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2012 03 14 IAB MinutesINVESTMENT ADVISORY BOARD Meeting March 14, 2012 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 Chairperson Spirtos followed by the Pledge of Allegiance. PRESENT: Board Members Mortenson, Spirtos, Park and Donais ABSENT: Board Member Blum OTHERS PRESENT: John Falconer, Finance Director and Vianka Orrantia, Senior Secretary II PUBLIC COMMENT - None III CONFIRMATION OF AGENDA — Confirmed as amended. Mr. Falconer advised that the federal guidelines state that the payment the Board receives for their attendance to the monthly Investment Advisory Board meeting is subject to payroll taxes. As a result, staff conducted a survey with all valley cities with four of the nine cities compensating their commissioners and /or board members. The Cities of La Quinta and Indio were the highest paying, with the City of Indio currently running their commissioner /board member payments through payroll. Mr. Falconer advised that this issue will be brought before the City Council on Tuesday, March 20, 2012. General discussion ensued amongst the Board and staff regarding possible alternatives in lieu of payment for the attendance to a City Board /Commission meeting. IV CONSENT CALENDAR 1. Approval of Minutes of Meeting on February 8, 2012 for the Investment Advisory Board. MOTION - It was moved by Board Members Donais /Park to approve the Minutes of February 8, 2012. Motion carried unanimously. V BUSINESS SESSION A. Transmittal of Treasury Report for January 2012 Mr. Falconer presented and reviewed the staff report for the month of January advising the Board that the City was in receipt of the first installment of property taxes. He further advised that as a result of elimination of the RDA, the City will no longer receive these installments and that the January tax installment would be the final payment. Mr. Falconer did note that although the tax installments have been eliminated, the City will continue to receive the debt - service payments from the County. Mr. Falconer advised that the January pass - through payments were made closing out the RDA and ending the cash balance for the month at $180 million. Mr. Falconer noted that the current cash balance will not remain at these levels due to the fact that the City will not be issuing bonds in the near future. Mr. Falconer advised the Board on the status of the construction of the Adams Street Bridge. General discussion ensued amongst the Board and staff regarding the previous Adams Street bridge contractor and the takeover of the completion of the bridge by the bonding company. Mr. Falconer advised that the January expenditures included $34,000 on Transient Occupancy Tax Rebate for Homewood Suites as well as $66,000 on the Washington Street dual left turn lane at Avenue 48. In response to Board Member Donais, Mr. Falconer advised that the TOT rebates are considered and approved by the City Council. Mr. Falconer advised that the average maturity decreased by twelve days from the prior month ending the month of January at 74 days. Mr. Falconer previously reported that Rabobank stood 10 basis points below LAIF and currently Rabobank stands 10 basis points above LAIF. Mr. Falconer advised that due to a near investment maximum in LAIF and Rabobank, staff has been investing in commercial paper as an alternative. As the investments mature, they are not reinvested and are used for any expenditures. Mr. Falconer reported that the overall portfolio's performance was one basis point lower than the prior month ending the month of January at .34 %. 2 In response to Board Member Donais, Mr. Falconer clarified that the $750,000 for Economic Development referenced in the third major change in cash flow on page 9, were funds budgeted from bond proceeds, not all funds were spent, therefore the balance will remain. In response to Chairperson Spirtos, Mr. Falconer advised that the Federal Home Loan Bank Notes & Bonds (FHLB) on page four, first column, fifth row, were at a near maximum investment due to fact that their rates were currently better than the T -Bill rates at this time, with $15 million invested in bond proceeds and $9 million invested in the pooled investments. In response to Chairperson Spirtos, Mr. Falconer replied that the Panasonic Finance Commercial Paper was a short -term investment purchased on January 13, 2012 and matured on March 6, 2012. The investment was not reinvested due to cash needs. MOTION — It was moved by Board Members Mortenson / Donais to review, receive, and file the Treasurers Report for January 2012. Motion carried unanimously. B. Continued Consideration of Fiscal Year 2012/2013 Investment Policy and Work Plan Items Mr. Falconer advised that at the previous board meeting, staff was asked to follow -up on several items and these items were returned for the Boards review and /or discussion. The Board reviewed the attached Investment Policy pages (Attachments No. 1, 2 and 3). Attachment 2: Mr. Falconer advised that listed under the "Unauthorized Investments," sixth item: - State and Government Indebtedness should now read: State Indebtedness. Board concurred. Attachment 3: The Board and staff reviewed the language in the third paragraph, last sentence and suggested the following; For all other funds, investments are limited to three years maximum maturity. wkh n o more than 25% of surplus funds I invested in maturities exceeding two years and less than three years. Mr. Falconer suggested that staff review the language to make sure that the language complies with the investment policy. I:7 Mr. Falconer advised that "Local Agencies" were referenced in the table on page 9 of the policy and should also be incorporated into the table on page 18 for continuity. In response to Board Member Donais, Mr. Falconer clarified that the -third party custodian for the City is Bank of New York, who also holds all investments with the exception of bond funds which are held by U.S. Bank. In response to Board Member Donais, Mr. Falconer clarified that the review of the auditor's letter is discussed during the Board's annual meeting with the auditor and is also part of the audit report. Mr. Falconer updated the Board on Councilman Osborne's thoughts in reference to the City's budget and the interest income shortfall, as well as investing in local agency bonds and maintaining the ability to invest in local agency bonds within the policy for future investments. MOTION — It was moved by Board Members Mortenson /Park 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 — February 2012 Mr. Falconer presented and reviewed the month end cash Report for the month of February advising the Board that the ending balance for the month (on page 2 of the report) was unusually large due to the cash need for the debt - service payment. The money was taken from LAIF in order to meet the payment. Mr. Falconer noted the payments of LAIF and Rabobank advising that LAIF pays on a quarterly basis with Rabobank paying on a monthly basis. In response to Board Member Mortenson, Mr. Falconer clarified that Councilman Osborne did not restrict bond investments to just "local" agency bonds, his statement included "agency" bond investments. General discussion ensued amongst the Board and staff regarding investing in agency bonds and their current market rates. Noted and Filed n B. Pooled Money Investment Board Reports — February 2012 Mr. Falconer advised the Board on the decrease of the portfolio from the previous year, with the January 2012 balance at $65 billion versus the January 2011, at $70 billion. He further advised that the average life of the portfolio went from 180 days to 245 days. (This item references back to the City's interest shortfall previously discussed under Item B of the Business Session) General conversation ensued amongst the Board and staff regarding interest income and how it was reported. Noted and Filed C. Bond Money Market Funds Mr. Falconer advised that at the previous Board meeting, staff was asked to contact U.S. Bank, (the City's bond trustee) and asked if they could provide a list of additional money market funds. Mr. Falconer advised that the list is provided for the Board's review. General discussion ensued amongst the Board and staff regarding the U.S. Bank Money Market funds and their current market rates. Mr. Falconer suggested, with the Board's direction, staff consider investing in First American Money Market Funds. Mr. Falconer advised that page 6 of the attachment provides information regarding the fund. Mr. Falconer noted that this particular fund strictly deals with Government Agencies and Instrumentalities, which is part of the City's investment criteria. In addition, Mr. Falconer noted that page 14 contains information of the Money Market Fund that the City is currently invested in. Noted and Filed VII BOARD MEMBER ITEMS - None VIII ADJOURNMENT E MOTION - It was moved by, Board Members Park /Mortenson to adjourn the meeting at 5:03 p . Mown carried unanimously. Vianka Orrantia Senior Secretary 0