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2001 11 14 IAB Minutes INVESTMENT ADVISORY BOARD Meeting November 14, 2001 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 Mahfoud followed by the Pledge of Allegiance. PRESENT: Board Members Lewis, Olander, Chairman Mahfoud, Moulin, Osborne (5:35) and Felice (via videoconference) OTHERS PRESENT: John Falconer, Finance Director, Vianka Orrantia, Secretary, and Cecil Mitchell II PUBLIC COMMENTS - none III CONFIRMATION OF AGENDA IV CONSENT CALENDAR 1. Approval of Minutes of Meeting on October 10, 2001 for the Investment Advisory Board. MOTION - It was moved by Board Member Lewis/Moulin to approve the Minutes of October 10, 2001. Motion carried unanimously. V BUSINESS SESSION A. Transmittal of Treasury Report for September, 2001 Vice Chairman Moulin advised that on page 3 of the Treasurer's Report, that the U.S. Treasury Bills should reflect 100%, not 75%. Investment Advisory Board November 14, 2001 Minutes Mr. Falconer advised the Board that the current interest rates continue to drop, since the September 30TM Treasury Report. The three/six month Treasury Note rates are currently about 1.80%. The spread between Government Agencies and Treasuries is about four or five basis points, which is not much of a spread between the two investments. Mr. Falconer also advised the Board that there would be mid-year corrections on the estimated interest income based on the rates dropping. The City currently is vested in all GSE agencies except for Sallie Mae and Ginne Mae. In response to Vice Chairman Moulin, Mr. Falconer advised that this will cut the City's investment interest budget in half, due to the original budget at using 4F2 % to 5%, which will be decreased down to around 2 1/2%. In response to Vice Chairman Moulin's whether the budget will be amended due to the percentage change, Mr. Falconer replied that at mid-year, between January/February of each year, staff will go through expenditures and revenues and look at how they are performing and than make recommendations to Council, either to increase appropriations and revenues or vice versa. In response to Board Member Lewis' question about what the Treasurer's plans were for the Treasury Notes that matured on the 31st of October, Mr. Falconer replied that the $4 million Treasury Note was rolled into another Treasury Note. Mr. Falconer continued that a larger amount will mature at the end of November, which is currently invested in Treasury Notes and they it will be rolled back into Treasury Notes. Mr. Falconer advised that looking at the yield curve, he felt that the City shouldn't go over 3 months. In response to Chairman Mahfoud, Mr. Falconer advised that the RDA currently has $34.3 million invested in Treasury Notes. MOTION - It was moved by Lewis/Olander to approve, receive and file the Treasurer's Report for September 2001. Motion carried unanimously. VI CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - October 2001 In response to Board Member Olander, Mr. Falconer advised, Investment Advisory Board November 14, 2001 Minutes referencing the LAIF performance report on page 009 that the October daily report is down 364 basis points. Mr. Falconer advised the Board that this amount could be checked daily via the Internet. Mr. Falconer also advised the Board that the only other option in investments would be commercial paper, but due to the current economic situation in the U.S., he does not feel comfortable in doing so at this time. Board Member Olander felt that Mr. Falconer would be forced back into some of these investments to contin'ue some type of return. Board Member Lewis advised that if Mr. Falconer continued to keep the investments between 30 to 45 days, that he would be able to pick up a few basis points in yield with commercial paper. In response to Vice Chairman Moulin, Mr. Falc(Jner advised the Board some of the money would be taken out of LAIF due to the upcoming warrant run. Board Member Osborne advised that he felt that the Board should consider increasing the maximum maturity on investments beyond two years, which is allowed by the State. Board Member Lewis advised that this might be possible if this would be tied with a portfolio percentage limitation, for example, only 10% portfolio could be over a particular maturity or tied in some way so that not all the money is tied up three years. Board Member Olander felt that would give the investments more stability and more yield. Vice Chairman Moulin advised that he felt this was a no risk way to extend maturities. The Board concurred that the maximum maturity on investments should be discussed when next year's investment policy is brought back to the Board. Noted and Filed. B. City of La Quinta Special Meeting Minutes - September 25, 2001. Vice Chairman Moulin requested that a correction be made to the minutes prepared by the City Clerk to reflect Chairman Mahfoud as Chairman and not previous Chairman Osborne. Board Member Olander advised that on page 5 of the minutes, where it stated "Board Member Olander noted that there could have been a liquidity problem had the City's investments been 100% in U.S. Investment Advisory Board November 14, 2001 Minutes Treasuries." he felt that this statement was out of context. Board Member Olander said this statement read that he was alluding to the fact the Board had gone to the possibility 100% securities in the event of a national disaster. Mr. Falconer advised the Board that the Council reviewed the Board's recommendations from the September 25~h joint meeting and concurred with Staff's recommendations for September. Wells Fargo has been notified to change the wire limit, to no daily limit and questionnaires have been sent to the Brokers. Mr. Falconer advised the Board that the monthly LAIF report was not received. Board Member Osbourne requested clarification, referencing the paragraph on page 8 in the Department Staff Report. Mr. Falconer clarified that the Financial Services Assistant will receive the verification from the custodian (Bank of New York) once securities are received. Noted and Filed. VII BOARD MEMBER ITEMS In response to Vice Chairman Moulin, Mr. Falconer advised the Board that Board Member Mitchell was appointed to the Investment Board in July. Mr. Falconer also advised that the policy states if there are three unexcused absences in a row, than the position is deemed vacant. It was Mr. Falconer's understanding that a letter is currently being processed by the Mayor to be sent to Ms. Mitchell and there is an item on the November 20th Council Meeting regarding the vacancy. Vice Chairman Moulin reiterated that the Investment Advisory Board is currently working as a six person Board, as opposed to seven people Board. Investment Advisory Board November 14, 2001 Minutes VIII ADJOURNMENT MOTION - It was moved by Board Member Lewis/Olander to adjourn the meeting at 6:02 p.m. Motion carried unanimously. S~ubmffted b~- Vianka Orrantia Secretary