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HomeMy WebLinkAbout2018-05-22 FC Regular Meeting Minutes I. CALL TO ORDER Chairman Leo called the meeting to order at 10:00 a.m. II. ROLL CALL Present: Absent: Lauri Aylaian, City Manager Russell Campbell, Community Member Robert Hargreaves, City Attorney Brian Holcombe, Community Member Kathleen Kelly, Council Member Janet Moore, Finance Director Stanley Sperling, Committee Member Susan Marie Weber, Mayor Pro-Tempore Robert Leo, Chair Also Present: Jared Burns, Desert Willow Golf Resort Jose Luis Espinoza, Assistant Finance Director Anthony Hernandez, Senior Financial Analyst Richard K. Kikuchi, Lance, Soll & Lunghard, LLP Thomas Metz, Deputy City Treasurer Miriam Miller, Office Assistant II Niamh Ortega, Recording Secretary Ryan Stendell, Director of Community Development Derek White, Desert Willow Golf Resort Brandon Young, Lance, Soll & Lunghard, LLP III. ORAL COMMUNICATIONS None. MINUTES REGULAR MEETING OF THE PALM DESERT AUDIT, INVESTMENT & FINANCE COMMITTEE Tuesday, May 22, 2018 INVESTMENT & FINANCE COMMITTEE MINUTES MAY 22, 2018 G:\Finance\Niamh Ortega\Investment Committee\2018\Minutes 052218.docx 2 IV. APPROVAL OF MINUTES A. MINUTES OF THE MEETING OF MARCH 27, 2018 MOTION was made by Member Sterling to approve the Minutes of the regular meeting of the Palm Desert Audit, Investment and Finance Committee held on March 27, 2018. Motion was seconded by Member Aylaian and carried by a 9-0 vote, with Aylaian, Campbell, Hargreaves, Holcombe, Kelly, Moore, Sperling, Weber and Leo voting AYE. V. NEW BUSINESS A. REPORT ON CITY INVESTMENT SCHEDULE AND SUMMARY OF CASH FOR MARCH AND APRIL 2018 Mr. Metz that for the month ended April 30, 2018, the City’s book value was $189.4 million. The rate of return was approximately 1.7% and the monthly earnings were approximately $257,000. Mr. Metz highlighted various purchases of commercial paper. The income portfolio book value was $82.6 million. The rate of return was approximately 1.7%, and the investment income was $116,000. There was a return of 2.2% on medium term investments. MOTION was made by Member Sperling to recommend that the City Council receive and file the City Investment Schedule and Summary of Cash Report for the months of March and April 2018. Motion was seconded by Member Campbell and carried by a 7-0 vote with Campbell, Holcombe, Kelly, Moore, Sperling, Weber and Leo voting AYE. Aylaian and Hargreaves ABSENT. B. STATEMENTS FOR LOCAL AGENCY INVESTMENT POOL ACCOUNT THROUGH APRIL 2018 Mr. Metz provided an overview of local agency investment activity and explained the purpose of each of the accounts. MOTION was made by Member Campbell to receive and file the reports for Local Agency Investment Fund (LAIF), California Asset Management Program (CAMP), and Riverside County Investment Pool through April 2018. Motion was seconded by Member Sperling and carried by a 8-0 vote with Campbell, Hargreaves, Holcombe, Kelly, Moore, Sperling, Weber and Leo voting AYE. Aylaian ABSENT. INVESTMENT & FINANCE COMMITTEE MINUTES MAY 22, 2018 G:\Finance\Niamh Ortega\Investment Committee\2018\Minutes 052218.docx 3 C. FINANCIAL REPORT FOR CITY OF PALM DESERT THROUGH APRIL 2018 Ms. Moore distributed a summary of sales tax received by category of stores physically located in Palm Desert. She reported that sales tax revenue is not robust but it is growing. She noted that State is very slow to remit payment to the City, so actual revenue is slowly catching up to estimated amounts. Since the remittances are almost three months behind the City does not receive the revenue from its largest sales months until July and August. On the expenditure side, public safety is typically several months behind in billing the City. Member Holcombe noted that it is difficult to tell if there are any areas of concern because payments seem to be sporadic. Councilmember Kelly asked for clarification of the year-to-date figure reported for public services on the reports. Mr. Hernandez responded that one is a straight-line budget, taking the full budgeted amount and dividing by 12 for a monthly budget. The other is a comparison to prior year, and explained that a payment arriving on April 30 would be included in April’s total, whereas one received on May 1 would be accounted for in the May report. Mr. Espinoza added that staff is continually analyzing the payments received to ensure that the City is on track and not missing payments. MOTION was made by Member Holcombe to receive and file the financial report for the City of Palm Desert through April 2018. Motion was seconded by Member Campbell and carried by a 8-0 vote with Campbell, Hargreaves, Holcombe, Kelly, Moore, Sperling, Weber and Leo voting AYE. Aylaian ABSENT. D. FINANCIAL REPORT FOR PARKVIEW PROFESSIONAL OFFICE BUILDINGS THROUGH APRIL 2018 Mr. Hernandez provided a summary of the revenue and expenses for the Parkview buildings. He stated that two leases would be presented for Council consideration later in the week, one for a current tenant and the other for a new tenant. MOTION was made by Member Campbell to receive and file the financial report for the Parkview professional office buildings through April 2018. Motion was seconded by Member Moore and carried by a 8-0 vote with Campbell, Hargreaves, Holcombe, Kelly, Moore, Sperling, Weber and Leo voting AYE. Aylaian ABSENT. E. FINANCIAL REPORT FOR DESERT WILLOW GOLF RESORT THROUGH APRIL 2018 Mr. White reported that Desert Willow has beaten the all-time record for revenues with five weeks still remaining in the fiscal year. He summarized INVESTMENT & FINANCE COMMITTEE MINUTES MAY 22, 2018 G:\Finance\Niamh Ortega\Investment Committee\2018\Minutes 052218.docx 4 the revenues and expenses highlighted on the monthly report, and attributed the increase in revenue to the team’s hard work, dynamic pricing and new programs that work with the existing economy. Additionally, December and January’s weather was outstanding with the least number of frost days staff has recorded. Chairman Leo questioned why resident rounds have decreased. Mr. White answered that in the high season there is more demand for loyalty programs and public play which results in less booking opportunities for resident rates. He reminded the Committee that residents currently receive a rate that is extremely discounted from fair market value but the window is limited. A task force was formed to review this issue and there has been a great deal of discussion regarding resident rates and accessibility as staff and task force members work to determine the right balance. Councilmember Kelly pointed out that no decisions have been made, and it has not yet been taken to Council for consideration. MOTION was made by Member Sperling to receive and file the financial report for the Desert Willow Golf Resort through April 2018. Motion was seconded by Member Campbell and carried by an 8-0 vote with Campbell, Hargreaves, Holcombe, Kelly, Moore, Sperling, Weber and Leo voting AYE. Aylaian ABSENT. VI. CONTINUED BUSINESS A. DISCUSSION RELATIVE TO ADDITIONAL AUDIT PROCEDURES PRICING AND SAMPLES Mr. Richard Kikuchi introduced Mr. Brandon Young who assists with the City’s audit. He reported that there was some interest during the 2017 audit for additional work to be conducted to provide another level of assurance that appropriate checks and balances are in place at the City. He presented a compilation of additional procedures that are most commonly requested by other cities, and requested feedback regarding areas that are of interest or if there are other risk areas that the City would like to explore. Ms. Moore recalled the discussion from the prior Audit, Investment & Finance Committee where the Committee’s primary concern was identifying areas that would be particularly susceptible to fraud. The Committee had recommended exploring one additional area, and the one that was most in line with what the Committee had discussed was No. 9 on Mr. Kikuchi’s handout, Procurement. This item addresses the validity of vendors to whom the City issues payments to ensure that it is a legitimate business with existing W9s and valid addresses. INVESTMENT & FINANCE COMMITTEE MINUTES MAY 22, 2018 G:\Finance\Niamh Ortega\Investment Committee\2018\Minutes 052218.docx 5 Mr. Kikuchi reminded the Committee that during the regular audit there is a certain amount of testing that already occurs. The additional procedures would be a more in-depth review of the process. Member Aylaian noted that she was particularly interested in the cash receipts handling at off-site locations. Mr. Espinoza stated that the auditors visit the Desert Willow site to test their records on an annual basis. The Aquatic Center has not yet been reviewed. Member Aylaian responded that she was interested performing the same type of review at the Aquatic Center and the community center. Member Leo questioned if the Committee wanted both procurement and cash receipts reviews. Ms. Moore added that she would like the Committee to recommend a sample size. Mr. Kikuchi stated that he could perform additional research on the number of transactions for each of the procedures and could propose a sample size following his research. Ms. Moore recommended that since the review would likely take place in the summer, the Committee could recommend a range and allow the City Manager to make the final decision. Chairman Leo suggested that the auditors work with staff to ensure that the sample size makes sense and is reasonable considering the cost of the procedure. MOTION was made by Member Campbell to recommend that the auditors perform two additional procedures reviews covering the areas of cash receipts and procurement, and that the auditors work with staff to determine an appropriate sample size. Motion was seconded by Member Holcombe and carried by a 9-0 vote, with Aylaian, Campbell, Hargreaves, Holcombe, Kelly, Moore, Sperling, Weber and Leo voting AYE. Mr. Kikuchi continued his presentation, informing the Committee that the next audit for the fiscal year ending June 30, 2018 will begin in the middle of June 2018. He described the procedures that the auditors would follow relative to GAAP and GASB. He reviewed the responsibilities of the audit firm and of City representatives. He reported that the audit culminates in an opinion letter addressed to the governing board. The auditors work with the Finance department and the Committee, but ultimately the governing board, or Council, is who the firm reports to. The Audit, Investment and Finance Committee meetings are an appropriate setting to discuss any areas of concern and finalize a plan for when the auditors are back onsite in Fall 2018. Ms. Moore reminded the Committee members that they are welcome to communicate directly with the auditors if they so desire. INVESTMENT & FINANCE COMMITTEE MINUTES MAY 22, 2018 G:\Finance\Niamh Ortega\Investment Committee\2018\Minutes 052218.docx 6 VII. OLD BUSINESS None. VIII. INFORMATIONAL ITEMS A. PRESENTATION RELATIVE TO THE CITY OF PALM DESERT’S GENERAL PLAN (R. Stendell, Director of Community Development) Mr. Stendell provided an overview of the City of Palm Desert’s General Plan, which was updated in 2016. He noted that a general plan does not view the projects with costs attached. A general plan is required by State law and correlates to the zoning code. Mr. Stendell stated that a discussion on the complete General Plan would be quite intensive. Instead, he chose to focus on one aspect, the San Pablo corridor project, as this was the project from the General Plan furthest along in design and development at this point. Displaying a map of Palm Desert, he oriented the Committee on the major streets and highlighted landmarks around the intersection of Highway 111 and Monterey Avenue, which is at the center of the General Plan. He shared that many successful cities and areas were studied when determining the redesign for San Pablo. He discussed the strategy utilized for El Paseo regarding façade enhancement and street rehabilitation and indicated that a similar strategy would be implemented for San Pablo. The hope is that not only would store owners rehabilitate their businesses, but homeowners in the adjacent residential neighborhoods would also rehabilitate their homes, increasing the overall value and appeal of the area. Mr. Stendell also informed the Committee that officials from College of the Desert has expressed interest in a project on the corner of Fred Waring and San Pablo, and it provides a future opportunity for the City to expand the redesign of San Pablo to north of Fred Waring. The construction cost for San Pablo has been estimated and is funded at $10 million. Final construction documents are expected to be completed in the fourth quarter of 2018, with groundbreaking anticipated in 2019. He noted that this project is not intended to compete with El Paseo, but rather should be considered as an additional or alternative option for shopping and dining. In closing, Mr. Stendell stated that he was available to meet with any of the Committee members should they have additional questions regarding the General Plan. INVESTMENT & FINANCE COMMITTEE MINUTES MAY 22, 2018 G:\Finance\Niamh Ortega\Investment Committee\2018\Minutes 052218.docx 7 B. COMMITTEE MEMBER COMMENTS Chairman Leo noted that last year the Committee took a hiatus for July and August. Ms. Moore added that summer is also a busy time of year for staff with fiscal year end and audit preparation. The financial data is relatively incomplete in July, and reports for the new fiscal year would not begin to be available until mid-August, at the earliest. It was the consensus of the Committee to adjourn the meeting to the next regular meeting in September 2018. C. REQUEST TO ADD POTENTIAL ITEMS TO UPCOMING AGENDA None. IX. ADJOURNMENT The meeting was adjourned at 11:00 a.m. to the next regular meeting of September 25, 2018. Respectfully submitted, Niamh Ortega, Recording Secretary