MINUTES OF THE CITY OF SARASOTA POLICE OFFICERS' PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF DECEMBER 11, 2020 Present: Chair Demetri Konstantopoulos, SecretaryfTreasurer, Ronnie K. Baty, and City Auditor and Clerk Shayla Griggs. Others: Attorney Scott Christiansen, Pension Plans Administrator Debra Martin, Senior Pension Analyst Anthony Ferrer, Pension Specialist Peter Gottlieb. Absent: Vice Chair Johnathan Todd, Trustee Joseph "Jody" Hudgins. 1. CALL MEETING TO ORDER: Presenter(s): Chair Konstantopoulos. Chair Konstantopoulos called the meeting to order at 8:15am. 2. PLEDGE OF CIVILITY: Presenter(s): Chair Konstantopoulos. Chair Konstantopoulos 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." 3. ROLL CALL: Presenter: Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin called roll. Chair Konstantopoulos, Secretary/Treasurer: Baty, and City Auditor and Clerk Griggs appeared in person Also in attendance were Attorney Scott Christiansen, Pension Plans Administrator Debra Martin, and Pension Specialist Gottlieb. Senior Pension Analyst Anthony Ferrer appeared telephonically. 4. PUBLIC INPUT: None. 5. APPROVAL OF MINUTES: 5.1. Approval Re: Minutes of the Firefighters Pension Plan Board of Trustees Regular Meeting of October 23, 2020. Presenter(s): Chair Konstantopoulos. Secretary/Treasurer Baty made a motion to approve the minutes of the October 23, 2020 meeting. City Auditor and Clerk Griggs seconded the motion. The motion carried unanimously (3-0). Book 1 Page 200 12-11-2020 8:15 a.m. Book 1 Page 201 12-11-2020 8:15 a.m. 6. RETIREMENT REQUEST(S): 6.1. Approval Re: DROP Retirement Request of Lori Lee Jaress. Presenter(s): Pension Plans Administrator Martin. Pension Plans Administrator Martin stated that Ms. Jaress requests to enter the DROP effective November 1, 2020 with 29.85 years of service and elected the lifetime only benefit. Secretary/Treasurer Baty made a motion to accept Ms. Jaress' request for retirement; City Auditor and Clerk Griggs seconded the motion. The motion carried unanimously (3-0). 7. INVESTMENT PERFORMANCE REVIEW: 7.1. Presentation and Discussion Re: Advent Capital Management, Portfolio Review as of September 30, 2020. Presenter(s): David Hulme, Managing Director and Co-Portfolio Manager, Advent Capital Management. Mr. Hulme appeared before the Board telephonically and introduced himself. Mr. Hulme gave a brief firm overview and discussed Advent's investment philosophy and strategy, its management and research teams, its balanced strategy, and convertible bond price dynamics. He gave a portfolio review, highlighting its characteristics, sector diversification, top ten holdings, and performance summary as of October 31, 2020, noting the portfolio is currently up 38% for the year. Mr. Hulme discussed the portfolio performance attribution through the same date, pointing out Intercept Pharmaceuticais received an adverse decision from the US Food and Drug Administration causing its poor performance, and that while Live Nation had not performed well, it has rebounded considerably in light of a potential vaccine; he also discussed the portfolio's composite risk/return Composite Risk/Return Characteristics and Advent's outlook for the primary convertible market, explaining year-to-date new issuance has totaled $137 Billion, which is approximately 50% more than 2019. Larry Cole of BCA appeared before the Board telephonically and asked Mr. Hulme to discuss the total size of the convertible market to give perspective to the amount of new issuançe. Mr. Hulme stated the market is over $550 Billion with typical maturities at five years; he stated that years typically see approximately $80-100 Billion a year which refreshes the market. Mr. Hulme pointed out that the new issuance was significant not just in the amount, but the timing, as many companies offering convertible bonds were quite depressed at the time of issuance and have since rebounded, which increased the value of the bonds. Mr. Cole stated that convertible bonds were the best performing asset class of the last year. Chair Konstantopoulos thanked Mr. Hulme for his presentation and good returns. 7.2. Presentation and Discussion Re: Garcia Hamilton & Associates, Portfolio Review as of September 30, 2020. Presenter(s): Jana Hamilton, Partner, Jeffrey Detwiler, Portfolio Manager, Garcia Hamilton. Ms. Hamilton and Mr. Detwiler appeared before the Board telephonicaly and introduced themselves. Ms. Hamilton gave a brief overview of the portfolio, noting they have been a fixed income manager for the Plan for approximately 5 years; she stated the portfolio consists of A-rated bonds or better, that it is an aggregate portfolio with approximately $16 Billion under management, and one of the few liquid bond managers. Ms. Hamilton gave a general overview of the portfolio and introduced the presentation. Mr. Detwiler discussed Garcia Hamilton's investment foreçasts and market performance over the last year and how the COVID-19 pandemic caused the market to move contrary to Garcia Hamilton's forecasts. He explained how Garcia Hamilton shifted its positioning to reduce its exposure in early 2020 to be more defensive which produced some positive alpha after the first quarter volatility. He discussed how the economy is expected to rebound as COVID-19 is contained, and discussed historical aspects including types of programs used during the current and previous financial crises, the Federal Reserve's balance sheet since 2003, a graph of the money supply since 1948, a comparison of inflation during and after financial crises, historical corporate bond spreads and intermediate financial bonds spread ratio since 1990; he forecasted treasury rates to rise given the level of the economy and corporate spreads. Mr. Detwiler discussed the portfolio's duration contribution by sector, noting the treasury and corporate sectors, yield curve exposure, portfolio positioning, noting that as of today its corporate exposure is roughly 45%, and concluded by predicting corporates will continue to outperform, meaning spreads will tighten, in which case Garcia Hamilton will move to reduce risk, and as the economy recovers he expects inflationary pressures to take hold which will cause Treasury security rates to rise. Chair Konstantopoulos thanked Ms. Hamilton and Mr. Detwiler for their presentation. 7.3. Presentation and Discussion Re: BCA Consulting, Investment Performance Period Ending September 30, 2020. Presenter(s): Larry Cole, Senior Consultant, BCA Consulting. Mr. Cole introduced his presentation by discussing the general positive returns for the year and good news of a COVID-19 vaccine, which he believes will continue to significantly rotate the market to favor value- oriented companies. He noted page 1 of BCA's presentation materials addresses the growth versus value question, and stated that calendar-to-date, thel Russell 1000 Growth Index is up 33.4% but the Russell 1000 Value Index is up only 1.5% for the same timeframe; however, quarter-to-date, the Russell 1000 Growth Index is up 7.3% and the Russell 1000 Value Index is up 14.8%. He expects this trend to continue as a COVID-19 vaccine is administered. Mr. Cole discussed the Investment Compliance Review noting the one item out of compliance was addressed by BNY/Boston Company and is no longer out of compliance. He reviewed the portfolio's net performance and asset allocation as of September 30, 2020, noting where itis overweighted, and explained there is more money in the equity side due to low interest rates, and that real estate market was flat with 1% income and a 1% drop in value, suggesting it was holding steady. Mr. Cole may suggest an adjustment to the growth and value balance but does not otherwise anticipate a need to rebalançe the portfolio. He reviewed the portfolio's gross performance, noting convertible bonds were the best performing sector, and stated he anticipates rates to increase in the future if the economy improves. Book 1 Page 202 12-11-2020 8:15 a.m. Book 1 Page 203 12-11-2020 8:15 a.m. Mr. Cole stated thet fund managers are generally performing well and that from September 30, 2020 through December 9, 2020, the portfolio is up approximately 8%. He reviewed the Peer Universe Quartile Rankings, Fiscal Year Rates of Return noting the gold bars are the Plan's declared rate of return, which had been reduced to 6.75% as of October 1, 2020, and should not be 7%; Mr. Cole stated he would have the report corrected. He discussed the Total Fund Five year rolling percentile ranking. Mr. Cole returned to the asset allocation and stated that as of this week, the portfolio is holding about 20% in large cap growth and slightly more than 15.5% in large cap value; he recommends the Board authorize a liquidation of $7 Million from Fidelity Large Cap Growth and put $5 Million in BNY/Boston Company large cap value, $1 Million in Cohen & Steers Global Infrastructure and $1 Million in Lazard Global Listed Infrastructure. Secretary/Treasurer Baty made a motion to accept Mr. Cole's recommendation. City Auditor and Clerk Griggs seconded the motion. The motion carried unanimously (3-0). Mr. Cole reminded the Board that at its last meeting he proposed a new: al large cap growth manager search to replace Fidelity; he now recommends putting that on hold considering the $7 Million reinvestment, as well as the Georgia Senate runoff election may have an impact on the markets. Chair Konstantopoulos thanked Mr. Cole for his service to the Plan and his presentation. 8. UNFINISHED BUSINESS: 8.1. Presentation and Discussion Re: Discussion of Office of Secretary/Treasurer. Presenter(s): Shayla Griggs, City Auditor and Clerk. City Auditor and Clerk Griggs explained she has now satisfied the requirements to serve as Secretary/Treasurer: of the Board, should the Board prefer. Attorney Christiansen clarified she is now a resident of the City of Sarasota and the City Commission has appointed her to the Board; he asked she send him the date of the Commission meeting at which her appointment was finalized. Secretary Baty made a motion to transfer the title of Secretary/Treasurer: to City Auditor and Clerk Griggs. Chair Konstantopoulos seconded the motion. The motion carried unanimously (3-0). The Board welcomed Secretary/Treasurer: Griggs to her position. 9. NEW BUSINESS: 9.1. Presentation and Discussion Re: Refund of Service Purchase for Christopher J. Childers. Presenter(s): Christopher. J. Childers Mr. Childers explained the history ofh his military service credit purchases and stated that he had erroneously believed he was eligible to purchase service credit for time he spent as a reservist in the United States Military; he stated he had served four years and one month of active-duty time, and an additional four years of inactive reserve time. Based on his prior understanding of "qualified military service,' he stated he had believed he was eligible to claim and purchase a total of five years of military time, but now understands inactive reserve time is not qualified military time. He proposed the relevant ordinance be clarified to read "active duty." He requests the Board authorize a refund of the purchase time of the last year in the amount of $26,060.88, with interest at a rate equal to the Pension Plan's rate of return from July 1, 2017 through December 31, 2020, for these funds to be rolled into his City Sponsored Mass Mutual 457(b) Account, and that the effective date he would be eligible to enter the DROP would be October 1, 2021. Attorney Christiansen explained Mr. Childers had proposed a reasonable solution; Mr. Christiansen stated that he had, in his 30 years of service to the Plan, not experienced a scenario where someone tried to purchase service credit for inactive service time. Secretary/Treasurer: Griggs left the meeting at 9:22am and returned at 9:23am. Attorney Christiansen noted that the Investment Consultant reports rates of returns after the ends of each respective quarter; while rates of returns would be available starting July 1, 2017 through September 30, 2020, the rate of return for the quarter ending December 31, 2020 will not be known until early 2021. Pension Plans Administrator Martin stated that, according to the respective City ordinance, "regular interest means, 'the interest computed at the rate of 5% per annum, or ordinarily to be compounded annually on December 315, calculated on the balance in question existing as of the first day of any calendar year, unless a different method of calculation is provided. I Attorney Christiansen explained that because the Plan mistakenly accepted Mr. Childers' payment for inactive service which was not eligible to be claimed and the Plan had earnings based on those erroneously accepted monies, a fair solution was to give Mr. Childers the Plan's earnings for the time it held the erroneously paid monies; he further clarified the Plan's ordinances reference quarterly interest calculations in several locations and wanted to avoid any confusion in the motion. Pension Plans Administrator Martin stated she expects to receive the rate of return for the quarter ending December 31, 2020 from the Investment Consultant sometime in mid- to late-February 2021. Attorney Christensen asked Mr. Childers if he would be amenable to receiving payment after the Plan receives the rate of return for the quarter ending December 31, 2020; Mr. Childers affirmed this was an acceptable solution, and only wanted to expedite the repayment of his money. Chair Konstantopoulos asked if a motion should be made to address the ambiguity in ordinances, as well as to clarify how the error was made. Pension Plans Administrator Martin explained that Mr. Childers had purchased his military time in several segments, the first and second of which were during previous City Auditors and Clerks, as well as previous Pension Administrators. At the time those purchases had been made, the Pension Department's claimed service process did not have a second review. Pension Plans Administrator Martin stated that when she reviewed Mr. Childers' records, his records contained notes and references to a full accounting of the service he had already claimed and purchased; had a quality review been performed at that time Mr. Childers made his final purchase of claimed military time, the review would have identified the error; Pension Plans Administrator Martin assured the Board it is fully staffed and now performs quality reviews on all benefit computations. Pension Plans Administrator Martin also explained that at the time Mr. Childers had purchased his claimed time, the City's Finance Department owned the accounting component of the claim process; the Pension Department now has its own software to track claimed service purchases, which is an additional check to prevent the issue from recurring. Book 1 Page 204 12-11-2020 8:15 a.m. Book 1 Page 205 12-11-2020 8:15 a.m. Trustee Baty made a motion to refund, as confirmed by Mr. Childers, 12 months of claimed service and interest from July 1, 2017 through December 31, 2020, at the quarterly rates of returns provided by the Investment Consultant, to be rolled over to Mr. Childers' 457(b) Plan with Mass Mutual. Secretary/Treasurer Griggs seconded the motion. The motion carried unanimously (3-0). Attorney Christiansen and Pension Plans Administrator Martin thanked Mr. Childers for his cooperation and apologized for the error. 10. ATTORNEY MATTERS: 10.1. Presentation and Discussion Re: ITMO Van Goestein V. Board of Trustees. Presenter(s): Scott Christiansen, Attorney. Attorney Christiansen explained that the Judge's decision clearly sided with the Board, and although Mr. Van Goestein could appeal, the scope of review at increasing levels of appeal becomes narrower and narrower. Attorney Christiansen stated that JP Morgan is reducing its fee for its real estate fund from 1% for the first $50 Million, to .95% on amounts larger than $25 Million. He stated the Plan has approximately $31 Million with JP Morgan's real estate fund. 10.2. Presentation and Discussion Re: ConAgra Securities Fraud Case Presenter(s): Scott Christiansen, Attorney. Attorney Christiansen stated that, although the Court dismissed the case, the Plan's attorneys, Robbins Geller, have asked for the Board's authority to appeal the decision. As counsel is paying costs out-of- pocket, Attorney Christiansen suggested the firm likely has a strong opinion as to why it believes it would prevail in an appeal, and he recommends authorizing it. Trustee Baty made a motion to authorize Robbins Geller to appeal the dismissal in the ConAgra Securities Fraud case. City Auditor and Clerk Griggs seconded the motion. The motion caried unanimously (3-0). 11. OTHER MATTERS: 11.1. Presentation and Discussion Re: Administrative Expense Budget Analysis. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin presented the Administrative Expense Budget Analysis, noting the actual expenses were at 89% of the budgeted amounts, mostly due to lack of Board travel as well as reductions in printing costs. Trustee Baty asked why actual salaries were above the budgeted amounts. Pension Plans Administrator Martin explained that it was in part, due to having a full staff, but mostly because previous budgets had held the salaries as flat from prior years' budgets when salary budgets should have allowed for annual raises that are anticipated. She stated that other items were also left flat when the actual amounts were known to change, as well as that Pension Administration identified and cancelled an unnecessary insurance policy. Pension Plans Administrator Martin assured the Board current proposed budgets are more carefully prepared. Attorney Christiansen recommended the Board make a motion to approve the report because it would need to be added to the annual report to the State of Florida. Trustee Baty made a motion to approve the Administrative Budget Expense Analysis for the period ending September 30, 2020. The motion carried unanimously (3-0). 11.2. Presentation and Discussion Re: Pension Fund Check Register, July 1, 2020 to September 30, 2020. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin noted the Pension Fund Check Register is presented because the current process uses ACH for payments. Previously, trustees were presented with supporting documentation when checks were presented for signatures. She explained reimbursements to the General Employees' Plan were due to payments for Pension Administration supplies being made from the General Employees' Plan which is then reimbursed by the Police Officers' and Firefighters Pension Plans for their respective shares of the expenses. Further, payment to BNY Mellon for quarterly investment management fees was due to insufficient cash on hand with the manager at the end of the quarter, sO this was paid from the Operating Fund. Payment to Mass Mutual fbo Mr. Furner was the last refund of his service purchase and contributions when he terminated from the Plan. The Board had no questions about this agenda item. Pension Plans Administrator Martin advised that the FPPTA announced it was not having an in-person trustee school in early 2021 but will instead have a virtual program in the spring from April 6, 2021 to April 9, 2020. 12. ADJORN. Chair Konstantopoulos adjourned the meeting at 9:41am. Gbp Chair Demetri Konstantopoulos Secreldly/Treasurer SIVa Griggs Book 1 Page 206 12-11-2020 8:15 a.m.