Book 1 Page 202 10-28-2020 9:00 a.m. MINUTES OF THE CITY OF SARASOTA FIREFIGHTERS PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF OCTOBER 28, 2020 VIA TELECONFERENCE, which is allowable under Executive Order No. 20-69 issued by Governor DeSantis on March 20, 2020 Present: Chair Michael Hartley, Vice Chair Shelia Roberson, City Auditor and Clerk Shayla Griggs, Trustee Charles Joseph, Trustee Scott Snow. Others: Attorney Pedro Herrera, Pension Plans Administrator Debra Martin, Senior Pension Analyst Anthony Ferrer, Pension Specialist Peter Gottlieb. Absent: None 1. CALL MEETING TO ORDER: Chair Hartley called the Sarasota Firefighters' Pension Plan (Plan) Board of Trustees regular meeting to order at 9.00 a.m. 2. PLEDGE OF CIVILITY: Presenter(s): Chair Hartley via videoconference. City Auditor and Clerk Griggs stated for the record, "We may disagree, but we will be respectful to one another. We will direct all comments to issues. We will avoid personal attacks.' 3. ROLL CALL: Presenter(s): Debra Martin, Pension Plans Administrator, via videoconference. Pension Plans Administrator Martin called Roll: Chair Hartley, Vice Chair Roberson, Trustee Joseph, Trustee Snow, and City Auditor & Clerk Griggs appeared virtually. Also appearing virtually were Attomey Pedro Herrera, Pension Plans Administrator Martin, Senior Pension Analyst Anthony Ferrer, and Pension Specialist Peter Gottlieb. Pension Plans Administrator Martin advised Agenda Item 6.2. includes the Large Cap Growth Manager search. 4. PUBLIC INPUT: None. 5. APPROVAL OF MINUTES: 5.1. Approval Re: Minutes of the Firefighters Pension Plan Board of Trustees Regular Meeting of September 23, 2020. Presenter(s): Chair Hartley. Vice Chair Roberson made a motion to accept the minutes; Trustee Snow seconded the motion. The motion carried unanimously (5-0). 6. INVESTMENT PERFORMANCE REVIEW: 6.1. Presentation and Discussion Re: Sawgrass Asset Management, Investment Performance as of September 30, 2020. Presenter(s): Chris Greco, Partner, Institutional Marketing & Client Service, Marty LaPrade, CFA Partner, Equity Portfolio Manager, via videoconference. Chris Greco appeared before the Board virtually and introduced himself, Marty LaPrade, and their presentation. He discussed the portfolio summary and expressed his appreciation for the Plan's business. Mr. LaPrade gave an overview of the current market and economy. He discussed the Plan's portfolio performance and stated he has never seen as significant a difference between the portfolio and the Russell 1000 index in the one-year return. He asserted the portfolio's underperformance is due to extreme concentration in the index in Facebook, Amazon, Apple, Microsoft, and Google stocks, which cannot be replicated in the portfolio due to investment policy statement constraints. Mr. LaPrade discussed Sawgrass's diversity throughout its history, its calendar returns in negative, positive, and strong positive markets, portfolio characteristics, the performance of the top and bottom performing stocks in the index which are either underweighted or not held in the portfolio, and current events which may have an effect on the market's performance. Chair Hartley thanked Sawgrass, Mr. LaPrade and Mr. Greco for their presentation. In response to questions, Mr. LaPrade noted there have been no structural or personnel changes at Sawgrass. He further speculated the portfolio may not perform as well as other funds which do not have similar constraints as the Plan, such as investment policy statements. 6.2. Presentation and Discussion Re: Graystone Consulting, Quarterly Performance and Summary, Asset Allocation, as of September 30, 2020, Large Cap Growth Manager Search. Presenter(s): Scott Owens, Associate Vice President, Institutional Consultant; Andy MclIvaine, Institutional Consultant, Graystone Consulting, via videoconference. Scott Owens appeared before the Board virtually and introduced himself, Andy Mclivaine, and Graystone's presentation. Mr. Mclivaine discussed the Board's September 2020 meeting where it had invited large cap growth managers present their qualifications to the Board as potential replacements for Renaissance Investmentment Management. Mr. Owens gave a brief history of events in the stock market and economy in 2020; he anticipates short term market volatility if federal economic stimulus is not enacted, if the 2020 Presidential Election is contested, and until there is better containment of the COVID-19 pandemic. He discussed returns as of September 30, 2020 in the domestic equity market, noting the disparity between growth and value has been unprecedented, various sectors within the S&P 500, international emerging and developing markets, and fixed income market. He discussed the portfolio's asset allocation and weighted performance, the risk/return analysis, cash flow analysis per each manager since inception, asset allocation, and the executive summary of the portfolio's fund managers. In response to Chair Hartley's question, Mr. Owens stated the portfolio is most vulnerable to a market pull- Book 1 Page 203 10-28-2020 9:00 a.m. Book 1 Page 204 10-28-2020 9:00 a.m. back in the large cap space as that has the highest valuation, however, to the Plan's credit, the portfolio is very well diversified compared to its benchmarks, especially in light of the concentration oft technology stocks in the S&P 500. Mr. Owens reviewed the quarterly performance of each fund manager. He suggested the Board call HGK in to discuss its continued service to thel Plan as it has not performed well in light of its downside capture being larger than its upside, and that it has not performed defensively in down markets. In response to the Board's question, Mr. Owens explained that UBS Trumbull's down market capture was a result of little movement in the real estate market where a .5% drop in the index and 1% drop in a fund results in a 200% downside capture, sO that the relative quantification appeared more dramatic than the absolute. Mr. Owens further clarified the Plan has 4%, or approximately $7.157 million dollars invested with Cohen & Steers, which is more conservative than their benchmark but not the lowest of the managers presented. He reviewed the compliance checklist, noting all investments comply with Plan mandates. Mr. Owens then discussed the large cap growth search summary as an update for the Board. He stated that he was not suggesting Board would want to make any decisions at this meeting. Chair Hartley explained he did not have other materials he wished to reference to adequately discuss the issue; he asked the matter to be continued at the December 2020 meeting, and opened the floor for questions for Graystone. Trustee Joseph asked Mr. Owens to discuss its divestment from Master Limited Partnerships (MLPs) to establish, in the context of the possibility of replacing fund managers, what the expectation should be of the Board's directions regarding the timeframe by which divestment and reinvestment would occur. Mr. Owens clarified that the Plan's transition from MLPS to infrastructure required a change to the Investment Policy Statement (IPS) which required the Board's signed request to be filed with the City Clerk, and a subsequent 31 day waiting period before investment in the new sector could occur. Had the Board requested a change in fund manager within the same sector, the change could have been immediate. Vice Chair Roberson asked what had been changed in the IPS; Mr. Owens clarified the IPS had no allocation fori infrastructure investment sO the change to add infrastructure was required. Vice Chair Roberson asked for a chronology of the steps required when the Plan divested from MLPs and invested in infrastructure. Pension Plans Administrator Martin advised she could provide that to Vice Chair Roberson. Trustee Joseph asked about Brown and Polen's upside captures being greater than their downsides, and if that would make them better choices. Mr. Owens explained that the FAAMGA stocks which have driven the market may not have the same performance as they have had this year. While they have had steadily increased in value this year, he questioned ift they will they continue to do sO. He expressed concern, echoed by Chair Hartley, that the returns seen in 2020 may decrease over the next three to five years. Chair Hartley asked how much of the Plan's portfolio does Renaissance have under management, Mr. Owens advised $10.3 million out of a total of $157 million in Plan assets, which equals approximately 6.5%. Mr. Owens presented an asset allocation with four different scenarios of reduced risk allocations by increasing fixed income and altemative holdings and decreasing equity holdings. He explained the most drastic change would increase the efficiency of the portfolio, meaning it reduced risk more than it decreased returns. He explained Graystone's rationale for the various mixes. On question, Pension Plans Administrator Martin advised the next Board meeting will be in the first part of December. Attorney Herrera appeared before the Board and introduced himself. He provided a brief history of the Governor's executive order regarding in-person quorums at public meetings and advised the Board should plan on the possibility of an in-person quorum at the meeting unless advised otherwise. 7. UNFINISHED BUSINESS: None. 8. NEW BUSINESS: 8.1. Presentation and Discussion Re: Proposed 2021 Meeting Schedule. Presenter(s): Debra Martin, Pension Plans Administrator, via videoconference. Pension Plans Administrator Martin clarified the December 2020 meeting is scheduled for December 2. She discussed the proposed 2021 Meeting Schedule, noting the January, April, July, and October 2021 meeting dates are proposed to be held on the Tuesdays prior to the regular Wednesday dates due to a scheduling conflict from one of the required attendees, that there is no scheduled June meeting, and the State of the Pension Workshop is anticipated to be in August. The Trustees discussed difficulties in attending meetings held on Tuesdays and proposed alternate days. Attorey Herrera advised he would work to rearrange his calendar or find an alternate attorey to attend on his behalf. The Board agreed by consensus to rescheduling the January, April, July, and October meeting dates to the fourth Wednesday of each month, excluding December, and review the next draft of the calendar for approval at its December 2020 meeting. Chair Hartley advised the Board would be amenable to another attorney sitting in for Attorney Herrera for those meetings. 9. ATTORNEY MATTERS: Attorney Herrera discussed the Governor's executive order suspending the requirements for public meetings to be held in single, publicly accessible locations, and have a physically present quorum. The Governor had extended the executive order through November 1, 2020. He discussed trustee education opportunities with the Florida Public Pension Trustees Association noting there may be a virtual conference or seminar in November or December, and a trustee school in the February or spring of 2021. He stated the League of Cities will also be putting on a virtual conference, although it may be for new trustees. He would advise Pension Plans Administrator Martin of the pertinent dates. Attorney Herrera advised Sugarman & Susskind will be issuing holiday gifts in the form of charitable donations on behalf of its clients. Attorney Herrera advised the Board that City Auditor and Clerk Griggs has satisfied the trustee requirement to be a resident of the City of Sarasota and that the Board had appointed a temporary Secretary/Treasurer while she completed that process. Vice Chair Roberson nominated City Auditor and Clerk Griggs to replace her as Secretary/Treasurer, Trustee Joseph seconded. Attorney Herrera advised City Auditor and Clerk Griggs could either vote for herself or, if she completed the appropriate disclosure, abstain from a vote. The motion carried unanimously (5-0). 9. OTHER MATTERS: Trustee Joseph asked Pension Plans Administrator Martin about the status of the supplemental share check distribution in the approximate amount of $6,000; he stated that, due to the amount of the check, he recommended leaving it in the Plan's account until the next year's disbursement. Pension Plans Administrator Martin stated that the actuary advised the check should be included in next year's distribution, and this year's distribution will be paid into member's bank account's on November 6, 2020. Attorney Book 1 Page 205 10-28-2020 9:00 a.m. Book 1 Page 206 10-28-2020 9:00 a.m. Herrera advised that the controlling ordinance is clear regarding the date of receipt of funds, which will require them to be included in the next year's distribution. Chair Hartley thanked Pension Plans Administrator Martin and Senior Pension Analyst Ferrer for their efforts in keeping up with him regarding the required documentation and processes for the share account distribution. Chair Hartley explained that enrollment period for retiree health would be open from November 2 through November 16, and retirees must re-enroll to keep their previous year's elections. Trustee Joseph advised that everyone was required to re-enroll unless they were in the Medicare/AARP Supplement. Trustee Snow stated that the City's Human Resources department advised him that for his circumstances he must re- enroll in dental and vision if you're not changing anything in your United Advantage plan but you must be on Medicare. 11. ADJOURN. Chair Hartley adjourned the meeting at 10:58 a.m. &demmibon Chair Michael Hartley Vice Chair Shelia Roberson