MINUTES OF THE CITY OF SARASOTA POLICE OFFICERS' PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF JUNE 28, 2024 Present: Chair Johnathan Todd, Vice Chair Ronnie K. Baty, Secretary/Treasurer: Shayla Griggs, Trustee Tyler Rossnagle. Others: Attorney Scott Christiansen, Pension Plans Administrator Debra Martin, and Pension Specialist Peter Gottlieb. Absent: Trustee Joseph Jody" Hudgins 1. CALL MEETING TO ORDER: Presenter(s): Chair Todd. Chair Todd called the regular meeting of the Police Officers' Pension Plan (Plan) Board of Trustees to order at 8:15 a.m. 2. PLEDGE OF ALLEGIANCE: Presenter(s): Secretary/reasurer Griggs. Secretary/Treasurer: Griggs led the Board and those in attendance in the Pledge of Allegiance. 3. PLEDGE OF CIMILITY: Presenter(s): Chair Todd. Vice Chair Baty stated for the record, "We may disagree, but we will be respectful of one another. We will direct all comments to issues. We will not engage in personal attacks." 4. ROLL CALL: Presenter: Pension Plans Administrator Martin. Pension Plans Administrator Martin called roll. Trustee Hudgins was not present. 5. PUBLIC INPUT: David Kennedy appeared before the Board and introduced himself. Officer Kennedy explained that he wished to share his personal experience to demonstrate what he believes to be a deficiency in the Plan. Officer Kennedy is currently participating in the Deferred Retirement Option Program (DROP). While on duty on a motorcycle and in pursuit of a speeding vehicle, he was struck by a drunk driver; as a result of the collision and despite surgical intervention, Officer Kennedy has been unable to work or only able to perform light duty since the accident, and unsure if he would be able to return to full duty. He explained that DROP participants are unable to apply for disability benefits under the Plan, and that his only option, should he be unable to perform his duties due to a medical condition, is to leave the DROP and begin receiving his retirement benefits before his 5-year DROP term is completed. This is problematic for him because he and his spouse had based their financial plans on his completing the 5-year DROP term. He believes he is the first participant to suffer a potentially job-threatening injury while in the DROP and claimed that several active Police Officers had indicated to him that they will not enter the DROP because they would not be able to file for disability benefits if they were injured during the course of their duties. Officer Kennedy asserted that there are pension plans which allow an injured police officer who is in a DROP program to return the monies they earned while in DROP to that system and the participant may then file for disability benefits. Officer Kennedy advised that he brings this matter to the Board sO that other Police Officers may be eligible to receive disability benefits while in the DROP. Book 1 Page 406 06-28-2024 8:15 a.m. Book 1 Page 407 06-28-2024 8:15 a.m. The Board thanked Officer Kennedy for bringing this matter to its attention. 6. APPROVAL OF MINUTES: 6.1. Approval Re: Minutes of the Police Officers' Pension Plan Board of Trustees Regular Meeting of May 24, 2024. Presenter(s): Chair Todd. Vice Chair Baty made a motion to approve the minutes of the Regular Meeting of May 24, 2024; Trustee Rossnagle seconded the motion. The motion passed unanimously (4-0). 7. NOMINATION OF BOARD OFFICERS: 7.1. Appointment Re: Selection of Chair. Presenter(s): Chair Todd. Secretary/Treasurer: Griggs and Attorney Christiansen noted that electing Board Officers is an annual requirement and that the Board may approve nominations by consensus. Vice Chair Baty nominated Johnathan Todd to continue serving as Chair; Secretary/Treasurer Griggs seconded the nomination. The Board approved by consensus. 7.2. Appointment Re: Selection of Vice Chair, Presenter(s): Chair Todd. Secretary//reasurer Griggs nominated Ronnie Baty to continue serving as Vice Chair; Trustee Rossnagle seconded the nomination. The Board approved by consensus. 7.3. Appointment Re: Selection of SecretanylTreasurer. Presenter(s): Chair Todd. Vice Chair Baty nominated Secretary/Treasurer Griggs to continue serving as Secretary/reasurer: Trustee Rossnagle seconded the nomination. The Board approved by consensus. 8. RETIREMENT REQUESTS: None. 9. INVESTMENT PERFORMANCE REVIEW: 9.1, Presentation and Discussion Re: Lazard Asset Management Performance Summary for Period Ending March 31, 2024. Presenter(s): Ben Young, Vice President, Lazard Asset Management. Ben Young of Lazard Asset Management (Lazard) appeared before the Board and introduced himself. Mr. Young reviewed pages 11 and 12 of the presentation materials and noted that Lazard is one of the first and largest global listed infrastructure funds; global infrastructure typically returns 70% to 80% as much as equities but with less volatility and more downside protection. He explained that Lazard is, "benchmark unaware, meaning it does not manage the portfolio to a benchmark regarding sector or country weighting, it will hold elevated levels of cash when warranted, and it will take 0% positions in countries or sectors which do not meet the strategy's investment criteria. The portfolio maintains a constant and passive currency hedge to the US Dollar to remove volatility caused by currency movement. He discussed how Lazard defines, "preferred" investments as listed on page 12 of the materials. Because of their sensitivity to energy prices, Lazard avoids investing in Master Limited Partnerships and power-generating utility companies. Mr. Young reviewed the Portfolio By Country And Sector page of the materials. The portfolio's domestic utility allocation is significantly lower than the benchmark's because Lazard has concerns regarding valuations in this sector; Lazard has begun to find some attractive investments in domestic utilities and is cautiously adding to that allocation. When viewing the Portfolio by Sector, he explained that the majority of the Toll Road and Diversified Utilities allocations are European companies; it has reduced its allocation to Railroads since its 2023 appearance before the Board from approximately 20% to 9%. He clarified that although the portfolio only holds 26 companies which gives the appearance of concentration, those companies hold more than 360 underlying assets which provide diversity to the portfolio. Turning to the page titled Performance Summary, Mr. Young advised that although the portfolio has consistently outperformed its benchmark, it will still underperform equities; further, considering equity markets are currently heavily concentrated in technology, it would be unreasonable to expect listed infrastructure to match equity's pace. Mr. Young reviewed the Stock Contribution - Top Contributors and Detractors page. Ferrovial and VINCI are toll road operators; traffic volumes are returning to pre-COVID 19 levels and that sector has contributed significantly to the portfolio's performance. Ferrovial sold off its 25% stake in Heathrow Airport in London, England, which benefited the portfolio. Ferrovial owns the 407 Highway in Toronto, Canada; during the COVID-19 pandemic, the Canadian government had frozen toll road charge increases, however those freezes have since ended, and the market has rewarded Ferrovial accordingly. CSX and Norfolk Southern are rail companies which performed strongly. He explained that an activist investor took a $1 billion position in Norfolk Southern; as the investor seeks to occupy seats on the executive board, the market has been optimistic that the company will benefit from its efforts to enhance operational efficiency. In Q2 2024, the potential nationalization of assets in France and the United Kingdom dragged the portolio's performance; Lazard is confident that, if nationalization occurs in either country, the respective governments will be required to fairly compensate all parties, including shareholders, in buying back properties, and it has been adding to its allocations in both countries. A second detractor from performance is the water utility sector. England's largest water utility company, Thames Water, was over-leveraged and held too much debt, and the company's viability is in question; as such, the entire water utility sector has sold off. Pennon Group and Severn Trent are United Kingdom water utility companies held in the portfolio; Lazard has full confidence that Thames Water's issues will not spill over into Pennon Group or Severn Trent. Mr. Young concluded his presentation with a brief market outlook. Uncertainty in geopolitical and macro events have made global equities an attractive asset class because of the companies' underlying predictable, consistent cash flow. Downside protection also remains attractive. To Trustee Baty's question, Mr. Young explained that the elections in Europe have already begun to have an impact in the global infrastructure market; European toll road companies are down approximately 10% year-to-date. Lazard is confident that a sizable amount of the regulation discussions are exaggerations which occur during the current election cycle, and Lazard has taken advantage of buying opportunities. To Trustee Rossnagle's question, Mr. Young explained that Lazard is adding to its domestic allocation because price-to-earnings ratios have been attractive. The Board thanked Mr. Young for his presentation. 9.2. Presentation and Discussion Re: SEI Trust/Cohen & Steers Performance Summary for Period Ending May 31, 2024. Presenter(s): Evan Serton, Senior Portfolio Analyst, SEI Trust/Cohen & Steers. Book 1 Page 408 06-28-2024 8:15 a.m. Book 1 Page 409 06-28-2024 8:15 a.m. Evan Serton of SEI Trust/Cohen & Steers (Cohen) appeared before the Board and introduced himself. Mr. Serton explained how Cohen differs from Lazard, and therefore the two portfolios are complementary to each other. Cohen has a fully invested portfolio with no cash, it is less concentrated, and it can invest in a broader scope of companies. Cohen is currently investing heavily in cell tower and mid-stream energy companies which transport and store energy. Both portfolios seek stable, consistent, and predictable cash flows which allow them to perform well when equity markets decline, however those attributes also hinder performance when equities are outperforming. He reminded the Board that in 2022, when global equities were down 16% and global bonds were down 17%, infrastructure was down only 5%. Turning to the page titled Class A total returns (%) in US$, Mr. Serton noted the portfolio has outperformed its benchmark over every time period, net of fees; year-to-date, the portfolio is up approximately 6%. He reviewed the portfolio's top contributors and detractors as shown on page 7 of the materials, noting it outperformed its benchmark by 2.4%. While the portfolio was underweighted in electric utilities, its strong stock selection has been rewarded. The portfolio is overweight to mid-stream energy companies; Cohen believes oil and gas companies will remain necessary for at least 20 to 30 years because of the time it will take for renewable energy companies to be able to satisfy the world's energy demands. While the detractors took less from performance than the contributors added, Cohen has become more cautious regarding railways as economic growth appears to be slowing; Cohen is positioning the portfolio accordingly. Turning to page 8 of the materials, Mr. Serton asserted that infrastructure valuations are currently very attractive relative to global equities. Because infrastructure companies have had some recent performance challenges which have driven prices down while equity prices have been pushed up by technology stocks, infrastructure fund prices are currently priced at a discount. He reminded the Board that when inflation is unexpectedly high, which Cohen calls, surprise inflation," as it was in 2022, infrastructure investments tend to outperform, and stocks and bonds underperform their respective long-term averages. Cohen believes that bringing inflation down from its current level of approximately 3% to the Federal Reserve's goal of 2% will be more difficult than it had been to reduce inflation from its high in 2022 to 3% and, historically, when surprise inflation is brought under control, there is almost always an ensuing period of re-acceleration of inflation, and therefore investors should anticipate listed infrastructure investments to outperform. Mr. Serton concluded his presentation by reviewing the Portfolio weights page of the materials; the current allocation is fairly unchanged. Even though electric utilities are attractively valued, there is profound regulatory risk in the subsector and Cohen remains cautious. Cohen is more bullish on mid-stream energy, especially in natural gas transportation companies and cell tower companies; Cohen is underweighted in passenger-related, economically sensitive sectors such airports and toll roads, as economic growth slows which will reduce demand for these businesses. The Board thanked Mr. Serton for his presentation. 10. UNFINISHED BUSINESS: None. 11. NEW BUSINESS: Chair Todd asked for the issues Mr. Kennedy raised to be added as an agenda item at a future meeting when all trustees are present. The Board informally concurred. Pension Plans Administrator Martin advised that would likely not be until the September 27, 2024, meeting. Secretary/Treasurer: Griggs asked Attorney Christiansen to prepare Attorney Kaufman for this discussion. Chair Todd asked Attorney Christiansen if information regarding how similar pension plans address the issue could be presented to the Board. Attorney Christiansen advised that under the Plan, as well as with his previous and current clients, Police Officers who are in the DROP are already retired; if a Police Officer participating in the DROP is injured and unable to work, that Officer can leave the DROP and begin receiving their retirement pension including the funds accrued while in the DROP. He advised would review the matter as well as discuss it with Attorney Kaufman to identify any clients who have addressed the circumstance differently. He advised the Board that it would be possible to change how the Plan addresses Police Officers who are in the DROP and are injured to the extent they are unable to perform the duties of their employment. 12. ATTORNEY MATTERS: Attorney Christiansen advised that all of the Board's Trustees have successfully filed their financial disclosures through the Commission on Ethics' web portal. There are 2 pending applications for disability benefits; presentations to the Board for both applications have been postponed at the requests of the applicants so that all Trustees will be present, and therefore they will be handled by Klausner, Kaufman, Jensen & Levinson. There have also been additional records received in the Ainscoe matter which were received after the Independent Medical Evaluation (IME); those records were forwarded to the IME physician for review and response. Attorney Christiansen and the Board discussed the logistics of a special meeting. The Trustees will receive all records in advance of the meeting, and the full Board should be present at its September 27, 2024, Regular meeting. Attorney Christiansen explained that the Plan is required to process requests for disability benefits within 180 days, which has already transpired, however because the applicants requested the extension to the processing timeframe, the Plan is not violating the timeframe. He noted that disability benefits begin when the Board approves the application, and benefit payments are not retroactive. Attorney Christiansen advised that he will appear before the City Commission on Monday, July 1, 2024, to present a proposed ordinance to change the Plan's investment parameters. He will also present a proposed ordinance for the General Employees' Pension Plan (GEPP) to address participants being removed from that system if they are on unpaid leave for more than 30 days; the Plan has the same provision, however because the Plan is open, participants mustrejoin the Plan upon returning to paid status. Because the GEPP is closed, participants who are removed due to excess unpaid leave are unable to rejoin upon returning to paid status and must therefore join a different retirement system. Attorney Christiansen has noted the Plan's records for Attomey Kaufman to address this issue when the next proposed ordinance is considered by the Board sO that if the Plan does close, the issue will have been addressed. Attorney Christiansen advised that the July 26, 2024, meeting will be his last meeting for the Plan and the Tuesday, July 30, 2024, GEPP meeting will be his last meeting before retiring. He noted that the Plan was Attorney Dehner's first pension client, and the Sarasota plans are a fitting conclusion to his professional career. 13. OTHER MATTERS: 13.1. Presentation and Discussion Re: Asset Allocation as of June 12, 2024. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin presented the Asset Allocation as of June 12, 2024. The Board had no questions. Pension Plans Administrator Martin advised that, as requested by the Board, Garcia Hamilton will present at the September 27, 2024, meeting and Allspring/Wells Capital will present at the December 20, 2024, meeting, and noted on the updated calendar presented. The meeting dates have not changed. 14. ADJOURN. Chair Todd adjourned the meeting at 9:03 a.m. a C 666 bE Chair Johnathan Todd Secrelbly/Treasurels Shayla Griggs Book 1 Page 410 06-28-2024 8:15 a.m.