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2010-02-15 Audit/Finance Committee MinutesAtiditlFi�wa�ice Committee Mi��utes Fel�ruaiy I5, 2010 After d�tet-���ining tliat a c��iai-�un ��ras prese�it, tl�e Ai�dit/Fi�iaz�ce Coi��mittee af the City of Deilto�l, Texas coiiven�d i�i a a�egular ti�eeting, Ma�iday, Februa�•y 15, 2010, at � 0:00 a.�n. i�� tl�e Clty Cali11C11 Wdi'�C S�5S1071 1"001]] ai CIt}' H�II, 215 E. McKinney Street, D�T1iOT2, Texas. PRESENT: Coi�ncil Memi�er Joe Mulroy; Mayoz� Mark Burrougl�s; Cout�cil Me���ber Cliris Watts, C��air STAFF PRES�NT: George Can�pbell, City Mai�agez�; Jon Fa�•hiile, Assistai�t City Manager; Howard Ma�•tii�, Assista��t City Managei•; Bryan Langley, Di�•ector of Fit�ai�ee; Hai��ey Jaivis, Cont�•allei; Kevir► Muilen, Assistai�t Co�ltroller; Cody Wood, AS515t�I1� C011il'OI��1'; Micl�elle McCallun�, Budget aiid Municipal Ca�irt Ma�iager; Antonio Pue��te; T�-easury Ma��ager OTHERS PRESENT: Jer•ry Gaitl�er and Jolui DeBurr•o witli Weaver, L.L.P. T3�e �neeting was cailed ta orde�• at 10:07 a.t��. 1. Co�isider a�proval of AuditlFi�a�ice Committee Nliuiites of Oc#ober 20, 2009 Coi�iicil M�i��ber• M��lroy �noved ta approti�e the ��1i�iutes of Oetober 20, 2009, wit�� a secand by Mayor Buri•o��gtzs. Tlle i��inutes we��e appraved (3-0). 2. Nla�iageme��t Repa�•# — n. Ai�dit/Finance Coi���ittee Action Item MRtri� No qt�estions o�• camii�e��ts on the Mat�•ix update. b. Septemf�ei• 30, 2009 Qc�arter[3� l+inancial Report Brya�� La�igley, Di�•ector of Fi�iance --- Tl�e Se�te��il�ei• 30 Quarterly Repo��t was included for �•e�ie��v and to take any c�uestions abai�t tl�e repoi�t o�• s�iggestions for clianges i�� il�e report forinatting, No questions or suggestions. c. Staff memo regarding Boud Cou��sel a��d rivat�ci�l Advisor Couh�acts Langley ---- The City is u�ider cozat��acts far fnancial ad�risory sei��ices tivith Fiist Sauth�Vest and �ond counsel ti��itl� McCall, �arkh�ust aiid Hortoi�. Bot1� contracts pro��ide i�ltial terms of t«o years b�tt extend auto���atically far up to tlu•�e adciitional, one-ycar periods t���less wx•itte�� notice 1 is p�•avided to tei-�i�ii�ate the contracts. Staff �•eco���n�ends we auco���atically extend fai• a secand one-year �xteilsioil as alla��red in f11e existi�lg contracts, Co����cil Memb�i• Mulroy -�i1 tl�a fiih�re contracts, I��ould suggest tl�at if t��ey a�-e eligible foa- extension, it wo�ild rec��ire a�'fiiniative action fi•o��i Coi�ncil, I tivould also like staff to �rovide a si�nunary of ille fees that have been paid to these fii-�ns. Actio� Ifem: P�•ovide a summary af tlie iltcome that l�as Parklii�rst, and Horton. bee�� paid to Fi�•st Sauth�vest and McCall, Mayor Bur�•ouglls — Br•oke�� do�vn as to liow each firn� earned tl�e i�1co�11e? Catt��ci1 Mei��ber Mltl�-ay — Yes. Langley — We cai� do tl�ai. Ai�d ��ill i��ake the cha��ge to rec�uire affirmative actiot� from Cou��cil on tl�e contract extension, Cauncil Me�nber Watts — A�ry okher co�nme��ts. M�yor Bcirrouglls - My suggestion is to move for«��rd, La��gley — These cont�•acts «�ill renew automatically u�iless �ve take actio�i. Coz���ci1 Me��ll�er Mi�lroy. - I co�icur witli staff recotnn�e�idations that the contr�ets �e allo�ved to exte��d a�rto��iatically. Coti��cil Membei• Watts — The ite��� ���ill inove fo�-ward for ai�toinatic renewal ai cantracts. 3. Receive a repo��t, iiold a discussioai, a�id give staff directio�i i•egaedi�g ihe FY 2008-09 Com�3rehensive Auuual Fiva�cial Repo��t and au�ual ai�dit. Langley �av� a sl�ot�t p�•�senTation an the Compr�I�ensivc Aiuliial �'i��ancial Report (CAFR}, The prese��tatioi� addressed tlie report sections, �n•a��ided a review of the accou�iti��g basis and fii�ayicial state�nei�ts, and cliscussec� sou�e of the key fina�icial i��fo�•�natio��, the at�dit process and con�ments receirlec� from tl�e audito�•s. He also discirssed tl�e Si�igle Auc�it Repa��t a��d the Ma��agen�eut Letter. La��gley introduced Jei7y Gaitiler with We�ve�•, L.L.P., auditors for the City of Dentoz;. Gaitl3er expressed appreciation for ap�ortunities ta perFo�-��i tlle aiidit and ha��c�ed out the req��ired con�m����icatians to khe A��dit Cainnlittee. Gaitiie�- stated th�t tl�e Audit was pe�•foz-���ed in accordauee �vith ge�ierally accepted accou�iting sta�idards and gei�eraliy acce�3ted gaver���a�ez�tal aucliti��g sta��dards. Ti�e City received a cle��i opinio��. Fiz�a��cial state�nenis fairly ��eflect �a�aa�cial ��ositioa�s and results of o�e��aiions and the report on cont�•ol and complia�ice had �lo � findi�lgs reiati�ig to the fi�lancial statemeilts. Tl�� �•epo�•t on i��t�rnal control at�d compiiance �•elat�d to federal financial systerns �rograms h�d no fii�dings alsa. Gaithcr sui��n�arized tlle Ma�iag�i�le��t L�tte�• a�1d re�orted tlie si�ggestio��s a��d actioiis taket� to eiisure that all recomn�endatio��s fi•om last yea�• had been inlplemented by City adii�i��istratiat�. Coui�eil Meil�ber Mulroy — In fiih�i'e ycars, could yoti get t1�is letter to us earlier? Gaither — Tl�ere we��e �10 ite���s to bring to your attentio�� b��t i�� tl�e fiihtre, �ve �vill get tl�e lette�• to yati� �x•io�• to tlae ���eetiz�g. Mayor Bur�•a�zghs -� Pa�c 3, seco�Zd fror�l khe bottot�� has Iast year's date, Gaitiier — We «�ill get that corrected. Co�uicil Men��e�� Watts — On tl�e attach���ent, wllere did tl�e c��iestia�is originate? Langley — Mr. M�11�•oy I�ad submitted the questians ta ��s related to tlle CAFR . 4. Receive a repart, lYOld a discussiou, and pr�vide directiou o�� the gra�ifi��g o£ a tl�iard a�xd fi�i�l a�ie-S�eat• extension fio the C�ty's depasitot•y coi�tr�ct �vith Wac��ovia Baatk, N.A, Langley explai��ed the contract histoiy ���ith Wachavia and the current opiion to g�-ant a final oiie- year eYte��sio�l to the City's depositoiy contract, Mayor Bun-oughs —�Vhat is tl�e course of procedure to deal witli a�ly changes as a�•esult of tiieir t11��•ge�• tivith Wells Fargo? La�igley — Tl�e tlaiz�gs tl�at ���e l�ave beeX� disct�ssing tl�tis faz• would r�ot h�ve an adv�rse aff�ct oi� tl�e City. They're �OOIC111�T at LiSlil�, a diffe�•e�it type of web �ased product than what we ��se iz�tet•nally to mai�age our cash bala�lce and tra��sitioi�i�ig tliat over will take son�e ti�i�e bltt it's nothing adverse from oiu• sta�ld poi��t. We are goiizg to begin �vork on developing a request for proposai (RFP) for banking seivices. We l�a��e not l�ad to cha��ge ot�r �ank accot���t ���it���ers or tl�e i�iuiibers listed a�i our checks, all ti�at has been �z�ai��tained. If �ve liave any changes, they u�ol�ld i�lnst Iikely be inlple��le�lted over a si� to ��ii1e mo��th period. Couilcil Member Watts — Yau say there n�ay be chai�ges in six to ni�ie ���o��tl�s. Do yol� t��izik accoui�t i�u���uex�s i��igl�t be part af tl�e ck�a��ge? As ���erges accux�, t��ey keep tl�ings on the status c�uo faz- a �vl�ile. Langiey --- They have told us that ot�r accoi�nt ilu�nbers �vi11 not be chai�ged at all. The a��ticipated cliai�ges tl�at «Te k��oiu about a�•e the �;reb-based prodiict that ��ve tise and how we ��Ia��age cash. Tl�ey I�ave fieen vei•y good al�ot�t conimunieating �viT1i us. As tliey ��J�re goi��g il��•o�ig�� the merger, tlieir representativ�s uTere coinii�g ta us a�id telling ll5 1101V t11ey thouglit things �were �oiii� to happe�i. 3 Coui�cil Mem[�er M��lray — I lcnow tl�ere is concern aboa�t the co�limittee voting on a�pro�al but in tlle ��asi, r,ve �•eco��zi��e��ded itenis fonvard for Council consideratio��. Motiail i1�ad� �y Cot��ici1 Me�nber Mulroy a��d seco�ided by Mayor Blli'I�iigI15 �O 1'eCOiTll11e11C1 ino�>ing tlie depository coiltract exte�lsion forward to the City Cout�eii for cor�sideration. Motio�� passeci l�y ����a��i�iious acclamation. 5. Receive �t repart, ��old a clisciissioit, and pf•o�ide directio�� on ti�e graufeng of a t�vo-yeai• exte��sio�� ta tl�e City's coutract �vitli First Soi�t���vest Asset Mauagemeut Iuc. (FSAM) for ii��estment advisory SF,'i�vices. Lan�ley reviewed the contract history «rith First SaE�tl�«Test Asset Ma�lageiner�t anc� the recent expansio�� of setvices to i��ch�dc using tll�ir set of i�rokers �nd dealers to g�t i�etter p�•ici�i� o�� tlje seeurities r,�e �ve�•e buyi��g. Iji using thei�• brokers a��d dealers, we tl�ink tl�at on average we cove�• tlle fees ��ue pay Fii•st Souti�west. We've bee�� very �leasec� �vitl� their services and recommend approval af thc t��o- y�ar eoiltract e�ts�fsio��. Coli��cil Member M��Iroy — I wauld z-eco������ez�d z��ovi��g tl�is %rward far Co����czl coz�side�-ation, Mayor B��rrouglas --- Docs First Sotxth�vest place securities for saie o�• stanc� �o gain a�� one a�•m of tl�e coz�lpany by so��le of thei�� advisory opiniai�s fo�• acquisition of securities? Some firms za�a�•k�t sec�irity offerii�gs and ���ake ino��ey irom tliat. Tl�en ti�ey also provide f nancial advisory ser•vic�s and tlie�e is th� tendency ta l�at�e � certain mativation. Tliey are se�arate entities bi�t ti�ey are all unde�• the s�r�le �unbrella. Laugiey- There is a forn� thaf First So��tl�r�est pravides stati�3g tllat they do i�ot mark��p a��y of tll�ir trades. T13e Treasi�iy staff n�ay wish to coininent in r�iore d�tail. Caroliz�e Fi��ley, Tz-easury Ada��iz�istz-ato�- -�t is pa�-t o�our agreeraae��t tl�at tl�ez�e is no jnarkup i� a sec��rity t��ar�s�ctian. Tl�ey do not i�i�ea�to�•y seci►rities at all so yau ��ill ��ot l�ave a���ark�p in ihat «�ay. We also da��ble cl�eck to see tl�at tl�ex-e is ��o z�aa�•k��p o�� ou�- secl�rities. Mayar B�ta�rougl�s — Do �ve cio tl�at? �'i�lley — Yes. On a spot check basis ��ve do. Lazigley — We typically make abo��t fou�• to firTe t�•ades �er mo��tli. The �najority of our activity is going back to ti�e iin�est��lent pools. Ti�ere is ilot a tr�n�eiidous ai��o��i1t l�ut ��ve do cl�eck tlleii� fro�1� tii�le to time ai�d could sl�ow yoi�, Mayo�- Bur�-oi�g��s — Oz�ly 1� �Otl 5�30� S011le��llllg. I�'S �L1Si 011� O� t�tOSe ��11i1�,S tllc�� IeSlilt 31l a sl�gllt level of discan�fo�•t i£ tl�e�-e is a dispz•opo�•tio�aate acquisitioz� level of sect�rities offered by that particular branch af tlae sa�ne co�i�pai�y. IYs j«st a�� aware��ess issi�e. 4 Co�i�icil Meinbe�• Watts — Is tliis contract related to Cou��cil Mei�i6er Mulroy's rec�uest for ite��iization p�ii•st�az�t to agenda iten� 2C? Coimcil Me�nber Mt�lz•oy — I tliink that is a sepa�•at� coiltract. Langley — Tl�at is correct. This is $36,0�0 per year. Motioi� made by Coi�neil Men�be�• Ml�lray ai�d seco�lcieci by Mayor Burroi�gl�s to �•eeomtnend an extensioi� to tlie City's contract r,vitl� First Soutl��vest Asset Mauagement foi�vard fo�' Coi�ncil co�isid��•atiori. Motion passed ����auir��ously Uy accla��latioi�. 6. Receive a�•eport, �old a disci�ss�o��, ai�d p�•avide di�•ection regardiug revisious to the CitjT's Deb# Policy. Langley --- W� are u�orking o�� a bond issuance for toi��orrow rvitl� the City Council to re��iance the TMPA o3�ligatioii. Wo��ki��g tl�z�ougl� tl�is pz-ocess, �ve fo����d some things tllat r�eeded atte�itio�i. We �nade soine i��ino�• cl�a�lges in tlie ��olicy si�ch as title changes and a sect�an related to tlie City Cliarter tl�at I�ad been changed in 20Q6. Tlie policy now states "all bo�ids sl�all be sold in accordailc� �vitl� a��licabte law." In the near fi�hue, staff �laz�s to co��sidea, comprel�ez�sive revisians io tl�e policy. Ho�ve�Ter, before doi�ig so, staff would lik� to re�ie�3� fiirth�r changes to the policy iz� ���a�-e detail with o��r Bot�d Cotu�sel ar�d �'inancial Advisor a��d staff, We iilay come back in the fiitu��e �tiTitl� tl�ose changes ���t rvat�ted to make these iiiinar clia���es in ad�ance of the baz�d saie. ra�� �ortune, Assista��t City Manager — The clia��ges ��o�l't b� appro�Jed befare tlie bo��d sale to�norrow ni�l�t. Langley — The rating a��ncies had asked for tl�is doci����e��t a��d ��ve �va��tec� ta clea�i u� the c�ocunient so tl�at if th�y coi��e back �vitl� a�iy qt�estions, «�e ca�� say tlie appraval is i�� pz-ocess. Council Membe�• Watts — This is iiot �oii�g befo�•e Council for• these pa�•ticular cl�anges. L111�Ie� — It �Vf�l �� COi211Y1� �?�CIC i0 COLli1C1�, y£5. Motian made by Council Men�ber M��lroy a�1d seconded by Mayor Bur�•oughs to recauamend revisio�is to tlle C�#y's Debt Policy for•ward far Cot��lcil coi�sideratia�i. Moiia�� �assed ii��auiir�ausly by acclamation. 7. Under Sectiou 551.042 of the Tex�s �pen Meetings Act, x�espo�ad to ��xc�i�ia•ies f�•om #he A11C�1�IF111:lItCe CDITlI211t��E', Ol' t�18 �]1l�IiC 1i'I�II S�lBC1ftC ��Ctt1al til�0i'I]1i1t1Q11 OZ• recitatio�� of policy, or accept a p�•oposal to pIace the maiter o�i tl�e �►geuda for aEi upcaming ineeting 5 AND C1�ic�e�• �ectio�i 551.(?�15 €�f fh� Te�:�s [��e�i Il�Ie�ti���s ��+�t, �a�•�vicle �•eljo�°ts �1uo�it iteli�s 4f co��irn�z�iity i�iterest t•���i•clin� �vllicl� w�o �ctio�i 4vi11 1�e �;�I�e��, to ia�cl���l�: expr�essions of th�nl€s co»gr�tulati+ans a3° c��clolenee, iuf'r���ri��tia�� �•eg�rcliu� �olicl�y� scheclules; �i�. ��oTiorar}� a�• sahrta�•}� r�eeogt�itiati of` �t l�iiblic af�cial, l�i��lic e�n��loyee, oi• otl�et• citize��; a re�niiider �t�oirt �u r��3co�t�itig e��ent o�°g���izeci �aj• s�3a���sayed b�,, tlie gc��re�°i�ir�� l�oci�r; iriform��ioii reg�i=diil� a soei7l, ce�•emoni�l, �t` Cfl111t11Uillfy �e�,e»t a��•���ai�ed �t� s����s��•ec� t��= ��r e��tii;}= a�lier tl��tii flre �o�re��ri�ri� t��dy� tl��t ��v�s 1tte��clecl 03� is scl�eciuIecl ta l�e �tte�icieci t�jT � meilat�er of tl�e gc�vei•�ri�g l�oci�r ��� ��� affici�l oi� e����iayee �f �I�e �»���aici��al�t��; �r ��� �r��i�u�te�eni�nt i��v�l�riitg �it i�r�iYiiuetiF ti�re�t to t11e ��i�kalie liealtlr �ate� �afet�,' �f pec�i�le i�i tlie �u���iici��lit�� �li�t li�s a�'iseir �tfiere tlie �aa5tiitg of �lie �t�enc�a, T�icre ��,rerc iYO itcrns ����;�;estec�. iVit�� i�a fiartl��r �usiiiess, tli� i7�cetin� ��djat�rneci ni 1tJ:3C G�.zn. ,�'� '�"'`,,% ;� r ,/ � CHR�� WA TS - C(�lVIivIITTEE CHA�R CIT�' �F DE1�TT�I�+T, �"�AAS �� � � � ,, � -�: i` ��. �1��.. TH�RESA JAl�1� �SI�I REC�RI�I1�.?G �EC�E'T'AR�T �IT�' QF DEI'�`T�1`�I, TE�AS �