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2012 02 08 IAB MinutesINVESTMENT ADVISORY BOARD Meeting February 8, 2012 1 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 Board Member Park followed by the Pledge of Allegiance. PRESENT: Board Members Mortenson, Park and Donais ABSENT: Board Members Blum and Spirtos OTHERS PRESENT: John Falconer, Finance Director and Vianka Orrantia, Senior Secretary II PUBLIC COMMENT - None III CONFIRMATION OF AGENDA - Confirmed IV CONSENT CALENDAR A. Approval of Minutes of Meeting on January 11, 2012 for the Investment Advisory Board. Board Member Mortenson requested a correction to the minutes as follows: Page 1: V. Business Session, Item A., second sentence; A large portion of the decrease was due to cash needs and an Page 3: Third Paragraph; In response to Board Member Mortenson, Mr. Falconer advised that as a result of the elimination of the RDA and the uncertainty of the tax increments payments, the 94 day average maturity gives the City ample flexibility for liquidity for unexpected cash needs. the Gity this eptkm-. Page 4: VI. Correspondence and Written Material, Item A, third paragraph; In response to Board Member Mortenson, Mr. Falconer clarified that the current balance of $16 million in Mutual Funds was correct. Investment Advisory Board Meeting Minutes February 8, 2012 In response to Board Member Park, Mr. Falconer clarified for the Board that the recurring CIP projects listed on page 1 are reported to help reflect the City's cash balances as well as the amounts paid toward the CIP projects, which vary from month to month. MOTION - It was moved by Board Members Mortenson /Donais to approve the Minutes of January 11, 2012 as amended. Motion carried unanimously V BUSINESS SESSION A. Transmittal of Treasury Report for December 2011 Mr. Falconer presented and reviewed the staff report for the month of December advising the Board of a decrease in the cash balance by $407,000 ending the month at $ 162.5 million. The decrease in the cash balance was due to the on- going CIP projects as follows; "A" Street expansion, Highway 111 Landscaping Improvements (with the landscaping almost to completion), Washington Street right turn lane at Eisenhower Drive; in addition to $194,000 spent on the Coral Mountain Apartment Project. Mr. Falconer noted that the City is reimbursed by the State, R.C.T.C. and C.V.A.G. on a "delayed" basis by approximately two to three months for the bridge expansion; in the interim, the City pays for any incurred costs. Mr. Falconer also noted that the Riverside County Sheriff's Department has been delayed in their billing, which will affect the cash balance in the near future. In response to Board Member Donais, Mr. Falconer clarified that the Sheriff's payment reflected in the November Treasurer's Report (presented at the January meeting) were payments for the months of September and October of 2011. Mr. Falconer advised the Board on the portfolio investments listed on page 7 of the report advising of the $17,000,000 maturing T -Bill, in addition to the maturing of a $5,000,000 TLGP Note, the monies were reinvested with a portion invested in LAIF to maintain yields. Mr. Falconer further advised that staff has reached the maximum investment limits for LAIF, Rabobank and Federal Home Loan Bank, with investment limits almost at a maximum with commercial paper, staff will look to investing in T- Bills. Mr. Falconer commented that the T -Bill short-term rates have increased substantially in the three -month (which has gone from zero to six basis points), as has six -month and one -year T -Bill investments. 2 Investment Advisory Board Meeting Minutes February 8, 2012 General discussion ensued among the Board and staff regarding short-term investments. Mr. Falconer advised that the average maturity for the month of December has decreased slightly due to the maturity of the T -Bill and the TLGP Note. Mr. Falconer advised the Board of the State Supreme Court's ruling to dissolve the RDA; he further advised that the tentative payment of $18 million to the State will not have to be paid. General discussion ensued amongst the Board and staff regarding the dissolution of the RDA and its impact to the City. In response to Board Member Mortenson, Mr. Falconer clarified comments previously stated at the January meeting in regards to the Rabobank drawdown. In response to Board Member Mortenson, Mr. Falconer clarified the amortized value of the U.S. Treasury Notes on page 6 of the report. In response to Board Member Mortenson, Mr. Falconer clarified that cash balances reflected in the first column of page 8 in the November 30, 2011 Treasury Report were reported in error. Mr. Falconer also clarified that due to the ERAF payments that were due, the May 2011 cash balance reflected in the December report was not as sizeable as the May 2010 cash balance. MOTION — It was moved by Board Members Donais /Mortenson to review, receive, and file the Treasurers Report for December 2011. Motion carried unanimously. General discussion ensued amongst the Board and staff regarding televising the City Council meetings, the cost and possible ways of payment for televising these meetings. B. Consideration of Fiscal Year 2012/2013 Investment Policy and Work Plan Items Mr. Falconer presented the draft 2012/2013 Investment Policy and the approved 2011/2012 work plan item staff report from the previous year for the Board's review and consideration for the upcoming fiscal year. Mr. Falconer advised that Board will present the updated investment policy and work plan items to the Interim City Manager and City Attorney in June, prior to submittal for City Council approval. 3 Investment Advisory Board Meeting Minutes February 8, 2012 Mr. Falconer advised the Board of his request to extend his resignation from May 31, 2012 to September 7, 2012, to assist in the budget process, the Successor Agency and City Audits and the winding down of the RDA. In response to Board Member Mortenson, Mr. Falconer clarified (referencing page 23) that it is the Board that recommends any changes and /or deletions to the investment policy. General discussion ensued amongst the Board and staff regarding the RDA's dissolution and the impact to the City's investments. Board Member Mortenson reviewed the Investment Policy (Attachment No. 1) and his recommended changes /additions /deletions and /or recommended follow - up items are shown in amended form. In response to Board Member Mortenson, Mr. Falconer advised that page 7, item VI Authority; second paragraph, last sentence, (The City Manager or his /her designee shall acknowledge in writing all purchases and sales of investments prior to their execution by the City Treasurer.) is currently implemented and utilized in all trades. In response to Board Member Mortenson, Board Member Donais clarified that a "Call Report," is a report generated by a regulated financial institution reporting on a quarterly basis its financial information. In response to Board Member Mortenson, Mr. Falconer clarified that the $50,000 Sweep Account target balance on page 9, item 1 was established to set a target maximum for the account. In response to Board Member Mortenson, Mr. Falconer clarified that on page 10, item No. 2 — the bullet point not allowing investments in the CDAR's programs was implemented by previous board members and can be changed. Staff will check on current CDAR rates and will report findings at the next scheduled meeting. General discussion ensued amongst the Board and staff regarding the CDAR's program. In response to Board Member Mortenson, Mr. Falconer clarified that the City does not currently hold TLGP paper and he is able to purchase TLGP secondary paper if needed. 4 Investment Advisory Board Meeting Minutes February 8, 2012 In response to Board Mortenson, Mr. Falconer advised that the City at this time will not be issuing any bonds. MOTION — It was moved by Board Members Mortenson /Donais to continue the review of the 2012/2013 Investment Policy and the Work Plan Items. Motion carried unanimously. VI CORRESPONDENCE AND WRITTEN MATERIAL A. Month End Cash Report — January 2012 Noted and Filed B. Pooled Money Investment Board Reports — December 2011 Noted and Filed C. Money Market Funds Noted and Filed VII BOARD MEMBER ITEMS Discussion ensued amongst the Board and staff regarding the handout and the possible conflict between the Investment Policy vs. Money Market funds due to the Shadow NAV weekly calculations vs. the NAV daily calculations. Mr. Falconer advised that staff will follow -up with U. S. Bank for any suggestions they may have as alternatives to other money market funds. MOTION - It was moved by Board Members Mortenson /Donais to adjourn the meeting at 5:13 p.m. ITV otign carried unanimously. Secretary 5