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2009 05 13 IAB MinutesINVESTMENT ADVISORY BOARD MEETING May 13, 2009 I 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 - III CONFIRMATION OF AGENDA -None IV CONSENT CALENDAR A. Approval of Minutes of Meeting on April 8, 2009 for the Investment Advisory Board. Board Member Rassi requested a correction be made on page 3, first sentence changing "bee" to "been." MOTION: It was moved Board Members Moulin/Deniel to approve the minutes of April 8, 2009 as amended. Motion carried unanimously. V BUSINESS SESSION A. Transmittal of Treasury Report for March 2009 In response to Board Member Deniel, Mr. Falconer advised those interested in applying to the Investment Advisory Board should submit their applications for consideration directly to the City Clerk's office before the middle of May. Board Member Park advised that Mr. Paul Rabbit will not be applying, who was the April meeting. General discussion ensued by the Board regarding the candidates and their qualifications. Mr. Falconer presented and reviewed the staff report advising the Board that a treasury bill, reflected on page 6, had matured and was reinvested for another six months. In addition, he also advised of the decline of the cash balance by $8.2 million with the bulk of the decline due to the RDA debt service payments. Mr. Falconer further advised that the portfolio maturities remain short, (at 69 days) with a continuance of the City's policy to buy and hold. Mr. Falconer advised that page 8 reflects the changes discussed at the previous month's meeting with the cash flow analysis now reflecting the difference between the revenue and expenses as a "Favorable (Unfavorable-" variance. Board Member Deniel commented that the sales tax year-to-date forecast was better than expected. In response to Board Member Deniel, Mr. Falconer and Chairman Ross advised the salary and fringe benefits variance in question from the previous month's meeting on page 8 was clarified on the cover page of Business Session B, Background Section third bullet point. Board Member Deniel suggested that if there is a variance reflected on a monthly report, perhaps staff could give a brief explanation describing the variance either verbally or on the report. In response to Board Member Deniel, Mr. Falconer advised the second golf course and the clubhouse at Silverrock have been indefinitely delayed. In response to Chairman Ross, Mr. Falconer clarified the title "LAIF balance" on page 8 of the report is the City's liquid cash balance. It was suggested by Board Member Deniel to re-title "LAIF Balance" to either available "Cash Balance" or available "Funds for Reinvestment." In response to Chairman Ross, Mr. Falconer clarified the maturing investments in the months of April and May have been rolled over and were reinvested in T-Bills. Mr. Falconer further clarified that the maturity lengths have recently been shortened due to the economic market. Board Member Deniel commented that changes to the Treasurer's report have helped simplify the report and reflects useful information. 2 MOTION - It was moved by Board Members Moulin/Deniel to approve, receive and file the Treasury Report for March 2009. Motion carried unanimously. B. Continued Discussion of the Investment Advisory Board 2008/09 Work Plan and 2009/10 Investment Policy Mr. Falconer advised of the follow-up items from the previous meeting: Internal Controls - Upon his review with staff in regards to internal controls, there are no recommendations at this time. TLGP -Presented to the Board was the draft staff report to be submitted to the City Council on June 19, 2009, for their consideration and approval. Also included within the report was a note stating the program will end June 30`" for new issues, but with a large secondary market, there will be investments available in the next fiscal year. General discussion ensued amongst the Board and staff regarding the TLGP, their yields and the FDIC's guarantee. Mr. Falconer advised in recent conversation with broker/dealers, recently investors have been pulling out of the TLGP and have been reinvesting in Corporate Notes due to a "stabilization" in the economy. In response to Chairman Ross, Mr. Falconer advised the third bullet was a follow-up item from the previous month's meeting. In response to Board Member Deniel, Mr. Falconer advised any future variances in the.Treasurer's Report will be noted with an explanation. MOTION -None. Chairman Ross summarized the TLGP discussion from the previous month's meeting and stated. Board Member Moulin was not in favor of the TLGP; the remaining Board members in favor of the program. Mr. Falconer advised that the drafted Staff Report would be his recommendation to amend Section X. 15) and (81 the Fiscal Year 2008/09 Investment Policy and continue with the program through the Fiscal Year 2009/10 Investment Policy. In response to Chairman Ross, Mr. Falconer advised that at the next scheduled meeting in June, the Board will meet with the City Manager 3 and City Attorney, and at that time, the Board would recommend any changes to the Investment Policy. If there is a Board Member who does not agree with the recommended changes, that Board member could make a minority report stating their opposition. General discussion ensued amongst the Board regarding the TLGP's maturities, comparable investments and the suggested language within the "draft" staff report. It was agreed upon by the Board to make the following changes to the draft staff report: Chairman Ross suggested that the TLGP is also included in Section 5. Prime Commercial Paper. Mr. Falconer advised that TLGP would be listed in Section 5 in the 2009/10 Investment Policy. The Board agreed to the following recommended changes to the draft staff report: Section 5, last sentence should read: The City is also permitted to invest in commercial paper issued [...] Discussion ensued amongst the Board regarding the underlined sentences within the current policy; it was recommended by Chairman Ross that a form change be made at the next scheduled meeting for the upcoming 2009/10 Investment Policy. Board concurred. MOTION - It was moved by Board Members Deniel/Rassi to approve the amended language to the draft staff report dated May 19, 2009. Motion carried unanimously. Board Member Moulin stated page 14 of the Investment Policy, second paragraph, references the auditor's comments in a "management letter" and suggested the term "management letter" be changed. Mr. Falconer advised the management letter is directed to the City Council and the term "management letter" is a generic term used. The Board reviewed the attached Investment Policy and changes/additions/deletions are shown in amended form. 4 General discussion ensued among the Board regarding the term "management letter;" it was agreed by the Board that Board Member Moulin draft suggested language and present it at the next scheduled Board meeting. Mr. Falconer advised that he would forward the most recent letter from the auditors to Board Member Moulin. Board Member Moulin suggested that on page 15 of the Investment Policy, Section XVIII Investment Advisory Board -first paragraph that the word "five" be omitted so that it would give the City Council flexibility if they decided to change the number of members on the Board. Mr. Falconer advised that the number of Board members is also included in the municipal code; if the number is deleted in the Investment Policy, the municipal code would also have to be changed. Board Member Moulin advised that on page 22, the function of "Security of Investments at City," the "Responsible Party" is currently listed as "Vault" and should reflect a person(s). Mr. Falconer advised that the responsible parties are the Accounting Manager and the Senior Secretary. Mr. Falconer advised that on page 23 item 4, Broker/Dealer Services, the group Merrill Lynch has been replaced with Banc of America Securities. MOTION - It was moved by Board Members Deniel/Rassi to continue the review of the investment policy, the work plan and the review of the TLGP to the next scheduled meeting. Motion carried unanimously. In response to Mr. Falconer, Chairman Ross advised staff should proceed with the TLGP staff report based on the recommended changes during the Board meeting. Board Member Deniel advised she would not be in attendance at the next scheduled meeting. VI CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report and other selected Financial Data -April 2009 Mr. Falconer presented and reviewed the month-end cash report advising the Board page 3 reflects the LAIF performance reflecting a slight decline and ending at 1.05%, and page 4 reflects the 30 to 90 day commercial 5 paper rates with the AA paper at .53% and the asset backed paper at 3.01 %. B. Pooled Money Investment Board Reports -January 2009 Noted and Filed C. Update on California Municipal Treasurers Association Conference (CMTA) General comments were made by Board Members and staff who attended the conference. Chairman Ross advised that one of the seminars he attended during the CMTA Conference was focused on the CDARS program; he thought this would be item of consideration for 2009/10 work plan. The conference was attended by four of the five Board members. Noted & Filed VII BOARD MEMBER ITEMS - General comments and discussion ensued regarding the handout from Board Member Moulin. VIII ADJOURNMENT MOTION - It was moved by Board Members Deniel/Park to adjourn the meeting at 5:48p.m. Motion carried unanimously. 6 Senior Secretary