2009 06 10 IAB MinutesINVESTMENT ADVISORY BOARD
MEETING
June 10, 2009
IAt this time Senior Secretary Orrantia placed the conference call to the City
Attorney.)
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, Ross, Rassi and Park
ABSENT: Board Member Deniel
OTHERS PRESENT: Tom Genovese, City Manger, Kathy Jenson, City
Attorney (Present: via teleconferencel, John Falconer, Finance Director and
Vianka Orrantia, Senior Secretary
tl PUBLIC COMMENT -None.
III CONFIRMATION OF AGENDA -None
IV CONSENT CALENDAR
A. Approval of Minutes of Meeting on May 13, 2009 for the
Investment Advisory Board.
MOTION: It was moved Board Members Moulin/Park to approve
the minutes of May 13, 2009. Motion carried unanimously.
V BUSINESS SESSION
A. Transmittal of Treasury Report for April 2009
Mr. Falconer presented and reviewed the staff report advising the
Board that the City's cash position had increased slightly by 52.2
million, ending the month at 5173.7 million due to the following
capital project reimbursements: 1) Riverside County Transportation
Commission for the widening of Highway 111 and; 21 CVAG
Reimbursement for the Fred Waring Drive Widening Project; In
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addition, the portfolio maturity decreased 15 days to 54 days, with
three higher yielding investments maturing causing the yield to
drop below 1 %, with the overall investment portfolio yield ending
at .85% and the pooled yield ending at .947%.
Mr. Falconer also advised that as a result of the IAB May meeting
allowing the Treasurer to invest in Commercial Paper and Corporate
Notes with FDIC coverage and upon approval by the City Council,
investments have been made in several investment instruments,
which will be reflected in future Treasurer's reports.
Mr. Falconer suggested that the Board consider future strategies
for alternative investments, one of which would be Certificate of
Deposits up to the $250,000 FDIC limit with local banks. Mr.
Falconer advised that Board Member Rassi utilized this particular
investment instrument during his employmeht as a Finance
Director.
Chairman Ross requested a correction be made to page 3, "Cash
_._^_
Balances," The portfolio size d~Q ihcreased [...]
Mr. Falconer reviewed the decline in the portfolio percentages
reflected on page 7: Federal Farm Credit maturing at 2.9%; Federal
Home Loan Bank maturing at 2.15%; Corporate Note with US Bank
Corp. maturing at 5.1 %; and the reinvestment of the U.S. Treasury
maturing at .30%. In addition, Mr. Falconer reiterated the
suggested use of Certificates of Deposits.
General discussion ensued among the Board and staff regarding
alternative investments in lieu of LAIF, in addition to a discussion
of next day liquidity.
In response to Board Member Moulin, Mr. Falconer advised that
page 9, title "Funds for Reinvestment" would be changed to
"Available Cash" at the Boards direction. Board concurred.
In response to Board Member Moulin, Mr. Falconer advised staff
would review the S30 million in "other revenues" and if composed
of several dollar amounts, the next report would reflect the
breakdown.
Chairman Ross complemented staff on the commentary listed on
page 9, under "Major Changes in Cash Flow [...]."
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MOTION - It was moved by Board Members Moulin/Park to
approve, receive and file the Treasury Report for April 2009.
Motion carried unanimously.
B. Continued Discussion of the Investment Advisory Board 2008/09
Work Plan-and 2009/10 Investment Policy
Mr. Falconer stated that Tom Genovese, City Manager was present
and Kathy Jenson, City Attorney was present, via teleconference.
Mr. Falconer presented the final redlined version of the investment
policy with minor changes, in addition to the Executive Summary
with staff's recommendations which included the following: 1)
Increase FDIC Coverage to 5250,000 -pages 8 and 17 of the
investment policy; 2) The City is also permitted to invest in
commercial paper issued under the FDIC Temporary Liquidity
Program subject to the aforementioned commercial paper
limitations -page 10 of the investment policy and; 3) The City is
also permitted to invest in corporate notes under the FDIC
Temporary Liquidity Program subject to the aforementioned
corporate note limitations -page 11 of the investment policy. Mr.
Falconer advised, as discussed in previous meetings and upon
review by Board Members Moulin and Rassi, staff drafted
suggested language in regards to the auditor's control letter to be
included as part of the policy on page 14.
Chairman Ross reviewed the changes/deletions to the 2009/10 as
follows:
Page 1 -Table of Contents: Fiscal Year ~998f89 2009/2010
Page 2 -Fiscal Year 2889 2009/2010
Page 4 - July 1,2888 2009 through June 30, 2888 2010
Adopted by the City Council on June ~ 19, 288s~ 2009
Page 6 - V Maximum Maturities - third paragraph, second
sentence: For FY 288~{8S 2009/2010, L..]
In response to Chairman Ross, Mr. Falconer advised upon review
by staff the 58 million dollar amount reflected is sufficient.
Page 8 -Chairman Ross requested that the phone numbers listed
be verified.
In response to Chairman Ross, Mr. Falconer advised that the
maximum investment per CD would be up to 5250,000, including
interest.
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In response to Board Member Moulin, Mr. Falconer clarified that the
dollar limitations are direct investments by the City and not a
sweep account; therefore it would not be considered a conflict.
Page 9 -First column, seventh row, Corporate Notes inc/udinq
Temporary Liquidity Guarantee Program (TL GPI
Ms. Jenson advised that on page 9 Item 2 A. & B., the formatting
of the underline extends beyond where it should.
Page 10 -Item No. 4, second paragraph, second sentence: For
Fiscal Year~09~{9S 2009/10 [...]
Item No. 5, last sentence is the proposed language approved by
City Council on May 13.
Page 11 -Item No. 8, last sentence is the proposed language by
City Council on May 13.
Page 14 -The independent auditor's /etter on internal control over
financial reporting and compliance ^^t !ctt~r c,,......°^*. ,
as it pertains pertain}ag 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
auditor's letter, as it pertains,
per~aiaiag 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.
,~
T a, -P evide a written response to the ~°~~"^t
auditor's letter T" ~'~ ' + ~+ '+^ '^ °" "`'
r
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General discussion ensued among the Board regarding the
Management Letter.
Mr. Falconer clarified that the City Manager does meet with the
auditor separately to discuss the results of the audit.
Mr. Genovese summarized for the Board the general purpose of the
meetings with the auditors and what the meeting entails. Mr.
Genovese advised that the proposed language covers two aspects
of the Finance Director's functions: 1) Finance Director and; 2)
Treasurer.
General discussion ensued among the Board regarding the meetings
and the auditor's letter.
Page 17 - Bid Process No. 2, City Restriction: < =~^99;9AA
5250,000 per institution
Bid Process No. 6: Corporate Notes including Temporary Liquidity
Guarantee Program (TLGP1
Page 19 -General rules regarding appointment will required to be
updated with the current code language.
Page 22 - Function: Security of Investments at City -
Responsible Party: aFault Accounting Manager and Senior
Secretary
Ms. Jenson advised that function of the "Acknowledge Investment
Selection", the Responsible Party should read City Manager or
either of the Assistant Managers. It was agreed by the Board that
it read City Manager or arj Assistant City Manager.
Page 23 - Institutional name changes: Item 2. Bank of New
York/Me/%n and Item 4. ^^^••''..,~,T'~h, Banc of America Securities.
Page 28 -Mailing address correction: P. O.
Box 1504 La Quinta, CA 9~b~ 92247-1504
Page 37 -Item 1 definition to be reviewed and updated. along
with a correction to the formatting.
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In response to Board Member Park, Chairman Ross advised that
CDARS currently is not a permissible investment within the
investment policy and would be consider as part of the upcoming
Investment Board's work plan.
MOTION - It was moved by Board Members Park/Moulin to approve
the Investment Policy for 2009/2010 as amended. Motion carried
unanimously.
VI CORRESPONDENCE AND WRITTEN MATERIAL
A. Month End Cash Report and other selected Financial Data -May
2009
Mr. Falconer commented that the April Treasury rates remain low
and the LAIF rates were up slightly at 1.60%.
Noted and Filed
B. Pooled Money Investment Board Reports -March 2009
Mr. Falconer advised that the graph on page 4 reflects a high loan
percentage and Mr. Falconer will contact LAIF and report back to
the Board at the next scheduled meeting.
In response to Chairman Ross, Mr. Falconer advised that in
comparison to page 2 of the report, the loan percentage has
increased by 4%.
General discussion ensued among the Board and Staff regarding
investments in LAIF.
Noted and Filed
VII BOARD MEMBER ITEMS
In response to Board Moulin, Mr. Falconer advised that the Board's
input in regards to CD's was beneficial and further advised that
investment in CD's would be beneficial not only to the City but also in
the community. Mr. Falconer advised that he would like to implement
the investment of CD's in the next couple of weeks and would be
looking at six month and one year CD's.
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In response to Board Member Rassi, Mr. Falconer advised that he will
investigate the waiving of the 1.10% collateral requirement on
investments smaller than the FDIC guaranteed insurance limit per
institution.
General discussion ensued among the Board and staff as to whether or
not to invest in a six month vs. year's CD.
Chairman Ross asked if there was any opposition by the Board as to
the Treasurer proceeding with the investments of CD's. There was no
opposition.
Chairman Ross expressed his gratitude for Board Member Deniel's
involvement on the Board for the last seven years.
VIII ADJOURNMENT
MOTION - It was moved by Board Members Moulin/Park to adjourn the
meeting at 5:38p.m. Motion carried unanimously.
mit
vL.!%ctnv-- ..
Vianka Orrantia,
Senior Secretary
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