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ORDINANCE 04- 06q
AN ORDINANCE OF THE CITY OF BOYNTON BEACH,
FLORIDA AMENDING CHAPTER 18, ARTICLE II, DIVISION S
OF THE CODE OF ORDINANCES OF THE CITY OF BOYNTON
BEACH, FLORIDA TO AMEND THE INVESTMENT POLICY
OF THE GENENRAL EMPLOYEES' PENSION eLAN TO
AFFORD THE PENSION PLAN GREATER FLEXIBILITY IN
ITS INVESTMENT ALLOCATIONS AND ENHANCE ITS
INVESTMENT OPPORTUNITIES; SPECIFICALLY AMENDING
SECTION 18-145, ENTITLED, "INVESTMENT OF FUNDS;"
PROVIDING FOR CODIFICATION; PROVIDING FOR
CONFLICTS; PROVIDING FOR SEVERABILITY; AND
PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the General Employees' Pension Board of Trustees ("Board") has
determined the necessity to amend the terms of the Investment Policy in order to meet
the investment needs of the Plan in an ever-changing investment market: and
WHEREAS, on February 20, 2004 the Board approved and recommended
amending the Investment Policy, as more particularly set forth herein; and
WHEREAS, it is the desire of the City Commission to adopt the changes in the
Investment Policy as recommended by the Board;
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION
OF THE CITY OF BOYNTON BEACH, FLORIDA, THAT:
Section 1. The foregoing "WHEREAS" clauses are hereby certified as being
true and correct and are incorporated herein by this reference. All exhibits attached
hereto are hereby incorporated herein.
Section 2. The City Commission of the City of Boynton Beach hereby
amends the Investment Policy for the General Employee's Pension Fund, as approved
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ORDINANCE NO.
and recommended by the General Employees' Pension Board of Trustees on February
20, 2004, by specifically amending § 18-145 of the City Code of Ordinances as follows:
(d) General Objectil,eS.
(1) The pnnarv investment objective of lhe Bovnton Beach General
Employees' Pension Fund is the preservation of invested capital. The secondary
o_.hbiective is to achieve lnoderate long-term real m'owth {after inflation) while
minimizin~ the volatility of returns.
_(2) To achieve these objectives, the Board seeks to create a well-
diversified and balanced portfolio of high quality equity, fixed income and
money market securities. The Board has determined that one or more outside
Investment Managers shall be retained to assure that all investments m~e
~ J~h the
manaeed in both a prudent and professional manner and in compliance x :'-
stated investment ~ouideJines.
£e ) Investment Oh/ectivex.
_(1) Investment objectives are intended to provide qtlantifiable
benchmarks to measure and evaluate portfolio return and risk. Most investment
styles require a full marl<el cycle to allow an Investment Manager to
demonstrate his abilities. A full market cycle is generally defined as a three to
five year time period. As a result, performance objectives will be measured over
three to five year periods. Monitorintz shorter periods may be used to determine
the trend of performance 1)remiulns or deficiencies.
(2) The specific investment objectives of the Bovnton Beach General
Employees' Pension Fund are as follows:
(A) Primary Objective:
i. To earn an avera_oe rate of rettHTt over the lon_o
term (3 to 5 years) which exceeds the return of a Tamer Index.
The Tamer Index for the Bovnton Beach General Employees'
Pension Fund is defined as a 55% investment in the Russell 3000
Stock Index, a 10% investment in the Europe Austrailasia and
Far East Stock Index (EAFE) and a 35~{:. investment in the
Merrill Lynch Master Bond Index.
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ORDINANCE NO.
ii. In addition, it is expected that the total rate of
return earned will rank above average when compared to a
representati ye uni verse of other, similarly managed portfolios.
(B) Secondary Objective: a further ~oal of the Bovnton
Beach Genera Employees' Pension Fund shall be to achieve an average
annual ]'ate of return greater than the absolute return of 8%. over the
lon.ger term. This absolute return objective will be evaluated in the
context of the prevailin~ investment market conditions.
(C) Volatility: The volatility of the Fund's total returns is
expected to be similar to that of the Tar~oet Index and will be evaluated
accordin el v.
(3} The invesm~ent objectives set fo~lh herein have been established
for the entire Bow~ton Beach General Employees' Pension Fund. The specific
investment objectives for each investment manao_.er will be outlined in separate
documents which shall be addenda hereto and incorporated herein to this overall
Statement of Investment Policy.
(al_f) hivestment Guidelines.
(1) The Board of Trustees has established the following target asset
allocation for the entire Boynton Beach General Employees' Pension Fund:
Allocation Range
(at market) i(at mar,,k, et)
l~quity securities ..... ~65~ ~30%
Fixed income securities ~35% 30°~'- '~0% ......
Cash 0% 0%- 10%
(2) To implement this strategy, the Board has chosen to hire one or
more professional investment managers. Specific assignments and additional
guidelines for each Investment Manager will be outlined in addenda to this
section. The following guidelines and restrictions apply to all fund investments.
(3) In accordance with the policies established by the Board of
Trustees, the assets of the Boynton Beach General Employees' Pension Fund
shall be invested in a diversified portfolio of fully negotiable, equity, fixed
income, and money market securities, provided they meet the following criteria:
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ORDINANCE NO.
a. Equity securities:
1. Investments in equity securities shall be limited to
no more than '7tV~;~75t¥ "~
........... at market valuation value ,,,
I
"aluat;% of the fund's total asset value;
2. All equity investments shall be limited to fully and
easily negotiable equity securities;
3. No more than 5% at cost value of an Investment
Manager's equity portfolio may be invested in the shares of a
single corporate issuer;
4. Investments in stocks of foreign companies shall
be limited to 20% (at cost) of the total investment portfolio;
5 In ............ in equity '~e'c'adti'e,~; "'hose
.... "'~: .... ;"" is !ess t,ha~~, Sn t:xi.l.l, ix:x.xa_~h,,ll be 1' ' '
65. Investment in those corporations whose stock has
been publicly traded for less than one year are limited to 15% of
the equity portfolio; and
5_6. Equities may be managed through the purchase of
open-end, no-load mutual funds or commingled funds.
,~,~.-,,,,.,.o,~ r.,.,,~.-,,~,,,~., ~,,. ............. ,,~,,_~,,,,_. Those securities\funds purchased
directly by investment advisors are expected to adhere to the
equi~guidelines herein. The Board implicitly accepts the__policy
of a mutual or commin_oled fund when it makes a direct
investment.
b. Fixed income securities:
1. The fixed income portfolio shall comply with the
following guidelines:
(A) The average credit quality of the fixed
income portfolio shall be rated "A" or higher; and
(B) The duration of the fixed income portfolio
should be less than 150%135% of the duration of the
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ORDINANCE NO.
market index. The market index is defined as the Merrill
Lynch r-. ................ o ............ Master Bond Index.
2. Investments in all corporate fixed income
securities shall be limited to:
(A) Those securities rated "BAA" or higher by
Moody's or by Standard & Poor's rating services. Fixed
income securities, which are downgraded below the
minimum rating, shall be sold at the earliest beneficial
opportunity;
(B) Securities issued by a corporation
organized under the laws of the United States, any state or
organized territory of the United States, or the District of
Columbia; and
(C) No more than 10% at cost of an Investment
Manager's total fixed income portfolio shall be invested in
the securities of any single corporate issuer.
3. Investments in Collateralized Mortgage
Obligations (CMOs) shall be limited to 15% of the market value
of the Investment Manager's total portfolio and shall be restricted
to issues which meet all of the following criteria:
(A) All issues must be backed by mortgage
securities issued, guaranteed, or fully insured by the
Government National Mortgage Association (GNMA),
the Federal Home Loan Mortgage Corporation (FHLMC),
the Federal National Mortgage Association (FNMA) or
that are rated "Aaa" by Moody's or "AAA" by Standard &
Poor's rating services; and
4. There is no limit imposed on investments in fixed
income securities issued directly by the United States
Government or any agency or instrumentality thereof.
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ORDINANCE NO.
5. Fixed income securities may be managed through
the purchase of open-end, no-load mutual funds or commingled
funds ,,o ~ ....... ~ .... ~,,,.,a.. ; ........... ':'= Those securities/funds
purchased directly bv investment advisors are expected to adhere
to the !'ix,cc! :,,ce,,,,~ guidelines herein. The Board im~
accepts the policy of a mutual or commingled fund when it
makes a direct investment.
c. Cash Equivalent Securities.
1. The investment manager may invest only in the
following short-term investment vehicles:
(A) The money market or STYF provided by
the Plan's custodian;
(B) Direct obligations of the United States
Government with a maturity of one year or less;
(C) Commercial paper with a maturity of 270
days or less that is rated A-1 or higher by Standard &
Poor's or P-1 or higher by Moody's; and
(D) Bankers acceptances issued by the largest
50 banks in the United States (in terms of total assets).
4. Prohibited Investments. Investments in interest only or principal
only CMOs, precious metals, limited partnerships of any kind, direct investment
in_E_real estate, repurchase agreements, venture capital, futures contracts, options
contracts, municipal bonds, trading on margin and short selling are prohibited.
l__nvestlnents not specifically addressed in this section are considered prohibited
investments.
5. Review of Policy. It is the intention of the Board of Trustees of
the Boynton Beach General Employees' Pension Fund to review this Statement
of Investment Policy and its addenda periodically to amend it to reflect any
changes in philosophy or objectives. However, if at any tie the Investment
Manager believes that the specific objectives defined herein cannot be met or
that these guidelines unnecessarily constrict performance, the Board shall be so
notified in writing.
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ORDINANCE NO.
Section 3. All Ordinances or parts of Ordinances, Resolutions or parts of
Resolutions in conflict herewith be and the same are hereby repealed to the extent of
such conflict.
Section4. If any clause, section, or other part or application of this
Ordinance shall be held by any court of competent jurisdiction to be unconstitutional or
invalid, such unconstitutional or invahd part or application shall be considered as
eliminated and so not effecting the validity of the remaining portions or applications
remaining in full force and effect.
This Ordinance shall become effective when the following have
Section 5.
occurred:
(a)
the City Commission has received and has accepted a report establishing
the actuarial soundness of these amendments; and
(b) As to bargaining unit members, when a collective bargaining agreement
ratifying the foregoing changes to pension benefits has been ratified by the
City Commission and the General Employees' Pension Board of Trustees,
or their successor organization.
Upon satisfaction of all of the above requirements, then in that event, the terms and
provisions of this Ordinance shall become effective.
FIRST READING this ,3 day of ~,~[t~'r ,2004.
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ORDINANCE NO.
SECOND, FINAL
t.~lts ~5'r ,2004.
ATTEST:
(CORPORATE SEAL)
READING and PASSAGE this ~ day of
CITY OF BOYNTON BEACH,
FLORIDA
/5 yo'r~
Vice ~
_/
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