HomeMy WebLinkAboutDocumentation_Regular_Tab 11A_12/10/1998F
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To: Village Council
From: Thomas G. Bradford,~Village Manager ~~~~
Date: November 5, 1998
Subject: Amendment of Investment Guidelines for Board of Trustees
of the Tequesta Employees' Pension Trust Fund; Agenda
Item
As you recall, at the Village Council Meeting in October, 1998, the
Village Council approved on first reading an Ordinance amending the
investment guidelines applicable to the Board of Trustees to enable
the Employees' Pension Trust Fund Investment Portfolio to be
invested in securities up to the current fifty percent limitation
to a sixty percent limitation. This request had been recommended
by the investment advisor to the Board of Trustees.
At the Board of Trustees' Meeting on October 28, 1998, an agenda
item was a review of the Ordinance that had been presented to the
Village Council. At their meeting on October 28th, the Board of
Trustees requested that the Village Council give consideration to
allowing the Board of Trustees to avail themselves of a new state
law that took effect on October 1, 1998. This new law allows
municipal pension funds to invest in foreign securities, with
limitations. The financial advisor to the Board of Trustees also
recommended that this option be granted to the Pension Trust Fund
portfolio.
On the assumption that the Village Council would also look
favorably upon this latest request, we have amended the Ordinance
that was presented to you in October to now allow for the
investment in foreign securities, with required limitations.
Therefore, the Ordinance is now back before ..you again for a first
reading, with second and final reading scheduled at the December,
1998 Village Council Meeting.
It is recommended that the Village Council adopt these latest
changes in investment options allowed to municipal pension funds in
the State of Florida.
TGB\ecr
WP80\MyFiles\Village Council\Council 11-5-98
JONEs
FOSTER
JOHNSTON
& STUBBS, P.A.
Attorneys and Counselors
John B. McCracken, Esq.
Direct Dial: (561) 650-0471
Direct Fax: (561) 650-0431
E-mail: jmccracken@jones-foster.com
November 4, 1998
Flagler Center Tower, Suite 1100
505 South Flagler Drive
West Palm Beach, Florida 33401
Telephone (561) 659-3000
Via Faz: 575-6203 and Mail
Mr. Thomas G. Bradford, Village Manager
Village of Tequesta
P.O. Box 3273
Tequesta, FL 33469-0273
Dear Tom:
Re: Amendment of Board of Trustees Investment Guidelines
Mailing Address
Post Office Box 3475
West Palm Beach, Florida 33402-3475
Facsimile (561) 832-1454
;,
''" ~ ! ~?
.~.; r ~
To be certain as to the definition of an "ADR", I contacted Peter Van Beuren. He provided
me the definition enclosed on "American Depositary Receipts".
In discussing the change to more fully describe ADR's, however, Peter and I came up with
other modifications and eventually eliminated "ADR's".
Accordingly, I enclose a revised, redlined copy which shows all changes from the first
reading copy of the Village Council as well as a final copy and a copy which shows all
changes and follows the format of the copy which was attached to the Ordinance on first
reading. Please note that there are several changes from my letter of earlier this week.
Accordingly, I would suggest that you discard the contents of that letter.
Please call if you have any questions.
Sincerely yours,
JONES, FOS
By
John . N
N:UCR\13153-46\B DFC
Enclosures
cc: Peter Van
JOHNSTON & STUBBS, P.A.
w/enc., via Fax
JONEs
FOSTER
` JOHNSTON
& STUBBS, P.A.
Attorneys and Counselors
John B. McCracken, Esq.
Direct Dial: (561) 650-0471
Direct Fax: (561) 650-0431
E-mail: jmccracken@jones-foster.com
November 2, 1998
Flagler Center Tower, Suite 1100
505 South Flagler Drive
West Palm Beach, Florida 33401
Telephone (561) 659-3000
Via Fax: 575-6203 and Mail
Mr. Thomas G. Bradford, Village Manager
Village of Tequesta
P.O. Box 3273
Tequesta, FL 33469-0273
Dear Tom:
Re: Amendment of Board of Trustees Investment Guidelines
Mailing Address
Post Office Box 3475
West Palm Beach, Florida 33402-3475 _
Facsimile (561) 832-1454.
E Y,
Q
In furtherance of the directions of the Board of Trustees of the Tequesta Employees Pension
Trust Fund at its October 28, 1998, meeting, I have revised the Village of Tequesta
Employees Pension Trust Fund Provision attached to the Ordinance which I understand was
passed by the Village Council on first reading and will be coming up again later this month
for second reading.
Please note that I have changed the format somewhat to provide for the new provisions to be
double underlined, not shaded, as the double underlining reproduces better in photocopying,
faxing, etc. I also enclose a copy of the exhibit in final form (no underlining) and a copy of
the exhibit which shows only the changes I have made.
Tom, at the Town of Palm Beach, we questioned what "foreign" investments under the new
statute meant. I enclose a copy of a letter dated,. October 5, 1998, from Patricia F.
Shoemaker at the Division of Retirement which provides the Division position on the
definition of "foreign" securities. Although "foreign securities" is somewhat vague, I thought
it best to stick with the language utilized in the state statute for purposes of our ordinance.
Mr. Thomas G. Bradford, Village Manager
Village of Tequesta
November 2, 1998
Page 2
By copy hereof to Peter Van Beuren, I am forwarding him copies of these documents for his
information and/or comment.
Sincerely yours,
JONES, FOSTER, JOHNSTON & STUBBS, P.A.
By
N:V(
Enclosures
cc:
Peter Van Beuren, w/enc.
a
ORDINANCE NO.
AN ORDINANCE OF THE VILLAGE COUNCIL OF THE
VILLAGE OF TEQUESTA, PALM BEACH COUNTY, FLORIDA,
AMENDING CHAPTER 2, ARTICLE III, RETIREMENT, OF THE
CODE OF ORDINANCES OF THE VILLAGE AT SECTION 2-30
EMPLOYEES PENSION FUND, BY AMENDING EXHIBIT A,
"EMPLOYEES PENSION TRUST FUND PROVISIONS", IN THE
MANNER AND FORM ATTACHED HERETO; PROVIDING
FOR SEVERABILITY; PROVIDING FOR REPEAL OF
ORDINANCES IN CONFLICT; PROVIDING FOR
CODIFICATION; PROVIDING AN EFFECTIVE DATE.
BE IT ORDAINED BY THE VILLAGE COUNCIL OF THE VILLAGE OF TEQUESTA,
PALM BEACH COUNTY, FLORIDA, AS FOLLOWS:
Section 1. Chapter 2, Article III, Retirement, Division 1, is hereby amended at Section
2-30, by amending the instruments which represent the terms of the Plan and Trust titled "Village
of Tequesta Employees Pension Trust Fund Provisions" Exhibit A in the manner and form attached.
Said revisions are incorporated in the trust fund provisions as if fully set forth herein. All remaining
provisions set forth in the "Village of Tequesta Employees' Pension Trust Fund Provisions" not
amended hereby shall remain in tact.
Section 2. Severability. If any provision of this Ordinance or the application thereof is
held invalid, such invalidity shall not affect the other provisions or applications of this Ordinance
which can be given effect without the invalid provisions or applications, and to this end, the
provisions of this Ordinance are hereby declared severable.
Section 3. Repeal of Ordinances in Conflict. All other ordinances of the Village of
Tequesta, Florida, or parts thereof which conflict with this or any part of this Ordinance are hereby
repealed.
Section 4. Codification. This Ordinance shall be codified and made a part of the official
Code of Ordinances of the Village of Tequesta.
Section 5. Effective Date. This Ordinance shall take effect immediately upon its passage
and approval, as provided by law. .
THE FOREGOING
Councilmember
follows:
ORDINANCE was offered by Councilmember
who moved its adoption. The Ordinance was seconded by
and upon being put to a vote, the vote was as
FOR ADOPTION AGAINST ADOPTION
The Mayor thereupon declared the Ordinance duly passed and adopted this day
of , 1998.
MAYOR OF TEQUESTA
Elizabeth A. Schauer
ATTEST:
Village Clerk
VILLAGE OF TEQUESTA
EMPLOYEES PENSION TRUST FUND PROVISIONS
Amend Section 4, Finances and Fund Management, paragraphs 6 B and C to read as follows:
B. All moneys paid into or to be held in the Pension Fund shall be invested and
reinvested by the Board and the investment of all or any part of such funds shall be limited to:
(1) Time, savings and money market deposit accounts of a national bank, a state
bank or a savings and loan institution, insured by the Federal Deposit Insurance Corporation,
provided the amount deposited does not exceed the insured amount.
(2) Obligations issued by the United States Government or obligations guaranteed
as to principal and interest by the United States Government or by an agency of the United States
Government.
(3) Stocks, bonds or other evidences of indebtedness issued or guaranteed by a
corporation organized under the laws of the United States or or its territories.
E~ or foreign securities, provided that:
a. Stocks. whether domestic or
foreign based, are limited to those traded on a recognized national
exchange or NASDAQ.
b. The security meets the following rating criteria:
i) Fixed Income: Standard & Poor's AAA, AA, A or
Moody's Aaa, Aa, A. (25% of the
bonds at time of purchase may be
rated Baa investment grade).
ii) Cash Reserves: Short term investments due less than 1
year where overall quality and
minimal risk guidelines apply.
Investments which may be used are:
money market funds of custodians,
Certificates of Deposit, U.S.
Government Obligations and
Commercial Paper rated A-1
(Standard & Poor's) or P-1 (Moody's).
iii) If any of the parameters described above are violated as a
result of market movements, credit downgrades or other
events not within the control of investment manager,
investment manager shall have a reasonable period of time,
not to exceed six months, to bring the portfolio into
compliance with the foregoing investment guidelines.
c. i) At the time of purchase, not more than five percent (5%) of
the Fund's assets shall be invested in the common stock or
capital stock of any one issuing company, nor shall the
aggregate investment in any one issuing company exceed five
percent (5%) of the outstanding capital stock of the company.
ii) It is not mandatory to adjust to above percentages should
issue exceed levels at any time during holding period.
d. No more than ten percent (10%1 of Fund assets may be invested
in foreign securities.
C. Further Limitations
(1) Investments in corporate common stock, foreign securities. convertible
preferred stock and convertible bonds shall not exceed sixty percent (60%) of the Fund assets at time
of purchase.
{3j- 2~ The manager is prohibited from investing in real estate, private placements
or from speculating in fixed income or interest rate futures.
~4 } 3~ Investment in options or future contracts is also prohibited.
N:UCR\t 3153-46\INV3-JBM.RED
September 4, 1998
2
VILLAGE OF TEQUESTA
EMPLOYEES PENSION TRU5T FUND PROVISIONS
Amend Section 4, Finances and Fund Management, paragraphs 6 B and C to read as follows:
B. All moneys paid into or to be held in the Pension Fund shall be invested and
reinvested by the Board and the investment of all or any part of such funds shall be limited to:
A uiuvivu< w Ya v . aa..v, iaa .. aavav ... ~~~ Y"' ., .,~~~ ., ~_~~__ _ .. _,. .. "'___ ~__ _ _ ____ r _~ __ _ _r'
f
~ 7 7
~1 Time. savings and money market deposit accounts of a national bank. a
state bank or a savings and loan institution. insured by the Federal Deposit Insurance
(Yornoration. provided the amount deposited does not ezceed the insured amount.
2~ Obligations issued by the United States Government or obligations
uuaranteed as to principal and interest by the United States Government or by an agency of
the United States Government
3~ Stocks, bonds or other evidences of indebtedness issued or guaranteed
by a corporation organized under the laws of the United States or its territories, or foreign
securities,provided that:
a. Stocks. whether domestic or foreign based. are limited to those
traded on a recognized national exchange or NASDAQ.
b. The security meets the following rating criteria:
Fixed Income: Standard & Poor's AAA. AA. A or
Moodv's Aaa. Aa. A. (25% of the
bonds at time of purchase may _6e
rated Baa investment grade).
ii Cash Reserves: Short term investments due less
than 1 year where overall quality
and minimal risk guidelines apply.
Investments which may be used are:
money market funds of custodians.
Certificates of Deposit. U.S.
Government Obligations and
Commercial Paper rated A-1
(Standard & Poor'sl or P-1
i'i If any of the parameters described above are violated as
a result of market movements credit downgrades or other
events not within the control of investment manager.
investment manager shall have a reasonable period of
time. not to exceed six months. to bring the portfolio into
compliance with the foregoing investment guidelines.
At the time
of the Funs
or capital ;
~EE~
five perce~
company.
of purchase. not more than five percent (5%1
's assets shall be invested in the common stock
• ock of any one issuing company, nor shall th
investment in any one issuing company exceed
~t (5%1 of the outstanding capital stock of the
ii t is not mandatory to adiust to above percentages should
issue exceed levels at any time during holding period.
d. No more than ten percent (10%1 of Fund assets may be invested
in foreign securities.
r •rt. n a rrr + v tt + • + +v r + ic°i ~ ~•+ + +t
C. Further Limitations
~1 Investments in corporate common stoc . foreign securities, convertible
preferred stock and convertible bonds shall not exceed sixty percent (60%1 of the Fund assets
at time of purchase.
2~ The manager is prohibited from investing in real estate. private
placements or from speculating in fixed income or interest rate futures.
~ Investment in options or future contracts is also prohibited.
N:UCR\ 13153-46\Qd VEST3.AIvID
September 4, 1998
VILLAGE OF TEQUESTA
EMPLOYEES PENSION TRUST FUND PROVISIONS
Amend Section 4, Finances and Fund Management, paragraphs 6 B and C to read as follows:
B. All moneys paid into or to be held in the Pension Fund shall be invested and
reinvested by the Board and the investment of all or any part of such funds shall be limited to:
(1) Time, savings and money market deposit accounts of a national bank, a state
bank or a savings and loan institution, insured by the Federal Deposit Insurance Corporation,
provided the amount deposited does not exceed the insured amount.
(2) Obligations issued by the United States Government or obligations guaranteed
as to principal and interest by the United States Government or by an agency of the United States
Government.
(3) Stocks, bonds or other evidences of indebtedness issued or guaranteed by a
corporation organized under the laws of the United States or its territories, or foreign securities,
provided that:
a. Stocks, whether domestic or foreign based, are limited to those traded
on a recognized national exchange or NASDAQ.
b. The security meets the following rating criteria:
i) Fixed Income: Standard & Poor's AAA, AA, A or
Moody's Aaa, Aa, A. (25% of the
bonds at time of purchase may be
rated Baa investment grade).
ii) Cash Reserves: Short term investments due less than 1
year where overall quality and
minimal risk guidelines apply.
Investments which may be used are:
money market funds of custodians,
Certificates of Deposit, U.S.
Government Obligations and
Commercial Paper rated A-1
(Standard & Poor's) or P-1 (Moody's).
iii) If any of the parameters described above are violated as a
result of market movements, credit downgrades or other
events not within the control of investment manager,
investment manager shall have a reasonable period of time,
not to exceed six months, to bring the portfolio into
compliance with the foregoing investment guidelines.
c. i) At the time of purchase, not more than five percent (5%) of
the Fund's assets shall be invested in the common stock or
capital stock of any one issuing company, nor shall the
aggregate investment in any one issuing company exceed five
percent (5%) of the outstanding capital stock of the company.
ii) It is not mandatory to adjust to above percentages should
issue exceed levels at any time during holding period.
d. No more than ten percent (10%) of Fund assets may be invested in
foreign securities.
C. Further Limitations
(1) Investments in corporate common stock, foreign securities, convertible
preferred stock and convertible bonds shall not exceed sixty percent (60%) of the Fund assets at time
of purchase.
(2) The manager is prohibited from investing in real estate, private placements
or from speculating in fixed income or interest rate futures.
(3) Investment in options or future contracts is also prohibited.
N:UCR\13153-46\INVEST3.REV
September 4, 1998
2
to adjusted gross income, then subtracting 540.000 for a married couple
filing jointly or 530.000 if 61ing singly: 2496 of the remainder is the
payable tax. The exemgion amounts are phased out by 25 oertta for
each 51 that AMT income exceeds SI50,000 for joint filets (5112,500
for irtdividuals). The corporate AMT has the same exentptions but a
rate of 2096. Preferences include 509E of the excess of "honk" (financial
statement) income over total taxable income plus other preferences such
as untaxed appreciation of charitable contributions, rennin "ex~xss"
ateelerated depreciation on assets put in service after 1986, tax-exempt
interest on private-purpose bonds issued after August 7, 1986. and other
industry-specific preferences. After 1989, the corporate AMT is set to
be based on the tax definition of earnings and, profits, not took income.
ALTERNATIVE ORDER order giving a broker a choice between two
t0Ut5e5 Of action: also ealltd an errher-or order or a one cancels the
other order. Such orders are either to buy or to sell, never both. Exe-
cution of one course automatically makes the other course inoperative.
An example is a combination buy IimitPouy stop order, wherein the buy
limit is below the curtent market and the buy stop is above.
AMBAC Indlrnnity CorporatlOD see MUNICIPAL BOND INSURANCE.
AMENDMENT addition to. or change, in a legal document. When pt`op-
erly signed, it has the full legal effect of the original document.
AMERICAN DEPOSITARY RECEIPT (ADR) receipt for the shares
of a foreign-based corporation held in the vault of a U.S. bank and
entitling the shareholder to all dividends and capital gains. Instead of
buying shares of foreign-based companies in overseas markets, Amer-
icans can buy shares in the U.S. in the form of an ADR. ADR's are
available for hundreds of stocks from numerous countries. ADR's are
also called American Deposirar~• Shares.
AMERICAN STOCK EXCHANGE (AMEX) stock exchange with the
second biggest volume of trading in the United States. Located at
86 Trinity Place in downtown Manhattan, the Amex was known until
1921 as the Curb Exchange, and it is still referred to as the Curb today.
For the most part, the stocks and bonds traded on the Amex are those
of small to medium-size companies, as contrasted with the huge rnm-
panies whose shares are traded on the New York Stocl: Exchange. A
large number of oil and gas companies, in particular, are traded on the
Annex. The Amex also houses ehe trading of options on many New
York Stock Exchange stocks and some OVER THE CaUNTER StOCkS.
More foreign shares are traded on the Amex than on any other U.S.
exchange.
AMORTIZATION accounting procedure that gradually reduces the cost
value of a limited life or intangible asset through periodic charges to
gt~lt~vr.r
17
into pt-r fixes assets the term used is DEPItEC1AT10N, and fot+wasting
me. lesion. both terms moaning esaerttially
~ycts (natural eesourca~lll Moss ~mpania follow the coratn~ul'e
Thing a5 arno izallOn. INTANGIBLE ASS~s StICh
~ san>< wrung off, through amo<t u any premium over
~~a711• It is also common pActitx to arttorti tnvescments.
rchase of preferred stook or bond
~ value paid in the W . resale or redempti~ •altre.
ne of arrwRirat-on is to rcfiect lar pay-
Tile PutP also refers to the reduction ooh ban by~tt-aturiry.
Amortttation al wfticient to pay iud ~ making
meats of interest and pr+ uP~ landed debt arc amort
Discount and laPo with a rcdetermiaedsched-
toincome in accordance P ~ to ~ fie and
applicable charges all ~~ systemaitcally, chug discount
ule. Vr'hile this is ttorrn qme in any amount of the rcmainntg
loss are peRrtiscible at any . 's aaaual rcPwt•
and expense• Such sa:ourtttng is detailed in a company
e house, bank wst depanmetu. or mutual
rson in a brokerag arias and makes buy of sal
ANALYST Pe cular companies atad industry
fund group who studies a numbs of comp
recommendations on the se` aline in a particular industry. but some in-
groups. Must analysts ~ittat interests them. regardless of iu line of
vestigate any comganY thercfote
me analysts have ~yd~bwhcn theny~tssune a buy m KII
business. So
affect the price of a comp Y~
rcCOmtnendallOn. See oISO CREDIT ANALYST• IICCS t0 Indicate that. m
AND INTER~T Phut u~ 1° quo er wl l receive xccau~ INTEaEST•
addition to the prioe quoted, the buy
It stock issue having a MARKET eAPtTAL1ZAT1oN of less
ANKLE BCfE s akin such small-~Pita'ltzaanc f stocks
than 5500 million. Generally ~~a g' issues, but their g7te BiOM'th
~ more sirecalative than "hi P~~
potential gives them more REl,AT1vE STRENGTtt in rec~ns. See also
SMALL Flltat EFFE(:T•
ANNUAL BASIS statistical technique whereby figures co ~og,~
of less than a yeas ace extended to cover a 12-month P~ Into
cedure, called annualizing must take seasonal variativlts (if any) •
account to be accurate. ~ of a com-
ANNUAL MEETING one-ryear meeting when the matag board of
pony report to stockholders on the yeai s results, sled the
directors stands for elactiun for the next year. The chief executvttvn~oo~
usually comments on the outlook foe the coming year' and,
senior officers, answers quesuons from shareholde~~ ~
also request that resolutions on corporate policy be
owning stock in the comparlY • $10C~olders unable to arena ~ ~ use
meeting may vote for directors and pass on resolutions ttlroug tdess of
o[ PROxv material, which must legally be mailed to all shateho
second.
~ ttLTERNATi;VE ORDER 16
CT. -09' 78(FRI- 14:54 TOWN C ~?ALM BEACH PURCHASING
_.
I~+nROa Cts~.r:s
Csovemor
State of Florida
Division of Retirement
RS EXECIlrIVE CENTER • 2639-C NORTH MONROE S7REET • 'rAlu-Hg55EE, FLORIDA 32399
MAILING ADDRESS: MUNlCIpq(, pp~E OFFICERS' ~ F~REfIGFiTERg' RETIREMENT TRUST FUNDS
POST OFFICe Box 3010 • TALLAHASSEE, FIARIDA 32315-3010
October 5, 1998
Mr. wlliam C. Crouse
Personnel Director
Post Office Box 2028
Palm Beach, Florida 33480
near Mr. Crouse:
~J. McMuu~N III
Oireetor
This is in response to your letter of September 16, regarding the definition of a "foreign security,"
as it relates to investment of pension fund assets under Chapters 175 and 185, Florida Statutes.
Please refer to ss. 175.071(1)(b)4, and 185.06 1 b Florida Statutes. Any bonds, stocks, or
other evidences of indebtedness that do not meet(the~ provisions of these sections would be
considered "foreign" investments.
If you have any further questions, please contact our office.
Sincerely,
.c~v,
Patricia F. Shoemaker
Benefits Administrator
Muniapai Police Officers' and
Firefighters' Retirement Funds
p~
RECEIVED
OCT 0 9 1996
P~RSUIVNEI DEPT
TEL: «1 838 5451 P. 002
~~
Telephone (850) 922-0667 • Suncom 292-0667 • Fax (650) 821-2161