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HomeMy WebLinkAbout2009 01 21 Board Of Trustees Special MinutesCITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING JANUARY 21, 2009 CALL TO ORDER The Board of Trustees Special Meeting was called to Order by Interim City Manager Kevin L. Smith on Tuesday, January 21, 2009 at 6:06 p.m. in the Commission Chambers of the Municipal Building (City Hall, 1126 East State Road 434, Winter Springs, Florida 32708). Roll Call: Board Member Maria Fair, present Board Member Ben McMahan, present Board Member Vernon Rozelle, Jr., present Board Member Max Swaim, present Boazd Member Bazbaza Watkins, present Interim City Manager Smith introduced himself and Ms. Michelle Greco, Director, Finance Department; and then spoke about the business before the Board at this Meeting; the process in which the Meeting would run; and introduced Deputy City Clerk Danielle Harker. REGULAR AGENDA REGULAR 600. General Services Department And Office Of The City Clerk Orientation Of Re-Appointed And New Board Members. Deputy City Clerk Hazker discussed the Orientation package with the Boazd Members. Boazd Member Vernon Rozelle, Jr. commented on the Orientation package saying, `"This has been one of the best presentations that I have seen in here." Boazd Member Rozelle continued, "I have most of this information in various places, but this is all here, and I want to thank you Danielle (Hazker)." Interim City Manager Smith noted, "And thanks to Danielle (Harker) for all her hard work." Board Member Maria Fair mentioned, "Thank you for the refresher course." Board Member Fair continued, `"Thank you very much." Next, Board Member Rozelle asked about the Minutes from the October 28, Regulaz Meeting and how they would be Approved? Deputy City Clerk Harker commented to the Board that the Minutes would be before the Board for Approval. CITY OF WINTER SPRINGS, FLARIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -JANUARY 21, 2009 PAGE 2 OF 11 Deputy City Clerk Harker mentioned that she could provide audiotapes from that Meeting, and said, "I will give you the Minutes to look over, but I -really want to know what I can do to make you feel comfortable in Approving the Minutes." Brief discussion ensued on the Minutes. Board Member Ben McMahan asked, "Is it possible that since we have got two (2) Members that are here, we can just spend time with the two (2) of you, talking a little bit about the Meeting, before we actually take a Vote?" Discussion continued. Board Member McMahan continued, "I would just like to have your take before we take the Vote to see if there was anything missing, that just did not make it to the page, if that is okay." Deputy City Clerk Harker replied, "That's fine." The Orientation continued. Next, Deputy City Clerk Harker conducted the Oath of Office and swore in the Board Members. REGULAR 601. Office Of The City Clerk Election Of Officers. Deputy City Clerk Harker explained the process of Electing a New Chair and Vice Chair. "I NOMINATE MARIA FAIR [FOR CHAIR]:' MOTION BY BOARD MEMBER McMAHAN. SECONDED BY BOARD MEMBER ROZELLE. DISCUSSION. DEPUTY CITY CLERK HARKER ASKED, "MS. FAIIt, DO YOU ACCEPT THAT NOMINATION?" BOARD MEMBER FAIR AGREED. BRIEF DISCUSSION. VOTE: BOARD MEMBER McMAHAN: AYE BOARD MEMBER WATKINS: AYE BOARD MEMBER FAIR: AYE BOARD MEMBER SWAIM: AYE BOARD MEMBER ROZELLE: AYE MOTION CARRIED. CTTY OF WINTER SPRINGS, FLORIDA MINU'T'ES BOARD OF TRUSTEES SPECIAL MEETING -JANUARY 21, 2009 PAGE 3 OF I1 "I NOMINATE VERN ROZELLE [FOR VICE CI3AIR]:' MOTION BY BOARD MEMBER McMAHAN. SECONDED BY BOARD MEMBER SWA1M. DISCUSSION. DEPUTY CITY CLERK HARKER ASKED, "MR. ROZELLE, DO YOU ACCEPT THAT NOMINATION?" BOARD MEMBER ROZELLE COMMENTED, "SURE; YES, I DO:' VOTE: BOARD MEMBER WATKINS: AYE BOARD MEMBER FAIR: AYE BOARD MEMBER SWAI[M: AYE BOARD MEMBER ROZELLE: AYE BOARD MEMBER McMAHAN: AYE MOTION CARRIED. REGULAR 602. General Services Department Bogdahn Consulting Will Present The Results Of The Request For Proposals (RFP) For An All Cap Value Manager To Replace Snow Capital Management. Interim City Manager Smith introduced this Agenda Item to the Board. Boazd Member Max Swaim asked, "How proactive is this Boazd supposed to be in the sense of we act only on request - by the Commission or can we initiate thoughts to the Commission?" Interim City Manager Smith replied, "If you have concerns as a Board that you think our Commission needs to awaze of, bring it up and discuss it as a Boazd; I will bring it to the City Commission. Once the City Commission discusses it, and gives you authority to move forwazd on that, that would the process anyway, we'll be in the place that we need to be." Interim City Manager Smith continued, "My recommendation to you, if you have any concerns as a Board that relates to our Pension Fund in any matter whatsoever, please discuss it and I'll take it to the Commission." Mr. David West, CFA, Bogdahn Consulting, LLC, 340 West Central Avenue, Suite 300, Winter Haven, Florida: introduced himself and handed out "The Bogdahn Group Firm Experience & Series Overview" book with the Board. Mr. West spoke on the Bogdahn Group stating, "This firm is one hundred (100%) independent; we charge a hard dollaz fee and that fee comes from the client only. We have no other sources of revenue. That's very, very important." Discussion. Tape 1/Side B Further discussion. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -JANUARY 21, 2009 PAGE 4 OF 11 Regarding the Investment Policy Statement, Mr. West mentioned, "We'd like to get that on the Agenda. We've got some Amendments that we'd like to propose to the Policy; that's an on-going review and service that we provide." Next, Mr. West said, "If there are any additional reporting issues or customization; we're -completely open to that. We're happy to customize." Mr. West continued, "We've got complete flexibility and we're happy to add -anything to that." Continuing, Mr. West spoke on educational Seminars/Workshops and stated, "We'd be happy again, to bring our resources outside, bring outside resources in through our network, to help educate the Board and -pursue -excellence in any particular area that - youmight have a concern on." Discussion ensued on the Bogdahn Group Fees. With comments on the term of the Bogdahn Group Agreement, Interim City Manager Smith said, "I'll confirm that." Continuing the discussion on the Bogdahn Group Agreement, Interim City Manager Smith asked Deputy City Clerk Harker, "Would you mind emailing that Contract to the Board?" Deputy City Clerk Harker replied, "I can email it tomorrow." Further discussion. Chairperson Fair explained, "The reason we are here is part of their role, they were monitoring Snow Capital [Management, LP]. They were not performing to the standards that their research team felt was necessary to fulfill the goals that we have for this plan. Dave (West) at that Meeting brought it to our attention and as a Board we chose to ask them to go out for an RFP (Request for Proposal) to seek a replacement." Mr. West spoke on the Portfolio and reviewed the "City of Winter Springs Employees' Retirement System Investment Manager Search Opportunistic Value Equity Presented January 21, 2009" with the Board. Much discussion. Tape 2/Side A Discussion continued. Regarding Snow Capital Management, LP compared to the other All-Cap Value Managers, Vice Chairman Rozelle asked, "Do we have -something comparable to these six (6), the seven (7) or are they way off the chart?" Mr. West replied, "We'd be happy to furnish that." Mr. West continued, "They would not make the cut because of -last year's efforts." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -JANUARY 21, 2009 PAGE 5 OF 11 Discussion. Regazding the Fee structures, Mr. West stated, "The Anchor [Capital Advisors, LLC] Fee schedule is one percent (1%)." Chairperson Fair asked, "Is there any break points in that?" Mr. West replied, "Yes, there are break points on all these; we aze fairly far from the break point." Chairperson Fair continued, "In all of them?" Mr. West mentioned, "I'd be happy to furnish the full Fee structure and in fact - I think that would be a nice thing to make sure we include in future seazches." Chairperson Fair remazked, "Please." Mr. West reassured, "I'd be happy to furnish the break points for everyone, but we are very faz away with the size of the mandate from any break point any time in the near future." Brief discussion on break points. Chairperson Fair directed, "Go ahead and give us the Fee structure on each of the Managers that you merited." Discussion continued. Continuing the discussion of the Fee structures, Mr. West said, "Anchor's [Capital Advisors, LLC] at one (1) [percent]; Moody Aldrich [Partners, LLC] is at one (1) [percent]." Mr. West continued, "Heartland [Advisors, Inc.] is at eighty-five (85) basis points; DG[HM] (Dalton, Greiner, Hartman, Maher, and Co., LLC) is at seventy-five (85) basis points - Robeco [Investment Management] is at eighty (80) basis points and Westwood [Management Corp] is at eighty (80) basis points." Much discussion. Regazding Heartland Advisors, Inc., Mr. West stated, "We do need to note that in January of 2008 they reached a -settlement with the SEC (Securities and Exchange Commission) with regard to a high yield, basically bond pricing, in a former high yield bond fund that was actually closed in 2004 -one of the things we want to be looking for is there any regulatory issue with any - of the Managers and they did submit that response. The senior management is the same there." Mr. West continued, "We want to make sure that everyone's aware of that settlement. As far as the settlement goes with the SEC (Securities and Exchange Commission) -it's closed now; it's done. There's no injunction on anyone from practicing -it's been settled." Discussion. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -JANUARY 21, 2009 PAGE 6 OF 11 Chairperson Fair mentioned, "I would be interested in knowing -who owns -Anchor Capital [Advisors, LLC] - is it a -privately owned firm or is it owned by a greater publicly traded company?" Mr. West responded, "Don't hold me to the number, and I will absolutely get you the definitive answer, but I believe the -ownership ratio is forty percent (40%) owned by the -founding principals of Anchor [Capital Advisors, LLC] with Bill Rice being majority owner -Bill Rice Jr, the second generation and the other sixty percent (60%) is owned by an Investment Capital firm that invests in Investment Managers." Mr. West continued, "We have that data and we'd be happy to furnish that data." Chairperson Fair noted, "I would be interested in knowing who -particularly if we narrowed it down to -three (3) or four (4), to see if they aze owned by corporate structure, if they are privately owned or if they aze publicly traded because I do think that makes some -difference." Discussion. Mr. West stated, "Moody [Aldrich Partners, LLC] is one hundred percent (100%) employee owned. I believe Westwood [Management Corp], but I'd like to refer to the option to get you the -answers you're seeking there. And Robeco [Investment Management], I can speak defiantly, that's a subsidiary of Rabobank." Further discussion. Mr. West commented, "We will provide in advance of the next Special Meeting or interview Meeting, you will have that due diligence questionnaire, which will have all of that information at your fingertips. We will also run the longer term now time periods and make that available." Further discussion. Chairperson Fair remarked, "The only other issue that I would have in making these rankings to come to a -conclusion for those presentations would be -you brought up a point with DGHM (Dalton, Greiner, Hartman, Maher, & Co, LLC) that you have not done what you believe is the due diligence, but yet they -come up certainly for consideration, so what would the process be there, if -DGHM (Dalton, Greiner, Hartman, Maher, & Co, LLC) turns out to be in the top three (3) or four (4), is that going to hinder our progress from your due diligence?" Mr. West said, "No, we would then take that as - a request from the Boazd to complete it and we'll - do it." Brief discussion. Chairperson Fair asked, "Is it still the recommendation of the Bogdahn Group to remain in Snow Capital [Management, LLC] product until we find a Manager as opposed to putting it into something shorter term in the interim?" CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -JANUARY 21, 2009 PAGE 7 OF I 1 Mr. West replied, "Yes, and the concern is -it's not -like we're in a Fund where there is a fire sale liquidation. They're in liquid securities traded daily. The concern - is if we - have the Snow [Capital Management, LLC] portfolio liquidated, there's a transaction cost. And then there's obviously a subsequent re-purchase cost for the replacement Manager." Mr. West continued, "The objective here is to minimize transaction cost -our recommendation is to stay invested; keep our place marker in the race." Continuing, Mr. West recommended, "We want to stay on -the Policy; stay invested. So, the alternative would be into perhaps ETF (Exchange Traded Fund) Index Fund." Tape 2/Side B Mr. West continued, "So, our recommendation has been and still is to -move this forward in a normal course of - a search and replacement and follow that -procedure." Discussion. Regarding how many Managers to interview, Vice Chairman Rozelle commented, "I like the idea that the Chair has pointed out that four (4) might be a good idea to look for just to give us a little more information." With brief discussion, Chairperson Fair said, "Four (4)." No objections were noted. Discussion continued. Regarding the Managers they would like to see interviewed, Board Member McMahan commented, "Anchor Capital [Advisors, LLC]; Moody Aldrich [Partners, LLC]; Robeco [Investment Management]; and DGHM (Dalton, Greiner, Hartman, Maher, & Co, LLC)." Boazd Member Watkins noted, "Same way." Chairperson Fair remarked, "Mine is number one (1), DGHM (Dalton, Greiner, Hartman, Maher, & Co, LLC); number two (2), Westwood [Management Corp]; number three (3), Heartland [Advisors, Inc.]; and number four (4), Anchor [Capital Advisors, LLC]." Vice Chairman Rozelle commented, "One (1) for Anchor [Capital Advisors, LLC]; two (2) Westwood [Management Corp]; three (3) Moody [Aldrich Partners, LLC]; and four (4) DGHM (Dalton, Greiner, Hartman, Maher, & Co, LLC)." Board Member Swaim stated, "Moody [Aldrich Partners, LLC]; Anchor [Capital Advisors, LLC]; Robeco [Investment Management]; and [Advisors, Inc.]." Interim City Manager Smith explained, "The tabulation of the scores would indict that Anchor [Capital Advisors, LLC] would be ranked number one (1); Moody [Aldrich Partners, LLC] would be ranked number two (2); DGHM (Dalton, Greiner, Hartman, Maher, & Co, LLC) would be ranked number three (3); and then there is a tie -between Robeco [Investment Management] and Westwood [Management Corp] for the final position." CITY OF WINTER SPRINGS, FLARIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -JANUARY 21, 2009 PAGE 8 OF 11 "CHAIR, I MOVE THAT WE SELECT FOUR (4) OF -THESE FIRMS THAT - PASSED THROUGH THE FIRST CUT AND THAT WE MOVE THAT - MY MOTION IS THAT WE WOULD INVITE FOUR (4) OF THESE FIRMS TO COME MAKE PRESENTATIONS AS SOON AS POSSIBLE AND DIRECT DAVID WEST TO WORK WITH THEM TO GET US ALL THE INFORMATION WE NEED TO -GET THOSE MEETINGS SET UP." MOTION BY VICE CHAIRMAN ROZELLE. CHAIRPERSON FAIR SAID, "AND I NEED YOU TELL US THE FOUR (4) THAT YOU ARE MAKING THE MOTION TO INTERVIEW." BRIEF DISCUSSION. VICE CHAIRMAN ROZELLE SAID, "THAT WE TAKE THE FIRST THREE (3) THAT WERE SELECTED IN RANK AND THEN FOR THE TWO (2) THAT WERE TIED, THAT WE ASK OUR CONSULTANT DAVID WEST TO COME UP WTTH AN EVALUATION BETWEEN THOSE TWO (2) TIES:' SECONDED BY BOARD MEMBER 5WAIM. DISCUSSION. BOARD MEMBER WATKINS ASKED, "WHICH ONES WERE TIED?" CITY MANAGER SMITH REPLIED, "ROBECO [INVESTMENT MANAGEMENT] AND WESTWOOD [MANAGEMENT CORP]:' CONTINUING, INTERIM CITY MANAGER SMITH ASKED MR. WEST, "COULD YOU OFFER A RECOMMENDATION AS TO YOUR -PREFERENCE - BETWEEN ROBECO [INVESTMENT MANAGEMENT] AND WESTWOOD [MANAGEMENT CORD]?" MR. WEST RESPONDED, "AS PREVIOUSLY STATED, WE WOULD - REQUEST THE OPTION TO COMPLETE THE FINAL VETTING OF ROBECO [INVESTMENT MANAGEMENT]. WE'VE COMPLETED AND WE'RE - COMFORTABLE WITH WESTWOOD [MANAGEMENT CORP]." MR. WEST CONTINUED, "BECAUSE ROBECO [INVESTMENT MANAGEMENT] AND DGH(M] (DALTON, GREINER, HARTMAN, MAHER, & CO., LLC) CAME OUT OF RESULT OF THIS BEING A PUBLIC OPEN SEARCH, WE HAVE NOT BEEN ABLE TO COMPLETE THE FINAL PHASE OF THE VETTING PROCESS WHERE WE WOULD BE COMFORTABLE -RECOMMENDING THAT MANAGER SPECIFICALLY." CHAIRPERSON FAIR ASKED, "ROBECO [INVESTMENT MANAGEMENT]?" MR. WEST SAID, "YES." CHAIRPERSON FAIR CONTINUED, "SO, YOU'RE TELLING US THAT YOUR FH2M HAS COMPLETED THE DUE DILIGENCE ON WESTWOOD (MANAGEMENT CORP], SO, THAT WOULD BE YOUR RECOMMENDATION FOR THE FOURTH?" CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIALMEETING -JANUARY 21, 2009 PAGE 9 OF 11 MR. WEST SAID, "RIGHT. WE -COULDN'T RECOMMEND SOMETHING THAT WE HAVEN'T COMPLETED OUR PROCESS ON. SO, MY ANSWER BECOMES FAIRLY SIMPLE." CHAIRPERSON FAIR ADDED, "SO, IT IS WESTWOOD [MANAGEMENT CORD]." MR. WEST STATED, "THAT'S THE ONLY ONE - WE'RE IN A POSITION TO BE COMFORTABLE WITH AS FAR AS HAVING COMPLETED OUR PROCEDURE:' DISCUSSION. "I WOULD ASK THAT MY MOTION BE AMENDED TO ACCEPT DAVE - WEST'S RECOMMENDATION TO INVITE WESTWOOD [MANAGEMENT CORP] AS THE FOURTH FIRM." MOTION BY VICE CHAIRMAN ROZELLE. SECONDED BY BOARD MEMBER SWAIM. DISCUSSION. VOTE: CHAIRPERSON FAIR: AYE BOARD MEMBER SWAIM: AYE VICE CHAIRMAN ROZELLE: AYE BOARD MEMBER McMAHAN: AYE BOARD MEMBER WATKINS: AYE MOTION CARRIED. Interim City Manager Srnith asked Mr. West, "When do you anticipate we can get these Managers here for interview process?" Mr. West replied, "If I may, if we could establish a date, if we could correspond with Kevin's (Smith) office and first of all come up with a workable date, we'd like to target obviously, as soon as possible, so two (2) to three (3) weeks out as soon as we establish a workable date, we will immediately get on the phone and send out the invitation." Discussion. Regarding the Regular Meeting on Tuesday, January 27, 2009, Chairperson Fair noted, "I think we should go ahead and have the Regular scheduled Meeting because we have new Members on this Board." Chairperson Fair continued, "I think by having a review next week, a quarterly review, that is going to really help them when those Managers come in, to be able to really make a better educated decision." No objections were noted. Mr. West remarked, "We also had the -Board had requested that we have the Managers come in on a cycle." Chairperson Fair mentioned, "Right." Mr. West continued, "So, we would have a Manager scheduled for that Meeting. I just needed to get confirmation tonight before we get someone on the Agenda, but we will have someone on that." Interim City Manager Smith stated, "So, we'll proceed with the Regular Meeting, Tuesday the twenty..." Deputy City Clerk Harker noted, "...Seventh [of January) at 6:30 [p.m.]." Chairperson Fair agreed, "Correct." CITY OF WINTER SPRINGS, FIARIDA MINUTES BOARD OF TRUSTEES SPECIAL. MEETING -JANUARY 21, 2009 PAGE 10 OF 11 Next, Chairperson Fair commented, "A concern that I have of an -issue that I would like for this Boazd revisit and that issue is to reconsider the 175 and 185 Plans. The reason for that is I have been personally in discussions with Joe Bogdahn (CIMA, Firm Principal, The Bogdahn Group). He and I have had numerous conversations on the issue, and Joe Bogdahn has graciously agreed to be at next week's Meeting to answer questions that we might have in regazd to 175/185 plans." Interim City Manager Smith noted, "Just for clarification, we would only have a 185 Plan because we don't have a Fire Department any longer, but I think it would be appropriate, if that's the Board desire, to refer that to the Commission to ask for that study or of course we could bring Joe (Bogdahn) here first to have you all talk about it." Chairperson Fair mentioned, "Right, that was kind of where I was going with that -it's that Joe (Bogdahn), simply in our conversations, and being that they aze our Advisor to the Plan, I feel that when he has information that he feels that needs to be shazed with the Board of Trustees, I would like to offer him the opportunity to do so. And since he has sent me an email making that, what I would say offer, request, whatever it was, I would like to extend him that opportunity." Interim City Manager Smith said, "That is your desire." "I WOULD LIKE TO MAKE A MOTION THAT OUR REGULAR SCHEDULED MEETING ON JANUARY 27~ (2009] THAT WE INVITE JOE BOGDAHN WITH THE BOGDAHN GROUP AND - IN ADDITION TO BEING OUR FINANCIAL ADVISOR, HE WILL DISCUSS WITH US THE 185 PLAN." MOTION BY CHAIRPERSON FAIR. SECONDED BY BOARD MEMBER WATKINS. DISCUSSION. VOTE: BOARD MEMBER WATKINS: AYE BOARD MEMBER SWAIM: AYE VICE CHAIRMAN ROZELLE: AYE BOARD MEMBER McMAHAN: AYE CHAIRPERSON FAIR: AYE MOTION CARRIED. Chairperson Fair asked Mr. West, "If you would please take care of that for us, that would be excellent." Mr. West said, "Absolutely." Interim City Manager Smith said, "Danielle (Hazker) will be getting with the Board Members after Dave (West) gets us some dates to check your availability. Would that happen before the Meeting on the [January] 27~' [2009] or would that happen at the Meeting on the [January] 27~' [2009]?" Mr. West said, "I would like to correspond with you tomorrow." Interim City Manager Smith said, "Then we'll be -moving along quickly and getting you -those dates and try to get a consensus." CTI'1' OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -JANUARY 21, 2009 PAGE 11 OF 11 Deputy City Clerk Harker asked Mr. West, "If you could possibly take our City calendar and when you look at the dates - if you could look at the dates where there isn't anything, like a City Commission Meeting scheduled in here." Next, Chairperson Fair suggested, "We definitely want to have the Chambers, if at all possible, for those presentations." ADJOURNMENT Chairperson Fair adjourned the Special Meeting at 8:52 p.m. RESPECTFULLY SUBMITTED: D ~ L~,E HARKER ~~ ;3~EUT~'CITY CLERK NOTE: These Minutes were approved at the April 28, 2009 Board of Trustees Regular Meeting.