MINUTES OF THE CITY OF SARASOTA GENERAL EMPLOYEES PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF DECEMBER 4, 2017 Present: Chair Barry Keeler, Vice Chair Ryan Chapdelain, Treasurer Kelly Strickland, Trustees Bonnie Wagner, Gretchen Schneider and Kari McVaugh Others: Attorney Scott Christiansen, Pension Plans Administrator Akersloot, Senior Pension Analyst Anthony Ferrer, and Pension Specialist Lois Belle Absent: Secretary Pamela Nadalini 1. CALL MEETING TO ORDER: Chair Keeler called the meeting to order at 8:30 a.m. 2. PLEDGE OF CIVILITY: Chair Keeler 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. ROLL CALL: Chair Keeler requested Pension Plans Administrator. Akersloot call roll in Secretary Nadalini's absence; Pension Plans Administrator Akersloot called the roll and noted that Secretary Nadalini would request an excused absence at the next meeting. 4. PUBLIC INPUT: No one signed up to speak. 5. APPROVAL OF THE MINUTES: 5.1. Approval Re: Minutes of General Employees' Pension Plan Board of Trustees Regular Meeting of October 16, 2017 Ar motion was made by Treasurer Strickland and seconded by Trustee McVaugh to approve the minutes of the General Employees' Pension Plan Board of Trustees Regular Meeting of October 16, 2017. Motion carried unanimously (5-0). 6. APPROVAL OF RETIREMENT REQUESTIS): None 7. INVESTMENT PERFORMANCE REPORT: 7.1. Presentation and Discussion Re: UBS Trumbull Property Fund Performance Review as of September 30, 2017 Presenter(s): Ron Lanier, Executive Director, UBS Realty Investors Book 1 Page 85 12/4/17 8:30 A.M. Book 1 Page 86 12/4/17 8:30 A.M. Mr. Ron Lanier came before the Board and introduced himself. Mr. Lanier stated the Trumbull Property Fund investment results for the City of Sarasota General Employees' Pension Plan net return from inception, on October 1, 2014, to September 30, 2017 was 7.97%. Mr. Lanier provide a market overview of the real Gross Domestic Product and job growthunemployment figures; that core real estate really correlates to these key market drivers. Mr. Lanier discussed UBS 2017 strategy and the diversification model of property types that UBS uses in comparison to the industry benchmark (NFI-ODCE); that the Trumbull Property Fund is a lower risk alternative in the industry with a 17% leverage focusing on stable income; that the gross dividend yield is 4.2%. Trustee Schneider entered Chambers at 8:46 a.m. Mr. Lanier stated that current environment is a mature economy with lower appreciation returns and slowing net operating income growth; that the fund composition has a greater allocation of apartments with a lower allocation of office versus industry benchmark consistent with the 2017 = 2018 investment direction. Mr. Lanier talked about the Trumbull Property Fund value-added risk management strategy; that this is a solid core portfolio (96.6% of the Trumbull Property Fund consists of stabilized assets); that the remaining 3.4% is value added diversification creating value through "building to core" with experienced developers in the industrial sector. Discussion ensued around the joint venture partnership with Becknell. The Board thanked Mr. Lanier for his time. 8. UNFINISHED BUSINESS 8.1. Approval Re: Proposed 2018 Regular Meeting Schedule for the General Employees Pension Plan Board of Trustees Presenter(s): Secretary Nadalini Pension Plans Administrator. Akersloot presented the Proposed 2018 Regular meeting schedule for the General Employees' Pension Plan Board of Trustees for approval, in Secretary Nadalini's absence. A motion was made by Trustee McVaugh and seconded by Vice Chair Chapdelain to approve the Proposed 2018 Regular meeting schedule for the General Employees' Pension Plan Board of Trustees. Motion carried unanimously (6-0). Pension Specialist Belle teleconference Pete Strong, Senior Consultant and Actuary, Gabriel Roeder Smith & Company on the telephone 8.2. Continued Discussion Re: Actuarial Impact Study on Changing Expected Rate of Return Presenter(s): Pete Strong, Senior Consultant and Actuary, Gabriel, Roeder, Smith & Company (via teleconference) Mr. Strong stated the Actuarial Impact Study was performed based on Secretary Nadalini's request to look at the impact based on prior year's valuation as this year's valuation is not ready, although the Board has already approved lowering the expected rate of return to 6.9%; that if the investment return assumption had been lowered to 6.9% last year the contribution requirement from the City would have been $196k higher, from 6.7% to about 6.9%, but because of favorable market value return this year, even after reflecting market smoothing, the total required contribution is expected to decline this year about $230k from the asset investment experience; that the favorable return will roughly offset the impact of the investment change. The unfunded liability impact is about a $2.1M increase and, again, the unfunded liability is expected to decline by $2.7M due to positive investment experience this year. There were no further questions for Mr. Strong and the Board thanked him for his time. There was no further action required as the General Employees' Pension Plan Board of Trustees approved motion to lower expected rate of return to 6.9% in the October 16, 2017 regular meeting. Chair Keeler requested Staff provide Board with the cost of the Actuarial Impact Study. 8.3. Status Update Re: Operating Rules and Procedures Presenter(s): Attorney Christiansen Attorney Christiansen provided the Board with an update of his meeting with Attorney Sarah Warren and Pension Plans Administrator Akersloot; Pension Plans Administrator Akersloot stated that the meeting identified a need for complete separation of accounting system from the City's current FMS system, which was agreed to by all parties. Attorney Christiansen stated that once the transition is completed then the Operating Rules and Procedures can be updated accordingly. Discussion ensued around need for separation to be able to provide consistent financial reporting across the three defined benefit plans. Financial Accounting had no objections to move the current General Employee accounting system from FMS to the Peachtree accounting system. Discussion ensued around need to issue P-cards to the General Employees' Pension Plan Board of Trustees for travel related purposes to ensure that travel is accurately reviewed and approved by Pension personnel as travel is paid from the General Employees' Pension Plan; that any Pension related travel must be approved and reconciled through the Pension Plans Administration department. Treasurer Strickland and Pension Plans Administrator to discuss further with Purchasing and bring findings before the Board. Treasurer Strickland stated that she is concerned about the new soft close financial reporting that was sent to public for October and November 2017; that she is unclear as to what the benefit is to the soft close format; that the Board prefers to see an interim revenue and expense accounting financial package; that although this information is public it is not necessary to provide unless requested; request to have soft close as an agenda item at the next meeting. Chair Keeler stated that he will be going into the Deferred Retirement Option Plan effective April 2018; that his term is expiring in June 2018; that the Board will need to recommend an Ordinance change if he is to be able to continue serving on the Board. A motion was made by Treasurer Strickland and seconded by Vice Chair Chapdelain to gather necessary data and provide to Attorney Christiansen to prepare an Ordinance recommendation to present to the City Commission. Motion carried unanimously (6-0). Book 1 Page 87 12/4/17 8:30 A.M Book 1 Page 88 12/4/17 8:30 A.M. 9. NEW BUSINESS: None 10. ATTORNEY MATTERS: Attorney Christiansen stated the fiscal year-end report must be sent to the City Commission and sent to the State. Attorney Christiansen stated that there were two issues with the Investment Managers; that Renaissance notified staff of ownership changes, that he doesn't see any issue regarding; that Center Coast is merging into Brookfield Investment Management Inc.; that business will continue as usual; that consent must be provided by January 24, 2018 or contract with terminate; recommend the Board vote to approve the merger contingent upon Graystone's feedback of the merger. A motion was made by Vice Chair Chapdelain and seconded by Trustee Schneider to approve the consent of merger contingent upon Graystone's review and recommendation. Motion carried unanimously (6-0). 11. OTHER MATTERS: None 12. ADJOURN. Chair Keeler adjourned the General Employees' Pension Plan Board of Trustees Regular Meeting at 10:26 a.m. BReer N IEELee, C.P.PT. MA Chair Barry Keeler Secretary Pamela Nadalini