Rancho Cucamonga City Council
June 27, 2024

CITY COUNCIL VISION STATEMENT
“Our Vision is to create an equitable, sustainable, and vibrant city, rich in opportunity for all to thrive by building on our foundation and success as a world class community.”

CITY OF RANCHO CUCAMONGA

SPECIAL MEETING AGENDA

CITY COUNCIL/FIRE PROTECTION DISTRICT
June 27, 2024 – 4:00 PM
Council Chambers
10500 Civic Center Drive
Rancho Cucamonga, CA 91730

CALL TO ORDER

PLEDGE OF ALLEGIANCE

ROLL CALL: Mayor Michael
Mayor Pro Tem Kennedy
Council Members Hutchison, Scott and Stickler

A. PUBLIC COMMUNICATIONS

This is the time and place for the general public to address the City Council on any item listed on the agenda.

State law prohibits the City Council from addressing any issue not previously included on the Agenda. The City Council may receive testimony and set the matter for a subsequent meeting. Comments are to be limited to three (3) minutes per individual. For City Council Rules of Decorum refer to Resolution No. 2023-086.

B. CONSENT CALENDAR

B1. Consideration of Approval of Revisions to Amended Fiscal Year 2023/24 Appropriations. (CITY/FIRE)

B2. Consideration to Approve and Adopt Revised Statements of Investment Policy for the City of Rancho Cucamonga and the Rancho Cucamonga Fire Protection District. (CITY/FIRE)

B3. Consideration to Approve the Following to be in Compliance with Governmental Accounting Standards Board (GASB) Statement No. 54: 1) Updated Fund Balance Policy; 2) a Resolution Committing to the Level of Fiscal Reserves for the City of Rancho Cucamonga; and 3) a Resolution Committing to the Level of Fiscal Reserves for the Rancho Cucamonga Fire Protection District. (RESOLUTION NO. 2024-057 AND RESOLUTION NO. FD 2024-009) (CITY/FIRE)

B4. Consideration to Approve Updated City General Fund Reserve Funding Goals Policy. (CITY)

B5. Consideration to Adopt Resolutions Updating the Fiscal Year 2024-2025 City and Rancho Cucamonga Fire Protection District Salary Schedules. (RESOLUTION NO. 2024-061 AND RESOLUTION FD 2024-017) (CITY/FIRE)

CITY COUNCIL VISION STATEMENT
“Our Vision is to create an equitable, sustainable, and vibrant city, rich in opportunity for all to thrive by building on our foundation and success as a world class community.”

C. CITY MANAGER'S STAFF REPORT(S)

C1. Consideration of Resolutions Adopting the Budget and Approving the Appropriations Limit for the Fiscal Year 2024/25 in Community Facilities District No. 85-1. (RESOLUTION NO. FD 2024-012 AND RESOLUTION NO. FD 2024-013) (FIRE)

C2. Consideration of Resolutions Adopting the Budget and Approving the Appropriation Limit for the Fiscal Year 2024/25 in Community Facilities District No. 88-1. (RESOLUTION NO. FD 2024-010 AND RESOLUTION NO. FD 2024-011) (FIRE)

C3. Consideration of a Resolution Adopting the Amended Fire Protection District General Fund Article XIIIB Appropriations Limit for Fiscal Years 2012/13 through 2023/24. (RESOLUTION NO. FD 2024- 014) (FIRE)

C4. Consideration to Adopt the Fire Protection District General Fund Preliminary Budget; Adopt a Resolution Approving the Fire Protection District General Fund Appropriations Limit for the Fiscal Year 2024/25; and Set a Public Hearing for the Approval of a Fire Protection District General Fund Final Budget for the Fire Board Meeting on July 17, 2024. (RESOLUTION NO. FD 2024-015) (FIRE)

C5. Consideration of a Resolution Adopting the Amended Article XIIIB Appropriations Limit for Fiscal Years 2012/13 through 2023/24. (RESOLUTION NO. 2024-058) (CITY)

C6. Consideration to Adopt Resolutions to Approve the Fiscal Year 2024/25 Budget, the Article XIIIB Appropriations Limit for the Fiscal Year 2024/25, and the Capital Improvement Program for the Fiscal Year 2024/25. (RESOLUTION NO. 2024-059 AND RESOLUTION NO. 2024-060) (CITY)

D. ADJOURNMENT

CERTIFICATION
I, Linda A. Troyan, MMC, City Clerk Services Director of the City of Rancho Cucamonga, or my designee, hereby certify under penalty of perjury that a true, accurate copy of the foregoing agenda was posted at least twenty-four (24) hours prior to the meeting per Government Code 54954.2 at 10500 Civic Center Drive, Rancho Cucamonga, California and on the City's website.

LINDA A. TROYAN, MMC

CITY CLERK SERVICES DIRECTOR

If you need special assistance or accommodations to participate in this meeting, please contact the City Clerk Services Department at (909) 774-2023. Notification of 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility. Listening devices are available for the hearing impaired.

DATE:June 27, 2024
TO:Mayor and Members of the City Council
President and Members of the Board of Directors
FROM:John R. Gillison, City Manager
INITIATED BY: Noah Daniels, Finance Director
Rick Flinchum, Finance Manager
SUBJECT: Consideration of Approval of Revisions to Amended Fiscal Year 2023/24 Appropriations. (CITY/FIRE)
RECOMMENDATION:

Staff recommends the City Council and Board of Directors approve the revisions to the Amended Fiscal Year 2023/24 Appropriations as submitted.

BACKGROUND:

On May 15, 2024, the City Council and Board of Directors approved the Amended Fiscal Year 2023/24 Appropriations. After approval of the amended appropriations, staff identified accounts that would have insufficient funds for the remainder of the fiscal year and, as such, are recommended to be revised. The appropriations recommended are deemed necessary by staff and the reasons for the revisions are noted in the analysis section.

ANALYSIS:

To ensure that sufficient funding is available for all known expenditures, staff is requesting the City Council and Board of Directors approve the revisions to the Fiscal Year 2023/24 budget in the following table:

REVISIONS TO AMENDED FISCAL YEAR 2023/24 APPROPRIATIONS Account
Number
Account Description Reason for Revision Increase /
(Decrease)
1001305-5300 General Fund/
Engineering/Development
Management/Contract Services
Purchase order carry
over for on-call traffic
analysis preparation.
(POCO)
$26,670
1017701-5603 Law Enforcement Reserve –
Capital Outlay – Equipment
Purchase order carry
over for A/V upgrades
at multiple City
facilities. (POCO)
$178,720
1025001-5417 Capital Reserve Fund/General
Liability Claims
Additional
unanticipated liability
claims.
$80,000

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Account
Number
Account Description Reason for Revision Increase /
(Decrease)
1025001-5607 Capital Reserve/Capital Outlay-
Improvements Other than Bldg.

Purchase order carry
over for electrical
engineering services
for EV infrastructure.
(POCO)
$41,800
1073002-5000 Benefits Contingency Fund –
Salaries
Timing of employee
buybacks occurred in
June rather than July.
$234,120
1109301-5200 Public Art Trust Fund – O&M Additional expenses for mini-mural project.
$5,400
1119401-5603 Park Improvement
Fund/Community Services-
Admin/Capital Outlay
Purchase order carry
over for Quakes
Stadium scoreboard
replacement. (POCO)
$174,950
1120303-5650/
2022120-0
Park Development
Fund/Engineering/Capital Project
Purchase order carry
over for dog park
contractor services.
$53,380
1120401-5650/
2022120-0
Park Development
Fund/Community Services
Purchase order carry
over for dog park
construction services.
(POCO)
$168,370
1130303-5650/
2110130-0
LMD 1/Engineering
Administration/Capital Project
Purchase order carry
over for Almond Trail
drainage. (POCO)
$225,670
1381701-5603 Homeland Security Grant/Capital
Outlay/Equipment
Purchase order carry
over for Public Works
Yard equipment.
(POCO)
$13,380
1876203-5300 CFD 2018-01/Assessment
District/Contract Services
Purchase order carry
over for special
counsel for annexation.
(POCO)
$35,190
1274208-5650/
2022274-0
State Grants Fund/Capital Project Purchase order carry
over for dog park
project (POCO)
$257,830
3288501-5207 Fire Protection Capital Fund –
O&M
Transfer budget for line
extension project for
FS 178.
($150,910)
3288501-5607 Fire Protection Capital Fund –
Capital Outlay
Transfer of budget for
line extension project
for FS 178.
$150,910
1110303-5650/
2112110-0
Beautification/Engineering/Capital
Project
Restated appropriation
for payment to City of
Fontana for San
Sevaine trail project.
$576,000
1120303-5300 Park Development/Engineering-
Admin/Contract Services
Restated appropriation
for professional land
survey services.
$130,000

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FISCAL IMPACT:

It is recommended that the City Council and Fire Board approve the appropriations noted in the analysis section. In total, the impact across all funds requiring revisions is an increase of $2,201,480 in expenditures.

Items designated as POCOs (purchase order carryover), totaling the amount of $1,175,960, represent purchase orders carried over from Fiscal Year 2022/23 which utilize the planned use of fund balance. Due to turnover of staff in several departments, these items were not included in the Amended Budget adopted by the City Council on May 15, 2024.

There is an impact to the General Fund in the amount of $26,670, resulting from the above mentioned POCO impacts. Thus, no current General Fund resources are being utilized for this appropriation revision.

Two appropriations are submitted as a re-authorization. $576,000 in the Beautification Fund was previously approved by the City Council at the October 18, 2023, meeting. $130,000 in the Park Development Fund was previously approved by the City Council at the September 19, 2023, meeting. Similar to the POCO items, these were not previously included in the Amended Budget adopted on May 15, 2024, and thus require reapproval.

Increased general liability claims expenditures will be funded by the City’s self-insurance reserve.

There is zero impact as a result of amended appropriations to the Fire Protection Capital Fund, as the changes in expenditures are offset as an equal transfer between two-line items.

COUNCIL MISSION / VISION / GOAL(S) ADDRESSED:

The adoption of the Fiscal Year 2023/24 amended appropriations supports the City Council’s core value of providing and nurturing a high quality of life for all by demonstrating the active, prudent fiscal management of the City’s financial resources in order to support the various services the City provides to all Rancho Cucamonga stakeholders.

ATTACHMENTS:

None

DATE:June 27, 2024
TO:Mayor and Members of the City Council
President and Members of the Board of Directors
FROM:John R. Gillison, City Manager
INITIATED BY: Noah Daniels, Finance Director
SUBJECT: Consideration to Approve and Adopt Revised Statements of Investment Policy for the City of Rancho Cucamonga and the Rancho Cucamonga Fire Protection District. (CITY/FIRE)
RECOMMENDATION:

Staff recommends that the City Council and Board of Directors approve and adopt the attached Statements of Investment Policy for the City of Rancho Cucamonga (City) and the Rancho Cucamonga Fire Protection District (Fire District).

BACKGROUND:

California Government Code Section 53646(a)(2) requires that the City and Fire District Treasurer or Chief Fiscal Officer annually renders to the City Council and Board of Directors a Statement of Investment Policy, which shall be considered at a public meeting. Further, the City Council and Fire Board shall also consider any modifications to the investment policy at a public meeting.

On August 5, 2020, the City entered into a professional services agreement with PFM Asset Management LLC (“PFM”) for professional investment advisory services. As part of their contract, PFM annually reviews the City’s and Fire District’s investment policies for potential revisions to ensure the City’s and District’s compliance with the Government Code and to ensure that the policy accommodates the investment strategies agreed to by the City and Fire District and PFM.

On June 22, 2023, the City Council and Fire Board approved and adopted the City’s and Fire District’s 2023 Statements of Investment Policy.

ANALYSIS:

PFM recently completed its review of the City of Rancho Cucamonga and the Rancho Cucamonga Fire Protection District’s Investment Policies (the “Policies”). As written, the Policies are in compliance with the California Government Code (the “Code”) statutes regulating the investment of public funds. However, two minor changes to the Policies are suggested to clarify aspects of the Policies:

First, language on asset-backed securities was updated in Senate Bill 882, which took effect January 1, 2024, to make clear that Agency Mortgage-Backed securities are not included under the Code’s requirements for privately issued mortgage- and asset-backed securities. PFM recommends changing the Policies to align with the current Code language but doesn’t otherwise change the type or quality of investments that the City or Fire District would purchase.

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9 2
Second, to avoid uncertainty on how to determine a security’s term to maturity at purchase, PFM recommends that the Policies explicitly state that a security’s term to maturity at purchase is measured from the settlement date. This incorporates a Code revision made as part of Senate Bill 1489, which took effect January 1, 2023, which made explicit that an investment’s remaining maturity is to be measured from the settlement date of the purchase to its final maturity.

FISCAL IMPACT:

There is no fiscal impact as a result of the recommended action.

COUNCIL MISSION / VISION / GOAL(S) ADDRESSED:

The Policies support the City Council and Fire Board’s fiduciary roles as custodians of the public’s resources by providing guidelines for the prudent investment of the City’s and Fire District’s idle cash and outlining policies essential to creating an equitable, sustainable, and vibrant city, rich in opportunity for all to thrive by building on our foundation and success as a world-class community.

ATTACHMENTS:

Attachment 1 – Statement of Investment Policy 2024-City Attachment 2 – Statement of Investment Policy 2024-Fire

CITY OF RANCHO CUCAMONGA

STATEMENT OF

INVESTMENT POLICY
2024
Prepared by the Administrative Services Group
Jim Harrington, Treasurer
Elisa Cox, Assistant City Manager/Deputy Treasurer
Noah Daniels, Finance Director
Hiram Zavala, Management Analyst II
ATTACHMENT 1

CITY OF RANCHO CUCAMONGA

STATEMENT OF INVESTMENT POLICY

TABLE OF CONTENTS

Introduction ........................................................................................................ 1 Scope .................................................................................................................. 1 Delegation of Authority ................................................................................... 1-2 Prudence ............................................................................................................ 2 Objective ......................................................................................................... 2-3 Ethics and Conflicts of Interest ......................................................................... 3-4 Authorized Financial Dealers and Institutions ..................................................... 4 Authorized and Suitable Investments .............................................................. 4-8 Prohibited Investments ....................................................................................... 8 Review of Investment Portfolio .......................................................................... 8 Investment Pools ............................................................................................. 8-9 Collateralization .................................................................................................. 9 Safekeeping and Custody .................................................................................... 9 Diversification ................................................................................................... 10 Maximum Maturities ........................................................................................ 10 Internal Control ................................................................................................ 10 Performance ................................................................................................ 10-11 Reporting .......................................................................................................... 11 Investment Policy Adoption .............................................................................. 12 Glossary ....................................................................................................... 13-19

Statement of Investment Policy Page 1

CITY OF RANCHO CUCAMONGA

STATEMENT OF INVESTMENT POLICY

1.0 INTRODUCTION

This Statement of Investment Policy (“Policy”) provides guidelines for the prudent investment of the City of Rancho Cucamonga’s (“City”) idle cash and outlines the policies essential to ensuring the safety and financial strength of the City’s investment portfolio. Th is Policy is based on the principles of prudent money management and conforms to al l federal, state, and l ocal laws governing the inves tment of public funds . The goal of this Policy is to enhance the economic status of the City by protecting its pooled cash and to invest public funds to:

1. Meet the daily cash flow needs of the City;

2. Comply with all laws of the State of California regarding investment of public funds; and

3. Achieve a reasonable rate of return while minimizing the potential for capital losses arising from market changes or issuer default.

2.0 SCOPE

This Policy applies to the investment activities of all funds of the City. These funds are accounted for in the City’s Annual Comprehensive Financial Report ( ACFR) and include: General Fund, Special Revenue Funds, Debt Service Funds, Capital Project Funds, Proprietary Funds, as well as Agency Funds and a Private-Purpose Trust Fund.

Bond proceeds shall be invested in accordance with the requirements and restrictions outlined in bond documents as approved by the City Council . If the bond documents are silent as to the permitted investments, the bond proceeds will be invested in the securities permitted by this Policy. Notwithstanding the other provisions of this Policy, the percentage limitations listed elsewhere in this Policy do not apply to bond proceeds.

3.0 DELEGATION OF AUTHORITY

The City Council, as permitted under California Government Code §53607, delegates the responsibility to manage the City’s investment portfolio to the City Treasurer for a period of one- year, unless revoked. Subject to review, the City Council may renew the delegation of authority each year. The City Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials, and their procedures, in the absence of the City Treasurer. Pursuant to Government Code §1190, the City

Statement of Investment Policy Page 2
Treasurer appoints the Assistant City Manager to act as Deputy Treasurer with responsibility to manage the City’s investment portfolio on a daily basis. The City Treasurer/Deputy Treasurer will maintain on file a written authorization designating those individuals to whom daily investment activities, such as carrying out the City Treasurer's/Deputy Treasurer’s investment instructions, confirming treasury transactions, and other routine activities, have been delegated.

As authorized by the City Council, the City may also utilize the services of an independent investment advisor to assist with the investment program under the supervision of the City Treasurer/Deputy Treasurer. The investment advisor shall follow this Policy and such other written instructions as are provided by the City. The investment advisor shall never take possession of the City’s funds or assets.

4.0 PRUDENCE

All persons authorized to make investment decisions on behalf of the City are trustees and therefore fiduciaries subject to the prudent investor standard, as described in Government Code section 53600.3 which states:

When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency.

The City Treasurer/Deputy Treasurer and authorized persons acting in accordance with this Policy and the “ prudent investor” standard 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 manner and appropriate action is taken to control adverse developments, whenever possible.

5.0 OBJECTIVE

The objective of the investment portfolio is to meet the short- and long-term cash flow demands of the City. To achieve this objective, the portfolio will be structured to provide safety of principal and liquidity, while then providing a reasonable return on investments.

The authority governing investments for municipal governments is set forth in Government Code Sections 53600 et seq. City strategy has been to limit investments more stringently than required under state law. The primary objectives of investment activities, in order of priority are:

Statement of Investment Policy Page 3

1. Safety - Safety and risk associated with an investment refers to the potential loss of principal, interest, or combination thereof. The City only invests in those instruments that are considered safe. Each investment transaction shall be undertaken in a manner that seeks to ensure , whenever possible , that all capital losses are avoided, whether from securities default, broker/dealer default, or erosion of market value . The City shall seek to preserve principal by mitigating two types of risk: credit risk and market risk.

• Credit risk, defined as the risk of loss due to failure of the issuer of a security, shall be mitigated by investing in only very safe securities and by diversifying the investment portfolio so that the failure of any one issuer would not unduly harm the City’s cash flow.

• Market risk, defined as the risk of market value fluctuations due to overall changes in the general level of interest rates, shall be mitigated by struc turing the portfolio to align with the City’s anticipated cash flow needs. It is explicitly recognized, however, that in a diversified portfolio , occasional measured lo sses may occur and must be considered within the context of overall investment return and liquidity needs.

2. Liquidity - Liquidity is an important investment quality especially when the need for unexpected funds occasionally occurs. The City’s investment po rtfolio will remain sufficiently liquid to enable the City to meet operating requirements that might be reasonably anticipated.

3. Yield - The City’s investment portfolio shall be designed with the objective of attaining a reasonable market rate of retu rn throughout budgetary and economic cycles, commensurate with the City’s investment risk constraints as long as it does not diminish the objectives of Safety and Liquidity.

6.0 ETHICS AND CONFLICTS OF INTEREST

The City Treasurer/Deputy Treasurer and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions.

Employees and investment officers shall disclose any material financial interest in financial institutions that conduct business with the City , and they s hall further disclose any personal financial/investment positions that could be affected by the performance of the City’s operations and functions or by the management of the City’s investment program. The Treasurer/Deputy Treasurer and investment employees are required to file annual disclosure statements as required by the Fair Political Practices Commission (FPPC).

Statement of Investment Policy Page 4

7.0 AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS

The City Treasurer/Deputy Treasurer shall only execute investment transactions with those direct issuers authorized by this Policy (LAIF, LGIPs such as CAMP, money market funds, and banks). All other investment transactions will be conducted through the City’s investment advisor who will maintain their own list of approved issuers, brokers/dealers, and financial institutions with which to conduct transactions on the City’s behalf.

8.0 AUTHORIZED AND SUITABLE INVESTMENTS

The City is further governed by California Government Code Sections 53600 et. seq. to invest in specific types of securities. The City has further limited the types of sec urities in which it may invest. In the event an apparent discrepancy is found between this Policy and the Government Code, the more restrictive parameters will take precedence. Percentage holding limits listed in this Policy apply at the time the security is purchased. Credit ratings, where shown, specify the minimum credit rating category required at purchase. In the event a security held by the City is subject to a credit rating change that brings it below the minimum credit ratings specified in this Policy, the City Treasurer/Deputy Treasurer should notify the City Council of the change in the next monthly investment report. The course of action to be followed will then be decided on a case-by-case basis, considering such factors as the reason for the change, prognosis for recovery or further rate drops, and the market price of the security. Any security not listed in Section 8.0 is not a valid investment for the City. The concise list of approved securities is as follows:

• United States Treasury Securities: United States Treasury Bills, Bonds, and Notes or those instruments for which the full faith and credit of the United States are pledged for payment of principal and interest.

There is no limit on the percentage of the portfolio that can be invested in this category.

• United States Federal Agencies: Obligations issued by Federal Agencies or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government-sponsored enterprises.

There is no limit on the percentage of the portfolio that can be invested in this category.

• Supranational Securities: United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter -American Development Bank. The maximum remaining maturity for supranational obligations must be

Statement of Investment Policy Page 5
five years or less, and they must be eligible for purchase and sale within the United States.

These investments must be rated in a rating category of “AA” or better by a NRSRO.

There is a 30% limit on the percentage of the portfolio that can be invested in this category.

The maximum remaining maturity of any investment in this category shall not exceed five- years.

• Municipals Notes or Bonds: Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state.

Registered treasury notes or bonds of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states, in addition to California.

Bonds, notes, warrants, or other evidences of indebtedness of a local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency.

Purchases are limited to securities rated in a rating category of “A” (long-term) or “A-1” (short-term) or their equivalents or better by a Nationally Recognized Statistical Rating Organization (“NRSRO”). (The minimum rating shall apply to any issuer , irrespective of any credit enhancement).

There is a 30% limit on the percentage of the portfolio that can be invested in this category.

• Negotiable Certificates of Deposit: Negotiable certificates of deposit issued by a nationally or state-chartered bank, a savings association or a federal association, a state or federal credit union, or by a federally licensed or state-licensed branch of a foreign bank. Purchases are limited to securities rated in a rating category of “A” (long-term) or “A-1” (short-term) or their equivalents or better by an NRSRO.

There is a 30% limit on the percentage of the portfolio that can be invested in this category.

• Asset-Backed Securities: A mortgage passthrough security, collateralized mortgage obligation, mortgage-backed or other pay-through bond, equipment lease-backed certificate, consumer receivable passthrough certificate, or consumer receivable -backed bond. Fo r securities eligible for investment under this subdivision not issued or guaranteed by the U.S.

Statement of Investment Policy Page 6
Treasury or a Federal Agency, the following limitations apply: Securities shall be rated in a rating category of “AA” or its equivalent or better by an NRSRO.

There is a 20% limit on the percentage of the portfolio that can be invested in this category.

The maximum remaining maturity of any investment in this category shall not exceed five- years.

• Medium-Term Notes: Medium-Term Notes are defined as all corporate and depository institution debt securities. They must be issued by corporations organized and operating within the United States. Notes eligible for investment shall be rated in a rating category of “A” or its equivalent or better by an NRSRO.

There is a 30% limit on the percentage of the portfolio that can be invested in this category.

The maximum remaining maturity of any investment in this category shall not exceed five- years.

• Bankers’ Acceptances: Bankers’ acceptances, otherwise known as bills of exchange or time drafts, that are drawn on and accepted by a commercial bank. Purchases are limited to issuers that have short-term debt rated in a rating category of “A-1” or its equivalent or higher by an NRSRO.

There is a 40% limit on the percentage of the portfolio that can be invested in this category.

The maximum maturity shall not exceed 180 days.

• Commercial Paper: Must be of “prime” quality of the highest ranking or of the highest letter and number rating as provided for by an NRSRO.

The entity that issues the commercial paper shall meet all the following conditions: (i) is organized and operating in the United States as a general corporation, (ii) has total assets in excess of five hundred million dollars ($500,000,000), and (iii) has debt other than commercial paper, if any, that is rated in a rating category of “A” or its equivalent or higher by an NRSRO.

T
here is a 40% limit on the percentage of the portfolio that can be invested in this category (the limit is 25% for agencies that have less than $100 million of investment assets). The maximum maturity shall not exceed 270 days.

• Repurchase Agreements (Repos): An executed Master Repurchase Agreement is required between the City and the broker dealer or financial Institution. The market value of securities that underlies a repurchase agreement shall be valued at 102 percent or greater of the funds

Statement of Investment Policy Page 7
borrowed against those securities and the value shall be adjusted no less than quarterly.

Collateral is restricted to U.S. Treasury and Federal Agency securities.

There is a 20% limit on the percentage of the portfolio that can be invested in this category.

The maximum maturity of any investment in this category shall not exceed one year.

• State of California Local Agency Investment Fund (LAIF): The Local Agency Investment Fund (LAIF) is a State of California managed investment pool established by the State Treasurer for the benefit of local agencies.

There is no limit on the percentage of the portfolio that can be invested in this category. The maximum investment in LAIF accounts is dependent upon limits established under the Local Agency Investment Fund guidelines and not Government Code.

• Local Government Investment Pool (LGIP): S hares of beneficial interest issued by a joint powers authority (JPA) organized pursuant to Section 6509.7 that invests in the securities and obligations authorized in Government Code. Whenever the City has any funds invested in a LGIP, the City Treasurer/Deputy Treasurer shall maintain on file a copy of the LGIP’s current information statement and periodically review the LGIP’s investments.

There is no limit on the percentage of the portfolio that can be invested in this category.

• Money Market Funds (“MMF”): Government Money Market Funds meeting either of the following criteria: (A) Attained the highest ranking or the highest letter and numerical rating provided by not less than two NRSROs, or (B) Retained an investment advisor with not less than five years’ experience and registered or exempt from registration with the SEC, with assets under management in excess of five hundred million dollars ($500,000,000).

Whenever the City has any funds invested in an MMF, the City Treasurer/Deputy Treasurer shall maintain on file a copy of the MMF’s current information statement. A maximum of 20% of the City’s portfolio may be invested in this category.

There is a 20% limit on the percentage of the portfolio that can be invested in this category.

• Bank Deposits: FDIC insured or collateralized demand deposit accounts, savings accounts, market rate accounts, certificates of deposits and other types of bank deposits in financial institutions located in California. The amount on deposit in any financial instit ution shall not exceed the shareholder's equity. To be eligible to receive City deposits, the financial institution must have received a minimum overall satisfactory rating, under the Community Redevelopment Act, for meeting the credit needs of California Communities in its most recent evaluation. Bank deposits are required to be collateralized as specified under Government Code Section 53630 et seq. The City Treasurer/Deputy Treasurer, at his/her discretion, may

Statement of Investment Policy Page 8
waive the collateralization requirements for any portion that is covered by federal deposit insurance. The City shall have a signed agreement with any depository accepting City funds per Government Code Section 53649. There is no limit on the percentage of the portfolio that may be invested in this category.

There is no limit on the percentage of the portfolio that can be invested in this category.

However, a maximum of 10 percent of the portfolio may be invested in time deposits.

9.0 PROHIBITED INVESTMENTS

Any security type or structure not specifically approved by this policy is hereby specifically prohibited. Security types which are thereby prohibited include, but are not limited to, inverse floaters, derivatives, range notes, interest only strips that are derived from a pool of mortgages, or in any investment that could result in zero interest accrual if held to maturity.

10.0 REVIEW OF INVESTMENT PORTFOLIO

The securities held by the City must be in compliance with Section 8.0 “Authorized and Suitable Investments” at the time of purchase. If, subsequent to the date of purchase , a security is determined to be no longer in compliance with Section 8.0, the City Treasurer/Deputy Treasurer shall report the non -compliant security to the City Council and shall include a disclosure in the monthly Investment Report if the security is held at the date the report is prepared.

The City’s external, independent auditors perform an annual review of the City ’s Investment Policy, investment process, and related internal controls. The annual review process is performed as part of the City’s annual external financial audit.

11.0 INVESTMENT POOLS

The Local Agency Investment Fund (LAIF) is a voluntary investment alternative for California’s local governments and special districts authorized by the California Government Code. LAIF is a State of California managed investment pool established by the State Treasurer for the benefit of local agencies.

The City’s participation in LAIF was approved by the City Council with other authorized investments in July 1987. It is a permitted investment with the knowledge that the fund may invest in some vehicles allowed by statute but not otherwise authorized under the City’s authorized investments. All securities in LAIF are purchased under the authority of Government Code Sections 16430 and 16480. All investments are purchased at market value, and market valuation is conducted monthly.

Statement of Investment Policy Page 9
The City may also invest in shares of beneficial interest issued by a joint powers authority (“JPA”) organized pursuant to Section 6509.7 of the California Government Code that invests in the securities and obligations specified in the code and which shall retain an investment advisor that meets the following criteria:

1. Be registered or exempt from registration with the Securities and Exchange Commission;

2. Have assets under management in excess of five hundred million dollars ($500,000,000), and

3. Have not less than five (5) years of experience investing in the securities and ob ligations authorized herein.

12.0 COLLATERALIZATION

All bank deposits must be FDIC insured or collateralized in accordance with Government Code Section 53630 et seq.

13.0 SAFEKEEPING AND CUSTODY

To protect against potential losses by the collapse of individual securities dealers, al l trades will be transacted on a delivery-versus-payment (DVP) basis. This means that the securities shall be delivered to the City’s designated custodian upon receipt of the payment by the City. The securities shall be held in safekeeping by a third -party custodian, acting as agent for the City under the terms of a custody agreement executed by the bank and City. The third -party custodian shall be required to issue a monthly safekeeping report to the City that lists the specific investment, rate, maturity and other pertinent information.

The only exception to the foregoing shall be dep ository accounts and security purchases made with investment pools and certificates of deposit since the purchased securities are not deliverable. Evidence of these investments will be held in the City’s vault . No outside broker/dealer or advisor may have access to City funds, accounts or investments, and any transfer of funds to or through an outside broker/dealer must be approved by the City Treasurer/Deputy Treasurer.

The City strives to maintain the level of investment of all funds as near 100% as possible, through daily and projected cash flow determinations. Idle cash management and investment transactions are the responsibility of the City Treasurer/Deputy Treasurer.

Statement of Investment Policy Page 10

14.0 DIVERSIFICATION

It is the policy of the City to diversify its investment portfolio. Assets shall be diversified to eliminate the risk of loss resulting from over-concentration of assets in a specific issuer, security type, and maturities. Diversification strategies shall be determined and revised periodically. The purpose of diversifying is to reduce overall portfolio risks while attaining an average market rate of return; therefore, it needs to be conceptualized in terms of maturity, instrument types and issuer. To promote diversification, no more than 5% of the portfolio may be invested in the securities of any one issuer, regardless of security type; excluding U.S. Treasuries, federal agencies, supranationals, and pooled investments such as LAIF, money market funds, or local government investment pools.

15.0 MAXIMUM MATURITIES

To the extent possible, the City will attempt to match security maturities to anticipated cash flow requirements. Where this Policy does not list a specific maturity limit, this Policy permits up to 10% of the portfolio to be invested in securities with remaining maturities between 5 and 10 years. For purposes of compliance with this Policy, an investment’s term or remaining maturity shall be measured from the settlement date to final maturity.

16.0 INTERNAL CONTROL

The City Treasurer/Deputy 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 procedures should include references to individuals authorized to execute transactions or transfers, safekeeping agreements, repurchase agreements, wire transfer agreements, collateral/depository agreements and banking services contracts, as appropriate.

The internal control structure shall be designed to provide reasonable assurance th at these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgement by management. The City Treasurer/Deputy Treasurer shall establish an annual process of independent review by an external auditor. This review will provide internal control by assuring compliance with policies and procedures set forth in this Policy. Also, see Section 9.0 of this Policy.

17.0 PERFORMANCE

The investment performance of the City’s operating portfolio shall be evaluated and compared to an appropriate benchmark in order to assess the success of the investment program relative to the City’s Safety, Liquidity, and Yield objectives. This review will be conducted annually with the City Treasurer, City Manager, Assistant City Manager, and Finance Director, and, if necessary,

Statement of Investment Policy Page 11
consideration will be given to making adjustments to future investment strategies as market conditions permit.

18.0 REPORTING

The City Treasurer shall prepare and submit a monthly investment report to the City Council and City Manager, which shall include all securities, excluding those held by and invested through trustees. The report shall include the following:

• A monthly report of transactions.

• The type of investment, name of the issuer, date of purchase, date of maturity, par and dollar amount invested in all securities.

• The weighted average maturity of the investments.

• Any funds, investments, or programs including loans that are under the management of contracted parties.

• A description of the compliance with this Policy.

• A statement of the City’s ability to meet its pooled expenditure requirements for the next six months or provide an explanation as to why sufficient money shall or may not be available.

• The investment portfolio report shall include current market value information for all investments. A monthly market value will be obtained for each security owned by the City.

For purposes of reporting, the market value of each security may be obtained from the City’s custodian bank or other pricing source(s) utilized by the City’s investment advisor.

The City Treasurer shall be responsible for reviewing and modifying investment guidelines as conditions warrant and is required to submit same for re -approval to the City Council on an annual basis with or without changes. However, the City Treasurer may, at any time, further restrict the items approved for purchase as deemed appropriate.

The basic premise underlying the City’s investment philosophy is, and will continue to be, to ensure that money is always safe and available when needed.

Statement of Investment Policy     Page 13
GLOSSARY OF TERMS

The glossary is provided for general information only. It is not to be consider a part of the Policy for determining Policy requirements or terms.

AGENCIES: Agencies of or sponsored by the Federal government set up to supply credit to various classes of institutions.  Examples include Federal Home Loan Banks (FHLB), Federal Farm Credit Bank (FFCB), Federal Home Loan Mortgage Corporation (FHLMC), and Federal National Mortgage Association (FNMA).

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

ASKED: The price at which securities are offered by a selling party to a buying party.

ASSET‐BACKED SECURITIES (ABS):

Securities whose income payments and hence value is
derived from and collateralized (or "backed") by a specified pool of underlying assets which are receivables. The pools of underlying assets can comprise common payments credit cards, auto loans, mortgage loans, and other types of assets. Interest and principal are paid to investors from borrowers who are paying down their debt.

BANKERS’ ACCEPTANCE (BA): A draft, bill, or exchange accepted by a bank or trust company.

The accepting institution guarantees payment of the bill, as well as the issuer.

BASIS POINT: One basis point is one‐hundredth of a percent (i.e., 0.01%).

BEAR MARKET: A period of generally pessimistic attitudes and declining market prices.

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 selling securities, you ask for a bid.)

BOND EQUIVALENT YIELD: The basis on which yields on notes and bonds are quoted.

Statement of Investment Policy     Page 14
BOOK VALUE (COST VALUE): The value at which a debt security is shown on the holder’s balance sheet.  Book value is acquisition cost less amortization of premium or accretion of discount.

BROKER/DEALER:  An  individual  or  firm  that  brings  buyers  and  sellers  together  in  a  securities transaction.

BULL MARKET: A
period of generally optimistic attitudes and increasing market prices.

CALLABLE SECURITIES: A security that is redeemable by the issuer before the scheduled maturity.

Bonds  are  usually  called  when  the  interest  rates  fall  so  significantly  that  the  issuer  can  save money by floating new bonds at lower rates.

CALIFORNIA  ASSET  MANAGEMENT
PROGRAM  (“CAMP”):  A  California  Joint  Powers  Authority (“JPA”) established in 1989 to provide California public agencies with professional investment services. Investments offered through the Cash Reserve Portfolio (the “Pool” or the “CAMP Pool”) and CAMP Term are permitted for all local agencies under California Government Code Section 53601(p). The Program also offers educational resources, market updates and arbitrage rebate compliance services.

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 monies.

CORPORATE MEDIUM‐TERM NOTE:  Corporate and depository institution debt securities with a maximum  remaining  maturity  of  five  years  or  less,  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.

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.

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.

Statement of Investment Policy     Page 15
DELIVERY  VERSUS  PAYMENT  (DVP):  Delivery  of  securities  with  a  simultaneous  exchange  of money for the securities.

DERIVATIVES: Financial products dependent for their value on (or derived from) an underlying financial instrument, a commodity, or an index.

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 at a discount.

DISCOUNT SECURITIES:   Non‐interest bearing, money market instruments that are issued at 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.

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

FEDERAL  FUNDS  RATE:  The  interest  rate  charged  by  one  institution  lending  federal  funds  to another.

FEDERAL  HOME  LOAN  BANKS  (FHLB):  Government  sponsored wholesale  banks  (currently  12
regional  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.

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 corporation’s purchases include  a  variety  of  adjustable  mortgages,  second  loans,  and  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

Statement of Investment Policy     Page 16
and sales of Government Securities in the open market to influence the volume of bank credit and money.

FEDERAL  RESERVE  SYSTEM:  The  central  bank  of  the  United  States  created  by  Congress  and comprising  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.

GOVERNMENTAL  ACCOUNTING  STANDARDS  BOARD  (GASB):   The  independent  organization that  establishes  and  improves  standards  of  accounting  and  financial  reporting  for  the  United States, state and local governments.

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 FMHM mortgages.   The term “pass‐through” is often used to describe Ginnie Maes.

INTEREST ONLY STRIP:  Investments created by separating the principal and interest portions of a  debt  security  or  pool  of  securities  into  separate  investments.   Interest  only  strips  are  most common  with  mortgage‐backed  securities.   The  investor  benefits  if  interest  rates  rise  and principal  repayments  slow,  but  if  interest  rates  fall  and  principal  repayments  accelerate,  the investor will receive less interest.  Once the principal amount has been repaid, interest payments stop, and the value of an interest only strip falls to zero.

INVERSE  FLOATER:   Debt  securities  that  have  a  floating  coupon  rate  that  adjusts  inversely  to movements  in  a  benchmark  interest  rate.   They  can  offer  a  hedge  against  falling  interest rates.  However, the structure of these investments can magnify changes in the security’s market value.  Furthermore, if interest rates rise, the investor may end up with a security that pays little to no interest with a diminished security value.

INVESTMENT AGREEMENTS: An
agreement with a financial institution to borrow public funds subject to certain negotiated terms and conditions concerning collateral, liquidity and interest rates.

LIQUIDITY:  A  liquid  asset  is  one  that  can  be  converted  easily  and  rapidly  into  cash  without  a substantial loss.

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.

Statement of Investment Policy     Page 17
LOCAL GOVERNMENT INVESTMENT POOL (LGIP): A type of pooled investment program formed by a joint powers authority in which funds from its local agency investors are aggregated together for investment purposes.

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

MARKET RATE
OF RETURN:  A rate of return commensurate with the market for similar securities (maturity, credit rating, duration and liquidity) would be considered a market rate of return.

MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase–reverse, repurchase agreements that establishes 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.

NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION (NRSRO): A credit rating agency approved by the U.S. Securities and Exchange Commission (SEC) that provides credit ratings that are used by the U.S. government
and investors as benchmarks.  Examples include
Standard & Poor’s Corporation, Moody’s Investor Services, Inc. and Fitch, Inc.

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

OPEN MARKET OPERATIONS:  Federal Reserve activity.  Under the Federal Reserve Act, the Fed uses purchases
and sales of Government and Federal Agency securities to add to or subtract from commercial  bank  reserves.   Goals  are  to  sustain  economic  growth,  high  employment  and reasonable price stability.

PAPER GAIN OR LOSS: Term used for unrealized gain or loss on securities being held in a portfolio based on comparison of current market quotes and their original cost.  This situation exists if the security is held while there is a difference between cost value (book value) and the market value.

PORTFOLIO: Collection of securities held by an investor.

Statement of Investment Policy     Page 18
PRIMARY DEALER:  A group of government securities dealers who submit daily reports of market activity, 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: An investment standard to be followed by those authorized to make investment decisions on behalf of a local agency.  Those authorized shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of that agency.

RANGE NOTE:  A structured investment that pays interest as long as a benchmark interest rate is within a specified interest rate range. These securities provide higher than market interest rates, but the investor will not receive any interest if the benchmark interest rate moves outside the

specified range. The investor is betting interest rates will remain relatively stable.

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; the current income return.

SAFEKEEPING: The service
to customers by banks and trust companies when the bank or trust company stores the securities for protection, receives coupon payments and redeems issues at maturity.

SECONDARY MARKET:  A market made for the purchase and sale of outstanding issues following the initial distribution of securities.

SECURITIES  &  EXCHANGE  COMMISSION:

Agency  created  by  Congress  to  protect  investors  in securities transactions by administering securities legislation.

SEC RULE 15(C) 3‐1:  See Uniform Net Capital Rule.

SUPRANATIONALS:   Development  banks  that  share  the  same  goal  of  providing  an  improved standard  of  living  in  their  member  countries,  but  each  having  different  mandates.   There  are three  banks  (supranationals)  in  which  California  local  agencies  can  invest  in  their  debt obligations;  the  International  Bank  for  Reconstruction  and  Development  (IBRD),  International Finance Corporation (IFC) and Inter‐American Development Bank (IADB).

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  BONDS:  Long‐term  coupon‐bearing  U.S.  Treasury  securities  issued  as  direct obligations of the U.S. Government and having initial maturities of over 10 years.

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TREASURY  NOTES:  Medium‐term  coupon‐bearing  U.S.  Treasury  securities  issued  as  direct obligations of the U.S. Government and having initial maturities from one to 10 years.

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  15‐1;  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.   Liquid  capital  includes  cash  and  assets  easily  converted  to  cash  without penalty.

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

YIELD TO MATURITY: The current income yield on an investment, minus any premium above par, or plus any discount from par in the purchase price with the adjustment spread over the period from date of purchase to maturity of
the bond.

RANCHO CUCAMONGA

FIRE PROTECTION DISTRICT

STATEMENT OF

INVESTMENT POLICY
2024
Prepared by the Administrative Services Group
Elisa Cox, Treasurer
Noah Daniels, Finance Director
Hiram Zavala, Management Analyst II
ATTACHMENT 2

RANCHO CUCAMONGA FIRE PROTECTION DISTRICT

STATEMENT OF INVESTMENT POLICY

TABLE OF CONTENTS

Introduction ........................................................................................................ 1 Scope .................................................................................................................. 1 Delegation of Authority ................................................................................... 1-2 Prudence ............................................................................................................ 2 Objective ......................................................................................................... 2-3 Ethics and Conflicts of Interest ......................................................................... 3-4 Authorized Financial Dealers and Institutions ..................................................... 4 Authorized and Suitable Investments .............................................................. 4-8 Prohibited Investments ....................................................................................... 8 Review of Investment Portfolio .......................................................................... 8 Investment Pools ............................................................................................. 8-9 Collateralization .................................................................................................. 9 Safekeeping and Custody .................................................................................... 9 Diversification ................................................................................................... 10 Maximum Maturities ........................................................................................ 10 Internal Control ................................................................................................ 10 Performance ................................................................................................ 10-11 Reporting .......................................................................................................... 11 Investment Policy Adoption .............................................................................. 12 Glossary ....................................................................................................... 13-19

Statement of Investment Policy Page 1

RANCHO CUCAMONGA FIRE PROTECTION DISTRICT

STATEMENT OF INVESTMENT POLICY

1.0 INTRODUCTION

This Statement of Investment Policy (“Policy”) provides guidelines for the prudent investment of the Rancho Cucamonga Fire Protection District’s (“District”) idle cash and outlines the policies essential to ensuring the safety and financial strength of the District’s investment portfolio. This Policy is based on the principles of prudent money management and conforms to all federal, state, and local laws governing the investment of public funds. The goal of this Policy is to enhance the economic status of the District by protecting its pooled cash and to invest public funds to:

1. Meet the daily cash flow needs of the District;

2. Comply with all laws of the State of California regarding investment of public funds; and

3. Achieve a reasonable rate of return while minimizing the potential for capital losses arising from market changes or issuer default.

2.0 SCOPE

This Policy applies to the investment activities of all funds of the Rancho Cucamonga Fire Protection District. These funds are accounted for in the City’s Annual Comprehensive Financial Report (ACFR) and include: General Fund, Special Revenue Funds, Debt Service Funds, Capital Project Funds, Proprietary Funds, as well as Agency Funds and a Private-Purpose Trust Fund.

Bond proceeds shall be invested in accordance with the requirements and restrictions outlined in bond documents as approved by the President and Members of the Board of Directors. If the bond documents are silent as to the permitted investments, the bond proceeds will be invested in the securities permitted by this Policy. Notwithstanding the other provisions of this Policy, the percentage limitations listed elsewhere in this Policy do not apply to bond proceeds.

3.0 DELEGATION OF AUTHORITY

The President and Members of the Board of Directors, as permitted under California Government Code §53607, delegate the responsibility to manage the District’s investment portfolio to the District Treasurer for a period of one-year, unless revoked. Subject to review, the President and Members of the Board of Directors may renew the delegation of authority each year. The District Treasurer shall be responsible for all transactions undertaken and shall establish a system of

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controls to regulate the activities of subordinate officials, and their procedures, in the absence of the District Treasurer. Pursuant to Government Code §1190, the District Treasurer appoints the Finance Director to act as Deputy Treasurer with responsibility to manage the District’s investment portfolio on a daily basis. The District Treasurer/Deputy Treasurer will maintain on file a written authorization designating those individuals to whom daily investment activities, such as carrying out the District Treasurer's/Deputy Treasurer’s investment instructions, confirming treasury transactions, and other routine activities, have been delegated.

As authorized by the President and Members of the Board of Directors, the District may also utilize the services of an independent investment advisor to assist with the investment program under the supervision of the District Treasurer/Deputy Treasurer. The investment advisor shall follow this Policy and such other written instructions as are provided by the District. The investment advisor shall never take possession of the District’s funds or assets.

4.0 PRUDENCE

All persons authorized to make investment decisions on behalf of the District are trustees and therefore fiduciaries subject to the prudent investor standard, as described in Government Code section 53600.3 which states:

When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency.

The District Treasurer/Deputy Treasurer and authorized persons acting in accordance with this Policy and the “prudent investor” standard 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 manner and appropriate action is taken to control adverse developments, whenever possible.

5.0 OBJECTIVE

The objective of the investment portfolio is to meet the short- and long-term cash flow demands of the District. To achieve this objective, the portfolio will be structured to provide safety of principal and liquidity, while then providing a reasonable return on investments.

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The authority governing investments for municipal governments is set forth in Government Code Sections 53600 et seq. District strategy has been to limit investments more stringently than required under state law. The primary objectives of investment activities, in order of priority are:

1. Safety - Safety and risk associated with an investment refers to the potential loss of principal, interest, or combination thereof. The District only invests in those instruments that are considered safe. Each investment transaction shall be undertaken in a manner that seeks to ensure, whenever possible, that all capital losses are avoided, whether from securities default, broker/dealer default, or erosion of market value. The District shall seek to preserve principal by mitigating two types of risk: credit risk and market risk.

 Credit risk, defined as the risk of loss due to failure of the issuer of a security, shall be mitigated by investing in only very safe securities and by diversifying the investment portfolio so that the failure of any one issuer would not unduly harm the District’s cash flow.

 Market risk, defined as the risk of market value fluctuations due to overall changes in the general level of interest rates, shall be mitigated by structuring the portfolio to align with the District’s anticipated cash flow needs. It is explicitly recognized, however, that in a diversified portfolio, occasional measured losses may occur and must be considered within the context of overall investment return and liquidity needs.

2. Liquidity - Liquidity is an important investment quality especially when the need for unexpected funds occasionally occurs. The District’s investment portfolio will remain sufficiently liquid to enable the District to meet operating requirements that might be reasonably anticipated.

3. Yield - The District’s investment portfolio shall be designed with the objective of attaining a reasonable market rate of return throughout budgetary and economic cycles, commensurate with the District’s investment risk constraints as long as it does not diminish the objectives of Safety and Liquidity.

6.0 ETHICS AND CONFLICTS OF INTEREST

The District Treasurer/Deputy Treasurer and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions.

Employees and investment officers shall disclose any material financial interest in financial institutions that conduct business with the District, and they shall further disclose any personal financial/investment positions that could be affected by the performance of the District’s

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operations and functions or by the management of the District’s investment program. The District Treasurer/Deputy Treasurer and investment employees are required to file annual disclosure statements as required by the Fair Political Practices Commission (FPPC).

7.0 AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS

The District Treasurer/Deputy Treasurer shall only execute investment transactions with those direct issuers authorized by this Policy (LAIF, LGIPs such as CAMP, money market funds, and banks). All other investment transactions will be conducted through the District’s investment advisor who will maintain their own list of approved issuers, brokers/dealers, and financial institutions with which to conduct transactions on the District’s behalf.

8.0 AUTHORIZED AND SUITABLE INVESTMENTS

In the event an apparent discrepancy is found between this Policy and the Government Code, the more restrictive parameters will take precedence. Percentage holding limits listed in this Policy apply at the time the security is purchased. Credit ratings, where shown, specify the minimum credit rating category required at purchase. In the event a security held by the District is subject to a credit rating change that brings it below the minimum credit ratings specified in this Policy, the District Treasurer/Deputy Treasurer should notify the President and Members of the Board of Directors of the change in the next monthly investment report. The course of action to be followed will then be decided on a case-by-case basis, considering such factors as the reason for the change, prognosis for recovery or further rate drops, and the market price of the security. Any security not listed in Section 8.0 is not a valid investment for the District. The concise list of approved securities is as follows:

 United States Treasury Securities: United States Treasury Bills, Bonds, and Notes or those instruments for which the full faith and credit of the United States are pledged for payment of principal and interest.

There is no limit on the percentage of the portfolio that can be invested in this category.

 United States Federal Agencies: Obligations issued by Federal Agencies or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government-sponsored enterprises.

There is no limit on the percentage of the portfolio that can be invested in this category.

 Supranational Securities: United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank

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for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank. The maximum remaining maturity for supranational obligations must be five years or less, and they must be eligible for purchase and sale within the United States.

These investments must be rated in a rating category of “AA” or better by a NRSRO.

There is a 30% limit on the percentage of the portfolio that can be invested in this category.

The maximum remaining maturity of any investment in this category shall not exceed five- years.

 Municipals Notes or Bonds: Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state.

Registered treasury notes or bonds of any of the other 49 states in addition to California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states, in addition to California.

Bonds, notes, warrants, or other evidences of indebtedness of a local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency.

Purchases are limited to securities rated in a rating category of “A” (long-term) or “A-1” (short-term) or their equivalents or better by a Nationally Recognized Statistical Rating Organization (“NRSRO”). (The minimum rating shall apply to any issuer, irrespective of any credit enhancement).

There is a 30% limit on the percentage of the portfolio that can be invested in this category.

 Negotiable Certificates of Deposit: Negotiable certificates of deposit issued by a nationally or state-chartered bank, a savings association or a federal association, a state or federal credit union, or by a federally licensed or state-licensed branch of a foreign bank. Purchases are limited to securities rated in a rating category of “A” (long-term) or “A-1” (short-term) or their equivalents or better by an NRSRO.

There is a 30% limit on the percentage of the portfolio that can be invested in this category.

 Asset-Backed Securities: A mortgage passthrough security, collateralized mortgage obligation, mortgage-backed or other pay-through bond, equipment lease-backed certificate,

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consumer receivable passthrough certificate, or consumer receivable-backed bond.

Securities shall be rated in a rating category of “AA” or its equivalent or better by an NRSRO.

There is a 20% limit on the percentage of the portfolio that can be invested in this category.

The maximum remaining maturity of any investment in this category shall not exceed five- years.

 Medium-Term Notes: Medium-Term Notes are defined as all corporate and depository institution debt securities. They must be issued by corporations organized and operating within the United States. Notes eligible for investment shall be rated in a rating category of “A” or its equivalent or better by an NRSRO.

There is a 30% limit on the percentage of the portfolio that can be invested in this category.

The maximum remaining maturity of any investment in this category shall not exceed five- years.

 Bankers’ Acceptances: Bankers’ acceptances, otherwise known as bills of exchange or time drafts, that are drawn on and accepted by a commercial bank. Purchases are limited to issuers that have short-term debt rated in a rating category of “A-1” or its equivalent or higher by an NRSRO.

There is a 40% limit on the percentage of the portfolio that can be invested in this category.

The maximum maturity shall not exceed 180 days.

 Commercial Paper: Must be of “prime” quality of the highest ranking or of the highest letter and number rating as provided for by an NRSRO.

The entity that issues the commercial paper shall meet all the following conditions: (i) is organized and operating in the United States as a general corporation, (ii) has total assets in excess of five hundred million dollars ($500,000,000), and (iii) has debt other than commercial paper, if any, that is rated in a rating category of “A” or its equivalent or higher by an NRSRO.

There is a 25% limit on the percentage of the portfolio that can be invested in this category.

The maximum maturity shall not exceed 270 days.

 Repurchase Agreements (Repos): An executed Master Repurchase Agreement is required between the Rancho Cucamonga Fire Protection District and the broker dealer or financial Institution. The market value of securities that underlies a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities and the value

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shall be adjusted no less than quarterly. Collateral is restricted to U.S. Treasury and Federal Agency securities.

There is a 20% limit on the percentage of the portfolio that can be invested in this category.

The maximum maturity of any investment in this category shall not exceed one year.

 State of California Local Agency Investment Fund (LAIF): The Local Agency Investment Fund (LAIF) is a State of California managed investment pool established by the State Treasurer for the benefit of local agencies.

There is no limit on the percentage of the portfolio that can be invested in this category. The maximum investment in LAIF accounts is dependent upon limits established under the Local Agency Investment Fund guidelines and not Government Code.

 Local Government Investment Pool (LGIP): Shares of beneficial interest issued by a joint powers authority (JPA) organized pursuant to Section 6509.7 that invests in the securities and obligations authorized in Government Code. Whenever the District has any funds invested in a LGIP, the District Treasurer/Deputy Treasurer shall maintain on file a copy of the LGIP’s current information statement and periodically review the LGIP’s investments.

There is no limit on the percentage of the portfolio that can be invested in this category.

 Money Market Funds (“MMF”): Government Money Market Funds meeting either of the following criteria: (A) Attained the highest ranking or the highest letter and numerical rating provided by not less than two NRSROs, or (B) Retained an investment advisor with not less than five years’ experience and registered or exempt from registration with the SEC, with assets under management in excess of five hundred million dollars ($500,000,000).

Whenever the District has any funds invested in an MMF, the District Treasurer/Deputy Treasurer shall maintain on file a copy of the MMF’s current information statement. A maximum of 20% of the District’s portfolio may be invested in this category.

There is a 20% limit on the percentage of the portfolio that can be invested in this category.

 Bank Deposits: FDIC insured or collateralized demand deposit accounts, savings accounts, market rate accounts, certificates of deposits and other types of bank deposits in financial institutions located in California. The amount on deposit in any financial institution shall not exceed the shareholder's equity. To be eligible to receive District deposits, the financial institution must have received a minimum overall satisfactory rating, under the Community Redevelopment Act, for meeting the credit needs of California Communities in its most recent evaluation. Bank deposits are required to be collateralized as specified under Government Code Section 53630 et seq. The District Treasurer/Deputy Treasurer, at his/her discretion,

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may waive the collateralization requirements for any portion that is covered by federal deposit insurance. The District shall have a signed agreement with any depository accepting District funds per Government Code Section 53649. There is no limit on the percentage of the portfolio that may be invested in this category.

There is no limit on the percentage of the portfolio that can be invested in this category.

However, a maximum of 10 percent of the portfolio may be invested in time deposits.

9.0 PROHIBITED INVESTMENTS

Any security type or structure not specifically approved by this policy is hereby specifically prohibited. Security types which are thereby prohibited include, but are not limited to, inverse floaters, derivatives, range notes, interest only strips that are derived from a pool of mortgages, or in any investment that could result in zero interest accrual if held to maturity.

10.0 REVIEW OF INVESTMENT PORTFOLIO

The securities held by the District must be in compliance with Section 8.0 “Authorized and Suitable Investments” at the time of purchase. If, subsequent to the date of purchase, a security is determined to be no longer in compliance with Section 8.0, the District’s Treasurer/Deputy Treasurer shall report the non-compliant security to the President and Members of the Board of Directors and shall include a disclosure in the monthly Investment Report if the security is held at the date the report is prepared.

The City’s external, independent auditors perform an annual review of the District’s Investment Policy, investment process, and related internal controls. The annual review process is performed as part of the City’s annual external financial audit.

11.0 INVESTMENT POOLS

The Local Agency Investment Fund (LAIF) is a voluntary investment alternative for California’s local governments and special districts authorized by the California Government Code. LAIF is a State of California managed investment pool established by the State Treasurer for the benefit of local agencies.

The District’s participation in LAIF was approved by the President and Members of the Board of Directors with other authorized investments in July 1987. It is a permitted investment with the knowledge that the fund may invest in some vehicles allowed by statute but not otherwise authorized under the District’s authorized investments. All securities in LAIF are purchased under the authority of Government Code Sections 16430 and 16480. All investments are purchased at market value, and market valuation is conducted monthly.

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The District may also invest in shares of beneficial interest issued by a joint powers authority (“JPA”) organized pursuant to Section 6509.7 of the California Government Code that invests in the securities and obligations specified in the code and which shall retain an investment advisor that meets the following criteria:

1. Be registered or exempt from registration with the Securities and Exchange Commission;

2. Have assets under management in excess of five hundred million dollars ($500,000,000), and

3. Have not less than five (5) years of experience investing in the securities and obligations authorized herein.

12.0 COLLATERALIZATION

All bank deposits must be FDIC insured or collateralized in accordance with Government Code Section 53630 et seq.

13.0 SAFEKEEPING AND CUSTODY

To protect against potential losses by the collapse of individual securities dealers, all trades will be transacted on a delivery-versus-payment (DVP) basis. This means that the securities shall be delivered to the District’s designated custodian upon receipt of the payment by the District. The securities shall be held in safekeeping by a third-party custodian, acting as agent for the District under the terms of a custody agreement executed by the bank and District. The third-party custodian shall be required to issue a monthly safekeeping report to the District that lists the specific investment, rate, maturity and other pertinent information.

The only exception to the foregoing shall be depository accounts and security purchases made with investment pools and certificates of deposit since the purchased securities are not deliverable. Evidence of these investments will be held in the City’s vault. No outside broker/dealer or advisor may have access to District funds, accounts or investments, and any transfer of funds to or through an outside broker/dealer must be approved by the District Treasurer/Deputy Treasurer.

The City strives to maintain the level of investment of all funds as near 100% as possible, through daily and projected cash flow determinations. Idle cash management and investment transactions are the responsibility of the District Treasurer/Deputy Treasurer.

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14.0 DIVERSIFICATION

It is the policy of the District to diversify its investment portfolio. Assets shall be diversified to eliminate the risk of loss resulting from over-concentration of assets in a specific issuer, security type, and maturities. Diversification strategies shall be determined and revised periodically. The purpose of diversifying is to reduce overall portfolio risks while attaining an average market rate of return; therefore, it needs to be conceptualized in terms of maturity, instrument types and issuer. To promote diversification, no more than 5% of the portfolio may be invested in the securities of any one issuer, regardless of security type; excluding U.S. Treasuries, federal agencies, supranationals, and pooled investments such as LAIF, money market funds, or local government investment pools.

15.0 MAXIMUM MATURITIES

To the extent possible, the District will attempt to match security maturities to anticipated cash flow requirements. Where this Policy does not list a specific maturity limit, this Policy permits up to 10% of the portfolio to be invested in securities with remaining maturities between 5 and 10 years.

16.0 INTERNAL CONTROL

The District Treasurer/Deputy Treasurer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the District are protected from loss, theft or misuse. The procedures should include references to individuals authorized to execute transactions or transfers, safekeeping agreements, repurchase agreements, wire transfer agreements, collateral/depository agreements and banking services contracts, as appropriate. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgement by management. The District Treasurer/Deputy Treasurer shall establish an annual process of independent review by an external auditor. This review will provide internal control by assuring compliance with policies and procedures set forth in this Policy. Also, see Section 9.0 of this Policy.

17.0 PERFORMANCE

The investment performance of the District’s operating portfolio shall be evaluated and compared to an appropriate benchmark in order to assess the success of the investment program relative to the City’s Safety, Liquidity, and Yield objectives. This review will be conducted annually with the District’s Treasurer, and Finance Director, and, if necessary, consideration will be given to making adjustments to future investment strategies as market conditions permit.

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18.0 REPORTING
The District Treasurer shall prepare and submit a monthly investment report to the President and Members of the Board of Directors and City Manager, which shall include all securities, excluding those held by and invested through trustees. The report shall include the following:
 A monthly report of transactions.
 The type of investment, name of the issuer, date of purchase, date of maturity, par and dollar amount invested in all securities.
 The weighted average maturity of the investments.
 Any funds, investments, or programs including loans that are under the management of contracted parties.
 A description of the compliance with this Policy.
 A statement of the District’s ability to meet its pooled expenditure requirements for the next six months or provide an explanation as to why sufficient money shall or may not be available.  The investment portfolio report shall include current market value information for all investments. A monthly market value will be obtained for each security owned by the District.

For purposes of reporting, the market value of each security may be obtained from the District’s custodian bank or other pricing source(s) utilized by the District’s investment advisor.

The District Treasurer shall be responsible for reviewing and modifying investment guidelines as conditions warrant and is required to submit same for re-approval to the President and Members of the Board of Directors on an annual basis with or without changes. However, the District Treasurer may, at any time, further restrict the items approved for purchase as deemed appropriate.

The basic premise underlying the District’s investment philosophy is, and will continue to be, to ensure that money is always safe and available when needed.

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GLOSSARY OF TERMS

The glossary is provided for general information only. It is not to be consider a part of the Policy for determining Policy requirements or terms.

AGENCIES: Agencies of or sponsored by the Federal government set up to supply credit to various classes of institutions.  Examples include Federal Home Loan Banks (FHLB), Federal Farm Credit Bank (FFCB), Federal Home Loan Mortgage Corporation (FHLMC), and Federal National Mortgage Association (FNMA).

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

ASKED: The price at which securities are offered by a selling party to a buying party.

ASSET‐BACKED SECURITIES (ABS):

Securities whose income payments and hence value is
derived from and collateralized (or "backed") by a specified pool of underlying assets which are receivables. The pools of underlying assets can comprise common payments credit cards, auto loans, mortgage loans, and other types of assets. Interest and principal are paid to investors from borrowers who are paying down their debt.

BANKERS’ ACCEPTANCE (BA): A draft, bill, or exchange accepted by a bank or trust company.

The accepting institution guarantees payment of the bill, as well as the issuer.

BASIS POINT: One basis point is one‐hundredth of a percent (i.e., 0.01%).

BEAR MARKET: A period of generally pessimistic attitudes and declining market prices.

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 selling securities, you ask for a bid.)

BOND EQUIVALENT YIELD: The basis on which yields on notes and bonds are quoted.

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BOOK VALUE (COST VALUE): The value at which a debt security is shown on the holder’s balance sheet.  Book value is acquisition cost less amortization of premium or accretion of discount.

BROKER/DEALER:  An  individual  or  firm  that  brings  buyers  and  sellers  together  in  a  securities transaction.

BULL MARKET: A
period of generally optimistic attitudes and increasing market prices.

CALLABLE SECURITIES: A security that is redeemable by the issuer before the scheduled maturity.

Bonds  are  usually  called  when  the  interest  rates  fall  so  significantly  that  the  issuer  can  save money by floating new bonds at lower rates.

CALIFORNIA  ASSET  MANAGEMENT
PROGRAM  (“CAMP”):  A  California  Joint  Powers  Authority (“JPA”) established in 1989 to provide California public agencies with professional investment services. Investments offered through the Cash Reserve Portfolio (the “Pool” or the “CAMP Pool”) and CAMP Term are permitted for all local agencies under California Government Code Section 53601(p). The Program also offers educational resources, market updates and arbitrage rebate compliance services.

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 monies.

CORPORATE MEDIUM‐TERM NOTE:  Corporate and depository institution debt securities with a maximum  remaining  maturity  of  five  years  or  less,  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.

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.

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.

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DELIVERY  VERSUS  PAYMENT  (DVP):  Delivery  of  securities  with  a  simultaneous  exchange  of money for the securities.

DERIVATIVES: Financial products dependent for their value on (or derived from) an underlying financial instrument, a commodity, or an index.

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 at a discount.

DISCOUNT SECURITIES:   Non‐interest bearing, money market instruments that are issued at 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.

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

FEDERAL  FUNDS  RATE:  The  interest  rate  charged  by  one  institution  lending  federal  funds  to another.

FEDERAL  HOME  LOAN  BANKS  (FHLB):  Government  sponsored wholesale  banks  (currently  12
regional  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.

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 corporation’s purchases include  a  variety  of  adjustable  mortgages,  second  loans,  and  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

Statement of Investment Policy    Page 16
and sales of Government Securities in the open market to influence the volume of bank credit and money.

FEDERAL  RESERVE  SYSTEM:  The  central  bank  of  the  United  States  created  by  Congress  and comprising  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.

GOVERNMENTAL  ACCOUNTING  STANDARDS  BOARD  (GASB):   The  independent  organization that  establishes  and  improves  standards  of  accounting  and  financial  reporting  for  the  United States, state and local governments.

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 FMHM mortgages.   The term “pass‐through” is often used to describe Ginnie Maes.

INTEREST ONLY STRIP:  Investments created by separating the principal and interest portions of a  debt  security  or  pool  of  securities  into  separate  investments.   Interest  only  strips  are  most common  with  mortgage‐backed  securities.   The  investor  benefits  if  interest  rates  rise  and principal  repayments  slow,  but  if  interest  rates  fall  and  principal  repayments  accelerate,  the investor will receive less interest.  Once the principal amount has been repaid, interest payments stop, and the value of an interest only strip falls to zero.

INVERSE  FLOATER:   Debt  securities  that  have  a  floating  coupon  rate  that  adjusts  inversely  to movements  in  a  benchmark  interest  rate.   They  can  offer  a  hedge  against  falling  interest rates.  However, the structure of these investments can magnify changes in the security’s market value.  Furthermore, if interest rates rise, the investor may end up with a security that pays little to no interest with a diminished security value.

INVESTMENT AGREEMENTS: An
agreement with a financial institution to borrow public funds subject to certain negotiated terms and conditions concerning collateral, liquidity, and interest rates.

LIQUIDITY:  A  liquid  asset  is  one  that  can  be  converted  easily  and  rapidly  into  cash  without  a substantial loss.

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.

Statement of Investment Policy    Page 17
LOCAL GOVERNMENT INVESTMENT POOL (LGIP): A type of pooled investment program formed by a joint powers authority in which funds from its local agency investors are aggregated together for investment purposes.

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

MARKET RATE
OF RETURN:  A rate of return commensurate with the market for similar securities (maturity, credit rating, duration and liquidity) would be considered a market rate of return.

MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase–reverse, repurchase agreements that establishes 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.

NATIONALLY  RECOGNIZED  STATISTICAL  RATING  ORGANIZATION  (NRSRO):  A  credit  rating agency  approved  by  the  U.S.  Securities  and  Exchange  Commission  (SEC)  that  provides  credit ratings that are used by the U.S. government
and investors as benchmarks.   Examples include
Standard & Poor’s Corporation, Moody’s Investor Services, Inc. and Fitch, Inc.

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

OPEN MARKET OPERATIONS:  Federal Reserve activity.  Under the Federal Reserve Act, the Fed uses purchases
and sales of Government and Federal Agency securities to add to or subtract from commercial  bank  reserves.   Goals  are  to  sustain  economic  growth,  high  employment  and reasonable price stability.

PAPER GAIN OR LOSS: Term used for unrealized gain or loss on securities being held in a portfolio based on comparison of current market quotes and their original cost.  This situation exists if the security is held while there is a difference between cost value (book value) and the market value.

PORTFOLIO: Collection of securities held by an investor.

Statement of Investment Policy    Page 18
PRIMARY DEALER:  A group of government securities dealers who submit daily reports of market activity, 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: An investment standard to be followed by those authorized to make investment decisions on behalf of a local agency.  Those authorized shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of that agency.

RANGE NOTE:  A structured investment that pays interest as long as a benchmark interest rate is within a specified interest rate range. These securities provide higher than market interest rates, but the investor will not receive any interest if the benchmark interest rate moves outside the

specified range. The investor is betting interest rates will remain relatively stable.

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; the current income return.

SAFEKEEPING: The service
to customers by banks and trust companies when the bank or trust company stores the securities for protection, receives coupon payments and redeems issues at maturity.

SECONDARY MARKET:  A market made for the purchase and sale of outstanding issues following the initial distribution of securities.

SECURITIES  &  EXCHANGE  COMMISSION:

Agency  created  by  Congress  to  protect  investors  in securities transactions by administering securities legislation.

SEC RULE 15(C) 3‐1:  See Uniform Net Capital Rule.

SUPRANATIONALS:   Development  banks  that  share  the  same  goal  of  providing  an  improved standard  of  living  in  their  member  countries,  but  each  having  different  mandates.   There  are three  banks  (supranationals)  in  which  California  local  agencies  can  invest  in  their  debt obligations;  the  International  Bank  for  Reconstruction  and  Development  (IBRD),  International Finance Corporation (IFC) and Inter‐American Development Bank (IADB).

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  BONDS:  Long‐term  coupon‐bearing  U.S.  Treasury  securities  issued  as  direct obligations of the U.S. Government and having initial maturities of over 10 years.

Statement of Investment Policy    Page 19

TREASURY  NOTES:  Medium‐term  coupon‐bearing  U.S.  Treasury  securities  issued  as  direct obligations of the U.S. Government and having initial maturities from one to 10 years.

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  15‐1;  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.   Liquid  capital  includes  cash  and  assets  easily  converted  to  cash  without penalty.

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

YIELD TO MATURITY: The current income yield on an investment, minus any premium above par, or plus any discount from par in the purchase price with the adjustment spread over the period from date of purchase to maturity of
the bond.

DATE:June 27, 2024
TO:Mayor and Members of the City Council
President and Members of the Board of Directors
FROM:John R. Gillison, City Manager
INITIATED BY: Noah Daniels, Finance Director
SUBJECT: Consideration to Approve the Following to be in Compliance with Governmental Accounting Standards Board (GASB) Statement No. 54: 1) Updated Fund Balance Policy; 2) a Resolution Committing to the Level of Fiscal Reserves for the City of Rancho Cucamonga; and 3) a Resolution Committing to the Level of Fiscal Reserves for the Rancho Cucamonga Fire Protection District. (RESOLUTION NO. 2024-057 AND
RESOLUTION NO. FD 2024-009) (CITY/FIRE)
RECOMMENDATION:

Staff recommends that the City Council adopt a resolution committing to the level of fiscal reserves for the City of Rancho Cucamonga (City) and the Board of Directors adopt a resolution committing to the level of fiscal reserves for the Rancho Cucamonga Fire Protection District (Fire District).

Both resolutions will approve the updated Fund Balance Policy shared by the City and Fire District.

BACKGROUND:

Since 2011, to comply with GASB 54, the City Council and Board of Directors have been recommended to adopt resolutions to establish the upcoming fiscal year’s Fund Balance Policy.

The Fund Balance Policy primary purpose is to establish fund balance commitments for the City and Fire District by formal action of the City Council and Fire Board.

ANALYSIS:

To accommodate any changes to these commitments that may become necessary due to changes in operations or City Council goals, staff annually bring the resolutions with the attached Fund Balance Policy before the City Council and Board of Directors for their consideration at the end of each fiscal year.

At this time, the Fund Balance Policy modifications include:
•clarify the five classifications of fund balance for governmental funds: nonspendable, restricted, committed, assigned, and unassigned.
•Updating the minimum funding goal for the Self-Insurance commitment from eight to nine times the yearly self-insurance reserve for the City and Fire District to reflect the increasing costs covered by insurance claims and reserve goal in the City’s Reserve Funding Goals Policy.

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These changes do not change the Policy's purpose or use. The fund balance commitments included in the Policy are the following:
•Changes in Economic Circumstances
The City General Fund’s fund balance commitment for changes in economic circumstances is established at a goal of a nine-month reserve, or 75% of the City General Fund’s adopted expenditure budget for the upcoming fiscal year. Similarly, the Fire District's fund balance commitment for changes in economic circumstances is established at a goal of a nine-month reserve, or 75% of the Fire District's adopted expenditures budget for the upcoming fiscal year.

The specific uses of the fund balance commitment include 1) the declaration of a state or federal state of emergency or a local emergency as defined in Rancho Cucamonga Municipal Code Section 2.36.020; or 2) a change in economic circumstances in a given fiscal year that results in revenues to the City or Fire District being insufficient to cover expenditures for one or more fiscal years. The City Council or Fire Board may, by the affirming vote of four members, change the amount of this commitment and/or the specific uses of these monies.
•Facilities Capital Replacement
The City General Fund and Fire District's fund balance commitment for their respective facilities’ capital replacement is established as a minimum funding goal of 50% of capital assets value comprised of construction in progress (excluding infrastructure), building improvements, and improvements other than building.
•Working Capital
The City General Fund’s fund balance commitment for working capital is established as a minimum funding goal of 5% of the City's General Fund adopted expenditure budget for the upcoming fiscal year. The Fire District's fund balance commitment for working capital is established as a minimum funding goal of 50% of the Fire District's adopted expenditure budget for the upcoming fiscal year.
•Self-Insurance
The City General Fund’s and Fire District's fund balance commitment for payment of workers' compensation, general liability, and employment practices liability claims is established as a minimum funding goal of nine times the City and Fire District's yearly self- insurance reserve for all types of insurance coverage.
•PASIS Workers' Compensation Tail Claims
The Fire District's fund balance commitment for payment of outstanding workers' compensation claims remaining after its withdrawal from PASIS is established at a goal equal to the claims cost detail report from the Fire District's third-party administrator at the end of the fiscal year, plus 15%.

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•Employee Leave Payouts
The City General Fund’s and Fire District's fund balance commitment for employee leave payouts is valued in accordance with the memorandum of understandings for the City and Fire District’s bargaining groups as of the last day of the fiscal year. •Vehicle and Equipment Replacement
The Fire District's fund balance commitment for replacing fire safety vehicles and equipment, as determined based on its replacement criteria, is established as a minimum funding goal of 50% of the Fire District’s vehicle and equipment replacement value. •Law Enforcement
The City General Fund’s fund balance commitment for public safety purposes, including operations, equipment, capital outlay, capital facilities, personnel, and booking fees. The funding goal is 100% of the most recently approved Schedule A from the San Bernardino County Sheriff's Department.
•Economic Development Strategic Reserve
The City General Fund’s fund balance commitment for the acquisition and development of key properties to promote economic development for the benefit of the City as a whole and potentially generate ongoing revenues through negotiated agreements with third parties, including, but not limited to, land leases or public-private partnerships. The funding goal is the equivalent of the current value of a 10-acre mixed-use site on Foothill Boulevard as of January 1 of each year.
•Seasonal Weather Emergency Reserve
The City General Fund’s fund balance commitment is to provide for unanticipated costs incurred due to damage resulting from severe weather emergencies, such as wind, flood, fire, extreme or cold, and other forces of nature to avoid adversely impacting the City’s operating budget. The City Council will appropriate funding for these events on an as- needed basis when extreme seasonal weather emergencies occur. •Community Benefit Projects
A portion of the City General Fund’s fund balance is received from development projects, typically by means of a development agreement, which is committed to addressing the impacts typically associated with, but not limited to, large warehouse, industrial, and commercial developments, including affordable housing demand, future greenhouse gas emissions, fire protection services, electric vehicle charging, reduction in vehicle miles traveled, pedestrian safety improvements, carbon capture, alternative energy production, noise reduction, and environmental justice.

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•Public Safety Personnel Affordable Housing
A portion of the Fire District's fund balance is committed to providing additional funding to match the City's contributions to help create affordable for-sale housing for public safety personnel, including but not limited to Fire District employees. Funding may be used for silent seconds, closing costs, assistance with obtaining financing, or to help buy down the cost of design and construction of single-family housing units. The funding goal for this reserve is established as the value of the affordability gap to construct 50 housing units that are affordable at the 60% California Tax Credit Allocation Committee (TCAC) median income with a 4% tax credit scenario per unit, or $192,600 per unit, for a total funding goal of $9,630,000.

Note that an action of the City Council and Fire Board to commit fund balance needs to occur before the end of the fiscal year; however, the amounts can be determined in a subsequent period based on the funding guidelines established in the Fund Balance Policy.

FISCAL IMPACT:

There is no fiscal impact as a result of the recommended actions.

COUNCIL MISSION / VISION / GOAL(S) ADDRESSED:

The Fund Balance Policy and accompanying Resolutions supports the City Council’s core value of providing and nurturing a high quality of life for all by demonstrating the active, prudent fiscal management of the City’s financial resources essential to creating an equitable, sustainable, and vibrant city, rich in opportunity for all to thrive by building on our foundation and success as a world-class community.

ATTACHMENTS:

Attachment 1 – Resolution (City)
Attachment 2 – Resolution (Fire)
Attachment 3 – Fund Balance Policy (Exhibit A)

Resolution No. 2024-XXX
RESOLUTION NO. 2024-XXX

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

RANCHO CUCAMONGA, CALIFORNIA COMMITTING TO THE

LEVEL OF FISCAL RESERVES FOR THE CITY OF RANCHO

CUCAMONGA
WHEREAS, the Rancho Cucamonga City Council desires to protect existing services; and WHEREAS, the Rancho Cucamonga City Council desires to be prepared for emergencies; and
WHEREAS, the Rancho Cucamonga City Council desires to maintain good fiscal management and fiscal structure to operate a municipal corporation; and WHEREAS, the Rancho Cucamonga City Council desires to maintain the financial strength required to obtain beneficial bond ratings for the City.

NOW, THEREFORE, the City Council of the City of Rancho Cucamonga, California, does hereby resolve on this 27 th day of June 2024 that the level of fiscal reserves maintained by the City of Rancho Cucamonga as of fiscal year end are committed to the goals as outlined in the City’s Fund Balance Policy, attached to this resolution as Exhibit A.

PASSED, APPROVED, AND ADOPTED this 27th day of June 2024.

ATTACHMENT 1

Resolution No. FD 2024-XXX
RESOLUTION NO. FD 2024-XXX

RESOLUTION OF THE BOARD OF DIRECTORS OF THE

RANCHO CUCAMONGA FIRE PROTECTION DISTRICT, SAN

BERNARDINO COUNTY, CALIFORNIA COMMITTING TO THE

LEVEL OF FISCAL RESERVES FOR THE RANCHO

CUCAMONGA FIRE PROTECTION DISTRICT
WHEREAS, the Rancho Cucamonga Fire Protection District Board desires to protect existing services; and
WHEREAS, the Rancho Cucamonga Fire Protection District Board desires to be prepared for emergencies; and
WHEREAS, the Rancho Cucamonga Fire Protection District Board desires to maintain good fiscal management and fiscal structure to operate a municipal corporation.

NOW, THEREFORE, the Board of Directors of the Rancho Cucamonga Fire Protection District, San Bernardino, California, does hereby resolve on this 27 th day of June 2024 that the level of fiscal reserves maintained by the Rancho Cucamonga Fire Protection District as of fiscal year end are committed to the goals as outlined in the District’s Fund Balance policy, attached to this resolution as Exhibit A.

PASSED, APPROVED, AND ADOPTED this 27th day of June 2024.

ATTACHMENT 2

ATTACHMENT 3

PURPOSE
This Fund Balance Policy establishes the procedures for reporting both restricted and unrestricted fund balance in the financial statements. Fund balance will be required to be reported using the five classifications based on the extent to which the City and Fire District are bound by the constraint on resources reported in the fund. The policy also authorizes and directs the Finance Director to prepare financial reports showing fund balance classifications as required by Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions.

GASB Statement No. 54 improves how fund balance information is reported and enhances decision-making value. The Fund Balance Policy creates certain commitments and assignments of fund balance, which will help ensure adequate financial resources to protect the City and Fire District against unforeseen circumstances and events, such as revenue shortfalls and unanticipated expenditures.

GENERAL POLICY
Fund balance is basically the difference between the assets and liabilities reported in a governmental fund. GASB Statement No. 54 established five categories for classifying fund balance, each of which identifies the extent to which the City Council and Fire District are bound by the constraint of reserves in the governmental fund.

Nonspendable fund balance—Includes amounts that cannot be spent or are legally or contractually required to be maintained intact. For the City and Fire District, this includes prepaid costs and noncurrent receivables, but it is not limited to them.

Restricted fund balance – reflects the same definition as restricted net assets, which are constrained to be used for a specific purpose by external parties, such as creditors, grantors, contributors, laws, or regulations of other governments or imposed by law through constitutional provisions or enabling legislation.

CITY OF RANCHO CUCAMONGA

RANCHO CUCAMONGA FIRE

PROTECTION DISTRICT

FUND BALANCE POLICY
POLICY NO.: ___-__
EFFECTIVE: June 15, 2011
REVISED: June 27, 2024
APPROVED:

FUND BALANCE POLICY
PAGE 2 OF 6
Committed fund balance – amounts that are committed for a specific purpose. These funds require action from the City Council or Fire Board to establish, remove, or change the specified use.

Assigned fund balance – amounts that have been set aside and are intended to be used for a specific purpose but are neither restricted nor committed. Assigned amounts cannot cause a deficit in unassigned fund balance.

Unrestricted
Unassigned fund balance – funds that are not reported in any other category and are available for any purpose within the General Fund. The General Fund is the only fund that will have a positive unassigned fund balance.

Nonspendabe and restricted fund balances are not addressed in this policy due to the nature of their restrictions.

Spending Prioritization for Fund Categories
When an expenditure is incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) amounts are available, it is the accounting policy of the City and Fire District to consider restricted amounts to be reduced first. Similarly, when an expenditure is incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used, it shall be the accounting policy of the City and Fire District that committed amounts would be reduced first, followed by assigned amounts, and then unassigned amounts.

Committed Fund Balance
The City Council (which also acts as the Board of Directors for the Rancho Cucamonga Fire Protection District), as the City's highest level of decision-making authority, may make commitments of fund balance for specific purposes pursuant to constraints imposed by formal actions taken, such as an ordinance or resolution. A committed fund balance cannot be used for any other purpose unless the City Council or Fire Board changes or removes a commitment through the same type of formal action taken to establish the commitment. City Council or Fire Board action to commit fund balance needs to occur within the fiscal reporting period; however, the amount can be determined in a subsequent period.
•Changes in Economic Circumstances
The City General Fund’s fund balance commitment for changes in economic circumstances is established at a goal of a nine-month reserve, or 75% of the City General Fund’s adopted expenditure budget for operations in the upcoming fiscal year. Similarly, the Fire District's fund balance commitment for changes in economic circumstances is established at a goal of a nine-month reserve, or 75% of the Fire District's adopted expenditures budget for operations in the upcoming fiscal year.

The specific uses of the fund balance commitment include 1) the declaration of a state or federal state of emergency or a local emergency as defined in Rancho Cucamonga Municipal Code Section 2.36.020; or 2) a change in economic circumstances in a given fiscal year that results in revenues to the City or Fire District being insufficient to cover expenditures for one or more fiscal years. The City Council or Fire Board may, by the

FUND BALANCE POLICY
PAGE 3 OF 6
affirming vote of four members, change the amount of this commitment and/or the specific uses of these monies.
•Facilities Capital Replacement
The City General Fund and Fire District's fund balance commitment for their respective facilities’ capital replacement is established as a minimum funding goal of 50% of capital assets value comprised of construction in progress (excluding infrastructure), building improvements, and improvements other than building.
•Working Capital
The City General Fund’s fund balance commitment for working capital is established as a minimum funding goal of 5% of the City's General Fund adopted expenditure budget for the upcoming fiscal year. The Fire District's fund balance commitment for working capital is established as a minimum funding goal of 50% of the Fire District's adopted expenditure budget for the upcoming fiscal year.
•Self-Insurance
The City General Fund’s and Fire District's fund balance commitment for payment of workers' compensation, general liability, and employment practices liability claims is established as a minimum funding goal of nine times the City and Fire District's yearly self-insurance reserve for all types of insurance coverage. •PASIS Workers' Compensation Tail Claims
The Fire District's fund balance commitment for payment of outstanding workers' compensation claims remaining after its withdrawal from PASIS is established at a goal equal to the claims cost detail report from the Fire District's third-party administrator at the end of the fiscal year, plus 15%.
•Employee Leave Payouts
The City General Fund’s and Fire District's fund balance commitment for employee leave payouts is valued to completely payout vacation, sick, and other leave balances in accordance with the memorandum of understandings for the City and Fire District’s bargaining groups as of the last day of the fiscal year. •Vehicle and Equipment Replacement
The Fire District's fund balance commitment for replacing fire safety vehicles and equipment, as determined based on its replacement criteria, is established as a minimum funding goal of 50% of the Fire District’s vehicle and equipment replacement value. •Law Enforcement
The City General Fund’s fund balance commitment for public safety purposes, including operations, equipment, capital outlay, capital facilities, personnel, and booking fees. The

FUND BALANCE POLICY
PAGE 4 OF 6
funding goal is 100% of the most recently approved Schedule A from the San Bernardino County Sheriff's Department.
•Economic Development Strategic Reserve
The City General Fund’s fund balance commitment for the acquisition and development of key properties to promote economic development for the benefit of the City as a whole and potentially generate ongoing revenues through negotiated agreements with third parties, including, but not limited to, land leases or public-private partnerships. The funding goal is the equivalent of the current value of a 10-acre mixed-use site on Foothill Boulevard as of January 1 of each year.
•Seasonal Weather Emergency Reserve
The City General Fund’s fund balance commitment is to provide for unanticipated costs incurred due to damage resulting from severe weather emergencies, such as wind, flood, fire, extreme or cold, and other forces of nature to avoid adversely impacting the City’s operating budget. The City Council will appropriate funding for these events on an as- needed basis when extreme seasonal weather emergencies occur. •Community Benefit Projects
A portion of the City General Fund’s fund balance is received from development projects, typically by means of a development agreement, is committed to addressing the impacts typically associated with, but not limited to, large warehouse, industrial, and commercial developments, including affordable housing demand, future greenhouse gas emissions, fire protection services, electric vehicle charging, reduction in vehicle miles traveled, pedestrian safety improvements, carbon capture, alternative energy production, noise reduction, and environmental justice.
•Public Safety Personnel Affordable Housing
A portion of the Fire District's fund balance is committed to providing additional funding to match the City's contributions to help create affordable for-sale housing for public safety personnel, including but not limited to Fire District employees. Funding may be used for silent seconds, closing costs, assistance with obtaining financing, or to help buy down the cost of design and construction of single-family housing units. The funding goal for this reserve is established as the value of the affordability gap to construct 50 housing units that are affordable at the 60% California Tax Credit Allocation Committee (TCAC) median income with a 4% tax credit scenario per unit, or $192,600 per unit, for a total funding goal of $9,630,000.

Assigned Fund Balance
Amounts that are set aside and are intended to be used by the City or Fire District for specific purposes but are neither restricted nor committed are reported as assigned fund balance.

Assigned amounts cannot cause a deficit in unassigned fund balance. The authority to establish assigned fund balance is delegated to the City Manager or Finance Director for the purpose of reporting these amounts in the annual financial statements. No formal action is required to remove an assignment. As such, the following are a few examples of assigned fund balance.

FUND BALANCE POLICY
PAGE 5 OF 6
•Economic and Community Development Special Services
The City General Fund’s fund balance is assigned for contracts, special services, or projects associated with Economic and Community Development special projects or initiatives; City Council goals, such as contract services for Economic and Community Development code development; or an amount for operating costs for Planning, Building and Safety, and Engineering Departments, excluding capital and project management costs.
•Habitat Mitigation and Sphere of Influence Issues
The City General Fund’s fund balance is assigned for ancillary costs related to annexations within the City’s sphere of influence area, including mitigation issues and legal challenges, and for the creation of a multi-species habitat conservation plan, including the acquisition of habitat conservation land. •Community Services Programs
The City General Fund’s fund balance is assigned for nonrecurring costs and capital improvements to support community service programs, including classes, special events, and theatrical and recreational activities sponsored by the Community Services Department. These funds aim to enable spending that strategically implements, supports, or enhances programs provided by the Community Services Department. •Animal Center Facility Replacement
The City General Fund’s fund balance is assigned for capital improvements to support animal services and care operations, including facility maintenance and replacement to provide medical care and treatment, education and outreach programs, and unforeseen circumstances and emergencies.
•City Infrastructure Replacement
The City General Fund’s fund balance is assigned for the replacement of the City's infrastructure network, including for maintaining, upgrading, and replacing the infrastructure assets within the City. These funds are set aside to ensure the long-term sustainability, safety, and functionality of public facilities and systems as the backbone for the City's infrastructure.
•Civic Center and Epicenter Master Plans
The City General Fund’s fund balance for the development and implementation of two master plans aimed at creating economic opportunities, fostering community engagement, and promoting an environment that integrates transportation, commercial activities, public spaces, and cultural amenities. The purpose of the master plans will be to develop the possibility for a range of purposes centered around a transient-oriented mixed-used district in and around Haven Avenue, Arrow Route, Rochester Avenue, and the Epicenter.

FUND BALANCE POLICY
PAGE 6 OF 6
Unassigned Fund Balance
Unassigned fund balance is the residual fund balance classification for the City’s General Fund.

The General Fund is the only governmental fund that would report a positive unassigned fund balance. For all other governmental funds, if expenditures incurred for specific purposes exceed the amounts restricted, committed, or assigned, it may be necessary to report a negative unassigned fund balance, and the department with responsibility for the fund should develop a plan to replenish the balance.

DATE: June 27, 2024
TO: Mayor and Members of the City Council
FROM: John R. Gillison, City Manager
INITIATED BY: Noah Daniels, Finance Director
SUBJECT: Consideration to Approve Updated City General Fund Reserve Funding Goals Policy. (CITY)
RECOMMENDATION:

Staff recommends that the City Council approve the attached updated City General Fund Reserve Funding Goals Policy.

BACKGROUND:

The City General Fund Reserve Funding Goals Policy establishes the methodology for the funding goals for each of the City General Fund reserves, including the replacement of vehicles, equipment, and computer equipment/technology. This policy, which the City Council initially approved in June 2012, formalizes the City General Fund reserves, establishes some new ones, and sets quantifiable goals for each reserve.

There were no changes to the City General Fund Reserve Funding Policy besides minor grammatical changes and clarification of the calculation of the reserve goal for the Finance Department. Specifically, the following:

1. The fund goal for the PERS Rate Stabilization reserve is equal to the “value of projected future employer contributions” to clarify the schedule from which to base the funding goal in the respective CalPERS actuarial valuation report.

2. This indicates that the consumer price index utilized to increase the funding reserve for the General Plan Update reserve is the Ontario-San Bernardino Area from December.

3. Indicating that calculations based on the budget are the “adopted expenditures budget for operations” in the upcoming fiscal year.

ANALYSIS:

Per policy, upon completing the City’s annual audit, the Finance Director prepares a schedule summarizing the funding status of each reserve for the City Manager to use in future budgetary planning.

This policy does not apply to reserves determined to be non-spendable under the City’s Fund Balance Policy, nor does it apply to reserves that pertain to outstanding encumbrances (i.e., purchase orders) or unrealized gain on investments (GASB31) as of fiscal year end.

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FISCAL IMPACT:

There are no fiscal impacts due to adopting the City General Fund Reserve Funding Goals Policy.

COUNCIL MISSION / VISION / VALUE(S) ADDRESSED:

The approval of the General Fund Reserve Funding Goals Policy supports the City Council’s core value of providing and nurturing a high quality of life for all by demonstrating the active, prudent fiscal management of the City’s financial resources to support the various services the City provides to all Rancho Cucamonga stakeholders.

ATTACHMENTS:

Attachment 1 - City General Fund Reserve Funding Goals Policy

PURPOSE
This City General Fund Reserve Funding Goals Policy establishes the methodology for the funding goals for each of the City General Fund reserves, including the replacement of vehicles, equipment, and computer equipment/technology. This policy does not apply to reserves determined to be nonspendable in accordance with the City's Fund Balance Policy, nor does it apply to reserves that pertain to outstanding encumbrances (i.e., purchase orders) or unrealized gain on investments (GASB31) as of fiscal year end. Upon the completion of the City's annual audit, this policy directs the Finance Director to prepare a schedule summarizing the funding status of each reserve as of the audit date. This schedule will serve as a tool for budgetary planning for the funding of each reserve.

GENERAL POLICY
Following is a detailed description of the methodology for the funding goals for each of the City General Fund reserves referred to above.

Self-Insurance
The funding goal for this reserve is established at nine times the Self-Insured Retention (SIR) in each program (Workers' Compensation, General Liability, and Employment Practices Liability) to allow for nine full-limit claims in any one year. The SIR is essentially the City's deductible in each program. Those numbers are calculated as follows: Workers' Compensation ($250,000 SIR) is $2,250,000; General Liability ($500,000 SIR) is $4,500,000; and Employment Practices ($250,000 SIR) is $2,250,000. The total proposed reserve is $9,000,000. This level of reserves protects the City's assets by ensuring adequate funding in the event of multiple large claims against the City.

Employee Leave Payouts
The funding goal for this reserve is established at the total payout value of vacation, sick leave, and comp time payouts per the respective City MOUs.

CITY OF RANCHO CUCAMONGA

CITY GENERAL FUND

RESERVE FUNDING GOALS POLICY
POLICY NO.: ___-__
EFFECTIVE: June 13, 2013
REVISED: June 27, 2024
APPROVED:

ATTACHMENT 1

CITY GENERAL FUND

RESERVE FUNDING GOALS POLICY
PAGE 2 OF 4
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PERS Rate Stabilization
The funding goal is established at a level equal to the value of projected future employer contributions identified in the respective annual CalPERS actuarial valuation for five fiscal years after the year of financial reporting. The related reserve is restricted as the funds have been placed in the PARS Post-Employment Benefits Trust, which is a restricted asset on the City's balance sheet.

Facilities Capital Replacement (City)
The funding goal for the City’s facilities capital replacement is established at a minimum of 50% of the capital assets' value comprised of construction in progress (excluding infrastructure), building improvements, and improvements other than buildings for governmental activities.

Changes in Economic Circumstances
The funding goal for changes in economic circumstances is established at a nine-month reserve, or 75%, of the City General Fund adopted expenditure budget for operations in the upcoming fiscal year.

Law Enforcement
The funding goal for this reserve is the equivalent of 100% of the most recently approved Schedule A from the San Bernardino County Sheriff's Department.

Economic and Community Development Special Services
The funding goal for this reserve is $5,000,000 to pay for contracts, special services, or projects associated with Economic and Community Development special projects or initiatives; City Council goals, such as contract services for Economic and Community Development code development; or an amount for operating costs for Planning, Building and Safety, and Engineering Departments, excluding capital and project management costs. Funding for this reserve would be provided by unspent revenue from Planning, Building and Safety, and Engineering (not including capital and project management) on an annual basis.

Habitat Mitigation and Sphere of Influence Issues
This reserve provides for ancillary costs related to annexations within the City’s sphere of influence area, including mitigation issues and legal challenges, and for the creation of a multi- species habitat conservation plan, including the acquisition of habitat conservation land. The overall funding goal will be increased each fiscal year based on the increase in the City's assessed valuation for the upcoming fiscal year per the City's property tax consultant. The funding goal for this reserve is established at $8,281,600.

Working Capital
The minimum funding goal for the City's General Fund working capital reserve is of 5% of the City's General Fund adopted expenditure budget for operations in the upcoming fiscal year.

CITY GENERAL FUND

RESERVE FUNDING GOALS POLICY
PAGE 3 OF 4
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Animal Center Facility Replacement
This reserve is established to fund the future replacement of the Animal Center facility. The funding goal is equivalent to the estimated construction cost of the future Center.

General Plan Update
The funding goal is equal to the cost of updating the City's General Plan based on the most recent contract awarded, which increased annually for the CPI as of December 31 for the Riverside- Ontario-San Bernardino Area preceding the fiscal year end. The funding source for this reserve is a 10% General Plan Maintenance Fee collected on all applicable Building and Safety Services Department and Planning Department services. The funding goal for this reserve is $3,703,580.

City Infrastructure Replacement
The funding goal for City infrastructure is established at a minimum of 50% of the value of infrastructure assets comprised of a road system (excluding right of way), monuments, storm drain system, and off-road trails system for governmental activities.

Dispatch System and 800 MHz Radio Reserve (City and Fire District) For the City, this reserve is established to fund the future acquisition or replacement of the City's 800 MHz radios, as well as the City's proportionate share of the Countywide radio infrastructure.

Additionally, for the Fire District, the reserve is established to fund the District's share of major capital facilities, IT systems, new dispatch enhancements or programs, and radio infrastructure and equipment for CONFIRE and the 800 MHz backbone system. For the City, the funding goal is established at 100% of the replacement cost of the radios and 100% of the proportionate cost of the Countywide radio infrastructure. For the Fire District, the funding goal is established at 100% of the District's share of the CONFIRE and the 800 MHz backbone system features noted above.

Mobile Home Park Program
The Building and Safety Department is responsible for enforcing the State mobile home laws and has adopted the State's related fee schedule. The City retains part of the fees collected to cover the cost of mandatory inspections performed by the Building and Safety Department in accordance with Title 25. The fee also covers the cost of educational materials and related printing services. The funding goal for this reserve is equal to the cost of a contract inspector for the mobile home park inspections for eight parks within the City.

City Vehicle and Equipment Replacement
The funding goal is established at 105% of the value of capital assets comprised of vehicles and equipment for governmental activities, excluding assets owned by the Rancho Cucamonga Fire Protection District. The reserve is accounted for in the City's Equipment and Vehicle Replacement Internal Service Fund (Fund 712).

CITY GENERAL FUND

RESERVE FUNDING GOALS POLICY
PAGE 4 OF 4
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City Computer Equipment/Technology Replacement
The funding goal is established at 105% of the value of capital assets comprised of computer equipment/technology for governmental activities, excluding assets owned by the Rancho Cucamonga Fire Protection District. The reserve is accounted for in the City's Computer Equipment and Technology Replacement Internal Service Fund (Fund 714).

Community Development Information Technology
The funding goal of this reserve is equal to the implementation costs to replace and upgrade the City's land management software (Accela) combined with three years' worth of the City's Cost Allocation Plan (CAP) allocations to support the annual costs associated with Department of Innovation and Technology staff time, maintenance contracts, and general administrative allocations for the City's land management software. The funding source for this reserve is a Technology Fee collected on all applicable Building and Safety Services Department, Engineering Department, and Planning Department services. The reserve is accounted for in the City Technology Fee Fund (Fund 020).

Economic Development Strategic Reserve
This reserve is established to fund the acquisition and development of critical properties to promote economic development that will benefit the City as a whole and potentially generate revenue for the City on an ongoing basis whenever feasible through negotiated agreements with third parties (including but not limited to public-private partnerships and land leases). The funding goal is established at $10,000,000, which is the equivalent of the current value of a 10-acre commercial parcel in the City. The funding goal will be adjusted annually based on the current value as of January 1 of each year. After initial funding, the reserve balance may fluctuate when properties are sold or acquired.

Seasonal Weather Emergency Reserve
This reserve is established to provide a dedicated funding source for unanticipated costs incurred due to damage resulting from severe weather emergencies such as wind, flood, fire, extreme heat, extreme cold, and other forces of nature. The funding goal is 75% of the highest-costing severe weather event in the three most recent fiscal years.

Community Benefit Projects
This reserve is established to provide a dedicated funding source for addressing specific industrial projects' expected impacts on affordable housing demand, future greenhouse gas emissions, fire protection services, environmental justice, and related effects typically associated with large warehouse development. The funding goal is equivalent to the total Community Benefit Fee commitments identified in qualifying development agreements entered into between the City and developers of large industrial warehouse developments.

DATE:June 27, 2024
TO:Mayor and Members of the City Council
President and Members of the Boards of Directors
FROM:John R. Gillison, City Manager
INITIATED BY: Robert Neiuber, Senior Human Resources Director Emily Nielsen, Senior Human Resources Business Partner
SUBJECT: Consideration to Adopt Resolutions Updating the Fiscal Year 2024-2025 City and Rancho Cucamonga Fire Protection District Salary Schedules. (RESOLUTION NO. 2024-061 AND RESOLUTION FD 2024-017)
(CITY/FIRE)
RECOMMENDATION:

Staff recommends the City Council/Fire Board adopt resolutions updating the Fiscal Year 2024- 2025 City and Rancho Cucamonga Fire Protection District salary schedules.

BACKGROUND:

The City Council/Fire Board traditionally adopts salary resolutions biannually for classifications employed by the City of Rancho Cucamonga and the Rancho Cucamonga Fire Protection District.

These resolutions are updated to reflect changes in salaries, additions and deletions of classifications, changes in job titles, and other terms of employment.

Pending the FY 24/25 budget approval by City Council/Fire Board, additional classifications will be added to the Executive Management Employees Group (Executive Management), Rancho Cucamonga Management Association (RCMA), Rancho Cucamonga City Employees Association (RCCEA), and Fire Support Services Association (Fire Support) salary schedules as outlined below.

ANALYSIS:

Effective July 1, 2024, the updates to the below salary schedules will include:

Executive Management Salary Schedule
•The addition of Director of Economic Development classification, with a proposed salary range of $135,192 to $191,688.
•The addition of Director of Planning classification, with a proposed salary range of $132,528 to $187,896.

RCMA Salary Schedule
•The Utilities Operations Manager job classification will receive a title change to become Utilities Operations/Project Manager.

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RCCEA Salary Schedule
•The addition of Business License Program Coordinator classification, with a proposed salary range of $52,212 to $70,392.
•The addition of Senior Environmental Compliance Inspector classification, with a proposed salary range of $67,992 to $92,172.

Fire Support Salary Schedule
•The addition of Public Relations Officer classification, with a proposed salary range of $87,610 to $111,800.
•The addition of Community Outreach Specialist with a proposed salary range of $58,428 to $74,568.
•The addition of Deputy Fire Marshal classification, with a proposed salary range of $90,001 to $114,858.

The attached resolutions adopt the changes as outlined above.

All other salary schedules, classifications, job titles, and other terms of employment remain the same.

Staff recommends that the City Council/Fire Board approve the resolutions updating the City and Rancho Cucamonga Fire Protection District salary schedules for the 2024-2025 fiscal year.

FISCAL IMPACT:

Adjustments to the salary schedules and their fiscal impacts were accounted for in the FY 2024- 2025 budget.

COUNCIL MISSION / VISION / GOAL(S) ADDRESSED:

This item addresses the City’s vision to build on our success as a world-class community, and create an equitable, sustainable, and vibrant city, rich in opportunity for all to thrive.

ATTACHMENTS:

Attachment 1 – Resolution 2024-061
Attachment 2 – Resolution FD 2024-017

RESOLUTION NO. 2024-XXX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

RANCHO CUCAMONGA, CALIFORNIA, APPROVING UPDATED
FISCAL YEAR 2023 -2024 SALARY SCHEDULES AND FISCAL
YEAR 2024-2025 SALARY SCHEDULES.

WHEREAS, the City Council of the City of Rancho Cucamonga has determined that it is necessary for the efficient operation and management of the City that policie s be established prescribing salary ranges, benefits and holidays and other policies for employees of the City of Rancho Cucamonga; and
WHEREAS, the City Council of the City of Rancho Cucamonga has previously adopted salary resolutions establishing salar y ranges, benefits and other terms of employment for employees of the City of Rancho Cucamonga; and
WHEREAS, the City Council of the City of Rancho Cucamonga recognizes that it is necessary from time to time to amend the salary resolution to accommodate changes in position titles, classifications salary ranges, benefits and other terms of employment; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Rancho Cucamonga, California to approve the attached list of new City job classificat ions and salary ranges. (Exhibit A).

PASSED, APPROVED, AND ADOPTED this ______ day of ___________, 2024.

ATTACHMENT 1

Minimum Control Point Maximum
Class Title Step Amount Step Amount Step Amount
Director of Economic Development 1625 $11,266 1665 $13,754 1695 $15,974 Director of Planning 1621 $11,044 1661 $13,482 1691 $15,658 Minimum Control Point Maximum
Class Title Step Amount Step Amount Step Amount
Business License Program Coordinator 4432 $4,351 4472 $5,308 4492 $5,866 Senior Environmental Compliance Inspector 3485 $5,666 3525 $6,917 3546 $7,681 Monthly Pay Ranges effective July 1, 2024
Resolution No. 2024-XXX

EXECUTIVE MANAGEMENT GROUP

ASSIGNMENTS OF CLASSIFICATIONS TO PAY RANGES
Monthly Pay Ranges effective July 1, 2024

RANCHO CUCAMONGA CITY EMPLOYEES ASSOCIATION

ASSIGNMENTS OF CLASSIFICATIONS TO PAY RANGES
Exhibit A

RESOLUTION NO. FD 2024-XXX

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE

RANCHO CUCAMONGA FIRE PROTECTION DISTRICT,

RANCHO CUCAMONGA , CALIFORNIA, APPROVING THE

RANCHO CUCAMONGA FIRE PROTECTION DISTRICT
SALARY SCHEDULES FOR FISCAL YEAR 2024-2025
WHEREAS, the Board of Directors of the Rancho Cucamonga Fire Protection District has determined that it is necessary for the efficient operation and management of the District that policies be established prescribing salary ranges, benefits and holidays, and other policies for employees of the Rancho Cucamonga Fire Protection District; and WHEREAS, the Board of Directors of the Rancho Cucamonga Fire Protection District has previously adopted salary resolutions that established salary ranges, benefits, and other terms of employment for employees of the Rancho Cucamonga Fire Protection District; and WHEREAS, the Board of Directors of the Rancho Cucamonga Fire Protection District recognizes that it is necessary from time to time to amend the salary resolution to accommodate changes in position titles, classifications salary ranges, additions and deletions of classifications, benefits, and other terms of employment; and
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Rancho Cucamonga Fire Protection District, Rancho Cucamonga, California to approve the attached list of new Fire District job classifications and salary ranges (Exhibit A).

PASSED, APROVED AND ADOPTED this ______ day of ___________, 2024.

ATTACHMENT 2

Resolution No. FD 2024-017
A to F
COMMUNITY OUTREACH 28.09 35.85 Hourly
SPECIALIST 2,247.20 2,868.00 Bi-Weekly
4,868.93 6,214.00 Monthly
DEPUTY FIRE MARSHAL 43.27 55.22 Hourly
3,461.60 4,417.60 Bi-Weekly
7,500.13 9,571.47 Monthly
PUBLIC RELATIONS OFFICER 42.12 53.75 Hourly
3,369.60 4,300.00 Bi-Weekly
7,300.80 9,316.67 Monthly

FIRE SUPPORT SERVICES ASSOCIATION

NEW CLASSIFCATIONS & PROPOSED SALARY RANGE
AS OF JULY 1, 2024
Exhibit A

DATE:June 27, 2024
TO:President and Members of the Board of Directors
FROM:John R. Gillison, City Manager
INITIATED BY: Mike McCliman, Fire Chief
Noah Daniels, Finance Director
Michelle Cowles, Management Analyst II
Rick Flinchum, Finance Manager
SUBJECT: Consideration of Resolutions Adopting the Budget and Approving the Appropriations Limit for the Fiscal Year 2024/25 in Community Facilities District No. 85-1. (RESOLUTION NO. FD 2024-012 AND RESOLUTION NO. FD 2024-013) (FIRE)
RECOMMENDATION:

Staff recommends the Fire Board adopt Resolutions approving the Community Facilities District (CFD) No. 85-1 annual budget for $11,320,380 and the appropriations limit of $20,070,132 for the Fiscal Year 2024/25.

BACKGROUND:

Annually, since the Fiscal Year 1986/87, the Board has adopted a budget for CFD No. 85-1 to provide for fire protection service operations within CFD No. 85-1. The proposed budget for the Fiscal Year 2024/25 includes funding for the personnel and operational costs necessary to maintain existing fire and life safety services within CFD boundaries. CFD 85-1 does not generate sufficient funds through the special taxes that it levies and collects to support the total annual staffing costs anticipated with the opening of Fire Station 178; therefore, CFD no. 85-1 receives supplemental funding from the Fire District's General Fund budget.

When the voters approved CFD No. 85-1 in 1985, an initial appropriations limit was established at $1,775,000, which was the amount of special taxes levied to provide for the costs of CFD No. 85-1. At that time, the voters also authorized CFD No. 85-1 to annually raise the appropriations limit to meet increased costs for operations and maintenance. That adjustment follows a prescribed methodology used in calculating the appropriations limited under Article XIIIB of the State of California Constitution, which include increasing the prior year’s appropriation limited by the percent change in State per capita personal income (Price Factor) and the change in San Bernardno County's population per the State of California Department of Finance (Population Factor).

ANALYSIS:

On June 20, 2024, the Fire Board held a workshop to review the appropriation requests for the Fiscal Year 2024/25. The attached Resolution adopts the one-year budget following the Board's deliberations at the publicly held budget study session.

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The Fire Board previously adopted an appropriations limit for Fiscal Year 2023/24 in the amount of $19,287,077. In terms of the adjustment to the appropriations limit, based on the factors for the appropriation limit (a Price Factor of 3.62% and a Population Factor of 0.42%), the CFD No. 85- 1’s appropriation limit for the Fiscal Year 2024/25 is $20,0704,132. For Fiscal Year 2024/25, CFD No. 85-1’s appropriations subject to this limit is $6,961,040, meaning that CFD No. 85-1 appropriations are expected to be 35% of the appropriation limit for the Fiscal Year 2024/25. The attached Resolution adopts the annual appropriations limit as required by Article XIIIB of the State Constitution.

FISCAL IMPACT:

The proposed Resolutions establish CFD 85-1's budget for Fiscal Year 2024/25 and ensures compliance with Article XIIIB of the State Constitution.

COUNCIL MISSION / VISION / GOAL(S) ADDRESSED:

This item addresses the City Council’s core value of providing and nurturing a high quality of life for all by ensuring the Fire District, through CFD 85-1, can provide fire operation services and emergency response programs to the City.

ATTACHMENTS:

Attachment 1 – Fiscal Year 2024/25 Budget Resolution
Attachment 2 – Fiscal Year 2024/25 Appropriation Limit Resolution

Resolution No. FD 2024-XXX
RESOLUTION NO. FD 2024-XXX

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE RANCHO

CUCAMONGA FIRE PROTECTION DISTRICT, SAN BERNARDINO

COUNTY, CALIFORNIA, APPROVING AND ADOPTING A BUDGET
FOR MELLO-ROOS COMMUNITY FACILITIES DISTRICT NO. 85-1 FOR FISCAL YEAR 2024/25
WHEREAS, a special election was held in the Mello-Roos Community Facilities District No. 85-1 (the "Community Facilities District") of the Rancho Cucamonga Fire Protection District (formerly Foothill Fire Protection District, the "District"), on Tuesday, December 10, 1985; and WHEREAS, because of the election, more than two-thirds (2/3) of the qualified electors voted in favor of a proposition to authorize the levy of a special tax for fire suppression services and facilities to establish an appropriations limit based upon changes in the cost of living and changes in population; and WHEREAS, the Board of Directors has received and reviewed the Fiscal Year 2024/25 budget for the Community Facilities District.

NOW, THEREFORE, the BOARD OF DIRECTORS OF THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT HEREBY RESOLVES, determines, and orders as follows:

SECTION 1. Adoption of Budget. The Board of Directors hereby approves and adopts the budget designated:

Mello-Roos Community Facilities
District No. 85-1
Annual Budget
for
Fiscal Year 2024/25
A copy of said budget is on file in the office of the District and available for public inspection.

SECTION 2. Filing of Budget. The Secretary is hereby authorized and directed to forward a certified copy of this resolution and a copy of the budget to the Office of the Auditor- Controller for the County of San Bernardino.

PASSED, APPROVED, and ADOPTED this 27th day of June 2024.

Resolution No. FD 2024-XXX
RESOLUTION NO. FD 2024-XXX

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE RANCHO

CUCAMONGA FIRE PROTECTION DISTRICT, SAN BERNARDINO

COUNTY, CALIFORNIA, ADOPTING AN APPROPRIATIONS LIMIT FOR MELLO-ROOS COMMUNITY FACILITIES DISTRICT NO. 85-1 FOR
FISCAL YEAR 2024/25 PURSUANT TO ARTICLE XIIIB OF THE

CALIFORNIA CONSTITUTION
WHEREAS, a special election was held in the Mello-Roos Community Facilities District No. 85-1 (the "Community Facilities District") of the Rancho Cucamonga Fire Protection District (formerly Foothill Fire Protection District, the "District"), on Tuesday, December 10, 1985; and WHEREAS, as a result of the election, more than two-thirds (2/3) of the qualified electors voted in favor of a proposition to authorize the levy of a special tax for fire suppression services and facilities, to establish an appropriations limit and to annually adjust the special tax and appropriations limit based upon changes in the cost of living and changes in population; and WHEREAS, the Board of Directors desires to establish the appropriations limit for the Community Facilities District 85-1 for Fiscal Year 2024/25;
NOW, THEREFORE, the BOARD OF DIRECTORS OF THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT HEREBY RESOLVES, determines, and orders as follows:

SECTION 1. Appropriations Limit. This Board of Directors hereby establishes the Fiscal Year 2024/25 appropriations limit for the Community Facilities District No. 85-1 at $20,070,132 based on the factors of the Gann limit (a C.P.I. change of 3.62% and a population change of 0.42%) per the State of California Department of Finance.

SECTION 2. Approval of Electorate. This Board of Directors hereby finds and determines that the qualified electorate has established the foregoing appropriations limit at a special election held on December 10, 1985, in the manner provided by law.

SECTION 3. Filing. The Secretary is hereby authorized and directed to file a certified copy of this resolution with the Board of Supervisors for San Bernardino County and with the office of the Auditor-Controller for the State of California.

PASSED, APPROVED and ADOPTED this 27th day of June 2024.

DATE:June 27, 2024
TO:President and Members of the Board of Directors
FROM:John R. Gillison, City Manager
INITIATED BY: Mike McCliman, Fire Chief
Noah Daniels, Finance Director
Michelle Cowles, Management Analyst II
Rick Flinchum, Finance Manager
SUBJECT: Consideration of Resolutions Adopting the Budget and Approving the Appropriation Limit for the Fiscal Year 2024/25 in Community Facilities District No. 88-1. (RESOLUTION NO. FD 2024-010 AND RESOLUTION NO. FD 2024-011) (FIRE)
RECOMMENDATION:

Staff recommends the Fire Board adopt Resolutions approving the Community Facilities District (CFD) No. 88-1 budget for $3,263,510 and the appropriations limit of $5,226,455 for the Fiscal Year 2024/25.

BACKGROUND:

On April 4, 1989, the qualified voters approved the formation of CFD No. 88-1 to authorize an annual levy of special tax that would provide for fire protection services within northeast Etiwanda.

The Board adopted an ordinance authorizing a special tax levy for CFD No. 88-1 on May 19, 1989. By resolution, the ordinance authorizes the District to annually levy the special tax for land acquisition, fire station construction, purchase of equipment and operations, and maintenance costs (which includes personnel) to provide fire protection services within CFD 88-1. At this time, the voters also authorized CFD No. 88-1 to annually raise the appropriations limit to meet increased costs for operations and maintenance. That adjustment follows a prescribed methodology used in calculating the appropriations limited under Article XIIIB of the State of California Constitution, which include increasing the prior year’s appropriation limited by the percent change in State per capita personal income (Price Factor) and the change in San Bernardino County’s population per the State of California Department of Finance (Population Factor).

Fiscal Year 2024-25 is the thirty-sixth (36) consecutive year the District has levied a special tax to provide required revenues for capital improvements (land, fire station facility, equipment) and fire protection services (personnel, operations, and maintenance) within this CFD. Because CFD 88-1 does not currently generate sufficient funds to support the total annual staffing costs, supplemental funding is necessary through the Fire District's General Fund budget.

ANALYSIS:

On June 20, 2024, the Fire Board held a workshop to review the appropriation requests for the Fiscal Year 2024/25. The attached Resolution adopts the one-year budget following the Board's deliberations at the publicly held budget study session.

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The Fire Board previously adopted an appropriations limit for Fiscal Year 2023/24 in the amount of $5,015,792. In terms of the adjustment to the appropriations limit, based on the factors for the appropriation limit (a Price Factor change of 3.62% and a Population Factor of 0.56%), the CFD No. 88-1 appropriation limit for the Fiscal Year 2024/25 is $5,226,455. For Fiscal Year 2024/25, CFD No. 88-1’s appropriations subject to this limit is $486,840, meaning that CFD No. 88-1’s appropriations are expected to be 9.31% of this appropriations limit. The attached resolution adopts the annual appropriations limit as required by Article XIIIB of the State Constitution.

FISCAL IMPACT:

The proposed Resolutions establish CFD 88-1's budget for Fiscal Year 2024/25 and ensures compliance with Article XIIIB of the State Constitution.

COUNCIL MISSION / VISION / GOAL(S) ADDRESSED:

This item addresses the City Council’s core value of providing and nurturing a high quality of life for all by ensuring the Fire District, through CFD 88-1, can provide fire operation services and emergency response programs to the City.

ATTACHMENTS:

Attachment 1 – Fiscal Year 2024/25 Budget Resolution
Attachment 2 – Fiscal Year 2024/25 Appropriation Limit Resolution

Resolution No. FD 2024-xxx – Page 1 of 1
ATTACHMENT - 1
RESOLUTION NO. FD 2024-xxx

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE RANCHO

CUCAMONGA FIRE PROTECTION DISTRICT, CITY OF RANCHO

CUCAMONGA, COUNTY OF SAN BERNARDINO, STATE OF

CALIFORNIA, APPROVING AND ADOPTING A BUDGET FOR
COMMUNITY FACILITIES DISTRICT NO. 88-1 FOR FISCAL YEAR 2024- 25 WHEREAS, the Board of Directors of the Rancho Cucamonga Fire Protection District (formerly Foothill Fire Protection District, hereinafter referred to as the "legislative body") has initiated proceedings, held a public hearing, conducted an election and received a favorable vote from the qualified electors relating to the levy of a special tax in a community facilities district, all as authorized pursuant to the terms and provisions of the "Mello-Roos Community Facilities Act of 1982", as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California. This Community Facilities is designated as COMMUNITY FACILITIES DISTRICT NO. 88-1 (hereinafter referred to as the "District"); and
WHEREAS, this legislative body has received and reviewed a budget for Fiscal Year 2024/25 for the District.

NOW, THEREFORE, the BOARD OF DIRECTORS OF THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT HEREBY RESOLVES, determines, and orders as follows:

SECTION 1: Adoption of Budget. The Board of Directors hereby approves and adopts the budget designated: "Mello-Roos Community Facilities District No. 88-1 Annual Budget for Fiscal Year 2024/25" and is on file in the office of the District and available for public inspection.

PASSED, APPROVED, and ADOPTED this 27th day of June 2024.

Resolution No. FD 2024-XXX
RESOLUTION NO. FD 2024-XXX

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE RANCHO

CUCAMONGA FIRE PROTECTION DISTRICT, SAN BERNARDINO

COUNTY, CALIFORNIA, ADOPTING AN APPROPRIATIONS LIMIT FOR COMMUNITY FACILITIES DISTRICT NO. 88-1 FOR FISCAL YEAR
2024/25 PURSUANT TO ARTICLE XIIIB OF THE CALIFORNIA

CONSTITUTION
WHEREAS, the Board of Directors of the Rancho Cucamonga Fire Protection District (formerly Foothill Fire Protection District, hereinafter referred to as the "legislative body") has initiated proceedings, held a public hearing, conducted an election and received a favorable vote from the qualified electors relating to the levy of a special tax in a community facilities district, all as authorized pursuant to the terms and provisions of the "Mello-Roos Community Facilities Act of 1982", as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California. This Community Facilities District is designated as COMMUNITY FACILITIES DISTRICT NO. 88-1 (hereinafter referred to as the "District"); and
WHEREAS, as a result of such election, the qualified electors of the District authorized the establishment of an Article XIII-B appropriations limit for the District equal to the maximum authorized special taxes that may be levied in any fiscal year and WHEREAS, this legislative body desires to establish the appropriations limit for the District for Fiscal Year 2024/25.

NOW, THEREFORE, the BOARD OF DIRECTORS OF THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT HEREBY RESOLVES, determines, and orders as follows:

SECTION 1. Appropriations Limit. This legislative body hereby establishes the appropriations limit for Community Facilities District No. 88-1 for Fiscal Year 2024/25 in an amount equal to $5,226,455.

SECTION 2. Approval by Electorate. This legislative body hereby finds and determines that the qualified electors of the District have authorized the foregoing appropriations limit at a special election held on April 4, 1989, in the manner provided by law.

PASSED, APPROVED, and ADOPTED this 27th day of June 2024.

ATTACHMENT 2

DATE:June 27, 2024
TO:President and Members of the Board of Directors
FROM:John R. Gillison, City Manager
INITIATED BY: Mike McCliman, Fire Chief
Noah Daniels, Finance Director
Michelle Cowles, Management Analyst II
Rick Flinchum, Finance Manager
SUBJECT: Consideration of a Resolution Adopting the Amended Fire Protection District General Fund Article XIIIB Appropriations Limit for Fiscal Years 2012/13 through 2023/24. (RESOLUTION NO. FD 2024-014) (FIRE) RECOMMENDATION:

Staff recommends the Fire Board of the Rancho Cucamonga Fire Protection District approve the resolution adopting the amended Article XIIIB Appropriations Limit for Fiscal Years 2012/13 through 2023/24.

BACKGROUND:

In conjunction with the adoption of the annual budget, the State of California Constitution, Article XIIIB, requires that an appropriations limit, referred to as the GANN limit, be established annually by the Fire Board. The GANN limit is intended to keep inflation adjusted, per-person government spending under 1978-79 levels.

There are established guidelines for setting the appropriations limit, including the use of four distinct factors in developing the annual limit:

1. Consumer Price Index (CPI) change for the subject year (CPI Factor);

2. Assessed Valuation due to new non-residential construction per the San Bernardino County Assessor (Price Factor);

3. Change in the City’s population per the State of California Department of Finance (City Population Factor); and,

4. Change in the County’s population per the State of California Department of Finance (County Population Factor).

Historically, the District solely utilized the CPI Factor and the City Population Factor during each budget adoption; however, the guidelines indicate that the CPI Factor or Price Factor and City Population or County Population Factor can be utilized to determine the higher factor to increase the appropriations limit by each year. As such, the appropriations limit is below what otherwise could have been calculated.

ANALYSIS:

As stated, each year the Fire Board approves a resolution establishing the appropriations limit for the upcoming fiscal year. On June 22, 2023, the Fire Board established the appropriations limit

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for Fiscal Year 2023/24 at $51,526,207. At the time, the District’s Fiscal Year 2023/24 appropriations subject to this limit totaled $50,908,370, which anticipated that the District would be at 98% of its GANN Limit at the fiscal year’s end of June 30, 2024.

Staff has conducted an analysis of the appropriations limit adoptions since Fiscal Year 2010/11 to review the factors used to set the appropriations each year, historically the C.P.I. Factor and Population Factor. This analysis has shown that, while all factors utilized in setting the limit were correct, the two aforementioned factors were not those that would provide an optimized appropriations limit in each year. Therefore, the appropriations limit has historically been well below the threshold it otherwise would be if guidelines were followed as intended. To ensure the District’s appropriations limit is optimized for efficient management of resources, staff is recommending a restatement of appropriations limits beginning with Fiscal Year 2012/13 through the current fiscal year. Though not every fiscal year will need new factors utilized, because of the rolling nature of appropriations limits, it is necessary to restate each fiscal year subsequent to 2012/13.

In recent fiscal years, inflation has driven up appropriations faster than the factors previously used in this calculation. Therefore, it is necessary to ensure the appropriations limit is adequate for the District’s operations and that the limit is not exceeded. This action will ensure that the limit is sufficiently established within the guidelines set by Article XIIIB and optimized for the growth in appropriations. The table below summarizes these changes.

Fiscal
Year
Factors Previously Used Former Limit New Factors Used New Limit 2012/13 CPI Factor: 3.77%%
City Population: 1.07%
$29,920,117 Price Factor: 11.57%
City Population: 1.07%
$31,563,941
2013/14 CPI Factor: 5.12%
City Population: 1.13%
$31,808,076 Price Factor: 5.96%
City Population: 1.13%
$33,823,919
2014/15 CPI Factor: -0.23%
City Population: 1.1%
$32,084,806 Price Factor: 3.09%
City Population: 1.1%
$35,254,671
2015/16 CPI Factor: 3.82%
City Population: 1.1%
$33,679,421 CPI Factor: 3.82%
City Population: 1.1%
$37,006,828
2016/17 CPI Factor: 5.37%
City Population: 1.18%
$35,905,577 CPI Factor: 5.37%
City Population: 1.18%
$39,456,680
2017/18 CPI Factor: 3.69%
City Population: 0.94%
$37,575,253 CPI Factor: 3.69%
County Population: 1.16%
$41,390,057
2018/19 CPI Factor: 3.67%
City Population: 0.79%
$39,262,382 Price Factor: 7.14%
County Population: 0.95%
$44,767,486
2019/20 CPI Factor: 3.85%
City Population: 0.44%
$40,954,591 Price Factor: 5.02%
County Population: 0.90%
$47,440,105
2020/21 CPI Factor: 3.73%
City Population: 0.18%
$42,560,011 Price Factor: 7.48%
County Population: 0.51%
$51,249,545
2021/22 CPI Factor: 5.73%
City Population: 0.01%
$45,019,980 CPI Factor: 5.73%
County Population: 0.17%
$54,278,394
2022/23 Price Factor: 9.3%
County Population: 0.14%
$49,274,368 Price Factor: 9.3%
County Population: 0.14%
$59,413,130
2023/24 CPI Factor: 4.44%
County Population: 0.12%
$51,526,207 CPI Factor: 4.44%
County Population: 0.12%
$62,128,310

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FISCAL IMPACT:

There is no fiscal impact as a result of this action. The recommendation by staff ensures the District’s compliance with Article XIIIB of the State Constitution.

COUNCIL MISSION / VISION / GOAL(S) ADDRESSED:

The adoption of the amended Article XIIIB appropriations limit supports the Fire District’s core value of providing and nurturing a high quality of life for all by demonstrating the active management of financial resources to support the various services provided to Rancho Cucamonga residents, businesses, and stakeholders.

ATTACHMENTS:

Attachment 1 – Resolution No. FD 2024-014

Resolution No. FD 2024-XXX
RESOLUTION NO. FD 2024-XXX

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE RANCHO

CUCAMONGA FIRE PROTECTION DISTRICT, SAN BERNARDINO

COUNTY, CALIFORNIA, ESTABLISHING AMENDED

APPROPRIATIONS LIMITS PURSUANT TO ARTICLE XIIIB OF THE
CALIFORNIA STATE CONSTITUTION FOR FISCAL YEARS 2012/13
THROUGH 2023/24
WHEREAS, Article XIIIB of the State of California provides that the total annual appropriations subject to limitation of the State and of each local government shall not exceed the appropriations limit of such entity of government for the prior year adjusted for changes in the cost of living and population except as otherwise provided in said Article XIIIB; and WHEREAS, pursuant to said Article XIIIB of the Constitution of the State of California, the Board of Directors deems it to be in the best interests of the Rancho Cucamonga Fire Protection District to establish an amended General Fund appropriations limit for Fiscal Years 2012/13 through 2023/24; and WHEREAS, the Rancho Cucamonga Fire Protection District has reviewed the appropriations limits and determined that the appropriations limits for Fiscal Year NOW THEREFORE, the Board of Directors of the Rancho Cucamonga Fire Protection District hereby resolves as follows:

Section 1.The above recitals are true and correct and are a substantive part of this Resolution.

Section 2.Pursuant to Article XIIIB of the Constitution of the State of California, the Board of Directors of the Rancho Cucamonga Fire Protection District hereby amends the appropriations limits for Fiscal Years 2012/13 through Fiscal Year 2023/24 as follows:

Fiscal Year 2012/13: $31,563,941
Fiscal Year 2013/14: $33,823,919
Fiscal Year 2014/15: $35,254,671
Fiscal Year 2015/16: $37,006,828
Fiscal Year 2016/17: $39,456,680
Fiscal Year 2017/18: $41,390,057
Fiscal Year 2018/19: $44,767,486
Fiscal Year 2019/20: $47,440,105
Fiscal Year 2020/21: $51,249,545
Fiscal Year 2021/22: $54,278,394
Fiscal Year 2022/23: $59,413,130
Fiscal Year 2023/24: $62,128,310 ATTACHMENT 1

Resolution No. FD 2024-xxx - Page 2 of 2
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Section 3.Said amended appropriations limits herein established may be further amended and deemed necessary by resolution of the Board of Directors.

Section 4.The Clerk of the Board of Directors shall certify to the adoption of this Resolution.

PASSED, APPROVED, AND ADOPTED this 27th day of June 2024.

DATE:June 27, 2024
TO:President and Members of the Board of Directors
FROM:John R. Gillison, City Manager
INITIATED BY: Mike McCliman, Fire Chief
Noah Daniels, Finance Director
Michelle Cowles, Management Analyst II
Rick Flinchum, Finance Manager
SUBJECT: Consideration to Adopt the Fire Protection District General Fund Preliminary Budget; Adopt a Resolution Approving the Fire Protection District General Fund Appropriations Limit for the Fiscal Year 2024/25; and Set a Public Hearing for the Approval of a Fire Protection District General Fund Final Budget for the Fire Board Meeting on July 17, 2024. (RESOLUTION NO. FD 2024-015) (FIRE)
RECOMMENDATION:

Staff recommends the Fire Board take the following actions:

1. Adopt the Rancho Cucamonga Fire Protection District General Fund (Fire District) preliminary budget in the amount of $55,824,110, which includes the Fire District’s General Fund budget of $50,967,920 and Fire District Capital Fund budget of $4,856,190.

2. Adopt a Resolution to approve the Fire District’s Appropriations Limit per Article XIIIB in the amount of $65,185,023 for the Fiscal Year 2024/25; and

3. Set a public hearing for the approval of a Fire District’s final budget for the regularly scheduled Fire Board meeting on July 17, 2024.

BACKGROUND:

The Fire Protection District Law of 1987 (Health & Safety Code Section 13800, et seq.), Chapter 7, requires the Fire Board to adopt a preliminary budget on or before June 30 of each year. That preliminary budget, with the exception of obligations for fixed assets and new permanent employee positions, is deemed appropriated on July 1 until the Board adopts the final budget.

The Fire Board must adopt the preliminary budget after making any changes on or before October 1 of each year. The final budget shall establish its appropriation limit pursuant to the State of California Constitution, Article XIIIB (Gann Limit). Additionally, a copy of the final budget must be forwarded to the auditor of each county in which the District is located.

As noted above, the Government Code requires that the Fire Board establish an appropriations limit annually based on the final budget, which was the amount of revnues, primarily property taxes, to provide for the expenditures of the Fire District. Historically, the District's final budget has mirrored the preliminary budget. As such, the Fire District's appropriations limit is calculated in conjunction with the adoption of the preliminary budget.

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The factors available in setting the appriations limit include:

1. Consumer Price Index (CPI) change for the subject year (CPI Factor);

2. Assessed Valuation due to new non-residential construction per the San Bernardino County Assessor (Price Factor);

3. Change in the City’s population per the State of California Department of Finance (City Population Factor); and,

4. Change in the County’s population per the State of California Department of Finance (County Population Factor).

ANALYSIS:

On June 20, 2024, the Fire Board held a budget study session to review the Fire District’s budget for the Fiscal Year 2024/25, which included a specific discussion regarding the preliminary budget. The proposed budget continues to meet the City Council and Fire Board's direction of operating independently. The Fire District achieved a proposed, balanced operational budget through a combination of moderate revenue growth and prudent management of expenditures for operations and planned capital improvements.

The Fire Board has set an appropriations limit for Fiscal Year 2023/24 in the amount of $62,128,310. In terms of the adjustment to the appropriations limit, based on the factors for the appropriation limit (a Price Factor based on the change in non-residential valuation due to new development of 4.34% and Population Factor for the population change in the City of 0.56%), the Fire District's Fiscal Year 2024/25 appropriations limit is $65,185,023. For the Fiscal Year 2024/25, the Fire District's appropriations subject to this limit is $54,609,100, meaning that the Fire District appropriations are expected to be at 84% of the appropriation limit for the Fiscal Year 2024/25. The attached Resolution adopts the annual appropriations limit as required by Article XIIIB of the State Constitution.

Please refer to the City Manager's Executive Summary for specific details regarding the Fire District's preliminary budget. An advertised public hearing for the Fire District’s final budget adoption will be made and set for for July 17, 2024 at the regularly scheduled meeting of the Fire Board.

FISCAL IMPACT:

The actions taken by the Fire Board will establish the Fire District’s preliminary budget for the Fiscal Year 2024/25 and ensure the Fire District's compliance with Article XIIIB of the State Constitution.

COUNCIL MISSION / VISION / GOAL(S) ADDRESSED:

This item addresses the City Council’s core value of providing and nurturing a high quality of life for all by ensuring the Fire District can provide fire operation services and emergency response programs to the City.

ATTACHMENTS:

Attachment 1 – Fiscal Year 2024/25 Appropriation Limit Resolution

Resolution No. FD 2024-XXX
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RESOLUTION NO. FD 2024-XXX

A RESOLUTION OF THE BOARD OF DIRECTORS OF THE RANCHO

CUCAMONGA FIRE PROTECTION DISTRICT, SAN BERNARDINO

COUNTY, CALIFORNIA, ADOPTING A GENERAL FUND
APPROPRIATIONS LIMIT FOR FISCAL YEAR 2024/25 PURSUANT TO

ARTICLE XIIIB OF THE CALIFORNIA CONSTITUTION
WHEREAS, Article XIIIB of the Constitution of the State of California provides that the total annual appropriations subject to the limitation of the State and of each local government for the prior year be adjusted for change in the cost of living and population except as otherwise provided in Sections (5), (7) and (8) of said Article XIIIB. These exclusions are Debt Service Funds, Revenue Bonds, Federal Funds and Grants, Contingencies, Emergencies, Enterprise Funds, Capital Improvement Carry-Overs, Capital Equipment, Intra-Governmental Service Funds, Reserves for Worker’s Compensation, Long-Term Disability, Retirement, Unemployment, and other reserve funds that are deemed reasonable and proper per the aforementioned sections; and
WHEREAS, pursuant to said Article XIIIB of the Constitution of the State of California, the Board of Directors of the Rancho Cucamonga Fire Protection District deems it to be in the best interest of the Rancho Cucamonga Fire Protection District to establish a General Fund appropriation limit for Fiscal Year 2024/25; and
WHEREAS, the Rancho Cucamonga Fire Protection District has determined that said General Fund’s appropriations limit for Fiscal Year 2024/25 be established in the amount of $65,185,023.

NOW, THEREFORE, the BOARD OF DIRECTORS OF THE RANCHO CUCAMONGA FIRE PROTECTION DISTRICT HEREBY RESOLVES that a General Fund appropriations limit for Fiscal Year 2024/25 pursuant to Article XIII-B of the Constitution of the State of California be established in the amount of $65,185,023 and the same is hereby established.

BE IT FURTHER RESOLVED that said appropriations limit herein established may be changed as deemed necessary by resolution of the Board of Directors.

PASSED, APPROVED, AND ADOPTED this 27th day of June 2024.

ATTACHMENT 1

DATE: June 27, 2024
TO: Mayor and Members of the City Council
FROM: John R. Gillison, City Manager
INITIATED BY: Noah Daniels, Finance Director
Rick Flinchum, Finance Manager
SUBJECT: Consideration of a Resolution Adopting the Amended Article XIIIB Appropriations Limit for Fiscal Years 2012/13 through 2023/24. (RESOLUTION NO. 2024-058) (CITY)
RECOMMENDATION:

Staff recommends that the City Council approve the resolution adopting the amended Article XIIIB Appropriations Limit for Fiscal Years 2012/13 through 2023/24.

BACKGROUND:

In conjunction with the adoption of the annual budget, the State of California Constitution, Article XIIIB, requires that an appropriations limit, referred to as the GANN limit, be established annually by the City Council. The GANN limit is intended to keep inflation adjusted, per-person government spending under 1978-79 levels.

There are established guidelines for setting the appropriations limit, including the use of four distinct factors in developing the annual limit:

1. Consumer Price Index (CPI) change for the subject year (CPI Factor);

2. Assessed Valuation due to new non-residential construction per the San Bernardino County Assessor (Price Factor);

3. Change in the City’s population per the State of California Department of Finance (City Population Factor); and,

4. Change in the County’s population per the State of California Department of Finance (County Population Factor).

Historically, the City solely utilized the CPI Factor and the City Population Factor during each budget adoption; however, the guidelines indicate that the CPI Factor or Price Factor and City Population or County Population Factor can be utilized to determine the higher factor to increase the appropriations limit by each year. As such, the appropriations limit is below what otherwise could have been calculated.

ANALYSIS:

As stated, each year the City Council approves a resolution establishing the appropriations limit for the upcoming fiscal year. On June 22, 2023, the City Council established the appropriations limit for Fiscal Year 2023/24 at $110,522,140. At that time, the City’s Fiscal Year 2023/24 appropriations subject to this limit totaled $85,043,430, which anticipated that the City would be at 76.95% of its GANN Limit at the fiscal year’s end of June 30, 2024.

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Staff has conducted an analysis of the appropriations limit adoptions since Fiscal Year 2010/11 to review the factors used to set the appropriations each year, historically the C.P.I. Factor and City Population Factor. This analysis has shown that, while all factors utilized in setting the limit were correct, the two aforementioned factors were not those that would provide an optimized appropriations limit in each year. Therefore, the appropriations limit has historically been well below the threshold it otherwise would be if guidelines were followed as intended. To ensure the City appropriations limit is optimized for efficient management of the City’s resources, staff is recommending a restatement of appropriations limits beginning with Fiscal Year 2012/13 through the current fiscal year. Though not every fiscal year will need new factors utilized, because of the rolling nature of appropriations limits, it is necessary to restate each fiscal year subsequent to 2012/13.

In recent fiscal years, inflation has driven up appropriations faster than the factors previously used in this calculation. Therefore, it is necessary to ensure the appropriations limit is adequate for City operations and that the limit is not exceeded. This action will ensure that the limit is sufficiently established within the guidelines set by Article XIIIB and optimized for the growth in City appropriations. The table below summarizes these changes.

Fiscal
Year
Factors Previously Used Former Limit New Factors Used New Limit 2012/13 CPI Factor: 3.77%%
City Population: 1.07%
$64,177,737 Price Factor: 11.57%
City Population: 1.07%
$69,005,753
2013/14 CPI Factor: 5.12%
City Population: 1.13%
$68,227,352 Price Factor: 5.96%
City Population: 1.13%
$73,946,565
2014/15 CPI Factor: -0.23%
City Population: 1.1%
$68,820,930 Price Factor: 3.09%
City Population: 1.1%
$77,074,505
2015/16 CPI Factor: 3.82%
City Population: 1.1%
$72,241,330 CPI Factor: 3.82%
City Population: 1.1%
$80,905,108
2016/17 CPI Factor: 5.37%
City Population: 1.18%
$77,016,368 CPI Factor: 5.37%
City Population: 1.18%
$86,261,026
2017/18 CPI Factor: 3.69%
City Population: 0.94%
$80,597,771 CPI Factor: 3.69%
County Population: 1.16%
$90,487,816
2018/19 CPI Factor: 3.67%
City Population: 0.79%
$84,216,611 Price Factor: 7.14%
County Population: 0.95%
$97,871,622
2019/20 CPI Factor: 3.85%
City Population: 0.44%
$87,846,347 Price Factor: 5.02%
County Population: 0.90%
$103,714,558
2020/21 CPI Factor: 3.73%
City Population: 0.18%
$91,289,924 Price Factor: 7.48%
County Population: 0.51%
$112,042,837
2021/22 CPI Factor: 5.73%
City Population: 0.01%
$96,566,481 CPI Factor: 5.73%
County Population: 0.17%
$118,664,569
2022/23 Price Factor: 9.3%
County Population: 0.14%
$105,692,014 Price Factor: 9.3%
County Population: 0.14%
$129,890,237
2023/24 CPI Factor: 4.44%
County Population: 0.12%
$110,522,139 CPI Factor: 4.44%
County Population: 0.12%
$135,826,221
FISCAL IMPACT:

There is no fiscal impact as a result of this action. The recommendation by staff ensures the City’s compliance with Article XIIIB of the State Constitution.

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COUNCIL MISSION / VISION / VALUE(S) ADDRESSED:

The adoption of the amended Article XIIIB Appropriations Limits supports the City Council’s core value of providing and nurturing a high quality of life for all by demonstrating the active management of the City’s financial resources to support the various services provided to Rancho Cucamonga residents, businesses and stakeholders.

ATTACHMENTS:

Attachment 1 – Resolution No. 2024-058

Resolution No. FD 2024-XXX – Page 1 of 1
ATTACHMENT 1
RESOLUTION NO. 2024-XXX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO

CUCAMONGA, CALIFORNIA, ESTABLISHING AMENDED

APPROPRIATIONS LIMITS PURSUANT TO ARTICLE XIIIB OF THE
CALIFORNIA STATE CONSTITUTION FOR FISCAL YEARS 2012/13
THROUGH 2023/24
WHEREAS, Article XIIIB of the State of California provides that the total annual appropriations subject to limitation of the State and of each local government shall not exceed the appropriations limit of such entity of government for the prior year adjusted for changes in the cost of living and population except as otherwise provided in said Article XIIIB; and
WHEREAS, pursuant to said Article XIIIB of the Constitution of the State of California, the City Council of the City of Rancho Cucamonga deems it to be in the best interests of the City of Rancho Cucamonga to establish an amended appropriations limit for Fiscal Years 2012/13 through 2023/24; and WHEREAS, the the Finance Director of the City of Rancho Cucamonga has reviewed the appropriations limits and determined that the appropriations limits for Fiscal Years 2012/13 through 2023/24 should be amended.

NOW, THEREFORE, the City Council of the City of Rancho Cucamonga hereby resolves as follows:

Section 1.The above recitals are true and correct and are a substantive part of this Resolution Section 2.Pursuant to Article XIIIB of the Constitution of the State of California, the City Council of the City of Rancho Cucamonga hereby amends the appropriations limits for Fiscal Years 2012/13 through Fiscal Year 2023/24 as follows:

Fiscal Year 2012/13: $69,005,753
Fiscal Year 2013/14: $73,946,565
Fiscal Year 2014/15: $77,074,505
Fiscal Year 2015/16: $80,905,108
Fiscal Year 2016/17: $86,261,026
Fiscal Year 2017/18: $90,487,816
Fiscal Year 2018/19: $97,871,622
Fiscal Year 2019/20: $103,714,558
Fiscal Year 2020/21: $112,042,837
Fiscal Year 2021/22: $118,664,569
Fiscal Year 2022/23: $129,890,237
Fiscal Year 2023/24: $135,826,221

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Section 3.Said amended appropriations limits herein established may be further amended as deemed necessary by resolution of the City Council.

Section 4.The City Clerk shall certify to the adoption of this Resolution.

PASSED, APPROVED, AND ADOPTED this 27th day of June 2024.

DATE: June 27, 2024
TO: Mayor and Members of the City Council
FROM: John R. Gillison, City Manager
INITIATED BY: Noah Daniels, Finance Director
Jason C. Welday, Director of Engineering Services/City Engineer Justine Garcia, Deputy Director of Engineering Services Rick Flinchum, Finance Manager
SUBJECT: Consideration to Adopt Resolutions to Approve the Fiscal Year 2024/25 Budget, the Article XIIIB Appropriations Limit for the Fiscal Year 2024/25, and the Capital Improvement Program for the Fiscal Year 2024/25. (RESOLUTION NO. 2024-059 AND RESOLUTION NO. 2024-060)
(CITY)
RECOMMENDATION:

Staff recommends the City Council adopt resolutions approving the Fiscal Year 2024/25 Budget, the Article XIIIB Appropriations Limit for the Fiscal Year 2024/25, and the Capital Improvement Program for the Fiscal Year 2024/25.

BACKGROUND:

Budget and Appropriations Limit. Each year, the City of Rancho Cucamonga prepares a one- year program of service through the adoption of the annual budget. The budget process typically begins in January, with the City Manager outlining the goals and directives of the coming year’s budget. Multiple departments coordinate the citywide process to submit budget requests, and the City Management Team and Finance Department held budget meetings in April to review these requests. From these events, the recommendations for the Fiscal Year 2024/25 budget were formulated.

In conjunction with the adoption of the annual budget, the State of California Constitution, Article XIIIB, requires that an appropriations limit be established annually by the City Council. The GANN Limit is intended to keep inflation adjusted, per-person government spending under 1978/79 levels. There are established guidelines for setting the appropriations limit, including the use of four variable factors in developing the annual limit:

1. Consumer Price Index (CPI) change for the subject year (CPI Factor);

2. Assessed Valuation due to new non-residential construction per the San Bernardino County Assessor (Price Factor);

3. Change in the City’s population per the State of California Department of Finance (City Population Factor); and,

4. Change in the County’s population per the State of California Department of Finance (County Population Factor).

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Capital Improvement Program. Per Government Code 65401, the City Council must adopt a Capital Improvement Program (CIP), internally referred to as the Major Projects Program (MPP), each fiscal year. The MPP consists of a multi-year plan for the planning, design, and construction of citywide infrastructure improvements. A copy of Government Code 65401 has been included as Attachment 3.

The MPP is a vital piece of the City’s Annual Operating Budget as it dictates major capital expenditures obligated in any given year. The MPP consists of a multi-year plan for citywide infrastructure improvements. Each year, the City budgets for funded projects that will occur during said fiscal year. The list of projects contained in the MPP addresses both the City’s long—and short-term capital goals and reflects the desires of the community, as well as projects that serve operational and maintenance needs.

ANALYSIS:

Budget and Appropriations Limit. On June 20, 2024, the City Council held a workshop to review the appropriation requests for the Fiscal Year 2024/25. The attached resolution adopts the one- year budget following the City Council’s deliberations at the publicly held budget study session.

The budget is summarized as follows:

FISCAL YEAR 2024/25 BUDGET
General Fund $115,368,260
Library Services $6,041,200
Special Funds $141,919,560
Total $263,329,020
Based on the factors of the GANN Limit (an assessed valuation change of 4.34% and a city population increase of 0.56%), the City’s Fiscal Year 2024/25 appropriations limit is $142,508,871. The City’s Fiscal Year 2024/25 appropriations subject to this limit total $87,929,920. It is anticipated that the City will be at 61.70% of its GANN Limit on June 30, 2025.

The additional resolution adopts the annual appropriations limit as required by Article XIIIB of the State Constitution.

Capital Improvement Program. This year the MPP has been categorized by corresponding Project Type and are listed in alphabetical order in each section based on Project Name.

Individual Project Sheets include a short summary, cost estimates, year the project is expected to be started, and future estimated impact on future operations. The MPP document can be viewed in its entirety on the City’s website at the following link: https://www.cityofrc.us/your- government/budget. A copy is also available in the Office of the City Clerk.

FISCAL IMPACT:

Budget and Appropriations Limit. The proposed resolutions establish the City of Rancho Cucamonga’s spending plan for Fiscal Year 2024/25 and ensure the City’s compliance with Article XIIIB of the Constitution of the State of California.

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Capital Improvement Program. Projects are funded from a variety of sources, including Development Impact Fees, Measure I, Gas Tax, and miscellaneous grants. The MPP for Fiscal Year 2024/25 proposes 60 projects, totaling just over $80,824,210, to be executed in the upcoming fiscal year. In addition, there are 23 projects totaling just over $62,577,980 identified in future years.

COUNCIL MISSION / VISION / VALUE(S) ADDRESSED:

Budget and Appropriations Limit. The adoption of the Fiscal Year 2024/25 Budget supports the City Council’s core value of providing and nurturing a high quality of life for all by demonstrating the active, prudent fiscal management of the City’s financial resources in order to support the various services the City provides to all Rancho Cucamonga stakeholders.

Capital Improvement Program. The City’s Engineering staff works with all Departments within the City to develop and implement an economically feasible Major Projects Program that embodies the City’s public infrastructure needs. This item addresses the City Council’s vision for the City by ensuring the construction of high-quality public improvements that promote a world class community and supports the City Council’s core value of promoting and enhancing a safe and healthy community for all.

ATTACHMENTS:

Attachment 1 – Resolution (Budget Adoption)
Attachment 2 – Resolution (Appropriations Limit)
Attachment 3 – Government Code 65401

Resolution No. FD 2024-XXX – Page 1 of 2
ATTACHMENT 1
RESOLUTION NO. 2024-XXX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO
CUCAMONGA, CALIFORNIA, ADOPTING THE CITY’S FISCAL YEAR
2024/25 BUDGET
WHEREAS, the Rancho Cucamonga City Council held one workshop to review the appropriation requests for Fiscal Year 2024/25 on June 20, 2024; and
WHEREAS, the Rancho Cucamonga City Council held a meeting on the General City Budget; and
WHEREAS, this public meeting was noticed in accordance with applicable laws and held on June 20, 2024
NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Rancho Cucamonga, California does hereby resolve on this 27th day of June 2024, as follows:

SECTION 1: Adoption of Fiscal Year 2024/25 Budget. The City of Rancho Cucamonga budget for Fiscal Year 2024/25, on file in the office of the Finance Director, is hereby adopted in the amount of $263,329,020. This budget total includes appropriations for both the general and other special purpose funds.

SECTION 2: Transfers of Funds Between and/or Within Appropriations. The City Council of the City of Rancho Cucamonga may transfer funds between funds or activities set forth in the budget. The City Manager may transfer funds between appropriations within any fund as set forth in the budget and may transfer appropriations between activities within any cost center in the same fund.

SECTION 3: Transfers of Funds Between Funds. Transfers of funds between funds as shown throughout the fund transfer sections of the budget shall be made as expenditures warrant such transfers.

SECTION 4: Disbursements. The City Manager and the Finance Director, or the duly designated representative, are hereby empowered and authorized to disburse funds pursuant to appropriations provided for in the Fiscal Year 2024/25 Budget and have the responsibility to establish procedures and to administratively implement and control the budget on all matters, except direct expenditures by Councilmembers which require Council approval.

The City Manager, or the duly designated representative, is hereby empowered and authorized to make an annual contribution to the PARS Public Agencies Post- Employment Benefits Trust for the City in an amount not to exceed $300,000 and for the Fire District in an amount not to exceed $1,000,000. The contribution is at the discretion of the City Manager based on the results of operations for each fiscal year and is not mandatory.

SECTION 5: Additional Appropriations. The City Council may amend this budget to add or delete appropriations.

SECTION 6: Personnel. The City Manager is hereby empowered and authorized to develop and fill additional positions as deemed necessary to conduct City operations provided funding is available in this budget.

PASSED, APPROVED, AND ADOPTED this 27th day of June 2024.

Resolution No. FD 2024-XXX – Page 1 of 1
ATTACHMENT 2
RESOLUTION NO. 2024-XXX

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO

CUCAMONGA, CALIFORNIA, ESTABLISHING AN APPROPRIATIONS

LIMIT PURSUANT TO ARTICLE XIIIB OF THE CALIFORNIA STATE CONSTITUTION FOR FISCAL YEAR 2024/25
WHEREAS, Article XIIIB of the Constitution of the State of California provides that the total annual appropriations subject to limitation of the State and of each local government shall not exceed the appropriations limit of such entity of government for the prior year adjusted for changes in the cost of living and population except as otherwise provided in said Article XIIIB; and WHEREAS, pursuant to said Article XIIIB of the Constitution of the State of California, the City Council of the City of Rancho Cucamonga deems it to be in the best interests of the City of Rancho Cucamonga to establish an appropriations limit for Fiscal Year 2024/25; and WHEREAS, the Finance Director of the City of Rancho Cucamonga has determined that the said appropriations limit for Fiscal Year 2024/25 be established in the amount of $142,508,871.

NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Rancho Cucamonga, California does hereby resolve that an appropriations limit for Fiscal Year 2024/25 pursuant to Article XIIIB of the Constitution of the State of California be established in the amount of $142,508,871 and the same is hereby established.

BE IT FURTHER RESOLVED that said appropriations limit herein established may be changed as deemed necessary by resolution of the City Council.

PASSED, APPROVED, AND ADOPTED this 27th day of June 2024.

GOVERNMENT CODE
TITLE 7. PLANNING AND LAND USE [65000 - 66499.58]
(Heading of Title 7 amended by Stats. 1974, Ch. 1536.)
DIVISION 1. PLANNING AND ZONING [65000 - 66301]
(Heading of Division 1 added by Stats. 1974, Ch. 1536.) CHAPTER 3. Local Planning [65100 - 65763]
(Chapter 3 repealed and added by Stats. 1965, Ch. 1880.) ARTICLE 7. Administration of General Plan [65400 - 65404] (Article 7 added by Stats. 1965, Ch. 1880.)
65401. If a general plan or part thereof has been adopted, within such time as may be fixed by the legislative body, each county or city officer, department, board, or commission, and each governmental body, commission, or board, including the governing body of any special district or school district, whose jurisdiction lies wholly or partially within the county or city, whose functions include recommending, preparing plans for, or constructing, major public works, shall submit to the official agency, as designated by the respective county board of supervisors or city council, a list of the proposed public works recommended for planning, initiation or construction during the ensuing fiscal year. The official agency receiving the list of proposed public works shall list and classify all such recommendations and shall prepare a coordinated program of proposed public works for the ensuing fiscal year. Such coordinated program shall be submitted to the county or city planning agency for review and report to said official agency as to conformity with the adopted general plan or part thereof.
(Amended by Stats. 1970, Ch. 1590.)
ATTACHMENT 3