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HomeMy WebLinkAboutMinutes Fire Pension 012622CITY OF PALM BEACH GARDENS FIREFIGHTERS' PENSION BOARD OF TRUSTEES QUARTERLY MEETING MINUTES City Hall, Council Chambers 10500 North Military Trail, Palm Beach Gardens, FL 33410 Wednesday, January 26, 2022, at 1:00PM TRUSTEES PRESENT: Mike Zingaro Rick Rhodes Jon Currier Thomas Topor Eric Bruns TRUSTEES ABSENT: None OTHERS PRESENT: Siera Feketa, Foster & Foster John Thinnes, AndCo Consulting Bob Sugarman, Sugarman and Susskind 1. Call to Order — Rick Rhodes called the meeting to order at 1:01 PM. 2. Roll Call — As reflected above. 3. Public Comments — None. 4. Approval of Minutes The Board approved the October 27, 2021, quarterly meeting minutes, upon motion by Jon Currier and second by Mike Zingaro; motion carried 5-0. 5. New Business a. Election of Officers i. Siera Feketa reviewed the election of Officers, commenting it had to be done annually at the first meeting of the year. Siera commented the current Chairman was Rick Rhodes, Vice -Chairman was Eric Bruns, and Secretary was Jon Currier. Siera commented they could approve keeping the same Officers or elect new ones. The Board voted to reselect the current Officers, upon motion by Jon Currier and second by Mike Zingaro; motion carried 5-0. b. Actual expenses as of September 30, 2021 i. Siera Feketa reviewed the requirement to approve the actual expenses and each expenditure type. Eric Bruns asked what the fees for the custodian were. Siera Feketa reviewed. The Board voted to approve the actual expenses as of September 30 2021 as presented upon motion by Eric Bruns and second by Jon Currier; motion carried 5-0. Update on collection of contributions for leave time i. Siera Feketa gave a brief update commenting there were 8 people left that needed to make their contributions. ii. Siera Feketa reviewed the background of the why they were collecting contributions for the newest trustee. iii. The Board discussed the options and if they could just deduct the contributions from their monthly benefit payment. iv. Bob Sugarman commented they could send a letter saying for the member's convenience the funds would be withheld from next pension payment. Bob commented the deduction was after tax. Bob commented this would be deducted, or they could write a check, or they could show up to a meeting if they want to dispute it. v. The Board discussed putting a deadline on it. Rick Rhodes recommended using the April 1st payment date so the administrator had time to send the letter and give the members until March to respond. The Board agreed with that recommendation. d. Auditor Engagement Letter i. Bob Sugarman commented he reviewed the letter and the language looked good. Siera Feketa commented the fee was $10,750 and last year it was $10,000. The Board voted to approve the auditor engagement letter, upon motion by Mike Zingaro and second by Eric Bruns; motion carried 5-0. e. Discussion of pension seminar i. Jon Currier gave a brief update on the pension seminar, commenting it had been difficult to schedule. Jon commented he was waiting to confirm he would be available, as he was scheduled to work, but he was trying for the July meeting date. Jon commented he wanted John Thinnes and Pedro Herrera in attendance. 6. Old Business — None. 7. Reports a. AndCo Consulting, John Thinnes, Investment Consultant i. Quarterly report through December 31, 2021 1. John Thinnes gave a brief firm update and thanked the Board for their business. 2. John Thinnes gave a market update. 3. John Thinnes reviewed the schedule of investable assets. 4. John Thinnes reviewed the asset allocation and the rebalance that was requested today to raise cash. 5. John Thinnes reviewed the financial reconciliation. Rick Rhodes asked if the $4.9 million was a prepaid contribution. Siera Feketa confirmed it was. 6. The Market Value of Assets as of 12/31/21 was $151,986,779. 7. The total fund gross returns for the quarter were 5.55%, slightly underperforming the benchmark of 5.74%. The total fund trailing gross returns for the 1, 3, 5, 7, and 10-year periods were 15.37%, 15.51 %, 11.58%, 9.67% and 11.10% respectively. Since inception (5/1/1998), total fund gross returns were 7.06%, slightly underperforming the benchmark of 7.07%. 8. John Thinnes reviewed the returns of the investment managers. 9. Mike Zingaro asked if Dana would attend the next meeting. John Thinnes commented he could have them attend the next meeting. John commented the return for American Realty was 8.81%, but they did not have that figure when the books were prepared. John commented that made the overall return even higher. Note: Mike Zingaro left the meeting at 1:27PM. 10. Eric Bruns asked how their bond managers situated, asking if it would help or hurt them if the Fed raised rates. John Thinnes gave an overview of the strategy of their bond managers. ii. Direct Lending — Senior Review 1. John Thinnes gave a brief overview of direct lending. 2 2. The Board requested the investment consultant to wait to present this since it was requested by Mike Zingaro. b. Sugarman and Susskind, Bob Sugarman, Plan Attorney i. Legislative update 1. Bob Sugarman commented there was no legislative update. ii. Bob Sugarman reviewed the items his office worked on since the last meeting. Bob reviewed a payroll question he received. Jon Currier and Bob Sugarman discussed if special event pay was considered pensionable. Jon asked how they could confirm if the City was paying them correctly and withholding contributions. The Board discussed different ways they could check this. Jon commented he would ask members to check their pay stubs and start there. 8. Consent Aaenda a. Payment ratification i. Warrant #48, #49, #50 b. Payment approval i. None c. Fund activity report for October 21, 2021, through January 19, 2022 The Board approved the Consent Agenda as presented, upon motion by Jon Currier and second by Eric Bruns; motion carried 4-0. Staff Reports, Discussions and Action a. Foster & Foster, Siera Feketa, Plan Administrator i. Fiduciary liability policy renewal 1. Siera Feketa reviewed the renewal quote for the current policy through Hudson commenting the total would be $9,818.25, which included a $9,750 base fee plus a $68.25 FIGA surcharge. Siera commented the only change was there was now a $10,000 retention, which would be included in all Euclid/Hudson renewal quotes moving forward. Siera commented they also got a quote from Markel with the same limits of liability and $0 retention. Siera commented the premium was $9,798.11, which included a $9,730 base fee and $68.11 FIGA surcharge. Siera reviewed the Florida Insurance Guarantee Association (FIGA) surcharge that was required by Florida effective 1/1/22 commenting the surcharge was 0.7%. 2. Eric Bruns asked what the downside of switching carriers was. Siera Feketa commented she did not see any issues on her end. 3. Bob Sugarman reviewed both companies commenting they were both leading companies in the industry. The Board voted to approve the fiduciary liability policy with Markel, upon motion by Jon Currier and second by Eric Bruns; motion carried 4-0. ii. Upcoming educational opportunities 1. Siera Feketa reviewed the upcoming FPPTA Annual Conference from June 26-29, 2022, in Orlando, FL. Jon Currier asked if the Annual Conference gave 10 CEUs. Siera commented it did but stated she would confirm. iii. Jon Currier asked for an update on the Share Plan statements. Siera Feketa commented the 9/30/21 statements were prepared in conjunction with the valuation report, so they took longer. Siera commented the valuation should be presented at the next meeting. Rick Rhodes asked if the City had provided the requested information. Siera commented she would have to check with Doug Lozen, but to her knowledge there had not been any significant issues. 10. Reports (continued) a. AndCo Consulting, John Thinnes, Investment Consultant i. Direct Lending Review 1. The Board and John Thinnes discussed how this asset class would fit in the portfolio. 2. John Thinnes and Bob Sugarman discussed how direct lending worked and the liquidity of this asset class. John commented their portfolio was extremely liquid, so he was not concerned about a 5% allocation to this asset class. 3. John Thinnes reviewed the benefits of direct lending, commenting there were higher returns. John commented the statements were usually generated 45 days after the end of the quarter so they would always be a quarter behind presenting the returns for this asset class. 4. John Thinnes reviewed the risk and reward of direct lending. 5. Thomas Topor asked how long this type of investment had been in business. John Thinnes commented one of the firms started in 1994, but the asset class had been around longer. 6. John Thinnes commented he would be recommending they hire Golub. 7. Rick Rhodes commented there was a 2-3-year period before they were invested so the 10-year period the funds would be invested would not begin for another 2-3 years. John Thinnes commented that was correct and they also had the right to request 2 one-year extensions. 8. Thomas Topor asked if this would offer more diversity in the portfolio. John Thinnes commented it did. 9. The Board discussed the recommendation and the asset class. 10. John Thinnes reviewed how many plans were invested in this asset class, commenting there were not as many because the portfolio had to be at least $50 million to invest this asset class, but more than half of his clients that qualified to invest in this asset class did invest in it. 11. John Thinnes commented as of today the market value of the fund was approximately $143 million. 12. The Board discussed diversification. 13. John Thinnes reviewed each the managers that were currently raising capital: Deerpath, Golub, and TCW. Note: Mike Zingaro returned at 2:18PM. 14. John Thinnes commented they were looking at a $5 million commitment, which was about 3.5% but eventually getting that to 5%. 15. John Thinnes commented they knocked off TCW as they were closing their fund soon. John further reviewed Deerpath and Golub. 16. John Thinnes commented Golub had agreed to the Florida side letters. 17. John Thinnes reviewed the fees for each manager, commenting the management fee was lower for Golub. John commented there was a preferred return which was also known as a performance fee, commenting they got a higher percentage as they exceeded the preferred return. John commented Golub would have a lower fee to start, but if they began to get double-digit returns, Golub had the highest fees. John commented he was comfortable with that since they were expecting higher returns. John commented he was recommending a $5 million commitment to Golub. 18. The Board discussed how these firms vetted the companies they invested in. John Thinnes commented they had teams of professionals that vetted this information. 19. John Thinnes commented they did not need to make a decision today and they could discuss it again at the next meeting. 20. Eric Bruns and John Thinnes discussed how this would be funded. John commented if it was relatively soon it would likely come from the equity side because it was overweight. John commented in the long term this 11 would be taken from US Fixed Income, but right now they were underweight in bonds. 21. The Board and John Thinnes discussed the locations of Golub's offices. 22. Bob Sugarman asked John Thinnes if he was proposing to interview them. John commented he did not think it was necessary, as he and his research team had researched these companies. 23. Bob Sugarman commented they recommended doing the interviews. The Board discussed. Bob commented the Board could interview them, they could form a committee to interview them, or they could rely on AndCo's due diligence. 24. Jon Currier asked if they would be rebalancing soon. John Thinnes commented they just rebalanced today, but they may rebalance again next month. 25. The Board and John Thinnes discussed the Investment Policy Statement (IPS) and how this would fit into the IPS. 26. John Thinnes commented there was no hurry to make a decision. John commented he could work with Pedro Herrera and Bob Sugarman to amend the IPS and then discuss this further at the next meeting. 27. John Thinnes commented he would bring an updated IPS to the next meeting. 28. The Board discussed if they wanted to meet with the manager. 29. Siera Feketa reminded the Board the next meeting would be longer. John Thinnes commented he would ask Dana to come to a future meeting. The Board agreed they were comfortable with not interviewing the managers. 30. Rick Rhodes asked for the draft IPS as soon as possible so if they had any questions, they could bring it to John Thinnes before the meeting. John commented he would go through the IPS and review it with Pedro Herrera. John commented he should be able to provide the draft in a few weeks. 31. Bob Sugarman asked if they should start working on an agreement with Golub. John Thinnes commented he could send them the side letters to review before the next meeting. 11. Trustee's Reports, Discussion and Action — None. 12. Adiournment — The meeting was adjourned at 2:49PM. 13. Next Meeting — April 27, 2022, at 1:OOPM, quarterly meeting. Respectfully submitted by: Appr ed era Feketa, Plan Administrator J urrier, Secretary Date Approved by the Pension Board: '�I L1 I Zci �. -2 5