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2009 01 14 IAB MinutesINVESTMENT ADVISORY BOARD Meeting January 14, 2009 CALL TO ORDER Regular meeting of the La Quinta Investment Advisory Board was called to order at the hour of 4:30 p.m. by Chairman Ross, followed by the Pledge of Allegiance. PRESENT: Board Members Moulin, Deniel, Ross, Rassi and Park ABSENT: None. OTHERS PRESENT: John Falconer, Finance Director and Vianka Orrantia, Senior Secretary II PUBLIC COMMENT -None III CONFIRMATION OF AGENDA Mr. Falconer advised that the handout for the joint meeting minutes of November 25`" with City Council were included for informational purposes only. Board Member Deniel requested that two items be added for discussion under Board Member Items; those items being the joint meeting with City Council and her conversation with Mayor Adolph. IV CONSENT CALENDAR A. Approval of Minutes of Meeting on December 10, 2008 for the Investment Advisory Board. Chairman Ross advised on page 4, under the Business Session Item that the words "motion carried unanimously" be added to reflect the Board's vote. Board Member Moulin made general comments on his observation of Mr. Gruber's comments in reference to the accrual of pension liability and GASB 45. MOTION: It was moved by Board Members Rassi/Park to approve the minutes of December 10, 2008 as amended. Motion carried unanimously. V BUSINESS SESSION A. Transmittal of Treasury Report for November, 2009 Mr. Falconer presented and reviewed the staff report advising the Board that the November cash balance has declined by 5600,000. Yields continue to decline with the overall yield closing at 2.36% and the pooled investments closing at 2.38%. The month of December will also reflect a decline in the pooled investments due to numerous maturing investments. Mr. Falconer also advised that staff continues to remain conservative with the portfolio due to current market conditions. Mr. Falconer further advised that page 7 reflects the yields to maturity and also reflects no current investments in commercial paper, with previous yields reflected at 2.7%, 2.8%, 2.2% and 2.1 %, and current yields at 1.2%, 1 .1 % and less than 1 %. Mr. Falconer stated that the headings in question on page 7 from the previous month's meeting dealing with mutual funds were clarified with the review of the recorded minutes and are now reflected to be the appropriate types and names. General discussion ensued among the Board regarding the current economy and the impact of the economy on the City's mid-year's projections, budget and TOT tax. MOTION - It was moved by Board Members Deniel/Moulin to approve, receive and file the Treasury Report for November 2008. Motion carried unanimously. B. Continued Consideration of the Fiscal Year 2008/2009 Work Plan Board Member Moulin advised that pages 2 and 7 of the report do not coincide. 2 It was agreed upon by the Board to list cash as a separate item with all the actual investments subtotaled with cash added so that pages 2 and 7 coincide. The Board along with staff reviewed the Treasurer's Report and made the following recommendations: Page 8: Mr. Falconer advised that this page is not required but is useful to staff with reconciling booked cash to the Treasurer's Report and providing trend information on cash balances. It was agreed upon by the Board to remove the oldest historical year and report two full years in addition to the current year, with no changes to distribution of cash and investments. Page 9: Mr. Falconer advised that page 9 is a six-month cash flow and also supports the statement on page 2 of the Treasurer's report, which states "I hereby certify that sufficient investment liquidity and anticipated revenues are available to meet the pools expenditure requirements for the next six months." Board Member Moulin suggested that in lieu of the year-to-date actual, that staff compare the recent months to the actual forecast. It was agreed upon by the Board that based on Board Member Moulin's request that staff provide information for comparing forecasts to actual receipts. This would result in three additional columns in the six-month cash flow forecast report. Page 10: Mr. Falconer advised of the history of page 10 and further advised that this page could be eliminated from the Treasurer's Report. The Board concurred with staff to eliminate page 10 from the Treasurer's Report. Page 11: Mr. Falconer advised that the discontinuation of the six-month T-Bill as the City's benchmark on page 11 was due to numerous discussions with Board Member Moulin; it was also decided that staff would use other financial indicators giving readers an opportunity to compare yield in the portfolio and other financial information. 3 Board Member Deniel suggested that staff eliminate two years of historical information. Chairman Ross stated that he felt that page was useful in helping the City Council review the last eight years of the current interest trends and suggested that the historical information 'remain. It was agreed upon by the Board that staff add atwo-year rate beginning July 2008. In response to Chairman Ross, Mr. Falconer advised that page 4 of the Treasurer's Report was the page in question by Councilmember Osborne concerning benchmarks. Page 12: Mr. Falconer advised of the history of page 1 Z and also advised that this page was not required. It was agreed upon by the Board that staff add the two year rate to the graph. MOTION - It was moved by Board Members Deniel/Rassi to approve the suggested changes and continue the discussion of the Fiscal Year 2008/2009 Work Plan to the February meeting. In response to Chairman Ross, Mr. Falconer advised that Board members Rassi and Deniel's terms expire in June of 2009. In response to Chairman Ross, Mr. Falconer advised that the City Clerk's office will send out a request for application for upcoming vacancies on the Board in May, and in June a special Council meeting is scheduled to interview applicants. Board Member Moulin advised the Board of the history of the City's Ordinance Section 2.80 and further advised that he had no additional changes at this time. Board Member Deniel suggested that item be added to next month's agenda due to time constraints. Board Member Rassi stated that he felt the ordinance did not require any changes and/or modifications at this time. 4 Mr. Falconer advised that there was a brief discussion on the background. Board Member Moulin referenced his handout and the suggested language for the Board's consideration. Mr. Falconer advised that staff would review past agendas to ensure the correct language previously discussed and present at the next scheduled meeting. Board Member Moulin stated that he had handouts from previous meetings regarding the discussion of the ordinance that he would bring to the next scheduled meeting. Chairman Ross stated that to his recollection there were previous discussions in reference to "staggering terms," the wording for investment background, (i.e. securities background vs. real estate investment-. MOTION - It was moved by Board Members Deniel/Park to continue the discussion of the Board member ordinance to the next scheduled meeting. VI CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report and other selected Financial Data - December Mr. Falconer advised that on page 9, the LAIF rate in December ended at 2.17% with a continuing decline, with the portfolio at 562 billion and with a large percentage invested in loans, which is further discussed in the attached commentary from the State. General discussed ensued by the Board regarding the State's commentary and its current financial issues. Noted and Filed B. Pooled Money Investment Board Reports -October 2008 Noted and Filed VII BOARD MEMBER ITEMS 5 Board Member Deniel stated that she felt during the joint meeting with City Council that Council was disappointed with the audit report and felt that the audit report did not contain enough substance, and there were no specifics directed to the City of La Quinta. Board Member Deniel advised that she contacted the audit firm to advise them of Council's sentiments and requested that Mr. Falconer follow-up with the management partner to reiterate Council's sentiments. Mr. Falconer advised that he had previous conversations with the Mayor regarding the audit report and advised him that the letter is prescribed by the AIPCA and the firm cannot deviate from their guidelines. Mr. Falconer stated that he had spoken to the audit partner after the presentation of the audited financial statements on ways to enhance future presentations of the audit results. General discussion ensued by the Board regarding the audit report, and the current and previous audit firm. Board Member Deniel advised the Board of her recent phone conversation with Mayor Adolph and his request of the Board to help or give some direction to help City residences avoid foreclosures. General discussion ensued by the Board regarding help with foreclosures. It was the conclusion of the Board that this was not a function of the Board but if members of the Board would like to offer services or make any suggestions to City Council or the Mayor, it would be done outside the realm of the Investment Advisory Board. VIII ADJOURNMENT MOTION - It was moved by Board Members Rassi/Park to adjourn the meeting at 6:21 p.m. Motion carried unanimously. ~~~~ Vianka Orrantia, Senior Secretary 6