HomeMy WebLinkAboutMinutes Fire Pension 012523CITY 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 25, 2023, at 1:OOPM
TRUSTEES PRESENT: Rick Rhodes
Eric Bruns
Jon Currier
Mike Zingaro
Thomas Topor
TRUSTEES ABSENT: None
OTHERS PRESENT: Siera Feketa, Foster & Foster
John Thinnes, AndCo Consulting
Pedro Herrera, Sugarman and Susskind
Doug Lozen, Foster & Foster
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
a. October 26, 2022, quarterly meeting
i. Rick Rhodes recommended two revisions, the first being on page 2, Section 7(a)(ii)(5)
should reflect that the gross returns slightly outperformed rather than underperformed.
Rick Rhodes commented the second revision was the last motion approving the FPPTA
membership should have the word "approved" added to the motion.
The Board approved the October 26 2022 quarterly meeting minutes with revisions upon motion
by Jon Currier and second by Thomas Topor• motion carried 4-0
Note: Mike Zingaro arrived at 1:03PM.
5. New Business
a. Election of Officers (Chairman/Vice-Chairman/Secretary)
i. Siera Feketa reviewed commenting this was scheduled to be done annually at the first
meeting of each year. Siera commented the current Chairman, Vice -Chair, and Secretary
were Rick Rhodes, Eric Bruns, and Jon Currier respectively. Siera commented they could
reelect the same officers or elect new ones.
The Board voted to reelect the current officers upon motion by Jon Currier and second by Eric
Bruns: motion carried 5-0.
b. Actual expenses as of September 30, 2022
i. Siera Feketa reviewed the requirement for the actual expenses commenting the plan was
under budget.
The Board approved the actual September 30 2022 expenses as presented upon motion by Jon
Currier and second by Eric Bruns; motion carried 5-0
Review of Request for Proposals (RFPs)
i. Pedro Herrera reviewed the RFPs that were sent out for plan administration and actuarial
services.
ii. Pedro Herrera reviewed the discussion the Board had at the July meeting regarding the
Foster & Foster fee proposal resulting in the RFP. Pedro commented Foster & Foster
presented fee proposals and the Board felt it was beneficial to do their due diligence and
see what other options were out there.
iii. Actuarial services
1. Rick Rhodes commented this stemmed from Foster & Foster's request for an
annual consumer price index (CPI) increase. Rick commented they extended the
current contract with a CPI increase with a minimum of 1 % to a maximum of 5%.
Rick asked Siera Feketa if it would have hit the maximum this year. Siera
commented that figure was not yet available as CPI was determined as of June
30th. Rick commented it would have been over 5% for 2022 if it was in place then.
Siera commented they proposed the CPI increase effective 10/1/2023. Doug
Lozen commented this was the first year of increases, but if it would have been
effective 10/1/2022 it would have been over the 5%. Rick commented that was his
concern with inflation so that was why they sent out the RFPs. Rick reviewed the
options Foster & Foster previously presented commenting they offered a fixed 4%
annual increase or CPI with a minimum of 1 % and maximum of 5%.
2. Eric Bruns asked if the Board was familiar with the other firms. Rick Rhodes
commented he was not and asked Pedro Herrera if he was. Pedro reviewed
commenting he works with the other firms. Pedro commented Foster & Foster has
the most Florida pension funds that he was aware of, and GRS probably has the
next most. Pedro commented they were the most prevalent, but they have worked
with all the firms.
3. Rick Rhodes commented they have not been unhappy with any services, and they
have done a bang-up job with both services, but he was just not happy with the
CPI increase. Rick commented he worked with CPI in another contract, and they
terminated the contract. Eric Bruns reviewed the non -quantifiable costs associated
with switching service providers. Eric commented he just does not like CPI and
was not comfortable with an automatic increase. Rick commented none of the
other providers put in an increase and guaranteed the fees for three years.
4. Eric Bruns commented they put it out there and he does not like the CPI, but he
would bite the bullet to have good service.
5. Jon Currier commented when they switched administrators it was difficult.
6. Mike Zingaro asked if Foster & Foster would consider a fixed rate over a three-
year period without the automatic increase. Doug Lozen commented they came
up with the additional options they presented with a minimum and maximum and
a fixed rate option.
7. Eric Bruns commented he was most comfortable with the CPI with floor and ceiling
as that was more tied to reality than a fixed increase. Thomas Topor commented
he likes the lesser of two evils.
8. Rick Rhodes asked the Board if they would rather stay with Foster & Foster. The
Board agreed to stay with Foster & Foster.
The Board voted to continue with Foster & Foster for actuarial services upon motion by Eric Bruns
and second by Thomas Topor; motion carried 4-1 Rick Rhodes opposed
iv. Plan administration services
1. Rick Rhodes commented there were some he was not familiar with. Rick asked if
Pedro Herrera was familiar with these firms.
2. Pedro Herrera commented they were familiar with all the firms and Foster & Foster
was the largest. Pedro reviewed HYN Consulting commenting they were a smaller
shop and they do a nice job. Pedro discussed L&A commenting they were probably
similar to Foster & Foster, but they only have one client in Florida. Pedro stated
they were based out of Michigan, but they were familiar with the work as they do
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similar work for many plans up north. Pedro commented they have a great
administrator now and he does not see a need for a change, but that was up to the
Board.
3. Jon Currier commented he has been happy with Foster & Foster and the switch to
someone else would be difficult. Jon commented the fee structure was not
preferable, but the better option. Eric Bruns commented he has similar feelings as
he does with actuarial. Jon commented he thinks it was not worth the change.
Thomas Topor commented he was trying to get perspective by getting proposals.
Thomas commented maybe if it was not broken do not fix it. Jon commented plus
the one firm was considerably more than the others. Rick Rhodes commented his
concern was the out years as the cost continues to grow. Rick commented it was
a good exercise and they did their due diligence. The Board agreed.
The Board voted to continue with Foster & Foster as plan administrator, upon motion bV Jon Currier
and second by Eric Bruns: motion carried 4-1 Rick Rhodes opposed
4. Rick Rhodes commented he never had a problem with Foster & Foster aside from
the contract.
5. Pedro Herrera commented he would work to finalize the addendums with the fee
schedule.
6. Old Business — None.
7. Reports (Attorney/Consultants)
a. Foster & Foster, Doug Lozen, Board Actuary
i. October 1, 2022 actuarial valuation report
1. Doug Lozen reviewed the summary of the report and funding requirements
commenting the City's required contribution decreased to 51.47% for fiscal year
ending September 30, 2024 from 52.39% for fiscal year ending September 30,
2023. Doug Lozen commented the decrease was attributable to net favorable
actuarial experience but was offset in part by a reduction in the investment return
assumption from 6.95% to 6.85%.
2. Plan experience was favorable overall on the basis of the plan's actuarial
assumptions. Sources of actuarial gain included interest crediting on DROP and
Share Balances and inactive mortality experience. This gain was offset in part by
losses associated with an investment return of 3.87% (Actuarial Asset Basis) which
fell short of the 6.95% assumption and an average salary increase of 10.97%
which exceeded the 4.54% assumption.
3. Mike Zingaro asked how they know when people pass away. Doug Lozen
commented they were notified by the administrator or they see the payment
stopped when reviewing custodial statements.
4. Doug Lozen discussed the share plan and the Mutual Consent Agreement with the
City commenting they were starting to have some allocations for the share plan as
the State monies exceeded $750,072.76.
5. Doug Lozen reviewed the shortfall commenting the $213,103.38 was due in
addition to the stated funding requirements for fiscal year end September 30, 2023.
Rick Rhodes asked if the credit was gone. Doug confirmed it was.
6. Eric Bruns asked what the deadline was to make the contribution. Doug Lozen
commented the sooner the better. Doug commented by March would be best since
the Annual Report was due March 15th and that deposit date needs to be in the
Annual Report. Rick Rhodes commented would he send this to the City once
approved. Doug commented he would send the report to the City.
7. Doug Lozen commented the investment return assumption was reduced from
6.95% to 6.85% and there was one more reduction scheduled to go to 6.75% and
then they would stay there unless the Board approves further direction. Doug
commented the Florida Retirement System (FRS) just decreased. Doug
commented they were close to FRS and their 6.85% was a little lower than the
average throughout the State.
8. Doug Lozen reviewed the history of funding progress commenting they have been
steady for the last decade commenting with this report they were about 86%
funded. Doug commented the fact that the funded status has remained steady as
they have lowered the investment return assumption was great news. Doug
commented it was a win to be more conservative on the investment return
assumption and still maintain funding progress.
9. Doug Lozen reviewed the Reconciliation of Unfunded Actuarial Accrued Liabilities
and the schedule of payments being made to unfunded liability. Doug commented
they were all paid off over different periods of time. Doug reviewed the items that
would fall of next recommending a consolidation of the unfunded next year. Doug
reviewed the impact of consolidating the unfunded.
10. Eric Bruns asked why they have not consolidated in the past. Doug Lozen
commented the only reason to recommend it was when the list gets too big and
when credit pieces start to fall off. Doug commented they have not had credits of
magnitude falling off in the past.
11. Rick Rhodes asked if the State would question it. Doug Lozen commented no they
do it all the time.
The Board voted to approve the October 1 2022 Valuation Report as presented upon motion by
Eric Bruns and second by Jon Currier; motion carried 5-0
The Board voted to approve consolidating the unfunded liability with the October 1 2023 valuation
upon motion by Mike Zingaro and second by Jon Currier; motion carried 5-0
12. Pedro Herrera reviewed the declaration of returns and the requirement to have the
returns declared. Pedro commented it mirrors the investment return assumption.
Pedro commented it does not have to be the same, but the State would question
it if it was not the same as what was reported in the valuation report.
13. Eric Bruns asked if it should be 6.75% since that was what they were changing to
next year. Doug Lozen commented for this purpose they recommend using 6.85%
and then next year they would declare 6.75%.
The Board voted the declaration of returns for the plan shall be 6.85% for the next year, the next
several years, and the long-term thereafter net of investment related expenses upon motion by Eric
Bruns and second by Jon Currier; motion carried 5-0.
b. AndCo Consulting, John Thinnes, Investment Consultant
i. Quarterly report through December 31, 2022
1. John Thinnes reviewed the market charts and the market reversions over time.
2. The preliminary Market Value of Assets as of December 31, 2022 was
$131,053,562.
3. John Thinnes reviewed the asset allocation by asset class. John Thinnes reviewed
the changes the Board has made to the portfolio over the last year.
4. The total fund preliminary gross returns for the quarter were 5.45%, slightly
outperforming the benchmark of 5.40%. The total fund trailing gross returns for the
1, 3, 5, 7, and 10-year periods were-13.86%, 3.15%, 5.08%, 7.07% and 8.06%
respectively. Since inception (May 1, 1998), total fund gross returns were 6.12%,
slightly outperforming the benchmark of 6.10%.
5. John Thinnes reviewed the performance of the investment managers and how they
impacted the portfolio. John reviewed Dana commenting they had a good quarter,
but he thinks they made a good decision with moving funds from them.
6. Rick Rhodes and John Thinnes briefly discussed the real estate market.
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7. John Thinnes commented they were off to a good start of the fiscal year, but their
fiscal year ends on September 30th so they still have a ways to go. John reviewed
their outlook on the market and inflation.
8. Eric Bruns asked what the turnaround was to get their money from American
Realty Core Property Fund and Intercontinental Real Estate. John Thinnes briefly
discussed commenting if they asked for a redemption, they would get it back in
two quarters and they could not take all of it.
Mavik Capital Management Review
1. John Thinnes commented he discussed this at the last meeting. John commented
it was a debt fund and reviewed how they invest.
2. John Thinnes commented they have raised about 60% of their goal and have other
deals pending.
3. John Thinnes commented they would be locking money up, but it was a shorter
deal than other funds. John commented most funds like this lock up the funds for
10 years and this one was much shorter. John reviewed the performance and
expected returns. John commented they were already investing so they would
hopefully earn returns right away.
4. John Thinnes commented it was different and this was a growing plan. John
reviewed the other plans that have committed to this fund. John commented he
thinks he could afford $2 million, which would probably get called quick.
5. John Thinnes and the Board discussed the fund and the possible risks associated
with it. John commented the fee was 1.5% on invested capital. Rick Rhodes asked
if they get any bonuses. John commented it was 8% preferred commenting they
get a 20/80 split of anything above 8%. The Board and John discussed the
preferred performance fee.
6. Jon Currier asked how they want to fund this. John Thinnes commented their
portfolio was fluid. John commented he thinks traditionally it would come from
bonds, but he would invest in line with the Investment Policy Statement (IPS) to
keep the plan close to targets.
7. John Thinnes commented he wants to do $2 million, but he thinks $1 million was
fine. John commented it would be committed for about five years but could be
longer.
8. The Board and John Thinnes discussed the fund and the pros and cons.
9. Rick Rhodes commented he noticed they changed their name and they used to be
TerraCap, which they changed in 2021. Rick asked if they had issues as TerraCap.
John Thinnes commented not that he knows of.
10. Eric Bruns asked what the biggest selling point was. John Thinnes commented the
plan was going to grow and he thinks it was going to be successful and if they open
a second fund, they would be grandfathered in to participate.
11. John Thinnes commented the recommendation would be to commit $1 million to
Mavik upon legal review.
12. Thomas Topor commented he trusts AndCo so he likes it. Eric Bruns commented
he has issues with itjust because itwas private. John Thinnes commented he likes
the idea but concerned about it being a new type of investment. Jon Currier
commented it sounds exciting, but he thinks it was more emotional than anything
else. Mike Zingaro commented he was in favor of diversification. Rick Rhodes
commented he agreed with the diversification. Rick commented it was riskier, but
they were bigger now and they need to diversify more. Rick commented he thinks
the fund needs to do it to grow more and keep them ahead of the game like they
were last year. Rick commented he was in favor of it. Eric commented $1 million
was not too significant so those were great points and would allow them to dip their
toe in.
13. The Board and John Thinnes discussed the fund further.
14. John Thinnes commented long term he would like to see the 10-15% of the fund
be invested in assets like this. John commented they could afford to, but right now
he only recommended $1 million because they have so much in real estate.
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The Board voted to approve at the recommendation of AndCo to move $1 000 000 to Mavik Capital
subiect to legal review and fund at his discretion to remain in line with the Investment Policy
Statement, upon motion by Mike Zingaro and second by Thomas Topor• motion carried 3-2 Eric
Bruns and Jon Currier opposed.
15. Pedro Herrera commented they would work on getting the documents completed.
Pedro commented when ready he would send it to Siera Feketa to send to Rick
Rhodes for signature. Pedro commented he just confirmed with John Thinnes the
Investment Policy Statement does not need to be amended.
c. Sugarman and Susskind, Pedro Herrera, Plan Attorney
i. Pedro Herrera commented he thinks they covered most of his items already.
ii. Pedro Herrera commented there was a Secure Act that passed a couple years ago. Pedro
commented two months ago the Secure Act 2.0 passed. Pedro commented the original
Secure Act increased the RMD age to 72 and this one increases it another year but was
contingent upon when they retire. Pedro commented they would be providing a special
report. Pedro commented they would likely need to amend the Ordinance to comply with
the change. Mike Zingaro asked if that means they need to start taking money at that age.
Pedro confirmed it does.
iii. Pedro Herrera reviewed the FPPTA trustees school commenting they would be there.
iv. Pedro Herrera reviewed the typical Division of Retirement school in Spring. Siera Feketa
commented she heard they may not continue due to a lack of attendance in the past.
Siera commented between her and Pedro they would keep the Board updated. The Board
discussed who was attending FPPTA.
8. Consent Agenda
a. Payment ratification
i. Warrants #57, #58
b. Payment approval
i. None
c. Fund activity report for October 20, 2022 — January 18, 2023
d. Jon Currier asked if its normal for Mike Zingaro to have two FPPTA fees. Siera Feketa
commented that was because one was for the CPPT program.
e. Rick Rhodes made note the COLA was on the fund activity report.
The Board approved the Consent Agenda as presented upon motion by Eric Bruns and second by
Jon Currier; motion carried 5-0.
9. Staff Reports, Discussions and Action
a. Foster & Foster, Siera Feketa, Plan Administrator
i. Fiduciary liability policy renewal
1. Siera Feketa reviewed commenting the policy expires on March 10, 2023. Siera
commented the renewal quote was $9,962.34, which was a base of $9,767.00 plus
a $195.34 FIGA surcharge. Siera commented the base premium was $37.00 more
than last year.
The Board voted to renew the Fiduciary Liability policy as presented upon motion by Eric Bruns
and second by Thomas Topor; motion carried 5-0.
ii. Upcoming educational opportunities
1. Siera Feketa reviewed the FPPTA 39'" Annual Conference from June 25, 2023
through June 28, 2023 in Orlando, FL.
iii. Siera Feketa reviewed the meeting location and the issues with the room if someone
needs to attend by phone. Siera commented she was not sure if they want to change
rooms or have Pedro Herrera reach out to the City.
iv. Rick Rhodes asked Pedro Herrera to send the City a letter. Pedro commented he thought
he sent an email, but he would send a letter and hopes to resolve this. Pedro commented
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he would work on that and then update the Board at the next meeting. Pedro commented
if they need to change locations before the next meeting, they have time to do that, but
he thinks they could resolve it.
10. Trustee's Reports, Discussion and Action — None.
11. Adiournment — The meeting was adjourned at 2:48PM.
12. Next Meeting — April 26, 2023, at 1:OOPM, quarterly meeting.
Respectfully submitted
-�by: Apprued-by-
Siera Feketa, Plan Administrator 'Jar Urrier, Secretary
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Date Approved by the Pension Board: 2
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