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HomeMy WebLinkAboutR-84-1213J-84-1015 RESOLUTION N0, 84-1213 A RESOLUTION APPROVING SETTLEMENT OF THE GATES CASE AND OTHER PENSION RELATED LITIGA- TION IN ACCORDANCE WITH THE TERMS AND CONDITIONS AS SET FORTH IN THE ATTACHED "AGREEMENT FOR RESOLUTION OF PENSION LAW- SUITS" EXCEPTING FOR THAT PORTION FOUND IN SECTION 3, PAGE 6, REGARDING THE MONEY MANAGERS; FURTHER AUTHORIZING AND INSTRUCTING THE CITY MANAGER AND THE CITY ATTORNEY TO TAKE SUCH STEPS AS MAY BE NECESSARY TO IMPLEMENT SAID SETTLEMENT, INCLUDING THE DRAFTING OF APPROPRIATE ORDINANCES AND RESOLUTIONS AND INCLUDING A REQUEST TO THE COURT THAT A PROVISION IN THE FINAL DECREE BE MADE WHICH REQUIRES RESOLUTION OF ANY PENDING LIEN FOR ATTORNEY'S FEE WHERE A PENDING LIEN IS INVOLVED. BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: Section 1. Settlement of the Gates case and other pension related litigation is hereby approved in accordance with the terms and conditions as set forth in the attached "Agreement for Resolution of Pension Lawsuits" excepting for that portion found in Section 3, Page 6, regarding the money managers. Section 2. The City Manager and the City Attorney are hereby authorized and instructed to take such steps as may be necessary to implement said settlement, including the drafting of appropriate ordinances and resolutions and including a request to the Court that a provision in the final decree be made which requires resolution of any pending lien for attorney's fees before the City pays any attorney's fee where a pending lien is involved. PASSED AND ADOPTED this 31St day of October , 1984. TEST: Maurice A. Ferre MAURICE A. FERR , MAYOR 7 RAL H G. ONGIE City Clerk PREPAR D AND APPROVED BY: ROBERT F. CLARK Deputy City Attorney RFC/wpc/pb/033 APPROVW $PTO FORW AND CORRECTNESS: LU1:1A A. uvu%* MEETING OF City Attorney OCT 81 IM TO; Honorable Mayor and Members of the City Commission FROM: Howard V. Gary City Manager CITY OF MIAMI. PLORIOA INTER -OFFICE MEMORANDUM DATE: October 16, 1984 FILE: SUBJECT: Update on Gates Case Litigation REFERENCES: ENCLOSURES: It is recoinlnF:,nded that a Resolution approving settlement of the Gates Case and other pension related litigation in accordance with the terms and conditions as set forth in the "Agreement for Resolution of Pension Lawsuits;" further authorizing and instructing the City Manager and the City Attorney to take such steps as may be necessary to implement said settlement, including the drafting of appropriate Ordinances and/or Resolutions. Periodically, over the last year, I have provided you with memoranda in an effort to keep you advised of the current status of our efforts to resolve the "Gates Case." It is indeed a pleasure for me to report that we are now about to enter the very final steps in this process. On August 10, the Board of Trustees for the Plan and the Board of Trustees for the System both voted unanimously to approve the proposed settlement. On September 24, a letter was received from the Internal Revenue Service (IRS) providing that employee contributions may be made on a "pre-tax" basis. The proposed agreement has now been signed by the President of each of the employee work groups. In early November, there will be a meeting with the Circuit Court Judge handling this case to review progress being made. At that time, the attorney for the Gates Case will request authority to notify all members of the class that a tentative settlement has been reached and will request their concurrence with the proposed settlement. Members of the class are the retirees of the Plan and the System. It is expected that the Judge will give members of the class thirty days to respond. After reviewing the responses, a decision must be made to either: a) go forward with the settlement as proposed or b) modify the settlement to accommodate concerns expressed by the class. Page 1 of 4 na4� 0 0 Honorable Mayor and Members of the City Commission -2- October 16, 1984 The City Commission must agree to the proposed settlement prior to reporting back to the Judge. This is essentially the same process that is followed in negotiating settlement of other cases. The Administration negotiates the "best deal" which is then presented to you for appropriate action. After your approval, final action is then taken to conclude the matter. The document which we will be asked to approve will represent the conclusion of all negotiations with all parties to resolve all pension lawsuits. There is nothing significant in the final agreement that has not been presented to you either by memoranda or included in the contracts for the Police and Fire Unions. Attached to this memorandum is a summary of the agreement which may prove helpful to you in reviewing the provisions. I would also point out that there are certain benefits provided in the current police and fire contracts that will not become operative until such time as the agreement is acted upon by the Courts. Although there are many cases that are included in what we refer to as the "Gates Case," essentially there are only three significant issues to be resolved: 1) organization and administration of the plans, 2) underfunding or unfunded actuarial accrued liability and 3) the issue of variable annuity. It has been alleged that the composition of the present Boards is dominated by management appointed personnel and that a single administrator cannot effectively administer both the Plan and the System. The agreement provides that only one member will be appointed by the City Manager, two appointed by the Unions and four independent members appointed by the City Commission. The Plan and the System may employ their own staff and may have their own separate offices. The unfunded actuarial accrued liability is alleged to have been created over a number of years : years as a result of providing improvements in benefits for the Plan and the System without providing appropriate funding to pay for those benefits. The actuaries have agreed that as of January 1, 1983, the unfunded actuarial accrued liability for the System was $97.7 million. As of October 1, 1982, the unfunded actuarial accrued liability for the Plan was $103.2 million. These amounts represent the total amount of money that the City must contribute to the System and the Plan, respectively, in order that retirees receive the benefits that they have been promised by the City. The unfunded actuarial liability did not appear overnight. According to one of the suits, the City has not been contributing the appropriate amount of money since 1939. . B4 213 0 0 Honorable Mayor and Members of the City Commission -3- October 16, 1984 Most pension systems have some amount of unfunded liability at any given time. When the amount of unfunded liability appears excessive or if there is no definite plan to provide adequate funding, one can anticipate serious problems. The City has agreed to make a very definite contribution each year to fund the unfunded liability and this amount will be forthcoming without question. A definite schedule has been prepared for the Plan and the System. Unless there is an agreed upon change in the schedule, all present actuarial accrued unfunded liability for the System will be complete in the year 2011. For the Plan, the final payment will be made in the year 2007. The agreement stipulates that any new benefits given must be accompanied by a definite schedule of payments to insure that those benefits are fully funded. The variable annuity was established in 1969 and only one payment has been made to retirees under its provision. The variable annuity was established to provide to retirees an additional monthly payment based upon the performance of certain stock in the portfolios of the Plan and the System. The formula upon which determinations were to be made was unclear and, as a result, payments have not been forthcoming to retirees. The idea of having a vehicle that would provide supplementary contributions to retirees is valid, however, the vehicle selected in this case apparently was inoperable. The proposed agreement terminates the variable annuity and any liability associated with that and in its place provides for a new vehicle called "COLA" (cost of living allowance) fund. This new vehicle is designed to provide monthly contributions to retirees based upon a more manageable and understandable program. It should be noted that no General Fund money will be used to fund this COLA. Funding will be from employee contributions and from excess itk,;erest earnings, if available. The proposed agreement provides that when the Final Judgment is issued in the Gates Case, all remaining pension lawsuits or administrative proceedings shall be dismissed. The City will be responsible to pay attorneys' fees. Resolution of the "Gates Case" has many advantages to the City as well as to employees and retirees. Removal of the additional financial statement. exception from the annual F Honorable Mayor and Members of the City Commission -4- October 16, 1984 The magnitude of the potential liability in this case requires that the independent auditor make a special note of this item in -the annual financial report. In the last report, the auditor's explanation on this item alone required four pages. 2. Impact on bond rating and interest costs for bonds. Regardless of how well explained, complex litigation potentially involving large sums of money creates concern, uneasiness and reservation. Investors tend to respond in a positive way to "clean" annual reports, thus tend to charge more interest where there may be concern or questions. 3. The cost of litigation has been expensive. Not only the cost of attorneys' fees, but this cost has required a considerable amount of staff time and consultant effort. 4. Retirees now assured of benefits. Providing adequate funding for promised benefits was a significant factor in initiating this suit. The proposed agreement provides a finite schedule of payments which will ensure adequate resources to pay benefits. 5. Conflicts between actuaries reduced or ended. For some time, there have been unresolved conflicts between actuaries for the Plan and the System, and the City's actuaries. The proposed agreement includes definite procedures, definitions and a structured, orderly method to resolve disputes between actuaries. Attachments: Summary of Agreement for Resolution of Pension Lawsuits 99 0 0 SUMMARY OF AGREEMENT FOR RESOLUTION OF PENSION LAWSUITS Shown below is a brief summary of the pertinent provisions of the Agreement for Resolution of Pension Lawsuits (Gates Cases): I. Organization and Administration A. Each Board shall consist of nine members serving two year terms; one member appointed by the City Manager, two members appointed by each of the two Unions, and four "independent" members appointed by the City Commission from a list submitted by the Unions. B. Each Board may employ its own pension administrator and staff. C. Each Board mbar have its own separate office, to be provided by the City of Miami. II. Funding A. The annual contribution by the City is divided into three parts: 1. Normal operational expenses will be funded by the City in much the same as they are presently funded; 2. Contribution to fund the unfunded actuarial accrued liability. This is the amount of money which must be contributed by the City in order to pay for the cost of past benefits provided. All alleged underfunding or unfunded liability has been consolidated into a defined amount according to a prescribed schedule and will be amortized over the next thirty years. The annual payments will increase at 5% per year and will be paid by the City without dispute; 3. Contributions for normal annual costs. This is the contribution required to provide benefits for current employees. If the amount requestel -by the actuary for the System or the Plan differs from current projections, a procedure has been established to resolve the dispute. B. Variable Annuity Eliminated and Replaced b un The liability, if any, of the Retirement Trust to pay a variable annuity benefit to any past, current or future retirees is hereby extinguished. 1. A cost of living adjustment fund (COLA) has been established which will be funded by a 2% contribution from the employee and an amount equal to 1x-of payroll from excess interest e�arn_inn only if those earnings are ava- ie. No General Fund money will be used to fund this COLA. 2. The contribution from excess interest earnings will continue for only three and one half years. After that time, the issue will be a matter for collective bargaining. 3. The present annual supplement provided to retirees directly from the General Fund by the City Commission will be discontinued at the end of FY184/85. 4. - The creation of the COLA fund is contingent upon the Pension Trust funds becoming approved by the IRS for "employer pick-up." In order to secure the approval of the unions, the Administration agreed to have the System and Plan modified to permit the contribution by the employee to be considered as deferred income and thus not subject to federal income tax until the employee retires. AGREEMENT --FOR RESOLUTION OF PENSION LAWSUITS August 10, 1984 0 n0 y CITY OF MIAMI FIRE FIGHTERS' AND --trn f r, POLICE OFFICFRS' RETIREMENT TRUST -, `O AND 'y CITY OF MIAMI GENERAL EMPLOYEES' AND SANITATION WORKERS' RETIREMENT TRUST z • ��X1 F JJ+. 7 • • • yAT _f �Xt. 1.i �t tea. �t o SECTIONS NAME................................................... Page COMPOSITION OF THE PENSION BOARD ....................... 2 ADMINISTRATIONAND MANAGEMENT .......................... 6 FUNDING ........................ ATTORNEYS' FEES AND COSTS ........................ DISMISSAL.............................................. 12 - ATTACHMENT•A... .... ..... 0 ........ es A-1 ATTACHMENT B ............................................. B-1 NAM E ,y The City Employees Retirement System shall hereinafter ?O-�',-,111 be known as the City of Miami. -Fire Fighters' and Police Officers, Retirement Trust (FIPO). It may be referred to in this Agreement as the !'System". The Miami City General Employees Retirement Plan shall hereinafter be known as the City of Miami General Employees' and Sanitation Workers' Retirement Trust: It may be referred to ink this Agreement as the "Plan". -1- r COMPOSITION OF THE PENSION BOARDS 1. There shall be established two pension boards, onell for the System and one for the Plan. The boards shall each �r l consist of nine members. The System board is to be selected in the following manner: • (1) One member selected by the City Manager, who shall not be a City = Commissioner, the City Manager, the City Finance Director, or an Assistant Finance Director. (2) Two members selected by the fire fighters. Both such members shall belong to the bargaining unit represented by Local 587, IAFF, and be elected and serve according to the Constitution and By-laws of Local 587. (3) Two members selected by the police officers. Both such members shall f belong to the bargaining unit represented by Lodge 20, FOP, and shall be elected and serve according to the Constitution and By-laws of _ Lodge 20. :o (4) Four independent members selected by the City Commission. All such -2- meribers steal f'` meet or ekee he minimum sLanBgirds forth in } _ _R_ . K Appendix A, and two of such members f shall be selected from a list of six persons submitted by Local 587," IAFF, according to its Constitution and By-laws; and two of such members shall be selected from a list of six persons submitted by Lodge 20, FOP, accordink to its Constitution and By-laws. Each list of six persons submitted to the City Commission shall not contain duplication. In the event of any duplication of names, both lists shall be returned by the City •_ Commission for resubmission. The Plan board shall be selected in the same way with Local 1907 of AFSCME representing the City's general employees bargaining unit and the Sanitation Employees Association representing employees of the sanitation bargaining unit functioning in the same manner as stipulated for the FOP and the IAFF in the P A6r_M F selection of the board except, in the case of' Local 1907, one or°'%O%y Ad both representatives to the board selected by/Local 1907 need not g,lu1$'i be members of the bargaining unit and may be _retiree. �j 2. The chairman shall be elected by the members of the board. 3• Five members shall constitute a quorum and it • shall take five affirmative votes for any motion or resolution to . j 4. All members of the System board shall have terms /.,::;7 of two years after the initial terms, which shall be staggered as follows: - a of the fire fighter members one be for term shall a one-year and the other for a two-year term; (b) of the police officer members, one shall be for a one-year term and % the other for a two-year term; (c) the member selected by the City • Manager shall be for an initial " two-year term; (d) of the independent members appointed by the City Commission from the list submitted by the fire fighters, one shall be for a one-year term - --- and the other for a two-year term; • (e) of the independent members appointed by the City Commission from the list submitted by the police officers, one shall be for a one-year term and the other for a two-year term. 5. All members of the Plan board shall have terms of ' two years after the initial terms,'which shall be staggered as ,2 follows: -4- _ (a) of the general* employee members, one shall be for a one-year term , and the other for a two-year term; A (b) of the sanitatlon�wor -er mem ers, SE%� gljd one shall be for a one-year term' and the other for a two-year term; (c) the member selected by the City Manager shall be for an initial 1 �Q two-year term; (d) of the independent members appointed by the City Commission from the list. submitted by the general employees, one shall be for a one-year term and the other for a two-year term; (e) of the independent members appointed by the City Commission from the list submitted by the sanitation SEq workers one shall be for a one-y ar 8�/%S/ �. term and the other for a two-year�� t term. 6. All board members shall be paid the same, amount at)y that paid to members of the Civil Service Board. Employee members shall not be paid for services as members of the board; however, when they attend meetings while on duty assignment, they shall receive leave with pay. ADMINISTRATION AND MANAGEMENT 1. Each board may, at its sole discretion, employ }' pension administrator whose qualifications would meet those set forth in Appendix B. The administrator may, subject to the approval of the board, employ such staff as necessary for proper administration of the pension funds. + 2. The budgets for the pension boards for administ- i trative purposes, including insurance, shall be approved by the City -Commission (with a base figure for each plan below which the City Commission could not refuse to fund without approval of the - boards) in the same manner as the Downtown Development Authority or the Offstreet Parking Authority budgets are approved and in the same fiscal year as the City is currently using. 3. Each board will be responsible, in its discretion, for selecting appropriate money managers for its - fund. Each board will establish written guidelines and w objectives against which the money managers' performances will be _ measured. If a money manager fails to meet such standards, they will be subject to termination at the sole discretion of the - board. 4. Each board may, at its sole discretion, have its own separate office and the City shall provide a facility for this purpose. The lease shall be for fifty years at $1 per year subject, however, to the provisions of paragraph 5. =' 5. In the event the City builds a new administra— tive office building, the City shall have the option to require a* the boards to move their offices into such building, provided ` ♦ . • •. t -. � ` • . i—� _ •��• e..t,r-!,•��!s •r'•Tt.�+t mewl.. Mtrrs�.. ii •I y .. that the usable office space in such building at the rate of $1 per year offered to the boards is suitable. The boards willi nevertheless endeavors consistent with their independence from each other, to share such persons, services and facilities. 6. Each board shall have authority to engage its own legal counsel, accountants, actuaries, and other professional advisors. 7. Each board shall meet at least once every two months after appropriate public notice. ' 6. When a hearing before or consideration by the City Commission is required for pension business, that business shall be•placed on the Commission's agenda and heard at its next regularly scheduled meeting, provided that such request complies with the City Commission's standard guidelines in regard to the time of receipt and the adequacy of information. 9. The City Manager shall provide the administrator of the appropriate board with copies of all City documents relating to the System or the Plan contemporaneously with the �= making or receipt by the City of such documents, or immediately —� thereafter. Each board's administrator shall accord the same -- - service to the City. 10. All communications pertaining to the System and the Plan from the City shall be made directly to the appropriate -! board with copies to the board's administrator. All such communications to the City from the System or the Plan shall be =f made directly to the City Manager with copies to the City j.fto/py COmmissionerS —tl 'r owi2 y . t z 2 irr ..4M ri FUNDING 1. The annual contribution to be made by the City ' shall be comprised of three parts: 4 a. Contribution for costs attributable to current year's service, using the entry age normal cost method With frozen actuarial accrued liability; b. Contribution for frozen unfunded actuarial, accrued liability; and c. Non -investment expenses for the Plan and the System. 2. The contribution for the City to fund the frozen unfunded actuarial accrued liability for the System shall be computed as follows: a. It is agreed that as of January 1, 19839 the unfunded actuarial accrued liability was $97,942,418. (Prior to current improvements. Current improvements are valued at $6,555,834.) The City shall contribute $4.5 million in FY- 1983/84; $5.0 million for FY-1984/85; $5.3 million for FY- 1985/86; $5.6 million for FY-1986/87. After FY-1986/87, the City contribution shall be as set out in the projection schedule set forth in Schedule A. r O r b. Any increases or decreases in the unfunded actuarial accrued liability arising from changes in benefits (which have been agreed to by labpr and management) and/or actuarial assumptions shall be amortized in level annual a� installments over a period of 30 years from the beginning of the fiscal year in which the change occurred. • r . i A 71 x AJ . t^N A$t' 4 c. Any increases in the unfunded actuarial accrued liability arising from increases in benefits provided by the City unilaterally shall be funded utilizing the amortization technique in (b) over the shorter of: (1) 30 years from the./%-- beginning of the fiscal year in which the change occurred, or (2) the period over which benefits increase is expected to be paid. 3. The contribution for the City to fund the frozen unfunded actuarial accrued liability for the Plan shall be s computed as follows: a. It is agreed that as of October 1, 19829 the unfunded actuarial accrued liability was $103,213,629. (Prior to.current improvements. Current improvements are valued at $5,740,0159 per Edward H. Friend & Co.) The City shall contribute $6.4M for FY-1984/85. After FY-1984/851 the City contribution shall be as set out in the projection schedule set forth in Schedule B. b. Any increases or decreases in the unfunded actuarial accrued liability arising from changes in 'benefits (which have been agreed to by labor and management) and/or actuarial assumptions shall be amortized in level annual install-r ments over a period of 30 years from the beginning of the fiscal year in which the change occurred. A i 77. , 'i c. Any increases in the unfunded actuarial accrued liability arising from increases in benefits provided by the City unilaterally shall be funded over the shorter of: (1) 30 years from the beginning of the fiscal' g g year in which the change occurred or (2) the period over which such benefits increase � p e e is expected to be paid. ' 4. The contribution for the City to the System and the Plan for entry age normal cost shall be determined by applying the actuarially calculated entry age' normal cost percentage. rate to the valuation payroll (covered payroll of .active participants). The contribution shall be determined as of October 1st of each year (based on the valuation payroll and the program provisions in effect at that time) for the fiscal year beginning on the subsequent October 1, adjusted for interest for one year, based on the actuarial assumptions. The funding method will be Entry Age Normal Frozen Actuarial Accrued Liability as i such method is defined as of the date of this agreement by the '-► American Academy of Actuaries. 5. The City's contribution for non -investment a expenses of the System and the Plan shall be the expected amount ' of such expenses for the year. Such expenses shall include those ! expenses typically paid for such purposes. These expenses are not included in Schedules A and B. r 6. The actuarial assumptions for the System and t\lhi— . Plan shall be adopted by the respective boards and based on recommendations from the actilaries selected by the boards. Such assumptions may be modified by the boards periodically based on JNI 3-year experience analyses, yand at such other times as the boards P deem appropriate. When a board is to consider a proposed or recommended change in assumptions, 60 days notice should be or given to the City prior to the first meeting of the board to consider tie proposal or recommendation and give reasonable notice thereafter. 7. The actuarial value of assets is presently designated as the lower of moving market value average (3 years) or statement value. Each board may choose other methods, and any other method recommended by.the actuary employed by a board and approved by the Florida Bureau of Local Retirement Systems, Division of Retirement, Department of Administration, shall be r acceptable. Prior to considering a change in method, a board ='! must give timely notice to the City. t 8. The parties anticipate that the annual contribu- tion to be made by the City to the System and Plan (inclusive of successors thereto or separate divisions thereof) shall be no t more than the amounts recorded in the projection schedule set forth in Schedule A for the System and Schedule B for"the Plan, which projections shall be appropriately modified in the event of changes in benefits as prov*id-ed for pursuant to paragraphs 2b, 2 and 3b, 3e, and modified for accrued interest as provided inVyP.- paragraph 4 of this agreement. a. Set forth in Schedules A and 8 are the contributions to be made by the City for normal costs and unfunded liability. The parties agree that the schedule of unfunded liability payments set forth in Schedules A and 8 (appropriately modified pursuant to paragraphs 2b, 2c and 3b, 30) will be made as set forth thereon until all unfunded liability has been amortized. Each year the contribution for the unfunded C�a liability is calculated to increase by 5% over the prior year's contribution, until the liability has been fully amortized. b. The annual normal cost contribution for the System to be made by the 'City shall be in accordance with Schedule A, provided that -in the event the System's actuary or an ap- uary retained by the City each using their own assumptions, shall determine that the normal cost contribution for any year --� c should be more or less than that set forth for normal cost in. Schedule A. they shall attempt to resolve the disagreement. If i - e the two actuaries agree on a normal cost contribution for that a year, that amount shall be contributed by the City. Failing a resolution by the two actuaries, they will select a third actuary to resolve the dispute. If they are unable to agree upon an t - actuary, such third actuary shall be selected by the American fi s ,•�i5 -f f t I Academy of Actuaries. The third actuary shall+ after an hip Independent study, submit its funding recommendation utilizing standard acceptable funding techniques, to the City Commission. r The City Commission shall then fund at the level recommended b y either the Systemts actuary or the City's actuary Whichever recommendation is closest to the recommendation of the third actuary. A Y • - e. The annual normal cost contribution for the Plan to be made by the City shall be in accordance with Schedule B, provided that in the event the Plan's actuary or an actuary retained by the City each using their own assumptions shall determine that the normal cost contribution for any year should i be more or less than that set for normal cost contribution for ' that year, that amount shall be contributed by the City. Failing a resolution by the two actuaries, they will select a third ; ac-tuary to resolve the dispute. If they are unable to agree upon an actuary, such third actuary shall be selected by the American r i -- Academy of Actuaries. The third actuary shall, after an indepen- dent study, submit its funding recommendation utilizing standard acceptable funding techniques, to the City Commission. The City Commission shall then fund at the level recommended by either the Plan's actuary or the City's actuary whichever recommendation is closest to the recommendation of the third actuary. 9. All provisions of this Agreement and the • Ordinances implementing it are intended to be and remain in r compliance with State and Federal Statutes. The City and boards c`± shall take all appropriate steps to maintain such compliance. 1 E. xi. • - - -Y 4. z+- 1 10. The liability, if any, of the retirement trusts to pay a variable annuity benefit to any past, current or future retirees is hereby extinguished. Nevertheless, the creation of a Cost of Living Adjustment- (COLA) fund is deemed desirable. Toward that objective, a special COLA fund shall be established individually for the Plan and the System provided_ that the pension funds become tax qualified and a designated amount, of the savings generated by this qualification shall be contributed to the respective COLA funds by employees. To this end, and to the extent such funds are available from excess interest earnings, determined on an accumulated basis from October 1, 1982 to the beginning of the year of determination reduced by any COLA transfer in prior years, there shall be contributed from each trust an amount equal to 1% of payroll per year, for each of three and one-half years, beginning with FY-83/84. Calculations shall be performed after the close of the fiscal year and payment will be made in a timely fashion. For the purpose of this Agreement, excess interest earnings shall be defined as being the difference between the rate of return on the actuarial market value of the average assets (investment and non- � O� investment) as calculated in accordance with Chapter 112, Florida Statutes, less the assumed rate of return for active members on the current actuarial valuation report. The details of the administration and benefits to be provided by the COLA funds _f i S I i shall be resolved through negotiations between the appropriate labor groups, the pension boards and the City Administration. IW` determining the disbursements of COLA funds to retirees, priority consideration shall be given to retirees Who receive 1(al monthly pensions because of the length of time they have bee 4� 4RC3 retired provided that the retiree did not withdraw )%s contribution -in lump sum payment(s) at the time. of his retirement I Q L,v or subsequent to his retirement. In the event the System and/or: s � W 4 : Plan cannot become tax qualified, the administration will Q �u continue to pursue the creation and implementation of the COLA a funds. o` 11. Each board shall be consulted as to the impact-�` on its trust of. any new pension benefits before the City. © �' Commission grants them. 12. Contributions, to be made by the City for the Q h o fiscal year shall be made quarterly, in equal payments, on they first day of each quarter during the fiscal year in question. (a)00 W �I�o r1RU A►jk)oAL For the System, if the amount of rcontribution has not. been w = a determined by payment date, then the City shall make quarterly;. w' _ A payments, based upon the prior year's contribution, un it t 1 h 0 act 'a Aou is� de'e mine Sh uld the eterm ne ou t f o ?C o rib do Jiff fro a ac al a ount s) p id� t n o c / x. �cLqj st en s all a ad on the nex quar erly pay ant (b) Fo— .. TN NO '�71gL'AillUUg1.. 8�1Of0 the Plan, if the amount of. contribution has not been determined by payment date, then the 0 Ir 6 v City shall make quarterly payments, based upon the prior yearts contribution, provided that this amount shall not be less than the amount shown on Schedule S under the column lab j eled Normal Y Costs, until the actual amount is determined. Should the determined amount of contribution differ from the actual amount(s) paid, then adjustment shall be made on the next quarterly payment. s • r. —16— 1 'J 1 .1 ATTORNEYS' FEES AND COSTS The City agrees to pay reasonable attorneys' fees t 1 Thomson Zeder Bohrer Werth••Adorno A Razook and reimburse the 7 Gates Plaintiffs for all costs incurred and paid by them in connection with the Gates lawsuit. The City further agrees to pay Edmond Gong and Ronald Silver their reasonable attorneys' fees incurred in connection with the Gates and related pension s suits. The City further agrees to pay Kaplan, Sicking, Hessen; Sugarman, Rosenthal & De Castro, P.A. its reasonable attorneys' fees and costs incurred in connection with suits relating to the System. Should there be a failure of the parties to reach an agreement as to the amount of costs or reasonable attorneys' fees for all or any of such lawyers or law firms, the Court shall decide. Such a failure will not affect the rest of the provisions, or delay implementation of this Agreement. 0 i a i DISMISSAL The terms of this Agreement shall be adopted, as soon as is practicable, as an amendment to the existing Pension Ordinances. The terms of this Agreement will also bedI incorporated in a final judgment in the Gates Lawsuit. A11' remaining pension lawsuits or administrative proceedings shall be dismissed with prejudice. t i j:- q}9 t ."s+r This memorandum of agreement is entered into this day of - 19 For the City of Miami Howard V. Gary City Manager For the Parties of the Lawsuits . 17 President, 1AFF i President, FOP �s 84 President, AFSCME , Pr "sident, SEA Chairman, Plan Board of Trustees Chairman, System Board of Trustees r •w r For the Plaintiff f-&r Gates A.. rA!IR i Fiscal Year 83-84 84-85 85-86 86-87 87-88 88-89 89-90 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98, 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 _ . . 08-09 09-10 10-11 11-12 12-13 13-14 14-15 ell;� SCHEDULE A SYSTEM CONTRIBUTION (In Millions) Normal 4.9 5.7 6.0 6.3 6.6 7.0 7.3 7.7 8.1 8.5 1) A -A 4.5 5.0 5.3 5.6 5.8 6.1 6.4 6.8 7.1 7.5 7.9 8.3 8.7 9.1 9.6 10.1 10.6 11.1 11.6 12.2 12.8 13.5 14.1 14.8 15.6 16.4 17.2 18.0 3.5 0.0 0.0 0.0 r .a 12 Total 2/ 9.4 10.7 11.3 r. 11.9 •. ,` 12.4 13.1 13.7 t 14.5 ' 15.2 16.0 .. Subsequent increases shall be in the same proportionate percentage as has occurred in the prior six -year period. Total does not include non -investment expenses which shall be In addition to this Total. rk SCNEDULt B PLAN CON" RI$UTION ON MILLIONS) riscal Year Normal Unfunded 83-84 2.9 5.8 84-8S 5.0 6.4 85-86 5.5 6.7 86-87 6.0 7.1 87-88 6.5 7.4 • 88-89 7.0 7.8 89-90 7.S 8.2 90-91 8.0 8.6 91-92 8.5 9.0 92-93 9.0 9.5 i 93-94 1j 9.9 94-95 10.4 95-96 11.0 96-97• 11.5 97-98 12.1 98-99 12.7 99-00 13.3 00-01 14.0 01-02 14.7 02-03 15.4 03-04 16.2 04-05 17.0 05-06 17.9 - --- 06-07 18.8 = 07-08 4.7 08-09 0 09-20 0 10-11 0 _ 11-12 0• - - 12-13 0 - 0 r.o Total" 8.7 11.4 12.2 13.1 13.9 14.8 15.7 16.6 17.5 18.3 i 13 -14 14-15 0 3j Subsequent increases shall be in the same proportionate percentage as has occurred in the prior six -year period. ._� Total does not include non -investment expenses uhich shall be in addition • to this Total. -21- k5 `4 I ' Attachment A -- - + MiNI14UM QUALIFICATIONS AND STANDARDS FOR SELECTION OF A BOARD 1.1EM8Eft The following criteria are offered for consideration in the selection of a list of board members: PAAAY z 1. is actively employed, self-employed or retired; 2. within the last five to ten years, has been directly or indirectly exposed to employee fringe Z •`,` benefits (particularly pensions); 3. not actively involved in nor aspires to be <_ actively involved in City, County or State politics. 4. will schedule sufficient personal time to attend Pension Board meetings if scheduled well enough in advance; shall, upon request of any other member, ' step down if meeting attendance is less than 75% over a year's time; 5. has resided in Miami (or its it6mediate environs) "— for over five years; --� Y 6. is familiar with and has had some direct or indirect exposure to the union/management process; ■ i • 175 C .� 7. is neither now, nor within the last five years been, a public employee union representative nor a City representative; 8. knowledge and/or familiarity with business principles. • 1i 77 • tiY� �d " �r5 r• p� �s a 1 i 11 i 175 C Attachment B MINIMUM LIST OF QUALIFICATIONS OF A PENSION ADMINISTRATOR y The salaried adminfstrator of the pension plan shall required to have the following qualifications: 1. an accounting or pension background; 2. managerial experience and the hiring, handling and motivating of a small staff; 3. capacity to write simple correspondence pertaining to fund activities, participant records, benefits, etc.; issue forms, receive and process benefit claims; 4. understands and is comfortable with simple benefit formulae; capable of calculations and paying benefits; 5. experience with the filing of governmental forms (including federal and state compliance requirements); has the initiative to inquire and successfully obtain -resource information on what is expected where information is not specifically available; 6. manages expenses prudently, based on guidelines established by the Board; B-1 s E '3 AIL Nor 175 C ._ 7. capable of developing cash flow projections; 8. capable of *preparing financial reports =~ reflecting fund activity, trends, etc. 41 9. capable of maintaining rough minutes of meetings of the Board of Trustees; 10. capacity to follow-up and require prompt receipt of expected incoming' data, reports, services of individuals and s = Y • firms under i contract to the Board, etc.; , the ability to deal with such individuals and firms by telephone and through correspondence; 11. capability of maintaining -an investment schedule; 12. has oral communications skills; 13. has a demonstrable good employment attendance record; ..� 14. is efficient, practical, committed to respon sible and effective overview of .the fund program, its finances and its expenses; 15. avoids political by-play, avoids involvement in position -taking, serves all Board members in an impartial and arms -length -J • B-2 . iY C 'RON MMM�O.. C l6. fashion, giving due recognition to ultimate fiduciary obligation to the members of the plan-, _4 knowledge or experience in regard to punch card magnetic tapest or other data processing equipment. B-3 A -r---- ------------- ----- --w---------------Ww-- 2. SETTLEMENT OF GATES CASE: APPROVE "AGREEMENT FOR THE RESOLUTION OF PENSION LAWSUITS"; FURTHER INSTRUCTING CITY MANAGER AND CITY ATTORNEY TO IMPLEMENT SAID SETTLEMENT, ETC. ------------------------------------------------------------ Mayor Ferre: The only other thing we are going to talk about today is the settlement of the Gates Case. All right, Mr. Manager. Mr. Randy Rosencrantz: Mr. Mayor and members of the Commission, you have before you a resolution which will in effect indicate to the Court that you concur with the settlement that had been negotiated by the Administration to resolve the Gates Case. The Gates Case, as most of you are probably familiar with are really seven different law cases dealing with the Pension Plan and the Pension System for the City of Miami. Some of these cases essentially allege that since 1939► that the City had not been contributing to the Pension Fund the amount of money that it should have been contributing. The agreement that you have before you now has been in the process I guess three or four years in terms of negotiations. The agreement that is before you has now been approved by all of the unions within the City of Miami that are part of the employee work force. It has been approved by the Board of Trustees of the Plan. It has been approved by the Board of Trustees of the System, the actuaries for the Plan and the System have both agreed the agreement as well as the actuaries for the City. The Gates people have been a part of this discussion and negotiation all the way through, have indicated that they will agree to this settlement when it gets before the Judge. So really, if I can very briefly summarize it, there are really three issues involved in the Gates Case. The one issues deals with the management and organization of the Pension Board of Trustees. It has been alleged that the present Board of Trustees, or the present management of the Pension System is management controlled. The settlement that you have before us changes the way the board is structured and it changes the way members of the board are selected. Also, the agreement that is before you provides that each Pension System, the Plan and the System, may each select their own administrator and staff. They don't have to have a separate staff, but they may if they wish. The third point under the organization, administration is, that each board may have its own separate offices if it so chooses to have separate offices. The second issue that was resolved in reference of series of cases called the Gates Case, had to do with funding. There was one major issue dealing with funding and that was the issue that is known as the unfunded liability. The cases allege that for many, many years the City promised benefits through its Pension System, but did not provide sufficient funding to fund those benefits. If you strip away everything that we talk about in reference to this case, it comes down to the point that we have worked out a plan that we think is very reasonable and very viable to provide the necessary funding to the Plan and to the System to pay for those benefits. In the part of the agreement, there is a definite schedule that we will contribute to each the Plan and the System, which will amortize the payments for those benefits over the next 30 years. Mr. Plummer: What does it cost? Id 1 October 31, 1984 Mr. Rosencrantz: There is a schedule included in your package, Mr. Plummer. At the end of the agreement there is a schedule entitled Schedule A and the a schedule entitled Scheduled H. The cost of this settlement - the settlement is so structured so that each year the City will contribute a prescribed amount to the plan and to the system. Over a 30 year period, we will completely amortize all of the unfunded liability that has been identified as of this time. Mr. Plummer: What is this settlement costing? Mr. Rosencrantz: In terms of actual dollars, as of right now, it is felt that the City owes to the system $103,200,000 in terms of unfunded liability and it owes to the Plan $108,900,000. We have taken those two amounts of money, determined an interest rate based on what the Plan and System would have received upon it, and set up a 30 year payment schedule so that we are going to pay those amounts of money over 30 years. The actual impact on any given year budget - there will be an increase in the annual appropriations required each year for each of these budgets, but it is not an increase that is not unmanageable for the City and it will over, over the long haul, pay off the unfunded liability. Mr. Plummer: What is projected as the annual payment? Mr. Rosencrantz: For the year 183-184, the estimated annual payment is $18,100,000; for 184-185, the payment is $21,800,000, and generally that amount will increase approximately 5% each year, but there are to conditions that I need to point out to you. Mayor Ferre: Wait a minute, how much have we been paying? Mr. Rosencrantz: We have been paying in the area of $17,000,000. Mayor Ferre: So this is not that much more. Mr. Rosencrantz: We have raised the base. No, it is not really that much more. Mayor Ferre: All right, because people were getting confused on these things, because they don't understand it. Already, this is not something that we reinvented, or found all of a sudden in the darkness. This is something that we have been dealing with, and we have been paying into over a long period of time. Last year we paid one over $17,000,000. How much did we pay to the Plan? Mr. Rosencrantz: For year 183-'84, the actual contribution was $19,200,000 for last year. Mayor Ferre: So that was last year's. Mr. Rosencrantz: Yes. The year we are in right now that we anticipate that we will contribute $21,800,000. Mayor Ferre: So in other words, we are going up from $1992009000 to $21,800,000. Is that correct? Mr. Rosencrantz: Yes. Mayor Ferre: So in other words, what we are going up is $29600,000. Mr. Rosencrantz: For this year, yes. Mayor Ferre: For this year. This is about 13% - 14%. ld 2 October 31, 1984 a 1 Mr, Rosencrantz: Yes. Mayor Ferre: That is a reasonable increase. Mr. Rosencrantz: Now I wanted to explain to the City Commission that subsequent years, the way this payment structure is structured, the way repayment is structured, is that we anticipate the payment will be 5% additional over what it was in the prior years, so we anticipate the increase will amount to about 5% each year over what it was in the prior years. t Mayor Ferre: Who pays for the difference - should it be more than 5%? y. Mr. Rosencrantz: We have as part of the agreement, the annual contribution to the Pension Trust Fund are divided into two parts. One part of that agreement deals with the unfunded liability. There is a definite fixed schedule of T. payments that we will make to that on each of the systems to take care of that unfunded liability. The other item of cause, which is a major item ofcost is what is considered as normal operating. That is a cost that is variable. It depends on how well the portfolio is doing and it depends on well the stock market is. Mayor Ferre: Well that is my question to you again, and the question is if we have ... how much money do we have now in both the Plan and the System? Mr. Rosencrantz: In total assets? Mayor Ferre: Yes, in total assets. Mr. Rosencrantz: As of the end of 1982, the assets for the . Mayor Ferre: We have got to have more later figures than 1982. Mr. Rosencrantz: I am sorry - for 1983, the actual assets for the Plan at the end of 1983 was $67,200,000. Mayor Ferre: And System? Mr. Rosencrantz: $119,5009000. Mayor Ferre: Okay, so, because I figured we were getting close to $2009000,000, so let me ask you this ... That is $1869000,000. Who pays for the shortfall. The problem has always been as to who pays for the shortfall, if there is a shortfall. Does it come from the taxpayers, or is there a set agreement? Is it going to be set by actuaries. Are we leaving it open ended? Who decides that? Mr. Rosencrantz: The way the agreement is structured, provides that if the actuary disagrees on what that annual contribution should be, there is a system to resolve that dispute. The final analysis, in the long term, is that the City will pay for whatever you identify in the shortfall. Mayor Ferre: The City? Mr. Rosencrantz: The City, yes. Mayor Ferre: This is the first time in the history of Miami that we have ever agreed, open endedly to pay for the shortfall. Up until now, the City hasn't been in agreement, right? Id 3 October 31, 1984 Mr. Rosencrantz: I beg your pardon? Mayor Ferre: Up until now, that has not been in agreement? Mr. Rosencrantz: No, I don't think that is true, Mr. Mayor, because the law, that created both the Plan and the System provide that certain benefits will be provided to the retiree. Mayor Ferre: So the fact is, that you think that in law, we have had the obligation of paying the shortfall, is that correct? Mr. Rosencrantz: Yes, I think that is true. Mayor Ferre: So, this is not new? Mr. Rosencrantz: No, this is not new. Mr. Plummer: What was the shortfall year? Mr. Rosencrantz: That is difficult to answer with a precise number, because ... Mr. Plummer: Approximate. Mr. Rosencrantz: ..w it was alleged to have been $400,000,000. Mayor Ferre: The shortfall. Mr. Rosencrantz: But, that ... Mayor Ferre: Is that part of the $19,200,000? Mr. Rosencrantz: No, I am sorry - when you said last year, I was referring to the year prior to that. Mr. Plummer: Yes, 1983. Mr. Rosencrantz: Yes. Mr. Plummer: Okay, so that would be above the $21,000,000. Mayor Ferre: In other words, if we are coming up with $21,800,000 ... Mr. Plummer: That addresses the unfunded. Mayor Ferre: ... what Commissioner Plummer is asking and I need to know the answer to that also, is the shortfall above the $21,80090009 or is it included in the $21,8009000? Mr. Rosencrantz: No, let me explain it to you this way, because the calculations for the annual pension contributions are extremely complicated. Let me explain it this way. The suit alleged that over a number of years that the City did two things (1) it under funded its commitment to the Pension System for the benefits to be provided and the other part they simply stated that you did not put enough money into the till each year to pay for the normal cost that you have. When we calculated out how to resolve each case, we took all of that money that was alleged to be under funded and short funding, and whatever you call it - it doesn't matter what you call it, we put it all together and said "This is what it amounts to and this is how it is going to be paid off over the next 30 years". Mr. Plummer: But it is the $21,800,000 the maximum liability of the City for this year? ld 4 October 31, 1964 0 • a Mr. Rosencrantz: Yes, for next year. Mr. Plummer: Shortfall, or no shortfall? Mr. Rosencrantz: The only thing that would change that, Commissioner Plummer, is when the actuaries do the actuary calculations and the number comes out higher than that, and a third independent actuary agrees that yes, $21,8009000 is not enough money, then it would be higher than the $219800,000. Mayor Ferre: It could go higher. Mr. Rosencrantz: It could possibly go higher, yes. Mayor Ferre: Let me ask you this, Randy. In your experience as a financial officer of a major American city and your experience as a financial officer in other local governments that you have worked - in the Baltimore area and so on, do you find that 10% of the general budget, which is what we are almost at is a reasonable amount of money for a City to be paying into this pension system? Mr. Rosencrantz: I think if you look at the statistics, that is probably within the norm, yes. Mayor Ferre: In other words, what we have is within the norm of American cities of this size. Mr. Rosencrantz: Yes, my understanding. Mayor Ferre: Now, let me ask you this question. The unfunded liability of $211,000,000, is that unusual for a City this size? Does, the County, in other words, the system in the State, or does the State system have a similar unfunded liability? My point is, do governments have unfunded liabilities. Mr. Rosencrantz: Yes. Mayor Ferre: If so, is this standard? Is this way above standard, or is this this a little bit above standard? Mr. Rosencrantz: I would say that most systems that I am familiar with have some degree of unfunded liability. I would also say that the unfunded liabilities that is facing the City of Miami seem to be as little larger than you normally would find in other jurisdictions. Is the State unfunded liability worse? Mr. Plummer: Yes. Mayor Ferre: Put that on the record. Mr. Gary: Yes. Mr. Mayor, I would probably say ... Mayor Ferre: In proportion. In other words, I am trying to say in proportion to where the City is, the State unfunded liability is worse than the City's. Mr. Gary: Mr. Mayor, I would say that I think you are asking Randy some questions that ... you are asking for his recollection. I think it would be probably appropriate for a comparison to be done and I think what you are going to probably find is it is probably not within the norm. You will probably find it low. If you some specific ... Mayor Ferre: You mean the unfunded liability? ld 5 October 31, 1984 ■ Mr. Gary: In terms of major cities? I mean, it is about to • bankrupt other cities - major cities of the country. Mr. Plummer: 1 will give you an example. The City of St. Petersburg, right now, for every dollar they pay of salary, pay 68% for pension. Mayor Ferre: Well, the reason why I am interested in doing this is specifically than none other than Mr. John McMullen, because I want him, on this record, up in Vermont to eat crow, okay? ... because Mr. John McMullen and the Miami Herald have over the last decade, slandered the City of Miami on a continuing and excessive basis, telling us how the City of Miami was bankrupt, how the City of Miami had no way out - how the City of Miami was beyond control, another one of the Miami Herald's attempts at eliminating the City of Miami as a viable entity. The City of Miami is fine, thank you! It is healthy, thank you! It has been healthy for the past 15 or 20 years. The accusations of the 10 years ago, 9 years ago, 8 years ago, 7 years ago, 6, 59 49 3, 29 1, are false. The City of Miami has been and continues to be on sound fiscal grounds, Mr. McMullen, in Vermont. Mr. Rosencrantz: Mr. Mayor, if I may add to that, the agreement that is before you provides a very definite way to deal with this issue, which I doubt that very, very few jurisdictions in the United States have and I think it is probably a very, very strong thing on behalf of the City to deal with this problem in this particular way. Mr. Plummer: How much is the attorney's fees? Mr. Rosencrantz: The provision that we have in the agreement is that the City will pay the attorneys that participated in this. The actual amount of the fees, the attorneys will submit their bills. The bills will be reviewed and the Court will make the final decision as to what attorneys should or should not be paid as it relates to this case. Mayor Ferre: Well, who decides the bills to be paid, the Courts? Mr. Rosencrantz: Yes. Mayor Ferre: Well now, as I understand it, we have Paul and Thomson to deal with. We have Eddy Gong to deal with. Who else do we have to deal with? Mr. Rosencrantz: We have Mr. Sicking and Company - Dick Sicking and Company. Mayor Ferre: We also have yours truly, representative Ron Silver. Mr. Rosencrantz: Mr. Silver, Mr. Sandy Moore who represents the Gates plaintiffs. I think that ... Mayor Ferre: Now, who is going to represent the City of Miami against all these wonderful attorneys? Mr. Rosencrantz: The representation has been provided to the City by the firm of Paul, Landy and Bailey. They will review all bills that are submitted by all the attorneys and 900 Mayor Ferre: Are we putting the fox in charge of the chicken coop by doing that? Id 6 October 31, 1984 Mr. Rosencrantz: I don't think so, because I plan to be part of that review process. Mayor Ferre: Well you know, they all eat at the Miami Club together with Mr. Paul over there. There is one table where Dan Paul sits and another table where Bob Paul sits and another table where Parker Thomson sits and that is how things are decided in Miami, for those of you that don't know and my question is ... Mr. Carollo: Dan, is that right? Mayor Ferre: ... is that proper for an attorney? I don't know, it just seems to me that ... Mr. Rosencrantz: There has to be some way to resolve the bills and pay for the time that the attorneys ... Mayor Ferre: Well, the Judge is going to resolve that, but who is going to fight for the City of Miami? Mr. Rosencrantz: At this point in time, I would say that Paul, Landy and Bailey would be one of the participants. Others that should participate in that I think it would be up to the City Manager. Mayor Ferre: Mrs. Dougherty, I would like your advice on that, because it seems to me that perhaps we ought to get a counsel from outside of this community, if we are going to have outside counsel to represent us if there is any concern about the billing. I assume that we are talking bills that are over half a million dollars and will be probably over a million dollars. Is that correct? Mr. Rosencrantz: You know Mr. Mayor, I have heard a lot of numbers and I wouldn't repeat any of those numbers as part of the public record. Mayor Ferre: I am not repeating any numbers. I am just saying that I am guessing and this is a unilateral guess on my part. There is no question that those figures are going to be well in excess of half a million dollars and maybe in excess of a million dollars. I am not making any statements one way or the other, but when the bills come in, before anything is done, I would want the Administration and the City Attorney to bring this specific subject to this Commission for discussion and deliberations before we decide what to do. Mr. Plummer: Well, Mr. Mayor, I am ready to vote on this today because it is a resolution. I think as it states in the resolution that there must be ordinances brought back before this Commission to be passed and made final. Mayor Ferre: Of courset Mi-. Plummer: I have one other question. Let's talk to the important factor, I haven't heard anything about it. Mayor Ferre: What? Mr. Plummer: The important facts. Mr. Mayor, 10 years ago, when I started working with the Pension Boards, unfunded liability was in the neighborhood of ... Mayor Ferre: Those were the days when you weren't too friendly with Southeast Bank. Mr. Plummer: You are correct. No, Southeast Bank was not friendly with met They are now. We had an unfunded ld T October 31, 1984 11 liability of about $2,0009000 to $3,000,000. Today, we have an unfunded liability in excess of $200,000,000. What provisions are in this new agreement in relation to any additional benefits? Because I want to remind the big factor of unfunded liability accrued in two general areas. The first, in buy back benefits, as well as the increase from two to two and one-half percent per year and the second item was that of the Yaeger pay plan across the board at twenty-three percent increase in salaries. What, if any, is written into this agreement about any future benefits, and I am not talking to the State that says that before you can grant a benefit, you must have the proof of where you are going to fund it. Any additional benefits would only increase the unfunded liability. What addresses in this agreement to that? Mr. Rosencrantz: The agreement very, very specifically addresses that problem, Commissioner Plummer, because I think what you stated is probably the reason that we are in the process of negotiation agreements to start out with. In the actual agreement itself, on Page 8 there is a paragraph dealing with that, and on Page 9, the first paragraph deals with that. What it says very, very specifically that the City agrees to, is that when in fact, our additional benefits are negotiated through the collective bargaining process, or whatever process these benefits are negotiated through, that the cost of those benefits will be amortized over a 30 year period, beginning in the year in which the change occurs. There is a very definite provision that says that if, in fact, you do give a benefit, you have got to bear the cost of it over the life of the benefit. Additionally, any additional benefits that are to be granted by the administration or by the City, must go to each of the affected boards before it becomes finalized. Mr. Plummer: But that would do nothing more than increase the $21,800,000 contribution. Mr. Rosencrantz: If you give additional benefits, yes. If the City Commission approves additional benefits, then you can anticipate that that will cost you additional money. If through some way you are able to decrease benefits, then you can anticipate that the cost will be less. Mayor Ferre: Okay, all we are doing here is voting a resolution that authorizes you to continue to finalize this thing, but it has not been finalized yet. Mr. Plummer: Well, it is more than that, Maurice. They need this to go to Court. Mayor Ferre: I realize that. We need to settle this in Court, and we need to get it all behind us and what have you, and this will hopefully do that. Is that correct? Mr. Rosencrantz: Yes. Let me just briefly explain the remaining steps of the process. Mayor Ferre: Yes. Mr. Rosencrantz: Monday, we hope to jointly go the Court and present to the Court this agreement and say to the Court we have all agreed this is the way that all of these seven cases will be resolved. If the Judge concurs that this is reasonable and proper and makes sense to him, he will then authorize us to notify all the members of the class, the class being the retirees. The retirees will have 30 days to respond and come back and tell the Judge that "Look, I like the agreement - I don't like the agreement", or there is also a provision that they can opt out of the agreement, Id 1.1 October 31, 1964 which says that they don't like the agreement, apparently, and they want to be treated separately. One of the attorneys can explain to you the ramifications of opting out. After the 30 day period, and we see what kind of response comes back from the retirees, we will go back to the Judge at that point and say "Look, the agreement we have, we are comfortable and and in accord with it" and we are going to recommend to the Judge at that point that he go forward and issue a final order to resolve all the cases and move forward with that. At that time, the effect of the resolution that you pass today will be to say to the Judge that this City Commission has in fact, reviewed the agreement and that you will pass the necessary ordinance to implement the final judgment as issued by the Court. Mayor Ferre: All right, very good. I've got one last question, Mr. Manager and that is, the whole question of how much money comes out of this $186,000,000 greatly depends on what the return on that investment is, because if those who are investing those funds get 10% back, then we get $189000,0009 $19,000,000 back, and then we are in pretty good shape. On the other hand, they get 7% back, we only get $14,000,000 and then we have got to put up some more money. Mr. Rosencrantz: Yes. Mayor Ferre: So, the question is, in the process of determining the selection of who the investor is, you might remember where we always got in trouble, the reason why J.L. was so upset with Southeast Bank, is because Southeast Bank, one time, because of Mel Reese, it was the bank that invested the money and we were getting 3% return, or something like that when everybody else was getting 6% in those days, and as a consequence of that, we got in real bad trouble. Now, I have read the document you gave me and the thing that has me concerned about this is that it is the Unions who give us a series of names. They appoint, and the Manager appoints and somebody else appoints, and then the Commission gets to appoint six, but those six come from a list that they give us, four for each position. Mr. Plummer: Four. The City Commission appoints four. Mayor Ferre: We appoint four. Mr. Plummer: The Manager appoints two. Mayor Ferre: How many names do they give us? They give us six names? Mr. Rosencrantz: Yes. Mayor Ferre: Of which we choose four. Mr. Plummer: Yes, two from each Union. Mayor Ferre: How many names do we get to choose from is the question. Mr. Rosencrantz: Twelve. Mayor Ferre: We have how many names? Mayor Ferre: We have twelve names from which we choose four, okay? We have twelve people that they recommend and we choose four of those twelve, right? Do those people, once they are choose serve at the will of the Commission, or do they serve to the next term? id 9 October 31, 1984 Mr. Rosencrantz: They serve a definite term. Mayor Fevre: How long is the term? Mr. Rosencrantz: The term I believe is four years. Mayor Ferre: So once they have selected twelve people, and once we choose four from those twelve, as I understand it, four from each board, so we have to choose eight out of twelve? INAUDIBLE BACKGROUND COMMENT. Mayor Ferre: That is what I want to make sure of, that we have a choice of twenty-four and that we have cross movement so that we could choose four out of twelve and that we can - choose any of those twelve for any of those four positions. Are you telling me that we have three people ... you are recommending three people for each seat. NOTE: COMMISSIONER CAROLLO ARRIVES AT 3:53 P.M. Mr. Don Teems: Let me try it okay? The Fire will submit six names to you. You will pick two of those six names. The Police, and this is in the System - the Police will submit six names to you and you will pick two of those six, okay? The Plan is the same thing. S.E.A. will submit six names to you. You will pick two of the six. Mayor Ferre: What if the Commission does not like any of the six? Mr. Teems: I think we have got to submit six more names to you. Mayor Ferre: Okay, I just want to make sure that that is in there, so that the Commission will always ... so that you, you know, give us six people that are unacceptable to the Commission ... see, the main thing that those people do, as I see it anyway, Don, is choose a company to invest the money, that is the main thing. They do a lot of other things, but to me ... Mr. Teems: That is the big thing. Mayor Ferre: The big thing is, choosing who is going to invest the money. Mr. Teems: And trying to administer those money managers to see if they are doing the right job. - m - Mayor Ferre: Keeping their eye on them to make sure they are doing a good job. Mr. Teems: See, Mr. Mayor, what we have got in this though, that we never had before, okay - we have certain specifications that these people have to fall under. There were requirements that they have to have before they can be submitted on a list that we never had before. There are some standards for the people and there is also some certain things that they have to do to be able to stay on the program. ' Mayor Ferre: Don, that is what I want to get to. This is my bottom line. I want to put this on the record. Randy, and Mr. Manager, I want to say on the record, I will not vote for any solution to this very complex and long lasting problem unless there is a clear cut standard that must be kept and that if it is violated by a certain - and I don't care if you do a three year running average, but if id 1O October 31, 198 everybody else in the Unites States is getting 10% investments, you guys are get 5% investments, I don't care who the Manager is, I want us - ( I am sure you do too) to deal with the issue and if you don't deal with, I want to deal with - I, the Commission. Mr. Teems: Mr. Mayor, we agree with you 190%. Mayor Ferre: Tell me how you seek ... Mr. Teems. It is our house okay, and we understand that and if our house isn't getting the income in it that it is supposed to, then we are going to lose in the long run. Mayor Ferre: What I am concerned about, Don, is not you and the people that are there now. I don't have any problems with any of you. I know you are worrying and you are going to be conscientious and I am not saying that 10 years from now somebody is not going to be conscientious, but what I am worried about is that somebody, for whatever reason it may be, chooses and investment corporation, a money manager that will be money managing your money - it will be well over $20090009000 by then and is not getting the return on investment that everybody else in the country is getting! And then you come back and say "Okay, put up the difference" and my successor and people that will be sitting here 10 years from now, other than myself will then at that time be saying to you - wait a moment, you know Coral Gables and Hialeah (well they are on the State system), Cincinnati and Cleveland and Los Angeles and Phoenix and Dallas and Houston all have return on investment on their pension systems and plans that are 10% and the City of Miami is getting only 5% and there is $7,000,000 or $8,000,000 missing there, and there is no thing that this City can do except pay up the money, and all I am saying is, that I want a safety fall back position, Mr. Manager, so that if we ever arrive at that point, when you are mismanaging your money and asking the taxpayers of Miami to put up the difference, then we have a way of saying - okay, one year is fine, two years maybe, but at the third year Ernie Fannatto is going to stand up and just not take it any more - that is it! Mr. Rosencrantz: Mr. Mayor, I'd like to point out to the Commission there is a specific provision in this agreement which indicates in effect what you saying that the Board, if they do have a money manager that does not perform, that in effect, if they don't meet your standards that they should move him on and get someone else. That part of it is in here. Mayor Ferre: No, sir. I don't want this to be a squabble -= in the year 1994. I want it to be automatic. If for the = years 1991,- 1992 and 1993, their money managers have been mismanaging, I want it to trigger immediately and come to the Commission for some kind of a solution. If they fall into a pattern where they are mismanaging their money _ clearly definable and under a certain basic formula, I don't care if you kick it up to the Governor, or you kick it to this Commission or wherever, but there has got to be a - solution, and I will tell you, I am not ready to vote for this thing until you have that in there. I don't care how you do it. You figure out your own - and it is in your own best interest, Don. Mr. Teems: Mr. Mayor, I know that, but that's ... Mayor Ferre: You won't be around - you will be up in North Carolina fishing and all of a sudden there is a big fight happening here in Miami and all of a sudden the Commission, or your successors have some kind of a deal with some Id 11 October 31, 1984 friends or something, and they are investing the money and getting half of what everybody else should be getting and you have got a problem and we have got a problem and there is no way to solve it, because you ..6 go ahead. Mr. Rosenerantz: Mr. Mayor, there is a provision and I would advise you to look on Page 6, it is Item 3 and what it states in effect that it is talking about the money managers. Each board will establish written guidelines and objectives against which the money manager's performance will be measured. Whatever criteria that is best, that is there. This is why that particular provision is in here. Mayor Ferre: That is not acceptable to me, because there is no automatic kickoff. This is like a governor in a car, you know, when it hits 65 miles, that thing kicks off. I don't want a beeper. See, what you have here is a beeper. It beeps. You know, after they exceed 65 miles and hour, this goes, beep, beep, beeps I don't want that. When it hits 65 miles an hour and the red light goes on, I want that motor to cut off, or something to stop it, and I want it to be automatic in here. Ron, you make it any way you want to, and you kick it up to the Governor if you want or the Supreme Court of Florida, or whoever. Mr. Teems: Let me see if I can clear something up. The Board right now, and in the future will rate money managers as they work. At least once a year, I am not sure if it is not more than once a year that the board rates these managers. Management is going to have somebody on that Board looking at it. I can't imagine the City Administration having somebody on that Board looking at it and then not meeting the standards and then not bringing it back to you. Mayor Ferre: Look, let me put it to you this way, okay? In the year 1991, you are up fishing in North Carolina and the Board is made up of John Smith, Willy Jones, Pepe Garcia, and Juan Rodriguez, okay? ... and Juan Rodriguez, Pepe Garcia and Willy Jones and Robert Smith all have some friends that they think are real good. They chose them as investors and these money managers - the name of the firm is Garcia and Garcia, okay? They are a very big local firm. Garcia and Garcia now has invested the money and instead of a 9.5% return, which is the average for its ... yes, and the Bank of Venezuela is the custody for that - they are custodians for the money and you are making 6%, and the Bank of Venezuela tells you that is not bad, it could be worse. So and so did something else, and all of a sudden, you are saying "Hey, come on. When I was on that system, that never happened. I am not happy with that", and they say "Go to your Board!" And you go to the Board, and your Board - it just happens that the President of the Fire Fighters is also Juan Garcia, and the President of the Police is Willy Smith, and at that point, you are into a situation where you don't have much to say about that, and your Board is already deciding whether it could do, and I am telling you that I just want to make sure when that happens with Mr. Jones and Mr. Smith, Mr. Rodriguez and Mr. Garcia, that this community and this City and you, up in North Carolina have a failsafe operation that automatically triggers off if somebody is misinvesting your money, and it has nothing to do as to who is on the Board, and who is not on the Board, you get my drift? Mr. Teems: Yes, I get your drift Mr. sure ... I am going to look to some tell me how to do that. I don't have you are saying. I just think ... Mayor, and I am not legal people so they a problem with what Id 12 October 31, 1984 Mayor Ferre: I want to tell you that I told Joe Grassie and I told Richard Fosmoen, and I told Howard Gary and George Knox that you would not have my vote, and Dean Mielke - is he around? Mr. Mielke, you know that I have told you when you were working for Mr. Grassie, and I told you when you were working for Mr. Fosmoen, and I told you when you working for Mr. Gary, that that was my bottom line condition. And Howard, you and I have gone over it. George Knox and I went over it. Bob Paul and I have gone over it and I was there then. I talked to you Don, about it. I've talked to Wally about it, Ron knows about it. I mean, there isn't anybody that I haven't talked to about this. That somewhere, there has to be an automatic kickoff, that if they are misinvesting the funds, as compared to other investing money managers, that it comes back to some governmental board. In other words, I want to save them from themselves. Mr. Gary: Well, Mr. Mayor ... do you want to respond first? Mr. Ron Silver: If I could respond to the Mayor on the subject matter. I am Ron Silver, Attorney at Law, 444 Brickell Avenue. Mayor Ferre: Who do you represent, Mr. Silver, for the record? Mr. Silver: I represent the Miami City General Employee's Plan, Trustees. This whole question about investments, Number one, each person assumes a duty as a Trustee, has a fiduciary responsibility, which means ... Mayor Ferre: Assuming, I will be in Brazil by then. Mr. Silver: No, that is not the case. You have fiduciary responsibility, okay, for which there will be insurance, okay? See, we have not been able to as a result of these lawsuits, been able to obtain an insurance policy which is fiduciary trustee insurance. Mayor Ferre: Insurance policies, Mr. Silver, as you well know, depend on the insurance company issuing the insurance, and if they say we don't want to insure the City of Miami because we don't like the way things are going there! Mr. Silver: We contend, Number one, that all the fiduciaries have to attain trustee insurance, plus it must be in Best book, rated by an insurance company that has a certain rating in Best book, but the fact of the matter is, it is not the mismanagement - see mismanagement of trust funds is difficult to ascertain. What you have to do is make the right decision. There are no guaranteed returns. Just because you or I have the best advice ... Mayor Ferre: Ron ... Mr. Silver: Wait a minute. Just because you and I have the best advice ... Mayor Ferre: You are talking about apples, I am talking about oranges. Mr. Silver: Okay, then let me respond to your oranges. Mayor Ferre: Talk about apples, talk about the same thing I am talking about. Go ahead. Mr. Silver: Okay, ask me a specific question then, and I will be happy to respond to you. ld 13 October 31, 1984 El Mayor Ferre: I am not worried about the fiduciary responsibility, Ron, and somebody misappropriating money, or running off the Brazil with it, because that you can get insurance for. Mr. Silver: Right. Mayor Ferre: We are not running for a crook. I am not worried about crookedness, somebody being crooked. That you have criminal courts to deal with. What I am worried about is, the same mistake, and let's say that it is on an honorable basis, and Plummer used to call it the Southeast syndrome, okay? And here is the way the Southeast syndrome used to work. Mel Reese would go to the Miami Club for lunch and he would meet with the trustees of the ... those of you who are smiling now are telling me that you remember how this works and you know exactly how this whole thing was fanagled. It was all honorable. There was nothing dishonest about it Mr. Silver: I heard about it when I was very young. Mayor Ferre: Southeast was chosen. I'll tell you, you have aged awfully fast! (LAUGHTER) It was all honorable and above board and Southeast was a money manager! Now, we were getting three and one-half percent and everybody else was getting 5%. Finally, the employees got upset with it and it came to a head and this Commission, and I served on it, made that in decision, back before Plummer - I was a Commissioner, I wasn't even Mayor. It was when I was on this as a Commissioner. Now, I want to tell you that those things can happen. If it happens for one year, I've got no problem. Somebody made a mistake. If it happens for two years, I've got no problem. What I do have a problem with, is if keeps on happening and it is the Union's fault who control these pension plans and systems, and because of friendships between Board of Directors and money managers, it doesn't get changed. And even though the membership of the employees and retirees complain about it, you know how sometimes that works. Mr. Silver: Well, what we have done as far as the Trustees are concerned now, if you guard against that happening, we have independent firm, which is DeMarche and Associates, analyze the three money managers. They are no way connected with any firm whatsoever, to ascertain for us that every particular ... Mayor Ferre: That is 1984. Are you guaranteeing that that will happen in 1994? Mr. Silver: We can put that in an agreement that says that we will have an independent firm, just as we have a ... Mayor Ferre: Who chooses the independent firm? - Mr. Silver: We can arrive at some agreement that ... Mayor Ferre: If you let the City of Miami Commission, or the Governor, choosing the independent firm, then I've got no problems. See, that gives me a guarantee. I want a failsafe system. Mr. Gary: Mr. Mayor. Mayor Ferre: Yes, sir. Mr. Gary: If I might, first of all, in terms of their conditions, I don't recall us having that conversation. If you recall, the issue that got us into where we are now is ld 14 October 31, 1964 E] the fact that the Gates people allege that the money that was legally theirs was not expended properly when it was under City's control and they spent money that was raised for pension for social security purposes, and other purposes. Mayor Ferre: I am worried about the same thing in reverse. Mr. Gary: Okay, if I may, the pensioneers have said the law says, they are received monies for pension plans and the law says that their board has a fiduciary responsibility for getting the money and administering the money and that is where we ran the issue with the Gunderson, if you recall. Gunderson sat on the Board, the Board would make a decision and Gunderson would overturn the decision because he controlled the money, you pay out the checks and he would therefore say "I will get you on the other end". The agreement that we have with the unions, and this is right. That should have never occurred, for the mere fact that when a Board such as a fiduciary board, when they make a decision, that decision should be honored, regardless of who writes the check, for the money is to be handled by them. I'd like to go back to the Rouse situation. It doesn't make sense for this Board not to want to make a profit on its money and make it the highest profit, because if they don't, they are the only ones that lose. And particularly the Board Members who sit at that particular point in time. Because those are the guys that always worry about whether there is going to be money in the fund when I get out. What occurs here now, they have a built in system that first of all resolves the old Gunderson issue, resolves the issue with regards to their making their own destiny, but they have a built in evaluation system in terms of evaluating their investment and I can tell you for a fact they have - those investors that have not done well - they have gotten rid of, for the mere fact that they don't get rid of them and they don't invest properly, then they are going to lose when they get out, for pensions. You are not going to find Mr. Teems not having a good investor, because when Mr. Teems retires, he wants to make sure that his money is in the bank, so they have an incentive there, Number one. Number two, the second incentive becomes the fact that their thing is what they have been doing in the past, they have been really exceeding the market, and any excess money, they get to keep Mr. Mayor, and so therefore they want to make it, there is the incentive - the same thing with Rouse. So the mere fact that it goes into the fund so when Teems gets ready to retire, not only do they have enough money in the fund, they have got a little more in terms of cushion and in terms of inflation, so I think the issue of whether or not the unions and the fiduciaries, or the people in that capacity as a fiduciary are going to invest properly, I think it is giving for the mere fact that they lose and it does happen, and Mr. Mayor, if I might, the money, and this was the issue of the Gates Case, the money, when it is turned over to the Union, it is the Union's fiduciary responsibility to see that it is invested and expended properly, and I don't think it is the Commission's responsibility. Mayor Ferre: Absolutely, it is the Commission's responsibility if we are coming up with taxpayer's money, for any shortfall, you bet! And I am telling you right now that I am not going to change my position of 10 years standing. I will vote for this memorandum with one exception - you come back with an acceptable solution that if on a continuing basis the money managers of this $200,000,000 system is going to not invest this money properly, and that we choose to set the standards and those standards aren't met, then give it to the Governor, I don't ld 15 October 310 1984 i O care! Give it to the State Legislature. Let them decide it. Some governmental body needs to decide. Mr. Silver: Mr. Mayor, can I just make two points - Number one, there is nothing in the agreement which prohibits the City from for instance, hiring somebody like I suggested to monitor the money managers on a quarterly basis or a yearly basis, or whatever the case might be. Secondly the Court has jurisdiction over this matter for twenty years, so if the City did in fact find that the money managers are not doing, they just go right into that Court. Mayor Ferre: Not acceptable. Not acceptable, and I think Mr. Plummer and I have been talking about this. He knows more about it than I do, because he served on one of these Systems for a while and I ... Plummer, am I wrong? Mr. Plummer: Ron, it is simple. The concern of the Commission has to be in the area, not if you make money, but in the shortfall and in the shortfall, then you are asking this Commission to pick up that tab. What the Mayor is saying is if you are going to demand that of us, we must retain some control. Mr. Silver: You do have. There is nothing that prohibits you from doing as I suggested that you do, to monitor ... Mr. Plummer: A monitor doesn't mean a thing. Monitoring doesn't change ... Mayor Ferre: And the monitor comes back and says "Hey, those guys are getting 3% less than they ought to be getting and then the City says "Hey, you guys aren't going a good job!" and so they ... Mr. Silver: Then they go into Court - they go right into Court ... Mayor Ferre: How long have we been in Court on this one, five years? Mr. Silver: Yes, but anything ... Mayor Ferre: And five years later we are here before another Commission and Dan Paul is here with Parker Thomson and Bob Paul and everybody else is involved and we get another - you know - come on! Mr. Silver: No, I understand. The reason our actuary from the Plan side has approved this situation is because of the definiteness of the agreement, whereby we would not be getting involved in disputes and that is the key to this as well as being aotuarially sound, but the fact of the matter is here there is that he has pinpointed in saying that the only way you are going to do this is to resolve disputes from occurring again. Mayor Ferre: Okay, I will tell you what. I will simplify it for you and this is the way I am willing to vote unless Plummer or somebody else wants to do it another way. I move that the resolution as presented before us by the City Attorney to take such steps as may be necessary to implement such settlements, including and drafting of appropriate ordinances and resolutions including the provisions for resolutions of any impending liens for attorney's fees before the City pays any attorney's fees where a pending lien is involved, provided however, that before final resolution and approval of this before the Court, that the people that are litigating this and the City Attorney and the City Manager, come up with a solution that specifioally Id 16 October 31, 1964 ti= i-= resolves the potential case on the part of the Board of Directors of both the Pension Plan and System, where there is a failsafe system of identifying mismanagement of the money manager's dealing of these funds and if, under a specific guideline system, this occurs over a repeated period of time, let's say three years, that there is a way in which this reverts back either to the Commission or the some governmental body or person, elected official to correct. I don't care how you do it. Mr. Rosencrantz: Mr. Mayor, I wonder if I could add - I think it is possible for us to be able to accommodate exactly what you want. My concern is simply this - that the agreement that you have has gone through a number of bodies. If we make any substance changes to that particular agreement would mean we would have to go back to that process. I wonder if I could ask you to give me about two minutes to meet with the City Attorney and our attorney and see if we can legally can come through a way that can achieve what you want without going back through through the process again. Mayor Ferre: But I wish to state to you Mr. Rosencrantz, and what I am saying today is exactly what I told Howard Gary, what I told Fosmoen and what I told Grassie, and actually Howard, in those days, you weren't the City Manager, I think when you first started dealing with this thing, you weren't even the City Manager. I said it to you, I said it to Dean Mielke, specifically, and I said it to George Knox, and I want to say that I have not changed my position one iota, nor will I! Mr. Rosencrantz: Could we have two minutes, and I think we can do that. Thank you. Mayor Ferre: Of course. We will take a five minute recess. THEREUPON, THE CITY COMMISSION WENT INTO A BRIEF RECESS at 4:29 P.M., reconvening at 4:35, with all the members of the Commission found to be present. Mayor Ferre: We are back in session. The proposal was just made on the record that the City of Miami Commission set a standard, like an average of ten similar sized cities who have a similar sized pension plan and if our money managers don't come to that average, then the City would have the right to go to the Court in the next twenty years and have the Judge intervene. The reason why that is not acceptable, is because that again does not have a failsafe mechanism, other than our appealing to the Judge. I don't need any mechanism to appeal to the Judge. Any time three members of this Commission think that somebody slipped and gone wrong, we would appeal to the Judge anytime. Mr. Teems: Mr. Mayor, what you want, is you want final control. Mayor Ferre: Nope! Mr. Teems: Yes, you do! Mayor Ferre: No I don't. -�' Mr. Teems: And you had final control over the last twenty years, and that is the problem now. Mayor Ferre: No, don't want final control. You have control, but I want you ... ld 17 October 31, 1984 Mr. Teems: No, I don't have control now. You do. Mayor Ferre: I want you to have it. I want you to have control. What I don't want you to have is absolute control. See, that is the problem around here. Mr. Teems: You tell me, in a financial circle, where you can give a guarantee, or you can get a guarantee, and I will take it, but there is no such animall Mayor Ferre: Don't want a guarantee. Mr. Teems: You want to be able to have the final say. Mayor Ferre: I don't want a guarantee. I don't want final say. I just want you - your money managers to do a good job and I want you to meet standards. Mr. Teems: Well, let me tell you something - let me tell you something, Mr. Mayor, okay? Seven years I have worked on this and I will tell you the first time we got a step in the right direction was when this man sat down with us and started negotiating, okay? ... about three years ago, if I am not mistaken. Mayor Ferre: Three years. Mr. Teems: We finally got all of the parties to agree. Mayor Ferre: What is your point? Mr. Teems: The point is, that right now, if you are looking for a guarantee, you are not going to find one. Mayor Ferre: Don't want a guarantee. Mr. Teems: So, we have no deal, okay? Mayor Ferre: Finel Mr. Teems: Okay! Understand what that means though. On November 5th Gates go to Court to sue. Mayor Ferre: That is fine. Mr. Teems: I know, that is fine! That is what you are saying - that is fine. Mayor Ferre: That is what I am saying. Mr. Teems: Okay, give me a guaranteel Mayor Ferre: That is what I said ten years ago. Mr. Teems: Give me a way to guarantee itl Mayor Ferre: There is no way ... Mr. Teems: Give me ... you are asking for a guarantee. I want to know what it is. Tell me how to do that[ Mr. Plummer: Don ... Mr. Teems: We have got all the attorneys here don't know how to do it. Mayor Ferre: Wait a minute. Mr, Teems: The City Manager doesn't know how to do it. I don't know how to do it, but you want itl ld 18 4otober 319 1984 t Mayor Ferre: Are you finished? Mr. Teems: I think. Mayor Ferre: Are you finished? All right, it is my turn, right? Let me answer you. No, I do not want control, the Plan or the System, nor to choose the money managers, to have the final say. All I want is a very simple mechanism that if the money managers over a three period running average do not meet the standards in America of what people are getting in large systems and plans as a return, that you no longer will have the sole decision, in that a governmental entity, whether it be the City of Miami Commission, or the Governor, or whatever entity will have irrevocably the right to disengage or choose or begin a new process of choosing, but you can choose the money manager. That is all I want. That is all I have ever wanted, and that is what I have requested. Mr. Teems: That is what the Board does, okay? That is what the Board does. Now, yes, we give you a list, but every two years, you vote on two of those people, just like we vote on two of ours. Now, if we let that happen, then shame on us. If you keep appointing the same people back to keep the same money manager, then it is shame on you. Mayor Ferre: We have been through the shame on us, and I don't want it to repeat. Mr. Teems: Mr. Mayor, let me tell you something, okay? What we have been through is twenty years of administrative control of that pension system, and that is why it is the shape that it is in now, okay? The Manager told you that - mismanagement in the past, and it is true. Right now ... Mayor Ferre: You run it. I do not want anything to do with the selection process. What you have is acceptable to me. What is not acceptable is if you have ... I do not believe in imperial policies. I do not believe in your having the total absolute right. There is no such thing. Mr. Teems: I don't have the right to anything, Mr. Mayorl Mayor Ferre: Well, the way you are structuring it, you have absolute right. I don't believe in absolute rights. Mr. Teems: You are wrong! You are wrong! The ... Mr. Plummer: Wait a minute, Don. Excuse me, let me ... Mr. Teems: The Board has the right! Mayor Ferre: Hey, I will tell you, there is a very simple solution. If you mismanage and you don't get enough return, you leave us off the hook! Don't ask the taxpayers to come up with the money - with any more money. If you want the taxpayers to come up with more money, than I want a failsafe system, period! Mr. Plummer: Don, let me read to you from the agreement. "Each Board will establish written guidelines..." The Board will establish them - not this Commission, but the Board. -- Mr. Teems: And not the Union. Mr. Plummer: I didn't say it. I read - I said the Board. Mr. Teems: I know. He keeps saying me. ld 19 October 31, 1984 Mr. Plummer: Okay. "...and objectives against which money managers performances will be measured." We have no control, according to this document, okay? If a money manager fails to meet such standards, they will be subject, possible, to termination, at the sole discretion of the Board. -= Mr. Teems: That is right._ Mr. Plummer: Yet, if they make a mistake, this Commission, who is going to be asked to make up the shortfall, has no control over that situation. Don, yes, I think this Commission is asking for control over that money which you are going to be asking from us! That is only reasonable. We cannot - we cannot write you a check without any numbers, and that is what this is providing. What the Mayor is saying is, there has got to be some control, if over a period, as you and I know, over three years is an actuarial assumption, that they don't prove to be a good outfit, and you don't remove them for whatever reason, then something automatically kicks in and triggers that removal. He is willing to take it out of your hands and the Commission's hands, okay? Don, I don't believe you or anyone else can expect this Commission to take and write a check for taxpayer's money without some control. It has got to be, over that shortfall - not over the Pension Board, not over the monies that are already in that Board, but the monies that you will be looking to us for in a shortfall. that is only reasonable. Mr. Teems: Commissioner, you have under funded what the Board's actuary has said, that the Pension System and Plan has needed, for the last three, four, five years. That was your decision. You made it. You under funded it. We had a recourse - take it to Court. We did that. That is where we are. Now the Court has jurisdiction, right now, okay? There is no guarantee to you, but there is no guarantee to me either.. Mr. Plummer: Except the wording of this agreement that says the Board shall be the sole determining factor. Mr. Silver: Mr. Commissioner, let me just ... it also says in here that there shall be four independent members selected by whom? ... by the City Commission. Mr. Plummer: Submitted by the Unions. We are bound by that. Mr. Silver: But you have the choice of selection of those people that you both mutually agree on. Mr. Plummer: That is correct, but they are making the list. Mr. Silver: But they are your representatives. 3 Mr. Plummer: As long as we stay within their recommendations. Mr. Silver: But they, I would hope ... you have got to have some reasonableness somewhere along the way. I would hope that your appointees, okay - the people that you appoint are going to come back to you and watch the Board and tell you if something is not going right, or you are going to require, as a Commissioner, them to do that to you. Now, if you don't require them to come back and tell you that there is something wrong, you are derelict in your responsibility, but you have that control. Mr. Plummer: Ron ... Id 20 October 31, 1984 i W] 11 Mr. Silver: You have that control over those particular people. Mr. Plummer: We are not speaking to that. We are speaking to the taxpayer's unfunded liability, the shortfall. That is what we are speaking to. Mr. Gary: If I might ... Mr. Silver: I am obviously not making myself very clear. Mr. Gary: If I might, Mr. Plummer, may I suggest, and maybe the Union can agree - look on Page 6, Item Number 3. Mr. Carollo: While you are all reading that, if I may interrupt all of you for just a brief moment, if I may, and I apologize, but I just can't sit back anymore and not speak out. If I may, Mr. Mayor, the foreman of the Grand Jury, Mr. Milton Vickers, who is back here today, if he has anything that he wants to say publicly, I want to give him the opportunity to come up and say it to me face to face. I am not going to permit this man to come here and be staring down at my administrative assistant, be trying to be intimidating with dirty looks, or be here thinking that I am going to be intimidated by his presence here in staring down at us. Now, if he has anything he wants to say to me, he can come up here and say it publicly. Mr. Manager, if you would sir, I would appreciate giving the opportunity. give Mr. Vickers the opportunity to say anything he wants to say. Mayor Ferre: All right, Lucia, read if you would, the ... Mrs. Dougherty: I've had two solutions proposed, Mr. Mayor, and one is the Administration has suggested that what we do is direct the City Attorney to pass an ordinance that would essentially give the City Commission the right to make a -- recommendation to the Pension Board to fire its money manager, if it doesn't meet a certain standard. The other suggestion is, and this would take the concurrence of the Unions that are present here, we will put this in the agreement - the annual return on investments by money managers must be equal to the level of return earned by money managers of the five largest governmental systems over a three period, or the money managers will automatically be changed. That leaves no discretion in the City Commission... Mayor Ferre: Fine. Mrs. Dougherty: No control in the City Commission whatsoever. Mayor Ferre: That is acceptable to me. When you come up with a solution - we are not going to take the taxpayer's =� money and let you play loose with it. It is that simple. Mr. Plummer: Let me ask the unions - is there a possibility that we could agree upon a percentage, that if it drops by say, 5% - in other words, from what it was the year previous. Mayor Ferre: Won't be down 5%. Suppose there is a crash in the bond market. Mr. Plummer: Maurice, I wasn't saying 5%. I said like 5. It could be 10, it could be 12. Mayor Ferre: It has got to be against ... I id 21 October 310 1984 t W Mr. Silver: That doesn't take into account market conditions. You know, that could very well ... Mayor Ferre: I agree with you and I think we have to have a standard and the standard ... I don't mind as long as you come with the standard. All I am saying, and I don't want any part of choosing who the money manager's are, but if the money managers you have on a three year running average don't meet standards, then I don't see why the taxpayer's should pay the shortfall. If there is no shortfall, I don't care. Mr. Plummer: If there is no shortfall, nobody cares if it is acceptable to them. Mayor Ferre: I don't know how you feel on this, because I am not sure of Miller and Joe. You know, F honestly cannot vote for something that is as open ended as that. That is us not having any control over it. There is no way in God's World that I could vote for an open ended thing like that without any control and it has got to have some kind of a standard. Mr. Carollo: Mr. Mayor, I apologize, but what I have been able to hear at this meeting so far, there are too many questions in my mind for me to make a vote on this today. Mayor Ferre: As I said, I am willing to accept everything but that one thing, and that is the one thing where I am hung up and you have got to come up with a solution. Mr. Dawkins: Well, Mr. Mayor, the only hangup appears to be that you say, and if I am in error, you correct me ... Mayor Ferre: Yes, sir. Mr. Dawkins: ... if there is a shortfall, then they accept it. Mayor Ferre: That is right. Mr. Dawkins: Or else don't make us responsible. Is that what you said? Mayor Ferre: That is right! If you can get them to accept that, I willing ... Mr. Dawkins: No, no. I just wanted to be sure that I understood what you said. Mayor Ferre: What I am saying is, Miller, that if there is a $200,000,000 ... Mr. Dawkins: Shortfall. Mayor Ferre: ... investment, and they are out there and they are out there and they invested, and they are getting out of that $20,000,000 return, okay - one year, and the next year it goes down to $15,000,000, -- Mayor Ferre: That is right, and everybody else in the country who has $200,000,000 investment funds are making out of that same thing $18,000,000, and they are making $15,000,000 and they are coming to us, or our successors and saying you make up the $3,000000, and we are saying "no". Mr. Carollo: Well, Mr. Mayor, what I suggest we do is we defer this item. I want to have the opportunity to sit down _ with Don and some of the other people to get a better understanding for just what it is they want. Pr- 1d 22 October 31, 1984 W I A • Mayor Ferre: Mr. Manager, we are about to ... Mr. Dawkins: I second it. Mayor Ferre: There is a motion to continue this matter with a second at this point. Go ahead. Mr. Carollo: Don, I want to have the opportunity to be able to sit - down with you to get a better understanding of what is it you are trying to accomplish. Mr. Wally Rodak: One of the problems we have is we have a Court date. Mr. Carollo: What is the Court date? Mr. Rodak: November 5th. Mr. Carollo: November 5th? Next Wednesday? Mr. Rodak: Monday is the Court date. Mayor Ferre: I don't mean that. I am not ... Mr. Rodak: We have to go before the Judge. We have an agreement, or we don't have an agreement, they go to trial. Mayor Ferre: Wally, I am not being critical of anybody here, but I want you to understand that this has been hanging on for seven years, and for three years now we have been making, as I understand it, some very substantial progress, which I am very happy to hear. And now that after three years with this tremendous progress that we have made, five, six days before we go to Court and this issue has not been addressed and I don't think anybody is surprised about my concern. This is the very same one I have been expressing from Day one for seven years. Mr. Rodak: The biggest point I make I guess, is that these people that we submit to you and you ask us if they weren't acceptable, we can get more people, and we say "yes". The thing is that they sit on staggered terms. Initially it is set up, this Board, you are going to have four names there and two of those people only sit for one year. The other two will sit for two years, and then there will be two years from that time on, and they will sit for a two year term, but it is staggered. Before you talk about a three level, after one year, you don't reappoint those people. The next year the other two people come up. Mayor Ferre: That is terrific. If you can also tell me that you are not going to look to the taxpayers to put up any more money, but if you are looking for the taxpayers to put up money, should somebody makes a mistake, than you have got to give me some relief, man, that is the only way we can go. You want the ad valorem taxpayers of Miami to put up more money, they you give me the fail-safe situation, it is that simple. You want to give me a fail-safe, then fine, then don't ask me for any more money. Very simple. I mean, I feel very badly about being the person to disrupt this three years of tremendous progress six days before ... Mr. Teems: You know, you are worried about the ad valorem tax, but you have a really bigger problem without this settlement than the ad valorem tax to the citizens - much, much bigger, Mr. Mayor. Mayor Ferre: That may be, 14 23 October 31, 1984 11 Mr. Teems: Well, it is the truth. It is not maybe, it is the truth! Mayor Ferre: Well, I tell you, I'd hate to be the one to, after the tremendous progress that we have made in seven years, especially in the last three, to be the ones six days before to throw the monkey wrench in, but I ... Mr. Teems: I know, but you are, Mr. Mayor. Mayor Ferre: Oh, you bet! I will. Mr. Teems: You have done it! Mayor Ferre: I will, oh, you bet! Mr. Teems: Oh, you have done it. Mayor Ferre: I want to. I intend to. I realize that. Mr. Teems: I think everybody here does. Mayor Ferre: Absolutely! And I want to tell you that this shouldn't be any surprise to you. I have been telling you and others from Day one what might ... Mr. Teems: Mr. Mayor, you never told me that, okay? You might have told the Administration that, I'm sure you did, but you never told me that. Mayor Ferre: Sir, I want to tell you that I have repeated this - Mr. Manager, you remember my conversation? Mr. Gary: No, sir. Mayor Ferre: You do not. Okay, all right, Mr. Mielke, do you remember my conversation with you on these things over the past years? Mr. Dean Mielke: We have had a lot of conversation on it, Mayor, but I don't recall ... Mayor Ferre: Well, I will tell you, you put me under oath right now. You put me under oath right now. Mr. Ralph Ongie: Do you solemnly swear the statement you will make in connection with this case will be the truth so help you God? Mayor Ferre: I do. I want to state into the record that over the past seven years, on different occasions, I have talked with Mr. George Knox, Mr. Dean Mielke, Mr. Howard Gary, Mr. Joe Grassie, Mr. Fosmoen and other members of the Administration, specifically stating to them in the discussions, that I would not accept any resolutions of the Gates, or pension matters, unless there is a fail-safe guarantee regarding the investment decisions. If the money managers did not properly invest those monies, should there be a shortfall, and should the taxpayers of Miami be asked to put up the shortfall, and there had to be a fail-safe situation involved in it. I further state into the record that on different occasions, several of the people that I talked to in negotiations, and at that time, specifically, the negotiators were Mr. George Knox. Mr. Mielke, you were involved in it, as a negotiator, and I forget who the others were, but I specifically, in the Manager's conference room, in discussing this matter, specifically stated at that meeting, and I came up with the formula, there is a memorandum on record; I specifically asked the Administration to discuss this with the unions during union Id 24 October 31, 1954 negotiation agreements, before, not in this last round , but in the previous round, and maybe in this last round, but I specifically stated in administrative sessions with the Commission present, that this matter be put on top of the table for discussion, and I so swear. e=_ Mr. Carollo: To the best of of his recollection. Mr. Gary: Mr. Mayor, I don't recall those statements, but the issue I recall that you had a concern about, which was the major issue at that time, was the composition of the Board in terms of whether or not the City Commission would have appointees, and I recall that ... Mayor Ferre: Mr. Manager, I must correct this for the record. My interest always has been, and only has been in the question of if there is a shortfall, who pays for it, and if there is a shortfall, and there is money being invested, how is the money being invested? I specifically remember - and Mr. Gunderson was also involved ... Mr. Gary: We can't ask him. Mayor Ferre: ... during this period. I specifically recall that the question, and Mr. Plummer will recall that the City of Miami Commission was asked to come up with a shortfall, which is the start of this whole mess in the first place. It was what, $4,000,000 or $5,000,0007 Mr. Gary: The issue in which we spent a lot of time on dealt with the membership on the Board, because of the Gunderson issue and that Mr. Teems and the initial negotiators when this thing was dead, and we met over in Mr. Sicking's office, was to insure that they maintained control, that the Commission had participation, and they were concerned that the people who were placed on the Board would be people who would be separated away from politics, administration. That was the major concern and therefore, we told them that, and we must have spent, I don't know - - about a month on two on this, or longer. We told them that we thought this City Commission should have a right to participate and to resolve their problem in terms of whether their best interests, their money would be taken into == consideration, we established criteria for those members, and we said we would submit to the Commission six names and if they kept putting names up that the Commission could not accept, they would have to continuously put up additional names. Those were the key ingredients. The second, and the last ingredient was to insure that the City had the ability -- to pay and then we worked out those differences, but the whole issue of who would be in control of, which was the problem of the Gates Case, was something that had to be resolved, and that was the primary issue. I think in terms of, as I stated before, in terms of whether or not the unions or any person in that fiduciary responsibility who is also personally liable will respond responsively in terms of investment. I guess you could equate it in terms of your pocketbook. Obviously, you don't want the greatest return, and obviously you want the guidelines to be there. I would suggest ... Mayor Ferre: I will produce, by the way, a memorandum, Mr. Manager, to your predecessor, specifically speaking to these - points, and I will be guided by what that memorandum says then, as today. Mr. Gary: Mr. Mayor, I was not questioning whether you talked to my predecessor. I was just saying I don't recall having that conversation with you, and my basic issue that I had to deal with at that time were the ones that I was aware of, and that we discussed at those meetings. ld 25 October 31, 1984 t n Mayor Ferre: Mr. George Knox was City Attorney and Mr. George Knox was part of the negotiation. He also received a copy of that memorandum. Mr. George Knox was involved in the ongoing negotiation for the past three years before he resigned as City Attorney. There is no question as to what my position was and is. We have a motion now that this item be continued. Is there any discussion? Yes, sir. Mr. Silver: Let me suggest an alternative which I don't know if it is going to acceptable to you, but it might be a way out of the situation for right now. As you know, we do have the Court hearing on Monday. So, my suggestion is, that you consider that resolution you have with you, subject to us being able to arrive at a decision which we can bring back to you. At least we can go to the Court on a status conference basis and say that the Commission is at least, with regards to everything else other than this one particular item, in agreement, but before we could present any settlement agreement for formal approval by the Court, we would have to get this particular item resolved. Just so we get an indication from the Commission to the Court. Mayor Ferre: I've got no problems with that. I've got no problems with ... Mr. Silver: I think we might be able to work that out, because, see we have to go back before all the boards and all the unions now, if we do change that matter, which depends ... Mayor Ferre: I've got no problems. Mr. Clerk, would you read the motion that I previously made, before the motion to continue? Commissioner Carollo, Mr. Silver has requested that we pass some kind of a motion to permit them to go before the Judge and begin the process of settlement - not settling it until they come back to us in final form, but specifically excluding that section on Page 6. Mr. Ongie: It is a long motion, Mr. Mayor, but I will try. Mayor Ferre: Go ahead. Mr. Ongie: " I move the resolution as presented, provided however, that before final resolution and approval by the Court, that the people litigating this matter, plus the City Attorney and the City Manager come up with a solution wherein it specifically resolves the potential case on the part of the Board of Directors on the Plan and System; wherein there is a failsafe system of identifying if the money managers are dealing effectively with these funds, and if this occurs through a repeated period of time ..." Mayor Ferre: In other words, the failure. Mr. Ongie: Yes. "That this come back before either the City Commission or some other governing body, or some elected official for correction." Mr. Silver: Just so we get the intent of what the resolution should be, because I think we are dealing with that one particular issue, but for our purposes and for the Court purposes, we have to understand that with the exception of this one particular issue so we don't come back again and we get all involved in another situation - with the exception of this one particular issue, that this Commission is in agreement with the settlement agreement. Mr. Carollo: If that is the intent, then that is fine. ld 26 October 31, 1984 T n Mayor Ferre: Mr. George Knox was City Attorney and Mr. George Knox was part of the negotiation. He also received a copy of that memorandum. Mr. George Knox was involved in the on -going negotiation for the past three years before he resigned as City Attorney. There is no question as to what my position was and is. We have a motion now that this item be continued. Is there any discussion? Yes, sir. Mr. Silver: Let me suggest an alternative which I don't know if it is going to acceptable to you, but it might be a way out of the situation for right now. As you know, we do have the Court hearing on Monday. So, my suggestion is, that you consider that resolution you have with you, subject to us being able to arrive at a decision which we can bring back to you. At least we can go to the Court on a status conference basis and say that the Commission is at least, with regards to everything else other than this one particular item, in agreement, but before we could present any settlement agreement for formal approval by the Court, we would have to get this particular item resolved. Just so we get an indication from the Commission to the Court. Mayor Ferre: I've got no problems with that. I've got no problems with ... Mr. Silver: I think we might be able to work that out, because, see we have to go back before all the boards and all the unions now, if we do change that matter, which depends ... Mayor Ferre: I've got no problems. Mr. Clerk, would you read the motion that I previously made, before the motion to continue? Commissioner Carollo, Mr. Silver has requested £? that we ass some kind of a motion p to permit them to 4` go before the Judge and begin the process of settlement - not settling it until they come back to us in final form, but 1 specifically excluding that section on Page 6. Mr. Ongie: It is a long motion, Mr. Mayor, but I will try. Mayor Ferre: Go ahead. Mr. Ongie: " I move the resolution as presented, provided however, that before final resolution and approval by the Court, that the people litigating this matter, plus the City Attorney and the City Manager come up with a solution wherein it specifically resolves the potential case on the part of the Board of Directors on the Plan and System; wherein there is a failsafe system of identifying if the money managers are dealing effectively with these funds, and if this occurs through a repeated period of time ..," Mayor Ferre: In other words, the failure. Mr. Ongie: Yes. "That this come back before either the City Commission or some other governing body, or some elected official for correction." Mr. Silver: Just so we get the intent of what the resolution should be, because I think we are dealing with that one particular issue, but for our purposes and for the Court purposes, we have to understand that with the exception of this one particular issue so we don't come back again and we get all involved in another situation - with the exception of this one particular issue, that this Commission is in agreement with the settlement agreement. Mr. Carollo: If that is the intent, then that is fine. - ld 26 October 31, 1984 n t Mr. Plummer: Also, the attorney's fees. Mr. Silver: Well, there is a provision in the settlement for attorney's fees, which will provide that the Court will set a reasonable attorney's fee. Mr. Plummer: Well, I think this Commission has some right as to what is going to be paid in attorney's fees. Mayor Ferre: No, you don't. You are giving - you are waiving that. You are letting the Judge decide that. Mr. Plummer: As far as our own attorneys? Mayor Ferre: Not our own attorneys. That is going to be peanuts. You are talking about ... Mr. Plummer: Yes, but you know, you ought to see how big elephants they are! Mayor Ferre: Our own attorneys are less than $250,000. I venture to tell you that the outside attorneys are going to be at least four to five times more than that. You want to laugh now? Mr. Plummer: No, the attorney fees. Mayor Ferre: I don't find that funny, myself. I don't find attorney's fees to be a particularly funny laughing matter. I think we are talking about a big, big, amount of money that a lot of people have been writing on, okay? So, I don't find that to be particularly funny. Mr. Silver: I don't think that is funny. I wasn't laughing, Mr. Mayor. Mayor Ferre: I wasn't talking to you. Mr. Silver: All right, I just wanted to make sure. You were looking - your eyes were turning in this direction and I didn't know whether you were focusing on me or somebody else. Mayor Ferre: (INAUDIBLE) ... who looks at who these days. I will tell you, I will go with this one that Lucia has come up with, and that says, after the words "Pension lawsuits", will read: ...."excepting for that portion found in Section 3, Page 6, regarding the money managers". The only other correction that I would have is the one that Van just gave me, which Lucia has said is acceptable to you, which down in the body says: "...and resolutions and including a provision in the final decree requiring resolutions ...". Mr. Silver: Yes, we are accepting the first one. It is fine with me. I am not sure ... Mayor Ferre: You are not accepting the second one? Mr. Silver: Well, read that again, I am sorry. Mayor Ferre: Just give it to him - here. INAUDIBLE BACKGROUND COMMENTS NOT ENTERED INTO THE PUBLIC RECORD. Mayor Ferre: Now, for me to accept this motion of Commissioner Carollo, who has made a previous motion to continue this - you have got to convince him. Mr. Carollo: I will rescind that motion, Mr. Mayor. Id ='4 27 October 31v 1984 Ll h ` Mayor Ferre: What? You are all set? Okay. Then, will somebody ... is this acceptable to you? Mr. Brian Goodkind: Mr. Mayor, if I may, my name is Brian Goodkind. I am from the firm of Thomson, Zeder. We represent the Gates plaintiffs in this action. The second provision that you have there, the second change in your resolution, would you please read that, or may I see it? Mayor Ferre: Yes, of course you may. Here it is. Mr. Goodkind: Mr. Mayor, if I may. There is a charging lien that has been filed in this case, suggesting that his firm is entitled to fees, and that is a matter that will be and has to be resolved by the Courts. It is strictly a political move to put anything in this resolution that pertains to that issue whatsoever. The City, and you can ask ... Mayor Ferre: What do you mean, political? Do you mean Democratic party vs. Republican, or what kind of political? Mr. Goodkind: I think your Honor knows what I mean. Mayor Ferre: No, I don't know. Tell me on the record. Mr. Goodkind: On the record, by political move, I mean a move that is unnecessary to resolve this matter. It is strictly a move for publicity reasons. Mayor Ferre: Publicity by who? Mr. Goodkind: By Mr. Paul, your Honor. Mayor Ferre: By Mr. Dan Paul? Mr. Goodkind: Yes. Mr. Mayor, if I may, I think your own attorneys, Paul, Landy, Bailey attorneys will tell you that that language is completely unnecessary to legally protect the City in this case. The City will pay the attorneys fees to whomever the Courts tells it to pay and the language is totally unnecessary. I have been advised by superiors in my firm that my firm will not recommend to the Gates representatives that they settle this action if that language is in that resolution. Mayor Ferre: Okay, Mr. Paul. Mr. Dan Paul: Mr. Mayor, my name is Dan Paul. Mayor Ferre: Are you seeking political publicity, Mr. Paul? Mr. Dan Paul: No, Mr. Mayor. Mr. Carollo: Is this under oath, or not, Dan? —_ Mr. Paul: Either way. This provision is necessary to _ protect the City, so the City doesn't have to pay twice. Everybody concedes that the lien has to be resolved by the Court, and it provides that the final decree, if it be entered, would provide a method for doing that and I think it is only appropriate and all the lawyers agree that it is appropriate except the people who don't want the lien set. Mayor Ferre: Lucia Allen Dougherty. Would you give us please, a legal opinion? Mrs. Dougherty: Mr. Mayor, we had agreed on some language that said that we were going to resolve all pending liens, ld 28 October 319 1984 I 1 t and that is something we have to do anyway. There is a lien pending and that is something that I think is appropriate to recognize in this resolution. Mayor Ferre: Does that mean you agree with it, or you disagree with it? Mrs. Dougherty: Yes, I agree with it. I don't think it hurts. It doesn't ... Mayor Ferre: Where are the attorneys for Paul, Landy, Bailey? Mr. Robert Sondak: My name is Bob Sondak from Paul, Landy, Bailey. Since what I have been trying to work towards in this matter in the last two years has been to resolve it amicably, might I suggest that the Commission could make recommendations to the Court and your attorneys will urge the Court to do that in a final decree, but the wording of the final decree by a Court is up to the Court, and so, could I just recommend that the resolution be amended to delete the reference to what the final decree has to say and I think that might alleviate everybody's concern, and get us back on the track towards resolving it. I think the matter of trying to resolve the over-all matter is a good settlement for the City. It is something that we might be able to accomplish better by deleting that one aspect of it as a change from the last draft of it that I saw this morning. Mrs. Dougherty: I am not opposed to doing that. Mayor Ferre: Paul? Mr. Paul: I am not sure what is proposed, Mr. Mayor, but obviously that matter has to be resolved and everybody concedes that it is appropriate to refer to it in this resolution, so I've no objection to saying, in this protection, including requesting the Court to include a provision in the final decree, resolving <the attorneys fee lien. I've no objection to that. Mr. Sondak: Mr. Mayor, I would go even further than that. The advice we are giving to the City and we have given it consistently is that the City should not make any payment of attorney's fees to the Gates plaintiff lawyers until this matter is resolved by the Court and everybody is in agreement on that, because it would be very foolhardy for the City to do anything otherwise. Mr. Paul: That ought to be in the resolution so that there is no question about it. Mayor Ferre: Lucia, would you tell us where we are now, legally? Mrs. Dougherty: You have my resolution. Mayor Ferre: I mean, is this the only thing we are adding then? What Mr. Paul added, we are not going to utilize that, is that it? I am asking you specifically (INAUDIBLE) ...this discussion. Are we talking about this, or are we talking about this? Mrs. Dougherty: This on the second page. He wanted to delete this requirement that the final decree ... Mayor Ferre: it in there? Mr. Paul has recommended it. You don't want Id 29 October 31, 1984 i Mrs. Dougherty: No, I am not opposed to it. They don't want • to do it, so what they are saying it is going to say: "and including a request to the Courts". Mayor Ferre: Is that acceptable to you? Go ahead and talk to them. We will take a few minutes while the lawyers discuss this. We are going to break up in a few minutes. INAUDIBLE BACKGROUND COMMENTS NOT ENTERED INTO THE PUBLIC RECORD. Mrs. Dougherty: For the record, your Honor, Section two ... Mayor Ferre: All right now, read the whole thing as amended now. Mrs. Dougherty: "The City Manager and the City Attorney are hereby authorized and instructed to take whatever steps are necessary to implement said settlement, including the drafting of appropriate ordinances and resolutions and to include a request to the Court that a provision in the final decree be made resolving any pending liens for attorney's fees before the City pays the attorney's fees where a pending lien is involved. Mr. Plummer: Did you say in there ... I didn't hear you say the resolving of Item three. Mrs. Dougherty: That was already put in there. Mr. Plummer: I thought you were reading the whole resolution. Mrs. Dougherty: Section one would include: "Settlement of the Gates case and other pension related litigation as hereby approved in accordance with the terms and conditions as set forth in the attached Agreement for Resolution of Pension Lawsuits, excepting that portion found in Section 3, Page 6, regarding the money managers." Mayor Ferre: We are ready to go. Can the Judge then force us to accept what they have on the money manager operation? Or is that something we have to do on our own - we the Commission? Mr. Plummer: We have not agreed to it. Mayor Ferre: I realize that, but once we agree to it, then that is it. Mr. Plummer: Well, if we don't agree to it, and the Judge rules something else, we go to Court! Mr. Silver: So that we all understand, there is no final agreement until every item is resolved and there is only one item left outstanding - the resolution, and that is the item that is missing in the resolution. If that item is not resolved, there is no agreement. „ Mayor Ferre: All right, for the record. Lucia, are you ready, now? Did you finally finalize reading it? Mr. Plummer: Ferre moved the motion. INAUDIBLE BACKGROUND COMMENTS. Mr. Plummer: Mr. Clerk, where are we? Mr. Ongie: I assume we are waiting for a motion. ld 30 October 31, 1984 A A Mr. Plummer: Mayor Ferre: E] Did you make a motion? I am ready to go. I am waiting for Lucia. Mr. Plummer: She is waiting for a motion. Mr. Ongie: She read it. Mayor Ferre: Mr. Ongie: She read it? Yes. Mayor Ferre: All right, who moves that motion? I move it. Mr. Carollo: Second. Mr. Perez: Motion and seconded. Call the roll. The following resolution was introduced by Mayor Ferre, who moved its adoption: RESOLUTION NO. 84-1213 A RESOLUTION APPROVING SETTLEMENT OF THE GATES CASE AND OTHER PENSION RELATED LITIGATION IN ACCORDANCE WITH THE TERMS AND CONDITIONS AS SET FORTH IN THE ATTACHED "AGREEMENT FOR RESOLUTION OF PENSION LAWSUITS" EXCEPTING FOR THAT PORTION FOUND IN SECTION 3, PAGE 6, REGARDING THE MONEY MANAGERS; FURTHER AUTHORIZING AND INSTRUCTING THE CITY MANAGER AND THE CITY ATTORNEY TO TAKE SUCH STEPS AS MAY BE NECESSARY TO IMPLEMENT SAID SETTLEMENT; INCLUDING THE DRAFTING OF THE APPROPRIATE ORDINANCES AND RESOLUTIONS AND INCLUDING A REQUEST TO THE COURT THAT A PROVISION IN THE FINAL DECREE BE MADE WHICH REQUIRES RESOLUTION OF ANY PENDING LIEN FOR ATTORNEY'S FEE WHERE A PENDING LIEN IS INVOLVED. (Here follows body of resolution, omitted here and on file in the Office of the City Clerk.) Upon being seconded by Commissioner Carollo, the resolution was passed and adopted by the following vote - AYES: Commissioner Miller J. Dawkins Commissioner Joe Carollo Commissioner J. L. Plummer, Jr. Vice -Mayor Demetrio Perez, Jr. Mayor Maurice A. Ferre NOES: None. ABSENT: None. Id 31 October 31, 1984