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2004 07 14 IAB Minutes .- INVESTMENT ADVISORY BOARD Meeting July 14, 2004 I CALL TO ORDER Regular meeting of the La Ouinta Investment Advisory Board was called to order at the hour of 5:43 p.m. by Chairman Lewis, followed by the Pledge of Allegiance. PRESENT: Chairman Lewis (5:43 p.m.), Board Members Olander and Mahfoud ABSENT: Board Members Moulin and Deniel OTHERS PRESENT: John Falconer, Finance Director and Vianka Orrantia, Secretary II APPOINTMENT OF OFFICERS A. Appointment of Investment Advisory Board Chairperson Chairman Lewis opened nominations for Chairperson. Board Member Mahfoud nominated Chairman Tom Lewis for Chairperson. MOTION - It was moved by Board Members Mahfoud/Olander to reappoint Chairman Lewis as Chairperson. Motion carried unanimously. B. Appointment of Investment Advisory Board Vice-Chairperson Chairperson Lewis opened nominations for Vice Chairperson. Board Member Olander nominated Board Member Mahfoud. MOTION - It was moved by Board Members Olander/Chairman Lewis to appoint Board Member Mahfoud as Vice Chairperson. Motion carried unanimously. III PUBLIC COMMENTS - None. IV CONFIRMATION OF AGENDA . Investment Advisory Board July 14, 2004 Minutes V. CONSENT CALENDAR A. Approval of Minutes of Meeting on June 9, 2004 for the Investment Advisory Board. MOTION - It was moved by Board Members Mahfoud/Olander to approve the Minutes of June 9, 2004 as submitted. Motion carried unanimously. VI BUSINESS SESSION A. Transmittal of Treasury Report for May 2004 Mr. Falconer informed the Board that page 2 of the Treasurer's report reflects a cash balance increase of approximately $1 5 million due to receipt of the second tax installment. Board Member Olander commented that page 7 of the Treasurer's report continues to reflect an increase in balances since September 2003, and asked where Staff should invest this money. Board Member Olander suggested the matter be placed as a study session item as "reviewing other forms of investments," and also suggesting the use of Commercial Paper or Corporate Notes. Mr. Falconer stated that staff concurs with the increase in cash and informed the Board that staff recently increased GSE percentages and as these investments mature staff will invest in this area and possibly Corporate Notes. Board Member Olander stated to the Board that staff is near the maximum allowable investment for LAI F and there are not too many other investments to invest in short term. Chairman Lewis mentioned to the Board that Corporate Notes were added as an investment for this year, along with an increase in GSE's, Commercial Paper was added for diversification. Mr. Falconer stated to the Board that LAIF balances have decreased, and Staff did invest in some Treasuries. Chairman Lewis stated that the May report reflects an increase of Treasuries by $10 million. Mr. Falconer advised the Board that this was due to two investments that matured, adding that one of the investments matured on Sunday, May 31 st, which technically did not settle until June 1 st. MOTION - It was moved by Board Members Mahfoud/Olander to review, 2 .. Investment Advisory Board July 14, 2004 Minutes receive and file the Treasurer's Report for May 2004. Motion carried unanimously. B. FY 2004/05 Meeting Schedule Chairman Lewis advised the Board that a request was made by Board Member Moulin via memorandum to reschedule the September 8th meeting to September 15th. MOTION - It was moved by Board Members Mahfoud/Olander to continue to meet on a monthly schedule with the Board going dark for the month of August and amend the September 8th meeting to September 15th. Motion carried unanimously. C. Consideration of Approval of Investment Advisory Board 2004/2005 Work Plan Chairman Lewis stated to the Board that one of the issues that was continually discussed in the previous year with the City Manager and City Attorney was the use of a professional money manager, and that if the City feels this is a direction they want to take, additional research is needed. Chairman Lewis suggested that the Board sketch out some preliminary ideas at the September meeting and then have the Board individually do some added research and look at this item in depth at the October meeting. Chairman Lewis stated that the City Attorney informed the Board that an ordinance change will need to be made and discussed and then presented to the City Council. Chairman Lewis advised the Board that due to comments made at the time of the City Council meeting and the approval of this year's investment policy, that if the Board feels the use of a professional money manager is the direction they wish to pursue and appropriate for the City of La Ouinta, there will need to be additional education on the Board's part to present to City Council before potential approval. Previously in the meeting, Board Member Olander commented about alternate investments ideas. Chairman Lewis stated that the Board might need to review the approved investments of the City and decide if they are appropriate for the size of investment portfolio. 3 , . Investment Advisory Board July 14, 2004 Minutes Mr. Falconer stated to the Board that in a phone conversation with Board Member Moulin, he asked to convey his recommendations. Board Member Moulin's recommendation was to have a primary and secondary work plan goal. The suggested primary work plan goal for this year was to cover the professional portfolio manager and as a secondary work plan cover GSE's, LAIF and Corporate Notes. Mr. Falconer summarized for the Board the items for the upcoming year work plan based upon the Boards discussion as follows: ~ Portfolio Manager ~ Possible ordinance change ~ Meeting with the City Council to discuss the portfolio manager further ~ Alternative investments based on the increasing size of portfolio ~ Continue to review GSE's, LAIF, Commercial Paper and Corporate Notes ~ Extending maturity limit from two years maximum Board Member Olander asked if Corporate Bonds, as opposed to the Notes or a combination could possibly be a consideration, keeping the maturities within the perimeters. Chairman Lewis advised the Board that technically the only difference between a bond and a note is the length of the maturity, and at this point and time, the Board does not allow anything that is technically a "bond." The Board and staff discussed extending the length of maturities and it was decided by the Board to review the extension of maturities. MOTION -It was moved by Board Members Maufoud/Olander to approve the 2004/2005 Work Plan. Motion carried unanimously. D. LAIF Conference Chairman Lewis advised the Board that he will not be able to attend the 2004 LA IF Conference due to a scheduling conflict., Mr. Falconer advised the Board that Board Member Moulin, he will not be able to attend the Conference. 4 . '", Investment Advisory Board July 14, 2004 Minutes The Board discussed and approved two Board Members to attend the 2004 LAIF Conference. MOTION - It was moved by Chairman Lewis/Olander to authorize two Board Members, (to be named at a later date), to attend the conference subject to Council approval. Motion carried unanimously. VII CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - June 2004 Mr. Falconer informed the Board an investment matured on June 30th and the investment was rolled over. Noted and Filed B. Pooled Money Investment Board Reports - April 2004 General comments were made by the Board regarding Bill Sherwood, Director of Investments successor. Noted and Filed C. Distribution of Investment Policies for Fiscal Year 2004/2005 Noted and Filed VIII BOARD MEMBER ITEMS IX ADJOURNMENT MOTION - It was moved by Board Members Lewis/Moulin to adjourn the meeting at 6:05 p.m. Motion carried unanimously. Vianka Orrantia Secretary 5