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HomeMy WebLinkAboutMinutes Police Pension 031721Palm Beach Gardens Police Officers' Pension Fund Minutes of the Meeting Held: March 17, 2021 1. Chair Jay Spencer called the regular Quarterly Meeting of the Board of Trustees of the City of Palm Beach Gardens Police Officers' Pension Fund to order at 2:02 PM in the Council Chambers and called roll. Those persons present included: TRUSTEES PRESENT Jay Spencer, Chairman Brad Seidensticker, Secretary Allan Owen, Trustee Marc Glass, Trustee Greg Mull, Trustee Audit (Brian Liffick) OTHERS PRESENT Scott Baur, Alison Lichter & A.C. Lovingood (Resource Centers) Bonni Jensen (Klausner Kaufman Jensen & Levinson) John McCann, Consultant (AndCo Consulting) Steve Stack, Investment Manager (Highland Capital) Brian Liffick, Auditor (Cherry Bekaert & Holland) Auditor Brian Liffick appeared before the Board to present the Audited Financial Statement for the period ending September 30, 2020. Mr. Liffick started his presentation by reviewing the required communications section, noting that there is an unmodified, clean opinion. The audit found no material weaknesses and there are no significant deficiencies reported. Mr. Liffick then informed the Board that his firm noticed two investments within Highland Capital that were rated Baa, which is below the allowable rating as stated in the Investment Policy Statement. Trustee Allan Owens asked for clarification of the investment ratings, which, Steven Stack with Highland Capital reviewed in detail. Mr. Stack informed the Board that there are several options that can be adopted moving forward, which include, changing the Investment Policy Statement to include all the investment rating companies, allowing Baa rated Bonds, or sell the Baa rated Bonds. Mr. Liffick then reviewed the financial highlights with the Board in detail, noting that the Plan's net position increased by $6,124,149 or 6.2% during 2020, primarily due to contributions and investment income. For the year ending September 30, 2020, the Plan's net position was 86.2% of the total pension liability of $121,300,726. Mr. Liffick concluded his presentation by stating that the Plan has a strong funded ratio of 86.12%. Marc Glass made a motion to approve the Audited Financial Statement for the Year ending September 30, 2020, as presented. The motion received a second from Allan Owens, approved by the Board 5-0. Greg Mull made a motion to approve the Cherry Bekaert Management Representation Letter as presented. The motion received a second from Brad Seidensticker, approved by the Board 5-0. The Board then discussed Bond Ratings and the idea of changing the Investment Policy Statement in detail with Steven Stack noting that the Plan lost no money on the Bonds with the Baa rating along with the reasons why those Bonds' ratings went down. The Plan's Investment Monitor John McCann stated that he has nothing against the Plan investing in BBB rated Bonds. Steve Stack noted that other Plans have 5% max in BBB rated Bonds and it was noted that it may be late to jump into the BBB Bond Markets. Trustee Brad Seidensticker stated that he would like Fitch, S&P, and Moodys included in the Investment Policy Statement and does not want to go below an A rating. Brad Seidensticker made a motion to update the Investment Policy Statement to include all major rating agencies. The motion received a second from Allan Owens, approved by the Board 5-0. Marc Glass made a motion to allow Chairman Jay Spencer to sign the updated Investment Policy Statement In- between Board Meetings. The motion received a second from Brad Seidensticker, approved by the Board 5-0. Investment Manager (Steve Stack, Highland Capital) Steven Stack with Highland Capital started his presentation by reviewing the performance returns of the fund with the Board. The Highland Capital Growth Fund for the Quarter ending December 31, 2020 earned 11.02% compared to the Russell 1000 Growth Index, the Highland Capital Fixed Income Fund earned 0.76% for the quarter and the Highland Capital Fixed Income 1-3 Year Treasury Fund earned 0.08%. Mr. Stack when on to review the top then holding in each fund with the Board, noting the investment's weight and returns, noting that as discretionary spending increases, the portfolios will respond in a positive manner. Mr. Stack concluded his presentation with the Board by stating that the portfolio is positioned in a good spot with how the markets are reacting. Trustee Brad Seidensticker inquired on how the Federal Reserve's decision to hold interest rate hikes until 2023 will affect the bond markets. Mr. Stack stated that he would bring a bond expert to the next Board Meeting to answer that question in greater detail. Investment Consultant (John McCann. AnclCo John McCann started his presentation by informing the Board that as of December 31, 2020, the Plan had a total of $117,929,999 in investments. For the quarter ending December 31, 2020, the returns were 10.99% compared to the benchmark of 10.87. The One -Year trailing returns were 13.06% compared to the benchmark of 13.39%, the Three -Year trailing returns were 9.12% compared to the benchmark of 9.74%. The Five -Year returns were 10.46%, compared to the benchmark rate of 10.48%, and since inception the Plan has a 7.93% net return on investments. Mr. McCann then reviewed the individual managers performance with the Board, pointing out that American Realty has a return of 1.14% for the quarter, stating that this return was not bad considering how the Pandemic has impacted the Real Estate Markets. Mr. McCann informed the Board that property values have decreased; however, rents for the portfolio are still at 90-96%, which is good, The American Realty Fund expects a 3-5% return on the income side this year. As of February 28, 2021, the Plan's value was at $120,000,000 with a Fiscal -Year -To -Date return of 14.02%, and Mr. McCann was pleased to inform the Board that as of March 12, 2021, the Plan is at $123,000,000 and the Fiscal -Year -To -Date return is at 16.5%. With how the markets are doing, Mr. McCann stated that he believes that this will be a good year with how the economy is bouncing back. Mr. McCann then gave the Board an update on the American Realty Strategic Value Fund. Mr. McCann stated that American Realty believes that they will call $2 million during the third quarter and IFM is making two acquisitions of $4.5-$6 billion in Spanish Utilities and that he expects the capital call to come soon. Mr. McCann then informed the Board that American Realty's asset allocation is at 8% and inquired if $1.5 million or $5 million should be placed into the portfolio. The Board and Mr. McCann has a detailed conversation regarding the real estate markets and the impacts that the COVID-19 Pandemic has had on the investment returns. This resulting in the Board requesting to have Richelle Cook attend the next Board Meeting to give an update on the fund. Attornev Report (Bonni Jensen. Klausner Kaufman Jensen & Levinson) Attorney Bonni Jensen started her presentation by giving the Board an update on the City's stance with regards to the Board Meetings moving forward. The City wants all meetings moving forward to be in person so that the recordings of these meetings can be done properly. Mrs. Jensen informed the Board that the City's recording system is unable to record those who join in remotely, which is one of the primary reasons for having all future Board Meetings in person along with the City Attorney's understanding of Governor Ron DeSantis not extending the emergency order allowing Boards to meet electronically. Jensen Memo — E-Verify: Mrs. Jensen informed the Board that effective January 1, 2021, a new Florida State law requiring the Registration and Use of E-Verify went into effect with two requirements which are applicable for public retirement plans. The new law requires Public Employers to register with and use the free E-Verify system to verify the work authorization status of all newly hired employees and that contracts entered by Public Employers must contain a provision requiring the parties use the E-Verify System. Jensen Memo — Missing and Nonresponsive Participant: Mrs. Jensen presented the Board with a memo on locating a missing or nonresponsive participant. Mrs. Jensen reviewed the best practices with attempting to locate a missing Minutes: March 17, 2021 Page 2 or nonresponsive participant with the Board along with a few additional options and suggestions that have come up in other Board Meetings. Jensen Memo — IRS Milage Rate for 2021: Mrs. Jensen informed the Board that the IRS released its updated Standard Milage Rate for 2021. The new rate is $0.56 per mile for miles driven after January 1, 2021. Mrs. Jensen noted that this amount is down 1.5 cents from last year and that the milage rate can fluctuate within the same year and that her firm will do their best to inform the Board and the Administrator of any changes. Proposed Policy Regarding Contractual Provisions for Investment Managers: Mrs. Jensen presented the Board with a Policy Regarding Contractual Provision for Investment Managers to the Board for consideration and adoption. Mrs. Jensen explained to the Board that this Policy would give her a written guide to follow when negotiating contracts with new Investment Managers and give her the ability to give potential managers a guide to the requirements that must be included in any new contract. Mrs. Jensen also pointed out a provision that allows for the Board to make an exception to the standard contractual provisions if the Board wishes to do so in the negotiation process. Greg Mull made a motion to adopt the Policy Regarding Contractual Provisions for Investment Managers as presented. The motion received a second from Allan Owens, approved by the Board 5-0. Administrator Report (Scott Baur & AC Lovingood, Resource Centers) Share Account Update: Scott Baur informed the Board that the Share Accounts are up to date and the statements are available online for the Plan's Participants. Resource Centers Memo — SOC1 Type 2 Audit: Mr. Baur presented the Board with a memo regarding the Resource Centers SOC1 Type 2 Audit. Mr. Baur explained what the SOC1 Type 2 Audit is and how it differs from other types of audits that the Trustees may see. Mr. Baur was happy to inform the Board that his Firm had a clean audit with no exceptions. Salem Trust Notice — Hollywood Office Closure: Mr. Baur presented the Board with a letter from Salem Trust informing the Board that they decided to close the Salem Trust Hollywood Office. Mr. Baur informed the Board that Karen Russo is still employed with Salem Trust and that she will be working remotely moving forward. FPPTA Updates: Mr. Baur informed the Board that the FPPTA has been holding their Trustee events virtually due to the Pandemic; however, the FPPTA has made the announcement that they will have the annual conference in person. As more information is provided, Mr. Baur stated that his firm will be sure to convey it to the Board. 4. MINUTES The Trustees reviewed the draft Minutes for the December 10, 2020 Board Meeting. Marc Glass made a motion to approve the Minutes for the December 10, 2020 Quarterly Meeting as presented. The Motion received a second from Brad Seidensticker, approved by the Board 5-0. 5. DISBURSEMENTS AND FINANCIAL STATEMENTS The Board reviewed the Warrant dated March 17, 2021, for payment of expenses. Greg Mull made a motion to approve the expenses on the Warrant dated March 17, 2021. The Motion received a second from Marc Glass, approved by the Board 5-0. The Board received, reviewed, and filed the interim financial statement through January 31, 2021. Minutes: March 17, 2021 Page 3 6. BENEFIT APPROVALS The Benefit Approvals for March 17, 2021 were presented for review. Greg Mull made a motion to approve the Benefit Approvals for December 10, 2020. The Motion received a second from Brad Seidensticker, approved by the Board 5-0. 7. OTHER BUSINESS Attorney Bonni Jensen presented the Board with the Police Comparison Report provided by the State of Florida upon her request to determine why the Chapter 185 Funds made such a drastic decrease from the previous year. The report was reviewed with the Board along with the reasons for the decrease in the Chapter 185 Funds. Trustee Allan Owens inquired as to the Status of the Actuarial Valuation Report. Mr. Baur informed the Board that Pete Strong was unable to attend the Board Meeting physically and that he would forward the Actuarial Valuation report to the City and present the report at the next Board Meeting. 8. PUBLIC COMMENTS No members of the public had any comment. 9. ADJOURN There being no further business, Chair Jay Spencer adjourned the meeting at 4:07 PM. Respectfully submitted, Brad Seidensticker, Secretary Minutes: March 17, 2021 Page 4