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2018 06 13 FAC Special Meeting
FINANCIAL ADVISORY COMMISSION 1 JUNE 13, 2018 SPECIAL MEETING NOTICE OF SPECIAL MEETING OF THE LA QUINTA FINANCIAL ADVISORY COMMISSION TO THE COMMISIONERS OF THE LA QUINTA FINANCIAL ADVISORY COMMISSION: NOTICE IS HEREBY GIVEN that a special meeting of the La Quinta Financial Advisory Commission is hereby called to be held on Wednesday, June 13, at 3:00 p.m. at La Quinta City Hall Study Session Room located at 78495 Calle Tampico, La Quinta, CA 92253 for the following purpose: ANNOUNCEMENTS, PRESENTATIONS AND WRITTEN COMMUNICATIONS 1.FIRST EMPIRE SECURITIES CONSENT CALENDAR 1.APPROVE MINUTES DATED MAY 9, 2018 2.RECEIVE AND FILE REVENUE AND EXPENDITURE REPORTS DATED MARCH 31, 2018 BUSINESS SESSION 1.APPROVE SILVERROCK EVENT SITE – PHASE 1 ENHANCED PLAN 2.REVIEW AND RECOMMEND FINAL PROPOSED BUDGET FOR FISCAL YEAR 2018/19 3.REVIEW CAPITAL ASSET POLICY AND RECOMMEND APPROVAL BY CITY COUNCIL 4.DISCUSS AND PROVIDE DIRECTION TO STAFF REGARDING PARTICIPATION IN THE CALIFORNIA ASSET MANAGEMENT PROGRAM DEPARTMENTAL REPORTS 1.FOURTH QUARTER 2017 (OCTOBER-DECEMBER) SALES TAX UPDATE FOR THE CITY OF LA QUINTA 2.REQUEST FOR PROPOSAL UPDATE FOR BANKING SERVICES Dated: June 8, 2018 /s/ GeorgeBatavick GEORGE BATAVICK, Chairperson Attest: JESSICA DELGADO, Management Assistant FINANCIAL ADVISORY COMMISSION 2 JUNE 13, 2018 SPECIAL MEETING DECLARATION OF POSTING I, Jessica Delgado, Management Assistant, do hereby declare that the foregoing notice for the Financial Advisory Commission special meeting of June 13, 2018 was posted on the outside entry to the Council Chamber at 78-495 Calle Tampico and on the bulletin boards at 51-321 Avenida Bermudas and 78-630 Highway 111 on June 8, 2018. Jessica Delgado, Management Assistant FINANCIAL ADVISORY COMMISSION AGENDA 1 JUNE 13, 2018 SPECIAL MEETING FINANCIAL ADVISORY COMMISSION AGENDA CITY HALL STUDY SESSION ROOM 78-495 Calle Tampico, La Quinta SPECIAL MEETING ON WEDNESDAY, JUNE 13, 2018 AT 3:00 P.M. ROLL CALL: Commissioners: Johnson, Lopez, Mills, Rosen, Turbow, Twohey, Chairperson Batavick PLEDGE OF ALLEGIANCE PUBLIC COMMENT At this time members of the public may address the Commission on any matter not listed on the agenda. Please complete a “Request to Speak” form and limit your comments to three minutes. The Financial Advisory Commission values your comments; however, in accordance with State law, no action shall be taken on any item not appearing on the agenda unless it is an emergency item authorized by GC 54954.2(b). CONFIRMATION OF AGENDA ANNOUNCEMENTS, PRESENTATIONS, AND WRITTEN COMMUNICATIONS 1.FIRST EMPIRE SECURITIES CONSENT CALENDAR NOTE: Consent Calendar items are routine in nature and can be approved by one motion. 1.APPROVE MINUTES DATED MAY 9, 2018 2.RECEIVE AND FILE REVENUE AND EXPENDITURE REPORTS DATED MARCH 31, 2018 Financial Advisory Commission agendas and staff reports are now available on the City’s web page: www.laquintaca.gov/ FINANCIAL ADVISORY COMMISSION AGENDA 2 JUNE 13, 2018 SPECIAL MEETING STUDY SESSION – NONE BUSINESS SESSION 1.APPROVE SILVERROCK EVENT SITE – PHASE 1 ENHANCED PLAN 2.REVIEW AND RECOMMEND FINAL PROPOSED BUDGET FOR FISCAL YEAR 2018/19 3.REVIEW CAPITAL ASSET POLICY AND RECOMMEND APPROVAL BY CITY COUNCIL 4.DISCUSS AND PROVIDE DIRECTION TO STAFF REGARDING PARTICIPATION IN THE CALIFORNIA ASSET MANAGEMENT PROGRAM DEPARTMENTAL REPORTS 1.FOURTH QUARTER 2017 (OCTOBER – DECEMBER) SALES TAX UPDATE FOR THE CITY OF LA QUNTA 2.REQUEST FOR PROPOSAL UPDATE FOR BANKING SERVICES COMMISSIONERS’ ITEMS ADJOURNMENT The next regular quarterly meeting of the Financial Advisory Commission will be held on August 8, 2018 commencing at 4:00 p.m. at the La Quinta City Hall Study Session Room, 78-495 Calle Tampico, La Quinta, CA 92253. DECLARATION OF POSTING I, Jessica Delgado, Management Assistant, of the City of La Quinta, do hereby declare that the foregoing Agenda for the La Quinta Financial Advisory Commission special meeting was posted on the City’s website, near the entrance to the Council Chamber at 78-495 Calle Tampico, and the bulletin boards at 78-630 Highway 111, and the La Quinta Cove Post Office at 51-321 Avenida Bermudas, on June 8, 2018. DATED: June 8, 2018 Jessica Delgado, Management Assistant City of La Quinta, California FINANCIAL ADVISORY COMMISSION AGENDA 3 JUNE 13, 2018 SPECIAL MEETING Public Notices The La Quinta City Hall Study Session Room is handicapped accessible. If special equipment is needed for the hearing impaired, please call the City Clerk’s office at 777-7103, twenty-four (24) hours in advance of the meeting and accommodations will be made. If special electronic equipment is needed to make presentations to the FAC, arrangements should be made in advance by contacting the City Clerk’s office at 777-7103. A one (1) week notice is required. If background material is to be presented to the Financial Advisory Commission during a special FAC meeting, please be advised that five (8) copies of all documents, exhibits, etc., must be supplied to the Management Assistant for distribution. It is requested that this take place prior to the beginning of the meeting. Any Writings or documents provided to a majority of the Financial Advisory Commission regarding any item(s) on the agenda will be made available for public inspection at the Community Development counter at City Hall located at 78-495 Calle Tampico, La Quinta, California, 92253, during normal business hours. FINANCIAL ADVISORY COMMISSION MINUTES 1 MAY 9, 2018 REGULAR QUARTERLY MEETING FINANCIAL ADVISORY COMMISSION MINUTES WEDNESDAY, MAY 9, 2018 CALL TO ORDER A regular quarterly meeting of the La Quinta Financial Advisory Commission was called to order at 4:00 p.m. by Vice-Chair Mills. PRESENT: Commissioners Johnson, Lopez, Mills, Rosen, Turbow, and Twohey ABSENT: Chairperson Batavick PLEDGE OF ALLEGIANCE Commissioner Twohey led the audience in the pledge of allegiance. PUBLIC COMMENT ON MATTERS NOT ON THE AGENDA – None CONFIRMATION OF AGENDA – Confirmed Chairperson Batavick joined meeting at 4:07 p.m. Staff requested that Business Session Item No. 2 – “Approve Investment Policy for Fiscal Year 2018/19” be move up and presented after the Announcements, Presentations, and Written Communications section of the agenda. Commission Concurred. ANNOUNCEMENTS, PRESENTATIONS, AND WRITTEN COMMUNICATIONS 1.PUBLIC AGENCY RETIREMENT SERVICES Executive Vice President Mitch Barker gave a presentation on PARS, a firm specializing in retirement service plans for public agencies, including its history, background, types of services offered, and program strategies. BUSINESS SESSION 2.DISCUSS FISCAL YEAR 2018/19 INVESTMENT POLICY Financial Services Analyst Hallick presented the staff report, which is on file in the Finance Department. CONSENT CALENDAR ITEM NO. 1 FINANCIAL ADVISORY COMMISSION MINUTES 2 MAY 9, 2018 REGULAR QUARTERLY MEETING Motion – A motion was made and seconded by Commissioners Mills/Lopez to approve fiscal year 2018/19 Investment Policy. Motion passed unanimously. CONSENT CALENDAR ITEMS 1.APPROVE FINANCIAL ADVISORY COMMISSION MINUTES DATED APRIL 11, 2018 Motion – A motion was made and seconded by Commissioners Johnson/Lopez to approve Consent Calendar Item No. 1 as submitted. Motion passed unanimously. 2.RECEIVE AND FILE THIRD QUARTER FISCAL YEAR 2017/18 TREASURY REPORTS FOR JANUARY, FEBRUARY, AND MARCH 2018 Motion – A motion was made and seconded by Commissioners Mills/Twohey to approve Consent Calendar Item No. 2 as submitted. Motion passed unanimously. STUDY SESSION 1.DISCUSS PRELIMINARY PROPOSED BUDGET FOR FISCAL YEAR 2018/19 Finance Director Campos and Financial Services Analyst Hallick presented the staff report, which is on file in the Finance Department. The Commission discussed proposed Measure G revenue and expenses; SilverRock revenue projections; Internal Service Fund expenses and General Fund allocations; unfunded internal and external proposals; and the process for creating the budget. BUSINESS SESSION 1.REVIEW THE CITY’S GENERAL FUND BALANCE AND RESERVES POLICY Finance Director Campos and Financial Services Analyst Hallick presented the staff report, which is on file in the Finance Department. The Commission discussed potential initial funding options; percentages and reasons for an unassigned fund balance; and how staff presents the Commission’s recommendations to Council. Motion – A motion was made and seconded by Commissioners Johnson/Lopez to recommend Council approval of the proposed reserve policy with a consideration to decrease the unassigned fund balance. Motion passed: ayes 5, noes 2 (Commissioners Mills and Rosen). DEPARTMENTAL REPORTS – None CORRESPONDENCE AND WRITTEN MATERIAL – None FINANCIAL ADVISORY COMMISSION MINUTES 3 MAY 9, 2018 REGULAR QUARTERLY MEETING COMMISSIONERS’ ITEMS – None ADJOURNMENT There being no further business, it was moved and seconded by Commissioners Johnson/Lopez to adjourn this meeting at 6:05 p.m. Motion passed unanimously. Respectfully submitted, Jessica Delgado, Management Assistant City of La Quinta, California City of La Quinta FINANCIAL ADVISORY COMMISSION MEETING: June 13, 2018 STAFF REPORT AGENDA TITLE: RECEIVE AND FILE REVENUE AND EXPENDITURE REPORTS DATED MARCH 31, 2018 RECOMMENDATION Receive and file revenue and expenditure reports dated March 31, 2018. EXECUTIVE SUMMARY •The revenue and expenditure reports summarize the City’s year-to-date (YTD) and period activity as of March 31, 2018 (Attachment 1). FISCAL IMPACT – None. BACKGROUND/ANALYSIS Reports Below is a summary of the column headers used on the Revenue and Expenditure Summary Reports: Original Total Budget – represents revenue and expenditure budgets the Council adopted in June 2017 for fiscal year 2017/18. Current Total Budget – represents original adopted budgets plus any carryovers (typically associated with long-term Capital Improvement Projects (CIP) from the prior fiscal year), and any Council approved budget amendments. Period Activity – represents actual revenues received and expenditures outlaid in the reporting month. Fiscal Activity – represents actual revenues received and expenditures outlaid YTD. Variance Favorable/ (Unfavorable) - represents the dollar difference between YTD collections and the current budgeted amount. Percent Used – represents the percentage activity as compared to budget YTD. The revenue report includes revenues and transfers into funds from other funds (income items). Revenues are not received uniformly throughout the year, resulting in peaks and valleys. For example, large property tax payments are usually received in December and May. Similarly, Redevelopment Property Tax Trust Fund payments are typically received in January and June. CONSENT CALENDAR ITEM NO. 2 The expenditure report includes expenditures and transfers out to other funds. Unlike revenues, expenditures are fairly consistent month to month. However, large debt service payments or CIP expenditures can cause swings. March Revenue MTD YTD YTD Percent of Budget General Fund $ 4,726,943 $ 31,597,702 62.09% All Funds $ 9,234,454 $ 57,796,270 71.90% Top Five Revenue/Income Sources for March General Fund Non-General Fund Measure G Sales Tax $1,569,508 Transfers In (CIP) $ 2,393,343 Transient Occupancy (Hotel) Tax $1,027,509 SilverRock Greens Fees $ 587,209 State Sales tax $1,004,949 County Government (Library/Museum) $ 268,165 Franchise Tax- Burrtec $ 225,587 Insurance Charges (Internal Service Fund) $ 247,250 Allocated Interest $ 179,910 Technology Support Charges (Internal Service Fund) $ 183,250 March Expenditures MTD YTD YTD Percent of Budget General Fund $ 6,996,142 $ 27,946,614 51.66% Payroll (GF) $ 623,633 $ 7,510,458 71.20% All Funds $ 16,894,228 $ 55,824,210 58.42% Top Five Expenditures/Outlays for March General Fund Non-General Fund Sheriff Contract(1) $ 4,122,914 Debt Service Payments- Successor Agency Bonds $4,587,699 Transfers Out (CIP) $ 2,249,492 Construction-Washington Street Apts. Rehabilitation $1,518,201 Insurance Allocation $ 112,250 Land Acquisition- Quail Ridge (drainage project,2nd payment) $1,166,474 Park Equipment Allocation $ 75,000 Capital Improvement Plan-Construction (2) $ 431,645 Marketing and Tourism Promotions $ 69,948 Developer Reimbursements $ 400,002 (1)This represents the period from September-December (2) Construction costs include City Hall misc. ADA improvements/restroom remodel and the turf conversion in North La Quinta Summary All funds are generally on target or under budget with regard to expenditures. The timing imbalance of revenue receipts versus expenditures is funded from the City’s cash flow reserve. Prepared by: Rosemary Hallick, Financial Services Analyst Approved by: Karla Campos, Finance Director Attachment: 1. Revenue and Expenditure Reports for March 2018 5/23/2018 5:38:55 PM Page 1 of 2 City Council Month Revenue Report City of La Quinta, CA Group Summary For Fiscal: 2017/18 Period Ending: 03/31/2018 Fiscal Activity Variance Favorable (Unfavorable) Period ActivityFun… Current Total Budget Original Total Budget Percent Used 101 - GENERAL FUND 31,597,701 4,726,942 48,551,600 50,887,600 -19,289,898 62.09 % 201 - GAS TAX FUND 1,010,798 140,824 1,415,400 1,415,400 -404,601 71.41 % 202 - LIBRARY & MUSEUM FUND 1,373,570 284,001 2,254,000 2,254,000 -880,429 60.94 % 203 - PUBLIC SAFETY FUND (MEASURE G) 300,000 0 300,000 300,000 0 100.00 % 210 - FEDERAL ASSISTANCE FUND 64,367 64,367 125,800 184,451 -120,083 34.90 % 212 - SLESA (COPS) FUND 106,458 8,547 100,100 100,100 6,358 106.35 % 215 - LIGHTING & LANDSCAPING FUND 1,012,016 1,368 1,448,900 1,448,900 69.85 % 217 - DEVELOPMENT AGREEMENT 0 0 -436,883 1,001 0.00 % 218 - CV VIOLENT CRIME TASK FORCE 0 0 -250 0.00 % 219 - ASSET FORFEITURE 387 1,001 0 -250 0 -13 0 0 -13 0.00 % 220 - QUIMBY FUND 51,841 14,399 55,000 55,000 -3,158 94.26 % 221 - AB 939 - CALRECYCLE FUND 39,430 17,602 62,500 62,500 -23,069 63.09 % 223 - MEASURE A FUND 464,095 74,688 724,500 724,500 -260,404 64.06 % 224 - TUMF FUND 302 231 0 0 302 0.00 % 225 - INFRASTRUCTURE FUND 183 74 0 0 183 0.00 % 226 - EMERGENCY MANAGEMENT PERFORMANCE GRANT (EMPG) 0 0 0 12,300 0.00 % 227 - State Homeland Security Programs (SHSP) 5,741 5,741 0 0 -12,300 5,741 0.00 % 231 - SUCCESSOR AGCY PA 1 RORF 7,669,155 5,890 0 0 7,669,155 0.00 % 235 - SO COAST AIR QUALITY FUND 26,374 12,629 50,300 50,300 52.43 % 237 - SUCCESSOR AGCY PA 1 ADMIN 125,000 0 0 0 -23,925 125,000 0.00 % 241 - HOUSING AUTHORITY 963,833 163,896 919,000 1,012,800 95.17 % 243 - RDA Low-Mod Housing Fund 12,278 4,904 0 0 0.00 % 249 - SA 2011 LOW/MOD BOND FUND (Refinanced in 2016) 72,571 0 0 0 -48,966 12,278 72,571 0.00 % 250 - TRANSPORTATION DIF FUND 374,375 73,617 369,000 369,000 5,375 101.46 % 251 - PARKS & REC DIF FUND 219,136 26,624 200,000 200,000 19,136 109.57 % 252 - CIVIC CENTER DIF FUND 103,362 14,037 100,000 100,000 3,362 103.36 % 253 - LIBRARY DEVELOPMENT DIF 36,808 4,472 30,000 30,000 6,808 122.69 % 254 - COMMUNITY CENTER DIF 14,759 2,070 15,400 15,400 -640 95.84 % 255 - STREET FACILITY DIF FUND 18,476 4,225 15,000 15,000 3,476 123.17 % 256 - PARK FACILITY DIF FUND 4,285 522 4,000 4,000 285 107.14 % 257 - FIRE PROTECTION DIF 47,515 6,455 40,000 40,000 7,515 118.79 % 270 - ART IN PUBLIC PLACES FUND 37,214 13,897 53,500 53,500 -16,285 69.56 % 275 - LQ PUBLIC SAFETY OFFICER 2,306 125 2,100 2,100 206 109.85 % 299 - INTEREST ALLOCATION FUND 0-232,900 0 0 0 0.00 % 310 - LQ FINANCE AUTHORITY DEBT SERVICE 166 0 671,400 671,400 -671,233 0.02 % 401 - CAPITAL IMPROVEMENT PROGRAMS 5,337,767 2,474,724 8,423,900 11,857,262 -6,519,494 45.02 % 501 - FACILITY & FLEET REPLACEMENT 563,105 149,823 531,000 531,000 32,105 106.05 % 502 - INFORMATION TECHNOLOGY 566,574 187,288 714,000 723,000 -156,425 78.36 % 503 - PARK EQUIP & FACILITY FUND 249,058 84,646 680,000 680,000 -430,941 36.63 % 504 - INSURANCE FUND 747,009 248,338 1,001,000 1,001,000 -253,990 74.63 % 601 - SILVERROCK RESORT 3,066,214 664,519 4,004,200 4,004,200 -937,985 76.57 % 602 - SILVERROCK GOLF RESERVE 3,731 1,445 61,300 61,300 6.09 % 760 - SUPPLEMENTAL PENSION PLAN 879 360 0 0 -57,568 879 0.00 % 761 - CERBT OPEB TRUST 1,507,063-16,336 0 1,523,400 -16,336 98.93 % Report Total: 9,234,453 57,796,270 72,922,900 80,389,413 -22,593,142 71.90 % ATTACHMENT 1 5/23/2018 5:05:30 PM Page 2 of 2 City Council Month Expense Report City of La Quinta, CA Group Summary For Fiscal: 2017/18 Period Ending: 03/31/2018 Fiscal Activity Variance Favorable (Unfavorable) Period ActivityFun… Current Total Budget Original Total Budget Percent Used 101 - GENERAL FUND 27,946,6146,996,14248,180,700 54,100,093 26,153,478 51.66 % 201 - GAS TAX FUND 861,843168,0881,435,000 1,442,240 580,396 59.76 % 202 - LIBRARY & MUSEUM FUND 799,580305,6401,947,500 2,524,500 1,724,919 31.67 % 210 - FEDERAL ASSISTANCE FUND 54,67754,677125,800 184,451 129,773 29.64 % 212 - SLESA (COPS) FUND 51,62045,094100,000 100,000 48,379 51.62 % 215 - LIGHTING & LANDSCAPING FUND 971,531142,9131,519,300 1,527,920 556,388 63.59 % 217 - DEVELOPMENT AGREEMENT 12,715580067,000 54,284 18.98 % 218 - CV VIOLENT CRIME TASK FORCE 3,406000 -3,406 0.00 % 219 - ASSET FORFEITURE 55000 -55 0.00 % 220 - QUIMBY FUND 416,0353,75600 0.00 % 221 - AB 939 - CALRECYCLE FUND 8,6146,38120,000 20,000 43.07 % 223 - MEASURE A FUND 122,98733,600787,000 787,000 15.63 % 225 - INFRASTRUCTURE FUND 0022,600 22,600 -416,035 11,385 664,012 22,600 0.00 % 227 - State Homeland Security Programs (SHSP)2,707000 -2,707 0.00 % 231 - SUCCESSOR AGCY PA 1 RORF 9,305,5964,587,69900 0.00 % 235 - SO COAST AIR QUALITY FUND 9,724032,000 49,000 -9,305,596 39,275 19.85 % 237 - SUCCESSOR AGCY PA 1 ADMIN 139,2343,42500 0.00 % 241 - HOUSING AUTHORITY 576,84560,4081,192,100 1,192,920 48.36 % 243 - RDA Low-Mod Housing Fund 78,00000259,000 -139,234 616,074 181,000 30.12 % 248 - SA 2004 LO/MOD BOND FUND (Refinanced in 2014)63,74450,0491,704,900 1,704,900 1,641,155 3.74 % 249 - SA 2011 LOW/MOD BOND FUND (Refinanced in 2016)1,518,2011,518,2019,400,000 9,400,000 7,881,798 16.15 % 250 - TRANSPORTATION DIF FUND 950,129400,0011,005,100 1,230,600 280,470 77.21 % 252 - CIVIC CENTER DIF FUND 54,28820,88000 -54,288 0.00 % 253 - LIBRARY DEVELOPMENT DIF 13,5184,72000 0.00 % 254 - COMMUNITY CENTER DIF 00101,600 101,600 -13,518 101,600 0.00 % 255 - STREET FACILITY DIF FUND 14,5895,60900 -14,589 0.00 % 256 - PARK FACILITY DIF FUND 4,2851,60200 -4,285 0.00 % 257 - FIRE PROTECTION DIF 2,8341,55300 0.00 % 270 - ART IN PUBLIC PLACES FUND 83,10615,900122,000 122,000 68.12 % 310 - LQ FINANCE AUTHORITY DEBT SERVICE 652,736100671,400 671,400 -2,834 38,893 18,663 97.22 % 401 - CAPITAL IMPROVEMENT PROGRAMS 5,963,2291,824,5408,614,400 12,054,782 6,091,552 49.47 % 501 - FACILITY & FLEET REPLACEMENT 459,820118,7241,069,300 1,214,300 754,479 37.87 % 502 - INFORMATION TECHNOLOGY 550,17546,396914,000 917,100 366,924 59.99 % 503 - PARK EQUIP & FACILITY FUND 282,972143,755670,000 880,000 597,027 32.16 % 504 - INSURANCE FUND 878,38212,317969,200 972,740 94,357 90.30 % 601 - SILVERROCK RESORT 2,957,570321,4664,003,400 4,005,470 1,047,899 73.84 % 760 - SUPPLEMENTAL PENSION PLAN 12,832000 -12,832 0.00 % Report Total:16,894,227 55,824,21084,607,300 95,551,616 39,727,405 58.42 % City of La Quinta FINACIAL ADVISORY COMMISSION MEETING: June 13, 2018 STAFF REPORT AGENDA TITLE: APPROVE SILVERROCK EVENT SITE – PHASE 1 ENHANCED PLAN RECOMMENDATION Approve SilverRock Event Site Phase 1 Enhanced plan. EXECUTIVE SUMMARY •City Council approved the SilverRock Specific Plan in July 2006, which includes a 35-acre public event site. •At their February 20, 2018 meeting, the Council establish an Ad Hoc SilverRock Event Site committee (“Committee”) consisting of a Council Member, a Community Services Commissioner and a Planning Commissioner. •The Committee has held five formal meetings and multiple follow-up meetings between members and stakeholders to identify programming options and translate them into design concepts for consideration. •On May 21, 2018 a joint meeting of the Council, Community Services Commission, and Planning Commission was held to review those design concepts. •Based on input received at this meeting, the SilverRock Event Site – Phase 1 Enhanced Plan (Attachment 1) was created and staff is recommending approval of the plan. FISCAL IMPACT Total project costs will be approximately $6 million. The project will be funded with $3.5 million in Quimby Funds, $100,000 in Art in Public Places Funds, and a proposed $2.4 million from Measure G Reserves. BACKGROUND/ANALYSIS In July 2006, City council approved the SilverRock Specific plan, which designates 35 acres as a special event space to accommodate art shows, festivals, corporate events, automobile shows, and public parking. In November 2014, the Council approved a Development Agreement with the SilverRock Development Company to construct two hotels, a conference center, a new golf clubhouse and retail and resort residential uses adjacent to the event site. BUSINESS SESSION ITEM NO. 1 The Ad Hoc Event Site Committee also included representatives from Montage International, SilverRock Development Company and the La Quinta Arts Foundation. The Committee created a timeline that completes the SilverRock Event Site to accommodate the La Quinta Arts Foundations’ 2020 Arts Festival. The Civic Center Campus will not be fully available during that time because of scheduled alternative transportation projects and concurrent street/storm water improvements. Some of the critical milestones of the SilverRock Event Site timeline include: • August 7, 2018 – City Council approve project plans • March 2019 – Begin construction • July 2019 – Plant Bermuda grass • September 2019 – Construction completed for the October winter over-seed • March 2020 – Landscape established and site ready for the Arts Festival The Committee established a master plan concept and prioritized amenities and needs for each phase of the project. Based on the $3.4 million project budget for phase one, it was determined the original concept would not be fully achievable. The additional $2.6 million estimated cost includes a restroom, enhanced lighting, fencing, parking, and the central water feature. In addition, the phase one enhanced plan has a concrete pad at the base of a sloped landscape to be used as a music area. To adhere to the schedule and have an item ready for Council consideration on August 7, the Community Services, Finance Advisory, and Planning Commissions are being asked to make a recommendation on the plan in light of the Committee’s work and input received at the joint meeting. ALTERNATIVES The Commission could elect to not recommend approval of the event site, which would cause a delay or impediment to bring the event site to full use by March 2020. Prepared by: Christina Calderon, Community Resources Manager Approved by: Chris Escobedo, Community Resources Director City of La Quinta FINANCIAL ADVISORY COMISSION MEETING: JUNE 13, 2018 STAFF REPORT AGENDA TITLE: REVIEW AND RECOMMEND FINAL PROPOSED BUDGET FOR FISCAL YEAR 2018/19 RECOMMENDATION Review and recommend the final proposed budget for fiscal year 2018/19. EXECUTIVE SUMMARY • The June 13 budget update focuses on the General Fund and the use of Measure G revenues. • Updates to revenues and expenses will be incorporated in the final budget document presented with line item details. • The final budget will be presented to Council for adoption on June 19. FISCAL IMPACT The updated General Fund revenues (including the use of savings) total $53,428,050 while expenditures total $51,167,258; producing an initial budget surplus of $2,260,792 of which $2,208,887 will be placed in Measure G reserves which results in a final budget surplus of $51,905. BACKGROUND/ANALYSIS On June 5 staff presented the final 2018/19 budget study session to Council with the following goals: • provide an update on revenue and expenditures which have changed since the initial budget study sessions held on May 1 and 15; • obtain clarification on external unfunded requests; and • provide final direction for staff to prepare the budget for adoption. Attachment 1 provides a narrative for all updates presented on June 5. Based on Council direction staff will incorporate the following updates in the final budget: • Establishment of a new fund for Economic Development • All interal unfunded request in Attachment 1 (totaling $45,245) • Reserve balance appropriations as approved with the Reserve Policy • $110,000 increase to community services grants Based on these approved updates the following is a summary of the proposed General Fund budget. BUSINESS SESSION ITEM NO. 2 FY 2018/19 Proposed Budget Update (6/8/18) General Fund Revenue 52,297,400$ General Fund CIP Savings 1,130,650$ Total Current Resources 53,428,050$ Less Operating/CIP Expenses (51,167,258)$ Total Current Expenses (51,167,258)$ Revenue over Expenses 2,260,792$ Mesaure G Reserves (2,208,887)$ Budget Surplus 51,905$ ALTERNATIVES The FAC may provide staff with a verbal or written recommendation to share with Council. Per State law, the City must adopt a budget by June 30. Prepared by: Karla Campos, Finance Director Attachment: 1. 2018/19 Budget Overview – Third Study Session 1 | Page 2018/19 BUDGET OVERVIEW – THIRD STUDY SESSION GENERAL FUND UPDATE Revenue Line Item Initial Budget Updated Budget Change STVR Registration Fees 100,000 108,000 8,000 Fire Service Credit 6,957,600 7,057,600 100,000 Wellness Center Memberships 100,000 125,000 25,000 Total Change 133,000 This third budget study session provides an update for all Funds which staff has identified a change in since the first budget study sessions (May 1 and 15). Line-item details will be incorporated into the budget document presented on June 19. General Fund revenue projections have increased by $133,000, due to increased projected Short-term Vacation Rental (STVR) registration fee income, Fire Service Credit income, and Wellness Center Memberships. The County of Riverside has provided updated fire contract service costs for 2018/19, which resulted in an increase of $100,000. The increase will be fully paid with fire services property tax revenue. If all expenses are incurred the fire services reserve balance (currently at $9.4 million) will decrease by nearly $300,000 in 2018/19. Staff will continue to monitor fire service expenditures and identify ways to reduce costs without impacting service levels. The Wellness Center Membership adjustment is due to an increase in membership dues (January 2019) from $50 to $75 for residents and $125 for non-residents. After these adjustments, total General Fund revenue is projected to be $52,297,400. External requests ($224,000) have not been funded at this time and the following adjusted internal requests totaling $462,000 have been added to the proposed budget. Additionally, the Measure G contribution for police services was 2 | Page INTERNAL UNFUNDED PROPOSALS Current Position Proposed Position Payroll Increase Assistant Specialist 4,705$ Analyst Manager 7,490$ Analyst Manager 17,950$ 30,145$ Measure G Sales Tax Revenue 8,455,000$ Police Services (3,150,000) Capital Improvements (3,296,113) Public Safety Fund Deposit (200,000) Available for Appropriation 1,808,887$ MEASURE G SUMMARY Measure G Sales Tax Revenue 8,455,000$ Police Services (2,750,000) Capital Improvements (3,296,113) Public Safety Fund Deposit (200,000) Available for Appropriation 2,208,887$ MEASURE G SUMMARY FY 2018/19 Proposed Budget Update (6/5/18) General Fund Revenue 52,297,400$ General Fund CIP Savings 1,130,650$ Total Current Resources 53,428,050$ Less Operating/CIP Expenses (51,027,113)$ Total Current Expenses (51,027,113)$ Revenue over Expenses 2,400,937$ Mesaure G Reserves (2,208,887)$ Budget Surplus 192,050$ reduced by $400,000 from $3,150,000 to $2,750,000. As of May 1, 2018 As of June 5, 2018 After these additions, the General Fund budget surplus is anticipated to be $2.4 million of which $2,308,887 is derived from Measure G sales tax revenue. Subsequent to May 1, staff identified additional personnel needs totaling $30,145. These requests include the following reclassifications. These reclassifications are a result of internal analysis to identify recent staff turnover replacements, incorporate operational needs, and an assessment of current staff skills. The Specialist positions is a critical asset to the Business License and Short-term Vacation Rental programs, including working with Code Enforcement and compliance contractors. The Hub Manager position currently oversees customer service operations, the short-term vacation rental program, and business licenses. A Manager in the City Manager’s office oversees economic development, information technology services, housing programs, and manages multiple contracts. Staff has identified a need to increase the Code Enforcement overtime budget by $10,100 to facilitate additional vacation rental compliance inspections and process code cases without adding staff. If approved the total overtime budget would increase to $15,000. This year a group of the La Quinta academy participants are working with the marketing department on producing a brochure showcasing the City’s amenities including: restaurants, spas, hiking and biking trails, 3 | Page GENERAL FUND RESERVES OTHER SPECIAL FUNDS Reserve/Trust As of 6/30/18 Emergency Reserve Natural Disaster 7,400,000$ Economic Disaster 8,140,000 Total 15,540,000 Cash Flow Reserve 5,000,000 Capital Replacement 5,000,000 Total Reserves 25,540,000 Pension Trust Fund 2,000,000 Unassigned Reserves 7,993,926 Overall Total 35,533,926$ Expense Line Item Initial Budget Updated Budget Change IT - Operating Supplies 5,000 10,000 5,000 IT - Phones 44,000 70,000 26,000 Parks - Pickelball Court 150,000 180,000 30,000 emergency services, and upcoming events. Staff is requesting $5,000 to assist with the design and printing costs. The adopted reserves policy and initial funding allocation will be presented as follows in the budget. Reserves will be reviewed and adjusted at mid-year (January 2019) after the Comprehensive Annual Financial Report is completed for 2017/18. Finance will present a Pension Trust Fund option for approval by Council in early 2018/19. The Measure G reserves will have a projected year-end balance of $4.3 million. Staff has identified a few adjustment requirements in internal Service Funds. These adjustments ensure projects are funded and adequate resources are available for the replacement of unusable information technology equipment. These adjustments in internal service fund costs would not increase previous allocations to departments, but rather draw from savings in each fund. In addition, the Measure A Fund revenue and expenses would be adjusted to match the approved Capital Improvement Budget. Expenses were lowered by $74,289; from $1,035,997 to $961,708. These adjustments would also be incorporated in the final budget presented on June 19 if approved. The final budget will include all line-item details for the initial proposed budget and all final budgetary requests which are approved. City of La Quinta FINANCIAL ADVISORY COMMISSION MEETING: June 13, 2018 STAFF REPORT AGENDA TITLE: REVIEW CAPITAL ASSET POLICY AND RECOMMEND APPROVAL BY CITY COUNCIL RECOMMENDATION Review Capital Asset Policy and recommend approval by City Council. EXECUTIVE SUMMARY •The purpose of the Capital Asset Policy (Policy) is to establish procedural requirements associated with fixed asset acquisition, recording, and monitoring in accordance with Governmental Accounting Standard Board (GASB) which requires cities to include all capital assets in their financial reporting and establish accounting and financial reporting requirements for assets. •Staff, City Attorney, and two independent auditing firms are reviewing the proposed Policy. The Policy conforms to current laws, risk management, and governmental accounting best practices. •After independent expert review the Policy will be presented to Council for adoption (estimated July 3). FISCAL IMPACT – None. BACKGROUND The City’s independent auditing firm has recommended the City develop a formal written Capital Asset Policy to properly recognize the City’s’ assets and improve internal controls. The proposed Policy sets forth written procedures to account for the City’s capital assets in accordance with Generally Accepted Accounting Principles (GAAP) and Governmental Accounting Standard Board (GASB) requirements. The current City policy requires that all fixed assets, including building and improvements, equipment and furniture, vehicles, infrastructure, and software, with an original cost or estimated historical cost of $5,000 or more and a useful life of more than three years, be subjected to accounting and reporting. The Policy provides the following: •Proper accountability and stewardship of assets; •Basis for projecting future replacement and expenditures; •Up to date insurable values and proof of loss substantiation; and BUSINESS SESSION ITEM NO. 3 •Compliance with GAAP/GASB and Government Accounting, Auditing and Financial Reporting (GAFFR). This Policy is important to properly recognize, depreciate, and replace fixed assets. ALTERNATIVES The commission may approve as presented, incorporate changes, or request further review before submitting to Council for adoption. Prepared by: Claudia Martinez, Senior Accountant Approved by: Karla Campos, Finance Director Attachment 1: Capital Asset Policy 1 of 4 CAPITAL ASSET POLICY 1.PURPOSE: This Capital Asset Policy (the “Policy”) is established to provide guidelines to ensure adequate stewardship over City resources through control and accountability of capital assets, and to collect and maintain complete and accurate capital asset information required for preparation of financial statements in accordance with Generally Accepted Accounting Principles (GAAP). 2.SCOPE: This Policy covers all capital assets for all Funds under the direct authority of the City including the Successor Agency to the La Quinta Redevelopment Agency, the Housing Authority and Finance Authority taking into consideration federal, state, and local laws, and ordinances or resolutions that may restrict their use and disposal. 3.GENERAL POLICY: Objectives: The City has established this Policy to: •Safeguard the significant investment in capital assets and establish a capitalization policy whereby dollar values assigned to capital assets are permanently recorded. •Identify all capital assets in order to provide a management tool for the replacement of re-occurring items avoiding duplication and inefficient use of capital assets. •Comply with state laws and regulations concerning governmental accounting, auditing, and reporting requirements, and thereby providing information for the preparation of financial statements in accordance with GAAP. •Work in conjunction with the City’s risk management program to ensure that capital assets are adequately insured to cover losses. 4.CAPITIALIZATION THRESHOLDS In determining whether assets should be capitalized, the following items should be considered: •Actual Cost, estimated cost for contributed/donated assets, or market value. •Assets other than land or infrastructure will be capitalized if the individual asset has a useful life of three (3) years or greater and a value over $5,000. •Land assets will always be capitalized without regard to cost; and will not be depreciated. •Infrastructure will be capitalized if it has a life expectancy of ten (10) years or greater. 5.GOVERNING AUTHORITY AND RESPONSIBILITY Pursuant to the provisions of the City of La Quinta Charter and sections 37209 and 40805.5 of the Government Code of the State of California, the Finance Director shall be responsible for all of the financial affairs of the City. This Policy grants the Finance Director the authority ATTACHMENT 1 2 of 4 to safeguard the City’s fixed assets and ensure proper financial classification and reporting. It is the responsibility of the departments and City Executive Directors to adhere to proper budgeting and purchasing guidelines, that capital assets are adequately controlled and used for appropriate City purposes. It is the responsibility of the Finance Department to ensure capital assets are properly accounted for by Fund and asset category. 6. USEFUL LIFE AND TYPES OF ASSETS The capital asset useful life is the determining factor for the number of accounting periods over which the asset shall be depreciated. Fixed assets which meet the appropriate cost and useful life criteria are grouped in the following classes: A. Building and improvements A building is a structure permanently attached to land, has a roof, and is partially or completely enclosed by walls. Building improvements are capital events that materially extend the useful life of a building, increase the value of the building, or both. Permanently attached fixtures or machinery that cannot be removed without impairing the use of the building is to be included in the value of the building. Buildings are valued at the historical cost, purchase price, contract price, or project cost. B. Equipment and furniture Equipment and furniture are defined as tangible assets not permanently affixed to a building and are used for operations and of which the benefits extend beyond three years. Improvements or additions to existing furniture or fixtures that meet or exceed the capitalization threshold should be recorded as an addition of value to the asset. C. Vehicles Vehicles include any licensed motor vehicles used by the City in its normal operations. Historical cost includes the purchase price plus registration, taxes, delivery fees, and outfitting costs. The value of any trade-ins, if applicable, should be considered. D. Infrastructure Infrastructure is defined as a long-lived capital asset that is normally stationary in nature and can be preserved for a significantly greater number of years than most capital assets. Land associated with infrastructure is reported as land rather than as part of the cost of the related infrastructure asset. Examples of infrastructure assets include roads, bridges, streets, sidewalks, medians, and storm drains. E. Software Software is a non-physical identifiable long-term asset of the City. Class Useful Life Building and improvements 10-30 years Equipment and furniture 3-20 years Vehicles 5-10 years Infrastructure 10-50 years Software 5-10 years 3 of 4 F. Construction in Progress (CIP) CIP includes new construction or improvements to land, buildings, or infrastructure that have not been physically completed or have not had all project costs processed by fiscal year-end and the final cost of which is expected to exceed the threshold. G. Improvements vs. Maintenance The Finance department will make the differentiation between improvement and maintenance projects by reviewing the invoices, budget, and interviewing personnel. • Improvements – Improvements consist of additions or betterments which shall be capitalized. o An addition refers to a physical extension of an existing asset or the acquisition of an entirely new unit, which does not merely replace one of similar function or value. o Betterments exist when a part of an existing asset is replaced by another and the replacement provides a significant increase in the life or value of the asset. • Maintenance – Maintenance costs refer to repairs or replacements to maintain the asset at its useful and current value. These costs will not be capitalized. 6. CAPITAL LEASES Equipment should be capitalized if the lease agreement is non-cancelable and meets any one of the following criteria: • Lease transfers ownership of the property by the end of the lease term. • Lease contains a bargain purchase option. • Lease term is equal to 75% or more of the estimated economic life of the lease property. • Present value of the minimum lease payments is at least 90% of fair market value. 7. ADDITIONS/ DELETIONS Additions and deletions to the fixed asset inventory records shall be made on a periodic basis. Additions are defined as an expenditure that either significantly extends the useful life or productivity of the existing capital asset and should be capitalized if it meets the requirements. When fixed assets are sold or disposed of, the inventory of fixed assets should be relieved of the cost of the asset and the associated accumulated depreciation. The City may dispose of a fixed asset due to: • Lack of need • Obsolescence • Impairment – wear, damage, or deterioration • Excess cost of maintenance • Theft/Loss The disposition of fixed assets shall be in accordance with City of La Quinta Municipal Code 3.12.060 Surplus Supplies and Equipment. Prior to declaring any fixed assets as surplus, staff shall obtain the approval of the City Council. 4 of 4 8. INVENTORY Physical inventory count shall be conducted at least once every year for vehicles, equipment, furniture and fixtures, and materials on hand. In order to ensure objective reporting of inventory items, a physical inventory should be performed by personnel having no direct responsibility (custody and receipt/issue authority) for assets subject to the inventory count. If it is not feasible to use such personnel, then the inventory shall be tested and verified by two or more personnel or a third party professional service provider. The results of the physical inventory shall be reconciled and may be subject to verification by the Finance department with the City’s fixed asset system. 9. DEPRECIATION Depreciation is the process of allocating the cost of depreciable capital assets over a period of time rather than incurring the entire cost as an expense in the year of acquisition. This process recognizes an asset’s periodic cost of use and declining usefulness over time. Land, certain land improvements, and certain works of art or historical treasures are inexhaustible and are therefore not depreciated. As a matter of this Policy, the City has elected to adopt the straight-line method of depreciation as follows: (Asset Cost- Residual Value) / Estimated Useful Life in Years = Annual Depreciation Expense Residual value is the amount that can be anticipated to be recovered when the asset is no longer useful for its intended purpose. Useful life should approximate the time an asset will provide service to the City. Capital assets that become fully depreciated and are still in use must remain in the financial capital accounts and identified within the capital asset system until they are disposed of. 10. CAPITAL ASSET POLICY REVIEW The Finance Director shall review this Policy annually to ensure careful and responsible management over City resources and recommend any changes to the City Manager and City Council. City of La Quinta FINANCIAL ADVISORY COMMISSION MEETING: June 13, 2018 STAFF REPORT AGENDA TITLE: DISCUSS AND PROVIDE DIRECTION TO STAFF REGARDING PARTICIPATION IN THE CALIFORNIA ASSET MANAGEMENT PROGRAM RECOMMENDATION Discuss and provide direction to staff regarding participation in the California Asset Management Plan. EXECUTIVE SUMMARY • Staff is recommending the California Asset Management Plan (CAMP) as a new investment to further diversify the investment portfolio while retaining liquidity. • CAMP funds are managed by a professional investment advisory firm and held in a third-party trust. • Historically CAMP has outperformed LAIF and provides similar benefits. FISCAL IMPACT – None. BACKGROUND Staff has evaluated the investment portfolio’s diversity, investment returns, and cash flow requirements. Based on this review, staff is recommending CAMP as a new investment to further diversify the portfolio while retaining liquidity. CAMP is similar to LAIF (Local Agency Investment Fund) in that: - the fund provides daily liquidity; - unlimited number of deposits and withdrawals at no cost; - transactions by wire, ACH and check; and - provides competitive money market returns. CAMP funds are: - managed by PFM Asset Management, LLC since 1981 as administrator and investment advisor; - held in a third-party custodian trust account with U.S. Bank National Association; - audited by Ernst & Young LLP; and - Nossaman LLP provides legal counsel and oversight. BUSINESS SESSION ITEM NO. 4 The current rate (7-day yield) is 2.01% as of 6/7/2018, which is 20 basis points higher than the LAIF daily rate of 1.81% as of 6/6/18. In addition, CAMP has received Standard and Poor’s highest rating of AAAm. . CAMP’s seven-member Board of Trustees include: - President Steve Dial, Deputy Executive Director and CFO, San Joaquin Council of Governments - Vice-President, Wayne Hammar, Treasurer-Tax Collector, Siskiyou County - Treasurer, Karen Adams, CPA, Treasurer-Tax Collector, Merced County - Andre Douzdijian, Director of Finance, San Diego Association of Governments - Duane Wolterstorff, CPA, Manager of Fiscal Support Services, Modesto City Schools - Christina Valencia, CFO and Assistant General Manager Inland Empire Utilities Agency - Lauren Warrem, CPA, Director of Finance/City Treasurer City of Vista ALTERNATIVES The commission may approve or request further review before submitting to Council for consideration. Prepared by: Rosemary Hallick, Financial Services Analyst Approved by: Karla Campos, Finance Director Attachments: 1. California Asset Management Program FACT Sheet 2. Standard and Poor CAMP Rating 30-Day Net Yield3 May-18 1.96% Apr-18 1.85% Mar-18 1.63% Feb-18 1.50% Jan-18 1.43% Dec-17 1.30% Nov-17 1.20% Oct-17 1.16% Sep-17 1.14% Aug-17 1.14% Jul-17 1.12% Jun-17 1.05% 1 The 7-Day yield is computed in accordance with methods prescribed by the SEC. The 7-Day SEC yield excludes distributed capital gains/losses. The current 7-day net yield more closely reflects the current earnings of the Fund than the average annual returns. 2 Weighted Average Maturity: Calculated by the final maturity for a security held in the portfolio and the interest rate reset date. This is a way to measure a fund’s sensitivity to potential interest rate changes. 3 As of the last day of the month. Average annualized 30-day yields are based on net investment income and distributed gains or losses for the period shown. The average annual returns are an SEC standardized calculation that represents the annual change in value of an investment over specified periods and assumes sales charges and reinvestment of dividends and capital gains. Past performance is no guarantee of future results. Yields will fluctuate as market conditions change. The current fund performance may be higher or lower than that cited. The yields shown may reflect fee waivers by service providers that subsidize and reduce the total operating expenses of the Fund. Fund yields would be lower if there were no such waivers. The current expense ratio is 0.15%. Average annual returns for historic periods and important disclosure information is provided on the following page. . Investment Objective Preserve principal, provide liquidity, provide as high a level of current income as is consistent with preserving principal and maintaining liquidity. Investment Philosophy The Pool’s adviser seeks to optimize investment returns through careful analysis of and investment in short- term governmental securities and other high-quality money market instruments while preserving the safety and liquidity of the underlying principal. Current 7-Day Net Yield1 Weighted Average Maturity2 Standard and Poor’s Fund Rating Investment Adviser 1.96% 38 days AAAm PFM Asset Management LLC California Asset Management Program (“CAMP”) is a California Joint Powers Authority ("JPA") established in 1989 to provide California public agencies with professional investment services. The CAMP Pool is a permitted investment for all local agencies under California Government Code Section 53601(p). CAMP is directed by a Board of Trustees, which is made up of experienced local government finance directors and treasurers. CAMP offers a range of services to assist Investors/Participants with their investment and arbitrage compliance needs, including: •A short-term money market portfolio rated AAAm by Standard & Poor’s •Separately managed portfolios •Specialized services for bond proceeds and operating funds •Investment and safekeeping services at a reasonable cost •Investment advice provided by PFM Asset Management LLC •Arbitrage rebate analysis and calculation As of May 31, 2018CAMP Pool Statistics Performance (30-Day Yield %) For more information, visit www.camponline.com or contact the Fund’s Investment Adviser at 800-729-7665 Fund Diversification Credit Quality Distribution (Standard & Poor’s Fund Ratings)Sector Composition Cash Reserve Portfolio (“Pool”) Characteristics As of May 31, 2018 California Asset Management Program Fact Sheet *In accordance with California Government Code §53601, sector percentages are applicable only at the date of purchase. Investment Sector Composition is compliant with California Government Code §53601 at the time of purchase. **Percentages may not total to 100% due to rounding. * ** Negotiable Certificates of Deposit 32% Commercial Paper 26% Repurchase Agreements 25% Supranationals 9% Federal Agencies 6% U.S. Treasuries 2% A-1 69%A-1+22% AAA 8% AA+1% ATTACHEMENT 1 Month 3-Month 1-Year 3-Year 5-Year California Asset Management Program 1.96%1.83%1.38%0.79%0.50% iMoneyNet Money Market Fund Index 1.72%1.62%1.20%0.59%0.37% Must be preceded or accompanied by a Program Guide. For a current Program Guide, which contains more complete information, please visit http://www.camponline.com/ or call 800-729-7665. Before investing, consider the investment objectives, risks, charges and expenses of the fund carefully. This and other information can be found in the fund’s Program Guide. Read the Program Guide carefully before you invest or send money. 1Source: iMoneyNet First Tier Institutional Money Market Fund Average. This index is comprised of funds rated in the top grade that invest in high-quality financial instruments with dollar-weighted average maturities of less than 60 days. It is not possible to invest directly in such an index. Standard & Poor’s fund ratings are based on analysis of credit quality, market price exposure, and management. According to Standard & Poor’s rating criteria, the AAAm rating signifies excellent safety of investment principal and a superior capacity to maintain a $1.00 per share net asset value. However, it should be understood that the rating is not a “market” rating nor a recommendation to buy, hold or sell the securities. For a full description on rating methodology, visit Standard & Poor’s website (http://www.standardandpoors.com/en_US/web/guest/home). This information is for institutional investor use only, not for further distribution to retail investors, and does not represent an offer to sell or a solicitation of an offer to buy or sell any fund or other security. Investors should consider the Trust’s investment objectives, risks, charges and expenses before investing in the Trust. This and other information about the Trust is available in the Trust’s current Information Statement, which should be read carefully before investing. A copy of the Trust’s Information Statement may be obtained by calling 1-800-729-7665 or is available on the Trust’s website at www.camponline.com. While the Trust seeks to maintain a stable net asset value of $1.00 per share, it is possible to lose money investing in the Trust. An investment in the Trust is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Shares of the Trust are distributed by PFM Fund Distributors, Inc., member Financial Industry Regulatory Authority (FINRA) (www.finra.org) and Securities Investor Protection Corporation (SIPC) (www.sipc.org). PFM Fund Distributors, Inc. is a wholly owned subsidiary of PFM Asset Management LLC. 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 2.00% 2.25% Service Providers Investment Adviser and Administrator PFM Asset Management LLC 50 California Street, Suite 2300 San Francisco, CA 94111 Distributor PFM Fund Distributors, Inc. 213 Market Street Harrisburg, PA 17101-2044 Custodian U.S. Bank, N.A. 800 Nicollet Mall Minneapolis, MN 55402 Independent Registered Public Accounting Firm Ernst & Young LLP 560 Mission Street Suite 1500 San Francisco, CA 94105 Counsel Nossaman LLP 50 California Street, 34th floor San Francisco, CA 94111 For more information, visit www.camponline.com or contact CAMP’s Investment Adviser at 800-729-7665 Average Annual Return As of May 31, 2018 California Asset Management ProgramiMoneyNetMoney Market Fund Index1 Cash Reserve Portfolio (“Pool”) Characteristics As of May 31, 2018 California Asset Management Program Fact Sheet September 28, 2017 BANK 28.9% REPO 21.5%TREAS 14.6% CP 14.3% GOV-AGCY 11.5% CORP 7.0% ABS 2.2% BANK - Bank Deposits; REPO - Repurchase Agreement; TREAS - Treasury; CP - Commercial Paper; GOV-AGCY - Agency and Government; CORP - Corporate; ABS - Asset-backed security Portfolio Composition as of September 28, 2017 www.spratings.com The fund invests primarily in U.S. Treasury and federal agency securities and repurchase agreements secured by such obligations, and may also invest in banker's acceptances, commercial paper and certificates of deposit. Repurchase agreements are conducted with counterparties that have strong credit quality. These guidelines are consistent with California regulations concerning the investment of public funds. The fund manager seeks to comply with guidelines similar to those mandated for money-market funds governed by Rule 2a-7 of the Investment Company Act of 1940. The fund maintains a weighted average maturity to reset (WAM(R)) of 60 days or less in order to maintain sufficient liquidity for redemptions and to limit market price exposure. PFM Asset Management LLC Stable NAV Government Investment Pool U.S. Bank, N.A. Michael Varano Rationale Overview Management Portfolio Assets Participants should consider the investment objectives, risks and charges and expenses of the pool before investing. The investment guidelines which can be obtained from your broker-dealer, contain this and other information about the pool and should be read carefully before investing. California Asset Management Trust (CAMP)/Cash Reserve Portfolio is rated 'AAAm' by S&P Global Ratings. The rating is based on S&P Global Ratings' analysis of the portfolio's credit quality, investment policies, market price exposure, and management. The rating signifies our forward- looking opinion about a fixed-income fund's ability to maintain principal value (i.e., stable net asset value, or 'NAV'). The CAMP Cash Reserve Portfolio is one of several funds managed by PFM Asset Management LLC. The investment objective of the CAMP Cash Reserve Portfolio is to provide as high a level of current income as is consistent with maintaining liquidity and stability of principal. The fund is designed as an investment vehicle for bond proceeds and operating funds of municipalities located in California. PFM Fund Distributors, Inc., a wholly-owned subsidiary of PFM Asset Management LLC, serves as the fund's distributor. The fund's investment adviser is PFM Asset Management LLC (PFM). As adviser, PFM manages the CAMP Cash Reserve Portfolio and is responsible for the purchase and sale of all portfolio assets. PFM and Public Financial Management Inc., which is under common ownership with PFM, have managed funds since 1981. The two firms act as financial advisers and/or investment advisers to cities, townships, boroughs, counties, school districts, authorities, and financial institutions throughout the country, providing clients with financial, investment advisory, and cash management services. PFM Fund Distributors, Inc. AAAm AAm Am BBBm BBm Dm Plus (+) or Minus (-) Principal Stability Fund Ratings Definitions A fund rated 'AAAm' demonstrates extremely strong capacity to maintain principal stability and to limit exposure to principal losses due to credit risk. 'AAAm' is the highest principal stability fund rating Phone 1-800-729-7665 assigned by S&P Global Website www.camponline.com Ratings A fund rated 'AAm' demonstrates very strong capacity to maintain principal stability and to limit exposure to principal losses due to credit risk. It differs from the highest-rated funds only to a small degree. A fund rated 'Am' demonstrates strong capacity to maintain principal stability and to limit exposure to principal losses due to credit risk, but is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than funds in higher-rated categories A fund rated 'BBm' demonstrates speculative characteristics and uncertain capacity to maintain principal stability. It is vulnerable to principal losses due to credit risk. While such funds will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions. A fund rated 'Dm' has failed to maintain principal stability resulting in a realized or unrealized loss of principal. The ratings may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the rating categories. A fund rated 'BBBm' demonstrates adequate capacity to maintain principal stability and to limit exposure to principal losses due to credit risk. However, adverse economic conditions or changing circumstances are more likely to lead to a reduced capacity to maintain principal stability. AAAm March 1995 About the Pool Pool Rating Pool Type Investment Adviser Portfolio Manager Pool Rated Since Custodian Distributor California Asset Management Trust/Cash Reserve Portfolio POOL PROFILE S &P Global Ratings Analyst:Peter Rizzo - (1) 212-438-5059 ATTACHMENT 2 AAAm 0 20 40 60 80 100 Days Portfolio Maturity Distribution as of September 28, 2017 *S&P 'AAAm' Money Fund Indices are calculated weekly by iMoneyNet, Inc., and are comprised of funds rated or assessed by S&P Global Ratings to within the specific rating categories. The S&P Global Ratings Rated LGIP Indices are calculated weekly by S&P Global Ratings and are comprised of 'AAAm' and 'AAm' government investment pools. The yield quoted represents past performance. Past performance does not guarantee future results. Current yield may be lower or higher than the yield quoted. 0.0% 0.4% 0.8% 1.2% 1.6% 2.0% S&P Rated GIP Index/All Fund Portfolio 7 Day Net-Yield Comparison * Principal Stability Rating Approach and Criteria *As assessed by S&P Global Ratings A-1+ 64.7% A-1 35.3% Portfolio Credit Quality as of September 28, 2017 * A S&P Global Ratings principal stability fund rating, also known as a "money market fund rating", is a forward-looking opinion about a fixed income fund's capacity to maintain stable principal (net asset value). When assigning a principal stability rating to a fund, S&P Global Ratings analysis focuses primarily on the creditworthiness of the fund's investments and counterparties, and also its investments' maturity structure and management's ability and policies to maintain the fund's stable net asset value. Principal stability fund ratings are assigned to funds that seek to maintain a stable or an accumulating net asset value. Generally, when faced with an unanticipated level of redemption requests during periods of high market stress, the manager of any fund may suspend redemptions for up to five business days or meet redemption requests with payments in-kind in lieu of cash. A temporary suspension of redemptions or meeting redemption requests with distributions in-kind does not constitute a failure to maintain stable net asset values. However, higher rated funds are expected to have stronger capacities to pay investor redemptions in cash during times of high market stress because they generally comprise shorter maturity and higher quality investments. Principal stability fund ratings, or money market fund ratings, are identified by the 'm' suffix (e.g., 'AAAm') to distinguish the principal stability rating from a S&P Global Ratings traditional issue or issuer credit rating. A traditional issue or issuer credit rating reflects S&P Global Ratings view of a borrower's ability to meet its financial obligations. Principal stability fund ratings are not commentaries on yield levels. 0 500 1000 1500 2000 2500 3000 0 20 40 60 80 100 120 Net Assets WAM (R) *WAM (F) ** Net Assets, WAM (R) and WAM (F) California Asset Management Trust/Cash Reserve Portfolio Pool portfolios are monitored weekly for developments that could cause changes in the ratings. Rating decisions are based on periodic meetings with senior pool executives and public information. Data Bank as of September 28, 2017 $1.00008 $2,596.00 51 days 81 days 1.13% Net Asset Value per Share.............. WAM (R) * ....................................... * Weighted Average Maturity (Reset) 7 Day Yield............................. Net Assets (millions)................... WAM (F) **.................................. ** Weighted Average Maturity (Final) Inception Date....................... 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S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees. S&P GLOBAL RATINGS, S&P, GLOBAL CREDIT PORTAL and RATINGSDIRECT are registered trademarks of Standard & Poor’s Financial Services LLC. DEPARTMENTAL REPORT ITEM NO. 1 City of La Quinta FINANCIAL ADVISORY COMMISSION MEETING DEPARTMENT REPORT PREPARED BY: Rosemary Hallick, Financial Services Analyst DATE: SUBJECT: June 13, 2018 Fourth Quarter 2017 (October – December) Sales Tax Update for the City of La Quinta The attached report was prepared by sales tax consultants HdL Companies as an update of sales tax receipts for fourth quarter sales from October to December 2017. Sales Tax Update •Most major business groups experienced an increase in sales in comparison to the fourth quarter of 2016, with the exception of the food/drugs segment which was generally flat and the business/industry segment which saw a slight decline. •The City’s sales-per-capita was higher than both the county and state averages, which has been the case for all quarters except the third since 2014. •General consumer goods (such as department stores) and restaurants/hotels made up 63% of sales tax revenue during this quarter. •La Quinta’s overall adjusted sales increase was 8.7%, which compares to Riverside County at 5.9% and Southern California at 3.5%. Measure G Update •Measure G transaction taxes continue to come in above our conservative estimates, and another budget adjustment was approved during the third quarter budget update to reflect the increase in revenues. •General consumer goods (such as department stores) and restaurants/hotels made up 62% of transaction tax revenue during this quarter, a similar share to sales taxes. •The autos and transportation sector made up 13% of transaction tax revenue as opposed to only 8% of sales tax revenue. •Our top 25 transactions tax producers predominately consisted of businesses located in La Quinta, however there were several businesses located outside of City limits that made the top 25. The City continuously monitors local development, economic conditions, impacts on travel and trade, and legislative and judicial news for any potential changes to sales tax collections. City staff will continue to monitor Measure G activity, as well as the projections provided by our consulting partners, to establish baselines for future budgeting purposes. Attachment 1: City of La Quinta Sales Tax Update La Quinta In Brief La Quinta's receipts from Octo ber through December were 7.1 % above the fourth sales period in 2016. Excluding reporting aberrations, actual sales were up 8.7%. Stellar holiday shopping results and a new specialty retailer boosted general consumer goods, accounting for 47% of the overall gain. Solid returns from leisure-entertain ment venues combined with contin ued interest in eating out benefitted restaurant-hotels. Improved winter sales of building suppl ies, auto receipts enhanced by low interest rates and abundant availability, and steady price in creases at the pump pushing service stations higher also contributed to the overall growth. The City's recently approved one cent transaction tax. Measure G, generated an additional $2,727,888. Net of aberrations. taxable sales for all of Riverside County grew 5.9% over the comparable time period; the Southern California region was up 3.5%. City of La Quinta Sales Tax Update First Quarter Receipts jo1· Fourth Quarter Sales (October -December 2017) SALES TAX BY MAJOR BUSINESS GROUP $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 General Restaurants County and State Pools Consumer and Goods Hotels ToP 25 PRODUCERS IN ALPHABETICAL ORDER Arco AM PM La Quinta Resort & Bed Bath & Beyond Club Best Buy Lowes Chevrolet Cadillac of Marshalls La Quinta Ross Circle K Stater Bros Cliffhouse Stein Mart Costco Target Hobby Lobby TJ Maxx Home Depot Torre Nissan Hyundai of La Tower Mart Quinta Ulla Beauty In N Out Burgers Vons Kohls Walmart Supercenter Building Autos and and Construction Transportation Food and Drugs ■ 4th Quarter 2016■ 4th Quarter 2017 Fuel and Service Stations Business and Industry REVENUE COMPARISON Three Quarters-Fiscal Year To Date 2016-17 2017-18 Point-of-Sale $5,470,243 $5,720,425 County Pool 688,862 667,386 State Pool 3,261 854 Gross Receipts $6,162,366 $6,388,665 Measure G $0 $6,683,876 Published by Hdl Companies in Spring 2018 Hd� www.hdlcompanies.com I 888.861.0220 c OM r A N I r 5 ATTACHMENT 1 DEPARTMENTAL REPORT ITEM NO. 2 City of La Quinta FINANCIAL ADVISORY COMMISSION MEETING DEPARTMENT REPORT PREPARED BY: Karla Campos, Finance Director DATE: June 13, 2018 SUBJECT: Request for Proposals Update for Banking Services On February 12th Chairman Batavick and Commissioner Mills were recommended to serve on the review and selection sub-committee for banking services. The request for proposals (RFP) has been delayed as staff has been updating or implementing several policies (purchasing, investments, capital assets, reserves, and debt management). The revised schedule is as follows: Issue RFP July 31 Proposals Due August 31 Individual Proposal Reviews September 3 - 14 Internal Discussion of Proposals Week of September 17 Proposer’s Presentation and Oral Interviews Week of October 1 Selection Made and Recommended November 6, Council meeting Proposals will be evaluated based on the following criteria: Qualifications and Experience: The organization, affiliations, branch locations, financial experience, independent bank rating agency reports, and compliance and good standing reports. Fees: One-time and recurring fees for all services including management, administrative, and transactional. Structure: The different parties to the agreement, such as trustee and investment manager, as well as legal structure of the trust. Start-up cost and effort: Level of staff, legal, and other efforts to establish the banking relationship. Ongoing administration: Level of effort to maintain the trust, ensure that the program is properly functioning, and monitoring performance; in addition to reporting and consulting support provided by the trust. Accessibility and Services: Accessibility to branch locations and services offered by the banking institution. Other considerations: Integration with current financial software, credit card services, online reporting and accessibility, and fraud prevention and detection. POWER POINTS FAC MEETING JUNE 13, 2018 6/19/2018 1 Financial Advisory Commission Special Meeting June 13, 2018 Financial Advisory Commission June 13, 2018 B1‐ Approve SilverRock Event Site C3‐Receive and File the 4th Quarter Fiscal Year 6/19/2018 2 SilverRock Event Site Timeline •August 7, 2018 – Council approve project plans •March 2019 – Begin construction •July 2019 – Plant Bermuda grass •September 2019 – Construction complete for October over‐seed •March 2020 – Landscape established & ready for arts festival 6/19/2018 3 6/19/2018 4 Funding •Measure G $2.4 million –Reserves at $6.9 million (35% for SilverRock) •Quimby Fund $3.5 million •Art in Public Places Fund $100,000 Financial Advisory Commission June 13, 2018 B2‐ Review and Recommend Final Proposed Budget for Fiscal Year 2018/19 C3‐Receive and File the 4th Quarter Fiscal Year 6/19/2018 5 Summary •Previous study sessions held May 1 and 15 and June 5 with Council •Includes updated revenue and expenditure projections •Staff requesting direction on remaining pending items •Final budget to be presented June 19 General Fund Updated Revenue Projections 6/19/2018 6 Internal Requests •The proposed budget incorporates: Proposed Budget Totals 6/19/2018 7 Outstanding Internal Funding Requests •Personnel Reclassifications (Hub and City Manager Office): $30,145 •Overtime (Code Enforcement): $10,100 •Design and Print Costs: $5,000 Outstanding External Funding Requests 6/19/2018 8 Reserves •Updated per Policy •Review and adjust in January 2019 after CAFR is completed Reserve/Trust As of 6/30/18 Emergency Reserve Natural Disaster 7,400,000$ Economic Disaster 8,140,000 Total 15,540,000 Cash Flow Reserve 5,000,000 Capital Replacement 5,000,000 Total Reserves 25,540,000 Pension Trust Fund 2,000,000 Unassigned Reserves 7,993,926 Overall Total 35,533,926$ Discussion and Questions 6/19/2018 9 Financial Advisory Commission May 9, 2018 B3 – Review Capital Asset Policy and Recommend Approval by City Council C3‐Receive and File the 4th Quarter Fiscal Year Financial Advisory Commission May 9, 2018 B4 – Discuss and Provide Direction to Staff Regarding Participation in the CA Asset Management Program C3‐Receive and File the 4th Quarter Fiscal Year 6/19/2018 10 Financial Advisory Commission May 9, 2018 D1‐Fourth Quarter 2017 (October‐December) Sales Tax Update C3‐Receive and File the 4th Quarter Fiscal Year Financial Advisory Commission May 9, 2018 D2‐ Request for Proposal Update for Banking Services C3‐Receive and File the 4th Quarter Fiscal Year 6/19/2018 11 Updated Timeline Issue RFP July 31 Proposals Due August 31 Individual Proposal Reviews September 3 - 14 Internal Discussion of Proposals Week of September 17 Proposer’s Presentation and Oral Interviews Week of October 1 Selection Made and Recommended November 6, Council meeting Financial Advisory Commission Next Regular Quarterly Meeting is on August 8, 2018 HAND OUTS FAC MEETING JUNE 13, 2018 Investment Portfolio Analysis Prepared on: Thursday, May 31, 2018 Presented By: Matthew D'Avanzo City of La Quinta 100 Motor Parkway, 2nd Floor | Hauppauge | NY 11788 Toll Free: 800.645.5424 | Tel: 631.979.0097 | Fax: 631.979.0448 www.1empire.com 1 of 14 Executive Summary Eff DurAvg Life (yrs) Par ($000)Sector Book Yield (%)% of Total Coupon(%) AGY $21,750 2.53 2.49 36.11% 1.69% 1.80% IND $3,500 1.41 1.25 5.81% 1.35% 1.35% NCD $16,989 2.66 2.34 28.20% 2.08% 2.09% TSY $18,000 2.06 1.88 29.88% 1.22% 1.32% Inv. Total:$60,239 2.36 2.19 100.00% 1.64% 1.71% Totals:$60,239 2.36 2.19 100.00% 1.64% 1.71% Yield Roll-off: Over the next 12 months, approximately 19.17% of the portfolio’s projected cashflows are expected to be repaid. Of this, $11.114 million is principal cashflow maturing at a weighted average yield of 1.474%.Therefore, to improve portfolio yield, the reinvestment of cashflows over the next year must average no less than 1.484%. Assuming portfolio balances remain constant, by increasing portfolio yield by 50 basis points, annual income would be increased by $301,195. If portfolio yield were to decrease by 50 basis points annual income would fall by a similar amount. Portfolio Market Valuation: As of 5/31/2018, the portfolio has a book value of $60,188,000, a fair market value of $59,028,000, and an estimated unrealized gain(loss) of ($1,160,000). Breakeven Yield: The weighted average yield at cost ("book yield") of the portfolio is 1.711%. Using the fair market value prices, the market yield on the portfolio is 2.562%. The market yield represents the portfolio's breakeven reinvestment yield if it were liquidated at its current market value. This is often referred to as the portfolio's "sell side yield". Portfolio Liquidity: Along with portfolio cash flows, there are two additional sources of liquidity present in the portfolio: the ability to sell securities and the ability to borrow against securities. The current SFAS # 115 classification of the portfolio is: • 65.99% available-for-sale • 34.01% held-to-maturity Additionally, at least $21.75 million or 36.11% of the portfolio is potentially eligible as collateral for borrowings. Interest Rate Shock Analysis Enclosed are several charts that estimate the impact on the portfolio’s average life, duration and market value under thirteen different rate-shock scenarios. Used in conjunction with the cash flow shock analysis charts, they give a macroeconomic view of the potential risks present in the portfolio in a dynamic interest rate environment. Portfolio Characteristics: Optionality: The portfolio is currently structured with: • 70% non-callable securities • 30% callable securities • 0% amortizing securities Based upon current interest rates: • 33.33% of the callable agency securities are expected to be called at the next call date • 66.67% of the callable agency securities are not expected to be called before maturity In the next 30 days the portfolio has $0.339 million projected cashflow. The future cash flows of the portfolio have been estimated under five interest rate scenarios: a flat rate environment, a rate of +/- 100 basis point and a rate of +/-300 basis points. By comparing the enclosed cash flow charts and tables against projected liquidity needs, periods of excess cash flow (reinvestment risk) can be identified, as well as intervals of potential liquidity shortfalls. Investment Portfolio Analysis City of La Quinta Thursday, May 31, 2018 www.1empire.com *Note: Investing in securities and CDs carries risk. Please review the risk disclosures on the last page of this document and/or at www.1empire.com/disclosures.html 2 of 14 Sector / SFAS #115 Classification / Coupon Type Distribution TSY AGYIND NCD AGY 36.1% IND 5.8% NCD 28.2% TSY 29.9% Total:100.0% Sector Distribution Eff Dur Avg Life (yrs)Par ($000)Sector Book Yield (%) Coupon (%)% of Total 2.49 2.53$21,750AGY 1.80% 1.69% 36.11% 1.25 1.41$3,500IND 1.35% 1.35% 5.81% 2.34 2.66$16,989NCD 2.09% 2.08% 28.20% 1.88 2.06$18,000TSY 1.32% 1.22% 29.88% 2.19 2.36$60,239Inv. Total: 1.71% 1.64% 100.00% 2.19 2.36$60,239Totals: 1.71% 1.64% 100.00% AFS HTM AFS 66.0% HTM 34.0% Total:100.0% SFAS #115 Classifications FIXED FIXED 100.0% Total:100.0% Fixed vs. Floating Rate Distribution Investment Portfolio Analysis City of La Quinta Thursday, May 31, 2018 www.1empire.com *Note: Investing in securities and CDs carries risk. Please review the risk disclosures on the last page of this document and/or at www.1empire.com/disclosures.html 3 of 14 0*YieldBook Price Par ($000) Call PriceCall DateMaturityCouponIssuerCusip Callable Agency Matrix D100*U100*D75* D50* D25*U25* U50* U75* MTY 1.35 100.000$2,500 1007/28/20184/28/2021 1.350FEDERAL HOME LOAN BANKS3130A7QZ 01/2021 MTYMTYMTYMTYMTYMTYMTY MTY 1.37 100.000$2,500 1004/26/201810/26/2020 1.380FEDERAL HOME LOAN BANKS3130A9UQ 03/2020 MTYMTYMTYMTYMTYMTYMTY 11/2019 2.36 100.000$1,000 1008/28/20182/28/2023 2.380FEDERAL HOME LOAN BANKS3130ADMF 08/2018 08/202108/2018 08/2018 02/2019 02/2020 02/2020 02/2021 MTY 2.22 98.950$500 1003/20/20186/20/2019 1.210FEDERAL FARM CR BKS3133EGFU 02/2019 MTYMTYMTYMTYMTYMTYMTY MTY 1.08 100.000$1,000 1004/12/20187/12/2019 1.080FEDERAL FARM CR BKS3133EGLC MTY MTYMTYMTYMTYMTYMTYMTY 04/2020 1.50 100.000$2,500 1007/28/20184/28/2021 1.500FEDERAL HOME LN MTG CORP3134G8Y3 01/2019 04/202010/2019 10/2019 04/2020 04/2020 04/2020 04/2020 MTY 1.99 100.000$2,000 1006/29/20183/29/2022 2.000FEDERAL HOME LN MTG CORP3134GBAE 09/2019 MTY09/2020 06/2021 MTY MTY MTY MTY MTY 2.13 100.000$1,000 1007/27/20187/27/2022 2.150FEDERAL HOME LN MTG CORP3134GBWG 04/2019 MTY07/2020 07/2021 01/2022 MTY MTY MTY MTY 1.98 100.000$1,000 1006/29/201812/29/2021 2.000FEDERAL HOME LN MTG CORP3134GBXF 06/2019 MTY06/2020 03/2021 MTY MTY MTY MTY 10/2021 2.55 100.000$1,000 1001/30/20191/30/2023 2.550FEDERAL HOME LN MTG CORP3134GSCD 01/2019 MTY01/2019 01/2019 10/2020 07/2022 MTY MTY 05/2021 2.75 100.000$750 1008/23/20182/23/2023 2.750FEDERAL HOME LN MTG CORP3134GSCQ 08/2018 MTY08/2018 08/2018 08/2020 05/2022 MTY MTY MTY 1.69 100.000$2,000 1007/27/20181/27/2020 1.700FEDERAL NATL MTG ASSN3135G0S5 07/2018 MTY04/2019 MTY MTY MTY MTY MTY 33.33% 1.76 99.970$17,750 1007/13/20186/12/2021 1.730------------Total / AVG 91.67%16.67%66.67%58.33%41.67%33.33%16.67%16.67% Investment Portfolio Analysis City of La Quinta Thursday, May 31, 2018 www.1empire.com *Note: MTY indicates that the bond is projected to expire at its maturity date and a Date Value indicates that the bond is projected to be called in the specified month/year. **Note: Investing in securities and CDs carries risk. Please review the risk disclosures on the last page of this document and/or at www.1empire.com/disclosures.html 4 of 14 Projected Cash Flows - 10-yr Annual (Principal & Interest) 0K 4K 8K 12K 16K 20K 1 2 3 4 5 6 7 8 9 10$12,062$18,008$11,927$15,469$5,212$246$0$0$0$0CDs and Other Deposits Treasuries & Agencies Muni, Corporates, Bk Notes YearAmount ($000)Year Total Cashflow ($000)Percentage of Total 1 $12,062 19.17% 2 $18,008 28.62% 3 $11,927 18.96% 4 $15,469 24.58% 5 $5,212 8.28% 6 $246 0.39% 7 $0 0.00% 8 $0 0.00% 9 $0 0.00% 10 $0 0.00% Investment Portfolio Analysis City of La Quinta Thursday, May 31, 2018 www.1empire.com *Note: Investing in securities and CDs carries risk. Please review the risk disclosures on the last page of this document and/or at www.1empire.com/disclosures.html 5 of 14 Cash Flow Shock Analysis - 10-yr Annual (Principal & Interest) $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 12345678910CDs and Other Deposits Treasuries & Agencies Muni, Corporates, Bk NotesAmount ($000)$0 $4,000 $8,000 $12,000 $16,000 $20,000 12345678910CDs and Other Deposits Treasuries & Agencies Muni, Corporates, Bk NotesAmount ($000)$0 $4,000 $8,000 $12,000 $16,000 $20,000 $24,000 $28,000 $32,000 12345678910CDs and Other Deposits Treasuries & Agencies Muni, Corporates, Bk NotesAmount ($000)Flat Rate Scenario -300 bps Scenario +300 bps Scenario Investment Proposal Analysis City of La Quinta Thursday, May 31, 2018 www.1empire.com *Note: Investing in securities and CDs carries risk. Please review the risk disclosures on the last page of this document and/or at www.1empire.com/disclosures.html 6 of 14 Cash Flow Shock Analysis - 10-yr Annual (Principal & Interest) $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 12345678910CDs and Other Deposits Treasuries & Agencies Muni, Corporates, Bk NotesAmount ($000)$0 $4,000 $8,000 $12,000 $16,000 $20,000 12345678910CDs and Other Deposits Treasuries & Agencies Muni, Corporates, Bk NotesAmount ($000)$0 $4,000 $8,000 $12,000 $16,000 $20,000 $24,000 12345678910CDs and Other Deposits Treasuries & Agencies Muni, Corporates, Bk NotesAmount ($000)Flat Rate Scenario -100 bps Scenario +100 bps Scenario Investment Proposal Analysis City of La Quinta Thursday, May 31, 2018 www.1empire.com *Note: Investing in securities and CDs carries risk. Please review the risk disclosures on the last page of this document and/or at www.1empire.com/disclosures.html 7 of 14 Projected Cash Flows - 5-yr Monthly (Principal & Interest) 0 1000 2000 3000 4000 5000 6000 Jun18Aug18Oct18Dec18Feb19Apr19Jun19Aug19Oct19Dec19Feb20Apr20Jun20Aug20Oct20Dec20Feb21Apr21Jun21Aug21Oct21Dec21Feb22Apr22Jun22Aug22Oct22Dec22Feb23Apr23CDs and Other Deposits Treasuries & Agencies Muni, Corporates, Bk Notes MonthAmount ($000)Investment Portfolio Analysis City of La Quinta Thursday, May 31, 2018 www.1empire.com *Note: Investing in securities and CDs carries risk. Please review the risk disclosures on the last page of this document and/or at www.1empire.com/disclosures.html 8 of 14 Cash Flow Shock Analysis - 5-yr Monthly (Principal & Interest) DIFFERENCE ($000)+300Bps ($000)FLAT ($000)-300Bps ($000)DIFFERENCE ($000)MONTH Jun18 4011 4350 339 339 0 Jul18 8012 8322 310 310 0 Aug18 1750 2052 302 302 0 Sep18 3005 3094 89 89 0 Oct18 -53 2810 2863 2863 0 Nov18 0 1040 1040 1040 0 Dec18 -13 574 587 587 0 Jan19 967 1036 69 69 0 Feb19 -22 775 797 797 0 Mar19 -20 2313 2333 2333 0 Apr19 -53 1036 1089 1089 0 May19 0 2244 2244 2244 0 Jun19 -513 578 1091 1091 0 Jul19 -1046 21 1067 1067 0 Aug19 -23 536 559 559 0 Sep19 -20 804 824 824 0 Oct19 -53 548 601 601 0 Nov19 -1007 752 1758 752 -1007 Dec19 -10 2580 2590 2590 0 Jan20 -2041 260 2301 2301 0 Feb20 -10 532 543 556 13 Mar20 -20 2550 2570 2570 0 Apr20 -2559 783 3342 842 -2500 May20 0 762 762 762 0 Jun20 -10 1049 1059 1059 0 Jul20 -24 499 523 523 0 Aug20 -10 1026 1036 1051 15 Sep20 -20 1032 1052 1052 0 Oct20 -2534 285 2819 5369 2550 Nov20 0 258 258 258 0 Dec20 -10 297 307 307 0 Jan21 -24 255 278 278 0 Feb21 -10 258 268 283 15 Mar21 -20 268 288 288 0 Apr21 -2517 518 3035 3035 0 May21 -755 249 1005 249 -755 Jun21 -10 5288 5298 5298 0 Jul21 480 757 277 277 0 Aug21 -504 13 516 544 28 Sep21 -20 1022 1042 1042 0 Oct21 -1006 2272 3278 2272 -1006 Nov21 0 252 252 252 0 Dec21 -1010 16 1026 1026 0 Jan22 -11 497 508 521 13 Feb22 0 491 491 519 28 Mar22 -2020 12 2032 2032 0 Apr22 0 498 498 498 0 May22 0 250 250 250 0 Jun22 0 984 984 984 0 Jul22 -1011 247 1258 1271 13 Aug22 0 492 492 522 30 Sep22 0 7 7 7 0 Oct22 0 498 498 498 0 Nov22 0 739 739 739 0 Dec22 0 248 248 248 0 Jan23 0 2 2 1015 1013 Feb23 0 2 2 1782 1780 Mar23 0 250 250 250 0 Apr23 0 490 490 490 0 May23 0 242 242 242 0 Investment Portfolio Analysis City of La Quinta Thursday, May 31, 2018 www.1empire.com *Note: Investing in securities and CDs carries risk. Please review the risk disclosures on the last page of this document and/or at www.1empire.com/disclosures.html 9 of 14 Gap Analysis - Potential Income Impact of Principal Reinvestment ($200) ($100) $0 $100 $200 $300 $400 $500 $600 0.25%0.5%1%2%3%4%5%6% ($136) ($108) ($53) $58 $170 $281 $392 $503 Assumed Re-Investment/Rollover YieldIncome Change ($000)Estimated Impact on Income at Various Reinvestment Yields Principal Maturing(12 Mo.Horizon): Current Book Yield of Principal Maturing: Est. Annual Income at Current Book Yield: $11,114,000 1.474% $163,832 Assumed Reinvestment Yield Estimated Annualized Income Income Difference from Current Book $(136,047)$27,785 0.25% $(108,262)$55,570 0.5% $(80,477)$83,355 0.75% $(52,692)$111,140 1% $(24,907)$138,925 1.25% $2,878 $166,710 1.5% $30,663 $194,495 1.75% $58,448 $222,280 2% $86,233 $250,065 2.25% $114,018 $277,850 2.5% $141,803 $305,635 2.75% $169,588 $333,420 3% $197,373 $361,205 3.25% $225,158 $388,990 3.5% $252,943 $416,775 3.75% $280,728 $444,560 4% Assumed Reinvestment Yield Estimated Annualized Income Income Difference from Current Book $308,513 4.25%$472,345 $336,298 4.5%$500,130 $364,083 4.75%$527,915 $391,868 5%$555,700 $419,653 5.25%$583,485 $447,438 5.5%$611,270 $475,223 5.75%$639,055 $503,008 6%$666,840 $530,793 6.25%$694,625 $558,578 6.5%$722,410 $586,363 6.75%$750,195 $614,148 7%$777,980 $641,933 7.25%$805,765 $669,718 7.5%$833,550 $697,503 7.75%$861,335 $725,288 8%$889,120 0.00% 0.40% 0.80% 1.20% 1.60% 2.00% 2.40% 2.80% 3.20% 6 Mth 1 Yr 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr 2.08% 2.23% 2.43%2.55% 2.70%2.81%2.86%2.94%3.03%Yield (%)"On The Run" Treasury Yield Curve Investment Portfolio Analysis City of La Quinta Thursday, May 31, 2018 www.1empire.com *Note: Investing in securities and CDs carries risk. Please review the risk disclosures on the last page of this document and/or at www.1empire.com/disclosures.html 10 of 14 Gap Analysis - Principal Cash Flow & Yield Roll-off $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 1 2 3 4 5 6 7 8 9 10 $11,114 $13,699 $13,146 $14,155 $7,880 $245 $0 $0 $0 $0 YearThousands ($000)+300 Bps Scenario $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 1 2 3 4 5 6 7 8 9 10 $11,114 $17,199 $11,396 $15,155 $5,130 $245 $0 $0 $0 $0 YearThousands ($000)Flat Rate Scenario $0 $4,000 $8,000 $12,000 $16,000 $20,000 $24,000 $28,000 $32,000 1 2 3 4 5 6 7 8 9 10 $28,864 $10,199 $5,646 $11,155 $4,130 $245 $0 $0 $0 $0 YearThousands ($000)-300 Bps Scenario Yield Roll-Off Year 1.47% 1 1.63% 2 1.61% 3 1.60% 4 2.51% 5 3.17% 6 0.00% 7 0.00% 8 0.00% 9 0.00% 10 Yield Roll-Off Year 1.47% 1 1.66% 2 1.71% 3 1.66% 4 2.50% 5 3.17% 6 0.00% 7 0.00% 8 0.00% 9 0.00% 10 Yield Roll-Off Year 1 1.65% 2 1.65% 3 1.87% 4 1.49% 5 2.59% 6 3.17% 7 0.00% 8 0.00% 9 0.00% 10 0.00% Investment Portfolio Analysis City of La Quinta Thursday, May 31, 2018 www.1empire.com *Note: Investing in securities and CDs carries risk. Please review the risk disclosures on the last page of this document and/or at www.1empire.com/disclosures.html 11 of 14 Interest Rate Shock Analysis - Average Life & Duration 0.00 0.40 0.80 1.20 1.60 2.00 2.40 2.80 -300 -200 -100 0 +100 +200 +300 1.65 1.65 1.94 2.36 2.43 2.48 2.48 Interest Rate Change (bps)YearsAverage Life (Yrs) 0 0.4 0.8 1.2 1.6 2 2.4 -300 -200 -100 0 +100 +200 +300 1.56 1.56 1.84 2.23 2.30 2.34 2.34 Interest Rate Change (bps)YearsModified Duration (yrs) Investment Portfolio Analysis City of La Quinta Thursday, May 31, 2018 www.1empire.com *Note: Investing in securities and CDs carries risk. Please review the risk disclosures on the last page of this document and/or at www.1empire.com/disclosures.html 12 of 14 Interest Rate Shock Analysis - Market Price -8% -6% -4% -2% 0% 2% 4% 6% -300 -200 -100 0 +100 +200 +300 5.40% 3.76% 2.10% 0.00% -2.23% -4.42% -6.55% Interest Rate Change (bps)Percent (%)Market Price Change (%) $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 -300 -200 -100 0 +100 +200 +300 $62,216 $61,248 $60,270 $59,028 $57,713 $56,420 $55,162 Interest Rate Change (bps)AmountEstimated Market Value ($) Investment Portfolio Analysis City of La Quinta Thursday, May 31, 2018 www.1empire.com *Note: Investing in securities and CDs carries risk. Please review the risk disclosures on the last page of this document and/or at www.1empire.com/disclosures.html 13 of 14 A Glossary of financial terms can be found For additional information detailing these risks please click , or visit www.1empire.com/disclosures.html Disclosures: Investment Portfolio Analysis Prepared on: May 31, 2018 Investment Portfolio data provided by: City of La Quinta Investment analytics and forecasts: Interactive Data's BondEdge software and/or Bloomberg LLC. When executing a sell-buy transaction, the sale may result in a capital gain or loss. Once the replacement security has been purchased, the subsequent sale of that security prior to its maturity may cause an additional capital gain or loss, and may influence performance and total return of the transaction. Before executing any transaction, the investor should understand all of the relevant risks associated with the transaction. Investing in securities contains risks, including but not limited to market risk, interest rate risk, prepayment/extension risk, and credit risk. For all types of debt securities, the sale prior to maturity may cause a principal gain or loss. Interest Rate Risk/Market Risk: The market price of the securities may move higher or lower depending on the prevailing market conditions and interest rates. The market value of debt securities will be inversely affected by movements in interest rates. When interest rates increase, market prices of existing securities will fall as these securities become less attractive to investors when compared to higher coupon new issues. When interest rates decrease, market prices on existing securities tend to increase because these securities become more attractive when compared to newly issued bonds with lower coupon rates. Sale of the bonds prior to maturity may cause a principal gain or loss. Credit Risk: Credit Risk is the ability or perceived ability of the issuer of a debt security to make all principal and interest payments, in full, and on time. In addition, changes in the law or regulations or the upgrade or downgrade of the issuer’s credit rating or other financial disclosures may have an impact on the market price of the bonds in the market. Sale of the bonds prior to maturity may cause a principal gain or loss. Prepayment Risk: For securities purchased at a premium (e.g. the price paid for the security was higher than the principal value), the risk that the principal will be paid back to the investor faster than expected which will result in a yield to maturity lower than expected. For amortizing investments: o If actual prepayment speeds are faster than projected prepayment speeds, there will be a shorter average life and a decrease in the yield to maturity. o If actual prepayment speeds are slower than projected prepayment speeds, there will be a longer average life and an increase in the yield to maturity. Generally, prepayment speeds on amortizing securities tend to accelerate in a declining interest rate environment. The payment of principal before it is expected may cause the reinvestment into a lower interest rate environment. Extension Risk: For securities purchased at a discount (e.g. the price paid for the security was lower than the principal value), the risk that the principal will be paid back to the investor slower than expected which will result in a yield to maturity lower than expected. For amortizing investments: o If actual prepayment speeds are faster than projected prepayment speeds, there will be a shorter average life and an increase in the yield to maturity. o If actual prepayment speeds are slower than projected prepayment speeds, there will be a longer average life and a decrease in the yield to maturity. Generally, prepayment speeds on amortizing securities tend to decelerate in a rising interest rate environment. The payment of principal later than expected may reduce the opportunity for reinvestment into a higher interest rate environment. Risk Disclosures: Source for data: Headquarters:100 Motor Parkway, Second Floor, Hauppauge, NY 11788-5157 Toll Free: (800)645-5424 Tel: 631-979-0097 Fax: 631-979-0448 www.1empire.com Contact Information: The projections generated by this model are hypothetical in nature and do not reflect actual investment results and are not guarantees of future results. Parts of this analysis are based on assumptions, which we believe to be reasonable and supportable; however future events may influence actual results. The information contained in this document has been obtained from sources we believe to be reliable however we do not guarantee it is accurate or complete. This document is not and should not be construed as an offer to buy or sell any security or securities. From time to time officers and/or employees of the firm or the firm itself holds a position in the securities referenced herein and/or acts as principal in the transactions referred to herein. This information is subject to change without notice. First Empire Securities, Inc., member FINRA and SIPC. here here. www.1empire.com 14 of 14