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HomeMy WebLinkAbout2007 01 31 Consent 401 Approval of the January 4, 2007 Special Meeting Minutes CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING JANUARY 4,2007 CALL TO ORDER The Board of Trustees Special Meeting was called to Order by Vice Chairman A. Mark Sardo on Thursday, January 4, 2007 at 5:03 p.m. in the City Commission Chambers of the Municipal Building (City Hall, 1126 East State Road 434, Winter Springs, Florida 32708). Roll Call: Vice Chairman A. Mark Sardo, present Board Member Guy DeMaio, present Board Member Byron Giltz, present Board Member Vernon Rozelle, Jr., present After a moment of silence, Vice Chairman Sardo led the Pledge of Allegiance. PUBLIC INPUT No one spoke. REGULAR AGENDA REGULAR 300. Office Of The City Manager Mr. Joseph Bogdahn, Bogdahn Consulting, LLC, To Present The Results Of The RFP (Request For Proposal) For Investment Manager Services. The Board Of Trustees To Select Firms For Interviews To Be Held At The January 31, 2007 BOT (Board Of Trustees) Regular Meeting Mr. Kevin Smith, Director, General Services Department, introduced Mr. David West, representing Bogdahn Consulting, LLC. Mr. David West, CF A, Bogdahn Consulting, LLC, 340 West Central Avenue, Suite 300, Winter Haven, Florida: regarding the Request for Proposal, Mr. West stated, "We went basically to three (3) sources - to be sure that we are pulling in all of the most suitable candidates for Selection for Interview. ,...., ~---, i::- ll[" =- ~ CL.. ,.... I ~ ~ ; - CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -JANUARY 4, 2007 PAGE20F7 Our objective tonight would be to basically select an All Cap Growth Manager for Interview. Two (2) or three (3) we recommend for interview. An All Cap Value Manager. Two (2) or three (3) we would recommend for Interview, and our Domestic Fixed Income Manager. This then puts us in a position, once the Interviews take place on the 31 st [January 2007], and the Selections are made, that puts us in a good position - to go and review the Custody Selections. Then at that time, once the new Custodian has been selected and we have one (1) of each of these three (3) Managers selected, we can then transition the portfolio. We recommend at a later date, but staying on the schedule, that we review the International and the Real Estate Components. Our objective tonight would be All Cap Value, All Cap Growth, and Domestic Fixed Income." Mr. West gave an overview of the Request for Proposal. Mr. Michael S. Blake, 711 Canadice Lane, Winter Springs, Florida: commented on the "Negative quarters". Discussion continued on the Request for Proposal. Mr. West commented on the most impressive candidates and stated, "Lateef [Asset Management] and DG Capital. Then close is Renaissance [Investment Mgmt.], and Rigel [Capital]." Regarding the fees for - Renaissance Investment Mgmt., Vice Chairman Sardo asked, "Seventy-five (75) basis points for the first five (5) after that?" Mr. West stated, "I need to check that fee schedule to give you a definitive answer." Mr. West continued, "That is a good question for the Interview, should they be chosen." Advisory Board Member Byron Giltz asked, "We should be given - between tonight and when they come - a Profile on each of these firms." Mr. West answered, "Absolutely." Board Member Giltz stated, "I do not know if you have a boiler plate agreement that you use with three (3) firms?" Mr. West stated, "We can provide that. Typically, we would prefer that Pension Counsel, but we can certainly, have Agreements in place with a number of these Managers that meet the necessary - requirements." Mr. West stated, "If I may - answer the first question, I am prepared to leave you with a narrative Profile of whatever firms you choose to work with tonight. That should answer the first part of the question. The second answer to your question comes - when we send the invitation out to the firms that are selected, we have a - very useful questionnaire that will help you frame up again, the Profile of the Manager. We also expect and request them to send their Presentation in advance of the Interview, so that the Trustees have sufficient time to review that information." ~ ~--, ;:;;a- ~ -== ~ t"" . ~ ~ . ~ CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - JANUARY 4,2007 PAGE30F7 In response to fees, Mr. West stated, "Obviously, there will be trading costs involved and - we will be helping you set a commission recapture program in the Agreement and with follow up letters. We will also be addressing the Management or placing caps on those trading costs so that any - commissions above one (1) or two (2) sets of shares get rebated back to the program so that the Manager is - not using that soft dollar to pay for their resource." Advisory Board Member Vernon Rozelle, Jr. asked, "Will you include - 'How are they going to soft - the trade per share costs'?" Mr. West stated, "We can do that, but all of these Managers will comply with that." Board Member Rozelle continued, "Can you discuss the difference or the advantages of co-mingled versus separate fund." Discussion. Regarding the number of Interviews, Vice Chairman Sardo asked, "At this point, do we want to make a recommendation for three (3)?" Board Member Giltz stated, "Three (3) or two (2)." Board Member Rozelle stated, "This is our biggest - of the distribution of the funds. I would - suggest that we talk to three (3)." Advisory Board Member Guy DeMaio stated, "Three (3)." Vice Chairman Sardo stated, "The maximum amount of people - three (3) would be a good number. Any other discussion on that?" There were no objections by the Advisory Board Members. Discussion. In terms of percentages, Board Member Rozelle asked, "Are we talking sixty/forty (60/40) or - the seventy/thirty (70/30)?" Mr. West stated, "In our original engineering - plan, we recommend throttling back a little bit from where you have been, with very high equity exposure. Again, we think with what we are looking at and doing, we can get the same result with a lot less equity exposure and that would be highly desirable." Mr. West stated, "That would be a sixty-five percent (65%) target about five percent (5%) less. Actually, I think you were seventy-five (75)." Board Member Giltz asked, "Should - that total up to our total assets?" Mr. West stated, "We still have the Real Estate and the International portions to go." Then, Mr. West stated, "In the International, we were targeting fifteen (15) to twenty (20) percent allocation. The Real Estate we were targeting a five to ten percent (5-10%) allocation. The recommendation for the Real Estate is going to be on the lower end of that allocation percentage. " ~ r-' ;...- ..-- ...... ~ ,-. . ,.... . G ~~ ; - CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - JANUARY 4, 2007 PAGE40F7 Vice Chairman Sardo asked, "Is there a recommendation or a Motion that someone would like to make, to recommend at least three (3), or four (4) - or two (2), whatever they feel comfortable with to go forward with this? The Growth Equity side." "MOTION FOR THREE (3)." MOTION BY ADVISORY BOARD MEMBER DeMAIO. SECONDED BY ADVISORY BOARD MEMBER ROZELLE. DISCUSSION. WITH CONSENSUS OF THE ADVISORY BOARD, THE MOTION WAS APPROVED. MOTION CARRIED. Tape J/Side B "I - MAKE A RECOMMENDATION AND A MOTION. I LIKE LA TEEF [ASSET MANAGEMENT]. DG CAPITAL, AND RENAISSANCE [INVESTMENT MGMT.]." MOTION BY VICE CHAIRMAN SARDO. SECONDED BY ADVISORY BOARD MEMBER GILTZ. DISCUSSION. WITH CONSENSUS OF THE ADVISORY BOARD, THE MOTION WAS APPROVED. MOTION CARRIED. Vice Chairman Sardo stated, "Lateef [Asset Management], DG Capital, and Renaissance [Investment Mgmt.], the ones we will take at look at in the Interview for the Growth Equity side. We will move onto the Value at this point." Mr. West gave an overview on the Value in the Request for Proposal. Vice Chairman Sardo asked, "How much overlap?" Mr. West stated, "In all these cases, and that is a very good question because that is a problem that you have. In all of these cases, we really do have Managers looking at Growth metrics and we really do have Managers looking at Value metrics. They are going to move around - overlap is going to be minimum, at worst." Continuing, Mr. West stated, "Since we have selected Lateef[Asset Management] as one (1) of our candidates, Lateef [Asset Management] is a very concentrated Manager. We added them back into the mix because one of the screening Criteria was, 'You have to hold on to thirty (30) stocks'. We were so impressed in working with Lateef [Asset Management] and their track record, that we felt that they deserved to be put back in there because they have done so well managing the risk of that concentrated Portfolio." 1-:-1 ~ c::::> f:.~ ,.... I ~ t-5 CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - JANUARY 4, 2007 PAGE50F7 VICE CHAIRMAN SARDO STATED, "DO WE REQUIRE ADDITIONAL INFORMATION TO COME UP WITH A NUMBER OF CANDIDATES?" ADVISORY BOARD MEMBER ROZELLE STATED, "I SUGGEST THREE (3) IS A GOOD NUMBER." SECONDED BY VICE CHAIRMAN SARDO. DISCUSSION. WITH CONSENSUS OF THE ADVISORY BOARD, THE MOTION WAS APPROVED. MOTION CARRIED. "I WILL MAKE A MOTION THAT WE RECOMMEND OPPENHEIMER [CAP], SNOW [CAP MGMT.], AND FIFTH THIRD [ASSET MANAGEMENT INC.]." MOTION BY ADVISORY BOARD MEMBER ROZELLE. SECONDED BY ADVISORY BOARD MEMBER GIL TZ. DISCUSSION. WITH CONSENSUS OF THE ADVISORY BOARD, THE MOTION WAS APPROVED. MOTION CARRIED. Mr. West commented that Galliard [Capital Management] and MBIA [Asset Management] were the most impressive. Continuing, Mr. West stated, "I will leave you with a Profile on that. Last, Fixed Income. This is Domestic Fixed Income. This one is going to be a little bit harder. The difference between the best and the worst, by Manager, is very small. Fixed income numbers and what it takes to outperform, we are talking - very, very small increment." Discussion. Board Member Giltz stated, "Y ou narrowed it down to the ones that are the most qualified." Mr. West stated, "Yes, and we added in two (2) Managers that we work with." Board Member Giltz added, "We probably - at some point, as Trustees should know the total - number of RFP's (Request for Proposal's) that came in." Mr. West stated, "We did put together a grid showing all the respondents, the products and some basic questions and how they were answered. You will know exactly." Mr. West added, "Y ou have that available for the Record." Vice Chairman Sardo stated, "Do I have Motion to determine how many that we want initially?" Mr. West stated, "You may only want to interview two (2) Fixed Income Managers. " Vice Chairman Sardo stated, "Okay. Do I have a Motion that we want to interview two (2)? Is that a Consensus at this point?" Board Member Giltz said, "Yes." Vice Chairman Sardo stated, "We agree on two (2)?" There were no objections by the Advisory Board Members. ,..-, r-, ::;::a.. ~ -- S:! ~ . ~ r-= CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - JANUARY 4, 2007 PAGE 6 OF 7 VICE CHAIRMAN SARDO STATED, "DO WE HAVE A MOTION TO NAME THOSE TWO (2) AT THIS POINT?" "I MOVE THAT - I THINK WE ARE DOWN TO GALLIARD [CAPITAL MANAGEMENT] AND MBIA [ASSET MANAGEMENT] WERE THE TOP TWO (2) THAT SEEM TO POP UP. AND, I HEARD DAVID [WEST] RECOMMEND THEM AS THE TOP TWO (2)." MOTION BY ADVISORY BOARD MEMBER GIL TZ. SECONDED BY ADVISORY BOARD MEMBER DeMAIO. DISCUSSION. WITH CONSENSUS OF THE ADVISORY BOARD, THE MOTION WAS APPROVED. MOTION CARRIED. Ms. Valarie Mendelson, Investigator, City of Winter Springs Police Department: commented on the fees and stated, "Because they are all so close - maybe we should pick a different number two (2) because of the costs?" Board Member Giltz stated, "The fees are all pretty close. The performance is the number one (1) Criteria that I would go by. And, two (2), I do not know if David [West] would agree with this, those fees are not cast in steel." Mr. West stated, "That is correct, they are not." Vice Chairman Sardo stated, "MBIA [Asset Management] also says, forty (40) basis points the first five (5). We do not know what happens after the first five (5). That is another question to ask them." Discussion ensued on the next Meeting, to which Vice Chairman Sardo said, "The Meeting on the 31st (January 2007, what time does that start? At 5:30. We look to have a total of six (6) and two (2) or eight (8) individuals here. Each is going to take about thirty (30) minutes or so? That sounds like a four (4) hour Meeting. Do we want to do that, or would we rather do a - three (3) hour Meeting, to have the Equity side done and move - the Fixed side to a future Meeting?" Vice Chairman Sardo asked, "Do we have any discussion regarding we go from 5 [:00] to 9'ish [:00], is that okay with everybody at this point?" With discussion, Vice Chairman Sardo stated, "At this point - the 31 st [January 2007] at 5 [:00] and it will be at a meeting room to the left." Mr. West stated, "Twenty (20) minute Presentation and ten (10) [minute] for Q and A (Question and Answer)." Mr. West added, "Three (3), three (3), and two (2)." Vice Chairman Sardo added, "Then what we will do is - schedule an additional Meeting to deal with the International and the Real Estate RFP's (Request for Proposal's)." Mr. West stated, "And, the Custodian." ,....., rr' := ~ ~ rr=: ,..... . ,..... . d ~ ... ~; - ell CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -JANUARY 4,2007 PAGE70F7 Board Member Giltz asked "Maybe somebody has it in this building, we do not, that I know of - the Investment Policy, the hard copy of the Investment Policy and Guidelines. We really need that." Discussion ensued regarding comparisons to Trusco Capital Management. Mr. Kevin Smith stated, "Update to our Pension Plan document. We will be asking the Commission at their next Meeting, this coming Monday night, to go over that document. The Pension Attorney will be here to answer questions; and see if we can get a Consensus on approving that document. I will let the Board know after Monday night - that date and we will also provide you with a copy - we should have it next week - the actual document for your review in preparation of that Meeting. ADJOURNMENT "MOTION TO ADJOURN." MOTION BY ADVISORY BOARD MEMBER DeMAIO. SECONDED. DISCUSSION. WITH CONSENSUS OF THE ADVISORY BOARD, THE MOTION WAS APPROVED. MOTION CARRIED. Vice Chairman Sardo adjourned the Special Meeting at 6:28 p.m. RESPECTFULLY SUBMITTED: DEBBIE FRANKLIN DEPUTY CITY CLERK NOTE: These Minutes were approved at the ,2007 Board of Trustees Regular Meeting. ~ ~ ~ c::>> fi1 t-~ l~