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HomeMy WebLinkAbout1988-10-27 MinutesMINUTES OF A MEETING OF THE FIRE PENSION & RELIEF FUND BOARD OF TRUSTEES A regular meeting of the Fayetteville Fire Pension & Relief Fund Board of Trustees was held on Thursday, October 27, 1988 at 1:30 p.m. in Room 313 of City Hall at 113 West Mountain Street. PRESENT: Ex -Officio Treasurer Scott Linebaugh, Secretary Suzanne McWethy, Fire Chief Mickey Jackson, Firemen Pete Reagan and John Dill. Others present were Zelda Parson, City Accounting Supervisor and Curtis Williams and Richard Yada of Merrill Lynch. ABSENT: Chairman Jim Pennington, Fireman Mike Bonaduce, Retiree Carl Springston CALL TO ORDER In the absence of the Chairman, the meeting was called to order by Scott Linebaugh. PENSION LIST The pension list for the month of November was considered. Chief Jackson said he thought "Yogi" Wright and Jack Boudrey's pension benefit amounts may need to be increased. Zelda Parson said she was not aware of any errors but suggested these amounts be checked. It was moved by Dill, seconded by Reagan, and unanimous, to approve the pension list with any necessary changes being made to Wright's or Boudrey's pension benefit. OTHER BUSINESS Linebaugh said Chairman Pennington asked to have a "scattergram" or comparison of RNC to the other money manager firms. Linebaugh said Pennington had asked for this for the October 4 meeting and RNC didn't bring it, and that Pennington would like to renew his request. Linebaugh said he and Pennington wanted to bring up the matter of the investment policy for discussion. Reagan suggested going over the investment policy at the end of the meeting, noting particularly that there were some portions of the policy he didn't understand. Fire Pension Minutes October 27, 1988 Page 2 NEW BUSINESS MERRILL LYNCH REPORT Yada reported on the Equity Account managed by RNC. He said the portfolio value was $511,315 on a total investment of $507,000. Yada said the statement sent out by Merrill Lynch on the ML -Lee investment shows the current price to be at $1,000, market value $100,000. Linebaugh asked if the investment could be sold at $100,000 today. Williams said that it could, commenting that the seller sets the asking price for the units. He said there were people selling their units at $1,000 per unit. He said trading is only done twice per year. He said buyers and sellers "put in orders at a price" and Merrill Lynch matches buyers and sellers. Williams said if the Pension Board wanted to sell its investment, Merrill Lynch would recommend putting in an order to sell at a price higher than $1,000 per unit. He said the investment was performing better than expected. Linebaugh said when his staff received information from the Fayetteville Merrill Lynch office that the investment was currently worth $900 per unit, that was based on the last highest trade that had been made. Linebaugh said he wanted to go on record that, in his opinion and in the City Attorney's opinion, the investment was illegal and the Board should get out of the investment. In answer to a question from Chief Jackson, Williams said you can put in an order to sell the investment at any time, but the actual transfers can only take effect in January or July. Williams said the limited partnership status of this investment is controlled by federal regulations, and if there is a publicly maintained market, you lose that status. He said the market for selling the investment therefore is "informal." He said Merrill Lynch does not solicit orders to sell the investment but, when they receive orders, they provide a way for buyers and sellers to get together. Yada said, since May 20, the Board has received $3,130 from the $100,000 investment. He said there would be another distribution at the end of November. He said the projected rate for the first year was 7-8%. He said total return is projected now at 20-25%. Williams said they disagreed it was an illegal investment and thought it was a good one. Yada said the reason for the investment was to be a bolster for the Equity Account in case something happened to the Equity Account. Yada, reporting on the Income Account, said the portfolio value was $1,960,828, with the original value being $1,647,000. He said this account was up $213,000. Yada said he should have RNC's quarterly report for the next meeting. Fire Pension Minutes October 27, 1988 Page 3 INVESTMENT POLICY With three members being absent, Reagan moved to table consideration of the investment policy until the next meeting. The motion was seconded by Dill and passed unanimously. MEETING DATE RE -SET Because of the upcoming Thanksgiving holiday, it was agreed to reset the November meeting to November 17. ADJOURN The meeting was adjourned at about 2:20 p.m.