City Council

BOARD OF WATER AND POWER COMMISSIONERS INVESTMENT COMMITTEE MEETING AGENDA March 26, 2024 9:00 AM CITY OF BIG BEAR LAKE, DEPARTMENT OF WATER AND POWER 41972 GARSTIN DRIVE Service, Quality, Community BIG BEAR LAKE, CALIFORNIA 92315 BOARD MEMBERS Reginald A. Lamson, General Manager Bob Tarras, Vice-Chair Nathan Statham, Chief Financial Officer Craig Hjorth, Treasurer Danny Ent, Water Superintendent Caitlin Kent, Accounting Technician STAFF MEMBERS This meeting will be held in person at the DWP Office at 41972 Garstin Drive, Big Bear Lake, CA 92315. OPEN SESSION CALL MEETING TO ORDER PLEDGE OF ALLEGIANCE PUBLIC FORUM All remarks shall be addressed to the Board as a body only. There is a three-minute maximum time limit when addressing the Board. Please note that California law prohibits the Board from taking action on any item not appearing on the agenda. 1. DISCUSSION/ACTION ITEMS 1.1 1.1 Discussion on Diversifying DWP Investments to an Additional Investment Pool Committee to review and discuss selection of additional investment pool. ADJOURNMENT I hereby certify under penalty of perjury, under the laws of the State of California that the foregoing agenda was posted in accordance with the applicable legal requirements. Dated this 22nd of March 2024. Leeanne Eagleson, Secretary to the Board of Commissioners DWP Board of Commissioners Page 1  AGENDA REPORT Service, Quality, Community DATE: March 26, 2024 TO: Investment Committee FROM: Reginald A. Lamson, General Manager PREPARED BY: Nathan Statham, Chief Financial Officer RE: Discussion on Diversifying DWP investments to an Additional Investment Pool Background DWP currently holds investments in two investment pools, California Asset Management Program (CAMP) and the Local Agency Investment Fund (LAIF). DWP added CAMP to its investment portfolio in January of 2023 since CAMP was outperforming LAIF and staff sought to diversify DWP’s investments. CAMP has continued to outperform LAIF, and consequently a majority of available funds have been invested in CAMP. DWP staff has concerns about issuer specific risk. CAMP holds only highly rated investments, so issuer specific risk is low; however, splitting investments to another pool with a similar profile would add additional protection to DWP’s investments. To mitigate issuer specific risk, staff has evaluated other public agency investment pools. While multiple pools are available, stable New Asset Value (NAV) pools with sufficient assets are more limited. Staff identified an optimal investment pool for diversification purposes called California Cooperative Liquid Assets Securities System (California CLASS). California CLASS California CLASS has two portfolios—the Prime Portfolio and the Enhanced Cash Portfolio. The Prime Portfolio is similar to CAMP in that it seeks to maintain a stable NAV of $1.00. Both CAMP and the Prime Portfolio are invested heavily in commercial paper and certificates of deposit. The Prime Portfolio offers same-day liquidity, unlimited withdrawals, and there is no minimum or maximum investment. California CLASS has over $1 billion under management with over 149 government participants (listing attached as Exhibit C). Investments are held through US Bank. California CLASS is governed by a four-member Board of Trustees comprised of general managers and finance directors of member agencies. The Prime portfolio is rated AAAm by S&P Global, the highest available rating for investment pools of this type and the same rating as CAMP. Investment returns have been comparable with CAMP as shown below. Page 2 Investment Committee – Investment Portfolio Discussion March 26, 2024 Page 2 of 2 2023 Monthly Distribution Yields CLASS CAMP Prime January 4.53% 4.53% February 4.73% 4.70% March 4.80% 4.77% April 4.97% 5.00% May 5.16% 5.15% June 5.24% 5.23% July 5.31% 5.29% August 5.52% 5.45% September 5.55% 5.48% October 5.56% 5.51% November 5.58% 5.55% December 5.55% 5.54% Conclusion Placing DWP funds in the California CLASS Prime Portfolio will diversify investments while continuing to maintain current returns. Attachments Exhibit A – CAMP Monthly Distribution Yields Exhibit B – CLASS Monthly Distribution Yields Exhibit C – CLASS Participant List Page 3  Exhibit A Cash Reserve Portfolio Monthly Distribution Yields2 2018 2019 2020 2021 2022 2023 2024 January 1.43% 2.62% 1.78% 0.12% 0.05% 4.53% 5.54% Current February 1.50% 2.64% 1.75% 0.10% 0.06% 4.73% 5.50% Annualized March 1.62% 2.61% 1.50% 0.08% 0.25% 4.80% Yield:1 April 1.84% 2.55% 0.98% 0.06% 0.50% 4.97% May 1.95% 2.52% 0.67% 0.05% 0.82% 5.16% 5.50% June 2.05% 2.48% 0.51% 0.05% 1.14% 5.24% July 2.11% 2.42% 0.37% 0.05% 1.64% 5.31% August 2.12% 2.28% 0.30% 0.05% 2.30% 5.52% September 2.14% 2.22% 0.27% 0.05% 2.61% 5.55% October 2.27% 2.05% 0.19% 0.05% 3.14% 5.56% November 2.36% 1.88% 0.14% 0.05% 3.90% 5.58% December 2.46% 1.80% 0.12% 0.05% 4.30% 5.55% 1. As of February 29, 2024. Past performance is not indicative of future results and yields may vary. The “current annualized yield” of the Pool may, from time to time, be quoted in reports, literature and advertisements published by the Trust. Current annualized yield represents the net change, exclusive of capital changes and income other than investment income, in the value of a hypothetical account with a balance of one share (normally $1.00 per share) over a seven-day base period expressed as a percentage of the value of one share at the beginning of the seven-day period. This resulting net change in account value is then annualized by multiplying it by 365 and dividing the result by 7. 2. The Trust also may publish a “monthly distribution yield.” The monthly distribution yield represents the net change in the value of a hypothetical account with a value of one share (normally $1.00 per share) resulting from all dividends declared during a month by the Pool expressed as a percentage of the value of one share at the beginning of the month. This resulting net change is then annualized by multiplying it by 365 and dividing it by the number of calendar days in the month. CAMP® is a registered trademark and the CAMP logos and designs are trademarks owned by the California Asset Management Trust (Trust). This information is for institutional investor use only, not for further distribution to retail investors, and does not represent an offer to sell or a solicitation of an offer to buy or sell any fund or other security. Investors should consider the Trust’s investment objectives, risks, charges and expenses before investing in the Trust. This and other information about the Trust is available in the Trust’s current Information Statement, which should be read carefully before investing. A copy of the Trust’s Information Statement may be obtained by calling 1-800-729-7665 or is available on the Trust’s website at www.camponline.com. While the Cash Reserve Portfolio seeks to maintain a stable net asset value of $1.00 per share and the CAMP Term Portfolio seeks to achieve a net asset value of $1.00 per share at the stated maturity, it is possible to lose money investing in the Trust. An investment in the Trust is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Shares of the Trust are distributed by PFM Fund Distributors, Inc., member Financial Industry Regulatory Authority (FINRA) (www.finra.org) and Securities Investor Protection Corporation (SIPC) (www.sipc.org). PFM Fund Distributors, Inc. is an affiliate of PFM Asset Management LLC. www.camponline.com | 1.800.729.7665 | camp@pfmam.com Page 4  Exhibit B California Cooperat ive Michigan Cooperat ive Liquid Liquid Asset AssetsSecurit Securities ies Syst Syst em em Invest wit h California CLASS Prime! Investing with California CLASS Prime could mean more for your local community. Use the California CLASS Prime investment calculator to see just how much you could have earned. Amount Invest ed California CLASS Investment Income Earned $1,000,000 As of Dat e Time $10 0 K $1M $10 M St ar t Dat e Dec 1- Dec 31 1month $471 $4,708 $47,066 December 1, 2023 Jul 1- Dec 31 6 months $2,789 $27,890 $278,897 End Dat e December 31, 2023 Jan 1- Dec 31 12 months $5,310 $53,097 $530,969 Months listed are in the year 2023 California CLASS Prime For more information on both historical yields Daily Yields as of Mont h-End and annualized performance, visit Month Year Month-End Yield www.californiaclass.com/rate or scan the below QR code: December 2023 5.5508% November 2023 5.5691% October 2023 5.5540% September 2023 5.5193% August 2023 5.4663% July 2023 5.4443% Source: Public Trust Advisors® Data unaudited. Values presented may not add up precisely to absolute figures due to rounding. Performance results for California CLASS are shown net of all June 2023 5.2651% fees and expenses and reflect the reinvestment of dividends and other earnings. Many factors affect performance including changes in market conditions and interest rates and in response to other May 2023 5.188% economic, political, or financial developments. Investment involves risk including the possible loss of principal. No assurance can be given that the performance objectives of a given strategy April 2023 5.0425% will be achieved. California CLASS is not a bank. An investment in California CLASS is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. March 2023 4.9771% Although the California CLASS Prime Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it February 2023 4.7275% will do so. Please review the California CLASS Prime Fund Information Statement before investing. Past performance is no guarant ee of fut ure result s. Any financial and/or invest ment decision may incur losses. Please visit January 2023 4.5990% www.californiaclass.com/rates-disclaimer for more information. Page 5 T (877) 930-5213 | F (877) 930-5214 | www.californiaclass.com | clientservices@californiaclass.com  Exhibit C California CLASS Participant List January 2024 Counties El Dorado County Lake County Sonoma County Treasurer Tehama County Municipalities City of Artesia City of Beaumont City of Brentwood City of Farmersville City of Folsom City of Fowler City of Fullerton City of Hemet City of Kingsburg City of Lancaster City of Morgan Hill City of Oroville City of Porterville City of Santa Ana City of Shafter City of Wasco City of Williams Town of Fort Jones Town of Paradise Other California CLASS Enhanced Cash California Special Districts Association CSDA Finance Corporation League of California Cities Public Agencies Self-Insurance System Special District Leadership Foundation Special District Risk Management Authority Tri-County Water Authority Special Districts Alameda County Mosquito Abatement District Alpine Fire Protection District Altadena Library District Anderson Springs Community Service District Artesia Cemetery District Atwell Island Water District Banning Library District Beaumont Library District Bell Canyon Community Services District Bighorn - Desert View Water Agency Bolinas Fire Protection District Bonita Sunnyside Fire Protection District Cabazon Water District Camarillo Health Care District Castroville Cemetery District Central Fire District of Santa Cruz County Channel Islands Beach Community Services Distict Chester Public Utility District Chico Area Recreation & Park District Chino Basin Water Conservation District Chino Basin Watermaster Clovis Veterans Memorial District Page No. 1 Page 6  Exhibit C California CLASS Participant List January 2024 Coachella Valley Resources Conversation District Coalinga - Huron Recreation & Parks District Coastside Fire Protection District Contra Costa Mosquito & Vector Control District Copper Valley Community Services District Corcoran Irrigation District Corning Healthcare District Costa Mesa Sanitary District Crescenta Valley Water District Del Puerto Health Care District Delano Mosquito Abatement District Desert Recreation District Durham Irrigation District East Orange County Water District Emerald Bay Service District Fallbrook Regional Health District Georgetown Divide P.U.D. Glenn County Resource Conservation District Gold Mountain Community Services District Goleta Sanitary District Groveland Community Services District Helendale Community Services District Herlong Public Utility District Hilmar County Water District Humboldt Bay Municipal Water District Idyllwild Water District Igo Ono Community Services District Indian Valley Community Services District Ironhouse Sanitary District Kensington Police Protection and Community Services District Kenwood Fire Protection District Keyes Community Services District La Puente Valley County Water District Lakeside Fire Protection District Las Gallinas Valley Sanitary District Leucadia Wastewater District Livermore Area Recreation and Park District Los Alamos Cemetery District Madera Irrigation District Mariana Ranchos County Water District Mark Twain Health Care District McKinleyville Community Services District Mendocino Coast Recreation and Park District Mendocino County Waterworks District II Mission Hills Community Services District Mojave Water Agency Murphy's Sanitary District North County Fire Protection District, San Diego County North Humboldt Recreation and Park District North of River Sanitary District No. 1 Oceano Community Services District Olympic Valley Public Service District Orange County Cemetery District Oxnard Harbor District Palos Verdes Library District Paradise Irrigation District Paradise Recreation & Park District Phelan Pinon Hills Community Services District Pico Water District Pine Grove Community Service District Pleasant Valley Recreation and Park District Rainbow Municipal Water District Rancho Murieta Community Services District Rancho Santa Fe Fire Protection District Resource Conservation District of Greater San Diego Rim of the World Recreation and Park District County Page No. 2 Page 7  Exhibit C California CLASS Participant List January 2024 San Antonio Basin Water District San Diego County Citrus Pest Control District San Gabriel Valley Mosquito and Vector Control District San Mateo County Mosquito and Vector Control District San Miguel Consolidated Fire Protection District Santa Cruz Port District Santa Maria Public Airport District Santa Ynez River Water Conservation District Sierra Resource Conservation District South Placer M.U.D. Stockton East Water District Tahoe - Truckee Sanitation Agency Tahoe City Public Utility District Temecula Public Cemetery District Templeton Community Services District Town of Discovery Bay - Community Services District Trabuco Canyon Water District Tracy Rural County Fire Protection District Truckee Donner Recreation and Park District Truckee Sanitary District Turner Island Water District Twentynine Palms Water District Union Public Utility District Vista Fire Protection District Wallace Community Services District Weott Community Services District West Basin Municipal Water District West County Wastewater District Western Shasta Resource Conservation District Williams Fire Protection Authority Total Participants: 149 Disclaimer: This participant list is being made public as a service to our participant base. The listed participants are active as of the end of the month. Page No. 3 Page 8