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HomeMy WebLinkAboutMinutes - Investment & Finance Committee 01/26/2005CITY OF PALM DESERT FINANCE DEPARTMENT INTEROFFICE MEMORANDUM TO: RACHELLE KLASSEN, CITY CLERK FROM: NIAMH ORTEGA, RECORDING SECRETARYW DATE: FEBRUARY 23, 2005 SUBJECT: APPROVED MINUTES OF THE JANUARY 26, 2005 INVESTMENT & FINANCE COMMITTEE MEETING Please find attached the Minutes of the Investment & Finance Committee meeting which took place on Wednesday, January 26, 2005, and were approved by the Committee at the meeting of February 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) G:\Finance\Niamh Ortega\Wpdocs\Investment Committee\MemosVklassen012605.wpd MINUTES REGULAR MEETING OF THE PALM DESERT INVESTMENT & FINANCE COMMITTEE Wednesday, January 26, 2005 I. CALL TO ORDER Chairman Gibson called to order a regular meeting of the Palm Desert Investment & Finance Committee at 10:30 a.m. II. ROLL CALL Present: Absent: Paul Gibson, Chairman/Finance Director Everett Wood, Member Buford Crites, Mayor Jim Ferguson, Mayor Pro-Tempore Carlos Ortega, City Manager Justin McCarthy, ACM/Redevelopment Thomas Jeffrey, Deputy City Treasurer Bob Hargreaves, City Attorney Russ Campbell, Member Bill Veazie, Member Thomas Lee Wormley, Member (arrived 11:05 a.m.) Also Present: Dennis Coleman, RDA/Housing Finance Manager Luis Espinoza, Assistant Finance Director Richard Kikuchi, Lance, Soll & Lunghard Janet Moore, Housing Authority Administrator Niamh Ortega, Recording Secretary Shirish Patel, Lance, Soll & Lunghard Rodney Young, General Manager, Desert Willow III. ORAL COMMUNICATIONS None. INVESTMENT & FINANCE COMMITTEE MINUTES JANUARY 26.2005 IV. APPROVAL OF MINUTES A. MINUTES of the meeting of November 24, 2004 MOTION was made by Mr. Campbell and seconded by Mr. Veazie to approve the Minutes of the November 24, 2004 meeting as submitted. Motion passed. V. NEW BUSINESS A. AUDIT REPORTS FOR CITY OF PALM DESERT AND PALM DESERT REDEVELOPMENT AGENCY Mr. Gibson indicated that each member had received a copy of the financial audit along with a report on findings. He introduced Richard Kikuchi and Shirish Patel of Lance, Soli & Lunghard, the company that performed the audit. Mr. Kikuchi informed the Committee that beginning in June 2004, a team of four auditors reviewed the internal procedures in place at the City. An independent count on the inventory was performed. At the end of August, an in-depth analysis of the balance sheet was conducted in order to produce the financial statement. In addition to typical procedures, auditors were required this year to test for fraud, which involved one person from each department taking part in an interview process to determine if fraud existed. The City, Redevelopment Agency, Housing Authority and Desert Willow were involved in the audit, and the procedure went smoothly. Mr. Kikuchi highlighted several areas of the financial report. As a result of the audit, the firm provided management feedback in three main areas as indicated in the letter addressed to the Investment & Finance Committee and distributed in the agenda packet. He indicated that there were no disagreements with management relative to procedures. Mr. Kikuchi drew particular attention to posting procedures during bid solicitations, and clarified issues surrounding sole source vendors. He also informed the Committee that the investment review was almost complete and would be presented at the Investment & Finance Committee meeting of February 23, 2005. 2 G:IFinancelNiamh OrtegalWpdocsllnvestment Committee120051Minutes\Minutes 012605 final.doc INVESTMENT & FINANCE COMMITTEE MINUTES B. CITY AND REDEVELOPMENT AND SUMMARY OF CASH DECEMBER 2004 JANUARY 26. 2005 AGENCY INVESTMENT SCHEDULES REPORTS FOR NOVEMBER AND Mr. Jeffrey made the following reports for November and December 2004. For the month ended November 30, 2004, the book value of the City Portfolio was approximately $128.6 million. Interest earnings were approximately $214,000. Yield -to -maturity was approximately 1.08%. For the month ended November 30, 2004, the book value of the RDA Portfolio was approximately $148.7 million. Interest earnings were approximately $221,000. Yield -to -maturity was approximately 1.84%. For the month ended December 31, 2004, the book value of the City Portfolio was approximately $124.7 million. Interest earnings were approximately $222,000. Yield -to -maturity was approximately 2.26%. For the month ended December 31, 2004, the book value of the RDA Portfolio was approximately $147.8 million. Interest earnings were approximately $239,000. Yield -to -maturity was approximately 2.00%. Mayor Pro-Tempore Ferguson asked why the book value of the City and Redevelopment Agency portfolios had decreased over a six-month period. Mr. Gibson responded that the City is no longer receiving sales tax and DMV fees on a monthly basis from the State, so the City operates with a decrease in cash flow for the first six months of the fiscal year. It was not expected that this cash flow would increase toward the end of the year, due to numerous Capital Improvement projects that are scheduled over the coming months. The Redevelopment Agency receives funding in January and May, and at the end of the calendar year makes pass - through payments to the County and the school districts, resulting in monthly fluctuations. The sales tax will end up costing the City nothing in the long term, but will cost approximately $300,000 in the short term, because of the timing. The current year's increase will be received next year. ERAF payment to the state is approximately $680,000 for the City and $3.9 million for the Redevelopment Agency. Staff expects to receive approximately $30 million in property taxes in January 2005, so there will be a significant reduction in the difference on the January report. 3 G:IFinancelNiamh OrtegalWpdocslInvestment Committee120051Minutes\Minutes 012605 final.doc INVESTMENT & FINANCE COMMITTEE MINUTES JANUARY 26. 2005 C. CORPORATE SECURITIES ISSUER LISTS FOR 2005 Mr. Jeffrey reported that it was time for an annual review of the corporate commercial paper and medium -term note issuer lists. Five new additions are recommended: Emerson Electric; First Tennessee Bank; Sherwin- Williams; South Trust/Wachovia Bank and USAA Capital Corporation. MOTION to approve both the medium term notes and the commercial paper issuer list for 2005 made by Mr. Campbell, seconded by Mr. Jeffrey, unanimously approved. D. PALM DESERT 2004 POLICIES AND PROCEDURES REVISIONS Mr. Jeffrey distributed and discussed the revisions to the Palm Desert Treasury Policies and Procedures for 2004. These revisions had been delayed due to unexpected staff illness. MOTION to recommend that the City Council approve the proposed revisions to the Palm Desert Treasury Policies and Procedures Manual retroactively to 2004, made by Mr. Campbell, seconded by Mr. Ortega, unanimously carried. E. ZIONS BANK'S 2005 BROKER CERTIFICATION Mr. Jeffrey indicated that Zions Bank of Salt Lake City, Utah had submitted all of the required documentation for broker certification. Mr. Jeffrey noted that Zions appeared to be particularly efficient at trade execution. F. LOCAL AGENCY INVESTMENT FUND (L.A.I.F.) ACCOUNT STATEMENTS FOR NOVEMBER AND DECEMBER 2004 Mr. Gibson reported that the City and RDA accounts are still maxed out. The reports were reviewed and placed on file. G. CALIFORNIA ASSET MANAGEMENT PROGRAM (C.A.M.P.) ACCOUNT STATEMENTS FOR NOVEMBER AND DECEMBER 2004 The reports were reviewed and placed on file. H. CITY AND REDEVELOPMENT AGENCY FINANCIAL REPORTS FOR NOVEMBER AND DECEMBER 2004 Mr. Gibson reported that the State is taking their 0.25°Ao portion of the sales tax. The ERAF payment has not been paid back yet, and should be received in April or May 2005. Building permit and business license fees 4 G:IFinancelNiamh OrtegalWpdocsllnvestment Committee120051Minutes\Minutes 012605 final.doc INVESTMENT & FINANCE COMMITTEE MINUTES JANUARY 26. 2005 have all increased. Transient Occupancy Tax is down from last year due to a one-time substantial payment received from a timeshare company in 2004. Expenditures are as projected in the budget. Mid -year budget request items have been received and will be reviewed in the coming week with the City Manager. Both reports were reviewed and placed on file. I. PARKVIEW PROFESSIONAL OFFICE BUILDINGS FINANCIAL REPORTS FOR NOVEMBER AND DECEMBER 2004 Mr. Gibson reported that tenants who are private sector vendors have been informed of the requirement to pay market rate for their spaces at the Parkview building. One tenant has indicated that he will be giving his notice and relocating his office. J. PALM DESERT GOLF COURSE FACILITIES CORPORATION FINANCIAL REPORTS FOR NOVEMBER AND DECEMBER 2004 Mr. Young reported that Desert Willow's revenues are slightly down for the month of December, but are up overall for the year. While the golf course was closed on Christmas Day, it was decided that it would remain open next year and offer limited play times. Rain closed the course on December 27, and resulted in approximately a $20,000 loss in green fee revenues, plus food, beverage and merchandise losses. Rounds were up by 200 over the same period last year, and the average rate showed an increase of $4.27. Year-to-date income through December had increased $87,000 net operating income to budget. VI. CONTINUED BUSINESS None. VII. OLD BUSINESS A. PUBLIC AND PRIVATE PARTNERSHIP BACKGROUND CHECKS No report. B. PALM DESERT FINANCING AUTHORITY BOND ISSUANCE Mr. Coleman informed the Committee that the subcommittee formed to review the RFQ for underwriting services would be meeting on February 7, 2005. 5 G:IFinancelNiamh OrtegalWpdocsllnvestment Committee120051Minutes\Minutes 012605 finaLdoc INVESTMENT & FINANCE COMMITTEE MINUTES JANUARY 26, 2005 Staff had begun to review the reimbursement policy for staff time spent on bond issues. The Committee had previously recommended that Best, Best & Krieger and Richards, Watson & Gershon review the proposed policy. Best, Best & Krieger indicated that the policy was acceptable as presented. Richards, Watson & Gershon suggested numerous changes, and will submit a redlined version for staff's review. Mr. Coleman added that staff met with Moody's Rating Agency, and they are interested in performing a rating next time a bond is being issued. Staff will bring some suggestions to the Committee at a later date. Another rating agency, Fitch, has scheduled a visit for February 11 to tour Palm Desert, and staff anticipates a favorable meeting. Staff feels that a few adjustments could result in a strong underline, which could help when insuring bonds, possibly resulting in obtaining a lower premium. It would be beneficial for staff to develop a strategy to lower the cost of bond insurance. VIII. ADJOURNMENT Mr. Gibson adjourned the meeting at 11:15 a.m. VOIVL-0--ND? . Niamh Ortega, Recor•jj g Secretary 6 G:IFinancelNiamh OrtegalWpdocsllnvestment Committee120051MinuteslMinutes 012605 final.doc