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2003 01 08 IAB Minutes INVESTMENT ADVISORY BOARD Meeting January 8, 2003 I CALL TO ORDER Regular meeting of the La Quinta Investment Advisory Board was called to order at the hour of 5:3© P.M. by Chairman Mahfoud, followed by the Pledge of Allegiance. ,~.~.,:~ PRESENT: Board Members Moulin, Olander, Felice, Mortenson and Chairman Mahfoud ABSENT: None OTHERS PRESENT: John Falconer, Finance Director, Vianka Orrantia, Secretary II PUBLIC COMMENTS - None III CONFIRMATION OF AGENDA - (This is the time set aside for public comment on any matter not scheduled on the agenda.) IV CONSENT CALENDAR Approval of Minutes of Meeting on December 22, 2002 for the Investment Advisory Board. MOTION - It was moved by Board Members Moulin/Lewis to approve the Minutes of December 11, 2002. Motion carried unanimously. V BUSINESS SESSION A. Transmittal of Treasury Report for November 2002 Mr. Falconer informed the Board that the only activity in the month of November was the roll over of a Treasury Note, which lost a small amount of yield. In response to Board Member Lewis, Mr. Falconer informed the Board that the out flows indicated on the Treasury Report were the normal Investment Advisory Board January 8, 2003 Minutes cash expenditures, such as Capital Improvement Payments, police payments etc... In response to Board Member Moulin, Mr. Falconer advised the Board that the maturity for $5 million Treasury Bill on December 26th was rolled over for six months, until the month of June. The City received a 1.22% yield. This T-Bill yield was 5 -6 basis points lower then agency paper. In response to Board Member Moulin, Mr. Falconer advised the Board that the City is no longer using the Dreyfus Account, and that the City is being credited towards the services. Mr. Falconer will check on this to see if this rate should be reduced to zero. (Staff did check on the interest rate and it was reduced to zero on the Treasury Report submitted to the City Council.) MOTION - It was moved by Board Members Lewis/Osborne to review, receive and file the Treasurer's Report November 2002. Motion carried unanimously. VI CORRESONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - December 2002 Chairman Mahfoud advised the Board that he felt that it was unlikely interest rates would go up this year and suggested that the Treasurer consider extending the maturities from six months to nine months or one year. Mr. Falconer advised to the Board that he is currently rolling over investments to like maturities. Board Member Olander stated to the Board that the Chinese are floating their currency. Board Member Mortenson asked who the City consults with in reference to interest rates? Mr. Falconer replied that the City usually relies on their Broker/Dealers and that he believed that rates would be fairly flat for the rest of the year. Noted and Filed B. Pooled Money Investment Board Report - October 2002 Board Member Moulin commented to the Board on the comparison of funds from 2001 to 2002. Board Member Moulin also suggested that people might be placing their funds elsewhere. Mr. Falconer replied to the Board that this reflects the entire PMIA and that the state might not have the money and there has been a decline. 2 Investment Advisory Board January 8, 2003 Minutes Board Member Moulin commented to the Board the amount of commercial paper invested was approximately 24%. Board Member Lewis advised the Board that there were not too many liquid investments paying 2Y2 %. Board Member Lewis also stated to the Board that on page 9, the life of LAIF has gone up 202 days as of the end of the December, back in October it was 186, an increase of 15 days in just two months. Board Member Olander advised the Board that LAIF continues to benefit from the pooled money account, with the rates going down, that LAIF gets the advantage of longer term investments from the State General Fund. Noted and Filed VII BOARD MEMBER ITEMS Chairman Mahfoud announced to the Board the resignation of Board Member Osborne. In response to Chairman Mahfoud, Mr. Falconer advised the Board that the City Clerk will place an item on the City Council agenda requesting direction as how to fill the term. Mr. Falconer also advised the Board that Staff will report back at the next scheduled meeting. Chairman Mahfoud asked Staff if a recommendation could be made to the City Council regarding the background of the potential candidate. Mr. Falconer advised the Board that the City Council does take this in to consideration. Board Member Moulin advised the Board that the City Council voted for an approval of a loan for the Embassy Suites and that the Finance Director was not involved in any of the process. Board Member Moulin stated to the Board that he felt the Finance Director should be involved. Board Member Moulin advised the Board that this should be a red flag to the City. Board Member Olander also commented on his concerns. Board Member Lewis advised the Board that he hoped that the City did not look at this as an investment, if that is how it is viewed, than there is a violation of the City's Investment Policy. Mr. Falconer wanted to bring to the Boards attention that the Prime Plus Two that the City is charging on the note was done to avoid triggering the payment of prevailing wages. Mr. Falconer also clarified that by charging the Prime Plus Two the City would be doing a market rate loan, not triggering prevailing wages, which might be placed upon the developer and result in a 25% 3 Investment Advisory Board January 8, 2003 Minutes increase to the construction costs of a $30 million note. Mr. Falconer advised the Board that he did not look upon this as an investment; it looked like "loans receivable or notes receivable," which is an asset on the books. Board Member Olander advised the Board that he feels the City is getting into a "risky business,' if the developer cannot finish the hotel the City will have to complete the project. Mr. Falconer advised the Board that the City does not have the resources to finish the project; and as outlined at the City Council meeting, the City would get the plans and the franchise rights to the hotel. Board Member Lewis stated to the Board that the City looks upon this as a redevelopment issue and does not view this project as investment. Mr. Falconer advised the Board that Councilman Osborne did mention in the public hearing that the City does not view this project as an investment. Chairman Mahfoud asked Mr. Falconer if the auditing firm was consulted. Mr. Falconer stated that they were not. VIII ADJOURNMENT MOTION It was moved by Board Members Lewis/Olander to adjourn the meeting at 5:58 p.m. Motion carried unanimously. · Submitte~ by,_ '~ Vianka Orrantia Secretary 4