purchasers; c. Normally operates in a competitive environment;
d. Provides goods or services that are ancillary to the operation of the Federal program; and
e. Is not subject to compliance requirements of the Federal program as a result of the agreement, though similar requirements may apply for other reasons.

3. The Purchasing Agent, or designee, will use their judgement in classifying each agreement as a subaward (Federal assistance relationship) or a procurement contract (procurement relationship). The substance of the relationship is more important than the form of the agreement in making the determination.

2. Every subaward will be clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. If some of the information is not available, the City will provide the best information available to it.

1. Federal Award Identification data as listed in Section 200.331 (1-4) and appropriate terms and conditions concerning closeout of the subaward.

3. Every subrecipient will be subject to evaluation and monitoring by the City as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include:

1. Reviewing financial and performance reports required by the pass-through entity.

2. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means.

3. Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521 Management decision.

4. Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in 200.331(b), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals:
a. Providing subrecipients with training and technical assistance on program-related matters; and

b. Performing on-site reviews of the subrecipient's program operations;
c. Arranging for agreed-upon-procedures engagements as described in § 200.425 Audit services.

5. The City will verify that every subrecipient is audited as required by Subpart F - Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501 Audit requirements.

6. The City will consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records.

7. The City will consider taking enforcement action against noncompliant subrecipients as described in § 200.338.

B. Procurement Standards.

1. The City shall maintain a contract administration system which ensures contractors perform in accordance with the terms, conditions and specifications of their contracts or purchase orders.

2. The City shall maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer or agent of the City shall participate in selection, or in the award or administration of a contract supported by federal funds if a conflict of interest, real or apparent, would be involved. Such a conflict would arise when:
a. The employee, officer or agent;
b. Any member of his or her immediate family;
c. His or her partner; or
d. An organization which employs, or is about to employ, any of the above, has a financial or other interest in or a tangible personal benefit from a firm considered for award.

3. The City’s officers, employees or agents will neither solicit nor accept gratuities, favors or anything of monetary value from contractors, potential contractors, or parties to sub-agreements. Such a conflict will not arise where the financial interest is not substantial or the gift is an unsolicited item of nominal intrinsic value ($50 or less). The City’s standards of conduct provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the City.

4. The City shall not enter into a contract with a non-Federal entity has a parent, affiliate, or subsidiary organization that is not a state, local government or Indian tribe, unless the non-Federal entity maintains written standards of conduct covering organizational conflicts of interest. Organizational conflicts of interest mean due to relationships with a parent company, affiliate, or subsidiary organization, the nonFederal entity is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization.

5. The City shall avoid acquisition of unnecessary or duplicative items. Consideration will be given to consolidating or breaking out procurements to obtain a more economic purchase. Where appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach.

6. The City shall consider entering into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services.

7. The City shall consider using Federal excess and surplus property in lieu of purchasing new equipment and property whenever such use is feasible and reduces project costs.

8. The City shall consider using value engineering clauses in contracts for construction projects of sufficient size to offer reasonable opportunities for cost reductions. Value engineering is a systematic and creative analysis of each contract item or task to ensure its essential function is provided at the overall lower cost.

9. The City shall make awards only to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement.

Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance and financial and technical resources.

10. The City shall maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection and the basis for the contract price.

11. The City shall use time and material type contracts only:
a. After a determination is made that no other contract is suitable; and b. If the contract includes a ceiling price the contractor exceeds at their own risk.

12. The City alone shall be responsible, in accordance with good administrative practice and sound business judgment, for the settlement of all contractual and administrative issues arising out of procurements. These issues include, but are not limited to, source evaluation, protests, disputes and claims. These standards do not relieve the City of any contractual responsibilities under its contracts.

C. Competition.

1. The City will conduct procurement transactions in a manner providing full and open competition. To ensure objective contractor performance and eliminate unfair competitive advantage, contractors developing or drafting specifications, requirements, statements of work, or invitations for bids or requests for proposals shall be excluded from competing for such procurements.

2. The City shall conduct procurements in a manner prohibiting the use of statutorily or administratively imposed in-state or local geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes

expressly mandate or encourage geographic preference. When contracting for architectural and engineering (A/E) services, geographic location may be a selection criteria provided its application leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract.

3. The City shall have written procedures for procurement transactions. These procedures will ensure that all solicitations:
a. Incorporate a clear and accurate description of the technical requirements for the material, product or service to be procured. Such description shall not, in competitive procurements, contain features which unduly restrict competition.

The description may include a statement of the qualitative nature of the material, product or service to be procured, and when necessary, shall set forth those minimum essential characteristics and standards to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided.

When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a brand name or equal description may be used to define the performance or other salient requirements of procurement. The specific features of the named brand which must be met by offerors shall be clearly stated; and
b. Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals.

4. The City shall ensure prequalified lists of persons, firms or products that are used in acquiring goods and services are current and include enough qualified sources to ensure maximum open and free competition. The City shall not preclude potential bidders from qualifying during the solicitation period.

D. Methods of Procurement to be Followed
The City shall use one of the following methods of procurement:

1. Procurement by Micro-Purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold as set by the Federal Acquisition Regulation at 48 CFR Subpart 2.1 (Definitions) and adjusted periodically for inflation. As of the date of this ordinance, the micro-purchase threshold is $10,000.

2. Procurement by Small Purchase Procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies or other property that do not cost more than the simplified acquisition threshold as set by the Federal Acquisition Regulation at 48 CFR Subpart 2.1 (Definitions) and in accordance with 41 U.S.C. 1908 and periodically adjusted for inflation. If small purchase procedures are used, price or rate quotations shall be obtained from an adequate number of qualified sources. As of the date of this ordinance, the simplified acquisition threshold is $250,000.

3. Procurement by Sealed Bids (Formal Advertising). Bids are publicly solicited and a firm-fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming to all the material terms and conditions of the invitation for bids, is the lowest in price.

a. For sealed bidding to be feasible, the following conditions should be present:
(1) A complete, adequate, and realistic specification or purchase description is available;
(2) Two or more responsible bidders are willing and able to compete effectively for the business; and
(3) The procurement lends itself to a firm-fixed-price contract and the selection of the successful bidder can be made principally based on price. b. If sealed bids are used, the following requirements apply:
(1) The invitation for bids will be publicly advertised and bids shall be solicited from an adequate number of known suppliers, providing them sufficient time prior to the date set for opening the bids;
(2) The invitation for bids, which will include any specifications and pertinent attachments, shall define the items or services for the bidder to properly respond;
(3) All bids will be publicly opened at the time and place prescribed in the invitation for bids;
(4) A firm-fixed-price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost and life cycle costs shall be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and
(5) If there is a sound documented reason, any or all bids may be rejected.

4. Procurement by Competitive Proposals. The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed-price or cost-reimbursement type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed bids. If this method is used, the following requirements apply:
a. Requests for proposals shall be publicized and identify all evaluation factors including relative importance. Any response to publicized requests for proposals shall be honored to the maximum extent practical;
b. Proposals will be solicited from an adequate number of qualified sources; c. The City shall conduct technical evaluations of the proposal received and for selecting awardees;
d. Awards will be made to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered; and e. The City may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby competitors’ qualifications are evaluated and the most qualified competitor is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms are a potential source to perform the proposed effort.

5. Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when one or more of the following circumstances applies:

a. The item is available only from a single source;
b. The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation;
c. The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in a written request from the City; or d. After solicitation of multiple sources, competition is determined inadequate.

6. Contracting with Small and Minority Businesses, Women’s Business Enterprises and Labor Surplus Area Firms.
a. The City shall take all necessary affirmative steps to assure that minority businesses, women’s business enterprises and labor surplus area firms are used when possible.
b. Affirmative steps include:
(1) Placing qualified small and minority businesses and women’s business enterprises on solicitation lists;
(2) Assuring that small and minority businesses and women’s business enterprises are solicited whenever they are potential sources; (3) Dividing total requirements, when economically feasible, into smaller tasks or quantities to permit maximum participation by small and minority businesses and women’s business enterprises;
(4) Establishing delivery schedules, where the requirement permits, which encourage participation by small and minority businesses and women’s business enterprises;
(5) Using the services and assistance, as appropriate, of such organizations as the Small Business Administration and the Minority Business Development Agency of the Department of Commerce; and
(6) Requiring the prime contractor, if subcontracts are to be let, to take the affirmative steps listed in subsections 6.b.(1) through (6) of this section.

7. Contracts Cost and Price.
a. The City shall perform a cost or price analysis in every procurement action exceeding the simplified acquisition threshold including contract modifications.

The method and degree of analysis will be dependent on the facts surrounding each procurement situation. As a starting point, the City shall make independent estimates before receiving bids or proposals.
b. Costs or prices based on estimated costs for contracts under the Federal award will be allowable only to the extent that costs incurred or cost estimates included in negotiated prices would be allowable for the City under Subpart E – Cost Principles of Title 2, Subtitle A, Part 200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards). c. The cost plus a percentage of cost and percentage of construction cost methods of contracting shall not be used.

8. Federal Awarding Agency or Pass-Through Entity Review. a. The City shall make available, upon request of the Federal awarding agency or pass-through entity, technical specifications on proposed procurements where the Federal awarding agency or pass-through entity believes such review is

needed to ensure that the item or service specified is the one being proposed for purchase.
b. The City shall make available upon request, for the Federal awarding agency or pass-through entity pre-procurement review, procurement documents, such as requests for proposal or invitations for bids, or independent cost estimates when:
(1) The City’s procurement procedures or operation fails to comply with the procurement standards of Title 2, Subtitle A, Part 200, Subsection 200.324; (2) The procurement is expected to exceed the simplified acquisition threshold and is to be awarded without competition or only one bid or offer is received in response to a solicitation;
(3) The procurement, which is expected to exceed the simplified acquisition threshold, specifies a “brand name” product;
(4) The proposed contract is more than the simplified acquisition threshold and is to be awarded to other than the apparent low bidder under a sealed bid procurement; or
(5) A proposed modification changes the scope of a contract or increases the contract amount by more than the simplified acquisition threshold. c. The City may be exempted from the pre-procurement review in subsection 8.b. above if the Federal awarding agency or pass-through entity determines that its procurement systems comply with the standards set forth in Title 2, Subtitle A, Part 200, or the City self-certifies compliance with such standards if selfcertification is permitted by the Federal awarding agency or pass-through entity.

9. Bonding Requirements. For public projects, the City shall require bid guarantees, performance bonds, and payment bonds consistent with Title 2, Part 200, Section 200.325 of the Code of Federal Regulations.

10. Contract Provisions. The City’s contracts shall contain the provisions in Appendix II to Title 2, Subtitle A, Part 200 – Contract Provisions for non-Federal Entity Contracts Under Federal Awards, as applicable.

E. Suspended or Debarred Parties
A. City employees shall not enter into covered transactions with parties that are suspended or debarred or otherwise excluded from or ineligible for participation in Federal assistance programs and activities (2 CFR 200.213; 2 CFR 180).

Exceptions to Bidding (Government Code 10300-10334)
Sole Source/Brand Procurement
An exception may be granted based on two premises:
• Only a single company or organization can supply the needed product or service. As in the case of proprietary software maintenance, only the licensor of the product can provide support.

• Only a single “brand/model” will meet the department’s technical/functional requirements. For example, only the Brand X equipment is compatible with existing system requirements. Brand X is available through several distributors. Brand X would be considered a “sole brand” but not a “sole source” since it is available from many sources (distributors).

Sole source requests should not be made unless the department is confident that the request is reasonable, appropriately justified to meet the City’s requirements, and can withstand a possible audit. Sole source/brand purchasing minimizes or eliminates competition and should be avoided whenever possible.

If a department believes that only a specific make and model will meet its needs, it should include an objectively written explanation that details the unique features of the sole source/brand item, which states why these features are required. If other brands or models have been tested or used previously, the department should specify the brands or models tested or used, the dates they were tested or used, and why they are not acceptable.

A written justification, signed by the department head must be submitted for the PA’s review/approval. Department should provide the written justification in a standard memo format to the PA.

Use of Existing Agreement
An exception may be granted if the product/service is available through the utilization of another public entity’s contract (includes city, county, state, federal, school district, League of California Cities, California Communities Program, Federal GSA). The contract must have been competitively bid, be current within the last year, and be for the same product or service. It must also meet all City policies.

Standardization
When supplies, equipment, or services are uniformly adopted or otherwise standardized, or when an item is designated to match others in use by the City, the purchase may be exempt from bidding requirements or be made with limited competition to distributors of the manufacturer of the standardized item. Compatibility issues between differing technologies will also be considered for exception.

Emergencies
The item(s) purchased are immediately necessary for:
• The continued operation of the office or department involved; or • Are immediately necessary for the preservation of life or property.

Technically, an emergency need is one that could not have been foreseen. Failure to submit a proper documentation on time does NOT constitute a valid emergency.

Contracted City Staff
The City of Farmersville is a small municipality that is dependent upon contracted professional staff to fill staff positions normally performed by in-house staff in larger agencies, such as City Engineer or City Planner. Therefore, an exception to the normal bidding process may apply when using contracted professional staff in their role as the City representative, in their respective field, under their existing contract. The task order will still be subject to the authorization and approval process and thresholds laid out in Chapter 2 of this document.

Pre-Qualified List of Contractors
The City of Farmersville wants to promote fairness and equality in bidding but also guard public funds from waste by avoiding awards to unqualified or under-qualified contractors that may respond with a lowest bid on a public project. Given the rural nature of the City, the bidding pool of contractors may be insufficient to meet quality standards of certain City projects. By establishing a pre-qualified list of contractors for construction projects the City can manage this risk for appropriate projects. A contractor may be added to the list after going through a vetting process established by the PA or designee. Pre-qualified contractors will be added to a list maintained by the PA or designee(s) for a period of one year. When a project becomes available, and not subject to other bidding requirements from State or Federal funding sources, a contractor from the pre-qualified list may be selected from the list, subject to the authorization and approval process and thresholds laid out in Chapter 2 of this document.

Miscellaneous
• Formal competition has failed
• A procurement made from another unit of government
• Procurement of used item is advantageous
• Public utilities (Gov Code 4217)
• Legal services
• Medical services

Local Preference
Purchasing goods and services from local vendors is desired because it stimulates the Farmersville economy and recognizes that local vendors are valued members of our community. City staff, exercising good judgement by considering factors such as quality, previous performance, availability, and potential tax revenues to the City will, when practicable, give preference to purchasing locally. All other portions of this policy relative to normal competitive bidding will apply.

A local advantage cannot be considered for Federal funded contracts. For more information see Uniform Guidance 2 CFR Ch. II §200.319 (7)(b).

A local advantage cannot be considered for State funded contracts due to increasingly strict State requirements mirroring Federal standards (e.g. CalTrans funded programs).

Unauthorized Purchases
Except for emergencies or other authorized exceptions, no purchases can be made or are authorized until funds have been encumbered by the Finance Department.

Usually, an unauthorized purchase is discovered when a department submits a documentation to cover a purchase (goods or services) that has already been delivered. Should a department make an unauthorized purchase, the department is issued a warning.

If a second violation occurs, a memorandum is sent stating that the Finance department will process the payment, after receipt of a written explanation.

If a third violation occurs, a memorandum is sent stating that the Finance department will not process the request / invoice. The department is advised approval must be sought from the City Council, or the employee can be personally responsible for the charges.

Written Contracts
City staff will typically require a written contract when the cost of the services, and in some cases goods, exceeds $50,000. New construction contracts are needed for projects exceeding $100,000.

The City of Farmersville prefers to use a Standard Services Contract and will provide it to departments upon request. The standard contract has been approved by the City Attorney and Risk Management. Use of any contract other than the standard contract, or making material changes to the standard contract, will require City Attorney approval.

Insurance Requirements
The City requires that contractors have, and maintain, certain types of insurance coverage when they enter into contractual agreements to perform services.

Insurance requirements vary depending on the type/scope of services provided. In certain cases, the contractor will need to provide insurance coverage, whether or not the contract requires the vendor to enter City property.

A Recommended Insurance Coverage Matrix has been developed to assist with the determination by Risk Management and is attached to this policy for reference.

Proof of insurance must be provided prior to the start of any work.

The following are the most commonly required types of coverage.

• Commercial General Liability: The City should be added, by endorsement, as an “additional insured.”
• Automobile Liability: Is required if driving or traveling is required in providing the contracted services If the vendor/contractor has employees but no vehicles registered to the business (non-owned and hired automobile liability coverage should be provided).
• Workers’ Compensation: Contractors working on City property must first provide proof of Workers’ Compensation for all employees working on the job site.

Requirement may be waived if the vendor is a sole proprietor/partner/corporate officer with no employees.
• Professional Liability (Errors and Omissions): Is required for certain services − including but not limited to − appraisers, notaries, software programmers, auditors, lawyers, insurance agents, surveyors, dentists, doctors, nurses, counselors, engineers, etc.

Prevailing Wages
In accordance with Labor Code Sections 1770-1773, prevailing wages must be paid to all workers on a “public works” project (see Glossary for definition) when the project is over $1,000.

When bidding on public works projects that exceed $1,000, under the law, all bidders are expected to use the same wage rates. The California Department of Industrial Relations determines the prevailing rate of wages for specific geographic areas. Additional information is available at www.dir.ca.gov/dlsr/pwd/index.htm.

Surety and Performance Bonds
Bid Bonds
The bid bond guarantees the City that the bidder will enter into the contract if it is awarded. Bid security shall be required for all construction work bids when the cost is estimated to exceed $25,000. Bids must be accompanied by a Bid Security in the amount of not less than 10% of the amount bid in one of the following forms:
• Cash
• A cashier's check made payable to the City of Farmersville • A certified check made payable to the City of Farmersville • A bidder's bond executed by an admitted surety insurer, made payable to the City of Farmersville
Upon an award to the lowest responsive and responsible bidder, the security of an unsuccessful bidder shall be returned in a reasonable period, but in no event shall that security be held by the City beyond 60 days from the time the award is made.

A bid received and not accompanied by cash, cashier's check, certified check, or

approved bond will result in return of the bid without consideration.

Bid security is optional for other bids or proposals.

Performance and Payment Bonds
The performance bond guarantees that the contractor will perform the duties assumed by entering the contract. The payment bond guarantees that the contractor will pay all suppliers and subcontractors who assist in the performance of the work.

One hundred percent (100%) performance and payment bonds are required on all public works projects awarded in excess of $25,000.

Performance and payment bonds are optional for other bids or proposals. In most instances, bonds are not necessary if a contractor has been selected after a thorough review of references, qualifications, and financial stability.

Settlements and Other Agreements
$1 to $25,000 – Administrative Process
The City Manager must act on behalf of the City with regard to settlements and other legal agreements where expeditious action would be of great benefit to the City. Because the City is largely self-insured through the Central San Joaquin Valley Risk Management Authority (CSJVRMA) with self-insured retention (SIR) limits of $25,000 or more, the City Manager can act to settle disputes and other agreements up to the $25,000 limit. The City Manager shall report the action to the Mayor at their earliest convenience and to the Council as a whole by the next regular Council Meeting available.

Over $25,000 − City Councils’ Approval
All other claims and disputes related to liability, property, or workers’ compensation are taken over by the CSJVRMA at the point that the cost surpasses the SIR limit of the City. In cases where the Memorandum of Coverage (MOC) through the CSJVRMA does not apply, and the cost exceeds $25,000 the City Manager must gain approval from the City Council to make settlement.

Outside Legal Services
Where it is necessary, as in the case where the City Attorney has a conflict of interest, or when it is deemed desirable because specialized legal expertise is required from the private sector, outside legal counsel may be retained by contract, subject to the following limitations:
• All contracts for outside legal services in excess of fifty thousand dollars ($50,000) shall be approved by the City Council.
• Contracts for such services, which do not exceed fifty thousand dollars

($50,000), are within the Purchasing Agent's authority, but are subject to prior written approval of the City Attorney.

Compliance is provided by way of a memo from the City Attorney annually.

Quick Reference
Chapter 3 – Procurement Methods
Topic Page
Council Approval 26
Procurement Credit Card 26
Accounts Payable Process 26

Procurement Methods
Chapter Objective: Review of methods used in the acquisition of products and services.

CouncilApproval
As stated earlier in this guide, the City Council, through the Purchases Ordinance, delegates contracting authority to the City Purchasing Agent. That authority is limited to $100,000 when contracting for services ($200,000 for construction services). Therefore, departments have the option to obtain Councils’ approval for certain large-dollar contracts. The Mayor signs the contract on behalf of the City. Any required encumbrance or appropriation is setup, by the Finance Department.

Procurement Credit Cards
The Procurement Bank Card eliminates the many steps in the procurement process and facilitates one payment to the bank on a monthly basis, instead of individual payments to a large number of vendors.

This procurement method is typically to be used for low-dollar purchases (under $10,000) and must be approved by the City Manager or Department Head, with complete documentation of the completed transaction, reconciled monthly by the Finance Department.

Procurement cards have unique controls that ensure purchases made are within program specifications for product and dollar limits. In addition, each cardholder requires certification of all purchases with verification performed by the approving official, before payment is made.

Cardholders must sign a participation agreement accepting the terms and conditions placed on card usage.

Accounts Payable Process
The most common procedure for processing payments for the City of Farmersville is through decentralized purchasing authority granted by the Purchasing Agent to department heads and then payment to the vendor is made through the centralized Accounts Payable process in the Finance Department.

Most payments are still made by check to make reconciliation and request for reimbursement through grants and other funding sources the clearest to all invested parties. Some 3

reoccurring payments are made by ACH by the Accounts Payable clerk.

Invoices and Pay Estimates
As purchases are made by authorized designees, it is their responsibility to receive a copy of the invoice or receipt of purchase and forward this to the Department Head for account coding and approval or directly to Accounts Payable clerk, as appropriate. Accounts Payable will not pay from statements or work orders – only invoices and pay estimates (for large construction projects).

Many invoices are reoccurring in nature and may come directly to the Finance Department or the Accounts Payable Clerk. In these situations, the invoices will be routed back to each purchasing authority (Department Head) for coding and payment approval.

Coding and Approval
All invoices must have appropriate coding and approval from the purchasing department head or City Manager before payment will be processed. Certain exceptions for common, reoccurring payments as indicated in the municipal code, are permitted.

Submission for Payment
Invoices need to be submitted to the Finance Department on a timely basis so that payment can be effective and efficient. Sufficient back-up needs to be included prior to submission including invoices, estimates, GSA per diem calculations and other supporting documentation to prove authority to purchase as well as proof of purchase and/or receipt of goods and/or services.

Accounts Payable Process
Invoices and Pay Estimates are received by the Finance department daily by mail, email, courier, FAX, in-person, from other departments, and internally. These documents are sorted, routed, and received back with budgetary coding and approvals as appropriate. All other issues are returned or routed to the City Manager depending upon the issue, frequency, or severity of the issue.

Once gathered together the Accounts Payable clerk assembles the invoices together and creates cover sheets for uniform coding and organization of the batch. This batch is provided to the Finance Director who reviews the invoices and approves or denies them for payment.

The approved invoices are then entered into the system to create a batch for payment. This is put through the distribution process and checks are created. Checks are then matched up with the supporting invoices and documents, compared to the batch reported and signed by the Finance Director and the Mayor or Mayor Pro Tem. The invoice batch, cover sheets and checks are scanned and saved for record keeping and audit purposes.

Exceptions to Check Writing
Some reoccurring payments (utility bills and ancillary payroll benefits) are paid through websites or electronically by admin staff as part of the payroll or typically monthly accounts payable process. These transactions are approved and submitted to Accounts Payable clerk to enter into the system in an “ACH batch” to record the transaction. The payments are reconciled monthly with the bank reconciliation process.

Quick Reference
Chapter 4 –Purchase Orders
Topic Page
What is a Purchase Order? 29
One-Time Purchase Orders 29

Purchase Orders
Chapter Objective: Review of purchase order nomenclature, and the process for using and approving POs.

What is a Purchase Order?
A purchase order authorizes the vendor to deliver materials or services in accordance with the terms and conditions specified thereon (or incorporated from a bid or other document by reference). It also acknowledges the obligation of the City to pay for the goods or services ordered, upon their receipt and proper invoice. Unless a separate contract document is executed, the purchase order establishes the contractual relationship between the City and the vendor. A purchase order is a legally binding contract.

The purchase order is the City’s commitment for the value of the material or service ordered. It is a legal document. When a purchase order is issued as an acceptance of a bid, quotation, or offer, a contractual relationship is established.

One-Time Purchase Orders
The City of Farmersville utilizes “One-time” purchase orders that are generally issued for a finite quantity of products, or services; i.e., large equipment purchases, and one-time projects. Encumbered funds may, with certain restrictions, be carried forward into the next fiscal year.

Purchase orders will be required in the following situations:
• Commodities (Materials & Equipment) over $75,000
Purchase orders will not be required in the case that contracts are in place. Typically, contracts are used in procurement of services at the following thresholds:
• Services (Non-Construction) will be completed by contract over $100,000 • Services (Construction) will be completed by contract over $200,000 4

Quick Reference
Chapter 5 – Vendor Issues
Topic Page
Contact with Vendors 31
Making Commitments to Purchase 31
Vendor/Supplier Mailing List 31
Accepting Deliveries from Vendors 31
Making Payments to Vendors 33

Vendor Issues
Chapter Objective: Provide guidelines for dealing with vendors and vendor-related issues.

Making Contact with Vendors
Vendors sometimes call on City departments and divisions. Although they may offer helpful information, they may also subject City employees to high-pressure sales pitches. Please direct vendors to the City Clerk. The Clerk will gather information about their products and services and give them applications for inclusion in the City’s Supplier Mailing List.

Making Commitments to Purchase
Because the City, like all public agencies, buys goods on an open competitive basis, employees / Commissioners / Council Members must not promise any vendor future business.

Vendor / Supplier Mailing List
The City Clerk maintains a list of suppliers for all classes of commodities and services that are regularly purchased by the City. Departments should refer all new suppliers to the City Clerk to be added to the list.

Accepting Deliveries from Vendors
Deliveries are usually made as follows:

City Hall: Packages delivered to City Hall are inspected for visible external damage, such as dents or punctures in packaging, water damage, etc. If such damage is discovered, it is noted on the delivering carrier’s bill of lading, and the department is notified. All other inspections are the responsibility of the ordering department.

Received at User Location: When goods are received directly by the department, the following procedures should be observed:
• Avoid accepting delivery of any merchandise until adequate identification from the 5

packaging or delivery documents (carrier’s receipt) is obtained. A packing slip or other suitable identification indicating the merchandise should be delivered to the department must be in evidence before the shipment is accepted. • Sign only for the number of boxes or parcels which are received from that carrier, and are listed on the delivery documents that accompany the delivery. • The receiver is not signing as to the condition of the merchandise inside the box or parcel. However, the receiver should note any exterior damage, including unsealed packaging, on the delivery documents before signing. The receiver should not refuse a shipment because of apparent damage. This may result in storage fees being charged to the City.
• In cases of known damage (apparent at time of delivery):
⇒ Note on both copies of delivery documents “case damaged in shipment” and, if the item is visible and the damage is visible, also include “item visibly damaged”
⇒ Obtain signature from carrier on both copies of delivery documents before signing for receipt
⇒ Return one copy of receipt to carrier
⇒ Contact the vendor immediately
Inspection: Thorough inspection of goods is the responsibility of the ordering department. This includes inspection for conformance to specifications and ordered quantity, as well as inspection for damage. The department has the ultimate responsibility for determining whether the items have been received in good order.
• Goods received should be checked promptly against the packing slip and the purchase order. Partial deliveries should be noted.
• If goods are damaged, the vendor should be notified immediately. Do not destroy or discard any damaged items or packing materials.
• Departments receiving incorrect shipments or damaged goods may wish to complete a Vendor Complaint form detailing the problem and return the form to Procurement Services or download the form from the GSA Procurement Services’ intranet website.
• The ordering department is obligated to accept delivery of any goods that have been ordered. If there is a change regarding need for the items, the department should immediately contact Procurement Services to make other arrangements.

Only Procurement Services has the authority to cancel purchase orders. It should be realized that there might be a restocking charge if items must be returned through no fault of the vendor. The City’s failure to accept and pay for ordered goods is a breach of contract.

Making Payment to Vendors
Payments should be made within the terms of the purchase order or agreement.

Customary payment terms for the City are Net 30 Days, from receipt of invoice, for goods/services received. Advance payments should be avoided. Invoices should be reviewed carefully, signed by the appropriate department authority, coded with the correct account code, and forwarded to Accounts Payable.

Some vendors offer discounts if their invoices are paid promptly. To take advantage of these early-payment discounts and to maintain good vendor relations, it is important that all invoices, packing slips, and receiving reports be forwarded to the Finance Department as soon as possible.

Questions regarding payment of invoices should be addressed to the Finance Department.

Quick Reference
Chapter 6 – Glossary
Topic Page
Glossary 35

Glossary of Procurement Terms
• Brand Name Or Equal Specifications. A specification limited to one or more items by manufacturers’ names or catalog numbers to describe the standard of quality, performance, and other salient characteristics needed to meet City requirements, and which provides for the submission of equivalent products. • Brand Name Specifications. A specification limited to one or more items by manufacturers’ names or catalog numbers.
• Business. Any corporation, partnership, individual, sole proprietorship, joint stock company, joint venture, or any other private legal entity. • Business, Local. Any corporation, partnership, individual, sole proprietorship, joint stock company, joint venture, or any other private legal entity, which maintains a physical working office within the geographic boundaries of the City of Farmersville. • Buyer. A professionally trained person employed by Procurement Services to obtain materials and services for City departments, in accordance with all state and local laws and internal City policies and procedures.
• Change Order. A written order signed and issued by the Purchasing Agent, or his designee, directing the supplier or contractor to make changes or modifications to an order. The change order may make written alteration to the specifications, delivery point, rate of delivery, period of performance, price, quality, quantity, or other provisions of the contract.
• Contract. Any authorized City agreement, regardless of what it is called (purchase order, contract, etc.), for the procurement of supplies, equipment, services, or construction.
• Contractor. Any person having a contract with the City. • Construction. The erection or assembly of large structures. The term construction is, to a significant degree, synonymous with building, but in common usage it most often is applied to such major works as buildings, ships, aircraft, and public works such as roads, dams, and bridges.
6

• Cost Analysis. The evaluation of cost data for arriving at costs actually incurred or estimates of costs to be incurred, prices to be paid, and costs to be reimbursed. • Cost Data. Factual information concerning the cost of labor, material, overhead, and other cost elements that are expected to be incurred, or which have been actually incurred, by the contractor in performing the contract; or that are expected to be incurred by the City in the use of the equipment or material to be purchased. • Cost Reimbursement Contract. A contract under which a contractor is reimbursed for costs which are allowable and allocable in accordance with the contract terms and the provisions, and a fee or profit, if any.
• Emergency Purchase Order. An emergency purchase order results when a situation arises in which compliance with normal procurement practice is impracticable or contrary to the public interest.
• Employee. An individual drawing a salary or wages from the City, whether elected or not; any non-compensated individual performing personal services for the City or any department, agency, commission, council, board, or any other entity established by the executive or legislative branch of the City; and any non-compensated individual serving as an elected official of the City.
• Fixed Asset. All City equipment and other assets with a purchase price of $5,000 or more, including tax and delivery, and relatively permanent. • Formal Bids. Formal bids are those that are obtained by written solicitation. The bids are received in writing by a set date and time. The bids are publicly opened by Procurement Services. The written bids and the bid summary are maintained by Procurement Services.
• Gratuity. A payment, loan, subscription, advance, deposit of money, service, or anything of more than nominal value, present or promised, unless consideration of substantially equal or greater value is received
• Immediate Family. A spouse, children, parents, brothers, and sisters. • Informal Quotes. Informal quotes are offers made by vendors. The quotes may be verbal, electronic, or written. The Buyer maintains a summary of the quotes received. • Invitation for Bids. All documents, whether attached or incorporated by reference utilized for soliciting sealed bids. Invitations for Bids (IFB) are awarded to the lowest responsive and responsible bidder(s).
• Local Business. (See Business, Local).
• Personal Services Contract. An accepted means for providing specialized tasks, which cannot be as effectively accomplished by the regular work force. • Prevailing Wage. In accordance with Labor Code Sections 1770-1773 prevailing wages must be paid to all workers on a “public works” project when the project is over $1,000.

• Price Analysis. The evaluation of price data, without analysis of the separate cost components and profit as in cost analysis, which may assist in arriving at prices to be paid and costs to be reimbursed.
• Pricing Data. Information concerning prices for items substantially similar to those being procured. Prices in this definition refer to offered or proposed selling prices, historical selling prices and current selling prices. The definition refers to data relevant to both prime and sub-contract prices.
• Procurement. The buying, purchasing, renting, leasing, trading, or otherwise acquiring of any supplies, equipment, services, or construction. It also includes all functions that pertain to the obtaining of any supplies, equipment, services, or construction, including descriptions of requirements, selection and solicitation of sources, preparation and award of contracts, and all phases of contract administration.
• Procurement Policy. Procurement governing document approved by resolution by the City Council of Farmersville.
• Public Works Project. As defined in Public Contract Code § 20150.2, "public project" means: a project for the erection, improvement, and repair of public buildings and works.
• Purchase Order. City’s commitment for the value of the material or service ordered. It is a legal document.
• Request for Proposals. All documents, whether attached or incorporated by reference, utilized for soliciting proposals. Requests for Proposals (RFP) are generally awarded based on several evaluation factors, including price. • Requesting Department. Any department, commission, board, or agency requiring supplies, equipment, services, or construction.
• Responsible Bidder or Offeror. A person who has the capability in all respects to perform fully the contract requirements, and the tenacity, perseverance, experience, integrity, reliability, capacity, facilities, equipment, and credit which will assure good faith performance, and who has submitted a bid that conforms in all material respects to the requirements set forth in the solicitation.
• Services. The furnishing of labor, time, or effort by a contractor, not involving delivery of a specific product other than reports which are merely incidental to the required performance.
• Specification Any description or scope of work of the physical or functional characteristics or of the nature of supplies, equipment, service, or construction. It may include a description of any requirement for inspection, testing or delivery of supplies, equipment, services, or construction.
• Supplier List. A list of potential bidders, listed by commodity codes for materials and services furnished.

Appendix A:

Risk Matrix

RISK MATRIX
&

INSURANCE

LANGUAGE

YORK RISK SERVICES
Revised July 2019

Table of Contents

Exhibit 1: Risk Matrix Definitions.................................................................................................... 1 Exhibit 2: Risk Matrix ..................................................................................................................... 2 Category 1 “Low Risk”..................................................................................................................... 3 Category 2 “Intermediate Risk” ...................................................................................................... 4 Category 3 “High Risk”.................................................................................................................... 6 Exhibit 3: Ancillary Coverage Requirements.................................................................................. 9

Exhibit 1
Risk Matrix Definitions
(Determine Risk Category by evaluating all factors that could increase the agency’s liability for that particular project. Once Risk Category is determined, utilize Exhibit 2 to select insurance terms.)

Risk Category Risk Level Examples
1 Low • Vending machine providers
• Facilities use
• Special events
• Some professional service providers
• General contracts
2 Intermediate • Construction contracts
• Some professional service providers
• Technology consultants
• Facilities use
• Special events
3 High • Major construction contracts
• Garbage haulers
• Some professional service providers
Other Undefined • The risk is unique
• Custom insurance requirements needed

Exhibit 2
Risk Matrix
(“+” = Limits may need to increase for Risk Categories 2 & 3, depending on the project.) Risk
Category Workers’ Compensation General Liability Auto Liability 1 Statutory
Employer’s Liability $1,000,000
$2,000,000 per occurrence
(may accept $1,000,000 per
occurrence for lower risks)
$4,000,000
general aggregate
$1,000,000
products/completed
operations aggregate
$2,000,000
Combined Single Limit
(may accept $1,000,000 for
lower risks)
2 Statutory
Employer’s Liability $1,000,000
$2,000,000+
per occurrence
$4,000,000+
general aggregate
$2,000,000+
products/completed
operations aggregate
$2,000,000+
Combined Single Limit
3 Statutory
Employer’s Liability $1,000,000
$5,000,000+
per occurrence
$10,000,000+
general aggregate
$5,000,000+
products/completed
operations aggregate
$5,000,000+
Combined Single Limit
Other
Consult with
Risk Management
Professionals
Consult with
Risk Management
Professionals
Consult with
Risk Management
Professionals

Language Templates for Risk Categories 1-3

1. Category 1 “Low Risk”
Insurance Requirements
i. Commercial General Liability
a. Vendor shall maintain commercial general liability insurance with coverage at least as broad as Insurance Services Office form CG 00 01, in an amount not less than two million dollars ($2,000,000) per occurrence for bodily injury, personal injury, and property damage, including without limitation, blanket contractual liability. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. Vendor’s general liability policies shall be primary and shall not seek contribution from the City’s coverage, and be endorsed using Insurance Services Office form CG 20 10 (or equivalent) to provide that City and its officers, officials, employees, and agents shall be additional insureds under such policies. For construction projects, an endorsement providing completed operations coverage for the additional insured, ISO form CG 20 37 (or equivalent), is also required. b. Any failure to comply with reporting provisions of the policies by Vendor shall not affect coverage provided the City.
c. Coverage shall state that Vendor insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability.
d. Coverage shall contain a waiver of subrogation in favor of the City. ii. Business Automobile Liability
a. Vendor shall provide auto liability coverage for owned, non-owned, and hired autos using ISO Business Auto Coverage form CA 00 01 (or equivalent) with a limit of no less than two million dollars ($2,000,000) per accident. iii. Workers’ Compensation and Employers’ Liability

a. Vendor shall maintain Workers’ Compensation Insurance and Employer’s Liability Insurance with limits of at least one million dollars ($1,000,000). Vendor shall submit to City, along with the certificate of insurance, a waiver of subrogation endorsement in favor of City, its officers, agents, employees, and volunteers. iv. All Coverages
a. Each insurance policy required by the agreement shall be endorsed to state that coverage shall not be suspended, voided, cancelled, or reduced in limits except after thirty (30) days' prior written notice has been given to the City, except that ten (10) days’ prior written notice shall apply in the event of cancellation for nonpayment of premium.
b. All self-insurance, self-insured retentions, and deductibles must be declared and approved by the City.
c. Evidence of Insurance - Prior to commencement of work, the Vendor shall furnish the City with certificates, additional insured endorsements, and waivers of subrogation evidencing compliance with the insurance requirements above.

The Vendor must agree to provide complete, certified copies of all required insurance policies if requested by the City.
d. Acceptability of Insurers - Insurance shall be placed with insurers admitted in the State of California and with an AM Best rating of A- VII or higher.

2. Category 2 “Intermediate Risk”
Insurance Requirements
i. Commercial General Liability
a. Vendor shall maintain commercial general liability insurance with coverage at least as broad as Insurance Services Office form CG 00 01, in an amount not less than two million dollars ($2,000,000) per occurrence for bodily injury, personal injury, and property damage, including without limitation, blanket contractual liability. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall

be twice the required occurrence limit. Vendor’s general liability policies shall be primary and shall not seek contribution from the City’s coverage, and be endorsed using Insurance Services Office form CG 20 10 (or equivalent) to provide that City and its officers, officials, employees, and agents shall be additional insureds under such policies. For construction projects, an endorsement providing completed operations coverage for the additional insured, ISO form CG 20 37 (or equivalent), is also required. b. Any failure to comply with reporting provisions of the policies by Vendor shall not affect coverage provided the City.
c. Coverage shall state that Vendor insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability.
d. Coverage shall contain a waiver of subrogation in favor of the City. ii. Business Automobile Liability
a. Vendor shall provide auto liability coverage for owned, non-owned, and hired autos using ISO Business Auto Coverage form CA 00 01 (or equivalent) with a limit of no less than two million dollars ($2,000,000) per accident. iii. Workers’ Compensation and Employers’ Liability
a. Vendor shall maintain Workers’ Compensation Insurance and Employer’s Liability Insurance with limits of at least one million dollars ($1,000,000). Vendor shall submit to City, along with the certificate of insurance, a waiver of subrogation endorsement in favor of City, its officers, agents, employees, and volunteers. iv. All Coverages
a. Each insurance policy required by the agreement shall be endorsed to state that coverage shall not be suspended, voided, cancelled, or reduced in limits except after thirty (30) days' prior written notice has been given to the City, except that ten (10) days’ prior written notice shall apply in the event of cancellation for nonpayment of premium.

b. All self-insurance, self-insured retentions, and deductibles must be declared and approved by the City.
c. Evidence of Insurance - Prior to commencement of work, the Vendor shall furnish the City with certificates, additional insured endorsements, and waivers of subrogation evidencing compliance with the insurance requirements above.

The Vendor must agree to provide complete, certified copies of all required insurance policies if requested by the City.
d. Acceptability of Insurers - Insurance shall be placed with insurers admitted in the State of California and with an AM Best rating of A- VII or higher. e. Subcontractors and Consultants - A category of risk and the applicable insurance requirements will be determined on a “per subcontractor” or “per consultant” basis, considering the particular work to be done by the subcontractor or consultant and the interrelationship of that work to other work being conducted by the Vendor.

3. Category 3 “High Risk”
Insurance Requirements
i. Commercial General Liability
a. Vendor shall maintain commercial general liability insurance with coverage at least as broad as Insurance Services Office form CG 00 01, in an amount not less than five million dollars ($5,000,000) per occurrence for bodily injury, personal injury, and property damage, including without limitation, blanket contractual liability. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. Vendor’s general liability policies shall be primary and shall not seek contribution from the City’s coverage, and be endorsed using Insurance Services Office form CG 20 10 (or equivalent) to provide that City and its officers, officials, employees, and agents shall be additional insureds under such policies. For construction projects, an endorsement providing completed operations coverage for the additional insured, ISO form CG 20 37 (or equivalent), is also required.

b. Any failure to comply with reporting provisions of the policies by Vendor shall not affect coverage provided the City.
c. Coverage shall state that Vendor insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability.
d. Coverage shall contain a waiver of subrogation in favor of the City. ii. Business Automobile Liability
a. Vendor shall provide auto liability coverage for owned, non-owned, and hired autos using ISO Business Auto Coverage form CA 00 01 (or equivalent) with a limit of no less than five million dollars ($5,000,000) per accident. iii. Workers’ Compensation and Employers’ Liability
a. Vendor shall maintain Workers’ Compensation Insurance and Employer’s Liability Insurance with limits of at least one million dollars ($1,000,000). Vendor shall submit to City, along with the certificate of insurance, a waiver of subrogation endorsement in favor of City, its officers, agents, employees, and volunteers. iv. All Coverages
f. Each insurance policy required by the agreement shall be endorsed to state that coverage shall not be suspended, voided, cancelled, or reduced in limits except after thirty (30) days' prior written notice has been given to the City, except that ten (10) days’ prior written notice shall apply in the event of cancellation for nonpayment of premium.
g. All self-insurance, self-insured retentions, and deductibles must be declared and approved by the City.
h. Evidence of Insurance - Prior to commencement of work, the Vendor shall furnish the City with certificates, additional insured endorsements, and waivers of subrogation evidencing compliance with the insurance requirements above.

The Vendor must agree to provide complete, certified copies of all required insurance policies if requested by the City.

i. Acceptability of Insurers - Insurance shall be placed with insurers admitted in the State of California and with an A.M. Best rating of A- VII or higher. j. Subcontractors and Consultants - A category of risk and the applicable insurance requirements will be determined on a “per subcontractor” or “per consultant” basis, considering the particular work to be done by the subcontractor or consultant and the interrelationship of that work to other work being conducted by the Vendor.

Exhibit 3
Ancillary Coverage Requirements
Contract Activity Involved
Professional
Liability
Pollution
Liability
Builders
Risk
Aircraft
Liability
Cyber
Liability
Installation
Floater
Construction or
Remodeling Projects -
Construction or
remodeling projects
X X X
Hazardous or Waste
Materials - Removal of
asbestos or lead-based
paint; or the use,
application, transport,
removal, cleanup, or
disposal of hazardous
material in quantities of
100 gallons or more; or the
disposal, treatment,
transport, or storage of
waste.

X
Installation of Equipment X
Professional Service
Provider - Services from an
accountant, architect,
attorney, claims
administration firm,
consultant, insurance
broker, engineer, financial
advisor, medical
professional, or other
person who maintains a
professional license.

X
Technology Vendor X X
Use of Aircraft or
Helicopter X

1. The following are suggested insurance language if Ancillary Coverages are recommended. Please consult with the Risk Manager for customized limits and language for specific circumstances.
a. Aircraft Liability Insurance
i. Aircraft liability insurance coverage shall provide limits of $5,000,000 - $10,000,000 per accident.
ii. The policy shall be endorsed to include the City, its officers, employees, and agents as additional insureds.
b. Builders Risk Insurance
i. Contractor shall obtain and maintain Builders Risk/Course of Construction insurance. Policy shall be provided for replacement value on an "all-risk" basis, including earthquake and flood. The City shall be named as Loss Payee on the policy and there shall be no coinsurance penalty provision in any such policy.

Policy must include: (1) coverage for removal of debris, and insuring the buildings, structures, machinery, equipment, materials, facilities, fixtures, and all other properties constituting a part of the project; (2) “Installation Floater” coverage with limits sufficient to insure the full replacement value of any property or equipment stored either on or off the project site. Such insurance shall be on a form acceptable to City to ensure adequacy of terms and limits.

Contractor shall not be required to maintain property insurance for any portion of the Project following transfer of control thereof to City. c. Cyber Liability Insurance
i. Cyber Liability Insurance with limits not less than $1,000,000 per claim. ii. Coverage shall be sufficiently broad to respond to the duties and obligations as is undertaken by Vendor in this agreement and shall include, but not be limited to, claims involving infringement of intellectual property, including but not limited to infringement of copyright, trademark, trade dress, invasion of privacy violations, information theft, damage to or destruction of electronic information, release of private information, alteration of electronic information, extortion, and network security.

iii. The policy shall provide coverage for breach response costs as well as regulatory fines and penalties, and credit monitoring expenses with limits sufficient to respond to these obligations.
d. Pollution Liability Insurance
i. Pollution Coverage shall be provided for liability arising out of sudden, accidental and gradual pollution and remediation. The policy limit shall be no less than two million dollars ($2,000,000) per claim. All activities contemplated in this agreement shall be specifically scheduled on the policy as “covered operations.” The policy shall provide coverage for the hauling of waste from the project site to the final disposal location, including non-owned disposal sites. ii. The policy shall be endorsed to include the City, its officers, employees, and agents as insureds.
e. Professional Liability Insurance
i. Contractor shall maintain professional liability insurance that insures against professional errors and omissions that may be made in performing the Services to be rendered in connection with this Agreement, in the minimum amount of two million dollars ($2,000,000) per claim and in the aggregate. Any policy inception date, continuity date, or retroactive date must be before the effective date of this agreement, and Contractor agrees to maintain continuous coverage through a period no less than three years after completion of the services required by this agreement.

Appendix B:

Approval Memo

PURCHASE APPROVAL MEMO
TO:

FROM:

DATE:

SUBJECT: REQUEST FOR PURCHASE APPROVAL
Please accept this memo for formal approval for purchase of the following item(s):

Description
Vendor
Capital Budget ID#
Budgeted Amount
Total Cost
Account Code
REQUEST STATUS: APPROVED ( ) DENIED ( )
SIGNED:

DATE:

FINANCE CHECK:

This memo to be attached to Accounts Payable back-up for each payment.

Appendix C:

Purchase Order

DATE:

P.O. #

DATE ORDERED DATE REQUIRED
ITEM # QTY UNIT PRICE TOTAL
[42] SUBTOTAL
TAX
S & H
OTHER
TOTAL
Authorized by Date
Other Comments or Special Instructions

DESCRIPTION

VENDOR NUMBER SHIPPING TERMS
Phone: 559‐747‐0458

VENDOR SHIP TO

PURCHASE ORDER
909 WEST VISALIA ROAD
FARMERSVILLE, CA 93223

Appendix D:

CUCCAC Manual

State of California

Cost Accounting Policies and
Procedures Manual

2019 Edition

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FOREWORD
The Uniform Public Construction Cost Accounting Act (Act), enacted in 1983 under Public Contract Code section 22000 et seq., allows local agencies to perform public project work of up to $60,000 with their own workforces if the agencies elect to follow the cost accounting procedures set forth in the Cost Accounting Policies and Procedures Manual by the California Uniform Construction Cost Accounting Commission.

Every five years, the California Uniform Construction Cost Accounting Commission reviews the informal bid limits for inflation and other factors to determine whether adjustments should be made. If an adjustment is made, the State Controller notifies the affected public agencies. The adjustment may become effective before it appears as a formal change in the Public Contract Code pursuant to Public Contract Code section 22020. The most recently posted bid limits can be found at www.sco.ca.gov/ard_cuccac.html titled under New Informal Bid Limit Increase (Pursuant to PCC 22032)
Any local agency can voluntarily elect to become a participating agency of the Act. Local agencies include cities, counties, redevelopment agencies, special districts, school districts, and community college districts.

Participating agencies benefit from the raised force account limit and the informal bidding procedures. More projects are completed in a timely manner as a result of the streamlines awards process and the reduction in paperwork related to advertising and report filing.

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California Uniform Construction Cost Accounting Commission Cost Accounting Policies and Procedures Manual
Table of Contents
CHAPTER 1 INFORMATION FOR ADOPTION AND IMPLEMENTATION OF THE CALIFORNIA UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING ACT................................................................................................5 CHAPTER 2 THE UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING ACT ....................................................... 35 CHAPTER 3 UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING POLICIES AND PROCEDURES........................ 42 CHAPTER 4 IDENTIFICATION, REPORTING, AND COMPUTATION OF PERSONNEL COSTS....................................... 52 CHAPTER 5 IDENTIFICATION, REPORTING, AND COSTING OF MATERIALS, SUPPLIES, AND SUBCONTRACTS ........ 60 CHAPTER 6 IDENTIFICATION, REPORTING, AND COSTING EQUIPMENT ................................................................. 64 CHAPTER 7 IDENTIFICATION, RATE DEVELOPMENT, AND ALLOCATION OF OVERHEAD ........................................ 70 APPENDIX A COST PRINCIPLES FOR STATE, LOCAL, AND INDIAN TRIBAL GOVERNMENTS..................................... 74 APPENDIX B OVERHEAD DETERMINATION AND ALLOCATION PERCENTAGE OF DIRECT LABOR COSTS METHOD 78

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CHAPTER 1 INFORMATION FOR ADOPTION AND IMPLEMENTATION OF THE

CALIFORNIA UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING ACT Table of Contents
Instructions for Adoption and Implementation of the Uniform Construction Cost Accounting Procedures……….7

1.01 Instructions for Adoption and Implementation of the Uniform Public Construction Cost Accounting Act (ACT) by Local Agencies...................................................................................................................7

1.02 Sample Election Resolution – Model.....................................................................................................8

1.03 Sample Informal Bidding Ordinance .....................................................................................................9 Procedure for Establishment and Maintenance of List of Registered Contractors……………………………………………10

1.04 Procedure for Establishment and Maintenance of List of Registered Contractors Per Section 22034 of the Public Contract Code ............................................................................................................... 10

1.05 County-by-County List of Construction Trade Journals...................................................................... 11

1.06 Sample Information for Mailed Notice .............................................................................................. 13

1.07 List of Construction Trade Journals.................................................................................................... 13 Accounting Procedures Review Process……………………………………………….…….……….……………………………..…………..20

1.08 Accounting Procedures Review.......................................................................................................... 19 Uniform Public Construction Cost Accounting Act………………………………………………………………………………….……….23

1.09 California Public Contract Code.......................................................................................................... 23

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CHAPTER 1 Information for Adoption and Implementation of the California Uniform Public Construction Cost Accounting Act
Instructions for Adoption and Implementation of the Uniform Construction Cost Accounting Procedures

1.01 Instructions for Adoption and Implementation of the Uniform Public Construction Cost Accounting Act (ACT) by Local Agencies
1) The Governing Board must elect by resolution to become subject to the uniform construction cost accounting procedures promulgated by the State Controller pursuant to the Public Contract Code section 22019. The resolution shall specify that the local agency will meet the requirements prescribed in the California Uniform Construction Cost Accounting Commission’s Cost Accounting Policies and Procedures Manual and state the effective date the agency will implement the accounting and bidding procedures.
2) The local agency must notify the State Controller in writing of the election to become subject to the uniform construction cost accounting procedures along with a copy of the resolution mailed to the following address:

Office of the State Controller
Local Government Programs and Services Division
Local Government Policy Section
P.O. Box 942850
Sacramento CA 94250
3) When a local agency elects to become subject to the uniform construction cost accounting procedures, the entire entity is considered subject to the Act and no departments will be exempt. However, Special Districts which are governed by a board of supervisors or city council are subject only if a separate election is made.
4) An informal bidding ordinance, or a board adopted policy equivalent to such as required by the participating agency, shall be enacted pursuant to Public Contract Code section 22034. 5) Once opting into the Act, participating agencies must always adhere to the terms of the Act until such time the agency formally opts out by resolution of its governing board. Having opted in, selective adherence to the terms of the Act is a violation.
6) The governing board may discontinue the agency’s participation under the uniform public construction cost accounting procedures by adopting a resolution stating this fact. A copy of the resolution shall be filed with the State Controller.
7) The State Controller shall notify the California Uniform Construction Cost Accounting Commission (Commission) of all local agencies electing to become subject to the uniform public construction cost accounting procedures. In addition, the Commission shall also be notified of local agencies electing to discontinue participation under these procedures.

SAMPLE

1.02 Sample Election Resolution – Model
This sample Election Resolution may be used by any public agency’s governing body.

RESOLUTION OF THE __________________________, STATE OF CALIFORNIA IN THE MATTER OF

UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING PROCEDURES
Resolution No. _____________
WHEREAS, prior to the passage of Assembly Bill No. 1666, Chapter 1054, Statutes of 1983, which added Chapter 2, commencing with Section 22000, to Part 3 of Division 2 of the Public Contract Code, existing law did not provide a uniform cost accounting standard for construction work performed or contracted by local public agencies; and WHEREAS, Public Contract Code section 22000 et seq., the Uniform Public Construction Cost Accounting Act, establishes such a uniform cost accounting standard;
WHEREAS, the Commission established under the Act has developed uniform public construction cost accounting procedures for implementation by local public agencies in the performance of or in the contracting for construction of public projects; and NOW, THEREFORE, BE IT RESOLVED that the ________________ of _________________, California, hereby elects under Public Contract Code section 22030 to become subject to the uniform public construction cost accounting procedures set forth in the Act and to the Commission's policies and procedures manual and cost accounting review procedures, as they may each from time to time be amended, and directs that the __________________- notify the State Controller forthwith of this election.

This Resolution shall take effect upon its adoption.

PASSED AND ADOPTED this ____ day of ___________________, _____ by the following vote; AYES:

NOES:

ABSENT:

Insert Seal if Applicable
________________________, _______________
Signature Title
City of __________________ County of _____________________

SAMPLE

1.03 Sample Informal Bidding Ordinance
(This SAMPLE INFORMAL BIDDING ORDINANCE or POLICY indicates action by a county board of supervisors.

However, the sample format shall be modified to conform to your governing agency’s rules).

ORDINANCE NO. _____________
AN ORDINANCE OF THE BOARD OF SUPERVISORS OF THE COUNTY OF _____________ ADDING SECTION _________ TO THE ORDINANCE CODE OF THE COUNTY OF ____________

TO PROVIDE INFORMAL BIDDING PROCEDURES UNDER THE UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING ACT (Section 22000, et seq. of the Public Contract Code) The Board of Supervisors of the County of ____________________do ordain as follows:

SECTION 1
Section _______ is hereby added to the County Code of the County of_____________ to provide as follows:

Section ____________. Informal Bid Procedures. Public projects, as defined by the Act and in accordance with the limits listed in Section 22032 of the Public Contract Code, may be let to contract by informal procedures as set forth in Section 22032, et seq., of the Public Contract Code.

Section ____________. Contractors List. The agency shall comply with the requirements of Public Contract Code Section 22034.

Section ____________. Notice Inviting Informal Bids. Where a public project is to be performed which is subject to the provisions of this Ordinance, a notice inviting informal bids shall be circulated using one or both of the following alternatives:

1. Notices inviting informal bids may be mailed, faxes, or emailed to all contractors for the category of work to be bid, as shown on the list developed in accordance with Section_________,

2. Notices inviting informal bids may be mailed to all construction trade journals as specified by the California Uniform Construction Cost Accounting Commission in accordance with section 22036 of the Public Contract Code. Additional contractors and/or construction trade journals may be notified at the discretion of the department/agency soliciting bids, provided however:
(1) If the product or service is proprietary in nature such that it can be obtained only from a certain contractor or contractors, the notice inviting informal bids may be sent exclusively to such contractor or contractors.

Section _____________. Award of Contracts
The County Purchasing Agent and the Director of Public Works are each authorized to award informal contracts pursuant to this Section.

SECTION 2
This Ordinance shall take effect and be in force thirty (30) days from the date of its passage, and before the expiration of fifteen (15) days after its passage, it or a summary of it, shall be published once, with the names of the members of the Board of Supervisors voting for and against the same in the _____________, a newspaper of general circulation published in the County of ___________________.

PASSED, APPROVED and ADOPTED by the Board of Supervisors of the County of _________________, State of California, this____ day of __________,_____, by the following vote:

AYES:

NOES:

ABSENT:

Procedure for Establishment and Maintenance of List of Registered Contractors

1.04 Procedure for Establishment and Maintenance of List of Registered Contractors Per Section 22034 of the Public Contract Code
Section 22034 of the Public Contract Code specifies the requirements for mailing, faxing, or emailing notices to contractors for work to be bid under the Act. As specified therein, an agency shall provide notices by electing a), b) or both methods listed as follows:
a) In lieu of a contractors list, mailing, faxing, or emailing notices to all construction trade journals specified in section 22036
b) Mailing, faxing, or emailing notices to all contractors on the list established by the agency for the work being paid
c) Both (a) and (b) pursuant to section 22034(a)(1)
In the event an agency elects to provide notice by mailing, faxing, or emailing notices to all contractors on the list established by the agency for the work being bid, the agency shall utilize the following procedure to establish and maintain the list of registered contractors outlined in section 22034 (a)(1):
a) Notice to contractors shall be provided in accordance with either paragraph (1) or (2), or both. 1) The public agency shall maintain a list of qualified contractors, identified according to categories of work. Minimum criteria for development and maintenance of the contractors list shall be determined by the commission. All contractors on the list for the category of work being bid shall be mailed, faxed, or emailed a notice inviting informal bids unless the product or service is proprietary. All mailing of notices to contractors pursuant to this subdivision shall be completed not less than 10 calendar days before bids are due.
2) The public agency may elect to mail, fax, or email a notice inviting informal bids to all construction trade journals specified in section 22036.
b) The notice inviting informal bids shall describe the project in general terms and how to obtain more detailed information about the project, and state the time and place for the submission of bids. c) The governing body of the public agency may delegate the authority to award informal contracts to the public works director, general manager, purchasing agent, or other appropriate person. d) If all bids received are in excess of two hundred thousand dollars ($200,000), the governing body of the public agency may, by adoption of a resolution by a four-fifths vote, award the contract, at two hundred twelve thousand, five hundred dollars ($212,500) or less, to the lowest responsible bidder, if it determines the cost estimate of the public agency was reasonable. (Amended by Stats. 2015, Ch. 269, Sec. 29. Effective January 1, 2016.)

1.04.01 Minimum Criteria for Development and Maintenance of the Contractors List Determined by the Commission, pursuant to Public Contract Code section 22034(a)(1)

1. At least once per calendar year, each public agency that has elected to become subject to the Uniform Public Construction Cost Accounting Act and intends to utilize the notice provisions outlined in section 22034(a) shall establish a new list or update its existing list of qualified contractors by mailing, faxing, or emailing written notice to all construction trade journals

designated for that Agency under Section 22036. The notice shall invite all licensed contractors to submit the name of their firm to the Agency for inclusion on the Agency's list of qualified bidders.

2. The notice shall require that the contractor provide:
 The name and address to which a Notice to Contractors or Proposal should be mailed, faxed, or emailed;
 A phone number at which the contractor may be reached;  The type of work in which the contractor is interested and currently licensed to do (earthwork, pipelines, electrical, painting, general building, etc.);  The class of contractor's license(s) held; and
 The contractor license number(s).

3. Agencies may include any contractor names they so desire on the lists, but lists must include, at minimum, all contractors who have properly provided the Agencies with the information required under #2 above in response to the written notice.

The Commission recommends that Agencies automatically include in their contractors lists the names of all contractors who submitted one or more valid bids to the Agencies.

4. A contractor may have his or her firm added to an Agency's contractors list at any time by providing the required information.

1.05 County-by-County List of Construction Trade Journals The Commission shall determine, on a county-by-county basis, the appropriate construction trade journals which shall receive mailed, faxed, or emailed notice of all informal and formal construction contracts being bid for work within the specified county per section 22036 of the Public Contract Code.

Per Public Contract Code section 22037, notices inviting formal bids must be published at least 14 calendar days before the date of opening the bids in a newspaper of general circulation, printed and published in the jurisdiction of the public agency. In addition, the Commission has determined that all public agencies that adopt and contract under the Act shall be required to mail, email, or fax a notice to the following specified construction trade publications of all formal construction contracts being bid and all invitations to join an agency’s qualified bidders list (i.e. the informal bidding list) within the specified county (as provided in sections 22034 and 22037 of the Public Contract Code). The numbers following the name of each county refer to the corresponding numbered trade journals listed starting on page 14.

Users will note that the notification of the trade journals listed in Column B for their county is required.

Additionally, the user will have to notify at least two of the trade journals listed in Column C, unless there is only one listed, in which case notification of that trade journal is sufficient. The Commission urges each public agency to select additional publications from its geographical area and include them on its list of publications to be notified. Sample information to be included in the mailed notice to trade journals is listed on page 13.

Note: Users are not required to mail a notice to a trade journal if the trade journal listed under their county is now charging for its services, or is out of business. Instead, the Commission requests that users find some other method of notifying potential contractors of published jobs and how to be added to their informal bidding lists (e.g. internet – county’s web page).

COUNTY NAME
(A)

TRADE JOURNALS REQUIRED

TO BE NOTIFIED
(B)

NOTIFY TWO OF THE

TRADE JOURNALS

LISTED BELOW
(C)
ALAMEDA 2, 3 8, 11, 14, 15, 16, 17, 18, 19
ALPINE 2, 3 11
AMADOR 2, 3 11, 13, 20
BUTTE 2, 3 5, 6, 11, 12
CALAVERAS 2, 3 11, 19, 20, 23
COLUSA 2, 3 5, 6, 11
CONTRA COSTA 2, 3 8, 11, 15, 16, 17, 19
DEL NORTE 2, 3 4, 5, 11
EL DORADO 2, 3 10, 11, 12, 13, 16
FRESNO 2, 3 11, 19, 21, 23, 24, 25
GLENN 2, 3 5, 6, 11, 12
HUMBOLDT 2, 3 4, 5, 11
IMPERIAL 2, 3 29, 31
INYO 2, 3 25
KERN 2, 3 21, 23, 24, 25, 26, 31
KINGS 2, 3 21, 23, 24, 25
LAKE 2, 3 4, 5, 7, 8, 11, 16
LASSEN 2, 3 5, 11, 12
LOS ANGELES 2, 3 8, 29, 31, 36
MADERA 2, 3 11, 19, 21, 23
MARIN 2, 3 7, 8
MARIPOSA 2, 3 11, 21, 23
MENDOCINO 2, 3 4, 7, 8, 11, 16
MERCED 2, 3 11, 19, 20, 21, 23
MODOC 2, 3 5, 11
MONO 2, 3 11
MONTEREY 2, 3 11, 18, 22, 26
NAPA 2, 3 7, 8, 9, 11, 16
NEVADA 2, 3 10, 11, 12, 13
ORANGE 2, 3 29, 31, 35
PLACER 2, 3 10, 11, 12, 13, 16
PLUMAS 2, 3 5, 6, 11, 12
RIVERSIDE 2, 3 29, 31, 35
SACRAMENTO 2, 3 5, 8, 10, 11, 12, 13, 16, 19
SAN BENITO 2, 3 11, 22
SAN BERNARDINO 2, 3 29, 31, 35
SAN DIEGO 2, 3 29, 31, 35
SAN FRANCISCO 2, 3 8, 11, 14, 15, 16, 17, 18
SAN JOAQUIN 2, 3 8, 11, 19, 20, 21, 23
SAN LUIS OBISPO 2, 3 22, 25, 26, 27, 31, 36, 37
SAN MATEO 2, 3 8, 14, 15, 17, 18
SANTA BARBARA 2, 3 26, 27, 28, 31, 36, 37
SANTA CLARA 2, 3 8, 11, 14, 15, 16, 17, 18

COUNTY NAME
(A)

TRADE JOURNALS REQUIRED

TO BE NOTIFIED
(B)

NOTIFY TWO OF THE

TRADE JOURNALS

LISTED BELOW
(C)
SANTA CRUZ 2, 3 18, 22
SHASTA 2, 3 4, 5, 11
SIERRA 2, 3 11, 12
SISKIYOU 2, 3 5, 11
SOLANO 2, 3 8, 9, 10, 11, 16, 19
SONOMA 2, 3 7, 8, 11, 16
STANISLAUS 2, 3 11, 19, 20, 21, 23
SUTTER 2, 3 6, 10, 11, 12
TEHAMA 2, 3 5, 11, 12
TRINITY 2, 3 4, 5, 11
TULARE 2, 3 23, 24, 25
TUOLUMNE 2, 3 11, 20, 23
VENTURA 2, 3 27, 31, 36, 37
YOLO 2, 3 8, 10, 11, 13
YUBA 2, 3 6, 10, 11, 12

1.06 Sample Information for Mailed Notice
Following provides the type of information that could be included in the mailed notice to the construction trade journals. This list should be used only as a guide.
 Project title and contract number, if any
 Cost range
 Site location
 Who is taking bids/date and time due
 Owner's address and phone number
 Architect's address and phone number
 Brief description of work to be done
 Where plans may be obtained/deposit required/whether or not refundable  Percentage of bid bond/percentage of performance bond/percentage of payment bond

1.07 List of Construction Trade Journals
The following organizations have indicated to the Commission that they:
a) Publish a newsletter or trade journal, on a weekly or more frequent basis, that contains a section listing projects being bid; or provide a telephone notice service to their members. b) Do not charge for publishing or otherwise disseminating a Notice to Contractors.

These organizations have indicated to the Commission that they serve subscribers or members in the counties listed to the right of each organization.

Organizations that meet criteria (a) and (b) above may be added to the list, or changes or corrections can be made to the list by contacting:

Office of the State Controller
Local Government Programs and Services Division
Local Government Policy Section
P. O. Box 942850
Sacramento, CA 94250

ORGANIZATION

AREAS OF MEMBERS OR SUBSCRIBERS

BY COUNTY
1 CMD (Construction Market Data)
Document Processing Center
30 Technology Parkway South, Suite 100
Norcross, GA 30092-2912
Phone: 800-424-3996
Email: [email protected]
Website www.cmdgroup.com
California
2 Construction Bidboard (Ebidboard)
11622 El Camino Real, #100
San Diego, CA 92130
Phone: 800-479-5314
Email: [email protected]
Website: www.ebidboard.com
California
3 Dodge Data & Analytics
830 Third Avenue, 6th Floor
New York, NY 10022
Phone: 877-784-9556
Email: [email protected]
Website: www.construction.com
California
4 Humboldt Builders’ Exchange, Inc.
1213 5th Street
Eureka, California 95501
Phone: 707-442-3708
Website: www.humbx.com
Del Norte, Humboldt, Lake, Mendocino, Shasta, and
Trinity
5 Shasta Builders’ Exchange
5800 Airport Road
Redding, CA 96002
Phone: 530-221-5556
Email: [email protected]
Website: www.shastabe.com
Butte, Colusa, Del Norte, Glenn, Humboldt, Lake,
Lassen, Modoc, Plumas, Sacramento, Shasta,
Siskiyou, Tehama, and Trinity

ORGANIZATION

AREAS OF MEMBERS OR SUBSCRIBERS

BY COUNTY
6 Valley Contractors Exchange, Inc.
951 East Eighth Street
Chico, CA 95928
Phone: 530-343-1981
Email: [email protected]
Website: www.vceonline.com
Butte, Colusa, Glenn, Plumas, Sutter, and Yuba
7 North Coast Builders Exchange
1030 Apollo Way
Santa Rosa, CA 95407
Phone: 707-542-9502
Fax: 707-542-2027
Website: www.ncbeonline.com
Lake, Marin, Mendocino, Napa, and Sonoma
8 Marin Builders Association
660 Las Gallinas Avenue
San Rafael, CA 94903
Phone: 415-462-1220
Fax: 415-462-1225
Email: [email protected]
Website: www.marinba.org
Alameda, Contra Costa, Lake, Los Angeles, Marin,
Mendocino, Napa, Sacramento, San Francisco, San
Joaquin, San Mateo, Santa Clara, Solano, Sonoma,
and Yolo
9 Solano-Napa Builders Exchange
135 Camino Dorado
Napa, CA 94558
Phone: 707-255-2515
Fax: 707-255-2749
Email: [email protected]
Website: http://snbe.org
Napa and Solano
10 Sacramento Regional Builders’ Exchange
1331 T Street
Sacramento, CA 95811
Phone: 916-442-8991
Fax: 916-446-3117
Email: [email protected]
Website: www.srbx.org
El Dorado, Nevada, Placer, Sacramento, Solano,
Sutter, Yolo, and Yuba
11 Placer County Contractors Association &
Builders Exchange
10656 Industrial Avenue, Suite 160
Roseville, CA 95678
Phone: 916-771-7229
Fax: 916-771-0556
Website: www.pccamembers.com
Alameda, Alpine, Amador, Butte, Calaveras, Colusa,
Contra Costa, Del Norte, El Dorado, Fresno, Glenn,
Humboldt, Lake, Lassen, Madera, Mariposa,
Mendocino, Merced, Modoc, Mono, Monterey,
Napa, Nevada, Placer, Plumas, Sacramento, San
Benito, San Francisco, San Joaquin, Santa Clara,

ORGANIZATION

AREAS OF MEMBERS OR SUBSCRIBERS

BY COUNTY
Shasta, Sierra, Siskiyou, Stanislaus, Solano, Sonoma,
Sutter, Tehama, Trinity, Tuolumne, Yolo, and Yuba
12 Nevada County Contractors’ Association
149 Crown Point Court
Grass Valley, CA 95945
Phone: 530-274-1919
Email: [email protected]
Website: www.nccabuildingpros.com
Butte, El Dorado, Glenn, Lassen, Nevada, Placer,
Plumas, Sacramento, Sierra, Sutter, Tehama, and
Yuba
13 El Dorado Builders’ Exchange
3430 Robin Lane, Suite 7
Shingle Springs, CA 95682
Phone: 530-672-2955
Amador, El Dorado, Nevada, Placer, Sacramento,
and Yolo
14 The San Francisco Builders Exchange
850 South Van Ness Avenue
San Francisco, CA 94110-1911
Phone: 415-282-8220
Email: [email protected]
Website: www.bxofsf.com
Alameda, San Francisco, San Mateo, and Santa Clara
15 Bay Area Builders Exchange
3055 Alvarado Street
San Leandro, CA 94577
Phone: 510-483-8880
Email: [email protected]
Website: www.bayareabx.com
Alameda, Contra Costa, San Francisco, San Mateo,
and Santa Clara
16 Bay Area Builders Exchange
2440 Stanwell Drive, Suite B
Concord, CA 94520
Phone: 925-685-8630
Website: www.bayareabx.com
Alameda, Contra Costa, El Dorado, Lake, Mendocino,
Napa, Placer, Sacramento, San Francisco, Santa
Clara, Solano, and Sonoma
17 Peninsula Builders Exchange
735 Industrial Road
San Carlos, CA 94070
Phone: 650-591-4486
Website: www.safetystar.org/safetystar
Alameda, Contra Costa, San Francisco, San Mateo,
and Santa Clara

ORGANIZATION

AREAS OF MEMBERS OR SUBSCRIBERS

BY COUNTY
18 Builders’ Exchange of Santa Clara County
400 Reed Street
Santa Clara, CA 95050
Phone: 408-727-4000
Fax: 408-727-2779
Website: www.bxscco.com
Alameda, Monterey, San Francisco, San Mateo,
Santa Clara, and Santa Cruz
19 Builders’ Exchange of Stockton
7500 West Lane
Stockton, CA 95210
Phone: 209-478-1000
Email: [email protected]
Website: www.besonline.com
Alameda, Calaveras, Contra Costa, Fresno, Madera,
Merced, Sacramento, San Joaquin, Solano, and
Stanislaus
20 Valley Builders Exchange, Inc.
1118 Kansas Avenue
Modesto, CA 95351
Phone: 209-522-9031
Email: [email protected]
Website: www.valleybx.com
Amador, Calaveras, Merced, San Joaquin, Stanislaus,
and Tuolumne
21 Builders Exchange of Merced & Mariposa
646 CA-HWY 59
Merced, CA 95341
Phone: 209-722-3612
Website: www.bxmm.org
Fresno, Kern, Kings, Madera, Mariposa, Merced, San
Joaquin, and Stanislaus
22 Central Coast Builders Association
242 East Romie Lane
Salinas, CA 93907
Phone: 831-758-1624
Email: [email protected]
Website: www.ccbabuilds.com
Monterey, San Benito, San Luis Obispo, and Santa
Cruz
23 Central California Builders Exchange
1244 N. Mariposa Street
Fresno, CA 93703
Phone: 559-237-1831
Email: [email protected]
Website: http://cencalbx.com/
Calaveras, Fresno, Kern, Kings, Madera, Mariposa,
Merced, San Joaquin, Stanislaus, Tulare, and
Tuolumne

ORGANIZATION

AREAS OF MEMBERS OR SUBSCRIBERS

BY COUNTY
24 Tulare & Kings Counties Builders Exchange
1223 S. Lovers Lane
Visalia, CA 93292
Phone: 559-732-4568
Email: [email protected]
Website: www.tkcbe.com
Fresno, Kern, Kings, and Tulare
25 Kern County Builders’ Exchange, Inc.
4310 Ardmore Avenue, Ste. 100
Bakersfield, CA 93309
Phone: 661-324-4921
Website: www.kcbex.com
Kern
26 San Luis Obispo County Builders Exchange
153 Cross Street, #130
San Luis Obispo, CA 93401
Phone: 805-543-7330
Email: [email protected]
Website: www.slocbe.com
Kern, Monterey, San Luis Obispo, and Santa Barbara
28 Ventura County Contractors Association
1830 Lockwood Street, No. 110
Oxnard, CA 93036
Phone: 805-981-8088
Email: [email protected]
Website: www.vccainc.com
Santa Barbara and Ventura
29 Southern California Builders Association
732 N. Diamond Bar Blvd. #224
Diamond Bar, CA 91765
Phone: 909-396-1451
Email: [email protected]
Website: www.socalbuilders.org
Imperial, Los Angeles, Orange, Riverside, San
Bernardino, and San Diego
30 Construction Data Company
2001 9th Avenue, 2nd Floor
Vero Beach, FL 32960
Phone: 800-800-652-0008
Email: [email protected]
Website: www.cdcnews.com
Southern California-Imperial, Kern , Los Angeles,
Orange, Riverside, San Bernardino, San Diego, San
Luis Obispo, Santa Barbara, and Ventura
31 BidAmerica
41085 Elm Street
Murrieta, CA 92562
Phone: 951-677-4819
Email: [email protected]
Website: www.BidAmerica.com
California

ORGANIZATION

AREAS OF MEMBERS OR SUBSCRIBERS

BY COUNTY
32 Construction Bid Source Interactive
6265 HWY 9
Felton, CA 95018
Phone: 888-786-9450
Website: www.constructionbidsource.com
California
33 Demandstar – Onvia Supplier Services
509 Olive Way, Suite 400
Seattle, WA 98101
Phone: 800-575-1736
Website: www.demandstar.com or
Website: www.onvia.com
California
34 Challenge News
1276 Lincoln Avenue, Suite 203
San Jose, CA 95125
Phone: 408-998-2534
Email: [email protected]
California
35 Associated General Contractors of America
San Diego Chapter, Inc.
6212 Ferris Square
San Diego, CA 92121
Phone: 858-558-7444
Email: [email protected]
Website: www.agcsd.org
Orange, Riverside, San Bernardino, and San Diego
36 Builders Notebook
P.O. Box 4883
Santa Barbara, CA 93140
Phone: 877-776-5436
Email: [email protected]
Website: www.buildersnotebook.com
Los Angeles, San Luis Obispo, Santa Barbara, and
Ventura
37 Tri-Co Reprographics
513 Laguna Street
Santa Barbara, CA 93101
Phone: 805-966-1701
Email: [email protected]
Website: www.tricoblue.com
Santa Barbara, Ventura, and San Luis Obispo
Accounting Procedures Review Process

1.08 Accounting Procedures Review
A. Pursuant to the provisions of Public Contract Code (PCC) §22042, the Commission has adopted the following procedures for conducting an Accounting Procedures Review, where an interested party presents evidence that work undertaken by a public agency falls within any of the following categories:

1. It was performed by a public agency after rejection of all bids, claiming work can be done less expensively by the public agency.

2. It exceeded the force account limit.

3. It was improperly classified as maintenance.

B. As used in the Accounting Procedures Review, "interested party" shall mean: a licensed contractor eligible to bid on the public project involved in the review; a labor organization whose members would be eligible to perform work on the public project if it were performed under contract; an association of licensed contractors and/or labor organizations; or a taxpayer of the public agency cited in the account review request.

C. Request for Accounting Procedures Review

1. Pursuant to PCC §22043(a)(b), in those circumstances as set forth in PCC §22042(a)(b)(c), a request for Commission review shall be in writing. The request shall be sent via certified or registered postal mail, and received by the Commission and/or State Controller’s Office (SCO) staff. It should be postmarked no later than eight business days from the date on which the public agency rejected all bids (PCC §22042(a)) or from the date on which an interested party formally complains in writing to the public agency (PCC §22042(b)(c)).

2. The address for purposes of requesting Commission review is:

CALIFORNIA UNIFORM CONSTRUCTION COST ACCOUNTING COMMISSION Office of the State Controller
Local Government Programs and Services Division
Local Government Policy Section
P.O. Box 942850
Sacramento, CA 94250

3. Such written notice from an interested party shall include the following information:
(a) The name, address, phone number, and contact person for the interested party. (b) An indication that work undertaken by the public agency falls within one of the following categories:
(i) It was performed by a public agency after rejection of all bids, claiming work can be done less expensively by the public agency.
(ii) It exceeded the force account limits.
(iii) It was improperly classified as maintenance.
(c) The name, address, and phone number of the public agency involved. (d) The project name and location, and/or project identification number. (e) The bid date and rejection date, if applicable.
(f) The low bid dollar amount, if applicable.
(g) The agency estimate, if available.
(h) Other documentation supporting the request. If the requestor is unable to obtain information from the participating agency, the request should note the fact and include an explanation of the circumstances.

4. When the request is transmitted to the Commission for review, the interested party shall mail a copy of the request by first class mail, postage prepaid, to the public agency involved.

D. The Commission shall approve and designate in writing the consultants available to perform the Accounting Procedures Review, if needed. Such consultants shall be prequalified as follows:

1. They shall submit resumes including experience to the Commission for prequalification.

2. Each applicant shall have at least five years’ experience with, and be knowledgeable of, public works construction or accounting under contracts let by public agencies.

3. They shall submit their schedule of fees required to perform such service.

E. Immediately upon receipt of a request for Accounting Procedures Review, SCO staff will forward all documentation to the Chairperson. The Chairperson shall assign the request to a working group consisting of two or more Commissioners, not to constitute a quorum. Each working group must have both private and public representations. Any correspondence received by SCO staff during the review will be immediately forwarded to the Chairperson and the members of the working group.

1. The working group may contact either the interested party or the signatory agency involved for additional information. They may also request a statement of the public agency’s position regarding the claim being set forth. Participating agencies are required to cooperate with any account reviews pursuant to this Act. Agencies failing to cooperate fully, through either unwillingness or inability, may be found to be non-compliant.

2. If the work group deems it necessary, it may use SCO Audit Division staff or a consultant deemed qualified for the purpose of this review. The auditor or consultant will conduct a thorough review of the facts surrounding the claim. This review may include any fieldwork deemed necessary by the auditor or consultant. The auditor or consultant shall interview the public agency involved, and submit as a part of the findings a complete statement of the public agency’s position regarding the review being conducted.

3. The auditor or consultant, if involved, shall prepare written findings and a recommended decision within the timeframes established in PCC §22043.

4. The statutory limit to complete the account review begins on the day that the request is received by SCO. Incomplete review requests may affect the ability of the Commission to render a timely decision.

Pursuant to PCC §22043(c), the commission review shall commence immediately and conclude within the following number of days from the receipt of the request for commission review:
(a) Forty-five days for a review that falls within subdivision (a) of §22042; and (b) Ninety days for a review that falls within subdivision (b) or (c) of §22042.

During the review of a project that falls within PCC §22042(a), the agency shall not proceed with the project until the final decision is received by the Commission.

F. The review will be added as an agenda item to be discussed by the Commission at a public meeting held within the timeframe established in PCC §22043. All documentation and correspondence received related to the review will be included. Any documentation and correspondence received after the agenda has been posted to the SCO website will immediately be forwarded to each Commission member and available for public review at the meeting.

G. The Commission shall review the findings of the work group and, if applicable, the auditor or consultant’s report, and render its final decision within the timeframes established in PCC §22043. Within the timeframes established in PCC §22044, a copy of the decision shall be mailed by first class mail, postage prepaid, by SCO staff to the interested party and the public agency involved. A copy shall also be provided to each Commission member and included for information as part of the subsequent Commission meeting agenda.

H. Decisions on Accounting Procedures Reviews shall be collected and maintained by SCO staff, and shall be available for public inspection during regular working hours. Such decisions may be cited and relied upon by interested parties and public agencies in subsequent reviews.

I. If the Commission makes findings in accordance with PCC §22043, that the work undertaken by a public agency falls within any of the categories described in §22042, on three separate occasions within a 10-year term, the Commission shall notify the public agency of those findings in writing by certified mail. Public agencies that receive notice of findings on three separate occasions within a 10-year term shall not use the bidding procedures provided by this article for five years from the date of the Commission’s findings contained in the third notice within a 10-year term. For the purposes of these review procedures, one investigation resulting in a finding or findings shall equate to one occasion. These review procedures are based on current statutory law.

J. Changes to statutory law shall be reviewed and automatically adopted into these procedures as deemed appropriate.

Uniform Public Construction Cost Accounting Act

1.09 California Public Contract Code
Chapter 2 Bidding on Public Contracts (The following statute is current as of January 1, 2017) Article 1. Legislative Intent and Definitions.

Code Statute
22000
Name of the Act
This chapter shall be known and may be cited as the "Uniform Public Construction Cost Accounting Act."
22001
Legislative Findings
and Declaration
The Legislature finds and declares that there is a statewide need to promote uniformity of the cost accounting standards and bidding procedures on construction work performed or contracted by public entities in the state. This chapter provides for the development of cost accounting standards and an alternative method for the bidding of public works projects by public entities.
22001.5
Notice describing
chapter provisions
to public agencies
On or before January 1, 2009, the State Controller shall send a notice to all public agencies describing the provisions of this chapter and the benefits of using its provisions. This notice shall also be included in any notification issued by the State Controller pursuant to Section 22020.
22002
Definitions
a) "Public agency" for purposes of this chapter, means a city, county, city and county, including chartered cities and chartered counties, any special district, and any other agency of the state for the local performance of governmental or proprietary functions within limited boundaries. "Public agency" also includes a nonprofit transit corporation wholly owned by a public agency and formed to carry out the purposes of the public agency.
b) "Representatives of the construction industry" for purposes of this chapter, means a general contractor, subcontractor, or labor representative with experience in the field of public works construction.
c) "Public project" means any of the following:
1) Construction reconstruction, erection, alteration, renovation, improvement, demolition, and repair work involving any publicly owned, leased, or operated facility.
2) Painting or repainting of any publicly owned, leased, or operated facility. 3) In the case of a publicly owned utility system, “public project” shall include only the construction erection, improvement, or repair of dams, reservoirs, powerplants, and electrical transmission lines of 230,000 volts and higher. d) "Public project" does not include maintenance work. For purposes of this section, "maintenance work" includes all of the following:
1) Routine, recurring, and usual work for the preservation or protection of any publicly owned or publicly operated facility for its intended purposes. 2) Minor repainting.

Code Statute
3) Resurfacing of streets and highways at less than one inch. 4) Landscape maintenance, including mowing, watering, trimming, pruning, planting, replacement of plants, and servicing of irrigation and sprinkler systems.
5) Work performed to keep, operate, and maintain publicly owned water, power, or waste disposal systems, including, but not limited to, dams, reservoirs, powerplants, and electrical transmission lines of 230,000 volts and higher. e) For purposes of this chapter, “facility” means any plant, building, structure, ground facility, utility system, subject to the limitation found in paragraph (3) of subdivision (c), real property, streets and highways, or other public work improvement. 22003
Public Agency
Subject to Uniform
Cost Accounting
Procedures,
Bidding Procedures
A public agency which has, by resolution, elected to become subject to the uniform construction cost accounting procedures set forth in Article 2 (commencing with Section 22010), may utilize the bidding procedures set forth in Article 3 (commencing with Section 22030) when contracting for "maintenance work," as defined in Section 22002, or when contracting for any other work which does not fall within the definition of "public project," as defined in Section 22002.

Article 2. California Uniform Construction Cost Accounting Commission Code Statute
22010
Creation;
Membership;
Appointment
There is hereby created the California Uniform Construction Cost Accounting Commission. The commission is comprised of 14 members.
a) Thirteen of the members shall be appointed by the State Controller as follows:
1) Two members who shall each have at least 10 years of experience with, or providing professional services to, a general contracting firm engaged, during that period, in public works construction in California. 2) Two members who shall each have at least 10 years of experience with, or providing professional services to, a firm or firms engaged, during that period, in subcontracting for public works construction in California. 3) Two members who shall each be a member in good standing of, or have provided professional services to, an organized labor union with at least 10 years of experience in public works construction in California. 4) Seven members who shall each be experienced in, and knowledgeable of, public works construction under contracts let by public agencies; two each representing cities, counties, respectively, and two members representing school districts, and one member representing a special district. At least one of the two county representatives shall be a county auditor or his or her designee.

Code Statute
b) The member of the Contractors' State License Board who is a general engineering contractor as that term is defined in Section 7056 of the Business and Professions Code shall serve as an ex officio voting member.
(Amended by Stats. 2015, Ch. 269, Sec. 24. Effective January 1, 2016.) 22011
Appointment
Recommendations
The Controller, in an effort to select highly qualified commission members, shall solicit from organized representatives of the construction industry and public agencies recommendations for appointments to the commission.
22012
Members;
Accounting
Experience
At least one commission member of the seven representing the construction industry and at least one of the seven representing public agencies shall have previous accounting experience.
22013
Chairperson; Term
The commission members shall select a chairperson from among its membership. The chairperson shall serve as chair for a term of two years from the date of selection. In no event shall two consecutive chairpersons be appointees representing either the construction industry or public agencies.
22014
Members; Term;
Vacancies
a) The members of the commission shall hold office for terms of three years, and until their successors are appointed.
b) Members may be reappointed, by the Controller, for subsequent terms of three years.
c) The Controller may appoint a successor for any commissioner after his or her three-year term expires.
d) The Controller shall, within 120 days, appoint a replacement to fill any vacancy on the commission.
(Amended by Stats. 2015, Ch. 269, Sec. 25. Effective January 1, 2016.) 22015
Staff; Members’
Compensation;
Grants
a) The Controller shall make available for the conduct of the commission's business, such staff and other support as does not conflict with the accomplishment of the other business of the office of the Controller
b) Each member of the commission shall serve without compensation, but shall be reimbursed for travel and other expenses necessarily incurred in the performance of the member's duties. Reimbursement rates shall conform to the Controller’s travel guideline rates.
c) The commission may accept grants from federal, state, or local public agencies, or from private foundations or individuals, in order to assist it in carrying out its duties, functions, and powers under this chapter.
(Amended by Stats. 2015, Ch. 269, Sec. 26. Effective January 1, 2016.) 22016
Meetings
The commission shall meet not less than once each year, at a time and place chosen by its membership.

Code Statute
22017
The Commission’s
Four Principle
Duties
The commission shall do all of the following:
a) After due deliberation and study, recommend for adoption by the Controller, uniform construction cost accounting procedures for implementation by public agencies in the performance of, or in contracting for, construction on public projects. The procedures shall, to the extent deemed feasible and practicable by the commission, incorporate, or be consistent with construction cost accounting procedures and reporting requirements utilized by state and federal agencies on public projects, and be uniformly applicable to all public agencies that elect to utilize the uniform procedures. As part of its deliberations and review, the commission shall take into consideration relevant provisions of the Office of Management and Budget Circular A-76, as periodically revised. b) After due deliberation and study, recommend for adoption by the Controller cost accounting procedures designed especially for implementation by California cities with a population of less than 75,000. The procedures shall incorporate cost accounting and reporting requirements deemed practicable and applicable to all cities under 75,000 population which elect to utilize the uniform procedures. For the purpose of these cost accounting procedures, the following shall apply:
1) Cities with a population of less than 75,000 shall assume an overhead rate equal to 20 percent of the total costs of a public project, including the costs of material, equipment, and labor.
2) Cities with a population of more than 75,000 may either calculate an actual overhead rate or assume an overhead rate equal to 30 percent of the total costs of a public project, including the costs of material, equipment, and labor.
c) Recommend for adoption by the Controller, procedures and standards for the periodic evaluation and adjustment, as necessary, of the monetary limits specified in Section 22032.
d) The commission shall make an annual report to the Legislature with respect to its activities and operations, together with those recommendations as it deems necessary.
(Amended by Stats. 2015, Ch. 269, Sec. 27. Effective January 1, 2016.) 22018
Recommended
Procedure;
Controller’s Review
The Controller shall, upon receipt of the commission’s recommendations, review and evaluate the recommended procedures and either formally adopt or reject the recommended procedures within 90 days of submission by the commission. 22019
Adoption;
Promulgation of
Uniform Procedure
Upon determining that the recommended uniform construction cost accounting procedures will serve the best interest of the state and public agencies, and upon formal adoption by the Controller, the Controller shall promulgate the uniform procedure for all public agencies electing to participate, together with instructions for their adoption and implementation by any public agency.

Code Statute
22020
Five Year
Consideration;
Material Changes;
Adjustments
In accordance with procedures and standards adopted pursuant to Section 22017, every five years the commission shall consider whether there have been material changes in public construction costs and make recommendations to the Controller regarding adjustments in the monetary limits prescribed by Section 22032, but in no case shall the amount, as adjusted, be less than fifteen thousand dollars ($15,000).

The Controller shall notify all participating public agencies of the adjustment prior to the effective date. That notification shall also describe the provisions of this chapter and the benefits of using its provisions.

Article 3. Public Projects; Alternative Procedures
Code Statute
22030
Application of
Article
a) This article applies only to a public agency whose governing board has by resolution elected to become subject to the uniform construction cost accounting procedures set forth in Article 2 (commencing with Section 22010) and which has notified the Controller of that election. In the event of a conflict with any other provision of law relative to bidding procedures, this article shall apply to any public agency which has adopted a resolution and so notified the Controller. b) A county, whether general law or charter, containing a population of less than 500,000 may award individual annual contracts as provided in Section 20128.5. (Amended by Stats. 2015, Ch. 269, Sec 28. Effective January 1, 2016) 22031
Alternative
Procedures
a) Prior to January 1, 2013, this article shall not prohibit a board of supervisors or a county road commissioner from utilizing, as an alternative to the procedures set forth in this article, the procedures set forth in Article 25 (commencing with Section 20390) of Chapter 1.
b) On or after January 1, 2013, this article shall not prohibit a board of supervisors or a county road commissioner from utilizing, as an alternative to the procedures set forth in this article, the procedures set forth in Article 25 (commencing with Section 20390) of Chapter 1 for both of the following:
1) Maintenance and emergency work.
2) New road construction and road reconstruction as long as the total value of the new road construction and the road reconstruction performed under the procedures set forth in subdivision (c) of Section 20395 during a fiscal year does not exceed 30 percent of the total value of all work performed by force account other than maintenance as reported in the Controller’s Streets and Roads Annual Report as of March 1 of each year prior to the fiscal year. c) The value of force account work necessary to facilitate capital projects for the purpose of contracting to the private sector, including design, engineering, inspection, testing, and other force account work necessary to administer private contracts, shall be excluded from the 30-percent limit in subdivision (b).

Code Statute
d) The value of force account work necessary to facilitate projects performed by county employees, including design, engineering, inspection, testing, and other force account work necessary to administer work performed under subdivision (b), shall apply to the 30-percent limit in subdivision (b). e) On or after January 1, 2013, for a county with a population of less than 50,000, this article shall not prohibit a board of supervisors or a county road commissioner from utilizing, as an alternative to the procedures set forth in this article, the procedures set forth in Article 25 (commencing with Section 20390) of Chapter 1. f) The requirements set forth in Section 22038 shall apply to any county subject to this section.
g) Any county board of supervisors or county road commissioner acting pursuant to the authority granted in paragraph (2) of subdivision (b) shall publicly declare its intention to use this authority prior to commencing work. The public declaration may be on a project-by-project basis, via a list of anticipated projects for the fiscal year, or via a list that may be included in the county’s annual budget. (Amended by Stats. 2014, Ch. 345, Sec. 3. Effective January 1, 2015.) 22032
Contracting
Procedures; Dollar
Amount
Limitations
a) Public projects of sixty thousand dollars ($60,000) or less may be performed by the employees of a public agency by force account, by negotiated contract, or by purchase order.
b) Public projects of two hundred thousand dollars ($200,000) or less may be let to contract by informal procedures as set forth in this article. c) Public projects of more than two hundred thousand dollars ($200,000) shall, except as otherwise provided in this article, be let to contract by formal bidding procedure. 76 Op. Atty. Gen. 126,7-14-93 = Job order contracts - General law county or general law city may not enter into a "job order contract" in excess of $50,000 for the performance of public projects involving minor construction, and the renovation, alteration, painting, and repair of existing facilities, except under narrowly defined statutory conditions applicable only to counties.
22033
Separation of Work
orders of Projects;
Evasion of
Provision of Article
It shall be unlawful to split or separate into smaller work orders or projects any project for the purpose of evading the provisions of this article requiring work to be done by contract after competitive bidding.
22034
Informal Bidding
Ordinance
Each public agency that elects to become subject to the uniform construction accounting procedures set forth in Article 2 (commencing with Section 22010) shall enact an informal bidding ordinance to govern the selection of contractors to perform public projects pursuant to subdivision (b) of Section 22032. The ordinance shall include all of the following:
a) Notice to contractors shall be provided in accordance with either paragraph (1) or (2), or both.

Code Statute
1) The public agency shall maintain a list of qualified contractors, identified according to categories of work. Minimum criteria for development and maintenance of the contractors list shall be determined by the commission.

All contractors on the list for the category of work being bid shall be mailed, faxed, or emailed a notice inviting informal bids unless the product or service is proprietary. All mailing of notices to contractors pursuant to this subdivision shall be completed not less than 10 calendar days before bids are due. 2) The public agency may elect to mail, fax, or email a notice inviting informal bids to all construction trade journals specified in Section 22036. b) The notice inviting informal bids shall describe the project in general terms and how to obtain more detailed information about the project, and state the time and place for the submission of bids.
c) The governing body of the public agency may delegate the authority to award informal contracts to the public works director, general manager, purchasing agent, or other appropriate person.
d) If all bids received are in excess of two hundred thousand dollars ($200,000), the governing body of the public agency may, by adoption of a resolution by a fourfifths vote, award the contract, at two hundred twelve thousand, five hundred dollars ($212,500) or less, to the lowest responsible bidder, if it determines the cost estimate of the public agency was reasonable.
(Amended by Stats. 2015, Ch. 269, Sec. 29. Effective January 1, 2016.) 22035
Emergencies
a) In cases of emergency when repair or replacements are necessary, the governing body may proceed at once to replace or repair any public facility without adopting plans, specifications, strain sheets, or working details, or giving notice for bids to let contracts. The work may be done by day labor under the direction of the governing body, by contractor, or by a combination of the two.
b) In case of an emergency, if notice for bids to let contracts will not be given, the public agency shall comply with Chapter 2.5 (commencing with Section 22050). 22035.5
Overcrowded
Justice Facilities;
Court Ordered
Relief; Application
of Section 22034
In counties that are under court order to relieve justice facility overcrowding, the procedures and restrictions specified in Section 20134 shall apply to all contracts issued under this chapter.
22036
Determination of
Construction Trade
Journals to Receive
Notice of Informal
and Formal
The commission shall determine, on a county-by-county basis, the appropriate construction trade journals which shall receive mailed, faxed, or emailed notice of all informal and formal construction contracts being bid for work within the specified county.

Code Statute
Construction
Contracts (Amended by Stats. 2015, Ch. 269, Sec. 30. Effective January 1, 2016.) 22037
Notice Inviting
Formal Bids;
Information;
Publication
Notice inviting formal bids shall state the time and place for the receiving and opening of sealed bids and distinctly describe the project. The notice shall be published at least 14 calendar days before the date of opening the bids in a newspaper of general circulation, printed and published in the jurisdiction of the public agency; or, if there is no newspaper printed and published within the jurisdiction of the public agency, in a newspaper of general circulation which is circulated within the jurisdiction of the public agency, or, if there is no newspaper which is circulated within the jurisdiction of the public agency, publication shall be by posting the notice in at least three places within the jurisdiction of the public agency as have been designated by ordinance or regulation of the public agency as places for the posting of its notices. The notice inviting formal bids shall also be sent electronically, if available, by either facsimile or electronic mail and mailed to all construction trade journals specified in Section 22036. The notice shall be sent at least 15 calendar days before the date of opening the bids. In addition to notice required by this section, the public agency may give such other notice as it deems proper.
22038
Rejection of Bids;
Failure to Receive
Bids; Options
a) In its discretion, the public agency may reject any bids presented, if the agency prior to rejecting all bids and declaring that the project can be more economically performed by employees of the agency, furnishes a written notice to an apparent low bidder. The notice shall inform the bidder of the agency's intention to reject the bid and shall be mailed at least two business days prior to the hearing at which the agency intends to reject the bid. If after the first invitation for bids all bids are rejected, after reevaluating its cost estimates of the project, the public agency shall have the option of either of the following:
1) Abandoning the project or readvertising for bids in the manner described by this article.
2) By passage of a resolution by a four-fifths vote of its governing body declaring that the project can be performed more economically by the employees of the public agency, may have the project done by force account without further complying with this article.
b) If a contract is awarded, it shall be awarded to the lowest responsible bidder. If two or more bids are the same and the lowest, the public agency may accept the one it chooses.
c) If no bids are received through the formal or informal procedure, the project may be performed by the employees of the public agency by force account, or negotiated contract without further complying with this article. (Amended by Stats. 2003, Ch. 296, Sec. 29. Effective January 1, 2004.)

Code Statute
22039
Adoption of Plans,
Specifications, and
Working Detail
The governing body of the participating public agency or its designated representative shall adopt plans, specifications, and working details for all public projects exceeding the amount specified in subdivision (c) of Section 22032. (Amended by Stats. 2015, Ch. 269, Sec. 31. Effective January 1, 2016.) 22040
Plans,
Specifications of
Working Details;
Examination
Any person may examine the plans, specifications, or working details, or all of these, adopted by the public agency for any project.
22041
Exemptions
This article does not apply to the construction of any public building used for facilities of juvenile forestry camps or juvenile homes, ranches, or camps established under Article 15 (commencing with Section 880) of Chapter 2 of Part 1 of Division 3 of the Welfare and Institutions Code, if a major portion of the construction work is to be performed by wards of the juvenile court assigned to those camps, ranches, or homes. 22042
Accounting
Procedures Review
The commission shall review the accounting procedures of any participating public agency where an interested party presents evidence that the work undertaken by the public agency falls within any of the following categories:
a) Is to be performed by a public agency after rejection of all bids, claiming work can be done less expensively by the public agency.
b) Exceeded the force account limits.
c) Has been improperly classified as maintenance.
22042.5
Informal Bidding
Procedures Review
The commission shall review practices of any participating public agency where an interested party presents evidence that the public agency is not in compliance with Section 22034.
(Added by Stats. 2015, Ch. 269, Sec. 32. Effective January 1, 2016.) 22043
Work Done by
Public Agency;
Commission
Review Request
a) In those circumstances set forth in subdivision (a) of Section 22042, a request for commission review shall be in writing, sent by certified or registered mail received by the commission postmarked not later than eight business days from the date the public agency has rejected all bids.
b) In those circumstances set forth in subdivision (b) or (c) of Section 22042, a request for commission review shall be by letter received by the commission not later than eight days from the date an interested party formally complains to the public agency.
c) The commission review shall commence immediately and conclude within the following number of days from the receipt of the request for commission review:
1) Forty-five days for a review that falls within subdivision (a) of Section 22042. 2) Ninety days for a review that falls within subdivision (b) or (c) of Section 22042.

Code Statute
d) During the review of a project that falls within subdivision (a) of Section 22042, the agency shall not proceed on the project until a final decision is received by the commission.
e) A request for commission review pursuant to Section 22042.5 shall be in writing, sent by certified or registered mail, and received by the commission no later than eight days from the day an interested party formally complains to the public agency. The commission review shall commence immediately and conclude within 90 days from the receipt of the request for commission review. (Amended by Stats. 2015, Ch. 269, Sec. 33. Effective January 1, 2016.) 22044
Written Findings;
Failure to Comply
with Chapter;
Action
The commission shall prepare written findings, which shall be presented to the public agency within 30 calendar days of formal commission review. Should the commission find that the provisions of this chapter or of the uniform cost accounting procedures provided for in this chapter were not complied with by the public agency, the following steps shall be implemented by that agency:
a) On those projects set forth in subdivision (a) of section 22042, the public agency has the option of either (1) abandoning the project, or (2) awarding the project to the lowest responsible bidder.
b) On those projects set forth in subdivision (b) or (c) of section 22042, the public agency shall present the commission’s findings to its governing body within 30 calendar days of receipt of written notice of the findings and that governing body shall conduct a public hearing with regard to the commission’s findings within 60 calendar days of receipt of the findings.
c) 1) On findings of noncompliance pursuant to section 22042.5, the public agency shall notify its governing body of the commissioner’s findings within 60 calendar days of receipt of written notice of the findings from the commission. 2) The public agency shall notify the commission in writing, within 90 days of receipt of written notice of the findings, of the public agency’ best efforts to comply.
(Amended by Stats. 2015, Ch. 269, Sec. 34. Effective January 1, 2016.) 22044.5
Compliance;
Removal from Act
If the commission makes a finding, in accordance with section 22043, on three separate occasions within a 10-year period, that the work undertaken by a public agency falls within any of the categories described in section 22042, the commission shall notify the public agency of that finding in writing by certified mail and the public agency shall not use the bidding procedures provided by this article for five years from the date of the commission’s findings.
(Amended by Stats. 2015, Ch. 269, Sec. 34. Effective January 1, 2016.) 22045
Implementation of
Procedures
a) No later than January 1, 1985, the commission shall recommend, for adoption by the Controller, written procedures implementing the accounting procedures review provided for in this article.

Code Statute
Review:

Commission
Recommendations
b) The Controller shall, upon receipt of the commission’s recommendation, review and evaluate the recommended procedures and either formally adopt or reject the recommended procedures within 90 days of submission of the commission.

Chapter 2.5 Emergency Contracting Procedures
Code Statute
22050
Contract Without
Bids; Procedures
a) 1) In the case of an emergency, a public agency, pursuant to a four-fifths vote of its governing body, may repair or replace a public facility, take any directly related and immediate action required by that emergency, and procure the necessary equipment, services, and supplies for those purposes, without giving notice for bids to let contracts.
2) Before a governing body takes any action pursuant to paragraph (1), it shall make a finding, based on substantial evidence set forth in the minutes of its meeting, that the emergency will not permit a delay resulting from a competitive solicitation for bids, and that the action is necessary to respond to the emergency.
b) 1) The governing body, by a four-fifths vote, may delegate, by resolution or ordinance, to the appropriate county administrative officer, city manager, chief engineer, or other nonelected agency officer, the authority to order any action pursuant to paragraph (1) of subdivision (a).
2) If the public agency has no county administrative officer, city manager, chief engineer, or other nonelected agency officer, the governing body, by a fourfifths vote, may delegate to an elected officer the authority to order any action specified in paragraph (1) of subdivision (a).
3) If a person with authority delegated pursuant to paragraph (1) or (2) orders any action specified in paragraph (1) of subdivision (a), that person shall report to the governing body, at its next meeting required pursuant to this section, the reasons justifying why the emergency will not permit a delay resulting from a competitive solicitation for bids and why the action is necessary to respond to the emergency.
c) 1) If the governing body orders any action specified in subdivision (a), the governing body shall review the emergency action at its next regularly scheduled meeting and, except as specified below, at every regularly scheduled meeting thereafter until the action is terminated, to determine, by a four-fifths vote, that there is a need to continue the action. If the governing body meets weekly, it may review the emergency action in accordance with this paragraph every 14 days.
2) If a person with authority delegated pursuant to subdivision (b) orders any action specified in paragraph (1) of subdivision (a), the governing body shall initially review the emergency action not later than seven days after the action, or at its next regularly scheduled meeting if that meeting will occur not later than 14 days after the action, and at least at every regularly scheduled meeting

Code Statute
thereafter until the action is terminated, to determine, by a four-fifths vote, that there is a need to continue the action, unless a person with authority delegated pursuant to subdivision (b) has terminated that action prior to the governing body reviewing the emergency action and making a determination pursuant to this subdivision. If the governing body meets weekly, it may, after the initial review, review the emergency action in accordance with this paragraph every 14 days.
3) When the governing body reviews the emergency action pursuant to paragraph (1) or (2), it shall terminate the action at the earliest possible date that conditions warrant so that the remainder of the emergency action may be completed by giving notice for bids to let contracts.
d) As used in this section, “public agency” has the same meaning as defined in Section 22002.
e) A three-member governing body may take actions pursuant to subdivision (a), (b), or (c) by a two-thirds vote.
f) This section applies only to emergency action taken pursuant to Sections 20133, 20134, 20168, 20193, 20205.1, 20213, 20223, 20233, 20253, 20273, 20283, 20293, 20303, 20313, 20331, 20567, 20586, 20604, 20635, 20645, 20685, 20736, 20751.1, 20806, 20812, 20914, 20918, 20926, 20931, 20941, 20961, 20991, 21020.2, 21024, 21031, 21043, 21061, 21072, 21081, 21091, 21101, 21111, 21121, 21131, 21141, 21151, 21161, 21171, 21181, 21191, 21196, 21203, 21212, 21221, 21231, 21241, 21251, 21261, 21271, 21290, 21311, 21321, 21331, 21341, 21351, 21361, 21371, 21381, 21391, 21401, 21411, 21421, 21431, 21441, 21451, 21461, 21472, 21482, 21491, 21501, 21511, 21521, 21531, 21541, 21552, 21567, 21572, 21581, 21591, 21601, 21618, 21624, 21631, 21641, and 22035.

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CHAPTER 2 THE UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING ACT Table of Contents
The Uniform Public Construction Cost Accounting Act………………………………..………………………………………………….38

2.01 The Uniform Public Construction Cost Accounting Act...................................................................... 38

2.02 Public Agency ..................................................................................................................................... 38

2.03 Public Project...................................................................................................................................... 38

2.04 Exemptions......................................................................................................................................... 38

2.05 Bid Limitations.................................................................................................................................... 39

2.06 Award of Bid....................................................................................................................................... 39 California Uniform Construction Cost Accounting Commission…………………….………………………………..……………….40

2.07 California Uniform Construction Cost Accounting Commission ........................................................ 40

2.08 Implementation.................................................................................................................................. 40

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CHAPTER 2 THE UNIFORM PUBLIC CONSTRUCTION COST ACCOUNTING ACT Uniform Public Construction Cost Accounting Act

2.01 The Uniform Public Construction Cost Accounting Act As specified in the State of California Public Contract Code, all governmental jurisdictions are limited to the dollar amount of public project work that can be performed using internal resources. The jurisdictions are further required to follow various bidding procedures in undertaking construction work performed or contracted in the jurisdiction. The passage of Chapter 1054, Statues of 1983, Uniform Public Construction Cost Accounting Act (Act), and subsequent amendments provides for alternative bidding procedures by public agencies in undertaking public project work, provided they subscribe to uniform construction cost accounting policies and procedures developed in accordance with the law.

The purpose of this document is to give public agencies those construction cost accounting policies and procedures required in accordance with this above-mentioned legislation. To assist in understanding these policies and procedures, we have provided examples throughout the manual. These examples are for illustrative purposes only and, although they may be used, should not be considered required formats for public agencies operating under this program.

2.02 Public Agency
Public Contract Code section 22002(a) provides the definition of a public agency for the purposes of the Act.

Public agencies are cities, counties, a city and county, chartered cities and chartered counties, any special district and any other agency of the state responsible for the local performance of governmental or proprietary functions within limited boundaries. Public agency includes a nonprofit transit corporation wholly owned by a public agency and formed to carry out the purposes of the public agency.

2.03 Public Project
As defined in Public Contract Code section 22002(c), all public projects performed by public agencies may include:
 Construction, reconstruction, erection, alteration, renovation, improvement, demolition and repair work involving any publicly owned, leased or operated facility.  Painting or repainting of any publicly owned, leased or operated facility.  In the case of publicly owned utility system, construction, erection, improvement or repair of dams, reservoirs, power plants and electrical transmission lines of 230,000 volts and higher.

2.04 Exemptions
Construction of any public building used for facilities of juvenile forestry camps or juvenile homes, ranches, or camps established under Article 15 (commencing with section 880) of Chapter 2 of Part 1 of Division 2 of the Welfare and Institutions Code, if a major portion of the construction work is to be performed by wards of the juvenile court assigned to those camps, ranches or homes, is exempt from the provisions of the Act.

In addition, in cases of great emergency, as determined by the governing body of the public agency, including, but not limited to, states of emergency defined in Government Code section 8558. When repair or replacements are necessary to permit the continued conduct of the operation or services of a public agency or to avoid danger to life or property. The governing body by majority vote, may proceed at once to replace or repair any public facility without adopting plans, specifications, strain sheets, or working details, or giving notice for bids to let contracts. The work may be done by day labor under the direction of the governing body, by

contract, or by a combination of the two. The governing body, by majority vote, may delegate to the appropriate county administrative officer or city manager the power to declare a public emergency subject to confirmation by the governing body, by a four-fifths vote, at its next meeting.

2.05 Bid Limitations
For those agencies whose governing board has by resolution elected to become subject to the uniform construction cost accounting policies and procedures and which have notified the State Controller of that election, the following bid limitations will be in effect pursuant to Public Contract Code section 22032 and 22034(d):
 Public projects of $60,000 or less may be performed by the employees of a public agency by force account (for definition see page 39 section 2.2), by negotiated contract, or by purchase order.  Public projects of $200,000 or less may be let to contract by informal procedures as set forth in this legislation.
 Public projects of more than $200,000 shall, except as otherwise provided in this legislation, be let to contract by formal bidding procedures.
 If all bids received are in excess of $200,000, the governing body of the public agency may by adoption of a resolution by a four-fifths vote, award the contract, at $212,500 or less, to the lowest responsible bidder, if it determines the cost estimate of the public agency was reasonable.

2.06 Award of Bid
Public Contract Code section 22038 allows the public agency in its discretion to reject any bids presented. If the agency prior to rejecting all bids and declaring that the project can be more economically performed by employees of the agency provides a written notice to an apparent low bidder that:
 Informs the lowest responsible bidder of the agency’s intention to reject the bid.  Is mailed to at least two business days prior to the hearing at which the agency intends to reject the bid.

If after opening bids all bids are rejected, the public agency shall have the option, after reevaluating its cost estimates of the project, of one of the following:
 The public agency may abandon the project or re-advertise for bids in the manner described by this legislation; or
 By passage of a resolution by a four-fifths majority of its governing body declaring that its employees can perform the project more economically, the public agency may have the project done by force account without further complying with this legislation.

If a contract is awarded, it shall be awarded to the lowest bidder. If two or more bids are the same as the lowest, the public agency may accept the one it chooses.

If no bids are received, the project may be performed by employees of the public agency by force account or by informal bidding procedures set forth in section 22034 of the Public Contract Code.