The URL can be used to link to this page

2008 06 19 CCCALL TO ORDER Roll Call: Council Members: &#444dja City Council agendas are available on the City's web page @ www.la-quinta.org CITY COUNCIL AGENDA CITY COUNCIL CHAMBERS 78-495 Calle Tampico La Quinta, California 92253 ADJOURNED MEETING THURSDAY, JUNE 19, 2008 — 6:00 P.M. Beginning Resolution No. 2008- Ordinance No. Henderson, Kirk, Osborne, Sniff, and Mayor Adolph PLEDGE OF ALLEGIANCE PUBLIC COMMENT At this time, members of the public may address the City Council on any matter not listed on the agenda. Please complete a "request to speak" form and limit your comments to three minutes. CONFIRMATION OF AGENDA CONSENT CALENDAR - NONE 001 City Council Agenda 1 June 19, 2008 BUSINESS SESSION 1. CONSIDERATION OF A RESOLUTION ADOPTING THE INVESTMENT POLICY OF THE CITY OF LA QUINTA FOR FISCAL YEAR 2008/2009. A. RESOLUTION ACTION 2. CONSIDERATION OF FISCAL YEAR 2008/2009 PRELIMINARY BUDGET. A. MINUTE ORDER ACTION ADJOURNMENT The next regular meeting of the City Council will be held on July 1, 2008, commencing with closed session at 3:00 p.m. and open session at 4:00 p.m. in the City Council Chambers, 78-495 Calle Tampico, La Quinta, CA 92253. OU2 City Council Agenda 2 June 19, 2008 DECLARATION OF POSTING I, Veronica Montecino, City Clerk of the City of La Quinta, do hereby declare that the foregoing agenda for the La Quinta City Council meeting of June 19, 2008, was posted on the outside entry to the Council Chamber at 78-495 Calle Tampico and on the bulletin boards at 51-321 Avenida Bermudas and 78-630 Highway 1 1 1, on June 13, 2008. DATED: June 13, 20 8 VERONICA J. NTECINO, City Clerk City of La Quinta, California Public Notices The La Quinta City Council Chamber is handicapped accessible. If special equipment is needed for the hearing impaired, please call the City Clerk's Office at 777-7103, twenty- four (24) hours in advance of the meeting and accommodations will be made. If special electronic equipment is needed to make presentations to the City Council, arrangement should be made in advance by contacting the City Clerk's Office at 777- 7103. A one (1) week notice is required. If background material is to be presented to the City Council during a City Council meeting, please be advised that eight (8) copies of all documents, exhibits, etc., must be supplied to the City Clerk for distribution. It is requested that this take place prior to the beginning of the meeting. n: 0U3 City Council Agenda 3 June 19, 2008 a •� F CF`N OF TNQ� COUNCIL/RDA MEETING DATE: June 19, 2008 ITEM TITLE: Consideration of a Resolution Adopting the Investment Policy of the City of La Quinta for Fiscal Year 2008/2009 RECOMMENDATION: AGENDA CATEGORY: BUSINESS SESSION: CONSENT CALENDAR: STUDY SESSION: PUBLIC HEARING: Adopt a Resolution of the City Council approving the Investment Policy of the City of La Quinta for Fiscal Year 2008/2009. FISCAL IMPLICATIONS: None CHARTER CITY IMPLICATIONS: None. BACKGROUND AND OVERVIEW: SB564 imposes certain reporting requirements on State and local agencies. Specifically, the bill requires, in part, that the treasurer of a local agency submit an annual statement of investment policy to the legislative body. As a result of this reporting requirement, in March of 2008, the Investment Advisory Board (IAB) began the process of updating the City's Investment Policy to conform to this legislative requirement. At the start of this process, the Investment Advisory Board believed that a major reorganization of the Investment Policy was needed to better organize the document since the last major update was done in 1996. 004 In addition to reorganizing the document, the following Policy changes to the document are proposed as follows and as outlined in Attachment 1: • Increasing the Local Agency Investment Fund (LAIF) from 25% to 30% of the Portfolio. • Increasing the maximum limitation of the Federal Farm Credit Government Sponsored Enterprise (GSE) from $20 million to $30 million. • Increasing the maximum limitation of the Federal Home Loan Bank Government Sponsored Enterprise (GSE) from $20 million to $25 million. • Adding to the Treasurers Permissible Investments List the use of a Professionally Managed Account with authority to invest up to 10% of the City's investments, subject to City Council approval. Regarding the previously mentioned Professionally Managed Account, this year's Policy would give the City Treasurer the discretion to request City Council consideration to utilize their services. If in the Treasurer's professional opinion, he or she believed it was in the best interest of the City, they would request City Council approval to issue the Request for Proposal (RFP) that has been included in Appendix G and H of the Policy. While the current City Treasurer has told the IAB that he does not plan to bring this item to the City Council for their consideration, he supports a future Treasurer's ability to do so, given the fact that it must go to the City Council for their consideration and given the fact that the RFP in the Investment Policy must be followed. On June 12, 2008, the Investment Advisory Board met with the City Manager, City Attorney and City Treasurer to review the proposed Investment Policy. The IAB recommended the Fiscal Year 2008/2009 Investment Policy on a 5 ayes- 0 nays- 0-absent vote. Chairperson Daniel of the IAB, and other Board Members plan to attend the City Council meeting and will be available to answer questions. Since there are many changes proposed to the Investment Policy, staff has included two versions -a final version (Attachment 2) and a strike out version (Attachment 3). The general purpose of the City's Investment Policy is to provide the rules and standards the City must follow when investing the City of La Quinta's public funds. It is the City of La Quinta's policy to invest all public funds in a manner which will provide a diversified portfolio with maximum security while meeting daily cash flow demands and the highest investment return in conformity with all State and local statutes. This Policy applies to all cash and investments of the City of La Quinta, La Quinta Redevelopment Agency and the La Quinta Financing Authority, hereafter referred to as the "City." 0U'5 The primary objectives of the City's investment activity in order of priority shall be: • Safety of principal; • Liquidity to meet all of the City's obligations and requirements that may be reasonably anticipated; • A risk -based market rate of return. It is understood that all investments shall be made with judgment and care, under circumstances then prevailing, by persons with prudence, discretion, and intelligence acting as they would in the management of their own affairs, not for speculation, but for investment, as well as considering the probable safety of their capital and the probable income to be derived. As noted in the policy, authority to manage the City's investment portfolio is derived from the City Ordinance. Management responsibility for the investment program is delegated to the City Treasurer, who shall establish and implement written procedures for the operation of the City's investment program consistent with the Investment Policy. The Treasurer is required to establish and implement a system of internal controls to maintain the safety of the portfolio. The internal control system will also ensure the timely preparation and accurate reporting of the portfolio financial information. As part of the annual audit of the City's financial statements, the independent auditor reviews the adequacy of those controls and advises the City if weaknesses are found. FINDINGS AND ALTERNATIVES: The alternatives available to the City Council include: 1. Adopt a Resolution of the City Council approving the Investment Policy for Fiscal Year 2008/2009; or 2. Adopt a Resolution of the City Council approving the Investment Policy with changes for Fiscal Year 2008/2009; or 3. Do not adopt a Resolution of the City Council approving the Investment Policy for Fiscal Year 2008/2009; or 4. Provide staff with alternative direction. Respectfully submitted, r9 M M. Falconer, Finance Director/Treasurer Gt)G Approved for submission by: Thomas P. Genovese, Executive Director Attachments: 1. Executive Summary of Proposed Changes 2. Proposed Investment Policy — Final Version 3. Proposed Investment Policy — Strike Out Version 007 RESOLUTION NO. 2008- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA QUINTA APPROVING AND ADOPTING THE AMENDED INVESTMENT POLICY FOR FISCAL YEAR 2008/2009 WHEREAS, the general purpose of the Investment Policy is to provide the rules and standards users must follow in investing funds of the City of La Quinta; and WHEREAS, the primary objectives, in order of priority, of the City of La Quinta's investment activity shall be: Safety of principal is the foremost objective of the investment program. Investments of the City of La Quinta shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The investment portfolio shall remain sufficiently !quid to meet all operating requirements that may be reasonably anticipated. The investment portfolio shall be designed with the objective of attaining a market rate of return or yield throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. WHEREAS, authority to manage the City of La Quinta's investment portfolio is derived from the City Ordinance. Management responsibility for the investment program is delegated to the City Treasurer, who shall establish and implement written procedures for the operation of the City's investment program consistent with the Investment Policy for Fiscal Year 2008/2009; and WHEREAS, the Investment Policy will be adopted before the end of June of each year and amended as considered necessary; and NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of La Quinta to adopt the Fiscal Year Investment Policy (Exhibit A). PASSED, APPROVED and ADOPTED at a regular meeting of the La Quinta City Council, held on this day of 2008 by the following vote, to wit: AYES: NOES: ABSTAIN: ABSENT: DON ADOLPH, Mayor City of La Quinta, California ATTEST: VERONICA J. MONTECINO, CMC, City Clerk City of La Quinta, California (SEAL) APPROVED AS TO FORM: M. KATHERINE JENSON, City Attorney City of La Quinta, California 003 Exhibit A (TO BE ATTACHED) 00 N 1 1 M%0"1V1L.1V I I FINAL VERSION PAGE EXECUTIVE SUMMARY 10 State Treasurer's Local Agency Investment Fund (LAIF): Increase investment limit from 25% to 30%. 10 U.S. Government Agency Securities and Federal Government Securities: Increase maximum Federal Home Loan Bank investments from $20 million to $30 million investments. 11 Professionally Managed Account(s): Allow the City Treasurer to place up to 10% of the portfolio with a professional portfolio management firm (PPMF). The PPMF will be approved by City Council pursuant to a Request for Proposal outlined in Appendix G and H. 011 AI InvB uwl VlvI � CITY OF LA QUINTA Investment Policy Fiscal Year 2008-09 Table of Contents Section Topic Executive Summary I General Purpose II Investment Policy III Scope IV Objectives ► Safety of Principal ► Provide Liquidity ► Yield A Risk -Based Market Rate Of Return V Maximum Maturities VI Prudence VII Authority Vill Ethics and Conflicts of Interest IX Authorized Financial Dealers and Institutions ► Broker/Dealers ► Financial Institutions X Permissible Deposits and Investments XI Investment Pools XII Payment and Custody XIII Interest Earning Distribution Policy XIV Internal Controls and Independent Auditors XV Reporting Standards XVI Financial Assets and Investment Activity Not Subject to this Policy XVII Investment of Bond Proceeds XIII Investment Advisory Board - City of La Quinta XIX Investment Policy Adoption Appendices Topic Page 2 I 6 6 7 7 7 8 12 12 12 13 14 14 15 15 15 Page A Summary of Permissible Deposits and Investments 17 B City of La Quinta Municipal Code Ordinance 2.70 - Investment Advisory Board 19 C City of La Quinta Municipal Code Ordinance 3.08 - Investment of Moneys and Funds20 D Segregation of Major Investment Responsibilities 22 E Listing of Approved Financial Institutions 23 F Broker/Dealer Questionnaire and Certification 24 G Request for Proposal for Professional Portfolio Management Firm 28 H Permissible Investment Chart — Professional Portfolio Managerrjent Firm 34 1 Investment Management Process and Risk 35 J Glossary 36 0i 1 CITY OF LA QUINTA Investment Policy Fiscal Year 2008-09 Executive Summary The general purpose of this Investment Policy is to provide the rules and standards that must be followed in administering the City of La Quinta's deposits and investments. The City's Investment Policy conforms to all state and local statutes and applies to all deposits and investments of the City of La Quinta, City of La Quinta Redevelopment Agency, and the City of La Quints Financing Authority (the"City" ). It is the City's policy to deposit and invest public funds in a manner that shall provide: ► Safety of principal; ► Liquidity to meet all of the City's obligations and requirements that may be reasonably anticipated; ► A risk -based market rate of return. It is the City's policy to hold securities and other investments until maturity. This buy -and -hold policy shall not prevent the sale of a security to minimize loss of principal when an issuer or backer suffers declining credit worthiness or when the liquidity needs of the portfolio require that a security be sold. Authority to manage the City's investment portfolio is derived from the City Ordinance. Management responsibility for the investment program is delegated to the City Treasurer, who shall establish and implement written procedures for the operation of the City's investment program consistent with the Investment Policy. The Treasurer shall establish and implement a system of internal controls to accomplish the following objectives: ► Safeguard assets; ► The orderly and efficient conduct of its business, including adherence to all City management policies; ► Prevention or detection of errors and fraud; ► The accuracy and completeness of accounting records; ► Timely preparation of reliable financial information. The System of Internal Controls developed by the City Treasurer shall be reviewed annually by the independent auditors in connection with the annual audit of the City's Financial Statements. The City Manager, Assistant City Managers, City Treasurer and city employees involved in the City's banking and investment process shall conduct the City's business in an ethical manner and refrain from any activity or relationship that may be, or have the appearance of, a conflict of interest. The City Treasurer maintains a listing of financial institutions which are approved for investment purposes. All Broker/Dealers and financial institutions that provide investment services will be subject to City Council approval. The Treasurer will be permitted to invest only in the permissible deposits and investments described in Section X and Appendix A up to the specified maximum allowable percentages 013 2 and/or dollar limitations and, where applicable, through the bid process requirements. Permissible deposits and investments include, in general: ► FDIC -Insured Checking, Savings, and Sweep Accounts; ► Certificates of Deposit; ► U.S. Government Agency Securities and Federal Government Securities; ► Prime Commercial Paper; ► Local Agency Investment Fund (LAIF); ► Money Market Mutual Funds; ► Corporate Notes; ► Professionally Managed Accounts. The City's deposits and investments are generally limited to three years' maximum maturity. However, the projected amount of funds not expected to be disbursed within five years may be invested in U.S. Treasury bills, notes and bonds maturing between three and five years. The City's Investment Policy does not specify a single benchmark as a goal or target yield for a rate of return on its investment portfolio. As a basis for comparison only, the Treasurer's monthly report will display the rates of return on the three-month, six-month, and one-year U.S. Treasury Bill, comparable -period rates for commercial paper, and the yield for the State Treasurer's Local Agency Investment Fund (LAIF). The Investment Policy shall be adopted by resolution of the La Quinta City Council on an annual basis. The Investment Policy will be adopted before the end of June of each year. This Executive Summary is only an overview summary does not constitute a complete review of the pages herein. of the City's Investment Policy. Reading this , which can only be accomplished by reviewing all City of La Quinta Statement of Investment Policy July 1, 2008 through June 30, 2009 Adopted by the City Council on June 19, 2008 I GENERAL PURPOSE The general purpose of this document is to provide the rules and standards that must be followed in administering the City of La Quinta's deposits and investments. II INVESTMENT POLICY It is the policy of the City of La Quinta to deposit and invest public funds in a manner that shall provide: ➢ Safety of principal; ➢ Liquidity to meet all of the City's obligations and requirements that may be reasonably anticipated; ➢ A risk -based market rate of return. The Investment Policy conforms to all State and local statutes governing the investment of public funds and sets forth the permissible deposits and investments of the City's funds and the limitations thereon. III SCOPE Except as further detailed in Section XVII, this Investment Policy applies to all deposits and investments of the City of La Quinta, City of La Quinta Redevelopment Agency and the City of La Quinta Financing Authority (hereafter referred to in this document as the "City"). These funds are reported in the City's Comprehensive Annual Financial Report (CAFR) and include all funds within the following fund types: ► General ► Special Revenue ► Capital Projects ► Debt Service ► Enterprise ► Internal Service ► Trust and Agency ► Any new fund types and fund(s) that may be created. IV OBJECTIVES The objectives of the City's investment activity, in order of priority and importance, are: 1. Safety of Principal Safety of principal is the foremost objective of the City's investment program. 015 M Investments shall be undertaken in a manner that seeks to ensure the preservation of principal of the overall portfolio in accordance with the permissible deposits and investments. The City shall endeavor to preserve its investment principal by making only permissible deposits and investments, undertaken in a controlled manner to minimize the possibility of loss or misappropriation through malfeasance or otherwise. Investments not backed by the full faith and credit of the United States Government shall be diversified by allocating assets between different types of permissible investments, maturities, and issuers as a means to mitigate credit risk and interest rate risk. A. Credit Risk is the risk of loss from the failure of the security issuer or backer. Credit risk may be mitigated by: ► Limiting investments to investment grade securities as permitted in Section X; ► Diversifying the issuers of the securities in the investment portfolio so that potential losses due to issuer failure or individual securities downgrades may be minimized. B. Interest Rate Risk is the risk that market values of securities in the portfolio will decline due to changes in general interest rates. Interest rate risk may be mitigated by: ► Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity; and ► Investing operating funds primarily in shorter -term securities. C. Liquidity Risk is the risk that a security cannot be liquidated because of its unique features or structure or because it is thinly traded. Liquidity risk is not a material issue for the City's portfolio because of the permissible deposits and investments (see Section X) and because the City maintains a buy -and -hold policy and holds securities and other investments to maturity. A discussion of the City's investment process and risk is presented in Appendix I. 2. Provide Liquidity The investment portfolio shall remain sufficiently liquid to meet all of the City's cash needs that may be reasonably anticipated. This is accomplished by structuring the portfolio so that sufficient liquid funds are available to meet anticipated demands. Furthermore, since all possible cash needs cannot be anticipated the portfolio should be diversified and consist of securities with active secondary or resale markets. The City's policy is to hold securities and other investments to maturity. Accordingly, securities shall not be sold prior to maturity with the following exceptions: ► A security with declining credit quality can be sold early to minimize loss of principal; ► Unanticipated liquidity needs of the portfolio require that one or more securities be sold. 5 3. Yield A Risk -Based Market Rate Of Return The City's investment portfolio shall be structured with the objective of yielding a risk - based market rate of return throughout budgetary and economic cycles. Return on investment is less important than the safety and liquidity objectives described above. The City's Investment Policy does not specify a single benchmark as a goal or target yield for a rate of return on its investment portfolio. The portfolio's rates of return will be influenced by several factors, including actions by the Federal Reserve Board, the marketplace, and overall economic perceptions and conditions. These factors will not affect yield during the securities' holding period because the City's buy -and -hold policy fixes the securities' yield at the time of purchase. As a basis for comparison only, the Treasurer's monthly report will display the rates of return on the three-month, six-month, and one-year U.S. Treasury Bill, comparable -period rates for commercial paper, and the yield for the State Treasurer's Local Agency Investment Fund (LAIF). The Treasurer may use these or any other published rates of return that the Treasurer deems appropriate for comparison to the return on the City's investment portfolio. V MAXIMUM MATURITIES It is the City's policy to hold securities and other investments until maturity, thus avoiding the risk of market value fluctuations with overall market interest rates. This buy -and -hold policy shall not prevent the sale of a security to minimize loss of principal when an issuer or backer suffers declining credit worthiness or when the liquidity needs of the City require that a security be sold. The buy -and -hold policy requires that the City's investment portfolio be structured so that sufficient liquid funds are available from maturing investments and other sources to meet all reasonably -anticipated cash needs. To meet anticipated cash needs, it is essential that the Treasurer have reliable, diligently prepared cash flow projections. Annually, the Treasurer shall project the amount of funds not expected to be disbursed within five years. For FY 2008/09, the amount of such funds is projected to be $8 million. Funds up to that amount may be invested in U.S. Treasury bills, notes and bonds maturing between 3 and 5 years. For all other funds, investments are limited to three years maximum maturity, with no more than 25% of surplus funds invested in maturities exceeding two years and less than three years. VI PRUDENCE The City shall follow the Uniform Prudent Investor Act as adopted by the State of California in Probate Code Sections 16045 through 16054. Section 16053 sets forth the terms of a prudent person which are as follows: "Investments shall be made with judgment and care - under circumstances then prevailing - which persons of prudence, discretion, and intelligence exercise in the professional management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived". 0, 7 0 VII AUTHORITY Authority to manage the City's investment portfolio is derived from sections 35607 and 35608 of City Ordinance 3.08.010. Management responsibility for the investment program is delegated to the City Treasurer for a period of one year pursuant to the City Council's annual adoption of the Investment Policy. The City Treasurer shall establish written procedures for the operation of the investment program consistent with the Investment Policy. Procedures should include reference to safekeeping, wire transfer agreements, banking service contracts, and collateral/depository agreements. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this Investment Policy and the procedures established by the City Treasurer. The City Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. The City Manager or an Assistant City Manager shall acknowledge in writing all purchases and sales of investments prior to their execution by the City Treasurer. Vill ETHICS AND CONFLICTS OF INTEREST The City Manager, Assistant City Managers, City Treasurer and city employees involved in the City's banking and investment process shall conduct the City's business in an ethical manner and refrain from any activity or relationship that may be, or have the appearance of, a conflict of interest. Any questionable activity or relationship shall be reported immediately and in compliance with the procedures set forth in Section 1.40 — Conflicts of Interest and Acceptance of Gifts and other Gratuities of the City of La Quinta Personnel Manual. Reporting must be made in accordance with the personnel policies of the City and, until resolved, the officer or employee shall refrain from participating in the City's business related to the matter. The City Manager, Assistant City Managers, City Treasurer and city employees may conduct personal business with banks, brokers, and other financial institutions that are authorized to conduct business with the City provided that the terms of the activity to the accountholder with the City are the same as those that are available to the public in general. IX AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The City Treasurer maintains a listing of financial institutions which are approved for direct investment purposes. In addition a list will also be maintained of approved broker/dealers selected by credit worthiness, who maintain an office in the State of California. Broker/Dealers who desire to become bidders for direct investment transactions must supply the City with the following: ► Current audited financial statements; ► Proof of Financial Industry Regulatory Authority (FINRA) Certification; ► Trading resolution; ► Proof of California registration; ► Resume of Financial broker; and ► Completion of the City of La Quinta Broker/Dealer questionnaire (see Appendix F) which contains a certification of having read the City's Investment Policy. The City Treasurer shall evaluate the documentation submitted by the broker/dealer and, independently verify existing reports on file for any firm and individual conducting investment related business. The City Treasurer will also contact the following agencies during the verification process: ► Financial Industry Regulatory Authority (FINRA) Public Disclosure Report File (1- 800-289-9999). ► State of California Department of Corporations (1-916-445-3062). The City Treasurer maintains a listing of financial institutions which are approved for investment purposes. All Broker/Dealers and financial institutions that provide investment services will be subject to City Council approval. Each securities dealer shall provide monthly and quarterly reports filed pursuant to U.S. Treasury Department regulations. Each mutual fund shall provide a prospectus and statement of additional information. 2. Financial Institutions will be required to meet the following criteria in order to receive City funds for deposit or investment (see Appendix E, "Listing of Approved Financial Institutions"): A. Insurance - Public Funds shall be deposited only in financial institutions having accounts insured by the Federal Deposit Insurance Corporation (FDIC). B. Collateral - The amount of the City's deposits or investments not insured by the FDIC —shall be collateralized by securities with market values of 110%, or by mortgages with market values 150%, of the amount of invested funds plus unpaid interest earnings. C. Disclosure - Each financial institution maintaining invested funds in excess of the FDIC insured amount shall furnish the City a copy of the most recent Call Report. The City shall not invest in excess of the FDIC insured amount in banking institutions which do not disclose to the city a current listing of securities pledged for collateralization in public monies. X PERMISSIBLE DEPOSITS AND INVESTMENTS Permissible deposits and investments are summarized below. A more comprehensive list is included in Appendix A. Permissible Investments and Limitations (See Appendix A for Additional Information) Maximum Allocation Maximum Maturity Restrictions Current/ Sweep Account: Checking & Savings Accounts FDIC Insured & Sweep Accounts 85% Portfolio On Demand U.S. Treasuries and/or GSE's Certificates of Deposit 60% Portfolio 3 Years `=$99,000 per institution E Permissible Investments and Limitations Maximum Maximum Restrictions (See Appendix A for Additional Information) Allocation Maturity U.S. Treasury Bills, Notes and Bonds, and Government National 100% Portfolio 3 Years `=$5,0000,000 Mortgage Association (GNMA) Securities maturing 3-5 Yrs U.S. Government Agency Securities and Federal Government Securities (except collateralized mortgage obligations (CMO's) or structured notes which contain embedded rate options): - Federal National Mortgage Association (FNMA) $20,000,000 3 Years - Federal Home Loan Bank Notes & Bonds (FHLB) $25,000,000 3 Years - Federal Farm Credit Bank (FFCB) $30,000,000 3 Years - Federal Home Loan Mortgage Corporation (FHLMC) $20,000,000 3 years Prime Commercial Paper 15% Portfolio 90 Days $5,000,000 per issuer maximum. Local Agency Investment Fund (LAIF) 30% Portfolio Current / On Demand $40 million per account. Money market mutual funds regulated by the SEC that consist only of US 200% Portfolio Current / Maintain $1 per Treasury Securities or GSE's and maintain a par value of $1 per share On Demand share par value $5,000,000 max Corporate Notes 10% 3 Years per issuer, AA rated or better. Requires Professionally Managed Account 10% 3 Years City Council - Approved RFP Checking, Savings, and Sweep Accounts — The City will only maintain checking, savings, and sweep accounts with FDIC insured financial institutions. As authorized by the City Council, a U.S. Treasury and/or U.S. Agency Securities Money Market Sweep Account with a $50,000 target balance may be maintained in conjunction with the checking account. 2. Certificates of Deposit - As authorized in Government Code Section 53649, Certificates of Deposit are fixed term investments which are required to be collateralized from 1 10% to 150% depending on the specific security pledged as collateral in accordance with Government Code Section 53652. There are no portfolio limits on the amount or maturity for this investment vehicle. Collateralization will be required for Certificates of Deposits in excess of the FDIC insured amount. The type of collateral is limited to City authorized investments. Collateral will always be held by an independent third party from the institution that sells the Certificates of Deposit to the City. Evidence of compliance with State Collateralization policies must be supplied to the City and retained by the City Treasurer as follows: A. Certificates of Deposits Insured by the FDIC: The City Treasurer may waive collateralization of a deposit that is federally insured. B. Certificates of Deposit in excess of FDIC Limits: The amount not federally insured shall be 110% collateralized securities or 150% mortgages market value of that amount of invested funds plus unpaid interest earnings. The City's Investment Policy limits the percentage of Certificates of Deposit to 60% of the portfolio. U ) U 9 ➢ The City does not allow investments in CDAR's or negotiable (secondary market) certificates of deposit. U.S. Treasury Bills Notes and Bonds and Government National Mortgage Associations (GNMA) securities - The City may invest in U.S. Treasury bills, notes, and bonds, and GNMA securities directly issued and backed by the full faith and credit of the U.S. Government. The City's Investment Policy limits investments in U.S. Treasury issues and GNMA's to 100% of the portfolio. ➢ The City's Investment Policy does not allow investments in local and state indebtedness. 4. U.S. Government Agency Securities and Federal Government Securities - The City may invest in securities issued by U.S. Government instrumentalities and agencies (commonly referred to as government sponsored enterprises or GSE's). These securities are not backed by the full faith and credit of the U.S. Government. Publicly owned GSE's include Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC) and Student Loan Marketing Association (SLMA). Non -publicly owned GSE's include the Federal Home Loan Bank (FHLB), Federal Farm Credit Bank (FFCB), Federal Land Bank (FLB) and Federal Intermediate Credit Bank (FICB). The City's Investment Policy allows investment only in securities of FNMA, FHLMC, FHLB and FFCB. For Fiscal Year 2008/09, the maximum face amount per issuer is $20 million for FNMA and FHLMC, $25 million for FHLB and $30 million for FFCB. In addition, no more than 30% of the portfolio surplus may be invested in all GSE's combined with a maximum $10 million face amount per purchase. Prime Commercial Paper - As authorized in Government Code Section 53601(g), a portion of the City's portfolio may be invested in commercial paper of the highest rating (A-1 or P- 1) as rated by Moody's or Standard and Poor's. There are a number of other qualifications regarding investments in commercial paper based on the financial strength of the corporation and the size of the investment. The City's Investment Policy permits investments in commercial paper with the following limitations: A. Maximum 15% of the portfolio. B. Maximum maturity of 90 days. C. Maximum of $5 million per issuer. These limitations are more restrictive than the State code allowed amounts of 25% of the total portfolio with maturities up to 270 days with no per -issuer limitations. 6. State Treasurer's Local Agency Investment Fund (LAIF) - As authorized in Government Code Section 16429.1 and by LAIF procedures, local government agencies are each authorized to invest a maximum of $40 million per account in this investment program administered by the California State Treasurer. The City's investment in LAIF is allowable as long as the average maturity of its investment portfolio does not exceed two years, unless specific approval is authorized by the City Council. The City has two accounts with LAIF and limits investment to 30% of the portfolio. 10 7. Money Market Mutual Funds - As authorized in Government Code Section 53601(k), local agencies are authorized to invest in shares of beneficial interest issued by diversified management companies (mutual funds) in an amount not to exceed 20% of the agency's portfolio. There are a number of other qualifications and restrictions regarding allowable investments in corporate notes and shares of beneficial interest issued by mutual funds which include (1) attaining the highest ranking or the highest letter and numerical rating provided by not less than two of the three largest nationally recognized rating services, or (2) having an investment advisor registered with the Securities and Exchange Commission with not less than five years' experience investing in the securities and obligations and with assets under management in excess of five hundred million dollars ($500,000,000). The City's Investment Policy only allows investments in mutual funds that are money market funds maintaining a par value of $1 per share that invest in direct issues of the U.S. Treasury and/or US Agency Securities with an average maturity of their portfolio not exceeding 90 days and the City limits such investments to 20% of the portfolio. 8. Corporate Notes - As authorized in Government Code Section 53601 (j), local agencies may invest in corporate notes. The notes must be issued by corporations organized and operating in the United States or by depository institutions licensed by the United States or any other state and operating in the United States. The City's Investment Policy allows investment in corporate notes authorized by the Government Code with the following limitations: ► Maturities shall not exceed three years from date of purchase. ► Eligible notes shall be regularly quoted and traded in the marketplace. P. Eligible notes shall be rated "AA"or better. ► Total investment shall not exceed 10% of the portfolio, and ► The maximum aggregate investment shall not exceed $5 million face amount for each issuer. This is more restrictive than the State code allowed amounts of 30% of the total portfolio with maturities up to five years with no per -issuer limitations. 9. Professionally Managed Account(s) - The City Treasurer may place up to 10% of the portfolio with a professional portfolio management firm ("PPMF"). The PPMF will be approved by the City Council based upon the City Treasurer's recommendation pursuant to completion of a request for proposal (RFP) as outlined in Appendix G. The PPMF shall have: (a) An established professional reputation for asset or investment management; (b) Knowledge and working familiarity with State and Federal laws governing and restricting the investment of public funds; (c) Substantial experience providing investment management services to local public agencies whose investment policies and portfolio size are similar to those of the City; (d) Professional liability (errors and omissions) insurance and fidelity bonding in such amounts as are required by the City; (a) Registration with the Securities and Exchange Commission under the Investment Advisers Act of 1940. Before engagement by the City and except as may be specifically waived or revised, the PPMF shall commit to adhere to the provisions of the City's Investment Policy with the following exceptions: 11 022 (f) The PPMF may be granted the discretion to purchase and sell investment securities in accordance with Appendix I of this Investment Policy; (g) The PPMF is not required to adhere to the buy -and -hold policy of the City's Investment Policy, and; (h) The PPMF does not need City Manager or City Treasurer approval to make permissible investments as detailed in column 8 of Appendix H of this Investment Policy. XI INVESTMENT POOLS There are three (3) types of investment pools: ► State -run pools (e.g., LAIF); ► Pools that are operated by a political subdivision where allowed by law and the political subdivision is the trustee (e.g., County Pools); ► Pools that are operated for profit by third parties. The City's Investment Policy permits investment only in pools authorized in Section X. XII PAYMENT AND CUSTODY The City shall engage qualified third party custodians to act in a fiduciary capacity to maintain appropriate evidence of the City's ownership of securities and other eligible investments. Such custodians shall disburse funds, received from the City for a purchase, to the broker, dealer or seller only after receiving evidence that the City has legal, record ownership of the securities. Even though ownership is evidenced in book -entry form rather than by actual certificates, this procedure is commonly accepted as the delivery versus payment (DVP) method for the transfer of securities. XIII INTEREST EARNING DISTRIBUTION POLICY Interest earnings are generated from pooled investments and specific investments. 1. Pooled Investments - It is the general policy of the City to pool all available operating cash of the City of La Quinta, La Quinta Redevelopment Agency and La Quinta Financing Authority and allocate interest earnings, in the following order, as follows: A. Payment to the General Fund of an amount equal to the total annual bank service charges as incurred by the general fund for all operating funds as included in the annual operating budget. B. Payment to the General Fund of a management fee equal to 5% of the annual pooled cash fund investment earnings. C. Payment to each fund of an amount based on the average computerized daily cash balance included in the common portfolio for the earning period. 2. Specific Investments - Specific investments purchased by a fund shall incur all earnings and expenses to that particular fund. 12 Ut XIV INTERNAL CONTROLS AND INDEPENDENT AUDITOR The City Treasurer shall establish a system of internal controls to accomplish the following objectives: ► Safeguard assets; ► The orderly and efficient conduct of its business, including adherence to management policies; ► Prevention or detection of errors and fraud; ► The accuracy and completeness of accounting records; and ► Timely preparation of reliable financial information. While no internal control system, however elaborate, can guarantee absolute assurance that the City's assets are safeguarded, it is the intent of the City's internal control to provide a reasonable assurance that management of the investment function meets the City's objectives. The internal controls shall address the following: Control of collusion. Collusion is a situation where two or more employees are working in conjunction to defraud their employer. Separation of transaction authority from accounting and record keeping. By separating the person who authorizes or performs the transaction from the people who record or otherwise account for the transaction, a separation of duties is achieved. Custodial safekeeping. Securities purchased from any bank or dealer including appropriate collateral (as defined by State Law) shall be placed with an independent third party for custodial safekeeping. 4. Avoidance of physical delivery securities. Book entry securities are much easier to transfer and account for since actual delivery of a document never takes place. Delivered securities must be properly safeguarded against loss or destruction. The potential for fraud and loss increases with physically delivered securities. Clear delegation of authority to subordinate staff members. Subordinate staff members must have a clear understanding of their authority and responsibilities to avoid improper actions. Clear delegation of authority also preserves the internal control structure that is contingent on the various staff positions and their respective responsibilities as outlined in the Segregation of Major Investment Responsibilities appendices. 6. Written confirmation or telephone transactions for investments and wire transfers. Due to the potential for error and improprieties arising from telephone transactions, all telephone transactions shall be supported by written communications or electronic confirmations and approved by the appropriate person. Written communications may be via fax if on letterhead and the safekeeping institution has a list of authorized signatures. Fax correspondence must be supported by evidence of verbal or written follow-up. Development of a wire transfer agreement with the City's bank and third party custodian. This agreement should outline the various controls, security provisions, and delineate responsibilities of each party making and receiving wire transfers. 13 024 The System of Internal Controls developed by the City, shall be reviewed annually by the independent auditor in connection with the annual audit of the City's Financial Statements. The independent auditor's management letter comments pertaining to cash and investments, if any, shall be directed to the City Manager who will direct the City Treasurer to provide a written response to the independent auditor's letter. The management letter comments pertaining to cash and investment activities and the City Treasurer's response shall be provided to the City's Investment Advisory Board for their consideration. Following the completion of each annual audit, the independent auditor shall meet with the Investment Advisory Board and discuss the auditing procedures performed and the review of internal controls for cash and investment activities. See Appendix D, "Segregation of Major Investment Responsibilities." XV REPORTING STANDARDS The City Treasurer shall submit a monthly Treasurers Report to the City Council and the Investment Advisory Board that includes all cash and investments under the authority of the Treasurer. The Treasurer's Report shall summarize cash and investment activity and changes in balances and include the following: ► A certification by the City Treasurer. ► A listing of purchases and sales/maturities of investments. ► Cash and Investments categorized by authorized investments, except for LAIF which will be provided quarterly and show yield and maturity. ► Comparison of month end actual holdings to Investment Policy limitations. ► Current year and prior year monthly history of cash and investments for trend analysis. ► Balance Sheet. ► Distribution of cash and investment balances by fund. ► A comparison of actual and surplus funds. ► A year to date historical cash flow analysis and projection for the next six months. ► A two-year list of historical interest rates. XVI FINANCIAL ASSETS AND INVESTMENT ACTIVITY NOT SUBJECT TO THIS POLICY The City's Investment Policy does not apply to the following: ► Cash and Investments raised from Conduit Debt Financing; ► Funds held in trust in the City's name in pension or other post -retirement benefit programs; No. Cash and Investments held in lieu of retention by banks or other financial institutions for construction projects; ► Short or long term loans made to other entities by the City or Agency; and Short term (Due to/from) or long term (Advances from/to) obligations made either between the City and its funds or between the City and Agency. 14 0�5 XVII INVESTMENT OF BOND PROCEEDS The City's Investment Policy shall govern bond proceeds and bond reserve fund investments. California Code Section 5922 (d) governs the investment of bond proceeds and reserve funds in accordance with bond indenture provisions which shall be structured in accordance with the City's Investment Policy. Arbitrage Requirement - The US Tax Reform Act of 1986 requires the City to perform arbitrage calculations as required and return excess earnings to the US Treasury from investments of proceeds of bond issues sold after the effective date of this law. These arbitrage calculations may be contracted with an outside source to provide the necessary technical assistance to comply with this regulation. Investable funds subject to the 1986 Tax Reform Act will be kept segregated from other funds and records will be kept in a fashion to facilitate the calculations. The City's investment position relative to the new arbitrage restrictions is to continue pursuing the maximum yield on applicable investments while ensuring the safety of capital and liquidity. It is the City's position to continue maximization of yield and to rebate excess earnings, if necessary. XVIII INVESTMENT ADVISORY BOARD - CITY OF LA QUINTA The Investment Advisory Board (IAB) is a standing board composed of five members from the public that are appointed by the City Council. Background information will be requested and potential candidates must agree to a background check and verification. On an annual basis, in conjunction with the Political Reform Act disclosure statutes, or at any time if a change in circumstances warrants, each board member will provide the City Council with a disclosure statement which identifies any matters that have a bearing on the appropriateness of that member's service on the board. All board members shall report annually to the City Clerk on Form 700, Statement of Economic Interests, any activities, interests, or relationships that may be, or have the appearance of, a conflict of interest. The IAB must meet at least quarterly, but usually meets monthly, to: 1. Review at least annually the City's Investment Policy and recommend appropriate changes; 2. Review monthly treasury report and note compliance with the Investment Policy and adequacy of cash and investments for anticipated obligations; 3. Receive and consider other reports provided by the City Treasurer; 4. Meet with the independent auditor after completion of the annual audit of the City's financial statements, and receive and consider the auditor's comments on auditing procedures, internal controls and findings for cash and investment activities, and; 5. Serve as a resource for the City Treasurer on matters such as proposed investments, internal controls, use or change of financial institutions, custodians, brokers and dealers. The IAB will report to the City Council after each meeting either in person or through correspondence at a regular City Council meeting. See Appendix B: "Investment Advisory Board Provisions". XIX INVESTMENT POLICY ADOPTION The City's Investment Policy will be reviewed annually by the City's Investment Advisory Board 15 �0 and the City Treasurer. The Investment Advisory Board will forward the Investment Policy with any revisions to the City Manager and City Attorney for their review and comment. A joint meeting will be held with the Investment Advisory Board, City Manager, City Attorney, and City Treasurer to review the Investment Policy and any comments prior to submission to the City Council for their consideration. The Investment Policy shall be adopted by resolution of the City Council annually before the end of June of each year. Uc 16 Z w U) W Z Z Q U) H O a W 0 LLJ m U) _D) 2 cc W a LL 0 cc Q E c O _O l0 N Of (0 G U a E 7 E X m E N d d O N � N 'C N Em E O E 10 �E m= 0-5 0.0 Q N N c � — C i C W 'O d d N E' E d N 3 f0 E N — N Q N F E U N d C t CT a W vO qc Mc aw N 6� MNW 0II mQQ Na a_eAU V'0 U 2.2P w' O w m�2oUWo 0E N� FT E yay �yy°�� m aqi pqp�� a aqi aEi aqi v M M OUO q w N c� O i E ? m o_ A EE_ `mIL coN N ,0 c p E 6 q y w C O tit m E H o$ m n •�.r +. o o `q O o m `m E n Q tp y c Ny O O O 0 G 0 n V o w c c }g o q C V N» Q) N E O Ec c o 0 0 0 '- o ' o O 7 o o 0 V N Q. d d d on 0 0 00. 0 IL O 2 a ° O _ O O O e N e e a 7 N N t0+1 fq N C G o 0 0 a 0 '0 0 o O O O 0 O 0 0 0 0 O O o O E A o O O O O O O O O O O �j•yy- c+ a a a e o 0 0 o a a a a a N o o �ci o o e e o e O N o 0 C O N O S? o ° Q z °U EmEo q� n d W d > q c U m e N N c 02n m d 0 o ¢ = U'E w li C a 0 0 aa� Z `" O L' NE a N M q O Wov ° :EC N q c C q q� a O�q C C N o T =� q a 0 mo qqN �ma W O 2 O w aw 0 0y°y 0 `EE o q 00 U g q LL m CNJ O IA O C m y a^ 0 N - g. �°" o Z a O rn LD q C O O. N CQ q N NN 0 OI co N c O1 c c t LL 0 q 0 qO 2S wU' N O) N N O 8i,8 q C m m 2 N a c Q a Z4 E m w y a rn o Q g t o 0 o a EZ. m w > m 0 `80 m U 0 u E'q q m [°] `o Z Eyo m o€ o E d ma y m c Zmw2 E �y m c 0/ � m F"0 O:E `o callo E � w0 u �1^ a 0 0, ai a` Appendix A u. L 17 Appendix A (continued) D E o w m yL OS _ O N n O =¢ aCl « c o `oZ oa o y s C'55 v m C �E wp N E� IL N C N N N a w C L_ s «h C C_ m2o d O o' m N w E N N N C N N 0J 6 m ._ j y� L y Q c ' D O E N E N y d ME 1 a N O , O N NBC p C a LL (Q C €ad 'NT V aCa y y of a'o oa � � m D m m E � N C Eid �m m d E oc m m a9yUC0 m dm!ES00mL CN ON N sO C0$ mQD n y O=cm 2 O ` cmJ m N 6W, >�OEt c mN NaN upN2 Z it0j C°a m A YO N OUN dLO 2t> a Km2K m2cm= t u E aU c m Q c_ LO Y 3 n _O m m0 a,° =a c .0 y _o E o mMa a i0 m pi N m N « D C N N 'E N m— Q ~ C c E E E a m '0o vi ._ m a1p N 0 O o r E y Es 1- U o E N 0— ., o... pNm2 V Lm OO LmX WL M.mO co Ow O Con0 a Wo. m > o O LU, Q Om_ WOc mL D NO a ¢dEyc O m m ma co no 0as m m N w O a @ m M oc`N n c c a o Om0 mC EC o T CU3a� ) n £ Z` E a mm - wm mo �'m o D O n � 0 Nom dc w m o O0m m : m�30 - m OLL m caoo , sV« m c e W.- O o 0 l D> O$E o O OLL mN w E2 moo j 'o C mypm Lno C vo 0m E q 2w^ o E Y2ai- i a W sc E EE 5 yN m$ Ute �mM0 Moo Ej m16 EW�by > a £m m £ oO E = E cm =c ao cm v m m a mLm m U OH NL N$N mN `o m� a m "� Z'w a %0 'c ca aa� m't dU iE ¢� E U id Q� F£'o � N O O c s c , s U +9 a LL LL W. Appendix B City of La Quinta Municipal Code Chapter 2.70 INVESTMENT ADVISORY BOARD PROVISIONS Sections: 2.70.010 General Rules Regarding Appointment. 2.70.020 Board meetings. 2.70.030 Board functions. 2.70.010 General rules regarding appointment A. Except as set out below, see Chapter 2.06 for General Provisions. B. The Investment Advisory Board (the "board") is a standing board composed of five (5) members from the public that are appointed by city council. C. Background in the investment field and/or related experience is preferred. Background information will be requested and potential candidates must agree to a background check and verification. D. On an annual basis, in conjunction with the Political Reform Act disclosure statutes, or at any time if a change in circumstances warrants, each board member will provide the City Council with a disclosure statement which identifies any matters that have a bearing on the appropriateness of that member's service on the board. Such matters may include, but are not limited to, changes in employment, changes in residence, or changes in clients. 2.70.020 Board meetings. The Board usually will meet monthly, but this schedule may be extended to quarterly meetings upon the concurrence of the Board and the City Council. The specific meeting dates will be determined by the Board Members and meetings may be called for on an as needed basis. 2.70.030 Board functions. A. The principal functions of the Board are: (1) review at least annually the City's Investment Policy and recommend appropriate changes; (2) review monthly Treasury Report and note compliance with the Investment Policy and adequacy of cash and investments for anticipated obligations; (3) receive and consider other reports provided by the City Treasurer; (4) meet with the independent auditor after completion of the annual audit of the City's financial statements, and receive and consider the auditor's comments on auditing procedures, internal controls, and findings for cash and investment activities, and; (5) serve as a resource for the City Treasurer on matters such as proposed investments, internal controls, use or change of financial institutions, custodians, brokers and dealers. B. The Board will report to the City Council after each meeting either in person or through correspondence at a regular City Council meeting. 19 030 Appendix C City of La Quints Municipal Code Chapter 3.08 INVESTMENT OF MONEYS AND FUNDS Sections: 3.08.010 Investment of city moneys and deposit of securities. 3.08.020 Authorized investments. 3.08.030 Sales of securities. 3.08.040 City bonds. 3.08.050 Reports. 3.08.060 Deposits of securities. 3.08.070 Trust fund administration. 3.08.010 Investment of city moneys and deposit of securities. Pursuant to, and in accordance with, and to the extent allowed by, Sections 53607 and 53608 of the Government Code, the authority to invest and reinvest moneys of the city, to sell or exchange securities, and to deposit them and provide for their safekeeping, is delegated to the city treasurer. (Ord. 2 § 1 (part), 1982) 3.08.020 Authorized investments. Pursuant to the delegation of authority in Section 3.08.010, the city treasurer is authorized to purchase, at their original sale or after they have been issued, securities which are permissible investments under any provision of state law relating to the investing of general city funds, including but not limited to Sections 53601 and 53635 of the Government Code, as said sections now read or may hereafter be amended, from moneys in his custody which are not required for the immediate necessities of the city and as he may deem wise and expedient, and to sell or exchange for other eligible securities and reinvest the proceeds of the securities so purchased. (Ord. 2 § 1 (part), 1982) 3.08.030 Sales of Securities. From time to time the city treasurer shall sell the securities in which city moneys have been invested pursuant to this chapter, so that the proceeds may, as appropriate, be applied to the purchase for which the original purchase money may have been designated or placed in the city treasury. (Ord.2 § I (part), 3.08.040 City bonds. Bonds issued by the city and purchased pursuant to this chapter may be canceled either in satisfaction of sinking fund obligations or otherwise if proper and appropriate; provided, however, that the bonds may be held uncancelled and while so held may be resold. (Ord. 2 § 1 (part), 1982) 20 031 3.08.050 Reports. The city treasurer shall make a monthly report to the city council of all investments made pursuant to the authority delegated in this chapter. (Ord. 2 § 1 (part), 1982) 3.08.060 Deposits of securities. Pursuant to the delegation of authority in Section 3.08.010, the city treasurer is authorized to deposit for safekeeping, the securities in which city moneys have been invested pursuant to this chapter, in any institution or depository authorized by the terms of any state law, including but not limited to Section 53608 of the Government Code as it now reads or may hereafter be amended. In accordance with said section, the city treasurer shall take from the institution or depository a receipt for the securities so deposited and shall not be responsible for the securities delivered to and receipted for by the institution or depository until they are withdrawn therefrom by the city treasurer. (Ord. 2 § 1 (part), 1982 3.08.070 Trust fund administration. Any departmental trust fund established by the city council pursuant to Section 36523 of the Government Code shall be administered by the city treasurer in accordance with Section 36523 and 26524 of the Government code and any other applicable provisions of law. (Ord. 2 § 1 (part), 1982) 21 032 SEGREGATION OF MAJOR INVESTMENT RESPONSIBILITIES Function Develop and Recommend Modifications to City's Formal Investment Policy Review City's Investment Policy and Recommend City Council Action Adopt Formal Investment Policy Implement Formal Investment Policy Review Financial Institutions & Select Investments Acknowledge Investment Selections Execute Investment transactions Confirm Wires (if applicable) Record Investment Transactions in City's Accounting Records Investment Verification (match broker confirmation to City investment records) Reconcile Investment Records to Accounting Records and Bank Statements Reconcile Investment Records to Treasurers Report of Investments Security of Investments at City Security of Investments outside City Review Internal Control Procedures Appendix D Responsible Parties Investment Advisory Board and City Treasurer City Manager and City Attorney City Council City Treasurer City Treasurer City Manager or Assistant City Manager City Treasurer or City Manager Accounting Manager or Financial Services Assistant Accounting Manager or Financial Services Assistant City Treasurer and Financial Services Assistant Financial Services Assistant Accounting Manager Vault Third Party Custodian External Auditor 22 0033 Appendix E LISTING OF APPROVED FINANCIAL INSTITUTIONS 1. Banking Services Wells Fargo Bank, Government Services, Los Angeles, CA 2. Custodian Services Bank of New York, Los Angeles, CA 3. Deferred Compensation International City/County Management Association Retirement Corporation 4. Broker/Dealer Services Merrill Lynch, San Francisco, CA Morgan Stanley, San Rafael, CA CitiGroup, San Francisco Newport Beach, CA 5. Government Pool State of California Local Agency Investment Fund City of La Quinta Account La Quinta Redevelopment Agency 6. Bond Trustees 1991 City Hall Revenue Bonds - US Bank 1991 RDA Project Area 1 - US Bank 1992 RDA Project Area 2 - US Bank 1994 RDA Project Area 1 - US Bank 1998 RDA Project Area 1 &2 — US Bank 2001 RDA Project Area 1 — US Bank 2002 RDA Project Area 1 — US Bank 2003 RDA Project Area 1 — US Bank Assessment Districts — US Bank No Changes to this listing may be made without City Council approval 23 U) Appendix F BROKER/DEALER QUESTIONNAIRE AND CERTIFICATION 1. Name of Firm: 2. Address: 3. Telephone:(_) 4. Broker's Representative to the City (attach resume): Name: Title: Telephone: (_) 5. Manager/Partner-in-charge (attach resume): Title: Telephone: 6. List all personnel who will be trading with or quoting securities to City employees (attach resume) Name: Title: Telephone: (_) (_) 7. Which of the above personnel have read the City's Investment Policy? 8. Which instruments are offered regularly by your local office? (Must equal 100%) % U.S. Treasuries % BA's % Commercial Paper % CD's % Mutual Funds Agencies (specify): • Repos • Reverse Repos % CMO's % Derivatives • Stocks/Equities • Other (specify): 9. References -- Please identify your most directly comparable public sector clients in our geographical area. Entity Contact 24 Entity Contact (1JD Telephone () Client Since Telephone (_) Client Since 10. Have any of your clients ever sustained a loss on a securities transaction arising from a misunderstanding or misrepresentation of the risk characteristics of the instrument? If so, explain. 11. Has your firm or your local office ever been subject to a regulatory or state/ federal agency investigation for alleged improper, fraudulent, disreputable or unfair activities related to the sale of securities? Have any of your employees been so investigated? If so, explain. 12. Has a client ever claimed in writing that you were responsible for an investment loss? Yes No If yes, please provide action taken Has a client ever claimed in writing that your firm was responsible for an investment loss? Yes No If yes, please provide action taken Do you have any current or pending complaints that are unreported to FINRA? Yes No If yes, please provide action taken Does your firm have any current, or pending complaints that are unreported to FINRA? Yes No If yes, please provide action taken 13. Explain your clearing and safekeeping procedures, custody and delivery process. Who audits these fiduciary responsibilities? Latest Audit Report Date 25 UJo 14. How many and what percentage of your transactions failed? Last month? °h S Last year? % $ 15. Describe the method your firm would use to establish capital trading limits for the City of La Quinta. 16. Is your firm a member in the S.I.P.C. insurance program? Yes No If yes, explain primary and excess coverage and carriers. 17. What portfolio information, if any, do you require from your clients? 18. What reports and transaction confirmations or any other research publications will the City receive? 19. Does your firm offer investment training to your clients? Yes No 20. Does your firm have professional liability insurance? Yes No If yes, please provide the insurance carrier, limits and expiration date. 21. Please list your FINRA/NASD Registration Number 22. Do you have any relatives who work at the City of La Quinta? Yes No If yes, Name and Department 23. Do you maintain an office in California? Yes No 24. Do you maintain an office in La Quinta or Riverside County? Yes No 25. Please enclose the following: ► Latest audited financial statements. ► Samples of reports, transaction confirmations and any other research/publications the City will receive. ► Samples of research reports and/or publications that your firm regularly provides to clients. ► Complete schedule of fees and charges for various transactions. 'CERTIFICATION' `CERTIFICATION' 26 037 I hereby certify that I have personally read the Statement of Investment Policy of the City of La Quinta, and have implemented reasonable procedures and a system of controls designed to preclude imprudent investment activities arising out of transactions conducted between our firm and the City of La Quinta. All sales personnel will be routinely informed of the City's investment objectives, horizons, outlooks, strategies and risk constraints whenever we are so advised by the City. We pledge to exercise due diligence in informing the City of La Quinta of all foreseeable risks associated with financial transactions conducted with our firm. By signing this document the City of La Quinta is authorized to conduct any and all background checks. Under penalties of perjury, the responses to this questionnaire are true and accurate to the best of my knowledge. Broker Representative Title Sales Manager and/or Managing Partner* 27 u33 Appendix G Request for Proposals Professional Portfolio Management Firm City of La Quinta, CA The City of La Quinta, CA is soliciting Requests for Proposals (RFP) from interested firms for the provision of a discretionary investment management services for City of La Quinta, CA. The portfolio to be managed of the invested assets is will be approximately 10% of the City's investment portfolio and will be invested between 0 - 3 years. The investment of City of La Quinta, CA's funds is guided by the applicable State statutes and the City of La Quinta, CA's investment policy. A copy of the investment policy is attached for your information. Questions regarding this RFP should be directed to: Name: Title: City of: Address: City, State, Zip Code: Phone Number: John M. Falconer Finance Director/Treasurer La Quinta, CA 78-495 Calle Tampico La Quinta, CA 92253 (760)777-7150 I. CRITERIA FOR EVALUATION AND SELECTION ■ Experience of the firm in providing services to public sector entities of similar size and with similar investment objectives; ■ Professional experience and qualifications of the individuals assigned to the account; ■ Portfolio management resources, investment philosophy and approach; ■ Responsiveness to the RFP, communicating an understanding of the overall program and services required; ■ Reporting capabilities; ■ Fees. II. SELECTION TIMETABLE A. [Month, Day and Year] Proposals due by [Time] PST. B. [Month, Day and Year] Proposals evaluated: to be determined C. [Month, Day and Year] [City of La Quinta, CA] [Board/Council] approves selection and awards contract. III. FORMAT FOR PROPOSALS Please format your response to this RFP in the following manner: A. Organization 28 0 ,; 9 1. Describe your organization, date founded, ownership and other business affiliations. Provide number and location of affiliated offices. Specify the number of years your organization has provided investment management service. 2. Describe your firm's revenue sources (e.g., investment management, institutional research, etc.) and comment on your firm's financial condition. 3. Within the past three years, have there been any significant developments in your organization (e.g., changes in ownership, new business ventures)? Do you expect any changes in the near future? 4. Describe any U.S. Securities and Exchange Commission (SEC) censures or litigation involving your organization, any officer, or employee at any time in the last ten years. 5. Describe the firm's fiduciary liability and/or errors and omissions insurance coverage. Include dollar amount of coverage. B. Personnel 1. Identify the number of professionals employed by your firm by classification. 2. Provide an organization chart showing function, positions, and titles of all the professionals in your organization. 3. Provide biographical information on investment professionals that will be involved in the decision -making process for our portfolio, including number of years at your firm. Identify the person who will be the primary portfolio manager assigned to the account. C. Governmental 4. Describe your firm's compensation policies for investment professionals and address any incentive compensation programs. Assets Under Management 1. Summarize your institutional investment management asset totals by category for your latest reporting period in the following table: Number Operating Funds of Clients F Number of Other Restrictive Clients Funds S Governmental Pension St bl Non Governmental 5 Pension � abf 29 0�+0 Corporate $ — _ — �pffili_ ', High Net Worth Client $t App Endowmental/Foun- $ _ -._ dation b Not - 4m 2. Provide the number of separate accounts whose portfolios consist of operating funds. 3. List in the following table the percentage by market value of aggregate assets under all governmental accounts under management for your latest reporting period: Type of Asset U.S. Treasury securities Federal Agency obligations Corporate securities rated AAA -AA Corporate securities rated A Corporate securities rated BBB or lower Other (specify Percent by Market Value 4. Describe the procedures that your firm has in place to address the potential or actual credit downgrade of an issuer and to disclose and advise a client of the situation. 5. Provide data on account/asset growth over the past five years. Indicate the number of government accounts gained and the number of government accounts lost. 6. List your five governmental largest clients. Identify those that are exclusively operating fund relationships and/or those that are other relationships (e.g., bond fund, retirement fund). 7. Provide a copy of the firm's Form ADV, Parts I and II (including all schedules). 8. Provide proof of State of California Registration, if your firm is not eligible for SEC registration. 9. Provide a sample contract for services. 30 041 D. Philosophy/Approach 1. Describe your firm's investment philosophy for public clients, including your firm's philosophy regarding average duration, maturity, investment types, credit quality, and yield. 2. Describe in detail your investment process, as you would apply it to City of La Quinta, CA's portfolio. 3. What are the primary strategies for adding value to portfolios? 4. Describe the process you would recommend for establishing the investment objectives and constraints for this account. 5. Describe in detail your process of credit risk management, including how you analyze credit quality, monitor credits on an ongoing basis, and report credit to governmental accounts. 6. Describe your firm's trading methodology. 7. Describe your firm's decision -making process in terms of structure, committees, membership, meeting frequency, responsibilities, integration of research ideas, and portfolio management. 8. Describe your research capabilities as they would pertain to governmental accounts. What types of analysis do you use? 9. Describe the firm's approach to managing relationships with the broker -dealer community. E. Portfolio Management 1. Are portfolios managed by teams or by one individual? 2. What is the average number of accounts handled per manager? 3. Which professional staff member will be the primary client contact for City of La Quinta, CA? 4. How frequently are you willing to meet with us? 5. Describe procedures used to ensure that portfolios comply with client investment objectives, policies, and bond resolutions. F. Fees Charged 1. Please include a copy of your firm's fee schedule applicable to this RFP. 2. Identify any expenses that would not be covered through this fee structure and would be required in order to implement the firm's program. 31 042 3. Is there a minimum annual fee? G. Performance Reporting 1. Please report on all accounts under $100 million. 2. Please provide performance history for governmental accounts for the last five years. 3. Please provide risk measurements for governmental accounts for the last five years. 4. Indicate whether your returns are calculated and compiled in accordance with the Association for Investment Management and Research (AIMR/CFA Institute) standards. 5. Do your reports conform to the State of California reporting standards? Are you willing to customize your reports to meet our specifications? 6. How will you notify us of investment transactions? 7. Are confirmations of investment transactions sent directly by the broker/dealer to the client? 8. Do your reports include rating information on investments which is required by GASB 40? H. References Provide a list of at least five (5) client references in California. References should be public agencies with portfolio size and investment objectives similar to City of La Quinta, CA. Include length of time managing the assets, contact name, and phone number. Insurance Requirements Exhibit A defines the insurance requirements that will need to be met prior to the [Board/Councill's approval of any agreement for services. J. Submittal of proposals 1. Seven (7) copies of the proposal shall be submitted in a sealed envelope bearing the caption RFP for (City of La Quinta, CA) and addressed to: City of La Quinta, CA 78-495 Calls Tampico La Quinta, CA 92253 Attention: John M. Falconer Finance Director/Treasurer 2. Proposal must be received no later than [Time] PST on [Month, Day, and Year]. 32 043 3. Proposals should be verified before submission. The City of La Quinta, CA shall not be responsible for errors or omissions on the part of the respondent in preparation of a proposal. The City of La Quinta, CA reserves the right to reject any and all proposals, to wave any irregularities, or informalities in the proposals, and to negotiate modifications to any proposal. Enclosures: Investment Policy Treasurers Report 33 u44 wppenaix rn a m i, A 0 a V R O O O O O O O N d N R N N N N N y O N N N R N y N y N y N R N N E �o�zzzzzzzrrrr}zr}}}}} } G a 0 0 0 0 0 0 0 0 0 0 0 o Y}> a z z z z z z z z z z z y} y}> > av m i a E¢o 0 QQo ¢ Q N� a 9 E c c c c c c c c c d. a zRc zNc U RR'J z z z z z z z Z z z z z Q 0 0 0 n n 0 m O o 0 Ca N N N N>> O O N e o o e R R O R O o e R N c .r 0 c 0 c 0 c 0 c o R R c o 0 0 a a c 0 c 0 c 0 c 0 a 'aM a 0 c 0 0 m z z Z Z> Z O t0 N N z Z z Z N Z z lC7 e N c o Y3 n a 0 N J... « O O e o O O 1 N e R W e 2 m T y 4 L' E d v o O D o v o o at0i v❑ v o aRi at0i 10 }}}} aRi o❑ Z aRi Z Z Z r Z N N pOp i0 N N N N O C C N c 4 'O y❑ Z' N 0 W 0 R N N N N l0 N E c ow r �y ya O U m a Z o O m° p a¢> c o, c u7 '3 o (.l Q m C a' N LL a Q LL g N N �_ N ca N m c E c L o 0 ¢ 5 m N '� W g d rn F v ❑ rn 0 0 H E c '� a Q N E m N� c 'Ei a m U Q t n m JN 0 LL s rn N 5 R m m y m E v E p m y o 0 E N c Z H L 7 U d o 0 a c m U c N V �1 U d y U U c a: o N E E E O O O �i M O b 0 N 100 10 �O f0 0 M M r� N M C'1 In M M M Gb OU � 34 Appendix I Investment Management Process and Risk Except as provided for in Section 27000.3, Government Code Section 53600.3 declares each person, treasurer, or governing body authorized to make investment decisions on behalf of local agencies to be a trustee and therefore a fiduciary subject to the prudent investor standard. These persons shall act with care, skill, prudence, and diligence under the circumstances then prevailing when investing, reinvesting, purchasing, acquiring, exchanging, selling, and managing funds. Section 53600.5 further stipulates that the primary objective of any person investing public funds is to safeguard principal; secondly, to meet liquidity needs of the depositor; and lastly, to achieve a return or yield on invested funds (Government Code Section 27000.5 specifies the same objectives for county treasurers and board of supervisors). Risk is inherent throughout the investment process. There is risk assigned to any investment activity as well as opportunity risk related to inactivity. Market risk is derived from exposure to overall changes in the general level of interest rates while credit risk is the risk of loss due to the failure of the insurer of a security. The market value of a security varies inversely with the level of interest rates. If an investor is required to sell an investment with a five percent yield in a comparable seven percent rate environment, that security will be sold at a loss. The magnitude of that loss will depend on the amount of time until maturity. Purchasing certain allowable securities with a maturity of greater than five years requires approval of the governing board (see Government Code Section 53601). Part of that approval process involves assessing and disclosing the risk and possible volatility of longer -term investments Another element of market risk is liquidity risk. Instruments with unique call features, special structures or those issued by little known companies are often thinly traded. Their uniqueness often makes finding prospective buyers in a secondary market more difficult and, consequently, the securities' marketability and price are discounted. However, under certain market conditions, gains are also possible with these types of securities. Default risk occurs when the borrower is unable to repay the obligation. Generally, securities issued by the federal government and its agercies are considered the most secure, while securities issued by private corporations or negotiable certificates of deposit issued by commercial banks have a greater degree of risk. Securities with additional credit enhancements, such as bankers acceptances, collateralized repurchase agreements and collateralized bank deposits are somewhere between the two on the risk spectrum. The vast majority of portfolios are managed within a buy and hold policy. Investments are purchased with the intent and capacity to hold that security until maturity. At times, market forces or operations may dictate swapping one security for another or selling a security before maturity. Continuous analysis and fine tuning of the investment portfolio are considered prudent investment management. [... I The Government Code contains specific provisions regarding the types of investments and practices permitted after considering the broad requirement of preserving principal and maintaining liquidity before seeking yield. These provisions are intended to promote the use of reliable, diverse, and safe investment instruments to better ensure a prudently managed portfolio worthy of public trust. Chapter II. Fund Management Local Agency Investment Guidelines 2007 Issued by California Debt and Investment Advisory Commission 35 0ain Appendix J GLOSSARY (Adopted from the Municipal Treasurers Association) The purpose of this glossary is to provide the reader of the City of La Quinta investment policies with a better understanding of financial terms used in municipal investing. AGENCIES: Federal agency securities and/or Government -sponsored enterprises. ASKED: The price at which securities are offered BANKERS' ACCEPTANCE (BA): A draft or bill of exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer. BID: The price offered by a buyer of securities. (When you are selling securities, you ask for a bid.) See Offer. BROKER: A broker brings buyers and sellers together for a commission. CERTIFICATE OF DEPOSIT ICD1: A time deposit with a specific maturity evidenced by a certificate. Large -denomination CD's are typically negotiable. COLLATERAL: Securities, evidence of deposit or other property which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. COMMERCIAL PAPER: Short-term unsecured promissory notes issued by a corporation to raise working capital. These negotiable instruments are purchased at a discount to par value or at par value with interest bearing. Commercial paper is issued by corporations such as General Motors Acceptance Corporation, IBM, Bank America, etc. COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual report for the City of La Quints. It includes five combined statements for each individual fund and account group prepared in conformity with GAAP. It also includes supporting schedules necessary to demonstrate compliance with finance -related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section. CONDUIT FINANCING: A form of Financing in which a government or a government agency lends its name to a bond issue, although it is acting only as a conduit between a specific project and bond holders. The bond holders can look only to the revenues from the project being financed for repayment and not to the government or agency whose name appears on the bond. COUPON: (a) The annual rate of interest that a bond's issuer promises to pay the bondholder on the bond's face value. (b) A certificate attached to a bond evidencing interest due on a payment date. DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. DEBENTURE: A bond secured only by the general credit of the issuer. DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities. DERIVATIVES: (1) Financial instruments whose return profile is linked to, or derived from, the movement of one or more underlying index or security, and may include a leveraging factor, or (2) financial contracts based upon notional amounts whose value is derived from an underlying index or security (interest rates, foreign exchange rates, equities or commodities). DISCOUNT: The difference between the cost price of a security and its maturity when quoted at 36 047 lower than face value. A security selling below original offering price shortly after sale also is considered to be at a discount. DISCOUNT SECURITIES: Non -interest bearing money market instruments that are issued a discount and redeemed at maturity for full face value, e.g., U.S. Treasury Bills. DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns. FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to various classes of institutions and individuals, e.g., S&L's, small business firms, students, farmers, farm cooperatives, and exporters. 1. FNMA's (Federal National Mortgage Association) - Used to assist the home mortgage market by purchasing mortgages insured by the Federal Housing Administration and the Farmers Home Administration, as well as those guaranteed by the Veterans Administration. They are issued in various maturities and in minimum denominations of $10,000. Principal and Interest is paid monthly. 2. FHLB's (Federal Home Loan Bank Notes and Bonds) - Issued by the Federal Home Loan Bank System to help finance the housing industry. The notes and bonds provide liquidity and home mortgage credit to savings and loan associations, mutual savings banks, cooperative banks, insurance companies, and mortgage -lending institutions. They are issued irregularly for various maturities. The minimum denomination is $5,000. The notes are issued with maturities of less than one year and interest is paid at maturity. 3. FLB's (Federal Land Bank Bonds) - Long-term mortgage credit provided to farmers by Federal Land Banks. These bonds are issued at irregular times for various maturities ranging from a few months to ten years. The minimum denomination is $1,000. They carry semi-annual coupons. Interest is calculated on a 360-day, 30 day month basis. 4. FFCB's (Federal Farm Credit Bank) - Debt instruments used to finance the short and intermediate term needs of farmers and the national agricultural industry. They are issued monthly with three- and six-month maturities. The FFCB issues larger issues (one to ten year) on a periodic basis. These issues are highly liquid. 5. FICB's (Federal Intermediate Credit bank Debentures) - Loans to lending institutions used to finance the short-term and intermediate needs of farmers, such as seasonal production. They are usually issued monthly in minimum denominations of $3,000 with a nine -month maturity. Interest is payable at maturity and is calculated on a 360- day, 30-day month basis. 6. FHLMC's (Federal Home Loan Mortgage Corporation) - a government sponsored entity established in 1970 to provide a secondary market for conventional home mortgages. Mortgages are purchased solely from the Federal home Loan Bank System member lending institutions whose deposits are insured by agencies of the United States Government. They are issued for various maturities and in minimum denominations of $10,000. Principal and Interest is paid monthly. Other federal agency issues are Small Business Administration notes (SBA's), Government National Mortgage Association notes (GNMA's), Tennessee Valley Authority notes (TVA's), and Student Loan Association notes (SALLIE-MAE's). FEDERAL DEPOSITOR INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits, currently up to $100,000 per deposit. FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently pegged by the Federal Reserve through open - market operations. 048 FEDERAL HOME LOAN BANKS (FHLB): Government sponsored wholesale banks (currently 12 regional banks) which lend funds and provide correspondent banking services to member commercial banks, thrift institutions, credit unions and insurance companies. The mission of the FHLB's is to liquefy the housing related assets of its members who must purchase stock in their district Bank. FEDERAL OPEN MARKET COMMITTEE (FOMC): Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a permanent member, while the other Presidents serve on a rotating basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases and sales of Government Securities in the open market as a means of influencing the volume of bank credit and money. FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks and about 5,700 commercial banks that are members of the system. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae): Securities influencing the volume of bank credit guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations, and other institutions. Security holder is protected by full faith and credit of the U.S. Government. Ginnie Mae securities are backed by the FHA, VA or FMHM mortgages. The term "pass -through" is often used to describe Ginnie Maes. LAIF (Local Agency Investment Fund) - A special fund in the State Treasury which local agencies may use to deposit funds for investment. There is no minimum investment period and the minimum transaction is $5,000, in multiples of $1,000 above that, with a maximum balance of $30,000,000 for any agency. The City is restricted to a maximum of ten transactions per month. It offers high liquidity because deposits can be converted to cash in 24 hours and no interest is lost. All interest is distributed to those agencies participating on a proportionate share basis determined by the amounts deposited and the length of time they are deposited. Interest is paid quarterly. The State retains an amount for reasonable costs of making the investments, not to exceed one -quarter of one percent of the earnings. LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes. LOCAL GOVERNMENT INVESTMENT POOL (LGIP): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold. MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase --reverse repurchase agreements that establishes each party's rights in the transactions. A master agreement will often specify, among other things, the right of the buyer -lender to liquidate the underlying securities in the vent of default by the seller -borrower. MATURITY: The date upon which the principal or stated value of an investment becomes due and payable MONEY MARKET: The market in which short-term debt instruments (bills, commercial paper, banker' acceptances, etc.) are issued and traded. OFFER: The price asked by a seller of securities. (When you are buying securities, you ask for an offer.) See Asked and Bid. OPEN MARKET OPERATIONS: Purchases and sales of government and certain other securities in the open market by the New York Federal Reserve 90 049 Bank as directed by the FOMC in order to influence the volume of money and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and credit; sales have the opposite effect. Open market operations are the Federal Reserve's most important and most flexible monetary policy tool. PORTFOLIO: Collection of all cash and securities under the direction of the City Treasurer, including Bond Proceeds. PRIMARY DEALER: A group of government securities dealers who submit daily reports of market activity and depositions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission (SEC) -registered securities broker -dealers, banks and a few unregulated firms. QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits. RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond the current income return. REPURCHASE AGREEMENT (RP OR REPO): A repurchase agreement is a short-term investment transaction. Banks buy temporarily idle funds from a customer by selling U.S. Government or other securities with a contractual agreement to repurchase the same securities on a future date. Repurchase agreements are typically for one to ten days in maturity. The customer receives interest from the bank. The interest rate reflects both the prevailing demand for Federal funds and the maturity of the repo. Some banks will execute repurchase agreements for a minimum of $100,000 to $500,000, but most banks have a minimum of $1,000,000. REVERSE REPURCHASE AGREEMENTS (RRP or RevRepo) - A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security"buyer" in effect lends the"seller" money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. Dealers use RRP extensively to finance their positions. Exception: When the Fed is said to be doing RRP, it is lending money that is increasing bank reserves. SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank's vaults for protection. SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following the initial distribution. SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect investors in securities transactions by administering securities legislation. SEC RULE 15C3-1: See Uniform Net Capital Rule. STRUCTURED NOTES: Notes issued by Government Sponsored Enterprises (FHLB, FNMAS, SLMA, etc.) And Corporations which have imbedded options (e.g., call features, step-up coupons, floating rate coupons, derivative -based returns) into their debt structure. Their market performance is impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the Shape of the yield curve. SURPLUS FUNDS: Section 53601 of the California Government Code defines surplus funds as any money not required for immediate necessities of the local agency. The City has defined immediate necessities to be payment due within one week. TREASURY BILLS: A non -interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months or one year. 39 050 TREASURY BONDS: Long-term coupon -bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities of more than 10 years. TREASURY NOTES: Medium -term coupon -bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities from two to 10 years. UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that member firms as well as nonmember broker -dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted into cash. UNIFORM PRUDENT INVESTOR ACT: The State of California has adopted this Act. The Act contains the following sections: duty of care, diversification, review of assets, costs, compliance determinations, delegation of investments, terms of prudent investor rule, and application. YIELD: The rate of annual income return on an investment, expressed as a percentage. (a) INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par of plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond. ,e 141 1 MLPF'11Y1G1Y 1 J W. _CITY OF LA QUINTA Investment Policy Fiscal Year 2008-09 Table of Contents tin Topic Executive Summary I General Purpose II Investment Policy III Scope N Objectives !!TT�_► Safety of Principal P_-► Provide Liquidity ► Yield A Risk -Based Market Rate Of Return V Maximum Maturities V Prudence V I Delegatien of uthority V 11 Ethics and Conflicts of Interest IX Authorized Financial Dealers and Institutions Page f► Broker/Dealers +0► Financial institutions X Permissibl�A•� ed Deposits and Investments aR-'�,d l4nitatiens X Investment Pools X I Payment and Custody X II Interest Earning Distribution Policy X V Internal Controls and Independent Auditors X 1 Reporting Standards X L114 Financial Assets and Investment Activity Not Subject to this Policy X J114 Investment of Bond Proceeds X IIX Investment Advisory Board - City of La Quinta X X1 Investment Policy Adoption 1e idices Topic Pa 9 Summary of PermissibleAathWized Deposits and Investments a^a�� d'WF itatie's City of La Quinta Municipal Code Ordinance 2.70 - Investment Advisory Board City of La Quinta Municipal Code Ordinance 3.08 - Investment of Moneys and Funds Segregation of Major Investment Responsibilities Listing of Approved Financial Institutions Broker/Dealer Questionnaire and Certification Pool Questmennake 9E 9C 9 9 A 'Investment gG Request for Proposal for Professional Portfolio Managefinent Firm Permissible Investment Chart - Professional Portfolio Management Firm H I Investment Management Process and Risk J1 Glossary e 1 UD CITY OF LA QUINTA Investment Policy Fiscal Year 2008-09 Executive Summary The general purpose of this Investment Policy is to provide the rules and standards seers that must be followed in administering'n• esting funds of the City of La Quinta's deposits and investments. The City's Investment Policy i+rconforms" to all state and local statutes. This P-e;:ey and applies to all depositssash and investments of the City of La Quinta, City of La Quinta Redevelopment Agency, and the City of La Quinta Financing Authority, " e,....f..."efe"=a .".`." desumeatas (the "City"). It is the City's policy to deposit and invest aFl-public funds in a manner that shallwhish wall provide_ ► Safety of principal; ► Liquidity towrhile meet all of the City's obligations and requirements that may -be reasonably anticipated; ► A risk -based market rate of return, ,. 50 It is the City's policy to hold securities and other investments until maturity. This buy -and -hold policy shall not prevent the sale of a security to minimize loss of principal when an issuer or backer suffers declining credit worthiness or when the liquidity needs of the portfolio require 0 5) 3 2 that a securitv be sold. Authority to manage the City �s��W s investment portfolio is derived from the City Ordinance. Management responsibility for the investment program is delegated to the City Treasurer, who shall establish and implement written procedures for the operation of the City's investment program consistent with the Investment Policy. The Treasurer shall establish and implement a system of internal controls to accomplish the following objectives: '4 ► Safeguard assets; -= �► The orderly and efficient conduct of its business, including adherence to all City management policies; ► Prevention or detection of errors and fraud; ► The accuracy and completeness of accounting records; and ► Timely preparation of reliable financial information. te Maintain the safety of the management fiFFA ie assist the City TFeaSUFeF OR managing the 0 nvestment PFegFaFn. The System of Internal Controls developed by the City Treasurer shall be reviewed annually by the independent auditors in connection with the annual audit of the City of La ` uintta s Financial Statements. - =9 mmm Zz =-Z The City Manager Assistant City Managers, City Treasurer and city employees involved in the City's banking and investment process shall conduct the City's business in an ethical manner and refrain from any activity or relationship that may be, or have the appearance of, a conflict of interest. The City Treasureref La Quinta Investment Polmey maintains a listing of financial institutions which are approved for investment purposes. All Broker/Dealers and financial institutions seleeted by the TreasareFW that provide investment services will be aPPFeved by the Gity ManageF subject to City Council approval. The Treasurer will be permitted to invest only in the permissibleG4y-appreved deposits and investments described in Section X and Appendix A up to the specified maximum allowable percentages and/or dollar limitations and, where applicable, through the bid process requirements. Permissible depositsAatheriaed and investments include, in general:vehieles And Fainted maAFAUM PBFtf Wee pesiIiens aFe lasted in Appendix A GummaFY of Authwized Investments and Limitations. ► FDIC -Insured Checking, Savings, and Sweep Accounts; ► Certificates of Deposit; ► U.S. Government Agency Securities and Federal Government Securities; ► Prime Commercial Paper; 0 -D Kl ► Local Agency Investment Fund ► Money Market Mutual Funds; ► Corporate Notes; ► Professionally Managed Accounts. The Citv's deposits and investments are generally limited to hays a maximum FnatWity oi three years' maximum maturity. However, the projected annual`dellar amount of funds not expected to be disbursed within five years may be invested in U.S. Treasury bills, notes and bonds maturing between three3 and five6 years. alAOFized by !he Gity Counsil. The Gity's inyestment in Money MaFket Mutual funds is allowable The Citv's Investment Policv does not specifv a single benchmark as a goal or target yield for a rate of return on its investment portfolio. As a basis for comparison only, the Treasurer's monthly report will display the rates of return on the three-month, six-month, and one-year U.S. Treasury Bill comparable -period rates for commercial paper, and the yield for the State Treasurer's Local Agency Investment Fund (LAIF). The Investment Policiesy shall be adopted by resolution of the La Quints City Council on an annual basis. The Investment Policiesy will be adopted before the end of June of each year. This Executive Summary is only an overview an e-a" • ' •� of the City's a La- 2u44a, Investment Policyles. Reading this summary does not constitute a complete review, which can only be accomplished by reviewing all of the pages herein. 4 055 City of La Quinta Statement of Investment Policy July 1, 2008-7through June 3024-, 20098 Adopted by the City Council on June- 194-9, 2008- I GENERAL PURPOSE The general purpose of this document is to provide the rules and standards aeefethat must be followed in administering the City of La Quinta's deposits and Bash investments. II INVESTMENT POLICY It is the policy of the City of La Quinta to deposit -and invest public funds in a manner that shallwhiek will provide_ ➢ Safety of principal ➢ Liquidity to w4i4e-meet all of the City's obligations and requirements that may be reasonably anticipated; ➢ "� •�� '��"� ��• ��• A risk -based market rate of return. 'n addition, t;ea, tThe Investment Policy wi41-conforms to all State and local statutes governing the investment of public funds and sets forth the permissible deposits and investments of the City's funds and the limitations thereon. III SCOPE Except as further detailed in Section XVII, Tthis Investment Policy applies to all depositseash and investments, exeept as furtheF detailed in Seetien XVII of the City of La Quinta, City of La Quinta Redevelopment Agency and the City of La Quinta Financing Authority, (hereafter referred to in this document as the "City"). These funds are reported in the City's a Lam Comprehensive Annual #Financial Report (CAFR) and include all funds within the following fund types: All f---Rdq viithiR the fallowing fund types; *-k�► General i-�x► Special Revenue «�. ► Capital Projects �'. ► Debt Service ?�► Enterprise ► Internal Service ► Trust and Agency ► Any new fund types and fund(s) that may be created. IV OBJECTIVES The gFimaFYobjectives, iR of the City ^4LQ'-'iRt-a's investment activity, in order of priority and importance, are shaWbe: 1. Safety of Principal Nl OJU Safety of principal is the foremost objective of the City's investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of investRient principaleeiA" iaof the overall portfolio in accordance with the permissibletted deposits and investments. The City shall endeavor to preserve its investment principal by making only permissible deposits and investments, undertaken in a controlled manner to minimize the possibility of loss or misappropriation through malfeasance or otherwise. Investments not backed by the full faith and credit of the United States Government shall be diversified by allocating assets between different types of permissible investments, maturities, and issuers as a means The objective will o mitigate credit risk and interest rate risk. A. Credit Risk is the risk of loss from the failure of the security issuer or backer. Credit risk may be mitigated by: be mitigated by� -NO- Limiting investments to investment gradethe safest types of securities as permitted in Section X; -�I►Diversifying the issuers of the securities in the investment portfolio so that potential losses due to issuer failure or individual securities downgrades may be minimized. .. I M- ..,. -. .. ..ri B. Interest Rate Risk is the risk that market values of securities in the portfolio will decline due to changes in general interest rates. Interest rate risk may be mitigated WeFeSt Rate Fisk is the risk that the MaFket value of seGUFities in the pekfOliO will fall due io -�t►Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity; and �itgy-ilnvesting operating funds primarily in shorter -term securities. C. Liauidity Risk is the risk that a securitv cannot be tfadedliquidated because of its unique features or# structure or because it is thinly traded. Liquidity risk is not a material issue for the City's portfolio because of the permissible deposits and investments (see Section X) and because the City maintains a buy -and -hold policy and holds securities and other investments to maturity. A discussion of the City's investment process and risk is presented in Appendix I. Provide Liquidity The investment portfolio shall remain sufficiently liquid to meet all of the City's epefa#iag fequirerflewfs cash needs that may be reasonably anticipated. This is accomplished by structuring the portfolio so that sufficient liquid funds are available to meet anticipated demands. Furthermore, since all possible cash demands needs cannot be anticipated the portfolio should be diversified and consist of securities with active secondary or resale markets. g U�� The City's policy is to hold securities and other investments to maturity. Accordingly, &securities shall not be sold prior to maturity with the following exceptions: 3t0. A deelining GFedit quality security with declining credit quality can seuld-be sold early to minimize loss of principal; �t► Unanticipated 6liquidity needs of the portfolio require that one or more 44e securities+ be sold. 3. Yield A Risk -Based Market Rate Of Return The City's investment portfolio shall be structureddesigRed with the objective of yield in attaiaiRg a risk -based market rate of return throughout budgetary and economic cycles, a l-: t nt tl e' .m a« L ........taint.. and liquidity needs. Returnon investment is lessef least importantee thaneempared-te the safety and liquidity objectives described above. The Citv's Investment Policy does not specify a single benchmark as a goal or target yield for a rate of return on its investment portfolio. The portfolio's rates of return will be influenced by several factors including actions by the Federal Reserve Board, the marketplace and overall economic perceptions and conditions. These factors will not affect yield during the securities' holding period because the City's buy -and -hold policy fixes the securities' yield at the time of purchase. As a basis for comparison only, the Treasurer's monthly report will display the rates of return on the three-month six-month and one-year U.S. Treasury Bill, comparable -period rates for commercial paper, and the yield for the State Treasurer's Local Agency Investment Fund ILAIFI. The Treasurer may use these or any other published rates of return that the Treasurer deems appropriate for comparison to the return on the City's investment portfolio. 1.44116R the SAAStFaints of safety, liquidity and yield, the City will endeaVOF tO fflaiRtaiA a V MAXIMUM MATURITIES It is the City's policy of the Gity of La Quintato hold securities and other investments of eash iR f:nane:..l :....•......seas until maturity, thus avoiding the risk that the of market value on fluctuationes with overall market interest rates. Thise buy -and -hold aRtil+iat-urity policy shall not prevent the sale of a security to minimize loss of principal when ant4e issuer or backer suffers declining credit worthiness or when the liquidity needs of the City require that a security be sold. The buy -and -hold aRtil Fnatafity policy requires that the City of-t FAR s investment portfolio beis structured so that sufficient liquid funds are available from maturing investments and other sources to meet all reasonably -anticipated cash needs. To meet anticipated cash needs, it is essential that the Treasurer have Feasenably aSGUFatereliable, diligently prepared cash flow projections. Annually, the Treasurer shall project the amount of funds not expected to be disbursed within five UJt� years. For FY 2008-7/098, the amount of such funds is projected to bewas $8 million. Funds up to that amount may be invested in U.S. Treasury bills, notes and bonds maturing between 3 and 5 years. For all other funds, investments are limited to three years maximum maturity, with no more than 25% of surplus funds invested in maturities exceeding two years and less than three years. VI PRUDENCE The City shall follow the Uniform Prudent Investor Act as adopted by the State of California in Probate Code Sections 16045 through 16054. Section 16053 sets forth the terms of a prudent person which are as follows: "Investments shall be made with judgment and care - under circumstances then prevailing - which persons of prudence, discretion, and intelligence exercise in the professional management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived". VII DELEGATION OF -AUTHORITY Authority to manage the City of La ui to s investment portfolio is derived from sections 35607 and 35608 of the -City Ordinance 3.08.010. Management responsibility for the investment program is delegated to the City Treasurer for a period of one year pursuant to the City Council's annual adoption of the Investment Policy. The City Treasurer-whe shall establish written procedures for the operation of the investment program consistent with the Investment Policy. Procedures should include reference to safekeeping, wire transfer agreements, banking service contracts, and collateral/depository agreements. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this Investment Policy and the procedures established by the City Treasurer. The City Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials. The City Manager or an Assistant City Manager shall acknowledgeappreve in writing all purchases and sales of investments prior to their execution by the City Treasurer. VIII ETHICS AND CONFLICTS OF INTEREST The City Manager Assistant City Managers City Treasurer 8#+sers and city employees involved in the City's banking and investment process shall conduct the City's business in an ethical manner and refrain from any activity or relationship that may be or have the appearance of, a conflict of interest Any questionable activity or relationship shall be reported immediately and in compliance serap4y with the procedures set forth in Section 1.40 - Conflicts of Interest and Acceptance of Gifts and other Gratuities of the City of La Quinta Personnel Manual. Reporting must be made to the 138FSORnel n1aneW in accordance with the personnel policies of the City and until resolved the officer or employee shall refrain from participating in the City's business related to the matter. The City Manager Assistant City Managers City Treasurer O isers and city employees may conduct personal business with banks brokers and other financial institutions that are authorized 8 U59 to conduct business with the City provided that the terms of the activity to the accountholder with the City are the same as those thata are available to the public in general. 1 -The Gity Masagff, Assistant City ManageF, the Gity T-FeaGHFeF and shall no! peFSOR811Y OF IX AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The City Treasureref Ln Quanta I...,,...... eRt Peliay maintains a listing of financial institutions which are approved for direct investment purposes. In addition a list will also be maintained of approved broker/dealers selected by credit worthiness, who maintain an office in the State of California. Broker/Dealers who desire to become bidders for direct investment transactions must supply the City-ofka--Quiets with the following: ',+► Current audited financial statements; �+► Proof of Financial Industry Regulatory Authority (FINRA) SeeHFky-Bealers Certification; �t► Trading resolution; �+► Proof of California registration; �+► Resume of Financial broker; and ► Completion of the City of La Quinta Broker/Dealer questionnaire (see Appendix F) which contains a certification of having read the City's o4�,a QUiRta Investment Policy. The City Treasurer shall evaluate the documentation submitted by the broker/dealer and independently verify existing reports on file for any firm and individual conducting investment related business. The City Treasurer will also contact the following agencies during the verification process: ► Financial Industry Regulatory Authority (FINRA) Plate one! AsseoiatieR of SeSUFitY Dealers Public Disclosure Report File (1-800-289-9999). --k-► State of California Department of Corporations (1-916-445-3062). The City Treasurer maintains a listing of financial institutions which are approved for investment purposes. All Broker/Dealers and financial institutions that provide investment services will be subject to City Council approval. Uu3 9 Each securities dealer shall provide monthly and quarterly reports filed pursuant to U.S. Treasury Department regulations. Each mutual fund shall provide a prospectus and statement of additional information. Financial Institutions will be required to meet the following criteria in order to receive City funds for deposit or investment (see Appendix E, "Listing of Approved Financial Institutions"): A. Insurance - Public Funds shall be deposited only in financial institutions having accounts insured by the Federal Deposit Insurance Corporation (FDIC). B. Collateral - The amount of the City's-ef-a Ou a deposits or investments not insured by the FDIC -shall be a-1- _ collateralized by securities' with market values of 110%, or 460/e- mortgages' with market values 150%, of theat amount of invested funds plus unpaid interest earnings. C. Disclosure - Each financial institution maintaining invested funds in excess of the FDIC insured amount shall furnish the City a copy of the most recent Annual Call Report. The City shall not invest in excess of the FDIC insured amount in banking institutions which do not disclose to the city a current listing of securities pledged for collateralization in public monies. X PERMISSIBLEAUTNDRIZED DEPOSITS AND INVESTMENT Permissible deposits The GitY T4eaGWFeF will be peFFAiited te invest On the and investments are summarized below. A more comprehensive list is included in the -Appendix A. Permissible Investments and Limitations (See Appendix A for Additional Information) Maximum Allocation Maximum Maturity Restrictions Checking & Savinas Accounts FDIC Insured & Sweeo Accounts 65% Portfolio Current / On Demand Sweep Account: U.S. Treasuries and/or GSE's Certificates of Deposit 60% Portfolio 3 Years `=$99.000 Per institution U.S. Treasury Bills Notes and Bonds and Government National 100% Portfolio 3 Years `=s6.0000.000 Mortgaae Association (GNMA) Securities — — maturing 3-5 Yrs U.S. Government Agency Securities and Federal Government Securities (except collateralized mortgage obligations (CMOs) or structured notes which contain embedded rate options): -Federal National Mortaaae Association (FNMA) -Federal Home Loan Bank Notes & Bonds (FHLB) $20,000,000 3 Years $25.000.000 3 Years 10 VUZ Permissible Investments and Limitations (See Appendix A for Additional Information) Prime Commercial Paper Local Agency Investment Fund (LAIR Money market mutual funds regulated by the SEC that consist only of US Treasury Securities or GSE's and maintain a par value of $1 per she Maximum Allocation Maximum Restrictions Maturily $30,000,000 3Years 15% Portfolio 90 Days I $5,000,000 Per issuer maximum. 30% Portfolio Current/ 40 million On Demand per account. 20% Portfolio Current/ Maintain$1 Per On Demand share oar value Corporate Notes 10% 3 Years $5,000,000 max per issuer. AA rated or better. Requires Professionally Manaaed Account 10% 3 Years City Council - Approved RFP M-:�j . 1. Checking, Savings, and Sweep Accounts — The City will only maintain checking, savings, and sweep accounts with FDIC insured financial institutions. As authorized by the City Council, a U.S. Treasury and/or U.S. Agency Securities Money Market Sweep Account with a $50,000 target balance may be maintained in conjunction with the checking account. 2. Certificates of Deposit - As authorized in Government Code Section 53649, Certificates of Deposit are fixed term investments which are required to be collateralized from 1 10% to 150% depending on the specific security pledged as collateral in accordance with Government Code Section 53652. There are no portfolio limits on the amount or maturity for this investment vehicle. Collateralization will be required for Certificates of Deposits in excess of the FDIC insured amount. The type of collateral is limited to City authorized investments. Collateral will always be held by an independent third party from the institution that sells the Certificates of Deposit to the City. Evidence of compliance with State Collateralization policies must be supplied to the City and retained by the City Treasurer as follows: A. Certificates of Deposits Insured by the FDIC: The City Treasurer may waive collateralization of a deposit that is federally insured. UUI- 11 B. Certificates of Deposit in excess of FDIC Limits: The amount not federally insured shall be 110% collateralized securities or 150% mortgages market value of that amount of invested funds plus unpaid interest earnings. The City's Investment Policy limits the percentage of Certificates of Deposit to 60% of the portfolio. ➢ The City does not allow investments in CDARs or negotiable (secondary market) certificates of deposit. 3. U.S. Treasury Bills, Notes, and Bonds and Government National Mortgage Associations (GNMA) securities — The City may invest in U.S. Treasury bills, notes, and bonds, and GNMA securities directly issued and backed by the full faith and credit of the U.S. Government. The City's Investment Policy limits investments in U.S. Treasury issues and GNMAs to 100% of the portfolio. ➢ The City's Investment Policy does not allow investments in local and state indebtedness. 94. U.S. Government Agencv Securities and Federal Government Securities — The City ma invest in securities issued by U.S. Government instrumentalities and agencies (commonly referred to as government sponsored enterprises or GSEs). These securities are not backed by the full faith and credit of the U.S. Government. Publicly owned GSEs include Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC) and Student Loan Marketing Association (SLMA). Non -publicly owned GSEs include the Federal Home Loan Bank (FHLB), Federal Farm Credit Bank (FFCB), Federal Land Bank (FLB) and Federal Intermediate Credit Bank (FICB). The Citv's Investment Policy allows investment only in securities of FNMA, FHLMC, FHLB and FFCB. For Fiscal Year 2008/09, the maximum face amount per issuer is $20 million for FNMA and FHLMC, $25 million for FHLB and $30 million for FFCB. In addition, ne no more than 30% of the portfolio surplus may be invested in all GSE's combined with a maximum $10 million face amount per purchase. peF-iSSFleF 5. Prime Commercial Paper - As authorized in Government Code Section 53601(g), a portion of the City's portfolio may be invested in commercial paper of the highest rating (A-1 or P- 1) as rated by Moody's or Standard and Poor's. There are a number of other qualifications regarding investments in commercial paper based on the financial strength of the corporation and the size of the investment. The City's Investment Policy permits investments in commercial paper with the following limitations: A. Maximum 15% of the portfolio. B. Maximum maturity of 90 days. C. Maximum of $5 million per issuer. These limitations are more restrictive than the State code allowed amounts of 25% of the total portfolio with maturities up to 270 days with no per -issuer limitations. U0 3 12 6. State Treasurer's Local Agency Investment Fund (LAIF) - As authorized in Government Code Section 16429.1 and by LAIF procedures, local government agencies are each authorized to invest a maximum of $40 million per account in this investment program administered by the California State Treasurer. The City's investment in the Siat.' eeal ^.........•Investment and (LAIFf is allowable as long as the average maturity of its investment portfolio does not exceed two years, unless specific approval is authorized by the City Council. The City o`er Quints has two accounts with LAIF. The `'sty of La Quint' Investment Polhey has and limitsatien of investment to 30%26% of the portfolio. 7. Money Market Mutual Funds - As authorized in Government Code Section 53601(k), local agencies are authorized to invest in shares of beneficial interest issued by diversified management companies (mutual funds) in an amount not to exceed 20% of the agency's portfolio. There are a number of other qualifications and restrictions regarding allowable investments in corporate notes and shares of beneficial interest issued by mutual funds which include (1) attaining the highest ranking or the highest letter and numerical rating provided by not less than two of the three largest nationally recognized rating services, or (2) having an investment advisor registered with the Securities and Exchange Commission with not less than five years' experience investing in the securities and obligations and with assets under management in excess of five hundred million dollars ($500,000,000). The City's Investment Policy only allows investments in mutual funds that are money market funds maintaining a par value of $1 per share that invest in direct issues of the U.S. Treasury and/or US Agency Securities with an average maturity of their portfolio not exceeding 90 days and the City limits such investments to 20% of the portfolio. 8. Corporate Notes - As authorized in Government Code Section 53601 (i), local agencies may invest in corporate notes The notes must be issued by corporations organized and operating in the United States or by depository institutions licensed by the United States or any other state and operating in the United States The City's Investment Policy allows investment in corporate notes authorized by the Government Code with the following limitations: ► Maturities shall not exceed three years from date of purchase. ► Eligible notes shall be regularly quoted and traded in the marketplace. ► Eligible notes shall be rated "AA" -or better. ► Total investment shall not exceedl0% of the portfolio, and ► The maximum aggregate investment shall not exceed $5 million face amount for each issuer. This is more restrictive than the State code allowed amounts of 30% of the total portfolio with maturities up to five years with no per -issuer limitations. 9 Professionally Managed Account(s) - The City Treasurer may place up to 10% of the portfolio with a professional portfolio management firm ("PPMF"). The PPMF will be approved by the City Council based upon the City Treasurer's recommendation pursuant to completion of a request for proposal (RFP) as outlined in Appendix G. The PPMF shall have: (a) an established professional reputation for asset or investment management; 13 uo4 (b) knowledge and working familiarity with State and Federal laws governing and restricting the investment of public funds; (c) substantial experience providing investment management services to local public agencies whose investment policies and portfolio size are similar to those of the City; (d) professional liability (errors and omissions) insurance and fidelity bonding in such amounts as are required by the City; (e) registration with the Securities and Exchange Commission under the Investment Advisers Act of 1940. Before engagement by the City and except as may be specifically waived or revised, the PPMF shall commit to adhere to the provisions of the City's Investment Policy with the following exceptions: (f) the PPMF may be granted the discretion to purchase and sell investment securities in accordance with Appendix I of this Investment Policy; (g) the PPMF is not required to adhere to the buy -and -hold policy of the City's Investment Policy, and; (h) the PPMF does not need City Manager or City Treasurer approval to make permissible investments as detailed in column 8 of Appendix H of this Investment Policy. gGYBFRFRe..t .'+'.. ..Weh el de the f..11ewingE funds, *Leeal gevernFnp-.Rt43o As OF Atl3eF ,vehtedncss aiiv—dtate ends er�cnoF 14 ceFtificates at deposit OF WPOlit '-'RbR.R that at a eeFRFAeFGial uses a PFivate bank, savings bank, see49F entity that assists On savings the plaoement and leaA 8sSOGiatiGn7 ef eeFtifieates XI INVESTMENT POOLS There are three (3) types of investment pools: ► 4}state-run pools (e.g., LAIF);—,-24 ► pools that are operated by a political subdivision where allowed by law and the political subdivision is the trustee (ei.ge., County Pools);-aad 21 ► pools that are operated for profit by third parties. The City's e`��e Investment Policy permits investment only in poolshas authorized in Section X' XII PAYMENT AND CUSTODY The City shall engage qualified third party custodians to act in a fiduciary capacity to maintain appropriate evidence of the City's ownership of securities and other eligible investments. Such custodians shall disburse funds, received from the City for a purchase, to the broker, dealer or seller only after receiving evidence that the City has legal, record ownership of the securities. Even though ownership is evidenced in book -entry form rather than by actual certificates, this procedure is commonly accepted as the delivery versus payment (DVP) method for the transfer of UOt� 17 securities. XIII INTEREST EARNING DISTRIBUTION POLICY Interest earnings are generated from pooled investments and specific investments. 1. Pooled Investments - It is the general policy of the City to pool all available operating cash of the City of La Quinta, La Quinta Redevelopment Agency and La Quinta Financing Authority and allocate interest earnings, in the following order, as follows: A. Payment to the General Fund of an amount equal to the total annual bank service charges as incurred by the general fund for all operating funds as included in the annual operating budget. B. Payment to the General Fund of a management fee equal to 5% of the annual pooled cash fund investment earnings. C. Payment to each fund of an amount based on the average computerized daily cash balance included in the common portfolio for the earning period. 2. Specific Investments - Specific investments purchased by a fund shall incur all earnings and expenses to that particular fund. XIV INTERNAL CONTROLS AND INDEPENDENT AUDITOR The City Treasurer shall establish a system of internal controls to accomplish the following objectives: }ice► Safeguard assets; VN-► The orderly and efficient conduct of its business, including adherence to management policies; #t-'�r► Prevention or detection of errors and fraud; V�-► The accuracy and completeness of accounting records; and 0-�-► Timely preparation of reliable financial information. While no internal control system, however elaborate, can guarantee absolute assurance that the City's assets are safeguarded, it is the intent of the City's internal control to provide a reasonable assurance that management of the investment function meets the City's objectives. The internal controls shall address the following: g1. Control of collusion. Collusion is a situation where two or more employees are working in conjunction to defraud their employer. 2. Separation of transaction authority from accounting and record keeping. By separating the person who authorizes or performs the transaction from the people who record or otherwise account for the transaction, a separation of duties is achieved. 3. Custodial safekeeping. Securities purchased from any bank or dealer including appropriate IDES In collateral (as defined by State Law) shall be placed with an independent third party for custodial safekeeping. 4. Avoidance of physical delivery securities. Book entry securities are much easier to transfer and account for since actual delivery of a document never takes place. Delivered securities must be properly safeguarded against loss or destruction. The potential for fraud and loss increases with physically delivered securities. 5. Clear delegation of authority to subordinate staff members. Subordinate staff members must have a clear understanding of their authority and responsibilities to avoid improper actions. Clear delegation of authority also preserves the internal control structure that is contingent on the various staff positions and their respective responsibilities as outlined in the Segregation of Major Investment Responsibilities appendices. 6. Written confirmation or telephone transactions for investments and wire transfers. Due to the potential for error and improprieties arising from telephone transactions, all telephone transactions shall be supported by written communications or electronic confirmations and approved by the appropriate person. Written communications may be via fax if on letterhead and the safekeeping institution has a list of authorized signatures. Fax correspondence must be supported by evidence of verbal or written follow-up. V. Development of a wire transfer agreement with the City's bank and third party custodian. This agreement should outline the various controls, security provisions, and delineate responsibilities of each party making and receiving wire transfers. The System of Internal Controls developed by the City, shall be reviewed annually by the independent auditor in connection with the annual audit of the City of La Quintz s Financial Statements. The independent auditor's management letter comments pertaining to cash and investments, if any, shall be directed to the City Manager who will direct the City Treasurer to provide a written response to the independent auditor's letter. The management letter comments pertaining to cash and investment activities and the City Treasurer's response shall be provided to the City's Investment Advisory Board for their consideration. Following the completion of each annual audit, the independent auditor shall meet with the Investment Advisory Board and discuss the auditing procedures performed and the review of internal controls for cash and investment activities. See Appendix D, "Segregation of Major Investment Responsibilities." XV @ENCHAM 4ISIG XVI REPORTING STANDARDS OU 19 The City Treasurer shall submit a monthly Treasurers Report to the City Council and the Investment Advisory Board that includes all cash and investments under the authority of the Treasurer. The Treasurer's Report shall summarize cash and investment activity and changes in balances and include the following: �t► A certification by the City Treasurer. �+► A listing of Rpurchases and sales/maturities of investments. �+► Cash and Investments categorized by authorized investments, except for LAIF which will be provided quarterly and show yield and maturity. �+► Comparison of month end actual holdings to Investment Policy limitations. 1+0. Current year and prior year monthly history of cash and investments for trend analysis. �+► Balance Sheet. _�+► Distribution of cash and investment balances by fund. 3+► A comparison of actual and surplus funds. �t► A year to date historical cash flow analysis and projection for the next six months. 3t► A two-year list of historical interest rates. XVII FINANCIAL ASSETS AND INVESTMENT ACTIVITY NOT SUBJECT TO THIS POLICY The City's Investment Policy does not apply to the following: ► Cash and Investments raised from Conduit Debt Financing; ► Funds held in trust in the City's name in pension or other post -retirement benefit programs; ► Cash and Investments held in lieu of retention by banks or other financial institutions for construction projects; ► Short or long term loans made to other entities by the City or Agency; and Short term (Due to/from) or long term (Advances from/to) obligations made either between the City and its funds or between the City and Agency. XVIII INVESTMENT OF BOND PROCEEDS The City's Investment Policy shall govern bond proceeds and bond reserve fund investments. California Code Section 5922 (d) governs the investment of bond proceeds and reserve funds in accordance with bond indenture provisions which shall be structured in accordance with the City's Investment Policy. Arbitrage Requirement - The US Tax Reform Act of 1986 requires the City to perform arbitrage calculations as required and return excess earnings to the US Treasury from investments of proceeds of bond issues sold after the effective date of this law. These arbitrage calculations may be contracted with an outside source to provide the necessary technical assistance to 071 ION comply with this regulation. Investable funds subject to the 1986 Tax Reform Act will be kept segregated from other funds and records will be kept in a fashion to facilitate the calculations. The City's investment position relative to the new arbitrage restrictions is to continue pursuing the maximum yield on applicable investments while ensuring the safety of capital and liquidity. It is the City's position to continue maximization of yield and to rebate excess earnings, if necessary. City's FURds. The PFOfessienal PE)FIfelie management fiFFA Will be aPPFaved by Gity Gaunail based lAyestment 1291mey as outlined in Appendix I. Sueh FnanageFS shall have! 0 1 an established whose iRyestment policies and POWOW size aFe SiFnil8F tO these ef the City; and (4) professional XVIIBE INVESTMENT ADVISORY BOARD - CITY OF LA QUINTA The Investment Advisory Board (IAB)_ is a standing board composed sensists of five members fromef the publicee+wAuffit-y that arphave been appointed by and report to the City Council. Background information will be requested and potential candidates must agree to a background check and verification. On an annual basis, in conjunction with the Political Reform Act disclosure statutes, or at any time if a change in circumstances warrants, each board member will provide the City Council with a disclosure statement which identifies any matters that have a bearing on the appropriateness of that member's service on the board. All board members shall resort annually to the City Clerk on Form 700, Statement of Economic Interests, any activities, interests, or relationships that may be, or have the appearance of, a conflict of interest. The IAB must meet at least quarterly, but usually meetss eA a monthly basis, but at least quaFteFly-to_ 1. Review at least annually the City's Investment Policy and recommend appropriate changes; 2. Review monthly treasury report and note compliance with the Investment Policy and adequacy of cash and investments for anticipated obligations; 3. Receive and consider other reports provided by the City Treasurer; 4. Meet with the independent auditor after completion of the annual audit of the City's financial statements, and receive and consider the auditor's comments on auditing procedures, internal controls and findings for cash and investment activities, and; 5. Serve as a resource for the City Treasurer on matters such as proposed investments, internal controls, use or change of financial institutions, custodians, brokers and dealers. U it 21 The IAB will report to the City Council after each meeting either in person or through correspondence at a regular City Council meeting. SeeT4+e aAppendixaes B_iFIelUde Gityof La "Investment Advisory Board Provisions". XIXI INVESTMENT POLICY ADOPTION On an annual The City's Investment pPolicyies will be initially- reviewed annually by the City's Investment Advisory Board and the City Treasurer. The Investment Advisory Board will forward the Investment pPolicyie&, with any revisions, to the City Manager and City Attorney for their review and comment. A joint meeting will be held with the Investment Advisory Board, City Manager, City Attorney, and City Treasurer to review the Investment p !olicyies and any comments, prior to submission to the City Council for their consideration. The Investment Policyies shall be adopted by resolution of the City of La Quinta City Council eR an annualY hasis�. The lsyeahne tPs;ia es "'� , be adapted before the end of June of each year. AB 943 requires that the InvestFnent Peliemes be sent to the California Debt And Investment AdYisGFY GOFAMiGGiOR within sixty days ef a ehange to the 'R.;.FP1#FARRt 1201MOY. 073 22 R c d a a El A 0 W J m Fn U) 2 ir W LL LL 0 cr- a D U) l0 417 4aN �LLC V U U as C m^Ca Aa ❑ o No ❑ ns uoi- 06 w0— 15 -�{ 2 V I K q TM U❑ M� oil } U y W o r E m > m g n E > > N m > r o VI vi o o o 0 d y o m o a rn o o v O N o oo 5 o n m K Q N N a) �n E N 0 9 o '—O� p p 0 LL o 0 0 0 0 O 0 p A R a am a ao o a a a o a O O _ o e e ;E a V O O O O N N N y C O 0 0 0 0 O O O O O Q C O O O O O O O O O O O E :.i •R 0 0 0 o a a a a a 2 O e o � O N O O e e o e e C U Q Z E c Q y m o. U 16 N d m a r c U y c to m to co d m A o Q= LL U« w c m > C a ada�o Z c NE d O LL m o y £ c LL o� c '� m O 0 L f0 N yCN N'aLO 0 U y'•- Od m u O LL NN w Z y Qm�aLLLyyy N=.aN�mNN- UQ�myay ��aICmNL V�yyO amcCt m ZQ m m a NNQQ =m�Ram-m%1 3c�JNO0 UaIcmmL a N O l0 0 0 ZLL CL m 0 O NoN=�>'LCo J,02 OVNaOtcwc=%l 0cj> c'❑n�NO aIcmJmLoy LNO U U: N N" LL 00 LL w N NI MI MI MI vl �I NI nl a` m N 074 ZI 0, £ c m rC m N v �� ro r n a J ai �Y3 Eyai m0 oaa g m m m C O 6 16 N y 3 N C C 0 Q oa c� v c a m.O N a m 0 O IL mSa E E U r c m m w m 10 C a m L .J. aNE v 0-0 C m �cc - E N N >, a 0 C o E N N m am E a0 E m oNm polo om �' m.=N d m oimcEw< `Oo.z m m 05 c a w C 3 ro r {0 5 E i m m rn IL T yEy m� C 1C L O y L j O N Z O d J m 016C OU-U) L> _� m N m Q °m N a a co my yca m M mL U WLL mmm DOH m O. q U N Q 6 C 01 `� m m>> m N N 'o Q C m m r L>O m m m J d woo Ka�Z�LLfAQ KO m 2 a LUm d >La 7 F- Z F E0 5 m O_ Y C O m Z' O `o m w J m J a "' m a o a umi d K o E o0.00 m� a v �m v > c c -R r y Z N C U E L E 00 m t m L 9 N E O O N E O N U n E u L 0 Ncn US y =. 08 o N m 3 a0 00 cc ma cc _ mN L.� ^n mm we LO �� M _45 mm xy a' o o c m des EU E 00 o0C a N m mC a Q 0- 2 aO a m m m 2. � j O O 0t C m a O E m� tm�r. c 0 ��= aE �a g —032 i $ 3 Sc ' vm= �g I =_- U -0 0 E i 0- 0a warn a vI a� c cc c0 2 aE• co 0> `01 0 M ami go o mG 2 a 2!LE oc ao ao army mNa my cLL c m a QLL .o €cLL w oc `> Q m a O y LL W Ui c >• J g .- m C _c m L s O>J 12 O. Emm my OananCmT CdNdyC€m T o w O Jy E NL E N U Em c c c 0,rnE m r aamso -M c om c E 12 9 0.2 M coo� a 0 Eo0amoo .6:2o E (o L �a o a mn5 E y C 0 _ L ONE N, 0 LL C ad Ea O `o L' s O 0E- 0 m E 6 =m Oma _ C m N O m N N (.i a L L.N a I m= d o E c N V m 0 0 m A m L LFo dw0 U is Q� Ham Fql N O m O` r M 0 5 c 0 0 0 'm 0 �5 Appendix B City of La Quinta Municipal Code Chapter 2.70 INVESTMENT ADVISORY BOARD PROVISIONS Sections: 2.70.010 General Rules Regarding Appointment. 2.70.020 Board meetings. 2.70.030 Board functions. 2.70.010 General rules regarding appointment A. Except as set out below, see Chapter 2.06 for General Provisions. B. The Investment Advisory Board (the "board") is a standing board composed of five (5) m�bers from the public that are appointed by city council. La ^_U?^•a Fesid_ney 06 FeqUiFed.exeept C. Background in the investment field and/or related experience is preferred. Background infor}nation will be requestedfequired and potential candidates must agree to a background check and verification. D. On an annual basis, in conjunction with the Political Reform Act disclosure statutes, or at any time if a change in circumstances warrants, each board member will provide the City Council with a disclosure statement which identifies any matters that have a bearing on the appropriateness of that member's service on the board. Such matters may include, but are not limited to, changes in employment, changes in residence, or changes in clients. 2.70.020 Board meetings. The Board usually will meet monthly, but this schedule may be extended to quarterly' meetings upon the concurrence of the Board and the City Council. The specific meeting dates will be determined by the Board Members and meetings may be called for on an as needed basis. 2.70.030 Board functions. 44A. The principal functions of the Board are: (1) review at least annually the City's Investment Policy and recommend appropriate changes; (2) review monthly Treasury Report and note compliance with the Investment Policy and adequacy of cash and investments for anticipated obligations; (3) receive and consider other reports provided by the City Treasurer; (4) meet with the independent auditor after completion of the annual audit of the City's financial statements, and receive and consider the auditor's comments on auditing procedures, internal controls, and findings for cash and investment activities, and; (5) serve as a resource for the City Treasurer on matters such as proposed investments, internal controls, use or change of financial institutions, custodians, brokers and dealers. .)711. The Board will report to the City Council after each meeting either in person or through correspondence at a regular City Council meeting. 25 070 Appendix C City of La Quints Municipal Code Chapter 3.08 INVESTMENT OF MONEYS AND FUNDS Sections: 3.08.010 Investment of city moneys and deposit of securities. 3.08.020 Authorized investments. 3.08.030 Sales of securities. 3.08.040 City bonds. 3.08.050 Reports. 3.08.060 Deposits of securities. 3.08.070 Trust fund administration. 3.08.010 Investment of city moneys and deposit of securities. Pursuant to, and in accordance with, and to the extent allowed by, Sections 53607 and 53608 of the Government Code, the authority to invest and reinvest moneys of the city, to sell or exchange securities, and to deposit them and provide for their safekeeping, is delegated to the city treasurer. (Ord. 2 § 1 (part), 1982) 3.08.020 Authorized investments. Pursuant to the delegation of authority in Section 3.08.010, the city treasurer is authorized to purchase, at their original sale or after they have been issued, securities which are permissible investments under any provision of state law relating to the investing of general city funds, including but not limited to Sections 53601 and 53635 of the Government Code, as said sections now read or may hereafter be amended, from moneys in his custody which are not required for the immediate necessities of the city and as he may deem wise and expedient, and to sell or exchange for other eligible securities and reinvest the proceeds of the securities so purchased. (Ord. 2 § 1 (part), 1982) 3.08.030 Sales of Securities. From time to time the city treasurer shall sell the securities in which city moneys have been invested pursuant to this chapter, so that the proceeds may, as appropriate, be applied to the purchase for which the original purchase money may have been designated or placed in the city treasury. (Ord.2 § I (part), 3.08.040 City bonds. Bonds issued by the city and purchased pursuant to this chapter may be canceled either in satisfaction of sinking fund obligations or otherwise if proper and appropriate; provided, however, that the bonds may be held uncancelled and while so held may be 27 1*7 resold. (Ord. 2 § 1 (part), 1982) 3.08.050 Reports. The city treasurer shall make a monthly report to the city council of all investments made pursuant to the authority delegated in this chapter. (Ord. 2 § 1 (part), 1982) 3.08.060 Deposits of securities. Pursuant to the delegation of authority in Section 3.08.010, the city treasurer is authorized to deposit for safekeeping, the securities in which city moneys have been invested pursuant to this chapter, in any institution or depository authorized by the terms of any state law, including but not limited to Section 53608 of the Government Code as it now reads or may hereafter be amended. In accordance with said section, the city treasurer shall take from the institution or depository a receipt for the securities so deposited and shall not be responsible for the securities delivered to and receipted for by the institution or depository until they are withdrawn therefrom by the city treasurer. (Ord. 2 § 1 (part), 1982 3.08.070 Trust fund administration. Any departmental trust fund established by the city council pursuant to Section 36523 of the Government Code shall be administered by the city treasurer in accordance with Section 36523 and 26524 of the Government code and any other applicable provisions of law. (Ord. 2 § 1 (part), 1982) 28 o.a Appendix D SEGREGATION OF MAJOR INVESTMENT RESPONSIBILITIES Function ResponsibleiR Parties Develop #efmaland Recommend ModificationslnvestmeRt Pel+ey Investment Advisory Board City TFeasuF8f to City's Formal Investment Policy and City Treasurer Review ferfnalCity's Investment Policy-and4eseffmnend City Manager and Recommend City Council Aaction and --City Attorney Adopt Fformal Investment Policy City Council Implement Formal Investment Policy City Treasurer Review Financial Institutions & Select Investments AppFeve-Acknowledge Innvestment sSelections Execute _linvestment transactions T. -.ea6WFaF Confirm Wwires, (if applicable) Record linvestment Ttransactions in City's Aaccounting Rfecords Investment Vverification —(match broker confirmation to City investment records) Reconcile linvestment Rfecords —to Aaccounting Rfecords and Bbank Sstatements Reconcile linvestment Rfecords City Treasurer City Manager or Assistant City Manager City Treasurer or City Manager eF Accounting Manager or Financial Services Assistant Accounting Manager or Financial Services Assistant City Treasurer and Financial Services Assistant Financial Services Assistant Treasurers Report_ of linvestments Accounting Manager Security of linvestments at City 29 Vault 0ig Security of (investments o9utside City Third Party Custodian Review linternal Ceontrol Pprocedures External Auditor 30 060 Appendix E LISTING OF APPROVED FINANCIAL INSTITUTIONS 1. Banking Services Wells Fargo Bank, Government Services, Los Angeles, CA 2. Custodian Services Bank of New York, Los Angeles, CA 3. Deferred Compensation International City/County Management Association Retirement Corporation 4. Broker/Dealer Services Merrill Lynch, San Francisco, CA Morgan Stanley, San Rafael, CA CitiGroup, San Francisco Newport Beach, CA 5. Government Pool State of California Local Agency Investment Fund City of La Quinta Account La Quinta Redevelopment Agency 6. Bond Trustees 1991 City Hall Revenue Bonds - US Bank 1991 RDA Project Area 1 - US Bank 1992 RDA Project Area 2 - US Bank 1994 RDA Project Area 1 - US Bank 1998 RDA Project Area 1 &2 - US Bank 2001 RDA Project Area 1 - US Bank 2002 RDA Project Area 1 - US Bank 2003 RDA Project Area 1 - US Bank Assessment Districts - US Bank No Changes to this listing may be made without City Council approval Got 31 Appendix F BROKER/DEALER QUESTIONNAIRE AND CERTIFICATION 1. Name of Firm:_ 2. Address: 3. Telephone:) 1 4. Broker's Representative to the City (attach resume): Name: Telephone: 5. Manager/Partner-in-charge (attach resume): Name: Telephone: 6. List all personnel who will be trading with or quoting securities to City employees (attach resume) Name: Title: Telephone: ( ) ( ) 7. Which of the above personnel have read the City's Investment Policy? 8. Which instruments are offered regularly by your local office? (Must equal —100 %) • U.S. Treasuries • BA's • Commercial Paper % CD's % Mutual Funds Agencies (specify): % Repos % Reverse Repos % CMO's % Derivatives • Stocks/Equities • Other (specify): 9._ References -- Please identify your most directly comparable public sector clients in our geographical area. Entity Contact Entity Contact 32 0 u 2 Telephone () Telephone () Client Since Client Since 10. Have any of your clients ever sustained a loss on a securities transaction arising from a misunderstanding or misrepresentation of the risk characteristics of the instrument? If so, explain. 11. Has your firm or your local office ever been subject to a regulatory or state/ federal agency investigation for alleged improper, fraudulent, disreputable or unfair activities related to the sale of securities? Have any of your employees been so investigated? If so, --explain. 12. Has a client ever claimed in writing that you were responsible for an investment loss? —Yes No If yes, please provide action taken Has a client ever claimed in writing that your firm was responsible for an — investment loss? —Yes No If yes, please provide - action taken Do you have any current or pending complaints that are unreported to FINRA Yes No If yes, please provide action taken Does your firm have any current, or pending complaints that are unreported to FINRA? Yes No If yes, please provide action taker 33 033 13. Explain your clearing and safekeeping procedures, custody and delivery process Who audits these fiduciary responsibilities? Latest Audit Report Date 14. How many and what percentage of your transactions failed?.. Last month? % $ Last year?— % $ 15. Describe the method your firm would use to establish capital trading limits for the City of La Quinta. 16. Is your firm a member in the S.I.P.C. insurance program?-_ Yes No If yes, explain primary and excess coverage and carriers. 17. What portfolio information, if any, do you require from your clients? 18. What reports and transaction confirmations or any other research publications will the City receive? 19. Does your firm offer investment training to your clients? Yes No 20. Does your firm have professional liability insurance?. Yes No If yes, please provide the insurance carrier, limits and expiration date._ 1 21 1 22 23 Please list your FINRA/NASD Registration Number. Do you have any relatives who work at the City of La Quinta? Yes No If yes, Name and Department Do you maintain an office in California. Yes No 34 004 24. Do you maintain an office in La Quinta or Riverside County? Yes No 25. Please enclose the following: I;- ► Latest audited financial statements. ;+ ► Samples of reports, transaction confirmations and any other research/publications the City will receive. r+=► Samples of research reports and/or publications that your firm regularly provides to clients. r� ► Complete schedule of fees and charges for various transactions. ***CERTIFICATION*** I hereby certify that I have personally read the Statement of Investment Policy of the City of La Quinta, and have implemented reasonable procedures and a system of controls designed to preclude imprudent investment activities arising out of transactions conducted between our firm and the City of La Quinta. All sales personnel will be routinely informed of the City's investment objectives, horizons, outlooks, strategies and risk constraints whenever we are so advised by the City. We pledge to exercise due diligence in informing the City of La Quinta of all foreseeable risks associated with financial transactions conducted with our firm. By signing this document the City of La Quinta is authorized to conduct any and all background checks. Under penalties of perjury, the responses to this questionnaire are true and accurate to the best of my knowledge. Broker Representative Date Title Sales Manager and/or Managing Partner* Date Title 35 0U5 .. .. -- -- -- GOWFAFAent pools Fnay invest In a bFeadeF Fange Of SeSHFitleS thBA YOUF entity invests MR. f. Thepelis7 en reuerseTepuschaseaoFeemenis-cPtiOnS, ShOFt saes and fLAUFes? allernatoves. The inteFeSt? (Simple a. Fnethadelogy used to ealeulate ' b. The fFequeney of ..t.. .mot ..ten? ' mailed?-) 1 is the yield e..ted to e....tiampants of the, pool ... e.thl..? (if not how often?) 36 Ciao What ,. a the diffeFeRt I nvestment a The � �i•e^My with ...hish h t PGAi f� The aRSWOFS to these will help deteFFnine questiens yeu whetheF nir feqL4eme this pool Fneets YOUF epwatienal 37 0U`7 a. What the papeFWGFIE FeqUiFed, if any? 38 068 39 lJ 6 9 Appendix GH Request for Proposals Professional Portfolio Management Firm City of La Quinta, CA The City of La Quinta, CA is soliciting Requests for Proposals (RFP) from interested firms for the provision of a discretionary investment management services for City of La Quinta, CA. The portfolio to be managed of the invested assets is will be approximately 10% of the City's investment portfolio net ef bend PFOeeeds and will be invested between 0 - 53 years. The investment of City of La Quinta, CA's funds is guided by the applicable State statutes and the City of La Quinta, CA's investment policy. A copy of the investment policy is attached for your information. Questions regarding this RFP should be directed to: Name: Title: City of: Address: City, State Zip Code Phone Number: John M. Falconer Finance Director/Treasurer La Quinta, CA 78-495 Calle Tampico La Quinta, CA 92253 (760)777-7150 I. CRITERIA FOR EVALUATION AND SELECTION ■ Experience of the firm in providing services to public sector entities of similar size and with similar investment objectives ■ Professional experience and qualifications of the individuals assigned to the account ■ Portfolio management resources, investment philosophy and approach ■ Responsiveness to the RFP, communicating an understanding of the overall program and services required ■ Reporting capabilities ■ Fees II. SELECTION TIMETABLE A. [Month Day, Year] Proposals due by [Time] PST. B. [Month Day, Year] Proposals evaluated: to be determined C. [Month Day, Year] [City of La Quinta, CA] [Board/Council] approves selection and awards contract. 40 090 III. FORMAT FOR PROPOSALS Please format your response to this RFP in the following manner: A. Organization 1. Describe your organization, date founded, ownership and other business affiliations. Provide number and location of affiliated offices. Specify the number of years your organization has provided investment management service. 2. Describe your firm's revenue sources (e.g., investment management, institutional research, etc.) and comment on your firm's financial condition. 3. Within the past three years, have there been any significant developments in your organization (e.g., changes in ownership, new business ventures)? Do you expect any changes in the near future? 4. Describe any U.S. Securities and Exchange Commission (SEC) censures or litigation involving your organization, any officer, or employee at any time in the last ten years. 5. Describe the firm's fiduciary liability and/or errors and omissions insurance coverage. Include dollar amount of coverage. B. Personnel 1. Identify the number of professionals employed by your firm by classification. 2. Provide an organization chart showing function, positions, and titles of all the professionals in your organization. 3. Provide biographical information on investment professionals that will be involved in the decision -making process for our portfolio, including number of years at your firm. Identify the person who will be the primary portfolio manager assigned to the account. 4. Describe your firm's compensation policies for investment professionals and address any incentive compensation programs. 41 091 C. Assets Under Management 1. Summarize your institutional investment management asset totals by category for your latest reporting period in the following table: Governmental Governmental Pension Non Governmental Pension Corporate High Net Worth Client Endowmental/Foun- dation Number Operating Funds of Clients S A �I A s A Number of Other Restrictive Clients Funds E a-2. Provide the number of separate accounts whose portfolios consist of operating funds. -2-.3. List in the following table the percentage by market value of aggregate assets under all governmental accounts under management for your latest reporting period: Type of Asset Percent by Market Value U.S. Treasury securities Federal Agency obligations Corporate securities rated AAA -AA Corporate securities rated A Corporate securities rated BBB or lower Other (specify 1 42 002 3-.4. Describe the procedures that your firm has in place to address the potential or actual credit downgrade of an issuer and to disclose and advise a client of the situation. 5. Provide data on account/asset growth over the past five years. Indicate the number of government accounts gained and the number of government accounts lost. 6. List your five governmental largest clients. Identify those that are exclusively operating fund relationships and/or those that are other relationships (e.g., bond fund, retirement fund). 7. Provide a copy of the firm's Form ADV, Parts I and II (including all schedules). 8. Provide proof of State of California Registration, if your firm is not eligible for SEC registration. 9. Provide a sample contract for services. D. Philosophy/Approach 1. Describe your firm's investment philosophy for public clients, including your firm's philosophy regarding average duration, maturity, investment types, credit quality, and yield. 2. Describe in detail your investment process, as you would apply it to City of La Quinta, CA's portfolio. 3. What are the primary strategies for adding value to portfolios? 4. Describe the process you would recommend for establishing the investment objectives and constraints for this account. 5. Describe in detail your process of credit risk management, including how you analyze credit quality, monitor credits on an ongoing basis, and report credit to governmental accounts. 6. Describe your firm's trading methodology. 7. Describe your firm's decision -making process in terms of structure, committees, membership, meeting frequency, responsibilities, integration of research ideas, and portfolio management. 8. Describe your research capabilities as they would pertain to governmental accounts. What types of analysis do you use? 43 093 9. Describe the firm's approach to managing relationships with the broker -dealer community. E. Portfolio Management 1. Are portfolios managed by teams or by one individual? 2. What is the average number of accounts handled per manager? 3. Which professional staff member will be the primary client contact for City of La Quinta, CA? 4. How frequently are you willing to meet with us? 4:5. Describe procedures used to ensure that portfolios comply with client investment objectives, policies, and bond resolutions. 9F. Fees Charged 91. Please include a copy of your firm's fee schedule applicable to this RFP. 92. Identify any expenses that would not be covered through this fee structure and would be required in order to implement the firm's program. 93. Is there a minimum annual fee? G. Performance Reporting 91. Please report on all accounts under $100 million. e2. Please provide performance history for governmental accounts for the last five years. e3. Please provide risk measurements for governmental accounts for the last five years. 4. Indicate whether your returns are calculated and compiled in accordance with the Association for Investment Management and Research (AIMR/CFA Institute) standards. 5. Do your reports conform to the State of California reporting standards? Are you willing to customize your reports to meet our specifications? 6. How will you notify us of investment transactions? 7. Are confirmations of investment transactions sent directly by the broker/dealer to the client? UJ� 8. Do your reports include rating information on investments which is required by GASB 40? a.H. References Provide a list of at least five (5) client references in California. References should be public agencies with portfolio size and investment objectives similar to City of La Quinta, CA. Include length of time managing the assets, contact name, and phone number. b-.I. Insurance Requirements Exhibit A defines the insurance requirements that will need to be met prior to the [Board/Council]'s approval of any agreement for services. �,.J. Submittal of proposals 91. Seven (7) copies of the proposal shall be submitted in a sealed envelope bearing the caption RFP for (City of La Quinta, CA) and addressed to: City of La Quinta, CA 78-495 Calle Tampico La Quinta, CA 92253 Attention: John M. Falconer Finance Director/Treasurer 92. Proposal must be received no later than [Time] PST on [Month, Day, Year]. 93. Proposals should be verified before submission. The City of La Quinta, CA shall not be responsible for errors or omissions on the part of the respondent in preparation of a proposal. The City of La Quinta, CA reserves the right to reject any and all proposals, to wave any irregularities, or informalities in the proposals, and to negotiate modifications to any proposal. Enclosures: Investment Policy Treasurers Report 45 095 rt x �o c m a a z, E LL C N N m v 9 a M am ml m O O O O O O O N N N N N O N N N w N ON NN Z Z Z Z Z Z Z} } }}} Z}} Y >0 r Y Y add o� a `y T 6 U a 0 O O O O O O O O O O O N N N N N w N w . Z Z Z Z Z Z Z Z Z Z Z QU m` x `m x E a a E U °' v •- c c a c c c c c c y c c c c a n c c U J z z Z Z Z Z Z Z Z Z z z a Z Z Q 0 0 0 0 0 0 _ � a n £ £ O FO o `o O 0 c c c c c o 0 0 o c c c c e e c c O o 0 0 o N m O o o O o O o O' o 0 o O e Z Z Z Z Z� m '� N N Z Z Z Z O 'h N Z Z N w o i� E m m N 0 0 o a 0 0 N N '� m m E m E m m m L La m m m m m m 10 La m m z o Y z " > i i o i Z i i u} ur m m rA to N zm zm n in r to to � a O Z' 1p O aEi E aci w a O U m N a rn m m LD E �' w ._ y w a� LL y n m U a w c w o ZCC OT>� TO A m n y m> > a o V U Q C l LL a Q LL w C �p t 6y m o aci c Q m �° gUJ F m o a umi m `m ~ d E c m Q c 6 J rn t6 y E m E c U 20 a m m 7 0 U F '� rn > o J `o o n d c m Z ami m � T 5 C J = m N 0 C N'O cn Q > a U Q U c U m 'E Eii '�� '� c2,�5 a d E N N m fOC m too (00 loD f�D m f�D too too fo0 m> O U o t0 h N h o o� ttI in C! to th tm M m n e7 N � in U n t r w E B U 0) Y E 0 0 n m Z. U n It 096 Appendix I Investment Management Process and Risk Except as provided for in Section 27000.3, Government Code Section 53600.3 declares each person, treasurer, or governing body authorized to make investment decisions on behalf of local agencies to be a trustee and therefore a fiduciary subject to the prudent investor standard. These persons shall act with care, skill, prudence, and diligence under the circumstances then prevailing when investing, reinvesting, purchasing acquiring exchanging selling, and managing funds. Section 53600.5 further stipulates that the primary objective of any person investing public funds is to safeguard principal; secondly, to meet liquidity needs of the depositor; and lastly, to achieve a return or yield on invested funds (Government Code Section 27000.5 specifies the same objectives for county treasurers and board of supervisors). Risk is inherent throughout the investment process. There is risk assigned to any investment activity as well as opportunity risk related to inactivity. Market risk is derived from exposure to overall changes in the general level of interest rates while credit risk is the risk of loss due to the failure of the insurer of a security. The market value of a security varies inversely with the level of interest rates. If an investor is required to sell an investment with a five percent yield in a comparable seven percent rate environment, that security will be sold at a loss. The magnitude of that loss will depend on the amount of time until maturity. Purchasing certain allowable securities with a maturity of greater than five years requires approval of the governing board (see Government Code Section 53601)• Part of that approval process involves assessing and disclosing the risk and possible volatility of longer -term investments Another element of market risk is liquidity risk. Instruments with unique call features, special structures or those issued by little known companies are often thinly traded. Their uniqueness often makes finding prospective buyers in a secondary market more difficult and, consequently, the securities' marketability and price are discounted. However, under certain market conditions, gains are also possible with these types of securities. Default risk occurs when the borrower is unable to repay the obligation. Generally, securities issued by the federal government and its agencies are considered the most secure, while securities issued by private corporations or negotiable certificates of deposit issued by commercial banks have a greater degree of risk. Securities with additional credit enhancements, such as bankers acceptances, collateralized repurchase agreements and collateralized bank deposits are somewhere between the two on the risk spectrum. The vast majority of portfolios are managed within a buy and hold policy. Investments are purchased with the intent and capacity to hold that security until maturity. At times, market forces or operations may dictate swapping one security for another or selling a security before maturity. Continuous analysis and fine tuning of the investment portfolio are considered prudent investment management. [... ] The Government Code contains specific provisions regarding the types of investments and practices permitted after considering the broad requirement of preserving principal and maintaining liquidity before seeking yield. These provisions are intended to promote the use of 48 r 09'7 reliable, diverse, and safe investment instruments to better ensure a prudently managed portfolio worthy of public trust. Chapter U. Fund Management Local Agency Investment Guidelines 2007 Issued by California Debt and Investment Advisory Commission 49 0 A Appendix J GLOSSARY (Adopted from the Municipal Treasurers Association) The purpose of this glossary is to provide the reader of the City of La Quinta investment policies with a better understanding of financial terms used in municipal investing. AGENCIES: Federal agency securities and/or Government -sponsored enterprises. ASKED: The price at which securities are offered. BANKERS' ACCEPTANCE IBA►: A draft or bill of exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer. BID: The price offered by a buyer of securities. (When you are selling securities, you ask for a bid.) See Offer. BROKER: A broker brings buyers and sellers together for a commission. CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a certificate. Large -denomination CD's are typically negotiable. COLLATERAL: Securities, evidence of deposit or other property which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. COMMERCIAL PAPER: Short-term unsecured promissory notes issued by a corporation to raise working capital. These negotiable instruments are purchased at a discount to par value or at par value with interest bearing. Commercial paper is issued by corporations such as General Motors Acceptance Corporation, IBM, Bank America, etc. COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual report for the City of La Quinta. It includes five combined statements for each individual fund and account group prepared in conformity with GAAP. It also includes supporting schedules necessary to demonstrate compliance with finance -related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section. CONDUIT FINANCING: A form of Financing in which a government or a government agency lends its name to a bond issue, although it is acting only as a conduit between a specific project and bond holders. The bond holders can look only to the revenues from the project being financed for repayment and not to the government or agency whose name appears on the bond. COUPON: (a) The annual rate of interest that a bond's issuer promises to pay the bondholder on the bond's face value. (b) A certificate attached to a bond evidencing interest due on a payment date. DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. DEBENTURE: A bond secured only by the general credit of the issuer. DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities. DERIVATIVES: (1) Financial instruments whose return profile is linked to, or derived from, the movement of one or more underlying index or security, and may include a leveraging factor, or (2) financial contracts based upon notional amounts whose value is derived from an underlying index or security (interest rates, foreign exchange rates, equities or commodities). 50 0919 DISCOUNT: The difference between the cost 3 price of a security and its maturity when quoted at lower than face value. A security selling below original offering price shortly after sale also is considered to be at a discount. DISCOUNT SECURITIES: Non -interest bearing money market instruments that are issued a discount and redeemed at maturity for full face value, e.g., U.S. Treasury Bills. 4. DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns. FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to various classes of institutions and individuals, e.g., S&L's, small business firms, students, 5. farmers, farm cooperatives, and exporters. 1. FNMA's (Federal National Mortgage Association) - Used to assist the home mortgage market by purchasing mortgages insured by the Federal Housing Administration and the Farmers Home Administration, as well as those guaranteed by the Veterans Administration. They are issued in various maturities and in minimum denominations of $10,000. Principal and Interest is paid monthly. 2. FHLB's (Federal Home Loan Bank Notes and Bonds) - Issued by the Federal Home Loan Bank System to help finance the housing industry. The notes and bonds provide liquidity and home mortgage credit to savings and loan associations, mutual savings banks, cooperative banks, insurance companies, and mortgage -lending institutions. They are issued irregularly for various maturities. The minimum denomination is $5,000. The notes are issued with maturities of less than one year and interest is paid at maturity. 51 FLB's (Federal Land Bank Bonds) - Long-term mortgage credit provided to farmers by Federal Land Banks. These bonds are issued at irregular times for various maturities ranging from a few months to ten years. The minimum denomination is $1,000. They carry semi-annual coupons. Interest is calculated on a 360-day, 30 day month basis. FFCB's (Federal Farm Credit Bank) - Debt instruments used to finance the short and intermediate term needs of farmers and the national agricultural industry. They are issued monthly with three- and six-month maturities. The FFCB issues larger issues (one to ten year) on a periodic basis. These issues are highly liquid. FICB's (Federal Intermediate Credit bank Debentures) - Loans to lending institutions used to finance the short-term and intermediate needs of farmers, such as seasonal production. They are usually issued monthly in minimum denominations of $3,000 with a nine -month maturity. Interest is payable at maturity and is calculated on a 360- day, 30-day month basis. 6. FHLMC's (Federal Home Loan Mortgage Corporation) - a government sponsored entity established in 1970 to provide a secondary market for conventional home mortgages. Mortgages are purchased solely from the Federal home Loan Bank System member lending institutions whose deposits are insured by agencies of the United States Government. They are issued for various maturities and in minimum denominations of $10,000. Principal and Interest is paid monthly. Other federal agency issues are Small Business Administration notes (SBA's), Government National Mortgage Association notes (GNMA's), Tennessee Valley Authority notes (TVA's), and Student Loan Association notes (SALLIE-MAE's). FEDERAL DEPOSITOR INSURANCE CORPORATION (FDIC): A federal agency that insures bank deposits, currently up to $100,000 per deposit. FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently pegged by the Federal Reserve through open - market operations. FEDERAL HOME LOAN BANKS (FHLB): Government sponsored wholesale banks (currently 12 regional banks) which lend funds and provide correspondent banking services to member commercial banks, thrift institutions, credit unions and insurance companies. The mission of the FHLB's is to liquefy the housing related assets of its members who must purchase stock in their district Bank. FEDERAL OPEN MARKET COMMITTEE (FOMC): Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a permanent member, while the other Presidents serve on a rotating basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases and sales of Government Securities in the open market as a means of influencing the volume of bank credit and money. FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks and about 5,700 commercial banks that are members of the system. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae): Securities influencing the volume of bank credit guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations, and other institutions. Security holder is protected by full faith and credit of the U.S. Government. Ginnie Mae securities are backed 52 by the FHA, VA or FMHM mortgages. The term .pass -through" is often used to describe Ginnie Maes. LAIF (Local Agency Investment Fund) - A special fund in the State Treasury which local agencies may use to deposit funds for investment. There is no minimum investment period and the minimum transaction is $5,000, in multiples of $1,000 above that, with a maximum balance of $30,000,000 for any agency. The City is restricted to a maximum of ten transactions per month. It offers high liquidity because deposits can be converted to cash in 24 hours and no interest is lost. All interest is distributed to those agencies participating on a proportionate share basis determined by the amounts deposited and the length of time they are deposited. Interest is paid quarterly. The State retains an amount for reasonable costs of making the investments, not to exceed one -quarter of one percent of the earnings. LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes. LOCAL GOVERNMENT INVESTMENT POOL (LGIP): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold. MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase --reverse repurchase agreements that establishes each party's rights in the transactions. A master agreement will often specify, among other things, the right of the buyer -lender to liquidate the underlying securities in the vent of default by the seller -borrower. 101 MATURITY: The date upon which the principal or stated value of an investment becomes due and payable MONEY MARKET: The market in which short- term debt instruments (bills, commercial paper, bankder' acceptances, etc.) are issued and traded. OFFER: The price asked by a seller of securities. (When you are buying securities, you ask for an offer.) See Asked and Bid. OPEN MARKET OPERATIONS: Purchases and sales of government and certain other securities in the open market by the New York Federal Reserve Bank as directed by the FOMC in order to influence the volume of money and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and credit; sales have the opposite effect. Open market operations are the Federal Reserve's most important and most flexible monetary policy tool. PORTFOLIO: Collection of all cash and securities under the direction of the City Treasurer, including Bond Proceeds. PRIMARY DEALER: A group of government securities dealers who submit daily reports of market activity and depositions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission (SEC) -registered securities broker -dealers, banks and a few unregulated firms. QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection 53 Commission to hold public deposits. RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond the current income return. REPURCHASE AGREEMENT (RP OR REPO): A repurchase agreement is a short-term investment transaction. Banks buy temporarily idle funds from a customer by selling U.S. Government or other securities with a contractual agreement to repurchase the same securities on a future date. Repurchase agreements are typically for one to ten days in maturity. The customer receives interest from the bank. The interest rate reflects both the prevailing demand for Federal funds and the maturity of the repo. Some banks will execute repurchase agreements for a minimum of $100,000 to $500,000, but most banks have a minimum of $1,000,000. REVERSE REPURCHASE AGREEMENTS (RRP or RevRepo) - A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security "buyer" in effect lends the "seller" money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. Dealers use RRP extensively to finance their positions. Exception: When the Fed is said to be doing RRP, it is lending money that is increasing bank reserves. SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank's vaults for protection. SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following the initial distribution. SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect investors in securities transactions by administering securities legislation. IU2 SEC RULE 15C3-1: See Uniform Net Capital Rule. STRUCTURED NOTES: Notes issued by Government Sponsored Enterprises (FHLB, FNMAS, SLMA, etc.) And Corporations which have imbedded options (e.g., call features, step- up coupons, floating rate coupons, derivative - based returns) into their debt structure. Their market performance is impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the Shape of the yield curve. SURPLUS FUNDS: Section 53601 of the California Government Code defines surplus funds as any money not required for immediate necessities of the local agency. The City has defined immediate necessities to be payment due within one week. TREASURY BILLS: A non -interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months or one year. TREASURY BONDS: Long-term coupon -bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities of more than 10 years. TREASURY NOTES: Medium -term coupon -bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities from two to 10 years. UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that member firms as well as nonmember broker -dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities, one reason new public issues are —spread among members of underwriting syndicates. Liquid capital includes cash and 54 assets easily converted into cash. UNIFORM PRUDENT INVESTOR ACT: The State of California has adopted this Act. The Act contains the following sections: duty of care, diversification, review of assets, costs, compliance determinations, delegation of investments, terms of prudent investor rule, and application. YIELD: The rate of annual income return on an investment, expressed as a percentage. (a) INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par of plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond. iu3 ok a (rt� at , o aw 3 s COUNCIL/RDA MEETING DATE: June 19, 2008 ITEM TITLE: Consideration of Fiscal Year 2008/2009 Preliminary Budget RECOMMENDATION: AGENDA CATEGORY: ✓� BUSINESS SESSION: v'- CONSENT CALENDAR: STUDY SESSION: PUBLIC HEARING: Adopt the Fiscal Year 2008/2009 Preliminary Budget and direct staff to prepare a Fiscal Year 2008/2009 Final Budget for the July 15, 2008 City Council Meeting. FISCAL IMPLICATIONS: All Preliminary Fiscal Year 2008/2009 revenues, operational appropriations and capital projects funding are included in this Preliminary Budget. Pursuant to City Council direction, staff has presented the City Council with a balanced General Fund with an estimated operating surplus of $52,703 for Fiscal Year 2008/2009. CHARTER CITY IMPLICATIONS: None. BACKGROUND AND OVERVIEW: Introduction As the City Council is aware the Budgeting process actually starts in February when the City Council discusses the City Council Goals and the Annual Financial Management review. The Annual Financial Management review is the first component of the strategic planning process and along with the discussion of the City Council goals are the building blocks of the Budget. The City Council has since reviewed and approved the Economic Development Plan, the Capital Improvement Program and the Marketing Plan for the upcoming Fiscal Year. Each of the implementation needs of these documents have been incorporated into the proposed budget. iO4 This preliminary Fiscal Year 2008/2009 Budget is similar to the format implemented in previous years. This format utilizes two separate documents to develop the City, Redevelopment Agency and Financing Authority's Budget. The first of the two documents utilized for presentation of this year's budget is titled: "Fiscal Year 2008/2009 Preliminary Budget," and includes the total scope of operations for the City, Agency and Financing Authority. The second document is titled: "Supporting Document." This document provides the detail for each program operation and the justification for any of the changes requested. . Summary of This Year's Budget Revenues — General Fund Staff is pleased to report that this year's General Fund revenues reflect a net increase from the previous year. The City is ahead of the curve on recurring revenue generation, which has outpaced our population growth. This will eventually even out as population growth continues and land for commercial development is no longer available for additional revenue generation. This year's General Fund budgeted revenues reflect an increase in a number of revenue sources totaling $ 1,368,813 over last year's budget. However, the City is also experiencing some decreases in certain revenue sources due to a down -turn in the economy. The Fiscal Year 2008/2009 revenues are projected with the major changes reflected in the following tables: INCREASE/ REVENUE TYPE (DECREASE) Property Tax $ 1,298,300 Motor Vehicle in Lieu 803,700 County Fire 191,000 Transient Occupancy Tax 127,400 Franchise Fee 106,700 Interest (25,422) Fees for Service (205,845) Licenses & Permits (228,320) Document Transfer Tax (300,000) Sales Tax (522,000) Summary of all other changes 123,300 Subtotal 1,368,813 Change in Transfers 496,022 Application of reserves - Change in Reimbursements (528,102) Total $ 1,336,733 105 Expenditures — General Fund This year's General Fund budget has provided for numerous service level increases. Some of the more notable planned expenditures in this year's budget include: • Fourth and final year funding for the Cal State San Bernardino campus building. • Increase in Riverside County Sheriff contract by six positions - four sworn patrol deputies, one Community Service Officer, and one dedicated Lieutenant. • 3.7% Cost of Living Adjustment effective July 1, 2008 for the FY 2008/2009 and normal step increases budgeted for City employees. • Funding for the November General Election. • Increase funding to pay for general liability insurance. • Increase funding for the County of Riverside Library contract with the expansion of the La Quinta Library. • Increase funding for the General Plan update. • Increase funding for the Pavement Management/Slurry Seal program. • Funding for a study of a Park District Assessment District. • Increase in salaries and fringe benefits in the Streets Maintenance Division of the Public Works Department for a Maintenance Worker 11 to assist in the maintenance of Highway 111. • Increase funding for Street signs in the Cove. Personnel In addition to the various additions to the proposed budget, several changes in the reporting structure have been made in Fiscal Year 2008/2009. In FY 2007/2008, the Museum Division in the Community Services Department was created to account for the Museum activities and in May 2008 the Museum opened. Two (2) part time Museum Aides ($1 1 per hour) are requested to be responsible for working at the Museum to answer customer questions and operate the store. This funding has been included in the FY 2008/2009 Preliminary Budget. The Public Works Department is requesting a new position of Maintenance Worker II (Range 46) to ensure maintenance issues are addressed along Highway 1 1 1 since the City acquired the Highway from Caltrans in January 2008. This funding has been included in the FY 2008/2009 Preliminary Budget. The Finance Department is requesting a Range increase in the Accounting Manager position (from range 72 to 76) to reflect this position's responsibilities compared to similar Manager Positions in the City. The funding would come from the Personnel Reserve contained in the Management Services Division. 110 The Development Services Division in the City Managers Office is requesting two proposed Economic Development Project Manager positions (Range 71) to replace two Management Analyst positions (Range 68) to better reflect the specialized duties these positions perform. The funding would come from the Personnel Reserve contained in the Management Services Division. The Planning Division of the Planning Department has an Assistant Planner position that has not been funded in the FY 2008/2009 budget. This position has not been filled and remains vacant. Police and Fire Department Budget Discussions Police Services - the overall budget for Police Services has increased by $1,991,704. This represents the largest service level cost in the proposed budget. Police Services represents 26.8% of total General Fund expenditures for FY 2008/2009 as compared with 23.15% of the FY 2007/2008 budget. The cost increase is due to two factors. The first is an increase in rates for services. This rate increase results in an estimated cost of $435,359 for the existing level of service. The second cost increase is due to the proposed addition of six new positions - four patrol deputies, one Community Service Officer and one dedicated Lieutenant. The estimated cost for these six positions is $1,263,664. The City Manager concurs with the recommendation of the Police Chief regarding the need for these additional positions. It is important to note that Attachment 2 of the proposed La Quinta Police Department FY 2008/2009 budget from the Police Chief included an additional request totaling $495,748 for two additional patrol officers and related training costs for a total of six patrol deputies. Also included within the Police Department proposal is $120,134 for building improvements for a new Police Office along the Highway 1 1 1 corridor and an increase of $125,000 to $250,000 for special enforcement activities. Fire Services - the overall budget for Fire Services has increased by $117,323 to a total of $4,979,375 for Fiscal Year 2008/09. This represents the fourth largest service level in the proposed budget. Fire Services represents 1 1.1 % of total General Fund expenditures for FY 2008/2009 as compared with same percentage for FY 2007/2008. The primary factor for the increase is a $160,000 capital request for exhaust equipment at the stations while all other costs under the contract are expected to remain at FY 2007/2008 levels. No change in Fire Services personnel is being recommended. Revenues for these services have come from the Fire Structural Tax and Property Tax increment from Project Area 1 and 2, which should exceed appropriations and continue to result in a surplus. r, I .. U Green and Sustainable Programs Included in the Fiscal Year 2008/2009 budget is a summary of City-wide green and sustainable environmental goals. Key green environmental projects include: Manage the Green and Sustainable La Quinta Program, which is directed toward reducing energy consumption and conservation of resources; Continue to partner with Coachella Valley Water District, Imperial Irrigation District, and the Gas Company to implement environmentally efficient programs that reduce greenhouse gas emissions; Complete energy audits and implement conservation enhancements for City buildings; Commence major update to City's General Plan that includes greenhouse gas and additional "green" programs and policies; Implement LEED, water conservation and other green/environmental programs for the SilverRock Resort clubhouse, golf courses, and related infrastructures; Install smart irrigation controllers at all City buildings; Implement and monitor the City of La Quinta and Coachella Valley Water District Cooperative Landscape Water Management Program; and Implement and monitor the City of La Quinta and Imperial Irrigation District Energy Reduction Program. Also included in the budget is a listing of department specific green and environmental projects totaling $763,200. Staff will be making significant efforts over this next fiscal year to meet the Council's expectations to protect the environment and maintain a "Green and Sustainable La Quinta." Community Service Projects In past budgets, the Council has included community service projects to benefit the citizens, children, and business community (Attachment 3). This attachment reflects requests totaling $72,800 that have not been included in the Fiscal Year 2008/2009 Preliminary Budget. iO3 The following table lists Community Service items exceeding $5,000 as contained in the Preliminary Budget: FY 08/09 AGENCIES BUDGETED CSUSB Building Fund (1) 250,000 Chamber of Commerce 130,000 La Quinta Arts Foundation 100,000 Boys & Girls Club - Facility Use (2) 60,000 YMCA Pool Contract 38,000 Grant Contingency 100,000 Community Special Events 12,900 Facility Dedications/Community Concert/Community Picnic 6,500 Date Festival 5,000 Coachella Valley Economic Partnership 10,000 Jacqueline Cochran Regional Airport ( Airshow and dues) 15,000 (1) FY 08/09 is the final payment. (2) $30,000 from Community Development Block Grant Overall, the City's General Fund Budget is a positive story. As identified on page C-1 of the Preliminary Budget, this year's budget is currently balanced and contains a surplus of $52,703. Some of the significant items or changes contained in the Preliminary Budget from FY 2007/2008, which total $3,105,692 are listed in Attachment 1. Other Funding Requests Listed below are funding requested by other agencies which have not been included in the Fiscal Year FY 2008/2009 budget: • A request of $145,800 from the La Quinta Arts Foundation. $100,000 has been included in the FY 2008/2009 budget. A remaining amount of $20,800 is requested for waiver of rental fees at the Civic Center Campus during the annual Arts Festival and $25,000 has been requested for other events and activities as outlined in the request. The request is provided as Attachment 4-1. • A request from the Riverside County Fair and Date Festival for an additional $5,000 to become a Patron Sponsor. $5,000 has been included in the FY 2008/2009 budget. The request is provided as Attachment 4-2. iU1 • A request for financial support 1no specific amount requested) for DesertArc formerly the Foundation for the Retarded of the Desert. The request is provided as Attachment 4-3. • A request for an increase in sponsorship of the Jacqueline Cochran Air Show 2008 of $5,000. $15,000 has been included in the FY 2008/2009 budget for the air show and dues. The request is provided as Attachment 4-4. • A request from Coachella Valley Economic Partnership for financial support from $17,000 to $50,000. $10,000 has been included in the FY2008/2009 budget. The request is provided as Attachment 4-5. • A request from the Boys & Girls Club for an additional $10,000. $60,000 has been included in the FY 2008/2009 budget. The request is provided as Attachment 4-6. The City Council may consider any or all of these funding requests at this time or refer, as deemed appropriate, the request(s) to the grant process. State Budget Impacts The FY 2008/2009 budget does not contain any State mandated shifts, which have resulted in lost revenues to the City and Redevelopment Agency in the past. Timeline Attached is a brief outline of the City staff presentation of the Preliminary Budget (Attachment 5) as well as a one -page summary of highlights of this year's budget (Attachment 6). Also attached are a Summary and Supporting Fiscal Year 2008/20009 Preliminary Budget for Council's consideration (Attachment 7). Staff is requesting that, at the June 19, 2008 City Council meeting, the Council review and make amendments as necessary to the Preliminary Budget. Subsequent to this review, staff is requesting approval of the Preliminary Budget with a July 1, 2007, effective date. Staff will then incorporate all changes pursuant to the discussion of the Preliminary Budget and schedule the item for consideration at the July 15, 2008, City Council meeting for Final Budget adoption. Capital Improvement Program The Fiscal Year 2008/2009 Preliminary Budget incorporates the planned capital expenditures for next year. The projects can be found on Pages H-1 and H-2 and include funding for three (3) major CIP projects — Village/Cove Area Fire Station, Corporate Yard - Phase 1 construction, and the sound attenuation Wall at Laguna De la Paz on Washington Street. Earlier this year, the City Council considered these three - Five Year Capital Improvement Program (CIP) projects and recommended them. Since these discussions, staff is also recommending the following projects be added to the budget: • An additional $186,900 reimbursement to TD Desert Development Tract 25429 street and other roadway improvements from Transportation Development Fees. • An additional $65,000 for a Sand Volleyball Court from Quimby Fees. • An additional $63,000 reimbursement to KSL Tract 29136 street and other roadway improvements from Transportation Development Fees. • An additional $30,000 for Dune Palms Road home acquisition costs from RDA 2 Low and Moderate Income Funds. H-1 also lists the developer/sales tax reimbursements that the City of La Quinta General Fund is estimated to pay which total $713,454 for FY 2008/2009. Five -Year Resource Allocation Plan City staff is currently completing the Five -Year Resource Allocation Plan (RAP). This five-year plan forecasts the operating expenditures and the anticipated revenues to pay for these expenditures. Staff will incorporate any changes between the Preliminary Budget and the final budget into the Five -Year Resource Allocation Plan which is scheduled for presentation at the July 15, 2008 City Council meeting. Summary This memorandum is intended only as a summary of the issues and details of the budget. We look forward to these discussions with the City Council at the June 19, 2008 City Council special meeting. The City staff will be prepared with recommendations, and requests to report on, methods/suggestions to balance the operating budget. FINDINGS AND ALTERNATIVES: City staff is requesting: 1) Review and comment on the 2008/2009 Fiscal Year Budget and provide direction regarding any proposed changes to the document; and 2) Approval of the 2008/2009 Fiscal Year Preliminary Budget as amended at the June 19, 2008, City Council Special Meeting. (Any approved changes by the City Council to be incorporated into the Final Budget for adoption on July 15, 2008.) Res ect/s�u bmittedd Jo n M. Falconer, Finance Director Approved for submission by: Thomas P. Genovese, City Manager Attachments: 1. Changes between Fiscal Year 2008/2009 & 2007/2008 General Fund Expenditures 2. Proposed La Quinta Police Department FY 2008/2009 Budget 3 Grants/Contingency/Contracts/Other & Dept Requests 4-1 . La Quinta Arts Foundation Funding Request 4-2. Riverside County Fair and Date Festival Funding Request 4-3. DesertArc Funding Request 4-4. Jacqueline Cochran Air Show Funding Request 4-5. Coachella Valley Economic Partnership Funding Request 4-6. Boys & Girls Club Funding Request 5. Staff Outline 6. Major Highlights 7. Preliminary Budget — two documents PA 1 1 HVIl1VIC1V 1 1 y 8�rt10m Y m�° b ........... 0�01� yNm N W W W 1� W n W Of m Y P Y Y Y Y Y g Q O l Y b W m N N U w 01�t7NyN OW � O� �0000 0000 000 O OO OOOO ONY p_ PON 10 (VNOfVW 01N N 00 OOON ONN NNl7 U w ooWWoF oW o 000��oo�� o000 0�0 Y�1 W O N 0 N m N O Y O O O O O O O O W O O O p O F W W O W O Y O O 0.1 IDcoO O W O O N 0.0 N ON O W W N � 0 n h Y N N W W M W N N '- q CN mT CLL O N(�yy yqC (Ny O 01NmNtW'1� NP O 00000000000 ONm� YO O pw 42 � IW'lNn W �� Y b �YNOCNmGOON n'mT CiP p N W P Y O b LL y 0 O C N W O m N m 0 C E a O y b A c 0 ° N 2 El 12 n o O or e JI E $ rc H g cc s 12 m E p Q m » c> m Q a E yQ2 $ ° iygn6 U; IL N LL CuO C Ln € D > O c n m E u U' K c c g ap¢3 i`.0 aQ O ,a'2ErQEcW Sm �'iS3L u'�WwaK EAU a a`cc �U t -c_ ou. �y @LL 'o c cc c._c.0 cc N EWU°`x�BWUO m'�cm mou a !�' $ g U '° a o E Si E L u u u u u n m N O O p m a m a .W y yN mH it U V > m 0 m m m E E o y U u ° m N E O E '2 c E u E E m E E 0 0 z g o a a m v c c m ° � u | ###§ § !* !!!! �: ;kk$!\ FRRR ! §§§§ § )) \&«2 §§ol. &§!!§i re11 ` § a#§q- /f#E $ ! [! [ §f \\\ ( ! ` ` `� £ !s`& V. ./2() {$/$ \ �} (�»; ) k\\Q [ }0 /\ )\\[}} }!!}}! } )) ) ii4 ¥4# ## !«! !r ¢#;O # ;§ 4;E ! /( \�k \ /; 2 { �\ - /_ k Ho j /5 / 00 - ||!$ ,ƒ !" ` �\ \ \k / , )k\ k ! )12 )2m !k 80 ! 2 ! ! 7 / } ii3 E P n m P Q Y N Y Y Y Y Y Y Y Y Y V Y P P N A O «««« N N N N N N N N N N N N N N N N N N U l�l N M 0 W N m W W m m m m m O m � N O m O O N N O m r N N m n m O P n m N Y O m W U « �omoNm ow w oo00om o mA N w V m m W P Y O P N O O O r O O A Cl O N m a O m n n N O w N m m mO O N « r n N q O C W W W O N o� y C LL O W m ym ym 0 W cOm m N W W fap (O y 01 O m m O O 0O m R O N O n N O N y N N W fpp Y N pp __ �p N � y LL i L C Y O O 0 N m m N � y a � y a mm y LL b e p y C LL a Im u y a ° 8 E 2 6« N > E 8 u 2 0- m E c wo w $$ y b LL O N O cO •C OW E aQ W O O W v W L E c$ w E a x'y 57'0 q3 E n¢ xF�`C mUW a °° U E NfJU mOU1WL fQ V IOL-mi�NJN N O7WU F F' 15 5 C O O m U i 0 0 a Y mmmmmmmwm mm y Iemm�elMwMe� e'Im W OGCCNN W UIO CN N N N N N N N N N N N U o��go�o 00 00 Ym o 00 0 00l o0 C O O N O O O N U O O O O O O O O O O N n O N N� Y m N r CO] a mo L N m% LLL N O O O O N O N LL Y C Y W O O n O O N y W Q Y O N Q a s a E L Cl V NIL O yyN O p CO Y p Ili w con x n C C J WO a - a W W 4 d d U L0 00 LLm 6 p U y O m c Y r 4 Y c t Q LL C c U � UoSf7 t1 ('JWQW NQ �17 m W W W W PPP W P W P W N d d N N N N N N N N N N N N N N W W T QNi j P P P P P b P P N P P P � OW ON d a a a a a v d W b b b m P P l't W W l7 P N! W W W P W N P O O O O W P W W W b t0 m N O O P J N N N W jhl� W bNl� WO0 -It d N N N N N N N N N N N N N N N N N P l7 W P P P N P fJ W N CI P 17 W P P U o 0000000 000o bWo�0o000o Oo ooOoo n o O o000000 000o PNO�000000 oOd 000mo m O mP O 00_00000 00_O_O_ I%IAb 000000 N 00 N O 1`PI�NeN �� NNWNO" 1� Or NNI d P U 0 0 0 0 o o O O . 1 O .... o 0 0 o o O o o O o Y1 W O O O O O O O O O O O O O O O O O N O N O O W O o O O O O O O O O O O O O O d O O O o P O N �N GCO O OOON O OYi YiNN lV 00.0o NOS m r .46 1 N N P N 00 W N N N P n NN N C ry m> CLL O P 0 0. 0 0 0 0 0 0 O N W O O O O O O O .. ..... A O. p O O O O O O O P N 0 0 0 0 0 0 0 O yy O O O O b O O p 00 000000_ O_ Iv _O_O_O_000 0�4 00000 00_ _ . . N b O N O N O W N yy 1� n n O O N O O O O N 1 LL y N 0 = b � n m N .W m m Ilf C Tj C A m ca = C W 9 LL@ a m LL @ E -a m o d W cIc cm a 3 3 = $ m m E E y.W Ec v m`in $$a� 8 �� o $e m ON E m m Q C C C P o m d C W m E2 b um c a C9 LL v m y c a$ m m E Rc' o m 2 Q o a a m n = 'n c c E R_ _. a W S „ m m u EmE Ema Fab oo E$ o0 ommo P05 v Yi U@ FiE m E 9 m r m t W a s n a E E c c m@ n E m E E'n �omcmo ccc ii �'€n� a '=En 'n I E r o m n c m m a o o E b m m. W o@ m m m o 0 U E UUm�UO3Z Umm❑ ZZaamNmmOU aU NUHUU UUW tq c a m y a v o „ cm m O E n 9 0 m J W 3 0 m u o a a y 11° A l l AUHIVItN 11 City of e Desert` DEPARTMENT BUDGET FY 2008-2009 Prepared By Lieutenant Raymond Gregory i19 Revised 3/19/2008 City of e Desert' To: Tom Genovese, City Manager Date: March 20, 2008 From: Captain Rodney Vigue, Chief of Police Re: Proposed Police Budget for Fiscal Year 2008-2009 After careful consideration and planning, the La Quinta Police Department is pleased to present a consolidated budget totaling $12,799,594 for fiscal year 2008-09. This budget contains funding for the needed resources to maintain the current level of patrol, plus several strategic enhancements to enable the police department to move to a higher level in its service to the citizens La Quinta and visitors to the city. This overall police services request represents an increase of $2,615,742 (about 26%) over last year's initial budget of $10,183,852 (before adjustments). The major factors making this increased funding commitment necessary are growth, the need for continuity in police administration, the need to maintain and improve a police presence in the Highway 111 shopping district, the need to protect the city's quality roadways and those who travel on them, and the need to have the ability to address crime problems and trends as they emerge. These issues will be covered in more detail in the pages that follow. The budget incorporates a projected 5% increase in the hourly patrol enforcement rates charged by the Riverside County Sheriffs Department for law enforcement services. The adjusted patrol rate for FY 2007-08 was $111.88 per hour, which, considering the budgeted FY 2007-08 contract hours of 130 per day, required an expense of $5,323,250. The Contract Administrator estimates the hourly rate for FY 2007-08 will be $117.47, which will require a budget increase of $250,702 just to maintain the current number of patrol hours. We are, however, requesting an additional 30 patrol hours per day to increase patrol coverage with an emphasis on more concentrated patrol in the La Quinta Cove. This vital improvement will bring the annual cost for daily patrol to $6,860,249, which represents an increase of approximately 29%. Fiscal Year: Contract Rate: Contracted Patrol Hours: Number of Patrol Days: Cost: 2007-08 $111.88 130 366 $5,323,250 2008-09 $117.47 130 365 $5,573,952 Increase if Patrol Hours Remain the Same: $250,702 i'L3 City of e Desert' Fiscal Year: Contract Rate: Increased Patrol Hours: Number of Patrol Days: Cost:, 2008-09 $117.47 160 365 $6,860,248 FY 2007-08 Adjusted Patrol Cost: $5,323,250 Difference: $1,536,998 This increase in rates and patrol hours will require similar increases in those activities that support patrol functions, such as the training fee, and allotments for investigations and mileage. The proposed budget includes the addition of a dedicated lieutenant position to serve as the assistant chief of police. Currently, the lieutenant component of the patrol hourly rate is spread proportionately amongst administrators in several divisions of the Sheriff's Department that provide police services to the city. As such, the current lieutenant with primary responsibility to La Quinta is also given many ancillary duties to perform outside the city. With a dedicated position, the city will be part of the selection process and emphasis will be given to continuity in that position. The duties of that position outside the city will be sharply reduced, and the assigned lieutenant will be the primary contact for city police matters and have ex-offrcio authority to act as the police chief in all executive functions. The proposed budget includes the opening, furnishing, and operation of a La Quinta Police Office in the Highway 111 Business Corridor. This office is anticipated to be in addition to the current police office in the Cove area on Avenida Bermudas. This office will provide a much - needed permanent police presence in the busy shopping district area, and be convenient for residents in the northern part of La Quinta. This office will also provide office space for the Business District Officer and the Special Enforcement Team, who have outgrown their small office at the Cove location. Subsequently the Traffic Services Team, which has no office space currently within city limits, will be able to move into the Cove Office to continue a dedicated police presence there. The budget also includes the addition of a Community Services Officer assigned to the Business District to increase police coordination with local merchants, perform crime prevention activities focused on the business community, and assist with the operation of the police office. The proposed budget includes funds to purchase and furnish a Commercial Enforcement Vehicle for the Traffic Services Team. The officers on the team are currently certifying in commercial enforcement, focused on regulating the construction vehicles and other large commercial vehicles that travel on the streets of La Quinta. Studies show that without concentrated enforcement, many of these vehicles are inadequately maintained and equipped, and travel with City of e Desert' over -weight or improperly placed loads. This creates an acute danger to other vehicles on the roadways and will cause the La Quinta's streets to degrade and require repair much more quickly. The proposed budget includes the allocation of funds to pay for the annual La Quinta Police Middle School Boot Camp, as well as an increase in funding for Special Enforcement activities, the Holiday Shopping Experience Protection activities, and additional periodic Special operations. The budget includes funding for specific services and equipment items the Special Enforcement Team needs to be able to perform increasingly sophisticated operations. The City of La Quiffs has consistently upheld a commitment to protect and enhance the quality of life for all who live in and visit the city. The City has also consistently recognized the vital role the police department holds in these efforts. Although we acknowledge there will be challenges in finding funding for all the activities that will need to be undertaken if we truly hope to meet these goals, we feel this budget represents a fair and balanced depiction of the need. As always, we stand ready to work with you in any way we can to maintain our safe and thriving communities, and ensure La Quinta remains the "Gem of the Desert." NnnN Cl)o1�o(OrO-NOOOMNNNn 00 00OLO M O(O Or �MO(000 0Op00 00000r)eO� W MN Ma0 O0N0MOO'C N r 0r 0000 O . (OODrMOr to (� V)OV nOON Mtn0V) 0)rN IT rru IT(D r U) N 0 OD O MN M M 07 cot, Cl) 00) NLL N O to N O()rcor'N 0(D4 r -It 0 0M) WLO N N N r N N Cl) r NM r n T NW LL (A (9 M t9 M !A H M•t9 V, f9 IA (A fA fA fA M (A (9 (A t9 {9 (R (9 t9 V, M M V, t9 !A (A V, M VI L L as m C w c � D c C Ln f9 fA 00 R C N 7 X + + jZ a O 0 O cc OfCL OC R C N m Ym � m U m O m Vm N C)OU _ mU o _C m .S 0 O C O 90 : 00' 00OOO ?9 0R N C OL a gym+ Z" Ln (p r r T T M r r N O M f n N N m X X X X X X X X X X X X X X 6MQ 0 W m0 i00 nnMMrnn00 co to inM ��nMnOor(0—(O O N=OO m0 V le (0 Mast 0000 �� MHO u)M Mn V ++ON N nIhNN�Onr�oioiv MM�O�ODOOMn ((iCGOOiG0�1 �NQ V 00 Ev .fig �� a60 0 V), PaN o mE E CL 0,«,.a0,0,to0,"«,40,4,�0W,«,v,«403.W � ��&, C >(� E0 }/ c E C m O R R R R R R R R R R R R R C C C m R m Cl o m m m m m m m m m m ry) y ;,� N �@ E O. SSOSSSSSS2SSSSSS22mm °' m o 00 r U 3 C7 u!i S L 9 W m a �mEM O Cl) O M (0 o O O O O OD c w O W O OD O M O M O O O go 0 co 0 00 0 M 0 O 0 O N W r r O W It t5 m m E N H) C• r Nar�r-0000 NNNN (OOOOO N NNNNOD 0,0) 0 m m ul m �Y Mrr r a �« RN W. yr W7J V) m CL 11 r W V m (D 'o L U L C m � m 2 m m r r b U offz W O lL d FAO V m 0 m' 00 m 0 C R C O > -0 m 7 LL E m V CU 3m mm0m V N a c Emii�oOOLtRcm C O 07 E: EC t7 C �, of Cm E C mojm W= m O �0000ci U V W o0o O 0mmna [ R c0 m Ea L Q Li �mmE'r'- F- E> a O Z'c m O O g 7' E: 'S m N m mw m— a R (L) m 0 L LL— vL 7 ioccccJ W y () m 0 m 0 r- m L O— c ELL Y~ R OOOJ0rii�! q O O N my m 0 m m R 0M C w: IL C — '0 '0 9 '0 IL �� > o m W � •c E O w m m m 9 C N LL O m LL 0 W J N C 0 0 C O � a n. a n. J O O -- m 0, m m 0 C m p m E EDo c Q �Q2 a mEEva toy, =0 20 0m •R NEEEE0 r0 R > 0 0 'O R R O O O m m- = •(p 0 3 Q �0Ema'S'9 m C Q 0 aaaES(n0oaC7zm��00��m0oLL�Umoww�o000o H {gj� f. rry'M�nnM(OOMON�O�Oa0a0r0000aMrXnOXXXO� 0 0 O O 0 0 r r r r N N N N N N M V a V M r Nrlbrrr O N i rr (b (b (b fb (b M (b (O (d (b (O M (b (b co (b ( (b (a fb (b Ob (b 0 (O ( W Mkv) MMMM M 0) M(�0?M MMM C)MM MO? M0)nin La of st�V Z r r r r r r r r r r r r r r r r Jvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvv - 123 CD M O m Ot` N1q n 00 MID mt0 W ID Yf '-M 100NN'�f Of NOONO01� of V V GDONN MOa00f 0/0 � O V O OM ��ao O� NCON OcoN OOOf�h000 V!O O V)h� M Vl NOS h W W MmN 0 V) V) V O trn n V) NM 00 to M Vi tz /A 1A V s � ci 00 M 06 �p NM to O YNM ttAo O N CCl) n (a(D n O M dQQ% N 1f! IA Vl M W /A V! 4GO 69 p t0 N � W 69 N 00 W R U LU N Z G WM NOh0 C4MMO%00 ow O r M'M 00000N�f 00000 M f� 0 dD 1 ONM N r- 0)N OMO s to D O 0 0 0W 9 �ONN W W M I� c00.-I�M�N' co O N Ocp M ao �0�-N In 1n OiOM OD cc+ep� 00 OnOCDNOO NN 1( N�� 0 coO� N IR OD N�Ln 1-: .-69 fANN69*9 Vi�C9 �V/ fiqr N = V) te 4A N W R' O OO NM VI n 2MNN co 00 M LO W OD 00 W Nma ONtO OOO t� 000 to 00 to M IN N f,MN M cO OHO m I- N M CA N M N F. t, W N OD 0 0 0 et O N M M d+ Cai Q mO M 0, 1,- 0- W M It fA ao IT h Oo O r NONNM2 MNV M n O N MV1 hW O 1 '- v MW W" N W N co V! W , 49 V) N l"" V) Co w p SQ C04co �Ot- 0 NO N o CO aa 0D O�1*00r�N000coONNW W N U 0 a0 o 001 a m0D 0 c0M V It a OhM� N Q N O N co O n r co om 00 N OOCow, 0 0 CLO N cpt� I�NaMNH10M Oct?t�M W N mu10 V) V! Vl V) o CL t, 'A `A a J a cda Q _ Q li cwi dm cdo E �� Wa7i pmanoa' � �� 8 WU. m >� C� N0mm m�y EL2�) m'( o �FOU' O a=mmm�c C f0 ELL 0 m1° 42 �c ' (L aam mmm mm o u•m9E WZ �a1L •Ug m 3 LL1--to o m c EZtoEm •mc- o v a BEao aE 3.E V) U U I W U y U�O W (C��j f4� (�yDj (QM� �yQD �yQD f1Q�� 1(Q�� {Mtp N t0 M 0) (O� �f� {0�(vO� (O�f (YOB fvO� f!Cpr ^ fGy�J} O %0 XQ Zf? l7 l? {'l lh {? C� M f7 M t'/ Cal• (� C'/ fTl {7 f�l t� CJ CJ 1� In 1A J NIV NN NNNfV NNNNIV NV N fV NfV NfVNNNNNNNNN vvveaaavvovvNVNV aooevvaavavv l�� City of 44 PROGRAM FUNDING CHANGE JUSTIFICATION M Desert" Fiscal Year 2008-2009 changes in comparison to adopted Fiscal Year 2007-2008 Budget (unadjusted) Patrol Services — Increase $303,039 The hourly rate for patrol services, as estimated by the Contract City Administrator, was increased to $117.47 per hour for FY 2008-09. This is an increase of approximately 5%. This increase is based upon the current 130 hours of contract patrol service per day. Patrol Services Addition of 30 hours Per Day — $1,286,297 The City of La Quinta has recognized the need for increased law enforcement coverage in the city, particularly in the La Quinta Cove. With this in mind, we have included 30 additional hours per day to allow increased patrols around the clock in designated areas. This addition will also necessitate a one-time training fee of $200,947. Overtime Expense — Increase $34,293 The hourly rate for overtime is estimated to rise approximately 5% due to anticipated wage increases. Additionally, past usage numbers have shown that the budget for this line item has been consistently underestimated and has failed to keep track with growth. The growth in police department activity means more officers are being called to court on days off and needing to stay past the end of their shift to adequately handle assigned calls. This budget therefore includes a 20% increase in projected hours. This component includes projected funding for 4,200 hours of deputy overtime and 3,000 hours of investigator overtime. Special Enforcement Team (SET) — Increase $77,155 This cost reflects the new contract hourly rate of $117.47. This rate is set by the Contract City Administrator and is an increase of approximately 5% over the FY 2007-2008 actual rate. Community Service Officer — Increase $90,945 The hourly rate for dedicated Community Service Officers, as estimated by the Contract City Administrator, will increase by 5%. We additionally propose to add an additional Community Service Officer to be assigned to the Business District. This officer will be tasked with increasing police coordination with local merchants, performing crime prevention activities focused on the business community, and assisting with the operation of the police office. Gang Task Force Officer — Increase $3,402 This increase reflects the change in the contract hourly rate set by the Contract City Administrator for this position. This rate actually experienced a slightly lower than expected increase last year, so the projected rate for FY 2008 — 2009 is projected to be r only about 3.5 % above last year's estimate. Drug Task Force Officer — Increase $3,402 This increase reflects the change in the contract hourly rate set by the Contract City Administrator for this position. This rate actually experienced a slightly lower than expected increase last year, so the projected rate for FY 2008 — 2009 is projected to be only about 3.5 % above last year's estimate. School Resource Officer — Increase $7,824 This increase reflects half the projected rate increase for three school resource officer positions. It is anticipated the current cost -sharing arrangement with Desert Sands Unified School District will continue, and the school district will absorb the other half of the rate increase. Motorcycle Officer — Increase $56,354 This cost reflects the new contract hourly rate of $100.54, with an additional $1.78 for each hour the officer is actual on a motorcycle. This rate is set by the Contract City Administrator and is an increase of approximately 5% over the FY 2007-2008 actual rate. Dedicated Lieutenant — Increase $189,218 This cost represents the cost for the addition of a dedicated lieutenant position to serve as the assistant chief of police. By adding a dedicated lieutenant position, the city will be part of the selection process and emphasis will be given to continuity in that position. The duties of that position outside the city will be sharply reduced, and the assigned lieutenant will be the primary contact for city police matters and have ex-officio authority to act as the police chief in all executive functions. Dedicated Sergeants — Increase $3,199 This cost reflects the new contract hourly rate of $79.33. This rate is set by the Contract City Administrator and is an increase of approximately 5% over the FY 2007-2008 actual rate. ]Mileage Costs (Patrol Units) - Increase $68,400 The previous budget estimated patrol unit mileage at 350,000 miles. Actual usage figures estimate that this projected number will be exceeded patrol miles will likely be in excess of 400,000 miles. While this mileage number can vary widely depending on circumstances, projections show a conservative estimate of 420,000 miles will be used on FY 2008-2009. This increase also includes a projected 5% increase in the rate per mile. Mileage Costs (Plain Units) — Increase $2,190 The previous budget estimated plain unit mileage at 15,000 miles. The proposed budget contains a modest increase in miles driven due to growth and a projected 5% increase in the rate per mile. Jail Access/Booking Fees — Decrease $93,565 Last year legislation passed wherein the State of California made funds available to Riverside County to eliminate the FY 2007-2008 booking fee. The legislature allowed for a jail access fee to be charged for bookings, except for felonies, DUIs, and misdemeanor domestic violence offenses. The jail access fee only applied to those l bookings remaining that were in excess of the city's three-year rolling average of bookings for those types of offenses. The Corrections Division estimates La Quinta will --have 162--bookings-in FX 2008-2009 in excess -of -the -three-year average. With a 2 1c 0 projected jail access fee of $384.01, this will cost the city $62,210. The legislation eliminating the booking fee additionally specifies cities will be responsible for all or a portion of the booking fee for the remaining bookings should the State elect to eliminate or reduce their contribution. The Contract Administrator has advised that early indications are the State may leave a 10 or 20% portion unfunded to help balance the State budget. In anticipation of this development, we are recommending an additional $22,101 be set aside, which would be 20% of the fee for an estimated 911 bookings. Even with this possibility, the amount $84,311 budget request represents a substantial decrease from the FY 2007-2008 estimate of $177,876. DOJ Blood Alcohol Fees — Increase $884 In FY 2007-2008, the budget set aside $17,000.00 to cover DOJ blood alcohol fees and screening fees. This amount is conservatively more than adequate to cover the fees for the current year, but these fees are growing. With stepped up DUI enforcement, we anticipate these fees may continue to rise, and are therefore requesting a modest 5% increase. Cal ID — Increase $4,051 The estimated increase is based on population data from the State of California, Department of Finance, and Population E-1 Report. The per capita cost of $0.86 has not changed. Facility Fees — Increase $25,631 The Contract City Administrator has determined an increase for facilities fees to $109,200. However, due to proposed staffing increases, we are recommending a 10 % increase over that figure to $120,110. Records Management System — Decrease $53,525 RMS costs and usage have not increased over the last year as initially anticipated. The Contract Administrator expects fees to also remain fairly level throughout the coming year. We are thus recommending a reduction to $59,896. Special Enforcement / Projects Funds — Increase $125,000 The use of focused Community Oriented Policing programs has helped address dangerous crime trends and hazardous public safety and/or quality of life issues as they occur. The current level of Special Enforcement Funds has not grown in several years and has reached the point where it needs to increase, particularly for certain high -profile programs. We have also proposed to add funding for programs that have proven successful in the past, but until now have had no designated funding. Examples are funding for the La Quinta Police Middle School Boot Camp and for vitally -needed Surveillance/Special Investigations programs. These fund requests are addressed in more detail in a subsequent section of the budget request. Equipment, Building, and Vehicle Maintenance and Operations — Increase $33,577 This funding level is estimated by the City of La Quinta Finance Department based on estimates for known assets owned. The Finance Department has stipulated the indicated increase. 1G7 3 Equipment Purchase Expenses — Increase $139,647 The Traffic Services Team has requested funds to purchase and furnish a Commercial Enforcement Vehicle at an estimated cost of $69,700, including all needed equipment. The Traffic Services Team will also need to replace two of their current city -owned motorcycles due to age and mileage at an estimated cost of $59,296. The Special Enforcement Team (SET) has requested to purchase several specialized items to be used in surveillance operations and the service of search warrants. This equipment includes night vision goggles, an infrared digital camera, a video camera, rechargeable flashlights, and tools for building entry. The SET estimates the total cost of these items will be approximately $23,827. SET is also requesting a contract with a vehicle rental establishment for the routine and rotating use of vehicles for surveillance activities at an estimated annual cost of $9,824. SET is also requesting funds to purchase additional patrol bikes for use in the Business District, select neighborhoods, and at the schools. The estimated cost to purchase and furnish these bicycles is $10,486. The Citizens -on -Patrol and Volunteer Program is asking for funding for necessary patrol items (such as radios and flashlights), uniforms, emergency supplies and recruitment literature. Their request totals $20,875. Citizens-on-Patrol/Volunteers — Increase $1,750 The La Quinta Police Citizens -on -Patrol program has joined the National Association of Citizens -on -Patrol and requests a modest increase in funding to continue to pay for membership fees and the costs of participation in the annual conference. Community Policing Offices — Increase $162,800 The Cove Police Office is currently furnished with old second-hand office furniture that is oversized for the small rooms. There is no room for the staff and volunteers that occupy this space. The solution is to install professional workstations in the front office, team office, and patrol office. The computers and printers at the Cove Office have also not been replaced in many years and are not currently on the city's replacement list. The estimate for the workstations, technology, plus supplies is approximately $41,800. The FY 2007-2008 budget allocates $17,325 for utilities and janitorial service for the Cove office. The proposed budget includes a 5% increase in this amount. The budget request includes funding for a second police storefront office to be located in the Highway 111 Business District. We have identified a potential location for this police office in the Dune Palms Plaza, 47-120 Dune Palms Rd, Suite B. Staff has meet with the leasing company for this site, and compiled estimates for any improvements or equipment that would be needed to turn this site into a functioning police office. The FY 2008-2009 budget request includes modification and equipment costs of approximately $37,526, lease costs totaling $70,428, and utility/janitorial costs of $12,180. The total estimated first -year cost for this police office is $120,134. 123 0 l:if. of Service Level Fiscal Year 2008-2009 Fundin It is projected the City of La Quints, Police Department will continue to receive approximately $100,000 in funding through the Supplemental Law Enforcement Services Fund (SLESF) grant administered by Riverside County. The police department may also be eligible for Justice Assistance Grants and will seek additional grant funds where appropriate to augment funding of specific programs. In addition to outside grants, the department will need an additional $250,000 of general fund monies to be combined with the outside grants to fund the following programs: Holidav Shopping Experience Protection Program - $50.000 The Holiday Shopping Experience Protection program runs from the day after Thanksgiving through New Year's Day. It provides a significant amount of extra patrol and presence in the City's shopping districts where robberies, purse -snatch incidents, thefts, and car burglaries are likely to occur during the holidays. With the police department helping provide a secure shopping environment, customers feel safe and are therefore attracted to the extensive shopping and dining opportunities that exist in La Quinta. Problem Swific Traffic Program - $50.000 The Problem Specific Traffic Program operates throughout the year. Through the utilization of Crossroads traffic data, the La Quints. Police Department has been able to identify target areas where specific problems are occurring. Additional manpower is then assigned to assist the Traffic Team with the abatement of those violations most likely to cause traffic collisions. Traffic programs currently funded through this program include targeted Holiday DUI shifts, School Zone Speed Reduction, and Street Racing Enforcement. This fund is also used to pay any additional expenses for grant -funded sobriety checkpoints that are not covered under that grant. Robbery Prevention Program - $100.000 The increase in the number of businesses locations and has increased the potential for robberies in the city. Historically, we have also experienced periodic strings of residential neighborhood robberies requiring focused interventions. This year-round program incorporates increased bicycle, Segway and patrol unit patrols in the Highway 111 corridor, along Washington Street, and in Old Town. The program also supplies additional resources when needed to serve robbery - related search warrants and increase focused neighborhood activities. It is anticipated that 50% s of the cost of this program will be covered by the SLESF grant. i Bur¢Iaryfrheft Prevention and Apprehension Program - $100,000 The Burglary/Theft Prevention and Apprehension Program mirrors the Robbery Prevention Program in many ways, but focuses primarily on addressing burglary and theft problems as they arise. This year-round program maintains a focus on reducing burglary, theft and auto theft through the education of potential victims, identification of potential crime locations, and the aggressive investigation and apprehension of those suspects committing these crimes. This fund is utilized for extra activities to support the city's neighborhood watch programs and working with business owners to reduce shoplifting, . fraud, and embezzlement. The multi -layered approach provides remedies and encourages citizens and the police to work together on this problem. It is anticipated that 501/6 of the cost of this program will be covered by the SLESF grant. Special Investigations/Surveillance Program - $30,000 The Special Investigations/Surveillance Program is designed to address special crime problems not covered in the other grant areas. Examples of crime problems where additional resources have been needed in the past include pattem-specific sexual assault incidents, vandalism/graffiti, and vice activities to include drug sales. The purpose of this fund is to support surveillance activities, enforcement activities, and the service of search warrants to abate specific crime issues that require intervention beyond what the Special Enforcement Team and patrol are able to complete with daily staffing. La Ouinta Police Middle School Boot Camp - $20,000 The La Quima Police Middle School Boot Camp, now in its third year of operation, is a cooperative effort between the City of La Quinta, the Sheriffs Department, the Probation Department, and the Desert Sands Unified School District. The City, through the police department, has historically provided funding for cadet uniforms, supplies, and activity expenses. The Sheriff and Probation Departments contribute staff for the boot camp, and the school district contributes the location. This program typically operates for 3 '/2 weeks in August, providing a wholesome, educational activity for approximately 50 middle school -aged youth as they learn self-discipline and are exposed to principles of law enforcement and the juvenile justice system. 1J� r;f. ,i Directly -Funded Police Services: Twenty -Seven Patrol Officers Three School Resource Officers Two Dedicated Sergeants (Administration / Special Enforcement) One Coachella Valley Narcotics Task Force Officer (CVNTF) One Coachella Valley Violent Crime Gang Task Force Officer (GTF) Six -Officer Special Enforcement Team (SET) One Business District Officer Four Community Service Officers Five Motorcycle Officers Community Policing Office Citizen Volunteers Critical Incident Services and Shared Resources: One Lieutenant Four Patrol Sergeants Four Investigators Traffic Reconstruction Unit Special Enforcement Bureau (SEB), also referred to as SWAT Hostage Negotiations Team (HNT) Forensic Services Unit Canine Units with access to Bloodhound Units and Search Units Hazardous Device Team (HDT), also referred to as the Bomb Team Coachella Valley Narcotics Task Force Coachella Valley Violent Crime Gang Task Force Central Homicide Unit -East (CHU) Aviation Unit Underwater Search & Recovery Team, also referred to as the Dive Team Desert Search & Rescue (SAR) Riverside Mountain Rescue Unit (RMRU) Sheriff's Mounted Posse Explorer Post 4503 131 i Accomplishments FY 2007 — 2008 Worked with allied agencies to address juvenile behavior at La Quinta High School, both Middle Schools in La Quinta, and the newly opened Continuation School. Continued the cooperative agreement between the City of La Quinta and the Desert Sands Unified School District, and formed strong ties with the new school superintendent and her administrative staff. Addressed traffic problems, including red-light runners at Highway 111 and Washington Street, and continued reducing the number and severity of injury and non -injury collisions. Held the first sobriety checkpoint in La Quinta in several years to educate the public of the dangers of driving while intoxicated and to take dangerous offenders off the road before they caused harm. Provided detailed monthly reports to the City Council, City Manager and staff regarding criminal activity, target programs, statistics, and crime trends. Implemented a strong presence in the La Quints Business District during the holiday shopping season to abate crime before it could happen and give all shoppers an assurance of safety when they choose to shop in La Quints and patronize local restaurants. Provided specialized services (Aviation, SEB, HNT, SET, Traffic Accident Reconstruction) and worked interdepartmentally with other bureaus (CHU, CVNTF, GTF) and cities (Indio and Palm Desert Police) to reduce/combat criminal activity within the city. Updated and modernized the Crossroads Collision Data Base, providing more accurate traffic collision data input for City $ngineering and Police Department use. Continued operation of Community Oriented Policing Office in the Village area of La Quinta Cove. Citizen volunteers staffed this office on a full time basis to provide direct access to police services for all La Quinta residents and visitors. Citizen Volunteers donated a total of 3,241 hours of service in 2007. Continued recruitment for Police Volunteers. We utilized the Volunteers in several emergency and non -emergency operations for traffic control and other public safety activities. Continued targeted special enforcement programs to combat specific crime problems 2 13'2 within the City and developed additional programs to focus on new problems. These programs included burglary suppression, robbery prevention, traffic safety, and special event security. Enhanced the Cove bicycle patrol program to include using Segways to patrol the Hwy 111 business district and Old Town La Quinta. Implemented a policy of aggressively identifying persons who had committed crimes in La Quinta and seeking them out to prove the crime and make an arrest, even if that meant getting a search warrant and serving it on the perpetrator of crime where they lived. Selected and supported a new candidate in the Business District Officer position to address to the needs of La Quinta businesses and the customers who patronize their establishments. Held the second annual La Quinta Police Middle School Boot Camp in August 2007, and provided approximately 50 cadets the opportunity to learn good citizenship while exposing them to the workings of law enforcement and the criminal justice system. Improved press relations and community interactivity by maintaining a free flow of appropriate information, and making staff and administrators available for public forums and other events. Goals For FY 2008 — 2009 Work with the City Council and staff in determining community needs and utilize community -oriented policing techniques to reduce the fear of crime. Increase visible police presence in residential areas where there exists a perception of crime, and work with community leaders to strengthen our partnerships within these communities. Work with City staff to identify priorities and secure funding sources that will provide for enhanced public safety. Build a stronger year-round presence in La Quinta's business districts to ensure citizens and visitors feel safe and encourage repeat visits. Work with City leaders and staff to provide a level of police staffing and programs that are fiscally responsible to the City in the long term and will keep pace with City growth. Continue to aggressively respond to and combat criminal activity within the City. 133 3 Work with the Gang Task Force and Narcotics Task Force to minimize gang and narcotic activities within the City. Maintain a strong special enforcement team to quickly address emerging crime trends and quality of life issues, and provide the team with the necessary resources to safely and efficiently to their job. Continue to work with the City's youth to offer alternatives to delinquency and develop strong citizenship skills. Continue to create an atmosphere of public trust and cooperation between the community and Police Department. Field and support a traffic services unit able to provide a broad base of services to ensure the safety of those who utilize the local roadways, reduce the occurrence and severity of traffic collisions, and protect the City's roadways from premature deterioration. Expand the size and utilization of the La Quinta Police Volunteer Program and Citizens -on -Patrol to cover all areas of the city and supplement the Department's efforts in the La Quinta Cove. 134 0 La Quinta Police Department 82-695 Dr. Carreon Blvd., Indio CA. 92201 Stanley Sniff- Sheriff MEMORANDUM To: Lieutenant Gregory Date: March 6, 2008 Fr: Sergeant Walton Re: Commercial Vehicle Enforcement Equipment Request SUMMARY: This request outlines the needed purchase of specialized equipment for the La Quinta Police Traffic Services Team. This request warrants the acquisition of a high profile, load capable, vehicle that can be used to regulate commercial vehicle traffic within the city limits of La Quinta. As such, this vehicle would be outfitted to comply with the definition of an emergency vehicle and carry equipment to enforce the commercial vehicle laws of California. Additionally, the La Quinta Police Traffic Services Team can utilize the special nature of this vehicle during fatal traffic collision investigations and safety checkpoint operations. LARGE TRUCK CRASH FACTS • Statewide, 5,190 people were killed in crashes involving large trucks in 2006. representing 12 percent of all traffic fatalities. Of these, 77 percent were occupants of another vehicle, 14 percent were large truck occupants, and 8 percent were non -occupants. An additional 116,000 people were injured in those crashes. (National Highway Traffic Safety Administration. (NHTSA) 2007). • Nearly one -quarter of occupant deaths in passenger vehicles that had multi -vehicle collisions were the result of crashes involving large trucks. (Insurance Institute for Highway Safety). • Large trucks make up just 4 percent of all registered vehicles and 7 percent of all vehicle miles traveled, but are involved in I percent of all crash fatalities. (NHTSA). • The annual death toll from truck -related crashes is the equivalent of twenty-six major airplane crashes every year. • The large number of truck -related deaths and injuries carries an enormous personal and financial price tag. The costs of large truck crashes in a year exceed $19 billion. (Federal Motor Carrier Safety Administration (FMCSA)). Trucking deregulation, a booming economy, and the concepts of "just in time delivery" and "rolling warehouses" have produced a deadly trend in the commercial trucking industry -- the exploitation of truck drivers by pressuring them to speed and drive over the legal hours of service limits. As most of you 105 know, truck drivers are not protected by the Fair Labor Standards Act of 1938, which guarantees all other Americans a basic eight hour work day with time and a half for overtime. Too many long haul and regional drivers are compensated today by the mile or by the load. This unfair system encourages, some would say "rewards", speeding and driving fatigued, both of which are the most heavily related causes of large truck fatality collisions. The FMCSA has acknowledged that perhaps as much as 84 percent of drivers maintain inaccurate logbooks with the great majority having falsified entries, both of the amount of driving time, and of off - duty rest time. PAV 09M DAMAGE: Heavier Single -Trailer trucks result in a significant amount of pavement damage. Pavement damage increases exponentially with the weight of a truck. For example, one 80,000-pound five axle truck does the some road damage as 9,600 automobiles and five -axle trucks operate well above 80,000 pounds in a number of states. A 100,000-pound five -axle truck does as much damage as more than 27,000 automobiles. Proponents of bigger trucks argue that adding axles to heavier singles would ameliorate pavement damage. That is riot true if those axles are "lift axles." Adding axles to ameliorate pavement damage makes trucks harder to turn but lifting the extra axle(s) eliminates that difficulty. If the lift axle is too high the truck is overloaded. Studies of lift axle use, as well as anecdotal evidence from tuck enforcement officers, show that lift axles are often improperly used, either purposefully or due to poor maintenance. There is also evidence that trident axles, which would be used on six -axle tractortrailers, cause damage to pavement sub -surfaces and slabs that most studies do not consider. (Pavement damage calculations are basal on the American Association of State Highway and Transportation Officials (AASHTO); Louisiana DOT Study,1999) SOLUTION: The La Quinta Police Traffic Team is qualified to regulate large truck operation within the city boundaries. The current and projected growth of the city has caused a significant influx of commensal traffic on existing streets. The need for commercial vehicle regulation will be needed long after die development of properties has subsided to combat an increase of commercial service vehicles. Commercial regulations apply to gardening vehicles that pull trailers, product laden tucks, agricultural trucks, aggregate vehicles, and rubbish vehicles. The enforcement of commercial vehicles is a specialized scope within law enforcement. The proven reductions of collisions that cause property damage, miuries, and death have been realized by jurisdictions that maintain an active coaunercialychicle enforcement unit. Commercial vehicle enforcement requires specialized equipment to gather vehicle weight and height data during enforcement investigations. Commercial vehicles, by their nature, have large statures. The use of a high profile commercial vehicle truck allows visibility and equipment carry ability a standard patrol vehicle lacks. UZOIM bUMATION: I recommend the purchase of a vehicle and specialized equipment to implement the regulation of commercial vehicle traffic within the boundaries of La Quints Vehicle: Cast: 2009 F250 4x4 Crew cab truck, 6.81. V-10 engine, 5 speed automatic trmnsarde $44,565.00 1Jo ' (Me actual cost will be less 8eedgovernment discount price) Camper Shell Emergency ligj ting / La Quints. Police Markings Police Radio system / Shotgun / AR.15 rack Axle Weight Scales, National Scale U C AX-5160K x 201b (6 scales) 100 Reflective Traffic Cones (18') KUSTOM Golden Eagle RADAR Medua:uic's Under Carriage Creeper Gasoline Portable Power Generator Mlscellsaoous Tools (extension cord, wheel blocks, supplememat lights) Total: State sales tax, shipment coat approximations, and Projected hMation: Net Total: 1 l $4,500.00 $1,995.00 $2,100.00 $5,995.00 $1,200.00 $2,985.00 $ t50.00 S 450.00 $1.200.00 $65,140.00 $ 4559.90 $69,699.80 137 i La Quinta Police Department 82.695 Dr. Carreon Blvd., Indio CA. 92201 Stanley Sniff - Sheriff MEMORANDUM To: Lieutenant Gregory Date: March 6, 2008 Fr: Sergeant Walton Re: Replacement Motorcycle Request SUMMARY: The City of La Quinta owns two (2) BMW 115ORTP motorcycles. Each motorcycle will reach the expected lifespan of three years, or 60,000 service miles within the 2008-2009 budget year. RECOMMENDATION: I recommend the purchase of two replacement motorcycles for La Quinta Police Traffic Services. Based on current use, maintenance expense records, quality, and serviceability, I recommend the City purchase the Honda STI300P. CURRENT MOTORCYCLES FOR REPLACEMENT: 2002 BMW 1150RTP, 51,235 miles 2004 BMW 1150RTP, 47.124 miles Replacement Vehicle: 2008 Honda ST1300P Motorcycle, Five speed transmission (Includes Doc fee, Sales Tax, and Tire Tax) Equipment (Emergency Lights, Crash Bars, Siren, Accessories) Installation Police Radio system / Shotgun / AR-15 rack / City Police Logos KUSTOM Golden Eagle RADAR Total: 7% projected inflation: Net Total: Cost: $15,057.25 $5.665.96 $1.500.00 $2.500.00 2 9$ . 85.00 $27,708.21 1$ ,939.57 $29,647.78 The replacement purchase nrice for two (2) motorcycles: $59,295.56 1�� UIPMEN!' MAKEIMODEL High Output Battery YTZ10S Battery Separator SurePower 1314 LPRICINNIGBattery Re /fuse DCH Accessories Front Guards with MC rise 559.00 Rear Guards mall design MC FAtmlniw 1300-007 Included above as set Sheamlight Rechargeable Flashfight 22.40 Rear Gun Mount, L.ock,10 sec timer. & Muzzle Plug 440.00 Note pad holder DCH fabricated 032149 49.99 Citebook holder mounted to front eft side 108.00 Lidar holder PmLaser3 mounted to front guards (right side 320.40 Heli Handle Bar Risers 170.10 Tomar 'on 600.00 Radio city to install radio, speaker, bracket, antemw and Push to Talk Switch NA Parts Total 5258A3 Parts Sales Tax 7.75% 407.53 TOTAL PARTS 510W Iestafiation i FiAw • CUDA LED fights very similar to the Predator H lights can be included for $1370.50. *We recommend the Unitrol Omcp 90 Siren(PA amplifier with a Unitrol U7504ion cable harness for plug and play installation. We have installed the commonly rewmmwaded Unitrol UM80K amplifier but it requires proprietary harnesses for cabling, the cost is comparable. Police Bike Proposal 1 December 5, 2007 Riverside County Sheriff's Department Indio Station La Quinta Police Memorandum To: Lt. Gregory Date: 03/06/08 From: Dep. Celaya #2955 Ref: SET Investigation Equipment and Services Sir, the members of the La Quinta Special Enforcement Team would like to request specific equipment and services to further assist us in our investigations. The investigations we have been involved in include surveillances (night and day), high visibility saturations, and search warrants. During these investigations we have found that the lack of equipment and services has become an obstacle for us. During nighttime surveillance investigations, our team has had to utilize a single night vision scope that doesn't work consistently. The picture on the scope is too grainy, and the zoom power isn't very good. Each team member requires night vision binoculars to better see a probledi residence, wanted suspect(s), suspicious or stolen vehicles, or property (i.e. copper wiring and valves) from different angles in times of darkness. The use of a night vision camera would also capture the aforementioned incidents and assist us in the prosecution of suspects. During daytime surveillance, video cameras are greatly needed to assist us in observing wanted suspect(s) coming in and out of certain residences, vehicles, and businesses. The recording of a residence will also help identify things or obstacles that can be officer safety issues during search warrant service or suspect contacts. A great tool for daytime and nighttime surveillances is the use of rental vehicles. There were instances when the team conducted programs in the business district and residential areas and the use of rental vehicles was required. The use of a rental vehicle allowed SET members to watch from a close proximity without being compromised. The use of a video camera would 140 allow SET members to capture the incident via daytime and nighttime recording. During high saturation programs, officers can also use the resource of a rental vehicle by having a SET member park at a designated problem area. During this program SET members also could have utilized the resource of night vision binoculars, video cameras, and high- powered flashlights. The tools needed would help SET members in the areas of intelligence gathering and officer safety. SET members have served search warrants with the use of only one door Ram and one door Pick. We have found that we required a second set of tools to gain access due to obstacles we have encountered. In one instance SET members required the use of multiple tools to gain entry in a bedroom inside a residence. SET members had to slow down our progress in clearing the residence for our safety. It is imperative SET members have the tools necessary to conduct our operations with the utmost safety and efficiency. Below you will find a list of items requested, vendors, along with the price of their products as well as tax, shipping and handling fees included. On ti Item Vendor Cost 08 Rigel 2100 SL Night Vision Might Vision Binoculars.com $ 5631.20 Goggles with hard case Ol Thermal -Eye 250 D Thermal Optics Planet.com $12,595.97 Imaging Digital Infrared Camera with hard case. Ol Sony Handycam BDR-UX20 Circuit City $ 1120.59 8GB Hard Drive/MS Card HD Camcorder with case. 08 SurefirelOX Dominator High Surefire $ 3879.00 Powered Flashlight with AC/ DC Rapid Charger. Ol Blackhawk Dynamic Entry Galls $ 378.55 Monoshock Ram 01 Blackhawk Dynamic Entry Galls $ 221.70 Hallagan Tool. The corporate rate at Enterprise Rental Car provided by Ray McCall for a compact vehicle is $549.00 per month. The contract is renewed every three months and the vehicle can be switched out daily if needed. An additional cost of $11.99 per day can be added for liability and $8.99 per day for damage waiver on the vehicle. Total per month with damage waiver: $818.70 Total per month with liability: $908.70 14l $23,827.00 Equipment: Vehicle Rental @ $818.70 Per Month: $ 9,824.40 Total Cost: $33,651.40 Respectfully Submitted, Ismael Celaya #2955 142 City of MEMORANDUM Is Desert" To: Lieutenant Gregory Date: March 11, 2008 From: Deputy John Alexander Re: Patrol Bike Proposal This memo is to request the purchase of six additional patrol bikes for the La Quinta Special Enforcement Team, the La Quinta Business District Deputy and the three La Quinta School Resource Officers. The patrol bikes are used for high visibility of police presence in the La Quinta business district during holiday seasons to detour crime. The patrol bikes have been used in past by the La Quinta Special Enforcement Team for "saturation" programs in the La Quinta Cove area. The patrol bike allows the officer a personal contact with the citizens of La Quinta. The patrol bike also gives the officer the ability to slow down and obtain a better view of the area he is patrolling. Patrol bike officers have the ability to approach potential lawbreakers in a stealthy manner. Patrol bikes are an important tool utilized by Police Departments nationwide. There are currently ten patrol bikes assigned to the City of La Quinta for use by officers in the above listed assignments. There are three 21.5" SLR Trek patrol bikes, three 19.5" SLR Trek patrol bikes and four 18" Trek patrol bikes. One of the 21.5" Trek patrol bikes is not being used due to its larger size. The other two 21.5" Trek patrol bikes are assigned to La Quinta Special Enforcement Team members. The three 19.5" Trek patrol bikes are also assigned to La Quinta Special Enforcement Team members. Of the four 18" Trek patrol bikes, only one is currently assigned to a La Quinta School Resource Officer. The other three 18" patrol bikes are not assigned and are 1 j43 in need of minor repairs. Additionally the 18" patrol bike used by the SRO is too small for his stature. The longevity of a patrol bike is three to five years depending on rigorous use and regular maintenance. The three 21.5" Trek patrol bikes and three 19.5" Trek patrol bikes are approximately three years old. The four 18" Trek patrol bikes are approximately seven years old. The four 18" patrol bikes have outdated equipment and at times have become quite costly to maintain. The four 18" Trek patrol bikes should be replaced due to the extreme length of rigorous use. I have contacted two local bike stores in the Coachella Valley and one in Yucaipa for quotes on patrol bike pricing. , Tri-A-Bike 44-841 San Pablo Palm Desert, Ca. 92260. Ph. # 340-2840 Description Price Cannondale Enforcement 1 Patrol Bike, includes kick stand and rear rack. $ 899.98 ea. Nite Rider light system. $ 379.98 ea. Siren and flip down red and blue lens. $ 49.96 ea. Nite Rider taillight. $ 9.00 ea. Duty bike bag. $ 39.00 ea. Total: $ 1490.12 tax included. Palm Desert Cyclery Inc. 77-780 Country Club Dr. Palm Desert, Ca. 92260 Ph. # 345-9096 Description Price Trek Police Bike 2008. $ 1,099.99 ea. Nite Rider lights digital patrol w/wig wag $ 375.00ea. Nite Rider universal taillight Nite Rider siren Equipment rack Trek Patrol Bag $ 65.00 ea. $ 60.00 ea. $ 40.00 ea. $ 89.99 ea. Total: $ 1,853.98 tax included. 144 Yucaipa Bike Center 34-844 Yucaipa Blvd. Yucaipa, Ca. 92399. Ph. # (909) 790-1551 Description Price Trek Police Bike 2008, includes kick stand and bag rack. $ 999.00 ea. Rear rack bag Jandd Deluxe $ 54.95 ea. Nite Rider lights digital patrol w/wig wag $ 339.00 ea. Flip down red/blue lens $ 29.74 ea. Nite Rider siren $ 59.49 ea. Water bottle cage $ 15.28 ea. Nite Rider taillight $ 53.54 ea. Total: $ 1,551.99 + sales tax. I request the purchase of six patrol bikes in all; four bikes to replace the four 18" bikes that are seven years old and two additional bikes for the two La Quinta SROs who currently have no bikes assigned to them. I request five 19.5" patrol bikes and one 17.5" patrol bike. The 19.5" bike will meet the physical stature for the average officer. The 17.5" bike will be for officer of smaller stature. I recommend the patrol bikes be purchased from Yucaipa Bike Center. The overall cost of the fully equipped patrol bike is not the most expensive and is not the least expensive. However the least expensive patrol bike was a Cannondale. All of the current patrol bikes are Trek and I would recommend continuing with the same brand and equipment. I would also like to request the purchase of additional vehicle rear mount bike racks. These racks are used for transporting the patrol bikes to and from deployment areas. We currently have two of the three capacity bike racks at Indio Sheriff's Station and at times due to several different events occurring at one time the bike racks are not always available. Additional rear mount bike racks may be necessary for the three School Resource Officers to transport their bikes to and from their respective assignments. The Bike Racks secure to the vehicles trunk edge with tie down straps. A secondary tie down strap is used to secure the bikes to the rack. Description Price. Thuley Speedway Bike Rack 3-Bikes $ 140.00 ea. Hollywood Bike Rack 2-Bikes $ 69.99 ea. 143 3 I recommend the purchase of the three bike rack which is comparable to our existing equipment. Total recommended purchase. 6- Trek patrol bikes w/equipment @ $ 1,551.99/ea. = $ 9,311.94 3- Three capacity vehicle racks @ $ 140.00/ea. = $ 420.00 Total $ 9,731.94 Sales Tax = $10,486.17 Respectfully submitted, Deputy John Alexander, #3271 i4b 4 City of Memorandum e Desert" To: Lieutenant Raymond Gregory Date: March 7, 2008 From: Sergeant Matthew Martello Re: C.O.P.S. and Volunteer Program This budget proposal is to provide information regarding the operation needs of the La Quinta Police Volunteer Program and the La Quinta Police Community Orientated Police Services (C.O.P.S.). Community, policing is often referred as a policing philosophy that promotes and supports organizational strategies to address the causes and reduce the fear of crime and social disorder through problem -solving tactics and police -community partnerships. The central goal of the COPS volunteer program is to assist our Police Department in implementing and enhancing community policing. Community policing focuses on crime and social disorder through the delivery of police services that includes aspects of traditional law enforcement, as well as prevention, problem solving, community engagement, and partnerships. The community -policing model balances reactive responses to calls for service with proactive problem solving centered on the causes of crime and disarray. Community policing requires police and citizens to join together as partners in the course of both identifying and effectively addressing these issues. Our citizen volunteers have donated thousands of hours and help supplement and support officers and civilian personnel by allowing them to concentrate on their primary duties. Volunteer roles may include performing clerical tasks, serving as an extra set of "eyes and ears," assisting with search and rescue activities, and writing citations for accessible parking violations. Operating costs for maintaining this program is minimal for the return service provided by these volunteers. The budget proposal is requesting equipment (safety cones, flashlights, digital camera), maintain clerical supplies and provide police radios for communication and volunteer safety. The radio costs attached to this budget request is the largest sum and is a one-time charge for purchase. 147 C.O.P.S and Volunteer Program Budget Request Tax is included in all line items. Two (2) Streamlight Flashlights 2034P-LED $210.00 (Streamlight—Flashlights.Com) One (1) Digital Camera Canon Power Shot W/case/Upgraded storage $230.00 (Office Max) Printer Ink Cartridges $1500.00 (Office Max) Uniforms $600•00 (Foundation of the Retarded — DesertARC) Clerical Supplies (label maker, paper, notebooks etc.) $1200.00 (Office Max) Emergency Supplies (police activity assistance, ice, water, food etc.) $775.00 Police radios: P7100 Handheld (HT) COPS Patrol $4100.00 M7100 Mobile Radio for COPS vehicle $4700.00 Office Desktop Radio for Cove Sub Station $6700.00 LED Cones- Pack and Pop folding safety cones $200.00 (GALLS) TurboFlare 8 pack multi -task light safety lights $260.00 (Beyond Bulbs Tactical Light Gear) Recruitment program (literature, advertisement) $400.00 Total: $20,875.00 i4$ 2 City of Memorandum e Desert' To: Lieutenant Raymond Gregory Date: March 7, 2008 From: Sergeant Matthew Martello Re: La Quinta Cove Sub Station Budget Request This budget request is to replace the outdated, computers, and printers inside the Police Sub Station It is also being submitted to add protection features to the unsecured building and make better space of limited workspace. The La Quinta Police Cove Sub Station officially opened in January 2001. The building was designed to provide service to the community and a location for officers to conduct business. The Sub Station is operated during the day by La Quinta Police Volunteers and currently is the work area for the Special Enforcement Team and Patrol Officers. Citizens use the location to report crime and gather information from officers and volunteers. Volunteers dedicate their time daily in the front office and keep the doors open during business hours throughout the week. The Special Enforcement Team is presently occupying the largest office; however, the team is planning to move to a new Sub Station location within the business district. The relocation of the Special Enforcement Team will allow the La Quinta Traffic Team to move in to the existing Sub Station. At this time, the Traffic Team does not have a work location and the redesigned workspace interior plan will provide six workstations for the team. Currently, the officers, volunteers and Special Enforcement Team workstations are a mix of different large old metal and wood desks, which were donated and placed in the station by the Sheriff's Department in 2001. The bulky desks limit the workspace and are aesthetically displeasing in the reception and officer work areas. Updating the obsolete furniture by replacing it with contemporary, space saving, functional, and organizational workstations is necessary and overdue. Removing these desks will create more workspace by better utilizing the current office space square footage. The new workstations will provide more storage, work room and is a better design for the existing restricted work environment. The computers inside the Sub Station where last updated in January 2003, and need to be replaced. Additional computers are necessary for the office due to the creation of new workspace from this proposal. Printers for these computers will also be necessary. Cove Sub Station Budget Request Tax is included in all line items. Herman Miller Meridian 5000 DeAW& Aeron Task Seating, Meridian Files Product is to be delivered and installed in the Special Enforcement Team, front and patrol offices. GM Business Interiors. $25,000.00 Computer: Eight (8) computers provided by the City of La Quinta. $12,000.00 Printers: Two (2) printers provided by the City of La Quinta. $2,500.00 5=hes: Ink cartridges, paper, files, generic notebooks, tape, staples, miscellaneous supplies. $2,300.00 Total Cost: $ 41,800.00 iJi� City of/{�� / 1 Q/ .- `"s'x'a•Oem o/fne Deee.Y MEMORANDUM To: Lieutenant Gregory Fr: Deputy Burgie Date: March 10, 2008 Re: Capital Request —Highway 111 Le Quinta Police Substation E UEST: I am requesting a Highway I I I storefront La Quinta Police Substation to better serve the businesses on Highway l 11 and residential communities in north La Quinta. HISTORYIFACTS: As the City of La Quinta continues to experience record growth, so does the La Quinta Police Department. Our current substation located in Old Town La Quinta is approximately 1.100 square feet and serves as office space for patrol officers, motor officers, special enforcement officers and volunteers. The department and its resources have outgrown its current substation and an additional substation is needed. At times, officers have to utilize the primary station in Indio to conduct investigations or complete reports. With the addition of another substation, commutes to the primary station would be significantly reduced and productivity would increase. The current substation in Old Town La Quinta has been a historical landmark as well as an ideal location for citizens residing and doing business in the southern area of La Quinta. With the addition of another substation on Highway 111, the police department will be more accessible to businesses on Highway 111 and as well as north La Quinta communities. With future plans of the primary station moving from Indio to Thermal, a second substation would again increase productivity and decrease commute times to La Quinta. DETAILS: Lease Information: Pat Wood PO Box 1764 La Quinta, CA 92247 818-317-3374 '51 The proposed substation is located at 47-120 Dune Palms Road Suite B inside the Dune Palms Piam. The substation has access to Dune Palms Road and Highway I I I - The following is a list of neighboring businesses: Moore's Karate, Trans West Design Center, C.V Beauty College, Pool and Spa, Store Quest and Chevron Gas Station. The square footage of Suit B is approximately 2,552 square feet The base rem is $1.90 per square feet plus .40 NNN. The total morrtbly tent would be $5,869.60 per month The monthly rent includes water, trash, building insurance, property troves, cwnunon area maintenance and some property management. The proposed substation has wall-to-wall carpet, finished walls and ceiling. There are 9 upgraded cubicles including locking cabinets and 9 chairs. There is a conference room which contains a conference room table and 8 conferee room chairs. There are 2 enclosed offices that are side by side. Thee is a men's and women restroom located at the rear of the substation as well as a break room and reception area. The above items are included in the rent. Electricity $150 per month Phone Bill (including data lines) $600 per month Security system $30 per month Pest Control $35 per month Janitorial Cost $200 per month Estimated monthly utility costs $1,015.00 MODIFICATION COSTS: Comvu erst Vendor — Circuit City 11 - HP 19" Desktop Computers $10,000.00 1- Microsoft Word Program $500.00 1— Cannon Portable Printer $250.00 Vendor — Toshibacom 1- Toshiba e-Studio5500c Copier $3,800.00 Vendor — Best Buy 1- Brothers Fax Machine $99.00 From Cotmter (Recention room) Vendor— A do G Cantra Lion I — Counter (estimated cost) $3,500.00 1JZ Man and I.oaos Vendor —Best Sign 1— Sign and logos $3,000.00 T 1� nes Vendor —Best Buy 12 — Panasonic Telephones $2,160.00 Office Fumiture Vendor— FiliugCabinets.com 2 — Schwab Series 5000 Filing Cabinets $4,000.00 Vendor —Office Max 2 — OfficePro Unassembled Office Hansen Chevy desks $2,800.00 2- Office Max Mesh Managers chairs $200.00 2- HON 5902 Series ComforTask Chair w/out arms $140.00 4- OfficeMax folding chairs $160.00 6- HON 4051 Multi Purpose Stacking chair with arms $1,200.00 Vendor — Circuit City I — Viuo 3r HDTV Television $900.00 1— Sony DVD/VCR Combo $90•00 Break Room Eouitxnent Vendor - Sears 1— Kenmore Refrigerator $393.00 1—Galaxy Microwave $53.00 Miscellaneous Items Vendor —Quartet 1- Dry erase board (6x4) $300.00 Estimated cost Estimated tax Estimated shipping Estimated Total TOTAL COST Rent - $5,869.60 per month Utilities 41,015 per month Modification Costs & Equipment ESTIMATED GRAND TOTAL $33,435.00 $2,591.21 $1,500.00 $37,526.21 $70, 429.00 $12,180.00 $37, 526.21 S120.134.21 153 OTHER LOCATIONS: A second possible location for a substation is located at 79-495 Highway 111 Suite #3 within The Centre at La Quints. The location is situated on the southwest corner of Dune Patens Road and Highway 111. The space has 1,900 square feet. The asking price is $3 per square foot plus $.65 NNN. The total monthly rent would be $6,570.00. This spay is a "Vanilla Shell" (wall textured, drop ceilings and lights). Construction costs are not included to build a reception area, cubicles, and office space for supervision. A third possible location for a substation is located at 79-400 Corporate Center Drive #116 within the LP Building. The space has 2,118 square feet. The asking price is $1.80 per square foot plus $.32 NNN. The total monthly rest would be $4,490.00. Construction costs are tat included to build a reception area, cubicles and a second office for supervision, however the owner is willing to absorb some of construction costs. Deputy Burgie Business District Deputy i54 (2r2 V2008) Prezell Burgle-47120 Dune Palms Floor Plan.pdt _ Pagel' OW EXHIBIT "O" FLOOR PLAN w r Footnote (2) City of La Quints Grants/Contingency/Contracts/AB939 Requests/Other & Dept Requests FY 08/09 Through 12-Jun-08 F" CJ 6 Actual Total Budgeted FY 07108 Actual It Budgeted Requests Council Category FY 07/08 Ex enditures Committed Committed FY 08/09 FY 08/09 Consideration Grants Soap Box Derby 4,400 2,017 2,017 4.400 Subtotal 4,400 2.017 0 2,017 4,400 0 0 Contingency KMIR 6 3.200 3,200 3.200 Foundabon for the Retarded 5,000 5,000 5,000 La Quints High School Baseball Booster Club 2,000 2,000 2,000 La Quints High School Girls Tennis Team 2,000 2,000 2,000 Operation Safehouse 5,000 5,000 5,000 La Quints Arts Foundation 25,000 25,000 25,000 La Quinta Playhouse 20,000 20,000 20,000 La Quinta High School Softball Booster Club 2,000 2.000 2,000 La Quinta High School Bend Boosters 2,000 2,000 2,000 La Quints High School Basketball Booster Club 2.000 2,000 2.000 La Quints High School Girls Soccer 2.000 2,000 2,000 The Arthritis Foundation 5,000 5,000 5,000 CV Rattlers Fastp tch Softball. Inc. 1,000 1,000 1,000 McCallum Theatre 5,000 5.000 5,000 La Quints High School Cheer 2,000 2,000 2,000 Olive Crest 5,000 0 5.000 5,000 Palm Springs Women in Film & Television 3,000 3.000 3,000 Quitting for Good Times 2,000 2,000 2,000 The Ranch Recovery Centers, Inc 2.000 2,000 2.000 So -Cal Xtreme, Inc 1,000 1,000 1.000 Truman Elementary School 1,400 1,400 1,400 ALS Association, Greater Los Angeles Chapter 500 500 Soo Coachella Valley Amateur Sports 1,000 1,000 1.000 Coachella Valley Community Trails Alliance 5,000 2,500 2,500 5,000 I Daher Learning Institute 11,700 11,700 11.700 La Quinta Arts Foundation 20,800 20,800 20,800 Soroptomist International 4,050 4,050 4,050 Integrated Learning Institute 2,000 2,000 2,000 Family YMCA of the Desert 5.000 5,000 5,000 Leadership Coachella Valley 1,700 1,700 1,700 Unassigned 9,157 9,157 9,157 Subtotal 158,507 134,850 14,500 149,350 100,000 0 Contracts Chamber of Commerce 130,000 97,500 32,500 130,000 130,000 Bob Hope Chrysler Classic 100,000 100.000 100,000 100,000 Community Special Events 12,000 11.121 879 12,000 12,900 Boys & Girls Club - Facility Use 60,000 43.770 16,230 60,000 60,000 10,000 YMCA Fritz Bums Pool Contract 39.200 38,232 968 39,200 38.000 Desert Resorts Convention Visitors Authority 660,000 719,139 719.139 675,000 Desert Resorts Convention Visitors Authority -Marketing 50,000 50,000 0 50,000 Marketing Services 490,000 323,655 166,345 490,000 540,000 im Murray Memorial Foundation DesertRegional Resorts Airport Authon 10.000 15,000 10,000 15,000 10,000 15,000 15,000 I 5,000 1 Subtotal 1,566,200 1,408,417 216,922 1,6-25-3-39-1 1,570,900 I-T5-,000 0 Continued on next page (3) (4) (5) (6) City of La Quints Grants/Contingency/Contracts/AB939 Requests/Other & Dept Requests FV OB/09 Through 12-Jun-08 DepartrrreM/Other Requests FIND Food Bank 250,000 0 250,000 250,000 CSUSB Palm Desert Campus 250.000 250,000 250,000 250,000 Subtotal 500,000 250.000 250,000 500,000 250,000 0 0 Written requests La Quints Arts Foundation 100,000 100,000 100,000 100,000 45,800 Riverside County Date Festival 5,000 5,000 5,000 5,000 5,000 DesertArc (formerly Foundation for the Retarded) 0 0 0 Coachella Valley Economic partnership 0 0 0 10,000 7,000 Subtotal 105,000 105,000 0 105,000 115.000 57,800 0 Total $2,334,107 $1,900,284 $481,422 $2,361,708 $2,040,300F $72,800 Note 1 - Grant represents reduction in facility fees paid to the Library Note 2 - $10,000 allocated for the Air Show and $10.000 allocated for membership Note 3 - Amount committed of $20,800 represents rent of City facilities during the festival Note 4 - Request for Special events Premier Sponsorship Note 5 - No speck amount in request Note 6 - Request for $17,000 - $50.000 Cal ATTACHMENT 4-1 April 16, 2008 Mr. Thomas P. Genovese, City Manager City of La Quinta P. O. Box 1504 La Quinta, CA 92247 Re: Renewal and possible expansion of Facilities Use Agreement of August 1, 2006 2008-09 Application for Contract Services Agreement Request for Waiver of Fees Dear Tom, For the purposes of annual budget hearings, may this serve as La Quinta Arts Foundation's request for the City's consideration to renew the Facilities Use Agreement of August 1, 2006. We ask consideration also be given to waive associated facility rental fees, previously imposed at $20,800 for the renewal term. In conjunction with renewal of the Facilities Use Agreement, we request Council consider a 2008/09 Contract'Services Agreement for production and promotion of the 27"' Annual La Quinta Arts Festival in the amount of $100,000. Further, we would like to open a dialog regarding the possibility of holding an additional event at the Civic Center Campus and would also like to explore the possibility of La Quinta Arts Festival parking at SilverRock Resort. Last year Council supported newly created events including Blues, Brews & BBQ which drew thousands of people to La Quinta generating commerce and good will in the community. We hope the Council will consider renewing support for these and additional planned events and activities in the amount of $25,000. Please see LQAF's final report for details, attached. In partnership with the City and in particular La Quinta's Community Services Department, La Quinta Arts Foundation is grateful and proud to have developed and collaborated on activities so widely embraced and supported by the community and beyond. We look forward to continuing and strengthening our relationship with La Quinta's Community Services Department and to being a resource for the new museum to bring programs for the benefit of the residents and visitors to the City of La Quinta. Sincerely, ��-�pp OA11c 1OtzmuJnz-, Christi Salamone Executive Director c: Mayor Don Adolph 1 Council Members Henderson, Kirk, Osborne, Sniff Edie Hvlton. Communitv Services Director April 16, 2008 m o Mr. Thomas P. Genovese, City Manager p City of La Quinta c P. O. Box 1504 La Quinta, CA 92247 o a A R T SU- Re: 2007-08 Contract Services Agreement Final Report Dear Tom, In accordance with the provisions of 2007-08 Contract Services Agreement, may the enclosed materials serve as our proof of performance report. If attendance, volunteer participation, and art sales are an indication, the 2007-2008 La Quinta Arts Foundation Activities Season met with huge success. Our contributions to the season were as follows: • SliverScreen at SilverRock— A "sold out" evening of cinema, food and fun showcasing SilverRock Resort's event and catering capabilities. • AR Under the Umbrellas at Old Town — Six weekends presenting 70+ artists complimented by live music and art demonstrations. Free public admission and parking. • Blues, Brews & BBQ — City of La Quinta staff estimated attendance at this one day event in Old Town at 6,000, plus. A sanctioned BBQ contest, sampling, live music; microbrew beers appointed the day. Over 20 community organizations were present to showcase their goods and services to the public, including fire protection and law enforcement who participated in the amateur cook -off. • Women in Art — Your Passport to Fashion — Brought La Quinta to El Paseo. More than 300 consumers visited Chico's clothing store to meet LOAF's six representative artists interpreting the art of fashion with their respective art mediums. • Los Angeles Theater Excursion to "Wicked"— Collaborating with Community Services staff, we designed an excursion including a private dinner at a Los Angeles restaurant and theater performance to a sold -out crowd of 50+. LQAF designed and printed and mailed invitations and flyers in addition to soliciting our database to attend. • Distinguished Artists of La Quinta — Partnered with Community Services Department to identify, nominate and acknowledge local artists qualifying for recognition under established City program. Approximately 100 people attended the dedication ceremony and reception. • La Quinta Community Picnic — As always, La Quinta Arts Foundation is slated to participate in the annual picnic providing a take-home art project for 300 attending children. • Old Town La Quinta Tile Mural — LQAF was instrumental at identifying La Quinta Artists Nancy and Larry Cush to design and install two murals at Old Town La Quinta where the original artist was unable to complete his services due to illness. • San Diego Museum Excursion— Partnering with Community Services Department to optimize an excursion to the Georgia O'Keefe exhibit slated for September 2008. • Desert Cities Public Art Forum — Hylton and Salamone represented La Quinta at the inaugural forum, hosted by City of Palm Desert. • La Quints Museum — Working with Museum Director, Kim Mack to provide 1 J historical data and materials for exhibition and grand opening of the museum. La Quints Arts Festival — It was repeatedly stated La Quinta Arts Festival 2008 was the best festival ever presented by LQAF. As of the date of this report art sales total slightly over $ 2 million. Given the state of the economy, to have achieved increased attendance and art sales demonstrates LQAF's increased marketing efforts were effective. A new partnership was formed with the City of Cathedral City to make their Art in Public Places purchases at La Quinta Arts Festival a perennial occasion. This first year, their expenditures totaled over $38,000. A sampling of 36% of the total purchaser's addresses indicates 35.62% of purchasers hailed from other US States and Canada, while 64.38% listed California residences. Of those who listed California as their residence, 42% came from outside of the Coachella Valley, and 58% were from throughout the Coachella Valley and high desert. This data indicates La Quinta Arts Festival is achieving the dual purpose of attracting visitors to La Quinta in addition to being a high quality cultural resource within the community. Attached please find the comprehensive marketing plan and expenditure detail (un- audited and awaiting final expenses) for La Quinta Arts Festival 2008 along with examples of the print advertising and secured editorial. As agreed, the City of La Quinta was prominently acknowledged as Premier Sponsor of La Quinta Arts Festival 2008 in marketing collateral. We are also proud to report La Quinta Arts Festival collateral including commemorative poster (2007 25'h Anniversary Poster and Boxed Note Cards) again received recognition from the Advertising Federation of the Desert, this year securing two Gold Awards which mean advancement to regional competition. In accordance with the conditions listed in Exhibit A, Scope of Services and Schedule of Performance, the City additionally received a.) full page, full color ad in the Festival 2008 official program, value $1,850 b.) full page, full color ad in Southwest Art Magazine, cost $2,384, c.) a website link to the City of La Quints website from LOAF website. The City of La Quinta also receives the corresponding 1% sales tax retum, estimated this year at over $22,500, a City business license fee from each artist participating in La Quinta Arts Festival and all other La Quinta Arts Foundation exhibitions, estimated at 400 artists and LQAF suppliers each paying a minimum of $15 estimated minimally at $6,000. (Also see Economic Impact Calculator attached) National recognition for La Quinta Arts Festival and the City of La Quinta was achieved by LQAF securing renewed partnerships, sponsorships and editorial coverage from prominent publications such as Los Angeles Times Travel Section, Southwest Art Magazine, Wildlife Art, Art News, Crafts Digest, and complimentary listings in AAA Westways, Sunset Magazine, Inland Empire Magazine, Desert Key Magazine -Arizona, The Business Press, San Diego Union Tribune, OC Register, Ocean Home, Daily Breeze, Redland Daily Facts, San Bernardino Sun, North County Times, and The Californian, among others. We are proud to continue the tradition of Promoling and Cultivating the Arts, contributing to the superior quality of life and advancement of the City of La Quinta. Sincerely, Christi Salamone, Executive Director c: Mayor Don Adolph, Council Members Henderson, Kirk, Osborne, and Sniff 2 i6i7 Edie Hylton, Director, Community Services Dept. ECONOMIC IMPACT OF LA QUINTA ARTS FOUNDATION ACTIVITIES La Quinta Arts Foundation applauds La Quinta decision makers for your continuing support of La Quinta Arts Foundation's programs in our community. The positive economic impact of supporting the activities of La Quinta Arts Foundation is outlined in the Arts and Economic Prosperity IN report issued in June 2007 by Americans for the Arts. This comprehensive survey using fiscal year 2005 data provided by 6,080 organizations in 156 study regions, calculating the spending patterns of more than 280,000 event attendees, bears out one truth — The Arts Mean Business. Nationally, the nonprofits arts and culture industry generates $166.2 billion in economic activity annually — a 24% increase in the past five years. This spending supports 5.7 million full time jobs strongly rooted in their respective communities. The arts and culture industry also generates nearly $30 billion in revenue to local, state and federal governments each year. By comparison the three levels of government collectively spend less than $4 billion annually to support the arts and culture — a return of 7:1 on investment. Riverside County, represented as one of the 156 study regions in the Survey, reports convincing evidence that the nonprofit arts and culture are a significant industry that generates $67.87 million in local activity. $41.07 million is spent by non profit arts and culture organizations with an additional $26.8 million in -event -related spending by their audiences, which delivers $6.74 million in local and state government revenue. The study again validated that the cultural visitor spends more and stays longer than other travelers, in our area $54.90 spent by non-residents versus $25.84 spent by residents for an overall average of $33.02. Higher spending was typically found in the categories of lodging, meals and transportation. Riverside County spending exceeds the national average of $40.19 for non local audiences vs. $19.53 local audiences. Using the Arts & Economic Prosperity Calculator, LQAF is able to provide you data on the impact of our activities (see attached). The first model tabulates the impact of LQAF's direct spending which indicates our position in the community as supporting 50 full time jobs, and returning nearly $65,000 to local government coffers. The next model incorporates additional direct expenditures made at LQAF events, more specifically art sold at La Quinta Arts Festival and Art Under the Umbrellas. The impact of that commerce equates to $131,344 returned to local government These undeniable statistics send a dear message to civic and business leaders that investment in the arts reaps the additional benefits of jobs, economic growth and quality of fife to attract a skilled and creative work force. The arts pump vital revenue into restaurants, hotels, retail stores and other local business. The enclosed testimonials from our business partners, patrons and volunteers reinforce the study conclusion. 3 ibl Information STEP 1: POPULATION POPULATION of your community: Less than 5D•000 ' STEP 2: TOTAL EXPENSES (optional) Your Organization's TOTAL EXPENSES (please do not use commas): $ 1000000 STEP 3: TOTAL ATTENDANCE (optional) TOTAL ATTENDANCE to your organization's arts events (again, do not use commas): 30000 Total Economic Impact Of: ,calcttlwe reset _�4- 7 Total Household Local State Expenditures FTE Jobs Income Government Government Revenue Revenue Nonprofit Arts and Culture $1,000,000 28 F $606,170 F $29,520 F $371320 Organizations: Nonprofit Arts and Culture Audiences: - $847 800 r 22.2 $305,912 $35,404 $40,109 Total Industry Impact: $1,847,800 50.2 $912,082 $K924 $77,429 (The Sum of Organizations and Audiences) .. :Print Your Results Please see the fine print below. Definitions Total Expenditures: The total dollars spent by your nonprofit arts and culture organization and its audiences; event -related spending by arts and culture audiences is estimated using the average dollars spent per person by arts event attendees in similarly populated communities. Back to Calculator FTE Jobs: The total number of full-time equivalent (FTE) jobs in your community that are supported by the expenditures made by your arts and culture organization and/or its audiences An FTE can be one full-time employee, two half-time employees, four employees who work quarter -time, etc Back to Calculator Household Income: The total dollars paid to community residents as a result of the expenditures made by your arts and culture organization and/or its audiences. Household income includes salaries, wages, and proprietary income. Back to Calculator Government The total dollars received by your local and state governments (e.g , license fees, taxes) as a result of the Revenue: expenditures made by your arts and culture organization and/or its audiences. Back to Calculator When using estimates derived from this calculator, always keep the following caveats in mind: (1) the results of this analysis are based upon the averages of similarly populated communities, (2) input/output models were customized for each of these similarly populated communities, providing very specific employment, household income, and government revenue data, and (3) your results are therefore estimates, and should not be used as a substitute for conducting an economic impact study that is customized for your community. ® Copyright 2007 by Americans for the Arts www AmericansForTheArts.oro http://www.americansfortheans.orgrinformation_services/research/services/economic_imp... 4/16/2008 i u 2 Information STEP 1: POPULATION POPULATION of your community Less than 50,000 STEP 2: TOTAL EXPENSES (optional) Your Organization's TOTAL EXPENSES (please do not use commas): $ 3250000 STEP 3: TOTAL ATTENDANCE (optional) TOTAL ATTENDANCE to your organization's arts events (again, do not use commas): 30000 ca6late reset Total Economic Impact Of: Total Household Local State Expenditures FTE Jobs Income Government Government Revenue Revenue Nonprofit Arts and Culture $3,250,000 91 $1,970,053 $95,940 $121,290 Organizations: Nonprofit Arts and Culture $847,g00 22.2 $305,912 $35,404 $40,109 Audiences: Total Industry Impact: $4097,800 113.2 $2,275,965 $131,344 $161,399 (The Sum of Organizations and Audiences) Print Your Results 1 Please we the fine print below Definitions Total Expenditures: The total dollars spent by your nonprofit arts and culture organization and its audiences; event -related spending by arts and culture audiences is estimated using the average dollars spent per person by arts event attendees in similarly populated communities. Back to Calculator FTE Jobs: The total number of full-time equivalent (FTE) jobs in your community that are supported by the expenditures made by your arts and culture organization and/or its audiences. An FTE can be one full-time employee, two half-time employees, four employees who work quarter -time, etc. Back to Calculator Household Income: The total dollars paid to community residents as a result of the expenditures made by your arts and culture organization and/or its audiences. Household income includes salaries, wages, and proprietary income. Back to Calculator Government The total dollars received by your local and state governments (e.g., license fees, taxes) as a result of the Revenue: expenditures made by your arts and culture organization and/or its audiences. Back to Calculator When using estimates derived from this calculator, allays keep the following caveats in mind (1) the results of this analysis are based upon the averages of similarly populated communities, (2) input/output models were customized for each of these similarly populated communities, providing very specific employment, household income, and government revenue data, and (3) your results are therefore estimates, and should not be used as a substitute for conducting an economic impact study that is customized for your community. ® Copyright 2007 by Americans for the Arts. www AmericansForTheArts.orc http://www.axnericansforthearts.org/information_services/research/serviceslewnomic_imp... 4/16/2008 i 06 3 Arts&Economic Prosperityl I I j *S "ARTS The Arts & Economic Prosperity III Calculator UNDERSTANDING THE ARTS & ECONOMICPROSPERITYM CALCULATOR Because of the variety of communities studied and the rigor with which the Arts & Economic Prosperity HI study was conducted, nonorofit arts and culture organizations located in communities that did not oarticinate in the study can estimate their local economic impact by using this tool. Estimates can be derived for both spending by nonprofit arts and culture organizations and event -related spending generated by their audiences. But first, the fine print ... When using estimates derived by the Arts & Economic Prosperity III Calculator, always keep the following caveats in mind: 1. The results of this analysis are based on averages of similarly populated communities. 2. Your results are estimates. This method of estimating economic impact is not a substitute for conducting a customized economic impact study on your community. (The Standard Deviation and the 95% confidence interval provide a sense of how well the averages represent the sets of numbers from which they were derived). 3. Input/output models were customized for each of these similarly populated communities, providing very specific employment, household income, and government revenue data. ECONOMIC IMPACT OF SPENDING BY NONPROFIT ARTS AND CULTURE ORGANIZATIONS Researchers developed a calculator that provides an estimated economic impact per $100,000 of spending by nonprofit arts and culture organizations. Thus, every $100,000 of spending by a nonprofit arts and culture organization has the following estimated total impact on its community. Table 1: Economic Impact Per $100,000 of Spending by Organizations Population Cohort Fun -Time Equivalent Jobs Resident Household Income Lmal Government Revenue state Government Revenue Fewer than 50,000 2.80 $60,617 $2,952 $3,732 50,000 to 99,999 3.09 $65,759 $3,411 $3,995 100,000 to 249,999 2.86 $64,897 $3,598 $4,051 250,000 to 499,999 2.99 $68,933 $3,571 S4,428 500,000 to 999,999 3.02 $71,881 $3,944 $4,554 1,000,000 or More 2.90 $70,003 $4,O10 $4,018 Avg. of All Study Regions Standard Deviation 95% Confidence Interval Source: Americans for the Arts, 2007. 2.94 $66,944 0.58 $10,804 0.11 $1,975 S3,589 K121 $1,062 S980 $194 $179 Page I of 3 I U 4 An Example ofHow to Use Table 1 An administrator from an arts and culture organization that spends $250,000 wants to determine the organization's economic impact on full-time equivalent employment on its community of 300,000 people. The administrator would: 1. Find the appropriate population grouping in Table 1-in this example, the "250,000 to 499,999" population grouping; 2. Determine the amount spent by the nonprofit arts and culture organization -in this example, $250,000; 3. Divide that total expenditure by 100,000; and 4. Multiply the resulting figure by the FTE Jobs economic impact ration from the "250,000 to 499,999" population grouping in Table 1. Thus, $250,000 divided by 100,000 equals 2.5; 2.5 times 2.99 (from Table 1) equals a total of 7.5 full-time equivalent jobs supported within the community. The same estimate can be made for household income and revenues to local and state government. ECONOMIC IMPACT OF EVENT -RELATED SPENDING BY ARTS AND CULTURE AUDIENCES The economic impact of event -related spending by arts and culture audiences can be derived similarly. The first step is to locate the median dollar amount spent per person directly as a result of attending a nonprofit arts and culture event excludin the cost of admission). Identify your population group column; the number at the bottom is the per -attendee estimate of event -related spending. Table 2: Median Per Person Event -Related Audience Spending Expenditure Category POPULATION COHORT FF;ewer an 000 50,000 to 99,999 100,000 to 249,999 250,000 to 499,999 500,000 to 999,999 1,000,000 or Mon Refreshments during event $2.38 $2.31 $2.51 $232 $3.06 $3.03 Meals before/after event $9.38 $9.23 $9.53 $10.11 $11.19 $10.69 Souvenirs and gifts $4.12 $2.16 $2.81 $222 $3.43 $3.66 Clothing or accessories $1.67 $1.20 $1.12 $1.80 $1.61 1 $1.44 Transportation (gas, bus, taxi) $2.40 $2.18 $2.02 $2.59 $2 78 $2.67 Child care $0.31 $0.24 $029 $0.38 $0.36 $0.30 Lodging (one night only) S4.88 $2.58 $3.12 $2 73 $5.28 $5.11 Other/miscellaneous $1.39 $0.56 $0.76 $0.70 $1.19 $0.82 TOTAL $28.26 $22.65 S24.45 S24.54 $29.77 $28.05 Source: Americans for the Arts, 2007. Page 2 of 3 -LU0 Once the proper median per -person event -related expenditure has been selected, that amount must be multiplied by the total attendance to your organization's arts and culture events. This will provide an estimated total amount of event -related audience spending. Using this total dollar figure, the following table can be used to determine the economic impact of audience spending. Thus, every $100,000 of event -related spending by nonprofit arts and culture audiences generates the following total economic impact on the community: Table 3: Economic Lnpact Per $100,000 of Event -Related Spending by Arts Audiences Population Cohort Median Per Person Event -Related Expenditure Fun -Time Equivalent Jobs Resident Household Income Local Government Revenue State Government Revenue 0,000 528.26 2.62 $36,083 $4,176 $4,731 9,999 $22.65 264 $40,564 $3,972 54,655 249,999 M 524.45 2.97 543,562 $5,073 $5,398 499,999 $24.54 2.97 547,946 $4,992 $5,974 999,999 $29.77 2.67 543,685 55,127 $5,386 nd above 528.05 2.56 543,291 $5,229 55,610 Avg. of Aa Study Regions $26.91 Standard Deviation 95% Confidence Interval 2.75 $42,823 0.55 $10,223 0.10 $1,968 $4,900 S"17 $1,662 $1,703 $304 $311 An Example ofHow to Use Tables 2 and 3 An administrator wants to determine the economic impact of his organization's 25,000 arts and culture event attendees on full-time equivalent employment in his community of 300,000 people. The administrator would: 1. Find the appropriate population grouping in each table -in this case, the "250,000 to 499,999" population grouping; 2. Use Table 2 to find the median per person expenditure for that population group -in this example, $24.54 per person; 3. Determine the total audience spending by multiplying the median per person expenditure by the total attendance (25,000)-$24.54 X 25,000=$613,500. 4. Divide the total audience spending amount by 100,000; and 5. Multiply that figure by the FTE Jobs economic impact results from the "250,000 to 499,999" population grouping in Table 3. Thus, $613,500 divided by 100,000 equals 6.135; 6.135 times 2.87 FTE Jobs (from Table 3) equals a total of 17.6 full-time equivalent jobs supported within the community. The same estimates can be made for household income and revenue to local and state government. Source: Americans for the Arts, 2007. Page 3 of 3 luO tu :3 0 I H", ell IA I I HM ILL.- A z 0 z o g «_ ll I ~ N al al S M n w I M IA H YI N W H 'p3 Mb t1 LL 2 Fa as M a` w Ya$1. 1114 w O S 2 Y cc 4 3�eia:F M Q ,.Y w m E 3 E E In x y, 1u3 r, a Ala OLD IOWD LA Quin+A April 16, 2008 Honorable Don Adolph, Mayor And La Quinta City Council Members Henderson, Kirk, Osborne, Sniff P. O. Box 1504 La Quinta, CA 92247-1504 Dear Mayor Adolph and Council Members, We are writing to encourage your on -going support of La Quinta Arts Foundation's activities in our community. La Quinta Arts Foundation produced and endorsed events drive high volume and the right demographic patrons to our establishments. Their events are conducted with the utmost professionalism and are representative of the quality of activity appreciated by La Quinta residents and visitors. We look forward to working with La Quinta Arts Foundation on existing and additional opportunities to support the business community and LQAF's non- profit mission. Sincerely, Old Town La Quinta Tenants Leslie Locken, Property Manager Kay Wolff P.O. Box 1016 77-227 Calle Ensenada La Quinta, CA 92247 April 18, 2008 Honorable Don Adolph, Mayor And La Quinta City Council Members Henderson, Kirk, Osborne, Sniff P. 0. Box 1504 La Quinta, CA 92247-1504 Dear Mayor Adolph and Council Members, I read with pride the Desert Sun article about La Quinta being named in the top eight ideal retirement communities in the U.S. by Where to Retire Magazine. The City Council and staff have every right to boast about your city for this and many other reasons. And you also noticed this distinction focused upon "retirees who love music and art." Hmmm. I wonder where the "art" comes from. As you read on, the writer acknowledges the important role La Quinta Arts Foundation plays in this the community. The Festival, for example, not only is a wonderful event in itself, but gives an avenue for local volunteers to get involved and feel ownership with the Foundation. Obviously, the Arts Foundation's success over the 26 years has been enhanced greatly by the support of the City. Not only in funding, but in your visible personal support of the various activities. Having a nationally known fine arts event in our midst really rounds out the community's identity: weather, nature, sports, small-town spirit, and ...... the arts. As a volunteer, former board member, and one of the original organizers, I encourage you to once again support the Foundation in the next fiscal year. This funding helps to spread the word about the Festival and the Foundation's many worthwhile activities. Sincerely, Kay Wolff Cc: Foundation staff e �f,� �• rya t q .^. h"4 l" iU` p� 4 b April 17, 2008 Honorable Don Adolph, Mayor And La Quinta City Council Members Henderson, Kirk, Osbome, Sniff P. O. Box 1504 ! La Quinta, CA 92247-1504 Dear Mayor Adolph and Council Members, ' We are writing to encourage your on -going support and sponsorship of La Quinta Arts Foundation's activities. LQAF produced events and activities promote a quality of life and sense of community for the benefit of all. As volunteers and members of LOAF we want to express the gratification that comes from being part of an organization providing opportunities for us to feel a part of and contribute back to our City. `- We are especial) ' y proud to be affiliated with the nationally recognized La Quinta Arts Festival which brings positive recognition to La Quinta. Sincerely, Sue Brogan � �. Volunteer 43820 Milan Court La Quinta, CA 92253 4Q .a AW Syr April 17, 2008 Honorable Don Adolph, Mayor And La Quinta City Council Members Henderson, Kirk, Osborne, Sniff P. O. Box 1504 La Quinta, CA 92247-1504 Dear Mayor Adolph and Council Members, We are writing to encourage your on -going support and sponsorship of La Quinta Arts Foundation's activities. LQAF produced events and activities promote a quality of life and sense of community for the benefit of all. As volunteers and members of LQAF we want to express the gratification that comes from being part of an organization providing opportunities for us to feel a part of and contribute back to our City. We are especially proud to be affiliated with the nationally recognized La Quinta Arts Festival which brings positive recognition to La Quinta. Sincerely, Margaret Sinicropi 79835 Tangelo LaQuinta, CA 92253 June 6, 2008 The Honorable Don Adolph and La Quinta City Council Members Lee Osborne, Tom Kirk, Stanley Sniff, Terry Henderson City of La Quinta P. O. Box 1504 La Quinta, CA 92253 Honorable Mayor and Council, Further to LQAF's previous communications dated April 16, 2008, this correspondence attempts to further detail LQAF's request for FY 2008-09. In conjunction with June 19th City budget hearings we are asking Council's consideration of the following: 1.) Contract Services Ireement for $100,000 for production and promotion of the 27 annual La Quinta Arts Festival, March 12-15, 2009 with City of La Quinta as Premier Sponsor. 2.) Renewal of Facilities Use Agreement for 5 years. Waiver of associated rental fees for term of contract. 3.) Consideration to park at SilverRock Resort, La Quinta Arts Festival, March 12-15, 2009 without imposed fees. Parking at SilverRocc would be advertised as free to the public with a free shuttle service. The cost of the shuttle service will be bome by LQAF and LQAF will be responsible to manage the parking with a professional service. 4.) Possible use of Civic Center Campus for 2nd annual Blues, Brews & BBQ (see b. below) &) Contract Services Agreement for $25,000 for Blues, Brews & BBQ. We would like to make the Council aware of collaborative activities planned for the benefit of La Quinta residents and visitors during FY08109 that are in addition to La Quinta Arts Festival, LQAF's docent program in the elementary schools and the Visual Arts Scholarship program. a. Art Culture Nighd_ife at Old Town La Quinta — Three days (one weekend) each month, July, August, and September 2008. b. Blues, Brews & BBQ — November 1, 2008. We continue negotiations with CVRPD for possible use of La Quinta Community Park for this event While use of the park was granted, the conditions imposed of not allowing vehicles or trailers on the ball field incapacitate the event as designed. We continue to work with the staff and board hopefully toward a mutual agreement. If the request is granted by CVRPD, LQAF will retract request number 4. above. �i� c. La Quinta Community Services Excursions • 9-20-08 Georgia O'Keeffe Exhibit, San Diego Museum of Art • 10-1-08 Terra Cotta Warriors Exhibit at Bowers Museum • TBD Jazz at Thornton Winery, Temecula • TBD Musicals at Pantages Theatre d. La Quinta Museum Exhibits • 12-11-08 thru 2-1-09 Desert Plein Air - a collaboration between LQAF, City of Palm Desert Community Gallery and LQ Museum. • 1-10-09 thru 3-8-09 Teapots— Ceramic Exhibition with potential fundraising activities for LQ Historical Society, Friends of LQ Museum, and LQAF • 5-15-09 thru 7-15-09 LQAF Scholarship Exhibit e. Art Under the Umbrellas at Old Town • Six Saturdays from October 2008 through April 2009 featuring art, demonstrations, live music and additional amenities, free to the public. Attached find draft budgets and supporting collateral for the listed activities. Thank you for your continued consideration. Christi Salamone Executive Director c. Tom Genovese, City Manager Edie Hylton, Community Services Director BLUES, BREWS, & BBQ 2008-2009 Account Description TOTAL BLUES, BREWS, & BBQ 2008-2009 REVENUE Ticket Sales 6,000@$5 50,000 Community Partners 20 @ $100 2,000 F & B Revenue 2,800 Beer Sales 15,000 Water Sales 2,400 City of La Quinta Participation 25,000 Sponsor Ads 16 @ $250 4,000 TOTAL REVENUE 81,200 EXPENSE Prizes 100 Beer Expenses 6,000 Grounds 4,750 Traffic Plan & Directional Signage 1500 Permits & Fees 650 Rentals 5,000 Supplies 500 Entertainment 8,000 Venue Rental & Fees 2,500 Production Costs 2,000 Marketing 14,000 Power Requirements 2-Generators 2,5W Labor 2,000 Security 4,000 Event Insurance 1,000 DIRECT EXPENSE 54,500 GROSS PROFIT/LOSS 26,700 ALLOCATED OVERHEAD 50,795 NET BLUES, BREWS & BBQ 24,095 1 I u 616/200811:33 AM 1 FY 0809 Budget Draft.xls OUTREACH ACCTN AccOrnt Descnpbw TOTAL 2008,2009 OUTREACH REVENUE 41907 Museum Tours 1,400 41672 Dooerd Proq a 3,000 TOTAL OUTREACH REVENUE 4,400 OUTREACH EXPENSE 61602 Ad(* Tours 2,800 61603 Museum Events S WakOWs 4,000ii 61605 Dooerd Prograrrs 3,000 61616 Postage 750 616M SdmiwM µSAwmrded 29,750 61636 Sdwbr,4*s Opwabrg E>Qrerrses 2,500 61646 Young @ Ad 950 DIRECT EXPENSE 43J50 GROSS PROFTTILOSS 39,%0 ALLOCATED OVERHEAD 50,M NET OUTREACH80,115 .1.t7 6162006 1123 AM 1 FY 0809 Budget Draf.)& Application Reg uestfr Sunshine Artists Pub 06/04/08 LQAF/Old Town LQ April 22, 2008 City of La Quinta Thomas Genovese 78-495 Calle Tampico La Quinta, CA 92253 RE: 2009 Riverside County Fair & National Date Festival Dear Mr. Genovese, The 2008 Riverside County Fair & National Date Festival, which ran from February 15`s through the 24", proved to be yet another successful year. We had a record breaking day the last Saturday, bringing in over 57,000 people! Our total number of fairgoers was 288,410! This year, with the support of sponsors like you, we were able to continue to provide larger -than -ever Headliner Entertainers to the community. These concerts were free with a paid admission ticket into the Fair. They included LeAnn Rimes, Blues Traveler, Los Tiranos Del Norte, Heart and our Super Fiesta featuring Banda Novillos and Gerardo Fernandez. We had over 7,500 attendees for the LeAnn Rimes, Los Tiranos Del Norte and Heart concerts putting us at maximum capacity. The partnership we have with the City of La Quints is very important to the Riverside County Fair & National Date Festival. We have been partners for many years. Due to our record breaking year, we would like the City of La Quintato come in as one of our Patron Sponsors ($10,000) for the 2009 Fair. This level will give you the following entitlements: • Advertising on Fairgrounds' electronic signs (over 30,000 vehicles pass by each day) • Name on Entryway Kiosk • Logo/Name listed on the Sponsorship Banner(s) • PA announcements daily (3) • Logo/link on Fair's website • Fair admission tickets (180) • Credential parking passes (6) • Preferred parking passes (4) 179 Riverside County Fair & National Date Festival 82-503 Highway 111 Indio, CA 92201 Toll -Free 800/811-FAIR Fax 760/863-8973 See us on the web @ hap./www.dateles[.org • Vendor/Exhibitor parking passes (8) • Sponsor Lanyards (4) unlimited entrance to the Fair • 1 Ox10 booth for the full ten days of the Fair • Naming rights for specific buildings or stage or a combination of special attractions • Listed in the "thank you" ad post -Fair (full -circulation the Desert Sun & The Press - Enterprise) • Invitation to special VIP festivities These assets will benefit the City of La Quinta in accomplishing many things to include: visibility, branding, advertisement, Logo/ID recognition, co -branded content, section on website, access to sampling/displays, employee benefits, promotional use, appearance/content & promotional involvement, and visibility. These factors will create successful marketing opportunities for your City. Next year's Fair dates are: February 13-22, 2009. Please also visit www.DateFest.org for additional information. If this level does not meet your needs, we will customize a package the will. If you have any questions about this proposal please contact me at 951-955-1092 or at schesternn rivcoeda.org. I will be in contact with you over the course of the next month to see if you have any questions and to set-up a meeting so we can discuss these opportunities. Best Regards, `MEN Stacey Chester Sponsorship Coordinator Riverside County Fair & National Date Festival Riverside County Fair & National Daze Festival 82-503 Highway I I I Indio, CA 92201 Toll -Free 800/811-FAIR Fax 760/863-8973 See us on the web C http:/www.datefesLorg ATTACHMFUT A-3 - r- May 14, 2008 Mayor Don Adoip d City Council ,_�b Vi City of La Quinta P.O. Box 1504 La Quinta, CA 92247 Honorable Mayor Adolph and City Council Members: The purpose of this letter is to request funding for DesertArc programs in the FY08/09 City Budget- and to inform you about several other ways that you can help DesertArc. As you maybe aware, DesertArc is the new name of the non-profit agency previously known as Foundation for the Retarded of the Desert. Background DesertArc serves the greater Coachella Valley and High Desert area. Its primary campus is located in Palm Desert. The agency was formed in 1959 and has grown to serve 640 clients. The client base continues to expand by about 5% per year. DesertArc clients are primarily low income adults with developmental disabilities including autism, cerebral palsy, downs syndrome, mental retardation and other debilitating medical conditions. Many are diagnosed with multiple disabilities. Sixty-eight of our clients and a number of clients' families live in the City of La Quinta. DesertArc's clients are referred and placed by the State's Regional Office. DesertArc has close working partnerships with Angel View and Canyon Springs Development Services Center whereby DesertArc provides day services to many of their. clients. Most of DesertArc clients have achieved a level of functioning and independence such that they are able to live in the community and about 35% have jobs sponsored by DesertArc. DesertArc services include: vocational training, job development and employment; residential services, independent living support and 24 hour emergency assistance; hot meals and nutrition; recreational and social opportunities; transportation; support and training for self help and independent living; case management and personalized coordination of client services; and advocacy for client needs and community integration. Few people realize that DesertArc is one of the area's largest employers as it employs 550 people of which 225 are clients. The relatively high employee to client ratio is attributable to licensing and program design requirements for staffing ratios to ensure client care and safety. Fewer realize that DesertArc, with a fleet of 23 buses and with 500 passenger trips per day, is the largest transportOPof. , disabled people east of Riverside/San Bernardino. The bus fleet operates 251 days per year and docks 600,000 miles per year. DesertArc's 08/09 Budget is projected be about $11 million. Of this, 80% comes from state and federal reimbursements for services; 15% comes from revenues generated by DesertArc business sales and 5% comes from donations and grants. Unfortunately, due in large part to several consecutive yew of frozen state reimbursements, DesertArc has struggled to balance its budget and has been unable to accrue any reserves to pay for its capital needs. There is also a great deal of concern abofttthepotential impact of the state budget upon DesertArc's finances. DesertArc has recently undergixne_a significant 101 www.desertarc.©rg Page 2 of 4 transition to new management who is working with the Board to aggressively restructure the agency to operate more cost effectively, raise more private donations and redesign programs to more effectively meet the needs of the clients. While great strides have been made, this remains a work in progress since there is so much more to do to ensure DesertArc`s long term viability as a premier provider of services for the disabled community. An important goal of the Board is to achieve strong on -going partnerships with local governments and all local governments are receiving a form of this letter. DesertArc touches each Desert community. Its services are vital to the clients, their families and their caregivers. DesertAres services reduce the need for local government services. DesertAres operations support local businesses and generate tax revenues from purchases for food, gas, services and products. As an employer, DesertArc supports hundreds of families. The bottom line is that DesertArc is an important community resource and its financial stability is critical to Desert communities on many levels. How can your local government help DesertArc? There are six ways to provide assistance. They are: 1. Provide direct grants to DesertArc. Grants and donations are needed to help DesertArc balance its budget and address its unfunded capital needs. Since it currently has no reserves, DesertArc has limited ability to make needed facility repairs and upgrades or replace its aging vehicle fleet. DesertArc can designate funds for specific purposes, such as transportation and meals, since those programs receive heavy support from the general funds of DesertArc (and the services are too critical to cut). In FY07/08, the City Council awarded to DesertArc $5,000 for disabled access ramps for a new modular unit used for programs. This was the first time in recent years the City awarded funds to DesertArc, the grant is much appreciated. We are hopeful that in FY08/09 La Quinta will provide additional funding to DesertArc. 2. Provide financial assistance to DesertAres residential programs. The agency offers an array of residential programs aimed at enabling the clients to live in the community as independently as possible. Assistance with programs costs such as meals, rent, utilities and other living costs would be beneficial to the clients and reduce the amount of general fund subsidy provided by DesertArc to support the program. Over the past year DesertArc has been working with several redevelopment agencies with no tangible success to date though proposals with other cities are under consideration at this time. 3. Hire DesertArc clients who are trained and qualified for specific occupations such as janitorial, clerical, kitchen or oarks maintenance. Some higher functioning clients can be hired to work in the community and local governments provide a great setting for our clients. A key goal of the Board is to place all qualified clients into community work settings and we have dozens who are available for such placements. Some clients can be hired individually as independent placements. More commonly, "Enclave" work teams of 3-4 clients accompanied by a Job Coach are hired under contract with DesertArc. (The clients are employees of DesertArc, not the business.) The Job Coach is on site to help the employer train and supervise the team. Client wages are based upon the prevailing wage of the job and the productivity of each client in relation to that job and the Job Coach wages are paid through state reimbursements. A team of 3 workers and 1 Job Coach costs about $4,000 per month. DesertArc works with the employer to 182 Page 3 of 4 assure optimum satisfaction with the arrangements. This program represents a great opportunity to help disabled people achieve some of their dreams. They love their jobs and are proud to work in well known successful businesses. For example, Enclaves are currently located at the City of Indio (2), Eisenhower Medical Center the Renaissance Esmeralda Resort and Spa. Since this may require a budget appropriation, DesertArc is encouraging your city to budget for one or more Enclaves and we encourage your staff to contact DesertArc for more information on how we can match DesertArc employment services with your needs. 4. Purchase goods and services from DesertArc. DesertArc is responsible for the employment of about 225 clients. Many of these clients work on -site in business enterprises operated by DesertArc. The businesses are operated by professional staff that train and supervise the work of the clients. Currently DesertArc operates high quality embroidery and silkscreen businesses. It also fulfills Internet product sales orders for Pentel (pentelstore.com) and fulfills light assembly contracts. DesertArc is also developing other business lines that will be available later this year. Buy DesertArcl These businesses are primarily conducted to employ our clients. Currently the net proceeds are nominal. Additional sustained support for our businesses would Increase jobs and generate revenue to support DesertArc's mission. Collectively local governments spend tens of millions of dollars annually on local products and services. Local governments have generally not taken advantage of the competitive pricing and quality services available at DesertArc. Over the past year the City of La Quinta was our best city customer as it spent $7,623 for embroidery/silkscreen—we greatly appreciate your business. We have plenty of capacity to do more. It is requested that, if it is not already, DesertArc be added to the City's formal bid list for embroidery, silkscreen and light assembly contracts. It is also requested that this information be disseminated to each of your departments since purchasing decisions are often made by their managers. S. Sponsor or co-sponsor one of our events. This past year has been one of transition for DesertArc as we are re -inventing ourselves. The Board is implementing a more aggressive fundraising effort in FY08/09. Through a grant from the Houston Foundation, DesertArc now employs a full-time fund development professional to lead our fundraising efforts. Our program will include a few special events. Fundraising events are most successful when there are sponsors and co-sponsors to help underwrite the costs. We will inform you when an opportunity for sponsorship arises. 6. tensor one of our buses. Perhaps you have seen some of our buses with our new logo as the buses traverse the community. We have received much positive feedback about their appearance. DesertArc has made arrangements such that local businesses can receive wide recognition by sponsoring one those buses. Their businesses are attractively displayed on our buses and available at a reasonable monthly cost. Promote your city, your events and your programs by using this means of promotion, it is cost-effective and provides a source of income to support our transportation program. A sponsorship can be purchased for as low as $330 per month with no set-up costs. Having served as an elected official I can relate to your role as City Official. I am aware that you receive many worthy requests from charitable groups. What differentiates DesertArc services is that we serve all Desert communities and provide special services for disabled people thus relieving local governments of some difficult responsibilities. Your support for our mission and your financial help makes life better for our clients and their families. We hope to strengthen our partnership with the City of La Quinta. 3 c Page 4 of 4 In closing, on behalf of the Board I want to invite each of you to visit our Palm Desert campus and take a tour of our programs. Our clients and staff appreciate seeing people interested in what we do and those that take a tour are often surprised by the size and scope of our program operations. Feel free to contact me or Executive Director Richard Balocco at 760.346.1611 to schedule an appointment or to obtain additional information about our services. Sincerely yours, �vv Christine Murphy Board President GR/cc CC: City Manager 1Un M I 1 M%O"1V1L1V I t-t May 22, 2008 Maria Casillas City of La Quinta 78-495 Calle Tampico La Quinta, CA 92253 RE: Proposal for Increase in Sponsorship of the Jacqueline Cochran Air Show 2008 Dear Maria, I would like to thank the City of La Quinta and its councilmember's for supporting the Jacqueline Cochran Air Show for the past four years. Your support has led to the overwhelming success of this air show and has helped provide the community with the Largest FREE oneday event in the Coachella Valley. Last year there were over 35,000 attendees! In the past, the City of La Quinta partnered with us as a Falcon Sponsor ($10,000) of the Air Show. The Riverside County Economic Development Agency would like to propose that the City of La Quinta once again partner with us at that level. This level of support will help with the ever increasing cost of fuel and overall production of the Air Show. As you know, the Jacqueline Cochran Air Show is a FREE community event and we heavily rely on the surrounding community to help keep this free to the public. In today's economy we are faced with Jet fuel rates as high as $6/gallon along with the cost of lodging and transportation. We are responsible for those expenses for the performers and their crews. The Jacqueline Cochran Air show has soared to new heights and is now a nationally recognized Air Show. It is known for having a broad range of aeronautical acts, jet teams and displays that rival several larger air shows such as the March Airfest and the Planes of Fame Air Show in Chino. The Us Navy and US Air Force have increased the caliber of performers and number of demo teams that participate in the air show. This demonstrates the venues hospitality, popularity and acceptance in the national aviation community. It also has a positive economic impact on the surrounding areas such as La Quinta, Indio, Coachella and Indian Wells, with particular stimulus to the restaurant and hotel industry. '35 The following entitlements are included at the $10,000 sponsorship level: ■ Company name, logo will be included on the several print advertisements, which include posters, brochures, newspaper ads, program/flier and banners. ■ PA Announcements (8) ■ Catered Chalet (16) ■ VIP Night Passes (16) ■ VIP Parking Passes(8) ■ Logo/Link on Air Show website ■ 10 x 10 booth at Air Show ■ Name mentioned in TV commercials The Fifth Annual Jacqueline Cochran Air Show will be held on Saturday, November 1, 2008 from 9am-3pm. With the exception of food and merchandise purchases, the event is FREE to the public. My hope is that the City of La Quinta will consider joining other Coachella Valley cities like, Coachella, Indio, and Palm Desert in providing a Falcon sponsorship for this exciting event. Should you have any questions, please feel free to contact me at (951) 955.9020 or e-mail me at rkross@rivcoeda.ore. Check out our website at www.jacquelinecochranairshow.org Thank you for your consideration, RX I pob_� Rebeckah Ross Sponsorship Coordinator Riverside County Economic Development Agency 160 M11NVI7WICIV1 'f-J 1 Ir Coachella valley UN 10 2008 C Economic ParrnershIp 73-710 Fred Waring Drive, Suite 106 •Palm Desert, CA 92260.760/340d575 •Fax 760/340-9212 -- - City of La Quinta Attn: Tom Genovese, City Manager 78-495 Calle Tampico La Quinta, CA 92247 Dear Mr. Genovese: Over the past few months, the Chairman and/or the President of the Coachella Valley Economic Partnership (CVEP) have met with leaders from each of the nine (9) Coachella Valley cities to discuss the current financial status and governance structure of CVEP, and to propose an increase in city financial participation. The case was made that cities could and should shoulder a greater burden of the funding and operations of CVEP, notwithstanding CVEP's continuing efforts to seek additional private sector funding. The enclosed Brief was created to provide a historical analysis of CVEP, to explore its current fiscal condition and to recommend future goals for the organization as it pertains to effectuating positive economic impact on the region. A proposed FY 2008-09 budget with revenue scenarios is included in the "Recommendations" portion of the document for your reference. At the January 2008 meeting of CVEP's Executive Committee, the Chairman recommended requesting public sector support for CVEP in the amount of $50,000 per city to address immediate fiscal constraints and to provide operational and planning funds for FY 2008-09. Though none of the city leaders specifically rejected the proposal, most indicated that a one-time infusion would be subject to approval by their respective councils and would require a detailed budget along with a plan indicating where the organization was heading and how the funding would be utilized. Subsequently, the Board of Directors took action at their meeting of April 24, 2008 on an alternative proposal to reduce the request to $11,000 per city in addition to the current $6,000 contribution ($17,000 total). $5,000 would be earmarked for development of a business plan. CVEP is recommending that each city read through the Brief and accompanying budget, which includes three revenue assumptions, in order to make a determination for future financial participation in the organization. The budget can be balanced under all revenue assumptions. The question of effectiveness will be answered through the resolve of each of CVEP's city partners to participate, as noted in the budget scenarios. CVEP is seeking up to $50,000 per city but not less than $17,000 in accordance with the Board recommendation. Help us build a truly competitive economic development organization which will bring the types of business this valley wants and needs to create clean, high paying, year -around jobs for our residents! Thank you for your, consideration, I��u iti7 John M. Soulliere President/CEO Coachella Valley Economic Partnership Helping Innovative Companies Expand/Relocate to The Coachella Valley. Discussion on the Financial and Governance Structure of the Coachella Valley Economic Partnership (CVEP) Prepared for The Nine Cities of the Coachella Valley By: John M. Soulliere, President/CEO June 5, 2008 Contents Summary.............................................................................................................................2 Background........................................................................................................................3 CurrentCVEP Revenue Model.........................................................................................6 Current CVEP Organizational/Governance Structure...................................................6 Casefor Strategic Planning...............................................................................................10 StaffFindings......................................................................................................................11 Recommendations...............................................................................................................12 Governance Restructure (conceptual).............................................................................13 Concludingcomments........................................................................................................15 Attachment A Budget.............................................................................................................. sc� Summary: The following document has been developed in response to action taken by the CVEP Executive Committee at its meeting of April 21, 2008. The action included a request of the President/CEO to provide a "white paper" or "Brief that would outline the current fiscal status and governance structure of the organization, as well as provide recommendations to address ongoing financial constraints, strategic planning and general purpose of the organization. A proposed budget with revenue scenarios has been included for review in tandem with the "Recommendations" portion of this document. The issue of concern pertains specifically to seeking an increase in the contribution of CVEP's public agency partners — generally city governments — towards bolstering the general operating fund of the corporation to address/remedy an ongoing deficit, as well as to create a base of funding for activities of benefit to our city partners. Further, the committee is seeking input regarding the ramifications of increased public funding and how it may affect the role of the public sector in the governance of CVEP. Levels of membership with accompanying rights and responsibilities related to governance are stratified by financial participation. Hence, the question of the role of cities within the governance structure is directly affected by a request for increased financial participation. Of immediate concern are the current and projected budget shortfalls as well as the appropriate role of CVEP as it pertains to business development, expansion and retention activities on behalf of the Coachella Valley. Additional factors include the need to institutionalize the Career Pathways Initiative (CPI) which, to date, has existed based upon "seed funding" received through non-profit entities. The first phase of expirations of that funding will occur on May 31, 2008. Included in CVEP's 2008-09 budget draft for consideration are sustaining funds for the CPI. CVEP is at somewhat of a crossroad. Since the organization does not exist in and of itself, it is for its members — both public and private — to determine what it will be and the impact it will have upon the economic future of the Coachella Valley. With much discussion over the years about the importance of economic diversification and stability, and creation of economic opportunity for our fixture residents, it falls to the members of the greater Coachella Valley community to determine how, when and through whom these most important issues will be addressed. CVEP was created to this end. Through a concerted effort of the public and private sectors, this mission can be accomplished. It will take an investment of both monetary and intellectual capital to do so. 'Executive Committee members for 2008: Cities of Palm Desert, Cathedral City, La Quinta and Palm Springs, Kevin McGuire of PDNB, Lee Morcus of Kaiser Grill, Aubrey Serfling of Eisenhower Medical Center, Bob Marra of Wheeler's Desert Letter, Kieth Goeff of Rabo Bank, and Michelle Krans of the Desert Sun. iA Page 2 of 15 Background: The Coachella Valley Economic Partnership was formed in 1995 with the mission of "diversifying" the regional economy through business "attraction, expansion and retention." One of the reasons for this action was to offset the effects of the seasonal revenue "troughs" created by the tourism -based economy, particularly as it pertains to regional retail sales. Additionally, diversification of the job market is essential to increasing year round disposable income for the residents of the Coachella Valley. In 2000, Riverside County conducted a county -wide study that identified numerous business clusters for targeted economic development activities. Five of these clusters were identified in a subsequent CVEP retreat as optimal for the Coachella Valley region and became the focus of CVEP's economic development efforts. The majority of CVEP's revenue is derived from private sector "memberships," events income and grants, with about +-4% of the total budget coming from cities. CVEP has approximately 110 members in good standing. CVEP Ongoing Work The majority of CVEP's work involves business attraction and regional preparedness. CVEP has forwarded approximately 25 business relocation leads representing over 4,000 jobs to its partners since October 2007. About 23 of these are currently active. roughly 20% of the leads were generated through County EDA and the California Business Investment Services (CalBis), while the remaining 80% were cultivated through CVEP- driven outreach, partner relationships or direct inquiry. CVEP distributes and manages leads on behalf of its member organizations and assists in packaging responses back to clients, ongoing communication, site visits and facilitates meetings between city representatives and business interests. CVEP is the point of contact where prospective clients are able to consolidate their site location activities for the entire Coachella Valley. Over the past eight months, CVEP has brokered at least one meeting between a business relocation prospect and representatives from every city in the Coachella Valley. CVEP will continue to work with regional government jurisdictions to present the valley as an attractive location for businesses to relocate. The branding of the region as the place "where business meets the good life" has been advanced through print ads, numerous speaking engagements both within and outside of the valley, and through the website. CVEP also assists its partners in making sure the Coachella Valley is properly positioned and represented as business capable. Our work in education and workforce development is nationally recognized. We have worked for creation of new business incentive areas, infrastructure enhancements such as workforce housing and municipal improvements, promoted regional lifestyle amenities, supported sustainable growth and created collaborations among industry peers, local government, utilities and higher education. Education and Workforce Development CVEP espouses the idea that education and workforce development are key components of economic development. In 2005, CVEP commissioned a labor market study — the first of its kind in the region — to determine the status of the regional workforce in light 91 Page 3 of 15 of existing and future business demand. The private sector identified the lack of a trained workforce as the number one deficiency for sustaining growing or attracting business to the region. CVEP responded by launching the Career Pathways Initiative (CPI). CPI has been successful in working within all three Coachella Valley K-12 school districts to develop pathways or "academies" to increase the number of students that are prepared and motivated to enter post -secondary education. Further, CPI has worked with the region's post -secondary education institutions to ensure continuity of purpose between the K-12 system, community college, universities and industry. This highly successful program has galvanized education and industry in key business clusters including health care, multi- media and technology, around an economic development strategy that will ensure a prepared workforce for future industry in the region. Funded through CVEP since 2005 by grants totaling about $1.5 million, the CPI is required to become sustainable through local participation if our current benefactors such as the James Irvine Foundation, the Ford Motor Company Fund, Southern California Edison, The Gas Company and Desert Health Care District are to continue with program specific support. Further, the success of the program has attracted an additional $310,000 grant which will be used to create a regional scholarship program that will distribute $10 million over ten years to Coachella Valley students for post -secondary education. CVEP must remain fiscally sound to receive additional funding and to provide the operational support to ensure the success of this first -of -its -kind program in state. In 2008, CVEP moved even deeper into the development of a sustainable workforce by merging its Education & Workforce Development Committee with the Riverside County Workforce Investment Board (WIB). CVEP and its partners now participate in the oversight and strategy development around the use of federal funds for county -wide workforce development activities. Recently, CVEP has brought forward a member initiative for workforce development that will, potentially, impact every city in the county of Riverside. We are asking that a survey of retiring "baby -boomers" be conducted among utility workers (including electric, gas, water, sewer and communications) to ensure that workforce development strategies are developed to prepare replacements for this large group of soon -to -retire staff members. Demographic Information CVEP sponsors the annual compilation of regional demographic data on behalf of its members. The data is compiled by Dr. John Husing (named among the top 100 influential leaders in southern California in 2007) in the form of an annual report and presented at CVEP's annual Economic Forecast Luncheon. Additional data specific to each Coachella Valley cities is also compiled into nine separate reports and provided to the cities by CVEP. The annual report has become an essential tool for regional leaders to understand regional demographic trends related to population, employment, housing, crime, banking and education, and to use as a basis for ongoing strategic planning. Approximately 3,000 reports are distributed annually within the region as well as in response to business relocation inquiries outside of the region. 1J? Page 4 of 15 Brief Financial History As of FY 1999-2000, CVEP enjoyed a surplus of approximately $200,000. The surplus has been used in six out of the subsequent seven years to balance the budget against deficit spending. In FY 2006-07 the surplus was finally exhausted creating an unfunded deficit carry over for FY 2007-08. Current management came on board in late July 2007, while the sitting Executive Committee was first convened in October of 2007. The period between late August 2007 and early November 2007 was one of "discovery" regarding the financial status of the organization. Assumptions made in the draft 2007-08 budget proposed in February of 2007 included a $95,000 contribution from CVEP's only Class "A" member at the time, the Imperial Irrigation District (IID), notwithstanding IID's three-year funding commitment expiring in the prior fiscal year. With a deficit carry over of roughly $54,000 and a 20% decrease in operations revenue, it became evident that CVEP was on the road to financial privation. As economic conditions weakened in late 2007-08, numerous private sector investors terminated their membership in CVEP, particularly in construction related industries (construction companies, brokers, title companies and realtors). This action exacerbated the previously unobserved revenue deficit trend in CVEP's general operating fund. It is projected that nearly a $120,000 deficit will be incurred by July 1, 2008 (contingent upon 100% collection of member commitments from FY 2007-08), though this amount may decrease by 10% or more due to a projected increase in memberships being cultivated by staff at present. CVEP administration has been working to increase the amount of fiscal oversight by its executive committee, the day to day governing board of the organization. A finance subcommittee was formed in early 2008 to work closely with the President/CEO and to make recommendations about the financial strategy of the organization. The President/CEO is recommending that a Finance Committee become institutionally established and identified at the first meeting of the newly -seated Executive Committee each year. This action will create continuity in fiscal accountability from year to year and provide for disclosure beyond the administrative structure. Page 5 of 15 Current CVEP Revenue Model: CVEP's total annual budget has historically hovered around $1 million to $1.3, with about $500,000 derived from local, state and national granting agencies. Grant funds reside in restricted accounts and are dispersed exclusively for activities related to CVEP's Career Pathways Initiative. The remaining gross revenue for general operations is generated through membership dues and events income. For FY 08-09, gross revenue projections are just under $570,000. This figure is based upon the assumption of retaining current membership levels, the addition of one Class "A" or Executive member (UCR), income estimates for the annual Economic Forecast event, and development of about $32,000 in new private sector memberships. There are additional assumptions outlined at the bottom of the attached budget spreadsheet for your review. It is important to note once again that the private sector funds about 90% of CVEP's general operations presently. Current CVEP Organizational/Governance Structure: Staffin The 2007-08 budget included three positions for general operations: the President/CEO, the Director of Business Development and the Executive Assistant. Additionally, CPI budgets for two consultants, and the Pathways to Success College Scholarship Program will provide for two staff members and one consultant through FY 2008-09. A modification in staffing is recommended in the proposed budget. It is projected that the changes will increase the effectiveness of the organization through a more efficient distribution of tasks and utilization of limited resources. Boards and Committees CVEP's governance structure was formed in accordance with Title 1, Division 2 of the California Corporations Code, Nonprofit Corporation Law. The governance of CVEP exists within a Board and Committee structure working with paid administration. In addition to the Board of Directors CVEP's bylaws identify five working committees as follows: 1) Executive Committee 2) Marketing Committee 3) Investor Relations Committee 4) Legislative Committee 5) The Education Workforce Following is a brief overview of the function and responsibilities of the Board and Committees. This narrative is necessary in order to provide a better understanding of the ramifications of proposed changes in the governance structure based upon the roles and responsibilities of the various boards and committees as well as how various levels of membership affect those the Board and committee structure. — Board of Directors ("the Board") — (CVEP Bylaws Article V) 1J4 Page 6 of 15 The Board, consisting of not les than 7 but not more than 45 members (currently 30 members), is charged with oversight of the corporation in all matters including creation of committees in accordance with section 5212 of the California Corporations Code. A minimum annual membership due of $5,000 is required to be eligible for a seat on the Board, with the exception of a committee chairperson. — Executive Committee The Board has provided that an Executive Committee exercise oversight of the general operations of the corporation as identified herein below, except for those maters requiring Board action under section 5212 of the Code. Generally, any action which amends the bylaws or makes change in the organizational structure requires ratification of the full Board. CVEP Bylaws, Article X: "The Executive committee is established by the Board as follows: "EXECUTIVE COMMITTEE. Pursuant to Corporations Code section 5212 (a), the Executive Committee is hereby established. The Executive Committee shall be responsible for general operations of the Corporation. The Executive Committee shall also have exclusive authority with respect to the hiring and firing of the Chief Executive Officer. The Executive Committee is empowered to exercise all governing authority as to corporate affairs otherwise exercised by the Board of Directors except with respect to: 1. The approval of any action for which this part also requires approval of the members (Corporations Code section 5034) or approval of a majority of all members (Corporations Code section 5033). 2. The filling of vacancies on the board or in any committee that has the authority of the board. 3. The fixing of compensation of the directors for serving on the board or on any committee. 4. The amendment or repeal of bylaws or the adoption of new bylaws is the duty of the Executive Committee. 5. The amendment or repeal of any resolution of the board that by its express terms is not so amendable or repealable. 6. The appointment of committees of the board or the members thereof. 7. The expenditure of corporate funds to support a nominee for director after there are more people nominated for director than can be elected. • 1:1� Page 7 of 15 8. The approval of any self -dealing transaction except as provided in paragraph (3) of subdivision (d) of section 5233 of the Corporations Code." At its annual meeting (October), the Board elects an Executive Committee based upon a slate prepared by the nominating committee. Historically, the nominating committee has identified a member for the chair who then identifies his/her desired officers and the balance of the Executive Committee membership, excluding members required within the bylaws (up to three Class "A" members and the two representatives of the east and west Coachella Valley cities). The Board may ratify the slate or provide an alternative for consideration. Traditionally, the President/CEO has played a role in the process to help identify the working committee whom he/she will serve for the subsequent year. — Additional Committees: The roles and responsibilities of the remaining four committees are generally advisory in nature. Action taken by the committees is recommended to the Executive Committee by the CEO or the committee chair, and to the Board when required under the bylaws. — President/CEO: The governance of the organization is rounded out by the President and Chief Executive Officer of the corporation according to Article VI of the Bylaws. The President/CEO is also named as an officer of the corporation. CVEP Bylaws, Section 6.9: "PRESIDENT AND CHIEF EXECUTIVE OFFICER. The Board may employ, on such terms as the Board deems appropriate, a President and Chief Executive officer to coordinate day-to-day operations of the Corporation. The President and Chief Executive officer shall report to the Executive Committee." — Membership (CVEP Bylaws, Article IV): The rights and privileges of each class of member differ. The most notable pertains to representation at various levels in the governance structure of the organization. As stated above, there are three classes of membership, A, B and C. Class "A" members ($50,000) are granted immediate placement on the Board and Executive Committee without ratification of the Board of Directors, though all nominees for CVEP membership must be ratified by the Board. Under current bylaws, up to three Class "A" members may sit on the Executive Committee at one time even if a Class `B" or "C" member must be displaced to open a seat. Class "B" members ($5,000) are granted board privileges, i.e. voting rights on the board of directors, and generally fill the balance of seats on the Executive Committee by election. Currently, CVEP is allowed not less than 7 or more than 45 board members. There are currently 30 Board members. Cities have traditionally been placed into the Class `B" membership based upon an annual contribution of $6,000. iJ0 Page 8 of 15 Class "C" members ($1,000) do not have voting rights unless the board elects to submit an issue to the general membership for a vote. Class "C" members may serve as committee chairs and, by reason of that service, are members of the Board of Directors and posses full voting privileges. Class "C" members may also be elected to the Executive Committee. Page 9 of 15 Case for Strategic Planning It is not enough to simply assign the task of regional economic development or even provide funding to that end absent a strategy and measurable performance standards. A comprehensive strategy or Blue Print establishes the role and responsibilities of an organization within the larger community. Further, the planning process would solicit significant member and community input creating a sense of "buy in" that will be essential to an effective implementation program. Deliverables could also include: i. An evaluation of regional growth patterns that will provide regional leaders with an understanding of where current business development practices and economic "policy" will take us over the next 20 years. ii. Direction for the future role of CVEP and develop a strategic plan to achieve the established goals of the organization as defined by the partners through the planning process. iii. A list of primary and secondary industry sectors for targeted marketing to ensure "cluster" development in desired sectors. iv. An in depth SWOT analysis and assessment of regional competitiveness (including the costs of doing business compared to competing markets) to identify what needs to be done in the Coachella Valley to attract desired industry sectors. v. A business plan which would include: 1. A marketing plan component. 2. A revenue plan component. 3. A recommended staffing plan component. vi. A strategic implementation component. vii. Establish performance measurements for the organization. Competing areas such as the western Inland Empire, Phoenix and Tucson, AZ, Las Vegas, NV and Portland, OR are well staffed, have significant budgets and are aggressive in their efforts to capture industry and bring better paying jobs to their regions. They understand the connection between economic sustainability and industry diversification as it pertains to wealth creation in a region. Housing markets, retail of all kinds, charitable organizations and community wellbeing are all supported through the growth of higher wage jobs that create disposable income. If the Coachella Valley is going to more than double in population as projected over the next 20 years to nearly 1 million people, it will be the jobs which are created that define the socio-economic state of the region at build out. As the valley has grown in population under the current economic drivers, it has fallen further behind in average pay on a national scale. For 1995, average for the Coachella Valley was $31,733 while the national average was almost 25% higher at $40,000. The valley, under current growth 2 Husing data from the 2007 Coachella Valley Economic Report 1J� Page 10 of 15 patterns, is literally growing poorer while crime rates per 1000 have increased. The continued proliferation of lower wage jobs will provide less disposable income and create instability in the regional economy at build out while increasing dependence upon the ebb and flow of the national economy as it pertains to tourism. Without additional industry vehicles to increase the importation of dollars to the region, the wealth of the region will continue to exit the area in the form of retail purchases which leave very little in the local economy. The need for tens of thousands of better paying jobs over the coming decades to bring balance to the regional economy cannot be overstated. A substantial increase in better paying jobs and disposable income to full-time valley residents can be achieved through aggressive business attraction, expansion and retention activities. It is not enough to simply develop a so-called business plan for the organization. CVEP does not need a business plan that is developed within the vacuum of its own existence. CVEP needs to develop a business plan within the scope of its defined purpose within the greater Coachella Valley with input from the public and private sectors. Outside of the members defining and supporting its purpose, CVEP has no purpose. Therefore, a comprehensive plan, as defined above, is the natural next step for not only CVEP but also for the Coachella Valley. Staff Findings: 1) The organization has been deficit spending since FY 2000-01 in all but one budget cycle. The over $200,000 cash surplus recorded at the end of FY 1999-2000 has generally been tapped year after year to keep the organization solvent through FY 2006-2007. With the expiration of a three year commitment by III) Energy in January 2007, an additional $100,000 shortfall exacerbated the accumulating deficit. 2) The current deficit has rendered the organization nearly insolvent requiring immediate and drastic action. 3) The mission of the organization is valid and important to every municipal jurisdiction in the Coachella Valley but has not been clearly defined or financially supported. 4) There is no regional commitment to a revenue plan that would provide adequate funding to bring fiscal stability to the organization or to support activities in alignment with the organizational mandate. 5) There is no comprehensive strategy in place to measure performance of the organization, identify funding requirements, implement marketing activities or move the organization into a significant level of effectiveness to achieve the desired results of either the organization or the region. 6) Current staffing structure is inadequate to effectively fulfill the mission of the organization. 7) Institutionalization of the Career Pathways Initiative as it transitions from full dependence upon non-profit seed funding is not currently possible. 8) The current bylaws do not reflect a governance structure that accommodates the disparate interests of the partnership with equity. Page 11 of 15 9) Immediate financial intervention is required in order to forego staff reductions that would significantly reduce the organization's ability to retain current and needed levels of service on behalf of its partners. Recommendations: In the attached budget, there are three revenue assumptions outlined which will lead to various outcomes regarding CVEP's effectiveness and long term fiscal stability. There are assumptions of additional revenue from the private sector indicated in each scenario as well. The proposed budget also requires a minimum of 10% increase in revenue (about $32,000) derived from new member development in addition to the private sector contributors identified in each scenario. As you review the budget, you will be able to determine how your decision to support or not to support CVEP at a given level will enable the organization to achieve a desired state of effectiveness. It is anticipated that with an increase in support from the public sector partners, the need for restructuring to accommodate a greater public sector role in the governance of CVEP will also emerge. I have included a conceptual restructuring model for review following the discussion of the impact of the three revenue assumptions below. — Assumptions 1) The first assumption is defined as the Board of Directors recommended funding. This scenario assumes an additional increment of $11,000 from each city, $5,000 of which would be earmarked for creation of a business plan. This scenario would accomplish the following: a. Address the current deficit and bring the organization into solvency. — One time cost - approximately $127,000 b. Retain current or modified staffing IF all private sector funding is realized. 2) The second is an assumption of the Board's recommendation with additional funding anticipated from two of the nine city partners, though not yet ratified as of the writing of this document. In addition to the above items would provide for the following: a. Provide funding for creation of the strategic plan OR provide for CPI. — Plan is a one time cost ranges from $135,000 to $150,000 depending on desired deliverables. — Minimum CPI support is $75,000 (CPI staff recommended budget is $266,000) while requiring staff to develop additional funding for sustainability from school districts, college and universities, private sector partners and grant funding. 3) The third is that requested by the Executive Committee and Chairman in meetings with city leaders over the past few months. — Address all factors in proposed budget with 2U0 Page 12 of 15 Governance Restructure Concept Introduction: The following discussion should be used as a basis for considering amendments to the governance structure of CVEP in response to an increase in financial participation from the public sector representatives. As previously stated, CVEP was originally structured to link certain oversight privileges with varying levels of financial participation. Some public sector leaders have expressed dissatisfaction with the historical model, particularly as it pertains to representation on the Executive Committee by the public sector based upon their financial participation. This section will discuss this assumption as well as provide an example of an alternate governance structure that could be considered by the CVEP Executive Committee and Board of Directors in response to the public sector concerns and the requested increase in public sector financial participation. Of the existing approximately 110 members of CVEP, nine are cities, one is the county EDA and three are Native American tribes. The public sector members are divided geographically between the east and west valley. The dividing line for east and west has been established as between the cities of Palm Desert for the west and Indian Wells for the east. Under the current scenario, the ratio of membership income to governance authority is weighted in favor of the public sector partners. Of the 27 occupied seats of the Board of Directors, nine are held by cities granting 30% of the governance to the cities. Additionally, the bylaws require that almost 20% of the executive committee (2 of 11 seats) be constantly occupied by the local government entities identified. Each city contributes a gross annual cash amount of $6,000 for membership. CVEP is billed annually for Dr. John Husing's economic data compilation and narrative for each city in the amount of $1,700 per city, leaving a net per -city contribution of $4,3003. Hence, while occupying nearly 30% of the board seats the net cash city contribution to CVEP's total budget (restricted and unrestricted) is about 4%. Cities currently support just under 8% of CVEP's general operating budget based upon the total net contribution of $38,700 ($4,300 X 9 cities) towards a $500,000 budget. Applied literally, the cities do not currently qualify for Board level membership. Example of a Conditional Governance Structure: Considerations for increased public sector representation on the Executive Committee of CVEP may be based upon the conditions set forth below. The public sector representation on the Executive Committee could be balanced based upon economic impact areas rather than a split between east and west valley. There are three identifiable benefit zones which may be considered: The East Valley, consisting of Indio, Coachella and the County of Riverside (Mecca, Thermal, etc.): These areas posses significant industrial properties within the respective jurisdictions. Economic impact of new industry moving to the east valley would likely be realized by all three jurisdictions. a Palm Desert contributes an additional $16,800 in -kind for office space. 201 Page 13 of 15 The Central Valley, consisting of La Quinta, Indian Wells, Palm Desert and Rancho Mirage: These highly retail/tourism-centric cities continue to benefit from their juxtaposition with Hwy 111 and one another. Though possessing little or no inventory of industrial land, these cities benefit from regional industrial development through an increase in executive and management level populations. They also serve as a shopping destination for populations of workers with disposable income. The West Valley, consisting of Cathedral City, Palm Springs and Desert Hot Springs: Family housing, mixed economies (including tourism) and a fair inventory of industrial land, particularly along the I-10, create a common benefit zone for these jurisdictions. Based upon these zones, it is recommended that three Executive Committee seats be dedicated to a rotating representative from each group. Hence, each entity would serve on the committee every three to four years. There is no change recommended for seats on the Board of Directors pertaining to the public sector members. It is also recommended that the ongoing annual contribution of each city be set at a minimum of $25,000 — notwithstanding the immediate demands identified in this document for the 2008-09 budget cycle — to better align the authority of the cities with their contributions. Under this scenario the cities and county would make up about 36% of the 11- member Executive Committee. �UL Page 14 of 15 Concluding Comments: As a business destination, the Coachella Valley in its entirety possesses many compelling attributes. These include lifestyle amenities, environmental amenities, business incentive zones, collaborative city governments, strategic geographic location in relation to markets, housing opportunities from affordable to executive, workforce, comparatively affordable land, post -secondary education opportunities, logistical advantages, peer networking and a wonderful climate. As a package, the Coachella Valley "business brand" is a yet unknown commodity that needs to stake its claim in the global marketplace of business development. CVEP is the entity that was established to undertake this momentous task. It is beholden upon the regional beneficiaries of this work to underwrite its cost. As has been stated on numerous occasions, a rising tide raises all ships. From home sales to retail shopping to proliferation of intellectual capital and the culture class, the benefits of attracting thousands of better paying jobs to the region will ripple well beyond the borders of the city wherein a particular business chooses to locate. Though temporarily slowed, the valley will continue to grow to nearly 1 million people in roughly 20 years. They are coming! But what jobs will that new population come for? How will that growth affect our socio-economic condition? What economic opportunities are we creating for our children? To what end have we invested in our post -secondary educational facilities? Will the Coachella Valley end up the way we want it without careful planning and a concerted, focused effort on implementation? It will take courageous leadership to address these questions and to chart a purposeful course that will take the Coachella Valley to a desirable destination. CVEP is looking to valley government, business and education leaders to authorize our move forward. The needed authorization is defined as adequate funding as well as intellectual participation in the process. CVEP belongs to its partners and it falls to the partners to create the CVEP — and the Coachella Valley — they desire. 203 Page 15 of 15 a x w w F- Q a u O Z 0 W W J Q g -1 W x Q C) L v c 9 U s a000$oao 00oo moo c 16 o vi oc000 0 0 m � m NW mOS tp 8 �j m 0 OC ypFa O _ EU K aR E u m a o � E E o p m E $ a a o U p m U w p Wo E E E E E E E 5�Qa M9 i v n- m a m m .- n �t .- n a Q o Y E E nag 804l aw- h E N Y Ass-. Y 2 w �5� :—iza YI 204 W U W O m o_ a Q c a � a LL !! M v n 0 0 N V _ E w n E fr OELLBmO � q ywy LLO ¢U ZEdo E� W mo L"�3fi "e EE EUU'aw Ewa§tWBE� m m oSLLf E O O f� �ocaitw d` mow r OG CG OO Gw(V 'OMOCG C O O O O O 6 0 0 0 O 6 6 O ON NO NO lV (V NfVN�lON av av �� voavaa� R �d i P V o�Mmu'fNdN� n N �E �S n egg' $e'8 SgarLre ffi �`o RU& P$�1��O 55o�553 W E��A 56 t U o� Ma'n o 0 0 oos000 s o 0 0 000000 O O O O nmv�nv��n •n m ao NNNNNN N ttVV N M1M1PM1PP P M1 M1 P o 000$ oa o_o 0 0_0o o a oOO 0 m '2 L § IZ I m E E E E E 4 g N C v a cote I 00 NIA 0 d a w r fi 5 t J u m n u � m am b w a m S U m m an k c � E m � o x` o � n v Y 7mi a F Q a a o w � E � � m E � � m m E vQ1i oa � o U vNi $0 wo E a � ° E pp C m 8 wE mmm O bc'EI L y� m C O p 0 c m ��gE o`O''c mE�oiwE I � S _E>E E m`i min®g Vl c �� > MI. b ,yj ep CQ o a�'(gSs$ i x o Y� O E uS a E�LL6rcv3�Ua¢u'Sorc ciS�ui5�=3 �s0 d O O O O O O O O O 6 O O O O O O O O 6 O O O O O O O O O O O 0 0$mm m`m'm 'm 0000 `m m0m;o oso oosoxo$ os m f°� ORORRRR NN LUS BOYS & GIRLS CLUB OF COACHELLA VALLEY Boys & Girls Club of Coachella valley 42-600 Cook Street Suite 120 Palm Desert, CA 92211 May 5, 2008 y 760 836-1160 760 776-9111 FAX e-mail Jducatte®becofcv org e-mail gegson@becofcv org www.becofcv.org Ms. Edie Hylton City of La Quinta OPERATING P.O. BOX 1504 BOARD OF DIRECTORS La Quinta, CA 92247-1504 Mike Way, President Douglas Miller, Vice President Judy Vossler, Secretary Dear Edie, David A. Peat, Treasurer Brian S. Hamik, Esq., Past President According to my records, a quarterly payment from the City of La Quinta is Steven Albanese due (April 30) in the amount of $7,500. I appreciate your attention to this Christopher now Anderson matter. Ralph Anderson J Brent Arrive In terms of 1.4.1 Basic License Fee of our agreement, I am wondering if the Michael P Busch Larry Chank City would consider an increase to four quarterly payments of $10,000 David Chapman David J Erwin beginning July 1, 2008? Your consideration of this request is very much Ross Escalette appreciated. If my memory serves me correctly, this agreement has been in Allan Farwell Jon F1tzHenry existence since 1994, when the building was first opened, and we have not Ward Fredericks requested an increase over those years. We're like everybody else in that our Lucia Moran Mark Nickerson expenses are only going up and we continue to try to keep our membership Donald A Pelegrino PhD fees for the children and their families while offering the best Foch 'Tut' Pensis affordable Suzanne Powell programs possible. Greg Raumin Rick Remvez Thanks, Edie. You have been wonderful to the Boys & Girls Club and I am Bert Ruttman Dominique Shwe willing to discuss the above request if it is your wish. Lee F. Simmons Mark D. Simon Joel Smilow Sincerely, Sue Stedmg J FOUNDATION BOARD OF TRUSTEES Mark D Simon, President David J Erwm, Vice President Jim DUcatte AI McCandless, Secretary Chief Executive Officer Les R. Peterson, Treasurer Joe Benitez Robert O. Bianco JD/mu Roach Edwards Kelly Flanagan John Foster Reid Jenkins George Kukjan Mark Nickerson Jim O'Brien Patty Stutz The POSitiVe Place For Kids A United Way Agency �✓ 2G7 June 19, 2008 Staff Outline for 2008/2009 Preliminary Budget City Manager - 5 minutes • Summary of Financial Condition • Summary of Preliminary Budget • Summary of Revenues 1. Expenditures 2. Review Items Listed on Transmittal Letter Finance Director - 15 minutes • A-2 - Review of budget process • A-5 - Review of budget format • B-1 - Present Organizational Chart • B-7 - Review of community profile which compares changes in the categories listed. • B-3 - Present General Fund Revenue Pie Chart which shows percentages. Mention that Pages D-1 through D-5 graph major revenue items and we are prepared to go over them if requested. • B-4 - Present General Fund Operating Expenditures Pie Chart - not net of reimbursement. This indicates in what areas the City is directing its efforts. • B-5 - Present City, RDA, Financing Authority expenditures by component - this is how each dollar of total expenditures is broken down. • C-1 - Review of the Budget Summary by Fund which brings together the financial activities of all the City, RDA and Financing Authority Funds. LV° • C-5 - Review of reimbursements to the General fund from other funds - other funds pay for personnel and operating expenditures that are recorded in the General Fund. • Section E - Explanation of Department by Department overviews of City operations • E-16 through E-19 - Explanation of format of the two budget documents which are tied together by the schedule of expenditures schedules. • H-1 & H-2 - Review of the City capital improvements approved by the Council in the Five Year Capital Improvement Plan. Question & Answer Period 2u9 A It At.P11VICIV I G City of La Quints FY 2008/2009 - Major Highlights Staff Resources: Funding for an additional four (4) Patrol Deputies Funding for an additional Dedicated Lieutenant Funding for an additional Community Service Officer Funding for an Maintenance Worker II Capital Spending -$ Major Projects - Village/Cove Area Fire Station - Phase 1 Corporate Yard Sound Attenuation Wall - Washington St and Laguna De la Paz REVENUES All Funds Anticipated Fund Sources Three Ma/or Fund revenues: General Fund RDA PA#1 Debt Service 1 RDA PA#1 Debt Service 2 General Fund Anticipated Funding Sources (A) Major Sources of General Fund Revenues Sales Intergovernmental Hotel Room Tax EXPENDITURES All Funds Anticipated Uses Three Major Fund Expenditures: Capital Projects RDA PA 1 Debt Service Fund RDA PA 2 Debt Service Fund OTHER Green & Sustainable Environmental Goals General Fund Anticipated Expenditures (B) Surplus/(Deficit) (A)-(B) 11-Jun-08 Department Police Police Police Street Maintenance - Public Works $ 9,472,971 1 1 $ 69,495,343 1 1 $ $ 4,215,841 $ 2,152,767 $ 1,262,470 $152,080,557 1 1 $167,327,393 1 1 $ $39,263,863 $37,906,750 $ 1,357113 $46,178,500 $43534,800 $ 2,343:70. $23,490,800 $ 23,,496,300 $ (5,500) $45,439,854 $44,114,821 $ 1,325,033 23010 25% -2% 24% 22% 2% 15% 15% 0% $187,504,282 1 1 $266,652,984 1 1 $ (79,148, $10,186,425 $56,084,465 $23,488,397 $763,200 $45,387,151 $70,273797 $ (60,087,372 $64,271:404 $ (8,186.939 $22,240,487 $ 1,247,910 $ 44,063,815 1 1 $ 1,323,337 2iU b5,;2 windows O&/ I d? /O g 'T+ PaAkA EXHIBIT A Suite 116 Cartoon / drawing tZunge size is yet to be determined. cubicles can growr maltipiy, and/or move in placement 4 ` (V FWWiOCSr 1 Roow. 1 1 ' 1 Suite 119 EXHIBIT B UU 1 1 i 1 1 I I 1 t } 'F7-=--- n aF6lc W 3 J LOBBY t &vuuvv% DF a►�Qpp�w T-� OFCt Cr`�Z pFFlG6 l m - Kear Exir Storage 11Office #9 11Office #10 LI Kitchen J SEATING Phone rm COFFEE i Office #8 Y or 2nd t Conference r Room 1 t t Office #7 a t t ,t. t N Suite 119 EXHIBIT C LOBBY r p�t —'------------- — Rest DF troom Office #4 (I Office #3 CONF. RM. Office #2 Office #1