Fort Walton Beach Council agenda — 01-08-08 regular agenda — reading text

updates and the budget and brief section. He also informed that he and Dr. Pullen attended the funeral for Sam Hayes of Crestview. The Mayor also reminded that Mr. Bayless with the Advocacy Group will be available to speak with everyone next week. The Mayor presented a New Years Resolution for the elected and charter officers and city staff to focus on the future and to work together as a team for the best of the City of Fort Walton Beach. CITY MANAGER ANNOUNCEMENTS The City Manager reported she met with Jim Curry, County Administrator and discussed common issues including the fairgrounds and the judicial center and the wastewater and treatment issue. She informed that at 1: 30 tomorrow there will be a negotiating session with the firefighters union. The City Manager announced a free Christmas play on Saturday, December 15 at the city auditorium; and a new exhibit that will be at the heritage park the next several months. She also advised city offices will be closed on December 24 and December 25, and there will be no commercial or residential trash pick up on December 25, and January 1. She thanked Council for their leadership the past year and for Council' s kind comments about city staff. She wished everyone happy holidays. Dr. Pullen mentioned the response of the museum' s " Bring Your Lunch" outstanding presentations. ADJOURNMENT Being no further business, the meeting adjourned at 10: 20 p. m. APPROVED: MAYOR: ATTEST: CITY CLERK ddm  261 MINUTES OF THE EMERGENCY COUNCIL MEETING OF THE CITY OF FORT WALTON BEACH, FLORIDA DECEMBER 20, 2007 f INTRODUCTION An emergency meeting of the City Council of Fort Walton Beach, Florida, was held on Thursday, December 20, 2007 at 6: 00 p. m. in the Council Chambers at City Hall, with the following members present: Councilmen: Mike Holmes, Virgil Miller, Dennis Reeves, Bill Garvie, Dr. Wayne Pullen, and Mike Minich Mayor Pro Tem). Absent: Mayor Mike Anderson and Councilman Jim Hartwell Also Present: Joyce Shanahan, City Manager; Lisa Absher, Finance Director; Helen Spencer, City Clerk; and Toni Craig, City Attorney CALL TO ORDER The Mayor Pro Tem called the meeting to order PLEDGE The Mayor Pro Tem led in the Pledge of Allegiance. INVESTMENTS IN THE SBA Report on the financial situation regarding investments in the State Board of Administration ( SBA), and possible action by the City. The City Manager stated the City Attorney has to leave shortly and will give an update on information learned late today about the situation, and then the Finance Director will brief Council. The City Attorney recounted a phone call late this afternoon with Jeff McInnis, attorney for the School District, based on some letters received about the School District sending notice to the SBA Board of Trustees and their position on the funds invested. She learned that the School District will hold an emergency meeting in the morning to discuss withdrawal of funds, and they have been communicating with all the other School Districts and Superintendents throughout the State who likewise are concerned and will be probably withdrawing funds if something happens. She relayed the School District found out through their financial investment advisor that Citizens Insurance, who holds $ 1. 9 billion in the Local Government Investment Pool (LGIP) is holding an emergency meeting tonight to determine whether or not they will withdraw their funds on Monday. She felt if Citizens withdraws $ 1. 9 billion it would be a detriment to the City and any funds left. She said the question unanswered right now is whether or not Citizens is actually authorized to withdraw the money because those funds are part of that the State Retirement System fund; but their Board of and some believe they are legally required to maintain their monies in Trustees is meeting tonight in an emergency meeting to determine whether or not they can withdraw. She received a phone call from Mr. McInnis at around 5: 25 pm to let her know that Citizens is meeting tonight in an emergency meeting and it is not known what they will do. She said a lot of the local government attorneys do not know what to do because it is a serious issue, but from a legal standpoint most of the attorneys have the idea that 2% will be lost and probably will not be able to recover it in the future unless the State CFO has said they want to see full disclosure and the fact that they followed the rules when you invested the money. She said if there is a class -action filed on behalf of the entire State against those investment brokers then the City may see some compensation for any loss, but the 2% is being imposed funds. She by the Board of Trustees for the fund and they have full ability to invest and manage the mentioned that most of the local government attorneys think that will not be recovered, it is a guaranteed loss, but if you consider all the other runs that may be made on the fund, financially it may be more secure 62 million with the SBA but than taking a risk. She mentioned that Okaloosa County also invests around $ they are not taking any action to withdraw funds.  12 -20 -07 62 Emergency Council meeting INVESTMENTS IN THE SBA Mr. Garvie requested clarification on a statement made in one of the letters from Mr. McInnis that said the funds already withdrawn were illegal and SBA was going to ask for those funds back. The City Attorney 14th said Mr. McInnis included in the letter comments from the Clerk of the Circuit in Hillsborough County and what he put in the letter was that it may have been illegal for them to invest in certain bonds. She said in reality when money is in an investment firm, there will be losses and increases, and it is all speculation; the entire letter was speculation and Mr. McInnis tried to couch it in litigation terms so that would not be a signal, but on the other hand the School Board is definitely looking at withdrawing their entire funds from the SBA. Mr. Garvie expressed his understanding that the legal position of the letter was that it was illegal for some of the entities to withdraw the amount of funds they withdrew and the SBA was going to petition them to give the money back. The City Attorney explained the point of the letter was that by allowing people to withdraw prior to freezing the funds creates a disproportionate amount of the funds that are at jeopardy for those remaining in the fund; so it is an equitable argument as there is nothing specific to say they violated the law by doing that so he is arguing that now everyone will suffer because some people withdrew and we are restricted and we will lose money if you withdraw now; and he referred to a certain part of the Florida Statute that outlines where the funds can be invested. She did not think any attorney disagrees they have full management authority of the funds and we are at their mercy by their rule. Mr. Miller expressed his understanding the Florida Statute says they can only draw out a certain percent and not all of it and the Director allowed them to withdraw all their funds instead 'of only a majority of the funds. The City Manager explained when these few localities pre- withdrew their money before there was a real red flag or a problem before the fund became frozen, once they froze the fund they then set aside 14% of the assets in a separate pool and she thought what the letter is representing is that those people should at least be required to repay the fund that 14% because that is what was inequitable. The Finance Director added that the attorney in Tampa quoted the section of the Florida State.Statutes the SBA Management was supposed to be following and said that the SBA Management did not follow 31St that section because after the SBA Management knew on October that there was a section, or a portion of the funds, that may have been less in value the SBA Management was at fault to allow those other people to withdraw 100% of their funds, and the fault lies with the SBA Management; and then said he would do a Writ of Mandamus. The City Attorney stated what they are dealing with is a legal fiduciary responsibility of the SBA Board of Trustees, the CFO, the Governor, and the Attorney General, and they are arguing that the result of it is that there are disproportionate losses to those staying in the fund. She said as a basis of where that disproportionate comes from they are arguing that they violated their fiduciary duties in allowing those withdrawals prior to the freezing. Mr. Miller asked if there were any bonds or securities that have stopped paying interest or dividends. The City Attorney said that is a financial question, but from a legal stand point there are very specific outlines of the investments they can make; and they either met those investment types or they did not. She said the big question is what happened if you met the requirement at one time and then the bonds, investments or papers went bad and were downgraded, and that is the real question from a legal stand point that they have been downgraded. She said they satisfied it at the time they invested the money but they may not satisfy it now when you start looking at it and that is when you bring in the actions and the fiduciary responsibilities of the Board of Trustees. The Finance Director asked the City Attorney if she knew of anyone else that is withdrawing their funds. The City Attorney said all she knew is that the implications is whatever one of the School Boards do, all the Superintendents throughout the State will do, and it is unknown whether or not that will happen.  12 -20 -07 Emergency Council meeting 263 INVESTMENTS IN THE SBA cont. Mr. Garvie wished to know if the entities have a cause of action against the fund and if the fund is backed up by insurance. The City Attorney said to her knowledge it is' not insured because it is an investment fund, and attorneys across the state are trying to figure out if there is a cause of action. She said it comes down to SEC law and whether or not they violated some form of Securities and Exchange Commission Rules and Regulations. She said that is