Finance Committee Meeting
May 24, 2022

Time and Location

2:00 p.m.
Meeting will be held virtually. Select to attend the May 24, 2022 meeting via Zoom. Or call 1 (669) 900-6833, Meeting ID: 830 4098 5067, Passcode: 269565.

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.

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1. Call to Order of the Meeting of the Finance Committee

The Committee Chair will call the meeting to order if a quorum is present. Announcements may be made at this time.

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2. Public Comments

Opportunity for members of the public to address the Committee.

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3. Select committee chair

The committee will select its committee chair.

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4. Approval of the minutes

The Committee Chair will request approval of the minutes of the September 13, 2021 Finance Committee meeting.

Download the September 13, 2021 Minutes (PDF, 131 KB)

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5. Loan repayments

The past few years the Conservancy has been in a land acquisition mode. As such, it has used borrowed funds to purchase some of its land acquisitions. As a result, the Conservancy has three outstanding loans:

  1. a line of credit with the City of Sacramento (2020) with a balance of $1,873,434;
  2. an inter-fund loan from Supplemental Endowment to Land Acquisition (2020) with a balance of $1,400,000; and
  3. an inter-fund loan from Supplemental Endowment to Land Acquisition (2022) with a balance of $3,013,075.

The City of Sacramento (City) collects all mitigation fees within its jurisdiction. Before sending the mitigation fees on to the Conservancy, the City deducts the Land Acquisition fund portion of the mitigation fees and applies it to the outstanding line of credit it has extended to the Conservancy.

Management is recommending a similar situation with all future incoming mitigation fees from the County of Sutter and Metro Air Park whereby the Land Acquisition Fund portion of the mitigation fees collected would be transferred to the Supplement Endowment Fund to repay the inter-fund loans. This is consistent with staff recommendation to the Board when it recommended using the inter-fund loans to pay for land acquisitions. The Conservancy needs to replace the Supplemental Endowment Funds so that it can continue to grow for its stated purpose, which is to fund the last 200 acres of mitigation, and for unforeseen circumstances.

This item requests the Finance Committee approve and recommend to the full Board the above-described repayment practice of the inter-fund loans with future incoming mitigation fees until the two inter-fund loans are fully repaid.

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6. Insurance review

Staff will review with the committee insurance policies that are set for renewal. The Conservancy presently holds the following polices: Directors and Officers, employee practices liability, crime, pollution, workers’ compensation, flood, cyber, umbrella, and a package policy that includes general liability, property, auto, and inland marine.

This item requests the Finance Committee approve and recommend to the full Board approval of renewing the above-listed insurance policies.

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7. Review Corporate Funds Investment Policy and Endowment and Supplemental Endowment Funds Investment Policy

The Endowment Operations and Maintenance Fund and Supplemental Endowment Fund Investment Policy is presented to the committee for review. The policies were last reviewed in 2019. Minor changes are presented for the Endowment Operations and Maintenance Fund and Supplemental Endowment Fund Investment Policy.

This item requests the Finance Committee approve and recommend to the full Board approval of the reviewed / updated policies.

Download the Corporate Funds Investment Policy (PDF, 182 KB)
Download the Endowment and Supplemental Endowment Funds Investment Policy (PDF, 189 KB)

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8. Review Finance Committee Charter

The Finance Committee Charter is presented to the committee for review. The charter was last reviewed in 2019.

Download Finance Committee Charter (PDF, 137 KB)

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9. Endowment funds investment overview

Introduction. As noted in the Conservancy’s Annual Meeting of the Corporation, Conservancy management has set “deep dive” examinations in 2022 for several financial aspects of the Conservancy’s operations. An examination of Conservancy financial processes seems especially warranted given:

  1. recent rapid growth of the Conservancy,
  2. the expectation that the Conservancy will likely experience record or near-record revenue in 2022,
  3. the complexity of certain financial issues facing the Conservancy, and
  4. external pressures.

Background. As regards the endowment funds, the Conservancy’s management is pleased with the growth of the endowment funds and do so with a conservative asset allocation. Indeed, from December 13, 2010 (when the present investment manager began) through December 31, 2021, the balance of the endowment fund went from $10,490,442 to $34,744,210, a 231-percent increase.

Accounting for the increase was $4,979,059 in net inflows (money the Conservancy added to the investment). Yet $19,274,709 was attributable to increases in investment value. In other words, in a little over a decade, the Conservancy’s endowment fund was plussed nearly $20 million dollars by the positive performance of its investments. Clearly, this gain in the endowment funds will help finance the maintenance and management of Conservancy preserves in perpetuity.

Does scale necessitate different management of the funds? The Conservancy is handling investing in its endowment funds pretty much the same way it did over 20 years ago. And instead of having a million dollars or so invested in endowment funds two decades ago, as of December 31, 2021, the Conservancy’s endowment funds (both combined) totaled nearly $40 million. It seems important to examine in a more detailed manner how the Conservancy manages its endowment funds investments given this exceptional growth.

Conclusion. As Conservancy management conducts this review, it will request periodic consultation with the Board’s Finance Committee. The level of such communications will be dictated by conclusions drawn from the examination. With the culmination of the effort, the Conservancy’s management hopes to provide a full briefing to the Board of Directors. Management will discuss this initiative with the committee.

Download the Endowment Funds chart (PDF, 213 KB)

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10. Adjournment

Official adjournment of the meeting.