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2002 06 12 IAB Minutes INVESTMENT ADVISORY BOARD Meeting June 12, 2002 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 Moulin, Osborne, and Felice (via videoconference) and Chairman Mahfoud ABSENT: Board Member Olander and Lewis OTHERS PRESENT: John Falconer, Finance Director, Kurt Mortenson prospective Board Member, Tom Genovese, City Manager and Kathy Jenson, City Attorney II PUBLIC COMMENT - None III CONFIRMATION OF AGENDA IV CONSENT CALENDAR 1. Approval of Minutes of Meeting on May 8, 2002 for the Investment Advisory Board. Board Member Moulin advised the Board that on page 5, last paragraph, last sentence the following word should be replaced: Mr. Sherwood stated that he has asked for written ir~surar~=e assurance from the State Board Member Moulin advised that Board that on page 6, first paragraph, sixth sentence, the following word should be deleted: Mr. Falconer also stated that i~ the City of Investment Advisory Board June 12, 2002 Minutes MOTION - It was moved by Board Members Moulin/Osborne to approve the minutes of May 8, 2002 as corrected. Motion carried unanimously. V. BUSINESS SESSION A. Transmittal of Treasury Report for April 2002. Mr. Falconer informed the Board that on page 010, the average maturity has gone from 35 days to 79 days; Mr. Falconer stated at this current time this is beneficial due to the current interest rates. Mr. Falconer also advised the Board that on page 003, the overall performance is currently meeting the City's benchmark with the yield at the 2% range. Mr. Falconer advised the Board that in reference to cash, that there was not much fluctuation in the portfolio, currently which at around 91 O0 million. Mr. Falconer advised the Board that at the May meeting, Board Member Lewis suggested that the heading on page 004, be changed to "Yield." Mr. Falconer stated that he would check the Trade Ticket to see how the ticket is titled and will report back to the Board at the July meeting. In response to Board Member Osborne, Mr. Falconer advised the Board that on page 004, the 95 million investment's terms are as follows; 10/31/02 and 3/31/04, which were placed out to two years. Board Member Osborne asked if the proposed Investment Policy is approved, will an additional 910 million be invested for longer terms? Mr. Falconer replied to the Board that due to the current interest rates he will not take out an additional 910 million for investments. Board Member Osborne asked if the City had received the taxes in the month of May? Mr. Falconer replied that the City received approximately 912 million on the 31s~ of May, at about 2:00 p.m. Board Member Osborne asked where the money was going to be applied? Mr. Falconer stated that staff is currently calculating what the pass through payments are and reinvesting in commercial paper the week of June 24th. MOTION - It was moved by Board Members Osborne/Moulin to review, receive and file the Treasurer's Report for April 2002. Motion carried unanimously. Investment Advisory Board June 12, 2002 Minutes B. Consideration of Fiscal Year 2002/03 Investment Policy The Board reviewed the attached Investment Policy and changes/additions/deletions are shown in amended form. Chairman Mahfoud asked the City Manager and City Attorney if they had any comments, changes and/or deletions? Ms. Jenson stated she reviewed the policy and she had no comments. Mr. Genovese stated he reviewed the policy with Mr. Falconer and that he felt the policy looked fine. Board Member Moulin advised the Board and Staff that the major changes were the isolation of the $10 million and changing the maturities between two to five years, also included in the changes were limitations to bonds and notes. Chairman Mahfoud also stated that they wanted Staff to have more flexibility to work with. Board Member Osborne advised the Board that on page 10, second paragraph, eighth sentence, the following word should be crossed out: ..~.i~icn the projected annual dollar amount, as detailed Section ~XX V, may be Chairman Mahfoud stated to the Board that they should review the final changes to the Investment Policy. The Board read through all the final changes of the Investment Policy. Board Member Moulin advised the Board that on page 7, Section V, Maximum Maturities, first paragraph, that the following word should be replaced: It is the policy of the City of La Quinta to hold securities and other investments i~ of In response to Chairman Mahfoud, Mr. Falconer advised the Board that the added bullet point on page 16 of the Investment Policy was the result of a request from Board Member Moulin. The bullet point resulted from the page added to the Treasurer's Report, comparing historical percentages and average maturity to the portfolio. Mr. Falconer informed the Board that on June 19th the 2002 RDA Project Area 1 closing will take place and new accounts will be created. Mr. Falconer requested that this account be added to the Investment Advisory Board June 12, 2002 Minutes 2002/03 Investment Policy on page 24, listed under item 6. In response to Board Member Osborne, Mr. Falconer informed the Board that the Auditors reviewed page 23 and discussed the issue of internal controls and there were no changes and/or comments in the area of cash. Mr. Falconer also informed the Board, that wiring changes arose after the September 11th incident, the Council met and suggested that changes be made and the City went from a "dial-up" program with Wells Fargo for transmitting wires, along with cash transactions into an internet based program. Board Member Osborne asked how the internal controls were drafted to make transfers over the Internet? Mr. Falconer replied that the internal controls were written based upon the software requirements. Mr. Falconer advised the Board that a member of the Investment Board may want to be present at the Council Meeting for the approval of the 2002/03 Investment Policy to address any questions. The Meeting is scheduled for Tuesday, at 3:00 p.m. Chairman Mahfoud and Board Member Osborne stated that they would be in attendance. In response to Board Member Moulin, Mr. Falconer advised the Board that the City Council will also be conducting interviews for a new Investment Board Member at the Council meeting on June 18th and that Mr. Mortenson, who is currently present, is one of the potential candidates. Motion - It was moved by Board Member Moulin/Osborne to finalize the Fiscal Year 2002/03 Investment Policy. Motion carried unanimously. VI CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - May 2002 General discussion ensued in reference to the current and future economy. Mr. Falconer advised the Board that the City of Palm Desert has been actively working to sponsor legislation to write into law that the monies in the local areas investment fund are specifically designated 4 Investment Advisory Board June 12, 2002 Minutes as funds for the investors in the pool and they would not be subject to the State coming in and tying up the monies in the event of a State budget crisis. Mr. Falconer also advised the Board that the City sent a letter of support and the issue is being tracked by a person on staff who tracks legislation. In response to Chairman Mahfoud, Mr. Falconer advised the Board that he had met with a representative, who was a consultant for Bond Logistics, and she informed Mr. Falconer that the court had ruled on the LAIF subject matter and had ruled in our favor. Mr. Falconer will follow-up by requesting a letter from LAIF. Mr. Falconer advised the Board that this matter pertained to the Howard/Jarvis Group. Back in 1997 the group asked a Superior Judge in Los Angeles to freeze LAIF, which meant that nine to ten cities had put in requests for withdrawal of funds and were not able to access their funds. The State requested an injunction and it was granted, therefore releasing the funds. This matter was ruled in the State's favor, releasing the funds and not freezing them. Mr. Falconer advised the Board that with this ruling and the proposed law by the City of Palm Desert will be a real plus for all cities. Noted and Filed B. Pooled Money Investment Board Reports - April 2002 In response to Board Member Osborne about the upcoming LAIF Conference, Mr. Falconer advised the Board if the proposed budget is approved by Council, that at the July Investment Advisory Board meeting a recommendation can be made for two Investment Advisory Board Members to attend the September LAIF Conference in Sacramento. Noted and Filed VII BOARD MEMBER ITEMS Board Member Moulin advised the Board that he was considering stepping down from the Board, but decided to remain on the Board but at a lesser capacity, 5 Investment Advisory Board June 12, 2002 Minutes VIII ADJOURNMENT MOTION - It was moved by Board Members Moulin/Osborne to adjourn the meeting at 6:05 p.m. Motion carried unanimously. ~n ited by, · Falco Secretary