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HomeMy WebLinkAboutMinutes 04-23-2008 ST. LUCIE COUNTY INVESTMENT COMMITTEE SPECIAL MEETING _________________________________________________________________ Date: April 23, 2008 Convened: 8:10 a.m. Tape: 1 Adjourned: 9:00 a.m. _________________________________________________________________ Present: Howard Conklin, Chairman; T.J. Buckley, Todd Bevan; Edwin M. Fry, Jr., Clerk of Circuit Court; Shai Francis, Finance Director; Lauri Heistermann, Deputy Clerk Absent: Chris Fogal, excused; Mike Dillman, Un-excused ________________________________________________________________ Tape 1 I MINUTES The meeting was opened by Howard Conklin, Chairman. The minutes from the January 23, 2008 meeting were reviewed. It was moved by T.J. Buckley and seconded by Todd Bevan to approve the minutes from the January 23, 2008 meeting; and upon roll call motion carried unanimously. The minutes from the March 19, 2008, Special meeting were reviewed. It was moved by T.J. Buckley and seconded by Howard Conklin to approve the minutes from the March 19, 2008 Special Meeting; and upon roll call motion carried unanimously. II. PRESENTATION OF QUARTERLY INVESTMENT REPORT The Clerk of Circuit Court presented the quarterly investment report for St. Lucie County for March 31, 2008. The Clerk of Circuit Court reviewed the investment schedule as of March 31, 2008. The Clerk of Circuit Court stated that the total investments are $368,260,303. He stated that the market value reflected was $358,847,989 and this is because there is no market value for Fund B in the State Board of Administration. He stated that there is $12,548,983 in Fund B. He informed the Committee that we have not had the ability to draw down from Fund A. 1 He stated that those funds are available, but there is a cost of 2% if we draw down when it is not opened by the State Board of Administration for draw down. Howard Conklin asked when the last draw down from the State Board of Administration occurred. The Clerk of Circuit Court stated that the last withdrawal was January 18, 2008. The Finance Director stated that there was $1,080,000 transferred to Fund A. Todd Bevan questioned the restrictions on Fund A. The Clerk of Circuit stated that there really is no restriction on Fund A. He stated that if we wanted to withdraw the balance of $76,818,150 today, we could do so, but there is a 2% charge. He informed the Committee that the last time we were able to withdraw funds without paying the redemption fee was in January, 2008. He stated that at that point there were funds withdrawn out of the pool. He informed the Committee that back in December, 2007 we had about $143,000,000 in the State Board of Administration and as of March 31, 2008 there was only $88,000,000. He informed the Committee that the investment earnings are also available from time to time. Howard Conklin asked what was happening statewide. The Clerk of Circuit Court stated that there were a couple of County’s that decided to go ahead and pay the redemption fee and pull all of their funds out, but it had been isolated. He advised the Committee that the State Board of Administration had contracted with Federated to manage Fund A. He stated that the State is looking for a new Executive Director for the State Board of Administration, which will be overseen by Federated. He stated that he felt that within the next 9 to 18 months Fund B should be resolved based on comments from the State level. Howard Conklin requested that the website for the State Board of Administration be provided to the Investment Committee members so that they could request periodic e-mail communications. The Clerk of Circuit Court reviewed the schedule of SBA Investment Activity as of March 31, 2008. He informed the Committee that the Fund B balance right now is about $11,500,000. The Clerk of Circuit Court reviewed the US Treasury Portfolio as of March 31, 2008. He stated that the face amount is $63,871,851 and the market value is $67,008,520. 2 Howard Conklin asked that if the County was to sell any of the 5 year T-Notes, what the penalty would be. The Clerk of Circuit Court stated there would be no penalty. Howard Conklin suggested that the Money Managers liquidate the 5 year T-Notes if they feel that the market value would be lost. The Clerk of Circuit Court reviewed the Money Market account as of March 31, 2008. He informed the Committee that the Money Market account currently has $164,391,906.25. He stated that there is $8,000,000 in Certificate of Deposits. He informed the Committee that we would be purchasing additional Certificates of Deposit with Gulfstream Bank based on results through the bid process. He stated that the 13 month rate was 3.75%, the 5 month rate was 3.25% and the 25 month rate was 4.0%. Howard Conklin recommended changing Bear Stearn to JP Morgan due to the take over. The Clerk of Circuit Court stated that we utilize Bear Stearn and Suntrust as a money market alternative. The Finance Director informed the Committee that the Reserve Primary fund with Bear Stearns does not exist anymore. All of the funds go directly to Black Rock. Todd Bevan recommended keeping track of what is going on with the investments with Bear Stearns and Suntrust. He stated that he felt Suntrust was still pretty solid. The Clerk of Circuit Court stated that all investment activity was in compliance with the bid process as outlined in the Investment Policy. All of the investment categories and portfolio composition percentages are in accordance with the Investment Policy. III. OPEN ITEMS 1.Status of RFP – Investment Management Services The Clerk of Circuit Court informed the Committee that he had requested that he be placed on the Board of County Commissioners agenda for the April 22, 2008 meeting to request that the Board approve moving forward with the Investment Management Services. 3 He stated that the County Administrator contacted him and stated that he was not sure this required Board approval. The County Administrator was going to talk to the County Attorney and pull the item from the Agenda. He informed the Committee that he and the Finance Director had reviewed the Investment Policy and could not find where Board approval was required for Money Managers, since the Investment Policy had been changed to incorporate Money Managers. He informed the Committee that had sent written correspondence to the County Administrator agreeing that it did not require Board approval. He thanked the Committee members for taking the time to meet with the Commissioners regarding the Money Managers. He informed the Committee that at this time we were preparing a draft agreement that will be sent to the top three firms. Howard Conklin stated that time is of the essence due to the status of the market. The Clerk of Circuit Court stated that we had received a draft agreement from PFM, Sawgrass and Capital Guardian. He stated that all three draft agreements were pretty similar. He stated that $105,000,000 will come out of the money market account to be distributed equally between the 3 Money Managers. This will take the money market account from $164,000,000 to about $60,000,000. He informed the Committee that at this time we will leave the funds that are in the Florida Local Government Investment Trust alone. He recommended to the Committee that we liquidate all of the 5 year treasuries and keep all of the 2 year treasuries until maturity. He stated that there is about $24,000,000 face value in the 5 year treasuries. Howard Conklin stated that this was an excellent recommendation. The Clerk of Circuit stated that since we were moving toward the Money Managers to manage the longer term portfolio, the money obtained from the liquidation of the 5 year treasuries could be utilized for the Money Managers. He informed the Committee that internally we would only deal with investments of 1 year or shorter. Todd Bevan asked if there would be anyway to do a comparison between the 3 Money Managers and what they had invested in. 4 The Clerk of Circuit Court stated that to some extent the 3 money managers will have money invested in the same types of investments because they are all bound by the County’s Investment Policy in terms of Treasuries and agencies with a maturity of 5 years or less. Howard Conklin asked if the portfolios for each Money Manager would be exchanged between the Money Managers. The Clerk of Circuit Court stated that this was not considered. He stated that his vision was to allow each Money Manager to invest $35,000,000 in the way they felt was the best for the County and independently. He stated that after an 18 month period of time we would have a better idea on how each Money Manager was performing. He stated that it was possible that in a two year period of time we could look at expanding what the Money Managers could do. Todd Bevan asked for a snapshot of the portfolio on a quarterly basis. The Clerk of Circuit Court stated that this would be required as part of the agreement. He stated that also as part of the agreement, they must be available to answer any questions during the quarterly meetings by conference call. Also, upon the Investment Committees request, they could be required to attend a quarterly meeting. Todd Bevan asked if any of the Money Managers stated that the Investment Policy was to conservative. The Clerk of Circuit Court stated that they all recognize that the Investment Policy is conservative, but it is a governmental agency. Howard Conklin stated that he would be interested in hearing feedback from the Money Managers about what other governmental entities are investing in. The Clerk of Circuit Court stated that he was sure that as we move forward the Money Managers are going to have recommendations to diversify the risk and pick up the yield. Howard Conklin stated that the meetings with the Commissioners went well. 5 The Clerk of Circuit Court stated that the recommendation would be to liquidate all of the 5 year treasuries, hold on to all of the 2 year treasuries until maturity and not purchase anymore treasuries. The goal at this point in time would be to manage short term investments internally of 1 year or a little more in Certificate of Deposits or Money Market accounts with the longer term investments being managed by the Money Mangers. It was moved by Todd Bevan and seconded by T.J. Buckley to approve the recommendation; and upon roll call motion carried unanimously. The Clerk of Circuit Court stated that by next week we should have the agreements with the Money Managers signed and the money transferred to the bank. He informed the Committee that we already have the agreement with US Bank and $35,000,000 will be deposited into the 3 different accounts and each Money Manager will have access to those funds. He stated that any trade that the Money Manager executes will be copied to the County so that investments can be monitored. All trades will be done delivery vs. payment. He informed the Investment Committee that it will be challenging for the County over the next two years due to the drop off in revenues of about $51,000,000. IV.COMMITTEE COMMENTS/RECOMMENDATIONS There were no comments/recommendations V.SELECT DATE OF NEXT MEETING The next scheduled Investment Committee meeting is scheduled for July 23, 2008 at 8:05 a.m. VI. There being no further business the meeting was adjourned at 9:00 a.m. 6