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Home My WebLink About2007 04 09 Regular 602 Asset Investment Managers And A Custodial Bank COMMISSION AGENDA April 9, 2007 Regular Meeting Consent Informational Public Hearin Re ular MGR. /J /DEPT. Authorization x A ITEM 602 REQUEST: Requesting the City Commission to consider the recommendation of the Board of Trustees regarding selection of Asset Investment Managers and a Custodial Bank for the City's Defined Benefit Pension Plan. PURPOSE: This agenda item is needed for the City Commission to consider the recommendation of the Board of Trustees regarding selection of Asset Investment Managers and a Custodial Bank for the City's Defined Benefit Pension Plan. CONSIDERATIONS: On September 11, 2006 the City Commission approved the issuance of an RFP for Investment Manager and Custodial Bank services to the City's Defined Benefit Pension Plan. The RFP was subsequently issued and responses were received, accordingly. During the period of January 2007 through March 2007, the Board of Trustees held meetings to interview prospective managers in the various asset classes as consistent with the Pension Plan's approved Investment Policy Statement. This Investment Policy Statement was approved by the City Commission on September 11, 2006. Asset classes are as follows: 1. Broad Growth Equity 2. Broad Value Equity 3. International Equity 4. Investment Grade Bonds 5. Treasury Inflation Protected Securities (TIPS) 6. Income Opportunity - Core Real Estate After interviews and consideration, the BOT voted to recommend the following Managers to the City Commission for consideration: Asset Class 1. Broad Growth Equity 2. Broad Value Equity 3. International Equity 4. Investment Grade Bonds 5. TIPS 6. Income Opportunity - Core Real Estate BOT Recommended Manager Lateef Asset Management Snow Capital Management Voyageur Galliard Capital Management Galliard Capital Management American Realty Additionally, the BOT voted to recommend the Following Custodial Bank to the City Commission for consideration: 1. Fifth Third Bank. Summary pages from Bogdahn Consulting's RFP Responders Analysis Report listing all firms selected for interview and consideration by the BOT are attached for review. FUNDING: Funding for the services of selected investment managers and custodial bank will come from the Pension Fund. A comparison of current fees to proposed new fees is as follows. Fees are stated as a percentage of assets under management. Plan assets as of 12/31/06 were used for comparison purposes. Current Asset Fee Plan Assets Est. Class (% Assets) 12/31/06 Annual Fee Trusco Capital Mgmt. * Combined / 0.75% < $10M + 14,538,000 95,421 Custody 0.45% > $lOM Proposed Asset Fee Plan Assets Est. Class (% Assets) 12/31/06 Annual Fee Lateef Growth Equity 1.00% 3,634,500 36,345 Snow Value Equity 0.70% 3,634,500 25,442 Feedom/Voyageur Int'! Equity 0.95% 3,343,740 8,359 Galliard Fixed Income 0.25% 726,900 1,090 Galliard TIPS 0.15% 2,180,700 20,717 American Realty Core Real Estate 1.10% 1,017,660 11 , 1 94 Fifth Third Custody 0.05% 14,538,000 7,269 Total 110,416 I Delta 14,995 * Trusco currently provides Investment Manager and Custodial Bank services to the Plan. RECOMMENDATION: Recommend the City Commission take the following actions: 1. Consider the recommendation of the Board of Trustees and approve the selection of the following asset managers, if deemed appropriate: Asset Class a. Broad Growth Equity b. Broad Value Equity c. International Equity d. Investment Grade Bonds e. TIPS f. Income Opportunity - Core Real Estate BOT Recommended Manager Lateef Asset Management Snow Capital Management FreedomN oyager Galliard Capital Management Galliard Capital Management American Realty 2. Consider the recommendation of the Board of Trustees and approve the selection of Fifth Third Bank as the Plan's Custodial Bank, if deemed appropriate. 3. Authorize the City Manager, Pension Attorney and City Attorney to facilitate the transfer to the newly approved investment managers and custodial bank and execute all necessary documents required for this transfer. A TT ACHMENTS: 1. Excerpts from minutes of BOT meetings of 1/31/07, 3/8/07, and 3/29/07. 2. Overview pages from Bogdahn Consulting's analysis of responders to the RFP. COMMISSION ACTION: ATTACHMENT 1 CITY OF WINTER SPRINGS, FLORIDA _MINUTES BOARD OF TRUSTEES REGULAR MEETING - JANUARY 31, 2007 (RESCHEDULED FROM JANUARY 30,2007) PAGE30F 12 .:..:. AGENDA NOTE: THE NEXT TWO AGENDA ITEMS WERE DISCUSSED NEXT, AS DOCUMENTED, FOLLOWED BY THE REST OF THE AGENDA IN THE ORDER AS NOTED. .:..:. CONSENT AGENDA CONSENT 400. Office Of The City Clerk Approval OfTbe November 16, 2006 Regular Meetin~ ~~nutes. No discussion. CONSENT 401. Office Of The City Clerk Approval Of The January 4, 2007 Special Meeting Minutes. This Agenda Item was not discussed. "MOVE FOR APPROVAL OF CONSENT AGENDA." MOTION BY VICE CHAIRMAN BLAKE. SECONDED BY CHAIRMAN SARDO. DISCUSSION. WITH CONSENSUS OF THE ADVISORY BOARD, THE MOTION WAS APPROVED. MOTION CARRIED. .:..:. AGENDA NOTE: THE FOLLOWING AGENDA ITEMS WERE DISCUSSED NEXT, AS DOCUMENTED, FOLLOWED BY THE REST OF THE AGENDA IN THE ORDER AS NOTED. .:..:. REGULAR AGENDA > REGULAR 302. General Services Department !nterviews ~r Prospecti:ve Investment Managers. Mr. David West, CF A, Bogdahn Consulting. LLC, 340 West Central Avenue, Suite 300, Winter Haven, Florida: commented on the length of each Presentation and stated, "The 'Growth Equity' line up, we have DG [Capital Management, Inc.], Lateef fAsset Management], and Renaissance [Investment Management]. c::::a ~ ~ <:::) ~ ~G ~ ~ .... u.. <C ~ c ~) ATTACHMENT 1 CITY OF WINTER SPRINGS. FLORIDA _MINUTES BOARD OF TRUSTEES REGULAR MEETING - JANUARY 31, 2007 (RESCHEDULED FROM JANUARY 30, 2007) PAGE40F 12 Lateef [Asset Management], as everyone has been made aware, has notified us that they will not have a Presenter. We regret that - there was a change in the firm policy, prior to our showing this Manager. We've worked with Lateef [Asset Management] successfully in a number of places. Tfie servjce- orientation has been very- positive. Again, we presented them - we thought - would be an excellent choice. TIrey did make a policy change. They will no longer physically service assets less than ten million dollars ($10'~OOO;O06:0()). We would like a minimum of servicing of once a year. We would certainly hope that a Presenter would be physically present to establish- a business." Mr. West continued, "Wey will honor the commitment that they were shown prior to - establishing - this new Policy. For this relationship and one (1) other relationship, where they had been previously chosen to be a finalist Manager, they will honor the less than ten million [dollar] ($10,000,000.00) commitment." Mr. C. Garrett Williams, DG Capital Management, Inc., 260 Franklin Street, Suite 1600, Boston, Massachusetts: commented on the history of the company and presented the 'Growth' strategy. Discussion. Mr. West asked, "Address - performance of 2000 and 1999. Can you give us a sense of the headwind and the tailwinds." Discussion. Advisory Board Member Vernon Rozelle, Jr. arrived at 5:40 p.m. Chairman Sardo stated, "I was looking at your clients and it had 'Ten (10) and Other' at the end of the year." Mr. Williams stated, "I will get back to you - on what those ten (10) are." Mr. West commented on the fee and stated, "At ninety (90) Basis Points? Vice Chairman Blake asked, "That is not ninety (90) Basis Points on the entire amount?" Mr. Williams answered, "Based on whatever-your asset level is." Next, discussion ensued regarding presenting an overview of Lateef Asset Management without a Representative being present. Tape liS ide B Mr. West gave a brief presentation on Lateef Asset Management and commented on the fee by stating..." I 00 Basis Points." 2 a::::a ~ :::-- c:,:') t=1C: ~ ~d :z: ~ l- LL <( ~ C 1lttA) ATTACHMENT 1 CITY OF WINTER SPRINGS, FLORIDA _ MINUTES BOARD OF TRUSTEES REGULAR MEETING - JANUARY 31, 2007 (RESCHEDULED FROM JANUARY 30,2007) PAGE 5 OF 12 Advisory Board Member Byron Giltz stated. "Do you have anything in writing from them on all of these changes they have made?" Mr. West stated, ''{ have an email correspondence. But, as far as an official Memorandum, we have not seen that yet." Discussion ensued regarding the process for approving a final Contract. Then, Mr. West continued regarding an official Memorandum, "An official Agreement, if you will, other than documenting it with email correspondence, no. We have worked with the firm. We believe the firm has a high level of integrity. For that reason, we - have every reason to believe that they would honor what they are suggesting." Advisory Board Member Giltz asked, "When we get - Contracts from - Investment Advisors, what are we going to do with them?" Mr. Smith stated, "We will - have our Attorney - review the contract before any signuturolrare affixed." Mr. James V. Wallerius Senior Vice President, Systematic Financial Management, 300 Frank West Burr Blvd, 7'h Floor, Teaneck, New Jersey: introduced himself and stated that he lives in Jacksonville. Ms. Jennifer C. Trowbridge, CFA Director afClient afServices, Renaissance Investment Management, The Baldwin Center, Suite 1200, 625 Eden Park Drive, Cincinnati, Ohio: spoke on the founding of the company and presented the financial strategies. Mr. West asked, "As far as product delivery, this process would be 'Separate'?" Mr. Wallerius stated, "Yes." Then, Mr. West asked, "As far as the fee - proposal seventy- five (75) [Basis Points] on the first five (5)?" Mr. Wallerius answered, "Yes." Board Member Giltz asked if Renaissance Investment Management has Liability Insurance. Mr. Wallerius stated, "Yes - I will verify." Regarding a 'Wrap Program', Mr. West asked, "You would be willing to work with - one (I), two (2), or three (3) various commission recapture Brokers?" Mr. Wallerius stated, "Yes." Tape 2/Side A Regarding Insurance, Mr. West noted, "We would certainly request with the Contract the appropriate attachments and insurance levels." Advisory Board Member Guy DeMaio stated, "Ongoing from year to year:' 3 ~ ~ ;;::::;- ~ c:x:: ~ e~ :z: ~ ..... LL. <( ~ C MS ATTACHMENT 1 CITY OF WINTER SPRINGS. FLORIDA _ MINUTES BOARD OF TRUSTEES REGULAR MEETING - JANUARY 31, 2007 (RESCHEDULED FROM JANUARY 30.2007) PAGE60F 12 Chainnan Sardo stated, "At this point, do we want to take a look at and have a Motion for a Nomination for a 'Broad Group' Candidate..." Mr. Smith added, "...Recommendation to the [City] Commission." Chainnan Sardo added, "We also have a recommendation on the Table to have a ranking." Vice Chainnan Blake said, "My ranking is Lateef [Asset Management], Renaissance [Investment Management], and DG [Capital Management, Inc.]. I actually have some distance between one (I) and two (2)." Board Member DeMaio stated, "Renaissance [Investment Management], Lateef [Asset Management], and DG [Capital Management, Inc.]." Board Member Rozelle stated, "Lateef [Asset Management], Renaissance [Investment Management], and DG [Capital Management, Inc.]." Board Member Giltz stated, "DG (Capital Management, Inc.] - Renaissance [Investment Management] - Lateef [Asset Management]." Chairman Sardo stated, ""'Lateef [Asset Management] - Renaissance [Investment Management] - and DG [Capital Management, Inc.]." Vice Chairman Blake stated, "Lateef" fJtS3er Miirragcmdkt] eight (8), Renaissance [Investment Management] ten (10), and DG [Capital Management, Inc.] twelve (12)." Chairman Sardo asked, "With the lowest number being correct, do I have a Motion?" "I MOVE WE RANK THEM, EIGHT (8), TEN (10), AND TWELVE (12) POINTS. LATEEF [ASSET MANAGEMENT] FIRST, RENAISSANCE [INVESTMENT MANAGEMENT] SECOND, AND DG [CAPITAL MANAGEMENT, INC.] THIRD, PURSUANT TO THE POINTS." MOTION BY VICE CHAIRMAN BLAKE. SECONDED BY ADVISORY BOARD MEMBER DeMAIO. DISCUSSION. WITH CONSENSUS OF THE ADVISORY BOARD, THE MOTION WAS APPROVED. MOTION CARRIED. Mr. Curtis L. Spears, Director, Public Funds, FTAM, Fifth Third Asset Management, 707 Grant Street, Suite 2000, MD A G TB2 0, Pittsburgh, Pennsylvania: gave a brief history of the company. Mr. Peter M Klein, CFA, Director, Mid Cap Value Strategies, FTAM, Fifth Third Asset Management, 600 Superior Avenue, East, MD A 6513C, Cleveland, Ohio: presented the firm's proposal. 4 ~~ ~ ~" ~ ~;: ~ .... LL <1: ~ c /WJ~ ATTACHMENT 1 CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - JANUARY 31, 2007 (RESCHEDULED FROM JANUARY 30. 2(07) PAGE 7 OF 12 Mr. Fred Johnston, Vice President, Institutional Trust Sales, Institutional Client Group, Fifth Third Bank, 200 E. Robinson Street, Suite 900, MD MBLE9B, Orlando, Florida: was introduced as a local member of the financial team. Ms. Kimberly Kutlenios, CRSP, Vice President, Senior Institutional Relationship Manager, Fifth Third Bank Investment Advisors, 200 East Robinson Street, 9th Floor. MD MBLE9B, Orlando, Florida: was introduced as a local member of the financial team. Discussion. Mr. West asked, "Delivery of product will be 'Separate'?" Mr. Klein answered, "Yes." Then Mr. West stated, "The fee - eighty (80) Basis Point fee quoted?" Mr. Spears remarked, "Yes. It is." Regarding Custodian Services, Mr. West stated, "Is there an opportunity to blend those services should they be selected and you be selected?" Mr. Spears answered, "Definitely, and give you a break." Mr. Johnston added, "Generally, what we do - we charge you our standard pricing and discount over the minimum." Then Mr. Johnston added, "I believe it would probably be somewhere in the three (3) Basis Points." Ms. Kutlenios commented, "I would handle all of the Custody work for you." Chairman Sardo called a Recess at 7:24 p.m. The Meeting was called back to Order by Chairman Sardo at 7:36p.m. Mr. Donald Curran. Senior Vice President, Oppenheimer Capital, J 345 Avenue of the Americas, New York, New York: presented the history and financial strategies of Oppenheimer Capital. Discussion. Tape 21Side B Further discussion. Mr. West asked, "The eighty-five (85) Basis Points again, confirming that." Mr. Curran stated, "That is the standard fee schedule. I will make sure that the fee - we offer you, if you choose us, would - match or would be at the lowest fee offered." Mr. Dave A. Mathews, Principal, Managing Director, Snow Capital Management, LP, 2100 Georgetowne Drive, Suite 400, Sewickley, Pennsylvania: presented his firm's financial strategies. Discussion. 5 br~ ~ ~ ~ ".." 18i.."it~ ~ ~ ~ l- LL. <( ~ C Ms ATTACHMENT 1 CITY OF WINTER SPRINGS. FLORIDA _MINUTES BOARD OF TRUSTEES REGULAR MEETING - JANUARY 31. 2007 (RESCHEDULED FROM JANUARY 30,2007) PAGE 8 OF 12 Mr. West said, "As far as fee, eighty (80) Basis Points?" Addressing Mr. West, Mr. Dave A. Mathews stated, "Understanding our relationships that we have with you, we can knock it down to seventy (70) [Basis Points]." Mr. Mathews added, "You saw our client list. There are a number of other Florida entities here." Furthermore, Mr. Mathews stated, "In my effort to come down and service those accounts, Dave [West] and Joe [Bogdahn] - to make it easier for me to come down from Pittsburgh, lined them up - all in a week. So, I will come down for a week." Discussion. Tape 3/Side A Chairman Sardo stated, "My ranking looks like; Snow [Capital Management], Fifth Third [Asset Management), and Oppenheimer [Capital)." Vice Chairman Blake stated, "I would concur [Snow Capital Management, Fifth Third Asset Management, and Oppenheimer Capital.]" Board Member DeMaio said, "I am going with Snow [Capital Management], Fifth [Third Asset Management], and Oppenheimer [Capital)." Board Member Giltz stated, "Fifth Third [Asset Management], Snow [Capital Management), and Oppenheimer [Capital]." Board Member Rozelle stated, "Fifth Third [Asset Management], Snow [Capital Management], and Oppenheimer [Capital)." Mr. Smith stated, "Snow [Capital Management) seven (7), Fifth Third [Asset Management] eight (8), and Oppenheimer [Capital] fifteen (15)." CHAIRMAN SARDO STATED, "DO I HAVE A MOTION TO RECOMMEND THESE NUMBERS TO THE [CITY] COMMISSION?" "SO MOVED - SNOW [CAPITAL MANAGEMENT], FIFTH THIRD [ASSET MANAGEMENT], AND OPPENHEIMER [CAPITAL]." MOTION BY VICE CHAIRMAN BLAKE. SECONDED BY ADVISORY BOARD MEMBER DeMAIO. DISCUSSION. 6 ~7~ ~ c:=- ~ ~G ~ l- LL. <( 0::: C ~) ATTACHMENT 1 CITY OF WINTER SPRINGS, FLORIDA _MINUTES BOARD OF TRUSTEES REGULAR MEETING - JANUARY 31. 2007 (RESCHEDULED FROM JANUARY 30,2007) PAGE 9 OF 12 VOTE: BOARD MEMBER ROZELLE: NAY BOARD MEMBER DeMAIO: AYE CBAJRMANSARDO: AYE BOARD MEMBER GIL TZ: NAY TICEC~BLAKE: AYE MOTION CARRIED. Board Member Giltz departed the Meeting at approximately 8:43 p.m. Ms. Carrie A. Cal/ahan, Senior Director, GaWard Capital Management, 800 LaSalle Avenue, Suite 2060, Minneapolis, Minnesota: presented a history of the finn and the financial proposal. Discussion. Brief discussion ensued regarding 'Co-Mingle' and 'Separate' and Ms. Callahan noted, "On the Co-mingle - twenty-five (25) Basis Points." Mr. West stated, "Giving the size of the mandate, if we would ask you to Manage an index like a fixed portfolio for us, could you do that, and what sort of fee arrangement should we expect?" Ms. Callahan stated, "Fifteen (15) on 'Tips' and -let us know." Mr. Thomas N. Tight /J, Regional Director, MBIA Asset Management Group, 301 East Pine Street, Suite 150, Orlando, Florida: commented on the history of the company and presented the financial strategies of company. Tape 3/Side B Mr. West asked, "It would be Separate. And, the fee?" Mr. Tight answered, "Twenty (20) Basis Points for the entire mandate." Furthermore, Mr. West stated, "At what cost would you run a 'Tips' portfolio, index?" Mr. Tight stated, "Would that be in addition, as part of the existing mandate..." Mr. West stated, "...We would be carving this out as a separate asset class..." Then, Mr. Tight answered, ".. . Absolutely . We do that for a number of other clients. We would be happy to do that." Mr. Tight added, "Being a fixed portfolio, we would charge a little bit less - fifteen (IS) Basis Points, somewhere around there." 7 ,::::a ~ ;:;;,:a.. c:::::>> ~ ~ ~..j ~ ;;;:;:;;;> l- LL. <( ~ C tM5 ATTACHMENT 1 CITY OF WINTER SPRINGS, FLORIDA _MINUTES BOARD OF TRUSTEES REGULAR MEETING-JANUARY 31, 2007 (RESCHEDULED FROM JANUARY 30,2007) PAGE 100F 12 With discussion regarding the Ranking, Vice Chairman Blake remarked, "I like - Galliard [Capital Management] a little bit better in their track record and history." Then, Chairman Sardo stated, "So, you would say right now, Galliard [Capital Management] one (1) and MBlA [Asset Management Group] a close second?" Vice Chairman Blake stated, "Yes." Chairman Sardo stated, "MBlA [Asset Management Group] sticks out to me because of their sophisticated, discipline approach to everything and how slIccessful they have been in that area." Board Member DeMaio said, "MBIA [Asset Management Group] and Galliard [Capital Management] ." Board Member Rozelle stated, "The return for Galliard [Capital Management] has been very strong. I would have to say Galliard [Capital Management] first. MBIA [Asset Management Group] second." Mr. West stated, "There is one (1) piece of flexibility that should probably be considered. MBIA [Asset Management Group] will provide a recustomized portfolio. I say that because we reviewed these Managers on the - aggregate general bond expertise. Should we want to give a different assignment - such as intermediate aggregate, which we had talked about and suggested, the Galliard [Capital Management] product, a co-mingled product - is the intermediate government credit, it is not the intermediate aggregate. It is a close fit, but not an exact fit." Mr. West added, "An intermediate term meaning one to ten (I -1 0) years." Mr. Smith asked, "Were there any opportunities for Custodial - with Galliard [Capital Management] through Wells Fargo?" Mr. West stated, "We have to look into that. I am not sure that Wells Fargo complies." Chairman Sardo said, "Based on Galliard's [Capital Management] performance, I am going to go over to that side." In addition, Chairman Sardo stated, "I decided to change my Vote to reflect Galliard [Capital Management] as my number one (1) choice based on the cost associated with the trades in the separate account of MBlA [Asset Management Group]. In addition, the rates of return of Galliard [Capital Management] are certainly much, more attractive percentage wise." CHAIRMAN SARDO STATED, "SO ALL SAID, WE ARE GOING TO RECOMMEND TO THE BOARD (CITY COMMISSION]. CAN WE HAVE A MOTION PLEASE?" "SO MOVED." MOTION BY VICE CHAIRMAN BLAKE. SECONDED BY ADVISORY BOARD MEMBER ROZELLE. DISCUSSION. 8 ,:::::a ~ ~ c::::> r:d ~: ~ :z: ~ l- LL. <C ~ c A\1S ATTACHMENT 1 CITY OF WINTER SPRINGS, FLORIDA _MINUTES BOARD OF TRUSTEES REGULAR MEETING-JANUARY 31, 2007 (RESCHEDULED FROM JANUARY 30,2007) PAGE II OF 12 CHAIRMAN SARDO SAID, "WHAT THE MOTION IS, IS TO RECOMMEND TO HAVE GALLIARD [CAPITAL MANAGEMENT] NUMBER ONE (1) AND MBIA [ASSET MANAGEMENT GROUP] NUMBER TWO (2)." VOTE: BOARD MEMBER DeMAIO: AYE CHAJRMANSARDO: AYE ~CEC~BLAKE: AYE BOARD MEMBER ROZELLE: AYE MOTION CARRIED. Mr. West stated, "Procedurally - we have a Pension Attorney who will handle the Manager Contracts. In this case, we will be happy to take direction to have the Managers direct their Contracts to Kevin [Smith) for distribution." After some discussion, Mr. West added, "We will have the Managers forward their Contracts to Kevin [Smith] for distribution for review." Mr. Smith stated, "We will put it through our normal process." "I MAKE A MOTION TO ALLOW THE CHAIRMAN TO SIGN OFF ON THE MINUTES FOR THE COMMISSION PACKET." MOTION BY ~CE CHAIRMAN BLAKE. SECONDED BY CHAIRMAN SARDO. DISCUSSION. WITH CONSENSUS, THE MOTION WAS APPROVED. MOTION CARRIED. Mr. West began by stating, "In the interest of - moving this forward, we would like to, as we did, prior to these interviews, we would like to bring forward Custody alternatives." Mr. West added, "Have Interviews. One of the potential candidates was here tonight." With discussion, Mr. West stated, "That did go out in the general RFP (Request for Proposal) in addition to the - International." Mr. West stated, "Our recommendation - at the next Meeting; review that grid from the RFP (Request for Proposal); International; Real Estate piece; and followup with Interviews." Chairman Sardo stated, "We do need to have him move on the International piece and that takes about thirty (30) days." Mr. West commented, "We could work on a tighter schedule." Then Mr. West added, "Before we pull the switch, we need to have signed Agreements from at least the Domestic Manager, the Custodian, and preferably the International Manager before we send out the Termination letter and transfer assets." Mr. Smith stated, "Before I take these to the [City] Commission, we would want to have all components prepared." Chairman Sardo said, "That means we need to expedite this decision for the International." 9 t:::I ~ :;::::;- <:::::lJ ~ e:::t-. ~r:: :2: ;;;;:;:>> .... LL <C ~ c NI6 ATTACHMENT 1 CITY OF WINTER SPRINGS, FLORIDA _MINUTES BOARD OF TRUSTEES REGULAR MEETING-JANUARY 31, 2007 (RESCHEDULED FROM JANUARY 30, 2007) PAGE 12 OF 12 Mr. West noted, "One of the three (3) partners - should be able to do that on the 21st..." Mr. West added, "...of February [2007]." Then, Mr. West stated, "We will not be interviewing on the 21sI (February)." With Consensus of the Board, the next Meeting is scheduledfor February 21, 2007 at 6:00 p.nt. INFORMATIONAL AGENDA INFORMA TlONAL 500. Not Used. 600. REPORTS No Reports were given. FUTURE AGENDA ITEMS None. ADJOURNMENT Chairman Sardo adjourned the Regular Meeting at 10:05 p.m. RESPECTFULLY SUBMI1TED: DEBBIE FRANKLIN DEPUTY CITY CLERK NOTE: These Minutes were approved at the ,2007 Board of Trustees Regular Meeting. 10 ==a ~ ~ c,::, ~ CL.. t::a-.. ~ ~ ~ I- u.. <( ~ o ~ ATTACHMENT 1 CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - MARCH 8, 2007 PAGE30F9 "I WOULD LIKE TO MAKE A MOTION THAT THE BOARD OF TRUSTEES RECOMMEND TO THE CITY COMMISSION OF WINTER SPRINGS, THE DOCUMENT JUST PRESENTED WITH THE ADDITIONAL LANGUAGE THAT WILL DETERMINE THAT THERE WILL BE A SINGLE TIME DETERMINATION OF DISABILITY AND THAT THE DEFINITION THAT WILL BE UTILIZED IS OUR CURRENT DISABILITY POLICY IN FORCE. IF NOT, THEN THE MOST RECENT DISABILTY POLICY THAT WAS IN FORCE, MOST RECENT - AND THAT THIS BOARD RECOMMENDS TO THE CITY COMMISSION OF THE CITY PAY FOR ONE HUNDRED PERCENT (100%) OF THE INCREMENTAL COST OF THIS." MOTION BY VICE CHAIRMAN BLAKE. SECONDED BY BOARD MEMBER ROZELLE. DISCUSSION. VOTE: VICE CHAIRMAN BLAKE: AYE BOARD MEMBER ROZELLE: AYE CHAIRMAN SARDO: AYE MOTION CARRIED. REGULAR ) 301. General Services Department Interviews Of Prospective International Equity Investment Managers. Mr. Nicholas Mavro, Vice President, State Street Global Advisors, One Lincoln Street, Boston, Massachusetts: pointed out, "We manage a lot of Pension assets; we have a very good, strong relationship with a number of Florida public clients." Continuing, Mr. Mavro stated, "As far with other things we bring to the table, obviously our size and our scope do bring a lot to the table. With the 1.7 trillion dollars that we manage, I think the fact that we are a little more comfortable with - international side - there's a lot that we can do and there's a lot that we can bring to bear in our own strategies, but for you, as a client." Discussion. Chairman Sardo commented, "You say determining points are - that differentiate you from the pack: number one (1), the amount of experience you have in public plans; number two (2), your R & D. And your third point?" Mr. Mavro replied, "The third point would be the consistency ofretums." With further discussion, Mr. Mavro explained, "For this mandate it would be eight (8) basis points - that would be on the co-mingled side." Tape 1/ Side B 11 ATTACHMENT 1 CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - MARCH 8, 2007 PAGE40F9 Discussion. Mr. John F. "Jack" Farland, CPPT, Managing Director, Voyageur Asset Management Inc., 2429 NE 12th Street, Ft. Lauderdale, Florida: explained, "We are now under the banner of Voyageur Asset Management [LLC], but they kept all of the Freedom employees. They kept the relationship with Bernie Horn (polaris Capital Management, President). As a matter of fact, re-signed a new five (5) year contract with Bernie Horn (Polaris Capital Management, President) so that the same sub-advisory relationship exists now. So for all practical purposes, it's a name change only. Everything else is exactly the same. They kept my office in Fort Lauderdale, they kept an office that we had western Massachusetts. As a matter fact, they kept the Freedom offices in Boston and the Voyageur [Asset Management, LLC] people have moved into the Freedom [Capital Management, LLC] offices now." Mr. Farland continued, "This was not a takeover of any kind. This was a strategic merger, if you will." Furthermore, Mr. Farland explained, "My job, and I'm not an analyst, I'm a marketing guy, and my job is to make sure that all of our clients are comfortable with us, like what we're doing, know what we're doing. I'm available to come to meetings whenever I'm summoned to come to meetings, etc." Discussion. Regarding Voyageur Asset Management, LLC clients, Board Member Rozelle asked, "Tell me what other groups in Florida?" Mr. Farland responded by saying, "All ofthe clients that Freedom Capital [Management, LLC] had in Florida have now become Voyageur [Capital Asset Management, LLC] clients. So we have St. Pete Beach Police, Fire, General Employees. We have Ft. Myers Fire, General Employees. We have Pompano Beach Police, Fire. We have Oania Beach Police, Fire." Discussion. Chairman Sardo asked, "What are the main key points that set you aside and differentiate you from the group, from the crowd?" Mr. Farland replied, "1 think our success is one (1) of the obvious points, but a couple of things that come to mind immediately, we have a product that has been proven for twenty-four (24) years." Mr. Farland continued, "But we have a product that's been proven for that long a period of time and 1 don't know of anybody else in the business that goes back that far with a product that has been successful ever since then. That to me sets us aside from everybody else. We also have a vested interest right here in this State and we have an office here. We don't have to have someone fly down from Boston or Chicago or wherever they may be coming from. You've got somebody who is within three (3) hours drive time." 12 r. ATTACHMENT 1 CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - MARCH 8, 2007 PAGE50F9 Mr. Farland said, "We have a commitment to Florida and as I've mentioned to you to the FPPT A (Florida Public Pension Trust Association) which we believe is a pretty good organization. And I think those two (2) things probably set us apart from most of the other people." Regarding Fees, Mr. Farland said, "It's a commingled fund. It's ninety-five (95) basis points and we pick up all expenses." Mr. West said, "So, we take the share of managing of those two (2) boxes that have been placed before us through this process. So, it would be a twenty-five percent (25%) maximum." Mr. Farland said, "That would maximum, but we don't even come close to twenty-five percent (25%). But that is the maximum." A brief Recess was held at 7:48 p.m. The Special Meeting came back to Order at 7:50 p.m. Mr. Robert S. Soraparu, Vice President, Nuveen Investments, Institutional Services group LLC, 333 West Wacker Drive, Chicago, Illinois: introduced himself saying, "I work in an institutional distribution capacity with Nuveen Investments. In that capacity we represent Tradewinds (NWQ Global Investors), which is our Global Equity Specialist out of Los Angeles, California." Referring to the list on page 2 of the Tradewinds NWQ Global Investments handout, Mr. Soraparu explained, "The reason we have listed here NWQ as well. - There's a cross ownership between Tradewinds and NWQ. They're both separate organizations. They do share the same space in Los Angeles, but for all intent and purposes, they will informally will bounce ideas off each other." Discussion. Tape 2/Sidc A In conclusion, Mr. Soraparu stated, "why Tradewinds (NWQ Global Investors), - why is this a firm that you should invest your money with? - The principals underlying our process, we feel, are repeatable. And that's something that you can see in our performance over time. We have fared extremely well. We have a team that's compromised of very talented people and we feel that we have the incentives in place in order to really retain these people over time." Mr. Farland continued, "We feel that our clients have been well served with the performance that we've been able to generate over time. By virtue of really avoiding - the downside and again, I think that's evidenced in the '2000' thru '2002' time period where we really were able to deliver value and what were somewhat treacherous markets." 13 ATTACHMENT 1 CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - MARCH 8, 2007 PAGE60F9 Regarding fees, Mr. Soraparu commented, "So, it's ninety-five (95) basis points on the first five million (5,000,000) which would essentially be the only break point that would matter in your case." Chairman Sardo said, "I would say Voyageur, State Street, and Tradewinds." Vice Chairman Blake said, "Voyageur, Tradewinds, State Street." Board Member Rozelle said, "I am Voyageur, Tradewinds, State Street." Vice Chairman Blake said, "Based on that, it would be unanimous then on the Voyageur, and Tradewinds is second with State Street as a close third." "VOYAGEUR FREEDOM POLARIS, PICK YOUR NAME, AS - BEING OUR TOP RECOMMENDATION, FOLLOWED SECOND BY TRADEWINDS. THAT'S MY MOTION." MOTION BY VICE CHAIRMAN BLAKE. SECONDED BY BOARDMEMBER ROZELLE. DISCUSSION. CHAIRMAN SARDO ASKED, "ALL IN FAVOR?" BOARD MEMBER ROZELLE SAID, "AYE." CHAIRMAN SARDO SAID, "AYE. OPPOSED?" NO OBJECTIONS WERE NOTED. WITH CONSENSUS OF THE BOARD, THE MOTION WAS APPROVED. MOTION CARRIED. REGULAR 302. General Services Department Interviews Of Prospective Custodial Banks. Mr. David West, CFA, Bogdahn Consulting, LLC, 340 West Central Avenue, Suite 300, Winter Haven, Florida: addressed the Board of Trustees. While the computer was being set up, Vice Chairman Blake suggested the City's logo replace the current Dell background. Mr. Richard D. Spurgeon, CFA, Senior Vice President & Chief Operating Officer, Salem Trust Company, 7411 Fullerton Street, Suite 110, Jacksonville, Florida: said, "We have, the last count, about 145 municipal plans of all different sizes." Chairman Sardo asked, "Do you have a representative list?" Mr. Spurgeon replied, "I thought that was included, but possibly not." Mr. Spurgeon continued, "Clients, we have - Oviedo Firefighters, Police; we have all three (3) Mount Dora plans now; Casselberry Police and Fire; Eustis Fire; Port Orange; Holy Hill; all three (3) Ormond Beach plans. And that's just in this area." 14 ATTACHMENT 1 CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - MARCH 8,2007 PAGE 7 OF9 Mr. Spurgeon said, "Brian (R. Brian Bizzell, Trust Officer and Relationship Manager) would be the primary Relationship Manager for your relationship. He would be assisted by two (2) ladies out of our Tampa office as well. Deborah Kochus (Trust Associate) and Leta Cheney (Vice President and Regional Manager) is the Regional Manager out of Tampa." Next, Mr. Spurgeon commented, "We have the benefits of a large institution and quite frankly, we have the ability to control our own destiny and make our own decisions much more easily than in a large corporate environment. So, we're able to react to client needs and provide the services that our clients want us to provide." Vice Chairman Blake asked, "Just to clarify, you will honor either your standard fee schedule or the eight thousand (8,000) fixed, whichever we prefer?" Mr. Spurgeon replied, "Whichever you prefer." Mr. Spurgeon said, "Once we take over Pension payments, we don't get complaints. And if we ever do, they're quickly resolved." Mr. Spurgeon said, "This is the standard log-on screen for our internet access; and we can sign up anybody for access as you want in your organization." Mr. Spurgeon continued, "This is only for the Portfolio itself. We don't have available today online inquiry capability for the - pensioners. That's something that's on my wish list, but as yet, we don't have that capability." With further comments, Mr. Spurgeon remarked, "Transactions available every day." Mr. Spurgeon replied, "It's updated daily. It's not a real time." Mr. R. Brian Bizzell, Trust Officer/Relationship Manager, Salem Trust Company, 7411 Fullerton Street, Suite 110, Jacksonville, Florida: addressed the Board. Tape 2JSide B Board Member Rozelle asked, "The 800 number that's available to the - retirees, what is the time frame that they call, which is the availability? Is it eight - five (8-5) [o'clock]?" Mr. Spurgeon replied, "It's not staffed twenty-four (24) hours. That 800 number rings to our offices so if it is not picked up by a live person during business hours, then it is recorded on a voicemail message and we respond the next day." Discussion. Mr. Fred Johnston, Vice President, Fifth Third Bank, Institutional Trust Sales" Institutional Client Group, 200 East Robinson Street, Suite 900, Orlando, Florida: gave an overview of the company. 15 ATTACHMENT 1 CITY OF WrNTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - MARCH 8, 2007 PAGE80F9 Ms. Kimberly Kutlenios, CRSP, Vice President, Fifth Third Bank, Senior Institutional Relationship Manager, 200 East Robinson Street, Suite 900, Orlando, Florida: addressed the Board of Trustees and said, "You can actually get your online statements instead of waiting for them to come in the mail, you can get them out there on the very first business of the month." Mr. West asked, "Just a fee confinnation question on the stiff funds now, Fifth Third manages their own stiff funds, instead of money market fund options. So, can you just toss on how that fee works here, it's not a revenue share, obviously; in this case, it's a direct product. Can you just communicate what that is?" Mr. Johnston replied, "On page 12 is the schedule of fees and the pricing is pretty simple. It's all-inclusive. We charge five (5) basis points on market value with a minimum fee of four thousand dollars ($4,000.00)." Ms. KutIenios said, "Whenever there's excess cash every month I can go in there and look at excess cash in the cash account and what we could do is based on the infonnation that Bogdahn (Consulting, LLC), gives me as far as how much money each Money Manager should get, we'll squeeze that into your money manager to let them know that they've got some cash that they can spend. That way you keep your cash at a minimum." Discussion Chainnan Sardo said, "In tenns of rankings, I have Fifth Third (Bank) as number one (1)." Vice Chainnan Blake commented, "I agree." "I WOULD LIKE TO MAKE A MOTION TO RECOMMEND, ONE MORE TIME, FIFTH THIRD (BANK)." MOTION BY CHAIRMAN SARDO. SECONDED BY VICE CHAIRMAN BLAKE. DISCUSSION. WITH CONSENSUS OF THE ADVISORY BOARD, THE MOTION WAS APPROVED. MOTION CARRIED. ) REGULAR 303. General Services Department Discussion And Selection Of Investment Manager Interviewees For Income Opportunity-Real Estate Component Of Investment Portfolio. Mr. West said, "We had - respectfully requested a deferral of that item. We need sufficient time for the public advertisement of the real estate income product to be out there. We've got a finite response date of the 16th of this month [March]. After which time, in very short order, we'll be in a position to present the finals for consideration for that product. So we respectfully request postponing that until the next Meeting." 16 ATTACHMENT 1 CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - MARCH 8, 2007 PAGE90F9 Discussion. Regarding the next Special Meeting, Mr. West said, "I think we are due a quarterly report just as the program, obviously, continues to be invested. So, we essentially would have two (2) items, are standard quarterly report - we can filter down three (3) finalists for presentation and again, not sure we've answered the question, do we necessarily want to have presenters here for this type of product. It may be a little more problematic to get a true finn representative here to speak to the product. In this case, it maybe more appropriate, more efficient to just look at the quantitative analysis and make a decision based on that. And we'll be trying to bring you, our focus is for core plus real estate, but again, frankly given the size of the mandate, a lot of minimums have been raised given the popularity of the asset class. Chairman Sardo asked, "If you feel comfortable with that you?" Vice Chairman Blake replied, "I do." Board Member Rozelle said, "Sure, I'm agreeable to that." As to the next Special Meeting, Chairman Sardo said, "6:30 [p.m.] on the 29th [March]." ADJOURNMENT Chairman Sardo adjourned the Special Meeting at 9:29 p.m. RESPECTFULLY SUBMJITED: DANIELLE HARKER. ASSISTANT TO THE CITY CLERK AND ANDREA LORENZO-LUACES, CMe CITY CLERK 17 ATTACHMENT 1 CITY OF WINTER SPRINGS, FLORIDA DRAFT MINUTES BOARD OF TRUSTEES SPECIAL MEETING - MARCH 29,2007 PAGEJOf7 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 Deportment Bogdahn Consulting To Present Income Opportunity Asset Class Managers For Board Consideration 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 firm 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. -==a ~ ===- c:::> QC: Q.... c:L. ~ r~ I- u.. <( ~ C 18 Aw1S ~!60{J7 ATTACHMENT 1 CITY OF WINTER SPRINGS, FLORIDA DRAFT MINUTES BO,\RD OF TRUSTEES SPECIAL MEETING - MARCH 29. 2007 PAGE 4 OF 7 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, I 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 I/Side 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 I would not want to use BlackRock [Inc.]." Board Member Rozelle commented, "I agree on the ranking." Board Member Rozelle continued, "So - definitely, I would rank American Realty Group, LLCJ." 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. OUf recommendation would be to the City Commission to go with American Realty [Group, LLC]. Do I have a Motion?" YICE CHAIRMAN BLAKE SAID, "SO MOYED." SECONDED BY BOARD MEMBER ROZELLE. DISCUSSION. 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. 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," 19 -===a ~ ;;:::a. c::::> -== ,::::a... ~~ ~ .... LI. e:( ~ C /wIS Lf/61/07 ATTACHMENT 1 CITY OF WINTER SPRINGS. FLORIDA DRAFT MINUTES BOARD OF TRUSTEES SPECIAL MEETING - MARCH 29. 2007 PAGESOF7 Vice Chainnan 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 THINK WE ARE GOOD WITH THAT? SO BE IT." WITH CONSENSUS OF THE ADVISORY BOARD, THE MOTION WAS APPROVED. MOTION CARRIED. 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." Vice Chainnan 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." Mr. 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 Chainnan Blake commented, "I think it would be really appropriate to get that answered right away." Mr. Smith noted, "I will do that." Chainnan Sardo stated, "And just give us a timeline what you expect." 20 ,::::a ~ ;::::-. c::=- ~ ~G :z: ;:;:;;:J .... LI.. e:( ~ o AA~ If!ov!Ol ATTACHMENT 1 CITY OF WINTER SPRINGS. FLORIDA DRAFT MINUTES BOARD or TRUSTEES SPECIAL MEETING - MARCH 29, 2007 PAGE60F7 Furthermore, Mr. Smith remarked, "We will move forward with getting this item to the Commission on the 91h, 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 101h, [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 (I) day." Vice Chairman Blake asked, "The Custodial Agreement has gone to the Commission or has not?" Mr. Smith replied, "Has not." Further discussion. 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." F---~ ::==-- c::=> ~ ~G :z: ;;:;:J l- Ll- <( '" o 21 AND 4fOrfuJ ATTACHMENT 1 CITY OF WINTER SPRINGS, FLORIDA DRAFT MINUTES BOARD OF TRUSTEES SPECIAL MEETING - MARCH 29. 2007 PAGE 7 OF 7 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) tor 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. Continuing, Mr. West finished, "The very final 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) wiJI 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 SUBMmED: DANIELLE HARKER ASSIST ANT TO THE CITY CLERK NOTE: These Minutes were approved at the .2007 Board of Trustees Regular Meeting. fr~ ;;;::=- c=t g:: ~d ;z: ~ .... u. <C 0=: C AM S ~/o];-/rf7 22 :JIII~""'-"''''''''-'~-------- . '", City of Wi liter Springs Employees' Pension Plan "':' , ': ' Opportunistic Growth Equity Manager Fee Proposals/Product Delivery diA+;,\</; Argent Capital DG Capital Lateef Asset Management Renaissance Inwstment Mgmt Rigel Capital Sawgrass Asset Management $28,560.00, $34,000.00 $34,000.00 $25,500.00 $27,200.001 $34,000.001 Separate! Commingled Separate Separatei Separate Separate! , 0.6 B : 2.0 B 2.7 B 5.3 B 2.0 B ! 1.2 B 2 Bogdahn Consulting, LL~ ~ () I s:: m z -l N --....- - - -- - - - - - - - - - - - -- - . City of Winter Springs Employees' Pension Plan . "/!.< ~~l' I Fee for est. $3.4 Style Assets Firm Fee (% of assets) Million Mandate Product Type Firm Assets ($) ($) Opportunistic Value Equity Manager Fee Proposals/Product Delivery Dana In\eStment Advisors Fifth Third Asset _ Managemen!____ Mesirow Financialln..estment Mgmt -------_._-._~---<_. t Oppenheimer Capital : Snow Capital Management ------,. N 0.75%1 ,-:...._~,~~" 0.80%: -----f 1.00%: ~85~_l . 0.80%\ $25.500.001 Separate; $27.200.0C)! Separate: $34. 006: 601' Separatel $28-,906:00 ; Commingled! $27.200:00r - -. SeParate] 2.86, 2.8BiI! ~Q:~~f 23.06f 5:48il: 0.56 0.66 0.1 6 0.5 B 5.06 17 Bogd$ihn Consulting, LLo{r )> ~ )> () I s:: m z -i N - - - - j.......,..,..... J _>> ,I - ~>;;<OO/ll ,... ~==- ~ ;;,"'~ .- ;,...;,~ !!!!!!I .. ... ~ 71l!!!! !!!!!!I ... - ,o--.:.::.:,.:..:~~ Overview of Process In the table below, we have included the criteria used to initially screen the database in PSN/M-Search. Criteria Value # Firms # Products L~~~~!_~I~~~_____________________________________________LLIJ~E;:r~~~9..IJ~2_~_q~!~L________________________________________________________L____________~?~L__________________lJ.~i :SY Annualized Return 1>= -99.000 : 1921 5331 :---------------------------------------------------t----------------------------------------------------------------------------i------------------t-------------------------1 :Gross or Net of Fees : Gross l 178: 4861 .-----------------------------------------------------r----------------------------------------------------------------------,...---------------r----------------------, ~~~-~!'-~IJ:~~~~E;:!~-~p!~!~ ~~~9____________________~-!9~~q9J!------__------------------------___________________________!_______________!1~t--------------------~~-~! L~J!'_~~J_(~~~20_9!_!~!~~~!L~j!~1~_~~_~1~!~2~~~___LLQt~r~1!~Q~l._____________________________________________________________1______________1?~l.___________________~?_~! t~_~_E;:r9!~Jl1!~~!~~~_~~J~~_~_~~r~~!~______________i~ev~~~~~~_~~~~__________________________________________________________.l______________~Q3!t_____________________!~_~i ~~i~~~-----------------__--------------------------------~~-~~~~!~-~~_9!_~~Yi!~!2_!~~__~!~ ~o~~l~!~~~_~pl~_~_~~~~~9G_~~______J----------------~3!~-----------------------~-qi ~~~-~~~:~ar~~!.~p!~re~1!~9-----------------------~~~9~~~q--__________________________________________________________________~--------------~t-----------------------?-~! L~_~~~~1~_~_~_~y!~!!~~_1~~!~p~~_!~~_~~~~~Jl__________l~~~~~is!~_~~1~J~~j_~~_~9~Q_______________________________________________l________________~~l_______________________~_~! v.> After we applied the quantitative screens outlined in the table above, we determined whether the strategy was available, whether the Plan's proposed mandate size would meet the investment minimum set for each strategy, and what vehicle structure would be. Primarily due to the size of the investment allocation, the list was narrowed further. Next, we applied the grading methodology described in the back of the search report to narrow the list to the six firms listed in the table below. t . I . ., l I'.' I : :: Est. Fee for $1.8 M: : Firm Assets: Product Firm : Strategy Name : Fee Schedule: Mandate: Product Delivery: ($): Assets ($) f!!l_~~9~ _9lp'i~~ ~€I!1f1.Q~~~!11 f.'(?'f.:~_~!. ~.~).~1!11~~?1~~~~! ~g~!ty_ _... _ _... _... _ _ _ _ _ _ _ _ _ ~ _ _ _ _ _ _ _ _ _ _ 9~~?~Zo~ _ _ _ _ _ _ _ _ _ _ _ _ _ ~!! ~9.q.:. _ _ _.. _ _ _ _ ~~~'!1_i!:l~_I~J_ u _.. _ _. ~}_ ~-L - - - -. _ _ ~ ~~.~. . ~~Cq ~~~~!_~!!~~9~'!l_~Q!._~~~... _ _ _ _. __ _ ~ 00 _~!:l!~rI)9!~~Q~~~t!?!~!g _~g!l~o/... _ _ 00 _. __ _00_: _ 00 00 _ _ _ _ _~ ~~?~ j _ _ _ _ _.. _ _ _ _ _ _ ??!?~_q J. _ _ _. ~I!~~~ ~~!~91f:1}!:l~j_ ___ u_ - ~!:?_ ~.:....... _ g~~.~. i . ~~~~I'9..~C ~~CJ!1_C!~~ !-_~C;;____ _'_. _ _ _ __ _ _ _"" _ u.~I!l~~!!'?ti.~ry~! ~g~!ty_ _ _ n. _'" _ _ _ u u _ _ _ _.. i _ 00 ____. _ _9~~?~Zo j _ u _. _ _ _ _ _... ~ !l~ 9_Q L _ _ _ ~~l!~~ ~~1~?~..':':!!19J__ ____ _~ ~~.?_ ~L _. _ _ _ _1:~ _~. ~~9~ _ 00... u __. _ __ __. ___ _ no _. _ _.. ___ 00 _. _ _ _ .~1!11~~?1~~Q~~A1p_~~ _~~!~~ ~t!?!~y_ _ _ _ _ _ __l_ __ 00 _..._ g~~9~Zo j _ __00 n' _ _. _ _1 ~!19_Qj_ _ _. __. _ _ _ ~~~'!1.i!1~J~J. ___. ~ !?~_1_,9_ ~j_ _ _ ___. _~:!.~. . Tradewinds NWQ Global :Intemational Value Equity ADR , 0,90%: 16,200: Separate: 29.0 B: 2.7 B )> . W~~~;rth: H~~~~-r-8:vi~"~h- - - u -- - - -.. - -- -. urWHV -I~t~;;,;rti~~~i E~~~- - - - - - - - - - - - - - -. - T - - - - -- -- - - ;~oo%1- - - - - - - - - - - -- ;8~OOO r - - - 00 n 00 - --s~p:;;t~r'.. - - - - 8.0- sT- - - - - - - 3~9-B' ~ () I s:: m z ~ N 2 Bogdahn Consulting, LLC + - - ------------ ,~+ Fixed Income Manager Fee Proposals/Product Delivery .j:>. ourt CaPital Mgmt. . & MalZec. Inc:w . .,^_._.,,_'_N'''_''^__._~'' ."'" sset Mgmt. lIiard Capital MgmE i~!3IA~Ai"~~~glll!~".. .. !Pacific Income Ad\\sors. Inc. '~~~~S.~SS~(~~!: 0.25%1 'o.25o/~1 o. 400f01~f~t.1r' w 0.35%\ .--..-.. j. ..' 0.35%! $10,000.001 .--..-..-int $10.000.00. $16,000.001 $14;000:00 1 $14,000.001 .......... ~ 3.0BI .-.-'1 4.2B\ w~T~.~l 21.4 B1 ---.-! 58.3 B. .,. "1 4.3BI 1.2 at .!:~~j ~.1~] 1.0 BI .-....-.1 3.2 B! 0.0781 "O.ewB; 0.4 B' 31 Bogdahn Consulting, LL~ )> ~ () I ~ m z -I N Search Overview As a part of our search for a "core" real estate manager, Bogdahn Consulting posted the following announcement on Public Pensions Online: The City of Winter SprinQs Employees Retirement System (Florida) RFP The City of Winter Springs Employees Retirement System (Florida)' is searching for a institutional, managed direct Real Estate product to fill a mandate totaling approximately $1 million. Response inquiries should be addressed to Bogdahn Consulting, LLC. Attention: Rob little (robl@bogdahnconsulting.com). Completed responses should be received by close of business March 16,2007. Four firms responded to announcement. Only two of the firms (American Realty and Intercontinental Real Estate Corporation) proposed a direct-investment, core real estate strategy; however, Intercontinental's U.S. Real Estate Investment Fund's (US REIF) inception date was July 2006, it only has two assets, and does not have any performance history. BCOM, Inc. and Naples Asset Management Company, LLC also responded to the RFP, but each firm proposed a mezzanine loan (mortgage) strategy and BCOM also proposed a "developmental" real estate strategy, which are not what we are recommending at this time. In addition to posting the search, Bogdahn also screened the PSN REIT/Real Estate Universe for strategies that would 01 meet the requirements of the proposed mandate. As of 12/31/06, there were only 17 core, non-REIT real estate strategies in the universe that consisted of 109 investment products. American Realty's core product was in the database. Based on our review of the 17 products in the universe, ASB Capital Management was the only firm that did not respond to the RFP that would accept the Plan's $1 million mandate size. BlackRock did not populate the Granite Property Fund in the PSN universe, but we knew they had a direct-investment, core real estate strategy and they acknowledged they would accept a $1 million mandate. . ., I I I' I _~~_~~~!!!3~~~~______________________t________________1~~S!~1----------__-_--~)-!lQ~Q~Q~t-------------~-11Q9-Q1Q9-Qi----------------~~!~~?!~-~~-~----------------l I : I I : )> _~~!!~!!e!~L~!!~~~~~~!lt__________JL._______________1~?~~1________________~j_~1~~Q~Q!>JL.____________~_11Q9_Q1Q9_Ql________~e~~~!!~~_~~_~?!!~_JC~~!________j ~)> . . .. . I I t I I I : :: I () .~!~~~~~~____________________________JL________________1~~~~1________________~J_!lQ~Q~Q9JL_____________~_11Q9_QlQ~Qi__~JP.~!!~!!~~_~~_~~L~9!~!!~!~~!~~~L~__1 ~ m z -l N Bogdahn Consulting, LLC.. + 2 INSTITUTIONAL CUSTODY SERVICES ,"P. W}t"\t~ - 5/3rd Bank Bank of New York Fiduciary Trust Salem Trust Service Schedule: Annual Administration Fee (based on percent of assets) Annual Minimum Fee Money Market Fee *(Revenue share expected 0-25 b.p.) Services Included: Accounting & Reporting Web Based On-Line - Daily Web Based On-Line - Monthly Statement Domestic Depository Settlements & ADRs Mutual Fund Settlements Physical Settlements Future/Option Settlements Principal Paydowns 0> Lump Sum Distribution Expense Checks Money Transactions (outbound wire) Periodic Benefit Payments Pre aration and mailin of Form 1099 0.0005 $4,000 0.004 0.000325 $3,500 yes* 0.00058 $5,000 0.0025 0.0004 $3,500 yes* $10jtransaction $15 each $10 each $10 each $3 eachjmonth Bogdahn Consulting, LL~ )> -l );! () I s: m z -l N