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1992.01.28_FAB_Minutes_Regulart... y .f .... -. TOWN OF HIGHLAND BEACH FINANCIAL ADVISORY BOARD REGULAR MEETING - MINUTES Tuesday, January 28, 1992 9.30 A.M. Chairman S. Myron Browner called this Regular Meeting to order in Com- mission Chambers at 9:30 A.M. Deputy Town Clerk Doris Trinley called the roll. Present were the Chairman, Vice Chairman Victor P. Hadeed and Members Fred Firstenburg, Dennie Freeman and Frank A. Magarace. Also present were Town Manager Mary Ann Mariano and Finance Director Michael Seaman. Chairman Browner welcomed Mayor Joseph A. Boulay, who was in the audience; however, no other members of the general public were present. Upon MOTION by Fred Firstenbu.rg/Dennie-Freeman, the Minutes of the October 1, 1991 Regular Meeting were unanimously approved. OLD B'USINBSS 0 None. NEW BUSINESS Presentation of Fiscal Year 199f/1991 Financial Statements by Haas, Diaz & Co. Chuck Haas, Debbie Diaz and Walter Brysh represented the auditors, Haas, Diaz & Co., with Ms. Diaz speaking for the firm in the conduct of the review. Ms. Diaz noted this audit was more comprehensive than those done in the past, which approach was taken to afford Finance Director Michael Seaman the opportunity of qualifying, on behalf of the Town, for a Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association. She said the final report would need to be submitted for Association review by March 31 and, if it meets their standards, notification of award should come through by September 1992. In commending Mr. Seaman for the substantial contri- butions he had made to the total audit, she also noted he had compiled all the information in the statistical sections. Page by page review took place, with questions raised by the members being answered to their satisfaction. Of particular note were the fol- lowing areas of additions, changes and clarifications requested: . Page 18 (note 5). It was requested that bond maturity dates be included. ,. of 16 • Financial Advisory Board Regular Meeting - Minutes January 28, 1992 Page 2 of 3 Page 20 (note 10). It was requested that mention be made in the audit that as of 10/1/91 a change in vesting had been made regarding only those employed from 10/1/91 on. (See Minutes of 10/1/91). . Page 21 (note 13). Cumulative increase over five-year contract with County Sanitation will be looked into for accuracy. Page 71. Request that line "Add back: exempt real property" be changed to "Less or Deduct: exempt real property." Concluding review, the members commented on the in-depth and comprehen- sive quality of the audit, complimenting the auditors, as well as Mrs. Mariano and Mr. Seaman, for their definitive contributions. The Board also noted their pleasure that Mrs. Mariano's recommendation of going with a smaller, local firm for this audit had been acted upon. The following M©TION was then made by Mr. Firstenburg/Mr. Freeman and met with unanimous approval: THE FINANCIAL ADVISORY BOARD RECOMMENDS THAT THE TOWN COMMISSION ACCEPT THE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 1991 AS PRESENTED, WITH SLIGHT AMENDMENTS RELATING TO COMMENTS MADE DURING THE COURSE OF REVIEW. (See additions, changes, clarifications noted above.) Review of Florida State Pooled Investment Account Chairman Browner explained that at the request of Commissioner John F. Rand, with the approval of the Town Commission, the Financial Advisory Board had been asked to again review the Town's participation in the the State Pooled Investment Fund. It was noted that all members had copies of the Commissioner's remarks to the Town Commission, dated December 3 and December 31, 1991, which gave his reasons for this request. (Attached hereto and made part of these Minutes.) Before discussion began, Mr. Firstenburg asked to read his comments in this regard into the record and did so. (Attached hereto and -made part of these Minutes.-) Lengthy discussion followed, with the members reiterating, for the most part, their previously stated positions, and included Mrs. Mariano's clarification that the responsibility for the investment of Town funds ultimately rested with the Town Manager. It was also agreed that it would be useful to make up a "dummy" portfolio, possibly on T-Bills, and monitor it for a period of time versus the State Pooled Fund investment for risk/ -rate of return. It was left that Mr. Magarace and Mr. Seaman would consult as to the set-up of this monitoring program. • Financial Advisory Board Regular Meeting - Minutes January 28, 1992 Page 3 of 3 Concluding review, the following MOTION was made by Mr. Firstenburg/ Mr. Magarace, which was the same as made at the October 1, 1991 meeting with the exception of the words "on a quarterly basis": THE FINANCIAL ADVISORY BOARD RECOMMENDS THAT THE TOWN OF HIGHLAND BEACH CONTINUE TO PARTICIPATE IN THE STATE POOLED INVESTMENT FUND AND THAT THE BOARD MONITOR THE INVESTMENTS AND RATE OF RETURN. Vote was as follows: Mr. Browner .......... NO Mr. Freeman .......... NO Mr. Hadeed........... YES Mr. Firstenburg...... YES Mr. Magarace......... YES Motion carried 3 to 2. December Financial Statement There were no comments or questions regarding same. It was agreed the next meeting would be called at the request of the Town Manager and upon MOTION by Mr. Firstenburg/Mr. Hadeed, this meet - meeting was adjourned at 11:20 AM. dmt APPROVE: ATTEST: DATE: .Myron rown�C airman Victor P. Hadeed, Vice Chairman J-� ; red Firstenburg 7T7 'Res, Dennie Freeman � � ,� a Fra k A. Magarace December 3,1991 To $ Town Commission Members om: Commissioner John F. Rand Res Pooled Investment Fund �Y3tIi rsferer_cz to uq repor.to you sated October 29, 19cl and to our discussion _:'.t t-Me 2or.m Voricahop meeting of the same date, I should like to advice 7ror, that I met v.-. ti= the i =e=cial officers of Delray Beach and Boca Raton pertai=: r to the above captioned pooled investment fund on November 5 and 1;4 -res, ecti.vely. Mle askant c3,=enta and conciu:.=ions from these 1- Rer.ra y B�:� ha.3 about :55 mi.�lion is z ands which they invest only in CD's with barks In, plorids who are cer-tified by ou-- S':.�..:ta c;zaIIf�cd public deposits-ries (QPD•s). Not all banks ozer3ting in Florida have this rating ::nc the list CLM cliange i_ar, one ee� to ���ot;.er. Having CD's is such. QPD• s, F'sor_"a.::iu...cipali tie_ have not only the protection of FDIC i�s^arzr_ce ks u, to �lv'�, bu` _isc i_. ..critic: a�itahle collateral as prescribedb;* th�'Floriza Statute so Delray considers such invest-.ent ae risk free. 2- Delray has never been a participants in tre Peeled. '.?und and .vhen that issue came up again for consideration about a year ago, they decided not to join tote fund, feeling th�it its i .vestment policy ;gas somewhat at�essive for relraf's staadar� • They prefer tc decide for themselves as to how to invest their funds on :a risk free basis. 3-Delray's financial stz;ff -v spends only a 1/2 dxj each month in mane 2.n�; their direc : investzaent Hands i.e. as far; as rollivers, new investments, etc. 4- Delray is stud*ing the possibility of investing in mutual funds that deal only in US Govt direc-c and guaranteed obligations because recent yields on CD' S have become very unattrs.ctilie. However, they are awaitiy ; an opinion from their attorneys as to whether the Florida Statute would allow them to invest in such a vehicle and they promised to share that opinion with me when received. In conclusion, Delray Beadh's views about the Pooled Fund coincide precisely wit:: those which I conveyed to you all previoaajy. Now Boca Raton is a different situation. They have approximately an average of about $100 million in funds to invest but they will only invest 50A of such funds in the Florida Pooled Fund wht h at presets amounts to $48 *i.11ion. The highlights of my discussion with Boca are as follows: 1- Boca z=x never saw a detailed breakdown of the Pooled Fund*s investments (such as I insisted upon) and while they were aware that some foreign bank paper was included therein, they PAGE TWO they were quite surprized alk at the amount involved and the level of concentration in one or two inatanceCe however, they did not express 4Z zzi real concern about it stating that they relied on the MM Pool(s stated invostc:ent policy and rating guidelines. Nevertheless, they asked me for permissi,:)n to mike a copy of the breakdvvnanalysis of theCpintsuranc folic and also a c:, ;; of the letter fro:: f the m=' �r?mit,.t1Y'-t� that nu Covera-ge 0x--- +t---d Oil a~y O: tiles fOS�i 1 �r vi)s 3 .ch I a .S'30d to let thr. e.cc . a",ve ao doubt tA�-, , -his ;a::.ter� a 1 will b � reviewed in. Qep �i1 by them 3i lle- it :+� +gas quite aPpc er_t to �!e that they were not aware Jf az tel,t of ors=. Lur.:: mar L: t:__" f :.LY:d 2� ._-:C �':3=.1j �.:3�� NrPT '::.1_'ng to ?:;vesTi ;��ib 01' r1fE'.Z.r tl::: lit CJ11;j the Fool�c �tLt: �_�; Their : eply was t= = t "one 3h .uict sever pub: :.11 their -n �t ^�1 �.�zr r^ cLL' -'y _��'� dicl nI t h4,Ve a similar -. policy. J'iry nia 3_ qj&ey told me tar- hat one Sts:ce :,olpd lid ( as failed in recent years ,7Tsstors :eq-n .;.bot_t 70 cents on evelI J dollar buti:il..:� '?ue =,o c . ao2urd is�res czer_t ,olicv by the people in in charge Of ,a MMIJ,L', it. In a�.nciasi on, 3ec3 d a not seem ,.o be cuncerned about their investment _:1 the pooled �+ d .1: ;tou ,h -Ghe'I ' ":L it i-. T.0 7� � Jf tiaeir available iuru:s.-0severt i �Ja-.,.��� ua1�� 4�� -viaFr �_���� therein in the �i xt G of co:�:ae Zs and tea? ytic �3. :material �sa$z :vhich I zrave them so it might be intarestIrg ".00 ..ieck with them a,aia in six monvhs to ascerta--.n. adza� : ar ta=y may 2aave altiEred their 'chinking. • I have not Cac'3YlZ-P.L: my Y1e:�'3 On this aL1DieCt l.e,, that we should not invest in this pooled -,,nd for reas.3ns which I have stated to all of you on _.rsviou3 oceasi ons anal 2.z is no:•i �:P to you to dmc:.ae whetr.er you agrees or disagree zy vie::s. I :,would like to have a consensus on the subject and I would be pleased to answer any question which you may have and to consider any stgestion you care to offer. 0 r. ` December 31, 1991 At our Met regular. meeting$ I requested that our participation in the Florida Pooled Fund be made an agenda item for thin workshop discussio: I have over the last several months provided each of you with my report_ pertaining to the composition of certain of the assets in this fund and my concern with respect thereto* I want first of all to make certain that Sou are cognizant of the fact that ray concern is primarily of a pb1losophical na*ure is that I am of the firm belief that we have a fiduciary responsibility to the residentja of Highland ;leach that our cash funds are invested on a risk free basis and at the present time this is not entirely the case. I am opposed to the Funa's investment in commercial paper obligations and especially in fore:tgm bank CD'a wheth have no FDIC insuranceo none of us would keep our own funds in a bans that does not have FDIC insurance so why should we be willir_-- to invest the Town• s funds in such foreign banks? We are facing difficult times and. I hope I am wfong when I say that our economy grill get worse before it gets better. Our banking industry i3 experiencing serious problems and ever a giant like Citibank is the subiact of some concern is some fi.arczal. circles. The FDIC itself isrunning out of money and will require substantial additions) funds to be ap_ ropriated by our Con_rrees . G? will have a whops ins, loss this year and more poor earnings, layoffs and bankruptcies have and will continue to occur in some other type izda.stries in our country. Interest rates are getting lower but not just an loans but on deposits especially. If you tare into consideration the present rate of inflation and the income tax that we personally have to pay on interest earned at a yield rate of 4 to 5A p.a., the wind up with no real benefit by •keeping. our money in banks. So banks xillk will be hard pressed to hold on to customers' deposits in.such a scenario. We are in a very deep recession .,nd xxd if it continues at its present level, Art will create serious consefluences very rapidly not only for us but also for the world as well. Ne have seen how quickly adverse situation- can happen almost overnight, look sxt at the break-up of the Soviet Union, look at how many airlines and banks have disappeared this year alone: etc . Since I brought this matter up for review quite some time agot many changes with new facts have transpired* l would,, therefore, like to suggest that our participation in this pooled fund be reviewed once again by our Financial Advisory Board and that we ask for their final recommendation as to whether we should remain in this fund or..not before making our own 1xn1v*s decision in this matter. If there is no objection, I request that, the Town mgr, arrange for an FAB meeting as soon as cosveneent for .ths.purpose. JOFM F. RAND COMMISSIONER 0