2003 02 12 IAB Minutes INVESTMENT ADVISORY BOARD
Meeting
February 12, 2003
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 Vice Chairman Olander, followed by the ~
Pledge of Allegiance.
PRESENT: Board Members Olander, Moulin, Lewis and Mortenson
ABSENT: Chairman Mahfoud and Board Member Felice
OTHERS PRESENT: John Falconer, Finance Director and 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 February 12, 2003 for the Investment
Advisory Board.
MOTION - It was moved by Board Members Moulin/Lewis to approve the
Minutes of February 12, 2003. Motion carried unanimously.
V BUSINESS SESSION
A. Transmittal of Treasury Report for December 2002
In response to Board Member Lewis, Mr. Falconer advised the Board
that the Treasury Bills were for a six-month period, from the $29
million bond issue of June 2002, which matured in December 2002
and were rolled them over until June 2003. Mr. Falconer also advised
the Board that on Page 005, that the interest went from 1.72% to
1.24%.
Investment Advisory Board February 12, 2003
Minutes
Board Member Olander advised the Board, referencing the City Council
Meeting Minutes dated January 21st, that currently LAIF is at 20%,
with 1 5% outstanding, and that Council Member Perkins is more
concerned than ever about the City's LAIF investments. Board
Member Olander also advised the Board of Council Members
Osborne's comments in the minutes, which read that "out of the $49
billion of LAIF Funds (PMIA) only 928 to 929 billion represent amounts
held for municipalities", which none of these amounts can be loaned
to the state. The Investment Advisory Board is pushing to get a
breakdown of where the cities' portions are invested. Board Member
Moulin asked the Board if this request was being fulfilled. Mr.
Falconer advised the Board that Council Member Osborne's desire
was to be able tell the Council Members where the portions of the
City's monies are being invested and how they are being invested.
Mr. Falconer advised the Board that they would not be able to obtain
this information due to the fact that the money invested in LAIF is
pooled cash, which is one big portfolio consisting of LAIF member and
state agencies. Board Member Mortenson asked the Board what is
Council Member Perkin's concern. Board Member Lewis replied to the
Board that LAIF has been an issue with several members of the
Council and Investment Advisory Board due to the fact that some of
the investments in LAIF are not permissible under the City's
investment policy and concerns of whether or not what LAIF does
with the money are safe and proven investments. One of the areas of
concern for him is the CD's that are purchased. On the surface, it
appears that the CD's have more of a political nature than an
investment nature. Board Member Olander replied to the Board that as
in the past, perhaps the legislature would begin to tap the fund to the
detriment of LAIF. Board Member Olander also advised the Board that
these funds are guaranteed by the State of California and are not now
accessible.
Board Member Lewis advised the Board that the other concern was
the loan issue, which is not a permissible use of the LAIF funds with
the PMIA.
Board Member Olander stated to the Board that he believes the
concerns of the Council Members may be personal feelings of the
past.
Board Member Moulin asked the Board who the loans are made to.
Mr. Falconer advised the Board that the Treasurers office maintains a
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Investment Advisory Board February 12, 2003
Minutes
As an example, if the construction of a prison starts before they go
out to bond, they need some cash. The State uses the PMIA pool for
seed money; they then issue the bonds and use the proceeds from the
bonds to repay the loan.
MOTION - It was moved by Board Members Lewis/Mortenson to
review, receive and file the Treasurer's Report December 2002.
Motion carried unanimously.
VI CORRESONDENCE AND WRITTEN MATERIAL
A. Month End Cash Report - January 2003
Board Member Moulin advised the Board that the comparison from the
Month End Cash report to LAIF indicates the differences between the
two, and also indicates that the loans have doubled, the treasuries
went down and so have the agencies; it has shifted out of treasuries
into loans. Mr. Falconer advised the Board that if it's $5 billion, he
would have to call the Treasurer's office and report back to the
Board. Board Member Lewis asked Mr. Falconer if he would call and
inquire.
Board Member Olander commented to the Board that it looks like
LAIF's increase has gone into federal agency discount notes. Board
Member Lewis commented to the Board that looking at the maturities
and other areas in LAIF, that the yield might come down.
Board Member Moulin advised the Board that looking at the Cash Flow
report for December, there was an extra amount of revenue coming in
for permits, which is a positive sign for the City.
In response to Board Member Olander, Mr. Falconer advised the Board
that the City has what is called the Developer Impact Fee, fees based
on new construction, which are a better indicator than building
permits, due to the fact some of the building permits issued are
remodels and/or repairs. Mr. Falconer informed the Board that January
was the biggest month the City has had in several years. There
haven't been too many commercial building permits issued.
Noted and Filed
B. Pooled Money Investment Board Report - October 2002
Investment Advisory Board February 12, 2003
Minutes
Board Member Moulin asked the Board why they thought the fund has
grown. Mr. Falconer replied that he had spoken Eileen Parks; Ms.
Parks stated that were was a large infusion of funds received and Mr.
Falconer thought they were from tobacco funds. Board Member Lewis
advised the Board that he thought the State issued tobacco bonds,
which are bonds that are anticipated to be paid off by settlements in
tobacco cases. This is money being spent before it is received, in
anticipation that the state is going to win and receive the land fall
money. Board Member Moulin asked if they were a revenue bond.
Board Member Lewis replied that they were 4 3/4 and tax free revenue
bond.
Board Member Olander asked the Board if they had any concerns
about commercial paper, currently at 22.8% of the portfolio. He
commented that considering the current status of the economic state
of California and the possibility of war, the City's portfolio is in good
shape. Board Members Moulin and Mortenson agreed.
Board Member Lewis suggested to the Board that the issue of a five or
seven man board should be determined by the City Council, and that
the policy read that the board will be cOmprised of five or seven
members, with the number to be set by City Council for each fiscal
year, rather than have the seats remain empty. Board Member
Olander stated that he read in the Council meeting minutes that the
Council decided to keep the current seat vacant and there would be
some consideration of a five man board. In response to Board Member
Olander, Board Member Mortenson commented to the Board that it
depends on the function of the Board and what the Board can and
cannot do. Board Member Mortenson also commented to the Board
that this Board is pretty structured, has relative tight confines and has
limited power, so a seven person board might not be needed. In
response to Board Member Olander, Mr. Falconer advised the Board
that the Investment Advisory Board is the only Board that has seven
members.
Noted and Filed
VII BOARD MEMBER ITEMS
Board Member Moulin asked the Board if the efforts have been completed for
the work plan for next year, and that there were three issues. Mr. Falconer
replied that the month of March is when these items are discussed.
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Investment Advisory Board February 12, 2003
Minutes
VIII ADJOURNMENT
MOTION - It was moved by Board Members Lewis/Moulin to adjourn the
meeting at 6:00 p.m. Motion carried unanimously.
Sub~i~ed~y,
Vianka Orrantia
Secretary