MINUTES OF THE CITY OF SARASOTA FIREFIGHTERS PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF JANUARY 22, 2020. Present: Chair Michael Hartley, Vice Chair Sheila Roberson, Secretary/Treasurer: Shayla Griggs and Trustee Scott Snow. Others: Attorney Herrera, Pension Plans Administrator Debra Martin, Senior Pension Analyst Anthony Ferrer. Absent: Trustee Charles Joseph. 1. CALL THE MEETING TO ORDER: Chair Hartley called the meeting to order at 9:00 a.m. 2. PLEDGE OF CIVILITY: Trustee Snow read into the record a memorandum from Mayor Willie Charles Shaw, dated February 13, 2015, entitled "City Commission and Advisory Board Meeting Protocols and Pledge of Civility." 3. PUBLICI INPUT: None 4. APPROVAL OF MINUTES: 4.1. Approval Re: Minutes of the Firefighters Pension Plan Board of Trustees Regular Meeting of December 4, 2019. A motion was made by Vice Chair Roberson and seconded by Trustee Snow to approve the Minutes of the Firefighters' Pension Plan Board of Trustees Regular Meeting of December 4, 2019. Motion carried unanimously (3-0). Secretaly/Treasurer: Griggs stated she will refrain from voting based on Chapter 175 of Florida Statutes, until residency requirements are met. Attorney Herrera added that Secretary/Treasurer Griggs is appointed by the City to sit on the Firefighters' Pension Board; that therei is a City residency requirement tobe met; that if Secretary/Treasurer: Griggs is present at the public meeting her duty is to vote or abstain; that if she abstains it is due to a conflict and a conflict form must be completed to meet Florida Statutes as well as City Ordinance. 5. INVESTMENT PERFORMANCE REVIEW: 5.1. Presentation and Discussion Re: Graystone Consulting Performance review as of December 31, 2019. Presenter(s): Scott Owens, CFA, CIMA, Associate Vice President Institutional Consultant and Andy Mcilvaine, Institutional Consultant, Graystone Consulting. Mr. Owens and Mr. Mcilvaine came before the Board and introduced themselves. Mr. Owens briefly reviewed infrastructure investments; that infrastructures are an asset class that creates diversification, has as good downside capture with better than bond like returns with lower volatility than stocks; that infrastructure is Book 1 Page 173 01-22-2020 9:00 a.m. Book 1 Page 174 01-22-2020 9:00 a.m. cell phone towers, water treatment facilities, toll roads and similar enterprises. Mr. Mcilvaine noted the S&P 500 Index was up 32% for the year; that there was little volatility due to trade war progress and the Federal Reserve lowering interest rates in October; moving forward there is an expectation of more volatility as it is an election year and there are still trade war issues along with other Geo political issues; that unemployment remains at a historic fifty year low at 3.5% with inflation slightly up in the fourth quarter. Mr. Mcilvaine provided an overview of the market; the Russell 1000 Index up 9.04% on the quarter and 31.42% over the past twelve months; the Russell 2000 out performed the Russell 1000 and growth outperformed value across the board; that ten out of the eleven sectors were positive. However, the Plan's holdings were up 5.06%, net of fees for the quarter ending December 31, 2019; and up 18%, net of fees, for the 2019 calendar year. Mr. MclIvaine added a brief overview of international and emerging markets. Mr. Owens reviewed the new format of the performance report. Mr. Owens provided a report on individual managers; that the investment policy checklist reflects compliance. The Board thanked Mr. Owens and Mr. Mcilvaine for their presentation. 6. UNFINISHED BUSINESS: 6.1. Presentation and Discussion Re: UBS, Trumbull Property Fund (TPF) loyalty program. Presenter(s): Scott Owens CFA, CIMA, Associate Vice President Institutional Consultant and Andy Mcilvaine, Institutional Consultant, Graystone Consulting. Mr. Owens and Mr. Mcilvaine came before the Board and introduced themselves. Mr. Owens discussed and recommended participation in the UBS Trumbull Property Fund (TPF) loyalty incentive which is a management fee discount; clients may commit to a 3-year period for a 15% fee discount; or clients can commit to a 4-year period for a 25% fee discount; available to clients until December 2020; may leave before the committed period ends after returning the discount amounts received; that there is a three to four year que to exit UBS. Discussion ensued. A motion was made by Vice Chair Roberson and seconded by Trustee Snow to accept the 25%, four-year commitment loyalty incentive on the UBS portfolio, on fiteen-milion-dollars of the Plan's holdings. Motion passed unanimously (3-0). Attorney Herrera added the TPF proposed agreement has been reviewed and is ready for signatures. The Board thanked Mr. Owens and Mr. Mcilvaine for their presentation. 6.2. Presentation and Discussion Re: Impact Statement on Lowering the Investment Assumption Rate. Presenter(s): Chair Hartley and Brad Armstrong, Actuary, Gabriel Roeder Smith & Company. Mr. Armstrong came before the Board and introduced himself. Chair Hartley distributed a letter regarding discussion with the City and The County. Mr. Armstrong discussed the letter and the calculation process; that in the past, the State received Federal flood insurance funding that was being passed through to local Plans' and this is no longer being passed through, creating a couple hundred thousand dollar shortfall; pre-96 shares were less; that there is shortfall for the prior year of $13,107.00 to the City and $74,466.00 for the County. Chair Hartley added an invoice was sent to the City and County for payment. In response to a question from Trustee Snow, Mr. Armstrong replied that the State may require an implementation of a new mortality table, thus increasing costs to the City and County. Chair Hartley noted that the Board has been prudent in lowering the rate of return with the Fiscal Year 2018 valuation, that lowering the rate at this point could strain the City and County budgets. Chair Hartley noted that the Board can readdress this at the October 2020 meeting. Trustee Snow stated he is comfortable leaving the assumed rate of return at 6.85%. Chair Roberson concluded that lowering the return can be revisited in a later meeting. The Board thanked Mr. Armstrong for his presentation. 7. NEW BUSINESS: 7.1. Presentation and Discussion Re: Actuarial Valuation Report for Fiscal Year Ended September 30, 2019. Presenter(s): Brad. Armstrong, Actuary, Gabriel Roeder Smith & Company. Mr. Armstrong came before the Board and introduced himself. Mr. Armstrong provided an overview of the Actuarial Balance sheet as of September 30, 2019 discussing present resources, expected future resources, actuarial present value of expected future benefit payments and reserves. Mr. Armstrong noted that the City/County contribution for fiscal year 2021 is $9,358,622.00 which is a decrease of $127,000.00 from fiscal year 2020. Mr. Armstrong discussed the experience gain throughout fiscal year 2019. This arose due to an investment return greater than the assumed rate of return as well as two additional retirees removed from the Plan during the year. Overall, the Funded condition of the Plan as of September 30, 2019 is 84.3%, which is an increase from 80.8% at September 30. 2018. Mr. Armstrong noted that going from 6.85% to 6.70% this year would increase the total local employer's contribution requirements to $9,359,000.00. Secretary/Treasurer Griggs left Chambers at 10:46 a.m. and returned at 10:57 a.m. A motion was made by Vice Chair Roberson and seconded by Trustee Snow to accept the Actuarial Valuation Report for Fiscal Year Ended September 30, 2019. Motion passed unanimously (3-0). The Board thanked Mr. Armstrong for his presentation. 7.2. Presentation and Discussion Re: GASB No. 67 Plan Reporting and Accounting Schedules for Fiscal Year Ended September 30, 2019. Presenter(s): Brad Armstrong, Actuary, Gabriel Roeder Smith & Company. Mr. Armstrong came before the Board and introduced himself. Book I Page 175 01-22-2020 9:00 a.m. Book 1 Page 176 01-22-2020 9:00 a.m. Mr. Armstrong presented the GASB No. 67 Plan reporting and accounting schedules for fiscal year ended September 30, 2019 and stated that this report is for informational purposes only. The Board thanked Mr. Armstrong for his presentation. Ms. Martin left Chambers at 11:03 a.m. and returned at 11:06 a.m. 7.3. Presentation and Discussion Re: Global Listed Infrastructure, Lazard Asset Management. Presenter(s): Frank Sposato, Director and Steve Keeler, Vice President, Lazard Asset Management. Mr. Sposato and Mr. Keeler came before the Board and introduced themselves. Mr. Sposato provided an overview of the Lazard Asset Management; value managers headquartered in New York with approximately $208 billion under management. Mr. Sposato gave a brief overview of global listed infrastructure; that it is an investment in publicly traded stock allowing for daily liquidity; that the investment is in companies that own and operate things like toll roads and power plants; that the strategy is to do better than inflation plus five over time. Vice Chair Roberson posed the question what index is used as a benchmark, Mr. Sposato replied CPI plus five percent. Mr. Keeler provided a brief overview of "preferred infrastructure": that preferred infrastructure is a subset of the infrastructure market believed to have higher revenue certainty, profitability and lower volatility; that Lazard focuses on this subset of the overall sector; that these are essential subset assets with a regulated retum, a long concession contract and the ability to pass through inflation. Mr. Keeler reviewed qualitative risk ranking and value by sector, country and region. Chair Hartley posed the question who the manager would be to present annually at the Board's meeting, and Mr. Sposato replied himself or Mr. Keeler. Chair Hartley asked why Lazard would be the best option Mr. Sposato replied, Lazard is a preferred infrastructure portfolio with real differentiation and diversification. The Board thanked Mr. Sposato and Mr. Keeler for their presentation. 7.4. Presentation and Discussion Re: Global Infrastructure Strategy, Nuveen Asset Management. Presenter(s): James K. Clark, CFA Client Portfolio Manager and Lisa M. George, CFA, AIFA Relationship Manager, Nuveen. Mr. Clark and Ms. George came before the Board and introduced themselves. Ms. George provided an overview of the firm: that Nuveen is asset management firm of the parent company TIAA; that Nuveen is a global diverse firm with over one hundred twenty years of history; that there is approximately a trillion dollars under management. Mr. Clark gave an overview of Nuveen asset management strategies, philosophy and reviewed the global infrastructure investment team. Mr. Clark stated that infrastructure is essential services; that they provide for the efficient operation of the economy in the domiciles where they are physically located; that by virtue of that, there is some removal of themselves from sensitivity to the economic processor cycle with long term contracts and a less volatile eamings stream; that infrastructure are needs based investments. Vice Chair Roberson posed the question why Nuveen turnover is higher than Lazard and Cohen and Steers, Mr. Clark replied Nuveen is an active manager driven by process; that opportunities are taken to trim and add based on relative valuation; that another driver is regulatory and political risks. Mr. Clark discussed the benchmarking process; that Nuveen is a diversified fund by prospectus and cannot have more than a quarter of holdings in any one sector; that the index matched up better from a geographic standpoint. Chair Hartley posed the question who would represent annually for performance review, Mr. Clark replied potentially himself, Matt Weyandt, or Lisa George. Chair Harlley posed the question why Nuveen is the best option for the Fund, Mr. Clark replied that the Board determines which is best for the constituency and the other investments that are currently in the portfolio. Discussion ensued. The Board thanked Mr. Clark and Ms. George for their presentation. Secretary/Treasurer Griggs left Chambers at 12:18 p.m. and returned at 12:20 p.m. 7.5. Presentation and Discussion Re: Global Listed Infrastructure, Cohen & Steers, Inc. Presenter(s): Brian Casey, Vice President and Ben Morton, Executive Vice President, Cohen & Steers, Inc. Mr. Casey and Mr. Morton came before the Board and introduced themselves. Mr. Casey provided an overview of the Firm; headquartered in New York and founded in 198 is the first Firm to focus exclusively in liquid real assets; that the Firm is a public company which listed under the New York stock exchange (CNS) in 2004; that there are $72.2 billion in assets under management. Mr. Morton discussed strategy; that there is an on the ground, experienced and dedicated liquid real assets global investment team with substantial market positioning; that Cohen and Steers is a public company with broad employee ownership; that the driver is excess returns relative to the benchmark. Mr. Morton discussed the diversified portfolio, infrastructure team along with the investment process, positioning and performance. Chair Hartley posed the question how the Firm is classified, as a value or growth manager, Mr. Morton replied the Firm is very focused on an evaluation discipline approach to investing. Chair Hartley asked why the Firm would be the best option, Mr. Morton replied the competitive advantage by the consistency of outperforming relative to the Benchmark thirteen out of sixteen years. Discussion ensued on various Benchmarks. Chair Hartley asked who would represent annually, Mr. Casey replied himself. The Board thanked Mr. Casey and Mr. Morton for their presentation. 7.6. Presentation and Discussion Re: Infrastructure Fund Search. Presenter(s): Scott Owens, CFA, CIMA, Associate Vice President Institutional Consultant and Andy Mcilvaine, Institutional Consultant, Graystone Consulting. Mr. Owens and Mr. Mcilvaine came before the Board and introduced themselves. Mr. Owens discussed the asset class and offered a review of the pros and cons on the infrastructure managers that presented. Book 1 Page 177 01-22-2020 9:00 a.m. Book 1 Page 178 01-22-2020 9:00 a.m. Discussion ensued. Attorney Herrera added from a legal standpoint there is no issue as his firm has reached agreements with all the firms that presented today. A motion was made by Vice Chair Roberson and seconded by Trustee Snow to engage Cohen and Steers, Inc. as manager for the global Infrastructure Collective Investment Trust (CIT) vehicle, transfer assets, enter into a contract and allocate the recommended assets to the mandate. Motion passed unanimously (3-0). Mr. Owens noted reallocation will be done to the target of the Investment Policy statements. Mr. Owens noted two things must happen to affect the transaction, that the contract is signed and be thirty days after the update to the Investment Policy Statement (IPS). The Board thanked Mr. Owens and Mr. Mcilvaine for their presentation. 7.7. Presentation and Discussion Re: A securities fraud action alleging violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") filed against Green Dot Corporation. Presenter(s): Atara Hirsch, Esq., Director of Institutional Investor Services, Abraham, Fruchter Twersky, LLP via Teleconference. Ms. Hirsch came before the Board via teleconference and introduced herself. Ms. Hirsch gave an overview of a securities fraud action alleging violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") filed against Green Dot Corporation; that the Sarasota Firefighters' Pension Plan lost approximately $110,000.00 in Green Dot Stock' and the recommendation is to move forward as lead plaintiff; that this is a "pump and dump case" where insiders of companies pump up the stock or inflate the price artificially sO that they can sell their own stock at a high value; that investors who purchased base on this artificial inflation are left holding stocks that have heavily declined in value. Ms. Hirsch gave a brief overview of Green Dot Corporation operations. Ms. Hirsch recommended moving forward as lead plaintiff, reviewed the process and requested authority to consider teaming up with other funds to move forward as a group. A motion was made by Vice Chair Roberson and seconded by Trustee Snow to approve engaging Abraham, Fruchter Twersky, LLP (AFT) as securities counsel in respect to the Green Dot litigation and proceeding with filing for lead plaintiff. Motion passed unanimously (3-0). The Board thanked Ms. Hirsch for her,presentation. 8. ATTORNEY MATTERS: Attorney Herrera reviewed the Legislative session; that there is a Bill filed seeking to incorporate fiduciary training for certain elected officials, officers and employees of the state; that the text of the language seems to conflict with other things. Attorney Herrera briefly reviewed Federal Appropriations Bill "SECURE" (Setting Every Community up for Retirement Enhancement) that became effective January 1, 2020. Vice Chair Roberson asked if action is required for any previous votes based on Secretay/Treasurer Griggs abstaining from voting, Attorney Herrera replied no action necessary unless there is a motion that only passed because of one vote. 9. OTHER MATTERS: Ms. Martin added that the update to the Investment Policy Statement (IPS) was done at the September 25, 2019 Board Meeting. 10. ADJOURN. Chair Hartley adjourned the Firefighters' Pension Plan Board of Trustees Regular Meeting at 1:34 p.m. Suloniln Chair Michae/Hartiey Vice Chair Shelia Roberson Book 1 Page 179 01-22-2020 9:00 a.m.