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W A T E R E N E R G Y L I F E RIVERSIDE PUBLIC UTILITIES • ' Board Memorandum P U B L I C U T I L I T I E S BOARD OF PUBLIC UTILITIES DATE: NOVEMBER 9, 2020 ITEM NO: 8 SUBJECT: RIVERSIDE PUBLIC UTILITIES CASH RESERVE POLICY UPDATE ISSUE: Receive this update on the Riverside Public Utilities Cash Reserve Policy. RECOMMENDATION: That the Board of Public Utilities receive this update on the Riverside Public Utility's Cash Reserve Policy, funds and use of funds. BACKGROUND: Policy History On December 18, 2015 and March 22, 2016, the Board of Public Utilities (Board) and the City Council, respectively, approved the Cash Reserve Policy. On May 23, 2016, and July 26, 2016, the Board and the City Council, respectively, approved the existing Riverside Public Utilities (RPU) Fiscal Policies which incorporated the Cash Reserve Policy in Appendix A. The approved policies documented and adopted financial goals for both the water and electric utilities and established policies for long-term, as well as day-to-day operations of both utilities. The policies cover a number of areas including financial reporting, cash reserves, operating and capital budgeting, debt management, investments, risk management, financial planning, and others. On January 10, 2017, the City Council adopted the City's existing Debt Management Policy to satisfy the requirements of Senate Bill (SB) 1029. On May 22, 2017 and July 11, 2017, the Board and City Council, respectively, approved the Dark Fiber Leasing Program, which included establishing uniform lease rates for the use of the dark fiber infrastructure, physical and cyber security policies, a master fiber lease license agreement, and a new cost center within the Electric Fund for related expenses and revenue with an appropriation of $1,800,000 for the dark fiber program construction and management activities. The Board and City Council also approved the transfer of $1,800,000 to a new dark fiber designated reserve to fund leased fiber activities. On May 22, 2018, the City Council approved rates that include the use of a Line of Credit (LOC) as part of the 5 -Year Rate proposal to keep utility rates as low as possible. Utilizing a LOC reduced