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HomeMy WebLinkAboutMinutes - Investment & Finance Committee - 01/28/2004ri 3 Finance Department MEMORANDUM To: Rachelle Klassen, City Clerk From: Diana Leal, Administrative Secreta Subject: Investment and Finance Committee Date: March 9, 2004 Attached is a copy of the January 28, 2004 minutes of the Investment and Finance Committee approved by the Committee on February 25, 2004. Please place on the next City Council agenda for approval thereof. Thank you for your assistance. Attachments (1) G:\Finance\Diana Leal\Wpdocs\Investment Committee\Memos\City Clerk\12-17-03 minutes.wpd CITY OF PALM DESERT INVESTMENT & FINANCE COMMITTEE Minutes January 28, 2004, 9:30 a.m. North Wing Conference Room I. CALL TO ORDER A regular meeting was called to order by Chairman Gibson on Wednesday, January 28, 2004 at 9:33 a.m. II. ROLL CALL Present: Paul S. Gibson, Finance Director Bob Spiegel, Mayor Buford Crites, Mayor Pro -Temp Thomas Jeffrey, Deputy City Treasurer Carlos Ortega, City Manager Russ Campbell Everett Wood Bill Veazie Dave Erwin, City Attorney Also Present: Justin McCarthy, ACM/Director of Redevelopment Jose Luis Espinoza, Assistant Finance Director Dennis Coleman, RDA Finance Manager Rodney Young, General Manager Desert Willow Diana Leal, Recording Secretary Guests: None III. ORAL COMMUNICATIONS None. IV. COMMITTEE MEMBER REPORTS None. 1 Absent: None 12804.wpd INVESTMENT & FINANCE COMMITTEE MINUTES January 28, 2004 V. CONSENT CALENDAR A. Approval of Minutes Motion was made by Mr. Spiegel and seconded by Mr. Campbell to approve the Minutes of the December 17, 2003 meeting as submitted. VI. CONSENT ITEMS HELD OVER None. VII. NEW BUSINESS A. Discussion of time of future Investment and Finance Committee meetings Mr. Gibson. said that this was the first time the Investment and Finance Committee has met at 9:30 a.m. The time of the meeting was changed to meet Mr. Crites' schedule. Mr. Veazie said that he would prefer to hold the meeting at 10:30 or 11:00 a.m. Mr. Crites said that council member Jim Ferguson can be appointed to attend the Investment and Finance Committee in his absence. He said that he believes that an Entrada Committee meeting is held on Wednesdays at 10:30 a.m. Mr. Crites suggested that the Investment and Finance Committee meeting be held at 10:30 a.m. and on the dates that the Entrada Committee meets, he can ask council member Jim Ferguson to attend the Investment and Finance Committee meeting. The committee unanimously agreed to hold the Investment and Finance Committee meetings at 10:30 a.m. on the 4th Wednesday of every month. B. City and Redevelopment Agency Investment Schedules and Summary of Cash Reports for December 2003 Mr. Jeffrey reported that the City had recently acquired $10 million of securities (two General Electric medium -term notes, one piece of Morgan Stanley commercial paper and one Fannie Mae discount note). Security yields were between 1.00 percent and 1.3 percent for maturities of less than 12 months. Mr. Gibson stated that the City had to buy the notes since it had reached its limit on C.A.M.P., and it would soon be receiving $24 million of property taxes from the County. 2 12804.wpd INVESTMENT & FINANCE COMMITTEE MINUTES January 28, 2004 For the month ended December 31, 2003, Mr. Jeffrey reported that the book value of the City Portfolio was approximately $132.8 million. The City earned approximately $172,000 in interest during that month. Portfolio yield -to - maturity was approximately 1.58%. For the month ended December 31, 2003, Mr. Jeffrey reported that the book value of the RDA Portfolio was approximately $141.7 million. The RDA earned approximately $159,000 in interest during that month. Portfolio yield -to - maturity was approximately 1.29%. Mr. Wood asked Mr. Jeffrey when he thought short-term interest rates would rise. Mr. Jeffrey replied that he had recently attended an economic conference in Indian Wells, and Merrill Lynch's chief economist had indicated that short-term interest rates would likely be raised before the 2004 Presidential election. There was historical precedent for the Federal Reserve taking such action. Mr. Spiegel observed that the declining U.S. dollar might present a problem. Mr. Jeffrey replied that, in the short term, a declining dollar would make U.S. manufacturing more competitive. Mr. Crites asked if the U.S. had any manufacturing left. Mr. Jeffrey replied that he was specifically thinking of Detroit (Ford Motor Co.). Mr. Jeffrey advised the Committee that Ford had exceeded its breakeven target for 2003, and had actually made a $500 million profit. This was a dramatic improvement in performance (Ford had lost $6.4 billion during 2001- 2002). Mr. Jeffrey then discussed the dramatic design changes that Ford had made to the 2003 Ford F-150 pick-up truck, enabling it to rise from the bottom of the safety rankings to the top within one year, displacing Toyota. Ford is also using Volvo, a wholly -owned subsidiary, to design the interior of a new Ford sedan, the "Five Hundred", so that it will be one of the safest cars in the industry. Ford's strategy appears to be that it will take safety and reliability, two of its historical weaknesses, and transform them into strengths. These actions show that when Ford wants to make the effort, it can be very competitive. C. State of California Local Agency Investment Fund Balance for the month of December 2003 Mr. Gibson said that the account is maxed out at $40 million. 3 12804.wpd INVESTMENT & FINANCE COMMITTEE MINUTES January 28, 2004 D. California Asset Management Program (CAMP) December 2003 Statements Mr. Gibson said that the City received $24 million from the County in property taxes. Staff is reinvesting in short term investments in order to stay within the CAMP limits. E. Audit Reports for City of Palm Desert and the Palm Desert Redevelopment Agency Mr. Gibson said that he was planning to have the auditors make a presentation to the committee. Unfortunately, the auditors had a schedule conflict and were unable to attend the meeting. He said that he could answer the committee's questions or have the auditors attend the next regularly scheduled Investment and Finance Committee meeting. Mr. Wood suggested that the auditors attend the Investment and Finance Committee meeting scheduled for February. Mr. Gibson asked if there were any specific items that the committee wished to discuss. Mr. Ortega said that the auditors' management letter denied finding any shortcomings. Mr. Gibson said that one of the findings was dealing with the apartment complexes. The auditors found that RPM, a third party management firm, overcharged some residents. Mr. Espinoza said that the auditors tested 200 files and only 2 errors were found. Mr. Gibson said that in the future, RPM will not only have the person responsible for billing review the items, they will also have a manager review and sign off on the items to prevent overcharging of tenants and other errors from occurring. F. City and Redevelopment Agency Monthly Financial Report for City Council for December 2003 Mr. Gibson said that the monthly payment for the Department of Motor Vehicles fees have been received. The governor backfilled payments to the City. Mr.. Spiegel asked about the prior money that was lost and if the money would be reimbursed to the City. Mr. Gibson said that the City gave a three-month loan to the State and staff does not expect payment until 2006. Mr. Spiegel inquired as to the loan amount. Mr. Gibson said that the loan was approximately $600,000. 4 12804.wpd INVESTMENT & FINANCE COMMITTEE MINUTES January 28, 2004 Mr. Gibson said that the City received the December payment for the sales tax. The City was $100,000, cash wise, greater than the last year quarter end which was 3.8% over the prior year. G. Parkview Professional Office Buildings - Financial Report for December 2003 Mr. Ortega asked about the issue of Roy Wilson's desire to occupy the office complex. Mr. Gibson said that he has provided all the paper work including a potential lease and Mr. Wilson said that it may take two to three months to be processed. The earliest Mr. Wilson needs to vacate his current facility is June which will be no problem to accommodate as there is a tenant that is scheduled to leave in May. H. Palm Desert Golf Course Facilities Corporation Financial Information for December 2003 Mr. Young said that the first quarter was weak and the second quarter was very strong. In December, the golf, minus food and beverage, had $403,000 in revenue which is $45,000 ahead of budget. It was also $60,000 ahead of prior year. They are very happy with the significant increase. Overall, they have had a great quarter as they are ahead of budget going into the second half of the year. They are behind right now, however, they have a big Friday and Saturday coming up. Mr. Wood asked if the equipment replacement reserve was the same in the financial statement as is noted in the Parkview Office Complex. Mr. Gibson said that it is depreciation as it is treated as an enterprise fund. Mr. Wood said that it adds to the balance sheet. Mr. Gibson said that Mr. Wood was correct, however, the golf course has golf equipment that needs to be replaced every 3-5 years. Mr. Young said that the resident percentage has increased. This is probably due to more competition. They are making up the loss from other areas because the rounds are up. In December of 2001, Desert Willow had 22% resident rounds and December 2003 they have 37% rounds which can be contributed to the increase of people that are moving to Palm Desert. Mr. Crites asked if there is a computer program that tracks residents by street because he is interested in finding out what impact Palm Desert Greens will have when it finishes annexation. Mr. Gibson said that the Coachella Valley Recreation and Park District (CVPRD) is responsible for providing the resident cards to the residents. Desert Willow tracks by address so they could come up with a listing of who is playing from Palm Desert Greens. Mr. Ortega said that Mr. Crites is seeking information on actual usage as opposed to permitted usage. Mr. Young said that they can track how many 5 12804.wpd INVESTMENT & FINANCE COMMITTEE MINUTES January 28, 2004 additional residents come from that area to obtain resident cards from CVRPD and Desert Willow can track the addresses. Mr. Young said that hopefully in the slower, summer months, as the rounds decrease there will be more availability because there are more residents that can fill in the vacant spots. During the season, he does not see an impact. Yesterday they had a few spots open, but rarely do they have anything open before 1:00 p.m. A resident can be displaced by another resident. If you live on Haystack, you will have more competition for the 60 tee times on Saturday morning as there are more people going for those tee times. This time of year they receive complaints from people because they are not able to get on the golf course. Mr. Ortega said that he answered a letter to a gentlemen where he informed him that he will not be able to get good tee times at this time of the year at $45/round. This is the way the coucilset t it up and the City wants you to come back and play during the shoulder Mr. Young said that they rarely turn around residents on Monday, Tuesday, Wednesday, Thursday even Sunday. There are a lot of Friday and Saturdays during mid March and mid April where the course is not available for them. Mr. Campbell said that the golf at Palm Desert Greens is technically free. Mr. Wood said that some residents play at Santa Rosa next door. Mr. Wood said that a lot of people got tired of playing there. He spoke with a few people that are on the board. One of the main reasons was that they wanted to get fire coverage across the street and the golf course privileges because at the time the cost of joining the City of Palm Desert was not a problem. Mr. Campbell said that he is on the board at Santa Rosa. They picked up new members, rearranged loans and did some cutbacks. This has made them solvent. He said that the owners of the land next door have been down to the City to discuss the installation of a small strip mall along Frank Sinatra. They will use about 4 or 5 acres and the remaining 12 acres will be townhouses. The board had a meeting to discuss land swapping as their land extends out about 50 feet further from the fence line. Mr. Spiegel asked Mr. Young if the second bar was installed. Mr. Young said that the second bar has been installed and they are using the bar every day, during the day, as a water station. They have used the second bar for several other functions as well. The last event they used the second bar was at a Merrill Lynch dinner where 400 guests attended. They had tables outside, inside, at the grill area and at the driving range. They had 12 heaters set up at the driving range and placed heaters around the putting greens. They set up 6 bars that night. The group spent approximately $47,000 with $6,000 in gratuity. The group stayed 10 days in the valley: the first few days at the Marriott and the remainder of their stay at La Quinta Resort. 6 12804.wpd INVESTMENT & FINANCE COMMITTEE MINUTES January 28, 2004 VIII CONTINUED BUSINESS - None. IX. OLD BUSINESS A. Status of Public and Private Partnerships Background Checks There being no business issues to report, discussion ensued to the next agenda item. B. Bond Issuance by Palm Desert Financing Authority Mr. Coleman said that at the last City Council meeting, the Bighorn refunding was approved with discussion. Staff signed off on the Preliminary Official Statement and the bonds should be refunded at the end of next month. One of the issues that was brought up was recovering costs for staff time. Staff will be looking at a policy to charge for staff time for bond issues done on behalf of property owners. Usually, when a new bond issue is done $50,000 is charged with only one exception which is for the formation of districts to place underground utilities. Staff has approached the developer and are talking about the reimbursement of costs for staff time. The estimates indicate that this will bring about $5,000 to $10,000 for personnel time involved. The developer indicated that they will entertain paying the City back for staff time. Mr. Coleman said that a bond conference will be held next week in San Francisco which will be hosted by an alternative group to the Bond Buyer. It is the second annual California Municipal Finance Conference. One of the panels will be looking at Redevelopment Agencies. Three redevelopment agencies will be participating: San Jose, San Francisco and Palm Desert which he will be representing. He will be speaking about redevelopment bonds and the current environment with the State budget. X. NEXT MEETING - Wednesday, February 25, 2004 at 10:30 a.m. XI. ADJOURNMENT There being no further business, the meeting was adjourned by Chairman Gibson at 10:06 a.m. 7 Respectf l'fy submitted, Diarra Leal, Re g Secretary 12804.wpd