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1996 12 11 IAB Minutes INVESTMENT ADVISORY BOARD MINUTES December 11, 1996 I CALL TO ORDER Regular meeting of the La Quinta Investment Advisory Board was called to order at the hour of 5:30 P.M. by Chairwoman Brown, followed by the Pledge of Allegiance. PRESENT: Board Members Frame, Irwin, Lewis, Osborne, Rodriguez, Sales and Chairwoman Brown ABSENT: None OTHER PRESENT: .John Falconer, Finance Director and Debbie DeRenard, Secretary II CONFIRMATION OF AGENDA In response to Board Member Irwin, Chairwoman Brown advised that she placed the LAIF Questionnaire under Correspondence and Written Material. III PUBLIC COMMENT- N/A IV CONSENT CALENDAR A. Approval of Minutes of Meeting on November 13, 1996 for the Investment Advisory Board. MOTION - It was moved by Board Members Lewis/Sales to approve the minutes of November 13, 1996 as submitted. Motion .carried unanimously. V BUSINESS SESSION A. Transmittal of Treasury Report for October 31, 1996 Mr. Falconer presented the Staff Report advising that the debt service payments are completed until the first part of 1997. Investment Advisory Board December 11, 1996 Minutes In response to Board Member Frame, Mr. Falconer advised that the Treasurers report is effective as of October 31, 1996, the City Council decided at their first meeting in November to decrease the LAIF rates. The new LAIF percentage will be recognized on the November 30, 1996 Treasurers Report. MOTION - It was moved by Board Members Frame/Osborne to Review, Receive and File the Treasury Report dated October 31, 1996. Motion carried unanimously. VI . CORRESPONDENCE AND WRITTEN MATERIAL' A. Month End Cash Report - November 1996 Mr. Falconer presented the staff report and advised that this report represents selected balances. B. Investment Liquidity and Anticipated Revenue Mr. Falconer presented the staff report and indicated that the report is basicallY a statement of cash position for past activities from July 1st to date and an income statement for future anticipated activity. In response to Board Member Frame, Mr. Falconer advised that he would change the "transfers out" and "transfers in" to reflect only large dollar items. C. Reporting to the City Council - Status Update Mr. Falconer advised that in the staff report to the City Council concerning clarification on whether or not the minutes were sufficient communication, the City Council determined that the minutes reflect sufficient communication. In addition, the City Council adopted a Handbook for Board Members/Commissions that will be available in two weeks and will cover the minutes, majority and minority reports and d~ssenting votes. Investment Advisory Board December 11, 1996 Minutes D. LAIF Questionnaire Chairwoman Brown advised that after she received the minutes from the City Council meeting, she recognized that one of the Council Members expressed an interest in the LAIF Questionnaire. She further advised the she spoke with each Council Members regarding the LAIF Questionnaire, and has placed it on the agenda because of an interest by the City Council to hear the Investment Advisory Boards discussion. In response to Chairwoman Brown, Mr. Falconer advised that the LAIF Questionnaire was presented to the Investment Advisory Board at their July, 1996 meeting and at the May 8th, 1996 meeting as an insert. In response to Board Member Frame, Mr. Falconer advised that the revised LAIF Questionnaire is due in two weeks, and it has several changes. Board Member Frame advised that his reason for asking is that if there are changes in the questionnaire due out in two weeks, wouldn't it be better to wait and discuss the revised questionnaire. Chairwoman Brown advised that it would be prudent of the Board to wait to discuss the questionnaire when the revised version is received. In response to Chairwoman Brown, Mr. Falconer adVised that the City deposits into LAIF one or two times a month and withdraws money approximately five to six times a month Mr. Falconer advised that Page 55-Attachment 3 reflects the LAIF balances for July 1995 to October 1996. Chairwoman Brown advised that Attachment No. 3 is very helpful for the Board. This attachment clearly indicates the diversification and how the LAIF balances have decreased. In response to Board Member Irwin, Mr. Falconer advised that one of the new changes will require one or more days notice for withdrawal of funds, this was first learned about on December 4, 1996, and only pertains to amounts over ten million. He is not aware of the amount of Investment Advisory Board December 1 '1, 1996 Minutes notice time that is required for withdrawal of funds over ten million. In response to Board Member Irwin, Mr. Falconer advised that the City currently has a balance of seven million in LAIF and he does not foresee having to move any amounts that would require a notice. Board Member Osborne advised that at the last meeting, there was discussion from the Board regarding LAIF- CD's and Oversees Banks. He indicated that he spoke with LAIF and was advised that the funds are kept in the United States.. There are no foreign securities in LAIF. He further advised that LA.IF has brought about disruption in the Board and it was his feelings that if the Board could get a better feel about LAIF and have a united approach, it would help the Board to plan for the City. Board Member Irwin questioned why the Board needs to have a united front. Chairwoman Brown advised that each Board Member was appointed to their position as a Board Member because of their backgrounds. Each of the Board Members are aware of past actions of the City in regards to funds. The City Council is looking for a balanced recommendation. She further advised that her input from Council is that they are very pleased with the goals of the Board. She further advised that she is in agreement with Board Member Osborne. Board Member Sales advised that the Board will continue to debate the issues and there is always going to be dissent. He further advised that every issue that comes before the Board he will confront it independently. He further advised that LAIF has become a political issue With the City Council. Board Member Osborne advised that when a LAIF Investment percent is given to the City Council, it should be supported by.the entire Board. Board Member Frame advised that it is incumbent that the Board address as thoroughly as possible all the issues, develop a majority consensus and then at that point, if the Board had done their job and researched all the issues and has come to the conclusion as a group that this will be the criteria of LAIF, then it should be supported by all Members. 4 Investment Advisory Board December 11, 1996 Minutes Board Member Irwin stated that he couldn't disagree more. He advised that the Board is wide apart on this issue. This Board does have a view that the majority of the Board feels that 40 to 50 percent invested in LAIF is safe and one member feels that no more than 0 - 10 percent should be invested. Board Member Frame advised that there can be a gap, but if this Board wants to act as a committee of extensively knowledgeable people, then we can accommodate dissent. Its outside of this room, that once the Board has made a decision, it is incumbent upon the members to support the decision to the outside. A common approach is necessary to keep the impression as it is now. Board Member Rodriguez advised that he respects the opinions of the Board Members in regards to LAIF. In order to resolve this situation, the Board needs to stay grounded, list the issues that are concerns with the Board and review each issue and try to resolve them. Board Member Irwin advised that for 2~ years he presented specific reasons and issues that he felt were unique to LAIF. And for whatever reasons this Board choose not to worry about them. If its important that the ground rules are that we have a united front, he cannot participate. Chairwoman Brown clarified that each person is a member of the Investment Advisory Board and we have all been placed because of our backgrounds. We come together for meetings once a month, we discuss issues and identify the cause and' effect and make the recommendations which may or may not be accepted by the Council. What Board Members Frame and Osborne are saying is that we have established that our minutes, both the tapes and the written minutes are the Boards way of communicating with the Council. Everyone's opinion is respected. The results of the discussions is going to be a vote. It will be clearly identified who is voting for and against. The key here is when the Board leaves the room, everyone can see that we stand together as a group. Board Member Sales advised that if other Board Members have views that are different from the majority, this Board cannot tell them that they cannot discuss them outside of this room. Investment Advisory Board December 11, 1 996 Minutes Board Member Irwin stated that this.is a democracy not a corporation. Board-Member Lewis advised that a number of issues have been touched upon and addressed. He further advised that this is a democracy, but one of the problems with government in general is that it is not run like a business. An important point that is being missed is that the effectiveness of a Board is how it works together. When a Board appears splintered than its effectiveness is decreased. Board Member Irwin stated that he has a responsibility to Council and he has no responsibility to the members of the Investment Advisory Board. Board Member Lewis stated that he disagrees. He advised that' Board Members don't have a responsibility to the members as people, I~ut to this Board as a whole. Each member was appointed not as one, but as a member of the Investment Advisory Board and that each member has a responsibility as a members of the Board to support it. Board Member Irwin advised that he has a responsibility to follow rules and regulations and the law, he does not have a responsibility to support the Board that he is aware of. If it is written in a handbook or Ordinance he would like to see it. Board Member Lewis advised that the Board is asking for support from each Board Member. Board Member Rodriguez advised that each members integrity is being questioned when the Board is being viewed. Chairwoman Brown advised that she choose to agendize the LAIF Questionnaire under Correspondence and Written Material because each one of the Board Members comments and feelings with regard to the · questionnaire were requested. Mr. Falconer advised that the handbook for Committees and Boards that was adopted by the City Council will cover some of the issues that have been discussed tonight. He encouraged the Board Member to read it when it is distributed. Investment Advisory Board December 11, 1996 Minutes In response to Board Member Sales, Mr. Falconer advised that he does not have the entire text with regards to communication with Council, but he read the following excerpt: "individual. contact with the City Council to discuss problems or neither encouraged or discouraged, this will have to be handled on an individual basis. Should a controversy arise within the commission, board or committee, Council guidance is available from City Staff." He further advised that the handbook discusses split opinions and how they should be dealt with. It also reviews a Board/Commission member representing themselves either as a private citizen or a member of a Board/Commission. He advised that each Board Member is allowed to go before Council as a private citizen. If you go before Council as a member of a particular board/commission, you cannot represent your personal opinion as one of the entire board/commission/committee unless the board/commission/committee has given you permission. In response to Mr. Falconer, .Chairwoman Brown advised that she recommends that the Board wait until the revised LAIF Questionnaire is reCeived before being reviewed by the Investment Advisory Board. VII BOARD MEMBER ITEMS - N/A VIII ADJOURNMENT MOTION - It was moved by Board Members Lewis/Frame to adjourn the meeting. MOtion carried unanimously.