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1998 04 08 IAB Minutes INVESTMENT ADVISORY BOARD Meeting April 8, 1998 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 Chairman Sales, followed by the Pledge of Allegiance. PRESENT: Board Members Brown, Bulgrin, Irwin and Chairman Sales ABSENT:. Board Member Frame, Lewis and Osborne OTHER PRESENT: John Falconer, Finance Director'and Debbie DeRenard, Secretary II CONFIRMATION OF AGFNDA- Confirmed III PUBLIC COMMFNT - None IV CONSI=NT CAI FNnAR A. Approval of Minutes of Meeting for March 11, 1998 for the Investment Advisory Board. Board Member Brown advised that the attendance needs to be corrected to reflect that she was present at the meeting and that Board Member Frame absent. MOTION - It was moved by Board Members Brown/Bulgrin to approve the minutes of March 11, 1998 as corrected. Motion carried unanimously. V BUSINFSS SFSSION A. Transmittal of Treasury Report for February, 1998. Mr. Falconer advised that at the last meeting it was requested that a brief description be added to the projected liquid cash balances. He advised that this has been added. Investment Advisory Board April 8, 1998 Minutes In response to Board Member Irwin, Mr. Falconer advised that the large balance in the Wells Fargo Bank is due to the Commercial Paper investment maturing. He further advised that it was wired to the account on February 27, 1998. MOTION - It was moved by Board Members Irwin/Bulgrin to Review, Receive and File the Treasurers Report for February 18, 1998. Motion carried unanimously. B. Fiscal Year 1998199 Investment Policies Mr. Falconer advised that the Investment Policy is red-lined to reflect the changes per discussions from the last two Investment Advisory Board Meetings. He reviewed the changes with the Board advising that the Commercial Papers section has been defined. Chairman Sales advised that he noticed from the minutes from March that the Board is discussing the LAIF percentages. C. LAIF Percentages (Correspondence & Written Material) Mr. Falconer presented the Staff report advising that there are three separate LAIF percentages. The analysis is for the period of 7/1/96 to 1/31/98. Between these months the actual LAIF balances ranged between 12.35% - 35.95% and surplus LAIF balances ranged between 11.25% and, 37.77%. The LAIF average actual and surplus percentages were 23.22% and 23.80%. In response to Chairman Sales, Mr. Falconer advised that Staff has not proposed any change to the LAIF percentages. Board Member Irwin advised that he has proposed a change to 25%. Board Member Brown advised that she was happy to see the portfolio more diversified. She further advised that she feels comfortable with the percentages as reported in the Staff Report. Investment Advisory Board April 8, 1998 Minutes B, Continued discussion of Fiscal Year 1998/99 Investment Policies Chairman Sales questioned if all the Board was satisfied with LAIF percentages at 35%. Board Member Irwin advised that he feels that LAIF should be lowered to 25 percent. He doesn't feel that LAIF is a bad investment, although they are not subject to an audit by a big six audit firm. He further advised that he would hope that the Board would vote on the Investment Policy tonight because he is unable to attend the May meeting. . In response to Chairman Sales, Mr. Falconer advised that Staff would like to see the LAIF balance remain at the same percentage. He further advised that at the current LAIF percentage, it gives Staff flexibility. In response to Board Member Irwin, Mr. Falconer advised that it has always been Staffs intent to reduce the actual portfolio for LAIF investment down to 25%, he further advised that he did not believe it was Staff's intent to change the policy limit from 35%. Mr. Falconer advised that the Board can meet with the City Manager and City Attorney as early as next month. The Investment Policy does not specify a month, it states that the Board will meet with the City Manager and City Attorney before the policy is submitted to the City Council. Board Member Irwin questioned if reducing the LAIF percentage to 30% give staff the flexibility. Mr. Falconer advised that reducing the LAIF percentage to 30% is worthy of consideration, and would return to.the Board at the next meeting with an answer. In response to Chairman Sales, Mr. Falconer advised that if the LAIF percentage .was to be decreased, he would have to look for another investment vehicle to maintain liquidity needs of the City. He further advised that he can clarify Staffs' position on reducing the LAIF percentage at the next meeting. Investment AdvisOry Board April 8, 1998 Minutes In response to Chairman Sales, Board Member Brown and Bulgrin advised that they would like to see the LAIF percentage remain at 35 percent. Board Member Brown advised that she prefers to have 'the LAIF percentage stay at 35%. She added that this does not mean that it would remain at that level. She would prefer to see the investments diversified. She further adviSed that if there is a vote on the Investment Policy at the next meeting, the Board can convey Board Member Irwin's feelings toward the LAIF percentage. Mr. Falconer advised that Board Member Irwin can submit written correspondence. He further advised that the Board has held special meetings in the past and they can be scheduled again. Board Member Irwin advised that the Board is aware of his views and he will let it stand at that. MOTION - It was moved by Board Members Brown/Bulgrin to continue the Fiscal Year 1998/99 Investment Policy. Motion carried unanimously. C. Workplan for Fiscal Year 1998/99 Board Member Brown advised that this issue is an important one with regards to how the Board approaches its investments. She further advised that she would like to see more diversification and continue to work hard toward alternatives to LAIF. In response to Chairman Sales, Mr. Falconer advised that a staff position was upgraded from Account Technician to Financial Management Assistant. This position does not deal with the day-to-day activity of investments. Board Member Irwin advised that he would like to review the Internal Policy procedures. In response to Chairman Sales, Mr. Falconer advised that the City did not receive a management letter from the Auditors. The Auditors did not find any exceptions, so there was no need for one. Investment Advisory Board April 8, 1998 Minutes Board Member Irwin advised that this Board is different from other Board. This Board is a monitoring board, where others are goal oriented. MOTION - It was moved by Board Members Brown/Irwin to develop a Workplan for Fiscal Year 1998/99 to include alternative investments and also incorporate the reviewing of internal controls to review procedures. Motion carried unanimously. VI CORRESPONDENCE AND' WRITTEN MATERIAL A. Month End Cash Report - March, 1998 In response to Board Member Irwin, Mr. Falconer advised that the LAIF interest rate can be found on the web site. The rate is a monthly rate. B. Pooled Money Investment Board Reports -January 1998 Noted and filed C. LAIF Percentages (Discussed during Business Session Item B) D. Collateralization of Certificates of Deposit Noted and filed VII BOARD MEMBER ITEMS - None VIII ADJOURNMENT MOTION - It was moved by Board Members Irwin/Bulgrin to adjourn the meeting at 6:25 p.m. Motion carried unanimously.