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HomeMy WebLinkAbout2018 02 20 Consent 300 Unapproved Minutes from the December 5, 2017 Regular MeetingBOARD OF TRUSTEES AGENDA ITEM ITEM 300 February 20, 2018 Regular Meeting REQUEST: Informational Consent X Public Hearings Regular The Office Of The City Clerk Is Requesting The Board Of Trustees Consider And Approve The Tuesday, December 5, 2017 (Rescheduled From Tuesday, November 14, 2017) Board Of Trustees Regular Meeting Minutes. ATTACHMENT(S): A. Unapproved Copy Of The Tuesday, December 5, 2017 Board Of Trustees Regular Meeting Minutes (7 Pages) CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING DECEMBER 5, 2017 (RESCHEDULED FROM NOVEMBER 14, 2017) CALL TO ORDER The Regular Meeting of Tuesday, December 5, 2017 (Rescheduled from Tuesday, November 14, 2017) of the Board of Trustees was called to Order by Chairperson David Withee at 5:35 p.m. in the Commission Chambers of the Municipal Building (City Hall, 1126 East State Road 434, Winter Springs, Florida 32708). Roll Call: Chairperson David Withee, present Vice -Chairperson Robin Paris, present Board Member Stephen Krohn, present Board Member Cindy Sosa, absent Assistant to the City Clerk Antonia DeJesus, present A moment of silence was held, followed by the Pledge of Allegiance. No changes to the Agenda were made. AWARDS AND PRESENTATIONS AWARDS AND PRESENTATIONS 100. Not Used INFORMATIONAL AGENDA INFORMATIONAL 200. Finance and Administrative Services Department The Finance And Administrative Services Department Is Advising The Board Of Trustees Of The October 1, 2016 Chapter 112.664, F.S. Compliance Report From Gabriel, Roeder, Smith & Company. This Agenda Item was not addressed. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - DECEMBER 5, 2017 (RESCHEDULED FROM NOVEMBER 14, 2017) PAGE 2 OF 7 PUBLIC INPUT Chairperson Withee opened "Public Input". No one spoke. Chairperson Withee closed "Public Input". CONSENT AGENDA CONSENT 300. Office Of The City Clerk The Office of the City Clerk Is Requesting The Board of Trustees Consider And Approve The Thursday, August 10, 2017 (Rescheduled From Tuesday, August 8, 2017) Board Of Trustees Regular Meeting Minutes. Regarding the Minutes for consideration and approval specifically Page 7, Chairperson Withee pointed out, "In the fifth paragraph, where Chairperson Withee expresses agreement with Mr. West and wondered, `Are we better off sitting in a tenured treasury?', it should read `ten (10) year'." Chairperson Withee noted the error again repeated in the same paragraph. Assistant to the City Clerk Antonia DeJesus acknowledged Chairperson Withee's comments. Discussion followed on exposure to the stabilities of treasuries, representations in the portfolio, and strategic allocation. "I WILL MAKE A MOTION TO APPROVE THE MINUTES FROM LAST BOARD MEETING." MOTION BY CHAIRPERSON WITHEE. SECONDED BY VICE -CHAIRPERSON PARIS. DISCUSSION. ASSISTANT TO THE CITY CLERK DEJESUS CONFIRMED THAT THE APPROVAL OF THE MINUTES WOULD INCLUDE THE CORRECTION OF "TENURED" TO "TEN (10) YEAR". NO OBJECTIONS WERE VOICED. VOTE: BOARD MEMBER KROHN: AYE VICE -CHAIRPERSON PARIS: AYE CHAIRPERSON WITHEE: AYE MOTION CARRIED. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - DECEMBER 5, 2017 (RESCHEDULED FROM NOVEMBER 14, 2017) PAGE 3 OF 7 PUBLIC HEARINGS AGENDA PUBLIC HEARINGS 400. Not Used REGULAR AGENDA REGULAR 500. Finance And Administration Services Department The Finance And Administrative Services Department Is Requesting That The Board Of Trustees Receive From AndCo Consulting The Fourth Quarter Investment Return Report And Enter Into A Discussion. Mr. Dave West, Senior Consultant, AndCo Consulting, 4901 Vineland Road, Suite 600, Orlando, Florida: referenced Page 2 of the "Quarterly Investment Report" and spoke of various impacts on the portfolio over the course of the quarter. Continuing, Mr. West reviewed fiscal year performance of several indexes. On Page 18, Mr. West commented on fund balances and then referred to Page 21, and pointed out actuarial implications for investments. Mr. West stated, "As far as this year goes, excellent year. Results were very, very strong, but the implications for the actuarial math is no effect." Additional comments followed on associated one (1), three (3), and five (5) year projection numbers. Mr. West referred to Page 19 and noted the portfolio's exposure to domestic and international equities and the correlated results. In addition, Mr. West pointed out an error on Page 20 and noted, "I'll get my shop working on that, and we'll come back either a revised book or some bullet explanations of what that was." Board Member Stephen Krohn inquired, "What is the expected long term return for Intercontinental?" With brief comments, Mr. West replied, "Their return should always be a little bit higher than our conservative American Core Realty fund; that's a very bread-and-butter, low leverage, Class A office space only, ninety-two percent (92%) leased type investment. So, we would anticipate if American comes in six (6%) or seven (7%), Intercontinental should probably stay up through the cycle — percent (1 %), maybe a percent and a half (1.5%), two percent (2%) higher range." Further remarks. Board Member Krohn then commented on quarterly numbers and inquired if there were any concerns. Mr. West answered, "No, we don't have any concerns." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - DECEMBER 5, 2017 (RESCHEDULED FROM NOVEMBER 14, 2017) PAGE 4 OF 7 Mr. West addressed Page 17 and reviewed contributions and distributions and added, "We are still cash flow positive." Further comments followed on investments fees and other investment expenses. Continuing, Board Member Krohn spoke positively about employee contributions and wondered why there was an increase in contributions. Mr. Shawn Boyle, Director, Finance and Administrative Services Department replied, "It's intentional. The Commission — City Manager has made a commitment to reducing the City's debt. One of the largest debts that are on the books is the unfunded liability in the Pension. So, in the last five (5) years, we've paid off in excess of ten million dollars ($10,000,000.00) worth of debt on bonds. We have also made a substantial increase in contributions above what the ARC which is the Annual Required Contribution." With further comments, Mr. Boyle stated, "You're going to see positive contributions above distributions as long as we can do that." Regarding Page 12 and asset allocations, Mr. West stated, "I'd like to suggest that, going forward — and again this recommendation is a long-term investment viewpoint, but one that is biased by cycle awareness of the current investment environment. So, any change would be tactical in nature, but should still be considered to be reasonably long-term projecting out into the future. And that would be to maintain the total equity overweight but move the domestic equity back to the target and actually increase the international equity." Furthermore, Mr. West mentioned the improving health of the global economy and surmised, "My recommendation is to rebalance the domestic equity portfolio back to target and take those proceeds and move the international equity portfolio commensurately to an overweight." Much discussion followed on international equities, global fixed income, strategic asset allocation, as well as receipt and disbursement details. Chairperson Withee asked about the specific composition of Mr. West's recommendation. With additional remarks, Mr. West commented, "I'll give you my conclusion recommendation — is to go with what's called PIMCO (Pacific Investment Management Company) Diversified Income fund." Mr. West distributed the "Global Bond Asset Class Primer" with additional comments. Continuing, Mr. West indicated that with his recommendation, the investment manager makes the decision to increase or decrease in the weightings in three (3) major investment areas and added, "We're getting an active management element on a global scale and across different quality levels of bond offerings." Brief comments followed on disbursements and receipts. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - DECEMBER 5, 2017 (RESCHEDULED FROM NOVEMBER 14, 2017) PAGE 5 OF 7 Mr. West referred to the "Global Bond Asset Class Primer" and discussion followed on investment managers, global bond funds, associated risks, asset allocation strategy, the PIMCO (Pacific Investment Management Company) fund, the "credit crisis", and various multi -statistic analyses of funds. Chairperson Withee wondered how many international bond funds were considered. Mr. West replied, "We've looked at the entire universe." Mr. West further addressed the selection and recommendation process. Board Member Krohn commented on the Loomis Salyes fund and wondered what the deciding factor was to recommend the PIMCO (Pacific Investment Management Company). Mr. West stated, "The quick answer is the — performance volatility in the Loomis [Sayles] fund is very high. And over time, when we had those periods of risk -on and risk -off, during those risk -off periods the Loomis [Sayles] fund performance was materially impacted much more." Much discussion followed on the Loomis Salyes and PIMCO (Pacific Investment Management Company). Chairperson Withee commented, "The Loomis [Salyes] is at fifty-seven (57) basis points — is the minimum for that to get to the institutional class also three million dollars ($3,000,000.00)?" In response, Mr. West stated, "I believe the Loomis [Salyes] fund may have — a lower minimum." Speaking to Mr. West, Chairperson Withee stated, "You've done the leg work and done the comparison from whatever the universe of potential bond investments or managers were down to this five (5) group that you've shown us. And your recommendation is for the PIMCO (Pacific Investment Management Company)..." Mr. West stated, "...Right." Chairperson Withee continued, "...And that's due to the lower volatility." Referring again to the "Quarterly Investment Report", Mr. West pointed out various information pertaining to the portfolio on Page 24. Mr. West also referenced Page 41 and briefly reviewed investment management fees. Board Member Krohn commented on the comparisons between the Loomis Salyes and PIMCO (Pacific Investment Management Company) fund managers and noted, "To me, if I were to pick, I would still pick Loomis [Salyes]." Board Member Krohn spoke further on Loomis Salyes and its performance and inquired as to how PIMCO (Pacific Investment Management Company) could be the better option. Responding to Board Member Krohn, Mr. West explained, "Loomis [Salyes] — has more latitude to overweight/underweight, and they'll take more risks from a practical standpoint." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - DECEMBER 5, 2017 (RESCHEDULED FROM NOVEMBER 14, 2017) �h PAGE 6 OF 7 Furthermore, Mr. West indicated, "The PIMCO (Pacific Investment Management Company) investment management strategy is constrained by the three (3) silos and a focus to maintaining a high level of income." Mr. West briefly touched on maintaining an income advantage and expanded on the Loomis Salyes and PIMCO's (Pacific Investment Management Company) investment strategies and noted, "Both are excellent funds." Discussion followed. In conclusion, Mr. West summarized, "The first recommendation was in reference to the equity allocations and is to rebalance domestic equity back to the target — roughly three percent (3%), and move those funds commensurately over to the international equity allocation. And again, that would be done on a percentage basis." Chairperson Withee asked, "And that would be to RBC [Royal Bank of Canada], corrected?" Mr. West confirmed, "Right." "I MAKE A MOTION THAT WE FOLLOW THE FIRST RECOMMENDATION WHICH IS TO TAKE THE OVERAGE FOR THE DOMESTIC EQUITY AND MOVE THAT INTO THE INTERNATIONAL EQUITY, PER THE RECOMMENDATION FROM ANDCO [CONSULTING]." MOTION BY CHAIRPERSON WITHEE. SECONDED BY BOARD MEMBER KROHN. DISCUSSION. VOTE: VICE -CHAIRPERSON PARIS: AYE CHAIRPERSON WITHEE: AYE BOARD MEMBER KROHN: AYE MOTION CARRIED. "AND THE SECOND RECOMMENDATION WAS TO DO SOMETHING SIMILAR WHICH IS TO TAKE THE EXCESS IN DOMESTIC FIXED INCOME, ROUGHLY — TWO POINT EIGHT PERCENT (2.8%) — AND MOVE THAT TO THE TOTAL GLOBAL FIXED INCOME PORTION OF THE ASSET ALLOCATION AND TO DO THAT WITH THE PIMCO (PACIFIC INVESTMENT MANAGEMENT COMPANY) DIVERSIFIED INCOME." MOTION BY CHAIRPERSON WITHEE. SECONDED BY VICE -CHAIRPERSON PARIS. DISCUSSION. VOTE: CHAIRPERSON WITHEE: AYE BOARD MEMBER KROHN: AYE VICE -CHAIRPERSON PARIS: AYE MOTION CARRIED. Further brief comments. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING — DECEMBER 5, 2017 (RESCHEDULED FROM NOVEMBER 14, 2017) PAGE 7 OF 7 600. REPORTS No Reports were given. PUBLIC INPUT Chairperson Withee opened "Public Input". No one spoke. Chairperson Withee closed "Public Input". Assistant to the City Clerk DeJesus noted that the next Regular Meeting was scheduled for Tuesday, February 13, 2018. ADJOURNMENT Chairperson Withee adjourned the Regular Meeting at 6:55 p.m. RESPECTFULLY SUBMITTED: ANTONIA DEJESUS ASSISTANT TO THE CITY CLERK NOTE: These Minutes were Approved at the , 2018 Board of Trustees Regular Meeting.