Agenda packet — Orange City Council, April 12, 2022 (part 5 of 7)

City of Orange Draft Citizen Participation Plan
Updated February 2022

CITY OF ORANGE

CITIZEN PARTICIPATION PLAN

CDBG AND HOME PROGRAM FUNDS

I. PURPOSE

The United States Department of Housing and Urban Development (HUD) requires jurisdictions that receive funding under certain federal entitle ment programs to adopt and comply with a Citizen Participation Plan ( CPP). The CPP sets forth the jurisdiction’s policies and procedures for citizen participation to ensure full compliance with federal regulations under Title 24 CFR Part 91. The City
currently receives annual entitlement grants for the Community Development Block Grant (CDBG) Program and HOME Investment Partnerships Program through HUD. This CPP primarily addresses the citizen participation requirements for the CDBG and HOME Programs. If the City receives federal entitlement grants from other funding sources in the future, the guidelines set forth in this CPP will be followed unless separate citizen participation requirements are issued by HUD.

The CPP provides a strategy to ensure the particip ation of citizens and other interested parties in the development of the Five-Year Consolidated Plan (CP), the Annual Action Plan (AAP) and the Consolidated Annual Performance and Evaluation Report (CAPER) . The CP, which is prepared every five yea rs, identifies the City’s overall housing and community development needs and market conditions, establishes funding priorities, outlines a strategy to address these priorities, and provides the framework for the use of CDBG, HOME and other federal entitlement grant funds. The AAP is prepared annually and outlines eligible programs and projects that are to be funded with the annual allocation of federal grant funds received by the City to address the priorities of the CP. Last, the CAPER is prepared annua lly following the end of the program year to report on annual accomplishments.

The City’s citizen participation process provides nonprofit agencies, City departments, the community, and other interested parties with the opportunity to work in partnership with the City to develop the CP, the AAP, any substantial amendments to the CP or the APP , and the CAPER . This process includes identifying needs and determining recommendations for the allocation of HUD funds and review and approval of performance evaluation reports.

In accordance with the regulations relating to citizen participation, the City will encourage all residents to participate in the development of the C P including Low- and Moderate -Income persons, and residents of predominantly Low - and Moder ate-Income neighborhoods. The City will also take appropriate actions to encourage the participation of minorities, non- English speaking persons, and persons with disabilities by extending accommodations for participation in the CPP process.

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City of Orange Draft Citizen Participation Plan
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II. CITIZEN PARTICIPATION STRATEGY

A. PROGRAM PLANNING PROCESS

The City of Orange recognizes that CDBG and HOME funds are to be used primarily to benefit Low - and Moderate -Income persons and neighborhoods . The following policy defines the City’s citizen participation strategy in accordance with federal regulations.

1. Citizen Involvement

In order to ensure that Orange residents and other interested persons/organizations have the opportunity to participate in the CP, AAP and CAPER process, public meetings and publi c hearings will be held to obtain community input, consider proposals, and provide technical guidance. The public meetings and hearings will address housing and community development needs including priority non-housing community development needs, development of propose d activities, and r eview of program performance. The meetings and public hearings will be publicized through the following methods:

 Display ads will be published in a newspaper of general circulation within the jurisdiction of the City of Orange at least 10 days before the meeting and hearing dates.

 Notices of the meetings and public hearings will be posted at the public counters in the City Clerk's Office, Community Development Department, City of Orange Main Public Library, the public notice kiosk at Ci ty Hall, and the City of Orange Community Development Department website.

The following entities will participate in the process in the following manner.

Community Development Block Grant Program Committee:

The Community Development Bloc k Grant Program Committee (CDBG Committee) will be comprised of up to five members from the community and will act as an advisory body to the City Council concerning planning, recommending, and implementing CDBG and HOME Program funding requests and allocations. This process will include the following tasks:

 Disseminating pertinent information during the CDBG application process, and other HUD application processes as applicable;

 Receiving presentations from nonprofit agencies and City Departments;

 Evaluating and rating applications for CDBG and other federal grant funding;

 Collecting citizen input concerning neighborhoods and community needs;

 Reviewing and providing feedback on draft funding recommendations for proposed projects for City Council's review and final approval; and

 Reviewing project/program progress and annual performance 670

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City of Orange Draft Citizen Participation Plan
Updated February 2022

Community Development Department:

The Community Development Department will be the lead agency in the coordination of the CPP, CP, AAP and CAPER development and reporting process and w ill coordin ate all required activities and amendments. For the CP process, the Community Development Department will conduct a needs assessment survey every five years to identify community development needs. The survey will be sen t to various stakeholders including nonprofit agencie s, City Departments, State and local health agencies, and the Orange County Housing Authority and will notify them of the public hearings before the CDBG Committee and City Council. The Community Developm ent Department will send written notice to various City Departments and nonprofit agencies each year notifying them of the Notice of Funding Availability process for CDBG program, and that applications are being accepted.

Citizen Participation Process:

The City of Orange will implemen t the following strategy to solicit meaningful community input during the preparation of the CP, AAP or CAPER. All public meetings and hearings will be conducted at City Hall located at 300 East Chapman Avenue, or at ke y public facilities which are easily accessible to the general public including persons with disabilities. During public health emergencies, all public meetings and hearings will be conducted virtually or in-person and public comments will be received via emails, voice mails, e-comment features, or in-person.

Consolidated Plan Process:

At a minimum, this plan will ensure that all HUD requirements are met as follows:

 The City will hold at least two public hearings during the CP process to obtain citizens’ views and to respond to proposals a nd questions. The first public hearing will be held during the development of the CP and will be held before the CDBG Committee; the second public hearing will be held before the City Council.

 Notices of the meeti ngs and public hearings will be posted at the public counters in the City Clerk's Office, Community Services Department, Community Development Department, City of Orange Main Public Librar y, the public notice kiosk at City Hall, and the City of Community Development Department website.

 There will be a 30 -day review period for citizen s to review and comment on the CP prior to approving the CP by City Council and submitting the CP to HUD.

 Public comments will be given consideration. The plan will include a summary of comments received and, if applicable, reasons any comments/suggestions were not incorporated.

Annual Action Plan Process:

At a minimum, this plan will ensure that all HUD requirements are met as follows:

 During the AAP process, at least one public meeting and two public hearings will be held. The first public hearing will be held by the CDBG Committee to receive application presentations 671

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City of Orange Draft Citizen Participation Plan
Updated February 2022

from City Departments and nonprofit agencies for CDBG and federal funding to obtain citizens’ views.

 The CDBG Committee will hold one publi c meeting during the developm ent of the plan to review, discuss and deliberate on the formulation of funding recommendations for the City Council.

 The City Council will hold one public hearing to consider the funding re commendations and approve the AAP.

 The proposed AAP will be published. At a minimum, the City will publish a summary of the proposed plan in a newspaper of general circulation.

 Notices of the meetings and public hearings will be post ed at the public co unters in the City Clerk's Office, Community Development Department, City of Orange Main Public Library, the public notice kiosk at City Hall , and the City of Orange Community Development Department website.

 There will be a 30 -day period for citizen review and comment prior to submitting t he AAP to the City Council for approval and submitting to HUD.

 Public comments will be given consideration. The plan will include a summary of comments received and, if applicable, reasons any comments/suggestions were not incorporated.

Consolidated Annual Performance and Evaluation Report (CAPER) Process:

At a minimum, this plan will ensure that all HUD requirements are met as follows:

 The proposed CAPER will be published in a newspaper of general circulation within the jurisdiction of the City of Orange.

 There will be a 15 -day period f or citizen review and comment prior to submitting the CAPER to HUD.

 Public comments will be given consideration. The plan will i nclude a summary of comments received and, if applicable, reasons any comments/suggestions were not incorporated.

2. Public Health Emergency, Natural Disaster, or Other Emergency

During a public health emergency, natural disaster, or other emergency, t he City will follow an expedited planning process to address the acute needs of the Low- and Moderate-Income residents in a timely manner. The expedited process includes a five-day public review process and one City Council meeting (virtual or in -person) to review and approve the reprogramming of funds and substa ntial amendments to the CP or the AAP . Public comments will be received by email or voice mail during the five-day public review process and at the City Council hearing by using the e -comment feature to submit comments or through appearing at City Hall and providing in-person comments

B. ACCESS TO RECORDS
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City of Orange Draft Citizen Participation Plan
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The City will ensure timely and reasonable access to information and records related to the development of the CP, and the use of monies for pr ograms funded by CDBG and HOME funds for the past five years. Information to be made available will include budget and progra m performance information, meeting minutes, and comments received by the City during the development of the CP.

Certain records will remain confidential to protect the privacy rights of affected households.

Requests for information and records must be ma de to the City Clerk Department in writing by a Public Records Act request. Staff will respond to such requests within 10 days.

C. TECHNICAL ASSISTANCE

Upon request, st aff will p rovide technical assistance to develop funding requests for CDBG -eligible activities. The following technical assistance will be provided:

 The annual project proposal submission and review cycle will include the distribution of information, instructions, forms and resources to interested citizens or representative groups so that they may have reasonable access to the funding consideration process.

 Self-explanatory project proposal forms and instruc tions will be provided to all persons who request them wh ether by telephone , letter, or email . The City's application for funds is designed to be easily understood, while still covering all key items necessary to determine the merits of the request. Cens us and Block Group data and m aps depicting the a reas of t he City will be furnished upon request.

 City staff will answer questions rece ived from citizens or representative groups asking for assistance with writing or submit ting eligible project proposals . Such assistance will not necessarily result in the provision of funds to said groups.

 Meetings will be conducted with groups or individuals as requested, to assist in identifying specific needs and to provide guidance in preparing project proposal applications.

 Completed project proposal forms from citizens or local nonprofit agencies will be assembled and a list of these proposals will be made available for public review.

 A project eligibility analysis process will be conducted at an early stage to d etermine the eligibility of each project. In c ases where only minor adjustments are needed to make proposals eligible or otherwise practical, City staff will allow the proponents to make necessary changes to the proposals within a reasonable time period.

D. COMMENTS AND COMPLAINTS

1. Comments

Citizens or adjacent localities, as well as agencies providing services to the community, wi ll be encouraged to state or submit their comments on the development of the CP or the AAP , suggest amendments to the C P or the AAP, or the CAPER . Written and verbal comments received at public hearings or during the public review period will be consider ed, summarized, and included with the 673

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City of Orange Draft Citizen Participation Plan
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City’s response in the final CP , AAP and CAPER. Comments and responses will also be included in amendments to the C P, AAP and CAPER. Wri tten comments can be emailed to the Community Development Department via [email protected] or addressed to: Administrative Analyst, City of Orange, Community Development Department, 300 East Chapman Avenue, Orange, CA 92866

A written response will be made to all written comments within 10 working days after receiving comments, acknowledging the letter and identifying a plan of action, if necessary. Ever y effort will be made to send a complete resp onse within 10 working days to those who submit written proposals or comments.

Copies of the complete final CP, AAP, CAPER, and any amendments will be available to interested parties in the Community Development Department. The City will provide a summary of the CP, AAP or CAPER upon request.

2. Complaints

Complaints regarding the CP planning process, AAP planning process, CAPER or proposed amendments must be made within 30 days from the date the document is published for comment. A written response w ill be mad e to all written complaints within five working days, acknowledging the letter and identifying a plan of action, if necessary. Staff will provide complete written responses to citizen complaints within 10 working days from the date of their complaint when practicable.

The City will accept written complaints provided that they:

 Include the name, address, and telephone number of the complainant and the date of the complaint.

 Describe the objection and provide supporting facts and data.

E. BILINGUAL OPPORTUNITIES

Wherever a significant number of residents speak and read a primary l anguage other than English, translation services at all public hearings will be provided in such language if translation services are requested in advance.

F. AMENDMENTS TO THE ACTION PLAN OR THE CONSOLIDATED PLAN

The City may transfer a portion of the allocations among approved, related activities (e.g., street rehabilitation projects) when necessary to offset budget s hortfalls. CDBG -funded Public Facilities activities that require change orders to increase or reallocate their respective budgets will be subject to City Manager approval for changes involving $30,000 or less, or City Council approval for changes involving more than $30,000.

Pursuant to Title 24 CFR Part 92, t he City will perform a “substantial amendment” of its approved AAP or CP whenever one of the following occurs:

 A change in goals and policies of the AAP or CP

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City of Orange Draft Citizen Participation Plan
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 Allocation of CDBG and HOME funds, i ncluding program income , to a new activity not previously described in the AAP or CP

 Substantial change in the purpose, scope, location, or beneficiaries of an existing activity

 Reallocation of more than 20 percent of CDBG or HOME entitlement funds for the program year

The process for a “substantial amendment” consists of the following during non-emergency scenarios.

1. Publishing a 10- day public notice of the date, time, and place of the public hearing in a newspaper of general circulation within the jur isdiction of the City of Orange as well as the City’s social media platforms.

2. Holding one public hearing before the City Council.

3. Noticing of the public hearing will be posted at the public counters in the City Clerk's Office, Community Development Department, City of Orange Main Public Library, the public not ice kiosk at City Hall, and the City of Orange Community Development website.

In case of public health emergency, natural disasters, or other emergencies, the above process follows an “expedited process” outlined under Section A.2.

G. APPEALS

Appeals co ncerning the Plans or decisions, statements, or recommendations of the staff should be made to the following parties in the order listed: Administrative Analyst, Community Development Department Director, City Manager, CDBG Program Committee, City Council, and finally, the Los Angeles Area HUD office.

H. ANTI-DISPLACEMENT/RELOCATION

In the event that any residential displacement and relocation must take place in order to carry o ut a program activity, the City of Orange ensures that it wil l collaborate with the applicant/developer to prepare and approve an Anti -displacement and Relocation Plan in connection with that project as required by federal regulations. In the event that any acquisition and relocation is required to carry out a program act ivity, the City of Orange will also comply with f ederal acquisition and relocation requirements pursuant to Uniform Relocation Assistance Policies Act of 1970 under Title 49 CFR Part

24. I. ASSURANCES

The Citizen Participation Plan outlines the n ecessary processes to engage the public when preparing or amending the CP, AAP or CAPER. Prior to City Council approval, citizens will be given a reasonable opportunity to comment on the CP, AAP or CAPER. The CP, AAP or CAPER will be made available to the public and reason able efforts will be made to make the se documents available in a format accessible to persons with disabilities, or in another language upon their request.

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City of Orange Draft Citizen Participation Plan
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The City of Orange as sures that the most diligent efforts will be made to comply w ith the process and procedures outlined in this Citizen Participation Plan.

676
From: Diaz, Cristan A
To: [email protected]
Subject: FY 2021 Revised CDBG Amounts
Date: Tuesday, May 18, 2021 3:32:38 PM
This is to inform you that CDBG allocation for FY 2021 has been revised. The allocation has been increased by approximately 1.5%. Please open this link to view your new CDBG amount:
https://www.hud.gov/program_offices/comm_planning/budget/fy21

We realize that the timing of revision may be problematic for many jurisdictions. We anticipate that for most jurisdictions, this nominal change will not trigger a substantial amendment; however, the SF 424 will have to reflect the revised amount and the additional money will have to reflected in IDIS.

Our Principal Deputy Assistant Secretary, James Arthur Jemison II, has provided a blanket waiver that has reduced the citizen participation public comment period from 30 days to 3 days. This waiver is in effect through August 16, 2021 and is limited to facilitating preparation of the grantee’s FY 2021 Consolidated Plan or Annual Action Plan and FY 2021 Plan substantial amendments.

Please note that you will receive an email this week transmitting the new CDBG Allocation letters, dated May 13, 2021 and copy of the waiver notice. Should you have any questions or concerns, please contact the CPD Representative assigned to your community. We apologize for the inconvenience this change has created and look forward to working with you to rectify this situation.

Questions? Please contact your CPD representative.

Los Angeles Community Planning and Development (CPD) Community Development Block Grant (CDBG) and Home Investment Partnerships (HOME) Program Mailing List is a newsletter from the HUD Los Angeles Area CPD Field Office featuring news and program information affecting housing and community development programs in the Southern California area.

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Some industry folks have asked, "How do I sign up my entire staff for this Mailing List?" It is easy. Just list your staff email addresses like this:
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HUD COVID-19 Resources and Fact Sheets

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680
Agenda Item
City Council
Item #: 3.36. 4/12/2022 File #: 22-0216
TO: Honorable Mayor and Members of the City Council
FROM: Rob Houston, City Manager

1. SUBJECT
Letter of Support for Senate Bill 1418 Regional Public Safety Collaborative.

2. SUMMARY
Senate Bill 1418 would provide for ongoing funding of regional programs to address homelessness, youth violence, and post-incarceration re-entry through the North Orange County Public Safety Collaborative.

3. RECOMMENDED ACTION
Authorize the Mayor to sign the letter of support for Senate Bill 1418.

4. FISCAL IMPACT
None.

5. STRATEGIC PLAN GOALS
Goal 1: Provide for a safe community
e: Develop and implement effective community outreach services and programs to promote public safety.

6. DISCUSSION AND BACKGROUND
State Senator Josh Newman is sponsoring Senate Bill 1418 to ensure ongoing funding for the North Orange County Public Safety Collaborative (Collaborative) and establish a similar collaborative and funding for the Central Coast. The Collaborative coordinates the efforts of 11 cities, including the City of Orange, to regionally address the issues of homelessness, youth violence, and post-incarceration re-entry. Since its inception in 2017, the Collaborative has:
· Conducted the county’sfirst Homeless Census to create a by-name registry of unsheltered individuals.
· Funded over 48 programs for youth including counseling, tutoring, leadership development, and mentoring programs.
· Provided housing and supportive services for formerly incarcerated university students. · Assisted with the development of the Outreach Grid mobile data management and referral tool to instantly identify available shelter beds and other services.

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Item #: 3.36. 4/12/2022 File #: 22-0216
· Regionalized street outreach and engagement services.

To date, the Collaborative has provided $118,181 directly to the City of Orange. This funding has been programmed for additional park security, trash/abandoned property cleanup, and funding for police activities to address homelessness.

7. ATTACHMENT
· City of Orange Senate Bill 1418 Support Letter
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Agenda Item
City Council
Item #: 3.36. 4/12/2022 File #: 22-0216
TO: Honorable Mayor and Members of the City Council
FROM: Rob Houston, City Manager

1. SUBJECT
Letter of Support for Senate Bill 1418 Regional Public Safety Collaborative.

3. RECOMMENDED ACTION
Authorize the Mayor to sign the letter of support for Senate Bill 1418.

4. FISCAL IMPACT
None.

5. STRATEGIC PLAN GOALS
Goal 1: Provide for a safe community
e: Develop and implement effective community outreach services and programs to promote public safety.

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Item #: 3.36. 4/12/2022 File #: 22-0216
· Regionalized street outreach and engagement services.

7. ATTACHMENT
· City of Orange Senate Bill 1418 Support Letter
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April 12, 2022
The Honorable Josh Newman
Senate District 29
1021 O Street, Room 6520
Sacramento, CA 95814
Re: SB 1418 (Newman) Regional Public Safety Collaborative Dear Senator Newman:

The City of Orange is writing to express our support of SB 1418, which will codify and fund two parallel ongoing collaborative programs on an ongoing basis: one in North Orange County and one in the Central Coast, that takes a deliberate collaborative approach to expand and refine programs that address youth violence, promote re-entry following incarceration, and develop better and more effective strategies and plans toward solving homelessness on a regional level.

On their own, cities have had, at best, limited success addressing homelessness, youth violence, and the challenges associated with post-incarceration re-entry. On the one hand, these endemic problems tend to defy municipal boundaries, while on the other, their inherently local nature tends to defeat top-down solutions devised and implemented at the state, or even county, levels.

Leveraging the State’s investments, the North Orange County Collaborative (Collaborative) has shown significant promise in aligning and coordinating the efforts of ten local law enforcement across their shared geography, while simultaneously enlisting and funding more than 40 local community-based organizations with experience and expertise in treating the underlying causes of these complex challenges. It was originally established through the 2017-18 state budget act with an appropriation of $20 million across its first four years. The Collaborative, which initially included six cities, was subsequently expanded to include eleven cities in Northern Orange County, after receiving an additional $7.8 million allocation in last year’s budget to fund its operation through the end of the current fiscal year.

The City of Orange is proud to be a member of the Collaborative and has worked tirelessly with our partners and neighbors to address youth violence, homelessness, and re-entry programs following incarceration. Community-based organizations and law enforcement have stopped working in silos and instead are working in coordination to help individuals in the region. The proven success and evidence based results of the Collaborative SB 1418 will codify as an ongoing program the innovative existing public safety collaborative model developed in Northern Orange County while also replicating and funding a second, analogous collaborative model in the Central Coast region. 685
For all of the above reasons, the City of Orange supports SB 1418.

Sincerely,
Mark A. Murphy
Mayor, City of Orange
686
Agenda Item
City Council
Item #: 3.37. 4/12/2022 File #: 22-0180
TO: Honorable Mayor and Members of the City Council
THRU: Rob Houston, City Manager
FROM: Christopher Cash, Public Works Director

1. SUBJECT
Designation of April 29, 2022, as Arbor Day. Resolution No. 11383.

2. SUMMARY
Adoption of Resolution No. 11383 will designate April 29, 2022 as Arbor Day in the City of Orange.

3. RECOMMENDED ACTION
Adopt Resolution No. 11383. A Resolution of the City Council of the City of Orange designating April 29, 2022, as Arbor Day.

4. FISCAL IMPACT
None

5. STRATEGIC PLAN GOALS
Goal 3: Enhance and promote quality of life in the community a: Renovate, maintain, develop, and/or expand public use places and spaces.

Goal 3: Enhance and promote quality of life in the community b: Deliver high quality and safe recreational, social, environmental, educational and cultural services.

6. DISCUSSION AND BACKGROUND
The City of Orange has been performing Arbor Day Events for over 30 years. Our City has been named a Tree City USA by the Arbor Day Foundation for 33 consecutive years. An annual observance of Arbor Day is a requirement for maintaining the City of Orange as a Tree City USA. The Arbor Day plantings allow us to beautify neighborhoods with the involvement of the community by planting hundreds of trees. Arbor Day is a fantastic opportunity to involve the community in the appreciation of trees. The interaction with community members and trees results in a connection with nature and a caring for important green infrastructure. This connection oftentimes spreads to other community members following an event. The direct involvement with this event not only is an opportunity to bring the community together, but it instills a sense of ownership and care for trees.

This is especially important with the involvement of the younger volunteers who often have yet to develop an appreciation for trees prior to such an event.

The observation of Arbor Day and community planting event will be on April 30, 2022. Volunteers from the community will be planting 11 15-gallon ‘KeithDavey’Pistache trees in the parkways at the City of Orange Printed on 4/7/2022Page 1 of 2
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Item #: 3.37. 4/12/2022 File #: 22-0180
from the community will be planting 11 15-gallon ‘KeithDavey’Pistache trees in the parkways at the 900 Block of E Heim Ave. The trees are being donated for the event by West Coast Arborists.

Participation in an Arbor Day event is required as part of the annual certification for Tree City USA.

7. ATTACHMENTS
· Resolution No. 11383
City of Orange Printed on 4/7/2022Page 2 of 2
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688
Agenda Item
City Council
Item #: 3.37. 4/12/2022 File #: 22-0180
TO: Honorable Mayor and Members of the City Council
THRU: Rob Houston, City Manager
FROM: Christopher Cash, Public Works Director

1. SUBJECT
Designation of April 29, 2022, as Arbor Day. Resolution No. 11383.

2. SUMMARY
Adoption of Resolution No. 11383 will designate April 29, 2022 as Arbor Day in the City of Orange.

3. RECOMMENDED ACTION
Adopt Resolution No. 11383. A Resolution of the City Council of the City of Orange designating April 29, 2022, as Arbor Day.

4. FISCAL IMPACT
None

5. STRATEGIC PLAN GOALS
Goal 3: Enhance and promote quality of life in the community a: Renovate, maintain, develop, and/or expand public use places and spaces.

Goal 3: Enhance and promote quality of life in the community b: Deliver high quality and safe recreational, social, environmental, educational and cultural services.

This is especially important with the involvement of the younger volunteers who often have yet to develop an appreciation for trees prior to such an event.

The observation of Arbor Day and community planting event will be on April 30, 2022. Volunteers from the community will be planting 11 15-gallon ‘KeithDavey’Pistache trees in the parkways at the City of Orange Printed on 4/7/2022Page 1 of 2
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689
Item #: 3.37. 4/12/2022 File #: 22-0180
from the community will be planting 11 15-gallon ‘KeithDavey’Pistache trees in the parkways at the 900 Block of E Heim Ave. The trees are being donated for the event by West Coast Arborists.

Participation in an Arbor Day event is required as part of the annual certification for Tree City USA.

7. ATTACHMENTS
· Resolution No. 11383
City of Orange Printed on 4/7/2022Page 2 of 2
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690
1 RESOLUTION NO. 11383

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF ORANGE DESIGNATING
APRIL 29, 2022 AS ARBOR DAY

WHEREAS, in 1872, J. Sterling Morton proposed to the Nebraska Board of Agriculture that a special day be set aside for the planting of trees and this special day, called “Arbor Day ,” was first observed with the planting of more than one million trees in Nebraska. This day is now observed throughout the Nation and the World; and

WHEREAS, participating in Arbor Day events promotes the development of civic pride, a sense of community, highlights the importance of planting and caring for trees; and

WHEREAS, trees are living green infrastructure, which produce oxygen, clean the air of pollutants, sequester carbon, help manage storm water, and provide essential habitat for wildlife; and

WHEREAS, trees in our City increase property values, and enhance economic vitality of business areas.

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

1. That the foregoing recitals are incorporated in and made part of this Resolution by reference;

2. That the City Council does hereby designate Friday, April 29, 2022 as Arbor Day within the City of Orange.

ADOPTED this ____ day of ____________________, 2022

Mark A. Murphy, Mayor, City of Orange

ATTEST:

Pamela Coleman, City Clerk, City of Orange

691
2 STATE OF CALIFORNIA )

COUNTY OF ORANGE )

CITY OF ORANGE )

I, PAMELA COLEMAN, City Clerk of the City of Orange, California, do hereby certify that the foregoing Resolution was duly and regularly adopted by the City Council of the City of Orange at a regular meeting thereof held on the day of , 2022 by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

Pamela Coleman, City Clerk, City of Orange

692
Agenda Item
City Council
Item #: 3.38. 4/12/2022 File #: 22-0186
TO: Honorable Mayor and Members of the City Council
THRU: Rob Houston, City Manager
FROM: Richard A. Rohm, City Treasurer
Will Kolbow, Assistant City Manager/Administrative Services Director

1. SUBJECT
Annual review and approval of the Statement of Investment Policy for Fiscal Year 2022-23.

Resolution No. 11384.

2. SUMMARY
The Investment Advisory Committee met this past February with the Chandler Investment Services (Chandler), the City’sinvestment management firm. During that meeting, Chandler explained that they conducted an extensive review of the City’scurrent Statement of Investment Policy to bring it up to date with current trends and laws governing public sector investments. They then provided recommendations to further the best interest of the City’s investment strategy. As such, the Investment Advisory Committee reviewed and approved changes to the City’s Statement of Investment Policy.

3. RECOMMENDED ACTION
Adopt Resolution No. 11384. A Resolution of the City Council of the City of Orange approving and adopting a Statement of Investment Policy for Fiscal Year 2022-23.

4. FISCAL IMPACT
None.

5. STRATEGIC PLAN GOALS
Goal 2: Be a fiscally healthy community
b: Analyze future fiscal needs and potential revenue opportunities.

6. DISCUSSION AND BACKGROUND
The California Government Code Section 53646 requires that the Statement of Investment Policy (SIP) be reviewed and approved by the legislative body on an annual basis. The City’sInvestment Policy is one of the most conservative policies in the State and it is proposed that the very conservative features of the policy be maintained. Many of the allowable investments under the State Code are not permitted in the City’spolicy. In addition, the policy puts additional specific limits on U.S. Government Agency investments.

In collaboration with the Investment Advisory Committee (IAC), Chandler Asset Management and staff recently reviewed the City’s investment policy to capture recent changes to California City of Orange Printed on 4/7/2022Page 1 of 3
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Item #: 3.38. 4/12/2022 File #: 22-0186
staff recently reviewed the City’s investment policy to capture recent changes to California Government Code (Code) Section 53601 and those areas that govern the investment of public funds.

Staff also reviewed the City’s policy to ensure the inclusion of the latest best practices from recognized industry groups such as Government Finance Officers Association (GFOA), California Society of Municipal Finance Officers (CSMFO), California Municipal Treasurers Association (CMTA), and the Association of Public Treasurers of the United States and Canada (APTUSC).

The proposed revisions to the SIP have been reviewed and approved by the IAC. It is important to note that one recommended change from Chandler involving SB 998 and negative interest securities was rejected by the IAC and therefore, not included in the recommended changes to the City Council. We believe the recommendations listed below take into consideration the desire to retain the predominant language of a well-written policy yet address best practices for the upcoming year.

These proposed investment policy changes are listed as follows:
· Section 2: Operations and Procedures:
o 2.1 Scope: Recommendation to replace the term CAFR (Comprehensive Annual Financial Report) with ACFR (Annual Comprehensive Financial Report) to be in line with GFOA recommendation.
o 2.4 Authorized Financial Institutions and Dealers: Recommendation to update the list of authorized institutions to transact business with and update language to include competitive bid process.
· Section 3: Permitted Investments
o 3.1 Investments Authorized
§ Agency Bonds: Recommendation to include the risk management language limiting the number of callable agency securities to 20% and adjust the amount of the purchase of any single issuer to be 30%, in line with Best Practices; § Commercial Paper: Recommendation to increase the limit for commercial paper to be in line with Best Practices and CA government code, as well as up to date with the passing of SB 998
§ Medium Term Notes: Recommendation to increase the maximum concentration of medium term notes to be 30%, in line with Best Practices and CA government code;
§ Permitted investments: Recommendation to include Pass-Through Securities and Supranationals under permitted investments;
§ NRSRO language: Recommendation to update NRSRO language including rating category for Commercial Paper, Medium Term Notes and Municipal City of Orange Printed on 4/7/2022Page 2 of 3
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Item #: 3.38. 4/12/2022 File #: 22-0186
Bonds.
o 3.3 Mitigating Risk in the portfolio:
§ Credit Risk: Recommendation to update the downgrade language; § Market Risk: Recommendation to update this section to reduce emphasis on laddering, remove term structure limitations and update language to include comment about improving opportunities.
· Section 4: Reporting, Review and Audits
o 4.1 Monthly Reports: Recommendation to update language as AIMR is no longer valid.
· Glossary: CAM recommends the inclusion of new terms to the Glossary.

7. ATTACHMENTS
· Resolution No. 11384
· Statement of Investment Policy
· Statement of Investment Policy - Redline
City of Orange Printed on 4/7/2022Page 3 of 3
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695
Agenda Item
City Council
Item #: 3.38. 4/12/2022 File #: 22-0186
TO: Honorable Mayor and Members of the City Council
THRU: Rob Houston, City Manager
FROM: Richard A. Rohm, City Treasurer
Will Kolbow, Assistant City Manager/Administrative Services Director

1. SUBJECT
Annual review and approval of the Statement of Investment Policy for Fiscal Year 2022-23.

Resolution No. 11384.

3. RECOMMENDED ACTION
Adopt Resolution No. 11384. A Resolution of the City Council of the City of Orange approving and adopting a Statement of Investment Policy for Fiscal Year 2022-23.

4. FISCAL IMPACT
None.

5. STRATEGIC PLAN GOALS
Goal 2: Be a fiscally healthy community
b: Analyze future fiscal needs and potential revenue opportunities.

In collaboration with the Investment Advisory Committee (IAC), Chandler Asset Management and staff recently reviewed the City’s investment policy to capture recent changes to California City of Orange Printed on 4/7/2022Page 1 of 3
powered by Legistar™
696
Item #: 3.38. 4/12/2022 File #: 22-0186
staff recently reviewed the City’s investment policy to capture recent changes to California Government Code (Code) Section 53601 and those areas that govern the investment of public funds.

These proposed investment policy changes are listed as follows:
· Section 2: Operations and Procedures:
o 2.1 Scope: Recommendation to replace the term CAFR (Comprehensive Annual Financial Report) with ACFR (Annual Comprehensive Financial Report) to be in line with GFOA recommendation.
o 2.4 Authorized Financial Institutions and Dealers: Recommendation to update the list of authorized institutions to transact business with and update language to include competitive bid process.
· Section 3: Permitted Investments
o 3.1 Investments Authorized
§ Agency Bonds: Recommendation to include the risk management language limiting the number of callable agency securities to 20% and adjust the amount of the purchase of any single issuer to be 30%, in line with Best Practices; § Commercial Paper: Recommendation to increase the limit for commercial paper to be in line with Best Practices and CA government code, as well as up to date with the passing of SB 998
§ Medium Term Notes: Recommendation to increase the maximum concentration of medium term notes to be 30%, in line with Best Practices and CA government code;
§ Permitted investments: Recommendation to include Pass-Through Securities and Supranationals under permitted investments;
§ NRSRO language: Recommendation to update NRSRO language including rating category for Commercial Paper, Medium Term Notes and Municipal City of Orange Printed on 4/7/2022Page 2 of 3
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697
Item #: 3.38. 4/12/2022 File #: 22-0186
Bonds.
o 3.3 Mitigating Risk in the portfolio:
§ Credit Risk: Recommendation to update the downgrade language; § Market Risk: Recommendation to update this section to reduce emphasis on laddering, remove term structure limitations and update language to include comment about improving opportunities.
· Section 4: Reporting, Review and Audits
o 4.1 Monthly Reports: Recommendation to update language as AIMR is no longer valid.
· Glossary: CAM recommends the inclusion of new terms to the Glossary.

A RESOLUTION OF THE CITY COUNCIL OF

THE CITY OF ORANGE APPROVING AND

ADOPTING A STATEMENT OF INVESTMENT
POLICY FOR FISCAL YEAR 2022-23

WHEREAS, California Government Code Sections 53600 et seq. set forth detailed provisions regarding permitted and prohibited investments by cities and accountability therefor ; and

WHEREAS, the City Council adopted Resolution No. 11340 on June 8, 2021 , adopting the City’s Statement of Investment Policy for Fiscal Year 2021-22 (the “FY 2021-22 SIP”); and

WHEREAS, the FY 2021 -22 SIP requires that the City Council annually review its Statement of Investment Policy and adopt a Statement of Investment Policy within 120 days following the end of each fiscal year by a resolution and vote of the City Council at a public meeting; and

WHEREAS, the Investment Advisory Committee has reviewed the proposed Statement of Investment Policy for Fiscal Year 2022-23 (the “FY 2022-23 SIP”) in the form attached to this Resolution, and has recommended that the City Council adopt the FY 2022-23 SIP.

NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Orange that the FY 2022-23 SIP, in the form attached, is the City’s Statement of Investment Policy for Fiscal Year 2022-23 and is duly adopted in accordance with State law and Chapter 2.49 of Title 2 of the Orange Municipal Code.

ADOPTED this ____ day of ____________________ 2022.

Mark A. Murphy, Mayor, City of Orange

ATTEST:

Pamela Coleman, City Clerk, City of Orange

699
2 STATE OF CALIFORNIA )

COUNTY OF ORANGE )

CITY OF ORANGE )

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS:

ABSENT: COUNCILMEMBERS:

ABSTAIN: COUNCILMEMBERS:

Pamela Coleman, City Clerk, City of Orange
700

Dated: April 12, 2021

CITY OF ORANGE

STATEMENT OF INVESTMENT POLICY
Fiscal Year 2022-23

1.0 INVESTMENT POLICY OVERVIEW

1.1 POLICY
It is the policy of the City of Orange (“City”) to invest public funds in a manner which will provide foremost for the safety of principal while meeting the short- and long-term cash flow demands of the City and conforming to all statutes governing the investment of City funds.

Annually, in accordance with California Government Code (“CGC”) Section 53646, the Treasurer will render to the City Council a Statement of Investment Policy for consideration and approval at a public meeting. Any investment currently held at that time that does not meet the guidelines of this policy, as changed from time to time by the City Council, shall be exempt from the requirements of this policy. However, at the investment’s maturity or liquidation, such funds shall be reinvested only as provided by this policy.

1.2 PURPOSE
This Statement of Investment Policy (“SIP”) is set forth by the City for the following purposes:

a) To establish a clear understanding for the City Council, Investment Committees, City management, responsible employees, citizens and third parties, of the objectives, policies and guidelines for the investment of the City’s idle and surplus funds.

b) To offer guidance to investment staff, brokers and any external investment advisors on the investment of City funds.

1.3 INVESTMENT OBJECTIVES
Within the overriding requirement of compliance with all Federal, State and local laws governing the investment of moneys under the control of the Treasurer, and as specified in the CGC Section 53600.5, when investing, reinvesting, purchasing, acquiring, exchanging, selling and managing public funds, the primary objectives, in priority order, of the investment activities shall be:

a) Safety: Safety of principal is the foremost objective of the investment program.

Investments of the City shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio.

701

2 b) Liquidity: The investment portfolio will remain sufficiently liquid to enable the City to meet all operating requirements which might be reasonably anticipated.

c) Return on Investments: The investment portfolio shall be designed and managed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment objectives, authorized investments and the cash flow needs of the City. The Treasurer’s monthly reports shall include benchmark reporting to define “a market rate of return”; which shall be one of the indices published in a financial journal of wide circulation that are most comparable to the Treasurer’s portfolio. The benchmark shall be used solely as a reference tool. The Treasurer shall not add additional risk to the portfolio in order to attain or exceed the benchmark.

1.4 PRUDENCE
Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs; not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. The standard of prudence to be used by investment officials shall be the “prudent investor” standard (CGC Section 53600.3) and shall be applied in the context of managing an overall portfolio. The Treasurer and other investment employees, acting within the intent and scope of the SIP and other written procedures, 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 the immediately following Treasurer’s Report and appropriate action is taken to control adverse developments. When a deviation poses a significant risk to the City’s financial position, the City Council shall be notified immediately.

1.5 ETHICS
Elected officials, City officers and employees and any other individuals involved in the investment operations are prohibited from personal business activity that could conflict with the proper execution of the investment program, or which could impair their ability to make impartial investment decisions, or which could give the appearance thereof.

Furthermore, these same individuals are prohibited from undertaking personal investment transactions with any individual with whom business is conducted on behalf of the City.

2.0 OPERATIONS AND PROCEDURES

2.1 SCOPE
a) This SIP applies to all financial assets of the City. These funds are accounted for in the Annual Comprehensive Financial Report and include: General Fund, Special Revenue Funds, Debt Service Funds, Capital Project Funds, Enterprise Funds, and Internal Service Funds.

702

3 b) This SIP specifically exempts and does not apply to the following financial assets and investment activities of the City:
(1) The City’s Deferred Compensation Plan is excluded because it is managed by a third party administrator and invested by individual plan participants.

(2) Proceeds of City or other debt issues in possession of a trustee or fiscal agent are not considered to be part of the financial assets covered by this policy. These bond proceeds shall be invested in accordance with the requirements and restrictions outlined in the bond documents.

2.2 DELEGATION OF AUTHORITY
a) The City Council’s authority to manage the investment program is derived from CGC Sections 53600 et seq.

b) In accordance with the City of Orange Municipal Code Chapter 2.26, management responsibility for the investment program is hereby delegated to the Treasurer, who shall establish written procedures for the operation of the investment program consistent with this SIP. Under the provision of CGC Section 53600.3, the Treasurer is a trustee and a fiduciary subject to the prudent investor standard.

c) The Treasurer may delegate all, or a portion of, his/her investment authority to a Deputy City Treasurer. Prior to the delegation of the investment authority to a Deputy City Treasurer, the City Treasurer shall notify the City Council and request confirmation of the delegation. Delegation of investment authority will not remove or abridge the Treasurer’s investment responsibility.

d) The City Council may engage the services of one or more external investment managers to assist in the management of the City’s investment portfolio in a manner consistent with the City’s objectives and in accordance with this SIP. Such external managers may provide advice and effectuate trades upon specific authorization for each transaction. Such managers must be registered under the Investment Advisors Act of 1940 and must have not less than five years’ experience investing in the securities and obligations authorized by the CGC Section 53601, and with assets under management in excess of five hundred million dollars ($500,000,000). The Treasurer shall review Form ADV of any investment advisor prior to engagement by the City Council. This Section does not preclude the Treasurer from retaining portfolio consultants within existing authority.

2.3 INVESTMENT OVERSIGHT COMMITTEE
a) Chapter 2.50 of the Orange Municipal Code establishes an Investment Oversight Committee (IOC). The terms and provisions of said Chapter 2.50 are incorporated into this SIP by reference as though fully set forth herein. The IOC consists of the Treasurer, the City Manager or designee, and the Director of Finance. The Treasurer is required to 703

4 act as Chair of the IOC, with the City Manager as Vice Chair. The IOC is required to act by majority vote.

b) The IOC shall, at least annually and more often if directed by the City Council or agreed by a majority of the IOC, review the City Council’s adopted SIP and report to the City Council its recommendations for any changes, additions or deletions to the SIP.

c) The IOC shall monitor the implementation of the City Council’s adopted SIP and annually submit a compliance report to the City Council.

d) The IOC shall review reports to the City Council from the Investment Advisory Committee and prepare responses as required.

e) The IOC shall meet and report quarterly to the City Council summarizing the IOC meetings and the recommendations of the Investment Advisory Committee. Such report shall contain an unedited copy of the Investment Advisory Committee’s recommendations.

2.4 AUTHORIZED FINANCIAL INSTITUTIONS AND DEALERS
a) Institutions eligible to transact investment business with the City shall include only the following:
(1) Primary government dealers as designated by the Federal Reserve Bank and non-primary government dealers;
(2) Nationally or state-chartered banks;
(3) The Federal Reserve Bank;
(4) Direct issuers of securities eligible for purchase by the City; (5) Institutions licensed by the state as a broker-dealer; and (6) Institutions that are members of a federally regulated securities exchange.

b) Selection of financial institutions and broker/dealers authorized to engage in transactions with the City shall be at the sole discretion of the City Treasurer. The Treasurer will maintain a list of financial institutions authorized to provide investment services to the City.

c) The City Treasurer shall obtain information from qualified financial institutions to determine if the institution makes markets in securities appropriate for the City’s needs, can assign qualified sales representatives and can provide written agreements to abide by the conditions set forth in the City of Orange SIP.

Investment accounts with all financial institutions shall be standard non- discretionary accounts and may not be margin accounts.

d) All financial institutions which desire to become qualified bidders for investment transactions must supply the Treasurer with the following:
704

5 (1) Audited financial statements for the institution’s three most recent fiscal years;

(2) At least three references from California local agencies whose portfolio size, investment objectives and risk preferences are similar to the City’s;

(3) A statement certifying that the institution has reviewed the CGC Sections 53600 et seq. and the City’s SIP, and that all securities offered to the City shall comply fully and in every instance with all provisions of the Code and with this SIP; and,

(4) Completed Broker/Dealer Questionnaire.

e) The Treasurer shall conduct an annual review of the financial condition of qualified institutions. In addition, a current financial statement is required to be on file for each qualified institution.

f) Public deposits shall be made only in qualified public depositories within the State of California as established by State law. Deposits shall be insured by the Federal Deposit Insurance Corporation (FDIC) or, to the extent the amount exceeds the insured maximum, shall be collateralized with securities in accordance with State law.

g) Selection of broker/dealers used by an external investment adviser retained by the City will be at the sole discretion of the adviser. Where possible, transactions with broker/dealers shall be selected on a competitive basis and their bid or offering prices shall be recorded. If there is no other readily available competitive offering, best efforts will be made to document quotations for comparable or alternative securities. When purchasing original issue instrumentality securities, no competitive offerings will be required as all dealers in the selling group offer those securities at the same original issue price.

2.5 COLLATERAL REQUIREMENTS
CGC Sections 53652 and 53667 require depositories to post certain types and levels of collateral for public funds on deposit above the FDIC insurance amounts. The collateral requirements apply to bank deposits, both active (checking and savings accounts) and inactive (non-negotiable time certificates of deposit).

2.6 SAFEKEEPING AND DELIVERY
a) To protect against fraud, embezzlement, or losses caused by collapse of individual securities dealers, all securities owned by the City shall be held in safekeeping by the City’s custodial bank, a third party bank trust department, acting as agent for the City under the terms of a custody agreement, and shall be evidenced by safekeeping receipts.
705

6 b) All security transactions entered into by the City shall be conducted on a standard delivery-versus-payment (DVP) basis, which ensures that securities are deposited with the third party custodian prior to the release of funds. All securities purchased or acquired shall be delivered to the City by book entry, physical delivery or by third party custodial agreement as required by CGC Section 53601. Investments in the State Pool or money market mutual funds are undeliverable, and are not subject to delivery or third party safekeeping requirements.

c) On a daily basis, investment trades shall be verified against the bank transactions and broker confirmation tickets to ensure accuracy. On a monthly basis, the custodial asset statement is reconciled with the month end portfolio holdings. On an annual basis, the external auditor confirms investment holdings.

3.0 PERMITTED INVESTMENTS AND RISK MANAGEMENT

3.1 INVESTMENTS AUTHORIZED
The City, as empowered by CGC Sections 53601 et seq. and 16429.1, hereby authorizes the City Treasurer to select investments from among the following:

(1) United States Treasury notes, bonds, bills or certificates of indebtedness, or those for which the faith and credit of the United States are pledged for the payment of principal and interest. (Limits: Maximum maturity at purchase 5 years; no other limits.)

(2) Obligations issued by banks for cooperatives, federal land banks, federal intermediate credit banks, the Federal Home Loan Bank, the Tennessee Valley Authority, the Federal National Mortgage Association, or other instruments of, or issued by, a federal agency or a United States government-sponsored enterprise. In every case, any issue purchased must be fully guaranteed as to principal and interest by the full faith and credit of the United States, or the issuing federal agency. (Limits: Maximum maturity at purchase 5 years; maximum concentration 75% of portfolio at time of purchase with no more than 30% of total portfolio in any single agency, the maximum percent of agency callable securities in the portfolio will be 20%, and excluding completely Government National Mortgage Association bonds; i.e., GNMA’s.)

(3) Shares of beneficial interest issued by diversified management companies that are Money Market Mutual Funds, registered with the Securities and Exchange Commission under the Investment Company Act of 1940 investing in the securities and obligations authorized by CGC Sections 53601(b) and (e) only (i.e., U.S.

7 assets under management in excess of five hundred million dollars ($500,000,000). (Limits: maximum 90 days Weighted Average Maturity; maximum concentration $15 million, or 20%, of portfolio, whichever is less.)

(4) State of California Local Agency Investment Fund (LAIF) is permitted, with the knowledge that the fund may invest in some vehicles allowed by statute but not otherwise authorized by the City Council in this SIP. The Treasurer shall obtain from the State Treasurer, no less than quarterly, reports providing sufficient detail to adequately judge the risk inherent in the LAIF portfolio, and shall inform the City Council immediately of any risks noted that may warrant reconsideration of this investment vehicle. (Limits: $75 million per account as of 1/1/2020.) (5) Investment in new Government sponsored pools will be subject to due diligence. A thorough investigation of the pool is required prior to investing, and on a continual basis.

(6) Funds held under the terms of a Trust Indenture or other contract or debt issuance agreement may be invested according to the provisions of those indentures or agreements.

(7) Certificates of Deposit approved by the California AB 2011 are permitted. (Limits:

The bill allows investment up to January 1, 2021; a maximum concentration 30% of total portfolio.)

(8) Commercial Paper of prime quality in the highest credit category by a nationally recognized statistical ratings organization (NRSRO) issued by a domestic corporation having assets in excess of $500,000,000 and rated in the category of “A” or better by a NRSRO on its debt other than commercial paper as provided by a national rating agency. (Limits: Maximum maturity of 270 days or less; maximum concentration 25% of portfolio may be invested in Commercial Paper. Under a provision sunsetting on January 1, 2026, no more than 40% of the portfolio may be invested in Commercial Paper if the Agency’s investment assets under management are greater than $100,000,000; no more than 5% of the book value of the portfolio funds to a single issuer at time of purchase.)

(9) Medium-term notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. (Limits: Maximum maturity at purchase 5 years; must be rated in the category of “A” or better by a NRSRO; maximum concentration 30% of portfolio and no more than 5% of the book value of the portfolio funds to a single issuer at time of purchase.)

(10) Municipal bonds include obligations issued by the State of California and any local agency within the state of California, and registered bonds of any of the other 49 707

8 states in addition to California, including bonds payable solely out of the revenues from a revenue producing property owned, controlled, or operated by a state or local agency or by a department, board, agency, or authority of a state or local agency. (Limits: Maximum maturity at purchase 5 years; must be rated in the category of “A” or better by a NRSRO; maximum concentration 20% of portfolio and no more than 5% of the book value of the portfolio funds to a single issuer at time of purchase.)
(11) Asset-Backed, Mortgage-Backed, Mortgage Pass-Through Securities, and Collateralized Mortgage Obligations limited to mortgage-backed pass-through securities issued by a US government agency or consumer receivable pass-through certificates or bonds. (Limits. Maximum maturity at purchase of 5 years ; the securities are rated in a rating category of “AA” or its equivalent or higher by a NRSRO, The aggregate investment in mortgage-backed and asset-backed securities described in this section shall not exceed 20% of the portfolio; no more than 5% held in any one issuer that is not a US government agency.) (12) Supranational securities, senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank which are eligible for purchase in the United States. (Limits: Maximum remaining maturity of five years or less; Investments under this subdivision shall be rated in a rating category of “AA” or its equivalent or higher by a NRSRO ; maximum concentration of 30% of the portfolio with no more than 10% invested in any one issuer.)

3.2 PROHIBITED INVESTMENT VEHICLES AND PRACTICES
The City Treasurer is prohibited from the following:

a) Borrowing for investment purposes (“Leverage”) is prohibited.

b) Buying or selling securities “on Margin” is prohibited.

c) Investing in any instrument, which is commonly known as a “derivative” instrument (options, futures, swaps, caps, floors, collars, U.S. Treasury zero coupon bonds, U.S. Treasury strips, interest only bonds, interest-only strips derived from mortgage pools), or any investment that may result in a zero interest accrual, even if held to maturity, is prohibited.

d) Under the provisions of CGC Sections 53601.6 and 53631.5, the City shall not invest any funds covered by this SIP in instruments known as Structured Notes (e.g. inverse floaters, leverage floaters, structured CD’s, range notes, equity-linked securities). Any such investments are prohibited.

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9 e) Trading securities for the sole purpose of speculating on the future direction of interest rates is prohibited.

f) State law notwithstanding, any investments not specifically described herein under Subsections 3.1 a) through 3.1 c) are prohibited.

(2) The City, on occasion, may sell a security prior to its maturity (recording a gain or loss) in order to improve the risk structure, liquidity and yield of the portfolio in response to market conditions.

(3) If any security owned by the City is downgraded to a level below the requirements of this policy, making it ineligible for additional purchases, it shall be the City’s policy to review immediately the credit situation and make a determination as to whether to sell or retain such securities in the portfolio. If the highest credit rating of a security is downgraded one notch below the quality required in this investment policy, it will be considered acceptable to retain such downgraded security in the portfolio and its presence in the portfolio will be reported to the City Council and monitored continuously for further information. If the highest credit rating of a security is rated two grades below the required minimum rating, it will trigger an automatic sale of such downgraded security.

b) Market Risk: While the City recognizes that longer term portfolios achieve higher returns, longer term portfolios have higher volatility of total return. The City will limit market risk by limiting the concentrations, volume and duration of its longer term investments, as well as limiting them to funds which are not needed for current year cash flow purposes.

(1) Maturities selected shall provide for stability of income and liquidity, and shall not exceed 5 years from the date of purchase. Funds not required for purposes of meeting specific cash flow needs shall be invested in permitted securities so that securities will mature periodically across the maturity spectrum with a maximum of five years.

(2) The City may, on occasion, sell a security prior to its maturity (recording a gain or loss) in order to diminish the portfolio’s exposure to market risk or reinvest into a better opportunity providing more potential earning to the City’s portfolio.
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10 4.0 REPORTING, REVIEW AND AUDITS

4.1 MONTHLY REPORTS
a) The Treasurer shall submit three monthly investment reports to the City Council, and they shall be submitted within 45 days following the end of the quarter. The monthly reports shall include a complete description of the portfolio, the type of investments, the issuers, maturity dates, par and dollar amounts invested on all securities, the current market values of each component of the portfolio, the source of the portfolio valuation, investments and moneys held by the City, and shall additionally include a description of any of the City’s funds, investments, or programs, that are under the management of contracted parties, including lending programs.

b) The report shall also include performance measures as recommended by the CFA Institute’s Global Investment Performance Standards (GIPS). These shall include a presentation of Total Return using accrual accounting, and a Time-weighted Rate of Return using a monthly valuation and one of the GIPS approved methods of calculation. The report shall also include a presentation of Yield to Maturity.

c) The report shall also include the performance of the benchmark described in Subsection 1.3 c) of this SIP as a basis of comparison for the City’s portfolio.

d) The report shall also include the following certifications:
(1) All investment actions executed since the last report have been made in full compliance with the SIP.
(2) The City will meet its expenditure obligations for the next six months is required by CGC Sections 53646(b)(2) and (3).

4.2 INTERNAL CONTROLS
The Treasurer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. Internal controls shall be in writing and shall address the following points: separation of transaction authority from accounting and record keeping, safekeeping of assets and written confirmation of telephone transactions for investments and wire transfers.

4.3 ANNUAL AUDIT
The Treasurer shall insure that the City’s annual process of independent review by an external auditor will include an appropriate investment review to assure compliance with this policy and acceptable internal controls. The audit shall be presented to the City Council upon its completion.

4.4 SPECIAL AUDITS
The City Council may at any time order an audit of the investment portfolio and/or the Treasurer’s investment practices.
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11 5.0 INVESTMENT POLICY ADOPTION
The SIP shall be reviewed annually by the City Council for consistency with the City’s overall investment objectives regarding preservation of principal, liquidity, return, relevance to current law as well as to current financial and economic trends. Any modifications necessary must be approved separately by the City Council. The SIP shall then be adopted in its entirety, as amended, within 120 days of the fiscal year end by resolution and vote of the City Council at a public meeting.

5.1 INVESTMENT POLICY CERTIFICATION
The 1999-2000 version of this investment policy was certified by the Municipal Treasurer’s Association of the United States and Canada, in June 2000. Recommended changes have been incorporated. In the event of any significant changes in legislation that will require significant changes to the SIP, the City will resubmit the new policy for re-certification.

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12 GLOSSARY

AGENCIES: Federal agency securities

ASKED: The price at which securities are offered.

ASSET BACKED SECURITIES: Securities supported by pools of installment loans or leases or by pools of revolving lines of credit.

BANKERS’ ACCEPTANCE (BA): A draft or bill or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer.

BENCHMARK: A segment of the securities market with characteristics similar to the subject portfolio. It is used to compare portfolio performance to the performance of the appropriate segment of the market. (e.g. 1-Year T-Bill rate)

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

BROKER: A broker brings buyers and sellers together for a commission.

CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a certificate. Large-denomination CD’s 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 moneys.

COLLATERALIZED MORTGAGE OBLIGATIONS (CMO): Classes of bonds that redistribute the cash flows of mortgage securities (and whole loans) to create securities that have different levels of prepayment risk, as compared to the underlying mortgage securities.

COMMERCIAL PAPER: Short-term, negotiable unsecured promissory notes of corporations.

COMPREHENSIVE ANNUAL FINANCIAL REPORT: The official annual report for the City of Orange. It includes five combined statements for each individual fund and account group prepared in conformity with GAAP. It also includes supporting schedules necessary to demonstrate compliance with finance-related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section.

COUPON: (a) The annual rate of interest that a bond’s issuer promises to pay the bondholder on the bond’s face value. (b) A certificate attached to a bond evidencing interest due on a payment date.
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13 DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account.

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

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

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 shortly after sale also is considered to be 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., US Treasury Bills.

DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns.

FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to various classes of institutions and individuals; e.g., S&L’s, small business firms, students, farmers, farm cooperatives, and exporters.

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A Federal agency that insures bank deposits, currently up to $250,000 per deposit.

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

FEDERAL HOME LOAN BANKS (FHLB): The institutions that regulate and lend to savings and loan associations. The Federal Home Loan banks play a role analogous to that played by the Federal Reserve Banks vis-à-vis member commercial banks.

FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA): 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, as the corporation is called, is a private stockholder-owned corporation. The corporations’ purchases include a variety of adjustable mortgages and second loans. In addition to fixed-rate mortgages. FNMA’s securities are also highly liquid and are widely accepted. 713

14 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, DC, 12 regional banks and about 5,700 commercial banks that are members of the system.

GLOBAL INVESTMENT PERFORMANCE STANDARDS: Created by the CFA Institute, a global association for investment management professionals, and are governed by the GIPS Executive Committee. Global Investment Performance Standards (GIPS) are a set of voluntary standards used by investment managers throughout the world to ensure the full disclosure and fair representation of their investment performance. The goal of the standards is to make it possible for investors to compare one firm’s performance against that of another firm.

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae):

Securities influencing the volume of bank credit guaranteed by GNMA and issued by mortgage banks, 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 FMHM mortgages. The term “pass-throughs” is often used to describe Ginnie Maes.

LEVERAGE: Borrowing funds in order to invest in securities that have the potential to pay earnings at a rate higher than the cost of borrowing.

LIQUIDITY: 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.

LOCAL AGENCY INVESTMENT FUND (LAIF): A pooled investment vehicle for local agencies in California sponsored by the State of California and administered by the State Treasurer.

MARGIN: The difference between the market value of a security and the loan a broker makes using that security as collateral.

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15 MARKET CYCLE: A market cycle is defined as a period of time which includes a minimum of two consecutive quarters of falling interest rates followed by a minimum of two consecutive quarters of rising interest rates.

MARKET VALUE: The price at which a security is traded and could presumably be purchased or sold.

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

MEDIUM TERM NOTES: Unsecured, investment-grade senior debt securities of major corporations which are sold in relatively small amounts on either a continuous or an intermittent basis. MTNs are highly flexible debt instruments that can be structured to respond to market opportunities or to investor preferences.

MONEY MARKET: The market in which short-term debt instruments (bills, commercial paper, bankers’ acceptances, etc.) are issued and traded.

MONEY MARKET MUTUAL FUND: A mutual fund that invests exclusively in short-term securities. Examples of investments in money market funds are certificates of deposit and U.S.

Treasury securities. Money market funds attempt to keep their net asset values at $1 per share.

MORTGAGE PASS-THROUGH SECURITIES: A securitized participation in the interest and principal cash flows from a specified pool of mortgages. Principal and interest payments made on the mortgages are passed through to the holder of the security

MUNICIPAL SECURITIES: Securities issued by state and local agencies to finance capital and operating expenses.

MUTUAL FUND: An entity which pools the funds of investors and invests those funds in a set of securities which is specifically defined in the fund’s prospectus. Mutual funds can be invested in various types of domestic and/or international stocks, bonds, and money market instruments, as set forth in the individual fund’s prospectus. For most large, institutional investors, the costs associated with investing in mutual funds are higher than the investor can obtain through an individually managed portfolio.

NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO):

A credit rating agency that the Securities and Exchange Commission in the United States uses for regulatory purposes. Credit rating agencies provide assessments of an investment's risk. The issuers of investments, especially debt securities, pay credit rating agencies to provide them with ratings. The three most prominent NRSROs are Fitch, S&P, and Moody's.

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16 NEGOTIABLE CERTIFICATE OF DEPOSIT: A large denomination certificate of deposit which can be sold in the open market prior to maturity.

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

PORTFOLIO: Collection of securities held by an investor.

PRIMARY DEALER: 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 Securities and Exchange Commission (SEC)-registered securities broker-dealers, banks, and a few unregulated firms.

PRUDENT INVESTOR STANDARD: Governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to CGC Sections 53600 et seq. are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, and managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency. Within the limitations of the CGC Sections 53600 et seq. and considering individual investments as part to an overall strategy, a trustee is authorized to acquire investments as authorized by law.

QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the payment of any sale or compensating use or ad valorem taxes under the laws of this state, which has aggregated 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.

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.

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.

SUPRANATIONAL: A Supranational is a multi-national organization whereby member states transcend national boundaries or interests to share in the decision making to promote economic development in the member countries.
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17 TIME CERTIFICATE OF DEPOSIT: A non-negotiable certificate of deposit which cannot be sold prior to maturity.

TOTAL RATE OF RETURN: Represents growth (or decline) in the value of a portfolio, including both capital appreciation and income, as a proportion of the starting market value.

TIME-WEIGHTED RATE OF RETURN: A modified measurement of Total rate of Return which eliminates the effect of the timing of funds flows to and/or from a security or portfolio.

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, six months, or one year.

TREASURY BOND: Long-term U.S. Treasury securities having initial maturities of more than 10 years.

TREASURY NOTES: A non-interest bearing discount security issued by the US Treasury to finance the national debt. Most bills are issued to mature in one, two, three, five or ten years.

YIELD: The rate of annual income return on an investment, expressed as a percentage.

YIELD TO MATURITY is the calculated rate of return based upon the present value of the cash flow from each interest payment, plus the present value of the cash flow from the investment’s redemption value at maturity vs. the purchase price.

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Dated: April 12, 2021

CITY OF ORANGE

STATEMENT OF INVESTMENT POLICY
Fiscal Year 2022-23

1.0 INVESTMENT POLICY OVERVIEW

1.2 PURPOSE
This Statement of Investment Policy (“SIP”) is set forth by the City for the following purposes:

b) To offer guidance to investment staff, brokers and any external investment advisors on the investment of City funds.

a) Safety: Safety of principal is the foremost objective of the investment program.

Investments of the City shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio.

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2 b) Liquidity: The investment portfolio will remain sufficiently liquid to enable the City to meet all operating requirements which might be reasonably anticipated.

Furthermore, these same individuals are prohibited from undertaking personal investment transactions with any individual with whom business is conducted on behalf of the City.

2.0 OPERATIONS AND PROCEDURES

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2.2 DELEGATION OF AUTHORITY
a) The City Council’s authority to manage the investment program is derived from CGC Sections 53600 et seq.

4 act as Chair of the IOC, with the City Manager as Vice Chair. The IOC is required to act by majority vote.

c) The IOC shall monitor the implementation of the City Council’s adopted SIP and annually submit a compliance report to the City Council.

d) The IOC shall review reports to the City Council from the Investment Advisory Committee and prepare responses as required.

Investment accounts with all financial institutions shall be standard non- discretionary accounts and may not be margin accounts.

d) All financial institutions which desire to become qualified bidders for investment transactions must supply the Treasurer with the following:
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5 (1) Audited financial statements for the institution’s three most recent fiscal years;

(2) At least three references from California local agencies whose portfolio size, investment objectives and risk preferences are similar to the City’s;

(4) Completed Broker/Dealer Questionnaire.

3.0 PERMITTED INVESTMENTS AND RISK MANAGEMENT

3.1 INVESTMENTS AUTHORIZED
The City, as empowered by CGC Sections 53601 et seq. and 16429.1, hereby authorizes the City Treasurer to select investments from among the following:

(6) Funds held under the terms of a Trust Indenture or other contract or debt issuance agreement may be invested according to the provisions of those indentures or agreements.

(7) Certificates of Deposit approved by the California AB 2011 are permitted. (Limits:

The bill allows investment up to January 1, 2021; a maximum concentration 30% of total portfolio.)

(10) Municipal bonds include obligations issued by the State of California and any local agency within the state of California, and registered bonds of any of the other 49 724

3.2 PROHIBITED INVESTMENT VEHICLES AND PRACTICES
The City Treasurer is prohibited from the following:

a) Borrowing for investment purposes (“Leverage”) is prohibited.

b) Buying or selling securities “on Margin” is prohibited.

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9 e) Trading securities for the sole purpose of speculating on the future direction of interest rates is prohibited.

f) State law notwithstanding, any investments not specifically described herein under Subsections 3.1 a) through 3.1 c) are prohibited.

10 4.0 REPORTING, REVIEW AND AUDITS

c) The report shall also include the performance of the benchmark described in Subsection 1.3 c) of this SIP as a basis of comparison for the City’s portfolio.

4.4 SPECIAL AUDITS
The City Council may at any time order an audit of the investment portfolio and/or the Treasurer’s investment practices.
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