MINUTES REGULAR MEETING OF THE PALM DESERT AUDIT, INVESTMENT & FINANCE COMMITTEE November 28, 2017 I. CALL TO ORDER Chairman Leo called the meeting to order at 10:01 a.m. Present Lauri Aylaian, City Manager Russell Campbell, Vice-Chairman Robert Hargreaves, City Attorney Jan Harnik, Mayor Sabby Jonathan, Mayor Pro Tempore Robert Leo, Chairman Janet Moore, Director of Finance Stan Sperling, Community Member Absent Brian Holcombe, Community Member Also Present Jarod Burns, Desert Willow Golf Resort Luis Espinoza, Assistant Finance Director Anthony Hernandez, Senior Financial Analyst Thomas Metz, Deputy Treasurer Niamh Ortega, Recording Secretary Derek White, Desert Willow Golf Resort II. ORAL COMMUNICATIONS A. None. B. None. III. APPROVAL OF MINUTES A. MINUTES OF THE MEETING OF SEPTEMBER 26, 2017 MOTION was made by Member Campbell to approve the Minutes of the regular meeting of the Palm Desert Audit, Investment and Finance Committee of November 28, 2017 as presented. Motion was seconded by Member Sperling and carried by a vote of 8-0, with Aylaian, Campbell, Harnik, Hargreaves, Jonathan, Moore, Sperling and Leo voting AYE; Holcombe
IV. NEW BUSINESS A. REPORT ON CITY INVESTMENT SCHEDULE AND SUMMARY OF CASH FOR SEPTEMBER AND OCTOBER 2017 Mr. Metz provided a summary of the reports and stated that the book value for the City Liquidity portfolio for the month ended October 31, 2017 was $161.7 million, interest earnings were $117,000, and yield to maturity was 0.80%. The book value for the City Income portfolio for the month ended October 31, 2017 was $94.4 million, interest earnings were $102,000, and yield to maturity was 1.25%. LAIF was stable during the September/October period. There was a large transfer of funds from the County pool to the liquidity portfolio to fund the annual budget. Approximately $43 million was drawn down from the CAMP account to purchase commercial paper, laddering it out approximately nine months so that they would be maturing as the City needs them throughout the year. MOTION was made by Member Harnik to recommend that the City Council approve the City Investment Reports through October 31, 2017. Motion was B. STATEMENTS FOR LOCAL AGENCY INVESTMENT POOL ACCOUNT THROUGH OCTOBER 2017 [This report was covered in the item immediately preceding.] MOTION was made by Member Harnik to receive and file the reports for Local Agency Investment Fund (LAIF), California Asset Management Program (CAMP) and Riverside County Investment Pool through October 2017 as presented. Motion was C. FINANCIAL REPORTS FOR CITY OF PALM DESERT FOR JUNE, SEPTEMBER AND OCTOBER 2017 Member Moore provided a summary of the reports, providing a final report for the month of June 2017 and the second report through October 2017. The June report reflects that the annual budget was $57.7 million and actual revenue was $57.1 million. This was approximately $3 million over prior year, and was mostly due to an increase in the TOT rate, and also a slight dip in sales tax, both of which were anticipated. Expenditures were budgeted at $57.2, and actuals were $56 million. 2
Member Jonathan asked why property taxes decreased by approximately $400,000 from the prior year. Member Moore responded that in part it was due to property tax received as a result of the sale of properties owned by the former Redevelopment Agency. It is likely due to a decrease in the number of properties sold and their associated property tax as disbursed to the City by the County following the sale. Member Jonathan asked for further information relative to the $500,000 increase in expenditures for the Parks account. Member Moore responded that the additional expense was to account for the minimum wage increase, which had a significant effect on the City s landscape and median maintenance contracts. Chairman Leo asked where the aquatic center is reflected, and Member Moore replied that it is not in the General Fund, and has its own fund. The general fund does subsidize it, and once the transfers are made, Member Moore will provide the Committee with detail on the transfers out. Member Jonathan asked the status of the audit, and Mr. Espinoza replied that the auditors were currently onsite and would have the audit completed shortly. The final report will be ready to present at the next Committee meeting, and will then be presented to Council at a subsequent meeting. Mr. Espinoza expects to have the report posted on the City s website around December 15, 2017. Member Jonathan noted that sales tax revenue was down this year, and Member Moore acknowledged that this was anticipated. She reminded the Committee that the sales tax report reflects closures that happened in the last calendar year, it just takes some time before the impact is evident in dollars. As an example, David s Bridal closed quite some time ago, and has since been replaced by Aldi, yet the dip in sales tax is only now showing up due to the time it takes for the State to collect the sales tax and then report the year over year variances. As requested at the last Committee meeting, Member Moore handed out some information regarding the City s unfunded liability. She reviewed the highlights of the most recent actuarial report, and informed the Committee that she attended the PERS Conference held a few weeks earlier. PERS indicated that Palm Desert is faring much better than other cities. Member Moore reported that the unfunded liability portion of the pension is based on a 30-year amortization for Palm Desert. The actuary prepared two scenarios based on a 15 and 20 year as well as a 30-year amortization schedule to provide alternatives that the City may wish to consider. Most recently, the City opted to make one payment at the start of the fiscal year rather than paying monthly, which saved the City approximately $250,000. 3
Chairman Leo asked if there is a point where the City should be concerned that it is not able to make these payments for unfunded liability. Member Moore said the City is constantly reviewing the status to ensure that the City s fiscal priorities are in order, and would recommend continuing to make upfront payments as long as it is possible. MOTION was made by Member Campbell to receive and file the City financial reports for June, September and October 2017 as presented. Motion was seconded by Member Sperling and carried by a vote of 8-0, with Aylaian, Campbell, Harnik, Hargreaves, Jonathan, Moore, Sperling and Leo voting AYE; Holcombe D. FINANCIAL REPORT ON PARKVIEW PROFESSIONAL OFFICE BUILDINGS THROUGH OCTOBER 2017 Mr. Hernandez reviewed the reported revenues and expenditures. There are no prospective tenants at this time. Member Harnik said she may have a group who are interested in space, and will advise them to contact Mr. Hernandez. Member Aylaian reminded the Committee that an update was requested on the Parkview remodel project. She reported that approximately $1.4 million was allocated for the project, and there are two parts to it. One part is signage for the entire campus including Parkview, the Community Center, the YMCA and City Hall. The second and larger part is the actual building improvement, and a scope of work has been identified involving the building itself and landscaping. Some of the most important issues center on security. An RFP for architectural services will be issued once the Council approves the scope of work at a January Council meeting. The conceptual design will be provided to whoever is awarded the project. MOTION was made by Member Sperling to receive and file the financial report on Parkview Office Buildings through October 2017 as presented. Motion was E. FINANCIAL REPORT ON DESERT WILLOW GOLF RESORT THROUGH OCTOBER 2017 Mr. White reported that this fall was one of the better seasons since FY14/15. The trigger point is the favorable Canadian exchange. He highlighted that yearto-date revenue was just over $2 million through October, which is 3% above budget and 24% above prior year. The main reason for the large increase over prior year is that a course was down over much of the summer last year due to a renovation. It is expected that November will be the best November they have ever had. Thanksgiving was sold out before November 1, with over 560 people served with over 100 people on the waiting list. 4
MOTION was made by Member Sperling to receive and file the financial report on Desert Willow Golf Resort through October 2017 as presented. Motion was V. CONTINUED BUSINESS None. VI. OLD BUSINESS None. VII. INFORMATIONAL ITEMS A. Member Harnik thanked the Committee members for their service and distributed a thank you card from the City to its community members. Chairman Leo asked if there was anything the Committee members wished to add to an upcoming agenda to discuss at a future meeting. He said he would like to have a discussion about the Aquatic Center, its costs, and estimates on refurbishment. Member Moore reported that she would ask Mr. Stendell to attend and provide a report. Member Harnik asked about projections relative to minimum wage. Member Moore responded that Thomas Metz is currently looking at that and provide the information when it is completed. Member Harnik asked if staff could work on providing a glossy overview to the public that highlight where the money comes from and goes to in the form of pie charts or graphs. She asked that it possibly be included in the BrightSide or similar mailing piece. Chairman Leo asked if there were any projected costs on the maintenance of the CV Link. Member Aylaian responded that there will be a study session planned after the first of the year to evaluate the costs. She also reminded the Committee that the proposed route is already in existence in Palm Desert and is currently being maintained, and cautioned it is difficult to estimate the overall maintenance cost since the design has not yet been finalized. Members Harnik and Jonathan recounted incidences of Manhattan and Chicago installing similar trails that have become quite popular. VIII. ADJOURNMENT By motion duly made and seconded, the meeting adjourned at 10:54 a.m. 5 Niamh Ortega, Recording Secretary