24-020 1 ORDINANCE NO. 24-020
2
3 AN ORDINANCE OF THE CITY OF BOYNTON BEACH,
4 FLORIDA, AMENDING ARTICLE II OF CHAPTER 18 OF THE
5 BOYNTON BEACH CODE OF ORDINANCES ENTITLED
6 EMPLOYEES' PENSION PLAN AMENDING SECTION 18-145
7 CITY OF BOYNTON BEACH INVESTMENT POLICY FOR
8 GENERAL EMPLOYEES' PENSION FUND; PROVIDING FOR
9 CODIFICATION; PROVIDING FOR SEVERABILITY OF
10 PROVISIONS; REPEALING ALL ORDINANCES IN CONFLICT
11 HEREWITH AND PROVIDING FOR AN EFFECTIVE DATE.
12
13 WHEREAS, the State Legislature adopted Florida statutory amendments governing the
14 investment of public funds, along with other related investment topics; and
15 WHEREAS, the Board, at the advice of the Investment Consultant, has recommended
16 changes to the Investment Policy governing the Board's investments; and
17 WHEREAS, the Board of Trustees ("Trustees") of the Employees' Pension Plan of the
18 City of Boynton Beach Florida Pension Plan recommends amendment of Article II, Section 18-
19 145 of the Plan to add the approved investment policy to the Code; and
20 WHEREAS,the City Commission of the City of Boynton Beach,Florida desires to amend
21 the Employees' Pension Plan of the City of Boynton Beach, Florida.
22 NOW, THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE
23 CITY OF BOYNTON BEACH, FLORIDA:
24 SECTION 1: The foregoing "WHEREAS" clauses are hereby ratified as being true and
25 correct and are hereby made a specific part of this Ordinance upon adoption hereof.
26 SECTION 2: Section 18-145 of Article II of Chapter 18 of the Boynton Beach Code of
27 Ordinances is hereby amended as follows:
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28 (a) General. The Board of Trustees of the Boynton Beach General Employees' Pension Fund
29 has established this Statement of Investment Policy. This policy has been identified by the
30 Board as having the greatest expected investment return and the resulting positive impact on
31 asset values, funded status,and benefits without exceeding a prudent level of risk. The Board
32 determined this policy after evaluating the implications of increased investment return versus
33 increased variability of return for several potential investment policies with varying
34 commitments to different asset classes.
35 (b) Purpose. The Board has established this Investment Policy to Tia Statement of Inves*Ment
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38 (1) Provide an unambiguous description of the Board's risk tolerance, as defined by the
39 asset classes that are considered allowable investments and the percentage allocations
40 to each asset class; - •- - • -• • _ . - - _ . : - . _ -_ . • -
414fustees4Fwesttftent-ebjeetild
;
42 (2) Emphasize diversification of portfolio investments within each asset class. Indic-ate
43
44 (3) Provide rate-of-return objectives and establish formal criteria to monitor and evaluate
45 the performance.
46 (c) General objectives. The primary investment objective of the Boynton Beach General
47 Employees' Pension Fund is to achieve the absolute return objective over the near-term,
48 intermediate-term, and longer-term time periods. The secondary objective is to achieve moderate
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49 long-term real growth of the assets while minimizing the volatility of returns. To achieve these
50 objectives, the Board of Trustees seeks to create a conservative, well diversified and balanced
51 portfolio of asset classes managed in separate accounts, mutual funds, commingled funds, and/or
52 limited partnerships. The Board has determined that one or more outside investment managers
53 shall be retained to assure that all investments are managed in both a prudent and professional
54 manner and in compliance with the stated investment guidelines.The Board of Trustees will make
55 direct investments in fund structured investments and acknowledges that no guidelines may be
56 imposed on these investments.
57 (d) Investment manager responsibilities.
58 (1)Within the guidelines and restrictions set forth herein, it is the intention of the Board to
59 give each the investment manager full investment discretion, with respect to assets under its
60 management.The investment managers shall discharge their its responsibilities in the same manner
61 as it would if the Fund toad were governed by the fiduciary, responsibility provisions of the
62 Employee-Retirement Income Security Act of 1974 (ERISA). Although the Fund Trustees fund
63 trustees acknowledge that ERISA does not apply to the Fund as a governmental fund, it hereby
64 imposes the fiduciary provisions of ERISA upon each investment manager whose performance
65 shall conform to the statutory provisions, rules, regulations, interpretations, and case law of
66 ERISA. The investment manager shall acknowledge, in writing,that it is a named fiduciary of the
67 fund.
68
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69 (2) Each investment manager is expected to provide any reasonable information requested
70 by the Board of Trustees. At a minimum, each manager shall provide a quarterly report detailing
71 their investment activity, the portfolio's current value, and any changes in investment philosophy
72 or strategy. Each investment manager is expected to meet with the Board of Trustees or their
73 designated representatives periodically to review investment performance and philosophy.
74 (3) Unless otherwise provided by the Fund's Custodian custodian,
each investment
75 manager will monitor portfolio activity to minimize uninvested cash balances.
76 (4) Each investment manager shall be responsible only for those assets under their
77 management.
78 (5) It will be the responsibility of each investment manager to review the monthly
79 valuations provided by the Fund's custodian and to note, in writing, any significant discrepancies
80 from the valuations provided in their own reports.
81 (e)Florida Statute 112.
82 (1) Expected annual rate of return. With consideration to rates of return from different
83 asset classes, the Board of Trustees has crafted its investment program in order to
84 deliver an expected rate of return similar to that of the actuarial assumed rate. The
85 Board shall determine for each actuarial valuation, the total expected annual rate of
86 return for the current year, for each of the next several years and for the long term
87 thereafter. The total expected annual rate of return is anticipated to be similar to the
88 actuarial assumed rate of return. This determination is to be filed with the Department
89 of Management Services and with the plan sponsor and consulting actuary.
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90 (2) Continuing education. The Board of Trustees relies on its consultants and
91 professionals to provide continuing education on pension and investment issues. The
92 Board of Trustees also recognize state and regional conferences as a source of
93 continuing education.The Trustees are encouraged to attend conferences, schools,and
94 other functions periodically in order to fulfill this requirement.
95 (3) Filing of investment policy. The investment policy is to be promptly filed with the
96 Department of Management Services, plan sponsor and consulting actuary. The
97 effective date of the investment policy and any amendment thereto shall be the 31st
98 calendar day following the filing date with the plan sponsor.
99 (f) Investment objectives. Given the above stated purpose of the Boynton Beach General
100 Employees' Pension Fund, the Board of Trustees recognizes the necessity of a long-term horizon
101 when formulating investment policies and strategies. However, shorter-term investment goals
102 have been established and are intended to provide quantifiable benchmarks to measure and
103 evaluate portfolio return and risk.
104 (1) Most investment styles require a full market cycle to allow an investment manager to
105 demonstrate his abilities. A full market cycle is generally defined as a three-to-five-
106 year time period. As a result, performance results will be measured over a three-to-
107 five-year period. Performance over shorter time periods will be monitored as a means
108 of identifying the trend of results.
109
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110 (2) The specific investment objectives of the Boynton Beach General Employees' Pension
111 Fund are as follows:
112 a. Absolute Return Objective: The goal of the Boynton Beach General
113 Employees' Pension Fund shall be to achieve an average annual rate of
114 return greater than the applicable actuarial assumed rate of return net of
115 investment expenses over the longer term (3 to 5 years),
116 b. Market Return Objective: In order to provide a reference of fund return and
117 risk relative to a similar basket of passive assets, the board has developed a
118 "Target Index". The fund's objective is to achieve a rate of return over the
119 long term (3 to 5 years), which exceeds the return of a Target Index.
120 1. The Target Index for the Boynton Beach General Employees'
121 Pension Fund is defined as a 35% investment in the Russell 1000
122 Stock Index, a 15% investment in the Russell 2000 Stock Index, a
123 10%investment in the MSCI Europe,Australasia and Far East Stock
124 Index, a 29% 15%investment in the NCREIF Property Index3 and a
125 15%investment in the Bloomberg Barclays Capital Aggregate Bond
126 Index,a 10%investment in the Consumer Price Index plus 3%(CPI
127 +3%).
128 c. Peer Return Objective: It is expected that the total rate of return earned by
129 the Fund and the returns earned by the stock and bond portions of the
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130 portfolio will each rank in the top 50% when compared to a representative
131 universe of other, similarly managed portfolios.
132 (g) Investment guidelines.
133 (1)The Board of Trustees has established the following target asset allocation for the entire
134 Boynton Beach General Employees' Pension Fund:
Target Allocation (at Target Range Representative Benchmark
market) (at market)
Public Equity:
Domestic Large Cap 35% 25% 60% Russell 1000/S&P 500
equity 20%-40%
Domestic Small/Mid Cap 15% 5% -20% Russell 2000/2500
Foreign equity 10% 5% -25 20% MSCI EAFE
Total Equity 60% 65% Maximum
Fixed income &
equivalents
Core Fixed income 2015% 40 5% -70 25% Bloomberg Barclays Agg/lnt
Non-Core / Alt Fixed 5% 0% - 15% Bloomberg Barclays Aug/Int/CPI +
Income 3%
Private Credit 5% 0% - 15% CPI +3%
Direct Private real estate 2015% 5% 30% NCREIF Property Index ODCE
10%-25%
Cash equivalents 0% 0% - 10% T-bills
135
136 It may be necessary to rebalance the portfolio periodically to maintain policy targets and
137 diversification. The Board of Trustees will monitor each component of the Retirement Plan
138 (including asset class, mutual fund, and portfolio asset values) and will adjust as
P manager J
139 necessary at quarterly meetings. To implement this strategy, the Board has chosen to hire one or
140 more professional investment managers.The following guidelines and restrictions apply to all fund
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141 investments. In accordance with the policies established by the Board of Trustees,the assets of the
142 Boynton Beach General Employees' Pension Fund shall be invested in a diversified portfolio of
143 fully securities, funds, or pooled assets, provided they meet the following criteria:
144 a. Equity securities:
145
146 1. Public equity investment may be diversified across Domestic
147 Investments Large Cap. Domestic Small Cap, and Foreign Equity
148 find EM).
149 2. Investments in equity securities/funds shall be limited to no more
150 than the ranges indicated above6-597/0-at-eest-valuatien-ef--the-fungs
151 e;
152 3. Investments in all equity securities shall be
153 limited to fully and easily negotiable equity securities;
154 4. Investments in foreign securities shall be limited to 25% (at market
155 valuation)of the total investment portfolio. The Board may achieve
156 diversification in foreign equity through commingled fund or
157 institutional mutual fund vehicles. These pooled investments are
158 considered an investment in foreign securities.
159 al American Depository Receipts(ADRs)and foreign ordinary
160 securities traded on domestic exchanges are United States
161 dollar-denominated securities listed and traded on a United
162 States exchange and are considered part of the ordinary
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163 investment strategy of the Board. These securities are not
164 considered foreign securities and may be purchased by
165 separate account managers without limitation;
166 5. Exchange traded funds (ETFS)may be utilized but may not exceed
167 10% (at market valuation) of any equity manager's managers
168 portfolio.
169 6. No more than 20%of the equity securities are to be invested in small
170 or mid-cap stocks. The Board defines small and mid-cap stocks as
171 the stocks whose market capitalization is less than$5 billion dollars.
172 7. No more than 5%fat cost value of an investment manager's equity
173 portfolio may be invested in the shares of a single corporate issuer.
174 b. Fixed income securities, Funds, and Related Strategies:
175 1. Fixed Income may include traditional fixed income in core or core+
176 strategies,private credit offered through limited partner structure,or
177 non-traditional and alternative fixed income management offered in
178 limited partner structure.
179 2. The fixed income portfolio shall comply with the following
180 guidelines:
181 (A)The average credit quality of all rated bonds held
182 in the fixed income portfolio shall be rated
183 "A"or higher;; snd_
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184 (B)The duration of the fixed income portfolio shall not
185 exceed 135% of the duration of the market index.
186 The market index is defined as the Bloomberg
187 Barclays Capital Aggregate Bond Index.
188 3. Investments in all rated corporate fixed income securities shall be
189 limited to:
190 (A)Those securities rated"BBB"shall not exceed 20%
191 of the entire fixed income portfolio.
192 (B)No more than 5% at cost of an investment
193 manager's total fixed income' portfolio shall be
194 invested in the securities of any single corporate
195 4. Futures contracts may be used on a non-levered basis for duration
196 adjustment and yield curve positioning purposes.
197 5. There is no limit imposed on investments in fixed income securities
198 issued directly by the United States Government ge.veffiment or any
199 agency or instrumentality thereof.
200 6. Commingled vehicles managed by the investment adviser may be
201 used to assist with the efficient implementation of portfolio strategy.
202 7. Index ETF's may be used for the efficient implementation of
203 portfolio strategy.
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204 8. Investment in private credit strategies are considered part of the
205 general fixed income asset class:
206 (A)Investments in private credit strategies shall not
207 exceed 15%of the value of the total Fund.
208 (B)All private credit investments shall be made
209 through participation in diversified limited
210 partnership vehicles.
211 (C)The Board shall endeavor to consider those
212 investments that offer transparency and low
213 relative fees.
214 c. Private Real Estate:
215 1. Investments in real estate shall not exceed 15% 30% (at market
216 valuation)of the value of the total Fund assets.
217 2. All real estate investments shall be made through participation in
218 diversified commingled funds of real properties. These funds shall
219 be broadly diversified as to property type and geography.
220 Experienced and professional real property investment managers
221 shall manage all real estate investments.
222
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225 . . . . _ . -. _ . - _ • _ • . . - -
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226 .. _ .. _ - _. - "•-: _. . , • . . .
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230 C. Private Equity/Privatc Crcdit:
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237 f. Cash equivalent securities:
238 1. The investment manager may invest only in the following short-
239 term investment vehicles:
240 (A)The money market or STIF provided by the plan's
241 custodian;
242 (B)Direct obligations of the United States government
243 with a maturity of one year or less;
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244 (C)Commercial paper with a maturity of 270 days or
245 less that is rated A-1 or higher by Standard &
246 Poor's or P-1 or higher by Moody's; and
247 (D)Bankers acceptances issued by the largest 50 banks
248 in the United States (in terms of total assets).
249 (4) Mutual Funds/Commingled Funds/Limited Partnerships. The Board of Trustees
250 recognizes and accepts that commingled, mutual fund and limited partnership
251 investments will be dictated by the investment policies and guidelines of those funds
252 and that no additional constraints may be imposed on them. The decision to make a
253 direct investment in any vehicle will only be made by the Board of Trustees after a
254 thorough review of the policies of the governing documents of those funds and after it
255 has been determined that those policies are appropriate and materially consistent with
256 the investment objectives.
257 (5) Prohibited securities. Only those derivative securities expressly described herein are
258 permissible. Trading on margin and short selling are prohibited for separate account
259 managers.
260 (6) Performance Evaluation. The Board of Trustees intends to review investment
261 performance and compliance with stated investment policies on a quarterly basis.
262 (7) Review of policy. It is the intention of the Board of Trustees of the Boynton Beach
263 General Employees' Pension Fund to review this statement of investment policy and
264 its addenda periodically to amend it by policy to reflect any changes in philosophy or
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265 objectives. However, if at any time the investment manager believes that the specific
266 objectives defined herein cannot be met or that these guidelines unnecessarily constrict
267 performance, the Board shall be so notified in writing.
268 (h) Compliance with Chapter 2023-28. Laws of Florida
269 The Board and its investment managers shall comply with the applicable requirements of
270 Chapter 2023-28. Laws of Florida. including Section 112.662. along with regulations adopted by
271 the Department of Management Services.
272 (1) Definition of pecuniary factor. The term "pecuniary factor" is defined as a factor
273 that an investment fiduciary "prudently determines is expected to have a material
274 effect on the risk or returns of an investment based on appropriate investment
275 horizons consistent with the investment objectives and funding policy of the
276 retirement system. The term does not include the consideration of the furtherance
277 of social. political. or ideological interests."
278 (2) Exclusive consideration ofpecuniary factors. Only pecuniary factors may be
279 considered, and the interests of the participants and beneficiaries of the system may
280 not be Libordinated to other objectives, including sacrificing investment return or
281 undertaking additional investment risk to promote any nonpecuniary factor. The
282 weight given to any pecuniary factor must appropriately reflect a prudent
283 assessment of its impact on risk or returns.
284 (3) Proxy voting. Only pecuniary factors may be considered when voting proxies.
285
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286 (4) Filing reauirements. The Board shall timely comply with the reporting
287 reauirements of Section 112.662.Florida Statutes.by filing a comprehensive report
288 by December 15 of each odd-numbered year. Investment managers and the Board's
289 investment consultant shall assist in the preparation of required reports and shall
290 annually confirm to the Board their compliance with Chapter 2023-28.
291 (5) Contracting and external communication requirements.
292 a. Manager contracts shall comply with Section 215.885. Florida Statutes.
293 b. Requests for proposals issued for investment manager services shall comply
294 with Section 287.05701. Florida Statutes.
295 (6) The investment consultant shall provide investment managers for consideration
296 who invest only based on Pecuniary factors as defined by this subsection (h)(1).
297 (7) If a Request for Proposals document is issued for Investment Manager services.the
298 solicitation document must include the following:
299 The Board of Trustees may not reauest documentation of or consider a vendor's
300 social, political, or ideological interests when determining if the vendor is a
301 responsible vendor. Additionally. the Board of Trustees may not give
302 preference to a vendor based on vendor's social. political, or ideological
303 interests.
304 SECTION 3: Codification. It is the intention of the City Commission of the City of
305 Boynton Beach, Florida, and it is hereby ordained that the provisions of this Ordinance shall
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306 become and be made a part of the Code and Ordinances of the City of Boynton Beach, Florida,
307 and that Sections of this Ordinance may be renumbered,re-lettered and the word"Ordinance"may
308 be changed to "Section," "Article," or such other word or phrase in order to accomplish such
309 intention.
310 SECTION 4: Severability. If any clause, section,or other part of this Ordinance shall be
311 held by any court of competent jurisdiction to be unconstitutional or invalid, such unconstitutional
312 or invalid part shall be considered eliminated and in no way affect the validity of the other
313 provisions of this Ordinance.
314 SECTION 5: Conflicts. That all Ordinances, parts of Ordinances, Resolutions, or
315 parts of Resolutions in conflict herewith be and the same are repealed to the extent of such conflict.
316 SECTION 6: Effective Date. That this Ordinance shall take effect immediately
317 upon passage.
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325 FIRST READING this /6f'day of 0ej-364., 2024.
326 SECOND, FINAL READING,AND PASSAGE this 1-1 ay of kjin 2024.
327 CITY OF BOYNTON BEACH, FLORIDA
328 YES NO
329 /
330 Mayor—Ty Penserga
331 tr332 Vice Mayor— Aimee Kelley
333
334 Commissioner—Woodrow L. Hay !�
335 v
336 Commissioner—Angela Cruz
337
338 Commissioner—Thomas Turkin
339
340 VOTE c-'Q
341 ATTE T:
342
343 i 344 JO
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345 Maylee U eJ • us, MMC T. ` - :-r_.
346 City Cle ' May
347 . ,.. h
348 �pYNTOk' , APPROVED AS TO FORM:
349 (Corporate Seal) S��;•c,O�PURATF'.F-y`�
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350 ' SEAL •••'_ ,sAu4 CAI b
351 i' It INCORPORATED!
352 itlis. 1920 r Shawna G. Lamb
:
353 IIS ••••......•• City Attorney
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