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HomeMy WebLinkAboutMinutes - Finance Committee 05/28/20195,11.E MINUTES REGULAR MEETING OF THE PALM DESERT AUDIT, INVESTMENT & FINANCE COMMITTEE Tuesday, May 28, 2019 CALL TO ORDER Chairman Leo called the meeting to order at 10:00 a.m. Present: Absent: Karen Alexander, Member Lauri Aylaian, City Manager Carlos Campos, City Attorney's Office Brian Holcombe, Member Russell Campbell, Vice -Chair Janet Moore, Finance Director Gina Nestande, Mayor Pro-Tempore (10:30 a.m.) Susan Marie Weber, Mayor Robert Leo, Chair Also Present: Stephen Aryan, Risk Manager Jared Burns, Desert Willow Golf Resort Jose Luis Espinoza, Assistant Finance Director Kirk Hamblin, Lance, Soll & Lunghard CPAs Anthony Hernandez, Senior Financial Analyst Richard K. Kikuchi, Lance, Soll & Lunghard CPAs Thomas Metz, Deputy City Treasurer Niamh Ortega, Recording Secretary II. ORAL COMMUNICATIONS A. None. III. APPROVAL OF MINUTES A. MINUTES OF THE MEETING OF MARCH 26, 2019 MOTION was made by Member Weber to approve the Minutes of the regular meeting of the Palm Desert Audit, Investment and Finance Committee held on March 26, 2019. Motion was seconded by Campbell carried by a 6-0 vote, with Alexander, Campbell, Campos, Moore, Weber and Leo voting AYE; Aylaian, Holcombe and Nestande ABSENT. INVESTMENT & FINANCE COMMITTEE MINUTES IV. NEW BUSINESS MAY 28, 2019 A. REPORT ON CITY INVESTMENT SCHEDULE AND SUMMARY OF CASH THROUGH APRIL 2019 Mr. Thomas Metz provided a summary of the report, highlighting that the City's book value for the period ended April 30, 2019 was $257 million, and the yield - to -maturity rate was 2.4%. He noted that a revised February statement for the Housing Authority was included with the reports, stating that the corrected version of the report has been provided to Council. MOTION was made by Member Campbell to recommend that the City Council receive and file the City Investment Schedule and Summary of Cash Report through April 2019. Motion was seconded by Member Weber and carried by a 6-0 vote, with Alexander, Campbell, Campos, Moore, Weber and Leo voting AYE; Aylaian, Holcombe and Nestande ABSENT. B. STATEMENTS FOR LOCAL AGENCY INVESTMENT POOL ACCOUNT THROUGH APRIL 2019 Mr. Metz reported that CAMP basis points are ahead of LAIF at this time. MOTION was made by Member Weber to receive and file the reports for Local Agency Investment Fund (LAIF), California Asset Management Program (CAMP), and Riverside County Investment Pool through April 2019. Motion was seconded by Member Campbell and carried by a 6-0 vote, with Alexander, Campbell, Campos, Moore, Weber and Leo voting AYE; Aylaian, Holcombe and Nestande ABSENT. C. FINANCIAL REPORT FOR CITY OF PALM DESERT THROUGH APRIL 2019 Member Moore stated that the City is currently on track, if not slightly ahead, of prior year to date. Sales tax shows an increase, although she cautioned that this could be due to a change in CDTFA reporting as opposed to the Board of Equalization. Transient occupancy tax shows a slight increase. TOT earned through the festival period is not reflected on the April report. Operators are due to remit the tax by the end of May for April, so it will shown on the next report. MOTION was made by Member Campbell to receive and file the financial report for the City of Palm Desert through April 2019. Motion was seconded by Member Weber and carried by a 6-0 vote, with Alexander, Campbell, Campos, Moore, Weber and Leo voting AYE; Aylaian, Holcombe and Nestande ABSENT. K INVESTMENT & FINANCE COMMITTEE MINUTES MAY 28, 2019 D. FINANCIAL REPORT FOR PARKVIEW PROFESSIONAL OFFICE BUILDINGS FINANCIAL REPORT THROUGH APRIL 2019 Mr. Hernandez provided a summary of the report. He highlighted that Suite 116 has been leased and the tenant is expected to move in June 2019. MOTION was made by Member Campbell to receive and file the financial report for the Parkview professional office buildings through April 2019. Motion was seconded by Member Alexander and carried by a 6-0 vote, with Alexander, Campbell, Campos, Moore, Weber and Leo voting AYE; Aylaian, Holcombe and Nestande ABSENT. E. FINANCIAL REPORT ON DESERT WILLOW GOLF RESORT THROUGH APRIL 2019 Mr. Burns provided a summary of operations through April 2019. He highlighted that revenue is ahead of budget and prior year, and payroll is slightly less than budgeted, although it is approximately $150,000 higher than prior year. Responding to question, he indicated that the majority of the change over prior year is due to the increase in minimum wage. MOTION was made by Member Campbell to receive and file the financial report for the Desert Willow Golf Resort through April 2019. Motion was seconded by Member Alexander and carried by a 6-0 vote, with Alexander, Campbell, Campos, Moore, Weber and Leo voting AYE; Aylaian, Holcombe and Nestande ABSENT. F. PRESENTATION RELATIVE TO THE AUDIT FOR THE FISCAL YEAR ENDING JUNE 30, 2019 Mr. Richard K. Kikuchi introduced himself and Kirk Hamblin, both with Lance, Soll & Lunghard CPAs. He informed the Committee that the firm is currently in the planning stages of the audit for the fiscal year ending June 30, 2019. He stated that this is a great opportunity to meet with officials regarding the audit and asked for input from members as they begin the audit. Mr. Kikuchi shared that his staff conducted interim procedures in April 2019. and reviewed the City's investment policy and spoke to various employees regarding the City's policies and procedures. His staff will be back at City Hall on September 30 for approximately two weeks in order to conduct the account analysis and test work so that the firm can render an opinion on the City's audit. He concluded that everything is going smoothly at this point, and invited feedback from Committee members. 3 INVESTMENT & FINANCE COMMITTEE MINUTES MAY 28, 2019 Member Moore added that Committee members may contact the auditing firm directly if they choose, noting that they are welcome to bring up any concerns they may have regarding the City's practices or operations. The auditors' contact information is available should anyone wish to receive it. G. REPORT RELATIVE TO THE AUDIT OF TRANSIENT OCCUPANCY TAX OPERATORS Mr. Jose Luis Espinoza noted that five hotel operators were audited to determine if they were following the correct procedures for collecting TOT. He noted that there were no significant findings. Mr. Kikuchi added that it is a good practice for the City to perform such an audit, regardless of whether there are findings. MOTION was made by Member Campbell to recommend that the City Council receive and file the report relative to the audit of Transient Occupancy Tax operators. Motion was seconded by Member Weber and carried by a 6-0 vote, with Alexander, Campbell, Campos, Moore, Weber and Leo voting AYE; Aylaian, Holcombe and Nestande ABSENT. H. REVIEW OF PROPOSED BYLAWS FOR THE AUDIT, INVESTMENT AND FINANCE COMMITTEE Mr. Metz provided some background information on the Committee since its inception, and how it has evolved to reach its current member composition. He noted that staff is requesting that the name be changed to Finance Committee, that staff be removed as voting members, and that the number of public members be increased to allow up to five members to serve. Member Moore added that she would like to keep this Committee as a true citizens' advisory committee, and that she would prefer that the members of the public rather than staff be voting members. She also noted that the public members could be increased or decreased, depending on the City Council's preference. Mr. Metz also pointed out that staff recommends the current rotation of Mayor and Mayor Pro-Tem be continued so that all Council members have the opportunity to be knowledgeable about the City's finances. Member Weber stated that Council has been selecting four community members to serve on the committee. She noted that she has heard various comments in support of appointing a particular Council member to the committee, and she is in favor of the rotation so that every Council member can learn and understand the financial activity taking place. 0 INVESTMENT & FINANCE COMMITTEE MINUTES MAY 28, 2019 Member Weber asked if staff could look into having one of the community members appointed directly by the Mayor for a period of one year. Member Campbell asked if this person would be a voting member, to which Member Weber confirmed. Member Moore asked if any other committees were structured to allow one Council member to appoint members in this manner. Member Weber responded that in her research she has not found any other committees established this way, although other cities allow the mayor to appoint people directly to committees without input from the rest of Council. Member Moore offered to research this suggestion further with the City Clerk to determine how that could be structured going forward. Chair Leo stated that he felt that Member Weber was raising a question regarding continuity. The by-laws allow for staggered four-year terms, so all members typically serve for their full term. Member Weber's suggestion would see a mayor's appointee serving for only one year unless the Mayor Pro-Tem elected to retain the same appointee for another one-year term. Member Campbell stated a concern regarding whether or not that person would be a sworn member similar to those already serving on the Committee. Member Weber indicated that staff should research how this would work for a one-year term. Member Moore asked if the majority of the Committee would like staff to further research the proposed Mayor's appointee. She asked if the Committee wanted to postpone this item until Member Weber's suggestion could be evaluated. Member Moore stated that there may be some complexities that need to be explored. Several variations of a motion were discussed, and Member Nestande joined the meeting during the formation of the motion. Member Weber asked for a recap on the discussion for the benefit of Member Nestande. Member Moore asked Member Nestande if she needed any additional information prior to voting, and Member Nestande responded that she was clear on the item. It was the consensus of the Committee to direct staff to conduct additional research and evaluation but that the bylaws could move forward as presented and staff could report back to the Committee at the next meeting. 5 INVESTMENT & FINANCE COMMITTEE MINUTES V. CONTINUED BUSINESS None. VI. OLD BUSINESS None. VII. INFORMATIONAL ITEMS MAY 28, 2019 A. PRESENTATION RELATIVE TO COST RECOVERY FOR EMERGENCY SERVICES (STEPHEN ARYAN, RISK MANAGER) Mr. Stephen Aryan introduced himself and indicated that part of his responsibility is to oversee public safety and fire contracts. He provided a brief overview of the fire protection service tax that is placed on a resident's property tax bill. In 2017, one of the City Council's goals was to initiate a cost recovery program to recoup the costs for ambulance services. The tax revenues collected do not cover the costs incurred to provide these services. Staff has worked over the past two years to put a program in place with Wittman, a third -party vendor, to bill the insurance companies and recover costs. For this fiscal year, the Finance department estimated approximately $1.2 million in revenues through this program, and in the last week exceeded that estimate by approximately $200,000. One of the most important parts of the program is the write-off policy. One Page 2 there is a copy of the fee schedule and the write-off policy. Mr. Aryan stressed that Palm Desert does not pursue any outstanding payments through collections. There was discussion surrounding the definition of residents vs. non- residents, and Chair Leo indicated that there are numerous issues in the City's HOAs as to whether a renter is a resident, and what information should be required for residency. Mr. Aryan stated that the intent is just to collect from the insurance companies, not be punitive towards its citizens. Member Nestande highlighted that there is a potential issue with nursing homes utilizing emergency services for non -emergency circumstances. Mr. Aryan responded that there has been some discussion regarding this issue at the staff level, although it is outside the realm of this presentation. n. INVESTMENT & FINANCE COMMITTEE MINUTES MAY 28, 2019 Mr. Aryan concluded that staff has brought in a program to recover costs that will annually increase revenue without negatively affecting the residents of Palm Desert. Chair Leo asked if the information relative to clients or patients would be subject to the Freedom of Information Act, and Member Moore responded that only certain information is received by the City sufficient to conduct the billing. The information is considered confidential and is therefore not a public record. B. COMMITTEE MEMBER COMMENTS Member Moore noted that the Committee schedule is to meet at least once a quarter, and has been meeting every other month. A few members have indicated that they will not be able to attend the July 23 committee meeting. She indicated that there may not be a quorum and asked if other committee members had a preference on meeting in July. Following discussion, Member Moore shared that committee meeting schedules are usually predetermined so as to avoid conflicts with other meetings and to ensure there is a meeting space available. Additionally, since staff will be working on year-end reports, there will be limited information provided, particularly should the Committee wish to move the meeting date forward by one week. She asked if the meeting of July 23 should be adjourned to the next regular meeting on September 24, 2019. Member Nestande indicated that she would prefer to meet in September rather than July. The Committee as a whole agreed. C. REQUEST TO ADD POTENTIAL ITEMS TO UPCOMING AGENDA None. Vill. ADJOURNMENT The meeting was adjourned at 10.55 a.m. to the next regular meeting of September 24, 2019. Respectfully submitted, Polt'i Niamh Ortega, Pecording Secretary 7