United Water Conservation District

Transcription

1 United Water Conservation District REQUEST FOR PROPOSAL FOR Banking Services Issue Date October 23, 2017 Response Due Date November 22, :00 P.M.

2 Table of Contents 1. Overview District Background Mandatory Minimum Requirements Required Banking Services Proposal Submission Requirements Proposal Evaluation Selection Process General Requirements... 6 Attachment A Banking Services Charges Attachment B Banking Services Questionnaire Attachment C Investment Policy... 15

3 1. Overview Purpose of RFP The District desires to select a reputable financial institution to manage its deposits, provide core banking services and make available certain other related financial services to the District for its benefit and the benefit of the citizens it serves. The purpose of this process is to identify the financial institution that can provide maximum services and competitive pricing. RFP Timeline The following table, Table 1 RFP Schedule of Events, identifies the RFP schedule that will be followed. RFP SCHEDULE Table 1 RFP Schedule of Events DATE/TIME District Issues RFP 10/23/17 Deadline for Proposal Submission 11/22/17 5 PM District Completes Evaluations 11/27 12/01/17 Oral Interviews Conducted if warranted Week of December 11, 2017 Notification to Finalist By December 21, 2017 Board of Directors submittal and approval of contract 1/10/18 Contract executed/implementation begins Upon Board Approval Transition period February 2018 The District reserves the right, at its sole discretion, to adjust this schedule, as it deems necessary. Notification of any adjustment to the RFP Schedule of Events will be provided to all Proposers who comply with Section 1.6 (Intent to Propose). RFP Coordinator All communications concerning this RFP must be submitted by to the RFP Contact identified below. The RFP Contact will be the sole point of contact for this RFP: Tina Rivera Chief Financial Officer tinar@unitedwater.org Contact with personnel of the District other than the above regarding this request for proposal may be grounds for elimination from the selection process. Intent to Propose Each Proposer who plans to submit a proposal may register by to the RFP Coordinator. The should indicate the Proposer's intent to respond to this RFP and include: Proposer name Name and title of Proposer main contact Address, telephone and address Submittal of the Intent to Propose is necessary to ensure receipt of RFP amendments, responses to vendor questions, and other communications regarding the RFP. The Intent to Propose is not intended to bind Proposers to 1 P a g e

4 submitting a proposal. 2. District Background In 1925, the founding organization of today s United, the Santa Clara River Protective Association (the Association) was formed to protect the runoff of the Santa Clara River from being exported outside the watershed. This effort was successful, and in 1927 the Association was re-organized into the Santa Clara Water Conservation District by the vote of the county residents. In 1950 the district reformed under the California State Water Conservation Act of 1931, as the United Water Conservation District (District), in order to issue bonds to raise money to construct the Santa Felicia Dam, creating Lake Piru and other conservation facilities. Today, the District serves an area of approximately 310 square miles in Ventura County, serving as the conservator of surface water and groundwater resources and provides wholesale (potable) water to the Port Hueneme Water Agency and the City of Oxnard along with many mutual water agencies. Additionally, the District provides raw surface water (when available) and groundwater to the Pleasant Valley County Water District and others for agriculture usage. United also has the ability to purchase state water from the State Water Project administered by the State s Department of Water Resources. All of these activities are part of the District s efforts to protect local groundwater resources from overdraft and seawater intrusion. The operating budget for FY is approximately $30 million for the fiscal year running July 1 st through June 30 th for all funds combined. The adopted budget and more information can be found on the website 3. Mandatory Minimum Requirements To be considered for selection, proposing financial institutions must have at least the following qualifications: Have a physical full-service banking facility within the District Boundaries Be a Federal or State of California chartered financial institution Be a Federal Deposit Insurance Corporation (FDIC) insured institution Be a qualified depository for public funds Be capable of providing the services sought by the District as identified below; and Comply with all requirements specified in this RFP 4. Required Banking Services The services required to accommodate the District s current and anticipated banking needs are outlined as follows: 1. Account Executive: An account executive must be assigned to the account to coordinate the account services and expedite the solution of any problem. A trained and competent backup for the account executive, familiar with the account, should be assigned in the proposal. Stipulate the name and a brief biography of the account executive and the backup to be assigned the District s account. 2. Online Services: The District requires the ability and availability to manage all accounts and bank services online. The online banking services should include account reconciliation, check image retrieval, account analysis and online transactions and statements. 2 P a g e

5 3. Accounts: The District currently utilizes a checking account. The financial institution must be able to accommodate the existing account and furnish the District with additional accounts as needed. 4. Monthly Statements and Account Analysis: a) The financial institution must provide the District, within ten (10) working days after the last calendar day of the month, a monthly account statement for all District accounts and have available copies of both the front and back sides of cleared items. b) The financial institution must provide the District with an account analysis within twenty (20) days after the last calendar day of the month. The analysis must detail all activity levels and charges for all accounts covered by the contract with the financial institution. 5. Standard Deposit Services: The financial institution should guarantee immediate credit of all incoming wire transfers and U.S. Treasury checks upon receipt and all other checks based on the financial institution s published availability schedule. The financial institution should specify in their proposal their deposit requirements. Please see Attachment B, Item D. 6. Wire Transfers, ACH Transactions, EFT and other transfers: The financial institution must have the capability to accommodate a wide range of electronic payments, money transfers, wires and ACH transactions for the transfer of funds to and from the District s accounts. These items include but are not limited to: a) Wire Transfers: The District currently generates numerous incoming and outgoing wires and transfers each month. The District requires adequate security and provisions and procedures. This proposal should include a copy of your standard wire transfer procedures and wire transfer agreement. Please see Attachment B, Item C. b) Federal and State Payroll Tax Payments: The District currently participates in the Federal Electronic Fund Transfer Payment System. c) Direct Deposit for Payroll: i. The District utilizes direct deposit services for its payroll on a bi-weekly basis according to the Automated Clearing House (ACH) rules and regulations. On an average payroll, 65 employees receive direct deposit. Employees have the option to transfer to multiple bank accounts. The financial institution should be able to receive a direct transmission with all payroll information. Transmission will be delivered by 3:00 p.m. two business days prior to payday. Deposits must be made into the employees account(s) by 8:00 a.m. PST on payday. If needed, the financial institution shall furnish pass-through software to aid in the ACH payroll file creation at no cost to the District. Any deviation from these time limits must be stated in the proposal. Please see Attachment B, Item C. ii. Transmit debit entries initiated by the District under ACH rules. The financial institution shall provide software or another means to allow the District to change and adjust ACH information prior to transmission to the financial institution. Upon timely and proper notification by the District, the financial institution shall manually adjust or stop payment or other adjusting entries. 7. Overdraft Protection: Every effort will be made to eliminate overdraft situations on the account. However, in case this situation does arise, the proposal should include any and all financial institution policies regarding overdraft charges or handling procedures including associated costs. Please see Attachment B, Item E. 8. NSF/Returned items: The financial institution should redeposit returned items due to non-sufficient funds or return to maker. Items returned a second time should be forwarded to the District on a daily basis and should indicate any applicable returned check charges. Please see Attachment B, Item F. 3 P a g e

6 9. Supply Services: Provide endorsement equipment and remote deposit scanners. Please use Attachment A to indicate if charges will apply. 10. Investment/Other Services: The District is interested in obtaining information on investment products and rates as well as any other products or services that would benefit the District. These products or services are not required but will be evaluated in terms of availability, feasibility, service levels, service providers and cost. The District will make its determination after receipt of proposals as to whether a product or service will be used. If the product or service is accepted later in the contract period, the services and charges stipulated in the proposal will be applied. 5. Proposal Submission Requirements Proposals should be prepared simply and economically and provide a straightforward, concise description of the Proposer s institution, qualifications, proposed solution, and capabilities to satisfy the requirements of this RFP. Emphasis should be on completeness and clarity of content. Proposals will be submitted no later than the Deadline for Proposal Submission as identified in Section 1. Proposers assume the risk of the method of delivery chosen. The District assumes no responsibility for delays caused by any delivery service. A Proposer's failure to submit a proposal as required before the deadline will cause the proposal to be disqualified. Proposers must submit in a sealed package an original and two (2) copies. The package should be clearly marked with Proposal for Banking Services Banking RFP 2017 and the name and contact information of the financial institution submitting the proposal. The proposal package should be mailed, couriered, or hand delivered to the address as follows: United Water Conservation District ATTN: Tina Rivera, Chief Financial Officer 106 N. 8 th St. Santa Paula, CA Failure to follow the specified format, to label the responses correctly, or to address all of the subsections may, at the District s sole discretion, result in rejection of the Proposal. Proposals should be prepared on standard 8 1/2" x 11" paper and printed on 2 sides. All proposal pages should be numbered. Proposals must contain the following information: Cover Page One printed page maximum. It should include the name of the proposing financial institution and its principal business address where the relationship will be managed. Table of Contents All pages are to be numbered and figures, tables, charts, etc. must be assigned index numbers and identified in the Table of Contents. 4 P a g e

7 Section 1 Executive Summary Two printed pages maximum. Introducing the company and the Account Executive. Please include a statement of the financial institution s understanding of the service to be performed and a positive commitment to provide the service as indicated in this RFP. The letter should be addressed to Tina Rivera, United Water Conservation District, 106 N. 8 th St., Santa Paula, CA Section 2 Insurance A statement that the financial institution can meet the District s mandatory insurance requirements: The District requires Commercial General Liability insurance with limits of not less than $1,000,000 per occurrence and $2,000,000 aggregate, Professional Liability Insurance with limits of not less than $1, per occurrence if available to a professional engaged in bank s regular course of business, Automobile Liability insurance with a minimum limit of $500,000 per accident, and Workers Compensation Insurance as required by the State of California. The District reserves the right to establish that these insurance requirements be met and complied with prior to any contractual agreement is entered into. Failure to comply could result in non-award of the contract. Section 3 Financial Institution Information The financial institution must provide all of the following as part of the proposal: Audited Financial Statements for the most recent fiscal year A copy of the current FDIC call report Company ownership information Provide a statement regarding any mergers or acquisitions that the financial institution in currently committed to and the expected impact on the services requested in this RFP. Section 4 References Please provide three (3) references attesting to the bank s experience as it relates to providing banking services. The references must include contact name, title, address, address, telephone number and services used. Section 5 Credit Rating Provide your short- and long-term rating from the following (preferably two) nationally recognized statistical ratings organizations: Moody s Fitch Ratings Standard & Poor s Kroll Bond Rating Agency (KBRA) Attachment A Banking Services Charges Attachment B Banking Services Questionnaire 6. Proposal Evaluation 5 P a g e

8 Proposals will be evaluated generally on the following criteria, which is neither weighted nor prioritized: Proper submission of proposal Demonstrated understanding of the service requested Overall capabilities of the financial institution to meet the required service levels described in this RFP The financial institution s financial standing among its peers and the associated credit quality ratings Qualifications of the financial institution and assigned individuals Fees charged and cost effectiveness of the proposed services Reference checks 7. Selection Process Each of the proposals received will be evaluated and determined if it meets the stated requirements. Failure to meet these requirements will be a cause for eliminating the financial institution from further consideration. The District shall not be liable in any way for any cost incurred by any financial institution or in the preparation of its proposal in response to this RFP nor for obtaining any required insurance. The District reserves the right to reject any and all proposals, to waive any technicalities, informalities and irregularities, to accept or reject all of part of proposals, and to be the sole judge of the suitability of the proposals offered. Evaluation of the proposals will be made by the Chief Financial Officer and other District staff as deemed appropriate by the District. In addition to evaluating written proposals, oral interviews may be requested. Final selection will be made by the UWCD Board of Directors, upon recommendation by the Chief Financial Officer. 8. General Requirements RFP Amendment and Cancellation The District reserves the unilateral right to amend this RFP in writing at any time. The District also reserves the right to cancel or reissue the RFP at its sole discretion. If an amendment is issued, it will be provided to all Proposers complying with Section 1.6 (Intent to Propose). Proposers will be required to respond to the final written RFP and any exhibits, attachments, and amendments issued by the District. Public Records Law Materials submitted by Proposers are subject to public inspection under the California Public Records Act (Government Code Sec et seq.), unless exempt. Irregularities and Illegal Acts All firms are required to make an immediate, written report of all irregularities and illegal acts or indications of illegal acts of which they become aware to the following parties: General Manager, District Legal Counsel, and the Chief Financial Officer. Collusion By submitting a response to the RFP, each Proposer represents and warrants that its response is genuine and not made 6 P a g e

9 in the interest of or on behalf of any person not named therein; that the Proposer has not directly induced or solicited any other person to submit a sham response or any other person to refrain from submitting a response; and that the Proposer has not in any manner sought collusion to secure any improper advantage over any other person submitting a response. Gratuities No person will offer, give or agree to give any District employee or its representatives any gratuity or offer of employment in connection with the award of contract by the District. No District employee or its representatives will solicit, demand, accept or agree to accept from any other person a gratuity or offer of employment in connection with a District contract. Nondiscrimination No person will be excluded from participation in, be denied benefits of, be discriminated against in the admission or access to, or be discriminated against in treatment or employment in the District s contracted programs or activities on the grounds of disability, age, race, color, religion, sex, national origin, or any other classification protected by federal or California State Constitutional or statutory law; nor will they be excluded from participation in, be denied benefits of, or be otherwise subjected to discrimination in the performance of contracts with the District or in the employment practices of the District s contractors. Accordingly, all Proposers entering into contracts with the District will, upon request, be required to show proof of such nondiscrimination and to post in conspicuous places, available to all employees and applicants, notices of nondiscrimination. Proposal Withdrawal, Errors, and Amendment To withdraw a proposal, the Proposer must submit a written request, signed by an authorized representative, to the RFP Coordinator. After withdrawing a previously submitted proposal, the Proposer may submit another proposal at any time up to the deadline for submitting proposals. Proposers are liable for all errors or omissions contained in their proposals. Proposers will not be allowed to alter proposal documents after the deadline for submitting a proposal. The District will not accept any amendments, revisions, or alterations to proposals after the deadline for proposal submittal unless such is requested by the District. Incorrect Proposal Information If the District determines that a Proposer has provided, for consideration in the evaluation process or contract negotiations, incorrect information which the Proposer knew or should have known was materially incorrect, that proposal will be determined non-responsive, and the proposal will be rejected. Assignment and Subcontracting The Contractor may not subcontract, transfer, or assign any portion of the contract without prior, written approval from the District. Each subcontractor must be approved in writing by the District. The substitution of one subcontractor for another may be made only at the discretion of the District and with prior written approval from the District. Notwithstanding the use of approved subcontractors, the Proposer, if awarded a contract under this RFP, will be the prime contractor and will be responsible for all work performed and will be responsible for all costs to subcontractors for services provided by the Proposer. The Proposer is prohibited from performing any work associated with this RFP or using contractors for any service associated with this RFP offshore (outside the United States). 7 P a g e

10 Licensure Before a contract pursuant to this RFP is signed, the Proposer must hold all necessary, applicable business and professional licenses. The District may require any or all Proposers to submit evidence of proper licensure. Conflict of Interest and Proposal Restrictions By submitting a response to the RFP, the Proposer certifies that no amount will be paid directly or indirectly to an employee or official of the District as wages, compensation, or gifts in exchange for acting as an officer, agent, employee, subcontractor, or consultant to the Proposer in connection with the procurement under this RFP. Notwithstanding this restriction, nothing in this RFP will be construed to prohibit another governmental entity from making a proposal, being considered for award, or being awarded a contract under this RFP. Contract Negotiations and Execution Assuming at least one proposal is deemed to benefit the District, the District intends to enter into contract negotiations with the selected Proposer. These negotiations could include all aspects of services and fees. If a contract is not finalized in a reasonable period of time, the District will open negotiations with the next ranked service provider. If a Proposer indicates an offer of services in addition to those required by and described in this RFP, these additional services may be added to the contract before contract signing at the sole discretion of the District. If the selected Proposer does not execute a contract with the District within fifteen (15) business days after notification of selection, the District may give notice to that service provider of the District s intent to select from the remaining Proposers or to call for new proposals, whichever the District deems appropriate. Right of Rejection The District reserves the right, at its sole discretion, to reject any and all proposals or to cancel this RFP in its entirety. Any proposal received that does not meet the requirements of this RFP may be considered to be nonresponsive, and the proposal may be rejected. Proposers must comply with all of the terms of this RFP and all applicable State laws and regulations. The District may reject any proposal that does not comply with all of the terms, conditions, and performance requirements of this RFP. Proposers may not restrict the rights of the District or otherwise qualify their proposals. If a Proposer does so, the District may determine the proposal to be a nonresponsive counteroffer, and the proposal may be rejected. The District reserves the right, at its sole discretion, to waive variances in proposals provided such action is in the best interest of the District. Where the District waives minor variances in proposals, such waiver does not modify the RFP requirements or excuse the Proposer from full compliance with the RFP. Notwithstanding any minor variance, the District may hold any Proposer to strict compliance with the RFP. Disclosure of Proposal Contents All proposals and other materials submitted in response to this RFP procurement process become the property of the District. Selection or rejection of a proposal does not affect this right. All proposal information, including detailed price and cost information, will be held in confidence during the evaluation process. Upon the completion of the evaluation of proposals, the proposals and associated materials will be open for review by the public to the extent allowed by the California Public Records Act, (Government Code Section and ). By submitting a proposal, the Proposer acknowledges and accepts that the contents of the proposal and associated documents will become open to 8 P a g e

11 public inspection. Severability If any provision of this RFP is declared by a court to be illegal or in conflict with any law, the validity of the remaining terms and provisions will not be affected; and, the rights and obligations of the District and Proposers will be construed and enforced as if the RFP did not contain the particular provision held to be invalid. Rights of the District in Summary The District reserves the right to: Make the selection based on its sole discretion Reject any and all proposals Issue subsequent Requests for Proposals Postpone opening proposals, if necessary, for any reason Remedy errors in the Request for Proposal process Approve or disapprove the use of particular subcontractors Negotiate with any, all, or none of the Proposers Accept other than the lowest offer Waive informalities and irregularities in the proposals Enter into an agreement with another Proposer in the event the originally selected Proposer defaults or fails to execute an agreement with the District Refuse, at its sole discretion, any subcontractors or any personnel provided by the prime contractor or its subcontractors. An agreement will not be binding or valid with the District unless and until it is approved by the District Board of Directors and executed by authorized representatives of the District and of the Proposer. 9 P a g e

12 Attachment A Banking Services Charges Pricing required: Any and all anticipated service charges must be shown on this form to be applicable under the agreement. Please list additional services in the section listed as Other. If no charge applies, enter No Cost on the line representing that service. *Please note District s monthly average based on a 4-month period. Pro-forma Pricing Matrix Description Monthly Average Unit Charge Cost of Service General Account Maintenance 1 Daily Balance Reporting Depository Account Master Account Deposited Checks 218 Subsidiary Accounts Credits Posted 10 Per Transaction Debits Posted 48 Per Transaction Encoding Charge Per Transaction Cash Deposits 3 Per Transaction ACH Processing Origination of File ACH Deletions ACH Entries Returned Checks Positive Pay Reconciliation Per Transaction Per Tape Per Transaction Per Transaction Per Transaction Per month 10 P a g e

13 Description Monthly Average Unit Charge Cost of Service Stop Payment 2 Per Transaction Service Unit Unit Charge Cost of Service Sort List tape Sort and List Per Transaction Per Transaction Items Deposited Deposits Per Transaction 20 Per Transaction Commercial Deposits Electronic Deposits Per Transaction Per Transaction Wire Transfers Incoming 2 Per Transaction Outgoing 2 Per Transaction Book Debit S/T - Electronic Book Credit ACH Originated 244 ACH Received ACH Payments Online Batch Release Internet ACH One Day item Internet ACH Two Day item 9 Internet ACH Base fee 1 Wire Monthly Base 1 Book Transfer Per item Special Handling Online Reporting Client 1 11 P a g e

14 Description Monthly Average Unit Charge Cost of Service Maintenance Fee Basic Banking Maintenance Fee Online Reporting Maintenance Fee Additional Accounts User Module Fee Online Viewing <90 days Previous Day Reporting Previous Day Dr/Cr Items Per item Current Day Reporting Maintenance Fee Online Reporting Maintenance Fee Additional accounts User Module Fee Online Viewing < 90 Days Previous Day Reporting Previous Day Dr/Cr Items Current Day Reporting Search Capability Per Account Event or Alert Messaging Service - Per Account Online Image Review Maintenance 1 Image Retrieval 1 Special Report Fee 12 P a g e

15 Description Monthly Average Unit Charge Cost of Service Disbursement Services DDA Checks Paid 195 DDA Statement with Image DDA Statement (Paper) Other: 13 P a g e

16 Attachment B Banking Services Questionnaire Please respond to the following questions regarding your banking services. Include any additional information that you want the District to know. Include samples if it would be beneficial. Please attach your responses with your proposal. A. Online Banking Services: I. Discuss your use of the internet in providing services to your customers. II. How often is the daily information updated? III. Discuss any training provided by your bank. IV. Please provide screenshots of your user interface for online banking, specifically the Account Summary/Activity screen. B. Statements: Please provide the following sample reports: I. Monthly checking account statement II. Monthly account analysis C. Wire Transfers, ACH transactions, EFT and other transfers: I. Describe your standard wire transfer services and procedures. II. Please discuss wire deadlines. III. Please describe your ACH service and the method by which the District can submit ACH files or initiate ACH via your bank s software. D. Deposit Services: I. Please provide your funds availability schedule for funds deposited via cash deposit, wire transfer, checks, and ACH credits (via online). II. Please provide your policy regarding receiving same day credit for deposits and any fees that apply. E. Overdraft Processing: I. Please provide your bank s policy on overdraft services. II. Please describe all charges associated with overdrafts and what are the bank limitations. III. Please describe your daylight overdraft policy and any associated charges. F. Non-Sufficient Funds (NSF)/Returned Items: Please describe your processing procedures for NSF/Returned items. G. Customer Service: Please describe your customer service structure for this account. H. Errors and Adjustments: I. Describe your process for avoiding and resolving deposit discrepancies. Are there established turn-around times for research and adjustments? If yes, please specify. II. How soon are deposit discrepancies (other than NSF items) identified? 14 P a g e

17 Attachment C Investment Policy Effective July 1, 2017 The purpose of this policy is to provide guidelines for the prudent investment of the District's temporarily idle cash, outline policies for maximizing efficiency of the District's cash management system and emphasize the preservation of capital. The ultimate goal is to enhance the economic status of the District while protecting its cash resources. I. GOVERNING AUTHORITY The investment program shall be operated in conformance with federal, state, and other legal requirements, including Government Code sections II. SCOPE This policy applies to the investment of all funds held directly by the District. Funds held and invested by trustees or fiscal agents are excluded from this policy; however, such funds are subject to the regulations established by the State of California pertaining to investments by local agencies. 1. Pooling of Funds Except for cash in certain restricted and special funds, the District will consolidate cash and reserve balances from all funds to maximize investment earnings and to increase efficiencies with regard to investment pricing, safekeeping and administration. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles. III. GENERAL OBJECTIVES The primary objectives, in priority order, of investment activities shall be safety, liquidity, and yield: 1. Safety Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective will be to mitigate credit risk and interest rate risk. a. Credit Risk The District will minimize credit risk, which is the risk of loss due to the failure of the security issuer or backer, by: Limiting investments to the types of securities listed in Section VII of this Investment Policy Pre-qualifying the financial institutions, broker/dealers, intermediaries, and advisers with which the District will do business in accordance with Section V Diversifying the investment portfolio so that the impact of potential losses from any one type of security or from any one individual issuer will be minimized. b. Interest Rate Risk The District will minimize interest rate risk, which is the risk that the market value of securities in the portfolio will fall due to changes in market interest rates, by: Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity Investing operating funds primarily in shorter-term securities, money market mutual funds, or similar investment pools and limiting the average maturity of the portfolio in accordance with this policy (see Section VIII). 15 P a g e

18 2. Liquidity The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by structuring the portfolio so that securities mature concurrent with cash needs to meet anticipated demands (static liquidity). Furthermore, since all possible cash demands cannot be anticipated, the portfolio should consist largely of securities with active secondary or resale markets (dynamic liquidity). Alternatively, a portion of the portfolio may be placed in money market mutual f unds or local government investment pools which offer same-day liquidity for short-term funds. 3. Yield The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. The core of investments is limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. Securities shall generally be held until maturity with the following exceptions: A security with declining credit may be sold early to minimize loss of principal. A security swap would improve the quality, yield, or target duration in the portfolio. Liquidity needs of the portfolio require that the security be sold. In an effort to evaluate the performance of the investment activity of the District, as it pertains to this policy, the District's cash management portfolio shall be designed with the objective of regularly meeting or exceeding a performance benchmark, which could be the average return on three-month U.S. Treasury Bills, the California Local Agency Investment Fund (LAIF) or the County of Ventura Investment Pool. IV. STANDARDS OF CARE 1. Prudence The standard of prudence to be used by investment officials shall be the "prudent person" standard (Civil Code Section 2261, et seq.) and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with written procedures and this investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, p rovided deviations from expectations are reported in a timely fashion and the liquidity and the sale of securities are carried out in accordance with the terms of this policy. The "prudent person" standard states that, "Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived." 2. Ethics and Conflicts of Interest Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions. Employees and investment officials shall disclose any material interests in financial institutions with which they conduct business. They shall further disclose any personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the District. 3. Delegation of Authority The District's Chief Financial Officer has been authorized to recommend to the General Manager investment transactions on behalf of the District. The disbursement of funds for the placement of individual investments undertaken by these officers will generally be approved in advance by the Finance Committee. If, in the opinion 16 P a g e

19 of the Chief Financial Officer and the General Manager, investment opportunities become available that the District should take advantage of before the Finance Committee is able to convene, the Committee will be notified, via FAX, 24 hours in advance of any disbursement of funds. A full report of the investment decision will be given to the Committee at the next scheduled meeting. In any event, such investment decisions will be within the guidelines set forth in this policy. The District may, upon approval by the Board of Directors utilize an investment management service. Any investment management service used must follow the District's Investment Policy outlined herein and as directed by the Board of Directors. The Finance Committee shall consist of three members of the Board of Directors (as appointed by the President of the Board), the General Manager or the Deputy General Manager, and the Chief F inancial Officer.. The Committee should meet as required to determine general strategies, the existing portfolio and to monitor results. The Committee shall include in its deliberations such topics as portfolio diversification, maturity structure, potential risks to District funds, brokers and dealers, the target rate of return on investments, and any other topics as it may determine or as directed by the Board of Directors. All actions of the Committee shall be reported to the full Board of Directors at the next regular Board meeting. V. AUTHORIZED FINANCIAL INSTITUTIONS, DEPOSITORIES, AND BROKER/DEALERS The District shall transact business only with Federal Deposit Insurance Corporation (F.D.I.C.) insured institutions, and licensed securities dealers as described in Government Code Section In selecting financial institutions for the investment of District funds, the Chief Financial Officer shall consider the creditworthiness of institutions. The Chief Financial Officer shall monitor, from time t o time, financial institutions' credit characteristics and financial history throughout the period in which the District's funds are deposited or invested. The following investment firms and financial institutions are authorized by United Water Conservation District to hold investments in the above authorized investment media: California Pooled Local Agency Investment Fund (LAIF) Ventura County Investment Pool Union Bank Morgan Stanley Dean Witter UnionBanc Investment Services (wholly owned subsidiary of Union Bank of California) Bank of the West Bond proceeds issued by the District and held by a trustee or fiscal agent are invested in accordance with the statutory provisions governing the issuance of the bonds, indebtedness or lease installmen t agreement approved by the District. Changes or additions to the approved list of investment media, institutions and firms may be recommended from time to time by the Chief Financial Officer to the General Manager for presentation to the Board's Finance Committee and then to the full Board of Directors, for approval. When considering additional institutions or firms, priority should be given to firms with local representatives, who have offices within the District boundaries. All financial institutions and broker/dealers who desire to become qualified for investment transactions must supply the following, as appropriate: Audited Financial Statements demonstrating compliance with State and federal capital adequacy guidelines Proof of State registration Certification of having read and understood and agreeing to comply with the District's Investment Policy Evidence of adequate insurance coverage Other information as determined necessary by staff or the Board of Directors 17 P a g e

20 An annual review of the financial condition and registration of all qualified financial institutions and broker/dealers will be conducted by the Chief Financial Officer. VI. INTERNAL CONTROLS The Chief Financial Officer shall establish a system of internal controls, which shall be docum ented in writing. The internal controls shall be reviewed by the General Manager, the Finance Committee and the independent auditor. The controls shall be designed to prevent losses of public funds arising from fraud, collusion, employee error, misrepresentation by third parties, unanticipated changes in financial markets or imprudent actions by District staff. VII. SUITABLE AND AUTHORIZED INVESTMENTS 1. Investment Types (Government Code Section Exhibit A) The following investment media have been approved by United Water Conservation District: Government Investment Pools U. S. Government Securities - generally limited to Treasury Bills, Treasury Notes, Bonds or other direct obligations which carry the full faith and credit of the United States Government. U.S. Government Agencies generally limited to items issued by a federal agency or a United States government-sponsored enterprise, such agencies include, but are not limited to, the Federal Farm Credit Bank (FFCB), Student Loan Marketing Association (SLMA), and the Federal National Mortgage Association (FNMA) and those issued by the Federal Housing Administration (FHA). The "prudent investor" rule shall apply for a single agency name, as U.S. Government backing is implied rather than guaranteed. Certificates of Deposit (CD) of domestic banks and savings and loan fully insured by the federal government or collateralized Approved Bank Demand Deposit Accounts Approved domestic Bank Overnight Sweep Accounts Money Market Funds that are rated no less than AAA, AAA or similar rating under any revised rating format by Standard & Poor's or Moody's. 2. Collateralization The District's cash held in its bank demand deposit accounts (including checking accounts and non -negotiable Certificates of Deposit) or bank overnight sweep accounts shall be collateralized by the financial institution with securities having a market value of at least 110% of the amount of deposits. VIII. INVESTMENT PARAMETERS 1. Diversification The District will diversify its investment portfolio to control the risks of loss resulting from over-concentration of assets in a specific maturity, specific issue or a specific class of securities. Maturities should be staggered to provide for liquidity and stability of income. No less than twenty-five percent (25%) of the portfolio should be invested in LAIF or other securities, which can be liquidated on one day's notice. No more than one-third (33%) of the District's portfolio shall be held by any single investment firm or institution, or as otherwise limited by Government Code Section The sole exceptions shall be the State of California Investment Pool (LAIF) or Obligations of the U.S. Government. No more than fifteen percent (15%) of the District's temporarily idle cash should be left in the District's general checking account or sweep instruments for more than 5 business days. Sufficient funds may be maintained in the District's general checking account to minimize monthly bank charges. The savings in monthly bank charges, over time, should be sufficient to offset the lost investment earnings potential of these excess funds retained in the general checking account. Generally, the State Local 18 P a g e

21 Agency Investment Fund and Obligations of the U.S. Government are the most favore d investment choices for the District. 2. Maximum Maturities To the extent possible, the District shall attempt to match its investments with anticipated cash flow requirements. Generally, the District's temporarily idle operating cash shall be invested in instruments whose average maturity does not exceed one year, except after review and approval by the Finance Committee, a portion of the District's portfolio may be invested in authorized investment instruments (i.e. securities and/or certificates of deposit) for up to but not to exceed three-years. Investments with maturities exceeding one year shall be disclosed to the Board of Directors at the next meeting of the entire Board. All District investments are intended to be held to maturity. IX. REPORTING The Chief Financial Officer, through the General Manager, will provide the Board of Directors with monthly reports of investments. Such reports will provide at least the following: The type of investment, name of issuer, date of maturity, par and dollar amount invested in each security or investment. The weighted average maturity of the investments. Any funds, investments, or programs, including loans that are under the management of contracted parties. The market value as of the date of the report, and the source of this valuation for any security. A description of the compliance with the statement of investment policy. A statement denoting the ability of the District to meet its expenditure requirements for the next six months. X. APPROVAL OF INVESTMENT POLICY This policy may be presented to and reviewed by the Board of Directors on an annual basis in a regularly scheduled Board meeting. 19 P a g e