CITY OF KNOXVILLE PENSION BOARD
MINUTES
THURSDAY – November 9, 2006
8:15 A.M.
917B E. 5TH AVENUE
The regular meeting of the City of Knoxville Pension Board was held in the Pension Board Conference Room at 917 E. 5th Avenue at 8:15 a.m. on November 9, 2006.
Present were: Mayor Haslam, Mr. Scott Calloway, Mr. Greg Coker, Mr. Buddy Harrell, Mr. Stephen King, Mr. Larry Martin, Ms. Barbara Pelot, Mr. Michael Cherry and Attorney Bud Gilbert.
Also present: Mr. Dan Holmes, Summit Strategies; Mr. Tom Digenan and Mr. Mike Lammers with UBS Global Asset Management; Ms. Tuba Malinowski with RREEF.
CALL TO ORDER:
Mayor Haslam presided and called the meeting to order at 8:19 a.m.
APPROVAL OF REGULAR MEETING MINUTES FOR October 12, 2006
Mr. Martin made a motion to approve the October 12, 2006, meeting minutes. Ms. Pelot seconded the motion. The motion carried unanimously by the members present.
APPROVAL OF REVISED AGENDA: Exhibit 1
The Revised Agenda was approved without objection.
CONTRACTS:
Custody and Securities Lending Service Provider Search
Mr. Holmes reviewed with the Board the results of the custody and securities lending service provider search that was completed by Summit Strategies. After a discussion with Mr. Holmes, and upon his recommendation to the Board, the following motion was made:
Motion: Ms. Pelot made a motion to renew the present contract with State Street for a 5 year term with a fixed price for custodial services and a transaction based fee for benefit payments and tax reporting. The motion for renewal is contingent upon completion of a contract including the proposed fees. Mr. Harrell seconded the motion. The motion carried unanimously by the members present.
ADMINISTRATIVE MATTERS:
Post Retirement Benefit Adjustment Resolution – Exhibit 2
Motion: Mr. Martin made a motion to approve the Post Retirement Benefit Adjustment Resolution as presented by the Executive Director in the agenda packet. Ms. Pelot seconded the motion. The motion carried unanimously by the members present.
Schedule Pension Board Meetings for First Quarter 2007
Thursday, January 11, 2007 – 8:15 a.m.
Thursday, February 8, 2007 – 8:15 a.m.
Thursday, March 8, 2007 – 8:15 a.m.
It was the consensus of the Board to accept the Pension Board meeting schedule for the first quarter 2007.
EXECUTIVE DIRECTOR COMMENTS:
The Personnel Committee made a motion to grant a performance pay bonus of $1,500.00 to each of the two staff members. The motion was seconded by Mr. Martin. The motion passed unanimously. In addition the committee proposed a policy for annual staff reviews and performance pay eligibility. Legal counsel was asked to draft a policy statement for the Board’s review at the December meeting.
Mayor Haslam left the meeting at 8:53 a.m.
ATTORNEY COMMENTS:
Cadogan Contract (alternative investment contracts)
Mr. Holmes addressed the concerns of the Pension Board from the November 2006 meeting. The investment will be made in the Cadogan Alternatives Strategies Trust (CAST) via an off shore corporation in the British Virgin Islands. This arrangement avoids the trust being subject to the Unrelated Business Income Tax. The British Virgin Island corporation has been in existence for 11 years with numerous clients including other public pension funds. The redemption language is much clearer and consistent with language in more traditional investment contracts.
Mr. Holmes also advised the Board that Cadogan was being sold to Fortis, a large European banking firm which will have majority ownership. Mr. Holmes discussed the terms of the sale and indicated that Summit Strategies feels this transaction will be beneficial for both entities. Mr. Holmes recommends the Board proceed with the completion of a contract with Fortis/Cadogan.
Motion: Mr. Martin made a motion based on the comments and recommendation from Summit Strategies to affirm the hiring of Cadogan as a new Hedge Fund Manager contingent upon completion of a contract. Mr. Harrell seconded the motion. The motion carried unanimously by the members present.
UBP Contract (alternative investment contracts)
Attorney Gilbert advised the Board that he would proceed with the legal review of the UBP Contract, the other Hedge Fund Manager that the Board hired along with Cadogan at the June 9, 2006, board meeting.
ENROLLMENTS:
The following General Government employees have filed applications to become members of the Plan G1 pension system.
Clyde J. Cole
Tara L. Davis
David W. Holiway
Mark S. Kolander
Joyce P. Minter
Jennifer Ridgeway
Sherry L. Rotolo
Raymond Thornton
Motion: Ms. Pelot made a motion to approve these applications for enrollment in the Plan G1 pension system. Mr. Harrell seconded the motion. The motion carried unanimously by the members present.
WITHDRAWALS:
The following employee(s) have filed applications to withdraw employee pension contributions plus 4% interest and the supplemental retirement account as applicable in Plan G Option 1.
Ralph D. Branche, General Government, Plan G1 – Non-vested
Dennis C. Griffin, General Government, Plan A - Vested
Charles E. Lawson, General Government, Plan G1 - Vested
James Leek, General Government, Plan G1 – Non-vested
Barbara J. Maffei, General Government, Plan G1 – Vested
Ronald Majors, Police Dept., Plan C – Non-vested
Mary Robertson, General Government, Plan G1 – Vested
Michael E. Teaster, General Government, Plan G1 – Non-vested
Motion: Mr. Harrell made a motion to approve these applications for withdrawal of employee contributions. Mr. Coker seconded the motion. The motion carried unanimously by the members present.
RETIREMENTS:
APPLICATION FOR PARTICIPATION IN THE DELAYED RETIREMENT OPTION PROGRAM (DROP): PURSUANT TO CHARTER SECTION 1371.8 – PLAN G.
The following employees have chosen a Delayed Retirement Option and will receive a one-time payment of the accumulated monthly benefits on termination of employment with the City of Knoxville.
Larry G. Hensley, General Government – Plan G2 Option A-7
50% with reinstatement
Date of birth, March 16, 1952: 54 years of age
Total credited service: 30 years 4 months 14 days
Average monthly salary for 2 highest – 12 month periods, $3,285.26.
$3,285.26 x .021 = $68.99 x 30.37169 = $2,095.34. Mr. Hensley chose Option A-7 – 50% with reinstatement to Glenda Darlene Hensley, spouse. $2,095.34 x .9115 =
$1,909.90 pension effective November 1, 2006.
DROP complete October 31, 2008.
Motion: Mr. Harrell made a motion to approve this application for DROP retirement payable under Option A-7. Mr. Coker seconded the motion. The motion carried unanimously by the members present.
Robert E. Lawhorn, General Government – Plan G2 Option A-6
100% without reinstatement
Date of birth, May 9, 1953: 53 years of age
Total credited service: 33 years 3 months 2 days
Average monthly salary for 2 highest – 12 month periods, $4,330.93.
$4,330.93 x .021 = $90.95 x 33.25548 = $3,024.59. Mr. Lawhorn chose Option A-6 – 100% without reinstatement to Mildred D. Lawhorn, spouse. $3,024.59 x .8921 =
$2,698.24 pension effective November 1, 2006.
DROP complete October 31, 2008.
Motion: Mr. Harrell made a motion to approve this application for DROP retirement payable under Option A-6. Mr. Coker seconded the motion. The motion carried unanimously by the members present.
APPROVAL OF INVOICES FOR PROFESSIONAL SERVICES:
Bryan, Pendleton, Swats & McAllister – Actuary (August 2006) $14,026.00
Calamos – Money Manager (3rd Qtr. 2006) 42,305.00
STW Fixed Income – Money Manager (3rd Qtr. 2006) 33,839.59
TCW Cowen – Money Manager (3rd Qtr. 2006) 89,603.67
UBS – Money Manager (3rd Qtr. 2006) 24,611.27
Mr. Cherry, Executive Director, has reviewed the bills and certifies that they are consistent with the services provided and are within the budgeted figures of the system’s financial plan.
Motion: Ms. Pelot made a motion to approve payment for these bills. Mr. King seconded the motion. The motion carried unanimously by the members present.
OTHER:
INVESTMENT MATTERS:
Small Cap Manager Search – Exhibit 3
Mr. Holmes distributed to the Board a finalist comparison handout of the two Small Cap Value firms interviewed by the Board at the October 12, 2006, Pension Board Meeting. Mr. Holmes reviewed with the Board their discussion of the two firms and the decision by the board members to hire AQR Capital Management as the new small cap value equity manager at last month’s board meeting. The full Board affirmed the decision to hire AQR as manager of a small cap value portfolio.
Mr. Coker requested a brief recess at 9:53 a.m. and the meeting resumed shortly thereafter.
Money Manager Reviews
UBS Money Manager Review
Mr. Tom Digenan and Mr. Mike Lammers with UBS Global Asset Management made a presentation and distributed a written report. A copy is on file in the Pension Office.
RREEF – DB Real Estate Money Manager Review
Tuba Malinowski with RREEF made a presentation and distributed a written report. A copy of the report is on file in the Pension Office.
Dan Holmes – Summit Strategies
Mr. Dan Holmes made a presentation of the 3rd Quarter 2006, Performance Report. A copy of his report is on file in the Pension Office.
Mr. Martin left the meeting at 11:11 a.m.
PUBLIC COMMENTS: None
ADJOURNMENT:
There being no further business, the following motion was made:
Mr. Coker made a motion to adjourn the meeting at 11:15 a.m. Mr. Harrell seconded the motion. The motion carried unanimously by the members present.
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Chair
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Date
M:\Board\minutes\2006\november.doc