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HomeMy WebLinkAboutAudt Inv & Fin Cmte - 04/28/09 MINUTES � � REGULAR MEETING OF THE PALM DESERT AUDIT, INVESTMENT, AND FINANCE COMMITTEE Tuesday, April 28, 2009 I. CALL TO ORDER Chairman Gibson called to order a regular meeting of the Palm Desert Audit, Investment and Finance Committee at 10:04 a.m. II. ROLL CALL Present: Absent: Paul Gibson, Finance Director Thomas Jeffrey, Deputy City Treasurer Luis Espinoza, Asst. Finance Director Robert A. Spiegel, Mayor Cindy Finerty, Mayor Pro-Tempore David Erwin, City Attorney John Wohlmuth, City Manager Justin McCarthy, ACM/Redevelopment Stephanie Loog, Community Member James Walker, Community Member Everett Wood, Community Member Also Present: Russell Campbell, Community Member Patrick Conlon, Director of the Office of Energy Anthony Hernandez, Senior Financial Analyst K Kaufmann, Desert Sun Richard Mogensen, Desert Willow CITY COUNCILACTION Niamh Ortega, Recording Secretary API'ROVFD_ ._i)T^.Ni!�.�) Arla Scott, Senior Financial Analyst RECF.IVF.D � " E:3"I'f1E�:�2 .� Bill Strausz, Richards, Watson & Gershon Veronica Tapia, RDA Accountant N1F.F,TING DATE � � '�' Derek White, Desert Willow Golf Resort AYF.S: �� 'P NOI�;�: �n/1c° AI�S�:NT: ��'�e-- III. ORAL COMMUNICATIONS A13STAtN: V[;RIFIEU RY: � C None. Originaf on File with City Cler 's Oi'�ce IV. APPROVAL OF MINUTES A. MINUTES OF THE REGU�AR MEETING OF MARCH 2412009 MOTION was made by Member Wood and seconded by Member Finerty to adopt and approve in their entirety the minutes of the regu/ar meeting of the Palm Desert Audit, Investment and Finance Committee he/d on March 24, 2009. Motion passed. G:\Finance\Niamh Ortega\Investment Committee�2009\Minutes\042809.docx AUDIT, INVESTMENT, AND FINANCE COMMITTEE MINUTES APRIL 28, 2009 V. NEW BUSINESS A. CITY AND REDEVELOPMENT AGENCY INVESTMENT SCHEDULES AND SUMMARY OF CASH REPORTS FOR MARCH 2O09 Chairman Gibson presented the report and it was received by the Committee. The Committee discussed the types of bonds available to the City. MOTION to recommend that Council receive the report as presented made by Member Finerty, seconded by Member Loog, and unanimously approved. B. LOCAL AGENCY INVESTMENT FUND (L.A.I.F.) ACCOUNT STATEMENTS FOR MARCH 2O09 The report was received and filed. C. CALIFORNIA ASSET MANAGEMENT PROGRAM (C.A.M.P.) ACCOUNT STATEMENTS FOR MARCH 2O09 The report was received and filed. D. CITY FINANCIAL REPORTS FOR AUGUST AND REDEVELOPMENT AGENCY FINANCIAL REPORTS FOR MARCH 2O09 Chairman Gibson indicated that the first payment of triple flip was received for sales tax and motor vehicle tax. TOT is down over last year. There was nothing significant to note on the expenditures for the City. Ms. Scott reported that RDA revenues were $1,198,010.69, and expenditures were $14,274,737.72. Responding to question, Mr. Gibson stated that the payment due to the State is $5.2 million, and the City is waiting till the due date to make the payment. E. PARKVIEW PROFESSIONAL OFFICE BUILDINGS FINANCIAL REPORTS FOR MARCH 2O09 Mr. Hernandez reported that staff is taking a lease agreement to Council in May for approval to rent Suite 112. F. PALM DESERT GOLF COURSE FACILITIES CORPORATION FINANCIAL REPORTS FOR MARCH 2O09 Mr. White reported revenues for the month of March were $1.45 million versus a budget of $1.65 million. Rounds were down 2% from prior year, but the revenue was down 13%, so the average rate has dropped approximately $10 per round, and $6 per round for the year to date. Expenditures were $239,500 versus a 2 AUDIT, INVESTMENT, AND FINANCE COMMITTEE MINUTES APRIL 28. 2009 budget of $246,400, reflecting a $13,000 savings. From an operating perspective, the course is $53,000 in the black. G. QUARTERLY ACCOUNT STATEMENTS ON DEFERRED COMPENSATION PLANS AND RETIREMENT HEALTH SAVINGS PLAN The report was received and filed. H. ENERGY INDEPENDENCE PROGRAM SOLAR LOAN FOR VERIDIAN LLC Chairman Gibson reported that this item was added to the agenda following discussion at the March meeting, and indicated that Mr. Bill Strausz of Richards, Watson & Gershon was in attendance to answer any questions regarding the loan and the program. This is the first commercial loan to be considered under the program. Member Loog noted that the key points in the letter from Wells Fargo state that long-term loans up to twenty years are available to homeowners at 7%. She asked if commercial owners would be considered homeowners, because typically residential and commercial loans have different rates, and larger commercial loans would leave little funding for residential loans. It was noted that it was to be requested of Council in Phase Three that the maximum loan amount would be $100,000. The rate for both residential and commercial loans would be 7%. There was concern regarding the 20-year term, with indications that this period was too long. It was noted that the Wells Fargo loan would be capped below 7%. Both Members Loog and Walker stated they were not comfortable with a term of such length, so it was recommended that during the next phase commercial loans have a shorter term, such as five to ten years. Following discussion, the suggestion was to reset the rate after five years using a percentage over a base index such as the T-bill rate, with a 7% floor. This would apply to all future loans. Member Loog asked how the interest accrues on the Energy Independence Program loans. Mr. Hernandez responded that the first payment creates negative amortization, and following the first payment it would be simple interest. Member Loog also pointed out that the property owner gets funded through the City, and can also get tax credits from the government. Member Loog questioned if the City was checking to determine if residents are current on their mortgage, to which Mr. Hernandez responded that a title search is perFormed. This raised concern because a credit report is not obtained and there is no way to determine from the title search if the mortgage is current, thus leaving the City unprotected should the owner default. Chairman Gibson responded that any loans over $30,000 would require consent from the mortgagor. Member Wohlmuth requested that Mr. Conlon review the current practice and what has been discussed for future phases. Mr. Conlon informed the Committee that the current EIP program stipulates that loans over $60,000 require City Manager approval, and loans over $200,000 require Council approval. Those 3 AUDIT, INVESTMENT, AND FINANCE COMMITTEE MINUTES APRIL 28. 2009 over $60,000 also require a consent agreement signed by the mortgagor. As of two weeks ago, the threshold has been lowered to $30,000 instead of $60,000. Currently, there is no maximum loan amount, so staff is proposing a cap of $100,000 to be considered for Council approval. Mr. Conlon also informed the Committee that solar improvements have taken 75% of the funding, leaving only 25% for air conditioner replacement, window replacement and other energy improvements. Staff is proposing that 50% be set aside for solar, and the remaining 50% for air conditioning and other energy- saving improvements. A title report and title insurance are currently required on the loan, and staff is reviewing the possibility of underwriting standards for a loan to value ratio. MOTION that the Veridian loan be approved as presented and recommended to Council for approval, made by Member Loog, seconded by Member Walker, unanimously approved. VI. CONTINUED BUSINESS None. VII. OLD BUSINESS A. PUBLIC AND PRIVATE PARTNERSHIP BACKGROUND CHECKS No report. B. PALM DESERT FINANCING AUTHORITY BOND ISSUANCE Chairman Gibson reminded the Committee that Wells Fargo had submitted a proposal to fund the Energy loans. The reviewing committee has recommended that Wells Fargo be moved forward to the Council for acceptance. Mr. Strausz indicated that the purpose of the proposed Letter of Credit from Wells Fargo is to enhance the City's credit. They are proposing a variable rate bond issue, the proceeds of which would be lent to the City and it would be the City's obligation to repay the debt. The letter of credit would guarantee the bond payment. Member Loog requested clarification that the loan was for property owners, not just homeowners. Staff responded that it was highlighted in the proposal that the loan would be for both residential and commercial properties. Member Loog also asked if Wells Fargo was willing to continue funding this program in future phases, to which Chairman Gibson responded that they would need to review that in the future, and that it was also staff's intention to secure funding prior to committing to additional phases. 4 AUDIT, INVESTMENT, AND FINANCE COMMITTEE MINUTES APRIL 28 2009 MOTION to recommend that City Council accept the proposal from Wells Fargo to provide funding for the Energy Independence Program with the caveat that commercial loans should have shorter due dates, made by Member Walker, seconded by Member Wood, unanimously approved. VIII. INFORMATIONAL ITEMS Chairman Gibson stated that last year the Committee and the Council had approved a seven-year contract with Diehl, Evans & Associates to perform independent auditing services for the City and its entities. This year, staff is recommending that the contract be continued for its second year if the Committee sees fit. The Committee agreed that they were very satisfied with the work performed, and that they wished to continue the second year of the contract. Chairman Gibson responded that he would take the Committee's recommendation to Council at their next regular meeting. IX. ADJOURNMENT There being no further business, this meeting, upon motion duly made, seconded and carried was adjourned at 10:55 a.m. to the next regular meeting of May 26, 2009. ..,�, �� � 1 — Niamh Ortega, Rec ding Secretary 5