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HomeMy WebLinkAboutDocumentation_Pension General_Tab 03_04/28/1999~ Y VILLAGE OF TEQUESTA Posc ONice Box 3273 • 250 Tequesta Drive • Suite 300 Tequesta, Florida 33469-0273 (561) 575-6200 Fax: (561) 575-6203 I. II. TEQUESTA EMPLOYEES' PENSION TRUST FUND BOARD OF TRUSTEES MEETING JANUARY 27, 1999 CALL TO ORDER AND ROLL CALL The Tequesta Employees' Pension Trust Fund Board of Trustees held a regularly scheduled meeting at the Village Hall, 357 Tequesta Drive, Tequesta, Florida, on Wednesday, January 27, 1999. The meeting was. called to order at 9:00 A.M. by Chairman Ron T. Mackail. A roll call was taken by Betty Laur, the Recording Secretary. Boardmembers in attendance at the meeting were: William Sharpless, Chairman Ron T. Mackail, Carl C. Hansen, and Secretary Tom Bradford. Also in attendance were Attorney John McCracken sitting in for Village Attorney John C. Randolph, Finance Director Connie Holloman, and Loomis, Sayler & Company representative Peter V. Van Beuren. Boardmembers Cheryl De~lasio and Shawn Miller were absent from the meeting. Peter Allen, who had been on an emergency call, arrived at 10:05 A.M. APPROVAL OF AGENDA Boardmember Bradford made a motioa to approve the ageada as submitted. Boardmember Hansen secoaded the motion. The vote oa the motion vas: Roa T. Mackail - for Thomas Bradford - for Carl C. 8ansea - for William Sharpless - for ! ~ BOARD OF TRIISTEES TE~UESTA E1~LOYEES' PENSION TRUST FUND NESTING MINUTES January 27, 1999 PAGE 2 The motion was therefore passed aad adopted aad the Agenda was approved as submitted. III. APPROVAL OF NTNUTES A) Tequesta Employees' Peasioa Trust Fund Board of Trustees meeting minutes for October 28, 1998, 1998 Boardmember Bradford made a motion to approve the minutes as submitted. Boardmember Hansen seconded the motion. The vote on the motion was: Ron T. Ma.ckail - for Thomas Bradford - for Carl C. Hansen - for William Sharpless - for The motion was therefore passed and adopted and the minutes were approved as submitted. IV. STANDING REPORTS A) Approval of New Applicants for Participation fn Plan (October 1998-January 1999): 1) Noel Hamzik, 11/9/98 2) Kara Irwin, 11/30/98 3) James Peters, 12/22/98 4) RiCki Nix, 1/3/99 5) Andrew Terwilliger, 1/11/99 B) Approval of Beneficiary Changes (October 1998 - January 1999) 1) None o r BOARD OF TRIISTEES TEQIIESTA EN~LOYEES' b~ETING MINdTES January 26, 1999 PAGE 3 PENSION TRIIST FDND Boardmember Bradford made a motion to approve the new applicants for participation is the pension plan. Boardmember Sharpiess seconded the motion. The vote oa the motiom was: Ron T. Mackail - for Thomas Bradford - for Carl C. Hansen - for William Sharpless - for The motion was therefore passed and adopted. C) Request for Withdrawal of Contributions (employees terminating employment with village (October 199$ - Jaauary 1999) Name Term. Date Payout Amount Shawn Thurman 11/1/98 $6,241.10 Boardmember Haasea made a motion to approve the request for withdrawal of contributions for those employees listed October 1998 through January 1999. Boardmember Sharpless seconded the motion. The vote oa the motion was: Roa T. Mackail - for Thomas Bradford - for Carl C. Haasea - for William Sharpless - for The motion was therefore passed and adopted. V. FINANCIAL REPORTS A) Loomis, Bayles & Company, L.P., Investment Manager's Financial Statement for Quarter Eadiag December 31, 1998 (Peter V. Van Beuren, V.P. & Sr. Partner) BQARD OF TRIISTEES TEQULSTA EMPLOYEES' PENSION TRIIST FUND MEETING MINOTES Jaauary 26, 1999 PAGE 4 1) Review aad Discussioa: Mr. Van Beuren presented an Investment Review booklet for the Village of Tequesta Employees' Pension Trust Fund for the period ending December 31, 1998. Mr. Van Beuren reviewed the report booklet beginning with Section Two, and explained that the mix was still at 50~ for fixed income and 50~ for equities. Mr. Van Beuren explained that during 1998 interest rates had trended downward which facilitated higher stock market valuations. Total returns year to year on both stock and bond indexes had been quite positive. The results for the year had been quite favorable for the pension trust plan both for equities and fixed income securities. Mr. Van Beuren explained these were unusual returns. Mr. van Beuren explained that his firm was trying to stay as close to the 50~/50~ allocation as possible, and were right on the mark at the end of the year. If cash came in at the end of the evaluation period that percentage could be slightly off. Securities which had substantially higher growth characteristics than the S&P 500 were selected with a price earnings multiple higher than that of the S&P 500. Mr. Van Beuren explained that the price earnings multiple would probably drop during 1999. The authority for changing the allocation mix was discussed. Mr. Van Bueren explained that he believed a change was now in progress. Mr. van Beuren commented that one way to add value to the portfolio was to overweight or underweight certain sectors of the economy, trying to avoid underperforming areas. Selecting longer maturities was also a strategy, staying within the A - AAA rated securities. Mr. Van Beuren explained that his firm was now limited to buying in sizes of $25,000 because of the size of the pension fund, and there would be more opportunities when the fund grew to where $1 million sizes could be purchased. Mr. $OARD OF TRIISTEES Tl3QIIESTA EN~L03CEES' PENSION TRIIST FUND FETING MINUTES January 26, 1999 PAGE 5 Van Beuren announced the fund had now crossed the $1 million level, and that the total fund as of 12/31/98 was $1,094,326. Mr. Van Beuren anticipated that in 1999 and 2000, retirement accounts would be controlled more by individuals. Important things happening throughout the world would guide Loomis Sayles & Company; for example, governments that had previously ignored these matters were now providing liquidity to make their currencies stable and thence their financial markets. Mr. Van Beuren explained that there was a cooperati:~te movement to help countries get over their major financial problems. Brazil, South America, and the Far East and were being helped by the International Monetary Fund. Mr. Van Beuren commented that the world had changed with the development of high technology and computers and companies were more efficient. The United States was a leader in this field. Mr. Van Beuren predicted 1D+ years of terrific growth around the world, and that corrections and pullbacks would recover. Mr. Van Beuren predicted continued slower growth with inflation curtailed, downward interest rates, and softened earnings. The challenge would be to find companies with above average growth rates in comparison to their .values end to target those early. Mr. Van Beuren stated the current market was very momentum driven, meaning that when buyers of common stocks were interested in a security they would generally accumulate shares for some time, after which they would leave it and go to something else, and a distribution process would begin. The energy sector was not predicted to be high during 1999. Boardmember Hansen questioned why more was not invested in Intel, which was doing very well. Mr. Van Beuren responded that diversity was very important in a smaller portfolio to minimize risk, BOARD OF TRIISTEES TEQIIESTA EI~~LOYEES' b~ETING ffiINOTE3 January 26, 1999 PAGE 6 PENSION TRIIST F'O1~TD and that sizes would grow as the portfolio grew. Mr. Van Beuren explained that approximately 25 separate companies were the right number for diversification for a $1 million account, and explained that their firm managed a hypothetical 35-company portfolio as a model, which was up 55~ during 1998. Nlr. Van Beuren commented that if the allocation mix was changed to 60~ they might add to the list of companies, and that Microsoft might be added at some point. Mr. Van Beuren reviewed purchases and sales made during the past quarter, and mentioned that corporate biographies were also included in the report. IMS Health was described by Mr. Van Beuren. Foreign investments were discussed and the ability to invest in multinational companies. Boardmember Bradford reported that the Village Council had approved an Ordinance December 10, 1998 on second and final reading so that the Board now had the option to invest in securities up to 60~, and to purchase foreign securities up to 10~ of the fund assets. Boardmember Bradford made a motion to approve the report by Peter Van Beuren for the period ending December 31, 1998. Boardmember Hansen seconded the motion. The vote oa the motion was: Roa T. Mackail - for Thomas Bradford - for. Carl C. Hansen - for Nilliam Sharpless - for The motion ovas therefore passed and adopted. B) Prudential Securities, Inc., Custodial Broker, Account Statements (October - December, 1998) Boardmember Bradford made a motion to approve the Prudential Securities, Inc., account statements for the t r BOARD OF TRIISTEES TEQIIESTA E~LOYEES' PENSION TRIIST FUND FETING MINQTES January 26, 1999 PAGE 7 ------------------------------------------------------------------------------- period ending December 31, 1998. Chairman Mackail seconded the motion. The vote oa the motion was: Ron T. Mackail - for Thomas Bradford - for Carl C. Haasea - for William Sharpless - for The motion was therefore passed and adopted. VI. PAY~1'PS TO BS REVIEWED AND APPROVED A) 10/20/98 Gabriel, Roeder, Smith & Co. - $525 (Monthly, Retainer - October) 12/4/98 Gabriel, Roeder, Smith & Co. - $525 (Monthly Retainer - November) 12/22/98 Gabriel, Roeder, Smith & Co. - $525 (Monthly Retainer - December) 12/16/98 Jones, Foster, Johnston & Stubbs - $479 (Legal Services) 11/25/98 Jones, Foster, Johnston & Stubbs - $335 (Legal Services) 11/30/98 Loomis Sayles & Co. - $2,216.00 (Management Services) Boardmember Bradford made a motion to approve the "` payments shown oa the agenda. Boardmember Haasea seconded the motion. The vote oa the motion was: Ron T. Mackaii - for Thomas Bradford - for Carl C. Hansen - for William Sharpless - for The motion was therefore passed and adopted. BQARD OF TRUSTEES TEQUESTA E~LOYEES' NSETING MINOTES January 26, 1999 PAGE 8 PENSION TRUST FUND ViI. Ordinance No. 538 Amending Pension Fund investment Options Boardmember Bradford reported that the Board had recommended to the Village Council consideration of an amendment to the Plan to allow the option to invest in foreign securities up to the maximum allowed by law, and to invest in securities up to 605. The village Council had approved the request, and the Board now had the authority to make investments in securities not to exceed 60g, which included foreign securities of up to 10~. Mr. Van Beuren clarified that the 10g was a total fund percentage allocation; and stated as an example that on a $i million account $600,000 would be permitted in equities. Attorney McCracken explained that in that example, the 10~ could be foreign equities and bonds'. Mr. Van Beuren commented that his company would probably not go up to the lOg maximum immediately, but this would allow investment in foreign based companies such as Royai Dutch Petroleum, Tyco International, etc. Chairman Mackail made a motion to grant Loomis Sales & Company authority to allow investment of 60~ is securities, 10% of which could be is foreign-based securities that are traded fa the form of ADRs on a flatioaal exchange, within the statutory limitations. Boardmember Hansen seconded the motion. The vote oa the motion was: Ron T. Mackail - for Thomas Bradford - for Carl C. Hansen - for William Sharpless - for The motion was therefore gassed and adopted. VIII. CONSIDERATION OF SELECTION OF INDEPENDENT LEGAL CODNSEL - William M. Sharpless, Esquire Boardmember 5harpless explained that he had great respect for the law firm of Jones, Foster, Johnston & Stubbs and ~ i BOARD OF TRUSTEES TEQU'ESTA ENpLOYEES' PENSION TRUST FUND MEETING MINUTES January 26, 1999 PAGE 9 that this was no reflection on their services; however, because of possible conflict of interest it was recommended at the training classes that all Boards of Trustees have their own independent attorneys. Boardmember Sharpless commented that he had spoken to members of other Boards who also recommended independent counsel. Boardmember Sharpless reported he had spoken about this matter to members of this Board after the last meeting, and had been asked to speak to some other attorneys. Boardmember Peter Allen joined -the meeting at 10:05 a.m. Boardmember Sharpless reported he had spoken with Peter Van Beuren, who had consulted other members of Loomis Sayles & Company, who had recommended attorney Lee Danar and Attorney Steven Sipen. Steve Palmquist had recommended Attorney Bonnie Jensen. Attorney Sipen~s fees were $200 per hour plus travel expenses from Miami Beach; Attorney Daner's fees were $180 per hour plus travel expenses from Sarasota, and .~. since their firm represented Palm Beach Gardens that traval expenses could be shared; and Attorney Jensen~s fee was $145 per hour with no travel expenses since she was located in West Palm Beach. Boardmember Hansen questioned the possible conflict of interest on the part of Jones, Foster, Johnson & Stubbs. Boardmember Sharpless explained that all members of the Board should only be concerned with one thing--the welfare of the participants in all three plans--and not the cost to the Village. Since the firm of Jones, Foster, Johnson & Stubbs represented the Village in many other matters, they might have concerns regarding the cost. Chairman Mackail asked Attorney McCracken whether he believed there was a conflict of interest. Attorney McCracken responded that his firm had handled the Town of Palm Beach and their pension fund for more than twenty years and had had no conflict to their knowledge. Attorney McCracken explained that there were frequently conflicts between unions and municipalities, but no conflict had been presented to them, and commented that many seminars were BOARD OF TRIISTEES TEQUESTA EMPLOYEES' PENSION TROST FUND MEETING MINUTES Jaauary 26, 1999 PAGE 10 sponsored by unions who recommended independent counsel. Chairman Mackail expressed his opinion that this Board's interest had always been in the pension fund and that the fund had grown successfully using the Jones Foster firm. Chairman Mackail did not recommend making a change because he did not believe the cost was prohibitive. Boardmember Hansen and Boardmember Allen expressed a desire to table this item until the next meeting to allow time to study the matter. Secretary Bradford reported that at a meeting of the employees the previous week they had heard a presentation from a firm regarding defined benefit versus defined contribution plans. Secretary Bradford stated he believed there was a real possibility that the employees might abolish the current plan in favor of a defined contribution plan, and therefore believed this was nat the time to make a change. Boardmember Sharpless stated that in light of this information from Secretary Bradford, he agreed the Board should not pursue this matter further, and he believed that if Jones Foster Johnston & Stubbs represented both the Town of Palm Beach and the~.r pension fund with no conflicts for twenty years, that nothing further should be done at this time. IX. ADJOURl~NT Boardmemb~r 8aasea a motioa to adjourn the meeting. Boardmember Sharpless seconded the motioa. The vote oa the motf on was Roa T. Mackail - for Thomas Bradford - for Peter Allea - for Carl C. 8aasea - for Nilliam Sharpless - for The motion was therefore passed aad adopted, and the meeting was adjourned at 10:22 A.M. t - BARD OF TRIISTEES TEQIIESTA E~LOYEES' PENSION TRIIST FUND ~BTING MINIITES Jaauary 26, 1999 PAGE 11 Respectfully submitted, ~~ ~ Betty Laur Recording Secretary ATTEST: Joann Manganiello Village Clerk DATE APPROVED: