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SUPPLEMENTAL MATERIAL <br /> Provided to the City Council <br /> After Distribution of Packet <br /> 5 2 /& <br /> LAW OFFICE Date <br /> PETER MACDONALD <br /> 400 MAIN STREET, SUITE 210 <br /> PLEASANTON, CALIFORNIA 94566-7371 <br /> (925)462-0191 <br /> FAX (925)462-0404 <br /> pmacdonald @macdonaldlaw.net <br /> May 1, 2016 <br /> Mayor Thorne and City Council <br /> City of Pleasanton <br /> 123 Main Street <br /> PO Box 520 <br /> Pleasanton, CA 94566 <br /> Subject: Jean Jones Endowment: Item 19, May 3, City Council meeting. <br /> In accordance with City Council direction, we sold 309 Neal Street, obtaining <br /> $1,060,000 as the gross sale price, and $1,025,434 net. That brought the checking <br /> account balance for the Estate of Jean Jones to $1,354,113 as of April 30, 2016. <br /> Subtracting expected final expenditures, I estimate that there will be an endowment of <br /> about $1,285,000 to promote historical preservation purposes. <br /> In order for the Estate to avoid paying income taxes on Jean Jones' IRA's, we have to <br /> have a substantial share of the Estate funds turned over to either the Historical Society <br /> or the City by June 5, 2016. So we join the City Manager in urging you to make your <br /> decision tonight. <br /> Both options presented in the Staff Report are, in my view, consistent with the legal <br /> requirements of Jean Jones' Will. Your legal options are either a City managed fund or <br /> an Endowment controlled by the Historical Society. City Council is the decider. <br /> As Executor, I serve the interests of the beneficiary (City) and the Testator (Jean <br /> Jones). I believe that having Jean Jones' bequest become an endowment controlled by <br /> the Historical Society is more in keeping with Jean Jones' intentions, and will better <br /> serve the cause of historic preservation. <br /> The whole idea of an endowment is for it to grow, and use only increased resources to <br /> fund ongoing historical preservation activities. The critical issues are 1) How funds are <br /> invested to generate spendable proceeds, and 2) Decisions about how those available <br /> proceeds are spent. On both counts, I believe the Historical Society will do a more <br /> effective job than the City. <br /> As to investment management: A portfolio of diverse mutual fund investments (such as <br /> low overhead Vanguard funds) will consistently outperform the investments typical of <br /> City monies, such as the Local Agency Investment Fund (currently earning 0.46% per <br />