MINUTES OF THE CITY OF SARASOTA POLICE OFFICERS' PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF JANUARY 23, 2017 Present: Chair Kevin Stiff, Vice Chair Ron Baty, Secretary/Treasurer: Pamela Nadalini (arrived at 8:30 a.m.), Trustees Duncan Miller and Darrell Nixon Others: Attorney Scott Christiansen, Pension Plans Administrator Harry Ramphal, Senior Pension Analyst Anthony Ferrer, and Pension Specialist Lois Belle Absent: None 1. CALL MEETING TO ORDER: Chair Stiff called the meeting to order at 8:15 a.m. 2. PLEDGE OF CIVILITY: Chair Stiff 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. 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 December 5, 2016 A motion was made by Vice Chair Baty, seconded by Trustee Miller to approve the minutes of the Police Officers' Pension Plan Board of Trustees Regular Meeting of December 5, 2016. Motion carried unanimously (4-0). 5. APPROVAL OF RETIREMENT REQUEST/S): None 6. INVESTMENT PERFORMANCE REVIEW: 6.1. Presentation and Discussion Re: Burgess Chambers & Associates Investment Performance for the Period Ending December 31, 2016 Larry Cole, Executive Vice President, Burgess Chambers & Associates, came before the Board to discuss the Plan's Investment Performance for the quarter ended December 31, 2016, stating that the Report was preliminary to date; that the market value as of December 31, 2016 is $204,000,000. Mr. Cole stated that he is not recommending any changes to the Plan's asset allocation at this point due to uncertainty in the economy; that the price of oil stabilized during the first quarter of 2017; that it should positively affect the value of the Plan's Master Limited Partnership holdings. In response to question from Chair Stiff regarding domestic energy production, Mr. Cole stated that there have been increased efficiencies in fracking technology; that this should help the value of these investments; that the Federal Reserve is expected to increase interest rates in the near future and to increase inflation during the first half of the year; that the gross of fees quarter return was 0.9%. Book 1 Page 51 01/23/17 8:15 A.M. Book 1 Page 52 01/23/17 9:00 A.M. Secretary/Treasurer Nadalini entered the Chambers at 8:30 a.m. 7. UNFINISHED BUSINESS: 7.1. Presentation and Discussion Re. Disability Benefits in the Line of Duty Retirement Request of Kelvin Williams Pension Plans Administrator Ramphal stated Staff is working with Kelvin Williams in order to establish Mr. Williams on the Police Officers' Pension payroll in time for the January benefit payment. A motion was made by Secretary/Treasurer Nadalini, seconded by Vice Chair Baty to approve the disability benefits and line of duty retirement request as presented. Motion carried unanimously (5-0). 8. NEW BUSINESS: 8.1. Presentation and Discussion Re: Proposed Amendment to Burgess Chambers & Associates Agreement for Investment Performance Monitoring and Advisory Services Larry Cole, Executive Vice President, Burgess Chambers & Associates, came before the Board to discuss a revision to the contract between Burgess Chambers & Associates and the Police Officers' Pension Plan. In response to question from Vice Chair Baty asking about the ability ofi the Plan to amend the contract, Attorney Christiansen stated the Plan has the authority to alter the contract. In response to request from Secretary/reasurer Nadalini requesting the Plan Attorney to review the existing contract, Attorney Christiansen stated his office would review the contract and add a contractual provision stating that the Plan may review the contract periodically. In response to question from Trustee Miller asking if the fee increase is pertormance based, Mr. Cole stated this increase is not performance based; however the proposed change is based on the Plan's market value, and Attorney Christiansen stated that a majority of his clients are charged a flat fee regardless of asset value. In response to question from Chair Stiff asking when the measurement date of the asset value would be, Mr. Cole stated that this measurement would be taken at the end of each quarter, and Chair Stiff requested the Plan's Attorney review the proposal to alter the contract. 8.2. Presentation and Discussion Re: Fiscal Year Ended September 30, 2016 Actuarial Valuation Pete Strong, Actuary, Gabriel Roeder Smith & Company came before the Board to discuss the Plan's Actuarial Valuation as of September 30, 2016, and stated the decrease in the City's contributions is due in part to the City hiring 20 new Police Officers during the Fiscal Year Ended September 30, 2016; that the Plan experienced fewer Police Officers than expected entering the DROP; that a 2.43% increase in contribution rate is due to change in mortality rate. Discussion ensued regarding the actuarial value of the Plan's assets. Mr. Strong stated that similar municipal pension plans have been evaluating Assumed Rates of Return; that the current consensus for 10 year realized returns is approximately 6.5%, and that for longer time periods, 7% is a reasonable expected return. In response to question from Chair Stiff regarding Florida Pension Plans' Assumed Rates of Return, Mr. Strong stated that the range is currently between 7.4% - 7.6%. Secretary/Treasurer Nadalini sought Board consensus to request Mr. Cole address the Board regarding his view of the Plan's Assumed Rate of Return. Chair Stiff noted Board consensus for Mr. Cole to address the Board. Mr. Cole came before the Board and stated that the Plan's current Assumed Rate of Return of 7% is reasonable; that the long term investment expectations are often inaccurate; that he is reluctant to recommend any changes based on these reports. In response to a question from Trustee Nixon regarding lowered rate of return increased City funding, Mr. Strong stated that the Plani recognizes gains and losses over a 25-year period instead of the current 30-year amortization period. Chair Stiff noted Board consensus. A motion was made by Secretary/Treasurer: Nadalini, seconded by Vice Chair Baty, to approve Actuarial Valuation. Motion carried unanimously (5-0). 8.3. Presentation and Discussion Re: Updated GASB No. 67 Disclosure Information - Fiscal Year Ending September 30, 2016 Pete Strong, Actuary, Gabriel Roeder Smith & Company came before the Board to discuss the results of the Plan's GASB No. 67 analysis, and stated that the Plan is 81% funded. A motion was made by Secretary/Treasurer: Nadalini, seconded by Vice Chair Baty, to approve GASB No. 67 Report. Motion carried unanimously (5-0). 8.4. Presentation and Discussion Re: Revised Summary Plan Description Attorney Christiansen presented the revised Summary Plan Description and suggested that the Board thoroughly review the document and discuss any concerns at the Police Officers' Pension Plan Board of Trustees Regular Meeting of February 24, 2017. Secretary/Treasurer Nadalini stated that she will seek to place discussion of the revised Summary Plan Description on the Police Officers' Pension Plan Board of Trustees Regular Meeting of February 24, 2017 meeting agenda. 9. ATTORNEY MATTERS: Attorney Christiansen stated that the Board formally recognize a 7% rate of return for short-term, intermediate-term, and long-term, based on the recommendation of the Plan's Consultant. A motion was made by Secretary/Treasurer: Nadalini, seconded by Vice Chair Baty, to recognize a 7% rate of return for short-term, intermediate-term and long-term based on the recommendation of the Plan's Consultant. Motion carried unanimously (5-0). Attorney Christiansen briefly discussed pending legislation regarding voting conflicts among Board members and stated that his office will monitor this proposed legislation. 10. OTHER MATTERS: Secretary Nadalini reminded Board members to fill out the Form 1 Financial Disclosures and maintain a copy of the receipt. Pension Specialist Lois Belle was introduced and provided the Board with a brief overview of her qualifications. Pete Strong, Actuary, Gabriel Roeder Smith & Company, came before the Board to recommend that his office review any changes in benefits, and Secretary/Treasurer Nadalini requested to move the discussion to the next meeting. Book 1 Page 53 01/23/17 8:15 A.M. Book 1 Page 54 01/73/17 9:00 A.M. 11. ADJOURN. Chair Stiff adjourned the Police Officers' Pensions Board of Trustees Regular meeting at 10:05 a.m. 6 V D Chair Kevin Stiff Secretary/Treasurer Pamela M. Nadalini