HomeMy WebLinkAbout2003-01-22 IFC Regular Meeting Agenda Packet ��,. �•°_� � �� �"T Des®rt'� r 8�
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' 2002
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Paul S. Gibson, C.C.M.T., Treasurer
Thomas W. Jeffrey, J.D., M.B.A., Investment Manager
Treasurer's Commentary
On 30 January, the Federal Reserve Open Market Committee ("FOMC") left the Federal Funds Rate unchanged at 1.75
percent. This is the first time that the FOMC has not cut interest rates since January 2001. The FOMC believed that while the
economy appeared to be bottoming out, an economic recovery would probably be several months off, and relatively mild.
Consequently, the FOMC decided to maintain its "easing bias".
Accounting and disclosure concerns (e.g., Enron)triggered a massive sell-off in the January corporate bond market. In the
commercial paper market, lower-rated corporate issuers were compelled to pay a premium in order to attract investors, due to
similar concerns. Energy,telecommunications, and auto companies were the most severely affected.
Standard and Poor's downgraded the long-term debt of General Motors Acceptance Corporation ("GMAC")from "A"to "BBB+",
based upon a long-term negative outlook, due to profitability pressures from Japanese competitors. One security in the City
Portfolio is affected by this downgrade. The City has a $4 million GMAC note that will mature in March 2003. Staff believes
that the City can continue to hold this note since the protability pressures on GMAC are not immediate. Additionally, this
security still meets the City's policy criteria on credit quality.
Pa"ks ll:iavom C..C.M r.
Treasurer
PORTFOLIO STATISTICS
Dollars in Thousands
JAN-02 DEC-01 NOV-01 OCT-01 SEP-01 AUG-01
CITY
Month-End Book Value`"' $ 179,824 $ 163,537 $ 166.386 $ 165,331 $ 169,727 $ 173,791
Month-End Market Value- $ 182,342 $ 166,130 $ 169,077 $ 168,076 $ 172,344 $ 176,049
Paper Gain (Loss) $ 2,518 $ 2,593 $ 2,691 $ 2,745 $ 2,617 $ 2,258
Interest Earnings $ 488 $ 499 $ 519 $ 567 $ 615 $ 712
Yield-To-Maturity 3.27% 3.55% 3.69% 3.98% 4.28% 4.42%
Weighted Maturity(Days) 325 364 360 375 359 354
Effective Duration 0.19 0.24 0.27 0.31 0.32 0.31
RDA
Month-End Book Value"` $ 85,482 $ 85,132 $ 84,935 $ 69,921 $ 70,498 $ 146,689
Month-End Market Value"` $ 87,392 $ 87,015 $ 86,814 $ 71,736 $ 72,303 $ 148,327
Paper Gain (Loss) $ 1,910 $ 1,883 $ 1,879 $ 1,815 $ 1,805 $ 1,638
Interest Earnings $ 184 $ 194 $ 203 $ 188 $ 289 $ 604
Yield-To-Maturity 2.45%, 2.61% 2.83'/a 3.04% 3.69% 3.96%
Weighted Maturity(Days) 202 203 204 247 221 904
Effective Duration 0.24 0.25 0.27 0.35 0.29 0.41
City Treasurer's Office
73-510 Fred Waring Drive
Sep-Jan omit SLGSs. Palm Desert, CA 92260-2578
760.346.0611
Cit400f Palm Desert- Portfolio Characteristics
31 January 2002
Dollars in Thousands
Ageing Interval Market Value
327 General Fund Ag
< 1 M $ 45eing
<2M 7,992
<3M 60 53
<6M 9,025
<1YR 18,322 45
<2Y R 4,072 0
<3YR = 30 22
0
<4YR a is s n
<5YR 5
>5YR
0
Total: $ 84,738 <1M <2M <3M <6M <1YR <2YR
Ratings Market Value Credit Quality
AAA $ 81,053 AAA
aar AA
AA 3,088 1 :) 2'/°
A 4,070 AlI 1 A
AI/PI 2%
Lin rated" 94,131 Unrated
Total: $ 182,342 52°i
Sector Market Value Asset Allocation Money Market Commercial
U.S.Treasury $ 23,548 Funds Paper
23% Corporate
Federal Agency 33,122 Bonds
Money Market Funds 42,428 7%
Commercial Paper - Federal Agency '
Corporate Bonds 12,242 19°/ LAIF
LAIF 40,000 22°i
RDA Loan 31,002 U.S.Treasury
Total: $ 182,342 13/ RDA Loan
17%
Month City Yield LAIF Yield Variance Pertormance
Feb01 5.86 6.17 -0.31
Mar 6.72 5.98 -0.26 6.5
Apr 6.46 5.76 -0.30
May 4.91 5.33 -0.42 5.5
Jun 4.71 4.96 -0.25
Jul 4.53 4.64 -0.11 m a.e r
Aug 4.42 4.50 -0.08 s 3.5T.
Sep 4.28 4.35 -0.07
Oct 3.98 3.79 0.19 2.5 6
Nov 3.69 3.53 0.17 Feb01 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan02
Dec 3.54 3.26 0.28
Jan02 3.27 3.07 0.20 12 LAIF Yield 13 City Yield
' Standard and Poor's Credit Ratings
" LAIF, Highlvlark Sweep, and City Loan to RDA Page 2 of 8
City of Palm Desert
Portfolio Holdings
31 January 2002
Market Ratings
Par Value Issuer Coupon Cmanrity I Moody'sl S& P
Medium-Term Notes
$ 1,000,000 ASSOCIATES 6.50 8/15/02 $ 1,010,974 4.38 102.18 $ 1,021,804 Aa3 AA-
$ 2,000,000 DU PONT 6.75 10/15/02 $ 1,999,149 6.81 103.30 $ 2.065,906 Aa3 AA-
$ 2,000,000 GENERAL ELECTRIC 5.18 2/1/02 $ 2,000,000 5.48 100.00 $ 2,000,000 Aaa AAA
$ 2,000,000 GENERAL ELECTRIC 6.52 10/8/02 $ 1.996,483 6.80 102.89 $ 2.057,808 Aaa AAA
$ 1,000,000 GENERAL ELECTRIC 6.65 9/3/02 $ 1,012,956 4.36 102.61 $ 1,026,118 Aaa AAA
$ 4,000,000 GENERAL MOTORS 5.95 3/14/03 $ 3,999,831 5.94 101.76 $ 4,070,356 A2 B*
$ 12,000,000 Subtotals $ 12,019,392 5.89 $ 12,241,991
Agencies-Coupon
$ 2,000,000 FED HOME LOAN BANK 5.13 2/26/02 $ 1,997,976 6.68 100.22 $ 2,004.375 Aaa AAA
$ 965,000 FED HOME LOAN BANK 6.75 2/15/02 $ 966,003 3.98 100.19 $ 966,809 Aaa AAA
$ 4,000,000 FED HOME LOAN BANK 3.50 8/6/02 $ 3,996,855 3.66 100.78 $ 4,031,250 Aaa AAA
$ 2,000,000 FED HOME LOAN MTG CORP 6.63 8/15/02 $ 1,999.055 6.72 102.50 $ 2,050,000 Aaa AAA
$ 2,000,000 FED NATIONAL MTG ASSOC 5.38 3115/02 $ 2,003,198 4.01 100.41 $ 2,008,125 Aaa AAA
$ 2,000,000 FED NATIONAL MTG ASSOC 6.75 8/15/02 $ 2,025,423 4.29 102.56 $ 2,051,250 Aaa AAA
$ 12,965,000 Subtotals $ 12,988,510 4.77 $ 13,111,809
Agencies- Discount
$ 2,071,000 FED HOME LOAN BANK 3.46 7/30/02 $ 1,999,741 3.60 99.12 $ 2,052.775 Aaa AAA
$ 1,000,000 FED HOME LOAN BANK 2.34 7/23/02 $ 980,175 2.41 99.15 $ 991,500 Aaa AAA
$ 1,000,000 FED HOME LOAN BANK 2.33 6/20/02 $ 982,396 2.39 99.32 $ 993,200 Aaa AAA
$ 2,048,000 FED HOME LOAN BANK 2.34 10/7/02 $ 2,000,077 2.42 98.63 $ 2,019,943 Aaa AAA
$ 2,000,000 FED HOME LOAN BANK 1.56 3/13/02 $ 1,995,233 1.56 99.81 $ 1,996,200 Aaa AAA
$ 4,000,000 FED HOME LOAN MTG CORP 3.77 3/28/02 $ 3,873,914 3.92 99.74 $ 3,989.600 Aaa AAA
$ 3,977,000 FED HOME LOAN MTG CORP 2.30 7/18/02 $ 3,900,774 2.36 99.18 $ 3,944,388 Aaa AAA
$ 2,000,000 FED HOME LOAN MTG CORP 2.35 10/10/02 $ 1,952,608 2.43 98.61 $ 1,972,200 Aaa AAA
$ 2,064,000 FED MTG DISCOUNT NOTE 3.51 6/20/02 $ 2,000,006 3.65 99.32 $ 2,049,965 Aaa AAA
$ 20,160,000 Subtotals $ 19,684,925 2.90 $ 20,009,771
U.S.Treasury-Coupon
$ 1,340,000 UNITED STATES TREASURY 6.25 8/31/02 $ 1,342,716 5.84 102.44 $ 1,372,663 Aaa AAA
$ 13,000 UNITED STATES TREASURY 6.25 2/28/02 $ 13,003 5.84 100.34 $ 13.046 Aaa AAA
$ 300,000 UNITED STATES TREASURY 6.63 3131/02 $ 300,322 5.85 100.78 $ 302.344 Aaa AAA
$ 15,194,000 UNITED STATES TREASURY 5.88 9/30/02 $ 15,196,610 5.84 102.56 $ 15,583.346 Aaa AAA
$ 16,847,000 Subtotals $ 16,852,651 5.84 $ 17,271,397
U.S.Treasury-Discount
$ 166,000 UNITED STATES TREASURY 5.08 5/15/02 $ 128,677 5.84 99.53 $ 165,221 Aaa AAA
$ 6,170,000 UNITED STATES TREASURY 5.03 8/15/02 $ 4,718,446 5.82 99.04 $ 6,111,014 Aaa AAA
$ 6,336,000 Subtotals $ 4,847,122 5.82 $ 6,276,236
NR=Not Rated Page 3 of 8
City of Palm Desert
Portfolio Holdings
31January 2002
Market I Ratings
r-P-ar-Va177 Issuer Coupon Maturity Cost YTM I Price I Value I Moody's I S& P
LGIPs
$ 40,000,000 L.A.I.F. 0.00 2/1/02 $ 40,000,000 3.07 100.00 $ 40,000,000 NR NR
$ 40,000,000 Subtotals $ 40,000,000 3.07 $ 40,000,000
Pooled Funds-AIM
$ 19,299,423 PRIME PORTFOLIO 0.00 2/1/02 $ 19,299,423 1.45 100.00 $ 19,299,423 Aaa AAA
$ 19,299,423 Subtotals $ 19,299,423 1.45 $ 19,299,423
Pooled Funds-Highmark
$ 21,637,556 CITY MAIN SWEEP 0.00 2/1/02 $ 21,637,556 1.13 100.00 $ 21,637,556 NR NR
$ 86,000 DESERT WILLOW SWEEP 0.00 211/02 $ 86,000 1.13 100.00 $ 86,000 NR NR
$ 1,405,392 OFFICE COMPLEX SWEEP 0.00 2/1/02 $ 1,405,392 1.13 100.00 $ 1,405,392 NR NR
$ 23,128,947 Subtotals $ 23,128,947 1.13 $ 23,128,947
City Loan to RDA
$ 31,002,917 CITY OF PALM DESERT 0.00 1/31/32 $ 31.002,917 3.07 100.00 $ 31,002,917 NR NR
$ 31,002,917 Subtotals $ 31,002,917 3.07 $ 31,002,917
Total Investments
$181,739,287 $179,823,888 3.27 $ 182,342,492
Cash
$ 50,709 OFFICE COMPLEX CHKG 0.00 1/31/02 $ 50.709 0.00 100.00 $ 50,709 NR NR
$ 5.804,073 CITY MAIN CHKG 0.00 1/31/02 $ 5,804.073 0.00 100.00 $ 5,804,073 NR NR
$ 14,348 DESERT WILLOW CHKG 0.00 1/31/02 $ 14,348 0.00 100.00 $ 14,348 NR NR
$ 28,949 OFFICE COMPLEX TRUST 0.00 1/31/02 $ 28,949 0.00 100.00 $ 28,949 NR NR
$ 56,506 RECREATIONAL FAC CHKG 0.00 1/31/02 $ 56,506 0.00 100.00 $ 56,506 NR NR
VACATION INN CHKG 0.00 1/31/02 $ - 0.00 100.00 $ - NR NR
5,954,585 Subtotals 5,964,585 0.00 5,954,585
Cash and Investments
$187,693,872 $185,778,472 $ 188,297,077
NR=Not Rated Page 4 of 8
Y Palm Deseoedevelopment Agency- Portfolio Characteristics
31 January 2002
Dollars in Thousands
Ageing Interval Market Value 01
<1M $ 70,022 Portfolio Ageing w/o SLGSs
<2M -
<3M 3,981 100
<6M 3,965 90 61
60
<1 Y R 861 a' 70
<2YR 1,032 o 60
<3YR 6,696 3 50
� ao
<4YR a° 30
<5YR 10 0 5 5 1 1 6 0
>5YR - p
Total: $ 86,557 <lM <2M <3M <6M <1YR <2YR <3YR <4YR
Oualit Market Value Credit Quality AA
AAA $ 45,393 00/6
AA - AAA ' A 5%
A 52°/
Al/P 1 3,987
Unrated 38,012 A Unrated
Total: $ 87,392 0% 43i=
Secto Market Value r Asset Allocation Money Market
Funds
U.S.Treasury $ ,972 Qas%3
Federal Agency ,972
Money Market Funds 38,087 Federal Agency r
5% '-0'OEsYur�r"'�a."...
LAIF32,Commercial
a
Commercial Paper 3,986986
U.S.Treasury
Corporate Bonds 11% LAIF
Total: $ 87,392 39'/
Month RDA Yield LAIF Yield Variance Performance
Feb01 5.73 6.17 -0.44
Mar 5.44 5.98 -0.54 7.0
Apr 5.20 5.76 -0.56
6.0
May 4.74 5.33 -0.59
Jun 4.44 4.96 -0.52
5.0
Jul 4.08 4.64 -0.56 � 40
Aug 3.96 4.50 -0.54
Sep 3.69 4.35 -0.66 3.0
Oct 3.04 3.79 -0.74 2.0
Nov 2.83 3.53 -0.69 Feb01 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan02
Dec 2.59 3.26 -0.67
Jan02 2.46 3.07 -0.61 ®LAIF Yield El RDA Yield
Standard and Poor's Credit Ratings
LAIF and HighMark Sweep Page 5 of 8
Palm Desert Redevelopment Agency
Portfolio Holdings
31 January 2002
Market Ratings
Par Value Issuer Coupon Maturity Cost I YTM I Price I Value I Moody'si S & P
Commercial Paper-Discount
$ 4,000,000 GENERAL ELECTRIC 2.25 4/10/02 $ 3,955,750 2.28 99.67 $ 3,986,702 P-1 A-1+
$ 4,000,000 Subtotals $ 3,955,750 2.28 $ 3,986,702
Federal Agency-Discount
$ 4,000,000 FED HOME LOAN MTG CORP 2.24 6/28/02 $ 3,936,284 2.30 99.29 $ 3,971,600 Aaa AAA
$ 4,000,000 Subtotals $ 3,936,284 2.30 $ 3,971,600
U.S.Treasury-Coupon
$ 181,000 UNITED STATES TREASURY 6.25 2128/02 $ 181,097 5.43 100.34 $ 181,622 Aaa AAA
$ 422,700 UNITED STATES TREASURY 6.25 8/31/02 $ 424,444 5.43 102,44 $ 433,003 Aaa AAA
$ 405,200 UNITED STATES TREASURY 6.25 8/31/02 $ 406,872 5.43 102,44 $ 415,077 Aaa AAA
$ 9,100 UNITED STATES TREASURY 6.25 8/31/02 $ 9,138 5.43 102.44 $ 9,322 Aaa AAA
is 1,018,000 Subtotals $ 1,021,550 5.43 $ 1,039,024
U.S.Treasury-Discount
$ 198,000 UNITED STATES TREASURY 4.70 2/15/03 $ 150,793 5.45 97.71 $ 193,470 Aaa AAA
$ 181,000 UNITED STATES TREASURY 4.63 2115/04 $ 130,168 5.51 93.81 $ 169,792 Aaa AAA
$ 7,143,000 UNITED STATES TREASURY 4.59 8/15/04 $ 4,989,671 5.54 91.57 $ 6,540,702 Aaa AAA
$ 532,400 UNITED STATES TREASURY 4.66 8/15/03 $ 394,279 5.47 96.03 $ 511,264 Aaa AAA
$ 344,600 UNITED STATES TREASURY 4.66 8/15/03 $ 265,200 5.47 96.03 $ 330,919 Aaa AAA
$ 8,399,000 Subtotals $ 5,920,112 5.53 $ 7,746,147
LGIPs
$ 14,055,000 LAIF BOND PROCEEDS 0.00 211/02 $ 14.055,000 3.07 100.00 $ 14,055,000 NR NR
$ 18,506,843 L.A.I.F. 0.00 2/1/02 $ 18,506,843 3.07 100.00 $ 18,506,843 NR NR
$ 32,561,843 Subtotals $ 32,561,843 3.07 $ 32,561,843
Pooled Funds-AIM
$ 32.635,972 PRIME PORTFOLIO 0.00 2/1/02 $ 32,635,972 1.45 100.00 $ 32,635,972 Aaa AAA
$ 32,635,972 Subtotals $ 32,635,972 1.45 $ 32,635,972
Pooled Funds-HighMark
$ 5,242,619 HOUSING AUTH CHK SWEEP 0.00 2/1/02 $ 5,242.619 1.13 100.00 $ 5,242,619 NR NR
$ 208,348 HOUSING AUTH TRT SWEEP 0.00 2/1/02 $ 208.348 1.13 100.00 $ 208,348 NR NR
$ 5,450,967 Subtotals $ 5,450,967 1.13 $ 5,450,967
Total Investments
$ 88,065,782 $ 85,482,479 2.46 $ 87,392,255
NR=Not Rated
Page 6 of 8
Palm Desert Redevelopment Agency
Portfolio Holdings
31 January 2002
Market Ratings
Par Value Issuer Coupon Maturity Cost _I_Xltj_Price_L Value I Moody's S&P
Cash
$ 51,607 HOUSING AUTH CHKG 0.00 2/1/02 $ 51,607 0.00 100.00 $ 51,607 NR NR
$ 51,688 HOUSING AUTH TRT CHKG 0.00 211/02 $ 51,688 0.00 100.00 $ 51,688 NR NR
$ 103,295 Subtotals $ 103,295 0.00 $ 103,296
Total Cash and Investments
$ 88,169,077 $ 85,585,774 $ 87,495,550
NR=Not Rated
Page 7 o1 8
STATEMENT OF COMPLIANCE
The investment portfolios of the City of Palm Desert('City')and the Palm Desert Redevelopment Agency ('RDA') are
governed by federal, state,and local law. The City Treasurer's"Statement of Investment Policy' is more restrictive than the
California Gov r me t Code. The Palm Desert Investment Committee and the Palm Desert City Council review the
Statement of Investment Policy annually.
For the month ended 31 January 2002,the City and the RDA investment portfolios were in compliance with all applicable
federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment
strategies, based upon the stated objectives of safety, liquidity, and yield (in order of priority).
Barring unforeseen events,the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert
and the Palm Desert Redevelopment Agency over the next six months. In addition, portions of either the City or the RDA
portfolio could be liquidated in order to meet any significant, unexpected cash requirements.
Bloomberg L.P. and Interactive Data Corporation provided the data and the analytical tools that were used to calculate the
market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities
are held in escrow accounts and are therefore not included in this report as assets. All balances are bank balances.
Respectfully submitted on 27 February 2002,
Pis iidwt4 C.C.M r.
City Treasurer
SUMMARY OF AUTHORIZED INVESTMENTS
California Government Code City Investment Policy
CA Govt Maximum Maximum Quality Maximum Maximum Quality %of City %of RDA
Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio
53601 a Palm Desert Bonds 5 Years No Limit Not Authorized 1
53601 b ea U.S.Treasuries 5 Years No Limit 5 Yrs No Limit 1 12.1% 8.1%
53601 c) CA State Debt 5 Years No Limit Not Authorized
53601 d CA Local Agency Debt 5 Years No Limit Not Authorized
53601 a Federal Agencies 5 Years No Limit 5 Years 30% 18.2% 4.6%
53601 f Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 & P-1 0.0%
53601 Commercial Paper 270 Days 15/30% A-1 or P-1 270 Days 15/30% A-1 or P-1 4.6%
53601 h Negotiable CDs 5 Years 30% 5 Years 30% AA& Aa I -
53601 i Re os 1 Year No Limit Not Authorized
53601 Reverse Re os JDa2Days0% Not Authorized
53601 Q Medium-Term Notes 30% A 5 Years 30% A 6.7%
53601 k Mutual Funds 20% AAA&Aaa 90 Da s 20% AAA& Aaa 45.8% 82.7%
53601 1 Trust Indenture Debt NotAuthorized
53601 m Secured Bank De ositso Limit NotAuthorized
53601(n) Mortgage-Backed 20% A(Issuer)& Not Authorized
Securities AA Securi16429 LAIFo Limit No Limit
62.8% 100.0%
(1 The Cit loan to RDA, which is not a bond, has been a roved b the Palm Desert Cit Council.
Certified California Municipal Treasurer Page 8 of 8
a
COMMITTEE MEETING WORKSHEET
Meeting Description Investment Committee Meeting Date 1/22/03 Time 2:00 p.m.
Location North Wing Conference Room Mailed Agenda 1/17/03
Posted Agenda 1/17/03
Time
Convene Adjournment
,0 1M
Staff Members Attending Yes No Others Attending Yes No
1 Paul Gibson, Chairperson 11 Dennis Coleman
2 Council Member 12 Justin McCarthy
3 Council Member 13 Rodney Young
4 Dave Erwin, City Attorney 14 Recording Secretary
5 Carlos Ortega, City Mgr.
6 Thomas Jeffrey
Public Members Attending Guests Attending
7 Russ Campbell 15
8 Murray Magloff 16
9 Bill Veazie 17
10 Everett Wood 18
19
20
Follow-Ups/ asks Assigne Pers6n Responsible Due Date
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Enanee Department
MEMORANDUM
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C
To: Rachelle Klassen, City Clerk G
From: Diana Leal, Administrative Secretary*
Subject: Investment and Finance Committee
Date: March 3, 2003
Attached is a copy of the January 22, 2003 minutes of the Investment and Finance Committee
approved by the Committee on February 26,2003. Please place on the next City Council agenda for
approval thereof.
Thank you for your assistance.
Attachments (1)
'ITY COUNCIL' ,ACTION
.P'�kOvY'n / DENIED
? ',C aIVRD OTHER
?L-1.'iNG DATE 0
p E REpLACE PAGE. N cJE� T--- --
��Zii;�50 N
.RSTAIN' NCNB
°ERIFIED AY: ---
lriginal or, File ili sYy Clerk' s (Tlfic.. .
G:Tinance\Diana Leal\Wpdocs\Investment Committce\2002 MemostCity Clerk\L22:03 minutes wpd
o •
_ CITY OF PALM DESERT
INVESTMENT & FINANCE COMMITTEE
AGENDA
January 22, 2003, 2:00 p.m.
North Wing Conference Room
I. CALL TO ORDER
II. ROLL CALL
III. ORAL COMMUNICATIONS
A. Any person wishing to discuss any item not on the agenda may
address the Investment and Finance Committee at this point by
giving his/her name and address for the record. Remarks shall be
limited to a maximum of five minutes, unless the Investment and
Finance Committee authorizes additional time.
B. This is the time and place for any person who wishes to comment
on agenda items. It should be noted that at the Investment and
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 the
Investment and Finance Committee authorizes additional time.
IV. COMMITTEE MEMBER REPORTS
V. CONSENT CALENDAR
ALL MATTERS LISTED ON THE CONSENT CALENDAR ARE
CONSIDERED TO BE ROUTINE AND WILL BE ENACTED BY ONE
ROLL CALL VOTE. THERE WILL BE NO SEPARATE DISCUSSION OF
THESE ITEMS UNLESS MEMBERS OF THE INVESTMENT & FINANCE
COMMITTEE OR AUDIENCE REQUEST ITEMS BE REMOVED FROM
THE CONSENT CALENDAR FOR SEPARATE DISCUSSION AND
ACTION UNDER SECTION V. CONSENT ITEMS HELD OVER, OF THE
AGENDA.
A. Approval of Minutes (will be distributed at the meeting)
Rec: Approve minutes of the regular meeting of December 18,
2002, as submitted.
Action:
1
12203,w d
INVESTMENT& FINANCE VMMITTEE
AGENDA January 22, 2003
VI. CONSENT ITEMS HELD OVER
None.
VII. NEW BUSINESS
A. City and Redevelopment Agency Investment Schedules and
Summary of Cash Reports for December 2002 (will be distributed
at the meetina)
Rec: Review and submit for the next City Council agenda.
Review the presentation on the investment graphs. Review
the investment activity for December 2002.
Action:
B. State of California Local Agency Investment Fund Balance for the
month of December 2002
Rec: Informational item for the Committee to review. No action
required
C. California Asset Management Program (CAMP) December 2002
Statement
Rec: Informational item for the Committee to review. No action
required
D. Annual Review of City Investment Policy (will be distributed at the
meetin
Rec: Report and submit to City Council
Action:
2
122o3.wpd
INVESTMENT& FINANCE11MMITTEE 0
AGENDA January 22, 2003
E. Comprehensive Annual Financial Report 6/30/02 Overview
presentation by Lance, Soil & Lunghard. LLP
Rec: Informational item for the Committee to review. No action
required
F. City and Redevelopment Agency Monthly Financial Reports for City
Council for December 2002
Rec: Report and submit to City Council
Action:
G. Parkview Professional Office Buildings - Financial Report for
December 2002
Rec: Review and file report
Action:
H. Palm Desert Golf Course Facilities Corporation Financial
Information for November 2002
Rec: Review and file report
Action:
Vill. CONTINUED BUSINESS
None.
IX. OLD BUSINESS
A. Status of Public and Private Partnerships Background Checks
Rec: Status report on background checks
Action:
3
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INVESTMENT & FINANCE*MMITTEE 0
AGENDA January 22, 2003
B. Bond Issuance by Palm Desert Financing Author
Rec: Status report on issuing new bonds
Action:
X. NEXT MEETING - Wednesday, February 26, 2003 at 2:00 p.m.
XI. ADJOURNMENT
I hereby certify under penalty of perjury under the laws of the State of
California, that the foregoing agenda for the Investment and Finance
Committee was posted on the City Hall bulletin board not less than 72
hours prior to the meeting. Dated this 171h day of January, 2003.
r
ana al, a ordi g Secretary
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� fim•y'a,.�:
XR
Mnanee Department
:M; �' MEMORANDUM
J`
To: Rachelle Klassen, City Clerk
From: Diana Leal, Administrative Secretary
Subject: Investment and Finance Committee
Date: March 3, 2003
Attached is a copy of the January 22, 2003 minutes of the Investment and Finance Committee
approved by the Committee on February 26,2003. Please place on the next City Council agenda for
approval thereof.
Thank you for your assistance.
Attachments (1)
DENIZIE
&Tinance\Diana Leal\Wpdocs\Investment Committee\2002 Memos\City Clerk\I-22-03 minutcs.wpd
_ CITY OF PALM gSERT
INVESTMENT & FINANCE COMMITTEE
Minutes
January 22, 2003, 2:00 p.m.
North Wing Conference Room
I. CALL TO ORDER
A regular meeting was called to order by Chairman Gibson on Wednesday, January
22, 2003 at 2:00 p.m.
II. ROLL CALL
Present: Absent:
Paul Gibson, Director of Finance None
Jean Benson, Mayor
Bob Spiegel, Mayor Pro-Temp
Thomas Jeffrey, Deputy City Treasurer
Jose Luis Espinoza, Finance Operations Manager
David Erwin, City Attorney
Carlos Ortega, City Manager
Everett Wood
Bill Veazie
Murray Magloff
Russ Campbell
Also Present:
Justin McCarthy, ACM Redevelopment
Rodney Young, Desert Willow General Manager
Diana Leal, Recording Secretary
Guests:
Richard Kikuchi, Lance, Soil & Lunghard, LLP
III. ORAL COMMUNICATIONS
Mr. Gibson introduced Mr. Richard Kikuchi, a representative from Lance;Soll and
Lunghard, LLP, the current year auditor. Mr. Gibson said that Mr. Kikuchi was in
attendance to answer any questions the Committee might have with regard to the
audit.
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INVESTMENT & IONCE JWMITTEE
• •
MINUTES January 22, 2003
IV. COMMITTEE MEMBER REPORTS
None.
V. CONSENT CALENDAR
A. Approval of Minutes
Motion was made by Mr. Wood and seconded by Mr. Campbell to approve the
Minutes of the December 18, 2002 meeting as submitted.
VI. CONSENT ITEMS HELD OVER
None.
VII. NEW BUSINESS
A. City and Redevelopment Agency Investment Schedules and Summary of
Cash Reports for December 2002
Mr. Jeffrey said that the economy is on hold, awaiting the start and finish of the
Iraq war. A mild U.S. economic recovery is expected to start in late 2003. The
big concern currently is that Asian and European investors will exit the U.S.
securities markets because of the sliding U.S. dollar. When the Asians and
Europeans repatriate their US earnings into their native currencies, they
sustain heavy losses due to an unfavorable exchange rate.
Mr Jeffrey reported that for the month ended December 31, 2002, the book
value of the City Portfolio was approximately $136.7 million. The City earned
approximately $225,000 in interest. Portfolio yield-to-maturity was
approximately 1.93%.
For the month ended December 31, 2002, the book value of the RDA Portfolio
was approximately $92.8 million. The RDA earned approximately $153,000 in
interest. Portfolio yield-to-maturity was approximately 1.95%.
Mr. Jeffrey has included a new statistic in the investments reports -- "Prior
Year Book Variance." This statistic measures portfolio size (increase/
decrease) in dollars on a year-to-year basis.
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INVESTMENT & FINANWOMM*E
MINUTES • January 22, 2003 v
Mr. Spiegel asked if it would make sense for the City to buy individual
securities with longer maturities, as opposed to buying shares in money
market funds and short-term investment pools. Mr. Gibson responded that if
the City were to buy longer-term securities, then the market value of the
portfolio would decline once market yields increased. It would be better to ride
out the current market in a liquid position so that the City can immediately
benefit from rising interest rates when that occurs. Mr. Jeffrey commented
that the best time to lock in is just before interest rates begin to fall, not when
they are about to rise. Unfortunately, such events are difficult to predict.
B. State of California Local Agency Investment Fund Balance for the Month of
December 2002
Mr. Gibson stated that the City's and the Redevelopment Agency's LAIF
accounts are maxed out at $40 million each.
Mr. Ortega asked if the City is going to continue to deposit money into CAMP
since Palm Desert's bill, SB 68, which was recently enacted, has clarified that
LAIF deposits do not belong to and cannot be appropriated by the State. Mr.
Gibson responded that the City plans to continue to use CAMP even though its
pool yield is below LAIF's, because buying shares in CAMP is more profitable
than buying individual money market securities at current yields.
Mr. Jeffrey said that since the City joined CAMP, the CAMP investment pool
has grown by 50%, from $800 million to $1.2 Billion. Because local agencies
have no other alternative to LAIF, they are investing in CAMP, which offers 10
basis points more than individual money market securities, on average. The
CAMP Board of Trustees is comprised entirely of local agencies.
Furthermore, LAIF is reportedly resisting any attempt to increase its deposit
limits.
Ms. Benson asked why only $27 million is deposited in CAMP, as opposed to
the $30 million that was originally withdrawn from LAIF for that purpose. Mr.
Jeffrey responded that money has been withdrawn periodically as necessary.
In addition, money is placed in sweep accounts to cover any checks to receive
.3 rather than 1.738 in CAMP.
C. California Asset Management Program (CAMP) December 2002
Mr. Gibson said that the account contains approximately $18 million.
D. Annual Review of City Investment Policy
Mr. Gibson said that the City's Investment Policy is amended annually
depending on legislation changes. Approximately 8 years ago the City was
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INVESTMENT & 61NCE&AMITTEE
MINUTES N=7 ® ® January 22, 2003
certified by the National Treasurers Association (NTA) that the City's policy
was sufficient. Staff will be submitting the policy once again to the NTA to
have them review and certify the policy.
Mr. Jeffrey said that staff had to make a few changes to the current policy to
closely resemble the NTA's format. The most substantial changes were the
following:
Page 4
Investment Procedures was previously combined with another section in the
previous policy. It now has its own section.
Page 12
Number 12. Asset-backed commercial paper. Two other entities have been
added, asset-back commercial paper trust and limited liability companies.
Number 13. Multi-government investment pools was previously pulled out
because staff did not think they would be investing in these pools. However,
they did not anticipate that the interest rates would tumble to where they are
currently. This section is being reinstated staying at the same terms of 20% as
the money market fund in LAIF. This would be CAMP.
Page 13
This was something new that came out of the national template for investment
policies from NTA. This information was previously obtained, however, this
creates a more formal structure for doing the questionnaire.
Most of the funds that staff will be looking at provide for the declaration of trust
and other documents. This would deal with the annual Redevelopment Agency
trust accounts.
Page 17
This was a boiler plate that was inserted to be in line with the NTA's template
policy. This is a general statement on how the portfolio will be managed.
Motion was made by Mr. Spiegel and seconded by Mr. Wood to approve
the changes made to the Investment Policy. Motion carried.
E. Comprehensive Annual Financial Report 6130102 Overview presentation by
Lance, Soil and Lunghard, LLP
Mr. Kikuchi thanked the committee for allowing him the opportunity of making
a presentation. He said that he has been with the firm of Lance, Soil &
Lunghard (LSL) for over 13 years. The firm has been in business for about 75
years. He said that LSL specializes in auditing municipalities. Over 60% of
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INVESTMENT & FINANq&OMM*E •MINUTES January 22, 2003
r
their revenue is derived from auditing cities and municipalities. Currently, they
audit approximately 40 cities. They spread out from Lancaster to Imperial
Beach. Municipal auditing is their main focus which they do all year round. He
said that one point that he stress with Mr. Gibson was that his firm provides
qualified individuals to do the City's audit.
Mr. Kikuchi said that he felt that this year's audit went well. Mr. Gibson said
that every report that he has received from Desert Willow, the Redevelopment
Agency and the Finance staff, indicate that everyone is happy with the audit.
Mr. Kikuchi said that a big part of the audit is the supervision of audit staff. He
made sure that he is present during the audit as much as possible to learn the
system and become familiar with the City staff. The staff that he assigned to
the City of Palm Desert's audit were experienced managers. This is a practice
that he likes to do for all his new clients. They do traditional-type audit
procedures. They assess the internal controls (i.e. payroll, disbursement,
receipts, etc.). Many tests were conducted as well as confirmations of assets
for the City and the Redevelopment Agency were requested. They look at the
general ledger, focusing on the larger accounts. Because they audit cities,
they know what to look for and what should exist. If something looks odd, they
investigate further.
In addition, they do cut-off procedures where they look at checks written and
receipts from July 1 forward to check if checks or receipts should have been
recorded in the prior year.
Further, they prepared draft reports which they presented to staff. He felt this
made for an efficient audit. They came in early with the final audit. He thinks
that Mr. Gibson and Mr. Espinoza deserve a pat on the back as the books
were in good order. The City of Palm Desert is an organized city. Ms. Benson
said that she thought it was a credit to Mr. Gibson and Mr. Espinoza that the
audit was done well.
Mr. Kikuchi said that various audits were conducted: the main CAFR which
includes the City and all its component units; the Redevelopment Agency
CAFR which includes the Housing Authority; and Desert Willow. They are
currently in the process of completing the single audit (an audit that is
triggered when a city spends more than $300,000 in federal monies). He is
very pleased that everything went well.
A highlight of the results of the CAFR is the general fund equity as it increased
by $3.6 million. The City is on a new reporting format. Now, the City not only
has fund equity, it also has net assets. The statement of net assets indicates
that the total assets increased by $12.8 million. General fund revenue
exceeded budgeted revenue by a little over $1 million. General fund
expenditures were below that appropriated by a little over $4 million. As far
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INVESTMENT & ONCE WMITTEE • •
MINUTES January 22, 2003
as the financial health of the city, based on the numbers, is that everything is
looking pretty good.
Ms. Benson asked if the net assets include all the apartments the City owns.
Mr. Gibson said that net assets include everything owned by the City as a
whole including the Redevelopment Agency, Desert Willow, etc.
Mr. Spiegel asked if the auditors prepare a document that discuss any
discrepancies, or if something is not being done properly, and if said document
is distributed. Mr. Kikuchi said that they do prepare such a document. There
were no reportable significant conditions. Usually the first year the auditors
review the numbers and do internal control work. If there were anything
significant, they would have seen it. If there were any minor items, it is likely
that they will be seen next year. However, as far as any major deficiencies in
the internal controls or financial reporting system, there does not exist any.
They did a test on 100 Housing Authority tenants for compliance work. In the
past, there were significant deficiencies in those files. This was an issue that
was brought up with the Housing Authority. This year they found a minor
item. Mr. Gibson said that the employee that was causing the problems there
is no longer working at the Housing Authority.
Ms. Benson said that the apartments are a major part of the Redevelopment
Agency budget. She would like to know what amount of money is invested so
that if she is asked by a resident, she can provide this information. Mr. Gibson
said that he can provide her with that information. Mr. Kikuchi said that the
information she seeks can be found in the Redevelopment Agency CAFR.
Mr. Ortega said that the CAFR report states what money was put into the
apartments, however, it does not show what they are worth.
Mr. Spiegel said that the City came in $4.5 million under what was budgeted
to be spent in the general fund with approximately $2 million being used for
resurfacing. He asked why this was if extra money was placed in the budget
last year because staff felt that more needed to be done. Mr. Ortega said that
some of the projects did not necessarily come from the general fund. Mr.
Gibson said that it is all due to the weather as resurfacing is dependent on the
heat. Typically, they try to let the contract out in May and do the work either in
June or July. There is a variance from year to year as to when the contracts
start and when the actual costs are paid out. When the reserve money does
not get used, they do a carry over in the budget or an encumbrance of the
contract, thus the funds are not lost. There also exists a maintenance of effort
required from the State in order to receive Measure A and Traffic Congestion
funding. If the maintenance of effort is not met, the money has to be returned
to the State.
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INVESTMENT & FINAN•COMMWE •MINU1 ES �anuary 22, 2003
P
Mr. Magloff said that the City uses a lot of equipment to do their work and
when the City owns a piece of equipment it is an asset. He asked who takes
care of the leases for the equipment that is leased. Mr. Gibson said that the
department utilizing the equipment takes care of issuing a purchase order to
enter into a lease agreement. The only true leases currently on the books are
Xerox machines, golf carts and golf cart equipment. Otherwise, leases are
made on a day by day basis as needed. Mr. Ortega said that the City does not
generally lease equipment like is the practice of other big companies.
Mr. Gibson said that the City has funds in the general fund for equipment
replacement so that as vehicles need to be replaced there are funds set aside
for that purpose. This coming year they will separate these funds from the
general fund to better track money utilized for equipment replacement.
Mr. Wood said that Mr. Kikuchi indicated that the City was found to be in good
shape and that LSL used mostly experienced staff on this audit to expedite it
and provide for an efficient audit. He asked if LSL would continue with this
practice or if it would change as the City was well run and well organized. He
said that he was concerned that the City would be used as a training ground.
Mr. Kikuchi said that they shy away from using their clients as a training
ground. They have the new auditors shadow an experienced auditor to learn.
He said that because the audit went very well, and because of the desirable
atmosphere, many of the auditors have asked to be scheduled to do the Palm
Desert Audit. Therefore, most of the auditors with seniority will be sent to
Palm Desert. He spends a lot of time finding the right people. He is very
confident of the managers that have been working for LSL as they have been
there for more than ten years.
Mr. Wood said that he admired that Mr. Kikuchi spoke well of his staff. He
asked if the costs for the audit would remain the same or change and if there
would be less auditing done now as the initial auditing service was completed.
Mr. Gibson said that when the bid for auditing services was done, they
requested a five-year proposal indicating cost for each year. The first year is
when the auditors incur their highest cost as they have to review the controls.
Thereafter, they recover some of the extra cost.
Mr. Gibson asked if the committee was satisfied with the CAFR report. Mr.
Spiegel said that he liked the detail. Ms. Benson said that she felt it was well
written. Mr. Ortega said that he had a chance to go through the separate
financials and did not see anything out of order. The auditor said that there
were no findings in the management letter. Findings would mean that the City
is doing something wrong accounting wise. If there are findings, they would be
presented to the City Council and the Council would seek correction of the
deficiencies in the following year's audit.
7
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IN VE T MENT &•ANCEWMITTEE • • January 22, 2003
' Mr. Gibson said that one of the weaknesses in the past, accounting wise, were
dealing with both the Housing Authority and Desert Willow where there is a
third party manager. However, things have improved drastically since Rodney
Young and his controller, Kathy Anderson have come aboard.
Motion was unanimously made by the committee to add the auditor's
contract to the agenda for action.
A second motion was made by Mr. Campbell and seconded by Mr.
Magloff to recommend to the City Council that they approve continuing
the contract with Lance, Soil and Lunghard (LSL) for Audit Services for
one more year. Motion carried.
F. City and Redevelopment Agency Monthly Financial Reports for City Council
for December 2002
Mr. Gibson said that the City received the quarter end report for sales tax.
There was a little over a 2% increase over the prior year in terms of the quarter
ending in November 14. This included the September 11 period of time.
Some time thereafter Mr. Spiegel commented to Mr. Gibson that the mall did
well. Mr. Spiegel said that JC Penney was 24% ahead, Robinsons-May and
Macy's were running about 5 or 6%. Ms. Benson said that she has received
many positive comments from the community regarding the parking structure.
Mr. Spiegel said that he received comments that the structure lighting is bright
and people feel safe parking there.
Mr. Gibson said that in regard to the Transient Occupancy Tax (TOT), the City
has not yet collected from the Vacation Inn. He heard that they may file for
bankruptcy under the receivership and therefore the City may lose a portion of
TOT. He said that Doug Phillips of Best, Best & Krieger, the City Attorney's
firm, will be following up on this matter.
In addition, the Marriott has been down. Mr. Gibson set up a meeting to
discuss what is happening now and what is expected for next year. He spoke
with Rodney Young of Desert Willow. Mr. Young indicated that they have had
a lot of leads. Mr. Young said that forecasts for 2004 pre-bookings are up
compared to the last six to seven years.
Mr. Gibson said that the City's cash receipts and TOT are about $50,000
ahead of last year. Building permits are equal to last year.
With regard to the State subvention that the City receives from the State which
is over $1.7 million a year, the State of California introduced the Governor's
budget which includes taking away this funding that the State currently
backfills. This funding makes up about 67.5% from the State's general fund to
8
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INVESTMENT & FINANIWOMMW-E
MINUTES • ganuary 22, 2003
the cities and counties. This amount equals the amount that was refunded or
rebated on the motor vehicle license fees. This is an annual fee that is paid on
motor vehicles. The leaders have indicated to the cities that they will attempt
to propose, through the senate and assembly, backfilling through increasing
the tax. Whether they are successful or not, it is uncertain. Mr. Ortega said
that the law that they adopted when they lowered the amount contains certain
provisions. One of the provisions was that if the State ran out of money, they
would cut the subventions. There was also language that the fee would be re-
worked to the prior levels. Many feel that because of the pressure, the vehicle
license fee will be instated.
Mr. Gibson said that another item in the Governor's proposal is booking fees
which is about $133,000 per year. The Redevelopment Agency would take
another hit of approximately $250 million per year to a point where they
receive 100% of all the schools' tax increment amount. The governor is
proposing to take it all away eventually. Mr. Spiegel asked if this could be
done. Mr. Gibson said that the legality of the State's ability to do this will be
challenged within the next six months.
Mr. Spiegel said that he read about the State taking away low income housing.
Mr. Gibson said that it was discussed in the Governor's mid-year proposal. He
proposed that $500 million be taken from the low mod fund based on the cash
balances. Since then, public hearings on the subject have been held. They
have indicated that it was not a good idea to take from the low mod fund,
however, they can take it from the 80% Redevelopment fund. They have not
finalized what will be done. Currently there is a proposed bill with language to
take money from the low mod. Mr. Spiegel asked if low mod funding has been
expended. Mr. Gibson said that low mod funding has been committed. Mr.
Ortega said that unfortunately they revert to definitions, what is committed and
not committed, and the report that is filed with the State, sometimes, is not
helpful with how committed money is defined. The State thought that because
some cities had not spent the money provided, the money was considered
available. However, after closer examination, they found that there was less
money available than what they thought. The City' position is going to be to try
to salvage everything, both the VLF and the 80% housing. The City will know
the outcome by October.
Mr. Spiegel asked about the sales tax. Mr. Gibson said that it is related to
pass through programs that the State currently does through the County level
and not through the City. Mr. Ortega said that the City does not qualify for that
type of funding as the State defines local services as those offered by the
County. The State is being generous in saying to the Counties that they will
give them an additional 1% of sales tax and providing them with additional
programs. Mr. Gibson said that at this time these programs will be funded,
however, he is not sure that they will be funded in the future.
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INVESTMENT & IWNCEWMITTEE •
MINUTES • January 22, 2003
G. Parkview Professional Office Buildings - Financial Report for December 2002
Mr. Gibson said that the roofing contract will begin at the end of the month.
The State Department of Agriculture has pulled out of one of the office spaces.
The office is approximately 1,600 square feet. The American Cancer Society
has indicated their desire to take over the space. It is a matter of working out
the lease arrangements.
H. Palm Desert Golf Course Facilities Corporation Financial Information for
November 2002
Mr. Young provided a report for December 2002. Food and beverage and
every day play is down. Net income was about $29,000 which was better than
budget. January started off poorly. They had to pre-wet the course for a
couple of weeks.
Ms. Benson asked why the revenues and expenses for the Firecliff course
were almost the same and the Mountainview Course had a huge difference on
the current and actuals. Mr. Young said that for the month of December
Mountainview was open and Firecliff was closed for the entire month due to
overseeding.
Mr. Young said that in order to improve golf course conditions in the months of
January, February and March, where more revenue is received, they moved
the overseeding back. The golf course was open from October 16 through the
November 10. They had to get a little more than three weeks where the two
golf courses were open. They lost two full weeks of revenue. He thinks that
they will catch up to equal last year. If weather permits, they should be in
good shape.
Mr. Wood asked who made the decision as to when the golf course is closed
for overseeding. Mr. Young said that the he and the superintendent look at the
prior year's weather, pre-bookings, etc. and make a prediction as to what the
following year will be like and based on their findings they make their decision.
Revenue is lost when the weather is too hot. They have to turn people away
because they can not have them play. They try to balance what is needed,
condition-wise, on the golf course, and balance what the revenue will be
according to their forecasting. They work closely with the Marriott and other
hotels to receive overflow golf.
Mr. Spiegel asked if they get overflow golf from the Marriott time shares. Mr.
Young said that they do get overflow and they also offer their time shares with
the opportunity to golf at other golf courses. Mr. Young distributes Desert
Willow flyers at different hotel concierges. In addition, they provided
certificates for free breakfast to promote their breakfast.
10
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INVESTMENT & FINAN fWOMMOPE
MINUTES anuary 22, 2003
r
Vill. CONTINUED BUSINESS - None.
IX. OLD BUSINESS
A. Status of Public and Private Partnerships Background Checks
There being no business issues to report, discussion ensued to the next
agenda item.
B. Bond Issuance by Palm Desert Financing Authority
Mr. McCarthy said that Mr. Coleman was not present because he went to
Sacramento for some of the hearings relative to the budget.
Mr. McCarthy said that they are planning to do some fairly large bond issues.
They are currently conducting analysis in terms of"worst-case scenario" if the
State takes what they are proposing to take from the Redevelopment Agency.
At this time, these are merely exercises as they have not seen any legislation
giving any specific concept as to how much money they will take from the
Redevelopment Agency.
Mr. McCarthy said that they have had communication efforts with a number of
the local legislators to educate them as to the benefits of redevelopment to the
local economy. A lot of the Redevelopment Agency bond issues have been
placed on hold for the moment.
X. NEXT MEETING - Wednesday, February 26, 2003 at 2:00 p.m.
XI. ADJOURNMENT
There being no further business, the meeting was adjourned by Mr. Gibson at 3:05 p.m.
Respectfully submitted,
4ianaea - co ding Secretary
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♦ "-` g'� n � ,,yy +.r+r� ��" '�R?. �'•„� � � a�x°�Y�: Via.
Paul S. Gibson, C.C.M.T., Treasurer
Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer
Treasurer's Commentary
Money market yields remain at historically low levels. The economy is on hold, pending the outcome of the forthcoming war
with Iraq (likely to occur in February). Investors continue to seek the haven of U.S. Treasuries and bond mutual funds, at the
expense of stock mutual funds. Consumer confidence maybe ebbing for the first time. Firms continue to be conservative
about capital spending plans, due to overcapacity. Investors withdrew$100 billion from the stockmarket in 2002.
A key concern is the possible exit of Asian and European capital from the U.S. securities markets in 2003, due to a sliding
U.S. dollar. Foreign investors are receiving less profit as they repatriate their U.S. earnings into their native currency.
The Bush Administration's tax stimulus package is designed to add 1%to 1.5%to Gross Domestic Product within the next
12-15 months(timed to coincide with the 2004 Presidential election cycle). This supports a mild recovery during 2003-2004.
On a separate note,the League of California Cities has asked the Palm Desert City Treasurer's Office to serve as an advisor
to the League on a county-sponsored proposal to start a local government investment pool that would compete with LAI F.
ra"bs.. Cia wl-4 C.C.M.T.
Treasurer
PORTFOLIO STATISTICS
Dollars in Thousands
DEC-02 NOV-02 OCT-02 SEP-02 AUG-02 JUL-02
CITY
Month-End Book Value"'" $ 136,687 $ 142,520 $ 144,054 $ 170,423 $ 180,743 $ 189,368
Month-End Market Value""' $ 136,899 $ 142,742 $ 144,259 $ 170.723 $ 181,096 $ 191.228
Paper Gain (Loss) $ 212 $ 222 $ 205 $ 300 $ 353 $ 1,860
Prior Year Book Variance $ (26,850) $ (23,866) $ (21,277) $ 696 $ 6,952 $ 15,450
Interest Earnings $ 225 $ 238 $ 271 $ 390 $ 428 $ 462
Yield-To-Maturity 1.93% 2.00% 2.15% 2.22% 2.64% 2.88%
Weighted Maturity(Days) 49 50 52 70 222 285
Effective Duration 0.01 0.03 0.04 0.04 0.06 0.08
RDA
Month-End Book Value"' $ 92.787 $ 92,761 $ 94,884 $ 99,221 $ 100,125 $ 115,066
Month-End Market Value"' $ 95,022 $ 94,996 $ 97,147 $ 101,468 $ 102,313 $ 119,206
Paper Gain (Loss) $ 2,235 $ 2,235 $ 2,263 $ 2,247 $ 2,188 $ 4,140
Prior Year Book Variance $ 7,655 $ 7,826 $ 24,963 $ 28.723 $ (46,564) $ (34,197)
Interest Earnings $ 153 $ 162 $ 185 $ 191 $ 199 $ 216
Yield-To-Maturity 1.95% 2.06% 2.23% 2.26% 2.27% 2.23%
Weighted Maturity(Days) 150 150 147 141 142 139
Effective Duration 0.12 0.13 0.13 0.13 0.14 0.13
City Treasurer's Office
73-510 Fred Waring Drive
Palm Desert, CA 92260-2578
Omits SLGSs. 760.346.0611
a •
#1 Palm Desert- Portfolio Characteristis
31 December 2002
Dollars in Thousands
Ageing Interval Market Value
General Fund A
< 1 M $ 69,124geing
<2M 2,029
< 3M 8,093 too
97
< 6M so
< 1YR -
<2YR o
c 3Y R 3 40
<4Y R a°
<5YR 20 10
>5YR 3 0 0 0 0
Total: $ 79,246 <1M <2M <3M <6M <IYA <2YR
Ratings' Market Value Credit Duality A A1/P1
AAA $ 25,150 AAA 4° 7%
AA ;{
A 4,024 AA
A1/P1 8,028 0%
Unrated'* 77,465 Unrated"
Total: $ 114,667 67%
Sector Market Value Asset Allocation MTNs LAIF
U.S. Treasury $ 4% 340X
Federal Agency 6,102 Comm Paper .
Money Market Funds 23,728 7 g
Commercial Paper 8,028 Money Market
MTNs 4,024 un s U.S.Treasury
Fd LALAW40,000 21% 4 'b'^ ' 00
RDA Loan 32,785 Fed Agenoy RDA Loan
Total: $ 114,667
Month City Yield LAW Yield Variance PeAormance
Jan02 3.27 3.07 0.20
Feb 3.27 2.97 0.31 3.6
Mar 3.17 2.86 0.31
Apr 3.18 2.85 0.34 _
May 3.06 2.74 0.32 s?
Jun 2.86 2.69 0.18 S 2.6
Jul 2.88 2.71 0.17 5:
Aug 2.64 2.59 0.04
Sep 2.22 2.60 -0.38 1.s
Oct 2.15 2.49 -0.33 Jan02 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nov 2.00 2.30 -0.31
Dec 1.93 2.20 -0.27 IMLAIF Yield pCiry Yield
Standard and Poor's Credit Ratings
LAIF, HighMark, and City Loan to RDA Page 2 of 7
A • •
City of Palm Desert
Portfolio Holdings
31 December 2002
Market Ratings
Par Value Issuer Coupon Maturity Cost YTM I Price I Value I Moody'al S& P
Medium-Term Notes
$ 4,000,000 GENERAL MOTORS 5.95 3114/03 $ 3,999,969 5.94 100.59 $ 4,023,763 A2 BBB
$ 4,000,000 Subtotal $ 3,999,969 5.94 $ 4,023,763
Commercial Paper-Unsecured
$ 2,030,000 GENERAL ELECTRIC 2.08 1/15/03 $ 1,999,036 2.17 99.95 $ 2,028,943 Aaa AAA
$ 6,000,000 GENERAL ELECTRIC 1.76 1/6/03 $ 5,943,387 1.83 99.98 $ 5,998.750 Aaa AAA
$ 8,030,000 Subtotal $ 7,942,422 1.92 $ 8,027,693
Agencies-Discount
$ 4,080,000 FED NATIONAL MTG ASSOC 2.21 &14/03 $ 3,999,350 2.31 99.76 $ 4,070,208 Aaa AAA
$ 2.034,000 SALLIE MAE 2.13 2/7/03 $ 1,999,461 2.22 99.88 $ 2,031,559 Aaa AAA
$ 6,114,000 Subtotal $ 5,998,811 2.28 $ 6,101,767
LGIP
$ 40,000,000 L.A.1.F. 0.00 1/1/03 $ 40,000,000 2.20 100.00 $ 40,000,000 NR NR
$ 40,000,000 Subtotal $ 40,000,000 2.20 $ 40,000,000
LGIP
$ 21,805,903 C.A.M.P. 0.00 1/1/03 $ 21,805,903 1.38 100.00 $ 21,805,903 WA AAA
$ 21,805,903 Subtotal $ 21,805,903 1.38 $ 21,806,903
Pooled Funds-AIM
$ 19,048,312 PRIME PORTFOLIO 0.00 1/1/03 $ 19,048,312 0.95 100.00 $ 19,048,312 Aaa AAA
$ 19,048,312 Subtotal $ 19,048,312 0.95 $ 19,048,312
Pooled Funds-HighMark
$ 2,815,464 CITY MAIN SWEEP 0.00 1/1/03 $ 2,815,464 0.31 100.00 $ 2,815,464 NR NR
$ 25,000 DESERT WILLOW SWEEP 0.00 1/1/03 $ 25,000 0.31 100.00 $ 25.000 NR NR
$ 14,369 GOLF COURSE SWEEP 0.00 1/1/03 $ 14,369 0.31 100.00 $ 14,369 NR NR
$ 1,824,909 OFFICE COMPLEX SWEEP 0.00 1/1/03 $ 1,824,909 0.31 100.00 $ 1,824,909 NR NR
$ 4,679,742 Subtotal $ 4,679,742 0.31 $ 4,679,742
City Loan to RDA
$ 32,785,480 CITY OF PALM DESERT 0.00 1/1/33 $ 32.785,480 2.20 100.00 $ 32,785,480 NR NR
$ 32,785,480 Subtotal $ 32,785,480 2.20 $ 32,785,480
Total Investments
$ 136,463,436 $ 136,260,639 1.926 $ 136,472,659
NR=Not Rated Page 3 of 7
0
City of Palm Desert
Portfolio Holdings
31 December 2002
Market Ratings
Par Value Issuer Coupon Maturity Cost I Moody'al S&P
Cash
$ 67,588 OFFICE COMPLEX CHKG 0.00 1211/02 $ 67,588 0.00 100,00 $ 67,588 NR NR
$ 62,780 CITY MAIN CHKG 0.00 1211102 $ 62,780 0.00 100.00 $ 62,780 NR NR
$ 188,982 DESERT WILLOW CHKG 0.00 1211/02 $ 188.982 0.00 100.00 $ 168,982 NR NR
$ 18,498 CPD GOLF COURSE 0.00 12/1/02 $ 18,498 0.00 100,00 $ 18.498 NR NR
$ 30,181 OFFICE COMPLEX TRUST 0.00 12/1/02 $ 30,181 0.00 100.00 $ 30,181 NR NR
$ 57,870 RECREATIONAL FAC CHKG 0.00 12/1/02 $ 57,870 0.00 100.00 $ 57,870 NR NR
$ - VACATION INN CHKG 0.00 12/1/02 $ - 0.00 100.00 $ - NR NR
$ 425 898 Subtotal $ 425,898 0.00 $ 425,898
Total Cash and Investments
$ 136,8891335 $ 136,686,537 $ 136,898,558
NR= Not Rated Page 4 of 7
A
Palm Des edlevelopment Agency- Portfolio Chlacteristics
31 December 2002
Dollars in Thousands
Ageinq Interval Market Value
Portfolio Ageing w/o SLGSs
< 1 M $ 68,997
< 2M 197
< 3M - 100 69
< 6M - 90
eo
< tYR 868 70
< 2YR 7,089 ; 60
< 3YR - 50
{? 40
<4YR a° 30
< 5YR 20 9
10 0 0 0 1 0 0
>5YR - o
Total: $ 77,151 <lM <2M 43M <6M <tYR <2YR <3YR <4YR
Credit Quali AI/Pi
Quality' Market Value _ 0%
AAA $ 34,356
AA AAA
D: r
A 3 . s Unrated'"
Al/P1
Unrated" 60,561 AA A
Total: $ 94,917 0°�
09/6
Asset Allocation FederalAgency
Sector Market Value
o�
U.S. Treasury $ 8,155
Federal Agency _ Money Market
Funds
Money Market Funds 32,366 34%
LAIF 54,396 t:> LAIF
Commercial Paper - o 57%
Corporate Bonds U.S.Treasury s
Total: $ 94,917 9i
Month RDA Yield LAIF Yield Variance Performance
Jan02 2.46 3.07 -0.61
Feb 2.51 2.97 -0.46
Mar 2.28 2.86 -0.59
Apr 2.42 2.85 -0.43
May 2.38 2.74 -0.36 2.6
Jun 2.37 2.69 -0.32
Jul 2.23 2.71 -0.48 S
Aug 2.27 2.59 -0.33
e +
Sep 2.26 2.60 -0.35 1.6
Oct 2.23 2.49 -0.25 Jan02 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nov 2.06 2.30 -0.25
Dec 1.95 2.20 -0.25 113 LAIF Yield 19 RDA Yield
Standard and Poor's Credit Ratings
LAIF and HighMark Sweep Page 5 of 7
Palm Desert Redevelopment Agency
Portfolio Holdings
31 December 2002
Market Ratings
Par Value Issuer Coupon Maturity r Cost I YTM I Price I Value I Moody'sl S&1P
U.S.Treasury-Discount
$ 198,000 UNITED STATES TREASURY 4.70 2115/03 $ 150,793 5.45 99.84 $ 197,479 Aaa AAA
$ 181,000 UNITED STATES TREASURY 4.63 2/15/04 $ 130,168 5.51 98.65 $ 177,351 Aaa AAA
$ -1,143,000 UNITED STATES TREASURY 4.59 8/15/04 $ 4,989,671 5.54 97.73 $ 6,911,995 Aaa AAA
$ 532,400 UNITED STATES TREASURY 4.66 8/15103 $ 394,279 5.47 99.23 $ 527,204 Aaa AAA
$ 344,600 UNITED STATES TREASURY 4.66 8/15/03 $ 255,200 5.47 99.23 $ 341,237 Aaa AAA
$ 8,399,000 Subtotal $ 5,920,112 5.53 $ 8,155,266
LGIP
$ 40,000,000 L.A.I.F. 0.00 1/1/03 $ 40.000,000 2.20 100.00 $ 40,000,000 NR NR
$ 4,894,821 L.A.I.F. BOND PROCEEDS 0.00 1/1/03 $ 4,894,821 2.20 100.00 $ 4,894,821 NR NR
$ 9,500,829 L.A.I.F. BOND PROCEEDS 0.00 1/1/03 $ 9.500,829 2.20 100.00 $ 9,500,829 NR NR
$ 54,395,649 Subtotal $ 54,3%,649 2.20 $ 54,395,649
Pooled Funds--AIM
$ 26,201,157 PRIME PORTFOLIO 0.00 1/1/03 $ 26,201,157 0.95 100.00 $ 26,201,157 Aaa AAA
$ 26,201,167 Subtotal $ 26,201,157 0.95 $ 26,201,157
Pooled Funds--HighMark
$ 5,957,126 HOUSING AUTH CHK SWEEP 0.00 1/1/03 $ 5,957,126 0.31 100.00 $ 5,957,126 NR NR
$ 207,831 HOUSING AUTH TRT SWEEP 0.00 1/l/03 $ 207,831 0.31 100.00 $ 207,831 NR NR
$ 6,164,957 Subtotal $ 6,164,957 0.31 $ 6,164,957
Total Investments
$ 95,160,763 $ 92,681,875 1.95 $ 94,917,029
Cash
$ 53,365 HOUSING AUTH CHKG 0.00 1/1/03 $ 53,365 0.00 100.00 $ 53,365 NR NR
$ 53,548 HOUSING AUTH TRUST 0.00 1/1/03 $ 53,548 0.00 100.00 $ 53,548 NR NR
$ 106,913 Subtotal $ 106,913 0.00 $ 106,913
Total Cash and Investments
$$ 95`,267� $ 92,788,788 $ 95,023,942
NR =Not Rated Page 6 of 7
I► w
STATEMENT OF COMPLIANCE
The investment portfolios of the City of Palm Desert('City')and the Palm Desert Redevelopment Agency ('RDA')are
governed by federal, state, and local law. The City Treasurees*Statement of Investment Policy' is more restrictive than the
California Govefnment Code. The Palm Desert Investment Committee and the Palm Desert City Council review the
Statement of Investment Policy annually.
For the month ended 31 December 2002,the City and the RDA investment portfolios were in compliance with all applicable
federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment
strategies, based upon the stated objectives of safety, liquidity, and yield (in order of priority).
Barring unforeseen events,the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert
and the Palm Desert Redevelopment Agency over the next six months. In addition,portions of either the City or the-RDA
portfolio could be liquidated in order to meet any significant, unexpected cash requirements.
Bloomberg L.P.and Interactive Data Corporation provided the data and the analytical tools that were used to calculate the
market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities
are held in escrow accounts and are therefore not included in this report as assets. All balances are bank balances.
Respectfully submitted on 22 January 2003,
PauLS. Circe C.C.M.T- "
City Treasurer
SUMMARY OF AUTHORIZED INVESTMENTS
California Government Code City Investment Policy
CA Govt Maximum Maximum Quality Maximum Maximum Quality % of City %of RDA
Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio
53601 a Palm Desert Bonds 5 Years No Limit Not Authorized 1
53601 b U.S.Treasuries 5 Years 'No Limit 5 Years No Limit I , 0.0%. 6.40%
53601 c) CA State Debt 5 Years No Limit Not Authorized
53601 d) CA Local Agency Debt 5 Years No Limit Not Authorized
53601 e) Federal Agencies 5 Years No Limit 5 Years 30% 1 4.4% 0.0%
53601(f) Bankers's Acce fences 180 Days 40% 180 Days 40% A-1 & P-1
53601 Commercial Pa er 270 Days 25% A-1+or P-1 270 Days 25% A-1+or P-1 5.8% 0.0%
53601 h Negotiable CDs 5 Years 30% 5 Years 30% AA-or Aa3
53601 1 Re os 1 Year No Limit 30 Da vs 20% AAA& Aaa
53601 i) Reverse Re os 92 Days 20% Not Authorized
53601 i Medium-Term Notes 5 Years 30% A 3 Years 30% A 2.9% 0.0%
53601 k Mutual Funds 90 Days 20% AAA&Aaa 90 Days 1 20% 1 AAA&Aaal 33.4% 1 34.9%
53601(I) Trust Indenture Debt Not Authorized
53601 m Secured Bank Deposits 5 Years No Limit Not Authorized
53601(n) Mortgage-Backed 5 Years 20% A(Issuer) & Not Authorized
Securities AA(Security
1.6429 LAIF No Limit No Limit 29.4% 58.70%
75.9% 100.0%
1 The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council.
Certified California Municipal Treasurer Page 7 of 7
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71nanee Department
MEMORANDUM
To: Gloria Martinez, Records Technician
From: Diana Leal, Administrative Secret
Subject: Investment and Finance Committee
Date: January 28, 2003
Attached, for your records, is a copy of the January 22, 2003 Investment and Finance Committee
meeting attendance register.
Thank you for your assistance.
Attachments (1)
GAFinance\Diana LeaMpdocAnvestment Committee\2002 Memos\City Clerk\l-22-03attendance.wpd
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MEMORANDUM
To: Rachelle Klassen, City Clerk
From: Diana Leal, Administrative Secretary
Subject: Investment and Finance Committee!
Date: January 28, 2003
Attached is a copy of the December 18, 2002 minutes of the Investment and Finance Committee
approved by the Committee on January 22,2003. Please place on the next City Council agenda for
approval thereof.
Thank you for your assistance.
Attachments (2)
G:Tinance\Diana Leal\Wpdocs\Investment Committee\2002 Memos\City Clerk\I-22-03 minutes.wpd
CITY OF PALM DART
�•�
INVESTMENT & FINANCE COMMITTEE
Minutes
December 18, 2002, 2:00 p.m.
North Wing Conference Room
I. CALL TO ORDER
A regular meeting was called to order by Chairman Gibson on Wednesday,
December 18, 2002 at 2:00 p.m.
II. ROLL CALL
Present: Absent:
Paul Gibson, Director of Finance None.
Jean Benson, Mayor
Bob Spiegel, Mayor Pro-Temp
Thomas Jeffrey, Deputy City Treasurer
David Erwin, City Attorney
Carlos Ortega, City Manager
Everett Wood
Bill Veazie
Murray Magloff
Russ Campbell
Also Present:
Justin McCarthy, ACM Redevelopment
Dennis Coleman, Redevelopment Finance Manager
Rodney Young, Desert Willow General Manager
Diana Leal, Recording Secretary
Guests:
None
III. ORAL COMMUNICATIONS
None.
IV. COMMITTEE MEMBER REPORTS
None.
1
121802 wPd
INVESTMENT & FINANCE�MITTEE
MINUTES December 18, 2002
V. CONSENT CALENDAR
A. Approval of Minutes
Motion was made by Mr. Campbell and seconded by Mr. Magloff to approve
the Minutes of the November 20, 2002 meeting as submitted.
VI. CONSENT ITEMS HELD OVER
None.
VII. NEW BUSINESS
A. City and Redevelopment Agency Investment Schedules and Summary of
Cash Reports for November 2002
Mr. Jeffrey reported that for the month ended November 30, 2002, the book
value of the City Portfolio was approximately $142.5 million. The City earned
approximately $238,000 in interest. The portfolio yield-to-maturity was
approximately 2%.
For the month ended November 30, 2002, the book value of the RDA Portfolio
was approximately $92.8 million. The RDA earned approximately $162,000 in
interest. The portfolio yield-to-maturity was approximately 2.06%.
Mr. Gibson said that market interest rates for 2001 were about 4% versus 2%
for 2002.
Mr, Jeffrey commented that the City is heavily invested in LAIF and money
market funds because the pool yields are superior to those of individual
securities. If the City purchased Wells Fargo commercial paper maturing in
September 2003, for example, then the yield would be 1.29%. If the same
money were invested in CAMP, then the yield would be 1.52%. If the same
money were invested in LAIF, then the yield would be 2.3%. Discount
Government Agency securities are not doing any better.
B. State of California Local Agency Investment Fund Balance for the Month of
November 2002
Mr. Gibson said that the accounts remain maxed out for both the City and
Redevelopment Agency.
2
12ieo2.woa
INVESTMENT & FINANCE�MITTEE .
MINUTES December 18, 2002
C. California Asset Management Program (CAMP) November 2002
Mr. Gibson said that the account contains approximately $18 million.
D. Comprehensive Annual Financial Report 6/30/02
Mr. Gibson said that the CAFR was presented as an informational item. He
said that the new auditors will be present at the January 2003 meeting to
answer any questions the Committee may have.
Mr. Gibson said that the current auditors are experienced in auditing
governmental agencies that audit other governmental agencies. The audit
was therefore expedited as the auditors are knowledgeable in the process.
Mr. Wood asked if staff would consider the current auditor for future audits.
Mr. Gibson said that the current auditors have a five year contract.
E. City and Redevelopment Agency Monthly Financial Reports for City Council
for November 2002
Mr. Gibson said that the sales tax is slightly down from last year's year-to-date
figures. In discussing this with the City's consultant, MRC, the state has
depleted some gains with the cash flow to cities with sales tax. The information
for the second quarter has not been received. This information is usually
received as of December 24.
With respect to the Transient Occupancy Tax (TOT), staff is hoping that
Vacation Inn will sell so that the City can receive back taxes owed. Mr. Gibson
said that revenues for licenses and permits are equivalent to last year.
Mr. Spiegel asked if staff had spoken to the Marriott recently. Mr. Gibson said
that he typically calls the Marriott about midyear, in January or so, to see
where they stand. Mr. Spiegel suggested that Mr. Gibson have someone call
the Marriott as he heard that their convention bookings are down dramatically
for the Spring. There are two new resorts that have opened up in Phoenix,
Arizona where the cost to stay is about the same as the Marriott. He believes
that because it is less expensive to go to Arizona than to Palm Springs, the
Marriott has lost some of their bookings.
Mr. Wood asked if the sales tax is paid back to the City on the basis of an
estimate or on an actual amount. Mr. Gibson said that they give the City an
advance which is based on the prior year's history and take into account
where the economy is headed and they provide an actual wrap up at the end
of each quarter.
3
1219o2.Pe
INVESTMENT & FINANCE�1flMITTEE •
MINUTES ®O December 18, 2002
Mr. Wood said that there could potentially be a deficit. Mr. Gibson said that it
is very possible in light of the fact that there are new stores that are opening in
nearby cities which can have an impact on the City of Palm Desert.
F. Parkview Professional Office Buildings - Financial Report for November 2002
Mr. Gibson said that as soon as the Mountain Conservancy signs their lease
the Parkview Office complex will be at full occupancy. Attorney Hanover is
considering having the Cancer Society take over the balance of their lease.
Council awarded the re-roofing contract to Petronella Roofing. They will start
the work in January. Carpeting and repainting is being done for the office of
the Water Resources Board, a ten-year tenant.
G. Palm Desert Golf Course Facilities Corooration Financial Information for
October 2002
Mr. Young said that November was a slow month. Golf surpassed food and
beverage and payroll was better than budget. Expenses were over due to the
purchase of seed for the overseeding. The golf shop came in better than
September and October, in both months the golf shop fell 60%, in November it
fell only 58%. Sales made up 99% of budget. The reason the merchandise
revenue was up in comparison to the prior year was that this year the
Executive Women's Golf Association bought approximately $16,000 in
merchandise. Gross profit is up $35,000 to date.
Mr. Young said that the capital improvements that are being done at Desert
Willow are coming along nicely. They will be placing the tiles in the
bathrooms. They will be plastering the walls today, painting tomorrow and will
be pouring concrete on Saturday. The parking lot light poles are in place and
the fixtures should be arriving any day. They will be pouring 12 more concrete
bases tomorrow. The lights near the clubhouse will be lit by 12/20/02.
VIII. CONTINUED BUSINESS - None.
IX. OLD BUSINESS
A. Status of Public and Private Partnerships Background Checks
There being no business issues to report, discussion ensued.to the next
agenda item.
4
121802.wpd
INVESTMENT & FINANCEOMITTEE •
MINUTES December 18, 2002
B. Bond Issuance by Palm Desert Financing Authority
Mr. Coleman said that at the last council meeting, the City Council passed the
findings and the bond documents on the bond issue for Project Area No. 2.
Based on the current interest rates, they can do a bond issue of about $35
million. Staff is exploring possibilities and is thinking of perhaps doing
something at a more conservative nature. This depends upon the State
budget. Today the governor was to announce that the budget, in the next 18
months, will have a deficit somewhere in the neighborhood of $27 to $30
billion. They are waiting to see the State Budget's effect on the redevelopment
agencies.
They are looking at sizing the bond issue in a way that they can accomplish
their projects and so that they can pay their administration and the amount of
money the legislators' will take from the redevelopment agencies. Last month
Mr. Coleman reported that the Redevelopment Agency will have to pay $1.2
million this year to the State for Education Revenue Augmentation Fund
(ERAF) this will shift the property taxes from the Agency to the schools in
order to reduce their bills accordingly. The total take from the Redevelopment
Agency this year is $75 million. They don't know what the legislators will be
requesting. In addition, they are concerned that the legislators will come after
the City for money as well. On January 10, 2003, staff will find out what the
governor's proposed budget will be. It will allow staff to work on their
disclosure documents and the preliminary official statement. These
documents can be included when the bond is sold. Maybe they can issue a
bond as low as $24 million. Staff is discussing this possibility. They will wait
until the City Manager, Finance Staff and Redevelopment can get it as close
as possible to get some projects accomplished without the State's budget
hurting the City or Agency. The Legislative Analyst has said, in a report, that
asking for more money from the redevelopment agencies may not be legal.
Mr. Wood asked if there would be a problem with the State paying back the
money. Mr. Coleman said that there would be no pay back.
MISCELLANEOUS
Mr. Jeffrey said that staff is in the process of proposing a bill for the 2003
Legislative Session that will expressly authorize local agencies to buy asset-
backed commercial paper ("ABCP"). Up until now, local agencies have
interpreted the California Government Code as implicitedly authorizing the
purchase of this paper. Consequently, local agencies have purchased over $1
billion worth of ABCP over the last few years. The City of Palm Desert has
been working on developing its own ABCP program over the last few months.
5
121802..Pd
INVESTMENT & FINANCE MITTEE
MINUTES December 18, 2002
At the 2002 Annual LAIF Conference, staff learned that LAIF needed express
authorization from the Legislature to buy ABCP. Consequently, the State
Treasurer's Office has set the legal precedent in this regard. The City
subsequently contacted several local agencies that had been purchasing
ABCP, and they were not aware of this development.
Staff is planning to propose a bill that uses LAIF's authorizing language on
ABCP to authorize ABCP purchases by local agencies.
Bill Sherwood, Director of Investments for LAIF, recently commented that
ABCP is now the dominant form of commercial paper and will eventually
replace unsecured commercial paper, which the City has traditionally bought.
X. NEXT MEETING - Wednesday, January 22, 2003 at 2:00 p.m.
XI. ADJOURNMENT
There being no further business, the meeting was adjourned by Mr. Gibson at 2:30 p.m.
Respectfully submitted,
C /
C
D'a a Leal rd ng Secretary
6
121e02. pd
Paul S. Gibson, C.C.M.T., Treasurer
Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer
Treasurer's Commentary
Money market yields remain at historically low levels. The economy is on hold, pending the outcome of the forthcoming war
with Iraq (likely to occur in February). Investors continue to seek the haven of U.S. Treasuries and bond mutual funds,at the
expense of stock mutual funds. Consumer confidence may be ebbing for the first time. Firms continue to be conservative
about capital spending plans, due to overcapacity. Investors withdrew$100 billion from the stock market in 2002.
A key concern is the possible exit of Asian and European capital from the U.S. securities markets in 2003, due to a sliding
U.S. dollar. Foreign investors are receiving less profit as they repatriate their U.S. earnings into their native currency.
The Bush Administration's tax stimulus package is designed to add 1%to 1.5%to Gross Domestic Product within the next
12-15 months(timed to coincide with the 2004 Presidential election cycle). This supports a mild recovery during 2003-2004.
On a separate note, the League of California Cities has asked the Palm Desert City Treasurer's Office to serve as an advisor
to the League on a county-sponsored proposal to start a local government investment pool that would compete with LAIF.
Pis ria)aom C.C.M.r.
Treasurer
PORTFOLIO STATISTICS
Dollars In Thousands
DEC-02 N6v-02 OCT-02 SEP-02 AUG-02 JUL-02
CITY
Month-End Book Value*"' $ 136,687 $ 142,520 $ 144,064 $ 170,423 $ 180,743 $ 189,368
Month-End Market Value"' $ 136,899 $ 142,742 $ 144,259 $ 170,723 $ 181,096 $ 191,228
Paper Gain (Loss) $ 212 $ 222 $ 205 $ 300 $ 353 $ 1,860
Prior Year Book Variance $ (26,850) $ (23,866) $ (21,277) $ 696 $ 6,952 $ 15,450
Interest Earnings $ 225 $ 238 $ 271 $ 390 $ 428 $ 462
Yield-To-Maturity 1.930/ 2.00% 2.15% 2.22% 2.640% 2,88%
Weighted Maturity(Days) 49 50 52 70 222 285
Effective Duration 0.01 0.03 0.04 0.04 0.06 0.08
RDA
Month-End Book Value"*" $ 92,787 $ 92,761 $ 94,884 $ 99,221 $ 100,125 $ 115,066
Month-End Market Value"" $ 95,022 $ 94,996 $ 97,147 $ 101,468 $ 102,313 $ 119,206
Paper Gain (Loss) $ 2,235 $ 2,235 $ 2,263 $ 2,247 $ 2,188 $ 4,140
Prior Year Book Variance $ 7,655 $ 7,826 $ 24,963 $ 28,723 $ (46.564) $ (34,197)
Interest Earnings $ 153 $ 162 $ 185 $ 191 $ 199 $ 216
Yield-To-Maturity 1.95% 2.060/6 2.23% 2.26% 2,27% 2.23%
Weighted Maturity(Days) 150 150 147 141 142 139
Effective Duration 0.12 0.13 0,13 0.13 0.14 0.13
City Treasurer's Office
73-510 Fred Waring Drive
Palm Desert, CA 92260-2578
Omits SLGSs. 760.346.0611
. Ci0f Palm Desert- Portfolio Characteristilf
31 December 2002
Dollars in Thousands
Ageing Interval Market Value
< 1 M $ 69,124 General Fund Ageing
<2M 2,029
<3M 8,093 100
e7
<6M 60
<1YR a
<2YR o s0
<3YR 40
<4YR a°
<5YR 20 10
0
>SYR - 3 0 0 0
Total: $ 79,246 <1M <2M <3M <6M <1YR <2YR
Ratings Market Value CredN Duality A A1/P1
AAA $ 25,150 AAA 4% 7%
a
AA - 22%
A 4,024 AA
A1/P1 8,028 0%
Unrated" 77,465 Unrated
Total: $ 114,667 67%
Sector Market Value Asset AIIOCatIOn MTNs LAIF
U.S.Treasury $ - 4% 34%
Federal Agency , Comm Paper
Money Market Funds 23,728728 7"
Commercial Paper 8,028 Money Market
MTNs 4,024 Funds U.S.Treasury
LAIF 40,000 21% P 01/RDA Loan 32,785 FedAgency, RDA Loan
Total: $ 114,667 6% 29°/
Month City Yield LAIF Yield Variance 1performancel
Jan02 3.27 3.07 0.20
Feb 3.27 2.97 0.31 3.6
Mar 3A7 2.86 0.31
Apr 3.18 2.85 0.34
May 3.06 2.74 0.32 ? °
Jun 2.86 2.69 0.18 2s
1
Jul 2. 2.71 0.
Aug 2.64 64 2.59 0.0404 � 3
Sep 2.22 2.60 -0.38 1.6
Oct 2.15 2.49 -0.33 Jan02 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nov 2.00 2.30 -0.31
Dec 1.93 2.20 -0.27 pLAIF Yield ®City Yield
Standard and Poor's Credit Ratings
LAIF, HighMark, and City Loan to RDA Page 2 of 7
City of Palm Desert
Portfolio Holdings
31 December 2002
Market Ratings
Par Value Issuer Coupon Maturity Cost YTM Price Value Moody's S& P
Medium-Term Notes
$ 4,000,000 GENERAL MOTORS 5.95 3114/03 $ 3,999,969 5.94 100.59 $ 4,023,763 A2 B88
$ 4,000,000 Subtotal $ 3,999,969 5.94 $ 4,023,763
Commercial Paper- Unsecured
$ 2.030,000 GENERAL ELECTRIC 2.08 1/16/03 $ 1,999,036 2.17 99.95 $ 2,028,943 Aaa AAA
$ 6,000,000 GENERAL ELECTRIC 1.76 1/6/03 $ 5,943,387 1.83 99.98 $ 5,998.750 Aaa AAA
$ 0,030,000 Subtotal $ 7,942,422 1.92 $ 8,027,693
Agencies-Discount
$ 4,080.000 FED NATIONAL MTG ASSOC 2.21 3/14/03 $ 3,999,350 2.31 99.76 $ 4,070,208 Aaa AAA
$ 2,034,000 SALLIE MAE 2.13 217/03 $ 1,999,461 2.22 99.88 $ 2,031.559 Aaa AAA
$ 6,114,000 Subtotal $ 5,998,811 2.28 $ 6,101,767
LGIP
$ 40,000,000 L.A.I.F. 0.00 1/1/03 $ 40,000,000 2.20 100.00 $ 40,000,000 NR NR
$ 40,000,000 Subtotal $ 40,000,000 2.20 $ 40,000,000
LGIP
$ 21,805,903 C.A.M.P, 0.00 1/1103 $ 21.805,903 1.38 100.00 $ 21,805,903 N/A AAA
$ 21,805,903 Subtotal 111 21,805,903 1.38 $ 21,805,903
Pooled Funds-AIM
$ 19,048,312 PRIME PORTFOLIO 0.00 1/1/03 $ 19,048,312 0.95 100.00 $ 19,048,312 Aaa AAA
$ 19,048,312 Subtotal $ 19,048,312 0.95 $ 19,048,312
Pooled Funds--HighMark
$ 2,815,464 CITY MAIN SWEEP 0.00 1/1/03 $ 2,815,464 0.31 100.00 $ 2,815,464 NR NR
$ 25,000 DESERT WILLOW SWEEP 0.00 1/1/03 $ 25,000 0.31 100.00 $ 25,000 NR NR
$ 14,369 GOLF COURSE SWEEP 0.00 1/1/03 $ 14,369 0.31 100.00 $ 14,369 NR NR
$ 1,824,909 OFFICE COMPLEX SWEEP 0.00 1/1/03 $ 1,824,909 0.31 100.00 $ 1,824,909 NR NR
$ 4,679,742 Subtotal $ 4,679,742 0.31 $ 4,679,742
City Loan to RDA
$ 32,785,480 CITY OF PALM DESERT 0.00 1/1/33 $ 32,785,480 2.20 100.00 $ 32,785,480 NR NR
$ 32,785,480 Subtotal $ 32,786,480 2.20 $ 32,785,480
Total Investments
$ 136,463,436 $ 136,260,639 1.926 $ 136,472,659 .
NR= Not Rated Page 3 of 7
City of Palm Desert
Portfolio Holdings
31 December 2002
Market Ratings
Par Value Issuer Coupon Maturity Cost I YTM I Price Value I Moody's S& P
Cash
$ 67,588 OFFICE COMPLEX CHKG 0.00 12/1/02 $ 67,588 0.00 100.00 $ 67,588 NR NR
$ 62,780 CITY MAIN CHKG 0.00 1211/02 $ 62,780 0.00 100.00 $ 62,780 NR NR
$ 188,982 DESERT WILLOW CHKG 0.00 12/1/02 $ 188,982 0.00 100.00 $ 188,982 NR NR
$ 18,498 CPD GOLF COURSE 0.00 12/1/02 $ 18,498 0.00 100.00 $ 18,498 NR NR
$ 30,181 OFFICE COMPLEX TRUST 0.00 12/1/02 $ 30,181 0.00 100;00 $ 30,181 NR NR
$ 57,870 RECREATIONAL FAC CHKG 0.00 1211/02 $ 57.870 0.00 100.00 $ 57,870 NR NR
$ - VACATION INN CHKG 0.00 1211/02 $ - 0.00 100.00 $ - NR NR
$ 425,898 Subtotal $ 425,898 0.00 $ 425,898
Total Cash and Investments
$ 136,889,335 $ 136,686,537 $ 136,898,558
NR=Not Rated Page 4 of 7
Palm Deseledevelopment Agency- Portfolio Cha1'dLteristics
31 December 2002
Dollars in Thousands
Ageing Interval Market Value 00
Portfolio Ageing
<1 M $ 68,997 w/o SLGSs
<2M 197
<3M - 100 69
<6M - 80
<1YR 868 a 70
<2YR 7,089 0 60
50
<3YR - 40
<4YR - a 30
<5YR
20 9
10 0 0 0 1 0 0
>5YR - 0
Total: $ 77,151 <1M <2M <3M <6M <tYR <2YR <3YR <4YR
Credit Qualit A1/131
Quality, Market Value
AAA $ 34,356
AA - AAA
A _ 360/6 ; .,., Unrated•'
640/6
Al/Pi -
Unrated" 60,561 AA A
Total: $ 94,917 0
ci
Asset Allocation Federal Agency
Sector Market Value
of
U.S. Treasury $ 8,155
Federal Agency - Money Market
Money Market Funds 32,366 Funds 0
LAIF 54,396 LAIF
Commercial Paper - 570/6
Corporate Bonds - U.S.Treasury
Total: $ 94,917 9%
Month RDA Yield LAIF Yield Variance Pertormance
Jan02 2.46 3.07 -0.61
Feb 2.51 2.97 -0.46
Mar 2.28 2.86 -0.59
Apr 2.42 2.85 -0.43
May 2.38 2.74 -0.36 iE 2.6 n y t
Jun 2.37 2.69 -0.32
Jul 2.23 2.71 -0.48
i
Aug 2.27 2.59 -0.33 s
Sep 2.26 2.60 -0.35 1.6 !
Oct 2.23 2.49 -0.25 Jan02 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nov 2.06 2.30 -0.25
Dec 1.95 2.20 -0.25 113 LAIF Yield p RDA Yield
' Standard and Poor's Credit Ratings
LAIF and HighMark Sweep Page 5 of 7
Palm Desert Redevelopment Agency
Portfolio Holdings
31 December 2002
Market Ratings
Par Value Issuer Coupon M-777-y-r Cost I YTM I Price I Value I Moody'sl S&P
U.S.Treasury-Discount
$ 198,000 UNITED STATES TREASURY 4.70 2115/03 $ 150,793 5.45 99.84 $ 197,479 Aaa AAA
$ 181,000 UNITED STATES TREASURY 4.63 2/15/04 $ 130,168 5.51 98.65 $ 177,351 Aaa AAA
$ 7,143,000 UNITED STATES TREASURY 4.59 8/15/04 $ 4,989,671 5.54 97.73 $ 6,911,995 Aaa AAA
$ 532,400 UNITED STATES TREASURY 4.66 8/15/03 $ 394,279 5.47 99.23 $ 527,204 Aaa AAA
$ 344,600 UNITED STATES TREASURY 4.66 8/15/03 $ 255,200 5.47 99.23 $ 341,237 Aaa AAA
$ 8,399,000 Subtotal $ 5,920,112 5.53 $ 8,155,266
LGIP
$ 40,000,000 L.A.I.F. 0.00 1/1/03 $ 40,000,000 2.20 100.00 $ 40,000,000 NR NR
$ 4,894,821 L.A.I.F. BOND PROCEEDS 0,00 1/1/03 $ 4,894,821 2.20 100.00 $ 4,894,821 NR NR
$ 9,500,829 L.A.I.F. BOND PROCEEDS 0,00 1/1/03 $ 9,500,829 2.20 100.00 $ 9,500,829 NR NR
$ 54,395,649 Subtotal $ 54,395,649 2.20 $ 54,395,649
Pooled Funds-AIM
$ 26,201,157 PRIME PORTFOLIO 0.00 1/1/03 $ 26,201,157 0.95 100.00 $ 26,201,157 Aaa AAA
$ 26,201,157 Subtotal $ 26,201,157 0.95 $ 26,201,157
Pooled Funds-HighMark
$ 5,957,126 HOUSING AUTH CHK SWEEP 0.00 1/1/03 $ 5,957,126 0.31 100.00 $ 5,957,126 NR NR
$ 207,831 HOUSING AUTH TRT SWEEP 0.00 1/1/03 $ 207,831 0.31 100.00 $ 207,831 NR NR
$ 6,164,957 Subtotal $ 6,164,957 0.31 $ 6,164,957
Total Investments
$ 95,160,763 $ 92,681,875 1.95 $ 94,917,029
Cash
$ 53,365 HOUSING AUTH CHKG 0.00 1/1/03 $ 53,365 0.00 100.00 $ 53,365 NR NR
$ 53,648 HOUSING AUTH TRUST 0.00 1/1/03 $ 53,548 0.00 100.00 $ 53,548 NR NR
$ 106,913 Subtotal $ 106,913 0.00 $ 106,913
Total Cash and Investments
$ 95,267,676 $ 92,788,788 $ 95,023,942
NR=Not Rated Page 6 of 7
STATEMENT OF COMPLIANCE
The investment portfolios of the City of Palm Desert('City")and the Palm Desert Redevelopment Agency ('RDA') are
governed by federal, state, and local law. The City Treasurer's"Statement of Investment Policy' is more restrictive than the
California Government Code. The Palm Desert Investment Committee and the Palm Desert City Council review the
Statement of Investment Policy annually.
For the month ended 31 December 2002, the City and the RDA investment portfolios were in compliance with all applicable
federal, state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment
strategies, based upon the stated objectives of safety, liquidity,and yield (in order of priority).
Barring unforeseen events,the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert
and the Palm Desert Redevelopment Agency over the next six months. In addition,portions of either the City or the RDA
portfolio could be liquidated in order to meet any significant, unexpected cash requirements.
Bloomberg L.P. and Interactive Data Corporation provided the data and the analytical tools that were used to calculate the
market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities
are held in escrow accounts and are therefore not included in this report as assets. All balances are bank balances.
Respectfully submitted on 22 January 2003,
pauLS (il lid C.C.M.T.
City Treasurer
SUMMARY OF AUTHORIZED INVESTMENTS
California Government Code City Investment Policy
CA Govt Maximum Maximum Quality Maximum Maximum Quality %of City %of RDA
Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio
63601 a Palm Desert Bonds 5 Years No Limit Not Authorized 1
63601 b U.S. Treasuries 5 Years No Limit 5 Years No Limit 0.0% ` 6.4% .,
53601 c) CA State Debt 5 Years No Limit Not Authorized
53601 d) CA Local Agency Debt 5 Years No Limit Nat Authorized
53601 a Federal Agencies 5 Years No Limit 5 Years 300/0 4.401. 0.0%
53601 f) Bankers's Acceptances. 180 Days 40% 180 Days 40%° A-1 & P-1 I -
53601(g) Commercial Paper 270 Days 25% A-1+or P-1 270 Days 25% A-1+or P-1 5.8% 0.0%
Negotiable CDs 5 Years 30% 5 Years- 30% AA-or Aa3
Re os 1 Year No Limit 30 Days 20% AAA&Aaa
Reverse Repos 92 Days 20% Not Authorized
Medium-Term Notes 5 Years 30% A 3 Years 30% A 2.9% 0.0%
636401 Mutual Funds 90 Days 20% AAA&Aaa 90 Days 20% AAA&Aaa 33.4% 34.9%
Trust Indenture Debt Not Authorized
Secured Bank Deposits 5 Years No Limit Not Authorized
63601(n) Mortgage-Backed 5 Years 20% A(Issuer) & Not Authorized
Securities AA(Security
16429 LAIF No Limit No Limit 29.40/. 58.7%
75.9% 100.0%
(1) The City loan to RDA, which is not a bond, has been approved by the Palm Desert City Council.
Certified California Municipal Treasurer Page 7 of 7
STATE OF CALIFORNIA ® A& PHILIP ANGELIDES, Treasurer
OFFICE OF THE TREASURERMF
SACRAMENTO
Local Agency Investment Fund
PO Box 942809
Sacramento, CA 94209-0001
(916) 653-3001
December, 2002 Statement
CITY OF PALM DESERT Account Number : 98-33-621
Attn: CITY TREASURER
73510 FRED WARING DRIVE
PALM DESERT CA 92260
Account Summary
Total Deposit : 0.00 Beginning Balance : 40,000,000.00
Total Withdrawal : 0.00 Ending Balance : 40,000,000.00
_y
Page : 1 of 1
STATE OF CALIFORNIA ® Ah PHILIP ANGELIDES, Treasurer
OFFICE OF THE TREASURER
SACRAMENTO
Local Agency Investment Fund
PO Box 942809
Sacramento, CA 94209-0001
(916) 653-3001
December, 2002 Statement
PALM DESERT REDEVELOPMENT AGENCY Account Number • 65-33-015
Attn: TREASURER
73-510 FRED WARING DRIVE
PALM DESERT CA 92260
Account Summary
Total Deposit : 0.00 Beginning Balance : 40,000,000.00
Total Withdrawal : 0.00 Ending Balance : 40,000,000.00
(RECEIVED
JAN 10 20M
P.D. REDEVELOPMENT AGENCY
Page : 1 of 1
�rD
CALIFORNIA ASSET CONFIRMATION
MANAGEMENT PROGRAM
Jot NT r0w6H5 nu-r fio 2l T\
50 CALIFORN 1 AIMEE[' 23R[JPLOOR
SAX FRANC'ISCO CALIF(111NIA 04111 FOR ACCOUNT
INFORMATION: 800-729-7665
STATEMENT DATE: 1/7/2003
CITY OF PALM DESERT
OPERATING FUND ACCOUNT NUMBER: 553-00
73-510 FRED WARING DRIVE
PALM DESERT,CA 92260 FUND NAME: Cash Reserve Portfolio
Page 1 of 1
Account Summary as of 1/7/2003
— .— — — --
Statement Income Dividends Capital Gains Total Shares Account
Date Paid This Year Paid This Year Owned __. _ .Value
1/7/2003 $0.00 $0.00 27,805,902.640 $27,805,902.64
Transaction Summary for 1/7/2003- 1/7/2003
Beginning Balance Purchases Reinvestments Redemptions Ending Balance
$21,805,902,64 $6,000,000.00 $0.00 $0.00 $27,805,902.64
TRADE POSTING DOLLAR AMOUNT SHARE SHARES THIS I I TOTAL
DATE DATE TRANSACTION OF TRANSACTION PRICE "" TRANSACTION SHARES OWNED
01/07/03 01/07/03 Beginning Balance 21,805,902.640
01/07/03 01/07/03 Purchase-Wire Pur. $6,000,000.00 $1.00 6,000,000.000 27,805,902.640
Message Line:
. i
0 •
t
CITE( OF PALM DESERT
STATEMENT OF
INVESTMENT POLICY
2003
PREPARED BY THE CITY TREASURER'S OFFICE
Thomas W. Jeffrey, J.D., M.B.A.
Deputy City Treasurer
REVIEWED AND APPROVED BY
Paul S. Gibson, C.C.M.T.
City Treasurer
Adopted by the City Council on
Palm Desert Treasury Policieled Procedures • Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
TABLE OF CONTENTS
OVERVIEW PAGE
1 .0 Policy ................................................................................ 1
2.0 Scope ............................................................................... 1
3.0 Prudence ........................................................................... 2
4.0 Objectives .......................................................................... 2
INVESTMENT AUTHORITY
5.0 Delegation of Authority ....................................................... 3
5.1 Investment Procedures ........................................................ 4
6.0 Ethics and Conflicts of Interest ............................................. 4
INVESTMENTS
7.0 Authorized Financial Dealers and Institutions........................... 4
8.0 Authorized and Suitable Investments ..................................... 7
8.1 Prohibited Investments ........................................................ 13
9.0 Investment Pools/Mutual Funds ............................................ 13
PORTFOLIO MANAGEMENT
10.0 Collateralization .................................................................. 14
11 .0 Safekeeping and Custody ..................................................... 14
12.0 Diversification ..................................................................... 15
13.0 Maximum Maturities ............................................................ 15
13.1 Portfolio Rebalancing ............................................................ 15
13.2 Credit Downgrading ............................................................. 16
13.3 Bond Proceeds .................................................................... 16
14.0 Internal Controls .................................................................. 17
PERFORMANCE MEASUREMENT
15.0 Performance Standards ......................................................... 17
15.1 Market Yield (Benchmark) ..................................................... 18
16.0 Reporting ............................................................................ 18
LEGAL REQUIREMENTS
17.0 Investment Policy Adoption ................................................. 18
18.0 Regulatory Submission ........................................................ 19
APPENDICES
A: List of Authorized Financial Institutions ................................. 20
B: Glossary ........................................................................... 21
Palm Desert Treasury Policie* Procedures • Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
1.0 Policy
It is the policy of the:
➢ City of Palm Desert;
➢ Palm Desert Redevelopment Agency;
➢ Palm Desert Housing Authority;
➢ Palm Desert Financing Authority; and the
➢ City of Palm Desert Golf Course Facilities Corporation
(hereafter referred to collectively as the "City") to predicate their investment policies,
procedures, and practices upon the following three principles: (1) compliance with
federal, state, and local laws governing the investment of public monies under the
City Treasurer's control; (2) protection of the principal monies entrusted to the
City; and (3) maximization of profit within the parameters of prudent risk
management, as defined by this Statement of Investment Policy.
For the purposes of this policy, "Investment Officers" shall be defined as the City
Treasurer and the Deputy City Treasurer.
2.0 Scope
This policy shall apply to all funds that are under the City Treasurer's control
including, but not limited to, the general fund; special revenue funds; debt
service funds; capital project funds; enterprise funds; and trust and agency
funds. These funds are accounted for in the City's Comprehensive Annual
Financial Report.
The City's Deferred Compensation Plan ("Plan") shall be excluded from the
scope of this policy if the following three conditions exist:
2.0.1 A third-party administrator manages the Plan.
2.0.2 Individual plan participants have control over the selection of
investments.
2.0.3 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 Plan shall be
deemed to be within the scope of this policy.
Page 1 of 26
Palm Desert Treasury Policies0d Procedures Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
Under all circumstances, the City Treasurer shall provide the Finance
Gammottee Investment and Finance Committee and the Palm Desert City
Council ("City Council") with a quarterly report on the investment of Plan
assets.
3.0 Prudence
Pursuant to California Government Code Section 53600.3, 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 policy 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
Investment and 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 sale of a security prior to maturity at 10 percent or more
below its acquisition cost.
4.0 Objectives
The City's investment objectives, in order of priority, shall be:
4.0.1 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 default; or market value erosion. Principal
shall be preserved by mitigating:
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
Page 2 of 26
' Palm Desert Treasury Policief0d Procedures Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
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.
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.
4.0.2 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 15, section 13.0 of
this policy.
4.0.3 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.
5.0 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.
Page 3 of 26
• Palm Desert Treasury Policiesod Procedures • Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
The City Treasurer and the Deputy City Treasurer shall have exclusive
authority to buy and sell securities on behalf of the City.
The Deputy City Treasurer may execute investment transactions on behalf of
the City only if the City Treasurer has previously authorized the transactions.
If the City Treasurer is unavailable, then the Finance Operations Manager
must authorize the investment transactions prior to execution.
5.1 Investment Procedures
The City Treasurer shall establish written procedures for the operation of the
City's investment program that are consistent with the provisions of this:
policy. The procedures shall include reference to: safekeeping, PSA
repurchase agreements, banking service contracts, and collateral/depositoryi
agreements. Such procedures shall include explicit delegation of authority tol
persons responsible for investment transactions. No person may engage in
an investment transaction except as provided under the terms of this policy,
and under the procedures that the City Treasurer establishes.
6.0 Ethics and 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.
7.0 Authorized Financial Dealers and Institutions
The City Treasurer shall maintain an authorized list (see page 20) of all
securities brokers that the Investment and Finance Committee and the City
Council have authorized to transact securities business with the City. This
Page 4 of 26
• Palm Desert Treasury Policies0d Procedures Revision No. 11
No. 2: -Statement of Investment Policy" Adopted:
list shall be provided to all members of the City Council and the Investment
and 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 for inclusion
on the City's authorized 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 secondary brokers that: (1) have been in
existence for more than five years; (2) have a net capital position in excess
of $100 million; (3) are licensed as brokers by the State of California; and (4)
are headquartered or have a branch office in California.
The number of primary dealers and secondary brokers on the authorized list
shall not exceed a combined total of five at any single time. The City shall
accept and review new broker applications only when there is an immediate
need to fill a vacancy on the authorized list. In all cases, the City shall only
accept applications from and transact business with the institutional
securities sales departments of primary dealers and secondary brokers.
All brokers that wish to apply for inclusion on the authorized list must, at a
minimum, provide the City Treasurer with a copy of the following
documents, unless otherwise noted:
7.0.1 Completed Broker Questionnaire and Certification (signed original
only).
7.0.2 Most recent Annual Report and most recent Securities and Exchange
Commission ("SEC") Form 10-K.
7.0.3 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.
Page 5 of 26
Palm Desert Treasury Policie0id Procedures Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
7.0.4 Current NASD Form BD Status Report.
7.0.5 NASD Form U-4 -- Uniform Application for Securities Industry
Registration or Transfer for each employee with whom the City would
be trading.
7.0.6 Current NASD Form U-4 Status Report on each employee with whom
the City would be trading.
7.0.7 A resume from each employee with whom the City would be trading.
7.0.8 Delivery instructions.
7.0.9 A resolution that identifies employees who are authorized to trade.
In addition to the above documents, secondary brokers must also submit:
7.0.10 Most recent SEC Form X-17 A-5 or, in the case of an investment
department within a commercial bank, most recent SEC Consolidated
Reports of Condition and Income for A Bank With Domestic and
Foreign Offices — FFIEC 031.
Investment Officers shall investigate all broker 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 by the State
of California Department of Corporations; and (5) are a member of the
NASD. Broker applicants may be requested to provide local government or
other client references from within California.
The Investment and Finance Committee and the City Council shall review the
submitted documents, along with the Investment Officers' recommendations,
and shall decide if any broker applicants should be added to the authorized
list. If a broker applicant fails to complete and submit the required
documents on time, then its application shall be deemed to have been
automatically rejected.
The City Treasurer shall provide all authorized brokers annually, in March,
with a copy of the City's current investment policy and a certification form.
Each broker shall be required to complete and submit the certification form
as proof that it has received the City's investment policy, read it, and intends
Page 6 of 26
Palm Desert Treasury Policies*d Procedures • Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
to comply with it. Each broker shall also submit its annual financial
statements to the City Treasurer for review and filing.
The City Treasurer shall maintain an authorized list (see page 20) of all
commercial banks, savings associations, and federal associations (as defined
by California Financial Code Section 5102) and trust companies that the
Finance 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 Investment and Finance Committee.
The City shall only deposit public monies in financial institutions that have:
7.0.11 At least $5 billion in total assets.
7.0.12 A core capital-to-total assets ratio of at least five percent.
7.0.13 Favorable statistical ratings from a nationally recognized rating
service, as determined by the City Treasurer.
7.0.14 A federal or a state charter.
7.0.15 A branch office within Riverside County.
7.0.16 A "satisfactory" overall rating in their most recent evaluation by
the appropriate federal financial supervisory agency, in terms of
meeting the credit needs of California communities, 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.
8.0 Authorized and Suitable Investments
The City Treasurer shall be 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.
Page 7 of 26
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No. 2: "Statement of Investment Policy" Adopted:
% of Portfolio
No. Type of Investment Authorized Other Restrictions
1 . United States Treasury bills, notes, bonds, 100% Maximum maturity: 5 years
or certificates of indebtedness, or those for
which the full faith and credit of the United
States are pledged for the payment
of principal and interest.
2. Federal Agency or United States 100% Maximum maturity: 5 years
government-sponsored enterprise ("GSE")
obligations, participations, or other No more than 30% of the
instruments, including those issued by or portfolio may be invested in any
fully guaranteed as to principal and one issuer (excluding the
interest by Federal Agencies or by proceeds of tax-exempt bonds).
GSE.
3. Banker's Acceptances ("BA") issued by 40% Rated "A-1 " or higher by S&P or
commercial banks. "P-1 " by Moody's.
Maximum maturity: 180 days
No more than 30% of the
portfolio may be invested in any
one BA issuer.
4. Commercial Paper ("CP") issued by 25% Rated "A-1 + " by S&P or
corporations organized and operating in "P-1 " by Moody's.
the United States with assets exceeding
$500 million. Maximum maturity: 270 days
No more than 10% of the
outstanding CP of any one
issuer may be purchased.
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Palm Desert Treasury Policiesod Procedures • Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
% of Portfolio
No. Type of Investment Authorized Other Restrictions
5. Negotiable Certificates of Deposit ("NCD") 30% Long-term debt rated "AA-"
issued by a nationally- or state-chartered higher by S&P or by Moody's.
bank, a savings association, a federal
association, or by a state-licensed branch Maximum maturity: 5 years
of a foreign bank.
6. Time Certificates of Deposit ("TCD") 15% TCDs exceeding $100,000 must
issued by qualified public depositories. be collateralized.
TCDs must be centralized at one
location for each bank or S&L.
Maximum maturity: 1 year
If TCD is uncol lateral ized, then
no more than $90,000 may be
invested.
Issuing public depository must
meet qualifying criteria on page
7, section 1 .7 of this SOIP.
7. Repurchase Agreements ("RP") sold by 20% Maximum maturity: 30 days
authorized brokers.
Collateral must be United States
Treasury, Federal Agency, or
GSE obligations.
Zero coupon and stripped
coupon instruments are not
acceptable as collateral.
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No. 2: "Statement of Investment Policy" Adopted:
% of Portfolio
No. Type of Investment Authorized Other Restrictions
7. Repurchase Agreements (continued) 20% Collateral must be valued at
102% of cost and adjusted
weekly.
City must have first lien and
security interest in all collateral.
City's custodian must hold
collateral.
An authorized broker must file a
Public Securities Association
(PSA) Master Repurchase
Agreement with the City
Treasurer, and the City Attorney
must review the agreement,
prior to the transaction of RP
business with that broker.
8. Medium-Term Notes issued by 30% Rated "A" or higher by S&P or
corporations organized and operating in the by Moody's.
United States, or by depository institutions
operating in the United States and licensed Maximum maturity: 3 Years
by the United States or by any state.
No more than 10% of the
portfolio may be invested in any
one issuer.
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Palm Desert Treasury P0licies0d Procedures • Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
% of Portfolio
No. Type of Investment Authorized Other Restrictions
9. Money Market Mutual Funds ("MMF") that 20% Rated "AAA" by S&P, "Aaa" by
are registered with the SEC under the (excluding Moody's, or "AAA-V-1 + " by
Investment Act of 1940. bond Fitch (must be 2 of 3)
proceeds)
MMF must have $500 million or
more in total assets or an
investment advisor with 5
years' experience investing for a
MMF with $500 million or more
in assets.
MMF must have dollar-weighted
average maturity of 90 days or
less.
MMF must buy securities that
mature in 13 months or less.
No commission may be charged.
10. State of California Local Agency See note 4 $40 million limit per account
Investment Fund ("LAIF") that is managed with LAIF, except for bond
by the State Treasurer's Office. trustee accounts (no limit).
City Council and Redevelopment
Agency approved participation
in LAIF on 12/12/81 in
Resolution No. 81-161 .
Page 11 of 26
Palm Desert Treasury Policies0d Procedures Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
% of Portfolio
No. Type of Investment Authorized Other Restrictions
11 . Structured Notes in the form of callable 20% Maximum maturity: 5 years
securities or "STRIPS" issued by the
United States Treasury or by Federal
Agencies or government-sponsored
enterprises ("GSE").
12. Asset-Backed Commercial Paper ("ABCP") 25% Rated "A1 + " by S&P of
issued by special purpose corporations "P1 " by Moody's.
("SPC"), trusts, or limited liability
companies ("LLC") organized and operating Restricted to programs
in the United States with assets exceeding sponsored by commercial banks
$500 million, that is supported by credit or finance companies.
enhancement facilities (e.g., over-
collateralization, letters of credit, surety Foreign banks limited to those
bonds, etc.). of Canada, United Kingdom,
Australia, France, Belgium,
Netherlands, Switzerland, and
Germany.
Program must have credit
facilities that provide at least
100% liquidity.
Serialized ABCP programs are
not eligible.
Maximum maturity: 270 days
Unsecured commercial paper
holdings must be included when
calculating the 25% maximum
concentration limit.
13. Local Government Investment Pools 20% Must meet above criteria for
("LGIPS") (excluding MMFs (except for LAIF).
bond
proceeds)
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Palm Desert Treasury Policies0d Procedures • Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
8.1 Prohibited Investments
Investment Officers shall not invest public monies in financial instruments
that are not authorized under this policy.
Prohibited investments shall include, but shall not be limited to, equity
securities, bond mutual funds, reverse repurchase agreements, and derivative
contracts (forwards, futures, and options). The purchase of derivative
securities shall be prohibited, unless specifically authorized in this policy.
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, reverse repurchase agreements, securities
lending, short selling, and other hedging strategies.
9.0 Investment Pools/Mutual Funds
A thorough investigation of the pool/fund is required prior to investing, and
on a continual basis. There shall be a questionnaire developed which will
answer the following general questions:
9.0.1 A description of eligible investment securities, and a written statement
of investment policy and objectives.
9.0.2 A description of interest calculations and how it is distributed, and
how gains and losses are treated.
9.0.3 A description of how the securities are safeguarded (including the,
settlement processes), and how often the securities are priced and the
program audited.
9.0.4 A description of who may invest in the program, how often, what size
deposit and withdrawal are allowed.
9.0.5 A schedule for receiving statements and portfolio listings.
9.0.6 A verification on whether or not reserves or retain earnings are utilized
by the pool/fund.
9.0.7 A fee schedule, and when and how it is assessed.
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Palm Desert Treasury Policies0d Procedures • Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
9.0.8 The eligibility of the pool/fund for bond proceeds and whether it will
accept such proceeds.
10.0 Collateralization
Investment Officers shall ensure that all demand deposits and all non-
negotiable certificates of deposit that exceed $100,000 shall be fully
collateralized with securities authorized under state law and under this SOIP.
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.
11 .0 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
authorized list (see page 20).
The only exception to the foregoing shall be securities purchases made with:
11 .0.1 Local government investment pools.
11 ,0.1 Money market mutual funds.
11 ,0.2 Federal Reserve Banks ("Treasury Direct Program") since the
purchased securities are not deliverable.
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Palm Desert Treasury Policies0d Procedures • Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
No securities broker or investment advisor shall have access to City monies,
accounts, or investments. Any transfer of monies to or through a securities
broker must have the City Treasurer's prior written approval. If the City
Treasurer is unavailable, then the Finance Operations Manager must
authorize the transfer, in writing.
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.
12.0 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 Investment and
Finance Committee designates.
13.0 Maximum Maturities
Investment Officers shall not invest in securities with maturities exceeding
five years. The Investment and 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.
13.1 Portfolio Rebalancing
If 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.
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Palm Desert Treasury Policies0d Procedures • Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
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.
13.2 Credit Downgrading
This policy 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.
If a security is downgraded below the minimum credit risk criteria specified
in this policy, 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 Investment and 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 annually, at a minimum.
13.3 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
policy, then such investments shall be made only with the Investment and
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 authorized list (see page
20).
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
Investment and 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
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Palm Desert Treasury Policiew Procedures • Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
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.
14.0 Internal Controls
The City Treasurer shall ensure that all investment transactions comply with
the City's policy, and shall establish internal controls that are designed to
prevent losses due to fraud, negligence, and third-party misrepresentation.
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 a process of independent review by an
external audit firm of the City's investment program every three years. The
external auditor shall review the program's management in terms of
compliance with the internal controls that are specified in the City's Treasury
Policies and Procedures Manual.
An Investment and 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 City Council pursuant to City ordinance, shall sit on this committee.
15.0 Performance Standards
The investment portfolio shall be designed with the objective of obtaining a
rate of return throughout budgetary and economic cycles, commensurate
with investment risk constraints and cash flow needs.
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Palm Desert Treasury Policies id Procedures • Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
15.1 Market Yield (Benchmark)
The City's investment portfolios, shall be passively managed with portfolio
securities being held to maturity. On selected occasions, however, 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 the capital gains would:
15.1 .1 Exceed the return that would be realized by holding the security to
maturity; and
15.1 .2 More than offset any income reduction due to reinvestment rate
risk.
The City shall 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.
16.0 Reporting
The City Treasurer shall provide the Finance Committee and the City Council
with a monthly investment report within 30 days of each month-end or at
the next scheduled City Council meeting following an 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 SOIP 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.
17.0 Investment Policy Adoption
The City Treasurer shall submit a Statement of Investment Policy to the
Investment and Finance Committee; the City Council; the Redevelopment
Agency Board; the Housing Authority Commission; the Financing Authority
Commission; and the Recreational Facilities Corporation Board of Directors
annually for their review and adoption.
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Palm Desert Treasury Policies9d Procedures • Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
18.0 Regulatory Submission
The City Treasurer shall provide the California Debt and Investment Advisory
Commission ("CDIAC") with:
18.0.1 Second- and fourth-quarter fiscal.year investment reports within 60
days of those quarter-ends.
18.0.2 The City's Statement of Investment Policy within 60 days of
calendar year-end or within 60 days of any amendment thereto.
All submissions to CDIAC shall be sent return receipt, certified mail.
Page 19 of 215
Palm Desert Treasury Policie* Procedures • Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
Appendix A: List of Authorized Financial Institutions
The City Treasurer's Office is authorized to transact investment and depository
business with the following financial institutions. Investment and depository
transactions with firms other than those appearing on this list are prohibited.
UNITED STATES GOVERNMENT
1 . Federal Reserve Bank
PRIMARY DEALERS
1 . Banc of America Securities, LLC
2. Merrill Lynch & Company, Inc.
3. Morgan Stanley & Company, Inc.
4. Salomon Smith Barney, Inc.
SECONDARY BROKERS
1 . Wells Fargo Institutional Securities, LLC
PUBLIC DEPOSITORIES
1 . Bank of America
2. California Federal Bank
3. Downey Savings & Loan
4. Northern Trust Bank
5. Union Bank of California
6. Washington Mutual Bank
7. Wells Fargo Bank
CUSTODIAN
1 . Union Bank of California
TRUSTEE
1 . Bank of New York
Page 20 of 26
Palm Desert Treasury Policies0d Procedures • Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
Appendix B: Glossary
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.
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No. 2: "Statement of Investment Policy" Adopted:
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.
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Palm Desert Treasury Policie* Procedures • Revision No. 11
No. 2: `Statement of Investment Policy" Adopted:
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
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.
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No. 2: "Statement of Investment Policy" Adopted:
MARKET VALUE. The price at which a security is trading and could presumably be
purchased or sold.
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.
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Palm Desert Treasury Policie* Procedures • Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
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..
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.
Page 25 of 25
Palm Desert Treasury Policie* Procedures • Revision No. 11
No. 2: "Statement of Investment Policy" Adopted:
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.
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 26 of 25
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• City of Palm Desert •
Parkview Office Complex
') Financial Statement
for Fiscal Year 2002-2003
December-02 December-02 # % YPD YTD #
Budget Actual Variance Variance Budget Actual Variance Variance
Revenues
31��1,t
Rental $ 68,500 $ 70,823 $ 2,323 103.39% '. $ 411,000 $ 423,317 $ 12,317 103.00%
Dividends/Interest $ 4,375 $ 902 $ (3,473) 20.61% 1`: $ 26,250 $ 5,853 $ (20,397) 22.30%
Total Revenues $ 72,875 $ 71,725 $ (1,150) 98.42% $ 437,250 $ 429,170 $ (8,080) 98.15%
Expenses
h
Professional-Accounting&Auditing $ 7,000 $ 7,000 $ - 100.00% `t $ 42,000 $ 42,000 $ - 100.00%
Professional-Consultants $ 6,000 $ 5,552 $ 448 92.53% , $ 36,000 $ 33,915 $ 2,085 94.21%
Tenant Improvements $ 2,500 $ 16,051 $ (13,551) 642,05"/ ,' $ 15,000 $ 27,870 $ (12,870) 185,80%
Repairs&Maintenance Building $ 8,000 $ 4,695 $ 3,305 58.69% ;' $ 48,000 $ 42,333 $ 5,667 88.19%
Repairs&Maintenance-Landscaping $ 2,300 $ - $ Z300 0.00% '.. :% $ 13,800 $ - $ 13,800 0,00%
Utilities-Water $ 250 $ 111 $ 139 44.20% q't -6c '` $ 1,500 $ 541 $ 959 36,05%
Utilities-Gas/Electric $ 51000 $ 4,671 $ 129 97.421/6 $ 51,0W $ 47,057 $ 3,943 92,27%
Utilities-Trash $ 700 $ 526 $ 174 75.14% �: $ 4,200 $ 2,104 $ 2,096 50.090/.
Telephone $ 150 $ 159 $ (9) 105.71% $ 900 $ 780 $ 120 86.670/.
Insurance $ 521 $ - $ 521 0.00% . $ 3,124 $ - $ 3,124 0.00%
Total Expenses $ 32,421 $ 38,964 $ (6,543) 120.18%" $ 215,524 $ 196,599 $ 18,925 91.22%
$ '72 ?�i571 . ) 10,8i144,$q
Equipment Replacement Reserve $ 13,000 $ 13,000 $ - 100.00% $ 78,000 $ 78,000 $ - 100.00%
fi+�ekTetiwdzue ' ;.��. r> jel,,,�a :• -: ..." .'27'.46�,. . , =19f7,,,6k� 5.1{�6„ " ' � "u a �,;_;;- 4„3t =2fi.` 1 �5716-*$ 010,84v';5 107 5S�,/,�
.. _ _ p.6 vt.A•,a ..
2003 Investment Reportlnv Report 2003
Y
• City of Palm Desert •
Parkview Office Complex
Vacancy Rate Schedule by Suite
December 2002
Suite Square
No. Tenant Feet
73-710 Fred Waring Drive-Two (2) Story Building
100 Hanover 1,915
100A EPA 645
102 Bergren 1,360
103 Multiple Sclerosis 488
104 Arthritis Foundation 960
106 Coachella Valley Economic Partnership 928
108 Assembly Rules Committee 785
(Property Manager is negotiating with Sen. Battin and
Assemblyman Benoit regarding redesigning the suites
to provide additional space to Sen. Battin and leasing the
remainder of suite 108 to Assemblyman Benoit)
112 Senator Battin 1,406
114 Chamber of Commerce 1,478
118 Goodwill Industries 1,250
119 City/CVAG Conference Room 1,380
120 Duke Gerstal 1,750
200 CVAG 4,292
200A University of California Riverside 841
201 University of California Riverside 604
203 Property Manager is Currently Negotiating with Mountain 480
Conservancy(State Agency)
2003 Investment ReportVacancy Report
City of Palm Desert •
Parkview Office Complex
Vacancy Rate Schedule by Suite
December 2002
205 Vacant 700
208 Alzheimer's Association 960
210 Wilson,Pesota&Pichardo 3,040
211 State of California Department of Food &Agriculture 937
217 Joe B.McMillan,.Esq. 775
220 CA. State Dept. of Agriculture 1,607
(Space will be vacated as of February 1,2003;The property
manager is currently negotiating a lease with The Cancer Society)
222 Cove Commission-Fire Marshal 1,900
222 CITY Storage-Vacant 1,081
Total square footage(2 story Building) 31,562
Vacancy Rate-2,261/31,562= 7.16%
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--2,261/51,191 4.42%
Occupancy Rate-48,930/51,191 95.58%
2003 Investment ReportVacancy Report
I City of Palm Desert
• Desert Willow •
Budget Vs Actual
For the month of
November 2002
Budgeted Actual Budgeted Actual
November November S Percentage Year to Year to S Percentage
Revenue 2002 2002 Variance Variance Date Date Variance Variance
Course&Ground $ 423,761 $ 421,282 S (2,479) 99.42% $ 1,123,942 $ 1,117,421 $ (6,521) 99,42%
Carts $ 34,985 S 29,835 $ (5,150) 85.28% $ 108,019 $ 103,840 $ (4,179) 96.13%
Golf Shop $ 66,296 $ 74,873 $ 8,587 112.95% $ 226,903 $ 211,447 $ (15,456) 93.19%
Range $ 4,500 $ 4,978 S 478 110.62% $ 8,050 $ 9,263 $ 1,213 115.07%
Food&Beverage $ 138,435 $ 125,850 S (12,585) 90.91% $ 434,891 $ 428,293 $ (6,598) 98.48%
Interest Income S 400 S 187 $ (213) 46.75% S 3,450 S 1,275 S (2,175) 36.96%
Total Revenues S 668.367 S 657.005 5 98.30% 1905 255 1871 539 33 716 98.23°
Payroll
Proshop $ 6,535 S 5,432 $ 1,103 83.12% $ 13,985 S 12,046 $ 1,939 86.14%
Can $ 20,626 S 24,403 $ (3,777) 118,31% $ 98,187 $ 91,760 S 6,427 93.45%
Course&Ground $ 138,090 S 134,472 S 3,618 97.38% $ 646,050 S 638,797 S 7,253 98.88%
Golf Operations $ 28,778 $ 27,126 S 1,652 94.26% $ 126,004 S 122,869 $ 3,135 97.51%
General&Administration $ 40,797 $ 29,562 $ 11.235 72.46% $ 202,968 $ 175,307 $ 27,661 86.37%
Food&Beverage $ 56,507 $ 61,335 $ (4,828) 108.54% $ 241,885 $ 273,042 $ (31,157) 112.98%
Tot I Pa roll S 291.333 S 282.330 S 9.003 96.91% $ 1,329,07 1 313 821 S 15.258 98.85%
Other Expenditures
Perimeter Landscaping $ - S - $ - 0.00% $ - $ - S - 0,00%
Proshop S 2,205 $ 7,275 $ (5,070) 329.93% $ 11,880 5 11,708 $ 172 98.55%
Proshop-COGS S 36,292 S 32,801 $ 3,491 90.38% S t24,262 $ 98,578 S 25,684 79.33%
Can $ 13,395 $ 14,579 $ (1,184) 108.84% $ 70,725 S 68,474 $ 2,251 96.82%
Course&Ground-North Course $ 67,807 $ 111,620 $ (43,813) 164.61% S 384,780 $ 332,705 $ 52,075 86.47%
Course&Ground-South Course $ 50,428 $ 20,012 S 30,416 39.68% $ 367,824 $ 339,440 $ 28,384 92.28%
Course&Ground-Desert Pallet-N S 950 S 770 S 190 81.05% S 5,930 $ 3,647 S 2,293 61.50%
Course&Ground-Desert Pallet-S $ 1,540 $ 845 $ 695 54.87% S 7,220 $ 4,529 S 2,691 62.73%
Golf Operations $ 490 $ 674 $ (184) 137.55% S 8,385 $ 6,206 $ 2,179 74.01%
General&Administration $ 63,847 $ 76,038 S (12,191) 119.09% $ 327,587 S 353,543 S (25,956) 107.92%
Range $ 800 $ (213) S 1,013 -26.63% S 9,900 S 7,454 S 2,446 75.29%
Food&Beverage S 14,733 S 16,902 S (2,169) 114,72% $ 63,415 $ 59,754 $ 3,661 94.23%
Food&Beverage COGS $ 43,179 $ 39,260 S 3,919 90.92% S 137,267 S 138,777 S (1,510) 101.10%
Management Fee $ 25,000 $ 25,000 $ - 100.00% $ 125,000 $ 125,000 $ - 100,00%
Firou cing/Lease S 346 $ 1,786 S (1,440) 516,18% S 2,22D $ 10,471 $ (8,251) 471.67%
Mind Other Expenditures S 321012 347.349 S 08.20% S 1646395 S 1560286 S 86109 94.77°
Desert Willow Golf Academy
Desert Willow Golf Academy $ 17,500 $ 6,743 S (10,757) 38,53% $ 43,400 S 27,398 S (16,002) 63.13%
COGS-Merchandise $ (11,397) $ (3,902) $ 7,495 34,24% $ (32,536) S (23,610) $ 8,926 72.57%
Other Expenditures S (1,689) S (1,465) $ 224 86.74% $ (11,607) $ (11,499) $ 109 9T06%
Learning Center Income(Loss) $ 4,414 $ 1,376 $ (3,038) 31.17% $ (743) $ (7,710) $ (6,967) 1037.69%
Operating Income(LOSS) $ 60,436 $ 28,702 $ (31,734) 47.49% $ (1,070,962) $ (1,010,278) $ 60,684 94.33%
Equipment Reserve Replacement $ 71,955 $ 66,734 $ (5,221) 92.74% $ 359,775 $ 333,670 $ (26,105) 92.74%
Net Income ss (11.519) (38.0321 (26,513) 330.17% 1 4 0 737 1 43 948 86.789 93.930
Snapshot of Golf Rounds Budgeted(me) Actual(me) ariance Variance% Budgeted td Actual td Variance Variance%
Resident 1,630 1,760 130 108% 4,745 4,984 239 105%
Non Resident 4,050 3,898 (152) 96% 15,131 14,833 (298) 98%
Other - - - 0% - 177 177 100%
Com Iimenta 250 228 22 91% 1615 1313 302 81%
Total 5,930 5,886 (44) 99% 21,491 21,307 (184) 99%
Folder:Desert Willow 2001:Dw2603;Finandal Statement Page i
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Desert Willow
® Breakdown of Rounds
per point of sale system
Desert Willow- Combined Analysis-November 2002
Resident _ 1,760 $ 79,200 $ 45.00 29.90%
Non-Resident 3,898 $ - $ - 66.22%
Other - $ - $ -_ 0.00%
Complimentary 228
Desert willow Totals 5,886 79,200 13.46 100.005.
Dw2003;POS AVG RD Page 9
• Desert Willow •
Breakdown of Rounds
per point of sale system
FIRECLIFF COURSE- NOVEMBER 2002
__Description No. Of Revenue Avg. Per I Pet to _
Rounds Per POS Round Total
Resident Rounds
Resident Fee- Weekend 203 $ 9,135 $ 45.00_ 12.749
Resident Fee-Weekday 208 $ 9,360 $ 45.00 13.06%
Resident-Twilight 6 $ 270 $ 45.00 0.38%
Total Resident 417 18,765 45.00 26,18%
Non Resident
Posted Weekend 95 $ 12,865 $ 135.42 5.96%
Posted Weekday 133 $ 18,225 $ 137.03 8.35%
IRO_C_Member/Guest- Weekday 9 $ 972 $ 108.00 0.567/
IROC Des. PRTY-Weekday 42 $ 2,835 $ 67.50 2.64%
IROC_—Member/Guest Weekend 13 $ 1,4 44 $ 108.00 0.82%
IROC Des. PRTY- Weekend 12 $ 810 $ 67.50 0.75%
Wholesale Weekend 95 $ 8,470 $ 89.16 5.96%
Wholesale Weekday 232 $ 15,660 $ 67.50 14.56%
Twilight 140 $ 11,130 $ 99.50_ 8.79%
Fee Special Event Variable 344 $ 24,586 $ 71.47 1 21.59%
Total Non Resident Rounds 1,115 96,957 86.96 24.28%
I
Other Rounds
Junior Walking - $ - $ - 0.00%
Total Other - - - 0.00%
Complimentary ___-- --�-- _--- _
VIP 13 $ - $ - 0.82%
PGA Member 25 $ 225 $ 9.00 1.57%
Donation - $ - $ - 0.00%
Employee 23 $ - $ - 1.44%
Total Complimentary 61 225 3.69 3.83%
Total Round FireCli 1,593 $ 1 55,947 i 1 $ 72.79 100.00%
Dw2003;POS AVG RD Page 10
Desert Willow
Breakdown of Rounds
per point of sale system
MOUNTAINVIEW COURSE- NOVEMBER 2002
Description - No. Of Revenue IAvg. Per 1 Pet to
Rounds Per POS Round Total
Resident Rounds
Resident Fee-Weekend 172 $ 7,740 $ 45.00 4.01%
Resident Fee-Weekday 1,162 $ 52,290 $ 45.00 27.070/a
Resident Twilight 9 $ 405 $ 45.00 0.21%
i
Total Resident 1,343 $ 60,435 45.00 31.28%
Non Resident '
-{ -�-—_—
Posted Weekend 150 1 $ _ 20,660 -jL$ 137.73 7 3.49%
Posted Weekday j 441 $ 60,385 Y $ 136.93 7 10.27%
IRO_C_Des. PRTY- Weekday 234 $ 15,795 1 $ 67.50� 5.45%
__
IRO- Des. PRTY-Weekend 18 $ 1,215_ I $ 67.50 j 0.42%
IR_OC Member/ Guest-Weekend 11 $ 1,188 $108.00 0.26%
IROC Member / Guest- Weekday 169 $ 18,252 $ 108.00 3.94%
Wholesale Weekend _ 100 $ 8,830 $ 88.30 2.33%
Wholesale Weekday _ 488 $ 39,330 $ 80.55 1 11.37%
Twilight 229 $ 17,610 $ 76.90 5.33%
Fee Special Event Variable 943 $ 90,055 $ 95.50 21.97%
Total Non Resident Rounds 2,783 273,300 98.20 64.83%
Other Rounds
Junior Walking - $ - $ - 0.00%
- 1
Total Other - is 0.00%
- ------ —-- 1-.-_----
Complimeatary
----
VIP_ 1 36 $ - I $ - 0.84%
PGA Member 57 $ 1,100 $ 19.30 1.33%
CO_D/PDHS - $ - I $ 0.00%
Trade I $ - `�
Donation_ _ _ _ - $ - $ -
Employee - 73 $ 75 r $ 1.03 1.70%
Total Complimentary 1671 $ 1,175 j 7.04 3.89%
Total Round Mountainview 4,293 $ 334,910 $ 78.01 100%
DW2003;POS AVG RD Page 11
• City of Palm Desert •
Desert Willow
Cash Reserve Analysis
for the month of
November 2002
Cash Reserve Analysis One Month
Required Reserve $ 500,000.00
Cash on Hand $ 516,853.00
Variance- Favorable Unfavorable $ 16,853.00
Page 12
.Palml7,.ert Recreation Facilities Corpordton
Income Statement
Nov-02 Nov-02 i1 %
Budget Actual Variance Variance
Food & Beverage Revenues $138,435 $125,850 ($12,585) 90.91%
Total Revenues $138,435 $125,850 ($12,585) 90.91%
Salaries $56,507 $61,335 ($4,828) 108.54%
Cost of Goods Sold-F&B $43,179 $39,260 $3,919 90.92%
Food &Beverage Expense $14,733 $16,902 ($2,169) 114.72%
Total Expenses $114,419 $117,497 ($3,078) 102.69%
Net Income (Loss) $24,016 $8,353 ($15,663) 34.78%
Note: The above revenues and expenditures are also included in the Desert Willow analysis.
Dw2003;PDRFC Budget Page 1
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