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Minutes - Investment - 2010-12-20• COSTA MESA SANITARY DISTRICT MINUTES OF INVESTMENT OVERSIGHT COMMITTEE MEETING December 20, 2010 CALL TO ORDER The meeting was called to order at 5:00 p.m. by,Treasurer Marc Davis ROLL CALL Committee Members Present: President Bob Ooten (rotating committee member) Director Art Perry (rotating committee member) Mr. Scott Carroll, General Manager Staff Members Present: Mr. Marc Davis, Treasurer Ms. Joan Revak, Office Manager /Clerk of the District Ms. Teresa Gonzalez, Accountant • Public Present: Ms. Arlene Schafer NEW BUSINESS Review of Investment Report Mr. Davis reported that the District's portfolio was earning approximately 1.22 % as of November 30, 2010. Staff budgeted 1.25% for the year so we are on target from a budget standpoint. LAIF, as an alternative, is earning 0.454 %. Our investments are earning about 77 basis points above what LAIF is paying. One security was called during the month of November. These funds were reinvested with the purchase of a 4 year Federal Farm Credit (FFCB) with a yield of 1.25 %. Subsequently in December two additional securities were called and the funds reinvested as follows: On 12/1/10 a 5 year FFCB with a yield of 1.60 %;on 12/9/10 a 4.25 year FHLB with a yield of 1.375 %. The District has received notification that a third security will be called on 12/30/10, for which Mr. Davis is looking to reinvest in January 2011. Mr. Carroll asked for an explanation of what triggers the calling of securities. Mr. Davis responded by explaining that in the government agency market, the issuers of securities have call features available to protect the government agency from drops in interest rates. Factors in the market trigger calls and the agency can call the security back in advance of maturity. • Mr. Davis made a reference to the green line on the graph on page 10 of the Investment Report. The line represents the District's portfolio interest rate information, currently slightly below a five year Treasury note yield. All the other benchmarks are much lower with at least a 0.5% range. 0 • • WNUTES OF INVESTMENT OVERSIGHT COMMITTEE MEETING Update on Annual Charge for FY 2010 -11 December 20, 2010 Page 2 As of this date, the first two allocations of the annual charge have been paid by the County and. received by the District. The third payment is expected to come in on 12/22/10, and this payment is expected to be large, because it includes the tax payments received by the 12/10/10 deadline. Mr. Davis made the observation that the payments are coming in faster this year compared to last fiscal year. The comparisons for the collection of the annual charge for the first two allocations are as follows: The Trash fund collection for fiscal year 2009 -10 was 21 % and 25% for the current fiscal year 2010- 11;'The Sewer fund collections for fiscal year 2009 -10 was 18% and 18.5% for the current fiscal year 2010 -11. Mr. Davis explained the District is an enterprise fund so the entire amount of charges will be recognized as revenue this fiscal year, even though not all the charges will be collected. Status of Review of Safekeeping Services At the last Investment Oversight Committee meeting held on September 23, 2010. Mr. Davis obtained direction from the Committee to put out an informal bid request for third party safekeeping services. Currently, the District pays Bank of New York $6000 a year to provide the third party service. Mr. Davis has requested informal bids from Bank of New York, Wells Fargo Bank and Union Bank. These three banks are currently reviewing our investment holdings and will deliver their proposals in the next few weeks. The proposals will be reviewed, and if the amount falls under the purchasing authority of the General Manager, Mr. Carroll will be signing the agreement. PUBLIC COMMENTS There were no items discussed under public comments. ADJOURNMENT The meeting adjourned at 5:18 p.m. Approved by: ecreta , Cos- fa Mesa' nit:ary District Board of Direc ors C President, Costa Mesa Sanitary District Board of Directors