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HomeMy WebLinkAboutMinutes 2008-09-17~z~ $~` MINUTES ~ 0 o SPECIAL MEETING `'~LrFOR~~A CITY COUNCIL OF THE CITY OF SOUTH SAN FRANCISCO P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 CITY HALL LARGE CONFERENCE ROOM 400 GRAND AVENUE WEDNESDAY, SEPTEMBER 17, 2008 Meeting Called to Order: 2 6:31 p.m. Roll Call: Present: Councilmen Addiego*, Garbarino and Mullin, Mayor Pro Tem Matsumoto and Absent: 3 4. Public Comments. Mayor Gonzalez. *Councilmen Addiego arrived at 6:33 p.m. None. None. Discussion with Elections Manager David Tom of the Office of the Honorable Chief Elections Officer, County Assessor- Clerk- Recorder. Elections Manager David Tom thanked Council for the opportunity to discuss the 200'7 November Election cost issue. Mayor Pro Tem Matsumoto advised Council had invited Mr. Tom to appear so it might obtain a better understanding of the process and procedure related to election costs. She stressf;d the importance of communication related to the issue given that the City sets a budget for such costs. Elections Manager Tom apologized for not communicating the cost issue to the City i1i a timely manner. He then advised that based upon a unique set of factors that had not been observed in past elections, the Elections Office was not entirely aware of the cost issue until invoicing was completed in February 2008. He explained the higher than expected amount of the invoices was attributable to the fact that no state or county wide contest existed on the ballot. Cost ,allocation among entities participating in San Mateo County Elections was set by a Grand Jury recommendation issued about five (5) years prior and is based on a cost per voter distribution. In the instance of the November 2007 Election, South San Francisco was part of a smaller pool of voters than in previous elections. Due to a certain number of fixed costs, the typical election in odd years costs anywhere from 1.5-1.8 million dollars. When County or State players were removed from this equation, the cost. per voter for the cities participating in the November 2007 Election went up substantially. Mr. Tom advised that although the County should have realized this early on, it did not as it was involved in rolling out the electronic voting system. During this time, the Elections Office was focused on making sure poll workers could successfully implement the system. Since issuance of the invoices in February, the Elections Office assigned cost review to a Management Analyst. Monitoring the expected cost per voter will thus become a routine part of the elections cycle. Councilman Garbarino explained what disturbed him most about the 2007 Election invoice was the County's lack of response to the City's concerns regarding the issue. Elections Manager Tom acknowledged that invoices for the November 2007 Election went out later than usual. Due to the contracted 2008 election schedule, including the February Primary, the April Special Election and the June Primary, the Elections Office did not have a chance to torn to the issue until late June when it met with City Clerks from affected cities. Councilman Mullin observed that since implementation of the eSlate machines, election results are published on the elections website more slowly than in the past. He requested an explanation of the challenges tabulating and publishing results over the Internet. Elections Manager Tom explained future results reporting would be later than in previous years, because the Secretary of State established 38 new requirements related to security of the vote. Counties are no longer allowed to transmit election results through media, including telephone lines. In the past, results were tabulated in transmission stations, which are no longer usable. Instead, all results have to be driven into the Elections Office on Election Night and tabulated in San Mateo. Other security measures, including a tagging system ensure that equipment is tracked every step of the way. These procedures add to tabulation time. He acknowledged, however, that the Office might consider refining the way data is displayed on the website. Councilman Addiego questioned whether a City like Daly City, which consolidates its municipal election with the presidential and gubernatorial elections, would have the expectation of a lower cost per voter figure. Elections Manager Tom responded that Daly City's cost per voter would not be less than the average cost per voter in a normal election with a state and/or county player. Mayor Gonzalez noted the Council of Cities had raised the 2007 Election invoice issue; and sought to meet with the Elections C)ffice. He questioned whether Mr. Tom had attended a Council of Cities event in response to this request. Elections Manager Tom responded that while he had not attended a Council of Cities meeting, he would be willing to. SPECIAL CITY COUNCIL MEETING SEPTEMBER 17, 2008 MINUTES PAGE 2 Outside Investment Review. City Manager Nagel explained that during meetings with the Finance Subcommittee of the City Council in 2007, it was agreed the City would seek an outside review of its portfolio by a qualified financial advisor. Accordingly, MBIA Asset Management was brought in to perform an Investment Management Program Review. City Treasurer Battaglia presented the report's major points and explained the scope of work. The scope of work authorized MBIA to review the City's investment policy and provide feedback to the City Council on the relative safety of the policy. It would also make recommendations on changes appropriate for a City of South San Francisco's size. Other than clarifying several aspects of the portfolio policy, MBIA made four (4) primary recommendations, including limiting exposure to the San Mateo County Pool and First National Bank ("FNB"), further clarifying or restricting the investment policy in ways that would be consistent with a buy and hold practice and considering several options for adding resources to the investment function. In response to questions from Council, City Treasurer Battaglia explained he had been reducing the investment in the County Pool by the maximum amount permitted for sometime. Gay Eichoff, the Regional Director of MBIA explained the company's work with agen~;,ies all over the country managing portfolios similar to that of South San Francisco for nearly :ZO years. She then introduced Dave Witthohn, Director of Investment Advisory Services, who ra.n customized programs for MBIA. Mr. Witthohn presented MBIA's report. He began by stating that the City's investment program looked very sound and was secured by a conservative approach. He advised that the types of securities in the portfolio were very safe and not backed by mortgages. Mr. Witthohn i:hen reported on MBIA's suggestions. Consistent with the City Treasurer's current practice, MBIA recommended continuing to reduce the City's investment in the County Pool. He explained the County Pool's strategy was inconsistent with the conservative strategy pursued by the City Treasurer, since it aggressively invested in corporate securities. He further advised that City Treasurer Battaglia had wisely been reducing the City's investment in the County Pool by as much as possible all the way along. Mr. Witthohn expressed concern over FNB's ranking. Although he believed FNB was relatively secure, he recommended that the City transfer the funds remaining in the bank to an A.AA rated money market mutual fund, which would provide both safety and liquidity. Finance Director Steele advised the City opened an AAA rated money market account with CAMP, which would further reduce exposure. Mr. Witthohn further recommended spreading out investments in agencies and adding some treasury investments. SPECIAL CITY COUNCIL MEETING SEPTEMBER 17, 2008 MINUTES PAGE 3 Councilman Addiego questioned what MBIA stood for. Mr. Witthohn advised that MBIA stood for Municipal Bond Investors Insurance. He explained the Company became an investment advisory fund to public entities specializing in all ~6xed income public sector securities. Many municipalities need an investment advisor that knows the public sector. Mayor Pro Tem Matsumoto questioned the usual terms of MBIA's contracts. Mr. Witthohn advised that MBIA's contracts generally have a 30 day termination. Price is usually set at 10 base points, or one (1) tenth of one (1) percent. Finance Director Steele estimated that based upon the portion of the portfolio to which the contract would pertain, the price would likely be around $50,000.00. Mayor Pro Tem Matsumoto expressed concern over investment decisions made by a previous City Treasurer. She stated approval for the work done by City Treasurer Battaglia, but noted that she would be weary of another elected City Treasurer given the requirements are only that one be 18 years of age and a registered voter. She further questioned Finance Director Steele's responsibilities with respect to the portfolio. Finance Director Steele advised that City Treasurer Battaglia had appointed both he and Gloria Taoromina as Deputy City Treasurers. Councilman Mullin questioned whether MBIA had any advice for Councilmembers regarding the referenced economic crisis. For example, where might there be potential fallout for municipalities from an investment or financial stability standpoint. Mr. Witthohn responded that tax receipts might be an issue. He noted however, that analysts are starting to see some signs of bottoming and slowing in the rate of decent of the economic crisis. Councilman Addiego commented he would like to know how property reassessments would affect South San Francisco. Finance Director Steele responded he could not get the information from the County. "The County did report, however, that it saw no change in overall applications for appeal by homeowners from the year before. Councilman Mullin questioned whether there were any concerns regarding treasury securities given recent economic circumstances. Mr. Witthohn responded. that as with any security, there could conceivably be some risk with treasury investments. However, the risk was relatively low compared to investments in other securities particularly in times of economic uncertainty. Mayor Pro Tem Matsumoto advised that in past years, she and former Councilmember Joe SPECIAL CITY COUNCIL MEETING SEPTEMBER 17, 2008 MINUTES PAGE 4 Fernekes had suggested enhanced reporting to the City Council. Mr. Witthohn responded that the City did not have economists on staff to prepare this type of financial/investment reporting. He explained that intricate nuances to portfolio accounting exist, which is why outsourcing of the reporting function is common in many municipalities. Mayor Gonzalez opined that a monthly report from MBIA would serve as an informational and educational tool for the Council. City Manager Nagel advised an RFP process would be undertaken. 6. Closed Session: Conference with Real Property Negotiator (Pursuant to Government Code Section 54956.8) Property: APN Nos. 015-010-260, 015-010-270, 015-010-600, 015-190-170 and 015- 190-190 (Oyster Point Marina area parcels) Negotiating Parties: City of South San Francisco and Oyster Point Ventures, LI,C Under Negotiation: Purchase and lease terms and price. Closed Session began: 7:59 p.m. Open Session Resumed: 8:04 p.m. Report out of closed session. by Mayor Gonzalez: No reportable action was taken. 7. Adjournment. Being no further business, Mayor Gonzalez adjourned the meeting at 8:04 p.m. Submitted by~ ~ ~ ~ ~ Krista i-nelli-Lar n, City Clerk City of South San F ncisco Approved: ~~Zi~"~ , Pedro Gonzal ay City of South San Francisc;o SPECIAL CITY COUNCIL MEETING MINUTES SEPTEMBER 17, 2008 PAGE 5