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1999 09 08 IAB Minutes INVESTMENT ADVISORY BOARD Meeting September 8, 1999 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 Chairperson Osborne, followed by the Pledge of Allegiance. PRESENT: Board Members Irwin, Lewis, Mahfoud, Moulin, Olander and Chairperson Osborne ABSENT: Board Member Bulgrin OTHERS PRESENT: John Falconer, Finance Director and Debbie DeRenard, Secretary III PUBLIC COMMENT- None IV CONFIRMATION OF AGENDA Mr. Falconer requested that an amended copy of the July 14, 1999 minutes be added to the agenda. The Board concurred. V CONSENT CALENDAR A. Approval of Minutes of Meeting on July 14, 1999 for the Investment Advisory Board. MOTION - It was moved by Board Members Lewis/Irwin to approve the amended Minutes of July 14, 1999. Motion carried unanimously. VI BUSINESS SESSION A. Transmittal of Treasury Report for June and July, 1999 In response to Board Member Lewis, Mr. Falconer advised that the description on page 2 of the June 1999 report describing the decrease of US Treasury Bills, Notes, Government Agency Securities and Commercial Paper should read "due to the maturity" instead of "due to the sale". Investment Advisory Board September 8, 1999 Minutes Board Member Olander questioned if the Board had any concerns using the Bank of New York as the custodian. In response to Board Member Olander, Board Member Irwin advised that the City does not have much of a choice. There are only a few agencies that render this service. He further advised that any public money assets that are held have to be collateralized. Custodial funds are usually kept in a separate entity within the bank. Board Member Irwin advised that on page 2 of the Treasurers Report the LAIF percentage is at 26.27 percent invested. He advised that he thought that Staff had an understanding with the Board to keep the LAIF balance below the 25 percent. He advised that he would rather see the excess investments in government treasury notes or agency securities or some combination. Mr. Falconer advised that it's Staff intent to maintain the 25 percent invested in LAIF, however the policy allows 35 percent. Board Member Irwin advised that its been two months since the last lAB meeting and the market spreads are widening as more corporate treasurers are getting ready for year end and Y2K. He further advised that the City has two securities that are expiring on 10/31/99 and 09/30/99 and he wondered if the City would consider selling the investments now rather than waiting for maturity. Mr. Falconer advised that the policy has always been to hold investments until maturity and he adheres to it. In response to Chairman Osborne, Mr. Falconer advised that the City would have to recognize a gain or loss on the sale of the investment. In response to Board Member Irwin, Mr. Falconer advised that the City would have to recognize a gain or loss on the transaction. He further advised that the City Auditors have instructed Staff that at the end of June 30th if the City has material unrealized gains or losses it has to be recognized on the Profit and Loss Statement. If the City were to actually sell an investment before maturity at a gain or loss it would have to be reflected in the financial statement. Investment Advisory Board September 8, 1999 Minutes In response to Board Member Irwin, Mr. Falconer advised that provisions have not been made to record the transaction differently. He further advised that he would rather withdraw money from the LAIF account to invest long term rather then break an investment. Board Member Lewis advised that he would prefer to see Staff do as Mr. Falconer has suggested. Instead of booking a loss, and the LAIF investment would be reduced. Board Member Moulin advised that on page 4 the Cash Balances column is dated July 1998 and it should be July 1999. In response to Chairman Osborne, Mr. Falconer advised that the auto mall account will not have activity every month. He further advised that the funds in the auto mall account are a combination of City/Developer contributions and are designated for public improvements. Once the public improvements are complete, the account will be closed. MOTION - It was moved by Board Members Lewis/Irwin to review, receive and file the Treasurers Report for June and July, 1999. Motion carried unanimously. B. Board Functions - Ordinance Board Member Moulin advised that at the last meeting the Board agreed on changes indicated in the staff report for Section 2.70.030. Section 2.70.020 was placed on the agenda in order for the Board to take action. He further suggested that Section 2.70.020 be changed as follows: "lni'Li,lly, ~ The Board ~ ~ ~hould meet oncc a monthi~, but this schedule may be extended to quarterly meetings upon the concurrence of the Board and the City Council. The specific meeting dates will be determined by the Board Members and meetings may be called for on an as needed basis." He further advised that the second sentence could be item B. In response to Board Member Irwin, Board Member Moulin advised that the wording will be "the Board usually will meet monthly". He advised 3 Investment Advisory Board September 8, 1 999 Minutes that this accommodates the Board because the Board usually meets monthly with the exception of August and December. Board Member Lewis advised that the added verbiage cleans up the language. Chairman Osborne advised that he doesn't feel an "A" is needed in front of the first paragraph if there is no "B" paragraph. In response to Board Member Lewis, Mr. Falconer advised that the recommended changes from the last meeting have not gone to the City Council. Mr. Falconer advised that the issue of the "A" can be referred to the City Clerk. MOTION - It was moved by Board Member Moulin/Orlander to approve the suggested changes. Motion carried unanimously (Board Member Bulgrin absent.) C. Request for Proposals - Bank Services Chairman Osborne advised that its his feelings that the Board should not try to rewrite the wording of the request for proposals. He further advised that he has spoken with Mr. Falconer and he feels it would be better if the format was kept in tact. Board Member Irwin concurred. Board Member Olander advised that on page three, second paragraph the Bank should be First Interstate, not First Interest. Mr. Falconer advised that the City is required to send an RFP to all those who requested to be placed on the City's Registry. In response to Board Member Moulin, Board Member Lewis indicated that requesting "ownership" details from a financial institution might be mistaken for other reasons. He further advised that the ownership should be immaterial, advising that if it is a financial institution in the United Investment Advisory Board September 8, 1999 Minutes States it is already highly regulated. In response to Board Member Olander, Mr. Falconer advised that the list of banks/organizations were collected as follows: 1 - City Registry that is maintained by the City Clerk's Office, 2 - Banks located in La Quinta, and/or 3 - Listed in the California Municipal Treasurers Association Roster. He further advised that the Board is welcome to add another institution. Mr. Falconer questioned if the Board would like to have representatives from the top institutions come to a Board meeting and make a presentation and/or set up a subcommittee or just leave the decision with Staff. Board Member Irwin advised that he would like to see a subcommittee. He further advised that the Board is here for investment policy and he feels that the Board wants to see a "strong bank" selected. In response to the Board, Mr. Falconer advised that he would like the Board to be involved in the selection process. Board Member Olander suggested that the three top institutions be invited to the lAB meeting to make a presentation. In response to Board Member Irwin, Mr. Falconer advised that previously an employee would take the daily deposit to bank. He advised that he felt that this was an 'unsafe practice and based on the time and mileage for that employee, having an armor car service is justified. In response to Board Member Irwin, Mr. Falconer advised that the City is set up to begin positive pay, however it has not been implemented because of the amount of Staff time it would require versus the RFP. The decision was made to implement the positive pay after a bank was selected. He further advised that in order to implement positive pay the City Would have to send a tape to the bank to confirm the check numbers and amounts. In response to Chairman Osborne, Mr. Falconer advised that the important guideline for institutions will be that they can meet the needs of the City. Investment Advisory Board September 8, 1999 Minutes In response to Board Member Moulin, Mr. Falconer advised that Tab X on page 13 can be changed to read Current Annual Audited Report. He further indicated that the most recent Annual and Quarterly Call Report can be added to Tab X. MOTION - It was moved by Board Members Irwin/Lewis to move forward with the RFP process as outlined by Staff as amended and that the lAB will participate in interviewing no more than the top three representatives at an lAB Meeting. Motion carried unanimously. VII CORRESPONDENC'E AND WRITTEN MATERIAL A. Month End Cash Report- August 1999 Noted and Filed B. Pooled Money Investment Board Reports - May & June, 1999 In response to Board Member Irwin, Mr. Falconer advised that the Financial Services Assistant prepares the LAIF entries and he would report back to the Board regarding how the LAIF percentages were obtained at the next meeting. C. Daily Investment Activity and Monthly Treasurer's Report Procedures Noted and Filed D. LAIF - Structured Notes and Asset Bank Securities Noted and Filed VIII BOARD MEMBER ITEMS - None Investment Advisory Board September 8, 1999 Minutes IX ADJOURNMENT MOTION - It was moved by Board Members Lewis/Moulin to adjourn the meeting at 6:30 p.m.. Motion carried unanimously. Submitted By: Debbie DeRenard Secretary