Fort Walton Beach Council agenda — 06-24-03 regular Council agenda — reading text

Do Not Concur m Reid Silverboard, City Manager Attachments: Ordinance 1562 - Firefighters Pension Trust Fund Ordinance 1563 - Police Officers Pension Trust Fund Letter - Larry Cole Letter - H.Lee Dehner Letter - Jim Linn Docid: C:\ Documents and SettingsUSHANAHAN\ My Documents\Pension\ Fire Plan\ Equity Limits Staff doc Report.. Page 2 1. J. Q U...: J .......-,..., eI c:u.,..;, ,",,,",.I. C YU ( \ 01' u u,,. u Merrin Lynch Consulting Services 50 North Laura Street Suite 3600 Jack~ nville, Aorida32~ 904 634 6007 904 634 6008 FAX 800 720 8211 Merrill Lynch June n, 2003 Joycc A. Shanahan Fimancc Director City of Fort Walton Beach 107 Miracle Strip Parkway SW P.O. Box 4009 Fort Walton Beach, FL 32549 DCAr Joyce, we are consull2nt to the Police and Fire pension plans, as the As we discussed at our recent meeting. stock.)limits in these that diminateS cost basis restrictions OIl the equity ( an ordinance change rcc() 1lding tD11le. based on the market valuc of the stoeks contain limits instead that the l2nguage plans. We are recommending risk in the portfolios. This is a much better control of the. relative to the total market wIue of the plans. stoCks even of not bcis1g able to pmchasc additional The poJice and Ftte phns are in the unique posi.rion in the local value in stocks. The cost basis b. n guage 50% of the portfolios' maIket though thq hlWC less than maIket wlue of the toW portfolio. When cost value of me stocb by the oxdinancc is computed by dividing the became the new cost basis 1UCIlt mukct l vJ& ue of ycan ago, the rhcn C\ the funds changed managers a couple due to difficult market With a dec1ioe in the value of the total value of the portfoJios fur me new managers. ordinance Imguagc. 1ms cost the 50% limit mandated by me current conditions,the cost basis now exceeds Police 81id as a xesult of language mat exists in Florida Statutes for basis language is in many local OIdioabces doesn't m2ke . much sense to a pcosion fund with nO tax implicatiom. Fire plans. Quite fraokIy, mat language maIkct. As most foIcc the ~ to scl1 stocks in a declining In met,the current language aaually could would agree,it is better to buylow and sell high than the reverse. market value limits on the stOcks. A much bctter way to control risk in II.pension fund portfolio is by placing market V21uc limit on the stocks in the portfolio- Thus the recommendation that the ordinance allow for a 70% stocks aM 40% bonds. The urget index would remain at 60% to meet with us and present this to Council. Tbank you again for taking the rime Sincerely, I.. arry-~  LEWIS, loNGMAN & WALKER, PA ATTORNEYS AT LAW REPLY To: TALLAHASSEE HELPING SHAPE FLORIDA' S FUTURE@ June 12, 2003 ERIC ASH KRISTIN K BENNETT W; O. BIRCHFIELD Mark W. Wiltsie JODY LANE BROOKS WIlliAM G. CAPKO Human Resources Director BETH ANN CARLsON City of Fort Walton Beach MICHELLE DIFFENDERFER Post Office Box 4009 ROBERT P. DIFFENDERFER Fort Walton Beach, FL 32549- 4009 KENNETH W; DODGE AMY M. DUKES BRENNA MAwUF DURDEN Re: Proposed Ordinances Amending the Police Officers' and LAURA JACOBS FEAGIN ROSLYNN M. FERGUSON Firefighters' Retirement Plans WAYNE E. FWWERS JOHN W; FOREHAND Dear Mark: WALTER E. FOREHAND MEUSSA GRoss. ARNoLD KEvIN S. HENNESSY I have reviewed the draft ordinances amending the City' s police and R. STEVEN LEwIs firefighter retirement plans, that were enclosed with Lee Dehner' s letter TERRY E. LEwIs of June 5, 2003 to the City Manager. The proposed ordinances are JAMES W; LINN ANNE loNGMAN legally sufficient and acceptable as to form. Because I am not familiar G. STEPHEN MANNING with the investment policies and practices of the two pension funds, I DAVID E. RAMBA express no opinion concerning increasing the equity limit on pension KENNETH G. SPlWAS fund investments from 50% at cost to 70% at market. EDWIN A.STEINMEYER GLENN E. THOMAS STEPHEN A.WALKER Please call me if you have any questions. With best regards, I am www. llw.law.com Sincerely, ine office Jackson.. 9428 Baymeaclows Road Suite 625 W. Linn Jacksonville, Florida 32256 904) 737. 2020 Fax: ( 904) 737. 3221 JWUes Tanaka.. ee Office Post Office Box 10788 ( 32302) 125 South Gadsden Street Suite 300 Tallahassee, Florida 32301 850) 222- 5702. Fax: ( 850) 224- 9242 West Palm Beach Ojf; ce 1700 Palm Beach Lakes Boulevard, Suite 1000 West Palm Beach, Florida 33401 561) 640. 0820 Fax: ( 561) 640. 8202  1 ORDINANCE NO. 1562 2 3 4 5 AN ORDINANCE OF THE CITY OF FORT WALTON 6 BEACH, FLORIDA AMENDING THE CITY OF FORT 7 WALTON BEACH MUNICIPAL FIREFIGHTERS' 8 PENSION TRUST FUND, ADOPTED BY ORDINANCE 9 1174, AS SUBSEQUENTLY AMENDED; AMENDING 10 SECTION 4, FINANCES AND FUND MANAGEMENT, 11 SUBSECTION INVESTMENT POWERS AND 12 AUTHORITY, SUBSECTION 1. C. TO INCREASE THE 13 EQUITY INVESTMETN LIMIT TO 70% AT MARKET 14 RATE; PROVIDING FOR CODIFICATION; REPEALING 15 ALL ORDINANCES IN CONFLICT HEREWITH AND 16 PROVIDING FOR AN EFFECTIVE DATE. 17 18 BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT 19 WALTON BEACH, FLORIDA; 20 21 SECTION 1. That Ordinance No. 1174 of the City of Fort Walton Beach, Florida, 22 adopting the restated City of Fort Walton Beach Municipal Firefighters' Pension Trust Fund, 23 as subsequently amended, is hereby further amended by amending Section 4, Finances and 24 Fund Management, subsection Investment Powers and Authority, subsection 1. C. to read as 25 follows: 26 27 INVESTMENT POWERS AND AUTHORITY 28 29 30 C. The Board of Trustees shall not invest more than five percent ( 5%) 31 of its assets in the common stock, or capital stock of anyone issuing 32 company, norshall the aggregate investment in anyone issuing 33 company exceed five percent ( 5%) of the outstanding capital stock of 34 that company; nor shall the aggregate of its investments, including 35 convertible bonds, under this paragraph at e6Sf market exceed firty 36 pcre:cftt (50%) seventy percent (70%) of the assets of the Fund. 37 38 SECTION 2. All Ordinances or parts of Ordinances in conflict herewith be and the same 39 are