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2003-11-19 IFC Regular Meeting Agenda Packet
COMMITTEE MEETING WORKSHEET Meeting Description Investment Committee Meeting Date 11/19/03 Time 2:00 p.m. Location North Wino Conference Room Mailed Agenda 11/12/03 Posted Agenda 11/12/03 Time Convene Adjournment I 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 V 16 9 Bill Veazie 17 10 Everett Wood VI 18 19 20 Follow-Ups/Tasks Assigned Person Responsible Due Date 1 16 z 3 7 �0� 4 5 knAQ 7 8 j 004j �p w,, � ��� spa ��r� -� w ►�.� �� ��.,�� a Spoke Mtn (1) Mtn (2) MEETING NOTES amw V- n L-cc , C16 u) Co r-ubc ( Coa lbil Cl 'tr10 m 745 �-7 "'Itat r, . m • WN MR, FLU, m rI MD 04. e. o mi i 0 • Spoke Mtn (1) Mtn (2) MEETING NOTES 3 WfAeO(L _ C0 c. 3-r lan e 6 c Q 7l tQj 5 � 41 0 Spoke Mtn (1) Mtn (2) MEETING NOTES t • City of Palm Desert Desert Willow Budget Vs Actual For the month of November 2003 Budgeted Actual Budgeted Actual November November $ Percentage Year to Year to $ Percentage Revenue 2003 2003 Variance Variance Date Date Variance Variance Course&Ground $ 420,035 S 414,420 $ (5,615) 98.66% $ 755,010 $ 1.143,411 $ 388,401 151,44% Cans S 28,177 $ 31,875 $ 3,698 113.12% $ 80,987 $ 117,190 $ 36,203 144,70% Golf Shop $ 70,555 $ 82,889 $ 12,334 117.48% $ 162,932 $ 239,105 $ 76,173 146,75% Range $ 5,000 $ 5.315 $ 315 106.30% $ 4,385 $ 10,340 $ 5,955 235,80% Food&Beverage $ 134,340 $ 137,656 $ 3,316 102.47% $ 317,427 $ 461,843 $ 144,416 145.50% Interest Income $ , 200 $ - $ (200) 0,00% $ 1,100 $ - $ (1,100) 0.00% Toml Revenues S 658307 S 672I55 $ 13848 102.10% $ 1,321,841 S 1971889 $ 650048 149.18% Payroll Proshop $ 5,841 S 6.537 $ (696) 111.92% $ 19,527 $ 29,652 $ (10.125) 151.85% Can $ 20,805 $ 22,890 $ (2,085) 110,02% $ 63,430 $ 85,934 $ (22,504) 135.48% Course&Ground $ 136,353 $ 124,312 S 12,041 91.17% S 504,155 S 641.375 $ (137,220) 127.22% Golf Operations $ 28,465 S 22,941 $ 5,464 80,76% $ 95,426 $ 104,479 $ (9,053) 109.49% General&Administration $ 36.183 $ 37,914 $ (L731) 104.78% $ 145,851 S 191,267 $ (45,416) 131.14% Food&Beverage $ 65,711 $ 65672 $ 39 99,94% $ 215,348 $ 290,310 $ (74,962) 134.81% Total Pa roll $ 293 298 $ 280 266 $ 13 032 95.56% S 1,043,737 1,343,017 $ (299,280 128.67% Other Expenditures Perimeter Landscaping S - $ - S - 0,00% $ - $ - $ - 0 00% Proshop S 3,500 S 4,689 S (1,189) 133.97% $ 7,730 $ 31,532 $ (23,802) 407.92% Proshop-COGS $ 30,577 $ 30,824 $ (247) 100.81% S 82,146 S 83,443 $ (1297) 101.58% Can $ 14,540 S 12,278 $ 2.262 84.44% $ 50,450 $ 63,147 $ (12.697) 125.17% Course&Ground-North Course $ 32,410 $ 51,000 $ (18,590) 157.36% $ 356,661 $ 332,479 S 24,182 93,22% Course&Ground-South Course $ 147,552 $ 37,484 $ 110,068 25.40% $ 194,266 $ 420,156 $ (225,890) 21628% Course&Ground-Desert Pallet-N $ 440 S 407 $ 33 92.50% $ 2,810 $ 2,626 $ 184 93.45% Course&Ground-Desert Pallet-S $ 1040 $ 960 S 80 92,31% $ 2.810 $ 2,777 $ 33 98.83% Golf Operations $ 475 $ 1.117 S (642) 235.16% $ 3265 $ 3,089 $ 176 94.61% General&Administration $ 69,771 $ 57,102 $ 12,669 81.84% $ 239.485 $ 286,867 $ (47.382) 119.78% Range $ 125 $ (698) $ 823 -558.40% $ 9,750 $ 8,685 $ 1065 89,08% Food&Beverage $ 32,881 $ 31,641 $ 1,240 96.23% $ 74,998 $ 108,592 $ (33,694) 144.99% I•ood&Beverage COGS $ 41,821 $ 47,283 $ (5,462) 113 06% $ 98,486 $ 152,713 $ (54.227) 155 06% Management Fee $ 25,000 $ 25,000 $ - 100.00% $ 100,000 $ 125,000 $ (25,000) 125,00% Financing/Lease $ 5,685 $ 5,564 $ 121 97.87% S 22,860 $ 27,982 S (5,122) 122 41% Total Other Expenditures $ 405 817 $ J04 651 $ 101 166 75.07% .$ 1.245.617 $ 1 649 088 S (403471), 132.39'7 ..... ,.,. Desert W illow Golf Academy Desen Willow Golf Academy $ 13.300 S 17,838 S 4,538 134.12% $ 23.250 $ 45,965 $ 22,715 197.70% COGS-Merchandise $ (6,647) $ (7,238) $ (591) 108.89% $ (22,439) $ (30,204) $ (7,765) 134.60% Other Expenditures $ (3,325) $ (5,323) $ (1,998) 160.09% $ (17,525) $ (22,493) $ (4,968) 128.35% Learning Center Income(Loss) $ 3,328 $ 5,277 $ 1,949 158.56% $ (16,714) $ (6,732) $ 9,982 40.28% Operating income(Loss) $ (37,480) S 92.515 $ 129,995 -246.84% $ (984,227) $ (1,026,948) $ (42,721) 104,34% Enuipment Reserve Replacement $ 71,955 S 68,064 $ (3,891) 94.59% $ 287,820 $ 345,273 S 57,453 119,96% Net Income Loss $ 109 435 S 24 451 33 886 -22.34% $ 1 272 047 $ 1 772 221 $ ]00 174 107.88 Snapshot of Golf Rounds Budgeted mo Actual mo Variance Variance% Budgeted td Actual td Variance Variance% Resident 1,800 1,834 34 102% 4.935 4,936 1 100% Non Resident 3,958 4,256 298 108% 16,983 17,496 513 103% Other - 21 21 100% - 65 65 100% complimentary 200 348 148 174% 1,113 1,724 611 155% 'total 51958 6,459 Sol t08% 23,031 24,221 11190 105% Folder.Desert Willow 2004:DW2004;Finan6a1 Statement Page 1 | ! \\\� \� \ | ! \N00 \ CO) ` 6 £ � ± ( \ \ ) E ! 10 ) E i � \ \ \ {) \ ) } \ \ \ \ \\ \ \ \ {9 / \ \ � * 7 \ {2 0 0! 0 c } \ � \ W. § 2� { § / ! a o \ ) _ ■ ) ; !_ ■ " \ \ ) G ! ° § {& _ ) ) { _ § ) } \ M v eo q a 6 7 N - ry M _� _ a.•.. n v� e - ry n E _ A 0 Q TgNp ww«www «wwwww www« w w w w w w w« i� > ° ° O E� - a www« w« wwwww« w«wwwwwwwwww www w w c< O�' �O w «wwww ww«www wwwwwwwwwwww www w w a 9 A mm m� UU U, O _ J. 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P e O= m r ••aJJJ"' U _ to b b O O O vi N N - N 9RZ 0� E cQ R z N c✓,� BQ BQ BQ tl-' 9Q BY m N m m ^ r OF 6F p2 BQ tR 8 a vbi gi �i s .•J M b r ybj — , f7 p� r P vbi t� M ° N N •-' N ce 4 W O la�l O e1 N P Y m N � T O00 w tttt�aaa 0 U p N < N � Q O b y N1 W O •/ N h � N M m q N n a d O 9 _ Q L .r N N < O' iG a N V r N —�. •p O N N a O O "a `om O F, CW a Z 1 $N V Val $ q Q OC a c o C •9 Y q y C �. 30 � w 5. `�. O .� QrnOZ U P. 6riiOZ U 9, QhOZ U ¢ � OZ u V iy a a> n M O ]m M � 2+ u u CVI vI _ N ti N ^ � •M-• N R > C,N u O O O vOi O O F a9 om U ceae ce � ce gF v �Om a,b'. m e `v go � viry � �C4 a ry n ram. 0 -� 06o c O cv 00 F o6 B° U m y OE „ O � tlt be BryQ Bp° 6Q 6$ u BQ BQ ae � be Be r r a n p BQ.�V h N N vl v4bl ybj U N _ O. �D O n 0 m U > o `4 Z ttVV V O Pi P w h C �O IA P O L h p^ y N LJ .tq N �. M vl z am o = QQ z 04 5 ae ee 5Q ae ae ys o �= � h m br yak _ > 9 •-•••<6o ao 00 N gaR'v, vni A '�v v �R -- rY L o 0 p d tryV Op v oo yy N'O n H ao' n F F6� $ Ov o Fv6 a a a a F F iy� L o T 98 H O ^J O T 6 O 0 'J' O T m d O O o" z V u ? a �, o` z V rah o` z u u � a � o` z u / ( \ ■ , a ° 0 - . § /& 22 ] ( to | ! eq 2 . « a ! i # \ \ cc } % # - § ! 0 | go !& . ; \ § ! ( | ) \ k k � 2 3 [4 ! ] ! _ ; , 3 ; ) ■ k ` » , / ! \ \ \ a ! Desert Willow • Breakdown of Rounds per point of sale system Desert Willow - Combined Analysis- November 2003 Resident 1,834 $ 82,570 $ 45.02 28.3906 Non-Resident 4,256 $ 361,336 $ 84.90 65.89% Other 21 $ 210 $ 10.00 0.33% Complimentary 348 $ 2,055 $ 5.91 5.39% Desert Willow Totals 6,459 446,171 69.08 100.00% DW2004;POS AVG RD Page 9 • Desert Willow . Breakdown of Rounds per point of sale system FIRECLIFF COURSE- NOVEMBER 2003 Description No. Of Revenue Avg. Per Pct to Rounds Per POS Round Total Resident Rounds Resident Fee 364 $ 16,420 $ 45.11 24.09% Total Resident 364 16,420 45.11 24.09% Non Resident Posted 160 $ 20,900 $ 130.63 10.59% IROC Member/Guest 6 $ 360 $ 60.00 0.40% IROC Sunrise 6 $ 624 $ 104.00 0.40% IROC Prime 22 $ 2,288 $ 104.00 1.46% IROC Midday 4 $ 304 $ 76.00 0.26% Wholesale 332 $ 22,848 $ 68.82 21.97% Midday 85 $ 8,235 $ 96.88 5.63% Sunrise 27 $ 3,510 $ 130.00 1.79% Twilight 94 $ 6,563 $ 69.82 6.22% Sunset 64 $ 2,880 $ 45.00 4.24% Outing 261 $ 20,856 $ 79.91 17.27% Fee Special Event Variable 13 $ 1,216 $ 93.54 0.86% Total Non Resident Rounds 1,074 90,584 84.34 71.087 Other Rounds Junior Walking 7 $ 70 $ 10.00 0.46 o Total Other 7 70 10.00 0.467 Complimentary VIP 16 $ $ 1.06% PGA Member 5 $ 50 $ 10.00 0.33% Champion Club 26 $ $ 1.72% PDHS/COD $ 0.00% Employee/Employee Guest 19 $ 150 $ 7.89 1.26% Total Complimentary 66 200 3.03 4.3777 Total Round (FireCliff) 1,511 $ 107,274 $ 71.00 100.00% DW2004;POS AVG RD Page 10 • Desert Willow • Breakdown of Rounds per point of sale system MOUNTAINVIEW COURSE- NOVEMBER 2003 Description No. Of Revenue Avg. Per Pot to Rounds Per POS Round Total Resident Rounds -Resident Fee 1,470 $ 66,150 $ 45.00 29.71% Total Resident 1,470 66,150 45.00 29.71% Non Resident Posted 429 $ 56,030 $ 130.61 8.67% Players Club 2 $ 120 $ 60.00 0.04% IROC Midday 37 $ 2,812 $ 76.00 0.75% IROC Member / Guest 3 $ 180 $ 60.00 0.06% IROC Sunrise 13 $ 1,352 $ 104.00 0.26% IROC Prime 91 $ 9,464 $ 104.00 1.84% Wholesale 1,248 $ 89,242 $ 71.51 25.22% Sunrise 105 $ 13,650 $ 130.00 2.120% Midday 178 $ 16,910 $ 95.00 3.60% Twilight 211 $ 14,680 $ 69.57 4.26% Sunset 201 $ 9,045 $ 45.00 4.06% Outing 535 $ 46,715 $ 87.32 10.81% Fee Special Event Variable 129 $ 10,552 $ 81.80 2.61% Total Non Resident Rounds 3,182 270,752 85.09 64.317 Other Rounds Junior Walking 14 $ 140 $ 10.00 0.28% Total Other 14 140 - 0.28% Complimentary VIP 067 $ - $ - 135% PGA Member $ 775 $ 15.20 1.03% COD/PDHS $ $ 036% n Champtios Club $ $ - 0A0% Employee/Employee Guest $ 1,080 $ 8.57 2.55% Total Complimentary 282 1,855 6.58 5.70% Total Rouad (Mountainview) 4,948 $ 338,897 $ 68.49 100% DW2004;POS AVG RD Page 11 City of Palm Desert Desert Willow Cash Reserve Analysis for the month of November 2003 Cash Reserve.Analysis One Month Required Reserve I $ 500,000.00 Cash on Hand $ 703,629.92 Variance- Favorable Unfavorable $ 203,629.92 Page 12 PalmI7€sert Recreation Facilities Corpor'acion Income Statement Nov-03 Nov-03 # % Budget Actual Variance Variance Food & Beverage Revenues $134,340 $137,656 $3,316 102.47% Total Revenues $134,340 $137,656 $3,316 102.47% Salaries $65,711 $65,672 $39 99.94% Cost of Goods Sold-F&B $41,821 $47,283 ($5,462) 113.06% Food & Beverage Expense $32,881 $31,641 $1,240 96.23% Total Expenses $140,413 $144,596 ($4,183) 102.98% Net Income (Loss) ($6,073) ($6,940) ($867) 114.28% Note: The above revenues and expenditures are also included in the Desert Willow analysis. DW2004;PDRFC Budget Page 1 Pal>osert Recreation Facilities CorpAkion Income Statement Oct-03 Oct-03 # % Budget Actual Variance Variance Food & Beverage Revenues $114,984 $146,064 $31,080 127.03% Total Revenues $114,984 $146,064 $31,080 127.03% Salaries $63,050 $62,302 $748 98.81% Cost of Goods Sold-F&B $35,717 $45,926 ($10,209) 128.58% Food & Beverage Expense $21,612 $29,989 ($8,377) 138.76% Total Expenses $120,379 $138,217 ($17,838) 114.82% Net Income (Loss) ($5,395) $7,847 $13,242 -145.45% Note; The above revenues and expenditures are also included in the Desert Willow analysis. DW2004;PDRFC Budget Page 1 \ { | \� � 0 0 � \ , & z ) \ \ }j \ ) ) ) ) ) \ ) 2 ) ƒ J � e \ � \ § ceJ ° ° zi cd /® � vo ) co £` § � \ � \ / 42 ( \ � \ | | e 00) � [ 7k ) ] § u � k \ ) § . cz ± ® _ a cc � \ \ a m a 00 00 o u a � � m 0 0 0 0 ro M o O o O o N � N O O N o w o m d U � L1 D+ rrz F -• a U d yeaF q O o Ki a0 N o 0 o M O `R N w m o0 � o 0 rl N U w � o 0 0 0 a m m U 37 d � v G o 0 U r N O O N 3 0 N m m a Q 0 0 0 0 N N N M O O O O N N O O O N o LO N fA O O O p� O <h M N O C� O N fl N O o O m N cc c o m o 96 Li O Q 7 lL C Y C C " U W O. r� ° G E o rnL a m O n n C V M y W 0 a @ NCL o EO O O V N 10 T N C7 0 N o V o 0 v m O1 Ol C O C O C c.E m 75 m J N O U� a O m O E i a U d � E H m - a m d o U tio6ateo o 00 m a 0 to C M V 0 0 0 0 o Z m a 0.ui m b M m a � 73 w y Ct o � Bw ' ° o ° M W O OO y ok O ,r; e � a+ � Y•�� a m 0 i Q r .Y in �f�+", ti 7 b O � � R 3 � p `• h vd�� _. C •^ �f 1 ki1.. P O ygt M z 0 m o Fla, 0 u 93 d O u B b L •0 y M pc p, 9 O D Y O O a� O (� IeA� �' o w c a z U o F Nam`+ U q g V V M w A O C. p ao � ?0 O c � y fA y b O y E d ~ a g 3 0 Ftnanee Department MEMORANDUM To: Rachelle Klassen, City Clerk i From: Diana Leal, Administrative Secret Subject: Investment and Finance Committee Date: December 26, 2003 Attached is a copy of the November 19, 2003 minutes of the Investment and Finance Committee approved by the Committee on December 17,2003. Please place on the next City Council agenda for approval thereof. Thank you for your assistance. Attachments (1) GAFinance\Diana LeaMpdocsUnvestment Committee\Memos\City Clerk\I 1-19-03 minutes.wpd _ CITY OF PALM DESERT INVESTMENT & FINANCE COMMITTEE Minutes November 19, 2003, 2:00 p.m. North Wing Conference Room I. CALL TO ORDER A regular meeting was called to order by Assistant Finance Director on Wednesday, November 19, 2003 at 2:04 p.m. II. ROLL CALL Present: Absent: Paul S. Gibson, Finance Director Dave Erwin, City Attorney Jean Benson, Mayor Murray Magloff Bob Spiegel, Mayor Pro-Temp Russ Campbell Thomas Jeffrey, Deputy City Treasurer Carlos Ortega, City Manager Bill Veazie Everett Wood Also Present: Steve Aryan, Assistant to the City Manager Justin McCarthy, ACM/Director of Redevelopment Dennis Coleman, RDA Finance Manager Rodney Young, General Manager Desert Willow Diana Leal, Recording Secretary Guests: None III. ORAL COMMUNICATIONS None. IV. COMMITTEE MEMBER REPORTS None. 1 111903 wpd INVESTMENT & FINANCOOMMITTEE MINUTES November 19, 2003 V. CONSENT CALENDAR A. Approval of Minutes Motion was made by Mr. Spiegel and seconded by Ms. Benson to approve the Minutes of the October 22, 2003 meeting as submitted with Mr. Gibson abstaining. VI. CONSENT ITEMS HELD OVER None. VII. NEW BUSINESS A. City and Redevelopment Agency Investment Schedules and Summary of Cash Reports for October 2003 Mr Jeffrey reported that, for the month ended October 31, 2003, the book value of the City Portfolio was approximately $174.1 million. The City earned approximately $175,000 in interest during that month. Portfolio yield-to- maturity was approximately 1.61%. For the month ended October 31, 2003, the book value of the RDA Portfolio was approximately $144.3 million. The RDA earned approximately $162,000 in interest during that month. Portfolio yield-to-maturity was approximately 1.30%. Mr. Spiegel asked for a status report on the financial condition of the Ford Motor Company. Mr. Jeffrey replied that Standard and Poor's (S&P) had recently downgraded Ford long-term debt from "BBB" to "BBB =', which is minimum investment grade. This downgrade was based upon Ford's projected performance over the next three to four years, taking into account Japanese competition and industry overcapacity. Previously, S&P had indicated that it would only downgrade Ford if it failed to breakeven in 2003. Somewhere in mid-stream, S&P changed its review criteria. S&P said that it would probably not review Ford again for another two years, unless something dramatic happens. Moody's is adhering to its earlier position that its year-end credit review of Ford will be based primarily on Ford's performance in 2003. There is a significant difference between S&P's and Moody's current Ford ratings. Moody's still rates Ford at "AY, which is equivalent to three notches above S&P's credit rating of "BBB 2. 2 111903,wpd INVESTMENT & FINANC•OMMITTEE • MINUTES November 19, 2003 Mr. Jeffrey commented that he was not overly concerned about the S&P downgrade since Ford's cash position has increased from $16 billion to $28 billion over the last 12 months. Although Ford has lost some market share over that period, it is largely because Ford has stopped making less profitable automobile models. Furthermore, there is a substantial difference of opinion between Moody's and S&P on how to rate Ford. The City Treasury staff regards Moody's as the better of the two credit rating services. In seven months' time, most of the Ford medium-term notes that the City currently owns will have matured. The remaining outstanding Ford notes are being used to finance the City's Retiree Health Program. At this time, there are no indications that Ford is at risk, in terms of becoming insolvent. Quarterly Account Statements on Deferred Compensation Plans Mr. Jeffrey said that he was distributing the third quarter 2003 reports from ICMA and Nationwide on the City's 457 Plan, for information purposes only. Mr. Gibson said that it doesn't count as City cash and is therefore not shown on the City's investment schedules. State law requires that the City prepare a report. Mr. Wood asked if the City was responsible for providing accounting for the deferred compensation funds. Mr. Gibson said that the City collects the money from the employees and transmit it to the company. This goes back to federal law which stated that the employees could not have the funds in the employees' names so that they could avoid the tax. Recently, the law was changed and it was made into a trust. Even though the City has no control of the funds, State law requires that the City provide a report. B. State of California Local Agency Investment Fund Balance for the month of October 2003 Mr. Ortega commented that the City and the Redevelopment Agency have both invested the maximum amount that can be deposited in LAIF. C. California Asset Management Program (CAMP) October 2003 Statements There being no business issues to report, discussed shifted to the next agenda item. D. Revised 2003 Policies and Procedures Mr. Jeffrey said that the Investment Committee has,reviewed, and the Council has approved, the Palm Desert Treasury Policies and Procedures for 2004. Mr. Jeffrey then distributed the policies and asked Committee members to insert the revised policies in their Treasury Policy and Procedure Manuals. Mr, 3 111903 wpd INVESTMENT & FINANCISOMMITTEE • MINUTES November 19, 2003 Wood asked if the new policies replaced the prior policies. Mr. Jeffrey replied that they did. E. City and Redevelopment Agency Monthly Financial Report for City Council for September 2003 Mr. Gibson said that the City received a hit through a CPA firm from a company called Interval International that is a timeshare company. This company transfers shares with other companies/development. An example would be if a person has a week in Palm Desert and wants to transfer their share to stay at the Marriott in Maui. This company provided the City with transient occupancy tax (TOT) for the last 3 years in the amount of $521,000. TOT will be collected from this company on a monthly basis from now on. Mr. Spiegel asked if this amount was shown in the report presented. Mr. Gibson said that it is not reflected as it was recently deposited after the Council accepted the provisions associated with the transaction. Ms. Benson asked how the City was made aware of the operation. Mr. Gibson said that he believes that there was a class action law suit against the company that triggered the payment to various entities of which the City was one. Ms. Benson asked if there were other companies that may be in the same situation. Mr. Gibson said that there is another company that is being looked at to see if they fall under the same category. The company that is paying the TOT is a company where a member pays $300/year for membership. Members can trade ownership in timeshares with other members. This company deals with approximately 90% of these type of exchanges. Mr. Spiegel asked what period the sales tax was based on and if the Westfield Shopping mall remained strong. Mr. Gibson said that the last quarter received was in September and it was for the 2nd quarter of the year. The mall remains strong. Mr. Gibson said that the audit changes for accruals for last year have been requested and the report presented has more realistic monies to compare last year to this year. Mr. Spiegel said that the City shows a decrease in the State's subvention. Mr. Gibson said that the State's subvention deals with the Department of Vehicles fee. The first three months they instituted the decrease but did not start collecting at the DMV. The state said that they would take the money away from the Cities and repay in three to five years once they get out of this bad financial situation. The City will lose $1.8 million in decreased fees. 4 1119w.wpd INVESTMENT & FINANCISOMMITTEE • MINUTES November 19, 2003 Mr. Spiegel asked if the City has received any franchise fees. Mr. Gibson said that it is a matter of timing. Typically, what the City receives is from the Waste Management. Sometimes they send it on a monthly basis and at other times it is done on a quarterly basis. Bob Kohn is looking into why the City has not received any monies. Mr. Wood asked if the City regulates when Waste Management submits their payments. Mr. Gibson said that the agreement indicates that they can send their money on a quarterly basis. F. Parkview Professional Office Buildings - Financial Report for October 2003 Mr. Gibson said that the City received a notice from the State indicated that they may be revisiting all of the leases and may be rethinking how much space they have with the City and all other entities in the state that they rent from depending on how they cut back on their departments. The City expects to know what they will require by January. The State was trying increase their space to have more staff, however, they have kept it the same. The Department of Rehabilitation combined two offices by bringing in an office from Blythe. Mr. Gibson said that he gave Mike McConnell a report that shows what is currently being used by the Fire Marshall and what is available for the Fire Marshall to move into. If the Fire Marshall agrees to the move, the state will technically lose their conference room space, however, a small conference room can be used to make up for the lost space. Mr. Gibson expects that it will be March or April before he receives a response as they will not need to leave their current space until July or so. The space will be ready for move in by January or whenever they decide to do so. New carpeting and painting can be done prior to their move. G. Palm Desert Golf Course Facilities Corporation Financial Information for September 2003 Mr. Young said that the first quarter they did not do so well. The October was an excellent month where they picked up 25% of what they were down in September. He expects to pick up another 50% in November and slightly more in December. The net operating income will be down by $31,000 by the end of the second quarter. A lot of the variances that took place in the first quarter was due to overseeding and changing the golf courses along with additional revenues and additional expenses that were due early. There was an outside additional expenses that came early such as an additional fee delivery that is scheduled for November compared to budget. 5 111903,"d INVESTMENT & FINANCOOMMITTEE • MINUTES November 19, 2003 The revenues are getting back to where the budget should be. The food and beverage operation was $10,000 over in October and $31,000 over in revenues. Payroll was over budget in September and they received a majority of it back in October. The expenses, $78,000, was the November seed delivery that was received in October. They did well in October. November is doing well. They will be busy through the weekend. They have a group from the Marriott on Saturday that will be paying for 120 - 140 players at $30/player that will be playing. They are sold out through Thanksgiving for Friday and Saturday following Thanksgiving. They have 130 players on the sheet book. They will have one golf course that will accommodate 150-160 players. The warm weather is perfect. Firecliff should come out very well and Mountain View is coming along. December looks good for the Christmas party and there will only be a few days open. Mr. Ortega invited Mr. Veazie's band to play at the Committee/Commission's Christmas party on December 13`h. Mr. Ortega said that Mr. Veazie's band was an excellent band that has played in New York. 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. Coleman said that they are possibly going to go before the Council either in December or January for a refinancing opportunity for the 1998 Canyons of Bighorn Assesment District outstanding bonds. They are working out a few things. There is a separate JPA with the County and the Redevelopment Agency (RDA) working on the financing of the animal shelter. Once all the details are worked out, they will price the bonds on December 2. It looks like the closing will be on December 18. X. NEXT MEETING - Wednesday, December 17, 2003 at 2:00 p.m. 6 111903.wptl INVESTMENT & FINANCOMMITTEE is November 19, 2003 XI. ADJOURNMENT There being no further business, the meeting was adjourned by Chairman Gibson at 2:39 p.m. Respectfull1v submitted, ana Leal, R ding 156cretary 7 111903.wpd Mnanee Department MEMORANDUM To: Records Technician From: Diana Leal, Administrative Secret Subject: Investment and Finance Committee 4Meeting*' Date: November 21, 2003 Attached, for your records, is a copy of the Investment and Finance Committee meeting attendance register. Thank you for your assistance. Attachments (1) GAFinance\Diana Leal\Wpdocs\Investment Committee\2002 Memos\City C1erk\2003\I0-22-03attend.wpd y G $ G z c O = 3 < z a a _ - � e � . { y / � 9 \ ) � � 2 / \ ) \ ■ G 2 q % « \ _ CITY OF PALM DESERT INVESTMENT & FINANCE COMMITTEE AGENDA November 19, 2003, 2:00 p.m. North Wing Conference Room 1. 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 Rec: Approve minutes of the regular meeting of October 22, 2003, as submitted. Action: 1 111901. pd INVESTMENT & FINANCEWMITTEE AGENDA November 19, 2003 VI. CONSENT ITEMS HELD OVER None. VII. NEW BUSINESS A. City and Redevelopment Agency Investment Schedules and Summary of Cash Reports for October 2003 Rec: Review and submit for the next City Council agenda. Review the presentation on the investment graphs. Review the investment activity for October 2003. Action: B. State of California Local Agency Investment Fund Balance for the month of October 2003 Rec: Informational item for the Committee to review. No action required C. California Asset Management Program (CAMP) October 2003 Statements Rec: Informational item for the Committee to review. No action required D. Revise 2003 Policies and Procedures (Material will be distributed at the meeting) Rec: Informational item for the Committee to review. No action required E. City and Redevelopment Agency Monthly Financial Report for City Council for October 2003 Rec: Report and submit to City Council Action: 2 111903.w d INVESTMENT & FINANCEILMITTEE 0 AGENDA November 19, 2003 F. Parkview Professional Office Buildings - Financial Report for October 2003 Rec: Review and file report Action: G. Palm Desert Golf Course Facilities Corporation Financial Information for October 2003 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: B. Bond Issuance by Palm Desert Financing Authority Rec: Status report on issuing new bonds Action: X. NEXT MEETING - To be discussed. 3 111903.w d AEDN INVESTMENT $ FINANCEMMITTEE AGENDA November 19, 2003 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 12`h day of November, 2003. D Leal, R' o ing ecretary 4 111903 wpd City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT October 2003 Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The Federal Open Market Committee (FOMC)met on 28 October and decided to keep the Federal Funds Rate at 1%. The FOMC noted that while spending is firming and the labor market appears to be stabilizing, deflation is still a risk. Economic growth (GDP) in the third quarter of 2003 has been estimated at 7.2%. This was accompanied by a decline in the unemployment rate from 6.4% (June)to 6.0% (October). Over the last three years, 70%of all GDP growth has come from government stimulus and/or the mortgage market. Both sources were driving the third quarter growth numbers. American consumers spent nearly 80% of the recent federal income tax cut. Economic growth in 2003 is expected to average 2.8%percent. In 2004, it is expected to rise to 4.0%, reflecting consumer spending of higher-than-normal income tax refunds in the spring. The latter growth rate is not surprising, given government priming of the economy during a presidential election year(usually adding 1% to the annual economic growth rate). Based upon the foregoing, further interest rate reductions by the FOMC are not likely. The FOMC, however, may delay raising interest rates until after the 2004 presidential election, since high unemployment, low capacity utilization, and low inflation are ilikely to remain intact at the end of 2004. Wage growth is also less than what is needed to sustain consumer spending. PaauLS. rithSo-4 C.C.Al.T' Treasurer PORTFOLIO STATISTICS Dollars in Thousands OCT-03 SEP-03 AUG-03 JUL-03 JUN-03 MAY-03 CITY Month-End Book Value"' $ 134,142 $ 138.363 $ 185,209 $ 175,837 $ 178,187 $ 181,221 Month-End Market Value"' $ 134,231 $ 138,561 $ 185,222 $ 175,744 $ 178,198 $ 181,196 Paper Gain (Loss) $ 89 $ 198 $ 13 $ (93) $ 11 $ (25) Prior Year Book Variance $ (9,912) $ (32,060) $ 4,466 $ (13,531) $ (17,680) $ (7,959) Interest Earnings $ 175 $ 176 $ 211 $ 213 $ 225 $ 199 Yield-To-Maturity 1.61% 1.62% 1.43% 1.46% 1.58% 1.62% Weighted Maturity(Days) 94 93 69 71 71 69 Effective Duration 0.17 0.19 0.14 0.15 0.16 0.16 RDA Month-End Book Value"' $ 144,220 $ 152,893 $ 123,315 $ 100,551 $ 99,266 $ 102,557 Month-End Market Value"' $ 146,360 $ 155,033 $ 125,431 $ 102,881 $ 101,611 $ 104,887 Paper Gain (Loss) $ 2,140 $ 2,140 $ 2,116 $ 2,330 $ 2,345 $ 2,330 Prior Year Book Variance $ 49,336 $ 53.672 $ 23,190 $ (14,515) $ 6,618 $ (1,091) Interest Earnings $ 162 $ 161 $ 146 $ 136 $ 144 $ 152 Yield-To-Maturity 1,30% 1.28% 1.36% 1.56% 1.71% 1.71% Weighted Maturity(Days) 87 82 102 139 140 135 Effective Duration 0.04 0.04 0.06 0.07 0.08 0.08 "' Omits SLGSs. City Palm Desert -- Portfolio Characteristics 31 October2003 Dollars in Thousands Ageing Interval Market Value < 1 M $ 67,243 General Fund Ageing <2M <3M - 100 <6M 5,365 80 61 < 1 YR 4,650 e <2YR - o sp <3YR 0 40 <4YR 5,927 i <5YR - 20 0 p 6 6 0 >5YR - p Total: $ 83,205 < 1M <2M <3M <6M <tYR <2YR Ratings* Market Value Credit Quality AAA AAA $ 40,308 31%72 Unrated"* 72,785 785 BBB 15,817 A - BBB D Unrated" Al/P1 - 12% 57% Total: $ 128,910 Sector Market Value Asset Allocation 311E 31% Money Market Funds 40,30 O LAlF 40,000 I RDA Loan 32,785 MTNs 15,817 Money Market U.S.Treasury _ Funds RDA Loan Federal Agency 32% 25% Commercial Paper - Total: $ 128,910 MTNs 12% Mon h City Yield LAW Yield Variance Performance Nov02 2.00 2.30 -0.31 Dec 1.93 2.20 -0.27 i 2.9 Jan03 1.63 2.10 -0.47 Feb 1.63 1.95 -0.32 2.5 Mar 1.48 1.90 -0.43 Apr 1.45 1.86 -0.41 2.1 May 1.62 1.77 -0.15 1.7 Jun 1.58 1.70 -0.12 L . { I Jul 1.46 1.65 -0.20 1.3 1 Aug 1.43 1.63 -0.20 Nov02Dec JanO3 Feb Mar Apr May Jun Jul Aug Sep Oct Sep 1.62 1.64 -0.01 Oct 1.61 1.60 0.01 OLAIF Yield OCity Yield Standard and Poor's Credit Ratings LAIF, and City Loan to RDA Page 2 of 6 City of Palm Desert Portfolio Holdings 31 October 2003 Market Ratings Par Value Issuer Coupon Maturity Cost YTM Price Value Moodys 1 S 8,P Medium-Term Notes $ 3,300,000 FORD MOTOR 5.75 2/23/04 $ 3,332,997 2.48 101.20 $ 3,339,742 A3 BBB $ 3,000,000 FORD MOTOR 7.20 6/15/07 $ 3,138,478 5.75 105.98 $ 3,179,250 A3 BBB $ 2,500,000 FORD MOTOR 7.20 6/15/07 $ 2,615,398 5.75 105.98 $ 2,649,375 A3 BBB $ 2,500,000 FORD MOTOR 7,50 6/15/04 $ 2,570,842 2.84 102.71 $ 2,567,672 A3 BBB $ 2,000,000 FORD MOTOR 6.70 7/16/04 $ 2,048,644 3.17 102.89 $ 2,057,798 A3 BBB $ 2,000,000 GENERAL MOTORS 6.38 1/30/04 $ 2,021,213 2.04 101.16 $ 2,023,164 A2 BBB $ 15,300,000 Subtotals $ 15,T27,573 3.77 $ 15,817,001 LGIP $ 40,000,000 L.A.I.F. N/A 11/1/03 $ 40,000.000 1.60 100.00 $ 40,000,000 NR NR $ 40,000,000 Subtotals $ 40,000,000 1.60 $ 40,000,000 LGIP $ 21,301,860 C.A.M.P. N/A 11/1/03 $ 21,301,860 0.91 100.00 $ 21,301,860 N/A AAA $ 21,301,860 Subtotals $ 21,301,860 0.91 $ 21,301,860 Pooled Funds--AIM $ 19,006,034 PRIME PORTFOLIO NIA 1111103 $ 19,006,034 0.67 100.00 $ 19,006,034 Aaa AAA $ 19,006,034 Subtotals $ 19,006,034 0.67 $ 19,006,034 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT N/A 11/1/33 $ 32,785,480 1.60 100.00 $ 32,785,480 NR NR $ 32,785,480 Subtotals $ 32,785,480 1.60 $ 32,785,480 Total Investments $ 128,393,374 $ 128,820,947 1.61 $ 128,910,376 Cash $ 3,033,610 CITY MAIN CHKG N/A 11/1/03 $ 3,033,610 N/A 100.00 $ 3,033,610 NR NR $ 1,833,969 OFFICE COMPLEX CHKG N/A 11/1/03 $ 1,833,969 N/A 100.00 $ 1,833,969 NR NR $ 245,393 DESERT WILLOW CHKG N/A 11/1/03 $ 245,393 N/A 100.00 $ 245,393 NR NR $ 185,681 RECREATIONAL FAC CHKG N/A 11/1/03 $ 185,681 N/A 100.00 $ 185,681 NR NR $ 22,293 OFFICE COMPLEX TRUST NIA 1111103 $ 22,293 N/A 100.00 $ 22,293 NR NR $ - VACATION INN CHKG N/A 11/1/03 $ - N/A 100.00 $ - NR NR $ 5,320,945 Subtotals $ 5,320,945 N/A $ 5,320,945 Total Cash and Investments $ 133,714,319 $ 134,141,891 $ 134,231,320 NR= Not Rated Page 3 of 6 Palm Desefledevelopment Agency --Portfolio Chateristics 31 October 2003 Dollars In Thousands Ageing Interval Market Value Portfolio Ageing <1 M $ 89,762 w/o SLGSs <2M 93 <3M 100 <6M 180 90 80 < 1YR 7,079 e 70 <2YR - 0 60 0 50 <3YR - 40 <4YR - 0 30 <5YR - 20 7 10 0 0 0 0 0 0 >5YR - p Total: $ 97,021 <1M <2M <3M <6M <1YR <2YR <3YR <4YR Qualit Market Value Credit Quality AAA $ 83,244 Unrated " 60,796 AAA AA i A 58% Unrated A1/P1 42% " I 42% Total: $ 144,040 Sector Market Value Asset Allocation U.S.Treasury $ 7,259 Money Market Funds 75,965 Money Market LAIF 60,816 Funds Federal Agency - 53% Commercial Paper a Corporate Bonds - U.S.Treasury LAIF Total: $ 144,040 5% a2% Month RDA Yield LAW Yield Variance Performance Nov02 2.06 2.30 -0.25 Dec 1.95 2.20 -0.25 Jan03 1.76 2.10 -0.34 Feb 1.66 1.95 -0.28 2.2 Mar 1.64 1.90 -0.26 O Apr 1.74 1.86 -0.12 May 1.71 1.77 -0.06 r 1. L L L L Jun 1.71 1.70 0.01UU Jul 1.56 1.65 -0.09 1.2 . Aug 1.36 1.63 -0.27 Nov02Dec JanO3Feb Mar Apr May Jun Jul Aug Sep Oct Sep 1.28 1.64 -0.36 Oct 1.30 1.60 -0.30 E3LAIF Yield ❑RDA Yield Standard and Poor's Credit Ratings LAIF Page 4 of 6 Palm Desert Redevelopment Agency Portfolio Holdings 31 October 2003 Market Ratings Par Value Issuer Coupon Maturity Cost I YTM I Price Value Moody's I S& P U.S.Treasury--Discount $ 181,000 UNITED STATES TREASURY 4.63 2115104 $ 130,168 5.51 99.71 $ 180,483 Aaa AAA $ 7,143,000 UNITED STATES TREASURY 4.59 8/15/04 $ 4,989,671 5.54 99.10 $ 7,078,577 Aaa AAA $ 7,324,000 Subtotals $ 5,119,839 5.54 $ 7,259,061 LGIPs $ 40,000,000 L.A.I.F. N/A 1111103 $ 40,000,000 1.60 100.00 $ 40,000,000 NR NR $ 6,202,323 L.A.I.F. (HOUSING) N/A 11/1/03 $ 6,202,323 1.60 100.00 $ 6,202,323 NR NR $ 4,969,078 L.A.I.F. BOND PROCEEDS N/A 11/1/03 $ 4,969,078 1.60 100.00 $ 4,969,078 NR NR $ 9,644,975 L.A.I.F. BOND PROCEEDS N/A 11/1/03 $ 9,644,975 1,60 100.00 $ 9,644,975 NR NR $ 60,816,377 Subtotals $ 60,816,377 1.60 $ 60,816,377 LGIP $ 31,634,296 C.A.M.P. N/A 11/1/03 $ 31,634,296 0.91 100.00 $ 31,634,296 NR AAA $ 31,634,296 Subtotals $ 31,634,296 0.91 $ 31,634,296 • Pooled Funds --AIM $ 44,331,050 PRIME PORTFOLIO N/A 11/1/03 $ 44,331,050 0.67 100.00 $ 44,331,050 Aaa AAA $ 44,331,050 Subtotals $ 44,331,050 0.67 $ 44,331,050 Total Investments $ 144,105,122 $ 141,901,561 1.30 $ 144,040,783 Cash $ 1,996,385 HOUSING AUTH CHKG N/A 11/1/03 $ 1,996,385 0.00 100.00 $ 1,996,385 NR NR $ 322,169 HOUSING AUTH TRUST N/A 11/1/03 $ 322,769 0.00 100.00 $ 322,769 NR NR $ - COUNTRY CLUB CHKG N/A 11/1/03 $ - 0.00 100.00 $ - NR NR $ 2,319,155 Subtotals $ 2,319,155 0.00 $ 2,319,155 Total Cash and Investments $ 146,424,877 $ 144,220,716 $ 146,359,938 NR= Not Rated Page 5 of 6 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 Treasurers"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 October 2003,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 19 November 2003, pa"4S. tidV&P4 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&PiMdys 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 1 0.0% 3.6% 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% 0.0% 0.0% 53601(f) Bankers's Acceptances 180 Days 40% 180 Days 40% A-1 & P-1 - - 53601(g) Commercial Paper 270 Days 25% A-1+or P-1 270 Days 25% A-1+or P-1 0.0% 0.0% 53601(h) Negotiable CDs 5 Years 30% 5 Years 30% AA-or Aa3 53601(i) Repos 1 Year No Limit 30 Days 20% AAA&Aaa 53601(i) Reverse Repos 92 Days 20% Not Authorized 53601 Q) Medium-Term Notes 5 Years 30% A 5 Years 30% A 12.2 0 0.0% 53601(k) Mutual Funds 90 Days 20% AAA&Aaa 90 Days 20% (2) AAA&Aaa 31.3% 53.5% 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) 16429 LAIF No Limit No Limit 31.1% 42.9% (1) The City loan to RDA,which is not a bond,has been approved by the Palm Desert City Council. 74.6% 100.0% (2) Maximum limit for mutual funds, excluding bond proceeds. Certified California Municipal Treasurer Page 6 of 6 r i �•� CITY OF PALM DESERT / OFFICE OF THE CITY TREASURER INTEROFFICE MEMORANDUM To: Members of the City Council Members of the Investment and Finance Committee From: Paul S. Gibson, C.C.M.T., City Treasurer Date: November 19, 2003 Subject: Quarterly Account Statements on Deferred Compensation Plans Enclosed are quarterly account statements from Nationwide Retirement Solutions and from ICMA Retirement Corporation on the 457 Deferred Compensation Plans that they are administering on behalf of the City of Palm Desert ("City"). They are for the quarter ending September 30, 2003. 1 am providing these statements to you for your review and information. The State Treasurer of California, Philip Angelides, has issued an opinion which states that local agencies should provide their governing bodies with periodic disclosure reports on all 457 Plan assets that are held in trust for employees. Although City employees determine: (1) how many of their cafeteria credits, if any, are to be applied to a 457 Plan; (2) who the plan administrator shall be; and (3) the investment option(s) to be selected, 457 Plan assets are technically considered to be City assets since they are held in the City's name. While this affords 457 Plan assets favorable tax treatment under the Internal Revenue Code, it also triggers a reporting requirement for the City. HATJEFFREVWORD 200MMEMORANDAMNANCE COMMRTEE1457 PLAN ACCOUNT STATEMENTS.00C uarterly Financial Report for ICMA RETIREMENT CORPORATION Yo1*57 Deferred Compensation On 07/01/2003 through 09/30/2003 Page 1 of 8 It is important that all of your plan contact PAUL S GIBSON 00to367. information be current. You can update it yourself. CITY OF PALM DESERT Simply log In to EZLink at www.icmarc.org. If you 73 510 FRED WARING DRIVE don't have EZLink access, contact Employer Services PALM DESERT CA 92260-2564 at t300-326-7272 for information. .3L St1.TtR(italy ia'orlmail the PO4 4 z diag:OH190j2UQ3 • . Ending Fund Balance 3,270,950.83 Plan No 302129 Contributory 3.098,895.02 Rollover 172,055.81 Total Contributions this Period $66,001.77 Pre-Tax . 172.055.81 Contributory $66.001.77 Total Plan Assets $3,270,950.83 SaYm�la4Ii1t S�xd � ;�l'lear ., � ' ,, Gurreat ,. a Saa3adgs x F.tMstrvi§i(ve' ''i�a�itia .;� ' s- F r: ' � 'i'o'gate 1�>iasteb � �?rielRired ' � 1".Trowth Grn�tli� . `` Beginning Balance S'rSik,$�2r94257 zt �it7��tri:4:i3O+i:, $214,096.17 $56,719.56 $36,72265 Contributions 1$$ $Gw�t1t 7,978.53 3,981.88 2,634.28 Rcll-ins v3 >99•f 83 �+'i 32S6k: - 0:00 10.60 10.82 Distributions 3 3£t 8 ...... „ 0.00 0.00 0.00 Adjustments 0.00 0.00 0.00 Fund-to-Fund Transfers ` d Cf0 U tW 0.00 0.00 0.00 Earnings ° u9646a7 � . : 7$'6j81y" 2,708.52 1,172.57 1,138.73 Ending Balance $3,2t7L1,95Q 83 � ;270,9$0.83;' $224,783.22 $61,874.01 $40,506.48 . - • s:�� Percentage Invested r Try, S1mimr5 hyiruad rxunl onrerm' [jYi;Equity PLdS . { . Cash ESkre$olids`: a h Growth: Growth therid 11[twageme3ll Index . Beginning Balance $33,116.84 $66,856.51 $1,310,151.77 V $15,713.09 $34,923.37 Contributions 1,827.63 4,361.56 17,863.73 3,920.00 870.49 Roll-Ins 0.00 6,448.05 1,020.84 0.00 0.00 Distributions 0.00 0.00 8,745.66- 0.00 0.00 Adjustments 0.00 0.00 6,558.81 0.00 0.00 Fund-to-Fund Transfers 1,000.00- 0.00 0.00 1,041.09 0.00 Earnings 1,318.71 3,176.95 11,028.84 0.01- 100.79- Ending Balance $35,263.18 $70,843.07 $1,337,878.33 $20,674.17 $35,693.07 Percentage Invested 10/6 2% 41% 1% 1% ?lease review your statement carefully. if you believe there is an error due to a transaction not previously confirmed,please notify TOMA.Rc at 800-326-7272 ten Espanol 800-669-821 si within 90 days of quarter end. Failure to do so may prevent ICMA-RC from adjusting your account. 777 North Capitol Street, NE •Washington, DC•20002-4240 •www.icmarc.org ICMA-RC Services, LLC.is a brokerldealer affiliate of the ICMA Retirement Corporation, member NASD and SI PC. arterly Financial Report fo Yo 57 Deferred Compensation On ICMA RETIREMENT CORPORATION 07j0112003 through .09130J2003 Page 3of 8 Alan NaiYfetTw�i PALM DESEFIT: � ' < �124x>:.� +'�+#�4'aP StoIG1z yai�t$get '51711 Co�.tQ�tU '�Ffte�E=1a#ol}ta1 '� Beginning Balance $41,060.39 $711.27 $22,257.33 $2,092.45 $45,767.54 Contributions 3,038.94 100-59 397.32 297.95 2,333.40 Roll-Ins 66.29 0.00 44.47 0.00 45.05' Distributions 0.00 0.00 0.00 0.00 0.00 Adjustments 0.00 0.00 0.00 0.00 0.00 Fund-to-Fund Transfers 1,677.12 0.00 0.00 482.13 70.57: Earnings 3,745.49 32.12 734.28 179.28 3,309.06 Ending Balance $49,588.23 $843.98 $23,433.40 $3,051.81 $51,384.48''_, Percentage Invested 1% Less than 1% f% Less than 1% 2% suEtr4nt�rpl'tyB:uui+l��og :, :y1`�tr[Aam'. z„ `Yntt E9�tY. Beginning Balance $8,086.44 Contributions 357.89 Roll-Ins 0-00 Lstributions .- 0.00 Adjustments 0.00 FuncI40-Fund Transfers 0.00 Earnings 448.22 Ending Balance $8,892.55 percentage Invested Less than 1 % Note:Amounts shown net of applicable fees and expenses. Earnings include dividends,interest and realized and unrealized gains and losses- 9iccVurib tuRFa Giraxhs�ccrr(paresgoar;iCbxA,RG plgnfr luESRk j+r?1ffRc'~R{�ff rziuxstmenZ c..AM [tR CIN�i u`DTdtrs mi[rarsatHl �'.'. 7 RttE�G A 1 Yla1k a#eta fACe Alt 8!4tA6{1.. 4i Ptli D{atFnaglly >•S:M 3' 'T Domestic Equities 46% Domestic Equities 52`% Fixed Income 50% Fixed Income 40% ®International 3% International 4% Cash Management 7=/, Cash Management 4% Fund category must equal at least 0.5%of assets to be displayed. Due to rounding,percentages may not sum to 100%. 777 North Capitol Street, NE•Washington, DC-20002-4240•www.icmarc.org ICMA-RC Services.LLC.is a broker/dealer affiliate of the ICMA Retirement COMOrafion, member NASD and SIPC. arterly Financial Report fo ICMA RHTIREMENT CORPORATION Yoi�u57 Deferred Compensationvin 07/01/2003 through 09/30/2003 Page 5 of 8 Fleu Nama GtTY 46 P14M OESERT , PlgksNu3A�4 § .>.: .. � o a x 07/31/2003 �.&6$5, $9,166.85 9,755.76 OS/28/200353 7 , 9,955.76 09/11l2003 3 4 fl5,' 9,494.85 09/26/20034gA..85., 9,494.85 Cash received from Employer 66,001.77 Total Contributions $66,001.77 777 North Capitol Street, NE•Washington, DC•20002-4240 •www.icmarc.org ICMA-RC Services, LLC- is a broker/dealer affiliate of the ICMA Retirement Comoration, member NASD and SIPC. and Performance Report For ICMA RETIREMENT CORPORATION Yo57 Deferred Compensation�lfan Page 7 of 8 Rt;'�tx Ni:IItle Cf'[Y#9F PA�;Mfl�SE#3F FUND PERFORMANCE CONTINUED As of SEPTEMBER 30, 2003 AVERAGE ANNUAL RETURNS ICMA-RC Ad Qrr Year- ]-Year 3-Year 5-Year 70-Year Inception Funds 2003 to- or Since Date Date Inception �9tQx*1 t$!#ICQtIIL 500 Stock Index Fund 2.45% 13.82% 23.19% -1106% 0.03% 3.07% 06/0211997 Growth&Income 2.21% ' 15.38% 25.84% -6.30% - 6.78% 10/01/1998 Broad Market Index 3.35% 16.06% 24,74% -10.03% 0.92% 9.13% 10/01/1994 VT Lord Abbett Large Co Value 2.73% U.47/ 25.80% - 3.391h 10/02200 Vr American Century Value 3,56% 12.95% 22.23% 7.371/. 7.05% 5.30% 09/0211997 Benchmarks: S&P500 Index 2.64% 14.72% 24.40% -10.13% 1.00% 10.05% Wilshire 5000 Index 5.99% 19.68% 29.04% -8.88% 2.44% 9,73% Growth 4.44% 15.77% 22.89% -13.00% 4.18% 8.42% 04/01/1933 VT Fidelity Contrafund 4.86% 14.33% 15.54% -5.98% 4.78% 9.10% 01/02/1996 VT Fidelity Magellan 1.26% 12,00% 20.24% -1224% 0.93% 5.56% 01/02/1936 VT Gabelli Value 2.00% 14.56% 28.21% -0.98% 7.48% 11.24% 10/02/1995 VT Calvert Social Investment 1.75% 10.88% 22.70% - - 13.56% 07/26/2002 VT MFS Large Company Growth 1.01% 13.49% 16.26% -19.61% - 0.02°! 10/01/1998 VT American Century Ultra 2.23% 14.61% 18.37% -14.96% 0.32% 5.50% 01/02/1996 Benchmarks: S&P 500 Index 2.64% 14.72% 24.40% -10A3% 1.00% 10.05% Wilshire 5000 Index 5.99% 19.681% 29.04% -8.88% 2.44% 9.73% S&P/BARRA Growth Index 2.75% 14.31% 2243% -14.06% -1.05% 10.54%. W7M%ly��r�awth&5ma�t Icaompany Index Fund 7.21% 24.78% 31.45% 9.65% 4.39% 3.96% 06/02/1997 Opportunities 8.05% 28.78% 3420% -17.66% 3.98% 9.50% 10101/1994 Price Small Cap Val 6.40% 19,41% 27.68% - 15.24% 07/29/2002 Price Small Cap Stk 4.62°/h 15.53% 23,58% - - 2.09% 10/02/2000Voyager 3.30% t-0.14% 19.81% -18.23% 0.79% 7.19% O6/02/1995VI NO Small Co Growth 7.88% 21,09% 27.14% - - -18.90% 10/022000 Benchmarks: Wilshire 4500 Index 5.38% 23.84% 30.97% -9.20% 5.12% 8.28% Russe920001ndex Hal/ 28.580% 36.50% -0.83% 7.46% 8.28% Funds avaitable in your plan may be offered by several sources and are designated as forlmvs:All funds managed by the ICMA Retirement Comomtion are denoted by the Vemagepoint logo.ICMA-RC funds with a VP prefix are Ventagepoint Mutual Funds.All other ICMA-RC funds are VantageTrust Funds.Nan-ICMA-RC funds(no logo)with a Vr prefix are offered by the VantagaTtust Corporation,Funds with neither the logo nor a Vr prefix am non-ICMA-RC funds oxemd outside of the VantageTrust Coryoration. 777 North Capitol Street, NE•Washington, DC•20002-4240 •www.icmaraorg ICMA-RC Services. LLC.is a broker/dealer affiliate of the ICMA Retirement Corporation,member NASD and SIPC. Nat1gnwidee CITY OF PALM DESERO Retirement Solutions r Nalio nwhk-F a,r'IColut De erred Compensation Program (457) Statement of Account 11111111111111111111111111111111111111111111111111111111114111 PAUL GIBSON 97 Page: 1 of 3 FINANCE DIRECTOR Entity: 0516 73510 FRED WARING DR PALM DESERT CA 92260-2524 2 O c 7 rn�t c f13C) Please review your statement carefully. Corrections may not be accepted more than 30 days after the closing date of the statement. Z IA � t�ttesw10, I1Qi3�� y 3 $2,622,887.43 fl Y�7ur T�z#alfeerr � lTp,Srn1 aG :, r _ $2,733,994.52 cy�alrlTT+�yt'a) yhryG�a+{ Ipajr��rtfrsp�r[�ut fi3aafew ' - $851,284.76 r' 4J1,' II Q1T r iM ,r51r�11` �� t �tlaL1�3 E �' { 4�1 54 W - $422.00 t74iC,T ►t841 ria�llrtf DSS 7 ?41 n' t '} ?tl $740,599.67 The amount shown above in Total Charges/Credits To Date is the total amount of charges or credits since you have joined the plan. Report Period: July 01, 2003 Thru September 30, 2003 457!Adterrtzc13G�1.t #p €11 {i4t1� 1111iGcglliaVltPf111d A'{8. p ]i t+9 «� 06/30/2003 Deferrals/ Withdrawals/ Charges/ 09/30/2003 Fund Name Value Transfers Exchanges Transfers Credits Gain/Loss Value Am Cent Value Ic 18,544.t3 458.71 212.84 -3,651.24 0.00 567.86 16,13Z30 �^ Brwn Cap Mgmt Sm1 Co Fd Ic 10.064.91 314.60 0.00 0.00 0.00 860.43 11.239.94 Drey Appreciation Fnd Inc 8,824.13 399.35 -540.57 -537.43 0.00 55.92 8.201.40 Drey Prem Mdcapstk Cis A 2,060.83 270.00 260.05 0.00 0.00 126.24 2,717.12 Drey S&P 500 Index Fund 38.966.29 1,156.74 - 183.61 - 1,469.78 0.00 913.88 39,283.52 o� Drey P74n3rdcnt Fnd Cls Z 10,943.48 477.29 0.00 0.00 0.00 274.70 11,695.52 Fid Asset Manager 34,085.23 1,125.39 0.00 -315.60 0.00 101.34 34,996.38 Rd Contrafund 80,903.92 1,747.05 -319.40 -643.20 0.00 3,897.26 85,585.63 Fid Equity Income Fnd 42,187.21 2,723.52 103.61 -433.20 0.00 1,119.42 45,700.56 Fed US G'tsc Fnd 2-5 Ys Is 9,033.09 873.75 - 1,559.67 0.00 0.00 -37.25 8.309.92 Nationwide Fixed Account 1.554,124.19 35,916.70 19,787.15 -22,702.14 0.00 17,884.06 1,605,009.96 Fid Magellan Fnd 77,957.90 745.22 -537.64 0.00 0.00 970.27 75,135.75 Franklin Balsheet Inv Fd A 17,266.35 228.83 0.00 -230.40 0.00 1,008.93 18,273.71 CUSTOMER SERVICE (877)677-3678 (ESPANOL) (800)649-9494 TDD: (800)848-0833 Web Site: WWW.NRSFORU.COM If you have any questions or concerns about your account, please call the Customer Service number, or write to the following address: - NATIONWIDE RETIREMENT SOLUTIONS PO BOX 182797 - --- --- - --- COLUMBUS-OH-43218--2-797 - ---- --------- --- 99997999P000000449 Report Period: July 01, 2003 thru Sedoer 30, 2003 • Page: 2 of 3 CITY OF PALM DESERT Entity: 0516 in S,p riit HE n=N 06/3012D03 Deferrals/ Withdrawals/ Charges/ 09/30/2003 Fund Name Value Transfers Exchanges Transfers Credits Gain/Loss Value Grwth Fnd of America, Inc. 29,226.50 766.71 0.00 -322.40 0.00 993.06 30.663.87 Gartmore Invdes Aggr Sc 6,207.39 1,395.60 0.00 0.00 0.00 312.18 7,915.17 Gartmore Invdes Mcdcons Sc 2,607.40 331.80 0.00 0.00 0.00 44.39 2,983.59 Invesco Dyn Fnd Ic 21.971.44 825.70 0.00 -29.45 0.00 954.30 23.721.99 Gartmore Invdes Modaggr Sc 4.D09.87 760.60 0.00 0.0D 0.00 168.65 4,938.92 Gartmore Invdes Mod Sc 848.15 110.60 0.00 0.00 0.00 24.25 983.00 Gartmore Invdes Cons Sc 883.95 110.60 0.00 0.00 0.00 7.35 1,001.90 Incm Fnd of America, Inc. 30,398.96 859.60 -685.34 0.00 0.00 738.20 31,311.42 Am Cent Income&Grwth IC 3.776.96 447.50 -387.95 0.00 0.00 79.02 3.945.53 Janus Adv Intl Grth I Shs 1,083.94 0.00 -73B.84 0.00 0.00 98.07 443.17 Janus Fund 80.026.15 6,942.47 -783.01 -858.71 0.00 2.955.33 88,282.23 Ms Iff Fixed Incm Port Ic 1,089.60 16500 0.00 -934.37 0.00 - 1.00 319.23 Mass Inv Grthstk Fnd Cis A 15.009.41 0.00 0.00 0.00 0.00 142.65 15.152.06 Gartmore Money Mid Fd Ps 31,810.27 2,468.28 -1,570.89 0.00 0.00 -23.86 32.683S0 Grtmre Mori Stable Val Rat 11.54&24 235AI - 1,550.90 0.00 0.00 84.96 10,314.71 Nat Bnd Indx Fnd CIS A 6,675.11 524.06 -2,992.33 2,119.24 0.00 -121.42 1,966.18 Gartmore Nationwide Fund D 70,057.99 2,978.52 -9.29 1,617.20 0.00 1,380.70 72.790.72 Neu Ber Genesis Fd TC 367.98 0.00 0.00 0.00 0.00 21.87 389.83 Nat S&P 500 Indx Inst Sm 12,126.29 1,263.47 - 1,205.52 -34.60 0.00 278.85 12,428.49 Nat Mdcap Mkt Idx Fnd Clsa 1.207.61 0.00 -745.58 0.00 0.00 87.72 549.75 Nat Smcap Indx Fnd Cis A 900.63 27.50 -583.97 0.00 0.00 90.68 434.84 Opp Global Fnd Cis A 6,264.61 284.80 -657.23 0.00 0.00 591.06 6.483.04 One Group,Midcap Grth Fd A 1,05T23 0.00 -687.77 0.00 0.00 69.12 438.58 lGrp Midcapval Fnd Cis A 210.57 0.00 - 122.10 0.00 0.00 20.43 108.90 Putnam Infinatl Equity Fd A 4,926.05 0.00 -364.59 0.00 0.00 264.32 4,825.78 Natwde Lg Cap Gr Inst S" 3.154.75 0.00 -691.16 0.00 0.00 16113 2,625.72 Pimco Ttlretnn Fnd Cis A 72.573.84 811.48 -1,505,74 0.00 0.00 -391.82 71,487.76 Natwde Small Cap Inst Sm 5,590.44 6D0.00 967.57 0.00 0.00 481.61 7.639.62 Ptnm Voyager Fnd Cis A 59,248.05 1.270.00 -481.36 -558.04 0.00 1,917.77 60,396.42 Gvit Small Company 1 15,923.80 225.00 0.00 0.00 0.00 1,305.28 17,454.08 Sin;Oppor Fnd 973.51 0.00 -382.12 0.00 0.00 62.50 653.89 Am Cent Growth Fnd Ic 9,383.91 921.86 - 17.19 0.00 0.00 173.77 10,46235 Am Cent Int'l Disc lc 4,105.91 0.00 -70.69 0.00 0.00 589.21 4,624.43 Am Cent Ultra Ic 80,022.27 3,503.33 -440.84 -913.71 0.00 1,715.82 83,886.87 Temp Foreign Fnd Cis A 29,213.36 481.25 - 180.61 - 196.80 0.00 2,636.15 31,953.35 Vankamp Growth&Inc Id A 9,453.96 572.11 -490.34 0.00 0.00 216.00 9,751.73 W&R Advisor High Income Y 1,206.45 235.41 -844.97 0.00 0.00 25.93 622.82 Totals: 2.539,000.99 75,555.60 0.00 -37,567.51 0.00 45,1198.35 2,622.887.43 ........... 6merraI&krerBemgHInvested ............. Fund Description Percent Unit Value Units ACV Am Cent Value Ic 1.3017 12,393.4012 BSC Elmn Cap Mgmt SMI Co Fd IC 1.2909 8,706.9520 DAF Drey Appreciation Fnd Inc 0.9375 8,748.4703 DPM Drey Prern Mc1capStk Cis A 1.2735 2133.5316 DSP Drey S&P 500 Index Fund 1.2467 31509-2076 DTC Drey PrM3rdcnt Fnd CIS Z 3.0407 3,846.3276 Fid Asset Manager FAM 1.8912 18.505.2933 FCN Fid Contrafund 3.3072 25.878.9421 FEI Fid Equity Income Fro 7.6452 5,977.7113 FIG Fed US G'tsc Fnd 2-5 Ys Is 1.6643 4,993.1108 FIX Nationwide Fixed Account FMG Fid Magellan Fnd 2.5935 30.512.8475 FRB Franklin Balsheet Inv I'd A 1,0639 17,176.6432 GFA Grwth Fnd of America, Inc. 5.3565 5,724.6277 IDA Gartmore Invdes Aggr Sc 0.9025 8,769.9474 IDC Gartmore Invdes Modcons Sc 1.0130 2,945.2555 IDF Invesco Dyn Fnd Ic 0.9758 24,311.0143 IDM Gartmore Invdes Modaggr Sc 0.9346 5,284.4614 IDS Gartmore Invdes Mod Sc 0.9722 1,011.1053 IDV Gartmore Invdes Cons Sc 1.0446 959.1034 IFA Incm Fnd of America, Inc. 3.4138 9,171.9227 IGF Am Cent Income& Grwth Ic 0.9429 4,152.6218 JAI Janus Adv Intl Grth I Shs 0.7485 592.0592 JF Janus Fund 1.9999 44,143.5188 MFI Ms Ift Fixed Incm Port IC 1.8255 174.8801 MIG Mass Inv Grthstk Fnd Cis A 16.8982 896.6684 MMF Gartmore Money Mkt Fc! Ps 3.5187 9,288.5017 IvISLI Grtmre Mori Stable Val Ret 1.2041 8,566.2410 NBI Nat Bnd Indx Fnd Cis A 1.1530 1,705.3407 NF Gartmore Nationwide Fund D 21.0379 3,459.9747 NGS Neu Ber Genesis Fd Tc 1,1034 353.3048 J_Y Nat_5&P 500 Indx Inst Sry 0.8863 14,022.6911 NMC Nat Mccap Mkt I&-FncI-Clsa ---- .020,V--------53a-.737'1- 8998799SP000000450 Report.Period: July 01, 2003 thru Sepser 30, 2003 Page: 3 of 3 CITY OF PALM DESERT Entity: 0516 ............. llilslia,Nmiji s �Hlflfflzi MT. ORDRe .1ANAW a nol-aw Z air.*�-..lml c 0 M erM 41,11-- 60E NO ............... V. qu I "MMEE.-.1 rF R 1.50 Fund Description Percent Unit Value Units NSC Nat Smcap Inc1x Frid Cis A 1.0254 424.0863 OGF Opp Global Frid Cls A 1.4695 4,411.6633 OGG One Group Midcap Grth Fd A 1.1906 368.3679 OGV 1Grp Mldcapval Frid Cis A 1.1907 91.4621 PIG Putnam Intnatl Equity Fill A 0.6681 7,222.6463 PLG r Inst Sry 0.7723 3,399.6830 PhAT Princo TtiFetrn'Fnd Cis A 1.1902 60,D64.4867 PRS Natwde Small Cap Inst Sry 1.3530 5,646.5072 PVF Firm Voyager Fnd Cis A 3.8669 15,618.8490 SCF Gvit Small Company 1 1.4867 11,740.2445 SOP Strg Op Fird 0.8470 772.0357 TCG Am CenrGrowth Fird Ic 5.8704 1,782.2279 TO Am Cent Int'l Disc Ic 1.5183 9,045.7843 TCL Am Cent Ultra Ic 2.7536 30,464.5903 TFF Temp Foreign Fird Cis A 2.2459 14,227.5D68 VKG Vankamp Growth & Inc Fill A 0.9570 10,189.6938 WHI W&R Advisor High Income Y 1.1049 563.6867 j -1.001-1-1l VIGO si 1 ................................ V4rn Helium _., .r� , , a 4ai gt2i. isUl. Policy Premium Report Period Account Surrender Death We Option Number Per Pay Premiums Value Value Bel Universalife 106.67 545.09 19,842.58 14,515.53 326,139.00 Plan I (Universal Life) 97.48 682.36 11,267.27 8,054.83 261,616.00 , . IxR......... H W, ilsilir !y jul.. si, MIN 01 M o4n mm A Bringing your assets together may be a good idea-it's easier to manage your portfolio to help achieve your goals and you could potentially eliminate fees! Call toll-free 1-877-677-3678 to find out more! The 4th quarter effective interest yield for the Nationwide fixed return option is 4.60%. The 2003 guaranteed minimum effective interest yield is 4.35%. IF YOU ARE AGE 65, PLEASE CALL THE SERVICE CENTER TO VERIFY YOUR DATE OF BIRTH 8998799SP000000 I CITY OF PALM DESERT �orage Annualised Total Return:Standardized 3rd Qua 003 1 Year 5 Years 10 Years Slake Inception/ Morningstar 10/01/02- 10/01/98. 10/01/93- Incel Adaptioo Investment Options Category YTD 09130103 09/30/03 0940103 Adoplon Date c;i u, ;AsSET':/A€i.LIL'RTIp10: tl ,�- m„� :r2 lim1 '-'� '.#,ui2misJ�:F: +I _ :. y ` a-. . .. -'"'s :_..__".. "-_.::,�..,..a,,s-..:�. ,._u„ . .. _- -_tee ..__' s=,.___ _ '-_. ..,_d----ai.:' 624 Ganmore Investor Desturetions Aggressive Fund-Service Class(b) M NIA 15.69% 2329% WA WA -456% 07H9/01 623 Gartrnore investor Destinations Moderately Aggressive Fund- Service Class(b)(a) NIA 13.19% 19.80% N/A WA -3.03% 07/19/01 622 GarOnore Investor Destinations Moderate Fund-Service Class(b) M WA 10.17% 15.63% N/A WA -127% 07/19/01 621 Garlmore Investor Destinations Moderately Conservative Fund- Service Class(b)(i) NIA 7.09% 11.04% WA NIA 059% 07/19101 620 Garmore Investor Destinations Conservable Fund-Service Class (b)(4) WA 4.16% 634% N/A NIA 2.01% 07119101 nr Iftalla ` a -M_MI.. L.^ = _6.:_3 SW American Century International Discovery Fund-Investor Class(a) (p) Foreign Stock 31.09% 31.06% N/A WA 8.94% 11/13/98 592 Jams Adviser International Growth Fund-1 Shares(8) Foreign Stock 1626% 2020% NIA NIA .1123% 04MIO1 456 Putnam International Equity Fund-Class A(#) Foreign Stock 11.62% 20.33% NIA N/A -11.14% 05/01100 529 Templeton Foreign Fund-Class A(0) Foreign Stock 16.03% 2156% 722% 6.16% 736% 11/02192 612 Nationwide®International Index Fund-Class A(6) WA 16.38% 23.62% WA NIA -1121% 0425101 408 Oppenheimer Global Fund A(C) World Stock 2157% 2473% N/A NIA 821% 11/13/98 x " ;Z:,.2u. a Rom- � MIMES. L �a r 389 GVR Small Corel9am(Fug•Class t(0) WA 24.11% 27.33% 11.35%� WA 8.88% Ot/02/98 607 Nationwide 0 Small Cap Fund-Institutional Service Class(t) WA 27.97% 33.04% WA WA 6.39% 11/f3/98 594 Nationwide 0 Small Cap Index Fund-Class A(0) WA 2653% 33.77% NIA N/A 1.04% 042"1 388 Neuberger Berman Equity Trust 0-Genesis Fund-Trust Class Shares(1/) Small Blend 15.72% 19.81% NIA WA 625% 02/14102 130 Brown Capita Management Small Company Fund-Institutional Class(8) Small Growth 25.80% 37.83% N/A WA 6.60% 10/01/99 2941nvesco Small Company Growth Fund-Investor Class(0) Small Growth 21.12% 26.98% N/A N/A '9.74%. 0425/01 214 Franklin Value Investors Trust:Franklin Balance Sheet Investment Fund-Class A(0) Smati Value 13.93% 1751% WA NIA 3.89% 02n,1102 ='.i E,,a _ - ae: _ s'.k..���•_',�e''Zllp-��6� '_"',v ��=,=-L..1�4.u�-,.:::msla�"=•ai -. . `�_��a::_�.:. .>fu-=,l���'v�:,- -__:v__- i x e n 158 Dreyfus Premier Mid Cap Stock Fund-Class A(/) Mld-Cap Bland 16.35% 20.4716 WA N/A 5.09% 11/13198 512 Strong Opportunity Fund(0) Mid-Cap Blend 2223% 33.17% WA N/A -6.60% 0425101 2781nvesco Dynamos Fund-Investor Class(0) Mid-Cap Growth 20.76% 32.03% NIA .WA -050% 11/13/98 632 One Group 0 Mid Cap Growth Fund-Class A(I) Mld-Cap Growth 15.87% N/A N/A N/A 19.06% 0124/03 536 Amedcan Century Value Fund-Investor Class(#) Mid-Cap Value 1245% 22.04% N/A WA 8.03% 05/01/00 630 One Group®Mid Cap Value Fund-Class A(0) Mid-Cap Valus 1555% NIA NIA NIA 19.07% 0124103 $13 Nationwide® Mid Cap Market Index Fund-Class A(0) NIA 18.36% 24.71% WA WA 0.94% 0425101 :w c x (aS_ . .�rHGe�'Jjitla�:. !u,:w.:�_...vi:�m.� 4_,.-,u:=d cam.- t. >x _x - .. a :. - °' i i P .�.-_ }� .�� _::=i-�. ';"z��e- _. 4 149 Dreyfus Appreciation Fund,Inc.(0) Large Blend 825% 1480% WA N/A -1.31% ...= 11/13/98y�) 160 Dreyfus S&P 500 Index Fund C) Large Blend 1353% 22.67% '0.47% NIA 350% 0"1/97 181 Fidelity Contrafund() Large Blend 14.11% 15.18% 4.63% 948% 1159% 11/02/92 193 Fidelity Magellan®Fund(') Largo Blend its*% 1911% 032% 6.99% 8A5% 01102192 0 367 Garmmore Nationwide Fund-Class D(x) Large Bland 13.91% 23.15% -1.51% 8.98% 11R9% 01/0235 0 372 Nationwide 0 S&P 500 Index Fund-Institutional Service Class(0) Large Blond 1357% 22.67% WA N/A -2A4% 11/13/98 539 American Century Growth Funtl-Investor Class(') Large Growth 11.62% 17,89% -228% 5.42% 10.74% 01I02185 543 American Century Ultra Fund-Investor Class C) Large Growth 14.34% 18.03% 0.09% 6.57% 6.95% 11115)91 289 Janus Fund C) Large Growth 15.62% 17.529/6 -0.90% 6.58% 6.89% 05103/93 343 Massachusetts Investors Growth Stock Fund-Class A(0) large Growth 13.30% 16.09% -0.96% 8-58% 11A4% 01/02/95 356 Morgan Stanley Institutional Fund Inc.-Equity Growth Portfolio- '� Class B(9) large Growth 13.99% 20A0% N/A NIA -1.73% 11/13/98 �r 459 Putnam Voyager Fund-Class A(0) Large Growth 14,03% 19.64% 0.07% 7A1% 10.69% 0440190 163 The Dreyfus premier Third Century Fund,Inc.-Class Z(It) Large Growth 12.50% 18.08% -3.77% 5.49% 7.07% 04/01/87 me 259 The Growth Fund of America®,Inc.-Class A(') large Growth 17.62% 25.48% 9.01% 11.41% 11.35% 05M1/91 537 American Century Income&Growth Fund-Investor Class(0) Large Value 13.78% 23.02% WA N/A -120% 11r13/98 183 Fidelity Equily-locome,Fund C) Larga Value 12.82% 23.15% 2.87% SAM 10.62% 0IM2%5 586 Van Kampen Growth and Income Fund-Class A(9) larga Velua 12.33% 21.31% WA WA •2.67% 02tI4/82 603 Nationwide 0 large Cap Growth Fund-institutional Service Class (a) WA 17AB% 2353 16% 11113/98 1' " S'AI81iG s= !il - :ydL.ki + �-:�al',a�8'_J.a .S krvll a Vim:_d_Ei s.-. i>` !_ ^�, r.:.,l% ._rnfi - -_-_ y. r 5��;� �.,, �itiv,ll NI 277 The Income Fund of America®,Inc.-Class A(a)(') Conservative Allocation 1223% 19.95% 529% 9.45% 9.75% 044:10196 -- 173 Fidelity Asset Manager "r(') Moderate Allocation 9.59% 17.14% 428% N/A 6.64% 11/01/93 .---Soglde"'I nnun :--nn" x'.. s.n 1 n. r �s, f:..q riuUnn-Enn 'a _i a nn: 355 MFS e Hlgh Income Fund-Class A(a)C) High Yield Bond 1445% 19.90% 2.97% 4.95% 7.nnn31% 01102/85 428 PIMCO Total Return Fund-Class A(4) Imenner late-Te 3.80% 5.94% NIA N/A 721% 03/30101 323 Morgan Stanley Institutional Fund Trust-MSIF Core Plus Fixed Income Portfolio-Institutional Class(') Intermediate-Term Bond 3.47% 524% 5.46% N/A 6.85% 09/01/94 611 Nationwide 0 Bond Index Fund-Class A(9) N/A 2.45% 3.85% N/A NIA 5.85% 03/30/01 642 Waddell&Reed Advisors Nigh Income Bond Fund-Class Y(0) N/A 11.64% N/A NIA WA 10.49% 0124/03 171 Federated U.S.Government Securities Fund:2.5 Years-Institutional Shares Short Short Government 1.90% 2.58% 5.05% 5.01% 5.01% 04/30193 UNHIMM'.:- Y11'lLl,v'.!: _.. :i: 'i:.'! ,v v ,a -L.''..evu -,Y .:? .....:_ .. .... I .: v. _ ..,uL .% ..: :i :. .. .. v .. 373 Gartmore Money Market Fund-Prime Shares(c)(#)CURRENT YIELD:- 28% N/A -0.12% .0.06% 253% 323% 426% 01/02/85 354 Gartmore Morley Stable Value Retirement Fund-OCVA(d)(8) WA 2.44% 3.50% 4.57% 4,77% 4.53% 07/3l/89 89987996P0000000.13 • Risk Disclosures Past performance is no guarentoture results. Investment return and principal value will flu o that an investor's shares/unds,when redeemed,may be worth more or less than their original cost. Small company funds involve increased risk and volatility. International investing involves additional risks;including currency fluctuations,political Instability,differences in accounting standards and foreign regulations. High yield funds are typically subject to greater risk and price volatility than funds which Invest in higher-rated debt securities. Sector funds may involve a greater degree of risk than an Investment with greater diversification. Due to market volatility,the recent returns of the funds may be less than the performance shown. An investment in the money market is not insured or guaranteed by the FDIC or any other government agency. It is possible to rose money by investing in the=nay market Since Inception/Adoption coklmrrcontains performance for the funds,9 the inception or adoption date was before the time period indicated. Footnotes a)These funds are not open to new participants. b) The Gartmore Investor Deethations Funds are designed to provide diversification and asset allocation across several types of investments and asset classes,primarily by Investing in underlying funds. Therefore,in addition to the expenses of the Investor Destination Funds,you are indirectly paying a proportionate share of the applicable fees and expenses of the underyng funds. c) The money market current yield is the annualized historical yield for the 7-day period ending on the last day of the calendar quarter. Yield quotation more closely reflects the current earnings of the money market fund than the total return quotation. d) This fund may not be available in all plans. This option is offered outside the group variable annuity contract The funds initial Investments will be in units of Morley Financials Stable Value Fund. Return history pertains to the Stable Value Fund managed by the same fund manager since inception In December 1993. Fee Disclosures- Performance figures assume a$1,000 initial hypothetical investment and reflect the deduction of the following lees: 'denotes a Fee of 0.95% #denotes a Fee of 0.80% +denotes a Fee of 0.70% If applicable,the participant account maintenance charge,up to a maximum of$50,will not be assessed unless agreed to by the entity. Options in bold are options in a group variable ar lty contract Fees indicated for those options are Variable Account Expense fees. Group and fixed annuities are issued by Nationwide Life Insurance Company,Columbus,Ohio. Contract#s:TSP-556 TSP-557; APO-2355;APO.2424. Fees and expenses listed are in addition to the fees disclosed in the fund p(ospectus(es). For more complete Information ab,uttees and charges,please request a prospectus from the Public Sector Service Center at 1-877-677-3678. Please read prospectus(es) carefully before investing. Securities offered through the Nationwide Investment Services Corporation,member NASD.In Michigan only: Nationwide Investment Svcs,Corporation. Investment Category provided ply Morningstar,Inc.,Chicago,IL. Although gathered from reliable soumes,data accuracy and completeness cannot be guaranteed. 89287996P000000454 STATE OF CALIFORNIA Adak PHILIP ANGELIDES, Treasurer OFFICE OF THE TREASURER SACRAMENTO My (i�' Local Agency Investment Fund PO Box 942809 Sacramento, CA 94209-0001 ? �'`�`� i AN S t6 i (916) 653-3001 October, 2003 Statement CITY OF PALM DESERT Account Number : 98-33-621 Attn: CITY TREASURER 73510 FRED WARING DRIVE PALM DESERT CA 92260 Transactions Effective Transaction Tran Confirm Authorized Amount Date Date Type Number Caller 10-15-2003 10-14-2003 QRD SYSTEM 164,081.44 10-22-2003 10-21-2003 RW 556414 THOMAS JEFFREY 164,081.44 Account Summary Total Deposit : 164,081.44 Beginning Balance : 40,000,000.00 Total Withdrawal : 164,081.44 Ending Balance : 40,000,000.00 Page : 1 of 1 STATE OF CALIFORNIA PHILIP ANGELIDES, Treasurer OFFICE OF THE TREASURER SACRAMENTO Local Agency Investment Fund F! it'i' • y PO Box 942809 Sacramento, CA 94209-0001 (916) 653-3001 October, 2003 Statement PALM DESERT REDEVELOPMENT AGENCY Account Number : 65-33-015 Attn: TREASURER 73-510 FRED WARING DRIVE PALM DESERT CA 92260 Transactions Effective Transaction Tran Confirm Authorized Amount Date Date Type Number Caller 10-15-2003 10-14-2003 QRD SYSTEM 164,081.44 10-22-2003 10-21-2003 RW 120608 THOMAS W. JEFFREY - 164,081.44 Account Summary Total Deposit : 164,081.44 Beginning Balance : 40,000,000.00 Total Withdrawal : 164,081.44 Ending Balance : 40,000,000.00 Page : I of 1 STATE OF CALIFORNIA PHILIP ANGELIDES, Treasurer OFFICE OF THE TREASURER ,O. SACRAMENTO CISV, v: PrnL%i; F:_5WT ��l,Wv ti` r j�Q, -IENI I Local Agency Investment Fund PO Box 942809 9I+{, . ,;; , a Sacramento, CA 94209-0009'' 4 4 r p'I q: a (916) 653-3001 October, 2003 Statement PALM DESERT HOUSING AUTHORITY Account Number : 25-33-003 Attu: DEPUTY CITY TREASURER 73-510 FRED WARING DRIVE ✓ PALM DESERT CA 99260-2578 Transactions Effective Transaction Tran Confirm Authorized Amount Date Date Type Number Caller 10-15-2003 10-14-2003 ORD SYSTEM 25,317.80 Account Summary Total Deposit : 25,317.80 Beginning Balance : 6,177,005.65 Total Withdrawal : 0.00 Ending Balance : 6,202,323.45 Page : 1 of 1 B. State of California Local Agency Investment Fund Balance for the month of October 2003 Report will be distributed at the meeting r• • • �I'I C!I I U Pfif f aLRT CALIFORNIA ASSET RO''f`,f "-E Dr-RA l cIF--N i STATEMENT MANAGEMENT PROGRAM IOIN"1' POWERS AIJ-1HORI"1"Y .5.CALIFORNIASTREET 23RIJFI-OOR ` l �,U,i10 f�tl 1 E t1 SAN FRANC[SCO CALIFORNIA 941 11 L t i ( FOR ACCOUNT INFORMATION: 800-729-7665 STATEMENT DATE: 10/31/2003 CITY OF PALM DESERT ACCOUNT NUMBER: 553-00 OPERATING FUND 73-510 FRED WARING DRIVE FUND NAME: Cash Reserve Portfolio PALM DESERT,CA 92260 Page 1 of 1 A`c�co n Summa as of 1�0%$'- 003 Statement Income Dividends Capital Gains Total Shares Account Date Paid This Year Paid This Year Owned Value 10/31/2003 $445,954.86 $0.00 21,301,859.840 $21,301,859.84 T`�ertsaction mart' o 101/2 03 0 ,�f2U0 Beginning Balance Purchases Reinvestments Redemptions Ending Balance $21,285,379.29 $0.00 $16,480.55 $0.00 $21,301,859.84 `TRAD" S NU, - " . AMOII SH E S.ARES THIS TOTAL DATE AT 0 nRA SACT10 PRI ACTION SHARE O ED 10/01/03 Beginning Balance 21,285,379.290 10/31/03 11/1/2003 Accrual Income Div Reinvestment-DIV $16,480.55 $1.00 16,480.550 21,301,859.840 Message Line: THE DIVIDEND YIELD FOR THE MONTH IS 0.91% THE ANNUALIZED YIELD IS 0.92% CALIFORNIA A S S E T STATEMENT MANAGEMENT PROGRAM JOIN-r POWERS AUTHORITY SQ CAUFORNIA ST2EET 23RD FLOOR SAN FRANCISCO CALIFOANIA 94111 FOR ACCOUNT INFORMATION: 800-729-7665 STATEMENT DATE: 1 0/3112 0 0 3 PALM DESERT REDEVELOPMENT AGENCY ACCOUNT NUMBER: 553-02 GENERALFUND ATTN: PAUL GIBSON FUND NAME: Cash Reserve Portfolio 73.510 FRED WARING DRIVE PALM DESERT,CA 92260-2578 Page 1 of 1 Account Summa as o 0/31 200 Statement Income Dividends Capital Gains Total Shares Account Date Paid This Year Paid This Year Owned Value 10/31/2003 $49,295.58 $0.00 31,634,295.580 $31,634,295,58 01 do=ra or 10 1J200 1 / l20'03 Beginning Balance Purchases Reinvestments Redemptions Ending Balance $33,523,920.31 $0.00 $25,375.27 $1,915,000.00 $31,634,295.58 MOUNT SH S ARES H S TOTAL DATE DATE S O ACTION PR CE S C ON SHARES OWNED 10/01/03 Beginning Balance 33,523,920.310 10/20/03 10/20/2003 Redemption-Wire Red. $1,915,000.00- $1.00 11915,000.000- 31,608,920.310 10/31/03 11/1/2003 Accrual Income Div Reinvestment-DIV $25,375.27 $1.00 25,375.270 31,634,295.580 Message Line: THE DIVIDEND YIELD FOR THE MONTH IS 0.91% THE ANNUALIZED YIELD IS 0.92%. ® • ®� CITY OF PALM DESERT OFFICE OF THE CITY TREASURER INTEROFFICE MEMORANDUM To: Members of the Investment and Finance Committee From: Thomas Jeffrey, Deputy City Treasurer Date: November 19, 2003 Subject: Inserts for Palm Desert Treasury Policies and Procedures Manual Attached please find the revised Treasury policies and procedures that the Palm Desert City Council approved on 23 October 2003. The revised "Statement of Investment Policy" that the City Council approved on 25 September 2003 is also included. Please replace the existing policies in your Treasury manual with these inserts. You can discard the earlier dated policies. TWJ:tj N:\geHreyAWord 2000WEMORANDAWINANCE COMMITTEES &P MANUAL INSERTS.do1 UTY OF PALM DESERT TREASURY POLICIES AND PROCEDURES City Council Jean M. Benson Mayor Robert A. Spiegel Mayor Pro Tempore Richard S. Kelly Council Member James C. (Ferguson Council Member Buford A. Crites Council Member City Administration Carlos L. Ortega City Manager City of Palm Desert • • Treasury Policies and Procedures • FOREWORD The "Statement of Investment Policy" for the City of Palm Desert, the Palm Desert Redevelopment Agency, the Palm Desert Housing Authority, the Palm Desert Financing Authority, and the City of Palm Desert Golf Course Facilities Corporation (hereafter referred to collectively as the "City") directs the City Treasurer to develop and to maintain an internal control structure that is designed to minimize the risk of the theft, loss, or misuse of public monies. The "Statement of Investment Policy" also directs the City Treasurer to retain an external auditor in order to determine whether or not the City's investment program has been conducted in compliance with internal policies and procedures. This Treasury Policies and Procedures Manual ("Manual") is intended to respond to the aforementioned requirements, and to provide the framework for City Treasury operations. This Manual shall also provide documentation that the external auditor can use to review treasury staff compliance with internal controls. This Manual shall be updated by the City Treasurer on an ongoing basis, as changes are made within the City Treasury. The City Treasurer shall review this Manual annually in order to ensure that it is accurate and current. 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 City of Palm Desert Revision No. 2 Treasury Policies and Procedures Adopted: 10/23/03 POLICY NO.: 1 SUBJECT: "TREASURY POLICY DEVELOPMENT" POLICY The purpose of this document is to outline the policy and procedure on treasury policy development. IT is the policy of the: City of Palm Desert; Palm Desert Redevelopment Agency; i 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") that treasury operations shall be governed by policies and procedures that have been approved by the Palm Desert City Council ("City Council"), the Palm Desert Redevelopment Agency Board ("Redevelopment Agency Board of Directors"), and the Palm Desert Housing Authority Commission ("Housing Authority Commission"), the Palm Desert Financing Authority Commission ("Financing Authority Commission"), and the Palm Desert Recreational Facilities Corporation Board of Directors ("Golf Course Facilities Corporation Board of Directors"). Policy may be defined as a written statement of administrative principle that is developed in very broad terms. It is meant to guide employee behavior and constitutes the standard against which the propriety of such behavior is measured. Policy must be followed,• deviation from it will not be allowed. Policy should always precede procedure so that employees will understand what procedure is meant to accomplish. Procedure may be defined as a written series of steps that are the accepted way to implement policy. Procedure should be written in the active tense and should answer "who, what, when, where, and how." A procedure for wire transfers, for example, would describe how the policy would be implemented, • as opposed to stating the policy itself. 1 of 3 Palm Desert Treasury Policies and Procedures Revision No. 2 No. 1: "Treasury Policy Development' Adopted: 10123103 • 1 .0 Policy Drafting Requests Treasury policies and procedures, or any amendments thereto, may be drafted at the request of: 1 .1 A majority of City Council, Redevelopment Agency Board, Housing Authority Commission, Financing Authority Commission, or Recreational Facilities Corporation Board members at a duly convened meeting of their respective bodies; 1 .2 A majority of Finance and Investment Committee members at a duly convened Committee meeting; 1 .3 The City Attorney; 1 .4 The City Treasurer; or 1.5 The Deputy City Treasurer. 2.0 Changes in Text The text of an approved treasury policy and procedure cannot be changed unless the City Council, the Redevelopment Agency Board, the Housing Authority Commission, the Financing Authority Commission, and the Recreational Facilities Corporation Board have approved a subsequent amendment. Treasury policies and procedures shall have full force and effect as of their date of adoption. 3.0 Annual Review The City Treasurer shall review all treasury policies and procedures annually in order to ensure that they are still current and accurate. The City Treasurer shall notify the City Council when the annual review has been completed. • 2of3 Palm Desert Treasury Policies and Procedures • Revision No. 2 No. 1: "Treasury Policy Development" Adopted: 10/23/03 • PROCEDURE 1 . Drafting. The Deputy City Treasurer shall have the primary responsibility for drafting all treasury policies and procedures, and any amendments thereto. 2. City Treasurer Review. The Deputy City Treasurer shall present a draft of the proposed treasury policy and procedure to the City Treasurer for review. The Deputy City Treasurer shall revise the draft in accordance with the City Treasurer's recommendations, if any. 3. Finance Committee Review. The Deputy City Treasurer shall then present the proposed treasury policy and procedure to the Finance and Investment Committee for review and approval. The Deputy City Treasurer shall revise the draft in accordance with the Committee's recommendations, if any. The City Attorney must have reviewed the policy draft before it can proceed to the next step in the review process. 4. City Council Review. The City Treasurer shall then present the proposed treasury policy and procedure to the City Council for review and approval. The policy draft shall be deemed to be approved if a majority of the City Council votes to adopt it at a duly convened City Council meeting. Otherwise, the Deputy City Treasurer shall revise the policy draft in accordance with the City Council's recommendations, and the City Treasurer shall then resubmit it to the City Council for approval. 5. Commission and Board Review. The City Treasurer shall then present the proposed treasury policy and procedure to the Redevelopment Agency Board of Directors, the Housing Authority Commission, the Financing Authority Commission, and the Golf Course Facilities Corporation Board of Directors for review and approval. 6. Publication. The Deputy City Treasurer shall be responsible for publishing, numbering, reproducing, disseminating, and filing all approved treasury policies and procedures. All documents relating to an approved treasury policy and procedure, including revised drafts, shall be filed in chronological order in a Presstex classification folder. All policy and procedure folders shall be stored in a file cabinet in the Deputy City Treasurer's office. • 3of3 • • • CITY OF PALM DESERT STATEMENT OF INVESTMENT POLICY 2004 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 25 September 2003 Palm Desert Treasury Policies9d Procedures Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • 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 Policield Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • 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 ➢ Palm Desert Recreational 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 Policies and Procedures Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 Under all circumstances, the City Treasurer shall provide the 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 Policiestd Procedures Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • 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. • The City Treasurer and the Deputy City Treasurer shall have exclusive authority to buy and sell securities on behalf of the City. Page 3 of 26 Palm Desert Treasury Policiesd Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • 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 Assistant Finance Director 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/depository agreements. Such procedures shall include explicit delegation of authority to 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 • list shall be provided to all members of the City Council and the Investment and Finance Committee. Page 4 of 26 Palm Desert Treasury Policies and Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • 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 Investment and 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 Investment and 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 four 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 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. • 7.0.4 Current NASD Form BD Status Report. Page 5 of 26 Palm Desert Treasury Policies'�nd Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • 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, 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: (11 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 decide if any new brokers 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 to comply with it. Each broker shall also submit its annual financial • statements to the City Treasurer for review and filing. Page 6 of 26 Palm Desert Treasury Policies0d Procedures 10 Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9125I03 • 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 Palm Desert Treasury Policies and Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • % 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. • 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 general 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. • Page 8 of 26 Palm Desert Treasury Policies and Procedures Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • % 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 SO1P. 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. • Page 9 of 26 0 Palm Desert Treasury Policies and Procedures Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • % 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: 5 Years by the United States or by any state. No more than 15% of the portfolio may be invested in any one issuer. • Page 10 of 26 Palm Desert Treasury Policies*d Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 % of Portfolio No. Type of Investment Authorized Other Restrictions 9. Money Market Mutual Funds ("MMF") that 20% Either rated "AAA" by S&P, are registered with the SEC under the (excluding "Aaa" by Moody's, or "AAA-V- Investment Act of 1940. bond 1 + " by Fitch (2 of 3), or retains proceeds) an investment advisor registered or exempt from registration with SEC, with at least 5 years of experience managing 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 $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 Policies3nd Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • % 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 "Al +" by S&P or 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) Page 12 of 26 Palm Desert Treasury Policies and Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • 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 genera{ 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. Page 13 of 26 Palm Desert Treasury Policied Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • 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. Page 14 of 26 Palm Desert Treasury Policies9d Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9125/03 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 Assistant Finance Director 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. The weighted-average maturity of the City portfolio shall not exceed 540 days. 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. 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. Page 15 of 26 Palm Desert Treasury Policies"dnd Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • 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 States Treasury from the investment of the gross proceeds of tax-exempt bonds that were sold after the effective date of that law. The City Treasurer • may contract with qualified outside financial consultants to provide the necessary technical expertise that is required to comply with this law. Page 16 of 26 Palm Desert Treasury Policie•d Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • 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 Deputy City Treasurer; 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. 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: Page 17 of 26 Palm Desert Treasury Policie•d Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • 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 Investment and 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. 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. Page 18 of 26 Palm Desert Treasury Policies'It"nd Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • 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 26 Palm Desert Treasury Policies and Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • 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 . Merrill Lynch & Company, Inc. 2. Morgan Stanley & Company, Inc. 3. Citigroup Global Markets, 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 Policiesand Procedures Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25103 • 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 ("CAFRI. The official annual report for the City of Palm Desert. It includes five combined statements for each individual fund and account group, that are prepared in conformity with GAAP. It also includes supporting schedules that are necessary to demonstrate compliance with finance-related legal and contractual provisions, extensive introductory material, and a detailed statistical section. COUPON. (a) The annual rate of interest that a bond's issuer promises to pay the bondholder on the bond's face value. (b) A certificate attached to a bond, that evidences interest due on a payment date. DEALER. A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. DEBENTURE. A bond secured only by the general credit of the issuer. • Page 21 of 26 Palm Desert Treasury Policie•d Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • 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. • Page 22 of 26 Palm Desert Treasury Policied Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • 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 VFOMC"). 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. • Page 23 of 26 Palm Desert Treasury Policies9d Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 • 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. • Page 24 of 26 Palm Desert Treasury Policied Procedures • Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9/25/03 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 26 Palm Desert Treasury Policies and Procedures Revision No. 12 No. 2: "Statement of Investment Policy" Adopted: 9125I03 • 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 26 City of Palm Desert • • Revision No. 2 Treasury Policies and Procedures Adopted: 10/23103 • POLICY NO.: 3 SUBJECT: "INTERNAL CONTROLS" POLICY The purpose of this document is to outline the policy on internal controls. 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") that the City Treasurer shall establish and maintain an internal control structure that minimizes the risk of the theft, loss, or misuse of public monies. This internal control structure shall be embodied in treasury policies and procedures. The internal control structure shall be designed to provide a "reasonable assurance" that the aforementioned objectives are met. The concept of reasonable assurance recognizes that: (1 ) the cost of a control should not exceed the benefits that are likely to be derived; and (2) the valuation of costs and benefits requires management to make judgements and estimates. The internal control structure for the City Treasurer's Office shall be premised upon the following three elements: 1 .0 Segregation of Duties If two parts of a transaction are done by different employees, then embezzlement, fraud, or concealment of errors can only occur through collusion. Consequently, the following four duties shall be segregated from one another in order to create a system of dual controls: 1 of 3 City of Palm Desert • Revision No. 2 Treasury Policies and Procedures Adopted: 10/23/03 1.1 Approving the purchase and sale of securities. 1 .2 Buying and selling securities, including the execution of wire transfers. 1 .3 Having custody of cash and investments. 1 .4 Making general ledger entries, and receiving and reconciling monthly bank statements. 2.0 Procedure Controls Internal controls in the form of procedures are intended to ensure that: 2.1 The City only acquires investments that are permitted by law. 2.2 The City investment program is integrated with City cash management and expenditure requirements. • 2.3 The level and nature of approvals that are required to purchase or sell investments are specified. 2.4 The City Treasurer's Office seeks competitive quotes for investment purchases. 2.5 Access to bank accounts, wire transfers, and cash and investments are limited only to specified public employees. Outside investment advisors and broker-dealers shall not be authorized to initiate wire transfers on the City's behalf. 2.6 Public employees who are in treasury operations are insured or bonded. 2.7 Yields on investments are maximized, after safety and liquidity have been considered. 2of3 • 0 City of Palm Desert Revision No. 1 Treasury Policies and Procedures Adopted: 10/23/03 • 3.0 Custody Controls These internal controls, which relate to the possession and transfer of securities that the City has bought or sold, are intended to ensure that: 3.1 All of the City's securities purchases are done on a receipt- versus-payment ("RVP") basis. 3.2. All of the City's securities sales are done on a delivery-versus- payment ("DWI basis. 3.3 All of the securities that the City owns are registered in its name. 3.4 Two signatures (passwords) are required for log-in access to City electronic banking and investment systems. 3.5 Two signatures are required for a release from safekeeping or for access to City safe deposit boxes. • 3of3 City of Palm Desert • • Revision No. 2 Treasury Policies and Procedures Adopted: 10/23/03 • POLICY NO.: 4 SUBJECT: "TRADING" POLICY The purpose of this document is to outline the policy and procedure on securities trading. 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") that sufficient internal controls shall be integrated into securities trading on behalf of the City so that the risk of costly trade errors or of theft, loss, or misuse of public monies, shall be minimized. The City shall hold competitive offerings whenever it must invest the gross proceeds of tax-exempt bonds. This is due to the severe financial penalties that could result if the City were perceived to be involved in "yield burning". In all other cases, the City may purchase securities on a non-competitive basis. The key difference between a competitive offering and a non-competitive offering, is the role of price. In a competitive offering, acceptance of an offer must be based solely upon price. In a non-competitive offering, acceptance of an offer may be based upon both price and a desire to "spread the business". 1 .0 Authority to Trade The only City employees who shall be authorized to buy and sell securities on behalf of the City shall be: • 1 .1 The City Treasurer. 1 of 8 Palm Desert Treasury Policies and Procedures • Revision No. 2 No. 4: "Trading" Adopted: 10/23/03 • 1.2 The Deputy City Treasurer. The City Treasurer and the Deputy City Treasurer shall engage in collective decisionmaking and consultation on all trades in order to make the best possible investment decisions. Each trade shall be done in conformance with all applicable policies and procedures, and shall be defensible in its own right. 2.0 Location of Trading All securities trading on behalf of the City shall be done in the Deputy City Treasurer's office. It shall serve as a dedicated trading site since all of the information resources (e.g., banking and investment computer systems, trade files, public finance manuals) that are needed to support trading operations are located there. Trading shall not be done from off-site locations unless a disaster or circumstance has rendered the Deputy City Treasurer's office unusable • or a trading advantage can be gained, in which case the City Treasurer must expressly authorize trading from an off-site location in advance. 3.0 Development of Trading Strategies The City Treasurer and the Deputy City Treasurer shall consider the following five factors while developing the City's trading strategies: 3.1 The Daily Cash Sheet that provides cash balance information. 3.2 The "Statement of Investment Policy" that identifies approved transactions, instruments, issuers, maturity limits, and concentration limits. 3.3 The Five-Year Cash Expenditure Forecast. 3.4 The present City portfolio structure. 3.5 The interest rate outlook. These factors should be evaluated within the overall context of passive • portfolio management, although selective active management may occasionally be required. 2of8 �t� �� • • Palm Desert Treasury Policies and Procedures Revision No. 2 No. 4: "Trading" Adopted: 10/23/03 • 4.0 Segregation of Duties The cornerstone of the internal control structure for trading shall be a separation of the transaction and the recordkeeping functions. The duties of executing trades; approving trades; and confirming and recording trades, shall not be concentrated in a single employee. A system of checks and balances shall be established by separating the functions of treasury from those of accounting. To that end, the following five public employees shall have separate and distinct duties with respect to securities trading: 4.1 Investment Manager. The Deputy City Treasurer shall be responsible for: 4.1 .1 Soliciting, negotiating, executing, and documenting trades. 4.1 .2 Receiving Trade Tickets. • 4.1 .3 Verifying Trade Terms. 4.1 .4 Interfacing with the City custodian and with the City trustee on trades. 4.1.5 Entering trades into the SymPro investment portfolio program. 4.1 .6 Storing trade documentation. 4.2 City Treasurer. The City Treasurer shall be responsible for: 4.2.1 Reviewing and approving trades. 4.3 Senior Financial Analyst. The Senior Financial Analyst shall be responsible for: 4.3.1 Entering trades into the accounting system. 4.4 Accounting Technician. The Accounting Technician shall be • responsible for: 3of8 ��� �'� �1 Palm Desert Treasury Policies and Procedures • Revision No. 2 No. 4: "Trading" Adopted: 10/23/03 • 4.4.1 Receiving, filing, and verifying custodial safekeeping statements. 4.4.2 Reconciling monthly bank, trustee, and custodial statements with cash-based SymPro investment portfolio reports. If one of the above employees is not available, then Finance Department management may substitute another employee so long as it does not violate policy restrictions on trading authority. 5.0 Trade Documentation All executed trades shall be supported by the following four documents: 5.1 Bloomberg Trade Ticket. The Bloomberg Trade Ticket is a confirmation of trade execution and trade terms. The broker that is buying or selling a security generates the related Trade Ticket • from Bloomberg Services. The City's custodian or trustee cannot settle a security transaction on behalf of the City until it has received a related Bloomberg Trade Ticket which has been signed by either the City Treasurer or the Assistant Finance Director. 5.2 Bloomberg Security Description. The Bloomberg Security Description is generated from Bloomberg Services, and describes the features and history of a security. This is necessary for data input in the SymPro investment portfolio program. 5.3 Broker Trade Confirmation. The Broker Trade Confirmation is a formal statement from the broker confirming both the trade and the terms of the trade. The City requires this statement for internal control purposes. 6.0 Trade and Settlement Dates "Trade date" is the date of trade execution. "Settlement date" is the date of a receipt-versus-payment ("RVP") or delivery-versus-payment ("DVP") transaction (the simultaneous • exchange of money for securities through an electronic funds transfer system). 4of8 �� f1� �� Palm Desert Treasury Policies and Procedures Revision No. 2 No. 4: "Trading" Adopted: 10123/03 • Settlement date is usually represented in one of five ways: 6.1 "Cash" (trade day) 6.2 'Regular" (trade day + one business day) 6.3 "Skip" (trade day + two business days) 6.4 "T + 3- (trading day + three business days). 6.5 "Delayed (beyond T + 3) "T + 3" is used primarily for corporate securities (commercial paper and medium-term notes) since they are electronically transferred through the DTC. United States Treasury and Government Agency securities are electronically transferred through the Federal Reserve Communications • System ("Fedwire"). Corporate securities are electronically transferred through the Depository Trust Company System ("DTC"). 7.0 Trading Losses It is the policy of the City to avoid realizing trading losses on securities transactions. Should it become necessary to realize a trading loss, then the City Treasurer must specifically approve the loss, in writing, prior to trade execution. If the City Treasurer is not available, then the Assistant Finance Director shall perform that task. PROCEDURE 1 . Solicitation of Offers. The procedure for competitive and non-competitive offerings shall be the same. The Deputy City Treasurer shall send a solicitation that includes a preformatted Offering Sheet, to the City's eligible brokers in advance of the trade date. The brokers shall use this • Offering Sheet to submit their bids to the Deputy City Treasurer by a certain time on the trade date. 5of8 N 11� �11 0 • Palm Desert Treasury Policies and Procedures Revision No. 2 No. 4: "Trading" Adopted: 10/23/03 a. Avoidance of Collusion. In a competitive offering, the brokers shall also complete and return to the Deputy City Treasurer a certification that collusion has not occurred, in order for the broker to be eligible to bid. Regardless of whether the offering is competitive or non-competitive, the Deputy City Treasurer shall not disclose to any eligible broker: (1) the identity of other eligible brokers or brokerage firms that are involved in the offering, or (2) any of the other offers. The Deputy City Treasurer shall address all solicitations to a single individual at a brokerage firm; not to all of the brokers involved in the offering. 2. Verification of Available Cash. In the case of securities purchases, the Investment Manager shall ensure that sufficient public monies are in the City's bank account to pay for the securities. If there will be a significant time lag between trade and settlement dates, then the Deputy City Treasurer shall ensure that the public monies which are intended for payment, are invested in the highest-yielding instrument that is authorized under Treasury Policy No. 2, "Statement of Investment Policy". . 3. Submission of Offers. After the Deputy City Treasurer has received the brokers's Offering Sheets on the trade date, the Deputy City Treasurer shall compare them, based on price, yield-to-maturity, lot size, and portfolio objectives. If information on an Offering Sheet is unclear, then the Deputy City Treasurer shall contact the submitting broker, and request clarification. a. Details of Offer. All offer prices should be in decimals in order to facilitate comparison. In the case of a competitive offering, the broker's commission for each security offering must disclosed on the Offering Sheet, in dollars, in order to assure compliance with IRS guidelines on yield-burning. if a broker fails to disclose a commission, then that broker shall be automatically disqualified from the offering. 4. Review of Offers. The Deputy City Treasurer shall review the offers, and shall evaluate their reasonableness against the market prices reported by Bloomberg Services. The Deputy City Treasurer shall then show all of the offers to the City Treasurer, and shall recommend the best ones for acceptance. The City Treasurer shall review and approve the offers that are in the best interests of the City. 5. Acceptance of Offers. After the City Treasurer has approved the offer(s), • the Deputy City Treasurer shall promptly contact the successful broker(s) by telephone to reconfirm the trade terms, in case market prices have 6of8 Palm Desert Treasury Policiesand Procedures • Revision No. 2 No. 4: "Trading" Adopted: 10/23/03 • significantly increased since the time of the initial offer. In order to minimize such risk, the Deputy City Treasurer should strive to accept all offers within one hour of submission. 6. Renegotiation of Offers. If market prices have significantly increased between the time of initial offer and trade execution, then the Deputy City Treasurer shall attempt to renegotiate a compromise price with the affected broker. If a compromise cannot be agreed upon, then the Deputy City Treasurer, in the case of a competitive offering, must reject the offer, and accept the next lowest cost offer from another broker. In the case of a non-competitive offering, the Deputy City Treasurer may either (a) reject the offer, and accept the next lowest offer from another broker (even if this means denying the first broker any business); or (b) accept the higher price. 7. Completion of Trade. The successful broker(s) shall forward each Bloomberg Trade Ticket to the Deputy City Treasurer in order to verify the security transaction(s). The Deputy City Treasurer shall compare the terms • on each Trade Ticket with those on the corresponding Offering Sheet in order to ensure uniformity. If there is a discrepancy, then the Deputy City Treasurer shall resolve the difference with the affected broker. Once all differences have been resolved, the Deputy City Treasurer shall present the Bloomberg Trade Ticket(s) to the City Treasurer for an approval signature. If the City Treasurer is unavailable, then the Assistant Finance Director shall perform that task. 8. Custodial Interface. The Deputy City Treasurer shall then fax to the City's custodian or trustee, a signed Bloomberg Trade Ticket with delivery instructions for each security purchased. The Deputy City Treasurer shall telephone the City trustee or custodian to confirm receipt of these documents, as well as payment terms. 9. Treasury Accounting. The Deputy City Treasurer shall then create a new investment file in SymPro, and shall enter the data from the Trade Sheet. On the next business day after settlement, the Deputy City Treasurer shall print the TEAM Balance Report that shows the cash being wired out for settlement. The Deputy City Treasurer shall give the Senior Financial Analyst: (a) a printout of the SymPro file on the new security; and (b) a copy of the related Balance Report. The Senior Financial Analyst shall • enter this data into the City accounting system. 7of8 /1 �1� �'� • 0 Palm Desert Treasury Policies and Procedures Revision No. 2 No. 4: "Trading" Adopted: 10/23/03 • 10. Retention of Trade Documents. The Deputy City Treasurer shall retain and file the following trade documents: a. Solicitation (competitive offering only). b. All Offering Sheets (competitive offering only). c. Certificate of Absence of Collusion (competitive offering only). d. Certificate of Third-Party Administrative Costs (competitive offering only). e. Certificate of Competitive Offering (competitive offering only). f. Most efficient portfolio of SLGSs (competitive offering only). g. Broker Trade Confirmation. h. Bloomberg Trade Ticket. i. Bloomberg Security Description. All trade documents that are connected with to a competitive offering, shall be retained for at least three years after the last outstanding bond is redeemed, pursuant to Internal Revenue Service regulations. • 11. Monthly Reconciliation. The Accounting Technician shall reconcile monthly bank, custodial, and trustee statements with cash-based SymPro investment portfolio reports, at month-end. • 8of8 1� �,� �1� City of Palm Desert 0 • Revision No. 2 Treasury Policies and Procedures Adopted: 10/23/03 • POLICY NO.: 5 SUBJECT: "COMPETITIVE OFFERINGS" POLICY The purpose of this document is to outline the policy and procedure on competitive offerings. 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") that the gross proceeds of tax- exempt bonds shall be invested in fixed-income securities which are obtained through competitive offerings. Such an approach is needed in order to ensure that the City buys securities that are priced at market, thereby avoiding any appearance of "yield burning". 1 .0 Yield Burning Yield burning occurs when the price of securities that are purchased for yield-restricted defeasance escrows is artificially inflated in order to lower the investment yield below the bond yield, thereby avoiding impermissible arbitrage. If this happens, then the Internal Revenue Service ("IRS") may: (1 ) compel the municipal issuer to reimburse the United States Treasury for excessive underwriter profits; or (2) eliminate the municipal issuer's tax exemption for the defeasance bonds. 2.0 Safe Harbor Under current IRS regulations, municipal issuers are guaranteed a "safe harbor" from allegations of yield burning if certain requirements are met. • The IRS will assume that the purchase price of securities for yield- 1 of 6 I'� �1� Palm Desert Treasury Policies and Procedures • Revision No. 2 No. 5: "Competitive Offerings" Adopted: 10/23/03 • restricted defeasance escrows approximates their fair market value on the purchase date if: 2.1 Reasonably Competitive Providers. The municipal issuer solicits, in good faith and in writing, offers from at least three reasonably competitive providers" that have no material financial interest in the bond issuance, and receives at least one offer from such a provider. IRS regulations define a reasonably competitive provider as a provider that has an established industry reputation as a competitive provider of the type of investment that is being purchased. 2.2 No Material Finance Interest. Bond underwriters, financial advisors, and their related providers are excluded from the competitive offering since they are deemed to have a material financial interest in the bond issuance. 2.3 Certification of Absence of Collusion. Each provider that submits • an offer includes an executed certification stating that by submitting the offer, the provider is representing that: (1 ) it did not consult with any other providers about their offer; and (2) the offer is not being submitted solely as a courtesy to the issuer or to any third party in order to satisfy the IRS requirement of at least one offer from a reasonably competitive provider. 2.4 Commercially Reasonable Terms. The terms of the competitive offering solicitation are "commercially reasonable". A term should be included in the competitive offering for a legitimate business purpose, other than to lower the yield or increase the cost of the offer. 2.5 No Last Look. No provider is permitted to review other offers before making an offer, in order to ensure that all providers have an equal opportunity to bid. 2.6 Comparison to SLGSs. If the investment is a guaranteed investment contract, then the municipal issuer must accept the offer with the highest yield (excluding broker's fees). For all other investments, the issuer must accept the lowest cost offer • (including broker's fees). The lowest cost offer should not exceed the cost of the most efficient portfolio of State and Local 2of6 �� u� 0 Palm Desert Treasury Policiesand Procedures • Revision No. 2 No. 5: "Competitive Offerings" Adopted: 10/23/03 • Government Series ("SLGS") securities with the same maturity that are available on the day that the offers are submitted: provided, however, that such SLGSs are available for purchase on that day. 2.7 Certification of Third-Party Administrative Costs. The fee that a municipal issuer pays to a provider (broker) is a qualified administrative cost only if the fee is comparable to one that would be charged for a reasonably comparable investment that is acquired with money other than tax-exempt bond proceeds, and the fee is reasonable. A broker's fee will meet the reasonableness and comparability tests if it does not exceed the lesser of $10,000 or 0.1 percent of the initial principal amount of investments that are purchased for the defeasible escrow. In order to comply with this requirement, all providers shall be required to execute a certification that the fee is a qualified administrative cost. if they fail to provide this information, then they shall be automatically disqualified from the competitive offering. 2.8 Retention of Records. The municipal issuer retains, until three years after the last outstanding bond is redeemed: (1 ) all bond documents; (2) purchase confirmations; (3) records of the amount actually paid by the issuer; (4) date- and time-stamped offers that were received; (5) competitive offering documents; and (6) working papers on the cost of the most efficient portfolio of SLGSs (if a guaranteed investment contract is not involved). 2.9 Certification of Competitive Offering. The municipal issuer certifies that: (1 ) offers were solicited from at least three uninterested, reasonably competitive providers; (2) all offerors had an equal opportunity to bid; (3) an offer was received from at least one reasonably competitive provider; and (4) if an agent conducted the offering, then that agent did not offer to provide the investments. 3.0 Exceptions . There is a major exception to restricted yields in defeasible escrows. A municipal issuer is permitted a three-year temporary period during which 3of6 0 • Palm Desert Treasury Policies and Procedures Revision No. 2 No. 5: "Competitive Offerings" Adopted: 10/23/03 • it may invest bond proceeds at a yield higher than the bond yield: provided, however, that on the issue date, the issuer had a reasonable expectation that 85 percent of the bond's "net sale proceeds" would be spent within three years. Bond proceeds that are deposited into a special escrow fund could be so invested. There are numerous other exceptions that are set forth in the Internal Revenue Code arbitrage regulations that are not discussed in this policy. PROCEDURE 1 . Competitive Offering. The Deputy City Treasurer shall solicit competitive offerings from at least three of the City's authorized brokers, in advance of the trade date. This solicitation shall consist of the following: a. A cover memorandum individually addressed to each broker, explaining • the details of the offering, and the delivery instructions. b. A Broker Registration Form. c. A Certificate of the Absence of Collusion. d. A Certificate of Third-Party Administrative Costs. e. A preformatted Offering Sheet with which each broker can prepare and submit an offer. Under no circumstances shell the cover memorandum include the names of the other brokers or brokerage firms that will be involved in the competitive offering. Likewise, under no circumstances shall the Deputy City Treasurer disclose to a broker the details of offers that the City has received from other competing brokers. 2. Calculation of Lowest Cost Portfolio. On the trade date, the Investment Manager shall determine the lowest cost of the most efficient portfolio of SLGSs with the same maturity, if such securities are available. The cost of the winning offers should not exceed the cost of this portfolio. 3. Deadline for Offers. Each broker shall submit an offer by a specified time on the trade date. In order to qualify for consideration, the offer must consist of: • 4of6 Palm Desert Treasury Policies d Procedures Revision No. 2 No. 5: "Competitive Offerings" Adopted: 10/23/03 a. A completed Broker Registration Form. b. An executed Certificate of the Absence of Collusion. c. An executed Certificate of Third-Party Administrative Costs. d. A completed Offering Sheet. Any broker that fails to include these three documents in an offer, shall be automatically disqualified from the competitive offering. 4. Evaluation of Offers. The Deputy City Treasurer shall review all offers and shall recommend the most favorable ones, based strictly upon the lowest cost, to the City Treasurer for review and approval. If the City Treasurer is unavailable, then the Assistant Finance Director shall perform that task. 5. Acceptance of Offers. After receiving the City Treasurer's approval, the Deputy City Treasurer shall immediately notify the successful offeror(s), by telephone, that the City has accepted its offer. At that time, trade terms should be reconfirmed, in the event that market prices have increased since the time of the initial offer. In order to manage such risk, the Deputy City Treasurer should strive to accept all offers within one hour of submission. 6. Renegotiation of Offers. If there has been a significant increase in market prices during the interim, then the Deputy City Treasurer shall renegotiate with the successful offeror for the lowest possible cost for the City. If, however, the cost of the investment has risen above other offers, then the Deputy City Treasurer shall accept the next lowest offer from another offeror instead. 7. Remaining Closing Procedures. The Deputy City Treasurer shall follow the remaining procedural closing steps (e.g., faxing a signed Bloomberg Ticket to the City's custodian or trustee) that are detailed in Treasury Policy No. 4, "Trading". 8. Retention of Records. The Deputy City Treasurer shall retain and file, together with all of the bond documents: a. A copy of the guaranteed investment contract (if applicable). b. The purchase confirmations (e.g., Bloomberg Trade Ticket, broker trade confirmation). c. A record of the amount actually paid by the City, including a record of • any administrative costs paid by the City, and the certification of the provider as to administrative costs; 5of6 ® • / Palm Desert Treasury Policies and Procedures Revision No. 2 No. 5: "Competitive Offerings" Adopted: 10/23/03 • d. Each offer that is submitted, in terms of the name of the submitting broker; the time and date of the bid; and the bid results. e. The competitive offering solicitation. f. The cost of the most efficient portfolio of SLGSs, if used to benchmark competitive offers. 9. Certificate of Competitive Offering. The City Treasurer shall certify, in writing, on the City's behalf, that: a. Offers were solicited from at least three uninterested, reasonably competitive providers. b. All offerors had equal opportunity to bid. c. An offer was received from at least one reasonably competitive provider. d. If an agent conducted the offering, then that agent did not make an offer to provide the investments, The Deputy City Treasurer shall file this certification with the other bond documents. • 6of6 City of Palm Desert 0 •Revision No. 2 Treasury Policies and Procedures Adopted: 10/23/03 • POLICY NO.: 6 SUBJECT: "CUSTODY AND SAFEKEEPING' POLICY The purpose of this document is to outline the policy and procedure on the custody and safekeeping of securities. 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") that the City shall retain third- party bank trust companies as clearinghouses for the payment, delivery, receipt, and safekeeping of securities that the City buys or sells. 1 .0 Selection of Custodian and of Trustee A third-party bank trust company shall serve as the City's custodian ("Custodian") for the purpose of settling all of the City's securities transactions that do not involve the investment of the gross proceeds of tax-exempt bonds. A third-party bank trust company shall serve as the City's trustee ("Trustee") for the purpose of settling all of the City's securities transactions that involve the investment of the gross proceeds of tax- exempt bonds. The City shall select both the Custodian and the Trustee through a Request for Proposals ("RFP") process. The City shall initiate an RFP process every five years, unless there is an immediate need to fill a vacancy or to replace a trust company. 1 of 7 Palm Desert Treasury Policies d Procedures Revision No. 2 No. 6: "Custody and Safekeeping" Adopted: 10/23/03 • The City shall subsequently execute separate custody agreements with the selected Custodian and the selected Trustee in order to confirm all legal rights and obligations. The City shall only use safekeeping or custodial agents that are located within the State of California. 2.0 Qualifications of Custodian and of Trustee The Custodian and the Trustee shall, at a minimum, possess the following qualifications: 2.1 Safekeeping. The ability to clear and safekeep all securities that are authorized by California Government Code Section 53601 . 2.2 Fiduciary Duty. The ability to hold all of the City's investments on a fiduciary basis and to segregate them from the trust company's other assets. 2.3 Bank Charter. Membership in the Federal Reserve System and . status as a State of California- or federally-chartered commercial bank, with its accounts insured by the Federal Deposit Insurance Corporation. 3.0 Methods of Delivering Securities All of the City's securities transactions shall be done either on a receipt- versus-payment ("DVP") basis. Both the Custodian and the Trustee shall disburse City monies or deliver City-owned securities to an approved broker only after that broker has delivered to the Custodian or to the Trustee either the securities to be sold or the money to purchase the securities. Both the Custodian and the Trustee shall only process a security transaction after they have received a Bloomberg Trade Ticket from the City which either the City Treasurer or the Assistant Finance Director has signed. The only exceptions to RVP or DVP shall be the purchase or sale of securities that are connected with: (1) local government investment pools; (2) money market mutual funds; or (3) Federal Reserve Banks ("Treasury Direct Program"), since those securities are not deliverable. 2of7 9 0 Palm Desert Treasury Policies and Procedures Revision No. 2 No. 6: "Custody and Safekeeping" Adopted: 10/23/03 When the City enters into a new custodial relationship, then the securities that the City already owns shall be delivered into safekeeping on a free-delivery basis. The countersignature of either the City Treasurer or the Assistant Finance Director shall be required for the free delivery of securities. Separate custodial accounts shall be maintained for the City of Palm Desert and for the Palm Desert Redevelopment Authority. 4.0 Credit Risk AO of the securities that the City owns shall be registered in the City's name. The ownership of the securities is thus safeguarded by limiting their negotiability. Governmental Accounting Standards Board Statement No. 3, Paragraph 68 requires that all investments, excluding local government investment pools and mutual funds, be classified into one of three categories of credit risk, and disclosed on a governmental entity's balance sheet. The • three categories are as follows: 4.1 `Category 1". This applies to investments that are: (1 ) insured by the Securities Investors Protection Corporation ("SIPC"); (2) physically held by the City or by the City's agent in the City's name; or (3) acquired through the Federal Reserve book-entry system where the broker is separate from the custodian, and the investments are recorded on the broker's book in the City's name. These transactions have the lowest degree of credit risk, they are preferred by the City. 4.2 "Category 27 This applies to uninsured investments that are acquired through a financial institution's trading department and held for safekeeping by the trust department of the same financial institution, and the investments are recorded on the trust department's books in the City's name. These transactions have a higher degree of credit risk. 4.3 "Category 3". This applies to uninsured investments that are: (11 acquired through a financial institution's trading department and held for safekeeping by the custodial department of the same . financial institution; (2) acquired through a financial institution's trust department and held for safekeeping by the same trust 3of7 Palm Desert Treasury Policies and Procedures •Revision No. 2 No. 6: "Custody and Safekeeping" Adopted: 10/23/03 • department; (3) acquired through and held for safekeeping by the same broker; or (4) not recorded on the financial institution's or on the broker's books in the City's name. These transactions have the highest degree of credit risk. 5.0 Authorized Access The following City employees shall be authorized to interface with both the Custodian and the Trustee: 5.1 The City Treasurer. 5.2 The Deputy City Treasurer. 5.3 The Assistant Finance Director. When an authorized employee is no longer employed by the City, then the City shall immediately notify both the Custodian and the Trustee, by telephone, of the expected date and time of the separation, and of the subsequent revocation of the employee's authority to interface with both the Custodian and the Trustee on the City's behalf. The City shall also confirm this, in writing, with both the Custodian and the Trustee within two business days. The written confirmation should be sent to both the Custodian and the Trustee by return receipt, certified mail. No broker or investment advisor shall have access to City monies, accounts, or investments. Any transfer of monies to or through an outside broker must have the City Treasurer's prior written approval. If the City Treasurer is not available, then the Assistant Finance Director shall perform that task. 6.0 Liability of City Treasurer The City Treasurer shall not be liable for securities that are delivered to and received by the Custodian and/or the Trustee, until the City Treasurer has withdrawn them from the Custodian and/or the Trustee pursuant to California Government Code Section 53608. • 4 of 7 0 • Palm Desert Treasury Policies and Procedures Revision No. 2 No. 6: "Custody and Safekeeping" Adopted: 10/23/03 • 7.0 Monthly Audit The City Treasurer shall receive monthly account statements from both the Custodian and the Trustee that list all of the securities that the Custodian and the Trustee are safekeeping for the City. An Accounting Technician shall complete, prior to each month-end, an audit of the prior month's inventory to ensure that both the Custodian and the Trustee can properly account for all of the City's securities that they should be holding. The Accounting Technician shall retain the monthly account statements in her files. 8.0 Annual Confirmation of Instructions The City Treasurer shall send to both the Custodian and the Trustee annually, by 30 June, the following documents: (1 ) the current City "Statement of Investment Policy"; (2) delivery instructions for security purchases; and (3) a list of public employees who are authorized to initiate investment transactions. The cover letter shall specify that only the City Treasurer shall be authorized to modify the delivery • instructions, in writing. 9.0 Annual Review The City Treasurer shall review all custodial and electronic funds transfer agreements, as needed, in order to ensure that all controls, security provisions, and the responsibilities are being properly followed, and are in compliance with current law. 10.0 Segregation of Broker and Custodial Functions The City shall seek to segregate the provision of brokerage services from the provision of custodial services. If the City, however, uses the same bank or brokerage firm to provide both brokerage and custodial services, then that bank or brokerage firm shall be required to carry liability insurance with the City named as a loss payee, up to the dollar amount of the securities that are held in safekeeping plus an allowance for legal costs in the event of a loss. 5of7 Palm Desert Treasury Policiesand Procedures • Revision No. 2 No. 6: "Custody and Safekeeping" Adopted: 10/23/03 • PROCEDURE 1. Receipt-Versus-Payment ("RVP"). The following steps shall be taken when the City buys a security: a. The broker shall have a current set of delivery instructions for the City on file, in advance. b. After closing the trade, the Deputy City Treasurer shall fax a copy of the associated Bloomberg Trade Ticket that has been signed by either the City Treasurer or the Assistant Finance Director, to the Custodian or the Trustee, with City delivery instructions affixed to the Ticket. c. The Deputy City Treasurer shall then telephone the Custodian or the Trustee to confirm receipt of the facsimile transmission and settlement terms. d. The Custodian or the Trustee shall then debit the City's cash account in order to deliver cash to the broker in exchange for the underlying • security that the broker simultaneously delivered by electronic funds transfer, to the Custodian or the Trustee. e. An Accounting Technician shall then review the next monthly account statement that the City receives from the Custodian or the Trustee for confirmation of the transaction, and shall retain and file that statement. 2. Delivery-Versus-Payment ("DVP"). The following steps shall be taken when the City sells a security: a. The broker shall have a current set of delivery instructions for the City on file, in advance. b. After closing a trade, the Deputy City Treasurer shall fax a copy of the associated Bloomberg Trade Ticket that has been signed by either the City Treasurer or the Assistant Finance Director, to the Custodian or the Trustee, with City payment instructions affixed to the Ticket. • 6of7 Palm Desert Treasury Policie®d Procedures • Revision No. 1 No. 6: "Custody and Safekeeping" Adopted 12/13/01 • c. The Deputy City Treasurer shall then telephone the Custodian or the Trustee to confirm receipt of the facsimile transmission and payment terms. d. The Custodian or the Trustee shall then debit the City's securities account in order to deliver the underlying security to the broker in exchange for cash that the broker simultaneously delivers by electronic funds transfer, to the Custodian or to the Trustee. e. An Accounting Technician shall then review the next monthly account statement that the City receives from the Custodian or the Trustee for confirmation of the transaction, and shall retain and file that statement. • 7of7 0 City of Palm Desert Revision No. 2 Treasury Policies and Procedures Adopted: 10/23/03 • POLICY NO.: 7 SUBJECT: "DISMISSAL OF BROKERS" POLICY The purpose of this document is to outline the policy and procedure on the dismissal of approved brokers. 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") that approved brokers are expected to maintain a certain level of financial stability, industry knowledge, and professionalism in their dealings with the City. The City may discontinue its relationship with a broker if it fails to maintain its qualifications to do business with the City or if it fails to execute securities transactions in an acceptable manner. 1.0 Reasons for Dismissal The City Treasurer may dismiss a broker for any one of a variety of reasons including, but not limited to, the following: 1 .1 Trade Fails. An excessive number of trade fails (a failure to deliver securities on time). 1.2 Trade Errors. An excessive number of trade errors. 1 .3 Account Officer Turnover. An excessive number of account officer changes. 9 1 of 3 Palm Desert Treasury Policies and Procedures Revision No. 2 No. 7: "Dismissal of Brokers" Adopted: 10/23/03 • 1 .4 Failure to Notify. A failure to notify the City Treasurer's Office in a timely manner of significant events that affect the broker-client relationship (e.g., adverse change in financial condition, change of account officers, regulatory infractions, relevant litigation). 1 .5 Inflated Pricing. An excessive number of offers that are substantially above market prices. 1.6 Adverse Change. An adverse change in the broker's financial condition. 1 .7 Failure to Comply. A repeated failure to comply with solicitation instructions. 1 .8 Legal Action. Pending legal action by the City against the broker. 1 .9 Gift Ban Violation. A violation of the gift ban in the City's "Statement of Investment Policy". • 1 .10 Inappropriate Investments. A consistent inability to offer appropriate investments to the City. 1 .11 Failure to Participate. A repeated failure to participate in competitive offerings. 1 .12 Failure to Submit Documents. A failure to submit required documents for annual requalification. 1 .13 Collusion on Pricing. Collusion on pricing with other brokers during competitive offerings. 1 .14 Yield Burning. The inflation of bond prices in order to lower yields ("yield burning"). PROCEDURE 1 . Disciplinary Documentation. The Deputy City Treasurer shall be • responsible for maintaining written documentation on an approved broker's 2of3 ® • Palm Desert Treasury Policies and Procedures Revision No. 2 No. 7: "Dismissal of Brokers" Adopted: 10/23/03 failure to perform at an acceptable level; comply with City policy; or maintain its qualifications. 2. Letter of Dismissal. If there are sufficient grounds to dismiss the broker, then the Deputy City Treasurer shall recommend such action to the City Treasurer. If the City Treasurer concurs, then the Deputy City Treasurer shall prepare a letter for the City Treasurer's signature that notifies the broker of the dismissal, and of the reason(s) for the dismissal. This letter shall be promptly sent to the broker. 3. Finance Committee Notification. The City Treasurer shall then notify the Finance and Investment Committee, at its next regularly scheduled meeting, of the dismissal and provide a copy of the dismissal letter to each committee member. 4. Request for Information. If the City Treasurer deems it necessary to fill a broker vacancy, then the City Treasurer may send a Request for Information ("RFI") to each broker that would like to replace the dismissed . broker and provide financial services to the City. The Finance and Investment Committee and the City Council shall review the completed RFIs and select a replacement broker. 5. Updating City Approved List. The Eligible List that is attached to the City "Statement of Investment Policy" shall be amended annually, if needed, in order to update the broker list. • 3of3 6 City of Palm Desert Revision No. 2 Treasury Policies and Procedures Adopted: 10/23/03 • POLICY NO.: 8 SUBJECT: "REQUESTS FOR PROPOSALS" POLICY The purpose of this document is to outline the policy and procedure on Requests for Proposals ("RFP"). 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") that the City Treasurer shall periodically issue RFPs for banking, custodial, and trustee services to any firms that wish to provide financial services to the City. The City shall issue such RFPs every five years unless there is an immediate need to fill a vacancy or to replace an existing financial services provider. The RFP process should normally begin in January. The Deputy City Treasurer shall be responsible for the development of these RFPs. Firms that wish to bid for the City's banking, custodial, and trustee business, may bid for that business in its entirety, or as separate product lines. PROCEDURE 1 . Proposal Process. The Deputy City Treasurer shall maintain an active file on all prospects that wish to bid for the City's banking, trustee, and/or custodial service contracts. In January of every fifth year, the Deputy City Treasurer shall begin the RFP process. It should consist of the following steps: 1 of 2 0 0 Palm Desert Treasury Policies and Procedures Revision No. 2 No. 8: "Requests for Proposals" Adopted: 10/23/03 a. Distribution of RFP b. Pre-Proposal Conference c. Proposal Submission d. Proposal Review e. Interview with Top Bidders f. Proposals Accepted by City Council g. Notification to Bidders h. Implementation 2. Technical Evaluation. The Deputy City Treasurer shall be responsible for doing a comparative technical evaluation of all RFPs that the City receives. 3. Finance Committee Review. The Deputy City Treasurer shall present the results of the technical evaluation, along with recommendations, to the Finance and Investment Committee for review and approval. 4. City Council Review. The City Treasurer shall present the Finance and Investment Committee's recommendations to the City Council for review and approval. 5. Updating City Approved List. If the City Council approves the retention of a new banker, custodian, or trustee, then the Eligible List in the City's "Statement of Investment Policy" shall be amended annually in order to reflect any such changes. • 2of2 City of Palm Desert Revision No. 2 Treasury Policies and Procedures Adopted: 10/23/03 • POLICY NO.: 9 SUBJECT: "BANK ACCOUNTS" POLICY The purpose of this document is to outline the policy and procedure on bank accounts. 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 establish bank accounts for the deposit and disbursement of public monies, and to maintain a complete set of bank contracts, including signature cards, for purposes of control, accountability, limitation, and authorization. The City shall establish as few bank accounts as possible in order to minimize banking costs. All monthly bank statements shall be mailed directly to and processed by the City accounting function. Two signatures shall be required for each bank account. 1 .0 Authorized Signers Only the City Treasurer or, in the City Treasurer's absence, the Assistant Finance Director, shall be authorized to sign as the "Signer of Contract" on bank documents. Certain City Council members, public employees, and employees of private management companies that contract with the City, shall be authorized as signers on various City bank accounts. The current account signers are as follows: • 1 of 4 ® • Palm Desert Treasury Policies and Procedures Revision No. 2 No. 9: 'Bank Accounts" Adopted: 10/23/03 1 .1 City Council 1 .1 .1 The Mayor. 1 .1 .2 The Mayor Pro-Tempore. 1 .2 City Employees 1 .2.1 The City Treasurer. 1.2.2 The Assistant Finance Director. 1 .3 Kemper Sports Management, Inc. 1 .3.1 J. Rodney Young. 1 .3.2 Brian Miller. . 1 .3.3 Michael Osgood. 1 .4 RPM Company 1 .4.1 David W. Fisher. 1.4.2 Barton R. Robertson. 1.4.3 Donnie Garibaldi. 1 .4.4 Robert Pfeil. 2.0 Annual Review The City Treasurer shall review all bank contracts and signature cards, as needed. • 2of4 Palm Desert Treasury Policies and Procedures *Revision No. 2 No. 9: "Bank Accounts" Adopted: 10/23/03 • PROCEDURE 1 . Opening A Bank Account. The City Treasurer shall determine whether or not a new City bank account is required, and who shall be authorized as an account signer. If a new City account is to be opened, then: a. The Deputy City Treasurer shall request signature cards from the bank; prepare them; and send them to the authorized signers for completion. b. After the authorized signers have completed the signature cards, they shall return them to the City Treasurer for the "Signer of Contract" authorization. c. The Deputy City Treasurer shall then return the original signature cards to the bank, along with the account contract(s). d. The Deputy City Treasurer shall retain and file a photocopy of each . account contract and each signature card. 2. Adding Or Deleting A Signer. When an authorized signer is hired, terminated, or transferred, then the Deputy City Treasurer or, in the Deputy City Treasurer's absence, the City Treasurer, shall immediately review all bank signature cards, account contracts, and Funds Transfer Agreements to determine if they require modification. If a modification is necessary, then the Deputy City Treasurer or, in the Deputy City Treasurer's absence, the City Treasurer, shall do the following: a. Prepare a letter instructing the bank to add or delete a signer. This letter shall be signed by the City Treasurer and countersigned by the affected signer, whenever possible. (1) In the case of a terminating employee, the letter shall be sent to the bank by facsimile machine on the same date that notice is received of the employee's forthcoming termination. The original letter shall also be sent to the bank in the mail. (2) In the case of a new employee, the Deputy City Treasurer shall request a new bank signature card or an addendum card from the bank; obtain the necessary signatures; and return the card to the • bank. 3of4 Palm Desert Treasury Policies Procedures •Revision No. 2 No. 9: "Bank Accounts' Adopted: 10/23/03 • b. In all cases, the Deputy City Treasurer shall retain and file a photocopy of the bank documentation. 3. Closing A Bank Account. Only the City Treasurer or, in the City's Treasurer's absence, the Assistant Finance Director, shall be authorized to close a City bank account. a. The Deputy City Treasurer shall draft a letter to the bank for signature by the City Treasurer or, in the City's Treasurer's absence, by the Assistant Finance Director, approving the closure of the account on an effective date. b. The Deputy City Treasurer shall send the original, signed letter to the bank, and retain and file a photocopy of the letter. c. The City accounting function shall confirm the closing of the bank account, and the termination of all related services, upon receipt of the next monthly bank statement. • d. The City accounting function shall then notify the City Treasurer that the bank account has been closed; remove the bank account from the general ledger; and retain a file on the closed bank account for the annual financial audit. 4of4 City of Palm Desert Revision No. 2 Treasury Policies and Procedures Adopted: 10/23/03 • POLICY NO.: 11 SUBJECT: "CHECKS" POLICY The purpose of this document is to outline the policy and procedure on checks. 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 use checks as its principal means of disbursement. Checks minimize the amount of cash on hand; require expenditure preauthorization and justification; and are easier to record than credit transactions. Weak or nonexistent internal controls, however, could result in check fraud losses for the City since the Uniform Commercial Code has shifted a greater proportion of such losses to the check issuer. 1 .0 Scope The provisions of this policy shall apply to all checks that the City originates or receives. 2.0 Objectives The City's objectives shall be to minimize the risk of: 2.1 Theft by third parties after checks have been ordered or mailed in payment of bills. 2.2 Forgery of check signatures by public officials or employees, or • by third parties who have intercepted checks in the mail. 1 of 8 0 Palm Desert Treasury Policies and Procedures Revision No. 2 No. 11: "Checks" Adopted: 10/23/03 2.3 Embezzlement by public officials or employees through the improper use of checks. 2.4 Fraud by public officials or employees through the misrepresentation or omission of a material fact concerning checks. 3.0 Segregation of Duties The duties of public officials and employees with respect to check custody, preparation, and execution shall be segregated so that embezzlement will not be facilitated by a concentration of responsibilities in one person (e.g., cash handling and financial statement preparation). Individuals, independent of one other, shall therefore discharge the following duties: 3.1 Check Stock Custody. The City Treasurer shall have exclusive custody of the key to the locked unit in which the check stock is kept. Only the Accounting Technician (accounts payable) and the Accounting Technician (payroll) shall be allowed to use the key. 3.2 Check Preparation. The Accounting Technician (accounts payable) and the Accounting Technician (payroll) shall have exclusive responsibility for preparing all checks. 3.3 Check Signing. The Mayor or the Mayor Pro-Tempore; and the City Treasurer or the Assistant Finance Director, shall have exclusive responsibility for signing all checks. 3.4 Batches Reviewed and Posted. Either the City Treasurer or the Assistant Finance Director shall review and post all accounting batches. 3.5 Bank Statement Reconciliation. The Accounting Technician (purchasing and bank reconciliation) shall have exclusive responsibility for reconciling the City's bank statements to its general ledger on a monthly basis. 3.6 Mail. The Finance Department Administrative Secretary shall • have exclusive responsibility for receiving, opening, and reviewing all incoming mail; and for preparing all outgoing mail. 2of8 Palm Desert Treasury Policies and Procedures Revision No. 2 No. 11: "Checks' Adopted: 10/23/03 • 3.7 Stop Payments. The Deputy City Treasurer shall have exclusive responsibility for placing stop payments on outstanding checks. 3.8 Check Register. The City Treasurer, the City Manager, or the Executive Director of the Palm Desert Redevelopment Agency; and the Mayor or the Mayor Pro-Tempore, shall have exclusive responsibility for approving all check registers. 3.9 Facsimile Signature Stamps. The City Clerk or the Deputy City Clerk shall have exclusive custody of the City's facsimile signature stamps. If any of the above-referenced Finance Department employees are unavailable, then Finance Department management may assign those responsibilities to other Finance Department employees. 4.0 Control Reports • A criminal typically attempts to conceal embezzlement by increasing or decreasing reported monthly expenditures, or by doing both. The City shall address this risk by requiring that the City Treasurer or the Assistant Finance Director prepare and review the City's monthly statements of financial position; statements of revenues and expenditures; check registers; and bank reconciliations. The City Council shall receive a copy of each check register and each statement of revenues and expenditures, on a monthly basis. 5.0 Procurement The City's check stock shall be pre-numbered, and shall have the following security features: 5.1 Artificial watermarks on both sides of the check that cannot be scanned or photocopied. 5.2 The word "VOID" will appear on the check if it is scanned or photocopied. 5.3 Chemical-reactive paper that voids the check if an ink eradicator • is applied. 3of8 Palm Desert Treasury Policies and Procedures Revision No. 2 No. 11: "Checks" Adopted: 10/23/03 5.4 Microprinting that prevents details from being matched if the check is scanned or photocopied. 5.5 Warning banners that advise tellers to inspect a check before accepting it, and that may deter criminal experimenting. The City Treasurer or the Assistant Finance Director shall be responsible, upon receipt of new check stock, for its immediate review in order to verify consecutive check numbering, and the accuracy of account information. If either individual is unavailable, then the Finance Department Administrative Secretary shall perform these duties. 6.0 Custody The City Treasurer shall designate a locked unit for the storage of all check stock. The City Treasurer shall have exclusive custody of the key to that unit, and shall release it only to authorized Accounting Technicians, or to their authorized replacements. • The Accounting Technician (accounts payable) and the Accounting Technician (payroll) who prepare the checks shall maintain a log that lists the checks that have been issued. Another Accounting Technician (purchasing and bank reconciliation) shall review the log on a quarterly basis in order to verify that all checks have been properly accounted for. 7.0 Request for Payment The Accounting Technician (accounts payable) shall prepare and submit to the City Treasurer or to the Assistant Finance Director, a transaction report that lists all check payees, prior to requesting the key to the locked unit in which the check stock is kept. The transaction report shall also itemize, describe, and justify all proposed expenditures by check. All check payments shall be supported by purchase orders; sales receipts; time cards; personal action forms; and any other necessary supporting documentation. Only original invoices (no photocopies unless unable to receive original) totaling the amount of the disbursement shall be attached to the request for payment prior to . execution. 4 of 8 Palm Desert Treasury Policies and Procedures Revision No. 2 No. 11: "Checks' Adopted: 10/23/03 • All requests for payment, and all attached invoices shall be stamped "PAID" in order to avoid duplicate payments. 8.0 Signature Authority Only the City Treasurer, the Assistant Finance Director,• the Mayor; and the Mayor Pro-Tempore shall have check-signing authority on the City's behalf. A dual-signature requirement shall be in effect at all times. Blank checks are never to be signed. Only the Mayor and the Mayor Pro-Tempore shall be allowed to use facsimile signatures. All checks in excess of $100,000, however, shall require two original signatures. All other government officials and employees are prohibited from having check-signing authority. 9.0 Mailing Checks should always be mailed directly to the vendor or payee. They • shall not be returned to the requesting department, division, or individual, in order to minimize the likelihood that such checks will be altered, and negotiated by someone other than the intended payee. 10.0 Manually-Issued Checks The City periodically must issue manual checks that are subsequently entered into the City's computerized accounting system. In order to minimize the potential for forgery, all manual checks shall prepared on a typewriter with a single-strike cloth ribbon. The dollar amount of the check shall be imprinted with an embossing machine. 11 .0 Positive Pay The City shall use "Positive Pay", or an equivalent program, in order to minimize check losses due to fraud or forgery. Under Positive Pay, the City provides its commercial bank with a daily list of the payees, numbers, dates, and dollar amounts of any checks that the City has issued. The bank responds by providing the City with a daily list of any checks that do not correspond with the City's previously submitted information. The City must then confirm that such checks are eligible . for payment before the bank will process them. 5of8 Palm Desert Treasury Policies and Procedures Revision No. 2 No. 11: "Checks' Adopted: 10/23/03 • 12.0 Cancelled Checks The City shall request that its commercial bank return all of the City's cancelled checks, or a disk with a copy of each check on both sides, on a monthly basis, by mail, so that the City will possess the requisite financial records for its annual financial audit. 13.0 Reconciled Bank Accounts The Accounting Technician (purchasing and bank reconciliation) shall promptly reconcile all bank statements within 30 days of statement mailing. That technician shall immediately report any discrepancy to the City Treasurer or to the Assistant Finance Director, and shall provide both with a supporting reconciliation report. The Assistant Finance Director shall perform a final review of the bank reconciliation, and shall approve the bank reconciliation by initialing it. 14.0 Stale Checks • Financial institutions classify checks that are presented for payment as "stale" if they are dated 12 or more months earlier. Even so, the banks cannot guarantee that such checks will not clear. The City accounting staff shall place stop payments on any checks that are over 18 months old, and shall void them in the City's financial records. 15.0 Voided Checks All checks that are spoiled or mutilated or that have been defectively prepared, shall be voided by: 15.1 Stamping or by writing, in ink, the word "VOID" in the check amount field, and in the vendor name/address field; and 15.2 Excising the signature blocks from the check. The check shall also be voided on the City's computerized accounting system. 16.0 Stop Payments 6of8 Palm Desert Treasury Policies and Procedures •Revision No. 2 No. 11: "Checks" Adopted: 10/23/03 • When one of the City's checks is lost in the mail or otherwise cannot be accounted for, then the City shall immediately contact the bank upon which the check is drawn, and place a stop payment on the check for at least one year. The check shall also be voided on the City's computerized accounting system. In order to place a stop payment on a check for one year, the City must renew the stop payment every six months. Even this does not guarantee that that bank will not clear the check, however. The only sure way to stop a check is to close the bank account upon which the check is drawn. 17.0 Destruction of Obsolete Check Stock Obsolete check stock shall always be destroyed, never discarded intact. Check stock shall be deemed to be obsolete when an address change occurs or a bank account is closed. The City Treasurer or the Assistant Finance Director shall, in the presence of another public • employee, either burn or shred all obsolete check stock. Alternatively, in the case of used check stock, the City Treasurer may retain a commercial shred company with bonded employees for that purpose. 18.0 Disciplinary Action Public employees who violate the provisions of this policy shall be subject to disciplinary action, up to and including termination of employment. PROCEDURE 1 . Cashier's Checks. Checks that are exchanged for cashier's checks shall be made payable to the City's bank with a notation under the name stating, "Cashier Check: (name of recipient/escrow number etc.)". 2. Petty Cash Checks. Checks that are used to refund petty cash shall be made payable to "(name of petty cash handler/employee)/Petty Cash". It shall be noted on the check stub that the purpose of the transaction will be . to "Refund Petty Cash". 7of8 ® • Palm Desert Treasury Policies and Procedures Revision No. 2 No. 11: "Checks' Adopted: 10/23/03 • 3. Inter-Account Transfer. Checks that are used to transfer money between the City's bank accounts shall be made payable to the title and to the account number to which they are being deposited. The inter-account transfer shall be noted on the check stub description. 4. Bank Checks. Checks that are used to pay obligations (principal and interest payments) that are owed to the City's bank, shall be made payable to that bank. The obligation to be met shall be noted on the check stub. 5. Signature Cards. Either the City Treasurer or the Deputy City Treasurer shall be responsible for periodically reviewing the City's bank signature cards; fund transfer agreements; and bank access codes in order to ensure that they are still in force. The Deputy City Treasurer shall keep copies of these documents in a locked unit. 8of8 City of Palm Desert • •Revision No. 2 Treasury Policies and Procedures Adopted: 10/23/03 • POLICY NO.: 12 SUBJECT: "STOP PAYMENTS" POLICY The purpose of this document is to outline the policy and procedure on stop payments. It is the policy of the: City of Palm Desert; Palm Desert Redevelopment Agency; 9 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") that stop payments should be placed upon lost or stolen checks as quickly as possible in order to avoid financial losses. The City accounting function shall be responsible for initiating all stop payment requests. 1.0 Authorization to Place Stop Payments The following three City employees shall be authorized to use the Union Bank of California TEAM Stop Payment Service ("SPS") to place stop payments: 1.1 The City Treasurer. 1 .2 The Deputy City Treasurer. 1 .3 The Assistant Finance Director. • 1 of 3 Palm Desert Treasury Policies and Procedures •Revision No. 2 No. 12: "Stop Payments' Adopted: 10123103 • 2.0 Placement of Stop Payments The Deputy City Treasurer shall have the primary responsibility for placing all stop payments. If the Deputy City Treasurer is not available, then the (1) Assistant Finance Director, or (2) the City Treasurer, in that order, shall be responsible for placing the stop payment. 3.0 Retention of Stop Payment Documentation The Deputy City Treasurer shall retain a copy of all stop payment documentation. PROCEDURE 1 . Request Origination. The City accounting function shall request that the Deputy City Treasurer place a stop payment on a check. The City employee making the request must complete the Stop Payment Form (white) and obtain the necessary pre-approval, in writing. A copy of the following documents must be attached to the Stop Payment Form in order for it to be processed: a. The check. b. The original invoice. Alternatively, the Deputy City Treasurer may initiate a stop payment request if a fraudulent check is detected through Union Bank's Positive Pay Program. 2. Internet Log-On. The Deputy City Treasurer shall then log-on to the Union Bank Team website. 3. Check Status. In order to verify that the check has not cleared, the Deputy City Treasurer shall: a. Select "Stops" ("Check Inquiry" will be the automatic default). b. Select the bank account number. c. Enter the check number. d. Select "Submit". • 2of3 Palm Desert Treasury Policies and Procedures •Revision No. 2 No. 12: "Stop Payments' Adopted: 10/23/03 • The status of the check will be shown as of the end of business of the prior day. 4. Stop Payment. If the check has not cleared, then the Deputy City Treasurer shall: a. Select "Place Stop". b. Select the appropriate bank account. c. Enter the check number. d. Enter the check amount. e. Select "Lost", "Stolen", "Destroyed", or "Other". f. Select "Submit". 5. Stop Payment Report. After placing the stop payment, the Deputy City Treasurer shall then produce a Stop Payment Report. a. Select "Stops History". b. Select Print. 6. Report Distribution. The Deputy City Treasurer shall then return the original paperwork to the Accounting Technician (accounts payable), with a copy of the Stop History Report attached. The Investment Manager shall retain a copy of that paperwork 7. Stop Payment Order Confirmation. When the Deputy City Treasurer receives this confirmation from the bank, the Deputy City Treasurer shall retain the original and provide the Accounting Technician (accounts payable) with a copy. 3of3 City of Palm Desert • •Revision No. 2 Treasury Policies and Procedures Adopted: 10/23/03 • POLICY NO.: 13 SUBJECT: "WIRE TRANSFERS" POLICY The purpose of this document is to outline the policy and procedure on wire transfers. 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 receive and disburse investment monies electronically through bank wire systems. A "wire transfer" is a form of electronic fund transfer that is commonly used for securities transactions. Once money is transferred by wire, the underlying investment transaction is final and irrevocable. A wire transfer may be initiated either through the Internet or by telephone. 1 .0 Wire Limits Wire transfers may not be initiated on behalf of the City for more than: 1 .1 $5 million on non-repetitive wires. 1 .2 $5,000 on Repetitive Wire No. 1010 (Desert Willow Checking Account) unless the City Treasurer has given prior approval. The only exception to the foregoing shall be the wire transfer of tax- exempt bond proceeds, Local Government Investment Fund ("LAIF) monies; property taxes; and tax increment revenues, upon which there • shall be no limit. 1 of 4 Palm Desert Treasury Policiesd Procedures •Revision No. 2 No. 13: 'Bank Wires' Adopted: 10/23/03 • 2.0 Wire Deadlines In order to assure same-day processing: 2.1 Union Bank of California. All wires with Union Bank of California ("UBOC") must be initiated by 1:00 p.m. Pacific Daylight Time. 2.2 LAIF. All wires with LAIF must be initiated by 10:00 a.m. Pacific Daylight Time. 3.0 Funds Transfer Agreements The City Treasurer shall execute a Funds Transfer Agreement with each approved financial institution, prior to conducting any wire transfers with that institution. The Deputy City Treasurer shall retain and file a photocopy of each Funds Transfer Agreement. The City Treasurer shall designate three City employees in each Funds Transfer Agreement who shall serve as "Authorized Representatives", in terms of initiating or verifying wire transfers. Each Authorized Representative shall receive a separate personal identification number ("PIN") that shall be kept confidential. 4.0 Authorized Representatives The following City employees shall be designated as Authorized Representatives: 4.1 The City Treasurer. 4.2 The Deputy City Treasurer. 4.3 The Assistant Finance Director. 4.4 The Information Systems Manager. No broker or investment advisor shaft be authorized to initiate or to verify wire transfers on behalf of the City. • 2of4 Palm Desert Treasury Policies and Procedures •Revision No. 2 No. 13: "Bank Wires" Adopted: 10/23/03 • 5.0 Wire Verification An Authorized Representative cannot initiate and verify the same wire transfer; another Authorized Representative must perform one of these tasks. Internet-initiated wires, both repetitive and non-repetitive, must be verified by a second-level approval on-line, in order to release the payment instructions. Telephone callbacks are required on all telephone-initiated wires, whether repetitive or non-repetitive. No account numbers shall be released over the telephone, other than to initiate or verify a wire transfer. PROCEDURE 1 . Repetitive Wire Transfers. These are wires that are sent on a recurring basis, in which the destination and beneficiary information remain the same, but the transfer amount and the release date vary. The process is as follows: a. The City employee who is requesting the wire transfer shall prepare a Wire Transfer Form (red) and obtain the necessary pre-approval, in writing. b. The Deputy City Treasurer shall then review the paperwork and enter the necessary particulars into the Wire Log. c. The Deputy City Treasurer shall then initiate the wire transfer with Union Bank over the telephone. If the Deputy City Treasurer is absent, then another Authorized Representative shall do so. d. An Authorized Representative other than the one who initiated the wire shall verify the wire when Union Bank does a telephone callback. The wire verifier shall then sign the Wire Log as such. e. The Deputy City Treasurer shall then confirm the wire on a next-day basis by printing a TEAM Daily Statement Report. The Deputy City 3of4 Palm Desert Treasury Policiesd Procedures •Revision No. 2 No. 13: "Bank Wires' Adopted: 10/23/03 • Treasurer shall then enter the wire transaction number into the Wire Log. f. The Deputy City Treasurer shall then distribute the Wire Transfer Form with a confirming TEAM Daily Statement page to the appropriate City accounting personnel for general ledger entry. 2. Non-Repetitive Wire Transfers. These are domestic transfers that allow the wire desk to enter the transfer amount, release date, destination, and beneficiary information. The process is as follows: a. The City employee who is requesting the wire transfer shall prepare a Wire Transfer Form (red) and obtain the necessary pre-approval, in writing. b. The Deputy City Treasurer shall then review the paperwork and enter the necessary particulars into the Wire Log. c. The Deputy City Treasurer shall then initiate the wire transfer with • Union Bank over the telephone. If the Deputy City Treasurer is absent, then another Authorized Representative shall do so. d. An Authorized Representative other than the one who initiated the wire shall verify the wire when Union Bank does a telephone callback. The wire verifier shall then sign the Wire Log as such. e. The Deputy City Treasurer shall then confirm the wire on a next-day basis by printing a TEAM Daily Statement Report. The Deputy City Treasurer shall then enter the wire transaction number into the Wire Log. f. The Deputy City Treasurer shall then distribute the Wire Transfer Form with a confirming TEAM Daily Statement page to the appropriate City accounting personnel for general ledger entry. • 4of4 City of Palm Desert • vision No. 2 Treasury Policies and Procedures Adopted: 10/23/03 • POLICY NO.: 14 SUBJECT: "ACCESS TO TREASURY SYSTEMS" POLICY The purpose of this document is to outline the policy on treasury systems access. 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 ensure that treasury systems for banking and investments are secure, in order to protect against the theft, loss, or misuse of public monies. 1.0 Local Agency Investment Fund ("LAIF") The City invests public monies in LAIF, based upon its liquidity and relatively high yield. Any transactions that are undertaken on behalf of the City must be initiated using a Personal Identification Number ("PIN") for each LAIF account. 1 .1 Authorization. The following City employees shall be authorized to initiate transactions on the City's behalf with LAIF: 1 .1 .1 The City Treasurer. 1 .1 .2 The Deputy City Treasurer. 1 .1 .3 The Assistant Finance Director. 1 .1 .4 The Information Systems Manager. • 1 of 4 Palm Desert Treasury Policies a*n rocedures tision No. 2 No. 14: "Access to Treasury Systems" Adopted: 10/23/03 • 1 .2 Security. The Deputy City Treasurer shall be responsible for maintaining PIN numbers. 2.0 SymPro Investment Program This software program is used to record, calculate, and report the City's investments. 2.1 Password Levels. In order to ensure that there exists an appropriate separation of duties regarding SymPro, there are three separate sets of functional capability, based upon password security level: 2.1 .1 Level One. This user is authorized to edit, add, and delete portfolios and files, and to change passwords. 2.1 .2 Level Two. This user is authorized to edit, add, and delete files. 2.1 .3 Level Three. This user is authorized to view only portfolios and files (there are no editing capabilities). 2.2 Authorization. The following City employees shall be authorized to operate at various security levels: 2.2.1 Level One. 2.2.1 .1 The City Treasurer. 2.4.1.2 The Deputy City Treasurer. 2.2.2 Level Two. 2.2.2.1 None. 2.2.3 Level Three. 2.2.3.1 None. • 2of4 Palm Desert Treasury Policies Procedures evision No. 2 No. 14: "Access to Treasury Systems' Adopted: 10/23/03 2.3 Security. The Deputy City Treasurer shall be responsible for maintaining, installing, and recommending changes to the SymPro software program. The Deputy City Treasurer shall be responsible for changing the system passwords as needed. 3.0 Bank of New York Information Network This software program is used to download data from the City's trustee, Bank of New York, on the investment of tax-exempt bond proceeds. 3.1 Authorization. The following City employees shall be authorized to access this program: 3.1.1 The City Treasurer. 3.1 .2 The Deputy City Treasurer. 3.1.3 The Assistant Finance Director. 3.2 Security. The Assistant Finance Director shall be responsible for changing the system passwords as needed. 4.0 Union Bank TEAM Information Reporting, Stop Payment & Money Transfer Services These software modules are used to download the City's bank account and cash management information; to place stop payments; and to transfer public monies electronically. 4.1 Authorization. The following City employees shall be authorized to access this program: 4.1 .1 The City Treasurer. 4.1 .2 The Deputy City Treasurer. 4.1 .3 The Assistant Finance Director. 4.2 Security. Each authorized employee shall be responsible for • changing the system password as needed. 3of4 Palm Desert Treasury Policies anProcedures R•sion No. 2 No. 14: "Access to Treasury Systems" Adopted: 10/23/03 • 5.0 Union Bank Positive Pay System This software program is used to download images of "exception" checks that the City of Palm Desert has purportedly issued and that have been presented to Union Bank for payment. The purpose of the program is to detect fraudulent checks. 5.1 Authorization. The following City employees shall be authorized to access this program: 5.1 .1 The City Treasurer. 5.1 .2 The Deputy City Treasurer. 5.1 .3 The Assistant Finance Director. 6.0 Storage of Passwords The Deputy City Treasurer shall document the quarterly Treasury systems passwords, and shall keep this documentation stored in a locked box within the Deputy City Treasurer's office. The Deputy City Treasurer, the City Treasurer, and the Assistant Finance Director shall retain exclusive possession of the keys for the locked box. 4of4 City of Palm Desert 0 vision No. 2 Treasury Policies and Procedures Adopted: 10/23/03 • POLICY NO.: 15 SUBJECT: "INTEREST ALLOCATION" POLICY The purpose of this document is to outline the policy and procedure on interest allocation. 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 • that all interest income which the aforementioned entities have accrued and received within a fiscal year should be allocated to individual accounting funds in the City of Palm Desert ("City") and the Palm Desert Redevelopment Agency ("RDA") investment portfolios, so that annual audited financial statements may be prepared. 1 .0 Deduction of Management Fee The Deputy City Treasurer's salary and fringe benefits shall be deducted from each accounting fund in order to reflect the cost of investment portfolio management. If any portion of the Deputy City Treasurer's compensation is allocated to the assessment districts as a cost, then it shall be deducted from the amount that is charged to the accounting funds. 2.0 Retention of Work Papers The Assistant Finance Director shall be responsible for retaining and filing all work papers pertaining to interest allocation so that the City's external auditor will have the requisite documentation for the City's annual financial audit. • 1 of 10 Palm Desert Treasury Policies Procedures Revision No. 2 No. 15: "Interest Allocation" Adopted: 10/23/03 • PROCEDURE 1. Start of Fiscal Year. At the beginning of each new fiscal year, the Deputy City Treasurer should begin the process of allocating interest income. a. Interest Allocation Workbook. Retrieve the Interest Allocation Workbook of the prior fiscal year from the Excel>Investments> Interest Allocation subdirectory in the Deputy City Treasurer's personal network directory, and access the "Cash Adjustment Worksheet" (see Exhibit "A"). b. Cash Adjustment Worksheet. Update the "Cash Adjustment Worksheet" by changing column dates; deleting individual monthly balances; reviewing adjustment formulas; and renaming and saving the workbook for the target fiscal year. 1) For each account, take the interest rate for the prior June, and copy it as the interest rate for July 1 of the subsequent fiscal year. Otherwise, SymPro will not allow data to be entered for each month of the target fiscal year. c. Pooled Fund Portfolios. Retrieve the City and the RDA Pooled Fund Portfolios of the prior fiscal year, and copy and rename them for the target fiscal year. The SymPro commands would be: Utility>Portfolio Copy/Deletion>Copy (Archive) Portfolio>Code (e.g., PC01 and PR01)>Name (e.g., 2001 CITY POOLED FUNDS and 2001 RDA POOLED FUNDS)>Path (C:\SYMPRO\DATA\POOLED). d. Prior-Year June SymPro Cash Balances. Print the June 30 SymPro cash balances for the prior fiscal year for the unedited City and RDA Pooled Fund Portfolios. The SymPro commands would be: Fixed Income> Reports>Investment Listings>Investments by Fund (FI)>Ending Date (6/30/(prior fiscal year)►>Select All. e. Fiscal Year-End Close. Perform a fiscal year-end close on the new Pooled Fund Portfolios. The SymPro commands would be: Utility> Setup>Fiscal Year End Close>(check box that data has been archived and back-up)>(enter prior fiscal year-end). This will clear all prior fiscal year transactions; create a beginning balance for the target fiscal year; • 2 of 10 Palm Desert Treasury Policies aProceduresision No. 2 No. 15: "Interest Allocation" Adopted: 10/23/03 • and reset the portfolio for the target fiscal year. Check "yes" when asked if the year-end of each portfolio should be processed. f. Data Entry of Prior-year June SymPro Cash Balances. Enter the June 30 book value cash balances, as calculated in Procedure 1 A. of this policy, by fund number, into Column C of the "Cash Adjustment Worksheet." g. Data Entry of June Audited Cash Balances (15' Period). Enter the audited cash balances, by fund number, from the June Bank Reconciliation (Period 15) of the prior fiscal year into Column D of the "Cash Adjustment Worksheet." 1) All cash that is listed, by fund number, for Activity Code Number 101-0000 under the "Active Cash Cumulative" column of each Cash Work Sheet, should be entered. 2) All 110-0000-101 sub-accounts should be added together and entered. • 3) The preliminary total in the "Cash Adjustment Worksheet" should match the preliminary total in the Cash Work Sheet. 4) The "Active RDA" cash balance in the Statement of Cash Transactions should be entered into the RDA 110 line item in the "Cash Adjustment Worksheet." h. Data Entry of Other Monthly Cash Balances. Enter the cash balances, by fund number, from the Cash Work Sheets for the months of the target fiscal year into the appropriate monthly columns of the "Cash Adjustment Worksheet." The ending month of June will be 12t' Period. 1) All cash that is listed, by fund number, for Activity Code Number 101-0000 under the "Active Cash Cumulative" column of each Cash Work Sheet, should be entered for each month. 2) All 1 10-0000-101 sub-accounts should be added together and entered. • 3 of 10 Palm Desert Treasury Policies a*Procedures Vision No. 2 No. 15: "Interest Allocation" Adopted: 10/23/03 • 3) The preliminary total in the Cash Adjustment Worksheet should reconcile to the preliminary total in the Cash Work Sheet for that month. 4) The "Active RDA" cash balance in the Statement of Cash Transactions should be entered into the RDA 110 line item in the Cash Adjustment Worksheet. After cash balances have been entered into the "Cash Adjustment Worksheet," the "Adjustment to SymPro" column that is adjacent to each month, will automatically calculate an adjustment. i. Backup of Interest Allocation Workbook. Backup the "Interest Allocation Workbook" by using the following Excel commands: c:\backup\(target fiscal year) INTEREST ALLOCATION. j. Data Entry into Pooled Fund Portfolios. Enter each cash adjustment, by month, as a deposit or a withdrawal in the Transactions Field of the appropriate Participant Fund in the City and the RDA Pooled Fund • Portfolios. The resulting cash balance in the Participant Fund should match the corresponding cash balance in the "Cash Adjustment Worksheet." The monthly interest rates will be calculated automatically later in the process. 1) No Cash Adjustment. If the cash adjustment is zero, then no data for that month should be entered into the Participant Fund. 2) RDA Cash Balance. In the case of RDA 110 (Active), the opposite sign convention (e.g., a positive for a negative in the "Cash Adjustment Worksheet" should be used when entering data into the Transactions Field of the Participant Fund. k. Backup of Pooled Fund Portfolios. Backup the City and the RDA Pooled Fund Portfolios by using the following SymPro commands: Utility> Portfolio Copy/Deletion>Copy (Archive) Portfolio>Code (e.g., 01 PC and 1PR)>Name (e.g., BACKUP-2001 CITY POOLED FUND and BACKUP-2001 RDA POOLED FUND)>Path (H:\(personal directory)\SYMPRO\DATA\BACKUP). • 4 of 10 Palm Desert Treasury Policies a4n?Procedures Prevision No. 2 No. 15: "Interest Allocation" Adopted: 10/23/03 • I. Report Production. The Deputy City Treasurer should then print the City and the RDA Pooled Funds Reports for the City Treasurer. All reports should be produced on both a cash basis ("CP") and an accrual basis ("AP"). 1) Portfolio Summary and Portfolio Details Reports. The SymPro commands are: Fixed Income>Report>Portfolio Management> Portfolio (PM). These reports should be printed, by month, for the target fiscal year (Exhibit "B"). m. Creation of Non-Restricted Funds Reports. The Deputy City Treasurer should then retrieve the current "CITY" and "RDA" investment portfolios, and copy and rename them for the target fiscal year. The SymPro commands are: Utility>Portfolio Copy/Deletion>Copy (Archive) Portfolio>Code (e.g., NC01 and NR01)>Name (e.g., 2001 CITY NON- RESTRICTED FUNDS and 2001 RDA NON-RESTRICTED FUNDS)>Path (C:\SYMPRO\DATA\NON-RES). n. Report Production. The Deputy City Treasurer should then provide the • City Treasurer with the following reports from the unedited City and RDA Non-Restricted Funds Portfolios. 1) Portfolio Reports. The SymPro commands are: Fixed Income> Report>Portfolio Management>Portfolio (PM). Print the "Portfolio Summary" and 'Portfolio Details-Investments" reports, by month, for the target fiscal year (see Exhibit "C")• Place a tick mark next to each individual security that is listed, avoiding duplication. 2) Investment Position Reports. The SymPro commands are: Fixed Income>Report>Reference>Investment Position Report (SP). Print the "Investment Position Reports" for all individual securities, except for State and Local Government Series; mutual funds; and local agency investment pools (see Exhibit "D"). The purpose of this report is to identify trustee securities that should be deleted from the City and the RDA Non-Restricted Funds Portfolios. 3) Delete Trustee Records. "Forward" through the SymPro investment records (using Search>Investment Number), and delete all records of trustee-held ("Restricted") securities, except for the following: • 5 of 10 Palm Desert Treasury Policies an3Procedures vision No. 2 No. 15: "Interest Allocation" Adopted: 10/23/03 a) City: Main Checking Account; Main Sweep Account; all custodian-held securities; CAMP; and LAIF. b) RDA: All custodian-held securities and LAIF. Also delete "City" SymPro Nos. 18040 and 18041 (Retiree Health investments); all individual securities that have matured prior to the target fiscal year; LAIF (Housing); LAIF (Bond Proceeds); City loan to RDA; and all State and Local Government Series. All interest income for the deleted records should have been previously booked (as trustee transactions) by the Senior Financial Analyst. 4) Reprint Portfolio Reports. The SymPro commands are: Fixed Income>Report>Portfolio Management>Portfolio (PM). Print the "Portfolio Summary' and the "Portfolio Details-Investments" reports, by month, for the targeted fiscal year (see Exhibit "C"). The Deputy City Treasurer should give them to the Finance Operations Manager for review and verification. • n. Backup of Non-Restricted Funds Portfolios. Backup the City and the RDA Non-Restricted Funds Portfolios by using the following SymPro commands: Utility>Portfolio Copy/Deletion>Copy (Archive) Portfolio>Code (e.g., 01NC and 01NR)>Name (e.g., BACKUP-2001 CITY NONRESTRICTED and BACKUP-2001 RDA NONRESTRICTED)> Path (I—IMpersonal directory)\SYMPRO\DATA\BACKUP). 1) Accrued Interest Report. Print the "Accrued Interest (Al) Report' by using the following SymPro commands: Fixed Income>Report> Interest. The reporting period should be from 7/01/(target fiscal year) through 6/30/(target fiscal year). o. Report Production. The Deputy City Treasurer should then provide the City Treasurer with the following reports from the edited City and RDA Non-Restricted Funds Portfolios. All reports should be on both a cash basis ("CP") and an accrual basis ("AP"). 1) Portfolio Summary and Portfolio Details Reports. The SymPro commands are: Fixed Income>Report>Portfolio Management> Portfolio (PM). Print these reports, by month, for the target fiscal • year (see Exhibit "E"). 6 of 10 Palm Desert Treasury Policies aProcedures vision No. 2 No. 15: "Interest Allocation" Adopted: 10/23/03 • 2) Interest Earnings Reports. The SymPro commands are: Fixed Income>Report>Interest>Interest Earnings (IE)>Issuer>Average Value/Annualized Yield. Print these reports for a 12-month period, from July 1 through June 30 of the target fiscal year (see Exhibit „F"). 3) Allocation Account Activity Reports. The SymPro commands are: Earnings Allocation>Report>Allocation Account Activity. Print the Allocation Accounts Activity Reports for a 12-month period, from the 2nd calendar day at the beginning of the target fiscal year through the 2nd calendar day after the end of the target fiscal year, in order to exclude June interest income on the front end and to add it on the back end (see Exhibit "G"). p. Preparatory Work Prior to Interest Allocation. Prior to allocating interest earnings, either the City Treasurer or the Assistant Finance Director should take the following steps: • 1) Accrual Worksheet. Prepare an Excel worksheet which calculates the amount of interest income that was earned in the prior fiscal period but received in the target fiscal period. Since debt securities with interest coupons typically pay interest every six months, interest received up to 31 December might include some accrued interest. 2) Calculation of Accrued Interest Earnings. Review the "Interest Earnings Report" in order to determine what portion of interest earnings that were received in the target fiscal period should be allocated as accrued interest from the prior fiscal period. Then prepare and post all accrued interest to the general ledgers of the edited City and RDA Pooled Fund Portfolios. 3) Calculation of Total Interest Earnings. Then add this accrued interest to interest received during the target fiscal period, in order to calculate the amount of total interest earnings that will be allocated to all accounting funds in the edited City and RDA Pooled Fund Portfolios. 4) Final Allocation Activity Report. The Deputy City Treasurer should • then print "Allocation Account Activity Reports" for the edited City 7 of 10 Palm Desert Treasury Policies and Procedures Revision No. 2 No. 15: "Interest Allocation" Adopted: 10/23/03 and RDA Pooled Fund Portfolios. The time period would be from 7/1/(target fiscal year) thorough 7/2/(subsequent fiscal year)). q. Allocation of Total Interest Earnings. The Deputy City Treasurer should then allocate total interest earnings to the accounting funds in the edited Pooled Fund Portfolios. All reports should be on a cash basis ("CP"). The SymPro commands are: 1) Select the Earnings Allocation>Utility>Select Investment Types For Allocation Pool menu options. Type "Y" in the "Include in Pool?" and "Active" columns for "Participant Accounts." 2) Select the Utility>Setup Account Properties menu options if management fees are to be allocated through interest earned. 3) Select the following Activity>Allocate Earnings menu options: a) Amount to Allocate. Enter the beginning and ending dates for each month of the target fiscal year for the appropriate edited • Pooled Fund Portfolio. Then enter total earnings for the month in "Amount To Allocate." Total earnings is taken from the "Portfolio Summary" report for the related edited Non-Restricted Funds Portfolio for each month of the target fiscal year, except for June. b) June Total Earnings. Total earnings for the month of June for both the City and the RDA may be calculated as follows: (1)Adjusted Annual Total Earnings. Reconcile the annual total earnings figure that SymPro has calculated in June with the annual total earnings figure that the Assistant Finance Director has calculated for the same time period. (2)Adjusted June Total Earnings. Add or subtract the difference from the total earnings figure that SymPro has calculated for the month of June. (3)Amount to Allocate. Enter the adjusted total earnings figure into "Amount to Allocation" for the month of June. • 8 of 10 Palm Desert Treasury Policies anSProcedures Vision No. 2 No. 15: "Interest Allocation" Adopted: 10123/03 • c) Imputed Interest Rate. SymPro will impute an interest rate for each month of the target fiscal year, based upon the total earnings that have been entered. r. Report Production. The Deputy City Treasurer should then provide the City Treasurer with the following report from the edited City and the RDA Pooled Funds Portfolios. All reports should be on a cash basis ("CP") only. 1) Allocation Account Activity Report. The SymPro commands are: Earnings Allocation>Report>Allocation Account Activity. Print the Allocation Account Activity Reports for a 12-month period, from the 2nd calendar day at the beginning of the target fiscal year through the 2nd calendar day after the end of the target fiscal year. Interest is posted on the first day of each subsequent month. These reports are needed in order to verify the final interest earnings allocation for each month. s. Allocation of Management Fee. The Deputy City Treasurer's services should be charged as a monthly fee to each accounting fund in the City and RDA Pooled Fund Portfolios. This fee shall be defined as the Deputy City Treasurer's salary plus fringe benefits (equivalent to 29.63 percent of salary). The basis for allocating the management fee should be the dollar amount of each accounting fund as a percentage of the dollar amount of all accounting funds within the Pooled Fund Portfolios. The management fee should be allocated to: (1) assessment district trust funds; (2) RDA trust funds; (3) all other City funds; and (4) all other RDA funds. The allocation of the management fee to all RDA funds shall be done concurrently with the allocation of City staff time that has been devoted to RDA projects. t. Posting of Interest Allocation. The City Treasurer or the Assistant Finance Director shall then post the interest earned to all accounting funds in the City and the RDA Pooled Fund Portfolios. The RDA Trust Fund shall be subdivided in order to subdivide individual pass-through accounts. 3. Fiscal Year-End Close. After monthly data has been entered for June, (the end of the target fiscal year), the Deputy City Treasurer should begin the fiscal year-end close for the "City" and the "RDA" SymPro portfolios by • doing the following: 9 of 10 Palm Desert Treasury Policies and Procedures •ision No. 2 No. 15: "Interest Allocation" Adopted: 10/23/03 • a. Verify Updated Interest Schedule. The SymPro commands are: Fixed Income>Activity>Update Interest Schedule by Due Date. Verify that all interest payments have been posted for the target fiscal year. b. Data Backup. Backup SymPro data for the City and the RDA by using the procedures listed in the yellow Monthly Investment Report — Instructions manual. This only needs to be done once. c. Archive Portfolios. The SymPro commands are: Utility>Portfolio Copy/Deletion>Copy (Archive) Portfolio>Code (e.g., FC03 and FR03)>Name (e.g., 2003 CITY PORTFOLIO FYEC and 2003 RDA PORTFOLIO FYEC)>Path (C:\SYMPRO\DATA\FYEC). This will archive the City and the RDA portfolios for the target fiscal year. d. Backup Archive Portfolios. The SymPro commands are: Utility> Portfolio Copy/Deletion>Copy(Archive) Portfolio>Code (e.g., 03FC and 03FR)>Name (e.g., BACKUP-2003 CITY FYEC and BACKUP-2003 RDA FYEC)>Path (H:\(personal directory)\SYMPRO\BACKUP). This will create an archive copy of the City and the RDA portfolios for the target fiscal year. e. Reindex Portfolio Files. The SymPro commands are: Fixed Income> Utility>Reindex Files. Reindex to remove any deleted records before proceeding with the close. f. The Close. The SymPro commands are: Fixed lncome>Utility> Setup>Fiscal Year End Close. Non-amortizing discount instruments should not be converted to amortizing ones. 1) Check box that questions whether data files have been archived and backed up. 2) Enter the last day of the target fiscal year as the "close date". 3) Hit "OK." 4) Confirm the new fiscal year-end date. The SymPro commands are: Fixed Income>Utility>Setup>Portfolio Setup/Preferences. 10 of 10 OEXHIBIT "A" r nr0 ciO e`00 (+a0Ot0000000Oa0(O rl C) co to a N d O MO . O MOOP . O 0 . . . . N . 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C ' W N N (O N G S N WLU z O a w > o > = a w z LU Z wLu J N (7 U' H ULLI Y C Q O LL a" Q m Q 4 a C a w IL m Q N N 'L 2 N m W rn U N C7 m C n m W $ O W U U ai � wHIBIT "D" • 2003 CITY NON-RESTRICTED FUNDS • Position Report - Portrait Investment#18044 As Of August 18, 2003 Investment# 18044 MEDIUM-TERM NOTES (MTN) Fund CITY _ Coupon 6.3800000 Current 6.3800000 CUSIP i CUSIP :37042WC58 Interest Period SC ❑ Month End Coupon Issuer GMAC_R GENERAL MOTORS Basis 360 Cert./Acct# 1st Coupon Beg 04/01/2003 End 10/01/2003 Dealer MS Yield to Maturity 2.0378086 YTM 365 2.038 Safekeeper UBOC-S GASB 3 1 -" Asset Class Long Term Moody's S&P Next Call Date Investment Held to Maturity A2 BBB Call Price 0 Yield to Call 0.000 Trade Date 05/13/2003 - - - --- -- — - Settlement Date 05/16/2003 Amortize to Date Issue Date 01/30/2001 Amortization Price 0.000000000000 Maturity Date 01/30/2004 Market Price 102.6353912 Market Price Date 06/30/2003 Par Value 2,000,000.00 Current Par Value 2,000,000.00 Purchase Price 103.0270000 Principal 2,060,540.00 crued Interest 15,950.00 Comment mmission 0.00 Total Income 90,028.89 Total 2,076,490.00 Interest Received to 0.00 Interest Schedule Interest Beginning Date: 04/0112003 Interest Days=254 Date Due Int. Due Date Rcvd. Int. Rcvd. Total Rcvd.Cd Receipt Comment Interest Accrued 10/01/2003 63,800.00 / / 0.00 0.00 63,800.00 10/01/2003 -15,950.00 / / 0.00 0.00 A -1S,950.00 01/30/2004 42,178.89 / / 0.00 0.00 42,178.89 Market Value History (Purchase Price: 103.0270000) As of: 08/18/2003 Price: 102.6353912 Par:2,000,000.00 Market Value:2,052,707.82 Mkt. Price Date Market Price Par Value Market Value 06/30/2003 102.6353912 2,000,000.00 2,052,707.82 05/30/2003 102.6752899 2,000,000.00 2,057,505.79 • Portfolio NC03 AP Run Date:00/1812003-10:18 Page 1 SP(PRF_SPCP)SymRept V6.32.103 Repon Ver.5.00 EXHIBIT "r � z 0 a. § } ) jk / ) % . , � p , , , , � � g � l ; ; 0 ; ; � ; © | § !l ; 6 6C4 \ \ / \ ( Cd � E / § \ » . ; j \ k m f kkj \ � \ \ L ■ off § ] 22 !! ! | l | | 2 cc; _ ® _ [ 2 a ' \ \ \ k # le m_} e / Q ) 0 m t � !! « ! aq « q } § cli eco A 2LU cli CS cli c0 { kk 7 ! § 2 � ) ) } E i � l (j f\ / § \\ ) / ! ) � W - ° § ) § ) \ } ( ) 8 } � - � � �}� / � � 0 / Jj \ ! / f \ a g Z U m u o >cn • o K K m LL n d n � a d � � F E R •- v •- N O O V m U T� e e'y tCl+l P C IO O O a°L D Y 0 O 9 O O (O n m m r Z m>' N O m t7 O O N N N O 1D O N A V N Q w m o �am CD m M M C n O of 0 of N ni C{ W GI E m M 0 V yr= O e m N d m m > •• rl- 40, N mf/) M F cQ > E 1 •O 0 O N p N a y 0 M:: 0 0 N f7 T � N m d d � 0 0 m N 0 0 0 0 m O a H 0 0 Z C ' N 0 0 0 O OO 0; LL G 6 t7 O O p1 m O m J oa 16O; O vi 1" n mC) a � e m � o E a V d c CO m CD O act N E � > a CC p e 5 1; N O O t7 pOo N C Oj 1] d W o u N O O N N N N L m N .G CJ Y V ' 16 M Cl 17 [ m C O o W 0 m E —y x > N � L ; W d � N d U � 1`o a 0 z 1Q c LL — H Z Z 7 O m L L N O C m d • N 0] h .cJ. 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U Q O o Q O U J o z' City of Palm Desert • Revision No. 2 Treasury Policies and Procedures Adopted'. 10123103 • POLICY NO.: 16 SUBJECT: "CASH AND INVESTMENTS AUDIT" POLICY The purpose of this document is to outline the policy and procedure on the audit responsibilities of the Treasury function. 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") that the City shall engage an external auditor to conduct a cash and investments audit every three years, unless there have been significant prior audit findings or a change in Treasury personnel. If either of the foregoing conditions occurs, then the City Treasurer or the Finance and Investment Committee may increase the frequency of the audits, as needed. A cash and investments audit shall include among its objectives, a review of: ➢ The effectiveness of the internal controls for the City's investment program. ➢ Staff compliance with treasury policies and procedures. ➢ The description and classification of investments, by fund type, on the City's balance sheet, as well as related disclosures, including restrictions and commitments. ➢ Custody and safekeeping arrangements. • 1 of 2 Palm Desert Treasury Policies and Procedures •sion No. 2 No. 16: "Cash and Investments Audit" Adopted: 10/23/03 • The City Treasurer and the Deputy City Treasurer shall cooperate fully with the external auditor, in terms of willingly producing all information and documents requested, as well as responding honestly to all inquiries. The City's annual audit includes certain audit procedures that are related to cash and investments, such as the confirmation of the year-end balances. It is the City's policy, however, to have the external auditor perform additional procedures related to cash and investments. Consequently, the Finance and Investment Committee shall identify and communicate to the external auditor what additional testing procedures will be required. The external auditor shall submit its report on these additional procedures to the Finance and Investment Committee by 31 December of that year. PROCEDURE 1 . Required Audit Documentation. The Deputy City Treasurer shall provide the external auditor with the following documents for the fiscal year being audited: a. "Statement of Investment Policy". b. Treasury Policies and Procedures Manual. c. Trade Book. d. Wire Log. e. All bank account signature cards. f. All monthly investment reports and schedules. g. All competitive offering documents. h. All broker qualification and requalification documents. i. All trustee, custodian, and bank administrative fee documents. j. All money market fund qualification documents. 2. Confirmation Letters. The Deputy City Treasurer shall ensure that "Confirmation of Marketable Securities Held By A Third Party" letters are prepared for the external auditor to send to the City's custodian and to the City's trustee. 2of2 =y y0 C7 ti 'o 0 'o u > r m -o Fy o w G A otj Av �. 'n :.o 'O G G 'T) :i CT S G .y+ ? m iD d y. O O cp T -i R `;E c - _ 0 ! 1 9 0 b C C Q OT � p A-f 0 m w N 'b O <. y y J J A d W J .- Orn w Orn J N p' C O ❑ w A U U oo O oo A � � 7 A O O o . .-+ N N N lJ W . W C 3 O '?. 00 W U {gyp G O OJ O O JO �, o w 000wo a w �Qow00000v� a. o tv 4 G. O O O N N N .-• U 0 0 0 0 0 0 0 -- O O. om �-n yOy oo .-• oyy0 0yo ywy �yO �yQ A ..-. �D .y+t ..- O O A O O .gyp. J b � p R1 �' O J O J VAi v�i J J � 01 CO U O 6�0 O N N y N O t c _ W _ N U A O w 0 tin O O til ONP ao RI UP p� �/d a m m 3 w �, N m �J�JIIII w O T ^ Q m Q � 3 O 0 u %a 3 m s .j U a a' w City of Palm Desert • • Parkview Office Complex Financial Statement for Fiscal Year 2003-2004 October-03 October-03 # % VTD YTD # % Budget Actual Variance Variance Budget Actual Variance Variance Revenues Rental $ 68,500 $ 72,159 $ 3,659 105.34% $ 274,000 $ 284,194 $ 10,194 103,72% Dividends/Interest $ 4,375 $ - $ (4,375) 0.00%j. $ 17,500 $ 216 $ (17,284) 1.23% Total Revenues $ 72,875 $ 72,159 $ (716) 99.02%1 j $ 291,500 $ 284,410 $ (7,090) 97.57% Expenses Professional-Accounting&Auditing $ 8,000 $ 8,000 $ - 100.00%3 $ 32,000 $ 32,000 $ - 100.00% Professional-Consultants $ 6,000 $ 5,673 $ 327 94.55%i $ 24,000 $ 22,324 $ 1,676 93.02% Tenant improvements $ 3,0W $ 5,000 $ (2,000) 166.67/. $ 12,000 $ 7,120 $ 4,880 59.33% Repairs&Maintenance Building $ 8,000 $ 14,017 $ (6,017) 175.22% $ 32,000 $ 38,824 $ (6,824) 121.33% Repairs&Maintenance-Landscaping $ 2,300 $ - $ 2,300 0.00%1 $ 9,200 $ - $ 9,200 0.00% Utilities-Water $ 150 $ 105 $ 45 69.69%� $ 600 $ 424 $ 176 70,75% Utilities-Gas/Electric $ " 8,000 $ 6,703 $ 1,297 83.79% - p $ 32,000 $ 38,365 $ (6,365) 119.89% Utilities-Waste Disposal $ 700 $ - $ 700 0.00% $ 2,800 $ 2,121 $ 679 75.77% Telephone $ 200 $ 164 $ 36 82.11%; $ 800 $ 645 $ 155 80.58% Insurance $ 521 $ - $ 521 0.00%j { $ Z082 $ - $ 2,082 0.00% Total Expenses $ 36,871 $ 39,662 $ (2,791) 107.5r/o , $ 147,482 $ 141,824 $ 5,658 96.16% i .______- _ ..._...96-___..-..�.,.__......._-.- Operating Inoome - $ 36,094 $ 32,497 $ (3,547} 90.26% $144,018, $ 142,586 $ (1,432), 99.01% Equipment Replacement Reserve $ 14,000 $ 13,306 $ 694 95.04% $ 56,000 $ 53,224 $ Z776 95,04% _._..._._ Tn -,...- _..._ _..._... Net Income - $ 22,004 $ 19,191 $ (2,813}� ,87.22°!a �� - $ 88,p18 -$.89,362 -$ 1,344 ]0153%i 2004 Investment Reportlnv Report 2003 " City of Palm Desert . ®arkview Office Complex ' Vacancy Rate Schedule by Suite October 2003 Suite Square No. Tenant Feet 73-710 Fred Waring Drive -Two (2) Story Building 100 Hanover 1,915 100A William Bonneheim 645 102 Bergren&Associates 1,360 103 National Multiple Sclerosis 488 104 Arthritis Foundation 960 106 Coachella Valley Economic Partnership 928 108 Assembly Rules Committee-Assemblyman Benoit 450 112 Senator Battin 1,741 114 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 Mountain Conservancy 480 205 Adopt-A-Class 700 208 Alzheimer's Association 960 210 Wilson, Pesota &Pichardo 3,040 2004 Investment ReportVacancy Report 1 City of Palm Desert �arkview Office Complex Vacancy Rate Schedule by Suite October 2003 211 State of California Department of Food&Agriculture 937 217 Joe B. McMillan, Esq. 775 220 EPA-Moved From Suite 101A 1,607 222 Cove Commission-Fire Marshal 1,900 222 CITY Storage-Vacant 1,081 Total square footage(2 story Building) 31,562 Vacancy Rate-1,081/31,562= 3.43% 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-1,081/51,191 2.11% Occupancy Rate-50,110/51,191 97.89% 2004 Investment ReportVacancy Report 2 G. Palm Desert Golf Course Facilities Corporation Financial Information for October 2003 Report will be distributed at the meeting City of Palm Desert Desert Willow ' . Budget Vs Actual For the month of September 2003 Budgeted Actual Budgeted Actual September September $ Percentage Yearto Yearto S Percentage Revenue 2003 2003 Variance Variance Date Date Variance Variance Course&Ground S 183,450 $ 133,638 S (49,812) 72.85% $ 405275 S 333,726 $ (71,549) 82,35% Carts $ 24,005 $ 19,350 S (4,655) 80.61% $ 57,592 $ 53,870 $ (3,722) 93.54% Golf Shop S 48,359 $ 31,731 $ (16,628) 65.62% $ 99,649 $ 81,189 $ (18460) 81.47% Range S 500 S 1,130 $ 630 226.00% $ 1,635 $ 2,980 $ 1,345 182.26% Food&Beverage S 99,0t8 S 86.804 S (12,214) 87.66% S 202443 S 178,123 $ (24,320) 87.99% Interest Income S 200 S - S (200) 0.00% $ 900 $ - 3 (900) 0.00% Total Revenues S 355 532 S 272,653 $ (82,879 76,69% S 767 494 S 649 888 $ 117 606 84.68 Payroll Freshen $ 4,834 $ 4,532 $ 302 93.75% $ 13,612 $ 16,449 $ (2,837) 120.84% Can S 16,416 S 16,010 $ 406 9Z53% S 45,464 S 44,912 $ 552 98.79% Course&Ground $ 120,546 $ 147,175 S (26,629) 122.09% $ 365714 S 411,852 $ (46,138) 112.62% Golf Operations $ 22,718 S 22,615 $ 103 99.55% S 66,886 $ 62,054 $ 4,832 92.78% General&Administration S 36,183 S 37,688 S (1,505) 104.16% $ 109295 $ 115,885 $ (6,590) 106.03% Food&Beverage S 56,544 $ 55,456 S 1,088 98.08% $ 152.298 $ 162,336 S (10,038) 106.59% Total Payroll S 257.241 S 283 476 $ 26 235 l I0.20% $ 75I 269 813.488 S (60.2 107.99% Other Expenditures Perimeter Landscaping $ - $ - S - 0.00% $ - $ - $ - 0.00% Proshop $ 3.000 $ 16.700 S (13,700) 556.67% $ 4,080 $ 20,651 $ (16,571) 506.15% Proshop-COGS S 26,796 S - $ 26,796 0.00% $ 55,410 $ 22,433 $ 32977 40.49% Cott $ 11,970 S MM4 $ 356 97.03% $ 35,910 $ 33,734 S 2,176 93.94% Course&Ground-North Course S 175,629 $ 42,220 S 133,409 24.04% $ 289.727 $ 155,797 $ 133,930 53,77% Course&Ground-South Course $ 40,060 $ 189,295 S (149,235) 472.53% $ 150,363 S 321,999 $ (17L636) 214.15% Course&Ground-Desert Pallet-N $ 405 $ 409 S (4) 100.99% S 1,805 $ 1,215 S 590 67.31% Course&Ground-Desen Pallet-S $ 1,005 S 409 $ 596 40.70% $ 2,405 $ 1,421 $ 984 59,09% Golf Operations $ 175 $ 427 $ (252) 244.00% $ 840 S 1,153 $ (313) 137.26% General&Administration $ 57,678 $ 49,731 $ 7,947 86.22% $ 172,148 S 160,122 $ 12,026 93.01% Range S 100 $ 10 S 90 10.00% $ 200 S 185 $ 15 92.50% Food&Beverage S 23,762 S 17,209 S 6,553 72.42% $ 53,286 $ 46,962 $ 6,324 88.13% Food&Beverage COGS $ 30,673 $ 23,257 S 7,416 75,82% $ 62,769 $ 59,504 S 3,265 94.80% Management Fee $ 25,000 $ 25,000 $ - 100.00% $ 75,000 $ 75,000 S - 100.00% Financing/Lease $ 5,708 S 5,595 S 113 98.02% $ 17,161 $ 16,837 $ 324 98.11% Total Other Expenditure! S 401961 S 381876 S 20085 95.00% S 921.104 $ 917013 $ 4091 99.56% Desert Willow Golf Academy Desert Willow Golf Academy S 5,600 S 7,877 S 2,277 140.66% $ 17.000 $ 20,341 $ 3,341 119,65% COGS-Merchandise S (4,927) $ (3943) $ 984 80,03% $ (16,724) $ (16,533) $ 191 98,86% Other Expenditures $ (2,250) $ (3,135) $ (885) 139.33% $ (10,100) S (12707) $ (207) 125.81% Learning Center Income(Loss) $ (1,577) $ 799 S 2,376 -50.67% $ (9,824) S (8,899) $ 925 90 58% Operating Income(Loss) S (305,247) $ (39L900) $ (86,653) 128.39% $ (916,703) $ (1,089,512) $ (172,809) 118,85% Equipment Reserve Replacement $ 71,955 S 68,091 $ (3,864) 94.63% S 215,965 $ 209,153 S (6,712) 96.89% Net Income loss $ (377.202) $ 1459.991) $ (82,789) 121.95% $ 1 132,568) $ 1 298 665 $ 166 097 114.67% Snapshot of Golf Rounds Budgeted mo Actual mo Variance Variance% Budgeted tJ Actual td Variance Variance% Resident 645 536 (109) 83% 1,495 1,204 (291) 81% Non Resident 4,131 3,229 (902) 78% 9,877 9,166 (711) 93% Other - 13 13 100% - 33 33 100% Complimentary 300 426 126 142% 755 997 242 132% Total 5,076 4,204 (872) 83% 12,127 11,400 (727) 94% Foldee Desert Willow 2004:DW2004;Financial Statement Page 1 t \ \/\00�\\ \ | t \\\\\\ \ ( 9 z � o ; » 04xa a as / 3 , : ! ! ! ) § ) y § / . ) § \ \ 2 ! ° � < a ) �2 k ! } / & f E § w ) ` a � � \ § ka ! ) f \ / m \� ) � � } § m m 6 9 v ryvo, c _ - _< iv�,m e' mm,r �•^.• ry nN m$ n - - c � . _ - _ a v � _ _ _ d > > i > oB � eSoz & = 4 y C w H✓i w N N »'S N»H H N w w w N N N w w w w » H w w N a O m 4 fi U a9• ..• S n m _ $ = 5 - _ _ NN v - _ A � Xn - - cc ry °•ma pe ; vy �p N» NNHH »H»www wN»»»wH»w»» » ww» w w a U Q o U X X X X X X X X a X X X X X X X X X X X X X X X X X X X X X X X X X X X X X > j v PON E H Hwwww wwHwww www»wwwwwww www H w < t E S ' _ m" N HHww» HwNNN» N»w»wwNNN»wH NwH w N a n v = v 4 C a x a 'g w � � 0 3 ° �• v z U Ltd iuu0 0i.. un. a` UUUu u° u°. 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Breakdown of Rounds per point of sale system DESERT WILLOW- COMBINED ANALYSIS- SEPTEMBER 2003 Resident 536 $ 18,760 $ 35.00 12.75% Non-Resident 3,229 $ 333,526 $ 41.35 76.81% Other 13 $ 85 $ 6.54 0.310/. Complimentary 426 $ 100 $ 0.23 10.13% Desert Willow Totals 4,204 152,471 36.27 100.00% Dw2004;P05 AVG RD Page 9 ® Desert Willow • Breakdown of Rounds per point of sale system FIRECLIFF COURSE- SEPTEMBER 2003 Description No. Of Revenue Avg. Per Pct to Rounds Per POS Round Total Resident Rounds Resident Fee-Weekend 495 $ 17,325 $ 35.00 12.98% Total Resident 495 17,325 35.00 12.98% Non Resident Posted Weekend 211 $ 15,825 $ 75.00 5.53% IROC Des. PRTY-Weekday 5 $ 188 $ 37.60 0.13% IROC MBR. / Guest Weekend 45 $ 2,700 $ 60.00 1,18% Wholesale Weekday 957 $ 44,489 $ 46.49 25,09% Twilight 1,084 $ 28,670 $ 26.45 28.42% Players Club 11 $ 385 $ 35.00 0,29% Outing 476 $ 22,824 $ 47.95 12.48% Fee Special Event Variable 238 $ 9,781 $ 41.10 6.24°/ Total Non Resident Rounds 3,027 124,862 41.25 79.37% Other Rounds Junior Walking 10 $ 82 $ 8.20 0.26% Total Other 10 82 8.20 0.26% Complimentary PGA Member 20 $ - $ - 0.52% VIP 141 $ - $ - 3.709% Employee Guest 121 $ 100 $ 0.83 3.17% Total Complimentary 282tT 100 0.35 7.39% Total Round(FireClif� 3,814 $ 142,369 $ 37.33 100.00% DW2004;POS AVG RD Page 10 ® Desert Willow • Breakdown of Rounds per point of sale system MOUNTAINVIEW COURSE- SEPTEMBER 2003 Description No. Of Revenue Avg.Per Pet to Rounds Per POS Round Total Resident Rounds Resident Fee 41 $ 1,435 $ 35.00 10.519/. Total Resident 41 1,435 35.00 10,51% Non Resident Posted Weekend 31 $ 2,325 $ 75.00 7.95% IROC MBR Guest-Weekday 10 $ 600 $ 60.00 2.56% Wholesale Weekday 50 $ 2,628 $ 52.56 12.82% '!\night 91 $ 2,275 $ 25.00 23.33% Players Club 3 $ 105 $ 35.00 0.77% Fee special Event Variable 17 $ 731 $ 43.00 4.36% Total Non Resident Rounds 202 8,664 42.89 51.79% Other Rounds Junior Walking 3 $ 3 $ 1.00 0.77% Total Other 3 3 1.00 0.77% Complimentary VIP 12 $ - $ - 3.08% PGA Member 4 $ - $ - 1.03% COD/PDHS 120 $ - $ - 30.77/ Donation 3 $ - $ - 0.77% Employee/Employee Guest 5 $ - $ - 1.28% Total Complimentary 144 - - 36.92% Tatai Round Mountalaview 390 $ 10 102 $ 25.90 1009/6 DW:004;PDS AVG RD Page 11 City of Palm Desert • Desert Willow Cash Reserve Analysis for the month of September 2003 Cash Reserve Analysis One Month Required Reserve $ 500,000.00 Cash on Hand $ 463,829.21 Variance-Favorable Unfavorable $ 36,170.79 Please note: As part of the management agreement Kemper Sports Inc. will deposit the shortfall of the cash bala to the Desert Willow bank account. Page 12 PalmDes#Recreation Facilities Corporatio Income Statement Sep-03 Sep-03 ✓! % Budget Actual Variance Variance Food &Beverage Revenues $99,018 $86,804 ($12,214) 87.66% Total Revenues $99,018 $86,804 ($12,214) 87.66% Salaries $56,544 $55,456 $1,088 98.08% Cost of Goods Sold-F&B $30,673 $23,257 $7,416 75.82% Food & Beverage Expense $23,762 $17,209 $6,553 72.42% Total Expenses $110,979 $95,922 $15,057 86.43% Net Income (Loss) ($11,961) ($9,118) $2,843 76.23% Note: The above revenues and expenditures are also included in the Desert Willow analysis. DW2004;PDRFC Budget Page 1