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HomeMy WebLinkAbout2008 10 01 Board of Trustees Special MinutesCITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING OCTOBER 1, 2008 CALL TO ORDER The Board of Trustees Special Meeting of Wednesday, October 1, 2008 was called to Order at 7:09 p.m. by Chairman A. Mark Sardo in the 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 Maria Fair, present Board Member David W. McLeod, present Board Member Vernon Rozelle, Jr., present Vice Chairman Michael S. Blake led the Pledge of Allegiance. A moment of silence followed. REGULAR AGENDA REGULAR 600. Office Of The City Manager Discussion Of Investment Policy. Board Member Maria Fair opened this Agenda Item up for discussion with the Board. Regarding the freeze on the U.S. Federal Reserve Fund, Board Member Fair stated, "It caused me to have concern about diversification. I do not think it is a very good idea that the City maintains such a large portion of its Reserve Funds in just one (1) place. I think that it needs to be more diversified because diversification reduces risk. Even if it is still in U.S. Treasuries, it still needs to be diversified in different places." Board Member Fair distributed a document entitled "Statement of Investment Guidelines City of Colorado Springs Reserve Account." As to whether the City of Winter Springs had their own Investment Policy Statement, Board Member Fair asked, "Does anybody know anything about that?" CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -OCTOBER 1, 2008 PAGE 2 OF 9 Discussion continued. Chairman Sardo inquired, "So, the question is, do we have a Policy regarding our Reserve Account?" City Manager Ronald W. McLemore replied, "Mr. Chairman, we do have a Policy; that Policy was recommended to the City from our Financial Consultants some years ago, which is [Public Financial Management, Inc. (PFM)] and we were well staffed. And that Policy, we have followed exactly." Board Member Fair handed another document entitled "Investment Policy City of Winter Springs, Florida Approved by the City Commission on September 10, 2001 and amended on January 28, 2002." Further discussion. Next, Board Member Fair commented, "Page 12, `Item J.' Money Market Mutual Funds. Well, that is what the [U.S. Federal] Reserve Fund is. It clearly says that a maximum of twenty-five percent (25%) of available Funds may be Invested with any one (1) Money Market Mutual Fund. Well, that twenty million [dollars] ($20,000,000.00) is in excess of twenty-five percent (25%) as per the Investment Policy Statement. So, because of that, I think we have a diversification issue." Manager McLemore explained, "This Board was never envisioned to be Advisors on the City's idle cash. However, under extraordinary times, when the Commission was faced with a very difficult situation, the Commission said, `We want to go to somebody to give us some advice on dealing with an extraordinary situation' -and the question was brought up, `Well, why not our Pension Board? They deal with these issues for us.' So, it then was directed to you, not as a matter of normal course. If it was a matter of normal course, you would not even be involved; to come back with some recommendations to meet this extraordinary window in time. So, I would suggest to you that that meant if your recommendation was to do something that was different from a Policy which was set up for more normal times - I think you - would have a different situation. But I think in this case, you've been given a lot of discretion to come back and say - `Okay, thinking about and -including in your thought process our Policy, but outside also of our Policy, bring us back your recommendation for this extraordinary window in time regarding the Investment of our -Bonds.' So, I think you've got a lot discretion here to move and you're not totally locked by that written Policy, because the Commission has asked for this specific advice from you." Much discussion. Board Member Fair distributed a document entitled "Government Finance Officers Association Recommended Practice Use of Local Government Investment Pools (LGIPs) (2007) (CASH)." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -OCTOBER 1, 2008 PAGE 3 OF 9 Board Member Fair remarked, "We have had an extraordinary circumstance and that even given that, I do still think that we should consider that any recommendation - to our City Commission, should have some grounds based on our Investment Policy Statement; even though we could maybe preference that." Board Member Fair continued, "I want to have some grounds for why we are making the recommendations that we are making." Discussion continued. Vice Chairman Blake contended, "I think calling this a Mutual Fund, while it technically is, is more of a technicality. And I do not know how you could find any type of Investment that could provide us the diversification among many Treasuries at a lower transactional cost when you look at the Staff that we have and the abilities that they have." Board Member Fair claimed, "I did find a Portfolio that in fact many Cities throughout the State of Florida; City of Pompano Beach is using it. There is a long list of Cities in the State of Florida that are using it; that has -eight (8) basis points, 0.8. We are paying 0.10; so, we are paying ten (10) basis; it is eight (8) basis points. And it is with [The] PFM [Group]. It is an AAA rated Federal Portfolio and for eight (8) basis points its all - the type of Funds that meet our Investment objectives. I ran across PFM Asset Management, did some homework, gave - them a call. They sent me the information and they have an incredibly safe, similar Fund that has the Treasuries. It has everything that we are looking for, eight (8) basis points and no additional Fees." Discussion. Vice Chairman Blake emphasized, "I do not think now necessarily is the time to look at yield either." Vice Chairman Blake further explained, "I think we are at safety and I think we need to stay at safety and diversification is important." Much discussion. Board Member Fair reiterated, "I am just looking to reduce the City's risk among Custodians given the extraordinary economic times that we are facing and I think if we can do that prudently with limited cost. Eight (8) basis points is a great option; [U.S. Federal] Reserves [Fund) is ten (10) basis points and we would ultimately be getting the same type of Portfolio. And it is AAA rated and many of the Cities in the State of Florida, by the way, have been going to this group as a result of the State Board of Administrations' problem. And they avoided some of the problems that SBA (State Board of Administration) avoided because about a year and half ago when they began to see things deteriorate, they began to move the assets in these Portfolios into a much safer, they were buying Treasuries back then. They made a lot of -changes." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -OCTOBER I, 2008 PAGE 4 OF 9 Regarding a Representative from The PFM Group, Board Member Fair reported that, "He said he would certainly come and -explain to us exactly what they have." Board Member Fair informed, "And he says they have - an exact duplicate product that meets all of our Investment objectives." Further discussion. Vice Chairman Blake advised, "I think the only prudent way to open the door and look at other alternatives out there is for a true third party -arms length search of what is available out there." With further discussion, Vice Chairman Blake recommended, "I think it is important to make sure that we have competent professional advice to go out and look at the market place, do the analysis, where it is not connected with anybody or anything." Discussion continued. Board Member Fair added, "I totally disagree with that. I think that [The] PFM [Group] works with School Districts; they have a list of Cities to work with. I do not think we need to pay The Bogdahn Group to go out there and come up with the information that is readily available to anybody on the Internet." Discussion ensued on The PFM Group and The Bogdahn Group. Regarding Vice Chairman Blake's suggestion, Chairman Sardo agreed, "I have to agree in that if we are going to open this up and - do this the way that we need to do this, we need to do a credible third party search and utilize an entity to do that for us, like we did with the Pension." Much discussion. Tape I/Side B After further discussion on having a third party consultation, Manager McLemore noted, "That puts you then back in a position - of reviewing all of that information and then making Advisory recommendation to the Commission based on this list of people and the recommendation of our Consultant, `This is what we think Commission, you should do'." Discussion continued. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -OCTOBER 1, 2008 PAGE 5 OF 9 Manager McLemore asked, "One is, what's the short term and then what's the long term? Is the short term say, `Well, we would recommend, Commission, we do one (1) more thing here' or `I really recommend that we -leave it alone'. And then the option would be `A' and `B'; engage [The] Bogdahn [Group], the Consultant that we've already hired to go out and do this thing. Or `B', then go -out for an RFP (Request for Proposal) for a whole new firm to come out and do this. That's really where you're at. What do you want to do in the short term? What do you want to do in the long term?" Discussion. Regarding the reason the Board was addressing this issue, Chairman Sardo elaborated, "We are here because -material was brought to the attention of Mr. McLemore that we needed to examine other material to see if we were doing the best job we possibly could be doing in making our recommendation that is going up to the Commission." Further discussion. Board Member Fair concluded, "The primary focus to meet our obligation is to point out the lack of diversification and I do think it is important." Vice Chairman Blake noted, "We have, under our current recommendation that was standing from our last Meeting to the Commission - we have -fifteen million [dollars] ($15,000,000.00) in straight pure Treasuries through the [U.S. Federal] Reserve [Fund]; five million [dollars] ($5,000,000.00) in governments through the [Florida] League [of Cities] and another eight million [dollars] ($8,000,000.00) that is scattered around through SBA (State Board of Administration) in a variety of different things." Vice Chairman Blake added, "I personally am more comfortable with that than -reaching into Government Agencies or Quasi-Governments at this point in time. I am also more comfortable in staying with very, very, very short maturities; sixty (60), ninety (90) days or less as opposed to going out one (1) to three (3) years. I do not think that this is the time to reach for yield. And I think we are already doing that through what we have locked up in SBA (State Board of Administration) and from what we recommended last time, the twenty-five percent (25%) over to the [Florida] League [of Cities]." Discussion. Manager McLemore conveyed, "It's a very simple deal and I'm not sure -why [The] Bogdahn [Group] couldn't do it for us with a clear definition of what their assignment is." Vice Chairman Blake agreed, "They can." Brief discussion. Chairman Sardo added, "I would agree with that also. We have been -through the process with [The] Bogdahn [Group] and -they have delivered on what they have been charged to do. If we go beyond the scope with that, we need to engage them to go beyond the scope on a professional manner and be compensated for that." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -OCTOBER I, 2008 PAGE 6 OF 9 "I WOULD LIKE TO MAKE A MOTION THAT THE BOARD OF TRUSTEES - LET THE COMMISSION KNOW THAT THE BOARD OF TRUSTEES HAS SOME CONCERN UNDER THE CURRENT MARKET SITUATION THAT WE MAY BE OVERLY CONCENTRATED IN CUSTODIAL RELATIONSHIPS. AND THAT WE FEEL THAT IT WOULD BE PRUDENT AT THIS TIME TO ENGAGE THE BOGDAHN GROUP, WHO HAS PREVIOUSLY GONE THROUGH AN EXTENSIVE RFP (REQUEST FOR PROPOSAL) PROCESS AND BEEN SELECTED AS THE CITY'S FINANCIAL ADVISOR FOR CERTAIN MATTERS THAT COME BEFORE IT; AND REQUEST OF THEM TO DO A SEARCH FOR ALTERNATIVE LIKE VIRTUALLY RISK FREE INVESTMENT ALTERNATIVES THAT WOULD HELP US TO DIVERSIFY AT THE CUSTODIAL LEVEL AND BRING THOSE RECOMMENDATIONS BACK TO US AS SOON AS POSSIBLE." MOTION BY VICE CHAIRMAN BLAKE. SECONDED BY BOARD MEMBER McLEOD. DISCUSSION. VOTE: VICE CHAIRMAN BLAKE: AYE BOARD MEMBER McLEOD: AYE BOARD MEMBER ROZELLE: AYE CHAIRMAN SARDO: AYE BOARD MEMBER FAIR: NAY MOTION CARRIED. Manager McLemore asked for clarification, "There would be an ongoing monitoring role or is that for a future discussion?" Brief discussion. Continuing, Manager McLemore suggested, "What we could do as part of that engagement is for a -fee rendering from them to add that to their services - to monitor that. Go out and do it and then monitor it and ask for Fee Proposals to do both. And you could -select or reject one (1) or both." Discussion. "I WILL MAKE THE MOTION THAT WE RECOMMEND TO THE COMMISSION - TO CONSIDER AN ONGOING ENGAGEMENT FOR THE PURPOSE OF INVESTMENT MONITORING SERVICES OF THE CITY'S GENERAL RESERVE FUNDS." MOTION BY VICE CHAIRMAN BLAKE. SECONDED BY BOARD MEMBER ROZELLE. DISCUSSION. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -OCTOBER 1, 2008 PAGE 7 OF 9 VOTE: BOARD MEMBER McLEOD: AYE BOARD MEMBER ROZELLE: AYE CHAIRMAN SARDO: AYE BOARD MEMBER FAIR: NAY VICE CHAIRMAN BLAKE: AYE MOTION CARRIED. Board Member Vernon Rozelle, Jr. asked, "None of these Motions today changes what we recommended - at our last Meeting?" Chairman Sardo replied, "That is correct." Manager McLemore answered, "I don't think so. Your recommendation is still to go forward with the twenty-five percent (25%) and then step two (2), do this." Chairman Sardo added, "That is how I see that too." Vice Chairman Blake mentioned, "I agree." REGULAR 601. Office Of The City Manager Discussion Of Actuarial Issues. Manager McLemore commented, "In our Contract with Seminole County for Consolidation of Fire Services; the Agreement was that the Transport Fund, which was a Fund that -billed out and received Funds for Medical Transport, would be retained by the City as Property of the City and not transferred to Seminole County. Now, there is in that Fund now about six hundred and twenty thousand dollars ($620,000.00) and - it was a part of the thought process with me that potentially we would be able, and I wanted to retain it and that was the reason that we got the language in it early, potentially use that to in some way bolster the financial strength of our -Pension Fund." Discussion. Vice Chairman Blake remarked, "What makes the best sense is since the County is willing to be put in whatever our Rate is; meaning the FRS (Florida Retirement System) Rate is now -nineteen and a quarter percent (19'/4%), there abouts. My thought would be to utilize that Fire Transport Fund as a mechanism to fund a higher Rate so that our contribution Rate, the combination between the City and the Employee, gets up to as close to that nineteen and a quarter percent (19'/4%) as possible to maximize what the County's transfer would be back into the Fund to us." Manager McLemore restated, "Under the Contract, the provision says that for those who remain in the City's Pension Plan -the County would pay our cost for retaining them in our system, up to a maximum of the FRS (Florida Retirement System) Rate." Brief discussion. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -OCTOBER 1, 2008 PAGE 8 OF 9 Manager McLemore confessed, "Originally, my thought was, I did not want that six hundred thousand dollars ($600,000.00) to go on paved streets; I didn't want that six hundred thousand dollars ($600,000.00) to go and do something that was maybe not related in some way to the Fire Services. So, some way to bolster our -Plan and obviously I'm thinking about reducing the past service liability with that six hundred thousand dollars ($600,000.00); seemed to me to be prudent." Discussion. Manager McLemore inquired, "What do you want me to do? Is the Motion going to include coming back to you or just taking your Motion directly to the Commission?" Vice Chairman Blake exclaimed, "It does not need to come back to us because it is really just about Policy and how they set with money." Chairman Sardo asked Board Member Fair, "Do you feel that way too?" Board Member Fair nodded in agreement. "MY MOTION WAS TO RECOMMEND TO THE CITY COMMISSION THAT A) THEY UTILIZE THE REMAINING DOLLARS IN THE FIRE TRANSPORT FUND TO FUND THE CITY OF WINTER SPRINGS PENSION PLAN. SECONDLY, TO ATTEMPT TO DO SO IN A WAY THAT WOULD INCREASE THE CITY'S CONTRIBUTION RATE UP TO WHATEVER LEVEL THE CURRENT COUNTY PAYS INTO THE SPECIAL RISK, FRS (FLORIDA RETIREMENT SYSTEM) RATE, WHICH NINETEEN AND A QUARTER PERCENT (19'/4%) OR SOMETHING CLOSE TO THAT; TO MATCH THAT IN ORDER TO MAXIMIZE THE REIMBURSEMENT FROM THE COUNTY." MOTION BY VICE CHAIRMAN BLAKE. MANAGER McLEMORE ASKED, "CLARIFICATION AND YOU WANT THAT LANGUAGE TO INCLUDE SPECIFICALLY TO - REDUCE THE PAST SERVICE LIABILITY FOR FIRE?" VICE CHAIRMAN BLAKE REPLIED, "YES." MANAGER McLEMORE CONTINUED, "I THINK THAT'S IMPORTANT." VICE CHAIRMAN BLAKE REMARKED, "AS PART OF THE MOTION? OKAY, THAT IS FINE." SECONDED BY BOARD MEMBER McLEOD. DISCUSSION. VOTE: CHAIRMAN SARDO: AYE BOARD MEMBER McLEOD: AYE BOARD MEMBER ROZELLE: AYE BOARD MEMBER FAIR: AYE VICE CHAIRMAN BLAKE: AYE MOTION CARRIED. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -OCTOBER I, 2008 PAGE 9 OF 9 Chairman Sardo conveyed to Board Member Fair, "Thank you for all the hard work that you -spent over the past -long period of time to -bring this to the attention of the Board and -thank you for all your hard work and due diligence." Vice Chairman Blake proclaimed, "I agree." ADJOURNMENT Chairman Sardo adjourned the Special Meeting at 8:33 p.m. RESPECTFULL I'' S ~BMITTED: . 4: D al•/LLE I~AR~ER DEPUi ~i CIT CI:LRiC NOTE: These Minutes were approved at the October 28, 2008 Boazd of Trustees Regulaz Meeting.