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1997 06 11 IAB Minutes INVESTMENT ADVISORY BOARD Meeting June 11, 1997 I CAI L TO ORnFR 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, Osborne, Lewis (5:33), Rodriguez, Sales and Chairwoman Brown ABSENT: None OTHER PRESENT: Thomas P. Genovese, City Manager, Dawn Honeywell, City Attorney, John Falconer, Finance Director and Debbie DeRenard, Secretary II CONFIRMATION OF AGFNDA- Confirmed III PUBLIC COMMFNT- None IV CONSENT CALENDAR A. Approval of Minutes of Meeting on May 14, 1997 for the Investment Advisory Board. MOTION - It was moved by Board Members Sales/Lewis to approve the minutes of the meeting of May 14, 1997. Motion carried unanimously. V BUSINESS SESSION A. Transmittal of Treasury Report for April 30, 1997 Mr. Falconer advised that Staff is listing any major changes on the Cash Flow Analysis-Page $, per Board Member Frame's suggestion. 1 Investment Advisory Board June 11, 1997 Minutes Mr. Falconer advised that Staff is trying to lengthen the maturity. The average maturity is at 128 days. He further advised that the City purchased securities with maturity values out two years during April. In response to Board Member Frame, Mr. Falconer advised that the Preliminary Budget will.go before the City Council on June 18, 1997 and the Final Budget on July 15, 1997. MOTION - It was moved by Board Members Frame/Osborne to approve the Transmittal of Treasury Report for April 30, 1997. Motion carried unanimously. B. Fiscal Year 97/98 Investment Policies Mr. Falconer advised that Thomas Genovese, City Manager and Dawn Honeywell, City Attorney is present per Section XX of the Investment Policy. The Investment Advisory Board will make any revisions, and forward to the City Manager and City Attorney for their review and comment. A Joint Meeting will be held with the Investment Advisory Board; City Manager, City Attorney and City Treasurer to review the. Investment Policies and comments, prior to submission to the City Council for their consideration. The meeting is part of the adoption policy process. He further advised that he would like this to be placed on the City Council agenda for June 17, 1997. In response to Chairwoman Brown, Mr. Falconer advised that the Investment Policy will be a Business Item on the Council Agenda which would be held at 3:00 P.M. In response to the Board, Mr. Genovese advised that since there is an interest among the Board to attend the meeting, he will see if the Investment Policy item can be placed first on the agenda. Board Member Irwin advised that the Board has reviewed in the past the investing of Commercial Paper and both times there has been a majority view to keep Commercial Paper as an investment vehicle. He advised that there is currently a 20-point spread between a 6-month Commercial Paper and 6-month T-bill. He stated that he is uncomfortable with the City making this kind of investment in a single name and would prefer Investment Advisory Board June 11, 1997 Minutes Commercial Paper being eliminated. Board Member Sales advised that the Board has had this conversation before and he feels the same as Board Member Irwin. In response to Board Member Sales, Mr. Falconer advised that investing in commercial paper would be based on the circumstances of the portfolio. He further advised that there would only be two instances during the year when this would occur, and that would be January and May. The City would not be able to invest all funds in T-bills. Commercial Paper is a tool that is available if needed. Board Member Lewis advised he recalls the reason that Commercial Paper was added as an investment vehicle was for very short term parking of funds so that City Staff could invest for a short period of time and have time to consider long term investments without exceeding the maximum percentages. Commercial Paper is limited to less than 30% of the portfolio, less than 31 days, and the highest rating. Board Member Irwin advised that if the Investment Policy would allow 75% investment of.Treasury Bill and 75% investment of Agency securities, this would equal 150% and eliminate the problem. The only reason for investing in commercial paper would be for the yield. Board Member Osborne advised that we are also talking liquidity. In response to Board Member Osborne, Mr. Falconer advised that Commercial Paper is sold in a million dollar increments. Board Member Lewis advised that it is very rare that companies with the ratings that the policy restricts Staff to invest with would go under in a matter of 31 days. Board Member Rodriguez advised that he doesn't have a problem with investing in commercial paper. Board Member Sales advised that he would not suggest changing the policy at this point. Staff is aware of his feeling toward investing in commercial paper. Investment Advisory Board June 11, 1 997 Minutes Dawn Honeywell, City Attorney, advised the Board that she reviewed the Investment Policy .and found it very prudent and well within the State of California guidelines. Thomas Genovese, City Manager, advised that he reviewed the Investment Policy and the minutes from the previous meetings and feels the Board did a good job meeting their goals. In response to Chairwoman Brown, Mr. Genovese advised that he personally has always stayed away from commercial paper, but that he sees the need for it as an investment vehicle since some of the other investments are restricted. In response to Board Member Sales, Mr. Genovese advised that he doesn't foresee any problem with LAIF, or that LAIF would be an issue since the investment percentage has been decreased. Staff has stated before that they intend to decrease the amount and in view of the Treasurers Reports for the last few months, the LAIF percentage has decreased. MOTION - It was moved by Board Member Lewis/Sales to approve the amended Fiscal Year 1997/98 Investment Policy and have it placed on the June 17, 1997 City Council agenda for their consideration. Motion carried unanimously. VI CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - May 1997 Mr. Falconer advised that the City did open up the Sweep Account and it is operational and does appear on this report for the first time. In response to Board Member Irwin, Mr. Falconer advised that the funds from the Sweep Account sweep into the U.S. Treasury fund. Investment Advisory Board June 11, 1 997 Minutes VII BOARD MEMBER ITEMS In response to Board Member Lewis, Mr. Genovese advised that Board/Committee interviews will be held at 6:00 P.M. on June 25th, Mr. Genovese advised that if a Member is unable to attend, they can notify the City Clerk of their absence. In response to Board Member Sales, Mr. Falconer advised that the July meeting will consist of .electing new officers and reviewing the work schedule. He advised that his preference would be to defer discussing Investment Strategies · until the September meeting. Board Member Lewis advised that he will not be able to attend the July meeting. Chairwoman Brown thanked the Board for their cooperation and participation throughout the year. It has been a very rewarding experience. She further thanks Mr. Falconer for his hard work. Board Member Rodriguez advised that he will not seek reelection due to a job promotion. VIII ADJOURNMENT MOTION - It was moved by Board Members Lewis/Sales to adjourn the meeting. Motion carried unanimously.