Minutes of the Regular Meeting Wednesday, December 20, 2006, at 12:30 p.m. Retirement Bldg., 2520 South I.H. 35, Ste. 205 Austin Police Pension Office

Transcription

1 Minutes of the Regular Meeting Wednesday, December 20, 2006, at 12:30 p.m. Retirement Bldg., 2520 South I.H. 35, Ste. 205 Austin Police Pension Office Members Present Members Absent Staff/Guests Peter Morin Sampson Jordan Sean Mannix Wes Martin Fred Fletcher Stephanie Willie Kendall Thomas Bob May John Ross Margaret Teinert Catherine Haggerty John Sommers Karen Kennard Wes Martin Art Alfaro Christine Sweeney Sean Mannix Mike Jung Vanessa Downey-Little Peter Morin, Chair, called the Board to order at 12:35 p.m. Approval of Minutes from the November 15, 2006, Regular Board Meeting Peter Morin, Chair, stated the November 15, 2006, Board Meeting Minutes as written in trustee packets, were up for discussion and approval. Not hearing any discussion, Peter asked for a motion of approval. Catherine Haggerty made a motion to approve the minutes of November 15, Vanessa Downey-Little seconded the motion. Service Purchases for November 2006 Peter Morin, Chairman, reported the Service Purchases for November 2006, as written in trustee packets, were up for discussion and approval. Not hearing any discussion, Peter asked for a motion of approval. Catherine Haggerty made a motion to approve the Service Purchases for November Vanessa Downey-Little seconded the motion NAME Bremner, Richard Bremner, Richard Cardona, Carlos Cardona, Carlos Havens, Douglas Havens, Douglas Jackson, Charles Lefebvre, William Normand, Tanya Stephenson, Marcus TYPE OF BUYBACK LENGTH OF BUYBACK 7 Mos. 7 Mos. 5 Mos.

2 Tanecka, Janice Vallejo, Chris Williams, Duane Williams, Duane 7 Mos. 12 Mos. New Retired Member(s) November 2006 Peter Morin, Chairman, reported the New Member Retirement for November 2006, as written in trustee packets, was up for discussion and approval. Not hearing any discussion, Peter asked for a motion of approval. Catherine Haggerty made a motion to approve the New Member Retirement for November Vanessa Downey-Little NAME OPTION RETIREMENT DATE AGE Yrs./Mos. Service James Nielson Life 11/30/ yrs. 8 Mos. 30 yrs 5 Mos. Life = Life Only Annuity I = 100% Joint & Survivor II = 50% Joint & Survivor III = 66 2/3% Last Survivor IV = Joint & 66 2/3% Last Survivor V = 15 Year Certain & Life DROP = Lump Sum Distribution QDRO = Qualified Domestic Relations Order PROP Distributions for November 2006 Peter Morin, APRS Chair, reported the PROP Distribution for November 2006, as written in trustee packets, was up for discussion and approval. Not hearing any discussion, Pete asked for a motion of approval. Catherine Haggerty made a motion to approve the Prop Distribution for November Vanessa Downey-Little seconded the motion. NAME AMOUNT DATE ACCOUNT BALANCE Edward L. Jones N/A 11/30/06 N/A Investment Committee Meeting, December 20, 2006 A. Manager Monthly & YTD Performance Report Kendall Thomas, Investment Committee Chair in absence of Ron Partain, Investment Consultant presented the APRS Manager performances report as prepared by Consulting Services Group as of November 30, 2006 using handout material titled Market Value and Returns Summary. The handouts presented by Kendall showed the APRS total composite return was 2.0%, Current Month, 14.5% Year to Date, 16.2% Trailing 1 Year, 15.6% Trailing 3 Years and 10.9% Trailing 5 Years. Kendall reported the following three managers Snow Capital, Waddell & Reed and Private Capital trailed their benchmarks year to date. He also reported the portfolio Asset Allocation Decision Tree was 59% Market Dependant (Equity, US & International-40% and Fixed Income, US & International-19%) and 41% Alternative Investments (Private Real Estate-22%, Timber-10% and Natural Resources-9%). No action required by Board. B. RMK Timber Performance, Sale & Investment Opportunities

3 Kendall Thomas, Investment Committee Chair reported the Committee met with RMK Timberland Group investment managers, Joyce Niggley, Charlie Daniel and Jim Webb on Wednesday, December 20, 2006 at 10:00 a.m. regarding performance, potential sales and additional investment opportunities. Kendall reported the separate managed timbers accounts ($ million market value) that APRS owns as fee simple in Wisconsin, South Carolina, Georgia and Florida has a since inception return of 9.27% over approximately 10 years. However, in the last year the market value had increased over 35.54%. The RMK managers believed future potential return increases exceeded the current market values and therefore, did not recommend marketing these properties for sale. These properties are located near population growth areas that have a potential sale premium for higher and better use. The Austin Timber, LLC timberfund ($3.155 million market value) in Alabama purchased approximately 6.25 years ago for the timber harvesting rights with no fee simple ownership of the land has a 1.11% return from inception. This investment for timber harvesting hit a bad market cycle during 2006, whereby the investment value of the timber decreased 7.96%. The RMK managers believe future timber sales for this property should increase, because the timber was moving into a product class that will recognize a higher value for its biological growth. The ATAYA Hardwoods, LLC partnership in Tennessee and Kentucky purchased 2.68 years ago as fee simple with two other investors has a since inception return of 13.17%. The last year market value return was 3.12%. This investment is for timber harvesting and sale of fee simple land. The RMK managers believed this partnership fund was very marketable for sale, had little upside potential for future returns and had an interested buyer. The current market value is $ million on a cost basis of $ million, which provides the APRS on its partnership 15.38% interest a realized gain of 33% if sold at market value. Kendall also reported the RMK managers briefed the Committee on potential investment opportunities in South America and South Africa, but the investment size ($10 million) would require sales one some of the APRS current timber allocations to take place before a commitment in any of these funds. No action required by the Board. C. Rebalancing and Asset Allocation Kendall Thomas, Investment Committee Chair reported the Committee did not make any recommendations to rebalance or make any other asset allocation changes to the APRS investment fund portfolio. No action required by the Board. Disability Committee Meeting, December 20, 2006 A. Disability Application of Lyndon Leuders John Ross, Disability Committee Chairman, reported the Committee met at 11:30 a.m. on December 20, 2006, to discuss the disability application and medical evaluation performed on Lyndon Leuders. He reported the Committee recommended approving and On the Job Disability benefit for Lyndon Leuders after reviewing all the medical reports and employment documents, interviewing Mr. Leuders, and consulting with APRS attorney Terry Kendall. Sean Mannix made a motion to approve an On the Job Disability Benefit as recommended by the Disability Committee for Lyndon Leuders. Catherine Haggerty seconded the motion. Design Proposals for Ste. 100 Sam Jordan, Pension Administrator introduced Margaret Tienert of Facilities Resource, Inc. a space planner/interior designer retained by the Austin Police Retirement System on October 18, 2006 to develop three design proposals for moving the pension office into larger downstairs space (4,263 square feet) made available with the tenant move out of Capital Area Planning Council (CAPCO) in November The current pension office space is 1,961 square feet. Margaret Tienert presented a power point presentation on three office layout proposals;

4 the first proposal provided minimum design change but allowed for the build out of a reception area, unisex restroom, office supply work room and needed cabinetry all to meet City Building Code compliance, the second proposal provided for the same design features, but also included a larger lobby waiting area, a new breakroom close to the Board room, relocation of the computer server room and member services and assistant administrator offices along with a janitor closet, the third proposal provided for all of the first and second design proposal features but added an enclosed record file room with an additional office. Peter Morin, APRS chair stated the first order of business was to determine if the trustees were in favor of moving the offices downstairs in the office space recently vacated by CAPCO. After discussion and deliberation regarding additional work and board room space needed, Catherine Haggerty made a motion to move the pension office into the downstairs office space. John Ross seconded the motion. Peter Morin, APRS chair stated the next order of business was to determine which of the three design proposals trustees were in favor of using in the moving of the pension office downstairs in the office space recently vacated by CAPCO. After discussion and deliberation Sean Mannix made a motion to commission a cost estimate for the Option 3 design proposed by Margaret Tienert of Facilities Resource, Inc. Catherine Haggerty seconded the motion. Margaret Tienert, reported she would provide the trustees with a contract agreement at the January 17, 2007 Regular Board meeting, that would engage her firm to provide detailed plans specifications for the remodel and design of Option 3, project management, coordination of the move downstairs and assist in furnishing décor. No action required by the Board. Pension Office Report A. Treasury Report Sam Jordan, Pension Administrator, presented the November 30, 2006 monthly Treasury Report, showing the total APRS asset value to be $449,161, (unaudited). This asset value was up by $15,994, from October 31, 2006 asset valuation of $433,166, million (unaudited). The total fund commitments awaiting Capital Calls on investments as of November 30, 2006 was $34,634, and APRS has treasury bonds and cash of $27,500,000 available to fund these investments. This is inline with Investment Consultant recommendation to have at least 2/3 of the commitment set aside in liquid investments for these capital calls. The Administrative Expenses paid year to date at November 30, 2006 of $529, was on target with total projections of $644, made in January No action required by the Board. B. HELPS, Pension Protection Act 2006 Sam Jordan, Pension Administrator, presented a letter with a Health Insurance Premium Withholding Form designed by APRS attorney Terry Kendall, mailed to all retirees. He reported the letter addressed the Pension Protection Act of 2006 signed into law allowing retired police, fire and emergency service employees to exempt from taxes up to $3,000 in premiums paid from their retirement payroll to cover medical, dental and long-term care insurance paid to the City of Austin health care provider chosen by the member in tax year This tax exclusion form must be on file at the pension office according to the APRS attorney in order for the tax exemption to be granted on the members 1099-R form at year-end. No action required by the Board. C Audit Engagement Proposal Sam Jordan, Pension Administrator, reported a letter was mailed to past APRS auditor, Montemayor & Associates P.C, requesting submission of a cost estimate to perform the December 31, 2006, audit of the Austin Police Retirement System financial statements, in accordance with generally accepted auditing standards. He reported an Understanding of Engagement letter was received from Arturo Montemayor III,

5 president of the firm, estimating a service cost of $13,000 to perform the audit beginning April 16, 2007 with completion on June 30, The cost of performing the 2006 audit increased over the 2005 audit, because the standard fee range for auditors increased to $70 from $55 an hour and this years audit requires an internal control audit by American Institute of Certified Public Accountants (AICPA). Kendall Thomas made a motion to retain the firm of Arturo Montemayor and Associates P.C, at a cost of $13,000.00, to conduct the year-end 2006 audit of the System financial statements under general accepted accounting standards and the internal control audit, beginning April 16 th with completion on June 30, Fred Fletcher seconded the motion. D. Accounting ICP Update Sam Jordan, Pension Administrator, reported the APRS accountant, Gabriella Powers informed him the Internal Control Policy (ICP), which governs the Administrator, Assistant Administrator and Accountant on their job duties and responsibilities in paying retiree payroll, office payroll, fund expenses and depositing service purchases needed to be updated. The conversion to a new Peachtree Accounting Software on October 1, 2006, replacing the old accounting software Money Counts when it became incompatible after APRS fund assets topped $400 million, now allows for all transactions to be posted into (1) accounting program, whereas the old accounting program had (2) separate accounting programs. This change requires the Financial Manager (accountant) to post receipts and payments into the paying and receivables module of the general ledger and then have the transactions approved by the Assistant Administrator. This method still employs the use of dual control between the Accountant and Assistant Administrator with the Administrator serving as backup for either the Accountant or Assistant Administrator in case of absence. Kendall Thomas made a motion to approve the update to the Accounting Internal Control Policy as presented by Sam Jordan, Pension Administrator that continues to employ the use of dual control in the General Ledger for posting receipts and payments between the Assistant Administrator and Finance Manager (accountant). John Ross seconded the motion. Old/New Business Sam Jordan reported the pension bill written by Terry Kendall approved by the Board at its November meeting had been delivered to Dawna Dukes, Travis County Representative s office. He reported the representative had indicated to the pension office through her aides that she was in favor of the bill and would carry it on behalf of the Austin Police Retirement System. The bill was submitted to the legislative counsel and is awaiting their approval and assignment of a bill number. No action required by the Board. Catherine Haggerty reported the Austin Police Association was still considering the purchase of the building for sale by the System but would not make a decision till sometime in January. No action required by the Board. Catherine Haggerty requested the APRS attorney address the Goals & Objective Committee in January on why the System could not currently grant tax free disabilities. No action required by the Board. Kendall Thomas reported he would be holding an Investment Committee meeting on January 17, 2007 at 9:00 a.m. and Capital Point Partners will be making a presentation on an investment opportunity in mezzanine loans. Alfred Jackson would be one of the presenters. No action required by the Board. Sean Mannix reported the Goals & Objective Committee would convene on Wednesday, January 17, 2007 at 10:30 a.m. to discuss pending legislation and other pertinent items

6 as requested. No action required by the Board. Bob May, APRS actuary reported he surveyed Active Police Officers regarding the State Proportionate Retirement option proposal being considered by the City of Austin and the following was his findings. 124 of 274 Officers who returned their survey with Prior Law Enforcement Service, 97 had it with an employer in the State of Texas of these 94 indicated it was in agency listed in the survey, 47 of 122 Officers who returned their survey with Active Duty Service, 2 had it with another public retirement system in Texas all of these indicated it was with an agency listed on the survey, 46 of 127 Officers who returned their survey with No Active Duty Service, 7 had it with another public retirement system in Texas and of these 5 indicated it was in an agency listed on the survey. No action required by the Board. Christine Sweeney, APRS attorney reported the loan refinancing on the investment in Coventry Real Estate (Two Riverway Office Building) was proceeding forward and the Investment Committee recommended moving forward on it as proposed by the partnership attorney. The Board approved by acclamation to move forward on the refinancing terms as recommended by the Investment Committee and Coventry Real Estate partnership attorney. Adjournment Peter Morin, Chair