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HomeMy WebLinkAboutMinutes - Finance Commmitee 02/11/2020. MINUTES ADJOURNED MEETING OF THE PALM DESERT FINANCE COMMITTEE Tuesday, February 11, 2020 CALL TO ORDER Chairman Leo called the meeting to order at 2:00 p.m. Committee Members: Robert Leo, Chair Gina Nestande, Mayor Kathleen Kelly, Mayor Pro -Temp ,-)LC Absent: Karen Alexander, Member Russell Campbell, Vice -Chair Also Present: Guests: Janet M. Moore, Director of Finance Kirk Hamblin, Lance. Soil & Lunghard Jose Luis Espinoza, Assistant Finance Director Anthony Hernandez, Senior Financial Analyst Thomas Metz, Deputy City Treasurer Derek White, General Manager - Desert Willow Golf Resort Jared Burns, Controller — Desert Willow Golf Resort Patty Leon, Recording Secretary Jessika Peltz. Office Specialist I II. ORAL COMMUNICATIONS III. APPROVAL OF MINUTES A. MINUTES OF THE MEETING OF NOVEMBER 26, 2019 MOTION was made by Member Kelly to approve the Minutes of the regular meeting of the Palm Desert Finance Committee held on November 26, 2019. Motion was seconded by Member Nestande and carried by a 3-0 vote, AYES: Kelly, Nestande, and Leo; NOES: None; ABSENT: Alexander and Campbell. IV. NEW BUSINESS A. REPORT ON CITY INVESTMENT SCHEDULE AND SUMMARY OF CASH FOR NOVEMBER AND DECEMBER 2020 Mr. Thomas Metz provided a summary of December's report. FINANCE COMMITTEE MINUTES FEBRUARY 11, 2020 MOTION was made by Member Nestande to recommend that the City Council receive and file the City Investment Schedule and Summary of Cash Reports for November and December 2019. Motion was seconded by Member Kelly and carried by a 3-0 vote, AYES: Kelly, Nestande, and Leo; NOES: None; ABSENT: Alexander and Campbell. B. STATEMENTS FOR LOCAL AGENCY INVESTMENT POOL ACCOUNT FOR NOVEMBER AND DECEMBER 2019 Mr. Thomas Metz commented that there were no significant changes to the accounts during the period. MOTION was made by Member Kelly to receive and file the reports for Local Agency Investment Fund (LAIF), California Asset Management Program (CAMP), and Riverside County Investment Pool for November and December 2019. Motion was seconded by Member Nestande and carried by a 3-0 vote, AYES: Kelly, Nestande, and Leo; NOES: None; ABSENT: Alexander and Campbell. C. FINANCIAL REPORT FOR CITY OF PALM DESERT THROUGH DECEMBER 2019 Mrs. Janet Moore provided an overview of the reports, stating that the City is on target compared with prior year. There was a decline in TOT primarily due to short-term rentals (STR); it is unclear if this is a result of the elimination of STR's in the R1 and R2 zones because the elimination took effect January 1 and knowing that they were not allowed after that date there may have been some short-term rentals that were not active in December. With regard to sales tax, Mrs. Moore noted that she is closely watching the allocation from the County's pool with regard to the South Dakota v. Wayfair Inc. (Wayfair) decision. The State took an action that sets certain thresholds for which retailers are affected so we don't know how that will affect what the City of Palm Desert receives. Member Nestande asked about online purchases such as Amazon and how those purchases play into the Wayfair decision. Mrs. Moore replied that Amazon is located in California therefore sales tax is collected for online purchases already. The Wayfair decision impacts online retailers located in other states. These retailers now will have to collect sales tax on sales made by purchasers in California. Member Kelly asked about the emergency services cost recovery. K FINANCE COMMITTEE MINUTES FEBRUARY 11, 2020 Mrs. Moore replied that the report shows expenditures and revenue in the Fire Fund. However, if there is a shortfall transfers would be done at the end of the year. The City was been conservative in its expectations for recovery and is currently above those projections. Staff will bring back a current update on the emergency services cost recovery at the next meeting. Member Leo asked if iHub was funded by the General Fund. Mrs. Moore stated that monies were set aside from the General Fund for tenant improvements to develop and open the iHub. The iHub is nearing completion and is expected to open soon. Staff will ask the Director of Economic Development Martin Alvarez to take pictures upon its completion to show the Finance Committee at a future meeting. MOTION was made by Member Kelly to receive and file the financial report for the City of Palm Desert through December 2019. Motion was seconded by Member Nestande and carried by a 3-0 vote, AYES: Kelly, Nestande, and Leo; NOES: None; ABSENT: Alexander and Campbell. D. FINANCIAL REPORT FOR PARKVIEW PROFESSIONAL OFFICE BUILDINGS FINANCIAL REPORT THROUGH DECEMBER 2019 Mr. Hernandez provided a summary of the report through December 2019. Member Kelly asked about tenant improvement expenses. Staff explained that there have been delays in tenant improvements especially at the State Department Office, which includes ADA improvements as well. Staff anticipates a significant amount to be spent on tenant improvements over the next few months. MOTION was made by Member Nestande to receive and file the financial report for the Parkview professional office buildings through December 2019. Motion was seconded by Member Kelly and carried by a 3-0 vote, AYES: Kelly, Nestande, and Leo; NOES: None; ABSENT: Alexander and Campbell. E. FINANCIAL REPORT ON DESERT WILLOW GOLF RESORT THROUGH DECEMBER 2019 Mr. Derek White provided a summary of operations through December 2019, stating green fees had dropped during the month of December due to rain. Labor costs are slightly over budget due to minimum wage increase. 3 FINANCE COMMITTEE MINUTES FEBRUARY 11, 2020 MOTION was made by Member Kelly to receive and file the financial report for the Desert Willow Golf Resort through December 2019. Motion was seconded by Member Nestande and carried by a 3-0 vote, AYES: Kelly, Nestande, and Leo; NOES: None; ABSENT: Alexander and Campbell. F. REPORT ON THE PALM DESERT RECREATIONAL FACILITIES CORPORATION AUDITED FINANCIAL REPORTS FOR THE FISCAL YEAR ENDED JUNE 30, 2019 Mr. Luis Espinoza introduced Mr. Kirk Hamblin with Lance, Soll & Lunghard, LLP (LSL). Mr. Hamblin stated LSL performed audits of the financial statements for the Palm Desert Recreational Facilities Corporation and the City of Palm Desert's Comprehensive Annual Financial Report for the fiscal year ended June 30, 2019. Mr. Hamlin provided a detailed explanation of the responsibilities of LSL that included an assessment of procedures in accordance with accounting principles accepted in the United States. Mr. Hamlin referenced a letter from LSL on page 17 and 18 of the report that discloses any internal deficiencies or issues with internal controls over the financial reporting and compliance as well as the results of the audit. Mr. Hamlin concluded there were no findings in the audits performed. Member Nestande congratulated the Finance Department. MOTION was made by Member Kelly to recommend that the City Council receive and file the Palm Desert Recreational Facilities Corporation audited financial reports for the fiscal year ended June 30, 2019. Motion was seconded by Member Nestande and carried by a 3-0 vote, AYES: Kelly, Nestande, and Leo; NOES: None; ABSENT: Alexander and Campbell. G. REPORT ON THE INDEPENDENT ACCOUNTS' REPORT ON AGREED - UPON PROCEDURES PERFORMED ON THE MEASURE A TRANSPORTATION FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2019 Mr. Luis Espinoza reported that the audit for Measure A is done by the Riverside County Transportation Commission (RCTC) and they hire their own auditors. The audit is a review of expenditures, revenues, and cash balance. 4 FINANCE COMMITTEE MINUTES FEBRUARY 11, 2020 MOTION was made by Member Kelly to recommend that the City Council receive and file the Independent Accounts' Reports on Agreed -upon Procedures Performed on the Measure A Transportation Fund for the fiscal year ended June 30, 2019. Motion was seconded by Member Nestande and carried by a 3-0 vote, AYES: Kelly, Nestande, and Leo; NOES: None; ABSENT: Alexander and Campbell. H. REPORT ON THE CITY OF PALM DESERT AUDITED FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2019 Mr. Luis Espinoza provided a brief overview of the financial statements, stating that the Comprehensive Annual Financial Report (CAFR) has a lot of information in it and is often not easy to understand. He noted that he would be reviewing some pages that are often of interest to the public and started by referencing the Statement of Net Position, which outlines government and department activities. Mrs. Janet Moore stated that back in 1986 the City of Palm Desert loaned the former redevelopment agency $6 million for various purposes including land acquisitions. When the former redevelopment agency was dissolved, the legislation did not allow loans between the City and former agency to be considered enforceable obligations. The State of California's Department of Finance (DOF) revisited this issue in subsequent legislation and re -instituted some of these types of loans. The City was required to provide extensive proof that these loans existed, however, because of the age of the transaction, records in the City's Finance Department showed the loans on the books but not an actual document showing the cash movement from one entity to the other. Consequently, the DOF did not allow the loan to be added as an enforceable obligation. In the interest of transparency, the Finance Department wanted to make sure that while we still believe these monies are owed to the City, there is a possibility that the City may not receive these monies back; therefore, the CAFR notes this and an entry was recorded for a doubtful account. Upon question, Mrs. Moore reported that there were five loans outstanding. Four of the five loans were accepted by the DOF and the City will receive a total of approximately $20 million including interest. Member Nestande asked if there was a possibility of finding such a document showing the outstanding loan. Mrs. Moore replied that the Finance Department continues diligently to look for any record concerning the loan. Mr. Espinoza summarized the General Fund Reserve Fund highlighting the fund balances. He noted that funds in the nonspendable and restricted category cannot be moved. The City Council can take action to change funds in the committed category. If they are assigned, the City Manager can take action to move the monies based on the City's needs. 5 FINANCE COMMITTEE MINUTES FEBRUARY 11, 2020 At this time, Mrs. Moore highlighted that the City of Palm Desert received the award of excellence in financial reporting from the Government Finance Officers Association. This award has been presented to the City for the last 22 consecutive years. MOTION was made by Member Kelly to recommend that the City Council receive and file the audited Comprehensive Annual Financial Report for the fiscal year ended June 30, 2019. Motion was seconded by Member Nestande and carried by a 3-0 vote, AYES: Kelly, Nestande, and Leo; NOES: None; ABSENT: Alexander and Campbell. V. CONTINUED BUSINESS None. VI. OLD BUSINESS None. Vll. INFORMATIONAL ITEMS A. COMMITTEE MEMBER COMMENTS B. REQUEST TO ADD POTENTIAL ITEMS TO UPCOMING AGENDA Committee to review the Investment Policy revisions. VIII. ADJOURNMENT The meeting was adjourned at 2:53 p.m. to the next regular meeting of March 24, 2020. Respectfully submitt PattN.n. cording Secretary 0