Aug 12, 2026 Board Finance Committee

[00:00:06]

ALL RIGHT. WELL, GOOD MORNING AND WELCOME TO THE BOARD FINANCE COMMITTEE MEETING OF THE EAST BAY REGIONAL PARK DISTRICT. THIS DAY,

[Roll Call]

WELCOME TO EVERYONE THAT'S HERE. MADAM CLERK, WOULD YOU READ THE ROLL? DIRECTOR DESCHAMBAULT. PRESENT. DIRECTOR WAESPI.

HERE. AND THAT IS ALL WE'RE HAVING TODAY, UNFORTUNATELY.

BUT WE'LL POWER THROUGH. OUR FIRST ITEM OF BUSINESS TODAY IS THE APPROVAL OF THE MINUTES OF THE BOARD FINANCE COMMITTEE MEETING OF MAY

[Approval of Minutes]

I HAVE A QUESTION FOR COUNSEL, I THINK I KNOW THE ANSWER.

I WASN'T AT THIS MEETING. I'M NOT NORMALLY PART OF THE COMMITTEE, BUT I CAN APPROVE THE MINUTES, CORRECT? AS LONG AS DIRECTOR WAESPI WAS THERE AND IS VOUCHING FOR THEM.

THANK YOU. GREAT. SO I'LL ACCEPT THAT AS A MOTION TO ACCEPT THE MINUTES OF THOSE TWO DATES.

AND I WILL SECOND THAT. ARE THERE ANY PUBLIC COMMENTS OR ANY OTHER QUESTIONS, COMMENTS, SUGGESTIONS? HEARING NONE. ALL IN FAVOR, SIGNIFY BY SAYING AYE.

AYE. AYE. MOTION PASSES. UNANIMOUSLY. THANK YOU.

WE'LL MOVE NOW TO PUBLIC COMMENTS NOT ON THE AGENDA.

[Public Comments on Items Not on the Agenda]

LET ME SAY MEMBERS OF THE PUBLIC MAY PROVIDE PUBLIC COMMENT, EITHER IN PERSON OR VIA ZOOM.

THOSE ATTENDING IN PERSON SHALL SUBMIT A SPEAKER CARD TO THE CLERK'S STAFF, OR OTHERWISE INDICATE THEIR DESIRE TO SPEAK ON A NON AGENDA ITEM.

THOSE ATTENDING VIA ZOOM MAY USE THE RAISE HAND FEATURE.

SPEAKERS WILL BE CALLED AS THEY TURN TO SPEAK.

EACH SPEAKER WILL BE PROVIDED UP TO THREE MINUTES TO ADDRESS THE BOARD.

A COUNTDOWN TIMER WILL BE DISPLAYED FOR THE SPEAKER'S CONVENIENCE.

WE HAVE ONE PERSON IN ATTENDANCE, SEAN ANDERSON.

GOOD MORNING. WELCOME. GOOD MORNING. DIRECTOR WAESPI.

DIRECTOR DESCHAMBAULT. FIRST OFF, I WANT TO OFFER AN APOLOGY TO YOU, DIRECTOR DESCHAMBAULT.

YOU WEREN'T ON THIS EMAIL. I HAD MERCURIO, SO YOU'RE GOING TO KIND OF HEAR ABOUT THIS THE FIRST TIME.

SO I'M THE CHAIR OF THE DEFERRED COMPENSATION ADVISORY COMMITTEE.

I WANT TO FOLLOW UP JUST BRIEFLY ON AN EMAIL THAT I SENT ON FRIDAY REGARDING TWO DEFERRED COMPENSATION MEMBERS WHO WERE DENIED ATTENDANCE AT THE UPCOMING NATIONAL ASSOCIATION OF GOVERNMENTAL DEFERRED COMPENSATION ADMINISTRATORS CONFERENCE BASED ON OPERATIONAL NEED.

FIRST, I WANT TO THANK THE COMMITTEE AGAIN FOR ITS LONG STANDING SUPPORT OF THE DEFERRED COMPENSATION ADVISORY COMMITTEE TO ATTEND TRAINING.

ONE OF THE AFFECTED MEMBERS TODAY ASKED THAT I RAISE THE ISSUE TODAY.

SO I WANT TO BRIEFLY BRING IT TO THE COMMITTEE'S ATTENTION.

WITH THE CONFERENCE APPROACHING, I WOULD APPRECIATE ANY ASSISTANCE THAT THE FINANCE COMMITTEE CAN PROVIDE IN DISCUSSING THE MATTER WITH THE GENERAL MANAGER OR APPROPRIATE STAFF, AND HELPING TO ENSURE THE IMPORTANCE PLACED ON DEFERRED COMP ADVISORY COMMITTEE TRAINING CARRIES THROUGH THE APPROVAL PROCESS.

THANK YOU. AND I WILL MAKE SURE TO FORWARD YOU THAT EMAIL.

THANK YOU TODAY. THANK YOU, SEAN, AND REMIND ME, WHEN IS THE DATE OF THE CONFERENCE? IT IS SEPTEMBER 29TH, I BELIEVE. ALL RIGHT. THANK YOU. NO MORE PUBLIC COMMENT.

OKAY. WE'LL NOW MOVE TO THE ACTION ITEMS. WE HAVE.

[Action Items]

IS THAT BETTER? VERY GOOD. SO IT IS MY PRIVILEGE TODAY AT THE BOARD FINANCE COMMITTEE TO PROVIDE THE QUARTERLY INVESTMENT REPORT AND MARKET REVIEW FOR QUARTER ENDING JUNE 30TH, 2026. I'LL BRIEFLY WALK THROUGH THE DISTRICT'S LIQUIDITY PORTFOLIO, INVESTED SECURITIES AND FUNDS HELD IN TRUST.

AND THEN WE'RE ASKING THE COMMITTEE AT THE CONCLUSION OF THIS TO RECOMMEND ACCEPTANCE OF THE REPORT TO THE FULL BOARD.

THE LIQUIDITY PORTFOLIO HIGHLIGHTS. REALLY THE PRINCIPAL STORY HERE IS THE $21.2 MILLION INCREASE FROM

[00:05:09]

YOU'LL SEE THAT AT THE BOTTOM OF THE TABLE, FAR RIGHT, THE $219.5 MILLION VERSUS THE $198.3 MILLION FROM THE PRIOR QUARTER. THIS INCREASE IS REALLY DRIVEN PRIMARILY FROM TIMING RELATED EVENTS THAT ARE CONSISTENT WITH OUR NORMAL CASH FLOW CYCLE, PRIMARILY, AGAIN, BECAUSE THE DISTRICT RECEIVES SIGNIFICANT PROPERTY TAX INSTALLMENTS IN DECEMBER AND APRIL.

SO REALLY THE KEY MESSAGE IS THE INCREASE HERE IS EXPECTED AND SEASONAL AND NOT AN UNEXPLAINED ACCUMULATION OF CASH. JODY, ARE YOU TAKING. WILL YOU TAKE COMMENTS OR QUESTIONS AS.

YEAH, AS WE GO. YEAH, ABSOLUTELY. GREAT. THANK YOU.

SO THIS INFLUX OF PROPERTY TAX COMES TWICE A YEAR, APRIL AND OCTOBER OR WHATEVER IT IS.

APRIL, DECEMBER. YEAH. SO THIS REPRESENTS A TAX FROM SIX MONTHS AGO, LAST YEAR, OR.

I KNOW THAT I GUESS IT WAS BEACON ECONOMICS SUGGESTED THAT AS OPPOSED TO 5.67% INCREASE IN PROPERTY TAX REVENUES, AS WE'VE HAD IN THE LAST FEW YEARS.

I DON'T KNOW IF THAT'S THE EXACT NUMBER, BUT IT'S CLOSE.

AND THAT NOW IN THIS YEAR AND THEN COMING YEARS IN THE FUTURE, IT WOULD BE MORE LIKE 3%.

YEAH. DOES THIS REFLECT ANYTHING LIKE THAT? IT'S REFLECTING REALLY OF ABOUT A 4% FROM THE PRIOR YEAR, WE'VE SEEN A DOWNTURN OR AT LEAST A DECREASE IN THE OVERALL INCREASE FOR LACK OF A BETTER TERM.

AND THEN THE COMING YEAR, WE'RE PROJECTING ABOUT A 3.8%.

SO WHEN THESE LARGE INFLUXES COME IN ON REALLY TWICE A YEAR, IT ALLOWS THE DISTRICT TO TAKE SOME OF THAT MONEY AND PUT IT INTO THESE INVESTMENT FUNDS.

GREAT. THANKS. I HAVE A MAYBE FOLLOW UP QUESTION.

GO AHEAD. I HAD THE SAME QUESTION IN GENERAL.

YOU KNOW, I'M AN ALTERNATE TO THIS, SO MAYBE DENNIS AND OTHERS HAVE A LOT MORE BACKGROUND.

BUT WITH THE INCREASE, I'M JUST SURPRISED. AND WE'VE HEARD THIS IN THE BUDGET, NOT JUST HERE ABOUT THIS DECREASE IN TAXES COMING TO US TO THE PARK DISTRICT. AND IS THAT SOMETHING THAT'S EXPECTED TO CONTINUE OR ON THE MARKET? I DON'T KNOW IF THAT'S A QUESTION YOU CAN ANSWER, BUT WITH ALL THESE ARENA NUMBERS AND ALL THESE NEW HOUSING AND ALL THIS PUSH FOR HOUSING, I GUESS I DON'T FULLY UNDERSTAND, AND I DON'T KNOW IF NOW'S THE RIGHT TIME FOR YOU TO ANSWER, LIKE, WHY ISN'T IT GOING UP AND WHY IS IT CONTINUING TO CAUSE THIS DECREASE IN OUR BUDGET? SO I THINK PART OF THE. ONE OF THE WAYS I WOULD ANSWER THAT QUESTION IS I THINK IT IS A MISNOMER TO SAY THAT WE'RE SEEING DECREASES IN OUR PROPERTY TAX REVENUE. THAT'S NOT WHAT IS HAPPENING. WHAT WE'RE EXPERIENCING REALLY IS THE YEAR OVER YEAR, 05, 6% INCREASES THAT HAVE BEEN OCCURRING THE PAST SEVERAL YEARS ARE JUST COMING BACK DOWN TO A MORE MODEST 3%, 4%. SO IT'S A DECREASE IN THE ESCALATION THAT WE'VE BEEN SEEING, BUT NOT A DECREASE IN OVERALL PROPERTY TAXES THAT THE DISTRICT IS EXPERIENCING. THANK YOU. THAT'S HELPFUL. AND YOU ANSWERED THE OTHER QUESTION I HAD.

SO 4% THIS YEAR IS STILL PRETTY GOOD. AND YEAH, WE'RE.

YEAH. SO AGAIN, THE KEY MESSAGE HERE IS THE INCREASE REALLY IS SEASONAL AND AGAIN NOT A UNEXPLAINED ACCUMULATION OF CASH.

IT TIES VERY. TAKES A VERY SIMILAR PARALLEL PATH TO THE PROPERTY TAX COLLECTIONS THAT WERE RECEIVING FROM THE COUNTY.

AND THEN ON FUNDS HELD IN TRUST. THIS SLIDE SHOWS THE FUNDS HELD IN TRUST, WHICH IS PRIMARILY THE WW DEBT SERVICE FUNDS. REALLY, AS WITH THE LIQUIDITY PRO PORTFOLIO, THE CHANGE DURING THE QUARTER REFLECTS, AGAIN, I'M KIND OF REPEATING MYSELF AD NAUSEAM.

ACCOUNTANTS LOVE TO TALK ABOUT TIMING DIFFERENCES AND IT'S OFTEN TRUE BUT IT IS REFLECTIVE OF THE PROPERTY TAXES COMING IN AGAIN

[00:10:01]

BUT AGAIN, THE CASH INCREASES TAKES A PRETTY ROUTINE ANNUAL PATH EACH YEAR WHERE PROPERTY TAXES COME IN PORTFOLIO COMPOSITION SHIFTS SOMEWHAT TOWARDS TREASURY, AGENCY FUNDS, TRUST BALANCES ALSO REFLECT THE TIMING OF THE PROPERTY TAXES.

AND PROBABLY MOST IMPORTANTLY, THERE'S REALLY NOTHING UNUSUAL OR UNTOWARD THAT I WOULD BRING BEFORE THE BOARD TODAY.

THIS IS A PRETTY STANDARD INVESTMENT REPORT, VERY CONSISTENT WITH WHAT HAS BEEN PRESENTED OVER THE PAST SEVERAL QUARTERS.

THAT BEING SAID, I STILL CAN'T HELP BUT ASK, IS IT ALSO CONSISTENT, THE DECREASE IN THE $6.8 MILLION FOR THE CORPORATE BONDS, NOTES AND CERTIFICATES? IS THAT WITHIN.

YEAH. SO THE DISTRICT WOULD HAVE AN INVESTMENT PORTFOLIO OR INVESTMENT POLICY STATEMENT AND SHIFTING WITHIN THOSE TYPES OF SECURITIES, INTO CORPORATE BONDS OR SHIFTING OUT OF CORPORATE BONDS INTO GOVERNMENT SECURITIES.

VERY COMMON. IT'S A PART OF A REBALANCING THAT OFTEN TAKES PLACE.

THESE ARE PROFESSIONALLY MANAGED PORTFOLIOS. SO THEY'RE WORKING ALWAYS WITHIN THE CONSTRAINTS OF THE INVESTMENT POLICY STATEMENT.

BUT IT IS CERTAINLY A PRACTICE TO MANEUVER BETWEEN THOSE DIFFERENT INVESTMENT VEHICLES IN ORDER TO MAXIMIZE THE RETURN THAT THE PORTFOLIO GETS. THANKS. I GUESS THANK YOU VERY MUCH FOR THE REPORT.

AND I LIKE TO EXPRESS MY APPRECIATION FOR PFM FOR MANAGING OUR ACCOUNTS SO WELL.

BUT, YOU KNOW, THE THINGS THAT WE DON'T HAVE ANY CONTROL OVER, LIKE THE INCREASE IN PROPERTY TAX REVENUE.

I'M WONDERING IF WE TAKE THAT INTO ACCOUNT, BECAUSE $21 MILLION NOW, I ASSUME, WILL BE AT $42.5 MILLION BY THE END OF THE YEAR.

BUT IF THAT REPRESENTS 4% AND WE HAD BEEN. WELL, LET'S SUGGEST IT REPRESENTS 4% IF INFLATION, GOD, I DON'T KNOW WHAT INFLATION IS.

I KEEP HEARING DIFFERENT THINGS ALL THE TIME. I FORGET EVERYTHING I HEAR, BUT IT SOUNDS LIKE INFLATION IS CLOSE TO THAT, RIGHT? THREE OR SOMETHING LIKE THAT. AND THEN THREE SOMETHING.

AND THEN WE'RE ALSO. WE'VE GOT UNION CONTRACTS COMING UP NEXT YEAR.

THIS IS JUST A DIRECT RELATION TO, I MEAN, IF 90% OF OUR REVENUES COME FROM PROPERTY TAXES, THIS QUOTE DOWNTURN. WELL, I'M CONCERNED ABOUT THAT.

THAT'LL BE INTERESTING BECAUSE WE HAVE OBLIGATIONS.

AND IT SEEMS LIKE IT WOULD JUST EAT UP EVERYTHING IN THE GENERAL FUND, AND WE WOULD HAVE NOTHING ELSE FOR ANYTHING ELSE, IF THIS IS THE WAY IT WORKS. BUT I GUESS THAT'S A REALITY THAT WE FACE AND THAT HAPPENS IN THE DISTRICT ALL THE TIME.

I KNOW WE HAVE UPS AND DOWNS THROUGHOUT THE HISTORY OF THE DISTRICT, BUT THIS LOOKS LIKE, I GUESS AS BEACON SUGGESTED THAT THIS IS GOING TO CONTINUE.

I ONLY HEARD FROM THE NEXT TWO YEARS. YEAH. THE OUT YEARS.

WHEN I SAY OUT PROBABLY THE NEXT THREE YEARS, THEY'RE ANTICIPATING AGAIN BETWEEN THE HIGH THREES TO LOW FOURS.

THAT CAN CHANGE, DIRECTOR WAESPI, IF THERE'S, YOU KNOW, WHAT'S HAPPENING TODAY COULD BE DRAMATICALLY DIFFERENT FROM WHAT'S HAPPENING 2 OR 3 YEARS WITH PROP 13. IF THERE'S A LARGE INFLUX OF SALES FOR INDIVIDUALS THAT HAVE BEEN IN HOUSES FOR A VERY LONG TIME.

NEW PEOPLE COME IN. THE TAX BASE ON THE PROPERTY TAX BASE IS ON THOSE HOUSES GET RESET.

THAT CAN ACTUALLY HAVE SOME PRETTY SIGNIFICANT YEAR OVER YEAR CHANGES IN THE TAX BASE.

THAT'S A GREAT POINT. SO, AND I DON'T KNOW IF YOU KNOW THIS, I SURELY KNOW, BUT OR IF ANYBODY ANALYZES.

IS THE INCREASE IN PROPERTY TAXES, THE 4% WE'RE EXPECTING OR REALIZED.

[00:15:06]

I DON'T KNOW WHAT THE BALANCE OR THE SCALE IS ON THAT.

I THINK IT IS ABSOLUTELY TRUE TO SAY THAT BOTH VARIABLES ARE VERY IMPORTANT TO WHATEVER THE OUTPUT IS, WHETHER IT BE 3.5%, 4%. THERE'S ALWAYS DIFFERENT WRINKLES, DIRECTOR WAESPI.

RECENTLY THERE WAS A. I WANT TO SAY IT WAS A PROPOSITION THAT WAS PASSED WHEREBY YOU COULD ACTUALLY.

IF YOU SOLD YOUR HOME, YOU HAD A ONE TIME OPTION TO CARRY FORWARD YOUR PROPERTY, YOUR PROP 13 EXEMPTION TO ANOTHER HOME THAT CREATES A LITTLE BIT MORE CONFOUNDING MATH.

I WOULD SAY WITHIN THE MODELS. BUT YEAH, THEY TAKE THAT INTO CONSIDERATION BASED UPON HISTORICAL DATA TO PLUG IN AND JUST KIND OF A DATA POINT THAT YOU MAY FIND INTERESTING.

TALKING TO BEACON A WEEK OR SO AGO, PROVIDING THEM THE ALAMEDA COUNTY ASSESSED VALUE YEAR OVER YEAR CHANGE. I THINK IT WAS THREE 3.48 AND THEY HAD PROJECTED 3.47.

SO WHATEVER THEY'RE DOING, AT LEAST IN THAT PARTICULAR YEAR, THEY HAD IT PEGGED PRETTY CLOSE.

ALL RIGHT. THANK YOU VERY MUCH FOR THE INFORMATION. ONE LAST QUESTION.

IN THE STAFF REPORT SAYS THE PARK DISTRICT'S ESG RISK RATING REMAINS CONSISTENT.

AND YOU'LL PROVIDE ADDITIONAL DETAIL AT THE FINANCE COMMITTEE MEETING.

ANY OTHER ADDITIONAL DETAIL TO. I THINK THAT DETAIL IS GOING TO BE PRESENTED BY MONIQUE.

YES. SO PFM WILL BE DOING A PRESENTATION, I BELIEVE, RIGHT AFTERWARDS.

AND MONIQUE. YEAH. MONIQUE IS HERE? SHE PROBABLY DOES NOT REMEMBER ME, BUT MONIQUE WAS ACTUALLY.

OKAY. VERY GOOD. WE DID BUSINESS BEFORE. YES.

SO I WAS HAPPY TO SEE THAT MONIQUE WAS HERE. THANK YOU FOR CLARIFYING.

SEPARATE AGENDA ITEM. GREAT. AND THANK YOU FOR YOUR REPORT.

SO ARE THERE ANY COMMENTS FROM THE PUBLIC? NO PUBLIC COMMENT.

I MOVE WE RECOMMEND TO THE FULL BOARD OF DIRECTORS.

ALL RIGHT. THANK YOU. THANK YOU.

INVESTMENT REPORT. AND I WILL SECOND THAT. AND IF THERE'S NO FURTHER COMMENTS OR QUESTIONS FROM ANYONE.

HEARING NONE. ALL IN FAVOR, SAY AYE. AYE. AYE.

OPPOSED? HEARING NONE. MOTION PASSES 2-0. THANK YOU VERY MUCH FOR YOUR REPORT.

THANK YOU. WE'LL MOVE NOW TO THE.

PARDON ME. I'VE LOST MY PLACE. DARN IT. WE'LL MOVE NOW TO THE AUTHORIZATION TO AWARD A THREE YEAR CONTRACT TO KNN PUBLIC FINANCE, LLC IN AN AMOUNT NOT TO EXCEED $80,000 FOR FINANCIAL ADVISORY AND DEBT ISSUANCE SERVICES, WITH TWO OPTIONAL ONE YEAR EXTENSIONS.

THAT WOULD BE. YOU'RE GOING TO PRESENT AGAIN. GREAT. THANK YOU.

AND THEN, DIRECTOR WAESPI, JUST BECAUSE OF THE PFM REPORT THAT WAS JUST GIVEN, WOULD YOU LIKE ME TO DO THIS PRIOR TO THE OTHER PFM REPORT? OR. WHATEVER YOU THINK IS MORE APPROPRIATE AND WHATEVER YOU THINK WE CAN UNDERSTAND MORE READILY.

THERE WAS TWO SEPARATE.

LET'S GO AHEAD AND REDO THAT. THANK YOU.

SPEAKERS].

[00:20:02]

WE HAVE A SHORTER PRESENTATION TODAY, AND WE'RE GOING TO BE.

EXCUSE ME. TALKING ABOUT CURRENT MARKET THEMES.

WE ALWAYS START THIS PRESENTATION TALKING ABOUT THE ECONOMIC THEMES THAT PERSISTED DURING THE QUARTER AND HOW IT INFLUENCED INVESTMENT DECISIONS.

AND MY PRESENTATION FOCUSES SPECIFICALLY ON THE ABOUT $177 MILLION IN ASSETS THAT ARE IN THE PFM AM MANAGED PORTFOLIO. SO WITH THAT SAID, I'LL TALK ABOUT CURRENT MARKET THEMES.

AND AGAIN, THESE ARE THE THEMES THAT PERSISTED DURING THE LAST CALENDAR QUARTER.

AND I'LL DO MY BEST TO BRING US CURRENT TO WHERE WE ARE TODAY.

I THINK THE BIGGEST THEME OVER THE QUARTER WAS THAT, YOU KNOW, US GROWTH AND CONSUMER SPENDING, ETC. REMAINED FAIRLY RESILIENT. A LOT OF THE AI DRIVEN INVESTMENT REALLY OFFSET A MODERATING CONSUMER.

ANOTHER WAY TO PUT THAT IS, AS CONSUMER SPENDING MODERATED, AS FOLKS STARTED FEELING SORT OF THE PRESSURE IN THE ECONOMY, A LOT OF THE INVESTMENT IN THE AI INFRASTRUCTURE REALLY HELPED OFFSET THAT.

AND SO WE HAD GENERALLY GOOD GROWTH THROUGHOUT THE QUARTER.

ANOTHER THING THAT WAS ON MY MIND WAS HEADLINE INFLATION.

BECAUSE OF THE ACTIVITY IN THE MIDDLE EAST WITH THE STRAIT OF HORMUZ, THE PRESSURE ON ENERGY AND COMMODITY PRICES, WE SAW A LOT OF INFLATIONARY FEARS AND INFLATION SHOCKS.

HOWEVER, WE DID NOT SEE THAT REALLY FLOWING THROUGH TO THE COST OF CORE GOODS AND SERVICES.

THE LABOR MARKET ITSELF WAS FAIRLY IMBALANCED.

WE SAW THE UNEMPLOYMENT RATE FOR THE QUARTER BASICALLY AVERAGE ABOUT 4.2%, WHICH WAS IN LINE WITH THE FED'S SORT OF INFLATION.

I'M SORRY, UNEMPLOYMENT TARGET AND WAGE GROWTH REMAINED MODEST.

SINCE THEN, WE KNOW THE UNEMPLOYMENT REPORT THAT CAME OUT FRIDAY SHOWED THE UNEMPLOYMENT RATE DECLINE BECAUSE PARTICIPATION RATE WAS AT A LOW, ABOUT FIVE YEAR LOW, ABOUT 61.5%. WE ALSO SAW SOME JOB LOSSES.

SO THAT COULD HAVE AN IMPACT ON FED ACTIVITY.

THE OTHER THING DURING THE QUARTER IS THAT JUNE USHERED IN A NEW LEADERSHIP FOR THE FED.

WE SAW THE NEW FED CHAIR, KEVIN WARSH, TOOK HIS SEAT.

HE STRESSED RESTORING PRICE STABILITY, AND THIS SORT OF GAVE THE IMPRESSION THAT WE MAY SEE, YOU KNOW, RATES HIGHER FOR LONGER. I KNOW THERE WERE SOME WHO THOUGHT WITH HIM COMING IN WE MAY SEE A SENSE OF FOCUS FOR LOWER RATES. BUT CHAIR WARSH REALLY TALKED ABOUT, YOU KNOW, GETTING BACK TO THE FUNDAMENTALS.

SO DURING THAT MEETING, THE FED LEFT POLICY UNCHANGED AT 3.5 TO 3.7%.

THAT'S THE CURRENT FED TARGET RANGE. THEY ALSO HAD SOME, YOU KNOW, REALLY GOOD TAKEAWAYS.

ONE, A MORE HAWKISH LEAN WITH A COMMITMENT TO A 2% INFLATION TARGET.

CHAIR WARSH NOTED THAT THE FED HAD SOME MORE WORK TO DO, AND SOME ASSUMED THAT THAT MEANT RATES HIGHER FOR LONGER.

HE ALSO PUT FORTH A MORE CONCISE AND FACT BASED STATEMENT WITH LESS FORWARD LOOKING GUIDANCE.

THIS IS ONE OF THE THINGS THAT CHAIR WALSH EMPHASIZED, THAT THE FED SHOULD NOT BE PROVIDING MORE FORWARD GUIDANCE.

AND AGAIN, JUST TO FOCUS ON THE ECONOMIC FUNDAMENTALS AND INCOMING DATA.

WE ALSO SAW DURING THAT MEETING THAT NINE PARTICIPANTS PROJECTED A 2026 RATE HIKE.

ALTHOUGH CHAIR WARSH PURPOSELY DID NOT SUBMIT HIS OWN PROJECTION FOR RATES WOULD BE.

BECAUSE OF THAT, THE SENSE THAT THE FED WAS PERHAPS MORE HAWKISH, AND WITH INFLATIONARY CONCERNS, WE SAW THE TREASURY YIELDS MOVE HIGHER IN GENERAL.

NOW THE EAST BAY REGIONAL PARK DISTRICT PORTFOLIO THAT WE MANAGE IS MANAGED WITH A 1 TO 5 YEAR MATURITY BAND IN MIND.

AND SO ON AVERAGE WE'RE BUYING SECURITIES WITH TWO YEAR TWO AND A HALF YEAR AVERAGES.

AND SO THE TWO YEAR TREASURY YIELD TENDS TO BE A REALLY GOOD PROXY FOR THE INCOME THAT WE'RE LOOKING AT.

AND SO ON THE NEXT SLIDE, I'LL SHOW YOU WHERE RATES HAVE GENERALLY FLED DURING THE QUARTER, BUT WE SAW RATES RISE WITH THAT GUIDANCE. ANOTHER THING TO POINT OUT IS THAT CREDIT SPREADS THEMSELVES, THE AMOUNT OF ADDITIONAL INCOME WE EXPECT TO RECEIVE FROM CORPORATE NOTES AND WHAT WE CALL SPREAD PRODUCT, ESSENTIALLY, ANYTHING OUTSIDE OF TREASURIES, REMAIN TIGHT.

THAT'S JUST GIVEN BECAUSE OF THE RESILIENT GROWTH IN THE ECONOMY, STABLE LABOR CONDITIONS, ESSENTIALLY, CORPORATIONS ARE ABLE TO FIND TALENT WHERE THEY'RE LOOKING.

AND THEN STRONG DEMAND FOR THOSE SECURITIES REALLY OUTWEIGHED ANY OTHER CONCERNS THE MARKET WOULD HAVE.

[00:25:08]

THIS CHART SHOWS THE ONE YEAR RANGE IN THE SHADED BLUE AREA.

AND THEN THE TWO LINES REPRESENT THE QUARTER THAT ENDED, JUNE 30TH, THE SOLID BLUE.

AND THEN THE DOTTED BLUE REPRESENTS THE PRIOR QUARTER.

SO YOU CAN SEE A BIG JUMP IN INTEREST RATES QUARTER OVER QUARTER.

THAT PROVIDED SOME GOOD OPPORTUNITY FOR US TO PURCHASE HIGHER YIELDING INVESTMENTS ON THE DISTRICT'S BEHALF.

BUT ONE OF THE THINGS THAT YOU'LL NOTICE WHEN I TALK ABOUT RETURNS IS THAT AS INTEREST RATES RISE, THE MARKET VALUE OR THE PRICE OF THE BONDS IN YOUR PORTFOLIO DECLINE.

AND SO YOU WILL SEE SOME NEGATIVE MARKET VALUE CHANGES, WHICH IS JUST A, YOU KNOW, UNREALIZED SHIFT IN VALUE BECAUSE OF THE ENVIRONMENT.

SO I'LL TALK ABOUT THAT. THE ONE THING TOO I WANT TO EMPHASIZE IS, YOU KNOW, HOW ATTRACTIVE RATES ARE ON AVERAGE.

THIS CHART SHOWS THE TWO YEAR TREASURY YIELD OVER THE LAST TEN YEARS.

AND ON THIS CHART WE ALSO SHOW THE TEN YEAR AVERAGE IN DOTTED YELLOW AND THE 20 YEAR AVERAGE IN DOTTED ORANGE FOR THE TWO YEAR.

AND SO WHAT I REALLY WANT TO EMPHASIZE FOR YOU IS THAT AT THE END OF THE QUARTER, YOU KNOW, THE TWO YEAR TREASURY YIELD WAS SIGNIFICANTLY HIGHER THAN THE TEN YEAR AND 20 YEAR AVERAGE.

WHAT DOES THAT MEAN? IT MEANS IT'S A GREAT TIME FOR US TO BE BUYING.

WE'RE REALLY COMFORTABLE PURCHASING LONGER TERM INVESTMENTS.

AND WE THINK IT'S JUST A VERY ATTRACTIVE OPPORTUNITY.

WE ALSO NOTE THAT THE, YOU KNOW, TWO YEAR AVERAGE IS ABOVE, OF COURSE, THE FED'S UPPER BOUND FOR THE TARGET RATE RANGE.

AND SO AGAIN, PUTTING ASSETS OUT LONGER, INVESTING IN THIS PORTION OF THE YIELD CURVE IS A REALLY ATTRACTIVE FOR THE DISTRICT.

TURNING TO YOUR INVESTMENT PORTFOLIO, THE THINGS I WANT TO EMPHASIZE HERE IS THE DONUT CHART IN THE UPPER RIGHT, YOUR SECTOR ALLOCATION. THE PORTFOLIO IS WELL DIVERSIFIED BY SECTOR.

EXTREMELY HIGH CREDIT QUALITY, THE AVERAGE CREDIT QUALITY IN THE PORTFOLIO IS A DOUBLE A.

WE COMPARE YOUR PORTFOLIO DURATION STRUCTURE, WHICH IS VERY CLOSE TO AVERAGE MATURITY TO ITS BENCHMARK STRUCTURE IN THE BOTTOM RIGHT.

AND ONE OF THE THINGS I WANT TO SPEAK ABOUT IS THAT THE PORTFOLIO'S DURATION IS A LITTLE BIT LONGER THAN THE BENCHMARKS, MEANING THAT WE'RE OUT A LITTLE BIT LONGER THAN WHERE YOUR BENCHMARK IS.

THE REASON FOR THAT IS BECAUSE IT'S A REALLY ATTRACTIVE TIME TO BE OUT LONGER BECAUSE RATES ARE AT SUCH HIGHS.

PORTFOLIO'S THROWING OFF REALLY GOOD INCOME, YOUR YIELD IS ABOUT A 4.28%.

THAT'S THE INCOME THAT YOU'RE EARNING IN THE PORTFOLIO.

AND THAT INCOME IS WHAT'S REALLY ALLOWING US TO PROVIDE YOU WITH NET POSITIVE RETURNS FOR THE QUARTER.

SO IN TERMS OF TOTAL RETURN PERFORMANCE, THIS IS THE PERFORMANCE METRIC THAT TAKES INTO ACCOUNT BOTH YOUR INCOME RECEIVED AND THE CHANGE IN MARKET VALUE. AND SO I ALREADY MENTIONED THAT YOUR CHANGE IN MARKET VALUE IS NEGATIVE FOR THE QUARTER.

AGAIN, THAT'S SIMPLY BECAUSE RATES ROSE. AND SO THE PRICE OF THE BONDS IN THE PORTFOLIO DECLINED.

ANOTHER WAY TO SEE THAT IS IF SOMEONE WAS GOING TO BUY BONDS FROM YOU, THEY'D WANT A DISCOUNT BECAUSE RATES ARE SO HIGH.

BUT YOU HAD PLENTY OF INCOME TO OFFSET THAT. SO YOUR TOTAL DOLLAR RETURN, TAKING THAT INTO ACCOUNT FOR THE QUARTER WAS ABOUT $743,000.

AND WHEN YOU TAKE A LOOK AT THE PORTFOLIO RETURNS VERSUS THE BENCHMARK RETURNS, WE HAD REALLY GREAT PERFORMANCE FOR THE DISTRICT.

SO WE'RE REALLY HAPPY WITH WHERE WE ENDED UP.

YES.

1 TO 5 YEAR TREASURY INDEX. I DON'T KNOW WHAT THAT IS, BUT I ASSUME THAT'S SOMETHING YOU CAN RELY ON.

IS IT WHAT PFM USES AS A BENCHMARK? DOES EVERYBODY USE THAT SAME BENCHMARK OR IS.

THAT'S A GREAT QUESTION. SO THE BENCHMARK IS A VERY COMMON BENCHMARK ACROSS CALIFORNIA PUBLIC AGENCIES FOR THESE TYPES OF MANAGED PORTFOLIOS. IT IS AN INDUSTRY BENCHMARK. SO VERY COMMON FOR THESE SHORT DURATION, HIGH QUALITY FIXED INCOME PORTFOLIOS.

WHAT IT REPRESENTS, THE 1 TO 5 YEAR US TREASURY INDEX IS ESSENTIALLY ALL THE US TREASURY OBLIGATIONS OUTSTANDING WITH MATURITIES BETWEEN 1 AND 5 YEARS. SO IT'S ESSENTIALLY A BASKET OF SECURITIES.

AND WE USE IT AS A REFERENCE POINT. IT GIVES US AN IDEA OF WHAT THE MARKET IS AVAILABLE FOR US TREASURIES,

[00:30:03]

AND IT GIVES US AN INDEPENDENT REPRESENTATIVE WITH WHICH TO COMPARE YOUR PORTFOLIO.

SO DO 90% OF PUBLIC AGENCIES LIKE OURS USE THIS BENCHMARK? OR IS IT 20% THAT USE THIS OR? THAT'S A GREAT QUESTION.

IF I WERE GOING TO SPECULATE, I'D SAY THE VAST MAJORITY OF MY CLIENTS WHO ARE PUBLIC AGENCIES UTILIZE THAT BENCHMARK.

OTHER COMMON BENCHMARKS FOR CALIFORNIA PUBLIC AGENCIES INCLUDE THE 1 TO 3 YEAR US TREASURY INDEX.

AND YOU'LL NOTICE IF YOU LOOK AT THE FOOTNOTES, AT ONE POINT, THE DISTRICT WAS USING THE 1 TO 3 YEAR.

WE ALSO SEE SOME AGENCIES USE THE 0 TO 5 YEAR US TREASURY INDEX.

AND THE DIFFERENCES BETWEEN THOSE, THE 1 TO 3, THE 1 TO 5, ARE REALLY DEPENDENT ON HOW COMFORTABLE THOSE AGENCIES ARE GOING OUT LONGER.

GENERALLY, CALIFORNIA PUBLIC AGENCIES CAN INVEST WITHIN FIVE YEARS.

SO WE TEND TO SEE THE FIVE YEAR BE THE MAJORITY OF THE TIME, THE MAX END OF THAT RANGE FOR PUBLIC AGENCIES IN CALIFORNIA.

ALL RIGHT. THANK YOU. YOU'RE WELCOME. THE LAST SLIDE I WILL SHOW IS JUST A ACCRUAL BASIS EARNINGS PROJECTION.

I TALKED A LOT ABOUT, YOU KNOW, MARKET VALUE CHANGE ACCRUAL BASIS EARNINGS TAKES AWAY THAT UNREALIZED LOSS FIGURE.

AND YOU CAN SEE THAT ON A REALIZED BASIS REAL INCOME, THE EARNINGS FOR THE QUARTER WERE ABOUT $1.9 MILLION.

AND THAT INCLUDES ALL THE INTEREST EARNED, THE REALIZED GAINS IN THE PORTFOLIO AND THE CHANGE IN AMORTIZED COST.

NOW, WITH THAT SAID, I'M GOING TO TURN TO THE ESG RISK REPORT THAT DIRECTOR DESCHAMBAULT ASKED ABOUT EARLIER.

SO A COUPLE OF THINGS. THE REGIONAL PARK DISTRICT A COUPLE YEARS AGO ENACTED A POLICY THAT YOU WANTED TO LOOK AT ESG AS A MEASURE OF PERFORMANCE FOR THE PORTFOLIO.

NOW, AN ESG RISK RATING ESSENTIALLY MEASURES THE ECONOMIC VALUE OF A CORPORATION THAT'S AT RISK BASED ON A COUPLE OF FACTORS. E IS ENVIRONMENTAL, AND IT INCLUDES SORT OF, YOU KNOW, HOW ARE YOU BEING A STEWARD OF ENVIRONMENTAL RESOURCES? IT TRACKS A NUMBER OF THINGS. I ALWAYS LIKE TO USE CHEVRON AS AN EXAMPLE.

THAT'S A COMPANY THAT, YOU KNOW, HAS CERTAIN ENVIRONMENTAL RISKS JUST BASED ON ITS BUSINESS.

AND THERE ARE SOME OF THOSE RISKS THAT IT CAN'T MANAGE BECAUSE THEY'RE AN OIL COMPANY, BUT THERE ARE SOME ENVIRONMENTAL RISKS THAT IT CAN MANAGE.

HOW IS IT LOOKING AT CLEANUP? HOW IS IT DOING THOSE THINGS? AND SO THAT'S A MANAGEABLE RISK THAT THE ESG RATING LOOKS TO MEASURE.

YOU ALSO HAVE SOCIAL FACTORS. AND THESE ARE THINGS LIKE YOU KNOW, COMMUNITY STEWARDSHIP, ETC.

AND THEN GOVERNANCE FACTOR. WHAT DOES THIS BOARD LOOK LIKE? HOW IS IT MANAGING THE COMPANY? NOW FOR THE DISTRICT, WHAT WE'RE LOOKING FOR IS IN GENERAL, WE WANT TO MAKE SURE THAT THE COMPANIES IN THE PORTFOLIO ARE MANAGING EACH OF THESE RISKS IN A REASONABLE WAY, MEANING THAT IN GENERAL, THEY DON'T HAVE A LOT OF EXPOSURE TO THIS RISKS AND OR THEY ARE MANAGING THEM WELL.

AND SO WHAT WE LOOK AT IS, DO YOU HAVE A LOW RISK SCORE, MEANING THAT YOU HAVE LITTLE UNMANAGED RISK IN YOUR PORTFOLIO? SO YOU ARE MANAGING YOUR ENVIRONMENTAL RISK WELL, YOU ARE PAYING ATTENTION TO SOCIAL FACTORS.

YOU'RE PAYING ATTENTION TO GOVERNANCE FACTORS.

WE PARTNER WITH A COMPANY CALLED SUSTAINALYTICS WHOSE BUSINESS IS PURELY TO LOOK AT THESE FACTORS.

EVALUATE COMPANY BEHAVIOR, BOARD MINUTES, ETC.

ABOUT 66 OF THE 70 ISSUERS IN THE PORTFOLIO FOR THE DISTRICT ARE RATED, WHICH MEANS THAT THEY ARE REPORTING ON THESE FACTORS.

AND SO WE'RE REALLY CONFIDENT THAT WE ARE MANAGING THIS CONSISTENT WITH THE DISTRICT'S POLICY.

NOW, BECAUSE DIRECTOR DESCHAMBAULT, IT'S MY UNDERSTANDING AND CORRECT ME IF I'M WRONG, THIS MAY BE YOUR FIRST FINANCE COMMITTEE MEETING FOR THIS MEETING. WE ARE HAPPY TO COME BACK, IF IT MEETS ASSISTANT GENERAL MANAGER NICHOLS PLANS TO COME BACK WITH A VERY SEPARATE ESG PRESENTATION TO TALK ABOUT EXACTLY WHAT THE DISTRICT'S POLICIES ARE.

BUT OUR GOAL IS TO MAKE SURE THAT WE HAVE AS LOW AS THE SCORE AS POSSIBLE, AND WE'VE BEEN ABLE TO ACHIEVE THAT.

[00:35:03]

I DIDN'T KNOW WHAT OUR TARGET WAS OR HAS BEEN OVER THE YEARS.

TO PUT THAT 19.4 IN PERSPECTIVE SOUNDS LIKE WE'RE DOING WELL AND CONTINUING TO DO WELL.

YES. THANK YOU. THANK YOU. AND THAT IS MY FINAL SLIDE HERE.

HAPPY TO TAKE ANY OTHER QUESTIONS. GREAT. THANK YOU VERY MUCH.

ANY QUESTIONS? ANY QUESTIONS OR COMMENTS FROM THE PUBLIC? NO PUBLIC COMMENT. ALL RIGHT. WELL MONIQUE, THANK YOU VERY, VERY MUCH FOR YOUR PRESENTATION, AND YOUR PRESENTATION ENHANCED AND VALIDATED OUR VOTE PREVIOUSLY.

SO THANK YOU VERY MUCH. YEAH. WE WILL MOVE NOW TO THE AUTHORIZATION TO AWARD A THREE YEAR CONTRACT TO KNN PUBLIC FINANCE. JONAH, IS THAT YOU AGAIN? ALL RIGHT.

GOOD AFTERNOON AGAIN. SO THE KNN PUBLIC FINANCE FINANCIAL ADVISORY SERVICES CONTRACT AWARD IS A RECOMMENDATION FOR THE BOARD FINANCE COMMITTEE TO MAKE A RECOMMENDATION TO THE FULL BOARD.

I'LL BRIEFLY COVER THE SERVICES AND OUR COMPETITIVE SELECTION PROCESS.

WHY STAFF IS RECOMMENDING KNN AND THE PROPOSED CONTRACT TERMS, SHOULD THE BOARD ACCEPT KNN AS THE INVESTMENT ADVISOR. PRIOR TO THAT, GETTING INTO THE NUTS AND BOLTS OF THE PRESENTATION, WOULD LIKE TO RECOGNIZE PEOPLE IN THIS ROOM. CHRISTINA CROSBY, ASSISTANT FINANCE OFFICER, AND KATIE HORNBECK, WHO'S OUR.

YOU'LL HEAR FROM LATER WITHIN OUR GRANTS DIVISION AND THEN CARLSON TY.

ALL OF THESE INDIVIDUALS WERE A PART OF THE COMMITTEE THAT WENT THROUGH THE RUBRIC, MET WITH THE APPLICANTS AND ULTIMATELY MADE THE SELECTION WITH WHICH I'M PRESENTING TODAY. SO THEY DID THE WORK.

SO ON THE BACKGROUND, THE DISTRICT USES AN INDEPENDENT MUNICIPAL ADVISOR REALLY PRIMARILY TO PROVIDE SPECIALIZED EXPERTISE WHEN WE'RE CONSIDERING DEBT ISSUANCE OR OTHER FINANCING ACTIVITY.

SO THE FIRM THAT ULTIMATELY RECEIVES THE CONTRACT, IT ASSISTS WITH STRUCTURING OUR TRANSACTIONS, EVALUATING MARKET CONDITIONS, PROVIDING THEIR EXPERTISE ON WHEN WOULD BE THE BEST TIME TO GO TO MARKET BASED UPON EXTERNAL FACTORS THAT ARE IN PLAY.

THEY PROVIDE FINANCING ALTERNATIVES. AND THEN ON THE COMPLIANCE SIDE, THERE IS A LOT OF REGULATORY COMPLIANCE, CONTINUING DISCLOSURE THAT HAS TO BE DONE TO VARIOUS AGENCIES AND THEN JUST OVERALL PROVIDE INDEPENDENT ADVICE TO STAFF AND TO THE BOARD. THERE'S A. IT'S BEEN MY EXPERIENCE THAT HAVING A WELL-ROUNDED FINANCIAL ADVISOR WHEN YOU'RE GOING OUT, WHEN A BOARD GOES OUT FOR HUNDREDS OF MILLIONS OF DOLLARS IN DEBT ISSUANCE, YOU WANT TO FEEL COMFORTABLE WITH THOSE THAT ARE GIVING YOU THAT ADVICE.

SO THIS WAS A PRETTY RIGOROUS PROCESS IN TERMS OF IDENTIFYING FIRMS THAT HOPEFULLY THE BOARD WOULD FEEL COMFORTABLE WITH IF THEY WERE TO GO OUT FOR SIGNIFICANT DEBT ISSUANCE.

YEAH. JONAH, WHO DO WE USE BEFORE? KNN HAS BEEN THE LONGTIME FINANCIAL DVISOR FOR THE DISTRICT.

IT HAD LARGELY, TO MY UNDERSTANDING, DIRECTOR WAESPI, SORT OF FALLEN OFF SIMPLY BECAUSE WE HAVEN'T DONE A LOT OF ISSUANCES IN THE RECENT PAST. SO THERE IS SOME CONTINUING DISCLOSURE THAT THEY WOULD DO.

THAT'S LIKE A. FOR ME, WHAT I'VE DONE, IT'S LIKE A $1500 TO $2000 BILL THAT THEY SEND BECAUSE THEY GOT TO SEND SOME INFORMATION OFF TO VARIOUS AGENCIES TO LET THEM KNOW WHAT OUR SPEND DOWN IS AND WHERE WE ARE IN TERMS OF COMPLIANCE WITH THE PAYING OUR BONDHOLDERS.

BUT THAT'S PRETTY SIMPLE STUFF WHERE REALLY THE MEAT AND POTATOES COMES IN AS IF YOU'RE GOING TO GO OUT TO MARKET AND ISSUE DEBT.

[00:40:03]

AND IT'S DEFINITELY SOMETHING THAT SOME PUBLIC ORGANIZATIONS TRY AND DO INTERNALLY.

I WOULD ARGUE THAT THE EXPERTISE FOR THIS IS OFTEN NOT WITHIN A PUBLIC AGENCY.

AND GOING OUT WITH A PRIVATE FIRM TO GUIDE THROUGH THE MARKET INTRICACIES IS A MUCH MORE APPROPRIATE MODEL AND ONE THAT WE'RE PROPOSING HERE TODAY. FOR SCOPE OF SERVICES, IT'S INTENTIONALLY BROAD ENOUGH TO COVER BOTH THE ACTUAL FINANCING TRANSACTIONS, AND AS I MENTIONED, THE ONGOING ADVISORY WORK THAT SURROUNDS THEM.

DEBT POLICY, CAPITAL PLANNING, CONTINUING DISCLOSURE, AND REGULATORY COMPLIANCE.

THEY HAVE THEIR FINGER ON THE PULSE OF ALL OF THE REPORTING REQUIREMENTS TO THE VARIOUS EXTERNAL AGENCIES, AND THEY ASSIST IN THAT. THESE SERVICES ARE ALSO ESSENTIALLY ON CALL.

THIS IS NOT A A CONTRACT WHERE WE PAY THEM A FIXED AMOUNT EACH MONTH FOR SERVICES.

NO, YOU'LL SEE IN A LATER SLIDE THERE'S AN HOURLY RATE ASSOCIATED WITH IT.

SO YOU CAN GO MONTHS WITHOUT TALKING TO THEM OVER REALLY ANYTHING.

AND THEN WHEN THINGS REALLY START HEATING UP AND MOMENTUM TOWARDS A SALE BEGINS TO TAKE EFFECT, THAT'S REALLY WHEN THE SERVICES ARE UTILIZED TO THE LARGER EXTENT.

OKAY, THERE WE GO. AND THEN FINANCIAL ADVISORY AND DEBT ISSUANCE.

REALLY THE RFP PROCESS. SO IN MARCH OF 26, THE RFP WAS ISSUED.

WE HAD A FAIRLY ROBUST RESPONSE, I WOULD SAY, WITH NINE PROPOSALS RECEIVED.

STAFF, THROUGH A PREDETERMINED RUBRIC, RANKED THOSE FIRMS AND INVITED THE TOP THREE IN FOR INTERVIEWS.

SELECTION CONSIDERATIONS CONSIDER AND YOU CAN SEE THAT THERE WON'T READ ALL OF IT, BUT JUST A GENERAL UNDERSTANDING OF THE DISTRICT, HOW THEY GO ABOUT TECHNICALLY APPROACHING TRANSACTIONS, THEIR EXPERTISE COSTS AND FEES.

AND THEN OBVIOUSLY THE REFERENCE CHECKS THAT REALLY ALL THREE OF THE FINALISTS HAD EXPERIENCE WITHIN THE REALM OF PUBLIC FINANCE.

VALUATION PROCESS. INTERVIEWS WERE REALLY AN ADDITIONAL COMPONENT OF THE EVALUATION.

YOU CAN GET PEOPLE'S PAPER PROPOSALS AND REVIEW THEM, BUT UNTIL YOU ACTUALLY HAVE A CHANCE TO HAVE THEM EXPLAIN IT AND BE ABLE TO GO BACK AND FORTH WITH QUESTIONS AND CONCERNS, I THINK THAT'S REALLY WHERE YOU GET THE COMFORTABILITY WITHIN ANY PARTICULAR FIRM THAT YOU CHOOSE.

IT DIDN'T REPLACE THE WRITTEN SCORING, THE EVALUATION PROCESS, BUT WE DID CONSIDER PROPOSALS IN THE INTERVIEWS TOGETHER IN TANDEM, ALONG WITH THE PROPOSED TEAMS THAT THEY PROVIDED THE FEES AND REFERENCES.

ALL OF THAT LED TO A CONCLUSION THAT KNN BEST FIT THE NEEDS OF THE PARK DISTRICT. AND IF YOU LOOK AT THE SCORING AMONGST THE MEMBERS THAT REVIEWED THE APPLICATIONS, INTERVIEWED THE FIRMS, THE INDIVIDUALS THAT I HAD MENTIONED BEFORE, CHRISTINA, KATIE, CARLSON. EACH ONE OF THEM HAD KNN AS THE TOP CHOICE.

SO IT WASN'T THE. ALL OF THE FIRMS WERE FAIRLY CLUSTERED, I WOULD SAY, IN TERMS OF THEIR OVERALL SCORING.

NO ONE WAS AN OUTLIER IN ONE WAY OR THE OTHER, BUT KNN WAS THE TOP CHOICE FOR EACH OF THE THREE PEOPLE.

SO SPECIFICALLY TO KNN, IT HAS EXTENSIVE EXPERIENCE WITHIN THE CALIFORNIA PUBLIC AGENCY SECTOR AND AN EXPANSIVE EXPERIENCE IN THE FINANCING THAT THE DISTRICT IS LIKELY TO UNDERTAKE, WHICH IS THEY HAVE EXPERIENCED IN DEBT POLICY, CAPITAL PLANNING, COMPLIANCE. AS MENTIONED EARLIER, WHEN YOU ASKED, DIRECTOR WAESPI, ABOUT WHO OUR CURRENT OR

[00:45:05]

SO BECAUSE OF THAT, WE'RE GETTING CONTINUITY AND INSTITUTIONAL KNOWLEDGE WHILE STILL HAVING GONE THROUGH THIS COMPETITIVE PROCESS.

AND JUST THE OVERALL VALUE TO THE PARK DISTRICT.

YOU CAN SEE THE BULLETS THERE. I WON'T REALLY READ THEM, BUT WHAT YOU'RE BUYING IS INDEPENDENT TECHNICAL EXPERTISE, WHEN WE HIRE A FIRM LIKE THIS. AND IT'S PARTICULARLY AROUND FINANCING ALTERNATIVES, THE TIMING, THE DEBT STRUCTURE, MARKET CONDITIONS AND THE COMPLIANCE COMPONENTS.

SO THE ADVISORY CONTRACT DOES NOT BY ITSELF AUTHORIZE ANY FUTURE DEBT ISSUANCE.

BUT WHEN WE GET INTO THE TERMS OF THE CONTRACT, YOU CAN SEE THAT THE DISTRICT IS BUILDING IN CAPACITY FOR A BOND ISSUANCE OR A REFUNDING OR SOME COMBINATION OF BOTH.

SO SPECIFICALLY TO THE CONTRACT TERMS, YOU'LL SEE THERE THREE YEARS WITH TWO OPTIONAL ONE YEAR EXTENSIONS, AN AUTHORIZATION AMOUNT NOT TO EXCEED $80,000, WHICH WOULD COVER ANY ON CALL SERVICES AND A FINANCING OUT TO MARKET, EITHER IN THE FORM OF NEW MONEY OR REFUNDING EXISTING OBLIGATIONS.

MY EXPERIENCE HAS BEEN, WHEN YOU GO OUT TO MARKET, YOU'RE PROBABLY GOING TO DO A LITTLE BIT OF BOTH.

THERE'S GOING TO BE DEBT THAT IS CURRENTLY OUTSTANDING THAT YOU CAN REFINANCE AND GET A BETTER DEAL FOR THE TAXPAYERS.

THERE'S A PARTICULAR METRIC ON IF YOU CAN SAVE 8% OR MORE IN NET PRESENT VALUE BY REFUNDING BONDS, YOU TYPICALLY SHOULD DO THAT. AND THEN ON THE NEGOTIATED FEE SCHEDULE, JUST, YOU KNOW, HOURLY RATES FOR NON TRANSACTION WORK,.

THOSE RANGE FROM THE 275 FOR AN ASSOCIATE OR FOR AN ANALYST ALL THE WAY TO GETTING THE MANAGING DIRECTOR.

HE OR SHE IS COMMANDING THE $400 PER HOUR AMOUNT.

AND THEN ON THE TRANSACTION SERVICES WHERE I HAD MENTIONED EARLIER AND REALLY THE DRIVER, FRANKLY, OF THE $80,000 REQUEST FOR AN OVERALL CONTRACT IS THE NEW MONEY FINANCING $50,000.

YOU CAN SEE A REFUNDING THERE AT 55. BUT THEN WHEN YOU COMBINE THOSE TWO IN A SINGLE TRANSACTION GOING TO MARKET, YOU CAN SEE THAT THE BLENDED RATE THERE IS SIGNIFICANTLY LESS THAN IF YOU WERE TO DO EACH OF THOSE IN A PIECEMEAL FASHION.

SO THAT 60 TO 70, AGAIN, WE THINK IS ALONG WITH THE HOURLY RATES FOR THE ON CALL SERVICES.

WE THINK THAT WE CAN FIT THAT $80,000 VERY NICELY IN WITH THE PROPOSAL THAT THEY PROVIDED ON THEIR FEE SCHEDULE.

WHICH BRINGS US TO OUR RECOMMENDATION. YOU CAN SEE THAT HERE.

WE'RE REALLY ASKING THE FINANCE COMMITTEE TO FORWARD THIS PROPOSAL TO THE FULL BOARD FOR THE APPROVAL OF THIS THREE YEAR CONTRACT WITH KNN PUBLIC FINANCE, INCLUDING WITH THE TWO YEAR OPTIONAL EXTENSIONS WITH THE $80,000 LIFETIME CONTRACT AMOUNT THAT WE FEEL, AGAIN, IS SUFFICIENT FOR THE DISTRICT, SHOULD IT DECIDE OR NEED TO GO OUT AND ISSUE PREVIOUSLY AUTHORIZED BONDS TO MARKET THIS CONTRACT WOULD ALLOW US TO DO SO.

ALL RIGHT. THANK YOU. WELL FIRST OFF, ARE THERE ANY QUESTIONS FROM BOARD MEMBERS? COMMITTEE MEMBERS? I GUESS I WOULD HAVE ONE. SO I MET IN THE BREEZEWAY THE KNN REPRESENTATIVE.

THANK YOU FOR BEING HERE. DO YOU HAVE ANY COMMENTS? OR I GUESS, WITH YOUR EXPERIENCE IN THE PAST DOING THIS AND.

AM I BLOWING IT HERE? DO WE HAVE A KNN REPRESENTATIVE HERE? NOT TO MY KNOWLEDGE. DARN IT. IT WAS [INAUDIBLE].

[00:50:03]

NO. OKAY. THANK YOU. BOY, I BLEW THAT QUESTION.

ANY COMMENTS FROM THE PUBLIC? HEARING NONE. NONE.

I'LL ACCEPT A MOTION TO APPROVE THIS RESOLUTION RECOMMENDATION.

I MOVE THAT WE AUTHORIZE A THREE YEAR CONTRACT TO KNN NOT TO EXCEED $80,000 TO GO FORWARD TO THE FULL BOARD.

THANK YOU. AND I WILL SECOND. JUST TO CLARIFY, AS WAS MENTIONED, THIS IS A RECOMMENDATION TO THE FULL BOARD.

SO THAT'S THE MOTION THAT YOU'RE MAKING. ALL RIGHT.

WE HAVE A MOTION AND A SECOND. HEARING NO FURTHER DISCUSSION.

ALL IN FAVOR, SIGNIFY BY SAYING AYE. AYE. AYE.

MOTION PASSES UNANIMOUSLY 2-0. THANK YOU VERY MUCH FOR YOUR PRESENTATION.

AND WE'LL MOVE NOW TO THE RECOMMENDATION TO THE BOARD OF DIRECTORS TO AUTHORIZE THE TRANSFER OF PREVIOUSLY APPROPRIATED GENERAL FUNDS TO THE 2017 AND 2023 WINTER STORM DAMAGE FEMA PROJECTS.

WELCOME, KATIE. ALL RIGHT. GOOD MORNING. KATIE HORNBECK, GRANTS MANAGER WITHIN THE FINANCE AND MANAGEMENT SERVICES DIVISION.

I'M HERE TODAY TO ALSO BRING FORWARD A REQUEST FOR YOUR RECOMMENDATION TO THE FULL BOARD LATER THIS MONTH.

SO THIS IS FOR TRANSFERRING PREVIOUSLY APPROPRIATED GENERAL FUNDS TO DIFFERENT PROJECTS THAT ARE ASSOCIATED WITH 2017 DAMAGES AND 2023 WINTER STORM DAMAGES. SO AS A QUICK BACKGROUND, BOTH IN 2017 AND THEN IN 2023, SORT OF THE END OF 2022, GOING INTO 2023, THERE WERE DECLARED MAJOR DISASTERS IN THE STATE OF CALIFORNIA.

THE DR NUMBERS ARE NOTED THERE. 4301, 4308 ARE BOTH UNDER 2017, AND THEN 4683 IS THE DISASTER THAT WAS DECLARED IN 2022-2023. SO ONCE THOSE ARE DECLARED AND THOSE NUMBERS ARE ISSUED, LOCAL GOVERNMENT SPECIAL DISTRICTS SUCH AS OURSELVES CAN SUBMIT THE PAPERWORK AND APPLY FOR PUBLIC ASSISTANCE FUNDS FROM FEMA.

AND SO UNDER THAT PROGRAM, FEMA WILL REIMBURSE ELIGIBLE WORK UP TO 75%.

AND THEN CALOES, CALIFORNIA OFFICE OF EMERGENCY SERVICES, WILL REIMBURSE UP TO 18.75%.

SO A COMBINED TOTAL OF 93.75% IS WHAT THEY'LL REIMBURSE US.

AND THEN THE PARK DISTRICT IS ON THE HOOK FOR THE REMAINING 6.25%, AS WELL AS ANY COSTS THAT WERE DEEMED INELIGIBLE BY FEMA.

SO FOR 2017, WE HAVE NINE REMAINING PROJECTS TO COMPLETE.

SEVERAL ARE SCHEDULED TO GET DONE THIS FALL UNDER THE TCP PROGRAM, AND THEN A FEW MORE NEXT YEAR.

THERE ARE SEVERAL AS WE WERE DOING SOME RECONCILIATION EARLIER THIS YEAR AND IN PREPARATION OF MOVING INTO WORKDAY, WE NOTICED THAT THERE WERE SEVERAL PROJECTS THAT HAD BEEN COMPLETED, BUT WERE EITHER OVERMATCHED OR UNDERMATCHED.

SO WHEN THEY WERE SET UP TEN OR PLUS YEARS AGO FOR WHATEVER REASON, THE STAFF AT THE TIME PUT IN A CERTAIN AMOUNT OF MONEY THAT WE MAYBE ESTIMATED WOULD BE THE MATCH THAT WE WOULD NEED. AND THAT ENDED UP BEING MORE OR LESS THAN WHAT WE NEEDED.

AND THEN FOR THE COUPLE OF PROJECTS THAT ARE GOING TO BE GETTING DONE THIS YEAR, IN ORDER TO AWARD CONTRACTS, WE NEED TO TRANSFER IN SOME FUNDS SO THAT THERE'S ENOUGH MONEY IN THE PROJECT TO GET DONE.

FOR 2023, AT THE END OF LAST YEAR AND AT THE BEGINNING OF THIS YEAR, WE RECEIVED FINAL PAYMENTS FROM FEMA AND CALOES FOR ALL OF THE WORK THAT OCCURRED UNDER CATEGORY A AND CATEGORY B FROM.

SO THAT'S THE DEBRIS REMOVAL WORK AND EMERGENCY RESPONSE WORK.

SO WE ENDED UP RECEIVING ABOUT $3.1 MILLION IN REIMBURSEMENT FROM FEMA.

SO NOW THAT WE RECEIVED THOSE FUNDS, WE'RE WORKING TO CLOSE OUT THOSE PROJECTS.

CATEGORY A, CATEGORY B PROJECTS AND TRANSFER FUNDS AROUND.

SO WE MAKE SURE WE HAVE THE MATCH THAT WAS NEEDED AS WELL AS THE PINOLE SHORES PROJECT THAT GOT DONE A WHILE AGO.

AND WE'RE READY TO CLOSE THAT OUT. AND IT NEEDS ADDITIONAL FUNDS TO COVER WHAT WAS DEEMED INELIGIBLE.

THESE NEXT THREE SLIDES, I'M NOT GOING TO GO THROUGH THESE POINT BY POINT. IT'S BASICALLY JUST THE ATTACHMENT IN THE STAFF REPORT.

AND IF THERE'S LIKE A SPECIFIC QUESTION ON ANY ONE OF THESE, I CAN TAKE THOSE AT THE END.

SO THE TOTAL AMOUNT THAT WILL BE TRANSFERRED IS $1.7 MILLION.

AND AGAIN, THIS IS ALREADY APPROPRIATED GENERAL FUNDS.

SO THERE'S NO NEW MONEY BEING REQUESTED HERE.

WE'RE JUST MOVING IT AROUND. AND THEN I'LL ALSO NOTE THAT, AS WE CONTINUE TO CLOSE OUT 2017 PROJECTS AND GET THE FINAL CHECKS FROM

[00:55:06]

AND I THINK NOTHING IS MORE RISKY THAN FEMA FUNDING.

WE DON'T KNOW WHAT WE'RE GOING TO GET OR WHEN WE'LL GET IT.

SO IT'S A LITTLE BIT OF A QUESTION MARK ON WHAT THE ACTUAL AMOUNT IS THAT WILL GET REIMBURSED BY FEMA AND CALOES.

ALL RIGHT. SO THE RECOMMENDATION TO THE BOARD FINANCE COMMITTEE IS TO FORWARD THIS ITEM TO THE BOARD OF DIRECTORS FOR REVIEW AND RECOMMENDATION TO AUTHORIZE THE TRANSFER OF THESE PREVIOUSLY APPROPRIATED GENERAL FUNDS TO 2017 AND 2023 WINTER STORM DAMAGE FEMA PROJECTS.

IF THIS IS FORWARDED TO THE BOARD IN THAT STAFF REPORT, THE BOARD RESOLUTION WILL SPECIFICALLY STATE THE PROJECT NUMBERS AND THE EXACT AMOUNT.

SO BASICALLY, WHAT WAS IN THAT TABLE, THAT WILL BE BUILT INTO THE BOARD RESOLUTION.

ALL RIGHT. THAT IS IT. I'M HAPPY TO TAKE ANY QUESTIONS QUESTIONS? ONLY LOGISTICALLY HERE, TRYING TO FOLLOW. HAD THIS PROBLEM TOO WHEN WE LOOKED AT THESE IN THE CIP, TRYING TO UNDERSTAND WHAT THE PROJECTS ARE, WHAT WARD, WHAT PARK.

NOT THAT I NEED THAT TO MAKE THIS DECISION NECESSARILY, BUT IT WOULD BE A LITTLE MORE STREAMLINED.

THE PROCESS IS CLEAR, BUT I'M ALSO. YOU'RE TALKING ABOUT 9 REMAINING 2017 WINTER PROJECTS TO COMPLETE.

THIS HAS 15 PROJECTS THAT WE NEED TO TRANSFER TO COVER.

SO WHAT.

IS THAT NINE IN HERE? ARE WE TRANSFERRING. I'M NOT.

SO THERE IS A PROJECT. 526900 THAT WE WERE OVERMATCHED BY ABOUT $120,000.

AND SO I'M TAKING THAT OVERMATCH AND GIVING IT OUT TO SEVERAL PROJECTS.

SO IT MIGHT LOOK LIKE IT'S MORE PROJECTS THAN THERE REALLY ARE.

IT'S JUST THAT THERE'S ONE FUND SOURCE GOING TO MULTIPLES.

AND THAT'S THE CASE.

SO I END UP WITH A LIST OF 15, NOT.

YEAH. SO IT'S JUST TO SHOW THAT HOW MUCH FROM THAT PROJECT BECAUSE THAT THE OVERMATCH, BECAUSE IT'S GOING TO MULTIPLE.

I'M HAVING IT LISTED MULTIPLE TIMES SO YOU CAN SEE HOW IT'S BEING BROKEN OUT.

WELL, I TRUST YOUR MAGIC AND YOUR MATH IS CORRECT.

AND YEAH, IT JUST WAS A LITTLE HARD TO FOLLOW.

OKAY. THANK YOU. APPRECIATE THE FEEDBACK.

FINISHING THIS UP, GETTING THESE DONE. SO GLAD THAT THAT MONEY HAS COME IN, THAT THESE PROJECTS ARE BEING COMPLETED.

THANKS FOR YOUR GOOD WORK. YEAH, WE'RE EAGER TO GET THEM OFF THE BOOK.

YEAH. YES. THANKS, KATIE. SO ANSWER ME ONE QUESTION.

I REMEMBER THIS GREAT NOT DEBATE PHILOSOPHICAL ARGUMENT.

SO I SEE YOU'RE GOING TO REPLACE SOME CULVERTS.

NOW, I REMEMBER WHEN I WORKED HERE YOU'D HAVE A 24 INCH CULVERT. IT WOULD RUN UNDER A TRAIL.

THE CULVERT FAILED AND WASHED AWAY THE TRAIL.

AND WE WOULD GO TO FEMA AND SAY, WE WANT TO PUT A 48 INCH CULVERT IN THERE.

WE WANT TO DOUBLE THE SIZE OF THAT SO THIS WON'T OCCUR AGAIN. AND FEMA SAID, OH, NO, NO. WHERE YOU BOUGHT A FORD AND REPLACING A FORD WITH A FORD OR A, OR A 24 INCH CULVERT WITH ANOTHER 24 INCH CULVERT.

DID THAT EVER GET RESOLVED ON A NATIONAL LEVEL? I MEAN, IT MAKES SO MUCH SENSE THAT YOU WOULD.

IF THINGS CONTINUE TO WASH OUT WITH A 24 INCH CULVERT, YOU WOULD.

IT WOULD MAKE SENSE TO GO TO 48. DID THEY EVER RESOLVE THAT ISSUE? YES. SO WE ARE UNDER THE 2023 DECLARED DISASTER.

WE'RE SORT OF ADDRESSED LIKE THIS IS WHERE IT'S KIND OF GETTING ADDRESSED OR FIXED.

THAT YOU CAN PUT A PERCENTAGE. I FORGET WHAT THE EXACT PERCENTAGE IS, BUT YOU CAN SAY IF IT'S NOT GOING TO BE A LIKE FOR LIKE, AND IT'S GOING TO BE AN UPGRADE, THEN A PERCENTAGE OF THE TOTAL COST CAN GO TOWARDS THAT.

SO YOU CAN DO IT. IT'LL BE APPROVED, BUT THEY MIGHT NOT FUND THE FULL COST OF IT, BUT A PERCENTAGE OF THAT UPGRADE WOULD OCCUR.

SO. ALL RIGHT. AND THEN ON THESE PROJECTS, I COULD HAVE FOUND MY PROJECT BOOK AND LOOKED UP WHAT 526900 IS.

BUT I'M WONDERING A COUPLE OF THINGS. WHERE ARE THE THREE PONDS? WHERE WERE THE THREE PONDS? AND, YOU KNOW, WHEN WE SAY REPAIR THE BIG BEAR AND EAST RIDGE TRAIL, ISN'T THERE AN EAST RIDGE TRAIL IN EVERY SINGLE PARK AND A STREAM TRAIL IN EVERY SINGLE PARK? UNLESS YOU'RE ON THE SHORELINE. YEAH. SO THE BIG BEAR IN EAST RIDGE TRAIL, THOSE ARE IN ANTHONY CHABOT.

YES. SO WHEN THESE WERE SET UP IT'S, YOU KNOW.

WHEN I CAME INTO THIS AND TOOK ON THIS PROCESS, YOU KNOW, THE RHYME OR REASON AS TO HOW THINGS WERE NAMED AND WHY IT WAS,

[01:00:01]

AND SO I CAN CERTAINLY FOLLOW UP WITH YOU IN AN EMAIL WHAT THE LOCATION IS, BUT IT PROBABLY.

IN THE BOOK PROBABLY DOESN'T SAY THE PARK. IT PROBABLY SAYS DISTRICT WIDE BECAUSE IT WAS ACROSS MULTIPLE PARKS.

FOR THE WAY FEMA. THE PROJECTS OFTEN FOLLOW THE WAY FEMA SET UP THEIR PROJECT WORKSHEETS.

THEIR PWS AND THEIR PWS MIGHT HAVE MULTIPLE PARKS, AND THOSE PARKS MIGHT HAVE MULTIPLE SITES.

SO WHEN WE PUT IT IN OUR SYSTEM, IT'S A LITTLE BIT HARD TO TRANSLATE THE EXACT LOCATION.

SO WE OFTEN JUST SAY DISTRICT WIDE. OKAY. I HESITATE TO BRING THIS UP, BUT WE ARE TRANSFERRING $1.7 MILLION AND IT'S COME UP BEFORE I THINK IT'S GOING TO COME UP AGAIN UNFORTUNATELY, THAT.

IS THIS EQUITABLE? I MEAN, I'M NOT ALLEGING THIS.

I'M JUST WONDERING BECAUSE I DON'T KNOW. ARE WE GOING TO TRANSFER EVERYTHING OUT OF WARD 3 AND PUT IT INTO WARD 5? YOU KNOW, THAT WHOLE METRO DISTRICT THAT WE TALK ABOUT ALL THE TIME, YET THINGS CHANGE.

WE USE ACQUISITION FUNDS FOR DEVELOPMENT, THINGS LIKE THAT, WHICH ARE CREATING A LITTLE BIT OF CONTROVERSY.

IS THERE ANY WAY WE CAN CLEAR THIS UP? I MEAN, I DON'T SUSPECT IT'S GOING TO HAPPEN, BUT, ARE WE DRAINING EVERYTHING, ALL THE FEMA FUNDS OUT OF.

LET'S USE THE EXAMPLE OF WARD 3, MY WARD AND PUTTING IT INTO SOMEONE ELSE'S.

SO I WOULD SAY THE FUNDS TO REITERATE ARE ALREADY APPROPRIATED.

AND WHAT WE'RE DOING IS WE'RE MOVING APPROPRIATED FUNDS FROM A COMPLETED PROJECT THAT JUST HAD TOO MUCH GENERAL FUND MONEY, AND WE NEED TO MOVE IT INTO ANOTHER PROJECT. SO EVERYTHING IN THIS FIRST COLUMN ON THE LEFT IS EXCESS.

YES. IT WAS OVERMATCHED. YEAH. OR THE PROJECT HAS ADDITIONAL FUNDS THAT WE WANT TO MOVE FROM ONE FEMA INTO ANOTHER FEMA.

OKAY. THAT MAKES TOTAL SENSE. ALTHOUGH I THINK IT MAYBE WOULD WOULD CREATE A LITTLE STIR IF YOU HAVE EXCESS FUNDS IN WARD 3, MAYBE YOU WOULD SPEND THEM IN WARD 3. WELL, WE HAVE TO SHOW MATCH.

SO WE HAVE TO SHOW THAT 6.25% MATCH, WHETHER IN ORDER TO CLOSE THE BOOK AND TO DEMONSTRATE TO FEMA THAT THE FULL COST OF THE PROJECT HAS BEEN COVERED. SO AT SOME POINT WE WILL HAVE TO DO THAT.

AND THEN IN TERMS OF, YOU KNOW, YOU COULD SAY LIKE, WELL, WE ACTUALLY DON'T WANT TO MOVE.

WE DON'T WANT TO MOVE SOME OF THOSE EXCESS FUNDS TO COMPLETE THE BIG BEAR PROJECT IN ANTHONY CHABOT, YOU COULD SAY THAT. AND THEN WE DON'T COMPLETE THE PROJECT THAT WE WITHDRAW FROM FEMA AND THEN WE DON'T GET ANYTHING.

IF WE DO THAT, THERE ARE SOME SUNK COSTS BECAUSE WE'VE DONE SOME OF THE DESIGN AND PERMITTING WORK TO DO THAT. SO IF WE DON'T COMPLETE IT, WE DON'T GET ANY OF THAT BACK. SO IT'S A LITTLE BIT OF A. THERE IS A CONVERSATION OF, YOU KNOW, DO WE WANT TO DO IT OR NOT? AND THAT'S WE'VE BEEN HAVING THOSE INTERNALLY. BUT I WOULD SAY THAT AT LEAST FOR PROJECTS THAT HAVE BEEN COMPLETED THAT NEED ADDITIONAL MATCH MONEY, THAT HAS TO HAPPEN AT SOME POINT. ALL RIGHT. THANK YOU.

I THINK THAT KIND OF GOES TO MY EARLIER QUESTION.

JUST TRYING TO FOLLOW. YOU KNOW, WE'RE THINKING PARKS, WARDS, TRYING TO TELL OUR STORY.

AND I GOT A LITTLE LOST HERE AS WELL. LIKE I ASSUMED, STREAM TRAIL IS PROBABLY REDWOOD.

AND YOU KNOW, TELLING OUR STORY FISCALLY AND THE BUDGETS, YOU'VE DONE A GOOD JOB, BUT I DON'T KNOW, GETTING IT OUT TO THE PUBLIC, LETTING KNOW THAT WE'VE DONE THESE OR WE'RE DOING THESE AND WRAPPING THESE UP.

MAYBE THAT'S SEPARATE FROM WHAT YOU'RE ASKING TODAY.

YOU JUST NEED US TO GET THE MONEY TO WHERE YOU NEED THE MONEY.

AND THIS IS WHAT FEMA APPROVED. AND THIS WAS OVERFUNDED.

AND I KIND OF GET THAT, BUT. YEAH, WELL, I THINK IF IT'S NOT, I CAN CHECK WITH THE CLERK OF THE BOARD'S OFFICE. IF IT'S NOT TRUE, I MIGHT BE ABLE TO UPDATE THE REPORT TO ADD A COLUMN FOR PARK LOCATION, IF THAT WOULD.

OR EVEN I THINK IT WAS REALLY HELPFUL TO HEAR THIS TODAY THAT SOME OF THEM ARE DISTRICT WIDE.

I MEAN, THAT WASN'T REALLY CLEAR. SO THANK YOU FOR BEING SO CLEAR IN YOUR PRESENTATION, I APPRECIATE THAT.

YOU'RE WELCOME. THANK YOU. SO WE HAVE THE OPPORTUNITY TO RECOMMEND TO THE FULL BOARD THIS AUTHORIZATION OF TRANSFER. ANY PUBLIC COMMENTS? AND HEARING NONE. DO I HAVE A MOTION TO RECOMMEND TO THE FULL BOARD? YES. I MOVE THAT WE RECOMMEND TO THE FULL BOARD THAT WE TRANSFER FUNDS TO COMPLETE THE FEMA PROJECTS AND FUNDING FOR THEM. GREAT. AND I WILL SECOND THAT. HEARING NO FURTHER DISCUSSION.

ALL IN FAVOR, SIGNIFY BY SAYING AYE. AYE. AYE.

MOTION PASSES 2-0, UNANIMOUSLY. THANK YOU VERY MUCH, KATIE, FOR YOUR PRESENTATION.

THANK YOU. WE'LL MOVE NOW TO INFORMATIONAL ITEMS.

[Informational Items]

[01:05:04]

YES. I THINK IT'S STILL GOOD MORNING. GOOD MORNING, DIRECTOR WAESPI, DIRECTOR DESCHAMBAULT.

I'M KAREN SEACAT, ASSISTANT FINANCE OFFICER IN FINANCE AND MANAGEMENT SERVICES.

AND TODAY I WILL BE PRESENTING THE UPDATE ON OUR EBRPD RETIREMENT PLANS, PARTICULARLY FOR THE QUARTER ENDING MARCH 31ST, 2026. AND BEFORE I BEGIN MY PRESENTATION, I WANT TO ACKNOWLEDGE THE PRESENCE OF DENNIS FROM PARS AND ALSO ANDREW FROM PFM ASSET MANAGEMENT. OKAY. JUST TO GIVE A QUICK BACKGROUND PRIOR TO PARK DISTRICT, MOVING TO CALPERS SOMETIME IN 2000 AND 2001, THE DISTRICT EMPLOYEES PARTICIPATED IN THESE EBRPD GENERAL AND SWORN SAFETY RETIREMENT PLANS. SO CURRENTLY THESE ONES ARE CLOSED FOR OUR ACTIVE EMPLOYEES.

AND AS SEEN ON THIS SLIDE, YOU WOULD SEE THAT THE PLANS ARE VERY STRONGLY FUNDED.

SO AS OF THE RECENT VALUATION OF JANUARY 2025, THE GENERAL PLAN IS AT ONE 12.8% FUNDED, WHILE OUR SWORN PLAN IS AT 103.2%. SO AS YOU CAN SEE, I'VE COMPARED IT WITH THE 2023 VALUATION.

AND THERE'S A AN 11.79% INCREASE FOR THE GENERAL, WHILE THERE'S A 12.05 INCREASE IN OUR SWORN PLAN.

SO SOME FACTORS THAT AFFECTED THIS WOULD BE THE DEMOGRAPHICS WHICH I'LL SHOW ON THE NEXT SLIDE AS WELL AS THE DISCOUNTED RATE.

SO THERE'S BEEN A 0.5% INCREASE FROM 2023 AND 2025.

SO DUE TO THE FULLY FUNDED STATUS OF THESE PLANS ARE OUR REQUIRED CONTRIBUTIONS HAD TREMENDOUSLY REDUCED. SO, AS SEEN HERE FROM 2024, THE GENERAL PLAN, WE HAD TO PAY $1.67 MILLION IN CONTRIBUTIONS, AND IT DRASTICALLY REDUCED TO 6000 IN 2025.

AND THIS YEAR WE HAD TO PUT IN 8000. SIMILARLY, FOR OUR SWORN PLAN, WE INITIALLY HAD TO PAY $236,000 IN 2024, AND THAT HAD ALSO DECLINED TO $56,000 IN 2025.

AND THEN FOR THIS YEAR, IT'S DOWN TO $39,000.

SO THIS JUST SHOWS THAT THERE'S REDUCTION IN THE COST PRESSURE FOR THE DISTRICT TO FUND THESE PLANS.

SO YOU WOULD ALSO SEE HERE THE PLAN DEMOGRAPHICS.

IT CONTINUES TO MATURE. SO FOR OUR GENERAL PLAN WE CURRENTLY ARE PAYING 133 RETIREES.

AND WE STILL HAVE 1 ACTIVE EMPLOYEE CONTRIBUTING TO THIS PLAN.

AND JUST FOR YOUR CURIOSITY, THE AVERAGE AGE OF THESE RETIREES CURRENTLY IS AT 81.8 YEARS OLD.

WHILE OUR SWORN PLAN CURRENTLY WE'RE PAYING 27 RETIREES WITH NO ACTIVE EMPLOYEES AND THE AVERAGE AGE IS 74.9.

SO THIS TREND JUST JUSTIFIES THE CONSERVATIVE INVESTMENT STRATEGY APPROACH THAT WE CURRENTLY HAVE.

AND THIS TREND REINFORCES THE FACT THAT THESE PLANS ARE IN THEIR PAY DOWN PHASE.

SO REGARDING THE INVESTMENT STRATEGY, BOTH PLANS MAINTAIN A CUSTOMIZED CONSERVATIVE ALLOCATION WITH FIXED INCOME REPRESENTING ROUGHLY 80% OF THE PORTFOLIO. ASSETS FOR BOTH PLANS AND EQUITY EXPOSURE IS LIMITED TO APPROXIMATELY 9%.

AND SIMILARLY WITH THE ACTUARIAL VALUATION, THE DISCOUNT DISCOUNT RATE USED BY PFM FOR BOTH PLANS IS AT 4.75%.

AND TO JUST BRIEFLY GIVE AN OVERVIEW OF THE Q1 2026 INVESTMENT PERFORMANCE.

Q1 THERE WAS THAT VERY HUGE SORRY, VERY SMALL DECLINE OF -0.24%.

AND THAT'S JUST DUE TO THE INFLATION PRESSURE AND ALSO THE GEOPOLITICAL EVENTS SUCH AS THE IRAN CONFLICT.

BUT WHEN YOU LOOK AT THE YEAR TO YEAR THAT'S A SOLID 6.8 ON BOTH PLANS.

SO PFM IS REALLY DOING A GOOD JOB IN MANAGING OUR INVESTMENT PORTFOLIOS.

SO THAT CONCLUDES MY PRESENTATION AND I'LL TURN IT OVER TO DENNIS FROM PARS AND ANDREW FROM PFM.

[01:10:16]

MY NAME AGAIN IS DENNIS YU, EXECUTIVE VICE PRESIDENT WITH PARS.

I'M PLEASED THIS MORNING TO PRESENT INFORMATION REGARDING THE DISTRICT'S PENSION PLANS.

AND JUST AS A QUICK REMINDER OF THE SERVICES PROVIDED TO THE DISTRICT SO THE COMPANY I REPRESENT IS PARS AND WE SERVE AS TRUST ADMINISTRATOR OF THE DISTRICT'S PENSION PLANS.

AND SO BASICALLY WE PROVIDE THE ONGOING ADMINISTRATIVE SERVICES TO BOTH THE DISTRICT AND TO THE RETIREES.

2 VERY IMPORTANT FUNCTIONS THAT PARS WE DON'T DO.

NUMBER 1 IS WE DON'T SERVE AS THE TRUSTEE OF THE PROGRAM.

SO THAT'S WHERE WE HIRE U.S. BANK TO SERVE AS THE PLAN'S TRUSTEE.

THEY ARE IN CHARGE OF SAFEGUARDING ALL THE PLAN ASSETS ON BEHALF OF THE PLAN PARTICIPANTS, AND THEN THEY DISTRIBUTE BENEFITS TO THE RETIREES UPON THE DIRECTION OF PARS.

THE OTHER FIRM THAT'S INVOLVED IS A COMPANY CALLED PFM ASSET MANAGEMENT.

AND SO THE DISTRICT GETS TO SET ITS PARTICULAR RISK TOLERANCE LEVEL FOR THE PROGRAMS. AND IT'S UP TO PFM THEN TO MANAGE THE PORTFOLIO ACCORDING TO THE DISTRICT SELECTED RISK TOLERANCE LEVEL.

I THINK YOU ALREADY DID GET A QUICK BACKGROUND OF THE PLAN THAT AGAIN, BACK IN 1961 AND 1964, THE DISTRICT DID ADOPT 2DIFFERENT PROGRAMS, 2 DIFFERENT PENSION PLANS, 1 FOR YOUR GENERAL EMPLOYEES AND 1 FOR YOUR SWORN EMPLOYEES.

AND WHEN THE DISTRICT DID TRANSFER TO CALPERS A LITTLE BIT MORE THAN 25 YEARS AGO ACTIVE EMPLOYEES AT THAT TIME WERE TRANSFERRED TO CALPERS.

HOWEVER, THERE WERE SOME LEGACY EMPLOYEES AND ALL THE RETIRED AND WHAT'S CALLED TERMINATED VESTED EMPLOYEES THAT DID STAY WITH THIS, THE EXISTING PROGRAM. SO THOSE ARE THE PARTICIPANTS THAT WE'RE CURRENTLY SERVICING WITHIN THE PARS PROGRAM.

PARS DID TAKE OVER ADMINISTRATION OF THIS PLAN BACK IN 2022.

ON THIS PAGE, I DON'T NEED TO GO INTO A LOT OF DETAIL, BUT JUST WANT TO GIVE YOU THE BASIC PLAN PROVISIONS FIRST FOR THE GENERAL EMPLOYEE PLAN.

SO BASICALLY WHAT I WOULD CALL A 2.3% AT 58 RETIREMENT PROGRAM.

AND THE EMPLOYEES THAT DID PARTICIPATE IN THE PROGRAM HAD VARIOUS RETIREMENT DISTRIBUTION OPTIONS THAT THEY WOULD BE ABLE TO SELECT FROM.

I BELIEVE WE DID COVER SOME OF THE DEMOGRAPHICS IN SOME OF THE EARLIER SLIDES.

THE THING I DID WANT TO JUST POINT OUT IS THAT THIS PLAN IS WHAT I CONSIDER A CLOSED PENSION PLAN.

SO AGAIN, WE WILL CONTINUE TO SEE THE PARTICIPATION IN THIS PROGRAM DECLINE OR SHRINK OVER TIME.

SO IN TOTAL RIGHT NOW THERE'S 137 PARTICIPANTS WHO ARE EITHER COLLECTING A BENEFIT OR 1 DAY WILL COLLECT A BENEFIT UNDER THIS PROGRAM.

AND AS YOU NOTICE FROM 2023 TO 2025, THAT NUMBER DID DECLINE, THAT TOTAL NUMBER DID DECLINE.

BUT RIGHT NOW THERE'S A TOTAL OF 137 PARTICIPANTS IN THIS PROGRAM.

WE TALKED A LITTLE BIT EARLIER ABOUT THE DISTRICT'S PLAN FUNDED STATUS FOR THE GENERAL PLAN.

SO YOUR DISTRICT IS IN VERY HEALTHY FINANCIAL SHAPE AT A FUNDING RATIO OF ABOUT 112%.

SO THE WAY THAT I LIKE TO LOOK AT IT IS THAT FOR EVERY DOLLAR OF LIABILITIES YOU HAVE, YOU ACTUALLY HAVE $1.12 OF ASSET THAT BACK THAT.

SO IT DOESN'T MEAN THAT YOUR DISTRICT IS COMPLETELY DONE WITH THE OBLIGATION OF THIS PROGRAM, BUT YOU'RE IN A VERY GOOD FINANCIAL SHAPE. AND AS MENTIONED EARLIER, THE DISCOUNT RATE IS AT 4.75%.

SO THAT MEANS THAT THE RATE OF RETURN THAT YOU'RE TRYING TO ACHIEVE EACH YEAR IS ACTUALLY SIGNIFICANTLY LOWER THAN ACTUALLY WHAT THE CALPERS RATE, AS AN EXAMPLE, IS SET AT, WHICH IS AT 6.8%. SO THAT'S 2% LOWER THAN THAN THE CALPERS RATE OF RETURN.

AND SO WHAT THAT MEANS IS THAT AS A RESULT, YOUR DISTRICT CAN INVEST MORE CONSERVATIVELY BECAUSE YOUR TARGETED RATE OF RETURN ISN'T QUITE AS HIGH.

AND THEN BECAUSE OF YOUR HEALTHY FUNDED RATIO, THAT'S WHY WE DO SEE YOUR CONTRIBUTIONS TO THE PLAN CONTINUE TO DECLINE OVER TIME.

AND POTENTIALLY IT COULD ACTUALLY EVENTUALLY DISAPPEAR, ASSUMING THAT THE DISTRICT'S FUNDING RATIO CONTINUES TO REMAIN IN A HEALTHY, HEALTHY STATUS. THE NEXT. YES. CAN I INTERRUPT? PARDON ME. SO ON THE GENERAL PLAN, THE DISTRICT DID ON THEIR OWN IN 64 IS LIKE CALPERS.

IS THERE A JUST A REGULAR SCHEDULED COST OF LIVING INCREASE IN THAT PLAN? I BELIEVE SO THAT YES, THERE IS A COST OF LIVING ADJUSTMENT THAT'S PROVIDED EVERY YEAR TO THE RETIREES.

DOES IT RELATE TO THE CALPERS ONE OR IS IT BETTER.

[01:15:01]

BUT I THINK FROM WHAT MY RECOLLECTION IS, IT'S SIMILAR IN NATURE TO THE CALPERS COST OF LIVING ADJUSTMENT.

THANK YOU. OKAY. AND THEN THE NEXT PAGE SIMPLY SHOWS THE HISTORICAL CONTRIBUTIONS, DISBURSEMENTS, AND ASSET TRENDS OF THIS PROGRAM. SO THE KEY THING TO NOTE IS THAT YOUR CONTRIBUTIONS INTO THE PLAN ARE BEING FAR OUTPACED BY THE DISTRIBUTIONS THAT ARE GOING OUT OF THIS PLAN. BUT THIS IS TYPICAL OF PLANS THAT ARE CLOSED IN NATURE, WHERE AGAIN, OVER TIME, WE'RE GOING TO SLOWLY SEE THAT ASSET BASE DECLINE.

AS YOU KNOW, WE GET LESS AND LESS OVERALL PARTICIPANTS IN THIS PROGRAM.

SO WE'RE CURRENTLY AT AROUND $41 MILLION FOR THE GENERAL PLAN FOR THE SAFETY PLAN.

IT'S A LITTLE BIT OF A SMALLER PROGRAM. THIS IS BASICALLY WHAT I WOULD CALL A 2% AT 50 PROGRAM FOR YOUR SWORN EMPLOYEES.

THIS PLAN HAS IN TOTAL 28 PARTICIPANTS IN THIS PROGRAM.

NO ACTIVE PARTICIPANTS, 1 TERMINATED VESTED, WHICH IS SIMPLY SOMEBODY WHO'S NOT WORKING WITH YOUR DISTRICT, BUT ONE DAY WILL RETIRE AND THEN BEGIN TO DRAW A BENEFIT UNDER THIS PROGRAM.

AND THEN 27 CURRENTLY PARTICIPANTS CURRENTLY DRAWING A BENEFIT UNDER THIS PROGRAM.

SO AGAIN, WE DID SEE SOME MORTALITY INCIDENTS OCCUR FROM THE PRIOR PERIOD.

THE NEXT ACTUAL EVALUATION WILL BE SCHEDULED TO BE PERFORMED AS OF JANUARY 1ST OF 2027 JUST FOR YOUR INFORMATION.

THIS PLAN LIKE WE SAW WITH THE GENERAL PLAN IS ALSO HAS A FUNDING RATIO GREATER THAN 100%.

THAT'S ALWAYS WHAT WE'RE STRIVING TO ACHIEVE.

SO AGAIN, A $1.03 OF ASSETS FOR EVERY DOLLAR OF LIABILITIES FOR THE PROGRAM.

YOU DO CONTINUE TO SEE THE ACTUAL LIABILITY DOES DECLINE OVER TIME WITH THIS PROGRAM.

AND THAT'S SIMPLY BECAUSE AS WE MOVE FORWARD AS PARTICIPANTS EITHER PASS AWAY OR THEY AGE.

THAT'S WHY WE SEE THE LIABILITIES BEGIN TO COME DOWN OVER TIME.

AND THEN LIKELY WE'RE SEEING THE SWORN COSTS DROP AS WELL.

SO HOPEFULLY, AGAIN, THERE MAY BE A PERIOD IN TIME WHEN THERE MAY NOT BE ANY CONTRIBUTION TO THIS PARTICULAR PROGRAM AGAIN, AS A RESULT OF YOUR FUNDED RATIO. OKAY. THIS PLAN IS SMALLER IN TERMS OF SIZE AT ABOUT $5 MILLION IN TOTAL ASSETS.

RIGHT? AND LASTLY, BEFORE I TURN IT OVER TO ANDREW AGAIN, PFM ASSET MANAGEMENT SERVES AS THE INVESTMENT MANAGER OF THE PROGRAM.

AND AGAIN, THE TARGETED RATE OF RETURN IS THAT 4.75% DISCOUNT RATE.

SO. THANK YOU.

1 MORE THERE WE GO. ALL RIGHT. GOOD MORNING, FINANCE BOARD.

MY NAME IS ANDREW BROWN AND I'M THE PORTFOLIO MANAGER FOR THE DISTRICT'S PENSION PLAN.

I HAVE THE, I GUESS THE BENEFIT OR MAYBE THE CURSE OF GOING LAST.

MONIQUE, MY COLLEAGUE, SHE TOUCHED ON PROBABLY ABOUT 85% OF THIS SLIDE IN TERMS OF THE ECONOMIC OVERVIEW BEING, YOU KNOW, WE'RE COLLEAGUES AT PFM MANAGER SEACAT DID A LOT OF THE INVESTMENT PERFORMANCE UPDATE THAT I'LL BE TOUCHING ON IN A SECOND.

SO I'M JUST GOING TO MAYBE AUGMENT AND UPDATE SOME OF THOSE 2 PRESENTERS BE VERY BRIEF AND THEN LEAVE IT OPEN TO A LOT OF Q&A.

HOPEFULLY. MONIQUE ACTUALLY HAS THIS SLIDE IN HER HER EXHIBIT PACKET.

ONLY IN HER WORLD, THEY ONLY HAVE THE FIRST 2 ROWS BECAUSE THE FIRST 2 ROWS ON THIS EXHIBIT PAGE, AND THIS IS OUR HEAT MAP, WHICH LOOKS AT 9 ECONOMIC AND MARKET VARIABLES AND PROVIDES SOME TYPE OF COLOR CODED GRADING ON A 6 TO 12 MONTH FORWARD LOOKING HORIZON.

SO A BLACK DOT AND A GREEN REGION WOULD BE SOME TYPE OF POSITIVE VIEW TOWARDS ONE DYNAMIC.

GRAY IS NEUTRAL. RED. YELLOW WOULD BE SOME NEGATIVE VIEWPOINT FOR ON A GO FORWARD BASIS.

I GUESS I WOULD AUGMENT HER COMMENTS AND HERS WERE MAYBE, MAYBE MORE ECONOMIC SINCE WE'RE ON THE MULTI-ASSET TEAM AND INVESTING IN EQUITIES.

SURE. WE'RE MAYBE MORE FOCUSED ON CORPORATE EARNINGS OR CERTAINLY MORE FOCUSED THAN SHE IS ON CORPORATE EARNINGS.

AND I WOULD HAVE YOU LOOK AT THE FAR LEFT HAND COLUMN WHERE WE HAVE A CORPORATE FUNDAMENTAL RATING AT GREEN.

AND THIS WAS ACTUALLY AS OF MARCH 31ST IN THE IN THE MOST RECENT UPDATE FROM JUNE 30TH, WE'VE ACTUALLY MOVED FINANCIAL CONDITIONS THERE AT 9:00 FROM NEUTRAL TO GREEN. SO WE LOOK AT CORPORATE FUNDAMENTALS, S&P 500 EARNINGS.

THEY JUST LOOK FABULOUS WHEN ALL IS SAID AND DONE BASED ON CURRENT ESTIMATES, WE'RE LOOKING AT BASICALLY 30% YEAR OVER YEAR GROWTH IN THE S&P 500 EARNINGS COMPARED TO 2025. SO RIGHT NOW FACTSET, WHICH IS A DATA MANAGEMENT FIRM, THEY'RE ESTIMATING CORPORATE EARNINGS AT $356 PER SHARE AT THE END OF THIS YEAR.

[01:20:08]

WELL, 2025 WAS NOT A RECESSIONARY PERIOD BY ANY STRETCH OF THE IMAGINATION.

SO THINGS LOOK GREAT IN CORPORATE AMERICA. HENCE WE'RE GIVING IT A POSITIVE GREEN OUTLOOK, RIGHT? AND MOST OF THE GROWTH REALLY, AT LEAST IN TERMS OF CORPORATE AMERICA, IS CERTAINLY ON THE BACK OF A.I.

ARTIFICIAL INTELLIGENCE, THE CAPEX INFRASTRUCTURE BUILD OUT OF THOSE SECTORS.

BUT WE'RE CERTAINLY SEEING EARNINGS EXPECTATIONS AND GROWTH ALSO ACROSS THE OTHER 10 SECTORS IN THE S&P 500. SO SO CERTAINLY CHECK THAT BOX EARNINGS ARE GROWING GREAT.

BUT YOU CAN KIND OF SEE AT THE BOTTOM OF THE PAGE WE HAVE A SLIGHTLY NEGATIVE TO NEUTRAL VIEW TOWARDS VALUATIONS.

JUST BECAUSE EARNINGS ARE GROWING WELL THE MARKET'S GOING UP TOO AS WELL.

SO WE'RE NOT TO GETTING EUPHORIC IN TERMS OF TAKING EXTRA RISK IN TERMS OF OUR EQUITY ALLOCATIONS VERSUS FIXED INCOME.

SO WE'RE A LITTLE BIT MEASURED ON THAT FRONT.

AND THEN FINALLY I GUESS JUST QUICKLY TO ADDRESS POLITICAL AND POLICY RISKS.

WE HAVE THEM RATED AS A RED. IT'S NOT TO SAY THAT ALL POLICIES COMING OUT OF DC ARE NEGATIVE NECESSARILY, BUT THERE'S CERTAINLY A WHOLE LOT OF VOLATILITY, RIGHT.

BE IT TRUMP'S TARIFFS THAT ARE BACK ON. IT SEEMS THE GEOPOLITICAL ISSUES GOING ON OBVIOUSLY IN THE MIDDLE EAST DOGE DEREGULATION.

THERE'S JUST A LOT OF IMPACT TO BOTH EQUITY AND FIXED INCOME MARKET.

AND SO IT KIND OF FEELS LIKE A MAYBE A NO BRAINER FOR THE NEXT 2 YEARS.

WE'LL JUST KIND OF KEEP IT AS A RED HERE IN TERMS OF THE POSSIBLE NEGATIVE IMPACT OR IMPACT, I SHOULD SAY, GOING TO THE INVESTMENT REPORT.

AND SO THIS IS THE GENERAL PLAN. AND AS I SAID, MANAGER SEACAT ALREADY GAVE AN UPDATE FOR THE 331 PERIOD.

BUT TODAY IS AUGUST 12TH. SO THE JUNE 30TH FISCAL YEAR IS IN THE BOOKS.

AND SO FOR THE GENERAL PLAN, WE ENDED THE FISCAL YEAR 25-26 WITH A 6.8% RATE OF RETURN.

SO, SO NOT DISSIMILAR FROM WHAT WE HAD AT THE END OF MARCH.

FOR THE OTHER PLAN, THE SWORN SAFETY, WE WERE AT 7%.

SO, SO CERTAINLY, EVEN THOUGH WE MANAGE IT CONSERVATIVELY AND CONSERVATIVELY WOULD BE IN THIS CASE OUR MAXIMUM EQUITY CEILING IS AT 20%, BUT WE TYPICALLY KEEP IT SOMEWHERE BETWEEN 15%.

AND I THINK MANAGER SEACAT HAD IT AT 9% IN HER EXHIBIT.

THAT WOULD BE MAYBE FOR THE DOMESTIC EQUITY, BUT WE'RE KEEPING IT AT A VERY LOW LEVEL.

THE BULK OF THE PORTFOLIO IS GOING TO BE IN FIXED INCOME AND CASH EQUIVALENT INVESTMENTS, BECAUSE WE HAVE A 4.7% DISCOUNT RATE, OR 4.75% DISCOUNT RATE. IT DOESN'T ASK US TO TILT THE PORTFOLIO TO EXCESSIVE GROWTH.

SO WE THINK, YOU KNOW, 15% EQUITY, 85% FIXED INCOME PORTFOLIO PROBABLY GENERATES ABOUT 5.3%, 5.4%. IF WE'RE LOOKING AT, YOU KNOW, OUR CAPITAL MARKET ASSUMPTIONS.

SO A LITTLE BIT NORTH OF 4.75%, BUT WE'RE CERTAINLY NOT STRETCHING FOR EXCESS RETURN.

WE CAN MANAGE THIS PORTFOLIO CONSERVATIVELY. AND WE DO.

AND WE DO THAT ALSO BECAUSE WE'RE HAVING A FAIR AMOUNT OF DISTRIBUTIONS.

SO WE DO WANT THE CASH GENERATED FROM FIXED INCOME.

I THINK ON AN ANNUAL BASIS, WHAT WE SEE ABOUT $4 MILLION IN DISTRIBUTIONS GOING OUT, BUT HISTORICALLY ABOUT 1 MILLION COMING IN.

SO NET NET, ABOUT A $3 MILLION DISTRIBUTION ON A NET BASIS.

SO IT'S DESIGNED TO BE CONSERVATIVE AND, YOU KNOW, CERTAINLY IN RISKY, VOLATILE GEOPOLITICAL TIMES, IT ALLOWS YOU TO SLEEP A LITTLE BIT MORE SOUNDLY AT NIGHT.

BUT YOU KNOW, WE DO HAVE SOME RISK ASSETS. SO I DON'T WANT TO MAKE ANYBODY ON THE BOARD THINK THAT IT'S, YOU KNOW, LIKE, LIKE A T-BILL. THERE'S A LITTLE BIT MORE VOLATILITY THAN THAT.

AND REALLY, I TRIED TO STREAMLINE SOME OF MY COMMENTS BECAUSE I JUST WANT TO MAYBE AUGMENT SOME OF THE PREVIOUS SPEAKERS THOUGHTS AND WHAT THEY SHARED.

THOSE WERE MAYBE THE MAIN THINGS THAT I WANTED TO HIT ON.

AND I'D LOVE TO ANSWER ANY QUESTIONS YOU MIGHT HAVE.

GREAT. THANK YOU. ANY QUESTIONS? IT'S CLEAR THAT THE FIXED INCOME APPROACH IS, IS WORKING.

THAT THAT'S APPROPRIATE. THE CONSERVATIVE APPROACH FOR, FOR THIS DEMOGRAPHICS.

I APPRECIATE HEARING THE BACKGROUND OF THE TRANSITION AND THE EMPLOYEES.

YOU KNOW, THE 9 FACTORS IS NICE TO SEE IT ALL ON ONE PAGE BECAUSE CLEARLY THERE'S A LOT OF VOLATILITY IN THE FEDERAL CONCERNS FOR PEOPLE, MYSELF INCLUDED. IS THIS DEMOGRAPHIC AGE OUT.

[01:25:01]

LOOKS LIKE IT'S IN, IN GOOD, GOOD, STRONG HANDS.

AS YOU SAID, I THINK THIS IS A CLOSED, KIND OF CLOSED PENSION PLAN THAT WILL JUST GO AWAY AT SOME POINT AS PEOPLE AGE AND MOVE OUT AND IS THIS IT SAID QUARTERLY, BUT THEN IT SAID IT WOULD COME BACK AGAIN IN JANUARY.

SO WE GET REPORTS TWICE A YEAR OR THIS COMES BACK TO THIS EVERY QUARTER.

ANNUALLY. YEAH. I DON'T REALLY HAVE ANY QUESTIONS.

I THINK YOU LAID IT OUT NICELY. AND I APPRECIATE THE N9 FACTOR COLOR CHART.

REALLY. I'M A VISUAL PERSON. SO ME TO SUMMARY YOUR CHART IS HELPFUL.

YEAH. THANK YOU FOR YOUR REPORT ANDREW AND DENNIS ALSO I THIS IS GREAT STUFF.

IT'S NICE TO HEAR. I'M GLAD TO HEAR YOU KIND OF ROLL THE DICE A LITTLE BIT WITH THESE RETIREMENT PLANS BECAUSE THERE'S SO THEY'RE OKAY.

THEY'RE LIQUID FOREVER TO OR UNTIL THEY PEOPLE CASH OUT.

IT'S INTERESTING. I, I CAN'T GET OVER THIS DISTRICT PLAN.

I WAS INVOLVED WHEN WE SWITCHED OVER AND I CHOSE PARS BUT BOY, IT LOOKS LIKE WE'RE GOING TO CLOSE UP SHOP PRETTY SOON.

THAT ONE PERSON THAT'S BEEN HERE 30 YEARS, WE OUGHT TO JUST GIVE HIM A COUPLE MILLION AND SAY, WE'LL NAME THE COMPANY AFTER YOU OR SOMETHING. BUT ANYWAY, THANK YOU VERY MUCH FOR YOUR PRESENTATION.

THANK YOU. I APPRECIATE YOU KEEPING EVERYBODY SOLVENT.

I AM A RETIRED ANNUITANT WITH THE PARK DISTRICT AND VERY APPRECIATIVE OF ALL THE WORK YOU GUYS DO.

ANY COMMENTS FROM THE PUBLIC? NO PUBLIC COMMENT.

YES, SIR. I WANTED TO KNOW WHO HAS.

EXCUSE ME. YOU. ARE YOU SPEAKING AS A MEMBER OF THE PUBLIC? YES, JUST AS A GENERAL QUESTION. DO YOU HAVE PUBLIC COMMENT? THANK YOU. I WANT TO KNOW WHO HAS DECIDED THAT A DISCOUNT RATE FOR THE DISTRICT PLANS WOULD BE 4.5%, WHILE THE CALPERS DISCOUNT RATE IS 6.5% AT THIS POINT.

IN OTHER WORDS, YOU KNOW THERE IS A 2% DIFFERENCE, MEANING THE BAR THAT WE HAVE SET OR SOMEBODY HAS SET BASICALLY IS DIFFERENT.

SO I WANT TO KNOW WHO HAS DECIDED THIS AND WHY.

APPRECIATE THAT. THANK YOU. SHIRLEY. GO AHEAD.

WELL, I THINK THAT BECAUSE WE DON'T TYPICALLY ANSWER QUESTIONS FROM THE PUBLIC DURING PUBLIC COMMENT, I THINK THE BEST THING TO DO WOULD BE FOR YOU TO MAYBE SPEAK WITH JONAH.

HE CAN GET WHATEVER INFORMATION YOU NEED, BUT IT'S NOT A QUESTION AND ANSWER TIME.

IT'S JUST IF YOU WANT TO MAKE A COMMENT. I APOLOGIZE.

THAT'S OKAY. OKAY. WELL, I APOLOGIZE IF I HAVE MISUNDERSTOOD THE PROCESS, BUT BASICALLY, YOU KNOW, IT'S A THING THAT I WANTED TO KNOW BECAUSE IT HAS NEVER COME UP BEFORE.

AND I'M NOT REALLY EXPECTING JONAH TO ANSWER BECAUSE THIS IS SOMETHING FROM THE PAST AND ALL THAT.

YOU KNOW, I JUST DO NOT KNOW THE PROCESS. THAT'S WHY I'M ASKING IT.

IT'S OKAY TO WANT TO ASK QUESTIONS. I'M NOT. I'M JUST SAYING THAT WE IN THESE COMMITTEE AND BOARD MEETINGS DON'T USUALLY PROVIDE THE ANSWERS.

BUT JONAH CAN CERTAINLY, IF HE WANTS TO FIND OUT THE INFORMATION FOR YOU.

THANK YOU FOR THE PUBLIC RECORD. CAN WE GET YOUR NAME? I'M DAVID SUMNER, I'M AUDIT MANAGER FOR THE PARK DISTRICT, INTERNAL AUDIT MANAGER FOR THE PARK DISTRICT.

AND THIS IS THE FIRST TIME I'M ATTENDING A MEETING THAT YOU ARE PARTICIPATING IN.

THANK YOU. SO I'M GRATEFUL FOR YOUR PRESENCE.

I HAVE WATCHED BOARD MEETINGS, TAPED RECORDS BEFORE AT HOME, AND MY WIFE AND I ARE VERY IMPRESSED WITH THE QUESTIONS THAT YOU ARE RAISING AT JUST ABOUT EVERY MEETING. THANK YOU.

WELL, YOU KNOW, I DON'T KNOW. DENNIS ARE YOU ABLE TO ANSWER THAT QUESTION? BECAUSE I KNOW THAT WE'RE NOT IN ORDER, BUT I DIDN'T CATCH IT.

BUT THAT IS A GOOD QUESTION. WHY IS IT A 4.75% DISCOUNT RATE FOR DISTRICT PLAN? AND WHY IS IT 6.75% FOR CALPERS? OKAY. SO TYPICALLY DISCOUNT RATES ARE SET BY YOUR ACTUARY.

SO WHAT YOUR ACTUARY DOES IS LOOK AT YOUR INVEST YOUR PARTICULAR INVESTMENT MIX.

AND BASED ON THAT INVESTMENT MIX, THEY WILL COME UP AND YOU KNOW, DEVELOP AN APPROPRIATE DISCOUNT RATE, WHICH IS COMMENSURATE WITH THE, YOU KNOW, THE RISKINESS OF YOUR PARTICULAR PORTFOLIO.

AGAIN, SINCE YOU'RE NOT USING A VERY RISKY PORTFOLIO, YOU'RE USING A VERY CONSERVATIVE PORTFOLIO.

HENCE THAT'S THE REASON WHY A MORE CONSERVATIVE DISCOUNT RATE HAS BEEN SELECTED.

CALPERS IS A COMPLETELY DIFFERENT ANIMAL. SO THE CALPERS RATE, AT 6.8%, IS ACTUALLY SET BY THE BOARD OF ADMINISTRATION AT CALPERS.

SO THAT'S SOMETHING THAT THEIR BOARD DICTATES THAT.

AND THEN THEIR INVESTMENT TEAM IS THEN TASKED WITH TRYING TO HIT THAT DISCOUNT RATE.

[01:30:02]

I'M SORRY. SO THEY HIT IT THE LAST TIME. IF YOU COULD STICK TO THE SO I WANT TO SAY OVER THE LAST 3 YEARS THEY'VE ACTUALLY HAVE HIT OR EXCEEDED THAT RATE. SO THEY'RE FUNDED RATIO AS A RESULT OF THEM EXCEEDING THE DISCOUNT RATE HAS IMPROVED OVER THE LAST 3 YEARS.

BUT IT STILL IS A PRETTY TALL TASK THAT, YOU KNOW, AGAIN, THIS IS 6.8% AGAIN GOING FORWARD FOR MAYBE A 40-50 YEAR TIME PERIOD.

GOING FORWARD. SO WE'LL ULTIMATELY SEE IF THEY'RE ABLE TO CONTINUE TO HIT THAT ON A YEAR, YEAR TO YEAR BASIS.

ALL RIGHT. THANK YOU VERY MUCH. OKAY. SO I GUESS WE'VE COMPLETED ALL OUR QUESTIONS AND COMMENTS.

AND THANK YOU VERY, VERY MUCH FOR YOUR PRESENTATIONS. WE NOW HAVE THE OPPORTUNITY TO RECOMMEND TO THE FULL BOARD THE TO ACCEPT THE 2026 RETIREMENT PLANS UPDATE. SORRY. YEAH, UNFORTUNATELY, WE DON'T NEED YOU GUYS TO VOTE ON THIS BECAUSE I MISSED THIS ON AS AN ACTION ITEM. SO IT'S JUST GOING TO BE INFORMATIONAL, BUT WE ARE GOING TO PRESENT THIS TO THE FULL BOARD.

EXCELLENT. IN THAT CASE WE WILL MOVE TO WE WILL MOVE TO ANNOUNCEMENTS. ARE THERE ANY ANNOUNCEMENTS.

HEARING NONE. WE'LL MOVE TO ADJOURNMENT. THANK YOU ALL VERY MUCH FOR BEING HERE. WE ARE ADJOURNED.

* This transcript was compiled from uncorrected Closed Captioning.