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2005 01 12 IAB Minutes INVESTMENT ADVISORY BOARD Meeting January 12, 2005 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 and Deniel, Chairman Lewis, Board Member Mahfoud (5 :32) 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 commen~ on any matter not scheduled on the agenda.) Board Member Moulin requested an item be added for discussion under Board Member items, in reference to Fannie Mae. IV CONSENT CALENDAR A. Approval of Minutes of Meeting on December 8, 2004 for the Investment Advisory Board. Board Member Moulin suggested that the following change be made on page 7, fifth paragraph, third sentence: original projections funds available for investing over two but not more than five years due to City commitments. Board Member Deniel stated that page 2 of the meeting minutes did not specify if the Board came to a conclusion as to whether the ordinance needed to be modified. Chairman Lewis stated that there were general comments made by several Board Members during that discussion, with no conclusion. Board Member Moulin informed the Board that if the guidelines stated by the Attorney General's opinion are followed, there would not need to be a change in the ordinance; placing the full responsibility upon the Treasurer. Board Member Moulin stated that he feels the Board as a whole would prefer that this issue be addressed in Investment Advisory Board Minutes January 12, 2005 the ordinance. Board Member Moulin also stated that this issue was raised several times during the course of discussion with Mr. Harrison and there was no definite answer given as to where the responsibility would lie. Board Member Olander commented to the Board, referencing page 7 fourth paragraph last sentence where Mr. Falconer states - as the City's activities increase the biggest challenge currently is the cash flow projections and forecasting, with the growth of the City and the complexity of the investments, the timing of implementing an investment manager in the near future comes at the right time. In response to Board Member Moulin Mr. Falconer advised the Board that there is an average of three to four investments made in a month and there is not a great deal of time spent in making these investments. If the Board decides to go with a portfolio manager, depending on whether it's a discretionary or nondiscretionary contract, this too can be time consuming. Mr. Falconer also advised the Board that he does not foresee the entire portfolio being placed with a portfolio manager with some bond proceeds and investments still made within the City. MOTION - It was moved by Board Members Mahfoud/Olander to approve the Minutes of December 8, 2004 as corrected. Motion carried unanimously. V BUSINESS SESSION A. Transmittal of Treasury Report for November 2004 Mr. Falconer informed the Board that the Treasurer's report reflects a Fannie Mae investment due to mature in January, this was not reinvested and the City currently does not hold any Fannie Mae investments at this time. Mr. Falconer commented that to the Board that the yield is still below the six month treasury mark with maturing with investments being reinvested at higher rates. Board Member Moulin stated that the Cash Flow report did not reflect the $75 million in agency funds that matured in December. Mr. Falconer advised the Board that these were bond proceeds for 2002 and 2004 which were reinvested in T -Notes for three and six-month periods. For the 2003 taxable bond issue, the $2 million went into a money market fund to be used for SilverRock Resort project. In response to Board Member Moulin, Mr. Falconer advised the Board 2 Investment Advisory Board Minutes January 12, 2005 that the $45 million was rolled over into three and six month T-Bills. In response to Board Member Olander, Mr. Falconer advised the Board (referencing the six month T -Bill benchmark), the amount currently invested is at approximately 2.9 % and we should be nearing the six month T -Bill benchmark by the end of February. MOTION - It was moved by Board Members Olander/Mahfoud to review, receive and file the Treasurer's Report November 2004. Motion carried unanimously. B. Request for Proposal for Portfolio Manager Mr. Falconer advised the Board of the nine sample RFP's received from other cities and the state, the one received from the state could be modified to fit the City of La Quinta, it also includes a discretionary and nondiscretionary contract which could be added as an appendix. Chairman Lewis stated he felt that this should be a non-discretionary relationship due to the previous history regarding investments. Board Member Deniel asked the Board what their thoughts might be if they used a discretionary account with a given sum and the framework of the City's Investment policy. Chairman Lewis stated that the wording would need to be carefully laid out. Mr. Falconer advised that the City currently utilizes a buy and hold strategy, if a portfolio manager is used they would need the flexibility of the market and make necessary changes that are warranted. Chairman Lewis stated to the Board that there was a feeling of some hesitation from City Council in using a portfolio manager. General discussion ensued amongst the Board regarding the possible use of a portfolio manager, possible guidelines and what portion of the City's portfolio might be used by the portfolio manager. Chairman Lewis asked the Board if there was one particular RFP that could be used as the framework and incorporate wording from other RFP's for the City. Mr. Falconer suggested to the Board that Staff draft an RFP using the RFP received from the California Debt & Investment Advisory Commission as the framework and customize it accordingly to fit the City of La Quinta. The draft will be reviewed by the Board at the next scheduled meeting for their input. 3 Investment Advisory Board Minutes January 12, 2005 Mr. Falconer advised the Board that fundamental decisions still need to be made as to whether or not the City will use a discretionary or non- discretionary, does the City want to use callable agencies or corporate notes. It was discussed previously possibly bringing in firms and allowing them to inform the Board as to how they manage portfolios. Board Member Deniel suggested the following be made to page two, item A-5 of the RFP from California Debt & Investment Advisory Board Commission which currently reads IIldentify the types of accounts managed by your firm (e.g., government, pension, corporate, high net worth, endowment/foundation)," she would like to enhance the existing wording by adding the following; the number of accounts of each category and the size of each category, this was used within the sample RFP received Payden&Rygel. Board Member Deniel asked the Board to review page nine, item two, second paragraph of the RFP from the California Debt & Investment Advisory Board there seems to be a contradiction with second paragraph and the sentence below. Chairman Lewis stated to the Board that Staff will draft an RFP and will bring back to the next scheduled meeting and recommended that the Board review the RFP's received and forward their recommendations and/or drafts to Staff before the next scheduled meeting. Board Member Moulin recommended that the City begin with a trial period with a small discretionary account. Board Member Mahfoud informed the Board that some cities institute pilot programs for a certain period of time and report back to Council. Board Member Deniel stated that she agreed with the recommendation given by Board Member Moulin. In response to Board Member Mahfoud, Chairman Lewis informed the Board that once a draft RFP is complete, than the Board can make the necessary changes and/or modifications to the policy. In addition Mr. Falconer informed the Board that this would have to be presented to the City Council and they will decide if the Board will be the appointed liaison for the RFP. MOTION - It was moved by Board Members Deniel/Olander to continue the review of the request for proposal for portfolio manager. Motion carried unanimously. 4 Investment Advisory Board Minutes January 12, 2005 VI CORRESONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - December 2004 Noted and Filed B. Pooled Money Investment Board Report - October 2004 Noted and Filed VII BOARD MEMBER ITEMS Board Member Moulin informed the Board of the recent events which have occurred over the last month regarding Fannie Mae and feels Fannie Mae paper is still an acceptable investment. General comments were made by Board Members in reference to Fannie Mae. VIII ADJOURNMENT MOTION - It was moved by Board Members Deniel/Olander to adjourn the meeting at 6:40 p.m. Motion carried unanimously. Subrr.Ütte.Q.. by '/:~ ,.// ) ~r¡ ,." ~//'I ... L.f~/", ," ,c,/ /', .' ¡/ i / Vianka Orrantia Secretary ******************** NEXT MEETING FEBRUARY 9, 2005 ******************** 5