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Home My WebLink About05-14-2015 BaraschMejia, Anthony From: barascharc @aol.com Sent: Tuesday, May 12, 2015 3:47 PM To: Mejia, Anthony Subject: Fwd: Investment oversight committee agenda and agenda items. Anthony, Please note that the attached memo has been sent to your office via you for the "Public Record" Please contact me directly at my office at 544 -2600 should you have any further questions. Best regards, Steve Barasch barascharc @aol.com - - - -- Original Message---- - From: barascharc <barascharc @aol.com> To: wpadilla <wpadilla @slocity.org> Sent: Tue, May 12, 2015 3:43 pm Subject: Re: Investment oversight committee agenda and agenda items Good afternoon Wayne, Hope all is well at The City of San Luis Obispo's Finance and IT Department and you are in good health. As I previously informed you I will not be able to attend the this Thursday's City of San Luis Obispo's Investment Oversight Committee meeting due to a previously scheduled business meeting in New Orleans which I can not miss as well as limited advance notice for the May 14, 2015 IOC meeting. I do however want to make some comments regarding the information contained within your original May 8, 2015 Email attached below which I originally received late in the afternoon last Friday. After my initial review of the rather significant information you sent and after an informative & lengthy phone conversation with Carlos Oblities of PFM asset Management, LLC I would like to offer the following comments for you and the other members of the IOC's consideration prior to the committee taking any actionable votes regarding the proposed agenda items. To this end I offer the following personal observations; 1.) 1 believe the IOC is now being guided in the wright direction by Carlos Oblities and his "Team" at PFM with your prior directives. 2.) 1 believe that PFM's examination of the city's "Core Assets" (both the "Historical Core" and the "Projected Core Assets" (as described on Page 17 of the Portfolio Review Document dated May 14, 2015 entitled "Projected Balances ") may well represent the most understandable method of defining the public funds available for longer term investments that have the potential for the highest possible "yields" within the city's existing and /or modified investment policies by revealing the necessary historical & projected operating liquidity needs (including the necessary operating cushions) for the city's "efficient" operations. 3.) 1 believe that the city's past 10 year history of realizing several quarters of "negative returns" (investment returns that actually fall below the established "benchmarks" based on the current Merrill Lynch Treasury Index rate or whatever new "benchmark" may be established by The IOC in the future) clearly demonstrates the need for a "longer term" (Up to the allowable five year term and possibly longer with the approved renewal of more productive financial instruments) cohesive investment policy. (Note:This is precisely the reason that I personally voted that the city's fourth quarter investments ending December 31, 2014, did not meet the previously adopted "benchmark" criteria based on the Merrill Lynch Treasury Index Rates at the last IOC meeting held on February 15, 2015 due to a rather large abundance of non - interest bearing cash assets parked in multiple "on demand" accounts thereby lowering the entire All -City Investment Portfolio's overall returns). 4.) 1 believe that the selected City of San Luis Obispo's "professional" investment advisers should be given the opportunity to manage and "re- balance" a greater percentage of the city's available "core assets" under the direction of the City Treasurer and with the overall investment oversight of the IOC in order to increase the potential "yields" and investment potentials of the city's "All City Investment Fund" and the city staff should self- manage a lesser percentage of the available "core assets" within the "Fund" as quickly as possible. 5.) 1 also believe that their is a distinct possibility that the Central Bank of The Federal Reserve (including the eleven district banks) will gradually increase overall interest rates charged to member financial institutions and the rate of inflation as measured by regional CPI's will also gradually increase (as the present artificial rates can not stay at the present level too much longer as the national economy's long term health will be further restricted) once this country's regional economies have more fully recovered from the 2007 through 2011 recessionary period. This belief will further erode the potential returns on the city's overall investments as "no cost of living" increases have been factored into the city's overall investment returns what -so -ever. In summary, I recommend that the entire IOC adopt the currently proposals summarized within the both the attached materials previously circulated to the entire IOC and members of the city council with an emphasis on the "City of San Luis Obispo Portfollio Review Investment Oversight Committee Report" and a further emphasis on pages 13 to 25 (and page 25 in particular) I hope my comments are received in a "productive manner" and can be made available to the entire IOC, the entire city council as well as any other city investment related stakeholders that may be deemed appropriate. My sincere regards, Steve Barasch, AIA, NCARB, Ph.D Public Member of the City of San Luis Obispo's Investment Oversight Committee, Corporate Management Adviser and Fiduciary Investment Manager to Domestic and Overseas Real Estate Opportunity Funds cc. All City of SLO Investment Oversight Committee Members City Council Members and Other City of SLO Department Heads Anthony J. Mejia, MMC -- San Luis Obispo City Clerk barascharc(c-Daol.com - - - -- Original Message---- - From: Padilla, Wayne <wpadilla(@slocity.org> To: barascharc <barascharc(a)aol.com >; Al E. Eschenbach ( AI. Eschenbach(aDglennburdette.com) < AI .Eschenbach5glennburdette.com> Sent: Fri, May 8, 2015 5:03 pm Subject: Investment oversight committee agenda and agenda items. Committee members - there is a lot of material that will be reviewed at the upcoming meeting and I wanted to get it out to you early so you have time to go over it. We can make hardcopy available for you on Monday if you desire it. We will certainly provide hardcopies at the meeting. It will be a very full agenda with the time focused on a review of the revised Investment Management Plan and the investment strategy to be used going forward. This will all be covered along with the supplementary information during the meeting by the investment advisor. The supplementary information may not make much sense now, but Carlos will explain how it ties into the future investment strategy during his discussion. As always, if you have questions, please give me a call or shoot me an email. Wayne Padilla Director of Finance & Information Technology gT Y p � i 1478 0 Finance & Information Technology Finance Operations 990 Palm Street, San Luis Obispo, CA 93401 -3249 E wpadilla af,slocity.org T 805.781.7125 slocity.org