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2006 04 12 IAB Minutes INVESTMENT ADVISORY BOARD Meeting April 12, 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 Chairperson Deniel, followed by the Pledge of Allegiance. PRESENT: Board Members Moulin, Deniel, Olander, Rassi and Egbert ABSENT: None OTHERS PRESENT: John Falconer, Finance Director, Vianka Orrantia, Secretary and Louise West, Accounting Manager 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.) Chairperson Deniel stated that as a result of a discussion at the March meeting in reference to whether or not the Board should respond to Council Member Osborne, she presented the Board with a draft memo and requested that this memo be added to Board Member items for discussion. Mr. Falconer advised the Board that the last page of the month end cash report was emailed to all Board Members and requested that this item be added to Section 6, Item Ä. IV CONSENT CALENDAR A. Approval of Minutes of Meeting on April 12, 2006 for the Investment Advisory Board. MOTION - It was moved by Board Members Egbert/Moulin to approve the Minutes of April 12, 2006. Motion carried unanimously. VI BUSINESS SESSION A. Transmittal of Treasury Report for February 2006 Mr. Falconer advised the Board of a misspelling on the Treasury report under "background," second paragraph should read: The County Treasurer's Report has very 900 good Investment Advisory Board Minutes April 12, 2006 Mr. Falconer reported to the Board for the month of February there was not much of a net change. The portfolio continued to climb with the pooled cash percentage at 4.14%, with the fiscal agent investments a little over 4% and the Treasury Bill rate at 4.58%. Mr. Falconer informed the Board that he made one change to the report which is reflected on page 5, listed under "unrealized loss" is a percentage of .46% basis points as compared to the County's Treasurer's report currently at .48% basis points, which is in line with government investments. The County is reporting an unrealized loss similar to the City. The County's yield, as of February is currently at 3.9% versus the City's current yield at 4.09%. Chairperson Oeniel stated for clarification that the unrealized is the existing portfolio lagging the rates as they increase or they are marked to market, this is the unrealized, not necessarily a loss but mark to market loss due to current rates being higher than portfolio rates. The Treasurer is tracking the County's rates to compare to City's rates and activities. Mr. Falconer stated he also included the County's Treasurer's report for review and comparison by the Board. Mr. Falconer informed the Board that the average portfolio is currently ninety-eight days; page 6 reflects the activities for the month and the new investment for the month was a 4.93% yield to maturity. Board Member Moulin suggested that the Treasurer implement some type of report explaining the City's lag as it relates to the current maturity market. General discussion ensued among the Board of suggested types of reporting that could help explain the City's lag due to the current market. Mr. Falconer suggested implementing a commentary similar to the one the County Treasurer prepares for their Treasury Report. The Board requested that the Treasurer prepare a summary page for the Board's review for the next scheduled meeting. MOTION - It was moved by Board Members Egbert/Olander to approve, receive and file the Treasury Report for February 2006. Motion carried unanimously. B. Consideration of Fiscal Year 2006/07 Investment Policies & Work Plan Items Chairperson Oeniel stated to the Board that she sees no change to the policy at this time. The Board concurred. 2 Investment Advisory Board Minutes April 12, 2006 In response to Board Member Egbert, Chairperson Oeniel and Board Member Moulin reviewed the process of the adoption of the policy and the City Council's authority to change or recommend changes to the policy. In response to Chairperson Deniel, Mr. Falconer advised the Board to continue the adoption of the policy to the May Investment Board meeting. MOTION - It was moved by Board Members Moulin/Olander to continue the review of the Fiscal 2006/07 Investment Policies. Motion carried unanimously. C. Continued Consideration of the Desert Sun Investment Advisory Board Notice The Board discussed possible changes to the existing ad used by the City Clerk. Board Member Egbert informed the Board that he had made some changes to the current ad but did bring his recommended changes to the meeting. He suggested to the Board that he email his changes for the Board's review incorporating the recommended changes from Board Member Moulin. Upon review by the Board, Board Member Egbert will finalize a draft ad and will forward to the City Clerk for consideration for publication for recruitment for the Investment Board. Mr. Falconer advised the Board that the City Clerk will need to make sure the recommended language for the ad complies with the City's current ordinance. Board Member Moulin stated that an emphasis needs to be conveyed to the City Clerk's office on notifying Investment Board candidates to appear at the scheduled Council meeting. MOTION - It was moved by Board Members Moulin/Olander to designate Board Member Egbert to provide the Board a revised ad to be forwarded to the City Clerk's office for consideration as language used for the Investment Advisory Board positions. Motion carried unanimously. D. Request City Council to Release Request for Proposal for Portfolio (RFP) for Investment Manager Services Chairperson Deniel stated that her draft memo for review and discussion under Board Member items also pertains to this issue and asked the Board to review and discuss the memo at this time. Board Member Egbert suggested that the percentage amount that will be used by the Investment Manager be indicated in the memo. Mr. Falconer informed the Board the 3 Investment Advisory Board Minutes April 12, 2006 amount that will be used is the dollar amount under the Treasurer's direction and that amount would be a dollar amount of $120 million. In response to Board Member Egbert, Chairperson Deniel recapped the history of a previous money manager used by the City. Board Member Moulin suggested the following changes to the memo: first bullet point the word "dissatisfied" be replaced with the word "concerned," second page, second arrow, the word "ever" be removed and the seventh arrow; the word "execute" be removed and replaced with the "transfer of funds and securities,." Board Member Rassi conveyed to the Board that he is not in favor of an outside money manager and the City should not sacrifice safety for yield. Upon review of the graph submitted by the Treasurer he stated that one can see that the current lag by the City is due the current market. Board Member Rassi suggested possibly relaxing the current restrictions given to the Treasurer. Board Member Olander stated that the Board needs to educate the City Council on the use of a money manager in order to feel comfortable on the hiring of one. General discussion was ensued by the Board on the hiring of a money manager. In response to Chairperson Oeniel, Mr. Falconer advised the Board that there are two options for the Board's consideration; 1) place the memo on the next scheduled City Council agenda scheduled for April 18th or 2) the memo can become part of the Investment Advisory Board work plan and discussed with the City Council in June. Mr. Falconer also advised the Board that if one Board member is not in favor of a money manager this could be subject to a minority report and this report can be used as part of the discussion with Council along with the memo. Mr. Falconer recommended that the Board incorporate the memo as part of the work plan and discuss with Council in June, prior to the adoption of the Investment Policy. Again general discussion continued among the Board regarding the use of a money manager. In response to Chairperson Oeniel, Mr. Falconer stated that the Board will need to have specific bullet points for Council's consideration and made the following recommendations: 1) request the City Attorney to draft an ordinance to allow the use of a money manager. 2) Would like to bring forward for City Council's consideration an RFP for a money manager. 3) Consider "X" amount of a percentage of the portfolio under the Treasurer's control to be used for the RFP. Mr. Falconer requested that Chairperson Deniel email the draft memo so that the examples given can be incorporated. 4 Investment Advisory Board Minutes April 12, 2006 Mr. Falconer advised the Board that he will not attend the next scheduled Board meeting and that the revised draft memo could be discussed at the June meeting and presented to Council in July. Board concurred. Board Member Moulin stated for the Board that releasing the RFP does not mean the City will actually hire a money manager, it gives the Board the opportunity to review those responding to the RFP and decide if the use of a money manager is feasible. MOTION - It was moved by Board Members Olander/Moulin to continue to the next scheduled meeting. Motion carried unanimously. VII CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - March 2006 Noted and Filed B . Pooled Money Investment Board Reports - January 2006 It was the consensus of the Board that the full report for the Pooled Money Investment Board Report not be included in the Investment Advisory Board agenda packet, the first three to five pages are sufficient for Board's review. Staff will provide a full report for each monthly meeting, in addition to the website link. Noted and Filed B. Cash Management Items Mr. Falconer updated the Board on the current implementation of Check 21 now being used by the City Finance Department. The City of La Quinta is the first City in the valley to implement the use of Check 21. Mr. Falconer informed the Board that due to the rising interest rates the City has switched over to a sweep account, with the accounts current yield at 4.09% in comparison to LAIF which is at 4.20%. In addition this account helps the City in the daily forecasting of funds. 5 \... { ~nvestment Advisory Board Minutes April 12, 2006 Mr. Falconer advised the Board that due to the clerical error by U.S. Bank in the month of March, Staff will be using three additional Broker/Dealers for bond proceeds. The three Broker/Dealers that will be used are Citicorp, Morgan Stanley and Merrill Lynch. Noted and Filed D. Investment Advisory Board Meeting Time It was the consensus of the Board to keep the scheduled meeting time at 5:30 p.m. Noted and Filed VIII BOARD MEMBER ITEMS IX Adjournment MOTION - It was moved by Board Members Moulin/Olander to adjourn the meeting at 7:05 p.m. Motion carried unanimously. ,/ Submitted by!.. . ( /'.." / ¿ I.··.. \ ~.... /' /4/ ,T, ~-, ,- -..--><,,). ) (j. " v Vianka Orrantia See reta ry 6