MEETING NUMBER 2848 JOURNAL OF PROCEEDINGS OF THE BOARD OF TRUSTEES OF THE POLICE AND FIRE RETIREMENT SYSTEM OF THE CITY OF DETROIT

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1 MEETING NUMBER 2848 JOURNAL OF PROCEEDINGS OF THE BOARD OF TRUSTEES OF THE POLICE AND FIRE RETIREMENT SYSTEM OF THE CITY OF DETROIT PROCEEDINGS HELD THURSDAY, JULY 28, :00 A.M. IN THE CONFERENCE ROOM OF THE RETIREMENT SYSTEMS 910 COLEMAN A. YOUNG MUNICIPAL CENTER DETROIT, MICHIGAN PRESENT Janice Butler Mark Diaz Matthew Gnatek Cheryl R. Johnson Joseph Martinico James Moore Sean P. Neary George Orzech Jeffrey Pegg Fred D. Wheeler Walter Stampor Cynthia A. Thomas Ryan C. Bigelow Janet S. Lenear Ronald Zajac Joe Turner Ex/Officio Trustee Elected Trustee Elected Trustee/Vice Chairman Ex/Officio Trustee/Treasurer Ex/Officio Trustee Elected Trustee Elected Trustee/Chairman Elected Trustee Elected Trustee Ex/Officio Trustee Executive Secretary Assistant Executive Secretary Investment Analyst Recording Secretary Legal Counsel Special Legal Counsel EXCUSED Brenda Jones Ex/Officio Trustee/Council Member ABSENT None

2 2 CHAIRPERSON Sean P. Neary VICE CHAIRPERSON Matthew Gnatek ROLL CALL WAS TAKEN AT 9:10 A.M. BY THE BOARD S RECORDING SECRETARY AND THE MEETING WAS CALLED TO ORDER. DROP RETIREMENTS BY TRUSTEE GNATEK SUPPORTED BY TRUSTEE BUTLER RESOLVED, THAT THE DROP APPLICATIONS WHICH ARE DESIGNATED BELOW BE APPROVED: DROP RETIREMENTS NAME, TITLE, DEPARTMENT: PETER HOWARD OFFICER - POLICE RETIREMENT TYPE, PLAN: DROP - NEW SERVICE CR./EFFECTIVE DATE: NAME, TITLE, DEPARTMENT: CHARLES WEAVER INVESTIGATOR - POLICE RETIREMENT TYPE, PLAN: DROP - NEW SERVICE CR./EFFECTIVE DATE: NAME, TITLE, DEPARTMENT: RHEUBEN BLACKMON OFFICER - POLICE RETIREMENT TYPE, PLAN: DROP - NEW SERVICE CR./EFFECTIVE DATE: NAME, TITLE, DEPARTMENT: WILLIE SMITH, SR. SERGEANT - POLICE RETIREMENT TYPE, PLAN: DROP - NEW SERVICE CR./EFFECTIVE DATE: NAME, TITLE, DEPARTMENT: STANLEY GRANGER INVESTIGATOR POLICE RETIREMENT TYPE, PLAN: DROP - NEW SERVICE CR./EFFECTIVE DATE: NAME, TITLE, DEPARTMENT: STEPHEN HOWELL SERGEANT - POLICE RETIREMENT TYPE, PLAN: DROP - NEW SERVICE CR./EFFECTIVE DATE: NAME, TITLE, DEPARTMENT: FITZGERALD HARRIS, III OFFICER - POLICE RETIREMENT TYPE, PLAN: DROP - NEW SERVICE CR./EFFECTIVE DATE:

3 3 DROP RETIREMENTS CONTINUED NAYS TRUSTEES BUTLER, GNATEK, MARTINICO, ORZECH, PEGG AND CHAIRMAN NEARY 6 NONE RETIREMENTS BY TRUSTEE GNATEK SUPPORTED BY TRUSTEE PEGG RESOLVED, THAT THE RETIREMENT APPLICATIONS WHICH ARE REFERENCED BELOW BE APPROVED: TRUSTEE JAMES MOORE ENTERED THE MEETING AT 9:13 A.M. SERVICE RETIREMENT NAME, TITLE, DEPARTMENT: DAVID CLARKE OFFICER - POLICE RETIREMENT TYPE, PLAN: SERVICE - NEW SERVICE CR./EFFECTIVE DATE: DUTY DISABILITY RETIREMENT CONVERSION NAME, TITLE, DEPARTMENT: FRANK HUTCHINS OFFICER - POLICE RETIREMENT TYPE, PLAN: DUTY DISABILITY RETIREMENT CONVERSION - NEW SERVICE CR./EFFECTIVE DATE: NAYS TRUSTEES BUTLER, GNATEK, MARTINICO, MOORE, ORZECH, PEGG AND CHAIRMAN NEARY 7 NONE CONFIRMATIONS BY TRUSTEE GNATEK SUPPORTED BY TRUSTEE BUTLER RESOLVED, THAT THE RECEIPTS AND DISBURSEMENTS THAT WERE PRESENTED TO THE BOARD THIS DATE BE CONFIRMED: RECEIPTS: $ 721, DISBURSEMENTS: $1,444, NAYS TRUSTEES BUTLER, GNATEK, MARTINICO, MOORE, ORZECH, PEGG AND CHAIRMAN NEARY 7 NONE SPECIAL COUNSEL JOE TURNER AND LEGAL COUNSEL RONALD ZAJAC ENTERED THE MEETING AT 9:16 A.M.

4 4 REFUNDS OF ACCUMULATED CONTRIBUTIONS BY TRUSTEE MOORE SUPPORTED BY TRUSTEE GNATEK RESOLVED, THAT THE CONTRIBUTIONS TO THE ANNUITY SAVINGS FUND BY MEMBERS OF THE POLICE AND FIRE RETIREMENT SYSTEM OF THE CITY OF DETROIT, AS SET FORTH ON LIST NUMBER 3413, IN THE AMOUNT OF $248,786.06, INCLUDING INTEREST, BE REFUNDED PENDING AUDIT BY RETIREMENT SYSTEM ACCOUNTING STAFF: NAYS TRUSTEES BUTLER, GNATEK, MARTINICO, MOORE, ORZECH, PEGG AND CHAIRMAN NEARY 7 NONE MINUTES OF JULY 7, 2011 AND JULY 14, 2011 PRIOR TO THE BOARD APPROVING THE MINUTES OF JULY 7 AND JULY 14, 2011, TRUSTEE ORZECH ASKED THAT THEY BE AMENDED TO REFLECT THE MATTERS THAT WERE DISCUSSED WHEN THE BOARD ENTERED INTO CLOSED SESSION, PER THE BOARD S POLICIES AND PROCEDURES. THE BOARD S RECORDING SECRETARY ASSURED THE BOARD THAT THE MINUTES WOULD BE AMENDED AND REDISTRIBUTED DURING RECESS. MINUTES OF JULY 7, 2011 AND JULY 14, 2011 BY TRUSTEE GNATEK SUPPORTED BY TRUSTEE BUTLER RESOLVED, THAT THE MINUTES OF THE MEETINGS HELD THURSDAY, JULY 7, 2011 AND THURSDAY, JULY 14, 2011 BE APPROVED AS AMENDED, RECORDED AND SUBMITTED BY THE BOARD S RECORDING SECRETARY: NAYS TRUSTEES BUTLER, GNATEK, MARTINICO, MOORE, ORZECH, PEGG AND CHAIRMAN NEARY 7 NONE

5 5 Pension Number: Police and Fire Retirement System of the City of Detroit Pre-Employment Military Service Credit By Trustee Gnatek Supported by Trustee Moore Whereas, The individual whose name is designated below has applied to this Board for Pre-Employment Military Service Credit and has complied with all of the necessary requirements of Section b of the Charter Provisions, as amended by Board resolution of February 3, 1983, Therefore Be It Resolved, That payment of the full amounts be made to the Pension Accumulation Fund by the method selected by the individual and the number of months eligible active duty be credited him/her as membership service credit subject to the conditions and limitations of the authorizing ordinance provisions as amended by Board resolution of February 3, 1983: Name Charles D. Rogers Police Department NAYS TRUSTEES BUTLER, GNATEK, MARTINICO, MOORE, ORZECH, PEGG AND CHAIRMAN NEARY 7 NONE

6 6 PENSION NUMBER: REFUND OF MILITARY SERVICE CREDIT BY TRUSTEE ORZECH SUPPORTED BY TRUSTEE PEGG WHEREAS, THE INDIVIDUAL WHOSE NAME IS REFERENCED BELOW HAS PRESENTED THE BOARD WITH A REQUEST TO RECEIVE A REFUND OF THE MILITARY SERVICE CREDIT HE/SHE PURCHASED, AND WHEREAS, THE BOARD HAS DISCUSSED THIS MATTER, THEREFORE BE IT RESOLVED, THAT SAID REQUEST BE APPROVED: NAME DATE OF REQUEST Thomas Phythian July 28, 2011 NAYS TRUSTEES BUTLER, GNATEK, MARTINICO, MOORE, ORZECH, PEGG AND CHAIRMAN NEARY 7 NONE MAYFIELD GENTRY REALTY ADVISORS, LLC APPRAISALS BY TRUSTEE MOORE SUPPORTED BY TRUSTEE PEGG WHEREAS, MAYFIELD GENTRY REALTY ADVISORS HAS PRESENTED THE BOARD WITH A JULY 27, 2011 LETTER WHEREIN MAYFIELD GENTRY REQUESTS THAT THE BOARD APPROVE ONE OF THE OPTIONS LISTED BELOW AS IT RELATES TO MAYFIELD GENTRY ACQUIRING (AT LEAST EVERY THREE YEARS) APPRAISALS ON ALL OF THE ASSETS MANAGED BY MAYFIELD GENTRY (AS SET FORTH IN THE SYSTEM S ASSET MANAGEMENT AGREEMENT WITH MAYFIELD GENTRY): OPTION 1) PROVIDE CONTACT INFORMATION FOR OTHER APPRAISAL FIRMS APPROVED BY THE BOARD OPTION 2) GRANT MAYFIELD GENTRY THE AUTHORITY TO CONTRACT WITH A NATIONALLY RECOGNIZED APPRAISAL FIRM TO COMPLETE THE NEXT CYCLE OF APPRAISALS

7 7 MAYFIELD GENTRY REALTY ADVISORS, LLC APPRAISALS - CONTINUED AND WHEREAS, THE BOARD HAS DISCUSSED THIS MATTER, THEREFORE BE IT RESOLVED, THAT THE BOARD SELECTS OPTION 2 ABOVE, AND BE IT FURTHER RESOLVED, THAT A COPY OF THIS RESOLUTION BE FORWARDED TO MAYFIELD GENTRY REALTY ADVISORS, LLC; COURTLAND PARTNERS; AND THE ACCOUNTING DIVISION OF THE RETIREMENT SYSTEM: NAYS TRUSTEES BUTLER, GNATEK, MARTINICO, MOORE, ORZECH, PEGG AND CHAIRMAN NEARY 7 NONE TRUSTEE MARK DIAZ ENTERED THE MEETING AT 9:32 A.M. LEGAL COUNSEL S REPORTS LEGAL COUNSEL RONALD ZAJAC ASKED THE BOARD TO ENTER INTO CLOSED SESSION TO DISCUSS A MATTER INVOLVING ATTORNEY/CLIENT PRIVILEGE. CLOSED SESSION BY TRUSTEE MOORE SUPPORTED BY TRUSTEE GNATEK Resolved, Tha t the Boa rd enter into Closed Session for the purpose of discussing matters involving attorney/client privilege: A Roll Call Vote was taken as follows: NAYS TRUSTEES BUTLER, DIAZ, GNATEK, MARTINICO, MOORE, ORZECH, PEGG AND CHAIRMAN NEARY 8 NONE

8 8 CONTINUATION OF CLOSED SESSION The Boa rd entered into Closed Session a t 9:23 A.M. to disc uss ICG Leaseback Fund I, LLC. TRUSTEE FRED WHEELER ENTERED THE MEETING DURING CLOSED SESSION (9:30 A.M.) TRUSTEE CHERYL JOHNSON ENTERED THE MEETING DURING CLOSED SESSION (9:30 A.M.) OPEN SESSION BY TRUSTEE GNATEK SUPPORTED BY TRUSTEE ORZECH Resolved, That the Board return to Open Session: A Roll Call Vote was taken as follows: NAYS TRUSTEES BUTLER, DIAZ, GNATEK, JOHNSON, MARTINICO, MOORE, ORZECH, PEGG, WHEELER AND CHAIRMAN NEARY - 10 NONE The Board returned to Open Session at 9:50 A.M. TT INTERNATIONAL DAVID BALLON (SR. VICE PRESIDENT) AND MARTIN PLUCK (PARTNER) DISCUSSED PERFORMANCE. TRUSTEE JOHNSON EXCUSED HERSELF DURING MESSRS. BALLON S AND PLUCK S PRESENTATION (10:02 A.M.) TRUSTEE ORZECH ASKED THAT TT INTERNATIONAL S FUTURE PERFORMANCE REPORTS REFLECT RETURNS NET OF FEES.

9 9 PARAMOUNT LIMITED, LLC JAMES MCTEVIA (MCTEVIA & ASSOCIATES), MARIE RACINE (RACINE & ASSOCIATES) AND DON WAGNER AND JERRY ELLIS (COUZENS LANSKY) DISCUSSED PARAMOUNT LIMITED, LLC AT LENGTH. TRUSTEE JOHNSON RE-JOINED THE MEETING (11:33 A.M.) PRIOR TO THE CONCLUSION OF MESSRS. MCTEVIA S, WAGNER S, ELLIS AND MS. RACINE S PRESENTATION. ICG LEASEBACK FUND I, LLC THE BOARD DISCUSSED ICG LEASEBACK FUND I, LLC WITH LOU VOGT (BANYAN REALTY ADVISORS) VIA PHONE CONFERENCE. CONTINUATION OF LEGAL COUNSEL S REPORTS MR. ZAJAC DISCUSSED VARIOUS MATTERS WITH THE BOARD OF TRUSTEES AS FOLLOWS: HILTON NAPOLEON STATUS REPORT WAS PROVIDED WITH RESPECT TO MR. NAPOLEON S LITIGATION WITH THE CITY OF DETROIT. IT WAS REPORTED THAT MR. NAPOLEON S ATTORNEY HAS FILED A NOTICE OF PRESENTMENT OF ORDER TO THE CIRCUIT COURT DATED JULY 25, 2011 WITH A PROPOSED ORDER WHICH WOULD PROVIDE THAT THE ADJUSTMENT/ INCOME OF MR. NAPOLEON S PENSION BENEFIT WOULD BE RETROACTIVE TO MARCH, ICG LEASEBACK FUND I, LLC GENERAL COUNSEL REPORTED AND PROVIDED COPIES OF THE RETIREMENT SYSTEMS LETTER DATED JULY 27, 2011 TO AXA EQUITABLE LIFE INSURANCE COMPANY AND FOUR (4) RELATED PARTIES PROVIDING NOTICE TO SENIOR LENDER, EXERCISE OF RETIREMENT SYSTEMS POWER OF ATTORNEY AND DIRECTION TO SENIOR LENDER NOT TO MAKE FUTURE PAYMENTS TO MEZZANINE BORROWER. COPIES OF LETTER DATED JULY 27, 2011 FROM SPECIAL LEGAL COUNSEL, F. LOGAN DAVIDSON, P.C., WERE PROVIDED TO THE BOARD ALONG WITH A COPY OF A RESOLUTION OF THE GENERAL RETIREMENT SYSTEM DATED JULY 27, 2011 REGARDING THIS MATTER. GENERAL COUNSEL RECOMMENDED THAT CLARK HILL, LLC BE RETAINED AS SPECIAL LEGAL COUNSEL REGARDING THIS MATTER AND STATED THE REASONS FOR HIS RECOMMENDATION.

10 10 PARAMOUNT LIMITED, LLC THE BOARD DISCUSSED PARAMOUNT LIMITED, LLC FURTHER WITH MARIE RACINE. PROPOSED ENGAGEMENT LETTER WITH PLANTE MORAN GENERAL COUNSEL RECOMMEND THAT THE BOARD NOT APPROVE THE ENGAGEMENT LETTER WITH PLANTE MORAN UNTIL GENERAL COUNSEL DISCUSSED THREE (3) ISSUES HE FELT MERITED DISCUSSION WITH PLANTE MORAN REGARDING FAIR MARKET VALUE AND THE CONTENT OF PARAGRAPHS TWO AND SEVEN OF THE PROPOSED ADDENDUM TO PLANTE MORAN, LLC S PROPOSED ENGAGEMENT LETTER DATED JUNE 29, GENERAL COUNSEL REFERRED TO RECENT ISSUES INVOLVING FAIR MARKET VALUE CONCEPTS AND THE AUDIT FOR JUNE 30, GENERAL COUNSEL INDICATED HE WISHED TO EXPLORE THE POSSIBILITIES OF CLARIFICATION OF THESE ISSUES IN THE PROPOSED ENGAGEMENT LETTER. GENERAL COUNSEL ALSO INDICATED HIS INTENTIONS TO DISCUSS SAME WITH OTHERS, INCLUDING GRAYSTONE. PROPOSED ENGAGEMENT LETTER WITH PLANTE MORAN BY TRUSTEE ORZECH SUPPORTED BY TRUSTEE PEGG RESOLVED, THAT THE PROPOSED ENGAGEMENT LETTER WITH PLANTE MORAN BE APPROVED AS SUBMITTED, AND BE IT FURTHER RESOLVED, THAT THE ENGAGEMENT LETTER BE EXECUTED BY TWO (2) AUTHORIZED SIGNATORIES ON BEHALF OF THE RETIREMENT SYSTEM: PRIOR TO ACTING UPON THE FOREGOING, TRUSTEE PEGG ASKED THAT STAFF PROVIDE THE BOARD WITH, FOR REVIEW, A COPY OF PLANTE MORAN S 2010 ENGAGEMENT LETTER. HAVING RECEIVED AND REVIEWED PLANTE MORAN S 2010 ENGAGEMENT LETTER, TRUSTEE ORZECH S MOTION WAS THEN BROUGHT FORWARD FOR A VOTE.

11 11 PROPOSED ENGAGEMENT LETTER WITH PLANTE MORAN BY TRUSTEE ORZECH SUPPORTED BY TRUSTEE PEGG RESOLVED, THAT THE PROPOSED ENGAGEMENT LETTER WITH PLANTE MORAN BE APPROVED AS SUBMITTED, AND BE IT FURTHER RESOLVED, THAT THE ENGAGEMENT LETTER BE EXECUTED BY TWO (2) AUTHORIZED SIGNATORIES ON BEHALF OF THE RETIREMENT SYSTEM: TRUSTEES BUTLER, DIAZ, GNATEK, JOHNSON, MARTINICO, ORZECH, PEGG, WHEELER AND CHAIRMAN NEARY - 9 NAYS TRUSTEE MOORE 1 EXPLANATION OF TRUSTEE JAMES MOORE S NAY VOTE: TRUSTEE MOORE INFORMED THE RECORDING SECRETARY THAT THE MINUTES SHOULD INDICATE THAT HIS NAY VOTE IS BECAUSE HE AGREES WITH THE RECOMMENDATION OF GENERAL COUNSEL TO EXPLORE POSSIBLE CLARIFICATION OF CERTAIN ISSUES PRIOR TO ENTERING INTO THE AGREEMENT WITH PLANTE MORAN. RECESS THE BOARD RECESSED FOR LUNCH AT 12:30 P.M. TRUSTEE JOHNSON EXCUSED HERSELF DURING RECESS (12:45 P.M.) TRUSTEE WHEELER EXCUSED HIMSELF DURING RECESS (1:15 P.M.) CHAIRMAN NEARY CALLED THE MEETING BACK TO ORDER AT 1:40 P.M.

12 12 RE: ICG LEASEBACK FUND I, LLC: SALE - LEASEBACK TRANSACTION GENERAL COUNSEL REPORTED AND PROVIDED COPIES OF THE RETIREMENT SYSTEMS LETTER DATED JULY 27, 2011 TO AXA EQUITABLE LIFE INSURANCE COMPANY AND FOUR (4) RELATED PARTIES PROVIDING NOTICE TO SENIOR LENDER, EXERCISE OF RETIREMENT SYSTEMS POWER OF ATTORNEY AND DIRECTION TO SENIOR LENDER NOT TO MAKE FUTURE PAYMENTS TO MEZZANINE BORROWER. COPIES OF LETTER DATED JULY 27, 2011 FROM SPECIAL LEGAL COUNSEL, F. LOGAN DAVIDSON, P.C., WERE PROVIDED TO THE BOARD ALONG WITH A COPY OF A RESOLUTION OF THE GENERAL RETIREMENT SYSTEM DATED JULY 27, 2011 REGARDING THIS MATTER. GENERAL COUNSEL RECOMMENDED THAT CLARK HILL, LLC BE RETAINED AS SPECIAL LEGAL COUNSEL REGARDING THIS MATTER AND STATED THE REASONS FOR HIS RECOMMENDATION. RE: ICG LEASEBACK FUND I, LLC: SALE - LEASEBACK TRANSACTION BY: Trustee Pegg Supported by Trustee Orzech WHEREAS, on December 19, 2007, the Police and Fire Retirement System of the City of Detroit and the General Retirement System of the City of Detroit (collectively, Lender ) and ICG-REA Manager, LLC ( Borrower ) entered into a loan agreement (the Loan Agreement ) whereby Lender agreed to make a $44,000,000 loan (the Loan ) and committed to issue an $8,000,000 Letter of Credit to Borrower in connection with the acquisition and leaseback of five part depots by ICG Leaseback Fund I, LLC (the Company ) from and to General Motors Corporation. The sole member of the Company is Borrower. Of the $44,000,000 original Loan amount, approximately $40,000,000 was funded, and WHEREAS, the Board has received a report from the Board s real estate advisor, Banyan Realty Advisors, LLC, informing the Board that the Borrower has failed to make the last two scheduled debt service payments on the loan, and WHEREAS, the Board has received a report dated July 26, 2011 from the Board s special legal counsel, F. Logan Davidson, P.C. explaining the Board s options if an Event of Default, such as failure to make required debt service payments, occurs, and WHEREAS, the Board is in receipt of a copy of a letter dated July 27, 2011 from the Police and Fire Retirement System and General Retirement System dated July 25, 2011 to AXA Equitable Life Insurance Company, and

13 13 RE: ICG LEASEBACK FUND I, LLC: SALE - LEASEBACK TRANSACTION - CONTINUED WHEREAS, the Board has discussed the matter, therefore be it RESOLVED, that the Board acknowledges and approves the aforesaid July 27, 2011 letter, and be it further RESOLVED, that General Counsel and Special Legal Counsel, F. Logan Davidson, take any further immediate action deemed by them to protect the interests of the Retirement System and assist Macuga, Liddle & Dubin, P.C. in representing the Retirement System regarding this matter, and be it further RESOLVED, that the law firm of Macuga, Liddle & Dubin, P.C. is retained to represent the Retirement System regarding this matter, and be it further RESOLVED, that all legal counsel take all action on behalf of the Retirement System as may be deemed appropriate by legal counsel to protect the Retirement System s interest, including without limitation, ( ) instituting litigation, ( ) exercising the power of attorney contained in the loan documents to notify the senior lender to remit any excess rent proceeds remaining after the senior lender s debt service is deducted to the Retirement System or as the Retirement System shall direct, ( ) obtaining an injunction to prevent the Borrower from converting the Borrower s assets or transferring the Borrower s assets to any other person or party, ( v) seeking the appointment of a receiver for the Borrower, and be it further RESOLVED, that Special Legal Counsel, F. Logan Davidson, P.C. assist Macuga, Liddle & Dubin, P.C., as may be requested by Macuga, Liddle & Dubin, P.C., in connection with said representation, and be it further RESOLVED, that a copy of this resolution be forward to Special Legal Counsel, F. Logan Davidson; Macuga, Liddle & Dubin, P.C.; and be it further RESOLVED, that a copy of this resolution be maintained in the Police and Fire Retirement System s records: Yeas Nays Trustees Butler, Diaz, Gnatek, Martinico, Moore, Orzech, Pegg and Chairman Neary 8 None

14 14 SPECIAL LEGAL COUNSEL S REPORTS SPECIAL COUNSEL JOE TURNER DISCUSSED VARIOUS MATTERS WITH THE BOARD, INCLUDING GRS, ET AL, VRSUS WATKINS, ET AL; RDD INVESTMENT CORPORATION; FLYNN; THE FOIA REQUEST OF ADRIAN DULTZIN-LACOSTE OF PE REPUBLIC; AND PFRS VERSUS INVESCOR, LTD. TRUSTEE WHEELER EXCUSED HIMSELF (AT 2:16 P.M.) DURING MR. TURNER S PRESENTATION. APPROVAL OF ENGAGEMENT LETTERS OF KLUGER KAPLAN AND REED SMITH BY TRUSTEE PEGG SUPPORTED BY TRUSTEE MOORE WHEREAS, the Boa rd of Trustees (the Boa rd ) ha s previously a pproved the engagement of Kluger Ka pla n la w firm ( Boa rd s Florid a Counsel ) a long with the Reed Smith la w firm ( Board s Spec ia l Consulting Counsel ) a s the Boa rd s c ounsels in the above-matter; and WHEREAS, the Boa rd ha s rec eived the a c tua l engagement letters from the Boa rd s Florid a Counsel and the Boa rd s Spec ia l Consulting Counsel; and WHEREAS, the Boa rd s Genera l Counsel a nd Cla rk Hill PLC ( Lea d Spec ia l Counsel ) have rec eived a nd a pproved the engagement a greements a nd, further rec ommend s the Boa rd signs the engagement letters; and WHEREAS, the Boa rd ha s c onsid ered this ma tter in open session; THEREFORE BE IT RESOLVED, tha t pursua nt to the rec ommend a tion of c ounsel, the Boa rd hereby a pprove the form of the engagement letters for Kluger Ka pla n a nd Reed Smith a nd a uthorize the authorized signers of the Boa rd to execute the final form of the agreements; and be it further RESOLVED, the Boa rd a uthorized Lea d Spec ia l Counsel to ta ke the a ppropriate a c tions to effec tua te the Boa rd s intent as noted in the previous resolutions; and be it further

15 15 APPROVAL OF ENGAGEMENT LETTERS OF KLUGER KAPLAN AND REED SMITH - CONTINUED RESOLVED, tha t a c opy of the exec uted engagement letters a nd this resolution be forwa rd ed to the Board s Florida Counsel; the Boa rd s Spec ia l Consulting Counsel; the Boa rd s Lea d Spec ia l Counsel; a nd the Accounting Division of the Retirement System: Yeas Trustees Butler, Diaz, Gnatek, Moore, Orzech, Pegg and Chairman Neary 7 Nays None CAPITAL CALLS BY TRUSTEE MOORE SUPPORTED BY TRUSTEE PEGG WHEREAS, THE BOARD HAS BEEN PRESENTED WITH A SUMMARY OF CAPITAL CALLS WHICH ARE REFERENCED AT THE END OF THESE PROCEEDINGS, AND WHEREAS, THE BOARD HAS BEEN REQUESTED TO APPROVE FUNDING OF SAID CAPITAL CALLS, THEREFORE BE IT RESOLVED, THAT SUBJECT TO FINAL APPROVAL OF ALL TRANSACTION DOCUMENTS BY THE BOARD S LEGAL COUNSEL AND SUBJECT TO STAFF AUDIT, THE BOARD APPROVES FUNDING OF SAID CAPITAL CALLS: Yeas Trustees Butler, Diaz, Gnatek, Moore, Orzech, Pegg and Chairman Neary 7 Nays None FEES AND EXPENSES BY TRUSTEE MOORE SUPPORTED BY TRUSTEE BUTLER WHEREAS, THE BOARD HAS BEEN PRESENTED WITH A SUMMARY OF MANAGEMENT FEES, LEGAL FEES AND ADMINISTRATIVE AND OTHER EXPENSES WHICH ARE REFERENCED AT THE END OF THESE PROCEEDINGS, AND WHEREAS, THE BOARD HAS BEEN REQUESTED TO APPROVE PAYMENT OF SAID FEES AND EXPENSES, THEREFORE BE IT

16 16 FEES AND EXPENSES - CONTINUED RESOLVED, THAT SUBJECT TO FINAL APPROVAL OF ALL TRANSACTION DOCUMENTS BY THE BOARD S LEGAL COUNSEL AND SUBJECT TO STAFF AUDIT, THE BOARD APPROVE PAYMENT OF SAID FEES AND EXPENSES: Yeas Trustees Butler, Diaz, Gnatek, Moore, Orzech, Pegg and Chairman Neary 7 Nays None PFRS COMMITTEES THE BOARD DISCUSSED ITS EXISTING COMMITTEES, INCLUDING THE TWO NEW COMMITTEES THAT WERE FORMED LAST WEEK PERSONNEL AND IT. TRUSTEES BUTLER AND ORZECH WERE NAMED TO SERVE ON THE IT COMMITTEE, AND TRUSTEES BUTLER, NEARY AND ORZECH WERE NAMED TO SERVE ON THE PERSONNEL COMMITTEE. THE ANNUAL REPORT COMMITTEE WAS TERMINATED THE EMPLOYEE BENEFITS COMMITTEE WAS RENAMED THE EMPLOYEE BENEFIT PLAN COMMITTEE THE MANAGER ROUNDTABLE COMMITTEE WAS RENAMED THE INVESTMENT ROUNDTABLE COMMITTEE THE POLICIES AND PROCEDURES COMMITTEE WAS RENAMED THE INVESTMENT POLICIES, PROCEDURES AND GUIDELINES COMMITTEE THE NEWSLETTER COMMITTEE WAS RENAMED THE NEWSLETTER/WEBSITE COMMITTEE TABLED MATTERS THE BOARD WILL DISCUSS THE TABLED MATTERS WHICH ARE DESIGNATED ON PAGE 3 OF THE BOARD S AGENDA NEXT WEEK.

17 17 PFRS WATCH LIST AT THE CHAIR S DIRECTION, THE BOARD S INVESTMENT ANALYST WILL REVIEW THE SYSTEM S WATCH LIST POLICIES AND PROCEDURES AND REPORT BACK TO THE BOARD. DEFERRED RETIREMENT OPTION PLAN THE BOARD DISCUSSED DROP WITHDRAWAL PROCEDURES. FREQUENCY OF RETIREMENT SYSTEM MEETINGS TRUSTEE GNATEK ASKED ABOUT THE POSSIBILITY/ FEASIBILITY OF MEETING TWICE A MONTH (OR LESS THAN WEEKLY) BE REFERRED TO THE BOARD S INVESTMENT POLICIES, GUIDELINES AND PROCEDURES COMMITTEE AND SAME WAS DONE AT THE CHAIR S DIRECTION. ISSUE OF POSSIBLE CONFLICT/NORTH POINT ADVISORS TRUSTEE PEGG ASKED THE CHAIR TO DIRECT THE BOARD S EXECUTIVE SECRETARY TO SEEK INFORMATION (BY LETTER AND/ OR OTHER INQUIRY) FROM OTHER RETIREMENT SYSTEMS REGARDING THE ISSUE OF POSSIBLE CONFLICT BETWEEN THE BOARD S INVESTMENT CONSULTANT, NORTH POINT ADVISORS, SIMULTANEOUSLY MANAGING THE BOARD S EMERGING MANAGERS PORTFOLIO. AUDIO RECORDING OF OPEN SESSION OF BOARD MEETINGS AT THE CHAIR S DIRECTION, A COPY OF THE BOARD S MAY 26, 2011 AND JULY 21, 2011 RESOLUTIONS WILL BE SENT TO THE DETROIT NEWS IN RESPONSE TO THE NEWS JULY 24, 2011 ARTICLE WHICH READS AS FOLLOWS: DETROIT RETIREES AFTER SQUANDERING MILLIONS ON BAD INVESTMENTS, RETIREMENT FUND TRUSTEES VOTE NO ON SPENDING $4,000 FOR EQUIPMENT TO RECORD MEETINGS. JUST TRUST US?. PUBLIC FORUM AT 4:20 P.M., CHAIRMAN NEARY DECLARED THE MEETING IN OPEN FORUM FOR GENERAL DISCUSSION BY THE PUBLIC ATTENDING THE MEETING.

18 18 ADJOURNMENT THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, CHAIRMAN NEARY ADJOURNED THE MEETING AT 4:20 P.M. UNTIL THURSDAY, AUGUST 4, 2011 AT 9:00 A.M., IN ROOM 910 OF THE COLEMAN A. YOUNG MUNICIPAL CENTER, DETROIT, MICHIGAN RESPECTFULLY SUBMITTED, CYNTHIA A. THOMAS ASSISTANT EXECUTIVE SECRETARY

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