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HomeMy WebLinkAbout2014 02 11 Consent 300 Unapproved Minutes from the December 5, 2013 Regular Meeting CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING DECEMBER 5, 2013 (RESCHEDULED FROM NOVEMBER 12, 2013) CALL TO ORDER qt.` The Regular Meeting of Thursday, December 5, 2013 (Rescheduled from November 12, 2013) of the Board of Trustees was called to Order by Chairperson Watkins at 5:33 p.m. in the Commission Chambers of the Municipal Building (City Hall, 1126 East State Road 434, Winter Springs, Florida 32708). Roll Call: Chairperson Barbara Watkins, present Vice-Chairperson Frank Mundo, present Board Member Shelly Burlon, present Board Member Brian Fricke,present Board Member Vincent Giannoni,present Assistant to the City Clerk Sean Beaudet, present A moment of silence was followed by the Pledge of Allegiance. Chairperson Barbara Watkins noted that Agenda Item Regular "602" would be the first Regular Agenda Item to be presented. AWARDS AND PRESENTATIONS AWARDS AND PRESENTATIONS 100. Not Used INFORMATIONAL AGENDA INFORMATIONAL 200. Finance And Administrative Services Department Providing A Summary Of The Pension-Related Expenditures For The Year Ended September 2013. Mr. Shawn Boyle, Director, Finance and Administrative Services Department presented a summary and offered to answer any questions about the expenditures. CITY OF WINTER SPRINGS,FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING-DECEMBER 5,2013 "" (RESCHEDULED FROM NOVEMBER 12,2013) PAGE 2 OF 9 Comparing the 2012 and 2013 expenditures, Chairperson Watkins inquired as to why C"0 "The expenses in 2013 were almost seventy-one thousand dollars ($71,000.00) less than the year before." Mr. Boyle explained, "That spike was really due to the Commission charging Kevin (Smith, City Manager) and I with evaluating the entire Pension". Mr. alet Boyle added that the billing was for the Pension Plan changes around 2010-2011. Further comments. PUBLIC INPUT Chairperson Watkins opened "Public Input". No one spoke. Chairperson Watkins closed "Public Input". CONSENT AGENDA CONSENT 300. Office Of The City Clerk Requesting The Board of Trustees Consider And Approve The August 13, 2013 Board Of Trustees Regular Meeting Minutes. "I MAKE A MOTION TO APPROVE THE (AUGUST 13, 2013) MINUTES." MOTION BY CHAIRPERSON WATKINS. SECONDED BY BOARD MEMBER BURLON. DISCUSSION. VOTE: CHAIRPERSON WATKINS: AYE VICE-CHAIRPERSON MUNDO: AYE BOARD MEMBER GIANNONI: AYE BOARD MEMBER FRICKE: AYE BOARD MEMBER BURLON: AYE MOTION CARRIED. 400. REPORTS No Reports were given. CITY OF WINTER SPRINGS,FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING—DECEMBER 5,2013 (RESCHEDULED FROM NOVEMBER 12,2013) p-.�,� PAGE 3 OF 9 �i iN PUBLIC HEARINGS AGENDA PUBLIC HEARINGS 500. Not Used wiecil ❖❖ AGENDA NOTE: THE FOLLOWING REGULAR AGENDA ITEMS WERE DISCUSSED IN THE ORDER DOCUMENTED. •• REGULAR AGENDA REGULAR 602. Finance And Administration Services Department Presentation And Acceptance Of The 2012 Actuarial Evaluation. Mr. Larry Wilson, A.S.A., Senior Consultant and Actuary, Gabriel, Roeder & Smith Company (GRS), One East Broward Boulevard, Suite 505, Fort Lauderdale, Florida: began the discussion on this Agenda Item and noted that for the year, employee contributions were up; there was an "Actuarial Loss due to an Investment Return less than our assumption on a Smooth Value"; and that "the Fund did well" with a nineteen and a half percent (19.5%)return. Further comments. Next, Mr. Wilson covered the Actuarial Loss in greater detail and said, "We are going to fund that over the thirty (30) year period and we will see that increase the contribution about eighty-eight thousand [dollars] ($88,000.00)." Mr. Wilson also noted that "Next year, based on the information [McDirmit] Davis [and Company, LLC] provided, we have a very good return. Based upon that return, we would expect that next year, if we maintain the smoothing, that the investment portion will be a gain next year." Board Member Shelly Burlon inquired, "How many years are you doing the smoothing?" Mr. Wilson replied, "Five (5) years" and referenced the bad economy in 2008 and the results it had on investments. Other items covered were employee turnover rate in relation to the Pension Plan; receipts and disbursements; and that the Plan has a positive cash flow in order to make contributions to account for the unfunded accrued liability. Much discussion ensued on Investment Return Assumptions; a pay down of the accrued liability; and the level of risk the City might be comfortable with utilizing various contribution investments. Board Member Vincent Giannoni departed the Meeting at 6:21 p.m. Tape 1/Side B CITY OF WINTER SPRINGS,FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING-DECEMBER 5,2013 (RESCHEDULED FROM NOVEMBER 12,2013) PAGE 4 OF 9 Board Member Burlon asked, "What determines the percentage that the County pays in 4==0 contributions?" Mr. Boyle responded, "We signed a contract a while back. That is determined by the greater of the City's required funding ratio or FRS (Florida Retirement System). So, if FRS (Florida Retirement System) is twenty and ours is nineteen, we'll get the twenty. If ours goes to twenty-five, we're only going to get the twenty. That is the situation right now. The FRS (Florida Retirement System) rate is substantially lower than the current City requirement. So, we are now subsidizing the County Fire Department to the tune of about a hundred thousand dollars ($100,000.00) a year because they are not paying enough into the system. So, the City is making up the difference." Additional comments continued. Mr. Wilson referenced the funding schedule on page 18 of the report and noted that there will be new accounting standards being required by the State of Florida and that the current standards will no longer be utilized. Vice-Chairperson Frank Mundo stated, "This plan was at seventy-seven percent (77%) funding at the end of'07 and it is down at sixty- one now? So, from '07 to '08 it went down a lot. Was that all a decline in the asset base, investment performance?" Mr. Boyle noted, "One of the biggest things is that we hired Larry's (Wilson) firm to come in. The old Actuary was using outdated assumptions and I don't think the numbers that they gave us were very accurate. There was another move. The City retroactively applied benefits to employees that were here. I think there is a chart in the back that shows you where the unfunded liability, how it develops." Mr. Wilson added that it is explained further on the last page of the report. Discussion ensued on the anticipated completion time of the 2013 Actuarial Evaluation, which Mr. Wilson remarked could be expected sixty (60) days after receipt of all data needed to complete the Actuarial Evaluation. Also, that once the Board of Trustees approves the Actuarial Evaluation, it must be submitted for approval to the State of Florida within ninety(90) days. "I MAKE A MOTION THAT WE APPROVE THE EVALUATION AS PRESENTED." MOTION BY CHAIRPERSON WATKINS. SECONDED BY VICE-CHAIRPERSON MUNDO. DISCUSSION. VOTE: BOARD MEMBER FRICKE: AYE BOARD MEMBER BURLON: AYE CHAIRPERSON WATKINS: AYE VICE-CHAIRPERSON MUNDO: AYE MOTION CARRIED. CITY OF WINTER SPRINGS,FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING—DECEMBER 5,2013 (RESCHEDULED FROM NOVEMBER 12,2013) PAGE 5 OF 9 0— Related to Board Member Burlon's previous questions about the new accounting required by the State of Florida, Mr. Wilson pointed out, "When we do our 10/1/13 Report, we are recommending we include that in the report. Some of the changes that are required under GASB (Governmental Accounting Standards Board), it is going to Nisez be a little tougher. The accounting is going to look less favorable to what is currently on the City's books." Mr. Wilson covered in greater detail some specific changes, including f--.- active employees versus inactive employees; mortality rates; and liabilities. REGULAR 600. Finance And Administration Services Department Requesting The Board of Trustees Receive From The Bogdahn Group, The Year Ending September 2013-Investment Return Report,And To Enter Into Discussion. Mr. Dave West, Senior Consultant, The Bogdahn Group, 4901 Vineland Road, Suite 600, Orlando, Florida: presented this Agenda Item and commented that the Pension Plan had done very well, that the Policy was up fifteen percent (15%), and was in the top six percent (6%) when measured against other similar Pension Plans. Mr. West then explained the reason for the great performance of the plan for the quarter was a larger investment in real estate and the recently agreed to change from Active to Passive Managers on equities. Much discussion ensued about the performance of many of the funds listed on pages 21 and 22 of the Investment Return Report, and also the Cash Flow as shown on page 20 of the Investment Return Report. Vice-Chairperson Mundo asked, "The management fees for equity in here are a hundred thousand [dollars] ($100,000.00), from what?" Mr. West replied, "Those are the remaining, residual fees from Dalton (Investments LLC) and Lateef (Investment Management). This will be the last quarter that we see any fees coming out from those (Active) Managers." Further discussion. Tape 2/Side A Next, the allocation of excess funds was addressed. Vice-Chairperson Mundo inquired to which investments excess cash would be channeled to. Mr. West said "Under the new letter we put together, we set up basically a sixty/forty(60/40) allocation direction for the custodian to allocate between the Vanguard Equity Index Fund and we chose to use the Templeton Global Bond Fund as our rebalancing agent. The reasons for that are two (2) fold. Number one (1), we would encourage additional diversification away from Domestic Fixed Income. Number; two (2), from a logistical standpoint, the Galliard Fund is a collective fund and they strike a unit value at month end. So, a monthly liquidity window. So from a practical standpoint, we can't move funds in and out until around the third or fourth business day of that fund". Mr. West further noted there were no transaction costs associated by doing so. CITY OF WINTER SPRINGS,FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING-DECEMBER 5,2013 (RESCHEDULED FROM NOVEMBER 12,2013) PAGE 6 OF 9 With additional discussion on fund allocations, Mr. West recommended, "From our perspective, we would not be opposed in any way, shape, or form of allocating additional money to the Real Estate Managers. Of the two (2), Intercontinental (Real Estate) is in the best position right now having recently made property acquisitions." Mr. West .me=ra believed around five hundred thousand dollars ($500,000.00) of seven hundred twenty- nine thousand [dollars] ($729,000.00) could be allocated, while maintaining the "Working cash balance in the portfolio." Vice-Chairperson Mundo asked if that is a direction that could be made by the Board of Trustees. Mr. West said "We would need a Motion and approval of the recommendation. Then we could go ahead put the direction together and get it off to Fifth Third (Bank) and they will take care of the allocation for us." Further discussion. Mr. West suggested that the Board of Trustees "Accept the recommendation from The Bogdahn Group to rebalance excess R&D reserves to the Real Estate Portfolio, funding Intercontinental Real Estate." "I WOULD MAKE THAT MOTION." MOTION BY VICE-CHAIRPERSON MUNDO. SECONDED BY CHAIRPERSON WATKINS. DISCUSSION. VOTE: VICE-CHAIRPERSON MUNDO: AYE BOARD MEMBER FRICKE: AYE BOARD MEMBER BURLON: AYE CHAIRPERSON WATKINS: AYE MOTION CARRIED. Chairperson Watkins asked about the source of the excess funds. Mr. West explained that the transmittal letter had to be redone, as it had involved the terminated Managers. Also, a larger contribution had occurred for the quarter. With further comments, Mr. Boyle added that the excess funds, "Was an intentional contribution by the City to increase funding levels for 2013. That was intentional." Further, Mr. West went over the content and recipient of the transmittal letter. Mr. Boyle added that if the Board of Trustees was satisfied with the amended transmittal letter, then it could be approved as an Administrative Order, pursuant to the Investment Policy Administrative Guidelines. "I MOTION THAT WE APPROVE YOUR LETTER." MOTION BY VICE- CHAIRPERSON MUNDO. SECONDED BY BOARD MEMBER FRICKE. DISCUSSION. CITY OF WINTER SPRINGS,FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING-DECEMBER 5,2013 (RESCHEDULED FROM NOVEMBER 12,2013) PAGE 7 OF 9 trim VOTE: BOARD MEMBER FRICKE: AYE BOARD MEMBER BURLON: AYE CHAIRPERSON WATKINS: AYE VICE-CHAIRPERSON MUNDO: AYE MOTION CARRIED. Vice-Chairperson Mundo referenced `Alternative Investments' on page 18 of the performance report and inquired "What is in that asset class? And if we wanted to look at Alternative Investments, what would those be?" Further comments. Replying, Mr. West noted that, "The most common asset in there would be hedge funds. That would include certain private equity offerings. It would also include alternative fixed income, which could include leveraged loans, bank loans." Further discussion ensued on different funds in Alternative Investments; if the Investment Policy Guidelines would allow involvement in hedge funds; the fact that other Pension Plans administered by the Bogdahn Group were using Alternative Investments; and if Alternative Investments were ever discussed with the Board of Trustees. Mr. West explained that in the past with the Board of Trustees, "There was understandably, a reluctance to go down in credit quality to participate in some of these other investment vehicles." Board Member Brian Fricke asked, "Does our Investment Policy allow us to invest in Inverse Funds?" Mr. West answered, "If we participated in a pooled fund, that would be allowed. From our perspective, we're more than happy to revisit the ideas that were presented, along with some additional ideas that we're putting forth." REGULAR 601. Finance And Administration Services Department Requesting The Board of Trustees Receive A Presentation From The Bogdahn Group On Floating Rate Securities,And To Enter Into Discussion. Mr. West presented this Agenda Item and explained, "Floating Rate Securities is the coupon. It is usually a short liability asset. We're not going to see depreciation. The down side to the vehicles that we put together in your first report is that they are all high quality. So,there's a huge give in yield in going into these funds." Further comments. Next, Mr. West noted, "When we did this, we looked for the best options out there from an investment grid perspective. In our opinion, the yield give is so substantial that we really don't benefit from allocating funds this way." Much discussion. Board Member Burlon and Board Member Fricke asked for more information on Alternative Investments. CITY OF WINTER SPRINGS,FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING-DECEMBER 5,2013 (RESCHEDULED FROM NOVEMBER 12,2013) ,,��rrrrssrr�� PAGE 8 OF 9 M� r Discussion ensued on having the managers of the various Alternative Investments . conduct presentations to the Board of Trustees for their consideration. Also proposed was the possibility of additional meetings to hear the presentations. Mr. Boyle offered the option of Special Meetings; said "We can move as fast as you all want to move"; and noted that other managers had appeared before the Board of Trustees in the past. r Tape 2/Side B Further, Mr. West explained, "Each of these products vetted out is going to be unique. So, what I would be doing is going through our list— even a five percent (5%) allocation here, as far as dollars — a lot of the products we won't make the minimums. Then, I've got to go back and get with my research group on each of these product offerings. Some I believe will be viable options." Further discussion on the timeframe to gather the information. Lastly, Mr. West noted "We'll put that together. I'll do my best to get it circulated electronically in advance." Vice-Chairperson Mundo inquired, "I trust that anything you give us will still be full disclosure on fees? I know a lot of these products are not cheap." Mr. West replied"Yes,that's part of our process. Absolutely." REGULAR 603. Finance And Administration Services Department The Bogdahn Group Requesting The Board of Trustees To Review The Contract And Fees for Investment Services,And To Enter Into Discussion. With a review of the contract, Mr. West explained "We basically deferred our request for any Fee increase. Normally our contract runs with a three (3) year Fee guarantee. Given the trials and tribulations and what was going on with the cost to the Pension system, we deferred that. Our proposal — we are respectfully requesting consideration of that Fee increase. We would then apply a fresh, new three(3) year guarantee for that Fee." Further comments followed on the current Fee and the proposed increase. Mr. West stated "We've been at eighteen [thousand dollars] ($18,000.00). We've been operating below our minimum." Board Member Fricke inquired, "What is your minimum?" Mr. West answered, "Twenty-five [thousand dollars] ($25,000.00)." Discussion. Mr. West further explained that the request is to increase the annual rate to twenty-five thousand dollars ($25,000.00); that the Bogdahn Group had been operating under their minimum contract; and that the original contract guidelines were still in effect. CITY OF WINTER SPRINGS,FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING—DECEMBER 5,2013 (RESCHEDULED FROM NOVEMBER 12,2013) PAGE9OF9 � . "I MAKE A MOTION THAT WE APPROVE (THE RATE INCREASE)." MOTION BY BOARD MEMBER BURLON. SECONDED BY VICE- CHAIRPERSON MUNDO. DISCUSSION. aritc VOTE: BOARD MEMBER BURLON: AYE CHAIRPERSON WATKINS: AYE VICE-CHAIRPERSON MUNDO: AYE BOARD MEMBER FRICKE: AYE MOTION CARRIED. PUBLIC INPUT Chairperson Watkins opened "Public Input". No one addressed the Board of Trustees. Chairperson Watkins closed "Public Input". ADJOURNMENT Chairperson Watkins adjourned the Regular Meeting at 8:03 p.m. RESPECTFULLY SUBMITTED: SEAN BEAUDET ASSISTANT TO THE CITY CLERK NOTE: These Minutes were Approved at the ,2014 Board of Trustees Regular Meeting.