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