MINUTES OF THE CITY OF SARASOTA FIREFIGHTERS PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF MAY 26, 2021 Present: Chair Michael Hartley, Vice Chair Shelia Roberson, Secretary/Treasurer Shayla Griggs, Trustee Charles Joseph, and Trustee Scott Snow. Others: Attorney Pedro Herrera, Pension Plans Administrator Debra Martin, and Pension Specialist Peter Gottlieb. Absent: None. 1. CALL MEETING TO ORDER: Chair Hartley called the Sarasota Firefighters' Pension Plan Board of Trustees regular meeting to order at 9.00 a.m. 2. 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. 3. ROLL CALL: Chair Hartley noted all the trustees were present in chambers. Attorney Herrera appeared telephonically; Pension Plans Administrator Martin and Pension Specialist Gottlieb appeared in person. 4. PUBLIC INPUT: None. 5. APPROVAL OF MINUTES: 5.1. Approval Re: Minutes of the Firefighters' Pension Plan Board of Trustees Membership Meeting of April 28, 2021. Presenter(s): Chair Hartley. Trustee Snow made a motion to adopt the minutes from April 28, 2021, meeting; Trustee Joseph seconded the motion. The motion carried unanimously (5-0). 6. INVESTMENT PERFORMANCE REVIEW: 6.1. Presentation and Discussion Re: Cohen & Steers, Quarterly Performance Summary as of March 31, 2021. Presenter(s): Evan Serton, SVP Senior Portfolio Specialist; Brian Casey, Vice President; Cohen & Steers. Book 1 Page 238 05-26-2021 9:00 a.m. Book 1 Page 239 05-26-2021 9:00 a.m. Mr. Casey and Mr. Serton of Cohen & Steers appeared before the Board and introduced themselves. Chair Hartley noted this was Cohen & Steers' first presentation to the Board in person and thanked the presenters for their appearance. Mr. Casey expressed his appreciation for the opportunity to serve the Plan in the infrastructure space. Mr. Casey introduced himself, Mr. Serton, and Cohen & Steers' presentation. Mr. Casey stated there have been no changes in the firm or investment team. He discussed the presentation titled Firm at a Glance, elaborating on its physical presence in the markets in which it invests, and the Strategy Breakdown; he commented on the proposed federal infrastructure stimulus as indicative of the need for investment in domestic as well as foreign infrastructure. He explained renewable energy sources like wind and solar, as well as 5G communications, are preferrable investment sectors within the infrastructure space. Mr. Serton stated he would discuss a market overview, portfolio performance, and how Cohen & Steers has positioned the portfolio for the future. He referred to Covid Sensitivity Driving Performance Dispersion, and explained Cohen & Steers only holds publicly traded companies within 4 categories: communications, transportation, utilities, and mid-stream energy. He discussed listed infrastructure's under-performance in 2020 compared to the broader stock market and directed the Board's attention to Infrastructure Index Returns, noting it is market-level data which highlights listed infrastructure's underperformance during the pandemic. This underperformance makes the asset class very attractive for investment, which is shown on the slide in the presentation materials titled Relative Valuation Favors Global Infrastructure on a Historical Basis. He explained the Global Listed Infrastructure page shows Cohen & Steers' portfolio, and the Performance Attribution shows the greatest contributors and detractors to the portfolio, noting in which sectors it is over- and underweighted. Mr. Serton stated that since June of 2020 when the Plan made its initial allocation, the portfolio has performed consistently with the index, however the firm anticipates opportunities for outperformance in the short- and long-term future. Mr. Serton discussed Cohen & Steers Macro Outlook, noting how it is aligning the portfolio to take advantage of those sectors which are forecasted to out-perform, such as renewable energy, noting it is now more cost effective to deliver energy produced by solar and wind than by conventional coal-based methods, wireless tower companies which support 5G networks, and transportation. Mr. Serton discussed the Global Listed Infrastructure Portfolio Weights and in which areas are over and underweighted. Chair Hartley and Mr. Serton discussed investment in the water sub-sector, noting the underperformance was not related to usage but that utilities are not as leveraged to economic acceleration as other sub-sectors. Mr. Serton noted that all of the companies in which iti invests are private, non-government entities. Vice Chair Roberson and Mr. Casey discussed the total amount the Plan has invested with Cohen & Steers, and what details the Board would like to have on a summary page. Chair Hartley thanked Mr. Serton and Mr. Casey for their presentation and service to the Plan. 6.2. Presentation and Discussion Re: Oak Ridge, Quarterly Performance Summary as of April 30, 2021. Presenter(s): Rob McVicker, Co-Founder and Senior Portfolio Manager; Brent Troy, Regional Director, Oak Ridge. Brent Troy of Oak Ridge appeared before the Board telephonically and introduced himself, Mr. McVickers, and their presentation. Mr. Troy noted Oak Ridge is a small- and mid-cap growth investor whose goal is high quality growth exposure while focusing on risk adjusted returns and down-side protection. Its investment philosophy is based on solid fundamentals, consistency of fundamentals, and attention to valuation. He reviewed details from the Plan's portfolio performance since inception. Mr. McVickers discussed Oak Ridge's Investment Philosophy as being structured on fundamentals, sustainable earnings growth, and reasonable valuations. He reviewed Why We Focus on Consistent Earnings and Portfolio Characteristics. Audio issues disrupted the meeting beginning at 9:34:40 a.m.; the meeting resumed at 9:39:17 a.m. Mr. McVickers continued his discussion of the Portfolio Characteristics, noting that on page 16 of the materials, the line titled "1-Year Forward EPS Growth (%)" should be "1-Year Forward PE" for Price to Earnings ratio. He explained that while Oak Ridge has more costs, they believe it is required to invest in higher quality companies. Mr. McVickers discussed the portfolio's downside capture of.85 and turnover ratio being 35-40% compared to other small cap growth managers which have turnover ratios closer to the 200% range. He discussed the portfolio's positioning relative to market and economiç events during the last year and forecasted potentially difficult times for the short term as the market currently favors value stocks. That notwithstanding, he believes there are opportunities for outperformance in areas such as consumer discretionaries, that the core portfolio is performing well, and small cap stocks are predicted to grow faster than large caps. The Board asked Mr. McVickers and Mr. Troy to include a portfolio summary page in future materials, which includes the amount invested at inception, withdrawals, deposits, total current portfolio value. Mr. Troy confirmed the total portfolio value of $9.4 million as of April 30, 2021. Attorney Pedro Herrera appeared before the Board telephonically and introduced himself. He asked Oak Ridge to discuss the portfolio in the context of potential inflation and rising interest rates. Mr. McVickers discussed the Sector Weights and presented various economic forecasts and explained how its investment philosophy should perform favorably. Chair Hartley thanked Mr. McVickers and Mr. Troy for their presentation. 6.3. Presentation and Discussion Re: Wedge Capital Management, Quarterly Performance Summary as of March 31, 2021. Presenter(s): Richard Wells, General Partner, Wedge Capital Management Richard Wells of Wedge Capital Management appeared before the Board telephonically and introduced himself. Mr. Wells stated there have been no institutional changes at Wedge Capital; in its presentation materials, he reviewed the Overview, Value Across Strategies, Performance History, noting his next materials will include net results, Performance Attribution Analysis by QVM Sector, Q1 Attribution by P/E and Market Cap, and Characteristics and Sector Weighting. He noted that financials have been outperforming technology, which is a relatively rare event, however the last 6 months may indicate a rotation back to the norm. He reviewed Book 1 Page 240 05-26-2021 9:00 a.m. Book 1 Page 241 05-26-2021 9:00 a.m. Balancing Value with other Characteristics and addressed Wedge Capital's outlook regarding inflation and potentially rising interest rates, noting they review market performance from nearly the last 100 years after similar circumstances which are incorporated into their current investment modeling. Mr. Wells discussed how Value Finally Appears to be Taking the Leadership from Growth, Capitalization and Total Return from 12/31/20-3/31/21, and the Economic Balance Sheet. Chair Hartley and Vice Chair Roberson thanked Mr. Wells for his presentation, and specifically for their presentation layout and summary page. Trustee Snow suggested requesting Investment Consultant Scott Owens to review Wedge Capital's summary page and reach out to investment managers to use it as a format for their respective presentation materials moving forward. Pension Plans Administrator Martin stated she would work with Mr. Owens regarding the matter. 7. UNFINISHED BUSINESS: 7.1. Presentation and Discussion Re: Brown Advisory, Contract Clarification. Presenter(s): Chair Hartley. The Board and Attorney Herrera discussed the acceptability of the contract as being part of the negotiated rate. Trustee Joseph noted the docu-sign section stipulated outdated hardware and software requirements; Attorney Herrera explained this was part of a consumer disclosure and could clarify it with Brown Advisory. Pension Plans Administrator Martin asked if Brown Advisory should be restricted from using soft dollar trades as stipulated on item 11 in the Client Information Worksheet. Attorney Herrera stated he believed they should be restricted, but he would like to confer with Investment Consultant Owens. Chair Hartley noted that the Plan considered allowing soft dollar trades provided it was part of Brown's best execution which is part of their fee agreement. Attorey Herrera stated that he would work with Pension Plans Administrator Martin to resolve the discrepancy and proceed according to the Board's intent. Trustee Snow left the meeting at 10:29:14 a.m. and returned at 10:34:24 a.m. 7.2. Presentation and Discussion Re: Legal Fees. Presenter(s): Debra Martin, Pension Plans Administrator. The Board discussed why the Plan's legal fees appeared to exceed those of the City's other two defined benefit pension plans. Pension Plans Administrator Martin noted the first page shows the General Employees' and Police Officers' Plans attorneys fees including fees related to disability hearings; the second page shows the same without the disability legal fees. The Board noted the Sugarman Susskind fee has not changed since 2004. Trustee Joseph made an analogy to being willing to buying higher quality, more expensive gasoline when the price difference is $0.05, however not willing to spend more when the prices were $2.85 compared to $11. At Vice Chair Roberson's request, Pension Plans Administrator Martin clarified the General Employees' and Police Officers' Plans do not have retainer arrangements with their attorney, but instead pay set rates for services rendered, and that both plans have used the same firm for at least 10 to 20 years. Attorney Herrera explained the Police Officers' and General Employees' Plans use the law firm of Christiansen and Dehner, P.A. for legal counsel. To Chair Hartley's request, Attorney Herrera stated he would confirm if Sugarman & Susskind had ever reduced fees when a plan changed from being open to closed, and that they would be open to entertain any proposals the Board offers. The Board discussed their overall satisfaction with Sugarman Suskind and its relationship with the Board, and that a fee reduction, considering the Plan's closed status, was worth further discussion, as well as possibly changing to a fee for service arrangement. Vice Chair Roberson asked if the other boards' hourly rates were stated in the materials, as well as if the total amounts included discretionary expenses in addition to the hourly rates. Pension Plans Administrator Martin stated that the other boards pay an hourly rate, as well as set fees for some specific services, such as making photocopies of medical records for disability hearings. Chair Hartley asked Attomey Herrera to review the comparison graphs in the presentation materials and propose what Sugarman & Susskind believes to be a reasonable hourly rate at the next meeting. At Attorney Herrera's request, Pension Plans Administrator Martin noted that on page 1 of the materials, under FY: 2020-2021, the Sum of FF for March appears to include the April fee, which is not shown on the graph, possibly because of when it was paid, and apologized for the confusion. Chair Hartley noted page 2 is the correct comparison as it excludes the fees related to disability cases, and it shows the April payment on a separate line. Attorey Herrera stated he would bring a fee for service proposal to the next meeting. Vice Chair Roberson asked if the Plan had an agreement or contract with Sugarman & Susskind. Attorney Herrera clarified it has a continuing engagement letter, or what it refers to as an "evergreen contract," which renews until it is terminated or changed. Vice Chair Roberson asked Pension Administration for comparable fee information regarding the Plan's investment consultant but is not suggesting any action at this time. 8. NEW BUSINESS: None. Secretary Griggs noted that Pension Plans Administrator Martin had to leave the meeting, but she could obtain answers to questions regarding the Administrative Expense Budget and the Pension Fund Check Register items. 9. ATTORNEY MATTERS: Attorney Herrera stated that the state legislative session ended, and no bills had been passed which would affect any municipal pension plans in Florida. Al proposed bill to close the defined benefit arm of the Florida Retirement System for all non-special risk employees who were hired after July 1, 2021, was passed in the state Senate, however it failed in committee in the House of Representatives. This bill went further than similar iterations had in previous sessions. In the budgeting process, the state legislature allocated approximately $208 million to the Department of Economic Opportunity (DEO) to be distributed to "essential first responders." This will translate to approximately 50,000 police officers, 35,000 firefighters, 30,000 paramedics, and 30,000 EMTs who will receive $1,000 bonus checks. The DEO is charged with establishing rules for distribution by the end of the fiscal year on September 30, 2021. More clarity should be issued over the next few months. Attorney Herrera reminded the Board that financial disclosures are due by July 1. While the state will issue by mail forms to those who filed disclosures last year, a trustee who did not receive a disclosure in the mail is still required to file a disclosure. Book 1 Page 242 05-26-2021 9:00 a.m. Book 1 Page 243 05-26-2021 9:00 a.m. The FPPTA has a conference from June 27 through June 30 with opportunities for continuing education credits. Attorney Herrera plans to attend the conference for the second day. 10. OTHER MATTERS: 10.1. Presentation and Discussion Re: Administrative Expense Budget. Presenter(s): Debra Martin, Pension Plans Administrator. Secretary Griggs, Vice Chair Roberson, and Chair Hartley agreed the credit for travel was related to a conference in March which had been booked but cancelled. Secretary Griggs clarified for Trustee Snow that the accounting and auditing expense had been spent for the year, and no further expenses are required for the year. 10.2. Presentation and Discussion Re: Pension Fund Check Register January 1, 2021 to March 31, 2021. Presenter(s): Debra Martin, Pension Plans Administrator. Chair Hartley explained this item is because payments are made by ACH. Vice Chair Roberson stated she will be attending work training later in the year which occur on the dates of two Board meetings. She intends to submit requests for excused absences for those dates as they approach. 11. ADJOURN. Chair Hartley adjourned the meeting at 11:04 a.m. SAhak Chair Michael Hartley Secretg/yTreasurer Shayla Griggs