Book I Page 44 12/05/16 8:15 A.M. MINUTES OF THE DECEMBER 5, 2016, CITY OF SARASOTA POLICE OFFICERS' PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING Present: Chair Kevin Stiff, Vice Chair Ron Baty, Secretary/Treasurer Pamela Nadalini (arrived at 8:19.a.m.) Trustees Duncan Miller and Darrell Nixon Others: Pension Plans Administrator Harry Ramphal, Senior Pension Analyst Anthony Ferrer, and Pension Specialist Chinyere Deehan Absent: Attorney Lee Dehner 1. CALL MEETING TO ORDER: Chair Stiff called the meeting to order at 8:15 a.m. 2. PLEDGE OF CIVILITY: Chair Stiff reviewed the 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 Police Officers' Pension Plan Board of Trustees Regular Meeting of October 28, 2016 A motion was made by Trustee Miller, seconded by Vice Chair Baty, to approve the minutes of the October 28, 2016, Police Officers' Pension Plan Board of Trustees Regular Meeting. Motion carried unanimously (4-0). 5. APPROVAL OF RETIREMENT REQUEST/S): None 6. INVESTMENT PERFORMANCE REVIEW: 6.1. Presentation and Discussion Re: Garcia Hamilton & Associates Janna Hamilton, Partner, and Jeffrey Detwiler, Portfolio Manager, Garcia Hamilton & Associates, came before the Board. Ms. Hamilton thanked the Board for the opportunity to serve the Police Officers' Pension Plan and to briefly discuss the Plan's fixed-income portfolio. Secretary/Treasurer Nadalini entered the Chambers at 8:19 a.m. Mr. Detwiler stated that the Plan's account returned a gross 0.3% for the quarter ending September 30, 2016; that the benchmark Barclays Capital Aggregate index returned 0.5% during the same period; that during the twelve-month period ending September 30, 2016, the Plan's account achieved a gross return of 6.0% while the same benchmark earned a return of 5.8%. Mr. Detwiler continued and provided the Board with an update regarding the performance of the account for the quarter ending December 31, 2016, and stated that the Plan's investment is down 2.6%; that this negative performance is still better than the benchmark, which lost 3.1% during this period. Discussion ensued about interest rates. Mr. Detwiler concluded and stated that as of September 30, 2016, the Plan's investment account was $21,111,216.56. In response to a comment and question from Trustee Miller about floating rate securities having a lower yield than similar fixed yield securities and asked the benefits of floating rates securities, Mr. Detwiler stated that floating rate securities have short durations; that the principal can be reinvested sooner and at a higher rate. 6.2. Presentation and Discussion Re: Burgess Chambers & Associates Investment Performance for the Period Ending September 30, 2016 Larry Cole, Executive Vice President, Burgess Chambers & Associates, came before the Board and stated that he is pleased to report the Plan earned $8,700,000 during the quarter ended September 30, 2016; that the Plan had a net return of 4.4% during the same period; that this performance is better than the Target Index which returned 3.6% during the quarter; that for the fiscal year ending September 30, 2016, the Plan earned $16,300,000 as the result of a net return of 8.6%; that the TI returned 10.6% during the twelve month period ending September 30, 2016; that the Plan's underperformance during this period is due its domestic investment managers being defensively positioned. Mr. Cole continued and briefly discussed the economic and market outlook for 2017, and stated that his firm is evaluating real estate and short-term fixed income investments; that he is not recommending any change to the Plan's investment allocation at this time. In response to a question by Chair Stiff about expectations for future interest rates, Mr. Cole that higher interest rates are anticipating in 2017; that the Federal Reserve is expected to raise rates as early as mid-December. Discussed ensued about quarterly and twelve month performance of each of the Plan's investment accounts. Mr. Cole concluded and stated that relative to other public pensions, the investment performance of the Police Officers' Pension Plan ranks in the top 8% of this peer group; that the outlook for Master Limited Partnerships (MLP) will benefit from inflation in the coming year spite the higher expected interest rates and anticipated economic expansion. In response to a comment from Trustee Miller about the fact that MLPS, pipelines, and petroleum distributors are capital intensive industries and these factors should have been discussed prior to the initial investment allocation, Mr. Cole stated that the explanation for the poor recent performance of MLPS was a sudden, unexplained correlation to oil prices. In response to a question from Chair Stiff about the change in Custodian from Salem Trust to Fifth Third Bank, Pension Plans Administrator Ramphal stated that he has been in contact with representatives from Fifth Third Bank and the conversion is expected to take place in mid-January 2017. 7. UNFINISHED BUSINESS: None Book I Page 45 12/05/16 8:15 A.M. Book I Page 46 12/05/16 8:15 A.M. 8. NEW BUSINESS: 8.1. Presentation and Discussion Re: Assumed Rate of Return Larry Cole, Executive Vice President, Burgess Chambers & Associates, came before the Board and Pete Strong, Actuary, Gabriel Roeder Smith & Company was teleconference into the meeting to discuss the Police Officers' Pension Plan's Assumed Rate of Return. Mr. Strong stated that his recommendation to the Board is to leave the Assumed Rate of Return at the current rate of 7% and Mr. Cole agreed with maintaining the current figure. In response to a question from Secretary/Treasurer: Nadalini about a formal statement of the Police Officers' Pension Plan's Assumed Rate of Return, Mr. Strong stated that this figure will be given in the Actuarial Valuation; that the fiscal year ending September 30, 2016, which will be available sometime early in 2017. 8.2. Approval Re: Proposed 2017 Regular Meeting Schedule for the Police Officers' Pension Plan Board of Trustees Pension Plans Administrator Ramphal presented the proposed Police Officers' Pension Plan Board of Trustees Regular 2017 Meeting Schedule. Chair Stiff noted Board consensus to approve the Police Officers' Pension Plan Board of Trustees Regular 2017 Meeting Schedule. 9. ATTORNEY MATTERS: Chair Stiff stated that the City and Southwest Florida Police Benevolent Association (PBA), Inc. is close to finalizing a contract; that Attorney Dehner should be made aware, and Secretary/Treasurer Nadalini stated that Attorney Dehner should contact the City Attorney's Office for specific details. Chair Stiff stated that the Plan will need to establish a Share Plan in the near future. 10. OTHER MATTERS: None 11. ADJOURN. Chair Stiff adjourned the Police Officers' Pensions Board of Trustees Regular meeting at 9:10 a.m. toak M. - D0X V BGV Chair Kevin Sfff SecretaryTreasurer Pamela M. Nadalini