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HomeMy WebLinkAboutDECEMBER 2000 INVESTMENT AND FINANCE COMMITTEE tr- MEETING AGENDA WORKSHEET Meeting Description Investment Committee Meeting Date 12/27/00 Time 12:00 p.m. Location North Wind Conference Room Mailed Agenda 42//0//1 31 Posted Agenda i�� Time Convene Adjournment /: Or-- Members Attending Yes No Others Attending Yes No 1 Paul Gibson, Chairperson 1 `/ 2 Russ Campbell l� 2 3 Carlos Ortega, CM 3 4 Jim Ferguson 4 5 Dick Kelley 5 6 Thomas Jeffrey 6 7 Murray Magloff 7 8 Bill Veazie 8 9 Gregg Lindquist 9 10 Dave Erwin 10 11 doyen ; 11 12 12 13 13 14 Items To Be Discussed Person Responsible Material 1 2 3 4 5 6 7 8 //, • • Spoke Mtn (1) Mtn (2) MEETI G NOTES Jc-yo`� Ia-� 60, A sec. +f C' /ii 8 f /01 - -. c te-c-c-eald "tau; Sletiaa frkf ee- 7/Ate 17-2-cece figo_</t11( "62- f 72.. ()c . 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N-10 ag- att dir 7/24,"a/44(- x 4?-0 .4 tW Agenda INVESTMENT & FINANCE COMMITTEE Wednesday, December 20, 2000 - 11:00 a.m. Administrative Conference Room CALL TO ORDER II. ROLL CALL III. APPROVAL OF MINUTES - November 15, 2000 Rec: Approve minutes of the regular meeting of November 15, 2000, as submitted Action: IV. ORAL COMMUNICATIONS A. Any person wishing to discuss any item not otherwise on the agenda may address the Investment & Finance Committee at this point by giving his or her name and address for the record. Remarks shall be limited to a maximum of five minutes unless additional time is authorized by the Chairman. B. This is the time and place for any person who wishes to comment on non-hearing agenda items. It should be noted that at the Investment & Finance Committee's discretion, these comments may be deferred until such time on the agenda, as the item is discussed. Remarks shall be limited to a maximum of five minutes unless additional time is authorized by the Chairman. V. OLD BUSINESS A. Status of Public and Private Partnerships Background Checks Rec: Report presented by Redevelopment Manager Dave Yrigoyen Action: B. Bond Issuance by Palm Desert Financing Authority Rec: Status Report on issuing new bonds presented by Dave Yrigoyen Action: AGENDA - INVESTMENT & FINANCE COMMITTEE December 20, 2000 Page 2 VI. NEW BUSINESS A. City and Redevelopment Agency Investment Schedules and Summary of Cash Reports for November 2000 Rec: Review and submit to the next City Council agenda. Review the presentation on the investment graphs. Review the investment activity for November 2000. Review status of capital projects and cash-flow projections. Action: B. Review Short Term Investments Maturing in December 2000 Rec: Review investments in 1) collateralized deposits; 2) treasury bonds and notes; and, 3) agencies discount notes Action: C. State of California Local Agency Investment Fund Monthly Report for October 2000 Rec: Informational item for the Committee to review. No action required. D. City and Redevelopment Agency Monthly Financial Reports for City Council for November 2000 Rec: Report and submit to City Council Action: E. Parkview Professional Office Buildings - Financial Report for November 2000 Rec: Review and file report Action: F. Desert Willow Golf Resort Financial Information for September and October 2000 Rec: Review and file report Action: G. Palm Desert Recreation Facilities Corporation Income Analysis for September and October 2000 Rec: Review and file report Action: AGENDA - INVESTMENT & FINANCE COMMITTEE December 20, 2000 Page 3 H. Approval of New Commercial Paper Issuers Rec: Review and approve Action: I. Approval of New Medium-Term Note Issuers Rec: Review and approve Action: J. Audit Reports for City of Palm Desert Rec: Review and approve Action: K. Audit Reports for Palm Desert Redevelopment Agency Rec: Review and approve Action: L. Annual Review of City Investment Policy Rec: Review and recommend for approval Action: M. Treasury Audit Issues Rec: Review and approve Action: VII. REPORTS AND REMARKS A. Reports and remarks by any Committee Member B. Items to be placed on the next agenda VIII. INFORMATIONAL ITEMS - None IX. NEXT MEETING - Wednesday, January 17, 2001, at 11:00 a.m. AGENDA - INVESTMENT & FINANCE COMMITTEE December 20, 2000 Page 4 X. ADJOURNMENT I hereby certify under penalty of perjury under the laws of the State of California, that the foregoing agenda for the Palm Desert Investment and Finance Committee was posted on the City Hall bulletin board not less than 72 hours prior to the meeting. Dated this December 12, 2000. De radley, Recording S tary :..........••••+••1 INVESTMENT AND FINANCE COMMITTEE , = h; Minutes •••........•-' November 15, 2000 CALL TO ORDER A regular meeting was called to order by Finance Director Paul Gibson on Wednesday, November 15, 2000, at 11:10 a.m. ROLL CALL Present were the following members, constituting a quorum: Finance Director Paul Gibson, City Council Member Bob Spiegel, City Manager Carlos Ortega, City Attorney Dave Erwin, Investment Manager Thomas Jeffrey, Murray Magloff and Bill Veazie Absent were the following members: Mayor Buford* Crites, Mayor Pro-Tempore Ferguson and Russ Campbell Also, present were: Redevelopment Manager Dave Yrigoyen and Recording Secretary Debra Bradley ORAL None. COMMUNICATIONS APPROVAL OF Upon motion of Mr. Spiegel, seconded by Mr. MINUTES Erwin, and by unanimous vote, the minutes of the October 18, 2000, meeting were approved as submitted. OLD BUSINESS A. Status of Public and Private Partnerships Background Checks A brief inquiry was made by Mr. Spiegel on the background check of Sonnenblick, to which it was advised that it had already been approved. B. Bond Issuance by Palm Desert Housing Authority Mr. Yrigoyen recalled his update from the last Committee meeting regarding the review of the housing numbers to determine what can be done for housing in the aspect of the Western Center. Staff has completed the preliminary financial figures with housing, which shows for the year 2001 $28 million for the housing Investment and Finance Committee Minutes of November 15, 2000 Page 2 projects. A bond issue is being looked into for housing programs in order to accomplish some of the projects that are being reviewed. The preliminary figures will be programmed and used for a meeting with the Western Center. Additionally at this meeting, an agreement between the City and Western Center will be obtained in terms of future obligations. Mr. Ortega gave a lengthy overview of the Agency's agreement with Western Center and the bond issuance compliance. Various discussions by several members followed. NEW BUSINESS A. City and Redevelopment Agency Investment Schedule for October 2000 Mr. Jeffrey distributed the City and RDA Portfolio reports for the month of October 2000. The book value of the City investment portfolio for the period ended October 31, 2000, was approximately $165.8 million, reflecting a decrease of approximately $465,000 from the prior month, due to debt service and an offset between the Redevelopment Agency and reimbursement funds coming in and debt service going out. A brief overview given by Mr. Jeffrey of the portfolio charts followed. The book value of the Redevelopment Agency (RDA) investment portfolio for the period ended October 31, 2000, was approximately $137.6 million, reflecting a decrease of $5.6 million from the prior month, due to reimbursement to the City. Mr. Jeffrey concluded by giving a brief overview of the portfolio charts. The Summary of Cash reports for the City and RDA for the month of October 2000 were not available. B. Review Short-Term Investments Maturing in November 2000 Mr. Jeffrey reported on the City's maturing investments in November 2000. There is a Ford Motor Credit medium- term note that will be maturing for $2 million. Pertaining to the Redevelopment Agency portfolio, three SLGS's and a Federal Agency note are maturing for $2.8 million. Investment and Finance Committee Minutes of November 15, 2000 Page 3 C. State of California Local Agency Investment Fund Monthly Reports for September 2000 There being no issues to report, discussion ensued to the next agenda item. D. Monthly Financial Report for City Council for October 2000 An overview of the October 2000 financial reports for the City was given by Mr. Gibson. Revenue year-to- date was up to $5.6 million. Mr. Gibson made reference to property taxes, footnoting that the County recently sent a letter to the City indicating their reallocation of property taxes based on the State audit, due to the State not apportioning the taxes correctly on the utility tax. The City's share is approximately $68,000. The monthly financial report for the Redevelopment Agency was distributed and filed. There being nothing significant to report, discussion followed to the next agenda item. E. Parkview Professional Office Buildings - Financial Reports for October 2000 Mr. Spiegel noted an agenda item at the last City Council meeting, to which Parkview's surplus in the amount of approximately $1 million was being transferred to park funds. It was noted by Mr. Gibson that the attorney which is trying take over Golf Dimension's space has yet to get them to move out. Temporarily, until March 2001, the attorney is trying to locate alternative space from other Parkview tenants. According to Golf Dimensions, they are now contemplating occupying the space longerthan March 2001. F. Desert Willow Golf Resort Financial Information for September 2000 Due to report unavailability, discussion ensued to the next agenda item. September and October 2000 reports will be available at the Committee's December meeting. - Investment and Finance Committee Minutes of November 15, 2000 Page 4 Mr. Magloff mentioned the poor food he recently received at Desert Willow Golf Resort. While he reported it to Mr. Lindquist, he wanted to make the Committee aware of it. Mr. Gibson offered to address Mr. Magloffs concerns to Mr. Lindquist. G. Palm Desert Recreation Facilities Corporation Income Analysis for September 2000 Due to report unavailability, discussion ensued to the next agenda item. INFORMATIONAL ITEMS A. Committee/Commission Holiday Party Mr. Gibson advised the Committee Members that the picture-taking originally scheduled at today's meeting has been cancelled, due to Desert Willow's lack of available space to exhibit extra functions. Committee Members were encouraged to attend the City's committee/commission holiday party to be held on December 9, 2000, at the Desert Willow clubhouse, beginning at 6:30 p.m. NEXT MEETING The next regularly scheduled meeting will be held on Wednesday, December 20, 2000, at 11:00 a.m., in the North Wing Conference Room. ADJOURNMENT There being no further business, the meeting was adjourned by Mr. Gibson at 11:30 a.m. Respectfully submitted, , �/, ,/tt I -br- Bradley, Recording Seat. 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(Z < '' " -si ■ = 8 c 8 4 y_ �,z 3,i e'/4,,,,m 4 v hK ' m a a NOy a co $o>Dy tom coNN d > O -..= cn - D p < < o m g t kai .c es„ ;ax IIIMIIIIIIaia s 6 80 . a a, O < O 2 2 8 A Fi g -.. Z O 8 ;vn+� 5K&.hy{;qy0. nr .a. e s x 8 �� REDEVELOPMENT AGENCY INVESTMENT ACTIVITY REPORT NOVEMBER 2000 EXECUTIVE SUMMARY As of 11/30/00, total portfolio book value was approximately$137MM (with SLGS). This reflected a net decrease of $596M from prior month due principally to bond draws. There was an unrealized portfolio net gain (market value- book value)of approximately$970M, based upon prevailing market interest rates. This was only a "paper"gain since there was no profit-taking. Significant changes in investment position, by security type, are discussed below: "State& Local Govt Series -Coupon." Palm Desert Financing Authority buys special interest-bearing U.S. Treasury notes with maturities of 2- 10 years to invest proceeds of advance refundings held in escrow(to comply with IRS yield and arbitrage rebate restrictions). Although unrated, considered "AM". THIS ACCOUNT BALANCE DID NOT CHANGE. "AIM Prime MMF Private Class." RDA invests tax-exempt bond proceeds(construction, cost of issuance, and reserve monies) in "AIM Prime Money Market Fund: Private Class". This$16.6MMM fund invests in U.S. Treasury repurchase agreements,first-tier commercial paper, and master notes. Weighted average maturity is 60 days or less. S&P credit quality ratingof"AAAm"; Moody's of"Aaa." THIS ACCOUNT BALANCE DECREASED BY APPROXIMATELY$289M DUE TO BOND DRAWS. "I ncal Agency Investment Fund (LAIF)." RDA invests City's loan in $13MMM pool managed by State Treasurer's Office for 2,600 governmental entities. LAW has diversified portfolio(BAs, CP,Treasuries, agencies,corporates, repos, reverse repos, CDs)with weighted average maturity of 180-540 days. THIS ACCOUNT BALANCE DID NOT CHANGE. "United States Treasury-Coupon." RDA buys interest-bearing U.S.Treasury notes with maturities of 2 - 10 years to invest tax-exempt bond proceeds. Although unrated, considered "MA". THIS ACCOUNT BALANCE DECREASED BY APPROXIMATELY$2M DUE TO AMORTIZATION OF PREMIUMS. "State & Local Govt Series -Time." Palm Desert Financing Authority buys special noninterest-bearing U.S. Treasury certificates of indebtedness with maturities of 15 days- 1 year to invest proceeds of advance refundings held in escrow(to comply with IRS yield and arbitrage rebate restrictions). Nonmarketable.Although unrated, considered "MA." THIS ACCOUNT BALANCE DECREASED BY APPROXIMATELY$362M DUE TO A MATURING SECURITY. "United States Treasury-Discount." RDA buys noninterest-bearing zero coupon securities ("STRIPS")with maturities of 6 months-30 years to invest tax-exempt bond proceeds (construction monies). Purchased at discount;face value paid at maturity(difference is yield). Although unrated, considered "AAA". THIS ACCOUNT BALANCE DID NOT CHANGE. "HighMark Sweep Accounts." RDA sweeps excess checking balances into "HighMark 100% U.S. Treasury Money Market Fund." This$905MM fund invests only in U.S. Treasury bills and notes(no repos or reverse repos). Weighted average maturity is 90 days or less (per SEC regs). Although unrated, underlying securities considered"AAA." THIS ACCOUNT BALANCE INCREASED BY APPROXIMATELY$51M DUE TO INTEREST INCOME. "Federal Agency-Coupon." RDA buys U.S. government agency and instrumentality notes with maturities of 2- 10 years to invest advance refundings and tax-exempt construction funds. Agency debt guaranteed by U.S. Treasury; instrumentality debt is not(guarantee, instead, believed to be U.S. Government's"moral obligation"). Although unrated,considered"AAA." THIS ACCOUNT BALANCE INCREASED BY APPROXIMATELY$3M DUE TO AMORTIZATION OF DISCOUNTS. "Federal Agency -Callable". The City purchases federal agency securities that may be called prior to maturity, in order to obtain an additional premium for that risk, thereby increasing overall portfolio profitability. THIS ACCOUNT BALANCE INCREASED BY APPROXIMATELY$2M DUE TO AMORTIZATION OF DISCOUNTS. "Medium-Term Notes". The City buys noninterest-bearing corporate medium-term notes with maturities of five years or less, to invest revenues. 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PORTFOUO (%) S !II L c_ O , O O O 8 h s,,,.sKxU 8 4 s .i - p I T T W C ^ p N 3 8 X 0 O 0 $ F o g se., c -( 4 Q mc- c i. ol m 8 E -a• •0 , ; y0 E O O * 3n.fD5 Y;i£rsichvey1.sE*,ai;la aP y9 8 - y _ 0 n ; T S C b-'1{ • o •0 33 8 tfty m td r!M aiJV" .ve,.se , m 8 xC h m m s s Om m m O a mz0 N .>tavcm C . 6 6 .y, N A NOm < 4.4.iz O y ? s' F psymr a 8 •= �"$9n,,z4st, %fl is - - - _ a - g '. . _ > rICI m S,G N y m -< m 51 C `s y� a m 8 3)t 7rtf•A,"t »fiaaaFr*i:L. ':P_i§ 6 g �3. wp N 0 m m a 8 k1rv33if`,•ftttiAX 3 4`4 n`.l'C1,n:73.Fs..t1�i4 8 c,K O V V 8 N O ?Vo.,/a'ke-'z_t5114:ftAY HfFt wrv":�.rtik /'3:4V.: 8 D b O O- , a a F Y,,CRP4149,'vim+ Yi- aAa “....Su 8 8 ,„ - Z 0 < $ W 8 8 <i1'4 it,:(iYu'S.4%q'{a`u^:R.'+E% 11Yi Yv CITY OF PALM DESERT INVESTMENT ACTIVITY REPORT NOVEMBER 2000 EXECUTIVE SUMMARY As of 11/30/00, total portfolio book value was approximately$166.8MM. This reflected a net increase of approximately$1MM from prior month due principally to revenue receipts. There was an unrealized portfolio net gain (market value-book value)of approximately$952M, based upon prevailing market interest rates. This was only a "paper"gain since there were no premature securities sales. Significant changes in investment position are shown below: "United States Treasury -Coupon". The City buys interest-bearing U.S. Treasury notes with maturities of 2- 10 years to invest assessment bond proceeds. Although unrated, considered "AAA". THIS ACCOUNT BALANCE DECREASED BY APPROXIMATELY$3M DUE TO AMORTIZATION OF PREMIUMS. "Federal Agency-Coupon". The City buys U.S. government agency and instrumentality notes with maturities of 2 - 10 years to invest assessment bond proceeds. Agency debt guaranteed by U.S. Treasury; instrumentality debt is not (guarantee, instead, believed to be U.S. Government's "moral obligation"). Although unrated, considered "AAA." THIS ACCOUNT BALANCE INCREASED BY APPROXIMATELY$3M DUE TO AMORTIZATION OF DISCOUNTS. "Local Agency Investment Fund (LAIF)". The City temporarily invests proceeds of matured securities in $13MMM pool managed by State Treasurer's Office for 2,600 governmental entities. LAIF has diversified portfolio (BAs, CP,Treasuries, agencies, corporates, repos, reverse repos, CDs)with weighted average maturity of 180- 540 days. THIS ACCOUNT BALANCE DID NOT CHANGE. "Federal Agency-Callable". The City purchases federal agency securities that may be called prior to maturity, in order to obtain an additional premium for that risk,thereby increasing overall portfolio profitability. THIS ACCOUNT BALANCE BALANCE DID NOT CHANGE. "City Loan to RDA". The City has made long-term cash advances at LAIF interest rate to RDA for property purchases. Advances will be repaid in future years from tax increment revenue generated by associated redevelopment projects. THIS ACCOUNT BALANCE DID NOT CHANGE. "AIM Prime MMF Private Class". The City invests assessment bond proceeds (construction, cost of issuance, and bond reserve monies) in "AIM Prime Money Market Fund: Private Class." This$16.6MMM fund invests in U.S. Treasury repurchase agreements, first-tier commercial paper, and master notes. Weighted average maturity is 60 days or less. S&P credit quality rating of'AAAm"; Moody's of"Aaa". THIS ACCOUNT BALANCE INCREASED BY APPROXIMATELY$94M DUE TO INTEREST INCOME. "United States Treasury-Discount". The City buys noninterest-bearing zero coupon securities ("STRIPS")with maturities of 6 months-30 years, to invest assessment bond proceeds. Purchased at discount; face value paid at maturity(difference is yield). Although unrated, considered "AM". THIS ACCOUNT BALANCE DID NOT CHANGE. "HighMark Sweep Accounts". The City sweeps excess checking balances into "HighMark 100% U.S. Treasury Money Market Fund". This $905MM fund invests only in U.S. Treasury bills, notes, and STRIPS (no repos or reverse repos). Weighted average maturity is 90 days or less (per SEC regs). Although unrated, underlying securities considered "AAA". THIS ACCOUNT BALANCE DECREASED BY APPROXIMATELY$2.9MM DUE TO SECURITIES PURCHASES. "State& Local Govt Series -Time". The City buys special noninterest-bearing U.S. Treasury certificates of indebtedness with maturities of 15 days- 1 year, to invest assessment bond proceeds (to comply with IRS yield &arbitrage rebate regs). Nonmarketable.Although unrated, considered "AAA". THIS ACCOUNT BALANCE DID NOT CHANGE. "Medium-Term Notes". The City buys interest-bearing corporate medium-term notes with maturities of five years or less, to invest revenues. THIS ACCOUNT BALANCE DECREASED BY APPROXIMATELY$2MM DUE TO A MATURING SECURITY. "Commercial Paper". The City high-grade, unsecured commercial paper at a discount, with maturities of 180 days or less, from Fortune 500 companies and global banks. THIS ACCOUNT BALANCE INCREASED BY APPROXIMATELY$5.9MM DUE TO SECURITIES PURCHASES. 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Q 0 I- W p c a rn is < O o Cn p LL rO) N U N U V U0 TO o I r N CO 7 ) < ( § { . 21 ic- re } | C EE } )`a to AI j / / / \ 2 ) § ) k N f C f { 3� ai < EE § - LU > 0 k ( 2 ■ £ . § 7d w § ^ & 2 § ) � ) 0 IIII cc ) | 0 - 12 \\ } } it 0kev \ } i0 § § ( o H k STATE OF CALIFORNIA PHILIP ANGELIDES, Treasurer OFFICE OF THE TREASURER SACRAMENTO CI^i L r Local Agency Investmea Fnnd PO Box 942809,,,,_ i,_„ r Sacramento, CA 94209-0001 1 ? 55 (916)653-3001 October, 2000 Statement CITY OF PALM DESERT Account Number : 98-33-621 Ann: CITY TREASURER 73510 FRED WARING DRIVE PALM DESERT CA 92260 Transactions Effective Transaction Tran Confirm Authorized Amount Date Date Type Number Caller 10-13-2000 10-12-2000 QRD SYSTEM 414,391.97 10-20-2000 10-20-2000 RD 278250 THOMAS JEFFREY 5,000,000.00 Account Summary Total Deposit : 5,414,391.97 Beginning Balance : 19,296,173.55 Total Withdrawal : 0.00 Ending Balance : 24,710,565.52 Page : 1 of 1 STATE OF CALIFORNIA PHILIP ANGELIDES, Treasurer OFFICE OF THE TREASURER CITY CR p - r N. `SACRAMENTO F .. , Local Agency Investment Fund . ,. PO Box 942809 7" ''T7 { ,; i '2: 55 Sacramento, CA 94209-0001 (916) 653-3001 October, 2000 Statement PALM DESERT REDEVELOPMENT AGENCY Account Number : 65-33-015 Ann: TREASURER 73-510 FRED WARING DRIVE PALM DESERT CA 92260 Transactions Effective Transaction Tran Confirm Authorized Amount Date Date Type Number Caller 10-13-2000 10-12-2000- QRD SYSTEM 412,529.90 10-17-2000 10-17-2000 RW 431414 THOMAS W. JEFFREY - 5,000,000.00 Account Summary Total Deposit : 412,529.90 Beginning Balance : 17,349,807.36 Total Withdrawal : - 5,000,000.00 Ending Balance : 12,762,337.26 Page : 1 of 1 00 40" m Ca g 0 w > _ v a 4 a h . m a Fe - y E 'tom, o '€ S. dl o d v a ¢ m t¢. 0 a w0 *� ..1 c a .G C M �.. ai w gs -a a C co F 4 L 0000 0 0 e 0 o e 0 0_ 0 0 0 y Va en :� V1 N 1/40 O ..-. y l� O o0 N N H •--r .�-� .�i .M-� .N. .m. co V1 O t� r r r O N O 01 rO I W e a Co 1- W a 00N.et tn � � o � � � � � 0 � � czi V` �O N 00 N N O 't 7 N to m O r0 O Z V1 .--i .--i N 7 O1/4 [f C!. 7 V7 Cr Va r- O 0O N be W c Q N O G C O O Q N N N a —p a ON O 0 >0 >4 .0 ce W o c 73. W V a a o W 0 < N O 0 rn O 0 o T V a 0 [� M 00 Vt va O O C O. O t. N o 0 0 0 0 o dd Q ` " W a _ O Z W O 0 7 �-+ N O O r 0 co�O N V) ',Si N O y M M W h Vt O ate. m c0 O O 0 O R O >' LL H t+', 0 01 M O1 7 00 N 0 O O P., N �-+ +-+ O O O O C h —I N N O -. a 00 0 0 town Z Q Q a v ,, `+ O O 00 O O 00 N 01 N -r N N V 7 �{ 0 CO 0 �0 N- O coN .N. 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Sm < `0 m a0a ca a U 0 wz PALM DESERT REDEVELOPMENT AGENCY COMBINED STATEMENT REVENUE AND EXPENDITURES COMPARED TO BUDGET 30-Nov-00 TOTAL RDA RDA RDA %OF ACTUAL (FAV)UNFAV BUDGET YTD BUDGET ACTUAL TO YTD BUDGET VARIANCE REVENUES 1 Tax increment 33,964,500,00. 14,151,875.00 651,899.82 5% 13,499,975.18 2 Interest 1,342,380.00 559,325.00 1,388,388.57 248% (829,063.57) Sales of Property - - - 0% - 3 Reimbursement From Other Agencies 1,015,000.00 422,916.67 112,948.97 27% 309,967.70 Other Revenue - - 125,190.35 0% (125,190.35) Transfers to/from other funds - - - 0% - TOTAL REVENUES 36,321,880.00 15,134,116.67 2,278,427.71 - 12,855,688.96 FAV(UNFAV)._ EXPENDITURES - Administrative Costs • 820,200,00 341,750.00 439,157.65 129% (97,407.65) Professional Services 876,477.50 365,198.96 73,454.38 20% 291,744.58 6 Property Tax Administrative Fee 546,000.00 227,500.00 - 0% 227,500.00 Cost of Inventory Sold - - - 0% - Payments to Other Governmental Agencies 11,612,795.00 - 4,838,664.58 - 0% 4,838,664.58 Bond Issuance Costs - - 0% - Bond Discount - - 0% - Interest And Fiscal Charges 9,520,213.00 3,966,755.42 2,808,191.67 71% 1,158,563.75 Principal Payments 3,030,000.00 1,262,500.00 365,000.00 29% 897,500.00 - - - 0% - Capital Outlay - - 0% _ Office Equipment '- 10,000.00 4,166.67 - 0°I° 4,166.67 Undergrounding Projects - 27,827.00 11,594.58 6,499.52 56% 5,095.06 Deep Canyon&Hwy 111 - - - 0% - El Paseo Improvements 4,250,000.00 1,770,833.33 743.71 0% 1,770,089.62 Parking Spaces - -500,000.00 ' 208,333.33 - 0% 208,333,33 Fred Waring Dr. Street Improvements 2,148,532.00 895,221.67 343.19 0% 894,878.48 1-10 Cook St Interchange 250,000.00 250,000.00 250,000.00 100% - 4 No.Sphere Infrastructure 1,184,058.00 493,357.50 1,024,548.28 208% (531,190,78) RDA Projects 3,313,582.00 1,380,659.17 - 0% 1,380,659.17 Desert Willow 107,170.00 44,654.17 650.00 1% 44,004.17 Land Purchases/Property Acquisition 4,557,000.00 1,898,750.00 27,700.69 1% 1,871,049.31 Business Enhancement Loan Programs 1,000,000.00 416,666.67 - 0% 416,666.67 Regional Park#4 5,000,000.00 2,083,333.33 - 0% 2,083,333.33 - - - 0% - Transfers - - 0% - Transfer Out Administrative Costs - - - - 0% - 3 Transfer(In)Out Capital Exp Reimb (920,000.00) (383,333.33) - 0% (383,333.33) Transfer Out Low/Mod Set-Aside 6,680,700.00 2,783,625.00 - 0% 2,783,625.00 - - - 0% - TOTAL EXPENDITURES 54,514,554.50 22,860,231.04 4,996,289.09 17,863,941.95'. 1. 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E c wEE ° 5° To EU3 c dcp a c a aa)) g 2 > 0 co a 0 U 8. ii E Q 0 � a Q m d 43 a a a m Q m = v a 5 c 5 )a aa)) c a) a y a) m E. m o ~ - H y ¢ a O c o W � w w o d ° = co O « E To N _ a) vl ❑ N U. w cp w A U O c x d �' E t m ~ c E o 0 E,c c 0 .c c c c F x =m mm m d m m r sv� � oI o ¢ aaamm° Via` � � � F � CC w PALM DESERT REDEVELOPMENT AGENCY 31-Oct-00 Schedule of Revenue and Expenditures HOUSING FUND 5 YTD (FAV)UNFAV Budget- Budget Actual YTD Variance REVENUES 2 Transfer in of 20% Set-Aside 6,711,700.00 2,796,541.67 2,796,541.67 3 Interest 15,000.00 6,250.00 23,069.90 (16,819.90) Rental Income 56,000.00 23,333.33 11,927.95 11,405.38 Sales of Property - 470,500.00 (470,500.00) 1 Reimbursement From Other Agencies - - 2 Housing Mitigation Fees - - Other Revenue 12,505.23 (12,505.23) TOTAL REVENUES 6,782,700.00 2,826,125.00 518,003.08 '2,308,121.92 EXPENDITURES FAV(UNFAV) Administrative Costs 3,901,385.00 1,625,577.08 109,675.98 1,515,901.10 Professional Services 293,305.00 122,210.42 6,386.87 115,823.55 Property Tax Administrative Fee - - Cost of Inventory Sold - - 6 Interest And Fiscal Charges 2,639,835.00 1,099,931.25 1,317,391.97 (217,460.72) 6 Principal Payments 915,000.00 381,250.00 915,000.00 (533,750.00) Office Equipment 5,000.00 2,083.33 2,083.33 Acquisition Rehab/Resale#7 948,933.00 . 395,388.75 126,106.73 269,282.02 Home Improvement Program 1-6 392,691.00 163,621.25 514.01 163,107.24 Santa Rosa 503,462.00 209,775.83 209,775.83 4 Property Purchases - 1,542.11 (1,542.11) 5 Desert Rose 93,279.00 38,866.25 311,747.27 (272,881.02) 5 Portola Palms Mobilehome Park 74,385.00 30,993.75 94,777.58 (63,783.83) Housing Development 2,000,000.00 833,333.33 833,333.33 Transfers - Transfer(In)/Out Administrative Costs - - Transfer(In)IOut Capital Exp Reimb - TOTAL EXPENDITURES 11,767,275.00 4,903,031.25 2,883,142.52 4019,888.73 Notes: 1 Includes prior year adjustment for tax increment calculation change 2 This transfer is done once a year only. 3 Interest is posted with investment maturities or dividend payments 4 Purchase of Rental property on Santa Rosa 5 Includes re-purchases and re-sales 6 Debt Service is due 10/1 and 4/1 of each year I \11 Palm Desert RDA Summary of Cash November 30,2000 Total Cash* 137,373,550.15 Less Cash Restricted for: (i) Bond Funds 120,202,266.74 (2) Debt Service 8,001,634.43 (3) 20%Set-Aside 1,044,112.16 (4) Housing Authority 4,195,275.45 (s) Trust 4,254,252.57 137,697,541.35 Unrestricted Cash (323,991.20) ** Chart of Restricted Cash i] Bond Funds 0 Debt Service ❑20% Set-Aside 0 Housing Authority ■Trust 0 Unrestricted Cash 87% A,sd � • r• VS'AVSZ .X1 3T°w d 'fi j 4�YEf..P a 3r titifiW 6% 0% 1% 3%3% (1) Balance includes funds for escrow payments, Bond Funded Capital Projects, and payments for Debt Service (2) Funds used for Debt Service Payments and expenditures for projects under contract (3) Funds used for low income purposes(transfer of 20%done at year end) (4) Funds reserved for the Housing Authority purposes (5) Deposit held for Pass-Through Agency Total Cash balance in this schedule is calculated on a cash basis. Investment committee receives cash balance on the accrual basis. ** The negative cash balance is due to administrative expenses. At the close of the fiscal year ending June 30, 2001, Debt Service funds will be transferred to cover the project and administrative costs. City of Palm Desert Portfolio Summary of Cash November 30,2000 Total Cash' $171,715,079.61 Less Cash Restricted for: Assessment Districts"(1) $63,179,807.99 Special Revenue Fund(2) $22,967,357.73 Capital Projects(3) $24,613,128.68 Enterprise Fund(4) $ 2,270,797.38 Trust&Assessments(s) $ 1,393,817,16 Library Materials(6) $ 10,092,28 Loan to RDA(7) $31,002,916.95 $145,437,918.17 Less General Fund Reserved for: Equipment Replacement $ 2,494,478.00 Debt Service $ - Loans&Receivables $ 500,000.00 Self Insurance/Retiree Health $ 4,379,711.26 $ 7,374,189.26 Unrestricted Cash $ 18,902,972.18 Total Cash 0 Assessment Districts ■Special Revenue Fund ❑Capital Projects 0 Enterprise Fund ❑Trust&Assessments IN Library Materials ■Loan to RDA ❑Unrestricted Cash ®General Fund Reserved 38% „ z g' s i 13% Alsi Ft a 4,-na` 14% 1% 4% ' 1% 0% 11% 18% (1)Funds are restricted to Assessment District Capital Improvement, Principal and Interest payments. (2)Funds have been restricted for specific purposes. Example: 'Measure A'funds can be used only for street projects. (3)Funds have been appropriated for Capital Projects. Example: $10 Million for Westfield Shoppingtown parking structure. (4)Funds have restrictions on what they can be used for. (5)Funds held on deposit for developers. (s)Funds restricted for library purposes. (7)RDA Loans-No payment schedule has been done. Payments are unknown. • Total Cash balance in this schedule is calculated on the cash basis. Investment Committee receives cash balance on the accrual basis. $ 53,767,136.14 Represents cash held by trustee in bonds • i _ ; City of Palm Desert Parkview Office Complex November-00 November-00 # % YTD YTD # % Budget Actual Variance Variance Budget Actual Variance Variance Revenues Rental $ 63,000 $ 67,950 $ 4,950 107.86% $ 315,000 $ 336,088 $ 21,088 106.69% Dividends/Interest $ 2,500 $ 7,726 $ 5,226 309.04% $ 12,500 $ 36,277 $ 23,777 290.21% Total Revenues $ 65,500 $ 75,676 $ 10,176 115.54% $ 327,500 $ 372,365 $ 44,865 113.70% Expenses Professional-Accounting&Auditing $ 5,800 $ 6,371 $ (571) 109.85% $ 29,000 $ 31,855 $ (2,855) 109.85% Professional-Consultants $ 6,500 $ 6,060 $ 440 93.24% $ 32,500 $ 30,304 $ 2,196 93.24% Tenant Improvements $ 2,500 $ - $ 2,500 0.00% $ 12,500 $ 20,400 $ (7,900) 163.20% Repairs&Maintenance Building $ 9,100 $ 5,344 $ 3,756 58.72% $ 45,500 $ 35,059 $ 10,441 77.05% ' Repairs&Maintenance-Landscapin $ 2,300 $ - $ 2,300 0.00% $ 11,500 $ - $ 11,500 0.00% Utilities-Water $ 250 $ 116 $ 134 46.47% $ 1,250 $ 448 $ 802 35.81% Utilities-Gas/Electric $ 4,500 $ 4,995 $ (495) 110.99% $ 26,000 $ 27,672 $ (1,672) 106.43% Utilities-Trash $ 450 $ 384 $ 66 85.24% $ 2,250 $ 3,224 $ (974) 143.29% Telephone $ 150 $ 151 $ (1) 100.49% $ 750 $ 753 $ (3) 100.42% Insurance $ 521 $ - $ 521 0.00% $ 2,603 $ - $ 2,603 0.00% Total Expenses $ 32,071 $ 23,420 $ 8,651 73.03% $ 163,853 $ 149,715 $ 14,138 91,37% Operating Income $ 33,429 $ 52,256 $ 18,827 156.32% $ 163,647 $ 222,649 $ 59,002 136.05%' Equipment Replacement Reserve $ 9,639 $ 9,639 $ - 100.00% $ 48,195 $ 28,917 $ 19,278 60.00% Net Income $ 23,790 $ 42,617 $ 18,827 179.14% $ 115,452 $ 193,732 $ 78,280 167,80% Invest2001-invest Parkview Office Complex Vacancy Rate Schedule by Suite November 2000 Suite Square No. Tenant Feet 73-710 Fred Waring Drive-Two (2) Story Building 100 Hanover 2,560 102 Bergren 1,360 103 Multiple Sclerosis 488 104 Arthritis Foundation 960 106 JMS Consulting 928 108 Senator Kelly 785 (A new four-year lease will be signed for Assemblyman Kelly) 112 Assemblyman Battin 1,406 (A new four-year lease will signed for Senator Battin) 114 Chamber of Commerce 1,478 118 Goodwill Industries 1,250 119 City/CVAG Conference Room 1,380 120 Golf Dimensions 1,750 200 CVAG 4,292 200A University of California Riverside 841 201 City Storage 604 203 Accounting Services 480 205 Coachella Valley Economic Partnership 700 208 Desert Springs Investments 960 210 Wilson,Pesota&Pichardo 3,040 211 Alzheimer's Association 937 217 Mcmillan 775 220 CA.State Dept. of Agriculture 1,607 InvestVacancy Report Parkview Office Complex Vacancy Rate Schedule by Suite November 2000 Suite Square No. Tenant Feet 222 WMA Securities 2,981 Total square footage(2 story Building) 31,562 Vacancy Rate-604/31,562= 1.91% 73-720 Fred Waring Drive- One Story Building 100 State of California-Water Resources 15,233 102 State of California-Rehabilitation Department 4,396 Total Square Footage 19,629 Vacancy Rate---0.00% 0.00% Overall Vacancy Rate for Both Buildings: Vacancy Rate-604/51,191 1.18% Occupancy Rate-50,587/51,191 98.82% Note:Parkview Office Complex is 100%occupied in terms of available space.Suite 106 is used as storage for the City of Palm Desert. Invest;Vacancy Report 1 City of Palm Desert • Desert Willow Budget Vs Actual For the month of September 2000 Budgeted Actual Budgeted Actual September September $ Percentage Year to Year to $ Percentage Revenue 2000 2000 Variance Variance Date Date Variance Variance Course&Ground $ 250,741 $ 196,675 $ (54,066) 78.44% $ 491,459 $ 390,116 $ (101,343) 79.38% Carts $ 15,000 $ 21,235 $ 6,235 141.57% $ 43,238 $ 52,043 $ 8,805 120.36% Golf Shop $ 48,294 $ 52,019 $ 3,725 107.71% $ 107,785 $ 113,759 $ 5,974 105.54% Range $ 3,840 $ 185 $ (3,655) 4.82% $ 8,960 $ 962 $ (7,998) 10.74% Food&Beverage $ 93,800 $ 66,856 $ (26,944) 71.28% $ 216,200 $ 159,640 $ (56,560) 73.84% Interest Income $ 1,500 $ 2,250 $ 750 150.00% $ 4,500 $ 10,207 $ 5,707 226.82% Total R venues 413 175 339 220 73 955 82.1 % 8 2 142 726 72 145 415 83.33V Payroll Proshop $ 8,556 $ 10,918 $ (2,362) 127.61% $ 25,526 $ 28,620 $ (3,094) 112.12% Cart $ 18,664 $ 16,804 $ 1,860 90.03% $ 47,130 $ 51,450 $ (4,320) 109.17% • Course&Ground $ 112,418 $ 126,869 $ (14,451) 112.85% $ 335,407 $ 342,194 $ (6,787) 102.02% Golf Operations $ 15,682 $ 20,602 $ (4,920) 131.37% $ 47,046 $ 58,660 $ (11,614) 124.69% General&Administration $ 37,894 $ 31,072 $ 6,822 82.00% $ 111,328 $ 97,292 $ 14,036 87.39% Desert Willow Golf Academy $ 4,191 $ - $ 4,191 0.00% $ 12,573 $ - $ 12,573 0.00% Food&Beverage $ 48,465 $ 52,116 $ (3,651) 107.53% $ 123,366 $ 164,646 $ (41,280) 133.46% 'Total Payroll $ 245,870 $ 258.381 $ (12,511) 105.09% $ 702,376 $ 742.862 $ (40,4861 105.76°4 Other Expenditures Perimeter Landscaping $ 1,208 $ - $ 1,208 0.00% $ 3,624 $ - $ 3,624 0.00% Proshop $ 5,185 $ 2,052 $ 3,133 39.58% $ 8,591 $ 8,593 $ (2) 100.02% Proshop-COGS $ 23,760 $ 19,469 $ 4,291 81.94% $ 51,920 $ 57,083 $ (5,163) 109.94% Cart $ 11,200 $ 15,585 $ (4,385) 139.15% $ 26,100 $ 37,003 $ (10,903) 141.77% Course&Ground-North Course $ 68,572 $ 122,257 $ (53,685) 178.29% $ 209,606 $ 240,928 $ (31,322) 114.94% Course&Ground-South Course $ 52,722 $ 52,582 $ 140 99.73% $ 171,671 $ 170,897 $ 774 99.55% Course&Ground-Desert Pallet-N $ 3,000 $ 1,441 $ 1,559 48.03% $ 6,850 $ 3,976 $ 2,874 58.04% Course&Ground-Desert Pallet-S $ 2,550 $ 1,842 $ 708 72.24% $ 6,200 $ 3,871 $ 2,329 62.44% Golf Operations $ 2,711 $ 6 $ 2,705 0.22% $ 5,785 $ 6,609 $ (824) 114.24% General&Administration $ 64,097 $ 74,904 $ (10,807) 116.86% $ 169,476 $ 178,729 $ (9,253) 105.46% Range $ 13,750 $ 344 $ 13,406 2.50% $ 14,450 $ 344 $ 14,106 2.38% Food&Beverage $ 10,638 $ 25,852 $ (15,214) 243.02% $ 24,119 $ 72,227 $ (48,108) 299.46% Food&Beverage COGS $ 29,943 $ 22,239 $ 7,704 74.27% $ 69,015 $ 59,070 $ 9,945 85.59% Management Fee $ 25,000 $ 25,000 $ - 100.00% $ 75,000 $ 75,000 $ - 100.00% Financing/Lease $ 20,507 $ 8,098 $ 12,409 39.49% $ 60,644 $ 45,996 $ 14,648 75.85% Total Ot er Ex enditures 334 843 371 671 36 828 11.00% 903 051 60 326 57 275 106.34V Desert Willow Golf Academy Desert Willow Golf Academy $ 8,750 $ - $ (8,750) 0.00°% $ 21,750 $ 1,200 $ (20,550) 5.52% COGS-Merchandise $ (1,800) $ - $ 1,800 0.00% $ (5,400) $ - $ 5,400 0.00% Other Expenditures $ (7,200) $ (4,077) $ 3,123 56.63% $ (9,625) $ (13,876) $ (4,25I) 144.17% Learning Center Income(Loss) $ (250) $ (4,077) $ (3,827) 1630.80% $ 6,725 $ (12,676) $ (19,401) -188.49% Operating Income(Loss) $ (167,788) $ (294,909) $ (127,121) 175.76% $ (726,560) $ (989,137) $ (262,577) 136.14% I Equipment Reserve Replacement $ 40,822 $ 78,912 $ 38,090 193.31% $ 122,466 $ 160,556 $ 38,090 131.10% t Income Lo s 208 610 373 821 165 211 179.20% 849 026 1 149 693 300 667 135.4114 Snapshot of Golf Rounds Budgeted(mo Actual(mo) Variance Variance% Budgeted(vtd) Actual(vtd) Variance Variance% Resident 596 546 (50) 92% 1,858 1,517 (341) 82% Non Resident 3,968 3,602 (366) 91% 8,335 8,391 56 101% Other 53 61 8 115% 306 186 (120) 61% Complimentary 180 280 100 156% 709 551 (158) 78% Total 4,797 4,489 (308) 94% 11,208 10,645 (563) 95% Folder:Desert Willow 2001:Dw2001;Financial Statement Page 1 \ \ ( ? \ \ \ N. c § k0 } 0 } , " N co- ) O. ; ® 0 | 0 k = ■ 0 ƒ 0.5 t j /� \ \ /! ) ( / 6 ©! / ) o ( ; ) \ g - tm ! ; u ! ) ƒ / / a oc < c zZ _ o ai ) m 2 0 _ II \ \ a r II 4 ;§ - / k `a \ k k . & & f ¥ 2 ° , ■ii \ ! # L _ | ) - - ) � ) « \ / / < © ! � ) ( " )a , ! g » k2 / k \/ ) - } * ) 9 f ) < m a 0 \ \ ol to . a tweeteeeset etteteteeeee e eee e t t e m WNN C NWNmmOOO bO ~ - nPOPPP ) Vb OOP cc re2 w b d O W b P cO O O N h O W d h N Ob d O N OONPPo bNN __co; O e1N h EY 2 - N - NA OmPON mN d ^ N WWjm W b a4 b N .O O O d ry b N 0 nn NOO bN b O P d NO _ v _ Nv v v v pV m N.= 00 cci N Vi w w w wH w wwwwwww w ww w w ww4V,Viwww w wViw w w w w N N O W N h b d h N m 0 Inm ^ 0 '00F0000 - d W- a O b D O. 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Ca ta H0 o o �+ C W o • - o o G. o g E °' E -' p d w E <cs 8 a< U 3<,x U . 07 a ! \ ! - C � P !_ / ! ! § H0.to/ < @; ! } ! % 7 Ip ` 2H 0 , k = 0 - } &; - - § - �k � z ` _ ±$ , _ ! \ \] \ 1i 44 I \ . � # I / f : ) / . & , f % G / ° ® k § | E' % § ) t . \ / \ 1 ±* a . � ~ , ! ; \ . ! a t $ ° ° a ) ! « - ) I ; ) Desert Willow Breakdown of Rounds per point of sale system Desert Willow - Combined Analysis- September 2000 Resident 546 $ 24,270 $ 44.45 12.16% Non-Resident 3,602 $ 192,217 $ 53.36 80.24% Other 61 $ 610 $ 10.00 1.36% Complimentary 280 $ 235 $ 0.84 6.24% Desert Willow Totals 4,489$ 217,332 $ 48.41 100.00% Dw2001;POS AVG RD Page 9 Desert Willow Breakdown of Rounds per point of sale system FIRECLIFF COURSE- SEPTEMBER 2000 Description No. Of Revenue Avg. Per Pct to Rounds Per POS Round Total Resident Rounds Resident Fee- Weekend 277 $ 12,325 $ 44.49 10.29% Resident Fee-Weekday 119 $ 5,355 $ 45.00 4.42% Resident Twilight 18 $ 770 $ 42.78 0.67% Total Resident 414 $ 18,450 $ 44.57 15.37% Non Resident Posted Weekend 278 $ 24,601 $ 88.49 10.32% Posted Weekday 147 $ 11,110 $ 75.58 5.46% Posted 9 Hole -Weekday 2 $ 70 $ 35.00 0.07% Posted 9 Hole -Weekend 2 $ 110 $ 55.00 0.07% IROC Member-Twilight 4 $ 256 $ 64.00 0.15% IROC Member Guest-9 Weekday 2 $ 110 $ 55.00 0.07% IROC Des. PRTY - 9 Weekend 1 $ 55 $ 55.00 0.04% IROC Des. PRTY - Weekday 69 $ 2,760 $ 40.00 2.56% IROC Des. PRTY - Weekend 214 $ 9,630 $ 45,00 7.95% IROC Des. PRTY - Twilight 2 $ 55 $ 27.50 0.07% IROC MBR - 9 Weekend 1 $ 55 $ 55.00 0.04% Wholesale Weekend 21 $ 1,533 $ 73.00 0.78% Wholesale Weekday 43 $ 2,725 $ 63.37 1.60% Twilight 303 $ 16,190 $ 53.43 11.25% Posted Replay 15 $ 710 $ 47.33 0.56% Passbook Weekday 67 $ 2,680 $ 40.00 2.49% Passbook Weekend 41 $ 2,195 $ 53.54 1.52% P.S. Golfer Fee (wknd) 12 $ 480 $ 40.00 0.45% P.S. Golfer Fee (wkdy) 2 $ 80 $ 40.00 0.07% Passbook Twilight Fee 7 $ 280 $ 40.00 0.26% Fee Special Event Variable 851 $ 31,969 $ 37.57 31.60% Total Non Resident Rounds 2,084 $ 107,654 $ 51.66 77.39% Other Rounds Junior Walking 53 $ 530 $ 10.00 1.97% Total Other 53 $ 530 $ 10.00 1.97% Complimentary VIP 39 $ - $ - 1.45% PGA Member 40 $ 50 $ 1.25 1.49% Donation 22 $ - $ - 0.82% COD/PDHS 24 $ - $ - 0.89% Employee 17 $ - $ - 0.63% Total Complimentary 142 $ 50 $ 0.35 5.27% Total Round (FireClifi) 2,693 $ 126,684 $ 47.04 100.00% Page 10 Dw2001;POS AVG RD Desert Willow Breakdown of Rounds per point of sale system MOUNTAINVIEW COURSE- SEPTEMBER 2000 Description No. Of Revenue Avg. Per Pet to Rounds Per POS Round Total Resident Rounds Resident Fee- Weekend 69 $ 3,055 $ 44.28 3.84% Resident Fee-Weekday 59 $ 2,625 $ 44.49 3.29% Resident Twilight 4 $ 140 $ 35.00 0.22% Total Resident 132 $ 5,820 $ 44.09 7.35% Non Resident Posted Weekend 97 $ 8,632 $ 88.99 5.40% Posted Weekday 123 $ 9,413 $ 76.53 6.85% IROC MBR Guest-Weekend 1 $ 35 $ 35.00 0.06% IROC Des. PRTY- Weekday 35 $ 1,400 $ 40.00 1.95% IROC Des. PRTY- Weekend 144 $ 6,480 $ 45.00 8.02% IROC Des. PRTY- Twilight 4 $ 135 $ 33.75 0.22% Wholesale Weekend 66 $ 4,657 $ 70.56 3.67% Wholesale Weekday 26 $ 1,750 $ 67.31 1.45% Nine-Hole ( 9)-Weekend 4 $ 140 $ 35.00 0.22% Twilight 176 $ 9,110 $ 51.76 9.80% Passbook Weekday 77 $ 3,080 $ 40.00 4.29% Passbook Weekend 46 $ 2,425 $ 52.72 2.56% P.S. Golfer Fee (wkdy) 8 $ 320 $ 40.00 0.45% P.S. Golfer Fee (wknd) 12 $ 480 $ 40.00 0.67% Fee Special Event Variable 699 $ 36,506 $ 52.23 38.92% Total Non Resident Rounds 1,518 $ 84,563 $ 55.71 84.52% Other Rounds Junior Walking 8 $ 80 $ 10.00 0.45% Total Other 8 $ 80 $ 10.00 0.45% Complimentary VIP 17 $ - $ - 0.95% PGA Member 12 $ 125 $ 10.42 0.67% CODJPDHS 77 $ - $ - 4.29% Donation 14 $ - $ - 0.78% Charity 2 $ 60 $ 30.00 0.11% Employee 16 $ - $ - 0.89% Total Complimentary 138 $ 185 $ 1.34 7.68% Total Round (Mountainview) 1,796 $ 90,648 $ 50.47 100% Page 11 Dw2001;POS AVG RD City of Palm Desert Desert Willow Cash Reserve Analysis for the month of September 2000 Cash Reserve Analysis One Month Required Reserve I $ 500,000.00 Cash on Hand $ 256,885.63 II Variance- Favorable Unfavorable I $ 243,114.37 I Page 12 PalmDesert Recreation Facilities Corporation Income Statement Sep-00 Sep-00 k % Budget Actual Variance Variance Food &Beverage Revenues $93,800 $66,856 ($26,944) 71.28% Total Revenues $93,800 $66,856 ($26,944) 71.28% Salaries $48,465 $52,116 ($3,651) 107.53% Cost of Goods Sold-F&B $29,943 $22,239 $7,704 74.27% Food & Beverage Expense $10,638 $25,852 ($15,214) 243.02% Total Expenses $89,046 $100,207 ($11,161) 112.53% Net Income (Loss) $4,754 ($33,351) $38,105 -701.54% Note: The above revenues and expenditures are also included in the Desert Willow analysis. Dw2001;PDRFC Budget Page 1 City of Palm Desert Internal Correspondence Date: 12 December 2000 Subject: Proposed Additions to City Commercial Paper and MTN Lists From: Thomas Jeffrey, Investment Manager To: Members of the Finance Committee Enclosed please find the City of Palm Desert's current Approved Commercial Paper and Medium-Term Note Issuer Lists. We are proposing the addition of a number of companies that are highlighted in gray block, to both lists. I have attached two Moody's Ratings Definition Guides in order to assist you in evaluating these prospects. Attachment: 1) Moody's Ratings Definitions Guide -- CP 2) Moody's Ratings Definitions Guide -- MTNs • Prime Rating System Page 1 of 2 ATTAc t-lMELIT 1 ,ry . o r.� quick SEARCH ® —y� - search m 1 t by I Issuer Name is user name ser r; for f password go !Select a Business Line It go advanced SEARCH home about moody's products&services contact find an analyst economic commentary -site map feedback help ABOUT MOODY'S : Rating Definitions A A TA ---ao M6RuAL PA •m Introduction Prime Rating System Global Locator Moody's short-term issuer ratings are opinions of understanding Risk the ability of issuers to honor senior financial .flaflng Approach obligations and contracts. These obligations have Rating Methodologies an original maturity not exceeding one year, Rating Definitions unless explicitly noted. . Risk Management Moody's employs the following three designations, Moody's History all judged to be investment grade, to indicate the Partnerships&Alliances relative repayment ability of rated issuers: Press Releases Careers Issuers rated Prime-1 (or supporting institutions) • Copyright • Information have a superior ability for repayment of senior short-term debt obligations. Prime-1 repayment Shareholder Relations ability will often be evidenced by many of the following characteristics: Leading market positions in well-established industries. High rates of return on funds employed. Conservative capitalization structure with moderate reliance on debt and ample asset protection. Broad margins in earnings coverage of fixed financial charges and high internal cash generation. Well-established access to a range of financial markets and assured sources of alternate liquidity. Issuers rated Prime-2 (or supporting institutions) have a strong ability for repayment of senior short-term debt obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and http://www.moodys.com/moodys/cust/staticcontent/2000200000265732.asp?section=rdef 12/13/00 Prime Rating System Page 2 of 2 coverage ratios, while sound, may be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. Issuers rated Prime-3 (or supporting institutions) have an acceptable ability for repayment of senior short-term obligations. The effect of industry characteristics and market compositions may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and may require relatively high financial leverage. Adequate alternate liquidity is maintained. Issuers rated Not Prime do not fall within any of the Prime rating categories. If an issuer represents to Moody's that its short- term debt obligations are supported by the credit of another entity or entities, then the name or names of such supporting entity or entities are listed within the parenthesis beneath the name of the issuer, or there is a footnote referring the reader to another page for the name or names of the supporting entity or entities. In assigning ratings to such issuers, Moody's evaluates the financial strength of the affiliated corporations, commercial banks, insurance companies, foreign governments or other entities, but only as one factor in the total rating assessment. Moody's makes no representation and gives no opinion on the legal validity or enforceability of any support arrangements. Moody's ratings are opinions, not recommendations to buy or sell, and their accuracy is not guaranteed. A rating should be weighed solely as one factor in an investment decision and you should make your own study and evaluation of any issuer whose securities or debt obligations you consider buying or selling. `a= Moody's Investors Soridca The leading provider of independent credit ratings, research and financial information to the capital markets. ©Copyright 2000 Moody's Investors Service Privacy &Security Proprietary Rights 13 DEC 2000, 15:15 Eastern Time http://www.moodys.com/moodys/cust/staticcontent/2000200000265732.asp?section=rdef 12/13/00 Debt Ratings A T T AC1-4MErJT L Page 1 of 4 7 . o - p • Ma rurch SEARCH :, I r.717° search by iIssuer Name 11 user name •y''. for I password ' %` . go Select a Business Line xi go advanced SEARCH home about moody's products&services contact find an analyst economic commentary sito map feedback help ABOUT MOODY'S Rating Definitions MEDI UM-TERM ►DOTES An introduction Debt Ratings Global Locator Aaa - Understanding Risk Rating Approach Bonds which are rated Aaa are judged to be of the Rating Methodologies best quality. They carry the smallest degree of Rating Definitions investment risk and are generally referred to as Risk Management "gilt edged' Interest payments are protected by a large or by an exceptionally stable margin and Moody's History principal is secure. While the various protective Partnerships&Alliances elements are likely to change, such changes as press Releases can be visualized are most unlikely to impair the career: fundamentally strong position of such issues. Copyright Information Aa ,Shareholder Relations Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat larger than the Aaa securities. A Bonds which are rated A possess many favorable investment attributes and are to be considered as upper-medium-grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment some time in the future. Baa Bonds which are rated Baa are considered as http://www.moodys.com/moodys/cust/staticcontent/2000200000265736.asp?section=rdef 12/13/00 Debt Ratings Page 2 of 4 medium-grade obligations (i.e., they are neither highly protected nor poorly secured). Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Ba Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well-assured. Often the protection of interest and principal payments may be very moderate, and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. B Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. Caa Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. Ca Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings. C Bonds which are rated C are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. Issues that are secured by escrowed funds held in trust, reinvested in direct, non-callable US government obligations or noncallable obligations unconditionally guaranteed by the US Government http://www.moodys.com/moodys/cust/staticcontent/2000200000265736.asp?section=rdef 12/13/00 Debt Ratings Page 3 of 4 or Resolution Funding Corporation are identified with a # (hatchmark) symbol, e.g., #Aaa. Con. (...): Bonds for which the security depends on the completion of some act or the fulfillment of some condition are rated conditionally. These are bonds secured by a) earnings of projects under construction, b) earnings of projects unseasoned in operation experience, c) rentals which begin when facilities are completed, or d) payments to which some other limiting condition attaches. The parenthetical rating denotes probable credit stature upon completion of construction or elimination of the basis of the condition Moody's assigns ratings to individual long-term debt securities issued from medium-term note (MTN) programs, in addition to indicating ratings to MTN programs themselves. Notes issued under MTN programs with such indicated ratings are rated at issuance at the rating applicable to all pari passu notes issued under the same program, • at the program's relevant indicated rating, provided such notes do not exhibit any of the characteristics listed below. For notes with any of the following characteristics, the rating of the individual note may differ from the indicated rating of the program: 1) Notes containing features which link the cash flow and/or market value to the credit performance of any third party or parties. 2) Notes allowing for negative coupons, or negative principal. 3) Notes containing any provision which could obligate the investor to make any additional payments. Market participants must determine whether any particular note is rated, and if so, at what rating level. Moody's encourages market participants to contact Moody's Ratings Desks directly if they have questions regarding ratings for specific notes issued under a medium-term note program. Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid- range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. http://www.moodys.com/moodys/cust/staticcontent/2000200000265736.asp?section—rdef 12/13/00 • Debt Ratings Page 4 of 4 0 Ateodys rnr.,tora savle. The leading provider of independent credit ratings,research and financial inforeatioa to the capital markets. ©Copyright 2000 Moody's Investors Service Privacy &Security Proprietary Rights 13 DEC 2000, 15:08 Eastern Time • • http://www.moodys.com/moodys/cust/staticcontent/2000200000265736.asp?section=rdef 12/13/00 12/13/00 CITY OF PALM DESERT 11:35 AM APPROVED MEDIUM-TERM NOTE ISSUERS JANUARY 2001 MOODY'S COUNTRY OF INDUSTRY/COMPANY (1) MTN RATING FOREIGN PARENT Auto American Honda Motor Co. (ONLY) A2 Japan Ford Motor Co. A2 General Motors Corp. A2 Toyota Motor Credit Corp. (ONLY) Aa1 Japan Bank BankAmerica Corp. Aa3 Bank of New York Co. A2 Chase Manhattan Corp. Aa3 J.P. Morgan & Co. Aa3 Northern Trust Corp. Al State Street Boston Corp. Aa3 Wachovia Bank of North Carolina Aa2 Wells Fargo & Co. Aa3 Chemical Du Pont (E.I.) de Nemours & Co. Aa3 Computer Hewlett Packard Co. Aa2 IBM Corp. Al Consumer Gillette Co. Aa3 Kimberly-Clark Corp. Aa2 Proctor & Gamble Co. Aa2 Drugs Abbott Labs Aaa Bristol-Meyers Squibb Co. Aaa Eli Lilly & Co. Aa3 Glaxo Wellcome Inc. (ONLY) Aa2 Britain Johnson & Johnson Aaa Merck & Co. Aaa Schering-Plough Corp. Aa2 SmithKline Beecham Corp. (ONLY) Aa3 Britain Warner-Lambert Co. Aaa Page 1 of 3 (1) Maximum maturity of"A" MTNs is 2 years; "AN' MTNs 3 years; and "AAA" MTNs 5 years. (2) Captive U.S. finance companies are also eligible unless excluded (as indicated by "ONLY"). Y 1 12/13/00 CITY OF PALM DESERT 11:35 AM APPROVED MEDIUM-TERM NOTE ISSUERS JANUARY 2001 MOODY'S COUNTRY OF INDUSTRY/COMPANY (1) MTN RATING FOREIGN PARENT Fdt'cation Columbia University Aaa Harvard University Aaa Yale University Aaa Electric Equipment Emerson Electric Aa1 General Electric Co. Aaa Finance American Express Co. Al Associates Corp. NA (ONLY) Aa3 Citigroup, Inc. Aa2 Food Hershey Foods, Inc. Al H.J. Heinz Co. Aa2 Kellogg Co. Aa2 insurance American International Group Aaa Manufacturing Minnesota Mining & Manufacturing (3M) Aal Office Equipment Pitney Bowes, Inc. Aa3 Petroleum BP America, Inc. (ONLY) Aa1 Britain Exxon-Mobil Corp. Aa1 Shell Oil Co. (ONLY) Aa1 Britain/Netherlands Restaurant McDonald's Corp. Aa2 Retail Home Depot, Inc. Aa3 Wal-Mart Stores, Inc. Aa2 Page 2 of 3 (1) Maximum maturity of"A" MTNs is 2 years; "AA" MTNs 3 years; and "AAA" MTNs 5 years. (2) Captive U.S.finance companies are also eligible unless excluded (as indicated by "ONLY"). 11/4 12/13/00 CITY OF PALM DESERT 11:35 AM APPROVED MEDIUM-TERM NOTE ISSUERS JANUARY 2001 MOODY'S COUNTRY OF INDUSTRY/COMPANY (1) MTN RATING FOREIGN PARENT Securities Brokerage Goldman Sachs Group Al Merrill Lynch & Company, Inc. Aa3 Morgan Stanley Dean Witter & Co. Aa3 Salomon Smith Barney, Inc. Aa3 Telecommunications Bell Atlantic Corp. Al BellSouth Corp. Aal Transportation United Parcel Service Aaa Utility - Electric Duke Energy Corp. Al Utility - Gas Washington Gas Light Co. Aa2 Page 3 of 3 (1) Maximum maturity of"A" MTNs is 2 years; "AA" MTNs 3 years; and "AAA" MTNs 5 years. (2) Captive U.S. finance companies are also eligible unless excluded (as indicated by "ONLY"). L a INTER MEMO O F F ICE To: Honorable Mayor and Members of The City Council From: Paul S. Gibson, Finance Director&City Treasurer Subject: Approval of Annual Statement of Investment Policy Date: 29 November 2000 RECOMMENDATION By minute motion, approve the City of Palm Desert's "Statement of Investment Policy"for the Year 2001, as submitted by the City Treasurer. BACKGROUND State law and City policy require the City Treasurer to conduct an annual review of the City's Statement of Investment Policy in order to ensure that it is in compliance with applicable law. This has been done. While many of the proposed changes are minor, a few merit attention: o Limiting authorization of securities transactions to Finance Department management. o Eliminating a requirement that Union Bank carry $15 million of custodial insurance. o Eliminating concentration limits on United States Treasury securities. o Eliminating maturity limits that are linked to credit ratings on Medium-Term Notes. o Increasing concentration limits on individual corporate issuers from five to 15 percent. o Increasing the maximum maturity of commercial paper to 270 days (per new State law). o Adding Negotiable Certificates of Deposit as an authorized investment. o Eliminating references to a specific investment benchmark in order to allow the benchmark to change as the structure of the City portfolio changes. o Adding a requirement that the City submit periodic investment reports and its investment policy to the California Debt and Investment Advisory Commission("CDIAC"). Due to an impending January 1 deadline for the submission of investment policies to CDIAC, Staff recommends that the City Council approved the attached investment policy with the understanding that final approval would be contingent upon subsequent review and approval by the City Finance Committee. Thomas Jeffrey will be available to answer any questions. Respectfully Submitted, Reviewed`ie'���� and Concurred, ulll S. Gibson, CCMT Carlos L. Orte ga Finance Director& City Treasurer City Manager T CITY OF PALM DESERT STATEMENT Of INVESTMENT POLICY 2001 Certified by the Municipal Treasurers's Association of the United States and Canada on 4 June 1996 ... / 1` •' It s 9 �21Pri PREPARED BY THE CITY FINANCE DEPARTMENT Thomas W. Jeffrey, J.D., M.B.A. Investment Manager REVIEWED AND APPROVED BY Paul S. Gibson, C.C.M.T. City Treasurer Adopted by the City Council on City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 TABLE OF CONTENTS OVERVIEW Introduction Scope Standard of Care Objectives INVESTMENT AUTHORITY Delegation of Authority Internal Controls Conflicts of Interest PROVIDERS OF FINANCIAL SERVICES Authorized Broker-Dealers Authorized Public Depositories Safekeeping and Custody Collateralization INVESTMENT INSTRUMENTS Authorized Investments Prohibited Investments and Practices Investment Pools PORTFOLIO MANAGEMENT Diversification Maximum Maturity Portfolio Rebalancing Credit Downgrading Bond Proceeds PERFORMANCE MEASUREMENT Portfolio Benchmark Performance Investment Reporting POLICY REVIEW AND ADOPTION CITY OF PALM DESERT APPROVED LIST GLOSSARY OF INVESTMENT TERMS City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 I. OVERVIEW INTRODUCTION It is the policy of the City of Palm Desert, the Palm Desert Redevelopment Agency, the Palm Desert Housing Authority, the Palm Desert Financing Authority, and the Palm Desert Recreational Facilities Corporation (hereafter referred to collectively as 3 the "City") to predicate their investment policies, procedures, and practices upon PAaaGaa the limitations placed upon them by governing legislative bodies. These Such COMBIelfO policies, procedures, and practices shall have embody the following three primary Beals principles: (1) To assure compliance with federal, state, and local laws INTO governing the investment of public monies under the control of the City Treasurer's control; (2) Te-preteet protection of the principal monies entrusted to the City; (3) maximization of profit within the parameters of prudent risk management, as defined in by this Statement of Investment Policy ("SOIF"). For the purposes of this policy, "Investment Officers" shall be defined as the City Treasurer and the City Investment Manager. SCOPE This Statement of Investment Policy SOIF shall apply to all funds that are under the control of the City Treasurer's control including, but not limited to, the general fund; special revenue funds; debt service funds; capital project funds; enterprise MORE funds; trust and agency funds; and any other funds under the control of the City Treasurer's control. These funds are accounted for in the City's Comprehensive COn►use Annual Financial Reports. WORDING The City's Deferred Compensation Plan ("Plan") shall be excluded from the scope of this Statement of Investment Policy SOIF if: (1 ) a third-party administrator manages the Plan; (2) individual plan participants have control over the selection of investments; and (3) the City has no fiduciary responsibility to act as a "trustee" for the Plan. The only exception to the foregoing shall be that if the City retains the fiduciary responsibility to act as a trustee for the Plan, then the proviaiens-G# Plan shall be deemed to be within the scope of this SOIF. Under all circumstances, the City Treasurer shall provide the Finance Committee and the City Council with a `quarterly report on the investment of Plan assets. Page 1 of 24 City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 STANDARD OF CARE Investment Officers as trustees of public monies shall adhere to the "prudent investor" standard when managing the City's investment portfolios. They shall invest "...with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency." Investment Officers who follow the provisions of this Statement of Invcatment Policy SOIF and who exercise due diligence shall be relieved of personal responsibility for a security's credit risk or market price risk: provided, that they report substantial deviations from expectations to the City Manager and to the City Finance Committee ("Finance Committee") in a timely manner, and that they take appropriate action to control adverse developments. "Substantial deviations" shall be defined as either a decline of 10 percent or more in the market value of a security due to issuer default or a credit risk downgrade; or the premature sale of a security prior to maturity at 10 percent or more below its acquisition cost. OBJECTIVES The City's investment objectives, in order of priority, shall be: 1 . Safety. Safety of principal shall be the foremost objective. Investments shall be made with the aim of avoiding capital losses due to issuer default; broker- dealer default; or market value erosion. Principal shall be preserved by mitigating: A. Credit Risk, the risk of loss due to the failure of the issuer of the security, shall be mitigated by investing in only the highest quality securities; by diversifying investments; and by pre-qualifying broker-dealers and public depositories; and B. Market Risk, the risk of loss due to a decline in bond prices because of rising market interest rates, shall be mitigated by structuring the portfolios so that issues mature concurrently with the City's anticipated cash requirements, thereby eliminating the need to sell securities prematurely on the open market. Page 2 of 24 City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 It is recognized, however, that in a diversified portfolio, occasional measured losses are inevitable, and must be considered within the context of overall investment return. 2. Liquidity. An adequate percentage of the portfolios shall be maintained in liquid, short-term securities that can be converted to cash, if necessary, to meet disbursement requirements. Since all cash requirements cannot be anticipated, the portfolios should consist largely of securities with active secondary markets. These securities should have a relatively low sensitivity to market risk. Maximum overall portfolio maturities are referenced on page 14, paragraphs 2 and 3 of this SOIF. 3. Yield. Yield shall be considered only after the basic requirements of safety and liquidity have been met. Whenever possible and in a manner consistent with the objectives of safety and liquidity, a yield higher than the market rate of return shall be sought. Page 3 of 24 City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 II. INVESTMENT AUTHORITY DELEGATION OF AUTHORITY California Government Code Sections 53607 and 53608 authorize the legislative body of a local agency to invest, deposit, and provide for the safekeeping of the local agency's funds or to delegate those responsibilities to the treasurer of the local agency. City of Palm Desert Municipal Code Section 3.08.010 delegates the authority to invest, deposit, and provide for the safekeeping of City public monies to the City Treasurer. City of Palm Desert Municipal Code Section 2.16.010 authorizes the City Director of Finance to serve ex officio as City Treasurer. The City Treasurer shall be responsible for all investment transactions that are executed on behalf of the City. The City Treasurer and the Investment Manager shall have the exclusive authority to buy and sell securities on behalf of the City. They shall engage in mutual consultation and in collective decisionmaking on economic trends, investment opportunities, and portfolio structuring. The Investment Manager may execute investment transactions on behalf of the City only if the City Treasurer has previously authorized the transactions-writing. If the City Treasurer is unavailable, then the Finance Operations Manager shall authorize the investment transactions, in-writing, prior to execution. If the Finoncc execution. WRITTEu4 AVTMoRIZATiou uN.JEcESSARY-- PRACTcs IS ORAL APPROVAL. CNAuJ OF APPROVAL 5410uLD $E LIMITED To Fi.jA+JcE DEPARTMenr DUE To TtcrlJ.c4L INTERNAL CONTROLS NAT Q of 5U65eCT. The City Treasurer shall be rcaponsiblc for cnauring ensure that all investment MORE transactions comply with the City's SOIF, and ter , uc1SE shall establishing internal controls that are designed to prevent losses due to fraud, WoRDIaG negligence, and third-party misrepresentation. Accordingly, the City Treasurer shall establish written procedures for the operation of the City's investment program that are consistent with the provisions of this of Invest i nt rolic'y SOIF. Page 4 of 24 City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 Internal controls deemed most important shall include: avoidance of collusion; separation of duties and administrative controls; separating transaction authority from accounting and record keeping; custodial safekeeping; clear delegation of authority; management approval and review of investment transactions; specific limitations regarding securities losses and remedial action; written confirmation of telephone transactions; documentation of investment transactions and strategies; and monitoring of results. The City Treasurer shall establish an annual process of independent review by an external audit firm. The external auditor shall review the management of the City's investment program in terms of compliance with the internal controls previously established in the City's Treasury Policies and Procedures Manual. A Finance Committee consisting of City officials and community representatives shall be responsible for reviewing the City investment reports, transactions, policies and procedures, and strategies, on a monthly basis. The Mayor; the Mayor Pro Tempore; the City Manager; the City Attorney; the Redevelopment Agency Executive Director; the City Treasurer; the Investment Manager; and various citizens who are appointed by the Palm Desert City Council ("City Council") pursuant to City ordinance, shall sit on this committee. CONFLICTS OF INTEREST Investment Officers shall refrain from personal business activity that could conflict with the proper execution of the City's investment program or impair their ability to make impartial investment decisions. They shall disclose to the City Council any material financial interest in financial institutions that conduct business within the City's jurisdiction. They shall also disclose any personal investment positions that could be related to the performance of the City's investment portfolios. Investment Officers shall subordinate their personal investment transactions to those of the City, particularly with regard to the timing of securities purchases and sales, and shall avoid transactions that might impair public confidence. Investment Officers and their immediate relatives shall not accept or solicit any gifts, gratuities, honorariums, or favors from persons or entities who provide or who are seeking to provide financial services to the City. Page 5 of 24 City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 III. PROVIDERS OF FINANCIAL SERVICES AUTHORIZED BROKER-DEALERS The City Treasurer shall maintain an Approved List (see page 18) of all securities broker-dealers that the Finance Committee and the City Council have authorized to engage in securities trading with the City. This list shall be provided to all members of the City Council and the Finance Committee. Any broker-dealer that has made a political contribution within any consecutive four-year period following 1 January 1996 in an amount that exceeds the limits in Municipal Securities Rulemaking Board ("MSRB") Rule G-37, to any member of or candidate for the City Council, the Redevelopment Agency Board, the Housing Authority Commission, or the Finance Committee shall not be eligible to transact business with the City. Only primary government securities dealers ("primary dealers") that regularly report to the Federal Reserve Bank of New York shall be eligible to apply for inclusion on the Approved List. The only exception to the foregoing requirement shall be that the Finance Committee and the City Council may, at their discretion, accept, review, and approve applications from regional brokers that: (1) have been in existence for more than five years; 12) have a net capital position in excess of $100 million; (3) are licensed as broker-dealers by the State of California; and (4) are headquartered or have a branch office in California. 8 BRoK The number of primary dealers and regional brokers on the Approved List shall not 1s exceed a combined total of eight six at any single time. The City shall accept and ExcesSivE1 review new broker-dealer applications only when there is an immediate need to fill BASED 04 a vacancy on the Approved List. In all cases, the City shall only accept GuRRedt applications from and transact business with the institutional securities sales departments of primary dealers and regional brokers. TRADING VoLuME Page 6 of 24 h. City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 All broker-dealers that wish to apply for inclusion on the Approved List must, at a minimum, provide the City Treasurer with a copy of the following documents, unless otherwise noted: 1 . Completed Broker-Dealer Questionnaire and Certification (signed original only). 2. Most recent Annual Report and most recent Securities and Exchange Commission ("SEC") Form 10-K. 3. National Association of Securities Dealers ("NASD") Form BD — Uniform Application for Broker-Dealer Registration or, in the case of an investment department within a commercial bank, SEC Form MSD. 4. Current NASD Form BD Status Report. 5. NASD Form U-4 -- Uniform Application for Securities Industry Registration or Transfer for each employee with whom the City would be trading. 6. Current NASD Form U-4 Status Report on each employee with whom the City would be trading. A resume from each employee with whom the City would be trading. 8. Moat recent MSRB rorm C 37/C 33 Delivery instructions. A trading-resekrtion resolution that identifies employees who are authorized to trad .CITY CA*J DOwULOAD MSR6 FotM Oki LJTERUET. PELIVEBY tuSTeucriodS SFlout,o BE ROPED. CLARIFICA11oU NEEDED os.1 TRADntG RFSot.UT,o'J. PRtMAay In addition to the above documents, secondary brokers must also submit: beRLERS 10. Most recent SEC Form X-17 A-5 or, in the case of an investment department ALRet►D 1 within a commercial bank, most recent SEC Consolidated Reports of Condition MEET and Income for A Bank With Domestic and Foreign Offices — FFIEC 031. TNESE CAPITAL RGQuiRer-4MTS oR T.+t_y wo14.D14'TSSE pR.'MAa4 UL/I.ERS. Investment Officers shall investigate all broker-dealer applicants in order to determine if they: (1 ) are adequately capitalized; (2) are subject to pending legal action (either the firm or the trader); (3) make markets in securities that are appropriate for the City's needs; (4) are licensed as a broker-dealer by the State of California Department of Corporations; and (5) are a member of the NASD. Broker- dealer applicants may be requested to provide local government or other client references from within California. The Finance Committee and the City Council shall review the submitted documents, along with the Investment Officers's recommendations, and shall decide if any broker-dealer applicants should be added to the Approved List. If a broker-dealer applicant fails to complete and submit the required documents on time, then its application shall be deemed to have been automatically rejected. Page 7 of 24 a City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 The City Treasurer shall conduct an annual review, in March, of the financial condition and the registrations of all approved broker-dealers in order to determine whether they should remain on the Approved List. In addition to other requirements, the City shall give all approved broker-dealers a copy of the City's current Ctatemcnt of Invcatmcnt Policy SOIF and a certification form. The completion and submission of the certification form by an approved broker-dealer shall constitute proof that it has received the City's y SOIF, read it, and intends to comply with it. The City Treasurer shall keep current audited annual financial statements on file for each approved broker-dealer with which the City does business. AUTHORIZED PUBLIC DEPOSITORIES UPDATeO The City Treasurer shall maintain an Approved List (see page 18) of all commercial CODE banks, savings associations, and federal associations (as defined by Financial Code Section 5.102) that the Finance LAn1GoA6£ Committee and the City Council have authorized as public depositories of City monies. This List shall be provided to all members of the City Council and the Finance Committee. The City shall only deposit public monies in financial institutions that have: (1) at least $5 billion in total assets; (2) a core capital-to-total assets ratio of at least five yercent; (3) favorable statistical ratings from a nationally recognized rating service, QEFuE as determined by the City Treasurer; (4) a federal or a state charter; end (5) a branch office within Riverside County; and (6) received a "satisfactory" oyerall ErIACTMEfff rating in their most recent evaluation by the appropriate federal- financial OF supervisory agency, in terms of meeting the credit needs of California communities, AG aloe pursuant to federal law. Under no circumstances shall the City's deposits in a financial institution exceed the total shareholders's equity of that institution. SAFEKEEPING AND CUSTODY Investment Officers shall conduct all security transactions on a delivery-versus- payment ("DVP") or on a receipt-versus-payment ("RVP") basis. A third-party bank trust department ("Custodian") that acts as an agent for the City under the terms of a custody agreement executed between both parties shall hold the securities. The City's Custodian shall be represented on the Approved List (see page 18). Page 8 of 24 L. 7 City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 The only exception to the foregoing shall be securities purchases made with: (1) local government investment pools; (2) money market mutual funds; and (3) Federal Reserve Banks ("Treasury Direct Program") since the purchased securities are not deliverable. No securities broker-dealer or investment advisor shall have access to City monies, accounts, or investments. Any transfer of monies to or through a securities broker- dealer must have the City Treasurer's prior written approval. If the City Treasurer is unavailable, then the Finance Operations Manager must authorize thetransfer, in writing. CNAi..► of APPRoJAL- W McT-D To F+wAlucE oEPAR meii Dee To Tcul.i.cM. l.Jdrrun.E of SuBCGC. City. NO LO.JGEQ r.JtEDEO 51 JCg ur iso..J 54.3I4 WAS 8EE4 DiSt+tSSED AS A BRoice . The City shall require Broker Trade Confirmations for all trades. Investment Officers shall review these confirmations immediately upon receipt, for conformity with the terms of the City's Trade Sheets. COLLATERALIZATION Investment Officers shall ensure that all demand deposits and all tom-negotiable S4404411 ccrtificate3 of deposit time deposits that exceed $100,000 shall be fully collateralized with securities authorized under state law and under this Statement of Investment Policy SOIF. Collateral may be waived for the first $100,000 since this will be insured by the Federal Deposit Insurance Corporation. Any amount on deposit over $100,000 plus accrued interest, however, shall be collateralized with United States Treasury or federal agency securities at a constant margin ratio of 110 percent or with mortgage-backed collateral at a constant margin ratio of 150 percent. Collateralized investments and demand deposits may require substitution of collateral. The City Treasurer must approve all requests from financial institutions for substitution of collateral that involve interchanging classes of security. An independent third party with which the City has a current custodial agreement shall always hold the collateral. The independent third party shall provide the City Treasurer with a safekeeping receipt that he shall retain. Page 9 of 24 City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 IV. INVESTMENT INSTRUMENTS AUTHORIZED INVESTMENTS The City is authorized to invest in the following financial instruments pursuant to California Government Code Section 53600 et seq.: The City's investment policy is more conservative than state law. 1 . United States Treasury Bills, Notes, Bonds, and Certificates of Indebtedness that are issued by the United States Government. There shall be no IJoT REQUIRED concentration limit on the purchase of Treasury such securities. other than UNDER STATE for zero coupon securities. Purchases of zero coupon Treasuries shall not I..ARJ. WE RARE-Ly BUY ZEROS. iP MCQW A SPECIFIC LIABIUTY Tr1A7 MAY EXCEED 3 YEARS. WE Wouult4T S W ELL Su A SEcARIT> WE Do, I T 52To Federal Agency and Instrumentality Notes that are issued by PRIM To the MATua i% Federal Farm Credit Bank; the Federal Home Loan Bank; the Federal Home Loan Mortgage Corporation; the Federal National Mortgage Association; the No I...on►GER ennessee Valley Authority; the Export-Import Bank of the United States; the Federal I and Bank. the Small Business Administration; the Student Marketing 1SSU6S BoaDS Loan Association; and the Farm Credit Consolidated System. Purchases of callable securities shall not exceed 20 percent of the book value of the City's investment portfolio. Purchases of callable securities shall not exceed more than 10 percent of the book value of the City's investment portfolio (excluding the gross proceeds of tax-exempt bonds) in any one year. No more than 30 percent of the book value of the City's investment portfolio (excluding the gross proceeds of tax-exempt bonds) may be invested in any one issuer. 3. Medium-Term Notes Investment shall be limited to medium term notca ("MTN") rated "A" or better by Standard & Poor's Corporation ("Standard & Poor's") or by Moody's Investors Service, Inc. ("Moody's"), that are issued by corporations organized and operating in the United States or by depository institutions licensed by the United States or by any state and operating within the United States. Purchases of "A" rated MTNs shall not AAA" rated MTNs five years to maturity. Purchases of MTNs shall not exceed 30 percent of the book value of the City's investment portfolio . No more than five percent of the book value of the City's investment portfolio NOT REQUIRED UNDER STA.% LAW. ELIMl.IATod WILL RAISE. CREDIT STAIJOARDS. AIJY MTN ToAT TNa crry Buys srtouc.D SE OF Page 10 of 24 SuFFitteni QUALITY To SE HELD coat 3 YEARS (64 PQAcTic.EI oUCt USvAL MAXIMUM MATvetCV). cuttmatMoRE, DIFFERence irU CRkocr QUALITY B&TWEA . 'AA3" A.40 "Ain IS SL16I-IT. 6ReATEST Buv1NG OPPORTUNITIES ARE IIJ "A1` MARKe:T. City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 NOT REQUIRED shall be invested in the MTNs of any one issuer. CINDER STATE I..AW ciuneallS, GITg CANJ OWL4 iksvEST 5% OF PORTFOLIO NN ONE COMPpo4V.TIS cknivae Woux.D ALLOW I4IUGSTMS.IT OP To IS,% (PEAmiTTa) &i LAW). 4. Prime Bankers's Acceptances bankers's acceptances ("BA") issued by commercial banks that are rated "A" or higher by Standard & Poor's and by Moody's. Purchases of BAs shall not exceed 180 days to maturity. Purchases of BAs shall not exceed 40 percent of the book value of the City's investment portfolio. No more than 30 percent of the book value of the City's investment portfolio shall be invested in BAs issued by any one bank. 5. ' onTime Deposits Invcatment Shall be certificates of dcpoait ("CD") that SVNIONYMS are collateralized and that are issued by qualified public depositories that meet the criteria specified on page 8, paragraph 3 of this Sent of Invcatmcnt Policy "SOIF". CDs Time deposits shall be centralized at one designated office location for each financial institution. &Bs Time deposits that exceed $100,000 shall be collateralized pursuant to the collateralization provisions of this Statement of Investment Policy SOIF. Purchases of CBs time deposits shall not exceed one year to maturity. No more than 15 percent of the book value of the City's investment portfolio shall be invested in CDs time deposits. If collateralization will not be involved, then no more than $90,000 may be invested in any one issuer. i Ii PQINII"a'i 6. Prime Commercial Paperinvcstmcnt shall be permitted in prime commercial IS ►IIGHEST paper—("CP") that is rated has a minimum rating of "Al " by Standard & Poor's or "P1 " by Moody's. The issuing corporation must be organized and QUAuTY PAPER. operating in the United States; have total assets of $500 million or more; uMinliNWH Rat :° and have long term debentures, debt, other than commercial paper, if any, ADON�D 4BCA14SE that have has been rated "A" or higher by Standard & Poor's or by Moody's. Purchases of CP shall not exceed -1-80 270 days to maturity. No more than o GReAtou of 15 percent of the book value of the City's investment portfolio shall be "A1+" PAPER. invested in CP. No more than 10 percent of the outstanding CP of any one issuer shall be purchased. CHA4SE To 2.70 of'15 REFLEC.TS C—,JauHEnV OP QECErJT STATE LEGISL.ATtoIJ . 7. Negotiable Certificates of Deposit ("NCDs") that are issued by a nationally- or state-chartered bank; a savings association or a federal association; or a state-licensed branch of a foreign bank, with long-term debt that has=been rated "AA" or higher by Standard & Poor's and by Moody's. No more than 30 percent of the City's investment portfolio may be invested in NCDs. NCDs ARE AUTr+oeILED uNoER STATE L0.1.4l. ADDEO To I NV ESTMEra Po L.IC' Ind CASE 000SL.E. -D 14. i r Page 11 of 24 INTEREST RATES Or EARLY ICl6os EVER APPEAR ACAIrJ, City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 8. Money Market Funds MORE Cold lSE r- L,AnIGUAGE ferrets ("MMF") that,; :are registered with the SEC under the Investment 'Company Act of 1940. In seeking to maintain a stable share price of $1 .00, the MMF shall have a dollar-weighted average maturity of 90 days or less and shall purchase securities with an effective maturity of 13 months or less. Commission (e.g., sales load on purchases, reinvested dividends, redemptions, and exchanges) shall not be included in the purchase of any fund shares. A qualifying MMF must have: (1) total portfolio net assets of $500 million or more; and (2) the highest rating of the two largest nationally recognized rating services OR an investment advisor who is registered with the SEC, and who has five years's or more of experience investing for MMFs of $500 million or more in total portfolio net assets. The City shall require audited annual financial statements and a "Statement of Additional Information" from each MMF in which it has public monies invested. No PERMITTED uuodt�more than 20 percent of the book value of the City's investment portfolio 5TATE LAW. (excluding the gross proceeds of tax-exempt bonds) may be invested in MFs. N SCGSS AR4 l"eR RDA. 9 Local Agency Investment Fund ("LAIF"), a pool which that is organized and managed by the State Treasurer's Office for the benefit of local agencies, pursuant to California Government Code Section 16429.1 . The City Council and the Redevelopment Agency Board approved City participation in LAIF on 12 December 1981 in Resolution Number 81-161 . Investment shall be limited to the maximum amount per legal entity that is permitted under state law. PROHIBITED INVESTMENTS AND PRACTICES Investment Officers shall not invest public monies in financial instruments that are not authorized under this SOIF. Prohibited investments shall include, but shall not be limited to, equity securities, bond mutual funds, repurchase agreements, reverse repurchase agreements, and derivative contracts (forwards, futures, and options). The purchase of derivative securities shall be prohibited except for callable and for zero coupon Treasury ("STRIPS") securities. Page 12 of 24 d' City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 Investment Officers shall not engage in securities lending, short selling, or other hedging strategies. LAIF and MMFs shall be exempt from the prohibitions on derivative contracts, derivative securities, repurchase agreements, reverse repurchase agreements, securities lending, short selling, and other hedging strategies. INVESTMENT POOLS Investment Officers shall investigate all local government investment pools ("LGIPs") prior to investing public monies and periodically thereafter while City public monies are invested in the LGIP. With the exception of LAIF, all LGIPs shall meet the criteria specified for money market funds in this t of Investment Policy SOIF. Page 13 of 24 City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 V. PORTFOLIO MANAGEMENT DIVERSIFICATION Investment Officers shall diversify the City's investment portfolios by security type and by issuer, except for bond reserve monies; bond escrow monies; and any other monies that the City Council or the Finance Committee designates. MAXIMUM MATURITY Investment Officers shall not invest in securities with maturities exceeding five years. The Finance Committee and the City Council, however, may approve longer maturities for the investment of bond reserve, bond escrow, and other funds if the maturities of such investments are expected to coincide with the expected use of the funds. At least 50 percent of the City portfolio shall mature in three years or less; 30 percent in two years or less; and 20 percent in one year or less. The only exception to these maturity limits shall be the investment of the gross proceeds of tax-exempt bonds. PORTFOLIO REBALANCING In the event that portfolio percentage constraints are violated due to a temporary imbalance in the portfolio, then Investment Officers shall hold the affected securities to maturity in order to avoid capital losses. If no capital losses would be realized upon sale, however, then Investment Officers shall consider rebalancing the portfolio after evaluating the expected length of time that it will be imbalanced. Portfolio percentage limits are in place in order to ensure diversification of the City investment portfolio; a small, temporary imbalance will not significantly impair that strategy. CREDIT DOWNGRADING This SOIF sets forth minimum credit risk criteria for each type of security. This credit risk criteria applies to the initial purchase of a security; it does not automatically force the sale of a security if its credit risk ratings fall below policy limits. Page 14 of 24 a City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 If a security is downgraded below the minimum credit risk criteria specified in this SOIF, then Investment Officers shall evaluate the downgrade on a case-by-case basis in order to determine the security should be held or sold. The City Treasurer shall inform the Finance Committee at its next monthly meeting of the credit downgrade and of the Investment Officers's decision to hold or sell the downgraded security. Investment Officers shall review the credit standing of all securities in the City's investment portfolios on a semiannual basis. BOND PROCEEDS The City Treasurer shall segregate the gross proceeds of tax-exempt bonds from the City general pool and shall keep them in a separate pool. They shall be invested pursuant to the instructions in the respective bond indentures of trust. If the bond indenture authorizes investments that conflict with this Statement of Investmcnt Policy SOIF, then such investments shall be made only with the Finance Committee's prior approval. All securities shall be held in third-party safekeeping with the bond trustee ("Trustee") and all DVP and RVP rules shall apply. The Trustee shall be represented on the Approved List (see page 18). Investment Officers shall use competitive offerings, whenever practical, for all investment transactions that involve the gross proceeds of tax-exempt bonds. The City shall obtain a minimum of three competitive offers. Any exceptions to this policy shall be documented and shall be reported to the Finance Committee at its next monthly meeting. The City is required under the "U.S. Tax Reform Act of 1986" to perform annual arbitrage calculations and to rebate excess earnings to the United States Treasury from the investment of the gross proceeds of tax-exempt bonds that were sold after the effective date of that law. The City Treasurer may contract with qualified outside financial consultants to provide the necessary technical expertise that is required to comply with this law. Page 15 of 24 L City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 VI. PERFORMANCE MEASUREMENT PORTFOLIO BENCHMARK The City's investment portfolios, for the most part, shall be passively managed with portfolio securities being held to maturity. On selected occasions, the City's portfolios may be actively managed for purposes of improving portfolio risk structure, liquidity, or yield in response to market conditions or to meet City requirements. Profit-taking may only be done if capital gains would: (1) exceed the return that would be realized by holding the security to maturity; and (2) more than offset any income reduction due to reinvestment rate risk. The City shall secondary market 03 a benchmark adopt a benchmark that approximates the composition and weighted-average maturity of each City portfolio, in order to measure whether or not the City's portfolio yields are matching or surpassing the market yield. PRoviOES FL.Exi B%L%Ty W CNAdGt$JG S 4cHMAtues 51-1o1_1t-O L'OMPCS titoJ FI.JD rtATJ¢ITV OF CtTy Pcn.TFOUO RQOIr4LLy CNhJa , PERFORMANCE INVESTMENT REPORTING °KiE'YEAR It Btu- I4uaot.t. WAS Too LD W. The City Treasurer shall provide the Finance Committee and the City Council With a monthly investment report within 30 days of month-end or at the next scheduled City Council meeting following a Finance Committee meeting. This report shall include a complete portfolio inventory with details on issue, par value, book value, coupon/rate, original settlement date of purchase, final maturity date, CUSIP number, average weighted yield, average days to maturity, and market value (including source of market valuation). The report will include a statement on compliance or noncompliance with the City's Statement of Investment Policy and a statement on whether there are or are not sufficient funds to meet the City's anticipated cash requirements for the next six months. REFLECTS The City Treasurer shall provide the California Debt and Investment Advisory RECEni Commission ("CDIAC") with second- and fourth-quarter fiscal year investment ENAaMen1 reports within 60 days of those quarter-ends. Likewise, the City Treasurer, shall OF also provide CDIAC with the City's SOIF within 60 days of calendar year-end or AB 943 within 60 days of any amendment thereto. Page 16 of 24 l• A E City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 VII. POLICY REVIEW AND ADOPTION The City Treasurer shall submit a f Investment Pol y SOIF to the Finance Committee; the City Council; the Redevelopment Agency Board; the Housing Authority Commission; the Financing Authority Commission; and the ecreational Facilities Corporation Board of Directors annually for their review and BETTER adoption. The City Treasurer shall submit this Stetcment the SOIF to the Finance hl„lE Committee by 30-November 31 October of each year. CVCLt: Page 17 of 24 City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 VIII. THE CITY OF PALM DESERT APPROVED LIST The City of Palm Desert, the Palm Desert Redevelopment Agency, the Palm Desert Housing Authority, the Palm Desert Financing Authority, and the Palm Desert Recreational Facilities Corporation have authorized the following securities broker- dealers, public depositories, and other financial institutions to provide financial services to the City. UNITED STATES GOVERNMENT 1 . Federal Reserve Bank PRIMARY DEALERS 1 . Banc of America Securities LLC 2. Chase Securities, Inc. (2. AOoto 3, L Brothers, Inc. Merrill Lynch & Company, Inc.4, Morgan_Stanley Dean_Witter & Company2- 1,%6rst155" 5. Salomon Smith Barney, Inc. REGIONAL BROKERS 1 . (REGLASStFsaD AS A PRIMARS 8ASeO uPW PARErT CO) 2. (DisMs 55ED) 3. Wells Fargo Bank PUBLIC DEPOSITORIES 1 . Bank of America (LOCAL 5O85IOIAtV OF ACquiRGo 2, California Federal Bank / 6 4 Downey Savings & Loan / N00.114ERIJ TRUST CDM�4Y CALPED 4. ClendaIe Fede Northern Trust Bank OP GNiCAGO, ILLd►lols 5. Our-OF- a ,si r lass) 6. Union Bank of California 7. Washington Mutual Bank 8. Wells Fargo Bank CUSTODIAN 1 . Union Bank of California TRUSTEE 1 . U.S. Bank Bank of New York (►JE►,J TRuSTGE) Page 18 of 24 City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 IX. GLOSSARY OF INVESTMENT TERMS AGENCIES. Federal agency and instrumentality securities. ASKED. The price at which securities are offered. BANKERS'S ACCEPTANCE ("BA"). A draft, bill, or exchange accepted by a bank or a trust company. Both the issuer and the accepting institution guarantee payment of the bill. BID. The price offered by a buyer of securities (when one sells securities, one asks for a bid). See "Offer". BROKER. A broker brings buyers and sellers together so that he can earn a commission. CERTIFICATE OF DEPOSIT ("CD"). A time deposit with a specific maturity, as evidenced by a certificate. Large-denomination CDs are typically negotiable. COLLATERAL. Securities, evidence of deposit, or other property which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. COMPREHENSIVE ANNUAL FINANCIAL REPORT ("CAFR"). The official annual report for the City of Palm Desert. It includes five combined statements for each individual fund and account group, that are prepared in conformity with GAAP. It also includes supporting schedules that are necessary to demonstrate compliance with finance-related legal and contractual provisions, extensive introductory material, and a detailed statistical section. COUPON. (a) The annual rate of interest that a bond's issuer promises to pay the bondholder on the bond's face value. (b) A certificate attached to a bond, that evidences interest due on a payment date. DEALER. A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. DEBENTURE. A bond secured only by the general credit of the issuer. Page 19 of 24 City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 DELIVERY VERSUS PAYMENT. There are two methods of delivery of securities: (1) delivery versus payment (DVP); and (2) delivery versus receipt (DVR). DVP is delivery of securities with an exchange of money for the securities. DVR is delivery of securities with an exchange of a signed receipt for the securities. DERIVATIVES. (1) Financial instruments that are linked to, or derived from, the movement of one or more underlying indexes or securities, and may include a leveraging factor; or (2) financial contracts based upon a notional amount whose value is derived from an underlying index or security (e.g., interest rates, foreign exchange rates, equities, or commodities). DISCOUNT. The difference between the acquisition cost of a security and its value at maturity, when quoted at lower than face value. A security that sells below original offering price shortly after sale, is also is considered to be at a discount. DISCOUNT SECURITIES. Non-interest bearing money market instruments that are issued a discount and that are redeemed at maturity for full face value (e.g., U.S. Treasury Bills). DIVERSIFICATION. Dividing investment funds among a variety of securities that offer independent returns. FEDERAL CREDIT AGENCIES. Agencies of the Federal Government that were established to supply credit to various classes of institutions and individuals (e.g., S&Ls, small business firms, students, farmers, farm cooperatives, and exporters). FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC"). A federal agency that insures bank deposits, currently up to $100,000 per deposit. FEDERAL FUNDS RATE. The rate of interest at which Fed funds are traded. This rate is currently pegged by the Federal Reserve through open-market operations. FEDERAL HOME LOAN BANKS ("FHLB"). Government-sponsored wholesale banks (currently 12 regional banks) which lend funds and provide correspondent banking services to member commercial banks, thrift institutions, credit unions, and insurance companies. The mission of the FHLBs is to liquefy the housing-related assets of its members, who must purchase stock in their District Bank. FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FNMA"). FNMA, like GNMA, was chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal corporation working under the auspices of the Department of Page 20 of 24 City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 Housing and Urban Development (HUD). It is the largest single provider of residential mortgage funds in the United States. Fannie Mae, as the corporation is called, is a private stockholder-owned corporation. The corporation's purchases include a variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages. FNMA's securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all security holders will receive timely payment of principal and interest. FEDERAL OPEN MARKET COMMITTEE ("FOMC"). The FOMC consists of seven members of the Federal Reserve Board and five of the 12 Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a permanent member, while the other Presidents serve on a rotating basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases and sales of government securities in the open market, as a means of influencing the volume of bank credit and money. FEDERAL RESERVE SYSTEM. The central bank of the United States created by Congress and consisting of a seven-member Board of Governors in Washington, D.C., 12 regional banks, and about 5,700 commercial banks that are members of the system. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA" or "Ginnie Mae"). Securities that influence the volume of bank credit that is guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations, and other institutions. A security holder is protected by the full faith and credit of the U.S. Government. Ginnie Mae securities are backed by the FHA, VA, or FMHM mortgages. The term "pass-throughs" is often used to describe Ginnie Maes. LIQUIDITY. A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow, and reasonable size can be done at those quotes. LOCAL GOVERNMENT INVESTMENT FUND ("LAIF"). Monies from local governmental units may be remitted to the California State Treasurer for deposit in this special fund for the purpose of investment. MARKET VALUE. The price at which a security is trading and could presumably be purchased or sold. Page 21 of 24 City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 MASTER REPURCHASE AGREEMENT. A written contract covering all future transactions between the parties to repurchase-reverse repurchase agreements, that establishes each party's rights in the transactions. A master agreement will often specify, among other things, the right of the buyer (lender) to liquidate the underlying securities in the event of default by the seller (borrower). MATURITY. The date upon which the principal or stated value of an investment becomes due and payable. MONEY MARKET. The market in which short-term debt instruments (e.g., bills, commercial paper, bankers's acceptances) are issued and traded. OFFER. The price asked by a seller of securities (when one buys securities, one asks for an offer). See "Asked" and "Bid". OPEN MARKET OPERATIONS. Purchases and sales of government and certain other securities in the open market by the New York Federal Reserve Bank, as directed by the FOMC in order to influence the volume of money and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and credit; sales have the opposite effect. Open market operations are the Federal Reserve's most important and most flexible monetary policy tool. PORTFOLIO. A collection of securities that an investor holds. PRIMARY DEALER. A group of government securities dealers that submit daily reports of market activity and positions, and monthly financial statements to the Federal Reserve Bank of New York, and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission (SEC) -- registered securities broker-dealers, banks, and a few unregulated firms. PRUDENT INVESTOR RULE. An investment standard. A fiduciary, such as a trustee, may invest in a security if it is one that would be bought by a prudent investor acting in like capacity, who is seeking reasonable income and preservation of capital. QUALIFIED PUBLIC DEPOSITORIES. A financial institution that: (1) does not claim exemption from the payment of any sales, compensating use, or ad valorem taxes under the laws of this state; (2) has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability; and (3) has been approved by the Public Deposit Protection Commission to hold public deposits. Page 22 of 24 City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 RATE OF RETURN. The yield obtainable on a security based on its purchase price or its current market price. REPURCHASE AGREEMENT ("RP" OR "REPO"). A holder of securities sells them to an investor with an agreement to repurchase the securities at a fixed price on a fixed date. The security "buyer", in effect, lends the "seller" money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. Dealers use RP extensively to finance their positions. Exception: when the Fed is said to be doing RP, it is lending money (increasing bank reserves). SAFEKEEPING. A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank's vaults for protection. SECONDARY MARKET. A market made for the purchase and sale of outstanding issues following the initial distribution. SECURITIES AND EXCHANGE COMMISSION. An agency created by Congress to administer securities legislation for the purpose of protecting investors in securities transactions. SEC RULE 15c3-1. See "Uniform Net Capital Rule". STRUCTURED NOTES. Notes issued by instrumentalities (e.g., FHLB, FNMA, SLMA) and by corporations, that have imbedded options (e.g., call features, step- up coupons, floating rate coupons, derivative-based returns) in their debt structure. The market performance of structured notes is affected by fluctuating interest rates; the volatility of imbedded options; and shifts in the yield curve. TREASURY BILLS. A non-interest bearing discount security that is issued by the U.S. Treasury to finance the national debt. Most T-bills are issued to mature in three months, six months, or one year. TREASURY BONDS. Long-term, coupon-bearing U.S. Treasury securities that are issued as direct obligations of the U.S. Government, and having initial maturities of more than 10 years. TREASURY NOTES. Medium-term, coupon-bearing U.S. Treasury securities that are issued as direct obligations of the U.S. Government, and having initial maturities of two to 10 years. Page 23 of 24 City of Palm Desert Effective Date: 01-01-01 Statement of Investment Policy Supersedes: 11-18-99 UNIFORM NET CAPITAL RULE. SEC requirement that member firms, as well as non-member broker-dealers in securities, maintain a maximum ratio of indebtedness-to-liquid capital of 15 to one. Also called net capital rule and net capita ratio. Indebtedness covers all money that is owed to a firm, including margin loans and commitments to purchase securities (one reason that new public issues are spread among members of underwriting syndicates). Liquid capital includes cash and assets easily converted into cash. YIELD. The rate of annual income return on an investment, expressed as a percentage. (a) INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond. Page 24 of 24 a City of Palm Desert Internal Correspondence Date: 5 December 2000 Subject: Additional Treasury Audit Issues From: Paul S. Gibson, Finance Director & City Treasurer To: Members of the Finance Committee Recommendations That the City Treasurer be authorized to forward the additional audit issues in Exhibit "B" to the City's outside auditor for use in a City treasury audit. Background One of the goals of the "2010 Plan" and the City's "Statement of Investment Policy" ("SOIF") has been to develop and to institutionalize an annual audit of the City's treasury function. The purpose of such an audit would be to test both internal controls and compliance with the City's SOIF and its Treasury Policies and Procedures. The City's outside auditor, as part of the City's annual financial audit, has already addressed the issues that are listed in Exhibit "A", which is attached. The City accounting and treasury staffs have developed additional audit issues that are listed in Exhibit "B", which is attached, that are intended to further strengthen accountability for treasury operations. We are requesting review and approval of these additional audit issues. Attachments: 1 ) Exhibit "A" -- Treasury Issues in 2000 Annual Audit 2) Exhibit "B" -- Additional Treasury Audit Issues EXHIBIT "A" 4 TREASURY ISSUES IN 2000 ANNUAL AUDIT 1 . Confirmation of Investments. Confirm total investments owned by the City on 30 June 2000. 2. Compliance Testing. Test two months of investment reports to determine if City followed its investment policy. Example: the limits on the amount of investments held in different securities. EXHIBIT "B" h ADDITIONAL TREASURY AUDIT ISSUES 1 . Legal Restrictions. Were all investments in conformity with the security types and concentration limits that were authorized by law, contract, and City investment policy? 2. Questionable Transactions. Was there any evidence of "churning" or of a repeated pattern of excessive premiums paid to a particular broker on securities purchases? 3. Bank Wires. Were all outgoing bank wires, both repetitive and non- repetitive, that were initiated either by a City employee or by an authorized third party, verified by a second City employee? 4. Trade Documentation. Were all trades that were executed during the audit period appropriately documented? 5. Trade Settlement. Did an independent third-party clear all trades? 6. Segregation of Tasks. Did an employee other than the City Investment Manager, account for all trades? 7. Investment Reporting. Were monthly investment reports filed with the Finance Committee and the City Council? 8. Realized Capital Losses. Were any securities sold at a loss? If so, was there reasonable justification for the sale? Were losses reported to the Finance Committee? 9. Signature Cards. Were the signatures on all bank cards kept current? Were two signatures required for each bank account? 10. Competitive Offerings. Were all competitive offerings conducted in a manner consistent with the City's investment policy? Did that policy conform with IRS requirements that must be met in order to ensure a "safe harbor"? 11 . Broker-Dealers. Was all qualifying documentation in order for new brokers? Was all requalifying documentation in order for existing brokers? 12. Successor Trusteeship. Were all investments and cash accounted for during the transfer of trust assets from U.S. Bank to Bank of New York? 13. Administrative Fees. Did U.S. Bank charge the City the correct administrative fees, pursuant to U.S. Bank's agreement with the City? - - - - { -U'Lie eat : Co_i_mtActrc - Dia t4i pu rev-,_ ri/_zappiLeurceL 413(0 Chia_ — C►�cic_cs F bt i G`p wct _ 5u l_ cat. . Sorg - 1,t ea) _r _C) tt Q 1L_04an _4 �C!c,w _q 4.o1Q 61/21cla± Gab csrn_m_ - bVj t �Z 6. N® ptie104 e.- eiv ate) - —gib 7!' tutztoiduu 4151_6. 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