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2006 02 08 IAB Minutes INVESTMENT ADVISORY BOARD Meeting February 8, 2006 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 Vice Chairperson Deniel, followed by the Pledge of Allegiance. PRESENT: Board Members Olander, Moulin, Deniel, Egbert and Rassi ABSENT: None OTHERS PRESENT: John Falconer, Finance Director, Vianka Orrantia, Secretary and Louise West, Accounting Manager II APPOINTMENT OF OFFICERS A. Appointment of Investment Advisory Board Chairperson Board Member Moulin nominated Board Member Deniel as Chairperson and Board Member Olander as Vice Chairman. Board Member Olander nominated Board Member Deniel as Chairperson and Board Member Moulin as Vice Chairman. MOTION - It was moved by Board Members Moulin/Olander to appoint Board Member Deniel as Chairperson. Motion carried unanimously. B. Appointment of Investment Advisory Board Vice-Chairperson MOTION - It was moved by Board Members Moulin/Egbert to appoint Board Member Olander as Vice Chairman. Motion carried unanimously. III PUBLIC COMMENTS Council Member Lee Osborne attended the Board meeting and voiced his concern as an interested party regarding the City's current investment returns, which is currently below the benchmark of the 6-month Treasury return. The current benchmark was set approximately 10 years ago. Since May of 2004 the average rate of return has been below the 6-month T -Bill rate and has remained. Councilman Osborne also voiced Council's concerns regarding a professional money manager and the City's previous experience with a professional money manager. Council has reques'ted that the Board look at Investment Advisory Board Minutes February 8, 2006 other ways to bring up the rate of return at or above the 6-month Treasury bill, not in the sense of an investment position but that of a management position. Councilman Osborne reiterated that this is no regards to lessoning staff's performance. Due to the substantial change in the size of the investment portfolio, Councilman Osborne feels the manner in which current investments are made possibly need to be revised. Upon review by Council, Council at this time feels a professional money manager might not be the answer and Council would like the Investment Advisory Board to possibly look at other avenues in which to increase the benchmark. The Board has been consistently helpful in setting up policies, investment strategies and reporting for investments. Board Member Moulin informed the Board and Staff that the current benchmark is a result of the current market conditions and the conditions that the investment policy imposes, one of which is the two year term of investments. The Board has made several changes to the policy over the last couple of years allowing for greater investment opportunities, and also allowing for commercial paper and corporate notes. Board Member Oeniel stated that a city employee dedicated to investments does not have the tools that of a professional money manager has strict access to. To increase the yield there are only two choices, the best choice would be hiring an outside professional money manager to manage a portion of the portfolio with the constraints and a third party custodian, this would eliminate fraud. The other alternative is to have City Staff invest in fixed income mutual funds. This will enhance the rate by having someone who is watching the credit risk and managing the interest rate risk which takes the City out of the area of I/holding to maturity," thus causing the City to hold short term paper. With the interest rates rising, the City will continue to lag. General discussion ensued among the Board and Staff regarding the issue of the benchmark, a professional money manager and possible changes to the policy. IV CONFIRMATION OF AGENDA V CONSENT CALENDAR A. Approval of Minutes of the Meeting on January 11, 2006 for the Investment Advisory Board. MOTION - It was moved by Board Members Olander/Moulin to approve the Minutes of January 11, \2006. Motion carried unanimously. 2 Investment Advisory Board Minutes February 8, 2006 VI BUSINESS SESSION A. Transmittal of Treasury Report for December 2005 Mr. Falconer reviewed the Treasurer's Report in detail for Board Member Rassi and the Board. In response to Board Member Deniel, Mr. Falconer updated the Board on SilverRock golf course activities. MOTION - It was moved by Board Members Moulin/Olander to approve, receive and file the Treasury Report for December 2005. Motion carried unanimously. B. Consideration of Fiscal Year 2006/07 Investment Policies & Work Plan Items Mr. Falconer advised that this item is added to the agenda to begin the review process of the investment policy. Board Member Deniel suggested to the Board that they review the policy bearing in mind what Councilman Osborne stated earlier in the meeting. Board Member Moulin suggested that the Board possibly review the current two year term limitation on investments. MOTION - It was moved by Board Members Moulin/Olander to continue the review of the Fiscal 2006/07 Investment Policies. Motion carried unanimously. VII CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - January 2006 Mr. Falconer reviewed the month end cash report for the new member of the Investment Advisory Board. Noted and Filed 3 Investment Advisory Board Minutes February 8, 2006 B . Pooled Money Investment Board Reports - November 2005 Noted and Filed C. Desert Sun Investment Advisory Board Notice Board Member Moulin stated that the current language used in the advertisement to recruit new Investment Advisory Board members should be revised. The current ad reads I/Investment Board reviews account statements and verifications to ensure accurate reporting that relates to investment activity," which the Board does not do. The qualifications that are recommended need to be revised as well. Board Member Moulin gave staff suggested revisions to the ad. Mr. Falconer informed the Board that they can make recommended changes and refer them to the City Clerk via the minutes or review at next month's scheduled meeting. Board Member Deniel suggested that instead of providing the City Clerk the meeting minutes, that the Board formally submit a recommended ad from the Board. Mr. Falconer stated that due to the Boards suggestions that this item be added to next month's meeting agenda under the business session items. Noted and Filed VIII BOARD MEMBER ITEMS Board Member Moulin advised the Board that he will not be in attendance at the scheduled May board meeting. IX Adjournment MOTION - It was moved by Board Members Moulin/Olander to adjourn the meeting at 6:55 p.m. Motion carried unanimously. SLJbmitte~ by, /-,'~, ,,' ; ~ ~Jxdt0 Út~t/I&-¡J<- Vianka Orrantia Secretary 4