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HomeMy WebLinkAboutMintues - Finance Committee 09/24/2019MINUTES REGULAR MEETING OF THE PALM DESERT FINANCE COMMITTEE Tuesday, September 24, 2019 CALL TO ORDER Chairman Leo called the meeting to order at 10:00 a.m. Committee Members: Absent. - Karen Alexander, Member Russell Campbell, Vice -Chair Robert Leo, Chair Susan Marie Weber, Mayor Gina Nestande, Mayor Pro -Temp Also Present: Guests: Lauri Aylaian, City Manager Oscar Armijo-Armijo & Associates Janet M. Moore, Director of Finance Jose Luis Espinoza, Assistant Finance Director Anthony Hernandez, Senior Financial Analyst Thomas Metz, Deputy City Treasurer Patty Leon. Recording Secretary Eric Ceja, Principal Planner Derek White, Desert Willow Golf Resort II. ORAL COMMUNICATIONS A. Director of Finance, Janet Moore, announced that Niamh Ortega accepted a position in the City Council office and will no longer be the recording secretary for this Committee. Patty Leon was introduced as the recording secretary and the point of contact for this Committee. Mrs. Moore noted that Mr. Russell Campbell is the Vice -Chair and the minutes will be revised to reflect his title. III. APPROVAL OF MINUTES A. MINUTES OF THE MEETING OF MAY 28, 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 May 28, 2019 with a correction to reflect Russell Campbell as Vice -Chair. Motion was seconded by Member Alexander and carried by a 5-0 vote, with Alexander, Campbell, Nestande, Weber and Leo voting AYE. FINANCE COMMITTEE MINUTES IV. NEW BUSINESS SEPTEMBER 24, 2019 A. REPORT ON CITY INVESTMENT SCHEDULE AND SUMMARY OF CASH THROUGH AUGUST 2019 Mr. Thomas Metz provided a summary of the current report, highlighting that the City's book value for the period ended August 30, 2019 was approximately $256.6 million, and the yield -to -maturity was 2.1 %. Mr. Metz reported the City's investment portfolio is laddered out for 2 to 3 years to mitigate the possibility of negative interest due to the events happening in both Europe and Japan. Mr. Metz stated that the economy is expected to grow by 1.7% in 2020 and 1.9% in 2021. He noted that the largest generation in history is retiring and many of those will start buying bonds driving yields lower. Member Weber asked about negative interest. Mrs. Moore stated that negative interest is when banks charge more fees to hold monies in accounts then is received in interest earnings. Member Nestande concurred. MOTION was made by Member Campbell to recommend that the City Council receive and file the City Investment Schedule and Summary of Cash Reports through August 2019. Motion was seconded by Member Alexander and carried by a 5-0 vote, with Alexander, Campbell, Nestande, Weber and Leo voting AYE. B. STATEMENTS FOR LOCAL AGENCY INVESTMENT POOL ACCOUNT THROUGH AUGUST 2019 Mr. Metz reported no significant changes to CAMP, LAIF or Riverside County accounts. MOTION was made by Member Alexander to receive and file the reports for Local Agency Investment Fund (LAIF), California Asset Management Program (CAMP), and Riverside County Investment Pool through August 2019. Motion was seconded by Member Campbell and carried by a 5-0 vote, with Alexander, Campbell, Nestande, Weber and Leo voting AYE. C. FINANCIAL REPORT FOR CITY OF PALM DESERT THROUGH AUGUST 2019 Mrs. Moore referenced the August report and stated that there is not much to report since revenues and expenditures are limited at this point in the fiscal year. 2 FINANCE COMMITTEE MINUTES SEPTEMBER 24, 2019 A revised June report was distributed to the Committee which shows updates based on entries made after the packets were mailed. She reported that actual revenue for FY 2018-19 increased over the prior year, mostly due to sales tax, transient occupancy tax (TOT) and interest income. Sales tax collected for FY 2018-19 was approximately $21.4 million, which was significantly higher than what was budgeted. The California Department of Tax and Fee Administration (CDTFA) was slow in their reporting and allocation of sales tax to cities and as a result, approximately $1 to $1.4 million sales tax received during the FY 2018-19 was for periods outside the fiscal year. It is hard to determine exactly how much because of the way the CDTFA describes the amount on remittances. TOT also increased over the amount budgeted. When staff was preparing the budget, the elimination of short-term rentals in the R1 and R2 zones was in progress and therefore staff was conservative in growth projections. The difference from last year's actual and this year's actual is minimal, with an increase of 1.3%. It is expected that there will be an impact going forward in the FY 2019-20 year based on the elimination date set by the City Council of December 31, 2019. Mrs. Moore also stated that Mr. Metz has done a wonderful job with investments which resulted in an increase in interest revenue, by way of laddering out the portfolio with higher yielding investments. Considering that a year ago we were at $1 million she thought it was worth mentioning. MOTION was made by Member Alexander to receive and file the financial report for the City of Palm Desert through August 2019. Motion was seconded by Member Weber and carried by a 5-0 vote, with Alexander, Campbell, Nestande, Weber and Leo voting AYE. D. FINANCIAL REPORT FOR PARKVIEW PROFESSIONAL OFFICE BUILDINGS FINANCIAL REPORT THROUGH AUGUST 2019 Mr. Hernandez provided a summary of both June and August reports. Member Leo asked if the Parkview upgrades were complete. Mrs. Aylaian replied that there are still capital projects for the exterior renovation of the parking structure to complete. Member Alexander asked about occupancy at Parkview. Mr. Hernandez stated that there are no changes to the current tenant count, although Lift to Rise rented the space adjacent to their suite and Public Works is in the process of completing the tenant improvements. With regard 3 FINANCE COMMITTEE MINUTES SEPTEMBER 24, 2019 to vacancies, Mr. Hernandez noted that the vacancy rate is 8.95% at this time. Mrs. Moore noted that some time ago the Finance Department and Desert Willow began utilizing some of the suites to store financial records, given that there was not a high demand for Parkview at that time. Finance staff has done a great job in cleaning up the stored files by scanning those records. 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 Weber and carried by a 5-0 vote, with Alexander, Campbell, Nestande, Weber and Leo voting AYE. E. FINANCIAL REPORT ON DESERT WILLOW GOLF RESORT THROUGH AUGUST 2019 Mr. White provided a summary of operations through August 2019. He referenced June's report, stating the audit is still ongoing but did not expect any adjustments to the numbers on the report. He highlighted the YTD financial data. The YTD columns on the right of the report show the gross revenue surpassed the prior year's revenue, which is the second year in a row Desert Willow's revenue is in excess of 10 million dollars. Desert Willow had its first year with over $7 million in green fees. Mr. White also noted that payroll costs did increase due to the increase in minimum wage. Member Leo asked about the dining room. Mr. White stated that the dining room is doing great but there was a decline from the previous year's revenue due to the loss of a key special event staff member during the seasonal turnover of positions. Upon question, Mr. White indicated that the mid -week concerts will continue and will be calendared on Thursday nights to allow banquet functions on the weekends. Mr. White summarized August's report stating they are actually ahead of the prior year, due to green fees and a growth of other pro shop revenue. The increase in pro -shop revenue was directly related to the increased sales of the platinum cards sold, which doubled from the prior year. MOTION was made by Member Campbell to receive and file the financial report for the Desert Willow Golf Resort through August 2019. Motion was seconded by Member Alexander and carried by a 5-0 vote, with Alexander, Campbell, Nestande, Weber and Leo voting AYE. C! FINANCE COMMITTEE MINUTES V. CONTINUED BUSINESS None. Vl. OLD BUSINESS None. VII. INFORMATIONAL ITEMS SEPTEMBER 24, 2019 A. PRESENTATION RELATIVE TO CANNABIS REGULATONS AND OPERATION (ERIC CEJA, PRINCIPAL PLANNER) Eric Ceja, Principal Planner, provided a presentation relative to the Cannabis regulations and operations in the City. A brief background of the approval process was given. To date, there are five dispensaries operating with one more expected to open this fiscal year. No commercial cannabis business may operate without first obtaining a conditional use permit and a license from the State Bureau of Cannabis Control. Retailers are required to submit tax returns monthly to the City. To date; S938,000 has been collected in tax revenue from the five retailers. Mr. Oscar Armijo, Chair of the Palm Desert Recreational Facilities Corporation (PDRFC). asked if taxes are directly submitted to the City or to another entity. Mr. Luis Espinoza responded that they are submitted to the City and processed the same as the transient occupancy tax (TOT). Mr. Armijo asked if the City has a policy in place to clarify the accuracy of the reports submitted by retailers. Mr. Espinoza replied that taxes are processed the same as TOT, and the city has the authority to review the accuracy of the financial data to support the taxes submitted by each retailer. Mr. Ceja stated that Prop 64 established the Bureau of Cannabis Control to implement a track and trace system as well as develop a point of sale system where the State can monitor their activity; the track and trace system is still in the process of being developed. Mrs. Moore noted that Mr. Armijo, as well as other board members from the Palm Desert Recreational Facilities Corportation were invited to attend this meeting by Mayor Weber so the members could better understand what is reviewed each month at this meeting as it relates to the PDRFC. 5 FINANCE COMMITTEE MINUTES SEPTEMBER 24, 2019 B. COMMITTEE MEMBER COMMENTS Member Alexander commented on the vacancies on El Paseo and asked if the City has provided any assistance to businesses on El Paseo. She also inquired about the San Pablo improvements at El Paseo. Member Nestande stated that the Council is working on economic development throughout the City which includes El Paseo. San Pablo is also a long-term project with growth potential. C. REQUEST TO ADD POTENTIAL ITEMS TO UPCOMING AGENDA Mrs. Moore asked the Committee if they would like to extend an invitation to the Community Development Department to provide an update at the next meeting on the projects in Palm Desert. The Committee agreed. At this time, Member Nestande invited the Committee to attend a Study Session regarding Desert Surf Resort scheduled for the later part of October. D. STAFF NOTES Palm Desert Finance Committee Bylaws A copy of the staff report and updated bylaws, approved by the City Council, was provided to the Committee. Mrs. Moore noted that after the last Committee meeting, Member Weber retracted her request for the Mayor to appoint a member for a year. Mrs. Moore noted that all other committees have members that serve four-year terms and that since the Mayor retracted her request, the bylaws were presented to the City Council exactly as they were presented to the Committee. Member Weber mentioned applications for the City's committees and commissions are available online if anyone is interested. II. Resignation of Brian Holcombe Mr. Moore reported that Mr. Holcombe tendered his resignation. Vill. ADJOURNMENT The meeting was adjourned at 10.55 a.m 26, 2019. to the next regular meeting of November r1_1!ctfully sub it �k�j Patty Leon, flecording Secretary