Book 1 Page 265 12-01-2021 9:00 a.m. MINUTES OF THE CITY OF SARASOTA FIREFIGHTERS PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF DECEMBER 1, 2021 Present: Chair Michael Hartley, Vice Chair Shelia Roberson, Secretary/Treasurer Shayla Griggs, Trustee Charles Joseph, and Trustee Scott Snow. Others: Attorney Pedro Herrera, Attorney Caroline Quill, Pension Plans Administrator Debra Martin, Senior Pension Analyst Anthony Ferrer, and Pension Specialist Peter Gottlieb. Absent: None 1. CALL MEETING TO ORDER: Chair Hartley called the Sarasota Firefighters' Pension Plan (Plan) Board of Trustees regular meeting to order at 9.01 a.m. 3. PLEDGE OF CIVILITY: Presenter(s): Chair Hartley. Vice Chair Roberson stated for the record, "We may disagree, but we will be respectful to one another. We will direct all comments to issues. We will not engage in personal attacks.' 4. ROLL CALL: Pension Plans Administrator Martin called roll; all trustees were present. 2. PLEDGE OF ALLEGIANCE: Presenter(s): Secretary/Treasurer Griggs Secretary/Treasurer Griggs advised the City Commission had asked all advisory boards to state the Pledge of Allegiance at the beginning of each public meeting; she led the Board in the Pledge of Allegiance. 5. PUBLIC INPUT: None. 6. APPROVAL OF MINUTES: 6.1. Approval Re: Minutes of the Firefighters' Pension Plan Board of Trustees Regular Meeting of October 27, 2021. Presenter(s): Chair Hartley. Trustee Joseph noted that, at the October 27, 2021 meeting, Chair Hartley asked Sawgrass Asset Management if there had been any changes at the firm, Marty LaPrade stated there had not, however since that appearance, the Board has received communications advising some staff had left Sawgrass, Chris Greco being one such person. Chair Hartley noted that Mr. Greco was involved in marketing and not asset management, and that Sawgrass's CEO called and assured him Mr. Greco's departure would not affect the management of Plan assets, however the question could be posed to Graystone Consulting at the January 28, 2022 meeting. Vice Chair Roberson made a motion to adopt the October 27, 2021, meeting minutes; Trustee Joseph seconded the motion. The motion carried unanimously (5-0). 7. BOARD ELECTIONS: 7.1. Approval Re: Nomination to Firefighters' Pension Plan Board of Trustees Seat FF1. Presenter(s): Secretary/reasurer Griggs. Senior Pension Analyst Ferrer appeared before the Board and unsealed the ballots; Secretary/Treasurer: Griggs read the ballots. Secretary/Treasurer Griggs noted 3 ballots were received after the deadline and were therefore ineligible for consideration. Charles Joseph received 64 votes, James McCord received 15 votes, and 1 ballot was not marked. Of the 3ineligible votes, 2 were for Mr. Joseph and 1 was for Mr. McCord. Chair Hartley advised there was an irregularity with the voting process. Attorney Herrera advised that Pension Plans Administrator Martin had identified an issue to him which they discussed and presented to Chair Hartley. Pension Plans Administrator Martin stated that after ballots had been mailed, it came to her attention that, in addition to appropriately mailing ballots to all retired members, ballots were erroneously sent to 44 beneficiaries who are not eligible to vote in this election. Because the ballots are anonymous, Pension Administration was unable to determine if any beneficiaries cast votes in this election. Attorney Herrera explained the Board had two options: recast the election or deduct the number of erroneously mailed ballots from the candidate who received the majority vote. Because Mr. Joseph, after deducting 44 votes from his total, would have 20 votes which is greater than Mr. McCord's 15 votes, the Board could accept the results of this election as valid. Vice Chair Roberson noted that even if the 3i ineligible votes were counted towards Mr. McCord, Mr. Joseph would still have more votes. By consensus, the Board accepted the results of the election of Charles Joseph to an additional 4-year term to begin February 1, 2022. Vice Chair Roberson asked for a list of the trustees and when their seats would expire. Pension Plans Administrator stated it would be provided with the January 28, 2022 meeting materials. 8. INVESTMENT PERFORMANCE REVIEW: 8.1. Presentation and Discussion Re: UBS Trumbull, Performance Summary as of September 30, 2021. Presenter(s): Ronald Lanier, Managing Director, UBS Trumbull. Ronald Lanier of UBS Trumbull appeared before the Board telephonically and introduced himself. Mr. Lanier discussed the TPF investment results for City of Sarasota Firefighters' Pension Fund, noting that of the $3.6 million partial redemption requested in January 2021, UBS has paid out $2.2 million and $1.4 million remains. He clarified that the redemption priority is based on the total balance invested and not the amount of the redemption request. While computations of upcoming payouts have not been finalized yet, he Book 1 Page 266 12-01-2021 9:00 a.m. Book 1 Page 267 12-01-2021 9:00 a.m. estimates either half or all the remaining balance of the partial redemption should be paid in January 2022. He noted the TPF is trailing its benchmark, the Open-End Diversified Core Equity (ODCE), but in the years the Plan had taken distributions, income has steadily risen year to year. While the COVID-19 pandemic caused a downturn in the market resulting in vacancies in 2020, the distribution in 2020 was still higher than the full year of 2016. At Chair Hartley's request, Mr. Lanier explained that although the TPF fund holds property and the TPI is an income fund, both generate income, and the Plan has elected to receive that income on a quarterly basis. Mr. Lanier reviewed the TPI investment results for City of Sarasota Firefighters' Pension Fund. He noted the progressively increasing income until 2021; he attributed the drop in 2021 to COVID-19. He also noted that the Plan has elected quarterly income distributions and occasionally distributions are made after the end of the quarter, as is the case with the October 18, 2021 distribution from the TPI fund and the October 5, 2021 and October 22, 2021 distributions from the TPF fund. He explained that the TPF is leading the Hybrid Debt Index (HDI) yet trailing the ODCE index because the TPF is more conservative with no leverage, while the ODCE has approximately 22% leverage; he expects the TPF to continue to trail the ODCE over time. Mr. Lanier reviewed the portfolio, starting with Trumbull Property Fund highlights, Full market cycle total returns peak to peak, TPF performance VS. NFI-ODCE which splits the income and appreciation components of the portfolio and ODCE index, TPF VS. Barclays Capital Aggregate Bond Index, TPF fund restructure, and TPF Diversified Core & Non-Strategic elaborating on Sector allocation and regional allocation. He discussed Non-Strategic asset ("NSA") disposition forecast, noting there may be some shift between 2023 and 2022 sales, and Non-Strategic sales activity. Regarding the TPF Diversified Core VS. ACOE, which is the All Core Open End index, Mr. Lanier stated the Total property-level return overall from 7/1/20 = 9/30/21 has been revised from 11.3% to 12.4% return; the revision is due to a once-a-decade change in UBS's accounting system. He stated this is a positive indication that the TPF will be competitive to the industry benchmark. He reviewed the TPF sector strategies, noting the differences between Q2 2018 and 3Q 2021, TPF portfolio strategy (3Q21), Capital flows, adding he expects the pending partial redemption to be mostly or completely satisfied in January 2022. He also noted the redemption pool increased to $8.6 billion in 2020 but reduced to $7.4 billion in 2021; he anticipates at least $600 million, if not $1 billion, to be paid out of the redemption pool in January 2022 depending on when sale transactions can be completed. Mr. Lanier discussed how the loyalty program, which the Plan is participating in, has begun to reward clients with decreased fees; he stated UBS's clients have approximately $4.7 billion invested under the loyalty program, and UBS will continue to allow enrollment into that program in 2022 as it remains beneficial to both UBS and clients. At Vice Chair Roberson's request, Mr. Lanier discussed how COVID-19 has affected UBS's operations; it has a 10-year lease with options for renewal to 20 years, and it is gradually bringing staff back into in-person work. Approximately 50% of its staff is currently working remotely, although it is waiting for more information about the omicron variant. Mr. Lanier discussed the Trumbull Property Income Fund, Investment returns from participating mortgages, TPI performance, TPI investment objectives, TPI VS. Barclays Capital Aggregate Bond Index, TPI VS. NFI- ODCE and Barclays Capital Aggregate Bond Index, TPI VS. Hybrid Debt Index, Risk-return profile versus NFI-ODCE funds, Total return focus, TPI portfolio diversification, TPI performance. Mr. Lanier asserted both the TPI and TPF portfolios are well-positioned going forward. The TPF has passed a difficult phase and has begun a rebound which is expected to continue as it sells off non-strategic assets. The TPI has come through a cyclical downturn due to COVID-19, and, depending on Q12022, he hopes for returns between 10% and 15% over the next calendar year. Mr. Lanier concluded his remarks in stating that UBS will begin to increase the portfolio's leverage from 17% to 22%, to be closer to the benchmark. While being conservative with less leverage during the pandemic helped to reduce the portfolio's down-capture, now that the country is beginning to emerge from the pandemic, increasing the leverage should increase its up-capture. Chair Hartley thanked Mr. Lanier for his presentation. 9. NEW BUSINESS: None. 10. UNFINISHED BUSINESS: None. 11. ATTORNEY MATTERS: Attorney Herrera introduced Caroline Quill who has been a new associate at Sugarman & Susskind for approximately a year. Attorney Quill introduced herself and, in consideration of the holiday season, advised the Board on ethics rules regarding gifts to public officials. Generally, any gift intended to influence a Board member should be refused or returned. That notwithstanding, gifts under $25 do not require any disclosure or reporting. When a gift is valued between $25 and $100, the person giving the gift should report the gift to the State of Florida. Gifts over $100 should be refused or donated, and the recipient should report to the State of Florida: the gift, who gave the gift, and state the gift's value. The Board had no questions. Attorney Herrera stated that Sugarman & Susskind will, if acceptable to the Board, give a charitable holiday donation on behalf of the Board to the Marilyn Susskind Cancer Research Fund, which works with the University of Miami Cancer Research Center, and was founded by Attorney Robert Sugarman. Trustee Joseph pointed out that the University of Miami has done significant cancer research for firefighters, and it is a worthy cause. Chair Hartley expressed his support as well. Lastly, Attorney Herrera noted there will an FPPTA trustee school in late January in Orlando. There will be a State of Florida school in late springlearly summer, usually at Florida State University in Tallahassee. Also, the FPPTA traditionally has a conference in June or early July. 12. OTHER MATTERS: 12.1. Presentation and Discussion: Administrative Expense Budget Analysis. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin noted this is the final expense budget analysis for fiscal year 2021. Budgeted expenses were 86.9% expended. Savings were attributed to trustees not traveling and changes in insurance. Book 1 Page 268 12-01-2021 9:00 a.m. Book 1 Page 269 12-01-2021 9:00 a.m. Trustee Joseph asked how inflation may change the budget. Secretary/Treasurer: Griggs noted computer software costs and supply costs may increase. Pension Plans Administrator Martin stated that there are also reductions in supply needs due to changing some processes to being electronic, which reduce costs. Chair Hartley noted the changes to the reduction in legal costs. 12.2. Presentation and Discussion: Check Register, July 1, 2021, to September 30, 2021. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin explained this is presented because payments are made by ACH. Chair Hartley asked for clarification of the payment to Travelers' Insurance on August 12, 2021. Pension Plans Administrator Martin explained this was the liability insurance. Pension Plans Administrator Martin added that Pension Administration is working with Gabriel Roeder Smith on its valuation of the Plan as well as Maudlin & Jenkins on its annual audit; a clean audit is expected. Trustee Snow asked if the Board had any additional information regarding Graystone Consulting's Unified Management Account (UMA) program discussed at the October 27, 2021 meeting. A discussion ensued. The Board generally expressed support for potentially reducing costs, as well as concern for hiring and retaining fund managers which do not participate in the UMA, as well changing custodial banks. Pension Plans Administrator Martin stated that Plan and the General Employees' Pension Plan use Salem Trust; the Police Officers' Pension Plan uses Fifth Third Bank. Neither she nor Secretary/reasurer Griggs have noticed any service differences between the two. Pension Plans Administrator Martin also stated that the General Employees' Pension Plan does not currently use the UMA. Chair Hartley advised he spoke with Scott Owens of Graystone Consulting about some of his concerns; he also wants to speak with more fund managers, and asked for this item to be added to the January 28, 2022 meeting agenda. Trustee Joseph noted that fund managers receive benefits from participating in the UMA and are free to decide whether those perceived benefits outweigh the associated reduced fees. Morgan Stanley receives greater fees by taking on more tasks in trade transactions. However, while the potential savings from enrollment in the UMA may be relatively insignificant in the context of the Plan's portfolio, the projected $220,000 annual savings could cover 4 pensions for a year. Chair Hartley agreed but added that this arrangement appears like "pay for performance." Attorney Herrera gave an overview of the program and explained it had been called a "wrap fee program" because services which are currently performed and billed by separate institutions would be bundled under a single fee which is less than the total of the separate fees. He noted that alternative investments would be handled outside the UMA program and was unsure of how those transactions would work, but he did not believe a separate custodian would be required. He also explained that instead of the Plan having contracts with individual fund managers, the Plan would have a contract with Graystone Consulting and be a third- party beneficiary to the contracts between Graystone Consulting and participating fund managers. There are approximately 10 custodial banks the Plan could choose from. Attorey Herrera stated that, despite appearances, the UMA program is not a "pay for performance" arrangement and has been available for at least 15 years. While he suggested the Board ask Graystone Consulting why it hadn't offered the program previously, he noted that other clients which use the UMA program tend to have less assets than the Plan, and more sizable pension plans tend to function as the Plan does now. Chair Hartley and Vice Chair Roberson expressed concern for identifying fund managers which do not participate in the UMA; Attorney Herrera suggested the Board could ask Graystone Consulting for the criteria a fund manager must satisfy to participate in the UMA. He also suggested the Board ask Graystone Consulting to clarify the process by which a non-participating fund manager could be hired by the Plan, as well as if the custodial bank for UMA-participating managers could accept assets for fund managers which do not participate in the UMA. At Vice Chair Roberson's request, Attorney Herrera stated that Aventura Police has recently discussed enrolling in the UMA, and he would reach out to them for more information. Chair Hartley asked Attorney Herrera to reach out to similarly sized plans which have recently enrolled. Trustee Snow stated he was concerned that participation in the UMA might discourage managers from approaching the Plan. Chair Hartley stated that in his history of being on the Board, approximately a third of its fund managers were outside of the investment consultant's recommendation. Vice Chair Roberson asked if there would be any benefit to hearing from Salem Trust. Attorney Herrera stated that Salem Trust's fee rate is based on the amount of assets under custody, and therefore if the amount of assets is decreased, the fee rate would likely increase. Further, there would be additional staff time required as well as additional reporting and processing. Chair Hartley, Vice Chair Roberson, Secretary/Treasurer: Griggs, Trustee Joseph, and Trustee Snow each stated they wish to participate in thel FPPTA school in. January. Pension Plans Administrator Martin discussed what trustees would need to do regarding registering and securing lodging while at the school. Chair Hartley noted he is already registered. Pension Plans Administrator Martin noted the FPPTA now charges a $300 guest fee to attend events which is not payable by the Plan. 11. ADJOURN. Chair Hartley adjourned the meeting at 11:02 a.m. d /Chair Michael nag Hartley Secretary//gasurer Shayla G149 Book 1 Page 270 12-01-2021 9:00 a.m.