HomeMy WebLinkAboutMarch 4Finance and Investment Committee Regular Meeting
Town of Los Altos Hills
Town Hall, Monday, March 4, 2013
The meeting was called to order at 4:00 pm by Chairman Mordo.
Members present: Allan Epstein, Kjell Karlsson, Jim Lai, Susan Mason, Stan Mok, Jean
Mordo, John Radford, Roddy Sloss and Gary Waldeck.
Members absent: Frank Lloyd and Bill Silver
Staff present: Carl Cahill, Town Manager; Yulia Rasulova, Administrative Services
Director; Richard Chiu, Public Works Director; and Richard Lee,
Finance Manager.
Guests present: Carlos Oblites, PFM Management, Town’s investment manager; Tom
Pavleticv, owner, and Marv Winer, associate, Municipal Financial
Services – consultant to Town for Sewer Rate Study; several Town
employees including Deborah Padovan, City Clerk and Jeanne Evilsizer,
City Building Technician.
Public Present: Jim Abraham, resident
Deferral of Allan Epstein pension presentation:
At the request of Mr. Cahill, and after discussion, the committee voted 7 in favor and 2 against (Epstein
and Sloss) to defer Mr. Epstein’s presentation on pension costs and related proposal.
Approval of minutes:
Minutes of the February 12, 2013 special meeting were approved as submitted.
Update on review of private streets and Sewer Study:
Mr. Chiu noted a study session is scheduled on March 21, 2013, at 3:30pm in which staff, the
Town’s attorney and a fire district representative will be in attendance. Staff will present costs associated
with upgrading and maintaining private roads, standards for private roads and a survey of how other cities
are addressing private road maintenance and acceptance. Mr. Chiu introduced members of Municipal
Financial Services who are on site performing the Sewer Rate Study. Mr. Chiu and his guests excused
themselves from the meeting.
Sherriff’s Contract Renewal:
Mr. Cahill reported that the 10 year contract with the Sherriff expires on July 1, 2014. He recommends
renewal without competitive bidding. Other options are extending the existing contract, writing a new
contract or competitive bidding. After discussion, the FIC requested that Mr. Cahill present information
supporting his recommendation, a description of the services desired from the law enforcement services, a
comparisons with functions and costs of similar sized town’s enforcement services, metrics measuring the
Sheriff’s performance, and an explanation of the pro’s and con’s of the alternatives presented. Mr. Cahill
agreed and excused himself from the meeting.
Finance and Investment committee minutes, March 4, 2013 – page 2.
Investment Performance Review:
Carlos Oblites presented several slides discussing market conditions in general and noted the Town’s $9.7
million portfolio comprises 72% US Treasury securities, 3% Corporate Notes and 25% CAMP fund of
short term government investments. The portfolio current yield to maturity is 0.57% before PFM fees of
0.10% and has an average maturity period of nine moths reflecting PFM’s belief that interest rates
will rise. Mr. Oblites stated the portfolio is in compliance with the Town’s investment policy and that
unscheduled cash draws by the Town make it more difficult to maintain target yields. Other than
suggesting that the Staff improve its cash forecasting and notification efforts, no change in investment
policy or recommendations were made.
Review of reserves:
Mr. Sloss presented slides based on the FY 2012 and 4 prior year CAFR’s showing the declining trend
in financial reserves, their composition and unrecorded estimated liabilities for retiree medical and
pensions as well as other commitments and designations the Town made for unassigned reserves.
Mr. Mordo requested that 1) Ms. Rasulova confirm with the Town’s auditors that the pension liability
will be recorded in its entirety on the Town’s books on July 1, 2014 and 2) clarification of
a $779,000 committed reserve line item on the Summary slide Mr. Sloss believes reserves should
continue to be monitored and remedial alternatives should be considered in the Town’s budget
cycle, but no special action is required because even though commitments, designations and unrecorded
liabilities exceed unassigned reserves at June 30, 2012, some of estimates are worst case, others will
be addressed in the normal course, and there are substantial unrecorded assets that could be monetized.
Replies to auditor internal control comments:
The committee received a letter addressed to Town Council dated February 13, 2013 from the auditors
stating there is a material weakness in the Town’s internal controls evidenced by material adjusting
journal entries proposed by the auditors during the annual audit. The auditors recommend that the Town
establish written procedures for year-end closing of accounting records which include review of all
adjustments and schedules prepared for audit. The Town accepted the finding and recommendation that
the failure to make entries was due to employee turnover and lack of written procedures. The Staff
committed to having written procedures in place by the end of FY 2013.
Update Westwind Barn status:
Ms. Rasulova reported that seven candidates responded to the RFP, they received an onsite tour,
responses to their questions issued, and proposals are due on Friday, March 8, 2013 . Mr. Mordo inquired
about barn occupancy and requested an update on actions to fill available boarding space.
Report by Gary Waldeck on recent Council activities of interest:
Los Altos City Council decided to reverse their prior Council’s decision to appoint a task force to explore
library management options.
Presentations from the Floor:
None.
Finance and Investment committee minutes, March 4, 2013 – page 3.
Proposed topics and dates for future meetings:
The next FIC regular meeting is Monday, April 1, 2013 at 4pm. A presentation on interim (quarterly)
financial reporting is planned to solicit a consensus on report content. Topics suggested for future
meetings are reviews of the Town’s insurance and pension costs (as noted above) and follow-up on safety
and Barn costs.
Adjournment: The meeting adjourned at 5:55 pm
Respectfully submitted by Roddy Sloss, Committee Secretary