Solvang CA | Official Website

Last Resolution No. 17-1003 Last Ordinance No. 16-0324

REGULAR MEETING OF THE SOLVANG CITY COUNCIL

COUNCIL CHAMBERS 1644 OAK STREET

March 13, 2017

6:30 p.m.

Please be advised that, pursuant to State Law, any member of the public may address the Council concerning any item on the Agenda. Please be aware that Items on the Consent Calendar are considered to be routine and are

normally enacted by one vote of the Council. If you wish to speak on Items 3, 4, 5, or 6 please do so during Public Communications.

Regular City Council meetings are broadcast live on Channel 23 in the Santa Ynez Valley, and stream live on the City’s website at www.cityofsolvang.com/City Council

CALL TO ORDER

ROLL CALL PLEDGE OF ALLEGIANCE

PRESENTATION Mayor Richardson will present a proclamation declaring April as Donate Life Month.

CITY MANAGERS REPORT

1. PUBLIC COMMUNICATIONS – WRITTEN OR VERBAL

At this time, please direct comments to the City Council regarding Consent Calendar Items or matters NOT on the agenda but within the jurisdiction of the Council. (Speakers are limited to five (5) minutes).

2. COUNCIL COMMENTS AND REQUESTS

Comments and requests from City Council Members. No action will be taken at this meeting.

3. CORRESPONDENCE RECEIVED BY CITY COUNCIL

4. APPROVAL OF AGENDA AS PRESENTED

5. CITY COUNCIL MINUTES OF FEBRUARY 27, 2017 Approval of Draft Minutes.

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http://www.cityofsolvang.com/City

6. CONSENT AGENDA a. Receive and File VisitSYV Annual Report for 2016 b. Approval of Warrant Register c. 2nd Reading of Proposed Amendments to the Solvang Municipal Code Regarding

Emergency Management, Parking Districts, and various other Code Amendments 1. Adopt on second reading, by title only, Ordinance No. 17-____, an Ordinance of

the City of Solvang making minor edits to Municipal Code Title 1, Chapter 3 sections 1 and 6F; Title 1 Chapter 4 sections 2E, 5B, 5D, 7 and 11C, and Title 9 section 2C-2J.

2. Adopt on second reading, by title only, Ordinance No. 17-____, an Ordinance of the City of Solvang amending Title 2 Chapter 3 in regards to Emergency Management; and

3. Adopt on second reading, by title only, Ordinance No. 17-____, an Ordinance of the City of Solvang updating Title 8 Chapter 7 and Title 11 Chapters 7A, 7B, and 11-7 to delete references to a Parking District.

d. Support of Drought Task Force Projects in Santa Barbara County 1. Adopt Resolution 17-____ as revised, to support the recommended drought

projects from the Santa Barbara County Drought Task Force; and 2. Direct the City Manager to send the adopted Resolution to the County of Santa

Barbara Office of Emergency Management. e. Solvang (Skytt) Mesa Landscape and Lighting Maintenance District No. 2004-1,

Resolution of Initiation and Intention 1. That the City Council adopt Resolution No. 17-____, a Resolution of the City

Council of the City of Solvang initiating the preparation of an engineer’s report, approving the Preliminary Engineer’s Report, and setting a public hearing for March 27, 2017.

REGULAR AGENDA

7. WATER AND WASTEWATER RATE INCREASES a. Discuss and provide staff direction on proposed rate increases; b. Direct staff to draft a Notice of Intent; and c. Set date of Public Hearing.

8. INVESTMENT POLICY AND OPTIONS

a. Adopt Resolution No. 17-___, a Resolution of the City Council of the City of Solvang acknowledging the receipt and filing of the Annual Investment Policy for fiscal year 2016-17; and

b. Adopt Resolution No. 17-___, a Resolution of the City Council of the City of Solvang authorizing signers to perform investment related activities with Multi-Bank Securities (MBS).

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9. COUNCIL MEMBER REPORTS (Oral reports: Each Council Member will give oral reports on their activities in relation to the following committee or agencies. In addition, each member may report on items that will be included on the agenda for such committee or agency and seek guidance from the Council as a whole on such items, including on what position to take on behalf of the City)

• Santa Barbara County Association of Governments • Air Pollution Control Board • Joint Wastewater Committee • Finance Committee • Chumash Tribe • Indian Gaming Benefit Committee • California Joint Powers Insurance Authority

10. ADVANCE CALENDAR

Informational Calendar – No Action. 11. CLOSED SESSION

Government Code Subdivision (a) of Section 54956.9 Existing Litigation – Amendment to Permit 15878 in front of the State Water Resources Control Board

Copies of staff reports and supporting documentation pertaining to each item on this agenda are available for public viewing and inspection at City Hall, 1644 Oak Street, Solvang, during regular business hours and on the City’s website www.cityofsolvang.com, in addition, any writings relating to an open session agenda item provided to a majority of the Council that is distributed within 72 hours of the meeting, after the posting of the agenda, will be identified and available separately at City Hall and may be posted to the website. In Compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, you should contact the office of Administrative Services at 688-5575 or the California Relay Service. Notification 48 hours prior to the meeting would enable the City to make reasonable arrangements to ensure accessibility to this meeting.

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A Proclamation of the City of Solvang OMV/Donate Life California Month

April 2017

WHEREAS, organ, tissue, marrow and blood donation are life-giving acts recognized worldwide as expressions of compassion to those in need and the spirit of giving and decision to donate are not restricted by age or medical condition;

WHEREAS, more than 118,000 individuals nationwide and more than 21,000 in California are currently on the national organ transplant waiting list, and on average, 22 people die each day while waiting due to the shortage of donated organs and with the need for donated organs is especially urgent in Hispanic and African American communities;

WHEREAS, more than 600,000 units of blood per year are needed to meet the need in California; and at any given time, 6,000 patients are in need of volunteer marrow donors; and millions of lives each year are saved and healed by donors of organs, tissues, marrow and blood;

WHEREAS, a single individual's donation of the heart, lungs, liver, kidneys, pancreas and small intestine can save up to eight lives; donation of tissue can save and heal the lives of up to 50 others; and a single blood donation can help three people in need;

WHEREAS, over thirteen million Californians have signed up with the state-authorized Donate Life California Donor Registry to ensure their wishes to be organ, eye and tissue donors are honored by signing up on the Donate Life California Donor Registry when applying for or renewing their driver's licenses or ID cards at the California Department of Motor Vehicles;

NOW, THEREFORE, BE IT RESOLVED that in recognition of National Donate Life Month, the month of April 2017 is hereby proclaimed "OMV/Donate Life California Month" in the City of Solvang, and in doing so we encourage all Californians to check "YES!" when applying for or renewing their driver's license or I.D. card, or by signing up at www.donateLIFEcalifornia.org or www.doneVIDAc Iifornia.or

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MINUTES OF THE REGULAR MEETING OF THE

SOLVANG CITY COUNCIL ____________________________________________________________________________________ Council Chambers February 27, 2017 1644 Oak Street Monday Solvang, CA 93463 6:30 pm ____________________________________________________________________________________

CALL TO ORDER: Mayor Richardson called the meeting to order at 6:30 p.m.

ROLL CALL:

PRESENT: Mayor Richardson, Council Members Duus, Jamieson, Toussaint, and

Zimmerman

STAFF: Brad Vidro, City Manager; Roy Hanley, City Attorney; Matt van der Linden, Public Works Director; Sandra Featherson, Administrative Services Director; Charlie Uhrig, Community Resources Officer, Holly Owen, Planning & Economic Development Director; and Lisa S. Martin, City Clerk

PLEDGE OF ALLEGIANCE: Led by Mayor Richardson

CITY MANAGERS REPORT:

City Manager Vidro turned over the report to Matt van der Linden, Public Works Director, for a storm summary. All in all, the City fared well, with localized flooding along Fredensborg Canyon Road just past College Canyon and at the northeast corner of Mission and Fifth. A culvert on S. Alisal got partially blocked and water/mud flooded the road. Damage to Fredensborg Canyon and Adobe Canyon culverts, the gate at the Water yard, and trees lost at HCA, on Third Street, and at the Veterans Memorial Building. No overflow occurred at the wastewater treatment plant. A private bridge failed at 795 Fredensborg Canyon Road. When reconstructed, this bridge will not be allowed to be a culvert bridge, but an engineered bridge over the creek, giving the water more room to flow freely.

1. PUBLIC COMMUNICATIONS – WRITTEN OR VERBAL

Fred Kovol, Solvang Resident The San Luis Reservoir isn’t full, so how is it spilling? Lake Cachuma is at 43 or 45.8% depending on what data you look at He has gotten 21.3” of rain at his home so far

Charlie Uhrig, Community Resource Officer A new Citizens Academy class begins this Wednesday for anyone interested

2. COUNCIL REQUESTS

None.

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3. CORRESPONDENCE RECEIVED BY COUNCIL

No discussion – informational only.

4. APPROVAL OF AGENDA AS PRESENTED No changes to the agenda.

5. CITY COUNCIL MINUTES OF FEBRUARY 13, 2017 Motion made by Council Member Duus to approve the minutes as written, seconded by Council Member Jamieson, and carried with a verbal response of 5 ayes.

6. CONSENT AGENDA a. Receive and File Sheriff’s Department Report for January 2017 b. First Reading of an Ordinance amending the Municipal Code

i. Introduce for first reading, by title only, Ordinance No. 17-___, an Ordinance of the City of Solvang making minor edits to Municipal Code Title 1, Chapter 3, sections 1 and 6F; Title1 Chapter 4 sections 2E, 5B, 5D, 7 and 11C, and Title 9 section 2C-2J.

c. Adopt Resolution No. 17-___ supporting Drought Task Force Projects i. Adopt Resolution 17-___ to support the recommended drought projects from the Santa

Barbara County Drought Task Force; and ii. Direct the City Manager to send the adopted Resolution to the County of Santa Barbara

Office of Emergency Management.

Item 6c was pulled by Council Member Jamieson. There is not enough information, no accounting of the money required for the projects. Would like a letter to be sent along with the resolution requesting that the State fund more water storage facilities. The voters have approved bond measures, etc. and nothing is ever done with the money. Would like staff to add language to the resolution to that effect and draft a letter. We need to stand up for ourselves. Matt van der Linden responded that we can change the Resolution to add that the State consider adding new storage structures. The six projects identified in the plan by the Drought Task Force have already been proposed and engineered. Council Member Zimmerman questioned whether Solvang is liable for any of these projects, financially? Brad Vidro responded that we are not, this is the list of projects that Santa Barbara County would like the State to help fund. We could potentially benefit because the Suspended Table A water purchase is one of the projects. Council Member Duus agreed with Council Member Jamieson. We are losing water that we had stored because the State doesn’t have enough capacity. The State Water Agency needs to hear from us. Mayor Richardson opened the item to public comment at 7:16 p.m.

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Fred Kovol, Solvang Resident The State is only going to give funding to correct the Oroville Dam problem The Resolution has nothing to do with Solvang

The item was closed to public comment at 7:18 p.m. Motion to table item 6C made by Council Member Jamieson, seconded by Council Member Duus, and carried with a verbal response of 4 ayes and 1 no (Zimmerman). Motion to approve Consent Agenda items A and B made by Council Member Duus, seconded by Council Member Jamieson, and carried with a verbal response of 4 ayes and 1 no (Zimmerman).

REGULAR AGENDA 7. 2015-2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT

Presentation by Terry Krieg, CPA. Mayor Richardson opened the item to public comment at 7:32 p.m. Fred Kovol, Solvang Resident Discussed the State Water debt

The item was closed to public comment at 7:36 p.m.

Council Member Toussaint asked for an explanation of the unrestricted funds. Terry Krieg answered that in the general fund, the amount shown as unassigned can be used for any purpose. Assigned monies are funds committed and set aside by Council based on policy. Council Member Toussaint questioned whether the CAFR is a required document. City Manager Vidro responded that it is not, we are only required to publish an annual financial statement. Terry Krieg added that about half of the cities he works with prepare a CAFR, the reason is for additional transparency. Motion made by Council Member Duus to accept the Comprehensive Annual Financial Report, seconded by Council Member Jamieson, and carried with a roll call vote of 5-0.

8. VENDOR SERVICES AGREEMENT FOR CUSTODIAL SERVICES

Staff report by Brad Vidro, City Manager.

Mayor Richardson opened the item to public comment at 7:55 p.m. and, seeing none, closed the item.

Motion made by Council Member Zimmerman to approve the staff recommendation, seconded by Council Member Toussaint, and carried with a roll call vote of 5-0.

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9. DISCUSS MUNICIPAL CODE CHANGES RELATING TO EMERGENCY

MANAGEMENT AND PARKING DISTRICTS

Staff report by Roy Hanley, City Attorney.

Mayor Richardson opened the item to public comment at 8:03 p.m. and, seeing none, closed the item.

Motion made by Council Member Zimmerman to approve staff recommendation, seconded by Council Member Duus, and carried by a roll call vote of 5-0.

10. DISCUSS PRIORITIES FOR CHANGES TO THE SOLVANG MUNICIPAL CODE Staff report by Brad Vidro, City Manager. Mayor Richardson indicated he does not think it is appropriate to consider a view protection ordinance. Council Member Jamieson asked staff if we want to include Workforce Housing. Holly Owen, Planning & Economic Development Director, responded that it would not be included at this time, it is more of a conceptual work in progress. Council Member Duus agrees. We cannot protect both trees, and views, because trees block views. Council Member Jamieson commented that public views are important. Private views are hard to legislate. The County of Santa Barbara does not protect private views. Planning Director Owen added that public viewsheds are typically protected as part of a city’s General Plan. Solvang does have policies that protect identified public viewsheds within the City. Mayor Richardson thinks we should be cautious about establishing an ordinance that puts another burden on the city. Council Members Zimmerman and Toussaint would rather not get involved in private view protection. Mayor Richardson opened the item to public comment at 8:21 p.m. Fred Kovol, Solvang Resident Public viewsheds have not been defined

The item was closed to public comment at 8:23 p.m.

There was consensus for staff to work on and take to the Planning Commission zoning ordinance amendments addressing Wireless Facilities, Accessory Dwelling Units, Cottage Food Industries, Tree Protection, and to add a definition for a Bed & Breakfast.

11. ELECTRIC VEHICLE CHARGING STATION SUBSCRIPTION RENEWAL

Staff report by Sandra Featherson, Administrative Services Director.

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There was discussion relating to fees and comparing our fees with neighboring communities.

Mayor Richardson opened the item to public comment at 8:45 p.m. Fred Kovol, Solvang Resident The price is 3 times the normal rate

The item was closed to public comment at 8:48 p.m. Discussion ensued relative to Tesla charging stations. There may be grants available. Motion made by Council Member Duus to approve the staff recommendation, seconded by Council

Member Jamieson, and carried with a roll call vote of 4-1 with Council Member Toussaint voting No. Staff is further directed to bring back a future agenda item regarding Tesla charging stations.

12. COUNCIL MEMBER REPORTS (Oral reports: Each Council Member will give oral

reports on their activities in relation to the following committee or agencies. In addition, each member may report on items that will be included on the agenda for such committee or agency and seek guidance from the Council as a whole on such items, including on what position to take on behalf of the City)

• Santa Barbara County Association of Governments

Mayor Richardson mentioned that President Trump has asked for additional priority funding for infrastructure projects. The Highway 101 widening project from Santa Barbara to Carpinteria is a No. 1 priority project.

• Air Pollution Control Board • Finance Committee • Joint Wastewater Committee • Chumash Tribe • Water Committee • Indian Gaming Benefit Committee • California Joint Powers Insurance Authority

13. ADVANCE CALENDAR Information only, no action.

14. ADJOURNMENT Mayor Richardson adjourned the City Council meeting at 8:49 p.m.

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Annual report for 2016 of the Santa Ynez Valley Hotel Association (dba Visit the Santa Ynez Valley) – Submitted 2/24/17 VisitSYV is reporting activity for the entire year of 2016. This report is submitted to the City of Solvang, the City of Buellton and the Santa Barbara County Board of Supervisors, in accordance with the fulfillment of the provisions of the SYV TBID.

Financial (Jan-Dec 2016) TBID Funding received - $888,737 Membership income - $20,625 County Marketing Grant - $7,307 Marketing Co-op with the Solvang CVB - $25,336 Web ad sales - $17,340 Total Income - $959,345

Expenses Advertising/Marketing - $400,777 Grants/Special Projects - $71,982 Travel & Conventions - $50,974 Personnel Costs - $168,873 Contract services - $81,580

Facilities/equipment - $6,390

Operations - $11,518

Other types of expenses - $6,247

Total expenses - $798,341

Balance (including reserves) as of December 31st, 2016 - $212,422

Membership We receive TBID funding from 35 lodging properties and currently have 184 members that pay a basic membership fee of $250, a nonprofit fee of $125, and trade members where services are traded for membership such as wine, catering, photography. We held 3 networking receptions that were well attended throughout the year.

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We partner with Solvang, Buellton and the Santa Barbra County Association of Governments to provide affordable ($7 each way) day trips between Santa Barbara and the SYV.

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Marketing (January 1, 2016 – December 31, 2016) Santa Ynez Valley Marketing Co-Operative Campaign January 1 – December 31, 2016 The year began with a brand new cooperative marketing campaign for the Santa Ynez Valley. The 2016 VisitSYV Marketing Co-Op consists of VisitSYV as the lead stakeholder with $150k and Solvang Conference & Visitors Bureau as a major stakeholder at $25k. DVA Advertising & PR Agency continues to be our ad agency. The results of these combined efforts have been greatly successful and VisitSYV is pleased to report on the metrics supporting the benefits of the marketing program to the entire Valley. New Creative VisitSYV kicked off 2016’s cooperative valley-wide marketing program with a brand new creative campaign featuring full bleed, iconic imagery and the new VisitSYV logo. The new creative campaign also plays on VisitSYV’s name and URL, using headlines like “SYVino” and “SYVariety” to speak to the valley’s unique culinary scene & amenities.

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Print The 2016 Campaign creative was featured in the following print in 2016:

Destinations Magazine, April and December issues (100,000 impressions)

Gentry Magazine, April, September, and October issues (107,200 impressions)

Sunset Magazine, Northern Circulation, May issue (350,000 impressions)

Sunset Magazine, Insider Southern California, June issue (157,211 impressions) 1,063,000 total print readership Digital In 2016 VisitSYV continued to expand on its digital marketing presence, including increasing its social media advertising on both Instagram and Facebook as well as running targeted banner campaigns and content amplification. We have seen strong results on all platforms and look forward to continuing to grow VisitSYV’s digital presence with a more robust content marketing strategy in addition to regional print magazines in 2017. See the metrics below for Web Banner Advertising: Google Display Ads 4,634,346 total impressions 12,798 clicks 0.28% CTR Facebook 1,447,085 total impressions 40,609 clicks 2.81% CTR Instagram 1,343,167 total impressions 36,136 clicks 2.69% CTR

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New to our digital ad campaign this year was content amplification. Content amplification is the process that marries valuable content with paid tactics. The targeting that content amplification employs allows marketers to put their content in front of their ideal customers across multiple

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channels, including websites, social media sites, and other properties. We took incredible, organic content featuring the Santa Ynez Valley written by well-respected publishers (i.e. Conde Nast), and paid to boost this content on websites utilized by our target visitors. See stats for our content amplification campaign below. Content Amplification 8.9 million impressions 5,972 clicks 0.07% CTR Public Relations Public relations efforts in 2016 included ongoing media outreach to more than 150 key regional and national editors and writers, focusing primarily on the wine, travel, and culinary categories; drafting and distributing press releases highlighting various themes including Restaurant Week, Wine Country 101, Wine Country With Kids, Summer Activities, Golf, Weddings, Arts/Culture, Holiday Activities, Meetings & Conferences, Spring Media Invitation, and Fall/Winter Media Invitation; coordinated media visits and proactive outreach that contributed to major regional/national coverage in media outlets including Chicago Tribune, Taste & Travel, AFAR, Marie Claire, Wine Enthusiast, MSN.com, Harpers Bazaar, USA Today, Smart Meetings, San Diego Union-Tribune, Los Angeles Times, Los Angeles Magazine, Better Homes & Gardens, Miami Herald, Sacramento Bee, Atlanta Journal-Constitution, Travel + Leisure, and more. Total value of public relations media coverage for 2016 = $1,487,941* Total circulation of editorial coverage for 2016 = 18,175,068 Total unique visitors/month of editorial coverage for 2016: 1,027,669,986

*PR value is calculated by multiplying the advertising rate times the size of the story, and then doubling that number to reflect the added value of editorial coverage

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VisitSYV worked with Griffin Publishing to create the 2016 destination guide, with over 90 pages covering the Santa Ynez Valley. 90,000 copies were printed, with distribution taking place via trade shows, California festivals, the Solvang Visitors Center, the Buellton Visitors Center, the Santa Barbara Visitors Center, and direct mailings to 18,339 homes in Santa Barbara, the Santa Ynez Valley, Laguna and Newport Beach. The guides are also distributed on a monthly basis to our hotels, museums, and popular restaurants and retailers. The guides are also being

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distributed to the 35 cruise ships that enter the region through Santa Barbara. The 2016 guide was an unprecedented success. Website From January 1, 2016 – December 31, 2016, VisitSYV.com has received 426,394 pageviews. The

site has also garnered 27,752 clicks to our members’ individual websites. The top 5 most

popular pages on the site are as follows: (1) Homepage; (2) Wine Tasting; (3) Events Calendar;

(4) Restaurant Week; (5) Discover Los Olivos.

Search Engine Optimization

VisitSYV has contracted Search Engine Pros to fully optimize the website. We continue to put

efforts into Search Engine Optimization monthly, and continue to use the blog for keyword

optimization.

VisitSYV Promotions

SYV Restaurant week (January 24-30, 2016) is an annual VisitSYV promotion which ties in with

Visit California’s Restaurant Month promotion. Our own SYV Restaurant Week advertising

campaign reached consumers via Facebook (99,029 impressions, 1,374 clicks to DineSYV.com),

3 issues of The Independent (40,000 printed), printed poster (100 printed) and postcard

distribution (5,000 printed). Restaurant Week presents an opportunity for increased

engagement and visitation for our website, and acts as a great opportunity to showcase our

members and show appreciation. A total of 21 VisitSYV restaurants participated including 3 new

restaurants, 8 hotel participants which offered packages and discounts, and an added 8

wineries participated as a pairing feature. This year’s promotion brought even higher record-

breaking traffic to the website. Please see analytic reports below.

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DineSYV.com*

Total Page views for DineSYV.com: 18,204

Avg Time Spent on page: 00:02:48*

Vs. Avg Time Spent on other pages: 00:01:30

*An increase in average time spent on DineSYV.com indicates that the content provided was

relevant, desirable content to the specific audience targeted by our ad campaign.

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Top Traffic Sources

Google: 6,654

Facebook: 4,483

Direct: 3,782* direct traffic can be attributed to Independent advertising, posters & postcards

Yahoo: 616

SolvangUSA: 475

*SYV Restaurant Week has become such a wild success for VisitSYV, we currently rank #1 on

Google for the search term “Restaurant Week”, beating out destinations across the US who

market similar promotions.

Santa Ynez Valley Scarecrow Fest: VisitSYV contributed to the coordination, print, social media,

and PR promotion of the Santa Ynez Valley Scarecrow Fest, executed by Solvang 3rd

Wednesday.

Social Media Stats

Our Facebook audience has increased to over 13,000 likes.

VisitSYV Twitter account has 3,534 followers.

VisitSYV Instagram has doubled its numbers with a total of 1,865 followers.

Additional Print Advertising Touring & Tasting Magazine VisitSYV sponsored a 2 page spread on the Santa Ynez Valley in the Spring Issue of Touring & Tasting (66,000 copies distributed nationwide). This allows for a feature both in print and several additional features online, including SYV coverage via the Online Grapevine E-Newsletter, Touring & Tastings’ meeting planners newsletter, as well as features on partner website www.hitchedmag.com.

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VisitSYV also sponsored a 4 page editorial spread on the Santa Ynez Valley in Visit Santa Barbara’s annual visitor’s magazine (100,000 copies printed). VisitSYV partners, Solvang

http://www.hitchedmag.com/

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Conference & Visitors Bureau and Buellton Chamber & Visitors Bureau, also sponsored a single page each, allowing the Santa Ynez Valley to have a 6+ page spread.

Westways: Discover March 2016 VisitSYV partnered with the Buellton Chamber & Visitors Bureau & Solvang Conference & Visitors Bureau for a 2 page advertorial co-op spread in Westways’ Discover March edition. This special insert went to 500,000 Westways households in California with household incomes of +$75,000. This was our second annual Westways co-op with the Buellton Chamber & Visitors Bureau, and the first time bringing on the Solvang Conference & Visitors Bureau as a Westways partner.

Additional Display Advertising

Golden Globes Gifting Suite VisitSYV partnered with Visit Santa Barbara at the Golden Globes gifting suite in January to promote our

region. We handed out gift bags full of Santa Ynez Valley and Santa Barbara items and gift cards. We also

poured local wine (Red Carpet Red Pinot Noir from Ampelos Cellars). It was great fun and everyone,

including the stars and foreign press, was impressed.

Santa Barbara International Film Festival VisitSYV was the proud sponsor of the Santa Ynez Valley Lounge at the 2016 Santa Barbara International Film Festival. We hosted educational film related seminars and panel discussions during the day and happy hours in the evening. Our full screen ad was played before over 300 screenings during the festival, and our logo was included before each tribute and award ceremony. We had a wonderful time and the feedback has been incredible. Our goal was to increase VisitSYV’s presence within Santa Barbara County and inspire the 90,000 festival attendees from around the globe to spend a few days with us here is the SYV.

OC Weekly Fresh Toast Festival VisitSYV was the glass sponsor of the OC Weekly’s Fresh Toast event, a special brunch festival with over 1,500 attendees located in Orange County held Saturday, February 27, 2016. As the glass sponsor we were able to get our brand in front of one of our top drive markets during off-season and inspire travel to our destination. We also received a quarter page ad in the OC Weekly Happy Hour & Brunch Guide.

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Santa Monica Taste/Makers Salon On May 19, 2016, VisitSYV partnered with the Santa Barbara County Vintners Association and Visit Santa Barbara to bring a taste of the Santa Ynez Valley to media influencers at a venue in Santa Monica. The event aimed to bring LA-based media and influencers into the fold of our hospitality community, build relationships, and tell the story of our region to a desirable, influential audience. Local businesses like S.Y. Kitchen, Artiste Wines, Bob’s Well Bread Bakery and Grassini Family Vineyards served during the event as ambassadors for our destination. Executive Director, Shelby Sim and Marketing & Communications Manager, Danielle Laudon, were also active ambassadors at the salon. The event resulted in media visits and PR coverage of the Santa Ynez Valley amounting to a PR valuation of $23,125. Airport Digital Display Ad Buy VisitSYV purchased a year-long campaign of digital display advertising in the Santa Barbara Airport which encourages travelers to visit the Santa Ynez Valley, highlighting that we are only 30 minutes north of the airport. Our ads play on 5 screens strategically placed in the lobby, baggage claim, and by the rental car booth. Ads ran through June 2016. KEYT Commercials VisitSYV aired 30 second commercials on KEYT and KKFX as part of a sweepstakes with users engaging with the website to win a special package, featuring a 2 night stay in the valley. From November 23 – December 24, 2016, VisitSYV had a total of 120 thirty-second commercials featuring the Santa Ynez Valley air on KEYT and KKFX. Trade Shows Bay Area Travel & Adventure 2016 – VisitSYV had a booth at the Bay Area Travel & Adventure Show in Santa Clara, CA in February 2016. Marketing & Communications Manager, Danielle Laudon, engaged with well over 1,000 consumers over the course of the 2 day show, and distributed 600 SYV Destination Guides. With 17,993 travel enthusiasts in attendance, The Bay Area Travel & Adventure Show was an excellent way to gain engagement and brand awareness in the Bay Area, one of our top two drive markets.

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The Santa Ynez Valley was represented with its very own branded booth and book of appointments with international travel buyers and media at IPW 2016 in New Orleans, Louisiana. VisitSYV Marketing & Communications Manager Danielle Laudon, Greg Corso (Sales, Solvang Conference & Visitors Bureau), and Kathy Vreeland (Executive Director, Buellton

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Visitors Bureau and Chamber of Commerce) represented the Santa Ynez Valley as a single destination at IPW. VisitSYV also partnered with the Solvang Conference & Visitors Bureau, the Buellton Visitors Bureau, Visit Santa Barbara and Santa Barbara County Vintners Association to provide a coordinated effort in bringing visitors to our region. In addition to our SYV booth, we joined forces with these partners to provide Santa Barbara County rosé to our travel buyers and make additional appointments with buyers specifically looking to learn more about our wine region. It was very successful and we’ve already hosted writers from Australia, Portugal and Hungary as an immediate result. With a consistent annual presence at international travel trade shows like IPW, we are confident that the Santa Ynez Valley will become a well-regarded, year-round destination promoted by agencies around the world.

Staff, Board and Member Development

Visit California Travel Outlook

Shelby Sim and Danielle Laudon attended the Visit California Travel Outlook in San Francisco

February 22-24, 2016. VisitSYV staff was able to network with Visit California’s international

representatives, and fostered new relationships with offices in Brazil, Australia and Scandinavia.

Staff also learned about current travel trends and strategies, including brand marketing in the

digital age and attracting/engaging millennial global audiences.

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Central Coast Tourism Council Planning Retreat & Conference

Shelby Sim & Danielle Laudon attended the Central Coast Tourism Council (CCTC) Planning

Retreat Mixer which kicked off the CCTC Retreat & Planning Conference on Monday, March 14,

2016 at Edna Valley Vineyards. Danielle attended the two day retreat and conference following

the mixer, and learned about current tourism trends via Visit California and contributed to

CCTC’s 3 year objectives, including their digital brand strategy. VisitSYV actively participates in

CCTC to learn from fellow Destination Marketing Organizations and also keep the Santa Ynez

Valley top-of-mind in marketing the Central Coast brand.

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TAG Certification Program

On May 23, 2016, VisitSYV partnered with the Solvang Conference & Visitors Bureau and

offered two free TAG (Travel Advocacy Group) Approved diversity training sessions. Attending

either of these training sessions qualified VisitSYV hoteliers to begin TAG Approval certification.

VisitSYV covered attending hoteliers’ first annual certification fee (a $179 value). LGBT travel

generates more than $100 billion each year in the U.S. alone and by sponsoring this program,

SYV tourism and hospitality professionals were empowered to leverage the evolving

demographics and travel behaviors of LGBT consumers to capture increased market share.

Executive Director, Shelby Sim, and Marketing & Communications Manager, Danielle Laudon,

attended both training sessions.

Grants and special projects The purpose of our grants program continues to be to assist with publicity and outreach for valley events which encourage overnight stays. Primary consideration goes to events which occur mid-week (Sunday to Thursday) and/or in off-season. For special projects we award scholarships to Hospitality students and Education programs. These funds in 2016 were awarded to the following; Spirit of The Santa Ynez Valley Education program $6,392 International Wine Film Festival $1,500 Santa Barbara Film Commission $10,000 Awarded two $1,000 Scholarship grants to Allan Handcock Hospitality students $2,000 Solvang CVB Taste of Solvang $3,500 Garagiste Festival $3,000 Santa Barbara Vintners Spring Harvest $4,000 Solvang Festival Theater $5,000 Los Olivos Rotary Jazz and Olive Festival $2,000 Santa Ynez Valley Rotary 4th of July Fireworks $4,000 SYV Artists Guild’s Los Olivos Quick Draw $3,500 Solvang CVB Danish Days $5,000 Los Alamos Valley Men’s Club’s Los Alamos Old Days $3,000 Los Olivos Day in the Country $3,500 People helping People Polo Classic $3,500 SYV Historical Museum Vaquero Show $3,500

24

Solvang CVB Julefest $4,000

11 | P a g e

Los Olivos Olde Fashion Christmas $3,000 For a total of $79,392

Collaborations with Santa Barbara County DMOs and other organizations VisitSYV collaborates actively with other county destination marketing organizations, Solvang CVB, Buellton Visitor Bureau, the Santa Barbara County Vintners Association, LOBO (Los Olivos Business Organization), the Buellton, Solvang, and Santa Ynez Chambers as well as the Santa Barbara Film Commission, The Chumash Foundation, Visit Santa Barbara, Go Goleta, Explore Lompoc, and the Santa Barbra County Association of Governments.

Public comment Members of the board and the Executive Director continue to be called upon to make written and/or verbal public comment on a number of hotel and tourism related issues. Each question is raised on a board agenda and voted upon by the board, or authorized by the president, before comment is made. Ongoing participation with our water challenges, wine ordinance, short term vacation rentals, and special events ordinance hearings as needed by Executive Director Shelby Sim, and, when available, Linda Johansen, President.

Organization In June of 2015, hotel representative, Christine Forsyth of the Ballard Inn (Ballard) stepped down from the board and was replaced by hotel representative, Jim Rice of the Santa Ynez Inn (Santa Ynez). Member representative, Kady Fleckenstein of Figueroa Brewing stepped down from the board and was replaced by member representative Bob Oswaks of Bobs Well Bread & Bakery. The board continues to meet monthly, normally the 2nd Thursday of the month, 9:00 a.m. at The Landsby in Solvang. The board consists of nine individuals, seven of which are from the hotel industry and the other two are an at large representation of the membership base.

25

12 | P a g e

Staff & Board of Directors Executive Director - Shelby Sim Marketing & Communications Manager - Danielle Laudon The board members are: President – Jessy Osehan, Manager, Hamlet Inn, Owner, Atterdag Inn, Solvang Vice President – Linda Johansen, Owner, Pea Soup Andersen Inn, Buellton and King Frederik Inn, Solvang Secretary – Bob Oswaks, Owner, Bob’s Well Bread & Bakery, Los Alamos Treasurer – Bion Rice, Owner/Winemaker, Sunstone Winery, Santa Ynez and Artiste Winery, Los Olivos James Colvin, General Manager, Hotel Corque, Solvang Cammy Pinoli, Director of Guest Services, Fess Parker Wine Country Inn & Spa, Los Olivos Barry Prescott, General Manager, The Landsby, Solvang Randy Pace, General Manager, Sideways Inn, Buellton Jim Rice, General Manager, The Santa Ynez Inn, Santa Ynez

Respectfully submitted by: Shelby Sim, Executive Director Santa Ynez Valley Hotel Association, dba Visit the Santa Ynez Valley [email protected] PO Box 633, Solvang, CA 93464 www.visitsyv.com, 805-325-3528 Please see next two pages for 2016 and 2017 budget information

26

mailto:[email protected]

http://www.visitsyv.com/

13 | P a g e

2016 Budget information

$888,737.23

$7,307.00 $25,336.00

$635.40

$20,625.00

$17,340.00

2016 ACTUAL- INCOME

Income

TBID Funding

County Marketing Grant

Marketing Co-Op

Other Income

Membership

Advertising/Enhancements

$400,777.32

$71,982.06

$50,974.41

$168,872.89

$81,580.00

$6,389.54

$11,518.33

$999.40

$5,303.12

2016 ACTUAL- EXPENSES

Expense

Advertising/Marketing

Special Projects/Promotions

Travel & Meetings

Personnel Costs

Contract Services

Facilities/Equipment

Operations

Credit Card Fees/Bank Fees

27

14 | P a g e

2017 Budget

28

CityofSolvangWarrantRegisterByCheckNumberCityofSolvang

DateRange: 02/01/2017 - 02/28/2017

NumberPaymentDateVendorNumberPaymentTypePaymentAmountVendorNamePayable # PayableTypePayableDatePayableDescriptionPayableAmount

BankCode: APBNK-APBankCodePaymentType: EFT

1079702/06/2017EFT0.001,493.601685Engel & Gray000001796612/22/2016Annualpoforsludgedisposal0.00534.83Invoice000001806501/04/2017Annualpoforsludgedisposal0.00467.68Invoice000001812101/18/2017Annualpoforsludgedisposal0.00491.09Invoice

1024702/06/2017EFT0.00983.871686MoreOfficeSolutions147927701/20/2017CityHall,Parks& PlanningCopiers10/19/10.00983.87Invoice

1003402/06/2017EFT0.0081.621687ReadyRefreshbyNestle17A001803803401/28/2017WWTPWater0.0081.62Invoice

1072302/06/2017EFT0.00658.051688ProcareJanitorialSupply, Inc10694401/27/2017WastewaterJanitorialSupplies0.00222.91Invoice10697301/27/2017HCAJanitorialSupplies0.0016.65Invoice10700401/27/2017Restroom #2JanitorialSupplies0.00418.49Invoice

1090202/06/2017EFT0.00295.941689StaplesAdvantage332792814301/21/2017AdminOfficeSupplies0.0015.18Invoice332792814401/21/2017FinanceOfficeSupplies0.00110.08Invoice332792814501/21/2017RecreationOfficeSupplies0.00170.68Invoice

1067802/06/2017EFT0.0022.001690HeidiSerbusINV000427202/02/2017Reimbursment-Training-FrontDestSafety 0.0022.00Invoice

1132002/06/2017EFT0.002,540.001691RafaelRuizJanitorService084001/30/2017Custodial0.002,540.00Invoice

1000902/13/2017EFT0.001,820.001692CaliforniaCodeCheck, Inc. osSLV17-0201/26/2017OnsiteBldgInspector1/6/17-1/19/170.001,820.00Invoice

1061102/13/2017EFT0.0086.191693FarmSupplyCo2274502/06/2017SunnyFieldsRoundUp0.0086.19Invoice

1005702/13/2017EFT0.00875.001694FGLEnvironmental, Inc. 612909A12/08/2016Inorganic & RadioAnalysis0.00415.00Invoice614121A12/09/2016BactiAnalysis-Colilert0.0040.00Invoice614285A12/13/2016BactiAnalysisQuantiTrayColilert0.0040.00Invoice614286A12/13/2016BactiAnalysis Colilert0.0040.00Invoice614587A12/13/2016BactiAnalysisColilert0.0040.00Invoice614588A12/13/2016BactiAnalysisColiform-S0.0020.00Invoice614921A12/23/2016BactiAnalysisColilert0.0040.00Invoice615286A12/30/2016BactiAnalysisColilert0.0040.00Invoice615514A01/04/2017BactiAnalysisColiform0.0040.00Invoice615515A01/04/2017BactiAnalysisColiform0.0040.00Invoice700093A01/12/2017BactiAnalysisColilert0.0040.00Invoice700408A01/19/2017BactiAnalysisColiform-Colilert0.0040.00Invoice700706A01/30/2017BactiAnalysisColilert0.0040.00Invoice

02/13/2017EFT0.000.001695Void** 1002802/13/2017EFT0.006,600.001696Hanley & Fleishman, LLP

279102/01/2017LegalServices0.006,600.00Invoice

1027602/13/2017EFT0.001,019.001697Infosend, Inc11672001/31/2017UtilityBillPrintingandDistribution0.001,019.00Invoice

1022402/13/2017EFT0.00433.301698ChristopheMillner

3/2/20173:34:28PMPage1of10

2943

CityofSolvangWarrantRegisterDateRange: 02/01/2017 - 02/28/2017

NumberPaymentDateVendorNumberPaymentTypePaymentAmountVendorNamePayable # PayableTypePayableDatePayableDescriptionPayableAmountINV000431201/27/2017KungFuInstruction0.00254.80InvoiceINV000431302/06/2017KungFuInstruction0.00178.50Invoice

1097502/13/2017EFT0.009.741699O'ReillyAutomotiveStores, Inc. dbaO'ReillyAutoParts437231065801/25/2017TRK #618Rep & Maint0.009.74Invoice

1072302/13/2017EFT0.001,553.631700ProcareJanitorialSupply, Inc10707702/01/2017Restroom #1JanitorialSupplies0.00513.97Invoice10707802/01/2017StreetSupplies0.00287.48Invoice10707902/01/2017Restroom #3JanitoiralSupplies0.00204.46Invoice10708002/01/2017VetsHallJanitorialSupplies0.00175.24Invoice10711702/03/2017Restroom #2JanitorialSupplies0.00230.30Invoice10711802/03/2017Restroom #2JanitorialSupplies0.00142.18Invoice

1028102/13/2017EFT0.0045.201701SatcomGlobalFZEAS0217016202/01/2017SIMCard0.0045.20Invoice

1047802/13/2017EFT0.00465.731702StatewideTrafficSafetyandSigns, Inc0300586702/06/2017RoadSupplies0.00465.73Invoice

1025802/13/2017EFT0.00920.001703TheValleyGardener2245512/25/2016Dec2016LandscapeMaint0.00460.00Invoice2255101/25/2017WWTPBankRestora?on - LongTermMai0.00460.00Invoice

1118202/13/2017EFT0.0010.501704UndergroundServiceAlertofSouthernCalifornia12017067802/01/20177Tickets0.0010.50Invoice

1033702/13/2017EFT0.0036,218.351705VisittheSantaYnezValleyDEC201602/09/2017December2016SYVTBID0.0036,218.35Invoice

1068602/13/2017EFT0.00832.651706ZWorldGIS2017-010202/09/2017GISMaint. & Updates0.00832.65Invoice

1061302/21/2017EFT0.00170.001707AdvantageGroup, The9609001/31/2017JanuaryFlexAdmin0.00170.00Invoice

1125702/21/2017EFT0.00232.901708AramarkUniformService53212829301/31/2017Matsandtowels0.00232.90Invoice

1000902/21/2017EFT0.002,205.001709CaliforniaCodeCheck, Inc. osSLV17-0302/09/2017On-SiteBuildingInspector1/20/17-2/2/10.002,205.00Invoice

1127902/21/2017EFT0.0035,900.001710CarolloEngineers, Inc015516202/09/2017Engineering -- Well22UpgradeProject0.0035,900.00Invoice

1016602/21/2017EFT0.001,920.001711ClinicalLabofSanBernardino95479002/13/2017AnnualPOforlabfees0.001,920.00Invoice

1000102/21/2017EFT0.00495.001712DalePena63401/13/2017VideoSVC1/27,2/13,2/27CouncilMee?n0.00495.00Invoice

1079702/21/2017EFT0.00474.041713Engel & Gray000001814301/25/2017Annualpoforsludgedisposal0.00474.04Invoice

1121002/21/2017EFT0.00378.381714HachCompany1031157002/08/2017Chlorine0.00378.38Invoice

1079002/21/2017EFT0.001,144.311715Polydyne, IncI11345602/06/2017AnnalPOforPolydine0.001,144.31Invoice

1132002/21/2017EFT0.002,600.001716RafaelRuizJanitorService084802/13/2017Custodial0.002,600.00Invoice

1014202/21/2017EFT0.003,000.001717SPMaintenanceServices, Inc6082901/31/2017StreetSweeping0.003,000.00Invoice

3/2/20173:34:28PMPage2of10

3044



1090202/21/2017EFT0.00234.611718StaplesAdvantage332889277701/23/2017FinanceDamagedShipmentCredit0.00- 60.16CreditMemo332889277801/23/2017FinanceOfficeSupplies0.0060.16Invoice332889277901/24/2017FinanceOfficeSupplies0.0077.03Invoice332889278001/28/2017FinanceOfficeSupplies0.0049.14Invoice332889278101/24/2017FinanceOfficeSupplies0.0039.95Invoice332889278201/25/2017PlanningOfficeSupplies0.0043.51Invoice332980678802/07/2017FinanceOfficeSupplies0.0024.98Invoice

1004202/21/2017EFT0.0082.251719WesternExterminatorCompany480615001/31/2017VetsHallJanuary0.0082.25Invoice

1000902/27/2017EFT0.007,969.801720CaliforniaCodeCheck, Inc. SLVG16-2110/01/2016PlanCheckElverhoyMuseum0.00440.00InvoiceSLVG17-0202/01/2017PlanReview0.007,529.80Invoice

1007602/27/2017EFT0.003,088.601721CannonAssociates6287301/31/2017Reservoir2Repairs & Recoa?ng - EngrgW0.003,088.60Invoice

1019502/27/2017EFT0.001,666.661722CityofLompocFinanceDept. 9702402/14/2017WineCountryExpress0.001,666.66Invoice

1054902/27/2017EFT0.00853.851723Level3Communications5208018902/17/2017T-1line0.00853.85Invoice

1022402/27/2017EFT0.0030.101724ChristopheMillnerINV000435902/15/2017KungFuInstruction0.0030.10Invoice

1072302/27/2017EFT0.001,612.201725ProcareJanitorialSupply, Inc10743902/17/2017Restroom #1JanitorialSupplies0.00498.32Invoice10744002/17/2017CityHallJanitorialSupplies0.00110.79Invoice10744102/17/2017VetsHallJanitorialSupplies0.00228.17Invoice10744202/17/2017Street-CansSupplies0.00179.67Invoice10744802/17/2017Restroom2JanitorialSupplies0.00490.69Invoice10744902/17/2017Restroom2JanitorialSupplies0.00104.56Invoice

9125702/27/2017EFT0.0037.881726Richardson, JimINV000436002/18/2017SBCAGBoardMeeting0.0037.88Invoice

1047802/27/2017EFT0.00210.071727StatewideTrafficSafetyandSigns, Inc0300597702/22/2017RoadSupplies-Aquaphalt0.00210.07Invoice

TotalEFT: 121,270.02

3/2/20173:34:28PMPage3of10

3145


NumberPaymentDateVendorNumberPaymentTypePaymentAmountVendorNamePayable # PayableTypePayableDatePayableDescriptionPayableAmountPaymentType: Regular

5184002/02/2017Regular0.00- 100.0033081SANCHEZ, SERGIO1099102/06/2017Regular0.0060.6734181A-OKPowerEquipment

23141201/24/2017HCARep & Maint0.0018.72Invoice23157901/25/2017StreetTreesRep & Maint0.0041.95Invoice

1061402/06/2017Regular0.004,413.7534182Autosys, Inc. 100601/30/2017FjordLiftStationRepair0.004,413.75Invoice

1007002/06/2017Regular0.00819.0434183Cal-CoastIrrigation77110701/18/2017Reservoir2RepairProject0.00589.80Invoice77110901/18/2017Reservoir2RepairProject0.00229.24Invoice

1065502/06/2017Regular0.0013.2134184Comcast81551/20/1701/20/201781557000500092410.0013.21Invoice

1136502/06/2017Regular0.00313.5234185FrontierCommunications69971/19/1701/19/2017805-688-6997-072877-50.00257.41Invoice74591/25/1701/25/2017805-688-7459-060995-50.0056.11Invoice

1014802/06/2017Regular0.0087.9034186GemplersSI0313275401/25/2017NathanUniform0.0087.90Invoice

1008102/06/2017Regular0.0026.6834187HarrisonHardware36692201/03/2017CityHallRep & Maint0.006.40Invoice36764101/11/2017Rep #6250.0018.34Invoice36832901/19/2017StreetTreesSupplies0.001.94Invoice

1002702/06/2017Regular0.001,997.9234188LompocExcelPersonnelSvsInc216311101/19/2017JennyBranson & GailOcheltreePE1/130.001,997.92Invoice

1118702/06/2017Regular0.00254.0034189Nu-TechPestManagement012442101/27/2017SunnyFieldGophers0.00125.00Invoice012468901/24/2017HCAGroundSquirrels0.00129.00Invoice

1029902/06/2017Regular0.0073.6334190PraxairDistribution, Inc. 7587723501/23/2017IndustrialAcetone-WWTP & CO2WTRSh0.0073.63Invoice

1030502/06/2017Regular0.0010,195.7534191S.B.C. PublicHealthDept. QTR2FY16/1701/24/2017AnimalServices10/1/16-12/31/160.0010,195.75Invoice

1117902/06/2017Regular0.00261.4134192ToddPipe & Supply648407-101/31/2017Restroom #1Rep & Maint0.00261.41Invoice

1067402/06/2017Regular0.0013,656.2534193WestCoastIndustrialCoatingsInc. 101/26/2017Reservoir2Repair & Recoating0.0013,656.25Invoice

1080002/06/2017Regular0.0027,655.1934194XylemWaterSolutionsUSA, Inc355693957701/18/2017Fjordpump #1rebuild0.0027,655.19Invoice

1116702/06/2017Regular0.00855.7934198SantaYnezValleyHardwareJan201701/31/2017JanuaryPurchases0.00855.79Invoice

5184002/03/2017Regular0.00100.0034200SANCHEZ, SERGIOINV000336506/14/2016DEPOSITREFUND6/11/160.00100.00Invoice


1120202/06/2017Regular0.0036,114.0034202SantaYnezCommunityServiceDistrict2015/16WWTP02/06/20172015/16WWTPBilling0.0036,114.00Invoice

1099102/13/2017Regular0.0064.6534214A-OKPowerEquipment23317301/31/2017HCA & CommonAreasSpeedFeed0.0064.65Invoice

1007302/13/2017Regular0.001,735.1334215BuellflatRockCo, Inc

3/2/20173:34:28PMPage4of10

3246


NumberPaymentDateVendorNumberPaymentTypePaymentAmountVendorNamePayable # PayableTypePayableDatePayableDescriptionPayableAmount118801/26/2017JanuaryFuel0.001,272.54Invoice9361501/31/2017WTR & RoadsConcrete & Rock0.00462.59Invoice

1119002/13/2017Regular0.00173.7734216CalNativedbaWindmillNursery20179602/03/2017VetsHallPlants0.00173.77Invoice

1122502/13/2017Regular0.0076.0034217CleanMachineLaundromat23126601/23/2017SolvangPark8Lbs0.008.00Invoice23127801/27/2017VetsHall8Lbs0.008.00Invoice23128501/30/2017SunnyField8Lbs0.008.00Invoice23128601/30/2017Restroom #116Lbs0.0016.00Invoice62203001/09/20178lbsSunnyFields0.008.00Invoice62203101/09/2017Restroom #316Lbs0.0016.00Invoice62205001/17/2017SunnyField12Lbs0.0012.00Invoice

1065502/13/2017Regular0.00106.0134218Comcast58981/28/1701/28/2017Acc# 81557000501258980.00106.01Invoice

1019702/13/2017Regular0.004,175.1234219CountyofSantaBarbaraGEN112016-3002/03/2017Election-Mayor0.002,750.32InvoiceGEN112016-3102/03/2017Election - CityCouncilMember0.001,424.80Invoice

1019702/13/2017Regular0.00- 4,175.1234219CountyofSantaBarbara1003702/13/2017Regular0.001,852.0834220CushmanContractingCorp.

601/20/2017AlisalBridgeSeismicRetrofitProject0.001,852.08Invoice

1123302/13/2017Regular0.00498.0034221DepartmentofJustice21538502/03/2017JanuaryFingerprints0.00498.00Invoice

1132402/13/2017Regular0.0035.0034222FoodbankofSantaBarbaraCo. INV000431502/08/2017VOADMembership1/2017-12/20170.0035.00Invoice

1136502/13/2017Regular0.00101.5034223FrontierCommunications19982/1/1702/01/2017Acc# 805-686-1998-110309-50.00101.50Invoice

1136502/13/2017Regular0.0048.1634224FrontierCommunications29001/28/1701/28/2017805-688-2900-110481-50.0048.16Invoice

1042902/13/2017Regular0.001,213.2134225GreenscapesLandscapingInc. 547202/03/2017sodreplacementatSunnyFields0.001,213.21Invoice

1008302/13/2017Regular0.002,100.0034226InnerNature1133201/31/2017Cityplanters0.002,100.00Invoice

1112102/13/2017Regular0.003,604.7034227Jones & Jones, LLP1202/04/2017FireDeptartmentAddi?on12/1/16-1/31/ 0.003,604.70Invoice

1005302/13/2017Regular0.00774.7434228Lautzehhiser'sStationery1192802/06/2017Minute/ResolutionBookOrder0.00774.74Invoice

1090602/13/2017Regular0.00150.0034229LeagueofCaliforniaCities162902/01/2017ChannelCoun?esDiv2017Membership 0.00150.00Invoice

1089502/21/2017Regular0.00- 130.4934230LeeCentralCoastNewspaper1089502/13/2017Regular0.00130.4934230LeeCentralCoastNewspaper

96454-101/29/2017ValleyPlazaShoppingCenterPublicHeari0.00130.49Invoice

1002702/13/2017Regular0.001,775.9234231LompocExcelPersonnelSvsInc216836701/26/2017JennyBranson & GailOcheltreePE1/20/10.001,775.92Invoice

1117102/13/2017Regular0.0010.7334232MadHatter47862/3/1702/03/2017JorgeUniform0.0010.73Invoice

1060702/13/2017Regular0.00390.0034233MillerEventManagement06072302/08/2017VetsHallSecurity12/10/160.00390.00Invoice

3/2/20173:34:28PMPage5of10

3347



1112602/13/2017Regular0.00358.3134234MissionReadyMix5951302/01/2017WaterRep & Maint0.00358.31Invoice

1012002/13/2017Regular0.00835.9334235NeweggBusiness, Inc. 120328143402/02/2017ASUSLaptopPSeriesP2430UA-XH530.00812.35Invoice120328145402/05/2017RyanToussaintLaptop0.0023.58Invoice

1113302/13/2017Regular0.00116.7834236Nielsen'sMarket0312210901/24/2017WWTPSupplies0.0034.35Invoice0409324001/25/2017EOCProvisions0.0047.31Invoice0516703201/06/2017TreeBurn0.0035.12Invoice

1138102/13/2017Regular0.0038,019.4834237RoadrunnerManagementServices, Inc. 544302/06/2017SYVTOperationsContract0.0033,607.38Invoice545302/06/2017January2017FuelReimbursment0.004,412.10Invoice

1003302/13/2017Regular0.004,246.4734238S.Y.R.W.C.D. ID #100011/31/1701/31/2017900AlamoPintado0.00256.49Invoice50011/19/1701/31/2017170050011890OldMillRd0.002,455.55Invoice75011/31/1701/31/2017AlamoPintadoRd0.001,534.43Invoice

1000402/13/2017Regular0.00132.0434239SantaBarbaraCoSheriffDept7842-43533602/07/20171/20/17LateReportCase0.00132.04Invoice

1122702/13/2017Regular0.00819.8534240SantaMariaTire, Inc01-51850CDT12/01/2016Inv#108652DBLpaymentCredit0.00- 620.96CreditMemo11072301/23/2017TiresSYVT#9770.00260.97Invoice11072401/23/2017SYVT #976Tires0.001,179.84Invoice

1121702/13/2017Regular0.00115.0034241StateofCalifornia4121102/08/2017BradVidroLicenseRenewal0.00115.00Invoice

1117902/13/2017Regular0.0074.6234242ToddPipe & Supply33173402/01/2017RoadsRep & Maint0.0074.62Invoice

1066102/13/2017Regular0.004,200.0034243WaterConsultancy, Inc. 24502/01/2017WellheadWaterSofteningConceptStudy0.004,200.00Invoice

5185102/15/2017Regular0.00219.2034249SUNRUNINCINV000435402/14/2017SUNRUNINC0.00219.20Invoice

1113602/15/2017Regular0.0089.1234250PettyCashINV000435602/15/2017AdminPettyCash0.0089.12Invoice

1099102/21/2017Regular0.00510.4934251A-OKPowerEquipment23562602/10/2017HCARotaryHammer0.00401.90Invoice23575902/10/2017HCASmallTools0.00108.59Invoice

1115502/21/2017Regular0.002,603.8634252Baker, Manock & Jensen41727202/10/2017EnvironmentalImpactReport0.002,603.86Invoice

1098602/21/2017Regular0.006,070.3734253BartleWellsAssociates1006E02/10/2017Water & WastewaterRateStudies0.006,070.37Invoice

1055302/21/2017Regular0.004,291.0034254BrightViewLandscapeServices522641301/10/2017LLMDLandscapeMaintenance0.004,291.00Invoice

1119002/21/2017Regular0.00348.1634255CalNativedbaWindmillNursery20196902/10/2017HCAPlants0.00348.16Invoice

1007002/21/2017Regular0.00794.1434256Cal-CoastIrrigation771109CDT01/18/2017WaterDeptReturn0.00- 229.24CreditMemo77124102/07/2017FjordBypassriserpipecustommade0.001,252.62InvoiceCM000014402/14/2017OverpaymentofCDTInv#7711090.00- 229.24CreditMemo

1065502/21/2017Regular0.0086.0634257Comcast

3/2/20173:34:28PMPage6of10

3448


NumberPaymentDateVendorNumberPaymentTypePaymentAmountVendorNamePayable # PayableTypePayableDatePayableDescriptionPayableAmount81552/5/1702/05/201781557000502281550.0086.06Invoice

1046702/21/2017Regular0.00126.6134258DellaValleEmbroidery136302/13/2017JorgeUniformEmbroidery0.00126.61Invoice


1126202/21/2017Regular0.00107.7534260GraphicSystems6894501/12/2017DoorHangers0.00107.75Invoice

1053002/21/2017Regular0.003,360.0034261GSIWaterSolutions0662.001-602/03/2017RiverWellsPermitHydrogeologyTechAss0.003,360.00Invoice

1018002/21/2017Regular0.001,018.7734262Jim'sServiceCenterJan201702/01/2017January2017Fuel0.001,018.77Invoice

1002702/21/2017Regular0.002,212.7634263LompocExcelPersonnelSvsInc217363802/02/2017JennyBranson & GailOcheltreePE1/270.002,212.76Invoice

1004602/21/2017Regular0.00129.5034264Lunde'sSolvangAutoRepair00676302/06/2017RepTRK#6130.0064.75Invoice00678002/06/2017Rep #6220.0064.75Invoice

1118702/21/2017Regular0.00332.0034265Nu-TechPestManagement012495702/07/2017AnnexAnts & Roaches0.0078.00Invoice012521802/13/2017HCAGroundSquirrels0.00129.00Invoice012527002/10/2017SunnyfieldGophers0.00125.00Invoice

1068202/21/2017Regular0.003,575.0034266RegionalGovernmentServicesAuthority672702/13/2017CompensationStudy0.003,575.00Invoice

1017402/21/2017Regular0.00932.0234267RoyalWholesaleElectric7842-43525602/06/2017boxandsuppliesforwetwellatfjord0.00840.86Invoice7842-43533602/07/2017WWTPSupplies0.0091.16Invoice

1117902/21/2017Regular0.0016.9034268ToddPipe & Supply33222802/09/2017RoadSupplies0.0012.48Invoice332287-102/10/2017RoadsSupplies0.004.42Invoice

1021402/21/2017Regular0.00482.5734269USABlueBook17644702/08/2017WWTPSupplies0.00482.57Invoice

9125802/21/2017Regular0.00276.2234270BradVidroINV000435502/14/2017LeagueofCACi?es-CtyMngrDeptMee? 0.00276.22Invoice

5018902/21/2017Regular0.0070.0034275RyanAbbottINV000435802/21/20172-MoxiMuseumTripCancella?onRefund0.0070.00Invoice

1070002/27/2017Regular0.00295.0034279Mr. RooterPlumbingoftheCentralCoast2877502/13/2017HCAVideoInspection0.00295.00Invoice

1006602/27/2017Regular0.001,120.6034280AccentsbyLaura72102/16/2017Four (4) IronColorFiberglassOutdoorPla0.001,120.60Invoice

1061402/27/2017Regular0.006,365.0034281Autosys, Inc. 101102/15/2017ProgramDenitCycleinSCADAandreplac0.006,365.00Invoice


1114502/27/2017Regular0.00317.6434283FergusonEnterprises, Inc431653402/16/2017FjordLiftstationPartsforBypass0.00128.51Invoice431656802/13/2017FjordLiftstationBypassLine0.00189.13Invoice

1000802/27/2017Regular0.00500.0034284FirstAmericanTitleCo.

3/2/20173:34:28PMPage7of10

3549


NumberPaymentDateVendorNumberPaymentTypePaymentAmountVendorNamePayable # PayableTypePayableDatePayableDescriptionPayableAmount4205-534816602/14/2017PrelimReport900AlamoPintado0.00500.00Invoice

1136502/27/2017Regular0.00137.1934285FrontierCommunications55752/13/1702/13/2017Acc# 805-688-5575-062171-50.00137.19Invoice


1123702/27/2017Regular0.0020,374.3034287HanlyGeneralEngineeringCorp150102/15/2017FredensborgCynRd - AdobeCrkStabiliza0.0016,500.00Invoice150202/16/2017EmergencyassistanceforFjordli? sta?on 0.001,984.30Invoice150302/15/2017RepairbrokenValveonWillowStreet0.001,890.00Invoice

1002702/27/2017Regular0.002,291.5234288LompocExcelPersonnelSvsInc217900402/09/2017JennyBranson & GailOcheltreePE2/3/170.002,291.52Invoice

1069702/27/2017Regular0.00405.0034289MenvegPropertiesLLCMarchRent02/22/2017MarchTransitRent0.00405.00Invoice

1112802/27/2017Regular0.00237.0634290NielsenBuildingMaterial54466212/29/2016StreetMaintSupplies0.004.08Invoice54521001/04/2017WasteWaterSmallEq-KeylessChuck0.0037.38Invoice54787901/19/2017ConcreteforRoadRep & Maint0.005.27Invoice54819301/23/2017WasteWaterTape0.0017.97Invoice54965501/31/2017RoadSupplies0.0015.06Invoice55159002/09/2017FjordLiftStationBypass0.0057.51Invoice55265602/16/2017SandBags0.00206.21InvoiceCM000012301/04/2017Inv #539189DoublePaymentCredit0.00- 106.42CreditMemo

1113702/27/2017Regular0.00109.5234291PacificGas & ElectricCompany0769-62/12/1702/12/20174922450769-60.00109.52Invoice

1113702/27/2017Regular0.0026,875.4934292PacificGas & ElectricCompany5526-12/14/1702/14/2017Acc# 3982645526-10.004,814.49Invoice7582-52/16/1702/16/2017Acc# 0408007582-50.0022,061.00Invoice

1000402/27/2017Regular0.00130,385.0034293SantaBarbaraCoSheriffDept17-19802/17/2017March2017ContractServices0.00130,385.00Invoice

1114602/27/2017Regular0.00180.0034294SolvangChamberofCommerceINV000438502/22/20174TicketsEconomicVitalityAnnualMee?n0.00180.00Invoice

1117602/27/2017Regular0.00170.9634295TheGasCompany941062/16/1702/16/2017188514941060.00170.96Invoice

1117602/27/2017Regular0.00420.4334296TheGasCompany950002/16/1702/16/2017Acc# 098214950000.00420.43Invoice

1117602/27/2017Regular0.00272.9934297TheGasCompany250072/21/1702/21/2017194215250070.00272.99Invoice

1117902/27/2017Regular0.00109.2234298ToddPipe & Supply33249602/15/2017FjordLiftStationStillWells0.0059.31Invoice649225-102/16/2017StreetRep & Maint0.0049.91Invoice

1133702/27/2017Regular0.00900.0034299UC Regents - EFP11902/14/20172017CorporateSponsorship0.00900.00Invoice

1022302/27/2017Regular0.00583.2934300UnitedRentals144151158-00102/16/2017RentalforFjordLiftStationBypass0.00583.29Invoice

1021402/27/2017Regular0.00170.7934301USABlueBook18106302/14/2017WWTPSupplies0.00170.79Invoice

1135102/27/2017Regular0.0017,297.3034302ValiCooper & Associates, Inc

3/2/20173:34:28PMPage8of10

3650


NumberPaymentDateVendorNumberPaymentTypePaymentAmountVendorNamePayable # PayableTypePayableDatePayableDescriptionPayableAmount160007A0011102/10/2017AlisalSeismicRetrofitConMangServices0.0017,297.30Invoice

9067502/27/2017Regular0.0033.1734303MattvanderLindenINV000438402/17/2017DroughtTaskForceMeetingFuelReimb. 0.0033.17Invoice

1099902/24/2017Regular0.004,313.7934307PlatinumPlusforBusinessdbaBusinessCardINV000438602/24/2017JanuaryPurchases0.004,313.79Invoice

1112802/27/2017Regular0.0021.9734308NielsenBuildingMaterial54619401/10/2017WWTPRep & Maint0.0021.97Invoice

TotalRegular: 402,513.30

BankCodeAPBNKSummaryPaymentPayable

CountCountPaymentTypeDiscountPaymentRegularChecks140980.00406,918.91ManualChecks000.000.00VoidedChecks030.00- 4,405.61BankDrafts000.000.00EFT's79430.00121,270.02

2191440.00523,783.32

3/2/20173:34:28PMPage9of10

3751


FundSummaryFundNamePeriodAmount998POOLEDCASH2/2017523,783.32

523,783.32

3/2/20173:34:28PMPage10of10

3852

CITY COUNCIL

STAFF REPORT/CONSENT AGENDA

TO: SOLVANG CITY COUNCIL MEMBERS FROM: Roy A. Hanley, City Attorney MEETING DATE: March 13, 2017 DATE PREPARED: March 6, 2017

53

SUBJECT: SECOND READING OF PROPOSED AMENDMENTS TO THE SOLVANG MUNICIPAL CODE REGARDING PARKING DISTRICTS, EMERGENCY MANAGEMENT AND VARIOUS OTHER CODE AMENDMENTS

_____________________________________________________________________________

I. RECOMMENDATION:

Adopt on second reading by title only the following three ordinances: 1. Ordinance No. 17-xxx minor edits to Municipal Code Title 1 Chapter3 sections 1

and 6F; Title 1 Chapter 4 sections 2E, 5B, 5D, 7 and 11C; and Title 9 section 2C-2J.

2. Ordinance 17-xxx amending the Municipal Code in regards to Emergency Management.

3. Ordinance 17-xxx deleting references to a Parking District in Solvang. II. BACKGROUND:

These matters have had much discussion at the City Council. The Council first had a discussion item regarding proposed changes to the Solvang Municipal Code and gave Staff direction on which items deserved immediate attention,, which items to work into an overall work plan for Staff, the Planning Commission and the City Council, and specified which items it did not wish to review. These items needing immediate attention were brought back for first reading at the most recent regular City Council meeting.

39

III. DISCUSSION:

These three items are now before the City Council for adoption on second reading. If any changes are made at this meeting, this will constitute a new first reading and staff will bring the item back for second reading at a future regular meeting of the City Council.

IV. ALTERNATIVES:

The City Council is not legally mandated to make these changes. However, staff does recommend them.

V. FISCAL IMPACT:

None.

VI. ATTACHMENTS:

1. Three City Council Ordinances 17-next in order

4054

ORDINANCE NO. 17-___

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SOLVANG AMENDING SOLVANG CITY CODE IN MULTIPLE AREAS

WHEREAS, the City Council of the City of Solvang has recently completed a review of the entire Municipal Code for the purposes of bringing outdated code sections up to date, clearing up potential enforceability issues, and making sure policy direction in the code matched the policy determinations of this City Council;

NOW, THEREFORE, THE PEOPLE OF THE CHARTERED CITY OF SOLVANG DO ORDAIN AS FOLLOWS:

The City Council of the City of Solvang hereby approves the amendments to Title 1, Chapter 3 sections 1 and 6F; Title 1 Chapter 4 sections 2E, 5B, 5D, 7 and 11C, and Title 9-2C-2J of the Solvang City Code (attached hereto as Exhibit A and included as though fully set forth at this point).

Section One. Effective Date:

This ordinance shall be in full force and shall take effect thirty (30) days after its passage.

Section Two. Publication:

Solvang is a Charter City and has adopted its own rules for summarizing and posting ordinances once they are adopted. A summary of this ordinance will be prepared by the City Attorney. The summary will be posted in three locations after adoption as directed in the Solvang Municipal Code. A true and correct copy of the full ordinance together with a record of the vote of each council member shall be kept by the City Clerk.

Section Three. Exemptions From CEQA.

The City Council finds, pursuant to Title 14 of the California Code of Regulations, section 15061 (b)(3), that this ordinance is exempt from the requirements of the California Environmental Quality Act (CEQA) in that it is not a project, which has the potential for causing a significant effect on the environment.

PASSED, APPROVED, AND ADOPTED by the City Council of the City of Solvang on this 13th day of March, 2017 by the following vote:

BY: Jim Richardson, Mayor

4155

ATTEST:

Lisa S. Martin, City Clerk

STATE OF CALIFORNIA )

COUNTY OF SANTA BARBARA )

CITY OF SOLVANG )

I, Lisa S. Martin, City Clerk of the City of Solvang, do herby certify that the foregoing Ordinance had its first reading on February 27, 2017 and was adopted on second reading on March 13, 2017 by the following vote:

AYES: COUNCILMEMBERS:

NOES: COUNCILMEMBERS

ABSENT: COUNCILMEMBERS

ABSTAIN: COUNCILMEMBERS

BY: Lisa S. Martin, City Clerk

Exhibit A: Text amendments to City Code: as identified

4256

Exhibit A

1-3-1: VIOLATION OR NONCOMPLIANCE; GENERAL PENALTY: It is unlawful for any person to violate any provision of, or to fail to comply with, any requirements of this code. Any person violating the provisions or failing to comply with any of the mandatory requirements of this code shall be guilty of an infraction or misdemeanor. All violations may be prosecuted by city authorities in the name of the people of the state, or redressed by civil action. Where such violations are specified by this code to be a misdemeanor the City Attorney may nevertheless elect to have the violation prosecuted as an infraction.Except where a violation is specifically designated as a misdemeanor, the violation shall be an infraction. 1-3-6: CITATION PROCEDURES: F. Arrest Warrant Issuance: No warrant shall be issued for the arrest of a person except as provided for by State Law 1-4-2: MEETINGS: E. Quorum: Three (3) members of the city council shall constitute a quorum for the transaction of business. Motions may be passed by a majority if only three (3) attend, but ordinances, resolutions and payment of money require at least three (3) affirmative votes. Less than a quorum may adjourn from time to time. Where there is no quorum, the mayor, mayor pro tempore or any member of the city council may adjourn, or if no member of the city council is present, the city clerk shall adjourn such meeting. For the purpose of considering any item which is subject to the vote of the city council, when a member disqualifies himself due to conflict of interest, his presence shall not be considered in determining the presence of a quorum. If by such disqualification a quorum is not present, consideration of such items shall be deferred until a quorum of noninterested council members are present to discuss and vote on the matter. 1-4-5: CONSENT CALENDAR: B. Ordinance Approval On First Reading: Whenever an ordinance appears for first reading on the consent calendar and the consent calendar shall be approved by unanimous vote, such ordinance shall be deemed to have been approved as read by title only. D. Reading By Title: Prior to the vote on the consent calendar, if so directed by the mayor, the city clerk shall read by title each and every ordinance on the consent calendar which has not been requested to be read in full, or which has not been dropped from the entire agenda.

Comment [JD1]: Deleted granting franchises

Comment [JD2]: Deleted “and passed for second reading”

Comment [JD3]: Added “if so directed by the mayor”

4357

mailto:?subject=Solvang%20Code%20Regulations&body=Below%20is%20a%20link%20to%20the%20City%20code%20which%20contains%20the%20information%20you%20requested.%250D%250Ahttp%253A%252F%252Fwww.sterlingcodifiers.com%252Fcodebook%252Findex.php%253Fbook_id%253D701%2526chapter_id%253D52687%2523s482842�

1-4-7: SPEAKING AT AND ADDRESSING THE CITY COUNCIL: A. Gaining The Floor: 1. Council Members: Every council member desiring to speak shall first address the chair and gain recognition by the presiding officer. Such member shall confine himself to the question under debate, and should avoid reference to character and indecorous language. Every council member desiring to question the city staff shall, after recognition by the presiding officer, address his questions to the city manager or city attorney, who shall then be entitled to answer either for himself or designate a member of the staff for that purpose. 1-4-11: RULES OF DEBATE: C. Informal Procedures: In the event of the use of informal procedures by the city council or the failure of the city council to act strictly in accordance with "Rosenberg’s Rules Of Order", such rules shall be deemed waived by all council members, unless a council member expresses his objections at the time when such matter is pending. 9-2C-2: TYPES OF WASTES PROHIBITED: J. Any salt from water softening devices utilizing salt in the regeneration process, except for regeneration systems permitted in residential property.

Comment [JD4]: Added should and changed avoiding to avoid

58

Comment [JD5]: Changed “Robert’s” to “Rosenberg’s” and deleted “or the table of rules mentioned in subsection B of this section”

Comment [JD6]: Added the exception for permitted systems on residential property

44

ORDINANCE NO. 17-_____

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SOLVANG, AMENDING SOLVANG CITY CODE IN REGARDS TO EMERGENCY

MANAGEMENT

WHEREAS, the City Council of the City of Solvang has recently completed a review of the entire Municipal Code for the purposes of bringing outdated code sections up to date, clearing up potential enforceability issues, and making sure policy direction in the code matched the policy determinations of this City Council and has determined that the sections governing emergency management needed to be updated to reflect changes in policy and law since 1985;

NOW, THEREFORE BE IT ORDAINED BY THE PEOPLE OF THE CHARTERED CITY OF SOLVANG that the City Council hereby modifies Title 2 Chapter 3 of the Municipal Code to read as set forth in Exhibit A attached hereto and incorporated herein as though set forth at this point.








4559

BY:

Jim Richardson, Mayor

ATTEST:




CITY OF SOLVANG )


AYES:

NOES:

ABSENT:

ABSTAIN:

BY:

60


46

Chapter 3 EMERGENCY MANAGEMENT 2-3-1: PURPOSE: The declared purposes of this chapter are to provide for the preparation and carrying out of plans for the protection of persons and property within this city in the event of an emergency, the direction of the emergency organization and the coordination of the emergency functions of this city with all other public agencies, corporations, organizations and affected private persons. 2-3-2: DEFINITIONS: EMERGENCY: The actual or threatened existence of conditions of disaster or of extreme peril to the safety of persons and property within the city caused by such conditions as air pollution, fire, flood, storm, epidemic, riot or earthquake or other conditions, including conditions resulting from war or imminent threat of war, but other than conditions resulting from a labor controversy, which conditions are or are likely to be beyond the control of the services, personnel, equipment and facilities of the city, requiring the combined forces of other political subdivisions to combat. 2-3-3: DISASTER COUNCIL: A. Membership: The disaster council is hereby created and shall consist of the following: 1. The mayor of the city who shall be chair. 2. The director of emergency services who shall be vice chair. 3. The coordinator of emergency services. 4. Such chiefs of emergency services as are provided for in a current emergency plan of the city, adopted pursuant to this chapter. 5. Such other persons having an official emergency responsibility, as may be appointed by the city council.

61

Comment [JD1]: CHANGED SERVICES TO MANAGEMENT

47

the city council, emergency and mutual aid plans and agreements and such chapters and resolutions and rules and regulations as are necessary to implement such plans and agreements. The disaster council shall meet upon call of the chair or, in his absence from the city or inability to call such meeting, upon call of the vice chair. (Ord. 85-21, 10-10-1985)

62

A. Offices Created: 1. There is hereby created the office of the director of emergency services. The city manager shall be the director of emergency services. 2. There is hereby created the office of Emergency Operations Center Manager of coordinator of emergency services, who shall be appointed by the director. B. Powers And Duties: 1. The director is hereby empowered to: a. Request the city council to proclaim the existence or threatened existence of a local emergency if the city council is in session, or to issue such proclamation if the city council is not in session. Whenever a local emergency is proclaimed by the director, the city council shall take action to ratify the proclamation within tenseven (107) days thereafter or the proclamation shall have no further force or effect. b. Recommend that the mayor of the city request the governor to proclaim a state of emergency when, in the opinion of the director, the locally available resources are inadequate to cope with the emergency. c. Control and direct the effort of the emergency organization of this city for the accomplishment of the purpose of this chapter. d. Direct cooperation between and coordination of services and staff of the emergency organization of this city and resolve questions of authority and responsibility that may arise between them. e. Represent this city in all dealings with public or private agencies on matters pertaining to emergencies as defined herein. f. In the event of the proclamation of a local emergency, as herein

48

provided, the proclamation of a state of emergency by the governor or the director of the state office of emergency services, or the existence of a state of war emergency, the director is hereby empowered: (1) To make and issue rules and regulations on matters reasonably related to the protection of life and property as affected by such emergency; provided, however, such rules and regulations must be confirmed at the earliest practicable time by the city council. (2) To obtain vital supplies, equipment and such other properties found lacking and needed for the protection of life and property and to bind the city for the fair value thereof and, if immediately required, to commandeer the same for public use; (3) To require emergency services of any city officer or employee and, in the event of the proclamation of a state of emergency in the city or the existence of a state of war emergency, to command the aid of as many citizens of this city as he deems necessary in the execution of his duties; such persons shall be entitled to all privileges, benefits and immunities as are provided by state law for registered disaster service workers; (4) To requisition necessary personnel or material of any city department or agency; and (5) To execute all of his ordinary power as administrative officer, all of the special powers conferred upon him by this chapter or by resolution or emergency plan pursuant hereto adopted by the city council, all powers conferred upon him by any statute, by any agreement approved by the city council, and by any other lawful authority. g. The director of emergency services shall designate the order of succession to that office, to take effect in the event the director is unavailable to attend meetings and otherwise perform his duties during an emergency. Such order of succession shall be approved by the city council. 2. The Emergency Operations Center Manager coordinator of emergency services shall, under the supervision of the director and with the assistance of emergency service chiefs, develop emergency plans and manage the emergency programs of this city; and shall have such other powers and duties as may be assigned by the director. 2-3-45: EMERGENCY ORGANIZATION:

4963

All officers and employees of this city, together with those volunteer forces enrolled to aid them during an emergency, and all groups, organizations and persons who may by agreement or operation of law, including persons impressed into service under the provisions of subsection 2-3-4B1f(3) of this chapter, be charged with duties incident to the protection of life and property in this city during such emergency, shall constitute the emergency organization of the city. 2-3-56: EMERGENCY MANAGEMENT PLAN: The disaster counDirector of Emergency Servicescil shall be responsible for the development of the emergency plan, which plan shall provide for the effective mobilization of all of the resources of this city, both public and private, to meet any condition constituting a local emergency, state of emergency or state of war emergency; and shall provide for the organization, powers and duties, services and staff of the emergency organization. Such plan shall take effect upon adoption by resolution of the city council. 2-3-67: EXPENDITURES: Any expenditures made in connection with emergency activities, including mutual aid activities, shall be deemed conclusively to be for the direct protection and benefit of the inhabitants and property of the city. 2-3-78: VIOLATIONS; PENALTY: It shall be a misdemeanor, punishable as provided in section 1-3-3 of this code, for any person, during a state of war emergency, state of emergency or local emergency to: A. Wilfully obstruct, hinder or delay any members of the emergency organization in the enforcement of any lawful rule or regulation issued pursuant to this chapter, or in the performance of any duty imposed upon him by virtue of this chapter.

6450

http://www.sterlingcodifiers.com/codebook/getBookData.php?ft=3&find=2-3-4B1

http://www.sterlingcodifiers.com/codebook/getBookData.php?ft=3&find=1-3-3

B. Do any act forbidden by any lawful rule or regulation issued pursuant to this chapter if such act is of such a nature as to give or be likely to give assistance to the enemy, or to imperil the lives or property of inhabitants of this city, or to prevent, hinder or delay the defense or protection thereof. C. Wear, carry or display, without authority, any means of identification specified by the emergency agency of the state.

5165

5266

ORDINANCE NO. 17-_____

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SOLVANG, AMENDING SOLVANG CITY CODE IN REGARDS TO PARKING DISTRICTS

WHEREAS, the City Council of the City of Solvang has recently completed a review of the entire Municipal Code for the purposes of bringing outdated code sections up to date, clearing up potential enforceability issues, and making sure policy direction in the code matched the policy determinations of this City Council and has determined that the sections governing a parking district needed to be updated to reflect that the parking district no longer exists;

NOW, THEREFORE BE IT ORDAINED BY THE PEOPLE OF THE CHARTERED CITY OF SOLVANG that the City Council of the City of Solvang hereby modifies Title 8 Chapter 7 of the Municipal Code to read as set forth in Exhibit A attached hereto and incorporated herein as though set forth at this point and to make minor modifications to Title 11 chapters 7A, 7B, and 11-7 as set forth in Exhibit B attached hereto and incorporated herein as though fully set forth at this point.








5367

BY:

Jim Richardson, Mayor

ATTEST:




CITY OF SOLVANG )


AYES:

NOES:

ABSENT:

ABSTAIN:

BY:

Lisa Martin, City Clerk


5468

CHAPTER 7 PARKING LOTS

8-7-1: APPLICABILITY AND PURPOSE: The provisions of this chapter shall apply to all off-street public parking lots owned or operated by the city. The sole purpose of this chapter is to provide for Parking District No. 1 assessments and to regulate the use and operation of the public parking lots established by such district. This chapter continues in full force and effect similar provisions established by the Solvang municipal improvement district prior to incorporation of the city. This chapter shall not affect, alter nor diminish any parking requirements established by the zoning and subdivision regulations of this code1. 8-7-2: PARKING DISTRICT ESTABLISHED: A. Creation And Authority: Pursuant to the Solvang Municipal Improvement District Act, Parking District No. 1 was created. B. Zones Of Benefit: Parking District No. 1 shall be divided into zones for purposes of assessment, each zone to be composed of and include all lands within the district which will be benefited in like measure. The zones are to be based on the percentage by which parking facilities are deficient with relation to the requirements set forth in subsection 8-7-3A of this chapter. C. Method Of Assessment: The zone of benefit designations, parking deficiency percentages determining the zone for each parcel of land and the percentage of assessed valuation of taxable real property within each zone to be used in computing the annual rate of ad valorem assessment within the district and to which said annual rate shall be applied area as follows:

Zone Designatio

n

Parking Deficiency

Percentage

Assessed Valuation

Comment [JD1]: Changed districts to lots

5569

Percent

70

0 0% 0% 1 0% 100% 2 Up to and including

25% 200%

3 Up to and including 50%

300%


400%


500%

Each of said zones, designated by said zone numbers, are plainly shown on the plat of the assessment district on file in the office of the city clerk. Reference is hereby made to said plat on file in the office of the city clerk for the boundaries of said zones and all details concerning same. D. Annual Hearings: 1. Annual hearings shall be called by the city council for the purpose of considering reclassifications of zone of benefit and applications for off-site parking credit. It shall be the responsibility of the individual property owner to submit his request to the city council for reclassification of off-site parking credit along with an applicable filing fee. 2. Each request must be delivered in writing with attached parking layout plat, to the city clerk for inclusion in annual resolution of intention to make changes in zones of benefit. 3. The city council shall consider each request for reclassification of off-site parking, both property owner or city staff initiated, on an individual basis and shall determine at its sole discretion whether reclassification or credit will be allowed. (Ord. 86-45, 4-17-1986)

8-7-3: PARKING LOT REQUIREMENTS: A. Design Requirements: 1. There shall be provided, but not in the required front or side yard,

Formatted: Font: (Default) Times, 14 pt,Font color: Custom Color(RGB(0,0,233))

56

mailto:?subject=Solvang%20Code%20Regulations&body=Below%20is%20a%20link%20to%20the%20City%20code%20which%20contains%20the%20information%20you%20requested.%0D%0Ahttp://www.sterlingcodifiers.com/codebook/index.php?book_id=701&chapter_id=52746

off-street parking spaces with adequate provisions for direct ingress and egress to the street for standard size automobiles without the necessity for moving other cars. 2. The design of parking spaces and maneuvering space in connection therewith shall be in accordance with current city zoning ordinance. 3. For buildings other than dwellings: parking space shall be provided and permanently maintained on the same lot or premises as the main building or structure or within five hundred feet (500') of said lot or premises. B. Number Of Spaces Required: 1 permanently maintained parking space for each housekeeping unit 1 space for every 4 fixed seats provided in said building or structure. Where no fixed seats are provided, 1 parking space for each 30 square feet of assembly floor area 1 parking space for each 300 square feet, or fraction thereof, of assembly floor area 1 parking space for each 200 square feet, or fraction thereof, of space devoted to patrons 1 parking space for each 400 square feet, or fraction thereof, of floor area; for bakeries with coffee shops, the sum of 1 parking space for each 400 square feet, or fraction thereof, of bakery area and 1 parking space for each 300 square feet, or fraction thereof, of coffee shop area 1 parking space for each 400 square feet, or fraction thereof, of floor space

71

1 parking space for each 600 square feet, or fraction thereof, of floor area 1 parking space for each 400 square feet, or fraction thereof, of floor area 1 parking space for each individual guest room or suite 1 parking space for each individual unit As determined by the city council The sum of the required parking spaces of the various uses C. Off-Site Parking Requirements: Parking space as required for buildings, other than dwelling units, may be provided and permanently maintained by the owners on a separate parcel within five hundred feet (500') of said building or structure. The city council shall consider, as provided in subsection 8-7-2D of this chapter, applications for credit for off-site parking facilities; provided, however, that such consideration shall be limited to new parking spaces established after August 1, 1970.

Formatted Table

57

D. Minimum Improvement Standards: In addition to the other conditions and requirements set forth in this code, the following minimum improvement standards for parking spaces are established: 1. Each parking space must be hard surfaced and delineated. Concrete, asphaltic concrete (AC), striped, raised buttons, etc. 2. Each parking space must be reached by hard surfaced access (street, alley, driveway, etc.). 3. Each parking space to be laid out to allow safe ingress and egress. 4. The city council may from time to time impose any other reasonable requirement in the interest of the public health, safety, and welfare. 8-7-2: E. Markings And Signs Required: 1. Suitable markings designating spaces for parking vehicles shall be placed and maintained in all parking lots. The location of the spaces so designated shall be as determined from time to time by the parking place commission or director of public works. 2. Suitable markings or signs shall be placed and maintained in all parking lots designating entrances and exits to and from, and the direction and maximum speed of movement of all vehicles within, said parking lots. The location of the entrance and exits and the direction of movement of vehicles, so designated shall be as determined from time to time by the parking place commission or director of public works. The maximum speed so designated shall be five (5) miles per hour. 3. Suitable markings or signs designating areas, if any, for the loading or unloading of any type of commercial vehicle shall be placed and maintained in all parking lots. The location of the areas so designated shall be as determined from time to time by the parking place commission or director of public works; provided that the provisions of this section shall not be deemed to require designation of any such areas. 8-7-34: PARKING LOT USE RESTRICTIONS: A. General Provisions:

7258

that portion of the parking lot during celebrations, parades, local special events and other purposes. 2. No person shall throw, deposit or drop and leave any garbage, waste or refuse of any kind whatsoever in or upon any parking lot except in designated waste or rubbish containers.

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B. Activities Prohibited: 1. Soliciting: No person shall engage in solicitation or cause another person to engage in solicitation of any kind or for any purpose whatsoever, in or upon any parking lot. For the purpose hereof, solicitation shall be deemed to include the placing in or upon two (2) or more vehicles of any leaflet, pamphlet, paper or other material in or upon which there are any printed or written words or pictures. 2. Overnight Camping: No person shall park any motor home, trailer, camper, or any other vehicle equipped with camping facilities in any parking lot for the purpose of overnight camping. C. Vehicles Prohibited: No vehicle over twenty feet (20') in length and exceeding seven thousand five hundred (7,500) pounds gross weight shall enter and park within the parking lots. Trucks, trailers, busses and any other vehicles exceeding the maximum allowable length and weight stated herein shall not enter or park within the parking lots. D. Driving Restrictions: 1. No person shall stop, leave standing or park any vehicle in any places in the parking lots other than within a single parking space as designated by markings. 2. No person shall operate any vehicle contrary to the directions of movement, or in excess of the designated maximum speed within the parking lots. E. Time Restrictions: No person shall leave standing or park any vehicle in any parking lot for a period longer than twenty four (24) consecutive hours without special permit issued by an authorized agent and/or officer of the city. 8-7-45: ENFORCEMENT:

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A. Violation of any regulation contained in section 8-7-4 of this chapter is a misdemeanor. B. Any vehicle left standing or parked contrary to the provisions of subsections 8-7-4B, C, D1 and E of this chapter shall be subject to removal from the parking lot, and in the event of removal thereof, such vehicle shall be released to the owner or other person entitled to possession thereof only upon payment of all expenses and charges incurred in removing such vehicle from the parking lot, including towing and storage charges. C. Violators of subsection 8-7-4D2 of this chapter shall be subject to restrictions imposed upon further use of the parking lots. Violators of subsections 8-7-4A2, A3 and B1 of this chapter and of this code shall be subject to payment of all expenses incurred in removing any litter and spillage and shall be subject to restrictions imposed upon further use of the parking lots

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http://www.sterlingcodifiers.com/codebook/getBookData.php?ft=3&find=8-7-4B

http://www.sterlingcodifiers.com/codebook/getBookData.php?ft=3&find=8-7-4D2

http://www.sterlingcodifiers.com/codebook/getBookData.php?ft=3&find=8-7-4A2

EXHIBIT B 11-7A-5: ADDITIONAL REGULATIONS: A. Parking: As required in chapter 11 of this title, except that required parking spaces may be provided in publicly owned parking lots of legally constituted parking districts subject to approval of the availability of the parking spaces by the parking district and the planning/community development director. 11-7B-5: ADDITIONAL REGULATIONS: A. Parking: As required in

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of this title, except that required parking spaces may be provided in publicly owned parking lots of legally constituted parking districts subject to approval of the availability of the parking spaces by the parking district and the planning/community development director. 11-11-7 REQUIRED NUMBER OF PARKING SPACES D. Commercial: Parking under the following provisions is the minimum required; however, additional parking may be required for retail developments in the TRC district based upon projected demand. An optional in lieu fee may be paid as provided in section 11-11-9 of this chapter for the construction of parking facilities. Additionally, a parking district exists in the village area where assessments are paid by property owners based on parking deficits in accordance with district set ratios. Assessments are reduced proportionate to the amount of parking provided on site. District ratios are available at the planning department on request.

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http://www.sterlingcodifiers.com/codebook/getBookData.php?ft=2&find=11

http://www.sterlingcodifiers.com/codebook/getBookData.php?ft=2&find=11


6276

CITY COUNCIL STAFF REPORT/CONSENT AGENDA

TO: SOLVANG CITY COUNCIL MEMBERS

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MEETING DATE: March 13, 2017 DATE PREPARED: March 3, 2017 SUBJECT: SUPPORT OF DROUGHT TASK FORCE PROJECTS IN SANTA

BARBARA COUNTY I. RECOMMENDATION:

1. Adopt Resolution No. 17- ___, to support the recommended drought projects from the Santa Barbara County Drought Task Force; and

2. Direct the City Manager to send the adopted Resolution to the County of Santa Barbara Office of Emergency Management.

II. BACKGROUND:

On January 17, 2014 Governor Brown declared a drought emergency. The Governor also later convened an interagency Drought Task Force to provide a coordinated assessment of the State’s dry conditions and provide recommendations on current and future state actions. The State’s response to the drought is being coordinated through the combined efforts of state agencies and the state’s model mutual aid system. Beginning in Water Year 2017 (October 1, 2016 - September 30, 2017), many parts of California began to emerge from a record-breaking drought. However, Santa Barbara County is still experiencing severe drought. The City of Solvang, and many other water agencies/cities in Santa Barbara County have water conservation programs, and many Santa Barbara County residents have substantially reduced their water usage. In addition, water agencies across Santa Barbara County have done much to diversify and secure their water supply sources over the past

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30 years. However, the current drought has emphasized the need to further develop drought resilient local water sources. On December 12, 2016, the Governor’s Drought Task Force convened a meeting in Santa Barbara County at the Emergency Operations Center to bring together regional stakeholders, including the City of Solvang. The meeting objective was to identify and develop a list of regional priority projects that address the immediate drought and long-term water supply sustainability. The Santa Barbara County Office of Emergency Management (OEM) was asked to facilitate the process of developing the drought and long-term water supply priority project list, with the intent of securing support from each of the region’s water agencies.

III. DISCUSSION:

OEM convened an Action Working Group that met to develop drought and long-term water supply projects, and agreed to provide the Governor’s Drought Task Force with the drought and long-term priority project list. Lake Cachuma reservoir normally supplies approximately 25,000 Acre Feet (AF) of water in a normal year to water agencies in Santa Barbara County. However, supplies from Cachuma have largely been unavailable during the drought, with no project water being allocated for the last two years.

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ADDITIONAL WATER SUPPLIES

1. Reacquisition of suspended Santa Barbara County Table A Water. 2. Recommissioning of the Charles E. Meyer Desalination Plant in Santa Barbara. 3. A comprehensive reuse program for Goleta and Carpenteria Valley Water

Districts. The reacquisition of suspended Table A Water will provide 12,214 acre feet (AF) of additional water from the State Water Project to various agencies throughout Santa Barbara County. This project will provide an overall increase in water supply and will serve as a critical drought buffer. The recommissioning and expansion of the Santa Barbara desalination plant has the potential to supply an additional 10,000 AFY of water and to serve as a regional facility for Santa Barbara’s South Coast water agencies. The comprehensive water reuse program, which includes projects designed for the Goleta and Carpenteria Water Districts’ service areas, has the potential to add up to 6,100 AF of additional water annually. This project develops additional drought proof water supplies by treating recycled water to a potable standard.

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PROTECTION OF EXISTING RESOURCES

1. Treatment facilities for the removal of hexavalent chromium from groundwater to regain local supply reliability.

2. Construct an interagency intertie to facilitate emergency health and safety-related water transfers throughout the South Coast.

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The Santa Ynez River Water Conservation District Improvement District No. 1 (ID#1) proposed a project that includes a new water treatment facility, blending facilities and well modification to treat naturally occurring hexavalent chromium (Cr6). This project restores 2,400 AF per year of well capacity. The restoration of this local water supply will lessen demand on shared resources with other water agencies in the County by reducing dependency on State water and Cachuma water releases. This project may indirectly benefit the City of Solvang by putting less demand on the Santa Ynez River. The Interagency Intertie Project will provide an emergency water supply by providing a larger intertie between Santa Barbara and Goleta, while also benefiting Montecito and Carpinteria. By constructing a high capacity intertie between Santa Barbara and Goleta to facilitate the delivery of water between systems on the South Coast, the overall reliability of the region’s water supplies will be improved. Maintaining the temporary emergency pumping system at Lake Cachuma (on standby) provides a mechanism to ensure that if in the near future the level of Lake Cachuma again drops below the level needed for water to flow naturally into Tecolate Tunnel, the South Coast water agencies can receive water from the Lake. As in the past, operation of this project will be coordinated with the Santa Ynez River Water Conservation District so that its’ possible future temporary operation is not expected to interfere with downstream water rights releases. It is staff’s understanding that due to a recent rise in the level of Lake Cachuma, the Project as described in Attachment 2 would be modified to maintain the temporary emergency pumping system on standby. In conclusion, City staff participated in the Santa Barbara County Drought Task Force and found that the recommended regional projects addressed the immediate drought and long-term water supply sustainability needs for northern and southern Santa Barbara County water agencies. At it’s Regular meeting of February 27, 2017 the City Council considered adopting a Resolution of support for the “Santa Barbara County Operational Area Proposal to the Governor’s Drought Task Force.” However, City Council directed staff to revise the proposed Resolution to also include the City’s request to the Governor to pursue construction of much needed additional off-stream water storage reservoirs throughout the State. Staff has revised the proposed Resolution accordingly. See attachment 1. The adopted Resolution will be included in the Santa Barbara County Operational Area

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Proposal to the Governor’s Drought Task Force to be sent to our State Senator and Assembly Member, and the Governor’s Office of Emergency Services (CAL-OES).

IV. ALTERNATIVES:

The City Council could choose not to adopt the proposed Resolution regarding the Santa Barbara County Operational Area Proposal to the Governor’s Drought Task Force; or adopt the Resolution with further modifications.

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FISCAL IMPACT:

Adoption of the proposed Resolution does not have a fiscal impact to the City. VI. ATTACHMENTS:

1. Resolution 2. Santa Barbara County Operational Area Proposal to the Governor’s Drought Task

Force

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RESOLUTION NO. 17 - ____

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SOLVANG, STATE OF CALIFORNIA, ACKNOWLEDGING PARTICIPATION WITH SANTA BARBARA COUNTY, CAL OES, AND LOCAL WATER AGENCIES TO RESPOND TO THE

DIRECTION OF THE GOVERNOR’S DROUGHT TASK FORCE

WHEREAS, On January 15, 2014, the Secretary of the United States Department of Agriculture (USDA) Declared 27 Counties in California, including Santa Barbara County, to be designated as primary natural disaster areas due to drought conditions. Subsequently, on January 17th, 2014, the Governor declared a statewide State of Emergency for Drought in the State of California. In turn, on the same date the Santa Barbara County Director of Emergency Services signed a Proclamation for a Local Emergency for Drought on January 17, 2014 that was subsequently ratified by the Santa Barbara County Board of Supervisors on January 21, 2014; and

WHEREAS, supplies from Lake Cachuma, a major water supply for many

communities, have been largely unavailable during the drought, with no project water being allocated for the last two years; and

WHEREAS, affected water providers serving communities in the County have been

forced to rely on local groundwater and inadequate State Water Project deliveries, including some into a nearly empty Lake Cachuma; and

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WHEREAS, although most of California recently emerged from drought emergency,

Santa Barbara County continues in severe drought and Lake Cachuma reservoir, which provides in a normal year about 25,000 AF of water supply, is far below capacity; and

WHEREAS, in recognition of the continued severe drought facing Santa Barbara

County the Governor’s Drought Task Force directed the County, local agencies, and Cal OES to work together to address the infrastructure needs and contingency planning necessary to maintain public health and safety during the immediate drought, and identify projects that can provide long term mitigation against future droughts; and

WHEREAS, a proposal with a list of projects and concerns detailing these immediate

and long term drought needs has been developed; and WHEREAS, Cal OES, Santa Barbara County, and local water agencies will work

together to develop a contingency plan and conduct Table Top exercises to prevent or significantly mitigate the likelihood of water shortages and outages from occurring over the next 12-18 months; and

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WHEREAS, many water agencies throughout the State have recently lost large quantities of carryover State water in the San Luis Reservoir due to lack of off-stream storage reservoirs throughout the State; and

WHEREAS, the extreme drought conditions suffered by residents throughout California over the past five years clearly demonstrates the need for additional off-stream storage reservoirs throughout the State of California;

NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SOLVANG That the undersigned request the County to provide the Governor’s Drought Task Force with the proposal with the list developed through this process (described above), and include in distribution the State Senate, State Assembly, and Cal OES office; and

NOW, THEREFORE, BE IT FURTHER RESOLVED BY THE CITY COUNCIL OF THE CITY OF SOLVANG that the City of Solvang requests that Governor Brown pursue construction of much needed additional off-stream storage reservoirs throughout the State of California, since over the years there is not a shortage of water, but a shortage of adequate storage statewide.

PASSED, APPROVED AND ADOPTED this 13th day of March, 2017 by the following roll call vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

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CITY OF SOLVANG:

______________________ Jim Richardson, Mayor

ATTEST:

_______________________ Lisa S. Martin, City Clerk

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Santa Barbara County Operational Area Proposal to the Governor’s Drought Task Force

Page 2 of 28

TABLE OF CONTENTS

PURPOSE ...................................................................................................................................................... 3

BACKGROUND .............................................................................................................................................. 3

ADDITIONAL WATER SUPPLIES .................................................................................................................... 4

PROTECTION OF EXISTING RESOURCES ....................................................................................................... 4

CONCLUSION ............................................................................................................................................ 5

SUMMARY LIST OF PRIORITY PROJECTS ...................................................................................................... 6

REACQUISITION OF SUSPENDED TABLE “A” WATER ................................................................... 7

RECOMMISSIONING AND EXPANSION OF CHARLES E. MEYER DESALINATION PLANT ... 10

COMPREHENSIVE WATER REUSE ‐ GOLETA .................................................................................. 14

COMPREHENSIVE WATER REUSE ‐ CARPINTERIA ....................................................................... 17

TREATMENT FACILITIES FOR THE REMOVAL OF HEXAVALENT CHROMIUM FROM

GROUNDWATER ..................................................................................................................................... 21

LAKE CACHUMA TEMPORARY EMERGENCY PUMPING FACILITY SYSTEM ........................... 24

INTERAGENCY INTERTIE PROJECT BETWEEN GOLETA AND SANTA BARBARA ................... 27

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Page 3 of 28

PURPOSE On January 17, 2014, Governor Brown proclaimed a drought emergency. He subsequently convened an interagency Drought Task Force to provide a coordinated assessment of the State’s dry conditions and

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required and will continue to depend on the combined efforts of all state agencies and the state's model mutual aid system. On December 12, 2016, the Governor’s Drought Task Force convened a meeting in Santa Barbara County at the Emergency Operations Center, in order to bring together regional stakeholders with the objective of identifying and developing a list of regional priority projects that address both the immediate drought emergency and long-term water supply sustainability.

The Santa Barbara County Office of Emergency Management (OEM) as the Operational Area Coordinator was asked to facilitate the process of developing the priority project list with the intent of securing support from each of the region’s water agencies. OEM convened an Action Working Group that met regularly to achieve the objectives of the Drought Task Force.

Following the development of the projects by the Action Working Group, XX water agencies and the County of Santa Barbara Board of Supervisors have resolved to support the effort and provide the Governor’s Drought Task Force with this project list.

BACKGROUND Beginning in Water Year 2017, many parts of California have begun to emerge from a record-breaking drought, yet Santa Barbara County remains one of only two counties still experiencing extreme drought (see Image A).

Locally Lake Cachuma, which normally provides 80 percent of the drinking water to 250,000 people residing in the County’s South Coast, as well as 80,000 residents downstream of the dam who rely on water rights held in the lake for drinking and agriculture needs, is at less than 15 percent of capacity and groundwater basins throughout the County are showing signs of stress. The

severe drought conditions that persist in Santa Barbara County continue to threaten the region’s ability to maintain public health and safety for residents as we enter a sixth year of extreme drought. Communities throughout the County have become reliant on the State Water Project (SWP), as well as local groundwater supplies.

Although water agencies across Santa Barbara County have done much to diversify and secure their water supply sources over the past 30 years, this drought has made clear the need to further develop drought

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Page 4 of 28

resilient local water sources. Further, while simultaneously enhancing and securing existing supply sources and infrastructure, many communities in the County have implemented strict conservation goals and measures to withstand the drought. While communities continue to conserve, with some achieving conservation levels as high as 45 percent, and others also achieving the State’s per capita goals of 55 gallons per person per day (GPDC); conservation is only one part of a holistic approach to withstanding this drought and future droughts.

It has also become increasingly apparent that the strain on the rate payers has been significant during this drought due to water agencies’ decreased revenues combined with the need for emergency drought-related projects and water purchases. Due to all of the aforementioned factors, the region’s water agencies have come together to develop a diverse set of projects that provide new water supplies for agencies across the County, increase water supply reliability, and take prudent steps to secure infrastructure critical to our ability to continue to safely deliver potable water during the current emergency.

Attached is the list of projects that has been developed and supported by local water agencies. These projects are grouped into two categories: Additional Water Supplies and Protection of Existing Resources.

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Santa Barbara County water agencies have identified the following three regional projects that will help to secure additional water for the region. These projects will provide drought relief and future drought mitigation.

1. Reacquisition of suspended Santa Barbara County Table A Water 2. Recommissioning of the Charles E. Meyer Desalination Plant in Santa Barbara 3. A comprehensive reuse program for Goleta and Carpinteria Valley Water Districts

The acquisition of suspended Table A Water will provide 12,214 AF of water to Santa Barbara County water agencies. The recommissioning and expansion of the desalination plant has the potential to provide up to an additional 10,000 AF of water annually. The comprehensive water reuse program, which includes projects designed for the service areas for Goleta and Carpinteria Water Districts, have the combined potential to add up to 6,100 AF of additional water annually.

It is important to note that desalination and water reuse projects are less impacted by drought and provide local sustainable supplies. Reacquisition of Table A Water, initially allocated to Santa Barbara County, will provide increased reliability as a drought buffer to Santa Barbara County when SWP allocations are less than 100%.

PROTECTION OF EXISTING RESOURCES Santa Barbara County water agencies have identified the following regional projects that will protect the existing water supply in the region. All of these projects aim to ensure that existing supplies are clean, safe, and reliable for delivery to residents.

1. Removal of Hexavalent Chromium from groundwater to regain local supply reliability 2. Maintain the temporary emergency pumping system at Lake Cachuma 3. Construct an interagency intertie to facilitate emergency health and safety-related water

transfers throughout the South Coast

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Page 5 of 28

While these projects do not provide additional water supplies, they either ensure that the delivery of current supplies will continue uninterrupted, or provide treatment to satisfy health and safety concerns for the delivery of potable water. Failure to proceed with these projects will either require additional new water sources from elsewhere, place additional strain on already scarce shared resources, or result in an inability to supply water to residents and critical facilities.

CONCLUSION Santa Barbara County has a long history of facing cyclical droughts of varying severity and will continue to confront worsening drought emergencies exacerbated by climate change. The intent of the Action Working Group and the following proposed projects is to provide water resiliency, climate change adaptation, and a proactive, long-term approach to future drought mitigation. A water outage/shortage is a real concern that could take place in the near-term. A failure of the Temporary Emergency Pumping System, a State Water Project mechanical failure or an operational delay in the startup or a failure at the Desal facility could all create a water crisis. Therefore, in addition to developing this list of priority projects, the Action Working Group has collaborated on a Water Outage/Shortage Contingency Plan and a tabletop exercise simulating a water outage/shortage scenario is scheduled to take place by March 2017. These tabletop exercises will provide input for further contingency planning focused on maintaining water service across communities impacted by the drought over the next 6-24 months.

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SUMMARY LIST OF PRIORITY PROJECTS

Project Type

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Acre Feet Increase

Estimated Cost Completion Time

Regional Benefit

Regional Support

Reacquisition of Suspended Table “A” Water Additional Water Supply

Up to 12,214 AF $36 million 12-18 months All All

Recommissioning and Expansion of Regional Desalination Facility

Additional Water Supply

Up to 10,000 AF/Y

$110 million approx. ($50 million expansion)

12-18 months All Most

Water Reuse - Goleta

Additional Water Supply

2,000-5,000 AF/Y $1mil. pilot. $100-150 mil. final

5-10 years All All

Water Reuse - Carpinteria Additional Water Supply

1,100 AF/Y $20 million 3 years All All

Treatment Facilities for the Removal of Hexavalent Chromium from Groundwater

Protection of Existing Resources

Restores 2,400 AF/Y

$14 million 3 years Most All

Temporary Emergency Pumping System at Lake Cachuma


N/A $2 million+ (costs vary, option to purchase or lease)

Immediate South Coast All

Interagency Intertie Project between Goleta and Santa Barbara


N/A $5 million 12 months South Coast South Coast

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Reacquisition of Suspended Table “A” Water

PROJECT DESCRIPTION:

To address water supply reliability in Santa Barbara County, the Central Coast Water Authority (CCWA) is proposing to acquire 12,214 acre-feet (AF) of State Water Project (SWP) Table “A” water from the State of California Department of Water Resources (DWR). This project will provide for an overall increase in water supply and will serve as a critical drought buffer.

REGIONAL BENEFIT:

CCWA member water purveyors that have agreed to participate in the purchase of this water, at this date, represent the South Coast, the Santa Ynez Valley and the Santa Maria Valley. In addition, terms of an agreement approved between CCWA and the Santa Barbara County Flood Control and Water Conservation District (County) specify that the use of this water be offered to other CCWA participants throughout the County when available.

HOW IT ADDRESSES HEALTH AND SAFETY:

This water provides additional high quality water for replenishment of the Santa Maria Groundwater basin; serves to supply additional water to areas in the Santa Ynez Valley in dire need due to Hexavalent Chromium in the groundwater supply; supplements water supplies to the South Coast; and increases deliveries of water to Lake Cachuma for subsequent delivery to the South Coast.

FUNDING CHALLENGES & POTENTIAL SOLUTIONS:

To reacquire this suspended Table “A” water all-back payments will be due both to DWR (approximately $30 million) and the County (approximately $6 million). It is estimated that the purveyors that are acquiring this additional Table “A” water will need to raise rates up to an additional ten percent to sustain the financing. Forgiveness of a portion of the back payments or repayment of the back payments from another source, such as grant funding, would reduce the burden on local rate payers.

DISCUSSION:

As a result of past contractual arrangements and litigation, the County is in the unique position of having the first right of refusal to acquire the last remaining quantity of SWP Table “A” Water available in California. In 1961, the County contracted with DWR for approximately 57,000 AF of SWP water. When the management of the water was transferred from the County to the County water purveyors in the early 1980’s, the purveyors desired to acquire only approximately 45,000 AF. Payment for the difference in water (12,214 AF) that the County originally contracted for and the amount the purveyors desired was suspended. To reacquire this suspended Table “A” water all-back payments will be due both to DWR (approximately $30 million) and the County (approximately $6 million).

Due to environmental and operational constraints in the Sacramento Delta, the percentage of water available for allocation to the SWP contractors has steadily declined over the last ten years. This has resulted in the actual amount of water delivered to SWP contractors being significantly reduced. Acquiring this 12,214 AF will substantially restore the dependability of the SWP water supply to near

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Page 8 of 28

levels originally anticipated when the purveyors anticipated their needs in 1981. This project will not increase the size of the conveyances or the flow capacity of the system to deliver water in excess of the original design of 45,000 AF per year. The reacquisition of the Suspended Table “A” water will allow the system to more consistently carry up to the full-capacity of the existing system.

CCWA represents the County water purveyors which deliver SWP water. The County is the contracting party with DWR. CCWA and the County have negotiated the deal points of a term sheet to proceed in discussions with DWR to acquire this water. These discussions will begin in late January of 2017. Transfer of the water will require an amendment of the contract between DWR and the County. DWR has determined an EIR will be required for this project. It is estimated that the time required to satisfy this requirement will be eighteen months.

Funding the back payments (approximately $36 million) will require financing by the purveyors that opt to receive this water. It is estimated that the purveyors that are acquiring this additional table “A” water will need to raise their rates up to an additional ten percent to sustain the financing.

Acquisition of this water will require an amendment to the State Water Contract between the County and DWR. This amendment will require the approval of the Board of Directors of the County Flood Control and Water Conservation District (Board). While some members of the community are opposed to the SWP and actively participated in the recent discussions regarding this acquisition at the Board meetings, the Board ultimately directed staff to proceed with negotiating the terms of acquisition with both DWR and CCWA.

CCWA member water purveyors that have agreed to participate in the purchase of this water represent the south coast, the Santa Ynez Valley and the Santa Maria Valley. Terms negotiated between the County and CCWA specify a commitment and pricing structure to facilitate water transfers between purveyors in the County. Interagency transfers within the County are not subject to provisions requiring the payback of water at a future date. Interagency transfers of water with water purveyors outside the County are subject to provisions requiring payback of water at a future date. For example, some South Coast purveyors have a payback requirement (water debt) that meets or exceeds the purveyor’s yearly allocation of SWP water. Water acquired from other purveyors within the County could be used to meet that water debt without an obligation from the borrowing purveyor to return the water in the future. As such, additional Table “A” water available to water purveyors within the County is a valuable asset that can provide the maximum flexibility for meeting water supply needs for all the CCWA member water purveyors.

IMPACTS:

Fiscal – Agencies that acquire this water will need to incur a rate increase of between five and ten percent to pay the back debt on this water (approximately $36 million total).

Operational – No operational impacts anticipated.

Legal – Challenges to both the contract amendment between the County and DWR and the environmental document may occur.

Labor – No impact to Labor is anticipated.

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Sociopolitical – Historically, some opposition exists to the SWP.

Policy – Not aware of any policy conflicts that this acquisition incurs.

Health and Safety – High quality water helps sustain basin recharge, offsets issues associated with high Hexavalent Chromium in the Santa Ynez Valley, and provides additional water to Lake Cachuma and subsequently to the South Coast. This project will provide for an overall increase in water supply (drought buffer).

Environmental – An environmental document is required.

Permitting Status – No construction is required.

ACTIONS NEEDED:

The County and DWR will need to engage in the most efficient and effective process to transfer this water to the County, due to the critical nature of securing this water supply as a drought buffer. The Board will need to approve a contract amendment with DWR to transfer this water to the County and funding options, including low cost financing and grants along with additional sources, need to be considered to reduce the impact on local rate payers.

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Recommissioning and Expansion of Charles E. Meyer Desalination Plant


The regional Charles E. Meyer Desalination Plant (Desal Plant) was originally put into service in 1991 to provide a much needed source of drinking water for Santa Barbara County. The Desal Plant was constructed and permitted to a capacity of 10,000 AFY to serve as a regional facility for Santa Barbara’s South Coast water agencies. The Desal Plant was deactivated in 1992, after heavy rainfalls filled local surface water reservoirs. The regional partners withdrew their interests from the Desal Plant in 1995, and the Desal Plant was put into long term storage in 1997.

The current Desal Plant project consists of reactivating the Desal Plant to a capacity of 3,125 AFY, with water deliveries to the City of Santa Barbara being anticipated by April 2017. Design is underway for a transmission pipeline that will primarily serve the City of Santa Barbara, but also provides future opportunities to convey water to other South Coast water agencies. This transmission pipeline would make the Desal Plant a regional facility, allowing it to diversify the region’s water supply mix and provide reliable drinking water supplies to Santa Barbara, Montecito, and Carpinteria. The current Desal Plant reactivation project is designed with the ability for the Desal Plant’s capacity to be incrementally increased, depending on regional water demands. The Desal Plant size and approximate cost options are:

$70M for the current project, with water production of 3125 AFY.

$10M for construction of a transmission pipeline sized to convey 10,000 AFY (sized for future Desal Plant expansion).

$30M to increase the Desal Plant’s capacity to 7,500 AFY.

$40M to increase the Desal Plant’s capacity to 10,000 AFY.

REGIONAL BENEFIT:

The Desal Plant could potentially be expanded to serve as a regional water supply facility, indirectly benefiting the South Coast communities, serving Santa Barbara, Montecito, and Carpinteria. Regionalizing the Desal Plant could be accomplished through approval of water supply agreements and exchanges with South Coast water agencies, communities receiving State Water, and communities receiving water from the Santa Ynez River.

The Desal Plant is permitted, and construction is underway for a facility that will produce 3,125 AFY. The Desal Plant is designed for expansion to 7,500 and 10,000 AFY. Expansion would enable the Desal Plant to be converted into a regional water facility, where it would diversify the South Coast’s water supplies and provide reliable drinking water supplies to Santa Barbara, Montecito, and Carpinteria.

In support of these regional opportunities and community benefits, the City of Santa Barbara is currently designing a transmission pipeline to connect the Desal Plant to the City’s water distribution system and the South Coast Conduit, which is owned by the U.S. Bureau of Reclamation and conveys water to other

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South Coast water agencies. The transmission pipeline is being sized to convey up to 10,000 AFY of desalinated water. The transmission pipeline has the potential to be jointly used for a future direct potable reuse project, serving as infrastructure for both desalinated and potable reuse water supplies.

The Desal Plant supports key objectives from the Santa Barbara County 2013 Integrated Regional Water Management Plan by augmenting water supplies, protecting groundwater supplies, and improving emergency preparedness for the South Coast. The South Coast’s surface water supplies are conveyed through tunnels that are miles long and subject to catastrophic failures following an earthquake. In contrast, the Desal Plant is being constructed to current seismic codes, and will have a more secure conveyance system than the South Coast’s surface supplies, especially after a large earthquake. The Desal Plant has the unique opportunity to serve as a regional water supply facility, providing safe and reliable drinking water supplies to the nearly 250,000 people living on the South Coast.


While the near-term trigger for reactivating the Desal Plant is the current drought situation, there are also long-term risks to the reliability of the region’s current water supplies to consider. These reliability concerns include a reduced yield from existing surface water supplies due to sedimentation in reservoirs, forthcoming environmental requirements for the Cachuma Project, and potential risks due to climate change. The region’s water supplies are also at risk in the event that surface water supplies are interrupted due to conveyance failure through the tunnels. For example, a seismic event could interrupt flow to Tecolote Tunnel, which conveys State Water and Cachuma Project water to over 250,000 people, resulting in an outage of a lifeline water source and a catastrophic water supply emergency.

The Desal Plant could potentially supply critical drinking water to the South Coast region, should a catastrophic interruption in water supplies occur. To be prepared for an emergency situation and be able to provide regional drinking water supply, the City of Santa Barbara is pursuing the construction of a transmission line that would connect the Desal Plant with the City’s water distribution system and the South Coast Conduit, which is a U.S. Bureau of Reclamation facility.

FUNDING, CHALLENGES & POTENTIAL SOLUTIONS:

The capital cost for the regional Desal facilities is as follows:

$70M for the current project, with water production of 3125 AFY.

$10M for construction of a transmission pipeline sized to convey 10,000 AFY (sized for future Desal Plant expansion).

$30M to increase the Desal Facility’s capacity to 7,500 AFY.

$40M to increase the Desal Facility’s capacity to 10,000 AFY.

The City of Santa Barbara is actively seeking opportunities for grant funding to offset the cost of the initial reactivation project (3125 AFY), the transmission pipeline to bring water to the South Coast Conduit, and future expansion of the desalination facility (up to 10,000 AFY). However, the largest opportunity for assistance, Proposition 1 (DWR Desalination Grant Program), has yet to be made available, and the grant guidelines have yet to be released. When Proposition 1 was passed in November

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2014, the City of Santa Barbara was encouraged that almost $100 Million was authorized for desalination projects. Now more than two years later, there appears to be no progress to disperse these funds, despite the urgency with which voters approved Proposition 1.

The City is urging the State to make the eligibility criteria for Proposition 1 funds based on project commencement dates that occurred after approval of Proposition 1 by voters, as opposed to projects that will begin after grant guidelines are released. Given the urgent need to address drought impacts and provide emergency water supply, the City could not wait for grant guidelines to be released before moving forward with the initial Desal Plant project. As a result, the City of Santa Barbara is seeking assistance for the financial burdens caused by the drought, and is asking the State to make eligibility for funding based on projects that commenced after Proposition 1 was approved by voters.

DISCUSSION:

The City of Santa Barbara, like many agencies in Santa Barbara County, is currently experiencing multi-year drought conditions. The City’s adopted 2011 Water Shortage Contingency Plan outlines the stages of drought and actions to achieve planned demand reductions. The City first declared drought in February 2014, and is currently in a Stage 3 Drought condition which is the most critical stage. The current Stage 3 Drought water use regulations require a 40% reduction from normal demands.

The City’s drought planning is based on its adopted 2011 Long Term Water Supply Plan (LTWSP), which uses the 1947-52 period as the design drought. While the current drought is drier and more severe than the previous drought of record, the City has adaptively managed its supplies based on the policies in the LTWSP. During times of drought when surface water supplies are diminished, the City relies on extraordinary conservation, increased groundwater pumping, State Water, and desalination as drought supplies.

The original Charles E. Meyer Desalination Plant was completed in March 1991 and put into long-term standby mode in 1997 at the end of the last significant multi-year drought. The Desal Plant is included in the LTWSP as a recognized drought water supply to ensure the community continues to have sufficient uninterrupted drinking water supplies during critical drought periods.

In response to extreme and prolonged drought, Santa Barbara City Council awarded a Design Build Operate contract on July 21, 2015 to IDE Americas, Inc. to reactivate the Desal Plant to provide up to 3,125 AFY of drinking water. Onsite construction for the Desal Plant reactivation project started in September 2015, and desalinated water deliveries to the City’s water distribution system are expected by April 2017.

The City’s permits allow the Desal Plant to be operated as a regional facility, and produce up to a capacity of 10,000 AFY. In support of regional opportunities, the City of Santa Barbara is pursuing the construction of a transmission line that would connect the Desal Plant with the South Coast Conduit, which serves other neighboring water agencies. Reactivation of the Desal Plant will allow the facility to serve as a regional water supply. The City is also considering possible expansion of the Desal Plant, in order to serve regional water supply needs, especially in the event of a South Coast-wide disaster.

IMPACTS

Fiscal – The estimated capital cost for the regional Desal facilities is as follows:

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$70M for initial Desal Plant reactivation project (3,125 AFY capacity)

$10M for the conveyance project (sized for future Desal Plant expansion)

$30M for Desal Plant expansion to 7,500 AFY. Costs to be refine in Spring 2017

$40M for Desal Plant expansion to 10,000 AFY. Costs to be refined as needed

The annual operating costs for a 3,125 AFY Desal Plant are $4.1M in full production and $1.5M in standby mode. The annual operating costs for an expanded facility will be determined in Spring 2017.

Environmental and Permitting Status – All required permits have been received for the Desal Plant project. The documentation of environmental assessments and determinations are found in the Final Environmental Impact Report and State Revolving Fund loan application (Project Number 4210010-005C).

Sociopolitical – All Santa Barbara water rate payers have been impacted by increased water rates resulting from the drought, and approximately 25 percent of the Santa Barbara community is of low and moderate income (American Community Survey).

Operational – N/A.

Legal – Water Supply or Exchange agreements would need to be negotiated with interested regional participants.

Labor – N/A.

Policy – Addressed above.

Health and safety – Addressed above.

ACTIONS NEEDED:

The City of Santa Barbara and its regional partners are seeking assistance for the financial burdens caused by the drought, and are requesting that the State make eligibility for funding based on projects that commenced after the Proposition 1 Desalination Grant Fund Program was approved by voters.

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Comprehensive Water Reuse - Goleta

PROJECT DISCRIPTION: This project would develop additional drought proof water supplies by treating recycled water to a potable standard. The proposed Direct Potable Reuse (DPR)/Indirect Potable Reuse (IPR) recycled water project would provide between 2,000-5,000 acre feet of new water supply that would further diversify the District’s water supply portfolio, and support management of the groundwater basin. Phase 1 of the project, a Recycled Water Feasibility Study, is already underway. Under Phase 2, a proposed pilot project would test and demonstrate the use of new technologies to increase the amount of available potable drinking water. Results of the pilot project would inform the design of a final project under Phase 3.

REGIONAL BENEFIT:

Prolonged drought conditions and unseasonably warm, dry weather have resulted in increased customer demand while preventing the replenishment of shared water supplies in the region. As drought conditions persist, Lake Cachuma has been reduced to a conveyance facility, with a zero allocation for two years in a row. This has forced water suppliers to rely on alternative sources of supply and demand reduction programs to meet customer demand during drought. Water supply on the South Coast is further challenged by delivery capacity and reliability issues, and forthcoming environmental requirements for the Cachuma Project.

A project to expand the use of recycled water by the District would develop alternative sources of local supply that are reliable and unaffected by drought, and reduce the District’s need to rely on Lake Cachuma and State Water to meet customer demand. Expanding and ensuring the continued delivery and use of recycled water benefits the entire Santa Barbara County region as it reduces reliance on imported water, and increases supply reliability. The IPD/DPR project envisioned by the District could ultimately result in the production and utilization of an additional 2,000 – 5,000 AF per year of drought-proof long-term water supplies.

The project involves a partnership with Goleta Sanitary District (GSD), and provides a multi-agency benefit by reducing ocean discharge. This project will also support key objectives from the Santa Barbara County 2013 Integrated Regional Water Management Plan; augmenting water supplies; protecting groundwater supplies; and improving emergency preparedness.


Recycled water plays a critical role in drought planning since it remains available even during periods of drought. Every drop of recycled water used conserves potable water supplies for drinking, health and safety.

Increasing treatment of recycled water to potable standards also increases the amount of reliable local supply available to the District during emergencies. Currently, the region’s water supplies are at risk in the event that surface water supplies are interrupted due to conveyance failure through the tunnel system. For example, a seismic event could interrupt flow to the Tecolote Tunnel, which conveys State Water and Cachuma Project water to over 250,000 people on the South Coast, and could result in an interruption of service to customers. None of the agencies have storage capacity large enough to store more than a

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week’s supply of water. The District’s would depend on reservoir storage capacity, which is limited to only a few days of drinking water supply, and the groundwater basin. The proposed IPR/DPR project would increase the amount of water available should a catastrophic interruption in water supplies occur.


As part of the District’s efforts to develop additional water supplies, on November 10, 2015 the Board of Directors authorized the acquisition of State grant funding and directed staff to complete a Recycled Water Feasibility Study (RWFS). The RWFS is underway and is anticipated to be completed in April. The study evaluates how the District could expand the use of recycled water within its service area.

The District is seeking $500,000 in grants for an estimated $1 million pilot project at GSD, with a District match of up to $500,000.

The cost estimates for the final project range from $100,000,000 up to $150,000,000.

This project is eligible for Federal and State grants, including Proposition 1 funding, and Integrated Regional Water Management Plan.

DISCUSSION:

Since 1995, the District has served recycled water for irrigation and restroom facilities through a partnership with the GSD. The District serves approximately 1,000 acre feet per year (AFY) to 30 customers in the Goleta Valley, representing 7% of District supplies. Recycled water is not currently treated to potable standards and must be delivered through a completely separate system of purple pipe. Due to regulations limiting the use of recycled water as currently treated, and constraints in the existing recycled water distribution system, the District is only able to utilize a portion of total capacity of the existing recycled water treatment plant. Given the cost and difficulty of moving recycled water through a separate system, the industry has increasingly focused on how improvements to recycled water treatment technologies can bring recycled water to potable water standards.

The proposed recycled water project is a three-phase project that includes development of a RWFS (underway), a pilot project, and construction of a full-scale project. The proposed pilot project would test and demonstrate the use of new technologies to increase the amount of available potable drinking water, and inform the design of a final project.

IPR uses highly treated recycled water to replenish groundwater basins, while DPR treats the water to a drinkable standard and uses existing potable water infrastructure for distribution to customers. There is increasing interest in IPR and DPR across the State, though only IPR is currently on track to be permitted within the short term in CA. Treating recycled water to even higher standards so its use can be expanded and prioritized to the highest purpose is a common feature of the next generation of recycled water projects.

Orange County is currently producing approximately 100 MGD via IPR for agricultural and industrial customers and to buffer its aquifer against saltwater intrusion. The City of San Diego is currently designing a 30 MGD reuse project that will mix purified water with surface water supplies in reservoirs. DPR is not currently allowed by regulations, but it is the subject of ongoing research and consideration by

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regulators. In 2016, the State published its report on the feasibility of DPR, but final regulations are not anticipated before 2020.

IMPACTS:

Fiscal – Cost estimates are being produced as part of the RWFS, but a final project would likely require significant funding in the form of grants, matching funds, and loans.

Operational – Depending on the project selected, there may be issues with blending and corrosion that would need to be addressed.

Legal – Depending on the project selected, and the regulations and permitting requirements, there may be legal considerations.

Labor – A final project would require additional expertise to operate and maintain. Sociopolitical –The State is currently developing regulations and permitting requirements.

Policy – A final project would need to be evaluated against the potential of other alternative water supply projects such as stormwater capture.

Environmental

98

– Environmental review would depend on the proposed project.

Interagency – The project builds on an established interagency partnership between GWD and GSD. This project would also help GSD comply with State mandates to be zero discharge.

ACTIONS NEEDED:

The District and its regional partners are seeking assistance for the financial burdens caused by the extended drought on the region, and requests that the State give funding preference to Santa Barbara County projects that are addressing drought related water supply reliability issues. Funding is needed for the pilot study, and subsequent final project to provide additional drought proof water supplies and further diversify the region’s supply portfolio.

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Comprehensive Water Reuse ‐ Carpinteria


This project develops additional drought proof water supplies by treating secondary sewer effluent to a potable standard. This project provides a new source of water supply, and diversifies the water portfolio for the Carpinteria Valley Water District (CVWD). The Recycled Water Indirect Potable Reuse (IPR) project will treat approximately 1100 acre feet per year (AFY) at the Carpinteria Sanitary District (CSD) treatment plant using full advanced water treatment. The finished purified water will then be stored in the Carpinteria Groundwater Basin for potable use later. In conjunction with other reuse projects currently proposed along the South Coast of Santa Barbara County this project will add a drought proof sustainable water supply to the region.

REGIONAL BENEFIT:

Water supply for the South Coast of Santa Barbara County is under stress due to the historic drought, limitations on State Water Project related to delivery capacity and reliability, and forthcoming environmental requirements for the Cachuma Project. This water supply stress has become a driver for Carpinteria Valley Water District to begin developing an IPR Project to provide a new sustainable water supply to the region.

While the Carpinteria IPR project is not proposed to serve other agencies outside the Carpinteria Valley directly, it will improve regional water supply reliability and create opportunities for exchange, among agencies on the South Coast, communities receiving State Water, and communities receiving water from the Santa Ynez River.

The IPR Project will also support key objectives from the Santa Barbara County 2013 Integrated Regional Water Management Plan; augmenting water supplies; protecting groundwater supplies; and improving emergency preparedness; and protecting ocean water quality.


While the near term drivers for the project are the current drought and the likely reduction of existing water supplies in the near future, there are also long term risks to the reliability of the region’s current water supply. Currently, the region’s water supplies are at risk in the event that surface water supplies are interrupted due to conveyance failure through the existing conveyance system. This conveyance facility is a weak link in the water supply system and failure of the pipeline or tunnel could cause large scale water outages to Carpinteria Valley Water District customers and the South Coast. The IPR project provides a local supply that does not rely on the conveyance facilities. For example, in the event of a catastrophic interruption, the IPR project and local groundwater supplies could provide a reliable local source capable of meeting minimum health and safety needs.

Additionally, when regulations allow, the IPR project could be converted to a Direct Potable Reuse project that would provide even more water supply flexibility in such an event. This project also supports mutual aid to Montecito Water District because CVWD has the ability to deliver its local water supply to Montecito Water District both through existing interties and the South Coast Conduit.

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The capital cost for the Carpinteria Indirect Potable Reuse Project facilities is as follows:

$4.0 Million Planning, Design, CEQA and Permitting

$17.1 Million for Facilities Construction

Total Project Cost $21.1 Million

The CVWD who is the lead agency for the Carpinteria Valley IPR project is in the process of developing a grant application for funding through the Recycled Water Funding Program funded by Proposition 1. It is our understanding the grant funding under this program is under great demand and that we are unlikely to acquire a grant from this funding source at this time. However, Carpinteria Valley Water continues to look for grant funding opportunities to help fund the project. CVWD is also looking to utilize State Revolving Fund low interest loans to fund the capital portion of the project. Since Carpinteria’s water rates are some of the highest in the County, many residents of Carpentaria have expressed concern about the impact on water rates of the project. The challenge is to balance the cost of this new water supply with the reliability of the overall water supply. There are several opportunities that CVWD is looking into that may offset the expense of the IPR project while improving the water supply reliability.

DISCUSSION:

Santa Barbara County is currently suffering through the most intense drought on record for this area. The result of this drought is that Lake Cachuma, a major water supply for the Santa Barbara South Coast, has become depleted and project members have received no water allocation for two years. This is compounded by the fact that State Water project deliveries have been limited to an average of 41% of total allotment over the drought thus far. In Carpinteria the water district has heavily depended on the local groundwater basin to make up for the lack of other water supplies. Like Cachuma, the groundwater basin has also suffered depletion from increased extraction and minimal recharge over the past five years. The basin water level is nearing a fifty year low and showing signs of overdraft and the threat of seawater intrusion. Even with rain finally falling locally this year it is likely that the Cachuma Project safe yield will be reduced for the foreseeable future due to forthcoming environmental requirements for the Cachuma Project. This will apply pressure on an already depleted groundwater basin in Carpinteria.

In 2014, at the height of the drought, CVWD decided to begin studying the potential for both a regional recycled water project and a local recycled water project. After determining the need for an additional reliable water supply, CVWD, Carpinteria Sanitary District and the City of Carpinteria commissioned a facility level study to determine what the best option for developing a project would be. With the assistance of The State Water Resources Control Board Recycled Water Planning Grant Program, the Carpinteria Recycled Water Facilities Plan (RWFP) was completed in May of 2015. The study concluded that an indirect potable reuse project was the most beneficial to the water users in Carpinteria Valley. CVWD is currently completing a funding analysis, public outreach and technical analysis for the project.

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The RWFP was developed to support decision making regarding building a Recycled Water Project in Carpinteria in order to mitigate water supply shortages. The Plan identified various uses for recycled water in Carpinteria Valley. Both non potable reuse (NPR) and indirect potable reuse were considered in the Plan. The RWFP found that the preferred project would be a treatment plant with Full Advanced Water Treatment (AWT) for use as an indirect potable water supply stored in the Carpinteria Groundwater Basin.

CVWD and CSD have contemplated cooperatively developing a Recycled Water Project as described in “Alternative 3C” of the RWFP. The Recycled water treatment would occur at the CSD Treatment Plant using AWT, including microfiltration, reverse osmosis and advanced oxidation process. It is estimated that the proposed project would yield about 1100 acre feet per year of water for reuse. It is assumed that the required additional treatment equipment for AWT would be located on the existing CSD treatment plant property. The finished water would be pumped into a proposed transmission pipeline connected to two groundwater injection wells located about one and a quarter miles away. The injected water would remain in the groundwater basin between two and six months at a minimum. The Water District would recover the water after this period through its existing groundwater production facilities for use as potable water.

Required new facilities include an advanced water treatment plant, pumping station, one and a quarter miles of transmission main and two injection wells with flushing tanks. The Project analysis is currently in the final stages of a funding plan, outreach plan and technical analysis. In June of 2017 the Boards of Carpinteria Valley Water District and Carpinteria Sanitary District will decide if they would like to move forward with the project. If they conclude the project is needed, then it is projected that the entire project including construction and startup will be completed by January of 2020.

IMPACTS:

Fiscal – CVWD believes that the IPR project will have impacts on water rates for a period of 10 years; however, CVWD is evaluating ways to minimize any rate impacts including utilization of grant funding, public private partnerships, interagency partnerships and debt restructuring.

Operational – Operational impacts for both CVWD and CSD are minimal.

Legal – Potential legal complexity exist with respect to using the Carpinteria Groundwater Basin for storage of purified recycled water. The District is working to develop a steering group of local groundwater stakeholders to assist it with this issue.

Labor – The project will require 2 to 3 FTEs to operate and maintain the project. This is figured into the unit price of water.

Sociopolitical – There are no known negative sociopolitical impacts that would result from this project. This project will provide a more secure water supply for the industry and agriculture potentially resulting job stability and economic growth in the area.

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Policy – The project is supported by policies from the State level to the local level. No known conflicts in policy with this project exist.

Environmental – Environmental impacts have not been analyzed yet, however CVWD believes that any environmental impacts will be mitigatable. CEQA analysis will begin in June of 2017.

Interagency – CVWD is working with the Carpinteria Sanitary District and the City of Carpinteria to develop the project to maximize the benefits to each agency. CVWD is interested in working with other local water agencies to expand the water supply benefits of the project.

ACTIONS NEEDED:

The Carpinteria Valley Water District and its regional partners are seeking assistance for the financial burdens caused by the extended drought on the region, and requests that the State give funding preference under any available funding programs to Santa Barbara County Reuse Projects that are addressing drought related water supply reliability issues.

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Treatment Facilities for the Removal of Hexavalent Chromium from Groundwater

PROJECT DISCRIPTION:

The proposed Treatment Facilities Project would treat naturally occurring Hexavalent Chromium (Cr6) and will restore 2,400 AF/Year (average year production) local potable water supply in the Santa Ynez Upland Groundwater Basin through use of a new water treatment facility, blending facilities and well modification.

REGIONAL BENEFIT:

103

The Santa Ynez River Water Conservation District Improvement District No. 1 (District) supplies water to three mutual water companies, Cachuma Lake County Park and the City of Solvang in addition to its own customers. Additionally, restoration of local supplies will lessen demand on shared resources with other water agencies in the County by reducing dependency on State Water and Cachuma water.


The Division of Drinking Water (of the State Water Resources Control Board (SWRCB)) adopted a maximum contaminant level (MCL) for Cr6 in drinking water of 10 parts per billion, effective July 1, 2014. As a result, the District lost the use of half of its Upland well water availability that served as the backbone of the District’s water supply system. Simultaneously, the ongoing drought that has plagued California for the last five years also took much or all of the District’s water availability from its three remaining surface water sources, i.e., Lake Cachuma, Santa Ynez River alluvial wells, and the State Water Project. Over half of the Upland well supplies must be treated or blended to meet the new drinking water standards before these sources can again be utilized. Without full use, the District is in danger of not meeting peak day demands, water pressure or fire flow requirements under all conditions.


All feasible methods of Hexavalent Chromium reduction are very expensive. Depending upon the Best Available Technology (BAT) chosen and the level of reliability desired, costs range from about $14 million to over $25 million. These considerable costs, made necessary due to drought and Hexavalent Chromium regulation, will be a huge burden to District customers.

The District continues to search for all Federal, State, and local grant and loan programs. A great amount of effort was expended pursuing Proposition 1 grants including making sure that naturally occurring Hexavalent Chromium was included in the original language as well as in the Water Code, attending and commenting on all workshops and draft guidance documents, setting up meetings with senior SWRCB staff and garnering lobbying assistance through the Association of California Water Agencies. All of this proved unfruitful, however, because the SWRCB stated that unless a contaminant could be removed from a groundwater basin (instead of treating it out of the pumped water) it could not be considered to be a groundwater project worthy of funding assistance. The SWRCB also stated that all districts looking for drinking water quality assistance must be a Disadvantaged Community to qualify for any grant assistance. Only loans from the State Revolving Fund would be considered otherwise.

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The District continues to pursue IRWM assistance, loans through the USDA, loans through the State Revolving Fund as well as revenue bonds. Without some sort of grant assistance, however, the costs for a fully reliable system appear to be out of reach.

DISCUSSION:

The District and its consultant work group began studying and proposing solutions to the Cr6 problem in late 2013. Work included multiple rounds of water quality sampling and well profiling to characterize the average concentration of Cr6 from each of the District Upland wells; comparison of available treatment technologies for removal of Cr6 and conceptual design of treatment facilities; comprehensive hydraulic analyses addressing potential water blending between multiple wells and distribution of water among and between the existing District water zones; conceptual engineering design of a dedicated distribution system for irrigation water, separate from the domestic water distribution system; and quantification of water supplies from all sources available to the District, with consideration for augmenting those supplies not containing Cr6.

Water quality sampling and well profiling efforts concluded that naturally occurring Cr6 concentrations vary between the District Upland wells. Four (4) of the ten (10) total District Upland wells demonstrated Cr6 concentrations consistently above the 10 ppb Cr6 limit. Several other wells demonstrated Cr6 concentrations hovering just below the 10 ppb Cr6 limit. Well profiling conducted for several of the Upland wells identified geologic zones with high Cr6 concentrations, which contributed to the overall Cr6 concentration in produced water exceeding the 10 ppb Cr6 limit. By preventing water from entering the well casing from the higher Cr6 zones, water below the Cr6 MCL can be produced. This technique is achieved by installing packers, which are commonly used in the oil industry.

Another approach for wells with total Cr6 concentrations very close to the Cr6 MCL is to blend this well’s water with another well that is producing water containing very low Cr6 concentrations. The water blended from the two well sources would then have Cr6 concentrations well within the MCL. All of the techniques identified above are included in the Hexavalent Chromium Treatment Facilities Project.

IMPACTS:

Fiscal

104

– N/A

Legal – To date, legal work has been minimal.

Labor – N/A

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Sociopolitical - The lack of public acceptance that the MCL legislation will benefit them and that they are at any real risk has been a common theme in public workshops and meetings.

Policy - N/A

Health and safety – Addressed above.

Environmental

105

– N/A

Permitting status – Environmental and preliminary design are complete. Detailed design is ongoing.

ACTIONS NEEDED:

The District intends to treat and blend its affected water sources to reestablish water source reliability but the cost will be financially damaging to its customers without State/Federal grant assistance. Therefore, the District and its regional partners are seeking assistance for the financial burdens caused by the drought and new water quality regulations, and request that the State provide any and all assistance to make this project eligible for grant funding through Proposition 1 (including reinterpreting the guidance documents to come into conformance with the enabling legislation and the water code, so naturally occurring arsenic is included) and/or other grant programs.

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Lake Cachuma Temporary Emergency Pumping Facility System


This project maintains operation of the Temporary Emergency Pumping System (TEPS) at Lake Cachuma during the drought by providing for maintenance, relocation, and possible purchase of components of the system. This project is a highly critical operational infrastructure project, which provides lifeline delivery of Cachuma Project water and State Project water to 250,000 residents on the South Coast of Santa Barbara County. Without the ongoing operation of the EPS, water service to all major population centers on the South Coast would be interrupted, causing a widespread immediate threat to public health and safety.

REGIONAL BENEFIT:

The Cachuma Project was constructed in the late 1950’s and has been the primary source of surface water supply for certain water agencies in central and south Santa Barbara County. When the lake was built, an intake gate was designed to deliver water to the South Coast through a gravity feed system. The severe drought has reduced Lake Cachuma storage to as low as 7% of its total capacity. For more than two years, water levels have been below the intake facility. Unable to flow by gravity into the intake tower, water has instead been pumped by the TEPS up to the lowest intake gate to continue water deliveries. Continued maintenance, and movement of the pump barge as lake levels rise and fall are critical to keeping the EPS operational. This project provides a regional benefit by ensuring continued, reliable conveyance of Cachuma Project water, State Project water and supplemental purchased water to purveyors on the South Coast of Santa Barbara County including Goleta Water District, the City of Santa Barbara, Montecito Water District and Carpinteria Valley Water District.

PUBLIC HEALTH AND SAFETY:

106

The continued operation and maintenance of the TTEPS is critical to prevent catastrophic failure or loss of water conveyance to 250,000 residents on the South Coast of Santa Barbara County. None of the agencies have storage capacity large enough to store more than a week’s supply of water, and some can only store several days’ worth, so even a short disruption could result in an interruption to maintaining delivery of potable water for public health and safety.


The TEPS was built at a cost of $4.1 million and ongoing annual operations and maintenance costs are $1.5 million. These costs were shared across four South Coast agencies, and grant funding was provided by the State in the amount of $3.1 million, but the ongoing costs and additional expenses associated with continued drought conditions have been a challenge for local agencies. While all the agencies that benefit from the TEPS have raised their rates, depending on the length of time the TEPS needs to remain in place, the level of maintenance required to keep it online, and how often it needs to be relocated as lake levels fluctuate, additional funding is required to ensure its continued operation.

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Grant funding may be available through USBR WaterSMART Grant/Drought Resiliency Program or Santa Barbara County IRWMP. Limitations exist regarding potential eligibility, maximum funding amounts, competition for funding/awards and timing issues, especially since expenses such as mobilization for moving the barge are a nontraditional grant fit. Debt financing may be available through the California Drinking Water State Revolving Fund or through other local financial institutions. However, challenges exist on debt financing including qualification and timing process. Capital and Operating budgets from participating Member Agencies are exhausted due to unanticipated costs resulting from drought emergency financial implications and decreased water sales revenue.

DISCUSSION:

Cachuma Lake is owned and operated by the U.S. Bureau of Reclamation (Reclamation). Reclamation has permits from the State Water Resources Control Board (SWRCB) for the continuing operation and maintenance of the Cachuma Project diverting water from the Santa Ynez River.

Due to the ongoing drought and the critical need for a reliable and uninterrupted water supply, the pipeline project was implemented in 2014. Drought conditions continue in Santa Barbara County with water levels in Lake Cachuma receding such that originally designed gravity flow is no longer available to provide continued, reliable delivery of Cachuma Project water, State Water and supplemental purchased water to over 250,000 residents on the South Coast of Santa Barbara County.

The Temporary Emergency Pumping Facility Project – consisting of a pumping barge with seven variable speed pumps, a floating 10,100 foot conveyance pipeline, approximately 100 installed anchor pilings, a tower appendage connection, and electrical supply and cabling – was constructed and installed in 2014 and in 2016. Sustained operations of the barge facility at the first location began in August 2015 and the barge facility was moved to deeper waters in the lake in late June of 2016.

As lake levels fluctuate with winter storms, it may be necessary to move the barge facility to prevent damage and interruption from flood debris. If lake levels rise above 670’ elevation, the barge facility must be relocated back to the original site for operation or it is at risk to be torn loose from its moorings. The TEPS is likely to remain in service for at minimum several months, assuming enough inflow occurs this winter to bring the lake back to gravity feed conditions. However, given the severe drought conditions, it is possible the TEPS will need to operate intermittently for several more years, requiring significant funding to keep the system operational as lake levels rise and fall during continued drought conditions.

IMPACTS:

Fiscal – The ongoing costs of maintaining the temporary facility has placed additional financial burdens on previously strained district budgets. The temporary EPS is operated under a lease-operate contract. As the drought continues and conditions require ongoing operations it may be more economical to purchase the TEPS equipment and/or begin operating the facility by agency staff.

Annual O & M costs - $1,500,000 Estimated relocation costs – $500,000 Estimated facility and pipeline acquisition costs - $1,500,000

10793

Page 26 of 28

Operational – The EPS provides water conveyance for a community of over 250,000 residents. Without continued operation of this project, the community would face a catastrophic failure and South Coast water purveyors would be unable to obtain Cachuma water, state water and supplemental water to meet regional demands.

Sociopolitical – The project has been operating since 2015 with a collaboration of stakeholders who support a temporary EPS project. This temporary facility is intended to serve through the duration of the current drought and is not a permanent project.

Environmental – All required permits have been received and are current for the regional project.

ACTIONS NEEDED:

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Funding for financial relief is requested for maintenance, potential relocation, and possible acquisition of components critical to ensuring the continued operation of the temporary EPS as the life-line infrastructure water conveyance facility from Lake Cachuma to the South Coast of Santa Barbara County.

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Page 27 of 28

Interagency Intertie Project between Goleta and Santa Barbara

PROJECT DISCRIPTION:

This project will provide an emergency water supply by providing a larger intertie between Santa Barbara and Goleta, while also benefiting Montecito and Carpinteria. By constructing a high capacity intertie between Santa Barbara and Goleta to facilitate the delivery of water between systems on the South Coast, the overall reliability of the region’s water supplies will be improved.

REGIONAL BENEFIT:

The Intertie Pump Project between Goleta and Santa Barbara (Intertie) involves construction of a new, larger connection (interconnect) between the water distribution systems of the Goleta Water District (GWD) and the City of Santa Barbara. The project would allow neighboring agencies to provide mutual assistance to one another in the event of an emergency such as a transmission line failure, earthquake, wildfire, or for a planned system shut down for repairs or maintenance. Since Santa Barbara is also connected to Montecito and Carpinteria, the regional benefit would extend to the entire South Coast.


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While the project does not provide for additional water supplies, it does increase reliability. Currently, the Goleta Water District and the City of Santa Barbara are limited in their ability to supply or transfer water from one system to another in the event of an emergency or major water treatment plant problem. The Interconnect project increases regional water supply reliability by providing for the ability to exchange large volumes of water between the two systems.

The interconnect would allow both agencies to convey between 3 to 4 million gallons of treated water per day (gpd) to one another in the event of an emergency (i.e., wildfire, drought, earthquake), during shutdowns of GWD or SB water system facilities, and during periods of high demand when supplemental supplies may be needed. The project would also help to mitigate downstream peaking impacts along the South Coast Conduit, as well as maximize the use of the limited regional storage facilities. The proposed booster pumping station will include data collection capabilities and will allow for the monitoring of the transfer of water from one agency to the other.


This project has been included in the Integrated Regional Water Management Plan of Santa Barbara County. The total cost of the project is $5 million, and the project is eligible for grants under Proposition 1 and IRWMP. This project may also qualify for emergency preparedness grants.

DISCUSSION:

The alternative to the project would be to use the existing smaller interties in the system located at Willowbrook, St. Vincent’s, and Modoc. These interties allow for up to 800,000 gpd to be moved between the systems. However, the Modoc intertie cannot be operated while the Goleta Water District wells are running, which given current drought conditions is continuous.

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Page 28 of 28

IMPACTS

Fiscal – Competes with other immediate concerns for drought related projects, especially those related to developing new water supplies, water quality, and large-scale conveyance and regional water system reliability.

Operational – Water quality and distribution issues related to blending of different water sources would need to be examined and proactively addressed.

Legal – N/A

Labor – N/A

Sociopolitical – N/A

Policy – In advance of a project, operational protocols and various agreements regarding exchanges and mutual aid will need to be established.

Health and safety – Beyond the water quality issues noted above, the needs of the dialysis center on the City of Santa Barbara side would also need to be reviewed and addressed.

Environmental – The CEQA process has not been initiated, but significant opposition is not anticipated.

Interagency – A project would require funding and approval by the City of Santa Barbara and Goleta Water District. As the two agencies are the two treatment points on delivery of water to the South Coast, benefits could also extend to other South Coast agencies.

ACTIONS NEEDED:

Funding in the form of grants or matching funds are needed to move the project forward.

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CITY COUNCIL STAFF REPORT / CONSENT AGENDA

TO: SOLVANG CITY COUNCIL MEMBERS FROM: Matt van der Linden, Public Works Director/City Engineer MEETING DATE: March 13, 2017 DATE PREPARED: March 2, 2017 SUBJECT: SOLVANG (SKYTT) MESA LANDSCAPE AND LIGHTING

MAINTENANCE DISTRICT NO. 2004-1, RESOLUTION OF INITIATION AND INTENTION

I. RECOMMENDATION:

1. Adopt Resolution 17-____ , A Resolution of the City Council of the City of Solvang initiating the preparation of an engineer’s report, approving the Preliminary Engineer’s Report.

2. Set a public hearing for April 10, 2017. II. BACKGROUND:

The City Council adopted the Tentative Vesting Map for the Skytt Mesa Project on May 27, 2003. Per Condition No. 50 of that 169-lot subdivision, the applicant was required to establish a Landscape and Lighting Maintenance District (LLMD) prior to the recordation of the first phase final map. The District was established in November 2004 and must now be evaluated annually for any changes.

III. DISCUSSION:

The City has retained Francisco & Associates to prepare the annual Engineer’s Report for the LLMD. The Engineer’s Report outlines the estimated operations and maintenance budget for the 169 single-family residential parcel subdivision at build-out, establishes the boundaries of the District, determines the method for spreading the annual maintenance costs to each single-family residential parcel, and determines the maximum annual assessment that can be levied on each single-family residential parcel.

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To expedite the process and insure that the assessments get put on the Fiscal Year (FY) 2017-18 tax rolls the attached Resolution fulfills three steps in the process. It initiates the Preliminary Engineer’s Report, approves the Preliminary Engineer’s Report, and sets the date for the public hearing on the levy of the proposed assessment. The public hearing will be held on April 10, 2017. After that public hearing the assessments will be set and the Final Assessor’s Roll will be prepared and filed with the Santa Barbara County Auditor’s Office to be included in the subsequent tax roll. The Final Assessor’s Roll will be included in the Fiscal Year 2017-18 tax roll. At the public hearings for the Solvang Mesa LLMD in June 2010, May 2011 and May 2012, several Solvang Mesa residents requested relief from the recommended large increase in the assessment. In these instances, the Solvang City Council agreed to limit the increase in the assessment to 5%, 16.5% and 9.4% respectively, with the additional cost to be drawn from the LLMD reserves. A 0% increase was recommended for FYs 2013-14, 2014-15, 2015-16 and 2016-17, and approved by the City Council. For the past several years, after setting the assessment, the City Council recognized that in future years the assessment may need to be higher.

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. At the close of FY 2016-17 the total reserves for the LLMD are projected to be approximately $223,588, and this figure less administrative fees, was used to develop the Preliminary Engineer’s Report. For this year’s Preliminary Engineer’s Report, it is estimated that $143,000 will be needed to maintain the lighting, landscaping, and open space areas. As improvements in the remaining project phase are completed and accepted into the LLMD by City Council, the assessment amount may be increased to a potential maximum of $2,431.91 per parcel at full build-out. One of the project conditions was that the CC&R’s of the subdivision include a Notification of the Landscape Maintenance District requirements, restrictions and costs. This was to insure all property owners are informed of the LLMD costs. At build-out, each single-family residential (SFR) parcel will benefit equally from the construction, operation, maintenance and servicing of the landscaping and street lighting improvements. Therefore, at build-out the total assessment revenue needed to construct, operate, maintain and service the landscaping and lighting improvements will be spread equally among the 169 SFR parcels. Currently the Phase 1, 2 and 3 landscaping and street lighting improvements, the development’s entryway improvements and the detention basin improvements have been completed and turned over to the City for maintenance. The maintenance is performed by a private landscape contractor utilizing the revenue generated from the LLMD. Phase 4 landscaping and lighting improvements are expected to be completed in FY 2017-18 and turned over to the City for maintenance beginning around January 1, 2018. The number of single family

98

residential parcels included in the Final Maps for Phases 1, 2, 3 and 4 are 38, 46, 39 and 46 respectively. Each of the 169 SFR parcels located in Phases 1, 2, 3 and 4 will benefit from the landscaping and street lighting improvements, and a portion of the entryway and detention basin improvements. The total estimated assessment amount for the parcels in Phases 1, 2, 3 and 4 is $202,800.00. Therefore, it is proposed that the $202,800.00 in assessment revenue needed from the 169 SFR parcels located in Phases 1, 2, 3 and 4 be assessed equally to each parcel, or $1,200.00 per parcel. As mentioned above, in May 2012 the City Council agreed to limit the increase in the FY 2012-13 assessment. This created a condition that would require use of LLMD reserves to cover the cost of services. However, a few weeks after the assessment was set, City staff evaluated the sizing of the four 2” LLMD irrigation meters in Phase 1. It was determined that two of the four 2” meters could be down sized to 1” meters. This resulted in a significant savings during FY 2012-13 and subsequent years. In addition, the parkway landscaping planned for Phases 3 and 4 was changed to eliminate turf and utilize drought tolerant low water usage plantings. Instead of utilizing two irrigation meters per Phase, the landscaping change has allowed each of these Phases to function adequately with just one meter (per Phase) resulting in further long term cost savings. These factors are allowing the recommended FY 2017-18 assessment to remain the same. With the recommended assessment, the LLMD reserves are projected to increase in FY 2017-18 by approximately $68,000 and achieve the recommended level. The Skytt Mesa Phase 2, 3 and 4 Final Maps have been recorded with 46, 39 and 46 lots respectively. The applicant (developer) will pay all annual assessments for parcels under their ownership until sold. After the sale, the developer will continue to be responsible for the landscape maintenance within that phase until the landscape improvement are completed for the entire new phase and that phase is added to the landscape maintenance contract. However, in the fiscal year following the sale of a lot, the full assessment will be applied to the new property owner. The annual Engineer’s Report for the LLMD will adjust the assessments as necessary prior to improvements within any new phase being added to the Assessment District. The total amount to be assessed in the FY 2017-18 tax rolls is $202,800.00, which represents the anticipated budget for the 169 parcels in Phases 1, 2, 3 and 4.

IV. ALTERNATIVES:

As the approving authority for the project, the City Council could modify the conditions of approval to modify the scope of the requirement for the creation of a Landscape Maintenance District. A home owners association (HOA) could be created, as in other similar developments throughout the City, and the HOA be

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responsible for the common area and open space landscape maintenance, and lighting costs. Under this alternative, the existing LLMD would need to be modified to only cover maintenance of the storm drain detention basin for the Skytt Mesa Development located within Hans Christian Andersen Park. As an additional alternative, the City of Solvang could hire additional staff utilizing the LLMD funding and assume responsibility for the common area and open space landscape maintenance, and lighting costs for the Skytt Mesa Development.

V. FISCAL IMPACT:

There is no fiscal impact to the City. The LLMD will fund the annual operation and maintenance of the landscaping and lighting improvements, which will be constructed for the Development as outlined in the conditions of approval for the project. This assessment district will be funded through the levy of a special assessment, collected on the Santa Barbara County’s property tax rolls for the 169 lots of the subdivision as outlined in the required Engineer’s Report.

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ATTACHMENTS:

A. FY 2017-18 Preliminary Engineer’s Report for LLMD 2004-1 B. Resolution

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City of Solvang

SOLVANG MESA LANDSCAPE & LIGHTING

MAINTENANCE DISTRICT NO. 2004-1

Prepared by:

Francisco & Associates, Inc.

130 Market Place, Suite 160 San Ramon, CA 94583

Fiscal Year 2017-18 Preliminary Engineer’s Report

March 13, 2017

SOLVANG MESA LANDSCAPE & LIGHTING FY 2017-18 MAINTENANCE DISTRICT No. 2004-1 TABLE OF CONTENTS

Francisco & Associates, Inc. i

TABLE OF CONTENTS

Page No.

City Directory ........................................................................................................................................ ii Signatures ............................................................................................................................................... iii Section I – Introduction ....................................................................................................................... 1 Section II – Engineer’s Report ........................................................................................................... 2 Part A – Plans and Specifications ............................................................................................... 4 Part B – Estimate of Cost............................................................................................................... 5 Table 1: Budget ...............................................................................................................6 Part C – Assessment District Diagram ...................................................................................... 8 Part D – Method of Apportionment of Assessment ............................................................. 10 Part E – Property Owner List & Assessment Roll ................................................................ 13 Appendix “A” – FY 2017-18 Assessment Roll ....................................................................... A-1

SOLVANG MESA LANDSCAPE & LIGHTING FY 2017-18 MAINTENANCE DISTRICT No. 2004-1 CITY DIRECTORY

Francisco & Associates, Inc. ii

CITY OF SOLVANG

SOLVANG MESA LANDSCAPE & LIGHTING MAINTENANCE DISTRICT No. 2004-1

FISCAL YEAR 2017-18

CITY COUNCIL MEMBERS AND CITY STAFF

Jim Richardson Mayor

Ryan Toussaint Mayor Pro Tem

Joan Jamieson Council Member

Hans Duus Council Member

Neill Zimmerman Council Member

Brad Vidro, P.E. City Manager

Sandra Featherson Administrative Services Director

Lisa S. Martin City Clerk

Matt van der Linden, P.E. Public Works Director/City Engineer

Francisco & Associates, Inc. Assessment Engineer

SOLVANG MESA LANDSCAPE & LIGHTING FY 2016-17 MAINTENANCE DISTRICT No. 2004-1 SIGNATURES

Francisco & Associates, Inc. iii

ENGINEER’S REPORT

CITY OF SOLVANG

SOLVANG MESA LANDSCAPE & LIGHTING MAINTENANCE DISTRICT No. 2004-1

FISCAL YEAR 2017-18

The undersigned respectfully submits the enclosed Engineer’s Report as directed by the City Council.

Dated: March 1, 2017 By_____________________________________________ Joseph A. Francisco, P.E. RCE No. 40688 I HEREBY CERTIFY that the enclosed Engineer’s Report, together with the Assessment Roll and Assessment Diagram thereto attached was filed with me on the ________ day of ______________, 2017. Lisa S. Martin, City Clerk City of Solvang Santa Barbara County, California By_____________________________________________ I HEREBY CERTIFY that the enclosed Engineer’s Report, together with the Assessment Roll and Assessment Diagram, thereto attached, was approved and confirmed by the City Council of the City of Solvang, Santa Barbara County, California, on the _________ day of _______________, 2017. Lisa S. Martin, City Clerk City of Solvang Santa Barbara County, California By_____________________________________________

SOLVANG MESA LANDSCAPE & LIGHTING SECTION I MAINTENANCE DISTRICT No. 2004-1 INTRODUCTION

Francisco & Associates, Inc. 1

SECTION I

INTRODUCTION

As required by the Landscape & Lighting Act of 1972, this Engineer’s Report describes the improvements which can be constructed, operated, maintained and serviced by the District, provides a maximum budget for build-out, provides an estimated budget for FY 2017-18, lists the maximum assessments that can be levied upon each assessable lot or parcel of land within the District and lists the FY 2017-18 assessments that can be levied upon each assessable lot or parcel of land within the District. In addition to complying with the provisions of the Landscape & Lighting Act of 1972, the Solvang City Council complied with the provisions of Proposition 218 which was approved by the California voters on November 5, 1996. Proposition 218, entitled “Right to Vote on Taxes Act”, added Articles XIIIC and XIIID to the California Constitution. This Proposition established new procedural requirements for the formation and administration of assessment districts. In order to comply with these requirements, the City of Solvang implemented the following procedures:

1. Every property owner subject to the proposed assessment was mailed a ballot allowing the property owner to vote on whether to form and levy assessments within the District. The ballots were accompanied by a public notice describing the total assessment, the individual property owner’s assessment, the reason for the assessment, and the general basis upon which the assessment was calculated.

2. The Solvang City Council held a Public Hearing on November 8, 2004 to provide an

opportunity for any interested person to be heard. After the close of the public input portion of the public hearing, the City Council directed City staff to tabulate the assessment ballots. All of the ballots received were in favor of forming the assessment district. City Council subsequently adopted a resolution forming the assessment district and authorizing the levy of assessments.

SOLVANG MESA LANDSCAPE & LIGHTING SECTION II MAINTENANCE DISTRICT No. 2004-1 ENGINEER’S REPORT


SECTION II

ENGINEER’S REPORT PREPARED PURSUANT TO THE PROVISIONS OF LANDSCAPING AND LIGHTING ACT OF 1972

SECTION 22500 THROUGH 22679 OF THE CALIFORNIA STREETS AND HIGHWAYS CODE

SOLVANG MESA LANDSCAPE & LIGHTING

MAINTENANCE DISTRICT No. 2004-1

FISCAL YEAR 2017-18 Pursuant to the Landscaping and Lighting Act of 1972 (Part 2 Division 15 of the Streets and Highways Code of the State of California, commencing with Section 22500), and in accordance with the Resolution of Intention, being Resolution No. 17-_____, adopted by the City Council of the City of Solvang on March 13, 2017, I, Joseph A. Francisco, P.E. the duly appointed Engineer of Work, Assessment Engineer for the Solvang Mesa Landscape & Lighting Maintenance District No. 2004-1 (“District”) submit the following Report, consisting of Section I (Introduction), and this, Section II, which consists of five (5) parts as follows:

PART A: PLANS AND SPECIFICATIONS

This part describes the improvements in the District. Plans and specifications for the improvements are as set forth on the list thereof, attached hereto, and are on file in the Office of the City Clerk of the City of Solvang, and are incorporated herein by reference.

PART B: ESTIMATE OF COST

This part contains an estimate of the cost of the proposed improvements at build out and for FY 2017-18, including incidental costs and expenses in connection therewith. The estimate is as set forth on the lists thereof, attached hereto, and is on file in the Office of the City Clerk of the City of Solvang.

PART C: ASSESSMENT DISTRICT DIAGRAM

This part incorporates a Diagram of the District showing the exterior boundaries of the District, the boundaries of any zones within the District and the lines and dimensions of each lot or parcel of land within the District. This Diagram has been prepared by the Engineer of Work and is on file in the Office of the City Clerk of the City of Solvang.

SOLVANG MESA LANDSCAPE & LIGHTING SECTION I1 MAINTENANCE DISTRICT No. 2004-1 ENGINEER’S REPORT


The lines and dimension of each lot or parcel within the District are those lines and dimensions shown on the maps of the Santa Barbara County Assessor for the year when this Report was prepared. The Assessor’s maps and records are incorporated by reference herein and made a part of this Report.

PART D: METHOD OF APPORTIONMENT OF ASSESSMENTS

This part describes the method of apportionment of assessments, based upon parcel classification of land within the District in proportion to the estimated special benefits to be received.

PART E: PROPERTY OWNER LIST & ASSESSMENT ROLL This part contains an assessment of the estimated cost of the improvements on each benefited lot or parcel of land within the District. The Assessment Roll is as set forth on the lists thereof, attached hereto, and is on file in the Office of the City Clerk of the City of Solvang. The Assessment roll is keyed to the records of the Santa Barbara County Assessor, which are incorporated herein by reference.

SOLVANG MESA LANDSCAPE & LIGHTING SECTION I1 MAINTENANCE DISTRICT No. 2004-1 PART A


PART A

PLANS AND SPECIFICATIONS

The landscape improvements which can be constructed, operated, maintained and serviced by the District generally include, but are not limited to, trees, bushes, plants, turf, irrigation systems including electrical meters, hardscapes, entry features, and appurtenant improvements as required to provide an aesthetically pleasing environment throughout the District. These landscape improvements were constructed as a condition of development and are generally located within the City’s right-of-way, within City easements, and within City open space areas. The street lighting improvements which can be constructed, operated, maintained and serviced by the District generally include, but are not limited to, poles, fixtures, bulbs, conduits, pull boxes, equipment, including guys, anchors, posts, pedestals and metering devices, and appurtenant improvements as required to provide safe lighting within the boundaries of the District. The detention basin improvements that can be constructed, operated, maintained, and serviced by the District generally include graded slopes, fencing, outlet and overflow structures, retaining walls and the detention basin itself. The plans and specifications for the improvements are on file in the Office of the City Clerk of the City of Solvang.

SOLVANG MESA LANDSCAPE & LIGHTING SECTION I1 MAINTENANCE DISTRICT No. 2004-1 PART B


PART B

ESTIMATE OF COST

The 1972 Act provides that the total cost of construction, operation, maintenance and servicing of landscape and lighting improvements can be recovered by the District. The costs to construct, operate, maintain, and service the landscape and lighting improvements include, but are not limited to, personnel, electrical energy, utilities such as water, materials, contractual services and other items necessary for the landscape and lighting improvements to be properly operated, maintained and serviced to City standards. Maintenance means the furnishing of services, materials and supplies for the ordinary and usual operations, maintenance and servicing of the landscaping, lighting and appurtenant improvements, including the repair, removal or replacement of all or part of any of the landscaping, street lighting or appurtenant improvements; including cultivation, irrigation, trimming, spraying, fertilizing and treating for disease or injury; and the removal of trimmings, rubbish, debris and other solid waste. Servicing means the furnishing of water for the irrigation of the landscaping improvements and the furnishing of electric current or energy for the operation of street lights, irrigation controllers or other appurtenant improvements. Below is a summary of the improvements which will be operated, maintained and serviced by the assessment district.

1) Landscaped parkways throughout the project; 2) Landscaping within the right of way of Chalk Hill Road along the frontage of the

project; 3) Landscaping in designated open space areas shown on the vesting tentative map and

landscaped parkway; 4) Landscaping in the Caltrans right of way, adjacent to the project, if permitted by

Caltrans; 5) Annual fire abatement of grasses and other vegetation management in unfenced

portions of the No Development Zone (individual lot owners shall be responsible for such annual fire abatement and vegetation management within those portions of the No Development Zone enclosed by a fence);

6) Maintenance of slopes of Lots 1-14, 93-97 and 158-166; 7) Entrance signage and landscaping; 8) Street lighting, conduits and appurtenant hardware; and 9) Detention basin within Hans Christian Anderson Park shall be perpetually

maintained. The construction, operation, maintenance, and servicing costs for build-out and Fiscal Year 2017-18 are summarized on the following page.



Build-Out

Budget

Total

FY 2017-18

Budget

MAINTENANCE COSTS

Water (irrigation) $78,000.00 $66,000.00Irrigation Power (PG&E ) $1,000.00 $1,000.00Street Light Power (PG&E ) (approx. 30 lights @ buildout) $6,000.00 $6,000.00E stimated Repairs and Replacement - FY 2017-18 $5,000.00 $5,000.00Detention Basin Maintenance $5,000.00 $5,000.00Open Space/Landscaping Maintenance $72,000.00 $60,000.00

Subtotal Maintenance Cost $167,000.00 $143,000.00

INCIDENTAL COSTS

Administration (City) $7,500.00 $7,500.00E ngineer's Report and Related Documents $5,000.00 $5,000.00County Collection Charges $200.00 $200.00

Subtotal Incidental Costs $12,700.00 $12,700.00

RESERVES

Operating and Capital Reserves 1 $268,600.00 $270,688.00Subtotal Reserve Costs $268,600.00 $270,688.00

TOTAL COSTS $448,300.00 $426,388.00

TOTAL REVENUE

Projected June 30, 2017 Surplus from Prior Fiscal Year $223,588.00ASSE SSME NT COLLE CTION FISCAL YE AR 2017-18 $202,800.00

Total Revenue $426,388.00

Total No. of Proposed Assessable Single Family Parcels (Phase I thru IV) 169

Maximum Assessment per Proposed Single Family Parcel 2

$2,431.91

FY 2017-18 Collection per Proposed Single Family Parcel (Phases I thru IV) $1,200.00

NOTES:( 1) Operating reserves are needed for future fiscal years because the City does not receive assessment revenue from the

County until January, therefore it is necessary to have an operating reserve fund to cover 6 months of cash flow from

July 1 through December 31 each fiscal year. Therefore, for FY 2017-18, $77,850 is needed for operating reserves

($143,000+$12,700) x 0.50 = $77,850.

In addition, Capital reserves are used to replace capital facilities in the event of failure, damage, vandalism or when

they reach their useful life expectancy. The estimated cost to replace the capital facilities at buildout is $715,000.

Since it is unlikely that all capital facilities will need to be replaced in the same year it is estimated that 25% of

the replacement cost, or $178,750 should be budgeted for capital reserves at buildout.( 2) The maximum assessment per parcel may be increase 5% each future fiscal year.

TABLE NO. 1

SOLVANG MESA LANDSCAPE & LIGHTING MAINTENANCE DISTRICT NO. 2004-1



The 1972 Act requires that a special fund be set up for the revenues and expenditures of the District. Funds raised by the assessments shall be used only for the purpose as stated herein. Any balance remaining on July 1 must be carried over to the next fiscal year unless the funds are being accumulated for future capital improvements and/or operating reserves.

SOLVANG MESA LANDSCAPE & LIGHTING SECTION I1 MAINTENANCE DISTRICT No. 2004-1 PART C


PART C

ASSESSMENT DISTRICT DIAGRAM

The boundaries of the Solvang Mesa Landscape Maintenance District No. 2004-1 are shown on the reduced map on the following page. These parcels will comprise 169 single family residential parcels upon build-out. For the particulars of the lines and dimensions for each Assessor Parcel Number, please refer to the Assessor Parcel Maps locate at the Santa Barbara County Assessor office for the year in which this Report was prepared.

SOLVANG MESA LANDSCAPE & LIGHTING SECTION I1 MAINTENANCE DISTRICT No. 2004-1 PART D


PART D

METHOD OF APPORTIONMENT OF ASSESSMENT

GENERAL Part 2 of Division 15 of the Streets and Highways Code, the Landscaping and Lighting Act of 1972, permits the establishment of assessment districts by Agencies for the purpose of providing certain public improvements, which include the operation, maintenance and servicing of landscaping improvements. Section 22573 of the Landscape and Lighting Act of 1972 requires that maintenance assessments must be levied according to special benefit, rather than according to assessed value. This Section states:

“The net amount to be assessed upon lands within an assessment district may be apportioned by any formula or method which fairly distributes the net amount among all assessable lots or parcels in proportion to the estimated benefit to be received by each such lot or parcel from the improvements. The determination of whether a lot or parcel will benefit from the improvements shall be made pursuant to the Improvement Act of 1911 (Division 7 (commencing with Section 50000)) [of the Streets and Highways Code, State of California].”

In addition, Article XIIID, Section 4(a) of the California Constitution limits the amount of any assessment to the proportional special benefit conferred on the property. The Act permits the designation of zones of benefit within any individual assessment district if “by reasons or variations in the nature, location, and extent of the improvements, the various areas will receive different degrees of benefit from the improvement” (Sec. 22574). Thus, the 1972 Act requires the levy of a true “assessment” rather than a “special tax”. Article XIIID provided that publicly owned properties must be assessed unless there is clear and convincing evidence that those properties receive no special benefit from the assessment. Exempted from the assessment would be the areas of public streets, public avenues, public lanes, public roads, public drives, public courts, public alleys, public easements and rights-of-ways, public greenbelts and public parkways, and that portion of public property that is not developed and used for business purposes similar to private commercial, industrial and institutional activities. LANDSCAPING/OPEN SPACE BENEFIT DETERMINATION Trees, landscaping, hardscaping, open space and appurtenant facilities, if well maintained, provide beautification, shade and enhancement of the desirability of the properties within the boundaries of the District. In Parkways and Land Values, written by John Nolan and Henry V. Hubbard, it is stated:



"... there is no lack of opinion, based on general principals and experience and common sense, that parkways do in fact add value to property, even though the amount cannot be determined exactly. Indeed, in most cases where public money has been spent for parkways, the assumption has been definitely made that the proposed parkway will show a provable financial profit to the City. It has been believed that the establishment of parkways causes a rise in real estate values throughout the City, or in parts of the City,..."

It should be noted that the definition of "parkways" above may include the roadway as well as the landscaping alongside the roadway. One hundred percent of the benefits resulting from the landscape and open space improvements are a direct and special benefit to the properties within the District. Therefore, there are no general benefits and 100% of the annual cost to operate and maintain the landscape and open space improvements is assessed to the properties within the boundaries of the District. STREET LIGHTING BENEFIT DETERMINATION The proper functioning of street lighting is imperative for the welfare and safety of the property owners throughout the District. The annual operation, maintenance and servicing of the District’s street lighting system benefits the properties within the District by providing increased illumination for ingress and egress, safe traveling at night, improved security, and protection of property. One hundred percent of the benefits resulting from the street lighting improvements are a direct and special benefit to the properties within the District. Therefore, there are no general benefits and 100% of the annual cost to operate and maintain the street lighting improvements is assessed to the properties within the boundaries of the District. GENERAL & SPECIAL BENEFIT There are no General Benefits associated with street lighting, landscaping and open space improvements within the Solvang Mesa Landscape & Lighting District. All of the street lighting, landscaping and open space improvements directly benefit and are a special benefit to the properties within the Solvang Mesa Landscape & Lighting District. ASSESSMENT METHODOLOGY At build-out, each single family residential parcel will benefit equally from the construction, operation, maintenance and servicing of the landscaping and street lighting improvements. Therefore, at build-out the total assessment revenue needed to construct, operate, maintain and service the landscaping and street lighting improvements will be spread equally to each proposed single family residential parcel.



The Phase I thru III landscaping and street lighting improvements and the entire development’s (Phase I thru IV) entryway and detention basin improvements have been completed and turned over to the City for annual maintenance. It is anticipated that the Phase IV landscaping and street lighting improvements will be completed in FY 2017-18 and turned over to the City for maintenance. Each of the 169 single-family residential parcels located in Phases I thru IV will benefit from the Phase I thru IV landscaping and street lighting improvements and their pro-rata share of the entryway and detention basin improvements. Therefore, it is proposed that $202,800.00 in assessment revenue is needed from the 169 single-family residential parcels located in Phase I thru IV, or $1,200.00 per parcel to cover these costs.

SOLVANG MESA LANDSCAPE & LIGHTING SECTION II MAINTENANCE DISTRICT No. 2004-1 PART E


PART E

PROPERTY OWNER LIST & ASSESSMENT ROLL

Appendix “A’ includes a listing of the Assessor parcels located within the boundaries of the Solvang Mesa Landscape & Lighting Maintenance District No. 2004-1 that will be assessed in FY 2017-18. The maximum assessment rate in FY 2017-18 that could be charged is $2,431.91 per single-family residential unit. In each subsequent fiscal year the maximum annual assessment rate for each single-family residential unit may be increased 5% per year. The total proposed assessment for FY 2017-18 is $202,800.00.

SOLVANG MESA LANDSCAPE & LIGHTING MAINTENANCE DISTRICT No. 2004-1 APPENDIX “A”

Francisco & Associates, Inc. A-1

FY 2017-18 ASSESSMENT ROLL (In Assessor Parcel Number Order)

City of SolvangSolvang Mesa Landscape & Lighting

Maintenance District No. 2004-1

PRELIMINARY ASSESSMENT ROLLFISCAL YEAR 2017-18

APPENDIX A

Assessor'sParcel

NumberAssessment

Amount

137-730-001 $1 ,200.00

137-730-002 $1 ,200.00

137-730-003 $1 ,200.00

137-730-004 $1 ,200.00

137-730-005 $1 ,200.00

137-730-006 $1 ,200.00

137-730-007 $1 ,200.00

137-730-008 $1 ,200.00

137-730-009 $1 ,200.00

137-730-010 $1 ,200.00

137-730-011 $1 ,200.00

137-730-012 $1 ,200.00

137-730-013 $1 ,200.00

137-730-014 $1 ,200.00

137-730-015 $1 ,200.00

137-730-016 $1 ,200.00

137-730-017 $1 ,200.00

137-730-018 $1 ,200.00

137-730-019 $1 ,200.00

137-730-020 $1 ,200.00

137-730-021 $1 ,200.00

137-730-022 $1 ,200.00

137-730-023 $1 ,200.00

137-730-024 $1 ,200.00

137-730-025 $1 ,200.00

137-730-026 $1 ,200.00

137-730-027 $1 ,200.00

137-730-028 $1 ,200.00

137-730-029 $1 ,200.00

137-730-030 $1 ,200.00

137-730-031 $1 ,200.00

137-730-032 $1 ,200.00

137-730-033 $1 ,200.00

137-730-034 $1 ,200.00

137-730-035 $1 ,200.00

137-730-036 $1 ,200.00

137-730-037 $1 ,200.00

137-730-038 $1 ,200.00

137-740-001 $1 ,200.00

137-740-002 $1 ,200.00

137-740-003 $1 ,200.00

137-740-004 $1 ,200.00

137-740-005 $1 ,200.00

137-740-006 $1 ,200.00

137-740-007 $1 ,200.00

137-740-008 $1 ,200.00

137-740-009 $1 ,200.00

137-740-010 $1 ,200.00

137-740-011 $1 ,200.00

137-740-012 $1 ,200.00

137-740-013 $1 ,200.00

137-740-014 $1 ,200.00

Assessor'sParcel

NumberAssessment

Amount

137-740-015 $1 ,200.00

137-740-016 $1 ,200.00

137-740-017 $1 ,200.00

137-740-018 $1 ,200.00

137-740-019 $1 ,200.00

137-740-020 $1 ,200.00

137-740-021 $1 ,200.00

137-740-022 $1 ,200.00

137-740-023 $1 ,200.00

137-750-001 $1 ,200.00

137-750-002 $1 ,200.00

137-750-003 $1 ,200.00

137-750-004 $1 ,200.00

137-750-005 $1 ,200.00

137-750-006 $1 ,200.00

137-750-007 $1 ,200.00

137-750-008 $1 ,200.00

137-750-009 $1 ,200.00

137-750-010 $1 ,200.00

137-750-011 $1 ,200.00

137-750-012 $1 ,200.00

137-750-013 $1 ,200.00

137-750-014 $1 ,200.00

137-750-015 $1 ,200.00

137-760-001 $1 ,200.00

137-760-002 $1 ,200.00

137-760-003 $1 ,200.00

137-760-004 $1 ,200.00

137-760-005 $1 ,200.00

137-760-006 $1 ,200.00

137-760-007 $1 ,200.00

137-760-008 $1 ,200.00

137-770-001 $1 ,200.00

137-770-002 $1 ,200.00

137-770-003 $1 ,200.00

137-770-004 $1 ,200.00

137-770-005 $1 ,200.00

137-770-006 $1 ,200.00

137-770-007 $1 ,200.00

137-770-008 $1 ,200.00

137-770-009 $1 ,200.00

137-770-010 $1 ,200.00

137-770-011 $1 ,200.00

137-770-012 $1 ,200.00

137-770-013 $1 ,200.00

137-770-014 $1 ,200.00

137-770-015 $1 ,200.00

137-770-016 $1 ,200.00

137-770-017 $1 ,200.00

137-770-018 $1 ,200.00

137-770-019 $1 ,200.00

137-770-020 $1 ,200.00

Assessor'sParcel

NumberAssessment

Amount

137-770-021 $1 ,200.00

137-770-022 $1 ,200.00

137-770-023 $1 ,200.00

137-770-024 $1 ,200.00

137-780-001 $1 ,200.00

137-780-002 $1 ,200.00

137-780-003 $1 ,200.00

137-780-004 $1 ,200.00

137-780-005 $1 ,200.00

137-780-006 $1 ,200.00

137-780-007 $1 ,200.00

137-780-008 $1 ,200.00

137-780-009 $1 ,200.00

137-780-010 $1 ,200.00

137-780-011 $1 ,200.00

137-780-012 $1 ,200.00

137-780-013 $1 ,200.00

137-780-014 $1 ,200.00

137-780-015 $1 ,200.00

137-800-001 $1 ,200.00

137-800-002 $1 ,200.00

137-800-003 $1 ,200.00

137-800-004 $1 ,200.00

137-800-005 $1 ,200.00

137-800-006 $1 ,200.00

137-800-007 $1 ,200.00

137-800-008 $1 ,200.00

137-800-009 $1 ,200.00

137-800-010 $1 ,200.00

137-800-011 $1 ,200.00

137-800-012 $1 ,200.00

137-800-013 $1 ,200.00

137-800-014 $1 ,200.00

137-800-015 $1 ,200.00

137-800-016 $1 ,200.00

137-800-017 $1 ,200.00

137-800-018 $1 ,200.00

137-800-019 $1 ,200.00

137-800-020 $1 ,200.00

137-800-021 $1 ,200.00

137-800-022 $1 ,200.00

137-800-023 $1 ,200.00

137-800-024 $1 ,200.00

137-800-025 $1 ,200.00

137-800-026 $1 ,200.00

137-800-027 $1 ,200.00

137-800-028 $1 ,200.00

137-800-029 $1 ,200.00

137-800-030 $1 ,200.00

137-800-031 $1 ,200.00

137-800-032 $1 ,200.00

137-800-033 $1 ,200.00

202/09/17 A -

The County Auditor only accepts amounts divisable by two, therefore the amount may differ from the approved rate due to rounding.

City of SolvangSolvang Mesa Landscape & Lighting

Maintenance District No. 2004-1

PRELIMINARY ASSESSMENT ROLLFISCAL YEAR 2017-18

APPENDIX A

Assessor'sParcel

NumberAssessment

Amount

137-800-034 $1 ,200.00

137-800-035 $1 ,200.00

137-800-036 $1 ,200.00

137-800-037 $1 ,200.00

137-800-038 $1 ,200.00

137-800-039 $1 ,200.00

137-800-040 $1 ,200.00

137-800-041 $1 ,200.00

137-800-042 $1 ,200.00

137-800-043 $1 ,200.00

137-800-044 $1 ,200.00

137-800-045 $1 ,200.00

137-800-046 $1 ,200.00

1 69Total Parcels:

$202,800.00TotalAssessment:

302/09/17 A -

The County Auditor only accepts amounts divisable by two, therefore the amount may differ from the approved rate due to rounding.

RESOLUTION 17- ______

A RESOLUTION OF INITIATION AND INTENTION OF THE CITY COUNCIL OF THE CITY OF SOLVANG FOR THE SOLVANG MESA LANDSCAPE & LIGHTING MAINTENANCE DISTRICT NO. 2004-1 FOR FISCAL YEAR 2017-18

WHEREAS, Section 22585 of the California Streets and Highways Code requires the City Council to adopt a resolution generally describing any changes to an existing assessment district pursuant to the Landscaping and Lighting Act of 1972, and WHEREAS, Section 22585 further requires that the City Council order the preparation of a Preliminary Engineer’s Report for submission to the legislative body.

NOW, THEREFORE BE IT RESOLVED 1. The City of Solvang hereby proposes initiation of the annual

assessment for Solvang Mesa Landscape & Lighting Maintenance District No. 2004-1 pursuant to Government Code sections 22500 et seq., commonly known as the “Landscaping and Lighting Act of 1972”;

2. The City of Solvang declares Francisco & Associates as the

Engineer of Work for the Solvang Mesa Landscape & Lighting Maintenance District No. 2004-1;

3. The City of Solvang approves the Preliminary Engineer’s Report,

as filed, for Solvang Mesa Landscape & Lighting Maintenance District No. 2004-1;

4. The City of Solvang hereby proposes intention to levy and collect

assessments for the Solvang Mesa Landscape & Lighting Maintenance District No. 2004-1 for Fiscal Year 2017-18;

5. The improvements shall consist of street lighting, landscaping,

irrigation systems, storm drain detention basin, and other open space improvements as described in the conditions of approval for the Skytt Mesa subdivision;

121135

6. A full and detailed description of the improvements, boundaries of the assessment district and any zone therein, and the proposed assessments upon assessable lots and parcels of land with the district are included in the Preliminary Engineer’s Report on file with the City Clerk;

7. The City of Solvang hereby sets a public hearing for 6:30 PM on

April 10, 2017 on the levy of the proposed assessment. PASSED, APPROVED AND ADOPTED this 13th day of March 2017, by the following vote: AYES: NOES: ABSTAIN: ABSENT:

_______________________ Jim Richardson, Mayor ATTEST: __________________________ Lisa S. Martin, City Clerk

122136

CITY COUNCIL STAFF REPORT

TO: SOLVANG CITY COUNCIL MEMBERS FROM: Brad Vidro, City Manager MEETING DATE: March 13, 2017 DATE PREPARED: March 3, 2017 SUBJECT: WATER AND WASTEWATER RATE INCREASE I. RECOMMENDATION:

1. Discuss and provide staff direction on proposed rate increases; 2. Direct staff to draft a Notice of Intent 3. Set date of public hearing.

II. DISCUSSION:

On July 11, 2016, the City Council awarded a contract for the water and wastewater rate study to Bartle Wells Associates. The consultant was tasked with preparing a comprehensive Water and Wastewater Rate and Fee Study to enable the City to update its water and wastewater rates and connection fees to recover operation and capital costs of providing water and wastewater service. At the January 23, 2017 City Council meeting the consultant presented the results of the study and made recommendations on rate increases. Additional options were requested by the City Council and the attached study has those included. The City’s water rates are based on annual operating costs, fixed and variable State Water payments, capital improvement projects related to the water system, and the ability to maintain a healthy reserve. Capital projects can be funded by water rates, debt service, or contributions from the general fund. City Council has previously allocated $810,000 of general fund reserves to be utilized for the one-time payment for Solvang’s 300 acre-feet share of the Suspended Table A water through the Central Coast Water Authority (CCWA). While this is an allowable use of the General Fund, staff recommend against continually using General Fund monies to subsidize the Water Fund. The Water Fund is an enterprise fund, which by definition, should be self-supporting.

Solvang City Council Report/Agenda Date March 13, 2017 Subject: Water and Wastewater Rate Increase Page 2 of 5

The City’s water rates have two components; a fixed meter charge, and a consumption charge that is two tiered for residential customers and single tiered for all other customers. For residential customers, the first tier is 0-16 hundred cubic feet (hcf) water usage per month, and the second tier is triggered at any usage over 16 hundred cubic feet (hcf) in a month. Currently the first tier is $3.45/hcf and the second tier is $4.05/hcf. All other users pay $3.75/hcf. The consultant is recommending the following increases over five years to account for increasing costs and capital improvements:

Year Water Rate Wastewater Rate 2017/18 5.5% 1.7% 2018/19 5.5% 1.7% 2019/20 5.5% 1.7% 2021/21 5.5% 1.7% 2021/22 5.0% 1.7%

In addition any water rates the City of Solvang adopts are required to meet the rate covenant included in our Water Supply Agreement with the Santa Ynez River Water Conservation District, Improvement District No. 1 (ID#1). This covenant requires participating agencies receiving State Water, to prescribe and collect rates and charges that are sufficient to yield water system revenues equal to 125% of the sum of the State Water contract payments each fiscal year. If the City does not increase water rates sufficiently, it will not meet the rate covenant and would be in violation of its Water Supply Agreement with ID#1. The consultant is recommending borrowing $3.4 million to complete the capital improvements and maintaining Water Fund reserve of 25% of operating and maintenance costs. Utilizing the rate increases proposed by the consultant the City would be able to meet the rate covenant as follows: FY 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 Minimum Required Revenue $2,627,435 $2,937,655 $2,928,875 $2,948,753 $3,023,004 $3,065,744 Total Revenue $5,934,092 $6,505,000 $7,407,400 $5,727,900 $6,067,600 $6,397,800 O&M Expenses $2,254,335 $2,296,000 $2,363,000 $2,431,000 $2,502,000 $2,575,000 Net Revenue $3,679,757 $4,209,000 $5,044,400 $3,296,900 $3,565,600 $3,822,800 Coverage 1.40 1.43 1.72 1.12 1.18 1.25 Use of Rate Coverage Deposit

$400,000 $200,000


Coverage 1.25 1.25 Anticipated Reserves Balance

$1,220,443

$1,308,414

$1,322,969 $1,344,938 $1,381,251

$1,410,186

At the January 23, 2017 City Council meeting a Councilmember requested that the consultant look at what no rate increase would look like. It is included in the Rate Study but the result would be that we would not meet the rate coverage covenant. FY 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 Rate Coverage 1.09 0.87 0.86 0.84 0.80 0.77 The only way to maintain our rate covenant and not deplete our reserves is through a rate increase. The consultants have provided various scenarios that will all generate the same amount of revenue. Staff needs direction on: 1) What tier structure to use? 2) What ratio of fixed to variable revenues? 3) What mechanism to use to pay for capital costs? The potential tiers and ratio of fixed to variable revenues are identified in the attached rate study as well as in Section III, Alternatives, of this document. The California Supreme Court ruled metered rates for consumption of water are “property related fees” and subject to the requirement of Proposition 218. As such, the City is therefore required to notify all customers and set a public hearing. This gives the customers the right to protest the proposed rate increase. If a majority of the property owners protest the rate increase, the City Council will not be able to institute the rate increase. Property owners must put their protest vote in writing and have until the close of the public hearing to submit a protest. Once the City Council has provided direction on the proposed rate increase the next step is to finalize a Notice of Intent and set the date of a public hearing. The final Notice of Intent is prepared and mailed to all property owners upon approval of the City Council. This will provide notice of the public hearing which can be no less than 45 days after the mailing of the notice. The effective date of the modified rates would typically be 30 days after the approval of the Resolution, but could be later if directed by the City Council.

III. ALTERNATIVES:

The current structure consists of a ratio of fixed revenue (meter fees) to variable revenue (per hcf unit used) of 67%/33%, which is higher than most agencies and tends not to encourage conservation. However, changing this ratio requires a greater dependence on maintaining similar levels of usage, in order to generate the same amount of revenue.


The consultant has proposed several potential rate scenarios. Scenario 1- Maintains a two tier residential structure with the same tiers, (Tier 1, 0-15, and Tier 2, 16 and over hcf) and changes the ratio of fixed revenue to variable revenue to 54%/46%. Scenario 2- Maintains a two tier residential structure, but changes the tiers to 0-12 hcf, and 13 and over hcf, and changes the ratio of fixed to variable revenue to 54%/46%. Scenario 3- Maintains a two tier residential structure, but changes the tiers to 0-12 hcf, and 13 and over hcf, and changes the ratio of fixed to variable revenue to 60%/40%. Scenario 4- Remove the two tier residential structure and have one unit cost for all customers and changes the ratio of fixed to variable revenue of 54%/46%. The table below shows the current rates, and the proposed rates under each of the Scenarios described above.

Current Scenario 1 Scenario 2 Scenario 3 Scenario 4 Tier 1 $3.45 $4.85 $4.85 $4.20 $5.10 Tier 2 $4.05 $5.88 $5.60 $4.95 N/A All others $3.75 $5.10 $5.10 $4.46 $5.10 5/8” meter $75.43 $61.58 $61.58 $68.14 $61.58 3/4” meter $113.15 $92.37 $92.37 $102.21 $92.37 1” meter $188.58 $153.95 $153.95 $170.36 $153.95 1/1/2” meter $377.17 $307.91 $307.91 $340.71 $307.91 2” meter $603.47 $492.65 $492.65 $545.14 $492.65 3” meter $1,206.94 $923.72 $923.72 $1,022.13 $923.72 4” meter $1,885.84 $1,539.53 $1,539.53 $1,703.55 $1,539.53 6” meter $3,771.68 $3,079.06 $3,079.06 $3,407.10 $3,079.06 8” meter $6,034.69 $3,079.06 $3,079.06 $5,451.37 $3,079.06 By redistributing the billing structure to a lower fixed meter cost the water customers who consume less water, will see a decrease in their bill, even with a 5.5% increase in the rates in the first year. Those water customers consuming greater amounts of water which create the need for additional supply in the system will see increases to their bills. The monthly change in a water bill for the first year, for a 5/8” meter customer using 8 hcf per month would be as follow for each scenario:

Current Scenario 1 Scenario 2 Scenario 3 Scenario 4 $103.03 $100.38 $100.38 $101.74 $102.38 Decrease ($2.65) ($2.65) ($1.29) ($0.65)


The monthly change in a water bill for the first year, for a 3/4” meter customer using 8 hcf per month would be as follow for each scenario:

Current Scenario 1 Scenario 2 Scenario 3 Scenario 4 $140.75 $131.17 $131.17 $135.81 $133.17 Decrease ($9.58) ($9.58) ($4.94) ($7.58)

The monthly change in a water bill for the first year, for a 3/4” meter customer using 20 hcf per month would be as follow for each scenario:

Current Scenario 1 Scenario 2 Scenario 3 Scenario 4 $185.15 $194.52 $195.37 $189.96 $194.37 Increase $9.37 $10.22 $4.81 $9.22

IV. FISCAL IMPACT:

The fiscal impacts of the potential rate increase are included in the study and vary depending on the alterative and rate increases chosen. The Consumers Price Index has increased around 2% for the last three years and operations and maintenance will continue to increase. Not increasing rates would require the use of Water Fund reserves to offset these increases.

V. ATTACHMENTS:

• Revised Water Rate Study dated 3/1/2017

128142

City of SolvangRate Study 2016

Water Tables3/8/2017

BARTLE WELLS ASSOCIATESIndependent Public Finance Advisors

129143

130144

Table 1City of Solvang2016 Water Rates

Single Family Residential Monthly Tiers $/hcfTier 1 0 to 16 hcf $3.45Tier 2 > 16 hcf $4.05

All Other Water Users $/hcfAll Use $3.75

Meter Size Monthly Rate5/8" $75.433/4" $113.151" $188.581 1/2" $377.172" $603.473" $1,206.944" $1,885.846" $3,771.688" $6,034.69outside city customers pay 1.5x these rates

131145

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

% o

f toa

l bill

s

HCF used

Chart A: Solvang Single Family Residence Monthly Water Consumption CY2015

Total use: 235,675 hcfMean monthly use: 11.53 hcfMedian monthly use: 8 hcf

Meters: 1738

<1% of bills> 22 hcf

132146

0%

2%

4%

6%

8%

10%

12%

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

% o

f toa

l bill

s

HCF used

Chart B: Solvang All Other Monthly Water Consumption CY2015

Total use: 183,082 hcfMean monthly use: 37.9 hcfMedian monthly use: 11 hcf

Meters: 436

<1% of bills> 23 hcf

133147

Table 2City of SolvangWater Operating Expenses

2013/14 2014/152015/16

Actual2016/17 Council

Adopted Escalation % 2017/18 2018/19 2019/20 2020/21 2021/22

Personnel ExpensesSalaries $329,266 $302,970 $312,082 $344,686 3.0% $355,000 $366,000 $377,000 $388,000 $400,000FICA 25,032 22,397 21,905 26,368 3.0% 27,000 28,000 29,000 30,000 31,000Retirement 75,889 54,872 -1,184 43,143 3.0% 44,000 45,000 46,000 47,000 48,000Cafeteria Plan 45,085 22,418 46,404 51,099 3.0% 53,000 55,000 57,000 59,000 61,000Worker's Comp. Ins. 7,998 13,658 22,293 11,892 3.0% 12,000 12,000 12,000 12,000 12,000Employee Medical Exams 63 185 252 180 3.0% 0 0 0 0 0Employee Screening 0 62 48 32 3.0% 0 0 0 0 0Recruitment 331 337 138 1,000 3.0% 1,000 1,000 1,000 1,000 1,000Education 494 1,058 2,799 2,462 3.0% 3,000 3,000 3,000 3,000 3,000Safety Gear 241 680 1,166 700 3.0% 1,000 1,000 1,000 1,000 1,000Uniforms 1,094 835 1,368 1,600 3.0% 2,000 2,000 2,000 2,000

148

Worker's Comp-Retro Bal Pmt 0 0 13,501 0 3.0% 0 0 0 0 0CalPERS Liability Reduction 0 64,664 0 0 3.0% 0 0 0 0 0Long Term Disability 0 0 155 1,376 3.0% 1,000 1,000 1,000 1,000 1,000Total $485,493 $484,136 $420,929 $484,538 $499,000 $514,000 $529,000 $544,000 $560,000

Maintenance & RepairsRepairs and Maintenance $36,339 $30,346 $51,262 $55,000 3.0% $57,000 $59,000 $61,000 $63,000 $65,000Vehicle Repairs & Maint. 1,511 2,945 2,933 4,000 3.0% 4,000 4,000 4,000 4,000 4,000Small Equipment 1,093 1,440 4,984 6,800 3.0% 7,000 7,000 7,000 7,000 7,000Vehicle Fuel 6,575 4,744 3,629 5,000 3.0% 5,000 5,000 5,000 5,000 5,000Total $45,518 $39,475 $62,807 $70,800 $73,000 $75,000 $77,000 $79,000 $81,000

Source of SupplyChlorination $13,160 $10,788 $13,764 $19,000 3.0% $20,000 $21,000 $22,000 $23,000 $24,000Power for Pumping 109,901 106,154 105,718 130,000 3.0% 134,000 138,000 142,000 146,000 150,000Purchased Water 875,230 470,350 -7,384 997,380 3.0% 1,027,000 1,058,000 1,090,000 1,123,000 1,157,000State Water Payment 2,844,078 2,902,222 2,534,152 2,627,435 Varies 2,937,655 2,928,875 2,948,753 3,023,004 3,065,744Ground Water Charges 6,014 1,970 9,589 6,000 3.0% 6,000 6,000 6,000 6,000 6,000Total $3,848,383 $3,491,484 $2,655,840 $3,779,815 $4,124,655 $4,151,875 $4,208,753 $4,321,004 $4,402,744

ConservationCloud Seeding Program $4,455 $3,063 $3,005 $4,000 3.0% $4,000 $4,000 $4,000 $4,000 $4,000Sustainable Groundwater Mgmt 0 0 0 5,000 3.0% 5,000 5,000 5,000 5,000 5,000Water Supply Management Program 0 36,800 9,200 2,500 3.0% 3,000 3,000 3,000 3,000 3,000Water Conservation Program 1,187 14,196 46,931 46,900 3.0% 48,000 49,000 50,000 52,000 54,000Total $5,642 $54,059 $59,136 $58,400 $60,000 $61,000 $62,000 $64,000 $66,000

Administration & GeneralSupplies $5,272 $2,859 $5,353 $5,000 3.0% $5,000 $5,000 $5,000 $5,000 $5,000Utility Bill Printing/Supplies 1,302 2,537 3,179 3,000 3.0% 3,000 3,000 3,000 3,000 3,000Postage 4,084 5,362 4,992 5,400 3.0% 6,000 6,000 6,000 6,000 6,000Computer/Desktop Equipment 0 2,576 141 2,910 3.0% 3,000 3,000 3,000 3,000 3,000Communications 4,400 4,670 4,813 5,000 3.0% 5,000 5,000 5,000 5,000 5,000Membership Dues 1,421 1,315 2,404 1,500 3.0% 2,000 2,000 2,000 2,000 2,000Line Leases 468 456 456 1,000 3.0% 1,000 1,000 1,000 1,000 1,000Insurance 20,338 12,325 16,749 16,734 3.0% 17,000 18,000 19,000 20,000 21,000Lease Payments 225 463 305 463 3.0% 0 0 0 0 0Property Taxes 64 65 66 90 3.0% 0 0 0 0 0Permit Fees 8,886 9,565 3,282 14,000 3.0% 14,000 14,000 14,000 14,000 14,000Credit Card Proces. Fee 837 786 3,126 3,720 3.0% 4,000 4,000 4,000 4,000 4,000Overhead Contribution 240,065 247,267 254,685 262,325 3.0% 270,000 278,000 286,000 295,000 304,000Miscellaneous 49 0 -1 0 3.0% 0 0 0 0 0Total $287,411 $290,246 $299,550 $321,142 $330,000 $339,000 $348,000 $358,000 $368,000

TransfersOffice Equip/Computer Rep $1,250 $1,250 $6,495 $5,609 3.0% $6,000 $6,000 $6,000 $6,000 $6,000Vehicle Replacement 10,009 11,761 8,910 8,910 3.0% 9,000 9,000 9,000 9,000 9,000Equipment Replacement 13,045 13,045 11,851 11,851 3.0% 12,000 12,000 12,000 12,000 12,000Total $24,304 $26,056 $27,256 $26,370 $27,000 $27,000 $27,000 $27,000 $27,000

Projected

134

Contracts & ServicesComputer Support $18,330 $13,523 $14,539 $19,343 4.0% $20,000 $21,000 $22,000 $23,000 $24,000Lab Fees 6,314 6,094 4,235 8,000 3.0% 8,000 8,000 8,000 8,000 8,000Legal Fees 9,342 15,609 10,461 10,000 3.0% 10,000 10,000 10,000 10,000 10,000Printing and Publishing 917 2,116 433 3,000 3.0% 3,000 3,000 3,000 3,000 3,000Professional Services 901 394 910 2,000 3.0% 2,000 2,000 2,000 2,000 2,000Special Legal 16,968 12,129 25,516 60,000 3.0% 62,000 64,000 66,000 68,000 70,000Studies 0 0 13,800 40,000

149

41,000 42,000 43,000 44,000 45,000Underground Alert 33 0 0 200 3.0% 0 0 0 0 0Hand Held Meter Readers 1,450 0 0 0 3.0% 0 0 0 0 0Temporary Agency Services 0 0 9,966 23,400 0 0 0 0 0Software/Website 0 3,434 2,520 1,132 3.0% 1,000 1,000 1,000 1,000 1,000Total $54,255 $53,299 $82,381 $167,075 $147,000 $151,000 $155,000 $159,000 $163,000

Debt ServiceInterest Expense $6,879 $5,797 $4,711 $42 3.0% $0 $0 $0 $0 $0Water Imp. Bond Payment 284,553 285,095 0 21,738 -100.0% 0 0 0 0 0Total $291,432 $290,892 $4,711 $21,780 $0 $0 $0 $0 $0

Capital OutlayWater Meter Replacement $10,800 $74,516 $50,277Capital Equipment 0 0 24,045Pump-Motor-Impellor Maintenance 0 5,879 16,025Valve & FH Replacement Program 295 0 0Upland Well Development 0 7,912 687,511EIR Study 19,230 0 0SCADA Upgrades 0 0 3,998River Well Development 50,209 730,357 63,460Atlas Map Update 2,500 0 12,070Reservoir 2 Repair Project 0 0 0Total $83,034 $818,664 $857,385 $624,000 $1,400,000 $2,000,000 $270,000 $250,000 $1,320,000

TOTAL EXPENSES $5,125,472 $5,548,311 $4,469,994 $5,553,920 $6,660,655 $7,318,875 $5,676,753 $5,802,004 $6,987,744

Source: City of Solvang FY 2016/17 Budget

135

Table 3City of SolvangWater CIP Plan

2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26

1. River Wells Project (w/o Water Treatment Plant) Water Fund $100,000 $400,000 $2,000,000 $2,500,0002. Reservoir #2 Recoating & Cathodic Protection Upgrades Water Fund $310,000 $310,0003. Wellhead Improvements - Well 22 Water Fund $155,000 $1,000,000 $1,155,0004. Meter Replacement Program Water Fund $59,000 $270,000 $270,000 $270,000 $869,0005. New Resorvoir #4 to Replace Cisterns Water Fund $150,000 $1,000,000 $1,150,0006. Well #3 and #4 Rehabilitation Water Fund $50,000 $350,000 $400,0007. Valve and Fire Hydrant Replacement Program Water Fund $100,000 $200,000 $300,0008. Waterline Replacement Program Water Fund $40,000 $300,000 $340,0009. Water Distribution System Study Water Fund $100,000 $100,00010. Sub-Meter Elimination Project Water Fund 100,000 $100,00011. River Wells Project - Phase 2 (Site B) Water Fund $200,000 $200,00012. Wellhead Improvements - Well 23 Water Fund $0Total $624,000 $1,400,000 $2,000,000 $270,000 $250,000 $1,320,000 $350,000 $510,000 $500,000 $200,000 $7,424,000

Source: City of Solvang FY 2016/17

Project Name & Description Funding Source Totals

136150

Table 4City of SolvangWater Misc Operating Revenues

2013/14 2014/15 2015/16

2016/17 Council

AdoptedEscalation

% 2017/18 2018/19 2019/20 2020/21 2021/22

MISC REVENUEConnection Fees $481,283 $497,405 $292,908 $353,943 2.0% $50,000 $51,000 $52,000 $53,000 $54,000Inspection Fees 820 368 0 300 2.0% 0 0 0 0 0Lease Income 16,861 17,367 17,888 17,000 2.0% 17,000 17,000 17,000 17,000 17,000Grant Revenue - Landscape Rebate Program 0 3,386 14,615 0 2.0% 0 0 0 0 0Bulk Water 183 2,135 1,145 500 2.0% 1,000 1,000 1,000 1,000 1,000Meter Change Fee 290 1,179 2,443 1,000 2.0% 1,000 1,000 1,000 1,000 1,000Miscellaneous Income 10,725 30,109 26,909 100 2.0% 0 0 0 0 0Fines & Penalties 0 120 0 20,000 2.0% 20,000 20,000 20,000 20,000 20,000Interest Income 10,920 6,943 15,475 16,000 2.0% 16,000 16,000 16,000 16,000 16,000Sale of Surplus Property 0 0 0 0 2.0% 0 0 0 0 0Collection Acct Recovery 639 190 1,520 500 2.0% 1,000 1,000 1,000 1,000 1,000Acc Payable Discounts -7 -37 0 0 2.0% 0 0 0 0 0Total Misc Revenue $521,714 $559,165 $372,902 $409,343 $106,000 $107,000 $108,000 $109,000 $110,000

Source: City of Solvang FY 2016/17

Projected

137151

Table 5City of SolvangEstimated Annual Revenue

Volumetric Revenue Fixed Revenue TotalSFR Inside $847,896 $1,868,278 $2,716,174All Other Inside $686,558 $1,231,519 $1,918,077All Other Outside $24,829 $55,670 $80,498Total $1,559,282 $3,155,467 $4,714,749

SFR InsideTier $/hcf Use Amount HCF Usage CY2015 % Water Sold Volumetric RevenueTier 1 $3.45 16 177,646 75.38% $612,879Tier 2 $4.05 > 16 58,029 24.62% $235,017Total 235,675 100.00% $847,896

SFR Inside - 12 HCF Tier Structure Use Amount HCF Usage CY2015 % Water Sold Tier 1 $3.45 12 156,236 66.29%Tier 2 $4.05 > 12 79,439 33.71%Total 235,675 100.00%

Meter Size # Units CY2015 Rate Fixed Cost5/8 1305 $75.43 $98,436.153/4 350 $113.15 $39,602.50

1 76 $188.58 $14,332.081 1/2 4 $377.17 $1,508.682 3 $603.47 $1,810.413 0 $1,206.94 $0.004 0 $1,885.84 $0.006 0 $3,771.68 $0.008 0 $6,034.69 $0.00

1738 $155,689.82

All Other InsideTier $/hcf Use Amount HCF Usage CY2015 % Water Sold Volumetric RevenueAll Use $3.75 All 183,082 100.00% $686,558

Meter Size # Units CY2015 Rate Fixed Cost5/8 208 $75.43 $15,689.443/4 60 $113.15 $6,789.00

1 47 $188.58 $8,863.261 1/2 42 $377.17 $15,841.142 58 $603.47 $35,001.263 6 $1,206.94 $7,241.644 1 $1,885.84 $1,885.846 3 $3,771.68 $11,315.048 0 $6,034.69 $0.00

425 $102,626.62

All Other OutsideTier $/hcf (x1.5) Use Amount HCF Usage CY2015 % Water Sold Volumetric RevenueAll Use $5.63 All 4,414 100% $24,829

Meter Size # Units CY2015 Rate Fixed Cost5/8 3 $113.15 $339.443/4 1 $169.73 $169.73

1 3 $282.87 $848.611 1/2 1 $565.76 $565.762 3 $905.21 $2,715.623 0 $1,810.41 $0.004 0 $2,828.76 $0.00

152

0 $5,657.52 $0.008 0 $9,052.04 $0.00

11 $4,639.14

All Other Inside Meter Charges

All Other Outside Meter Charges

Total Annual Revenue

SFR Inside Meter Charges

138

Table 6City of SolvangWater Cash Flow Projection

2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22

Beginning Fund Balance $2,667,300 $3,047,472 $2,835,648 $2,731,590 $2,509,913 $2,502,684

% Rate Revenue Increase 5.50% 5.50% 5.50% 5.50% 5.00%Growth - % 0.5% 0.5% 0.5% 0.5% 0.5%

REVENUESOperating RevenueWater Volumetric Charges1 $63,967 $1,559,282 $1,653,300 $1,753,000 $1,858,700 $1,970,700 $2,079,600Water Meter Charges 4,313,307 3,155,467 3,345,700 3,547,400 3,761,200 3,987,900 4,208,200Connection Fees 292,908 353,943 50,000 51,000 52,000 53,000 54,000Misc Operating Revenue 79,994 55,400 56,000 56,000 56,000 56,000 56,000Total Operating Revenues $4,750,177 $5,124,092 $5,105,000 $5,407,400 $5,727,900 $6,067,600 $6,397,800

Non Operating RevenuesLoans $1,400,000 $2,000,000Transfer In - General Fund $1,276 $810,000Total Non Operating Revenues $1,276 $810,000 $1,400,000 $2,000,000 $0 $0 $0

TOTAL REVENUES $4,751,453 $5,934,092 $6,505,000 $7,407,400 $5,727,900 $6,067,600 $6,397,800

EXPENSESOperating ExpensesPersonnel Expenses $420,929 $484,538 $499,000 $514,000 $529,000 $544,000 $560,000Maintenance & Repairs 62,807 70,800 73,000 75,000 77,000 79,000 81,000Source of Supply 2,655,840 3,779,815 4,124,655 4,151,875 4,208,753 4,321,004 4,402,744Conservation 59,136 58,400 60,000 61,000 62,000 64,000 66,000Administration & General 299,550 321,142 330,000 339,000 348,000 358,000 368,000Contracts & Services 82,381 167,075 147,000 151,000 155,000 159,000 163,000Total Operating Expenses $3,580,643 $4,881,770 $5,233,655 $5,291,875 $5,379,753 $5,525,004 $5,640,744

Non Operating Expenses2001 Water Bond Payment2 $4,711 $21,780 $0 $0 $0 $0 $0Loan Debt Service3 56,170 192,582 272,825 272,825 272,825Transfer Out - Vehicle 27,256 26,370 27,000 27,000 27,000 27,000 27,000Capital Improvement Project 857,385 624,000 1,400,000 2,000,000 270,000 250,000 1,320,000Total Non Operating Expenses $889,352 $672,150 $1,483,170 $2,219,582 $569,825 $549,825 $1,619,825

TOTAL EXPENSES $4,469,994 $5,553,920 $6,716,825 $7,511,457 $5,949,578 $6,074,829 $7,260,569

NET REVENUES $281,458 $380,172 ($211,825) ($104,057) ($221,678) ($7,229) ($862,769)

Ending Fund Balance $2,667,300 $3,047,472 $2,835,648 $2,731,590 $2,509,913 $2,502,684 $1,639,915

Target (25% O&M) $895,161 $1,220,443 $1,308,414 $1,322,969 $1,344,938 $1,381,251 $1,410,186Target Met yes yes yes yes yes yes yes

Debt Service Coverage (Min. 1.25x) 248.54 48.32 22.63 10.99 1.28 1.99 2.77Target Met yes yes yes yes yes yes yes

1 - Volumetric and Meter charges were combined into one account in 2015/162 - Refinanced 2001 Water Bond. Final payment in FY 2016/17.3 - assumes 20 year loans at 5% interest for 2 years of capital, subordinate to Water Supply Agreement

Water Supply Agreement Coverage Requirement (CCWA)

WATER SUPPLY AGREEMENT $2,534,152 $2,627,435 $2,937,655 $2,928,875 $2,948,753 $3,023,004 $3,065,744COVERAGE REQUIREMENT $2,534,152 $2,627,435 $2,937,655 $2,928,875 $2,948,753 $3,023,004 $3,065,744

TOTAL REVENUE $4,751,453 $5,934,092 $6,505,000 $7,407,400 $5,727,900 $6,067,600 $6,397,800O&M $1,046,491 $2,254,335 $2,296,000 $2,363,000 $2,431,000 $2,502,000 $2,575,000

NET REVENUE $3,704,962 $3,679,757 $4,209,000 $5,044,400 $3,296,900 $3,565,600 $3,822,800

COVERAGE (Min 1.25x) 1.46 1.40 1.43 1.72 1.12 1.18 1.25

Transfer In - Rate Coverage Fund Deposit 400,000 200,000Coverage with Transfer In 1.25 1.25

Projected

139153

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22

Chart C: Water Projected Revenue, Expenses & Reserves

Personnel Expenses Maintenance & RepairsSource of Supply ConservationAdministration & General Contracts & ServicesDebt Service Fund TransfersCapital Expenditures Total RevenueFund Reserves Recommended Operating Reserves (25% O&M)

140154

Table 7City of SolvangWater Cash Flow Projection - No Rate Increases

2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22

Beginning Fund Balance $2,667,300 $2,887,842 $2,498,487 $2,075,612 $1,589,659 $983,355


REVENUESOperating RevenueWater Volumetric Charges1 $63,967 $1,559,282 $1,567,100 $1,574,900 $1,582,800 $1,590,700 $1,598,700Water Meter Charges 4,313,307 3,155,467 3,171,200 3,187,100 3,203,000 3,219,000 3,235,100Connection Fees 292,908 353,943 50,000 51,000 52,000 53,000

155

Misc Operating Revenue 79,994 55,400 56,000 56,000 56,000 56,000 56,000Total Operating Revenues $4,750,177 $5,124,092 $4,844,300 $4,869,000 $4,893,800 $4,918,700 $4,943,800

Non Operating RevenuesLoansTransfer In - General Fund $1,276Total Non Operating Revenues $1,276 $0 $0 $0 $0 $0 $0

TOTAL REVENUES $4,751,453 $5,124,092 $4,844,300 $4,869,000 $4,893,800 $4,918,700 $4,943,800


Non Operating Expenses2001 Water Bond Payment2 $4,711 $21,780 $0 $0 $0 $0 $0Loan Debt Service3

Transfer Out - Vehicle & Equip ReplacementCapital Improvement Project Total Non Operating Expenses $4,711 $21,780 $0 $0 $0 $0 $0

TOTAL EXPENSES $3,585,353 $4,903,550 $5,233,655 $5,291,875 $5,379,753 $5,525,004 $5,640,744

NET REVENUES $1,166,099 $220,542 ($389,355) ($422,875) ($485,953) ($606,304) ($696,944)

Ending Fund Balance $2,667,300 $2,887,842 $2,498,487 $2,075,612 $1,589,659 $983,355 $286,411

Target (25% O&M) $895,161 $1,220,443 $1,308,414 $1,322,969 $1,344,938 $1,381,251 $1,410,186Target Met yes yes yes yes yes no no

Debt Service Coverage (Min. 1.25x) 248.54 11.13Target Met yes yes




TOTAL REVENUE $4,751,453 $5,124,092 $4,844,300 $4,869,000 $4,893,800 $4,918,700 $4,943,800O&M $1,046,491 $2,254,335 $2,296,000 $2,363,000 $2,431,000 $2,502,000 $2,575,000

NET REVENUE $3,704,962 $2,869,757 $2,548,300 $2,506,000 $2,462,800 $2,416,700 $2,368,800

COVERAGE (Min 1.25x) 1.46 1.09 0.87 0.86 0.84 0.80 0.77

Projected

141

$700,000 Deficit

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22

Water Projected Revenue, Expenses & Reserves with No Rate Increases and No Capital Projects

Total Operating Expenses Total Operating Revenues Ending Fund Balance

142156

Table 8City of SolvangWater Cash Flow Projection - General Fund Gift

2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22



REVENUESOperating RevenueWater Volumetric Charges1 $63,967 $1,559,282 $1,653,300 $1,753,000

157

$1,970,700 $2,079,600Water Meter Charges 4,313,307 3,155,467 3,345,700 3,547,400 3,761,200 3,987,900 4,208,200Connection Fees 292,908 353,943 50,000 51,000 52,000 53,000 54,000Misc Operating Revenue 79,994 55,400 56,000 56,000 56,000 56,000 56,000Total Operating Revenues $4,750,177 $5,124,092 $5,105,000 $5,407,400 $5,727,900 $6,067,600 $6,397,800

Non Operating RevenuesGeneral Fund Gift $1,400,000 $2,000,000LoansTransfer In - General Fund $1,276 $810,000Total Non Operating Revenues $1,276 $810,000 $1,400,000 $2,000,000 $0 $0 $0

TOTAL REVENUES $4,751,453 $5,934,092 $6,505,000 $7,407,400 $5,727,900 $6,067,600 $6,397,800


Non Operating Expenses2001 Water Bond Payment2 $4,711 $21,780 $0 $0 $0 $0 $0Loan Debt ServiceTransfer Out - Vehicle & Equip Replacement 27,256 26,370 27,000 27,000 27,000 27,000 27,000Capital Improvement Project 857,385 624,000 1,400,000 2,000,000 270,000 250,000 1,320,000Total Non Operating Expenses $889,352 $672,150 $1,427,000 $2,027,000 $297,000 $277,000 $1,347,000

TOTAL EXPENSES $4,469,994 $5,553,920 $6,660,655 $7,318,875 $5,676,753 $5,802,004 $6,987,744

NET REVENUES $281,458 $380,172 ($155,655) $88,525 $51,147 $265,596 ($589,944)


Total Unrestricted Fund Target (25% O&M) $895,161 $1,220,443 $1,308,414 $1,322,969 $1,344,938 $1,381,251 $1,410,186Target Met yes yes yes yes yes yes yes

Debt Service Coverage (Min. 1.25x) 248.54 48.32Target Met yes yes

1 - Volumetric and Meter charges were combined into one account in 2015/162 - Refinanced 2001 Water Bond. Final payment in FY 2016/17.



TOTAL REVENUE $4,751,453 $5,934,092 $6,505,000 $7,407,400 $5,727,900 $6,067,600 $6,397,800O&M $1,046,491 $2,254,335 $2,296,000 $2,363,000 $2,431,000 $2,502,000 $2,575,000

NET REVENUE $3,704,962 $3,679,757 $4,209,000 $5,044,400 $3,296,900 $3,565,600 $3,822,800

COVERAGE (Min 1.25x) 1.46 1.40 1.43 1.72 1.12 1.18 1.25


Projected

143

Table 9City of SolvangWater Cash Flow Projection - General Fund Loan

2015/16 2016/17

158

2018/19 2019/20 2020/21 2021/22



REVENUESOperating RevenueWater Volumetric Charges1 $63,967 $1,559,282 $1,653,300 $1,753,000 $1,858,700 $1,970,700 $2,079,600Water Meter Charges 4,313,307 3,155,467 3,345,700 3,547,400 3,761,200 3,987,900 4,208,200Connection Fees 292,908 353,943 50,000 51,000 52,000 53,000 54,000Misc Operating Revenue 79,994 55,400 56,000 56,000 56,000 56,000 56,000Total Operating Revenues $4,750,177 $5,124,092 $5,105,000 $5,407,400 $5,727,900 $6,067,600 $6,397,800

Non Operating RevenuesGeneral Fund Loan $1,400,000 $2,000,000LoansTransfer In - General Fund $1,276 $810,000Total Non Operating Revenues $1,276 $810,000 $1,400,000 $2,000,000 $0 $0 $0

TOTAL REVENUES $4,751,453 $5,934,092 $6,505,000 $7,407,400 $5,727,900 $6,067,600 $6,397,800


Non Operating Expenses2001 Water Bond Payment2 $4,711 $21,780 $0 $0 $0 $0 $0General Fund Loan Debt Service3 $38,791 $188,412 $188,412 $188,412 $188,412Loan Debt ServiceTransfer Out - Vehicle & Equip Replacement 27,256 26,370 27,000 27,000 27,000 27,000 27,000Capital Improvement Project 857,385 624,000 1,400,000 2,000,000 270,000 250,000 1,320,000Total Non Operating Expenses $889,352 $672,150 $1,465,791 $2,215,412 $485,412 $465,412 $1,535,412

TOTAL EXPENSES $4,469,994 $5,553,920 $6,699,446 $7,507,287 $5,865,165 $5,990,416 $7,176,156

NET REVENUES $281,458 $380,172 ($194,446) ($99,887) ($137,265) $77,184 ($778,356)


Total Unrestricted Fund Target (25% O&M) $895,161 $1,220,443 $1,308,414 $1,322,969 $1,344,938 $1,381,251 $1,410,186Target Met yes yes yes yes yes yes yes

Debt Service Coverage (Min. 1.25x) 248.54 48.32 32.77 11.23 1.85 2.88 4.02Target Met yes yes yes yes yes yes yes




TOTAL REVENUE $4,751,453 $5,934,092 $6,505,000 $7,407,400 $5,727,900 $6,067,600 $6,397,800O&M $1,046,491 $2,254,335 $2,296,000 $2,363,000 $2,431,000 $2,502,000 $2,575,000

NET REVENUE $3,704,962 $3,679,757 $4,209,000 $5,044,400 $3,296,900 $3,565,600 $3,822,800

COVERAGE (Min 1.25x) 1.46 1.40 1.43 1.72 1.12 1.18 1.25


Projected

144

Table 10ACity of SolvangWater Cost Analysis (Scenarios 1-2 - 54% fixed revenue recovery)

Expenses 2016/17

Expenses Recovered by Meter ChargesPersonnel Expenses $484,538Maintenance & Repairs 70,800Administration & General 321,142State Water Project - Fixed 26,370Contracts & Services 167,075

159

21,780State Water Payment - Fixed 1,679,951Capital Projects 624,000Total Fixed $3,395,656

Expenses Recovered by Base Use ChargesSource of Supply $1,103,660State Water Payment -Variable 947,484Total Variable Base $2,051,144

Expenses Recovered by Excess Use Charges1

ID#1 Meter Fees $48,720Conservation Program 58,400Total Variable Tier 2 $107,120

Total Costs $5,553,920

1 - Incorporated into Residential Tier 2 and All Other Uniform Rate

145

Table 10BCity of SolvangWater Cost Analysis (Scenario 3 - 60% fixed revenue recovery)

Expenses 2016/17

Expenses Recovered by Meter ChargesPersonnel Expenses $484,538Maintenance & Repairs 70,800Administration & General 321,142State Water Project - Fixed 26,370Contracts & Services 167,075Debt Service 21,780State Water Payment - Fixed 1,952,315Capital Projects 624,000Total Fixed $3,668,020

Expenses Recovered by Base Use ChargesSource of Supply $1,103,660State Water Payment -Variable 675,120Total Variable Base $1,778,780

Expenses Recovered by Excess Use Charges1

ID#1 Meter Fees $48,720Conservation Program 58,400Total Variable Tier 2 $107,120

Total Costs $5,553,920

1 - Incorporated into Residential Tier 2 and All Other Uniform Rate

146160

Table 11City of SolvangWater Meter Charge Calculation

Meter Charges (Scenarios 1-2) 2016/17

Fixed Operating Costs $3,395,656+ Operating Reserve Surplus 380,172

Total Fixed Operating Costs $3,775,828

Less: Non Rate Operating RevenuesConnection Fees $353,943Miscellaneous Revenue 55,400Transfer-In 810,000

Total Non Rate Operating Revenues $1,219,343

Fixed Operating Revenue Requirement

161

Meter Equivalent Units (5/8 inch) 3459.5$/Meter Equivalent (Annual) $739

Projected Monthly Meter Charge - 5/8 inch $61.583/4 inch $92.37

1 inch $153.951-1/2 inch $307.91

2 inch $492.653 inch $923.724 inch $1,539.536 inch $3,079.068 inch $4,926.50

Projected Basic Rate Revenue $2,556,485

Meter Charges (Scenario 3)

Fixed Operating Costs $3,668,020+ Operating Reserve Surplus $380,172

Total Fixed Operating Costs $4,048,193

Less: Non Rate Operating RevenuesConnection Fees $353,943Miscellaneous Revenue 55,400Transfer-In 810,000


Fixed Operating Revenue Requirement $2,828,850


Projected Monthly Meter Charge5/8 inch $68.143/4 inch $102.21

1 inch $170.361-1/2 inch $340.71

2 inch $545.143 inch $1,022.134 inch $1,703.556 inch $3,407.108 inch $5,451.37


147

Table 12City of SolvangWater Volumetric Charge Calculation

Volumetric Charges - Scenario 1 2016/17 Scenario 2 2016/17 Scenario 3 2016/17

Base Rate Volumetric Costs $2,051,144

162

$2,051,144 Base Rate Volumetric Costs $1,778,780Total Use 423,171 Total Use 423,171 Total Use 423,171Base Rate $4.85 Base Rate $4.85 Base Rate $4.20

Excess Use Volumetric Costs $107,120 Excess Use Volumetric Costs $107,120 Excess Use Volumetric Costs $107,120Residential Share* (56%) $59,658 Residential Share* (56%) $59,658 Residential Share* (56%) $59,658All Other User Share* (44%) $47,462 All Other User Share* (44%) $47,462 All Other User Share* (44%) $47,462

Total Volumetric Costs $2,158,264 Total Volumetric Costs $2,158,264 Total Volumetric Costs $1,885,900

Tier 2 Residential Use (0 to 16 hcf) 58,029 Tier 2 Residential Use (0 to 12 hcf) 79,439 Tier 2 Residential Use (0 to 12 hcf) 79,439Tier 2 Excess Use Rate (> 16 hcf) $1.03 Tier 2 Excess Use Rate (> 12 hcf) $0.75 Tier 2 Excess Use Rate (> 12 hcf) $0.75

All Other Use 187,496 All Other Use 187,496 All Other Use 187,496All Other Users Excess Use Rate $0.25 All Other Users Excess Use Rate $0.25 All Other Users Excess Use Rate $0.25

SFR Rate SFR Rate SFR RateTier 1 Rate (0 to 16 hcf) $4.85 Tier 1 Rate (0 to 12 hcf) $4.85 Tier 1 Rate (0 to 12 hcf) $4.20Tier 2 Rate (>16 hcf) $5.88 Tier 2 Rate (>12 hcf) $5.60 Tier 2 Rate (>12 hcf) $4.95

All Other Use Rate $5.10 All Other Use Rate $5.10 All Other Use Rate $4.46

Residential Tier 1 Revenue $861,065 Residential Tier 1 Revenue $757,289 Residential Tier 1 Revenue $656,731Residential Tier 2 Revenue 340,929 Residential Tier 2 Revenue 444,705 Residential Tier 2 Revenue 393,576All Other Use Revenue 956,270 All Other Use Revenue 956,270 All Other Use Revenue 835,593Total Volumetric Revenue $2,158,264 Total Volumetric Revenue $2,158,264 Total Volumetric Revenue $1,885,900

*shares based on percentage of total use *shares based on percentage of total use *shares based on percentage of total use

148

Table 13City of SolvangRate Structure Scenario 4 - Universal Tier (54% fixed, 46% variable)

Volumetric Charges 2016/17

Total Volumetric Costs* $2,158,264Total Use 423,171 Base Rate $5.10

Total Residential Use 235,675Residential Revenue $1,201,994

Total All Other Use 187,496All Other Use Revenue $956,270Total Volumetric Revenue $2,158,264

Fixed Charges 2016/17

Fixed Operating Costs $3,395,656

+ Operating Reserve Surplus 380,172Total Fixed Operating Costs $3,775,828

163

Connection Fees $353,943Miscellaneous Revenue 55,400Transfer-In 810,000


Fixed Operating Revenue Requirement $2,556,485


Projected Monthly Meter Charge - 5/8 inch $61.583/4 inch $92.37

1 inch $153.951-1/2 inch $307.91

2 inch $492.653 inch $923.724 inch $1,539.536 inch $3,079.068 inch $4,926.50


*includes base volumetric costs and excess use costs from Table 7

149

Table 14City of SolvangWater Proposed Rate Summary

current currentSingle Family Residential Monthly Tiers $/hcf Single Family Residential Monthly Tiers $/hcf Single Family Residential Monthly Tiers $/hcf Single Family Residential Monthly Tiers $/hcf

Tier 1 0 to 16 hcf $3.45 Tier 1 0 to 16 hcf $4.85 Tier 1 0 to 12 hcf $4.85

164

0 to 12 hcf $4.20Tier 2 > 16 hcf $4.05 Tier 2 > 16 hcf $5.88 Tier 2 > 12 hcf $5.60 Tier 2 > 12 hcf $4.95

All Other Water Users $/hcf All Other Water Users $/hcf All Other Water Users $/hcf All Other Water Users $/hcfAll Use $3.75 All Use $5.10 All Use $5.10 All Use $4.46

Fixed Rates Fixed Rates Fixed Rates Fixed RatesMeter Size Monthly Rate Meter Size Monthly Rate Meter Size Monthly Rate Meter Size Monthly Rate5/8" $75.43 5/8" $61.58 5/8" $61.58 5/8" $68.143/4" $113.15 3/4" $92.37 3/4" $92.37 3/4" $102.211" $188.58 1" $153.95 1" $153.95 1" $170.361 1/2" $377.17 1 1/2" $307.91 1 1/2" $307.91 1 1/2" $340.712" $603.47 2" $492.65 2" $492.65 2" $545.143" $1,206.94 3" $923.72 3" $923.72 3" $1,022.134" $1,885.84 4" $1,539.53 4" $1,539.53 4" $1,703.556" $3,771.68 6" $3,079.06 6" $3,079.06 6" $3,407.108" $6,034.69 8" $4,926.50 8" $4,926.50 8" $5,451.37eliminates outside user charge

Volumetric Revenue $1,559,282 33% Volumetric Revenue $2,158,264 46% Volumetric Revenue $2,158,264 46% Volumetric Revenue $1,885,900 40%Fixed Revenue $3,155,467 67% Fixed Revenue $2,556,485 54% Fixed Revenue $2,556,485 54% Fixed Revenue $2,828,850 60%Total $4,714,749 Total $4,714,749 Total $4,714,749 Total $4,714,749

Monthly Tiers $/hcfAll Users All Use $5.10

Fixed RatesMeter Size Monthly Rate5/8" $61.583/4" $92.371" $153.951 1/2" $307.912" $492.653" $923.724" $1,539.536" $3,079.068" $4,926.50

Volumetric Revenue $2,158,264 46%Fixed Revenue $2,556,485 54%Total $4,714,749

FY2016/17Current Rates - 67% fixed revenue, 33% variable

revenue, 16 hcf tier

Scenario 4 - 54% fixed revenue, 46% variable revenue, Universal Tier

Scenario 3 - 60% fixed revenue, 40% variable revenue, 12 hcf tier

ProposedScenario 1 - 54% fixed revenue, 46% variable revenue,

16 hcf tierScenario 2 - 54% fixed revenue, 46% variable revenue,

12 hcf tier

150

Table 15City of SolvangWater Rate Projections

Volumetric Ratescurrent 2017/18 2018/19 2019/20 2020/21 2021/22

Single Family Residential Monthly Tiers $/hcf5.5% 5.5% 5.5% 5.5% 5.0%

165

0 to 16 hcf $3.45 $3.64 $3.84 $4.05 $4.27 $4.49Tier 2 17 hcf & above $4.05 $4.27 $4.51 $4.76 $5.02 $5.27

All Other Water Users $/hcfAll Use $3.75 $3.96 $4.17 $4.40 $4.65 $4.88

Fixed RatesMeter Size Monthly Rate5/8" $75.43 $79.58 $83.96 $88.57 $93.44 $98.123/4" $113.15 $119.37 $125.94 $132.87 $140.17 $147.181" $188.58 $198.95 $209.89 $221.44 $233.62 $245.301 1/2" $377.17 $397.91 $419.80 $442.89 $467.25 $490.612" $603.47 $636.66 $671.68 $708.62 $747.59 $784.973" $1,206.94 $1,273.32 $1,343.35 $1,417.24 $1,495.19 $1,569.954" $1,885.84 $1,989.56 $2,098.99 $2,214.43 $2,336.23 $2,453.046" $3,771.68 $3,979.12 $4,197.97 $4,428.86 $4,672.45 $4,906.078" $6,034.69 $6,366.60 $6,716.76 $7,086.18 $7,475.92 $7,849.72*outside city customers pay 1.5x these rates



Tier 1 0 to 16 hcf $4.85 $5.11 $5.39 $5.69 $6.00 $6.30Tier 2 17 hcf & above $5.88 $6.20 $6.54 $6.90 $7.28 $7.64


Fixed RatesMeter Size Monthly Rate5/8" $61.58 $64.97 $68.54 $72.31 $76.29 $80.103/4" $92.37 $97.45 $102.81 $108.47 $114.43 $120.151" $153.95 $162.42 $171.35 $180.78 $190.72 $200.261 1/2" $307.91 $324.84 $342.71 $361.56 $381.44 $400.512" $492.65 $519.75 $548.33 $578.49 $610.31 $640.823" $923.72 $974.52 $1,028.12 $1,084.67 $1,144.33 $1,201.544" $1,539.53 $1,624.21 $1,713.54 $1,807.78 $1,907.21 $2,002.576" $3,079.06 $3,248.41 $3,427.08 $3,615.56 $3,814.42 $4,005.148" $4,926.50 $5,197.46 $5,483.32 $5,784.90 $6,103.07 $6,408.23*eliminates outside user charge



Tier 1 0 to 12 hcf $4.85 $5.11 $5.39 $5.69 $6.00 $6.30Tier 2 13 hcf & above $5.60 $5.91 $6.23 $6.57 $6.94 $7.28



Current Rates - 67% fixed revenue, 33% variable revenue, 16 hcf tier

projected monthly bills (recommended increases)



Proposed Rates, Scenario 2 - 54% fixed revenue, 46% variable revenue, 12 hcf tier


151



Tier 1 0 to 12 hcf $4.20 $4.43

166

$4.94 $5.21 $5.47Tier 2 13 hcf & above $4.95 $5.23 $5.51 $5.82 $6.14 $6.44


Fixed RatesMeter Size Monthly Rate5/8" $68.14 $71.89 $75.84 $80.02 $84.42 $88.643/4" $102.21 $107.83 $113.77 $120.02 $126.62 $132.961" $170.36 $179.72 $189.61 $200.04 $211.04 $221.591 1/2" $340.71 $359.45 $379.22 $400.08 $422.08 $443.182" $545.14 $575.12 $606.75 $640.12 $675.33 $709.093" $1,022.13 $1,078.35 $1,137.66 $1,200.23 $1,266.24 $1,329.554" $1,703.55 $1,797.25 $1,896.10 $2,000.38 $2,110.40 $2,215.926" $3,407.10 $3,594.49 $3,792.19 $4,000.76 $4,220.80 $4,431.848" $5,451.37 $5,751.19 $6,067.51 $6,401.22 $6,753.29 $7,090.95*eliminates outside user charge


Monthly Tiers $/hcf5.5% 5.5% 5.5% 5.5% 5.0%

All Users All Use $5.10 $5.38 $5.68 $5.99 $6.32 $6.63


Proposed Rates, Scenario 4 - 54% fixed revenue, 46% variable revenue, universal tier




152

Table 16City of SolvangWater Bill Projections

167

Monthly Fixed Charge*

Monthly Volumetric

ChargeMonthly Total Bill

2017/18 2018/19 2019/20 2020/21 2021/22Current Rates - 67% fixed revenue, 33% variable revenue, 16 hcf tier

5.5% 5.5% 5.5% 5.5% 5.0%Single Family ResidencesMinimum 0 $75.43 $0.00 $75.43 $79.58 $83.96 $88.57 $93.44 $98.1225th percentile 4 $75.43 $13.80 $89.23 $94.14 $99.32 $104.78 $110.54 $116.0750th percentile 8 $75.43 $27.60 $103.03 $108.70 $114.67 $120.98 $127.64 $134.0275th percentile 14 $75.43 $48.30 $123.73 $130.54 $137.71 $145.29 $153.28 $160.94Excessive user 20 $75.43 $71.40 $146.83 $154.91 $163.43 $172.41 $181.90 $190.99Maximum 291 $75.43 $1,168.95 $1,244.38 $1,312.82 $1,385.03 $1,461.20 $1,541.57 $1,618.65

All Other UsersMinimum 0 $75.43 $0.00 $75.43 $79.58 $83.96 $88.57 $93.44 $98.1225th percentile 3 $75.43 $11.25 $86.68 $91.45 $96.48 $101.78 $107.38 $112.7550th percentile 11 $75.43 $41.25 $116.68 $123.10 $129.87 $137.01 $144.55 $151.7775th percentile 36 $75.43 $135.00 $210.43 $222.00 $234.21 $247.10 $260.69 $273.72Maximum 1515 $75.43 $5,681.25 $5,756.68 $6,073.30 $6,407.33 $6,759.73 $7,131.52 $7,488.09*assumes 5/8" meter

Proposed BillsScenario 1 - 54% fixed revenue, 46% variable revenue, 16 hcf tier 5.5% 5.5% 5.5% 5.5% 5.0%Single Family ResidencesMinimum 0 $61.58 $0.00 $61.58 $64.97 $68.54 $72.31 $76.29 $80.1025th percentile 4 $61.58 $19.39 $80.97 $85.42 $90.12 $95.08 $100.31 $105.3250th percentile 8 $61.58 $38.78 $100.36 $105.88 $111.70 $117.84 $124.33 $130.5475th percentile 14 $61.58 $67.86 $129.44 $136.56 $144.07 $151.99 $160.35 $168.37Excessive user 20 $61.58 $101.05 $162.64 $171.58 $181.02 $190.97 $201.48 $211.55Maximum 291 $61.58 $1,693.22 $1,754.80 $1,851.32 $1,953.14 $2,060.56 $2,173.89 $2,282.59


Proposed BillsScenario 2 - 54% fixed revenue, 46% variable revenue, 12hcf tier 5.5% 5.5% 5.5% 5.5% 5.0%Single Family ResidencesMinimum 0 $61.58 $0.00 $61.58 $64.97 $68.54 $72.31 $76.29 $80.1025th percentile 4 $61.58 $19.39 $80.97 $85.42 $90.12 $95.08 $100.31 $105.3250th percentile 8 $61.58 $38.78 $100.36 $105.88 $111.70 $117.84 $124.33 $130.5475th percentile 14 $61.58 $69.36 $130.94 $138.14 $145.74 $153.76 $162.21 $170.33Excessive user 20 $61.58 $102.95 $164.53 $173.58 $183.13 $193.20 $203.82 $214.02Maximum 291 $61.58 $1,620.03 $1,681.61 $1,774.10 $1,871.67 $1,974.61 $2,083.22 $2,187.38





2016/17

153

Proposed BillsScenario 3 - 60% fixed revenue, 40% variable revenue, 12hcf tier 5.5% 5.5% 5.5% 5.5% 5.0%Single Family ResidencesMinimum 0 $68.14 $0.00 $68.14 $71.89

168

$80.02 $84.42 $88.6425th percentile 4 $68.14 $16.81 $84.96 $89.63 $94.56 $99.76 $105.25 $110.5150th percentile 8 $68.14 $33.63 $101.77 $107.37 $113.27 $119.50 $126.07 $132.3875th percentile 14 $68.14 $60.35 $128.49 $135.56 $143.02 $150.88 $159.18 $167.14Excessive user 20 $68.14 $90.08 $158.22 $166.92 $176.10 $185.79 $196.01 $205.81Maximum 291 $68.14 $1,432.73 $1,500.87 $1,583.42 $1,670.51 $1,762.39 $1,859.32 $1,952.28


Proposed BillsScenario 4 - 54% fixed revenue, 46% variable revenue, universal tier 5.5% 5.5% 5.5% 5.5% 5.0%Single Family ResidencesMinimum 0 $61.58 $0.00 $61.58 $64.97 $68.54 $72.31 $76.29 $80.1025th percentile 4 $61.58 $20.40 $81.98 $86.49 $91.25 $96.27 $101.56 $106.6450th percentile 8 $61.58 $40.80 $102.38 $108.01 $113.95 $120.22 $126.83 $133.1875th percentile 14 $61.58 $71.40 $132.98 $140.30 $148.01 $156.16 $164.74 $172.98Excessive user 20 $61.58 $102.00 $163.59 $172.58 $182.07 $192.09 $202.65 $212.79Maximum 291 $61.58 $1,484.16 $1,545.74 $1,630.76 $1,720.45 $1,815.08 $1,914.91 $2,010.65




154

29.3

6

35.8

8

40.4

8

41.0

2

51.4

0

54.6

7

60.8

7

62.9

2

63.9

6

69.2

6

67.4

6

73.5

7

81.7

6

94.6

2

99.4

7

103.

03

105.

88

108.

70 15

5.50

average, 69.72

$0

$20

$40

$60

$80

169

$120

$140

$160

$180

Chart E: Single Family Residential Monthly Water Rate Survey (8 HCF), Sep 2016

*assumes 8 hcf monthly usage

155

36.7

0

38.6

2

45.5

4

46.5

6

54.8

6

60.0

3

69.0

1

72.6

2

74.4

5

76.8

8

77.0

3

78.6

0

91.8

2

109.

93

113.

63

115.

98

116.

10

120.

56 15

5.50

average, 77.78

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

170

Chart F: Single Family Residential Monthly Water Rate Survey (10 HCF), Sep 2016

*assumes 10 hcf monthly usage

156

CITY COUNCIL STAFF REPORT

TO: SOLVANG CITY COUNCIL MEMBERS FROM: Sandra Featherson, Director of Administrative Services MEETING DATE: March 13, 2017 DATE PREPARED: March 1, 2017 SUBJECT: CITY OF SOLVANG INVESTMENT POLICY AND

INVESTMENT OPTIONS I. RECOMMENDATION:

1) Adopt Resolution 17-_____- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SOLVANG ACKNOWLEDGING THE RECEIPT AND FILING OF THE ANNUAL INVESTMENT POLICY FOR FISCAL YEAR 2016-17

2) Adopt Resolution No. 17-____, A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF SOLVANG AUTHORIZING SIGNERS TO PERFORM INVESTMENT RELATED ACTIVITIES WITH MULTI-BANK SECURITIES (MBS).

3) Authorize the City Manager to execute the eConnectDirect Users Agreement. 4) Authorize the City Investment Officers to purchase $1M of CD’s and U.S.

Government Agency Bonds.

II. DISCUSSION: Each year the City adopts a Resolution acknowledging the receipt and filing of an investment policy in accordance with the California Government Code. Maintaining an investment policy is recommended by the City Auditor and the Government Finance Officers Association.

Solvang City Council Report/Agenda Date: March 13, 2017 Subject: Investment Policy Page 2 of 4

The policy strives to keep idle cash invested and has been investing cash with the Local Agency Investment Fund (LAIF) since July 1988. This investment has proven to meet the City’s criteria for investments, which are safety, liquidity, and yield. Staff have reviewed the current Investment Policy, and have identified a few changes to be consistent with the California Local Agency Investing Guidelines, (Guidelines), updated for 2017, issued by the California Debt and Investment Advisory Commission – in particular Figure 1 (and the accompanying notes) of the Investment Policy, which identifies appropriate investment options for California municipalities. In addition, Section XIV, Investment Reporting, was revised to be consistent with the Guidelines, by updating the required elements of a quarterly report as well as the addition of a monthly accounting report of all investment transactions. The City currently manages its cash flow by maintaining a checking account with Montecito Bank and Trust for day to day operational needs while the remaining excess available cash (not immediately needed) is deposited with the Local Agency Investment Fund (LAIF) that is managed by the California State Controller. According to the State Controller’s Office, the overall portfolio earned interest at a rate of .719% for the month ending December 31, 2016. At the request of the Finance Subcommittee, staff evaluated the available options for investing available cash in accordance with our Investment Policy and maintaining liquidity, safety, and yield. Certificates of Deposit (CD’s) and U.S. Government Agency Bonds (Agency Bonds) are possible investment options allowed by the City’s Investment Policy. While staff can choose investments from the wide variety of investments available, staff recommends the use of a broker to assist with the purchase and record keeping involved with buying CD’s and Agency Bonds. Staff do not have the same expertise as a licensed broker to assist in the purchase of investments. Staff also sent a survey to contacts on the California Society of Municipal Finance Officers listserv and of the 13 cities that responded, all are using brokers to assist with investment purchases. Based on recommendations from other cities, staff recommends working with Multi Bank Securities (MBS) as its broker. MBS provides its services free of charge and works primarily with municipalities, including the neighboring city of Pismo Beach. A list of California clients is attached. Staff reviewed the qualifications and references of MBS and determined they are a qualified broker and have provided all of the information required in our Investment Policy. What makes MBS unique and why staff are recommending them, in addition to the investment assistance, MBS offers a proprietary software platform (eConnectDirect), endorsed by the National Association of Counties, that allows staff to evaluate and purchase in real time from MBS, CD’s/securities available


not only from their own internal inventory but from a network of hundreds of other brokers-dealers as well, including local banks. In addition, the MBS software platform provides reports on all of your investments in one place, which makes it easier for staff to manage. Staff proposes to work with MBS to invest in various CD’s and U.S Government Agency Bonds in such a way as to ensure liquidity when needed and by purchasing investment instruments with laddered due dates, such as 1 year, 3 years, and 5 years. The securities will be held by a third party, Pershing LLC (a Bank of New York Mellon Company). In order to access funds for purchase, sale, or transfers of interest, the City needs to authorize signers on the brokerage account. Staff recommends the City Manager and Administrative Services Director (who serves as the City Treasurer) be the signatories on the account on the City’s behalf. Two signatures would be required prior to any purchase or sale. Staff is recommending an initial investment of $1M, in amounts less than $250,000 each to maintain Federal Depository Investment Corporation (FDIC) insurance. We anticipate a purchase of four investments, including one from a local banking institution. Once staff gain more experience with making investments, staff can certainly review broker-dealer options again, as well as other potential third party custodians. As indicated in the Investment Policy, the City Treasurer is responsible for ensuring adequate internal controls over any investment. The Investment Policy also outlines responsibilities for ethics and conflicts of interest.

III. ALTERNATIVES:

City Council could choose not to adopt the Resolutions.

IV. FISCAL IMPACT:

The City could earn interest between 1-2% on the investments in CD’s and Agency Bonds, which would provide additional income over the next three years to the City. An example investment portfolio is below, with an initial investment of $1M. First year earnings are estimated to be $14,250.


Amount Term Interest Rate Earnings $250,000 1 year 1% $2,500 $250,000 18 months 1.35 $3,375 $250,000 2 years 1.55% $3,875 $250,000 3 years 1.80% $4,500 First Year

Earnings $14,250

V. ATTACHMENTS:

A. Resolution 17-_____, A Resolution of the City Council of the City of Solvang Acknowledging the Receipt and Filing of the Annual Investment Policy for Fiscal Year 2016-17

B. Resolution 17-_____, A Resolution of the City Council of the City of Solvang Authorizing Signers to Perform Investment Related Activities with Multi-Bank Securities (MBS).

C. Investment Policy D. MBS Municipal Due Diligence Packet E. MBS California Municipal Clients F. MBS/County Endorsement

RESOLUTION NO. 17-_____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SOLVANG ACKNOWLEDGING THE RECEIPT AND FILING OF THE ANNUAL

INVESTMENT POLICY FOR THE FISCAL YEAR 2016-17

WHEREAS, the California State Legislature passed legislation during 1984 session required the filing of an annual Statement of Investment Policy by local public agencies; and

WHEREAS, the Governor of the State of California signed such legislation (Chapter 1226 into law effective January 1, 1985); and

WHEREAS, the City Treasurer of the City of Solvang declares the annual Statement of Investment Policy to be as follows:

PURPOSE: This statement is intended to provide a guideline for the prudent investment of temporary idle cash, restricted monies and to outline a policy for maximizing the efficiency of the cash management system. Ultimate investment goals include the enhancement of economic status and the protection of cash investments.

OBJECTIVE: The cash management system of the City of Solvang is designed to accurately monitor expenditures and revenues, thus insuring the investment of monies to the fullest extent possible. Attempts to obtain highest interest yields possible are a statement of fact as long as investments meet the criteria required for safety and liquidity.

POLICY: The City of Solvang strives to maintain the level of investment of idle funds as near to 100% as possible. Criteria for selecting investments and the absolute order of priority are: 1. Safety, 2. Liquidity, 3. Yield.

The City of Solvang operates its investment program with many Federal, State and self-imposed constraints. It does not buy stocks; it does not speculate; it does not deal in futures, options or security loan agreements.

The final basic premise underlying the City of Solvang investment philosophy is to ensure the safety of principal and to provide money when needed. A high dollar yield of investments, though important, ranks third in the priority of investment strategy. (See Attachment “A” for complete policy.)

NOW, THEREFORE BE IT RESOLVED, by the City Council of the City of Solvang, the annual Statement of Investment Policy for the City of Solvang has been filed by the City Treasurer for the Fiscal Year 2016-2017 in compliance with Section 53646(a) of the California Government Code.

175161

PASSED AND ADOPTED this 13th day of March, 2017 by the following vote:

AYES: NOES: ABSENT: ABSTAIN: ____________________________ Jim Richardson, Mayor ATTEST: ________________________ Lisa S. Martin, City Clerk

162176

RESOLUTION NO. 17-_____

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SOLVANG APPROVING AUTHORIZED SIGNERS FOR INVESTMENT ACCOUNTS

WHEREAS, the City Council of the City of Solvang, organized under the laws of the State of California, which at said meeting a quorum was present and acting throughout, the following preamble and resolutions were adopted and have been and now are in full force and effect; and

WHEREAS, the City Council is duly authorized and permitted by its Charter and/or investment policies to:

1) Engage in cash settlement transactions for the purchase of physical certificates of deposits

(CDs) purchased through eConnectDirect or through any introducing agent.

2) Engage in cash settlement transactions in the form of CDs held in safekeeping at federally insured financial institutions.

3) Engage in cash or DVP (delivery-versus-payment) settlement transactions in securities

including, but not limited to: debt instruments, bond debentures, notes, certificates of deposits and other fixed-income securities, including but not limited to: US Government Agency Bonds, Corporate Bonds, Municipal Bonds, Mortgage-Backed Securities, CMOs and Treasury Bonds, notes and bills.

4) Receive on behalf of the Investor or deliver to the Investor or a designated third party,

monies, bonds or other securities. 5) Sell, assign or endorse for transfer bonds or other securities registered in the name of the

Investor. 6) Establish and maintain safekeeping accounts with Fedwire and ACH privileges from which

account funds are directly spent, and the responsibility for which is entirely that of the Investor. Said privileges will be limited to the persons designated by the Investor. Each designated person can independently perform the prescribed privileges.

NAME TITLE SIGNATURE

Sandra Featherson________________ Director of Administrative Services __________________________ Brad Vidro_______________________ City Manager____________________ __________________________

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NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SOLVANG THAT: City of Solvang can open an account or accounts in its name with a safekeeping agent, introducing broker, or Federally Insured Financial Institution offering CD rates through eConnectDirect or through any introducing agent and that the persons named above, or their successors in office, may, on behalf of the Investor or any one of them acting individually, be and they are hereby authorized to (1) give or

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submit orders in said account(s) for the purchase, sale or other disposition of CDs, bonds and other securities listed on eConnectDirect or offered by any introducing broker; (2) make, execute, deliver or submit directly or through the services of eConnectDirect any and all written endorsements and documents necessary to effectuate closure or the disbursements of funds of or from the Investor account; (3) may at anytime while the account is open, modify, amend, submit or enter into any other arrangement with the safekeeping agent of its CD or securities. This authorization to each of said officers is to remain in full force and effect until other written notice of revocation is submitted to the safekeeping agent(s) and Multi-Bank Securities Inc.

I FURTHER CERTIFY that the signatures of the officers (or others) identified above are authorized by the foregoing Resolution to act for the City of Solvang.

ADOPTED AND APPROVED THIS 13th DAY OF MARCH, 2017, BY THE FOLLOWING VOTE: AYES:

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NOES: ABSENT: ABSTAIN: ________________________ Jim Richardson, Mayor ATTEST AND IN WITNESS: ______________________ Lisa S. Martin, City Clerk

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I. Introduction The purpose of this document is to provide guidelines for the prudent investment of the City’s temporarily idle cash and outline policies for maximizing the efficiency of the City’s cash management system. The ultimate goal is to enhance the economic status of the City while protecting its pooled cash. The guidelines are intended to be broad enough to allow the investment officers to function properly within the parameters of responsibility and authority, yet specific enough to adequately safeguard the investment assets. II. Governing Authority The investment program shall be in conformance with federal, state, and other legal requirements, including California Government Code 53600 and 53630 et seq. III. Scope This policy applies to all funds and investment activities under the direct authority of the City. The covered funds, and any new funds created by the City of Solvang, unless specifically exempted by this policy, are defined in the City’s Comprehensive Annual Financial Report and include:

• General Fund • Special Revenue Funds • Debt Service Funds • Capital Project Funds • Internal Service Funds • Agency Funds • Enterprise Funds

Funds excluded from this policy: • Bond Proceeds. Proceeds of debt issuance shall be invested in accordance with the

City’s general investment philosophy as set forth in this policy. The overriding policy for the investment of bond proceeds will be dictated by the bond documents governing such funds as long as the documents are approved by the City Council.

• Subject to the prior written consent and approval of the City Treasurer and City Manager, financial assets held and invested by trustees or fiscal agents are excluded from this policy. However, such assets are nevertheless subject to the regulations established by the State of California pertaining to investments by local agencies as well as the related bond indentures.

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IV. General Objectives The primary objectives, in priority order, of investment activities shall be safety, liquidity, and yield:

A. 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 market risk.

1. Credit Risk Credit risk is the risk that a security or portfolio will lose some or all of its

value due to a real or perceived change in the ability of the issuer to repay its debt. The City will minimize credit risk by: • Limiting investments to the safest types of securities • Pre-qualifying the financial institutions, broker/dealers, intermediaries,

and advisers with which the City will do business • Diversifying the investment portfolio so that potential losses on individual

securities will be minimized

2. Market Risk Market risk is the risk that the portfolio value will fluctuate due to changes in the general level of interest rates. The City will minimize market risk 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

B. 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). A portion of the portfolio also will be placed in money market mutual funds or local government investment pools, which offer same-day liquidity for short-term funds.

C. 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 of safety and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives described above.

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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 not be sold prior to 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.

V. Standards of Care

A. Prudence

As per California Government Code Section 53600.3, “all governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds …are trustees and therefore are fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency. Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law.” The standard of prudence to be used by investment officials shall be the “prudent investor” standard and shall be applied in the context of managing an overall portfolio. Trustees acting in accordance with written procedures and this investment policy and exercising due diligence shall be relieved of personal liability for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, the primary objective of a trustee shall be to safeguard the principal of the funds under its control. The secondary objective shall be to meet the liquidity needs of the depositor. The third objective shall be to achieve a return on the funds under its control.

B. Ethics and Conflict of Interest

1. Officers and employees involved in the investment process shall refrain from personal activity that could conflict with the proper execution of the investment program or that could impair their ability to make impartial investment decisions.

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2. Officers and employees involved in the investment process shall disclose to the

City Clerk any material financial interest in financial institutions that conduct business with the City of Solvang and they shall further disclose any large personal financial/investment positions that could be related to the performance of the City’s portfolio.

3. Officers and employees shall refrain from undertaking personal investment

transactions with the same individual with which business is conducted on behalf of the City.

4. All bond issue participants, including but not limited to, underwriters, bond

counsel, financial advisors, brokers and dealers will disclose any fee sharing arrangements or fee splitting to the City Manager and City Treasurer prior to the execution of any transactions. The providers must disclose the percentage share and approximate dollar amount share to the City prior to the execution of any transactions.

VI. Delegation of Authority and Responsibilities

A. City Council The City Council will retain ultimate fiduciary responsibility for the portfolios. The City Council is responsible for approving and adopting the Investment Policy, annually reviewing such policy, reviewing investment reports issued by the City Treasurer, authorizing bond documents and other unique financing transactions, and authorizing any deviations from the City’s investment policies.

B. Investment Officers

Authority to manage the investment program is granted to the City Treasurer and City Manager, herein after referred to as Investment Officers or Trustees, as designated by the City Council. The Director of Administrative Services, serves as the City Treasurer. Investment transactions are the responsibility of the Investment Officers, who by annual review of this policy are delegated that authority by the City Council. The authorized Investment Officers as stated above, in accordance with the City of Solvang Investment Policy, are responsible for administering an investment program which:

• Adheres to the Investment Policy • Prioritizes safety and liquidity • Determines risk and optimizes return • Provides for a system of due diligence in making investment decisions

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VII. Investment Procedures A. The City Treasurer shall establish internal control procedures for the operation of

the investment program consistent with this policy. These procedures shall include, but are not limited to, the following items:

1. Internal Controls and Safekeeping 2. Wire Transfers 3. Master Repurchase Agreements 4. Collateral/Depository Agreements 5. Broker/Dealer Relationships

B. Cash handling and cash management are integral components of an effective

management program. In keeping with the City of Solvang Policy on Cash Handling, the aforementioned procedures shall include references to: 1. Cash collection and handling 2. Depository practices 3. Cash flow issues 4. Cash flow projections 5. Anti-theft/Anti-fraud practices 6. Banking agreements 7. Accounting practices

C. Such procedures shall include explicit delegation of authority to persons

responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the City Treasurer.

VIII. Safekeeping and Custody

A. Delivery vs. Payment All trades where applicable will be executed (cleared and settled) on a delivery vs. payment (DVP) basis, to ensure that securities are deposited in an eligible financial institution prior to the release of funds.

B. Third-Party Safekeeping Securities will be held by an independent third-party safekeeping institution selected by the City of Solvang. All securities will be evidenced by safekeeping receipts in the City of Solvang’s name. The safekeeping institution shall provide on request by the City of Solvang, a copy of its most recent report on internal controls –Service Organization Control Reports prepared in accordance with the Statement on Standards for Attestation Engagements (SSAE) No. 16 (effective June 15, 2011).

C. All bank deposits will be FDIC (Federal Deposit Insurance Corporation) insured or deposited with institutions that comply with the State collateral requirements for public funds.

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D. Internal Controls

1. The City Treasurer is responsible for establishing and maintaining an internal

control structure designed to ensure that the assets of the City are protected and to prevent the following: a. Fraud b. Theft c. Loss of principal d. Loss of control over funds e. Inaccurate reporting f. Negligence g. Over-reliance on a single employee for investment decisions.

2. The internal control structure shall be designed to provide reasonable

assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived and (2) the valuation of costs and benefits requires estimates and judgments by management.

3. The internal controls shall address the following points:

a. Control of collusion b. Separation of transaction authority from accounting and record keeping c. Custodial safekeeping d. Avoidance of physical delivery securities e. Clear delegation of authority to subordinate staff members f. Written confirmation of transactions for investments and wire transfers g. Dual authorization of wire transfers h. Staff training i. Review, maintenance and monitoring of security procedures both manual

and automated.

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4. Accordingly, the City Treasurer shall establish a process for an annual independent review by an external auditor to assure compliance with policies and procedures.

IX. Authorized Financial Institutions, Depositories, and Broker/Dealers

A. Selection of Eligible Financial Institutions and Broker/Dealers Selection of financial institutions and broker/dealers authorized to engage in transactions with the City shall be at the sole discretion of the City.

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All financial institutions and broker/dealers who desire to become qualified for investment transactions must supply the following as appropriate:

1. Audited financial statements 2. Proof of National Association of Securities Dealers (NASD) certification 3. Proof of state registration 4. Completed broker/dealer questionnaire (not applicable to Certificate of

Deposit counterparties) 5. Certification of having read and understood and agreeing to comply with the

City’s investment policy. 6. Evidence of adequate insurance coverage.

B. Selection of Eligible Depositories

1. All financial institutions who desire to become depositories must supply the following (as appropriate) a. Audited financial statements demonstrating compliance with state and

federal capital adequacy guidelines b. Proof of state registration c. Evidence of adequate insurance coverage

2. Deposits The City will only deposit funds with an institution that has a rating of at least

“A” as assigned by an established rating service based on quarterly financial information provided by the Federal Reserve Board and the Federal Home Loan Bank Board (i.e., The Financial Directory). Ratings will be monitored on a quarterly basis and any downgrade in rating below “A” will be reported to the City Council together with a recommendation for possible action.

C. Selection of Brokers/Dealers

Investments must be purchased directly from the issuer, from an institution licensed by the state as a broker-dealer, from a member of a federally regulated securities exchange, or from a brokerage firm designated as a primary government dealer by the Federal Reserve Bank. Broker/dealers shall be selected by creditworthiness (e.g., a minimum capital requirement of $10,000,000 and at least five years of operation).

D. A periodic review of the financial condition and registration of all qualified

financial institutions and broker/dealers will be conducted by the investment officer.

E. In selecting financial institutions for deposit or investment of funds, the authorized

Investment Officers shall consider the credit-worthiness of the institution.

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F. From time to time, the investment officer may choose to invest in instruments

offered by minority and community financial institutions. In such situations, a waiver to the above criteria may be granted. All terms and relationships will be fully disclosed prior to purchase and will be reported to the appropriate entity on a consistent basis and should be consistent with state or local law. These types of investment purchases should be approved by City Council in advance.

G. The authorized Investment Officers will maintain a file of the broker/dealers with

which it is currently doing business, which will include the firm name, contact person, telephone number, and current audited financial statements.

H. Collateralization

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1. Certificates of Deposit:

a. The full amount of the principal and the interest that may be accrued during the maximum term of each certificate of deposit shall at all times be insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration

b. The City Treasurer, at his/her discretion may waive the collateral requirement for deposits up to the maximum dollar amount which are covered by the Federal Deposit Insurance Corporation.

X. Suitable and Authorized Investments

A. Investment Types and Credit Guidelines The City of Solvang shall be governed by the California Government Code, Sections 53600 et seq. Where this policy specifies a percentage limitation for a particular category of investment, that percentage is applicable only at the date of purchase. Within the context of these limitations, the following investments are authorized, provided, however, that where there is no limitations on the term of the investment, no investment shall be made in any security which, at the time of the investment, has a term remaining to maturity in excess of 5 years, unless specifically exempted in this Investment Policy or the Council has granted express authority to make that investment no less than 3 months prior to the investment. Following is a table summarizing allowable investments for the City. This table (Figure 1) summarizes and is consistent with California Government Code Sections 53600 and 53630 et seq.

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FIGURE 1

ALLOWABLE INVESTMENT INSTRUMENTS PER STATE GOVERNMENT CODE (AS OF JANUARY 1, 2017)A APPLICABLE TO ALL LOCAL AGENCIESB

See “Table of Notes for Figure 1” on the next page for footnotes related to this figure.

INVESTMENT TYPE MAXIMUM MATURITYC

MAXIMUM SPECIFIED % OF PORTFOLIOD

MINIMUM QUALITY REQUIREMENTS

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Local Agency Bonds 5 years None None

U.S. Treasury Obligations 5 years None None

State Obligations— CA And Others 5 years None None

CA Local Agency Obligations 5 years None None

U.S Agency Obligations 5 years None None

Bankers’ Acceptances 180 days 40%E None

Commercial Paper— Pooled FundsI

270 days 40% of the agency’s moneyG

Highest letter and number rating by an NRSROH

Commercial Paper— Non-Pooled FundsF

270 days 25% of the agency’s moneyG

Highest letter and number rating by an NRSROH

Negotiable Certificates of Deposit 5 years 30%J None

Non-negotiable Certificates of Deposit 5 years None None

Placement Service Deposits 5 years 30%K None

Placement Service Certificates of Deposit

5 years

30%K

None

Repurchase Agreements 1 year None None

Reverse Repurchase Agreements and Securities Lending Agreements

92 daysL

20% of the base value of the portfolio

NoneM

Medium-Term NotesN 5 years 30% “A” rating category or its equivalent or better

Mutual Funds And Money Market Mutual Funds N/A 20% MultipleP,Q

Collateralized Bank Deposits 5 years None None

Mortgage Pass–Through Securities 5 years 20% “AA” rating category or its equivalent or better R

County Pooled Investment Funds N/A None None

Joint Powers Authority Pool N/A None MultipleS

Local Agency Investment Fund (LAIF) N/A None None

Voluntary Investment Program FundT

N/A None None

Supranational ObligationsU 5 years 30% “AA” rating category or its equivalent or better

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TABLE OF NOTES FOR FIGURE 1

A

B

C

D

E

F

G

H

I

J

K

Sources: Sections 16340, 16429.1, 53601, 53601.8, 53635, 53635.2, 53635.8, and 53638.

Municipal Utilities Districts have the authority under the Public Utilities Code Section 12871 to invest in certain securities not addressed here.

Section 53601 provides that the maximum term of any investment authorized under this section, unless otherwise stated, is five years. However, the legislative body may grant express authority to make investments either specifically or as a part of an investment program approved by the legislative body that exceeds this five year maturity limit. Such approval must be issued no less than three months prior to the purchase of any security exceeding the five-year maturity limit.

Percentages apply to all portfolio investments regardless of source of funds. For instance, cash from a reverse repurchase agreement would be subject to the restrictions.

No more than 30 percent of the agency’s money may be in bankers’ acceptances of any one commercial bank.

“Select Agencies” are defined as a “city, a district, or other local agency that do[es] not pool money in deposits or investment with other local agencies, other than local agencies that have the same governing body.”

Local agencies, other than counties or a city and county, may purchase no more than 10 percent of the outstanding commercial paper of any single issuer.

Issuing corporation must be organized and operating within the U.S., have assets in excess of $500 million, and debt other than commercial paper must be in a rating category of "A" or its equivalent or higher by a nationally recognized statistical rating organization, or the issuing corporation must be organized within the U.S. as a special purpose corporation, trust, or LLC, has program wide credit enhancements, and has commercial paper that is rated “A-1” or higher, or the equivalent, by a nationally recognized statistical rating agency.

“Other Agencies” are counties, a city and county, or other local agency “that pools money in deposits or investments with other local agencies, including local agencies that have the same governing body.” Local agencies that pool exclusively with other local agencies that have the same governing body must adhere to the limits set for “Select Agencies,” above.

No more than 30 percent of the agency’s money may be in negotiable certificates of deposit that are authorized under Section 53601(i).

No more than 30 percent of the agency’s money may be invested in deposits, including certificates of deposit, through a placement service (excludes negotiable certificates of deposit authorized under Section 53601(i)).

L

M

N

O

P

Q

R

S

T

U

Reverse repurchase agreements or securities lending agreements may exceed the 92-day term if the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement or securities lending agreement and the final maturity dates of the same security.

Reverse repurchase agreements must be made with primary dealers of the Federal Reserve Bank of New York or with a nationally or state chartered bank that has a significant relationship with the local agency. The local agency must have held the securities used for the agreements for at least 30 days.

“Medium-term notes” are defined in Section 53601 as “all corporate and depository institution debt securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States”

No more than 10 percent invested in any one mutual fund. This limitation does not apply to money market mutual funds.

A mutual fund must receive the highest ran ing by not less than two nationally recognized rating agencies or the fund must retain an investment advisor who is registered with the SEC (or exempt from registration), has assets under management in excess of $500 million, and has at least five years experience investing in instruments authorized by Sections 53601 and 53635.

A money market mutual fund must receive the highest ranking by not less than two nationally recognized statistical rating organizations or retain an investment advisor registered with the SEC or exempt from registration and who has not less than five years experience investing in money market instruments with assets under management in excess of $500 million.

Issuer must be rated in a rating category of “A” or its equivalent or better as provided by a nationally recognized statistical rating organization.

A joint powers authority pool must retain an investment advisor who is registered with the SEC (or exempt from registration), has assets under management in excess of $500 million, and has at least five years experience investing in instruments authorized by Sec- tion 53601, subdivisions (a) to (o).

Local entities can deposit between $200 million and $10 billion into the Voluntary Investment Program Fund, upon approval by their governing bodies. Deposits in the fund will be invested in the Pooled Money Investment Account. Only those obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), and Inter-American Development Bank (IADB).

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If the credit rating is subsequently downgraded below the minimum rating level for a new investment of that security, the Investment Officer shall evaluate the downgrade on a case-by-case basis in order to determine if that security should be held or sold. The Investment Officer will apply the general objectives of safety, liquidity, yield, and legality to make the decision.

B. Due Diligence Requirement As stated, a thorough investigation of an investment pool or mutual fund is

required prior to investing and on a continual basis. At a minimum, the following information shall be on file for each pool and/or mutual fund:

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2. A description of interest calculations, how interest is distributed, and how gains and losses are treated.

3. A description of how these securities are safeguarded (including the settlement process), and how often these securities are priced and the program audited.

4. A description of who may invest in the program, how often, and the size of deposits and withdrawals.

5. A schedule for receiving statements and portfolio listings. 6. Whether reserves, retained earnings, etc. are utilized by the pool/fund.. 7. A fee schedule, and when and how fees are assessed. 8. Whether the pool/fund is eligible for bond proceeds and/or will it accept such

proceeds.

C. Prohibited Investments The City of Solvang shall not invest in any investment instrument/pool/fund unless specifically allowed under the “Investment Types” section of this policy.

The City of Solvang shall comply with Government Code Section 53601.6 which states “A local agency shall not invest any funds pursuant to this article or pursuant to Article 2 (commencing with Section 53630) in inverse floaters, range notes, or mortgage derived-interest-only strips” and that “A local agency shall not invest any funds pursuant to this article or pursuant to Article 2 (commencing with Section 53630) in any security that could result in zero interest accrual if held to maturity.”

D. Legislative Changes

Any State of California legislative action that further restricts allowable maturities, investment types or percentage allocations will be incorporated into the City of Solvang Investment Policy and supersede any and all previous applicable language. If the City is holding an investment that is subsequently prohibited by a legislative change, the City may hold that investment, if it is deemed prudent by the City Council, until the maturity date to avoid an unnecessary loss.

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XI. Investment Parameters

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A. Diversification The investments shall be diversified by: 1. Limiting investments to avoid over concentration in securities from a specific

issuer or business sector (excluding Local Agency Investment Fund and U.S. Treasury securities),

2. Limiting investment in securities that have higher credit risks, 3. Investing in securities with varying maturities, and 4. Continuously investing a portion of the portfolio in readily available funds

such as local government investment pools (LAIF), or money market funds to ensure that appropriate liquidity is maintained in order to meet ongoing obligations.

B. Maximum Maturities

In order to minimize the impact of market risk, it is intended that all investments will be held to maturity. To the extent possible, the City shall attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the City will not directly invest in securities maturing more than five (5) years from the date of purchase or in accordance with state and local statutes and ordinances. The City shall adopt weighted average maturity limitations (which often range from 90 days to 3 years), consistent with the investment objectives. Investments may be sold prior to maturity for cash flow, appreciation purposes or in order to limit losses, however, no investment shall be made based solely on earnings anticipated from capital gains. Because of inherent difficulties in accurately forecasting cash flow requirements, a portion of the portfolio should be continuously invested in readily available funds.

XII. Cash Management

In order to obtain a reasonable return on public funds, the following cash management practice will be followed:

A. Maintain maximum investment of all City funds not required to meet immediate

cash flow needs. B. Except for cash in certain restricted and special funds, the City will consolidate

cash balances from all funds to maximize investment earnings. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles.

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C. Maximize the City’s cash flow through immediate deposit of all receipts, use of

direct deposit when available, and appropriate timing of payment to venders. D. Maximize cash flow information available through the use of only one operating

bank account. XIII. Evaluation of Investment Performance The investment portfolio will be designed to obtain a market average rate of return during budgetary and economic cycles, taking into account the City’s investment risk constraints and cash flow needs.

A. Benchmark Comparison The investment portfolio shall be structured to optimize the return given the risk constraints and cash flow needs. Investment performance shall be continually monitored and evaluated by the City Manager. Investment performance statistics and activity reports shall be generated on a quarterly basis for presentation to the City Council. In evaluating the performance of the City’s portfolio in complying with this policy, it is expected that yields on City investments will regularly meet or exceed the average return on a two-year U.S. Treasury Note. However, a variance of .5% positive or negative from the benchmark is considered reasonable by the City Council for evaluation purposes.

XIV. Investment Reporting The City Treasurer shall prepare and submit a quarterly investment report to the City Council. This report will include the following elements relative to the investments held at quarter-end.

1. A listing of individual securities held at the end of the reporting period by authorized investment category.

2. Average life and final maturity of all investments listed. 3. Coupon, discount or earnings rate. 4. Par value, amortized book value and market value. 5. Percentage of the portfolio represented by each investment category. 6. A description of the funds, investments, and programs (including lending

program) managed by contracted parties (i.e. LAIF, investment pools, outside money managers, and securities lending agents.)

7. A statement of compliance with the investment policy or an explanation for non-compliance.

8. A statement of the City of Solvang’s ability to meet its pool’s expenditure requirements for the next six months, as well as an explanation of why sufficient money will not be available if that is the case.

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In addition, the City Treasurer, who has been delegated authority to invest or reinvest funds of the City of Solvang, must submit a monthly report to the City Council accounting for transactions made during the reporting period. This report is separate and distinct from the quarterly report.

XV. Investment Policy Review and Adoption The Investment Policy shall be submitted annually to the City Council for review and adoption. The policy shall be reviewed at least annually to ensure its consistency with the overall objectives of the City and its relevance to current law and financial and economic trends. Any modifications made thereto must be approved by the City Council.

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Appendix 1: Glossary

The following is a glossary* of key investing terms, many of which appear in GFOA’S Sample Investment Policy. Accrued Interest - The accumulated interest due on a bond as of the last interest payment made by the issuer. Agency - A debt security issued by a federal or federally sponsored agency. Federal agencies are backed by the full faith and credit of the U.S. Government. Federally sponsored agencies (FSAs) are backed by each particular agency with a market perception that there is an implicit government guarantee. An example of federal agency is the Government National Mortgage Association (GNMA). An example of a FSA is the Federal National Mortgage Association (FNMA). Amortization - The systematic reduction of the amount owed on a debt issue through periodic payments of principal.

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Basis Point - A unit of measurement used in the valuation of fixed-income securities equal to 1/100 of 1 percent of yield, e.g., “1/4” of 1 percent is equal to 25 basis points. Bid - The indicated price at which a buyer is willing to purchase a security or commodity. Book Value - The value at which a security is carried on the inventory lists or other financial records of an investor. The book value may differ significantly from the security’s current value in the market. Callable Bond - A bond issue in which all or part of its outstanding principal amount may be redeemed before maturity by the issuer under specified conditions. Call Price - The price at which an issuer may redeem a bond prior to maturity. The price is usually at a slight premium to the bond’s original issue price to compensate the holder for loss of income and ownership. Call Risk - The risk to a bondholder that a bond may be redeemed prior to maturity. *This glossary has been adapted from an article, entitled “Investment terms for everyday use,” that appeared in the April 5, 1996, issue of Public Investor, GFOA’s subscription investment newsletter. Cash Sale/Purchase - A transaction, which calls for delivery and payment of securities on the same day that the transaction is initiated.

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Commercial Paper - An unsecured short-term promissory note issued by corporations, with maturities ranging from 2 to 365 days. Convexity - A measure of a bond’s price sensitivity to changing interest rates. A high convexity indicates greater sensitivity of a bond’s price to interest rate changes. Coupon Rate - The annual rate of interest received by an investor from the issuer of certain types of fixed-income securities. Also known as the “interest rate”. Credit Quality - The measurement of the financial strength of a bond issuer. This measurement helps an investor to understand an issuer’s ability to make timely interest payments and repay the loan principal upon maturity. Generally, the higher the credit quality of a bond issuer, the lower the interest rate paid by the issuer because the risk of default is lower. Credit quality ratings are provided by nationally recognized rating agencies. Credit Risk - The risk to an investor that an issuer will default in the payment of interest and/or principal on a security. Current Yield (Current Return) - A yield calculation determined by dividing the annual interest received on a security by the current market price of that security. Delivery Versus Payment (DVP) - A type of securities transaction in which the purchaser pays for the securities when they are delivered either to the purchaser or his/her custodian. Derivative Security - Financial instrument created from, or whose value depends upon, one or more underlying assets or indexes of asset values. Discount - The amount by which the par value of a security exceeds the price paid for the security. Diversification - A process of investing assets among a range of security types by sector, maturity, and quality rating. Duration - A measure of the timing of the cash flows, such as the interest payments and the principal repayment, to be received from a given fixed-income security. This calculation is based on three variables: term to maturity, coupon rate, and yield to maturity. The duration of a security is a useful indicator of its price volatility for given changes in interest rates. Fair Value - The amount at which an investment could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

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Federal Funds (Fed Funds) - Funds placed in Federal Reserve banks by depository institutions in excess of current reserve requirements. These depository institutions may lend fed funds to each other overnight or on a longer basis. They may also transfer funds among each other on a same-day basis through the Federal Reserve banking system. Fed funds are considered to be immediately available funds. Federal Funds Rate - Interest rate charged by one institution lending federal funds to the other. Government Securities - An obligation of the U.S. government, backed by the full faith and credit of the government. These securities are regarded as the highest quality of investment securities available in the U.S. securities market. See “Treasury Bills, Notes, and Bonds.” Interest Rate - See “Coupon Rate”. Interest Rate Risk - The risk associated with declines or rises in interest rates which cause an investment in a fixed-income security to increase or decrease in value.

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Internal Controls - An internal control structure designed to ensure that the assets of the entity are protected from loss, theft, or misuse. The internal control structure is designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that 1) the cost of a control should not exceed the benefits likely to be derived and 2) the valuation of costs and benefits requires estimates and judgments by management. Internal controls should address the following points: 1. Control of collusion - Collusion is a situation where two or more employees are working

in conjunction to defraud their employers. 2. Separation of transaction authority from accounting and record keeping - By separating

the person who authorizes or performs the transaction from the people who record or otherwise account for the transaction, a separation of duties is achieved.

3. Custodial safekeeping - Securities purchased from any bank or dealer including appropriate collateral (as defined by state law) shall be placed with an independent third party for custodial safekeeping.

4. Avoidance of physical delivery securities - Book-entry securities are much easier to transfer and account for since actual delivery of a document never takes place. Delivered securities must be properly safeguarded against loss or destruction. The potential for fraud and loss increases with physically delivered securities.

5. Clear delegation of authority to subordinate staff members - Subordinate staff members must have a clear understanding of their authority and responsibilities to avoid improper actions. Clear delegation of authority also preserves the internal control structure that is contingent on the various staff positions and their respective responsibilities.

6. Written confirmation of transactions for investments and wire transfers - Due to the potential for error and improprieties arising from telephone and electronic transactions, all transactions should be supported by written communications and approved by the appropriate person. Written communications may be via fax if on letterhead and if the safekeeping institution has a list of authorized signatures.

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Inverted Yield Curve - A chart formation that illustrates long-term securities having lower yields than short-term securities. This configurations usually occurs during periods of high inflation coupled with low levels of confidence in the economy and a restrictive monetary policy. Investment Company Act of 1940 - Federal legislation which sets the standards by which investment companies, such as mutual funds, are regulated in the areas of advertising, promotion, performance reporting requirements, and securities valuations. Investment Policy - A concise and clear statement of the objectives and parameters formulated by an investor or investment manager for a portfolio of investment securities. Investment-grade Obligations - An investment instrument suitable for purchase by institutional investors under the prudent person rule. Investment-grade is restricted to those obligations rated BBB or higher by a rating agency. Liquidity - An asset that can be converted easily and quickly into cash. Local Government Investment Pool (LGIP) - An investment by local governments in which their money is pooled as a method for managing local funds. Mark-to-market - The process whereby the book value or collateral value of a security is adjusted to reflect its current market value. Market Risk - The risk that the value of a security will rise or decline as a result of changes in market conditions. Market Value - Current market price of a security. Maturity - The date on which payment of a financial obligation is due. The final stated maturity is the date on which the issuer must retire a bond and pay the face value to the bondholder. See “Weighted Average Maturity.” Money Market Mutual Fund - Mutual funds that invest solely in money market instruments (short-term debt instruments, such as Treasury bills, commercial paper, bankers’ acceptances, repos and federal funds). Mutual Fund - An investment company that pools money and can invest in a variety of securities, including fixed-income securities and money market instruments. Mutual funds are regulated by the Investment Company Act of 1940 and must abide by the following Securities and Exchange Commission (SEC) disclosure guidelines:

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1. Report standardized performance calculations. 2. Disseminate timely and accurate information regarding the fund’s holdings, performance,

management and general investment policy. 3. Have the fund’s investment policies and activities supervised by a board of trustees, which

are independent of the adviser, administrator or other vendor of the fund.

4. Maintain the daily liquidity of the fund’s shares.

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6. Have all individuals who sell SEC-registered products licensed with a self-regulating organization (SRO) such as National Association of Securities Dealers (NASD).

7. Have an investment policy governed by a prospectus which is updated and filed by the SEC annually.

Mutual Fund Statistical Services - Companies that track and rate mutual funds, e.g., IBC/Donoghue, Lipper Analytical Services, and Mornignstar. National Association of Securities Dealers (NASD) - A self-regulatory organization (SRO) of brokers and dealers in the over-the-counter securities business. Its regulatory mandate includes authority over firms that distribute mutual fund shares as well as other securities. Net Asset Value - The market value of one share of an investment company, such as a mutual fund. This figure is calculated by totaling a fund’s assets which includes securities, cash, and any accrued earnings, subtracting this from the fund’s liabilities and dividing this total by the number of shares outstanding. This is calculated once a day based on the closing price for each security in the fund’s portfolio. (See below.)

[(Total assets) - (Liabilities)]/(Number of shares outstanding) No Load Fund - A mutual fund which does not levy a sales charge on the purchase of its shares. Nominal Yield - The stated rate of interest that a bond pays its current owner, based on par value of the security. It is also known as the “coupon,” “coupon rate,” or “interest rate.” Offer - An indicated price at which market participants are willing to sell a security or commodity. Also referred to as the “Ask price.” Par - Face value or principal value of a bond, typically $1,000 per bond. Positive Yield Curve - A chart formation that illustrates short-term securities having lower yields than long-term securities. Premium - The amount by which the price paid for a security exceeds the security’s par value. Prime Rate - A preferred interest rate charged by commercial banks to their most creditworthy customers. Many interest rates are keyed to this rate.

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Prospectus - A legal document that must be provided to any prospective purchaser of a new securities offering registered with the SEC. This can include information on the issuer, the issuer’s business, the proposed use of proceeds, the experience of the issuer’s management, and certain certified financial statements. Prudent Person Rule - An investment standard outlining the fiduciary responsibilities of public funds investors relating to investment practices. Regular Way Delivery - Securities settlement that calls for delivery and payment on the third business day following the trade date (T+3); payment on a T+1 basis is currently under consideration. Mutual funds are settled on a same day basis; government securities are settled on the next business day. Reinvestment Risk - The risk that a fixed-income investor will be unable to reinvest income proceeds from a security holding at the same rate of return currently generated by that holding. Repurchase Agreement (Repo or RP) - An agreement of one party to sell securities at a specified price to a second party and a simultaneous agreement of the first party to repurchase the securities at a specified price or at a specified later date. Reverse Repurchase Agreement (Reverse Repo) - An agreement of one party to purchase securities at a specified price from a second party and a simultaneous agreement by the first party to resell the securities at a specified price to the second party on demand or at a specified date. Rule 2a-7 of the Investment Company Act - Applies to all money market mutual funds and mandates such funds to maintain certain standards, including a 13-month maturity limit and a 90-day average maturity on investments, to help maintain a constant net asset value of one dollar ($1.00). Safekeeping - Holding of assets (e.g., securities) by a financial institution. Serial Bond - A bond issue, usually of a municipality, with various maturity dates scheduled at regular intervals until the entire issue is retired. Sinking Fund - Money accumulated on a regular basis in a separate custodial account that is used to redeem debt securities or preferred stock issues. Swap - Trading one asset for another. Term Bond - Bonds comprising a large part or all of a particular issue which come due in a single maturity. The issuer usually agrees to make periodic payments into a sinking fund for mandatory redemption of term bonds before maturity.

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Total Return - The sum of all investment income plus changes in the capital value of the portfolio. For mutual funds, return on an investment is composed of share price appreciation plus any realized dividends or capital gains. This is calculated by taking the following components during a certain period.

(Price appreciation) + (Dividends paid) + (Capital gains) = Total Return Treasury Bills - Short-term U.S. government non-interest bearing debt securities with maturities of no longer than one year and issued in minimum denominations of $10,000. Auctions of three- and six-month bills are weekly, while auctions of one-year bills are monthly. The yields on these bills are monitored closely in the money markets for signs of interest rate trends. Treasury Notes - Intermediate U.S. government debt securities with maturities of one to ten years and issued in denominations ranging from $1,000 to $1,000,000 or more. Treasury Bonds - Long-term U.S. government debt securities with maturities of ten years or longer and issued in minimum denominations of $1,000. Currently, the longest outstanding maturity for such securities is 30 years.

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Volatility - A degree of fluctuation in the price and valuation of securities. “Volatility Risk” Rating - A rating system to clearly indicate the level of volatility and other non-credit risks associated with securities and certain bond funds. The rating for bond funds range from those that have extremely low sensitivity to changing market conditions and offer the greatest stability of the returns (“aaa” by S&P; “V-1” by Fitch) to those that are highly sensitive with currently identifiable market volatility risk (“ccc-“ by S&P, “V-10” by Fitch). Weighted Average Maturity (WAM) - The average maturity of all the securities that comprise a portfolio. According to SEC rule 2a-7, the WAM for SEC registered money market mutual funds may not exceed 90 days and no one security may have a maturity that exceeds 397 days. When Issued (WI) - A conditional transaction in which an authorized new security has not been issued. All “when issued” transactions are settled when the actual security is issued. Yield - The current rate of return on an investment security generally expressed as a percentage of the security’s current price. Yield-to-call (YTC) - The rate of return an investor earns from a bond assuming the bond is redeemed (called) prior to its nominal maturity date.

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Yield-to-maturity - The rate of return yielded by a debt security held to maturity when both interest payments and the investor’s potential capital gain or loss are included in the calculation of return. Zero-coupon Securities - Security that is issued at a discount and makes no periodic interest payments. The rate of return consists of a gradual accretion of the principal of the security and is payable at par upon maturity.

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Multi-Bank Securities, Inc.®

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Contents

SIPCProtection

Veteran-Owned Business

AuditedFinancials

StateRegistration

InvestmentPolicy

Compliance

Pershing

eConnectDirect®

Biography

References

Multi-Bank Securities, Inc.

201

Southfield, MI 48075

Proud ly v e t e r an-owned!www.mbssecurities.com

The information provided in the followingpages has been prepared to meet or exceed

your regulatory requirements.

Member of FINRA & SIPC; MSRB Registered

16DD_P.pdf 03.20.16

2016 Municipal Due Diligence

PHONE/FAX: +1 (855) 928-0109ACCOUNT EXECUTIVERUSSELL JACKSON

[email protected]

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http://www.mbssecurities.com

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2016 Due Diligence Packet 3


Address

Phones

Faxes

1000 Town Center, Suite 2300Southfield, Michigan 48075

800.967.9045248.291.1100248.291.1101

2400 East Commercial Boulevard, Suite 812Ft. Lauderdale, Florida 33308

800.967.9045954.351.6930954.351.9197

Member of FINRA & SIPC; MSRB Registered.A Veteran-Owned Business


Address

Phones

Faxes


800.967.9045248.291.1100248.291.1101


800.967.9045954.351.6930954.351.9197

Member of FINRA & SIPC; MSRB RegisteredA Veteran-Owned Business

Thank you for your interest in Multi-Bank Securities, Inc., a veteran-owned business. We understand you have numerous options for your investment needs and we appreciate you taking the time to learn more about us and how we may be of service to you.

As a privately-held organization providing fixed-income securities, we provide you the broad market visibility you should expect from a trusted service provider. Here are a few additional facts:

• We place several billion dollars in CDs annually.• We offer an array of Treasury and agency securities.• We provide services to several thousand institutional accounts located in EVERY state in the U.S.• We clear through Pershing LLC, a BNY Mellon Company, to reduce risk and to provide you with smooth execution.• We serve institutional investors with investment capital ranging from $1 million to several billion dollars.• We offer a variety of brokered and non-brokered solutions, and have placed billions of dollars in deposits in thousands of community banks.

To say we have been in business since 1988 may be commonplace, but since our firm’s inception, we notably have maintained a zero customer complaint record.* Institutions that may be somewhat hesitant to do business with a new broker-dealer have offered us the opportunity to do business with them based on this fact alone. By going to www.finra.org/Investors/ToolsCalculators/BrokerCheck/index.htm, you can access BrokerCheck, a free tool that allows you to research the professional backgrounds of current and former FINRA-registered brokerage firms with whom you do business. We invite you to have a look for yourself by navigating to BrokerCheck – our FINRA number is 22098.

We are proud to say we have helped more than 5,000 institutions like yours and have earned and preserved the respect of our customers by addressing their investment goals with personal service, investment expertise and progressive technologies.

Speaking of technology, we invite you to try our advanced offering eConnectDirect®, a powerful online tool that allows our customers to easily access, navigate and transact investment options. Our customers have the ability to manage all their investment and funding portfolios in a single user session and gain access to thousands of executable inventory offerings of government agencies, corporate and municipal bonds, and federally-insured CDs.

I hope you will find everything you need in the enclosed document to complete your due diligence on our firm. We have included information both on our firm and our clearing firm, Pershing LLC, a BNY Mellon Company. For further assistance, please contact your Multi-Bank Securities, Inc. account executive.

We look forward to the opportunity to do business with you.

Sincerely,

David T. Maccagnone Chairman and Chief Executive Officer*Based on information available through our regulators and/or supplied to us by our clearing firm.

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http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/index.htm


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2016 Due Diligence Packet 5 Member of FINRA & SIPC; MSRB Registered.


Multi-Bank Securities, Inc. is committed to providing you with the highest

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diligence needs and expectations.

In order to support your due diligence requirements, the following

information is provided:

Evidence of SIPC Protection ............................................................................................................7

Veteran Business Enterprise Certification ........................................................................................9

Statement of compliance with SEC annual report filing requirements ..........................................13

A copy of the most recently audited financial statement ..............................................................15

Independent Auditor’s Report .................................................................................................17

Statement of Financial Condition ...........................................................................................19

Notes to Statement of Financial Condition .............................................................................20

A copy of the Multi-Bank Securities, Inc. registration statement ...................................................25

Agreement that specifies the type of securities your institution purchases ....................................27

Investment Policy Recommendations and Guidlines .............................................................29

Compliance Information ...............................................................................................................31

Privacy Policy ..........................................................................................................................32

Business Continuity .................................................................................................................33

Statement regarding SEC, FINRA or state securities sanctions ................................................35

AML and CIP: Test Procedures and Internal Audit ..................................................................37

Code of Ethical Business Conduct ..........................................................................................39

IT Security ...............................................................................................................................40

BrokerCheck Response ...........................................................................................................41

Confirmation of Insurance ......................................................................................................43

Pershing Statement of Financial Condition ...................................................................................45

Pershing Auditor’s SOC1 Certification Letter ..........................................................................70

Safety of Customer Assets........................................................................................................71

eConnectDirect® ...........................................................................................................................73

Biography ......................................................................................................................................75

References .....................................................................................................................................77

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MULTI-BANK SECURITIES, INC.

STATEMENT OF FINANCIAL CONDITION

December 31, 2015

Filed Pursuant to Rule 17a-5(e)(3) Under the Securities Exchange Act of 1934 As a Public Document

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MULTI-BANK SECURITIES, INC. STATEMENT OF FINANCIAL CONDITION

December 31, 2015

ASSETS Assets:

Cash $ 10,071,378 Accounts receivable:

Brokers, dealers and clearing organization 18,515,497 Deposit - clearing organization 2,000,000 Other 66,449

Securities owned, at fair value 400,851,172 Prepaid Taxes - Prepaid expenses 326,668 Deferred tax asset (Note 2) 2,812,060

$434,643,224 Other assets:

Deferred costs (Note 6) 2,397,092 Total assets $437,040,316

LIABILITIES AND STOCKHOLDER’S EQUITY

Liabilities: Accounts payable:

Commissions due sales representatives $ 7,094,557 Other 159,328

Securities sold, not yet purchased, at fair value 355,838,144 Amount due to Parent Company (Note 4) 407,301 Accrued interest – subordinated debt 288,333 Accrued expenses 2,276,318

Total current liabilities 366,063,981 Subordinated debt (Note 7) 32,000,000

Subordinated debt – Exit fee (Note 7) - Deferred compensation (Note 9) 8,270,764

Total long-term liabilities 40,270,764 Total liabilities 406,334,745 Stockholder’s equity:

Common stock, par value $1.00 per share; 50,000 shares authorized; 16,000 shares issued 16,000

Capital in excess of par value 1,533,000 Retained earnings 29,156,571

Total stockholder’s equity 30,705,571 $437,040,316

See accompanying notes.

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20 Member of FINRA & SIPC; MSRB Registered.

MULTI-BANK SECURITIES, INC. NOTES TO STATEMENT OF FINANCIAL CONDITION

December 31, 2015 Note 1 - ORGANIZATION

Multi-Bank Securities, Inc. (the “Company”) is an institutional fixed-income

securities broker-dealer registered with the Financial Industry Regulatory Authority (FINRA) and the U.S. Securities and Exchange Commission. The Company is a wholly owned subsidiary of Multi-Bank Services, Ltd. See Note 4 for transactions with Parent Company.

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

Securities transactions are recorded on the trade date, as if they had settled. Profit and losses arising from all securities transactions are recorded on a trade date basis.

Securities owned and securities sold, not yet purchased are recorded at fair value in

accordance with FASB ASC 820, Fair Value Measurements and Disclosures.

Management Estimates The preparation of financial statements in conformity with generally accepted

accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Concentrations of Counterparty Credit Risk

The Company is engaged in various trading and brokerage activities with counterparties that primarily include broker-dealers, banks, and other financial institutions. In the event the counterparties do not fulfill their obligations, the Company may be exposed to risk. The risk of default depends on the creditworthiness of the counterparty. The Company monitors its exposure to risk through a variety of control procedures, including daily review of trading positions. Federal Income Taxes

The Company files a consolidated Federal income tax return with its Parent Company. The provision for Federal income tax for the year ended December 31, 2015 is based on a separate return filing. The amount of current and deferred taxes payable or refundable is recognized as of the date of the financial statements, utilizing currently enacted tax laws and rates. The Company’s income tax asset relates primarily to deferred compensation and represents the amount available to reduce income taxes payable in future years.

The Company recognizes and measures its unrecognized tax benefits in accordance

with FASB ASC 740, Income Taxes. The primary objective of ASC 740 is to prescribe measurement and disclosure requirements for income tax provisions when uncertainty exists as to whether the reporting entity’s tax positions would be sustained in the event of an examination. Company management believes that there are no material uncertainties in which tax positions taken would not be sustained upon examination.

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NOTES TO STATEMENT OF FINANCIAL CONDITION December 31, 2015

(Continued)

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Subsequent Events The Company has evaluated events and transactions for potential recognition or

disclosure through February 16, 2016, which is the same date the financial statements were available to be issued.

Note 3 – FAIR VALUE

Fair Value Measurement FASB ASC 820 defines fair value, establishes a framework for measuring fair value,

and establishes a fair value hierarchy which prioritizes the inputs to valuation techniques. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. Valuation techniques that are consistent with the market, income or cost approach, as specified by FASB ASC 820, are used to measure fair value.

The fair value hierarchy prioritizes the inputs to valuation techniques used to

measure fair value into three broad levels: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets

or liabilities the Company has the ability to access. Level 2 inputs are inputs (other than quoted prices included within level 1) that

are observable for the asset or liability, either directly or indirectly. Level 3 are unobservable inputs for the asset or liability and rely on

management’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. (The unobservable inputs should be developed based on the best information available in the circumstances and may include the Company’s own data.)

The inputs or methodologies used for valuing securities are not necessarily an

indication of the risk associated with investing in those securities.

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(Continued)

Note 3 – FAIR VALUE (Continued) The following table presents the Company’s fair value hierarchy for those assets and

liabilities measured at fair value on a recurring basis as of December 31, 2014.

Level 1 Level 2 Level 3 Total Assets: Corporate and other debt $ - $ 819,186 $ - $ 819,186 U.S. government and agency - 386,123,256 - 386,123,256 U.S. Treasuries 1,346,099 - - 1,346,099 Municipal debt - 12,545,180 - 12,545,180 Equities 17,451 - - 17,451

Total securities owned $ 1,363,550 $399,487,622 $ - $400,851,172 Liabilities: U.S. government and agency $ - $321,150,545 $ - $ 321,150,545 U.S. Treasuries 30,084,573 - - 30,084,573 Equities 4,603,026 - 4,603,026

Total securities sold, not yet purchased

$34,687,599

$321,150,545

$ -

$ 355,838,144

Note 4 - TRANSACTIONS WITH PARENT COMPANY

The Parent Company, Multi-Bank Services, Ltd. provides various administrative services to the Company, including furniture and fixtures. For the year ended December 31, 2015, administrative expenses charged to the Company amounted to $300,000.

In addition, at various times, each Company makes advances to each other. The net of all inter-company activity resulted in a payable to the Parent Company in the amount of $407,301 at December 31, 2015.

Note 5 - NET CAPITAL REQUIREMENTS

The Company is subject to the Securities and Exchange Commission's Uniform Net Capital Rule (Rule 15c3-1). Based on the provisions of this rule, the Company must maintain net capital equivalent to the greater of $100,000 or 1/15th of aggregate indebtedness, as defined.

At December 31, 2015, the Company's net capital was $53,966,522 and its required net

capital was $1,233,107. The ratio of aggregate indebtedness to net capital (which may not exceed 15 to 1) was .34 to 1.

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(Continued)

Note 6 – DEFERRED COSTS

Deferred costs in the amount of $2,397,092 at December 31, 2015 are summarized as follows:

Borrowing fees

and related costs

Website Development costs

CRM Development

costs

Total

Balance, 12/31/14 $ 443,238 $ 1,585,776 $ 69,260 $ 2,098,274 Additions 960,198 - 64,080 1,024,278 Amortization (484,638) (228,000) (12,822) (725,460) Balance, 12/31/15 $ 918,798 $ 1,357,776 $ 120,518 $ 2,397,092

Borrowing fees and related costs represent amounts paid in connection with the financing of the subordinated debt. These amounts are being amortized over the term of the loan.

Website development costs represent amounts paid in connection with the website

application and infrastructure development of a web-based platform as a means for financial institutions to research, trade, or obtain both brokered and non-brokered funding alternatives. These costs are being amortized over the estimated useful life of ten years.

CRM development costs represent amounts paid in connection with the development

and customization of a customer relationship manager application. These costs are being amortized over the estimated useful life of ten years.

Note 7 – SUBORDINATED DEBT

The Company in consideration of the sum of $32,000,000 has a subordinated loan agreement with a private investment firm. The loan bears interest at 9.375% per annum and matures on November 16, 2021. The debt is subordinate in right of payment to all claims of all other present and future creditors of the Company. The subordinated debt has been approved by the Financial Industry Regulatory Authority (FINRA) and is thus available in computing the Company’s net capital under the SEC’s net capital rule.

In addition, under the terms of the agreement the Company is obligated to pay a

$30,000 monthly commitment fee.

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MULTI-BANK SECURITIES, INC. NOTES TO STATEMENT OF FINANCIAL CONDITION

December 31, 2015 (Continued)

Note 8 - EMPLOYEES’ BENEFIT PLAN

The Company maintains a defined contribution 401(k) benefit plan covering all eligible employees of the Company. Under provisions of the Plan, participating employees can elect to contribute to their account a percentage of their compensation not to exceed the limitations imposed by the Internal Revenue Service. In addition, the Company at its discretion may make a matching contribution, which percentage will be determined each year by the Company. For the year ended December 31, 2015, the Company elected not to make a matching contribution.

Note 9 – DEFERRED COMPENSATION PLAN

The Company maintains a Deferred Compensation Plan available to a select group of management and highly compensated employees. The plan allows participants each year to elect to defer all or a portion of their salary and bonuses. All deferrals to the participants’ accounts vest immediately. Deferred account balances earn interest at 7% per annum.

At December 31, 2015 the total deferred compensation in the amount of $8,270,764

includes $960,655 of accrued interest.

Note 10 - OPERATING LEASE COMMITMENTS

The Company leases its primary operating facilities in Southfield, Michigan and Ft. Lauderdale, Florida. They also lease facilities in various other states. The minimum lease payments on these leases are summarized as follows:

Years Ended December 31, Amount

2016 406,000 2017 419,000 2018 423,000 2019 371,000 2020 370,000

The lease agreements include escalation clauses that increase the minimum rental

payment for increased lessor taxes and operating expenses.

For the year ended December 31, 2015, the total lease expense pursuant to the above operating leases amounted to $580,342.

Furniture and equipment is provided by the Parent Company, the charge for which is

included in the administrative charges paid to the Parent Company, see Note 4.

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Jurisdiction/SRO Category Status Status As Of Date

AK Broker Dealer Approved 03/27/1997

AL Broker Dealer Approved 11/07/1994

AR Broker Dealer Approved 05/02/1997

AZ Broker Dealer Approved 10/11/2001

CA Broker Dealer Approved 03/30/1994

CO Broker Dealer Approved 04/23/1991

CT Broker Dealer Approved 08/20/1998

DC Broker Dealer Approved 03/30/1994

DE Broker Dealer Approved 10/11/1994

FINRA Broker Dealer Approved 12/23/1988

FL Broker Dealer Approved 02/05/1991

GA Broker Dealer Approved 02/28/1994

HI Broker Dealer Approved 04/05/1995

IA Broker Dealer Approved 03/31/1994

ID Broker Dealer Approved 03/20/1997

IL Broker Dealer Approved 07/13/1989

IN Broker Dealer Approved 03/24/1997

KS Broker Dealer Approved 05/04/1994

KY Broker Dealer Approved 03/08/1994

LA Broker Dealer Approved 09/07/1994

MA Broker Dealer Approved 07/25/1994

MD Broker Dealer Approved 03/11/1994

ME Broker Dealer Approved 05/24/1994

MI Broker Dealer Approved 08/31/1988

MN Broker Dealer Approved 09/02/1994

MO Broker Dealer Approved 05/02/2002

MS Broker Dealer Approved 03/04/1994

MT Broker Dealer Approved 02/14/1994

NC Broker Dealer Approved 08/02/1994

ND Broker Dealer Approved 04/25/1997

NE Broker Dealer Approved 11/02/1994

Regulatory, State, & Territory Registrations

Data Current as of: Tuesday March 1, 2016

CRD#: 22098

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Jurisdiction/SRO Category Status Status As Of Date

NH Broker Dealer Approved 09/28/1995

NJ Broker Dealer Approved 11/09/1994

NM Broker Dealer Approved 08/02/1994

NV Broker Dealer Approved 05/23/1994

NY Broker Dealer Approved 06/05/1996

OH Broker Dealer Approved 11/21/1994

OK Broker Dealer Approved 06/04/1991

OR Broker Dealer Approved 04/04/1997

PA Broker Dealer Approved 03/07/1994

PR Broker Dealer Approved 02/10/2000

RI Broker Dealer Approved 03/02/1994

SC Broker Dealer Approved 08/04/1994

SD Broker Dealer Approved 03/04/1994

SEC Broker Dealer Approved 05/06/1988

TN Broker Dealer Approved 08/04/1994

TX Broker Dealer Approved 06/29/1990

UT Broker Dealer Approved 01/19/1994

VA Broker Dealer Approved 05/16/1994

VI Broker Dealer Approved 01/30/2012

VT Broker Dealer Approved 06/18/1997

WA Broker Dealer Approved 10/04/1989

WI Broker Dealer Approved 09/06/1991

WV Broker Dealer Approved 01/28/1994

WY Broker Dealer Approved 08/08/1994

Regulatory, State, & Territory Registrations

DATA CURRENT AS OF: Tuesday March 1, 2016 (continued)CRD# 22098

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March 1, 2016

To Whom It May Concern:

This letter is to inform you that we at Multi-Bank Securities, Inc. (MBS) do not give accounting, regulatory, tax or legal advice. However, MBS makes every effort to recommend investments we feel are appropriate for our clients.

It is our intention to maintain on file an investment policy from every one of our clients. If you have a written investment policy outlining the types of investments you can and cannot make, please forward it to us at your convenience. We have designed a system of controls to help reduce the risk of inappropriate investments for our clients.

Sincerely,

David T. MaccagnoneChief Executive OfficerMulti-Bank Securities, Inc.

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Municipal Investment PolicyRecommendations and Guidelines

Po

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& P

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Member of FINRA & SIPC; MSRB Registered 2016 MUNI Investment Policy.pdf 03.20.16

Your Investment Policy

Since 1988, Multi-Bank Securities, Inc. (MBS) has been serving the investment needs of municipalities throughout the United States. It is with great care that we recommend investment products we feel are appropriate and strictly adhere to your investment policy guidelines. We have systems in place to assist you in reducing the risk of making inappropriate investments.

Maintenance of Your Policy

It is our policy to review and maintain a copy of your investment policy on file. Should your policy need reviewing, your MBS account executive is ready to help. Our team of highly skilled professionals is required to regularly complete continuing education to ensure a broad understanding of how fixed-income products impact the municipal market. They are well-versed in current regional, state and federal governmental investment statutes and policies.

Sample Investment Policies

National municipal organizations such as the Association of Public Treasurers of the United States & Canada (APT) and the Government Finance Officers Association (GFOA) make sample investment policy guidelines and recommendations available to governmental entities. To receive a free copy, please contact your MBS representative.

www.mbssecurities.com



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Important Compliance Information

USA PATRIOT Act Multi-Bank Securities, Inc. is committed to complying with the U.S. statutory and regulatory requirements designed to combat money laundering and terrorist financing. The USA PATRIOT Act requires all financial institutions to obtain certain identification documents or other information in order to comply with their customer identification procedures (CIP).

When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We also may ask to see your driver’s license or other identifying documents. Until you provide the required information or documents, we may not be able to open an account or effect any transactions for you. For additional information, contact Merlin Elsner, our designated AML officer, at (800) 967-9008.

Order Routing

Ordering routing information for your specific orders is available upon request by contacting your account executive. You also can see the most recent quarterly order routing information on our corporate website, www.mbssecurities.com, by clicking on Order Routing at the bottom of the home page.

FINRA BrokerCheck Information

The FINRA BrokerCheck Program is available at www.finra.org and can be accessed by clicking on Protect Yourself, then clicking on BrokerCheck under Before You Invest. This site gives background information, registration/license status and disciplinary history of brokers and firms.

Securities Investor Protection Corporation (SIPC)

Information about SIPC, including the SIPC brochure, can be obtained by calling SIPC at (202) 371-8300 or on the SIPC website: www.sipc.org.

Firm Contact Information

If you have any concerns about your account, please contact Merlin Elsner, our chief compliance officer, at (800) 967-9008.

Updated March 2016

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Privacy PolicyMulti-Bank Securities, Inc. respects your right to privacy. We always have been committed to securing the confidentiality and integrity of your personal information. We are proud of our privacy practices and want our current and prospective clients to understand what information we collect and how we use it.

Why We Collect Your Information

We gather information about you and your accounts so we can (i) know who you are and thereby prevent unauthorized access to your information, (ii) design and improve the products and services we offer, and (iii) comply with the laws and regulations that govern the financial industry.

What Information We Collect

We may collect the following types of nonpublic personal information about you:• Information about your identity, such as your name, address and tax identification number• Information about your transactions with us• Information we receive from you on applications, forms or through discussion

Sources from Which We Obtain Your Information

We collect nonpublic personal information about Multi-Bank Securities, Inc.’s clients from the following sources:• Information we receive from you on applications, forms or through direct discussion with you• Information we may obtain via the Internet• Information we receive from our clearing firm or any third-party vendor for authentication purposes

What Information We Disclose

Your securities account is carried by our clearing firm pursuant to clearing agreements. We may disclose to them all the information we collect regarding your account. Our clearing firm is contractually obligated to keep the information we have provided them confidential and use the information only for the services required and as allowed by applicable law or regulation.

We also may disclose information to third parties to effect a transaction you request or authorize; for example, to a bank from which you wish to purchase a certificate of deposit.

We do not disclose any nonpublic personal information about our customers or former customers to anyone, except as permitted by law and noted above. Moreover, we will not release information about our customers or former customers, except as noted above, unless one of the following conditions is met:• We receive your prior written consent• We believe the recipient to be you or your authorized representative• We are required by law or regulation to release information to the recipient

Confidentiality and Security

We maintain physical, electronic and procedural safeguards to protect your personal account information. We also restrict access to your personal and financial data to authorized associates who have a need for these records. We require all non-affiliated organizations to conform to our privacy standards and are contractually obligated to keep the provided information confidential and used only as requested. Furthermore, we will continue to adhere to the privacy policies and practices described in this notice even after your account is closed or becomes inactive.

The examples contained within the Privacy Policy are illustrations and are not intended to be exclusive. If there are material changes to this policy, they will be posted on our website at www.mbssecurities.com.

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Business Continuity Statement

If you cannot contact us as you usually do through your account executive or your branch office after a significant business disruption, you should call our alternative number, (800) 967-5094 or go to our website at www.mbssecurities.com. If you cannot access us through either of these means, contact our clearing firm Pershing LLC (Pershing) directly in one of the following ways:

1. Call 1 (201) 413-3635. Pershing will process limited trade-related transactions (option No. 1), cashdisbursements (option No. 2) and security transfers (option No. 3) on your behalf

2. Via Facsimile at 1 (201) 413-53683. Via postal service at Pershing LLC, P.O. Box 2065, Jersey City, NJ 07303-2065

Our Business Continuity Plan

We plan to quickly recover and resume business operations after a significant business disruption and respond by safeguarding our employees and property, making a financial and operational assessment, protecting the firm’s books and records, and allowing our customers to transact business. In short, our business continuity plan is designed to permit our firm to resume operations as quickly as possible, given the scope and severity of the significant business disruption. Our business continuity plan addresses the following: data backup and recovery; all mission critical systems; financial and operational assessments; alternative communications with customers, employees and regulators; alternate physical location of employees; critical suppliers, contractors, banks and counter-party impact; regulatory reporting; and assuring our customers’ prompt access to their funds and securities if we are unable to continue our business. Our clearing firm, Pershing, backs up our important records in a geographically separate area. While every emergency situation poses unique problems based on external factors, such as time of day and the severity of the disruption, we have been advised by our clearing firm that its objective is to quickly restore its own operations and be able to complete existing transactions and accept new transactions and payments. Your orders and requests for funds and securities could be delayed during the restoration period.

Varying Disruptions

Significant business disruptions can vary in their scope, including the business district, the city or the entire region where one or more of our offices are located. Within each of these areas, the severity of the disruption also can vary from minimal to severe. In the event of a disruption to one or more of our offices, we will transfer our operations to an appropriate site when needed, and expect to recover and resume business within 24 hours. In the event of a disruption affecting a larger area, we will transfer our operations to a site outside of the affected area when needed, and expect to recover and resume business within 48 hours. In either situation, we plan to continue in business, transferring operations to our clearing firm if necessary, and notify you through our website, www.mbssecurities.com, or through our customer emergency number, (800) 967-5094, on how to contact us. If the significant business disruption is so severe that it prevents us from remaining in business, we will assure our customers’ prompt access to their funds and securities.

If you have questions about our business continuity planning, you can contact us at [email protected]

Corporate Headquarters1000 Town Center, Suite 2300 Southfield, MI 48075(800) 967-9045 phone(248) 291-1101 fax

Updated March 2016

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Multi-Bank Securities, Inc.Anti-Money Laundering Policy Test Procedures

January 1, 2016

Executive Summary

Multi-Bank Securities, Inc. (MBS) has in place an Anti-Money Laundering (AML) policy. Merlin Elsner is Chief Compliance Officer and Michael W. Drews is the Florida Compliance Officer. Management has approved the AML policy as written and all questions are to be directed to Merlin Elsner. The Company AML policy is available for review upon request.

Merlin Elsner is responsible for ensuring the review of all new accounts. Additionally, the company’s clearing agent Pershing LLC (Pershing) also reviews each account. Many MBS accounts (credit unions, banks, municipalities and SEC-registered investment advisors) are exempt from full Customer Identification Procedures (CIP). MBS relies on the fact that each of these exempted institutional entities is independently audited to ensure AML compliance. Whenever practical and/or available, MBS will review external AML policies and independent audit reports made available for compliance with appropriate rules and regulations.

MBS engaged the Company Controller to perform the annual AML Independent Testing. The Company Controller operates fully independent of the Compliance Department and reports directly to the CEO. During the annual independent testing of our AML procedures, 10 randomly selected accounts were checked against the OFAC list found at www.ustreas.gov/ofac. Further, the Controller verified as of the most recent test (concluded December 31st, 2015), none of the randomly selected accounts were found on the OFAC list. The Company Controller found no material deficiencies for 2015.

Day-to-Day Operations

Michael W. Drews and his fellow traders are responsible for making sure that all new accounts have appropriate and sufficient information, including names, addresses, and tax identification numbers prior to opening the accounts. The trading desk will reject all accounts with improperly filled out forms or forms missing material information. Pershing systems do not allow for customer accounts to be opened without proper identification information.

Pershing is responsible for verifying new control lists with all existing accounts. They have assured us that they do this task regularly. MBS screens all accounts on a continuous basis through a third party vendor established as best industry practice.

Merlin Elsner, or his designee, is responsible for deposit and withdrawal review. He follows the AML policy instructions for verifying information and recordkeeping. Reviews are performed in a timely manner utilizing in-house CRM reports as well as Pershing system reports to capture all information necessary for AML review. MBS does not accept money or securities from clients at any time. MBS account activity is reviewed systematically against a complex series of dynamic logical rules to screen for potential AML activity through the Pershing Platform. This platform produces behavior-based reports which are reviewed in addition to internal CRM reports. CRM reports are reviewed on a daily basis by Executive Management. This two-pronged approach ensures that MBS has in place an adequate policy to guard against and detect potential AML activity.

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Given the sophistication of MBS client account internal AML policies, MBS considers the risk of an actual AML incident to be extremely low. The risk rating of accounts at MBS is presented in a spectrum to be considered in the overall securities market, and while there may be differences in ratings within the firm, the overall AML risk remains low when considering the overall market.

Merlin Elsner is also responsible for ensuring the review of the bi-weekly Financial Crimes Enforcement Network (FinCEN) report and compares it to the MBS customer database in a timely fashion. Evidence of these report reviews is kept extremely confidential and is available for review upon request from FINRA and/or the SEC. MBS screens new accounts (banks, credit unions, municipalities are exempt) against the Office of Foreign Asset Control (OFAC) database. Pershing screens accounts and transaction beneficiaries against the report for all clearing transactions. MBS performs OFAC screening on an “ongoing” basis in addition to the initial account opening procedures.

Merlin Elsner is responsible for AML training of new and existing employees. The company also holds employee meetings to cover sales practice and compliance issues. The company maintains attendance records and has the record book available for review as necessary. Employees must complete Firm Element continuing education training as well as the FINRA required continuing education. Merlin Elsner coordinates compliance training for all MBS locations.

The company has procedures in place to maintain files for at least five years. The company maintains documentation for two years on site. The company also has an off-site storage facility to maintain previous years. The Company Controller personally verifies the packaging and storage of all relevant documents. The off-site storage facility is subjected to an inspection by MBS and all associated files are stored in a safe and secure location with extremely limited access.

Merlin Elsner is responsible for the Suspicious Activity Report (SAR). Mr. Elsner is familiar with the SAR form and BSA E-filing procedures. He will file a SAR immediately as applicable. The company does not accept money from clients; and therefore, does not maintain a Currency Transaction Report (CTR). All customer checks must be payable to Pershing LLC and all money wires go directly to Pershing. Pershing will not accept funds that originate from outside of the United States, this includes, but is not limited to, checks and electronic transfers.

Please contact me at 1 (800) 967-9008 with any questions related to this AML document.

Merlin ElsnerChief Compliance OfficerMulti-Bank Securities, Inc.

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Code of Ethical Business Conduct

Mission Statement

Multi-Bank Securities, Inc. is a fixed-income securities Firm focused on delivering value to the institutional markets. We seek to earn and preserve the respect, confidence, and loyalty of our employees and customers through integrity, professionalism, investment expertise, progressive technology, and exceptional personal service.

Code of Ethical Business Conduct

Our Code of Ethical Business Conduct outlines our principles, ethics, and standards to help guide our employees. Every person at our firm is valuable and fulfills a vital role. Each client’s objective can be successfully met when all departments work harmoniously with that singular goal in mind. The following are in addition to the rules required by FINRA and other regulatory authorities.

Commitment: We have made a commitment to operate ethically and to lead with integrity. We are committed to maintain the trust of fellow employees, clients, business partners, and other industry professionals. This commitment is embedded in our core values.

Integrity: Is the sum of the collective actions of our employees and how those actions measure up every day to our fundamental values. We are obligated to demonstrate moral and sound judgment in all actions within the office environment and the public. Our reputation is a direct reflection of our culture.

Respect: We support an environment that encourages respect. We do not make false or misleading statements about our customers, business partners and competitors, nor do we misrepresent facts in order to gain a competitive advantage, engage in illegal or unethical business practices.

Professional Growth: Our Representatives are instructed to familiarize themselves with all policies, laws, and regulations that apply to their jobs including but not limited to state statues, by-laws and investment policies prior to conducting business. We support our Representatives pursuit of professional licenses and certifications.

Accurate Records: It is critical that we properly maintain records and uphold state statutes, by-laws and investment policies at the corporate level as well as in personal files for each customer. These documents will be updated accordingly, or as required by law.

Employee Manual: The Employee Manual is provided to assist employees in being successful at their job. The manual outlines our expectations of employment practices and policies including the code of conduct. It is the responsibility of every employee to be familiar with, and understand the contents of the manual. A verification receipt is required to be executed by each employee. We should all work to create a positive and diverse workplace that is free from discrimination and harassment. We are committed to a zero tolerance policy against harassment or threatening behavior of any kind.

Travel: We strongly encourage building trust and rapport with customers and business partners. Representatives are supported and make every effort to attend board meetings, council / commissioner meetings including state conferences and chapter meetings, locally and nationally.


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800.967.9045954.351.6930954.351.9197


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Information Security Attestation Letter - 2016

Date: February 12, 2016

In December of 2015, Multi-Bank Securities, Inc. contracted a Qualified Security Assessor Company to perform an External Penetration Test on Multi-Bank Securities, Inc. Internet facing systems. The objective of this engagement was to identify vulnerabilities in Multi-Bank Securities, Inc. systems and network security that both internal and external adversaries could exploit.

The security engagement occurred during the period from January 11, 2016 to January 19, 2016. The testing process began with an information gathering phase in which the vendor’s assessment team conducted steps designed to gather all pertinent information surrounding the target environment. Automated and manual testing techniques were used to assess the target areas to gauge the level of business risk of any discovered vulnerabilities.

It was their overall opinion that Multi-Bank Securities, Inc. had taken the appropriate steps to reduce enterprise risk level and mitigate the probability of such an event.

Based on the assessment, Multi-Bank Securities, Inc. has implemented sufficient security controls toensure the continued operation of business processes. The existing security controls appear to adequately mitigate risks to business processes to ensure the protection of personallyidentifiable information and critical business data.

As of this date, the Chief Information Officer attests that no material changes or events, as they relate to this external vendor, have occurred.

During the remainder of 2016 and thereafter, Multi-Bank Securities, Inc. will continue diligent efforts on improving its overall security posture.

Should you have any questions regarding this matter, please feel free to contact me directly at(248) 291-1053, or via e-mail at [email protected]

Sincerely,

Merlin ElsnerChief Compliance Officer


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800.967.9045248.291.1100248.291.1101


800.967.9045954.351.6930954.351.9197


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1

Dear Multi-Bank Securities, Inc. Client,

Thank you for performing your due diligence on Multi-Bank Securities, Inc. We understand that this is a crucial part of building a trusting relationship with your broker, and we are more than happy to provide a response concerning your finding(s).

There are three items on our BrokerCheck report we would like to further explain.

The first incident was initiated by the State of Alabama on June 16, 1994. The incident occurred when Multi-Bank Securities, Inc. submitted a broker-dealer application to the State and incorrectly filled out the paperwork in the process. Multi-Bank Securities, Inc. paid a small fine, and Alabama vacated the denial order following the paperwork corrections.

The second incident was initiated by the Vermont Securities Division on June 12, 1997. Multi-Bank Securities, Inc. was cited for transacting business as an unregistered broker-dealer in Vermont. We paid a small fine, became registered in the State of Vermont and conduct business there today.

Finally, in May 2015, as a result of a sweep, FINRA found that our firm failed to accurately report to TRACE certain inter-dealer transactions in a timely manner.

The citation states,

“Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to report the correct time of trade execution for transactions in Trade Reporting and Compliance Engine (TRACE)-eligible securitized products within 15 minutes of the time of execution to TRACE; and failed to show the correct time of execution on the memorandum of brokerage orders.”

MBS paid a small fine without admitting or denying the facts as presented, and will continue to do business in the market of fixed-income securities. To prevent future events like this, we made changes to our supervisory policies and procedures to reduce redundant supervisory reviews. We reviewed and continue to review our inter-dealer relationships to ensure that trade times are reported, and to ensure that both parties contractually understand and agree to each transaction prior to creating a TRACE


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800.967.9045954.351.6930954.351.9197


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reporting obligation.

We are proud of our customer compliance record and will continue to provide you the best in customer service. We thank you again for the opportunity to provide you with additional details. Should you have any questions or concerns, I can be reached directly at (248) 291-1053, or by email at [email protected].

Sincerely,

Merlin ElsnerChief Compliance OfficerMulti-Bank Securities, Inc.


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800.967.9045248.291.1100248.291.1101


800.967.9045954.351.6930954.351.9197


228242


BINDER NO.BINDER DATE

CLIENT CODE POLICY TYPE

ACCOUNT EXECUTIVE

NAMED INSURED

EFFECTIVE DATE EXPIRATION DATE POLICY NUMBER INSURER

COVERAGE DESCRIPTION AND AMOUNTS/LIMITS

Premium:

Confirmed By: Authorized Representative:

Admitted: Non-Admitted:

Original

Page 1 of 1

08/25/15 312040

MULTSE2 Renewal

Multi-Bank Securities, Inc.1000 Town Center Drive, Suite 2300Southfield, MI 48075

11/01/15 11/01/16 81940548 Federal Insurance Company

Coverage: Securities Dealers Bond

Effective Date of Change: 11/01/2015Description of Change: Renewal

It is hereby understood and agreed that the renewal of coverage is bound effective 12:01 a.m. on November 1, 2015 for a one year period as follows:

Limit of Liability:Deductible:One Year Premium:

$2,000,000 per loss $20,000 per loss

All terms and conditions remain as expiring

Phyllis Chechile 212-504-5909

This confirmation of insurance sets forth the general terms, conditions and subjectivites, if any, of placement effected by Crystal & Company on your behalf and at your direction. This confirmation of insurance will be cancelled, superseded and replaced upon delivery of the insurer's binder of coverage. The insurer's binder will be in effect and control this placement until the receipt of the insurer's formal policy/bond documentation.

In addition to the fees and/or commissions received by Crystal & Company for the placement of insurance, in certain circumstances other parties, including other intermediaries, may earn and retain usual and customary commissions for their role in providing insurance products or services under their separate contracts with insurers and/or reinsurers. Further, in certain segments of our business, some of our compensation may be derived from supplemental or bonus commissions paid by insurers or intermediaries based on criteria designed by the insurer or intermediary, to value all the policies that we place with it in a particular period.

At Crystal & Company Refer To:Phyllis Chechile

Federal Insurance Company

Program

X

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230244


PERSHING LLC (An Indirect Wholly Owned Subsidiary of

The Bank of New York Mellon Corporation)

Statement of Financial Condition

December 31, 2015

(With Report of Independent Registered Public Accounting Firm)

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Statement of Financial Condition

December 31, 2015

Table of Contents

Page

Report of Independent Registered Public Accounting Firm 1

Statement of Financial Condition 2

Notes to Statement of Financial Condition 3

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Notes to Statement of Financial Condition

December 31, 2015

3 (continued)

(1) Organization and Description of Business

Pershing LLC (the Company) is a single member Delaware Limited Liability Company and a wholly owned subsidiary of Pershing Group LLC (the Parent), which is a wholly owned subsidiary of The Bank of New York Mellon Corporation (BNY Mellon).

The Company is registered as a securities broker-dealer with the Securities and Exchange Commission (SEC) authorized to engage in fully disclosed and omnibus clearing, sales and trading and brokerage services. The Company is a member of the New York Stock Exchange, Inc. (NYSE), Financial Industry Regulatory Authority (FINRA), Chicago Board of Options Exchange, Inc., Securities Investor Protection Corporation (SIPC), and other regional exchanges.

(2) Summary of Significant Accounting Policies

The Company’s statement of financial condition is prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management’s best judgment and estimates. Estimates and assumptions that affect the reported amounts in the statement of financial condition and accompanying notes may vary from actual results.

(a) Cash and Cash Equivalents

The Company defines cash and cash equivalents as highly liquid investments with original maturities of three months or less.

(b) Cash and Securities Segregated for Regulatory Purposes

The Company defines cash and securities segregated for regulatory purposes as deposits that have been segregated in special reserve bank accounts for the benefit of customers and the proprietary accounts of brokers (PAB) under Rule 15c3-3 of the SEC. At December 31, 2015, the Company had $4.279 billion in segregated cash and $1.0 billion in segregated U.S. Government Treasury securities.

(c) Collateralized Financing Agreements

Securities borrowed and securities loaned are financing arrangements that are recorded at the amount of cash collateral advanced or received. For securities borrowed, the Company deposits cash or other collateral with the lender. For securities loaned, the Company receives cash collateral that typically exceeds the market value of securities loaned.

Securities sold under agreements to repurchase (repurchase agreements) and securities purchased under agreements to resell (resale agreements) are treated as financing arrangements and are carried at their contract amount, the amount at which they will subsequently be resold or repurchased, plus related accrued interest. Repurchase and resale agreements are typically collateralized by cash or government and government agency securities and generally have terms from overnight up to three months. The Company nets repurchase agreements and resale agreements in the statement of financial condition in accordance with Accounting Standards Codification (ASC) Subtopic 210-20, Balance Sheet Offsetting. The impact of netting as of December 31, 2015 was $237.9 million.

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December 31, 2015

5 (continued)

indicators pursuant to the provision of ASC Topic 350, Intangibles – Goodwill and Other, and ASC Topic 360, Property, Plant & Equipment.

(g) Customer Transactions

Receivables from and payables to customers include amounts due on cash and margin transactions. Securities owned by customers are held as collateral for receivables. Customer securities transactions are recorded on a settlement date basis, which is generally three business days after trade date. Securities owned by customers, including those that collateralize margin or other similar transactions, are not reflected in the statement of financial condition.

(h) Restricted Stock Units

During the year, BNY Mellon issued restricted stock to employees, including certain Company employees. The Company accounts for this plan in accordance with ASC Topic 718, Compensation – Stock Compensation, and accordingly compensation cost is measured at the grant date based on thevalue of the award and is recognized over the vesting period.

(i) Income Taxes

The Company is included in the consolidated federal and combined state and local income tax returns filed by BNY Mellon. In addition, the Company files stand-alone tax returns in certain jurisdictions including New Jersey. Income taxes are calculated using the modified separate return method, and the amount of current tax expense or benefit is either remitted to or received from BNY Mellon, pursuant to a tax sharing agreement between BNY Mellon and the Company.

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes, which generally requires the recognition of tax benefits or expenses on the temporary differences between the financial reporting and the tax basis of the assets and liabilities. If appropriate, deferred tax assets are adjusted by a valuation allowance, which reflects expectations of the extent to which such assets will be realized.

In accordance with ASC Topic 740, the Company recognizes the effect of the income tax positions only if those positions are more likely than not of being sustained. A tax position that fails to meet a more-likely than-not recognition threshold will result in either a reduction of the current and deferred tax assets, and/or recording of current or deferred tax liabilities.

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December 31, 2015

6 (continued)

(3) Receivables from and Payables to Broker-Dealers and Clearing Organizations

Amounts receivable from and payable to broker-dealers and clearing organizations include the following (dollars in millions):

Receivables:Brokers and dealers $ 2,464Securities failed to deliver 634Clearing organizations 235

Total receivables $ 3,333

Payables:Brokers and dealers $ 1,825Securities failed to receive 651

Total payables $ 2,476

(4) Financial Instruments

ASC Topic 820 applies to all financial instruments that are being measured and reported on a fair value basis. This includes those items currently reported in cash and securities segregated for regulatory purposes, financial instruments owned, at fair value and financial instruments sold, not yet purchased, at fair value on the statement of financial condition.

As defined in ASC Topic 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market and income approaches. Based on these approaches, the Company utilizes certain assumptions that market participants would use in pricing the asset or liability. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial instrument assets and liabilities carried at fair value have been classified and disclosed in one of the following three categories:

Level 1 Quoted market prices in active markets for identical assets or liabilities.

Level 2 Observable market based inputs or unobservable inputs that are derived from or corroborated by market data.

Level 3 Unobservable inputs that are not corroborated by market data.

Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as listed equities and U.S. Government Treasury securities.

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December 31, 2015

7 (continued)

Level 2 includes those financial instruments that are valued using models or other valuation methodologies calibrated to observable market inputs. These models are primarily industry-standard models that consider various assumptions, including discount margins, credit spreads, discounted anticipated cash flows, the terms and liquidity of the instrument, the financial condition, operating results and credit ratings of the issuer or underlying company, the quoted market price of publicly traded securities with similar duration and yield, time value, yield curve, default rates, as well as other measurements. In order to be classified as Level 2, substantially all of these assumptions would need to be observable in the marketplace and can be derived from observable data or supported by observable levels at which transactions are executed in the marketplace. The Company did not have any assets or liabilities classified as Level 2 at December 31,2015.

Level 3 is comprised of financial instruments whose fair value is estimated based on internally developed models or methodologies utilizing significant inputs that are unobservable from objective sources. The Company did not have any assets or liabilities classified as Level 3 at December 31, 2015 and there was no change in Level 3 assets or liabilities during the year.

In determining the appropriate levels, the Company performed an analysis of the assets and liabilities that are subject to ASC Topic 820. The following tables present the financial instruments carried at fair value as of December 31, 2015 (dollars in millions):

Assets at fair value as of December 31, 2015Level 1 Level 2 Level 3 Total

Cash and securities segregated for $ 1,000 — — 1,000 regulatory purposes

Financial instruments owned:Equities 29 — — 29

Total assets atfair value $ 1,029 — — 1,029

Liabilities at fair value as of December 31, 2015Level 1 Level 2 Level 3 Total

Financial instruments sold:Equities $ 3 — — 3

Total liabilities atfair value $ 3 — — 3

Estimated Fair Value of Financial Instruments Not Carried at Fair Value

The fair values of the other financial assets and liabilities are considered to approximate their carrying amounts because they have limited counterparty credit risk and are short-term, replaceable on demand, or bear interest at market rates.

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December 31, 2015

8 (continued)

The table below presents the carrying value and fair value of Pershing LLC’s financial instruments which are not carried at fair value (dollars in millions). The table below therefore excludes items measured at fair value on a recurring basis presented in the table above. In addition, the table excludes the values of non-financial assets and liabilities (dollars in millions).

December 31, 2015Estimated Carrying

Level 1 Level 2 Level 3 fair value value

Summary of financial instruments:Assets:

Cash and cash equivalents $ 452 — — 452 452 Cash and securities segregated 4,279 — — 4,279 4,279

for regulatory purposesSecurities borrowed — 7,515 — 7,515 7,515 Securities purchased under

agreements to resell — 988 — 988 988 Receivables from customers — 13,351 — 13,351 13,351 Receivables from broker-dealers and clearing organizations — 3,333 — 3,333 3,333 Due to Affiliates — 768 — 768 768

Total $ 4,731 25,955 — 30,686 30,686

Liabilities:Drafts payable $ — 386 — 386 386 Securities loaned — 1,684 — 1,684 1,684 Securities sold under — 4,040 — 4,040 4,040

agreements to repurchasePayables to customers — 20,061 — 20,061 20,061 Payables to broker-dealers and clearing organizations — 2,476 — 2,476 2,476 Due from Affiliates — 276 — 276 276

Total $ — 28,923 — 28,923 28,923

Fair value can vary from period to period based on changes in a wide range of factors, including interest rates, credit quality, and market perceptions of value and as existing assets and liabilities run off and new transactions are entered into.

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9 (continued)

Offsetting Assets and Liabilities

The following table presents financial instruments that are either subject to an enforceable netting agreement or offset by collateral arrangements. There were no financial instruments subject to a netting agreement for which the Company is not currently netting (dollars in millions).

Financial assets subject to enforceable master netting agreements

Gross amounts Net assets

December 31, 2015Gross assets recognized

offset in the statement of

financial condition

recognized on the statement

of financial condition

(1)

Financial instruments

Cash collateral received Net amount

Securities borrowed $ 7,515 — 7,515 7,261 — 254

Securities purchased under 1,226 238 988 986 — 2 agreements to resellTotal financial assets subjectto enforceable master netting agreement $ 8,741 238 8,503 8,247 — 256

Financial liabilities subject to enforceable master netting agreements

Gross amounts Net liabilities

Gross liabilities

recognized

offset in the statement of

financial condition

recognized on the statement

of financial condition

(1)

Financial instruments

Cash collateral

pledged Net amount

Securities loaned $ 1,684 — 1,684 1,615 — 69

Securities sold under agreements 4,278 238 4,040 4,040 — — to repurchaseTotal financial liabilities subjectto enforceable master netting agreement $ 5,962 238 5,724 5,655 — 69

(1) The total amount reported in financial instruments is limited to the amount of the related instruments presented in the statement of financial condition and therefore any over-collateralization of these positions is not included.

Gross amounts not offset

Gross amounts not offset

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10 (continued)

Repurchase Agreements and Securities Lending

The following table presents the contract value of repurchase agreements and securities lending transactions accounted for as secured borrowings by the type of collateral provided to counterparties.

Repurchase agreements and securities lending transactions accounted for as secured borrowings at December 31, 2015Remaining contractual maturity of the agreements

Overnight and 30 days or(in thousands) continuous Up to 30 days more TotalRepurchase agreements:

U.S. Treasury $ 349,466 $ — $ — $ 349,466 U.S. Government agencies 119,050 — 4,816 123,866 State and political subdivisions 82,033 — 147,718 229,751 Agency RMBS 1,817,305 — — 1,817,305 Non-agency RMBS 377 — — 377 Agency commercial MBS 527 — — 527 Corporate bonds 371,680 — 665,317 1,036,997 Other debt securities 23,307 — 1,000 24,307 Equity securities 575,000 — — 575,000 Money market funds 89,160 — 31,148 120,308

Total $ 3,427,905 $ — $ 849,999 $ 4,277,904 Securities Lending:

U.S. Treasury $ 98 $ — $ — $ 98 U.S. Government agencies 35,337 — — 35,337 Agency RMBS 145,617 — — 145,617 Agency commercial MBS 2,083 — — 2,083 Corporate bonds 106,116 — — 106,116 Sovereign debt/sovereign guaranteed 51 — — 51 Equity securities 1,394,722 — — 1,394,722

Total $ 1,684,024 $ — $ — $ 1,684,024 Total borrowings $ 5,111,929 $ — $ 849,999 $ 5,961,928

The Company’s repurchase agreements and securities lending transactions primarily encounter risk associated with liquidity. The Company is required to pledge collateral based on predetermined terms within the agreements. If the Company were to experience a decline in the fair value of the collateral pledged for these transactions, additional collateral could be required to be provided to the counterparty, thereby decreasing the amount of assets available for other liquidity needs that may arise.

As of December 31, 2015, the Company has $400 million of collateral related to repurchase agreements that had remaining contractual maturities that exceeded 90 days.

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December 31, 2015

11 (continued)

(5) Fixed Assets

Fixed assets are included in other assets on the statement of financial condition and consists of the following (dollars in millions):

Capitalized software $ 180Leasehold improvements 30 Computer equipment 10 Computer software 19 Other 20

Total 259

Less accumulated depreciation (183) Total fixed assets, net $ 76

(6) Third Party Bank Loans and Lines of Credit

The Company has $1.5 billion in uncommitted lines of credit with non-affiliated banks as of December 31,2015. There were no borrowings against these lines of credit at December 31, 2015. Interest on such borrowings is determined at the time each loan is initiated.

(7) Income Taxes

The deferred income taxes reflect the tax effects of temporary differences between the financial reporting and tax bases of asset and liabilities. The Company has a gross deferred tax asset of $13.9 million and a gross deferred tax liability of $23.5 million at December 31, 2015. The deferred tax asset is primarily attributable to stock compensation and the deferred tax liability is primarily attributable to a deferred intercompany gain. The net deferred tax liability is $9.6 million. The Company has not recorded a valuation allowance because the Company believes it is more likely than not that the deferred tax assets will be realized.

Federal taxes payable due to BNY Mellon of $33.8 million are included in payables to affiliates and state taxes receivable of $2.3 million are included in other assets on the statement of financial condition.

BNY Mellon’s federal consolidated income tax returns are closed to examination through 2010. The Company’s New York State income tax return examination has been closed through 2012. The Company’s New York City income tax return examination has been closed through 2011. The Company’s New Jersey income tax returns are closed to examination through 2010.

(8) Related Party Transactions

The Company provides clearing related services to indirect wholly owned subsidiaries of BNY Mellon. Balances due from/to these affiliates were approximately $767.7 million and $47.6 million, respectively.They are included in receivable from affiliates and payables to affiliates, respectively, on the statement of financial condition.

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December 31, 2015

12 (continued)

The Company has $6.4 billion of unsecured loan facilities with the Parent. At December 31, 2015, there were no borrowings against the loan facilities. The Company also has loan agreements with three affiliates. At December 31, 2015, there were no borrowings against the loans.

Balances due to BNY Mellon for taxes, payroll, technology and leased equipment were $104.0 million and are included in payables to affiliates on the statement of financial condition. The Company entered into a repurchase agreement with an affiliate and at December 31, 2015 had a payable of $124.1 million included in payables to affiliates on the statement of financial condition.

For the year ended December 31, 2015, the Company leased furniture and fixtures and computer and other communications equipment from an affiliate.

(9) Employee Benefit Plans

BNY Mellon sponsors a 401(k) plan (the Plan) for its active employees. The Plan offers the Company’semployees the opportunity to plan, save and invest for their future financial needs. The Company makes periodic contributions to the Plan based on the discretion of management.

(10) Pledged Assets and Guarantees

Under the Company’s collateralized financing arrangements and other business activities, the Company either receives or provides collateral. In many cases, the Company is permitted to sell or repledge these securities held as collateral. At December 31, 2015, the fair value of securities received as collateral where the Company is permitted to sell or repledge the securities was $39,096 million and the fair value of the portion that had been sold or repledged was $18,386 million. The details of these sources and the uses of collateral are noted in the below tables (dollars in millions).

Source of available collateral – received, borrowed or owned:Financial instruments owned, at fair value $ 29Securities segregated for regulatory purposes 1,000 Securities borrowed 7,261Securities purchased under agreements to resell 1,225Margin securities available to re-pledge 29,581

Total source of collateral $ 39,096

Use of available collateral – re-pledged, loaned or sold:Financial instruments sold, but not yet purchased, at fair value $ 3 Securities loaned 1,615Securities sold under agreements to repurchase 4,537Pledged to clearing corporations 863Short sale covering 10,368Securities segregated for regulatory purposes 1,000

Total use of collateral $ 18,386

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December 31, 2015

13 (continued)

The Company additionally receives securities as collateral in connection with certain security for security transactions. In instances where the Company is permitted to sell or repledge these securities, the Company reports the fair value of the collateral received and obligation to return the collateral in the statement of financial condition. At December 31, 2015, the Company reported $183 million associated with securityfor security transactions as securities borrowed and securities loaned on the statement of financial condition and included in the table above.

The Company also conducts a fully paid lending program, in which customers agree to make available their fully paid securities to be loaned to third parties in exchange for a fee. At December 31, 2015, the fair value of the securities borrowed under this program was $205 million and is included in securities borrowed and securities loaned on the statement of financial condition and included in the table above.

Obligations under Guarantees

The Company has adopted the disclosure and recognition requirements for guarantees in accordance with ASC Topic 460, Guarantees, whereby the Company will recognize a liability at the inception of a guarantee for obligations it has undertaken in issuing the guarantee, including its ongoing obligation to stand ready to perform over the term of the guarantee in the event that certain events or conditions occur.

The Company provides guarantees to securities clearinghouses and exchanges. Under the standard membership agreement, members are required to guarantee the performance of other members. Under the agreements, if another member becomes unable to satisfy its obligations to the clearinghouse, other members would be required to meet shortfalls. The Company’s liability under these arrangements is not quantifiable or limited and could exceed the cash and securities it has posted as collateral. However, management believes the potential for the Company to be required to make payments under these arrangements is remote. Accordingly, no contingent liability is carried on the statement of financial condition for these arrangements.

In connection with its securities clearing business, the Company performs securities execution, clearance and settlement services on behalf of other broker-dealer clients. Management believes the potential for the Company to be required to make unreimbursed payments relating to such services is remote due to the contractual capital requirements associated with clients’ activity and the regular review of clients’ capital. Accordingly, no contingent liability is carried on the statement of financial condition for these transactions.

(11) Commitments and Contingences

As of December 31, 2015, the Company had commitments with twenty one customers to lend a maximum total of $3.617 billion for various terms not exceeding 364 days. These commitments consisted of outstanding loans of $2.970 billion, which are reported in receivables from customers on the statement of financial condition, and unfunded commitments totaling $647 million.

The Company has non-cancelable leases for office space and equipment that expire on various dates through 2021. At December 31, 2015, minimum future rentals on noncancelable operating leases are as follows (dollars in millions): 2016 $22, 2017 $22, 2018 $22, 2019 $21 and $29 for the years thereafter.

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December 31, 2015

14 (continued)

The Company is involved in various legal proceedings arising in connection with the conduct of the Company’s business. The Company believes that based on currently available information and the advice of counsel, the results of all such proceedings in the aggregate, will not have a material adverse effect on the Company’s financial condition. The Company intends to defend itself vigorously against all claims asserted against it. In accordance with applicable accounting guidance, the Company establishes reserves for litigation and settlements when those matters proceed to a stage where they present loss contingencies that are both probable and reasonably estimable. In such cases, there may be a possible exposure to loss in excess of any amounts accrued. The Company will continue to monitor such matters for developments that will affect the amount of the reserve, and will adjust the reserve amount as appropriate.

(12) Regulatory Requirements

As a registered broker-dealer, the Company is subject to the Uniform Net Capital Rule under Rule 15c3-lof the Securities Exchange Act of 1934 and has elected to use the alternative method of computing regulatory net capital requirements provided for in that Rule. Under the alternative method, the required net capital may not be less than two percent of aggregate debit items arising from customer transactions or $1.5 million, whichever is greater. At December 31, 2015, the Company’s regulatory net capital of approximately $2.27 billion was 12.6% of aggregate debit items and in excess of the minimum requirement by approximately $1.9 billion.

Advances to affiliates, repayment of borrowings, dividend payments and other equity withdrawals are subject to certain notification and other provisions of the Rule 15c3-1 and other regulatory bodies.

Pursuant to Rule 15c3-3 of the SEC, the Company may be required to deposit in a Special Reserve Bank Account, cash or acceptable qualifying securities for the exclusive benefit of customers. At December 31, 2015, the Company had approximately $5.14 billion of cash or acceptable qualifying securities on deposit in such accounts.

As a clearing broker, the Company is required to compute a reserve requirement for the proprietary accounts of broker-dealers (the PAB Reserve Formula). As of December 31, 2015, the Company had approximately $139 million of cash deposits in cash accounts designated for the exclusive benefit of PAB pursuant to Rule 15c3-3 of the SEC.

(13) Financial Instruments and Related Risks

(a) Customer Activities

Certain market and credit risks are inherent in the Company’s business, primarily in facilitating customers’ trading and financing transactions in financial instruments. In the normal course of business, the Company’s customer activities include execution, settlement, and financing of various customer securities, which may expose the Company to off-balance sheet risk in the event the customer is unable to fulfill its contractual obligations.

249263






December 31, 2015

15 (continued)

The Company’s customer securities activities are transacted on either a cash or margin basis. In margin transactions, the Company extends credit to customers, which is collateralized by cash and/or securities in the customer’s account. In connection with these activities, the Company executes and clears customer transactions involving securities sold but not yet purchased and option contracts. The Company seeks to control risks associated with its customer activities by requiring customers to maintain margin collateral in compliance with various regulatory, exchange and internal guidelines. The Company monitors required margin levels daily; pursuant to such guidelines, the Company requires the customer to deposit additional collateral or to reduce positions, when necessary. Such transactions may expose the Company to significant off-balance sheet risk in the event the collateral is not sufficient to fully cover losses which customers may incur. In the event the customer fails to satisfy its obligations, the Company may be required to purchase or sell the collateral at prevailing market prices in order to fulfill the customer’s obligations.

The Company’s customer financing and securities settlement activities may require the Company to pledge customer securities as collateral in support of various secured financing sources, such as securities loaned. Additionally, the Company pledges customer securities as collateral to satisfy margin deposits of the Options Clearing Corporation. In the event the counterparty is unable to meet its contractual obligation to return customer securities pledged as collateral, the Company may be exposed to the risk of acquiring the securities at prevailing market prices in order to satisfy its obligation. The Company controls this risk by monitoring the market value of securities pledged on a daily basis and by requiring adjustments of collateral levels in the event of excess market exposures.

(b) Credit Risk

As a securities broker and dealer, the Company is engaged in various securities trading and brokerage activities servicing a diverse group of domestic and foreign corporations, governments, and institutional and individual investors. A substantial portion of the Company’s transactions is executed with and on behalf of institutional investors including other broker-dealers, banks, U.S. government agencies, mutual funds, hedge funds and other financial institutions.

Credit risk is the potential for loss resulting from the default by a counterparty of its obligations. Exposure to credit risk is generated by securities and currency settlements, contracting derivative and forward transactions with customers and dealers, and the holding in inventory of loans. The Company uses various means to manage its credit risk. The creditworthiness of all counterparties is analyzed at the outset of a credit relationship with the Company. These counterparties are subsequently reviewed on a periodic basis. The Company sets a maximum exposure limit for each counterparty, as well as for groups or classes of counterparties. Furthermore, the Company enters into master netting agreements when feasible and demands collateral from certain counterparties or for certain types of credit transactions.

(c) Market Risk

Market risk is the potential loss the Company may incur as a result of changes in the market or fair value of a particular financial instrument. All financial instruments are subject to market risk. The Company’s exposure to market risk is determined by a number of factors, including size, duration,

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December 31, 2015

16

composition and diversification of positions held, the absolute and relative level of interest rates and foreign currency exchange rates, as well as market volatility and liquidity. The Company managesmarket risk by setting and monitoring adherence to risk limits.

Financial instruments sold, not yet purchased represent obligations of the Company to deliver the specified security at the contracted price and thereby, create a liability to purchase the security in the market at prevailing prices. Accordingly, these transactions result in off-balance sheet risk, as the Company’s ultimate obligation to satisfy the sale of financial instruments sold, not yet purchased may exceed the amount reflected in the statement of financial condition.

(d) Operational Risk

In providing a comprehensive array of products and services, the Company may be exposed to operational risk. Operational risk may result from, but is not limited to, errors related to transaction processing, breaches of internal control systems and compliance requirements, fraud by employees or persons outside the Company or business interruption due to systems failures or the other events. Operational risk may also include breaches of the Company’s technology and information systems resulting from unauthorized access to confidential information or from internal or external threats, such as cyber attacks. Operational risk also includes potential legal or regulatory actions that could arise as a result of noncompliance with applicable laws and/or regulatory requirements. In the case of an operational event, the Company could suffer a financial loss as well as damage to our reputation.

(e) Financial Instruments with Off-Balance-Sheet Risk

The Company enters into various transactions involving derivatives and other off-balance sheet financial instruments. These financial instruments include forward foreign exchange contracts that are used to meet the needs of customers. Generally, forward foreign exchange contracts represent future commitments to purchase or sell foreign currency at specific terms at specified future dates.

At December 31, 2015, the notional value related to these off-balance sheet forward foreign exchange contracts was $1.22 billion.

(14) Subsequent Events

The Company has evaluated subsequent events from December 31, 2015 through February 26, 2016, the date the Company’s statement of financial condition is available to be issued. On January 29, 2016, the Company paid a cash dividend of $75 million to BNY Mellon.

251265


252266





One Pershing Plaza Jersey City, New Jersey 07399 pershing.com

Pershing LLC, a BNY Mellon company Member FINRA, NYSE, SIPC

January 5, 2016

To Whom It May Concern:

We have reviewed the internal control environment of Pershing LLC (‘Pershing’) applicable to the Pershing business described in Pershing’s Service Organization Control (SOC 1) Report as of September 30, 2015 and for the period October 1, 2014 through September 30, 2015 which report includes the Independent Service Auditor’s Report, KPMG LLP, dated December 16, 2015. To the best of our knowledge there have been no material changes to Pershing’s internal controls, as described in the SOC 1 Report, for the period October 1, 2015 through December 31, 2015 which would materially adversely affect our internal control environment.

Please note we did not perform procedures to determine the operating effectiveness of the internal controls for the period of October 1, 2015 through December 31, 2015. Accordingly, we express no opinion on the operating effectiveness of any aspects of the controls, individually or in the aggregate.

The information contained in this letter is confidential and proprietary to Pershing LLC and must be treated in accordance with the standard of care specified in your written agreement with Pershing LLC or its affiliate. You should not disclose this letter or provide a copy of it to any third party without the prior written consent of Pershing LLC. However, you can provide a copy of this letter to your independent auditors only for the purposes of their examination of the service performed by Pershing LLC as it relates to an audit of your financial statements and for no other purposes.

Pershing LLC

This letter may not be reproduced without the written permission of Pershing LLC.

256


Financial Strength—December 31, 2015

Pershing’s core financial strength provides the first measure of protection for our global client assets. Our parent company, BNY Mellon, is a leading provider of financial services for institutions, corporations and high-net-worth individuals. While financial strength does not protect against loss due to market fluctuation, our internal controls and regulatory oversight help maintain our stability and focus.

Pershing, a BNY Mellon company

› Approximately $1.5 trillion in global client assets1

› Net capital of approximately $2.0 billion2—well above the minimum requirement

BNY Mellon

› $28.9 trillion in assets under custody and/or administration

› $1.6 trillion in assets under management

Pershing LLC (Pershing), a BNY Mellon company, has been a leading global provider of financial business solutions for over 75 years and serves many of the world’s most respected financial organizations. We remain committed to the safekeeping, servicing, segregation and reporting of our global client assets.

The Protection of Client Assets Remains at the Center of Our Focus

Excess ofSIPC CoverageThrough Lloyd’sand Other CommercialInsurers

SIPC Coverage Evaluation andSegregation of Assets

FinancialStrength

ClientAssets

Understanding the Protection of Client Assets 4TH QUARTER 2015

1 Pershing LLC and its global affiliates2 Pershing LLC

Pershing’s Strength, Stability and Focus

257


Evaluation and Segregation of Assets

Pershing protects client assets through rigorous internal control measures. An annual audit by a major independent auditing firm and the audit team at our parent company, BNY Mellon, helps to monitor controls that are in place. In addition, an Annual Service Organizations report (as required) by a major independent auditing firm provides additional evaluation of the design and operating effectiveness of Pershing’s internal controls related to account transfers, billing, clearance and settlement, confirmations and cash management functions, corporate actions, foreign exchange and prime brokerage controls, interest, margin monitoring, order and trade processing, physical custody, pricing and statements.

Clients’ fully paid-for assets are segregated from our own, with quarterly vault inspections conducted. We maintain enough liquid assets, net of any liabilities, to protect clients’ fully paid-for assets in the unlikely event of Pershing’s failure and liquidation.

Pershing is a broker-dealer registered with the U.S. Securities and Exchange Commission, all 50 states as well as the District of Columbia and Commonwealth of Puerto Rico, and certain foreign jurisdictions.

Securities Investor Protection Corporation (SIPC®) Coverage

Pershing is a member of the SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at sipc.org.

Excess of SIPC Coverage Through Underwriters at Lloyd’s and Other Commercial Insurers

In addition to SIPC protection, Pershing provides coverage in excess of SIPC limits from certain underwriters in Lloyd’s insurance market and other commercial insurers. The excess of SIPC coverage is valid through February 10, 2017 for Pershing LLC accounts. It provides the following protection for Pershing LLC’s global client assets:

› An aggregate loss limit of $1 billion for eligible securities—over all client accounts

› A per-client loss limit of $1.9 million for cash awaiting reinvestment—within the aggregate loss limit of $1 billion

SIPC and the excess of SIPC coverage do not protect against loss due to market fluctuation.

An excess of SIPC claim would only arise if Pershing failed financially and client assets for covered accounts—as defined by SIPC—cannot be located due to theft, misplacement, destruction, burglary, robbery, embezzlement, abstraction, failure to obtain or maintain possession or control of client securities, or to maintain the special reserve bank account required by applicable rules.

Lloyd’s currently holds an A+ rating from Standard & Poor’s® (S&P®), an A rating from A.M. Best and an AA- rating from Fitch. These ratings are based on the financial strength of the company and are subject to change by the rating agencies at any time.3 For more information about Lloyd’s, please see lloyds.com.

3 Ratings as of December 2015.

©2016 Pershing LLC. Pershing LLC, member FINRA, NYSE, SIPC, is a wholly owned subsidiary of The Bank of New York Mellon Corporation (BNY Mellon). Pershing and your financial organization are separate, unaffiliated companies that are not responsible for each other’s services or policies. Trademarks, service marks and logos belong to their respective owners.

One Pershing Plaza, Jersey City, NJ 07399OVR-PER-SSF-4Q15-2-16

pershing.com

258


For more information, visit www.eConnectDirect.com or call (800) 967-9052.

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The National Association of Counties has partnered with Multi-Bank Securities, Inc. (MBS), endorsing eConnectDirect® as an essential tool for members to manage their fixed-income investment needs. This tool gives county treasurers and finance officers visibility to thousands of fixed-income offerings in a market with little transparency. It arms local government investors with the necessary tools and confidence to select and transact within the fixed-income marketplace. While eConnectDirect® allows investors to be self-sufficient, the service also allows them to work with a licensed MBS account executive in a dynamic, collaborative way by working side-by-side on investment strategies and decisions.

eConnectDirect® is transforming the way local governments invest, allowing treasurers to:

eConnectDirect® offers access to trillions of dollars of fixed-income investments:

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For institutional issuers and investors only. Not intended for the investing public. Member of FINRA & SIPC; MSRB Registered. © 2016 Multi-Bank Securities, Inc. All Rights Reserved. Investor Benefits Muni.pdf 01/12/2016.

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Multi-Bank Securities, Inc. is registered in all 50 states. A biography of an account executive licensed in your state will be made available upon request.

Address

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800.967.9045248.291.1100248.291.1101


800.967.9045954.351.6930954.351.9197


f i n r a, s i p c, m s r b


Address

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Russell Jackson Account ExecutiveCRD# 2976249(855) 928-0109 phone/[email protected]

Russell Jackson joined Multi-Bank Securities, Inc. (MBS) in 2012 as an account executive serving the investment needs of institutional clients.

Russell brings more than 10 years of experience in the financial industry to the firm. Prior to MBS, Russell held the positions of investment executive and proprietary trader at various firms. Today, he specializes in fixed-income securities, such as U.S. Treasuries, U.S. government agencies, certificate of deposits and mortgage-backed securities.

Russell earned a Bachelor of Science in Business Administration with a concentration in Finance from the University of Alabama in Huntsville. He holds the following FINRA licenses: a General Securities Representative (Series 7), a General Securities Principle (Series 24) and a Uniform State Securities (Series 63). He also holds the Certified Fixed Income Practitioner (CFIP) designation.

Russell’s leisure time is spent pursuing his passion of music by playing classical piano and the guitar.


Address

Phones

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800.967.9045954.351.6930954.351.9197

Member of FINRA & SIPC; MSRB RegisteredA Veteran-Owned Business

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Address

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Faxes


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Member of FINRA & SIPC; MSRB Registered.A Veteran-Owned Business2016 California Munis.pdf 07.27.16

Municipalities in bold represent accounts currently registered with eConnectDirect®.Please contact your MBS account representative for contact information if needed.

Sample of California Municipalities That Have an Account With MBS

All-American Canal/Imperial Dam Capital ReplacementAlpine Fire Protection DistrictCalifornia State Pooled Money Investment AccountCarson Reclamation AuthorityCentral Basin Municipal Water DistrictChino Basin Desalter AuthorityCity of ArtesiaCity of AtascaderoCity of AzusaCity of BlytheCity of BrawleyCity of CarlsbadCity of CarsonCity of ClovisCity of CommerceCity of DavisCity of Desert Hot SpringsCity of EastvaleCity of El SegundoCity of Elk GroveCity of ExeterCity of FillmoreCity of FolsomCity of FresnoCity of GardenaCity of GlendaleCity of GlendoraCity of HawthorneCity of Hermosa BeachCity of HollisterCity of HughsonCity of Huntington BeachCity of Imperial BeachCity of Indian WellsCity of La MesaCity of La VerneCity of Laguna BeachCity of Lake Forest

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County of ImperialCounty of InyoCounty of LassenCounty of ModocCounty of MonoCounty of NevadaCounty of San FranciscoCounty of San JoaquinCounty of San Luis ObispoCounty of Santa CruzCounty of SiskiyouCounty of TehamaCounty of TulareCounty of TuolumneDelta Diablo Sanitation DistrictDiablo Water DistrictEast Bay Municipal Utility DistrictEastern Municipal Water DistrictFallbrook Public Utility DistrictFoothill Municipal Water DistrictHelix Water DistrictImperial Irrigation DistrictIndio Water AuthorityInland Empire Utilities AgencyLakeside Water DistrictLos Molinos Community Service DistrictMammoth Community Water DistrictMesa Water DistrictMono County SchoolsNorthern Inyo Healthcare DistrictPleasant Valley Recreation & Park DistrictPort of Los AngelesSacramento Metropolitan Fire DistrictSan Diego Housing CommissionSan Gabriel Valley Municipal Water DistrictSanta Clara Valley Water DistrictSierra Kings District HospitalTown of LoomisVallecitos Water District

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http://www.mbssecurities.com

National Association of Counties • 25 Massachusetts Avenue, NW Suite 500 • Washington, DC 20001 • 202.393.6226 • www.naco.org

September 12, 2014

Dear NACo Member,

I am pleased to inform you that the NACo Financial Services Center (FSC) has entered into a long-term, exclusive partnership agreement with Multi-Bank Securities, Inc., (MBS) a national fixed income institutional broker-dealer, to help members manage their fixed income investment needs.

As you know, counties are challenged with effectively managing their investments in an environment that requires them to be more transparent with better pricing and enhanced controls. With that in mind, we recently embarked on a search for a solutions provider. After a 24-month process, which included a competitive RFI, a thorough due diligence process, and test pilots, we, along with our evaluation committee, selected MBS as our new partner. This national fixed-income institutional broker-dealer will assist our members with their fixed-income investment needs through their online proprietary platform, eConnectDirect®.

eConnectDirect® is an online investment marketplace designed by MBS to help institutional clients search, compare, transact and manage their fixed income portfolios. It delivers information that allows them to perform transactions across thousands of fixed-income assets. Among the many features of eConnectDirect®, clients receive the tools to purchase and monitor insurance coverage of federally insured CDs, access to new issue and secondary agency bonds, treasuries, corporates and municipal securities. eConnectDirect® provides transparency to the marketplace by compiling bond offerings from hundreds of broker-dealers as well as access statements and balances online, and the ability to target new investment opportunities.

As noted, this partnership is the result of an in-depth selection process spearheaded by the NACo Financial Services Center (FSC). The FSC formed a committee of county treasurers and finance employees to conduct a thorough analysis of several firms and their capabilities and resources. A Request for Information was conducted late last year. After an extensive review process, MBS was selected based on several factors including: a) the eConnectDirect® solution; b) a 30-year history of excellent customer service; c) an impeccable compliance record; and d) its focused expertise as an underwriter of U.S. agency debt and certificates of deposit.

We are confident this partnership will help members effectively manage their fixed-income investment needs and provide active and tangible support to counties, county treasurers and other local government entities. eConnectDirect® is particularly well-suited to help counties remain responsive to investment-related regulation and the transparency requirements our members face.

We look forward to a successful partnership and are committed to providing our members with value added, innovative solutions. In the meantime, please do not hesitate to call either David Keen at (202) 942-4206 or Bill Jasien at (703) 969-1150, with any questions you may have.

Sincerely,

Matt Chase

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March 7, 2017

Below is an Advance Calendar of anticipated agenda items. The dates are tentative but reflect an overview of items to come. Items on this advance calendar are subject to change. Final agendas will be available on-line and at City Hall at least 72 hours prior to the meeting date.

MEETING DATE AGENDA ITEM ACTION

MARCH 27, 2017 Solvang School Crosswalk Art Proposal Review Increase Contingency Funding for Fire Station Remodel Approve SCVB Request for Funds Consider *Public Notice Required Solvang Trolley Conveyance Renewal Approve *Public Notice Required Measure A 5-Year Local Program of Projects (2nd Mtg in March 2017) Approve APRIL 10, 2017 *Public Notice Required Solvang Mesa LLMD Resolution of Assessment (1st Mtg in Apr 2017) Adopt Resolution authorizing execution of TDA Claim Form Adopt 75th Anniversary Proclamation for Elna’s Dress Shop Present Annexation/Sphere of Influence Update APRIL 24, 2017 MAY 8, 2017 MAY 22, 2017 *Public Notice Required Amend Appropriation Limit for FY 2016-17 (2nd Mtg in May) Approve JUNE 2017 Preliminary Budget Hearing AUGUST 2017 Extension of Cannabis/Marijuana Regulations Approve Unscheduled Resolution of Intent re: Installment Sale Water Revenue Bonds Adopt Ordinance Amendment- Snowbird Meter Fees Consider Storm Water Resource Plan Consider *Public Notice Required Building Fee revisions, California Code Check Agreement Approve Wireless Telecommunication Facilities Regulations Adopt Findings of SYCSD Recycled Water Planning Study Consider NPDES Permit Trash Amendment Summary Adopt Conflict of Interest Code Review (June 2018) Discuss Hazard Mitigation Plan Update Approve

ADVANCE CALENDAR

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Warrant Register (1st meeting of each month) Approve Sheriff’s Department Report (2nd meeting of each month) Receive SCVB Report (2nd meeting of each month & biennial report) Receive Fire Department Report (Quarterly) Receive VisitSYV Report (Quarterly) Receive

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