2009-27024 ResoRESOLUTION NO. 2009-2024
A RESOLUTION ESTABLISHING THE CITY OF
MIAMI BEACH OTHER POST-EMPLOYMENT
BENEFITS ("OPEB") TRUST, AND AUTHORIZING
THE MAYOR TO EXECUTE THE CITY OF MIAMI
BEACH OPEB TRUST DOCUMENT.
WHEREAS, the City of Miami Beach has established and maintains certain employee
and retirement benefit plans that provide post-employment benefits other than pensions
("OPEB"), including but not limited to medical, dental, vision and prescription-drug coverage, to
participants and their dependents who are eligible for coverage thereunder; and
WHEREAS, the Governmental Accounting Standards Board (GASB) has issued
Statement 43 and Statement 45, which establish standards for accounting and financial reporting
for state and local governmental employers that offer other post-employment benefits to
participants and their eligible dependents; and
WHEREAS, GASB Statement 43 and GASB Statement 45 require the City of Miami
Beach to account for any OPEB unfunded actuarial accrued liability, i.e., the present value of
other post-employment benefits earned but not funded and amortized over a period not to exceed
thirty (30) years; and
WHEREAS, the City of Miami Beach wishes to establish an irrevocable trust pursuant to
Section 115 of the Internal Revenue Code for the purpose of funding and pre-funding other post-
employment benefits provided under its retirement benefit plans in accordance with GASB
Statement 43 and GASB Statement 45;
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND THE
CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA that the City of
Miami Beach OPEB Trust Document (the "Trust Document") is hereby adopted and approved in
substantially the form attached hereto as Exhibit "A."
BE IT FURTHER RESOLVED, that the Mayor is hereby authorized to execute and
deliver the Trust Document in substantially the form attached hereto as Exhibit "A", and the City
Manager is directed and authorized to take all necessary and appropriate action to carry out the
purposes and terms of the OPEB Trust.
BE IT FURTHER RESOLVED, that the following funds that have been set aside and
designated for OPEB in the General Fund, shall be transferred to the OPEB Trust concurrent
with the creation of said Trust and the adoption of this Resolution, and said funds shall be
reflected as assets of the OPEB Trust upon the effective date of this Resolution These funds
resulted from the following:
(a) $2,000,000 set aside from the FY 2005/06 General Fund budget; and
(b) $2,000,000 set aside from the FY 2006/07 General Fund budget;
BE IT FURTHER RESOLVED, that the following funds shall be transferred to the
OPEB Trust upon the adoption of the year-end budget amendments to the FY 2007/08 budgets
specified below:
(a) $2,246,568 as part of the FY 2007/08 General Fund year-end budget amendment.
(b) $612,411 as part of the FY 2007/08 Enterprise and Internal Service Funds year-
end budget amendment.
BE IT FINALLY RESOLVED, that this Resolution and the Trust Document attached
hereto as Exhibit "A" shall become effective as of September 30, 2008, and that all resolutions
and parts of resolutions in conflict with this Resolution are hereby repealed to the extent of the
conflict.
PASSED AND ADOPTED by the City Commission of the City of Miami Beach,
Florida, this 2nd day of March, , 2009.
May Matti Herrera Bower
Attest:
d' a~.t~~
City Clerk Robert Parcher
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
~ 1~ z/~y
Ciiy Attorn Date
COMMISSION ITEM SUMMARY
Condensed Title:
A RESOLUTION ESTABLISHING THE CITY OF MIAMI BEACH OTHER POST-EMPLOYMENT
BENEFITS (OPEB) TRUST, AND AUTHORIZING THE MAYOR TO EXECUTE THE CITY OF
MIAMI BEACH OPEB TRUST DOCUMENT
Key Intended Outcome Supported:
Improve City's Overall Financial Health and Maintain Overall Bond Rating
Supporting Data (Surveys, Environmental Scan, etc.):
• Bond Ratings S&P - AA- Moody's - Aa3
Issue:
Should the City establish the Other Post -Employment Benefits Trust, including all necessary and
appropriate action to carry out the purposes and terms of the OPEB Trust
item Summary~Recommenclation:
In 2004, the Governmental Accounting Standards Board (GASB) statements established standards related
to benefits paid to retirees other than pensions, requiring City of Miami Beach to report under these
standards for the period 10/1/07 though 9/30/08, and annually thereafter.
To date, the City has funded the these benefits on a "pay-as-you-go" basis; when the premiums are due,
rather than when the liability is incurred. Since the City did not set aside funds over the years of
employment for retired employees or related to past years of service for current employees, the City has to
report on unfunded liabilities that relate to prior years (amortized over 30 years) as well as the current year
liability related to those currently employed. For FY 2007/08, the City's annual liability (the Annual
Required Contribution -ARC), including both normal costs and amortization of unfunded liability, ranges
from $13.276 million based on a 8.5% discount rate to $17.432 million based on an 5% discount rate. The
discount rate is the assumed rate for the long term investment yield on the investments used to finance the
payment of long term benefits. With a trust, and assuming a plan to fund the trust over time, an 8.5%
discount rate can be assumed. Without a trust, a 5% discount rate is assumed.
Although, GASB standards require the City to recognize the liability for OBEP benefits as incurred, it does
not prescribe that these must be funded or how. The City has the options of never funding the liability;
funding when and if funds become available; or funding pursuant to a plan that will provide full funding over
a reasonable timeframe. None-the-less, unfunded liabilities typically affect the financial rating of the City.
The health insurance premiums that the City has funded annually on spay-as-you-go basis count towards
the City's ARC. The Net Obligations for the City for FY 2007/08 range from $6.901 million with a Trust that
is funded over time to $11.057 million without a Trust.
Adviso Board Recommendation:
Finance and Ci ide Pro~ects Committee recommended the creation of an OPEB Trust (2/11/09).
Financial Information:
Source of Amount Account
Funds: 1 $4,000,000 Funds that have been set aside and designated for
OPEB in the General Fund in rior ears
2 $ 612,411 FY 2007/08 year-end transfer from Enterprise and
Internal Service Funds
3 $2,246,568 FY 2007/08 year-end transfer from the General Fund
Total $6,858,979
Financial Impact Summary:
Clerk's Office
Sign-Offs
De a irec r Assistant C' Mana er ana er
~ MIAMIBEACH
~~
AGENDA ITEM 7 E
DATE Z'a,'~~
m MIAMIBEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Matti H. Bower and Members of the City Commission
FROM: Jorge M. Gonzalez, City Manager
DATE: February 25, 2009
SUBJECT: A RESOLUTION ESTABLISHING THE CITY OF MIAMI BEACH OTHER
POST-EMPLOYMENT BENEFITS (OPEB) TRUST, AND AUTHORIZING THE
MAYOR TO EXECUTE THE CITY OF MIAMI BEACH OPEB TRUST
DOCUMENT
ADMINISTRATION RECOMMENDATION
Adopt the Resolution,
ANALYSIS
In 2004, the Governmental Accounting Standards Board (GASB) released Statement No. 43
-Financial Reporting for Postemployment Benefit Plans Other than Pension Plans (GASB
43) and Statement No. 45 -Accounting and Financial Reporting by Employers for
Postemployment Benefit Plans Other than Pension Plans (GASB 45). These two
statements established uniform accounting and financial reporting standards for state and
local governments related to benefits paid to retirees other than pensions (OPEB), including
implementation dates based on the total annual revenues of the entity. Based on the GASB
standards, the City of Miami Beach is required to report under these standards as part of
their year-end financial reports for the period October 1 2007 though September 30, 2008,
and annually thereafter.
The City of Miami Beach currently provides the following Post Employment Benefits:
Health and Dental Insurance
• Employees hired prior to March 18, 2006 are eligible to receive a 50% health
insurance contribution of the total premium cost. At age 65, if the retiree is eligible
for Medicare Part B, the City contributes 50% of the Medicare Part B payment.
• Employees hired after March 18, 2006, after vesting in City's retirement plans, are
eligible to receive an amount per year of credible service, up to a maximum of $250
per month until age 65 and $5 per year of credible service up to a maximum of $125,
thereafter.
Life Insurance ($1,000)
To date, the City has funded the cost of these benefits on a "pay-as-you-go" basis, i.e. when
the premiums are due, rather than when the liability is incurred. The GASB standards
require that the liability for these OPEB costs be recognized when incurred, meaning in
association with each year of service by the employee. Since the City did not set aside
A RESOLUTION ESTABLISHING THE CITY OF MIAMI BEACH OTHER POST-
EMPLOYMENT BENEFITS (OPEB) TRUST
Page 2
funds over the years of employment for employees that are currently retired or related to
past years of service for current employees, the City has to report on unfunded liabilities that
relate to prior years (amortized over 30 years) as well as the current year liability related to
those currently employed.
To determine the impacts of the new OPEB standards, the City hired Gallagher Benefits
Services to perform an actuarial analysis of the City's liabilities. Most significant in the
analysis is the difference in the discount rate that can be used in the actuarial calculation
depending whether the City elects to create a separate OPEB trust. The discount rate is the
assumed rate for the long term investment yield on the investments used to finance the
payment of long term benefits. With a trust, and assuming a plan to fund the trust over time,
an 8.5% discount rate can be assumed. Without a trust, a 5% discount rate is assumed.
In summary, for FY 2007/08, the City's annual liability (the Annual Required Contribution -
ARC), including both normal costs and amortization of unfunded liability, ranges from
$13.276 million based on a 8.5% discount rate to $17.432 million based on an 5% discount
rate for All Workers. Given the unique nature of the Fire Health Trust, there had been
question as to whether the City should include the liability related to Fire Workers.
Subsequent to the February 11, 2009 Finance and Citywide Projects Committee meeting
where this item was discussed, outside counsel has opined that the City cannot exclude Fire
Workers in the determination of the actuarial liability.
However, the health insurance premiums that the City has funded annually on apay-as-you-
go basis count towards the City's ARC. Accordingly, the Net Obligations for the City for FY
2007/08 range between $6.901 million to $11.057 million for All Workers.
FY 2008 Annual Required Contribution
All Workers
8.5% Discount Rate
10/10/07 Accrued Liability (Unfunded) $ 155,956,000
Amortization of Unfunded Liability $ 10,420,000
Normal Cost $ 2,856,000
FY 2007/08 GASB 45 ARC ~ 73.276.000
FY 2007/08 Actual) Employer Contribution $ 6,37
Net OPEB Obligation $ 6,90
5% Discount Rate
10/10/07 Accrued Liability (Unfunded) $ 256,342,000
Amortization of Unfunded Liability $ 10,707,000
Normal Cost $ 6,725,000
FY 2007/08 GASB 45 ARC t ~7_a32_eee
FY 2007/08 Actual Employer Contribution $
Net OPEB Obligation $
A RESOLUTION ESTABLISHING THE CITY OF MIAMI BEACH OTHER POST-
EMPLOYMENT BENEFITS (OPEB) TRUST
Page 3
Although, GASB standards require that the City recognize the liability for OBEP benefits as
incurred, it does not prescribe that these must be funded or how. The City has the following
options with regards to funding the liability:
Never funding the liability
Funding when and if funds become available
Funding pursuant to a plan that will provide full funding over a reasonable
timeframe
None-the-less, unfunded liabilities typically affect the financial rating of the City. This will be
particularly important for those funds where the City is planning to sell bonds in the next few
years (Water, Sewer, Stormwater, and Parking). At the February 11, 2009 Finance and
Citywide Projects Committee meeting, the Committee recommended that the City
administration proceed with the creation of an OPEB trust effective for FY 2007/08 and
future years.
The table below shows the breakout for the FY 2007/08 ARC by fund, including department
information for each of the Enterprise Fund departments:
2008 Annual Required Contribution (ARC)
8.5% Discount
Rate
Water $ 57,456
Sewer $ 36,178
Stormwater $ 30,432
Parkin $ 142,657
Convention Center $ 5,116
Sanitation $ 115,884
Internal Service Funds $ 224,688
Subtotal $ 612,410
General Fund $ 6,288,590
Total all Workers $ 6,901,000
Between FY 2005/06 and FY 2006/07, the City has set aside $4 million from General Fund
year-end surplus, and the recommended FY 2007/08 year-end budget amendment includes
an additional $2.25 million to be used to fund the City's OPEB liability. These funds will be
used to begin funding the OPEB trust. In addition, the Enterprise Funds and Internal Service
Funds will provide transfers to the Trust to offset the ARC requirements in the amounts
noted above for FY 2007/08.
Funding for the FY 2008/09 ARC will be evaluated based on an updated actuarial report for
FY 2008/09, but the City already has the following funds budgeted which can be used to
fund the Trust, in addition to the potential for additional year-end surpluses.
$6.9 million budgeted for retiree health benefits;
To the extent possible, fund the Enterprise Fund expenses from any FY 2008/09
savings;
To the extent possible, fund the Internal Service Fund expenses from FY
A RESOLUTION ESTABLISHING THE CITY OF MIAMI BEACH OTHER POST-
EMPLOYMENT BENEFITS (OPEB) TRUST
Page 4
2008/09 through chargebacks to the user departments;
• $0.4 million budgeted in the General Fund as contingency for health insurance
increases above 10%.
Going forward, the City will need to develop a plan to ensure that the Trust is fully funded
over a reasonable timeframe. Further, other opportunities may exist to reduce the ARC over
time, thereby reducing the future year funding requirements. These include: requiring higher
contributions for medical and dental plans, establishing an annual cap or increasing limits for
retiree medical benefits, reducing or phasing-out dependant coverage for retiree medical
benefits, increasing vesting requirements for medical benefits, etc. However, in addition to
the fact that these may require collective bargaining, they may also make the City less
competitive in recruitment in comparison to what other public sector organizations may offer.
The administration will continue to explore what other jurisdictions and private entities are
doing in this regard.
CONCLUSION
The attached Resolution will establish and fund the City of Miami Beach Other Post-
Employment Benefits Trust.
JMG:KGB:PW
ffiIBIT A 2/6/09
CITY OF MIAMI BEACH, FLORIDA
OPEB TRUST
By Resolution _, enacted on ,the CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA (as Grantor), transferred, assigned and conveyed to the BOARD
OF TRUSTEES (Trustee) the sum of dollars ($~ to be held in trust for the
purposes set forth herein. This Trust shall hereafter be known as the City of Miami Beach,
Florida, OPEB Trust.
WHEREAS, the City has established and maintains certain employee benefit plans that
provide post-employment benefits other than pensions (hereinafter "other post-employment
benefits" or "OPEBs"), such as but not limited to medical, dental, vision and prescription drug
coverage, to OPEB Participants who are eligible for coverage thereunder; and
WHEREAS, the Governmental Accounting Standards Board (GASB) has issued
Statement 43 (hereinafter "GASB 43") and Statement 45 (hereinafter "GASB 45"), which
establish standards for accounting and financial reporting for state and local governmental
employers that offer OPEBs to their OPEB Participants; and
WHEREAS, among other things, GASB 43 and GASB 45 require the City to account for
its unfunded actuarial accrued liability, i.e., the present value of OPEBs earned but not funded
and amortized over a period not to exceed thirty (30) years; and
WHEREAS, as authorized by O.C.G.A. § 47-20-10.1, the City and Trustee desire to
establish an irrevocable trust to be known as City of Miami Beach OPEB Trust (the "Trust"),
which will be an entity separate from the City for the exclusive purpose of providing funds to
pay for OPEBs, with the intent that (i) the income of the Trust will be exempt from federal and
state income tax (under Internal Revenue Code Section 115 with respect to federal income tax),
(ii) transfers to the Trust will not be taxable to OPEB Participants, (iii) the Trust will qualify as a
trust for purposes of GASB 43 pursuant to Paragraph 4 of GASB 43, and (iv) all assets of the
Trust are and will be irrevocably dedicated to, and shall be used for the exclusive purpose of,
providing for payments of OPEBs and for paying expenses of administering the Trust, and will
not be available to any creditors of the City; and
WHEREAS, this Trust, either in whole or in part, shall not be used for, nor shall any of
the income or other assets held under the terms of this Trust be used for, purposes other than the
payment of OPEBs to or on behalf of OPEB Participants under the employee benefit plans or the
expenses incident thereto or expenses of the Trust; and
WHEREAS, the Trustee is willing to accept the Trust; and
WHEREAS, Trust assets shall be held by the Trustee at all times and the Trust assets
shall not be considered funds or assets of the City for any purpose;
2/6/09
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
conditions hereinafter set forth and in order to state said Trust, the City and the Trustee hereby
mutually covenant and agree as follows:
SECTION 1
DEFINITIONS
The following words or phrases shall have the meanings set forth below unless a different
meaning plainly is required by the context. Any reference to a section number shall refer to a
section of this Trust Document unless otherwise specified.
1.1 "Board of Trustees" means the Board established pursuant to Section 7 of this Trust
Document, the membership of which, as so constituted from time to time, comprises the Trustee.
1.2 "Code" means the Internal Revenue Code, as amended from time to time.
1.3 "City" or "Miami Beach" means Miami Beach, Florida, acting by and through its City
Manager and its duly-elected City Commission.
1.4 "Investment Manager" means the individuals or companies appointed by the Trustee
pursuant to Section 5.1 to manage all or a portion of the investments of the Trust fund.
1.5 "OPEB Participants" means participants who are eligible for other post-employment
benefits under the Plans, together with their eligible dependents.
1.6 "Other post-employment benefits" or "OPEBs" means post-employment benefits, other
than pension benefits, paid pursuant to the Plans on behalf of OPEB Participants after an
employee's separation from service. Such benefits may include, but shall not necessarily be
limited to, medical, prescription drugs, dental, vision, Medicare Part B premiums, and life
insurance. The participating other post-employment benefit plans, as amended from time to time,
shall be incorporated herein by reference, and the terms herein shall have the meanings attributed
to them in such plans.
1.7 "Plan" or "Plans" means such employee benefit plan or plans for which OPEBs are funded
in whole or in part by the City under this Trust.
1.8 "Trust" means the trust fund created by this Trust Document.
1.9 "Trust Document" means this instrument, including all amendments thereto.
1.10 "Trustee" means, as the context requires, an individual member or all of the then current
membership of the Board of Trustees.
2/6/09
SECTION 2
ESTABLISHMENT OF TRUST
2.1 Trust Established. The City hereby establishes the Trust with respect to such funds as shall
from time to time be paid over to the Trustee in accordance with the Plans and earnings thereon,
if any. The Trust shall be held, managed and administered by the Trustee in trust in accordance
with the provisions of this Trust Document. The principal of the Trust, together with any
earnings thereon, shall be held by Trustee separate and apart from any assets of the City. All
Trust assets and all income thereon are irrevocably dedicated to, and shall be used for the
exclusive purpose of, making payments of other post-employment benefits for the benefit of
OPEB Participants and for paying expenses of administering the Trust.
2.2 Compliance. The Trust is intended to comply with and be atax-exempt governmental trust
under Section 115 of the Code. This Trust Document shall be interpreted in a manner consistent
with that intent and with the intention of the City that the Trust hereunder satisfies those
requirements of GASB Statement 43 and GASB Statement 45.
2.3 Exclusive Benefit. Except as provided under applicable law, no part of the corpus or income
of the Trust fund may be used for, or diverted to, any purpose other than for the exclusive benefit
of OPEB Participants under any Plan prior to the satisfaction of all liabilities of the Plan with
respect to such OPEB Participants and payment of expenses of administering the Trust.
2.4 Limit of Interests.
(a) No Right to Reversion. Except as provided in subsection (b) hereof, neither the City, the
Board of Trustees, nor any Trustee shall have any right, title, interest, claim, or demand
whatsoever in or to the funds held by the Trust, other than the right to a proper application
thereof and accounting therefor by the Board of Trustees as provided herein, nor shall any funds
revert to the City, the Board of Trustees, or any Trustee.
(b) Return of Contributions. Notwithstanding any other provisions of this Trust Document, if and
to the extent permitted by the Code and other applicable laws and regulations thereunder and by
GASB Statement 43 and GASB Statement 45, upon the City's request, a contribution that is
deposited into the Trust by a mistake in fact shall be returned by the Trustee to the City within a
reasonable period of time.
2.5 Spendthrift Provision. All assets, income and distributions of the Trust shall be protected
against the claims of creditors of the City and OPEB Participants, and shall not be subject to
execution, attachment, garnishment, the operation of bankruptcy, the insolvency laws or other
process whatsoever, nor shall any assignment thereof be enforceable in any court.
2.6 Named Fiduciary. The Trustee shall be the fiduciary for the Trust fund and shall have the
power to delegate responsibilities under this Trust Document. Such delegations may be to
officers and employees of the City of Miami Beach or to other individuals or organizations,
including an actuary or a third-party administrator or record keeper, all of whom shall hold those
2/6/09
delegations at the pleasure of the Trustee. Any employee of the City of Miami Beach who
already receives full-time pay, and who is delegated such fiduciary responsibilities, shall serve
without additional compensation except for reimbursement for expenses properly and actually
incurred. Whenever the Trustee delegates a fiduciary duty in writing, the Trustee shall be free
from liability for breach of such duty to the fullest extent permitted by law.
2.7 Segregation of Assets. Assets under the Trust may be segregated only for investment
purposes. No individual account for any OPEB Participant will be maintained at any time under
the Trust, and no OPEB Participant will have any right or title with respect to any specific assets
of the Trust. Accordingly, no OPEB Participant will have a preferred claim, lien on, security
interest in, or any beneficial interest in, any particular assets of the Trust. OPEB Participants will
be entitled to receive payments of assets of the Trust (or have such assets paid on behalf of such
OPEB Participants) only as determined by the Trustee in accordance with this Trust Document.
2.8 City Contributions. In its sole discretion, the City from time to time and at any time may
make contributions of cash or other assets acceptable to Trustee to the Trust, from employer
contributions, employee contributions, or any other source. Neither Trustee nor any OPEB
Participant nor any other person or entity shall have the right to compel such contributions. All
such contributions and all income thereon are irrevocably dedicated to, and shall only be used
for, those purposes authorized in Paragraphs 2.1 and 2.3 of the Trust Document.
2.9 Annual Audit. The City shall appoint a responsible accounting firm to conduct an annual
audit of the Trust at the sole expense of the City. The results of such audit shall be provided to
the Trustee.
SECTION 3
DUTIES OF THE TRUSTEE
3.1 Management of Trust Fund. The Trustee shall manage the assets of the Trust fund, as
would a prudent person under like circumstances who is familiar with such matters.
3.2 Receipt of Contributions. Trustee agrees to accept contributions to the Trust that are paid to
the Trustee by the City in accordance with the terms of this Trust Document. The Trustee shall
receive all contributions in cash or in such other form as permitted under the laws of the State of
Florida and acceptable to the Trustee. The Trustee shall be accountable to the City for the funds
remitted to it by the City, and shall have a duty to see that the payment received complies with
the provisions of the Plans and with any statute, regulation or rule applicable to contributions.
3.3 Disbursement of Assets.
(a) Disbursements. Subject to Paragraphs 2.1 and 2.3 of this Trust Document, the Trustee
shall from time to time make payments or disbursements out of the Trust fund to persons or
other entities in such amounts as are necessary for the payment of other post-employment
benefits pursuant to and in accordance with the terms of the Plans, and for the payment of
reasonable and proper expenses of the Trust. In addition, the Trustee shall from time to time
2/6/09
make payments or disbursements out of the Trust fund to such persons or other entities,
including the City, for the reimbursement of the Plans' other post-employment benefit
obligations or expenses previously satisfied by such persons or other entities. The Trustee
shall pay all fees and expenses reasonably incurred by it in the administration of other post-
employment benefits under the Plans and the Trust fund unless the City directly pays such
fees and expenses. Nothing contained in this Trust Document or any of the Plans shall
constitute a guarantee that Trust assets will be sufficient to pay any other post-employment
benefits to any particular OPEB Participant.
(b) Expenses. The reasonable and proper expenses of the Plans and the Trust shall include,
but not be limited to:
(i) the fees of any third-party administrator and actuary's fees as agreed upon by the
Trustee from time to time;
(ii) expenses incurred by the Trustee in the operation and administration of the other post-
employment benefits under the Plans and this Trust fund;
(iii) the fees and other charges against the Trust fund by any Investment Manager or other
person or firm that provides services for the other postemployment benefits provided
under the Plans or the Trust fund, including attorney's fees; and
(iv) any income or other taxes properly levied or assessed against the Trust fund.
3.4 Other Duties.
(a) Records. The Trustee shall keep such accounts and records and make such reports and
disclosures as shall be required by law and by the Governmental Accounting Standards
Board under this Trust Document and under the Plans. The records of the Trust pertaining to
the City shall be open to inspection by the City at all reasonable times and will be audited on
an annual basis by such persons as the City may specify.
(b) Statements. On or before March 1 each year, the Trustee shall furnish the City with an
annual statement of account showing the condition of the Trust fund and all investments,
receipts, disbursements and other transactions effected by the Trustee during the fiscal year
covered by the statement and also stating assets of the Trust held at the end of the fiscal year.
The statement of account shall be conclusive on all persons, including the City, except as to
any transaction concerning which the City files with the Trustee written exceptions or
objections within ninety (90) days after receipt of the statement of account.
(c) Compliance. The Trustee shall take such action (or refrain from taking such action, as the
case may be) as shall be necessary to comply with the Trust, other agreements between the
Trustee and the City or applicable State of Florida and federal laws.
(d) Authority to Delegate Duties. The Trustee is authorized to delegate any of the duties
assigned to it in this Agreement, other than those duties relating to the investment or
2/6/09
management of the assets of the Trust fund, to any individual or organization it deems
qualified to perform such duties. The Trustee is only authorized to delegate investment and
asset management duties to an Investment Manager pursuant to the provisions of Section 4.
When delegating duties, the Trustee shall document the delegation in either (i) a written
amendment to this Trust approved by the City, (ii) Trustee minutes or resolutions, or (iii) a
separate written agreement with the delegate.
(e) Delegation of Duties. The Trustee may delegate the administrative duties under the Plan
to an actuary and/or third party administrator. The duties of the actuary and/or third party
administrator shall be set forth in an agreement for administrative services between the
Trustee and the actuary and/or third party administrator.
(f) Liability Limitations. The Trustee shall not be liable for the acts or omissions of parties to
whom it has specifically delegated duties, except with respect to any acts or omissions in
which the Trustee participates knowingly or which h the Trustee knowingly undertakes to
conceal, and which the Trustee knows constitutes a breach of fiduciary responsibility. The
Trustee shall be held harmless, to the extent provided for in the laws of the State of Florida,
by the City and OPEB Participants, together with their heirs, successors and assignees, from
any and all liability hereunder for acts or omissions performed in good faith and with
prudence. Except as otherwise provided by contract or applicable law, no person acting in a
fiduciary capacity with respect to the Trust shall be liable for any action taken or not taken
with respect to the Trust except for actions that constitute negligence or willful misconduct.
SECTION 4
INVESTMENT OF TRUST ASSETS
4.1 General Investment Power. The assets of the Trust shall be invested by the Trustee in
accordance with an investment policy adopted by the Trustee in accordance with section
218.415, Fla. Stat. Except to the extent such duties are specifically delegated to one or more
Investment Managers under Paragraph 4.4, the Trustee shall manage and control assets of the
Trust, including selecting and retaining or disposing of any investment of such assets.
4.2 Full Investment Powers. The Trustee shall have full discretion and authority with regard to
the investment of Trust assets, except to the extent it has delegated such discretion to a properly
appointed Investment Manager with respect to Trust assets under such Investment Manager's
control or direction. The Trustee is authorized and empowered with all investment powers
conferred on trustees by the laws of the State of Florida.
4.3 Investment Managers. The provisions in this subsection shall control the appointment and
use of Investment Managers, as follows:
(a) Appointment. The Trustee may appoint one or more Investment Managers to manage the
assets of all or any part of the Trust fund. Each such Investment Manager shall be either:
2/6/09
(i) registered as an investment adviser under the Investment Advisers Act of 1940;
(ii) a bank, as defined in such Act; or (iii) an insurance company qualified to perform the
services of an Investment Manager under the laws of more than one state.
The Trustee shall obtain from any Investment Manager a written statement:
(i) acknowledging it is a fiduciary with respect to the Trust assets under its management;
and
(ii) certifying that it is either an investment adviser, a bank, or an insurance company,
which is qualified to be appointed as an Investment Manager under this Trust Document.
The Trustee shall enter into a written contract or agreement with each such Investment
Manager in connection with its appointment as such, and such contract shall be subject to
such terms and conditions and shall grant to the Investment Manager such authority and
responsibilities asthe Trustee deems appropriate under the circumstances. The Trustee
shall not be responsible for any investment decision made by an Investment Manager
unless the Trustee actually makes that decision.
(b) Trustee Duties. Any investment directions or notifications from an Investment Manager
to the Trustee may be made orally or in writing, or in such manner as shall be agreed upon
between the Investment Manager and the Trustee; provided, in the event the Investment
Manager gives the Trustee oral recommendations, directions or notifications, the Investment
Manager shall confirm such directions or notifications in writing immediately thereafter.
(c) Violation of Trustee's Fiduciary Duties. Notwithstanding the foregoing, if, in the
Trustee's sole discretion, the execution of any instruction with respect to, or the continued
holding of any assets in, an investment managed by an Investment Manager would be in
violation of the Trustee's fiduciary responsibilities, the Trustee may refuse to execute such
instruction or may dispose of such asset or assets, respectively; provided, the Trustee shall
not be responsible for the acts or omissions of such Investment Manager. In any such case,
the Trustee shall promptly notify the Investment Manager of such situation.
(d) Failure to Direct. In the event that an appointed Investment Manager shall fail to invest
all or any portion of the assets under its management, the Trustee shall be responsible for the
investment of such assets. If an appointed Investment Manager shall fail to give the Trustee
instructions or directions relating to the voting of shares held pursuant to an investment
directed by the Investment Manager or the execution and delivery of proxies, or relating to
the purchase and sale of fractional shares or the exercise of any other ownership right, the
Trustee shall take such action as it deems to be in the best interest of the Trust, provided such
action is consistent with the then existing investment policies established by the Trustee.
(e) Termination of Appointment. Upon termination of the appointment of an Investment
Manager, the Trustee may appoint a successor Investment Manager with respect to the
investments formerly under the management of the terminated Investment Manager or may
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merge or combine such investments with other investments or Trust assets within the
guidelines of the investment policies established by the Trustee.
(f) Asset Transfer. If the Trustee directs an Investment Manager to hold a portion of the
assets of the Trust as well as make the investment decisions for such funds, the Trustee shall
enter into such contractual or other arrangements as are necessary for the transfer and
custody of such assets of the Trust fund. If the Trustee terminates such Investment Manager,
it shall take such action to recapture and take directly into the Trust fund any assets so
transferred.
(g) Reports and Valuations. An Investment Manager who has custody of any portion of the
assets of the Trust shall keep accurate and detailed books and records on all investments,
receipts, disbursements and other transactions for such account and shall determine the fair
market value of the assets of such account as of each reporting date determined by the
Trustee, and, further, shall file a copy of such books and records and valuations with the
Trustee on or before such deadlines as the Trustee shall reasonably set. The Trustee also shall
have the right to request that any person who is responsible for making the investment
decisions for an investment account determine the fair market value of any asset, or all of the
assets, held for that account and file a copy of such valuation with the Trustee before such
deadlines as the Trustee reasonably shall set, and each such person shall comply with any
such request.
SECTION 5
POWERS OF THE TRUSTEE
5.1 General Authority. Except to the extent such powers are specifically delegated to an
Investment Manager under Paragraph 4.4 of this Trust Document, the Trustee shall receive, hold,
manage, convert, sell, exchange, invest, reinvest, disburse and otherwise deal with the assets of
the Trust, including contributions to the Trust and the income and profits therefrom, without
distinction between principal and income and in the manner and for the uses and purposes set
forth in this Trust Document.
5.2 Specific Powers. In the management of the Trust, the Trustee or its delegate, as the case may
be, shall have the following powers in addition to the powers customarily vested in trustees by
the laws of the State of Florida but in no way in derogation thereof, and such powers shall be
exercised in accordance with proper directions and the investment policy established by the
Trustee or the Investment Committee and without order of, and report to, any court:
(a) Sales. To sell, exchange, convey, transfer or otherwise dispose of any property held in the
Trust, by private contract or at public auction. No person dealing with the Trustee shall be
bound to see the application of the purchase money or other property delivered to the Trustee
or to inquire into the validity, expediency or propriety of any such sale or other disposition;
(b) Purchase of Property. With any cash at any time held by it, to purchase or subscribe for
any authorized investment and to retain the same in the Trust;
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(c) Retention of Cash. To hold cash without interest in such amounts as may be in its opinion
reasonable for the proper operation of the Trust;
(d) Exercise of Owner's Rights. To give general or special proxies or powers of attorney with
or without power of substitution with respect to any corporate stock or other security; to
exercise any conversion privileges, subscription rights or other options, and to make any
payments incidental thereto; to oppose, consent to, or otherwise participate in reorganizations
or other changes affecting any stock, bond, note or other property, and to delegate
discretionary powers and pay any assessments or charges in connection therewith, and
generally to exercise any of the powers of an owner, including voting rights, with respect to
any stock, bond, note or other property held as part of the Trust;
(e) Registration of Investment. To cause any stock, bond, other security or other property
held as part of the Trust to be registered in its own name or in the name of one or more of its
nominees; provided, the books and records of the Trustee shall at all times show that all such
investments are part of the Trust;
(f) Disbursement. To make disbursements for the payment of other post-employment benefits
under the Plans and for the payment of reasonable and proper expenses of this Trust or of the
Plans as related to OPEBs;
(g) Retention of Disputed Funds. To retain any funds or property subject to any dispute
without liability for the payment of interest; and to decline to make payment or delivery of
the funds or property until final adjudication is made by a court of competent jurisdiction;
(h) Execution of Instruments. To make, execute, acknowledge and deliver any and all
documents of transfer and conveyance and any and all other instruments, which may be
necessary or appropriate to carry out the powers herein granted;
(i) Settlement of Claims and Debts. To settle, compromise or submit to arbitration any
claims, debts or damages due or owing to or from the Trust, to commence or defend legal or
administrative proceedings and to represent the Trust in all legal and administrative
proceedings;
(j) Employment of Agents, Advisors and Counsel. To employ and to act or refrain from
acting on the advice or opinion of suitable agents, actuaries, accountants, investment
advisers, brokers and counsel, and to pay their reasonable expenses and compensation;
(k) Power to do any Necessary Act. To do all acts which it may deem necessary or proper
and to exercise any and all powers of the Trustee under the Plans and this Trust Document
upon such terms and conditions as it may deem in the best interests of the Trust;
(1) Loans. To borrow money only for such periods of time and upon such terms and
conditions as the Trustee deems necessary and proper to cover any temporary, short-term
overdrafts, and to secure such loans by mortgaging, pledging or conveying any property of
the Trust; and
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(m) Appointment of Custodian. To appoint a custodian to safeguard the assets of the Trust.
The City hereby authorizes and directs the Trustee t o enter into such agreements with any
such custodian as may be necessary to establish an account with the custodian. For
administrative purposes, contributions deposited to the appointed custodian shall be deemed
as contributions deposited with the Trustee on behalf of the Trust.
5.3 Standard of Care. The Trustee shall discharge its duties under this Trust Document with the
care and skill required with respect to such duties. The Trustee shall not be responsible for the
title, validity, or genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Trust Document and shall be held harmless in acting upon any
notice, request, direction, instruction, consent, certification, or other instrument believed by it to
be genuine and delivered by the proper party or parties.
5.4 Exclusive Benefit Rule. Except as otherwise provided by any applicable provision of any
statute, regulation, ordinance, resolution or other post-employment benefit plan, no portion of the
vested principal or the income of the Trust shall revert to the City, or ever be used for or diverted
to any purpose other than for (i) the exclusive benefit of OPEB Participants and (ii) the payment
of reasonable expenses of such plans and the Trust. The Trustee shall administer the Trust in
compliance with IRC Section 503(b).
SECTION 6
ADMINISTRATION
6.1 Bonds and Reports to Court. Each Trustee shall be bonded to the extent required by law,
except that, to the extent the requirement of any such bond may be waived, such waiver shall be
deemed to have been exercised, and no such bond shall be required. The Trustee shall not be
required to make any inventory or appraisal or report to any court or to secure any order of any
court for the exercise of any power herein contained.
6.2 Accounting by Trustee. The Trustee, or its delegate, shall cause to be created and
maintained adequate and distinct written or computerized records with respect to the operation of
the Trust, including all investments, and any pending litigation to which the Trust or the Trustee
is a party. Such records shall be retained for so long as the contents thereof may be or become
material to the administration of the Trust or in the full and complete discharge of liabilities to
any and all OPEB Participants.
6.3 Expenses. The expenses incurred by the Trustee in the performance of its duties hereunder,
all proper charges and disbursements of the Trustee, including all personal property taxes,
income taxes and other taxes of any and all kinds whatsoever that may be levied or assessed
under existing or future laws upon or in respect of the Trust, or any money, property or security
forming a part of the Trust fund, may be paid by the Trustee from the Trust, and the same shall
constitute a charge upon the Trust, unless the City pays the same or any part thereof.
Notwithstanding the foregoing, neither the City nor the Trust shall be liable or responsible for the
payment of fees, expenses, taxes or charges incurred by any Trustee on account of any
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misfeasance, malfeasance or nonfeasance by any Trustee or on account of any act or omission in
violation of this Trust Document or any applicable law.
6.4 Action of the Trustee. A majority of the Trustee shall constitute a quorum and acts of a
majority of the Trustees present at any meeting at which a quorum is present or acts approved by
all Trustees in writing shall be deemed to be valid acts. Notwithstanding the above, the duly
elected chairperson of the Trustee as designated by the Trustee may execute any documents
relating to the Trust, including contracts relating to the investment or reinvestment of the assets
of the Trust, documents necessary for the exercise of any ownership rights thereunder, service
agreements or other related documents, and may perform other such ministerial acts. The Trustee
shall keep minutes of its proceedings and complete and accurate records which may be examined
at any reasonable time on behalf of the City by any officer or employee designated in writing by
the City.
SECTION 7
SELECTION AND TERM OF BOARD OF TRUSTEES
7.1 Membership. The Board of Trustees shall have three (3) members, as follows:
1. Chief Financial officer or designee.
2. or designee.
3.
or designee.
7.2 Term. Members of the Board of Trustees holding the positions specified above serve for as
long as they hold the specified position. Designees shall serve at the pleasure of the designating
official.
7.3 Compensation. Except with respect to actual expenses incurred by Trustees as provided in
Paragraph 6.3, Trustees shall not receive any compensation for their services rendered as
Trustees.
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SECTION 8
AMENDMENT OR TERMINATION OF TRUST
8.1 Amendment of Trust. This Trust Document may be amended at any time by written
instrument executed by the Trustee and the City. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Plans or shall make the Trust revocable.
8.2 Termination of Trust. The City reserves the right at any time to terminate this Trust;
provided, however, that under no circumstance shall any portion of the Trust revert to or become
property of the City. Upon termination, the Trustee shall continue to administer the Trust in
accordance with the provisions contained herein until all obligations under the Plans have been
discharged and satisfied or all funds have been paid out. Until all assets of the Trust are
distributed, the Trust shall continue, and this Trust Document shall remain in effect. Any assets
remaining in the Trust following termination and after all obligations under the Plans have been
discharged and satisfied shall revert to the City.
8.3 Property Not Transferred. The Trustee reserves the right to retain such property as is not
suitable for distribution or transfer at the time of the termination of the Trust and shall hold such
property for the benefit of those persons or other entities entitled to such property until such time
as the Trustee is able to make distribution. Upon the appointment and acceptance of a successor
trustee, the Trustee's sole duties shall be those of a custodian with respect to the property not
transferred.
SECTION 9
MISCELLANEOUS
9.1 Successors and Assigns. The stipulations in this Trust Document shall inure to the benefit
of, and shall bind, the successor and assigns of the respective parties.
9.2 No Third Party Beneficiaries. The provisions of this Trust Document are intended to
benefit only the parties hereto, their respective successors and assigns, and OPEB Participants
under each Plan. There are no other third party beneficiaries.
9.3 Waiver. No waiver by either party of any failure or refusal to comply with an obligation
hereunder shall be deemed a waiver of any other or subsequent failure or refusal to so comply.
9.4 Conflict. In resolving any conflict among provisions of the Trust and in resolving any other
uncertainty as to the meaning or intention of any provision of the Trust, the interpretation that (i)
causes the Trust to be exempt from tax under IRC Sections 115 and 501(a), and (ii) causes the
participating other post-employment benefit plan and the Trust to comply with all applicable
requirements of law shall prevail over any different interpretation.
9.5 Severability. If any term or provision of this Trust Document or the application thereof to
any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of
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this Trust Document, or the application of such term or provision to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Trust Document shall be valid and enforceable to the fullest
extent permitted by law.
9.6 Section Headings. The headings of the various sections and subsections of this Trust
Document have been inserted only for the purposes of convenience, are not part of this Trust
Document and shall not be deemed in any manner to modify, explain, expand or restrict any of
the provisions of this Trust Document.
9.7 Governing Law. This Trust shall be governed and construed in accordance with the laws of
the State of Florida and, to the extent applicable, the Internal Revenue Code.
9.9 Effective Date. This Trust shall be effective as of Octber 1, 2008.
IN WITNESS WHEREOF, the City of Miami Beach and the Trustee have caused this
Trust Document to be signed by their duly authorized officers or representatives on this day
of , 2009. (The remainder of this page left intentionally blank.)
2/6/09
MIAMI BEACH, FLORIDA
By:
Mayor
Miami Beach City Commission
ATTEST:
City Clerk
BOARD OF TRUSTEES
Trustee
APPROVED AS TO FORM:
City Attorney
Trustee
Trustee