HomeMy WebLinkAboutMinutes Police Pension 06102111 City of Palm Beach Gardens Police Officers' 11
Pension Fund
Minutes of the Meeting Held
June 10, 2021
The regular meeting of the Board of Trustees of the City of Palm Beach Gardens
Police Officers' Pension Fund was called to order at 9:00 AM by Jay Spencer in the
Council Chambers at the Palm Beach Gardens City Hall at 10500 North Military Trail,
Palm Beach Gardens, Florida.
TRUSTEES PRESENT
Jay Spencer, Chairman
Brad Seidensticker, Secretary
Marc Glass, Trustee
Greg Mull, Trustee
OTHERS PRESENT
Scott Baur (Resource Centers)
A.C. Lovingood (Resource Centers)
Bonni Jensen (KKJ&L)
John McCann (AndCo Consulting)
Pete Strong (GRS Consulting)
Steve Stack (Highland Capital)
Brian Escobedo (Highland Capital)
Richelle Cook (American Realty)
ACTUARIAL VALUATION REPORT — GRS CONSULTING
Pete Strong appeared before the Board to present the Actuarial Valuation Report for
the period ending September 30, 2020. Mr. Strong began his presentation by
informing the Board that contributions were up approximately $294,959.00, mainly
due to increased payroll. The State Contributions are expected to stay the same and
the City's required contribution is $4,416,118.00 viruses the prior year's
contributions of $4,121,159.00. The investment return assumption has been
lowered from 6.5% to 6.3% since the prior valuation with Mr. Strong noting that the
Plan has been very proactive on the assumed rate of return when compared to other
Pension Plans. Because the investment return assumption is now lower than the
guaranteed rate of return for DROP accounts, a 1.4% liability load was added to
active members' Normal Retirement liabilities, as well as a 0.4% liability load on
retirees' liabilities who currently have a DROP balance. Mr. Strong then reviewed the
2019 FRS Mortality Table changes with the Board, noting that the mortality tables
and improvement scales were updated as mandated by Florida State Statutes
Chapter 112.63(1)(f).
There was a net actuarial experience gain of $130,357 for the year, resulting in a
more favorable than expected actuarial experience. This was primarily due to the
recognized investment return of 6.5%. The investment return was 7.2% based on
market value of assets and 7.4% based on actuarial value of assets. This gain was
mostly offset due to fewer than expected terminations of employment, slightly higher
salary increases than expected, and mortality experience. The net actuarial gain
decreased the required employer contribution by 0.14% of cover payroll. The funded
ratio for the Plan was 79.8% versus the prior year's rate of 78.2%. Mr. Strong then
reviewed the Actuarially Determined Employer Contribution and the Actuarial Value
of Benefits and assets with the Board in addition to the cumulative actuarial gains
and losses. He reminded the Board that in 2001 there was a provision passed to
offer the retirees an annual COLA contingent upon the cumulative actuarial
experience being positive. The negative balance has been decreasing consistently
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since 2010. If the market continues to grow, this trend will result in the balance
going positive, thus triggering the COLA payments.
Mr. Strong informed the Board that an Experience Study is usually done every five to
seven years and recommended that a new Experience Study be conducted now to
update the Plans assumptions. Trustee Greg Mull asked Mr. Amrose the reason for
doing the study. Mr. Amrose stated that the reason is too true -up the Plan's
assumptions to be more in line with what is actually happening with the Plan.
Marc Glass made a motion upon the advice of the Actuary to conduct an
Experience Study. The Motion received a second from Greg Mull and was
approved by the Trustees 4-0.
Brad Seidensticker made a motion to approve the 2020 Actuarial Valuation
Report as presented. The Motion received a second from Marc Glass and was
approved by the Trustees 4-0.
• Greg Mull made a motion based on the recommendation of the investment
consultant; to set the expected rate of return to 6.3% as the Board expects to
receive 6.3% for the short-term, mid-term, and long-term thereafter. The
Motion received a second from Brad Seidensticker and was approved by the
Trustees 4-0.
AMERICAN STRATEGIC VALUE FUND PRESENTATION — AMERICAN REALTY
Richelle Cook with American Realty Advisors started her presentation by reviewing
her firm while noting that there have been no changes and that they are sloly
bringing employees back into the office. Mrs. Cook then reviewed the American Core
Realty Fund with the Board, noting that the fund is open-end with a total of $6.87
Billion in assets. The American Core Realty Fund has a target return rate of 7-9%,
gross of fees and the fund has a quarterly liquidity. The American Strategic Value
Realty Fund was then reviewed with the Board with Mrs. Cook noting that the fund is
open-end with $2.18 Billion in assets under management. The return target for the
Fund is 11-104% and has a quarterly liquidity. The outlook for property sectors was
reviewed in detail with the Board with the mention of industrial and residential being
the biggest movers. Within the specialty sectors, hotel occupancy improvement is
advancing, though there remains considerable weaknesses that are expected to
persist through year end. Preleasing for fall 2021 student housing has lagged along
with a long-term downward trend in postsecondary enrollment. The demand for live
science space has accelerated by the pandemic, creating opportunities for developers
and investors. Mrs. Cook noted that within the retail sector, neither Fund is invested
in malls, only supermarket anchored retail space.
As of March 31, 2021, the American Core Realty Fund has a total of 67 investments,
cash is at 1.3$, the leverage ratio is at 22.1%, total commercial space is 15.2 million
square feet with 482 tenants. The fund has a total of 2,673 residential units, with
92.3% of them currently leased. There are currently 461 investors in the fund, with
$47.0 Million in the contribution queue and $203.0 Million in the redemption queue.
For Palm Beach Gardens Police, the Fund earned a net 1.59% for the quarter ending
March 31, 2021. The one-year net return is 0.78%, three-year returns are 4.21%,
the five-year returns are 5.00%, and since inception, the Fund has earned 7.76%
net of fees. Mrs. Cook then reviewed the strong rent collection results with the
Board, noting that the Fund has a 44% less rollover on leases in office space
compared to the competition. Mrs. Cook then reviewed the recent transactions
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within the Fund. Trustee Brad Seidensticker asked what the lease acceleration rate
is for the fund, which Mrs. Cook stated was 2-3.5%. Mrs. Cook also stated that
inflation is causing some constraints due to the increased costs, thus forcing the
Fund to change the leverage from 20% to 30%. Mrs. Cook concluded her
presentation by reviewing the Fund Snapshot with the Board. Chairman Jay Spencer
asked Mrs. Cook where the Plan is in the queue for the American Realty Value Fund.
Mrs. Cook stated that there will be two capital calls in the next two quarters and
expects that all the allocated funds will take approximately three quarters to call.
HIGHLAND CAPITAL
Steve Stack introduced Associate Portfolio Manager, Brian Escobedo, who will review
the 1-3 Year fixed income portfolio with the Board. Mr. Escobedo thanked the Board
for the opportunity to attend the Board Meeting and started his presentation with
review the asset allocation of the 1-3 Year fixed income Fund, noting that as of
December 31, 2020, the Fund has $5,121,882 with $955,962 in cash. As of March
31, 2021, the Fund has a total of $5,112,413, with $1,244,813 in cash. Mr.
Escobedo then reviewed the Fund performance for the quarter, noting that growth
was up 1.44%, compared to the benchmark of 0.94%. Fixed Income was down -
1.90%, compared to the BBCGC benchmark rate of -4.28% and the BBCAG
benchmark rate of-3.37%. The Fixed Income 1-3 Year Fund was down-0.18$,
compared to the BBC 1-3 Year Treasury benchmark rate of -0.05% and the BBCGC
1-3 Year benchmark rate of-0.04%. Mr. Escobedo stated that right now, inflation is
at 5%, if this rate goes for several more quarters, it will cause some issues in the
Fixed Income sector. Inflation is most visible in new and used car sales and at the
supermarkets, noting that most of the shortages are caused by bottlenecks from
supply shortages caused by the pandemic. The Fixed Income Sector Allocation was
then reviewed in detail with the Board members with Mr. Escobedo comparing
Highland Capital's allocations with the Bloomberg Barclays Capital
Government/Credit Index and the Bloomberg Barclays Capital Aggregate Index.
INVESTMENT CONSULTANT REPORT - ANDCO
John McCann presented the Investment Consultant Report for AndCo for the period
ending March 31, 2021. Mr. McCann started his presentation by reviewing the
schedule of investable assets with the Board, noting that the total fund composite
has been consistently increasing at a more rapid pace than the net cashflows of the
Plan. As of April 30, 2021, the Plan has a total of $127 Million in assets under
management and the Plan's Fiscal -Year -To -Date return is at 20.26%, which the
Board was pleased to hear. Mr. McCann then reviewed the asset allocations with the
Board, noting that Domestic Equity has been doing very well and that he has a
recommendation to rebalance the fund, which will be discussed shortly. For the
quarter ending December 31, 2021, the Plan earned a net gain of 4.90% compared
to the benchmark of 4.12%. The one-year trialing returns were 16.42% compared
to the benchmark of 15.44%, the three-year returns were 10.99% versus the
benchmark of 11.32%, and the five-year return were 11.11% compared to the
11.31% benchmark. Since inception, the Plan has had a net investment return of
8.04%. Mr. McCann then reviewed how each manager in the Plan is doing, noting
that Domestic Equities have been doing very well. Mr. McCann reviewed the impact
of the Colonial Pipeline Cyber Incident with the Board along with the impacts that it
had on the Plan's Portfolio. Mr. McCann then informed the Board that IFM
Investments is expected to make their first capital call this summer and hope's that
the Plan will be included in that capital call. Mr. McCann then made a
recommendation to trim down Domestic Equity to fund the upcoming capital calls
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from American Realty and IFM Investments. Mr. McCann made a recommendation to
sell $2 Million of the Rumbline S&P 500 Fund and invest that $2 Million in the
Highland Capital Short Term Fixed Income Fund.
• Marc Glass made a motion to sell $2 Million of the Rumbline S&P 500 Fund
and invest that $2 Million in the Highland Capital Short Term Fixed Income
Fund. The motion received a second from Brad Seidensticker and was
approved by the Trustees 4-0.
Mr. McCann then presented the Board with the updated Investment Policy Statement
that the Board Requested with the new Bond Rating Institutions.
• Marc Glass made a motion to accept the revised Investment Policy Statement
as presented. The Motion received a second from Brad Seidensticker and was
approved by the Trustees 4-0.
ATTORNEY REPORT
JENSEN MEMO - FORM 1: Attorney Bonni Jensen informed the Board that their Form
1 Reports need to be filed no later than July 1, 2021. Mrs, Jensen stated that she is
unable to give advice on how the fill the forms out; however, she can answer general
questions that the Board may have.
ADMINISTRATOR REPORT
2021-2022 Plan Budget - Draft: Mr. Lovingood presented the Board with the 2021-
2022 Plan Budget for review and approval.
• Marc Glass made a motion to approve the 2021-2022 Plan Budget as
presented. The Motion received a second from Brad Seidensticker and was
approved by the Trustees 4-0.
Active DROP Participants 03-31-2021: Mr. Lovingood presented the Board with the
Active DROP Participants List as of March 31, 2021.
Resource Centers Memo - Payment Verification Update: Mr. Baur informed the
Board that The Resource Centers has started sending out the Payment Verification
Letter to all retirees of the Pension Plan. Mr. Baur reviewed the process that The
Resource Centers is taking on this project.
FPPTA Events Update: Mr. Baur gave the Board an update on the FPPTA Annual
Conference on the information that the FPPTA has released so far. Mr. Baur
informed the Board that the host hotel is open for reservations for any members that
wish to attend and that The Resource Centers can register them for the conference.
MINUTES
The March 17, 2021 minutes were presented in the Trustee packets for review and
were tabled till the next Board Meeting.
• Marc Glass made a motion to approve the March 17, 2021, minutes as
amended. The Motion received a second from Brad Seidensticker and was
approved by the Trustees 4-0.
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DISBURSEMENTS
The Disbursements through June 10, 2021 were presented in the Trustee packets for
review.
• Marc Glass made a motion to approve the Disbursements as amended. The
Motion received a second from Brad Seidensticker and was approved by the
Trustees 4-0.
FINANCIAL STATEMENTS
The interim financial statements were provided for informational purposes.
BENEFIT APPROVALS
The Benefit Approvals for June 10, 2021 were presented in the Trustee packets for
review.
• Greg Mull made a motion to approve the Benefit Approvals as presented for
June 10, 2021. The Motion received a second from Marc Glass and was
approved by the Trustees 4-0.
OTHER BUSINESS
Jay Spencer inquired if the Board is interested in joining NCPERS. Mr. Spencer noted
that the NCPERS Conferences contain much more detail that he believes would be
beneficial for all the Trustees on the Board. Attorney Bonni Jensen disclosed that
NCPERS is a client of her firm. There was a detailed discussion regarding the
NCPERS membership cost, available conferences, and each Trustee's thoughts on the
membership.
• Greg Mull made a motion for the Board to join NCPERS. The Motion received
a second from Marc Glass and was approved by the Trustees 5-0.
PUBLIC COMMENTS
There were no public comments at this time.
ADJOURN
There being no further business, the Trustees officially adjourned the meeting at
12:10PM. The next meeting is scheduled for Thursday September 9, 2021, at 9:00
AM.
Respectfully submitted,
Brad Seidensticker, Secretary
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