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HomeMy WebLinkAbout2005-03-23 IFC Regular Meeting Agenda Packet ® • ®� CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARY�� DATE: APRIL 27, 2006 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports for Mach 2006 which were presented and approved at the meeting of April 25, 2006. Please include on the upcoming agenda for review and acceptance by City Council. Please feel free to contact me at Ext. 382 if you have any questions. Thank you. nmo Attachment (as noted) G:WinanceWiam Ortega\WOCocs\Investment Com tteelMemos\ lasseninwep M012605.wpC CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK n,, � FROM: NIAMH ORTEGA, RECORDING SECRETARYk`v DATE: APRIL 4, 2006 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports for January and February 2006 which were presented and approved at the meeting of March 28, 2006. • Please include on the upcoming agenda for review and acceptance by City Council. Please feel free to contact me at Ext. 382 if you have any questions. Thank you. nmo Attachment (as noted) • GIFI nceWia OnegaM J veal 1Commltmwem Wfas ninvrepon012N&wpd CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARY NMI DATE: MARCH 24, 2005 SUBJECT: COMPLIANCE ANALYSIS AND INVESTMENT REPORTS Please find attached the Compliance Analysis and Investment Reports for January 2005 which were presented and approved at the meeting of March 23, 2005. Please include on the upcoming agenda for review and acceptance by City Council. Please feel free to contact me at Ext. 382 if you have any questions. Thank you. nmo Attachment (as noted) ��o C� dv-�k 3bu�a5 GAFinanceWiam One a\W d=%Invms nl Cgm UO Wemo Was ninvreport UWS wpd COMMITTEE MEETING WORKSHEET Meeting Description Investment Committee Meeting Date 3/23/05 Time: 10:30 a.m. Location North Wing Conference Room Mailed Agenda 3/17/05 Posted Agenda 3/17/05 Time Convene Adjournment \0" S Staff Members Attending Yes No Others Attending Yes No Paul Gibson, Chairperson 12 Dennis Coleman 2 Council Member- Crites 13 Rodney Young 3 Council Member- Ferguson 14 Recording Secretary-Niamh O. 4 *orney 5 Carlos Ortega, City Mgr. 6 Thomas Jeffrey 1 y 7 Justin McCarthy Public Members Attending Guests Attending 8 Russ Campbell 15 9 Bill Veazie 16 10 Everett Wood 17 11 Thomas Wormley 18 19 20 Follow-Ups/Tasks Assigned Person Responsible Due Date 1 2 3 4 5 6 7 8 Spoke Mtn (1) Mtn (2) MEETING NOTES • 3`)°l a . 5. 1 F— 10 -� OHM P - o,) C� w ' 6 00) a - a �tl tiv► iv ed b bt.�:�l� - c ld' ov, to cw ' OkLUAj - 000 + - � e pi- Spoke- >Mtn (1) Min(2) . MEETING S¢tv�c� a e04 A � a . REP io cv v3 c WR w� i,n ��.�,; 0 S AqA 77 7 % Kz \ } \ ) , e � J \ , ( � » / \ / • � » K kf = ® E m CD >2 } ƒ % z mw / _ [ § Z { ƒ C \ / o ) § 4 B \ m z § \ d § I-) m 2 q § k § © 0 m g a m / \ / n / m0 \ { � § \ j % « / POSTED AGENDA REGULAR MEETING OF THE PALM DESERT INVESTMENT & FINANCE COMMITTEE Wednesday, March 23, 2005 — 10:30 a.m. North Wing Conference Room, City Hall 1. CALL TO ORDER II. ROLL CALL III. ORAL COMMUNICATIONS A. Any person who wishes to discuss an item not on the agenda may do so after he/she has given his/her name and street address for the record. Speakers must limit their remarks to three (3) minutes unless the Committee authorizes additional time. B. Any person who wishes to comment on an agenda item may do so. At the Committee's discretion, however, such comments may be deferred until the item is discussed on the agenda. Speakers must limit their remarks to three (3) minutes unless the Committee authorizes additional time. IV. APPROVAL OF MINUTES A. MINUTES OF THE MEETING OF FEBRUARY 23, 2005 Rec: By Minute Motion, approve the Minutes of the regular meeting of the Palm Desert Investment and Finance Committee of February 23, 2005, as presented. V. NEW BUSINESS A. CITY AND REDEVELOPMENT AGENCY INVESTMENT SCHEDULES AND SUMMARY OF CASH REPORTS FOR FEBRUARY 2005 Rec: By Minute Motion, recommend that the City Council approve the City and Redevelopment Agency Investment Reports for the periods ended January 31, 2005. B. LOCAL AGENCY INVESTMENT FUND (L.A.I.F.) ACCOUNT STATEMENTS FOR FEBRUARY 2005 Rec: Review and file. 1 t INVESTMENT & FINANCE COMMITTEE AGENDA MARCH 23, 2005 C. CALIFORNIA ASSET MANAGEMENT PROGRAM (C.A.M.P.) ACCOUNT STATEMENTS FOR FEBRUARY 2005 Rec: Review and file. D. CITY AND REDEVELOPMENT AGENCY FINANCIAL REPORTS FOR FEBRUARY 2005 Rec: Review and file. E. PARKVIEW PROFESSIONAL OFFICE BUILDINGS FINANCIAL REPORTS FOR FEBRUARY 2005 Rec: Review and file. F. PALM DESERT GOLF COURSE FACILITIES CORPORATION FINANCIAL REPORTS FOR FEBRUARY 2005 Rec: Review and file. G. RETIREE HEALTH STIPEND FUND Rec: Review and file. H. APPROVAL OF LETTER OF AUDIT ENGAGEMENT RECEIVED FROM LANCE. SOLL & LUNGHARD FOR FISCAL YEAR ENDING JUNE 30, 2005 Rec: Recommend that the City Council approve continuance of the existing contract with Lance, Soil & Lunghard (LSL) for audit services for Fiscal Year ending June 30, 2005. I. 2005 INVESTMENT POLICIES AND PROCEDURES Rec: Receive and file. VI. CONTINUED BUSINESS None. 2 G:IFinanceftamh OrtegalftdocsVnvestment Committee12005VigendMagenda 032305.doc a INVESTMENT & FINANCE COMMITTEE AGENDA MARCH 23, 2005 VII. OLD BUSINESS A. PUBLIC AND PRIVATE PARTNERSHIP BACKGROUND CHECKS Rec: Review and file. B. PALM DESERT FINANCING AUTHORITY BOND ISSUANCE Rec: Review and file. Vill. ADJOURNMENT Rec: By Minute Motion, adjourn the meeting. *** Next Meeting: Wednesday, April 27, 2005 at 10:30 a.m. in the North Wing Conference Room, City Hall. I hereby certify, under penalty of perjury, under the laws of the State of California that the foregoing agenda for the Palm Desert Investment and Finance Committee was posted on the City Hall bulletin board not less than seventy-two (72) hours prior to the meeting. Dated this 16th day of March 2005. i Niamh Ortega, Reco"69Secretary 3 GA-inanceWiamh OrtegalWpdocsllnvestment Committee1200SAgendalagenda 032305.doc MINUTES REGULAR MEETING OF THE PALM DESERT INVESTMENT & FINANCE COMMITTEE Wednesday, February 23, 2005 I. CALL TO ORDER Chairman Espinoza called to order a regular meeting of the Palm Desert Investment & Finance Committee at 10:32 a.m. II. ROLL CALL Present: Absent: Luis Espinoza, Acting Chairman Paul Gibson, City Treasurer Buford Crites, Mayor Thomas Wormley, Member Jim Ferguson, Mayor Pro-Tempore Carlos Ortega, City Manager Justin McCarthy, ACM/Redevelopment Thomas Jeffrey, Deputy City Treasurer David Erwin, City Attorney Russ Campbell, Member Bill Veazie, Member Everett Wood, Member Also Present: Dennis Coleman, RDA/Housing Finance Manager Anthony Hernandez, Senior Financial Analyst Niamh Ortega, Recording Secretary III. ORAL COMMUNICATIONS None. IV. APPROVAL OF MINUTES A. MINUTES OF THE MEETING OF JANUARY 26, 2005 Mr. Espinoza noted that the names of the Mayor and Mayor Pro-Tempore would be changed on the attendance record to reflect the recent change of INVESTMENT & FINANCE COMMITTEE MINUTES FEBRUARY 23, 2005 office, appointing former Mayor Pro-Tempore Crites to the position of Mayor and Councilman Ferguson to that of Mayor Pro-Tempore. MOTION was made by Mr. Campbell and seconded by Mr. Veazie to approve the Minutes of the January 26, 2005 meeting as corrected. Motion passed. V. NEW BUSINESS A. CITY AND REDEVELOPMENT AGENCY INVESTMENT SCHEDULES AND SUMMARY OF CASH REPORTS FOR JANUARY 2005 Mr. Jeffrey discussed the investment reports for January 2005. For the month ended January 31, 2005, the book value of the City Portfolio was approximately $140.2 million. Interest earnings were approximately $243,000. Yield-to-maturity was approximately 2.54%. For the month ended January 31, 2005, the book value of the RDA Portfolio was approximately $160.6 million. Interest earnings were approximately $268,000. Yield-to-maturity was approximately 2.23%. Mr. Veazie asked about the City's $12 million investment in Ford Motor Credit Corporation bonds that were rated A3/BBB-. Mr. Jeffrey replied that the City had a short-term position in Ford, with the bonds maturing in slightly over two years. The credit rating agencies had indicated that they thought it unlikely that Ford bonds would be rated below investment grade. Staff was comfortable with these short-term investments since Ford had excellent liquidity and a good balance sheet. Even with the Ford investments, the City was only able to achieve a 5.75% return for the Retiree Health Program, when the actuarial target was 6.50%. Mayor Pro-Tempore Ferguson asked how the City would bridge the gap between funded and unfunded liabilities for Retiree Health. Mr. Espinoza replied that the City was transferring more money from the General Fund into a restricted fund for Retiree Health than was actually required. Mr. Espinoza added that the City's financial statements included a note that disclosed the gap. Mr. Ferguson requested that the Committee receive, at its next meeting, an analysis of the unfunded liability, the effectiveness of the Ford investments in hitting the target, and the amount of City contributions. Mr. Espinoza replied that this would be done. Mayor Pro-Tempore Ferguson asked if there is a new assessment of the bonding capacity for each project area since they have been extended in the last few years. Mr. Coleman responded that the new dates to receive 2 W.IMinuteslMinutes 022305.doc INVESTMENT & FINANCE COMMITTEE MINUTES FEBRUARY 23, 2005 increment are 2026 for Project Area 1 (original), 2032 for Project Area 1 (annexed), 2038 for Project Area 2, 2039 for Project Area 3, and 2043 for Project Area 4. The tax increment cap will not be reached in Project Areas 1 (original), 2 and 3. It may be reached in Project Areas 1 (annexed) and 4. The bonding capacity is around $55 million to $62 million, taking ERAF into consideration. Over the next two years, the ERAF payment is approximately $3.9 million. MOTION to accept the report and recommend that it be received and filed by the City Council made by Member Wood, seconded by Member Ortega, and unanimously approved. B. LOCAL AGENCY INVESTMENT FUND (L.A.I.F.) ACCOUNT STATEMENTS FOR JANUARY 2005 The reports were reviewed and placed on file. C. CALIFORNIA ASSET MANAGEMENT PROGRAM (C.A.M.P.) ACCOUNT STATEMENTS FOR JANUARY 2005 The reports were reviewed and placed on file. D. CITY AND REDEVELOPMENT AGENCY FINANCIAL REPORTS FOR JANUARY 2005 The City's report was reviewed and placed on file. Mr. Coleman announced that the Redevelopment Agency's reports were distributed for November and December 2004, as well as January 2005. The reports were reviewed and placed on file. E. PARKVIEW PROFESSIONAL OFFICE BUILDINGS FINANCIAL REPORT FOR JANUARY 2005 The report was reviewed and placed on file. F. PALM DESERT GOLF COURSE FACILITIES CORPORATION FINANCIAL REPORT FOR JANUARY 2005 Mr. Espinoza reported that Mr. Young was out of state and would be able to answer any questions at the next regular meeting. Mr. Ortega reported that at the end of January, in spite of a few rainy days, the course was performing better than budgeted. G. 457 DEFERRED COMPENSATION REPORTS FOR 4Q04 (NATIONWIDE AND ICMA) 3 WlMinutesWinutes 022305.doc { INVESTMENT & FINANCE COMMITTEE MINUTES FEBRUARY 23 2005 The report was reviewed and placed on file. H. INDEPENDENT ACCOUNTANTS' REPORT — CASH AND INVESTMENT ACTIVITIES REVIEW Mr. Espinoza reported that there were no significant findings by the accountants, and will be reviewed again in three years. VI. CONTINUED BUSINESS A. UPDATE ON INVESTMENT SUBCOMMITTEE MEETING Mr. Coleman reported that the subcommittee met to discuss the Request for Qualifications (RFQ) draft for underwriting services. Once the changes are made, the RFQ will be distributed. A list of those receiving the RFQ was distributed to the Committee. The next meeting date has not yet been determined. VII. OLD BUSINESS A. PUBLIC AND PRIVATE PARTNERSHIP BACKGROUND CHECKS No report. B. PALM DESERT FINANCING AUTHORITY BOND ISSUANCE Mr. Coleman reported that staff was directed by Council to research the possibility of recovering funds for staff time expended on bond issues. He requested that the Committee approve staff to enter into discussions with the City Attorneys to explore this opportunity. Member Wood questioned if the City is the only source for developers to recover these fees. Member Ortega indicated that the developer would typically have to pay for conditions placed on a development in cash, but the City of Palm Desert allows them to form an assessment district to do this. The purpose would be to obtain a legal opinion that designates how much the City could impose. MOTION to approve discussions between staff and the City Attorneys to explore recovery of funds for staff time spent on bond issues made by Member Wood, seconded by Member Campbell, unanimously approved. 4 W.WinuteslMinutes 022305.doc INVESTMENT & FINANCE COMMITTEE MINUTES FEBRUARY 23, 2005 VIII. ADJOURNMENT Mr. Espinoza adjourned the meeting at 11:15 a.m. Niamh Ortega, Recording Secretary 5 WAMinutesWinutes 022305.doc City of Palm Desert City and Redevelopment Agency Portfolios COMPLIANCE ANALYSIS AND INVESTMENT REPORT February 2005 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)will next meet on March 22nd. Another 25 basis-point increase in the Federal Funds Rate, from 2.50% to 2.75%, is a certainty. The latest estimate is that the Federal Funds Rate will be at 4.00% by year-end. The FOMC is concerned about inflation prospects in 2006, as well as cheap money fueling bubbles in housing and other assets. Productivity growth is also slowing. A combination of a large trade deficit, high oil prices, and a strong economic expansion have increased the market's inflation expections, pushing up U.S. Treasury yields sharply. Consequently, the FOMC wants to cultivate an image as a strong inflation fighter, in order to reassure the financial markets. The rising price of oil may slow the FOMC's "rapid fire" rate hikes sometime this year. Oil price shocks, however, do not have the dramatic impact on the business cycle that they once did. The Federal Reserve has found that a one-time energy shock does not have a major impact on core inflation. As a recent Federal Reserve paper noted, oil prices rising relative to other prices is not inflation. Inflation, by definition, is when all prices rise in general, due to monetary policy and the general economy. Inflation prospects depend more on how the FOMC manages monetary policy relative to the economic expansion. Higher interest rates and oil prices will slow economic growth in 2005. Gross Domestic Product (GDP)will probably be near 3.75%for the year. Long-term bond yields will continue to rise as Asian countries buy fewer Treasuries. PaabS. CidyS& , C.C.M.r Treasurer PORTFOLIO STATISTICS Dollars in Thousands FEB-05 JAN-05 DEC-04 NOV-04 OCT-04 SEP-04 CITY Month-End Book Value*** $ 142,687 $ 140,218 $ 124,724 $ 128,602 $ 130,550 $ 132,121 Month-End Market Value— $ 142,852 $ 140,446 $ 124,992 $ 128,877 $ 130,866 $ 132,403 Paper Gain (Loss) $ 165 $ 228 $ 268 $ 275 $ 316 $ 282 Prior Year Book Variance $ 17,749 $ 12,381 $ (8,112) $ (3,536) $ (3,592) $ (6,242) Interest Earnings $ 283 $ 243 $ 222 $ 214 $ 200 $ 191 Yield-To-Maturity 2.66% 2.54% 2.26% 2.08% 1.96% 1.84% Weighted Maturity(Days) 172 178 121 119 124 123 Effective Duration 0.30 0.32 0.14 0.15 0.17 0.18 RDA Month-End Book Value*'" $ 159,105 $ 160,560 $ 147,802 $ 148,730 $ 149,149 $ 158,671 Month-End Market Value'** $ 159,134 $ 160,623 $ 147,862 $ 148,761 $ 149,180 $ 158,703 Paper Gain (Loss) $ 29 $ 63 $ 60 $ 31 $ 31 $ 32 Prior Year Book Variance $ (5,466) $ (2,570) $ 6,079 $ 4,546 $ 4,929 $ 5,778 Interest Earnings $ 285 $ 268 $ 239 $ 221 $ 216 $ 202 Yield-To-Maturity 2.37% 2.23% 2.00% 1.84% 1.73% 1.61% Weighted Maturity(Days) 136 127 65 65 65 62 Effective Duration 0.20 0.20 0.05 0.07 0.09 0.10 Omits SLGSs. City of Palm Desert -- Portfolio Characteristics 28 February 2005 Dollars in Thousands Ageing Interval Market Value < 1 M $ 60,781 General Fund Ageing <2M 3,033 <3M 8,041 100 <6M 15,985 80 < 1YR - 0 61 <2YR - a 60 <3YR 12,001 w 0 40 <4YR a° 16 <5YR - 20 3 8 12 >5YR - p 0 0 71 Total: $ 99,841 <1M <2M <3M <6M <1YR <2YR <3YR AA Ratings* Market Value Credit Quality AAA 0/0% AAA $ 31,187 26°f Unrated*' 72,785 AA 6,200 A 14, 74 Un " A-1 13,9 62%74 ! A 62% Total: $ 138,720 12% • Sector Market Value Asset Allocation Money Market Funds $ 19,098 LAIF LAIF , "/0 36 RDA 320 RDA Loan 32,785785 RDA Loan MTNs 20,773 29% U.S.Treasury - Federal Agency 12,090 Money Market Commercial Paper 13,974 Funds MTNs Total: $ 138,720 17% 18% Month City Yield LAW Yield Variance Performance Mar04 1.56 1.47 0.09 Apr 1.54 1.45 0.09 May 1.53 1.43 0.11 2.6 Jun 1.58 1.47 0.11 Jul 1.68 1.60 0.07 ' 2.2 && Aug 1.74 1.67 0.06 a f Sep 1.84 1.77 0.07 5- 1.8 Oct 1.96 1.89 0.07 E i Nov 2.08 2.00 0.08 1.4 . Dec 2.26 2.20 0.06 Mar04 Apr May Jun Jul Aug Sep Oct Nov Dec Jan05 Feb Jan05 2.54 2.26 0.28 Feb 2.66 2.37 0.29 MLAIF Yield OCity Yield Moody's Credit Ratings " LAIF,and City Loan to RDA Page 2 of 8 City of Palm Desert Portfolio Holdings 28 February 2005 Market Ratings Par Value Issuer JCouponj Maturity Cost YTM Price Value I Moody's S&P Medium-Term Notes $ 2,406,000 ABBOTT LABS 6.80 5/15/05 $ 2,428,989 2.08 100.70 $ 2,422,755 Al AA $ 3,000,000 BANK ONE 4.13 9/1/07 $ 3,034,306 3.64 100.54 $ 3,016,308 Aa3 A+ $ 3,000,000 FORD MOTOR CREDIT 7.20 6/15/07 $ 3,087,504 5.75 104.13 $ 3,124,014 A3 BBB- $ 2,500,000 FORD MOTOR CREDIT 7.20 6115107 $ 2,572,920 5.75 104.13 $ 2,603,345 A3 BBB- $ 4,612,000 FORD MOTOR CREDIT 7.20 6/15/07 $ 4,817,897 5.10 104.13 $ 4,802,651 A3 BBB- $ 1,610,000 FORD MOTOR CREDIT 6.75 5/15/05 $ 1,622,882 2.80 100.64 $ 1,620,283 A3 BBB- $ 3,000,000 GOLDMAN SACHS 7.20 3/1/07 $ 3,212,109 3.50 106.12 $ 3,183,573 Aa3 A+ $ 20,128,000 Subtotal $ 20,776,608 4.28 $ 20,772,929 Commercial Paper--Discount $ 3,000,000 GENERAL ELECTRIC 2.56 5/13/05 $ 2,976,107 2.62 99.44 $ 2,983,227 P-1 A-1+ $ 3,000,000 GENERAL ELECTRIC 2.63 6/15/05 $ 2,968,221 2.70 99.90 $ 2,997,110 P-1 A-1+ $ 3,000,000 GENERAL ELECTRIC 2.71 7/15/05 $ 2,960,479 2.78 99.66 $ 2,989,885 P-1 A-1+ $ 5,050,000 GENERAL ELECTRIC 2.73 6122/05 $ 4,999,067 2.80 99.08 $ 5,003,784 P-1 A-1+ $ 14,050,000 Subtotal $ 13,903,873 2.73 $ 13,974,006 Federal Agencies--Discount $ 1,015,000 FED. NATIONAL MTG ASSOC 1.92 5/2/05 $ 997,021 2.00 99.55 $ 1,010,433 Aaa AAA $ 3,035,000 FED. NATIONAL MTG ASSOC 1.71 3/3/05 $ 2,995,644 1.78 99.99 $ 3,034,697 Aaa AAA $ 3,045,000 FED. NATIONAL MTG ASSOC 1.79 4/1/05 $ 2,999,427 1.86 99.78 $ 3,038,301 Aaa AAA $ 5,047,000 FED. NATIONAL MTG ASSOC 2.71 6/15/05 $ 4,999,129 2.77 99.19 $ 5,006,119 Aaa AAA $ 12,142,000 Subtotal $ 11,991,221 2.23 $ 12,089,550 LGIP $ 40,000,000 L.A.I.F. 0.00 311/05 $ 40,000,000 2.37 100.00 $ 40,000,000 U U $ 40,000,000 Subtotal $ 40,000,000 2.37 $ 40,000,000 LGIP $ 9,419,473 C.A.M.P. 0.00 3/1/05 $ 9,419,473 2.28 100.00 $ 9,419,473 U AAA $ 9,419,473 Subtotal $ 9,419,473 2.28 $ 9,419,473 Pooled Funds --AIM $ 9,678,194 PRIME PORTFOLIO 0.00 3/1/05 $ 9,678,194 2.13 100.00 $ 9,678,194 Aaa AAA $ 9,678,194 Subtotal $ 9,678,194 2.13 $ 9,678,194 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 3/1/35 $ 32,785,480 2.37 100.00 $ 32,785,480 U U $ 32,785,480 Subtotal $ 32,785,480 2.37 $ 32,785,480 "U"= Unrated Page 3 of 8 City of Palm Desert Portfolio Holdings 28 February 2005 Market Ratings Par Value Issuer lCouponj Maturity Cost YTM I Price I Value IMoodysl S&P Total Investments $ 138,203,147 $ 138,554,850 2.66 $ 138,719,632 Cash $ 3,182,632 CITY MAIN CHKG 0.00 3/1/05 $ 3,182,632 0.00 100.00 $ 3,182,632 N/A N/A $ 492,270 DESERT WILLOW CHKG 0.00 3/1/05 $ 492,270 0.00 100.00 $ 492,270 N/A N/A $ 457,617 RECREATIONAL FAC CHKG 0.00 3/1/05 $ 457,617 0.00 100.00 $ 457,617 N/A N/A $ 4,132,519 Subtotal $ 4,132,519 $ 4,132,519 Total Investments and Cash $ 142,335,666 $ 142,687,368 $ 142,852,151 Corporate Issuer Concentrations as a % of the City Portfolio(Market Value): ABBOTT LABS 1.80% BANK ONC 2.20% FORD MOTOR CREDIT CORPORATION 8.80% GENERAL ELECTRIC CAPITAL CORPORATION 10.07% GOLDMAN SACHS 2.30% "U"= Unrated Page 4 of 8 Palm Desert Redevelopment Agency--Portfolio Characteristics 28 February 2005 Dollars in Thousands Ageing Interval Market Value< 1 M $ 74,281 portfolio Ageing w/o SLGSs <2M - <3M _ 100 <6M 2,953 90 80 80 < 1YR 3,618 a 70 <2YR 3,088 0 60 <3YR 8,998 0 50 `C 40 <4YR - 10 30 <5YR 20 10 10 0 0 3 4 3 0 >5YR - 0 Total: $ 92,938 < 1M <2M <3M <6M <1YR <2YR <3YR <4YR Quality' Market Value Credit Quality AA 0% AAA $ 83,359 AAA Unrated" 60,704 53% AA - A 6,699 (4 Unrated" A-1 5,996 4% 39% Total: $ 156,758 4% A 4% Sector Market Value �ASset Allocation Money Market U.S. Treasury $ 45, 3 O 35%s . Money Market Funds 45,24243 Federal Agency 15,023 U.S.Treasury Commercial Paper 5,996 18% LAIF Corporate Bonds 6,699 47% Total: $ 156,758 Month RDA Yield LAW Yield Variance performance Mar04 1.20 1.47 -0.28 Apr 1.22 1.45 -0.23 2.5 May 1.17 1.43 -0,26 Jun 1.37 1.47 -0.10 2.0 Jul 1.53 1.60 -0.08 Aug 1.51 1.67 -0.16 c Sep 1.61 1.77 -0.17 1.5 r Oct 1.73 1.89 -0.16 r 6 Nov 1.84 2.00 -0.17 1.0 lL Dec 2.00 2,20 -0.20 Mar04 Apr May Jun Jul Aug Sep Oct Nov Dec Jan05 Feb Jan05 2.23 2.26 -0.03 Feb 2.37 2.37 0.00 3LAIF Yield ❑RDA Yield * Moody's Credit Ratings LAW Page 5 of 8 Palm Desert Redevelopment Agency Portfolio Holdings 28 February 2005 Market Ratings Par Value Issuer Coupon Maturity Cost YTM I Price Value I Moody's I S&P Medium-Term Notes $ 3,525,000 FORD MOTOR CREDIT 6,88 211106 $ 3,616,951 3.94 102.36 $ 3,608,335 A3 BBB- $ 3,000,000 FORD MOTOR CREDIT 6.50 1/25/07 $ 3,088,370 4.85 103.02 $ 3,090,717 A3 BBB- $ 6,525,000 Subtotal $ 6,705,320 4.36 $ 6,699,052 Commercial Paper--Discount $ 3,039,000 GENERAL ELECTRIC 1.73 3/1/05 $ 2,999,569 1.80 99.99 $ 3,038,788 P-1 A-1+ $ 3,000,000 GENERAL ELECTRIC 2.77 8/15/05 $ 2,952,448 2.87 98.57 $ 2,957,160 P-1 A-1+ $ 6,039,000 Subtotal $ 5,952,017 2.33 $ 5,995,948 U.S.Treasury--Coupon $ 23,107,000 UNITED STATES TREASURY 1.63 3/31/05 $ 23,102,551 1.86 99.94 $ 23,092,558 Aaa AAA $ 23,107,000 Subtotal $ 23,102,551 1.86 $ 23,092,558 Federal Agency--Coupon $ 3,000,000 FED. FARM CREDIT BANK 2.63 9/17/07 $ 2,940,959 3.43 97.06 $ 2,911,875 Aaa AAA $ 3,000,000 FED. HOME LOAN BANK 3.38 9/14/07 $ 2,993,007 3.82 98.91 $ 2,967,188 Aaa AAA $ 3,000,000 FED. HOME LOAN MTG 4.88 3/15/07 $ 3,087,349 3.38 102.16 $ 3,064,688 Aaa AAA 1.$ 9,000,000 Subtotal $ 9,021,315 3.54 $ 8,943,750 Federal Agency--Discount $ 3,040,000 FED. NATIONAL MTG ASSOC 1.75 314/05 $ 2,999,509 1.82 99.98 $ 3,039,392 Aaa AAA $ 3,040,000 FED. NATIONAL MTG ASSOC 1.71 3/1/05 $ 3,001,012 1.78 100.00 $ 3,040,000 Aaa AAA $ 6,080,000 Subtotal $ 6,000,521 1.80 $ 6,079,392 LGIP $ 40,000,000 L.A.I.F. 0.00 3/1/05 $ 40,000,000 2.37 100.00 $ 40,000,000 U U $ 5,727,930 L.A.I.F. (HOUSING) 0.00 3/1/05 $ 5,727,930 2.37 100.00 $ 5,727,930 U U $ 5,092,135 L.A.I.F. BOND PROCEEDS 0.00 3/1/05 $ 5,092,135 2.37 100.00 $ 5,092,135 U U $ 9,883,828 L.A.I.F. BOND PROCEEDS 0.00 3/1/05 $ 9,883,828 2.37 100.00 $ 9,883,828 U U $ 60,703,893 Subtotal $ 60,703,893 2.37 $ 60,703,893 LGIP $ 17,501,192 C.A.M.P. 0.00 3/1/05 $ 17,501,192 2.28 100.00 $ 17,501,192 U AAA $ 17,501,192 Subtotal $ 17,501,192 2.28 $ 17,501,192 Pooled Funds --AIM $ 27,741,755 PRIME PORTFOLIO 0.00 3/1/05 $ 27,741,755 2.13 100.00 $ 27,741,755 Aaa AAA $ 27,741,755 Subtotal $ 27,741,755 2.13 $ 27,741,755 "U"= Unrated Page 6 of 8 Palm Desert Redevelopment Agency Portfolio Holdings 28 February 2005 Market Ratings Par Value Issuer Coupon Maturity Cost YTM I Price Value Moody's I SB.P Total Investments $ 156,697,840 $ 156,728,565 2.37 $ 156,757,540 Cash $ 2,062,199 HOUSING AUTH CHKG 0.00 311105 $ 2,062,199 0.00 100.00 $ 2,062,199 N/A N/A $ 314,657 HOUSING AUTH TRUST 0.00 3/1/05 $ 314,657 0.00 100.00 $ 314,657 N/A N/A $ 2,376,856 Subtotal $ 2,376,856 $ 2,376,856 Total Investments and Cash $ 159,074,696 $ 159,105,421 $ 159,134,396 .Corporate Issuer Concentrations as a %of the RDA Portfolio(Market Value): FORD MOTOR CREDIT CORPORATION 4.28% GENERAL ELECTRIC CAPITAL CORPORATION 3.80% "U"= Unrated Page 7 of 8 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert("City")and the Palm Desert Redevelopment Agency("RDA")are governed by federal,state, and local law. The City Treasurer's"Statement of Investment Policy"is more restrictive than the California Government Code. The Palm Desert Investment Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended 28 February 2005,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 23 March 2005, ,vacd,S. 67 )So , C.C.M.7- City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality %of City %of RDA Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601(a) Palm Desert Bonds 5 Years No Limit Not Authorized(1) 53601(b) U.S.Treasuries 5 Years No Limit 5 Years T No Limit I 1 0.0% 14.77% 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% 6% 6.7% 9.6% 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 10.0% 3.8% 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 536010) Medium-Term Notes 5 Years 30% A 5 Years 30% 1 A 1 15.0% 4.3% 53601(k) Mutual Funds 90 Days 20% AAA&Aaa 90 Days 20% (2) 1 AAA&Aaal 7.0% 1 17.7% 53601(I) Trust Indenture Debt Not Authorized 53601(m) Secured Bank Deposits 5 Years No Limit Not Authorized 53601(k) Local Government AAA&Aaa AAA&Aaa Investment Pools 90 Days 20% or Advisor 90 Days 20% (2) 1 or Advisor 1 6.8% 11.2% 53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& Not Authorized Securities AA(Security) LAIF No Limit No Limit 28.9% 38.7% (1) The City loan to RDA,which is not a bond, has been approved by the Palm Desert City Council. 76.3% 100.0% (2) Maximum limit for mutual funds and local government investment pools,excluding bond proceeds. ' Certified California Municipal Treasurer Page 8 of 8 § § e § ) \Z \\ � ! , § _ , E ! ! - ! , § a . � § } . ! o / rw § / (If o . : � LLL \ ■ � , § § q / LLCM � § CO. § � § § / (n eu a « 2 - d0r ¥ � 0 � / 2 � � � § 2 ) \ . � u > _ auj U " � 0z J $ or f 29 k § / § 0 \ m k ƒ ( ) \ § // / . * , \ STATE OF CALIFORNIA PHILIP ANGELIDES, Treasurer OFFICE OF THE TREASURER SACRAMENTO I DESERT Local Agency Investment Fund FINA�ICc DEPARTMENT PO Box 942809 Sacramento, CA 94209-0001 Y015 11AR I I PM 1: 51 (916)653-3001 February, 2005 Statement CITY OF PALM DESERT Account Number : 98-33-621 Attn: CITY TREASURER 73510 FRED WAR/NG DRNE PALM DESERT CA 92260 Account Summary Total Deposit : 0.00 Beginning Balance : 40,000,000.00 Total Withdrawal : 0.00 Ending Balance : 40,000,000.00 Page : 1 of 1 STATE OF CALIFORNIA PHILIP ANGELIDES, Treasurer OFFICE OF THE TREASURER SACRAMENTO CffY OF PALM DESERTFIlN'ANCE DEPARTMENT Local Agency Investment Fund PO Box 942809 105 MAR 14 AN 9-' 02 Sacramento, CA 94209-0001 (916) 653-3001 February, 2005 Statement PALM DESERT REDEVELOPMENT AGENCY Account Number : 65-33-015 Attn: TREASURER 73-510 FRED WARING DRIVE PALM DESERT CA 92260 Account Summary Total Deposit : 0.00 Beginning Balance : 40,000,000.00 Total Withdrawal : 0.00 Ending Balance : 40,000,000.00 Page : 1 of 1 STATE OF CALIFORNIA PHILIP ANGELIDES. Treasurer OFFICE OF THE TREASURER SACRAMENTO GN OE PALM DESERT Local Agency Investment Fun JINANCE DEPARTMENT PO Box 942809 2Q15 MAR 14 AM 9: 02 Sacramento, CA 94209-0001 (916) 653-3001 February, 2005 Statement PALM DESERT HOUSING AUTHORITY Account Number : 25-33-003 Attn: DEPUTY CITY TREASURER 73-510 FRED WARING DRIVE PALM DESERT CA 99260-2578 Account Summary Total Deposit : 0.00 Beginning Balance : 5,727,930.09 Total Withdrawal : 0.00 Ending Balance : 5,727,930.09 Page : 1 of I CfFY OF PALM CESERT CAVVIP F11,!M,!CE DEFT\RTMENT CA LI FORN I A ASSET STATEMENT M A N A G,1:X1 L N T PR OG R.4M 0INI POWrRS AUT11ORITF 20)5 MAR 15 AM 11: 21 I',CALLJVI 1KNIA.111trFT 2DRonLu,JR SAN FRA,NCISCO CALIFURN]:\e4111 FOR ACCOUNT INFORMATION: 800-729-7665 STATEMENT DATE: 2/28/2005 CITY OF PALM DESERT ACCOUNT NUMBER: 553-00 OPERATING FUND ATTN:THOMAS JEFFREY FUND NAME: Cash Reserve Portfolio FINANCE DEPARTMENT 73-510 FRED WARING DRIVE PALM DESERT,CA 92260-2578 Page 1 of 1 n Summa of 8/2 Statement Income Dividends Capital Gains Total Shares Account Date Paid This Year Paid This Year Owned Value 2/2 8120 0 5 $35,654.19 $0.00 9,419,473.420 $9.419,473.42 nsa on S mma o Beginning Balance Purchases Reinvestments Redemptions Ending Balance $10,402,274.01 $0.00 $17,199.41 $1,000,000.00 $9,419,473.42 S ES THIS O A• D - S n S ES •WNED 02/01/05 Beginning Balance 10,402,274.010 02/14/05 2/14/2005 Redemption-Wire Red. $1,000,000.00- $1.00 1,000,000.000- 9,402,274.010 02/28/05 3/112005 Accrual Income Div Reinvestment-DIV $17,199.41 $1.00 17,199.410 9,419,473.420 Message Line: The Monthly Distribution Yield Is 2.28%. The Monthly Effective Annual Yield Is 2.30%. Q Fy OF PAI_Ivl DESERT CASdVW FINANCE DEPARTMENT C .\ 1— 1 F O RN I A A S S E T STATEMENT MANAGEMENT PROGRAM 1. 2Q1S MAR OW F,RS A U'1 ii'Ii J l'1'Y L 15 AM 11: 21 ,i C:\I,IPUItNI,\ �FRFF"1' �313U FLVa)li S.\N FR,NSCI5CO CALIFORNIA Oi l 1 I FOR ACCOUNT INFORMATION: 800-729-7665 STATEMENT DATE: 2/28/2005 PALM DESERT REDEVOLPMENT AGENCY ACCOUNT NUMBER: 553-02 GENERALFUND ATTN:THOMAS JEFFREY FUND NAME: Cash Reserve Portfolio FINANCE DEPARTMENT 73-510 FRED WARING DRIVE PALM DESERT,CA 92260-2578 Page 1 of 1 Account$ummary aso 2/28/2005 , Statement Income Dividends Capital Gains Total Shares Account Date Paid This Year Paid This Year Owned Value 2/28/2005 $70,692.34 $0.00 17,501,192.160 $17,501,192.16 Trartsact_;an Summlfry for�2/1'!20 =2128%2005 =,.- - :• � n ' Beginning Balance Purchases Reinvestments Redemptions Ending Balance $21,067,876.63 $0.00 $33,315.53 $3,600,000.00 $17,501.192.16 TRAD .SLLrEm , ,pOL'LAEtgAMOU�t3' SHARE ` SHAFj,E3" "S„ TOTAL DATE DATE ANSAC11gN OFyTRASACFIINICE TRANSAGN SH_„_FSrO�VNED 02/01/05 Beginning Balance 21,067,876.630 02JI4/05 2/14/2005 Redemption-Wire Red. $3,600,000.00- $1.00 3,600,000.000- 17,467,876,630 02/28/05 3/1/2005 Accrual income Div Reinvestment-DIV $33,315.53 $1.00 33,315.530 17,501,192.160 Message Line: The Monthly Distribution Yield is 2.28%. The Monthly Effective Annual Yield is 2.30%. o 'v Oy m •�^• o m a •� [+9 .� n o m A .� 0 m w 'tl < t8. o � 0 tl rt S .ad.' A w 00 ON m m oo .- ON w a, J N ry O rt O' O NO in w C w A ON Oo NO ^ G1 j rt 5 NOcn .fl S ; .r. N W C C `^ y A O A O O N 0 0 9 C; b W N N N W N J A Q o ^-] O W O W O `O O� O Q O �D J O 'W A U:.,.W J R N oo O oo .- O — oo -� 'O O A_ A rNo O U O O.Uj yO y rt K &i b O `D w O o0 J NO O J fn W � O. W �O 00 to to O'. ON W G. pAo u O O O O O w T N O N W NO O .U. A ON O U �7o 7:0 TON O' y 00 O O W .-• A U n �p 01 0 0 N'N W .y 0o N T O C �D A N o0 C �O IJ C� A C� C -4 A '14 � 5. o O. O ON 0 A � - � Ow JONv � m O J O1 J N J W -�1 W 00 O U U ON LAU ..a VI � a GQ d m � waft tl e m w O w oo J b b W In � b Ib 5 yyW O � p ♦/ C 7 w b .-• J O w .- N U A "� +7 O .•• 0 0 � N- t�i d` � � 0 p C IJ in 0. C Q\ w ON :• -J woo C y ID p pd, O to to J 01 w N J 0o G A +1 CD so N W ON. U tl ON U .-• U .- m A N .� ON w U O N Oi'N 'A �Q �_\ M CA w r� e: ctli P. m m w ON ON oc OR - .�N- b DowNrn -oo' _.. o c/) a Ch y o9 a � m tl y s ` G c � 9 Palm Desert Redevelopment Agency February,2005 Budgeted February,ZWS F/A N1 P/A N2 P/A N3 P/A N4 HSG HA Totals Revenues: Tax Increment 496.964N M5,627.00 6,657W 141,296.In - - 990,54400 Other Income 11,113W 4116600 - - - 443,833.W 481,332.W Transfer in 58,333.W - 15,416.00 15,500,00 - - 89,249.00 Total 588,630.W M91193.00 ZW3.W 156,796.W - 4431833.W 1,561,125m Expenditures: Administrative Costs 140,596.00 10,950W 1,249,00 499.00 62,17600 152,396.0 367,866.00 Professional Services 25.02400 BMW - 833.00 12,916.W 125,257W 16,E863.00 Other Professional Services 47,126.00 36,909.0 14,919.00 18,612.00 45,116.W 92783W 255,465.00 Capital Pmlects 1,247,W5.00 400.61 159,441,00 2O195nhl) 2.050.907.00 385,882.00 6,29y397.00 a rebt Serve 92,829,00 182128.00 126,866.00 82519.00 - - 486,34200 Transfer Out. - - - - 358,276.00 - 358,276.00 Total 1553570.W 631A69m 302475.W 2,151,986.W 2,529,391.W 756,318.W 7,925,21N.W Net Cairt/Loss (!)K940.00) (281,676.00) (280.4020) (1,995,1 W.W) (2,529,391.00) (312,485.0) (6,364,OB4.00) Actual February,2W5 P/A NI P/A N2 P/A 43 P/A 44 HSG HA Totals Rev nu es: Taxlnc em - - - - - - - Other Income 21.64626 5,127.08 5375.05 54,678.39 8,22244 3M,532.63 479581.85 Transfer In - - - - - - - Tutal 21.646.26 5,127.W 5,375.M 54,67839 B,223.44 38453163 479581.85 Expenditures: Administrative Costs 97,924,10 - - - 43,811.31 201,319.65 M2.955.07 Professional Services 1,136.00 - - - - 110,801.79 111,937.79 Other Professional Servile' 4,396 Ti BWb6 111W.81 - 11230 7R033.65 76.5M.39 Capital Pojects 20,68970 R519.24 567.90 674,48L71 24,890.19 50,405.20 972556.94 Debt Service - - - - - - - Tr:msferOtu - - - - - - Total 313,M37 13AW.90 1/m.n 674,484.n 68,914.01 432560.29 1503,984.19 Netfairt/l.nss (291,400.31) (8,2B2.82) 3,706.34 (619,806.32) (60,591.57) (48,027.66) (1,024,402.34) Year-to-Date July 04-Feb os P/A NI P/A 42 P/A 43 P/A N4 HSG HA Totals Revenues: Tax lncrernent 17,565.7WSO 6,208,977W 1.13n,768.53 4A15,i95.31 - - 29,261,19.94 Other Income 707,889.37 30024.56 22249.40 IM,02611 654,486.37 2,725,38230 4,276,051311 Transfer In 6,07988 15,M6.19 4,3D.16 20,655.% 5,624,816S9 - 5,871,222.08 Total 18,279,678.75 6,254.34835 1,1W,341.09 4,572,417.38 6A79303.26 2,72538230 39,411,4n.13 Expenditures: Administrative Costs 939,998.67 5,123.90 615,63 14.16 392,W7.M 949,656.01 2,287,415.60 Professional Services 32,01428 - - %7.13 22659.53 783,367.50 839.008.44 Other Professional Services 11.689.05 131.521.50 1IRPPIA3 4.88701 83,872.25 441,201.71 695,615.95 Capital Projects 2,316.594.58 952.226,32 585,1R28 2747,76994 1,653,690.53 583,398.16 8,838,951.81 Debt Service 11195894 1,901,45230 2,908.33 109,308.M - - 3,808,627.50 Transfer Out 6,183,379.45 3,64a %16 317,618.58 4,150.n6W 2,82B.27268 - 17,129,3MA7 'total 9,507,633-17 6,M2,673.18 %6,759.25 s"3,662.T7 4,980-911= 2,757,623.38 33598,851.17 Net Gain/Loss B,-112,015is (388.324.83) 1831581.84 (4,nl,245.39) 1,4W,801.04 (32,241.08) 5,812,616.96 Crrrrent Capital Projects P/A 41 P/A 92 P/A 43 1'/A 04 HSG HA 12 A.,.Sit 1)urr11611tan Caumry Club Village Fn.Ivar Park Palm Village A7,nrmvnfs Normal this time EcIrada Del Ease. Pad Maintenance Street Improvements IUnro,,Tnuf Parmla Palms Mcbd,Home Park Visitors lnEenromn Center Lake/Pump Repaus Son Marino pec"ty Eric)ohnson Gardens Well Site Improvements 421d Ar, Homo lrreprnuenu of Prajttl5 Vallaron Child Coe C, Frank Sinatra WW.rgmunJutg Sidewalk bnpmvereents Past,,Be,, Fepunhase Refinance Rrlornlion Ben hls City of Palm Desert Parkview Office Complex Financial Statement for Fiscal Year 2004-2005 February-05 February-05 # % YTD YTD # % Budget Actual Variance Variance Budget Actual Variance Variance Revenues t Rental $ 69,000 $ 74,418 $ 5,418 107.85%I ? $ 550,500 $ 590,126 $ 39,626 107.20% Dividends/Interest $ 700 $ - $ (700) 0,00%1 { $ 5,600 $ - $ (5,600) 0,00% Total Revenues $ 69,700 $ 74,418 $ 4,718 106.779% - $ 556,100 $ 590,126 $ 34,026 106.12% Expenses _ I f Professional-Accounting&Auditing $ 8,500 $ 8,829 $ (329) 103.87%' $ 68,000 $ 70,632 $ (2,632) 103.87% Professional-Consultants $ 6,000 $ 5,550 $ 450 92.50% $ 48,000 $ 44,392 $ 3,608 92.48% Tenant improvements $ 3,000 $ - $ 3,000 0.00%j $ 24,000 $ 39,597 1 $ (15,597) 164.99% Repairs&Maintenance Building $ 8,000 $ 10,703 $ (2,703) 133.78% $ 64,000 $ 69,399 $ (5,399) 108.44% Repairs&Maintenance-landscaping $ Z300 $ 650 $ 1,650 28.26%; i $ 18,400 $ 1,950 $ 16,450 10,60% Utilities-Water $ 150 $ 116 $ 34 77.45% j $ 1,200 $ 836 $ 364 69.65% Utilities-Gas/Electric $ 7,000 $ 3,718 $ 3,282 53.12%1 $ 56,000 $ 42,262 $ 13,738 75.47% Utilities-Waste Disposal $ 600 $ 561 $ 39 93.43%i 1 $ 4,800 $ 4,373 $ 427 91.11% Telephone $ 250 $ 85 $ 165 33.90%i. $ 2,000 $ 1,977 $ 23 98.83% Insurance $ 521 $ - $ 521 0.00%. $ 4,166 $ - $ 4,166 0.00% Total Expenses $ 36,321 $ 30,212 $ 6,109 83.18%; $ 290,566 $ 275,418 $ 15,148 94.79% I Opensting.Imome _ - $ 39,379 $ 44�0b' $ 10,827 33244%a $ 2(5,534 $ 314;7p$ $ 49;i74 lWi% Equipment Replacement Reserve $ 16,700 $ 16,666 $ 34 99.80% $ 133,600 $ 133,328 $ 272 99.80% Net Income '- $' 16,679 $ 27,540 $ 10,861 165.12°1°. - $131�934 $ 181,380'`. $ 49A46' 132480% 1-Note:The tenant improvements for The Riverside County Supervisor,Roy Wilson are recorded as an expenditure for the purpose of this investment report, however,at the end of the year the tenant improvements will be capitalized as fixed assets and depreciated over the useful life of the asset. 2005 Investment Reportlnv Report 2005 ,r City of Palm Desert Parkview Office Complex Vacancy Rate Schedule by Suite February 2005 Suite Square No. Tenant Feet 73-710 Fred Waring Drive-Two (2) Story Building 100 Hanover 1,915 100A William Bonneheim 645 102 Cove Commission-Fire Marshal 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 3,040 211 State of California Department of Food &Agriculture 937 217 Joe B. McMillan,. Esq. 775 2005 Investment ReportVacancy Report r City of Palm Desert Parkview Office Complex Vacancy Rate Schedule by Suite February 2005 220 Environmental Products Applications 1,607 222 Riverside County Supervisor-Roy Wilson 3,348 Total square footage(2 story Building) 31,929 Vacancy Rate—0.00% 0.00% 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-0.00% 0.00% Occupancy Rate-100% 100.00% 2005 Investment ReportVacancy Report PaimDesert Recreation Facilities Corporation Income Statement Feb-05 Feb-05 N Budget Actual Variance Variance Food & Beverage Revenues $195,292 $191,943 ($3,349) 98.29% Total Revenues $195,292 $191,943 ($3,349) 98.29% Salaries $77,573 $72,011 $5,562 92.83% Cost of Goods Sold-F&B $59,669 $55,349 $4,320 92.76% Food & Beverage Expense $24,558 $33,599 ($9,041) 136.81% Total Expenses $161,800 $160,959 $841 99.48% Net Income (Loss) $33,492 $30,984 ($2,508) 92.51% Note: The above revenues and expenditures are also included in the Desert Willow analysis. DW2005;PDRFC Budget Page 1 City of Palm Desert Desert Willow Budget VS Actual For the month of February 2005 Budgeted Actual Budgeted Actual February February S Percentage Yearto Year to $ Percentage Revenue 2005 24105 Variance Variance Date Date Variance Variance Course&Ground S 761,070 S 722,627 S (38.443) 9495% S 2,845,452 S 2,893.162 S 47,710 101.68% Cans $ 4$,938 $ 45,255 S (683) 98.51% S 215,542 $ 203,385 S (12.157) 94,36% Golf Shop S 112,116 $ 125,766 S 13,650 112.17% $ 544,352 $ 535,299 $ (9,053) 98.34% Range $ 5,000 $ 6,905 S 1905 138.10% S 22,100 $ 25,170 S 3,070 113.89% Food&Beverage $ 195,292 S 191,943 $ (3,349) 98.29% S 955,984 S 985,794 S 29.810 103,12% Interest Income $ - S - $ - 0.00% $ - $ - $ - 0.00% otat Ritygnues S 1 119 4l6 I 1092 96 S (26.9201 97.60% S 4 583 30 S 4 642 810 S 59 80 101.30 SMINEEMINNa Payroll Proshop $ 3,671 $ 2,003 $ 1,668 54.56% $ 24,491 S 13,386 $ 11,105 54.66% Can S 32.554 $ 24.575 S 7.979 75.49% $ 176,989 S 157,736 5 19,253 89.12% Course&Craund S 120,603 S 111,305 S 9,298 92.29% S 1,036,523 $ 995,748 $ 40.775 9607% Golf Operations S 28,613 $ 27,493 S 1,130 9&05% S 205,917 S I80773 S 25,144 87.79% General&Administration $ 42,324 S 34,729 $ 7,595 82.06% S 333,344 $ 300,332 $ 33,012 90,10% Ford&Beverage $ 77,573 $ 72,011 S 5562 92,83% $ 514,178 S 520,626 $ (6448) 101'25% Total Par 11 305,338 S 272.106 33.232 89.12% S 2,291.442 S 2.169 601 S 122 941 94.64 Other Expenditures Perimeter Landscaping $ - S - S - 0.00% $ - S - S - 0.00% Proshop $ 5,600 S 5,070 $ 530 90,54% S 37,475 $ 35,671 S 1,804 95,19% Proshop-COGS $ 53,950 $ 48,840 S 5.110 90.53% $ 234.297 S 217,550 S 16,747 92,85% Can S 14,190 S 15,792 S (1,602) 111,29% $ 117,420 $ 114,382 S 3,038 97,41% Course&Craund-North Course S 29,374 $ 31,779 $ (2,405) 108.19% $ 478,291 S 477,870 S 421 99,91% Course&Ground-South Course $ 29,375 $ 26,084 $ 3,291 88,90% $ 432.419 S 419,588 S 12,831 97.03% Course&Craund-Desert Pallet-N $ 425 S - $ 425 0.00% $ 4,000 S 4,807 $ (807) 120,19% Course&Ground-Desert Pallet-S $ 1,025 S - S 1025 0.000/6 $ 5,900 S 2,911 S 2,999 50.19% Golf Operations S 1,175 S 1.065 S 110 90.64% S 13,200 S 8,694 S 4,506 65.86% General&Administration S 67,179 S 75,418 S (8,239) 112,26% $ 504,471 S 512,088 $ (7,617) 101.51% Range $ 145 $ (1,493) S 1,638 -1029.66% $ 11,990 S 12,674 $ (684) 105.70% Food&Beverage S 24,558 S 33,599 S (9,041) 136,81% $ 177,914 S 256,624 $ (78.710) 144.24% Food&Beverage COGS S 59,669 S 55,349 $ 4,320 92,76% S 295.134 $ 315,580 S (20,446) 106,93% Management Fee S 25.000 S 25,000 $ - 100.00% $ 200,000 $ 197,787 $ 2,213 98.89% Financing/Lease $ 4,121 S 3.939 S 182 95.58% S 34,521 $ 32,673 S 1,848 94,65% Total Other Ez endi ures S 315.796 320 442 S (4,656) 101.47% S 2 546 932 5 2,608499 S 6!967 102.43% Desert Willow Golf Academy Desert Willow Golf Academy $ 16,650 S 10.625 $ (6,025) 63.81% S 103,300 S 93,846 $ (9,454) 90.85% COGS-Merchandise S (6,611) S (5,808) S 803 $7,85% $ (51,774) $ (54,018) $ (2,244) 104.33% Other Expenditures S (6,250) S (6,563) S (313) 105,01% S (37.825) S (37630) S 195 9948% S Learning Center Income(Lou) S 3,799 S (1,746) S (5,535) -46.08% $ 13,701 S 2,198 S (1),503) 16.04% Operating Income(LOSS) S 502,081 $ 498,202 S (3,879) 99.23% S (241243) $ (132,492) $ 108,751 5492% Equipment Reserve Replacement S 70,000 S 72,725 S 2,725 103.89% S 560,000 $ 557,145 S (2,855) 99.49% e[Incom loss 432 O81 5 425.477 (6.604) 99.47% (801.2431 $ 689 6371 S 111,606 86.07% Sna shot of Golf Rounds Bud eted mo Actual mo Variance Variance% Budgeted td Actual td Variance Variance% Resident 2,725 2,860 135 105% 11,785 11.325 (460) 96% Non Resident 4,480 4,619 139 103% 31,625 34,834 3,209 110% Other - 44 44 100% - 410 410 100% Coro limeute 340 177 163 52% 2457 2057 400 84% Total 7,545 7,700 155 102% 45,867 48,626 2,759 106% Voider:Denert WJlow 2004:DW2005;Financial Statement Page 2 / 2 ! / ci ! be r ) r `) E ) 91 ! { ` i ( r! \ / ! Gam ] < = I # U) § _ ) \ \ \) \ ) 10. ) \ ) ) ) \ ) ) § / ) 00 ; - \ } ) g ~ ® § Q § — 2 - 2 ` Ic § j ) a � ) (0 ` \ [ | ! � £ ° ) Cq k ; co ! \ca § ƒ ar 0 � � \< \ cq � � � \ ] } \ 0 m � XXXX X XXXXXX X XXT � aXX � XXXX X XX . X X > X XX X X s d Play� s � ism _ m - Hin - 0 8 _ sn - - lls 8 saa to 2 $ > HIM I ^ n ���m�$ e w n G•., _ a v �_ m 6 0 - $ m - - ^ � 80 »ww»ww w w»»»ww w «wwwww«ww«ww « w«» « » « w n � 8 0 .. :: p� »»»« »» ww» w«» «- «»www»w ««w « »«« » a o dp w - Li - m � � „ m n �ate $I: 6 ;,i —U " � < „ $ X ;ea X Xa � XX X gXXXXXXXoBN am X m aS' m X X4 � „ X - - i > > slog . 95190 Mqry ART!" ! a. mn - ey !j an- -w w w w w w» w w» www » « a - - rn n a SIR 15rv « 1 a rv � w w»»«w « w »«ww«w w, wwwwwwww« www »w» w » a .^, BRa gv' 8 ^ w g• � $ � � 8e °' � .'P � a^^, S B 8 $ P $ = 8 is E = W w« www« ««« »w« www« ««w « »««w ww « w w a, 9 i B � ' � � 'i � �u � 3 E �• y5, a `�' � a°C 8 II Y C d � Y O O O 6 �y}�y}55 ¢y ; _ UUI�a' �a F iUU(] �5 M ii6 V U U IU C aa11u. F30 J ug Z n° CZOU F k � cli o ) \ R ; | \\ \ \ Q }) � a ■ ■ u0 ; - § 2a � k \ # »a «e 30 § ; / 4 § a Cd k kk } R ® ) } co / } ) : � & \ § } 0 \ \ § ) § § / ( ! l tm ! ) E[ ; . .4 LL j0 ` ! - }| (m UC ; � E k ° S ) § �; ( (k um ; \ { ` \ E \ / \ \ ° �s, ` / eo U r 7 d e 58888888 ry v rv".4 e n n a_ rem . �m '� NVNnnvnn !F!R tR M !R !R !Q IR dl > e om Y c U - - � � m E N U > > 0 o i u C Z pe yy i 3 z< qq CC rN yy33 1/� _ — O U 5� $83o�$r C cm ?Z F�m i V «ry F 9 c U 9 n e ° 0 S cececececececece 5� 88888Sgg Y e �d a'> �m O ce cececece y eR ce dt o u - F Em Y u ti $ *W*cece*** bq _ o >- 9 d0 Fa< y 0 • _ _ IR!4 M eR tR eR �R tR p`i " $ a cececececececece pe cecececece� rce tl' > F a "ayst .. � o > > U h o > m U Z°o cei � om �s�u °o a Z N U e a �e � F. o K `om J-Z m i a a2 �R9 F � f F Y y g 2 9 gpp 2 t E a y m` UMIZUH U ��cY z°d a" c°� ° � <' R GS ME 00 ( ! { ■ , , ` - ) § � . kk ■ § ° A� 00 A } } ) 2 ) o / �k r ~ * . | 06 ) ) 00 ! | { gl | I $ ) \ ! ; a a J » 0 ° $ § } 0 � ® lox \ k ] & / \ / � 2 Desert Willow Breakdown of Rounds per point of sale system Desert Willow - Combined Analysis- FEBRUARY 2005 - LI Resident 2,148 $ 96,660 $ 45.00 22.90% Non-Resident _6_,781 j $ 673,728 $ 99.36 72.40% Other 54 $ 6851 I $ 12.69 I 0.60% Complimentary 385 $ - I j $ - 4.10% Desert Willow Totals 9,368 . 771,073 82.31 100.00°1a DW2005;POS AVG RD Page 9 Desert Willow Breakdown of Rounds per point of sale system FIRECLIFF COURSE- FEBRUARY 2005 Description No. Of i Revenue I iAvg. Per Pet to Rounds Per POS Round Total Resident Rounds Resident Fee 945 $ 42,525 $ 45.00 20.39% Total Resident 945 42,525 45.00 20.39% Non Resident II IROC Member/ Guest 102 I $ 11,608 $ 113.80 2 20% IROC Designated Party 30 $ 2,475 $ 82.50 0.65% Sunrise 230 $ 28,750 $ 125.00 4.96% Prime 369 1 $ 60,885 $ 165.00 7.96% Midday 166 1 $ 20,750 1 $ 125.00 1 3.58% Sunset 284 $ 18,460 1 L$__ 65.00 6.13% Wholesale 1,394 j $ 124,917 1 $ 89.61 30.08% Outing 311 ! $ 34,688 1 $ 111.54 6.71% Twilight 397 i $ 34,202 1 $ 86.15 1 8.57% Fee Special Event Variable 171 1 $ 13,524 1 $ 79.09 1 3.69% Total Non Resident Rounds 3,454 350,259 101.41 74.52% Other Rounds Junior Walking 33 $ 475 $ 14.39 0.71% Total Other 33 475 14.39 j 0.71% Complimentary 1 _ I i VIP 37 1 $ 1 $ - 0.80% PGA Member 12 $ - 1 1 $ - 0.26% USGA Kids on Course - $ - 1 $ - 1 0.00% Champions Club 4 I $ - Lt $ - 0.0900 Donation 12 $ $ 0.26% PDHS/COD _ 112 1 $ - _-1-1 $ 2.42% Employee / Employee Guest 26 $ $ - 0.56% 11 Total Complimentary j 203 - - 4.38% 1 1 Total Rounds FireCliff) 4,635 $ 393,259 1 1 $ 84.85 1 100.00% DW2005;POS AVG RD Page 10 Desert Willow Breakdown of Rounds per point of sale system MOUNTAINVIEW COURSE- FEBRUARY 2005 - r- Description No. Of Revenue Avg. Per I Pet to Rounds Per POS Round j Total Resident Rounds Resident Fee 1,203 1 $. 54,135 1 1 1 $ 45.00 25.42% Total Resident 1,203 54,135 45.00 25.423/, � I I Non Resident 1 IROC Member/ Guest 95 $ 10,748 1 $ 113.14 2.01% IROC Designated Party 30 $ - 1 i $ - I 0.63% Sunrise 113 $ 14,125 1 1 $ 125,00 1 2.39% Prime 328 1 $ 54,120 1 $ 165.00 1 6.93% Midday 168 1 $ 21,000 1 $ 125.00 1 3.55% Sunset 1 276 1 $ 17,940 1 1 $ 65,00 1 5.83% Wholesale 1,401 $ 117,4 77 1 $ 83.80 29.60% Outing 405 j $ 46,445 1 $ 114.68 8.56% Rvilight 364 1 $ 31,439 1 $ 86.37 1 7.69°/u Fee Special Event Variable 147 $ 10,245 1 $ 69.69 3.11% 77 I II I Total Non Resident Rounds 3,327 323,469 97.23 70,29% I I Other Rounds 1 1 � i Junior Walking 21 I $ 210 1 $ 10.00 1 0.44% Total Other 21 210 1 1 10.00 1 0.44% Complimentary PGA Member 8 $ - $ 0.17% VIP 13 $ - 1 1 $ - 0.279/. Donations 12 $ - 1 $ - 0.25% Champions Club 3 1 $ - � $ - 0.06% PDHS/COD 132 1 $ - 1 1 $ - 2.79% Employee / Employee Guest 14 1 $ - 1 1 $ - 0.309/. 1 11 1 Total Complimentary 1821 3.85% Total Rounds (Mountainview) 4,733 J $ 377,8141 $ 79.83 100% DW2005;POS AVG RD Page 11 City of Palm Desert Desert Willow Cash Reserve Analysis for the month of February 2005 Cash Reserve Analysis One Month Re uired Reserve 1 $ 500,000.00 ash on Hand $ 996,565.43 Variance- Favorable Unfavorable $ 496,565.43 Page 12 CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: INVESTMENT & FINANCE COMMITTEE FROM: NIAMH ORTEGA, RECORDING SECRETARAVQ0 DATE: MARCH 18, 2005 SUBJECT: ANALYSIS OF RETIREE HEALTH FINANCING Enclosed for your information is a report on compliance and internal control over financial reporting addressed to the Mayor and City Council, and a letter addressed to the Investment and Finance Committee. Please include these items in your agenda packet under Section V. G., Retiree Health Stipend Fund. Please feel free to contact me at (760) 346-0611, Ext. 382 if you have any questions. Thank you. nmo Distribution: Buford Crites Jim Ferguson Carlos Ortega Paul Gibson Thomas Jeffrey Dennis Coleman David Erwin Russ Campbell Bill Veazie Everett Wood Thomas Wormley GARnance\Niamh Ortega\Wpdocs\Investment Committee\Memos\inv&fin committee 031805.wpd CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM To: The Investment and Finance Committee From: Paul S. Gibson, C.C.M.T., Finance Director and City Treasurer Date: March 18, 2005 Subject: Analysis of Retiree Health Financing The City of Palm Desert ("City") completely funds and administers its Retiree Health Program. This program is independent of the City's CALPERS program (employee retirement plan). The City's Retiree Health liabilities consist of "Past Service Liability" (retired employees who are currently receiving payments) and "Future Service Liability" (current employees who will retire in the future and receive payments). The City must comply with Governmental Accounting Standards Board (GASB) Pronouncements Nos. 43 and 45, which require that "Other Post-Employment Benefits," other than pension plans, assets, and liabilities, be accrued and expensed. Accordingly, the City hired an actuary to do a study that was completed on July 1, 2002. The study projected an unfunded Past Service Liability of$4,006,049 for the City. The actuary suggested that the City could fund this deficit by annually contributing $851,7991 to the Retiree Health Fund (Fund 576), over 20 years, in order to pay for both Past and Future Service Liability. The City subsequently chose to: (1) fully fund the Past Service Liability as of July 1, 2002; and (2) make a smaller annual contribution to the Retiree Health Fund. By fully funding the Past Service Liability, the City reduced its required annual contribution from $851,799 to $651,497. The City plans to contribute $939,000 ($543,000 contribution plus $396,000 of interest earnings) for Fiscal Year 2005, however, in order to fund a Future Service Liability deficit. t The annual contribution is comprised of the following;a)Present Value of benefits accruing in current year- $381,127,b)Twenty(20)year amortization of the unfunded past service liability-$200,302,c)Interest earnings on the unfunded service liability-$270,370.00 C9Documents and Settings�,obsont aaal Settings%Tern mry Intemet Ri"s OLKI INETIREE HEALTH ANALYSIS.doc 1- The actuarial study concluded that Retiree Health Program assets would need an annual yield of 6.50% in order to fund Past and Future Service Liability. In view of this target and historically depressed market yields, Staff requested the City Council's permission to buy Ford Motor Credit Corporation (a profitable finance affiliate of Ford Motor Company) bonds with a higher-than-market yield, for the Retiree Health Program. The City Council authorized this purchase at the May 8, 2003 Council meeting. The Ford bonds have a yield-to-maturity of 5.75%. Based upon the Ford bonds' current earnings, the City's Retiree Health Program is projected to have a $2,235,829 surplus, in terms of funding Past Service Liability (see Table 1). In contrast, the Program is projected to have a $1,487,446 deficit, in terms of funding Future Service Liability (see Table 2). The City will need to fund this deficit over the next 20 years. Staff is required to have another actuarial study done by October 2005. Table 1 —Provides a snapshot of the City funded Past Service Liability Account Balance Total Past Service Liability ................................................ 6,037,790 1 Less: Cash in fund to date (Assets)June 30, 2004...................... 7,334,319 City Cash Contribution for fiscal year 2004-2005................. 543,300 Interest earned to June 30, 2005............................... 396,000 Cash Balance Projected at June 30, 2005................... 8,273,619 !Equals Funded (ljnfunded)_Past Service Liability,.... 2,235,829 1- Based on the actuarial report prepared by The EPLER Company C 10oauments and Seltingsbglbson1mal Setting;\Temporary Internal Files10LK1 iV ETIREE HEALTH ANALVSISAM z- Table 2- Provides a snapshot of the City Retiree Health Fund Balance compared to the total Benefit Obligation ANALYSIS OF THE CITY OF PALM DESERTS RETIREE HEALTH BALANCE (projected to June 30, 2005 City of Analysis of Present Value of all Benefits Palm Desert Active ................................ $ 8,645,222 1 Retired .............................. 1,115,843 ' Total Present Value of all benefits (Past and Future Liabilities)................. 9,761,065 1 Less: Cash In fund to date (Assets) June 30, 2004 .................................... 7,334,319 City Cash Contribution for fiscal year 2004-2005............................. 543,300 Interest earned to June 30, 2005............................................ 396,000 Cash Balance Projected at June 30,2005................... 8,273,619 ;Equals:funded (Unfunded Total Present Value of All Benefits $_ (1,487,446)i C.-Doo .m N aO SetM9S\,9,bson\Lo 1 Selling.\Tem mo Intemet Fdes\OLKMRETIREE HEALTH ANALYSIS doc -3- CITY OF PALM DESERT/PALM DESERT REDEVELOPMENT AGENCY REQUEST FOR QUALIFICATIONS BOND UNDERWRITING SERVICES The City of Palm Desert and the Palm Desert Redevelopment Agency are interested in establishing a pool of underwriting firms to conduct all underwriting transactions over the next three years. If your firm is interested in responding to this RFQ, please read the RFQ carefully and fully respond to each question. Please pay particular attention to the proposal submission and presentation requirements listed below: 1. UNDERWRITER RFQ REQUIREMENTS AND QUESTIONS Responses to this RFQ will be used to establish a pool of eligible qualified firms to provide underwriting services for General City/Agency finance transactions to be undertaken within the next three years. A. General Underwriter Minimum Qualification Requirements Firms must have a minimum of five (5) years of satisfactory experience in providing underwriting services to California public agencies and have at least one office located in California. If the firm has been in business for less than five years, the experience of its principals may be used to meet this requirement. Detailed information regarding experience in these areas must be provided. B. General Underwriter Scope of Services From time to time, the City/Agency may require services from pre- qualified bond underwriting firms who are members of the pool established as a result of this RFQR. The members may be selected for a particular project on any basis that meets the interests of the City/Agency. Members may be asked to submit specific qualifications and a fee proposal for specific transactions. All fees are contingent upon the closing of the transaction. The City/Agency also reserve the right to select firms for individual transactions on a rotating basis. The City/Agency anticipate that any firm selected will be called upon to: L Provide customary underwriter services in connection with the City/Agency finance transactions; including specific project review, preparation, and implementation of rating agency and insurance company presentations. 1 ii. Propose or review and comment upon transaction documents to the extent they relate to the issuance of obligations by the City/Agency. iii. Propose or review and comment upon the structure, alternatives, and feasibility of any proposed transactions. iv. Advise City/Agency staff on the size and timing of transactions and issuance of additional obligations, redemption prior to maturity and call premiums. V. Participate in meetings with and presentations to the City Council, City/Agency staff, consultants, rating agencies, and insurance companies. This may include appearances at meetings of the City Council. vi. Other underwriter services that the City/Agency may request. The above list is not meant to constitute an exhaustive list of duties. Firms selected may be called upon to provide other services not identified here in connection with a particular transaction. C. Pfeaesal-Qualification Questions i. In a table, list the last three (3) years of California debt experience (broken out by new issue COPs / leases, new issue revenue bonds, new issue tax allocation bonds (80% and 20%), new issue land-based assessment district, Mark- Roos Pools, Mello-Roos bonds and all refundings including the par, agency, date, and name of issue. Indicate whether your firm was a senior manager or co-manager. ii. List any transactions in which Underwriter PROPOSER participated on behalf of Palm Desert City/Agency. The City/Agency will review all contracts the Underwriter PROP9S€R has performed for the City/Agency, as Underwriter PROP SER'C past performance will be considered in the evaluation process. As such, the Underwriter PROPOSER must list and describe all work performed for the City/Agency. iii. Describe your firm's technical capability in optimizing bond portfolios and what software your firm utilizes in structuring bond issues. 04�WRDMDe,Ns ColeMMDATAMord D t \U deiter RFD tl 0M 2 iv. Describe your firm's capabilities and strategies to market and sell Palm Desert paper. Include a discussion of your firm's retail and institutional distribution capabilities in California and a description of the number of personnel in the sales force, both nationally and in California. V. Name 1-3 financings that the firm, and preferably the project manager, has been involved in during the last 3-5 years that demonstrate the firm's creativity or of which you are especially proud. What were some of the challenges you encountered and how did you overcome them? vi. Describe how your firm distinguishes itself from other firms. List any issues you see concerning the marketing and sales of Palm Desert paper. vii. Describe the experience, qualification and other vital information, including relevant experience on previous similar projects, of all key individuals who may be assigned to a City/Agency transaction. Key personnel include partners, managers, associates and other professional staff that will perform work and/or services in this project. This information shall include functions to be performed by the key individuals. viii. What is your maximum underwriting liability pursuant to SEC guidelines? Please explain how you derived this figure. During the last three (3) years, describe any situation where you underwrote unsold bonds for a client, including the amount you underwrote and the client. Describe your secondary market activities. ix. Describe any other experience in areas such as: • Synthetic refundings • Auction Rate / VRDOs • Any other creative structures you wish to discuss X. Please disclose whether the firm, or any of its partners, members, associates, or employees, has within the last five (5) years been convicted of any crime or offense arising directly or indirectly from the conduct of the firm's business, or whether any of the firm's partners, members, associates or employees has, within the last five (5) years, been convicted of any crime or offense involving financial misconduct or fraud. If so, please describe any such indictments or charges and surrounding circumstances in detail. 'O.d,sG9RDA\Dennis CW—IkDATA%Wnl�D112%11 A.. RFO.ree eoc 3 Please disclose whether the firm, or any of its partners, members, associates or employees, has ever been indicted or otherwise charged in connections with any criminal matter arising directly or indirectly from the conduct or the firm's business which is still pending, or whether any of the firm's partners, associates or employees has ever been indicted or otherwise charges in connection with any criminal matter involving financial misconduct or fraud which is still pending. If so, please describe any such indictments or charges and surrounding circumstances in detail. Have you been sued by a client and what was the outcome of such litigation? A. Fees: Include proposed gross spread and any pre-sale hourly rates by title. Would the fee compensation for certain types of transactions be different and what the range might be for those transactions (e.g. tax allocation vs. land-based, etc.). Please note that for specific transactions, the City/Agency may solicit a detailed cost proposal from a number of pool members. The range of compensation asked for at this time is to provide general information to assist in selecting firms to participate in the pool. Additionally, please provide a list and any cap on expenses for which the firm would expect to be reimbursed. Note that all fees will be paid on a contingent basis upon successful closing of the transaction. xii. Supplemental Information - Any additional information the PROPOSER wishes to include. xiii. PROPOSER is required to submit five (5) references for which these services have been performed within the last three (3) years. 2. QUALIFICATIONS PROPOSALSUBMISSION A. General I. All interested and qualified Underwriters PROPOSERSare invited to submit a proposal for consideration. Submission of a proposal indicates that the Underwriter PR^,�rhas read and understands this entire RFQP-, to include all appendixes, attachments, exhibits, schedules, and addendum (as applicable) and all concerns regarding this RFQP have been satisfied. 4 ii. Proposal must be submitted in the format described below. Proposals are to be prepared in such a way as to provide a straightforward, concise description of capabilities to satisfy the requirements of this RFQP-. Expensive bindings, colored displays or promotional materials, are neither necessary nor desired. Emphasis should be concentrated on conformance to the RFQR instructions, responsiveness to the RFQR requirements, and on completeness and clarity of content. iii. Proposals must be complete in all respects as required in this section. A proposal may not be considered if it is conditional or incomplete. iv. All proposals and materials submitted become the property of the City/Agency. All proposals received are subject to the "California Public Records Act". V. If any Underwriter PROPOSER, in his/her response, has trade secrets or other information, which is proprietary by law, the Underwriter PRGPQS€R must notify the City/Agency of its request to keep said information confidential. This request must be made in writing and attached to the envelope containing the proposal response. The proprietary or confidential data shall be readily separable from the response in order to facilitate eventual public inspection of the non-confidential portion of the response. The City/Agency will review this request and notify the Underwriters PROPOSERS in writing of its decision as to whether confidentiality can be maintained under law, in the event a public records request is made for the Underwriter's ,�- response. B. Proposal Presentation i. All proposals must be submitted on 8 '/2" x 11" paper, neatly typed, double-sided on recycled paper, with normal (1-inch) margins, and single-spaced. Each page, including attachments and exhibits, must be clearly and consecutively numbered at the bottom center of the page. ii. One (1) marked as original and nine (9) copies (total of 10) of the complete proposal must be received by the deadline below for receipt of proposals. The original and all copies must be in a sealed envelope or container and submitted to the City/Agency: G ROA\Dennis Cd n\DATA\W r D la\ ntl rural r RP 5 Due Date: April 22, 2005 Place: City of Palm Desert Attn: Dennis M. Coleman Title: Redevelopment/Housing Finance Manager 73-510 Fred Waring Dr. Palm Desert, CA 92260 (760) 776-6341 Phone (760) 341-6372 Fax dcoleman(@ci.palm-desert.ca.us Questions regarding the RFQ may be addressed via email, phone or to the Financial Advisor: Del Rio Advisors Kenneth L. Dieker 1325 Country Club Drive Modesto, CA 95356 (209) 543-8704 Phone (209) 545-1754 Fax kdieker(a-)munisoft.com iii. Hand carried proposals may be delivered to the address above ONLY between the hours of 8:00 a.m. to 5:00 p.m., Monday through Friday, excluding holidays observed by the City/Agency. Underwriters PROPOSERS are responsible for informing any commercial delivery service, if used, of all delivery requirements, and for ensuring that the address information appears on the outer wrapper or envelope used by such service. Underwriters PROPOSERS are solely responsible for ensuring that the responses are delivered in a timely manner. City/Agency is not responsible for any incorrect or late deliveries. 3. EVALUATION/SELECTION PROCESS A. Introduction Following the opening of the proposal packages, the proposals will be evaluated by an Evaluation Committee. The committee will be comprised of appropriate City/Agency personnel from several departments, and members of the Investment and Finance Committee. \R A\D nni le n\ ATA\W r D 1 n rwnt r RF 6 B. Proposal Evaluation I. Initial Review Staff will initially review each proposal for adherence to the minimum requirements. If a proposal does not meet these minimum requirements, it may be rejected as non- responsive to the RFOP-. Proposals deemed non-responsive at this point will not be further evaluated. ii. Technical Review The Evaluation Committee will evaluate responsive proposals on the experience and qualifications of the firm, the approach to the services and the fees for services, using the following criteria: Criteria 1. Experience Q020%) - Firm has strong CA financing experience relevant to our needs: including COPs, revenue bonds, new issues, refundings, short-term financings, swaps, synthetic and forward refundings, variable and auction rate structures; good bond proceed and escrow investment experience and modeling -capabilities, etc. 2. Approach (15%) - Proposal demonstrates a clear understanding of the scope, ability to work with staff is evident, demonstrated ability to take initiative in performing transaction duties, clear identification of ability and tools used to estimate refunding savings, escrow earnings, to market and sell CA paper, etc. 3. Assigned Professionals (35%) - have clear city/agency and related transactional experience, are available to provide services as needed, Firm has staffing resources to meet City's/Agency's needs and can commit staff named in .proposal, named professional has managed relevant projects, etc. 4. Cost (1029%) - Hourly rates and cost ranges are reasonable and comparable to industry norms and other proposals. 5. Strong Customer Service Ethic (10%) - References indicate that named professionals are responsive to requests for additional analysis and information, met or exceed all performance expectations, and would be hired again. Upon completion of the Initial and Technical (qualifications) evaluation, the Committee may require oral presentation(s) of those UnderwriterpR^,� (s) the Evaluation Committee deem to warrant further consideration . .\RDA% nni C n\ ATAIWord n.1.11n0 rnrit r F 7 C. Award Following the evaluation of the proposals, the Evaluations Committee will present the Investment and Finance Committee with a list of firms recommended for admittance to the Pool. Upon concurrence of the Investment and Finance Committee, the list of prospective Pool members will be submitted to the City Council for its approval. A n i n\ City of Palm Desert Revision No. 3 Treasury Policies and Procedures Adopted: 2/10/05 • 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 ("UP") process. The City may 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 and Procedures Revision No. 3 No. 6: "Custody and Safekeeping" Adopted: 2110/05 • 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 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 6: "Custody and Safekeeping' Adopted: 2I10I05 • 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 A#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 2'. 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: (1) 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. 3 No. 6: "Custody and Safekeeping" Adopted: 2110/05 • 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. • 4of7 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 6: "Custody and Safekeeping" Adopted: 2/10/05 • 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 1 January, 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 Policies and Procedures Revision No. 3 No. 6: "Custody and Safekeeping" Adopted: 2/10/05 • 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 Policies and Procedures Revision No. 3 No. 6: "Custody and Safekeeping" Adopted: 2/10/05 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 City of Palm Desert Revision No. 3 Treasury Policies and Procedures Adopted: 2/10/05 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 may periodically issue RFPs for banking, custodial, and trustee services to any firms that wish to provide financial services to the City. The City may 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 may begin the RFP process. It should consist of the following steps: 1 of 2 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 8: "Requests for Proposals" Adopted: 2/10/05 • 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. Investment and Finance Committee Review. The Deputy City Treasurer shall present the results of the technical evaluation, along with recommendations, to the Investment and Finance 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. 3 Treasury Policies and Procedures Adopted: 2/10/05 • 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. 3 No. 9: 'Bank Accounts" Adopted: 2I10I05 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 .2.3 The Information Systems Manager. 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. 3 No. 9: "Bank Accounts" Adopted: 2/10/05 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 and Procedures Revision No. 3 No. 9: "Bank Accounts' Adopted: 2/10/05 • 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. 3 Treasury Policies and Procedures Adopted: 2/10105 • 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. • 1of10 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 15: "Interest Allocation" Adopted: 2110105 • 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)►>Book Value>Select All>Print. e. Fiscal Year-End Close of Pooled Fund Portfolios. 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 backed up)>(enter prior fiscal year-end). This will clear all prior fiscal year transactions; create a beginning balance for • the target fiscal year; and reset the portfolio for the target fiscal year. 2of10 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 15: "Interest Allocation" Adopted: 2110/05 • 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`h 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 1 10-0000-101 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 12`h 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 110-0000-101 sub-accounts should be added together and entered. • 3 of 10 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 15: "Interest Allocation" Adopted: 2/10/05 • 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, from the "Cash Adjustment Worksheet", 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, and vice-versa). 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 and Procedures Revision No. 3 No. 15: "Interest Allocation" Adopted: 2/10/05 • 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 year, 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 and Procedures Revision No. 3 No. 15: "Interest Allocation" Adopted: 2/10/05 • a) City: Main Checking Account; all custodian-held securities; CAMP; and LAIF. b) RDA: All custodian-held securities; CAMP; 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 ("SLGS"). All interest income for the deleted records should have been previously booked (as trustee transactions) by the Senior Financial Analyst. 4) Print Edited Non-Restricted Funds Portfolio Reports. The SymPro commands are: Fixed Income>Report>Portfolio Management> Portfolio (PM). Print the "Portfolio Summary" and the "Portfolio Details-investments" reports, on an accrual basis, by month, for the targeted fiscal year (see Exhibit "C"). The Deputy City Treasurer should give them to the Assistant Finance Director or the Senior Financial Analyst 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., 01 NC and 01 NR)>Name (e.g., BACKUP-2001 CITY NONRESTRICTED and BACKUP-2001 RDA NONRESTRICTED)> Path (H:\(personal directory)\SYMPRO\DATA\BACKUP). 1) Accrued Interest Report. Print the "Accrued Interest (All Report" for the City and RDA Non-Restricted Funds Portfolios by using the following SymPro commands: Fixed Income>Report>Interest> Accrued Interest (AI). 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> 6 of 10 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 15: "Interest Allocation" Adopted: 2/10/05 • Portfolio (PM). Print these reports, by month, for the target fiscal year (see Exhibit "E"). 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 (LP). 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. • 7 of 10 Palm Desert Treasury Policies and Procedures Revision No. 3 No. 15: "Interest Allocation" Adopted: 2/10/05 • 4) Final Allocation Activity Report. The Deputy City Treasurer should then print "Allocation Account Activity Reports" for the edited City 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?" if "yes" is marked in the "Active Column" for "Participant Accounts." 2) 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 intersection of the "Current Month" and "Interest Earnings" columns in 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 and Procedures Revision No. 3 No. 15: "Interest Allocation" Adopted: 2/10/05 • 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. 4) 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 Revision No. 3 No. 15: "Interest Allocation" Adopted: 2/10/05 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 Income>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 City of Palm Desert Revision No. 3 Treasury Policies and Procedures Adopted: 2/10/05 • 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 Investment and Finance 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 Revision No. 3 No. 16: "Cash and Investments Audit" Adopted: 2/10/05 • 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 Investment and Finance 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 Investment and Finance 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 INVESTMENT & FINANCE COMMITTEE Regular Meeting of March 23, 2005 Verbatim Minutes COLEMAN: ... The largest capital projects expenditures that went out is in Project Area 4 and that has to do with the reimbursement to Indian Wells for the Warner Trail Storm Drain. The third box at the bottom shows basically the year-to-date receipts and expenditures and as we mentioned before, basically, we get a major portion of our income in terms of tax increment in January. The next big chunk comes in May. We will have some supplemental income flowing in between now and then and will be reflected on the sheets as they're updated. So as you can see basically our largest expenditures are transfers out and debt service as well as capital. We do have a debt service payment coming up for April 1st, we have about 8.9 million going out, and it's primarily our Project Area 1, Project Area 4, and I believe some Housing payments that are going out. Thomas will be wiring debt service payments to the trustee on about the 27'h of the month. It will be reflected in the transfers out. So if you guys have any questions ... ORTEGA: Dennis, when I look at the uh, tax increment, that's the first half tax increment? COLEMAN: Correct, first half with the first payment with the State Board equals a utility. ORTEGA: The other income, the biggest chunk is Housing Authority. COLEMAN: Correct. ORTEGA: Is that an internal transfer or is that additional money that came to the Housing Authority, or is that operational? COLEMAN: It's operational. It's the rents. ORTEGA: Okay. Okay. GIBSON: Any other questions? COLEMAN: The Housing itself, can I point something out? Carlos, the Housing itself is the transfer of housing revenue, the low-mod set-asides, but the Housing Authority 2.7 is the rents. When you get the transfers in for Housing ... Investment & Finance Committee Verbatim Minutes — March 23, 2005 Page 2 of 6 ORTEGA: No, no. I understand. I thought maybe you'd moved the 29 plus maybe you had taken the 20 or 21%, I understand. COLEMAN: Okay. VEAZIE: It's not a question, but either I'm getting older or the printing is getting smaller. GIBSON: We will attempt to have Dennis rotate it around so that we can make it larger. COLEMAN: I will let Veronica know, who prepares this diligently. We've been concentrating on making sure the numbers are right, but ... CAMPBELL: Tell her you've got some old guys here. COLEMAN: We will attempt to accommodate. ORTEGA: It's just like what the banks do. They give you this teaser rate, and there's a whole lot of other stuff you can't read. (Laughter) COLEMAN: We'll try. If we have to do separate sheets, we'll do that. But we'll figure out some way to get this so that you don't have to do this (squinting). But you won't have questions if it's that tiny, though. GIBSON: Any other questions? Yes. WORMLEY: Does anybody know the price of crude oil three years ago? Other than myself? MCCARTHY:24 bucks a gallon? WORMLEY: How about 18. MCCARTHY:Wow. ORTEGA: Not a gallon. No, a barrel. McCARTHY: Oh, a barrel. Three years from now. WORMLEY: Does anybody know the high? McCARTHY: 58? WORMLEY: 57. Does anybody know what it was yesterday? Investment & Finance Committee Verbatim Minutes — March 23, 2005 Page 3 of 6 McCARTHY: 56? WORMLEY: 54. McCARTHY: Okay. WORMLEY: Gas prices. Rip-off. Never been a shortage, never will be. Buy gold. Does anybody know what gold went to? $852 an ounce. I was there. rode it up, I rode it down. ORTEGA: And you lived to tell about it? WORMLEY: I hedged, and I made money. McCARTHY: Okay, so you were short on the down. Okay. WORMLEY: I was short. If I were playing the market today, 1 would short crude oil. Interest rates are going higher. Interest rates control the market without a doubt. Gas prices have to go lower, or we gotta move out of California. (chuckles) WORMLEY: It's a rip-off. Do you know what my son paid in Monterey six months ago? Three dollars and seventy cents a gallon. Think of it. In other words, buy gold. ORTEGA: I make a motion that we take that 40 million dollars and ... (laughter) McCARTHY: Okay, we don't want to buy gold directly, but let's buy about a hundred contracts, and ... (Talking, inaudible) GIBSON: Next item of new business, if there are no other questions regarding the RDA? Seeing none, Parkview ... (Meeting continues) COLEMAN: ... We changed the criteria in terms of the ranking, terms of certain percentages, taking a look at it. We also did add one other line, because one of the things we did ask to disclose whether or not there was any wrongdoing by any of the employees or partners, and basically, we did add a line to deal with whether or not they had been sued by a client, and the outcome of such litigations. But a lot of this was pretty cosmetic in Investment & Finance Committee Verbatim Minutes — March 23, 2005 Page 4 of 6 terms of the changes we made, mostly changing the word "underwriters" and taking out "proposals" since we are doing a request for qualifications. If the Subcommittee reviews this and they feel that it is consistent with what we said, and that's the subcommittee that the full committee recommended me, if they're okay with this, then we'll get this out. I set up three weeks into April, but I might just push it to the end of April to get back. Probably April 29th from the 22nd, and we'll then sit down and go through all these proposals, and rank them, and try to come up with a group for the full committee to perhaps have oral interviews with. And I'm not sure, but we may want to have even, I don't know if you just want to clear the decks when this comes up for the full Finance and Investment on top of the meeting or separate meeting or what. GIBSON: As far as the interviews go? COLEMAN: Yeah, the orals. GIBSON: It's up to the group here, but currently the way it is, would be the Subcommittee would do the interview and then we'd do a recommendation to the whole committee unless the group here wants to be fully participatory in that process. In case they want to disclose confidential information, by having a subcommittee they can ... COLEMAN: Yeah, we did say "Upon evaluation of the proposals, the evaluation committee will present the Investment & Finance Committee with a list of firms recommended for admittance to the pool. Upon concurrence of the Investment and Finance Committee, a list of prospective firms will be (inaudible). GIBSON: Any questions? Seeing none, any comments by the committee members? Okay. The next meeting is April 27th. Yes? WORMLEY: One question, irrelevant. What is the status of the Salton Sea? GIBSON: Salton Sea Authority or the sea? WORMLEY: Both. And/or, what is the status of the Salton Sea? In other words, I hear that they are selling lots for development anywhere from five dollars to a hundred dollars. ORTEGA: I can send you a newsletter that the Salton Sea Authority puts out as to what the status is of all the clean up and all that. McCARTHY: I can comment, maybe, a little bit. I've been following it fairly closely over at CVEP, if you'd like. Investment & Finance Committee Verbatim Minutes — March 23, 2005 Page 5 of 6 ORTEGA: Oh yes. McCARTHY: Okay. Uh, well basically, as you know, we have nothing to do with the Salton Sea. WORMLEY: Right. McCARTHY: Okay. So, you have the Salton Sea Authority. The Salton Sea Authority is trying to get the State to agree to permit it to be the lead agency in terms of the restoration of the lake. As part of the big water deal that was struck, there was about $300 million that was identified as potentially dedicated to that purpose, and the Salton Sea Authority is looking at options of financing the gap. There's an estimate of about $750 million to actually do the restoration. One of the approaches is to do a, um, basically divide the lake kind of in two, have a freshwater, or more a lake that's useful for fishing and what-not, and then part of the lake would be more brimy and have a higher salt content. But it is embroiled in the regional water politics that's going on, and so no, and environmental, no major decisions have been made as yet. Know that there is an effort afoot to try and get the Authority to have the authority and the ability to do the restoration. The Salton Sea does have a very good website which they have, and you can get a great deal of information there. WORMLEY: I'll tell you what they can do. They can dynamite it. You know what that will do? It's the largest body of water in California. If they dynamite it, it will deepen it. It will kill the bacteria. It will kill the bad fish odor, and the lake will resolve. In other words, it will become a blue water lake like Lake Tahoe. That is the solution. It's a three-year project. The money will probably be authorized. Bonds will be sold, possibly. Now, Mike, what is the prime rate? CAVANAUGH: It was raised yesterday; it's five and a half. WORMLEY: What are you thinking it's going to go to? CAVANAUGH: End of the year it'll be over 6, 6.2. WORMLEY: Okay. That's reasonable. GIBSON: Any other comments or questions? HARGREAVES: Yeah, the Authority meets tomorrow morning at 10 o'clock at the IID headquarters in La Quinta. There will be a full presentation about where Investment & Finance Committee Verbatim Minutes — March 23, 2005 Page 6 of 6 they're at and where they're going if you're really interested in what's going on down there. WORMLEY: Uh, do you think we should buy gold or lots down there? HARGREAVES: In the short run, I'd buy lots down there. WORMLEY: I think you're right. In the long run, I'd buy gold. ORTEGA: I'd like to change my motion. That 40 million? (Laughter) I think we'll take 20 of that and go buy lots. (Laughter) GIBSON: Meeting is adjourned. CITY OE It M OESERI 73-51c FRED WARING DRIVE _ PALM DESERT, CALIFORNIA 9 2 260-2 5 7 8 TEL: 760 346-o6i I FAX: 760 340-0574 info@palm-desert.org March 18, 2005 Mr. Thomas Wormley 74-401 Hovley Lane East, #1515 Palm Desert, California 92260 Dearmf-���� , Just a friendly reminder that our records indicate that you have missed two Investment Committee meetings this year. In accordance with City policy, you are only allowed two absences. A third absence will be recognized as your automatic resignation. The City Council is very aware of the time constraints its Committee/Commission members have with regard to serving their community. Each member of the Council sincerely appreciates the time and effort you expend each month for the success of Palm Desert's Investment Committee and would regret losing you as a member of this important board. They also recognize, however, that your own business obligations must be your first priority, and if you should miss another meeting, they would encourage you to reapply in the future when your schedule permits. Please feel free to call me if you have any questions or if you need clarification of this policy. Sincerely, RACHELLE D. KLASSEN, CIVIC CITY CLERK RDK:mgm cc: Niamh Ortega, Recording Secretary G.U1yCWG1oda Martinez\COMMITTEES-COMMISSIONSWTTENDANCE ROSTERS anti Waming Lanark WonrJey-Invstmnt-Waming LR.Eoc LD renma.aEvnto r.nv ` MLance Brandon W.Burrows &v Donald L.Parker Michael K.Chu ghard David E.Hale A P.or iomt co Uon LLP Donald G.Slater Richard K.Kikuchi CertiFed Public Accountants Retired Robert C.Lance 1914-1M Richard C.Soil Fred J.Lunghard,Jr. tv]aAM July 28, 2004 Paul S. Gibson, CCMT Director of Finance/City Treasurer City of Palm Desert, California INDEPENDENT ACCOUNTANTS' REPORT We have performed the procedures enumerated below, which were agreed to the management of the City of Palm Desert, California (the City), solely to assist the City in reviewing Time Warner Cable's calculation of franchise fees remitted to the City, per agreements between the City and Time Warner Cable (the Grantee), for the year ended December 31, 2003. This engagement to apply agreed upon-procedures was performed in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of the management of the City of Palm Desert. Consequently, we make no representation regarding the sufficiency of the procedures described below, either for the purpose for which this report has been requested, or for any other purpose. The procedures performed and the results obtained from the performance thereof were as follows: 1. Procedures Performed: We obtained and reviewed the Agreement between the City (the "Grantor")and Time Warner(the"Grantee"). Findings: We noted that the Agreement does not expressly state that internet services are included among the gross revenues subject to franchise fees. As a result, the Franchisee reduced its taxable gross revenues by the amount of revenues generated from internet services, amounting to $1,845,636.32.The related franchise fee could have been $92,281.82. Roadrunner High Speed MISP 2003 Internet AOL& Earthlink Totals 1 st Quarter $ 349,658.38 $ 41,246.59 $ 390,904.97 2nd Quarter 390,456.88 50,270.05 440,726.93 3rd Quarter 400,452.85 60,039.74 460,492.59 4th Quarter 483,105.73 70,406.10 553,511.83 Totals $ 1,623,673.84 $ 221,962.48 $ 1,845,636.32 Franchise Fee rate 5% $ 92,281.82 The City Attorney has represented that internet service revenues are not subject to the payment of franchise fees. 75 Years 1929 2004 of Excellence 203 N. Brea Blvd.,Suite 203 •Brea,CA 92821-4056 '(714) 672-0022 • Fax(714)672-0331 'www.lslcpas.com MILLP ghard CERTIFIED%IB[M ACCWNTANTS Paul S. Gibson, CCMT Director of Finance/City Treasurer City of Palm Desert, California Page 2 2. Procedures Performed: For the year ended December 31, 2003, we obtained the quarterly schedule of franchise fees,which details amounts subject to the franchise fee (Gross Revenues)and the 5%fee applied. Findings: No exceptions were noted as a result of our procedures. 3. Procedures Performed: We reviewed the amount subject to fee (Gross Annual Revenues) and reviewed the general ledger for other potential revenues not reported (Gross Annual Revenues as defined in Section 2.13). Findings: 3.1 We noted that the franchise fee is calculated based on the actual payments collected plus Palm Desert's proportionate share in other revenues (noted below) during the quarter, reduced by the deductions listed below: Other Revenues - These are allocated based on the number of Palm Desert subscribers to the total Desert Cities subscribers in the system. (1) Tower rental income (2) DCR (3) Home Shopping (4) Magazine sales, net of cost of TV Guide(Finding#3.2) (5) Leased access (6) Local origination (7) Microwave services (8) Advertising Revenues, net of advertising bad debts (9) Other revenues Deductions: (1) Refunds-Customers'credit balances that are refunded to customers upon request (2) Late Charges/Fees- Fees charged to customers for late payment (3) Payment Reversals - Consists of NSFs, unauthorized ACH, ACH denied by the bank, stop-payment orders made by customers (4) Payment Adjustments - Credit card payment adjustments due to closed accounts and wrong card information provided by customers (5) Roadrunner Revenues - Revenues from high speed internet service (6) MISP- Revenues from AOL and Earthlink internet services (7) Possessory Taxes (8) FCC Regulatory Fees (9) Advertising Sales Bad Debts - It is noted that revenues should not be reduced by sales bad debts because franchise fees are calculated based on actual payments, which are on a cash basis. 3.2 The cost of TV Guide purchases incurred by Time Warner is deducted from the sales there from. However,during the first and third quarters,the costs of sales incurred were more than sales by an average of$950,00. USLance Soll s Lunghard LLP CERTIFIED MBOC ICCWNIINIS Paul S. Gibson, CCMT Director of Finance/City Treasurer City of Palm Desert, California Page 3 3.3 In the course of tracing other revenues to the general ledger,we noted some amounts being understated, resulting to a net understatement of franchise fees of$586.68. See calculation per Schedule A. 3.4 In the course of reviewing the general ledger, we noted significant amounts of reclassification amounting to $543,701 that was made in January 2003. We requested copies of the journal voucher and the corresponding supporting documents, but we received copies of journal vouchers only as of October 6, 2004. The journal vouchers do not provide sufficient information that will enable us to determine that those revenues really pertains to one cost center as against the other cost center. 4. Procedures Performed: For each quarter, we traced a sample of cash receipts to the summary of gross revenues. Findings: The usual procedure of selecting sample receipts to test was not possible under the system. The system set-up does not allow us to test individual customer account billings and payments. Alternatively, we selected five samples, one from each of the last five months, the data of which are available in the system as TWC San Diego took over the accounting from the Desert Cities office in August 2003, We requested a CPSD 100 Report for each of the selected days. We traced the total payments received for the day from CPSD 100 to the Deposit Analysis Report, and traced and agreed the total deposits per the Deposit Analysis Report to the CPSM 302 totals. No exceptions were noted. 5. Procedures Performed: We tested the calculation of 5%franchise fees. Findings: No exceptions were noted as a result of our procedures. 6. Procedures Performed: We reviewed any adjustments to franchise fees and amounts subject to fees. Findings: See procedure#3 above for adjustments or reductions from gross revenues. 7. Procedures Performed: We traced amounts in#5 above to quarterly cash receipts received by the City. We tested for accuracy and timeliness. Section 14.01.040(9)(c), Failure to Make Required Payment, of Ordinance 318 states that, "In the event that any franchise payment or recomputed amount is not made on or before the dates specified herein(i.e.30t"day of the following month at the end of each quarter), Grantee shall pay as additional compensation: (1) an interest charge, computed from such due date, at an annual rate equal to the commercial prime rate interest in effect upon the due date; and (2) a sum of money equal to 5% of the amount due in order to defray those additional expenses and costs incurred by the Grantor by reason of delinquent payment." Findings: We noted that payments of franchise fees for the third quarter, which were due on October 31, 2003(Friday),were received on November 3, 2003(Monday). Likewise,the fees for the fourth quarter, which were due on January 31, 2004 (Saturday), were received on February 3, 2004 (Tuesday). This resulted to delinquency penalties of $19,716.67. Refer to Schedule B for the calculation of delinquency penalties. IS $paIICG Lunghard LLP CERTIFIED MaM AC 17--M Paul S. Gibson, CCMT Director of Finance/City Treasurer City of Palm Desert, California Page 4 8. Procedures Performed: We verified that each franchise fee payment is accompanied by a report disclosing the total gross revenue collected by the grantee and an itemization of the various categories of revenues collected during the quarter. Findings: No exceptions were noted as a result of our procedures. 9. Procedures Performed: We obtained and reviewed the grantee's annual financial report due no later than 90 days after close of fiscal year. We traced the amount of gross revenues used in franchise fee calculation to the financial report. Findings: This procedure is not possible because the grantee's annual financial report covers the entire organization and the financial information pertaining to gross revenues for cable services in the City of Palm Desert is not shown separately in the financial report. Alternatively, amounts of payments for cable services and other revenues were traced to the general ledger. Some exceptions were noted and were discussed in finding#3.3. 10. Other Procedures Performed: We obtained an understanding of the billing and accounting systems of the Grantee. Based on the information gathered, the following describes the billing and accounting system of the grantee: Time Warner Cable has an operating unit in Palm Desert, CA, that oversees the operations for the Desert Cities consisting of 14 franchises. Accounting services are maintained in the San Diego office. However, billing service is being provided by Cable Service Group (CSG) of Omaha, Nebraska. CSG is responsible for the preparation and distribution of billings to all customers, accumulation of payment information and the maintenance of customers' accounts. They are also responsible for providing billing and collection information to the accounting office of Time Warner Cable in San Diego, CA. Billing cycle is from the 22nd of the previous month to the 21" of the current month. Payments through the local office goes to a local bank, the Bank of America, automatic debit (ACH)goes to the Mellon Bank and through the lock box,which goes to Bank One. CSG provides the following monthly reports to the Finance Department in San Diego: u CPSM 318 - Financial Summary Report-This report uses accrual basis of accounting. This report goes to "Onbase," an imaging system, and uploaded to Excel format, summarized, and recapitulated to formulate the necessary journal entries, which are booked into Legacy in 2003. • CPSM 302 - Report of Monetary Transaction Activity - This report is prepared on a cash basis and is used to prepare the Quarterly Report of Gross Revenues from Cable Services subject to Franchise Fees. o CPSM 306 - Payment Adjust Composition Report- This report is prepared on a cash basis and is used to prepare the Report of Other Revenues Allocable to all Franchise Agencies in the system. • CPSD 100-Ledger Activity Report-This report details the daily monetary transactions. The Accounting office in San Diego, CA prepares an analysis of deposits on a daily basis, making sure that deposits or payments are posted to the correct accounts and that payments collected reconciles with the daily deposits. LLS $p 1 & Lunghard LLP CERTIFIED MOLIC ACCOONUNTS Paul S. Gibson, CCMT Director of Finance/City Treasurer City of Palm Desert, California Page 5 Conclusion We were not engaged to, and did not, perform an audit of the franchise fees remitted by Time Warner, the objective of which would have been the expression of an opinion on the franchise fee payments made by Time Warner to the City. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to the City. This report is intended solely for the use of the City and should not be used by those who have not agreed to the procedures and taken responsibility for the sufficiency of these procedures. However, this report is made a matter of public record, and its distribution will not be limited. Although this type of engagement may occasionally disclose defalcation and similar irregularities, it is not designed for such purposes and should not be relied upon to disclose fraud, should any exist. ,/� sq'-4� VoA Schedule A Palm Desert-Time Warner Cable Franchise Fees Agreed-Upon Procedures December 31,2003 Other Revenue-Exceptions Noted Amount Per Amount per GL %of Amount Description/Period Acct No. Quarterly Report (MGFTB340) Over(Under) Allocation Allocated p Other Revenue-Jan'03 5M6-1-11-4699 $ 88,642.45 $ 90,223.91 $ (1,581.46) 0 Other Revenue-Feb'03 5M6-1-11-4699 92,023.68 93,175.85 (1,152.17) 03 Advertising Revenue-Feb'03 6U2-3-11-DAVD 719,056.92 743,631.92 (24,575.00) (AAd Sales Bad Debt-Feb'03 6U2-3-11-5711 17,847.06) - (7,847.06) Other Revenue-Mar'03 5106-1-114699 92.981.51 93,990.87 (1,009.36) Ad Sales Bad Debt-Mar'03 6U2-3-11-5711 2,279.77 4,966.30 (2,686.53) (38,851.58) 0.220963 $ 8,584.76 Ad Sales Bad Debt-Jul'03 6U2-3-11-5711 (6,205.34) 6,205.34 (12,410.66) 0.220246 2,733.40 C� Advertising Revenue-Oct'03 6U2-3-11-DAVD 870,235.61 872,165.11 (1,929.50) 0.215302 415.43 Total Under Statement of Other Revenues 11,733.59 Franchise fee rate 0.05 Total Under Payment of Franchise Tax $ 586.68 City of Palm Desert Schedule B Franchise Fees-Time Warner Cable Calculation of Delinquency Penalties December 31,2003 No.of Interest Total Franchise Due Date Days Penalty Prime Rate Delinquency Period covered Fees Paid Date Paid Delayed 5%(Note 1) 4%(Note 1) Penalty 3rd quarter2003 $ 190,968.55 10/31/03 11/03/03 2 $ 9,548.43 $ 41.86 $ 9,590.29 4th quarter 2003 202,084.59 01/31/04 02/03/04 1 10,104.23 22.15 10,126.38 $ 393 053.14 $ 19,652.66 $ 64.01 $ 19,716.67 Note 1 -This rate was obtained from the Prime Rate Historical Data on http://mortgage-x.com. hn- - �_ 3aa-b—y - - w