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1995 05 10 IAB Minutes Investment Advisory Board Minutes May 10, 1995 I CALL TO C)RDER Regular meeting of the La Quinta Investment Advisory Board was called to order at the hour of 5:30 P.M. by Chairman Lewis, followed by the pledge of Allegiance. PRESENT: Board Members Brown, Gilreath, Irwin, Sales and Chairman Lewis ABSENT: None OTHERS PRESENT: Thomas Genovese, City Manager, John Falconer, Finance Director, John Risley, Accounting Supervisor and Debbie DeRenard, Secretary II CONFIRMATION OF AC-ENDA Confirmed III PUBLIC COMMENT None IV CONSENT CALENDAR A. Approval of Minutes of March 8, 1995. Motion - It was moved by Board Members Gilreath/Irwin to approve the Minutes of March 8, 1995 as submitted. Motion carried unanimously. V I~IISINESR SESRION A. Transmittal of Treasurers Report dated February 28, 1995. Board Member Brown thanked Staff for the Demand Register. She further questioned who reviews and approves the legal contracts for the City. Mr. John Falconer, Finance Director advised that the City Manager approves all invoices. In response to Board Member Brown, Mr. Risley advised that the City Investment Advisory Board 2 May 10, 1995 Minutes Attorney is Dawn Honeywell, Stradling, Yocca, Carlson and Rauth. He further advised that if there are questions regarding a contract, a copy could be brought to a future meeting. In response to Board Member Brownl Mr. Risley advised that he was not sure when the City last went out to bid for Attorney Services. Mr. Falconer advised that this would be a policy question and should be directed to the City Manager. Board Member Sales questioned what this had to do with the Investment Advisory Board. Board Member Brown advised that this is a concern because more than 25% of the account payable report is paid to Attorney Fees. It might be prudent for the Investment Advisory Board to suggest in-house Counsel. In response to Board Member Sales, Mr. Falconer advised that the City is currently working on the 1995-96 Budget. Mr. Risley advised that the Budget amounts for Attorney Services for 1994- 95 were $250,000.00. Mr. Risley advised that a better forum for sharing this concern would be at a City Council Meeting. Board Member Brown advised that it would be in the best interest of the Investment Advisory Board to question the cost of the Attorney Fees, before a member from the public questions the costs. Chairman Lewis advised that the Investment Advisory Board is getting into the actual fiscal running of the City. Several months ago the City Attorney met with the Board to discuss the involvement of the Investment Advisory Board and determine their role. The City Attorney advised that the Board should advise the City on investment policy, i.e., the actual Investment Policy and to monitOr compliance of that policy and in the event that the City would go out and do actual investment, the Board would give general guidelines on how to invest the actual funds. He further advised that the Investment Advisory Board is not responsible for the day to day running of the City and legal fees would fall into this category. Board Member Sales questioned what stage the Mission Statement was at Investment Advisory Board 3 May 10, 1995 Minutes and suggested that the Board place it on the agenda for the May 1995 meeting. Board Member Sales advised that there is a City Ordinance that put the Investment Advisory Board into existence. There are no regulations or proposed regulations relative to the Ordinance. There are no guidelines. This Board is setting precedence. Board Member Sales suggested that the Mission Statements be place on the Agenda for June. Board Members concurred. Board Member Sales requested that a balance sheet be included in the agenda packet so that the Board can tie each report together. Mr. Falconer questioned if Board Member Sales was looking for a historical data sheet for the City. Mr. Risley advised that currently, a historical report is not produced at the City. Motion - It was moved by Board Member Gilreath to approve the Treasurers report dated February 28, 1995. Motion died from lack of second. Board Member Irwin advised that he is unsure of what the Board is approving and taking responsibility for. Should this Board be taking this responsibility as a routine matter? Does the City need a Board of five to review the bank reconciliation every month? Chairman Lewis advised that the bank reconciliations tie directly to the treasurer's report. The treasurer's report is a listing of cash and investments that are under control by the City of La Quinta. Excess cash and the investments are well within the oversight of this Board. The bank reconciliations are attached to the treasurer's report and are viewed as supporting documentation to show where those figures on the treasurer's report come from. The demand register is a different item. The demand register shows where the money was spent within the City of La Quinta and where the warrants were generated. The demand register is a completely separate item from the Treasurers Report. Chairman Lewis advised that the Board accepts and approves the Investment Advisory Board 4 May 10, 1995 Minutes Treasurers Report. The Board does not accept and approve the demand register. The Board concurred that a Mission Statement was needed. Motion - It was moved by Board Members Gilreath/Sales to' approve the Treasurers Report dated February 28, 1995. Motion carried unanimously. B. Transmittal of Treasurers Report dated March 31, 1995. Motion - It was moved by Board Members Sales/Gilreath to approve the Treasurers Report dated March 31, 1995. Motion carried unanimously. VI 1~{3ARD MEMRER COMMI=NTS Board Member Sales questioned the status of the Bid that was sent out for banking services. Mr. Risley advised that the bid was given to First Interstate Bank. Action Item In response to Board Member Sales, Mr. Risley advised that he would include a Balance Sheet in the next agenda. Action Item Chairman Lewis requested that the Mission Statements be added to the next agenda. Mrs. DeRenard requested a Mission Statement from Board Member Irwin before the next meeting. Board Member Irwin commented on City's investment in LAIF. He advised that in the past he has indicated a concern, because LAIF does not publish annual statements. They publish an annual report, but not an audit report. There is no audit of this pool by an independent account firm. It is not registered or regulated by the SEC. The Board is not aware of their investment policies, strategies or their current view of the market. The expense ratio was figured at 15 - 18 basis points. The monthly reports were almost impossible to understand. He reviewed the monthly reports with the Board. Mr. Falconer advised that the City could buy a one (1) year Treasury Bonds and get a better interest rate, but with LAIF you can have your money with less then a 24- Investment Advisory Board 5 May 10, 1995 Minutes hour notice. Board Member Irwin advised that the City could invest in mutual funds. Chairman Lewis advised that LAIF is a mutual fund. Board Member Irwin advised LAIF does not operate as a mutual fund. There are no daily net asset values. Board Member Sales advised that the Board needs to find out how much available cash the City has and what is the anticipated needs of the City over the next year. Chairman Lewis advised that a Mission Statement is important, some idea from the City as to what funds are investible for short and long terms. When this information is received, this Board can make recommendations based on each Board Members individual ideas and discussing where the Board feels it should recommend to the City where to invest. Chairman Lewis advised that per the Investment Policy, the City must diversify investments. Board Member Irwin advised that the present Investment Policy allows for 89% investible in LAIF. He further advised that he would like the Board to address the Investment Policy. Mr. Falconer advised that Staff can bring back a proposed Mission Statement for the June agenda. Action Item Board Member Sales requested a copy of the auditors report and the auditors management letter. VII INFnRMATIONAL ITEMS - None VIII Ar~JOURNMF:NT Motion - It was moved by Board Members Brown/Gilreath to adjourn the meeting. Motion carried unanimously.