Plymouth Retirement Board Monday, November 30, 2009 8:30 a.m. Retirement Board Conference Room
Chairman Thomas Kelley called the meeting to order at 8:45 a.m. in the conference room of the Plymouth Retirement Office. Board members were present were Lynne Barrett, John Murphy, Shawn Duhamel & Richard Manfredi. Debra Sullivan and Wendy Cherry of the Retirement Office were present, as was Atty. Michael Sacco & Tony Tranghese of FIA.
Section I: Regular Business – Regular Meeting
Minutes:
Minutes dated October 29, 2009: Regular Board Meeting
Motion to approve minutes made by Mr. Manfredi; seconded by Ms. Barrett. Unanimously voted.
Warrant:
Warrant #10, dated October 31, 2009: $1,581,347.67 (Partial)
Warrant #11, dated November 30, 2009: $ 61,059.62 (Partial)
Warrant #12, dated December 31, 2009: $ 3,545.76 (Partial)
Motion to approve warrants made by Mr. Manfredi; seconded by Ms. Barrett. Unanimously voted.
Public Comment: None
Section II: Solicitation & Correspondence:
PERAC Memo’s:
The Board received & reviewed the following PERAC Memo’s:
PERAC Memo #42/2009: Regulations Dealing with New Definition of Regular Compensation
PERAC Memo #43/2009: 840 CMR 10:10(3) &10:15(4)Annual Review of Medical Testing Fees
PERAC Memo #44/2009: Hedge Fund Guidelines
Extension to Funding Schedule & Actuarial Valuation:
PERAC:
John Boorack, Actuarial Analyst from PERAC, has asked what the Board plans regarding future funding schedules if the legislature does not extend the funding schedule to 2040.
Motion made by Mr. Duhamel to send Mr. Boorack a copy of the letters addressing this issue previously given to Joseph Connarton and James Lamenzo, dated September 4, 2009. (See attached).
Actuarial Valuation Presentation:
Larry Stone was present to discuss the possible 29-year extension of the funding schedule to 2040. Mr. Stone told the Board that because they have adhered to a strict and prudent funding schedule, utilizing at least an 8% interest rate, they are in top third performing systems in the State. He told the Board that most retirement systems in the Commonwealth will not benefit from this extension, as they are to far behind to catch up, even with an extension to year 2040.
He presented several different options to the Board:
Fiscal Year $ Increase over FY 2011 % Increase over FY 2011
2012 $182K 2.4%
Proposed minimum allowable schedule of 29 years (to 2040) with a 4.0% amortization increase
2012 $1.5 million 19.6%
The increase using the current max allowable schedule of 19 years (to 2028) with a 4.5% amortization increase. This scenario demonstrates the schedule if the current legislation does not pass.
Beginning in 2012, if the System increased their contribution by 8%, it would be fully funded between 2025 – 2026. The appropriation in year 2025 would be $22.3 million, an increase of $14.7 million in 14 years.
The next actuarial valuation is required is the January 14, 2010 valuation.
Motion made by Mr. Duhamel to send a letter to House Senate President Murray explaining why a ten-year extension to the funding schedule will not be enough for a large amount of retirement systems; seconded by Mr. Murphy. Unanimously voted.
Motion made by Ms. Barrett to have Larry Stone conduct a preliminary valuation for January 1, 2009; seconded by Mr. Manfredi. Unanimously voted.
Annual Manager Reviews:
The following managers were present for their annual investment performance review:
Intercontinental Real Estate:
Devin Sullivan, Client Representative & Paul Nasser, CFO & COO, were present for their annual performance review with the Board. Fund IV is a closed-ended, value-added real estate investment strategy containing 6 investments. The fund is closed to investors and the Boards’ initial $3 million investment has been completely drawn down. Mr. Nasser told the Board that the fund does not fully mature until 2016, so there is plenty of time to wait out the market for appraisals to gain value. The six investments within the portfolio are as follows:
Waterplace, Providence RI:
Waterplace is two residential buildings, containing 193 units, and is now 82% occupied. Originally developed to sell as condos, a large number of these units are now rented, with the goal to sell as condos once the real estate market picks up. This property will break even with its investment once it is 95% occupied.
Ten Fax, Quincy, MA:
Ten Faxon is a luxury 200-unit apartment building in Quincy MA that is now 88% occupied with rentals. This property is already at break-even level.
371-401 D Street, Boston MA:
This is unimproved land that will no longer be developed by Intercontinental. Their goal is to hold this land and sell off the entire property, most likely to the nearby Convention Center for a parking area or hotel. This loan has already been paid off.
Lot E, New Haven, CT:
Lot E is a mixed-use project, which is almost complete, and has been leased to New Haven Hospital for 25 years, with a contract to buy the property at the end of the lease.
Howard Legion Project, New Haven, CT:
This property has been sold to the New Haven Hospital for construction of a parking garage.
Watermark, Portland, ME
Watermark is debt-free property located across from Portland Harbor that will be sold once the market stabilizes.
Mr. Nasser told the Board that there is currently $12 million left in Fund IV and that no more money will be invested into this fund. He told the Board that they expect the next 12 months will continue to be tough for closed funds, but it is a very exciting time for new funds with all of the opportunities available right now.
Boston Trust:
Mark Cushing was present from Boston Trust to discuss the annual performance for the Small-Cap Core fund. Boston Trust is a privately held firm with 20 investment professionals with a total of 54 employees and $4 billion in assets under management. Mr. Cushing told the Board that there have been no layoffs or staff reduction, but have added three employees to their staff.
Valued at $10.1 million and representing 10.3% of assets, at period ended October 31, 2009, the fund out-performed the both the Russell 2000 Index with –4.40% vs. –6.79%. Year-to-date performance also out-performed with 17.09% vs. 14.12%.
When asked about his outlook for 2010, Mr. Cushing told the Board that he is not expected much improvement in the bond market, in particular, the junk bond market, which did well during 2009. He added that he expected a 10%-15% increase in stocks during 2010, with small-cap stocks expected to do better than large-cap stocks.
Investment Update as of October 31, 2009 from FIA:
Tony Tranghese of FIA presented the October 2009 Investment Performance Flash Report. On October 31, 2009, the portfolio was up 17.3% year-to-date, a total fund value of $98.4 million. The 1-year performance is up 13.2% from December 31, 2008.
Mr. Tranghese told the Board that PRIT will be at the Board’s December 18, 2009 meeting for their annual review. At this meeting, the Board should vote whether or not they would like to enter into the PRIT Vintage Year 2010 Fund. The deadline to enter into this fund is December 31, 2009.
Internet Security Information:
Jack Boyle & Don Stevenson from Clever Minds were present to discuss 2 security systems with the Board, Mozy Pro & Logmein, which they would like to use to support and maintain the Retirement Office network. Mr. Boyle told the Board that its good to have more than one back-up system in place, and recommended that both back-ups be encrypted while data is being transferred, as well as stored encrypted. Mr. Boyle suggested that the primary back-up be outsourced to Mozy Pro, and a secondary back-up be done quarterly, on-site with a USB disc drive. This disc could be transported by the Retirement Office staff and stored off-site, encrypted, in a locked, fireproof & secure location. Since PTG is a web-based software, data from it is not stored on the Retirement Office server, which will lessen the amount of data to back-up. Mr. Stevenson also recommended this type of back-up procedure, as well as Logmein, which is a web-based program that would allow them to gain access to the Retirement Office computers from a remote location. Mr. Stevenson notified the Board that the existing server needs to be replaced soon, and recommended that they purchase a new Dell server, which costs approximately $3500 - $5000, along with several USB disc drives for on-site, quarterly back-ups.
Chairman Kelley asked Atty. Sacco to review the proposal presented by Clever Minds to ensure that MozyPro and Logmein are compliant with PERAC & Massachusetts Privacy laws.
Motion to purchase new Dell server and USB disc drives made by Mr. Manfredi; seconded by Mr. Duhamel. Unanimously voted.
Motion to implement dual-back up system, using MozyPro for primary back-up, and Logmein for remote access, made by Duhamel; seconded by Mr. Manfredi. Unanimously voted.
Mr. Boyle told the Board that they will be preparing a maintenance agreement for the Board in the near future. This maintenance would primarily cover two hours per month of off-site maintenance and a quarterly visit to the office.
Investments:
The Board received the following investment correspondence:
- Capital Markets Flash Report – October 2009
- Wellington CIF II Core Bond Fund Report – October 2009
- PRIM Board has announced a deadline of December 31, 2009 to enter into their Private Equity Vintage Year 2010 portfolio. Board to discuss and vote.
Portfolio Monitoring Services:
Richard Lorant, Client Representative & Leslie Stern, Attorney for Berman DeValerio were present to discuss their proposal for portfolio monitoring services with the Board. Berman DeValerio is a Boston-based law firm that offers 3rd party monitoring services. Chairman Kelley shared his concerns with Ms. Stern that when a claim is settled, the Boards’ custodial bank, State Street, is contacted. Ms. Stern assured Chairman Kelley that they are in touch regularly with State Street regarding claims that one of their clients may be entitled to, and that State Street is always responsive and proactive in the collection process. Berman DeValerio uses a web-based monitoring system that tracks claims and notifies clients and their custodial banks when they are entitled to a settlement, and also provides access to claims filing documents. Mr. Lorant told the Board that his firm is very selective in which cases are pursued and litigated. Berman DeValerio is a law firm that is equipped with staff ranging from paralegals to former FBI agents specializing in white-collar crime, to forensic accountants. Ms. Stern also told the Board that if a client is concerned on a particular case that they are not the lead firm or even involved with, they will also follow that claim for the client. There is no cost to the Retirement System for this monitoring service.
Motion made by Mr. Duhamel to go forward with the contractual services of Berman DeValerio; seconded by Mr. Manfredi.
IAC Request/Staff Issue:
Update: Susan Turner will use her personal earned time to help the IAC and perform the service of taking minutes for the meetings.
Section III: Membership
Refunds:
School:
Jones, Shelley, Group 1, Security Receptionist
3 years, 6 months service (12/12/05 – 9/1/09)
Total rollover amount: $2433.23 (no FWT)
Motion to approve refunds made by Mr. Manfredi; seconded by Mr. Duhamel. Unanimously voted.
Retirements:
Town:
Burke, Michael, Group 4, Police Sergeant
33 years, 2 months service (9/15/79 – 11/28/09)
Superannuation retirement, opt c
Retirement date: November 28, 2009
Rapoza, Thomas, Group 1, Zoning Inspector
33 years, 5 months service (7/19/76 – 12/31/09)
Superannuation retirement, opt a
Retirement date: December 31, 2009
School:
D’Ambrosio, Kathleen, Group 1, Computer Lab Aide
18 years, 4 months service (9/12/97 – 12/15/09)
Superannuation retirement, opt c
Retirement date: December 15, 2009
Sherman, Joyce, Group 1, Cafeteria Worker
20 years, 7 months service (5/18/89 – 12/18/09)
Superannuation retirement, opt
Retirement date: December 18, 2009
Motion to approve retirements made by Mr. Manfredi; seconded by Mr. Duhamel. Unanimously voted.
Transfers:
Town:
Salmon, Catherine, Assessing Data Analyst
9 years, 4 months service (4/24/00 – 9/18/09)
Total amount to be transferred: $50,627.525
Transferring to: Plymouth County Retirement Assoc.
Motion to approve transfer made by Mr. Manfredi; seconded by Mr. Duhamel. Unanimously voted.
Notice of Refund Owed to Retirement Board from Accidental Disability Retirees:
Section 91A Hearing:
PERAC has notified the Board that Ken Rood, Group 4, former Police Department employee owes $12,912.38 for excess earnings in calendar year 2008, due by December 9, 2009. Mr. Rood was present for the hearing. Mr. Rood asked the Board for a waiver or reduction of this fee, and explained that it would cause a personal financial hardship for him to pay this amount by the December 9, 2009 due date. Attorney Sacco explained to Mr. Rood that that there is nothing that the Retirement Board can do to change or waive this amount due, as it is not a Board policy, but a statue set forth in M.G.L. Chapter 32, Section 91A. Attorney Sacco explained to Mr. Rood that the Board only has the discretion to withhold his allowance, less health insurance premiums, until the debt is paid, in place of a lump sum payment. If Mr. Rood does not make arrangements to re-pay this debt in either form before December 9, 2009, his entire retirement allowance will be withheld until such time the debt is repaid in full. Mr. Rood agreed to have the Retirement Office withhold all amounts, excluding health insurance premiums, from his month allowance until his entire debt has been satisfied.
Mr. Duhamel told Mr. Rood that there is currently a bill pending in the legislature that would increase the allowed additional earnings on an Accidental Disability from $5,000 to $15,000 per year. Mr. Duhamel told Mr. Rood that he would keep him updated on the progress of that bill.
Motion made by Mr. Duhamel to begin withholding Mr. Rood’s retirement allowance, excluding health insurance premiums, until the debt has been fulfilled, beginning with check date January 31, 2010; vote seconded by Ms. Barrett. Unanimously voted.
Board Policy: Disability Applicant Hearings:
Board to discuss current policy in place which states that a disability applicant shall appear before the Board after the medical panel certificates have been received, in addition to the initial evidentiary hearing. This policy was adopted at the Boards’ April 1998 meeting.
Attorney Sacco told the Board that, in general, it is not necessary to require an Accidental Disability retirement applicant to appear after the medical panels have been received from PERAC. The applicant is required to attend an evidentiary hearing once all of the medical notes have been collected at the beginning of the process. It is at this point that the Board votes whether or not to forward the application to PERAC for medical panel examinations. From time to time, the Board may want to have an applicant come back for more information or clarification after the medical panels have been received, but in most cases it is not necessary. The applicant and their attorney, if applicable, is always notified of the Board’s upcoming vote in advance of the meeting and invited to attend, but told in writing that their attendance is not necessary.
Motion made by Mr. Manfredi to amend the policy to leave it to the discretion of the Board, on a case-by-case situation, if the applicant will be asked to come back after medical panels have been received by the Board; seconded by Mr. Duhamel. Unanimously voted.
Section IV: General Business
Accidental Disability Calculation:
Mr. Duhamel told the Board that the Calculation of Accidental Disability Retirement Allowances, in , which changed the formula by which the allowance of an accidental disability retirement is calculated, has been omitted by the legislature and will not be used in calculations. Mr. Duhamel told the Board that House Senate President Therese Murray had a large role in this and would like to send a thank you letter on behalf of the Board for her efforts in eliminating this unfair change of Section 8 of M.G.L. Chapter 32 Section 7(2)(a)(ii) in Chapter 21 of the Acts of 2009 Pension Reform.
Next Meeting: Thursday, December 18, 2009, 8:30 a.m.
Adjournment: Motion made by Mr. Duhamel to adjourn the meeting at 12.25 p.m.; seconded by Mr. Murphy. Unanimously voted.
Respectfully Submitted, Wendy Cherry
The Town of Plymouth Retirement Board unanimously voted to approve these minutes at their meeting held on Friday, December 18, 2009. Original signed minutes are available at the Retirement Office, 10 Cordage Park Circle, Suite 240, Plymouth MA.
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