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2009 11 04 IAB MinutesADJOURNED INVESTMENT ADVISORY BOARD MEETING November 4, 2009 CALL TO ORDER Regular meeting of the La Quinta Investment Advisory Board was called to order at the hour of 4:00 p.m. by Chairman Ross, followed by the Pledge of Allegiance. PRESENT: Board Members Olander, Moulin, Ross, Park and Rassi ABSENT: None OTHERS PRESENT: John Falconer, Finance Director and Vianka Orrantia, Senior Secretary II PUBLIC COMMENT - (This is the time set aside for public comment on any matter not scheduled on the agenda.) -None III CONFIRMATION OF AGENDA -Confirmed IV CONSENT CALENDAR Approval of Minutes of October 7, 2009 for the- Investment Advisory Board Board Member Park requested that the following corrections be made to page 3, second paragraph: the two year bill at 7 % and LAIF at ~93%, L..1 Page 3, fourth paragraph; did not cover page 5 and staff would make the necessary correction accordingly s °~~;^' a4 '~ ..''~ ""^^r" MOTION: It was moved Board Members Moulin/Olander to approve the minutes of October 7, 2009 as amended. Motion carried .unanimously. V BUSINESS SESSION A. Transmittal of Treasury Report for September 2009 Mr. Falconer presented and reviewed the staff report advising the Board that page 3 reflects a decline in cash by 514.3 million due to an $11 million semi-annual debt service payment and a one time retirement payment to CaIPERS of 51.3 million. The portfolio increased by 20 days due to a purchase of a 55 million TLGP GE Capital investment as a result of the maturity of a 52 million bond. Mr. Falconer further advised that per the investment policy, the medium term notes cap currently is at 10% and page 4 reflects the overall medium term investments at 9%; unless the Board approves a raise in the cap, staff will not be investing in any additional medium term notes at this time. Mr. Falconer also advised that it was reported by the U.S. Treasury that the current TLGP risk weighted factor declined from 20% to 0%. In addition, he advised that LAIF recently increased their limit from 540 million per account to 550 million per account. General discussion ensued amongst Board and staff regarding LAIF's increase in their account limits. Mr. Falconer continued to recap the Treasurers Report further advising staff's decision to extend the terms in Treasuries to two years due to the current yields, which will be reflected in the November report. General discussion ensued amongst the Board regarding the upcoming investment maturities, reinvestments, cash flow analysis and immediate cash liquidity if needed. In response to Chairman Ross, Mr. Falconer advised that the upcoming 510 million investment due to mature will be reinvested for an additional two years upon the City Manager's approval. General discussion continued amongst the Board and staff regarding the investments, interest earnings and yields. Board Member Moulin stated that he feels that TLGP Notes do not fit in the Corporate Notes category and should reconsider reclassifying them. Mr. Falconer responded by stating that the state code recognizes TLGP's as Corporate Bonds, due to the fact that there is no other category to list them under, and therefore he categorizes them under the Corporate Notes category. 2 General discussion ensued amongst the Board with consideration of the reclassification of the TLGP's, TLGP terms and consideration of an increase of investment percentage in TLGP Notes. Mr. Falconer stated that he feels the TLGP's should remain in the Corporate Notes category and suggested the Board consider an increase in the investment percentage. In response to Board Member Moulin, Mr. Falconer advised that with Council's approval a change to the investment policy could be made anytime during the year. General discussion ensued amongst the Board regarding TLGP guaranties and their securities. In response to Board Member Rassi, Mr. Falconer summarized the one time payment to CALPERS. In response to Board Member Moulin, Mr. Falconer advised that spreads between Farm Credit and Fannie Mae vs. Treasuries currently run three to four basis points to repay the sidefund liability. General discussion ensued amongst the Board in regards to the current status of Freddie Mac and Fannie Mae and possible consideration of reinvesting in Freddie Mac once again. Chairman Ross asked the Board and staff if they would like to continue discussions regarding the reclassification of the TLGP Bonds and/or possible increase in percentage invested in TLPG bonds. It was the conclusion of the Board and staff to continue discussions to the January meeting. In response to Chairman Ross, Mr. Falconer reviewed page 9, which reflects the first quarter forecasts. Mr. Falconer advised that the forecasted Transient Occupancy Tax (TOT) was down, along with other revenues. Mr. Falconer further advised that this current trend in the decline in revenues is an impact to all cities, and staff is working diligently to control expenditures. General discussion ensued amongst the Board regarding the City's forecasts and possible affects on investments and their maturities. 3 In response to Board Member Moulin, Mr. Falconer summarized the cost analysis for the golf cart fees and advised that effective January 1, 2010 the fees for two years will be $20. Motion - It was moved by Board Members Moulin/Olander to approve, receive and file the Treasury Reports for September 2009. Motion carried unanimously. B. Continued Discussion of the Investment Advisory Board 2009- 2010 Work Plan Mr. Falconer presented and summarized items of discussion derived from the previous months meeting, the Money Market Mutual Funds, CalTrust, the seven day Heritage Money Market Fund and the CAMP Program. Mr. Falconer advised that these items were discussed as possible alternatives to LAIF. In response to Chairman Ross, Mr. Falconer summarized the state and local codes for money market funds. General discussion ensued amongst the Board and staff in regards non-secured money market funds and the institution of the sweep account. Chairman Ross asked if the Heritage Money Market Fund would be an alternative to LAIF the Board might consider. It was the consensus of the Board not to use this particular investment instrument. Mr. Falconer suggested that the Board possibly consider the CAMP program and advised that the weighted average currently is 60 days and stands at .28%. Mr. Falconer stated that since attending the LAIF Conference he is more at ease in still investing in LAIF. Chairman Ross and Mr. Falconer summarized and commented on the AB55 Loans discussed at the LAIF conference. Chairman Ross advised that the preliminary calendar for the Board has the Board meeting with the auditors in December and discussing CDARS in January. Chairman Ross suggested that an Ad Hoc committee be formed to review the pros and cons of the suggested investment instruments and present the findings back to the Board at 4 the January meeting. Board Members Park and Moulin volunteered to work along with Chairman Ross and staff. VI Motion - It was moved by Board Members Moulin/Park to continue the discussion of the 2009-2010 work plan. Motion carried unanimously CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report -October 2009 Mr. Falconer presented the month-end staff report advising that the report included information on notes and bonds and their long term rates. In response to Chairman Ross, Mr. Falconer advised the Board of the new Housing Authority (HA) entity recently created within the City. He further advised that the HA was created to comply with the low/moderate housing mandates as well as being able to have eminent domain rights, own property and rehab homes owned by the City, ultimately selling them thus generating revenue back into the General Fund (which cannot be done through the RDA-. The City Council will serve as the Executive Board and the Housing Authority Board will be comprised of citizens within the community. General discussion ensued amongst the Board regarding the Housing Authority. Chairman Ross commented that the month of June was record month for LAIF ending the portfolio at S62 billion. Noted & Filed B. Pooled Money Investment Board Reports -August 2009 and LAIF Conference Materials Mr. Falconer presented and summarized the LAIF Conference material for the Board. Mr. Falconer stated that he felt this year's conference reportings were very negative. Chairman Ross summarized the economic forecast given at the conference. 5 General discussion ensued amongst the Board and staff regarding the conference material, in addition to mortgage rates, mortgage delinquencies, commercial real estate and the regional unemployment forecast. Noted & Filed VII BOARD MEMBER ITEMS -None VIII ADJOURNMENT MOTION - It was moved by adjourn the meeting at 5:12 p.m S mitted by ~~Z~/Q~~ Vianka Orrantia Senior Secretary Board Members Moulin/Olander to Motion carried unanimously. 6