HomeMy WebLinkAboutMinutes Fire Pension 092010PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND
MINUTES OF MEETING HELD
September 20, 2010
A meeting of the Board of Trustees was called to order at 9:05 A.M. at Council
Chambers, Palm Beach Gardens, Florida. Those persons present were:
TRUSTEES
Tom Murphy
Roy 011iff
Ed Morejon (9:08 A.M.)
Donna Wisneski
Rick Rhodes
MINUTES
OTHERS
Margie Adcock, Administrator
Pedro Herrera, Attorney
Joe Bogdahn, Investment Monitor
Cindy Farrow and David Falconer, Custodian
The Board reviewed the minutes of the meetings held July 26, 2010. A motion was
made, seconded and carried 4 -0 to accept the minutes of the meeting held July 26, 2010.
CUSTODIAN REPORT
Cindy Farrow and David Falconer appeared before the Board. Mr. Falconer is the Trust
Services Manager for Regions Morgan Keegan Trust and Ms. Farrow is the Relationship
Manager. Mr. Falconer gave a brief introduction and overview of the firm. He stated
that they were part of Regions Financial Corporation, which Corporation has $142 billion
in assets with $18.6 billion in Florida bank deposits.
Ed Morej on entered the meeting.
Mr. Falconer stated that Regions Morgan Keegan Trust is part of the Trust and Asset
Management Division of Regions Financial Corporation. It has $70 billion in assets and
is the nations fourth largest corporate trustee. They have 8 Florida offices and 37,000
client accounts. They have the breadth and depth of resources to provide a very good job
for the Fund. Ms. Farrow discussed the custodial services provided to the Board. She
noted that they do not outsource any services. She discussed Internet access as well. Ms.
Wisneski requested summarized quarterly statements of the account. Mr. Morejon stated
that the entire Board should get a copy. Ms. Farrow stated that she would forward that
information to the Administrator each quarter. Ms. Farrow noted that the Fund has seven
sub - accounts that are all rolled up into a master account. There was also discussion on
the cash in the account and possible notification of excess cash that may be in the R &D
account. It was noted that the Investment Consultant monitors the cash in the account.
Farrow discussed the local management team. She reviewed the custody services team.
She provided a representative client list. She revised the seven current sub - accounts of
the Fund. The fee for their services is 4 basis points, which is an all- inclusive fee. It was
noted that the Custodian files and settles all class actions.
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INVESTMENT MONITOR REPORT
Joe Bogdahn appeared before the Board. He continued discussing the review of real
estate current market conditions from last meeting. He reviewed the real estate market
conditions. He reviewed the cap rate spread to the 10 year Treasury. He noted that
Intercontinental is 88% occupied currently with 7% cash income coming through. He
stated that valuations have been written down in their entire portfolio so they have
reappraised their entire portfolio. He reviewed the allocation considerations such as the
rising interest rates and inflation. He reviewed the bond price change implications by
maturity for rising and falling interest rates. He noted that currently there is a 2.5%
allocation to real estate and the target is 10 %. He would like the Fund to get back up to
the target. Mr. Bogdahn recommended allocation money to the real estate component.
He stated that the Fund would have some significant headwinds and risk in bonds.
Mr. Herrera stated that the Intercontinental agreement is fine and ready to go. He did not
bring the agreement with him to the meeting, but would email it for the Chair to sign.
Mr. Bogdahn stated that he would notify both American Realty and Intercontinental of
the mandates of the Board.
ATTORNEY REPORT
Mr. Herrera discussed the status of the proposed Ordinance. Mr. Morejon stated that he
thought the Board and the professionals did everything they could to explain the issue
very clearly. He stated that on Thursday the City Council Members understood that it
was going to save money because a person entering the DROP is no longer accruing a
benefit. In the end the City Council Members were unwilling to go against the City
Manager's direction. The City is going to hire someone to do a pension study. Ms.
Wisneski stated that she thought the Board should obtain a copy of the recording of the
City Council meeting. It was noted that 90% of the Ordinance was approved, but the 3%
guaranteed interest on the DROP was not approved. It was noted that the Council did
state that they would consider a retroactive change to October 1 for those Participants
currently in the DROP. Mr. Bogdahn stated that he would revise the Investment Policy
Statement for the increase in the asset allocation for international under the new
Ordinance.
Mr. Herrera provided the Board with a Memorandum regarding an IRS determination
letter request dated September 13, 2010. He recommended the Fund apply for a
favorable determination letter during Cycle E, which is extended through January 31,
2011. It was noted that the Board had approved such a submission previously in 2008
but Mr. Sugarman subsequently advised the Board to hold off on the submission. Mr.
Herrera stated that the IRS has advised that it is going to turn its attention to the
compliance of public pension plans. He stated that the attorney's fee for the request
would be $8,500 and there is a $1,000 user fee to the IRS for filing the request. There
was a lengthy discussion. A motion was made, seconded and carried 5 -0 to approve for
the filing of a favorable determination letter with a cap of $8,500 for attorney's fees and
$1,000 for the user fee to the IRS.
Joe Bogdahn, Cindy Farrow and David Falconer departed the meeting.
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Mr. Herrera stated that he would need the Chair to sign certain documents related to the
determination letter filing. A motion was made, seconded and carried 5 -0 to authorize the
Chair to sign any necessary documents for the IRS determination letter.
Mr. Herrera stated that he drafted a proposed Ordinance for the IRC compliance language
and sent it to the Actuary for an impact statement. He stated that he thought it had already
been done but after review of the current Ordinance realized it was not. He noted that the
main language of the proposed Ordinance deals with the 415 limits. He stated that in
order to proceed with the determination letter, the required compliance language needs to
be in the Ordinance. If the language is not in the Ordinance, then going forward with the
determination letter is moot. There was a lengthy discussion. The Board was very
concerned and upset that they needed to go back to City Council for another change when
they just had an Ordinance change before the Council last week. The Board decided to
have a special meeting on October 4t' to discuss this further and review the proposed
Ordinance.
Mr. Herrera discussed new health care legislation that was enacted this summer. He
stated that there was no bearing on the Fund but it might be able to save the City some
money. He recommended that the Chairman provide the information to the City Finance
Director.
ADMINISTRATIVE REPORT
The Board was presented with the engagement letter for Steve Gordon to perform the
Audit for the fiscal year ending September 30, 2010. Ms. Wisneski stated that the letter
does have everything she was looking for. Mr. Herrera stated that the letter was legally
sufficient. A motion was made, seconded and carried 5 -0 to approve the engagement
letter for Steve Gordon to perform the Audit for the fiscal year ending September 30,
2010.
Ms. Adcock presented the Board with the benefit calculation and election for Scott
Fetterman. A motion was made, seconded and carried 5 -0 to approve the benefit election.
There was discussion on how the process is working. It was noted that some Participants
still do not understand that they will not have a final calculation for 6 -8 weeks after they
retire or enter the DROP. It was determined that a checklist should be provided advising
of the steps and information needed, which checklist can be provided with the annual
employee benefit statements and put in the summary plan description. A motion was
made, seconded and carried 5 -0 to have the Secretary work with the Administrator to add
a checklist to the summary plan description, website and provide annually with the
employee benefit statements.
Ms. Adcock presented the list of disbursements to be made. The Board questioned an
entry on the Attorney invoice regarding a member going through a divorce. Mr. Herrera
agreed to remove it from the invoice. A motion was made, seconded and carried 5 -0 to
approve the disbursements listed with an adjustment to the attorney invoice to deduct
$171 from the invoice.
Ms. Adcock provided the Board with a copy of the current agreement between the Fund
and her office. She discussed the background of the agreements. The Board decided to
discuss this further at the November meeting. Mr. Murphy stated that he wanted to
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discuss the online calculator with Mr. Baur. He does not feel it is working properly to
give participants a complete calculation. The Board authorized Mr. Murphy to discuss
the matter with Mr. Baur.
OTHER BUSINESS
The Board reviewed the responses received to the disability review process. There was a
discussion on the responses received. Mr. Herrera discussed the process and noted that
the review process is to confirm they are still disabled. There was a lengthy discussion.
Mr. Rhodes suggested that a form be sent for the doctors to complete so the Board
obtains the information it is seeking. The form would have the job description on the
back for the doctors to refer to. A motion was made, seconded and carried 5 -0 to allow
Mr. Rhodes to draft a form to be used for the disability review process. There was then
discussion on the fact that a proper response was not received from Kevin Mitchell. A
motion was made, seconded and failed 2 -3 to send a letter to Mr. Mitchell advising that a
letter would need to be received by the Board from a doctor by October 15th or his
November pension payment would cease until such time as he complies. Ed. Morejon,
Roy 011iff and Tom Murphy opposed the motion. There was further discussion. Mr.
Herrera revised the Ordinance and Disability Review Policy. He noted that there is a
provision requiring 60 days within which a disability recipient can provide information.
There was a lengthy discussion. A motion was made, seconded and carried 5 -0 to
reconsider the prior motion. There was further discussion. The original motion was
called and carried 5 -0.
Mr. Morejon stated that he would like the minutes of the meetings to be done as soon as
possible after a meeting and provided to everyone so that the service providers and
Trustees know what items need to be followed up on.
There being no further business, the meeting adjourned.
Respectfully submitted,
Tom Murphy, Secretary