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HomeMy WebLinkAboutMinutes Police Pension 112812City of Palm Beach Gardens Police Officers' Pension Fund Minutes of the Meeting Held November 28, 2012 The regular meeting of the Board of Trustees of the City of Palm Beach Gardens Police Officers' Pension Fund was called to order at 9:01 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 David Pierson, Secretary Brad Seidensticker, Trustee Greg Mull, Trustee Marc Glass, Trustee OTHERS PRESENT Audrey Ross (Resource Centers) Bonni Jensen (Law Offices of Perry & Jensen) Donna Kramer (PBG Clerk's Office) Steve Stack (ICC Capital Management) John McCann (Thistle Asset Consulting) Steve Palmquist (GRS) Pete Strong (GRS) ACTUARY REPORT GRS — Presented by Steve Palmquist & Pete Strong Mr. Palmquist explained that he was here today to personally address the board regarding a letter that they recently received regarding his upcoming retirement; January 1, 2013. Mr. Spencer wanted to first thank Mr. Palmquist for all the great services that he has provided to the board over the many years. He noted that Mr. Palmquist has been involved with the building of this Plan since the beginning and he has been a true asset. Mr. Palmquist introduced Mr. Strong to the board and stated that Mr. Strong will be taking over for him. Mr. Strong welcomed himself and commented that he has been working closely with Mr. Palmquist for the last 5 years in preparation of his upcoming retirement. Mr. Palmquist explained that his team of Actuaries behind the scenes will still remain in place, and there will always still be 2 senior Actuaries and 1 senior Analysis working on every project. The board wished Mr. Palmquist luck in his retirement. INVESTMENT MANAGER REPORT ICC Capital Management — Presented by Steve Stack Mr. Stack wanted to address the inquire of ICC with Munder. He explained that ICC has signed a letter of intent with the company Munder out of Michigan. In return Munder has sent a care package to ICC and they are currently working on gathering all the information needed. Mr. Stack stated that after that process has been completed, then ICC will either enter into a final agreement with Munder or they won't. He noted that he does not have an exact timeline to the transition at the moment if it does happen, although the probability of the transition happening is about 75% at this time. Mr. Stack explained that Munder will retain ICC's employees and that they also offer a lot more opportunity to ICC investment wise. He reassured that board that if the transition did go through, that there would be no changes to this Plan's portfolio, portfolio team, fees, etc. Mr. Stack noted that he will update the board as more information becomes available. Mr. Stack updated the board on another firm /client related item. He stated that ICC has had their second largest client leave them last quarter due to changes the client made to their plan. He noted that ICC is trying to get back with them because they were a client of theirs since 1995. This plan will not be impacted because the client that left was in a separate portfolio. Mr. Stack reviewed the September 30, 2012 fixed income report and commend that they ended the quarter with $16,118,391 in assets. The total fund outperformed the index net of fees for the quarter at 1.70% versus 1.59 %, but for the fiscal year the fund was behind net of fees at 4.93% versus the index at 5.16 %. On the equity side the fund was behind for the quarter and fiscal year at 4.91% versus 6.11% and 24.64% versus 29.19 %, respectively. Mr. Stack explained that their underperformance was mainly to do with one stock, Apple. Apple had the biggest holding in the market during the quarter at 9 %, and ICC only had a 1% holding in them. He stated that they missed out then, but since the quarter Apple has sold off and ICC has benefited from that with a gain of 300 basis points. Lastly he commented that they are currently trying to find a way to reserve the capital because of the issues overseas. INVESTMENT CONSULTANT REPORT Thistle Asset Consulting - Presented by John McCann Mr. McCann reviewed the Plans investment style as of the end of the fiscal year. Overall he commented that the portfolio is nicely diversified between large and mid cap companies and well as International. Mr. McCann noted that the plan had a great fiscal year ending September 30, 2012 with a total net return of 18.63% versus the index at 19.60 %. The plans assumed rate of return of 7.75% was beat for this fiscal year, and we will also be dropping off a very bad year from 2008 at the end of this fiscal year which will be very beneficial to the fund. Mr. McCann reviewed each manager's performance during the quarter and the fiscal year. He noted that Apple was held in 3 different funds within the equity portfolio and RhumbLine's 3 accounts were all in line with the index for the quarter and fiscal year. Mr. McCann commented that American Realty had another capital call on 10/1/2012, which is not reflected in this report. With the recent funding American Realty is now up to $1M and Mr. McCann stated that he would like the board to consider allocating more to them from the ICC's fixed income account. He reminded the board that we are taking the yield from American Realty every quarter and using it for benefit payments instead of reinvesting them. Mr. McCann reviewed the plans asset allocation and commented that he would recommend moving $1.5M from the ICC fixed income account to the American Realty account. This would now move the American Realty allocation up to 5% ($2.5M) of the portfolio. He noted that if the board did decide to do this, then they would also need to amend their investment policy guidelines to increase the allocation target to American Realty. The board had a lengthy discussion on the transfer that was being recommended. MOTION: Mr. Pierson made a motion to authorize the transfer of $1.5M from the ICC fixed income account to the American Realty account per the Investment Consultants recommendation. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 5 -0. MOTION: Mr. Seidensticker made a motion to amend the investment policy guidelines to increase the allocation target to American Realty to 5 %, and to also approve the Chair to execute the revised investment policy guidelines in between meetings. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 5 -0. Mr. McCann discussed with the board some other investment ideas and opportunities. He recommended adding more into real estate, repositioning the International and RhumbLine accounts. The board had a lengthy discussion on the different ideas and asked Mr. McCann to put together an asset allocation and bring it back to the next meeting. The Trustees also discussed gold, commodities, and ETF's. Mr. McCann stated that if the board was looking into something of that nature, then they would need to purchase either ADR's or ETF's because not a lot of companies trade domestically with gold or commodities. He noted that he will also bring back some more information regarding this as well. ATTORNEY REPORT Law Offices of Perry & Jensen - Presented by Bonni Jensen Ms. Jensen explained that the Plan received a letter from the Division of Retirement regarding the recent Ordinance changes that were passed, which lowers the plans benefits. This letter is known as the "Naples Letter ". Ms. Jensen reviewed the letter with the board and explained the Division of Retirement's new interpretation of the Chapter 185 monies (in which they are now changing their interpretation after many years). The Division now wants the Trustees to determine if their 185 monies meet the minimum requirements that were in place as of 1999. Ms. Jensen explained that in order for this to be determined, GRS would need to do the actuarial analysis. MOTION: Mr. Seidensticker made a motion to authorize and approve GRS to prepare a calculations /analysis in accordance to the letter the Plan received from the Division of Retirement regarding the minimum Chapter 185 benefits since 1999. SECOND: Mr. Glass seconded the motion. CARRIED: The motion carried unanimously 5 -0. Ms. Jensen reviewed some of the benefit changes that were recently passed and the effect it will have on some members. For example, now the DROP eligibility is according to years of service and not age like before. Therefore if a member is not hired by the City before they are 29 years of age, then they will never be eligible to enter the DROP because they will be pass that 30 year max of service that is allowed under the DROP provision. The new retirement eligibility states that members must be age 59 to retire and most people in the work force now will have over 30 years of employment by age 59. The DROP clause stated that members are not eligible to enter the DROP past their 30th year of employment. Mr. Mull stated that the revised contract started effective September 13, 2012 and is only in place for 1 year; therefore they can address this issue during the next contract in 2013. Lastly Ms. Jensen also stated that once GRS completes the analysis and if the minimum benefits are met then the plan will stay as is. But if the analysis reflects that there is additional money left over after the minimum benefits from 1999 have been met, then that money can be used to buy down the age 59 requirement back to age 52 with 25 years of service (back to what the normal retirement eligibility has always been prior to the recent changes). We will find out more after the analysis is complete. Ms. Jensen commented that she was contacted by the plan's securities monitor; Kessler, Topaz, Meltzer & Check (KTMC). KTMC stated that they will file all class action filings for free on behalf of the board. Ms. Jensen noted that Salem Trust also currently offers this service for free as well. Although in September Salem Trust sent out a letter to all their Plan's stating that they were going to start charging for their class action monitoring services. Salem Trust ended up retracting back their original letter fairly quickly because it is already in their contract that they would provide this service as no additional cost. Since then Salem Trust has stated that they may approach their clients in the near future to revise their contracts to either remove the class action servicing part all together, or they will start charging for the service. The Board discussed what Salem Trust provides as well as KTMC, and asked Ms. Jensen to invite KTMC to their next meeting as they would like to hear from them regarding their class action filing process. Ms. Jensen noted that she will invite KTMC to the January 31, 2013 meeting. Ms. Jensen presented that board with the revised PRC fee addendum to be executed. She commented that the board previously approved a monthly fee retainer increase from $2,275 to $2,575 per month effective September 1, 2012. Ms. Jensen noted that she is assisting former Trustee Wayne Sidey with his appeal because when he left the board he never received his Form 1 Disclosure due to the fact that he moved out of the State. Therefore he missed the deadline to file and he was hit with a fee in which they are in the process of appealing. ADMINISTRATOR REPORT Resource Centers — Presented by Audrey Ross Ms. Ross started that recently an active member passed away and she needs the boards help in determining who will be the beneficiary of his death benefit. This member did not have a beneficiary form on file and he was partially vested in the Plan with 8 years and 9 months of service. It was also noted that the member was not married at the time of his death, although he did have a dependant child. The Board disused the situation and Ms. Jensen reviewed the Plan's language with the board and noted that in this case since the member did not have a beneficiary form on file, the board can make the discretion as to where the payment can go. Ms. Jensen noted that her recommendation would be to pay the members estate since there is no surviving spouse, and also his child cannot receive a benefit at this time or at any other time in the future either. She explained that the child would not be able to start collecting the benefit until the members early or normal retirement date is reached, and in this case the child will already be over the age of 18 by that time and would no longer be entitled to the benefit. The Trustees' has a lengthy discussion on the different options. MOTION: Mr. Seidensticker made a motion to pay out the non -duty death benefit to the Estate of Mr. Thomas Juric. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 5 -0. Ms. Ross noted that she will send the necessary information over to GRS so they can calculate his lump sum benefit that will be paid to his Estate. Ms. Ross presented the board with the 2013 meeting dates. MINUTES MOTION: Mr. Seidensticker made a motion to approve the minutes from the August 9, 2012 regular meeting. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 5 -0. DISBURSEMENTS APPROVALS MOTION: Mr. Pierson made a motion to approve the disbursements. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 5 -0. BENEFIT APPROVALS MOTION: Mr. Mull made a motion to approve the applications to enter the DROP for Andrew Spragg, Christopher Barca, Gary Carmack, Jack Schnur, Jeffrey Main, Ralph Kranchick, and Robert Christoffers. SECOND: Mr. Glass seconded the motion. CARRIED: The motion carried unanimously 5 -0. MOTION: Mr. Seidensticker made a motion to approve the application for distribution of DROP account (2/15/2013) for Jay Spencer. SECOND: Mr. Glass seconded the motion. CARRIED: The motion carried unanimously 4 -0. *Jay Spencer sustained from the vote* *Form 8B on file* OTHER BUSINESS Ms. Ross presented the board with the September 30, 2012 Audit Engagement Letter from Cherry, Bekaert & Holland. She noted that CBH is increasing their fee this year from $14,500 to $14,850 after 4 years. MOTION: Mr. Seidensticker made a motion to approve September 30, 2012 Audit Engagement Letter, including the fee increase to $14,580. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 5 -0. Ms. Ross presented the board with the 2013 Fiduciary Liability Insurance Renewal. She commented that the renewal fee this year is $5,572, which is $322.30 lower than last year. MOTION: Mr. Seidensticker made a motion to bind coverage for the 2013 Fiduciary Liability Insurance. SECOND: Mr. Mull seconded the motion. CARRIED: The motion carried unanimously 5 -0. Ms. Ross presented the board with the September 30, 2012 Salem Trust class action report. She noted that there were no class actions filed or there were settlements received in on behalf of the plan during the quarter. PUBLIC COMMENTS N/A AJOURN There being no further business, and the future meetings are scheduled for the 3rd Thursday of the first month proceeding the quarter. The next regular meeting was scheduled for Thursday January 31, 2013 at 9AM; the Trustees officially adjourned the meeting at 11:22AM. Re ec fully sub it d, A DAVID PIERSON, Secretary FORM 813 MEMORANDUM OF VOTING CONFLICT FOR COUNTY, MUNICIPAL, AND OTHER LOCAL PUBLIC OFFICERS L "� "' ^ " "� -FIRST NAME- IDDLE NAME NAME OF BO D COMMISSION UTI�ORITY, 0 COMMITTF , MAILING k\- -,,E,- 'Cs en to 'f �" f n /`x v /CIOUN(T��� THE BOARD, COUNCIL, COMMISSION, AUTHORITY OR COMMITTEE ON WHICH I SERVE IS A UNIT OF: CITY ❑COUNTY ]OTHER LOCAL AGENCY "/ M NAME OF POLITICAL SUBDIVISION: DATE ON HICH V TE OCCURRED MY POSITION IS: I2 ELECTIVE ❑ APPOINTIVE WHO MUST FILE FORM 813 This form is for use by any person serving at the county, city, or other local level of government on an appointed or elected board, council, commission, authority, or committee. It applies equally to members of advisory and non - advisory bodies who are presented with a voting conflict of interest under Section 112.3143, Florida Statutes. Your responsibilities under the law when faced with voting on a measure in which you have a conflict of interest will vary greatly depending on whether you hold an elective or appointive position. For this reason, please pay close attention to the instructions on this form before completing the reverse side and filing the form. INSTRUCTIONS FOR COMPLIANCE WITH SECTION 112.3143, FLORIDA STATUTES A person holding elective or appointive county, municipal, or other local public office MUST ABSTAIN from voting on a measure which inures to his or her special private gain or loss. Each elected or appointed local officer also is prohibited from knowingly voting on a mea- sure which inures to the special gain or loss of a principal (other than a government agency) by whom he or she is retained (including the parent organization or subsidiary of a corporate principal by which he or she is retained); to the special private gain or loss of a relative; or to the special private gain or loss of a business associate. Commissioners of community redevelopment agencies under Sec. 163.356 or 163.357, F.S., and officers of independent special tax districts elected on a one -acre, one -vote basis are not prohibited from voting in that capacity. For purposes of this law, a "relative" includes only the officer's father, mother, son, daughter, husband, wife, brother, sister, father -in -law, mother -in -law, son -in -law, and daughter -in -law. A "business associate" means any person or entity engaged in or carrying on a business enterprise with the officer as a partner, joint venturer, coowner of property, or corporate shareholder (where the shares of the corporation are not listed on any national or regional stock exchange). ELECTED OFFICERS: In addition to abstaining from voting in the situations described above, you must disclose the conflict: PRIOR TO THE VOTE BEING TAKEN by publicly stating to the assembly the nature of your interest in the measure on which you are abstaining from voting; and WITHIN 15 DAYS AFTER THE VOTE OCCURS by completing and filing this form with the person responsible for recording the min- utes of the meeting, who should incorporate the form in the minutes. APPOINTED OFFICERS: Although you must abstain from voting in the situations described above, you otherwise may participate in these matters. However, you must disclose the nature of the conflict before making any attempt to influence the decision, whether orally or in writing and whether made by you or at your direction. IF YOU INTEND TO MAKE ANY ATTEMPT TO INFLUENCE THE DECISION PRIOR TO THE MEETING AT WHICH THE VOTE WILL BE TAKEN: • You must complete and file this form (before making any attempt to influence the decision) with the person responsible for recording the minutes of the meeting, who will incorporate the form in the minutes. (Continued on other side) i APPOINTED OFFICERS (continued) • A copy of the form must be provided immediately to the other members of the agency. • The form must be read publicly at the next meeting after the form is filed. IF YOU MAKE NO ATTEMPT TO INFLUENCE THE DECISION EXCEPT BY DISCUSSION AT THE MEETING: • You must disclose orally the nature of your conflict in the measure before participating. • You must complete the form and file it within 15 days after the vote occurs with the person responsible for recording the minutes of the meeting, who must incorporate the form in the minutes. A copy of the form must be provided immediately to the other members of the agency, and the form must be read publicly at the next meeting after the form is filed. DISCLOSURE OF LOCAL OFFICER'S INTEREST I, Ja I_�_� , hereby disclose that on �( K) Q M �ck � 20 r: (a) A measure came or will come before my agency which (check one) inured to my special private gain or loss; inured to the special gain or loss of my business associate, inured to the special gain or loss of my relative, inured to the special gain or loss of whom I am retained; or inured to the special gain or loss of is the parent organization or subsidiary of a principal which has retained me. (b) The measure before my agency and the nature of my conflicting interest in the measure is as follows- \J cl) On 1q t n e J �- .ice (C C�� (I JJ I2 ni eJ 0 � � ��> 1 Y - J�J �JJ 1J1 �J 1JJicJ }, ir�c KcL�� -�-�J J Date Filed Sign by which NOTICE: UNDER PROVISIONS OF FLORIDA STATUTES §112.317, A FAILURE TO MAKE ANY REQUIRED DISCLOSURE CONSTITUTES GROUNDS FOR AND MAY BE PUNISHED BY ONE OR MORE OF THE FOLLOWING: IMPEACHMENT, REMOVAL OR SUSPENSION FROM OFFICE OR EMPLOYMENT, DEMOTION, REDUCTION IN SALARY, REPRIMAND, OR A CIVIL PENALTY NOT TO EXCEED $10,000. CE FORM 8B - EFF. 1/2000 PAGE 2