Common use of Cash and Investments Clause in Contracts

Cash and Investments. The carrying value of cash and investments held by the QSA JPA as of June 30 consisted of the following: 2021 2020 Deposits $ 10,300 $ 10,327 Investments 32,113,637 45,167,388 Total cash and investments $ 32,123,937 $ 45,177,715 The QSA JPA uses the investment policy of the SDCWA for purposes of investments. The following table identifies the investment types that are authorized for the QSA JPA by the California Government Code (Gov’t Code), Sections 53600 et seq, and the QSA JPA’s Investment Policy (Inv. Policy). The table also identifies certain provisions of the California Government Code (or the QSA JPA’s investment policy, if more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. Maximum Maturity Maximum Percentage of Portfolio Maximum Investment in One Issuer Minimum Rating Municipal Securities None None None 30% None 5% None "A" U.S. Treasury securities None None None None None None None None Federal agency securities None None None None None None None None Bankers' acceptances 180 days 180 days 40% 40% 30% 5% None "A-1" Commercial paper 270 days 270 days 40% (6) 30% 10% (7) 5% "A-1" "A-1" Non-Negotiable Certificates of Deposit 5 years 5 years None 30% (1) None None None None Placement service deposits 5 years 5 years 50% 30% (1) None None None None Negotiable Certificates of Deposit 5 years 5 years 30% 30% (1) None 5% None "A-1" or "A" Repurchase agreements 1 year 1 year None 20% None None None "A" Medium-term notes 5 years 5 years 30% 30% None 5% "A" "A" Mutual funds n/a n/a 20% 20% 10% 10% AAA (2) AAA (2) Money market mutual funds n/a n/a 20% 20% None 20% AAA (2) AAA (2) Mortgage pass-through and asset backed securities (3) 5 years 5 years 20% 20% None 5% "AA" "AA" County pooled investment funds n/a (4) None (4) None (4) None (4) JPA pools (other investment pools) n/a n/a None 25% None 25% None AAA Supranationals 5 years 5 years 30% 15% None 5% "AA" "AA" Local agency investment fund (LAIF) n/a n/a None (5) None None None None Notes:

Cash and Investments. The carrying value of cash and investments held by the QSA JPA as of June 30 consisted of the following: 2022 2021 2020 Deposits $ 10,452 $ 10,300 $ 10,327 Investments 35,254,656 32,113,637 45,167,388 Total cash and investments $ 35,265,108 $ 32,123,937 $ 45,177,715 The QSA JPA uses the investment policy of the SDCWA for purposes of investments. The following table identifies the investment types that are authorized for the QSA JPA by the California Government Code (Gov’t Code), Sections 53600 et seq, and the QSA JPA’s Investment Policy (Inv. Policy). The table also identifies certain provisions of the California Government Code (or the QSA JPA’s investment policy, if more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. Maximum Maturity Maximum Percentage of Portfolio Maximum Investment in One Issuer Minimum Rating Municipal Securities None None None 30% None 5% None "A" U.S. Treasury securities None None None None None None None None Federal agency securities None None None None None None None None Bankers' acceptances 180 days 180 days 40% 40% 30% 5% None "A-1" Commercial paper 270 days 270 days 40% (6) 30% 10% (7) 5% "A-1" "A-1" Non-Negotiable Certificates of Deposit 5 years 5 years None 30% (1) None None None None Placement service deposits 5 years 5 years 50% 30% (1) None None None None Negotiable Certificates of Deposit 5 years 5 years 30% 30% (1) None 5% None "A-1" or "A" Repurchase agreements 1 year 1 year None 20% None None None "A" Medium-term notes 5 years 5 years 30% 30% None 5% "A" "A" Mutual funds n/a n/a 20% 20% 10% 10% AAA (2) AAA (2) Money market mutual funds n/a n/a 20% 20% None 20% AAA (2) AAA (2) Mortgage pass-through and asset backed securities (3) 5 years 5 years 20% 20% None 5% "AA" "AA" County pooled investment funds n/a (4) None (4) None (4) None (4) JPA pools (other investment pools) n/a n/a None 25% None 25% None AAA Supranationals 5 years 5 years 30% 15% None 5% "AA" "AA" Local agency investment fund (LAIF) n/a n/a None (5) None None None None Notes:

Cash and Investments. The carrying value of cash and investments held by the QSA JPA as of June 30 consisted of the following: 2021 2020 Deposits $ 10,300 10,327 $ 10,327 4,164 Investments 32,113,637 45,167,388 40,949,447 Total cash and investments $ 32,123,937 45,177,715 $ 45,177,715 40,953,611 The QSA JPA uses the investment policy of the SDCWA for purposes of investments. The following table identifies the investment types that are authorized for the QSA JPA by the California Government Code (Gov’t Code), Sections 53600 et seq, and the QSA JPA’s Investment Policy (Inv. Policy). The table also identifies certain provisions of the California Government Code (or the QSA JPA’s investment policy, if more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. Maximum Maturity Maximum Percentage of Portfolio Maximum Investment in One Issuer Minimum Rating Municipal Securities None None None 30% None 5% None "A" U.S. Treasury securities Federal agency securities None None None None None None None None Federal agency securities None 30% None None None None None 5% None None None None None "A" None None Bankers' acceptances 180 days 180 days 40% 40% 30% 5% None "A-1" Commercial paper 270 days 270 days 4025% (6) 3025% 10% (7) None 5% "A-1" "A-1" Non-Negotiable Certificates of Deposit 5 years 5 years None 30% (1) None None None None Placement service deposits 5 years 5 years 50% 30% (1) None None None None Negotiable Certificates of Deposit 5 years 5 years 30% 30% (1) None 5% None "A-1" or "A" Repurchase agreements 1 year 1 year None 20% None None None "A" Medium-term notes 5 years 5 years 30% 30% None 5% "A" "A" Mutual funds n/a n/a 20% 20% 10% 10% AAA (2) AAA (2) Money market mutual funds n/a n/a 20% 20% None 20% AAA (2) AAA (2) Mortgage pass-through and asset backed securities (3) 5 years 5 years 20% 20% None 5% "AA" "AA" County pooled investment funds n/a (4) None (4) None (4) None (4) JPA pools (other investment pools) n/a n/a None 25% None 25% None AAA Supranationals 5 years 5 years 30% 15% None 5% "AA" "AA" Local agency investment fund (LAIF) n/a n/a None (5) None None None None Notes:

Cash and Investments. The carrying value of cash and investments held by the QSA JPA as of June 30 consisted of the following: 2021 2020 2023 2022 Deposits $ 10,300 10,132 $ 10,327 10,452 Investments 32,113,637 45,167,388 75,315,493 35,254,656 Total cash and investments $ 32,123,937 75,325,625 $ 45,177,715 35,265,108 The QSA JPA uses the investment policy of the SDCWA for purposes of investments. The following table identifies the investment types that are authorized for the QSA JPA by the California Government Code (Gov’t Code), Sections 53600 et seq, and the QSA JPA’s Investment Policy (Inv. Policy). The table also identifies certain provisions of the California Government Code (or the QSA JPA’s investment policy, if more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. Maximum Maturity Maximum Percentage of Portfolio Maximum Investment in One Issuer Minimum Rating Municipal Securities securities None None None 30% None 5% None "A" A U.S. Treasury securities None None None None None None None None Federal agency securities None None None None None None None None Bankers' acceptances 180 days 180 days 40% 40% 30% 5% None "A-1" A-1 Commercial paper 270 days 270 days 40% (640%(1) 30% 10% (710%(2) 5% "A-1" "A-1" A-1 A-1 Non-Negotiable Certificates negotiable certificates of Deposit deposit 5 years 5 years None 30% (130%(3) None None None None Placement service deposits 5 years 5 years 50% 30% (130%(3) None None None None Negotiable Certificates certificates of Deposit deposit 5 years 5 years 30% 30% (130%(3) None 5% None "A-1" A-1 or "A" A Repurchase agreements 1 year 1 year None 20% None None None "A" A Medium-term notes 5 years 5 years 30% 30% None 10%(2) 5% "A" "A" A A Mutual funds n/a n/a 20% 20% 10% 10% AAA (2AAA(4) AAA (2AAA(4) Money market mutual funds n/a n/a 20% 20% None 20% AAA (2AAA(4) AAA (2AAA(4) Mortgage pass-through and asset backed securities (3securities(5) 5 years 5 years 20% 20% None 5% "AA" "AA" AA AA County pooled investment funds n/a (46) None (46) None (46) None (46) JPA pools (other investment pools) n/a n/a None 25% None 25% None None AAA Supranationals 5 years 5 years 30% 15% None 5% "AA" "AA" AA AA Local agency investment fund (LAIF) n/a n/a None (57) None None None None Notes: (1) SB 998, until January 1, 2026, allows for a maximum of 40% of the portfolio to be invested in eligible commercial paper for local agencies that have more than $100 million in assets under management. (2) The combined maximum portfolio exposure to the commercial paper and medium-term notes of any single issuer is 10% per Govt. Code Section 53601(h)(k). (3) The combined investment policy maximum portfolio exposure to certificates of deposit, placement service certificates of deposit and negotiable certificates of deposit is 30%. (4) A mutual fund and a money market mutual fund must receive the highest ranking by not less than two Nationally Recognized Statistical Rating Organizations authorized by Govt. Code Sections 53601 and 53635. (5) Limitations in this section apply to securities not issued by the U.S. Treasury or Federal Agencies. (6) These investments are not authorized by the investment policy. (7) The investment policy's maximum investment amount is the maximum permitted by LAIF. Interest rate risk is the risk where changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity its fair value is to changes in market interest rates. One of the ways that the QSA JPA manages its exposure to interest rate risk is by investing in LAIF to provide the liquidity needed for operations. Information about the sensitivity of the fair values of the QSA JPA’s investments to market interest rate fluctuations is provided by the following tables that show the distribution of the QSA JPA’s investments by terms to maturity as of June 30, 2023 and 2022, respectively. U.S. Treasury securities $ 25,862,903 $ 15,992,420 $ 8,261,626 $ 1,608,857 Federal agency securities 23,062,067 9,331,697 13,730,370 - Medium-term notes 10,058,406 486,029 9,368,487 203,890 CAMP JPA pools 8,624,664 8,624,664 - - LAIF 4,310,615 4,310,615 - - Asset backed securities 1,439,708 - 955,421 484,287 Commercial Paper 980,005 980,005 - - Supranationals 955,330 - 955,330 - Money market mutual funds 21,795 21,795 - - LAIF $ 14,200,199 $ 14,200,199 $ - $ - U.S. Treasury securities 9,406,937 3,401,505 2,804,225 3,201,207 Federal agency securities 5,936,833 1,476,583 2,390,795 2,069,455 Medium-term notes 3,881,329 1,125,780 1,819,283 936,266 Supranationals 1,213,102 244,698 233,523 734,881 Commercial Paper 394,759 394,759 - - Asset backed securities 120,281 - 120,281 - CAMP JPA pool 60,063 60,063 - - Money market mutual funds 41,153 41,153 - - Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented in the following tables, is the minimum rating required (where applicable) by the Gov’t. Code or the Inv. Policy, and the actual rating for each issuer as of June 30, 2023 and 2022, respectively. U.S. Treasury Securities $ 25,862,903 n/a $ 25,862,903 $ - $ - $ - $ - Federal agency Securities 23,062,067 n/a - - 22,329,137 732,930 - Medium-term notes 10,058,406 A - 1,061,586 945,470 8,051,350 - CAMP JPA Pools 8,624,664 AAAm - 8,624,664 - - - LAIF 4,310,615 n/a - - - - 4,310,615 Asset backed Securities 1,439,708 AA - 1,439,708 - - - Commercial Paper 980,005 A-1 - - - 980,005 - Supranationals 955,330 AA - 955,330 - - - Money markets mutual funds 21,795 AAAm - 21,795 - - - LAIF $ 14,200,199 n/a $ - $ - $ - $ - $ 14,200,199 U.S. Treasury securities 9,406,937 n/a 9,406,937 - - - - Federal agency securities 5,936,833 n/a - - 5,936,833 - - Medium-term notes 3,881,329 A - 343,505 601,795 2,936,029 - Supranationals 1,213,102 AA - 1,213,102 - - - Commercial Paper 394,759 A-1 - - - 394,759 - Asset backed securities 120,281 AA - 120,281 - - - CAMP JPA Pools 60,063 AAAm - 60,063 - - - Money market mutual funds 41,153 AAAm - 41,153 - - - For the fiscal years ended, June 30, 2023 and 2022, investments in any one issuer that represents five percent or more of investments (other than U.S. Treasury securities, money market mutual funds, and external investment pools, which are all exempt) are as follows: Federal Home Loan Bank Federal agency securities $ 12,984,786 20.8% Federal Farm Credit Bank Federal agency securities 5,652,483 9.1% Federal Home Loan Mtg. Corp. Federal agency securities $ 2,607,373 7.0% Federal National Mtg. Assn. Federal agency securities 2,338,298 7.0% Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (for example, broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The Gov’t. Code and the Inv. Policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: the Gov’t. Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110 percent of the total amount deposited by the public agencies. California law also allows financial institutions to secure QSA JPA deposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public deposits. The QSA JPA categorizes certain assets and liabilities within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of investments. The three levels of the fair value hierarchy are as follows: LEVEL 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities. As of June 30, 2023 and 2022, there are no Level 1 investments. LEVEL 2: Inputs are significant other observable inputs for the asset or liability. LEVEL 3: Inputs are significant unobservable inputs for the asset or liability. As of June 30, 2023 and 2022, there are no Level 3 investments. Significant Other Observable Inputs (Level 2) Total investments measured at cost 12,957,074 14,301,415 Total investments (1) Measured at amortized cost. (2) Reported based on the pro-rata share of the fair value provided by LAIF for their entire portfolio. (3) Reported as a stable one-dollar value per share. The QSA JPA is a voluntary participant in the LAIF that is regulated by Gov’t Code Section 16429.1 under the oversight of the Treasurer of the State of California. Fair value of the QSA JPA’s investment in the pool is reported in the accompanying financial statements at amounts based upon the QSA JPA’s pro-rata share of the fair value provided by LAIF for their entire portfolio. The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. The QSA JPA is a voluntary participant in the California Asset Management Program (CAMP), a California Joint Powers Authority that falls under Gov’t Code Section 53601(p), which is directed by a Board of Trustees that is made up of experienced local government finance directors and treasurers. The investments are recorded on an amortized cost basis. The QSA JPA administers the funding of environmental mitigation requirements related to IID’s transfer with the SDCWA and a water acquisition agreement with the CVWD. The QSA JPA was formed pursuant to the QSA JPA Creation and Funding Agreement (the Agreement) executed on October 10, 2003, and is comprised of representatives from the IID, CVWD, SDCWA, and the State of California. Under the Agreement, the collective financial contributions made by the three water agencies are capped at $133 million (in 2003 dollars), with the balance to be paid by the State of California. As a means of managing cash-flow requirements for mitigation activities, the Agreement permits the three water agencies to adjust their payment schedules by rescheduling future payments from outer years to budget years in the near term. Advanced payments are discounted at six percent from the date of the scheduled payment to the date of the advance. Payment schedules have been modified twice to meet the environmental mitigation funding obligations of the QSA JPA. On April 25, 2007, the QSA JPA agencies executed an agreement to advance payments during fiscal years 2008 and 2009 totaling $13,194,508, with a collective nominal credit of $25,792,750 against future contributions. On May 20, 2015, the IID, CVWD, and XXXXX executed an agreement to advance payments during fiscal years 2016-2022 totaling $40,500,000, with a collective nominal credit of $127,341,394 against future contributions. In September 2022, IID completed an early payoff of $48,458,655 for its remaining QSA JPA environmental mitigation contributions, consistent with the advance funding provision. As of June 30, 2023 and 2022, the total mitigation contributions receivable balance was as follows: Final Contributions IID 2023 $ - $ 18,159,281 CVWD 2026 3,187,971 5,561,053 SDCWA 2026 3,229,776 4,478,654 Total $ 6,417,747 $ 28,198,988 Interest receivable consists of the following items: (1) accrued interest due from LAIF and BNY, (2) accrued interest for the six month period of January through June due from the contributing member agencies related to their annual mitigation contribution payments due on December 31, and (3) cumulative unpaid accrued interest receivable due from IID. Refer to Note 3 for further information on the Agreement. As of June 30, 2023 and 2022, the total interest receivable balance was as follows: 2023 2022 (1) Accrued interest due from LAIF and BNY $ 341,953 $ 82,370 (2) Accrued interest due from member agencies 192,533 1,692,571 (3) Cumulative unpaid accrued interest due from IID - 28,220,034 Total $ 534,486 $ 29,994,975 The unavailable mitigation contributions are directly related to the mitigation contributions receivable and consists of the total outstanding principal balance of $6,417,747 and $28,198,988 at June 30, 2023 and 2022, respectively, plus interest receivable on unpaid member balances of $192,533 and $29,912,605 at June 30, 2023 and 2022, respectively, for a total unavailable mitigation contributions balance of $6,610,280 and $58,111,593 at June 30, 2023 and 2022, respectively.

Cash and Investments. The carrying value of cash and investments held by the QSA JPA as of June 30 consisted of the following: 2021 2020 Deposits $ 10,300 2,775 $ 10,327 5,586 Investments 32,113,637 45,167,388 25,368,911 23,324,281 Total cash and investments $ 32,123,937 25,371,686 $ 45,177,715 23,329,867 The QSA JPA uses the investment policy of the SDCWA for purposes of investments. The following table identifies the investment types that are authorized for the QSA JPA by the California Government Code (Gov’t Code), Sections 53600 et seq, and the QSA JPA’s Investment Policy (Inv. Policy). The table also identifies certain provisions of the California Government Code (or the QSA JPA’s investment policy, if more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. Maximum Maturity Maximum Percentage of Portfolio Maximum Investment in One Issuer Minimum Rating Municipal Securities Local agency bonds U.S. Treasury securities Federal agency securities 5 years 5 years 5 years 5 years 5 years 5 years None None None 3020% None 5% None "A" U.S. Treasury securities None None None None None None None None Federal agency securities 5% None None None None None None A None None Bankers' acceptances 180 days 180 days 40% 40% 30% 5% None "A-1" A1/P1/F1 Commercial paper 270 days 270 days 4025% (6) 3025% 10% (7) 5% "A-1" "A-1" Non-Negotiable A1/P1/F1 A1/P1/F1 Certificates of Deposit deposit 5 years 5 years None 30% (1) 20% None None None None Placement service deposits 5 years 5 years 50% 30% (14) 30% (5) None None None None Negotiable Certificates certificates of Deposit deposit 5 years 5 years 30% (4) 30% (15) None 5% (6) None "A-1" or "A" A (7) Repurchase agreements 1 year 1 year None 20% None None None "A" A 20% of portfolio 20% of portfolio Reverse repurchase agreements 92 days 92 days base value base value None None None None Medium-term notes 5 years 5 years 30% 30% None 5% "A" "A" A A (7) Mutual funds n/a n/a 20% 20% 10% 10% AAA (2) AAA (2) Money market mutual funds n/a n/a 20% 20% None 20% AAA (2) AAA (2) Mortgage pass-through and asset backed securities (3) 5 years 5 years 20% 20% None 5% "AA" "AA" AA AA County pooled investment funds (1) n/a (43) None (43) None (43) None (43) JPA pools (other investment pools) n/a n/a None 25% None 25% None None AAA Supranationals (8) 5 years 5 years 30% 1510% None 5% "AA" "AA" AA AA Local agency investment fund (LAIF) (2) n/a n/a None (59) None None None None Notes:None