Loading...
HomeMy WebLinkAboutOctober 25Finance and Investment Committee Special Meeting Town of Los Altos Hills Town Hall, Monday, October 25, 2017 The meeting was called to order at 4:00 pm by Chairman Sloss. Members present: Allan Epstein, Betty Kayton, Kjell Karlsson, Stan Mok Christopher Nam, Bill Silver and Roddy Sloss Members absent: Susan Mason and Chris Welborn Associate members: Jim Lai, present; Frank Lloyd, present Council: Gary Waldeck, present; John Radford, absent Staff present: Carl Cahill, City Manager; Tony Sandhu – Finance Consultant and Frances Reed, Administrative Services Technician Public present: Jim Abraham Guests present: Mitch Barker, Exec. Vice President, PARS; Andrew Brown, Senior Portfolio Manager, Highmark Capital Section 115 Trust Investment Strategy – Mitch Barker and Andrew Brown An eighteen page handout was distributed and discussed covering questions submitted in advance, fees, clients, similar services offered for OPEB clients, comparative performance data, and projected CalPERS employer contributions. Five predesigned investment strategies were presented each with a Mutual Fund or Index Fund option, and recent quarterly investment reports for each strategy were presented and discussed. A specimen client policy statement was presented for each model strategy. In response to a request, a single policy document covering all five strategies will be prepared and forwarded to the Town for its consideration. PARS also offers its clients the opportunity to design their own strategy (which is done by only a few their clients.) A standard client agreement will be sent to Mr. Sandu for further staff review. PARS has no minimum investment requirement nor does it have a policy limiting the number or time period of investment strategy changes a client may choose to implement. However, Mr. Brown stated that PARS would not be an efficient investment vehicle for investments intended to be held for less than nine months to a year. After the discussion, the Chairman asked members to state their investment strategy preference for a PARS investment which is presented as an attachment. Report on Pension Prepayment Matters – Roddy Sloss Mr. Sloss referred members to a one page summary handout of due diligence work he performed on CalPERS provided amortization schedules for a $1.5 million prepayment of two medium term amortization bases. Mr. Sloss reported that he could not replicate the promised 7.375% discount rate but that his independent calculations resulted in discount rates between 6.875% and 7%. He also modeled a CALPERS repayment strategy to PARS investment strategy for the same amount and period noting that while PARS required a lower interest rate to accomplish a similar result, the PARS rate had both time and market risk which the CalPERS prepayment did not. He then briefly reviewed the available amortization bases that could be prepaid and noted that the Town’s CalPERS actuary, Continued October 25, 2017 FIC minutes, continued page 2. David Clement, suggested that the longer most recent amortization bases would provide the most favorable prepayment results. Mr.Sloss, acknowledging this is a complicated subject that was only briefly discussed, asked members to indicate a preference for which amortization bases would be prepaid. The results are presented in an attachment to these minutes. Report on Finance Department activities of interest – Tony Sandhu Mr. Sandhu noted that Ms. Huang was returning from her leave at the beginning of November and that members interested in commenting on a draft of the Town’s CAFR financial statements should do so by the time she returns. Mr. Sandhu also undertook to receive a copy of PARS client agreement and initiate the Town staff review process. Report on Council activities of interest – Gary Waldeck Mr. Waldeck reported that the November Council Meeting agenda was full, that work on Committee Charters would be taken up again in December, and that the proposed Short Rental Ordinance was referred back to the Planning Commission. A Special Joint Council Meeting with Los Altos and Los Altos Hills will be held November 16, 2017 before the Regular Council Meeting. Funding of the proposed Los Altos Community Center and plans for a new zip code for Los Altos Hills will be discussed. Approval of minutes: September 27, 2017 meeting minutes were approved as amended by members who attended that meeting. Review of future meeting calendar: The next FIC meeting will be a Regular meeting on December 4, 2017 to review the results of the annual audit and CAFR with the Town’s auditors, Maze and Associates. The following Special meeting is tentatively scheduled of Monday January 9th, 2018 to review the Bickmore prepared OPEB biennial report. Other topics for future meetings are: Section 115 Trust Investment Policy Statement, Workers Comp. provider change, review of long term capital plans and related policies, complete work on prepayment of OPEB and Pension liabilities; Financial policy and procedures review; Status of Planning and Building software (Filemaker replacement), Cost Recovery/Cost Allocation Study, LAH Sewer rate study and updates to related published schedules and literature, review of FIC Monthly Project Summary Report and review of Quarterly Finance Department report on financial controls. Presentations from the floor: Mr. Abraham stated his belief that CalPERS was not doing a satisfactory job and that if it is practical for the Town to make alternative arrangements for employee retirement benefits, he believed that would be in the Town’s interest although he is aware that leaving CalPERS is prohibitively expensive. Adjournment: At approximately 5:45 pm there were no further matters to be discussed and the meeting adjourned. Respectfully submitted by Roddy Sloss, Committee Secretary attachment