MINUTES OF THE CITY OF SARASOTA POLICE OFFICERS' PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF FEBRUARY 28, 2020 Present: Chair Ronnie K. Baty, Vice Chair Demetri Konstantopoulos, Trustee Johnathan Todd, and City Auditor and Clerk Shayla Griggs. Others: Attorney Scott Christiansen, Pension Plans Administrator Debra Martin, and Senior Pension Analyst Anthony Ferrer. Absent: Trustee Jody Hudgins. 1. CALL MEETING TO ORDER: Chair Baty called the meeting to order at 8:15 a.m. and called a 15-minute recess due to lack of quorum. Chair Baty called the meeting back to order at 8:25 a.m. 2. PLEDGE OF CIVILITY: Chair Baty read into the record a memorandum from Former Mayor Willie Charles Shaw, dated February 13, 2015, entitled "City Commission and Advisory Boards Meeting Protocols and Pledge of Civility." 3. PUBLIC INPUT: None. 4. APPROVAL OF THE MINUTES: 4.1. Approval Re: Minutes of the Police Officers' Pension Plan Board of Trustees Regular Meeting of January 24, 2020. Presenter: Chair Baty. A motion was made by Trustee Todd and seconded by Vice Chair Konstantopoulos to approve the Minutes of the Police Officers' Pension Plan Board of Trustees Regular Meeting of January 24, 2020. Motion carries unanimously (3-0). 5. RETIREMENT REQUESTIS): None. 6. INVESTMENT PERFORMANCE REVIEW: 6.1. Presentation and Discussion Re: Burgess Chambers & Associates Investment Performance as of December 31, 2019. Presenter(s): Larry Cole, Executive Vice President, Burgess Chambers & Associates. Mr. Cole came before the Board and introduced himself. Book 1 Page 170 02-28-2020 8:15 a.m. Book 1 Page 171 02-28-2020 8:15 a.m. Mr. Cole discussed the impact of the coronavirus on the market; that from an economiç standpoint the USA will be impacted; that the consensus is of a pent-up demand with a swift swing back of the market expected the later half of the year; that historically in this market you do not sell into it. Mr. Cole stated the Plan had an investment gain of 6.2% gross for the first quarter of the fiscal year; that from a total return standpoint, the portfolio is currently down 6% in the second quarter. Trustee Todd posed the question what is needed right know to see a turnaround, Mr. Cole replied China is the biggest factor from an economic standpoint; that there currently is a slowdown of new cases of the coronavirus in China; that the USA continues to contain cases of the coronavirus while the domestic consumer remains strong. Mr. Cole provided a brief overview of overweights and noted no compliance issues. Mr. Cole provided a performance overview with a net beginning market value of $246,678,243.00 for the quarter with a gain of $14,922,398.00; that the one-year number is at 20.5% net; that market value December 31, 2019 is $260 million and market value as of the close of business February 27, 2020 is at $253 million; that if equity weighting were to drop below 35%, he may recommend to rebalance into equities. Mr. Cole reviewed Individual managers and recommended divesting from MLP's. Discussion ensued on lowering the assumption rate, consensus was noted to continue this discussion at a later date when Mr. Cole and Pete Strong, Actuary/Consultant, Gabriel Roeder Smith & company, are present before the Board. The Board thanked Mr. Cole for his presentation. 7. UNFINISHED BUSINESS: None. 8. NEW BUSINESS: 8.1. Presentation and Discussion Re: Review of Infrastructure Managers. Presenter(s): Larry Cole, Executive Vice President, Burgess Chambers & Associates. Mr. Cole came before the Board and introduced himself. Mr. Cole reviewed global infrastructure funds such as power plants, railroads, gas, marine ports and airports; that this strategy is a much broader approach which may include a small percentage of MLP's; that globally there will be a lot of monies spent on infrastructure; that historically this asset class has consistently held up well with good downside protection. Mr. Cole's recommendation is to get out of MLP's and split the proceeds between Lazard Global Listed Infrastructure and Cohen and Steers Global Listed Infrastructure. Mr. Cole added Lazard is a pure mutual fund and Cohen and Steers behaves exactly like a mutual fund but is called the Collective Investment Trust which is only for Pension monies and the advantage that it is cheaper by about 25 basis points. Vice Chair Konstantopoulos posed the question with the impact of the coronavirus, is this the time to move into Global Infrastructure, Mr. Cole replied it is only 1.2% of the total portfolio; that the goal is to get out of MLP's; that the coronavirus is a temporary problem that will be resolved with pent up demand. Discussion ensued. A motion was made by Vice Chair Konstantopoulos and seconded by Trustee Todd to liquid the Plan's MLP holdings. Motion carries unanimously (3-0). A motion was made by Trustee Todd and seconded by Vice Chair Konstantopoulos to reinvest the proceeds from the sale of the MLP portfolios on a 50/50 basis split to the Lazard Mutual Fund and the Cohen and Steers, CIT (Collective Investment Trust) Global Infrastructure portfolios. Motion carries unanimously (3-0). The Board thanked Mr. Cole for his presentation. 8.2. Presentation and Discussion Re: Revised Investment Policy Statement. Presenter(s): Larry Cole, Executive Vice President, Burgess Chambers & Associates. Mr. Cole came before the Board and introduced himself. Mr. Cole provided to the Board a review of the revised Investment Policy Statement which was revised to accommodate the Plan's future investment in the Infrastructure asset class. A motion was made by Trustee Todd and seconded by Vice Chair Konstantopoulos to accept the changes to the Investment Policy Statement. Motion carries unanimously (3-0). The Board thanked Mr. Cole for his presentation. 8.4. Presentation and Discussion Re: Expected Rate of Retum. Presenter(s): Attorney Scott Christiansen, Esq., Christiansen and Dehner, P.A. Attorney Christiansen stated this is a declaration of what the Plan expects to earn on its investments on a going- forward basis. Attorney Christiansen confirmed with Mr. Cole the recommendation of the expected rate of return of 7%. A motion was made by Vice Chair Konstantopoulos and seconded by Trustee Todd that based upon the advice of the investment consultant, that the Board expects to eamn a 7% investment return for the next year, the next several years and for the long term thereafter. Motion carries unanimously (3-0). 8.3. Presentation and Discussion Re: Independent Auditors Report for the Fiscal Year Ending September 30, 2019. Presenter(s): Allison Wester, CPA, Partner, Mauldin & Jenkins, LLC. Ms. Wester came before the Board and introduced herself. Ms. Wester discussed thei independent auditors report and required external auditor communications performed for the Plan for the year ending September 30, 2019, issuing an unmodified opinion. Ms. Wester stated that there was an increase of approximately $870,700.00 in the current fiscal year, primarily related to return on investments. Book 1 Page 172 02-28-2020 8:15 a.m. Book 1 Page 173 02-28-2020 8:15 a.m. A motion was made by Trustee Todd and seconded by Vice Chair Konstantopoulos to accept the Independent Auditors report for fiscal year ending September 31, 2019, as presented by Mauldin & Jenkins. Motion passed unanimously (3-0). The Board thanked Ms. Wester for her presentation. 9. ATTORNEY MATTERS: Attorney Christiansen inquired on Ms. Griggs residency requirement status, Ms. Griggs replied she expects to have an updated address soon. Attorney Christiansen provided an update on the Robbins, Geller, Rudman & Dowd LLP consolidated class action against Conagra Brands, Inc.; that oral argument is scheduled for a motion to dismiss in June. Attorney Christiansen gave a brief update of the David Van Gostein disability case; that we were waiting for a response from the Judge on the Writ of Certiorari that was filed by the plaintiff's attorney; that a request from the Judge to file a response was received and the response has been filed; that the attorney for Mr. Van Gostein has filed a reply to Attorney Christiansen's response; that all of the briefs have been sent to the Judge; that there is a new Judge; Judge Walker. Attorney Christiansen addressed City Auditor and Clerk Griggs on the ordinance approved by the Board regarding the Internal Revenue code changes and the presentation to the Commission asking if it was adopted, Secretary/Treasurer Griggs stated it was presented at the November 18, 2019 City Commission meeting and confirmed it was adopted. Attomey Christiansen asked that a copy be sent to him and Ms. Martin confirmed it was sent to Tallahassee. Attomey Christiansen reviewed the current Legislative session, Senate Bill 1270; that this Bill will require that appointed Public Officials will have to have an additional five hours of training every four years in the area of Board governance and fiduciary responsibilities; that the Bill does also provide that the training can be done online. 10. OTHER MATTERS: 10.1. Presentation and Discussion Re: Administrative Expense Budget Analysis. Presenter(s): Debra Martin, Pension Plans Administrator. Ms. Martin presented the Administrative Expense Budget Analysis as of the end of the first quarter, December 31, 2019; that the column second from the right is the 2020 Budget approved by the Board in March last year; that last year Pension Administration was instructed to keep thel budget flat; that the expense budget line item salaries is higher as this is the only expense dollar amount paid by the City (reimbursed by Pension on a pro-rata basis) and there is an increase in salaries each year; that as the new budget is being developed, it is noted the Pension Board does not own nor lease any equipment sO this will not be in next year's budget; that itl has just recently come to our attention, due to staff tumover in a specific position, that certain things have not been done as far as doing reads on the copy machine sO the CAC has been absorbing that cost and the next quarter there will be something costed in this line item; that this analysis is based on a cash basis not accrual, therefore some items that were expensed in the first quarter will not be seen until the next analysis is presented to the Board. Ms. Martin added the back of the page is for informational purposes and this is straight out of the General ledger; that you can see were we are as of December 31, 2019 as far as additions and deductions to the Fund, again on a cash basis as there are no accruals. Ms. Martin concluded by adding this Administrative Expense Budget Analysis will be presented quarterly to provide an updated picture where the Plan is as far as Administrative expenses. Attorney Christiansen asked what the Plan is paying as far as staff salaries, Ms. Martin replied 30%. 11. ADJOURN. Chair Baty adjourned the meeting at 9:40 a.m. wL Chair Ronnie K, Baty, Vice Chair Demetri Konstantopoulos Book 1 Page 174 02-28-2020 8:15 a.m.