HomeMy WebLinkAboutSeptember 8Finance and Investment Committee Meeting
Town of Los Altos Hills
Town Hall Council Meeting Room
Monday, September 8, 2008
The meeting was called to order at 5:05 p.m. by Chair Roddy Sloss.
Members present: Wilf Corrigan, Karl Kneip, Stan Mok, Jean Mordo, Doug Norby, Roddy Sloss
Members absent: Jim Lai, Frank Lloyd, Lalla Stark
Staff present: Nick Pegueros
Public present: Allan Epstein, Ginger Summit
Approval of minutes: The minutes of the May 12, 2008 meeting were approved as submitted.
Report by Jean Mordo – recent city council activities of interest: Next Council meeting (Thursday 9/11)
will include discussion of: 1) New construction ‘green’ building initiatives (building materials, water and
power conservation); 2) Consideration of donation to Gardener Bullis school for teacher classroom aids in
the range of $10,000-$15,000; and 3) Infrastructure Committee report recommending Town participate in
funding of Sewer extensions.
Report by Nick Pegueros – recent finance department matters
1) Initiation of Green Waste as Town’s garbage vendor is on track to begin 10/1/08, resident cost increase
will average 20%, and services are improved by weekly pick-up, unlimited garden and recycle disposal and
vendor supplied disposal containers; 2) Santa Clara Country Tax Collector delivered preliminary report
indicating that Town’s fiscal 6/30/09 property tax revenue exceeds the 3.9% Town Budget growth
assumption primarily due to higher than anticipated residential property turnover. The favorable variance
could be substantial but it is too soon to measure as property owners can still file appeals (through September
15) and the underlying data has not yet been received by the Town’s property tax consultant for review; 3)
Fiscal 2008 Town financial books are closed and audit field work is scheduled to begin around the end of
October. Peer review award earned again for FY 2008.
Report by Nick Pegueros on Ad Hoc Internal Control Committee activities
The Town’s external auditors now require an annual internal control self evaluation as a result of a regulatory
change. The Town has hired a consultant to perform the work. The consultant’s study relates to existing
procedures. A report is expected by the end of November. The cost of the internal control work is expected
to be $80,000. In related matters, the Town has recently outsourced Payroll to ADP and is considering new
financial software alternatives. New financial software could cost approximately $80,000 plus annual
maintenance. These changes will impact internal controls.
Report by Nick Pegueros on Insurance
1) New and incremental umbrella coverage for property and liability insurance totaling $25 million has been
purchased for $9,000 per year from a third party insurer for a fiscal year term ending 6/30/09. The coverage
applies to the Town and the municipalities of Millbrae and San Bruno. The $25 million is a per event limit
and an annual claim limit for all three municipalities. The total per event coverage now available to the
Town for Liability and Property is $30 million subject to a $25,000 deductible. 2) Existing coverage
through AGAB covers Earthquake. 3) A dividend was requested from the Worker’s Compensation insurer
group. The dividend was put to a vote of the four participating group members and was voted down 3-1.
Worker’s Comp insurance alternatives will be considered by Town management. 4) New and incremental
coverage for employment practices insurance is being considered by Town management for risks of
wrongful termination.
FIC minutes – September 8, 2008 – page 2.
Report by Jean Mordo – Westwind Barn
The Town took over management of Westwind Barn on 7/1/08. The operating budget deficit for the first six
months is $11,000. There are 50 horse stalls and all are currently filled and paying rent. There is one
permanent employee and a 2 person outside service to perform animal maintenance.
There is an estimated $1.8 million required to retrofit the Barn for earthquake protection and upgrade it for
continued use. Of this amount, the Town will match third party contributions up to approximately 50% of
the estimated cost, providing there is a minimum of at least $500,000 of third party contributions. The third
party contribution deadline is April 2009. The Town is committed to operate the Barn until then when the
Town Council will consider alternatives including the scope of construction work, hiring a third party
permanent manager, and closing the Barn as a recreational facility.
Town Investment Policy review
Committee members considered the need for changes to the existing policy. Stan Mok proposed a
clarification of the Town manager’s authority to engage a third party investment manager. Nick Pegueros
suggested it might be appropriate to require the Town’s third party investment manager to obtain written
permission before selling a security. The Town’s existing investment manager, PFM, will be invited to make
a presentation at the Committee’s next meeting on October 6, 2008. Policy modifications, if any, to be
proposed by the Committee to Council will be further considered at that time.
Annual Election of Committee Officers
Attending committee members voted unanimously in favor Roddy Sloss serving as Committee Chairman,
Stan Mok serving as Committee Vice Chairman and Karl Kneip serving as Committee Secretary. The next
scheduled election of Committee Officers will take place in the July 2009 Committee meeting.
Presentations from the floor
The status of the following Sewer matters were discussed: 1)Billings from the Town of Los Altos. Allan
Epstein offered to review bills and report back to Town Management. 2) Nick will present overhead
allocations to the FIC for review. 3) Sewer Connection Fees are being deposited in the Sewer Operating
Fund consistent with historical practice; 4) Incremental billing is expected from Los Altos based on Los
Altos sewer cost and revenue projections published on the Los Altos website. Roddy Sloss noted Los Altos
may be planning to bill the Town Sewer Fund for Sewage Treatment Plant costs which the Town Sewer
Fund is already paying directly to the Sewage Treatment Plant.
Future Meeting Calendar: Next meeting is 5:00 pm Monday, October 6, 2008. A 12 month proposed
future meeting date calendar was distributed.
Adjournment - The meeting adjourned at 6:10 p.m.
Minutes prepared by Roddy Sloss