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HomeMy WebLinkAboutMinutes Police Pension 12092111 City of Palm Beach Gardens Police Officers' 11 Pension Fund Minutes of the Meeting Held December 9, 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 9:06 AM by Jay Spencer in the Council Chambers at the Palm Beach Gardens City Hall at 10500 North Military Trail, Palm Beach Gardens, Florida. Chairman Jay Spencer stated that the Board will modify the Agenda to accommodate the Disability Hearing for Robert Hughes. TRUSTEES PRESENT Jay Spencer, Chairman Brad Seidensticker, Secretary Marc Glass, Trustee Greg Mull, Trustee Allan Owens OTHERS PRESENT Scott Baur (Resource Centers) A.C. Lovingood (Resource Centers) Bonni Jensen (KKJ&L) Tonya Oliver (Oliver & Fox John McCann (AndCo Consulting) Jennifer Gainfort (AndCo Consulting) Robert Hughes (Plan Member) Pete Strong (GRS Consulting) Steve Stack (Highland Capital) Brian Escobedo (Highland Capital) Richelle Cook (American Realty) ROBERT HUGES INFORMAL DISABILITY HEARING Attorney Bonni Jensen explained that the Board has a In -Line Duty Disability, the Independent Medical Examination (IME) Report finds that Mr. Robert Hughes is disabled; however, the IME states that the disability could possibly be hereditary and not duty related. The Board must decide if Mr. Hughes is totally disabled, will remain so permanently and continuously, and that the disability resulted from the performance of his duties as a police officer. The Board must determine if the presumption statue applies to this disability case. Mrs. Jensen also reminded the Board that the Plan also requires that a member must be disabled for a minimum of six months before the Board grants a disability benefit. Mrs. Jensen then reviewed the presumption statute with the Board in detail to determine if the presumption applies to this case. Mr. Hughes must have passed a pre -hire physical and that comprehensive and substantial evidence does not exist to indication the disability resulted from some other cause. Tonya Oliver addressed the Board on behalf of Robert Hughes, stating that Mr. Hughes has coronary artery disease, when Mr. Hughes started his employment with the Palm Beach Gardens Police Department, the pre -employment physical required an EKG and that the EKG results from that pre -employment physical gave no indication of coronary artery disease. Mrs. Oliver then referenced Florida Statute 112.18, which details the presumptions for heart disease. Mrs. Oliver reviewed when Mr. Hughes's disability occurred and when Mr. Hughes last day of employment was with the Board and informed the Board that Mr. Hughes is currently receiving Workers Compensation Benefits. Dr. Shaw's medical findings that Mr. Hughes has a 57% impairment was reviewed with the Board and Mrs. Oliver noted that the IME physician found Mr. Hughes to have a 55% impairment and Mr. Hughes employment Minutes 12/09/2021 Page 1 with the Palm Beach Gardens Police Department was terminated due to his medical impairments. There were some findings that indicate the Mr. Hughes was predisposed to have a heart condition; however, the pre -employment physical did not provide any indication of hypertension. Chairman Jay Spencer stated that he believes that the facts of this case are fairly simple and that he believes that Mr. Hughes met the threshold for a duty disability benefit. The Board discussed the IME and availability of any permanent light duty accommodations for Mr. Hughes. • Greg Mull made a motion that Robert Hughes is unable to perform the functions of a police officer. The Motion received a second from Marc Glass and was approved by the Trustees 5-0. • Allan Owens made a motion that Robert Hughes disability is to remain permanent and continuously. The Motion received a second from Bread Seidensticker and was approved by the Trustees 5-0. • Marc Glass made a motion that Robert Hughes disability occurred in line of duty as a police officer. The Motion received a second from Greg Mull and was approved by the Trustees 5-0. ACTUARIAL EXPERIENCE STUDY — GRS CONSULTING Pete Strong appeared before the Board to present the Experience Study that was performed on updating several assumptions for the Plan. Mr. Strong began his presentation by reviewing the purpose of the Study and noted that the Plan had no impact so far from COVID-19 related deaths, noting the Federal and State COVID-19 death presumptions on the State and Federal Level. Mr. Strong stated that his firm does not recommend making any changes to the inflation expectations at this time due to these expectations are for the long-term and not short-term. Mr. Strong then went into detail on the recommended adjustments to the salary increase rates, retirement rates, separation/turnover rates, and the Plan's disability rates. The net impact for all the adjustment taken together do not change the required contributions for the City. Mr. Strong then address the Assumed Rate of Return, noting that long-term capital market assumptions are lower, and the Board considered lowering their Assumed Rate of Return. Mr. Strong noted that he will apply assumption updates for the October 1, 2021, Actuarial Valuation Report. The Board then discussed the current schedule to lower the Assumed Rate of Return and the consideration of accelerating the process based upon the current year's gains. • Marc Glass made a motion upon the advice of the Actuary to lower the Assumed Rate of return to 6.15% this year and accept the recommended Assumption Changes identified by the Experience Study with a further reduction of the Assumed Rate of Return to 6.00% in 2022. The Motion received a second from Brad Seidensticker and was approved by the Trustees 4-0. Allan Owens informed the Board that the City of Palm Beach Gardens is interested in doing a feasibility study to give current members of the Palm Beach Gardens Police Officers' Pension Fund the option to go into the FRS Pension Fund and close the Plan Minutes 12/09/2021 Page 2 to future hires. The City would like to engage Pete Strong for this study and would like to have the study performed for due diligence reasons. Greg Mull made a motion to allow GRS to communicate and engage in the completion of the FRS Feasibility Study for the City of Palm Beach Gardens. The Motion received a second from Marc Glass and was approved by the Trustees 5-0. FRS FEASIBILITY STUDY — CITY REOUEST 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 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 started his presentation by reviewing the current market environment in detail with the Board along with the inflation, employment, and mortgage refinancing trends. Mr. Stack then reviewed the typical corrections over the years with the Board, noting that volatility in the markets should not be surprising. For the quarter Minutes 12/09/2021 Page 3 ending September 30, 2021, the Growth Fund had an ending Market Value of $13,883,562 with a cumulative return of 0.39%, Fixed income Fund had a ending Market Value of $27,458,517 with a cumulative return of 0.29%, and the 1-3 Year Fixed Income Fund had a ending Market Value of $6,921,314 with a cumulative return of 0.31%. For the Fiscal Year, the Growth Fund had a cumulative return of 26.45%, Fixed income Fund had a cumulative return of 1.03%, and the 1-3 Year Fixed Income Fund had a cumulative return of 0.62%. INVESTMENT CONSULTANT REPORT - ANDCO Jennifer Gainfort reviewed the results as of September 30, 2021. Going all the way back to 1992, the Plan has total assets of $126,699.689 compared to $26,509,048 in contributions into the Plan. The Plan earned 0.18% for the Quarter Ending September 30, 2021, compared to the 0.50% benchmark. The Plan's Fiscal -Year -To - Date return is at 22.71% compared to the benchmark rate of 22.00%, which the Board was pleased to hear, the three-year returns were 10.45% versus the benchmark of 11.06%, and the five-year return were 11.16% compared to the 11.31% benchmark. Since inception, the Plan has had a net investment return of 8.12% compared to the benchmark rate of 9.00%. Mrs. Gainfort then reviewed how each manager in detail with the Board along with each of the allocations. Mrs. Gainfort then reviewed the Updated Investment Policy Statement with the Trustees. Brad Seidensticker made a motion to approve the Investment Policy Statement presented to the Board. The motion received a second from Allan Owerns and was approved by the Trustees 5-0. Mrs. Gainfort informed the Board that The American Realty Strategic Value Fund has another Capital Call and she recommended funding the Capital Call from the Highland Capital Core Fixed Fund. Marc Glass made a motion to fund the American Realty Strategic Value Fund Capital Call from the Highland Capital Core Fixed Fund. The Motion received a second from Brad Seidensticker and was approved by the Trustees 5-0. John McCann thanked the Board for allowing him to be their Investment Consultant ATTORNEY REPORT JENSEN MEMO - Legal Updates: Attorney Bonni Jensen informed the Board that a bill filed in the Florida Legislature will make COVID-19 infection resulting in death as presumed to have occurred in the line of duty. The Federal COVID-19 Death Benefit increased to $590,000.00 and extended the presumptions to December 31, 2023 or when the COVID-19 Pandemic is declared over. Aristotle Agreement: Mrs. Jensen informed the Board that the Aristotle Agreement is ready for signature. Chairman Jay Spence inquired if the Board could have a farewell lunch for John McCann at a future scheduled date. Mrs. Jensen stated that the Board could do that if they wish and reminded the Board that they are subject to Sunshine Law and to be careful on what is spoken about at the lunch. The Board then discussed the possible location and expected cost for the farewell lunch along with an expected cost of approximately $600.00. Minutes 12/09/2021 Page 4 Greg Mull made a motion to approve a farewell lunch for John McCann with an expected cost of no higher than $600.00jeri. The Motion received a second from Brad Seidensticker and was approved by the Trustees 5-0. JENSEN MEMO — LEGAL UPDATES: ATTORNEY BONNI JENSEN ADMINISTRATOR REPORT Active DROP Participants 11-30-2021: Mr. Lovingood presented the Board with the Active DROP Participants List as of November 30, 2021. Fiduciary Liability Insurance & Cyber Security Insurance Quotes: Mr. Lovingood gave the Board an update on the pending Fiduciary Liability Insurance and Cyber Security Insurance Quotes. Marc Glass made a motion to authorize Chairman Jay Spencer to renew the Cyber Security and Fiduciary Liability Policies when the quotes are received. The Motion received a second from Brad Seidensticker and was approved by the Trustees 5-0. Website Shae Allocation Worksheet: Mr. Baur reviewed his Firm's investigation into the Share Allocation Worksheet that was posted on the Plan's Website and reviewed the IP Addresses of those who accessed the file and when the file was accessed. The Board, Mr. Baur, and Attorney Bonni Jensen reviewed the potential risks and the recommendation was to send out letters to all members explaining what had happened and how the issue was resolved along with offering credit monitoring if the member wishes. MINUTES The September 9, 2021 minutes were presented in the Trustee packets for review. Trustee Brad Seidensticker noted a few minor changes to the minutes presented. Brad Seidensticker made a motion to approve the September 9, 2021, minutes as amended. The Motion received a second from Greg Mull and was approved by the Trustees 5-0. DISBURSEMENTS The Disbursements through December 9, 2021 were presented in the Trustee packets for review. Mr. Lovingood informed the Board that the Klausner Invoice #28871 which had the incorrect total had been corrected out with a refund from the provider. Marc Glass made a motion to approve the Disbursements as amended. The Motion received a second from Allan Owens and was approved by the Trustees 5-0. FINANCIAL STATEMENTS The interim financial statements were provided for informational purposes. Minutes 12/09/2021 Page 5 BENEFIT APPROVALS The Benefit Approvals for December 9, 2021 were presented in the Trustee packets for review. Mr. Lovingood noted the DROP Distributions in excess of $35,000.00 have been processed but are pending Board Approval before distribution. Mr. Lovingood noted that this was due to the blackout dates for End of Year Accounting. • Brad Seidensticker made a motion to approve the Benefit Approvals as presented for December 9, 2021. The Motion received a second from Greg Mull and was approved by the Trustees 5-0. OTHER BUSINESS Jay Spencer 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 March 10, 2022, at 9:00 AM. Respectfully submitted, Brad Seidensticker, Secretary Minutes 12/09/2021 Page 6