Loading...
HomeMy WebLinkAbout2010 01 26 Board Of Trustees Regular Meeting Minutes CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2010 CALL TO ORDER The Regular Meeting of Tuesday, January 26, 2010 of the Board of Trustees was called to Order by Chairperson Maria Fair at 6:35p.m. in the Commission Chambers of the Municipal Building (City Hall, 1126 East State Road 434, Winter Springs, Florida 32708). Roll Call: Chairperson Maria Fair, present Vice Chainnan Vernon Rozelle, Jr., present Board Member Ben McMahan, present Board Member Max Swaim, present Board Member Barbara Watkins, present A moment of silence was followed by the Pledge of Allegiance led by Chairperson Fair. Chairperson Fair inquired if there were any Agenda changes. None were noted. Ms. Kelly Balagia, Interim Finance Director advised the Board that she and City Manager Kevin L. Smith had discussed the investment cost related to Informational Agenda Item "101" for the first quarter and that Manager Smith thought there were some timing differences as a result of the cash basis presentation for the first quarter of 2010. Chairperson Fair mentioned that this may result in not receiving all the invoices from the Investment Managers and mentioned, "Hopefully at our next Meeting that we could have an update that is the true expenses for the Fiscal plan year." Next, an update regarding Gabriel, Roeder, Smith & Company obtaining the necessary information for them to provide the Actuarial Report was addressed. Mrs. Balagia remarked, "They guarantee they will have it turned around sixty (60) days from the date they get all the data." Further discussion ensued on the difficulties of receiving the data from Retirement Plan Specialists, Inc. and Vice Chairman Vernon Rozelle, Jr. suggested we get duplicate copies of any data that is supplied directly to Gabriel, Roeder, Smith & Company. Ms. Balagia mentioned, "I will make a note to get a duplicate." CITY OF WINTER SPRINGS, FLORIDA M INUTES BOARD OF TRUSTEES REGULAR MEETING - JANUARY 26, 2010 PAGE 2 OF 12 Ms. Balagia also stated, "I will be following up with him (Larry Wilson, Gabriel, Roeder, Smith & Company) on Friday," and added, "I am going to ask if there is any way that he (Larry Wilson, Gabriel, Roeder, Smith & Company) could deliver a report by mid - March." Discussion ensued on the due date of the Comprehensive Annual Financial Report (CAFR). Additionally, Ms. Balagia updated the Board Members regarding the Retirement Plan Specialists, Inc. invoice and noted that a letter was sent through the Office of the City Attorney, but there has been no response yet from the former Actuarial Firm. Chairperson Fair asked, "Do you know if it was sent Certified Mail? We want to make sure it was received by RPS (Retirement Plan Specialists, Inc.). If you could ask that question and find out." Ms. Balagia replied, "I sure will." Continuing, Chairperson stated, "If not, I would highly recommend that there is a consideration it be re- submitted via Certified Mail." Further discussion followed on correspondence with Retirement Plan Specialists, Inc. Additionally, scheduling a Special Meeting in early March of this year was discussed next. INFORMATIONAL AGENDA INFORMATIONAL 100. Office Of The City Manager Providing A Summary Of Pension - Related Expenditures For Fiscal Year 2009. No additional information on this Agenda was discussed directly under this Agenda Item. INFORMATIONAL 101. Office Of The City Manager Providing A Summary Of Pension - Related Expenditures For The First Quarter Expenditures For Fiscal Year 2010. Chairperson Fair mentioned, "I really do not think we can really question this so much until we get to finding out what happened with the other issue of why the quarterly fees were not complete in the actual annual statement." Discussion ensued with comments related to the possibility of further billing from Retirement Plan Specialists, Inc. and a letter sent by the Office of the City Attorney. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - JANUARY 26, 2010 PAGE 3 OF 12 The Board Members again discussed future invoices that the City may receive from Retirement Plan Specialists, Inc. and Chairperson Fair suggested, "Just make sure that Kevin (Smith) knows that before that gets paid, we need to have a discussion about it." CONSENT AGENDA CONSENT 200. Office Of The City Clerk Requesting Approval Of The October 27, 2009 Regular Meeting Minutes. Chairperson Fair announced, "We are looking to get a Motion for Approval of the Minutes of the October 27, 2009 Regular Meeting." "SO MOVED." MOTION BY BOARD MEMBER McMAHAN. SECONDED BY VICE CHAIRMAN ROZELLE. DISCUSSION. VOTE: BOARD MEMBER McMAHAN: AYE CHAIRPERSON FAIR: AYE VICE CHAIRMAN ROZELLE: AYE BOARD MEMBER WATKINS: AYE BOARD MEMBER SWAIM: AYE MOTION CARRIED. CONSENT 201. Office Of The City Clerk Requesting Approval Of The November 18, 2009 Special Meeting Minutes. "MOTION TO APPROVE" (NOVEMBER 18, 2009 SPECIAL MEETING MINUTES). MOTION BY BOARD MEMBER SWAIM. SECONDED BY BOARD MEMBER McMAHAN. DISCUSSION. VOTE: BOARD MEMBER SWAIM: AYE BOARD MEMBER WATKINS: AYE CHAIRPERSON FAIR: AYE VICE CHAIRMAN ROZELLE: AYE BOARD MEMBER McMAHAN: AYE MOTION CARRIED. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - JANUARY 26, 2010 PAGE 4 OF 12 AWARDS AND PRESENTATIONS AWARDS AND PRESENTATIONS 300. Not Used. 400. REPORTS There were no Reports given. PUBLIC INPUT No one spoke. PUBLIC HEARINGS AGENDA PUBLIC HEARINGS 500. Not Used. REGULAR AGENDA REGULAR 600. Office Of The City Manager Presentation From A Representative of RBC Global Asset Management (U.S.), Inc. (Formerly Known As Voyageur Asset Management, Inc.) Mr. Mike Spencer, Senior Portfolio Manager, RBC Global Asset Management (U.S.) Inc., 155 Federal Street, 16" Floor, Boston, Massachusetts: began his presentation by informing the Board of the company name change from Voyageur Asset Management, Inc. to RBC Global Asset Management (U.S.), Inc. and remarked, "RBC (Global Asset Management [U.S.], Inc.) is a very strong Bank. They never got in trouble. They never had bad assets." Continuing Mr. Spencer noted, "We manage for you a portfolio that is an International Equity. By that we mean, we are buying stocks of companies that are located outside of the United States." Discussion ensued on how RBC Global Asset Management (U.S.), Inc. identifies investment companies. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING — JANUARY 26, 2010 PAGE 5 OF 12 Mr. Spencer then mentioned, "Looking at calendar year 2009, the portfolio returned 53.45% (percent). The International Stock Index returned 32.45% (percent) so we had access return over and above the market of twenty -one percent (21%). That's good." Continuing Mr. Spencer added, "We're still not where we want to be." Next, Mr. Spencer discussed the City of Winter Springs Portfolio as displayed on pages 10 and 11 under the "International Equity" section of the presentation booklet entitled "City of Winter Springs Pension Plan ". Then the "2009 Strategy Review" was reviewed. Review of the presentation booklet continued followed by discussion of international companies. Mr. Spencer pointed out, "This portfolio does not normally have a lot of turnover," and then continued with review of the page entitled "Buys and Sells 2009" in the presentation booklet entitled "City of Winter Springs Pension Plan ". Concluding, Mr. Spencer suggested, "I would expect this year you will see more turnover than you saw last year. We are finding a lot of companies are inexpensive and look pretty good, and we are not quite ready to sell things that haven't quite reached the sale price. But we would expect in this quarter and next, to see a decent amount of sales of things that have reached our targets." Discussion. Tape 1 /Side B Further discussion ensued on international investment companies and the investigation process RBC Global Asset Management (U.S.), Inc. performs on companies;, RBC Global Asset Management (U.S.), Inc. team establishments and their sub — advisory company, Polaris Capital Management. REGULAR 601. Office Of The City Manager Presentation From Bogdahn Consulting, LLC Of The Investment Review Report For The Quarter Ended December 31, 2009. Mr. Dave West, Bogdahn Consulting, LLC, 4901 Vineland Road, Suite 600, Orlando, Florida: remarked, "This particular meeting date falls very early in the reporting cycle," and further explained why the report is a partial Report. Continuing Mr. West mentioned, "As soon as we have all the data — available, we will deliver the final Report which will include the write up and all the relevant pieces of analysis." Mr. West continued his presentation by reviewing the "Early Quarter Partial /Preliminary Report" with the Board of Trustees and then directed the Board's attention to Page 12 of the Report. CITY OF WINTER SPRINGS, FLORIDA M INUTES BOARD OF TRUSTEES REGULAR MEETING - JANUARY 26, 2010 PAGE 6 OF 12 Mr. West briefed the Board on the rebalancing and mentioned, "We are trying to work with Kevin's (Smith) office to get — those monies moved and get those funds rebalanced." Continuing, Mr. West reviewed and interpreted the pie graphs and charts within the Report. Next, Mr. West pointed out some highlighted interest on Page 16 of the Report and referred to RBC Global Asset Management (U.S.), Inc. noting "Huge contribution coining from the International Equity." Additional percentages were reviewed and Mr. West remarked, "We continue to monitor. We had American Realty here at the last Regular Meeting. We had the discussion if we rebalanced — they suggested continuing to defer for a couple of quarters. We are starting to see some strategist come out and suggest, from a Valuation standpoint only that this commercial real estate basis is starting to appear on radar screens and look attractive. From a fundamental basis, we are suggesting we continue with the strategy that we have in place here at the moment, but we're continuing to track that." Mr. West then added, "Our bottom line recommendation from our perspective is to hold the course the way we are with the discussion we had at the November 18`", [2009], meeting. If there is any change to that, I will certainly keep you apprised." Vice Chairman Rozelle commented in regards to the Fixed Income in the Bond, "If the Bond Market begins to change drastically over the next six (6) months or year — are we weighted too high in the fixed side? What is your perspective on Bonds ?" Mr. West responded, "Looking at the allocation for longer term perspective, we would suggest that the Bond allocation is appropriate," and continued "Number two (2), given the possibility — or high probability of interest rates starting to creep up, where obviously the price depreciation is much more onerous for pure treasurer or the lowest yielding securities as is for higher, spread product. In this environment, I think Galliard (Capital Management, Inc.) would be advantaged in that they are buying higher coupon or higher yielding securities, which will provide somewhat of an offset for that. Corporate Bonds have done enormously well. Galliard (Capital Management, Inc.) participates in a number of other market sectors, which if you look at historical norms and assume things were turned to historical norms, there is still room for some of the sectors they have invested in to appreciate in price. So, hopefully that combination would provide an offset. But, I think at the end of the day the perspective outlook for Bonds, that's probably something like the coupon and no more, hopefully, the coupon or current yield. So if we have incremental yield hopefully that's enough to offset any increasing yields in general interest rate terms which might result in depreciation of the Bonds on a market to market basis." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - JANUARY 26, 2010 PAGE 7 OF 12 Vice Chairman Rozelle thanked Mr. West for his reply and stated, "The only reason I bring it up, is it seems like the excruciating slow process we would face if we needed to move. Because we would have to have Special Meeting and then we would have to go before the Commission." Chairperson Fair commented, "Our Investment Policy does not allow for us to move out of Bonds." Vice Chairman Rozelle clarified that he was not suggesting moving out of Bonds. Chairperson Fair noted, "My recollection from the November 18` [2009] Meeting is that our instruction was to take our position out of Bonds and redistribute among DGHM (Dalton, Greiner, Hartman, Maher & Co.), Lateef (Asset Management Equity) and Voyageur (k.n.a. RBC Global, Asset Management [U.S.], Inc.) is that correct ?" Mr. West stated, "Correct. We would be reducing the Bond allocation by; I think the number was, about nine hundred, ninety -five thousand dollars ($995,000.00)." Next, Chairperson Fair said, "So, we were basically bringing all of the Bond overage where we had a run up in the Bonds back into the proper allocation to be in line with our Investment Policy. And unfortunately, I do not know why it has taken sixty -nine (69) days, but I counted, because I am not real happy about that. It has been sixty -nine (69) days since we Voted on that and you just told us that it had not happened yet ?" Mr. West explained, "The custodian is not authorized to take any direction from us. We can only serve as the Adviser." Continuing Mr. West mentioned, "We are trying to work with them again so we can make this January close liquidity window and get those assets moved." The returns and fixed portfolio percentages were discussed next. Chairperson Fair suggested, "I think going forward, we need to figure out a better way to make sure that these changes get implemented in a timely fashion." Mr. West responded, "I've got one (1) solution we could propose. Our objective is to facilitate this investment experience to the extent that we can. Some of our clients will give the Boghdan Group authorization to move funds within Accounts only, within the custody Accounts only to be able to enact rebalancing without having to have the outside authorized signer from the Board — in this case it is from the City." Mr. West continued, "If that's an acceptable solution, we can provide the proper documentation." Chairperson Fair asked, "Who needs to give the directive to the custodian to make this move." Mr. West replied, "I think the direction usually has come from the City Manager's Office." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING JANUARY 26, 2010 PAGE 8 OF 12 Vice Chairman Rozelle remarked, "When we first made this decision back in November and I recommended it, the portion that we are talking about, a little over a million was more than five percent (5 %) of the total portfolio. In another quarter, the equities are gaining, so it will become a little less of a percentage of the total and as the equities gain, the Bond portions are getting smaller, but — we still have missed out a lot." Chairperson Fair stated, "In just one quarter alone, we have missed out on a huge return, just because of the inefficiency in the system that has been put in place, which is nothing that we have been able to structure, but a structure that was put in place by, I assume Bogdahn (Group) along with the City of Winter Springs. I just think that it is incredibly inefficient and it needs to be corrected." Continuing, Chairperson Fair suggested, "I think you need to take this information back to — your boss, Joe (Bogdahn), and discuss it with Joe (Bogdahn) and come up with a viable solution to this problem." Mr. West remarked, "We would be happy to provide the letter that has the language that the custodian would accept that authorizes the Bogdahn Group upon authorization from the Advisory Board to move assets; but only to move assets within the Accounts. Just so everyone is clear, the construct or mandate of our firm, we cannot transact, in any securities in any way, we can only advise." It was noted by Chairperson Fair, "You are our liaison to the custodian and to the Money Mangers and as such, you are the ones that give that directive or facilitate that directive, between the custodian and the City," and then stated, "That is why we are paying you guys eighteen thousand dollars ($18,000.00) a year." Further discussion ensued on obtaining the necessary paperwork authorizing the Bogahn Group to work with the custodian. Board Member Ben McMahan asked, "Is it just a matter he (Kevin Smith) needs to sign a piece of paper and give it to the custodian ?" Mr. West responded, "Basically." Chairperson Fair inquired, "Does he (Kevin Smith) have the piece of paper, yet ?" Mr. West noted that the paper was forwarded electronically on November 20 2009. Further discussion ensued regarding communication efforts between the Bogdahn Group and the City of Winter Springs. Vice Chairman Rozelle posed the question, "If Kevin (Smith) or his Assistant signs it, then you can execute it within a few days ?" Mr. West affirmed, `Everything has been laid out again and this time all the parties involved in the money movement has been — advised if you will, of the pending action. So, we are still waiting for the authorization before..." Chairperson Fair inquired ".... "Is there a Contract with each of these Money Managers that outline that ?" Mr. West replied, "That would be standard operating procedure." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - JANUARY 26, 2010 PAGE 9 OF 12 Chairperson Fair requested, "Could we please get a copy of that, if you could email that to me ?" Mr. West answered, "Yes" and mentioned they are on file with the City. Discussion regarding authorizations and Contracts ensued. Chairperson Fair also requested that the custodial Contract with Fifth Third Bank be sent to the Board and asked the Clerk to make a note that it would be a great idea for all the Board Members to receive a copy of all the Contracts. The Board reviewed the steps and confirmed with Mr. West that there were no other issues in regards to the rebalancing. Mr. West noted, "The process is, we will make the recommendation, lay out the dollars as we did on the Special Meeting on the 18 (of November 2009) and that information is accepted or not Approved. If it is Approved, then we have laid out to the dollar and to the account of what has to happen. So the City would then forward that information on under its authorized signature, if you will, and then the assets can be moved." Following, Chairperson Fair inquired, "When a contribution is made, employee contribution, employer contribution, does this the same process have to be done as to where the money goes? Does Fifth Third Bank have to have that directive in the form of a signed document from the City as to where those contributions go ?" Responding, Mr. West stated, "They would actually be receiving that information on those contributions from the City who already would be the authorized signer." Chairperson Fair asked, "Is that submitted electronically ?" Mr. West mentioned, "I am not sure how that is set up. I assume that it would be." Chairperson Fair suggested, "That would be another good question that we should probably find out the answer to." No objections were voiced. Chairperson Fair added, "Is there a standard letter of instruction ?" Mr. West commented, "Yes, there would be a standard letter of instruction." Chairperson Fair then inquired, "Why don't we have a standard letter of instruction that can do the same thing ?" Next, Chairperson Fair expressed, "Bogdahn (Group) is our advisor. It is not Kevin's (Smith) job or Kelly's (Balagia) job, or my job or Gayle's (Coutant) job or the employee's job to know that a standard letter of instruction needs to be done to facilitate the transfer of Funds among Money Mangers. I really feel like that is part of the advice that you need to be giving to the City so that they can do their job. Their job is not managing money or managing assets or moving money between custodians." Mr. West agreed, "Our job is hopefully to make this as simple as possible, provide to the dollar, to the decimal and the Account, this is where it has to go." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING — JANUARY 26, 2010 PAGE 10 OF 12 Chairperson Fair noted, "So is it fair that we can hold you accountable between this Meeting and the next Meeting to find a solution to this problem and give us a Report?" Mr. West replied, "Yes." Discussion ensued on authorized signers and previous documents that were processed. Then, Board Member McMahan suggested to Mr. West, "Can we add on to your list of `to- do's', besides bringing a solution back for the long term. I actually would like to make sure that you work with the City to get this accomplished, get the signature you need within the next week ?" Mr. West stated, "We need to make this January window." Chairperson Fair asked, "When is the January window? This is January 26 [2010] — what date is the window ?" Mr. West noted, "At the end of the month," and continued, "I will contact Kevin's (Smith) Office again, tomorrow, per our discussion tonight to see if there is anything else we can do to help facilitate to get it through; and at the next Meeting, I'll have a draft authorization letter." Further discussion ensued on a standard letter of instruction and authorizations. Tape 2 /Side A Chairperson Fair suggested that a Special Meeting be held once the final numbers are received by Bogdahn Group. No objections were voiced. Vice Chairman Rozelle asked Ms. Balagia, "Can we get a directive that Kevin (Smith) notifies us all by email as soon as this is transmitted back to Fifth Third Bank." Ms. Balagia responded, "Sure." Chairperson Fair announced, "As soon as you have final numbers — Kelly (Balagia), if you would please let Kevin (Smith) know we would like to schedule a Special Meeting for that purpose, as well as to see where we stand with GRS (Gabriel, Roeder, Smith & Company) and our Actuarial Report for our Fiscal Year." Mr. West informed the Board Members that they would turn the Reports over as soon as the numbers are available and mentioned he could attend a Special Meeting. Chairperson Fair also mentioned to Ms. Balagia, "If you would, at that Special Meeting, let Kevin (Smith) know that we would like an update on the Pension Plan related expenditures so we can resolve the issue where those quarterly Fees have not been included in the Fiscal Year? That way we can resolve that mystery as well." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - JANUARY 26, 2010 PAGE 11 OF 12 Board Member McMahan also commented, "We had an issue from the last Meeting about service agreements with the Actuaries. Kevin (Smith) and the Actuary were going to work together on that and what we could expect time wise. I would like to have an update on that." Chairperson Fair added, "With our new Actuary, correct? As to when Reports would be made available at the end of each quarter...." Board Member McMahan added "...And there were monetary considerations that were being worked on as well." Mr. West suggested that the Bogdahn Group be at the Meeting when Gabriel, Roeder, Smith & Company presents the Actuarial Report. Mr. West noted, "At that time, it would be customary — actually, it's required to submit a letter up to the State indicating that the Meeting was held and the Board accepted the recommendation, or not of the advisors on that rate of return," and added, "That's always done in conjunction with the delivery of Actuarial Valuation Report." Discussion regarding the date of the Actuarial Valuation Report not being available until the end of February or even sometime in March 2010 followed. Chairperson Fair suggested, "If for some reason we don't have that ready, we can certainly have a Meeting in March for the purpose of just doing the Actuarial." Then, the Board Members discussed changing Meeting dates by two (2) weeks so that the Reports generated by The Bogdahn Group could include final pertinent information. REGULAR 602. Office Of The City Clerk Requesting An Election Of Chairperson Be Held For 2010. "I NOMINATE MARIA FAIR FOR CHAIRPERSON." MOTION BY BOARD MEMBER WATKINS. SECONDED BY BOARD MEMBER SWAIM. DISCUSSION. CHAIRPERSON FAIR COMMENTED, "SURE." VOTE: BOARD MEMBER WATKINS: AYE VICE CHAIRMAN ROZELLE: AYE BOARD MEMBER McMAHAN: AYE BOARD MEMBER SWAIM: AYE CHAIRPERSON FAIR: AYE MOTION CARRIED. CIT OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MELTING — JANUARY 26, 2010 PAGE 12 OF 12 REGULAR 603. Office Of The City Clerk Requesting An Election Of Vice Chairperson Be Held For 2010. "I WOULD LIKE TO NOMINATE BEN McMAHAN (FOR VICE CHAIRMAN." MOTION BY VICE CHAIRMAN ROZELLE. SECONDED BY BOARD MEMBER SWAIM. DISCUSSION. VOTE: CHAIRPERSON FAIR: AYE BOARD MEMBER McMAHAN: AYE VICE CHAIRMAN ROZELLE: AYE BOARD MEMBER WATKINS: AYE BOARD MEMBER SWAIM: AYE MOTION CARRIED. ADJOURNMENT Chairperson Fair adjourned the Special Meeting at 8:22 p.m. RESPECTFULLY SUBMITTED: _ 6, a GAY LL COUTANT A'SSISTA.Nf TO THE CITY CLERK NOTE: These Minutes were approved at the May 26, 2010 Board of Trustees Regular Meeting.