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Investment Advisory Committee Minutes December 11, 2003

MINUTES

Regular Meeting
Fullerton City Hall - 303 West Commonwealth Avenue
Third Floor - Room 301
Administrative Services Department Conference Room

Thursday, December 11, 2003 - 4:15 p.m.

CALL TO ORDER

Chair Lauderdale called the meeting to order at 4:15 p.m.

ROLL CALL

Members present: Mike Clesceri, 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

PUBLIC COMMENTS

None.

ACTION

Item 1. Approval of Minutes of August 21, 2003

There were no suggested changes to the August 21, 2003, minutes. Chair Lauderdale asked for a motion to approve. City Manager Meyer moved to approve the minutes. City Treasurer seconded. Motion carried.

Item 2. Status of Investment Portfolio

City Treasurer Garrova pointed out there had been a steady decline in the portfolio of about $2.9 million, which she stated was primarily a result of: loss of VLF (Vehicle In-Lieu Fees) between August and September (noting that VLF revenue in 2002 was $694,000 and in 2003 is $209,000); bond payments ($500,000); fire truck expenditure ($763,000); Sports Park payment ($864,000); and annual payment to the Orange County Water District ($417,000), all of which left little idle funds available for investment.

Ms. Garrova noted that during the reporting period the City did not receive any significant property tax, but that a property tax payment of $5.2 million ($3.1 million for the City, $2.1 million for the Agency) had been received December 11, which was available for investment.

City Manager Meyer asked how the City was doing on property tax revenue. Acting Administrative Services Director Steinbrink indicated that revenues were up about 7 to 9%, pointing out that the City typically receives its largest property tax payment in December. Ms. Garrova noted that another payment would be received within a few days.

Ms. Garrova continued with her presentation of the status of the portfolio, pointing out that investments are within the guidelines of the City’s investment policy, and that LAIF continues to be the best place for short-term cash (in the range of 1.56%), noting that LAIF’s portfolio is short-term. Vice Chair Foeller pointed out that the maximum percentage of portfolio in LAIF is 60% or $40 million, and Ms. Garrova noted that the City’s investment with LAIF was at the maximum $40 million limit.

City Manager Meyer asked if the City’s account with LAIF could be segregated into two separate accounts (one for the City and one for the Redevelopment Agency), which would allow two separate limits. Ms. Garrova indicated that when the LAIF information was updated, Council had approved resolutions for the City and the Agency. The investment policy incorporates the City and Agency funds. She further stated that she and Glenn needed to discuss the accounting aspects including the 60% limitations. However, having an Agency LAIF account would be a viable choice because of the current interest rates for short-term investments.

Ms. Garrova pointed out that she had not reinvested in Treasury Bills because of the low interest rates, and that commercial paper was still a consideration for short-term investing if the LAIF maximum was reached. She noted that the other investments in the portfolio were federal agencies, which were mostly callable. Discussion was held regarding the purchase of federal farm credits vs. federal home loans, callable and maturity duration considerations, restatement of Freddie Mac’s financials because of their accounting disclosure problems, and the diversification of the City’s portfolio.

Adjournment

There being no further business, City Treasurer moved to adjourn the meeting. Vice Chair Foeller seconded. Chair Lauderdale adjourned the meeting at 4:43 p.m.

Next meeting scheduled for February 19, 2004, at 4:00 p.m. in the Administrative Services Department Conference Room.

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