05/18/2015Monday, May 18, 2015
1:00 PM
City of Clearwater
City Hall
112 S. Osceola Avenue
Clearwater, FL 33756
Pension Trustees
Meeting Agenda
May 18, 2015Pension Trustees Meeting Agenda
1. Call To Order
2. Approval of Minutes
2.1 Approve the minutes of the April 13, 2015 Pension Trustees meeting as
submitted in written summation by the City Clerk.
3. Citizens to be Heard Regarding Items Not on the Agenda
4. New Business Items
4.1 Approve the new hires for acceptance into the Pension Plan as listed.
4.2 Approve the following request of employees Christopher Cruickshank, Marine
and Aviation Department; Dorothee Morrow, Engineering Department;
Suzanne Sobkowiak, Police Department; Deborah Storey, Police Department;
and Rex Whittenberger, Solid Waste General Services Department for a
regular pension as provided by Sections 2.416 and 2.424 of the Employees’
Pension Plan.
4.3 Approve agreements hiring Intercontinental Real Estate Corporation and
USAA Real Estate Company as core plus real estate money managers for the
pension plan, and authorize the appropriate officials to execute same.
5. Adjourn
Page 2 City of Clearwater Printed on 5/13/2015
Cover Memo
City of Clearwater City Hall
112 S. Osceola Avenue
Clearwater, FL 33756
File Number: ID#15-1298
Agenda Date: 5/18/2015 Status: Agenda ReadyVersion: 1
File Type: MinutesIn Control: Pension Trustees
Agenda Number: 2.1
SUBJECT/RECOMMENDATION:
Approve the minutes of the April 13, 2015 Pension Trustees meeting as submitted in written
summation by the City Clerk.
SUMMARY:
APPROPRIATION CODE AND AMOUNT:
USE OF RESERVE FUNDS:
Page 1 City of Clearwater Printed on 5/13/2015
Pension Trustees Meeting Minutes April 13, 2015
City of Clearwater
City Hall
112 S. Osceola Avenue
Clearwater, FL 33756
Meeting Minutes
Monday, April 13, 2015
1:00 PM
Pension Trustees
Page 1 City of Clearwater Draft
Pension Trustees Meeting Minutes April 13, 2015
Roll Call
Present 5 - Chair George N. Cretekos, Trustee Doreen Hock-DiPolito, Trustee
Jay E. Polglaze, Trustee Bill Jonson, and Trustee Hoyt Hamilton
Also Present: Jill Silverboard – Assistant City Manager, Rod Irwin - Assistant City
Manager, Pamela K. Akin - City Attorney, Rosemarie Call - City Clerk,
Nicole Sprague - Official Records and Legislative Services Coordinator
To provide continuity for research, items are listed in agenda order although not necessarily
discussed in that order.
Unapproved
1. Call To Order – Chair Cretekos
The meeting was called to order at 1:25 p.m. at City Hall.
2. Approval of Minutes
2.1 Approve the minutes of the March 16, 2015 Pension Trustees meeting as submitted in
written summation by the City Clerk.
Trustee Jonson moved to approve the minutes of the March 16,
2015 Pension Trustees meeting as submitted in written summation
by the City Clerk. The motion was duly seconded and carried
unanimously.
3. Citizens to be Heard Regarding Items Not on the Agenda – None.
4. New Business Items
4.1 Approve the new hires for acceptance into the Pension Plan as listed.
Name, Job. Class, & Dept./Div. Pension
Elig. Date
Joseph Contreras, Recreation Leader, Parks and Recreation
Dept
1/26/2015
Natalie Lamb, Recreation Specialist Parks and Recreation
Dept
1/26/2015
Erin Marks, Librarian I, Library Dept 1/26/2015
Mark Smith, Stormwater Technician, Engineering Dept 1/26/2015
Kyle Aldrich, Parking Technician, Engineering Dept 2/9/2015* Page 2 City of Clearwater Draft
Pension Trustees Meeting Minutes April 13, 2015 Brandon Fletcher, Solid Waste Worker, Solid Waste Dept 2/9/2015**
Kyle Harter, Water Plant Operator C, Public Utilities Dept 2/9/2015
Belinda Nichol, Customer Service Rep, Customer Service Dept 2/9/2015
Kristen Parete, Legal Staff Assistant, Legal Dept 2/2/2015
Brandi Portalatin, Solid Waste Worker, Solid Waste Dept 2/9/2015***
Linda Rothstein, Librarian III, Library Dept 2/9/2015
John Toston, Parks Service Technician I, Parks and Recreation Dept 2/9/2015
Jonathan Hurt, Police Cadet, Police Dept 2/21/2015
Erik Jordan, Water Plant Operator Trainee, Public Utilities Dept 2/23/2015
Scot MacDonald, Radio Manager, General Services Dept 2/23/2015
* Kyle Aldrich was hired into a part time position on 05/6/2013, and transferred to a full-time permanent position as of 2/9/2015; he will be eligible for pension as of
2/9/2015.
** Brandon Fletcher was hired into a temporary position on 11/17/14, and transferred to a full-time permanent position as of 2/9/2015; he will be eligible for pension as of 2/9/2015. *** Brandi Portalatin was previously employed with the City of Clearwater, resigned effective 08/14/2014, rescinded resignation and was rehired 2/9/2015; she will be eligible for pension as of 2/9/2015.
Trustee Hock-DiPolito moved to approve the new hires for
acceptance into the Pension Plan as listed. The motion was duly
seconded and carried unanimously.
4.2 Approve the following request of Karen Maldonado, Engineering Department, to vest
her pension as provided by Section 2.419 of the Employees’ Pension Plan.
Karen Maldonado, Construction Office Specialist, Engineering Department,
was employed by the City on June 5, 2004 and began participating in the
Pension Plan on that date. Ms. Maldonado terminated from city employment
on February 21, 2015.
The Employees’ Pension Plan provides that should an employee cease to be
an employee of the City of Clearwater or change status from full-time to
part-time after completing ten or more years of creditable service (pension
participation), such employee shall acquire a vested interest in the retirement
benefits. Vested pension payments commence on the first of the month
following the month in which the employee normally would have been eligible
Page 3 City of Clearwater Draft
Pension Trustees Meeting Minutes April 13, 2015
for retirement.
Section 2.416 provides for normal retirement eligibility for non-hazardous duty
employees hired prior to the effective date of this reinstatement (January 1,
2013), a member shall be eligible for retirement following the earlier of the date
on which a participant has reached the age of fifty-five years and completed
twenty years of credited service; the date on which a participant has reached
age sixty-five years and completed ten years of credited service; or the date on
which a member has completed thirty years of service regardless of age. For
non-hazardous duty employees hired on or after the effective date of this
restatement, a member shall be eligible for retirement following the earlier of
the date on which a participant has reached the age of sixty years and
completed twenty-five years of credited service; or the date on which a
participant has reached the age of sixty-five years and completed ten years of
credited service. Ms. Maldonado will meet the non-hazardous duty criteria and
begin collecting a pension in March 2031.
Trustee Polglaze moved to approve the following request of Karen
Maldonado, Engineering Department, to vest her pension as
provided by Section 2.419 of the Employees’ Pension Plan. The
motion was duly seconded and carried unanimously.
4.3 Approve the following request of employees Etheridge Hall, Police Department;
Marianna Mallon, Police Department, and Leonard Rickard, Fire Department, for a
regular pension as provided by Sections 2.416 and 2.424 of the Employees’ Pension
Plan.
Etheridge Hall, Police Sergeant, Police Department, was employed by the City
on April 5, 1993, and his pension service credit is effective on that date. His
pension will be effective April 1, 2015. Based on an average salary of
approximately $91,217.61 over the past five years, the formula for computing
regular pensions and Mr. Hall’s selection of the Single Life Annuity, this
pension benefit will be approximately $58,583.28 annually.
Marianna Mallon, Police Service Technician, Police Department, was employed
by the City on June 13, 1984, and her pension service credit is effective on that
date. Her pension will be effective March 1, 2015. Based on an average salary
of approximately $52,568.79 over the past five years, the formula for
computing regular pensions and Ms. Mallon’s selection of the Single Life
Annuity, this pension benefit will be approximately $44,389.20 annually.
Leonard Rickard, Assistant Fire Marshal, Fire Department, was employed by
Page 4 City of Clearwater Draft
Pension Trustees Meeting Minutes April 13, 2015
the City on July 25, 2005, and his pension service credit is effective on that
date. His pension will be effective August 1, 2015. Based on an average
salary of approximately $71,913.72 over the past five years, the formula for
computing regular pensions and Mr. Rickard’s selection of the 75% Joint and
Survivor Annuity with a 30% partial lump sum distribution, this pension benefit
will be approximately $13,892.28 annually.
Section 2.416 provides for normal retirement eligibility for non-hazardous duty
employees hired prior to the effective date of this reinstatement (January 1,
2013), a member shall be eligible for retirement following the earlier of the date
on which a participant has reached the age of fifty-five years and completed
twenty years of credited service; the date on which a participant has reached
age sixty-five years and completed ten years of credited service; or the date on
which a member has completed thirty years of service regardless of age. For
non-hazardous duty employees hired on or after the effective date of this
restatement, a member shall be eligible for retirement following the earlier of
the date on which a participant has reached the age of sixty years and
completed twenty-five years of credited service; or the date on which a
participant has reached the age of sixty-five years and completed ten years of
credited service. Ms. Mallon has met the non-hazardous duty criteria.
Section 2.416 provides for normal retirement eligibility for hazardous duty
employees, a member shall be eligible for retirement following the earlier of the
date on which the participant has completed twenty years of credited service
regardless of age, or the date on which the participant has reached fifty-five
years and completed ten years of credited service. Mr. Hall and Mr. Rickard
have met the hazardous duty criteria.
Trustee Hamilton moved to approve the following request of
employe es Etheridge Hall, Police Department; Marianna Mallon,
Police Department, and Leonard Rickard, Fire Department, for a
regular pension as provided by Sections 2.416 and 2.424 of the
Employees’ Pension Plan. The motion was duly seconded and
carried unanimously.
4.4 Determine Trustees’ expected rate of return for the pension plan’s investment for the
current year, for each of the next several years, and for the long term thereafter.
Florida Statutes 112.661(9) requires an annual determination of expected rates
of return be filed with the Florida Department of Management Services, with
the plan’s sponsor, and with the consulting actuary.
Staff is recommending the current plan investment rate of return assumption of
Page 5 City of Clearwater Draft
Pension Trustees Meeting Minutes April 13, 2015
7.0%, net of investment-related fees, as the expected annual rate of return for
the current year, for each of the next several years, and for the long term
thereafter.
Trustee Hock-DiPolito moved to Determine Trustees’ expected rate
of return for the pension plan’s investment for the current year, for
each of the next several years, and for the long term thereafter. The
motion was duly seconded and carried unanimously.
4.5 Accept the January 1, 2015 Annual Actuarial Valuation for the Employees’ Pension
Plan.
Per the actuary report dated January 1, 2015, a minimum city employer
contribution of $8.8 million, or 11.66% of covered payroll, is required for fiscal
year 2016. This is a decrease of $2.0 million over the fiscal 2015 required
contribution of $10.8 million, or 14.53% of covered payroll.
The net decrease in the required contribution of $2.0 million versus the prior
year is primarily due to investment earnings experience, partially offset by the
increase in contributions resulting from the change in the actuarial cost method
from frozen entry age to entry age normal.
The calendar year 2014 investment return was 7.99% net of investment fees,
versus the assumed rate of 7.0%. The “five-year smoothed” investment return
based on the actuarial value of the assets was 11.04% versus the assumed
rate of 7.0%. Calendar 2010 thru 2014 investment returns were 17.50%,
(0.32%), 13.92%, 16.90% and 7.99%, respectively.
Additional actuarial experience gain occurred due to actual salary increases of
3.38% versus expected 4.04%, and fewer retirements than expected (45 actual
versus 51 expected).
The Plan's funded ratio is 101.89% (including the credit balance) versus
97.05% for the prior year, based on the Entry Age Normal funding method. The
Actuarial Value of Assets exceeds the Market Value of Assets by $57.2 million
as of January 1, 2015.
The plan's credit balance, which reflects actual contributions in excess of
actuarially required contributions for prior years, increased from $5,390,884 to
$10,381,518 during calendar 2014. This $5.0 million increase was due to the
City’s intentional overfunding of fiscal 2014’s contribution. The City contributed
approximately 20% of salaries, versus the actuarially required 14.53%, in order Page 6 City of Clearwater Draft
Pension Trustees Meeting Minutes April 13, 2015
to increase the plan’s credit balance reserves for future volatility in required
contributions.
The Employees’ Pension Plan is highly leveraged on investment returns in
comparison to most pension plans, which means changes in investment
earnings cause significant increases or decreases in required employer
contributions. This year-to-year volatility necessitates building reserves, such
as the plan’s credit balance, during periods of positive investment earnings
experience. This provides the City the ability to subsidize increased employer
contributions during periods of negative investment earnings experience with
contributions from accumulated reserves.
Gabriel Roeder Smith Actuary Pete Strong reviewed the actuarial
valuation results. He said the contribution requirement decreased by
approximately $2 million and the credit balance is currently $10.38 million.
There was a funding methodology change this year to Entry Age Normal
(EAN). The funding method has been implemented in this year's valuation,
causing the pension plan to be fully funded.
In response to a concern, the City Clerk said she has been working with
Human Resources Director Joseph Roseto regarding proposed state
legislation that would require a less conservative mortality table and
providing the actuary's feedback to the City's state lobbyists. Mr. Smith
said the proposed legislation should provide a minimum mortality
requirement, allowing municipalities to use a more conservative mortality
table. Clearwater's plan already uses a more conservative mortality
table.
Trustee Jonson moved to accept the January 1, 2015 Annual
Actuarial Valuation for the Employees’ Pension Plan. The motion
was duly seconded and carried unanimously.
4.6 Annual review of the Employees’ Pension Plan investment performance for the
calendar and plan year ended December 31, 2014.
This is the annual presentation on the investment performance of the
Employees’ Pension Plan for calendar and plan year ended December 31,
2014.
For the last calendar year, the plan had a return of 8.24%, versus a customized
benchmark of 9.91%, placing the plan in the 12th percentile of public pension
plans per the Wilshire Public Plan Sponsor Universe.
Page 7 City of Clearwater Draft
Pension Trustees Meeting Minutes April 13, 2015
For the last three calendar year period, the plan had an annualized return of
13.27% versus a benchmark of 12.55%, placing the plan in the 15th percentile
of public plans for that period.
There were no changes in money managers during calendar 2014. The
Pension Investment Committee will be proposing hiring of two new Core Plus
real estate managers at the May Trustees meeting.
A number of managers underperformed their indexes during calendar 2014,
and their performance is being monitored closely.
Finance Director Jay Ravins provided a PowerPoint presentation.
5. Adjourn
The meeting adjourned at 1:54 p.m.
Chair
Employees’ Pension Plan Trustees
Attest
City Clerk
Page 8 City of Clearwater Draft
BLANK INTENTIONALLY
Cover Memo
City of Clearwater City Hall
112 S. Osceola Avenue
Clearwater, FL 33756
File Number: ID#15-1182
Agenda Date: 5/18/2015 Status: Agenda ReadyVersion: 3
File Type: Action ItemIn Control: Pension Trustees
Agenda Number: 4.1
SUBJECT/RECOMMENDATION:
Approve the new hires for acceptance into the Pension Plan as listed.
SUMMARY:
Pension
Name, Job. Class, & Dept./Div .Elig. Date
Jessica Turner, Accounting Technician, Parks and Recreation Dept 3/07/2015 *
Wayne Johnson, Utilities Mechanic, Public Utilities Department 3/09/2015
Joshua Jones, Recreation Leader, Parks and Recreation Department 3/09/2015 **
William Baratta, Solid Waste Equipment Operator, Solid Waste Dept 3/23/2015
Matthew Hess, Beach Lifeguard, Parks and Recreation Department 3/23/2015 ***
Kathleen Holden, Crime Analyst, Police Department 3/23/2015
Jose Patino, Public Information Specialist, Public Communications Dept 3/23/2015
Susan Pryor, Customer Service Rep, Planning and Development Dept 3/23/2015 ****
Eric Rau, Parks Service Technician I, Parks and Recreation Dept 3/23/2015
* Jessica Turner was employed in a temporary / Event Support Staff assignment from
06/24/2006 to 11/02/2013, and another temporary assignment from 01/06/2015 to 03/07/2015.
She was hired into a full time position as of 03/07/2015 and will be eligible for pension as of
03/07/2015.
** Joshua Jones was employed in a temporary assignment from 8/11/2014 to 03/09/2015, and
then hired into a full time position as of 03/09/2015. He will be eligible for pension as of
03/09/2015.
*** Matthew Hess was hired as a seasonal employee from 04/08/1995 to 6/16/2001, from
6/16/2001 to10/6/2001, and from 06/02/2014 to 1/13/2015. He was hired into a full time
position as of 03/23/2015 and will be eligible for pension as of 03/23/2015.
**** Susan Pryor was hired into a part time position on 02/23/2015, and transferred to a
full-time permanent position as of 3/23/2015; she will be eligible for pension as of 3/23//2015.
APPROPRIATION CODE AND AMOUNT:
N/A
USE OF RESERVE FUNDS:
Page 1 City of Clearwater Printed on 5/13/2015
File Number: ID#15-1182
N/A
Page 2 City of Clearwater Printed on 5/13/2015
Cover Memo
City of Clearwater City Hall
112 S. Osceola Avenue
Clearwater, FL 33756
File Number: ID#15-1183
Agenda Date: 5/18/2015 Status: Agenda ReadyVersion: 2
File Type: Action ItemIn Control: Pension Trustees
Agenda Number: 4.2
SUBJECT/RECOMMENDATION:
Approve the following request of employees Christopher Cruickshank, Marine and Aviation
Department; Dorothee Morrow, Engineering Department; Suzanne Sobkowiak, Police
Department; Deborah Storey, Police Department; and Rex Whittenberger, Solid Waste
General Services Department for a regular pension as provided by Sections 2.416 and 2.424
of the Employees’ Pension Plan.
SUMMARY:
Christopher Cruickshank, Marine Supervisor, Marine and Aviation Department, was employed
by the City on January 11, 1988, and his pension service credit is effective on that date. His
pension will be effective May 1, 2015. Based on an average salary of approximately
$54,943.16 over the past five years, the formula for computing regular pensions and Mr .
Cruickshank’s selection of the 75% Joint and Survivor Annuity, this pension benefit will be
approximately $41,240.88annually.
Dorothee Morrow, Traffic Engineering Assistant, Engineering Department, was employed by
the City on June 27, 1994, and her pension service credit is effective on that date. Her
pension will be effective May 1, 2015. Based on an average salary of approximately
$40,511.88 over the past five years, the formula for computing regular pensions and Ms .
Morrow’s selection of the Single Life Annuity, this pension benefit will be approximately
$23,222.28 annually.
Suzanne Sobkowiak, Police Office Specialist, Police Department, was employed by the City
on January 5, 1998, and her pension service credit is effective on that date. Her pension will
be effective June 1, 2015. Based on an average salary of approximately $33,299.75 over the
past five years, the formula for computing regular pensions and Ms. Sobkowiak’s selection of
the 75% Joint and Survivor Annuity, this pension benefit will be approximately $14,328.84
annually.
Deborah Storey, Police Property Clerk, Police Department, was employed by the City on
February 1, 1988, and her pension service credit is effective on that date. Her pension will be
effective May 1, 2015. Based on an average salary of approximately $37,219.34 over the past
five years, the formula for computing regular pensions and Ms. Storey’s selection of the Single
Life Annuity, this pension benefit will be approximately $27,891.24 annually.
Rex Whittenberger, Fleet Mechanic Supervisor, Solid Waste General Services Department,
was employed by the City on March 21, 1987, and his pension service credit is effective on
that date. His pension will be effective April 1, 2015. Based on an average salary of
Page 1 City of Clearwater Printed on 5/13/2015
File Number: ID#15-1183
approximately $77,464.91 over the past five years, the formula for computing regular pensions
and Mr. Whittenberger’s selection of the 50% Joint and Survivor Annuity, this pension benefit
will be approximately $62,636.76 annually.
Section 2.416 provides for normal retirement eligibility for non -hazardous duty employees
hired prior to the effective date of this reinstatement (January 1, 2013), a member shall be
eligible for retirement following the earlier of the date on which a participant has reached the
age of fifty-five years and completed twenty years of credited service; the date on which a
participant has reached age sixty -five years and completed ten years of credited service; or
the date on which a member has completed thirty years of service regardless of age. For
non-hazardous duty employees hired on or after the effective date of this restatement, a
member shall be eligible for retirement following the earlier of the date on which a participant
has reached the age of sixty years and completed twenty -five years of credited service; or the
date on which a participant has reached the age of sixty -five years and completed ten years of
credited service. Mr. Cruickshank, Ms. Morrow, Ms. Sobkowiak, Ms. Storey and Mr .
Whittenberger have all met the non-hazardous duty criteria.
Section 2.416 provides for normal retirement eligibility for hazardous duty employees, a
member shall be eligible for retirement following the earlier of the date on which the participant
has completed twenty years of credited service regardless of age, or the date on which the
participant has reached fifty-five years and completed ten years of credited service.
APPROPRIATION CODE AND AMOUNT:
N/A
USE OF RESERVE FUNDS:
N/A
Page 2 City of Clearwater Printed on 5/13/2015
Cover Memo
City of Clearwater City Hall
112 S. Osceola Avenue
Clearwater, FL 33756
File Number: ID#15-1283
Agenda Date: 5/18/2015 Status: Agenda ReadyVersion: 1
File Type: Action ItemIn Control: Pension Trustees
Agenda Number: 4.3
SUBJECT/RECOMMENDATION:
Approve agreements hiring Intercontinental Real Estate Corporation and USAA Real Estate
Company as core plus real estate money managers for the pension plan, and authorize the
appropriate officials to execute same.
SUMMARY:
The plan’s investment committee conducted a manager search for core plus real estate
money managers to further diversify the portfolio and reduce volatility of investment returns.
The committee chose two core plus real estate money managers, with contrasting investment
strategies, for recommendation to the Trustees: Intercontinental Real Estate Corporation and
USAA Real Estate Company.
Intercontinental Real Estate Corporation offers an investment product, U .S. Real Estate
Investment Fund, LLC (US REIF), investing in a balanced portfolio of geographically
diversified North American yield driven property assets, including office buildings, multifamily,
retail, industrial, senior living, healthcare, and student housing. Investments targeted are those
that provide stable and predictable cash flow with an opportunity for capital appreciation.
USAA Real Estate Company offers an investment product, US Government Building Fund,
investing in a diversified portfolio of high quality core government leased office and industrial
properties located in major U .S. markets, with an emphasis in the mid -Atlantic region including
Washington, D.C., Virginia, and Maryland. Investments targeted are those with stable and
reliable cash flows from mission critical governmental tenants that will limit downside risk
associated with real estate cycles.
Management fees for Intercontinental ’s US REIF fund are 1.1% on the first $25 million under
management, plus a performance based fee of 20% of the total return in excess of 8%. Fees
for USAA’s US Government Building Fund are 1.25% of the first $10 million under
management, and 1.10% on the next $15 million.
The pension plan’s investment committee is recommending an allocation of $10 million to
each of the money managers. The monies would be transferred from the plan ’s REIT’s real
estate manager, who currently has an allocation of approximately $50 million.
The plan’s pension attorney, Stu Kaufman with Klausner, Kaufman, Jensen and Levinson, has
reviewed the attached agreements and his recommended changes have been incorporated.
Page 1 City of Clearwater Printed on 5/13/2015
ACTIVE/81745379.5
US GOVERNMENT BUILDING OPEN-END FEEDER 1, LP
USAA REAL ESTATE COMPANY
9830 Colonnade Boulevard, Suite 600
San Antonio, TX 78230-2239
May 18, 2015
City of Clearwater
Employees’ Pension Fund
P.O. Box 4748
Clearwater, FL 33758-4748
Re: $10,000,000 Investment in US Government Building Open-End Feeder 1, LP (the
“Partnership”)
Ladies and Gentlemen:
This letter agreement (this “Letter Agreement”) confirms our understanding with
respect to certain matters relating to an investment by the City of Clearwater Employees’
Pension Fund (the “Investor”) in the Partnership. Capitalized terms used in this Letter
Agreement and not otherwise defined herein shall have the respective meanings ascribed
to them in the Amended and Restated Limited Partnership Agreement of the Partnership
dated December 18, 2014 (as amended from time to time, the “Partnership
Agreement”) or the Subscription Agreement (“Subscription Agreement”) dated May
18, 2015, as applicable. In consideration of the Capital Commitment made by the
Investor, the Investor and the General Partner, individually and on behalf of the
Partnership, agree as follows:
1. Initial Disclosure of Terms Agreements. On or before the date that is 60 days
following the execution and delivery of this Letter Agreement , the Partnership
and the General Partner shall (a) disclose to the Investor in writing the material
terms of each side letter or similar agreement, subscription agreement and limited
partnership agreement or limited liability company agreement and any
amendments to any of the foregoing (each, a “Terms Agreement”) entered into
on or prior to the date hereof by the General Partner, the Partnership, the Fund
Manager, each other Feeder or Feeder Fund, any Parallel Fund, or the general
partner or investment manager of any of them (each, an “MFN Person”) that then
remains in effect, with any investor (an “Equivalent Investor”) whose Aggregate
Committed Investment is equal to or less than the combined total Aggregate
Committed Investment of the Investor and, except as provided in paragraph 3,
shall offer to the Investor the opportunity to elect, by written notice to the General
Partner within 30 days after such disclosure, to include such terms in this Letter
Agreement and thereby make such terms applicable to the Investor’s interest in
the Partnership.
2
ACTIVE/81745379.5
“Aggregate Committed Investment” means, with respect to any Person, their
Capital Commitment to the Partnership, any other Feeder, any Feeder Fund or any
Parallel Fund.
2. Right to Elect Additional Terms. If, at any time on or after the date on which
disclosure would be required by paragraph 1, any MFN Person enters into any
Terms Agreement with an Equivalent Investor containing terms that are more
favorable in any material respect to the such Equivalent Investor than the rights
granted to the Investor pursuant to this Letter Agreement, then, except as provided
in paragraph 3, the General Partner shall (i) promptly disclose such terms to the
Investor in writing and (ii) offer to the Investor the opportunity to elect to include
such terms in this Letter Agreement and thereby make such terms applicable to
the Investor’s interest in the Partnership by written notice to the General Partner
within 30 days after such disclosure under this paragraph 2.
3. Limitation on Investor’s Rights. The Investor’s rights under paragraphs 1 and 2
shall not apply to (i) terms of other Feeders, Feeder Funds, and Parallel Funds that
are attributable to the differences in the tax or regulatory compliance objectives
between the Partnership and such other Feeder, Feeder Fund, or Parallel Fund, (ii)
rights to make future capital contributions, (iii) agreements regarding Advisory
Committee membership, (iv) terms attributable to any Limited Partner that is
Sponsor Affiliate or an employee or direct or indirect investor in a Sponsor
Affiliate, (v) agreements relating to tax, regulatory or other legal issues that are
applicable to particular investors or types of investors and not to the Investor, (vi)
agreements with Existing Investors and (vi) agreements relating to the settlement
of bona fide disputes or defaults. The Investor may not elect particular economic
terms or benefits made available to an Equivalent Investor unless the Investor
elects the entire collection of economic terms applicable to the Equivalent
Investor and forgoes any economic terms otherwise available to the Investor,
including without limitation, those set forth in this Letter Agreement. “Existing
Investor” means each member (or affiliate thereof) of US Government Building
Fund, LLC, a Delaware limited liability company, prior to July 1, 2012.
4. Representations and Warranties of the General Partner. The General Partner
represents and warrants to the Investor as of the date hereof as follows:
a. The Partnership is a limited partnership duly formed, validly existing and
in good standing under the Act, and has the partnership power and
authority to execute and deliver the Investor’s Subscription Agreement
and this Letter Agreement. The General Partner is a limited liability
company duly formed, validly existing and in good standing under the
Delaware Limited Liability Company Act, and has the power and
authority to execute and deliver the Partnership Agreement, this Letter
Agreement and to perform its obligations thereunder. Each of the
Partnership and the General Partner is duly qualified under the laws of
each jurisdiction where its ownership, lease or operation of property or the
3
ACTIVE/81745379.5
conduct of its business requires such qualification, except where the
failure to so qualify would not have a material adverse effect on its
activities or properties.
b. To the knowledge of the General Partner, the execution, delivery and
performance of each of the Partnership Agreement, the Investor’s
Subscription Agreement, this Letter Agreement or any agreement related
thereto by the General Partner of its obligations thereunder do not result in
the breach of any agreement to which the General Partner is a party;
c. The General Partner has full authority to enter into this Letter Agreement
on behalf of itself and the Partnership, and this Letter Agreement is
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency, moratorium, or other similar law affecting the
enforcement of creditor’s rights generally and general principles of equity,
and is and shall be enforceable against any future general partner of the
Partnership;
d. To the knowledge of the General Partner, that neither the execution and
delivery of, nor performance of the obligations under, the Partnership
Agreement, the Subscription Agreement, this Letter Agreement or the
Management Agreement, as applicable, by the General Partner materially
violates any statute, regulation, order, writ, injunction, judgment or decree
to which the General Partner is subject; and
e. There is no legal action, suit or arbitration or other legal, administrative or
governmental investigation, proceeding or inquiry pending, or to the
knowledge of the General Partner, threatened against the properties or
assets of the General Partner or the Partnership , that might reasonably be
expected to have a material adverse affect on the Partnership or the
General Partner’s ability to perform its obligations with respect to the
Partnership.
5. Insurance. Throughout the term of this Letter Agreement, the General Partner
shall cause the Partnership to maintain or cause to be maintained in full force and
effect the following insurance covering its activities, the activities of the General
Partner on its behalf, and the activities of the Advisory Board (i) errors and
omissions/professional liability insurance with coverage limits of at least
$5,000,000; and (ii) crime coverage insurance with coverage limits of at least
$10,000,000; provided, in each case, that such insurance coverage is available on
commercially reasonable terms. The General Partner shall use its commercially
reasonable efforts to provide prompt written notice to the Investor of any material
reduction in the coverage limits or insurance providers described in (i) or (ii)
above.
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6. Florida-Specific Provisions.
a. Public Entity Crimes Notice. The Investor represents to the General
Partner, and the General Partner acknowledges, that a person or affiliate
who has been placed on the State of Florida Convicted Vendor List (the
“Convicted Vendor List”), following a conviction for a public entity
crime, may not (i) submit a bid on a contract to provide any goods or
services to a public entity, (ii) submit a bid on a contract with a public
entity for the construction or repair of a public building or public work,
(iii) submit bids on leases of real property to a public entity, (iv) be
awarded or perform work as a contractor, supplier, sub-consultant, or
consultant under a contract with any public entity, and (v) transact
business with any public entity, in excess of $25,000.00, for a period of
thirty-six (36) months from the date of being placed on the Convicted
Vendor List.
b. Non-Discrimination Policy. The General Partner represents and warrants
to the Investor that the General Partner has adopted and will maintain a
policy of non discrimination against employees or applicants for
employment on account of race, religion, sex, color, national origin, age or
handicap, in all areas of employment relations, throughout the term of this
Letter Agreement.
7. Miscellaneous.
a. Entire Agreement. This Letter Agreement, together with the Subscription
Agreement and the Partnership Agreement, constitute the entire agreement
among the parties hereto with respect to the subject matter hereof or
thereof, and supersede any prior agreement or understanding among the
parties hereto with respect to the subject matter hereof or thereof. In the
event of a conflict between the provisions of this Letter Agreement, the
Subscription Agreement and the Partnership Agreement, the provisions of
this Letter Agreement shall, to the fullest extent of applicable law, control.
This Letter Agreement shall survive delivery of fully executed originals of
the Partnership Agreement and Subscription Agreement, and the
Investor’s admission to the Partnership as a limited partner.
b. Severability. In case any one or more of the provisions contained in this
Letter Agreement or any application thereof shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and other application thereof
shall not in any way be affected or impaired thereby.
c. Amendments and Waivers. This Letter Agreement may not be modified
or amended or the rights of any party hereunder waived unless such
modification, amendment or waiver is effected by a written instrument
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expressly modifying, amending or waiving this Letter Agreement or the
rights of a party hereunder, which instrument is executed by all parties.
d. Third-Party Rights. Nothing in this Letter Agreement shall be deemed to
create any right in any person not a party hereto (other than the permitted
successors and assigns of a party hereto) and this Letter Agreement shall
not be construed in any respect to be a contract in whole or in part for the
benefit of any third party (except as aforesaid).
e. Notices. Any notices required hereunder shall be in writing and shall be
given in accordance with the provisions of the Partnership Agreement.
f. Successors; Effectiveness. This Letter Agreement will be binding upon,
and inure to the benefit of, the respective permitted successors, assigns
and transferees of the parties hereto. This Letter Agreement shall remain
in effect only for so long as the Investor remains a Limited Partner of the
Partnership and is not default of its obligations under the Partnership
Agreement. The obligations of the General Partner under this Letter
Agreement shall terminate in the event it is no longer the general partner
of the Partnership. Any successor of the General Partner as general
partner of the Partnership shall be bound by this Letter Agreement.
g. Counterparts. This Letter Agreement may be executed in counterparts
(whether original, electronic or facsimile counterparts), each of which
shall be deemed an original and which together shall constitute one and
the same instrument.
h. Governing Law and Venue. This Letter Agreement shall be governed by,
and interpreted and enforced in accordance with, the laws of the state of
Delaware without giving effect to the principles, policies or provisions
relating to choice or conflict of laws, except to the extent the terms hereof
expressly require interpretation or enforcement of a law, regulation or
public policy of the State of Florida, in which case the laws of the State of
Florida, as applicable shall govern. In consideration of the Investor’s
status as an agency of the State of Florida, notwithstanding anything to the
contrary in the Partnership Agreement or the Investor’s Subscription
Agreement, as to the Investor, courts within the State of Delaware,
whether state or federal, shall not be the exclusive venue for disputes
arising, directly or indirectly, under or in connection with this Letter
Agreement or any dispute solely among the parties to this Letter
Agreement in connection with the Subscription Agreement of the Investor,
the Partnership Agreement and any amendments thereto.
If this Letter Agreement correctly sets forth our understanding and agreement
with respect to the matters addressed herein, please so confirm by executing this Letter
Agreement in the space provided below.
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US Government Building Open-End Feeder 1, LP – City of Clearwater Side Letter Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Letter Agreement to be executed
as of the day and year first above written:
US Government Building Open-End Feeder 1, LP,
a Delaware limited partnership
By: US Government Building GP, LLC, its sole general partner
By: USAA Equity Advisors, Inc., its sole member
By:
Name:
Title:
US Government Building GP, LLC, a Delaware limited liability company
By: USAA Equity Advisors, Inc., its sole member
By:
Name:
Title:
Acknowledged and agreed as of the date first written above:
Board of Trustees of the City of Clearwater
Employees’ Pension Fund
By:___________________________
Name: George N. Cretekos
Title: Chairperson
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