98-22813 RESO
RESOLUTION NO. 98-22813
A RESOLUTION CALLING A SPECIAL ELECTION
TO BE HELD ON SEPTEMBER 1, 1998 FOR THE
PURPOSE OF SUBMITTING TO THE ELECTORATE
OF THE CITY OF MIAMI BEACH FOR THEIR
APPROVAL OR DISAPPROVAL, AN AMENDMENT
TO ARTICLE VI, SECTION 31 OF THE
RELATED SPECIAL ACTS OF THE CITY OF
MIAMI BEACH, FLORIDA, TO DELETE
SPECIFIC RESTRICTIONS CONCERNING
PENSION BOARD INVESTMENT AND ALLOCA-
TION, AND TO SUBSTITUTE THEREFOR
LANGUAGE AUTHORIZING THE PENSION BOARD
TO EXERCISE (IN A PRUDENT MANNER)
INDEPENDENT JUDGEMENT IN ALLOCATING AND
INVESTING FUNDS; AUTHORIZING THE MIAMI
BEACH COMMISSION TO ESTABLISH BY
ORDINANCE PENSION BOARD INVESTMENT
GUIDELINES AND RESTRICTIONS.
BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF MIAMI
BEACH:
SECTION 1:
In accordance with the provisions of the Charter of the City
of Miami Beach, Florida and the general laws of the State of
Florida, a Special Election is hereby called and directed to be
held in the City of Miami Beach, Florida, from 7:00 a.m. to 7:00
p.m. on September 1, 1998 for the purpose of submitting to the
electorate the question as set forth hereinafter.
SECTION 2:
The appropriate and proper Dade County election officials
shall conduct the said Special Election hereby called, except for
the certification of the results of said Special Election, which
duty shall be performed by the City Commission.
The official
1
returns for each precinct shall be furnished to the City Clerk of
the City of Miami Beach as soon as the ballots from all precincts
have been tabulated on the night of said Special Election.
SECTION 3:
Said voting precincts in the City of said Special Election
shall be as established by the proper and appropriate Dade County
Election Officials. All electors shall vote at the polling places
and the voting precincts in which the OFFICIAL REGISTRATION BOOKS
show that the said electors reside. A list of the voting precincts
and the polling places therein (subject to change by the Supervisor
of Elections of Dade County, in accordance with the laws of
Florida) is attached hereto as Exhibit A.
SECTION 4:
Registration of persons desiring to vote in the Special
Election shall be in accordance with the general law of the State
of Florida governing voter registration.
Qualified persons may
obtain registration forms to vote at the Office of the City Clerk,
City Hall, 1700 Convention Center Drive, First Floor, Miami Beach,
Florida 33139, each and every day until August 3, 1998, between the
hours of 9:00 a.m. and 5:00 p.m., and at such other voter
registration centers and during such times as may be provided by
the Supervisor of Elections of Dade County. Each person desiring
to become a registered voter shall be responsible for properly
filling out the registration form and returning it to the Dade
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County Elections Office. All registration forms must be received
by the Dade County Elections Office and clocked in no later than
August 3, 1998, at 5:00 p.m. in order for a person to vote in this
Special Election.
All questions concerning voter registration
should be directed to the Dade County Elections Office, 111
Northwest 1st Street, Floor 19, Miami, Florida 33130; Mailing
Address:
375-5553.
SECTION 5:
Copies of the proposed amendment to the Miami Beach City
P.O. Box 012241, Miami, Florida 33101; Telephone (305)
Related Special Acts shall be made available to the electors at the
office of the City Clerk from 9:00 a.m. to 5:00 p.m. each day,
Saturdays, Sundays and holidays excepted, not later than thirty
days prior to the date of said election.
SECTION 6:
Not less than thirty days' notice of said Special Election
shall be given by publication in a newspaper of general circulation
in Miami Beach, Dade County, Florida.
Such publication shall be
made at least once each week for four consecutive weeks next
preceding said Special Election.
SECTION 7:
The notice of election shall be substantially in the following
form:
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CITY OF MIAMI BEACH, FLORIDA
NOTICE OF SPECIAL ELECTION
NOTICE IS HEREBY GIVEN THAT A SPECIAL ELECTION
HAS BEEN CALLED BY THE CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, AND WILL BE HELD
IN SAID CITY FROM 7:00 A.M. UNTIL 7:00 P.M. ON
THE 1ST DAY OF SEPTEMBER, 1998, AT WHICH TIME
THERE SHALL BE SUBMITTED TO THE DULY REGIS-
TERED AND QUALIFIED VOTERS OF THE CITY OF
MIAMI BEACH THE FOLLOWING QUESTION:
GENERAL EMPLOYEES RETIREMENT SYSTEM PENSION
BOARD: DELETING SPECIFIC RESTRICTIONS ON
BOARD'S ALLOCATION/INVESTMENT OF FUNDS.
SHALL ARTICLE VI, SECTION 31 OF THE RELATED
SPECIAL ACTS OF THE CITY OF MIAMI BEACH,
FLORIDA, BE AMENDED TO DELETE SPECIFIC
RESTRICTIONS CONCERNING PENSION BOARD INVEST-
MENT AND ALLOCATION, AND TO SUBSTITUTE
THEREFOR LANGUAGE AUTHORIZING THE PENSION
BOARD TO EXERCISE (IN A PRUDENT MANNER)
INDEPENDENT JUDGMENT IN ALLOCATING AND
INVESTING FUNDS; AUTHORIZING THE MIAMI BEACH
CITY COMMISSION TO ESTABLISH BY ORDINANCE
PENS ION BOARD INVESTMENT GUIDELINES AND
RESTRICTIONS.
YES
NO
SECTION 8:
The official ballot to be used in the Special Election to be
held on September I, 1998, hereby called, shall be in substantially
the following form:
OFFICIAL BALLOT
CITY OF MIAMI BEACH, FLORIDA
SPECIAL ELECTION, SEPTEMBER I, 1998
4
GENERAL EMPLOYEES RETIREMENT SYSTEM PENS ION
BOARD: DELETING SPECIFIC RESTRICTIONS ON
BOARD'S ALLOCATION/INVESTMENT OF FUNDS.
SHALL ARTICLE VI, SECTION 31 OF THE RELATED
SPECIAL ACTS OF THE CITY OF MIAMI BEACH,
FLORIDA, BE AMENDED TO DELETE SPECIFIC
RESTRICTIONS CONCERNING PENSION BOARD INVEST-
MENT AND ALLOCATION, AND TO SUBSTITUTE
THEREFOR LANGUAGE AUTHORIZING THE PENSION
BOARD TO EXERCISE (IN A PRUDENT MANNER)
INDEPENDENT JUDGMENT IN ALLOCATING AND
INVESTING FUNDS; AUTHORIZING THE MIAMI BEACH
CITY COMMISSION TO ESTABLISH BY ORDINANCE
PENS ION BOARD INVESTMENT GUIDELINES AND
RESTRICTIONS.
YES
NO
SECTION 9:
Absentee voters participating in said Special Election shall
be entitled to cast their ballots in accordance with the provisions
of the laws of the State of Florida with respect to absentee
voting.
SECTION 10:
That the City of Miami Beach shall pay all of the expenses for
conducting this Special Election and will pay to Dade County or
directly to all persons or firms upon receipt of invoice or
statement approved by the Supervisor of Elections of Dade County,
Florida.
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SECTION 11:
This Resolution shall be effective immediately upon its
passage.
PASSED AND ADOPTED this
1st
day of
July
I 1998.
1)
MAYOR
ATTEST:
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CITY
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CLERK
APPROVED 1<S TO
FORM & LANGUAGE
& FOR EXECUTION
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PROPOSED RELATED SPECIAL ACTS AMENDMENT
SEPTEMBER 1. 1998 SPECIAL ELECTION
Text of Ouestion No.
Article VI, Section 31 of the Charter of the City of Miami
Beach, Florida, is hereby amended to read as follows:
All moncys paid into any pcnsion or
retircmcnt systcm crcated by this Act, cxccpt
such moncys as arc necessary to mcct currcnt
opcrating or pcnsion and retircmcnt paymcnts,
shall bc in~ested in thc following.
Bonds, notcs, securitics or othcr cvi
dcnces of indcbtcdncss which arc thc dircct
obligation of thc govcrnmcnt of thc Unitcd
Statcs and for which the full faith and crcdit
of thc govcrnmcnt is p1cdgcd.
Loans, insurcd or guarantccd as to
principal and intcrcst by thc gO'v'ernment of
thc Unitcd Statcs or by any agency or instru
mcntality thcrcof, to thc extent of such
insurancc or guaranty.
Bonds, notcs and other sccuritics of any
statc, county or incorporatcd city in any
statc of thc Unitcd Statcs or thc District of
Columbia, which arc thc dircct obligation of
such statc, county or city and for pa}~cnt of
~ihich said gO"v"ernmcntal body has the lmiful
authority to ICv-.r" taxcs or makc asscssmcnts.
Bonds, notcs or other e~idcnces of
indcbtedncss which arc payablc from rcv.cnucs
of any structurc or improvcmcnt millcd by any
statc, county or incorporatcd city within the
Unitcd Statcs.
Di'v.idcnd paying stocks, common or prc
fcrrcd, of any corporation crcatcd and
cxisting undcr thc laws of the Unitcd Statcs
or of any statc, pro~idcd that thc amount so
in~cstcd shall at no time cxcccd fifty pcrccnt
of thc total funds invcstcd. Stocks, common
or preferred, of any corporation not crcatcd
and exiDting under the lmm of the United
States, or of any state, shall at no time
exceed fi~e percent of the total equities. 1Jo
ffiore than twenty percent of the total equity
portfolio ffiay be in7ested in non dividend
paying stocks, lJihich are subj ect to the
guidelines set by ordinance.
Donds, noteD or other interest bearing
obligations of any solvent corporation
organized under the laws of the United States,
or any state, territory or possession of the
United States.
Shares or sa7ings accounts of federal
savings and loan associationD, to the extent
that they are insured by an agency or an
instrumentality of the go~ernment of the
United States.
All moneys paid into any pension or
retirement system created by this Act. except
such moneys as are necessary to meet current
operating or pension and retirement payments.
shall be invested by the pension board. In
connection therewith. the pension board shall.
in acquiring. investing. reinvesting. exchang-
ing. retaining. selling and managing property
for the benefit of any pension or retirement
system created by this Act. exercise the judg-
ment and care under the circumstances then
prevailing. which persons of prudence. discre-
tion and intelligence exercise in the manage-
ment of their own affairs. not in regard to
speculation but in regard to the permanent
disposition of their funds. considering the
probable income as well as the probable safety
of their capital. Within the limitations of
the foregoing standard. the pension board is
authorized to acquire and retain every kind of
property. real. personal or mixed. and every
kind of investment specifically including. but
not by way of limitation. bonds. debentures
and other corporate obligations. and stocks.
preferred or common. which persons of pru-
dence. discretion and intelligence acquire or
retain for their own account and. within the
limitations of the fore9oing standard. the
pension board may retain property aCQuired.
without limitation as to time and without
regard to its suitability for ori9inal pur-
chase. The city commission is authorized. by
ordinance. to set more specific guidelines and
restrictions for investment by the pension
board.
The city commission is authorized, by
ordinance, to increase the pension benefits to
members of the city pension fund for employees
of the City of Miami Beach.
CITY OF
MIAMI BEACH
:
-,-
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH FLORIDA 33139
~ETIREMENT SYSTEM FOR
GENERAL EMPLOYEES
MEMORANDUM
(305) 673.7437
FAX: (305) 673-7297
DATE:
June 17, 1998
TO:
Mr. Sergio Rodriguez
City Manager
Mr. Richard Bender 0
Executive Assistant to the City Manager/Labor Relations
VIA:
FROM:
Margaret A. Arculeo ~.
Pension Administrator
RE:
Resolution to Change the City Charter on Pension Investments
-----------------------------------------------------------------------------------------------------------------------
The General Employees Retirement System Board of Trustees must adhere to very specific
restrictions when investing Pension Fund moneys. It is outlined in the City Charter that no more than
50% of total funds may be invested in stocks. Mr. Cottle, who is Investment Consultant for the Fund,
has completed an Asset Allocation Study. He has concluded that an allocation of 60% in stocks and
40% in bonds would be necessary to produce slightly higher returns than the System's actuarial
assumption rate. (Statement on Asset Allocation Study and Recommendation, attached.)
In accordance with Mr. Cottle's recommendation, two years ago the General Employees requested
a resolution calling for a Special Election to amend the Related Laws of the City Charter. The
amendment would have authorized the Pension Board to exercise independent judgment (in a Prudent
Manner) in allocating and investing Pension funds and would have authorized the City Commission
to establish by Ordinance more specific investment guidelipes and restrictions. The ballot results were
49.44% in favor and 50.56% opposed.
Recently Mr. Cottle repeated his recommendation, and we would again like to present the resolution
for a Special Election. Since the Legal Department had already approved the form of the Resolution
No. 96-22081 June 13, 1996, we would like to submit same for the July 1,1998, Commission
Agenda.
If you have any questions, please do not hesitate to contact Steve Cypen, legal counsel for the Board.
Ima
Enc.
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Asset Allocation Study and Recommendation
Dorn, HeIliesen & Cottle, Inc. conducted an asset and liability analysis for the City of
Miami Beach General Employees' Retirement System in June, 1996. This study
evaluated the System's current asset mix and alternative asset mixes relative to the
System's liabilities. We believe asset allocation is the most important investment
decision made by an institutional investor. Research supports this opinion. Academic
studies have found that asset allocation accounted for about 91 % of the variance in
quarterly returns for a typical pension plan I.
Asset allocation is effective if it provides an asset mix which generates reasonable returns
for the Retirement System, while at the same time guards against significant increases in
liabilities, especially those that are unmatched by increases in assets. Our asset allocation
model incorporates plan liabilities to provide the lowest possible total plan risk (variation
of the difference between assets and liabilities) for a given level of return. The projected
liabilities used in this study were provided by the Retirement System's actuary, Gabriel,
Roeder, Smith and Company.
The outcome of our analysis of alternative asset mixes and liabilities is an "efficient
frontier" of asset mixes, a set of asset mixes which provide the highest expected return
for a given level of funding uncertainty. These mixes range from a low-return, low-
uncertainty mix, to a high-return, high-uncertainty mix. We examined the Retirement
System's current asset mix, and current target mix to infer potential trade-offs in return
and uncertainty for alternative asset mixes. The expected cost of implementing a new
asset mix was also considered relative to the expected benefit of the mix.
The current target has an expected return lower than the actuarial-assumed interest rate,
or "hurdle rate" of 8.5%. We recommend adopting the Proposed Asset Mix as the new
target asset mix. The Proposed Mix has an expected return of 8.8%, which provides a
cushion between the assets' expected return and the System's actuarial interest rate. The
Proposed Mix has a 40% allocation to domestic bonds and 60% to domestic common
stocks. When simplified into an equity vs. bond allocation, the Proposed Mix is still
reasonably conservative.
In conclusion, we recommend the adoption of the Proposed Asset Mix which will provide
a slightly higher expected return than the System's actuarial interest rate assumption,
while not significantly increasing its expected level of risk. In addition, the Proposed
Asset Mix is expected to make the Retirement System more financially sound over the
long term.
I Please see "Determinants of Portfolio Performance II: An Update," Gary P. Brinson. Brian D.
Singer and Gilbert L. Beebower, Financial Analysts Journal, May/June 1991. This article is an
update of Gary P. Brinson, L. Randolph Hood, and Gilbert L. Beebower, "Determinants of
Portfolio Performance," Financial Analysts Journal, July/August 1986.
CITY OF MIAMI BEACH
CIT'f HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH. FLORIDA 33139
http:\'d.mlaml-beach.".LA
COM:\lISSION ME:\IOR.-\~DUM NO. 3 ~O-1'X
TO: 'la~()r ~ei~en O. Ka~din ;And DATE:
.\Iemhen of the City CommiHion July 1, 1998
FROM, S".;o Rod,;.o<z "/1-/ /' ,
City Manager
. /
SUBJECT; A RESOLUTION CALLING A SPECIAL ELECTION TO BE HELD ON
SEPTEMBER 1, 1998 FOR THE PURPOSE OF SUBMITTING TO THE
ELECTORATE OF THE CITY OF MIAMI BEACH FOR THEm
APPROVAL OR DISAPPROVAL, AN AMENDMENT TO THE RELATED
SPECIAL ACTS OF THE CITY OF MIAMI BEACH, FLORIDA TO DELETE
ALL SPECIFIC RESTRICTIONS CONCERNING PENSION BOARD
INVESTMENT ALLOCATION, AND TO SUBSTITUTE THEREFOR
LANGUAGE AUTHORIZING THE PENSION BOARD TO EXERCISE (IN
A PRUDENT MANNER) INDEPENDENT JUDGMENT IN ALLOCATING
AND INVESTING FUNDS; AUTHORIZING THE MIAMI BEACH CITY
COMMISSION TO ESTABLISH PENSION BOARD INVESTMENT
GUIDELINES AND RESTRICTIONS.
ADMINISTRATIVE RECOMMENDATION
Adopt the Resolution.
ANALYSIS
The Retirement System for General Employees of the City of Miami Beach contains very specific
restrictions on investments. For example, no more than fifty percent of total funds may be invested
in stocks. In addition, at least eighty percent of all stocks must be dividend paying. These restrictions
make it difficult for the Pension Board to obtain maximum returns. The resolution would amend the
City of Miami Beach Related Special Acts to provide the more enlightened "Prudent Person
Standard". This standard already governs the Retirement System for Unclassified Employees and
Elected Officials of the City of Miami Beach and the City Supplemental Pension Fund for Firefighters
and Police Officers in the City of Miami Beach. Note that the amendment authorizes the City, by
ordinance, to set more specific guidelines and restrictions for investment by the Pension Board. In
other words, although the City may choose to reimpose certain guidelines and restrictions, they will
not be in the Related Special Acts and thus will be more easily amended to meet any current
investment environment. The amendment has no fiscal impact on the plan.
The Resolution was drafted with references to the re-codified City Charter in anticipation of its
approval at the July 1 st meeting.
AGE:"<'DA ITL\I ~l C
DATE~
CONCLUSION
This amendment is recommended by the Board of Trustees as necessary for investment flexibility to
meet changing financial circumstances.
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