2004 09 16 IAB Minutes
INVESTMENT ADVISORY BOARD
Meeting
September 16, 2004
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 Lewis, followed by the Pledge of Allegiance.
PRESENT: Board Members Olander, Moulin, Deniel and Mahfoud (5:36)
ABSENT: None
OTHERS PRESENT: John Falconer, Finance Director and Vianka Orrantia,
Secretary
II PUBLIC COMMENTS
III CONFIRMATION OF AGENDA
It was requested by Board Member Deniel to move the October Board meeting
to a later date; this item will be discussed under Board Member items.
IV CONSENT CALENDAR
A. Approval of Minutes of Meeting on July 14, 2004 for the Investment Advisory
Board.
MOTION - It was moved by Board Members Deniel/Olander to approve the
Minutes of July 14, 2004. Motion carried unanimously.
V. BUSINESS SESSION
A. Transmittal of Treasury Report for June and July 2004
Mr. Falconer informed the Board that the June report reflects a large
increase cash of $45 million due to a $90 million bond issue.
Approximately $25 million was used to payoff an outstanding bond issue;
the net proceeds were approximately $66 million. The Hammer property,
near Dune Palms and Highway 111, was purchased for
Investment Advisory Board SEPTEMBER 16, 2004
Minutes
approximately $1 5 million; the $45 million derived from net transactions
and other cash transactions.
In response to Chairman Lewis, Mr. Falconer advised the Board that the
bond issue was for low/moderate income housing, the money is often
used to purchase land and develop the property, because the process
often takes years, it could be a matter of at least two years before the
money is spent. Mr. Falconer also advised the Board that the arbitrage
rate on a bond is a little over 5 %, if the City earned more than 5 % the
money would have to be given back to the Internal Revenue Service. This
is not a concern of the City with the current interest rate environment. In
addition, the City currently holds Surety Bonds on the Reserve Funds, so
there are no long term investments for debt service reserve requirements;
currently they are invested in T -Bills with a portion due to mature at the
end of September and a portion to mature at the end of December.
In response to Board Member Deniel, Mr. Falconer clarified for the Board
low /moderate income housing bonds and low /f')1oderate housing within
the City.
In response to Board Member Moulin, Mr. Falconer clarified for the Board
the $90 million listed on the June balance sheet under deferred revenue.
Chairman Lewis stated that the investments/purchased sold page, (fourth
page) of the July report, Freddie Mac Discount Note should read GSE's.
Mr. Falconer informed the Board that the approved increase for GSE's
from $7.5 million to $10 million was reflected in the July report.
MOTION - It was moved by Board Members Moulin/Olander to
approve, receive and file the Treasury Report for June and July 2004.
Motion carried unanimously.
B. FY 04/05 Investment Advisory Board Work Plan
Chairman Lewis advised the Board that City Council would like to
defer approval of the 2004/05 work plan until after the joint meeting
scheduled for September 28, 2004.
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Investment Advisory Board SEPTEMBER 16, 2004
Minutes
Chairman Lewis advised the Board that the joint scheduled meeting
with the City Council is to discuss the 2004/05 work plan. General
discussion ensued among the Board regarding the joint scheduled
meeting and if preparation for the meeting is necessary.
MOTION - It was moved by Board Members Deniel/Olander to continue
the approval of the 2004/05 Work Plan until after the joint meeting with
City Council. Motion carried unanimously.
VI CORRESPONDENCE AND WRITTEN MATERIAL
A. Month End Cash Report - August 2004
Mr. Falconer informed the Board of the City/Agency $240 million
outstanding bond payable debt; this debt service payment was paid from
a transfer out of LAIF in the amount of $8.5 million, placing the LAIF
balances below $10 million.
Chairman Lewis asked the Board from a liquidity stand point, will this
affect the cash needs of the City. Mr. Falconer replied to the Board that
approximately $15 million is due to mature at the end of September.
Mr. Falconer informed the Board page nine is the benchmark used for the
preparation of the Treasurer's report, the six month Treasury yield was
1 .735 which was identical to the portfolio yield for the month of July.
Noted and Filed
B. Pooled Money Investment Board Reports - May and June 2004
Noted and Filed
C. Joint Meeting with the Investment Advisory Board Work Plan
All Board members will be in attendance with the exception of Board
Member Deniel.
Noted and Filed
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Investment Advisory Board SEPTEMBER 16, 2004
Minutes
D. New LAIF Conference Dates
Mr. Falconer informed the Board that the registration deadline for the
conference is October 1 5, 2004 and any Board member wanting to
attend is to notify staff prior to the deadline.
Noted and Filed
VIII BOARD MEMBER ITEMS
Board Member Deniel requested that the scheduled October meeting be moved
to a later date. It was decided among the Board to keep the original scheduled
date.
Board Member Olander commented to the Board that the bond market currently
contains Consumer Bonds which is an asset backed bond with consumer paper,
(i.e. credit cards, mortgages, student loans, car loans, etc...)these bonds are
being packaged by the banks and represent 32% of the U.S. bond market.
Board Member Olander also commented that currently Government bonds are at
29 % and Corporate Bonds are at 20%. Because these consumer bonds are
pooled, this could be a cause for concern.
In response to Board Member Moulin, Mr. Falconer advised the Board that he
will follow up with Staff to address the firewall which currently does not allow
teleconferences.
VIII Adjournment
MOTION - It was moved by Board Members Olander/Moulin to adjourn the
meeting at 6:30 p.m. Motion carried unanimously.
Vianka Orrantia
Secretary
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