CITY OF FULLERTON
INVESTMENT ADVISORY COMMITTEE
Fullerton City Hall – 303 West Commonwealth Avenue
Third Floor- Room 301
Administrative Services Department Conference Room
Tuesday, April 10, 2007– 4:00 p.m.
CALL TO ORDER
Chair Lewczyk called the meeting to order at 4:05 p.m.
Members present: Frank Allen, Citizen Member
Phyllis Garrova, City Treasurer
Lynn Lauderdale, Vice Chair, Citizen Member
Stan Lewczyk, Chair
Glenn L. Steinbrink, Director of Administrative Services
Members absent: Chris Meyer, City Manager
Shawn Nelson, Mayor
ACTION OR DISCUSSION ITEMS
Item 1. Approval of Minutes of June 8, 2006
Vice Chair Lauderdale motioned to approve the minutes. Mr. Allen seconded the motion. Motion unanimously approved.
Item 2. Approval of Minutes of November 16, 2006
Mr. Allen motioned to approve the minutes. Vice Chair seconded the motion.
Motion unanimously approved.
Item 3. Status of Investment Portfolio
The 03/31/07 quarterly report distributed by City Treasurer Phyllis Garrova provided the following:
1. Portfolio balances as of 01/31/07, 02/28/07, and 03/31/07.
2. Types of investments, with percentages of portfolio invested in each type, and change from last report.
3. List of maturities between 01/01/07 and 03/31/07.
4. List of purchases between 01/01/07 and 03/31/07.
City Treasurer Garrova pointed out that the portfolio had experienced a significant jump to $94 million at January 31, primarily as a result of triple flip revenue and vehicle in-lieu funding. She further noted that there was a $7.5 million drop at February 28 (to $86.5 million), and explained that expenditures are usually higher in February due to vacation/sick leave/comp time conversion payoffs for the previous payroll year. In addition, there was a $1.9 million bond payment in February. The drop to $83 million at March 31 was a result of normal expenditures plus two lease payments.
Ms. Garrova reported that during the January-March quarter 10 investments ($13.5 million) had matured, and eight purchases ($11 million) had been made. She noted that the five-year yield curve indicated the City was lagging a bit, but only a half point. With the 2 and 3 percent investments dropping off, Ms. Garrova indicated that she expects to exceed projected earnings by June 30.
Item 4. Annual Review of Investment Policy
City Treasurer Garrova indicated there were two legislative changes during 2006:
1) Amendments to Government Code Section 53635. Section (a)(2) was changed to provide that no more than 10% of the total assets of the investments that a local agency makes may be invested in any one issuer's commercial paper, and Government Code Section 53635(a)(3) was eliminated.
2) Assembly Bill 2011 passed 9/25/06 adding Sections 53601.8 and 53635.8 to the Government Code, which allows local agency funds to be invested in multiple certificates of deposit using a deposit placement service.
While any amendment to existing Government Code is automatically incorporated into the City's Investment Policy, Ms. Garrova pointed out that the newly added sections "allow" cities to invest using the Certificate of Deposit Account Registry Service (CDARS), and considering there exists no proven track record for cities using CDARS, she recommended that the committee not incorporate this new investment option into the City of Fullerton Investment Policy for at least one year. She noted that this new service is currently a topic of discussion among city treasurers, and waiting one year would give staff time to evaluate the experience of other cities. She further noted that there appeared to be positives and negatives to the investment option, such as FDIC insured, but no liquidity. Committee members agreed to wait one year.
Chair Lewczyk asked if there were any other comments or suggested changes to the proposed 2007 Investment Policy. With no response, Vice Chair Lauderdale motioned to approve the changes. Mr. Allen seconded, and the motion was unanimously approved.
Ms. Garrova pointed out that the proposed 2007 Investment Policy would be submitted to Council for approval on June 19.
Item 5. Confirmation of Remaining Meeting Dates for 2007 (August 16, November 15)
The remaining two meeting dates of the Investment Advisory Committee in 2007 were confirmed for August 16 and November 15 at 4:00 p.m. in the Administrative Services Department Conference Room.
There being no further business, Chair Lewczyk asked for a motion to adjourn. Mr. Allen so moved, Ms. Lauderdale seconded, and the meeting was adjourned at 4:32 p.m. by unanimous vote.