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2007 02 14 IAB Minutes INVESTMENT ADVISORY BOARD Meeting February 14, 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, Rassi and Egbert ABSENT: Board Member Olander OTHERS PRESENT: John Falconer, Finance Director and Vianka Orrantia, Secretary II PUBLIC COMMENTS - Marc Ferrand - La Guinta Resident - Attended for informational purposes only. III CONFIRMATION OF AGENDA - (This is the time set aside for public comment on any matter not scheduled on the agenda.) Mr. Falconer advised Board Member Olander's wife notified him that Board Member Olander was recently released from the hospital and would not be able to attend the board meeting. He would possibly be at the next scheduled meeting. IV CONSENT CALENDAR Approval of Minutes of Meeting on January 10, 2007 for the Investment Advisory Board. Chairperson Deniel requested a copy of the monthly board meeting audio tapes. Mr. Falconer informed the Board that the venue for the meetings will change due to the City Hall expansion. For the remainder of 2007, the board meetings will, tentatively take place in the Finance conference room. Mr. Falconer will confirm the location prior to the next scheduled meeting and notify the Board. MOTION - It was moved by Board Members Moulin/Rassi to approve the minutes of January 10, 2007. Motion carried unanimously. V BUSINESS SESSION A. Transmittal of Treasury Report for December 2006 Investment Advisory Board Minutes February 14, 2007 Mr. Falconer advised that due to some major construction projects: the Vista Dunes Mobile Home Park located at Miles and Adams, and the SilverRock Golf Course, the portfolio balance has slightly decreased by $3.6 million at the end of December. Chairperson Deniel asked if the SilverRock revenue was on schedule. Mr. Falconer advised that the City was looking at four to five years before the golf course would break even. At that time the hotel should be built, and the City would begin collecting T.O.T. in addition to the golf fees. Further discussion regarding SilverRock Golf Course revenue ensued among the Board. In response to Board Moulin, Mr. Falconer advised that that the month of December was a busy month for maturities and repurchases. There were a number of GSE's that matured along with bond proceeds and T-Bills. In response to Board Member Moulin, Mr. Falconer described for the Board the University of California commercial paper that was purchased. In addition, Mr. Falconer advised that the U.S. Treasury bill interest rate listed on page 7 was overstated on the activity page term and would advise Staff to follow up with the correct rate. The exception listed in the Treasurer's Report was removed mid-December and the portfolio investments will continue to remain in short maturities. MOTION - It was moved by Board Members Moulin/Rassi to approve, receive and file the Treasury Report for December 2006. Motion carried unanimously. B. Audit Request for Proposal Member Selection Committee Board Member Egbert recommended that Board Members Moulin and Deniel be appointed to the Audit Request for Proposal Member Committee. In response to Board Member Moulin, Mr. Falconer advised that the origin of the RFP committee was derived from the previous audit RFP five years ago, which was approved by the City Council. The committee consisted of two Investment Advisory Board Members, the City Manager and the Finance Director. For this RFP, Staff also recommended to Council that a Finance Director from another City also serve on the 2 Investment Advisory Board Minutes February 14, 2007 committee, along with a request from Council Member Osborne that someone from his firm also serve. In response to Board Member Egbert, Mr. Falconer advised that the RFP's are due the first part of March. Upon receipt of the RFP's, they will then be distributed to the committee for review. A meeting will be scheduled for the committee to meet, at which time they can short list the firms. Five years ago, three firms were invited for oral interviews. Board Member Moulin stated that he would like to see Councilmember Osborne on the audit selection committee instead of another member of his firm. He feels that another CPA firm should serve on the audit selection committee. Board Member Egbert asked if there was a conflict if Councilmember Osborne served on the audit committee. Chairperson Deniel replied that it would only be a conflict if his firm responded to the RFP. Chairperson Deniel recommended that Councilmember Osborne serve on the audit selection committee. MOTION - It was moved by Board Members Egbert/Rassi to appoint Chairperson Deniel and Board Member Moulin to serve on the Audit Request for Proposal Member Selection Committee with Board Member Rassi as a substitute. Motion carried unanimously. C. California Municipal Treasurer's Conference - Long Beach, CA May 2 _ 4,2007 Mr. Falconer advised that the City does provide for one staff member and two Board Members to attend the annual CMTA conference. He presented the Staff Report advising that the Annual California Municipal Treasurers Association Conference will be held May 2 - 4, 2007 in Long Beach, California. Mr. Falconer advised that reservations are needed as soon as possible in order to obtain the early registration fee. Chairperson Deniel and Board Members Egbert and Moulin advised that that they are unable to attend. Board Member Rassi advised that he will be able to attend. 3 Investment Advisory Board Minutes February 14, 2007 MOTION - Consensus-Board Member Rassi will attend the conference. D. Continued Consideration of the Fiscal Year 2007/08 Work Plan - Review of Investment Policy Mr. Falconer advised that Staff was asked to further look into the CDAR's program. Mr. Falconer met with a representative from Palm Desert National Bank to review the CDAR's program. He further advised that the Bank provided additional literature for the Board's review. Mr. Falconer advised that the following questions from the Board were addressed: Audit Confirmation: Mr. Falconer believed that audit confirmations will have to be sent to the individual savings and loan and/or bank. Wiring of Funds: Funds are required by the bank on a Wednesday and transmitted to the Bank of New York on Thursday. Because of the delay in the transmittal of funds, this may cause the funds to be at risk. Staff would need to follow up to see if the transmittal of funds can be transmitted the same day or how the funds would be insured. Fees: Lost interest would roughly be $300 on a $3 million investment, if kept in a bank ledger account versus opening an account. Staff is not in favor of opening an account. Mr. Falconer advised that he felt comfortable with the FDIC coverage afforded the CDAR's program based on the information that was provided. He further advised that Wells Fargo Bank would have to be excluded because they are currently the City's banking institution. In response to Board Member Egbert, Mr. Falconer advised that Palm Desert National Bank would not participate. If $1 million were invested the bank would take the funds and disburse them with ten different institutions and would not retain any of the funds. Board Member Egbert commented that his understanding of the program is to place money in local institutions. Mr. Falconer advised that if Palm Desert National is wired $1 million, it's then disbursed to other institutions. Palm Desert National however will 4 Investment Advisory Board Minutes February 14, 2007 not obtain a CD in their name. The funds would than be transmitted between various institutions and back to Palm Desert National Back. Chairperson Deniel requested a diagram of the CDAR's cash flow. Staff to provide at the next scheduled meeting. Further discussion ensued among the Board regarding the CDAR's program. Chairperson Deniel suggested that the CDAR's program be added to next year's policy and accept the policy as is. Board Member Moulin concurred. Board Member Egbert suggested rather than delaying until next year, that this item be tabled for further discussion. Board Member Moulin clarified that if this item is tabled, than this ends the discussion of this item. He suggested continuing discussion of this item. Chairperson Deniel suggested that the Board continue to discuss the investment policy as one item and the CDAR's program as a separate item. Board concurred. Mr. Falconer and Board Member Rassi suggested that they discuss this item with other cities at the CMTA conference. Chairperson Deniel motioned to exclude the CDAR's program from this year's Investment Policy Statement and continue discussing to see how the program is implemented outside of the Investment Policy. In response to Board Member Egbert, Board Member Rassi advised that if the Board decided to implement the program six months later, the policy can be changed. Motion - It was moved by Chairperson Deniel/Board Member Moulin to exclude the CDAR's program from this year's Investment Policy Statement and continue discussing to see how the program is implemented outside of the Investment Policy. Motion carried unanimously. 5 Investment Advisory Board Minutes February 14, 2007 In response to Board Member Moulin, Mr. Falconer advised that he was comfortable with change to maximum maturities to 25%. Board Member Moulin advised that he was not comfortable with the some of the wording on page 6, second paragraph, last sentence. The Board concurred that the following sentence now read: with no more than 25% of surplus funds invested in maturities exceeding two years and less than three years. In response to Board Member Egbert, Mr. Falconer advised that page 3, first sentence should be consistent with page 1 7, Section 19 and should read: "The City Treasurer, with thll approval of the City Council, may use a professional portfolio managell1el1t firm in\lestmont mana€ler engages by the City to assist the City Treasurer in managing the investment program. " Board Member Moulin advised that on page 9 first paragraph should be consistent with page 6. Mr. Falconer advised that if the policy is going to be for the upcoming year, than page 10, first paragraph, last sentence should reflect FY 07/08. He further advised at the next scheduled meeting, he will provide the Board the surplus amount that can be invested for 3 - 5 years based on the City's cash flow, so this can be included on page 6. There were no comments from the Board to page 10, in reference to Commercial Paper. There were no comments from the Board in regards to page 11. Chairperson Deniel advised that page 12, the section referencing CDAR's should be deleted from the policy. Along with Board Member Moulin, Mr. Falconer advised that there should be a paragraph referencing the CDAR's program on page 12 and the wording should be similar to page 10, last sentence under "Bankers' Acceptances;" 6 Investment Advisory Board Minutes February 14,2007 Chairperson Deniel advised the Board that she would like to be finished with the policy by the month of April. Board Member Moulin concurred. There were no comments from the Board in regards to page 17. Mr. Falconer advised that page 24, item number 4: Broker/Dealer Services, the Los Angeles office of Merrill Lynch has closed and the City's account has been transferred to the San Francisco office. We are now in the process of forwarding the Broker/Dealer questionnaires. The City is expected to have this process completed by the end of the month. MOTION - It was moved by Board Members Moulin/Egbert to continue the discussion of the Fiscal Year 2007/08 Work Plan Investment Policy to the February meeting. Motion carried unanimously. VI CORRESPONDENCE AND WRITTEN MATERIAL A . Month End Cash Report Noted and Filed B. Pooled Money Investment Board Report In response to Chairperson Deniel, Mr. Falconer advised that the rates are currently at 5.16%. Mr. Falconer advised that he was in receipt of an email from Eileen Park, LAIF Administrator, advising everyone that after 30 plus years she will be assuming a new position at the end of the month. Her replacement has 1 8 years of experience. Noted and Filed VII BOARD MEMBER ITEMS Board Member Egbert requested that the Board consider changing the meeting from'5:00 p.m. to 4:00 p.m. Chairperson Deniel suggested 4:30 p.m. Mr. Falconer advised that he will poll other cities as to when their meetings start and if this will require Council approval. Mr. Falconer will report back to the Board at the next scheduled meeting. Board Member Moulin advised the Board that the Economic Form 700 is due. 7 Investment Advisory Board Minutes February 14, 2007 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 8