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CEMETERY COMMISSION 2015/04/15 MinutesLAKE FOREST CEMETERY COMMISSION MEETING LAKE FOREST CEMETERY GATEHOUSE WEDNESDAY, APRIL 15, 2015 5:00 P.M. MEETING MINUTES I. ROLL CALL, CALL TO ORDER: Chairman Colin Silvester called the meeting of the Lake Forest Cemetery Commission to order at 5:05 p.m. at the Lake Forest Cemetery Gatehouse. The following members were present: Chairman Colin Silvester; Commissioners Dennis O’Brien and Patrick Looby; Secretary/Treasurer Bob Kiely; City Staff Chuck Myers, Superintendent of Parks and Forestry; and Phil Alderks, Cemetery Sexton; and Tony Hoban from William Blair and Company. II. APPROVAL OF THE JANUARY 21, 2015 MINUTES: Commissioner O’Brien motioned to approve the January 21, 2015 Minutes which was seconded by Commissioner Looby and passed unanimously. III. APPROVAL OF REVENUE/EXPENSE REPORT: Sexton Phil Alderks presented the Revnue/Expense Report. Alderks said that revenues were as expected with lot sales on the slightly low end, but both service charge and niche revenue higher and more than making up the difference. Currently, Alderks further stated, sales and revenues have exceeded the projected budget amount and expenses were on the low end, but other than that things were pretty normal for this time of year. Secretary/Treasurer Kiely said that he had met with Superintendent Myers and Sexton Alderks to review the budget format and reminded the Commission that staff would be presenting an updated budget format this summer as the Commission had requested. Kiely also asked the Commission to let staff know if there was a specific way they wanted the budget presented. Chairman Silvester said that the biggest change that he saw was that appreciation (net gains/losses) should not be included in the budget. IV. FIRST QUARTER INVESTMENT REPORT: Investment manager Tony Hoban from William Blair and Company reviewed the Cemetery’s portfolio with the Commission. Hoban spoke to both the first quarter returns and also the overall performance of the investments for 2014. Hoban stated that even with the strong 4th quarter the Cemetery’s US equities trailed the S&P 500 and the Russell 3000 Growth indices in the first quarter of 2015. Hoban touched on the performance of both US stocks and international investments, the US fixed income market and economic factors such as lower energy prices, the rate of inflation, and how central banks were driving interest rates lower. Following the discussion on general market trends and review of the portfolio Chairman Silvester turned the discussion to a memo to the Commission by Commissioner O’Brien regarding Indexed Funds vs. Actively Managed Funds. Commissioner O’Brien’s memo (attached). Commissioner O’Brien’s memo The City of Lake Forest is subject to the requirements of the Americans with Disabilities Act of 1990. Individuals with disabilities who plan to attend this meeting and who require certain accommodations in order to allow them to observe and/or participate in this meeting, or who have questions regarding the accessibility of the meeting or the facilities, are required to contact City Manager Robert R. Kiely, Jr., at (847) 234-2600 promptly to allow the City to make reasonable accommodations for those persons. compared the active management of the large cap stocks to indexing the large caps in order to save money on fees and also to increase returns. Tony Hoban said that in the past 5 years 21% of managers have beaten the market. As such, active managers will generally underperform in up markets like we have had. Hoban said that active managers perform better in volatile/choppy markets, so the Commission needs to think about what they think the market is going to do in the next number of years. Chairman Silvester commented that the Commission should take a long term view, as in 10 to 20 years, and be willing to take short term hits since over time the Cemetery will go through many business cycles. Hoban said that he thinks the market is going to be a little more volatile with higher interest rates for the immediate future. Secretary/Treasurer Kiely said that he saw 2 things that were important. First, would be the idea of active vs. passive (indexed) approach to management and second, that we have the right manager. He commented that since we have just gone through the RFP process with Wm. Blair and other investment firms and that we again selected William Blair, that we have confidence in our manager. Now the Commission needs to settle the active vs. passive management question. Chairman Silvester reminded the Commission that this is a big decision they are making and not something that you just jump in and out of. Silvester then made the motion to instruct William Blair to move the large cap US equities from an active management strategy to indexed funds of their recommendation at their earliest convenience, but not later than the next Commission meeting on July 15, 2015. Commissioner O’Brien seconded the motion which passed unanimously. Sexton Alderks then brought up the issue of approval of charges for services against the private cemetery trust funds. Alderks said the Commission Care Fund Account (private trust accounts held by the Cemetery) currently owes the Commission Account $118,659.53 for services rendered to the private lots. Alderks said that this is a paper transfer, but this is to pay for services spelled out in the trusts that are over and above normal perpetual care maintenance. Commissioner O’brien motioned to meet the obligation of the Commission Care Fund transfer to the Commission Fund which was seconded by Commissioner Looby and passed unanimously. V. CEMETERY UPDATES – RAVINE DESIGN: Superintendent Myers reported that work is progressing on the Ravine Design Project and our design firm, Conservation Design Forum, is about 75% complete with design. Staff recently met with CDF for a design review with the goal of 95% completion of the design work. Myers said he had just received an email tonight from CDF following the meeting. Myers said that 100% completion of phase II is completion of the design and also the permitting of the project. Myers said that we have not ‘officially’ been notified regarding the Illinois Coastal Management Grant but we have been told that we are a finalist. The grant would be for $80,000 to be used toward the $160,000 total for the west ravine restoration. Myers said we should know whether or not we will be receiving any monies from the grant in June. Superintendent Myers also reported that the Cemetery has signed a contract for maintenance/clearing of invasive species in the South Ravine that was restored in 2003-2004. Sexton Phil Alderks said that he is waiting for the contractor, Applied Ecological Services, to let him know when the work will be scheduled. VI. REVIEW OF CEMETERY RULES AND REGULATIONS: Sexton Alderks referred to the draft copy of the Lake Forest Cemetery Rules and Regulations in the packet along with the General Guidelines. Alderks said that the ‘General Guidelines’ contained the current rules and regulations and they not been reviewed in over 10 years. Alderks said that during this time a lot has changed in the industry and also with Illinois law so he had the ‘Guidelines reviewed by an attorney who specialized in cemetery law and that the attorney found them deficient. The attorney then used our current ‘General Guidelines’ to create a draft rules and regulations that is also in the packet for review. Alderks said he was handing the draft out for review and then discussion at the July Cemetery Commission meeting. VII. RESOLUTION OF APPRECIATION FOR COMMISSION CHAIRMAN COLIN SILVESTER: Sexton Alderks then presented outgoing Cemetery Commission Chairman Colin Silvester with a Resolution of Appreciation from the Cemetery Commission. Alderks read the resolution (attached) and congratulated Chairman Silvester on 6 years of service to the Cemetery. Secretary/Treasurer Kiely and the other Commission members also thanked Chairman Silvester for his leadership and commitment to the Commission. VIII. OTHER MATTERS: No other matters. IX. CITIZENS’ OPPORTUNITY TO ADDRESS CEMETERY COMMISSION: No citizen comments were made during this meeting. X. ADJOURNMENT: The meeting adjourned at 6:35 pm.