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2006 05 10 IAB Minutes INVESTMENT ADVISORY BOARD Meeting May 10, 2006 CALL TO ORDER Regular meeting of the La Quinta Investment Advisory Board was called to order at the hour of 5:35 P.M. by Vice Chairman Olander, followed by the Pledge of Allegiance. PRESENT: Board Members Moulin, Olander, and Egbert ABSENT: Board Members Deniel and Rassi OTHERS PRESENT: Louise West, Accounting Manager and Therese Vella-Finorio, Secretary 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.) IV CONSENT CALENDAR A. Approval of Minutes of Meeting on April 12, 2006 for the Investment Advisory Board. Board Member Egbert stated that page four, first sentence should read: amount that will be used is the åeUaf percentage amount under the Treasurer's direction Board Member Egbert asked for clarification on page six as to why Mr. Falconer no longer intended to use the bank, was this due to clerical error or is he just adding three additional broker/dealers for bond proceeds. MOTION - It was moved by Board Members Moulin/Egbertl to approve the Minutes of April 12, 2006, 2006 as amended. Motion carried unanimously. VI BUSINESS SESSION A. Transmittal of Treasury Report for March 2006 Board Member Olander commented (referencing the Treasurer's Commentary), that this was a big step forward for the Treasurer and the comments were very impressive. Board Member Egbert concurred. Investment Advisory Board Minutes May 10, 2006 Board Member Egbert attended the CMT A Conference and at the conference a presentation was given by the 12th Fed District Economist and it was expected that the Feds would have a 0.25% increase and eluded that an additional increase would take place in the near term. Upon reading a current article in the Press Report the increase could be delayed until fall. Mrs. West informed the Board that page 6 of the Treasurer's Report reflects the rollover of investments at a higher yield than previously purchased. Board Member Egbert informed the Board that while at the conference he attended a meeting hosted by LAIF and felt very comfortable with their investment philosophy and the individual who is responsible for investments and operations. Board Member Egbert also informed the Board that he met with approximately 15 of the 20 vendors at the conference. One of the vendors is trying to emerge as an alternative to LAIF and will distribute their data at the next scheduled meeting when all Board members are back. The vendor will not have the State's backing and the State will not stand behind any loses they might incur. The vendor is currently involved in the drafting of a legislation that will provide this to them and in the future the State might have two entities that will provide LAIF like services. General discussion was ensued by the Board regarding LAIF. Board Member Egbert formally stated that he was thankful to the City for allowing him to attend the conference and expressed his interest in attending the upcoming LAIF Conference. MOTION - It was moved by Board Members Moulin/Egbert to approve, receive and file the Treasury Report for March 2006. Motion carried unanimously. B. Continued Consideration of Fiscal Year 2006/07 Investment Policies & Work Plan Items Board Member Olander expressed his concerns regarding the accounting issues for FNMA. FNMA's last audited financial statements date back to 2001 and they have had nothing reliable for the last six years. Board Member Olander stated that we have substantial items in our portfolio. It puts all of us on notice as we have substantial exposure. Any fall out from any further problems could create problems for the GSE's. There is nothing that can be done at this moment but it would be likely to be like the problem of the S & L's of 10 to 15 years ago. Board Member Olander expressed his reservations for GSE's. 2 Investment Advisory Board Minutes May 10, 2006 Board Member Egbert stated he would be in favor of changing the investment policy to add a new statistic to be monitored that would be a direct investment through GSE's and indirect through LAIF, to monitor investment dollars and percentages from a discussion stand point. Board Member Moulin concurred, but stated that this would not be a change to the policy. MOTION - It was moved by Board Members Moulin/Egbert to continue the review of the Fiscal 2006/07 Investment Policies. Motion carried unanimously. Continued Consideration of Request for City Council to Release Request for Proposal for Portfolio (RFP) for Investment Management Services Board Member Egbert stated that the two letters submitted should have been labeled as the Treasurer's revision or if it was a combination of his letter and Board Member Deniel's. MOTION - It was moved by Board Members Egbert/Moulin to continue the consideration of Request for Cit Council to Release Request for Proposal for Portfolio (RFP) for Investment Management Services. Motion carried unanimously. VII CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report - April 2006 Ms. West stated at the previous month's meeting Mr. Falconer informed the Board about the implementation of a sweep account with a 40/0 interest for the account. Board Member Egbert asked the Board if the sweep account should be monitored, sweep account income vs. pay for services and is there a way to calculate what other alternative costs would be. Ms. West stated that the City receives an analysis report each month, but did not see it on the report due to the fact this was the first month the City implemented the sweep account. Board Member Olander suggested that Mr. Falconer possibly clarify this at the next scheduled meeting. Noted and Filed B . Pooled Money Investment Board Reports - February 2006 Noted and Filed 3 Investment Advisory Board Minutes May 10, 2006 c. Commission Recruitment Board Member Egbert stated in reference to draft ad for the City Clerk, Board Member Egbert stated that he had received comments from Board Members Deniel and Moulin. Board Member Egbert shared with the Board that he was a bit surprised to see that the ad had already been published as he had not given Mr. Falconerthe final version of the Board's draft. He was told that it was the City Clerk's responsibility to publish the ad, which she did, but unfortunately the ad did not contain the Board's suggested changes to the ad. Board Member Moulin stated that the changes could be made before it is published again, however, Ms. West informed the Board that the ad will only appear once in the paper. Board Member Moulin asked that the changes be made to reflect "Knowledge" should not be capitalized, and posses should be spelled as "possesses." It was agreed by the Board to accept the draft that appeared in the paper but with the two corrections to be made to the document. Board Member Moulin stated that Board Member Deniel indicated there are three vacancies to fill in June, but he believes there are only two. Board Member Egbert asked for clarification on terms of service as he received the application from the City Clerk stating he has two weeks to reapply. Board Member Egbert asked if he would need to reapply, or if his commission has not expired yet. He is not clear as to whether or not his commission ends on June 30th. Board Member Moulin said that it would be better to have two vacancies filled in a given year not three. Board Member Moulin had called Mr. Falconer to ask if that was the case and Mr. Falconer said that we are required to fill the vacancy of the person that left. Board Member Olander will follow up with Mr. Falconer for clarification. Board Member Olander also asked that the list of commissioners be updated to show the correct e-mail addresses for Board Members Olander and Rassi. Noted and Filed D. Update on California Municipal Treasurers Association Conference Board Member Egbert stated that since Board Member Deniel and Mr. Falconer were not in attendance for this month's meeting, he did not bring the entire presentation regarding the CMT A Conference, he would like to provide a complete set of the 8 to 9 sessions for the Board that he attended. He will provide a complete packet for each Board member at the next scheduled meeting. 4 Investment Advisory Board Minutes May 10, 2006 Board Member Egbert stated that he could not attend all of the sessions due to the fact that they ran concurrent. General discussion ensued amongst the Board regarding the conference. Noted and Filed VIII BOARD MEMBER ITEMS Board Member Moulin stated that he will get clarification of the terms of service. Board Member Egbert asked if the City employed someone to listen to the tapes of the Boards and Commissions for comments or things of importance. Staff replied that the City does not. IX Adjournment MOTION - It was moved by Board Members Moulin/Egbert to adjourn the meeting at 6:35 p.m. Motion carried unanimously. Submitted by, ) : .. ./.. /' ;:^ '7 . / . /.. l . //' , ---I:~^r-/ ¿/v¿d~~y£t~ Vianka Orrantia, Secretary 5