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HomeMy WebLinkAbout1990-04-26 Minutes• • MINUTES OF A MEETING OF THE FIRE BOARD A meeting of the Fayetteville City Fire Board was held on Thursday, April 26, 1990 at 130 p.m. in Room 326 of City Hall. PRESENT: Fire Chief Mickey Jackson, Scott Linebaugh, Firemen Pete Reagan, Mike Bonaduce, and Secretary Sherry Thomas, and Gib Weisbecher of Merrill Lynch. ABSENT: John Dill CALL TO ORDER The meeting was called to order by Scott MINUTES Motion was made by Reagan, of the last meeting. The PENSION LIST Linebaugh. seconded by Dill, to approve the minutes motion passed unanimously. It was noted the list was unchanged from the previous month and Reagan, seconded by Dill made a motion to approve the pension list. The motion passed unanimously. SKELTON RETIREMENT Linebaugh stated that matter. A transcript Skelton's attorney had MAY ELECTIONS there had been no action on the Skelton of the last meeting was provided but Mr. not responded yet. There was discussion about procedure for balloting for the May election. Chief Jackson suggested sending letters stating that persons interested in running for an office or nominating someone else for a position should send back a letter stating such. INVESTMENTS Gib Wiesbecher gave a recap regarding the stock market changes, noting a decline the last several weeks. At the same time, he noted that interest rates have begun to rise. He pointed out that when interest rates go up, so does pressure on the equity markets. This accounts for an approximate 100 point decline just over the last 10 days. Wiesbecher stated he felt it was wise to be very cautious with investments at this time. He stated that the balanced account with capital showed an approximate 39% investment with government bonds, with another 14% being in cash equivalents, bringing the entire portfolio up to 53% in either government bonds or cash. Common stock represents approximately 47% of the • • • April 26, 1990 portfolio with a total portfolio of $2,075,000. He also stated that this portfolio has a very good long range plan that includes government bonds and high quality common stocks. In the Roxbury account, the cash side is approximately 43 1/2% "out of the market". He pointed out the main themes in the portfolio; pollution control, foods and consumer products telecommunications and cellular sectors, and he discussed the merits of the companies invested in relation to today's market trends. Wiesbecher related that the income account is one month short of becoming complete for the CD portfolio, with 46% being represented by money market (cash). He stated that, due to the rising interest rates in the bond market, they would be seeking to commit to some longer term treasury and higher quality corporate bonds in the near future. Wiesbecher also explained "Quarterly Treasury Refunding", which is pay-off of maturing debt on securities and auction of government securities. This consists of a 30 year bond, a 10 year bond and a 3 year note and occurs every three months with the next auction this May. He stated that every time the refunding takes place, interest rates tend to rise just prior to the auction in an attempt to attract foreign investors, particularly the Japanese. Wiesbecher was asked if Oxidental Petroleum had a "stop -gap" or if it should be sold, due to it's continued decline. He said Oxidental had enough underlying assets to warrant holding on to it at this time, with a 9 or 9 1/2% dividend yield to cushion the stock from any further decline. An overview of the investment policy (Pension Fund) was presented with 25% representing stocks, which have a range of 25-50% with a 35% target. Government bonds are represented by 19%, having a range of 15-75% and a 40% target. Noting that the account would decrease soon due to the quarterly treasury refunding, cash (CD's and money markets) are represented by 53%, with a 15% target. "Other" (ML Lee) has a target range of 10%, currently represented by 1.96% When asked what other investments Merrill Lynch recommended, Wiesbecher described an investment called the "Europe Fund", which represents a fund to be managed by S.G. Warberg, one of the largest and most respected management companies in England. Merrill Lynch feels that with trade barriers coming down and more and more economies striving to become "Free Market", Europe will be one of the best places to allocate investment dollars. It will be traded as a "closed end" fund on the New York Stock Exchange, with an annual minimum dividend of 7%. Merrill Lynch recommended a 4,000 share or $60,000 commitment to the Europe Fund, which would raise representation of the "Other" category to approximately 3% and reduce cash. Risk management of currency fluctuation was also discussed. Since the offering period was to end on this day, Merrill Lynch was needing • • • April 26, 1990 a decision of the Board. It was also added that no commission would be paid for purchases during the offering period but that after today, a commission would be charged for future purchases. When asked for comments concerning the decision, Linebaugh stated that he had not had time to review the information, and since the risk factor was great, he would suggest not committing at this time. It was discussed that this would fit with the Pension Fund Investment Policy. Reagan stated he felt the purpose of the "Other" category was for investments of this nature. Dill felt since it was not a large sum of money, this would serve as a good source of diversification. Reagan, seconded by Dill, made a motion to invest $60,000 in the "Europe Fund" as recommended by Merrill Lynch. It was asked if there was any minimum or maximum time limit regarding holding or selling the Fund. Mr. Wiesbecher stated that although it was to be viewed as a long term investment, there were no time limits on holding or selling. The motion passed with Linebaugh voting in the minority. RAISE FOR RETIREES Springston opened discussion on raises for retirees in the amounts of $10.00 per month for volunteers and $50.00 per month for full paid retirees. It was stated that the retirees would stand a better chance of getting a raise years from now if no raises were approved now. It was also pointed out that starting salaries now are quite different than for someone who started with the department 10 or 15 years ago. The feeling was that eventually the fund would be gone, and future retirees will have nothing to draw from. Jackson, seconded by Reagan, made a motion to study the scenario of an increase of $10 for volunteers and $50 for paid employees and it's impact on the fund and future earnings and report back to the Board at a future meeting. The motion passed unanimously. ADJOURNMENT The meeting was adjourned at 2:48 p.m.