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HomeMy WebLinkAbout2007 03 29 Board of Trustees Special Minutes CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING MARCH 29, 2007 CALL TO ORDER The Board of Trustees Special Meeting was called to Order by Chairman A. Mark Sardo on Thursday, March 29, 2007 at 6:36 p.m. in the City Commission Chambers of the Municipal Building (City Hall, 1126 East State Road 434, Winter Springs, Florida 32708). Roll Call: Chairman A. Mark Sardo, present Vice Chairman Michael S. Blake, present Board Member Guy DeMaio, absent Board Member Vemon Rozelle, Jr., present PUBLIC INPUT No one wished to speak. Vice Chairman Michael S. Blake led the Pledge of Allegiance, followed by a moment of silence. Discussion ensued on the next Appointment for this Board. REGULAR 301. General Services Department Bogdahn Consulting To Present Investment Review Report For The Quarter Ended December 31,2006. Mr. David West, CFA, Bogdahn Consulting, LLC, 340 West Central Avenue, Suite 300, Winter Haven, Florida: distributed copies of the 'City of Winter Springs General Employees' Defined Benefit Plan and Trust' booklet. Vice Chairman Blake asked, "Does the Commission get a copy of this Report?" Mr. Kevin Smith, Director, General Services Department replied, "No, sir, that has not been transmitted to Commission. If that's the Board's desire, I can certainly make that happen. " CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - MARCH 29, 2007 PAGE 2 OF 8 I WOULD LIKE TO MAKE A MOTION THAT WE GET THE EXECUTIVE SUMMARY - PAGE 2 AND - PAGE 5, SPECIFICALLY TRANSMITTED FROM THIS BOARD TO THE COMMISSION; POINTING OUT PRETTY MUCH THE BASIC ITEMS THAT THEY JUST POINTED OUT TO US, JUST TO GET THEM TmNKING IN TERMS OF WHERE WE ARE GOING AND WHERE WE ARE HEADED. SPECIFICALLY WITH THE BUDGET ISSUES FROM LEGISLATURE THAT ARE OCCURRING. I THINK THIS WOULD BE - IDEAL." MOTION BY VICE CHAIRMAN BLAKE. CHAIRMAN SARDO SAID, "IT ALSO VALIDATES THE DIRECTION WE'RE GOING IN.'' VICE CHAIRMAN BLAKE SAID, "AND WILL HELP THEM TO DO WHAT THEY NEED TO DO HERE SHORTLY." CHAIRMAN SARDO ASKED, "DO I HAVE A SECOND?" BOARD MEMBER VERNON ROZELLE JR. SAID, "SECOND." DISCUSSION. WITH CONSENSUS OF THE ADVISORY BOARD, THE MOTION WAS APPROVED. MOTION CARRIED. Mr. Smith asked, "Would you like that to continue on an on-going basis or just this one (1) time? Mr. Chairman - clarification from the Board." Chairman Sardo replied, "On- going basis. They should know what we know." Mr. Smith asked, "Consensus?" Vice Chairman Blake remarked, "Absolutely." No objections were noted. Mr. West asked, "Would it facilitate the delivery if we were to give you this report electronically?" Mr. Smith replied, "That would be helpful, yes sir." Mr. West commented, "We'd be happy to do that." Mr. Smith continued, "Then I could prepare an Agenda Item and attach the required documents. That would be helpful, yes sir." Mr. West added, "And we will footnote in the future, as is our practice, the date of inception of the new Managers, so that's perfectly clear because we'll still track rolling numbers. But it's important to know when the new team is in place." Vice Chairman Blake commented, "That is a very important point by the way. I think it's important, and it's going to take you maybe another step, to report the long term rolling numbers, as you currently do, but along side of that perhaps continue the break in points since the change in Management." Vice Chairman Blake continued, "I don't think its fair for us,but specifically for the Commission to be hampered by four (4) years worth of results a year out that - they don't adequately see the picture of where they currently are in terms of the Professional Management that they are receiving." Mr. West reiterated, "So, what we would be doing would be breaking out also each individual Manager and we're only going to track their history relative to their -benchmarks also." CITY OF WINTER SPRINGS, FWRIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - MARCH 29, 2007 PAGE30F8 Vice Chairman Blake said, "That's not exactly what I said, but I like that as well." Vice Chairman Blake continued, "All I am trying to suggest is when - they see returns being reported, specifically with any benchmarks, I still want to see five (5) year numbers. But separate it out of that, I want to see numbers from the date of change." Mr. West replied, "I'm with you; we can do that." REGULAR 301. General Services Department Bogdahn Consulting To Present Income Opportunity Asset Class Managers For Board Consider~tion And Selection. Mr. West distributed copies of the 'Core Real Estate Manager Review' booklet. Continuing, Mr. West said, "We are limited as to what investment products we can participate in. - Our recommendation is to go with a - Core Plus cornerstone - institutional Real Estate managed product - As the City assets, pension assets grow, then of course we'll look at other alternatives." Mr. West continued, "Our recommendation again is that we fill that core space with a nice solid income generating Real Estate product." Mr. West added, "If there are other major capital changes where we believe something needs to be identified, we're certainly bring that opinion before the Board." Next, Mr. West reviewed some of the Respondent's and related data provided in this document. Discussion. Chairman Sardo asked, "Could you give us a quick brief on each - structure?" Mr. West explained, "I would prefer to defer to another person in the fll11l as far as getting into the actual legal ramifications. And we would actually defer to the Attorney negotiated the contract." Mr. West continued, "I can't answer that, but I would be happy to get someone who can give you a very detailed explanation." Mr. West suggested, "We recommend we stay as close to that core basic bread and butter - institutional Real Estate product as possible." Further discussion. Mr. West commented, "As always, as I've done in the past, I've got the thick book. I'll leave this for the Record. The proposals are in here and the - long form data and everything on each of the Managers." Discussion. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - MARCH 29, 2007 PAGE40F8 Chairman Sardo asked, "Knowing the other advisors or money managers that are in the plan, which one works well?" Mr. West replied, "Given that this is a very different asset class, the fit issue here, 1 think, - really gets more down to a function of what we would perceive as a an interest in working with this particular marketplace. And if that's the case, from an investment - it's a very different asset class, all of them would blend well. They all provide nice level of diversification and obviously an income enhancement over the fixed income portfolio. So, the fit becomes more a question of. . ." Tape IISide B Mr. West continued, "...a perceived desire by these Managers to work with particular type of asset pool that we're representing here. In that case, the short answer to your question, is American Realty [Group, LLC] seems to have bent over backwards to work on contractual issues, like fiduciary, to make those things work - they are the purest Core and again, in our opinion, that's the most conservative approach. And they have stayed true to that Core Real Estate approach." Regarding Ranking of the Core Real Estate Managers, Vice Chairman Blake remarked, "American Realty [Group, LLC], first; ASB [Capital Management, LLC], second; and 1 would not want to use BlackRock [Inc.]." Board Member Rozelle commented, "I agree on the ranking." Board Member Rozelle continued, "So - definitely, 1 would rank American Realty Group, LLC]." Chairman Sardo said, "I do agree." Chairman Sardo continued, "I would go - American Realty [Group, LLC], ASB [Capital Management, LLC], and then BlackRock [Inc.]." Chairman Sardo added, "So, at this point, we are all in agreement. Our recommendation would be to the City Commission to go with American Realty [Group, LLC]. Do 1 have a Motion?" VICE CHAIRMAN BLAKE SAID, "SO MOVED." SECONDED BY BOARD MEMBER ROZELLE. WITH CONSENSUS OF THE ADVISORY BOARD, THE MOTION WAS APPROVED. MOTION CARRIED. Chairman Sardo reminded the Board of the next scheduled Regular Meeting on April 24, 2007. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - MARCH 29, 2007 PAGE 5 OF 8 Mr. Smith spoke for the Record and said, "With the completion of our portfolio as well as our Custodial Bank, I'll move forward with an Agenda Item to bring forth in front of the City Commission to consider your recommendation. If so considered, then we'll move forward with flushing out the contracts with the Attorney; work with - Dave (West, CF A, Bogdahn Consulting) on the transition and move forward." Vice Chairman Blake asked, "When did you plan to take it to the Commission?" Mr. Smith replied, "As soon as City Manager is agreeable to me taking it forward. I will prepare the Agenda Item tomorrow." I WOULD LIKE TO MAKE A MOTION THAT THE BOARD GRANTS THE CHAIRMAN THE AUTHORITY TO REVIEW THE MINUTES AND TO SIGN OFF ON THEM AS APPROVED FOR QUICK DELIVERY TO THE COMMISSION SO THEY CAN ACT ON THAT ITEM. MOTION BY VICE CHAIRMAN BLAKE. MR. SMITH SAID, "I'M ASSUMING THAT THE BOARD DESIRES QUICK DELIVERY. CHAIRMAN SARDO REPLIED, "YES." SECONDED BY BOARD MEMBER ROZELLE. DISCUSSION. CHAIRMAN SARDO SAID, "BY CONSENSUS, I TIDNK WE ARE GOOD WITH THAT? SO BE IT." NO OBJECTIONS WERE NOTED. Regarding Agenda Item which would be brought to the City Commission, Mr. Smith remarked, "My target would be the [April] 9th, [2007]." Mr. Smith continued, "It would be prudent for me to say the two (2) meetings from now to be safe." Mr. West suggested, "Hopefully on the meeting of the 24th, we'll be reporting that the transition is complete; and at the very minimum we will be giving you an update on where the transition is." Mr. West stated, "Our recommendation is - that we, just generally speaking that we not serve official notice to the Manager that is being terminated until we have all completed contracts. So, there is - nothing left unmanaged." With discussion on terminating the current Contract with SunTrust [Banks, Inc.], Mr. West commented, "That is the case; it is thirty (30) day Notice." Mr. West continued, "Typically they've worked with the Client and - they won't hold us to a thirty (30) day Notice, but technically, yes, I believe that is the contractual agreement." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - MARCH 29, 2007 PAGE60F8 Vice Chairman Blake asked, "Who is reviewing the contracts?" Mr. Smith replied, "No one at this point. My thought process was to get everything here to complete the process and then move forward." Mt. Smith continued, "The answer to your question is I'm not one hundred percent (100%) sure; I would have to ask the City Manager." Vice Chairman Blake commented, "I think it would be really appropriate to get that answered right away." Mr. Smith noted, "I will do that." Chairman Sardo stated, "And just give us a timeline what you expect." Furthermore, Mr. Smith remarked, "We will move forward with' getting this item to the Commission on the 9th, authority to move forward with the Contracts, Attorney's - and so forth. " Mr. West commented, "Just working the schedule up, then on the 10th, we could potentially be un-invested for twenty (20) days." Mr. West continued, "It becomes more of a question, are we comfortable being un-invested for that period of time?" Discussion. Mr. West said "I think there's two (2) options on the table. The first is the termination letter goes out; the portfolio is liquated at the end of this month, assuming that the thirty (30) days is not required, which I don't think it will be. And we potentially are un- invested until the 10th, [2007]. If there are contractual issues, they all have to be ironed out before the 10th, [2007]." Vice Chairman Blake asked, "Do they all have to be ironed out before the first dollar goes in or each mandate on its own?" Mr. West replied, "Each mandate has to be ironed out." Vice Chairman Blake said, "On its own." Mr. West agreed and said, "Right." Discussion. Mr. West continued, "Then the second option would be we wait till the end of next month; everything's in order; contracts are in order. The simultaneous cease and desist goes out on the [April] 30th, [2007]. The new Management team is fully in place. They take over. That would be the cleanest, least period of un-invested time; probably one (1) day." Vice Chairman Blake asked, "The Custodial Agreement has gone to the Commission or has not?" Mr. Smith replied, "Has not." Further discussion. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - MARCH 29, 2007 PAGE 7 OF 8 Regarding the Regular City Commission Meeting on April 9, 2007, Mr. Smith said, "My preference would be, Dave (West, CFA, Bogdahn Consulting), that you were there. We want to afford the Commission as much resources are we possibly can." Mr. West said, "I'd be happy to." Mr. Smith continued, "Although I don't believe it to be one hundred percent (100%) necessary." Mr. West said, "As far as where the assets ultimately go, in the initial re-balancing, again I am referencing "Schedule A" of the previously approved "Investment Policy Statement", our target allocation has a Core Real Estate component, a minimum of five percent, okay, we are targeting seven percent to fund this real estate investment to get us to that million dollar minimum. That means that two percent (2%) has to come from one of the other targeted assets. Our recommendation would be to move the target on the investment grade bond portfolio from twenty-five (25). Pull the assets from that. - And we would write a letter rebalancing assets are going here to that effect and get that to Kevin (Smith, Director, General Services Department) for inclusion presumably. If that's agreeable to the Board?" Vice Chairman Blake commented, "I would absolutely agree."." Chairman Sardo added, "Tell me again the account it is coming from?" Mr. West noted, "The Fixed Income Account. Is that agreeable?" Vice Chairman Blake stated, "Agreeable." No objections were noted. Mr. West finished, "The very fmal item is a consent form. We'd like to - use our technological advances. This is a consent form which basically grants the Custodian, which will be Fifth Third [Bank], to communicate with us electronically." Mr. West continued, "We just need to have this consent form authorized by - again, everything has got to go to the authorized signer for all this stuff." Vice Chairman Blake stated, "The Commission already agreed to do that in the sense when they hired you..." Mr. West stated, "...Okay." Vice Chairman Blake continued, "Kevin (Smith) will put that as part of the package and the whole thing gets approved to be signed off on." " Mr. West stated, ".. . Okay." FUTURE AGENDA ITEMS None were mentioned. ADJOURNMENT Chairman Sardo adjourned the Regular Meeting at 7:41 p.m. RESPECTFULLY SUBMI1TED: ANDREA LORENZO-LUACES, CMC, CITY CLERK AND NOTE: These Minutes were approved at the April 24, 2007 Board ofTrustees Regular Meeting. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - MARCH 29, 2007 PAGE80F8