Annual Meeting of the Corporation and Regular Meeting Board of Directors
February 5, 2020
Time and Location
4:00 p.m.
(Meeting in 1st floor conference room)
Meeting facilities are accessible to persons with disabilities. If you require special assistance to participate in the meeting, notify the Conservancy’s office at (916) 649-3331 at least 48 hours prior to the meeting.
Annual Meeting of the Board of Directors
1. Call to Order of the Annual Meeting of the Corporation
The Board Chair will call the meeting to order if a quorum is present. Announcements by the Board Chair or Executive Director may be made at this time. Board members may make announcements at this time as well.
2. Public Comments
Opportunity for members of the public to address the Conservancy’s Board of Directors.
3. Approval of the Annual Meeting of Corporation Minutes
The Board Chair will request approval of the minutes of the Annual Meeting of the Corporation on February 6, 2019.
4. Election of Officers
Election of officers of the corporation. The elected Board Chair will discuss with Board members their thoughts regarding the election of officers. The election of officers will be held. Committee assignments may be made.
Download the Conservancy’s 2019 Officers and Committees Roster (PDF, 55 KB)
5. Establish time, date and location of regular Board meetings
The time, date and location of regular meetings of the Conservancy’s Board of Directors will be the first Wednesday of February, April, June, August, October, December at 4:00 p.m. at the offices of the Conservancy, 2150 River Plaza Dr., Suite 460, Sacramento, California.
6. Adjournment of the Annual Meeting of the Corporation
Official adjournment of the Annual Meeting of the Corporation.
Regular Meeting of the Board of Directors
7. Call to Order of the Regular Meeting of the Board of Directors
The Board Chair will call the meeting to order if a quorum is present. Announcements by the Board Chair or Executive Director may be made at this time. Board members may make announcements at this time as well.
8. Public Comments
Opportunity for members of the public to address the Conservancy’s Board of Directors.
9. Approval of the minutes
*All items listed under the Consent Calendar, including minutes, are considered and acted upon by one Motion. Any Board member may request an item be removed for separate consideration.*
The Board Chair will request approval of the minutes and consent items of the Board of Directors meeting of December 3, 2019.
Download the Conservancy’s December 3, 2019 Board meeting minutes (PDF, 575 KB)
10. Authorization to amend signature cards and related financial institution authorizations
Documents necessary for the Conservancy to conduct business with its financial institutions need to be updated from time-to-time, especially when officers are elected.
As has been done in prior years, this action authorizes the Conservancy’s Chair, Vice Chair, Treasurer, Secretary and Assistant Secretary to sign signature cards and related authorizing documents for the Conservancy’s Wells Fargo Bank, Wells Fargo Investments, Wells Fargo Advisors, City of Sacramento Treasurer’s Office, U.S. Bank, and T. Rowe Price accounts.
Download the Conservancy’s draft authorized signers resolution (PDF, 58 KB)
11. “Just and reasonable” determinations for the Chief Financial Officer
The Board is required to determine that changes to a chief financial officer’s compensation are “just and reasonable.” See excerpt from California Government Code, Section 12586(g):
The board of directors of a charitable corporation or unincorporated association, or an authorized committee of the board, and the trustee or trustees of a charitable trust shall review and approve the compensation, including benefits, of the president or chief executive officer and the treasurer or chief financial officer to assure that it is just and reasonable. This review and approval shall occur initially upon the hiring of the officer, whenever the term of employment, if any, of the officer is renewed or extended, and whenever the officer’s compensation is modified. Separate review and approval shall not be required if a modification of compensation extends to substantially all employees.
The Conservancy’s Compensation and Governance Committee reviewed this item. Management requests the Board make a declaration that the “just and reasonable” test has been met for the Chief Financial Officer.
Download the Conservancy’s Chief Financial Officer’s “Just and Reasonable” report (PDF, 535 KB)
12. Silva barn repairs
Due to recent high winds, the Conservancy’s large barn on the Silva tract needed emergency repairs as the roof was beginning to heave. For all the necessary repairs the Conservancy received an estimate of $45,460.00. Management authorized the contractor to complete $10,000.00 of emergency repairs to stabilize the barn roof until such time as staff could present this additional expense to the Board.
The Conservancy is requesting a 10% contingency ($4,546.00) for any incidental costs, bringing the total project cost to $50,006.00. The $10,000.00 previously paid for the emergency repair will reduce the balance to $40,006.00. Management seeks Board approval to complete this repair.
Download the estimate for the Conservancy’s Silva barn repairs (PDF, 58 KB)
13. Bylaws update
Conservancy management, in consultation with Best, Best and Krieger, has proposed amendments to the Conservancy’s Bylaws which reflect current legal and procedural changes. The Compensation and Governance Committee will have reviewed the proposed amendments prior to presentation to the full Board. Management recommends approval of the proposed amendments to the Bylaws.
The Conservancy’s proposed updated Bylaws are available upon request.
Please email your inquiry to: Email [email protected]
14. Land dedication 50 acres to 20 acres
Introduction
This is a follow up to the last Board meeting. The matter at hand is the Conservancy Board’s discussion regarding whether the under 50-acre small mitigation option could be mitigated via the normal HCP process, or, if like the larger mitigation projects, its proponents would need to find their own mitigation land. The Board explored reducing the 50-acre threshold to 20 acres, or possibly eliminating the option altogether. Board members initiated this matter, concerned about the Conservancy’s ability to deliver on it.
Background
The Conservancy has had the luxury of holding a large inventory of approved mitigation acres due to having made land exchanges many years ago and receiving 50 percent more acres than it surrendered. (These exchanges were a response to a couple of U.S. Justice Department requests to reduce preserve fragmentation and consolidate the system of preserves.) This stocked the Conservancy’s inventory of approved mitigation acres to the point where the Conservancy could say “yes” to requests for mitigation, virtually without exception.
Current land availability
Today, nearly all of the inventoried acreage has been exhausted. Additionally, the Conservancy is having a difficult time finding sellers of approvable mitigation land. This has largely been caused by the numerous acres that have been approved in the area outside the 17,500 acres classified as “Permitted Acres” of the HCPs. And as of today, many thousands of acres in the Natomas Basin that lie outside the Permitted Acres-designated area are proposed for still more development. Owners of land in these areas typically believe their properties will be worth developer prices which are very much higher than ag or mitigation land prices. Therefore, these are not viable for acquisition. Moreover, the HCPs prohibit mitigation land to be located in “land designated for urban use by a local land use agency.”
Response and reaction
At the last Conservancy Board meeting, several parties expressed an interest in commenting on the matter. Conservancy staff reached out to those parties and requested comments. Staff will brief the Board on the reaction of these parties.
Action requested
This item furthers the Board’s consideration of this matter. As requested by the Board, it is continued for further discussion and possible action.
15. City of Sacramento report
Report from the City of Sacramento regarding HCP-related activity and other topics.
16. Financial statement review
A financial statement will be provided for the period ended December 31, 2019 (unaudited). Additional financial information will be provided.
Download the Conservancy’s unaudited December 31, 2019 financial statements (PDF, 1 MB)
17. Conservancy endowment funds investment manager
The Conservancy’s endowment funds are managed by T. Rowe Price. Representative Phil Burger of T. Rowe Price will meet with the Board for the purposes of providing the Board with the 2019 annual report on the Conservancy’s endowment funds accounts.
18. Non-native weed challenge
The Conservancy is required to produce rice and to exclude non-native weed species on preserves. While the Conservancy itself never uses insecticides, fungicides or rodenticides, it does occasionally use herbicides on mitigation properties when other solutions have failed or are not practical. Resistance issues have been a concern for years, but are now more acute than ever. Staff will brief the Board.
The non-native weed graphics are available upon request.
Please email your inquiry to: Email [email protected]
19. Operating cash sufficiency outlook
Many years ago, the Board of Directors requested that the Conservancy staff share with it the internal exercise staff periodically conducts on long-range cash flow analysis, and that one of the runs on the cash flow analysis include a “worst case scenario.” Staff will present the results of the most recent scenario planning exercise to the Board.
Download the Conservancy’s operating cash sufficiency outlook paper (PDF, 254 KB)
20. NBHCP Finance Model and how it works to guide funding
In 2020, Conservancy staff will attempt to more extensively familiarize the Board with the inner workings of the Conservancy’s budget and finance matters. In this meeting, the Board will be briefed on the NBHCP Finance Model.
Download Conservancy’s NBHCP Finance Model cash flow chart (PDF, 23 KB)
21. Rate of return assumptions
Conservancy management periodically engages an independent third party to test the rate of return assumption it uses to both budget and drive the NBHCP Finance Model each year. It is also used less formally as a comparison against endowment fund returns. Staff will brief the Board on its most recent re-assessment and testing of the assumed rate of return, explain its relevance to and implications for the Conservancy’s long-term financial standing, and why it will not be proposing any changes to the rate of return assumption.
22. Considerations regarding the Conservancy’s Corporate Funds Investment Policy
Discussion
Generally speaking, the Conservancy maintains essentially three “buckets” of invested capital:
- Bucket #1 is for working capital, and is managed for day-to-day operating needs. (It is subject to the corporate funds investment policy.)
- Bucket #2 is for funds that are not held for working capital purposes, but that are “standing by” for use as working capital or other purposes. (It is subject to the corporate funds investment policy.)
- Bucket #3 is for endowment, and is very long-term in nature. (It is subject to the endowment funds investment policy.)
At issue in this agenda item is Bucket #2. Funds in Bucket #2 have most recently been managed in an account held at U.S. Bank. Investment returns are low (generally 1% to 2.5%, net of fees), and the Conservancy Board’s investment policy restricts investable assets to fixed income securities, and more specifically, those which are short-term in duration.
Each year, the Conservancy’s management meets with the funds advisors to review compliance with the Board’s investment policy, asset allocation and to hear recommendations relevant to the investments. These discussions include questions and answers with respect to higher returns, consistent with safety. Conservancy management is comfortable that the investment manager is optimizing for return, safety and compliance with the Board’s investment policy for that class of Conservancy assets.
For consideration
For the Board’s consideration, presented below are incremental steps that could be used to adjust the Board’s investment policy. Each would most likely result in higher returns (ratings listed are for S&P):
- extend the duration of allowable fixed income investments from up to five years to up to seven years (or longer),
- reduce credit quality so that the investment manager could acquire positions in securities with as low as an BBB rating, down from A- rating but still classified as “investment grade,” and/or
- allow some exposure, say 20 percent or 25 percent, to equities, perhaps indexed or near-indexed equities.
Recommendation
At this time, the Conservancy’s management does not recommend any changes to the Board’s investment policy for this class of financial assets. We believe that given the position or place we are in the market cycle is one reason, but also, the Conservancy’s likely need for the use of this cash in the near future dictates that it remain liquid, albeit with certain allowances provided for in the existing policy.
It is further recommended that the policy be re-evaluated approximately one year from now, sooner if needs change.
Download the Conservancy’s Corporate Funds Investment Policy (PDF, 73 KB)
23. Executive Director’s Report
Various matters for Board members’ general information will be presented by the Conservancy’s Executive Director.
Download the Conservancy’s Executive Director’s Report (PDF, 2 MB)
24. Executive Session
Executive Session is scheduled for real estate matters pursuant to Government Code 54956.8.
25. Adjournment of the Regular Meeting of the Board of Directors
Official adjournment of the Regular Meeting of the Board of Directors.
Upcoming Regular Meetings
- April 1, 2020
- June 3, 2020
- August 5, 2020