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[Ad Hoc Committee on Pensions on August 22, 2024.]
IT'S NOW 2 0 5.I, I BELIEVE WE HAVE A QUORUM.
SO FIRST THING ON AGENDA, APPROVE OF THE MINUTES.
I NEED A SECOND FOR THE MINUTE.
AS CARRIE, FIRST ITEM, WE'RE GONNA HAVE JACK IRELAND COMING UP.
UH, I HOPE, UH, YESTERDAY, UM, THERE WAS A FRIDAY WAS A MEMO CAME OUT WITH AGENDA.
SO, JACK, CAN YOU JUST BEFORE WE GET STARTED ON YOUR PRESENTATION, MODERNIZATION OF CITY ASSET DISCUSSION, AND THIS IS A DISCUSSION ABOUT CITY ASSET, BUT ALSO A DISCUSSION THAT IN THE FUTURE THAT WE ARE GONNA HAVE IS THAT, UM, THE ASSET OF THE CITY DOLLARS THAT WE HAVE, UM, WHAT CAN WE DO WITH ASSETS, BUT WE MIGHT HAVE TO CHANGE SOME POLICY.
BUT TODAY IT'S A, JUST A DISCUSSION TO MAKE SURE DOWN THE ROAD, WE'RE NOT GONNA DO IT TODAY, BUT IT'S SOMETHING THAT WE ARE GONNA PUT IN OUR COFFIN, UM, IN OUR, UH, TOOL, ON OUR TOOL BELT THAT WE'LL BE ABLE TO USE IN THE FUTURE IS SOMETHING THE CITY MANAGER, UH, WAS, UH, WAS SPEAKING ABOUT, UH, A COUPLE WEEKS AGO AND, AND SAID THAT, UH, WE HAD NOT BRIEFED IT TO THE, A HOC COMMITTEE.
AND, AND WE CAN BRIEF A HO COMMITTEE IS SOMETHING THAT WE, UM, UH, UH, LOOKING AT AND THINK IS SOMETHING MIGHT BE THE IDEAL THAT NOT ONLY USING FOR ONE ENTITY IN THE CITY OF DALLAS COULD BE USED FOR MANY AND MORE, MANY OTHER ENTITIES IN THE CITY OF DALLAS.
SO WITH THAT, JACK ONLY YOU, UM, GET STARTED AND, AND GO FROM THERE.
I'M JACK IRELAND, CHIEF FINANCIAL OFFICER FOR THE CITY.
SO WE HAVE A VERY, VERY SHORT, UH, PRESENTATION.
UH, JUST A COUPLE OF SLIDES THAT WE, UH, PUT TOGETHER.
UH, AND ON THE SECOND SLIDE, UH, JUST AS A REMINDER THAT SINCE WE BEGAN TALKING ABOUT, UH, THE FUNDING SETTLEMENTS, RESTORATION PLANS FOR BOTH THE DALLAS POLICE AND FIRE PENSION SYSTEM AND THE EMPLOYEE RETIREMENT FUND, MONETIZATION OF ASSETS HAS BEEN SOMETHING THAT'S BEEN MENTIONED SEVERAL DIFFERENT TIMES, ALL THE WAY BACK TO WHEN THE MAYOR STUDY GROUP FIRST PRESENTED TO THE COMMITTEE LAST FALL.
UH, ROB WALTERS, UH, JOHN STEVENS, UH, PAUL QUINN, THEY ALL MENTIONED THE OPPORTUNITY THAT WE HAVE WITH THE MONETIZATION OF ASSETS THAT WOULD HELP, UH, FUNDING FOR, UH, EITHER OF THE TWO PENSION FUNDS.
SO, UH, BEYOND THEN OR SINCE THEN, WE'VE HAD ONGOING COMMUNICATION TO THE GOVERNMENT PERFORMANCE AND FINANCIAL MANAGEMENT COMMITTEE REGARDING MONETIZATION ACTIVITIES.
UH, DR. ROBERT PEREZ BEFORE HE LEFT AND NOW, UH, DON SALE GIBSON, UH, UPDATES TO GOVERNMENT PERFORMANCE AND FINANCIAL MANAGEMENT COMMITTEE.
EACH MONTH ON THE WORK THAT WE'RE DOING, UH, WE IDENTIFIED, UH, INITIALLY 10 PROPERTIES THAT WERE BEING LOOKED AT, UH, APPRAISALS BEING DONE, WORKING THOSE PROPERTIES TO DETERMINE IF THEY COULD BE, UH, SOLD OR IF THERE WAS AN OPPORTUNITY FOR SOME TYPE OF PUBLIC PRIVATE PARTNERSHIP.
SOME WAY TO BRING, UH, SOME MONETIZATION OUT OF THOSE, UH, REAL PROPERTY ASSETS THAT WE HAVE.
SO RIGHT NOW, THE CITY ORDINANCE THAT WE HAVE IN PLACE THAT GOVERNS HOW WE, UH, DEAL WITH THE PROCEEDS FROM THE SALE OF, UH, ASSETS WAS PASSED BY CITY COUNCIL BACK IN 1977.
SO OBVIOUSLY THIS IS A VERY OLD RESOLUTION, UH, OR ORDINANCE THAT THE CITY COUNCIL PASSED, BUT WE HAVE FOLLOWED IT SINCE THEN, WHICH, UH, INDICATES THAT PROCEEDS ARE BUDGETED ANNUALLY IN OUR CAPITAL CONSTRUCTION FUND FOR MAJOR MAINTENANCE TYPES OF PROJECTS.
AND SO WE USE THE MONEY FOR HVAC REPLACEMENTS OR ROOF REPLACEMENTS, WATER INFILTRATION, BUT THAT IS THE LIMIT ON THE USE OF THE CELL OR THE PROCEEDS FROM THE CELL OF PROPERTY.
SO YOU WILL SEE ON YOUR, UH, CITY COUNCIL AGENDA ON A REGULAR BASIS WHEN WE SELL A PROPERTY, YOU'LL SEE THAT WE'RE DEPOSITING THOSE FUNDS INTO THE GENERAL CAPITAL RESERVE.
AND SO WE USE THE GENERAL CAPITAL RESERVE, USE THE MONEY FOR THOSE CAPITAL CONSTRUCTION PROJECTS EACH YEAR.
UH, IN OUR NEW PROPOSED BUDGET, WE HAVE ABOUT NINE, UM, ABOUT $11 MILLION OF APPROPRIATIONS AS PART OF OUR CAPITAL BUDGET, UH, USING FUNDS THAT HAVE BEEN ACCUMULATED IN THAT FUND AS WELL AS PROJECTED FORWARD THIS YEAR.
UH, SO WE DO USE IT IN THAT WAY, BUT IF WE WANT TO CHANGE THE WAY WE USE IT AGAIN AS SUGGESTED BY THE MAYOR'S STUDY GROUP, POSSIBLY FOR PENSION, WE WOULD NEED TO AMEND THAT ORDINANCE.
UH, WE WOULD REALLY LIKE TO HEAR FROM YOU.
IS THAT SOMETHING YOU WANT TO DO? IS THAT SOMETHING YOU'RE INTERESTED IN? DO YOU WANT TO CONTINUE TO USE THE FUNDS JUST FOR OUR DEFERRED MAINTENANCE PROGRAM?
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IS THERE OTHER OPPORTUNITIES? WE WOULD LOVE TO HEAR THE COMMITTEE'S, UH, FEEDBACK ABOUT THAT IN WHICH WE WOULD INCORPORATE INTO A, UH, FUTURE CHANGE TO THAT ORDINANCE IF, IF THERE'S ANY CHANGES THERE.AND THOSE ARE THE REMARKS I HAVE.
AND MS. TOLBERT, I DON'T KNOW IF YOU HAD ANYTHING ELSE YOU WANTED TO ADD, BUT WE REALLY WANTED TO HEAR FROM THE COMMITTEE.
IF I COULD JUMP IN, UM, CHAIR ATKINS.
UM, AS JACK MENTIONED, WE REALLY WANTED THIS TO BE A CONVERSATION WITH THIS, UM, BODY.
WE HAVE NOT TALKED ABOUT IT IN ANY DETAIL.
UH, WE HAD IT INCLUDED IN SEVERAL OF OUR OPPORTUNITIES FOR ADDITIONAL FUNDING IN PREVIOUS PRESENTATIONS, BUT WE NEVER HAD THE CONVERSATION AROUND WHAT YOU WOULD LIKE FOR US TO DO.
SO WE REALLY JUST WANTED TO GET INPUT.
UM, WE DO NOT HAVE A POLICY TO BRING FORWARD AT THIS TIME, BUT BASED ON YOUR COMMENTS TODAY, WE CAN SPEND SOME TIME GOING BACK AND REALLY LOOKING AT THE BEST WAY TO FRAME THAT UP AND BRING IT BACK TO THE COUNCIL AT A FUTURE DATE.
BUT THANK YOU VERY MUCH FOR THE OPPORTUNITY TO BE HERE TODAY.
UH, JACK, THIS POLICY BEEN IN PLACE SINCE WHEN, 1977.
AND WHEN THE POLICY WERE IN PLACE, WHAT WAS THE PURPOSE OF THE POLICY? UM, THE, THE POLICY JUST IDENTIFIED WHEN, UH, REAL PROPERTY WAS SOLD.
UH, WHAT, HOW WOULD WE DISPOSE OF THE, UH, THE, THE PROCEEDS AND IT DIRECTED, UH, TO, TO USE THOSE PROCEEDS FOR CAPITAL CONSTRUCTION.
AND THAT'S, THAT'S WHAT WE'VE DONE.
THAT'S WHAT WE CONTINUE TO DO.
AND SO WHEN IS SOLD, WHAT ACCOUNT DO THE, THE PROFIT GO INTO WHEN YOU SELL PROFIT, WHAT DO, WHAT ACCOUNT DO THEY GO INTO? THE PROCEEDS GO INTO A FUND CALLED THE GENERAL CAPITAL RESERVE.
IT'S MY NUMBER, I THINK 6 25 GENERAL CAPITAL RESERVE.
BUT YOU DO NOT GO INTO THE RESERVE FUND, RIGHT? NO, NO.
IT, IT IS A, IT'S A RESERVE SPECIFICALLY USED FOR FUNDING OUR CAPITAL CONSTRUCTION EACH YEAR, CAPITAL CONSTRUCTION.
SO IN ORDER TO CHANGE THAT, THAT WE, WE WOULD HAVE TO, WOULD THAT BE A POLICY CHANGE? THAT WOULD BE AN ORDINANCE CHANGE OR WHAT? IT WAS APPROVED BY ORDINANCE IN 1977.
SO I BELIEVE WE WOULD NEED TO AMEND THAT ORDINANCE, UH, TO CHANGE THE WAY WE CURRENTLY, UM, USE THOSE PROCEEDS.
AND SO IF WE DECIDE TO DO THAT, WE CAN USE THOSE PROCEEDS TO BALANCE THE BUDGET IN DIFFERENT ASPECT.
IT'S COUNCIL POLICY DECISION ON HOW WOULD YOU WOULD WANT TO DO THAT, BUT ABSENT A CHANGE, WE WILL CONTINUE TO FOLLOW THE EXISTING POLICY AND, AND, UH, THE EXISTING PRODUCT, ALL A HUNDRED PERCENT OF ABOVE PROCEED GO TO THAT LINE ITEM, THAT PURPOSE? YES, SIR.
AND SO YOU DECIDE TO CHANGE THE POLICY, YOU CAN ALLOCATE A PERCENTAGE OUT TO WHAT LINE ITEM THAT YOU WANT TO PUT OUT.
IS THAT A, IS THAT A POSSIBILITY? IT, IT'S A POSSIBILITY FOR YOU TO, UH, AS A POLICY TO DECIDE THAT YOU WANT TO USE SOME AMOUNT TO CONTINUE TO USE FOR CAPITAL PROJECTS AND ANOTHER AMOUNT FOR SOME OTHER PURPOSE AND HOWEVER YOU CHOOSE TO DO THAT.
AND I, THE REASON WE COME TO THIS COMMITTEE FOR THE CONVERSATION IS BECAUSE IT WAS FIRST BROUGHT UP IN THIS COMMITTEE BACK BY THE MAYOR'S TASK FORCE, UH, THOSE MEMBERS SAYING THERE WAS OPPORTUNITY.
WELL, IF WE'RE GOING TO USE PROCEEDS, THEN I HAVE A ORDINANCE HURDLE THAT I NEED TO GET OVER TO GET OVER THAT HURDLE.
I WOULD NEED COUNSEL TO CHANGE THE ORDINANCE TO BE ABLE TO DO THAT.
AND I GUESS, OF COURSE TO YOU, IT'S SOMETHING THAT WOULD BE CHANGED, BUT WE ARE PROBABLY LOOKING AT IN THE NEXT YEAR BUDGET IS THAT, UH, WE COULD TAKE UP AN ORDINANCE CHANGE AT ANY TIME.
UH, THE COUNCIL DIRECTED US TO, UH, I THINK TODAY WE JUST REALLY WANTED TO GET YOUR FEEDBACK AND TO SPEND, IF YOU DO WANT TO CHANGE THE ORDINANCE FOR, GIVE US SOME TIME TO THINK ABOUT HOW THAT WOULD LOOK AND THEN BRING THAT BACK TO YOU.
NOT ANYTIME REAL SOON, BUT WHAT, WHAT THE FALL PERHAPS WHAT THE REASON WHY I SAY THAT, SO GER FOR, I'M LOOKING AT HOW WE SELL REAL ESTATE, SELL PROPERTY, YOU KNOW, UH, WE GONNA BE ABLE TO SELL ANY KIND OF PROPERTY RIGHT, THAT WE'RE GONNA CLOSE BEFORE, UH, THIS YEAR BUDGET OVER WHICH OCTOBER 1ST.
SO WE DO NOT HAVE A PROPERTY AT THIS POINT THAT WILL CLOSE IN THE NEXT 30 TO 45 DAYS.
UH, ANYTHING THAT WE SELL GOING FORWARD, UM, WITH THE EXISTING POLICY IN PLACE, WE COULD STILL JUST PARK THE FUNDS THERE.
AND ANY POINT IN THE FUTURE THAT THE COUNCIL WOULD LIKE FOR US TO BRING SOME POLICY MODIFICATIONS, WE COULD DO THAT AT ANY POINT IN TIME.
SO WE DON'T NECESSARILY NEED THAT DECISION TODAY, IT'S JUST REALLY ABOUT IF YOU WANNA GIVE US SOME FEEDBACK ON WHAT YOU WOULD LIKE TO DO, WHAT YOU WANT US TO GO BACK AND THINK ABOUT, THEN WE CAN DO THAT.
AND IT CAN ALSO BE DONE AS PART OF THE BUDGET PROCESS.
I JUST WANNA MAKE SURE THAT, YOU KNOW, WE, WE DON'T HAVE ANYTHING TO SALE TODAY.
I, I WOULD ADD ONE LAST THING, IF I MAY.
UH, MAYOR PROTI IS THESE ARE CONSIDERED ONE-TIME FUNDS.
SO WE WOULD WANT WHATEVER YOUR POLICY
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TO BE, TO USE THEM FOR ONE-TIME PURPOSES.WE WOULD NOT WANT YOU TO USE IT TO PLUG A HOLE IN THE GENERAL FUND THAT REQUIRES AN ONGOING REVENUE SOURCE, BUT TO CONSIDER WHATEVER YOUR USE IS AS ONE TIME.
UH, WITH THAT, I HAD, UH, CHAIRMAN MARINO, UH, MIGHT ON FIRST.
UH, THANK YOU FOR THE PRESENTATION.
UM, HISTORICALLY, UH, DO WE HAVE AN ANNUAL BUT, OR NOT A BUDGET, BUT A INCOME OF REAL ESTATE THAT'S BEEN SOLD? SO EXAMPLE FOR THE PAST FIVE YEARS, DO WE HAVE THAT NUMBER OF WHAT'S COME IN? SO WE DO, SIR.
IT'S, IT VARIES BY YEAR BECAUSE THESE, IT DEPENDS ON WHEN SOMETHING COMES UP AVAILABLE FOR SALE, ONCE IT'S BEEN IDENTIFIED AS SURPLUS PROPERTY.
SO WE COULD POTENTIALLY HAVE, UH, TWO OR THREE PRETTY CLOSE TOGETHER AND NOT HAVE ANOTHER ONE FOR ANOTHER SEVERAL MONTHS.
UM, WE HAVE, UH, LIKE I MENTIONED, BUDGETED FOR THIS NEXT YEAR, A TOTAL OF 11 AND A HALF MILLION DOLLARS FOR OUR CAPITAL CONSTRUCTION FUND.
UM, SO WE HAVE THOSE FUNDS, JEANETTE, THOSE ARE IN DEPO ON DEPOSIT NOW.
SO THOSE ARE FUNDS THAT HAVE, ARE FROM ALREADY PROPERTIES THAT HAVE ALREADY BEEN SOLD, NOT ON COUNTING ON ANYTHING GOING FORWARD.
AND WHEN I WOULD HAVING BUDGET YOU LIKE AN AVERAGE OR SOMETHING OVER THE LAST.
DO THOSE NUMBERS CARRY OVER FROM, UH, A BUDGET YEAR TO THE NEXT, OR DO THEY HAVE TO BE EXPENSED? NO, SIR.
IT'S A, THE CAPITAL CONSTRUCTION FUND IS CONSIDERED A MULTI-YEAR FUND.
SO WE ALLOCATE THOSE FUNDS NOW TO BUILDING SERVICES DEPARTMENT THAT HAS A NEW NAME, UH, BUT TO THE BUILDING SERVICES DEPARTMENT, AND THEY DO THOSE PROJECTS AND IT MAY BE A, YOU KNOW, AN 18 MONTH PROJECT OR A 24 MONTH PROJECT OR WHATEVER, BUT THEY CARRY OVER.
SO, AND I KNOW THIS NUMBER'S GONNA BE HUGE, BUT WHAT, WHAT IS THE CURRENT NEED OF, UH, BUILDING, UH, MAINTENANCE AND REPAIRS YEP.
THAT WE COULD POTENTIALLY, THAT'S THE BIG NUMBER THAT I DON'T KNOW.
AND I DON'T KNOW IF MR. GIBSON BEHIND US, BEHIND Y'ALL HAS A NUMBER OR NOT.
IF NOT, LET ME SAY IT'S A BIG NUMBER.
UH, COUNCILMAN MORENO, WE MAY HAVE A NUMBER TODAY, BUT THEN SOMETHING ELSE MAJOR GOES WRONG WITH THE FACILITY OR SEVERAL FACILITIES AND THEN IT GETS ADDED, SO IT'S NOT A STATIC NUMBER.
ZEL GIBSON, INTERIM ASSISTANT CITY MANAGER, UH, CHAIRMAN.
IT'S IN THE HUNDREDS OF MILLIONS OF DOLLARS.
UM, I KNOW TODAY WE'RE TALKING SOLELY ABOUT SURPLUS PROPERTIES.
UH, BUT DO WE, WOULD WE HAVE AN OPPORTUNITY TO ALSO LOOK AT THE, WHEN WE SELL ABANDONMENTS AND WHEN WE'RE SAIL SAILING A RIGHT OF WAYS IN, UH, YOU KNOW, WHEN AN ALLEY OR A STREET GETS ABANDONED, DO THOSE GO BACK TO THE GENERAL REVENUE THOSE GO INTO AS WELL? IT'S, IT'S THE ABANDONMENTS AND, AND SELL OF SURPLUS PROPERTY.
SO RIGHT NOW, THEY BOTH GO INTO THAT, THEY BOTH GO INTO THIS FUND.
THAT WE CAPTURE BOTH OF THOSE.
UM, YOU KNOW, I, I THINK WE'VE HAD THESE DISCUSSIONS FOR A LONG TIME ABOUT, UH, SURPLUS PROPERTIES GOING TO THE PENSION, AND, AND I'M FULLY SUPPORTIVE OF THAT.
UH, BUT I DO WANT TO NOTE, MAKE SURE THAT THERE'S OPPORTUNITIES, IF A NEED IS TO DEMO THE BUILDING OR TO ADD SECURITY, THAT WE RECAPTURE THOSE, UM, AND RE REIMBURSE THOSE DEPARTMENTS THAT, UM, PUT UP THE UPFRONT COST FOR DEMO OR SECURITY SO THAT THOSE DON'T GET, UH, HURT EITHER.
SO I WANNA MAKE SURE THAT, THAT WE ARE RECOUPING SOME OF THOSE INVESTMENTS THAT THE CITY IS PUTTING IN.
UM, AND THAT, AND THAT WE COME BACK IN, IN ANY SALE OF THAT PER OF THAT BUILDING OR, OR LAND, WE RECLAIM THOSE DOLLARS SO THAT WE CAN CONTINUE, UM, PROVIDING WHAT WE NEED TO.
UH, WE, WE AGREE WITH THAT COMPLETELY IN THAT THERE'S, THERE ARE NEEDS THAT WE'VE SEEN OVER THE LAST COUPLE OF MONTHS ANYWAY OF NEEDING TO TAKE CARE OF THOSE PROPERTIES THAT, THAT HAVE BEEN IDENTIFIED AS SURPLUS THAT WE'RE WAITING TO SELL.
UH, SO YES, WE WOULD WANT TO, RIGHT.
I I JUST WANNA MAKE SURE THAT ANY OPERATIONAL COST, UH, THAT WE RECAPTURE THAT SO THAT, YOU KNOW, WE CAN CONTINUE, UH, THAT PROCESS.
UM, IF WE WERE TO MOVE FORWARD, UH, WITH A, UH, RECOMMENDATION TO AMEND THE ORDINANCE, WHAT'S THE PROCESS? SO THE PROCESS WOULD BE, UH, TODAY FOR US TO RECEIVE FEEDBACK, UH, FOR US TO WORK WITH THE CITY ATTORNEY'S OFFICE TO, UH, AMEND THE ORDINANCE AND THEN BRING IT BACK.
UH, WE, WE WOULD BRING IT TO THE FULL COUNCIL FOR A VOTE.
AND IT'S A QUESTION OF WHETHER Y'ALL WOULD WANT IT TO COME BACK TO YOUR COMMITTEE OR WOULD YOU WANT IT TO GO TO GPFM OR JUST STRAIGHT TO COUNCIL FOR A VOTE? WHATEVER YOUR DIRECTION WOULD BE ON THAT, SIR.
AND, AND I'LL JUST CLOSE WITH THIS.
UM, YOU KNOW, I, I DO, I DO WANT TO SORT OF OUT START OUTSOURCING THIS AND, AND NOT HAVING IT INTERNALLY WHEN, WHEN YOU HAVE THESE BUILDINGS AND THESE OPERATIONS.
UM, BUT I ALSO WANNA MAKE SURE THAT WHEN WE'RE HAVING THESE APPRAISALS
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ON THESE PROPERTIES, THAT WE BRING TRUE EXPERTS THAT ARE IN THE DALLAS MARKET THAT KNOW WHAT'S HAPPENING ADJACENCY, YOU KNOW, THERE'S TRANSPORTATION, UH, IMPROVEMENTS THAT ARE COMING, THAT ALL THAT WOULD BE RELAYED, UH, TO THE, UH, UH, PERSON DOING THE APPRAISAL SO THAT WE GET TOP DOLLAR FOR, UM, ANY POTENTIAL SALE OF A PROPERTY THAT WE KNOW WHAT THE ZONING IS THAT, THAT WE'RE DOING ALL THE DUE DILIGENCE IN ORDER TO MAKE SURE THAT WE'RE PUTTING THE CITY IN THE BEST POSITION TO GET THE MOST BENEFIT BACK SO THAT THAT CAN GO BACK INTO THE PENSION AND COVER ANY CITY, UM, COSTS THAT'S ASSOCIATED WITH THAT.MR. MORENO, I COULDN'T AGREE WITH YOU MORE, UH, EVEN TO THE EXTENT THAT IF WE NEED MORE THAN ONE APPRAISAL AND IF WE NEED TO HAVE A CONSULTATION SO THAT WE GET THE HIGHEST BEST USE FOR THE CITY FROM THE PROPERTY THAT WE DO.
THANK YOU, MR. MAYOR, PER COUNCILWOMAN WILLIS.
AND, UM, THANK YOU FOR BRINGING THIS FORWARD CHAIR SINCE WE'VE BEEN TALKING ABOUT IT FOR A WHILE AND I'M, I'M GLAD WE'RE DOING THE APPRAISALS ON 10 PROPERTIES, BUT I THINK THE PORTFOLIO IS SOMETHING LIKE 750 PROPERTIES THAT THE CITY HAS OVERALL.
NOT THAT WE HAVE TO TACKLE THAT, ALL OF THAT, I DON'T KNOW THE EXACT NUMBER.
UM, I THINK WHAT HAPPENED IN THIS LAST FEW MONTHS, THE, WE PUT TOGETHER A LIST OF TOP 10.
AND SO THE ONES THAT THE FACILITIES AND THE REAL ESTATE TEAM IS CURRENTLY WORKING OFF OF IS THAT LIST OF THE TOP 10.
AND THEN WE'LL DEFINITELY, UH, BE SHARING KIND OF WHERE WE ARE IN THE STAGES OF ALL OF THOSE.
AND THEN THERE'LL PROBABLY BE A REUP OF ANOTHER LIST.
BUT RIGHT NOW WE DO HAVE A TOP 10 LIST THAT WE'RE WORKING THROUGH.
'CAUSE I THINK WE ALL KNOW WE'RE BEHIND ON THIS, AND SO IT'S GREAT THAT WE'RE STARTING TO TAKE THESE BITES.
BUT WHAT I WOULD LIKE TO ASK FOR IS, I MEAN, I KNOW WE'VE TALKED ABOUT DIFFERENT WAYS TO DIRECT THIS, AND OBVIOUSLY THE PENSION FUNDS ARE ONE OF THE THINGS THAT'S VERY, YOU KNOW, VERY TIMELY AND RELEVANT.
BUT I'M ALSO CURIOUS ABOUT WHAT THE STAFF, UH, MIGHT, MIGHT ALSO WANNA MENTION.
LIKE LAND ACQUISITION IN SOME AREAS COULD BE AN OFFSET, OR THERE COULD BE BE SOME OTHER THINGS THAT WE WOULD NEED TO EXPAND THIS POTENTIAL USE AS A SOURCE OF FUNDS ON, BECAUSE WE'VE GOT DEMANDS, WE'VE GOT PROPERTY TAX CAPS, WE'VE GOT OTHER THINGS COMING OUR WAY.
SO I WOULD LIKE TO HEAR THE POINT OF VIEW FROM THE STAFF ON SOME, YOU KNOW, WHAT THE NEXT LIST MIGHT BE IN ADDITION TO SOME OF THESE VERY, UH, LIMITING CATEGORIES THAT WE'VE GOT.
BUT ALSO THAT WE EXPLORE THE PROS AND CONS OF HOW WE CAN REMAIN AGILE.
DO WE WANT TO HAVE A FIXED PERCENTAGE THAT WOULD GO FROM A PROPERTY SALE, OR DO WE WANNA LEAVE IT AGILE AND LOOK AT OUR, OUR LIST OF POTENTIAL, UM, YOU KNOW, USES THAT WE COULD HAVE AND THEN REMAIN, UH, FLUID SO THAT IF WE'VE GOT A DEMAND THAT CROPS UP, WE'RE ABLE TO RESPOND TO THAT WITH A SALE OF A PROPERTY.
WHEN I LOOK BACK AT THIS, AND IT'S FROM 1977, I KINDA WANNA POSITION THIS A LITTLE BETTER FOR THE FUTURE AND MAYBE NOT HAVE IT BE SO LIMITING.
AND IT COULD EVEN BE PRIORITIZED WHERE, YOU KNOW, THE PREFERENCE WOULD BE, YOU KNOW, THESE TOP THREE TO FIVE ITEMS. AND THEN HOWEVER, IF THERE'S NOT A DEMAND FOR THAT, MAYBE THERE'S A SECOND TIER THAT IT COULD ALSO BE USED FOR LEAVING US OPEN TO BEING ABLE TO USE THOSE FUNDS.
UM, BUT ALSO GIVING SOME DIRECTION ABOUT WHAT THE PRIORITY WOULD BE, YOU KNOW, FOR TODAY AND FOR TOMORROW.
AND THEN THERE WAS ALSO A QUESTION ON HERE, UM, OR SOMEWHERE ABOUT SHOULD THIS COME BACK TO THIS COMMITTEE OR THE COUNCIL? AND I WOULD SAY THAT THIS EOV, WHICH OTHERS MAY HAVE SOME THINGS TO ADD TO THAT, UM, SHOULD BE CONSIDERED BY THE FULL COUNCIL, BECAUSE THIS CERTAINLY HAS AN IMPLICATION FOR ALL OF US.
UH, COUNCILMAN WILLIS AND I WILL SAY THAT THIS IS THE TYPE OF FEEDBACK THAT WE DEFINITELY NEED.
UM, AS YOU HEARD FROM MR. GIBSON, OUR NEEDS AS IT RELATES TO MAJOR MAINTENANCE OF ALL OF OUR CITY FACILITIES WILL CONTINUE TO GROW.
AND WE STILL NEED TO BE TALKING THROUGH WAYS TO REINVEST AND BE ABLE TO DEAL WITH THOSE DEFERRED MAINTENANCE NEEDS.
SO WHATEVER WE BRING BACK, WE DEFINITELY WANNA MAKE SURE THAT WE'VE CREATED AN OPPORTUNITY TO BE ABLE TO DO BOTH, UM, AND THEN CREATE SOME ADDITIONAL CRITERIA THAT WE CAN BRING BACK TO THE FULL CITY COUNCIL FOR A CONVERSATION.
SO THIS IS WHAT WE REALLY NEEDED FROM TODAY'S MEETING, SO WE CAN GO BACK AND START WORKING THROUGH THAT.
PAULA, CAN YOU HEAR ME? GO AHEAD.
CAN YOU HEAR? CAN YOU HEAR ME? YES.
IS THERE JUST A WAY TO REPEAL IT AND ALLOW IT NOT TO BE SO PRESCRIPTIVE? OR ARE YOU WANTING IT TO BE PRESCRIPTIVE? WELL, UN UNLESS, UNLESS WE CHANGE IT, IT, IT PRESCRIBES HOW WE DO USE IT.
SO IT WOULD EITHER NEED TO BE REPEALED OR, UH, AMENDED TO GIVE US A DIFFERENT DIRECTION.
IT HAS BEEN A GOOD THING FOR US TO HAVE A DEDICATED
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SOURCE OF FUNDS FOR MAJOR MAINTENANCE BECAUSE WE'VE NOT HAD THAT, UH, OTHER THAN THIS SOURCE OF FUNDS, UH, BECAUSE WE'RE UNLIKELY TO INCLUDE IN BOND PROGRAMS FUNDING FOR MAJOR MAINTENANCE.AND SO THIS WAS THE WAY THAT WE MANAGED THAT PROGRAM OVER THE LAST EVERY DECADES I UNDER I UNDERSTAND THAT, BUT I GUESS WHAT I'M SAYING IS IF WE WANNA BE AGILE, THAT'S BEEN MENTIONED AND WE'RE DOING A LOT OF THINGS, WHY DO WE HAVE TO HAVE A ORDINANCE BEING SO PRESCRIPTIVE? WHY CAN'T IT BE A CONVERSATION AT EACH COUNT AT, YOU KNOW, BECAUSE EACH YEAR IS GONNA BE DIFFERENT, THE NEEDS COULD BE DIFFERENT, AND THEN WE'LL HAVE INTO AMEND AN ORDINANCE AGAIN, INSTEAD OF JUST SAYING LIKE, HAVING SOME GUIDELINES IN WHICH THE MONEY IS USED FOR VERSUS IT COULD ONLY BE USED FOR HERE, HERE, HERE.
I, I THINK THAT'S WHAT WE WOULD WANT.
UM, AND I THINK WHAT YOU HEAR US SAYING IS THAT RIGHT NOW, BECAUSE IT IS VERY PRESCRIPTIVE, IF WE WERE TO SELL AN ASSET OR WE HAD SOMETHING COMING UP IN THE NEXT FEW MONTHS, THIS IS THE WAY WE WOULD ONLY BE ABLE TO UTILIZE IT.
SO I THINK WE DO WANNA CREATE THE FLEXIBILITY TO WHERE WE CAN DO SOME CASE BY CASE.
YOU KNOW, KIND OF SITUATIONAL, WHAT, WHAT ARE WE DEALING WITH? BUT RIGHT NOW WE DON'T HAVE THAT FLEXIBILITY.
SO WHATEVER WE BRING BACK, I THINK IT WOULD BE IMPORTANT FOR US TO NOT SET OURSELVES UP TO WHERE WE HAVE A FUND THAT WE COULD ACCESS, BUT THEN IT'S SO PRESCRIPTIVE THAT WE CAN'T USE IT WHEN WE NEED IT.
SO I THINK, I THINK WE'RE IN THE SAME VEIN THAT YOU'RE GOING IN YOUR CONVERSATION, BUT RIGHT NOW IT IS VERY LIMITING THE WAY IT CURRENTLY, UM, CORRECT.
SO WHY DO WE NEED AN, WHY WOULD WE EVEN NEED AN ORDINANCE? WHY CAN'T WE JUST REPEAL IT AND THAT IT BE DONE? THAT WOULD DEFINITELY BE A DECISION OF THE COUNCIL RIGHT NOW.
THE ORDINANCE IS ON, ON, IT'S, IT'S, IT'S AN ORDINANCE THAT WE CURRENTLY HAVE TO FOLLOW.
IF THAT'S THE DECISION OF THE COUNCIL, IS JUST TO DO AWAY WITH IT ALL TOGETHER, NOT HAVE ANY ORDINANCE OR ANY GUIDELINES OTHER THAN WHAT WE WOULD DEVELOP THAT WOULDN'T NECESSARILY BE OF ORDINANCE.
THAT WOULD REALLY BE WHAT THE COUNCIL NEEDS TO DIRECT US TO DO.
BECAUSE IT JUST SEEMS LIKE AN ORDINANCE.
I MEAN, NO TELLING WHAT COULD POP UP IN YEARS TO COME, AND THEN THEY'RE IN THE SAME BOAT AND IT'S 77.
I MEAN, I WAS A KID WHEN THAT WAS PASSED, AND I UNDERSTAND WHAT WAS GOING WITH IT.
BUT IF YOU WANNA HAVE FLEXIBILITY, THEN I MEAN, I THINK NO ORDINANCE AND, UH, HAVING GOT, AND HAVING MAYBE SOME GUIDELINES THAT AREN'T IN AN ORDINANCE THAT IS MORE IN A BUDGET DOCUMENT OF SOME SORT.
BUT IF WE HAVE TO DO AN ORDINANCE, THEN I WOULD SAY MAKE IT VERY BROAD AND VERY, UM, UH, GENERAL STATEMENTS NOT LIKE, CAN BE USED FOR X, Y, AND Z, BUT FOR USED FOR THIS, THIS, AND THIS.
BECAUSE I, I DON'T WANT IT TO BE PRESCRIPTIVE BECAUSE I DO THINK THEN WE GET BACK IN FUTURE COUNCILS AND THEY'RE MAY BE HAVING A SITUATION THAT, UM, SOMETHING LIKE THIS, AND THEN THEY'RE GONNA HAVE TO REPEAL SOMETHING THAT WE PASSED IN 24, SO, OR CHANGE IT.
SO THAT, THAT'S JUST MY IS IS TO GIVE IT MORE FLEXIBILITY.
BUT BY ALL MEANS, YES, WE NEED TO CLOSE GAPS AND PAY BILLS.
SO, UM, THAT THAT'S WHAT THIS COULD BE USED FOR.
WOULD WE BE ABLE TO USE IT TO PAY BILLS? I MEAN, I KNOW NOT NOW.
UNDER THE, UNDER, UNDER THE 1977 ORDINANCE.
THE, THE FUNDS COULD BE USED IN WHATEVER WAY THE COUNCIL POLICY DIRECTS US TO USE IT.
I WOULD DISCOURAGE YOU USING ONE TIME REVENUE FOR ONGOING COSTS.
DO WE NEED AN ORDINANCE OR CAN WE JUST REPEAL IT AND HAVE NOTHING? I THINK YOU COULD JUST REPEAL IT.
UH, I DO THINK HAVING SOME TYPE OF GUIDANCE IS IMPORTANT.
UH, OTHERWISE YOU'RE GOING TO HAVE THIS SAME CONVERSATION AND DEBATE IT EVERY TWO WEEKS WHEN WE HAVE SOMETHING ON THE AGENDA TO SELL.
WELL, AND THAT'S MY, THAT'S KIND OF MY, I'M SORT OF CURIOUS ABOUT THAT.
UM, DID WE JUST NOT THINK OF IT? OR
BUT AS IT CAME UP LAST FALL, RIGHT, THAT THESE PROCEEDS COULD BENEFIT THE PENSIONS.
WE WILL HAVE THE CONVERSATION.
AND I WOULD LIKE TO SEE IT BENEFIT THE PENSION.
I THINK THERE'S WISDOM TO AMENDING IT, BUT, UM, I DON'T THINK I WOULD REPEAL IT.
UM, I THINK GUIDELINES ARE GOOD AND, AND HAVING CONTEXT AND KNOWING, UM, I THINK THAT'S JUST THE RESPONSIBLE WAY REALLY TO HANDLE IT.
UM, BUT, UM, CLEARLY WE HAVE SOME WORK TO DO.
SO THAT, THAT'S ALL CHAIRMAN REALLY
[00:25:01]
RIDLEY ANY QUESTION? THANK YOU, MR. CHAIR.I THINK THAT ALTHOUGH FLEXIBILITY THROUGH REPEALING THE ORDINANCE SOUNDS DESIRABLE, I I THINK THAT WOULD ALLOW A FIGHT OVER THESE FUNDS EVERY BUDGET YEAR.
AND I, I THINK THAT WOULD, UM, BE UNDESIRABLE.
I THINK WE SHOULD HAVE SOME GUIDELINES FOR THE USE OF THESE FUNDS SO THAT WE HAVE A LONGER TERM VISION FOR THEM, RATHER THAN JUST HAVING A MONEY GRAB EACH YEAR.
UH, THAT CHANGES YEAR TO YEAR TO YEAR.
UM, I THINK THAT MAKES YOUR BUDGETING PROCESS EASIER, DOES IT NOT? BECAUSE, YOU KNOW, YOU MAY NOT BE ABLE TO PREDICT HOW MUCH MONEY WILL GO INTO THE FUND EVERY YEAR, BUT YOU KNOW, IT'S GONNA GO TO ONE THING, WHICH IS MAINTENANCE OF FACILITIES.
WITHOUT THAT DIRECTION, THAT PRESCRIPTION, YOU WOULDN'T KNOW WHAT, WHERE IT WAS GOING.
UM, SO I, I AM NOT IN FAVOR OF CHANGING IT TO ALLOCATE ALL THE FUNDS TO THE PENSION FUND BECAUSE WE ALREADY HAVE A PLAN FOR DEALING WITH THE PENSION.
I DON'T THINK WE NEED TO, UH, ADD BELT TO SUSPENDERS.
I I HAVE CONFIDENCE IN THE CITY MANAGER'S PLAN FOR THE PENSION, AND I DON'T THINK WE NEED TO TAKE ANY ACTION IN FURTHERANCE OF THAT PLAN.
ALAN, BALLAD, YOU HAVE ANY QUESTION? UM, THANK YOU, MR. CHAIR.
THANK Y'ALL FOR THE PRESENTATION.
UM, I, UH, WOULD JUST, WOULD JUST AGREE THERE'S A LOT THAT'S ALREADY BEEN STATED THAT, UM, I AGREE WITH.
I I, I THINK THAT, UM, ONE THING THAT JACK JUST MENTIONED IN, IF IT WERE TO BE REPEALED, THAT THERE STILL NEEDS TO BE SOME SORT OF, UH, GUIDING GUARDRAILS.
I I'M IN FULL SUPPORT OF THAT.
I WOULD ALSO AGREE WITH THE, UM, UH, SENTIMENT THAT I, I THINK THAT THIS SHOULD, UM, ESPECIALLY IN A BROADER POLICY SENSE, COME TO THE FULL COUNCIL FOR US TO, UM, CONTINUE TO CONSIDER.
UH, I I DON'T NECESSARILY THINK THAT THAT, UH, THERE'S NEXUS THAT CAN BE DRAWN TO, OF COURSE, THE PENSION.
BUT JUST AS MR. RIDLEY SAID, UM, IT CURRENTLY IS NOT IN, UH, THE PLAN THAT WE KNOW WE HAVE.
UH, IF, IF THE, UH, MONETIZING OF ASSETS GIVES US THE ABILITY TO INFLUX FUNDS, UM, AND EXPEDITE THAT PLAN, THAT'S FINE.
AND THAT'S WHEN WE CAN TAKE THIS BACK UP, I, I BELIEVE, AS A PENSION ITEM.
BUT I THINK THAT AS, UM, MS. BLACK OR UH, UH, MS. UH, WILLIS SAID WE HAVE, UM, HUNDREDS OF ASSETS TO, UH, REALLY DIG INTO AND CONSIDER.
AND SO I THINK THIS IS A MUCH, UH, GREATER CONVERSATION.
AND I ALSO THINK IT'S A, A, A POLICY DISCUSSION THAT I'D LOVE TO HEAR FROM THE FULL BODY ON, UH, MOVING FORWARD.
CHAIRMAN GRACIE, HAVE A QUESTION.
UM, I GUESS IT'D BE ACCOMMODATION OF, OF THE TWO OF YOU, IN TERMS OF, I THINK YOU SAID WE HAD HUNDREDS OF MILLIONS IN TERMS OF TOTAL COSTS, UH, REPAIRS AS WE ADD TO THIS LIST OF POTENTIAL PROPERTIES, WHAT DOES THAT DO TO THE TOTAL MAINTENANCE COST? I'M JUST TRYING TO THINK, WHAT DOES THAT DO? HOW DOES THAT, WHAT'S THE IMPACT? UH, THANK YOU FOR THE QUESTION.
SO O OBVIOUSLY AS WE DIVEST FROM THESE PROPERTIES, OUR LONG-TERM MAINTENANCE COSTS START TO GO DOWN.
SO DO WITH THE, WITH THE CURRENT LIST OF THE 10 AND THE, MAYBE THERE'S SOME OTHER PROPERTIES ON THERE.
DO WE KNOW RIGHT NOW WITH, LET'S JUST USE THESE 10 WITH THESE 10 ARE NOW OUR MAINTENANCE COSTS WILL BE REDUCED BY X.
DO WE KNOW WHAT THAT NUMBER IS BY SELLING THOSE? AND THEN I GUESS WHERE I'M, I'M, I GUESS I'M TRYING TO GET TO A POINT WHERE IF WE PUT ALL OF THESE ASSETS IN TERMS OF PRIORITIZING AND ALL OF THAT, WHICH ONES HAS THE GREATEST MAINTENANCE COST ON THIS LIST? AND WOULD THAT BE THE PRIORITY IN TERMS OF WHICH WE SELL AND, AND, AND START REDUCING SOME OF OUR EXPENSES? BECAUSE THE, THE PIECE I'M WORRIED ABOUT, AND AGAIN, I FULLY SUPPORT USING THESE FUNDS TO, TO COVER THE, THE PENSION PIECE.
BUT AT THE SAME TIME, YOU MENTIONED THIS, YOU KNOW, THESE ONGOING EXPENSES THAT WE HAVE WITH OUR EXISTING FACILITY.
SO I, I DO WANNA, UM, KEEP SOMETHING IN PLACE THAT ALLOWS US TO BE ABLE TO DO BOTH.
I THINK, UH, AGAIN, DARNELL WILLIS MENTIONED THAT, BUT MAYBE IT'S A PRIORITIZING IT, BUT BEING ABLE TO DO THAT, BUT AT THE SAME TIME, I WANNA WATCH WHEN WE SELL, WHAT DOES THAT DO TO OUR MAINTENANCE COST SO THAT HOPEFULLY WE GET REVENUE COMING IN, WE GET MAINTENANCE GOING DOWN, AND EVENTUALLY WE CAN BREAK EVEN.
'CAUSE I WANT, 'CAUSE AT SOME POINT, ALL OF THIS WILL BE FIXED.
AND THEN WE'LL HAVE TO START DISCUSSING, OKAY, WHAT'S NEXT?
[00:30:01]
AND I WANT TO, AS WE'RE THINKING ABOUT THE PARAMETERS AROUND HOW WE USE THIS, I WANT TO THINK ABOUT THAT NOW AND FACTOR THAT IN.I DON'T KNOW WHAT THE WORDING LOOKS LIKE, BUT I WANNA BE REMAIN FLEXIBLE IN THAT SENSE TOO.
SO ONCE REVENUE'S HERE, EXPENSES IS DOWN, PENSION IS WHERE IT NEEDS TO BE.
WHAT HAPPENS NEXT AND WHAT DOES THAT LOOK LIKE? AND CAN WE ANTICIPATE WHAT THE REDUCED EXPENSES WILL BE? YES, SIR.
THAT THE, THE ONLY THING THAT I WOULD WOULD ADD IS THAT WE KEEP ADDING TO THE INVENTORY AS WELL.
AND I WOULD ALSO TELL YOU THAT IT'S KIND OF HARD TO PROJECT A MAJOR FAILURE.
IT'S ONE THING TO DO THE ROUTINE MAINTENANCE SOME OF THE DAY-TO-DAY STUFF, AND THEN A CHILLER OR A MAJOR COMPONENT IN A BUILDING OR A SYSTEM GO OUT AND ALL OF A SUDDEN YOU NEED THREE OR $4 MILLION.
THOSE ARE THE THINGS THAT WE CAN PROJECT AND PUT A QUESTION MARK.
BUT YOU HAVE SOME SYSTEMS THAT HAVE GONE WELL BEYOND THEIR USEFUL LIFE.
AND THEN WE HAVE SOME OTHER SYSTEMS THAT TIME OUT MUCH EARLIER THAN THAT.
SO IT, IT'S A, IT'S A CRAPSHOOT TO THE EXTENT OF TRYING TO WORK A NUMBER LIKE THAT.
BUT I THINK WE CAN SHARE SOMETHING WITH YOU LIKE THAT.
IF, IF I COULD, IF I COULD JUST ADD TO THAT, I THINK THAT PART OF THE ANALYSIS AS WE GO FORWARD, BECAUSE THIS IS A PROCESS CURRENTLY THAT WE'RE GOING THROUGH, UM, BRING, AND I, I'M, I'M GOING BACK TO THE COMMENT FROM COUNCIL MEMBER MORENO.
WE ARE LOOKING TO ENGAGE A THIRD PARTY.
SO WE HAVE SOMEONE, THIS IS THEIR EXPERTISE.
THIS IS WHAT THEY DO FOR A LIVING.
THEY'LL BE ABLE TO GUIDE AND HELP US LOOK AT THE TYPE OF ANALYSIS THAT YOU JUST MENTIONED.
AND IT'LL GIVE US AN OPPORTUNITY TO HAVE A ROBUST STRATEGY.
IT WILL NOT BE JUST DEPENDENT ON WHAT WE WANNA THROW ON THE LIST.
UH, AND THERE'LL BE GUIDELINES, THERE'LL BE CRITERIA.
SO I THINK WE'RE GOING IN THAT DIRECTION.
UM, AND I THINK WE'LL DEFINITELY GET THERE WITH THE NEW FOCUS THAT WE HAVE FOR HOW WE'VE TAKEN NOW OUR FACILITIES TEAM AND OUR REAL ESTATE TEAM.
AND WE'VE PUT THOSE TWO TOGETHER.
SO I THINK WE'RE HEADED IN THE RIGHT DIRECTION.
UM, MR. GRACIE, YOU MADE OUT SOME, SOME VERY GOOD POINTS.
I KNOW THAT, YOU KNOW, I HAVE THE DE DEVELOPMENT CENTRAL SERVICE STATION THAT HAS A HUNDRED MILLION IN, IN NEEDS, UH, JUST TO GET THE REPAIRS NEEDED.
BUT IF WE WERE ABLE TO OFFLOAD THAT, NOT ONLY ARE WE HAVING AN INFLECTION OF, OF, UH, CAPITAL, BUT WE'RE ALSO STOPPING THE, THE NEEDS ASSESSMENT OUT THERE.
AND SO I, I THINK THAT'S WHAT WE'RE KIND OF CHASING, UM, THE NUMBERS THERE.
UM, AND I, YOU KNOW, SO I DO WANNA SAY, I DO WANNA GIVE SOME FLEXIBILITY ON HOW THESE, UH, PROCEEDS CAN BE USED, BUT I DO WANT SOME STRONG GUIDELINES.
I KNOW THAT TODAY WE HAVE THE COMMITMENT FROM OUR INTERIM CITY MANAGER TO, UH, PUT SOME OF THESE FUNDS TOWARDS OUR PENSION.
UH, BUT I WANNA MAKE SURE THAT 10, 15 YEARS DOWN THE ROAD, UH, THAT THAT COMMITMENT, IT MIGHT NOT BE THERE.
UM, AND SO IF WE HAVE IT IN WRITING, I THINK IT WILL ADD TO SOME SAFEGUARDS.
AND IF NEEDED, THAT COUNCIL THEN CAN REEVALUATE, UM, HOW TO REPRIORITIZE THOSE, UH, THOSE PROCEEDS.
BUT, UM, DEFINITELY WANNA ADD SOME, SOME FLEXIBILITY, BUT SOME GUIDELINES, UM, AS WELL.
UM, JACK, UH, CITY MANAGER, UM, YOU KNOW, I THINK IT'S A, A GREAT TOOL TO PUT IN THE TOOL BELT, BUT ALSO ARE LOOKING AT THAT WHEN YOU DECIDE TO PUT THIS PARTICULAR TOOL IN THE TOOL BELT, YOU GOTTA LOOK AT, UM, TO SEE THAT AS A WHOLE, YOU KNOW, WHAT IS, UH, THE COST TO DO THAT.
AND, AND, AND TO, BEFORE WE START DOING THAT, WE NEED TO FIND OUT WHAT IS OUR ASSET VALUE? WHAT IS THE VALUE? WHAT, HOW MUCH MONEY DO WE HAVE? IF WE SELL EVERYTHING, WHAT IS THE ASSET VALUE FOR THE, AND HOW LONG IT GONNA TAKE THAT? SO I'M TRYING TO MAKE SURE THAT DON'T GO OVERBOARD AND SAY, OH, WE'RE GONNA HAVE X AMOUNT OF DOLLAR NEXT WEEK, A MONTH AFTER NEXT WEEK.
WE DON'T KNOW UNTIL YOU PUT THOSE, UH, MECHANISMS IN PLACE.
AND SO, SO THEREFORE, THAT'S WHY WHEN I SPOKE TO THE CITY MANAGER, I TOLD YOU, JACK, THIS IS SOMETHING WE CAN'T RUSH.
YOU KNOW, WE'RE NOT GONNA BE ABLE TO GET IT DONE TODAY.
I THINK THE FULL COUNCIL NEED TO BE BRIEF ON IT, BECAUSE NO ONE, IT'S A, UH, A, A YEAR BY YEAR BUDGET.
YOU KNOW, IF YOU SELL SOMETHING, HOW MUCH OF THAT MONEY WILL GO TOWARD WHAT ITEM THAT YOU'RE TRYING TO PUT IN PLACE? WE HAVE NOT DECIDE HOW MUCH MONEY GO WHERE AND WHAT DEPARTMENT AND WHAT I NEED AS A WHOLE.
SO UNTIL WE GET THAT DONE, AND, AND, AND I THANK ALL THE COUNCIL MEMBERS FOR YOUR INPUT, BUT WE NEED NOT TO RUSH INTO IT, BUT IT'S A DISCUSSION AND WE NEED TO FIGURE IT OUT.
BUT IT'S A WHOLE LOT OF HOMEWORK THAT ZEL YOU AND JACK AND AND APPRAISER, AND WE NEED TO FIND OUT WHAT IS THE VALUE OF IT? HOW MUCH WE GOT, IF WE SELL X, WHAT'S THE RETURN ON THE MONEY? HOW LONG IT GONNA TAKE BEFORE WE GET THAT MONEY? YOU KNOW, AND WHAT IS OUR NEED GONNA BE? HOW MUCH YOU GONNA PUT TOWARDS THE
[00:35:01]
PENSION? HOW MUCH YOU GONNA PUT TOWARDS, UH, UH, UH, INFRASTRUCTURE, WHATEVER.WE DON'T KNOW THAT UNTIL WE SAID, HEY, IF WE SELL X, WE GOT A HALF A BILLION DOLLARS.
WHAT IS THAT PERCENTAGE GONNA GO TOWARDS? WHAT DO THEY GO TOWARDS THAT EVERY YEAR? IT IS A ONETIME SALE EVERY YEAR, EVERY YEAR, OR KEEP GOING AT IT TO INFINITY OR NOT.
SO THOSE ARE THINGS THAT I THINK THE FLOOR COUNCIL NEED TO BE HEARD.
AND, AND, AND I THINK THAT'S THE INPUT THAT I WAS EXPECTED, OR DISC COMMITTEE TO DO IT.
BUT I THINK THAT THIS WAS NOT JUST FOR COMMITTEE, BUT I THINK IT'S A DISCUSSION THAT WE NEED TO START THIS DISCUSSION TO GO BACK TO THE FULL COMMITTEE TO, SO THE FULL COMMITTEE SAY, HEY, THIS IS SOMETHING GONNA CHANGE IF WE WANT TO CHANGE THIS DEAL.
YOU WANT TO ADD ANYTHING ELSE TO THAT? JACK, JUST THANK YOU VERY MUCH FOR THE COMMITTEE SHARING YOUR THOUGHTS ON THIS.
THE NEXT ITEM IS AN INVESTMENT REPORT FOR THE DOLLAR POLICE, FIRE PENSION AND EMPLOYEE RETIRED ERF.
SO JACK, UH, LET ME COME TO, UH, SEE HOW CAN WE WORK THIS OUT.
I KNOW WE HAVE PEOPLE FROM THE DALLAS, UH, POLICE AND FIRE SYSTEM HERE, AND WE DO HAVE PEOPLE FROM ERF, UH, COLLEAGUES.
DO Y'ALL WANT TO HEAR THIS? LET'S DO THIS SEPARATE.
I THINK WE, WE COMBINE, IT MIGHT GET KIND OF CONFUSED.
UH, SO LET'S DO, WE GOT, I HEARD DALLAS POLICE PENSION SYSTEM, AND THERE WAS A, A MEMO, UM, THAT CAME OUT LATE YESTERDAY, I BELIEVE THIS MORNING, THAT EVERYONE SHOULD HAVE IF YOU DIDN'T GET IT.
UM, I'M SORRY, I DON'T BLAME, UH, MR. IRELAND, BUT NOT GIVE IT TO YOU.
BLAME, I AIN'T GONNA BLAME I, YOU KNOW, SINCE HIS NAME WAS ON THE
UH, UH, SO WE DO HAVE A, A, A PERSON HERE, I THINK DORY, DORY HERE.
UH, AND, AND I GUESS, UH, I KNOW WE GOT KELLY HERE.
SO IF YOU DON'T MIND, AND THIS IS WHAT I WOULD LOVE TO DO.
I WOULD LOVE TO HAVE DORY COME UP.
I WOULD HAVE KELLY COME UP BECAUSE THIS REPORT THAT YOU INTERVIEW, THE DOLLAR POLICE PENSION BOARD, YOU DID THE INTERVIEW AND YOU ASKED ALL THESE QUESTIONS AND YOU GAVE US A PROBABLY MAYBE A 90 PAGE REPORT.
AND I WANT YOU CAN SUMMARIZE WHAT YOU, OKAY.
SO WHAT WE'RE GONNA DO, DORY AND KELLY, WILL Y'ALL COME FORWARD? UH, OKAY.
THE REPORT WE ARE NOT TALKING ABOUT, ABOUT ANYTHING ELSE BUT A REPORT.
SO, SO THEREFORE THE REPORT THAT DORY, UH, GAVE US, DORY, I WANT YOU, YOU CAN START OUT FIRST AT WHAT DID THIS REPORT TELL US? FIVE MINUTES.
I MEAN, THEN LET ME, EXCUSE ME.
WE DONE HEAR MOST OF THIS REPORT BEFORE.
SO I'M JUST BASIS YOU THE EXPERT.
I'M ASKING YOU TO SAID, HEY, WHAT DO YOU, WHAT IS YOUR FINDING HERE AND WHAT'S YOUR RECOMMENDATION? WHAT YOU THINK THAT CERTAIN THINGS SHOULD HAPPEN? UH, DO, KELLY, DO YOU AGREE WITH SOME THAT YOU DON'T AGREE? IT IS VERY SIMPLE IN MY MIND.
SINCE YOU'RE THE EXPERT, IF I MAY, DORY, DORY, BEFORE YOU START, IF I MAY, UH, MR. ATKINS, UH, IT'S AN APPENDIX TO THIS MEMO.
SO WE CAN SCROLL DOWN IF YOU HAVE A SPECIFIC PAGE YOU HAVE A QUESTION ON SO THAT WE CAN SHOW IT.
SO IF THERE'S SOMETHING SPECIFIC, DORY THAT YOU WANNA REFERENCE, JUST TELL US THE PAGE AND WE'LL, WE CAN GO TO IT.
[00:40:16]
UM, OH, THERE WE GO.CAN YOU HEAR ME NOW? DO I NEED TO START OVER? I THINK I MADE THIS MISTAKE ON JUNE 6TH, SO I DON'T LEARN VERY FAST.
SO ANYWAY, UH, FIRST OF ALL, WE WANT TO THANK DALLAS POLICE EMPIRE FOR WORKING WITH US ON, UH, THIS PROJECT.
THEY'RE VERY BUSY AND WHAT THEY'RE DOING OVER THERE.
AND IT, IT HELPED CLARIFY, UH, SOME THINGS THAT I THINK ARE IMPORTANT.
THE, THE FUND OBVIOUSLY MADE SOME LEGACY INVESTMENTS PROBLEMS, UH, PRIOR TO SEVEN YEARS AGO, AND THEY'VE BEEN SADDLED WITH THAT PROBLEM FOR A WHILE.
THEY'VE WORKED VERY HARD TO JUST GET RID OF THOSE ASSETS.
UH, IT'S BEEN VERY DIFFICULT TO EITHER SELL 'EM OFF OR WORK 'EM OFF, AND THEY HAVE WORKED 'EM DOWN.
NOW THE, THE END RESULT OF WHAT THEY HAVE, UH, ON THEIR BALANCE SHEET FOR THOSE ASSETS WOULD BE BASICALLY THE WORST OF THE WORST BECAUSE IT'S EASIER TO GET RID OF THE GOOD ASSETS.
SO THEY'RE STILL WORKING ON THAT.
UH, THE FUND IS, IS SEVERELY UNDERFUNDED.
IT NEEDS CONTRIBUTIONS FROM THE CITY.
UH, AND, AND NOW THE, UH, STAFF IS WORKING DILIGENTLY AS THEY WIND THAT DOWN TO LOOKING FORWARD, THOSE PERFORMANCE OF THOSE LEGACY ASSETS HAVE DRUG THEM DOWN FOR MANY YEARS.
THEY'LL CONTINUE TO DRAG 'EM DOWN GOING FORWARD FOR A LITTLE WHILE, UH, UNTIL THEY CAN GET RID OF 'EM AND PUT 'EM IN SOME BETTER PERFORMING ASSETS.
UH, REGARDING, UH, EXISTING PERFORMANCE, YOU KNOW, WITHOUT GETTING INTO A LOT OF DETAIL, THEY'VE DONE A GOOD JOB OF PICKING MANAGERS IN THE EQUITY SPACE AND PERFORMED EITHER DEPENDING ON WHAT PEER GROUP.
WE USE A LOT OF DIFFERENT PEER GROUPS JUST TO KIND OF STRESS TEST STUFF.
UH, BUT DEPENDING ON WHICH PEER GROUP YOU LOOKED AT, THEY'VE EITHER OUTPERFORMED OR PERFORMED A TO SPEED WITH THOSE EQUITY MANAGERS AND DONE, DONE PRETTY WELL WITH THOSE, UH, UH, FIXED INCOME.
UH, UH, YOU KNOW, O OKAY, THERE'S NOT A LOT OF OUTPERFORMANCE TO HAVE IN FIXED INCOME WITHOUT TAKING A LOT OF RISKS, PARTICULARLY WHEN RATES MOVE UP 500 BASIS FORMS, UH, ON PRIVATE ASSETS OR ALTERNATIVE ASSETS OR UNDER ALLOCATED.
THEY'VE, UH, TARGETED GETTING DOWN TO 5% FROM THEIR 2018.
UH, WE'VE DISCUSSED THIS WITH THEM AT LENGTH.
UH, IT LOOKS LIKE THEY'VE HIRED ALLBORNE TO, UH, MOVE AHEAD AND PROBABLY INCREASE EXPOSURE TO PRIVATE ASSETS.
UH, AND WE THINK THAT'S A GOOD IDEA.
THE, UH, THEY HAVE AN OVER, UH, COMPARED TO MANY PEER GROUPS, THE ALLOCATION TO EQUITIES IS HIGHER THAN A LOT OF PEER GROUPS.
NOW, THAT'S WHERE A LOT OF VOLATILITY SHOWS UP.
AND WHEN YOU'RE CREATING A ALL-WEATHER PORTFOLIO, UM, YOU KNOW, THAT'S WHERE YOU CAN REALLY GET HURT.
SO THINK 2008, RIGHT? MARKET DROPS TO 40 BASIS 40% IN EQUITIES.
UH, YOU CAN GET CREAM BEAR, ESPECIALLY IF YOU DON'T HAVE A LOT OF LIQUIDITY, WHICH THIS FUND NEEDS LIQUIDITY.
OKAY? NOW, THAT'S NOT UNCOMMON.
A LOT OF PEOPLE SAY IT'S A BLACK SWAN.
YEAH, DOESN'T HAPPEN VERY OFTEN.
IT HAPPENS EVERY 20 YEARS, ROUGHLY DATING BACK TO 1797, AND YOU CAN CLACK OFF THE DATES OF YOUR INVESTMENT MANAGEMENT.
YOU KNOW, THE DATES, IT'S 17 97, 18, 19, 18, 37, 18 57, 18 73, 18 93, 19 0 9, 19 29, 19 73, 19 89, 2008, 2008 BEING THE LEAST DAMAGING OF ALL OF THOSE YEARS WITH THE LOWEST UNEMPLOYMENT OR THE HIGHEST ON, UH, OR THE LOWEST UNEMPLOYMENT RATE IN ALL OF THOSE, MOST OF THOSE WERE ALL DEPRESSIONS OR PANICS THAT WERE PRETTY SEVERE AND LOTS OF BANK FAILURES.
SO THAT WILL HAPPEN AGAIN, AND IT'S NOT UNUSUAL.
AND THE TRICK THAT THEY RUN INTO RIGHT NOW IS THEY HAVE LIQUIDITY ISSUES IF THAT PORTFOLIO GOES DOWN.
SO AN INJECTION BY THE CITY IS VERY IMPORTANT, BUT ALSO AN ALLOCATION TO ALTERNATIVE ASSETS.
AND THESE ALTERNATIVE ASSETS, THIS IS REAL GENERAL, AND WE COULD SIT HERE AND TALK ABOUT THIS ALL DAY.
THEY CAN BE MORE RISKY IF YOU DON'T DO A GOOD JOB, RIGHT? THAT'S WHAT SORT OF GOT 'EM INTO THIS TROUBLE WITH THE PRIOR, PRIOR GROUP BEFOREHAND, NOT THIS CURRENT GROUP.
BUT IF YOU CAN PICK LOWER RISK ALTERNATIVE ASSETS THAT HAVE CASH FLOWS, THAT HAVE LIQUIDITY FEATURES THAT KIND OF GET YOU INTO THE MARKET.
AND THEY HAVE A PLAN WITH ALLBORNE, OR THEY'RE WORKING ON A PLAN, WHICH WE HAVE NOT SEEN YET.
IT'S NOT IN WRITING YET, BUT I'M TOLD THAT THEY'RE WORKING ON THAT.
AND, UM, YOU KNOW, THAT'S, THAT'S A GOOD STEP FORWARD FOR THEM.
BUT IN THE MEANTIME, YOU KNOW, THE PAST, YOU KNOW, THE PERFORMANCE IS, IS SOME SEVERE UNDERPERFORMANCE, AND I THINK THEY'RE WORKING TO, TO GET THE IMPROVE THAT GOING FORWARD.
[00:45:01]
KELLY, YOU WANNA RESPOND TO ANY OF THAT? GOOD AFTERNOON, UH, MAYOR PROAM ATKINS AND MEMBERS OF THE, UM, COMMITTEE.I'D LIKE TO INTRODUCE RYAN WAGNER, WHO'S OUR CHIEF, UM, INVESTMENT OFFICER WHO'S, UM, UP HERE WITH ME.
AS YOU CAN SEE, UH, WHEN WE WERE, UM, ASKED ABOUT THIS MEETING, WE WERE ONLY TOLD TO BE HERE TO, UM, ANSWER QUESTIONS.
SO I DON'T HAVE ANYTHING SPECIFIC TO PREPARE, BUT I WILL ASK BRIAN TO GO THROUGH, UM, SOME HIGHLIGHTS THAT WE'VE RESPONDED TO.
AND I WOULD LIKE TO ACTUALLY, UM, THANK BOTH JACK AND DORY FOR THE OPPORTUNITY TO RESPOND TO THEIR DRAFT REPORT.
THAT WAS SOMETHING THAT MY BOARD ASKED FOR AFTER THE LAST REPORT WHEN WE DIDN'T HAVE AN OPPORTUNITY TO MEET WITH MR. WILEY AND HIS STAFF BEFORE THAT WAS PRESENTED.
SO I APPRECIATE THE FACT THAT WE DID GET TO HAVE A COUPLE OF MEETINGS WITH MR. WILEY AND HIS STAFF, AND I DO APPRECIATE THE FACT THAT OUR RESPONSES, UM, TO THE FINDINGS IN THE REPORT WERE INCLUDED WITH THE MATERIALS.
MS. KELLY SAID, I'M RYAN WAGNER, THE CHIEF INVESTMENT OFFICER OF DPFP.
UM, I, I'LL RESPOND TO SOME OF THIS STUFF LORI BROUGHT UP, AND IT WAS, UM, APPRECIATED ME WITH THEM SITTING DOWN A COUPLE TIMES OVER THE SUMMER TO GO THROUGH OUR PORTFOLIO AND HOW WE WE RUN THE PORTFOLIO.
UM, I'M GONNA COVER OUR RESPONSE FIRST, AND THEN I CAN ADDRESS SOME OF THE QUESTIONS YOU GUYS HAVE AND SOME STUFF DORY MENTIONED.
UM, I WOULD SAY THAT OUR, OUR MAIN FEEDBACK ON THE REPORT WAS, UM, WE WORKED WITH DORY AND HIS GROUP AND THROUGH SOME MEETINGS OVER THE SUMMER, WE PROVIDED QUITE A BIT OF INFORMATION TO THEM, INCLUDING, UM, OUTSIDE REPORTS FROM NIKITA ON HOW WE OPERATE THE PORTFOLIO INVESTMENT POLICIES, HISTORY ON THE PLAN, UM, AND A LOT OF THE INFORMATION WAS OMITTED FROM THE FINAL REPORT.
WHY THAT OCCURRED, I'M NOT SURE, BUT I THINK THAT WOULD GIVE THE COMMITTEE A MUCH BETTER UNDERSTANDING OF HOW WE ACTUALLY OPERATE THE PLAN.
I THINK THERE WAS A LOT OF QUESTIONS ASKED, AND THEY COULD HAVE ANSWERED THE QUESTION, AND THEY DID NOT, FOR WHATEVER REASON, UM, AS REQUIRED BY STATE LAW, THE PENSION REVIEW BOARD REQUIRED DPFP AND EVERY OTHER PLAN IN THE STATE PUR DO AN OUTSIDE EVALUATION OF INVESTMENT PRACTICES.
EVERY THREE YEARS WE'VE DONE THAT TWO TIMES.
NOW WE SUBMIT THAT TO THE PRB PENSION REVIEW BOARD, UM, AND THAT IS A VERY COMPREHENSIVE REVIEW OF HOW WE HIRE MANAGERS, HOW WE MONITOR FEES, WHAT'S IN OUR INVESTMENT POLICY, WHY IT'S IN THERE, HOW WE UPDATE THE INVESTMENT POLICY, HOW WE MONITOR THE CURRENT PORTFOLIO.
IT'S, YOU KNOW, A HUNDRED, IT, IT'S SEVEN PAGES.
BUT, UM, VERY COMPREHENSIVE REVIEW, UM, OF THOSE PRACTICES.
WE PROVIDED THAT TO CITY STAFF, TO TORY AND HIS CREW.
I THINK IF YOU'RE LOOKING TO, TO SEE NOT JUST THE PERFORMANCE, WHICH WAS ALSO WHAT PALMER STREET WAS THAT WAS LOOKING AT, BUT HOW WE ACTUALLY OPERATE IN THE PORTFOLIO AND SOME OF THE GOVERNMENT STRUCTURES IN PLACE, THAT'S A MUCH MORE COMPREHENSIVE EVALUATION OF THAT.
UM, WE, WE DO AGREE WITH SOME OF THE, THE CONVERSATIONS WE HAD WITH, WITH DORIE, HIS GROUP ON INCREASING PRIVATE ASSETS OVER TIME.
HOW DO WE GO ABOUT DOING THAT? WE, YOU KNOW, WE APPRECIATE HIS RECOGNITION THAT SOME OF THE LEGACY ASSETS ARE A PROBLEM, AND WE'VE TAKEN QUITE A FEW STRIDES TO LIQUIDATE THAT PORTFOLIO.
WE'VE GOTTEN 1.4 BILLION BACK IN PROCEEDS ON THAT PORTFOLIO SINCE, UH, 2016, FOR VARIOUS REASONS.
WHAT'S LEFT IS VERY HARD TO JUST GO OUT AND SELL AND REALLOCATE TO SOMEWHERE ELSE IN THE PORTFOLIO.
I'D SAY ONE OF THE MAIN KIND OF JUST INVESTMENT DISAGREEMENTS WE PROBABLY HAVE WITH SOME OF THE FINDINGS IN THE COMMERCE WE REPORTED, WE DO NOT BELIEVE THAT ADDING PRIVATE MARKETS IN ANY WAY WOULD LOWER THE VOLATILITY OR RISK IN PORTFOLIO THAT'S ON PAPER.
THEY'RE NOT MARKED DAILY LIKE PUBLIC ASSETS ARE.
SO I THINK IF YOU LOOK ACROSS INVESTMENT LITERATURE, ALL THE MAJOR CONSULTANTS RECOGNIZE THAT THERE'S A HIGHER LEVEL OF RISK REQUIRED TO GET THE LEVEL OF RETURN THAT YOU'RE LOOKING AT FOR PRIVATE EQUITY AND OTHER ASSET CLASSES.
THAT BEING SAID, WE DO AGREE AT THE PLACE IN THE PORTFOLIO GIVEN OUR LIQUIDITY CONSTRAINTS.
IT'S JUST WHAT'S THE RIGHT LEVEL, HOW QUICKLY DO WE GET THERE? GIVEN SOME OF THE HISTORY WITH THE, THE POOR PERFORMING PRIVATE ASSETS, I THINK IT'S, OUR BOARD'S BEEN A LITTLE BIT CAUTIOUS ON, ON WHEN TO START MAKING NEW INVESTMENTS AND HOW TO GO ABOUT DOING THAT.
AND THAT'S, I THINK, ALL BOARDS IN BIG HELP TO STAFF AND THE BOARD ON SELECTING FUNDS GOING FORWARD.
UM, SOME OF THE, THE, WE HAVE FIVE PAGES OF COMMENTS, I WON'T GET THROUGH ALL OF 'EM.
I THINK SOME OF THE OTHER ISSUES WERE, SOME OF THE PEER GROUP THAT WE WERE COMPARED TO WERE NOT CLEAR ON KINDA HOW THEY WERE SELECTED, AND THEY CHANGED PAGE TO PAGE THROUGHOUT THE REPORT.
SO JUST TIGHTENING UP SOME OF THAT EVALUATION.
[00:50:01]
IN THE ERF REPORT, UM, THEY RECOGNIZE THAT, YOU KNOW, COMPARING TO PLANS, YOU NEED TO RECOGNIZE THE, THE CURRENT SITUATION OF THE PLAN, THE FUNDING LEVEL, THE SIZE OF ASSETS, AND HOW YOU CAN INVEST THE PORTFOLIO.UM, AND THEN JUST GOING FORWARD, OUR TARGET TO PRIVATE MARKETS AT 15, WE'RE GOING THROUGH AN ASSET ALLOCATION PROCESS RIGHT NOW THAT WE'RE LOOKING AT RAISING THAT UP TO 18.
SO, UM, I THINK TOWARDS AT FIVE, THAT'S JUST FOR PRIVATE EQUITY, NOT FOR PORTFOLIO.
ANYTHING YOU WANNA ADD? I I, I WANTED TO ADD THAT, UM, YOU KNOW, IN ADDITION TO WHAT RYAN SAID, I THINK THE OVERALL CONCLUSION, WE DISAGREE WITH THAT.
UM, WE WOULD DISAGREE THAT HIRING ANOTHER GROUP OF PEOPLE TO, TO, YOU KNOW, COME IN AND DO A CURSORY REVIEW, EVEN IF IT'S ON A MONTHLY BASIS, I DON'T BELIEVE WOULD ADD VALUE.
FIRST OF ALL, THEY'RE NOT FIDUCIARIES TO THE PLAN.
WE'VE GOT A VERY SOPHISTICATED BOARD OF 11 PEOPLE.
A LOT OF THEM HAVE INVESTMENT BACKGROUNDS.
WE HAVE A VERY SOPHISTICATED INVESTMENT ADVISORY COMMITTEE.
THEY ARE, UM, ALL FIDUCIARIES, ALL OF THOSE PEOPLE ARE, UM, WE'VE GOT AN INVESTMENT CONSULTANT.
WE HAVE A STAFF THAT ARE WORKING ON THE PORTFOLIO EVERY DAY.
I'M NOT SURE HOW, UM, ADDING ANOTHER PERSON IN THERE IS GOING TO PROVIDE ANYTHING MORE THAN, UM, IS AVAILABLE.
ALL OF OUR INFORMATION IS INFORMATION AVAILABLE ON OUR WEBSITE.
SO TO ME, I DIDN'T SEE HOW THAT WOULD ADD VALUE.
SO I WANNA OPEN UP, UM, TO THE COLLEAGUES.
I MEAN, I KNOW THE REPORT WAS A LONG, A BIG REPORT AND, AND UNFORTUNATELY WE JUST GOT IT, YOU KNOW, BUT IT WAS NOT COMPLETELY, AND IT WAS KIND OF COMPLETED YESTERDAY, A DAY BEFORE YESTERDAY.
SO THEREFORE, I APOLOGIZE BECAUSE Y'ALL DIDN'T GET IT IN TIME.
UM, SO I'M GONNA GO AROUND, UH, WITH COUNCILMAN WILLIS IN QUESTION.
SO WE WERE TRYING TO STICK TO THIS AS A REPORT.
NOT A, NOT A RECOMMENDATION, JUST A REPORT ABOUT SOME FINDING.
SO ONE THING THAT'S ACKNOWLEDGED IN THIS ACROSS BOTH FUNDS IS THAT THROUGH THE YEARS, THE CITY OF DALLAS HAS NOT DONE A VERY GOOD JOB ON OVERSIGHT OF THESE FUNDS.
AND, UH, THAT DOESN'T JUST COME IN THE FORM OF BOARD GOVERNANCE, WHICH, YOU KNOW, ONCE WE SIGN BOARD MEMBERS OVER, THEY DON'T REALLY BELONG TO US ANYMORE.
AND SO, UM, BECAUSE OF THAT, UM, WE DON'T EVEN USE, WE DON'T EVEN LOOK AT THESE FUNDS, WHICH WE INVEST HEAVILY INTO WITHOUT EVEN THE SAME SCRUTINY.
WE GIVE OUR OWN DEPARTMENTS, LIKE WE HAVE A BUDGET ACCOUNTABILITY REPORT, WE'VE GOT COMMITTEES THAT REVIEW FINANCES AND, AND SO WE CAN PICK UP WHEN THINGS ARE GOING WELL OR WHEN THINGS ARE NOT GOING WELL.
AND SO A MAJORITY OF THIS COMMITTEE SOUGHT TO CHANGE THIS AND START TO TURN THAT TIDE.
AND THE FIRST STEP WAS HAVING AN INDEPENDENT CONSULTANT, UH, TO BE ABLE TO LOOK AT BOTH FUNDS, HOW THEY ARE PERFORMING.
AND THE ULTIMATE GOAL IS THAT IF THEY CAN JUST DELIVER ON THEIR GOALS OR EXCEED THEIR GOALS, WE ALL WIN.
THE CITY OF DALLAS, TAXPAYERS WIN.
AND SO IT'S, IT'S REALLY IN THAT SPIRIT THAT WE'RE HERE TODAY.
AND SO THAT SHOULD BE OUR COMMON GROUND.
GROUND IS, IS THE, YOU KNOW, OPTIMAL PERFORMANCE OF THE FUNDS.
AND SO, UM, YOU KNOW, I WOULD SAY THAT WE WILL ALWAYS NEED TO HAVE OUR OWN INDEPENDENT EVALUATION OF THIS, BECAUSE WE NEED SOMEONE WHO IS LOOKING OUT FOR THE CITY OF DALLAS AND OUR TAXPAYERS AND, UH, WHERE THERE MAY BE POINTS OF DIFFERENCE.
I MEAN, IF WE HAD SOMEONE IN THIS ROLE YEARS AGO, LIKE IN 20 10, 20 12 OR LATER, UH, WE MIGHT NOT BE SITTING HERE TODAY HAVING THIS DISCUSSION BECAUSE THERE WOULD'VE BEEN WIRES TRIPPED, UH, THAT WOULD'VE PREVENTED THIS.
AND SO THAT IS WHY I SAY IT'S INCUMBENT UPON THIS GROUP AND ULTIMATELY OUR COUNCIL TO NOT LET THAT HAPPEN AGAIN.
AND WE AREN'T EXPERTS IN THIS.
AND SO WE NEED, WE NEED TO HAVE THAT INDEPENDENT, UM, EVALUATION, WHETHER IT'S MONTHLY, I DON'T KNOW, BUT IT NEEDS TO HAPPEN.
UH, SO I WOULD SAY, LET ME JUST, UM, START WITH ONE THING THAT I THINK IS REGISTERED HERE THAT THE POLICE AND FIRE PENSION FUND HAS A TARGET, UH, RATE OF RETURN OF 6.5%, AND THE EMPLOYEE RETIREMENT FUND HAS 7.25%.
AND THAT WAS ACTUALLY ONE OF THE 65 QUESTIONS I THINK THAT WAS SUBMITTED TO, UH, CFO IRELAND, UM, ABOUT WHAT THAT IMPACT COULD BE.
AND OVER TIME, I THINK, AND IT WAS DELOITTE THAT CALCULATED THIS FOR US, THAT, UM, IF IT STARTED JANUARY 1ST, 2023, RAISING THAT RATE UP TO AT LEAST WHAT THE ER F'S TARGET RATE WOULD BE, IS $450 MILLION ACROSS THIS 30 YEAR PERIOD.
AND WE SIT HERE AND TALK ABOUT OUR REAL ESTATE PORTFOLIO, 5 MILLION HERE, 10 MILLION THERE.
[00:55:01]
IT, I MEAN, THAT'S $15 MILLION A YEAR.SO THAT WOULD BE A BIG BITE AT THE COOKIE, NOT JUST NIBBLING AROUND THE EDGES.
AND SO, MR. WILEY, MY QUESTION IS, UM, WOULD THERE BE SOME IMPEDIMENT IN WHAT YOU'VE STUDIED HERE TO ASKING THAT BOARD TO AT LEAST COME UP TO WHERE THE RFS RATE IS? RIGHT.
UH, FIRST OF ALL, I WANNA ADDRESS YOUR, YOUR INITIAL COMMENTS.
AND, UH, THAT'S ONE OF THE THINGS THAT WE PICKED UP ON RIGHT AWAY IS WE WERE SURPRISED ABOUT THE DISCONNECT.
WE KNEW THERE WAS A DISCONNECT, BUT WE DIDN'T REALIZE HOW BIG THAT DISCONNECT THERE WAS BETWEEN THE CITY AND THE FUND.
AND, UH, I, I'LL GIVE YOU A COUPLE OF DATA POINTS THAT KIND OF, UH, REFLECT YOUR POINTS.
WELL, ONE OF 'EM WAS VISITING WITH A BOARD MEMBER THAT HAD BEEN ON FOR 15 YEARS THROUGH SEVERAL ADMINISTRATIONS, GROUPS OF COUNCIL PEOPLE.
UH, HE SAID NOT ONCE IN THE 15 YEARS AS HE HAD A CONVERSATION WITH THE CITY ABOUT THE FUND, NOT ONCE AS A CITY APPOINTED.
UH, SO THERE'S A DISCONNECT IN CON AND, YOU KNOW, THERE'S A LOT OF OTHER DATA POINTS, BUT I JUST THOUGHT YOU MIGHT FIND THAT INTERESTING.
UH, THE SECOND DATA POINT, UH, WHICH GOES BACK PRIOR TO YOU, YOU GUYS, OF COURSE, IS, UH, AND I DIDN'T REALIZE THIS, BUT EVIDENTLY, UH, WILSHIRE, WHO IS THE CONSULTANT FOR ERF, WAS ALSO THE CONSULTANT FOR DALLAS POLICE AND FIRE.
AND I'M TOLD, UH, THAT WILSHIRE FIRED DALLAS POLICE AND FIRE AS A CLIENT.
NOW THAT DOESN'T HAPPEN VERY OFTEN, UH, RARELY.
AND WHEN IT DOES, THERE'S USUALLY A CORRELATION BETWEEN
UH, THINK OF IT THIS WAY, AS AN AUDITOR FIRING A COMPANY, WHY WOULD AN AUDITOR DO THAT? OKAY, THAT'S A MAJOR RED FLAG.
SO IF YOU, IF YOU HAD SOME KIND OF SYSTEM OR CONNECTION OR SOMEONE THAT, A CONSULTANT OR SOMETHING THAT WOULD, THAT KNEW WHAT THAT MEANT, THEY WOULD'VE KNOWN IMMEDIATELY, UH, THAT WE'VE GOT A PROBLEM.
AND, YOU KNOW, THAT'S, AS WE ALL ARE SAD TO SAY, I MEAN, THAT'S A MULTI-BILLION DOLLAR PROBLEM, UH, THAT COULD HAVE BEEN, YOU KNOW, AT LEAST ADDRESSED EARLIER.
SO, UH, I APPRECIATE YOUR COMMENTS ON THAT, AND I THINK, UH, DON'T UNDERESTIMATE HOW IMPORTANT, UH, I, I APPRECIATE YOUR RECOMMENDATION THAT YOU, YOU NEED NO MORE OVERSIGHT LIKE A HOLE IN THE HEAD, AND I UNDERSTAND THAT, BUT THIS IS FOR THE CITY MORE SO THAN IT IS YOU.
AND THAT'S WHERE THERE'S A BIG DISCONNECT.
YOUR SECOND ISSUE ON, ON THE RETURNS OF 6.5% AND SEVEN POINT A QUARTER, UH, MY, MY GUESS IS THAT IS LOWER BECAUSE, UH, THEY HAVE THE, THE DRAG ON THE, ON THE LEGACY ASSETS, THE FASTER THEY CAN ADDRESS THAT, THE FASTER THEY CAN GET THAT UP TO SEVEN AND A QUARTER AND, AND, AND INCREASE THAT EXPECTATION.
UH, YOU KNOW, THE, THE PLAN TO DEAL WITH THAT, UH, WE VISITED 'EM WITH THAT.
WE KNOW THEY'RE WORKING ON IT.
UH, UH, YOU KNOW, THEY HAVE SOME IDEAS THAT THEY'RE WORKING ON.
UH, YOU KNOW, WE PROBABLY HAVE SOME THOUGHTS AND IDEAS ABOUT THAT TOO, BUT IT'S, YOU KNOW, WE'RE STILL VERY NEW IN A RELATIONSHIP.
WELL, BUT THAT'S WHAT I'M GETTING AT AS FAR AS THIS MIX.
I MEAN, MY QUESTION IS, IS THERE SOME OBSTACLE, I GET THE LAG ON THESE OTHER ASSETS.
I GET THAT, BUT IT LOOKED LIKE FROM YOUR REPORT THAT THERE WERE SOME OTHER PARTS OF THIS, THAT THERE WERE RECOMMENDATIONS ON, UM, YOU KNOW, BEGINNING TO ADDRESS SOME OF THESE, THE MIX OF THE PORTFOLIO, AND THAT THAT COULD START, YOU KNOW, MAKING UP FOR THE LAG, WHICH HELPS THE TAXPAYERS.
CAN I RESPOND TO, UM, WHY WE HAVE A SIX AND A HALF PERCENT RATE OF RETURN INSTEAD OF A SEVEN AND A QUARTER RETURN? WELL, I THINK IN THE INTEREST OF TIME, I WOULD LIKE TO FOCUS ON THE QUESTION THAT I, OKAY.
AND LET, LET ME PUT THE RULES IN PLACE.
UH, WHAT I WANT TO DO, THERE IS A REPORT THAT DORY DID, AND THIS REPORT THAT WE HAVE, I WANT STICK TO THE REPORT, WHAT YOU PRESENTED, AND LET'S TAKE THE REPORT AND DON'T CROSS OVER.
WISH, YOU KNOW, AND YOU GO AHEAD.
I YOU SHOULD ANSWER THE QUESTION BECAUSE YOU ARE SITTING THERE.
WELL, I MEAN, I WAS TRYING RESPOND TO THE QUESTION THAT WAS ASKED.
EXCUSE ME, EXCUSE ME ON THE CHAIR.
I WAS TRYING TO RESPOND TO THE QUESTION THAT WAS ASKED BY THE COUNCIL MEMBER, RIGHT? AND SO, AS A CHAIR, I'LL GIVE YOU OPPORTUNITY TO ANSWER THAT QUESTION BECAUSE I WANNA MAKE SURE EVERYONE BE OPEN AND HONEST WITH EACH OTHER, AND I'M GETTING, I NOT COULDN'T GET TIME OFF.
YOU KNOW, I, I AIN'T SAY YOU GOT FIVE MINUTES OR FOUR MINUTES, THREE MINUTES, BUT I THINK THIS IS VERY IMPORTANT FOR THE TAXPAYER AND THE CITIZEN THAT WE ALL UNDERSTAND WHAT WE ARE GOING THROUGH.
[01:00:01]
WE HIRED DORY, WE PAID HIM WHAT OUR TAXPAYER MONEY TO DO A REPORT.AND NOW HE DID, HE TRYING TO GET A REPORT, HE TRYING TO REPORT IT BACK TO US, AND WE WERE TRYING TO GIVE HIM AN OPPORTUNITY.
SHE DON'T HAVE TO BE AT THE TABLE.
SHE HERE, AND SHE STILL SHOULD HAD AT LEAST A, A COURTESY TO RESPOND TO THE QUESTION, IF YOU DON'T MIND, AND NOT TAKING OFF YOUR TIME.
BUT I THINK WE SHOULD NEED TO GET HER THE COURTESY SINCE SHE HERE.
THE WAY I UNDERSTOOD THE QUESTION WAS, IS THERE ANYTHING, ANY IMPEDIMENT TO RAISING THE TARGET TO SEVEN AND A QUARTER? WE COULD PUT THAT TARGET AT SEVEN AND A QUARTER TODAY, AND THAT WOULD MAKE OUR FUNDING LEVEL LOOK BETTER AND THAT WOULD DECREASE THE CITY'S A D, C AND DO ALL THE THINGS WE ALL WANT TO HAPPEN.
THE BOARD SET THE, UM, ASSUMED RATE OF RETURN AT SIX POINT HALF PERCENT BECAUSE AFTER THE CONSULTANT DID THE CAPITAL MARKET STUDY USING THE RATES AT THE TIME, THEY'RE DIFFERENT NOW.
UM, THERE WAS A 50%, JUST SLIGHTLY OVER 50% CHANCE OF MAKING SIX AND A QUARTER AND, UH, SIX AND A HALF, I'M SORRY.
AND THERE WAS LESS THAN A 50% CHANCE WITH THE PUBLISHED CAPITAL MARKET ASSUMPTIONS AT THE TIME OF MAKING SEVEN AND A QUARTER.
SO THEY PUT IT AT A LEVEL THAT WOULD BE A GOOD ACHIEVABLE NUMBER.
SO NOBODY HAD SURPRISES DOWN THE ROAD.
BUT THE ERF THINKS THEY CAN ACHIEVE 7.25% IN TODAY.
UM, SO REAL QUICK, TWO THINGS WOULD AFFECT OUT THE CAPITAL MARKETS ASSUMPTIONS AND THE ASSET ALLOCATION.
SO, OKAY, SO GETTING INTO THE ASSET ALLOCATIONS, THERE WAS, UM, TALKING ABOUT PRIVATE EQUITY.
SO IN READING ABOUT, UM, THE FUND, AND I'VE BEEN GOING TO THE MEETINGS, SO IT, IT SOUNDS LIKE CHANGING THAT ALLOCATION HAS BEEN TALKED ABOUT SINCE 2018.
AL WAS HIRED IN 20, 23, 5 YEARS LATER.
AND THEN, UM, I THINK IN THE FEBRUARY MEETING, IT TALKED ABOUT HAVING THEM GO INTO ACTION LIKE IN LATER PART OF 2024.
AND NOW IT SOUNDS LIKE THAT'S MOVING INTO 2025.
AND SO, UM, I MEAN, I, I'M JUST TRYING TO GET AT THIS LAG AND WHAT YOU FEEL LIKE THE IMPACT OF ACTING ON THIS COULD BE.
I MEAN, IT SOUNDS LIKE THAT WAS KIND OF THE HEADLINE IN YOUR REPORT WAS ABOUT THAT PRIVATE EQUITY MIX.
LET'S JUST MAKE IT MORE GENERAL WITH THAT.
PRIVATE EQUITY WILL HAVE THE HARDEST SHARP RATIO, WHICH IS RETURN PER UNIT OF RISK.
AND THERE SEEMS TO BE SOME DISCUSSION ABOUT RISK.
I TOLD YOU ON JUNE 6TH, WE'RE RISK MANAGERS FIND RISK, REDUCE RISK.
YOU CAN MAKE MORE MONEY, OTHERWISE YOU DON'T DO IT.
SO EVERYTHING'S DONE IN THAT CONTEXT.
SO, SO, UH, HAVING SAID THAT, UM, YES, I, YOU KNOW, WE CAN COME IN AND GO, HEY, HERE'S THE OPTIMAL ASSET ALLOCATION SO THAT YOU CAN DO BETTER.
OKAY, NOW THE QUESTION IS HOW FAST CAN THEY GET INTO THAT AND HOW FAST CAN THEY IMPLEMENT IT? AND HOW, HOW CAN THEY DO IT IN A, YOU KNOW, PRUDENT MANNER.
UH, AND THIS IS IN A MARKET WHERE WE'RE GETTING MORE AND MORE UNSTABLE, OKAY? AND, AND THAT'S FROM STOCKS, BONDS TO, UH, PRIVATE ASSETS.
THERE'S A LOT OF EXTRA PRIVATE EQUITY OUT THERE.
CAPITAL MARKETS ASSUMPTIONS ARE GOING ALL DOWN.
BUT EVEN FACTORING ALL THAT IN THE CASE, YOU WANT TO CREATE AN ALL WEATHER PORTFOLIO THAT OUTPERFORMS YOUR PEERS NO MATTER WHAT HAPPENS.
AND SO WE CAN COME IN WITH THIS, THE THEORETICAL STUFF, THE REAL QUESTION IS HOW CAN YOU IMPLEMENT IT? AND THAT TAKES TIME TO KIND OF WORK THROUGH.
AND WE, WE MADE AN AMAZING AMOUNT OF PROGRESS IN JUST A FEW DISCUSSIONS WITH THEM.
UH, AND, AND I'M OPTIMISTIC THAT, UH, THEY'RE HEADING IN THE RIGHT DIRECTION.
UH, AND, UH, THEY'LL FIND THEIR WAY.
THE REAL QUESTION IS JUST THE AMOUNT OF TIME, BECAUSE THERE'S NOT A LOT OF TIME.
UH, LET ME JUMP INTO SOMETHING THAT MAY RELATE BACK TO THAT.
ON PAGE 41, UH, YOU TALK ABOUT ONLY, I MEAN, I COUNTED THERE 27 FUNDS, UM, ON THE PRIVATE EQUITY MANAGER SELECTION, IT SAID THAT WAS A PROBLEM PRE 2016, UM, ONLY TWO FUNDS ARE TOP QUARTILE PERFORMERS.
UH, IT JUST LOOKS LIKE THE, THERE'S A, A MANAGER ISSUE AROUND, AND I DO RECALL, UM, THAT THE CHIEF INVESTMENT OFFICER, THE FUND HAD HAD SAID IN ONE MEETING, YOU KNOW, YOU DON'T JUST CHANGE CHANGE MANAGERS 'CAUSE THEY HAVE A BAD QUARTER.
BUT MY QUESTION IS, IT FEELS LIKE SOME OF THESE HAVE BEEN AROUND FOR A WHILE AND AT SOME POINT MAYBE SOME CHANGES SHOULD BE MADE.
AND SO I JUST, I DON'T KNOW WHAT THAT PERIOD OF TIME IS, WHAT AN INDUSTRY NORM MIGHT BE, WHAT YOU WOULD RECOMMEND, GIVEN THAT THIS IS, YOU KNOW, I MEAN, THERE'S A WAY TO MAKE UP THE, THE MONEY IN THE FUND, AND I THINK THAT'S PART OF WHAT MAKES ABSOLUTELY HOW FAST CAN YOU GET OUT, RIGHT? AND IT'S BEEN SEVEN YEARS.
THEY DON'T, THEY DIDN'T INVEST IN THESE, THEY INHERITED THEM AND THEY'VE BEEN WORKING THROUGH 'EM,
[01:05:01]
AND I THINK THEY'VE SOLD THE NUMBER 1.4 BILLION OR SOMETHING LIKE THAT.THEY'VE WORKED IT DOWN QUITE A BIT.
UH, THEY'RE MAKING REALLY GOOD PROGRESS.
UM, YOU KNOW, SO IF YOUR QUESTION IS COULD THEY HAVE SOLD IT EARLIER? COULD THEY SOLD IT AT A LOSS? COULD THEY HAVE MADE UP THE LOSS? YOU KNOW, THOSE ARE ALL QUESTIONS, BUT THEY'RE ALL KIND OF LOOKING BACKWARD.
NOW THE QUESTION IS WHAT DO WE DO GOING FORWARD? YOU KNOW, THEY'VE GOT A SMALLER AMOUNT, UH, THERE, THERE, THESE ARE THE HARDEST ASSETS TO DEAL WITH.
THERE ARE SOME WORKOUT STRATEGIES, GP REPLACEMENT STRATEGIES, UH, SELL AT A LOSS STRATEGIES, REPLACE IT WITH SOMETHING LESS RISKY OR AT LEAST MAKES A RETURN.
ALL THOSE KIND OF THINGS, I THINK THEY'RE KIND OF CONSIDERING, BUT WE DID NOT GET, WE WERE NOT ABLE TO DO A LOT OF DETAILED WORK ON THOSE IDEAS AS WE RAN OUT OF TIME.
SO LET'S GO BACK TO GOVERNANCE, UM, BECAUSE I MEAN, WE'VE TALKED ABOUT HOW THAT MIGHT'VE, MIGHT'VE HELPED.
UM, SOME OF THE THINGS THAT HAPPENED NOT, NOT OCCUR.
AND SO YOU CALL OUT ON PAGE FORTY FOUR, FOUR DIFFERENT THINGS, UM, ABOUT A MORE ROBUST MONITORING POLICY FOR THE PUBLIC MANAGERS, UM, INVESTMENT MANAGER SEARCH AND SELECTION, WHICH AGAIN, GOING BACK INTO SOME OF YOUR EARLIER PAGES IN THIS DECK, IT SEEMS LIKE THAT'S BEEN PART OF AN PART OF THE ISSUE.
UH, CLARIFYING CONSULTANT FLAGS UNDERPERFORMING MANAGERS TO THE BOARD AND TO THE INVESTMENT COMMITTEE ON A QUARTERLY BASIS.
SO I GUESS YOU MENTIONED THAT BECAUSE THAT'S NOT HAPPENING NOW.
AND THEN, UM, ADDING A SECTION ON CONTROL PROCEDURES SO THAT IT COULD BE UNDERSTOOD HOW CONSULTANTS WILL PROVIDE INFORMATION TO THE BOARD.
AND SO I'M JUST, I MEAN, IF YOU'RE, YOU'RE RECOMMENDING THESE, IS THIS SOMETHING YOU FEEL LIKE THESE ARE THINGS THAT SHOULD BE ENACTED PRETTY QUICKLY THAT THESE ARE HELP THE CITY? OKAY.
YOU KNOW, WE'VE HAD A PERFORMANCE PROBLEM HERE, NOT SO MUCH AS THEY INDICATED EARLIER A POLICY PROBLEM.
OKAY? SO THESE WERE SORT OF IN SOME ENHANCEMENTS AND WE SAT DOWN WITH THEM WITH ACTUALLY A MUCH LONGER LIST AND WORKED THROUGH A LOT OF 'EM.
AND, AND I THINK THERE WAS A LOT OF, UH, CONCERN ABOUT THAT AT FIRST, BUT THEN WHEN WE WENT THROUGH IT IN DETAIL, I THINK THEY WERE ACTUALLY OKAY WITH MOST OF THEM.
NOW, IN FAIRNESS, THEY DID WRITE A RESPONSE, UH, ON THEIR OBJECTIVE SEVEN HERE, UNDER THEIR RESPONSE, AND I'LL, I'LL JUST READ IT TO YOU.
IT SAYS, COMMERCE STREET FAILS TO EVALUATE WHERE DALLAS POLICE AND FIRE ADHERES THE INVESTMENT POLICIES AND GUIDELINES.
WELL, YOU, YOU KNOW, AGAIN, IT, IT'S A TWEAKING MECHANISM.
AND AGAIN, THEY ALREADY HAD A REPORT FROM THE PENSION FUND REVIEW BOARD THAT SAID, YOU KNOW, THAT THEY WERE FINE ON THAT.
SO THESE WERE BASICALLY JUST TWEAKS, BUT I, I WILL SAY THIS, LEMME GO THROUGH THIS.
DALLAS POLICE AND FIRE PROVIDES AN IN-DEPTH EXPLANATION TO ATED INVESTMENT POLICY STATEMENT, WHICH THEY DID WITH THE INTENT OF ENSURING THEIR UNDERSTANDING OF AND INSTITUTIONAL INVESTMENT POLICIES.
DPFP ALSO DESCRIBED THE ANNUAL IPS REVIEW AND BOARD APPROVAL PROCESS, AS WELL AS EMPHASIZING THAT OUR IPS COMPLIES WITH BOTH CFA AND TEXAS PRB GUIDELINES.
BUT AGAIN, WE JUST OFFERED SOME THOUGHTFUL ENHANCEMENTS.
AND IF YOU THINK ABOUT IT, IF YOU READ THOSE, THEY, IT WAS ABOUT HOW TO GET RID OF MANAGERS, AND I FIND THIS PROBLEM IN A LOT OF FUNDS.
AND SO WE WERE JUST OFFERING SOME HELP ON THAT.
SO, UH, MEETING THESE BEST PRACTICES DOESN'T EXCLUDE THE FACT THAT YOU CAN'T IMPROVE IT.
OKAY? SO I THINK THAT'S THE KEY THING.
UH, MOST THEIR STAFF, WHEN WE MET WITH THEM THE LAST TIME ABOUT THIS, HAD NO PROBLEM WITH OUR SUGGESTED IMPROVEMENTS.
SO I'M ACTUALLY KIND OF SURPRISED TO SEE THIS COMPLAINT IN HERE.
AND WE NEVER SAID THAT THEY FAILED TO ADHERE THEIR INVESTMENT POLICIES OR GUIDELINES.
SO I'M NOT SURE WHY THEY'RE BEING DEFENSIVE ABOUT IT, EVEN THOUGH THE I IPS COMPLIES WITH BOTH CFA AND PRB GUIDELINES, WHAT WE DID SAY IS THEY COULD ENHANCE THE IPS IN A COUPLE OF DIFFERENT AREAS AND WE'RE COMPLIMENTARY FOR THE MOST PART AND MADE SUGGESTIONS ON THE FOLLOWING.
SO, WHILE DPFP HAS A ROBUST MONITORING POLICY FOR PUBLIC MANAGERS, THE LANGUAGE IN SECOND AND SEVEN POINT B COULD BE MORE EXPLICITLY OUTLINE CURRENT STAFF PROCEDURES.
IF THEY DON'T WANT TO DO THAT, YOU KNOW, THAT'S FINE.
THEY'VE GOT A BOARD AND THEY GOT ALL THESE THINGS, WE JUST THINK IT WOULD BE AN ENHANCEMENT AND IT'S UNDER SEVEN A UNDER SEARCH AND SELECTION, MAKE CLEAR THAT THE IAC REVIEWS AND APPROVES IT.
IF THEY THINK IT'S CLEAR, FINE, BUT WE DIDN'T THINK IT WAS THAT CLEAR.
ALSO, ADD LANGUAGE TO CLARIFY THE CONSULTANT FLAGS UNDERPERFORMING MANAGERS TO THE BOARD, I, UH, AC ON A QUARTERLY BASIS, THIS IS WHERE IT'S A LITTLE BIT MORE MEATY.
I THINK THAT'S REALLY IMPORTANT BECAUSE THE TURNOVER OF MANAGERS, IT'S A LITTLE HARDER ON THE PRIVATE SIDE, BUT IN THE PUBLIC SIDE, YOU KNOW, THAT'S IMPORTANT.
OR, YOU KNOW, WHERE MANAGERS COME IN AND OUT OF FIXED INCOME OR, OR EQUITIES.
NOW HAVING SAID THAT, I TOLD YOU BEFORE, THEY ACTUALLY HAVE DONE PRETTY GOOD JOB WITH
[01:10:01]
THEIR MANAGERS IN THE PUBLIC SIDE.O OKAY WITH, BUT IT'S BEEN A BULL MARKET FOR A LONG TIME.
WHEN WE HIT A BAD MARKET, WELL GO AROUND KIND OF ROUND OF TIME, SO I'M GET SOMEONE ELSE.
WELL, I WAS JUST GONNA FINISH THE THOUGHT ON THE GOVERNANCE.
SO I JUST, UM, I WOULD SAY THAT WOULD BE A GOOD GESTURE TO BE ABLE TO MAKE ON THESE.
AND THAT THIRD ONE IS WHAT STUCK OUT TO ME TOO, IS THAT THE WHOLE ISSUE HERE IS HAD THERE BEEN EVALUATIONS AND SOMETHING TO HELP HIT THE TRIP WIRE, UM, AND THIS LOOKS LIKE ONE THAT WOULD VERY MUCH HELP THE BOARD OF THE FUND DO THAT AND COULD ALSO BE AVAILABLE FOR US SO THAT WE COULD ALSO HAVE A MECHANISM TO SEE IT.
AND I JUST, I JUST, THE, THE RESISTANCE TO GOVERNANCE IS A CONCERN TO ME.
AND SO, UM, WELL IN FAIRNESS, THEY, I DIDN'T, WE DIDN'T DETECT THAT RESISTANCE WHEN WE MET, SO I'M NOT SURE WHERE THIS COMES FROM.
OH, IT WAS FROM A BOARD MEETING ACTUALLY IN ON, UM, APRIL 11TH.
THE, THE CHAIR HAD JUST SAID, WE NEED TO AGREE ON LIKE, THE FINANCIAL ISSUES FIRST AND THEN WE'LL GET TO GOVERNANCE.
AND I WOULD LIKE TO SEE GOVERNANCE RUN MORE IN TANDEM WITH THAT.
I THINK THAT'S WHAT THE TAXPAYERS WOULD EXPECT TOO.
CAN I RESPOND TO THE INVESTMENT POLICY? PARDON? THE, THE COMMENTS ON THE INVESTMENT POLICY? I'D LIKE TO HAVE ONE MINUTE TO RESPOND TO THOSE.
WAS THAT A REPORT THAT YOU GAVE OR JUST JUST A COMMENT? NO, IT'S ON THE REPORT.
YEAH, THERE'S SECTIONS THAT CLEARLY THE FIRST TIME WE TALKED TO COMMERCE THREE, THEY DID NOT HAVE A GOOD UNDERSTANDING OF WHAT SHOULD BE IN AN INSTITUTIONAL PENSION INVESTMENT POLICY.
UM, IF THEY DON'T HAVE ANY PENSION CLIENTS, I'M NOT SURE HOW THEY WOULD HAVE THAT UNDERSTANDING.
UM, WHAT'S IN THE REPORT RIGHT NOW.
WE POINTED OUT TO THEM, THEY ASKED US TO RESPOND IN WRITING TO THIS PAGE.
WE GAVE A VERY DETAILED RESPONSE ON WHERE THESE, ALL THESE MONITORING THINGS LIE IN THE POLICY, THE FIRST TRAFFIC REPORT.
THEY CLEARLY DID NOT READ OUR POLICY THOROUGHLY ENOUGH TO UNDERSTAND IT.
AND WE DO HAVE MONITORING AND CONTROL PROCEDURES VERY CLEARLY IN OUR POLICY, AND WE'D BE HAPPY TO WALK THROUGH THE IPS OF ANY OF THE COUNCIL MEMBERS.
I AGREE WITH COUNCILWOMAN WILLIS THAT THERE HAVE BEEN TREMENDOUS LAPSES IN OVERSIGHT BOTH ON THE PART OF THE BOARD AND INVESTMENT MANAGERS AND ON THE PART OF THE CITY.
I WOULD PROPOSE THAT THE BOARD SUBMIT TO THIS COMMITTEE QUARTERLY REPORTS OF INVESTMENT PERFORMANCE, INVESTMENT ALLOCATION, A, UH, FINANCIAL STATEMENT, INCLUDING INFLOWS AND OUTFLOWS SO THAT THIS COMMITTEE CAN ACCURATELY ASSESS THE MANAGEMENT OF THESE FUNDS AND THE, UH, OVERALL PERFORMANCE OF THE PORTFOLIO.
UM, THAT SHOULD BE DONE ON A QUARTERLY BASIS AND ON AN ANNUAL BASIS.
IT MIGHT BE APPROPRIATE TO, UM, HAVE A CONSULTANT SUCH AS COMMERCE STREET, UH, LOOK AT THE OVERALL YEAR PERFORMANCE AND PROVIDE ANY ADVICE AT THAT POINT.
I DON'T SEE A NEED FOR HIRING AN EXPENSIVE CONSULTANT ON AN ONGOING BASIS JUST TO EDUCATE THE CITY ABOUT PENSION FUNDS.
I THINK THAT SHOULD BE, UH, UNNECESSARY IF THE BOARD IS PROVIDING THE NECESSARY REPORTS TO THIS COMMITTEE.
UM, I THINK WE CAN ALL READ FINANCIAL STATEMENTS AND WE CAN TELL WHETHER THEY'RE LOSING MONEY OR WHETHER THE INFLOWS EXCEED THE OUTFLOWS.
UM, SO I DON'T SEE THE NEED FOR THAT WITH REGARD TO THE COMMERCE STREET REPORT ON THE DPFP.
IKE WAS FRANKLY ALARMED BY WHAT I READ IN PAGES 41 AND PARTICULARLY 42, BECAUSE THEY IDENTIFY THAT THE P MANAGER SELECTION WAS A PROBLEM FOR, UH, THE BOARD PRIOR TO 2016.
WE ALL KNOW THAT WE NEED THAT GOING INTO THIS.
BUT MORE WORRISOME IS THE TABLE ON PAGE 42, WHICH IDENTIFIES THAT THAT REMAINS A PROBLEM AFTER 2016 TO THE TUNE OF A LOSS OF $23 MILLION IN THE PRIVATE EQUITY PORTFOLIO.
THOSE NEED TO BE REVIEWED AND, UH, APPROPRIATE CHANGES MADE IN THOSE MANAGERS TO AVOID THESE KINDS OF CRIPPLING LOSSES.
YOU HAVE AN OUTFLOW OF $10 MILLION A MONTH THAT REQUIRES A INVESTMENT PORTFOLIO THAT HAS THE NECESSARY LIQUIDITY TO BE ABLE TO, UH, UH, FUND THOSE OUTFLOWS.
UM, AND IT ALSO REQUIRES A PORTFOLIO THAT MEETS THE INDUSTRY STANDARDS FOR THE ASSET ALLOCATION FOR PRIVATE EQUITY.
[01:15:01]
AND THIS TARGET OF 5% IS SUBSTANTIALLY BELOW WHAT THE PEER CITIES HAVE.AND SO, DORY, IT SEEMS THAT YOUR PRINCIPAL INDICTMENTS OF THE FUND AND ITS MANAGEMENT ARE THE CHOICE OF, UM, PRIVATE EQUITY MANAGERS AND THE ASSET ALLOCATION.
WOULD THAT BE TRUE? THAT THAT'S CORRECT.
SO WE NEED TO FOCUS ON THOSE TWO.
WE NEED TO BRING THEM UP TO THE, UM, UH, BENCHMARK INDEXES AND OUR PEER CITIES SO THAT WE CAN ANTICIPATE MUCH BETTER PERFORMANCE GOING INTO THE FUTURE.
SO, UM, THOSE, AND I THINK GOVERNANCE ISSUES, UH, PARTICULARLY THE OVERSIGHT OF THE PRIVATE EQUITY MANAGERS ARE CRITICAL THAT THAT BE, UH, DONE ON A FREQUENT BASIS AND ADJUSTMENTS BE MADE AS NECESSARY TO ENSURE THAT WE NOT ONLY STAY AT THE RECOMMENDED ALLOCATION OF ASSETS, BUT WE ALSO HAVE PRODUCTIVE ASSET MANAGERS.
I MEAN, THIS PAGE 42 SHOWS THAT THEY'RE ALL IN THE FOURTH QUARTILE EXCEPT TWO.
I, I DON'T UNDERSTAND WHY WE ARE USING, UH, PORTFOLIO MANAGERS THAT ARE IN THE BOTTOM OF THE PERFORMANCE RANKINGS.
UH, THAT JUST BOGGLES MY MIND.
REAL QUICK ON THAT, THESE ARE INVESTMENTS MADE EXCUSE PRIOR TO THIS STAFF AND THEY'RE KIND STUCK IN THEM.
UM, MS. BLACKMAN, I SEE YOU HAD YOUR HAND UP.
AND CHAIRMAN, CAN YOU HEAR ME? I GOT IT.
CAN YOU HEAR ME? YES, I CAN HEAR YOU NOW, YES.
AND, UH, THANKS FOR, UH, FOR BRINGING, UH, FOR BRINGING THIS FORWARD.
DORY, IF YOU HAD A, UH, HEADLINE, WHAT WOULD IT BE GIVEN WHAT YOU FACE TODAY? THE CITY IS FACED WITH NEEDING TO WRITE A CHECK.
AND IT FEELS A TREMENDOUS BURDEN.
UH, IT WANTS TO HELP, YOU KNOW, THE POLICEMEN AND THE FIREMEN, RIGHT? WE HAVE COLA ISSUES.
UM, WE GOTTA UNDERFUNDING ISSUES, AND THEY'RE GONNA HAVE TO WRITE A CHECK.
I THINK THE HEADLINE IS, THE FUND CAN HELP TOO WITH INCREASED PERFORMANCE.
IT'S NOT GONNA BE OVERNIGHT, IT'S GONNA TAKE TIME, BUT WITH INCREASED PERFORMANCE THROUGH LESS RISK, OKAY, WHEN I SAY PERFORMANCE, I'M NOT TALKING ABOUT MORE RISK, TALKING ABOUT LESS RISK THAN WHAT THEY HAVE NOW.
IF THEY CAN TAKE LESS RISK AND MAKE MORE MONEY, CAN HELP EASE THE BURDEN FOR THE TAXPAYERS IN THE CITY.
AND SO, DORY, GIVEN YOUR PROFESSIONAL EXPERTISE, WE'RE ABOUT TO WRITE A $200 MILLION CHECK THIS YEAR.
DO YOU HAVE GOOD FAITH THAT PUTTING IT IN THIS FUND, IT WILL BE USED WISELY AND INVESTED WISELY, AND WE WILL GET THAT RETURN.
I HAVE NOT SEEN THE PLAN TO INVEST THE 200 MILLION, SO I WOULD WITHHOLD THAT.
UH, I THINK IT DEPENDS ON SEVERAL THINGS.
THEY CERTAINLY HAVE AN EXTREMELY QUALIFIED BOARD.
UH, THEY HAVE A QUALIFIED STAFF.
I THINK, UH, I'M CONCERNED ABOUT THE RELATIONSHIP BETWEEN THE CITY AND THE STAFF.
I THINK IT NEEDS TO BE MORE COLLABORATIVE AS WELL AS WITH THE BOARD.
UH, AND IF THAT WERE MORE COLLABORATIVE AND THEY, I, I SEE A PLAN THAT WORKS, THEN, YOU KNOW, YEAH, I COULD JUMP UP AND DOWN AND SAY, THAT MAKES SOME SENSE.
I MIGHT EVEN SAY, HEY, THEY DON'T LIKE YOU OR YOU DON'T LIKE THEM AND YOU AREN'T COLLABORATIVE.
AND THEY STILL MAY COME UP WITH A GREAT PLAN,
BUT I THINK THE ODDS OF SUCCESS INCREASE WHEN EVERYONE'S WORKING TOGETHER.
AND, UM, I, I MEAN, I'M NOT GETTING THAT SENSE THAT WE ARE GONNA GET TO THAT PLACE OF WORKING TOGETHER.
SO I DO HOPE THAT WE DO COME TO THAT BECAUSE IT IS IMPORTANT.
SO I GUESS WE GOT THIS REPORT ON 1ST OF AUGUST, BUT I GUESS WE DIDN'T GET IT TILL LAST NIGHT.
IS THAT CORRECT, JACK? YES, MA'AM.
WE, UH, RECEIVED THE REPORT, UH, RIGHT AROUND AUGUST THE EIGHTH, I BELIEVE, AND WE DISTRIBUTED IT YESTERDAY TO THE COMMITTEE.
IS THERE A REASON WHY THAT HAPPENED? WELL, INITIALLY IT WAS, UH, TO AVOID, UH, INTERFERING WITH THE RELEASE OF THE BUDGET THAT HAPPENED ON THE NINTH AND NEEDING TO GET SOME SPACE THERE, THEN DECISIONS RELATED TO WHAT WAS GOING TO BE ON THIS COMMITTEE'S AGENDA OF, AND WE DIDN'T POST THIS COMMITTEE'S AGENDA
[01:20:01]
UNTIL MONDAY ABOUT NOON.SO THEN IT WAS JUST PREPARING THE DOCUMENTS TO SEND TO YOU.
SO WE APOLOGIZE THAT IT WAS, UH, NOT SENT TO YOU EARLIER, BUT, UM, I APPRECIATE THAT WE, WE WANTED TO GET SOME TIME WITH THE CITY'S BUDGET BEING RELEASED ON THE SAME DAY WE GOT THIS.
I GUESS I THINK THIS IS SO IMPORTANT BECAUSE IT IS RELATED TO BUDGET, AND IT IS RELATED TO MOVING FORWARD THAT WE SHOULD BRING THIS TO FULL COUNSEL AND HAVE A PRESENTATION BECAUSE THIS IS A LOT OF STUFF, YOU KNOW, AND, AND IT'S, AND WE NEED TO BE WALKED THROUGH IT BECAUSE, UH, AS I'VE SAID, WHEN MAMA WRITES A CHECK, MAMA GETS TO ASK THE QUESTIONS, AND WE'RE GONNA REWRITE IN BIG CHECKS BECAUSE WE'RE FULFILLING OUR OBLIGATION.
AND SO I THINK THIS NEEDS TO COME TO FULL COUNSEL WITH A FULL PRESENTATION, AND IT COULD BE A FULL DAY OF SPECIAL OF THIS.
BUT THIS IS TOO IMPORTANT NOT TO UNDERSTAND WHAT WE ARE DOING BECAUSE, UM, AS MS. ELLIS SAYS, YOU KNOW, WE, IF WE COULD INCREASE, UH, PERFORMANCE, AND AS YOU'VE SAID DORY, THEN IT MAKES IT BETTER FOR EVERYBODY.
AND, UH, WE EITHER NEED TO COLLABORATE OR WE'RE ALL GONNA GO DOWN.
AND SO, UH, WE NEED TO ALL BE IN THE SAME ROOM AND GET THIS STUFF OUT AND, AND NOT HAVE A CAT FIGHT BECAUSE PEOPLE'S LIVES DEPEND ON THIS.
AND SO, I WOULD LIKE TO HAVE THIS AND WALK THROUGH IT AND UNDERSTAND IT.
I'VE BEEN LOOKING AT IT, AND THERE'S A LOT OF ALARMING THINGS.
AND, UH, AND I, I WOULD LIKE TO HAVE THIS BROUGHT TO US FULL AND HAVE AN UNDERSTANDING OF WHAT WE'RE, WHAT WE'RE ABOUT TO DO.
AND, AND SO THAT WAY WE CAN CHANGE SOME GOVERNANCE, BECAUSE I BELIEVE GOVERNANCE IS WHAT WE'RE GONNA NEED TO GET US THROUGH TO, TO THE OTHER SIDE.
AND, UM, AND I WOULD LIKE TO HAVE IT TO COME TO GPFM, UH, IN THE FUTURE, UH, BECAUSE THIS COMMITTEE COULD GO AWAY.
AND WHEN IT DOES, THAT'S THE PLACE THAT WE NEED TO HAVE A RELATIONSHIP WITH ANYBODY WHO IS TAKING MONEY FROM, FROM THE CITY.
SO, UM, I DON'T HAVE, I HAVE QUESTIONS AND DORY, I'LL GET WITH YOU SEPARATELY.
UH, BUT, UM, I THANK YOU FOR DOING THIS, UH, BECAUSE I DO BELIEVE THAT, UH, A LITTLE PERFORMANCE CAN GO A LONG WAY.
UM, SO I'M SITTING HERE AND OBSERVING, UH, BEEN ON THIS COMMITTEE FOR, FOR A WHILE NOW, AND JUST STILL TRYING, NOT BEING A FINANCIAL EXPERT, UH, BUT LOOKING, UH, AT THE REPORTS THAT HAVE BEEN SUBMITTED, FIRST I WANNA SAY, YOU KNOW, LOOKING AT THOSE LEGACY ASSETS, I, I WANNA APPRECIATE THAT THOSE HAVE BEEN BROUGHT TO THE FOREFRONT.
AND ALSO UNDERSTANDING THAT WE HAVE BEEN DOING SOME MOVEMENT AND TRYING TO OFFLOAD THOSE ASSETS, BUT TRYING TO BE A LITTLE BIT MORE AGGRESSIVE ON THAT.
THE BIGGEST THING FOR ME, BIGGEST THAT I WANNA WALK AWAY FROM HERE IS THE COLLABORATION PART.
IT HAS TO, IT HAS TO IMPROVE WHAT WE'RE TALKING ABOUT PEOPLE'S, UH, FINANCIALS, UH, PEOPLE'S LIVES.
AND, AND WE ALL HAVE TO BE AT THE TABLE AND WILLING TO, TO COME TOGETHER TO, TO ADDRESS THESE ISSUES.
UM, 'CAUSE AT THE END OF THE DAY, WE ALL WANT TO EASE THOSE BURDENS, BUT WE ALSO WANNA MAKE SURE THAT, UH, WE ARE HAVING AN OVERSIGHT ON THOSE PERFORMANCES THAT ARE COMING THROUGH.
AND SO I ABSOLUTELY AGREE THAT WE HAVE TO HAVE, UH, NOT ONLY QUARTERLY REPORTS, BUT REPORTS AS NEEDED AS, AS WE'RE, UH, EVALUATING THIS MOVING FORWARD.
AND, UM, I, I HOPE THAT WE DO COME, UH, TO THE TABLE AND THAT WE'RE ALL REALLY BESTED AND PUT PERSONALITIES, WHATEVER IT IS, PUT IT, PUTTING IT ASIDE, AND REALLY JUST DOING WHAT'S BEST FOR THE CITY OF DALLAS AND FOR THE, UH, TEAM MEMBERS THAT WE HAVE A RESPONSIBILITY AND COMMITMENT TO.
UH, I KNOW THAT, THAT I'M WILLING TO DO THAT.
AND SO I JUST WANNA MAKE SURE THAT, UH, THAT WE'RE WORKING TOGETHER AND, UM, AND I KNOW IT CAN GET DONE.
SO, UH, MAYOR PROTO, I JUST WANNA THANK YOU IN PARTICULAR FOR, FOR YOUR LEADERSHIP AND, AND THE COMMITMENT THAT YOU'VE BEEN PUTTING IN.
I KNOW THAT YOU HAVE, UM, ALL HANDS ON DECK ON, ON THIS MATTER.
SO, SO JUST THANK YOU FOR YOUR LEADERSHIP CHAIRMAN STEWART.
UM, I'M DEFINITELY STRUCK BY THE COMMENT THAT THERE'S A DISCONNECT BETWEEN THE CITY AND THE FUND.
UM, THAT'S I THINK WHERE OUR, OUR MOST VULNERABLE POINT IS.
AND, UM, SO I AM, I AM VERY INTERESTED IN FIGURING OUT HOW WE ADDRESS THAT.
SO WHEN DID THE WILSHIRE GROUP FIRED THE DALLAS POLICE AND FIRE FRAMES? DO WE KNOW WHAT YEAR THAT, OR DATE? WHEN DID WILSHIRE GO AWAY? FIRST, I'VE NOT SEEN EVIDENCE THAT WILSHIRE FIRED THE PENSION FUND.
UM, AND WAS, IT MUST HAVE BEEN IN THE EARLY TWO THOUSANDS WHEN WE SWITCHED FROM WILSHIRE TO NPC.
DO YOU KNOW THE DATE IT WAS BEFORE 2005? YEAH, MAYBE MID 2000.
[01:25:01]
IT'S BEEN A LONG, OKAY.UM, SO I THINK WHAT MY, WHAT I WOULD LIKE TO HAVE, AND I THINK WOULD BE HELPFUL WHEN WE, WHEN WE DO TAKE THIS PRESENTATION TO THE FULL COUNCIL, IS TO LOOK AT OUR PEER CITIES TO LOOK AT STATE TEACHER PENSION.
WHAT, I MEAN, THIS IS SOMETHING, THIS IS NOT UNUSUAL OR NEW.
UM, I, I KNOW JUST ENOUGH TO BE DANGEROUS ABOUT THAT RELATIONSHIP BETWEEN PENSION FUNDS AND THE GOVERNING BODY.
AND THERE, THERE'S A WAY TO DO THIS BETTER, SO MUCH BETTER.
UM, AND WE NEED TO DO THAT, WHATEVER IT IS, SO THAT WE ARE EITHER GETTING THE FINANCIAL STATEMENTS QUARTERLY, BUT I THINK IT PROBABLY IS A TAD BIT MORE THAN THAT.
I THINK WE WILL NEED SOME KIND OF INTERPRETATION OF THAT, OR MONITORING.
UM, THERE'S JUST BEEN A BREAK IN THE TRUST FOR WE, I, I, THAT'S JUST ME OBSERVING AS A NEW PERSON, BUT LISTENING TO THESE CONVERSATIONS FOR ALMOST A YEAR, UM, THERE'S JUST BEEN A BREAK IN THIS RELATIONSHIP.
AND, UM, IN ORDER TO GET THINGS BACK ON TRACK TO GET THE FUND PERFORMING WHERE IT NEEDS TO PERFORM, UM, I, I JUST THINK IT, IT IS GONNA TAKE SOME INTERVENING PERSON OR, UM, CONSULTING COMPANY, WHATEVER, WHATEVER THAT IS FUND, YOU KNOW, WHATEVER WE WANNA, WHOEVER THAT PERSON IS.
BUT I, I DON'T SEE ANY REASON WHY WE SHOULDN'T FILL THAT SLOT THE SAME WAY ALL THE, ALL OF OUR PEER CITIES DO AND OUR STATES DO.
NEW YORK STATE TEACHERS FUND, I CAN LOOK INTO THAT ONE.
UM, WHAT, WHAT IS THAT? WHO FILLS THAT FUNCTION TO MAKE, TO KEEP THAT CONNECTION? THANK YOU.
UH, LET, LET ME KIND OF FINISH BECAUSE WE GOTTA DO THE NEXT REPORT.
I SAY WHAT, YOU HAVE ONE COURSE, YOU GOT ONE COURSE, AND THEN, YOU KNOW, LET HER ON THE BOARD.
THEN I GO GIVE ZACH THE BOARD.
UM, I WAS JUST GOING TO ADDRESS, UM, WHAT MS. BLACKMAN SAID ON THE, THE TIMING OF THIS, BECAUSE I NOTICED THAT ON THE RESPONSE MEMO FROM THE POLICE AND FIRE PENSION FUND, IT WAS DATED AUGUST 9TH, WHICH MEANS THAT THE FUND WAS PRIVY TO THESE DOCUMENTS BEFORE THIS BODY WAS.
AND SO, UM, I THINK YOU TOOK A BULLET, YOU DIDN'T NEED TO TAKE MR. IRELAND ON THIS.
UM, I THINK WE'RE BIG KIDS AND WE CAN HANDLE GETTING A BUDGET AND DOCUMENTS ABOUT THIS AT THE SAME TIME.
SO, UM, LEGALLY WE WERE ABLE TO GET THESE.
AND SO, UM, IT'S NOT RIGHT TO STAND IN THE WAY OF THAT.
AND I WANNA BE SURE THAT GOING FORWARD ON THIS COMMITTEE AND OTHERS THAT UM, WE DON'T HAVE THAT OBSTACLE, UH, BECAUSE I WOULD'VE LIKED THE OPPORTUNITY TO GIVE MORE TIME TO CONSIDER THIS BEFORE TODAY.
UM, I'M GONNA TRY AS CALMLY AS NICELY AS POSSIBLE TO AGREE WITH MY COLLEAGUES, AND I SAY THAT IN A WAY THAT I ABSOLUTELY THINK THERE NEEDS TO BE OVERSIGHT.
BUT WHAT I'VE BEEN SITTING HERE WATCHING, AND THANK YOU FOR THIS REPORT, AND I WILL DIG INTO THIS, AND I'M TRYING NOT YOU TWO, SINCE YOU'VE SAT DOWN, YOUR EYEBROWS HAVE BEEN IN DEFENSE MODE SINCE Y'ALL SAT DOWN.
AND THAT'S BOTHERSOME BECAUSE MY UNDERSTANDING IS NEITHER ONE OF YOU WERE A PART OF THIS FUND WHEN EVERYTHING HAPPENED, CORRECT? CORRECT.
CAN I RESPOND TO THIS? NO, THAT'S PART OF THE PROBLEM.
THE, AND, AND, AND THE, THE REASON I'M SAYING THAT IS BECAUSE YOU ALL WERE BROUGHT ON AFTER THE FACT.
WE ARE ALL HAVE THE SAME OBJECTIVE, AND THAT IS TO CORRECT THIS ISSUE, NOT FOR YOU, NOT FOR YOU, NOT EVEN FOR US.
THIS IS A ISSUE WE'RE CORRECTING FOR THE PEOPLE THAT BENEFIT FROM THIS FUND.
SO AS WE TALK ABOUT THESE RECOMMENDATIONS THAT THEY'RE MAKING, THESE ARE RECOMMENDATIONS AND YOUR BODY LANGUAGE IN DEFENSE TO THESE RECOMMENDATIONS WHEN THE OBJECTIVE IS TO TRY TO FIX SOMETHING THAT NONE OF US WERE A PART OF IS CONFUSING TO ME.
SO I'M SAYING TO YOU ALL COMING FROM, I MANAGE THE INVESTMENT PORTFOLIO FOR THE CITY.
WHEN THINGS LIKE THIS HAPPEN, YOU OUGHT TO WANT AS MUCH HELP AS YOU CAN.
AND THE DEFENSIVENESS BE DEFENSIVE, THAT'S FINE.
BUT UNDERSTAND, THE OBJECTIVE IS TO WRITE THIS PORTFOLIO AND EVERYBODY INVOLVED IN THIS WANTS THE SAME OUTCOME.
SO I'M ENCOURAGING YOU ALL MIND THE BODY LANGUAGE.
YOU GUYS ARE DEFENDING THIS AS IF YOU DID IT.
AND THAT'S CONCERNING BECAUSE THAT'S WHAT IS COMING OFF.
I UNDERSTAND THAT'S NOT WHAT YOU'RE TRYING TO GIVE OFF, BUT THAT'S WHAT YOU IS IF YOU'RE DEFENDING THOSE MISTAKES WHEN EVERYBODY WANTS IT.
AND AS A RESULT OF THIS DEFENSE, IT
[01:30:01]
SEEMS LIKE THINGS ARE GETTING DELAYED.SO TO MY COLLEAGUE'S POINT, I REALLY WANT US TO MOVE TOWARDS SOME GOVERNANCE.
THIS BUDGET RIGHT NOW IS A RESULT OF THOSE THINGS THAT HAPPENED OVER THERE.
SO ALL WE'RE TRYING TO DO IS CORRECT THIS FOR OUR OFFICERS AND OUR RETIRED OFFICERS, AS WELL AS MAKE SURE OUR TAXPAYERS DON'T HAVE TO CONTINUE SUFFERING AS A RESULT.
SO I'M ENCOURAGING ALL TO COME TOGETHER, STOP BEING DEFENSIVE OVER THESE, THESE RECOMMENDATIONS DON'T SEEM THAT BAD IN TERMS OF THAT, YES, IT MAY BE A LITTLE MORE, I DON'T KNOW, INSIGHT WISE, AND THERE MAY BE SOME THINGS MISSING.
THAT'S HOW AUDITS AND THINGS ARE.
WE KNOW THAT, BUT THE OBJECTIVE IS TO CORRECT THE ISSUE.
SO PLEASE KEEP THAT IN MIND AND MIND YOUR BODY LANGUAGE BECAUSE EVERYTHING Y'ALL ARE SAYING, SINCE YOU, YOU'VE BEEN IN DEFENSE MODE.
AND I GET IT AND I UNDERSTAND, I REALLY DO.
I PROMISE I HAD BERNIE MADOFF MONEY
SO ALL I'M JUST, I WANT YOU ALL TO UNDERSTAND THAT THE OBJECTIVE FOR EVERYBODY SITTING RIGHT HERE IS TO FIX THIS.
SO AGAIN, WITH SOME OF THESE RECOMMENDATIONS, I AM ASKING FOR SOME LEVEL OF OVERSIGHT AND I'M BEING VERY DIRECTED WITH IT BECAUSE AGAIN, THE FACT THAT THERE IS A DEFENSE ANYTIME WE ASK FOR OVERSIGHT IS AN INDICATOR TO ME.
AND THAT'S A PROBLEM AS A JUDICIARY.
AND ALL OF THESE WORDS THAT WE KEEP THROWING AROUND, WE TOO ARE THOSE SAME JUDICIARIES FOR THE TAXPAYERS.
AND THIS IS NOW IMPACTING TAXPAYER DOLLARS.
SO I JUST WANNA ENCOURAGE YOU MIND YOUR BODY LANGUAGE AND TREAT THIS AS IF EVERYBODY HAS THE SAME OBJECTIVE.
I DON'T KNOW YOUR INVESTMENT AND YOUR FINANCIAL BACKGROUND.
THE ONLY THING I CARE ABOUT IS YOU'RE SITTING IN THIS SEAT RIGHT NOW AND YOU'RE RESPONSIBLE FOR CORRECTING THIS ALONG WITH THE REST OF US.
AND I'M GOING TO ENCOURAGE YOU TO DO THAT, MA'AM, I'M ENCOURAGING YOU TO DO THAT.
THIS IS AN EFFORT TO CORRECT SOMETHING THAT WILL BENEFIT OUR OFFICERS AND OUR RETIRED OFFICERS.
THAT'S ALL I HAVE TO MR. CHAIR.
MAY I RESPOND TO, TO WHICH, WHICH REMARK?
LET ME SEE HOW YOU'RE GONNA RESPOND AND I CAN, I MIGHT STOP YOU, BUT I'LL LET YOU STOP.
YOU KNOW, SO I, I THINK I HEARD FROM FOUR OR FIVE OF YOU THAT YOU WOULD LIKE TO SEE QUARTERLY REPORTS, FINANCIAL REPORTS AND INVESTMENT REPORTS.
THAT THOSE ARE ON OUR WEBSITE.
THEY'VE BEEN ON THE WEBSITE FOR MORE THAN 10 YEARS, EVERY QUARTER.
WE'RE HAPPY TO SEND THEM TO YOU IF IT'S EASIER THAN GETTING THEM OFF OUR WEBSITE.
THE GOVERNANCE PIECE, UM, WHEN THESE BAD INVESTMENTS WERE MADE, THE CITY HAD CITY COUNCIL PEOPLE ON THE BOARD.
OFTENTIMES THEY DIDN'T COME TO THE MEETINGS.
THE CITY CURRENTLY APPOINTS THE MAJORITY OF OUR BOARD.
AND I APOLOGIZE, WE DON'T MEAN TO COME OFF DEFENSIVE.
I DON'T MEAN, AND I KNOW RYAN DOESN'T EITHER.
WE DON'T FEEL LIKE THIS HAS BEEN A FAIR PROCESS.
I MEAN, WE, UM, WERE TOLD WE WERE ONLY GONNA BE ANSWERED QUESTIONS.
WE WEREN'T ABLE TO GIVE A REPORT ON REALLY OUR INVESTMENT PORTFOLIO.
SO WE'RE SITTING HERE HEARING THINGS THAT WE CAN'T RESPOND TO.
THERE'S STATEMENTS BEING MADE THAT WE DON'T GET TO RESPOND TO OR EXPLAIN.
AND SO I, THAT'S WHY WE'RE DEFENSIVE.
WE WOULD LIKE TO HAVE A FAIR REVIEW OF THIS.
AND I FEEL LIKE THIS IS MORE OF A SETUP THAN A FAIR REVIEW.
OKAY, LET, I WENT THROUGH, WE GONNA STOP WITH THE QUESTION.
I'M GOING TO FINISH THIS REAL QUICK.
NUMBER ONE, THIS REPORT WAS SUPPOSED TO BE THE REPORT THEY GIVEN TO US.
WHAT THIS REPORT IS, IF IT GOT OUTTA HAND, I'M GONNA BLAME ME AS A CHAIR.
I SHOULD LET IT GOT ON THE HAND.
I WAS THE PERSON FEELING GOT HERE.
BUT ONE THING I'M WANT TELL YOU WHAT I KNOW, I WAS A TRUSTEE ON THE BOARD BACK IN 13, 14.
I CAME TO EVERY MEETING AND THERE WERE THREE COUNCIL MEMBER ON THAT BOARD.
WE WERE STACKED, WE WAS OUT AND VOTED AND EVERYTHING.
I HIRED DELOITTE, I WENT AND GOT DELOITTE.
I WENT AND HIRED A PRIOR ATTORNEY NAMED DARYL JORDAN LAW FIRM TO REPRESENT ME.
WAS EVERYTHING GOING? SO I GOT FIRSTHAND AND VALUE WHAT'S GOING ON WITH THE BOARD AND WITH THIS REPORT AND ONLY THING I WOULD LIKE TO REPORT ON, SIR, I'M GONNA GIVE REPORT.
I TO END ONE IF WE'RE NOT COMPLETE.
YOU MIGHT DISAGREE, BUT I GOTTA I GOT SPEAK RIGHT NOW.
NOW, ONLY THING WE'RE TRYING TO DO TO RESOLVE THE ISSUE, THERE'S NOT A FIGHT AGAINST EACH OTHER, IS A FIGHT FOR THE TAXPAYER TO DO THE JOB.
THAT'S WHAT WE HERE FOR THAT FIDUCIARY RESPONSE.
[01:35:02]
NOT, DON'T BLAME ON ANYONE.AND THAT'S OUR RESPONSIBILITY TO FIX THE PROBLEM ON HEARING FOR THE FIRST TIME THAT WE DO NOT HAVE GOOD COMMUNICATION WITH OUR STAFF IN THE PENSION BOARD.
TO MY UNDERSTANDING, CITY MANAGER TALKED TO THE PENSION BOARD OCCASIONALLY, RIGHT? HAVE YOU BEEN SPEAKING TO THEM? THE BOARD? I HAVE NOT BEEN TO A BOARD MEETING, BUT I HAVE HAD CONVERSATIONS WITH KELLY, THE EXECUTIVE DIRECTOR, DIRECTOR.
SO THEREFORE THERE ARE SOME CONVERSATION WITH THAT.
AND SO, SO THEREFORE, IF WE NEED TO HAVE BETTER COMMUNICATION, WE NEED TO SET THAT UP.
HOW DO WE COMMUNICATE? IF WE GOTTA COMMUNICATE TO THE COMMITTEE, WE AS A POLICYMAKER NEED TO SET UP THAT COMMITTEE HOW THEY COMMUNICATE AND BRING THAT TO US.
SO I KNOW THAT WHEN THE MAYOR HAVE HIS APPOINTEES ON THE BOARD, THEIR FIDUCIARY RESPONSIBILITY IS TO THE BOARD.
THAT'S THEIR FIDUCIARY TO THE BOARD.
NOW, THOSE APPOINTEES SHOULD COME BACK AND REPORT TO US, BUT THAT MIGHT BE THE POLICY THAT WE MAY NEED TO LOOK INTO.
SO WE DO NEED TO HAVE BETTER COMMUNICATION ON BOTH SIDES.
I'M NOT SAYING THAT WE ARE FAULT AT FAULT.
I'M NOT SAYING THE PENSION BULLET AT FAULT, BUT THE TAXPAYERS IS ONE WHO GOTTA PAY FOR IT.
AND, AND, AND I'VE BEEN HERE FOR A LONG TIME AND I WAS THERE BACK IN 13, 14, I SAW WITH HIM 17 ON BACK HERE AGAIN.
BUT ONLY THING I WANTED RESOLVED THE ISSUE OF THE RETIREES WHO WORK THEIR LIFE AND THEY GOT ANNUITY OVER 30 YEARS AND THEY'RE NOT GONNA GET WHAT THEY THINK THEY WORK FOR.
AND WE ARE THE CITY AND THE TAXPAYER GOTTA PAY FOR THAT.
BUT ALSO THE CITY HAVE RESPONSIBILITY TO OUR TAXPAYER ALSO TO GET THE STREETS FIXED, TO GET A SANITATION TO PICK UP THE EVERYTHING.
SO WHATEVER WE NEED TO DO, JACK, UH, IN REPORTS, WHATEVER ANYTHING THEY NEED TO GET INTO YOUR, SEND IT TO EVERY COUNCIL MEMBER.
BECAUSE I AIN'T GONNA BE SAYING HERE THAT I DIDN'T GIVE OUT THIS REPORT OR THAT REPORT, WHATEVER, IT'S A PUBLIC DOCUMENT, GIVE IT OUT.
BUT IT IS MY FAULT BECAUSE I DON'T GIVE OUT ANYTHING TO THE LEAST COMPLETED POINT OF INFORMATION.
LEMME FINISH POINT OF INFORMATION.
I, I, NO, I GOT, I GOT THE, THE CHAIR.
UNLESS THE, THE ATTORNEY SAID I CANNOT SPEAK, I'D LIKE TO APPEAL TO THE BODY, UM, TO ASK A FOR A POINT OF INFORMATION.
SO, SO THEREFORE, LET ME FINISH MY QUESTION,
AND WITH THAT, LET'S START WITH THE NEXT SPRING.
WE GOT THE EMPLOYEES, UH, NEXT REPORT.
DORY, ARE YOU READY FOR THAT? THE NEXT ONE? OKAY, THANK YOU.
YES, DORY GOT MAYBE 15 MINUTES.
UH, REAL QUICK ON THE SUMMARY OF THIS, THIS IS, UH, OBVIOUSLY A DIFFERENT FUND, EMPLOYEES RETIREMENT FUND.
UH, THE REPORT WOULD SAY KIND OF SPEAKS FOR ITSELF, BUT IN SUMMARY, UH, THEY'VE DONE A VERY GOOD JOB OF, OF MANAGING, DEPENDING ON WHAT PEER GROUP, WE KIND OF STRESSED THE DIFFERENT PEER GROUPS.
WE USE NATIONAL, WE USE TEXAS.
WE EVEN, UH, DEFINED A PEER GROUP AND WENT OVER IT.
AND, UH, DEPENDING ON WHICH ONE YOU LOOK AT, THEY'RE EITHER AN AVERAGE OR SLIGHTLY BELOW AVERAGE OR SLIGHTLY ABOVE AVERAGE, DEPENDING ON WHAT TIME, UH, FRAME YOU LOOK AT IT.
UM, UH, POINTS OF IMPROVEMENT.
YOU KNOW, IF WE'RE GONNA TAKE A CRITICAL CRITICAL EYE, THEY'RE ONLY FINE TUNING.
YOU KNOW, FIRST OF ALL, COMMUNICATION WAS VERY GOOD WITH THIS FUND, VERY COLLABORATIVE, VERY FRIENDLY.
AND, UH, WE MOVED VERY QUICKLY, UH, WITH THIS GROUP IN, IN JUST A FEW, IN JUST A FEW, MANY MEETINGS.
UH, WE THINK, UH, THERE, UH, KINDA LIKE DALLAS POLICE AND FIRE ON THE EQUITY SIDE, THERE HAVE A LITTLE MORE RISK AND ALLOCATION TO EQUITIES THAN THEIR PEERS OR TOP QUARTILE PERFORMERS.
THEY'RE UNDER ALLOCATED ON THE, UH, ALTERNATIVE ASSET SIGN.
UM, THEY HAVE MORE OF AN ALLOCATION THAN DALLAS POLICE AND FIRE, AND THAT'S PART OF THE REASON WHY THEY PERFORM WELL.
SO IT WOULD JUST BASICALLY, UH, BE TWEAKING BECAUSE OF THE SIZE OF THE FUND AT THREE AND A HALF BILLION, 1% MAKES A BIG DIFFERENCE.
THE QUESTION IS, CAN YOU GET THERE BY TAKING LESS RISK? AND, UH, THOSE ARE SOME OF THE, UH, CONVERSATIONS THAT WE WERE EXPLORING WITH, UH, UH, WITH STAFF AND, AND MANAGEMENT.
[01:40:01]
AND UH, UH, WE THINK THERE'S, THERE'S A WAY TO DO THAT.UH, BUT I WOULD, I WOULD TELL YOU, UH, WE'RE VERY APPRECIATIVE OF THEIR COLLABORATIVE SPIRIT, UH, THE WAY THEY WORKED WITH US.
AND, UM, UH, YOU KNOW, THEY'RE CERTAINLY, UM, YOU KNOW, WELL OVER TWICE THE FUNDING RATIO OF THE OTHER FUND.
SO THEY'RE A COMPLETELY DIFFERENT ANIMAL.
QUICK, ANY QUESTION, GABE? COUNCIL WILLIS, THANK YOU VERY MUCH.
AND, UM, YOU KNOW, I, I REALLY APPRECIATE BEING COLLABORATIVE ON THIS AND, UM, YOU KNOW, BEING WILLING TO WORK WITH SOMEONE, LOOKING OUT FOR OUR INDEPENDENT INTERESTS.
SO I JUST HAD A COUPLE OF QUESTIONS BECAUSE HONESTLY, THE, YOU KNOW, ANYTHING THAT DIDN'T LOOK LIKE IT WAS PERFORMING OPTIMALLY, IT LOOKED LIKE IT WAS SLIGHTLY BELOW, BUT, YOU KNOW, COULD BE BETTER.
BUT IT SOUNDS LIKE THERE'S THE SPIRIT TO, TO MANAGE THAT AND MAKE IT BETTER.
AND SO I AM, I'M EXCITED THAT YOU ALL ARE TALKING ABOUT HOW THAT CAN BE.
UM, MY ONLY QUESTION GOES BACK TO GOVERNANCE
AND SO THERE WERE A COUPLE OF QUESTIONS, UM, AND THANK YOU COMMERCE STREET, BECAUSE IT'S CLEAR THAT YOU ALL DID DIVE INTO THE, THE, UH, THE GOVERNANCE OF EACH OF THE FUNDS, BECAUSE THESE ARE NOT BOILERPLATE GOVERNANCE SUGGESTIONS.
THEY'RE VERY SPECIFIC TO THE SEPARATE FUNDS.
BUT, UM, THERE WAS ONE, THE TOP BULLET, THIS IS ON PAGE 35.
UM, IT, IT TALKED ABOUT THE SPECIFICS OF DUTIES AND RESPONSIBILITIES OF THE BOARD, STAFF, CONSULTANTS, INVESTMENT MANAGERS, AND CUSTODIANS.
AND, UM, I MEAN, TO ME, I WAS KIND OF SURPRISED TO SEE THAT THAT DOESN'T EXIST.
AND MAYBE IT EXISTS IN A FORM, BUT NOT AS ROBUSTLY AS MIGHT BE HELPFUL.
SO, UM, WHAT IS, UH, MS. AL, SINCE YOU'RE HERE, I'LL JUST SAY, UH, WERE YOU ALL AMENABLE TO THESE TWO SUGGESTIONS? UH, YES.
WE ARE, UH, OPEN TO FIRST, YOU KNOW, JUST, UH, WE WE'RE AN OPEN AND TRANSPARENT FUNDS, SO WE WORKED COLLABORATIVELY WITH, UH, PROVIDING ANY DOCUMENTATION WITH OUR INVESTMENT POLICY STATEMENT.
WE HAVE SEVERAL DIFFERENT POLICIES.
FOR EXAMPLE, GENERAL INVESTMENT POLICY STATEMENT.
WHEN THEY CAME BACK WITH SOME COMMENTS OR QUESTIONS, WE REALIZED THAT WE HAD NOT GIVEN THEM THE MANAGER SELECTION AND MONITORING POLICY, WHICH, WHICH WE'VE HAD IN PLACE FOR DECADES.
AND SO WE HAVE, UH, THE ROLES AND RESPONSIBILITIES THAT ARE, UM, OUTLINED.
WE MAY TO MAKE IT A LITTLE CLEARER IN THE INVESTMENT POLICY STATEMENT.
AND SO WE'RE OPEN TO DOING THAT.
AND THE, UH, LIKE I SAID, THE MANAGER SELECTION MONITORING POLICY, THEY'RE ASKING US TO PUT AS AN APPENDIX FOR THE GENERAL INVESTMENT POLICY.
WELL, I APPRECIATE NOT RESISTING GOVERNANCE, BUT INSTEAD EMBRACING GOVERNANCE.
SO THAT REALLY, UM, IS MEANINGFUL TO ME AND I HOPE THIS BODY.
ANYONE ELSE? CHAIRMAN, REALLY.
UM, DORY, I NOTICE IN LOOKING AT THE ASSET ALLOCATION BENCHMARK ON SLIDE 19, UH, THE RF IS AT 10% PRIVATE EQUITY, WHICH EQUALS THE AVERAGE, BUT THE TOP QUARTILE IS 19%, AND THE BOTTOM QUARTILE IS ONLY 2%.
AND YOU'VE STATED IN THE PREVIOUS DISCUSSION THAT THE UNDERPERFORMANCE OF THE DPFP FUND IS DUE AT LEAST IN PART, TO THEIR ASSET ALLOCATION BEING WHITE ON PRIVATE EQUITY.
AND SO WOULD YOU ALSO CONCLUDE THAT THE PERFORMANCE OF THE ERF COULD BE BETTER IF THEY HAD A HIGHER ALLOCATION OF PRIVATE EQUITY CLOSER TO THAT OF THE TOP CORE FILE? UH, I, I DON'T, I DON'T WANNA OVERGENERALIZE WITH THAT.
YOU KNOW, THERE'S A RISK RISK INVOLVED, RIGHT? SO, UM, LET'S LUMP IN ALTERNATIVE ASSETS HERE.
ALTERNATIVE ASSETS WOULD BE REAL ESTATE HEDGE FUNDS AND PRIVATE EQUITY, YOU ADD THOSE UP, THAT'S 26, 20 9%, RIGHT? UM, IF YOU LOOK OVER ON THE TOP QUARTILE AND YOU ADD THOSE UP, IT'S CLOSER TO AROUND 40 OR SO.
UH, AND THAT'S PRETTY TYPICAL.
YOU EVEN SAW AN THEN SOME INDEPENDENT CONSULTANT MENTIONED THAT IN THE DALLAS MORNING NEWS TODAY.
UM, THE ALLOCATION AMONGST THOSE DIFFERENT ASSETS VARIES AMONG GROUPS.
UH, FROM A HUNDRED THOUSAND FEET, I WOULD SAY YES, PROBABLY NEED SOME, UH, WE COULD PROBABLY, YOU'RE GONNA HAVE THE HIGHEST SHARP RATIO, WHICH IS RETURN PER UNIT OF RISK IN GENERAL FROM PRIVATE EQUITY.
UH, YOU CAN GET THAT ALSO FROM REAL ESTATE INFRASTRUCTURE, HEDGE FUNDS, PRIVATE CREDIT, THINGS LIKE THAT.
SO WHAT WE'D LIKE TO DO IS JUST SIT DOWN AND TALK WITH THEM ABOUT THAT ALLOCATION AND WHAT THEIR VISION IS GOING FORWARD.
WE DID GET INTO SOME OF THOSE CONVERSATIONS.
WE DID TALK A LITTLE BIT ABOUT PRIVATE CREDIT.
UH, BUT YOU KNOW, AND ESPECIALLY YOU CONSIDER TODAY'S
[01:45:01]
MARKET, I HAVEN'T LOOKED AT THE UNDERLYING ASSETS, BUT REAL ESTATE'S A LITTLE HIGHER ALLOCATION THAN THIS TOP, TOP QUARTILE.AND THAT TENDS TO HAVE HIGHER FEES BEING A LITTLE MORE EFFICIENT, A LITTLE TOUGHER, SHARP RATIOS.
UH, BUT IT ALSO, YOU KNOW, YOU COULD ALSO COME BACK AND ARGUE, YOU GOTTA BE CAREFUL ON PRIVATE EQUITY RIGHT NOW BECAUSE IT'S UH, UH, GOT A LOT OF CASH IN IT.
THERE'S A LOT OF STABLE, THERE'S A LOT OF DRY POWDER, UH, FORECAST OF RETURNS ARE LOWER.
AND SO, BUT THAT'S BEEN, THAT'S A 20, 30 YEAR TREND IN PRIVATE EQUITY AS WELL.
BUT IN GENERAL WITH SOME OF THOSE CAVEATS, YEAH, I THINK I'D LIKE TO SEE A LITTLE HIGHER ALLOCATION OF PRIVATE EQUITY.
AND IF YOU WANNA REDUCE RISK, POP UP CASH A LITTLE BIT, TAKE UP A TAKE A LITTLE BIT OUT OF PUBLIC EQUITY.
THAT PUBLIC EQUITY IS WHERE ALL THE SHOCK IS, RIGHT? WE DROP 40% OF THE PUBLIC MARKET, YOU KNOW, YOU'RE GONNA GET HURT WORSE THAN YOU WOULD WITH THE TOP QUARTILE, ASSUMING, AND THIS IS THE ASSUMPTION, ASSUMING YOU INVEST IN GOOD QUALITY, PRIVATE EQUITY OR ALTERNATIVE ASSETS, THAT CAN BE A BIG ASSUMPTION, RIGHT? 'CAUSE IF YOU SCREW THAT UP, YOU'RE IN TROUBLE.
WELL, AND THAT LEADS TO MY NEXT QUESTION, WHICH THE, IS THE COMPARISON BETWEEN THE DPFP REPORT OF YOURS THAT IDENTIFIED UNDERPERFORMING, UH, PRIVATE EQUITY FUNDS? I DON'T SEE THAT IN THE RF REPORT.
IS THAT BECAUSE YOU FOUND THAT THEIR PERFORMANCE WAS GENERALLY UP TO THE BENCHMARK? YES.
W WHEN YOU LOOK AT THIS, IT'S A VERY SIMPLE PRIVATE EQUITY PORTFOLIO.
SOMETIMES THERE'S BEAUTY AND SIMPLENESS, RIGHT? IT'S A VERY SIMPLE PRIVATE EQUITY.
UH, HAMILTON'S VERY WELL KNOWN.
UH, GROSSMAN'S VERY WELL KNOWN.
I'VE KNOWN WHO FAIRVIEW IS FOR, FOR 25 YEARS.
UM, THE SECONDARY FUNDS PROVIDE A LITTLE MORE LIQUIDITY, A LITTLE LESS RISK, A LITTLE MORE UPFRONT CASH FLOW.
THEY'RE A LITTLE MORE CONSERVATIVE WAY TO GET, UH, EXPOSURE TO PRIVATE EQUITY.
AND LONG, LONG ANSWER TO THIS IS, YEAH, IT'S A LITTLE BIT UNDER THE AVERAGE, BUT IT GETS WHAT THEY NEED.
AND IT'S, IT'S A NICE RETURN WITH A NICE, UH, MULTIPLE AND THEY'VE DONE A GOOD JOB.
ANYONE ELSE BESIDES IF I GO TO COUNCIL WILLIS? GO AHEAD.
I JUST HAD A FOLLOW UP TO SOMETHING YOU JUST SAID.
YOU WERE TALKING ABOUT, UM, A FUND WITH MORE LIQUIDITY AND LESS RISK THAT YOU'VE GOT.
SO IT SOUNDS LIKE THAT WAS THE ISSUE THAT WE WERE HAVING ON THE OTHER FUND WITH THEY NEED LIQUIDITY, BUT I MEAN, TELL ME A LITTLE BIT MORE ABOUT THAT.
WOULD THAT BE AN OPTION FOR THAT FUND TO HELP? UH, WHICH FUND ARE WE TALKING ABOUT? WELL, I'M, I'M SAYING WHAT YOU WERE SAYING, YOU JUST CALLED OUT ONE OF THE FUNDS THAT YOU LISTED THERE THAT YOU OH, THE SECONDARY FUND, YEAH.
ONE OF OUR RECOMMENDATIONS IS THEY SHOULD, BECAUSE THEY'RE GONNA HAVE A J CURVE PROBLEM, RIGHT? AT DALLAS POLICE AND FIRE.
AND WHAT THAT MEANS IS THEY'VE BEEN OUTTA THE MARKET FOR SEVEN YEARS AND IT TAKES FIVE TO SEVEN YEARS TO BUILD A PRIVATE EQUITY PORTFOLIO FROM SCRATCH.
SO YOU SORT OF HAVE TO CHEAT, HOW DO I GET INTO MAYBE, UH, SECONDARY FUND OR, UH, UH, BUT DOING SOME DIRECT CO-INVESTING WITH SOME FUND NAMES THAT I TRUST OR, UH, UH, BUYING AN EXISTING PORTFOLIO OR FUND THE FUNDS OR AN IMMEDIATE CASH FLOW AND SOME KIND OF PRIVATE CREDIT, LOWER RISK TYPE.
THOSE ARE ALL THINGS THAT WE DISCUSSED.
AND YOU'RE CORRECT, WE DID DISCUSS SECONDARY FUNDS WITH WELL AND JUST, SO, YEAH, SO THAT WAS IT, BECAUSE I THINK THAT WAS THE FEAR.
BUT YOU'RE TELLING ME THERE ARE OPTIONS OUT THERE AND HAVE, DID YOU SHARE THESE WITH THE OTHER FOLKS? YES.
OH, SO WE SHOULD EXPECT TO SEE THAT THEN OR SOMETHING.
WELL, THAT'S ASSUMING THEY AGREE WITH THE IDEA.
SO I JUST WANTED TO COMMENT ON, ON THE SECONDARY.
SO, WELL, WE STARTED OUR PRIVATE EQUITY PORTFOLIO IN 2009.
SO AFTER THE GREAT FINANCIAL RECESSION, WE STARTED OUT WITH SECONDARIES BECAUSE THERE WERE A LOT OF FOUNDATIONS, ENDOWMENTS THAT HAD LIQUIDITY ISSUES.
AND SO WE COULD BUY IT AT A DISCOUNT AND HAVE TO HAVE NO J CURVE.
SO WHEN WE STARTED OUR PRIVATE EQUITY PORTFOLIO, WE DID NOT HAVE AN ISSUE OF A DRAG ON THE, ON THE PERFORMANCE BECAUSE WE DIDN'T HAVE A J CURVE.
'CAUSE WE WENT HEAVILY INTO BUYING GOOD, UM, EQUITY PORTFOLIOS AT A DISCOUNT.
THAT, THAT, THAT'S A PERFECT EXAMPLE OF SOMETHING THAT COULD WORK FOR DALLAS POLICE AND FIRE AND THE, AND THE SISTER FUND OVER HERE HAS ALREADY DONE IT.
ANYONE ELSE? CHAIRMAN STEWART, I'M JUST GONNA ASK THE QUESTION THAT'S, YOU KNOW, IN MY HEAD AND THAT CAN BE A SCARY THING,
UHHUH, UH, AND THEN I WAS LATER TOLD THAT THAT WASN'T YET.
UH, BUT THAT THEY HAD TO FOCUS ON THEIR CURRENT PROBLEMS. SO MY GUESS IS, UH, THEY WERE SO FOCUSED ON THEIR CURRENT PROBLEMS AND MAYBE A LITTLE BIT SNAKE BIT THAT THEY WERE YEAH.
RETICENT AND HESITANT TO DO SO.
[01:50:01]
STILL DON'T HAVE A FULL ANSWER ON THAT.UH, BUT I'M NOT SURE I NEED ONE.
I'D JUST LIKE TO SEE IT FIXED, RIGHT?
MR. MAY SAY THAT WE HAVE TO FIGURE THIS OUT TO, UM, SHARE GRACIE'S POINT ABOUT WHY WE'RE HERE AND WHO, WHO WE'RE CONCERNED ABOUT.
SO YES, WE'RE GONNA FIGURE IT OUT, BUT I THINK IT'S GONNA BE TIME CONSUMING COMPLICATED.
AND IT'S GONNA TAKE, I MEAN, IT'S JUST GONNA TAKE A LOT OF WORK.
I THINK MORE OF IT IS JUST LIKE YOU SAID, THE COMMITMENT TO FIGURING IT OUT.
IF EVERYONE DOES IT AND WE DO A LITTLE KUMBAYA, WHICH EVERYONE'S BEEN KIND OF SINGING, I THINK THINGS CAN MOVE QUICKER THAN PEOPLE THINK.
AND MY ENGINEER LEAD US IN AROUND THE KUMBAYA,
DO YOU FEEL LIKE GOVERNANCE IS A ONE BIG ASPECT THAT WE NEED TO CRACK? SO GOVERNANCE IS ALWAYS AN ISSUE.
OKAY? EVERYTHING STARTS WITH LEADERSHIP.
UH, THERE IS A COMMON THREAD IN UNDERPERFORMANCE WITH GOVERNANCE USUALLY.
OKAY? SO, UM, YOU KNOW, THE CITY APPOINTS PEOPLE TO THESE BOARDS.
UH, THE CITY HAS ACCESS TO THE REPORTS AS YOU HEARD FROM MS. KELLY.
UH, BUT IF THE CITY IS NOT COMMUNICATING WITH THOSE BOARD MEMBERS AND THE CITY'S NOT INTERPRETING AND MONITORING ON A CONTINUAL BASIS, AND THEN IT DOESN'T HAVE THE EXPERTISE LINED UP TO MONITOR RED FLAGS, THEN THINGS CAN SLIP.
SO, UH, I I'M NOT CONVINCED YOU HAVE A GOVERNANCE PROBLEM.
UH, YOU CERTAINLY DON'T HAVE A GOVERNANCE PROBLEM WITH THE ERL.
OKAY? THERE'S, UH, EASY COMMUNICATION, EASY TO COLLABORATE, AND QUITE FRANKLY, UH, WE NEED THEM RIGHT NOW.
THEY'RE BIG, THEY'RE THREE AND A HALF BILLION.
SO IF, IF WE CAN, UH, WORK WITH THEM AS A CITY AND GO, HEY, CAN WE TAKE LESS RISK AND GET ANOTHER ONE OR 2% OUT OF YOU, YOU KNOW, OVER 10 YEARS, THAT'S 350 MILLION TO $700 MILLION.
SO WE NEED TO BE NICE TO CHERYL ON THAT.
AND WE NEED TO BE NICE TO THAT BOARD BECAUSE THEY CAN HELP.
YOU KNOW, THEY'RE DOING FINE, BUT WE CAN GET A LITTLE BETTER WITH LESS RISK.
AND THAT HELPS US WITH THE UNDER PERFORMANCE THAT WE HAVE FROM THE PAST.
UM, AND, UH, AS FAR AS THE OTHER FUND, I HAVE HIGH HOPES FOR THEM.
I THINK WE MADE SOME PROGRESS, BUT WE HAVE MORE PROGRESS TO GO.
UH, I, I, YOU KNOW, YOUR REPORT, YOU KNOW, THAT I READ AND, AND HOPEFULLY ALL OTHER COLLEAGUES WILL GET A CHANCE TO READ THE COMPLETE REPORT IN THE MEMO, THE MEMO MEMORANDUM THAT, UH, THE CITY MANAGER WROTE, AND I HOPE WE READ THAT ALSO KIND OF TEED EVERYTHING UP TODAY.
UH, WE WERE NOT PLANNING TO GET ANY INFORMATION DETAIL, IT WAS JUST A REPORT, BUT ALSO IT WAS A GOOD, UH, CONVERSATION AND IT WAS A GOOD, AND SOMETIME, UH, YOU, YOU GOTTA HAVE STRONG CONVERSATION IN ORDER TO GET SOMETHING OUT OF IT.
AND, AND, AND, AND CHAIRMAN GRACIE, I WANNA THANK YOU.
UH, ALSO, UH, COUNCILWOMAN WILLIS, YOU KNOW, THANK YOU FOR YOUR REMARKS.
AND ALSO, IT'S NOT TRYING TO SAY THAT WE ARE TRYING TO SLOW YOU DOWN, BUT WE ALL GONNA HAVE EMOTION.
WE ALL GONNA HAVE FEELINGS THAT WE ALL WANT, WANT TO HAVE THE BEST FOR THE CITY.
AND I DO RESPECT YOU, YOU AND PAULA, BLACK WOMEN, Y'ALL HONEST FEELING THAT YOU CARE ABOUT THE CITY.
AND, AND THE REASON WHY I SAY THAT, BECAUSE Y'ALL ARE THE ONE, THE NUMBER TWO, THAT BEING ON A COMMITTEE EVERY MINUTE OF THE DAY ASKS THE TOUGH QUESTION.
YOU ASK THE TOUGH QUESTION, YOU WANT THE ANSWER.
YOU DON'T WANNA RUSH IT, BUT YOU DO IT.
SO I DO RESPECT YOUR INPUT AND I JUST WANT TO TELL YOU STRAIGHT OFF POINT, NO DISRESPECT TO YOU.
I DO RESPECT Y'ALL INPUT AND WE, YOU ARE TRYING TO DO WHAT IS BEST FOR THE CITY OF DALLAS.
BUT WE ALL GOTTA WORK TOGETHER BECAUSE WE DO SEE, THIS IS A BUDGET ITEM.
IT'S NOT GOING TO, UH, GET, UH, DONE IN MY LIFETIME ON THIS COUNCIL.
[01:55:01]
IT GONNA BE THE NEXT TERM, THE NEXT TERM TO GET EVERYTHING DONE.BUT WE DO, WE DID HAVE A GOOD START TODAY.
LET'S GO BACK AND, AND LEARN WHAT WE HAD TODAY AND, AND MOVE FORWARD.
I THINK CHAIRMAN, WE REALLY HAVE A QUESTION.
UH, DARCY, I AM INTERESTED IN GETTING YOUR PERSPECTIVE ABOUT SLIDE 18, WHICH DISCLOSES THE FUNDED RATIO FOR APPEARS TO BE 20 SOME DIFFERENT FUNDS.
UH, THE DALLAS ERF IS AT 73%, THE HIGHEST IS 78%.
AND SO I'M CURIOUS HOW WE SHOULD LOOK AT THAT 73% FUNDED RATIO, IT SEEMS TO BE AT LEAST ABOVE THE MIDPOINT OF THE PAC.
WHY ARE ALL OF THESE FUNDS LESS THAN A HUNDRED PERCENT? SHOULD WE BE WORRIED ABOUT THAT? IS THAT QUESTION FOR ME? YES.
FIRST OF ALL, THAT WAS A DEFINED PEER GROUP.
WE PURPOSEFULLY PICKED UNDERFUNDED PENSION FUNDS OH, TO COMPARE THEM TO, 'CAUSE THEY MAY HAVE SIMILAR LIQUIDITY AND FUNDING NEEDS.
SO WOULD BE, IT DOESN'T MEAN THAT THERE AREN'T A HUNDRED PERCENT FUNDED GROUPS OUT THERE.
SO THERE'S ANOTHER COHORT THAT WOULD BE A HUNDRED PERCENT.
BUT AT LEAST THIS DISCLOSES THAT AMONGST, UH, MANY OTHER FUNDS WERE NOT THAT BAD OFF IN TERMS OF FUNDING PERCENTAGE.
ON PAGE 16, IT, IT SHOWS THE, UH, CRITERIA FOR COMING UP WITH THAT, UH, PEER GROUP.
AND THAT'S HOW WE CAME UP WITH IT.
UH, THIS WAS A SUGGESTION WE HAD IN VISITING WITH THE STAFF AT ERF AND SAY, HEY, CAN WE FIND A GROUP THAT'S A LITTLE MORE RELEVANT? OKAY.
AND, UH, MR. CHAIR, I WOULD MAKE THE SAME SUGGESTION IN TERMS OF, UH, REPORTING THAT THE ERF FUND ALSO PROVIDE QUARTERLY REPORTS TO THIS COMMITTEE, UM, SO THAT WE CAN ALSO, OR THIS COMMITTEE CAN ALSO REVIEW THEIR PERFORMANCE.
ANYTHING ELSE, ANYONE? I WAS JUST GONNA SAY HAPPY TO DO IT.
UH, WOULD IT BE OKAY IF WE JUST CLOSE WITH OUR NEXT STEPS JUST SO WE MAKE SURE THAT WE ARE MOVING FORWARD IN THE DIRECTION OF THIS BODY? YES, GO AHEAD.
SO AS YOU WILL RECALL, WE ARE CURRENTLY SCHEDULED TO GO BACK TO THE FULL CITY COUNCIL.
UH, WE HAVE A SEPTEMBER 11TH DATE THAT WE'RE PLANNING FOR THE APPROVAL OF THE PLAN.
JUST WANNA MAKE SURE THAT WE'RE STILL ON THE SAME PAGE WITH OUR DATES.
UM, WE DIDN'T TALK ABOUT NEXT STEPS, AND I KNOW IT'S NOT ON THE AGENDA.
I JUST WANNA MAKE SURE OUR DATE IS STILL THE SAME.
PARDON? UH, MS. BLACKMAN, IS THERE A REASON WHY 11TH AND WE CAN'T PUSH IT TO THE END OF THE MONTH? BECAUSE I DO THINK THE FULL COUNCIL NEEDS TO, TO HEAR THIS ON, WE DON'T HAVE THREE OF OUR COLLEAGUES THERE THAT ARE ON THIS COMMITTEE.
A FEW OTHERS, I, THEY WERE CHIMING IN, BUT I THINK THIS IS MORE DATA IS BETTER AND IF WE CAN PUSH IT FOR THE, UM, 25TH, BUT THAT, BUT IF NOT, THEN I GUESS THE 11TH.
BUT THIS, THIS DOES NEED TO COME TO FULL COUNSEL AND WE DO NEED TO BE WALKED THROUGH AND UNDERSTAND THE NUANCES OF WHAT THIS REPORT SAYS.
SO WHAT WE'LL DO IS, UM, WE'LL, WE'LL ADJOURN AND, AND I'LL GET WITH, UM, EVERYONE ON OUR COMMITTEE AND, AND WE'LL GET BACK YOU CITY MANAGER AND, AND SEE WHAT DATES THAT WE GONNA COME UP WITH.
ARE WE ADJOURNED? YES, WE ADJOURN.