Sue Savage address to the city council on June 12 meeting
■ Sue Savage / Contributed
In a regular meeting of the Hemet City Council on June 12, Hemet resident Sue Savage addressed the council with a series of questions regarding the city’s policies on investing taxpayer money. The three-minute speech raised a number of issues about how City Treasurer Judith Oltman is managing the city’s investments. Mayor Michael Perciful later told citizens attending the meeting that the city is planning on forming an oversight committee to create more transparency regarding how Hemet invests its funds. Following is Savage’s speech posing a list of questions to the council. No answers were forthcoming following her presentation.
Good Evening Honorable Mayor and Esteemed Council Members,
In tonight’s address to my city council, I am asking eleven questions:
Question 1. Resolution R-4588 Item H requires Hemet’s investment policy be reviewed annually to ensure compliance with new laws. The Investment Policy is dated July 8, 2014. Four years without update. Is there a legal liability here?
Question 2. Pursuant R-4588 Local Municipal bonds shall be limited to 5 year maturities. Ten out of 16 municipal bonds are over five year maturities in last month’s report. Is there a legal liability here?
Question 3. FDIC maximum is $250,000 per bank per account holder. Bank of Hemet holds a $494,000 CD, nearly double FDIC coverage. The City Treasurer writes the $244,000 uninsured funds are collateralized by Bank of Hemet. There is no collateral on the face of The Bank of Hemet CD. We requested the collateral documentation claimed and have yet to receive it. Is there a taxpayer dollar safety liability here?
Question 4. Judith Oltman said she manages using a “buy and hold” strategy. California’s Investment Guidelines state: “Continuous analysis and fine tuning of the investment portfolio are considered part of prudent investment management.”
Question 5. Nearly a million taxpayer dollars are in unrated Banks in Singapore, India and Private Banks. Only 14 of the twenty-seven banks holding our CD dollars are top rated banks. How can we work with the City Treasurer to put taxpayer dollars in top rated banks complying with safety requirements?
Question 6. Hemet’s Investment Policy, dictates maximum percentages allowed by investment type. Negotiable CDs are capped at 10 percent maximum of the total portfolio. Yet, nearly 11 percent of the portfolio is Negotiable CD’s. How can we work with Hemet’s City Treasurer to bring Negotiable CD’s into compliance with Hemet’s Investment Policy?
Question 7. As stated, the maximum percentage allowed for Negotiable CDs is 10 percent on Page 7. Yet, Page 5 states 50 percent of portfolio is allowed. Which one is correct? Correct that is, according to the State of California? Is there a legal liability here?
Question 8. Judith Oltman’s April Report, shows Citibank’s rate of return is 0.45 percent. Citibank monthly statement shows only 0.15 percent. We brought this discrepancy to the May 8th City Council meeting, yet the discrepancy persists. This incorrectly skews the “Average Rate of Return”. How can this be rectified?
Question 9. Section Five of The Investment Policy states The treasurer shall submit a monthly investment report to City Council. California State Code also requires a monthly investment report.
In 2016, Council meeting minutes show no investment reports filed in the months of July or August. The “Portfolio Balance as of September 2016” Investment Report was never filed. An end of August report was filed twice with different portfolio balances.
In 2017, May, July, August and November show no investment reports filed as part of City Council meeting minutes. How can we work with Hemet’s City Treasurer to file timely Investment Portfolio Reports in compliance with local and state code.
Question 10. How do we work with Hemet’s City Treasurer enabling her to provide the highest interest income for the taxpaying citizens of Hemet?
The Bank of Hemet’s $494,000 CD pays $1,976 annually. Federal Agency Issues would pay $15,314 annually. Investing in Federal Agencies would increase interest revenue $13,338 annually. Money desperately needed by the City of Hemet and the deserving taxpayers.
Moving 12 of the 71 items in the city’s $65 million portfolio to obtain competitive interest rates would increase city revenue by $402,000. This additional interest could start tomorrow and would not involve a single layoff or cut in budget.
City Council has expressed concern regarding Treasurer’s Report numerous times in the past on:
March 28, 2017
Mayor Pro Tem Meyer questioned the rate of return
June 13, 2017
Karlee Meyer voted no to approving the receive and file of the
investment report, Perciful, Brown, Wright, Krupa approved.
June 27, 2017
Mike Perciful and Karlee Meyer voted no to approving the
receive and file of the Investment report. Brown, Wright,
July 11, 2017
Judith Oltman gave a work study on the city investments and
the ad Hoc Investment Committee was formed to review the
Sept 26, 2017
Karlee voted no to approving the receive and file of the
investment report, Perciful, Brown, Wright, Krupa approved.
March 13, 2018
Investment policy was presented to council for approval. City
attorney was asked to review the policy for any updates from
the state. The review was shelved.
The city is sliding ever closer to the brink of bankruptcy. Per these minutes, city council is concerned.
Question 11. The state auditor wrote Hemet would go bankrupt this year. A citizen asked me how Hemet can be going broke with $65 million in the bank. Simple, Hemet’s $87 million dollar debt exceeds our 65 in the bank. Why wasn’t the $402,000 increase in interest revenue implemented yesterday?
This ends my questions.
The City Treasurer recall petition is awaiting approval by City Attorney Eric Vail and City Clerk Sarah McComas.
We have emailed our concerns to the California State Auditor. They advised forwarding our concerns to the State Attorney General and representatives.
We ask this city council take the following three actions:
Action 1. Discuss the legal liability of both the City Council Members and the City Treasurer for disregard of State of California and Hemet’s Investment policy.
Action 2. Direct Judith Oltman or Lorena Rocha to remove the CD from the Bank of Hemet, providing Hemet taxpayers with safety and yield on their portfolio dollars and complying with the State of California and Hemet’s investment policy.
Action 3. Direct Hemet’s investment portfolio to be restructured to provide the highest interest rate possible allowing an increase in revenue.
In summary, we request a position on the Ad Hoc Investment Policy for the city. Councilwoman Linda Krupa has explained why this isn’t gonna happen. We thank Ms. Krupa for the 1.5 hours she spent with us yesterday. We believe Ms. Krupa has something more wonderful than the Ad Hoc in mind and look forward to that presentation. We also thank Mayor Pro Tem Karlee Meyer for meeting with us for over an hour and a half suggesting an Investment Committee be formed so taxpayers can watch over our own taxpayer dollars.
We want to thank Mayor Perciful for meeting with us earlier today.
We assume council persons Wright and Brown understand our concerns.