BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Adopt a Resolution Delegating Authority to Deposit and Invest Funds to the Treasurer or Their Designees, Approve the Board Investment Policy, and Authorize the Negotiation and Execution of Agreements with Investment Management Service Providers.
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RECOMMENDATION: Recommendation
A. Adopt the Resolution DELEGATING AUTHORITY TO DEPOSIT AND INVEST FUNDS TO THE TREASURER OR THEIR DESIGNEES;
B. Approve the Board Investment Policy; and
C. Authorize sole source procurement with SymPro and Bloomberg for investment-related services for five years in a combined amount not to exceed $100,000 annually.
Body
SUMMARY:
In accordance with Executive Limitation (EL) 4.9 regarding treasury and investment management, and pursuant to California Government Code (Government Code) Sections 53607 and 53608, staff recommends that the Board approve the recommendations to ensure financially prudent management of Santa Clara Valley Water District’s (Valley Water) investment portfolio.
Delegation of Authority to Deposit and Invest Funds
Per Government Code Sections 53607 and 53608, the delegation of authority to invest Valley Water’s funds must be renewed annually by the Board. The Board’s current delegation of authority to invest expires on June 30, 2026. If the Board chooses not to delegate the authority to invest funds in Fiscal Year 2026-27, the Treasurer (Chief Financial Officer) or their designees (Treasury and Debt Officer) will be limited to making deposits only, and the Board will be responsible for the investment of Valley Water’s funds. Furthermore, Government Code Section 53608 requires the Board to delegate the authority to deposit funds for safekeeping with a federal or state association (as defined by Section 5102 of the California Financial Code), a trust company or state or national bank located within this state or with the Federal Reserve Bank of San Francisco or any branch thereof within this state, or with any Federal Reserve bank or with any state or national bank located in any city designated as a reserve city by the Board of Governors of the Federal Reserve System. Through the Board’s adoption of the resolution attached to this memorandum as Attachment 1, the Board, pursuant to Government Code Sections 53607 and 53608, will delegate to the Treasurer or their designees, the authority to invest or deposit such funds during Fiscal Year 2026-27 in accordance with the provisions set forth in the Government Code.
Investment Policy
The Valley Water Board Investment Policy (Investment Policy) is in compliance with the Government Code and follows the priorities of safety, liquidity, and yield. The Investment Policy applies to Valley Water’s pooled investment fund, which encompasses all monies under the direct oversight of the Treasurer or their designees. Included in the investment pool are funds accounted for in Valley Water’s General Fund, the Safe, Clean Water Fund, the Watershed Funds, the Water Utility Enterprise Fund, the Equipment Service Fund, the Risk Insurance Fund, and debt proceeds with special consideration given to specific provisions contained in the indentures for each debt obligation.
The Investment Policy reflects minor editorial changes as well as the following updates:
• Updates published by the California Debt and Investment Advisory Commission (CDIAC) reflecting state law changes effective as of January 1, 2026:
o Revised sections 7.4 and Appendix B - as per Chapter 323, Statutes of 2025 (SB 595), which amends Gov. Code section 53601(h). The bill extends the authority for local agencies that manage $100 million or more in investment assets to invest up to 40% of their funds in eligible commercial paper to January 1, 2031. SB 595 also makes the change, concurrent and conforming with the amendments to Gov. Code 53601(h) made by SB 858, to permanently increase the maximum allowable maturity for prime quality commercial paper from 270 days to up to 397 days, up to and after the January 1, 2031, sunset date established under SB 595.
o Revised Section 7.14.1 - as per SB 595, which amends Gov. Code section 53601.6 to extend a local agency’s authority to invest in securities issued by, or backed by, the United States government that could result in zero-interest accrual if held to maturity, to January 1, 2031.
Community Bank Investments
Valley Water supports small, local banks in the Bay Area and currently holds the following investments:
• $65 million in deposits, which are secured by the Federal Depository Insurance Corporation or collateralized by letters of credit from the Federal Home Loan Bank of San Francisco.
• Three separate letters of credit issued by San Jose-based Technology Credit Union totaling $841,000 to meet the U.S. Army Corps’ financial assurance requirements for the operations of Upper Penitencia, Coyote Ridge, and Rancho Cañada de Pala Preserve watershed projects.
Socially Responsible Investing
At its August 11, 2020, meeting, the Board approved an update to Executive Limitation (EL) 4.7.7, incorporated into section 3.4 of the Investment Policy, to stipulate that Valley Water can only do business with banks that have an environmental, social and governance (ESG) risk rating of average/medium or better from at least one professional ESG research company. Small and local banks/credit unions located within the nine Bay Area counties with total assets of $10 billion or less are exempt from this provision. Investments in banks and credit unions that are not exempt from this provision are compliant.
Investment Management Service Providers
The following systems are essential tools used by Valley Water staff to effectively manage, monitor, and report on Valley Water’s $800 million investment portfolio in compliance with the Government Code and Investment Policy:
• SymPro Investment Management Software - this subscription-based software solution provides investment portfolio accounting, reporting, and analysis. It’s used daily to track investments, interest earnings, and accounting activity, and is used in the preparation of weekly, monthly, and quarterly investment reports, which are posted as non-Board agenda items.
• Bloomberg Terminals - this subscription-based software platform is used by staff for real-time market data, analytics, news, and trading. Bloomberg Terminals is the industry standard, widely used by traders, portfolio managers, and analysts for data-driven decision-making and documentation. Trade-based information pulled from the platform for compliance and accounting purposes includes trade tickets, security descriptions, bond ratings, price/coupon/yield, cash flow analysis, and market comparison data.
SymPro’s investment module has been used by Valley Water staff for nearly 30 years to track investments and generate reports that are submitted to the Board quarterly, as required by the Government Code. It’s an important tool used to reconcile cash and investment accounting and to comply with the Government Code and Investment Policy regarding portfolio and maturity limits. The current annual cost for SymPro is $19,482.
Bloomberg terminals have been used by Treasury staff for over 14 years to assess financial markets and to communicate and execute trades with brokers in real time. Bloomberg is considered a crucial tool for executing fixed-income trades (e.g., US Treasuries/Agencies, municipal bonds, corporate bonds), which make up over 64% of Valley Water’s investment portfolio. The current annual cost for the Bloomberg terminals is $54,900.
Board authorization to enter into sole source agreements with the service providers for a combined amount not to exceed $100,000 annually would ensure operational continuity, accommodate periodic cost increases, and maintain compliance with the Government Code, Investment Policy, and procurement policies.
ENVIRONMENTAL JUSTICE IMPACT:
There are no Environmental Justice impacts associated with this item.
FINANCIAL IMPACT:
Adoption of the resolution will ensure that Valley Water funds continue to be invested in accordance with the FY 206-27 Investment Policy. Estimated investment earnings of $19.5 million have been included in the Fiscal Year 2026-27 budget. The annual not-to-exceed amount of $100,000 for the Sympro and Bloomberg agreements has been incorporated into the FY 2026-27 budget for Treasury and Debt Management Unit Project No. 60221002 and is offset by portfolio investment earnings.
CEQA:
The recommended action does not constitute a project under CEQA because it does not have a potential for resulting in direct or reasonably foreseeable indirect physical change in the environment.
ATTACHMENTS:
Attachment 1: Resolution
Attachment 2: FY 2026-27 Board Investment Policy
UNCLASSIFIED MANAGER: Manager
Darin Taylor, 408-630-3068