GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM OF THE VIRGIN ISLANDS REGULAR MEETING OF THE BOARD OF TRUSTEES St. Thomas/St. Croix via Zoom Thursday, March 23, 2023 9:30 am ** AGENDA ** I. Call to Order II. Roll Call III. Comments and Suggestions from Retirees IV. Comments and Suggestions from Active Members V. Secretary’s Minutes (Regular: 2/23/23; Special: 3/2/23) VI. Communications and Correspondences VII. Chairperson’s Report VIII. Administrator’s Report IX. Committee Reports X. Treasurer’s Report XI. Investment Officer’s Report XII. EXECUTIVE SESSION This portion of the meeting will be closed to the public for matters pertaining to trade secrets / or financial or commercial information/ or personal/ or legal matters; or matters whose premature disclosure will frustrate the implementation of the proposed agency action. A. New Business (i). N Coley Contract XIII. Privileges of the Floor XIV. Adjournment GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING March 23, 2023 1 The Regular Meeting of the Board of Trustees for March 23, 2023, was called to order at 9:32am. The meeting was held via Zoom. At roll call, Trustees present were Bowry, Dorsey, Liger, Russell, and Callwood. Trustees not present were Smith and McDonald. A quorum was established with 5 voting Trustees present. Ex-Officio member Cindy Richardson submitted a letter dated March 23, 2023, requesting to be excused. Trustee Smith joined the meeting after the roll call. Staff in attendance: Austin Nibbs, Administrator, Cathy Smith, General Counsel, Ishmael Meyers, Deputy General Counsel, Denise Jeremiah, Chief Financial Officer, Asiah Clendinen Gumbs, COO, Glenville Henderson, Investment Analyst, Sakeeda Figueroa, Communication and Member Education Specialist, LeSean Moses, IT, Zaida Castro, Executive Assistant to the Administrator, Nikia Coley, Administrative Assistant to the Board of Trustees, Roy Moorehead, Chief Security Officer-Havensight Mall, and Ucilla Austrie, Accounting Coordinator. Also, present in the meeting Board Counsel, Pedro K. Williams and Kelsha Williams of the Williams & Williams Law firm. The stenographer Desire Hill was in attendance via zoom. Comments and Suggestions from Retirees No Comments from Retirees. Comments and Suggestions from Active Members No Comments from Active Members. Secretary’s Minutes (Regular 2/23/2023; Special: 3/02/2023) A motion was made by Trustee Liger and seconded by Trustee Dorsey to approve the February 23, 2023, Regular Board meeting minutes. The motion passed with 4 Yes (Bowry, Dorsey, Liger, Callwood), and 3 Absent (McDonald, Russell, and Smith) A motion was made by Trustee Liger and seconded by Trustee Dorsey to approve the March 2, 2023, Special Board meeting minutes. The motion passed with 3 Yes (Bowry, Liger, and Callwood), 2 Not Voting (Dorsey and Russell), and 2 Absent (Smith and McDonald). Communications and Correspondences None GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING March 23, 2023 2 Chairman’s Report Chairman Callwood reported: He met with WAPA and WICO representatives along with GERS’ Senior Staff on March 9th regarding matters to Havensight Mall. On March 13th, along with GERS’ Senior Staff met with Governor Bryan to discuss Havensight Mall issues. Information that was discussed will be shared with the Trustees in the Executive Session. Administrator’s Report Meetings, Presentations, and Appearances February 28 Meeting with Legal to discuss Bill No. 35-0004. March 2 Havensight Mall Oversight Committee (HMOC) meeting to review responses to the RFQ – Strategic and Infrastructure Plan. 6/7 Met with Legal and attended hearing regarding a retirees board appeal case. 8 Special HMOC meeting to continue review of responses to RFQ - Strategic and Infrastructure Plan. 9 Meeting with WAPA and WICO to discuss water line losses at Havensight Mall. 13 Meeting with Governor Bryan Re: Havensight Mall issues. 14 Meeting with DPNR regarding water distribution system at Havensight Mall. 15 Special HMOC meeting for presentation by respondent to the RFQ - Strategic and Infrastructure Plan. 16 Meeting with BoltNagi (Corporate Attorney) regarding the dissolution of Carambola Northwest LLC. Meeting with GAO representatives. 17 HMOC monthly meeting. GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING March 23, 2023 3 Attended the Development Committee meeting. Member Services Retirement Applications - as of March 10, 2023 2015 2016 2017 2018 2019 2020 2021 2022 2023 Total STX 147 111 118 177 143 114 164 143 31 STT 147 164 127 224 172 126 179 182 15 Total 294 275 245 401 315 240 343 325 46 Processed 293 275 245 401 315 239 340 239 0 Remaining 1 0 0 0 0 1 3 86 46 137* % Completed 99% 100% 100% 100% 100% 99% 99% 74% 0% Compliance and Control - Contribution Processing October 1, 2022 – February 28, 2023 Refunds No. Cases Total No. of Cases Completed Amount Pending Regular 213 $3,935,958.93 19 Erroneous 14 6,346.96 2 Employer Share 3 21,693.66 5 Overpayment 174 444,479.08 11 Total 404 $4,408,478.63 37 Death Benefits No. Completed Amount No. of Cases Types 10/1/22-02/28/2023 10/1/22-02/28/2023 Pending Active 11 $ 539,814.21 26 Retired 4 300,879.52 5 Total 15 $ 840,693.73 31 GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING March 23, 2023 4 Accounting Department Annuity Payments Number of retirees as of March 15, 2023, payroll: 8,763 Cumulative amount paid from October 1, 2022 – March 15, 2023 Number of retirees added to the payroll from October 1, 2022 – March 15, 2023. 177 Number of retirees added to the payroll for the March 15, 2023, pay date. 23 Number of retirees expected to be placed on payroll for March 30, 2023 pay date:28 Number of retirees deleted from the payroll from October 1, 2022, through March 15, 2023: 147 Note: The Gross Retiree Payroll for 3/15/23 was $11,056,909.10 GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING March 23, 2023 5 LOAN PORTFOLIO FOR THE MONTH ENDING FEBRUARY 28, 2023 PERSONAL LOANS Total STT/STJ STX Active Personal Loans 493 283 210 Retiree Personal Loans 473 266 207 966 549 417 MORTGAGES Construction/Home Improvement 18 10 8 Land 16 14 2 Purchase/Refinance 22 17 5 Totals 56 41 15 TOTAL LOANS & MORTGAGES 1,022 590 432 TOTAL OUTSTANDING Total STT/STJ STX Active PL $ 3,998,404.41 $ 2,497,250.38 $ 1,501,154.03 Retiree PL 3,742,671.33 2,091,331.51 1,651,339.82 Purchase/Refi 1,222,065.74 954,372.20 267,693.54 Construction 1,851,106.82 1,129,974.70 721,132.12 Land Loans 314,200.80 279,620.15 34,580.65 GRAND TOTAL $ 11,128,449.10 $ 6,952,548.94 $ 4,175,900.16 GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING March 23, 2023 6 Operations St. Croix Office Complex No major issues other than ongoing maintenance. PROJECTS COMPLETED/IN PROGRESS: COMPELTED - Repaving of the rear parking lot at the Casino Control Commission. COMPLETED - Installing a roof with guttering over the maintenance shed. COMPLETED - Removing rust, priming and painting all exterior doors. IN PROGRESS- Painting all exterior columns. IN PROGRESS - Replacing missing tiles and refurbishing the fountain. St. Thomas Office Complex No major issues other than ongoing maintenance. PROJECTS PENDING: Paint second and third floor lobby and third floor corridor Fill potholes in covered parking areas Restripe parking lot. Lobby/Atrium/ Restroom Renovations/ ADA Compliance – Architect Contract signed, and the GERS received designs/drawings. Project on hold until Roof and AC completed. To be included in FY 2024 Budget. Havensight Mall Work progresses on the demolition projects and refurbishment of Warehouse J. Hotel Development CZM hearing was held on February 23, 2023. CZM walkthrough with the developer was conducted on Friday March 17, 2023., Generator The generator was delivered on Monday March 13, 2023. It will be fully functional barring any unforeseen circumstances by August 2023. GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING March 23, 2023 7 Office Buildings Rental and Electricity Collections – Exhibit A Feb 2023 Total FYTD Arrearages Rental $118,802.49 $398,817.85 $50,252.44 Electric 71,619.43 197,434.38 36,302.19 Total $190,421.92 $596,252.23 $86,554.63 The Administrator stated that $11,637.42 was collected for electrical arrearages after the report was prepared. LEASES (Outstanding) Equus Workforce Solutions New tenant. Lease was sent to Equus for review and signature on March 10, 2023. Division of Personnel Awaiting finalization. Last language agreed to on March 13, 2023. Department of Justice Both parties have executed the lease. However, DOJ is required to provide proof of funding to DPP. Awaiting DOJ to forward the proof of funding documentation to DPP to finalize the processing of the agreement. GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING March 23, 2023 8 RENTAL – EXHIBIT A GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING March 23, 2023 9 Questions and Comments from Board of Trustees to Administrator Nibbs Trustee Russell inquired about challenges of government employees withdrawing from the system. According to Administrator Nibbs, the mindset has changed since the influx of the bond note. However, some are still withdrawing their contributions because they are not convinced the system is stable. Trustee Russell asked Administrator Nibbs for an update of the proposed “Return to Work” Legislation. Administrator Nibbs responded that the numbers of “Return to Work” retirees are at a minimum. Administrator Nibbs will get the numbers from Compliance and Control for Trustee Russell. Trustee Russell asked what is the next step with the CZM walk-through. Administrator Nibbs asked Chief Operating Officer, Clendinen Gumbs to respond. According to Ms. Clendinen Gumbs, within thirty days of the walk-through, CZM will make a formal recommendation to the Legislature. Trustee Bowry asked about the tenant Equus Workforce Solutions. Administrator Nibbs asked Chief Operating Officer, Clendinen Gumbs to respond. According to Ms. Clendinen Gumbs, this program is through the Department of Labor. They give grants and funding and ResCare won the contract to operate Job Corp in the Virgin Islands. It is the same management under the name Equus Workforce Solutions. ResCare Lease had expired, and they had an option to renew under the name Equus Workforce Solutions. Trustee Bowry inquired about Carambola. Administrator Nibbs responded that Carambola was sold on July 4, 2019, and all assets have been liquidated. Prior to the liquidation, GERS filed the required financial reports with the Lt. Governor’s Office. As of the closing, there was an amount of $225K placed in escrow for liability purposes with the buyer’s attorney (Dudley). After the closing, the buyer claimed that Carambola was responsible for outstanding invoices for about $125K which were not identified in the true-up. Bolt Nagi (Corporate Attorney for Carambola Northwest LLC) completed confirmation and a reconciliation with the buyer’s accountant and the outstanding invoices that were claimed have decreased significantly. The process by Bolt Nagi to resolve the $225K in escrow is ongoing. The Board passed a resolution a few years ago for the dissolution of Carambola Northwest LLC. Bolt Nagi filed the termination documents in March 2023, and the termination was approved by the Lt. Governor’s Office dissolving Carambola Northwest LLC. Trustee Bowry inquired about the GAO report. Administrator Nibbs stated that GAO wanted a follow-up about the bond note and other information discussed in the prior meetings, and also GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING March 23, 2023 10 asked for copies of the appraisals of our properties. They will finalize their report by the end of the year. Committee Reports. (a) Investment Committee – Trustee Callwood – No Report. (b) Development Committee Trustee Russell reported that the Development Committee and Administrator gave a lengthy report regarding Havensight Mall. Due to the undeveloped land owned by GERS the Development Committee would like to proceed expeditiously with proposals that may be presented to the Committee. Another expectation of the Committee was establishing a set meeting time, a date which is each Monday of the month from 5:00 p.m. – 6:00 p.m. The Committee also discussed participating in a walk-through at Havensight Mall on March 30th. The Committee also discussed the possibility of rescinding the Moratorium and Alternative Investment Resolution, specifically for the St. Thomas and St. Croix undeveloped properties. The majority of the Board of Trustees do not agree with a blanket lifting of the policy at this time. Projects should be considered on a case-by-case basis, have specific discussions, and vetted by the Board before entertaining the proposals. Trustee Bowry recommended that a Cost Analysis be performed. (c) Budget/Audit Committee Report – Chairman Callwood - No Report. (d) Policy Committee Report – Trustee Bowry. No Report. Treasurer’s Report System Denise Jeremiah, CFO, read the Treasurer’s Report for the System and Havensight Mall for the month ending February 28, 2023, into the record. Total Collections for February 28, 2023, is $15.1M and FYTD is $225.6M. Total Disbursements for January 31, 2023 is $24.5M and FYTD is $130.2M; Net Cash Deficit for February 28, 2023 is $9.4M and a Net Cash Surplus of $95.3M FYTD. Havensight Mall Total Collections for February 28, 2023 was $404.8K and FYTD $2.3M; Total Disbursements for February 28, 2023 was $941.5K and FYTD is $2M and a Net Cash deficit of $536.8K and Net Cash surplus of $222.4K FYTD. GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING March 23, 2023 11 A motion was made by Trustee Smith and seconded by Trusteel Liger to accept the Treasurer’s for February 28, 2023. The motion passed with 5 Yes (Bowry, Liger, Russell, Smith, and Callwood), 1 Not voting (Dorsey) and 1 Absent (McDonald) Investment Report Glenville Henderson, Investment Analysts, read the investment report for the month ending February 28, 2023, into the record. The Total Plan returned -2% for the month of February 2023. Total Domestic Equity returned -2.3% and was in line with its benchmark. Total International Equity returned -3.6% and underperformed its benchmark by 0.1%. Total Fixed Income returned -1.6% and outperformed its benchmark by 1.0%. Tot Alternatives Returned -0.5% outperformed it benchmark by 1.7% Notable Fund Performance: Russell 3000 index returned -2.3% MSCI Emerging MKTS Index returned -7.0% U.S. AGG Bond Index returned -2.6%. Cash Flow Activity: Month ended was $482.7M. Began the month with $492.6M; Net Cash Flow of $-23.5M; Income -$266.3K, Loss of -$9.7M; Ending Market Value $4982.7M. Custodial/Consulting/Management Fees: $24K Calendar MTD; $121K Calendar YTD; $229K Fiscal YTD. Trustee Smith asked Mr. Henderson when the System can return to investing in stocks and bonds. Mr. Henderson stated that the system is currently invested in stocks and bonds due to the reallocation of the investment policy. A motion was made by Trustee Russell and seconded by Trustee Bowry to accept the Investment Officer’s Report for February 28, 2023. The motion passed with 6 Yes (Bowry, Dorsey, Liger, Russell, Smith, and Callwood) and 1 Absent ( McDonald,). A motion was made by Trustee Dorsey and seconded by Trustee Bowry to go into Executive Session. This portion of the meeting will be closed to the public for matters pertaining to trade secrets or financial or commercial information or personal or legal matters; or matters whose premature disclosure will frustrate the implementation of the proposed agency action. The motion GOVERNMENT EMPLOYEES’ RETIREMENT SYSTEM MINUTES BOARD OF TRUSTEES REGULAR MEETING March 23, 2023 12 passed with 5 Yes (Bowry, Dorsey, Liger, Russell, and Callwood), and 2 Absent (McDonald and Smith). Executive Session A motion was made by Trustee Dorsey and seconded by Trustee Russell to come out of Executive Session. The motion passed with 5 Yes (Bowry, Dorsey, Liger, Russell, and Callwood), and 2 Absent (McDonald and Smith). Regular Session. The Chairman reported out of Executive Session that the Board had approved the renewal of the contract of the Administrative Assistant to the Board. A motion was made by Trustee Russell and seconded by Trustee Bowry to adjourn the meeting. The motion passed with 5 Yes (Bowry, Dorsey, Liger, Russell, and Callwood), and 2 Absent (McDonald and Smith). The meeting ended at approximately 11:51am. The minutes for the Regular Session were transcribed from the zoom recording by Zaida Castro, Executive Assistant to the Administrator and reviewed and edited by the Secretary of the Board. Austin L. Nibbs, CPA, CGMA Administrator/CEO Secretary, GERS Board of Trustees