2007 01 10 IAB Minutes
INVESTMENT ADVISORY BOARD
Meeting
January 10, 2007
CALL TO ORDER
Regular meeting of the La Guinta 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 and Vianka Orrantia,
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.)
Mr. Falconer requested that the three handouts be added to the agenda:
Business Session "B", two of the handouts relate to the CDARS program and
one relates to the Cal Trust program with the different investment options.
IV CONSENT CALENDAR
Approval of Minutes of Meeting on December 13, 2006 for the Investment
Advisory Board.
The Board advised of the corrections to the meeting minutes:
Page 1 :
Board Member Rassi asked for clarification to the change made on page 1,
Consent Calendar, under Board Member Items. Chairperson Deniel stated that
this was a grammatical correction.
Page 2:
Chairperson Deniel asked for clarification to the sixth paragraph. Board Member
Moulin clarified that the management letter explained that the Treasurer
exceeded the Freddie Mac investment and this was an inadvertent error. The
sentence should read:
Investment Advisory Board
Minutes
January 10,2007
Board Member Moulin clarified that the previOlJillty discussed investment
tRis was an inadvertent error.
Page 3:
Chairperson Deniel advised that the fifth paragraph, sixth sentence should read:
Because these are not oarried marked to market, they are added up at
In addition the following correction in the fifth paragraph, twelfth sentence, the
word issurer is incorrectly spelled and should be spelled issuer.
Page 4:
Board Member Moulin advised that the second paragraph, fifth sentence, the
word !*1st should be should be replaced with passed.
Chairperson Deniel advised that the sixth paragraph should read "Ms. Christian
advised that the majority of cities audited by the firm, do not have professional
money management firms.
MOTION - It was moved by Board Members Moulin/Egbert to approve the
minutes of December 13, 2006, as amended. Motion carried unanimously.
Noted and Filed.
V BUSINESS SESSION
A. Transmittal of Treasury Report for November 2006
Mr. Falconer advised that the Treasurer's commentary reflects a decrease
in mutual funds of approximately $2 million, due to capital project
expenditures. He further advised that the performance of the portfolio
has slightly increased from 5% to 5.03% and investments remain short.
For the month of November, there was some rolling over of commercial
paper and transfer of treasuries into LAIF.
Mr. Falconer advised that the property tax increment payments from the
County are expected at the end of January. Based on preliminary
discussions with the County, an increase from the previous year is
anticipated.
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Investment Advisory Board
Minutes
January 10,2007
In response to Board Member Moulin, Mr. Falconer advised that the City
currently holds a GE Capital Corporate Note; the note is due to mature in
2008. He further advised of the additional investments in GE Capital as
of November 30th, $3 million is currently invested in a medium term-note,
and $2 million in commercial paper holdings.
In response to Board Member Moulin, Mr. Falconer advised that the
current maximum amount invested in Freddie Mac is $10 million with $5
million in Fannie Mae, which is due to mature in early 2007. Due to
previous discussions with the Board, Mr. Falconer will not be reinvesting
in Fannie Mae until the current issues with Fannie Mae have been
resolved.
General discussion ensued among the Board regarding the agreement
with Lowe's and the City of La Guinta. In addition, general discussion
also ensued regarding Transient Occupancy Taxes.
MOTION - It was moved by Board Members Olander/Moulin to approve,
receive and file the Treasury Report for November 2006. Motion carried
unanimously.
B. Continued Consideration of the Fiscal Year 2006/07 Work Plan - Review
of Investment Policy
Chairperson Deniel asked if the Board was in agreement with the
summary page submitted by the Treasurer with the proposed changes
and additions to the investment policy.
Board Member Olander expressed his concerns in regards to the new
CDAR's program. General discussion ensued among the Board regarding
the CDAR's program.
Chairperson Deniel advised that she was not against the proposed $3
million to be invested in the CDAR's.
Mr. Falconer advised that item five, GSE dollar limitations, Staff is
proposing a $20 million maximum per issuer versus the current $10
million formulated percentage amount for allowable GSE's which would
be re-evaluated every year.
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Investment Advisory Board
Minutes
January 10, 2007
Chairperson Deniel suggested the following language, "10% of the
portfolio for the year 2007 has been limited by the Board to an absolute
$20 million per issuer." She advised that this dollar amount should be
reviewed by the Board every year without looking at the percentage.
Mr. Falconer stated that current language could remain, with the addition
of the following; "which would result in a $20 million limit."
In response to Board Member Egbert, Mr. Falconer advised that Staff and
the Board can amend the policy at any given time.
Chairperson Deniel suggested that the Board review the Investment
Policy changes and/or deletions by page:
Page 3:
No comments were made by the Board.
Page 6:
Board Member Moulin suggested that the Treasurer consider
establishing percentages of the portfolio and their duration
of maturity. (i.e. 50% of the portfolio should mature in a
year and 75% in two years.)
Mr. Falconer advised that the code requires the Treasurer
certify at hand six month liquidity.
General discussion ensued among the Board regarding the
maximum maturities.
Board Member Moulin suggested that the policy state that
"75% of the portfolio due in two years or less."
Chairperson Deniel concurred.
Chairperson Deniel suggested that the Treasurer make a
recommendation and present it to the Board at the next
scheduled meeting.
Page 9:
Third bullet point, eleventh sentence, remove the word
"each"; twelfth sentence, remove "GSE," and add at the
end of the twelfth sentence, "for Fiscal Year 2006/07 the
amount has been determined $20 million per issuer."
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Investment Advisory Board
Minutes
January 10, 2007
In response to Board Member Egbert, Mr. Falconer advised that the on
page 7, first paragraph, the underlined sentence has been in the policy
and is not a modification.
Page 10:
No comments from the Board
Page 11:
No comments from the Board
Page 12:
CDAR's - Chairperson Deniel requested that Staff possibly
obtain a one to two page executive summary and/or a flow
chart regarding the CDAR's program and bring it back to the
next scheduled board meeting in February.
Page 17:
Section 19: - Title change: Professisnal COntl'ooting
Professional Portfolio Management Manager In addition,
the following changes were agreed upon by the Board:
First sentence: the City may engage a professional
investment portfolio managtn'lent firm manager
Third sentence: The Investment portfolio managen'\ent firm
manager
Sixth sentence: the portfolio management firm manager or
advisor shall commit to adhere to the provisions
Board Member Moulin advised that due to the change in the title of
section nineteen, the index page will also need to reflect the change.
General discussion ensued among the Board regarding ISHARES and
whether or not this would be added to the investment policy. The
consensus of the Board was not to add it to the policy at this time.
MOTION - It was moved by Board Members Moulin/Olander to continue
the discussion of the Fiscal Year 2006/07 Work Plan Investment Policy to
the February meeting.
VI CORRESPONDENCE AND WRITTEN MATERIAL
A . Month End Cash Report
Mr. Falconer advised of the market condition update and that LAIF yields
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Investment Advisory Board
Minutes
January 10, 2007
were at 5.1 5 % and were at 5.14 % when the report was prepared.
Noted and Filed
B. Pooled Money Investment Board Report
Noted and Filed
VII BOARD MEMBER ITEMS - None
VIII Adjournment
MOTION - It was moved by Board Members Moulin/Olander to adjourn the
meeting at 6:40 p.m. Motion carried unanimously.
Vianka Orrantia,
Secretary
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