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HomeMy WebLinkAboutMinutes - Invstmnt & Finance Committee 03/24/20042E- F.5 Finance Department MEMORANDUM To: Rachelle Klassen, City Clerk From: Diana Leal, Administrative Secretary_ Subject: Investment and Finance Committee Date: April 29, 2004 Attached is a copy of the March 24, 2004 minutes of the Investment and Finance Committee approved by the Committee on April 28, 2004. Please place on the next City Council agenda for approval thereof. Thank you for your assistance. Attachments (1) G:1Finance\Diana Leal \Wpdocs\Investment Committeev emos\City Clerk13-24-04 minutes.wpd CITY OF PALM DESERT INVESTMENT & FINANCE COMMITTEE Minutes March 24, 2004, 10:30 a.m. North Wing Conference Room I. CALL TO ORDER A regular meeting was called to order by Chairman Gibson on Wednesday, March 24, 2004 at 10:31 a.m. II. ROLL CALL Absent: Present: None 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: Steve Aryan, Asst. to the City Manager Jose Luis Espinoza, Assistant Finance Director Dennis Coleman, RDA Finance Manager Diana Leal, Recording Secretary Guests: None. III. ORAL COMMUNICATIONS None. IV. COMMITTEE MEMBER REPORTS None. 1 32404.wpd INVESTMENT & FINANCE COMMITTEE MINUTES March 24, 2004 V. CONSENT CALENDAR A. Approval of Minutes Motion was made by Mr. Spiegel and seconded by Mr. Crites to approve the Minutes of the February 25, 2004 meeting as submitted. VI. CONSENT ITEMS HELD OVER None. VII. NEW BUSINESS A. 1 City and Redevelopment Agency Investment Schedules and Summary of Cash Reports for February 2004 For the month ended February 29, 2004, Mr. Jeffrey reported that the book value of the City Portfolio was approximately $124.9 million. The City earned approximately $143,000 in interest during that month. Portfolio yield -to -maturity was approximately 1.58%. For the month ended February 29, 2004, Mr. Jeffrey reported that the book value of the RDA Portfolio was approximately $164.6 million. The RDA earned approximately $154,000 in interest during that month. Portfolio yield -to -maturity was approximately 1.20%. 2. Cash and Investment Audit Procedures Mr. Gibson said that at the previous Investment and Finance Committee meeting, staff distributed a document regarding the investment review procedures. He said that the auditor reviewed the document and made two recommendations. One recommendation was on the time limits of completing the bank reconciliations. The second recommendation was to have staff follow up on any unidentified item(s) that need to be journalized, or bank errors within the bank reconciliation by the month after having received the bank statement. Mr. Wood asked about the term "haphazard" used in the prior documents given to the committee. Mr. Gibson said that he handed out a memorandum explaining that "haphazard" is a valid term in auditing. Other terms used to describe the type of audit performed are random and systematic. Mr. Campbell asked if the audit was read by someone else, would the term haphazard be questioned. Mr. Wood said that it would make it simpler for the reader to understand if more descriptive words were used in the report. Mr. Espinoza said that he can talk to the auditors to issue a separate report. Mr. Wood said that it would be too 2 32404.wpd INVESTMENT & FINANCE COMMITTEE MINUTES March 24, 2004 much work for staff and that perhaps the words "restricted" and "unrestricted" should be added to the columns to specify the type of funding. Mr. Gibson said that GASB is very critical about the wording used in the reports. Mr. Gibson said that a synopsis can be prepared. Mr. Wood said that this would duplicate the work for staff. Mr. Espinoza said that a non-GASB report is generated for the Redevelopment Agency. This type of report can be done for the committee if desired. Mr. Ortega said that the Finance Department needs to meet certain standards. Mr. Gibson said that the City can be written up for not following the required accounting standards. Motion was made by Mr. Veazie and seconded by Mr. Campbell to approve the Investment Review Procedures and change the auditing procedure to "random" sampling and add the two items recommended by the auditors. Motion carried. 3. City of Rancho Mirage Investments Mr. Jeffrey said that he was able to obtain an investment portfolio for the City of Rancho Mirage for February 2004. The City of Rancho Mirage portfolio indicates that they were able to obtain a yield of 2 %2% whereas the City of Palm Desert had a yield of 1.6% for the same time period. The reason for this is that they are going much further out on the yield. Their securities on average will mature in 639 days, our securities will mature in 111 days. One reason they are able to accomplish this is that they do not have a lot of infrastructure expenditures. Mr. Wood asked about the market risk involved. Mr. Jeffrey said that their market risk is higher than that of the City of Palm Desert as they are able to go out further as they have a smaller portfolio with a smaller bank account balance. Mr. Spiegel asked if the $86 million indicated on the City of Rancho Mirage's portfolio was the only amount invested. Mr. Jeffrey said that their portfolio is actually higher because the redevelopment bond proceeds are not included. Mr. Spiegel said that Mr. Ortega and he attended a meeting at the Coachella Valley Association of Governments where each of the Valley cities discussed their concerns of the affects of the State budget cuts. Both the City of La Quinta and the City of Rancho Mirage indicated that they were not as concerned about the proposed budget cuts as they were doing well financially. 32404. wpd INVESTMENT &FINANCE COMMITTEE MINUTES March 24, 2004 B. City of Palm Desert Single Audit of Federally Assisted Grant Program for fiscal year ended June 30, 2003 Mr. Gibson said that the City of Palm Desert was audited for purposes of Federal and State grants to ensure that the City was in compliance with the Federal and State guidelines. The City of Palm Desert's auditor prepares the report and the City files said report with a state and federal agency. Mr. Spiegel asked if there were any findings. Mr. Gibson said that there were no findings. Motion was made by Mr. Spiegel and seconded by Mr. Erwin to receive and file the City of Palm Desert Single Audit of Federally Assisted Grant Program for Fiscal Year Ended June 30, 2003. Motion carried. C. State of California Local Agency Investment Fund Balance for the month of February 2004 Mr. Gibson stated that the City and RDA LAIF accounts remain maxed out at $40 million each. D. California Asset Management Program (CAMP) February 2004 Statements Mr. Gibson said that Staff continues to invest CAMP funds. E. City and Redevelopment Agency Monthly Financial Report for City Council for February 2004 Mr. Gibson said that he received good news via e-mail from the City's sales tax consultant indicating that the quarter that includes the Christmas season was up 10% over last year. Mr. Spiegel said that last month the Westfield Shoppingtown mall reported a 17% revenue increase. Mr. Gibson said that in regard to the revenues, last year to date was 17.7 million and this year to date is 17.3 million. The bulk of the difference is due to the State subvention of the Department of Motor Vehicle fees that have been reduced for the first three months. F. Parkview Professional Office Buildings - Financial Report for February 2004 Mr. Gibson said that Parkview continues to do well. Supervisor Wilson called and indicated that he is interested in occupying a space at Parkview. Mr. Gibson is waiting for Supervisor Wilson to initiate discussion about the terms 32404.wpd INVESTMENT & FINANCE COMMITTEE MINUTES March 24, 2004 of the lease, etc. He expects Supervisor Wilson to occupy a space in the complex in June or July. Palm Desert Golf Course Facilities Corporation Financial Information for February 2004 Mr. Gibson said that Mr. Young is out of town this week. Mr. Ortega said that in February there was a great leap forward in revenues compared to January. Desert Willow makes most of their money in February, March and April_ Mr. Gibson said that he went to Desert Willow yesterday and the restaurant was filled to capacity. The alumni from the University of Washington were seated outside the restaurant and were playing golf. Mr. Ortega said that on Friday Desert Willow is expecting the San Jose State alumni. Mr. Wood asked if most of the money Desert Willow spends is at the beginning of the season for the course and grounds in preparation of the next season. Mr. Ortega said that quite a bit of money is spent in September because of the purchase of the seed for the re -seeding and for staff overtime. One of the things that he has asked staff is whether they should track the number of rounds in relation to the course and grounds. To a great extent maintenance of the grounds affects the services area where more people have to be hired to clean the club. However, for the most part, the golf course needs to be kept in the same shape whether there are 75 players or 275 players. Mr. Wood asked if the money required for seeding can be set in an account and written off over the use of that period so as to even out the financial statement. Mr. Ortega said that they do cash accounting, if they were doing accrual accounting it would be possible. Mr. Gibson said that with the limited amount of people they have at Desert Willow, he does not believe that they will be able to accomplish this task. Mr. Wood said that if a budget is estimated for the work to be done, it seems to him that over the life of budget, it would be possible to do. Mr. Ortega said that typically this is done when you prepay a service before it is completed. For example, you pay for a service six months in advance, however, in reality you do not use the service for the next six months. In this case, the expenditure for the reseeding and overtime is made and used in the same month. Mr. Wood said that it will last for a specified period of time. Mr. Gibson said that if there were enough accounting staff the City could potentially look at that. However, with the work Desert Willow's staff has at this time, he does not think it would be performed easily. VII1. CONTINUED BUSINESS - None. 5 32404.wpd INVESTMENT & FINANCE COMMITTEE MINUTES March 24, 2004 IX. OLD BUSINESS A. Status of Public and Private Partnerships Background Checks There being no business issues to report, discussion ensued to the next agenda item. B. Bond Issuance by Palm Desert Financing Authority Mr. Coleman said that they are moving forward with the assessment district. There are two major landholders that will sell their land. Two of the land owners will place $50,000 in deposit to form an assessment district for the University Park. Cost will be in the neighborhood of $20 million. At this time staff is looking at what infrastructure improvements qualify for the bond issue. One of the things they do is obtain a deposit from the developer to pay for engineering and appraisal costs. The item will be taken before the City Council in the next month or so. He said that the City charges $50,000 for the formation of districts, for the issuing of the bond and for staff time involved. He is in the process of developing a reimbursement policy. Mr. Ortega said that what might be done is charge a percentage for a portion of the bond amount because it presents a quick benefit to the developer. Mr. Crites asked staff to look at what savings was being given to the developer and look at the equitable sharing or profit. Mr. Ortega said that by obtaining the money from a bond a developer obtains a potential 2% savings. Mr. Coleman said that it depends upon whether or not the developer is top -tiered credit worthiness. Mr. Ortega said that staff can look at the potential savings to the developer and report to the committee at a later date. An agreement can be drawn whereby the developer agrees to pay the City a specified amount. X. NEXT MEETING - Wednesday, April 28, 2004 at 10:30 a.m. XI. ADJOURNMENT There being no further business, the meeting was adjourned by Mr. Erwin at 11:02 a.m. Respectfully submitted, p, 6 Di n . Lea R rding Secretary 32404.wpd