Fullerton City Hall - 303 West Commonwealth Avenue
Third Floor - Room 301
Administrative Services Department Conference Room
Wednesday, June 18, 2003 - 4:00 p.m.
CALL TO ORDER
Chair Foeller called the meeting to order at 4:07 p.m.
| Members present:|| Don Bankhead, Mayor |
Steven Foeller, Citizen Member, Vice Chair
Phyllis Garrova, City Treasurer
Lynn Lauderdale, Citizen Member, Chair
Chris Meyer, City Manager Glenn L. Steinbrink, Acting Director of Administrative Services
| Members Absent:|| Janie L. Sechrest, Citizen Member|
City Treasurer Garrova informed the Committee members that Janie Sechrest would be submitting a formal letter of resignation due to her change in residence. She is no longer a Fullerton citizen and, therefore, no longer eligible to serve on the committee. Ms. Garrova indicated that interviews for committee members had been conducted earlier in the year and that she would need to determine if there were any other applicants available from the recruitment list.
Chair Lauderdale asked if the recruitment for a replacement member was mandated prior to the next meeting. City Manager Meyer stated it was not mandated, and Ms. Garrova indicated the only requirement for a meeting to be held was a quorum.
Item 1. Approval of Minutes of March 20, 2003
There were no suggested changes to the March 20, 2003, minutes. Chair Lauderdale asked for a motion to approve. Mayor Bankhead moved to approve the minutes. Vice Chair Foeller seconded.
AYES: Bankhead, Foeller, Garrova, Lauderdale, Meyer, Steinbrink
Item 3. Status of Investment Portfolio
City Treasurer Garrova provided the Committee members with a copy of the latest investment report as of 4/30/03, which provided the current status of the portfolio with previous month and previous quarter comparisons, along with a listing of activity that occurred during the reporting period. Ms. Garrova informed the committee that the 1.425% Treasury bill rate as of 4/30/03 was down to 0.90% as of the meeting date; and that agency discount notes, which were also 1.425% at 4/30/03, were also down to less than 1% as of the meeting date. Ms. Garrova indicated that because of the falling rates, the City would probably cut back on short-term investments, but continue to use LAIF for liquidity, and extend more into the three-to-five-year investments, noting that currently 34% of the portfolio was invested three to five years in instruments with one-, three- and six-month call features. Ms. Garrova stated that the City would continue the three-to-five-year trend until such time as short-term investments picked up. She also noted that all investments are in compliance with the City's Investment Policy.
City Treasurer Garrova reminded the Committee that the 2003 Investment Policy would be submitted to Council on July 1, 2003, for approval.
Ms. Garrova noted that at the last committee meeting former member Janie Sechrest had suggested that the Committee review new guidelines under development by the California Debt Investment Advisory Committee (CDIAC) and consider them for the City's Investment Policy as appropriate. Ms. Garrova informed the Committee that she had contacted CDIAC and learned that the guidelines would most likely not be published until late 2003. Ms. Garrova pointed out that the City's Investment Policy is modeled after the Municipal Treasurer's Association (MTA) of the United States & Canada and does not believe that CDIAC's guidelines will differ from those of the MTA, but indicated she would submit them to the Committee for review when they were published.
Vice Chair Foeller asked if the City was reaching its limit with LAIF. City Treasurer Garrova indicated that the maximum was 60% or $40 million, and that the City was close to reaching maximum.
Chair Lauderdale asked what type of pickup the City received with a one-, two-, or three-month call. Ms. Garrova stated that if 1 to 2 in basis points could be achieved, it was worth the investment.
Chair Lauderdale asked what the yield difference was in callable vs. noncallable. Ms. Garrova indicated that it was at least a full basis point for a bullet, noting that the economic climate becomes a consideration versus when the money is needed.
Chair Lauderdale asked Ms. Garrova to comment briefly with regard to Freddie Macs. Ms. Garrova noted that concern has been expressed regarding Freddie Macs because their top management had recently been replaced, but added that their credit rating remained high. She further noted that Freddie Mac had called many of its issues prior to their call dates and that the SEC had concerns regarding their reserves. She assured the Committee there was no concern about risk with Freddie Mac securities.
Chair Lauderdale noted that the March 31 financial statements reflected expenditures to-date of 58%, while 75% of the year was completed. City Manager Meyer pointed out that the capital project expenditures always lag behind, and significant amounts are carried forward. He indicated that if you separate out the capital projects from the operating departments, the percentages of expenditures to-date and year completed were closer.
Acting Director of Administrative Services Steinbrink stated that all departments had been asked to save 2% of their operating budgets for fiscal year 2002-03, for a year-end total expenditure of 98% of appropriations, but noted that the capital projects would bring it down to 60-70% for the year.
Vice Chair Foeller asked if the developer of the Amerige Heights project, SunCal, had given the City a $5 million deposit or set-aside for the sports complex, and was it reflected in the financial statements.
City Manager Meyer stated it was about $6.5 million, and that it was included in the financials. Mr. Steinbrink explained that the $6.5 million actually came out of the School District Community Facilities District bond.
City Manager Meyer asked the City Treasurer whether the County Board of Supervisors had voted on allowing cities back into the County's investment pool. He had heard that the Board of Supervisors turned down the County Treasurer Moorlach's request to let cities back in the pool.
Ms. Garrova indicated that she had not heard about a vote, but that she was aware that the County had approved Merrill Lynch to return.
There being no further business, Chair Lauderdale adjourned the meeting at 4:25. p.m.
Next meeting scheduled for August 21, 2003, at 4:00 p.m. in the Administrative Services Department Conference Room.