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1997 10 08 IAB Minutes INVESTMENT ADVISORY BOARD Meeting October 8, 1997 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 Chairman Sales, followed by the Pledge of Allegiance. PRESENT: Board Members Brown, Irwin, Lewis(5:50), Osborne and Chairman Sales ABSENT: Board Member Frame and one (1) Vacancy OTHER PRESENT: John Falconer, Finance Director and Debbie DeRenard, Secretary II CONFIRMATION OF AGEND/~ Mr. Falconer added the Corrected Investment Advisory Board Minutes for the September 10, 1997 meeting and the Cash Flow page to the Treasurers Report for August 1997. III PUBI lC COMMENT - None IV CONSENT CAI ENnAR A. Approval of Minutes of' Meeting on September 10, 1997 for the Investment Advisory Board. In response to Board Member Osborne, Mrs. DeRenard advised that the corrections where as follows: Page 4 Corrected Sentence- Board Member Irwin agreed further advising that the Board should not be choosing entities for investment in commercial paper. Investment Advisory Board September 10, 1997 Minutes Page 4 Typo in second paragraph. Page 6 Typo in forth paragraph. MOTION - It was moved by Board Members Irwin/Osborne to approve the Minutes of the September 10, 1997 meeting as corrected. Motion carried unanimously. V. BUSINFSS SESSION A. Transmittal of Treasury Report for August 1997 MOTION - It was moved by Board Members Brown/Irwin to Accept, Receive and File the Treasurers Report for August 1997. Motion carried unanimously. B. Investment Plan Mr. Falconer presented the Staff Report advising that after the last meeting, the Board gave Staff direction to review the investment plan in more detail. A cash flow projection worksheet for FY 1997/98 has been included in the Staff Report. He further advised that worksheets on commercial paper have also been included for the Boards review. In response to Chairman Sales, Mr. Falconer advised that a 6-month forecast was mailed to each Board Member before the meeting and a one year forecast is included in the agenda packet. Mr. Falconer advised that a change was made in the cash flow report from last month. The revised report will help the Board to review the short term cash needs. In response to Board Member Irwin, Mr. Falconer advised that in the Treasurers Report on Page 4, the column titled Maturity Dates notes the investment maturing dates. Mr. Falconer advised that if there was a deficient during the month, an investment would have to be sold early. Investment Advisory Board September 10, 1 997 Minutes Chairman Sales questioned the Cash Flow Analysis pointing out that in January 1998 a 3 million-dollar surplus is projected and Staff has proposed investing 3.7 in LAIF. Mr. Falconer advised that further down in the analysis, it displays a projected amount of 8.6 Million in LAIF. The 3.7 million couldn't be invested in LAIF due to the 35% LAIF investment limit. He further advised that on Attachment No. 2 in the Staff Report it lists projected LAIF balances. He advised that last month the lAB gave staff directions to review investing in commercial paper and get some recommendations. At that point in time three million will be available to be invested in commercial paper. In response to Board Member Osborne, Mr. Falconer advised that the three million dollars is earmarked as an expenditure at the end of February 1998. In response to Board Member Irwin, Mr. Falconer advised that the investment in commercial paper would be an investment of thirty days or less, and one million dollars per each entity. Mr. Falconer advised that Pages 6 through 21 are the inventory lists available for commercial paper for that day from the three broker dealers. In response to Chairman Sales, Mr. Falconer advised that in January three million dollars is available for a short term investment. One of the options would be to invest in commercial paper. Mr. Falconer advised that on Page 5 of the staff report, the LAIF balances are indicated and it details the amount that will be withdrawn from LAIF for short term investing. In response to Board Member Osborne, Mr. Falconer advised that administering the investment in commercial paper will not be time consuming. He further advised that each broker dealer submits what is available for investing in commercial paper, staff reviews the availability and decides on the investment. Investment Advisory Board September 10, 1997 Minutes In response to Chairman Sales, Board Member Irwin advised that there are thirty day T-bills available. He further advised that commercial paper was one of several different vehicles that the Board had Mr. Falconer review. Mr. Falconer advised that some of the commercial paper investments listed in the staff report are for over thirty days. They were added as information items only. In response to Chairman Sales, Mr. Falconer advised that investing in commercial paper is an option that is available to the Board. It's not the most conservative option but in reviewing the cost and benefit and the diversification it's a good investment. Board Member Osborne advised that taking into consideration the LAIF limitation of 35% and the possible interest that can be earn $7,500 to $10,000 from Commercial paper he feels the investment is worthwhile. He further advised that within the one million, rating system and thirty day limit the risk is minimized. Chairman Sales stated that he needs assurances in regards to commercial paper. He further advised he doesn't feel the earned income is worth the risk. Board Member Irwin requested a set of bids and agency rates for commercial paper be included in the next agenda packet. He further advised that it might give the Board more comfort in having the additional information. Board Member Irwin suggested a change to the Cash Flow sheet that listed the cash balances and changes. Mr. Falconer advised that he would work with Board Member Irwin and together they could come up with a work sheet that would be helpful to the Board. He further advised that he would review other investment vehicles for the Board. MOTION -It was moved by Board Members Lewis/Brown to continue the Investment Plan to the November meeting. Motion carried unanimously. Investment Advisory Board September 10, 1997 Minutes VI CORRI=SPONnFNCI= ANn WRITTFN MATERIAL A. Month End Cash Report - September 1997 Noted and Filed B. Pooled Money Investment Board Reports -June 1997 Noted and Filed VII BOARD MEMRFR ITFMS Board Member Irwin stated that when the Board first drafted the Investment Policy, one of the items that was discussed was the six-month treasury for a bench mark and it was agreed upon by the Board. He further advised that since that time he feels that the six-month benchmark is losing its relevancy. In. response to the Board, Board Member Irwin advised that the Board casts it aside that some of the investments would be invested for 30 days or less and we cast it aside that we have needs coming up nine months down the road so we buy a nine-month investment, and since we are doing this, what is the relevance of a six-month bench mark. Board Member Osborne said that some type of benchmark is needed. Board Member Lewis advised that if the Board .is using a six-month rate as the benchmark and rates are falling below this, then the Board needs to review what type of investment vehicles are being used. Board Member Irwin advised that it implied to him that the Board almost has a second benchmark of 180 day maturity. Mr. Falconer advised that the City is currently at 179 day maturity. Board Member Brown advised that there needs to be a benchmark to protect against taking unusual risks. Investment Advisory Board September 10, 1997 Minutes Board Member Osborne questioned what extent of the investment in commercial paper the Board is going to be involved. Chairman Sales advised that the Investment Advisory Board is only an advisory Board. A. Next Board Meeting Date Mr. Falconer advised that if the City Council appoints a new Investment Advisory Board member at their October 21 meeting, it might be a good idea to meet in November. The Board concurred on meeting in November. VIII ADJOURNMENT MOTION - It was moved by Board Members Lewis/Osborne to adjourn the meeting at 6:45. Motion carried unanimously.