MINUTES OF THE DECEMBER 7, 2016, CITY OF SARASOTA FIREFIGHTERS PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING Present: Chair Michael Hartley, Vice Chair Shelia Roberson, and Trustees Charles Joseph and Scott Snow Others: Attorney Pedro Herrera, Pension Plans Administrator Harry Ramphal, Senior Pension Analyst Anthony Ferrer, and Pension Specialist Chinyere Deehan Absent: Secretary/Treasurer Pamela M. Nadalini 1. CALL THE MEETING TO ORDER (AGENDA ITEM 1): Chair Hartley called the meeting to order at 9:00 a.m. 2. PLEDGE OF CIVILITY (AGENDAI ITEM 2): Trustee Joseph read into the record a memorandum from Mayor Willie Charles Shaw dated February 13, 2015, entitled "City Commission and Advisory Board Meeting Protocols and Pledge of Civility." 3. CHANGE TO THE ORDER OF THE DAY: Chair Hartley presented the following Change to the Order of the Day: A. Move Item No. 8.1. to before Item 5., SO Actuary Brad Armstrong, Gabriel Roeder Smith and Company, may speak regarding the Plan's Assumed Rate of Return. Chair Hartley noted Board consensus to approve the Change to the Order of the Day. 4. PUBLIC INPUT (AGENDA ITEM 3): No one signed up to speak. 5. APPROVAL OF MINUTES (AGENDAI ITEM 4): 1) Approval Re: Minutes of the Firefighters' Pension Plan Board of Trustees Regular Meeting of October 26, 2016 (Agenda Item 4.1) In response to a question from Trustee Snow asking if Pension Administration has received any information regarding the City/County allocation of State of Florida Funds, Pension Plans Administrator Ramphal stated that the information has not been provided at this time. A motion was made by Trustee Joseph, seconded by Trustee Snow, to approve the Minutes of the October 26, 2016, Meeting of the Firefighters' Pension Plan Board of Trustees. Motion carried unanimously (4-0). 6. NEW BUSINESS (AGENDA ITEM 8): 1) Presentation and Discussion Re: Assumed Rate of Return (Agenda Item 8.1) Brad Armstrong, Actuary, Gabriel Roeder Smith and Company, came before the Board and Charles Mulfinger, Managing Director, Graystone Consulting, came before the Board via teleconference to discuss the Plan's Assumed Rate of Return. Book 1 Page 45 12/07/16 9:00 A.M. Book 1 Page 46 12/07/16 9:00 A.M. In response to questions by Trustee Snow and Chair Hartley regarding the Plan's Assumed Rate of Return, Mr. Armstrong stated that as of the Fiscal Year Ended September 30, 2014, the Plan's Assumed Rate of Return was 7.25%; that within the past year, the Board took action to lower the rate to 7.00%. Vice Chair Roberson read into the record an excerpt of the February 24, 2016, minutes in which the Board unanimously approved lowering the Plan's Assumed Rate of Return to 7.00% for the Fiscal Year Ended September 30, 2015, and September 30, 2016, while mplementing a six-year amortization period for Fiscal Year 2018. In response to a question by Trustee Snow regarding the implementation of the mortality table, Vice Chair Roberson stated that the mortality table will be implemented when mandated. In response to a question from Chair Hartley asking when the six-year amortization table will be mandated; Mr. Armstrong stated that the amortization table will be mandated and implemented during Fiscal Year 2018. In response to a question from Chair Hartley asking the net of fees Assumed Rate of Return, Mr. Mulfinger stated 6.5%. Chair Hartley stated that an impact study for a six-year amortization utilizing a 6.9% and a 6.75% Assumed Rate of Return should be prepared. In response to a comment and a question from Vice Chair Roberson indicating the Board has been prudent in previously lowering the Plan's Assumed Rate of Return and asking Mr. Mulfinger's view, Mr. Mulfinger stated that the Board has been proactive in lowering the rate and no reason is seen to lower the Assumed Rate of Return at this time. 7. APPROVAL OF RETIREMENT REQUESTIS) (AGENDA ITEM 5): None. 8. INVESTMENT PERFORMANCE REVIEW (AGENDA ITEM 6): 1) Presentation and Discussion Re: Sawgrass Asset Management Investment Review (Agenda Item 6.1) Gregg Gosch, Client Service Representative, and Martin LaPrade, Portfolio Manager, Sawgrass Asset Management came before the Board to discuss the Plan's Large Cap Growth Equity portfolio. Mr. LaPrade stated that the Plan's account returned a gross 0.4% for the quarter ending September 30, 2016, while the benchmark Russell 1000 index returned 4.6% during the same period; that during the twelve-month period ending September 30, 2016, the Plan's account achieved a gross return of 11.3% while the same benchmark earned a return of 13.8%; that at September 30, 2016, that value of the Plan's investment account was $18,889,809. A general discussion of interest rates and the macroeconomic environment was provided by Mr. LaPrade. Mr. LaPrade proceeded to discuss the companies which comprise the Plan's major holdings in the investment account with Sawgrass Asset Management. In response to a question to a question by Attorney Herrera regarding potential litigation surrounding Alphabet, Inc., Mr. LaPrade stated that as the parent company of Google, Alphabet faces antitrust issues in the European Union; that he expects these claims to be resolved with minimal disruption to the company's ongoing operations and profitability. 2) Presentation and Discussion Re: UBS Global Real Estate Investment Performance (Agenda Item 6.2) Ronald Lanier, Executive Director, UBS Realty Investors, came before the Board to discuss the performance of the Plan's investment in the Trumbull Property Fund. Mr. Lanier stated that the Plan has been invested in UBS Global Real Estate since June 2006; that the Plan has funded the account with $11,350,000 of contributions; that the market value of the investment has grown to $16,264,000 as of September 30, 2016; that the market value does not include an approximate $2,185,000 in withdrawals by the Plan; that since inception, the Plan has experienced an annualized gross rate of return of 6.59%. Mr. Lanier discussed the specific geographic regions of the United States in which the Trumbull Property Fund owns properties and gave detailed descriptions of some of the portfolio's holdings. Mr. Lanier stated that the Trumbull Property Fund is well positioned to withstand an increase in interest rates; that real estate in general is positively correlated to inflation; that UBS has been preparing for an increase in interest rates; that the portfolio is a value-added alternative investment which complements a pension fund's income-seeking portfolio. Mr. Lanier discussed further the Plan's investment in the Trumbull Property Income Fund. Mr. Lanier stated that the Trumbull Property Income Fund is well positioned to withstand the expected increase in interest rates as any increase in cost will be passed on to the Fund's tenants; that real estate values are generally positively correlated to inflation; that UBS' investment managers have been preparing for an increase in interest rates. 9. UNFINISHED BUSINESS (AGENDAI ITEM 7): None. 10. NEW BUSINESS (AGENDA ITEM 8): 1) Approval Re: 2017 Proposed Regular Meeting Schedule for the Firefighters' Pension Plan Board of Trustees (Agenda Item 8.2): Pension Plans Administrator Ramphal presented the proposed Firefighters' Pension Plan Board of Trustees Regular 2017 Meeting Schedule. Chair Hartley proposed changing the date of the June 2017 meeting to June 21, 2017, from the proposed date of June 28, 2017, to accommodate Trustee travel to pension-related conferences. Chair Hartley noted Board consensus to approve the Proposed 2017 Meeting Schedule of the Firefighters' Pension Plan Board of Trustees Regular 2017 Meeting Schedule with the change of a meeting date from June 21 to June 28, 2017. 11. ATTORNEY MATTERS (AGENDA ITEM 9): Attorney Herrera stated that each Trustee is a Public Official; that each member is required to disclose the receipt of gifts valued over $25 from vendors or potential vendors; that the Trustee is free to decline any gift and should always do so if the value of the gift is greater than $100. Book 1 Page 47 12/07/16 9:00. A.M. Book 1 Page 48 12/07/16 9:00 A.M. 12. OTHER MATTERS (AGENDA ITEM 10): Vice Chair Roberson stated that she contacted Lynn Skinner, Client Service Representative, Salem Trust, regarding the resignation of Brad Rinsem, President, Salem Trust; that Ms. Skinner gave assurance that operations will continue as normal. Attorney Herrera stated that Mr. Rinsem's departure had been discussed and expected at some point in the future. 13. ADJOURN (AGENDA ITEM 11). Chair Hartey adjourned the Firefighters' Pension Plan Board of Trustees Regular meeting at 10:56 a.m. Sulah lu Chair Michael Hadley Vice Chair Shelia Roberson