Book 1 Page 76 7/28/17 8:15 a.m. MINUTES OF THE CITY OF SARASOTA POLICE OFFICERS' PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF JULY 28, 2017 Present: Vice Chair Duncan Miller, Trustees Demetri Konstantopoulos and Johnathan Todd Others: Attorney Scott Christiansen, Senior Pension Analyst Anthony Ferrer, Senior Pension Accountant Cynthia Akersloot and Pension Specialist Lois Belle Absent: Chair Ron Baty Trustee and Secretary/Treasurer Pamela Nadalini 1. CALLI MEETING TO ORDER: Vice Chair Miller called the meeting to order at 8:15 a.m. 2. PLEDGE OF CIVILITY: Vice Chair Miller read into the record a memorandum from Mayor Willie Charles Shaw, dated February 13, 2015, entitled "City Commission and Advisory Boards Meeting Protocols and Pledge of Civility." 3. PUBLIC INPUT: No one signed up to speak. 4. APPROVAL OF THE MINUTES: 4.1. Approval Re: Minutes of the Police Officers' Pension Plan Board of Trustees Regular Meeting of June 23, 2017 A motion was made by Trustee Todd and seconded by Trustee Konstantopoulos to approve the Minutes of the Police Officers' Pension Plan Board of Trustees Regular Meeting of June 23, 2017. Motion carried unanimously (3-0). 5. APPROVAL OF RETIREMENT REQUESTIS): None 6 INVESTMENT PERFORMANCE REVIEW: 6.1. Presentation and Discussion Re: Franklin Templeton Investment Performance as of June 30, 2017 Presenter(s): Brian Beda, Business Manager, and Calvin Roseberry, Consultant, Franklin Templeton Brian Beda, Business Manager, and Calvin Roseberry, Consultant, Franklin Templeton, came before the Board and introduced themselves. Mr. Beda began with a brief overview of Franklin Templeton's background; that Franklin Templeton is compliant with the Police Officers' Pension Plan Investment Policy Statement; that the market value as of June 30, 2017 is $6,526,702; that at inception in 2006 the market value was $6,576,305 and while that appears very flat the fund has withdrawn $7,303,132 since inception. Mr. Roseberry provided a market overview; that growth outperformed value regardless of size; that Franklin Templeton lagged in benchmark in the short term but has outperformed the benchmark in the 5-year and 10-year performance review. Mr. Roseberry briefly described Franklin Templeton's strategy but confident with current portfolio holdings. Vice Chair Miller thanked Mr. Beda and Mr. Roseberry for their presentation. 6.2. Presentation and Discussion Re: J. P. Morgan Investment Performance as of June 30, 2017 Presenter(s): Jaclyn Weinman, Vice President, J.P. Morgan Asset Management Jaclyn Weinman, Vice President and Client Portfolio Manager, J.P. Morgan Asset Management introduced herself to the Board; that she is a real estate specialist; that she is new to the relationship but not new to the firm or the platform; that her role is meant to be a liaison between J.P. Morgan's investors and the portfolio management team. Ms. Weinman discussed J. P. Morgan's strategic property fund strategy and asset selection; that J.P. invests only in the four-traditional real estate asset classes: multi-office, family, retail and industrial; that the quality of assets is very high as well and J.P. pursues well leased, well located assets in strong demographic areas where you have liquidity when you want to sell and good quality construction. Ms. Weinman stated that J. P. really benefits from size; that they are a $42 Billion in asset value, gross asset value on a net basis. This allows J. P. to diversify across sector, geography and within markets. Ms. Weinman provided an overview of J. P. Morgan's conservative debt philosophy; that all debt is taken at the asset level and there is no recourse to the fund; that this philosophy allows J. P to avoid restrictive covenants from the Banks and cross-colateralization. This strategy allows less risk while achieving benchmark. Vice Chair Miller thanked Ms. Weinman for her very informative presentation. 6.3. Presentation and Discussion Re: Burgess Chambers Investment Performance as of June 30, 2017 Presenter(s): Larry Cole, Senior Consultant, Burgess Chambers & Associates Larry Cole, Senior Consultant, Burgess Chambers & Associates introduced himself to the Board and provided a brief overview of his role. Mr. Cole stated that the Custodial Records are the official records for Burgess' performance review; that ift there is discrepancy he works with the investment manager and the custodian to ensure figures are consistent and accurate. Mr. Cole advised the Board that NIS violated the stop trade requirement which caused some delay and issue with final reporting for second quarter 2017; that he will provide final numbers as soon as available to staff. Mr. Cole discussed the format of his presentation; that page 5 provides a specific summary of the Fund; that the beginning market value for the quarter was $213,691,478 with a return of 2.7% net of fees. Fiscal year to date up 8.2%, beating the target index. Mr. Cole recommended to the Board to rebalance the target asset allocation to take some risk out of the fund; that he would recommend taking $500,000 from domestic equity and put that into Convertibles; specifically, $250,000 from Wells and $250,000 from iShares and put $250,000 into Advent and $250,000 into SSI. He provided a brief overview of how convertibles work to the Board. The rationale for the recommendation is that the market is nine years into the bull market and the fund Book 1 Page 77 7/28/17 8:15 a.m. Book 1 Page 78 7/28/17 8:15 a.m. is overweighed in common stocks (domestic equity) sO given the current situation, begin to reduce some risk and move into a more defensive position. Ar motion was made by Trustee Todd and seconded by Trustee Konstantopoulos to rebalance portfolio to reduce domestic equity holding by $500,000 and increase convertibles by $500,000, as recommended by Burgess Chambers & Associates. Motion carried unanimously (3-0). 7. UNFINISHED BUSINESS: 7.1. Approval Re: Authorize the Chair and Secretary to Execute the Second Addendum to Custody Services Agreement between The Board of Trustees of the City of Sarasota Police Officers' Pension Fund and Fifth Third Bank Presenter(s): Attorney Scott Christiansen, Christiansen & Dehner Attorney Christiansen stated that the Second addendum eliminates the unintended services originally noted in the contract but that Fifth Third Bank is not performing. AI motion was made by Trustee Konstantopoulos and seconded by Trustee Todd to approve execution of the Second addendum to Custody Services Agreement between the Board of Trustees of the City of Sarasota Police Officers' Pension Fund and Fifth Third Bank. Motion carried unanimously (3-0). 8. NEW BUSINESS: None 9. ATTORNEY MATTERS: Attorney Christiansen provided an update on the Disability Claim for Mr. David Van Gostein; that there is a deposition scheduled in August 2017; that a full hearing before the Board of Trustees of the City of Sarasota Police Officers' Pension Fund thereafter. In response to a question from Trustee Todd asking if an initial decision had been rendered, Senior Pension Analyst Ferrer stated that Mr. Van Gostein had been granted eligible for a non-line of duty disability at the February 24, 2017 hearing. Attorney Christiansen reminded staff that the administration budget to State is due; that State money should be arriving in August and be deposited into Fund accordingly. Attorney Christiansen stated that Financial Disclosures were completed for all but Mr. Nixon, staff to follow up with Mr. Nixon; that Trustees Todd and Konstantopoulos must submit within 30 days of nomination to the Board. Attorney Christiansen provided a legislative update on SB80; that the new legislation requires 5 day written notification to Custodian of Records on records requests; that there is new legislation providing a property tax exemption for Police Officers and Firefighters disabled in the line of duty. 10. OTHER MATTERS: Senior Pension Analyst Ferrer stated that Chair Baty and Secretary/Treasurer: Nadalini will seek excused absences at the next meeting; that the Police Officers' Pension Plan Board of Trustee regular meeting of August 25, 2017 has been cancelled due to the State of the Pension workshop on August 31, 2017. 11. ADJOURN. Vice Chair Miller adjourned the Police Officers' Pension Board of Trustees Regular meeting at 9:50 a.m. a IN - Bbalay Vice Chair Miller Secretary/Treasurer Nadalini Book 1 Page 79 7/28/17 8:15 a.m.