22-019 1
2 ORDINANCE 22-019
3
4 AN ORDINANCE OF THE CITY OF BOYNTON BEACH FLORIDA
5 AMENDING ARTICLE II OF CHAPTER 18 OF THE BOYNTON BEACH
6 CODE OF ORDINANCES ENTITLED EMPLOYEES PENSION PLAN
7 AMENDING SECTION 18-145 CITY OF BOYNTON BEACH INVESTMENT
8 POLICY FOR GENERAL EMPLOYEES' PENSION FUND; PROVIDING FOR
9 CODIFICATION CONFLICT SEVERABILITY AND AN EFFECTIVE DATE.
10
11 WHEREAS, the Board at the advice of the Investment Consultant has recommended
12 changes to the Investment Policy governing the Board's investments;
13 WHEREAS, the Board of Trustees ("Trustees") of the Employees' Pension Plan of the
14 City of Boynton Beach Florida Pension Plan recommends amendment of Article II, Section 18-
15 145 of the Plan to add the approved investment policy to the Code; and
16 WHEREAS the City Commission of the City of Boynton Beach Florida desires to so
17 amend the Employees' Pension Plan of the City of Boynton Beach Florida
18
19 NOW THEREFORE BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF
20 BOYNTON BEACH FLORIDA
21
22 Section 1. The foregoing WHEREAS clauses are hereby certified as being true
23 and correct and are incorporated herein by this reference.
24 Section 2. Section 18-145 of Article II of Chapter 18 of the Boynton Beach Code
25 of Ordinances is hereby amended as follows:
26 Sec. 18-145. City of Boynton Beach Investment Policy for General Employees' Pension Fund.
27 (a) General. The Board of Trustees of the Boynton Beach General Employees' Pension
28 Fund has established this Statement of Investment Policy.This policy has been identified by
29 the Board as having the greatest expected investment return, and the resulting positive
30 impact on asset values, funded status, and benefits, without exceeding a prudent level of
31 risk. The Board determined this policy after evaluating the implications of increased
32 investment return versus increased variability of return for several a number of potential
33 investment policies with varying commitments to different asset classes stocks and bonds.
34 (b) Purpose. This Statement of Investment Policy is intended to complement the
35 investment guidelines provided in applicable State Statutes, and local ordinances.
36 The purpose to this Statement sectien is to:
37 (1) Provide the investment manager a more accurate understanding of the trustees'
38 investment objectives; and
39 (2) Indicate the criteria by which the investment manager's performance will be
40 evaluated
41 (c) General Objectives. The primary investment objective of the Boynton Beach
42 General Employees' Pension Fund is to achieve the absolute return objective over the
43 near-term, intermediate-term and longer-term time periods. The secondary objective
44 i • . i'-v- m• • -r• - 1•1 - ,r• h •f h- • • I. i' „ , ,�' '1 , h•
45 volatility of returns. To achieve these objectives, the Board of Trustees seeks to create
46 a conservative, well diversified and balanced portfolio of asset classes managed in
47 separate accounts, mutual funds, commingled funds, and/or limited partnerships.The
48 Board has determined that one or more outside investment managers shall be
49 retained to assure that all investments are managed in both a prudent and
50 professional manner and in compliance with the stated investment guidelines. The
51 Board of Trustees will make direct investments in fund structured investments and
52 acknowledges that no guidelines may be imposed on these investments,
53 (de) Investment manager responsibilities.
54 (1) Within the guidelines and restrictions set forth herein, it is the intention of the
55 Board to give the investment manager full investment discretion, with respect to assets
56 under its management. The investment manager shall discharge its responsibilities in the
57 same manner as it would if the fund were governed by the fiduciary; responsibility
58 provisions of the Employee-Retirement Income Security Act of 1974 (ERISA). Although the
59 fund trustees acknowledge that ERISA does not apply to a governmental fund, it hereby
60 imposes the fiduciary provisions of ERISA upon each the-investment manager whose
61 performance shall conform to the statutory provisions, rules, regulations, interpretations,
62 and case law of ERISA. The investment manager shall acknowledge, in writing, that it is a
63 named fiduciary of the fund.
64 (2) Each The-investment manager is expected to provide any reasonable information
65 requested by the Board of Trustees. At a minimum, each manager shall provide a quarterly
66 report detailing their investment activity, the portfolio's current value, and any changes in
67 investment philosophy or strategy. Each The firm's investment manager is expected to
68 meet with the Board of Trustees or their designated representatives periodically to
69 review investment performance and philosophy. at least once per year. A designated
70 representative will meet with the Board of Trustees, at least quarterly. A designated
71 representative of a mutual fund company is not required to attend meetings with the Board
72 of Trustees.
73 (3) Unless otherwise provided by the Fund's custodian, each the investment manager
74 will monitor portfolio activity to minimize uninvested cash balances.
75 (4) lash The investment manager shall be responsible only for those assets under
76 their its management.
77 (5) It will be the responsibility of each the investment manager to review the monthly
78 valuations provided by the Fund's custodian and to note, in writing, any significant
79 discrepancies from the valuations provided in their own reports.
80 (e) Florida Statute 112.
81
82 (1) EXPECTED ANNUAL RATE OF RETURN: With consideration to rates of return
83 from different asset classes, the Board of Trustees has crafted its investment program
84 in order to deliver an expected rate of return similar to that of the actuarial assumed
85 rate. The Board shall determine for each actuarial valuation, the total expected
86 annual rate of return for the current year, for each of the next several years and for
87 the long term thereafter. The total expected annual rate of return is anticipated to be
88 similar to the actuarial assumed rate of return. This determination is to be filed with
89 the Department of Management Services and with the plan sponsor and consulting
90 actuary.
91
92 (2) CONTINUING EDUCATION: The Board of Trustees relies on its consultants and
93 professionals to provide continuing education on pension and investment issues. The
94 Board of Trustees also recognize state and regional conferences as a source of
95 continuing education. The Trustees are encouraged to attend conferences, schools,
96 and other functions periodically in order to fulfill this requirement.
97
98 (3) FILING OF INVESTMENT POLICY: The investment policy is to be promptly filed
99 with the Department of Management Services, plan sponsor and consulting actuary.
100 The effective date of the investment policy and any amendment thereto shall be the
101 31st calendar day following the filing date with the plan sponsor.
102
103 (f) INVESTMENT OBJECTIVES. Given the above stated purpose of the Boynton
104 Beach General Employees' Pension Fund, the Board of Trustees recognizes the
105 necessity of a long-term horizon when formulating investment policies and
106 strategies. However, shorter-term investment goals have been established and are
107 intended to provide quantifiable benchmarks to measure and evaluate portfolio
108 return and risk.
109
110 Most investment styles require a full market cycle to allow an investment manager
111 to demonstrate his abilities. A full market cycle is generally defined as a three-to-five-
112 year time period. As a result, performance results will be measured over a three-to-
113 five-year period. Performance over shorter time periods will be monitored as a means
114 of identifying the trend of results.
115
116 - • y . . .i - .l - ' . •'• - . , - . 1 01 1 • , • . II • • • - '
117 Pension Fund are as follows:
118
119 Absolute Return Objective: The goal of the Boynton Beach General Employees'
120 Pension Fund shall be to achieve an average annual rate of return greater than
121 the applicable actuarial assumed rate of return net of investment expenses over
122 the longer term (3 to 5 years),
123
124 Market Return Objective: In order to provide a reference of fund return and
125 risk relative to a similar basket of passive assets, the board has developed a
126 "Target Index". The fund's objective is to achieve a rate of return over the Ion•
127 term (3 to 5 years), which exceeds the return of a Target Index.
128
129 The Target Index for the Boynton Beach General Employees' Pension Fund
130 is defined as a 35% investment in the Russell 1000 Stock Index, a 15%
131 investment in the Russell 2000 Stock Index, a 10% investment in the MSCI
132 Europe, Australasia and Far East Stock Index, a 20% investment in the
133 NCREIF Property Index and a 15% investment in the Bloomberg Barclays
134 Capital Aggregate Bond Index.
135
136 Peer Return Objective: It is expected that the total rate of return earned by the
137 Fund and the returns earned by the stock and bond portions of the portfolio will
138 each rank in the top 50% when compared to a representative universe of other,
139 similarly managed portfolios.
140 (d) General objectives.
141 (1) The primary investment objective of the Boynton Beach General Employees'
142 Pension Fund is the preservation of invested capital. The secondary objective is to achieve
143 moderate long term real growth (after inflation)while minimizing the volatility of returns.
144 (2) To achieve these objectives, the Board seeks to create a well diversified and
145 balanced portfolio of high quality equity, fixed income and money market securities. The
146 Board has determined that one or more outside investment managers shall be retained to
147 assure that all investments are managed in both a prudent and professional manner and in
148 compliance with the state investment guidelines.
149 (e) Investment objectives.
150 (1) Investment objectives are intended to provide quantifiable benchmarks to measure
151 and evaluate portfolio return and risk. Most investment styles require a full market cycle to
152 allow an investment manager to demonstrate his or her abilities. A full market cycle is
153 - ._ - - - - - - - -- - - - -- - - - - . - __ - -
154 measured over three to five year periods. Monitoring shorter periods may be used to
155 determine the trend of performance premiums or deficiencies.
156 (2) The specific objectives of the Boynton Beach General Employees' Pension Fund are
157 as follows:
158 a. Primary objective:
159 1. To earn an average rate of return over the long term (three to five years) which
160 exceeds the return of a Target Index. The Target Index for the Boynton Beach General
161 Employees' Pension Fund is defined as a 55% investment in the Russell 1000 Stock Index, a
162 10% investment in the Russell 2000 Stock Index, a 20% investment in the MSCI Europe
163 Austrailasia and Far East Stock Index (EAFE), a 10% investment in the NCREIF Property
164 - , . - - .... •- -- -- -- - ' -- _. - :- - - •
165 2. In addition, it is expected that the total rate of return arncd will rank above
166
167 b. Secondary objective: A further goal of the Boynton Beach General Employees'
168 Pension Fund shall be to achieve an average annual rate of return greater than the absolute
169 return of 8%, over the longer term. This absolute return objective will be evaluated in the
170 context of the prevailing investment market conditions.
171 c. Volatility: The volatility of the fund's total returns is expected to be similar to that
172 of the Target Index and will be evaluated accordingly.
173 (3) The investment objectives set forth herein have been established for the entire
174 Boynton Beach General Employees' Pension Fund. The specific investment objectives for
175 each investment manager will be outlined in separate documents which will be addenda
176 hereto and incorporated herein to this overall statement of investment policy.
177 (g#) Investment guidelines.
178 (1) The Board of Trustees has established the following target asset allocation for the
179 entire Boynton Beach General Employees' Pension Fund:
180
Target Target Representative
Allocation Range Benchmark
(at (at market)
market)
Equity;;ecuritics
Domestic Large Cap 35%4% 25% 30% - Russell 1000
equity 60%
Domestic Small/Mid 15% 5%-20% Russell 2000/2500
10%29-% 5% - 25% MSCI EAFE
Foreign equity
Total Equity 60%
Fixed income &
equivalents
Fixed income 20%25% 10%20% - Bloomberg Barclays
70% Agg/Int
Direct real estate 29%40% 5% - 30%1-5% NCREIF Property Index
01_3C1
Cash equivalents 0% 0% - 10% T-bills
181 It may be necessary to rebalance the portfolio periodically to maintain policy targets
182 and diversification. The Board of Trustees will monitor each component of the
183 Retirement Plan (including asset class, mutual fund, and portfolio manager asset
184 values) and will adjust as necessary at quarterly meetings. To implement this strategy,
185 the Board has chosen to hire one or more professional investment managers. The
186 following guidelines and restrictions apply to all fund investments.
187
188 (2) To implement this strategy, the Board has chosen to hire one or more
189 professional investment managers. Specific assignments and additional guidelines for
190
191 guidelines and restrictions apply to all fund investments.
192 (3} In accordance with the policies established by the Board of Trustees, the
193 assets of the Boynton Beach General Employees' Pension Fund shall be invested in a
194 diversified portfolio of fully - - - - -, - ' - •- - --, . - - . - - -
195 securities, funds, or pooled assets, provided they meet the following criteria:
196 a. Equity securities:
197 1. Investments in equity securities shall be limited to no more than 75% at
198 65% at cost valuation of the fund's total asset value;
199 2. All equity investments shall be limited to fully and easily negotiable equity
200 securities;
201 3. No more than 5% at cost value of an investment manager's equity
202 -- - •- - . - - - - ,hares of a single corporate issuer;
203 4. Investments in stocks of foreign securities companies shall be limited to
204 25% (at market) of the total investment portfolio. The Board may achieve
205 diversification in foreign equity through commingled fund or institutional
206 mutual fund vehicles. These pooled investments are considered an investment
207 in foreign securities. American Depository Receipts (ADRs) and foreign ordinary
208 securities traded on domestic exchanges are United States dollar-denominated
209 securities listed and traded on a United States exchange and are considered part of
210 the ordinary investment strategy of the Board. These securities are not considered
211 foreign securities;
212 4. Exchange traded funds (ETFS) may be utilized but may not exceed
213 10% (at market valuation) of anyequi managers portfolio.
214 5. No more than 20% of the equity securities are to be invested in small
215 or mid-cap stocks. The Board defines small and mid-cap stocks the stocks
216 whose market capitalization is less than $5 billion dollars. Investment in those
217 corporations whose stock has been publicly traded for less than one year are limited
218 to 15% of the equity portfolio; and
219 6. No more than 5% at cost value of an investment manager's equity
220 portfolio may be invested in the shares of a single corporate issuer. Equities
221 may be managed through the purchase of open end, no load mutual funds,
222 exchange traded funds, or commingled funds. Those securities/funds purchased
223 directly by investment advisors arc expected to adhere to the guidelines herein. The
224 Board implicitly accepts the policy of a mutual or commingled fund when it makes a
225 direct investment.
226 b. Fixed income securities:
227 1. The fixed income portfolio shall comply with the following guidelines:
228 (A) The average credit quality of the bond fixed income portfolio shall be
229 rated "A" or higher; and
230 (B) The duration of the fixed income portfolio shall not exceed shoal-be
231 less than 135% of the duration of the market index. The market index is defined as the
232 Bloomberg Barclays Capital Aggregate Bond Index.
233 2. Investments in all corporate fixed income securities shall be limited to:
234 (A) Those securities rated "BBB" shall not exceed 20% of the entire fixed
235 income portfolio. ."BAA" or higher by Moody's or by Standard & Poor's rating
236 cervices. Fixed income securities, which are downgraded below the minimum rating,
237 ,hall be sold at the earliest beneficial opportunity;
238 (B) Securities issued by a corporation organized under the laws of the
239
240 Columbia; and
241 (C) No more than 5% 48% at cost of an investment manager's total fixed
242 income' portfolio shall be invested in the securities of any single corporate issuer.
243 3. Futures contracts may be used on a non-levered basis for duration
244 adjustment and yield curve positioning purposes. - ---- •- = - - -
245 Mortgage Obligations (CMOs) shall be limited to 15% of the market value of the
246 ---- - -- - - -- - - - - - - - - _ ' -247
248 (A) All issues must be backed by mortgage securities issued, guaranteed, or
249 - - - - -- __ , . •-•. - e. - •- •- , .- _
250 Home Loan Mortgage Corporation (FHLMC), the Federal National Mortgage
251 Association (FNMA) or that arc rated "Aaa" by Moody's or "AAA" by Standard &
252
253 4. There is no limit imposed on investments in fixed income securities issued
254 directly by the United States government or any agency or instrumentality thereof.
255 5. Commingled vehicles managed by the investment adviser may be
256 used to assist with the efficient implementation of portfolio strategy. Fid
257 income securities may be managed through the purchase of open end, no load
258 mutual funds or commingled funds. Those securities/funds purchased directly by
259 investment advisors are expected to adhere to the guidelines herein. The Board
260 implicitly accepts the policy of a mutual or commingled fund when it makes a direct
261 investment.
262 6. Index ETF's may be used for the efficient implementation of portfolio
263 strategy.
264 c. Real Estate
265 1. Investments in real estate shall not exceed 30% (at market valuation)
266 of the value of the total Fund assets.
267 2. All real estate investments shall be made through participation in
268 diversified commingled funds of real properties. These funds shall be broadly
269 iversified as to nrouertv tune and aeo r
270 3. Experienced and professional real property investment managers shall
271 manage all real estate investments
272
273 d. Absolute Return;
274 1. Investments in absolute or real return strategies shall not exceed 20%
275 of the value of the total Fund assets,
276 2. All absolute or real return investments shall be made through
277 participation in diversified commingled funds, mutual fund or limited
278 partnership vehicles.
279 3. The board shall endeavor to consider those investments that offer
280 liquidity, transparency and low relative fees.
281
282 e. Private Equity/ Private Credit:
283 1. Investments in private equity and credit strategies shall not exceed
284 15% of the value of the total Fund assets.
285 2. All private equity and private credit investments shall be made through
286 participation in diversified limited partnership vehicles.
287 3. The board shall endeavor to consider those investments that offer
288 liquidity, transparency and low relative fees.
289
290 f. Cash equivalent securities:
291 1. The investment manager may invest only in the following short-term
292 investment vehicles:
293 (A) The money market or STIF provided by the plan's custodian;
294 (B) Direct obligations of the United States government with a maturity of
295 one year or less;
296 (C) Commercial paper with a maturity of 270 days or less that is rated A-1
297 by Standard & Poor's or P-1 or higher by Moody's; and
298 (D) Bankers acceptances issued by the largest 50 banks in the United States
299 (in terms of total assets).
300 (4) Mutual Funds / Commingled Funds / Limited Partnerships: The
301 Board of Trustees recognizes and accepts that commingled, mutual fund and
302 limited partnership investments will be dictated by the investment policies and
303 guidelines of those funds and that no additional constraints may be imposed on
304 them. The decision to make a direct investment in any vehicle will only be made
305 by the Board of Trustees after a thorough review of the policies of the
306 governing documents of those funds and after it has been determined that
307 those policies are appropriate and materially consistent with the investment
308 objectives.
309 ( 4) Prohibited securities investments. Only those derivative securities
310 expressly described herein are permissible. Trading on margin and short selling
311 are prohibited for separate account mana• • Investments in interest only or
312 principal only CMOs, precious metals, limited partnerships of any kind, direct
313 ---• - - -- _ ------ - . - - - -
314 options contracts, municipal bonds, trading on margin and short selling are
315 prohibited. Investments not specifically addressed in this section arc considered
316
317 (6) Performance Evaluation. The Board of Trustees intends to review
318 investment performance and compliance with stated investment policies on a
319 quarterly basis.
320 (5) Review of policy. It is the intention of the Board of Trustees of the Boynton
321 Beach General Employees' Pension Fund to review this statement of investment policy
322 and its addenda periodically to amend it by policy to reflect any changes in
323 philosophy or objectives. However, if at any time the investment manager believes
324 that the specific objectives defined herein cannot be met or that these guidelines
325 unnecessarily constrict performance,the Board shall be so notified in writing.
326 Section 3. It is the intention of the City Commission of the City of Boynton Beach that the
327 provisions of this Ordinance shall become and be made a part of the Code of Ordinances of
328 the City of Boynton Beach Florida. The Sections of this ordinance may be renumbered re-
329 lettered and the word Ordinance may be changed to Section Article or such other word or
330 phrase in order to accomplish such intention.
331 Section 4.All Ordinances or parts of Ordinances Resolutions or parts of Resolutions in conflict
332 herewith be and the same are hereby repealed to the extent of such conflict. If any clause
333 section or other part or application of this Ordinance shall be held by any court of competent
334 jurisdiction to be unconstitutional or invalid such unconstitutional or invalid part or
335 application shall be considered as eliminated and so not effecting the validity of the
336 remaining portions or applications remaining in full force and effect.
337 Section 5. This Ordinance shall become effective immediately upon adoption provided that
338 the changes approved herein are effective retroactively to May 23, 2022.
339 CITY OF BOYNTON BEACH, FLORIDA
340
341 YES NO
342
343 Mayor—Ty Penserga VVV
344
345 Vice Mayor—Angela Cruz c/
346
347 Commissioner—Woodrow L. Hay
348
349 Commissioner—Thomas Turkin
350
351 Commissioner-Aimee Kelley 1/
352
353 VOTE J C
-0
354
355
356
357 ATT - •
358
359 `I 'n ✓ -
360 Maylee D- J.sus, MPA, C Ty Pelog�'
361 City Cle Mayo I.
362 =spy NTON�`‘,
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363 .��PORAT4.••� 1�
364 (Corporate Seal) i :•° AL:_'+, J
365 of SD •
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366 �� 1920 •; S Michael D. Cirullo,Jr.
367 �� City Attorney
368 ,,t% FLOR\V'
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