HomeMy WebLinkAbout05-08-2014 IOC MinutesCITY OF SAN LUIS OBISPO
INVESTMENT OVERSIGHT COMMITTEE
MINUTES
Thursday, May 8, 2014
1:30 PM
Council Hearing Room 2nd Floor, 990 Palm Street
San Luis Obispo, California
MISSION: As set forth in the Investment Management Plan, this committee is
responsible for reviewing the City's portfolio on an ongoing basis to determine
compliance with the City's investment policies and for making recommendations to the
City Treasurer (Director of Finance and Information Technology) regarding investment
management practices.
CALL TO ORDER
A meeting of the Investment Oversight Committee was called to order on Thursday,
May 6, 2014, at 1:35 p.m. in the Council Hearing Room 2nd Floor, located at 990 Palm
Street, San Luis Obispo, California, by Chair Padilla.
ROLL CALL
Committee Members
Present: Mayor Jan Marx; City Manager Katie Lichtig; Assistant City Manager
Michael Codron, Finance & IT Director /City Treasurer Wayne Padilla;
Acting Finance Operations Manager Vilma Warner; Steve Barasch, public
member
Committee Member
Absent: None
Others Present: Al Eschenbach, Independent Auditor and ex- officio member; Jayson
Schmitt, Chandler Investments (City's Financial Advisor); Heather
Goodwin, Deputy City Clerk
PUBLIC COMMENT
There were no members of the public desiring to speak.
Investment Oversight Committee Minutes — May 8, 2014 Page 2
1. APPROVAL OF MINUTES
MOTION BY COMMITTEE MEMBER MARX, SECOND BY COMMITTEE
MEMBER CODRON, CARRIED 6 -0, to approve the Investment Oversight
Committee Minutes of February 20, 2014.
2. PRESENTATION OF THE QUARTERLY REPORT AND PORTFOLIO
PERFORMANCE
City Financial Advisor Schmitt summarized the quarterly investment report and
portfolio's performance over the quarter and responded to inquiries from the
Committee.
MOTION BY COMMITTEE MEMBER BARASCH SECOND BY COMMITTEE
MEMBER LICHTIG, CARRIED 6 -0, to confirm the investment policy is in
compliance with the City's investment policy as demonstrated in the Investment
Report for the period ending March 31, 2014.
3. DISCUSSION AND PRESENTATION OF INFORMATION COMPARING THE
CITY'S PORTFOLIO CHARACTERISTICS TO THOSE OF OTHER CITIES
City Financial Advisor Schmitt reviewed the comparison of the City's portfolio
characteristics and those of other cities; with the exception of Ventura; the other
cities have been used in the City's benchmark reporting; responded to inquiries from
the Committee.
The Committee received and filed the analysis of the comparison of the City's
portfolio characteristics and those of other cities.
4. DISCUSSION OF POSSIBLE CHANGES TO INVESTMENT POLICY TO ALLOW
INVESTMENTS WITH HIGHER YIELDS
City Financial Advisor Schmitt discussed the Investment Policy Recommendations;
responded to Committee inquiries.
Nick Witry, representing J.P. Morgan Securities was teleconferenced to join the
Committee meeting.
City Treasurer Padilla reviewed the proposed changes to City's Investment
Management Plan; discussed the suggested changes; responded to inquiries form
the Committee.
Following discussion, it was agreed that the City Financial Advisor Schmitt would
provide additional information including a brief history of the pool of corporations that
have comprised the single "A" rating group in the past for further discussion at a
future meeting.
Committee Member Barasch discussed and distributed hard copies of Fitch Ratings
press release entitled "Fitch Affirms San Luis Obispo, CA's Lease Rev Bonds at
Investment Oversight Committee Minutes — May 8, 2014 Page 3
`AA'; Outlook Stable;" Coast Hills mailer; and memo from Nick Witry, representative
from J.P. Morgan Securities to the Committee; responded to Committee inquires.
Nick Witry, representing J.P. Morgan Securities summarized the letter stating
increasing the risk on investments by expanding all of the investment parameters
would improve the potential to add higher - yielding investments to the City's portfolio.
Following discussion, it was agreed to evaluate and discuss Nick Witry's
recommendations as it relates to the City's policy at a future meeting.
Unnamed Individual from the floor questioned the concern for loss and being
conservative in the City's diverse portfolio.
City Treasurer Padilla responded stating that the 7.5% value is the rate of return
assumption used by the Public Employees Retirement System (PERS) to generate
all computations for their work in determining the pension funding formulas.
Council Member Ashbaugh from the floor requested the Committee to explain the
Governmental Accounting Standards Board (GASB) requirement with respect to the
reporting that the City is going to have to initiate regarding pension obligations and
when the new reporting requirement to show unfunded liabilities for all cities and
counties will become effective.
City Treasurer Padilla responded indicating that accounting standards are
recognizing that better reporting and transparency needs to occur; the City is
obligated to report under the same governmental standards; the unfunded liabilities
of the pension program need to be disclosed in the financial statements of public
agencies under the new accounting rules; assets available to cover the liabilities are
to be stated at fair market value.
Following discussion, the Committee received and filed the proposed changes to the
Investment Policy contained in the Investment Management Plan.
5. DISCUSSION OF POSSIBLE CHANGES TO THE INVESTMENT POLICY
RELATED TO SOCIALLY RESPONSIBLE INVESTMENTS
City Financial Advisor Schmitt discussed the possible changes to the current
investment policy that would address Socially Responsible Investing; responded to
Committee inquires.
Scott Sechrist from the floor expressed his company exclusively focuses on socially
responsible investments and addressed fossil fuel divestments to the Committee.
Following discussion and by consensus, the Committee agreed to gather additional
information then make a decision on policy changes a future meeting.
Investment Oversight Committee Minutes — May 8, 2014 Page 4
6. ITEMS TO BE CONSIDERED FOR THE NEXT MEETING
Recommendations
Discussion ensued regarding Committee Members bringing forward
recommendations for discussion during future meetings.
Following discussion, it was agreed that the Committee Members would discuss
how local financial institutions might be utilized to make investments that comply
with the City's investment policy.
ADJOURNMENT
The meeting adjourned at 3:26 p.m.
Approved: 08/14/14