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Home My WebLink AboutResolution No. 2011-17the c i y e/ ICE Al. ALASKA CITY OF KENAI RESOLUTION NO. 2011 -17 Suggested by: Administration A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, PERTAINING TO THE AUTHORIZED INVESTMENTS OF, THE INVESTMENT ALLOCATIONS OF, AND ESTABLISHING APPROPRIATE BENCHMARKS TO MEASURE PERFORMANCE OF THE GENERAL FUND LAND SALE PERMANENT FUND. WHEREAS, the City of Kenai Council is authorized to establish investment policies for the GFLS Permanent Fund; and, WHEREAS, the KMC 7.30.020(b) permits investment of the GFLS Permanent Fund in various asset classes and the Council believes that establishing asset allocation criteria for these various asset classes is in the best interest of the City of Kenai; and, WHEREAS, the Council intends to annually review the asset allocations and performance of the GFLS Permanent Fund; and, WHEREAS, providing benchmarks to measure the performance of the fund is prudent. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that the Council designates the following investments for the General Fund Land Sale Permanent Fund: AUTHORIZED INVESTMENTS FOR THE GFLS PERMANENT FUND (1) Investments authorized by KMC 7.22.030 (2) Corporate obligations of investment grade quality as recognized by a nationally recognized rating organization. If, after purchase, these obligations are downgraded below investment grade, the obligations shall be sold in an orderly manner within ninety days of downgrading. (3) Domestic Equities, which taken as a whole, attempt to mirror the characteristics or replicate the Standard Poor's 500 Index, including both mutual funds and exchange traded funds ETF's). (4) Domestic Equities, which taken as a whole, attempt to replicate the Standard Poor's 400 Mid -Cap Index, including both mutual funds and exchange traded funds ETF's). (5) Domestic Equities, which taken as a whole, attempt to replicate the Standard Poor's 600 Small -Cap Index, including both mutual funds and exchange traded funds ETF's). (6) International Equites, which taken as a whole, attempt to replicate the Morgan Stanley Europe, Australasia, Far East (EAFE) Index, including both mutual funds and exchange traded funds (ETF's). (7) Equities, which taken as a whole, attempt to replicate the universe of domestic real estate investment trusts as represented by the Standard Poor's REIT composite index, including both mutual funds and exchange traded funds ETF's). Resolution No. 2011 -17 Page 2 of 3 (8) Emerging Market Equities, which taken as a whole, attempt to replicate the Morgan Stanley Emerging Market Index including both mutual funds and exchange traded funds (ETF's). BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that the Council adopts the asset allocations and performance measurement standards as follows: GFLS PERMANENT FUND ASSET ALLOCATION PLAN AND PERFORMANCE MEASUREMENT TARGETS Section 1: The Asset Allocation Plan and Target Weightings with range restrictions are as follows: ASSET CLASS TARGET WEIGHTING RANGE Fixed Income 45 40 -65 Large -Cap Domestic Equity 20 15 -25 International Equity 10 5 -15 Mid -Cap Equities 10 5 -15 Small -Cap Equities 5 0 -10 International Emerging Markets 5 0 -10 Real- estate equities 5 0 -10 Section 2: The performance of the Fund and investment managers will be measured as follows: Performance measurement of the Fixed Income allocation will be measured against the Target weighting, using the Barcleys Intermediate Government /Credit Index for the benchmark. Performance measurement of the Large -Cap Domestic Equity allocation will be measured against the Target weighting, using the Standard Poor's 500 Index for the benchmark. Performance measurement of the International Equity allocation will be measured against the Target weighting, using the Morgan Stanley Europe, Australia, Far East (EAFE) Index for the benchmark. Performance measurement of the Mid -Cap Equity allocation will be measured against the Target weighting, using the Standard Poor's 400 Mid -Cap Index as the benchmark. Performance measurement of the Small -Cap Equity allocation will be measured against the Target weighting, using the Standard Poor's 600 Small -Cap Index as the benchmark. Resolution No. 2011 -17 Page 3 of 3 Performance measurement of the International Emerging Markets allocation will be measured against the Target weighting, using the Morgan Stanley Emerging Markets Index as the benchmark. Performance measurement of the Real- Estate Equities allocation will be measured against the target weighting, using the Standard Poor's REIT Composite Index as the benchmark. BE IT FURTHER RESOLVED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that this resolution shall become effective March 2, 2011. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 16th day of February, 2011. ATTEST: Carol L. Freas, City Clerk Approved by Finance: ±7 �fhr yo(/ KENAI, ALASKA \v/ To: Rick Koch, City Manager If From: Terry Eubank, Finance Director Date: February 9, 2011 Re: Resolution 2011 -17 "Village with a Past, CL y with a Future FINANCE DEPARTMENT 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 283 -7535 ext 221 FAX: 907 283 -3014 Ordinance 2529 -2011 changed the investment guidelines for the City's General Land Sale Permanent Fund. After the March 2, 2011 effective date of Ordinance 2529-2011 the fund may be invested in the same manner as the Airport Land Sale Permanent Fund. KMC 7.30.020 (a) (2) requires the Council to annually approve, by resolution, the asset allocation and benchmarks for portfolio performance measurement. Based upon the historic performance of the Airport Land Sale Permanent Fund, Resolution 2011 XX establishes the same asset allocation and performance benchmarks as those established for the Airport Land Sale Permanent Fund by Resolution 2011 -04. A portfolio as described in the resolution is expected to produce an annual rate of return averaging 7.1 Since September 2008 a portfolio as described has produced nearly a 13% rate of return for the Airport Land Sale Permanent Fund. The balance General Land Sale Permanent Fund monies will be grouped with the investments of the Airport Land Sale Permanent Fund and all earnings will be allocated based upon ownership percentage. Grouping of the funds will reduce fees associated with managing and safe keeping of the investments.