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1995 06 14 IAB Minutes Investment Advisory Board Minutes June 14, 1995 I CAI I Tn nRDER 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 (6:10), Gilreath, Irwin, Sales and Chairman Lewis ABSENT: None OTHERS PRESENT: John Falconer, Finance Director and Debbie DeRenard, Secretary II CC~NFIRMATIC~N CJF Ac~:NDA Chairman Lewis requested that Board Member Comments, Item lA and lB be moved to Business Session as Items C and D. III PUBLIC COMMENT None IV CnNSENT CALENnAR A. Approval of Minutes of May 10, 1995. MOTION - It was moved by Board Members Irwin/Sales to approve the Investment Advisory Board Minutes as submitted. Motion carried unanimously. V ~IIRINFRR RFRRION . A. Transmittal of Treasurers Report dated April 30, 1995. In response to Board Member Sales, Mr. Falconer advised that the Treasurers Reports are prepared by Geniene Croft Account Technician, John Risley Accounting Supervisor and the Finance Director. He advised that the bank statements are received on the 10th of the month and cannot be prepared sooner. Mr. Falconer advised that the Treasurers Report has Investment Advisory Board 2 June 14, 1995 Minutes been reviewed by the Council. Board Member Irwin advised that the Treasurers Report are reviewed by the Investment Advisory Board after the City Council has reviewed them. This seems redundant. Mr. Falconer advised that this is due to the timing of the Board meetings. He advised that the Board can-comment on any item, if there are any corrections they will be brought to the Councils attention. Chairman Lewis advised that this issue was brought up last meeting and because of the Boards concern, the Balance Sheet was provided. In response to Board Member Irwin, Mr. Falconer advised that the Management Letter was included in the Audit Report that was submitted to the Board Members. MOTION - It was moved by Board Members Sales/Gilreath to accept and approve the Treasurers Reports as submitted. Motion carried unanimously. B. Consideration of a Specific Task Outline. Board Member Sales advised that the Mission Statement prepared by Mr. Falconer is adequate, but missing detail. Chairman Lewis advised that mission statements are usually short, and do not contain a lot of detail. Board Member Irwin advised that he likes the draft that Mr. Falconer submitted, but is still bothered by the Ordinance that governs the Board. 'He further advised that he is troubled by some citizen's group that would impose the review .of the monthly treasurers report, balance sheet and financial statements. If any on the Board are not trained as auditors or accountants and those of us that are, know little about municipal accounting. Municipal acc, ounting is a very specialized area of accounting. Chairman Lewis questioned staff whether the Board approves or receives the Treasurers reports. Ms. DeRenard advised that the recommendation on the Staff Report for the Board is to Review, Receive and File the Treasurers Report. Investment Advisory Board 3 June 14, 1995 Minutes Chairman Lewis advised that the Board is not approving the Treasurers Report, as much as the Board is saying that they have reviewed and received it. Board Member Irwin advised that the context of the term review imposes a duty on the Board that is bothersome. Chairman Lewis advised that the Boards need to make sure the City is in compliance with the investment policy. The Treasurers Report is the only report the' Board receives containing the information regarding compliance with the investment policy. Board Member Sales advised that he would like to see a report presented to this Board on a monthly that shows any additional investments that have been made, any funds that have become available or are available for investments and a form that is easily understood by the Board. Mr. Falconer advised that Finance Department can provide a report regarding the change of the investments. Action Item In response to Board Member Irwin, Mr. Falconer advised that the Finance Department can provide a consolidated report of the Investment Funds. Action Item Chairman Lewis volunteered to provide a copy of the Bank of the Desert changes in investment report. The Board reviewed the Ordinance and after further discussion the Board ......................... requested the following changes (~!i~): 2,70.030 Board functions. The Board will annually elect a Chairperson and Vice-Chairperson at the first meeting held after each June 30. The following are functions of the Board that are to be addressed at each meeting: (I) review account statements and verifications to ensure accurate reporting ~ ii~ i~~iii~ ~iiii~~~ii~; (ii) monitor compliance with existing ~',ilpolicy and procedures; and (iii) review and make investment contracts, and investment consultants. The Board will report to City Council after each meeting either in Investment Advisory Board 4 June 14, 1995 Minutes person or through correspondence at a regular City Council meeting. MOTION - It was moved by Board Members Sales/Gilreath to continue the Consideration of a Specific Task Outline. Motion carried unanimously. C. LAIF Investments Board Member Irwin advised that he has two problems with the investment in LAIF. The first problem is that the Investment Policy allows the City to invest 90 percent of all funds into this investment. Second, he advised that he doesn't believe LAIF is the investment vehicle for a small town like La Quinta. LAIF does many things that the City is not.permitted to do under the City's Investment Policy. He advised that his concerns were that LAIF does not offer financial statements and the monthly reports that have been received recently are hard to read. In response to Board Member Sales, Board Member Irwin advised that any financial statement that lacks an audit opinion of a major accounting firms is not a generally accepted accounting practice. Board Member Sales disagreed. Action Item Board Member Irwin advised that there is no information offered on LAIF's investment policies. Chairman Lewis advised that he is not as uncomfortable with LAIF as Board Member Irwin. He further advised that he feels the City has too much of their investments in LAIF. LAIF is a giant mutual fund. If LAIF does not have a stated purpose, other than just simply investing and returning a yield to investors, this is a little broad. Mr. Falconer advised that Staff is open to looking into diversifying in other investment vehicles. He further advised that advantages to being invested in LAIF are that if the City has a major purchase, they can have the money wired the next day. An investment would not have to be broken to make the major purchase. In response to Board Member Irwin, Mr. Falconer advised that mutual funds are not insured. Investment Advisory Board 5 June 14, 1995 Minutes Board Member Sales questioned what insurance the City would have with LAIF other than the assurance of the State of California. Mr. Falconer advised that the City would have the market value of the securities behind them. In response to Chairman Lewis, Mr. Falconer advised that the investment are pledged to the individual investors as collateral. Action Item Mr. Falconer advised,that he would research to see if there is a contract with LAIF and the City of La Quinta. Action Item In response to Board Member Sales, Mr. Falconer advised that he would research who is the custodial account holder for La Quinta. Board Member Irwin advised that he was hoping to have a resolution for this item, but that if it has to be continued, have it continued for specific reasons. Action Item Chairman Lewis requested this item be continued until next meeting and that each Board Member bring back general recommendations as to what percentage the City should move out of LAIF and what percentage the City should invest in treasuries, agencies, CD, mutual funds and what sort of maturities. Action Item Mr. Falconer advised that he would obtain Treasurers Reports from other cities in the Valley. Action Item Chairman Lewis requested a month to month report comparison showing. how much the City has had invested in LAIF for the last six months. He would like the report to show a high and Iow figure for the month. MOTION- It was moved by Board Members Irwin/Sales to continue the LAIF Investments. Motion carried unanimously. D. Investment policy Investment Advisory Board 6 June 14, 1995 Minutes Board Member Irwin advised that the specific item he wanted to discuss was the term govemment pool on page 8. He advised that this term needs to be changed and the percentage lowered. Chairman Lewis advised that the idea behind the 90% investible in government pools was that it was somewhere the City could park the money and it would continue to earn interest as opposed to a demand checking account at a financial institution. The idea was not that the City would invest 90% in LAIF and leave it there. It was meant for a short term parking while new investment were being sought. In response to Board Member Irwin, Mr. Falconer advised that there are other Government Pools besides LAIF. Board Member Irwin advised that the term Government Pool needs to be clarified. Board Member Brown advised that she recalled in previous minutes, a draft investment policy was prepared for Council and the Council manipulated the figures.. Board Member Irwin suggested amending the Investment Policy to limit the City to a certain percentage, vehicle and a specific institution. Chairman Lewis requested that the Board bring back their recommendations as to what would be an appropriate limitation and term per Institution or Pool. Action Item Mr. Falconer advised that in conjunction with the City Manager he would bring his recommendations back to the Board. Action Item Mrs. DeRenard advised that she would provide copies of June, July and August, 1994 Investment Advisory Board minutes. MOTION - It was moved by Board Members Sales/Gilreath to continue the Investment Policy. Motion carried unanimously. VI RnARD MI=MBI=R COMMENTS Investment Advisory Board 7 June 14, 1995 Minutes Chairman Lewis advised that Council Member Bangerter questioned whether a monthly meeting was appropriate because it seems it takes a long time to get thing accomplished. Chairman Lewis expressed that he did not feel that the Board needed to meet more than once a month at the present time. He advised that in the future if the Boards work increased and decisions need to be made, the meetings could be held more frequently. Chairman Lewis asked for the Boards input: Board Member Brown: Monthly meetings are adequate at the present time and quarterly once the policy is in place. Board Member Sales: Willing to meet more often if necessary. Increasing the meetings should be considered when the new Board Members are present. Until then there should be no change until the September meeting. At the September meeting, if the Board has not made progress the meetings should be increased. Board Member Gilreath: Agreeable with Board Member Sales. Board Member Irwin: The Board should meet more frequently - at a minimum of twice a month. If the Board gets to the point where things a running smooth, the Board could cutback to once a month. Does not feel the Board should ever change to quarterly meetings. Chairman Lewis: Recommends that the Board meet on the current meeting schedule, and at this point make the determination as to what need to be accomplished. Meeting any less frequently than monthly would be inappropriate of the Board. 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