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HomeMy WebLinkAboutAudit Investment and Finance Committee - 09-22-2015MINUTES REGULAR MEETING OF THE PALM DESERT AUDIT, INVESTMENT & FINANCE COMMITTEE Tuesday, September 22, 2015 — 10:00 a.m. CALL TO ORDER Chairman Gibson called the meeting to order at 10:00 a.m. ROLL CALL Present: Russ Campbell, Community Member Paul Gibson, Committee Chair/Finance Director Abram Goldman, Community Member Bob Leo, Community Member Stanley Sperling, Committee Member Robert Spiegel, Mayor Pro-Tempore Susan Marie Weber, Mayor Also Present: Jared Burns, Desert Willow Golf Resort Anthony Hernandez, Senior Financial Analyst Thomas Jeffrey, Deputy City Treasurer Niamh Ortega, Recording Secretary Derek White, Desert Willow Golf Resort III. ORAL COMMUNICATIONS None. IV. APPROVAL OF MINUTES Absent: David Erwin, City Attorney John Wohlmuth, City Manager A. MINUTES OF THE MEETING OF JULY 28, 2015 MOTION was made by Member Campbell to approve as presented the Minutes of the regular meeting of the Palm Desert Audit, Investment and Finance Committee held on July 28, 2015. Motion was seconded by Member Leo and carried by a 7-0 vote, with Campbell, Gibson, Goldman, Leo, Sperling, Spiegel and Weber voting AYE; Erwin and Wohlmuth ABSENT. INVESTMENT & FINANCE COMMITTEE MINUTES SEPTEMBER 22, 2015 V. NEW BUSINESS A. CITY INVESTMENT SCHEDULES AND SUMMARY OF CASH REPORTS FOR JULY AND AUGUST 2015 Member Jeffrey reported that the book value of the City portfolio for the period ended August 31, 2015 was approximately $202.1 million. Interest earnings were approximately $78,000. Yield -to -maturity was approximately 0.47%. MOTION was made by Member Campbell to recommend that the City Council receive and file the City Investment Schedules and Summary of Cash Reports for July and August 2015. Motion was seconded by Member Leo and carried by a 7-0 vote, with Campbell, Gibson, Goldman, Leo, Sperling, Spiegel and Weber voting AYE; Erwin and Wohlmuth ABSENT. B. LOCAL AGENCY INVESTMENT POOL ACCOUNT STATEMENTS FOR JULY AND AUGUST 2015 Chairman Gibson provided an overview of the various reports. MOTION was made by Member Weber to receive and file the reports for Local Agency Investment Fund (LAIF), California Asset Management Program (CAMP), Riverside County Investment Pool, and Rabobank Investment Pool for July and August 2015. Motion was seconded by Member Sperling and carried by a 7-0 vote, with Campbell, Gibson, Goldman, Leo, Sperling, Spiegel and Weber voting AYE; Erwin and Wohlmuth ABSENT. C. CITY FINANCIAL REPORTS FOR JULY AND AUGUST 2015 Chairman Gibson provided an overview of the reports and highlighted the activity for the month of August 2015. He noted that the sales tax increase has been minimal at 0.6% over the prior year. He highlighted that due to a software conversion, the budgeting feature only allows for an evenly distributed monthly percentage of the annual amount. This is a reporting issue which staff is working on, and hopes to have it resolved in the coming months. MOTION was made by Member Campbell to receive and file the City financial reports for July and August 2015 as presented. Motion was seconded by Member Weber and carried by a 7-0 vote, with Campbell, Gibson, Goldman, Leo, Sperling, Spiegel and Weber voting AYE; Erwin and Wohlmuth ABSENT. D. PARKVIEW PROFESSIONAL OFFICE BUILDINGS FINANCIAL REPORTS FOR JULY AND AUGUST 2015 Mr. Hernandez provided an overview of the report, and highlighted that Altum Group had expanded their office and leased an additional space at the Parkview building. Chairman Gibson mentioned that a parapet project was budgeted to mask the rooftop -mounted HVAC units. Member Spiegel asked that the artist who designed the rooftop artwork be contacted to determine if the artwork may be permanently removed. Chairman Gibson responded that staff had approached the artist when the artwork was being repainted, and he wished for it to remain per his agreement 2 INVESTMENT & FINANCE COMMITTEE MINUTES SEPTEMBER 22, 2015 with the City. Member Spiegel requested that staff reach out again and determine if this is still the artist's desire. MOTION was made by Member Sperling to receive and file the Parkview Professional Office Buildings financial reports for July and August 2015 as presented. Motion was seconded by Member Weber and carried by a 7-0 vote, with Campbell, Gibson, Goldman, Leo, Sperling, Spiegel and Weber voting AYE; Erwin and Wohlmuth ABSENT. E. PALM DESERT GOLF COURSE FACILITIES CORPORATION FINANCIAL REPORT FOR JULY AND AUGUST 2015 Mr. White provided a summary of the report and highlighted the income, expenses and overall performance for the month of August. He noted that July was a better month than August, as is typical for desert golf resorts, and he was looking forward to September and busier months ahead. Member Leo questioned an item prepared for the next Council meeting regarding the extension of a loan repayment by Kemper to the City. Member Gibson responded that the loan was originally made due to the City closing the kitchen to perform renovations, and the economy taking much longer than expected to recover. The City maintains an agreement with Kemper that includes a requirement that Kemper maintain a surplus of $500,000 in cash flow. In the event that the amount available is less than the required amount, Kemper is obligated to make up the shortfall. The City had originally taken a large portion of the profits from Kemper prior to the economy slowdown. When combined with the restaurant closure and market downturn, the resulting circumstances led to Kemper already inputting $1.4 million in addition to the $500,000 required by the City's agreement. Staff did not feel it was appropriate to request that Kemper repay the full $500,000 at this time, and recommended the five-year extension. Kemper will continue to make annual interest payments at 4% of the loan value. MOTION was made by Member Campbell to receive and file the Palm Desert Golf Course Facilities Corporation financial reports for July and August 2015 as presented. Motion was seconded by Member Sperling and carried by a 7- 0 vote, with Campbell, Gibson, Goldman, Leo, Sperling, Spiegel and Weber voting AYE; Erwin and Wohlmuth ABSENT. F. REVIEW OF AUDIT GUIDELINES AND DISCUSSION OF WORK BEING PERFORMED ON AUDIT FOR FISCAL YEAR ENDED JUNE 30, 2015 Mr. Nitin Patel, CPA, of White Nelson Diehl Evans, LLP reviewed the responsibilities, scope and timing of this year's audit. He reported that the audit is performed in accordance with GAAP (Generally Accepted Accounting Principles) and considers internal controls for the City, Palm Desert Recreational Facilities Corporation and the Housing Authority. Interim fieldwork began in June, and additional fieldwork will be completed this week. The audit should be complete by November and the final report issued in December 2015. Mr. Patel highlighted the most pertinent GASB changes for this year. Responding to question, he indicated that so far the audit looks fine, with no 3 INVESTMENT & FINANCE COMMITTEE MINUTES SEPTEMBER 22, 2015 material items to report. Mr. Gibson indicated that staff intends to request an extension to the auditors' contract for one additional year in order to allow for the transition of Finance Directors and provide an opportunity for the new Finance Director to conduct the Request for Proposals for auditing services for upcoming years. That recommendation will be brought to Council at a meeting yet to be determined. VI. CONTINUED BUSINESS None. VII. OLD BUSINESS None. Vill. INFORMATIONAL ITEMS None. IX. ADJOURNMENT MOTION was made by Member Leo to adjourn the meeting at 10:30 a.m. Motion was seconded by Member Campbell and carried by a 7-0 vote, with Campbell, Gibson, Goldman, Leo, Sperling, Spiegel and Weber voting AYE; Erwin and Wohlmuth ABSENT. Niamh Ortega, Recording tary 4